A substantial increase in interest charges has eroded the first quarter trading profit of the Lanka Orix Leasing Co. Ltd. (LOLC) but gains in other income had compensated partly according to a quarterly report to shareholders.

LOLC posted a consolidated turnover of Rs. 553 million during the quarter under review, up from Rs. 524.5 million a year earlier. The before interest profit for this period of Rs. 157.5 million was up from Rs. 149.3 million in the comparative quarter the previous year.

But interest cost had grown to grown to Rs. 148.5 million from Rs. 117.2 million a year earlier. This brought down the after-interest profit to Rs. 9 million, down sharply from Rs. 32.1 million earned a year earlier. But other income of Rs. 24.5 million, up from Rs. 10.3 million a year earlier, compensated substantially and the pre-tax profit of Rs. 34.5 million compared with Rs. 42.4 million earned in the first quarter of last year.

With the tax liability down to Rs. 0.5 million (Rs. 1.2 million a year earlier), the after-tax profit of Rs. 34 million for the quarter under review compared with Rs. 51.2 million earned a year earlier.

After discounting a profit of Rs. 2.9 million attributable to minority interest (Rs. 0.8 million a year earlier), the profit attributable to LOLC shareholders for the quarter under review was Rs. 31.1 million. This compared with Rs. 40.4 million earned in the first quarter of the last financial year.

As LOLC had Rs. 621.9 million of bought forward unappropriated profits in its books, a profit of Rs. 653 million was available for appropriation as at June 30, 1998.

Asia Capital now owns a 20% stake in LOLC which has an issued share capital of Rs. 90 million (company) and Rs. 108 million (consolidated). The company has net assets of Rs. 1.2 billion as at June 30, 1998.