SPLC has registered strong growth over the last two years and has focused on team building and business diversification. With a significant increase in business, leverage had risen sharply during this period, prompting a 60 percent rights issue subsequent to FY2005. While this issue would reduce leverage, projected growth is likely to continue to put pressure on capitalisation in the short-term.
Leverage would, therefore, be keenly monitored as a key risk indicator. SPLC's reliance on short-term funds is also increasing over time and increased utilisation of long-term funding sources may improve maturity matching.
The leasing sector in general has experienced pressure on markup spreads, on account of which SPLC's core profitability has remained at a level similar to the previous year. Equity investments have contributed notably to bottom-line profitability in FY2005.
Positive developments have been noted in the area of recovery of delinquent leases and portfolio quality indicators are gradually improving.