Softlogic Holdings posts strong growth in revenue, profits

Softlogic Holdings Plc has reported strong growth in its top line as well as bottom line performance in the third quarter and first nine months ended on 31 December 2015.

Group Profit before Tax reported a significant increase of 70.0% to Rs. 2.4 billion during the cumulative period while the quarterly PBT improved 92.9% to Rs. 1.4 billion. 

Taxation for the period more than doubled to Rs. 700.7 million (Rs. 327.7 million in 1-3QFY15) during the nine-month period. This was mainly as a result of dividend taxation following the Asiri Central Hospital’s land sale.

Profit after tax for the period during the nine months of FY2015/16 amounted to Rs. 1.7 billion (up by 56.9%) with 3QFY16 reporting Rs. 1.0 billion (up 99.6%).

Quarterly Group Revenue reported a strong growth of 43.8% to near Rs. 16.0 billion while the cumulative revenue increased 51.7% to Rs. 42.1 billion. 

Contributors to the Group’s outstanding performance were primarily derived from its fully owned subsidiaries in the Retail (33.3% contribution to Group topline) and ICT (29.7% of Group revenue) sectors followed by Healthcare Services (17.3%) and Financial Services (16.0%).

Consolidated Gross Profit was Rs. 4.9 billion, reflecting an increase of 24.2%, during the third quarter of the financial year with cumulative Gross Profit increasing 35.8% to Rs. 13.6 billion. Hence, the Group EBITDA improved 42.9% to Rs. 6.1 billion for the nine month period whilst the quarter recorded an EBITDA of Rs. 2.3 billion, an increase of 17.3%.

Stringent cost control measures have been a vital part of the Softlogic Holdings expansion strategy and helped operating cost margins to decline from 22.8% in 1-3QFY16 from 27.6% in the cumulative comparative period.

With regard to the future outlook Softlogic Holdings Plc said although, the last quarter performance was extremely promising given the high growth sectors it is in, the day-to-day macro-economic environment still pose challenges which cannot be controlled.

“Nonetheless, we are confident that with the right management decisions, the Group’s performance will reach a new height in the coming periods,” Softlogic Holdings Chairman Ashok Pathirage said. 

Information & Communication Technology revenue more than doubled with the quarterly revenues reaching Rs. 5.0 billion while the cumulative was Rs. 12.5 billion (Rs. 6.1 billion in 1-3QFY16). This segment’s Operating Profit improved 12.1% to Rs. 649.5 million to contribute 13.6% to Group operating profit (Rs. 161.9 million in 3QFY15) during 1-3QFY15.

The retail sector contributed 33.3% to Group turnover to register a 64.7% growth to Rs. 14.0 billion during the cumulative period with the quarter posting Rs. 5.3 billion (up 24.7%). Operating profit improved 95.3% to Rs. 1.4 billion (28.5% contribution to Group). Quarterly operating profit of the sector increased 59.6% to Rs. 578.7 million contributing 31.4% to quarterly Group operating profit base. 

Strong performance was registered in the healthcare cluster with turnover for the collective period increasing 14.9% to Rs. 7.3 billion and quarterly revenues improving 19.4% to Rs. 2.6 billion. Central Hospital, Asiri Surgical Hospital and Asiri Hospital Holdings continued on a steady pace during the quarter.

Operating Profit of the sector was Rs. 766.7 million during the quarter (up 55.4%) with the cumulative number reaching Rs. 1.8 billion (up 18.9%). Finance Income of the cluster moved up 74.9% to Rs. 117.7 million during the cumulative period. Sector PBT stood at Rs.735.1 million during the quarter with 1-3QFY16 reporting a 41.1% growth to Rs. 1.5 billion. Segment’s PAT was Rs.1.3 billion, up 43.0%, for the nine months ended December 2015. 

Financial Services sector performed well , recording revenues of Rs. 6.7 billion, an increase of 14.3% for the 1-3QFY16. PAT improved to Rs. 844.9 million from Rs 554.8 million increasing by 52.3% from the previous period.  The sector also had a strong quarter with revenues of Rs 2.4 billion, up 30.6%, while PAT for the quarter was recorded at Rs 628.8 million, which is a sharply increase from Rs 287.9 million reported in the comparative quarter. 

 Automobile sector revenue recorded an increase of 69.9% to Rs. 972.2 million in 1-3QFY16 with the three months recording a sum of Rs. 433.3 million (up 52.1%). 

The Leisure sector will witness significant upside in earnings following the opening of the city hotel in mid-2016. Its present earnings primarily reflect Ceysand Resort’s performance with turnover improving 72.9% to Rs. 574.9 million for 1-3QFY16 with the quarter reporting an increase of 21.2% to Rs. 233.4 million. However, a foreign exchange loss of Rs. 66.9 million was incurred following the depreciation of the rupee. The resort achieved an average occupancy of 72% during the quarter.