Progressive Entrepreneurship

Transcription

Progressive Entrepreneurship
Softlogic Holdings | Annual Report 2014-15
Our Vision
To be the most preferred and trusted product
and service provider delivering high quality
solutions to the corporate and retail sector
with a view to enhancing shareholder value
and revolutionising industry competencies.
Our Credo
To make sound and responsible
investment decisions in all our businesses
and to employ and retain the best people;
through this, to become the most admired
corporate in Sri Lanka.
Our Core Values
Softlogic’s corporate values are
in our DNA. They guide the way
we think and act.
Through integrity,
accountability, humility,
simplicity, passion and a focus
on success, we have created
a vibrant corporate culture in
which ideas flourish, people
thrive and success is assured.
INTEGRITY
We act with honesty and
uphold ethical standards
always. We genuinely value
individuals for the diversity they
bring, through their different
backgrounds, experiences,
approaches and ideas.
ACCOUNTABILITY
We emphasize accountability in
our behaviors as individuals and
collectively as a corporation.
HUMILITY
We seek the humility to place
the organization and society
before ourselves.
SIMPLICITY
We strive for simplicity by
examining and improving
processes, procedures and
activities, and breaking down
internal barriers.
PASSION
We are passionate about
our businesses and brands,
and jealously safeguard our
reputation.
FOCUS ON SUCCESS
We foster a “can do” attitude
and work tirelessly to reap
great results, simultaneously
seeking profit optimization and
capital growth.
Entrepreneurship is about always being equipped with the right profit-making
decisions involving several business activities impacting the organisation
simultaneously or separately. Such decisions necessarily underpin strong
financial discipline and speed of response to changing market forces. At
Softlogic, we are forward-looking because we have always been forwardthinking, thereby aligning our business decisions with expanding market
realities. In progressive entrepreneurship, we know that our thinking creates
markets, stimulates demand and shapes our destiny when we smartly execute
revenue and profit imperatives. This year we have synergized and consolidated
operations and have focused on reinvesting profits to create more future value
for our shareholders, business partners and all other stakeholders at large.
We think big; therefore, we are!
Scan the QR Code with your smart
device to view this report online.
2
Contents
The Odel Story
A walk through Centara
Ceysand Resort & Spa
> See page 38
> See page 68
About Softlogic
3
Group Structure
4
Financial Highlights
5
Highlights of 2014/15
6
Our Value Creation Model – ‘Make good to GREAT’
8
Chairman’s Review
12
Board of Directors
16
Sector Heads 20
Functional Heads 22
Management Discussion & Analysis
26
5 pg>
Financial
Highlights
13pg>
Chairman’s
Review
70pg>
Corporate
Governance
Business Overview
Retail Sector
32
Financial Statements
Healthcare Services Sector
42
Statement of Directors’ Responsibilities 106
ICT Sector
48
Independent Auditors’ Report
107
Financial Services Sector
54
Income Statement
108
Automobile Sector
60
Statement of Comprehensive Income
109
Leisure Sector
64
Statement of Financial Position
110
Corporate Governance
70
Statement of Changes in Equity
112
Risk Management Review
79
Cash Flow Statement
114
Sustainability Report
85
Notes to the Financial Statements
117
Board Remuneration Committee Report
98
Investor Information
215
100
Corporate Directory
218
Notice of Meeting 219
Audit Committee Report
Annual Report of the Board of
Directors on the Affairs of the Company 101
Form of Proxy
223
Financial Calendar 2015
104
Corporate Information
IBC
Softlogic Holdings PLC
3
About Softlogic
Softlogic Holdings PLC was founded in
1991, and was listed on the Colombo
Stock Exchange in June 2011.
Softlogic is a leading diversified group,
with interests in six distinct business
sectors -- ICT, Retail, Financial Services,
Healthcare Services, Automobiles and
Leisure, in which we employ over 8,000
people across 46 companies. Our aspirations are best expressed
in our corporate dictum, “Best in the
Business.”
We strive for continuing revenue
growth and the necessary cash flow
to allow us invest in continuously
developing our businesses and, as
importantly, paying dividends to our
shareholders. Our focus remains on the
long-term success of our businesses;
our strategy has significantly been to
acquire businesses and help them grow
faster, using the expertise that is ours.
This “progressive entrepreneurship”
has proven time and again to be an
excellent basis for value creation.
As we look forward, we continue to
execute our simple, proven strategy to
deliver more than acceptable returns
to our shareholders. Our current
businesses continue to provide many
opportunities for further growth of
individual businesses, and of the Group
as a whole.
>>Softlogic is a leading
diversified group, with
interests in six distinct
business sectors -ICT, Retail, Financial
Services, Healthcare
Services, Automobiles
and Leisure, in which
we employ over
8,000 people across
46 companies.
Doing it the “Softlogic Way”
Softlogic is a conglomerate operating with a universal set of values we call the “Softlogic Way”; we work with
an array of globally recognised brands and partners to respond to and benefit from the growing Sri Lankan
economy and provide a platform for our own growth.
CUSTOMERS
LEADERSHIP
COMMUNITY
Delighted customers assure our
future; we earn their loyalty by
committing to high standards
of customer care, delivery and
after-sales service.
Everyone at Softlogic is a
potential leader. We encourage
our people to “raise the bar”
higher to assure their success,
and ours.
Softlogic cares about Sri Lanka
and Sri Lankans, and we are
proud of the ways in which
we help them, not least by
our concern for the natural
environment.
SHAREHOLDERS
BUSINESS PARTNERS
TEAM WORK
We are conscious of our
shareholders’ expectations of us;
we know we will be judged by
our delivery of monetary returns
to them and by our standard of
corporate governance.
We believe in an open
relationship with our principals
and partners, and know they will
judge us by how well we deliver
solutions to our customers,
in keeping with their service
standards and reputation.
Softlogic is ultimately judged
by how well its people work
together. We encourage an
open door policy and clear
communication to help people
deliver performance and share
pride in their own achievements
and those of the team.
Annual Report 2014-15
4
Group Structure
Healthcare
Finance
Asiri Hospital
Holdings PLC
Softlogic
Capital PLC
Retail
Softlogic Retail
(Pvt) Ltd.
Asiri Surgical
Hospital PLC
Softlogic
Finance PLC
Dai-Nishi
Securities (Pvt) Ltd.
Central
Hospital Ltd.
Softlogic
Stockbrokers
(Pvt) Ltd.
Odel PLC
Asiri Central
Hospitals Ltd.
Asian Alliance
Insurance PLC
Asiri
Diagnostics
Services (Pvt) Ltd.
Capital Reach
Portfolio Management
(Pvt) Ltd.
Asiri Hospital
Matara (Pvt) Ltd.
Asian Alliance
General
Insurance Ltd.
Odel Lanka
(Pvt) Ltd.
Odel Apparels
(Pvt) Ltd.
BSL International
Lanka (Pvt) Ltd.
Digital Health
(Private) Limited *
Odel Properties
Pvt) Ltd.
Odel Information
Technologies
Services (Pvt) Ltd.
Softlogic
Restaurants (Pvt) Ltd.
Silk Route Foods
(Pvt) Ltd.
* Digital Health (Private) Limited.
was incorporated on 14 August 2015
Softlogic
Retail One (Pvt) Ltd.
Automobile
ICT & Other
Softlogic Properties
(Pvt) Ltd.
Future Automobiles
(Pvt) Ltd.
Softlogic Information
Technologies (Pvt) Ltd.
Softlogic City Hotels
(Pvt) Ltd
Softlogic
Automobiles (Pvt) Ltd.
Softlogic
International
(Pvt) Ltd.
Ceysand Resorts Ltd
Softlogic Brands
(Pvt) Ltd.
Greenfield Trading
(Pvt) Ltd.
Asiri Hospital
Kandy (Pvt) Ltd.
Leisure
Softlogic
Communications
(Pvt) Ltd.
Softlogic Computers
(Pvt) Ltd.
Softlogic Destination
Management (Pvt) Ltd.
Softlogic Real Estate
(Pvt) Ltd.
Softlogic Australia
(Pty) Ltd.
Softlogic Solar
(Pvt) Ltd.
Softlogic
Communication
Services (Pvt) Ltd.
Abacus International
Lanka (Pvt) Ltd.
Nextage (Pvt) Ltd.
Softlogic Corporate
Services (Pvt) Ltd.
Softlogic BPO
Services (Pvt) Ltd.
Softlogic Mobile
Distribution (Pvt) Ltd.
5
Financial Highlights
For the Year ended 31 March
2015
2014
2013
2012
2011
Earnings Highlights
Group Revenue
Gross Profit
Earnings Before Interest Tax, Depreciation & Amortisation
Finance Cost
Group Earnings Before Interest & Taxation
Group Earnings Before Taxation
Group Earnings After Taxation
Total Comprehensive Income Net of Tax
Group Earnings Attributable to Equity holder
Group Comprehensive Income Attributable to Equity holder
Gross Profit Margin
Net Profit Margin
Earnings Per Share
Dividends
Interest Cover
Return on Capital Employed*
(Rs. Mn)
(Rs. Mn)
(Rs. Mn)
(Rs. Mn)
(Rs. Mn)
(Rs. Mn)
(Rs. Mn)
(Rs. Mn)
(Rs. Mn)
(Rs. Mn)
(%)
(%)
(Rs.)
(Rs. Mn)
(X)
(%)
39,563.9
14,116.6
6,400.6
2,692.8
4,961.5
2,268.7
1,819.1
2,160.4
555.8
760.7
36
5
0.7
2.38
11
29,246.4
11,011.6
5,024.9
2,660.0
3,918.0
1,258.0
1,009.1
1,236.6
155.8
220.1
38
3
0.2
120
1.89
12
25,351.3
8,983.3
4,227.3
2,754.6
3,207.5
453.0
153.0
2,077.0
(371.0)
557.0
35
1
(0.5)
234
1.53
11
21,818.8
7,329.8
4,486.2
2,007.4
3,608.0
1,600.5
1,015.9
855.8
448.3
340.0
34
5
0.6
101
2.23
15
10,788.0
2,880.4
2,198.9
857.0
1,903.9
1,047.0
971.0
829.0
27
9
1.3
2.57
17
Balance Sheet Highlights
Total Assets
Current Ratio
Asset Turnover
Total Interest Bearing Borrowings
Shareholders' Funds
Net Asset per Share**
Total Equity
Debt : Equity***
Debt : Total Assets Operating Cashflow
Capital Expenditure
Cash Earnings per Share
(Rs. Mn)
(X)
(x)
(Rs. Mn)
(Rs. Mn)
(Rs.)
(Rs. Mn)
(X)
(X)
(Rs. Mn)
(Rs. Mn)
(Rs.)
87,587
1.0
0.5
43,906
7,625
9.8
15,782
2.8
0.5
426
4,438
0.5
65,863
0.9
0.4
31,518
6,802
8.7
13,351
2.4
0.5
1,775
3,604
2.3
53,836
0.82
0.5
23,037
7,288
9.4
13,568
1.7
0.4
1,777
2,271
2.3
44,688
0.73
0.5
22,782
7,202
9.2
11,312
2.0
0.5
157
1,138
0.2
29,134
0.49
0.4
17,938
3,041
3.9
7,045
2.5
0.6
(1,916)
621
(2.5)
Market close price as at 31 March
Shares in Issue
Market Capitalisation as at 31 March
52 Week Market Share Price High
52 Week Market Share Price Low
Price Earnings Ratio
Price to Book Value
Enterprise Value
Enterprise Value : EBITDA
Dividend Pay Out
Dividend per Share
Dividend Yield
Total Shareholder Return
(Rs.)
(Mn)
(Rs. Mn)
(Rs.)
(Rs.)
(X)
(X)
(Rs. Mn)
(X)
(%)
(Rs.)
(%)
(%)
13.2
779
10,283
20.4
10.3
18.4
1.3
52,263
8.17
25
10.6
779
8,257
8.1
12.5
65.9
1.5
38,014
7.56
77
0.155
1
3
10.4
779
8,102
13.3
9.4
n/a
1.4
29,816
7.05
n/a
0.3
2
(4)
11.2
779
8,725
28.0
11.1
22.9
1.4
30,593
6.82
23
0.13
1
-
640
17,658
8.03
-
110.5
106.0
108.1
9.7
1,005,000
108.8
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
8,433
6,822
6,400
6,085
4,581
Debenture Information
52-week Debenture Share Price High
52-week Debenture Share Price Low
Last Traded Price as at 31 March
Last Traded Yield
No. of Debentures Traded
Value Traded
Group Employment****
*
**
***
****
(Rs.)
(Rs.)
(Rs.)
(%)
(Rs. Mn)
Return on Capital Employed calculated as percentage of EBIT and Total Capital Employed (Equity plus interest bearing borrowings).
Net Asset Value calculated based on weighted number of shares as at 31.03.2015.
Debt to Equity calculated based on Total Equity Capital.
Excluding employees of the associate companies of the Group.
6
Softlogic opened stores -Galleria, Samsung, Charles
& Keith & BURGER KING®
-- at the Arcade Independence
Square
Softlogic Holdings opened the doors of its
first resort, Centara Ceysand Resort & Spa in
Bentota.
Softlogic partnered with
Metropolitan to promote Acer
computers.
Asiri introduced a modern platelet
counter that measures young
platelets in peripheral blood.
Softlogic launched its online retail store –
www.mysoftlogic.lk
With leading Consultants in
Cosmetology and Dermatology
providing services to its
discerning patients, Central
Hospital opened the doors of its
new unit dedicated to cosmetic
procedures, ‘Beauty Central’.
The Bone Marrow Transplant and Clinical
Hematology Unit at Central Hospital carried
out the first allogeneic procedure in Sri Lanka.
Softlogic Finance was recognised as the ‘Most
Innovative Non-Banking Finance Company’
and the ‘Best Customer Service Company For
Finance’ in Sri Lanka for 2014 at the Global
Banking & Finance Review Awards.
Asian Alliance Insurance celebrated 15
years in business.
Asian Alliance Insurance
received a Silver Award in
the ‘Insurance Category’
and a further Silver Award
for Overall Excellence in
the ‘Large Companies
Category’ at the ‘National
Business Excellence
Awards 2014’.
Softlogic Finance received
a Merit Award in the
‘Non-Banking and Financial
Services Category’ at the
same event.
December 2014
Softlogic Information
Technologies launched the
new Latitude 14 Rugged
Extreme notebook and the
Latitude 12 Rugged Extreme
convertible notebooks for
customers who require
powerful solutions that
survive tough environments.
Central Hospital launched a
one-stop heart care centre,
to enable patients access
to nearly all Cardiologists,
Cardiac Surgeons and a
range of highly-advanced,
potentially life-saving
equipment in one place.
November 2014
BURGER KING® Sri Lanka
won the award for Best
New Market in Restaurant
Excellence and the Employee
of the Year at the BK AsiaPac
PTE Ltd 2014 Asia Pacific
Convention.
Softlogic Finance won an Effie Award as
a finalist in the ‘Finance’ category at the
2014 Awards of the Sri Lanka Institute of
Marketing, for their ‘The Bus’ campaign
on the ‘Easy withdrawals’ facility offered
to Fixed Deposit customers.
Softlogic introduced Tommy Hilfiger to Sri
Lanka with the opening of its first store at
Arcade Independence Square.
Splash, the Middle East’s largest high
street fashion retailer, opened its first
exclusive store in Colombo.
July 2014
April 2014
June 2014
Highlights of 2014/15
BURGER KING® opened its outlet
in Kandy.
Softlogic concluded a major
transaction on the Colombo
Stock Exchange with the
acquisition of a significant
shareholding in Odel PLC,
leading later to a 93.39%
ownership of that Company.
opened its General Insurance
Corporate Office at Ward Place,
Colombo 07.
launched innovative solutions
in General Insurance with new
“DRIVE THRU” and “365 DAY
INSURANCE” services, mainly
targeting motor customers.
A BURGER KING® was opened
at Central Hospital.
Softlogic Retail, the authorised
distributor for Panasonic in
Sri Lanka, added a new dimension
in its quality assurance by
acquiring SLS certification for its
Compact Fluorescent Light (CFL)
Bulb.
BURGER KING® introduced the world
famous Chicken Whopper to its menu.
January 2015
Softlogic Retail concluded an
agreement with Whirlpool to market
and distribute Whirlpool products in Sri
Lanka.
BURGER KING® opened at the
Departures Hall of the Bandaranaike
International Airport.
Future Automobiles was awarded the
“FORD GOLDEN SHOVEL AWARD”
by Ford Motor Company in recognition
of leading-edge-facilities to support
long-term customer satisfaction and
owner loyalty.
March 2015
February 2015
Asiri Laboratory Services received the
esteemed 15189-2012 international
accreditation in recognition of its
competence and effectiveness in
modernisation and development of
pathology and laboratory services.
Crocs™ was added to Softlogic Brand’s
portfolio, with Crocs shoes being retailed
at Odel and Mothercare.
October 2014
September 2014
August 2014
7
Asiri Laboratory Services opened two collection
centres in Gampaha and Wattala.
Asian Alliance Insurance launched another
innovative insurance solution, Click2Claim,
allowing motor insurance policyholders to
accelerate claim procedures by providing a
photograph of the damaged vehicle via this
mobile phone app.
The microbiology section of Asiri Laboratory
Services was placed first in the National External
Quality Assessment Scheme in bacteriology.
Softlogic Holdings was ranked second most
valuable conglomerate brand in 2015 based
on independent market research conducted
amongst 1,700 respondents in Colombo and
Gampaha. Asiri Hospital Holdings, Odel, Asian
Alliance Insurance and Softlogic Finance were
other Group companies recognised in this
prestigious annual ranking.
Softlogic Retail opened its 200th showroom in
Mahawilachchiya.
8
Our Value Creation Model –
‘Make good to GREAT’
The catalyst driving many business acquisitions involves synergies. When companies
are merged, the whole is often greater than the sum of its parts.
1991
COMPANY
Softlogic Information Technologies (Pvt) Ltd (Previously known as Softlogic Information
Systems (Pvt) Ltd. after being merged with Softlogic Trading (Pvt) Ltd).
OPERATIONS
Hardware and software solutions provider.
AT ACQUISITION/ INITIATION
NOW
RS. 6 MN
RS. 1 MN
Turnover
Asset base
RS. 2.3 BN
RS. 1.8 BN
Turnover
Asset base
1995
COMPANY
Softlogic Computers (Pvt) Ltd.
OPERATIONS
Specialised in marketing and supporting networking and power protection products
through a locally established dealer channel.
RS. 8 MN
RS. 8 MN
RS. 484 MN
RS. 220 MN
Turnover
Asset base
Turnover
NOW
Asset base
1997
COMPANY
Softlogic International (Pvt) Ltd.
OPERATIONS
Authorised partner of Dialog Axiata PLC providing mobile packages. Retailer of ‘Nokia’,
‘Microsoft Lumia’ and ‘Samsung’ handsets.
RS. 0.4 MN
RS. 1.1 MN
RS. 396 MN
RS. 1.1 BN
Turnover
Asset base
Turnover
NOW
Asset base
1998
COMPANY
Abacus International (Pvt) Ltd
OPERATIONS
An associate set up in partnership with Abacus International Ltd,
Asia Pacific’s largest computer reservations system.
RS. 8 MN
RS. 15 MN
RS. 184 MN
RS. 91 MN
Turnover
Asset base
Turnover
NOW
Asset base
9
2004
COMPANY
Softlogic Properties (Pvt) Ltd
OPERATIONS
Holding company of the leisure sector.
NOW
RS. 227 MN
Centara Ceysand - a 84-room resort in 2010.
Asset Base
Property acquired to construct a five-star city hotel,
Movenpick City Hotel in 2011.
RS. 3.6 BN
Centara Ceysand Resorts & Spa - a 166-room 4-star plus
Resort & Spa.
Asset Base
Movenpick City Hotel has an asset base of Rs.3.2 Bn.
2006
COMPANY
Softlogic Retail (Pvt) Ltd (Previously known as Uni Walkers Ltd)
OPERATIONS
Was agent for Daihatsu and Panasonic. This operation is now carried out through our
Automotive, Consumer Durables and apparel sector.
RS. 150 MN
RS. 658 MN
RS. 9.1 BN
RS. 13.2 BN
Turnover
NOW
Turnover
Asset base
Asset base
2010
COMPANY
Softlogic Capital PLC (Previously known as Capital Reach Holding (Pvt) Ltd.)
OPERATIONS
Sector holding company of the financial services cluster.
RS. 960 MN
RS. 5.4 BN
RS. 10 BN
RS. 32.9 BN
Turnover
Asset base
Turnover
NOW
Asset base
2011
COMPANY
Asiri Hospital Holdings PLC
OPERATIONS
Acquired controlling stake of country’s leading private healthcare provider.
RS. 4.9 BN
RS. 12.4 BN
RS. 8.6 BN
RS. 18.2 BN
Turnover
Asset base
Turnover at initial consolidation
NOW
Asset base
10
We’re in the business
of adding value whatever we do...
11
EXTENSIVE
REACH
Softlogic reaches out to thousands of
customers across the island every day,
through our wide branch network and
strong presence in six sectors.
RETAIL
Restaurants – 07
Branded Apparel – 22
Odel - 20
Consumer Electronics – 208
Furniture – 01
HEALTHCARE
SERVICES
Hospitals – 05
Laboratories – 09
Collection Centres – 12
ICT
Telco, Regional Distributors – 24
Telco, Dealers – <1,500
Telco, Retail points – <40
Mobile Service Centres – 05
Softlogic Computers and Service Center – 01
IT, Regional Technical Support points – 17
FINANCIAL
SERVICES
Softlogic Finance – 23
Softlogic Finance Gold Loan Centres – 09
Asian Alliance Insurance – 63
Asian Alliance General Insurance – 13
Asian Alliance Insurance operating via Softlogic Retail network – 36
AUTOMOBILE
Ford Centre – 01
Ford Service Dealers – 04
Daihatsu – 01
LEISURE
Centara Ceysand Resorts & Spa – 01
While we focus on providing growing value to every stakeholder, we have significantly
expanded our customer service capabilities through a broader presence across the island.
At Softlogic we are confident that we can further strengthen our positions in the markets
we serve, adding value to all stakeholders.
12
Chairman’s
Review
13
Dear Shareholders,
>>The progress we made in 2014,
combined with the presence in six
sectors which will benefit from growth
in the economy, will consolidate
Softlogic’s position in the market.
Progressive Entrepreneurship takes
time to put in place. Patience, hard
work, trust, agility and passion are
important. But above all, creative vision
is essential.
We present this year’s Annual Report with
satisfaction. The theme is ‘Progressive
Entrepreneurship’, and we continue to
pursue the optimal value for our mix of
stakeholders - shareholders, employees,
partners and the communities with whom
we interact. We have achieved solid results
this year and have created the groundwork
for even better results in the future.
A long term view is essential to sustainable
growth. The year brought us investment
opportunities we capitalised on. We
aggressively pursued the acquisition
of Odel while tightening our existing
operations to consolidate activities and to
ensure greater Shareholder Value.
The external environment was challenging
in many sectors, especially in the early part
of the year when interest rates impacted
and floods affected purchasing ability.
Despite these challenges, our strategy
and our engaged workforce enabled us
reinforce our strong positions across our
business sectors. We made progress with
our cost leadership initiatives, consolidating
and streamlining individual sectors while
extending our reach and customer service
capability. The progress we made in
2014, combined with the presence in six
sectors which will benefit from growth in
the economy, will consolidate Softlogic’s
position in the market.
BUSINESS PERFORMANCE
The Sri Lankan economy grew 7.4%
amidst many challenges in 2014.
Consumer and investor confidence
recovered during the year, due to low
inflation and interest rates, and the
exchange rate remaining stable.
Your Group performed strongly during the
year. Notable achievements were:
•
Asset growth: Total assets at endMarch 2015 rose to Rs.87.6 Bn, from
Rs.65.9 Bn last year.
•
Revenue & Profit Growth: We
boosted Group Revenue to nearly
Rs.40.0 Bn (a 35.3% growth). Profit
before tax grew to Rs.2.3 Bn (up
80.3%) and profit after tax increased
to Rs.1.8 Bn (up 80.3%).
•
Strategic Moves: Opening of
Group’s first resort, Centara Ceysand
Resorts & Spa, acquisition of Odel,
commencement of ‘Samsung’
operations and the representation of
new brands (Tommy Hilfiger, Pepe
Jeans, Whirlpool and Crocs™).
•
Investments: Expansion of our
retail business and BURGER KING®
franchise, construction of Softlogic
City Hotel and investment in high-tech
medical facilities at Asiri.
•
Immediate Goal: Improving
performance at Retail and ICT sectors.
Your faith in Softlogic Holdings brought
rewards, with the value of our share rising
25% during the year.
INFORMATION &
COMMUNICATIONS
TECHNOLOGY
Information Technology is dynamic, fastchanging and fiercely competitive. Despite
challenges due to some projects being
withheld for re-evaluation, the industry
forged ahead with purchasing power
improving, corporate interest re-emerging,
public awareness rising and device prices
declining. ‘Dell’ was recognised as the No.
1 PC brand in the country for the seventh
consecutive year in the latest report
from the International Data Corporation,
capturing 38.5% of the PC market during
2Q2014.
Our IT businesses have moved a step
ahead, to focus on advanced end-user
computing, data centre and recovery
solutions, advanced infrastructure
(including intelligent building management
systems) and data security. These areas
are considered key elements in Sri
Lanka’s IT industry in the future. Routine
technological upgrades were deferred
by users due to uncertainty. With the
conclusion of both the Presidential and
General Elections, we expect to see
resurgence this year.
Impressive results in our
telecommunications business was
primarily driven by our recently
commenced ‘Samsung’ operations –
Softlogic Mobile Distribution. Despite
being in business for only four months
of the year, the company contributed
notably to the sector’s achievements.
Synergies helped this success. ‘Nokia’
and ‘Microsoft Lumia’ handset ranges
continued to perform strongly. With
consumer preference favouring authorised
and reliable suppliers, the grey market
14
Chairman’s Review
Considerable synergies have
been realised following the
Odel acquisition. These accrue
from the sharing of retail space,
back-end infrastructure, in-house
management expertise, and a
wider exposure for our brands.
no longer poses a serious threat. We
continued to lead the mobile handset
market in Sri Lanka in 2014.
RETAIL
The Odel acquisition was the year’s
highlight, and we now own 93.39%
of the company. We saw Odel as one
of the strongest local fashion brands
serving a broader spectrum of customers.
The company’s asset base was also
considered, when we decided on this
strategic acquisition. Considerable
synergies have been realised following the
acquisition. These accrue from the sharing
of retail space, back-end infrastructure, inhouse management expertise, and a wider
exposure for our brands.
The geographical expansion of our
Consumer Durables business continued.
Our current 208 showrooms cover retail
space of 263,714 sq. ft, and we expect
to have 250 stores in place by end-March
2016. Expansion is planned taking an
approach emphasising cost consciousness
and synergy.
Revenue
Rs.
39.6Bn
35.3%
Brand acquisitions continued at Softlogic
Brands, as we added ‘Tommy Hilfiger’ in
December 2014, and ‘Crocs™’ and ‘Pepe
Jeans’ in April and June 2015 respectively.
‘Splash’ was relocated in Colombo in
December 2014 to better position itself to
capture its middle income target audience.
We opened three stores at Liberty Plaza
for ‘Pepe Jeans’, ‘Giordano’ and an
international watch station in April 2015.
Our Quick Service Restaurant chain
extended to Kandy, a fast developing part
of the hill region. Another was opened at
Central Hospital. BURGER KING® also
opened at the Colombo International
Airport and at the Arcade, Independence
Square during the financial year.
These initiatives drove performance of the
retail sector strongly during the year.
HEALTHCARE SERVICES
‘Asiri’ is recognised for its world-class
healthcare in Sri Lanka. Each Asiri hospital
is a centre of excellence, offering the
highest standard of medical care by
dedicated medical personnel. We have
continuously invested in state-of-the-art
medical facilities to ensure we continue
to provide the best of modern medical
treatments.
Central Hospital launched the first
ever advanced cosmetology and
dermatology centre, ‘Beauty Central’.
The centre’s procedures include; laser
hair removal, removal of vascular
birthmarks, dermatological procedures,
facial rejuvenation and face-lifts, keloid
scar reductions and a host of aesthetic
treatments not requiring incision, surgery
or general anaesthesia. A state-of-the-art
Cardiac Centre was also opened at Central
Hospital in November 2014.
Asiri Surgical Hospital introduced Digital
Mammography, making Asiri the first
private healthcare provider to offer
advanced three dimensional imaging
detection of breast cancer.
Training and qualifying for the Joint
Commission International Accreditation is
near completion. We expect to obtain this
accreditation next year.
We pursue development of our hospital in
Kandy, based on research that identifies
15
a need for private healthcare outside
Colombo. Kandy is the commercial hub of
the hill country. Asiri, a brand which has
won the trust of people across the country,
will be well accepted there. We intend
to set up a 133-bed hospital expected
to commence operations in 2018.
Construction is to begin in October 2015.
FINANCIAL SERVICES
Our Financial Services sector moved
steadily during the year, with good
performances all round. Asian Alliance
Insurance, which ranks 5th in Life
Insurance, led the way. Overall Gross
Written Premium for both Life and
General insurance reached Rs.4.9 Bn,
an increase by 16.1% over the previous
year. Life business recorded a growth of
20.4%. General Insurance, which enjoys
some synergy with our Healthcare and
Automotive Sectors, saw premiums rise
8.9%.
With changes in the duty structure and tax
concessions for vehicles, vehicle values
declined significantly affecting the Leasing/
HP business of the finance companies.
This made us focus more on lending to
the SME sector, where we see immense
potential. Softlogic Finance, which ranked
10th in the Industry with Total Assets of
Rs.20 Bn, saw Customer Deposits rise to
Rs.12.0 Bn and the Lending Portfolio to
Rs.15.3 Bn during the year.
Softlogic Stockbrokers has a very
experienced investment advisory team
and a strong foreign and institutional client
base. The company performed well and
was ranked third in the industry at the end
of the year.
We raised capital in these businesses
during the year, concluding rights issues
of 10:28 (at Rs.30 per share) and 13:10 (at
Rs.3.40 per share) at Softlogic Finance and
Softlogic Capital respectively.
AUTOMOBILES
POSITIONED FOR PROGRESS
The Automobile sector’s fortunes are
closely linked to changes in the import duty
structure. Notable improvements in sales
were achieved during the year, following
relaunch of our ‘King Long’ bus range.
Sales of these buses are mainly to the
leisure sector. Our Body, Paint and Repair
Centre, which works closely with Asian
Alliance General Insurance, progressed
ahead of expectation, while the 3S Facility
for Ford and Daihatsu showed modest
returns.
Softlogic is well positioned to grow its
business and deliver strong results to its
owners. We have a diversified platform
that gives us wide exposure to Sri Lanka’s
economic growth, which we expect will
receive fresh impetus following Sri Lanka’s
recent elections.
We are repositioning our products
competitively to drive volumes in the
future. We will widen our portfolio with
new FORD models, and will focus on
‘green’ vehicles to benefit from tax
concessions applicable there.
We expect that Softlogic will, after a time
of consolidation, enhance revenues from
every sector in which it is active.
LEISURE
We opened the doors of our first resort,
Centara Ceysand Resorts & Spa, in June
2014. Feedback and reviews have been
positive, and the resort enjoyed full
occupancy during the winter peak season.
This four-star plus resort has become a
preferred destination on the southern
coast. It offers a wide range of amenities
to complement its exquisitely furnished
hotel rooms and suites. Its facilities and
warm hospitality ensure success.
We believe the success story of Centara
Ceysand Resorts & Spa will also extend to
our city hotel. Both hotels are managed by
international operators- Centara Hotels &
Resorts, Thailand and Movenpick Hotels &
Resorts, Switzerland.
The structure of the Movenpick City
Hotel was completed in September 2014.
We are now at an advanced stage of
installations and interior fit-out works. We
expect to open this five-star hotel late in
2016.
An extraordinary team with an unrelenting
commitment to excellence provides
the expertise and maturity to guide our
decisions and actions.
APPRECIATION
We are fortunate to have an excellent
executive team and pool of human
resources. I thank all of them for
committing their talent and effort to
building our success.
I also record my personal appreciation to all
our Directors, who have been unstinting in
their support during the year.
We thank our investors for their confidence
in us. When I report to you on Softlogic’s
progress next year, I am sure I will be
reporting on a robust organisation ever
more focused on delivering value to you.
We look forward to continuing our journey
together.
Ashok Pathirage
Chairman
31 July 2015
16
Board of
Directors
17
Left to right
Harris Premaratne - Non-Executive Director, Ashok Pathirage - Chairman/ Managing Director,
Roshan Rassool - Executive Director, Richard Ebell - Non-Executive Independent Director,
Ranjan Perera - Executive Director, Dr. Sivakumar Selliah - Non-Executive Independent Director,
Prashantha Lal De Alwis - Non-Executive Independent Director, Haresh Kaimal - Executive Director,
Hemantha Gunawardena - Executive Director
18
Board of Directors
‘With their knowledge and experience gained in
diverse businesses as Directors and Senior Managers,
the Board of Directors has the capability needed
to build on successes of the past and establish
Softlogic as a pre-eminent Sri Lankan conglomerate.’
Ashok Pathirage
Chairman/ Managing Director
With a visionary outlook, Mr. Pathirage
provides strategic leadership to a
conglomerate whose turnover is nearly
Rs.40 Bn. He was appointed Chairman
of Softlogic in 2003. Six other entities
under his Chairmanship are listed on
the Colombo Stock Exchange. He is
the Chairman/Managing Director of the
country’s leading private healthcare
provider, Asiri Group of Hospitals. He is
also Chairman of Softlogic Capital PLC,
Softlogic Finance PLC, Asian Alliance
Insurance PLC, Asian Alliance General
Insurance Ltd. and Odel PLC whilst
also being Chairman of other Group
companies that operate in Leisure,
Retail, Automobile and ICT businesses.
He also serves as Deputy Chairman of
National Development Bank PLC and is
Chairman of NDB Capital Holdings PLC.
joining Softlogic. He is presently
Director/CEO of the Software Division
of Softlogic Information Technologies
(Pvt) Ltd and Director Softlogic BPO
Services (Pvt) Ltd.
Haresh Kaimal
Executive Director
Mr. Haresh Kaimal is a co-founder
of Softlogic and a Director since its
inception. With over 25 years of
experience in IT and operations, he
currently heads the IT division of
the Group to drive advancements in
Information Technology and Enterprise
Resource Management within
Softlogic. He is also a Director of Odel
PLC and Softlogic BPO Services (Pvt)
Ltd.
Ranjan Perera
Executive Director
Hemantha Gunawardena
Executive Director
Mr. Gunawardena is one of the cofounders of the Softlogic Group and has
served as a Director from its inception.
He has extensive experience in the
field of IT, both front- and back-end,
and counts over 25 years in this field.
He was a Senior Software Manager at
a leading Sri Lankan Blue Chip before
Mr. Ranjan Perera is one of the cofounders of Softlogic. He is Sector Head
– Mobile Business and the Managing
Director of Softlogic International
(Pvt) Ltd. He possesses extensive
knowledge from his many years
of experience in senior managerial
positions handling world renowned
brands in mobile telecommunication.
Roshan Rassool
Executive Director
Mr. Roshan Rassool joined Softlogic
in 1995 and was appointed to the
Board in 2009. He is Director/CEO of
the Computing Systems & Systems
Integration Solutions Division of
Softlogic Information Technologies
(Pvt) Ltd., which has business
partnerships with Dell Corporation,
Apple Computers, Lenovo, CISCO,
EMC storage systems, Microsoft, HP
imaging products and VMware. He was
appointed a member of Dell South Asia
Partner Advisory Council in 2011. He
served as Chairman of Infotel Lanka
in 2006/2007 and was President of Sri
Lanka Computer Vendors Association at
the same time. He was also Chairman
of the Federation of Information
Technology Industries, Sri Lanka in
2007.
He holds an MBA from the University
of East London. He is also an Associate
Member of the Association of Business
Executives and a Member of the
Cyprus Institute of Marketing. He has
over 25 years of experience behind him
in the ICT industry having worked at
senior managerial positions in reputed
companies.
19
Dr. Sivakumar Selliah
Non-Executive Independent Director
Dr. Selliah holds an MBBS degree and
a Masters Degree (M.Phil). He joined
the Board of Softlogic in 2010. He has
over two decades of experience in
varied fields. He is Deputy Chairman
of Asiri Hospitals Holdings PLC, Asiri
Surgical Hospital PLC and Central
Hospital Ltd. He is a Director of Odel
PLC, HNB Assurance PLC, Lanka
Walltiles PLC, Lanka Tiles PLC, Horana
Plantations PLC, ACL Cables PLC and
Lanka Ceramics PLC. He is also the
Chairman of Cleanco Lanka (Pvt) Ltd
and JAT Holdings (Pvt) Ltd. Dr. Selliah
serves on the Remuneration and Audit
Committees of some of the companies
on whose Board he serves.
Prashantha Lal De Alwis, PC
Mr. Prasantha Lal De Alwis joined the
Softlogic Board as a Non-Executive
Director in 2011. He obtained his
LL.B (Bachelor of Law) and LL.M
(Masters in Law) from the University
of Colombo and Sri Lanka Law College
respectively and was enrolled as an
Attorney-at-Law in 1983. He started
his career as a State Counsel at the
Attorney General’s Department of
Sri Lanka in 1983 and served in that
capacity until 1990. He subsequently
joined the private bar and since then
has practised in both Appellate and
Trial courts, specialised in Criminal
and Family Law. He was appointed a
President’s Counsel in 2012. He is a
visiting Lecturer at the Faculty of Law,
University of Colombo, and a member
of the Board of Management of the
Centre for Studies of Human Rights,
University of Colombo. Mr. De Alwis
was a Director of Sampath Bank PLC
from 2002 to 2011 and Chairman of
its Human Resources, Remuneration
and Risk Management Committees.
He presently serves as a Director of
Siyapatha Finance PLC, Orit Apparel
Ltd. and Coral Sands Hotel Ltd. He is
an Associate Member of the Chartered
Institute of Marketing (CIM) UK and
is presently Honorary Legal Advisor
of CIM Sri Lanka and the Ayurveda
Doctors (Gampaha Wickremarachchi)
Association of Sri Lanka. He was a
founder member of the Consumer
Affairs Authority of Sri Lanka in 2002.
He was appointed as Honorary Consul
for Seychelles in Sri Lanka by the
President of the Republic of Seychelles
in October 2013.
Harris Premaratne
Non-Executive Director
Mr. Harris Premaratne joined the
Softlogic Board in February 2014. He
has extensive banking experience,
having held several top positions and
gained many accolades in the banking
industry. He is an Associate of the
Chartered Institute of Bankers, London.
Mr. Premaratne is a Past President of
the Sri Lanka Banks’ Association. He is
currently on the Boards of Asiri Hospital
Holdings PLC, Asiri Surgical Hospital
PLC, Softlogic Capital PLC, Asiri Central
Hospitals Ltd. and Central Hospital
Ltd. and is Chairman of Remuneration
Committee and member of the Audit
Committee of all those hospitals. He
was appointed Executive Director and
Deputy Chairman of Softlogic Finance
PLC on 21 January 2015.
Richard Ebell
Mr. Richard Ebell was appointed to
the Board of Softlogic in March 2014.
He is a Fellow of the Institute of
Chartered Accountants of Sri Lanka
(CA Sri Lanka) and the Chartered
Institute of Management Accountants
(CIMA), UK. He also holds a Diploma in
Marketing from the Chartered Institute
of Marketing (CIM), UK. Mr Ebell
has experience of almost 40 years in
finance and commercial activity after
qualifying as a Chartered Accountant.
He is a Past President of CIMA, Sri
Lanka Division, and a member of CA
Sri Lanka’s Quality Assurance Board.
He participated in establishing an Audit
Committee Forum in June 2014, and
remains involved with that initiative.
Mr. Ebell also serves on the Boards of
Finlays Colombo PLC and Cargills Bank
Ltd.
Note : Desamanya Deva Rodrigo
served as a Non-Executive Independent
Director of Softlogic Holdings PLC until
his resignation from the Board on 30
June 2014.
20
Sector Heads
Iftikar Ahamed - Financial Services
Dr. Manjula Karunaratne - Healthcare Services
Nasser Majeed - Retail
Dr. Stephan Anthonisz - Leisure
21
The entrepreneurial
spirit of our team
‘It is our endeavour to remain focused on opportunities to reach
operational excellence. We balance this freedom with a strong sense
of cost-discipline in mind being fully aware of those market forces
which require fast response to change. Our guidelines and processes,
facilitate innovation and promote unrivalled customer service which is
documented and well understood across the Group’
Iftikar Ahamed
Sector Head – Financial Services
Iftikar Ahamed heads the Financial
Services sector of the Group. He is
Managing Director of Softlogic Capital
PLC, the holding Company of the
Financial Service sector, and is also
Managing Director of Asian Alliance
Insurance PLC and an Executive
Director of Softlogic Finance PLC
and Softlogic Stockbrokers (Pvt) Ltd.
Mr. Ahamed counts over 30 years of
experience in a wide range of roles
within the financial services industry
and has extensive banking experience
both in Sri Lanka and overseas. He
has held senior management positions
as Deputy Chief Executive Officer at
Nations Trust Bank PLC and Senior
Associate Director at Deutsche Bank
AG. He holds an MBA from the
University of Wales, UK.
Dr. Manjula Karunaratne
MBBS, M.Sc (Trinity, Dublin), Dip. MS
Med (UK) MSOrth Med. (Eng)
Sector Head – Healthcare Services
Dr. Karunaratne was appointed to
the Board of Asiri Hospital Holdings
PLC and Asiri Surgical Hospital PLC in
2006, and is currently Chief Executive
Officer of the Asiri Hospitals Group. He
also serves on the Boards of Central
Hospital Ltd, Asiri Central Hospital
Ltd., Asiri Hospital Matara (Pvt) Ltd.,
Asiri Diagnostic Services (Pvt) Ltd.
and Asiri Hospital Kandy (Pvt) Ltd. He
previously held the positions of Medical
Director, Asiri Hospital Holdings PLC
and was Group Chief Operating Officer,
Asiri Hospitals Group. Dr. Karunaratne
is a Specialist in Sports/ Orthopedic
Medicine. He possesses over 25 years
of professional medical experience
both in Sri Lanka and overseas, and
is responsible for the overall medical
policy of the Group.
