Sri Lanka’s Softlogic Sept net soars on one-off tax reversal amidst slump
ECONOMYNEXT – Profits at Sri Lanka diversified Softlogic Holdings surged to 372 million rupees in the September 2018 quarter, up from a loss of 41 million rupees a year earlier, due to a one-off tax reversal off-setting a slump in earnings across retail, healthcare and leisure, interim results showed.
"The scale and diversity of the group helped in weathering the macro-economic shocks of increased interest rates, a fast depreciating currency, adverse tax changes, import margin requirements and price led inflation," Chief Executive Ashok Pathirage told shareholders.
Earnings were 35 cents a share in the quarter. In the six months to end September 2018, earnings were 40 cents a share on a profit of 421.5 million rupees, surging from a profit of 2.4 million rupees a year earlier, financial results filed with the Colombo Stock Exchange showed.
Softlogic Holdings ended Thursday 40 cents higher at 20.40 rupees.
There was a one-off tax reversal for 1.8 billion rupees in the quarter, attributed to subsidiary Softlogic Life Insurance, which saw net profits reach 2 billion rupees in the quarter, up 720 percent from a year earlier.
In the quarter, revenue grew 14 percent from a year earlier to 18 billion rupees, while cost of sales increased 14.4 percent to 11.7 billion rupees leading to a 13 percent increase in gross profit to 6.5 billion rupees.
Distribution expenses fell 7 percent to 857.5 million rupees and administrative costs rose 21 percent to 3.7 billion rupees.
Net finance costs rose 3.2 percent to 1.2 billion rupees.
Borrowings of the group fell 4 percent from a year earlier to 32.9 billion rupees at end September while total assets grew 15 percent 121.4 billion rupees.
Earnings from financial services segment, which includes Softlogic Life Insurance and Softlogic Finance, totalled 2.1 billion in the September quarter, ballooning from 4.3 million rupees a year earlier.
Healthcare earnings fell 10 percent to 459 million rupees. This segment includes listed Asiri Hospital Holdings.
Retail and telecommunications segment earnings declined 47 percent to 122.2 million rupees.
This segment includes consumer electronics, restaurants, listed department store Odel and fashion brand outlets and now, supermarkets.
"We believe (supermarkets are) a natural progression which will complement the group’s other consumer driven businesses affording visibility and presence across all key consumer value chains to operate under one loyalty platform where consumers could earn and burn points across all sectors of the group," Pathirage said.
Leisure and property reported a 328.5 million rupee loss in the quarter, up 329 percent from a year earlier.
Information technology reported a 16.9 million profit in the quarter, compared to a loss of 13.6 million rupees a year earlier.
Automobile dealerships for Ford and Suzuki reported combined losses of 48.6 million rupees, up 20 percent from a year earlier.
"The wait-and-see approach taken by customers following duties and exchange rate depreciation dragged down the performance of this sector. The Ford sales is primarily generated from Corporate and Government tenders which are now affected by the political uncertainty prevailing in the country," Pathirage said.
Losses from other businesses in the group fell 7 percent to 341.7 million rupees.
"Softlogic has pursued expansionary goals in its core verticals with the aim of strategically positioning itself anticipating that Softlogic’s proposition is a fundamental need in today’s sophisticated market and that the economy will be fast-tracked with Tourism, Leisure and Retail swinging into top gear," Pathirage said. (COLOMBO, 16 November 2018)