The Softlogic Group Gross Profit has increased by 9.2% to Rs. 19.7 bn maintaining GPMs at 33% in the financial year 2016-17.
The Group operating profit reached Rs. 5.3 billion for the year under review while the quarter reported a Rs. 1 bn operating profit. Administrative expenses has increased by 18% to Rs. 12.2 bn (20.6% cost margin in FY2017 as opposed to 18.9% in FY2016) with the quarter also reporting 17.6% cost growth to Rs. 3.6 bn.
The increase in administration cost can be related to the commercial opening of the city hotel and management’s conservative decision to increase provisioning of ageing debtors and inventory in the retail sector. The annual distribution costs of the Group have also increased by 9.4% to Rs. 3.2 bn with the quarter also registering an increase of 11.4% to Rs. 935.4 mn.
The Softlogic Group recorded a Rs 1.68 bn PBT for the year, following corporate tax charge, PAT reached Rs.1 bn during the year. In addition, the dividend tax increased to Rs. 256.6 mn (up 69.9%), which resulted in earnings for the year to report Rs. 825.3 mn. Thus, the Profit for the financial year ended 2017 was Rs. 970.6 mn.
The Group annual turnover reported an 8.2% growth to Rs. 59.1 bn while the quarter recorded a 5.4% growth to Rs. 14.3 bn. The general economic slowdown coupled with VAT and other fiscal reforms during the year impacted top line growth and bottom line. Further, the increased effects of one-off tax and provisioning in the last quarter, together with losses from the recently opened hotel affected profitability.
However, the Group has already overcome many hurdles affecting its key sectors, healthcare services and retail, and performance is expected to improve in the upcoming periods. The key contributors to Group turnover for the year were retail 33, healthcare services, 18% contribution, financial services, 15% contribution, ICT, 7% contribution followed by automotive and leisure sectors.
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