Despite challenging business environment:

Arpico Finance records 36 percent growth in 2008-2009

Arpico Finance PLC achieved 36 percent growth in 2008-2009 compared to the preceding year with a total income of Rs. 319 million, an increase of Rs. 85 million over the previous year.

Despite the backdrop of low business confidence and adverse economic factors such as inflation and volatile interest rates, the company’s pre-tax profits dropped by 22 percent while post-tax profits declined by 19 percent.

This was commendable considering the contraction of the financial system, said Chairman, Arpico Finance Company PLC, Pratapkumar de Silva in the annual report 2008-2009.

Registered finance companies experienced the most turbulent and challenging year during 2008-2009.

The crisis originated with the failure of unregistered and unregulated financial institutions due to breach of trust. The crisis then increased into the registered finance companies sector too. The timely intervention by the Central Bank was commendable and this action averted a major crisis in the financial system.

The Central Bank granted relief to the sector strengthening the management of troubled finance companies. Arpico Finance PLC’s investments grew by 20 percent to reach Rs.144 million despite the business environment being unproductive.

The industry’s growth of accommodation granted for the year 2008 was 17 percent.

Moreover, the company also invested Rs.111 million in gold loans and Rs.61 million in real estate projects.

The year also recorded a growth in interest earning assets by Rs. 282 million or 37 percent to Rs. 1,053 million.

The total assets base of the company reached Rs. 1,394 million which increased by 28 percent.

The Company’s cash inflow from its core business lines of lease/hire purchase and real estate were the main sources of funding for investments.

Additionally, Rs. 100 million was raised through securitization while the deposit base increased by Rs. 29 million.

The company maintained a liquid asset ratio of 25 percent, which was above the statutory minimum.

Despite the liquidity crunch in the market the company was successful in meeting its obligations to all stakeholders - depositors, lenders or clients seeking advances without committing to high cost borrowings in adverse market conditions.

However, we look forward to the year 2009-2010 with optimism.

The military success in defeating terrorism, one of the biggest obstacles for economic development, is certain to improve the investment climate, he said.

C de S