Annual Report.CDR - Colombo Stock Exchange

R E V I E W O F O P E R AT I O N S
The Company Performances
As a result of decline in demand for new credit facilities and
current depression in real estate market, the net revenue of the
Company decreased to Rs. 5.2 billion in 2009/10 from Rs.
10.6 billion in 2008/09.
The interest income of the Company declined by 43 percent
during the year under review mainly due to decline in new
credit facilities to compensate the depletion of current
facilities.
The interest expense for the same period decreased by 27
percent mainly due to the reduction of deposit rate in line with
reduction in Treasury Bill rates and decrease in borrowings
rates.
Movement in Treasury Bill Rate (3 months)
25
20
15
10
5
0
2005 2006 2007 2008 2009
Real Estate
The real estate and housing projects balance stood at Rs. 6.8
billion mainly due to the depression in real estate market.
Public Deposits
The Company sustained its market leadership in holding a
largest public deposit base in the non banking financial sector
in the year under review. This reflects the customers'
continued confidence in the Company. But with the collapse
of some unauthorized financial institutions which created a
loss of confidence among deposit holders, the Company
experienced high deposit withdrawals during the year thus
reducing the public deposit balance by 5 percent for the year
ended 2009/10 to Rs. 25.7 billion from Rs. 27.1 billion for the
year ended 2008/09.
Public Deposits (Rs. Mn)
30000
25000
20000
15000
10000
5000
0
31-03-2005
31-03-2006
31-03-2007
31-03-2008
31-03-2009
31-03-2010
Assets and Liabilities
The total assets of the Company decreased by 25 percent to Rs.
27.5 billion as at end 2009/10 from Rs. 36.7 billion as at end
2008/09 mainly due to the decline in new facilities and
depletion of current facilities.
The liabilities declined by 14 percent to Rs. 30.4 billion as at
end 2009/10 from Rs. 35.2 billion as at end 2008/09. Decrease
in public deposits and borrowings contributed mainly to the
reduction.
Hire Purchase and Leasing
The loan portfolio on hire purchase and leasing as at end
2009/10 showed a decrease of 47 percent to Rs. 5.5 billion
compared to previous year end due to decline in new facilities
thus failing to accommodate depletion of current facilities.
Income Distribution (Rs. Mn)
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Hire
Purchase
Leasing Real
Estate
Others
2008/09
2009/10
Collections
During the year under review, the Company's non performing
loan portfolio increased to 29.86 percent in end 2009/10 from
14.34 percent in end 2008/09 owing to the depletion of
performing loan portfolio including real estate financing.
Further a loan loss provision of Rs. 594 million was made for
the year 2009/10 (Rs. 635 million in the year 2008/09) in
complying with Central Bank directions No. 1 of 1991.
Future Prospects
With the opening up of North and East sectors after end of
three decades of civil war, a significant boom in the tourism
sector, maintaining of downward trend in interest rates by
CBSL, gradual building of confidence amongst public on the
financial sector and reduction in inflation rate, the Company
forecasts an increase in demand for financial and real estate
products in the future.
T H E F I N A N C E C O . P L C - A N N U A L R E P O RT 2 0 0 9 - 2 0 1 0
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