Nasser Majeed
Sector Head – Retail
Mr. Nasser Majeed assumed duties as
CEO, Retail Sector in 2013. He counts
over 25 years of multi- disciplined
business experience, starting his career
at KPMG Ford Rhodes Thornton &
Company in 1981 and moving to Singer
Industries (Ceylon) Ltd. in 1984. He
served the Singer group in many areas
including Cost Accounting, Product
Management, Exports, Marketing and
General Management. His experience
includes a stint as Director / General
Manager of PT Singer Indonesia Tbk.,
from 2005 to 2006 and thereafter
as Marketing Director of Singer Sri
Lanka PLC from 2007 to 2013. Nasser
also served on the Boards of Regnis
Appliances Ltd., and Singer Sri Lanka
PLC as an Alternate Director.
Dr. Stephan Anthonisz
Sector Head – Leisure
Dr. Anthonisz joined Softlogic in 2012
as CEO/ Director of Softlogic Properties
(Pvt) Ltd. He is responsible for our two
leisure projects of which one, Centara
Ceysand Resorts & Spa, is now in
operation. Stephan has held managerial
positions covering diverse roles in
Sri Lanka and overseas with leading
conglomerates. He previously held the
position of Head of Value Added Tea
Exports at Unilever Ceylon Ltd., before
taking on the role of CEO, Property
Development with Asian Hotel &
Properties PLC. He holds an MBA and
a Doctorate in Business Administration
from the Australian Institute of
Business Administration, Adelaide.
22
Functional Heads
Desiree Karunaratne - Group Director Marketing
Linton Nelson – Director, Logistics
Vindya Solangarachchi - Head of IT
Ruwanthi Fernando - Head of Business Consultancy and
Resource Planning
Damith Vitharanage - Group Head of Risk and Internal Audit
Erandi Wickramaarchchi - Group Chief Financial Officer
23
Natasha Fonseka - Group Head of
Human Capital & Taxation
Meneka Galgamuwa - Head of
Corporate Planning
Hiran Perera - Head of Treasury and Corporate Finance
Chinthaka Ranasinghe - Head of Strategy and
Business Development
24
Functional Heads
Chinthaka Ranasinghe
Desiree Karunaratne
Hiran Perera
Head of Strategy and Business
Development
Group Director - Marketing
Head of Treasury and Corporate
Finance
Joining Softlogic in 2014, Mr. Chinthaka
Ranasinghe heads the Group Strategy
and Business Development division. He
has over 18 years of senior managerial
experience in equity research and
investment banking in one of Sri
Lanka’s leading conglomerates.
He is a Management Graduate from
the University of Colombo (BBA) and
a Passed Finalist of the Chartered
– UK.
She joined Softlogic in 2003 and is
Group Director Marketing.
She holds an MBA from the University
of Wales. She has over 15 years of
senior management experience across
a diverse range of businesses in retail,
fashion, information technology, travel
and media. She serves on the Boards
of Softlogic Restaurants (Pvt) Ltd.,
Softlogic Destinations Management
(Pvt) Ltd., Silk Route Foods (Pvt) Ltd
and Nextage (Pvt) Ltd.
Erandi Wickramaarchchi
Damith Vitharanage
Group Chief Financial Officer
Group Head of Risk and Internal Audit
She joined Softlogic in 2004 and serves
as Group Chief Financial Officer. She
holds a Special Degree in Accountancy
and Financial Management from the
University of Sri Jayawardenepura. She
is a Fellow of the Institute of Chartered
Accountants of Sri Lanka and an
Associate of the Institute of Certified
Management Accountants, Sri Lanka.
She holds an MBA in Finance from the
Cardiff Metropolitan University. She
is also an Associate of the Institute
of Certified Public Accountants (CPA),
Australia. She serves on the Boards
of Softlogic Capital PLC, Softlogic
Communications (Pvt) Ltd., Softlogic
Corporate Services (Pvt) Ltd., Softlogic
BPO Services (Pvt) Ltd. and Ceysand
Resorts & Spa Ltd.
He joined Softlogic in 2013 and has
over 15 years of senior managerial
experience in Audit, Investigation,
Financial Management, Financial
Analysis, Administration, Human
Resource Management, Information
Security, Risk Management and
General Management in both the state
and private sectors in Sri Lanka and
the Middle East. He is a Management
Graduate from the University of
Colombo (BBA), holds a Post- graduate
diploma in HR and possesses a
Management MBA specialised in
Transformational Leadership.
He has Associate Memberships from
the Institute of Chartered Accountants
of Sri Lanka, the Chartered Institute
of Management Accountants (CIMA),
UK, and the Chartered Institute of
Marketing (CIM), UK, and is a Certified
Information System Auditor (CISA) USA
and Certified Project Manager (PMP)
USA.
He joined Softlogic in 2013 as the Head
of Corporate Finance and Treasury.
Prior to this appointment, he was
Head of Wholesale Risk, Sri Lanka and
Maldives, at HSBC. He counts 28 years
of experience in banking, including
three years of cross-border exposure.
Linton Nelson
Director - Logistics
He joined Softlogic in 2013 as Director
- Logistics and is responsible for
Group Shipping & Logistics (including
Odel’s distribution centre) and Group
Security. He counts over 37 years
of experience in the Department of
Customs of Sri Lanka, with 15 years of
senior managerial experience as Head
of Intelligence and Director Sea Cargo
Clearance. He is in the final stages of a
Bachelor’s Degree in Law at the Open
University of Sri Lanka and holds a
Higher National Certificate in Business
Studies. He has had special training in
the UK, USA, Japan, Australia and China
to strengthen his expertise in logistics.
Meneka Galgamuwa
Head of Corporate Planning
She joined Softlogic in 2011 and serves
as Head of Group Corporate Planning.
She is an Associate of the Chartered
(CIMA), UK, and an Associate of
the Chartered Institute of Marketing
(CIM), UK, and holds an MBA from
the University of Sri Jayawardenapura.
She has over 15 years of senior
management experience in diverse
industries in Sri Lanka and the UK.
25
Natasha Fonseka
Group Head of Human Capital &
Taxation
She joined the Group in 2010 and is
currently Group Head, Human Capital
& Taxation. She is an Associate of the
Chartered Institute of Management
Accountants (CIMA), UK and a
Chartered Global Management
Accountant (CGMA), USA. She counts
over 20 years of experience in senior
managerial positions in taxation,
financial advisory services, finance
and human resources in reputed
professional firms and in the private
sector.
Ruwanthi Fernando
Head of Business Consultancy and
Resource Planning
Ruwanthi joined Softlogic in 2014. She
brings on board more than 17 years
of experience as a senior manager in
various MNCs based in Sri Lanka and
the USA. Her career in finance and in
ICT spans across corporate banking,
venture capital, equity research,
technology advisory and business
process outsourcing (BPO)/ offshoring.
She holds an MBA from the University
of New Haven, Connecticut, USA and
completed a Programme on Investment
Appraisal, Project Finance and Risk
Analysis, Harvard International Institute
of Development (HIID), Harvard
University, USA. She is also a finalist of
the Chartered Institute of Management
Accountants (CIMA), UK.
Vindya Solangaarachchi
Head of IT
He joined Softlogic in 2013 as Head
of IT. He holds a Master of Science
Degree in Technology Management
(from Staffordshire University), a
Bachelor’s Degree in Information (from
Charles Stuart University), a Higher
National Diploma (from Edexcel) and
a Diploma in Computer Studies (from
NCC, UK) and is a Member of the
British Computer Society. He counts
over 15 years of senior management
experience in ICT, retail and insurance.
26
>>We believe that with policy stability, a fast moving
economy would ensure the multiplier effect of growth
which then will naturally accompany the principle
of intrinsic value creation inherent in our diversified
business model; this will propel the Group to a new
unparalleled height.
Management Discussion
& Analysis
LOCAL ECONOMY
Economic Indicators
GDP (Market Prices) GDP per Capita
GDP Growth
Unemployment Rate
GDP Deflator
Export
Imports
Workers' Remittances
Current Account Balance
Tourist Arrivals
Overall Balance
Total External Debt
Annual Average Exchange Rate
Budget Deficit Government Debt Interest Rate (91-Day T-Bill), Inflation Rate (Annual Avg CCPI Change)
Year End All Share Price Index
Diversified Sector Index
S&P SL20 Index
Population Doing Business Ranking
USD Bn
USD
%
%
USD Mn
USD Mn
USD Mn
% of GDP
'000
USD Mn
USD Mn
Rs/ USD
% of GDP
% of GDP
% p.a
%
'000
2014
2013
2012
2011
2010
2009
74.9
3,625
7.4
4.3
5.1
11,130
19,417
7,017.8
(2.7)
1,527
1,369.0
43.0
130.6
6.0
75.5
5.7
3.3
7,298.95
2,105.5
4,089.1
20,675
99
67.2
3,280
7.2
4.4
6.7
10,394
18,003
6,407.0
(3.8)
1,275
985.0
39.9
129.1
5.9
78.3
7.5
6.9
5,912.8
1,759.5
3,263.9
20,483
85
59.4
2,922
6.3
4.0
8.9
9,774
19,190
5,985
(6.7)
1,006
151
37.1
127.6
6.5
79.2
10.0
7.6
5,643.0
1,822.0
3,069.0
20,328
83
59.2
2,836
8.2
4.2
7.9
10,559
20,269
5,145
(7.8)
856
(1,061)
42.2
110.6
6.9
78.5
8.7
6.7
6,074.4
1,909.1
n/a
20,869
102
49.6
2,400
8.0
4.9
7.3
8,626
13,451
4,116
(2.2)
654
921
43.3
113.1
8.0
81.9
7.2
6.2
6,635.9
2,2421
n/a
20,653
105
42.1
2,057
3.5
5.8
5.9
7,085
10,207
3,330
(0.5)
448
2,725
44.4
114.9
9.9
86.2
7.7
3.5
3,385.6
1,132.8
n/a
20,450
97
BB- Stable
B+ Stable
B1 Positive
BB- Stable
B+ Stable
B1 Positive
BB- Stable
B+ Stable
B1 Positive
BB- Stable
B+ Positive
B1 Positive
B+ Positive
B+ Stable
B1 Stable
B+Negative
B Negative
-
Sovereign Ratings:
Fitch
Standard & Poor's
Moody's
27
‘Slower Growth in Emerging
Markets, a Gradual Pickup in
Advanced Economies’
– World Economic Outlook, July 2015 Update
Sri Lanka’s economy grew 7.4% in
2014, up marginally from 7.2% a year
earlier yet lower than the projection
of 7.8%. Accordingly, per capita
GDP increased to USD3,625 in 2014
from USD3,280 in the previous year.
Inflation was contained at single-digit
levels for the sixth consecutive year,
with reductions in fuel, gas, electricity
and water prices late in the year.
Unemployment declined marginally,
to 4.3% in 2014 from 4.4% last year.
The year witnessed a political transition
with the Presidential Election in January
2015, bringing some uncertainty on
economic policy.
Growth was led by domestic
consumption expenditure, while
investments added to the economic
expansion during the year. The Services
sector, which accounted for 57.6%
of GDP, grew 6.5% for 2014 led by
wholesale and retail trade, transport
and communication, banking, insurance
and real estate. The Industrial sector
recorded growth of 11.4% in 2014,
increasing its share to 32.3% of GDP
(31.1% in 2013), with the Construction
sub-sector being the top contributor.
Agriculture suffered due to adverse
weather patterns, and grew marginally
in 2014. Lower interest rates drove
private consumption, whilst domestic
savings grew slightly to 21.1% of the
GDP (20.0% of the GDP in 2013).
Sri Lanka’s external sector reflected
an overall BOP balance. The current
account deficit narrowed to 2.7% of
GDP (3.8% in 2013) with help from
workers’ remittances. The trade deficit
declined to 11.1% of the GDP in
2014 (from 11.3% last year). Regular
policy intervention maintained foreign
exchange rates during the year.
OUTLOOK
GLOBAL ECONOMY
• Emerging Markets – Negative
Growth for the last four years has
not encouraged expectations of midterm growth. However, a rebound is
expected in 2016.
The global economy grew 3.4% in
2014. Advanced economies recovered,
while growth in emerging market and
developing economies slowed.
Global
A global slowdown was witnessed
during 1Q2015, mostly from North
America. However, easy financial
conditions, more helpful fiscal policies
in the Euro region, lower oil prices and
improving confidence and labour market
conditions countered stalling growth.
Projections
2015E 2016E
2013
2014
3.4%
1.4%
5.0%
3.3%
3.4%
1.8%
4.6%
3.2%
3.3%
2.1%
4.2%
4.1%
3.8%
2.1%
4.7%
4.4%
-0.9%
-1.2%
-7.5% -38.8%
-4.0% -15.6%
9.1%
-1.7%
1.4%
5.9%
1.4%
5.1%
0.0%
5.5%
1.2%
4.8%
0.40%
0.2%
0.2%
0.3%
0.2%
0.2%
0.40%
0%
0.10%
1.20%
0%
0.10%
Global
World Output (Annual Growth %)
Advance Economies (Annual Growth %)
Emerging Market and Developing Economies (Annual Growth %)
World Trade Volume - Goods & Services (Annual Growth %)
Commodity Prices
Oil
Non-Fuel (average based on world commodity export weights)
Consumer Prices
Advance Economies (Annual Growth %)
Emerging Market and Developing Economies (Annual Growth %)
London Interbank Offered Rate (%)
On USD (six month)
On Euro (three month)
On JPY (six month)
Source : World Economic Outlook – July 2015 Update
28
‘Going forward, the Sri Lankan
economy is projected to reach
upper middle income levels
and sustain the favourable high
growth and low inflation nexus in
the medium term, supported by
appropriate economic policies.’
• Advanced Economies –Temporary
setbacks in North America will
drag down growth of the advanced
economies. Ageing population and
declining investments are some
weaknesses. Wage growth and
relaxed financial conditions, lower oil
prices and stronger housing markets,
are strengths. The economic
recovery in the Euro region resulted
in a robust recovery in domestic
demand there and reflects a strong
economic comeback. Japan recorded
a more-than-expected growth in the
first quarter of 2015 supported by a
pickup in capital investment.
Revenue
(Rs. Mn)
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2012
2015E
2016E
2017E
2018E
GDP (Market Prices - Rs. Bn)
11,080
12,447
14,044
15,853
Annual Average Inflation (%)
3%
4%
4%
4%
4,009
4,469
4,997
5,624
-1%
-1.4%
-1%
-1%
Overall Budget Deficit (% of GDP)
-4.4%
-4.2%
-4.0%
-3.8%
Growth in credit to private sector (%)
15.5%
15%
15%
15%
Per Capita GDP (USD)
Current Account Balance (% of GDP)
Source : Central Bank of Sri Lanka
- Central Bank of Sri Lanka
2011
Projections
Local
2013
2014
2015
• Oil – Oil prices recovered in 2Q2015
reflecting higher demand. Global oil
supply is running well above 2014
levels and inventories are still rising.
The reduction in oil investments
may, however, lead to weaker
activity in North America than
expected earlier.
human resources. Monetary policy
will assist in maintaining inflation at
single-digit levels and fiscal policy will
reduce budget deficits and improve the
Government’s debt profile.
CONSOLIDATED FINANCIAL
REVIEW
Local
Reporting Compliance
Growth in 2015 will be determined by
political stability and the priorities of the
Government. Modest growth will be
reported in 2015, with the slowdown
of public sector construction. Political
uncertainty could impede private
investments, but consumption will
increase with the price reductions
on food and fuel. State consumption
will increase recurrent expenditure.
Export industries will benefit from
the economic climate in advanced
economies. Performance of the
agricultural sector is dependent on
the weather, although increases
in government-guaranteed prices
for several agricultural products
are likely to induce increases in
production. Economic growth is likely
to gain pace beyond 2015 following
implementation of new policies by
the Government. Productivity levels
will increase with the adoption of
technology and development of
The financial performance and position
for the year are based on Sri Lanka
Accounting Standards. The statements
are in line with the requirements of
the Colombo Stock Exchange and the
Companies Act No.07 of 2007.
Revenue
Consolidated revenue for the year
ending 31 March 2015 approached
Rs.40.0 Bn, an increase of 35.3%.
Retail contributed most, making up
31.2% of the Group’s top line, followed
by ICT with 23.5%, Healthcare and
Financial Services with 21.7% and
20.1% respectively.
The boost in the Retail segment
followed the consolidation of Odel’s
results for five months of the year.
Expansions in Consumer Durables,
apparel and restaurants added to
the growth. ICT sector performance
reflected the success of our recently
29
commissioned ‘Samsung’ operations,
while ‘Microsoft Lumia’ handsets and
‘Dell’ computers also contributed.
Healthcare Services maintained steady
growth, with continuous investment
in state-of-the-art facilities during the
year, including Cardiac Centre, Beauty
Central, Bi-planer Catheterisation
Lab, Digital Mammography and
Bone Marrow transplant facilities.
Financial Services reflected healthy
performances of Asian Alliance
Insurance, Asian Alliance General
Insurance, Softlogic Finance and
Softlogic Stockbrokers.
Results from Operating Activities
Gross Profit grew 28.2% to Rs.14.1
Bn for the year, despite slight erosions
in margins as a result of product and
channel mix in the Retail and Healthcare
sectors.
Other operating income reflected a
significant Rs.1.2 Bn for the year (up
133.8%). The increase was led by the
gain on disposal of investments by
EBITDA
(Rs. Mn)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Asian Alliance Insurance, and fees on
new loans at Softlogic Finance.
Operational costs, at Rs 11.0 Bn,
accounted for 27.9% of turnover,
against 27.0% last year. Administrative
expenses made up 81.7% of these
costs, growing 41.4% to Rs.9.0 Bn for
the year, while distribution expenses
grew 33.4%, to Rs.2.0 Bn.
Our operating model has proved
effective throughout. Softlogic has a
history of acquisitions and business
formations which are analysed by
our Strategy team, with strategies
emphasising synergy implemented
post-acquisition.
Operating Profit for the year was Rs.4.3
Bn, reflecting a strong increase of
17.3%.
Of the six sectors, the highest
contribution to consolidated operating
profit came from Healthcare Services,
a contribution of 42.6% for the year,
followed by Financial Services which
contributed 24.0%. Compared to
the previous year, the wholly owned
sectors, Retail and ICT improved their
contributions significantly, to 20.7%
and 16.6% respectively. We expect the
improvement to continue as synergies
and cost discipline, and the growth
impetus at retail strengthens. The
performance of the Automotive sector
faced challenges, but measures have
been taken to turn the business around.
The Leisure sector sees positive
indications from its newly opened
resort Centara Ceysand, and Movenpick
City Hotel nearing completion.
Net Finance Expenses
Net debt, comprising short- and
long-term interest bearing borrowings
(overdrafts included) less cash and
cash equivalents, increased 34.2% to
Rs.36.6 Bn as at 31 March 2015, from
Rs.27.3 Bn a year before. The increase
was primarily driven by the Odel
acquisition (cost Rs.5.6 Bn), while other
investments, expansions and working
capital needs absorbed the balance.
Stabilisation of interest rates at a lower
level supported our growth strategy.
Finance expenses for the year rose only
by 1.2%, to Rs.2.7 Bn. Finance income
declined 3.0% to Rs.1.1 Bn. A marginal
decline in mark-to-market gains on
Asian Alliance Insurance’s investment
portfolio contributed to the reduction.
The life insurer’s fixed income also
declined, with fluctuations of interest
rates in the treasury/ bond market.
Profit Before Tax
(Rs. Mn)
2,500
2,000
1,500
1,000
500
0
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
30
Profit after Taxation
Profit After Tax
(Rs. Mn)
Consolidated Profit after taxation
for the year reached Rs.1.8 Bn, an
improvement of 80.3%. Consequently,
net profit margins improved to 4.6% for
the year from 3.4% last year. Earnings
per share for the year increased to
Rs.0.7 from Rs.0.2 last year.
2,000
1,500
Total Assets
(Rs. Mn)
100,000
80,000
60,000
The result was boosted by a Rs.513.4
Mn fair value gain on the property of
Asiri Central Hospitals, which has since
been realised on its sale.
1,000
500
40,000
20,000
Non-Controlling Interest
0
2011
2012
2013
2014
2015
Taxation
Tax expenses increased 80.5% to
Rs.449.6 Mn, compared with Rs.249.2
Mn last year. The effective tax rate
remained at 19.8%.
Non-Controlling Interest share of profit
increased 48.1% to Rs.1.3 Bn, due to
increased earnings in the Healthcare
and Financial Services sectors.
It is noteworthy though, that this
share of profit reduced to 69.4%, from
84.6% last year, we expect the trend to
continue as performances of our fully
owned sectors - Retail, ICT and Leisure
- improve.
0
2011
2012
2013
2014
Comprehensive Income Statement
Revaluations of the property of Central
Hospital (Rs.369.6 Mn). Currency
translations of Softlogic Australia’s
operation resulted in a gain of Rs.48.5
Mn. Total comprehensive income
amounted to Rs.2.2 Bn for the year,
against Rs.1.2 Bn last year.
Five -year Cash allocation
Y/E 31 March
Purchase and construction of property, plant and equipment
Addition to prepaid lease rentals
(Purchase) / disposal of short term investments (Net)
Addition to intangible assets
(Increase) / decrease in other non current assets
2011
2012
2013
2014
2015
(244.55)
(1,064.26)
(2,258.47)
(3,459.16)
(4,023.08)
-
(65.00)
-
-
(702.52)
(181.2)
524.3
263.1
469.1
3,007.2
(0.22)
(155.03)
(8.38)
(305.01)
(71.18)
(165.89)
0.15
(69.65)
(63.14)
(114.59)
Dividends Received
-
90.47
145.01
146.29
141.86
(Purchase) / disposal of other non current financial assets
-
(1,144.54)
(1,603.70)
(1,989.24)
(858.86)
Proceeds from disposal of controlling interest
Increase in interest in subsidiaries
Increase in interest in associate
Acquisition of business, net of cash acquired
Proceeds from sale of property, plant and equipment Net outflow of investing activities
2015
-
-
28.90
-
347.86
(12.96)
-
-
-
-
(807.72)
-
(1.25)
-
-
(3,272.82)
(4,240.02)
(183.98)
-
(5,817.19)
65.31
58.69
129.30
91.40
124.17
(4,720.1)
(5,995.3)
(3,559.1)
(5,109.8)
(7,966.3)
31
Cashflow
Cash and cash equivalents increased
by Rs.3.9 Bn to Rs.5.6 Bn at 31 March
2015. Net cash flow from operating
activities decreased by Rs.1.4 Bn to
Rs.425.9 Mn. The most significant
contributor in this respect was the
increase in loans and advances granted.
Net cash outflow on investing activities
increased by Rs.2.9 Bn to Rs.8.0 Bn
during the year. Major contributors
were the increased investment in
Property, Plant and Equipment, and the
acquisition of Odel. Net cash flow from
financing activities increased by Rs.6.1
Bn to Rs.11.5 Bn due to increased long
and short term borrowings.
PROGRESSIVE OUTLOOK
Interest and exchange rates stabilised
during the year, which also saw
continuing low inflation. Our six sectors
generally performed to expectations,
with the Retail cluster emerging
stronger following Odel’s acquisition.
With the conclusion of the Presidential
and General Elections, political stability
has been achieved. However, we are
waiting for policy reforms of the new
regime. Interest and exchange rates
stabilised during last financial year
coupled with low inflation. Other macro
elements too supported our business
story. Our six sectors performed
within our expectations with the Retail
cluster emerging stronger following
the acquisition of Odel. Given our
debt funded acquisition, we may
consider replacing debt with equity
should a change in the macroeconomic
environment takes shape prompting
a prudent rebalancing of the portfolio.
We believe that with policy stability, a
fast moving economy would ensure the
multiplier effect of growth which then
will naturally accompany the principle
of intrinsic value creation inherent in
our diversified business model; this will
propel the Group to a new unparalleled
height.
32
Retail Sector
Apparel business offers
authentic brands. Consumer
durables offer quality, value for
money and easy reach.
We have developed a distinctive retail strategy in the consumer
durables space, and in the premium clothing and accessories segment.
Our apparel business offers authentic brands, while our consumer
durables offer quality, value for money and easy reach.
Our Furniture stores are the definitive provider of contemporary furniture
and home accessories including bedding, cutlery and home décor.
Our entry into fast foods has been a success, with BURGER KING®
becoming one of the top choices of consumers. Our Quick Service
Restaurant (QSR) operation extended its reach during the year, while
33
Revenues
reached Rs.12 Bn,
up 64%,
for the year
Store Expansion
also expanding its menu. Restaurants
were opened in Kandy and at the
Colombo Airport, Central Hospital
and Arcade at Independence Square.
BURGER KING® was recognised as Sri
Lanka’s Best New Market in Restaurant
Excellence at the 2014 Asia Pacific
Convention.
We added ‘Whirlpool’ to our range
during the year, and also now
retail ‘Samsung’ products from our
telecommunication subsidiary.
A restructuring took place after the
Odel acquisition so we could capitalise
on synergies. Odel is now the holding
company of our fashion and apparel
businesses with Softlogic Retail being
the parent of all businesses covering
consumer durables, furniture and
apparels.
Brand Authenticity
Increasing Footfall
SOFTLOGIC HOLDINGS PLC
SOFTLOGIC RETAIL (PVT) LTD.
Retailer of Consumer Durables and Furniture
DAI-NISHI SECURITIES
(PVT) LTD.
Non-operating subsidiary
ODEL PLC
Chain of retail
departmental stores
SOFTLOGIC RESTAURANTS (PVT) LTD.
Quick Service Restaurant chain
operating BURGER KING® restaurants’
SILK ROUTE FOODS (PVT) LTD.
Restaurant at the
Colombo Airport
SOFTLOGIC BRANDS (PVT) LTD.
Branded apparel stores.
OTHER ODEL SUBSIDIARIES
Manufacturing products
for Odel and supporting
services -- premises, logistics,
warehousing, IT and other
business services
34
Retail Sector
Consumer Electronics
Branded Apparel
International Watches
Departmental Stores
Restaurants
Online Store
Furniture
Authentic Brands / Products
Off Seasonal Promotions
Service
Promotional updates
voicemails and SMS
Value for Money
Online Store
Value
Reach
35
FY15
FY14
% YoY
FY13
Revenue (Rs. Mn)
12,334.3
7,538.7
63.6%
5,647.1
EBITDA (Rs. Mn)
1,112.5
693.7
60.4%
750.7
EBT (Rs. Mn)
340.7
192.1
77.4%
364.5
PAT (Rs. Mn)
271.2
153.5
76.7%
282.6
No. of Employees
1,863
805
Total Assets (Rs. Mn)
22,368.8
9,034.6
147.6%
6,511.4
Total Equity (Rs. Mn)
6,904.4
1,746.2
295.4%
1,088.5
Total Debt (Rs. Mn)
10,560.3
3,620.9
191.6%
3,359.4
Capital Employed (Rs. Mn)
17,464.7
5,367.1
225.4%
4,447.9
Profitability
746
Today’s shoppers, Sri Lankans as well
as tourists, are more conscious in their
buying decisions, seeking value for their
money and therefore the best deals
available. They are also shifting their
channel of purchase from physical visits
to virtual stores.
Financial Position
INDUSTRY REVIEW
Sri Lanka has a significant-sized
population of some 21 Mn.
Increases in Sri Lanka’s retail spend are
closely correlated with growth in GDP.
Private Consumption Expenditure (PCE)
on clothing and footwear grew 15.4%
in 2014, rising to 5.7% of PCE. A per
capita GDP of USD5,624 is projected in
2018, up from USD3,625 in 2014. This
portends a significantly higher retail
spend in the future.
Increasing and changing consumer
needs have catalysed the development
of retailing in the country. There are a
small number of organised players in
the sector. These established players
continue to pursue market penetration
strategies, focusing on hitherto
untapped regions of the country.
COMPANY REVIEWS
Softlogic Retail (Pvt) Ltd.
Demand for consumer durables and
aspirational goods showed clear growth
during the year. This was seen in rural
areas as well as in metropolitan areas.
The Consumer Durables market was
stable, with favourable exchange rates
and interest rates helping. Relaxed
credit fueled consumer growth, as
did increased cash in the hands of
consumers. We used a number of
sales strategies to hold our own against
competitors. Competitive pricing,
interest-free hire purchase facilities,
tie- ups with banks for interest-free
36
Retail Sector
instalment schemes, and an effective
sales team ensured growth during the
year. Softlogic’s distribution network is
a key strength which we are resolutely
building on to achieve territorial
expansion.
A stronger contribution is expected
from the furniture segment in the
future, as we have recently begun
representing ‘Natuzzi Italia’ - a large
furniture house with a strong global
reach, having 7 manufacturing plants
and more than 1,200 points of sale
worldwide.
Softlogic Brands (Pvt) Ltd.
We are Sri Lanka’s only fashion
retailer, holding exclusive rights for
leading international brands which are
trend setting and enjoy widespread
brand loyalty and quality acceptance.
We added a number of franchise
partnerships during the year – ‘Tommy
Hilfiger’, ‘Crocs™’ and ‘Pepe Jeans’
were introduced most recently. This
has assisted us in driving the market
Market Penetration Strategy
Fold 01
Metropolitan and Urban Reach
Upscale ‘Softlogic Max’ stores, with
industry-best visual merchandising and
sales practices. These stores have an
average retail space of 4,500 sq.ft.
There are 12 ‘Softlogic Max’ stores in prime
city locations.
Fold 02
Rural Reach
Softlogic and mini showrooms, easily and
quickly set up, target rural markets. These
have retail space ranging between 800-1,500
sq.ft. We also encourage the sales concept
of ‘travelling bags’ taking our products to
doorsteps across the island. We have 194
Softlogic and mini showrooms islandwide.
Number of Consumer Electronics showrooms
(includes 02 ‘Samsung’ flagship stores)
Total Retail Space (Sq. ft)
263,714
Targeted showroom count by 31 March 2016
Targeted Retail Space by 31 March 2016 (Sq. ft)
and establishing Softlogic Brands as
a leading fashion retailer in Sri Lanka.
The Odel acquisition confirmed our
commitment to the local fashion market.
208
250
303,714
Softlogic Restaurants (Pvt) Ltd.
This company holds the master
franchise for BURGER KING® in Sri
Lanka. BURGER KING ® is the world’s
second largest hamburger chain serving
over 11 Mn guests per day across 91
nations. We opened seven restaurants
– in Kollupitiya, Rajagiriya, Mount
37
Lavinia, and Kandy, and at the Arcade
Independence Square, the Central
Hospital, and the Colombo Airport -within a year of operation.
Number of Branded Apparel Stores
17
Total Retail Space of Branded Apparel Stores (Sq.ft)
38,358
Number of Odel Stores
Odel Retail Space (Sq.ft)
20
108,118
PROGRESSIVE PERFORMANCE
The Retail sector recorded a revenue
growth of 63.6% during the year to
Rs.12.3 Bn, five months of Odel’s
revenue being consolidated in
Group turnover. The year began with
unfavourable weather conditions
impacting the purchasing power of
customers. The situation reversed with
a good harvest, and Government actions
putting more money in consumers’
hands. Favourable interest and exchange
rates helped.
Mn for the year, contributing 15.0% to
the Group. The sector completed the
year with a bottom line of Rs.271.2 Mn,
reporting a strong increase of 76.7%.
The Sector’s operating profits grew
47.8% to Rs.878.3 Mn in FY2014/15.
An increase of 20.0% in finance costs
was primarily due to the acquisition of
Odel and increases in working capital
consequent to expanding activity. Profit
before tax increased 77.4%, to Rs.340.7
Tourists have been a target audience for
us. The average tourist stay in Sri Lanka
in 2014 was 10 days, and the average
spend USD161 per day. It is estimated
that 55% of this spending is on food
and lodging, while the balance is on
shopping. Given the country’s ambitious
tourist arrivals target of 2.5 Mn for 2018,
we believe this market will contribute
strongly to the retail industry in future
years.
PROGRESSIVE OUTLOOK
The retail industry is set for a steady
run in the next years, with a growing
consumer preference for authentic
brands and a shift towards organised
trade taking shape.
Domestic purchases have by no means
slowed down. Sri Lanka’s growing
middle-class population and changing
spending patterns favouring branded
products and the organised retail sector
is expected to help keep retail demand
upbeat in the upcoming years. Colombo,
as the commercial capital of the country,
has enormous retail potential and is
expected to witness significant retail
development.
Softlogic Retail will continue with its
expansion strategy, while Softlogic
Brands has successfully signed
exclusive distributorship agreements
with many other international brands.
‘Peter England’, ‘Van Heusen’, ‘Louis
Philippe’, ‘Only’, ‘Jack & Jones’, ‘Vero
Moda’, ‘Puma’ and ‘Allen Solly’ are
new apparel brands with Softlogic. We
will also introduce Luxottica’s eyewear
portfolio inclusive of ‘Prada’, ‘Alain Mikli’,
‘Armani Exchange’, ‘Arnette’, ‘Burberry’,
‘Bvlgari’, ‘Chanel’, ‘Coach’, Dolce &
Gabbana’, ‘Emporio Armani’, ‘Giorgio
Armani’, ‘Michael Kors’, ‘Miu Miu’,
‘Oakley’, ‘Polo Ralph Lauren’, ‘Tiffany &
Co.’, ‘Tory Burch’, ‘Versace’ and ‘Vogue
Eyewear’.These brands will be retailed
in exclusive showrooms as well as in our
departmental stores – Odel and Galleria.
Our QSR chain will continue to expand
its presence in prime city locations.
THE ODEL MALL
Studies reveal that Sri Lanka’s per
capita mall stock versus its per capita
income of the country is relatively low
within the region. Colombo has about
8 limited space malls with around 10
in the pipeline. Considering the Sri
Lankan preference for organised retail
space, the paucity of outlets in existing
malls and the relatively few malls in
the pipeline, the idea of an Odel mall
concept came to life. Odel’s mall in the
prime Colombo location it occupies, will
add to retail dynamism in the country.
This 400,000 sq.ft mall will be in
operations by 2018.
38
Household name in
Sri Lanka’s retail market,
attracting c.3,500 footfalls
on weekdays and over
5,000 on weekends
THE STORY OF THE ACQUISITION OF ODEL
Odel is one of the largest retailers of apparel and
fashion lines in Sri Lanka, with its brand ideals of
satisfying “Mind, Body & Soul”. The company
focuses on creating fashion trends and delivering
value to its shoppers by offering compelling
selections of local and imported apparel, fashion
accessories and footwear, and a home store. Odel
is the country’s strongest local fashion brand and
serves a broad spectrum of customers.
Softlogic was offered the 44.5% of the shareholding
of the promoters of Odel, in September 2014.
The cost of accepting the offer, at a price of Rs.22.0
per share was approximately Rs.2.7 Bn. As required
by the Company Takeover’s and Mergers Code
1995 as amended in 2003, a joint offer was then
made by Softlogic Holdings and Softlogic Retail to
the other shareholders. Parkson Retail Asia Limited,
who held 47.46% of the share capital accepted the
offer. Taking note of other acceptances also, a total
of Rs.5.6 Bn, shared between Softlogic Holdings
and Softlogic Retail, was ultimately invested in
acquiring a 93.39% stake in the company.
Odel has achieved a high
level of visibility in Colombo
and other urban areas, as
shown below
•
Colombo 07
•
Battaramulla
•
Majestic City
•
Kiribathgoda
•
Katunayake Airport
•
Kandy
•
Ja-Ela
•
Wattala
•
Kohuwela
•
Dutch Hospital
•
Crescat
•
Queens
•
Nugegoda
•
Negambo
•
Mount Lavinia
•
Galle
•
Panadura
•
Moratuwa
Rationale for the acquisition
Odel is a household name in the Sri Lankan
apparel market, attracting approximately
3,500 footfalls on weekdays and over 5,000
on weekends. Softlogic Holdings through its
subsidiary, Softlogic Brands, possesses the
largest international branded apparel and fashion
accessory portfolio in Sri Lanka. These lines
complement Odel’s range of products excellently
40
The story of the acquisition of Odel PLC
when they are combined, giving the
shopper a unique experience.
The addition of Odel to our business
portfolio has already created significant
synergies through:
• Odel’s footfalls becoming available
to Softlogic‘s branded apparel and
accessories when those are sold by
Odel.
• Sharing of back-end infrastructure
and optimal use of available retail
store space.
Softlogic Brands has over 35,000 sq.
ft. of prime retail space in Colombo,
in which 19 brands are retailed. The
combination of this with Odel’s makes
us a very powerful player.
Odel owns a large land area in
Ward Place, Colombo 07, whose
underutilised area is planned to be
converted to a high-end mall, in which
rental space is priced at a premium. It
also holds land in Battaramulla, which is
planned to be disposed of.
overhead rationalisation and retail
space/ revenue optimisation.
Wider brand choice under one roof
FUTURE – OUR PATHWAY TO
FURTHER SYNERGIES
Ownership Changes
A change of ownership was in effect
with Odel becoming the holding
company of the apparel and fashion
businesses of Softlogic. The transfer of
Softlogic Brands from Softlogic Retail
was based on an independent valuation
of Softlogic Brands. The stake in Odel
held by Softlogic Holdings has been
transferred to Softlogic Retail, making
Softlogic Retail the parent of Odel.
Synergetic effects have been evident in
Odel’s post acquisition (2HFY2014/15)
period with the operational cost base
improving significantly. We expect that
these changes will further help realise
the synergies of shared expertise,
Odel has been a favourite shopping
centre for Sri Lankans, expatriates and
foreign visitors. This retailer has been
the one to attract customers from both
middle and high income categories
selling a good mix of exclusive as well
affordable quality range of various
related-products. Building on these
strengths, we have gradually housed
some of our own international apparel
section at Odel. Odel was already
selling Nike and Levis products, and
our international watch range, before
the acquisition. All our apparel brands
other than Charles & Keith and French
Connection have now been placed at
Odel.
We also plan to offer other leading
local brands at Odel. Our aspiration
41
is to make Softlogic/Odel, the choice
shopping destination for people across
all strata of society.
The Odel Mall
Shopping malls are popular in Sri Lanka
with the greater sophistication and
international awareness of customers
and the convenience malls offer. We
will be constructing a premier shopping
mall using German designers at Odel’s
flagship store at Kannangara Mawatha,
Colombo 07. The present Odel store
would continue its operations with the
mall being planned at the under-utilised
land base. Top German designers and
architects have already developed the
blue print of this mall. This mall will
feature an extensive retail space to
house some of the best known brands
both locally and abroad to better cater
to local and international tourists and
retail customers.
42
Healthcare
Services Sector
Core focus is on upgrading
technology and assembling
the best team of medical
professionals we can, to
contribute to the highest quality
standards possible.
‘Asiri’ has established and is consolidating its presence as one of the
foremost private healthcare provider in Sri Lanka. The hospitals have
continuously invested to keep up with global trends. Asiri’s consultants
and the medical expertise it offers are its core strengths.
43
Revenue
increased 11%
to Rs.9 Bn during
the year
Leading healthcare
provider in Sri Lanka
State-of-the-art
medical facilities
Well-trained Medical
Professionals
INDUSTRY REVIEW
The private healthcare sector in Sri
Lanka is growing rapidly. The largescale private healthcare providers
have invested in technological
advancements, research and
innovation. The State’s healthcare
services are under-resourced and lack
advanced medical treatment facilities.
In 2014, 221 registered private hospitals
with 5,776 beds operated. This
included 10 Ayurvedic hospitals with 90
beds. Accessibility to leading medical
consultants and advanced technologies
without a wait, and the increasing
popularity of health insurance, have
supported the growth of private
healthcare. Private healthcare players
are now not limiting their presence to
the big cities alone, but are moving into
rural regions.
ASIRI HOSPITAL HOLDINGS PLC
108-bed hospital at Kirula Road, Colombo 5.
ASIRI SURGICAL
HOSPITAL PLC
147-bed hospital at
Kirimandala Mawatha,
Colombo 5.
CENTRALHOSPITAL LTD.
228-bed hospital at Norris
Canal Road, Colombo 10.
DIGITAL HEALTH (PVT)
LTD.
A joint Venture with
Dialog Axiata PLC
ASIRI CENTRAL HOSIPTAL
LTD.
Not operational
ASIRI DIAGNOSTICS
SERVICES (PVT) LTD.
A joint venture to oversee
laboratory services in the
Central Province
ASIRI HOSPITAL MATARA
(PVT) LTD.
62-bed hospital in Matara.
ASIRI HOSPITAL KANDY
(PVT) LTD.
Hospital under
construction in Kandy.
44
As healthcare costs increase
elsewhere, more people are now
looking to Medical Tourism. With
potential savings between 25%
and 75% of what it might cost
them otherwise, patients seek Sri
Lanka’s private healthcare service for
high quality and timely treatments.
Sri Lanka’s healthcare sector has
undergone enormous transition in
terms of technology and expertise in
recent years and the country stands
on the threshold of becoming a global
health destination. With this in mind,
private healthcare providers are actively
working on international accreditations.
The need for professional medical staff
is felt by the industry as a whole. Asiri
has taken a step forward by providing
rigorous 3-year training for its nursing
staff, ensuring to generate a steady
stream of qualified and trained staff
to deliver service in keeping with our
philosophy of excellent patient care.
Excellence in nursing care remains a
hallmark of the ‘Asiri’ brand.
The rise of Non-Communicable
Diseases particularly from the
country’s rapidly ageing population has
made private healthcare procedures
conscious of the need to address
this area. Greater awareness of
“wellness” and the need for preventive
health screening and prompt medical
assistance when needed, generated
greater demand across all our hospitals.
Stiff competition has, however, led
to the erosion of margins of private
healthcare providers, as they compete
on price to maintain patient volume.
