LOLC Holdings PLC (LOLC) releasing its nine-month results has recorded a PAT (profit after tax) of Rs. 45 billion after adjusting for corporate tax on a PBT (profit before tax) of Rs. 48 billion.
The Group recorded Rs. 4 billion as profits for the quarter, and LOLC said in a statement it was a healthy performance considering the COVID-19 pandemic situation negatively affecting the financial services and leisure sector directly and other sectors indirectly.
The Group’s Financial Services Sector contributed Rs. 3.5 billion as profits, and these results were achieved allowing a strong level of risk mitigating provisions amounting to Rs. 23 billion (Rs. 10.3 billion in 2019) for bad and doubtful debts being made, over and above the regulated levels. Conservative provisioning was made considering the potential risks arising from the pandemic and the dull economic environment across all countries in which the Group operates. Due to the current crisis situation, the livelihoods of all sectors have been badly affected and at the request of the regulators of each country, the Group’s Financial Services companies have extended moratoriums to affected customers.
The flagship Finance company of LOLC, LOLC Finance PLC (LOFC) recorded a PAT of Rs. 4.2 billion compared with Rs. 961 million achieved in the comparable period last year. Commercial Leasing and Finance PLC (CLC) recorded Rs. 1.9 billion as PAT for the current nine months compared with Rs. 1.2 billion made in the previous year. The profit of LOLC Development Finance PLC (LOLCDF) was Rs. 216 million compared with a Rs. 124 million recorded in the last year.
LOLC’s foreign Financial Services entities contributed well to the profits of the Group, with LOLC Cambodia leading the way with a Rs. 5.7 billion PAT, followed by LOLC Myanmar Micro Finance Ltd., the Greenfield business operation of LOLC, making a profit contribution of Rs. 554 million as PAT. The rest of the companies also made healthy progress, despite the global impact of COVID-19.
The three finance companies in Sri Lanka experienced a strong level of deposit inflows despite the all-time low interest rates. The deposit books grew, demonstrating the trust the depositors placed in these companies, considering the Group’s financial stability and strength.
The global expansion strategy for the financial services sector remains a key focus, with plans being made for further investments in Africa and in Asia.
LOLC currently operates in Sri Lanka, Cambodia, Myanmar, Indonesia, Philippines, Pakistan, Nigeria and Zambia in Financial services, Maldives and Sierra Leone in Non-Financial Services businesses.
Despite the global economic downturn, LOLC Group has a strong pipeline of multilateral funding available to LOLC and its operating companies both locally and globally. This clearly demonstrates the confidence these institutions have placed in the LOLC Group, due its long unblemished track record and the potential for growth, even during this turbulent period.
LOLC’s two insurance companies, LOLC General Insurance Ltd. and LOLC Life Assurance Ltd., recorded a strong level of business growth contributing Rs. 970 million and Rs. 325 million respectively as profits in the nine months up to December.
LOLC’s trading and manufacturing businesses made a profit contribution of Rs. 2 billion compared with a loss of Rs. 1 billion recorded in the previous year. Brown and Company PLC made Rs. 1.2 billion as profits in the nine months.
The Plantations and Power Generation sector improved their loss position, reducing losses to Rs. 1.6 billion from Rs. 2.3 billion during the nine months. Maturata Plantations Ltd. made a significant contribution to this reduction in losses with a strong profit contribution with tea exports generating increased revenues.
The operation in Sierra Leone, Sunbird Bio Energy Ltd., shows strong potential in the medium term with the company achieving its primary goals in the short span of time since the investment. The company achieved its plantation target of 5,400 Hectares of sugarcane being planted. The factory operation is running well for the second year since LOLC’s involvement in the company and holds a stock of 12.2 million litres of ENA/RS to be sold, while the sales concluded stands at 5.8 million litres of ENA.
The leisure sector was directly affected by the COVID-19 pandemic, however due the Group’s timely conversion of these properties into repatriation hotels, the loss was contained at Rs. 2.8Billion. The Group continues with the construction of properties in Sri Lanka and in Maldives, which will enable commencement of operations when the leisure business returns to normalcy.
Anticipating strong growth in the leisure business in the medium to long term and the resultant capital appreciation of the properties, LOLC’s leisure subsidiary, EDEN Hotels Lanka PLC acquired the controlling interest of Serendib Leisure for Rs. 798Mn.
In December, Browns Investments PLC, LOLC’s Strategic Investment Arm has entered into an agreement to partner with China Harbour Engineering Company Limited (CHEC) to commence the Colombo International Finance Centre (CIFC), a Mixed Development Project in the Colombo Port City (CPC). This project comprises of a land area under development of 6.8 hectares with an investment value totalling USD 1 Billion and represents important long-term implications on the economic growth of Sri Lanka.
Mr. Kapila Jayawardena commenting on the performance said, “We are pleased with the performance achieved by our companies in the nine months up to December 2020 despite the COVID-19 pandemic affecting businesses globally. The sale of PRASAC Micro Finance Company at the opportune time made the Group stand strong during tiring times. LOLC has been resilient to the negative effects of the pandemic with the diversification and the timely expansion into the region and beyond.
We are well geared to face the challenges in the coming months and have aligned our mid-term to long-term strategies to stay strong and to reap the benefits that will be present during the recovery period and after.”