# E M L CONSULTANTS PLC Financial Summary

Canonical URL: https://pal.lk/updates/eml-financial-summary
Symbol: EML.N0000
Company: E M L CONSULTANTS PLC
Sector: Commercial & Professional Services
Published: 2026-08-13T20:56:41Z
Last updated: 2026-08-13T20:56:41Z

# EML Consultants PLC Financial Summary and Investment Analysis

## Executive Overview

EML Consultants PLC, incorporated in 1993 and listed on the Colombo Stock Exchange Empower Board, provides multidisciplinary consultancy services spanning engineering, environment, natural and social sciences, technical services, management and financial consultancy. Its client base includes Sri Lankan government institutions, private-sector entities and international development agencies.

**Periods covered:** Q2 2023–Q1 2026, with audited CY2025 and comparative historical data through CY2021.

The financial picture shows a company undergoing a **margin and balance-sheet recovery despite weak revenue growth**. Audited CY2025 revenue fell 23.9% to LKR 88,749,414, yet gross profit increased 2.9% because direct costs fell substantially faster than revenue. Gross margin expanded from 31.7% to 42.8%, while operating loss narrowed 46.6%. Reported PAT returned to LKR 2,108,444 from an LKR 8,080,921 loss, although management states that the net profit arose **solely because of a deferred-tax adjustment**; underlying operations remained loss-making.

Q1 2026 produced a small LKR 169,161 profit despite revenue declining 14.9% YoY. Gross margin remained strong at 44.2%, suggesting that the improved direct-cost structure has persisted.

## Financial Performance

### Revenue and Profitability Trends

| Period   | Revenue (LKR) | Gross Profit (LKR) | Net Profit/(Loss) (LKR) | GP Margin | NP Margin |
| -------- | ------------: | -----------------: | ----------------------: | --------: | --------: |
| Q2 2023  |    29,168,679 |         11,636,322 |             (1,573,706) |     39.9% |    (5.4%) |
| Q3 2023  |    16,230,783 |          6,619,500 |               4,325,473 |     40.8% |     26.6% |
| Q4 2023  |    29,774,927 |         12,805,625 |               1,040,511 |     43.0% |      3.5% |
| Q1 2024  |    21,311,648 |          4,814,050 |             (6,271,089) |     22.6% |   (29.4%) |
| Q2 2024  |    29,309,261 |         11,461,491 |               3,310,841 |     39.1% |     11.3% |
| Q3 2024  |    21,825,895 |          8,456,482 |             (1,981,561) |     38.7% |    (9.1%) |
| Q4 2024  |    45,599,393 |         14,354,863 |                 432,892 |     31.5% |      0.9% |
| Q1 2025  |    27,283,566 |         10,897,974 |             (1,143,807) |     39.9% |    (4.2%) |
| Q2 2025  |     9,145,292 |          3,071,204 |             (4,780,724) |     33.6% |   (52.3%) |
| Q3 2025  |    21,333,115 |          9,731,844 |               2,567,970 |     45.6% |     12.0% |
| Q4 2025* |    30,987,441 |         14,295,857 |               5,465,003 |     46.1% |     17.6% |
| Q1 2026  |    23,229,552 |         10,272,301 |                 169,161 |     44.2% |      0.7% |

*Q4 2025 is derived from audited CY2025 less the reported 9M 2025 results. PAT therefore includes year-end tax/deferred-tax adjustments and should not be treated as recurring quarterly earnings. Interim CY2024 figures also differ from subsequently audited CY2024 results; audited annual figures supersede interim annual totals.

The clearest structural improvement is **gross margin**: after dropping to 22.6% in Q1 2024, it reached 45.6% in Q3 2025, approximately 46.1% in Q4 2025 and 44.2% in Q1 2026.

Audited CY2025 revenue fell from LKR 116,575,223 to LKR 88,749,414, while direct costs dropped 36.3% from LKR 79,661,371 to LKR 50,752,535. Gross profit consequently increased from LKR 36,913,852 to LKR 37,996,879.

