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Monday, June 27, 2011

Pacific Textiles to gain Rs.3.2 bn from Textured Jersey PP

By Jithendra Antonio

The major shareholder of Textured Jersey Lanka (TJL), Cayman Island incorporated Pacific Textiles Holdings Limited (PT) group is yet to realize a total gain of over Rs.3.2 billion or Hong Kong Dollars 230 million on the disposal of shares via TJL private placement.

“Based on the planned listing and stock offering of PT Sri Lanka, the unaudited financial information of PT Sri Lanka and relevant fair value evaluation at the date of disposal, the Group anticipates to recognize a gain on disposal of approximately HK$230 million,” the Chairman of PT Group Wan Wai Loi recently told share holders in its latest financial report.

He outlines that the Pacific Textiles Group proposes to spin-off a subsidiary, PT Sri Lanka, for a separate listing on the Main Board of the Colombo Stock Exchange.

“This proposed separate listing has been approved by the Colombo Stock Exchange, and it is anticipated that the listing will be completed by August 2011,” Loi states noting In connection with the proposed separate listing, the Group disposed 83 million shares representing 14.43% of equity interest in PT Sri Lanka under a pre-IPO private placement in May 2011.

In his review for the financial year 2011 concluded June 24, Wan Wai Loi points out that directors consider the above transactions as a single transaction. However, he further notes that in accordance with Hong Kong Accounting Standard (HKAS) 27 (Revised), the Group has remeasured its 40% retained interest in PT Sri Lanka to its fair value with the change in carrying amount recognized in profit or loss. It further states that it recognizes a goodwill in interest in associate for the remaining 40% equity interests in PT Sri Lanka of approximately HK$150 million (Rs.2.1 billion) in the consolidated financial statements for the year ending 31 March 2012.

“The Pre-IPO Private Placement was very successful. The spin-off of PT Sri Lanka for separate listing on the Main Board of the Colombo Stock Exchange is progressing well.” Wai Loi points out in his financial review. Wai Loi in his review notes that the gross proceeds to be received by the PT Sri Lanka from IPO before deducting the related legal and professional expenses is expected to be approximately US$11.0 million or Rs. 1.2 billion (approximately HK$85.9 million).

He further goes on to explain that the gearing ratio of Pacific Textile (PT), being the ratio of total debts including current and non-current borrowings and finance lease obligations to total equity, was 4.5% (up from 2.2% in 2010) attributable mainly to an increase in borrowings by PT Sri Lanka.

However, according to Wai Loi, the spin-off move of textured Jersey will undoubtedly enhance the profile of PT Sri Lanka (Textured Jersey) and provide the operation a funding platform for future business development.

“After the PT Sri Lanka IPO, we will still be the largest shareholder of PT Sri Lanka and will continue to enjoy the benefits from the growth and development of the business through our shareholding interest,” he said.

Meanwhile the segmental financial results of PT outlines that the company’s sales revenue from Sri Lanka’s Texture Jersey had shot up from HK $ 1.04 billion to HK $ 1.11 billion or Rs.15.6 billion in 2011 as the third largest contributor of group’s revenue above Hong Kong and African region operations.

The financials further states that group revenues of approximately HK$1.58 billion or Rs.22.2 billion are derived from a single external customer accounting for approximately 22% of the Group’s revenue. It also notes that the Group’s non-current assets other than financial instruments and deferred tax.

Assets amounting to HK $ 191.4 million or Rs.2.6 billion are located in Sri Lanka.

Wai Loi states that the subsidiary established and operated in Sri Lanka, Textured Jersey Lanka Limited (“PT Sri Lanka”), is exempted from income tax on its profits for 15 years from the first year of commencement of commercial operations in September 2001.

“After the expiration of the tax exemption period, the profits of PT Sri Lanka will be charged at the rate of 12% for a period of 8 years,” the financial notes.

A joint venture by Sri Lanka’s Brandix group and Hong Kong’s Pacific Textiles, Textured Jersey is hoping to announce its IPO offering 80 million ordinary voting shares today at Rs.15 per share.

source - www.dailymirror.lk