STILL STANDING TALL
Sri Lanka's leading listed entities demonstrate their fortitude
National security lapses, not to mention the nation's penchant for political toing and froing, hogged the headlines in Sri Lanka and beyond throughout 2019 with questions being raised in many quarters whether the powers that be – whoever they may be – followed due process regarding these domains.
Transparency International's Corruption Perceptions Index (CPI) places Sri Lanka in 89th place (up from No. 91 in the previous year) from among 180 countries and territories with a score of 38 out of 100 (on a scale of 0 – or 'highly corrupt'; to 100 – i.e. 'very clean'). This score was no different to where the nation stood back in 2017.
The CPI reflects perceived levels of public sector corruption according to experts and businesspeople; and it concludes that "the continued failure of most countries to significantly control corruption is contributing to a crisis in democracy around the world."
In the lead-up to the 16 November presidential poll, Transparency International Sri Lanka (TISL) launched a hotline for the public to report incidents where state resources were being misused for election campaigning purposes.
TISL's Executive Director Asoka Obeyesekere told reporters that "it is important that all public officials, ranging from those working in local government authorities to those employed at state owned enterprises, are aware of the strict penalties for violations."
He added: "It is important that public officials are mindful of incidents of misuse of public property during elections, which have led to the conviction of senior officials in recent years. We hope that such instances will serve as a deterrent and will encourage those currently in public service to safeguard themselves from political interference."
Meanwhile, the South Asia Economic Focus Fall 2019 report of the World Bank projects Sri Lanka's real GDP growth (at market prices) to come in at 2.7 percent in 2019, and increase to 3.3 percent in 2020 and 3.7 percent in 2021, "supported by recovering investment and exports as the security challenges and political uncertainty dissipate."
The report points out that "reduced tourism receipts following the recent [21 April] attacks will exert pressure on external accounts despite reduced import demand. Since the fiscal balance may deteriorate amid contracting revenues, large refinancing needs, weak fiscal buffers and high debt make the country vulnerable to rollover risks."
With the dawn of a new presidential term and prospect of a general election in 2020, both the people and businesspeople must surely be hoping there will be a turnaround in the country's fortunes – for the better.
Turning to the performance of Sri Lanka's leading listed entities in financial year 2018/19, Hayleys retains the top spot ahead of LOLC Holdings (LOLC) by virtue of its reported consolidated revenue of Rs. 219 billion, which is 23 percent higher than that of the latter.
Meanwhile, LOLC reclaims the No. 1 slot for profitability from John Keells Holdings (JKH), having recorded a post-tax profit of nearly Rs. 20 billion.
As for market capitalisation, which is another prime indicator of corporate might, Ceylon Tobacco Company (CTC) leads the way with an equity value of 251 billion rupees at 31 March 2019.
Fifty-two LMD100 corporations reported lower earnings in financial year 2018/19 compared to the preceding 12 months. Moreover, there are six loss makers among the 100 leading listed companies (in 2017/18, there were nine) although 41 companies (compared to 50 in 2017/18) reported profit upside in the double digits or higher.
In the latest edition of the nation's premier listed company rankings, as many as 74 companies (71 in the prior year) recorded annual revenues in excess of Rs. 10 billion. And in terms of bottom lines, 17 entities (versus 15 in 2017/18) enjoyed post-tax profits of over five billion rupees.
Turning the clock back 25 years when the pioneering rankings were first published in 1993/94 (that was when the LMD 100's predecessor – The LMD 50 – was compiled for the first time), the list of corporate heavyweights contained 25 entities that do not feature in the latest edition of Sri Lanka's leading listed companies.
An equal number of corporations were not in contention at the inception of the rankings including the likes of LOLC, Dialog Axiata and Melstacorp, all of whom feature on the 2018/19 Leaderboard.
Aggregate revenue of the 100 leading listed entities has grown by 15 percent in the latest rankings whereas their combined bottom lines dipped by one percent. To put things in perspective, back in 1993/94, cumulative revenue (for the top 50) rose by 20 percent year on year while profits spiked by as much as 60 percent.
The aggregate asset value of the 100 leaders meanwhile, appreciated by 16 percent during 2018/19 while their combined shareholders' funds were 15 percent higher than when the financial year began.
Indeed, times have been hard lately.
– LMD/Media Services
LMD 100 SECOND BOARD | 2018/19