Thursday, July 7, 2011

Youngest diversified conglomerate, LOLC sees profits grow 194%

Sri Lanka’s youngest diversified conglomerate recorded impressive results for the first full year since the thirty year conflict ended in May 2009. Lanka Orix Leasing Company PLC (LOLC) saw its profits grow 194 percent for the year ended March 31, 2011 on strong revenue growth of 115.43 percent.

LOLC’s annual report released on Wednesday showed that its profits after tax had grown 194.46 percent to Rs. 7 billion as at end March 2011, from Rs. 2.3 billion a year earlier, while gross revenue increased 115.43 percent from Rs. 14.9 billion a year earlier to Rs. 32.1 billion.

"The diversification strategy of the group contributed heavily to the top line with a full year of operations from the leisure, agriculture and plantations and trading sectors adding value to the top line. The consolidated revenue from these sectors of the group increased to Rs. 16.8 billion from Rs. 2.6 billion during the previous year, where only three months from December 2009 to March 2010 were consolidated," LOLC said in its annual report.

"The income from the financial services to the group increased by 20 percent over the previous year to Rs. 11.9 billion despite the reduction in interest rates. The impact of the lower interest rates prevalent during the year was overcome by the increase in income from the growth of the group’s loan book.

"The group made substantial gains from investments, with capital gains of Rs. 55.1 million on the sale of Treasury bonds complementing the gains through short-term investments. The capital gains realised from the sale of shares was Rs. 2 billion and marked-to-market gains from shares held for trading is Rs. 1 billion.

"The increase in net interest cost of the group over the previous year was 4 percent even though the quantum of borrowings of the group has increased by a much larger proportion, due to low interest rates prevalent.

"The direct expenses excluding net interest cost increased by 88 percent to Rs. 1 billion mainly due to increases in value added tax on financial services to Rs. 650 million and BTT, debit tax, etc to Rs. 368 million.

"Provisioning for bad and doubtful debt of the group was down 14 percent to Rs. 546 million reflecting significant improvement in the portfolio quality. The gross non-performing loan ratio of the group was 2 percent as the year end and the net non-performing ratio, after provisions for bad and doubtful debts, was 0.1 percent which was well below the industry average.

"The other operating expenses of the group, including staff costs, increased to Rs. 6.3 billion and the resultant profit from operating activities was 7.8 billion.

"The group recognised Rs. 179 million as share of profit from equity accounted investees during the year, mainly form PRASAC Microfinance Institution in Cambodia and Associated Battery Manufacturers.

"The LOLC group through LOLC Leisure, obtained controlling interest of Confifi Group of Hotels, consisting of Confifi Hotel Holdings PLC (Club Palm Garden), Riverina Hotels PLC and Eden Hotel Lanka PLC in May 2010. Subsequently, LOLC Leisure acquired controlling interest in Tropical Villas Pvt. Ltd. The group recognised a negative goodwill of Rs. 272 million, arising from the fair value of net assets acquired via the hotel properties," LOLC said.

The total assets of the group as the year end was Rs. 111.8 billion, with the increase in total assets over the previous year being mainly from the increase in financial assets. Rs. 23.3 billion of the 48 percent balance sheet growth was from the lending portfolio of the group of the companies, it said.

LOLC is headed by Ms. Rohini Nanayakkara, its chairperson, and seconded by Ishara Nanayakkara, the deputy chairman. Kapila Jayawardena is the group managing director and CEO
source - www.island.lk

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