2016/17 - Singer (Sri Lanka) PLC - Finance (Lanka) PLC | Annual Report 2016/2017 1 VISION To be the…

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  • 2016/17

    Gaining

    SINGER FINANCE (LANKA) PLC

  • Gaining

    Singer Finance PLC spearheaded the credit card

    company sector by introducing

    backing of Singer (Sri Lanka) PLC our parent Company, we are set and ready to conquer

    durables and introduce a wide

    competitive edge we will strive

    levels delivering the best to our

  • Singer Finance (Lanka) PLC | Annual Report 2016/2017 1

    VISION

    To be the foremost Finance Company in Sri Lanka.

    MISSIONTo continuously improve the quality of life of Sri Lankans by

    VALUES

    CommunityWe conduct our business by conforming to the ethics of our country and share the social

    fortunate

    EmployeesWe respect each other as individuals and encourage cross functional teamwork while providing opportunities for career development

    CompetitorsWe respect our competitors and recognise their contribution to the Finance Industry

    Environment

    to ensure that the environment is protected and conserved for the future generations

    ConsumersWe live up to the expectations of a responsible organisation by providing customer-

    ShareholdersWe provide a reasonable return while safeguarding their investment

  • 2

    Pages 08-11

    Pages 12-15

    Chairmans Message

    Review

    Total AssetsLKR

    Total EquityLKR

    Dividend Per ShareLKR

    12.7Bn 2.7Bn 1.06

    Group Chief

  • Singer Finance (Lanka) PLC | Annual Report 2016/2017 3

    Pages 16-18

    Review

    Financial Highlights | 4

    Letter from the Chairman | 8

    Group Chief Executive | 12

    | 16

    Board of Directors | 19

    Senior Management | 26

    Middle Management | 28

    Junior Management | 31

    Management Discussion and Analysis | 38

    | 43

    | 50

    | 57

    Corporate Governance | 61

    Financial InformationAnnual Report of the Board of

    Company | 121Statement of Directors Responsibility | 126Independent Auditors Report | 127

    Other Comprehensive Income | 128Statement of Financial Position | 129Statement of Changes in Equity | 130Statement of Cash Flows | 131Notes to the Financial Statements | 132Ten Year Summary | 174Value Added Statement | 175Share Information | 176Glossary of Financial Terms | 180Notice of Annual General Meeting | 182Form of Proxy | Enclosed

    Chief Executive

    Governance Direction No. 3 of 2008 | 108

    | 109

    | 110

    | 111

    | 112

    | 113

    | 114

    | 116

    | 117

    Contents

  • 4

    Gross NPL Ratio Net NPL Ratio Net Assets Per Share

    2.05%

    23 02 18 317

    0.40% Rs. 16.46

    Financial Highlights

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    Total Equity

    2012/13 2013/14 2014/15 2015/16 2016/17

    Rs. Mn

    0

    3,000

    6,000

    9,000

    12,000

    15,000

    Total Assets

    2012/13 2013/14 2014/15 2015/16 2016/17

    Rs. Mn

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    Gross Income

    2012/13 2013/14 2014/15 2015/16 2016/17

    Rs. MnShareholders Funds:

    Public Depoits

    84.74%

    2015/16 - 2.18% 2015/16 - 0.46% 2015/16 - Rs. 15.71

    Branches Service CentresMega Service Centres

    Employees

  • Singer Finance (Lanka) PLC | Annual Report 2016/2017 5

    2016/17 2015/16 Change %

    Financial Performance (Rs. 000)Gross Income 2,610,297 2,113,396 23.5Interest Income 2,418,122 1,982,889 21.9

    978,996 688,135 42.3 568,214 646,813 -12.2 198,385 205,958 -3.7 369,829 440,855 -16.1

    Revenue to the Government 339,027 293,928 15.3Gross Dividends 175,253 248,000 -29.3

    Financial Position at the Year End (Rs. 000)Total Equity 2,720,616 2,597,628 4.7Public Deposit 3,210,548 3,173,767 1.2

    11,552,460 10,036,295 15.1 12,698,479 11,035,809 15.1

    Investor InformationEarnings Per Share (Rs.) 2.24 2.67 -16.0Dividend Per Share (Rs.) 1.06 1.50 -29.3

    16.46 15.71 4.7Price Earning Ratio (Times) 7.64 6.79 12.6Dividend Payout Ratio (Times) 49.88 59.22 -15.77Dividend Cover (Times) 2.11 1.78 18.54

    Ratios 2.05 2.18 0.40 0.46

    42.98 38.65 Gross Interest Margin (%) 59.51 65.39 Net Interest Margin (NIM) (%) 12.65 13.55

    4.79 6.51 13.91 17.77

    Interest Cover (Times) 1.58 1.95 0.29 0.34

    Debt : Equity Ratio (Times) 3.41 2.95 1.78 1.89

    Statutory Ratios 12.59 13.34

    Core Capital Ratio (%) (Minimum Requirement 5%) 19.00 22.92 19.00 22.92 84.74 81.85

  • 6

    16.9%Vehicle loan

  • Singer Finance (Lanka) PLC | Annual Report 2016/2017 7

    Rs. 78.4 MnIncreased

    During the year, Singer Finance expanded the vehicle loan portfolio.

    individuals who wanted urgent working capital loans .

