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| Sunday, 7 December 2003 |
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| News Business Features Editorial
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SLT posts 2.5 billion after tax profit for 9 months The countries Telecom giant Sri Lanka Telecom (SLT) has posted an impressive 9 months profit of Rs. 2.5 Billion after tax despite the negative market conditions with the liberalisation of the Telecom Industry. However this figure would be sliced off with a Rs. 710 million VRS payment, which would cut back the net earnings to a still healthy Rs.1.84 billion. The Net earnings per share of Rs.1.88 before VRS will be trimmed to Rs. 1.36 as against 1.49 in 2002. The company experienced a drop in sales growth due to the delay in implementing the tariff revision, which was finally approved from 1st of September 2003. The tariff revision of 15% was due from the beginning of the year but was later approved for a 12.5% increase from September 2003. This delay resulted in a drop in revenue for the period. However, the real effects will be felt in the last quarter to 31st December 2003, where 4 months of a 12.5% increased tariff would be available to the company's revenue for the year. SLT has shown that it has the financial stability and resilience to meet all competition and still maintain its profitability. The company settled a substantial number of loans for which high interest rates were paid, Thereby effectively reducing the interest cost. The company's long-term debt is currently at Rs. 19.6 billion from Rs. 25.4 billion in the year ended 2002. This shows a very healthy cash flow and augurs well for the future. The free cash flows of the company improved to Rs. 14.7 billion from 12.5 in 2002 which helped to pay off the high interest loans and the VRS scheme which is due to be recovered in 2 years. The companies EBITDA (earnings before interest tax and depreciation allowance) has remained at the same margins as last year of approximately 60%. This amply demonstrates that the profitability through efficient management of resources has helped achieve the healthy bottom line. The other encouraging features are the ROA (return on assets) and the ROE(return on earnings) . The ROA has improved from 7% to 8%, while the ROE has seen a steady 12% maintained prior to extra ordinary items (i.e.VRS costs). |
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