LOLC Holdings Group SL’s top profit earning listed entity for second year running

While group profits have grown, a loss posted at company level

LOLC Holdings PLC, the highly diversified conglomerate quoted on the Colombo Stock Exchange, has in its just published annual report told its shareholders that the publication of its results for 2019/20 was, in the words of its Deputy Chairman Ishara Nanayakkara, “an apt occasion to announce the good news……that LOLC has achieved the distinction of being the most profitable listed entity in Sri Lanka for two years in a row.”

While an after tax profit of Rs. 19.79 billion, up slightly from the previous year’s Rs. 19.64 billion, has been posted by the group, at company level there was a loss of 9.09 billion, up from a loss of Rs. 3.2 billion a year earlier. LOLC last paid a dividend of 50 cents a share in 2013 but its share closed the year at Rs. 88.90 and was trading at over Rs. 120 last week.

Nanayakkara said that LOLC had total assets of USD 7.083 billion “and a considerable footprint overseas.”

“Reflecting this strength, the audited financial statements I place before you for the year under review mirror the resilience of the group, which was able to record a marginal increase in profit after tax….notwithstanding the dismal economic and political climate that prevailed during the period,” he said.

He attributed his optimism to the fact that 80% of their profit before tax is derived from overseas. This will assure their partners and shareholders that their diversified business interests will always enable the group to achieve growth regardless of challenges in their Sri Lanka operations.

The LOLC group is into financial services, construction, agriculture and plantation, manufacturing and trading, leisure and renewable energy and is expanding overseas. It also has some other strategic investments in its portfolio.

The report said that the group had rapidly evolved into being the biggest non-banking financial institution in the country and one of its biggest and most diversified conglomerates.

“Our footprint in Sri Lanka spans every district, from the rural hinterland to major cities and we have enduring business partnerships with a host of financial and developmental organizations across the world,” the report said.

“We have significantly successful financial services investments in Cambodia,, Myanmar, Pakistan, Indonesia, the Philippines, Nigeria and Zambia; business operations in Maldives and Sierra Leone as well as corporate offices in Singapore, UAE and Mauritius and we continue to expand our international presence by actively seeking new opportunities in the region.”

Discussing the financial services sector, Nanayakkara said they had performed to the best of their ability against the backdrop of multiple shocks including the Easter bomb, the presidential election and the Covid pandemic “which fortunately did not impact the year under review in any significant manner although it will cast a shadow on how the local and global economy will recover in the next financial year.”

The 2018 debt waiver by the then government had caused irrevocable damage to the country’s microfinance sector. The concession was granted only to arrears clients discouraging regular clients, adversely affecting the healthy recovery ratio of over 90% maintained up to that point.