This has emphasised the need for
FY15
FY14
% YoY
FY13
Revenue (Rs. Mn)
8,592.0
7,745.8
10.9%
6,927.4
EBITDA (Rs. Mn)
2,480.4
2,557.3
-3.0%
2,389.5
EBT (Rs. Mn)
1,780.2
1,475.1
20.7%
1,165.2
PAT (Rs. Mn)
1,616.7
1,322.2
22.3%
3,802
3,596
30,015.8
27,497.6
9.2%
24,505.0
17,349.7
15,885.9
9.2%
15,020.8
Total Debt (Rs. Mn)
8,400.2
8,963.1
-6.3%
6,431.3
25,749.9
24,849.0
3.6%
21,452.1
Profitability
No. of Employees
996.5
3,635
Financial Position
continued investment in better
technology even further.
COMPANY REVIEWS
This 108-bed hospital which started as
a laboratory service provider is now a
specialist in Pediatrics and Maternity,
whilst catering to other branches
of medicine. Asiri Hospital Holdings
operates one of the country’s most
technologically advanced laboratory
facilities, accounting for 13,000 daily lab
tests and some 65% of the market. It is
the market leader through its innovation
and its network of over 400 collection
centres (Including third party collection
points).
To strengthen its dominant position in
laboratory services, a state-of-the-art
laboratory building is to be built adjacent
to the hospital. A facelift is also in
progress. The completion of this Rs.200
Mn project in 2016 will give the hospital
a modern façade, and a building to
house the very profitable pathology and
phlebotomy units.
Asiri Surgical Hospital PLC
With a capacity of 147 beds, this
hospital offers specialised surgical
care and an advanced heart centre,
modern operating theatres and an
urology operating theatre. The specialty
of this hospital has been recognised
worldwide; research papers at several
medical conferences in the past came
from this hospital. Its heart centre
includes a dedicated coronary care unit
with 49 beds, and a surgical ICU with
advanced monitoring systems. The
hospital introduced Sri Lanka’s first
Digital Mammography facility during
the year, making Asiri the first private
healthcare provider to offer advanced
three dimensional breast imaging for
the earliest detection of breast cancer.
The new technology, Tomosynthesis,
is the gold standard in breast cancer
screening and detection. The hospital
also introduced a bariatric surgery
programme for weight management
during the year.
More than fifty Sri Lankans travel
overseas annually for liver transplant
surgery, at great inconvenience and
cost to themselves. Mindful of this, the
45
Group is setting up a dedicated liver
transplant unit at Asiri Surgical Hospital,
which will be operational by end-2015.
Central Hospital Ltd.
This 228-bed hospital is a one-stop,
technologically advanced medical centre
offering diagnostic, therapeutic and
intensive care facilities. Started in 2010,
this hospital has gained recognition as
one of the best in Neuro Sciences in Sri
Lanka. The hospital has 12 ultra-modern
operating theatres for neurosurgery,
maternity, orthopedics, ophthalmology
and genitourinary surgery, and a
sophisticated haemo-dialysis unit. The
hospital has 310 qualified nurses, 182
skilled paramedical staff and more than
300 Consultants treating in- and outpatients.
Central Hospital has continuously
invested in technology. It conducted the
first ever Bone Marrow Transplant in
June 2014. Patients with hematological
disorders such as Thalassemia can now
be treated locally by Asiri at much lower
cost than overseas. This unit handles
Allogenic Transplants treating blood and
bone marrow related disorders, a boon
for children with Thalassemia especially,
for whom a Bone Marrow Transplant
will in most cases be a lifetime cure.
During the year, the Interventional
Cath-Lab was established here, the first
Bi-planer Catheterisation Laboratory in
Sri Lanka. It is the first in Sri Lanka to
offer Interventional Radiology, where
minimally invasive techniques are
used to diagnose and treat various
pathologies. The high standard of
accuracy in imaging by Bi-planer
DSA unit offers the most promising
outcomes for stroke patients to date,
due to speedy detection of the precise
point of blockage. Bi-planer Digital
Imaging also enables perfect delivery
of chemotherapy to the location
where it is needed in treating cancers,
minimising collateral damage and
potentially adverse side effects.
An advanced Cardiac Centre, with
a Cardio-Catheterization Laboratory
focusing on diagnosis, prevention,
treatment and surgery for heart
diseases was opened in November
2014 with six successful surgeries
being undertaken in its first month.
Asiri also invested in a ‘Beauty
Central’ at Central Hospital, opened in
September 2014. This unit is equipped
with the latest medical technology
and the best specialist team for
treatments including Abdominoplasty,
Nasal Surgery, Breast Augmentation
& Reduction, Liposuction, Acne
46
Treatment, Eyelid Surgery and all
Oculoplastic Surgery.
and surgical care facilities. It was Asiri’s
first venture outside Colombo.
The hospital is also now installing
the world’s most advanced neuronavigational and intra-operational
monitoring system for its patients.
Asiri Diagnostic Services (Pvt) Ltd.
Asiri Central Hospital Ltd.
This hospital ceased operations in
2010 with operations being transferred
to Central Hospital. The land and
building of the hospital at Horton Place,
Colombo 7, was leased to the Army
Hospital until June 2014. The asset was
recognised as held for sale in its books
when an agreement to sell was signed
in respect of the property. The sale was
completed in July 2015.
Asiri Hospital Matara (Pvt) Ltd.
This is a 62-bed facility in the Southern
Province, offering a range of general
This is the Group’s laboratory services
in the Central Province, carried out with
a joint venture partner.
Asiri Kandy (Pvt) Ltd.
Our focus is not limited to Colombo.
A 133-bed facility will commence
operation in Kandy in 2018.
Construction of the hospital is to begin
in October 2015.
Digital Health (Pvt) Ltd.
This is a joint venture formed in
August 2015 in partnership with Digital
Holdings Lanka (Pvt) Ltd., a subsidiary
of Dialog Axiata PLC, and Asiri Hospital
Holdings to develop a state-of-the-art
electronic commerce infrastructure for
Sri Lanka’s healthcare sector.
The sector continued to perform well,
and registered growth of 10.9% (to
Rs.8.6 Bn) in revenue, contributing
21.7% to the Group’s top-line. Central
Hospital was the largest contributor to
Group earnings, supported by its strong
market position in the diagnostics
segment. Operating profit declined
marginally to Rs.1.8 Bn, still 42.6%
to the Group’s operating profit. The
sector had finance income of Rs.91.3
Mn, up 85.1% during the year, helped
by the receipt of an advance on the
sale of Asiri Central Hospital’s property.
Finance cost increased 14.8% to
Rs.635.3 Mn, while a fair value gain
of Rs 513.4 Mn was registered on
the Asiri Central Hospital property.
Profit before taxation increased 20.7%
to Rs.1.8 Bn, contributing 78.5% to
Group profit before tax. Profit after
taxation improved 22.3% to Rs.1.6
Bn contributing 88.9% to the Group’s
bottom line.
47
PROGRESSIVE OUTLOOK
Ambitious plans reflect the sector’s
long term view and its consequent
investment strategy. Our core focus
is on upgrading technology and
assembling the best team of medical
professionals we can, to contribute to
the highest quality standards possible.
The Group is working towards Joint
Commission International Accreditation
(JCIA) for Asiri Surgical and Central
Hospital in 2016. It has already garnered
a substantial share of Maldivian
medical tourists visiting Sri Lanka. We
expect to welcome medical tourists
from other countries going forward,
and are supported in our aspiration by
the investments being made and the
development efforts underway.
48
ICT Sector
Emphasis on 4G adoption,
migration from feature to
smart phones and active
usage of ICT in economic
activities would drive
demand
Our ICT product lines include, but are not limited to, mobile handsets &
accessories, computers, software and hardware solutions.
INDUSTRY REVIEW
IT is one of the largest components of the worldwide spend on
technological products and related services. Global spending on IT in
2014 was some USD3.7 trillion, a 1.9% increase from 2013.
49
Revenue
of Rs.9 Bn,
improvement
of 55%
Strong Distribution
Network
Leading Brands
Technical
Expertise
SOFTLOGIC INFORMATION
TECHNOLOGIES (PVT) LTD.
Software and hardware solutions provider
SOFTLOGIC COMMUNICATIONS (PVT) LTD.
Handles ‘Nokia’ and ‘Microsoft Lumia business
SOFTLOGIC COMPUTERS (PVT) LTD.
Tailor-made IT solutions provider
SOFTLOGIC COMMUNICATION SERVICES (PVT) LTD.
Service arm of Softlogic Communications (Pvt) Ltd
SOFTLOGIC BPO SERVICES (PVT) LTD.
ICT service provider to the Group as well as third
parties
SOFTLOGIC INTERNATIONAL (PVT) LTD.
Authorised dealer for Dialog Axiata PLC and retailer
for ‘Samsung and Nokia / Microsoft Lumia operations
SOFTLOGIC AUSTRALIA (PTY) LTD.
Software solutions provider in Australia
SOFTLOGIC MOBILE DISTRIBUTION (PVT) LTD.
Handles the ‘Samsung’ operations
50
ICT Sector
With Government acting to improve
IT literacy in the country, Sri Lanka’s IT
market has experienced double-digit
growth over the last several years. IT
has become essential to households
and corporates, and non-availability
of a proper IT infrastructure makes
businesses dysfunctional and less
competitive. The B2B IT business
has therefore experienced significant
growth for several years.
The recent past has seen major
improvements in the country’s internet
services. Internet penetration in 2014
grew 67.3%, raising internet availability
to 16.4 per 100 persons. This was
driven by mobile internet connections,
which grew by 85.8%.
Sri Lanka is ranked 16th in the Global
Services Location Index, which
assesses off-shoring destinations
for services such as IT support. The
industry targets USD5 Bn in export
revenue from the IT-BPO sector by
2022, and we believe our IT businesses
will benefit from the trickle-down
effects.
The telecommunication industry in
Sri Lanka has evolved significantly.
There was exponential growth in smart
phones especially, driven by aspirations
and short product life-cycles. According
to the International Data Corporation,
the mobile phone market in Sri Lanka
reached 1 Mn in the last quarter of
2014, smart phones accounting for
approximately 22% of this volume. The
data excludes “grey” imports coming
into the country through irregular
channels.
FY15
FY14
% YoY
FY13
Profitability
Revenue (Rs. Mn)
9,252.0
5,982.3
54.7%
6,283.8
EBITDA (Rs. Mn)
766.2
543.2
41.1%
719.0
EBT (Rs. Mn)
408.1
29.8
1270.5%
183.0
PAT (Rs. Mn)
270.6
19.4
1296.0%
168.3
887
805
7,596.3
5,838.8
30.1%
1,400.2
1,266.5
10.6%
678.5
Total Debt (Rs. Mn)
3,217.5
2,764.4
16.4%
3,145.3
4,617.7
4,030.9
14.6%
3,823.8
No. of Employees
727
Financial Position
COMPANY REVIEWS
Softlogic Communications (Pvt) Ltd.
Nokia, now a part of Microsoft, is a
world leader in telecommunications,
driving the growth and sustainability of
the broader mobile industry. Softlogic
Communications is the national
exclusive distributor for its handsets in
Sri Lanka since 2000. Our distribution
network remains a core strength, with
over 2,000 retail points island-wide.
This network includes seven retail
showrooms in Colombo and seven in
other parts of the country.
Following the acquisition of the Nokia
Devices and Services business by
Microsoft, the smart phone range
was rebranded-‘Microsoft Lumia’
in November 2014. The company’s
smart phone range, ‘Microsoft Lumia’,
continued to perform strongly, while
demand for ‘Nokia’ feature handsets
stands undisturbed. Microsoft / Nokia
stands third in the smart phone market,
with close to a 9% market share.
5,553.3
Softlogic Communication Services
(Pvt) Ltd.
This is the authorised service partner
of Softlogic Communications. The
company has six Care Centres, in
Colombo, Kandy, Kurunegala, Galle,
Anuradhapura and Ratnapura, delivering
convenient and comprehensive
after-sales service. This company’s
performance is closely correlated with
that of Softogic Communications.
Softlogic Mobile Distribution (Pvt)
Ltd.
Our newest telco company holds
distributor rights for one of the
world’s best-known handset brands—
SAMSUNG—in Sri Lanka. The
company operates through 13 regional
distributors. With an approximately
30% share, Samsung leads the market
in smart phones. Samsung remains
one of the most favoured smart phone
brands in the country.
This company has been very
successful, and is expected to be a
driver of the ICT sector’s future growth.
51
Softlogic International (Pvt) Ltd.
Softlogic International, which operates
27 franchise service centres, is the
Authorised Business Partner for Dialog
Axiata, offering corporate and individual
GSM packages, DTV, CDMA & HSPA
connections and provides customer
service. This fits well in Softlogic’s
repertoire.
Softlogic International also retails
‘Nokia/ Microsoft Lumia’ and ‘Samsung’
handsets, operating a phone gallery in
Colombo.
Softlogic Information Technologies
(Pvt) Ltd.
The company is the leading importer
of personal computers in Sri Lanka. It
also markets and distributes notebook
computers, servers, storage, network
infrastructure and printers. It strives to
provide the world’s best products and
services to its customers, consolidating
its market leadership.
This B2B business has very competent
IT consultants and engineers in its
Enterprise Solutions team. We also
provide outsourced IT services to
a wide clientele. Our Engineering
Services team provides engineering and
consulting services to a host of clients,
and includes experts in all the relevant
areas.
highest quality ICT services to the
Group, via a fully integrated software
platform. In doing this, the company
seeks to help all Group businesses
leverage the potential of IT to achieve
long-term competitive advantage.
Additionally, Softlogic BPO Services
provides ICT consultancy and bespoke
MIS solutions to third party clients in Sri
Lanka and overseas.
Softlogic Australia (Pty) Ltd.
Softlogic Computers (Pvt) Ltd.
This company provides a wide range
of tailor-made solutions, and occupies
a profitable niche serving the retail,
hospitality, banking, and financial
services markets.
Softlogic BPO Services (Pvt) Ltd.
Established in 2013, Softlogic BPO
Services is creating a Centralised
ICT Services Unit aimed at giving the
This is Softlogic’s overseas subsidiary,
a leading software solutions provider
catering primarily to the needs of
healthcare and age-care clients in
Australia, and serving over 50 clients in
these areas. Its flagship Chefmax food
services suite is implemented in many
reputed state and private hospitals
and is well known amongst healthcare
professionals.
52
ICT Sector
PROGRESSIVE OUTLOOK
ICT sector revenue grew 54.6% to
Rs.9.3 Bn, increasing its contribution
from 20.5% to 23.5% of the Group’s
top-line. The growth was driven
by its new ‘Samsung’ business at
Softlogic Mobile Distribution, while the
performance of ‘Nokia’ and ‘Microsoft
Lumia’ continued to be good. The B2B
IT business performed in line with
expectations.
Active usage of ICT services in
economic activities such as e-banking,
mobile banking, e-bus ticketing,
and mobile points of sale (POS) has
increased in recent years. Reduction
in unemployment levels, stabilisation
of exchange and interest rates and
increasing per capita income augur
well for the sector. The inclination
towards technology, an emphasis
on 4G adoption and an increasing
migration from feature phones to
smart phones will drive volumes in the
next few years. Considering the low
PC penetration and low device prices,
the hardware market will grow while
software will be driven by enterprisebased software.
Operating profit reached Rs.705.3
Mn, up 39.6%, and contributed
16.6% to Group operating profit.
Finance cost, primarily from working
capital borrowings, declined 37.3%
to Rs.302.1 Mn on the back of low
interest rates during the year.
Profit before taxation was Rs.408.1 Mn
(Rs.29.8 Mn last year), and the sector
closed the year on a strong note with
profit after taxation of Rs.270.6 Mn
(Rs.19.4 Mn last year).
We expect our ICT companies to be a
prime beneficiary of this growth.
53
54
Financial
Services Sector
Financial Services cluster has
achieved many milestones in
the short time since Softlogic
became involved in these
businesses in 2010.
Softlogic’s investment strategy has focused on the sectors that are
most likely to benefit from Sri Lanka’s growth. We anticipate that per
capita GDP will soon reach upper middle income levels, due to the
sustained growth we expect will accrue from appropriate economic
policies. Financial Services is one area in which we see huge potential.
55
Revenues
reached
Rs.8 Bn mark
for the year
under review
5th Life Insurance player
Innovative financial
solutions
Increasing presence
island wide
SOFTLOGIC CAPITAL PLC
Holding company of the Financial Services cluster.
Licensed by the Securities & Exchange Commission as a
market intermediary in the Investment Manager category
SOFTLOGIC FINANCE PLC
Licensed finance company regulated
by the Central Bank of Sri Lanka.
Core activities include acceptance
of deposits, and grant of lease, hire
purchase, loan and other credit facilities
ASIAN ALLIANCE INSURANCE PLC
Insurer licensed by the Insurance
Board of Sri Lanka to undertake Life
Insurance
CAPITAL REACH PORTFOLIO
MANAGEMENT (PVT) LTD.
Not operational
SOFTLOGIC STOCKBROKERS
(PVT) LTD.
Stockbroker licensed to operate on
the Colombo Stock Exchange
ASIAN ALLIANCE GENERAL
INSURANCE LIMITED
Insurer licensed by the Insurance
Board of Sri Lanka to undertake
General Insurance
56
The Financial Services cluster has
achieved many milestones in the short
time since Softlogic became involved
in these businesses in 2010. The year
has been one of the most significant in
performance, with many key indicators
reaching ‘best ever’ levels.
FY15
FY14
% YoY
FY13
Revenue (Rs. Mn)
8,001.8
EBITDA (Rs. Mn)
1,282.2
7,457.5
7.3%
5,681.2
969.7
32.2%
EBT (Rs. Mn)
399.9
844.8
400.8
110.8%
(212.0)
PAT (Rs. Mn)
784.5
337.6
132.4%
(245.5)
No. of Employees
1,295
1,134
35,258.1
30,509.8
15.6%
25,302.1
8,126.2
4,939.5
64.5%
4,522.2
Total Debt (Rs. Mn)
7,016.4
8,806.3
-20.3%
6,077.1
15,142.6
13,745.8
10.2%
10,599.3
Profitability
1,041
Financial Position
INDUSTRY REVIEWS
Non-Bank Financial Institutions
(NBFIs)
The NBFI sector is a key part of Sri
Lanka’s financial system.
Licensed Finance Company (LFC) and
Specialised Leasing Company (SLC)
sector asset growth moderated in
2014 due to lower demand for credit,
particularly in the early part of the year.
Demand picked up in the second half,
with lower interest rates helping.
Mergers and acquisitions during the
year were aimed at building resilience
and improving the stability of the sector.
The NBFI sector comprised 48 LFCs
and 8 SLCs at end-2014. Its branch
network increased by 72, to 1,132,
during the year. 47 of the new branches
were opened outside the Western
Province.
The sector’s assets and liabilities are
being re-priced, given the currently
lower interest rates. This re-pricing has
had a positive effect on net interest
income, due to the access to lower
cost deposits. The interest margin (net
interest income as a percentage of total
assets) increased to 8.0% for 2014,
compared to 6.6% in 2013.
The low interest rates resulted in total
assets of the sector growing 18.9% in
2014. ROA and ROE improved to 3.0%
and 13.1% respectively. The NPL ratio
increased marginally, from 6.7% in
2013, to 6.9%.
The sector provides scope for mutually beneficial relationships with Softlogic’s other business sectors, as depicted below.
RETAIL
Hire purchase solutions
AUTOMOBILE
Leasing/ motor insurance
ICT
Hire purchase
LEISURE
Travel insurance
HEALTHCARE SERVICES
Medical insurance
57
Insurance
31st December
The industry, which accounts for 3.4%
of financial sector assets, experienced
moderate growth in 2014. There were
21 insurance companies registered with
the Insurance Board of Sri Lanka (IBSL).
Of these, 12 are composite insurance
companies carrying on both long-term
insurance and general insurance, 6
engage exclusively in general insurance
and 3 conduct only long-term insurance.
Market Size (Rs. Mn)
The separation of composite insurance
companies, transition to a Risk Based
Capital (RBC) Regime, increase in
minimum capital requirements and
preparation for public listings by
2016 were key policies introduced
during the year. The RBC parallel test
run commenced and is expected to
continue till end-2015. Seven insurance
companies are listed on the Colombo
Stock Exchange (CSE) and the balance
must be listed on the CSE by February
2016.
Market Growth (%)
Asian Alliance Insurance PLC’s market share (Rs. Mn)
Asian Alliance Insurance PLC’s market share (%)
The reach of the insurance sector in Sri
Lanka is relatively low. Total premium
as a percentage of GDP was 1.05% in
2014- 0.45% for long-term insurance
and 0.6% for general insurance. The
sector recorded 5.1% growth in
Gross Written Premium (GWP), to
Rs.99.9 Bn in 2014.The low market
penetration is caused, significantly by a
lack of awareness of insurance and its
benefits.
2013
2014
41,675.9
44,610.4
11.2%
7.0%
2,520.3
3,048.1
6.1%
6.8%
Life Insurance
Long term insurance business
generated a GWP of Rs.44.6 Bn in
2014 (2013: Rs.41.7 Bn). The market
recorded slower growth of 7.0% in
2014, compared with 11.2% in 2013.
The top five contributors accounted
for 81.6% of total long term insurance
GWP in 2014 (2013: 82.6%). The
number of long term insurance policies
31st December
Market Size (Rs. Mn)
Market Growth (%)
Asian Alliance General Insurance Ltd’s market share (Rs. Mn)
Asian Alliance General Insurance Ltd’s market share (%)
2013
2014
53,310.8
55,261.6
7.3%
3.7%
1,556.4
1,651.8
2.9%
3.0%
58
in force had risen by 5.4%, to 2,612,497
at end-2014. 545,721 long term
insurance policies were issued during
the year.
General Insurance
The total GWP generated from general
insurance was Rs.55.2Mn in 2014
compared to Rs.53.3Mn in 2013, an
increase of 3.7 %. This low growth
was due to slow growth in marine,
miscellaneous and motor insurance
businesses and negative growth in
fire insurance. Most classes of general
insurance remained price competitive,
with insurance companies competing
fiercely for market share.
Motor insurance dominated the general
insurance market, generating a GWP
of Rs.34.9 Bn in 2014 (2013: Rs.33.2
Bn). This represented 63.2% of the
total GWP in general insurance. Motor
insurance grew by 5.4% in 2014.
Equity Market
The equity market improved, recording
growth of 13.6% in the year with
the index reaching 6,820.34 at endMarch 2015. Market Capitalisation
stood at Rs.2.9 trillion then, with Price
Earnings and Price to Book Value
ratios of 18.4X and 2.0X, respectively.
The improvement is attributed to
low interest rates, improved growth
prospects, relatively better corporate
earnings and continued foreign
purchasing.
COMPANY REVIEWS
Softlogic Finance PLC
The focus of NBFIs is mainly on the
SME sector. SME’s have benefited
from a number of developments during
the year, especially on Leasing and Hire
Purchase products.
Vehicle valuations reduced significantly
due to changes in import taxes and
the availability of tax concessions, and
this has affected the existing Leasing
/ HP portfolios of NBFI’s. This, and
new competition from Banks in this
area, has encouraged a shift in product
emphasis. Softlogic Finance has shifted
its focus towards SME working capital
financing, which offers considerable
scope and where speed of execution
and accessibility are key success
factors. This change in product focus
has resulted in a SME loan portfolio of
Rs.4.9 Bn at year-end, or 31% of the
total, compared with Leasing and Hire
Purchase, where the portfolio was
Rs.3.1 Bn. or 20% of the total.
The Company continues to enjoy a
successful deposit franchise, with
Customer Deposits rising to Rs.12.1 Bn
at end-March 2015, an increase of 30%
from Rs.9.3 Bn in the previous year.
With interest rates remaining low and
stimulating demand for credit, Softlogic
Finance, which is ranked 10th amongst
59
LFC’s, is poised to deliver excellent
performance.
Softlogic Finance boasts of an islandwide presence of 17 fully fledged
branches and 13 Gold Loan Centres.
Asian Alliance Insurance PLC
Low penetration provides the
opportunity for growth in Life Insurance.
Asian Alliance Insurance focuses almost
entirely on Life products. GWP grew
21% in 2014, with a further growth of
21% in the 1st Quarter 2015. We feel
lower interest rates will enhance Life
business, as customers diversify their
investment options.
Asian Alliance Insurance continued
its strong performance, recording the
highest growth rates in the market
and the highest average premium, and
emerging 5th in the industry during the
year. It has a presence of 70 Branches
island-wide.
Complying with the regulator’s direction
that Life and General businesses should
be separated, Asian Alliance General
Insurance Ltd was incorporated as
a wholly owned subsidiary of Asian
Alliance Insurance, to undertake
General Insurance. We have revamped
General Insurance operations with
a focus on technology, to improve
customer convenience and operational
efficiency as we concentrate on the
key Motor and Health sectors in the
retail area, supported by the Softlogic
Group’s presence in relevant sectors.
The development of creative packages
included ‘DRIVE THRU’ and ‘365
DAYS INSURANCE’. The company’s
‘CLICK2CLAIM’ motor product, offering
a hassle-free claims process, is one of
the most innovative introduced thus
far, and has been recognised for its
innovativeness globally as well.
We are confident that our strategy
will deliver superior results and the
profitability that has been elusive for
General Insurance in the country,
and when combined with our high
performing Life Insurance business that
our continued progress in the industry
is assured.
Softlogic Stockbrokers (Pvt) Ltd
Softlogic Stockbrokers has one of the
most experienced teams in the industry.
This research driven stockbroker
focused on building its clientele during
the year. One of the company’s core
strengths is its competent independent
research team, which provides
comprehensive research and analysis of
Sri Lankan equities, the economy and
debt markets. The company has tie-ups
with the global brokerage Auerbach
Grayson and Company LLC. Amongst
other foreign tie-ups are Exotix Partners
LLP and Pictet & Cie. The firm ranked
3rd in the industry at 31st March 2015,
with a market share of 8.9%.
FINANCIAL REVIEW
Revenues for the sector approached
Rs.8.0 Bn, an increase of 7.3% for
the year, to contribute 20.1% to the
Group’s top line. Operating Profit
rose by 36.7% to Rs.1.0 Bn making
up 24% of the Group’s Consolidated
Operating Profit for the year. Finance
Income, which reflects performance
of Asian Alliance Insurance’s fixed and
equity investment portfolio, declined
marginally to Rs.935.6 Mn. The decline
was due to interest rate fluctuations,
which affected the treasury bond
investments of the Life business.
Rs.944.3 Mn was transferred to life
policy holders during the year. Finance
Cost halved to Rs.168.1 Mn for the
year, primarily due to the low interest
rates. Profit before Taxation doubled to
Rs.844.8 Mn (Rs.400.8 Mn last year)
led by the decline in finance costs.
Accordingly, the sector closed the year
with a substantial 132.4% rise in Profit
after Taxation, to Rs.784.5 Mn.
PROGRESSIVE OUTLOOK
We expect future growth in the Life
Insurance sector with customers
diversifying their investments,
whilst the revamping of strategy in
General Insurance will improve both
customer convenience and operational
efficiencies.
Softlogic Finance continues to enjoy
a successful deposit franchise, and
with its new focus on working capital
loans to the SME sector is confident
of maintaining satisfactory growth and
profitability in the coming year.
The performance of the stockbroking
unit depends on the buoyancy of the
Colombo Stock Exchange, which in
turn hinges on economic and business
sentiment in the country. It is hoped
that with a stable government and
clear direction on economic and fiscal
policies, the growth seen thus far will
continue, and that with the quality of its
research team the stockbroking unit’s
progress will continue.
Overall, the Financial Services
businesses are primed and poised to
benefit from Sri Lanka’s growth, and
management is optimistic that results in
future will reflect this.
60
Automobile
Sector
We are redrafting initiatives to
significantly improve customer
experiences and convenience,
while driving quality and building
relationships with customers
Softlogic entered into the automotive sector with the acquisition of
Uni-Walkers Limited, now Softlogic Retail, in 2006.
INDUSTRY REVIEW
New vehicle registrations for 2014 increased 31.5% to 429,556,
against the decline seen in 2013. Car registrations increased 37%.
The demand for new vehicles was driven chiefly by low interest rates
and the stability of the Sri Lanka Rupee.
61
Revenues
improved
76% to
Rs.743 Mn during
the Financial
year 2014/15
Expert after
sales service
New range of
Ford vehicles
Prospect of introducing
“green” vehicles
SOFTLOGIC AUTOMOBILES (PVT) LTD.
Authorised dealer for Daihatsu and King Long
The year saw several initiatives to
simplify the tax structure on vehicle
imports. While taxes applicable on
hybrid vehicles were increased, taxes
on motor cars with an engine capacity
under 1,000 cc were reduced. Taxes on
electric cars were also reduced.
FUTURE AUTOMOBILES (PVT) LTD.
Authorised dealer for Ford
COMPANY REVIEWS
Softlogic Automobiles (Pvt) Ltd.
Softlogic Automobiles handles the
Daihatsu business, which commenced
with the acquisition of Uni Walkers in
2006. The turnaround post acquisition
was noteworthy, but was slowed
thereafter by changes in import duties.
In 2012, Softlogic Automobiles
commenced a strategic partnership
with Xiamen King Long United
Automotive Industry, the National Bus
Manufacturer of China, for introduction
of King Long buses and vans to the Sri
Lankan market. The range of buses was
relaunched in 2014, and King Long has
now become one of the bestselling
62
Automobile Sector
brands of luxury coaches in Sri Lanka,
sought after by both tour operators and
public transport providers. A high-tech
3S (Sales, Service and Spare Parts)
facility for Daihatsu is in place.
Softlogic aggressively promoted its
Body, Paint and Repair Centre to
mitigate the effect of slowing sales
of new vehicles. This facility serves
all light vehicles including Ford and
Daihatsu, as well as King Long buses.
It works closely with Asian Alliance
General Insurance.
Future Automobiles (Pvt) Ltd.
Future Automobiles handles the Ford
business, which started in 2010. A
state-of-the-art 3S facility conforming
to global standards was unveiled at the
Ford facility recently. This has driven
sales, and has increased convenience
and customer confidence, as all
FY15
FY14
% YoY
FY13
Revenue (Rs. Mn)
743.4
EBITDA (Rs. Mn)
(14.7)
423.6
75.5%
704.7
(10.4)
-41.6%
EBT (Rs. Mn)
17.1
(97.4)
(55.5)
-75.6%
(48.5)
PAT (Rs. Mn)
(106.3)
(40.3)
-164.1%
(43.9)
94
73
Profitability
No. of Employees
76
Financial Position
1,321.0
627.8
110.4%
67.3
34.8
93.6%
29.9
Total Debt (Rs. Mn)
477.6
112.7
323.7%
187.6
544.9
147.5
269.4%
217.5
services are now available under one
roof.
Revenues of the automobile sector
grew by a healthy 75.5% during the
year, to Rs.743.4 Mn. This was led
primarily by sales of ‘King Long’ buses.
329.3
The Daihatsu business continued its
steady performance, while contributions
from the Collision Repair Centre and
Franchise Workshops (FORD, Daihatsu
& King Long) progressed satisfactorily.
The investment in the 3S Ford facility
increased finance costs, which resulted
in a loss for the year.
63
PROGRESSIVE OUTLOOK
The sector strives to raise its profile and
performance in the years ahead. We
are redrafting initiatives to significantly
improve customer experiences and
convenience, while driving quality and
building relationships with customers.
We are repositioning our products with
competitive pricing, and will introduce
the following new FORD Models in the
current year.
a. Mustang Sports Car.
b. Everest SUV.
c. Mondeo Hybrid Car.
d. Ranger Double Cab.
e. Transit passenger van.
The sector is also focusing on
introducing a line of “green” vehicles,
to benefit from the tax structure
applying to these.
64
Leisure Sector
Softlogic opened its first resort
in June 2014, and has received
positive feedback from both
local and foreign guests.
Softlogic opened its first resort in June 2014, and has received positive
feedback from both local and foreign guests. The resort achieved an
average occupancy of 72% in the winter season.
INDUSTRY REVIEW
Sri Lanka’s tourism industry has experienced high growth since the
civil conflict ended. Tourist arrivals have increased, reaching 1.5 Mn in
2014 (up 19.8%) and 1.0 Mn between January and July 2015. Chinese
65
Achieved
Rs.628 Mn as
revenues for the
year as against
Rs.92 Mn
reported last
year
Increasing occupancy
and yield
Centara Resort - Best
new hotel of the year
Movenpick City Hotels
to open in April 2016
SOFTLOGIC PROPERTIES (PVT) LTD.
Holding Company of the Leisure Sector
SOFTLOGIC CITY HOTELS (PVT) LTD.
5-star hotel In Colombo, under construction
tourists led the arrivals in 2014. The
Sri Lanka Tourist Board targets 2.0 Mn
arrivals in 2015.
Industry income increased 41.7%, to
USD2.4 Bn, in 2014 and tourism is
SOFTLOGIC DESTINATION
MANAGEMENT (PVT) LTD.
Travel solutions provider
CEYSAND RESORTS LTD.
Four-star plus resort in the
Southern part of the country
now the third largest foreign exchange
earner in the country. An increased
duration of stay, to 9.9 days (up from
8.6 days), was seen in 2014. Improved
road and rail connectivity, port and
airport development, and the entry of
global operators have boosted tourism.
Sri Lanka climbed 11 notches to rank
63rd of 141 countries in the World
Economic Forum’s Travel & Tourism
Competitiveness Report 2015.
66
Leisure Sector
Sri Lanka is not only a holiday
destination, and is fast gaining
popularity for MICE tourism. This
segment accounts for 11% of total
arrivals, and 240,000 MICE visitors are
targeted in 2016.
FY15
Local tourism has also been growing
rapidly. We expect this to continue
with increases projected in per capita
income.
% YoY
FY13
Profitability
Revenue (Rs. Mn)
628.1
91.7
584.5%
54.9
EBITDA (Rs. Mn)
93.0
(50.2)
285.3%
(44.4)
EBT (Rs. Mn)
(142.3)
(91.0)
-56.3%
(97.3)
PAT (Rs. Mn)
(142.8)
(76.3)
-87.2%
(79.5)
289
7
11,329.7
8,074.4
40.3%
6,267.2
5,077.1
3,963.5
28.1%
3,840.1
Total Debt (Rs. Mn)
3,437.7
2,511.5
36.9%
1,646.2
8,514.8
6,475.0
31.5%
5,486.3
No. of Employees
This industry faces numerous
challenges. Present room stock is
insufficient to cater to the ambitious
arrivals targets. The formal hotel
sector needs to expand. There are
26,700 graded rooms island wide.
Approximately 50,000 rooms are
needed to serve 2.5 Mn tourists in
2016. Some 75 hotels are under
construction and these would add
5,300 rooms. The informal sector
could add another 4,000 rooms, and
condominiums can service part of the
market. This still leaves a gap.
FY14
7
Financial Position
COMPANY REVIEWS
Ceysand Resorts Ltd.
Ideally located oceanfront on the Indian
Ocean and bordering the Bentota river,
Centara Ceysand Resorts & Spa offers
unparalleled luxury and service. This
four-star plus resort offers a wide range
of amenities and exclusive facilities to
complement its exquisitely furnished
rooms and suites. Its luxurious spa,
freshwater swimming pool, water
sports and entertainment facilities and
warm hospitality make the resort one of
the most sought after in the southern
part of Sri Lanka. It provides an ideal
escape from the hustle and bustle of a
hectic lifestyle. The strategic location
of the resort between the Indian
Ocean and the Bentota river, makes it
especially attractive.
67
The resort is operated by Centara
Hotels & Resorts of Thailand and
functions in line with Centara’s
international standards.
Its success is one we at Softlogic
celebrate.
Movenpick City Hotels (Pvt) Ltd.
Softlogic has strategically partnered
Movenpick Hotels and Resorts, who
will manage this world class business
hotel in the city of Colombo. This will
be a five-star hotel built in Colombo
after very many years. The upscale city
hotel, located in the heart of the city,
will occupy half an acre in its prime
downtown location, surrounded by
commercial activity and prestigious
restaurants.
The 24-storied hotel, designed with
sustainability in mind, will feature
contemporary architecture. It will boast
219 rooms ranging from standard
rooms to fully-fledged luxury suites.
Guests will enjoy a range of facilities
including a fitness centre, spa and
pool. The hotel will feature rooftop
al fresco bar and restaurant facilities,
providing guests with stunning views
of downtown Colombo and the Indian
Ocean. The hotel will have an all-day
dining restaurant, French and Asian
Fusion specialty restaurants and an
exclusive nightclub. It will be equipped
to handle any business need, and will
have five meeting/ boardrooms and a
fully functional business centre.
The structure of the building has been
completed, and the hotel is nearing
completion. For Interior design an
internationally renowned design firm
Di Leonardo was commissioned. This
group, which is based in Rhode Island,
US, has worked with prestigious brands
such as Marriott, Ritz Carlton and
Sheraton. The “fit out” contract was
awarded to S&T of Oman, who are now
engaged in fitting-out guestrooms and
public areas.
We envisage the hotel will be
operational by April 2016.
The sector closed the year with a loss
of Rs.142.8 Mn (Rs.76.3 Mn last year).
PROGRESSIVE OUTLOOK
Centara Ceysand Resorts & Spa has
proved an immediate success, and we
believe this success will quickly extend
to Movenpick City Hotel also, following
its opening.
Softlogic Destination Management
(Pvt) Ltd
Softlogic Destination Management (Pvt)
Ltd. is one of Sri Lanka’s well-reputed
travel companies engaged in both
inbound and outbound travel, providing
quality management services to tour
operators as well as local corporate
businesses.
This is a total travel solution
provider with a 24/7 service covering
a unmatchable range of travel
options, hotels, travel insurance and
Visa assistance. Its wide range of
services includes assistance upon
arrival, transfers, tours and safaris,
special interest activities, tailormade arrangements and contracting
accommodation.
PROGRESSIVE REVIEW
Revenue grew to Rs.628.1 Mn in the
year (against Rs.91.7 Mn last year). This
accrued mainly from Ceysand Resort,
whilst destinations management
operations made a nominal contribution.
Finance cost increased to Rs.90.2 Mn
during the year, from Rs.1.9 Mn in
the previous year, due to funding of
Ceysand Resorts.
68
165
Total Rooms
Superior - 106
Deluxe - 44
Family Residence - 8
Suites - 7
A pontoon takes
you across the
tranquil Bentota
River to the resort.
Café Bem offers
authentic Sri
Lankan, Asian
and international
cuisines. 360
Seafood restaurant
specialises in
seafood.
Rooms and
suites each with a
furnished balcony
or terrace looking
out across the
ocean or river.
69
90m palm-fringed
swimming pool is
situated next to the
beach, and boasts a
Jacuzzi.
Strategic location
of the resort between
the Indian Ocean
and the Bentota
river, makes it very
attractive.
Its luxurious spa,
freshwater swimming
pool, water sports and
entertainment facilities
and warm hospitality
make the resort one of the
most sought after in the
southern part of Sri Lanka.
70
The success of Softlogic depends on our ability to
continually add value. Building trust with customers and
investors is a priority in our pursuit of value. Responsible
corporate governance is therefore very important to us.
OUR GOVERNANCE
FRAMEWORK
As a Group with global representations,
the Corporate Governance practices
followed by the Company and its
subsidiaries are of best practices.
Through the Governance mechanism
in the Company, the Board along
with its Committees undertakes its
responsibilities to all its shareholders
by ensuring transparency, fair play and
independence in its decision making.
Softlogic strives to expand its
businesses and be competitive in all
of them. It seeks to adopt the 'best
practices' followed in Corporate
Governance across all its sectors. The
Company recognises the need for
transparency and accountability in all
its actions, to protect the interests of
its stakeholders. The Board considers
itself a ‘Trustee of its Shareholders’ and
acknowledges its responsibilities for
adding to and safeguarding their wealth.
Hence, Softlogic’s shareholders
participate at the Annual General
Meeting in appointing its Board of
Directors, and also its Auditors. The
Board of Directors manage Softlogic’s
affairs on behalf of its shareholders.
The Auditors report to the shareholders
on their scrutiny of Softlogic’s financial
statements. The responsibility for good
governance lies with the Board of
Directors.
The Board, which is entrusted with
the direction of Softlogic and the
supervision and control of management,
has delegated responsibility for dayto-day management of Softlogic to its
Executive Management. The Group’s
management and organisational
structure corresponds to its segmental
reporting lines. Each business sector’s
management team is responsible for
the activity of the sector and reports to
the Sector Head, who in turn reports,
through Executive Management, to the
Board.
sectors. Each business is directed by
more detailed guidelines establishing
objectives, strategies, and control
and reporting requirements. These
are regularly reviewed to monitor
compliance and encourage continuous
improvement.
Our Governance Aspirations
•
Adopt best governance practices,
respecting principles established
by relevant industry regulators.
•
Act in the best interests of
stakeholders and satisfactorily
address situations involving
conflicts of interest.
•
We seek high standards and efficient
processes through:
Maintain effective internal control
and risk management systems.
•
Preserve data integrity.
•
an appropriate organisational
structure;
•
•
effective internal control and risk
management; and
Implement appropriate accounting
policies compliant with Sri Lanka
Accounting Standards.
•
sound internal and external
reporting.
Provide accurate, complete, clear
and timely information.
•
Pursue best corporate governance
practices, respecting principles
established by relevant industry
regulators.
•
Our model strives for a robust
framework of responsibility and
accountability throughout Softlogic,
establishing guidelines and
performance standards across all
71
1
Board Governance
2
• Board Committees
Audit Committee
Remuneration Committee
• Diverse Board
• Assessment of Board effectiveness
• Balance mix of Non-Executive Directors
• Annual General Meeting
• Quality and frequent communication
with investors/ analysts
• Active investor relations department
• Instant web based query-response
3
Checks and Balances
• Effective Risk Management
• Prevention of insider trading
• Independent assurance:
Internal and external audit
Corporate
Governance
4
5
Shareholder Governance
Code of Conduct
• Effective internal audit and risk management
• Legal and compliance
• Management governance and assurance
• ‘The Code’
Ombuds Process
• Ombuds process for both employees
and non-employees
• Employee suggestion box to track complaints,
suggestions and any unethical reporting.
