Softlogic financial services cluster records Rs.163mn net profit for June quarter

The Softlogic group’s financial services holding company, Softlogic Capital PLC, posted a net profit of Rs.163 million for the quarter ended June 30, 2016 (1Q17), a jump from Rs.43.3 million it recorded during the same quarter a year ago, the interim results filed with the Colombo Stock Exchange showed. 

The earnings per share rose to 24 cents from 6 cents a year ago. 
But the operating profits fell by 14 percent to Rs.1.25 billion as direct expenses rose by 74 percent, while the interest expense rose by 4 percent from a year ago. Hence, the bottom line was largely cushioned by the ‘change in insurance contract liabilities’, which dropped to Rs.27.8 million from Rs.459.2 million during the same period last year. 

The Softlogic Capital PLC financial services cluster includes Asian Alliance Insurance PLC, Softlogic Finance PLC and Softlogic Stockbrokers (Pvt.) Ltd. 

The financial services cluster recorded revenues of Rs.2.9 billion, which also includes fee and trading income made by its finance company and insurance unit, other incomes, realized gains, fair value gains and dividend income. 

The top line, which encompasses all incomes above mentioned, rose by a modest 11 percent year-on-year (YoY). 

A statement from the company said the financial services cluster revenues accounted for 16.7 percent of the group top line. 

Apart from financial services, the Softlogic group has interests in to healthcare, retail, technology, leisure and automobiles. 

The group for the same June quarter made a net profit of Rs.101.8 million or 13 cents a share, up 22 percent from a year ago. 

“Increasing interest rates was a systemic challenge faced by many corporate leaders in recent times,” Softlogic Chairman Ashok Pathirage recently told in its group 
earnings release. 

As of June 30, 2016, the Softlogic group had an asset base of Rs.97.7 billion while its financial services cluster had an asset base of Rs.38 billion.  Meanwhile, during the June quarter, the group insurance unit, Asian Alliance Insurance PLC posted a net profit of Rs.233.8 million, increasing from Rs.52.4 million a year ago. 

This June, the company entered into a share sale and purchase agreement to sell the entire stake in its general insurance business to Fairfax Asia Limited in a deal worth Rs.1.27 billion. This sale is to be concluded by end-September. 

Meanwhile, Softlogic Finance PLC posted a net profit of Rs.90.3 million for the same quarter in comparison to Rs.55 million a year ago. 

The financials of Softlogic Stockbrokers are not publicly available as it’s privately held. 
It generated a revenue of Rs.263 million for the year ended March 31, 2016, recording an increase of 59 percent and “was ranked second in the market”, a Softlogic Capital statement said.   
Softlogic Holdings PLC, controlled by Pathirage, held 73.74 percent in Softlogic Capital, while he directly held a 0.16 percent stake in the company as at June 30, 2016. 
ARC Capital (Pvt.) Ltd, an investment vehicle said to be controlled by corporate figure Ajith Devasurendra, held a 10.22 percent stake, being the second largest shareholder.