FINANCIAL PERFORMANCE

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 Performance Review

Circulars

• Total revenue generated by the sixty five (65) Commercial Enterprises for the year 2004 amounts to Rs.337Bn compared to Rs.279.4Bn generated in the previous year reflecting an increase of 21%.
• The increase in total revenue is mainly attributed to increase in revenue generation from the manufacturing sector and secondly the banking sector. All the sectors except the trading sector have been able to increase its revenue during the year. Plantation & agriculture and service sectors have been able to increase its revenue by 22% and 10% respectively while the infrastructure sector has been able to increase its revenue only by 3%.
• During the year, highest revenue has been generated by the Ceylon Petroleum Corporation from the manufacturing sector amounting to Rs.121.5Bn. This represents 36% of the total revenue. The second largest contributor to the total revenue during the year has been the Ceylon Electricity Board amounting to Rs.51Bn, which represents 15% of the total revenue.
• From the banking & finance sector highest revenue has been generated by the Central Bank of Sri Lanka amounting to Rs.31.6Bn representing 9% of the total revenue. Revenue generated by the three main banks namely Bank of Ceylon, People’s Bank and National Savings Bank amounts to Rs.23.96Bn , 22.6Bn and 19.4Bn respectively, representing 20% of the total revenue.
• There has been a substantial improvement in the revenue generated by the Strategic Enterprises (excluding Sri Lanka Central Transport Board and Sri Lanka Railways) during the year. Total revenue generated by the Strategic Enterprises during the year amounts to Rs.267Bn reflecting an increase of 18%, which represents 79% of the total revenue.
• The revenue generated by the fifty four (54) Non-Strategic Enterprises (excluding Central Bank Sri Lanka) however has increased only by 4%, which represents only 11% of the total revenue.
• Total revenue of the six Development Banks has increased by 16% during the year while highest revenue has been generated by the Wayamba Development Bank.
• Total revenue of the sixty four (64) Commercial Public Enterprises (excluding Central Bank Sri Lanka) has increased by 16%.

• Net profit before interest and tax has improved during the year by 26%. Highest profit has been achieved by the banking & finance sector, which represents 87% of the total profit. Plantation & agriculture and service sectors have been able to increase their profits by 56% and 87% respectively during the year while the infrastructure and manufacturing sectors have incurred losses.
• Highest profits have been made by the Central Bank, which amounts to Rs.26.3Bn representing 56% of the total net profit before interest & tax.
• Net profit before interest and tax of the ten (10) Strategic Enterprises has declined by 27% during the year with the substantial loss incurred by the Ceylon Electricity Board amounting to Rs.8.8Bn.
  Except two Strategic Enterprises namely Ceylon Electricity Board and National Water Supply & Drainage Board rest of the eight enterprises were able to make profits during the year.
  Highest profit maker for the year was Sri Lanka Ports Authority while Ceylon Petroleum Corporation being the second highest of the ten Strategic Enterprises. Profits of the ten Strategic Enterprises represent 31% of the total profit.
• Profits of Non Strategic Enterprises (excluding Central Bank of Sri Lanka) have deteriorated by 3% during the year, which represent 13% of the total profits.
• Net profit before interest & tax of the sixty four (64) Commercial Public Enterprises however have declined by 22% during the year.

• Financial charges during the year have increased by 23%. Infrastructure, plantation & agriculture and trading sectors have been successful in curtailing the financial charges during the year. Highest financial charges have been incurred by manufacturing sector representing 79% of the total financial charges mainly to high finance cost of Ceylon Electricity Board and Ceylon Petroleum Corporation.
• Financial charges of the Strategic Enterprises have increased by 25% during the year mainly due to high finance cost of Ceylon Electricity Board amounting to Rs.6.4Bn. While the finance cost of the Strategic Enterprises represents 96% of the total finance cost, Ceylon Electricity Board’s finance cost represents 60% of the total finance cost.
• Financial charges of the Non Strategic Enterprises however have declined by 18% during the year.

• There has been tremendous improvement in the net profit reflecting 27% increase during the year. All the sectors except infrastructure and manufacturing have been able to improve the profit situation.
  Substantial increase in the finance cost of the Ceylon Electricity Board and Ceylon Petroleum Corporation have mainly attributed to the decline in the net profit in the manufacturing sector.
  Infrastructure sector continues to incur losses with the high finance cost of National Water Supply & Drainage Board.
• Profits of the ten Strategic Enterprises however have declined very sharply by 64% mainly due to high finance cost of Ceylon Electricity Board, Ceylon Petroleum Corporation, Sri Lanka Ports Authority and National Water Supply & Drainage Board.
• Net profits of the Non Strategic Enterprises (excluding Central Bank of Sri Lanka) too have declined marginally by 2% during the year.
• Despite substantial increase in the total revenue the net profits of the six Development Banks has increased by only 1% during the year. Wayamba Development Bank has achieved the highest profit during the year.
• Net profits of sixty four (64) Commercial Public Enterprises excluding Central Bank of Sri Lanka however have declined very sharply by 44% during the year.
• The net profit of the Central Bank, amounts to Rs.26.3Bn representing 73% of the total net profits reflects an increase of 139% during the year.