• External Regulators
Companies Act No.07 of 2007
CA Sri Lanka
Securities & Exchange Commission of Sri Lanka
Colombo Stock Exchange
Sri Lanka Accounting & Auditing Standards
Monitoring Act 15 of 1995
Finance Business Act No. 42 of 2011
Insurance Board of Sri Lanka
Private Health Service Regulatory
Council of the Ministry of Health
Sri Lanka Medical Ordinance
and Council and other relevant governing
bodies of the Healthcare sector
72
External Control: Softlogic Group has
prepared its Corporate Governance
Code (‘the Code’) in line with the
Code of Best Practice on Corporate
Governance issued by the Securities
and Exchange Commission of Sri
Lanka and The Institute of Chartered
Accountants of Sri Lanka (CA Sri Lanka)
in 2013.
Internal Control: Articles of
Association, Code of Ethics and
Business Conduct (the Code), policies
such as the Financial Policy and Human
Resource Policy, guidelines and
manuals.
The Board has a formal schedule of
matters reserved for its attention.
These include:
•
strategy and long-term plans;
•
major capital projects, acquisitions
and divestments;
•
financial structure;
•
annual budgets and operating
plans; and
•
•
annual and quarterly financial
results.
scrutinise and challenge
performance across the Group’s
business;
•
Specific responsibilities are delegated
to Board Committees.
review risk profile and the integrity
of the financial information and
controls;
•
determine the Company’s broad
policy for executive remuneration;
and the remuneration packages
for the Executive Directors and the
Chairman.
HOW THE BOARD OPERATES
BOARD COMPOSITION
The role of the Board
Our Board consists of nine Directors,
who served through the year. One other
Non-Executive Director, Desamanya
P D Rodrigo relinquished his position
on 30 June 2014. The Directors at
31 March 2015 were the Chairman
& Managing Director, four Executive
Directors and four Non-Executive
Directors.
The Board, along with its Committees,
provides leadership and guidance to the
Company’s management and directs,
supervises and exercises control over
its activity. The Board is responsible
for the overall conduct of Softlogic’s
businesses.
The Directors have collective
responsibility for the Group’s direction.
Non-Executive Directors contribute to
the Board’s workings by bringing to
discussions their skills and experience,
and independent judgement and
constructive challenges on areas
covered. They continuously;
Non-Executive Directors
The table below shows the
independence or otherwise of our NonExecutive Directors.
Date first elected by Independence
shareholders
11 February 2011
Yes
Mr. Prasantha Lal De Alwis, PC.
23 September 2011
Yes
Mr. Harris Premaratne
12 September 2011
Non-Executive Independent to 21
January 2015; Non-Executive from
that date.
Mr. Richard Ebell
12 September 2011
Yes
Conflicts of Interest
The Board is aware of the other
engagements of its Directors and is
satisfied that these are not in conflict
with their engagement as Directors of
the Company.
73
The process for avoiding conflicts is as
follows:
•
Directors report their other
engagements to the Board
Secretary, identifying potential
conflicts of interest on
appointment, and actual conflicts
of interest when the need arises.
•
Other engagements, potential
conflicts and actual conflicts
identified are advised to the Board.
•
Directors do not participate in any
discussion or decision on matters
in which actual conflicts of interest
exist.
Board Meetings
Matters considered by the Board
include:
•
Strategic and business
developments;
•
Financial reports;
•
Operations updates;
•
Potential changes to the Group’s
business and asset portfolio; and
•
Reports from the Audit and
Remuneration Committees.
Dates for Board Meetings in the
current year have been decided and
communicated in advance. Agendas,
with relevant papers, will be sent in
advance to the Directors. Additional
meetings of the Board are held when
deemed necessary by the Board.
Board activities in the year under
review
Board activities are structured to
assist the Group in achieving its
objectives to support and advise the
management on the delivery of the
Group’s strategy within a transparent
governance framework.
Business Performance
• Sectoral Performance
• Subsidiary performance
• Brand performance
Key areas of
focus for the
Board
Business Strategy
• Acquisitions, technology,
expansions and structural strategy
Shareholder Focus
• Returns to shareholders
• Shareholders Engagement
Business Risk
• Strategic and operational risks
Financial
Governance
Diversity and talent
• Chief Financial Officers’ report
• Budgets
• Management Accounts
• Board Performance
• Board Committee reports
• Succession planning
• Talent capability and diversity
74
Chairman Director
Ashok Pathirage (Chairman)
Haresh Kaimal
Hemantha Gunawardena
Ranjan Perera
Roshan Rassool
Prasantha Lal De Alwis, PC
Harris Premaratne
Richard Ebell
Executive
Executive
Executive
Executive
Executive
Independent
Non-Executive
Independent
Non-Executive
Independent
Non-Executive up
to 21 January 2015;
Non-Executive from
that date
Independent
Non-Executive
Shareholding in
as at 31 March 2015
No. of Committee
positions held in other
quoted companies
No. of Directorships
in other quoted
companies
Category
Attendance at the last
AGM
Name of Director
Attendance at Board
Meeting during
FY2014/2015
The Directors, their attendance at the Board Meeting and the Annual General Meeting held during the year, are given below, as
are the numbers of Directorships and Committee Memberships held by them in other companies and their shareholdings in the
Company:
Chairman Member
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
06
-
01
01
-
01
-
04
-
46.59%
8.33%
7.38%
7.81%
-
✓
✓
-
09
-
04
0.26%
✓
✓
-
-
-
-
-
✓
✓
-
04
04
01
-
✓
✓
-
01
01
01
-
HOW THE BOARD IS KEPT
UPDATED
•
The Board is kept briefed on
matters of significance.
Directors take responsibility for
identifying their training needs, for
keeping abreast of their responsibilities
as Directors and for ensuring they
are adequately informed about the
Company. Hence, the Directors
must keep updated to maintain their
effectiveness. This is achieved as
follows:
•
Non-Executive Directors
are provided with briefings
and information at their request.
These briefings are often provided
at Board Committee meetings, by
Senior Executives.
The Board believes Directors possess
the knowledge, ability and experience
to function effectively as Directors of a
listed conglomerate.
Non-Executive Directors meet the
Chairman & Managing Director on
a monthly basis to receive briefings
Messrs. R J Perera, H K Kaimal and
Dr. S Selliah retire by rotation and offer
themselves for re-election at the Annual
•
and information and address
matters of concern to them.
Re-election of Directors
75
General Meeting to be held on the 30th
day of September 2015.
play. The Committee also monitors the
work and performance of internal audit.
financial statements and the re-election
of Directors and auditors.
Independent Advice
The Committee relies on the
competence of management, its
internal auditors and its external
auditor in discharging its oversight
responsibilities. Management is
responsible for the proper preparation
and presentation of the financial
statements, and for internal control over
financial reporting.
Extraordinary General Meetings (EGMs)
are held when a particular need arises.
No EGMs were held during the year.
The Board recognises that there may
be occasions when Directors feel it
is necessary to seek independent
professional advice in the discharge
of their duties. They are permitted
to do this, in consultation with the
Company Secretary.
Board Committees
The Board has delegated defined
responsibilities to an Audit Committee
and the Remuneration Committee.
Information on these Committees and
their activities can be found in their
reports on pages 98 to 100. These
Committees are given the resources
they require and the access to
information they need to allow them
to undertake their duties effectively.
The Board is appropriately briefed by
these Committees during the year.
Directors who are unable to attend
Board and Committee meetings may
be briefed on discussions arising
thereafter.
Board Audit Committee
The Board Audit Committee monitors
the integrity of the Company’s financial
reporting and reviews annual and
interim financial statements before
they are recommended to the Board for
approval and release. The Committee
monitors the Company’s relationship
with its external auditors who attend
Committee meetings when necessary,
and their independence in the role they
The Audit Committee is made up of
four Non-Executive Directors of whom
three are Independent Directors.
The Board Audit Committee Report
appears on page 100.
External Auditors
External Auditors are appointed at
Softlogic’s Annual General Meeting
each year. The auditors scrutinise
and report on the annual financial
statements, and perform interim audit
reviews when these are required. It
is Softlogic’s preference to appoint as
auditor a leading international audit
firm. Ernst & Young were appointed to
audit the financial statements of the
Company for the financial year ended
31 March 2015.
Board Remuneration Committee
The Board Remuneration Committee
is empowered to review and make
recommendations in respect of the
remuneration of the Chairman &
Managing Director, Executive Directors
and Executive Management of the
Company and the CEOs of certain
subsidiary companies.
The Committee comprises three NonExecutive Directors of whom two are
Independent Directors.
The Board Remuneration Committee
Report appears on page 98.
General Meetings
The Annual General Meeting is the
forum in which shareholders express
their views on Softlogic’s affairs. This
Meeting considers adoption of the
Group Internal Audit
Group Internal Audit (GIA) is a unit
that assists Softlogic to accomplish its
objectives by bringing an independent
and systematic approach to evaluating
and improving effectiveness of
the Company’s internal control,
risk management and governance
processes. GIA is empowered by the
Board to perform engagements in
any Group company. The Head of GIA
reports to the Board Audit Committee.
Chairman/ Managing Director
The combination of the roles of
Chairman and Managing Director in
one individual has proven effective for
Softlogic. The Chairman & Managing
Director is well acquainted with
the importance of sound Corporate
Governance across Softlogic. He
encourages participation of Directors in
76
discussions, to make sure their views
are known. Softlogic strives to maintain
a balance of power between Executive
and Non-Executive Directors, ensuring
the Board remains in control of its
affairs and is alert to its obligations to
stakeholders.
The Managing Director is responsible
for the daily management of the
business as directed by the Board.
He reports to the Board on Softlogic’s
activities and expansions, and is the
main point of contact with investors,
the market, the media and relevant
authorities.
Details regarding the Chairman &
Managing Director and other Directors
are set out on pages 16 to 19 of the
Annual Report.
Softlogic’s Risk Management System
is focused on identifying, assessing,
communicating and managing risks. A
description of the Risk Management
System appears on pages 79 to 84 of
this Annual Report.
•
assists the Chairman in providing
Directors with relevant information;
•
minutes the proceedings of each
Board meeting and makes draft
minutes available to Directors prior
to the next meeting;
•
assists the Chairman in providing
inductions;
•
is responsible for advising the
Board on corporate governance
procedures required to be
followed; and
•
assisting Directors, where
appropriate, to obtain the
independent professional
advice they require, at the
Company’s expense.
Risk Management
The Softlogic Code of Business
Conduct and Ethics lays out relevant
principles as a guide to employees, who
are required to read, understand and
follow ‘the Code’.
An Effective Governance Culture
Good governance stems from the
culture and mindset of the organisation.
It requires people to meet performance
expectations while managing the
organisation’s resources effectively
and responsibly, and meeting high
standards of ethical performance. At
Softlogic we are committed to meeting
the aspirations of our stakeholders,
as demonstrated by the processes
we aspire to put in place, the
entrepreneurial performance-focused
work environment we espouse, and the
shareholder returns we seek.
Company Secretary
The Corporate Company Secretary acts
as Secretary to the Board. In doing so it:
Ethics, Code of Conduct and Insider
Administration
The demands of corporate governance
require professionals to raise their
competency and capability levels to
meet the expectations in managing the
enterprise and its resources effectively
with the highest standards of ethics.
It has thus become crucial to foster
and sustain a culture that integrates
all components of good governance
by carefully balancing the complex
inter-relationship among the Board of
Directors, Audit Committee, Finance,
Corporate Secretarial team, Auditors
and Senior management. At Softlogic,
our employee satisfaction is reflected in
the stability of our senior management,
low attrition across various levels
and substantially higher productivity.
(Corporate Sustainability Report on
pages 85 to 97).
We have communicated ‘the Code’
to all subsidiary companies and
established it as a fundamental part
of our corporate culture. For example,
All new employment contracts include
a reference to the Code and the
obligation to comply with it.
Softlogic considers the reputation it
enjoys to be an invaluable asset. To
safeguard this reputation, it verifies
the integrity of its business partners.
This allows us understand potential
business partners before entering any
relationship with them, reducing the
risk of a relationship that can damage
the Company/ Group or its business.
Renowned international agencies such
as IFC, DEG, FMO, Actis and a number
of internationally recognised franchises
form Softlogic’s stakeholder list.
Softlogic’s legal division is in charge of
the guidance and supervision of insider
issues and also maintains the projectspecific insider registers if necessary.
The up-to-date shareholdings of the
Directors can be obtained on the
quarterly financial release to the
Colombo Stock Exchange and the
Annual Report. Every share dealings of
the Directors is disclosed as and when
the transaction takes place to the CSE.
77
Whistle Blower Policy
Means of Communication
Softlogic’s whistle blower policy
provides guidance to employees for
approaching designated persons to
convey information about unethical
behaviour, breaches of laws and
regulations, and violations of ‘the Code’.
Financial results – The quarterly
and annual results are published on
the Colombo Stock Exchange (CSE)
website in keeping with the relevant
rules, and are shared with the media
and posted on the Softlogic website
after submission to the CSE. As
a part of the Green initiative, the
quarterly results are sent by email to
Shareholders whose email IDs are
registered with the Group Investor
Relations.
Annual Report – Softlogic’s
comprehensive Annual Report is
made available to shareholders and
others entitled to it, and is available
on the Company's website in a freely
downloadable format.
Intimations to CSE – Price sensitive
information and matters which are
material and relevant to shareholders
are intimated to the CSE and posted on
Soflogic’s website.
Briefings – Group Investor Relations
meets investors and analysts from
time to time, to brief them on Group
activities.
Corporate Website – http://www.
softlogic.lk/– Softlogic’s website
provides comprehensive information
on the Group and provides for
investors and potential investors to
submit inquiries and seek feedback.
The section on News Room includes
all major press reports and releases,
awards and campaigns.
COMPLIANCE DISCLOSURE
The Company has complied with all requirements related to capital markets, with no penalties or strictures having been imposed
by the relevant authorities.
Compliances with the Corporate Governance Rules of the Colombo Stock Exchange are set out below
CSE Listing
Rule No.
Subject
Board of Directors Disclosures
7.10.1
Non-Executive
Directors (NEDs)
7.10.2 (a)
and (b)
7.10.3(a)
and (b)
Independent
Directors
Disclosure relating
to Directors
Condition
Compliance Details
Status
Compliant
Two, or at least one third of the
total number of Directors, should be
Non-Executive Directors.
Two, or one third of NEDs
(whichever is higher), should be
independent.
Each Non-Executive Director
should submit a declaration of
independence/ non-independence
in the required format.
Names of Independent Directors
should be disclosed in the Annual
Report.
Compliant
Compliant
44% of the Board comprises NonExecutive Directors. Refer page 72
of the Annual Report (on Corporate
Governance)
Three Non-Executive Directors of
Softlogic are independent. Refer page
72 of the Annual Report on Corporate
Governance
Disclosed under Directors’ Profiles
(pages 18 and 19) and Corporate
Governance (page 72).
78
CSE Listing
Rule No.
Subject
7.10.3(c)
Directors’ Resumes A brief resume of each Director
should be included in the Annual
Report, including his areas of
expertise, with a resume being
submitted for new Directors on
their appointment.
Definition of
Requirements for fulfilling criteria.
“Independence”
7.10.4
Remuneration Committee
7.10.5(a)
Requirement and
composition of
Remuneration
Committee
7.10.5(b)
Disclosure of the
functions of the
Remuneration
Committee
Audit Committee
7.10.6.(a)
Composition of
Audit Committee
7.10.6.(b)
Functions of the
Audit Committee
Condition
Compliance Details
Status
Compliant
Disclosed under Directors’ Profiles
(pages 18 and 19).
The profiles of new Directors
are advised to the CSE on their
appointment.
Compliant
Compliant
The Committee shall consist of
Non–Executive Directors, a majority
of whom shall be independent.
Disclosed on page 98 of the Board
Remuneration Committee Report.
Compliant
The Committee shall recommend
the remuneration payable to the
Executive Directors and Chief
Executive Officer or equivalent role.
Disclosed in the Board Remuneration
Committee Report (pages 98 to 99).
Compliant
Disclosed in the Corporate
Governance Report (page 75) and
Board Audit Committee Report (page
100).
Compliant
Disclosed in the Corporate
Governance Report (page 75) and the
Committee Report (page 100).
Compliant
Disclosed in Board Audit Committee
Report (page 100).
Shall comprise NEDs, a majority
of whom shall be independent.
The Chairman or a member should
be a member of a recognised
professional accounting body.
Overseeing preparation,
presentation and adequacy
of disclosures in the financial
statements.
Monitoring the system of internal
controls.
Assessing the independence and
quality of performance of the
external auditors.
7.10.6.(c)
Annual Report
disclosures on the
Audit Committee
Recommending to the Board the
appointment, reappointment and
removal of the external auditors.
The names of the members of the
Audit Committee.
A report of the Audit Committee
setting out the manner of
compliance with their functions.
79
Risk Management
Review
‘We seek to achieve an appropriate balance between
risks and rewards in our business spheres, and aspire to
build and enhance a risk management framework that
will facilitate delivering the required risk insights and
inputs into our ambitious growth plans in a vibrantly
entrepreneurial environment’
Effective risk management is one of
the fundamental factors of success
of Softlogic. Our approach includes
limiting the concentration of exposure
and managing potential losses from
systematic swings, and ensuring
continued availability of resources to
counter downturns.
The development of risk management
processes across the Group has
continued over the year. Management
in our six business sectors is directly
involved in risk management initiatives,
How we manage risk
Oversight and
governance
structure
Audit and Compliance
Subsidiary Risk Management
Board
Group Risk Management
Management
Structure
Tactical Risk
- Managing Executives and Group Executives
Strategic
Risk
Senior management
Chief Executive Officers
Operational Risk
- Executive Heads
Process Risk
- Line Management
Project Risk
- Project Manager
Business Heads
80
with Financial Services and Healthcare
having advanced and presently striving
to achieve best practices in risk
management.
DEVELOPMENT AND
IMPLEMENTATION OF RISK
GOVERNANCE STANDARDS
To be on par with its increasing
diversity, complexity and size,
Softlogic’s risk management practices
needed review. Consequently, Softlogic
is developing risk governance standards
for each major risk category to which
it is exposed. The standards will
establish consistency in the way in
which major risk types are dealt with
across the Group. Management in each
business unit will be responsible for
ensuring appropriate implementation.
Compliance will be assessed through
assessments conducted by Business
Unit Risk Officers, supplemented by
reviews by the Group Risk Department
and by Internal Audit.
The Process we follow:
Our Process of defining, assessing, classifying
and monitoring risks is set out below
1
Defining risk
Management defines risks as
strategic, project, process,
operational and tactical levels.
3
Monitoring and
reporting risks
Operational, tactical and
strategic risks are monitored,
reported on and managed.
Internal Audit reviews Risk
Departments and reports on
their findings.
Assessing risk
Risks are assessed based on
their potential impact on
business activity, financial
position and reputation. A
‘level 1’ risk is insignificant
while a ‘level 5’ risk is
catastrophic.
Assessing likelihood
Risks are assessed based on
their likelihood of occurrence,
considering controls in place
to address them. A scale of 1
to 5 is used, where 1
indicates ‘Never’ and 5 is
‘Almost certain, despite the
controls in place’.
5
2
4
Classifying risks
Risks are classified as critical,
high, medium and low, based
on impact and likelihood.
Where a risk has a high
likelihood of occurrence and
the impact is high, it would
be considered critical.
OUR APPROACH
Our approach to risk management is
based on well-established practices
and calls for individual responsibility,
and oversight supported by exception
reporting. We focus on management
participation, with comprehensive
risk management structures being
developed within individually listed
and large business units particularly.
Business Unit Risk Officers and
Business Heads will be responsible to
ensure the management of risk within
their businesses and for ensuring that
appropriate, and adequately designed
risk management frameworks are in
place. These frameworks are compliant
with the Group’s risk governance
standards.
To ensure independence, Business
Unit Risk Officers report only
administratively to their Business Unit
Heads, and indirectly to the Group Head
of Risk and directly to the Chairman of
Risk Committee.
OUR RISK MANAGEMENT
MODEL
The acceptance of risk is an integral
part of Softlogic’s businesses. The
definition of risk appetite and the
control and management of risk is
therefore critical.
Strong management and prudential
decision making has been key to
Softlogic’s growth, stability and
success. Our risk management model
is based on ‘three lines of defence’.
The primary responsibility for risk
management lies at business level
which is, the first line of defence; an
essential role of all business managers
81
is to ensure risks are managed. The risk
management function is the second
line of defence, which independently
assesses material risks. The third line of
defence is the Internal Audit.
RISK APPETITE
Risk appetite refers to the nature and
extent of risk the Group is willing to
accept. The Healthcare and Financial
Service clusters are reaching an
advanced state in this respect; other
sectors will follow.
Parameters influencing risk appetites
are below:
SOFTLOGIC’S RISK
MANAGEMENT CULTURE
Softlogic recognises that effective
risk management is more than just
management information systems and
controls; embedding an effective risk
management culture amongst staff is
of paramount importance.
Fostering an effective risk culture is
a key theme that we anticipate to
trickle down the organisation and is
maintained broadly through five steps
at Softlogic:
1
ADJUST
Review and
Revise
PLAN
Continual
Improvement
Continual
Improvement
4
CHECK
Analyse &
Monitor
3
2
DO
Communicate
& Implement
1. Setting of objectives – The
Board of Directors sets out the
expectations regarding appropriate
financial and non-financial
objectives.
2. Alignment of risk appetite – Group
Head of Risk in consultation with
Executive and Non- Executive
Directors devise the risk
management plan.
3. Leading and executing the
strategies– Corporate and middle
management operationally
embark on implementing these
expectations by their actions,
communication, consequences,
education and organisational
governance.
4. Monitoring - Effectiveness is
assessed and periodically reported
to allow adjustment and refinement
as necessary.
5. Learning and feed forward – The
learning from risk that varied from
set parameters are studied and
fed into the next cycle of risk
management plan.
We communicate our risk management
approach to employees via induction
and training sessions, to help embed
this culture throughout Softlogic.
SOFTLOGIC’S ENTERPRISE RISK
PROFILE
The Enterprise risk profile seeks to
identify and measure risk across six
sectors and monitor emerging trends
and exposures. Softlogic defines risks
as occurrences which have a potentially
negative impact on achievement of
Group objectives.
Strategic and business risk
This is the risk that the profitability of
the Group is adversely impacted by
failure to identify and implement correct
strategy, or react appropriately to
changes in the environment.
We are conscious of the need to
understand all elements of new
businesses/ expansions before they
are undertaken. We are well aware of
acquisition / expansion risks; failing to
deliver on integrated objectives, on
commercial, operational and cost-saving
targets and on expectations of synergy
with existing businesses.
Mitigation Strategy: Our concentration
risk is limited through the diversity
of our business model. Decisions
concerning new business are vetted
by relevant Business Heads, the
Group’s strategy team and the Risk
Management Department, who
support the Chairman’s and Board’s
assessments. The new business
approval process requires relevant
risks (including market, financial and
operational risks) to be examined to
ensure these are understood and
addressed prior to implementation.
Internal Audit performs a post-audit,
typically within six to twelve months of
acquisition or launch. This is followed
by continuous monitoring of progress
against the integration plan. We ensure
the ‘Softlogic Way’ is embedded
throughout the acquired business.
General economic risk
Weak or deteriorating local or foreign
(systematic or uncontrollable) economic
82
1
Specific risk constraints in individual
business units are defined
Limits
Tolerance Levels
2
Risk Appetite Statements
conditions could adversely affect
achievement of Group’s objectives.
Mitigation Strategy: Our Risk
Management Department monitors
changes in local and foreign conditions.
We stay in touch with our overseas
stakeholders, including principals,
suppliers and financing partners to
monitor material changes happening in
those countries.
Market risk
Market risk is the risk of adverse
changes due to changes in foreign
exchange rates, interest rates and
prices.
Softlogic is exposed to risks in these
areas:
– Foreign exchange – Volatility will
affect profitability and can threaten the
sustainability of business, Softlogic
being a significantly import-reliant
business.
Mitigation Strategy: Exchange rate
movements are monitored for
currencies on which the Group has
exposure; where appropriate, Group
Treasury enters into forward exchange
rate contracts to mitigate the risk.
– Interest rates – Softlogic is sensitive
to interest rate movements given its
The capacity to endure
risk is determined
3
The level of risk considered
acceptable in pursuing
objectives is defined
significant level of borrowings. Changes
in interest rates also have implications
for the Financial Services Cluster’s
business.
Mitigation Strategy: Our Treasury
Management teams monitor market
conditions to manage the impact from
changing interest rates. Forward rate
agreements, interest rate swaps, cap
and floor agreements, fixed and floating
rates and asset / liability maturity
matching are used to mitigate risks.
– Equities – changes in the price and
volatility of individual equities. Six,
including the Holding Company, are
listed on the Colombo Stock Exchange–
Commodities (product prices) –
Changes in the cost of our products can
have major impacts on our bottom line.
Mitigation Strategy: Procurement
teams monitor likely price movements
and work with the Corporate Planning
Division to establish pricing that will
satisfactorily balance profitability and
market share. Our healthy, long- term
partnerships with overseas principals
reduce the prospects of radical price
increases.
Credit risk
Credit risk arises from failure by
counterparties to meet their contractual
obligations, causing losses to the
Group.
Mitigation Strategy: Robust credit
assessment and management policies
are established Group-wide. Credit
outstanding is closely monitored,
with guarantees and deposits /
assets available as security helping to
reduce losses on defaults. The Group
mostly lends to rated or internally
vetted counter parties with sound
credit quality. Their credit ratings are
routinely monitored. A continuous
review of credit risk profiles consisting
both external and internal factors
analysis across the Group’s investment
portfolios is in place.
Liquidity risk
Liquidity risk arises when the Group,
despite being solvent, cannot
generate sufficient cash to meet
its payment obligations as they fall
due, or can only do so on materially
disadvantageous terms. This may arise
where counterparties who provide
Softlogic with funding, withdraw or do
not accommodate a roll-over of that
funding, or as a result of a disruption
in asset markets resulting in normally
liquid assets becoming illiquid.
Mitigation Strategy: It is a Group-wide
practice to prepare annual cash flow
forecasts, building in provisions for
contingencies, maintaining buffers
for unutilised limits/ contingencies/
non-roll-overs, and identifying maturity
mismatches, are used at company and
Group levels. Group Treasury maintains
good relationships with bankers and
investors in Commercial Paper and
other credit lines, to help ensure
availability of funds. The CFO, Group
Head of Risk and Head of Treasury
83
meet regularly to monitor liquidity risks
and needs, and gearing.
external events can cause loss of
earnings and reputation.
Operational risks
Mitigation Strategy: The implementation
of a new ERP system is an important
initiative in standardising systems and
processes. We will also centralise back
office activity within an in-house BPO,
to optimise efficiency.
Risks in this category are broad in
nature and inherent in most businesses
and processes. These include the risk
of failures in resourcing or planning,
errors or fraud, and weaknesses in
systems and processes. In essence,
these relate to people, systems and
processes in our operations.
– People – We believe that our People
form the basis of enduring advantage;
without their engagement and
alignment with the Group’s aspirations
our performance can only be suboptimal. it is essential that we develop
and maintain management capability
across our 46 subsidiaries. We identify,
develop and retain an appropriate
succession plan of able managers for
the present and future needs of the
Group.
Mitigation Strategy: We believe in
building leadership through our Group
Talent Management initiative, and in
inculcating a culture of accountability,
empowerment and personal
development among all employees.
An effective induction programme is
in place to orient new comers. The
importance of succession planning
for key management positions is
recognised. Processes are in place to
understand and respond to employee
needs; bi-annual performance reviews
are also conducted.
– Systems & processes – Information,
other systems, internal control failures,
inadequate procedures and human
errors, inadequate procedures and
– Information security – Cyber-attacks
will result in disruption of information
technology (IT) systems and a loss
of important information, can cause
significant business disruption. These
can negatively impact cash flows
and financial position, and have other
adverse consequences.
Mitigation Strategy: Executive
Management approves and periodically
reviews Group IT strategy to ensure
investment in IT systems and
innovations to safeguard and improve
business efficiency. Group Head of IT,
with the Cluster Heads of IT, monitor
the integrity of IT infrastructure and
data. To complement IT security teams,
under risk departments review, areas
related to IT security.
Business Continuity and Disaster
Recovery Plans
A disaster or major disruption could
have severe implications on the
business.
Mitigation Strategy: Business Continuity
and Disaster Recovery Plans are in
place for each cluster, and are tested
periodically. Disaster Recovery Plans
extend to key IT systems and data
bases/ warehouses. Physical and
electronic security systems are also
in place. Processes that reflect best
practices are also in place to review the
risk of incidents across the Group on a
periodic basis, BCP and DR plans are
tested without business disruptions.
Risk departments are mapping
operational procedures and related
controls to feedback internal audit
departments.
Political, environmental,
technological and regulatory risk
Our business sectors may be affected
by various external changes, local and
global.
Mitigation Strategy: We engage with
Governmental and non-Governmental
organisations to ensure they understand
Softlogic and to respond to questions
they have. We seek to anticipate and
respond to important changes in public
policy wherever we operate. Legal and
regulatory compliances of the Group are
monitored continuously by compliance
officers.
Social and reputational risk
Damage to Softlogic’s brands can
arise from any association, action or
inaction perceived by stakeholders to
be inappropriate or unethical. This could
lead to loss of trust and confidence
and a decline in our customer base and
affect our ability to recruit and retain
talented people.
Mitigation Strategy: Softlogic values
have been embedded in all our
business activities. Our Code of
Business Conduct guides employees
in dealing with customers, employees,
suppliers and society at large. Social
media publicity is monitored. A well-
84
structured stakeholder communication
mechanism exists to understand
diverse viewpoints.
Grievance Handling Procedure
The Company’s Grievance Procedure is set out below. All employees should bring their
grievance to the notice of the Management as per the process laid down below.
EMPLOYEE HAS A CONCERN
FUTURE PLANS
As one of Sri Lanka’s fast-growing
conglomerates, Softlogic aims to bring
value, expertise and innovation in line
with its Credo.
Softlogic’s ambitious expansion
and growth during the year has
made it obligatory to review the risk
management structure in the Group in
a much detailed manner. Experienced
and able risk teams will be set up as
required at retail and healthcare service
sectors.
Financial Services sector will be
taking the next step in terms of risk
management following various levels
of stress testing across credit risk
components and portfolio levels (For
instance, concentration risks with
deeper analysis such as stress testing
and scenario analysis of expected
credit losses). Cluster Risk Officers will
be appointed. We would strengthen
focus on operational risk areas and
concentrate on developing internal
control systems of our Retail Sector.
Softlogic will form a Board appointed
Sub-Committee on Integrated Risk
Management (IRMC), headed by a NonExecutive Board member.
These strong risk management
practices will allow us strengthen the
Group so we can aspire to exceed the
needs of our stakeholders.
Does not like
to discuss
with the
immediate
Supervisor
Does not like
to discuss
with the
immediate
Supervisor
or HOD
Yes
Discus with Immediate
Supervisor
Concern /
issue resolve
Yes
End
Concern /
issue resolved
Yes
End
Concern /
issue resolved
Yes
End
Yes
End
No
Discus with the Head
Department / Operations
No
Discuss with HR Department
Initial Inquiry of the concern
(Verbal / Written)
No
Written Complaint Lodged
Initial Assessment of the
Complaint
Respondent notified of
complaint, reply and sought
further information / evidence
sought from complaint / witness
Case Review
Further Investigation
Conciliation
Concern /
issue resolved
85
Sustainability
Report
Sustainability is integral to Softlogic and all its actions.
We believe a business must act responsibly and be
sustainable to create long-term value for its stakeholders.
LIVING THE HIGHEST
Other
Stakeholders
+14,000
Shareholders
‘Maximizing Shareholder
Returns’
‘Maximizing returns to employees,
customers, lenders and other
business partners’
Societal
contribution
‘Contribute to the greater
good of all’
Our
People
Corporate
Governance
and internal
control
Quality
Softlogic
CSR
Strategy
focus
Our
Environment
Our
Economic
Contribution
Community/
Philanthropy
This report explains our efforts
to promote economic, social and
environmental sustainability in the
communities in which we live and
work. In it, we give examples of how
we are LIVING THE HIGHEST in terms
of health and safety, environmental
stewardship, openness and honesty
strong community partnerships, and an
engaged and solution-driven workforce
in our businesses.
The theme LIVE THE HIGHEST is
built on our commitment to making a
positive difference to the communities
we serve. Our success is linked to the
condition of communities in which
we operate. If they are not thriving, it
is likely that our businesses cannot,
either. Our decisions therefore must
consciously help build sustainable
communities. We regard this approach
as one to which every employee at
Softlogic can contribute.
86
We have always linked the
success of our business to the
strength of the environment and
community in which we operate.
In the environmental space, we focus
on saving energy, water, recycling paper
and several other green projects. In the
workplace, we focus on fostering human
rights, inclusion and diversity, and on
creating safe and healthy workplaces
for our associates. And in contributing
to building sustainable communities,
we focus on promoting economic
opportunity and empowerment.
We have always linked the success
of our business to the strength of the
environment and community in which
we operate. If they are not thriving,
there is a strong likelihood that our
businesses would suffer. The decisions
we make are related to building
more sustainable communities and
earning our social acceptance as an
environmental trustee— an intrinsic
value of sustainability. We regard our
social reputation as a responsibility
of every employee at Softlogic, and it
starts with ‘me’.
In this report, you will read about our
sustainability strategy and goals, the
things we have done and the progress
we have made. We are a company
committed to LIVE THE HIGHEST, and
we are working energetically to deliver
on this aspiration.
Softlogic’s approach to CSR and
sustainability focuses on:
•
conducting business responsibly;
•
considering stakeholders’
perspectives in decision-making;
•
creating value for our shareholders
and communities; and
•
contributing to sustainable
development.
87
Top Priorities
STAKEHOLDER ENGAGEMENT MAP
Invest or
& Lenders
Government &
Regulations
Communities
Employees
Customers
Business
Partners
Ú
Ú
Ú
Ú
Ú
Ú
• Business
Strategy and
Continuity
• Risk and
reputation
management
• Financial
performance
• Regulatory
Compliance
• Local
Employment
• Health and
Safety
• Taxes and
Royalties
• Building trust
with local
communities
• Business
Continuity and
Success
• Improving
living standards
of local
communities
• Professional
Development
• Economic
Development
• Job Creation
• Satisfaction
• After Sales
Service
• Product Quality
and Safety • Active
involvement
of partners
and principals
in relevant
business areas.
• New Products
• Job Security
• Other Benefits
Ú
Corporate Engagement
• Corporate
Governance
• Investor
Presentations,
conferences,
web releases
and general
meetings
• Active Investor
Relations Desk/
Helpline
Ú
• Social Projects
• Policy
development
and advocacy
• Industry trade
association
memberships
Ú
• Social
Investment
programmes
• Media and social
media
• Royalty relations
Ú
• Training &
Development
• Internal
Communication
• ‘The Code’
• Human Capital
Helpline
Ú
Ú
• Value for Money • Constant
dialogue with
• New product
partners/
introductions
principals, most
whom are
international
agencies/ brands
• 1:1 Formal
dialogues when
necessary
• CSE/ SEC Filing
and notifications
Ú
Operations Engagement
• Roadshows
• Meetings
with Research
analysts/
investment
advisors/ fund
managers and
other investors
Ú
• Permit Review
and other
compliance
activities
• Collaboration
on social
investment
projects
• Participating
in surveys and
research
Ú
• Community
outreach
Ú
• Employee
Volunteering
• Philanthropy and • Management
System
volunteering
• Media
Ú
Ú
• Investment in
effective team,
procedures,
brands etc.
• Customer
questionnaires
• Management
organised store
visits
• Customer Help
desk
• Presentations
and conference
calls at regular
intervals on
financial and
non-financial
updates
• International
expertise on
board from
strategic/
operational
execution
88
“To win in the marketplace,
our employees will be the
differentiator. Softlogic needs the
right people in the right roles, with
the right skills and attitude and
doing their best work, to excel,”
Natasha Fonseka, Group Head of
Human Capital
Softlogic’s CSR Decision-Making Process
Sectoral/ Group Senior Management
CSR Working Groups
(representatives of functions related to sustainability
strategies and CSR teams at individual sectors)
We strive to recruit the brightest
talent and provide them with
the resources to succeed. This
commitment to, and focus on,
people has been part of Softlogic’s
core values from its origin.
Our people are at the forefront
of everything we do. Having the
right people, properly resourced
and motivated, enables us deliver
excellent results and meet our
strategic aspirations.
We have these key people
priorities:
1. Putting the right people in the
right place at the right time, to
support customer needs;
2. engaging them, to make sure
they share our passion for
better customer service; and
3. building leaders, and
strengthening our leadership
capability at all levels.
‘A priority is to ensure everyone
who works with, or at, Softlogic is
treated fairly.’
2004/05
560
2014/15
8,433
89
Development
is prioritised, so all employees develop their skills and contribute as best they can.
Accelerated leadership
development
prepares leaders for future roles and provides greater bench strength.
Clear career paths
ensure employees are in appropriate positions, allowing Softlogic to serve customers
better.
Diversity and inclusion
are part of our talent decisions. By embracing diversity of thought, background, ethnicity
and gender, Softlogic is more inclusive and reflects that diversity in its actions.
GREAT RESULTS FROM
A GREAT TEAM
Softlogic is investing strategically in
a talent-focused culture. Our training
framework brings a consistent approach
to development opportunities across
the Group and provides job profiles and
career paths, and technology and career
development tools, for employees. A
range of in-house and external training
opportunities is provided for staff,
based on the annual Training Need
Analysis.
Our approach has equipped staff with
the skills to excel in their jobs. For
instance, Asiri nursing staff are among
the most valued in the industry, as they
undergo a three-year comprehensive
training course at the Asiri School of
Nursing, focused primarily on improving
patient care and service quality. During
the year, Asiri gave special attention
to obtaining the Joint Commission
International Accreditation (JCIA), the
highest accreditation a hospital can
obtain. In addition to Asiri’s routine
training, specialised training was
conducted for the staff of Asiri Surgical
Hospital and Central Hospital.
Regional Product Training workshops
are held monthly to enhance product
knowledge and provide market
updates to retail sales staff. These
are conducted by representatives of
our principals and by use of in-house
resources.
1 Training need Analysis
2 Training Plan
3 Iddenfication of Training sources
and preparation of Training budget
4 Publishing the training Calendar
for the year
5 Post training evaluation / Assessment
of training effectiveness
Female
44%
Male
56%
90
Softlogic’s commitment to learning
and development is directed at helping
employees and leaders achieve
outstanding results. This commitment
is delivered in many ways, focused on:
•
New Employee Orientation
•
Job Skill Training
•
Sales and Product Training
•
Employee Development
•
Leadership Development
•
Mentoring
•
Job Rotation
•
Executive Coaching
•
Career Guidance
During the year
•
Softlogic Retail organised a
workshop and team building
activity dealing with business
objectives and areas of focus. Each
employee was given their annual
objectives at this workshop.
•
A six-month course in English
was held for Centara Ceysand’
employees, for whom familiarity
with English is very important.
•
A training session on cocktails
was held for relevant employees,
led by Mike Sweetman, National
Vice President, United Kingdom
Bartenders Guild and British Trainer
of Food and Beverage for Sri
Lanka. Experts from our supplier
Grande Champagne also conducted
a seminar for employees.
sustainability are ingrained in our culture
and values, and enshrined in ‘the Code’.
EMPLOYEE INVOLVEMENT
We believe engaged employees
understand Softlogic’s vision, feel a
sense of ownership in the Company’s
success and contribute to improved
business performance across the
board, not least in safety, customer
satisfaction, financial performance and
environmental leadership.
Leverage
job skills
Participation in
volunteer work
Donations
RESPONSIBLE BEHAVIOUR
Conducting business responsibly
is essential to maintain Softlogic’s
reputation. Compliance and risk
management are integrated in our
day to day activity. Responsibility and
Raise awareness of
social issues
We engage employees in establishing
goals, initiatives and processes. They
are kept informed of key happenings
across the Group. Investor Relations
emails employees on financial and
share performance; promotional emails
and updates from Group Human Capital
keep staff informed of happenings
across the Group.
Employees at Softlogic have many
opportunities to participate in social
activities of the Group.
91
A Blood Donation Campaign was
organised in July, at Asiri Surgical
Hospital. Over 110 employees donated
blood at this event.
Employees of Centara Ceysand Resorts
& Spa, have undertaken responsibility
to ensure the river and beaches
surrounding the resort are kept clean.
SHARED VALUES
The Group Sustainability Team, with
individual subsidiaries, formulates
Softlogic’s social responsibilities policies
and implements these across the
Group. Group Human Capital promotes
CSR activities through the Group by
ensuring policies and initiatives are
appropriately communicated.
Recognising the importance of
employee awareness on effective CSR,
Softlogic offers a variety of programs
• Physical work and environment
• Work life balance
Work
using a three-level approach, where
employees are first encouraged to learn
about CSR, second to participate in CSR
activities, and third to incorporate CSR
in their day-to-day work.
• Job Profile
• Resources
• Processes
• Accomplishments
Societal
contribution
People
• Senior Leadership
• Colleagues
• Valuing People
• Customers
Engagement
Company
Policies
and
Practices
• Performance Appraisals
• Diversity
• Company Reputation
Operations
Total
Rewards
• Training and development
• Intercompany transfers
and other career
opportunities
• Pay
• Performance related incentives
• Recognitions
• Other benefits
92
We believe employee participation
is essential for our community
engagement to be meaningful. Softlogic
encourages employees to become
aware of social issues, deepen their
understanding of these and participate
in fundraising initiatives, community
projects and other activities. We
encourage employees to be instructors
in workshops for children and students,
and to contribute in other ways that
benefit from their skills and aptitudes.
Centara Ceysand opened their doors to
University students for a day, so they
could visit and learn about the hotel
industry.