Administrative expenses rose 10.7% to LKR 51,045,257. Management attributes this mainly to salaries, ISO certification and write-offs of long-outstanding receivables. Approximately 65% of administrative expenditure relates to staff, leaving a relatively high fixed-cost base.

Operating loss nevertheless improved from LKR 12,595,784 to LKR 6,724,095. PBT narrowed sharply from a LKR 5,605,560 loss to only LKR 286,469 loss.

## Balance Sheet Analysis

| LKR                  |  2024-12-31 |  2025-12-31 |  2026-03-31 |
| -------------------- | ----------: | ----------: | ----------: |
| Total assets         | 283,637,684 | 264,316,886 | 268,118,874 |
| Current assets       | 180,834,007 | 165,182,096 | 170,072,012 |
| Total liabilities    |  88,811,406 |  66,811,831 |  70,444,658 |
| Current liabilities  |  58,084,047 |  38,052,518 |  41,616,310 |
| Shareholders' equity | 194,826,278 | 197,505,055 | 197,674,216 |
| NAV/share            |       ~2.14 |        2.17 |        2.17 |
| Current ratio        |       3.11x |       4.34x |       4.09x |

CY2025 total liabilities fell 24.8%, while equity increased 1.4%. Management-reported debt/equity dropped from **10.5% to 1.7%**, principally following settlement of short-term borrowings.

Trade and other receivables declined from LKR 39.74 million to LKR 22.80 million in CY2025, while related-party receivables declined from LKR 15.00 million to LKR 6.08 million. However, by 2026-03-31 trade/other receivables had increased again to approximately LKR 32.46 million.

## Cash Flow Analysis

| Period  | Operating CF | Investing CF | Financing CF |
| ------- | -----------: | -----------: | -----------: |
| CY2024  | (23,821,414) |   15,337,194 |  (3,189,461) |
| CY2025  |   13,747,857 |    4,471,106 |  (2,199,464) |
| Q1 2026 |  (4,846,607) |    1,313,818 |      738,137 |

CY2025 represented a major cash-flow turnaround. Operating cash flow improved by approximately LKR 37.6 million YoY. Receivable collections and reductions in related-party balances were important contributors.

Capital expenditure was only LKR 1,335,402, giving approximate CY2025 **free cash flow of LKR 12.41 million**.

Q1 2026 reversed part of this improvement: operating cash flow became negative LKR 4.85 million, largely alongside renewed receivable growth, and cash equivalents decreased during the quarter. This deserves monitoring even though headline liquidity ratios remain strong.

## Key Financial Ratios and Growth Indicators

* **CY2025 GP margin:** 42.8% vs 31.7% in CY2024.
* **CY2025 operating margin:** (7.6%), improved from approximately (10.8%).
* **CY2025 net margin:** 2.4%, but tax-adjustment dependent.
* **CY2025 ROE:** approximately 1.1%.
* **CY2025 ROA:** approximately 0.8%.
* **2021–2025 revenue CAGR:** approximately **(5.3%)**, showing long-term revenue contraction.
* **2021–2025 gross-profit CAGR:** approximately **0.25%**, indicating margin gains have broadly preserved gross profit despite declining revenue.
* EPS improved from **(0.09)** in CY2024 to **0.02** in CY2025.
* No dividend was recommended for CY2025.

The five-year record remains volatile: revenue was LKR 110.50 million in CY2021, LKR 132.48 million in CY2022, LKR 90.05 million in CY2023, LKR 116.58 million in CY2024 and LKR 88.75 million in CY2025.

## Economic and Market Context

Management describes the operating environment as challenging, with consultancy volumes affected by economic conditions, government development expenditure, private investment and donor-funded activity.

Price competition is significant, with competitors submitting low-priced bids. Government project initiations improved during CY2025 and international donor agencies continued contributing projects, although at modest levels.

EML Consultants PLC secured **10 new projects during CY2025 while carrying 13 projects from previous years**, across waste management, environmental assessments, circular economy, urban planning, research and donor-funded assignments.

## Future Potential and Outlook

Management's primary CY2026 objective is **increasing business volumes while maintaining tighter direct-cost control**. Strategic partnerships and relationships with Asian and European institutions are expected to support access to technical-assistance and donor-funded projects.

