The financial performance of Sri Lanka Telecom PLC for the year ending 31 December 2023, as detailed in their annual report, indicates a challenging economic environment. The company faced a contraction in the Sri Lankan economy, rising costs, and fluctuations in exchange and interest rates, which created a complex business environment.
Key financial highlights from the report include:
- Operating Profit: LKR 5,081 million, a decrease of 14.7% from the previous year.
- Profit/(Loss) Before: Tax LKR (1,611) million, a significant decline from a profit of LKR 12,648 million in the previous year.
- Profit/(Loss) After Tax: LKR (1,132) million, down from a profit of LKR 8,463 million in the previous year.
- Earnings Per Share (EPS): LKR (0.63), a decrease from LKR 4.69 in the previous year.
- Revenue: LKR 106.4 billion, slightly down from LKR 107.7 billion in 2022.
- Total Liabilities: LKR 158.1 billion.
Key Financial Ratios
Based on the provided context from the Sri Lanka Telecom PLC Annual Report for December 2023, here are some key financial ratios:
- Return on Assets (ROA): This ratio indicates the overall effectiveness in generating profits with available assets. For 2023, the ROA was (1.59)%, which suggests that the company experienced a loss relative to its assets.
- Return on Equity (ROE): This ratio measures the profitability of a business in relation to shareholders’ equity. The ROE for 2023 was (4.42)%, indicating that the company generated a negative return on shareholders’ equity.
- Operating Margin: This ratio measures what proportion of revenue is left over after paying for variable costs of production. The operating margin for 2023 was 3.85%, which is lower compared to previous years, reflecting a decrease in profitability from operations.
- Asset Turnover: This ratio measures the value of sales or revenues generated relative to the value of its assets. The asset turnover for 2023 was 0.43 times.
- Current Ratio: This ratio measures the ability to cover short-term liabilities with current assets. The current ratio for 2023 was 0.54 times, indicating a tighter liquidity position compared to the previous year.
- Quick Asset Ratio: Also known as the Acid-test or liquidity ratio, it measures the ability of a business to pay its short-term liabilities by having assets that are readily convertible into cash. The quick asset ratio for 2023 was 0.50 times.
- Debt/Equity Ratio: This ratio measures the proportion of borrowed funds to its equity. The debt/equity ratio for the company in 2023 was 1.06 times, which is higher than the previous year, indicating an increase in leverage.
- Interest Cover: This ratio indicates the number of times interest expense is covered by earnings before interest and tax. The interest cover for 2023 was 0.58 times, suggesting that the company had lower earnings to cover its interest expenses compared to the previous year.
These ratios reflect a challenging financial year for Sri Lanka Telecom PLC in 2023, with decreased profitability, tighter liquidity, and increased leverage. It’s important for stakeholders to consider these ratios in the context of the broader economic environment and the company’s strategic initiatives for future growth.
This Report is compiled by LankaBIZ, an AI Assistant based on available source documents. Click below link to Find answers to queries relating Sri Lanka economy, Business regulations, Corporate Analysis & Stock Market Research.
www.lankabizz.net
Divestment of Shareholdings by Government of Sri Lanka
The latest position regarding the divestment of Government of Sri Lanka shareholdings in Sri Lanka Telecom PLC is that the Government of Sri Lanka has shortlisted two parties for the divestment of the majority shares in Sri Lanka Telecom (SLT). The government intends to divest its shareholding of 50.23% in SLT through an open competitive bidding process. The divestment process is ongoing, and interested parties are participating in the bidding to acquire the majority shares in Sri Lanka Telecom.
The two parties bidding to buy the Government of Sri Lanka’s shareholdings in Sri Lanka Telecom PLC are Reliance Jio from India and Gortune. Both companies have expressed interest in acquiring a stake in Sri Lanka Telecom PLC as part of the government’s initiative to decrease its ownership in state-owned enterprises.
Future Outlook
Despite these challenges, the company has demonstrated resilience and has taken decisive action to improve performance and ensure sustainability. The company’s strategic focus includes operational excellence, digital transformation, and customer-centric solutions, aiming to position SLT for long-term success.
Looking to the future, SLT expects 2024 to be more promising. The company is focused on expanding its market presence, particularly in the fibre sector through PEOTV, and has partnered with Mobitel to deliver popular content to its mobile customer base. The company is also exploring foreign development projects to extend its footprint and collaborating with foreign companies as the ICT solutions contractor for large local projects.
The global economic outlook is cautiously optimistic, with global GDP growth projected to stay at 3.1% in 2024 and rise to 3.2% in 2025. Inflation is expected to fall, which may alleviate some of the pressures on the company.
In summary, while Sri Lanka Telecom PLC faced significant challenges in 2023, the company is taking strategic steps to improve its financial performance and profitability. With a focus on innovation, customer service, and expansion, both locally and internationally, SLT is working towards a more positive financial outlook for the future.
