FOREWORD
ROCK SOLID CORPORATES
Sri_Lanka’s leading listed entities are resilient in times of uncertainty
While COVD-19 continued to be a concern for corporates for much of 2021, the nation’s economic woes heightened towards the latter part of the calendar year on the back of challenges such as the value of the rupee and a forex crunch, upcoming debt obligations, the rising cost of living and dwindling reserves.
Transparency International’s Corruption Perceptions Index (CPI) places Sri Lanka in 94th spot (down from No. 93 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 rating is no different to where the nation stood back in 2019.
The CPI reflects perceived levels of public sector corruption according to experts and businesspeople. And it concludes that “most countries have made little to no progress in tackling corruption in nearly a decade… Corruption not only undermines the global health response to COVID-19 but contributes to a continuing crisis of democracy.”
Transparency International explains: “As the past tumultuous year has shown, COVID-19 is not just a health and economic crisis but a corruption crisis as well, with countless lives lost due to the insidious effects of corruption undermining a fair and equitable global response.”
It recommends strengthening the oversight of institutions, ensuring open and transparent contracting, defending democracy and promoting the civic space, and publishing relevant data and guaranteeing access.
In a message marking International Anti-Corruption Day, Transparency International Sri Lanka (TISL) Executive Director Nadishani Perera asserted that “at a time when our country is making strides in vaccinating people to combat the COVID-19 pandemic, let us also commit to fight the pandemic of corruption that has plagued this country for decades… exacerbating inequalities and causing the country to stagnate as a developing nation.”
Meanwhile, the South Asia Economic Focus Fall 2021 report compiled by the World Bank expects Sri Lanka’s economic expansion to reach 3.3 percent in 2021 although “the medium-term outlook is clouded by preexisting macroeconomic weaknesses and the economic scarring from the COVID-19 pandemic.”
It adds: “Continued macroeconomic challenges – particularly the high debt burden, large gross financing needs and weak external buffers – will adversely affect growth and poverty reduction over the medium term.”
Measures to reduce the country’s debt vulnerabilities, and restore fiscal and external buffers, are expected to remain among Sri Lanka’s main strategies going forward while tackling equity gaps will be necessary to maintain human capital achievements and long-term growth prospects.
In the latest edition of the LMD 100, Hayleys retains the top spot ahead of Expolanka Holdings with regard to the performance of Sri Lanka’s leading listed entities in financial year 2020/21 – thanks to its reported consolidated revenue of Rs. 241 billion, which is nearly 10 percent higher than that of the latter.
Meanwhile, LOLC Holdings (LOLC) holds on to the No. 1 slot for profitability, having recorded a post-tax profit in excess of 50 billion rupees.
As for market capitalisation, which is also a prime indicator of corporate might, John Keells Holdings (JKH) leads the way with an equity value of almost Rs. 196 billion at 31 March 2021.
Forty LMD 100 corporations reported lower earnings in financial year 2020/21 compared to the preceding 12 months. And there are 11 loss makers among the 100 leading listed companies (in 2019/20, there were 17) while 70 companies (compared to 28 in 2019/20) registered profit upside in the double digits or higher.
In the latest edition of the nation’s pioneering listed company rankings, as many as 69 companies (72 in the prior year) recorded annual revenues in excess of Rs. 10 billion. In terms of bottom lines, 22 entities (versus 13 in 2019/20) 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 24 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 Expolanka Holdings and LOLC, which feature on the 2020/21 Leaderboard.
Aggregate revenue of the 50 leading listed entities has grown by eight percent in the latest rankings whereas their combined bottom line increased by as much as 45 percent. To put things in perspective, back in 1993/94, cumulative revenue rose by 20 percent year on year while profits spiked by 60 percent.
The aggregate asset value of the 50 leaders meanwhile, appreciated by seven percent during 2020/21 while their combined shareholders’ funds were nearly 14 percent higher than from when the financial year began.
– LMD/Media Services
