Nation Lanka Finance renews focus on shareholder value-maximisation as part of strategic turnaround

Following its strategic turnaround which commenced in 2015, Nation Lanka Finance has consistently delivered impressive financial results and is paving the way for a dynamic journey of growth. With a renewed focus on shareholder value maximisation, Nation Lanka Finance Director/CEO Jayantha Perera has set out to ensure that the company establishes itself as an organisation that will eventually give shareholders the highest compounded annual return on their investments. 

Nation Lanka Finance recently announced a Rights Issue to raise Rs. 502 million in order to ensure the company’s compliance with the Central Bank’s stipulated capital base requirements. The Rights Issue will also help to fund and sustain the company’s continued growth and expansion. 

An industry specialist with a proven track record

 Jayantha Perera has over 20 years of experience in the financial services industry, having worked in the areas of investment management, capital markets and corporate finance. He was the Chief Financial Officer of the Nawaloka Hospitals from 2006-2010 and helped to finance the successful construction and development of the new Nawaloka building despite many constraints. He is also a CFA charter holder and an old boy of St. Joseph’s College, Colombo.  

Perera previously headed the capital markets division at Merchant Bank and served as the Managing Director of Richard Peiris Securities. As he took over the operational and strategic management of Nation Lanka Finance in May 2015, his ultimate objective has been to make sure that the company’s shareholders receive the maximum return on their investments. He has also re-emphasised the company’s commitment to ethics and compliance.

With his calm demeanour and leadership style, Jayantha Perera has started rolling out a restructuring plan, which has already helped to make the company profitable again. Commenting on this he stated, “Following a fruitful year, I look forward to working with our entire team to implement our turnaround to full effect. There are a variety of initiatives that we have in the pipeline and our entire team is dedicated to ensuring that we continue our momentum of growth. I did not come here to play the role of captain, I simply want to put the company in order and I’m grateful for the trust that the Board of Directors and the entire team here have placed in me.” 

A strong financial performance

Commenting on how the company’s financial performance has improved over the last nine months, Perera stated, “In the first half of 2015, Nation Lanka Finance delivered a top-line of Rs. 1.04 billion in revenue, which was nearly the same as the revenue of Rs. 1.15 billion, of the entire previous year. However we managed to significantly improve the company’s bottom-line, having incurred a loss of Rs. 282 million in 2014, we bounced back in the first half of 2015 with profits of Rs. 63 million.” 

A culture focused on developing people 

Commenting on how he managed to facilitate the turnaround, Perera stated, “Our team has worked tirelessly to ensure that we reach our financial targets, they have been open to new ideas and every member has fully supported me. We facilitated this turnaround by streamlining our processes and making full use of our existing resources, without replacing any personnel.”

He further added, “We renewed our commitment to investing in and developing our people, to give them the skills required to perform at the highest level. As a result, employees at all levels of the organisation have really demonstrated their commitment and they are passionate about showing their customers, depositors and the general public that Nation Lanka Finance is a great company, with great people who are capable of delivering on their promises.”

The road to profitability 

Expanding on how the company was able to return to profitability Perera said, “The company’s microfinance portfolio and working capital loans, which we offer to smaller businesses have performed exceptionally well and contributed significantly to our top-line. We also implemented stringent cost controls on our fixed and variable costs and strengthened our focus on recoveries. We had a core capital base of Rs. 38 million at the beginning of the financial year we have through our profitable operation managed to increase our equity position for Rs. 102 million during the first six months ending 30 September 2015. 

“The company’s organic capital growth has nearly tripled and in the first nine months of 2015, we have made a profit of Rs. 137 million in the first nine months of the current financial year. We also took significant measures to control all non-performing loan allocations, which proved to be instrumental in the company’s recovery.” 

Investor interest and opportunities

Nation Lanka Finance received significant support and funding after the Nawaloka Group acquired almost 25% stake of the company. Commenting on investor interest and opportunities he stated, “We have received significant interest from investors and we have also obtained substantial funding from the Nawaloka Group and other institutions. This has enabled us to extend our lending portfolio and secure greater top-line growth. As we look ahead to the future, we are also open to strategic alliances and obtaining low-cost funding solutions from foreign agencies for specific product lines.” 

