Ambeon stays acquisitive after Rs.2bn gain from South Asia Textiles sale

• Deal was slightly revalued by the suitor after an ongoing due diligence study 

Ambeon Holdings PLC remains acquisitive after the sale of its subsidiary, South Asia Textiles Limited to Hayleys Fabric PLC in April this year in a deal valued at little under Rs.4 billion as the diversified group is looking at consolidating its key business interests comprising of technology, financial services, and manufacturing of porcelain products.

Ambeon Holdings Chairman Sanjeev Gardiner describing the divestment as, “a well deliberated decision,” said it was executed with the intention of focussing, “more on its core businesses stemming mainly from technology, financial services and manufacturing cluster of porcelain products.”  

“We remain optimistic in exploring both inorganic and organic growth, which can provide a platform for strong growth in earnings,” he said in his annual review of the group’s operations.  

On April 23, 2021 Ambeon Holdings, which held 97.67 percent stake in South Asia Textiles Limited, the group’s largest revenue generator shed its entire stake to Hayleys Fabric PLC, a complimentary knit fabric maker, for a consideration of Rs.3.9 billion which was later adjusted to Rs.3.79 billion after a due diligence study carried out by the suitor. 

The company had received Rs.3.54 billion from Hayleys Fabric, which funded the deal via debt and the balance Rs.255.4 million was expected by June 30 after the finalisation of the due diligence study, the group said in a note to its interim results.

Ambeon recognised a gain on disposal of Rs.1.94 billion from the sale, which elevated its earnings for the quarter ended in June 2021 to Rs.5.65 a share or Rs.2.02 billion compared to a loss of 37 cents a share or Rs.131.59 million in the corresponding period in 2020.

Besides, the group also expressed its intention to further expand its technology segment footprint into Maldives and the SAARC region, via its subsidiary Millennium Information Technology, widely known as MillenniumIT ESP. 
After facing some challenging operational and financial performance during 2020 due to pandemic-induced order cancellations by foreign clientele and factory disruptions in the  porcelain cluster and the deferment of capital expenditure in the IT services segment, the two units showed recovery in the most recent fiscal quarter ended June 2021 at top 
line level. 

The group’s porcelain manufacturing is carried out via its two subsidiaries Dankotuwa Porcelain PLC and Royal Fernwood Porcelain Limited. 

Meanwhile, the group’s financial services cluster represented by Taprobane Capital Plus (Pvt) Limited did well through June 2021 from the financial year ended in March 2021, led by its stockbroking arm due to heightened local investor activity in the stock market. 

Meanwhile, in a recent development that took place after reporting June interim results, the group’s property segment represented by its subsidiary, Colombo City Holdings PLC, 

had disposed a 47.2-perch land plot together with the building owned by the company at Union Place, Colombo 02 to Vision Care Optical Services (Pvt) Limited for Rs.575 million on August 3. 

By June 30, 2021, the parent company Ambeon Capital PLC, a firm jointly controlled by Galle Face Hotel Group, Hirdaramani Group and Navitas Holdings, had 81.43 percent in Ambeon Holdings while another 5.59 percent stake was held by Almas Organisation (Pvt) Limited being the second largest shareholder.