ISSN: 1391 - 0531
Sunday, July 29, 2007
Vol. 42 - No 09
Financial Times  

Arpico Finance profits up

Arpico Finance Co Ltd proved its resilience by achieving a creditable performance for the financial year which ended March 31, 2007, given the non-conducive and volatile external environment in which the company operated with rising interest rates, fuel costs and the worsening security situation, Chairman Pratapkumar de Silva said.

Similarly, De Silva said the company had earned a reasonable return for shareholders and generated value to all the stakeholders. The company's Annual Report for the year ending March 31, 2007 shows a net profit of Rs.16.3million as opposed to a net profit of Rs.22.3 million over the corresponding period for the previous year.

The company achieved a total income of Rs.181 million, recording a growth of Rs.18.7 million or 11.5%. Their earning assets grew by Rs.98 million to Rs.676 million, up by 17%. However, the operating expenses including the release from the provision for doubtful advances increased to Rs.159 million by Rs.24.7 million or 18.4%. This increase was led by the rise in the interest costs by Rs.19 million which was in fact attributable to both expansion in business volumes and the volatility of interest rates.

The Board has also recommended a dividend of Rs.2.50 per share for the year. In determining the dividend distribution, Arpico has determined the need to strengthen the capital base of the company to meet both the regulatory directions and building the risk weighted assets which directly contribute to its profitability.

Pratapkumar said the company benefited from the economic growth for the year 2006 which was 7.4% by recording growth in both revenue and assets. Finance companies are expected to enhance the capital base as a protection for various stakeholders dealing with the companies and the adoption of a sustainable dividend distribution is one way of building capital funds. "However, the latest budget proposed the introduction of deemed divided tax for companies which do not distribute at least 25% of the distributable profits. This is a disincentive for finance companies, in particular, to those who strive to strengthen the capital base," he said. Penetration of the market by an aggressive investment strategy and making the company more cost efficient would be the challenges for the future. (NG)

 

Top to the page
E-mail


Copyright 2007 Wijeya Newspapers Ltd.Colombo. Sri Lanka.