Singer Finance 1Q pre-tax profit up 63% to Rs. 85.4 m

Singer Finance announced impressive financial results for 1Q FY 2011/2012, recording a Profit before Tax of Rs. 85.4 million, which represents a growth of 63% over the previous year. The company’s numbers were buoyed by an increase in the Leasing and Hire Purchase portfolio, which accounted for 57% of the revenue for the quarter.

The Lease and Hire Purchase segments achieved an operating profit margin of 30% and 32% respectively during this quarter – an increase from 19% achieved by each of these segments last year.

Further augmenting the profit before tax is the steady control of costs. “We’ve displayed an admirable ability to control costs in relation to revenue, demonstrated by an operating costs-to-income ratio of 42%, down from 45% last year. We expect this to continue due to the high business volumes expected for this financial year”, said Shantha Wijeweera, CEO, Singer Finance.

Further augmenting the notable numbers were the company’s low Non-Performing Loans (NPL) Ratio, which stood at 0.5% during the 1Q FY 2011/2012, and a Risk Weighted Capital Ration of 20.6% — well above the minimum regulatory requirement of 10%.  

Wijeweera also commented on the outlook for the rest of the financial year. “We are optimistic about the demand for vehicle financing products to continue during the year given the lower tariff structure and stable interest rates. In addition, we are finalising expansion plans on previously untapped markets such as the Northern Province. We’ve already opened a window operation in Vavuniya in that regard’.

Further, the company announced that it had changed its method of estimating provision for bad and doubtful debts with effect from 1 April 2011. This was done to be in line with Central Bank Sri Lanka’s (CBSL) Direction No. 3 of 2006 on bad and doubtful debts. In accordance with the Sri Lanka Accounting Standard 10 – Accounting, Polices, Changes in Accounting Estimate and Errors —  the reversal of the over provision for bad and doubtful debts as at 1 April 2011 amounting to Rs.13.1 mn was also recognised in the current period income statement.

Singer Finance (Lanka) PLC (SFLL), a subsidiary of Singer (Sri Lanka) PLC (SSL), was incorporated on 19 April 2004 to carry out finance business within the provisions of the Finance Companies Act No.78 of 1988 as amended by Act No.23 of 1991. SFLL obtained the licence from Central Bank of Sri Lanka to carry out Finance Leasing business and licensed as a registered “Finance Company” in terms of section 2 of the Finance Companies Act No.78 of 1988. The company’s asset base currently exceeds Rs 4.8 billion and enjoys a market capitalisation of Rs. 3.18 billion.