Financial Times

MBSL 3Q profits soar, announces rights issue
Merchant Bank of Sri Lanka (MBSL) has announced that third quarter group profits have almost doubled and that it is planning a one for two rights issue to strengthen its fund base.

“A noteworthy feature for the three months ended September 30, 2005 is the remarkable growth in profits,” a bank statement said. Group profits rose 91 percent to Rs 61.92 million compared with the same quarter last year while at company level profit was up 88 percent to Rs 56.27 million.

MBSL’s Chief Operations Officer Gamini Karunatilleke said that the company’s net assets had also considerably improved to Rs 13.85 per share as at September 30, 2005 compared to the negative figure of Rs 2.16 as at September 30, 2004. “Having demonstrated a significant growth in terms of revenue and profits, MBSL has proposed a Rights Issue of shares in the proportion of one ordinary share for every two ordinary shares held at an offer price of Rs 15, inclusive of a premium of Rs 5 per share,“ Karunatilleke said.

“This price, considering the current earnings and the book value per share, is at a considerable discount to the shareholders. The current market price (ex-rights) is approximately Rs 27.00 per share which indicates the potential gain for the shareholders.” The provisional allotment will be made on October 18, 2005 subject to the approval of the shareholders and the issue will be closed on November 10, 2005.

For the nine months ending September 30, 2005, MBSL recorded a net profit of Rs 136.4 million for the Group and a net profit of Rs 120.3 million at company level. “These profits indicate a growth of 59 percent for the company and 74 percent for the group compared with the corresponding period in 2004,” the statement said.

In terms of the Net Interest Income up to September 30, 2005, MBSL has recorded an income of Rs 206.9 million and a sum of Rs 317.4 million for the Group, a growth of 12.8 percent for the company and 6.2 percent for the Group.

The earnings per share of the company up to September 30, 2005 was Rs 2.67 which marks a significant growth of 32.2 percent compared to Rs 2.02 up to September 30, 2004.

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