EMPLOYEE RECOGNITION
Acknowledging the contributions of our
workforce is important in engaging and
retaining employees. Channels through
which we recognise employees for
their exceptional work are:
•
Spotlight, our corporate employee
recognition/ promotion program.
•
Quarterly/ Annual Performance
Awards in subsidiary companies,
which provide leadership teams
with the opportunity to honour elite
performance.
A Showroom Staff Day is held for
showroom employees, to show
appreciation for the efforts they put in.
Ten programmes were held across the
island during the year.
A staff motivational programme themed
“Sales Magic” was held before the
November/December retail sales
season. This was directed at the Sales
team, with over 300 participating.
Clean Organisational Culture
Softlogic has zero tolerance of unlawful
activity. We strive for an unblemished
organisational culture through education
and strict monitoring. Induction
programmes and communications on
ethics guide employees on the courses
of action they should take in given
situations. Strict disciplinary action is
taken where there are breaches, with
countermeasures installed to prevent
recurrence.
Other Employee Benefits
Softlogic takes a comprehensive
approach to enhancing employee
wellbeing, whether related to health,
life or money. Softlogic offers tools
and resources that support the various
facets of wellness. Program offerings
include special health assessment
packages at Asiri, health coaching,
wellness challenges and financial
counselling. Free medical insurance
packages are provided to employees
across the Group; discounts are
provided when employees purchase
any Softlogic product /service.
The year’s highlights include these:
Centara Ceysand Resorts & Spa held
an awareness programme for its
employees on World AIDS Day. A video
presentation on AIDS was followed
by a quiz. Winners received prizes
to encourage involvement in such
awareness sessions.
A campaign was organised by the Asiri
Group in May 2014 to mark World Hand
Hygiene Day, with over 300 employees
participating. Participants were given
practical knowledge in proper hand
hygiene.
Fire drills are organised regularly
in Softlogic locations, to ensure
employees are aware of emergency
procedure in case of fire.
Softlogic strives for a flexible work
environment so employees can be
more effective in their work and home
lives. Arrangements include job sharing
93
and flextime. These and other initiatives
promote work-life balance and enable
employees to realise their potential,
while maintaining a healthy balance.
Several of Softlogic’s initiatives are
aimed at bringing together employees
who work in different parts of the
country.
Softlogic supports employees on
Academic and Continuous Professional
Development, by sharing costs they
incur on external training, professional
memberships and examinations.
During the year, the e-waste mechanism was extended across our key retail showrooms and
branches. The Group’s waste paper disposal during the year was:
THINKING GREEN
At Softlogic, we believe responsible
management of the materials we use
and the waste we produce is important
for operational efficiency and for the
environment. We seek opportunities to
reduce waste, and to recycle and reuse
it to ensure the waste we do produce is
handled responsibly. We monitor paper
waste generation and recycling across
the Group through an outsourced
recycler.
540 fully
grown Trees
55,791 litres
of Oil
127,160 kwh
of Electricity
95 cubic meter
of Land fill
1,010,286
litres of
Water
Reduced Green House Gas
Emissions by 31,792 Kgs
of Carbon equivalent
Our environmental initiatives focus on:
•
Energy use
•
Waste management
Green Projects
Energy use is important to our
business from environmental and cost
perspectives; we strive to consume
less and reduce our environmental
impact by monitoring power
consumption. Some elements of our
approach involve use of promotional
emails / text messages rather than
printed handbills, and use of energy
efficient lighting systems and products.
Waste management is an important
focus as our operations generate paper,
plastic and metal waste; we strive to
consume less and recycle more, and to
reduce our environmental impact by:
•
Encouraging individual
responsibility for recycling, and
providing recycling facilities for
paper.
•
Setting printers/copiers to doublesided printing and photocopying as
default.
•
Using proper disposal for IT and
electronic equipment.
•
Using licensed organisations to
remove/ recycle waste.
94
‘Green’ projects for the year included:
Future Automobiles, with its principal
Ford Motor Company, awarded a
USD20,000 (approximately Rs.2.6 Mn)
grant to the Field Ornithology Group
of Sri Lanka (FOGSL) under Ford’s
Environmental Grants Program for
2014. The grant will promote the study
of birds and through this, environmental
conservation and social interaction
in Sri Lanka. The FOGSL project is
entitled “Exemplary Citizens through
Conservation – Creating Ambassadors
of Peace and Reconciliation”. The
program will link communities and
students from previously war-torn
regions in the North and East with
counterparts elsewhere in Sri Lanka,
with nature studies and the study of
birds as a focal point of their interaction.
The first of a series of workshops was
held in the Sinharaja World Heritage site
recently.
Softlogic Finance launched its first
‘Clean Zone’ in March. The programme
aims to improve cleanliness across
100km of road, with waste segregation
and recycling supported. The project
was launched by Deputy Minister
of Policy Planning and Economic
Affairs, Hon. Dr. Harsha de Silva at
the company’s Nawala branch. The
‘Clean Zone’ initially focuses on 500m
of road on either side of the Nawala
branch. The project is next looking
at improving cleanliness of 2km of
road on either side of all branches and
pawning centres across the island. The
benefit of this programme is potentially
significant, contributing also to disease
control.
Asian Alliance Insurance continued
its ‘Protect Your Beautiful World’
project, focused on supporting natural
reserves and related establishments
island-wide. The project provides ecofriendly paper bags to tourists visiting
World’s End, without charge, and
was launched in 2013 in co-operation
with the Department of Wildlife
Conservation. The unique design of the
bags differentiates them from ordinary
eco-friendly bags; their attractiveness
even makes users preserve them as
souvenirs of their journey to World’s
End.
Asian Alliance Insurance also continued
placing awareness boards on the
outskirts of the Yala National Park, and
at Habarana and Minneriya, to create
awareness on the preservation of
wildlife.
Besides this, Asian Alliance Insurance
contributed to the ‘Manampitiya project’
in collaboration with the Department
of Wildlife Conservation. This centres
on the Floodplains Park, Manampitiya,
an area of 17,500 hectares. The
destruction of forests and pollution
of the environment have made wild
animals stray from their natural habitat
and wander into densely populated
areas, which results in them being
harmed by vehicles and also becoming
a threat to near-by villages. 19 signs
were erected on the main road
between Batticaloa and Polannaruwa.
The signs, in all three languages, are
on luminous surfaces and urge drivers
to ‘Drive Slow’ and ‘Be Watchful’. The
project also seeks to stop residents
from dumping garbage and polluting the
environment.
Asian Alliance Insurance also worked
with the Department of Forests
to spread awareness about the
importance of protecting natural
resources. 13 signs were erected along
the Habarana–Trincomalee road carrying
messages such as ‘Keep Nature Clean’,
‘Drive Slowly’, ‘Love Animals’, ‘Love
Nature’, ‘Be Watchful of Nature’, ‘Keep
your eyes on the road’, ‘Slow Down
– Elephant Crossing’, ‘Give Life to
95
Wild Life’ and ‘Slow Down – Peacock
Crossing’.
In conjunction with the Mayor and
District Secretary of Nuwara Eliya,
Asian Alliance Insurance designed a
guide book for local and foreign visitors
to Nuwara Eliya, providing valuable
information for tourists on beautiful
locations in the town.
Asian Alliance Insurance’s numerous
‘green’ projects were reflected in their
annual calendar, drawing stakeholder
attention to these initiatives.
Odel made responsible whale-watching
its cause for World Animal Day 2014.
Sri Lanka lies within the International
Whaling Commission’s protected zone
in the Indian Ocean. The most popular
spots for whale-watching excursions
are Kalpitiya, Mirissa, Dondra and
Trincomalee. Because of our proximity
to the deep waters of the continental
shelf, whales come in very close to
land. A campaign to protect the giant
cetaceans was carried out by Odel as
part of its commitment to promote
animal conservation in support of World
Animal Day. Nearly 500 children and
their parents attended the educational
programme at Odel’s Alexandra
Place store to learn about these giant
mammals of the ocean; their habitat,
their lifestyle, from what they need to
be protected, and why. As part of the
campaign, Odel produced a whaleinspired range of products including T
shirts, mugs, soft toys and stationery.
Part of the profits from the sale of
these products were contributed to
Sri Lanka’s first Responsible Whale
Watching Accreditation programme in
Mirissa conducted by Friends of the
Sea, a non-profit, non-governmental
organisation whose mission is
conservation of the marine habitat.
Odel also conducted a campaign to
save Sri Lanka’s beaches through an
inspired Eco Art festival marking World
Environment Day. The objective was
to create awareness of the problem
of beach pollution amongst the
younger generation. The spectre of
coastal pollution caused by unchecked
littering was colourfully and poignantly
addressed by a hundred little hands.
Equipped with crayons, water colours,
pencils, paper and other materials,
they sketched and painted under the
watchful eyes of a panel of judges,
producing a kaleidoscope of visual
interpretations of Odel’s theme of
'Save our beaches; Do your bit to
combat pollution.' This was preceded
by a clean-up of Mount Lavinia beach
organised by the Human Resource
Department of Odel to involve
employees in this cause, along with the
general public.
Centara Ceysand Resorts & Spa took
steps with its employees and guests
to mark Earth Day. Earth Hour was
marked with a shutdown of power
and an outdoor barbecue for guests.
The employees participated in a
special training programme touching
on energy saving and preserving the
environment. The Human Resources
Division of the resort organised a
seminar on environment preservation at
the junior section of Aluthgama Maha
Vidyalaya. The senior students of this
school visited the resort for a seminar
delivered by Dr. Varuna Fernando, a
consultant in environmental studies.
96
COMMUNITY INVOLVEMENT
AND PHILANTHROPY
Making a positive difference in our
community
In the spirit of our corporate ideal – all
people, regardless of race, religion or
culture, living and working together
harmoniously into the future– Softlogic
takes an approach to business that is
socially responsible and economically
logical. For our customers, we offer the
best products possible, simultaneously
striving to improve our relationships
with local communities and contributing
to peoples’ happiness. This is even
more marked as we expand our
presence across the island, amongst
diverse communities in cities and in
rural areas facing difficult social and
economic conditions.
Our branch network in the Retail
and Financial Services clusters looks
at employing people and sourcing
materials from the immediate
community, helping raise local living
standards.
These are a few projects the Group
handled or contributed to during the
year:
Softlogic Holdings contributed Rs.10
Mn to a project of the National Housing
Development Authority aimed at
assisting communities facing housing
problems across the island. The
Authority’s programmes benefit low
income rural and urban families.
Softlogic Holdings was lead sponsor for
the event ‘Ridhi Pahan Rayak’ organised
by the Kandy Sinhala Velada Peramuna
women’s arm towards establishing a
new kidney transplant unit at the Kandy
National Hospital.
Softlogic Holdings helped the Holy
Rosary Church of Arukgoda to establish
a ‘Daham Pasala’. Previously, catechism
classes were conducted outdoor, under
trees. Scorching heat and monsoon
rains were hindrances. The Parish
Council and the students organised a
Fundraising Raffle to which Softlogic
provided handsets. The proceeds were
utilised to construct a ‘Daham Pasala’
building.
Softlogic recognises, in its philanthropy,
that our subsidiaries are closest to
their customers and best positioned
to determine how to serve them
most effectively. Our approach to
community engagement and charitable
giving allows individual companies to
determine how best to respond.
Asiri Group continued its free health
camp programmes, this time in
collaboration with social organisations
and the Military Forces in various
locations. Each camp costs about
Rs.150,000. The rural areas in which
camps were held during the year
were Hambantota, Galle, Kataragama,
Udawalawe, Panama, Mullaitivu,
Vavuniya and Padaviya.
Asiri Hospital Matara organised a Health
Camp (Lama Suwasahana) for school
children at Mahindarama Temple,
Thalaramba, at which approximately
500 children were treated through
the concerted efforts of its staff.
Another Medical Camp was organised
for villagers at Kohuliadda School,
Hakmana, at which nearly 250 people
were treated. A free health camp (Guru
Matha, Guru Piyawaru Upahara Dinaya)
for retired school teachers was also
organised in Hakmana, to celebrate the
7th Anniversary of Asiri in Matara; 110
retired school teachers were treated at
the camp.
97
Asiri Surgical Hospital has performed
free heart surgeries for underprivileged
children since 2011, successfully
conducting 67 such surgeries to date.
22 of these were performed during the
year, at an average cost of Rs.450,000
each. The patients are referred to Asiri
Surgical Hospital by the Lady Ridgeway
Hospital for Children; this initiative
enables children from low-income
households to obtain life-saving surgery
at no cost.
Group employees supported the Sirasa
Shakthi Sahana Yathra unit by donating
essential provisions to individuals
who had been displaced owing to the
landslide in Koslanda, which affected
many in the area. Softlogic Finance
assisted those displaced, some of
whom were left with no families or
homes, with employees of its Badulla
Branch coordinating relief operations.
A large consignment of clothes for
adults and children, and much needed
dry rations, were sent to the area and
distributed among the victims.
Millions of people across 14 districts of
Sri Lanka were affected by prolonged
drought. Polonnaruwa, where hundreds
of families rely on agriculture for their
livelihood, was one of the areas most
severely affected. Softlogic Finance
delivered a large consignment of
much-needed water, dry rations and
other necessities to those families.
This was conducted with the help of its
Polonnaruwa Branch, who coordinated
the supplies. The employees of
Softlogic Finance were prime
contributors to this initiative.
Softlogic Group continued its cattle
rescue programme this year. Cattle
intended for slaughter were released
and given to low income families to
help them in their daily lives.
Copies of the 'Tripitaka', the collection
of teachings of Lord Buddha, were
presented to newly ordained Buddhist
monks in the monastery situated at
Samangala in Ampara.
Our Economic Contribution
Year Ending 31 March
2015
2014
Change (%)
Direct Economic Value Generated
Revenue
39,563.9
29,246.4
35%
Interest Income
608.9
654.4
(7%)
Dividend Income
141.9
146.3
(3%)
5.3
13.3
(60%)
Share of results of Associates
Value Gain in investment property
Other Income
Total Value Created
526.7
91.1
478%
1,534.0
42,380.6
853.6
31,005.1
72%
37%
Economic Value Distributed
Operating Cost
29,343.3
21,687.0
35%
Employee Wages & Benefit
5,562.6
3,745.8
49%
Payments to Government
2,962.8
1,903.4
56%
Capital Providers
2,692.8
2,780.1
(3%)
40,561.5
30,116.2
35%
Depreciation
1,190.0
901.8
32%
Amortisation
248.0
204.0
22%
68.8
65.6
5%
Retained Profit
1,819.1
888.8
105%
Total Retained
3,325.9
2,060.2
61%
Total Value Distributed
Economic Value Created
Defined Cost Benefit - Net
98
Board Remuneration Committee Report
The Remuneration Committee
recommends to the Board, the Group’s
framework of executive remuneration
and specific packages and conditions of
employment for each of the Executive
Directors and Senior Management.
The Remuneration Committee
comprises three Non-Executive
Directors (two of whom, including the
Chairman, are Independent Directors).
Decisions of the Committee are taken
at meetings or by circular resolutions.
d. Board members’ remuneration on
factors including their contribution
to the activities of the Board, the
number of Board and Committee
meetings attended, and the
performance and results of the
Company.
In discharging its responsibilities
the Remuneration Committee is
assisted by the Group Head of Human
Capital, who acts on the instructions
of the Committee and maintains an
independent position in which conflicts
of interest are avoided.
During the year under review, one
Remuneration Committee meeting was
held in May 2014. The composition of
the Remuneration Committee and the
attendance at the meeting held is as
below:
e. Ensure disclosure of Directors’
remuneration is accurate, complete
and transparent.
Name
Category
Meetings attended
Mr. W M P L de Alwis, PC
Chairman
01/01
Desamanya P D Rodrigo*
Member
01/01
Mr. G L H Premaratne**
Member
n/a
Mr. R A Ebell ***
Member
n/a
* Resigned with effect from 30 June 2014
** Appointed with effect from 31 July 2014
*** Appointed with effect from 8 July 2015
The Chairman of the Group, who is also
Managing Director, attends meetings by
invitation. No Director of the Company
is involved in determining his own
remuneration.
The Chairman of the Committee
reports to the Board on its activities.
The performance of the Committee is
reviewed as part of the effectiveness
review of the Board Committees.
COMMITTEE OBJECTIVE
The main purpose of the Board
Remuneration Committee is to ensure
adoption of remuneration policies which
attract and retain top talent in alignment
with the Company’s strategy, and to
drive performance in the short and long
term.
f.
Recommend retirement benefits
of the Managing Director and
Executive Directors, in terms of
guidelines adopted by the Board.
g. Recommend short term incentive
schemes, after reviewing their
design, the targets set and the
participation thresholds.
h. Review and monitor progress in
people management.
COMMITTEE STRATEGY
The broad terms of reference of the
Remuneration Committee are to:
a. Recommend the remuneration
policy to be adopted at Softlogic
Holdings PLC. The remuneration
strategy considers current
industrial trends, employee
experience, past performance
and the need for retention and
motivation.
b. Review the performance of the
Managing Director, Executive
Directors and Senior Management
in the context of the Company’s
performance.
c. Recommend the perquisites
applicable to the Managing Director
and Executive Directors.
Softlogic Holdings’ remuneration
policy is designed to attract, develop
and retain passionate, committed
and talented people to effectively
implement Group strategy and
create value for its shareholders.
The remuneration strategy is based
on retaining critical skills and driving
performance through attractive pay
and incentive packages. A significant
portion of executives’ total potential
remuneration is performance-related,
to drive the right behaviours. Targets
are set annually in the context of
the Group’s plans and the economic
environment in which it operates.
INTERNAL & EXTERNAL INPUT
The Group’s policy on senior executive
remuneration is designed to encourage
individuals who can bring their
99
experience and independent views
to discussions on the policy, strategic
decisions and governance of the Group.
In setting remuneration, the Committee
takes into consideration the practices
of other companies of similar size
and scope. A key philosophy is that
staff must be properly rewarded and
motivated to perform in the Group’s
best interests.
Members of Senior Management
and the Company Secretary have,
as necessary, contributed to the
Committee’s discussions.
The Committee considers market data
available when considering incentive
and remuneration packages.
The Remuneration Committee will seek
relevant professional advice whenever
necessary to increase its understanding
and effectiveness.
ACTIVITIES DURING THE YEAR
•
considered succession plans for
executives and reviews successors
identified for key positions in the
Group.
The Committee also focused on:
•
Developing a Succession and
Talent Management Plan.
•
Monitoring equality of treatment,
and the encouragement of
diversity, across the Group.
•
Recognising long service through
awards to long-serving employees.
I thank Desamanya P D Rodrigo, who
stepped down from the Board and
the Committees of Softlogic Holdings
during the year, for his valuable
contribution in the past years as a
member of the Committee. I welcome
Mr. Harris Premaratne and Mr. Richard
Ebell, who were appointed to the
Committee on 31 July 2014 and 8 July
2015 respectively. I also extend my
gratitude to the Head of Group Human
Capital, Natasha Fonseka and her team,
for their valuable contributions.
The Committee:
•
formally considers succession
plans for executives and regularly
reviews identified successors for
key positions in the Group;
•
recommended to the Board the
remuneration of the Chairman/
Managing Director, Executive
Directors and Senior Management;
•
recommended bonuses and salary
adjustments for Group employees,
following quarterly and bi-annual
appraisals and a final performance
evaluation; and
Prasantha Lal De Alwis
31 July 2015
100
Audit Committee Report
SCOPE
The responsibilities of the Committee
are set forth in the written Terms of
Reference (TOR), a revised version of
which was adopted by the Board on 8
July 2015.
The Committee will not engage directly
with Group companies covered by other
audit committees established under
mandatory regulatory requirements; it
receives briefings on the activities of
these committees as necessary.
COMPOSITION
The Committee was chaired by
Desamanya P D Rodrigo until his
resignation from the Board on 30 June
2014, and thereafter by R A Ebell, who
was appointed a Director on 20 March
2014 and a member of the Committee
on 19 June 2014. Other members of
the Committee are:
Dr. S Selliah
Mr. W M P L De Alwis, PC
Mr. G L H Premaratne (appointed w.e.f.
19 June 2014)
Softlogic Corporate Services (Pvt) Ltd.,
served as Secretary of the Committee up
to 30 June 2014. Mr D Vitharanage, Chief
Risk Officer Chief Internal Auditor (CRO/
CIA) served as Secretary thereafter.
•
the work and performance of the
internal auditors;
•
the Company’s relationship with
its External Auditors, auditor
independence and performance, and
the management’s responsiveness
to external audit; and
•
procedures in place to examine,
regularly, the Company’s ability to
continue as a going concern in the
foreseeable future.
The Committee meets quarterly to
review and make recommendations
on the quarterly and annual financial
statements before they are considered
and approved by the Board for release
to shareholders and the public. It also
meets at other times to consider
matters arising from its review of the
financial statements and other subjects,
including internal audit findings and
reviews of specific businesses and
change initiatives.
The Committee has reviewed the plan for
reducing the number of External Auditors
deployed across the Group and reassigning
audits to improve audit cohesiveness. It has
also provided inputs in the determination of
KPIs and evaluation of performance of the
CRO / CIA.
MEETINGS & REPORTING
ACTIVITY & FOCUS
The Audit Committee has primarily
focused during the year on its
responsibilities for monitoring:
•
•
integrity of the Company’s and
Group’s financial statements,
including the reasonableness of
assertions made in their preparation,
the appropriateness of accounting
policies used and the adequacy of
presentation and disclosures made;
effectiveness of internal control
over financial reporting;
The Committee met fourteen [ 14 ]
times during the year.
Attendance at these meetings has been
as follows:
Name
Desamanya P D Rodrigo
The Chief Financial Officer attends
all meetings by invitation, and other
members of Senior Management attend
meetings by invitation as required.
The External Auditors attend meetings
by invitation when their presence is
necessary; discussion of their major audit
and review findings is a key component
of those meetings. The Committee
further meets with the External Auditors,
with no members of management
present, to cover contentious matters
and matters they wish to discuss in
confidence with the Committee.
The Committee makes written
reports to the Group Chairman /
Managing Director, for dissemination
to the Board, following each
quarterly meeting at which financial
statements are reviewed prior to
a recommendation being made on
them. These draw attention to matters
requiring consideration and action.
The Committee also briefs the Group
Chairman /Managing Director from time
to time on matters of concern, at ad
hoc meetings or at meetings scheduled
by him with the Non-Executive
Directors.
REAPPOINTMENT OF EXTERNAL
AUDITORS
The Audit Committee has proposed
to the Board of Directors that
the incumbent auditors, Ernst &
Young, Chartered Accountants be
recommended for re-appointment for
the year ending 31 March 2016 at the
upcoming Annual General Meeting.
Meetings
attended
2/2
Mr. R A Ebell
13 / 13
Dr. S Selliah
14 / 14
Mr. W M P L de Alwis, PC
12 / 14
R A Ebell
Chairman (w.e.f. 1 July 2014)
Audit Committee
Mr. G L H Premaratne
12 / 14
31 July 2015
101
Annual Report of the Board of Directors
on the Affairs of the Company
The Directors of Softlogic Holdings
PLC have pleasure in presenting to the
members their Annual Report together
with the Audited Financial Statements
of the Company and the Group for the
year ended 31 March 2015.
GENERAL
Softlogic Holdings PLC is a public
limited company which was
incorporated under the Companies
Act No. 17 of 1982 as a private limited
company on 25 February 1998, reregistered under the Companies Act
No. 07 of 2007 on 17 December 2007,
converted to a public limited liability
company on 10 December 2008, and
listed on the Colombo Stock Exchange
on 20 June 2011. The name of the
Company was changed to Softlogic
Holdings PLC on 25 August 2011.
PRINCIPAL ACTIVITIES
The principal activities of the Company
are holding investments, providing
management services and financial
assistance to its subsidiaries. The
principal activities of the subsidiary
companies are Information and
Communications technology,
Automobiles, Retailing, Hoteliering
and Leisure, providing Financial and
Insurance services and Healthcare
services. The Group operates through
branches, offices and subsidiaries in Sri
Lanka and overseas.
and services in each of its business
segments.
PERFORMANCE REVIEW
The Financial Statements reflect the
state of affairs of the Company and the
Group. This report forms an integral part
of the Annual Report of the Board of
Directors.
FINANCIAL STATEMENTS
Section 168 (b) of the Companies Act
requires that the Annual Report of the
Directors include financial statements
of the Company, in accordance with
Section 151 of the Act and Group
financial statements for the accounting
period, in accordance with section
152 of the Act. The requisite financial
statements of the Company are given
on pages 108 to 214 of the Annual
Report.
DIRECTORS’ RESPONSIBILITY
FOR FINANCIAL REPORTING
The Directors are responsible for
the preparation of the Financial
Statements of the Company to reflect
a true and fair view of the state of
affairs. The Directors are of the view
that these financial statements have
been prepared in conformity with the
requirements of the Companies Act No.
07 of 2007 and the Sri Lanka Financial
Reporting Standards. A statement in
this regard is given on page 106.
FUTURE DEVELOPMENTS
An indication of likely future
developments is set out in the
Chairman’s Review on pages 13 to
15. In the ordinary course of business
the Group develops new products
AUDITOR’S REPORT
The Auditor’s Report on the financial
statements is given on page 107 of the
Annual Report.
SIGNIFICANT ACCOUNTING
POLICIES
The significant accounting policies
adopted in the preparation of the
financial statements are given on
pages 117 to 140 of the Annual Report.
There was no change in the accounting
policies adopted from the previous year
except those mentioned in Note 1.7 to
the Financial Statements.
PROPERTY, PLANT &
EQUIPMENT
The details and movement of property,
plant and equipment during the year
under review is set out in Note 15 to
the Financial Statements on pages 172
and 175.
CAPITAL EXPENDITURE
The total capital expenditure incurred
on the acquisition of property, plant
and equipment for the Company and
the Group amounted to Rs.6 Mn
(2014 – Rs.15 Mn) and Rs.4,284 Mn
(2014 – Rs.3,505 Mn) respectively.
Details of capital expenditure and their
movements are given in Note 15 to the
Financial Statements on pages 172 to
174 of the Annual Report.
RESERVES
The reserves for the Company and the
Group amounted to Rs.541 Mn (2014
Rs.223 Mn) and Rs.2,536 Mn (2014 –
Rs.1,713 Mn) respectively.
The movement and composition of
the Capital and Revenue reserves is
disclosed in the Statement of Changes
in Equity.
102
Annual Report of the Board of Directors
on the Affairs of the Company
DONATIONS
During the year, donations made by
the Company and the Group amounted
to Rs.10.1 Mn (2014 - Rs.0.1 Mn)
and Rs.16.1 Mn (2014 – Rs.4.7 Mn)
respectively.
STATED CAPITAL
The stated capital of the Company
as at 31 March 2015 was
Rs.5,089,000,000.00. There was no
change in the stated capital of the
Company during the year under review.
disclosure in the financial statements
other than those disclosed in Note 47 to
DIRECTORATE
The following Directors held Office
during the year under review. The
biographical details of the Board
members are set out on pages
18 and 19.
Mr. A K Pathirage (Chairman / Managing
Director)
Mr. G W D H U Gunawardena
Mr. R J Perera
TAXATION
Mr. H K Kaimal
The information relating to income tax
and deferred taxation is given in Note
10 to the Financial Statements.
Mr. M P R Rassool
DIVIDENDS
Mr. W M P L De Alwis, PC
The Directors declared an interim
dividend of Rs.0.25 per share for the
year under review which was paid on
19 May 2015.
Mr. G L H Premarathne
STATUTORY PAYMENTS
In terms of Article 87 of the Articles of
Association of the Company, Messrs R
J Perera, H K Kaimal and Dr. S Selliah
retire by rotation and being eligible offer
themselves for re-election.
The Directors, to the best of their
knowledge and belief are satisfied that
all statutory payments in relation to the
government and the employees have
been either duly paid or appropriately
provided for in the Financial
Statements.
EVENTS AFTER THE DATE OF
THE STATEMENT OF FINANCIAL
POSITION
No circumstances have arisen and no
material events have occurred after the
date of Statement of Financial Position,
which would require adjustments to, or
Dr. S Selliah
Desamanya P D Rodrigo (resigned
w.e.f. 30th June 2014)
Mr. R A Ebell
RETIREMENT AND RE-ELECTION
OF DIRECTORS
DIRECTORS’ SHAREHOLDING
Directors’ interest in the shares of the
Company as at 31 March 2015 were as
follows.
Name of Director Mr. A K Pathirage No. of Shares
362,933,569
Mr. G W D H U Gunawardena 57,527,300
Mr. R J Perera 60,836,700
Mr. H K Kaimal 64,870,800
Mr. M P R Rassool Dr. S Selliah 2,000,000
Mr. W M P L De Alwis, PC -
Mr. G L H Premarathne -
Mr. R A Ebell -
DIRECTORS’ REMUNERATION
Directors’ remuneration in respect of
the Company for the financial year
ended 31 March 2015 was Rs.19 Mn
(2014 – 34 Mn). The remuneration of
the Directors is determined by the
Board.
DIRECTORS’ INTERESTS IN
CONTRACTS AND PROPOSED
CONTRACTS WITH THE
COMPANY
Directors’ interests in contracts, both
direct and indirect are referred to in
Note 42 to the Financial Statements.
The Directors have no direct or indirect
interest in any other contract or
proposed contract with the Company.
INTERESTS REGISTER
The Interests Register is maintained
by the Company as per the Companies
Act No. 07 of 2007. All Directors have
disclosed their interests pursuant to
Section 192(2) of the said Act.
SHAREHOLDERS’ INFORMATION
The distribution of shareholders is
indicated on page 215 of the Annual
Report. There were 14,169 registered
shareholders as at 31 March 2015
(31 March 2014 – 15,557).
103
SHARE INFORMATION
Information on share trading is given on
page 216 of the Annual Report.
INTERNAL CONTROL
The Directors are responsible for the
governance of the Company including
the establishment and maintenance
of the Company’s system of internal
control. Internal control systems are
designed to meet the particular needs
of the organisation concerned and the
risk to which it is exposed and by their
nature can provide reasonable, but not
absolute assurance against material
misstatement or loss. The Directors
are satisfied that a strong control
environment is prevalent within the
Company and that the internal control
systems referred to above are effective.
RISK MANAGEMENT
The Group’s risk management
objectives and policies and the
exposure to risks, are set out in pages
79 to 84 of the Annual Report.
The Auditors of the Company, Messrs
Ernst & Young, Chartered Accountants
were paid Rs.1.7 Mn as audit fees for
the financial year ended 31 March 2015
(2014 – Rs.1.5 Mn) by the Company,
details of which are given in Note 8 to
As far as the Directors are aware, the
Auditors do not have any relationship
(other than that of an auditor) with the
Company that would have an impact
on their independence. The Auditors
also do not have any interest in the
Company.
Having reviewed the independence
and effectiveness of the external
auditors, the Audit Committee has
recommended to the Board that the
existing auditors, Messrs Ernst &
Young, Chartered Accountants be
reappointed. Ernst & Young have
expressed their willingness to continue
in office and an ordinary resolution
reappointing them as auditors and
authorising the Directors to determine
their remuneration will be proposed at
the forthcoming AGM.
ANNUAL GENERAL MEETING
The Annual General Meeting of
the Company will be held at the
“Committee Room C” of Bandaranaike
Memorial International Conference
Hall (BMICH), Bauddhaloka Mawatha,
Colombo 07 on Wednesday 30th day
of September 2015 at 10.30 a.m. The
Notice of the Annual General Meeting is
on page 219 of the Annual Report.
For and on behalf of the Board
A K Pathirage
Chairman/Managing Director
H K Kaimal
Director
CORPORATE GOVERNANCE
The report on Corporate Governance is
given on pages 70 to 78 of the Annual
Report.
THE AUDITORS
The Board Audit Committee reviews
the appointment of the external
auditors, as well as their relationship
with the Group, including monitoring
the Group’s use of the auditors for nonaudit services and the balance of audit
and non-audit fees paid to the auditors.
GOING CONCERN
The Directors having assessed the
environment within which it operates
are satisfied that the Company and
the Group have adequate resources
to continue its operations in the
foreseeable future. Therefore, the
Directors have adopted the goingconcern basis in preparing the financial
statements.
Softlogic Corporate Services (Pvt) Ltd
Secretaries
31 July 2015
Colombo
104
Financial Calendar 2015
15 August 2014
1QFY15 Interim release
14 November 2014
Group revenue – Rs.8.0 bn, up 14.6%
Cumulative Group revenue – Rs.16.7 bn, up 17.7%
Gross profit – Rs.2.5 bn, up 14.4%
Cumulative gross profit – Rs.6.1 bn, up 19.3%
Profit before tax– Rs.294.9 mn, up 36.0%
Cumulative profit before tax– Rs.721.8 mn, up 110.5%
Profit after tax– Rs.225.3 mn, up 21.9%
Cumulative profit after tax– Rs.579.1 mn, up 90.1%
16 February 2015
29 May 2015
Cumulative Group revenue – Rs.27.8 bn, up 27.7%
Cumulative gross profit – Rs.10.0 bn, up 25.6%
Cumulative profit before tax– Rs.1.4 bn, up 39.5%
Cumulative profit after tax– Rs.1.1 bn, up 37.4%
Annual Group revenue – Rs.39.5 bn, up 35.0%
Annual gross profit – Rs.14.1 bn, up 28.2%
Annual operating profit – Rs.4.3 bn, up 22.0%
Annual profit before tax– Rs.2.4 bn, up 87.7%
Annual profit after tax– Rs.1.8 bn, up 83.5%
105
Financial
Statements
Statement of Directors’ Responsibilities 106
107
Income Statement
108
109
110
112
Cash Flow Statement
114
117
106
Statement of Directors’ Responsibilities
The responsibilities of the Directors,
in relation to the financial statements
of the Company differ from the
responsibilities of the Auditors, which
are set out in the Report of the Auditors
on page 107.
The Companies Act No. 07 of 2007
stipulates that the Directors are
responsible for preparing the Annual
Report and the financial statements.
Company law requires the Directors to
prepare financial statements for each
financial year, giving a true and fair view
of the state of affairs of the Company at
the end of the financial year, and of the
of the Company and the Group for the
financial year, which comply with the
requirements of the Companies Act.
The Directors consider that, in
preparing financial statements set out
on pages 108 to 214 of the Annual
Report, appropriate accounting policies
have been selected and applied in a
consistent manner and supported by
reasonable and prudent judgments
and estimate, and that all applicable
accounting standards have been
followed. The Directors confirm that
they are justified in adopting the going
concern basis in preparing the financial
statements since adequate resources
are available to continue operations in
the foreseeable future.
The Directors are responsible for
keeping proper accounting records,
which disclose with reasonable
accuracy, at any time, the financial
position of the Company and to enable
them to ensure the financial statements
comply with the Companies Act No. 07
of 2007.
They are also responsible for
safeguarding the assets of the
Company and for taking reasonable
steps for the prevention and detection
of fraud and other irregularities. In this
regard the Directors have instituted an
effective and comprehensive system
of internal control. The Directors are
required to prepare financial statements
and to provide the external auditors
with every opportunity to take whatever
steps and undertake whatever
inspections they may consider to be
appropriate to enable them to give their
independent audit opinion.
The Directors are of the view that they
have discharged their responsibilities as
set out in this statement.
COMPLIANCE REPORT
The Directors confirm that to the best
of their knowledge, all taxes, duties
and levies payable by the Company, all
contributions, levies and taxes payable
on behalf of and in respect of the
employees of the Company and other
known statutory dues as were due and
payable by the Company as at the date
of the Statement of Financial Position
have been paid or, where relevant
provided for, in arriving at the financial
results for the year under review.
For and on behalf of the Board of
Secretaries
31 July 2015
Colombo
107
TO THE SHAREHOLDERS OF SOFTLOGIC HOLDINGS PLC
Report on the Financial Statements
We have audited the accompanying financial statements of
Softlogic Holdings PLC (“the Company”), and the consolidated
financial statements of the Company and its subsidiaries
(“Group”), which comprise the statement of financial position
as at 31 March 2015, and the income statement and statement
of comprehensive income, statement of changes in equity and
cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory information.
Board’s Responsibility for the Financial Statements
The Board of Directors (“Board”) is responsible for the
preparation of these financial statements that give a true and fair
view in accordance with Sri Lanka Accounting Standards, and
for such internal controls as Board determines is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with Sri Lanka Auditing Standards. Those standards
require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation
of the financial statements that give a true and fair view in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made
by Board, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a
true and fair view of the financial position of the Group as at 31
March 2015, and of its financial performance and cash flows for
the year then ended in accordance with Sri Lanka Accounting
Standards.
Report on other legal and regulatory requirements
As required by Section 163(2) of the Companies Act No. 07 of
2007, we state the following:
a) The basis of opinion, scope and limitations of the audit are as
stated above.
b) In our opinion:
-
we have obtained all the information and explanations that
were required for the audit and, as far as appears from our
examination, proper accounting records have been kept by
the Company,
-
the financial statements of the Company give a true and fair
view of its financial position as at 31 March 2015, and of
its financial performance and cash flows for the year then
ended in accordance with Sri Lanka Accounting Standards,
and
-
the financial statements of the Company and the Group
comply with the requirements of section 151 and 153 of the
Companies Act No. 07 of 2007.
31 July 2015
Colombo
108
Income Statement
In Rs.
For the year ended 31 March
Revenue
Note
3
Cost of sales
Gross profit
Group
2015
2014
Company
2015
2014
39,563,884,110
29,246,435,584
416,018,805
(25,447,258,306)
(18,234,876,165)
(80,991,653)
355,554,590
(90,424,044)
14,116,625,804
11,011,559,419
335,027,152
265,130,546
Dividend income
4
-
-
961,271,765
403,985,123
Other operating income
5
1,162,561,036
497,258,384
108,111,472
94,532,167
Distribution expenses
(2,016,859,252)
(1,511,521,978)
-
-
Administrative expenses
Results from operating activities
(9,010,634,418)
4,251,693,170
(6,374,080,924)
3,623,214,901
(347,890,153)
1,056,520,236
(221,702,118)
541,945,718
Finance income
6
1,122,173,265
1,156,974,990
201,540,615
355,897,046
Finance expenses
Net finance cost
7
(2,692,809,554)
(2,660,026,602)
(1,006,903,157)
(980,482,527)
(1,570,636,289)
(1,503,051,612)
(805,362,542)
(624,585,481)
Change in insurance contract liabilities
9
(944,348,980)
(966,545,920)
-
-
Change in fair value of investment property
17
526,702,000
91,100,500
40,736,886
60,300,500
5,290,016
2,268,699,917
13,280,969
1,257,998,838
291,894,580
(22,339,263)
(449,618,026)
(249,163,813)
28,417,501
(1,195,889)
1,819,081,891
1,008,835,025
320,312,081
(23,535,152)
555,779,746
155,863,630
Share of profit of equity accounted investees
Profit/ (loss) before tax
Tax expense
Profit/ (loss) for the year
19.5
10
Attributable to:
Equity holders of the parent
Non controlling interest
Profit for the year
1,263,302,145
852,971,395
1,819,081,891
1,008,835,025
Earnings per share
Basic
11
0.72
0.20
Dividend per share
12
-
0.15
Figures in brackets indicate deductions.
The accounting policies and notes as set out in pages 117 to 214 form an integral part of these financial statements.
109
In Rs.
Note
Profit/ (loss) for the year
Other comprehensive income
Group
Company
2015
2015
2014
1,819,081,891
1,008,835,025
320,312,081
2014
(23,535,152)
Other comprehensive income to be reclassified to
income statement in subsequent periods
Currency translation of foreign operations
48,583,081
18,526,748
-
-
Net (loss) / gain on available for sale financial assets
16,245,855
(59,626,107)
-
2,749,371
64,828,936
(41,099,359)
-
2,749,371
Net other comprehensive income to be reclassified to
Other comprehensive income not to be reclassified
to income statement in subsequent periods
Revaluation of land and buildings
15.1
369,616,947
313,990,550
-
-
Net change in fair value on derivative financial
32.5
30,540,342
(30,540,342)
-
-
35
(84,380,473)
931,713
(2,634,546)
(3,531,852)
134,233
(85,252)
-
-
315,911,049
284,296,669
(2,634,546)
(3,531,852)
Tax on other comprehensive income
Other comprehensive income/ (loss) for the year, net of tax
(39,411,524)
(15,421,880)
737,672
-
341,328,461
227,775,430
(1,896,874)
(782,481)
2,160,410,352
1,236,610,455
318,415,207
(24,317,633)
instruments
Actuarial gains/ (loss) on retirement benefits
Share of other comprehensive income of equity
accounted investees
19.5
Net other comprehensive income not to be reclassified to
Total comprehensive income/ (loss) for the year, net of tax
Attributable to:
Equity holders of the parent
760,741,038
220,149,620
1,399,669,314
1,016,460,835
2,160,410,352
1,236,610,455
110
In Rs.
