SMB Leasing posts PAT of Rs 72.2 mn for 2012

SMB Leasing PLC ended 2012 with an after tax profit of Rs 72.26mn after posting a loss of Rs 11.96mn for 2011. The company absorbed a loss of Rs 7.89mn from its associate group companies with consolidated profit after tax for 2012 at Rs 62.40mn compared to Rs 0.19mn for 2011. The key driver for this resurgent bottom line was a 58% increase in top line revenue for the company which grew to Rs 68.01mn in 2012 from Rs 106.53mn in 2011.

Higher revenues were complimented by a large improvement in the net interest margin which jumped from 22% in 2011 to 60% for 2012, almost tripling the margin at the gross profit level. Other income fell marginally by 10% to Rs 32.27mn from Rs 35.86mn in 2011.

The changes and restructuring efforts that have taken place at the company has resulted in total operating expenses falling 20% to Rs 55.27mn from R 69.02mn in 2011.

Reversals accounted for around Rs 21.12mn, a figure mitigated by Rs 12.51mn in added provisions and write offs. Other overhead expenses however fell 20% year on year to Rs19.43mn from Rs 24.28mn. VAT contribution to the government improved 165% to Rs 4.92mn from Rs 1.86mn a year earlier.

The company’s balance sheet showed improved business activity with net loans, advance and leases showed a substantial increase of 50% over corresponding periods to Rs 969.1mn from Rs 646.46mn a year earlier.

Total assets remained relatively flat at Rs 1,309.84mn in 2012 compared to 1,354.27mn in 2011 as cash and short term funds reduced to fund the improved lease and loan book.

Total liabilities fell 30% to Rs 352.28mn in large part due to a reduction in outstanding borrowings which were down 40% from Rs 248.08mn in December 2011 to Rs 148.62mn. Net assets per share fell to Rs 0.53 per share from Rs 0.61 per share, down 13% year on year.

The company has seen a dramatic turnaround in its fortunes as the company reported a negative asset value in 2009 followed by a poor bottom line in 2010 (84% lower than the 2009 profit level) and a loss in 2011. This revival and recovery stems from a series of bold initiatives taken to save the ailing company starting in 2010 when the company extended an invitation to Umesh Gautam, CEO of Lanka Ashok Leyland, to join the board. Soon after, the company raised funds through a rights issue with attached warrants to be converted in 2011 which helped the company with much needed liquidity.

Commenting about the transformation of SMB Leasing, Gautam said, “while acknowledging the many changes and business initiatives taken over the last two years by the management, the real enabler for this uptick in business activity for me has always been, maximizing the potential of the existing management, who have dug in and stuck by this company through the last few years, and it is by their day to day efforts that this company is able to go from loss to profit again.

A simple boost in morale and team building initiatives have resulted in the company being re energized and the spark of success has once again been reignited. The management and staff deserve the full credit for this reversal in fortunes and will continue to be the cornerstone of this company’s success going forward.