LOLC Group, posted a record-breaking performance for the financial year ending March 31 2021, achieving unprecedented bottom line results of Rs. 57 billion in Profit Before Tax (PBT), and a Profit After Tax (PAT) of Rs. 53 billion - a first for any corporate in the country.
By achieving profits on this massive scale in the history of Sri Lanka’s corporate world, the Group once again consolidated its position as the top most profitable diversified corporate in the country, three years in a row - establishing LOLC as one of the largest Micro and Small & Medium Enterprises (MSME) platforms in the world.
This stunning performance by LOLC resulted in a Rs. 28Bn being recorded as Profits Attributable to the Equity Holders of the Parent company. The Group results denote an impressive Earnings Per Share of Rs. 59.01 compared with Rs. 22.93 recorded in the previous year. Whereas, the total comprehensive income was Rs. 81Bn out of which Rs. 37Bn is attributable to the Equity Holders of the Parent company. Furthermore, the total attributable comprehensive income per share was Rs. 77.84.
The resultant Net Assets Value per Share as at the year-end was Rs. 286.23 compared to Rs. 194.72 reported last year, demonstrates the exceptional value creation by the Group during the concluded financial year.
The story of LOLC’s rise into an elite blue-chip within a span of 40 years is nothing short of awe-inspiring, surpassing competitors who have been in existence for over a century.
In Sri Lanka, the LOLC Group diversified into agriculture and plantations, leisure, renewable energy, construction, manufacturing and trading, information services, as well as research and innovation over and above its flagship financial services. All of these businesses recorded an upward trend in profitability in 2020/21, despite the adverse effects of COVID-19 being felt by Sri Lanka’s economy through 2020, coupled with weak GDP growth in the preceding year. LOLC’s financial services have brought about life-changing financial inclusion in MSMEs in Sri Lanka, empowering frequently marginalized communities to build a better future for their families - driving women’s empowerment and financial independence by encouraging their entrepreneurial ambitions.
Overall, the LOLC Group’s Financial Services achieved a Rs. 17.3Bn as bottom line despite allowing for a strong level of risk mitigating provisions amounting to Rs. 30Bn for bad and doubtful debts on a very conservative basis against Rs. 17Bn last year.
LOLC’s finance companies in Sri Lanka experienced a strong level of deposit inflows despite the all-time low interest rates. The flagship finance company - LOLC Finance PLC (LOFC) – with a Total Assets base of Rs. 170Bn, recorded PAT of Rs. 4.4Bn.
Commercial Leasing & Finance PLC (CLC) with a Total Assets Base of Rs. 77Bn also recorded strong performance, posting a PAT of Rs. 2.2Bn in 2020/21.
Meanwhile, with a Total Assets Base of Rs. 19Bn, LOLC Development Finance (LODF) PLC recorded a PAT of Rs. 155Mn.
Seylan Bank succeeded in delivering a steady PAT of Rs. 3Bn for FY2020.
LOLC’s global success took seed in 2007, when it invested in PRASAC - a Cambodian microfinance organisation - and grew it into a billion-dollar organization in less than 12 years. A 70% stake was recently acquired by the Republic of Korea’s largest commercial bank, Kookmin Bank, for US$ 603 Mn - thereby contributing to overall Group profitability and strengthening its balance sheet with a put option to divest the remaining stake in December 2021.
LOLC’s overseas financial services entities made strong contributions to the profitability of the Group in 2020/21 - with LOLC Cambodia leading the way with a US$ 45 Mn in PAT with the Total Assets base exceeding over US$ 1 Bn. In Cambodia, LOLC continues to hold a 97% stake in LOLC Cambodia - the fourth-largest microfinance company in terms of market position, and the second most profitable microfinance institution in Cambodia after PRASAC.
Venturing into Myanmar in 2013 as a greenfield operation, LOLC Myanmar Microfinance Company Limited has now become the fourth-largest among the 176 MFIs, with an asset base of US$ 175 Mn, a portfolio of US$ 126 Mn and a growing deposit book of US$ 20 Mn. LOLC Myanmar has seen exceptional performance in FY2020/21 by posting a profit of US$ 3 Mn as PAT, and envisages strong growth prospects amidst the atmosphere of a large unbanked population.
In 2017, LOLC ventured into Pakistan by investing in Pak Oman Microfinance Bank (POMB), a joint venture with the Islamic republic of Pakistan and the Sultanate of Oman.
Tapping into other neighbouring emerging markets, LOLC invested in the Philippines - a country with a population of 110 million - through LOLC ASKI Finance and LOLC Bank Philippines - a thrift bank in 2019.
In the year under review, the Group made its first finance sector investment in the African region by acquiring a controlling stake of FinaTrust Microfinance Bank in Nigeria – a West African nation with the largest population in the continent of 206 million.
The Group commenced operations in Zambia by incorporating LOLC Finance Zambia as a Greenfield operation - which currently operates through 6 branches.
The global expansion strategy for the financial services sector remains a key focus, with plans being made for expanding into more markets in both Africa and Asia.