• Total cost of employment of the sixty five (65) Commercial Enterprises has increased marginally by 6% from 40.6Bn to Rs.43.2Bn. This is mainly due to the salary revision introduced by the 2004 Budget Proposal.
• While the banking & finance sector reflects the highest cost of employment representing 44% of the total cost of employment the manufacturing and services sectors represent 24% and 22% respectively.
• Highest salary bill during the year has been paid by People’s Bank while second highest being Sri Lanka Ports Authority amounting to Rs.7.3Bn and Rs.6.8Bn respectively.
• Total number of employees however has dropped to 94,420 in the current year from 97,623 employees in the previous year.
• Manufacturing sector have employed the highest number of employees while banking & finance and services sectors rank second and third respectively. Ceylon Electricity Board has employed the highest number of employees of 13,454 while Sri Lanka Ports Authority the second highest with 13,233 employees.
• The average cost per employee which was Rs.416,000 in 2003 has increased to Rs.459,000 in 2004, mainly due to the increase in total cost of employment. Employees of the Central Bank represents the highest paid during the year amounting to Rs.1,335,000 per employee per annum.
• The cost of employment of the ten Strategic Enterprises too has increased by 6% from Rs.32.8Bn to Rs.34.8Bn although the number of employees has declined by 3% during the year, which represents 81% of the total cost of employment.
• Total cost of employment of Non Strategic Enterprises however has increased by 15% while the number of employees has declined by 5% during the year.
• The total cost per employee for the Strategic Enterprises has been substantially high when compared with Non Strategic Enterprises. Total cost per employee for Strategic Enterprises and Non Strategic Enterprises amounts to Rs.561,000 and Rs.221,000 respectively.
  The four Strategic Banks high cost per employee could have attributed to this increase. The average cost per employee of the Strategic Banks has been approximately Rs.765,000 per employee per annum.
• Number of employees of the ten Strategic Enterprises represents 66% of the total number of employees.
• Total cost of employment of six Development Banks has increased by 10% during the year while the number of employees has declined by 1%.

• There has been a substantial decline in the capital expenditure during the year mainly in the manufacturing sector.
• The capital expenditure in the manufacturing sector although has declined during the year it represents 52% of the total capital expenditure.
• Ceylon Electricity Board has incurred the highest capital expenditure amounting to Rs.11.2Bn while National Water Supply & Drainage Board being the second highest amounting to Rs.4Bn
• The capital expenditure of the ten Strategic Enterprises represents 94% of the total capital expenditure.
• Capital expenditure of the six Development Banks has increased substantially by 72% during the year mainly due to the high capital expenditure of Ruhuna Development Bank, which represents 44% of the total capital expenditure of the Development Banks.

• Total assets of the sixty five (65) Commercial Enterprises have increased from Rs.1,525.7Bn as at end of 2003 to Rs.1,718.6Bn as at end of 2004 reflecting 13% increase with the increase in the total non-current assets by 8% and total current assets by 18%.
• The banking & finance sector records the highest asset base, which represents 70% of the total asset base. All the sectors except the trading sector have been successful in increasing their asset base, of which Central Bank records the highest asset base amounting to Rs.414Bn representing 24% of the total asset base.
• Total assets of the ten Strategic Enterprises have increased by 11% representing 68% of the total assets, of which Ceylon Electricity Board records the highest assets base amounting to Rs.283Bn.
• The total asset base of Non Strategic Enterprises (excluding Central Bank of Sri Lanka) too has increased by 12% representing 8% of the total asset base.
• Total assets of the six Development Banks have increased from Rs.12.03Bn as at end of 2003 to Rs.15.67Bn as at end of 2004 with the increase in the total non-current assets and total current assets by 34% and 27% respectively. Wayamba Development Bank has recorded the highest asset base, which represents 26% of the total assets of the Development Banks.

• Total liabilities of the sixty five (65) Commercial Enterprises have increased by 11% with the increase in the non-current liabilities by 7% and current liabilities by 15%.
• The banking & finance sector has the highest liabilities representing 79% of the total liabilities of which Central Bank of Sri Lanka records the highest liabilities amounts to Rs.325.2Bn representing 25% of the total liabilities.
• Total liabilities of the ten Strategic Enterprises too have increased by 11% representing 71% of the total liabilities. Bank of Ceylon records the highest liabilities amounting to Rs.251Bn of the ten Strategic Enterprises.
• Total liabilities of Non Strategic Enterprises (excluding Central Bank of Sri Lanka) have increased by 16%, which represents only 4% of the total liabilities.
• Total liabilities of the six Development Banks too have increased during the year by 33% with the increase in the non-current liabilities by 51% and current liabilities by 26%. Wayamba Development Bank records the highest liabilities representing 26% of the total liabilities of Development Banks.

• Total Equity of Commercial Enterprises has improved by 16% during the year.
• Ceylon Electricity Board records the highest equity amounting to Rs.161.5Bn representing 38% of the total equity.
• Equity of the Strategic Enterprises and Non Strategic Enterprises (excluding Central Bank) has increased by 13% and 9% respectively.
• Equity of the six Development Banks has improved by 9% during the year. Ruhuna Development Bank has recorded the highest equity, which represents 27% of the total equity of Development Banks.

• Net profit before financial charges & tax to total assets of the sixty five (65) Commercial Public Enterprises has improved from 2% to 3% while net profit before tax to equity remained at 8%.
• With the substantial increase in the net profit in the service sector had resulted in substantial increase in the return on equity and assets in that sector. Highest return has been achieved by the services sector.
• Return on equity of the ten Strategic Enterprises have declined from 5% to 2% while return on assets has declined from 2% to 1%.
• With the decline in the net profit of Non Strategic Enterprises (excluding Central Bank of Sri Lanka) return on equity and return on assets have declined from 8% to 7% and 5% to 4% respectively.
• Return on equity of the Development banks has declined during the year from 27% to 25% while return on assets remained at 3%.
• Due to the substantial decline in the net profit before tax the return on equity has declined by half while return on assets remained at 2% for the sixty four Commercial Public Enterprises (excluding Central Bank).
• Return on equity as well as return on total assets of the Central Bank has all most doubled in the current year from 17% to 30% and 3% to 6% respectively.