Softlogic swings to first pre-tax profit since 2019

 Chairman/Managing Director 

Ashok Pathirage 

• Group posts Rs. 24 m PBT for FY26, reversing a Rs. 7.5 b loss, its first pre-tax profit in seven years
• Revenue rises 24.5% to a 10-year high of  Rs. 129  b;  
• EBITDA  up 43.1% to a 10-year high of Rs. 17.8 b
• Operating cash flow jumps 59.6% to Rs. 14 b, lifting cash earnings per share to Rs. 10.07 from Rs. 6.30
• Restructuring offers signed on about Rs. 59.7 b of bank facilities, with capital grace periods of up to 18 months
• Softlogic Life raises $ 15 m in Tier 2 capital from Nordic impact investors; ODEL Mall Phase I to be funded through pre-sales, with no new debt

Softlogic Holdings PLC (SHL) has reported a group Profit Before Tax (PBT) for the first time since 2019. PBT reached Rs. 24 million for the financial year to end-March 2026, compared with a Rs. 7.5 billion loss the previous year.

Since reporting a Rs. 1.7 billion PBT in the year to end-March 2019, the group had sustained heavy losses, the largest being Rs. 20.9 billion in the year to end-March 2023. Its losses narrowed to Rs. 12.6 billion in FY24 and Rs. 7.5 billion in FY25, before the return to profit in FY26.

Group revenue rose 24.5% to a 10-year high of Rs. 129 billion for the year to end-March 2026, from Rs. 103.6 billion a year earlier. Gross profit increased 22% to Rs. 46 billion, and EBITDA (earnings before interest, tax, depreciation and amortisation) grew 43.1% to Rs. 17.8 billion from Rs. 12.5 billion. Both figures were also 10-year highs.

SHL said the results, based on its audited financial statements, showed that the group’s core business models remained resilient, cash-generative and structurally sound. It attributed the EBITDA growth to improved operating leverage, meaning costs rose more slowly than revenue.

Cash generation improved in step. Net cash inflows from operating activities rose 59.6% to Rs. 14 billion from Rs. 8.8 billion in FY25, a sharp reversal from an outflow of Rs. 7.1 billion in FY23. Cash earnings per share rose to Rs. 10.07 from Rs. 6.30.

SHL said it had made tangible progress on a systematic debt-restructuring plan, working with its primary bankers to convert short-term debt into long-term structured maturities aligned with the group’s operating cash flows.

As at 31 March, 2026, restructuring offer letters had been signed and received for facilities amounting to Rs. 47.5 billion. A further Rs. 12.2 billion was signed between the year end and the date of the Annual Report, bringing the total to about Rs. 59.7 billion. The revised arrangements include capital repayment grace periods of six, 12 and 18 months. The group has also obtained Banking Facility Support Letters amounting to Rs. 13.2 billion from the relevant financial institutions.

Net debt fell to Rs. 115.9 billion in FY26 from Rs. 124.1 billion in FY24. The group’s debt load remains heavy, however: net debt stands at about 6.5 times FY26 EBITDA.

SHL said the ODEL Mall mixed-development project has been recalibrated into distinct phases, with Phase I structured to be funded primarily through pre-sales of office space and no additional debt.

The group’s hotels, Pullman Colombo City Centre and Pullman Bentota Resort & Spa, have been realigned under Accor management. SHL said the move would improve international occupancy, generate foreign currency cash flows and reduce foreign exchange volatility on its hospitality debt.

Softlogic Life Insurance secured $ 15 million in long-term Tier 2 capital, a form of subordinated debt that counts towards an insurer’s regulatory capital, from institutional investors Norfund and OP Finnfund Global Impact Fund I.

Softlogic Finance PLC had its lending restrictions lifted by regulators, allowing it to rebuild its secured lending portfolio. SHL added that the forthcoming exercise of warrants, which give holders the right to buy new shares at a set price, would bring new equity capital into the group and accelerate deleveraging.