Softlogic Holdings report 7-pct growth in first six months 2019

softlogic

Softlogic Holdings top line witnessed a 7% growth to Rs. 17.1 billion during the quarter ended JUNE 30, 2019 following the decline in consumer demand and business sentiments.

The top contributors to Group revenue were Retail (49%), Financial Services (22%) and Healthcare Services (20%). The non-core vertical which includes Automobile and Leisure & Property together contributed 4% to Group topline, said Chairman, Softlogic Holdings Ashok Pathirage.

Gross Profit improved 10% to Rs. 6.4 bn. A GP margin improvement was evident during the quarter from 36% in 1QFY19 to 37% in 1QFY20.

Operating profit for the quarter was Rs. 1.7 bn. Operational expenses increased 17% to Rs. 4.8 bn. Distribution and Administration expenses increased 12% and 18% to Rs. 773 mn and Rs. 4.1 bn respectively in 1QFY20 as a result of the opening of Asiri Hospital Kandy and expansion of supermarket operations.

Other operating income which comprises one-off gains declined by 2% to Rs. 193 mn during the quarter.

EBITDA for the quarter was Rs. 2.5 bn while EBITDA margin was 14.5%.

Financial Services witnessed a top line growth of 20% to Rs. 3.7 bn during the quarter with the life insurance provider emerging to be the core contributor. Sector’s quarterly operating profit was Rs. 563 mn, a 44% growth. PBT of the sector rose to Rs. 581 mn as opposed to Rs. 234 mn before closing the quarter with a PAT growth of 74% to Rs. 395 mn.

Softlogic Life Insurance achieved a Gross Written Premiums growth of 24% to Rs. 2.95 bn for the quarter. Softlogic Finance PLC’s assets improved by 3% to Rs. 22.2 bn as at June 30, 2019 whilst customer deposits was Rs. 17.3 bn (up 10%). 3

The IT business revenues increased a strong 22% growth to Rs. 813 mn for the quarter following realization of project revenues. Operating profit reached Rs. 81 mn (up 70%) during the quarter.

Quarterly automobile sector revenue was Rs. 282 mn. The first quarter of the financial year witnessed an unexpected disruption to the economy following the Easter Sunday attacks. This woefully affected all sectors of the economy with hotels, hospitals and retail enduring the immediate impact of the aftermath of the Easter attacks.

Movenpick Hotel and Centara Ceysands Resort & Spa were the most affected with booking cancellations which led to drastic drop in revenue which negatively impacted earnings.

The Easter attacks disrupted Softlogic retail operations with many of its outlets being closed for a number of days in the aftermath of the attacks.

The ODEL flagship store was closed for an intermittent number of days after the attacks which further depressed consumer sentiments.

“Given the challenging business environment, the Group reported a loss of Rs. 476 mn during the quarter”.

(PRESS RELEASE)