The Chairperson of First Capital Holdings Plc, Ms. Manjula Mathews says Sri Lanka’s financial services sector’s growth is expected to moderate from current levels in 2015 amidst political uncertainty.
“The CBSL’s key policy rate cuts in April 2015 together with indications of scope for further policy relaxation could imply market rate fluctuations within a relatively low interest rate regime. As a result trading gains from the primary dealership are likely to be moderate in the year ahead,” the Chairperson said in her review in the company’s Annual Report, released recently for the year ended 31st March 2015.
During the year, consolidated profit after tax increased to Rs. 85 million, an increase of 198% compared to the previous year.
Results include a one-off gain of Rs. 233 million arising from the deemed disposal of shares in Orient Finance PLC. Turnover increased by 55% to Rs. 2.8 billion compared to Rs. 1.8 billion in the previous year.
“During the year, your Group’s revenue rose by 54% to Rs. 2.8 billion. This is mainly attributable to the primary dealing arm which capitalized on the opportunities offered by the reduction in interest rates in the secondary market. As a result, profit after tax increased by 198%, to Rs.985 million from Rs.330 million in the previous year. In addition, First Capital recorded its highest fee income from debt and equity placements reporting an income of Rs.127 million.
First Capital’s Debt Structuring and Placement team recorded a business volume of Rs.22 billion which included a placement of a corporate debenture of Rs.5 billion, one of the largest debt placements that occurred in the market during the year,” the Chairperson said.
Meanwhile, the Chief Executive Officer First Capital Holdings Plc, Dilshan Wirasekara said the Sri Lankan economy is expected to continue its growth momentum in 2015 with low inflation supporting the relaxation of monetary policy. This, he said, presents an encouraging background for the business community in the country.
“Our Primary Dealer will continue its strategy of seeking periodic trading opportunities while maintaining an optimum level of leverage. It is also expected that the economic conditions will support the corporate debt market which will drive growth in our Corporate Debt Structuring unit. These two units will continue to drive our growth in the forthcoming year,” Wirasekara said.
“We expect Stockbroking and Margin Trading to show some progress although subdued trading conditions are expected to prevail in the forthcoming year. Wealth Management business and Unit Trusts will build on the growth momentum seen in 2014/15 and we expect the contribution from these units to increase in the years ahead.”
In June 2015, the Board of Directors of First Capital Holdings PLC resolved to sell its entire stake in Orient Finance PLC (Equity accounted Investee) consequent to the offer made by the Board of Directors of said Investee and Bartleet Finance PLC in relation to the amalgamation of Orient Finance PLC with Bartleet Finance PLC into one single entity in accordance with the Provisions in Part VIII of the Companies Act No. 07 of 2007 whereby the amalgamated Entity (i.e. surviving entity) will be Bartleet Finance PLC. The total consideration on account of the said sale of investment is Rs.432.745 million.
The Company realized a capital gain of Rs.23.241 million based on the carrying value of the investment as at 31 March 2015.