TFC narrows FY11 loss by 14% YoY

http://www.sundaytimes.lk/110612/BusinessTimes/bt29.html

Sri Lanka’s oldest finance company The Finance Company (TFC) will focus on hire purchase, leasing and pawning as well as land sales to take it back to profitability, according to its Chief Executive Kamal Yatawara. Additionally, the company’s fourth quarter financials reported its net loss for the period had fallen by 3% year-on-year to negative Rs. 2.07 billion while its net loss for the 12 months to end-March 2011 had dropped by 14% year-on-year to negative Rs. 3.68 billion.

A former Ceylinco Group subsidiary which experienced a run on deposits following allegations of fraud at a number of Ceylinco Group firms, TFC was put under management of the Merchant Bank of Sri Lanka (MBSL) by the country’s Central Bank, a caretaker arrangement which ended as of February 2011 following Rs. 3.6 billion in capital raised in January 2011 (40 million voting shares at Rs. 40 each and 100 million non-voting shares at Rs. 20 each). The installation of a new board of directors by the Central Bank was also necessitated after MBSL’s exit.

Elaborating on the loss incurred for the 2011 Financial Year (FY11), Mr. Yatawara noted that it also included “Rs. 1.4 billion provided for fall in value of the assets held by the company, recovery of which is doubtful. The shareholders funds were negative by Rs.3. 488 billion as at 31st March 2011.”

Mr. Yatawara also revealed that, by “[leveraging] the advantage of wide reach and established goodwill amongst the long standing large customer base both in urban and rural Sri Lanka, the deposit intake too has recorded increased volumes.”

The company’s interim, unaudited FY11 financials also showed marked decreases in investments in real estate, housing, hire purchase, vehicle, equipment and property leases as well as its loan burden for its easy payment, housing and fixed deposits products; while more liquid assets, including cash in hand and balances with banks and investments in government securities, bank deposits and dealing securities, were all privy to marked increases. Also going up, by almost three-fold, the company’s exposure to pawning, whereas the line item “amounts due from customers” fell by close to half.

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