As at 31 March
Note
Group
2015
2014
Company
2015
2014
Assets
Non current assets
Property, plant and equipment
15
Lease rentals paid in advance
16
24,909,536,887
854,795,905
17,538,277,279
153,312,184
121,538,318
-
150,325,511
394,000,000
Investment property
17
94,848,000
2,266,146,000
442,641,386
Intangible assets
18
8,857,003,875
7,731,412,573
1,723,508
5,341,896
Investments in subsidiaries
19
-
-
10,592,900,172
9,007,349,757
26,216,105
24,746,404
11,000,000
11,000,000
57,797,564
Investments in equity accounted investees
Other non current financial assets
Rental receivable on lease assets and hire purchase
19.1
20
9,087,649,679
6,166,907,714
1,277,947,548
21.1
3,669,327,302
3,762,890,106
-
-
Other non current assets
22
292,792,966
142,966,541
-
-
Deferred tax asset
23
318,527,576
307,629,785
68,817,557
-
48,110,698,295
38,094,288,586
12,516,568,489
9,625,814,728
7,669,562,845
6,622,803,106
5,109,353,850
5,070,927,688
241,724,591
167,169,840
Current assets
Inventories
24
Trade and other receivables
25
Loans and advances
26
5,524,162,085
2,077,038,702
-
-
21.2
2,881,969,879
4,616,673,500
-
-
Amounts due from related parties
42.1
572,053
778,460
2,290,507,881
2,453,097,064
3,760,097,208
2,773,900,450
21,724,101
31,136,264
Other current assets
27
Short term investments
28
8,392,441,152
6,358,330,664
3,670,748,138
1,643,996,055
1,926,725,822
36,778,334,150
1,762,101,994
27,769,105,308
42,695,145
6,267,399,856
279,766,916
4,575,166,139
2,698,000,000
-
-
-
39,476,334,150
27,769,105,308
6,267,399,856
4,575,166,139
87,587,032,445
65,863,393,894
18,783,968,345
14,200,980,867
29
5,089,000,000
1,167,195,634
5,089,000,000
628,907,045
5,089,000,000
541,413,224
5,089,000,000
222,998,017
30
1,368,340,826
7,624,536,460
1,083,932,574
6,801,839,619
5,630,413,224
5,311,998,017
8,157,436,153
15,781,972,613
6,548,905,153
13,350,744,772
5,630,413,224
5,311,998,017
Cash in hand and at bank
Investment property held for sale
17
Total assets
Equity and Liabilities
Equity attributable to equity holders of the parent
Stated capital
Revenue reserves
Other components of equity
Total equity
111
In Rs.
As at 31 March
Note
Group
2015
Company
2015
2014
2014
Non current liabilities
Insurance contract liabilities
31
Interest bearing borrowings
32
5,129,272,339
22,844,291,422
4,184,923,357
12,999,848,935
5,767,785,189
2,448,181,474
Public deposits
33
2,214,295,787
1,885,402,009
-
-
Deferred tax liabilities
34
314,257,283
332,324,498
-
-
Employee benefit liabilities
35
655,925,545
444,467,274
30,669,730
30,083,785
Other deferred liabilities
36
3,044,433
5,476,209
-
-
Other non current financial liabilities
37
31,710,620
6,260,352
509,915,332
-
31,192,797,429
19,858,702,634
6,308,370,251
2,478,265,259
7,041,840,113
15,970,784
5,751,656,616
19,508,602
29,531,350
148,005,634
14,569,828
946,657,314
Current liabilities
Trade and other payables
Amounts due to related parties
38
42.2
Income tax liabilities
39
322,656,391
174,142,951
-
-
Short term borrowings
40
14,787,184,778
11,822,115,977
4,191,598,768
3,920,810,772
Current portion of interest bearing borrowings
32
4,616,956,512
4,144,437,836
2,368,998,067
1,455,262,816
18,028,769
Other current liabilities
41
2,330,891,786
771,866,598
24,009,337
Public deposits
33
9,838,760,403
7,418,343,338
-
-
1,658,001,636
2,551,874,570
83,041,714
55,388,092
40,612,262,403
32,653,946,488
6,845,184,870
6,410,717,591
87,587,032,445
65,863,393,894
18,783,968,345
14,200,980,867
Bank overdrafts
Total equity and liabilities
I certify that the financial statements comply with the requirements of the Companies Act No. 7 of 2007.
Group Chief Financial Officer
The Board of directors is responsible for the preparation and presentation of these financial statements.
Director
Director
The Accounting Policies and Notes as set out in pages 117 to 214 form an integral part of these Financial Statements.
31 July 2015
Colombo
112
Group
In Rs.
Stated
capital
Attributable to equity holders of parent
Treasury
Revaluation
shares
reserve
Exchange
translation
reserves
As at 01 April 2013
Profit for the year
Other comprehensive income / (loss)
Total comprehensive income
Direct cost on issue of shares
Transfer to reserve fund
5,089,000,000
-
(47,753,697)
-
1,337,323,893
-
(93,885,610)
-
-
-
124,450,980
18,526,748
-
-
124,450,980
18,526,748
-
-
-
-
(8,167,488)
-
-
Acquisition, disposal and changes in non controlling interest
-
-
-
-
Dividend paid
-
-
-
-
5,089,000,000
(55,921,185)
1,461,774,873
(75,358,862)
Profit for the year
-
-
-
-
Other comprehensive income / (loss)
-
-
171,272,900
171,272,900
48,583,081
48,583,081
Transfer to reserve fund
-
-
-
-
Deferred tax reversal on depreciation impact of revaluation
-
-
3,327,624
-
Acquisition, disposal and changes in non controlling interest
-
-
-
-
Subsidiary dividend to non controlling interest
-
-
-
-
5,089,000,000
(55,921,185)
1,636,375,397
(26,775,781)
Treasury shares purchased during the year
Subsidiary dividend to non controlling interest
As at 31 March 2014
As at 31 March 2015
Company
In Rs.
As at 01 April 2013
Stated
Available for sale
Revenue
capital
reserve
reserve
Total
5,089,000,000
-
(2,749,371)
-
370,810,021
(23,535,152)
5,457,060,650
(23,535,152)
-
2,749,371
2,749,371
(3,531,852)
(27,067,004)
(782,481)
(24,317,633)
5,089,000,000
-
(120,745,000)
222,998,017
(120,745,000)
5,311,998,017
Profit for the year
-
-
320,312,081
320,312,081
Other comprehensive loss
-
-
(1,896,874)
318,415,207
(1,896,874)
318,415,207
5,089,000,000
-
541,413,224
5,630,413,224
Loss for the year
Other comprehensive income/ (loss)
Dividend paid
As at 31 March 2014
As at 31 March 2015
113
Available for sale
reserve
Attributable to equity holders of parent
Statutory
Other
reserve fund
reserves
Total
Non controlling
Revenue
Total equity
interest
reserve
240,463,858
-
87,790,590
-
-
675,126,490
155,863,630
7,288,065,524
155,863,630
6,280,065,130
852,971,395
13,568,130,654
1,008,835,025
(63,890,355)
-
-
(14,801,383)
64,285,990
163,489,440
227,775,430
(63,890,355)
-
-
141,062,247
220,149,620
1,016,460,835
1,236,610,455
-
61,377,352
-
(5,871,054)
(61,377,352)
(5,871,054)
-
-
(5,871,054)
-
-
-
-
-
(8,167,488)
-
(8,167,488)
-
-
(572,303,697)
-
(572,303,697)
(134,030,648)
(706,334,345)
-
-
-
(120,033,286)
(120,033,286)
-
(120,033,286)
176,573,503
149,167,942
(572,303,697)
628,907,045
6,801,839,619
(613,590,164)
6,548,905,153
(613,590,164)
13,350,744,772
-
-
-
555,779,746
555,779,746
1,263,302,145
1,819,081,891
23,754,556
23,754,556
-
-
(38,649,245)
517,130,501
204,961,292
760,741,038
136,367,169
1,399,669,314
341,328,461
2,160,410,352
-
(32,635,898)
-
(11,477,810)
32,635,898
(11,477,810)
-
(2,847,938)
-
(14,325,748)
-
-
-
-
-
3,327,624
-
3,327,624
-
-
70,105,989
-
70,105,989
726,589,317
796,695,306
-
-
-
-
-
(514,879,693)
(514,879,693)
200,328,059
116,532,044
(502,197,708)
1,167,195,634
7,624,536,460
8,157,436,153
15,781,972,613
114
Cash Flow Statement
In Rs.
Note
For the year ended 31 March Group
Company
2015
2014
2015
2014
2,268,699,917
1,257,998,838
291,894,580
(22,339,263)
(1,122,173,265)
(1,156,974,990)
(201,540,615)
(355,897,046)
-
-
(961,271,765)
(403,985,123)
7
2,692,809,554
2,660,026,602
1,006,903,157
980,482,527
17
(526,702,000)
(91,100,500)
(40,736,886)
(60,300,500)
(5,290,016)
(13,280,969)
-
-
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments for:
Finance income
6
Dividend income
Finance cost
Share of results of equity accounted investees
19.5
Gratuity provision and related costs
35
140,196,129
105,555,003
6,520,501
6,319,025
Provisions for/ write off of impaired receivables
8
96,689,666
34,210,138
61,416,769
4,577,366
Provision for impairment of inventories
8
190,001,431
49,765,780
-
-
-
-
8,250,980
-
Fair value adjustment on assets held for sale
Depreciation of property, plant and equipment
15
1,189,997,919
901,836,851
24,239,655
25,452,041
Profit on sale of property, plant and equipment
5
(24,486,006)
(34,808,911)
(6,368,059)
(16,622,339)
(644,439,532)
(222,795,432)
(80,981,615)
(56,984,480)
(65,919,502)
25,855,552
-
-
Profit on sale of investments
Unrealised (gain)/ loss on foreign exchange
Amortisation/ impairment of intangible assets
8
248,049,626
204,045,351
2,624,845
2,221,133
Amortisation of prepaid lease rentals
8
1,036,939
1,036,927
-
-
Provision for put option liability
Increase / (decrease) in deferred income
-
6,260,352
-
-
64,246,524
(61,646,822)
-
-
Impairment / derecognition of property, plant & equipment and
Intangible assets
Profit before working capital changes
29,141,735
29,691,599
995,249
-
4,531,859,119
3,695,675,369
111,946,796
102,923,341
(Increase) / decrease in inventories
(1,317,762,392)
(1,453,796,534)
-
-
(Increase) / decrease in trade and other receivables
(1,974,792,070)
(860,489,097)
(74,554,750)
(68,400,306)
(Increase) / decrease in loans and advances
(5,344,525,114)
(818,798,373)
-
-
(Increase) / decrease in investments in lease and hire purchase
1,828,266,427
(1,102,821,152)
-
-
(Increase) / decrease in other current assets
(1,083,438,824)
(1,105,659,002)
1,999,042
(3,221,346)
(1,951,918,164)
(Increase) / decrease in amounts due from related parties
206,407
93,603,954
(1,662,568,488)
1,033,858,656
1,876,437,387
14,961,522
(502,247)
(3,537,818)
(2,512,237)
(294,537,636)
(348,808,956)
Increase / (decrease) in other current liabilities
1,394,780,108
500,247,453
5,980,569
(6,312,073)
Increase / (decrease) in public deposits
2,749,310,843
2,346,794,300
-
-
944,348,982
966,545,920
-
-
2,758,574,324
4,135,227,988
(1,896,772,945)
(2,276,239,751)
Increase / (decrease) in trade and other payables
Increase / (decrease) in amounts due to related parties
Increase / (decrease) in insurance provision
Cash generated from/ (used in) operations
Finance income received
Finance expenses paid
Dividend received
Tax paid
Gratuity paid
Net cash flow from/ (used in) operating activities
35
653,876,070
732,654,329
199,719,324
354,408,194
(2,619,644,709)
(2,650,623,018)
(994,129,825)
(965,397,880)
1,000,000
27,000,000
961,271,765
403,985,123
(296,639,907)
(429,862,142)
(32,249,264)
(14,310,092)
(71,288,846)
(38,898,992)
(2,767,813)
(1,335,500)
425,876,932
1,775,498,165
(1,764,928,758)
(2,498,889,906)
115
In Rs.
Note
Company
2015
2014
2015
2014
(4,023,075,585)
(3,459,164,705)
(5,539,092)
(14,782,876)
CASH FLOWS FROM /(USED IN) INVESTING ACTIVITIES
Purchase and construction of property, plant and equipment
Addition to prepaid lease rentals
16
Addition to investment property
Purchase of intangible assets
(Increase)/ decrease in other non current assets
(Purchase) / disposal of short term investments (net)
(702,520,660)
-
-
-
-
-
(7,904,500)
(7,563,029)
(71,178,662)
(305,007,400)
(1,861,900)
-
(114,585,768)
(63,138,432)
-
507,968,637
3,007,229,282
469,049,446
-
Dividends received
141,855,097
146,289,554
-
-
(Purchase) / disposal of other non current financial assets (net)
(858,863,791)
(1,989,235,451)
-
36,324,001
Proceeds from disposal of controlling interest
347,856,250
-
1,787,901,615
(326,688,191)
Increase in interest in subsidiaries
Acquisition of business, net of cash acquired
Proceeds from sale of property, plant and equipment
Net cash flow from/ (used in) investing activities
(A)
-
-
(1,305,012,469)
(5,817,191,859)
-
(2,789,975,487)
-
124,167,193
91,402,881
17,405,813
24,095,340
(7,966,308,503)
(5,109,804,107)
(2,304,986,020)
219,353,882
(514,879,693)
(613,590,164)
-
-
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid to non controlling interest
Proceeds from shareholders with non-controlling interest on issue
of rights in subsidiaries
Proceeds from long term borrowings
(Increase) / decrease of controlling interest
(Increase) / decrease in other non-current financial liabilities
311,113,243
-
-
-
18,538,930,076
7,546,880,910
5,738,547,536
2,000,000,000
(179,401,247)
(2,529,972,054)
-
-
25,450,268
-
-
-
Repayment of long term borrowings
(8,799,899,215)
(3,554,156,028)
(1,517,981,903)
(492,003,416)
Proceeds from / (repayment of) short term borrowings (net)
2,140,258,979
4,643,339,981
270,787,996
2,973,374,625
(14,325,748)
(5,871,054)
-
-
Unamortisation of debenture issue expense/ loan processing fee
(17,878,920)
(20,136,995)
-
(11,094,231)
-
(120,033,286)
-
(120,745,000)
11,489,367,743
5,346,461,310
4,491,353,629
4,349,531,978
NET INCREASE IN CASH AND CASH EQUIVALENTS
3,948,936,172
2,012,155,368
421,438,851
2,069,995,954
CASH AND CASH EQUIVALENTS AT THE BEGINNING
1,700,038,527
(312,393,037)
1,737,755,263
(332,240,691)
(928,291)
276,196
-
-
5,648,046,408
1,700,038,527
2,159,194,114
1,737,755,263
1,926,725,822
1,762,101,994
42,695,145
279,766,916
Unfavourable balances
5,379,322,222
2,489,811,103
2,199,540,683
1,513,376,439
Bank overdrafts
(1,658,001,636)
(2,551,874,570)
(83,041,714)
(55,388,092)
Cash and cash equivalents
5,648,046,408
1,700,038,527
2,159,194,114
1,737,755,263
Dividend paid to equity holders of parent
Net cash flow from financing activities
Effect of exchange rate changes
CASH AND CASH EQUIVALENTS AT THE END
ANALYSIS OF CASH AND CASH EQUIVALENTS
Favourable balances
116
Cash Flow Statement
A.
ACQUISITION OF SUBSIDIARIES
Softlogic Holdings PLC and Softlogic Retail (Pvt) Ltd, a subsidiary of Softlogic Holdings PLC acquired 122,894,000 (45.16%) ordinary shares
of Odel PLC respectively at a price of Rs.22.00 per share on 11 September 2014.
This acquisition resulted in Softlogic Holdings PLC and Softlogic Retail (Pvt) Ltd having to make a mandatory offer to the shareholders of
Odel PLC to acquire all remaining shares of Odel PLC at a price of Rs.22.00 per share which is the highest price paid by them within the
previous twelve months.
The Joint Mandatory Offer made by Softlogic Holdings PLC and Softlogic Retail (Pvt) Ltd to the shareholders of Odel PLC expired on 13
October 2014 and Softlogic Holdings PLC and Softlogic Retail (Pvt) Ltd, a subsidiary of Softlogic Holdings PLC acquired further 130,739,418
(48.04%) ordinary shares of Odel PLC.
The acquisition had the following effect on the Groups’ assets and liabilities. In Rs.
2015
Acquisition of Odel PLC and its subsidiaries
Property, plant & equipment
Intangible assets
Deferred tax asset
Inventories
Retirement benefit liabilities
Bank overdrafts
Net identifiable assets and liabilities
Non controlling interest holding
Brand name recognised on acquisition
3,867,168,723
84,847,663
2,328,157
35,240,657
1,242,446,603
216,926,184
38,653,229
1,332,148,214
97,324,121
(338,609,995)
(31,848,115)
(58,279,692)
(322,244,333)
(59,901,192)
(795,520,205)
(60,298,308)
(334,567,106)
4,915,814,605
(360,023,384)
998,180,211
5,553,971,432
Investment by non controlling interest
25,977,443
5,579,948,875
Total purchase price paid
Cash consideration
Cash at bank and in hand acquired (net)
5,579,948,875
237,242,985
5,817,191,860
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1.1
CORPORATE INFORMATION
Reporting entity
Softlogic Holdings PLC is a public limited liability
company incorporated and domiciled in Sri Lanka and
listed on the Colombo Stock Exchange. The registered
office and principal place of business of the company is
located at No. 14, De Fonseka Place, Colombo 5.
The responsibility of the Board of Directors in relation to
the financial statements is set out in the “Statement of
Directors’ Responsibilities” report in the Annual Report.
1.2 GENERAL POLICIES
Consolidated financial statements
The financial statements for the year ended 31 March
2015, comprise “the Company” referring to Softlogic
Holdings PLC as the holding Company and “the Group”
referring to the companies that have been consolidated
therein.
Approval of financial statements
The Financial statements for the year ended 31 March
2015 were authorised for issue by the Board of
Directors on 31 July 2015.
Principal activities and nature of operations
Holding Company
Softlogic Holdings PLC, the Group’s holding company,
manages a portfolio of investments consisting of a
range of diverse business operations, which together
constitute the Softlogic Group, and provide function
based services to its subsidiaries and associates.
Subsidiaries and associates
The business activities of the companies within the
Group are information and communication technology,
automobiles, retailing of consumer electronics ,
manufacturing garments & fashion retailing , hoteliering,
providing financial services, providing healthcare
services, providing insurance services, stock brokering
and providing management consultancy and financial
advisory services.
There were no significant changes in the nature of the
principal activities of the Company and the Group during
the financial year under review.
Statement of compliance
The financial statements which comprise the Income
Statement, Statement of Comprehensive Income,
Statement of Financial Position, Statement of Changes
in Equity and the Statement of Cash Flow , together
with the accounting policies and notes (the “financial
statements”) have been prepared in accordance
with Sri Lanka Accounting Standards (herein referred
to as SLFRSs/LKASs) as issued by the Institute of
Chartered Accountants of Sri Lanka (CA Sri Lanka) and
in compliance with the requirements of the Companies
Act No. 7 of 2007.
Softlogic Holdings PLC became the holding company
of the Group during the financial year ended 31 March
2003.
Responsibility for financial statements
1.3 SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements have been
prepared on an accrual basis and under the historical
cost convention except for investment properties, land
and buildings, fair value through profit or loss financial
assets, derivative financial instruments and available for
sale financial assets that have been measured at fair
value.
Presentation and functional currency
The consolidated financial statements are presented
in Sri Lankan Rupees (Rs.) the Group’s functional
and presentation currency, which is the primary
economic environment in which the Holding Company
operates. Each entity in the Group uses the currency
of the primary economic environment in which they
operate as their functional currency except the entities
incorporated outside Sri Lanka.
The following subsidiary is using a different functional
currency other than Sri Lankan Rupees (Rs.);
Subsidiary
Country of
Functional
Incorporation currency
Softlogic Australia
(Pty) Ltd
Australia
Australian Dollar
(AUD)
118
Going concern
The Directors have assessed, and are confident that
the company will be able to continue in operation for
the foreseeable future. In addition, the Directors are
not aware of any material uncertainties that may cast
significant doubt upon the Group’s ability to continue as
a going concern. Accordingly, these financial statements
have been prepared on a going concern basis.
1.4 CONSOLIDATION POLICY
Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Company and its subsidiaries
as at 31 March 2015. The financial statements of
the subsidiaries are prepared in compliance with the
Group’s accounting policies unless otherwise stated.
Subsidiaries are those entities controlled by the
Group. Control over an investee is achieved when the
Group is exposed, or rights to variable returns from
its involvement with the investee and when it has the
ability to affect those returns through its power over the
investee.
Specifically, the Group controls an investee if, and only
if, the Group has:
• Power over the investee (i.e., existing rights that give
it the current ability to direct the relevant activities of
the investee)
• Exposure, or rights, to variable returns from its
involvement with the investee
• The ability to use its power over the investee to
affect its returns
Subsidiaries consolidated have been listed in note 19.
The following subsidiary has been incorporated outside
Sri Lanka:
Name of the Company
Country of Incorporation
Softlogic Australia (Pty) Ltd
Australia
The Group re-assesses whether or not it controls an
investee, if facts and circumstances indicate that there
are changes to one or more of the three elements of
control.
Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired
or disposed of during the year are included in the
consolidated financial statements from the date the
Group gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other
comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the
non-controlling interests having a deficit balance. The
financial statements of the subsidiaries are prepared
for the same reporting period as the parent Company,
which is 12 months ending 31 March, using consistent
accounting policies.
All intra-group assets, liabilities, equity, income,
expenses and cash flows relating to transactions
between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an equity
transaction.
If the Group loses control over a subsidiary, it
derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other components
of equity while any resultant gain or loss is recognised
in the income statement. Any investment retained is
recognised at fair value.
The total profits and losses for the year of the Company
and of its subsidiaries included in consolidation are
shown in the consolidated income statement and
consolidated statement of comprehensive income
and all assets and liabilities of the Company and of its
subsidiaries included in consolidation are shown in the
consolidated statement of financial position.
Non-controlling interest which represents the portion
of profit or loss and net assets not held by the Group,
are shown as a component of profit for the year in
the consolidated income statement and statement of
comprehensive income and as a component of equity
in the consolidated statement of financial position,
119
separately from equity attributable to the shareholders
of the parent.
The Consolidated Statement of Cash Flows includes the
cash flows of the Company and its subsidiaries.
1.5 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
These accounting policies have been applied
consistently by Group entities.
1.5.1 INCOME STATEMENT
Revenue recognition
Revenue is recognised to the extent that it is probable
that the economic benefits will flow to the Group,
and the revenue and associated costs incurred or to
be incurred can be reliably measured. Revenue is
measured at the fair value of the consideration received
or receivable, net of trade discounts and value added
taxes, after eliminating sales within the Group.
The following specific criterias are used for the revenue
recognition:
Sale of goods
Revenue from the sale of goods is recognised when the
significant risk and rewards of ownership of the goods
have passed to the buyer with the Group retaining
neither a continuing managerial involvement to the
degree usually associated with ownership, nor an
effective control over the goods sold.
Rendering of services
Revenue from rendering of services is recognised
by reference to the stage of completion. Where the
contract outcome cannot be measured reliably, revenue
is recognised only to the extent that the expenses
incurred are eligible to be recovered.
Income from leases, hire purchases, loans and
advance
The accounting for income from leases, hire purchases,
loans and advance is recognised using the Effective
Interest Rate (EIR) which is the rate that exactly
discounts the estimated future cash receipts through
the expected life of the financial instrument or a shorter
period, where appropriate, to the net carrying amount
of the financial asset. The calculation takes into account
all contractual terms of the financial instrument and
includes any fees or incremental costs that are directly
attributable to the instrument and are an integral part of
the EIR.
The unearned income is recognised over the facility
commencing on the month on which the facility is
executed in proportion to the declining receivable
balance.
However, accrual of income from lease ceases when
the account is overdue for more than six months.
Overdue charges
Overdue charges of leasing/hire purchase have been
accounted for on cash received basis.
Life and General insurance business - gross written
premiums
Gross recurring premiums on life insurance are
recognised as revenue when receivable from the
policyholder.
Gross general insurance written premiums comprise
the total premiums receivable for the whole period of
cover provided by contracts entered into during the
accounting period and are recognised on the date on
which the policy commences.
Life insurance business - reinsurance premiums
Gross reinsurance premiums on life insurance and
investment contracts are recognised as an expense
when the date on which the policy is effective.
Gross general reinsurance premiums written comprise
the total premiums payable for the whole cover
provided by contracts entered into the period and are
recognised on the date on which the policy incepts.
Premiums include any adjustments arising in the
accounting period in respect of reinsurance contracts
incepting in prior accounting periods.
Unearned reinsurance premiums are those proportions
of premiums written in a year that relate to periods
of risk after the Statement of Financial Position date.
Unearned reinsurance premiums are deferred over the
term of the underlying direct insurance policies for risks-
120
attaching contracts and over the term of the reinsurance
contract for losses occurring contracts.
from the proceeds on disposal, the carrying amount of
such assets and the related selling expenses.
Life insurance business - unearned premium
reserve
Gains and losses arising from activities incidental to the
main revenue generating activities and those arising
from a group of similar transactions, which are not
material are aggregated, reported and presented on a
net basis.
Unearned premium reserve represents the portion
of the premium written in the year but relating to the
unexpired term of coverage. Unearned premiums are
calculated on the 365 basis except for marine policies
which is computed on a 60-40 basis.
Other income
Other income is recognised on an accrual basis.
Dividend
Dividend income is recognised when the Group’s right
to receive the payment is established.
Consultancy and professional service income
Recognise as income in the period in which entitlement
to the consideration arises.
Finance income
Finance income comprises interest income on funds
invested (including available for sale financial assets),
dividend income, , fair value gains on financial assets
at fair value through profit or loss, gains on the remeasurement to fair value of any pre-existing interest in
an acquiree that are recognised in Income Statement.
Interest income is recorded as it accrues using the
effective interest rate (EIR), which is the rate that
exactly discounts the estimated future cash receipts
through the expected life of the financial instrument or
a shorter period, where appropriate, to the net carrying
amount of the financial asset. Interest income is
included in finance income of the Income Statement.
Rental income
Rental income arising from operating leases on
investment properties is accounted for on a straight-line
basis over the lease terms.
Gains and losses
Net gains and losses of a revenue nature arising from
the disposal of property, plant and equipment and
other non current assets, including investments, are
accounted for in the Income Statement, after deducting
Turnover based taxes
Turnover based taxes include Value Added Tax,
Economic Service Charge, Nation Building Tax, Turnover
Tax and Tourism Development Levy.
Companies in the Group pay such taxes in accordance
with the respective statutes.
Expenditure recognition
Expenses are recognised in the Income Statement
on the basis of a direct association between the cost
incurred and the earning of specific items of income.
All expenditure incurred in the running of the business
and in maintaining the property, plant and equipment in
a state of efficiency has been charged to the Income
Statement.
For the purpose of presentation of the Income
Statement, the “function of expenses” method has
been adopted, on the basis that it presents fairly the
elements of the Company and Group’s performance.
Finance costs
Finance costs comprise interest expense on
borrowings, unwinding of the discount on provisions,
fair value losses on financial assets at fair value through
profit or loss, impairment losses recognised on financial
assets (other than trade receivables) that are recognised
in the Income Statement.
Interest expense is recorded as it accrues using the
effective interest rate (EIR), which is the rate that
exactly discounts the estimated future cash payments
through the expected life of the financial instrument or
121
a shorter period, where appropriate, to the net carrying
amount of the financial liability.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the respective assets. All other borrowing costs are
expensed in the period they occur. Borrowing costs
consist of interest and other costs that the Group incurs
in connection with the borrowing of funds.
1.5.2 TAXATION
Current Tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted at
the reporting date in the countries where the Group
operates and generates taxable income.
Current income tax relating to items recognised
directly in equity is recognised in equity and for items
recognised in other comprehensive income shall be
recognised in other comprehensive income and not
in the income statement. Management periodically
evaluates positions taken in the tax returns with respect
to situations in which applicable tax regulations are
subject to interpretation and establishes provisions
where appropriate.
Deferred Tax
Deferred tax is provided, using the liability method, on
temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences except;
• Where the deferred tax liability arising from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences
associated with investments in subsidiaries and
associates, except where the timing of the reversal
of the temporary differences can be controlled and
it is probable that the temporary differences will not
reverse in the foreseeable future.
deferred tax assets are recognised for all deductible
temporary differences, carry-forward of unused tax
credits and unused tax losses, to the extent that it is
probable that taxable profit will be available against
which the deductible temporary differences, and the
carry-forward of unused tax credits and unused tax
losses can be utilised except:
• where the deferred tax asset relating to the
deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
the taxable profit or loss; and
• in respect of deductible temporary differences
associated with investments in subsidiaries and
associates, deferred tax assets are only recognised
to the extent that it is probable that the temporary
differences will reverse in the foreseeable future
and taxable profit will be available against which the
temporary differences can be utilised.
The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax
assets are reassessed at each reporting date and are
recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax
assets to be recovered.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted as at the reporting date.
Deferred tax relating to items recognised outside the
Income Statement is recognised outside the Income
Statement. Deferred tax relating to items recognised in
correlation to the underlying transaction either in other
comprehensive income or directly in equity.
122
Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
when the deferred taxes relate to the same taxable
entity and the same taxation authority.
Sales tax
Revenues, expenses and assets are recognised net of
the amount of sales tax except:
• where the sales tax incurred on a purchase of assets
or services is not recoverable from the taxation
authority, in which case the sales tax is recognised
as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
• where the receivable and payables that are stated
with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable
to, the taxation authority is included as part of receivables
or payables in the Statement of Financial Position.
On dividend income
Tax on dividend income from subsidiaries is recognised
as an expense in the Consolidated Income Statement.
1.5.3 Current versus non current classification
The Group presents assets and liabilities in the
statement of financial position based on current/noncurrent classification. An asset as current when it is:
• Expected to be realised or intended to be sold or
consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after
the reporting period, or
• Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the
reporting period, or
• There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period.
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Fair value measurement
The Group measures financial instruments and certain
non-financial assets at fair value at each reporting date.
Fair value related disclosures for financial instruments
and non-financial assets that are measured at fair value
or where fair values are disclosed, are summarised in
the following notes:
Note
Disclosures for valuation methods,
significant estimates and assumptions
Quantitative disclosures of fair value
measurement hierarchy
Investment in unquoted equity shares
Financial instruments (including those
carried at amortised cost)
13.5.3.1.1
14.5
20.2
14
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be
accessible by the Group.
The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant's ability to generate
economic benefits by using the asset in its highest and
123
best use or by selling it to another market participant
that would use the asset in its highest and best use.
The Group uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the
fair value measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is directly or indirectly observable
• Level 3 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Group
determines whether transfers have occurred between
levels in the hierarchy by reassessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
The Group determines the policies and procedures
for both recurring fair value measurement, such as
investment properties and unquoted AFS financial
assets, and for non-recurring measurement, such as
assets held for sale in discontinued operations.
External valuers are involved for valuation of significant
assets, such as land and building and investment
properties, and significant liabilities, such as insurance
contracts. Selection criteria for external valuers include
market knowledge, reputation, independence and
whether professional standards are maintained. The
Group decides, after discussions with the external
valuers, which valuation techniques and inputs to use
for each case.
For the purpose of fair value disclosures, the Group
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as
explained above.
1.5.4. Property, plant and equipment
Basis of recognition
Property, plant and equipment are recognised if it is
probable that future economic benefits associated with
the asset will flow to the Group and the cost of the
asset can be reliably measured.
Basis of measurement
Plant and equipment are stated at cost less
accumulated depreciation and any accumulated
impairment loss. Such cost includes the cost of
replacing component parts of the plant and equipment
and borrowing costs for long-term construction projects
if the recognition criterias are met. When significant
parts of plant and equipment are required to be replaced
at intervals, the Group derecognises the replaced part,
and recognises the new part with its own associated
useful life and depreciation. Likewise, when a major
inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognised in
the Income Statement as incurred.
Land and buildings are measured at fair value less
accumulated depreciation on buildings and impairment
charged subsequent to the date of the revaluation.
Where land and buildings are subsequently revalued,
the entire class of such assets is revalued at fair value
on the date of revaluation. The Group has adopted a
policy of revaluing land and buildings by professional
valuers at least every 3 years.
The carrying values of property, plant and equipment
are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not
be recoverable.
Any revaluation surplus is recognised in the Statement
of Other Comprehensive Income and accumulated
in equity in the asset revaluation reserve, except to
the extent that it reverses a revaluation decrease of
the same asset previously recognised in the Income
Statement, in which case the increase is recognised
in the income statement. A revaluation deficit is
124
recognised in the Income Statement, except to the
extent that it offsets an existing surplus on the same
asset recognised in the asset revaluation reserve.
Accumulated depreciation as at the revaluation date
is eliminated against the gross carrying amount of the
asset and the net amount is restated to the revalued
amount of the asset.
Upon disposal, any revaluation reserve relating to the
particular asset being sold is transferred to retained
earnings.
Derecognition
An item of property, plant and equipment are
derecognised upon replacement, disposal or when no
future economic benefits are expected from its use.
Any gain or loss arising on derecognition of the asset is
included in the income statement in the year the asset
is derecognised.
Depreciation
Depreciation is calculated by using a straight-line
method on the cost or valuation of all property, plant and
equipment, other than freehold land, in order to write
off such amounts over the estimated useful economic
life of such assets.
The estimated useful lives of assets is as follows:
Assets
Years
Building
40-60
Buildings on leasehold land
40-60 or over the
period of lease
Plant & machinery
4-10
Computer equipment, furniture
& fittings
2-10
Motor vehicle
4-8
The useful lives and residual values of assets are
reviewed, and adjusted if required, at the end of each
financial year end.
Capital work in progress
Capital work in progress consists of cost of assets,
labour and other direct costs associated with property,
plant and equipment being constructed by the group.
Once the assets become operational, the related costs
are transferred from construction in progress to the
appropriate asset category and are depreciated together
with the related asset.
1.5.5 Leases
The determination of whether an arrangement is, or
contains, a lease is based on the substance of the
arrangement at the inception date, whether fulfillment
of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a
right to use the asset, even if that right is not explicitly
specified in an arrangement.
For arrangements entered into prior to 1 April 2011,
the date of inception is deemed to be 1 April 2011 in
accordance with the SLFRS 1.
Group as a lessee
Finance leases which transfer to the Group substantially
all the risks and benefits incidental to ownership of the
leased item, are capitalised at the commencement of
the lease at the fair value of the leased property or,
if lower, at the present value of the minimum lease
payments. Lease payments are apportioned between
finance charges and reduction of the lease liability so as
to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are recognised
in finance costs in the Income Statement.
A leased asset is depreciated over the useful life of
the asset. However, if there is no reasonable certainty
that the Group will obtain ownership by the end of the
lease term, the asset is depreciated over the shorter
of the estimated useful life of the asset and the lease
term. Operating lease payments are recognised as
an operating expense in the Income Statement on a
straight-line basis over the lease term.
Group as a lessor
Leases in which the Group does not transfer
substantially all the risks and benefits of ownership
of the asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating lease
are added to the carrying amount of the leased asset
and recognised over the lease term on the same basis
as rental income. Contingent rents are recognised as
revenue in the period in which they are earned.
The cost of improvements to buildings on
leasehold land is capitalised, disclosed as leasehold
125
improvements, and depreciated over the unexpired
period of the lease or the estimated useful life of the
improvements, whichever is shorter.
1.5.6 Lease rentals paid in advance
Prepaid lease rentals paid to acquire land use rights are
amortised over the lease term in accordance with the
pattern of benefits provided.
Details of the pre-paid lease rentals are given in note 16
to the financial statements.
1.5.7 Investment properties
Properties held to earn rental income and properties
held for capital appreciation has been classified as
investment property.
Investment properties are measured initially at cost,
including transaction costs. The carrying value of an
investment property includes the cost of replacing
part of an existing investment property, at the time
that cost is incurred if the recognition criteria are met,
and excludes the costs of day-to-day servicing of the
investment property. Subsequent to initial recognition,
the investment properties are stated at fair values,
which reflect market conditions at the reporting date.
Gains or losses arising from changes in fair value are
included in the Income Statement in the year in which
they arise. Fair values are evaluated at frequent intervals
by an accredited external, independent valuer.
Investment properties are derecognised when
disposed, or permanently withdrawn from use because
no future economic benefits are expected. Any gains or
losses on de-recognition or disposal are recognised in
the Income Statement in the year of de-recognition or
disposal.
Transfers are made to or from investment property
only when there is a change in use. For a transfer
from investment property to owner occupied property
or inventory (WIP), the deemed cost for subsequent
accounting is the fair value at the date of change in use.
If owner occupied property becomes an investment
property or inventory (WIP), the Group accounts for
such property in accordance with the policy stated
under property, plant and equipment up to the date
of change in use. Where Group companies occupy
a significant portion of the investment property of a
subsidiary, such investment properties are treated
as property, plant and equipment in the consolidated
financial statements, and accounted using Group
accounting policy for property, plant and equipment.
1.5.8 Intangible assets
Basis of recognition
An intangible asset is recognised if it is probable that
future economic benefits associated with the asset
will flow to the Group and the cost of the asset can be
reliably measured.
Basis of measurement
Intangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
acquired in a business combination is the fair value as at
the date of acquisition.
Following initial recognition, intangible assets are carried
at cost less any accumulated amortisation and any
accumulated impairment losses.
Internally generated intangible assets, excluding
capitalised development costs, are not capitalised, and
expenditure is charged against Income Statement in the
year in which the expenditure is incurred.
Useful economic lives, amortisation and
impairment
The useful lives of intangible assets are assessed as
either finite or infinite lives. Intangible assets with
finite lives are amortised over the useful economic life
and assessed for impairment whenever there is an
indication that the intangible asset may be impaired.
The amortisation period and the amortisation method
for an intangible asset with a finite useful life is
reviewed at least at each financial year-end and such
changes are treated as accounting estimates. The
amortisation expense on intangible assets with finite
lives is recognised in the Income Statement.
Intangible assets with infinite useful lives are not
amortised but tested for impairment annually, or more
frequently when an indication of impairment exists
either individually or at the cash-generating unit level.
The useful life of an intangible asset with an infinite life
is reviewed annually to determine whether infinite life
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assessment continues to be supportable. If not, the
change in the useful life assessment from infinite to
finite is made on a prospective basis.
Lease rights
Lease rights acquired as part of a business combination,
are capitalised if it meets the definition of an intangible
asset and the recognition criteria are satisfied. Leased
rights are amortised on a straight-line basis over their
estimated useful life.
Present value of acquired in-force business (PVIB)
The present value of future profits on a portfolio of long
term life insurance contracts as at the acquisition date is
recognised as an intangible asset based on a valuation
carried out by an independent actuary. Subsequent
to initial recognition, the intangible asset is carried at
cost less accumulated amortisation and accumulated
impairment losses.
The PVIB is amortised over the average useful life of
the related contracts in the portfolio. The amortisation
charge and any impairment losses would be recognised
in the consolidated Income Statement as an expense.
Software
Purchased software
Purchased software is recognised as an intangible asset
and is amortised on a straight line basis over its useful
life.
Software license
Software license costs are recognised as an intangible
asset and amortised over the period of the related
license.
Brand Name
Brands acquired as part of a business combination,
are capitalised as Brand name, if the Brand meets the
definition of an intangible assets and are tested for
impairment, annually or more frequently if the events or
changes in the circumstances indicate that the carrying
value may be impaired.
Customer list
The present value of the income anticipated deriving
from repeat customer list of the leasing and hire
purchase portfolio and registered tour agent list
as at the acquisition date are recognised as an
intangible asset based on a valuation carried out by an
independent valuer. Subsequent to initial recognition,
the intangible asset is carried at cost less accumulated
amortisation and accumulated impairment losses.
Customer list recognised at the acquisition date will be
amortised over the period interest income is anticipated
to derive from repeat customers and reviewed annually
for any impairment in value.
A summary of the policies applied to the group’s
intangible assets are as follows;
Intangible
Useful Life
Acquired/ Internally Impairment testing
generated
Goodwill
Lease Rights
Infinite
25-88 years
Acquired
Acquired
annually or when an indication of impairment exists
when an indication of impairment exists
Purchased Software
3-5 years
Acquired
when an indication of impairment arise
Present value of acquired 16 years
in-force business (PVIB)
Brand Name
Infinite
Acquired
Acquired
annually or when an indication of impairment exists
Customer List
Acquired
5 years
Gains or losses arising from derecognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the carrying
amount of the asset and are recognised in the Income
Statement when the asset is derecognised.
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1.5.9 Business combinations & goodwill
Business combinations are accounted for using the
acquisition method of accounting.
The Group measures goodwill at the acquisition date
as the fair value of the consideration transferred
including the recognised amount of any non-controlling
interests in the acquiree, less the net recognised
amount (generally fair value) of the identifiable assets
acquired and liabilities assumed, all measured as of the
acquisition date.
When the fair value of the consideration transferred
including the recognised amount of any non-controlling
interests in the acquiree is lower than the fair value of
net assets acquired, a gain is recognised immediately in
the Income Statement.
The Group elects on a transaction by transaction basis
whether to measure non-controlling interests at fair
value, or at their proportionate share of the recognised
amount of the identifiable net assets, at the acquisition
date. Transaction costs, other than those associated
with the issue of debt or equity securities, that the
Group incurs in connection with a business combination
are expensed as incurred.
When the Group acquires a business, it assesses the
financial assets and liabilities assumed for appropriate
classification and designation in accordance with
the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer’s previously
held equity interest in the acquiree is re measured to
fair value at the acquisition date through the Income
Statement.
Any contingent consideration to be transferred by the
acquirer will be recognised at fair value at the acquisition
date. Contingent consideration which is deemed to
be an asset or liability, which is a financial instrument
and within the scope of LKAS 39, is measured at fair
value with changes in fair value either in the Income
Statement or as a change to the Statement of Other
Comprehensive Income. If the contingent consideration
is classified as equity, it will not be remeasured.
Subsequent settlement is accounted for within equity.
In instances where the contingent consideration does
not fall within the scope of LKAS 39, it is measured in
accordance with the appropriate SLFRS/LKAS.
After initial recognition, goodwill is measured at cost
less any accumulated impairment losses. Goodwill is
reviewed for impairment, annually or more frequently
if the events or changes in the circumstances indicate
that the carrying value maybe impaired.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash
generating units that are expected to benefit from the
combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
Impairment is determined by assessing the recoverable
amount of the cash-generating unit to which the
goodwill relates. Where the recoverable amount of the
cash generating unit is less than the carrying amount,
an impairment loss is recognised. The impairment loss
is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other
assets pro-rata to the carrying amount of each asset in
the unit.
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at
the closing rate.
Where goodwill forms part of a cash generating unit
and part of the operation within that unit is disposed
of, the goodwill associated with the operation disposed
of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation
disposed of and the portion of the cash-generating unit
retained.