The company's long operating history, recognised relationships with organisations including JICA, World Bank, ADB and EU-related institutions, multidisciplinary consultant network, and experience across Sri Lanka and the wider region provide competitive credentials.

However, no quantitative revenue or earnings targets were disclosed. Sustainable recovery therefore depends on turning the improved gross-margin structure into sufficient project volume to cover administrative overheads.

## Risks and Challenges

* **Core profitability:** CY2025 operations remained loss-making before finance income and tax effects.
* **Earnings quality:** CY2025 PAT depended on a deferred-tax credit rather than operating profitability.
* **Revenue contraction:** CY2025 revenue fell 23.9%; Q1 2026 revenue fell another 14.9% YoY.
* **High fixed costs:** administrative expenses continued rising despite lower revenue.
* **Project timing:** client or third-party delays can postpone milestones and revenue recognition.
* **Competitive bidding:** low-price competitors can reduce both win rates and achievable margins.
* **Government/donor exposure:** project flow depends partly on government capital expenditure, political stability, donor priorities and geopolitical developments.
* **Working capital:** Q1 2026 showed renewed receivable growth and negative operating cash flow.
* **Human resources:** specialised assignments depend partly on external consultants and availability of qualified experts.
* **Contingency:** an Anuradhapura Labour Tribunal case relating to an EPF/ETF claim by a former project consultant remains partly heard and pending.
* Management identifies inadequate liquidity for meaningful external-market expansion as a weakness despite strong current liquidity.

## Shareholder and Corporate Information

At 2025-12-31, 90,900,000 shares were outstanding. Aeroform (Private) Limited held **29.70%**, while Kaluachchigamage Avanthi Kumara Jayatilake held **21.20%**. The top 20 shareholders controlled 65.28%; 99.74% of shares were locally held.

By 2026-03-31, Aeroform remained at 29.70%, while Jayatilake's holding had declined to **19.00%**; top-20 concentration fell to 62.83%.

During CY2025 the share traded between LKR 3.40 and LKR 5.90 and closed at LKR 4.60. The Q1 2026 filing reports a LKR 4.50–14.10 range and LKR 9.30 last-traded price. At LKR 9.30 versus NAV/share of LKR 2.17, price/NAV was approximately **4.29x**. A P/E based on CY2025 is not particularly informative because reported EPS was only LKR 0.02 and earnings were materially tax-credit driven.

The CY2025 financial statements received an unmodified audit opinion. Q1 2026 figures are unaudited and prepared under LKAS 34.

## Investment Decision Indicators

**Strengths:** materially improved gross margins; substantially lower leverage; strong current ratio; CY2025 operating cash-flow recovery; established donor/government relationships; diversified consultancy expertise; owned office property; improving operating-loss trajectory.

**Weaknesses:** contracting revenue, continuing core operating losses, high administrative cost base, weak underlying ROE/ROA, dependence on finance income and deferred tax for reported profitability, and volatile quarterly project volumes.

**Opportunities:** larger government development pipeline, renewed donor-funded activity, environmental/sustainability consultancy demand, international partnerships, and converting the substantially improved gross margin into operating leverage if revenue recovers.

**Threats:** aggressive low-price competition, economic/political instability, changes in donor priorities or regulation, project delays, working-capital reversals and scarcity of specialist consultants.

### Overall Assessment

The reports show **meaningful financial repair but not yet a fully established earnings turnaround**. Balance-sheet leverage, liquidity, gross margins and CY2025 cash generation improved substantially. Q1 2026 also demonstrated that the company can remain marginally profitable at a lower revenue level because of stronger gross margins.

The critical unresolved issue is operating scale: CY2025 EBIT remained negative and reported PAT relied on deferred tax. The most important indicators to monitor are therefore **revenue/project-win recovery, sustained 40%+ gross margins, administrative-cost discipline, positive operating profit without finance/tax support, receivable conversion and operating cash flow**. A sustained improvement in those measures would provide materially stronger evidence that the current financial repair has converted into a durable operating recovery.