Finlays 1Q results suffer Rs. 44 m hit

Saturday, 21 May 2011 00:18 - - {{hitsCtrl.values.hits}}

Finlays Colombo Plc’s results for the first quarter of 2011 had got a provision of Rs. 44 million on account of an incident in fully-owned subsidiary Finlay Cold Storage Ltd.

The company said that the subsidiary engaged in the provision of temperature controlled logistics services has been subject to an odour taint. Finlay Cold Storage carried out a full investigation to determine the facts and implications if any to the financial statements.

Subsequently the subsidiary decided for commercial reasons and in the interest of the long-term business relationship to give a credit of Rs. 44 million to the customer against storage charges payable by the customer during 2011.

The credit expense has been recognised in the interim results of Finlay Cold Storage and in the consolidated accounts of Finlays Colombo for the quarter ended 3 April 2011.

As per interim results, Finlays Colombo Plc’s net profit attributable to equity holders had declined by 91% to Rs. 13 million in the first quarter from Rs. 139 million a year earlier. Profit before tax was down by 77% to Rs. 37 million. Gross profit before the extraordinary expense was Rs. 212.5 million, down by 1% over the first quarter of last financial year. Other operating income had declined by 83% to Rs. 16 million as well.

Group revenue at Finlays Colombo Plc had increased by 8% to Rs. 1.28 billion.

At company level, revenue also grew by 8% to Rs. 1.04 billion whilst gross profit dipped by 11% to Rs. 61.7 million.

Share price up Rs. 42

Despite the dip in profits and midst market’s overall dip investors saw value in shares of Finlays Colombo as it shot up yesterday by Rs. 42 to close to Rs. 253.

Its intra-day peak was Rs. 270 reflecting an increase of Rs. 59. Gains were on a thin volume of 1,200 shares. The share didn’t trade on Thursday when first quarter results and impact of Rs. 44 million in the accounts were announced.