  • 8

    Sri Lanka is now rapidly moving towards a cash-less society with an increase in debit and credit card transactions with retail payments in cash for goods and services recording a decline. Dr. Saman Kelegama

    Chairman

  • Singer Finance (Lanka) PLC | Annual Report 2016/2017 9

    Glimpse on the EconomyThe Sri Lankan economy recorded a 4. 4%

    budgets presented in 2015 and 2016, Sri

    foreign direct investments (FDIs). In this policy turnaround, the Government had

    that moves gradually according to market

    revenue in order to balance the budget; in

    Monetary Fund (IMF) in June 2016 and gradually increasing the interest rates to

    sector. These measures did have an impact

    31.8 per cent during 2015.

    LFC/SLC Sector

    comprising the Licensed Finance Companies

    Rupees One Trillion mark in assets. The

    encouraging and by end 2016, the sector comprised 46 LFCs, 7 SLCs and 1,313

    of LFC sector, recent measures by the

    regulate the motor vehicle leasing industry

    (LTV) ratios, caused contraction in the

    of 2016, as a result of revision on the LTV ratios on vehicle leasing, accelerated during

    100% of the value of vehicle being reduced

    their total value for motor cars, SUVs and

    for commercial vehicles (lorries and heavy vehicles). These measures on vehicle leasing

    entire vehicle leasing industry, leading to a decline in income from the business.

    While the revision resulted in a drop in business volumes for the leasing business

    vehicles.

    The sectors reliance on retail deposits has

    the overall funding structure of the sector

    36.2 per cent in 2016 from 31.6 per cent in

    to 43.8 per cent in 2016 from 48.3 per cent

    or Rs. 124.4 billion to Rs. 438.7 in absolute

    Your Company recorded another

    business to expand its portfolio and reduce dependence on its leasing activities for income

    on a path to innovate

    avenues of income,

    level of maturity in overall business.

    Letter from the Chairman

  • 10

    Performance in Expansion Mode with reduced dependence on leasing Despite these prudential measures by

    its portfolio and reduce dependence on its

    overall business.

    the Company reached Rs. 2.6 billion in the

    Interest Income, Fee and Commission Income, Trading Income and Other Operating Income.

    commendable, considering the backdrop

    interest costs had a major impact on the performance of the Company in the year

    290.8 million to Rs. 978.9 million, posting

    during the year due to policy rates being increased by the government. Despite steep

    The steep increase in impairment cost of 142

    year also recorded an increase in bad debts in the latter part of the 3rd quarter and the

    attributable to general market conditions and liquidity constraints in the hands of the consumer.

    considering the fact that the previous

    by 82.3% to Rs. 29.1 million, contributing

    Last years reduction on impairment costs

    conditions resulting in an increase in

    patterns.

    increased by 33%, mainly due to the Credit

    Companys NPL declined from 2.18% in March 2016 to 2.05% in March 2017, a very healthy NPL position for a Finance Company.

    We Continue to Make History

    institution to launch a visa credit card.

    payments in cash for goods and services recording a decline. In response to these

    Debit Card in the 3rd quarter of the Calendar

    inclusion in the economy.

    suppliers of the Group.

    Challenges Ahead The future holds many challenges more regulation to the industry is inevitable and

    in a more competitive industry landscape,

    edge.

    Despite prudential measures adopted by the

    Company in the short and medium term seem a realistic goal.

    of good governance, ethical management and business.

    The priority of the Company is to maintain

    our stakeholders and our customers. We also strive to safeguard our most valued asset, our team. Our focus in human resource management is to recruit, build

    team, to provide equal opportunities and

    Factoring business and Revolving Loans.

    market share in traditional businesses like Leasing and Consumer Durables Financing.

    Letter from the Chairman

  • Singer Finance (Lanka) PLC | Annual Report 2016/2017 11

    Planning (ERP) management information

    Acknowledgements

    shareholders and customers have continued

    Credit Committee and the Group Related

    their valuable services throughout this period

    the valuable services of Mr. Joe Kan

    the successor for the outgoing Director. My

    the industry in the path to success.

    Dr. Saman Kelegama Chairman

    02nd June 2017

  • 12

    We were successful in

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