1.5.10Associates
An associate is an entity over which the Group has
significant influence. Significant influence is the power
to participate in the financial and operating policy
decisions of the investee, but is not control or joint
control over those policies.
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Associate companies of the Group which have been
accounted for under the equity method of accounting
are:
Name of the Company
Country of
Incorporation
Abacus International Lanka (Pvt) Ltd Sri Lanka
Nextage (Pvt) Ltd
Sri Lanka
Gerry’s Softlogic (Pvt) Ltd
Pakistan
The consideration made in determining significant
influence is similar to those necessary to determine
control over subsidiaries. The Group’s investments
in its associates are accounted for using the equity
method. Under the equity method, the investment in
an associate is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise
changes in the Group’s share of net assets of the
associate since the acquisition date. Goodwill relating to
the associate is included in the carrying amount of the
investment and is not tested for impairment individually.
The income statement reflects the Group’s share of
the results of operations of the associates. Any change
in OCI of those investees is presented as part of the
Group’s OCI. In addition, when there has been a change
recognised directly in the equity of the associate, the
Group recognises its share of any changes, when
applicable, in the statement of changes in equity.
Unrealised gains and losses resulting from transactions
between the Group and the associate is eliminated to
the extent of the interest in the associate.
The aggregate of the Group’s share of profit or loss
of an associate is shown on the face of the income
statement outside operating profit and represents
profit or loss after tax and non-controlling interests in
the subsidiaries of the associate. After application of
the equity method, the Group determines whether it
is necessary to recognise an impairment loss on its
investment in its associate. At each reporting date, the
Group determines whether there is objective evidence
that the investment in the associate is impaired. If there
is such evidence, the Group calculates the amount of
impairment as the difference between the recoverable
amount of the associate and its carrying value, and
then recognises the loss as ‘Share of results of equity
accounted investees’ in the income statement.
Upon loss of significant influence over the associate,
the Group measures and recognises any retained
investment at its fair value. Any difference between the
carrying amount of the associate upon loss of significant
influence and the fair value of the retained investment
and proceeds from disposal is recognised in income
statement.
The accounting policies of associate companies
conform to those used for similar transactions of the
Group.
Equity method of accounting has been applied for
associate financial statements using their corresponding
/ matching 12 month financial period. In the case of
associates, where the reporting dates are different to
Group reporting dates, adjustments are made for any
significant transactions or events up to 31 March.
1.5.11 Foreign currency translation
Foreign currency transactions and balances
The consolidated financial statements are presented in
Sri Lankan Rupees (Rs.), which is the holding company’s
functional and presentation currency.
The functional currency is the currency of the primary
economic environment in which the entities of the
Group operate.
All foreign exchange transactions are converted to
functional currency, at the rates of exchange prevailing
at the time the transactions are effected.
Monetary assets and liabilities denominated in foreign
currency are retranslated to functional currency
equivalents at the spot exchange rate prevailing at the
reporting date.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated
using the exchange rates as at the dates of the initial
transactions. Non-monetary assets and liabilities are
translated using exchange rates that existed when the
values were determined. The gain or loss arising on
translation of non-monetary items is treated in line with
the recognition of gain or loss on changing fair value of
the item.
Foreign exchange forward contracts are fair valued
at each reporting date. Gains and losses arising from
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the deferred cumulative amount recognised in the
Statement of Other Comprehensive Income relating
to that particular foreign operation is recognised in the
Income Statement.
changes in fair value are included in the Income
Statement in the period in which they arise.
Foreign operations
The Statement of Financial Position and Income
Statement of overseas subsidiaries and associate which
are deemed to be foreign operations are translated
to Sri Lankan Rupees (Rs.) at the rate of exchange
prevailing as at the reporting date and at the average
annual rate of exchange for the period respectively.
The exchange differences arising on the translation
are taken directly to the Statement of Other
Comprehensive Income. On disposal of a foreign entity,
The Group treated goodwill and any fair value
adjustments to the carrying amounts of assets and
liabilities arising on the acquisition as assets and
liabilities of the parent. Therefore, those assets and
liabilities are non-monetary items already expressed
in the functional currency of the parent and no further
translation differences occur.
The exchange rates applicable during the period were
as follows:
Income Statement (Avg. Rate)
31-03-2015
Rs.
31-03-2014
Rs.
31-03-2015
Rs.
31-03-2014
Rs.
US Dollar
133.10
130.73
131.03
128.79
Australian Dollar
101.55
120.90
114.63
121.51
Pakistan Rupees
1.31
1.33
1.30
1.31
1.5.12 Impairment of non-financial assets
The Group assesses at each reporting date whether
there is an indication that an asset may be impaired. If
any such indication exists, or when annual impairment
testing for an asset is required, the Group makes an
estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash
generating unit’s fair value less costs to sell and its
value in use and is determined for an individual asset,
unless the asset does not generate cash inflows that
are largely independent of those from other assets
or groups of assets. Where the carrying amount of
an asset exceeds its recoverable amount, the asset
is considered impaired and is written down to its
recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the asset.
Impairment losses are recognised in the Income
Statement, except that, impairment losses in respect
of property, plant and equipment previously revalued
are recognised against the revaluation reserve through
the Statement of Other Comprehensive Income to the
extent that it reverses a previous revaluation surplus.
An assessment is made at each reporting date as
to whether there is any indication that previously
recognised impairment losses may no longer exist
or may have decreased. If such indication exists,
the recoverable amount is estimated. A previously
recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment
loss was recognised.
If that is the case, the carrying amount of the asset is
increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that
would have been determined, net of depreciation,
had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in
the Income Statement unless the asset is carried at
revalued amount, in which case the reversal is treated
as a revaluation increase. After such a reversal, the
depreciation charge is adjusted in future periods to
allocate the asset’s revised carrying amount, less any
residual value, on a systematic basis over its remaining
useful life. The following criteria are also applied in
assessing impairment of specific assets:
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1.5.13 Impairment of goodwill
Goodwill is tested for impairment annually and when
circumstances indicate that the carrying value may be
impaired.
Impairment is determined for goodwill by assessing
the recoverable amount of each cash-generating
unit (or group of cash-generating units) to which the
goodwill relates. Where the recoverable amount of
the cash generating unit is less than their carrying
amount, an impairment loss is recognised. Impairment
losses relating to goodwill cannot be reversed in future
periods.
1.5.14 Financial instruments - initial recognition and
subsequent measurement
Financial assets
Initial recognition and measurement
Financial assets within the scope of LKAS 39 are
classified as financial assets at fair value through
profit or loss, loans and receivables, held-to-maturity
investments, available-for-sale financial assets, or as
derivatives designated as hedging instruments in an
effective hedge, as appropriate. The Group determines
the classification of its financial assets at initial
recognition.
All financial assets are recognised initially at fair value
plus, in the case of assets not at fair value through profit
or loss, directly attributable transaction costs. Purchases
or sales of financial assets that require delivery of
assets within a time frame established by regulation
or convention in the marketplace (regular way trades)
are recognised on the trade date, i.e. the date that the
Group commits to purchase or sell the asset.
The Group’s financial assets include cash and shortterm deposits, trade and other receivables, loans and
advances, Rental receivable on lease assets and hire
purchase, quoted and unquoted financial instruments
and derivative financial instruments.
Subsequent measurement
The subsequent measurement of financial assets
depends on their classification as follows:
Financial assets at fair value through profit or loss
include financial assets held for trading and financial
assets designated upon initial recognition at fair value
through profit or loss. Financial assets are classified as
held for trading if they are acquired for the purpose of
selling or repurchasing in the near term.
Financial assets at fair value through profit or loss are
carried in the Statement of Financial Position at fair
value with changes in fair value recognised in finance
income or finance costs in the Income Statement.
The Group evaluates its financial assets held for
trading, other than derivatives, to determine whether
the intention to sell them in the near term is still
appropriate. When the Group is unable to trade
these financial assets due to inactive markets and
management’s intention to sell them in the foreseeable
future significantly changes, the Group may elect to
reclassify these financial assets in rare circumstances.
The reclassification to loans and receivables, availablefor-sale or held to maturity depends on the nature of
the asset. This evaluation does not affect any financial
assets designated at fair value through profit or loss
using the fair value option at designation.
Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not
quoted in an active market. After initial measurement,
such financial assets are subsequently measured at
amortised cost using the effective interest rate method
(EIR), less impairment. Amortised cost is calculated
by taking into account any discount or premium on
acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included in
finance income in the Income Statement. The losses
arising from impairment are recognised in the Income
Statement in finance costs.
Held to maturity investments
Held to maturity investments non derivative financial
assets with fixed or determinable payments and fixed
maturities are classified as held to maturity when the
Group has the positive intention and ability to hold them
to maturity. After initial measurement, held to maturity
investments are measured at amortised cost using the
effective interest method, less impairment. Amortised
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cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included
in finance income in the Income Statement. The losses
arising from impairment are recognised in the Income
Statement in finance costs.
Available for sale financial investments
Available for sale financial investments include equity
and debt securities. Equity investments classified as
available for sale are those, which are neither classified
as held for trading nor designated at fair value through
profit or loss. Debt securities in this category are those
which are intended to be held for an indefinite period
of time and which may be sold in response to needs
for liquidity or in response to changes in the market
conditions.
After initial measurement, available for sale financial
investments are subsequently measured at fair value
with unrealised gains or losses recognised as Other
Comprehensive Income in the available for sale reserve
until the investment is derecognised, at which time the
cumulative gain or loss is recognised in other operating
income, or determined to be impaired, at which time
the cumulative loss is reclassified to the Income
Statement in finance costs and removed from the
available for sale reserve. Interest income on available
for sale debt securities is calculated using the effective
interest method and is recognised in the Income
Statement.
The Group evaluates its available for sale financial
assets to determine whether the ability and intention
to sell them in the near term is still appropriate. When
the Group is unable to trade these financial assets due
to inactive markets and management’s intention to do
so significantly changes in the foreseeable future, the
Group may elect to reclassify these financial assets
in rare circumstances. Reclassification to loans and
receivables is permitted when the financial assets meet
the definition of loans and receivables and the Group
has the intent and ability to hold these assets for the
foreseeable future or until maturity. Reclassification to
the held to maturity category is permitted only when
the entity has the ability and intention to hold the
financial asset accordingly.
that has been recognised in equity is amortised to
the Income Statement over the remaining life of the
investment using the EIR. Any difference between
the new amortised cost and the expected cash flows
is also amortised over the remaining life of the asset
using the EIR. If the asset is subsequently determined
to be impaired, then the amount recorded in equity is
reclassified to the Income Statement.
1.5.14.1Derecognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is derecognised when:
• the rights to receive cash flows from the asset have
expired
• the Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation
to pay the received cash flows in full without
material delay to a third party under a ‘pass through’
arrangement; and either
(a) the Group has transferred substantially all the risks
and rewards of the asset, or
(b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Group has transferred its rights to receive
cash flows from an asset or has entered into a pass
through arrangement, and has neither transferred
nor retained substantially all of the risks and rewards
of the asset nor transferred control of it, the asset is
recognised to the extent of the Group’s continuing
involvement in it.
In that case, the Group also recognises an associated
liability. The transferred asset and the associated liability
are measured on the basis that reflects the rights and
obligations that the Group has retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and
the maximum amount of consideration that the Group
could be required to repay.
For a financial asset reclassified out of the available for
sale category, any previous gain or loss on that asset
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1.5.14.2Impairment of financial assets
The Group assesses at each reporting date whether
there is any objective evidence that a financial asset or
a group of financial assets is impaired. A financial asset
or a group of financial assets is deemed to be impaired
if, and only if, there is objective evidence of impairment
as a result of one or more events that has occurred
after the initial recognition of the asset (an incurred
‘loss event’) and that loss event has an impact on the
estimated future cash flows of the financial asset or the
group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the
debtors or a group of debtors is experiencing significant
financial difficulty, default or delinquency in interest or
principal payments, the probability that they will enter
bankruptcy or other financial reorganisation and where
observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as
changes in arrears or economic conditions that correlate
with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the
Group first assesses whether the objective evidence
of impairment exists individually for financial assets
that are individually significant, or collectively for
financial assets that are not individually significant. If
the Group determines that no objective evidence of
impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset
in a group of financial assets with similar credit risk
characteristics and collectively assesses them for
impairment. Assets that are individually assessed
for impairment and for which an impairment loss is,
or continues to be, recognised are not included in a
collective assessment of impairment.
If there is objective evidence that an impairment loss
has been incurred, the amount of the loss is measured
as the difference between the assets carrying amount
and the present value of estimated future cash flows
(excluding future expected credit losses that have not
yet been incurred). The present value of the estimated
future cash flows is discounted at the financial asset’s
original effective interest rate. If a loan has a variable
interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate.
The carrying amount of the asset is reduced through
the use of an allowance account and the amount of the
loss is recognised in the Income Statement. Interest
income continues to be accrued on the reduced carrying
amount and is accrued using the rate of interest used
to discount the future cash flows for the purpose of
measuring the impairment loss. The interest income
is recorded as part of finance income in the Income
Statement.
Loans together with the associated allowance are
written off when there is no realistic prospect of future
recovery and all collateral has been realised or has been
transferred to the Group. If, in a subsequent year, the
amount of the estimated impairment loss increases
or decreases because of an event occurring after the
impairment was recognised, the previously recognised
impairment loss is increased or reduced by adjusting
the allowance account.
If a future write off is later recovered, the recovery is
credited to finance costs in the Income Statement.
Available for sale financial investments
For available for sale financial investments, the Group
assesses at each reporting date whether there is
objective evidence that an investment or a group of
investments is impaired.
In the case of equity investments classified as available
for sale, objective evidence would include a significant
or prolonged decline in the fair value of the investment
below its cost.
‘Significant’ is evaluated against the original cost of the
investment and ‘prolonged’ against the period in which
the fair value has been below its original cost. Where
there is evidence of impairment, the cumulative loss
measured as the difference between the acquisition
cost and the current fair value, less any impairment loss
on that investment previously recognised in the Income
Statement is removed from the Statement of Other
Comprehensive Income and recognised in the Income
Statement. Impairment losses on equity investments
are not reversed through the Income Statement;
increases in their fair value after impairments are
recognised directly in the Statement of Other
Comprehensive Income.
133
In the case of debt instruments classified as availablefor-sale, impairment is assessed based on the same
criteria as financial assets carried at amortised cost.
However, the amount recorded for impairment is the
cumulative loss measured as the difference between
the amortised cost and the current fair value, less
any impairment loss on that investment previously
recognised in the Income Statement.
Future interest income continues to be accrued based
on the reduced carrying amount of the asset, using the
rate of interest used to discount the future cash flows
for the purpose of measuring the impairment loss. The
interest income is recorded as part of finance income.
If, in a subsequent year, the fair value of a debt
instrument increases and the increase can be
objectively related to an event occurring after the
impairment loss was recognised in the Income
Statement, the impairment loss is reversed through the
Income Statement.
1.5.15.Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of LKAS 39 are
classified as financial liabilities at fair value through
profit or loss, loans and borrowings, or as derivatives
designated as hedging instruments in an effective
hedge, as appropriate. The Group determines
the classification of its financial liabilities at initial
recognition.
All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings, carried
at amortised cost. This includes directly attributable
transaction costs.
The Group’s financial liabilities include trade and other
payables, bank overdrafts, loans and borrowings,
financial guarantee contracts, and derivative financial
instruments.
Subsequent measurement
The measurement of financial liabilities depends on
their classification as follows:
Loans and borrowings
After initial recognition, interest bearing loans and
borrowings are subsequently measured at amortised
cost using the effective interest rate method. Gains
and losses are recognised in the Income Statement
when the liabilities are derecognised as well as through
the Effective Interest Rate method (EIR) amortisation
process.
Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation
is included in finance costs of the Income Statement.
Financial guarantee contracts
Financial guarantee contracts issued by the Group are
those contracts that require a payment to be made to
reimburse the holder for a loss it incurs because the
specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised initially
as a liability at fair value, adjusted for transaction costs
that are directly attributable to the issuance of the
guarantee. Subsequently, the liability is measured at the
higher of the best estimate of the expenditure required
to settle the present obligation at the reporting date and
the amount recognised less cumulative amortisation.
1.5.15.1Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms,
or the terms of an existing liability are substantially
modified, such an exchange or modification is treated
as a derecognition of the original liability and the
recognition of a new liability, and the difference in
the respective carrying amounts is recognised in the
Income Statement.
Investment sold together with a deep in the money
put option are not derecognised from the Statement
of Financial Position as the Group retains substantially
all of the risks and rewards of ownership. The
corresponding cash received is recognised in the
Consolidated Statement of Financial Position as
an asset with a corresponding obligation to return
it, including accrued interest as a financial liability,
reflecting the transaction’s economic substance as a
loan to the Group. The difference between the sale and
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put option exercise price is treated as interest expense
and is accrued over the life of agreement using the EIR.
Any gains or losses arising from changes in the fair
value of derivatives are taken directly to the Income
Statement.
1.5.16 Offsetting of financial instruments
Financial assets and financial liabilities are offset and
the net amount reported in the Consolidated Statement
of Financial Position if, and only if, there is a currently
enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net
basis, or to realise the assets and settle the liabilities
simultaneously.
1.5.17 Fair value of financial instruments
The fair value of financial instruments that are traded
in active markets at each reporting date is determined
by reference to quoted market prices, without any
deduction for transaction costs.
For financial instruments not traded in an active market,
the fair value is determined using appropriate valuation
techniques. Such techniques may include using
recent arm’s length market transactions; reference
to the current fair value of another instrument that is
substantially the same; a discounted cash flow analysis
or other valuation models.
An analysis of fair values of financial instruments
and further details as to how they are measured are
provided in note 14
1.5.18 Derivative financial instruments
Initial recognition and subsequent measurement
The Group uses derivative financial instruments such
as forward currency contracts, interest rate swaps
and forward commodity contracts to hedge its foreign
currency risks, interest rate risks and commodity price
risks, respectively. Such derivative financial instruments
are initially recognised at fair value on the date on
which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are
carried as financial assets when the fair value is positive
and as financial liabilities when the fair value is negative.
The fair value of commodity contracts that meet the
definition of a derivative as defined by LKAS 39 are
recognised in the Income Statement in cost of sales.
Derivative financial instruments and hedging
activities
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and are
subsequently remeasured at their fair value. The
method of recognising the resulting gain or loss
depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item
being hedged. The group designates certain derivatives
either,
• hedges of the fair value of recognised assets or
liabilities or a firm commitment (fair value hedge)
• hedges of a particular risk associated with a
recognised asset or liability or a highly probable
forecast transaction (cash flow hedge)
• hedges of a net investment in a foreign operation
(net investment hedge)
The Group documents at the inception of the
transaction the relationship between hedging
instruments and the hedged items, as well as its risk
management objectives and strategies for undertaking
various hedging transactions. The company also
documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives that
are used in hedging transactions are highly effective
in offsetting changes in fair values or cash flows of
hedged items.
The fair values of various derivative instruments
used for hedging purposes are disclosed in note
32. Movements on the hedging reserve on Other
Comprehensive Income Statement (OCI) are shown in
the same note. The fair value of a hedging derivative
is classified as a non current asset or liability when the
remaining hedged item is more than 12 months and as
a current asset or liability when the remaining maturity
of the hedged item is less than 12 months. Trading
derivatives are classified as a current asset or liability.
Cash flow hedge
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in Statement of Other
135
Comprehensive Income (OCI). The gain or loss in
relation to ineffective portion is recognised immediately
in the income statement.
However, as per the payment of Gratuity Act No. 12 of
1983 this liability only arises upon completion of 5 years
of continued service.
Amounts accumulated in equity are reclassified to profit
or loss in the periods when the hedged item affects
profit or loss. When a hedging instrument expires or
is sold, or when a hedge no longer meets the criteria
for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity and is
recognised when the forecast transaction ultimately
recognised in the income statement. When the forecast
transaction is no longer to expected to occur, the
cumulative gain or loss that was reported in equity is
immediately transferred to the Income Statement.
The gratuity liability is not externally funded.
1.5.19Inventories
Inventories are valued at the lower of cost and net
realisable value. Net realisable value is the estimated
selling price less estimated costs of completion and the
estimated costs necessary to make the sale.
The costs incurred in bringing inventories to its present
location and condition, are accounted for as follows:
• Finished goods - direct materials, direct labour and an
appropriate proportion of fixed overheads based on
normal operating capacity
• Other inventories - at actual cost
1.5.20 Cash and cash equivalents
Cash and short term deposits in the statement of
financial position comprise cash at banks and in hand
and short term deposits with a maturity of three months
or less.
For the purpose of the cash flow statement, cash
and cash equivalents consist of cash and short term
deposits as defined above, net of outstanding bank
overdrafts.
1.5.21 Defined benefit plan - Gratuity
The liability recognised in the Statement of Financial
Position is the present value of the defined benefit
obligation at the reporting date using the projected unit
credit method. Any actuarial gains or losses arising are
recognised immediately in the Other Comprehensive
income.
1.5.22 Defined contribution plan - Employees’ Provident
Fund and Employees’ Trust Fund
Employees are eligible for Employees’ Provident Fund
contributions and Employees’ Trust Fund contributions
in line with respective statutes and regulations. The
companies contribute the defined percentages of gross
emoluments of employees to an approved Employees’
Provident Fund and to the Employees’ Trust Fund
respectively, which are externally funded.
1.5.23 Insurance contract liabilities - Life
Life insurance liabilities are recognised when contracts
are entered into and premiums are received. The
liability is determined as the sum of the discounted
value of the expected future benefits, claims handling
and policy administration expenses, policyholder
options and guarantees and investment income from
assets backing such liabilities, which are directly
related to the contract, less the discounted value
of the expected gross premiums that would be
required to meet the future cash outflows based on
the valuation assumptions used. The liability is either
based on current assumptions or calculated using the
assumptions established at the time the contract was
issued, in which case a margin for risk and adverse
deviation is generally included. Furthermore, the liability
for life insurance contracts comprises the provision for
unearned premiums and unexpired risks, as well as for
claims outstanding, which includes an estimate of the
incurred claims that have not yet been reported to the
company. Adjustments to the liabilities at each reporting
date are recorded in the Statement of Comprehensive
Income. Profits originated from margins of adverse
deviations on run off contracts are recognised in the
Statement of Comprehensive Income over the life of
the contract, whereas losses are fully recognised in the
Statement of Comprehensive Income during the first
year of run off. The liability is derecognised when the
contract expires, is discharged or is cancelled.
At each reporting date, an assessment is made of
whether the recognised life insurance liabilities are
adequate, net of related PVIF (Present Value Interest
136
Factor) and DAC (Deferred Acquisition Costs), by
using an existing liability adequacy test. The liability
value is adjusted to the extent that it is insufficient to
meet future benefits and expenses. Any inadequacy is
recorded in the Statement of Comprehensive Income,
initially by impairing PVIF and DAC and, subsequently,
by establishing a technical reserve for the remaining
loss. In subsequent periods, the liability for a block of
business that has failed the adequacy test is based on
the assumptions that are established at the time of
the loss recognition. The assumptions do not include a
margin for adverse deviation.
1.5.24 Insurance contract liabilities – Non life
Non life insurance contract liabilities are recognised
when contracts are entered into and premiums are
charged. These liabilities, known as the policy liability
provisions include the premium and claim liabilities.
The premium liabilities relate to policies for which the
premium has been received but the exposure has not
fully expired, while the claim liabilities relate to claims
that have been incurred but not yet settled.
The provision for unearned premiums represents
premiums received for risks that have not yet expired.
Generally the reserve is released over the term of the
contract and is recognised as premium income.
The claim liabilities are based on the estimated ultimate
cost of all claims incurred but not settled at the
Statement of Financial Position date, whether reported
or not, with a reduction for the expected value of
salvage and other recoveries.
Delays can be experienced in the notification and
settlement of claims, therefore, the ultimate cost of
these cannot be known with certainty at the Statement
of Financial Position date. The liability is calculated at
the reporting date using a range of standard actuarial
claim projection techniques, based on empirical data
and current assumptions that may include a margin
for adverse deviation. No provision for equalisation or
catastrophe reserves is recognised. The liabilities are
derecognised when the contract expires, is discharged
or is cancelled.
The calculation may use current estimates of future
contractual cash flows to determine the investment
return expected to arise on assets relating to the
relevant non life insurance technical provisions.
1.5.25 Provisions, contingent assets and contingent
liabilities
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of
the amount of the obligation. Where the Group expects
some or all of a provision to be reimbursed, for example
under an insurance contract, the reimbursement is
recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating
to any provision is presented in the Income Statement
net of any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.
All contingent liabilities are disclosed as a note to the
financial statements unless the outflow of resources is
remote. A contingent liability recognised in a business
combination is initially measured at its fair value.
Subsequently, it is measured at the higher of:
• the amount that would be recognised in accordance
with the general guidance for provisions above (LKAS
37) or
• the amount initially recognised less, when
appropriate, cumulative amortisation recognised
in accordance with the guidance for revenue
recognition (LKAS 18)
Contingent assets are disclosed, where inflow of
economic benefit is probable.
1.5.26 SEGMENT INFORMATION
Operating segments
The Group’s internal organisation and management is
structured based on individual products and services
which are similar in nature and process and where the
risk and return are similar. The operating segments
represent this business structure.
137
Segment information
Segment information has been prepared in conformity
with the accounting policies adopted for preparing and
presenting the consolidated financial statements of the
Group.
1.6
SIGNIFICANT ACCOUNTING JUDGMENTS,
ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements of the
Group requires the management to make judgments,
estimates and assumptions, which may affect the
amounts of income, expenditure, assets , liabilities and
the disclosure of contingent liabilities, at the end of the
reporting period. In the process of applying the Group’s
accounting policies, the key assumptions made relating
to the future and the sources of estimation at the
reporting date together with the related judgments that
have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within
the financial year are discussed below.
1.6.1 Valuation of property, plant and equipment and
investment property
The Group measures land and buildings at revalued
amounts with changes in fair value being recognised in
other comprehensive income and in the statement of
equity. In addition, it carries its investment properties at
fair value, with changes in fair value being recognised in
the income statement. The Group engaged independent
valuation experts to determine fair value of investment
properties and land and buildings as at 31 March 2015.
The valuer has used valuation techniques such as
market values and discounted cash flow methods
where there was a lack of comparable market data
available based on the nature of the property.
The determined fair values of investment properties,
using investment method, are most sensitive to the
estimated yield as well as the long term occupancy rate.
The methods used to determine the fair value of the
investment properties, are further explained in note 14.
1.6.2 Impairment of non financial assets
Impairment exists when the carrying value of an asset
or cash generating unit exceeds its recoverable amount,
which is the higher of its fair value less costs to sell
and its value in use (VIU). The fair value less costs to
sell calculation is based on available data from an active
market, in an arm’s length transaction, of similar assets
or observable market prices less incremental costs for
disposing of the asset. The value in use calculation is
based on a discounted cash flow model. The cash flows
are derived from the budget for the next five years and
do not include restructuring activities that the Group is
not yet committed to or significant future investments
that will enhance the asset’s performance of the cash
generating unit being tested. The recoverable amount
is most sensitive to the discount rate used for the
discounted cash flow model as well as the expected
future cash inflows and the growth rate used for
extrapolation purposes. The key assumptions used to
determine the recoverable amounts for the different
cash generating units, are further explained in note 18.1.
1.6.3 Fair value of financial instruments
Where the fair value of financial assets and financial
liabilities recorded in the Statement of Financial Position
cannot be derived from active markets, their fair value
is determined using valuation techniques including
the discounted cash flow model. The inputs to these
models are taken from observable markets where
possible.
Where this is not feasible, a degree of judgment is
required in establishing fair values. The judgments
include considerations of inputs such as liquidity risk,
credit risk and volatility. Changes in assumptions about
these factors could affect the reported fair value of
financial instruments, are further explained in note 14
1.6.4Taxes
The Group is subject to income tax and other taxes
including VAT. Significant judgment was required to
determine the total provision for current, deferred and
other taxes due to the uncertainties that exists with
respect to the interpretation of the applicability of tax
laws, at the time of the preparation of these financial
statements.
138
Uncertainties also exist with respect to the
interpretation of complex tax regulations and the
amount and timing of future taxable income. Given the
wide range of business relationships and the longterm nature and complexity of existing contractual
agreements, differences arising between the actual
results and the assumptions made, or future changes
to such assumptions, could necessitate future
adjustments to tax income and expense already
recorded. Where the final tax outcome of such matters
is different from the amounts that were initially
recorded, such differences will impact the income
and deferred tax amounts in the period in which the
determination is made.
The Group has tax losses relate to subsidiaries that
have a history of losses that do not expire and may
not be used to offset other tax liabilities and where the
subsidiaries have no taxable temporary differences nor
any tax planning opportunities available that could partly
support the recognition of these losses as deferred tax
assets. Further details on taxes are disclosed in note
10.4 in the financial statements.
1.6.5 Employee benefit liability
The employee benefit liability of the Group is based
on the actuarial valuation carried out by independent
actuarial specialist. The actuarial valuations involve
making assumptions about discount rates and future
salary increases. The complexity of the valuation, the
underlying assumptions and its long term nature, the
defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed
at each reporting date. Details of the key assumptions
used in the estimates are contained in note 35.
1.6.6 Valuation of Insurance Contract Liabilities – Life
Insurance
Life Insurance liabilities are recognised when contracts
are entered into and premiums are charged. These
liabilities are measured by suing the Net Premium
Valuation (NPV) method as specified by the Insurance
Board of Sri Lanka (IBSL) based on the recommendation
of the Independent Consultant Actuary.
The liability is determined as the sum of the discounted
value of expected future benefits, less the discounted
value of the expected future premiums that would be
required to meet the future cash outflows based on the
valuation assumptions used. The liability is computed
based on IBSL specified guidelines and current
assumptions which vary based on the contract type.
Furthermore, adjustments are performed to capture
likely liability that may arise due to currently lapsed
contracts reviving in the future.
The minimum mandated amount, which are to be
paid to policyholders plus and declared / undeclared
additional benefits, are recorded in liabilities.
The liability is derecognised when the contract expires,
is discharged or cancelled.
whether the recognised life insurance liability is
adequate by using an existing liability adequacy test.
1.6.7 Valuation of Insurance Contract liabilities – General
Insurance
General insurance contract liabilities include the
outstanding claims provision (Reserve for gross
outstanding and incurred but not reported, and incurred
but not reported enough – IBNR / IBNER) and the
provision for unearned premium and the provision for
premium deficiency.
Gross claims payable including IBNR
The outstanding claims provision is based on the
estimated ultimate cost of all claims incurred but not
settled at the reporting date, whether reported or not,
together with related claims handling cost and reduction
for expected value of salvage and other recoveries.
Delays can be experienced in the notification and
settlement of certain types of claims, therefore the
ultimate cost of these cannot be known with certainty
at reporting date. The liability is calculated at the
reporting date using range of slandered actuarial claim
projection techniques, based on empirical data and
current assumptions that may include a margin for
adverse deviation. The liability is not discounted for the
time value of money. No provision for equalisation or
catastrophe reserves is recognised.
The liabilities are derecognised when the obligation to
pay a claim expires, is discharged or is cancelled.
IBNR reserve is determined by an independent external
actuary.
139
1.6.8 Liability adequacy test (LAT) - Life insurance
whether the recognised life insurance liabilities are
adequate by using an existing liability adequacy test as
laid out under SLFRS 4. The liability value is adjusted to
the extent that it is insufficient to meet future benefits
and expenses. In performing the adequacy test,
current best estimates of future contractual cash flows,
including related cash flows such as claims handling and
policy administration expenses, policyholder options and
guarantees, as well as investment income from assets
backing such liabilities, are used. A number of valuation
methods are applied, including discounted cash flows
to the extent that the test involves discounting of cash
flows, the interest rate applied based on management’s
prudent expectation of current market interest rates.
Any deficiencies shall be recognised in the Income
Statement by setting up a provision for liability
adequacy.
1.7 CHANGES IN ACCOUNTING POLICIES
The accounting policies adopted by the Group are
consistent with those used in the previous year except
for the following SLFRSs with effect from current year.
•
SLFRS 10 Consolidated Financial Statements
•
SLFRS 11 Joint Arrangements
•
SLFRS 12 Disclosure of Interests in Other Entities
•
SLFRS 13 Fair Value Measurement
•
LKAS 1 Presentation of Financial Statements
(amendments)
SLFRS 10 - Consolidated Financial Statements
With the adoption of SLFRS 10 in Sri Lanka with
effect from 1st January 2014, the Group changed its
accounting policy for determining whether an investee
is a subsidiary based on the definition of control. The
Group considers that control exists when the company
has power over an investee; has exposure or rights to
variable returns from its involvement with the investee
and when it has ability to use its power over the
investee to affect the amount of the Company’s returns.
SLFRS 11 - Joint Arrangements SLFRS 11 Replaces
LKAS 31
Interests in Joint Ventures and SIC-13 Jointlycontrolled Entities Non-monetary Contributions by
Venturers. SLFRS 11 removes the option to account
for jointly controlled entities (JCEs) using proportionate
consolidation. Instead, JCEs that meet the definition of
a joint venture under SLFRS 11 must be accounted for
using the equity method. No impact on application of
this standard to the Group.
SLFRS 12 - Disclosure of Interests in Other Entities
SLFRS 12 sets out the requirements for disclosures
relating to an entity’s interests in subsidiaries, joint
arrangements, associates and structured entities. The
requirements in SLFRS 12 are more comprehensive
than the previously existing disclosure requirements
for subsidiaries. For example, where a subsidiary is
controlled with less than a majority of voting rights.
While the Group has subsidiaries with material noncontrolling interests, there are no unconsolidated
structured entities. SLFRS 12 disclosures are provided
in notes 44 to the Financial Statements.
SLFRS 13 - Fair Value Measurement
SLFRS 13 establishes a single source of guidance
under SLFRS for all fair value measurements. SLFRS 13
does not change when an entity is required to use fair
value, but rather provides guidance on how to measure
fair value under SLFRS. SLFRS 13 defines fair value
as an exit price. As a result of the guidance in SLFRS
13, the Group reassessed its policies for measuring
fair values. Application of SLFRS 13 has not materially
impacted the fair value measurements of the Group.
Additional disclosures where required, are provided in
the individual notes relating to the assets and liabilities
whose fair values were determined.
LKAS 1 Presentation of Items of Other
Comprehensive Income
Amendments to LKAS 1 The amendments to LKAS
1 introduce a grouping of items presented in Other
Comprehensive Income. Items that will be reclassified
(‘recycled’) to Income Statement at a future point in
time (e.g., net loss or gain on AFS financial assets) have
to be presented separately from items that will not be
reclassified (e.g., revaluation of land). The amendments
140
affect presentation only and have no impact on the
Group’s financial position or performance.
1.8 COMPARATIVE INFORMATION
The presentation and classification of the financial
statements of the previous years have been amended,
where relevant for better presentation and to be
comparable with those of the current year.
2
SRI LANKA ACCOUNTING STANDARDS
(SLFRS/LKAS) ISSUED BUT NOT YET
EFFECTIVE
The following SLFRS have been issued by the Institute
of Chartered Accountants of Sri Lanka that have an
effective date in the future and have not been applied
in preparing these financial statements. Those SLFRS
will have an effect on the accounting policies currently
adopted by the Group and may have an impact on the
future financial statements.
SLFRS 9 –Financial Instruments: Classification and
Measurement
SLFRS 9, as issued reflects the first phase of work on
replacement of LKAS 39 and applies to classification
and measurement of financial assets and liabilities.
This standard was originally effective for annual periods
commencing on or after 01 January 2018. However the
effective date has been deferred subsequently.
SLFRS 15 Revenue from Contracts with Customers
SLFRS 15 establishes a new five step model that will
apply to revenue arising from contracts with customers.
Under SLFRS 15 revenue is recognised at an amount
that reflects the consideration to which an entity
expects to be entitled in exchange for transferring
goods or services to a customer. The principles in
SLFRS 15 provide a more structured approach to
measuring and recognising revenue.
The new revenue standard is applicable to all entities
and will supersede all current revenue recognition
requirements under SLFRS 15. Either a full or modified
retrospective application is required for annual periods
beginning on or after 1 January 2018 with early adoption
permitted. The Group is currently assessing the impact
of SLFRS 15 and plans to adopt the new standard on
the required effective date.
141
3REVENUE
In Rs.
3.1
Company
2014
Sale of goods
22,312,130,430
13,404,473,971
-
-
Rendering of services
17,251,753,680
15,841,961,613
416,018,805
355,554,590
39,563,884,110
29,246,435,584
416,018,805
355,554,590
Information Technology
Leisure
Retail
Automobile
2014
9,251,981,418
5,982,330,875
628,053,779
91,747,256
12,334,289,525
7,538,707,859
743,443,707
423,571,341
8,001,764,086
7,457,509,687
Healthcare Services
8,591,960,503
7,745,800,066
12,391,092
6,768,500
39,563,884,110
29,246,435,584
DIVIDEND INCOME
In Rs.
Company
Income from investment in related parties
2015
2014
961,271,765
403,985,123
961,271,765
403,985,123
OTHER OPERATING INCOME
In Rs.
Profit on sale of property, plant & equipment
Group
2015
Company
2014
2015
2014
24,486,006
34,808,911
6,368,059
16,622,339
644,439,532
222,795,432
80,981,615
56,984,480
80,712,189
(64,914,308)
-
-
108,101,975
101,809,356
-
-
41,704,900
42,404,017
10,698,225
15,472,224
263,116,434
160,354,976
10,063,573
5,453,124
1,162,561,036
497,258,384
108,111,472
94,532,167
2015
2014
2015
2014
Interest income
608,924,563
654,420,002
121,757,916
353,712,620
Finance income on other financial instruments
513,248,702
502,554,988
79,782,699
2,184,426
1,122,173,265
1,156,974,990
201,540,615
355,897,046
Profit on disposal of investments
Exchange gain/ (loss)
Fees received
Commission income
Sundry income
6
2014
Group
2015
Financial Services
Other
5
2015
Business segment analysis
In Rs.
4
Group
2015
FINANCE INCOME
In Rs.
Group
Company
142
7
FINANCE EXPENSES
In Rs.
Group
Interest expense on borrowings
2014
2015
2014
1,982,452,160
2,347,217,455
378,824,446
885,700,435
610,418,341
212,068,316
622,203,634
88,027,397
Finance cost on other financial instruments
Other finance expenses
8
Company
2015
99,939,053
100,740,831
5,875,077
6,754,695
2,692,809,554
2,660,026,602
1,006,903,157
980,482,527
PROFIT/(LOSS) BEFORE TAX
Profit/ (loss) before tax is stated after charging all expenses including the following;
In Rs.
Group
Remuneration to executive and non executive Directors
Company
2015
2014
2015
2014
203,187,470
174,197,317
19,020,680
37,260,000
16,933,012
15,114,223
1,684,320
1,452,000
5,693,497
6,150,404
670,900
176,901
Auditors' remuneration
- Audit
- Non audit
Cost of defined employee benefit
- Defined benefit plan cost
140,086,952
105,555,003
6,520,701
6,319,025
- Defined contribution plan cost - EPF/ETF
493,632,066
385,202,893
21,636,469
21,225,823
Staff expenses
4,723,500,928
3,065,956,858
169,320,283
141,837,978
Depreciation of property, plant and equipment
1,189,997,919
901,836,851
24,239,655
25,452,041
248,049,626
204,045,351
2,624,845
2,221,133
1,036,939
1,036,927
-
-
Exchange losses/ (gains)
(80,712,189)
64,914,308
-
-
Donations
16,079,974
4,717,296
10,058,750
107,500
Provisions for/ write off of impaired receivables
96,689,666
34,210,138
61,416,769
4,577,366
Amortisation of intangible assets
Amortisation of lease rentals paid in advance
Provision for impairment of inventories
190,001,431
49,765,780
-
-
1,526,928
29,691,599
995,249
-
27,614,808
-
-
-
Impairment and derecognition of property, plant and equipment
Impairment and derecognition of intangible assets
9
CHANGE IN LIFE INSURANCE CONTRACT LIABILITIES
The results of Asian Alliance Insurance life business segment is consolidated line by line into the Group’s consolidated income statement.
The change in life insurance contract liabilities represents the transfer to the Life Fund, the difference between all income and expenditure
attributable to life policy holders during the year.
In Rs.
Group
2015
2014
Revenue
2,853,600,448
2,375,811,906
Cost of sales
Gross profit
(1,504,101,485) (1,182,119,230)
Operating expenses including distribution and administration expenses
(1,752,626,994) (1,400,622,644)
1,349,498,963
1,193,692,676
Net finance income
781,263,011
704,975,888
Profit attributable to shareholders
566,214,000
468,500,000
944,348,980
966,545,920
143
10
TAX EXPENSE
In Rs.
Group
Company
2015
2014
2015
2014
359,033,601
336,526,604
11,065,070
1,195,889
40,027,509
17,018,719
28,597,314
-
145,083,916
20,106,273
-
-
-
1,949,573
-
-
(94,527,000)
(126,437,356)
(68,079,885)
-
449,618,026
249,163,813
(28,417,501)
1,195,889
Current income tax
Current tax charge
Under provision of income tax of previous years
10% Withholding tax on inter company dividends
ESC written-off
Deferred income tax
Relating to origination and reversal of temporary differences
10.1 Reconciliation between current tax charge and the accounting profit
In Rs.
