Sri Lanka’s Singhe Hospitals facing serious loss of capital

ECONOMYNEXT- Sri Lankan healthcare provider Singhe Hospitals Plc which has experienced 18 straight quarters of losses since debuting in the Colombo Stock Exchange in March 2015, is losing capital and will convert some debt to equity, according to the company.

A Colombo Stock Exchange filing said that Singhe Hospitals ‘is facing a situation of serious loss of capital’, after net assets fell below half of the stated capital.

Singhe Hospitals said this was due to changes in the new income tax laws, which has resulted in the company incurring an additional deferred tax liability of 9.5 million rupees at the end of the fourth quarter of 2018.

The director board will hold an extraordinary general meeting of shareholders on 13 September 2018 to take action.

The company’s Chairman A. M Weerasinghe, the main shareholder with a 77 percent stake, has lent 50.7 million rupees to the hospital.

Singhe Hospitals said that it will convert the debt, along with the 15.5 million rupees of interest on the loan, into equity with a private placement of 66.2 million rupees, subject to shareholder and regulatory approval.

At the end of the first quarter of 2019, the company, which operates the only private hospital in the Sabaragamuwa Province, had accumulated 543.6 million rupees in losses.

It had a stated capital of 848.2 million rupees and a reserve of 119.4 million rupees.

Higher administrative costs have pushed the hospital into the red over the years.

Stockbroker Bartleet Religare Securities had advised not to purchase Singhe Hospital shares at the time of its initial public offering. The 250 million rupee IPO received slow response. It was later oversubscribed with high net worth individual T. Senthilverl purchasing shares.

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Singhe Hospitals said that it is hoping the laboratory network it expanded will improve the financial position of the company.

In the June quarter Singhe Hospitals posted a 2.4 million net loss, which is the closest it has got to making profits since going public. (COLOMBO, 31 August, 2018)

 

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