He further added, “We decided to offer our Rights Issue shares at a considerably low price compared to market rates, so we could provide a low entry point for potential investors and shareholders. The shares bought for Rs. 1 today, over a period of time could possibly deliver considerable returns that are over and above the returns of other listed companies. We are very confident that our stock value will increase over time and will provide shareholders with the highest long-term returns available in the market. Our low entry point, makes it affordable to invest in shares and makes it possible for our shareholders to enjoy significant returns in the long-run.”

The impact of the Rights Issue: Reiterating how the Rights Issue will impact the company’s operations, Perera stated, “Whilst the Rights Issue will help raise the necessary capital to ensure that the company is in full compliance with the stipulated Tier 1 capital adequacy regulations set by the Central Bank of Sri Lanka, the funding obtained through the Rights Issue will also enable Nation Lanka Finance to ensure its continued growth and strategic expansion in key business areas. 

“The funds will enable us to widen and diversify our product portfolio in areas that have proven to be lucrative. With additional liquidity, we will also be able to offer significantly more competitive rates and pricing structures for our products. We are currently hoping to expand and strengthen our presence in high potential areas in the market such as leasing and hire purchases.”

The importance of shareholder value-maximisation 

Explaining why he is so adamant to ensure that shareholder returns are a priority, Perera stated, “Ensuring shareholder interests should not be considered lightly as a mere privilege, but rather as a responsibility. We have to do our part to deliver on the investment that our shareholders have made. Companies and their shareholders must share a mutual sense of responsibility towards each other. At Nation Lanka Finance, we value the input and financial commitment that our shareholders have made and we truly do feel that it is extremely important for us as the senior management to do our part to deliver the best returns possible.” 

A commitment to good governance and corporate citizenship

Emphasising his no-nonsense approach to poor governance, Perera said, “I want our shareholders, employees and partners to renew their sense of trust in Nation Lanka Finance and rest assured that this company has an unwavering commitment to good governance and ethical conduct. One of our fundamental priorities now is to ensure good governance across all aspects of the company’s operations. We have put all the correct policies and protocols in place to ensure that all of our business activities adhere to stringent guidelines and best practices. Anyone who does not adhere to the recommended ethical guidelines will not be tolerated here.” 

He further added, “The Board of Directors of Nation Lanka Finance remain completely committed to good governance and corporate citizenship. We already run a variety of initiatives in the areas of entrepreneurship, women’s empowerment and vocational training; however in the future we hope to strengthen our focus on CSR considerably. We also want to focus further on employee development and wellbeing. We want to ensure that our employees are happy and driven; I believe that motivating people is a short-term accomplishment; however inspiring them is what changes the game for a company. 

“We want to build on our employee training and education programs, because whatever we invest in our employees not only helps them, but also has a strong trickle-down effect on our customers.  Inspired employees who are confident in their capabilities can truly deliver exceptional levels of customer service and a focus on service has given Nation Lanka Finance a distinct edge in the market-place thus far.”

Investing in shares during a global financial crisis 

Acknowledging that the global financial crisis has had a negative impact on the local economy and has made investors cautious, Perera stated, “Even though the world is still facing financial uncertainty, it’s important for investors not to lose sight of the immense opportunities that Sri Lanka has to offer. The low entry levels offered to shareholders through our Rights Issue is an opportunity that has relatively low risk attached to it and is likely to deliver significant long-term benefits.”

He added, “Sri Lanka is well-poised for rapid economic growth, industries are starting to really thrive, geographically we are situated in a strategic location and our neighbours India and China are on a growth trajectory. Additionally, the western world trusts us again and has taken a genuine interest in our country and all this augurs well for Sri Lanka’s growth. Even in times of uncertainty, Nation Lanka Finance is dedicated to serving our nation and its people and we want to offer solutions and opportunities that will contribute towards the country’s progress and development.” 

Nation Lanka Finance offers its customers a diversified range of practical financial products and services, which are delivered in an efficient and professional manner. The company is licensed and regulated by the Central Bank of Sri Lanka and has a rich heritage extending over 28 years. Over the years, NLF has gradually expanded its network and now has a strong presence in 25 location points across Sri Lanka. Nation Lanka Finance is committed to ensuring that customers from all communities and walks of life can access the company’s services and benefit from elevated standards of living.