First Capital reports higher revenue and trading income in 1H
Tuesday, 19 November 2013 00:01
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First Capital Holdings PLC, one of the country’s best performing non-bank financial service providers in 2012-13, has recorded healthy gains in revenue and trading income in the first six months of the current year, but seen a decline in the gain on fair value of financial investments held for trading.
Income for the first half of 2013-14 was up 32.7% to Rs. 909.8 million, and net trading income grew by 47% to Rs. 253 million, the company said in a filing with the Colombo Stock Exchange.
However, the gain on fair value of financial investments held for trading declined by Rs. 126.3 million over the corresponding six months of the previous year, and coupled with a 66.7% increase in administrative expenses, contributed to lower pre and post tax profits, interim financial statements released by the company showed.
Profit before tax at Rs. 128.9 million for the six months reviewed, reflected a decline of Rs. 8.7 million over the corresponding period of last year, First Capital Holdings reported.
Taxes of Rs. 27.6 million on dividends resulted in taxation for the period increasing six fold to Rs. 33.5 million.
Consequently, profit after tax for the six months at Rs. 95 million was Rs. 37 million below that of the first half of the previous year.
Healthy financial performance
In a review of operations accompanying its interim financial statements, First Capital Holdings PLC said its Board of Directors had declared an interim dividend of Rs. 2 per share in August this year, on the basis of the Group’s healthy financial performance since 1 April 2012.
“First Capital Treasuries Ltd., our primary dealer arm, displayed sustained performance during the period under review,” the Group’s Director/CEO Jehaan Ismail said. “There was also contribution from the structuring and placement of corporate debt securities, though not to the level we expected.
“In addition to taking trading and strategic investment positions, the Primary Dealer business also benefited through the reduction of policy rates made by the Central Bank of Sri Lanka. Policy rates were cut by 50 basis points in May 2013 and there was also another 50 basis point cut in October 2013.
“Primary dealers were allowed to deal in corporate debt securities in July 2013 and this should give our overall business a new dimension,” he said, but cautioned that competition in the business is also on the rise with the Central Bank issuing three primary dealer licenses since 1 April 2013.
“First Capital Ltd. continues to see opportunity in the listed corporate debts space and we need to work hard against intense competition to win mandates,” Ismail said.
“We have recently recruited a senior and experienced person to drive this business and we expect a good amount of success over the next few months.”
Asset growth
He disclosed that First Capital Asset Management Ltd. also expects to keep growing its assets under management, especially in the unit trust business.
“The demand for margin trading advances has been lower than usual due to a lackluster stock market. It is difficult to predict a pick-up in the market but we are well placed to capitalise on margin trading volumes, especially given the fact that we have our own stockbroker. First Capital Equities Ltd. is the newest addition to our family and is an established stockbroker with experienced staff. We expect to realise the gains of synergies between First Capital Equities and the various other arms of our Group, especially if there is resurgence in the stock market,” Ismail added.
First Capital Holdings comprises of First Capital Ltd., First Capital Treasuries Ltd., First Capital Markets Ltd., First Capital Asset Management Ltd. and First Capital Equities Ltd. The Group raised a noteworthy Rs. 6 billion for a diverse group of clients through commercial paper, debentures and securitisations in 2012-13.
First Capital’s Board of Directors comprises Deshamanya Lalith De Mel (Chairman), Manjula Mathews, Jehaan Ismail, Dinesh Schaffter, Nihara Rodrigo, Eardley Perera, Minette Perera and Nishan Fernando.
