06 Mar 2017
The senior management of SET-listed digital finance firm Group Lease Public Company Limited (GL) has given assurance that the 3,477 million baht worth of loans and accrued interests as at the end of 2016 were extended to GL’s trusted long-time partners who are dealers in various products and services for which GL provides financing to end consumers.
“These are loans given to the dealers of motorcycles, agricultural machineries, solar panels and various electrical appliances. Many of them are our business partners who have also become our shareholders. They are trust-worthy,” GL chairman and chief executive officer Mitsuji Konoshita stated today (March 6, 2017).
He added: “What I care most is the relationship with our clients; we need to know the nature and requirements of their business. In this sense, it is perfectly reasonable and we are quite comfortable to extend the SME loans since most of our dealers have more than 3 years of relationship with us in leasing and other financing services.”
Mr. Konoshita issued the statement after some investors have raised concern about the transparency in the dealings following remarks by GL’s auditor in the 2016 financial statements. The statements referred to the loans and accrued interests in question which were extended to two groups of borrowers in Singapore and Cyprus who used a combination of GL shares and other assets such as real estate in Cyprus and Brazil plus government bonds as collateral.
The concern which circulated within some VI (value investors) circles was believed to be one of the factors behind the steep declines of GL share prices in recent days.
GL has been expanding aggressively from its home base in Thailand to neighboring countries in Asia by adopting its highly efficient and low-cost digital finance platform to extend leasing services to large number of grassroots borrowers. On top of that, the company has also expanded its lending portfolios to cover the small and medium-sized dealers who supply the various products and services to the end consumers.
Loans to these SME dealers have helped boost the company’s profitability in recent years. The most recent financial results showed GL making a record-high profit of 1,062 million baht last year, which represents a whopping 82.34% increase from the year before.
Referring to another part of the auditor’s remarks about the “extension” of the repayment period of the SME loans, Mr. Konoshita stated that the loans were initially given on a three-month rollover period over one-year maturity. After the company became fully satisfied with the borrowers’ credit worthiness, then the repayment term would be extended to one-year rollover period over total 3-year maturity.
As for the question on why the transactions were done in Singapore and Cyprus, Mr. Konoshita said it was because the tax regimes in the two countries are favorable for such deals.