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Troubled finance company deep in the red

23 Aug 2013 - {{hitsCtrl.values.hits}}

The troubled finance company, Central Investment & Finance Company PLC (CIFL) continued to mount its losses and the first quarter (1Q14) results released to the Colombo Stock Exchange (CSE) showed a net loss of Rs.182 million. In the corresponding quarter last year, the company’s net profit stood at Rs.334, 000.

The company’s Loss per Share is 218 cents. The net loss recorded by the company during the financial year ended March 31,2013 was Rs. 330.4 million.

The net interest income of the company plunged by a staggering 261 percent Yearon-Year (YoY) to a negative Rs.127.4 million. This was because the company had to account as much as Rs.150 million in interest expenses for their deposit holders when it could only accrue an interest income of Rs.22.6 million during the three months to June 30, 2013. Interest income received from leases and hire purchases more than halved to Rs.3.2 million while the interest income from loans plunged to Rs.19.2 million from Rs.68.5 million a year ago.

Real estate and housing segments did not bring revenue during the period while other investments income were only Rs. 216,000, a steep drop from Rs. 3.0 million a year ago.

Operating expenses decreased by 30 percent YoY to Rs.57 million, demonstrating the management’s effort to reduce costs.

Since the termination of the services of ex-CEO, Jayanth Wickrameratne in January, there was a run on the deposits, and according to the then Chairman, Lakshman Rupasinghe (now a board member), deposit holders withdrew their deposits upon maturity without renewing it for a further period, eroding the deposit base.

As of June 30, the company has a deposit liability of Rs.3.3 billion, largely unchanged from March 31,2013.

Meanwhile the high expectations for a fresh equity infusion of US $ 12 million by the new owners, the Roscoe Maloney family to revive the ill-fated company also appear to be remote.

The Central Bank issued a directive on July 01, appointing Peoples’ Leasing and Finance PLC as the managing agents and allowed time till July 31 to come up with a revival plan for CIFL. Further, the Central Bank removed all executive powers from executive board members and instructed the managing agents not to mobilize fresh deposits until further notice. Unlike many other finance companies, CIFL lacks the presence of a single largest shareholder, to provide strength and stability when times are not so good. Currently the largest shareholding by a single party is 17.53 percent held by Aspic Corporation Private Limited. (DK)

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Troubled finance company deep in the red

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