LASF reports 71% decline in nine months net profits

February 14, 2020

Lasco Financial Services Limited (LASF), for the nine months ended December 31, 2019 recorded trading income of $1.82 billion; this represented a growth of 11% when compared to $1.63 billion posted in 2018, while trading income for the quarter amounted to $600.68 million (2018: $545.20 million). Other income increased to $111.53 million versus $109.15 million in 2018. This resulted in overall income of $1.93 billion, a growth of 11% compared to $1.74 billion for the corresponding period in 2018.

Operating expenses amounted to $1.59 billion, 25% more than the $1.27 billion booked the year prior. Of this administrative expenses rose by 25% to $795.74 million compared to the $635.66 million in 2018. Selling and promotional expenses also grew 25% to close at $792.13 million relative to the $635.85 million reported in the prior period.

As a result, profit from operations declined by 27% to total $340.21 million, relative to the $467.02 million recorded last year. Profit from operations for the quarter fell 43% to close at $92.98 million (2018: $163.09 million).

Finance costs increased to $148.05 million (2018: $131.09 million), resulting in a profit before tax of $192.16 million, relative to the $335.92 million booked for 2018. For the quarter, pre-tax closed at $40.99 million (2018: $113.13 million).

Net profits attributable to shareholders totaled $76.93 million, 71% decline from $267.72 million posted for the same period last year, followed by taxes for the period of $115.23 million (2018: $68.21 million). Net profit for the quarter amounted to $2.21 million relative to $106.57 million booked in 2018.

Management noted, “This is attributable to our continuous overly cautious approach to loan loss provisions. The quarter over quarter improvement however, is a signal for management that steps to strengthen its collections framework and the continuation of the transformation of the business are beginning to bear results.”

Additionally LASF highlighted, “in managing its strategic risks continues to make adjustments to its business model to remain relevant to its customer base. Our LASCOPay prepaid epay Mastercard which was launched in the last period of the second quarter is one of the responses to an industry risk. The card gained traction for the third quarter and as more of our customers adopt, we expect continued growth and relevance of this product.”

Earnings per share for Lasco Financial Services Limited (LASF) amounted to $0.06 (2018: $0.21). EPS for the quarter totaled $0.002 (2018: $0.084), while the twelve-month trailing earnings per share amounted to $0.07. The number of shares used in our calculations amounted to 1,270,094,391 units. LASF closed the trading period on February 14, 2020 at $3.75.

Balance Sheet Highlights:

As at December 31, 2019, the company’s assets totaled $4.13 billion (2018: $3.66 billion), $471.94 million or 13% more than its value a year ago. This increase was largely due to ‘Cash and cash equivalents’ which climbed from $234.04 million in 2018 to $418.86 million in 2019. Also, ‘Receivables’ contributed to this growth which increased to close at $2.59 billion (2018: $2.21 billion).

Equity attributable to stockholders of the company amounted to $1.67 billion relative to $1.64 billion in 2018. This translates to a book value per share of $1.32 (2018: $1.29).

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