LASCO Financial Services Limited’s (LFSL) consolidated First Quarter (Q1) transactions generated JA$538.9M in revenues, a decline of 17.6%, or $115.5M when compared to the corresponding three-month period in 2019. This as total expenses increased by $84.8M or 17.8% giving rise to operating loss of $22.0M.
LASF ended the quarter with a net loss of $105.7M compared with profits of $91M in the comparative financial period.
As the Government of Jamaica navigated its response to the COVID – 19 pandemic LFSL also implemented actions to assist its customer base and preserve cash flow while protecting its staff and assets. Although transactions in all business lines were impacted, the decline in revenue was largely due to reduced earnings from the customer base whose businesses were immediately impacted by the imposed restrictions, reported Managing Director Jacinth Hall-Tracey.
At the onset of the pandemic, Management, she noted, took the immediate steps to reduce expenditure in line with expected earnings. Some staff were temporarily impacted through job rotation, reduced hours
and layoffs as the business organized to focus on essential work and projects that would strengthen its prospects after the pandemic.
In keeping with prudent accounting standards and the uncertainties of the duration of the pandemic, in addition to making provisions for expected credit losses based on current arrears, an additional overlay of $31M was imposed totaling $193M in estimated credit losses for the period.
In its response to assisting its credit customers to navigate the unprecedented impact on their business, LFSL took the following actions during the period in order to control the impact on future earnings:
• Make contact with customer base to assess the extent of the impact on their cash-flows and ability to service the loan
• Encourage affected customers to make claims on the insurance policy to cover the loan payments
• Encourage micro-business customers to continue to make even partial payments to the accounts while they organized for restructuring or moratorium
• Contact employers to pass on the salary deductions to us for the account of their staff
• Reorganize the sales and collections teams to collect payments from customers
Critical to ensuring that the company had the ability to navigate the unforeseen, was the management of their liquidity. In this regard, LFSL was able to raise cash and short term deposits by over 350% from $208.0M to $941.6M, as a result of steps taken to temporarily restrict the growth of its loan portfolio and reducing spends on non-essential items.
Additional emphasis was placed in the last 3 quarters on strengthening collections and debt management which also yielded additional cash.
Total assets increased marginally from $4,032.0M to $4,038.4M. Although there is a general increase in assets, there was a reduction in the Loans and receivables due to write-offs and a reduction in the investment property due to its sale in the financial year just ended.
LASCO Financial Services she noted had adopted IFRS 16 for leases over US$5,000 per annum with tenures over twelve months, which resulted in an increase in assets of $186.3M for right-of-use assets and a lease liability of $216.8M.
LASCO Financial Services also welcomed Dr. Hopeton Morrison, as their new General Manager for the subsidiary LASCO Microfinance, nothing that his wealth of knowledge and experience in the field of microfinance is critical to navigating these unprecedented times. Dr. Morrison took leadership of the company on August 3, 2020.
LASCO Financial Services closed the quarter with earnings per share of negative eight cents ($0.0833)