Troubled The Finance Company PLC (TFC), with the EPF as the fourth highest stakeholder owning over five million shares, has seen its losses fall 94 percent, unaudited financial results for the 12-months ending March 31, 2012 showes.
A deal where state-owned National Savings Bank (NSB) purchased around 7.8 million shares of The Finance Company at a consideration of Rs. 391 million, at an inflated price of 66 percent above the market price, was shot down by the President earlier this year after the Treasury noted that the deal was not in the best interest of NSB, the country’s largest savings bank.
Financial results submitted to the Colombo Stock Exchange showed TFC report a loss of Rs. 196.75 million for the year ended March 31, 2012, down 94 percent from a Rs. 3.8 billion loss a year earlier.
During the year, interest income fell 3.97 percent to Rs. 2 billion, while interest expenses fell 20 percent to Rs. 2.46 billion.
‘Other’ operating income grew 255.9 percent to Rs. 718.9 million while other income increased 125.7 percent to Rs. 385.3 million.
Total operating expenses fell 65.35 percent to Rs. 1.12 billion.
Public deposits fell a marginal 0.05 percent from a year earlier to Rs. 20.85 billion as at March 31, 2012, the unaudited balance sheet of TFC showed. Its long term loan liability grew 58.8 percent to Rs. 486.5 million.
Total assets fell 7.5 percent to Rs. 19.82 billion as at March 31, 2012 from a year earlier.
Cash in hand and balances with banks grew 46.12 percent to Rs. 349.9 million, investments in deposits with banks grew 19.5 percent to Rs. 133.1 million and investments in dealing securities grew 20.8 percent to Rs. 102 million.
TFC’s investments in real estates fell 49.3 percent to Rs. 1.91 billion, investments in housing projects fell 2.5 percent to Rs. 1.83 billion.
The hire purchase business grew 42.5 percent to Rs. 3.74 billion, vehicle and equipment leasing grew 75.7 percent to Rs. 571.3 million and property leasing grew 17.94 percent to Rs. 493.6 million.
Its pawning business grew 164.5 percent to Rs. 1.02 billion as at end-March 2012.
The Employees’ Provident Fund which is managed by the Central Bank was the fourth highest stakeholder of TFC with 5,091,200 ordinary voting shares as at March 31, 2012, which amounted to an 8.43 percent stake.
NDB PLC/T. Senthilverl is the highest stakeholder with 11.79 percent followed by Ceylinco Investment Co. at 11.04 percent and Seylan Bank/T. Senthilverl at 8.9 percent.
Seylan Bank PLC Account No. 3 holds a 7.44 percent stake in the company.
State Banking giant, the Bank of Ceylon through Ceybank Unit Trust holds a 5.70 percent stake (3.44 million shares). Another state-owned bank, People’s Bank holds a 3.44 percent stake (2.08 million shares).
Ceylinco Insurance PLC’s general fund holds a 3.10 percent stake.
Commercial Bank of Ceylon PLC/Devi Holdings Pvt. Ltd. holds a 0.76 percent stake (456,940 shares).
The entire board of the NSB has resigned over the controversial transaction involving TFC shares and the Securities and Exchange Commission (SEC) is conducting an inquiry.
"For the year ended March 31, 2012 TFC reported a loss of Rs. 196.8 million and the Central Bank had invested EPF funds on more than five million shares. TFC’s losses have fallen 94 percent, so this shows that all concerned are trying their best to turn the company around. TFC probably would have benefited by the nearly eight million shares purchased by NSB. But why the inflated price? And is it alright for the Central Bank to invest EPF funds in this company? Why would it do this? Does this mean that the Central Bank endorses NSB’s purchase? There are far too many questions that have not bee answered," a market analyst said, echoing similar sentiments among other brokers and analysts we spoke to.