Mercantile Investments records Rs. 360.8 million profit

COMPANY RESULT: Mercantile Investments Limited (MIL) performed excellently once aga in the year ended March 31, 2006 with free tax profits of Rs. 360.8 million, an increase of 16% over the previous year despite a challenging economic environment.

MIL has increased revenues by 22% to Rs. 974 million and interest income has grown to Rs. 890 million an increase of 27% due to strong growth in Hire Purchase income. Interest expenses too were significantly up by 38% to Rs. 335 million as a result of volatile interest rate prevailing during the past year.

The Company took strategic decisions during the year to further reduce the mismatch with a long term lending and short term borrowing and did secure its loan portfolio by more long term debt contributing to additional interest cost during the year.

MIL has in addition strengthened their Lease and Hire Purchase Recovery Process and providing for non-performing loans as directed by the Central Bank. The investment and security of the company increased by 15% to Rs. 1.032 billion. Although, securities are stated at cost Rs. 357 million, they carry a realizable market value of Rs. 684 million.

MIL has recorded their investment and securities at market value as at Balance Sheet date of Rs. 672 million.

However, the investment has greater value as the major investments are in companies where MIL has group controlling interest.