Wednesday Nov 06, 2024
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Wednesday Nov 06, 2024
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Logistics giant and most valuable PLC in the country Expolanka Holdings yesterday announced plans to de-list from the Colombo Stock Exchange (CSE).
Singapore-based and Japanese owned SG Holdings Global Pte Ltd., which owns 82.43% in Expolanka, has proposed the de-listing offer at Rs. 185 per share to minority shareholders who may wish to divest. Pending the announcement, trading of Expolanka shares was suspended. The share was trading at Rs. 150.50, up from Rs. 147.75 on Thursday and Rs. 130.75 at the end of January.
In a statement, Expolanka said the challenging global macro environment and the accompanying geopolitical tensions have resulted in a significant bottleneck for the Group to continue with its expansion drive. The recent financial performance of the company has been greatly impacted by these challenges and has consequently resulted in a period of earnings volatility.
Notwithstanding the earnings volatility in the recent past, Expolanka Holdings’ (EHL) parent company has plans for EHL to focus on its core business and grow its international operations. In those circumstances, the capital requirements for EHL will become increasingly international in nature, requiring it to raise capital from outside of Sri Lanka and in foreign currency, which borrowings would result in increased gearing and a high forex risk to the local minority shareholders thereby impacting shareholder
wealth.
The Board having considered the need to expand its international operations and the resulting high gearing as well as the attendant forex risk occasioned as a result thereof and taking into account the interests of its minority shareholders, has approved a proposal to delist the shares of EHL from the Colombo Stock Exchange subject to necessary shareholder sanction and regulatory approvals and clearances.
“We are confident that this proposal is in the best interest of our shareholders which provides an attractive and fair premium which will enable our minority shareholders to unlock value,” said EHL Director and Group CEO Hanif Yusoof. “We would like to thank our valued shareholders for their continued confidence in the Board and for the constant support extended to the company over several years,” he added.
Yusoof, one of the co-founders of EHL, also said the company will continue to comply with Sri Lanka’s statutory reporting and compliance requirements and focus on delivering on its promise to Sri Lanka and its people.
“As previously, post-delisting, the company will continue to navigate market complexities in a fast-revolving business environment while continuing to drive sustainable growth as it strives to gain market share as one of the top-tier logistics companies in the world,” Yusoof added.
With a market capitalisation of Rs. 294.2 billion, EHL is the most valuable company listed on the CSE.
The de-listing is subject to regulatory and shareholder approval. The public shareholding of EHL is 9.9% held by 20,850 shareholders.
The company’s net asset per share as at 31 December 2023 was Rs. 3.24 and at Group level it was Rs. 66.04, down from Rs. 76.19 as at 31 March 2023.
In FY22, Expolanka share peaked to its highest ever price of Rs. 405 before closing at Rs. 207.75. In FY22, Expolanka posted the highest ever profit of Rs. 73 billion on Rs. 684 billion turnover. In FY23, however, in tandem with challenges in the global freight market, profit slumped to Rs. 31 billion on Rs. 546 billion turnover. In FY23, EHL’s shares highest price was Rs. 204 and closed at Rs. 138.
In the third quarter of FY24, EHL’s biggest business, the logistics sector delivered a revenue of Rs. 64.4 billion, with a gross profit of Rs. 10.2 billion whilst reporting a net loss of Rs. 5.2 billion for the quarter as against a profit of Rs. 3 billion a year ago. The sector reported a revenue of Rs. 177 billion, a gross profit of Rs. 32.1 billion and a net loss of Rs. 12.7 billion for the nine months ended 31 December 2023 as against a profit of Rs. 32 billion in the corresponding period of previous financial year.
“A drop in volumes and a steep decline in Freight rates had impacted both revenue and gross profit, which resulted in operating losses,” EHL said in a review accompanying interim accounts.
In its statement yesterday, EHL said with a history of over 45 years, the Expolanka Group today has transformed itself into a leading logistics company with an international presence spanning 39 countries. Being a supply chain specialist, the company is one of the leading service providers to the export industry in Sri Lanka and generates a significant share of its earnings in foreign currency. With its global presence and international customer base as well as with its multicultural workforce, the Expolanka Group is one of the few Sri Lankan companies that has been able to expand globally.
Supported by capital infused by its parent company SG Holdings Global Pte, as and when needed, the company has grown amidst turbulent times. SG Holdings Global Pte which made its initial investment in EHL in 2014, currently owns 82.43% of the shares of the company.
Expolanka Holdings is a globally acclaimed conglomerate based in Sri Lanka, known for its diversified presence in four pivotal sectors: logistics, leisure, IT, and food. Guided by a forward-thinking mindset and a meticulously planned growth roadmap, EHL consistently challenges industry standards further cementing its leadership in these dynamic sectors, the statement added.
