LOLC paid no dividends for past several years to fund overseas expansion: Ishara

“Enhanced overseas expansion requires large investments”

LOLC Holdings Deputy Chairman Ishara Nanayakkara told shareholders at the company’s recent annual general meeting for the year 2019/20 that the non-payment of dividends for the past several years was a cash conservation measure in the context of their enhanced overseas expansion plan requiring large investments.

In addition, the company continuously invests in its financial and non-financial subsidiaries and must hence retain capital, he said.

A shareholder queried why LOLC, which has extensively publicized its profitability running into billions of rupees, had not paid dividends since around 2012. In it latest annual report for the year ended March 31,2020, Nanayakkara said that LOLC has been the country’s most profitable listed conglomerate for two years running.

The LOLC group net profit for the year in review was Rs.19.79 billion, up from Rs.19.64 billion the previous year

Asked when the non-payment of dividends policy was likely to change, Nanayakkara said “that depends of the future expansion of the company” when a dividend policy will be decided.

LOLC had a share split in 2010 when each exiting share was subdivided into 10.

Nanayakkara said in the last annual that the group’s total assets were USD 7.083 billion and it has a “considerable footprint overseas.”

The net asset value per share stood at Rs. 194.72 on the last balance sheet date. The share traded at a low of Rs. 86 and a high of Rs. 194.90 during the last financial year.

“Although the share split was long ago, shareholders in need of an income who had an interest in the company then, could have sold some of their new shares at a tidy profit,” an analyst said.