Date: November 14, 2019
LASF recorded for the six months ended September 30, 2019, a total of $1.22 billion in Trading Income; this represented a growth of 12% relative to the $1.08 billion recorded for the comparable period in 2018. For the quarter, Trading Income closed at $630.06 million (2018: $558.14 million), a growth of 13% year over year. Other Income for the six months period amounted to $92.28 million compared to $57.02 million in 2018. Consequently, this resulted in an overall income of $1.31 billion for the six months, a growth of 15% compared to $1.14 billion in 2018. The Company stated, “this was driven by an increase in business from the Subsidiary, LASCO Microfinance Limited and Cambio trades in the parent business.”
Operating Expenses for the period closed at $1.06 billion, which is 27% more than the $837.27 million recorded in September 2018. Selling and Promotional Expenses increased by 23% amounting to $530.59 million relative to $432.77 million in 2018, while Administrative Expenses rose 31% to close at $530.33 million (2018: $404.50 million). Management stated, “this was primarily caused by the increase in estimated credit losses.”
As a result, Profit from Operations for the period fell by 19% to total $247.23 million relative to $303.93 million that was recorded for the corresponding period in 2018. While for the second quarter, Profit from Operations declined by 48% closing at $68.92 million (2018: $131.67 million).
Finance Cost amounted to $96.06 million for the period (2018: $81.13 million), an increase of 18%. As for the second quarter, Finance Cost totaled $47.50 million versus $40.43 million in the prior comparative quarter.
Profit before taxes amounted to $151.17 million in 2019 relative to $222.80 million in 2018, a 32% drop year over year. For the quarter, profit before taxes closed at $21.42 million (2018: $91.24 million).
After taxation of $76.45 million (2018: $61.65 million), Net Profit for the six months ended September 30, 2019 amounted to $74.72 million, declining by 54% from the prior year’s comparable period Net Profit of $161.15 million. Also, for the second quarter, LASF booked net loss $16.37 million versus net profit of $60.63 million in the previous comparable period.
LASF noted, “the year to date decline in profit was impacted by write offs and growth in staff expenses as we bolstered our capacity in collections, finance and administrative support to align with the growth and volume of the portfolio. The year to date loan portfolio of $2.0B net of write offs is a 40% increase in value and number of clients. Our loans subsidiary is now the leading revenue driver and is contributing 39% of total revenues which is in keeping with our strategic objectives of having a strong diversified revenue base.”
Earnings per Share (EPS) for the period amounted to $0.06 (2018: $0.13), while for the quarter, the LPS amounted to $0.01 (EPS 2018: $0.05). The number of shares used in the calculation was 1,268,594,391. The twelve months trailing EPS is $0.16. The stock price as at November 13, 2019 closed at $5.08.
Additionally, LASF highlighted, “towards the end of the second quarter, LFSL entered the market with its first payment product, LASCOPay; a co-branded prepaid MasterCard. This new product, targeted primarily at the large remittance customer base and the general unbanked population is expected to lead LFSL into much anticipated strategic objective of Financial Inclusion for a large sector of Jamaicans who currently receive micro payments.”
Balance Sheet Highlights:
As at September 30, 2019, the Company’s assets totaled $4.11 billion, $478.21 million more than its value a year ago . This increase in ‘Total Assets’ was largely driven by increases in ‘Loans and Receivables and ‘Intangible Assets’ which closed at $2.64 billion (2018: $1.95 billion) and $873.63 million (2018: $839.80 million), respectively. However, ‘Cash and Cash Equivalents’ declined by 52% from $465.31 million as at September 30, 2018 to total $221.38 million in 2019.
Total Stockholders’ equity as at September 30, 2019 closed at $1.67 billion an increase of 9% compared to the $1.53 billion reported in 2018. This resulted in a book value per share of $1.32 (2018: $1.21).
Disclaimer: Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.