LOLC Group recorded an impressive pre-tax profit of Rs. 8.3Bn and Rs. 7Bn as post-tax profits for the twelve months up to 31st March 2011. The comparatives for the last financial year were pre-tax profits of Rs. 2.8Bn and Rs. 2.4Bn post tax profits. The growth in the pre-tax profits was a staggering 192% over last year with post-tax profits recording a growth of 194%.LOLC’s core business, Financial Services concluded an exceptional year with more than 60% profit contribution to that of the group. The profits from the financial service sector grew three times over when compared with the previous year and ended at Rs. 5.3 Bn.The financial services sector is reaping the benefits of the well thought proactive strategies executed by the company capitalizing on the resurgence of the economy subsequent to the end of the three decade long war. LOLC’s strategy of rapidly expanding its footprint throughout Sri Lanka and the wide range of products on offer complemented the growth of the group along with the favorable macro economic conditions. The group’s focused efforts in extending its service offerings in the North and East resulted in significant business volumes being generated from these regions. The lending businesses more than doubled the disbursement of new loans when compared with the previous year, with the increased demand for credit and prevalent lower interest rates.The total lending portfolio of the group grew by 68% over the previous year to Rs. 58.4 Bn with the increased quantum of disbursements. The lending portfolio consists of finance lease, hire purchase, loans, Islamic financing, debt factoring, working capital solutions, micro finance and fleet management.LOLC’s finance company, Lanka ORIX Finance Company Ltd. (LOFC)’s deposits mobilization gathered momentum throughout the year with a strong year end with a deposits base of Rs. 17.4Bn, an impressive growth of 72% over the last year’s deposit base of Rs 10.1Bn.Total revenue from the financial services sector of the group, increased by 45% over F/Y 2009/10 and was Rs. 18.3 Bn, despite the lower interest rates and resultant lower interest income during 2010/11 when compared with the previous year. The intra group revenue was Rs. 2.2Bn.The net interest cost of the financial services sector was Rs. 5.9 Bn for the year, lower than the previous year’s net interest cost of Rs. 6.0 Bn even though the quantum of interest bearing borrowing were much higher during the current year. The lower interest rate environment prevalent in the country during the current financial year, and the USD and Euro denominated long term financing that LOLC and its subsidiaries secured through bilateral and multilateral funding partners contributed towards the reduction in cost of funds.During this financial year LOLC sought Central Bank of Sri Lanka’s approval to not to renew its leasing license to facilitate the Company’s intention to move to a holding company structure. In line with this, all leasing business done under the LOLC Company previously is now booked under Lanka ORIX Finance Co. Ltd. (LOFC) LOLC Micro Credit Co. Ltd., (LOMC) and Commercial Leasing Co. Ltd. (CLC), the three financial services companies who are engaged in the lending business.LOLC’s move towards a diversified holding company commenced with many diversified investments being made into carefully picked growth sectors which are very much aligned with the economic growth prospects for Sri Lanka. These sectors consist of Leisure, Plantation and Agriculture, Renewable Energy, Trading and Construction.LOLC Group’s long term strategy is to grow the financial services sector from strength to strength capitalizing on the already established companies which has clear strategies targeting several segments of the SME and Micro sectors.Whilst the financial services sector provides the steady growth in profitability, the investments made in the diversified businesses too has given much advantage to the Group’s bottom line which is a 40% of the Group’s total profitability. This sector has contributed Rs. 3.3Bn pre-tax profits to the Group. LOLC has made these investments in line with their long term growth strategy coupled with growth trends seen in the Sri Lankan economy which are expected to perform well in the medium to long term.In line with this strategy, LOLC increased its investments in the leisure sector with the acquisition of 4 hotels on the southern coast of the country, consisting Confifi Hotel Holdings PLC, Riverina Hotels PLC, Eden Hotels PLC and Tropical Villas (Pvt) Ltd. Three of the hotels were closed for business from 1st May in order to complete an accelerated refurbishment program. After being upgraded, the hotels will be managed by a globally reputed hotel management company.During the year, further investments were made by the LOLC Group into the Sierra Holdings (Pvt) Ltd., Sierra Construction (Pvt) Ltd., and Agstar Fertilizers (Pvt) Ltd.The year ended was an exceptional one for the LOLC Group with significant changes in the strategic direction leading to a long term sustainable business model of diversified business enterprises contributing well to the core business of financial services.