One of LOLC’s two insurance companies LOLC Life Assurance registered a GWP of Rs 3.2 Bn - the first Life Company in the industry to achieve this milestone in less than 10 years - and posted a growth of 21% in GWP, backed by a robust growth of 59% in first year premiums: the highest new business growth in the insurance industry. Meanwhile, LOLC General Insurance achieved Rs. 6Bn in Gross Written Premium in 2020 in less than 10 years - a first for Sri Lanka.
After success in the overseas MSME sector, the company is leveraging on its vast international customer base and technical synergies to enter the micro insurance arena, already securing licenses in Cambodia and a representative office in Myanmar - thereby offering end-to-end financial security for the MSME sectors in these markets.
LOLC Securities (LOSEC) Private Limited, a leading stock broker with strong retail and local and foreign institutional client base, expanded its market share from 7% to 9.5% in FY 2020/21.
LOLC’s expertise in financial services has been further underscored by the launch of iPay, a unique payment aggregator which has garnered close to 90,000 subscribers and enables a wide range of financial transactions through the app. It has been successfully launched in Sri Lanka and Cambodia, along with implementation plans already in place for Myanmar, Pakistan and Indonesia.
Browns’ trading business recorded one of its highest revenues with an increase of 45% with a gross profits increase of 47% for FY 2020/21, while posting a PAT of Rs. 1.8Bn.
The Group’s local plantations sector operates through Maturata Plantations and Gal Oya plantations, two businesses that recorded strong performance in the year under review.
The BI Group acquired a 67% stake in Tropical Island Commodities Pvt Ltd. During the year, Maturata recorded a historic performance with an excellent profit contribution to the Group, a PAT of Rs. 382Mn.
Gal Oya Plantations continued to enhance its sugar cane growing and production capacity with Hingurana Sugar Factory being expanded to meet local demand, which will also help the Government to reduce expenditure on sugar imports.
BI Group, invested in Sunbird Bioenergy (SBSL) Limited in 2019, an agro-based company incorporated in Sierra Leone, the largest land extent allocated for sugar cane plantation in the region with 23,791Ha with the ability to increase up to 50,000Ha, produces Extra Neutral Alcohol (ENA) as per the global industrial standards.
The company achieved its plantation target of increasing the sugar cane extent up to 6,500Ha from 900Ha in 2019, a remarkable achievement for the Group and produced an ENA of 14.3Mn liters. SBSL also generates and exports power to the national grid with a power generation capacity of 32MWh.
In the renewable energy sector, Sagasolar Power (Pvt) Limited, the first utility scale solar plant in the country, has been in operation for over 4 years since its commissioning in 2016 and generates steady profit contributions to the BI Group.
Browns Engineering, the Construction and Engineering arm of BI, aims to improve its market share in the telecommunication industry in Sri Lanka to be the turnkey solutions provider for telco operators. The company has performed extremely well with Rs. 1.6 Bn revenue along with Rs. 361 Mn in PAT.
Excel World is being upgraded to become the premier food & beverage and MICE destination in Colombo City.
Browns Hotels & Resorts, with Eden Resort & Spa in Beruwala, The Paradise in Dambulla, Dickwella Resort & Spa and The Calm Resort & Spa in Pasikudah converted of these properties into repatriation hotels helped the operating hotels to enjoy a steady stream of revenues generating operating profits.
BI leisure subsidiary, Eden Hotels Lanka PLC acquired the controlling stake of Serendib Hotels PLC. Dolphin Hotel, Avani Bentota and Hotel Sigiriya are currently operating as Quarantine properties.
The Group’s leisure footprint expanded to the global arena with a significant investment in Maldives in the last few years. Another project in progress on the island of Bodhufarufinolhu with 100 keys, in the Ari Atoll, Maldives is to be completed in December.
Having grown its leisure footprint significantly and with the expansion planned for the medium term, the Group will hold 2,000 plus keys in Sri Lanka and overseas leisure properties to be positioned as a significant leisure operator.
Browns Investments PLC entered into a landmark agreement to partner with China Harbour Engineering Company Limited (CHEC) to commence the Colombo International Finance Centre (CIFC) Mixed Development Project, which has strategic development project status, in Colombo Port City (CPC). This project comprises of a land area under development of 6.8 Hectares with an investment value totaling US$ 1 Bn. The LOLC Group is also exploring Technology and Innovation aligned to President of Sri Lanka’s vision and to infuse local value addition. LOLC Advanced Technologies has built capacity to convert graphite to grapheme and in partnership with SLINTEC, in which it has invested, is also conducting value additions such as fortifying rice with nutraceuticals; and researching organic fertilisers to cater to the current demand.
Recording the highest profitability by a corporate in Sri Lanka in just a span of 40 years and the profitability levels achieved by LOLC in 2020/21 could be the historical pivot point for a new dawn in corporate sector performance for Sri Lanka. Amidst a global trend of economic uncertainty, the Group’s strategic investments and robust financial performance have infused formidable stability and resilience to Sri Lanka’s economy.
0 comments: