Singer Finance posts impressive nine month results

Singer Finance (Lanka) Ltd. has posted impressive results in the first nine months of 2010/11 financial year with healthy growth in the top line and high profitability despite one-off charge over its record breaking IPO.

Income for the nine months ended on 31 December 2010 was Rs. 713 million, up by 41%, whilst interest income was up 43% to Rs. 656 million. Interest expenses grew by only 13% to Rs. 212 million, enabling Singer Finance to post a net interest income of Rs. 444 million, a growth of 108% over the first nine months of 2009/10 financial year.

A 19% growth in other income to Rs. 56.6 million saw the company topping the half a billion mark in terms of profit from operating activities, up by 92% over a year earlier.

Included in the nine months accounts was Rs. 26 million one off charge over its Initial Public Offering (IPO) expense whilst Singer Finance also saw staff cost rise by 68% to Rs. 52 million and administration and selling expenses rise by 84% to Rs. 262.7 million. However provision for bad and doubtful debts had reduced to Rs. 10.2 million from Rs. 42.7 million in the first nine months of last financial year.

Consequently the net profit before tax was Rs. 150.5 million, up by 236% whilst profit after tax was Rs. 51.1 million, an increase of 164% over the Rs. 19.3 million achieved in the first nine months of 2009/10.

All leading business activities have enjoyed substantial increase in profitability with Hire Purchase of Vehicles contributing the highest with a pre-tax profit of Rs. 68.3 million, up from Rs. 16.8 million followed by loans generating Rs. 53.7 million, up from Rs. 3 million and leasing Rs. 25.4 million, up from Rs. 8.7 million in the first nine months over the corresponding period of last financial year.

During the third quarter Singer Finance recorded an interest income of Rs. 232 million up 32%. During the quarter Interest expenses decreased by Rs. 4.8 million. “Combined impact of higher interest income and lower interest expenses resulted in increasing the Gross margin by Rs. 61 million or 62% above the last year same period,” Singer Finance Director/Chief Executive Officer R.S. Wijeweera said.

Administration cost and other related expenses increased by Rs. 42 million during the quarter. “These expenses increased mainly due to increase of business activities during the period,” Wijeweera added. During the quarter provision for bad and doubtful debts were reduced by Rs. 22 million and according to the CEO this was the result of strict credit evaluation criteria and despite the stringent provisioning policy adopted by the company.

 Quarterly profit before charging of IPO expenses and taxes rose to Rs. 41 million up  by 194% and after charging Rs. 26 million IPO expenses, Singer Finance net profit is Rs. 5.8 million during the quarter. “If not for this one time IPO expenses, quarter ended 31 December 2010 and nine months ended 31 December 2010 would have recorded net profits of Rs. 31.8 million and Rs. 77 million respectively,” the CEO said.

In December Singer Finance issued 25% stake (26,666,667 shares at Rs. 15 each) raising Rs. 400 million via the IPO. It saw a subscription worth Rs. 54 billion. On debut Singer Finance share peaked to a high of Rs. 50.80, up by 238% from its IPO price before finishing the day at Rs. 49.20, still higher by 228% or Rs. 34.20. On Friday the share closed at Rs. 42.50.