Group
Company
2015
2014
2015
2014
2,268,699,917
1,257,998,838
291,894,580
(22,339,263)
Dividend income from group companies
1,653,064,339
1,191,449,827
-
-
Share of results of equity accounted investees
Other consolidation adjustments
Profit after adjustment
Exempt profits
Profits not charged to income tax
(5,290,016)
(13,280,969)
-
138,208,837
384,653,543
-
-
4,054,683,077
2,820,821,239
291,894,580
(22,339,263)
(638,349,692)
(698,473,529)
-
-
(587,882,106)
(358,210,653)
(121,718,501)
(141,222,563)
(1,794,919,435) (1,337,739,381)
(961,531,131)
(403,985,123)
Adjusted accounting profit chargeable to income taxes
1,033,531,844
426,397,676
(791,355,052)
(567,546,949)
Deductible expenses
(2,541,925,794)
(742,172,003)
(119,612,903)
(61,534,177)
Non deductible expenses
92,911,146
Resident dividend
3,323,906,278
1,009,841,911
966,243,610
Other source of income
25,834,322
358,210,653
5,521,435
6,570,818
Set off against tax losses
(255,496,411)
(305,695,503)
(21,278,981)
(2,299,786)
Other reductions
(103,501,877)
(4,569,249)
-
-
1,482,348,362
742,013,485
39,518,108
(531,898,948)
Taxable income
10.2 Reconciliation between tax expense and the product of accounting profit
In Rs.
Tax effect on chargeable profits
Group
Company
2015
2014
2015
2014
120,638,635
383,222,879
(220,033,413)
1,839,829
Tax effect on non deductible expenses
678,193,423
160,965,349
270,548,210
-
Tax effect on deductible expenses
(442,711,142)
(212,199,054)
(39,449,727)
(643,940)
40,027,509
17,018,719
28,597,314
-
Under/ (over) provision for previous years
Other income based taxes
ESC
10% WHT on inter company dividends
Current and deferred tax share of equity accounted investees
Total income tax expense
-
1,949,573
-
-
145,083,916
20,106,273
-
-
2,912,685
4,537,430
-
-
544,145,026
375,601,169
39,662,384
1,195,889
144
10.2 Reconciliation between tax expense and the product of accounting profit
In Rs.
Group
Company
2015
2014
2015
2014
268,002,289
250,461,453
11,065,070
1,195,889
88,118,629
81,527,721
-
-
Income tax charged at
Standard rate of 28%
Concessionary rate of 12%
Under/ (over) provision for previous years
Charge for the year
Other income based taxes
40,027,509
17,018,719
28,597,314
-
396,148,427
349,007,893
39,662,384
1,195,889
-
1,949,573
-
-
145,083,916
20,106,273
-
-
2,912,685
4,537,430
-
-
544,145,028
375,601,169
39,662,384
1,195,889
ESC
10% WHT on inter company dividends
Current and deferred tax share of equity accounted investees
Total income tax expense
Group tax expense is based on the taxable profit of individual companies within the Group. At present the tax laws of Sri Lanka do not
provide for Group taxation.
10.3 Deferred tax charge / (release)
In Rs.
Group
Company
2015
2014
2015
2014
Income statement
Deferred tax expense arising from
Accelerated depreciation for tax purposes
151,515,976
49,858,092
6,511,796
-
Revaluation of investment property to fair value
(3,345,592)
(5,433,565)
36,995,098
-
(2,343,356)
(14,177,521)
(8,587,525)
-
(194,432,183)
(123,427,648)
(86,540,231)
-
(45,921,845)
(33,256,714)
(17,196,695)
-
(94,527,000)
(126,437,356)
(68,817,557)
-
46,880,016
13,614,458
-
-
(7,510,356)
1,831,292
-
-
41,864
(23,870)
-
-
39,411,524
15,421,880
-
-
Benefit arising from tax losses
Others
Deferred tax expense arising from revaluation of land and
building to fair value
Deferred tax expense arising from actuarial gains/ (loss)
on retirement benefits
Share of associate company deferred tax
Deferred tax has been computed at 28% for all standard rate companies (including listed companies), and at 12% for Leisure sector
companies & Healthcare sector companies and at rates as disclosed in notes 10.5.
10.4 Tax losses carried forward
In Rs.
Tax losses brought forward
Adjustments on finalisation of liability
Acquisition through business combinations
Tax losses arising during the year
Utilisation of tax losses
Group
Company
2015
2014
2015
2014
7,849,400,321
6,921,859,196
1,463,202,788
929,751,347
945,895,734
(968,288)
(16,436,697)
(418,753)
63,492,085
-
-
-
2,065,672,968
1,234,204,916
-
536,169,980
(255,496,411)
(305,695,503)
(21,278,981)
(2,299,786)
10,668,964,697 7,849,400,321
1,425,487,110
1,463,202,788
145
10.5 Applicable rates of income tax
The tax liability of resident companies are computed at the standard rate of 28% except for the following companies which enjoy full or
partial exemptions and concessions.
Exemptions/ concessions granted under the Board of Investment Law/ Inland Revenue Act
Company
Basis
Exemption or
concessions
Period
Healthcare sector
(except companies enjoy full
exemptions)
Providing healthcare
12%
Open ended
-do-
Exempt
10 years from 2004 (expired on 31 December 2014)
Central Hospital Ltd
-do-
Exempt
8 years from 1st year of profit or 2 years from
commencement of operation whichever is earlier (from
FY 2012/13 onwards)
Asiri Hospital Matara (Pvt) Ltd
-do-
Exempt
8 years from March 2008
Softlogic City Hotels (Pvt) Ltd
Construction of tourist
Exempt
7 Years from 1st year of profit or 2 years from
commencement of operation whichever is earlier
services
hotel
Ceysand Resorts Ltd
Promotion of tourism
12%
Open ended
Softlogic BPO Services (Pvt) Ltd
Providing IT services
Exempt
6 years from 1st year of profit or 2 years from
commencement of operation whichever is earlier
Income tax rates of off-shore subsidiaries
Company
Country of incorporation
Rate
Australia
33.3%
11
EARNINGS PER SHARE
11.1
Basic earnings per share
In Rs.
Group
2015
2014
Profit attributable to equity holders of the parent
555,779,746
155,863,630
Weighted average number of ordinary shares
774,408,298
774,408,298
0.72
0.20
Basic earnings per share
11.2 Amount used as denominator
In Rs.
Group
Ordinary shares at the beginning of the year
2015
2014
779,000,000
779,000,000
(4,591,702)
(4,591,702)
774,408,298
774,408,298
Effect of purchase of treasury shares
Ordinary shares at the end of the year
12
DIVIDEND PER SHARE
Equity dividend on ordinary shares declared and paid during the year
In Rs.
Group
2015
Interim dividend
-
2014
-
0.15
120,033,286
146
13
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities, comprise of public deposits, borrowings, trade and other payables, and financial guarantee
contracts. The main purpose of these financial liabilities is to finance the Group’s operations and to provide guarantees to support its
operations. The Group financial assets comprise loans and advances, rental receivable on lease assets and hire purchase, trade & other
receivables and cash and short term deposits that flows directly from its operations. The Group also holds other financial instruments
such as investments in equity instruments.
The Group is exposed to market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. Risk
management is carried out under 3 lines of defence in the order of senior management officials under policies approved by the Group’ s
operating segments and units. The Group’s overall risk management program seeks to minimise potential adverse effect on the Group’s
financial performance.
The Board of Directors of the Group and Boards of directors of individual components manage each of these risks, which are summarised
below.
Risk management framework
The Board of Directors of the Group and Boards of directors of individual components has overall responsibility for the establishment and
oversight of the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set the appropriate risk
limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Group through its training and management standards and procedures, aims to maintain a disciplined and constructive control
environment in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures, and reviews the adequacy of the risk management framework in relation to the risk faced by the Group. The Group
Audit committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk
management control and procedures, the results of which are reported to the Audit Committee.
13.1 Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will adversely deviate because of changes in market
movements.
Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity
risk. Financial instruments are affected by market risk includes: borrowings, trade payable, short term investment and available for sale
investments.
13.1.1 Management of market risk
Group separates its exposure to market risk between trading and non trading portfolios. Trading portfolio of the Group is mainly held by
the finance services segment, include position arising from market making and proprietary position taking, together with financial assets
and liabilities that are managed on a fair value basis.
With the exception of translation risk arising on the Group’s net investments in its foreign operations, all foreign exchange positions within
the Group are transferred by Group’s central treasury. Accordingly, the foreign exchange positions are treated as part of the Group’s
trading portfolios for risk management purpose.
The Group employs a range of tools to monitor and limit market risk exposures. These are discussed below, separately for trading and
non trading portfolios.
147
The table below sets out the allocation of assets and liabilities subject to market risk between trading and non trading portfolios.
Group
Market risk measure
Carrying
Trading Non trading
amount
portfolio
portfolio
As at 31 March
Market risk measure
Carrying
Trading Non trading
amount
portfolio
portfolio
2015
2015
2015
2014
2014
2014
Rental receivable on lease assets
5,640,315,376
611,778,969
5,028,536,407
4,616,975,141
600,882,720
4,016,092,421
and hire purchase
Loans and advances
Policyholders loans
Reinsurance receivables
6,551,297,181
8,835,995,112
135,501,276
226,767,434
6,396,035,672
8,392,441,152
1,926,725,822
2,545,608,628
-
6,551,297,181
8,835,995,112
135,501,276
226,767,434
6,396,035,672
5,846,832,524
1,926,725,822
8,379,563,606
3,512,629,173
114,342,102
160,845,746
4,910,081,942
6,358,330,664
1,762,101,994
1,651,035,281
-
8,379,563,606
3,512,629,173
114,342,102
160,845,746
4,910,081,942
4,707,295,383
1,762,101,994
Assets subject to market risk
Liabilities subject to market risk
Public deposits
Bank overdrafts
31,710,620
27,461,247,934
12,053,056,190
7,041,840,113
14,787,184,778
1,658,001,636
31,710,620
6,260,352
- 27,461,247,934 17,144,286,771
- 12,053,056,190 9,303,745,347
- 7,041,840,113 5,751,656,617
- 14,787,184,778 11,822,115,977
6,260,352
- 17,144,286,771
- 9,303,745,347
- 5,751,656,617
- 11,822,115,977
-
-
1,658,001,636
2,551,874,570
2,551,874,570
Company
Market risk measure
Carrying
Trading Non trading
amount
portfolio
portfolio
As at 31 March
2015
2015
2015
Market risk measure
Carrying
Trading Non trading
amount
portfolio
portfolio
2014
2014
2014
Assets subject to market risk
1,277,947,548
- 1,277,947,548
57,797,564
241,724,591
- 241,724,591 167,169,840
3,670,748,138 1,346,207,455 2,324,540,683 1,643,996,055
42,695,145
42,695,145 279,766,916
57,797,564
- 167,169,840
5,619,616 1,638,376,439
- 279,766,916
Liabilities subject to market risk
Bank overdrafts
8,136,783,256
29,531,350
4,191,598,768
83,041,714
- 8,136,783,256 3,903,444,290
29,531,350
14,569,828
- 4,191,598,768 3,920,810,772
- 3,903,444,290
14,569,828
- 3,920,810,772
-
-
83,041,714
55,388,092
55,388,092
148
13.1.2 Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long term debt
obligations with floating interest rates.
Exposure to interest rate risk
The interest rate profile of the Group’s interest bearing financial instruments as reported to management of the Group is as follows.
Group
Nominal amount
As at 31 March
2015
Company
Nominal amount
2014
2015
2014
Fixed rate instrument
Financial assets
23,512,675,261
19,833,489,296
2,528,664
530,528,664
Financial liabilities
(17,249,360,709)
6,263,314,552
(22,076,183,607)
(2,242,694,311)
(1,074,685,050)
(1,072,156,386)
(1,118,687,507)
(588,158,843)
Effect of interest rate swaps
-
(30,540,342)
-
-
6,263,314,552
(2,273,234,653)
(1,072,156,386)
(588,158,843)
38,710,129,828
38,710,129,828
18,715,298,710
30,540,342
18,745,839,052
11,846,654,019
11,846,654,019
6,760,955,646
6,760,955,646
Variable rate instruments
Financial liabilities
Effect of interest rate swaps
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings.
Provided all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings, as
follows:
Increase in basis points
As at 31 March
Effect on profit before tax
Rupee
borrowings
Other
currencies
Group
Company
2015
+25b.p
-25b.p
+15b.p
-15b.p
(84,116,612)
84,116,612
(29,616,635)
29,616,635
2014
+25b.p
+15b.p
(66,243,894)
(16,902,389)
-25b.p
-15b.p
66,243,894
16,902,389
The assumed spread of basis points for the interest rate sensitivity analysis is based on the currently observable market environment
changes to base floating interest rates.
13.1.3 Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of adverse
fluctuations in foreign exchange rates. The Group’s exposure to the risk of fluctuations in foreign exchange rates relates primarily to the
Group’s operating activities and foreign currency borrowings.
Management has set up a policy that requires the company and its subsidiaries to manage their foreign exchange risk with strict limits on
maximum exposure.
Foreign currency sensitivity
The following table demonstrates the sensitivity to a possible changes in the USD/LKR exchange rate, provided that all other variables
are held constant such as, Group’s profit before tax following changes in the fair value of the Group’s forward exchange contracts on
borrowings.
149
The Group’s exposure to foreign currencies other than USD is not material.
Effect on profit before tax
As at 31 March
Increase in
exchange rate
USD
Group
Company
2015
+3%
-3%
101,757,120
(101,757,120)
N/A
N/A
2014
+3%
-3%
121,812,108
(121,812,108)
N/A
N/A
The Group manages its foreign currency risk using a balanced approach in respect of forward contracts that are expected to occur within
a maximum 24 month period.
Where the nature of the hedging is not an economic one, it is the Group’s policy to negotiate with counterparties or banks to obtain most
advantage position for the Group.
As at 31 March 2015, the Group entered into forward contracts in respect of 13.56% (2014 : 60%) of its foreign currency borrowings for
which firm commitments existed at the reporting date, respectively.
Foreign Exchange risk in operating activities
The exposure is mainly from foreign creditors arising out of operating activities where fluctuation of foreign exchange rate may occur
where the credit period is between 3-6 months.
13.1.4 Equity price risk
The Group’s finance sector holds listed and unlisted equity securities and put option over quoted equity instruments which are
susceptible to market price risk arising from uncertainties about future values of these securities.
The Group manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Periodic
reports on equity investment portfolio are submitted to the senior management of individual business segment based on the relevance.
The respective Board of Directors reviews and approves all equity investment decisions. To manage its price risk arising from investments
in equity securities, the group diversifies its equity investment portfolio.
Group
As at 31 March
Financial assets at fair value through
profit or loss
2015
2014
Rs.
Bank, Finance and Insurance 2,446,925,110
Beverage, Food and Tobacco
2,587,074
Construction and Engineering
Diversified Holdings
12,000,875
Footware and Textile
Hotels and Travels
1,353,165
Manufacturing
55,216,004
Power and Energy
18,492,960
Telecommunications
9,033,440
2,545,608,628
%
Available for sale investments
2015
2014
Rs.
%
Rs.
%
Rs.
%
96.12 1,573,569,944
0.10
1,912,500
0.47
11,456,482
0.05
13,165
2.17
52,132,364
0.73
4,133,426
95.31
0.12
0.69
0.00
3.16
0.25
610,234,121
1,521,440
23,408
-
99.75
0.25
-
530,757,732
88.33
7.66
4.01
0.00
-
7,817,400
0.47
-
-
100.00 1,651,035,281
0.35
100.00
611,778,969
100.00
46,000,000
24,106,200
18,788
600,882,720
100.00
150
Company
Financial assets at fair value through
profit or loss
2015
2014
As at 31 March
Bank, Finance and Insurance
Footware and Textile
Power and Energy
2015
2014
Rs.
%
Rs.
%
Rs.
%
Rs.
%
4,812,557
1,338,847,938
2,546,960
1,346,207,455
0.36
99.45
0.19
100.00
3,186,416
2,433,200
5,619,616
56.70
43.30
100.00
-
-
-
-
Investments in unquoted investments are made after obtaining the board approval.
Sensitivity analysis
The following table demonstrate the sensitivity of cumulative change in fair value to reasonably possible changes in equity prices provided
all other variables are held constant. The effect of a decrease in equity prices is expected to be equal and opposite to the effect of the
increase shown.
This table consider only equity shares classified under short term and long term financial assets.
Group
Change in
As at 31 March
equity Effect on profit
before tax
price
Company
Effect on Effect on profit
Equity
before tax
Effect on
Equity
2015
Quoted equity investments listed in
Colombo Stock Exchange and put option
over quoted equity instruments
+10%
258,642,381
61,177,563
135,445,845
Nil
- 10%
(252,165,220)
(61,177,563)
(135,445,845)
Nil
+10%
- 10%
167,500,068
(168,214,004)
167,500,068
(168,214,004)
561,962
(561,962)
Nil
Nil
2014
Quoted equity investments listed in
Colombo Stock Exchange and put option
over quoted equity instruments
13.2 Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a
financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables and customer lending) and
from its investing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial
instruments.
The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all clients who wish to trade on credit terms
are subject to credit evaluation procedures. In addition, receivable balances are monitored on an ongoing basis with that the Group’s
exposure to bad debt is not significant.
Hire purchase and lease portfolio is broad based accounting for over 95,622 (2014 - 75,950) contracts and risk of non payment is mitigated
by stringent standard of credit approval process. There is no concentration risk on any single region, customer or sector in particular
collection of dues from customers is robust with the delinquency rate being better than the financial industry average.
With respect to credit risk arising from other financial assets of the Group, such as cash and cash equivalents, available for sale financial
investments, short term investments, the Group’s exposure to credit risk arise from default of the counterparty. The Group manages its
operations to avoid any excessive concentration of counterparty risk.
151
13.2.1 Credit Risk - Default risk
Default risk is the risk that one party to financial instruments will fail to discharge an obligation and cause the other party to incur financial
loss. It arises from lending, trade finance, treasury and other activities undertaken by the Group. The Group has in place standards,
policies and procedures for the control and monitoring of all such risks.
Credit Risk - Concentration risk
The Group seeks to manage its credit concentration risk exposure through diversification of its lending, investing and financing activities
to avoid undue concentrations of risks with individuals or group of customers in specific businesses. It also obtains security when
appropriate. The types of collateral obtained include cash margins, mortgages over properties and pledge over equity instruments.
The requirement for an impairment is analysed at each reporting date on an individual basis for major clients. Additionally, a large number
of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual
incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets
disclosed in Note 13.2.2.
The tables below show the maximum exposure to credit risk for the components of financial position. The maximum exposure is shown
gross before the effect of mitigation through the use of collateral agreements.
152
13.2.2 Risk Exposure - Group
As at 31 March 2015
Note
Other non Rental receivable Rental receivable
current on leased assets on leased assets
investments & hire purchases & hire purchases
- long term
- short term
Government securities
Corporate debt securities
Deposits with banks and Unit Trusts
Loans to executives
Loans and advances
Policyholders loans
Rental receivable on leased assets & hire purchases
13.2.2.1
13.2.2.2
13.2.2.3
13.2.2.4
13.2.2.5.1
13.2.2.5.2
13.2.2.6
13.2.2.7
13.2.2.8
13.2.2.9
3,877,841,032
953,348,819
42,442,694
4,686,862
3,447,334,303
-
3,669,327,302
2,881,969,879
Total credit risk exposure
13.2.2.10
-
-
-
8,325,653,710
3,669,327,302
2,881,969,879
761,995,969
761,995,969
9,087,649,679
3,669,327,302
2,881,969,879
Total equity risk exposure
Total
13.2.2 Risk Exposure - Group
As at 31 March 2014
Deposits with banks and Unit Trusts
Loans to executives
Loans and advances
Policyholders loans
Rental receivable on leased assets & hire purchases
Total
Note
Other non Rental receivable Rental receivable
current on leased assets on leased assets
investments & hire purchases & hire purchases
- long term
- short term
13.2.2.1
13.2.2.2
13.2.2.3
3,189,701,356
627,299,943
48,874,122
-
-
13.2.2.4
13.2.2.5.1
13.2.2.5.2
13.2.2.6
13.2.2.7
13.2.2.8
13.2.2.9
13.2.2.10
1,549,932,573
5,415,807,994
3,762,890,106
3,762,890,106
4,616,673,500
4,616,673,500
751,099,720
751,099,720
6,166,907,714
3,762,890,106
4,616,673,500
153
Cash in hand and at
banks
Trade and other
receivable
Short term
investments
Amounts due
from related
parties
Total
% of allocation
-
16,370,946
5,388,660,809
135,501,276
6,379,664,726
226,767,434
-
2,726,980,399
92,576,655
2,902,275,470
-
572,053
-
6,604,821,431
1,045,925,474
2,944,718,164
21,057,808
8,835,995,112
135,501,276
6,379,664,726
226,767,434
572,053
6,551,297,181
19.05
3.02
8.49
0.06
25.48
0.39
18.40
0.65
18.89
1,926,725,822
-
-
-
1,926,725,822
5.56
1,926,725,822
12,146,965,191
5,721,832,524
572,053
34,673,046,481
100.00
1,926,725,822
12,146,965,191
2,545,608,628
125,000,000
2,670,608,628
8,392,441,152
572,053
2,545,608,628
886,995,969
3,432,604,597
38,105,651,078
74.16
25.84
100.00
Cash in hand and at
banks
Trade and other
receivable
Short term
investments
Amounts due
from related
parties
Total
% of allocation
-
-
2,697,282,330
31,924,215
1,853,088,838
-
5,886,983,686
659,224,158
1,901,962,960
21.57
2.42
6.97
1,762,101,994
1,762,101,994
22,702,451
1,962,696,600
114,342,102
4,887,379,491
160,845,746
7,147,966,390
4,582,295,383
778,460
778,460
22,702,451
3,512,629,173
114,342,102
4,887,379,491
160,845,746
778,460
8,379,563,606
1,762,101,994
27,288,513,827
0.08
12.87
0.42
17.91
0.59
30.71
6.46
100.00
1,762,101,994
7,147,966,390
1,651,035,281
125,000,000
1,776,035,281
6,358,330,664
778,460
1,651,035,281
876,099,720
2,527,135,001
29,815,648,828
65.33
34.67
100.00
154
13.2.2 Risk Exposure - Company
As at 31 March 2015
Deposits with bank
Loans to executives
Note
Other non
current
investments
Cash in
hand and at
banks
13.2.2.2
13.2.2.3
13.2.2.4
2,528,664
-
-
13.2.2.6
13.2.2.8
13.2.2.10
1,275,418,884
1,277,947,548
42,695,145
42,695,145
-
-
1,277,947,548
42,695,145
Other non
current
investments
Cash in
hand and at
banks
2,528,664
55,268,900
57,797,564
279,766,916
279,766,916
Trade
and other
receivable
Short term
investments
- 2,199,540,683
774,677
-
Amounts
due from
related
parties
Total
% of
allocation
2,528,664
- 2,199,540,683
774,677
0.04
36.34
0.01
240,949,914
- 240,949,914
- 2,290,507,881 3,565,926,765
42,695,145
241,724,591 2,199,540,683 2,290,507,881 6,052,415,848
3.98
58.92
0.71
100.00
Financial assets at fair value
through profit or loss
Total
- 1,346,207,455
- 1,346,207,455
91.50
- 125,000,000
- 125,000,000
- 1,471,207,455
- 1,471,207,455
241,724,591 3,670,748,138 2,290,507,881 7,523,623,303
8.50
100.00
13.2.2 Risk Exposure - Company
As at 31 March 2014
Deposits with bank
Loans to executives
Note
13.2.2.2
13.2.2.3
13.2.2.4
13.2.2.6
13.2.2.8
13.2.2.10
Trade
and other
receivable
Short term
investments
Amounts
due from
related
parties
Total
2,528,664
- 528,000,000
- 528,000,000
6,503,850
6,503,850
59,936,203
59,936,203
100,729,787 985,376,439 2,453,097,064 3,594,472,190
- 279,766,916
167,169,840 1,513,376,439 2,453,097,064 4,471,207,823
% of
allocation
0.06
11.81
0.15
1.34
80.39
6.26
100.00
Financial assets at fair value
through profit or loss
Total
-
-
57,797,564
279,766,916
5,619,616
4.30
- 125,000,000
- 125,000,000
- 130,619,616
- 130,619,616
167,169,840 1,643,996,055 2,453,097,064 4,601,827,439
-
5,619,616
-
95.70
100.00
155
13.2.2.1Government securities
As at 31 March 2015 as shown in the table above, 19.05% (2014 - 21.57%) of Group debt securities comprise investments in
government securities which consist of treasury bonds, bills and reverse repo investments. Government securities are usually referred to
as risk free due to the sovereign nature of the instrument.
13.2.2.2Corporate debt securities
As at 31 March 2015, corporate debt securities comprise 45.49% (2014 - 44.13%) and 100.00% (2014 - 100.00%) of the total
investments for the Group and Company respectively out of which were rated “A-” or better, or guaranteed by Treasury.
Group
Company
As at 31 March
2015
2014
2015
2014
Fitch rating
Rs. Rating %
of total
Rs. Rating %
of total
Rs. Rating %
of total
Rs. Rating %
of total
AA-
188,165,584
17.99
A+
181,281,273
17.33
-
-
-
-
-
-
10,028,664
0.96
-
-
2,528,664
100.00
-
-
A
ABBB+
195,006,820
29.58
-
-
2,528,664
100.00
96,338,351
9.21
95,938,900
14.55
-
-
-
-
236,674,432
22.63
43,253,172
6.56
-
-
-
-
BBB
94,988,304
9.08
141,290,116
21.43
-
-
-
-
BBB-
238,448,866
22.80
92,174,420
13.98
-
-
-
-
Guaranteed by Treasury
-
-
59,636,515
9.05
-
-
-
-
Not rated
-
-
31,924,215
4.84
-
-
-
-
1,045,925,474
100.00
659,224,158
100.00
2,528,664
100.00
2,528,664
100.00
Total
13.2.2.3Deposits with banks and Unit Trusts
Deposits with banks mainly consist of fixed and call deposits.
As at 31 March 2015, 94.31% (2014 - 61.01%) and 100.00% (2014 - 100.00%) of the fixed and call deposits and investments in Unit
Trusts were rated “A-” or better for the Group and Company respectively.
Group
Company
As at 31 March
2015
2014
2015
2014
Fitch rating
Rs. Rating %
of total
Rs. Rating %
of total
Rs. Rating %
of total
Rs. Rating %
of total
AA
177,560,635
6.03
-
AA-
2,580,928,895
87.65
597,210,292
-
-
-
-
31.40 2,199,540,683
-
100.00
457,000,000
86.55
13.45
A
6,773,430
0.23
71,100,000
3.74
-
-
71,000,000
A-
11,803,809
0.40
492,110,139
25.87
-
-
-
-
125,000,402
4.24
142,971,142
7.52
-
-
-
-
-
-
30,958
0.00
-
-
-
-
BBB
BBUnit trust
42,620,393
1.45
549,666,306
28.90
-
-
-
-
Not rated
30,600
0.00
48,874,123
2.57
-
-
-
-
100.00 2,199,540,683
100.00
528,000,000
100.00
Total
2,944,718,164
100.00 1,901,962,960
13.2.2.4Loans to executives
Loans to executives portfolio is largely made with short term distress loans granted to executive staff. The respective business units have
taken necessary power of attorney/ promissory notes as collateral for the loans granted.
156
13.2.2.5 Loans and advances
13.2.2.5.1 Loans and advances
As a part of overall risk management strategy, the board of directors of the respective components specially in the finance cluster has
delegated responsibility for the oversight of credit risk to its ‘Credit Committee’ and ‘Credit Risk Committee’. Company ‘Credit Risk
Monitoring Unit’ is reporting to ‘Risk Committee’ through the ‘Chief Risk Officer’ who is responsible for management of the company’s
credit risk. Following are the few steps to manage credit risk;
•
•
introduction of a comprehensive credit policy as the guide line in lending has strengthened the credit evaluation process
concentration risk of credit is evaluated regularly and amends the credit policy accordingly in order to ensure credit granting process
response to market requirements
•
•
implementation of delegated authority levels in line with the process of strengthening credit screening and evaluation process
implementation of a customer rating system as a way of building a data base within the company for efficient and effective credit
evaluation process to service current evaluation as well as prospective evaluations
•
regular discussions are initiated in both ‘Credit Committee’ and ‘Integrated Risk Management Committee’ in relation to credit risk
and identifying necessary actions to be implemented
The table below shows the maximum exposure to credit risk for the components of statement of financial position. The maximum
exposure is shown gross, before the effect of mitigation through the use of collateral agreements.
676,872,151
-
383,488,735
- 192,459,233
- 220,712,552
- 114,091,221
41,549,816
28,640,936
63,933,997
47,816,604
- 169,851,029
- 3,232,901,788
Less than 30 days
31 - 60 days
61 - 90 days
91 - 120 days
121 - 150 days
151 - 180 days
181 - 365 days
above 365 days
Total
loans
Personal
- 2,353,846,400
lending
Short term
-
-
debtors
Pawning
143,256 3,839,623,823 383,488,735
- (1,112,938,655)
143,256 2,726,685,168 383,488,735
Not due/ current
As at 31 March
Category
debtors
Pawning
loans
Revolving
loans
Consumer
-
-
loans
Revolving
496,157,280
496,157,280
-
496,157,280
SME
-
-
loans
SME
loans
59,890,688
16,664,648
6,490,146
4,176,430
3,159,807
2,610,772
14,065,284
37,996,203
- 5,389,527,898
- 5,244,473,920
loans
Consumer
319,260,161 5,334,551,698
(48,338,426) (378,238,902)
270,921,735 4,956,312,796
- 5,389,527,897
- (54,976,199)
- 5,334,551,698
319,260,161
708,942,877 385,236,606 524,830,914 338,280,852
(32,070,726)
(1,747,871) (28,673,634) (19,020,691)
loans
Personal
- 3,232,901,789
- (70,150,117)
- 3,162,751,672
143,256
143,256
-
lending
Short term
Age analysis of facilities considered for collective impairment
Less : Unearned income
Net carrying amount
Total carrying amount
collective impairment is applicable
- gross amount
- allowance for impairment
Gross carrying amount
for the rest of portfolio where
- gross amount
Individually impaired
As at 31 March
Assets at amortised cost
Loans and advances excluding loans to life policyholder
2015
Total
2014
Total
loans
Other
2014
Total
-
252,349,921
37,145,858
237,377,200
24,400,358
120,581,367
16,428,670
45,726,246
9,889,519
31,800,743
12,560,234
66,544,769
10,995,145
61,881,888
35,371,627
207,847,232
6,504,339
8,622,429,686 3,444,985,597
- 7,598,320,320 3,291,689,847
2015
Total
2,286,142 10,375,511,095 4,492,040,441
- (1,539,515,983) (979,411,268)
2,286,142 8,835,995,112 3,512,629,173
- 8,622,429,686 3,444,985,597
- (125,126,316)
(35,843,564)
- 8,497,303,370 3,409,142,033
2,286,142 1,878,207,725 1,082,898,408
2,286,142 1,959,720,647 1,176,667,968
- (81,512,922)
(93,769,560)
loans
Other
157
158
Movement in impairment allowance for loans advances
In Rs.
Movement in specific
impairment allowance
As at 31 March
Movement in collective
impairment allowance
Movement in impairment
allowance (total)
2015
2014
2015
2014
2015
2014
At the beginning of the year
93,769,560
31,736,935
35,843,564
3,196,847
129,613,124
34,933,782
Net impairment charge for the year
45,918,614
62,032,625
89,282,752
32,646,717
135,201,366
94,679,342
Write offs during the year
(3,264,732)
-
-
-
(3,264,732)
-
(54,910,520)
-
-
-
(54,910,520)
-
81,512,922
93,769,560
125,126,316
35,843,564
206,639,238
129,613,124
Setoffs during the year
At the end of the year
13.2.2.5.2 Loans to life policyholders
The Company issued loans to life policyholders considering the surrender value of the life policy as collateral. As at the reporting date, the
value of policy loans granted amounted to Rs.135.50 mn (2014 – Rs.114.34 mn) and its related surrender value is more than its carrying
value.
13.2.2.6Trade receivables
Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to
customer credit risk management. Credit quality of the customer is assessed based on an extensive credit rating scorecard and individual
credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any
consignments to major customers are generally covered by bank guarantees or other forms of credit insurance.
In Rs.
Group
As at 31 March
Company
2015
2014
2015
2014
2,585,966,771
1,693,953,959
8,197,258
7,652,521
949,978,060
846,041,373
-
12,589,592
Trade receivable settlement profile
Current/ 0 - 30 days
31 - 60 days
61 - 90 days
489,445,907
687,783,446
17,185,660
91 - 120 days
994,755,964
343,466,538
-
-
> 121 days
913,994,985
520,001,713
104,431,386
80,487,674
188,210,125
141,105,814
-
-
6,122,351,812
4,232,352,843
129,814,304
100,729,787
Impaired
Gross carrying value
Less : Impairment provision
Individually assessed impairment provision
(64,744,932)
(60,145,332)
-
-
Collectively assessed impairment provision
Total
(123,465,194)
(80,960,484)
-
-
5,934,141,686
4,091,247,027
129,814,304
100,729,787
The requirement for an impairment is analysed at each reporting date on an individual basis for major clients. Additionally, a large number
of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual
incurred historical data.
13.2.2.7Reinsurance receivable
As a part of overall risk management strategy, the Group cedes insurance risk through proportional, non proportional and specific risk
reinsurance treaties. While these mitigate insurance risk, the recoverable from reinsurers and receivables arising from ceded reinsurance
exposes the company to credit risk. Following are the few steps to manage reinsurance risk in addition to explained above;
• placed in line with policy guidelines approved by the Board of Directors on an annual basis in line with the guidelines issued by the
Insurance Board of Sri Lanka
• counterparties’ limits that are set each year and are subject to regular reviews
on a regular basis management assesses the creditworthiness of reinsurers to update the reinsurance strategy and ascertain the
suitable allowance for impairment of reinsurance assets
159
• outstanding reinsurance receivables are reviewed on a monthly basis to ensure that all dues are collected or set off against payable
• maintain close and professional relationship with reinsurers
• no cover is issue without confirmation from reinsurance unless non reinsurance business
As at reporting date reinsurance receivables amount to Rs.226.77 mn as at 31 March 2015 (2014 - Rs.160.85 mn). This mainly consists
of reinsurance receivable on paid claims amounting to Rs.90.60 mn (2014 - Rs.64.00 mn) and reinsurance share of claim reserve
(receivables on outstanding claims) of Rs.136.17 mn as at 31 March 2015 (2014 - Rs.97.00 mn).
13.2.2.8Amounts due from related parties
The Group’s amounts due from related parties mainly consist of associates and receivables from KMPs.
The Company balance consists of the balance from affiliate companies.
13.2.2.9Rental receivable on leased assets & hire purchases
As a part of overall risk management strategy, the board of directors has delegated responsibility for the oversight of credit risk to its
‘Board of Credit Committee’. Company ‘Independent Credit Risk Monitoring Unit’ is reporting to ‘Risk Committee’ through the ‘Head of
Credit Risk’ who is responsible for management of the company’s credit risk. Following are the few steps to manage credit risk;
• introduction of a comprehensive credit policy as the guide line in lending , has strengthened the credit evaluation process
• such credit policy is formulated in consideration with current market conditions and implemented policy is evaluated regularly (once in 3
months) in order to make sure, such policy is in line with the market conditions
• determine the levels of service and quality of the valuers involving in the credit evaluation process
• regular discussions are initiated in both Credit Committee and Integrated Risk Management Committee in relation to credit risk and
identifying necessary actions to be implemented
The table below shows the maximum exposure to credit risk for the components of statement of financial position. The maximum
exposure is shown gross, before the effect of mitigation through the use of collateral agreements.
Credit quality by class of financial assets
Assets at amortised cost
As at 31 March
Rental
receivable on
lease assets
Rental
receivable on
hire purchase
Total
2015
Rental
receivable on
lease assets
Rental
receivable on
hire purchase
Total
2014
9,123,406
(4,214,008)
4,909,398
26,414,222
(6,006,016)
20,408,206
35,537,628
(10,220,024)
25,317,604
95,426,326
(1,797,172)
(87,748,192)
5,880,962
124,559,403
(23,639,131)
(70,552,038)
30,368,234
219,985,729
(25,436,303)
(158,300,230)
36,249,196
2,163,767,882
(33,938,983)
2,129,828,899
6,065,913,572
(113,991,814)
5,951,921,758
8,229,681,454
(147,930,797)
8,081,750,657
3,248,858,523
(14,064,491)
3,234,794,032
Individually impaired
- gross amount
- write off during the year
For the rest of portfolio where
collective impairment is applicable
- gross amount
Total carrying amount
Less : Unearned income
Net carrying amount
2,134,738,297 5,972,329,964 8,107,068,261
(406,402,040) (1,149,369,040) (1,555,771,080)
1,728,336,257 4,822,960,924 6,551,297,181
7,817,645,659 11,066,504,182
(53,609,871)
(67,674,362)
7,764,035,788 10,998,829,820
3,240,674,994 7,794,404,022 11,035,079,016
(837,884,960) (1,817,630,450) (2,655,515,410)
2,402,790,034 5,976,773,572 8,379,563,606
160
Age analysis of facilities considered for collective impairment
Category
As at 31 March
Not due/ current
Rental
receivable on
lease assets
Rental
receivable on
hire purchase
Total
2015
Rental
receivable on
lease assets
Rental
receivable on
hire purchase
Total
2014
1,864,579,559 5,228,487,992 7,093,067,551 3,026,813,784 7,240,242,278 10,267,056,062
Overdue:
Less than 30 days
31 - 60 days
61 - 90 days
91 - 120 days
121 - 150 days
151 - 180 days
181 - 365 days
above 365 days
Total
63,242,060
148,423,009
211,665,069
75,984,453
197,270,468
273,254,921
46,764,505
99,209,509
145,974,014
52,244,971
124,337,928
176,582,899
31,577,307
87,980,213
119,557,520
31,359,210
77,230,060
108,589,270
20,926,672
71,730,748
92,657,420
13,461,486
33,122,085
46,583,571
19,547,658
67,154,286
86,701,944
11,966,159
30,838,499
42,804,658
13,055,786
45,634,818
58,690,604
9,191,653
24,174,645
33,366,298
52,257,142
174,667,820
226,924,962
22,594,837
57,580,359
80,175,196
51,817,193
142,625,177
194,442,370
5,241,970
32,849,337
38,091,307
2,163,767,882 6,065,913,572 8,229,681,454 3,248,858,523 7,817,645,659 11,066,504,182
Movement in impairment allowance
2015
2014
104,497,172
41,212,308
Net impairment charge for the year
273,582,089
216,321,662
Recoveries during the year
54,465,996
5,263,432
Write offs during the year
(258,172,216)
(158,300,230)
174,373,041
104,497,172
Reversal of notional interest for the year
(16,222,220)
(11,386,507)
At the end of the year after notional interest for the year
158,150,821
93,110,665
13.2.2.10Cash in hand and at bank
Deposits with banks mainly consist of fixed and call deposits. Credit risk from balances with banks and financial institutions is managed
by the Group’s Treasury Department in accordance with the Group’s policy. Investments of surplus funds are made only with approved
counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed in an annual basis, and may
be updated throughout the year subject to appropriate approval. The limits are set to minimise the concentration of risks and therefore
mitigate financial loss through potential counterparty’s failure to make payments. The Group’s maximum exposure to credit risk for the
components of the Statement of Financial Position is the carrying amounts as illustrated. 13.3 Liquidity risk
Liquidity risk is the risk that Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled
by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have
sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damages to the Group’s reputation.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans,
debentures, finance leases and hire purchase contracts that will always have sufficient liquidity to meet its liabilities when its due under
normal and stressed conditions. The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be
low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders.
161
Net debt / (cash)
Group
2015
Company
2014
2015
2014
8,392,441,152
6,358,330,664
3,670,748,138
1,926,725,822
1,762,101,994
42,695,145
279,766,916
Total liquid assets
10,319,166,974
8,120,432,658
3,713,443,283
1,923,762,971
14,787,184,778 11,822,115,977
Current portion of borrowings
Bank overdrafts
4,616,956,512
4,144,437,836
1,658,001,636
1,643,996,055
4,191,598,768
3,920,810,772
2,368,998,067
1,455,262,816
2,551,874,570
83,041,714
55,388,092
Total liabilities
21,062,142,926 18,518,428,383
6,643,638,549
5,431,461,680
Net debt / (cash)
10,742,975,952 10,397,995,725
2,930,195,266
3,507,698,709
Liquidity risk management
An optional combination of positive and negative cash flows along with investment returns and contractual obligation maturing is collated
through an intra day cash reporting system for all business segments. High value contractual outflows are processed through various
control filters. The group is in the process of building a “Liquidity Dashboard” with the implementation of ERP program. This would help
further accelerate the review and identification of debt maturities relating to net liquidity position on daily basis and thus enable proactively
mobile necessary funding mobilisation or reinvest of cash surplus if any. Closely monitoring and working to reschedule maturity profile
is any to de-stress cash flows and re-align them with actual investment tenor. This would engender optimal liquidity positioning and this
would reduce borrowing cost and enhance reinvestment income.
Maturity analysis
The table below summarises the maturity profile of the Group’s financial liabilities at 31 March 2015 based on contractual undiscounted
payments.
Within
Between
Between
Between
Between
More than
1 year
1-2 years
2-3 years
3-4 years
4-5 years
5 years
Total
Interest bearing loans
and borrowings
Other non current
financial liabilities
Trade and other
4,616,956,512 7,840,463,194 3,383,374,968 3,139,491,673 4,091,400,830 4,389,560,757 27,461,247,934
-
31,710,620
-
-
-
-
31,710,620
payables
7,041,840,113
Amounts due to related
-
-
-
-
-
7,041,840,113
parties
15,970,784
15,970,784
Short term borrowings 14,787,184,778
- 14,787,184,778
Public deposits
9,838,760,403 1,037,598,357 976,766,009 199,931,421
- 12,053,056,190
Bank overdrafts
1,658,001,636
- 1,658,001,636
37,958,714,226 8,909,772,171 4,360,140,977 3,339,423,094 4,091,400,830 4,389,560,757 63,049,012,055
Contingent gross
commitment on put
option
- 1,812,828,000
-
-
-
-
1,812,828,000
162
Maturity analysis
The table below summarises the maturity profile of the Group’s financial liabilities at 31 March 2014 based on contractual undiscounted
payments.
Within
Between
Between
Between
Between
More than
1 year
1-2 years
2-3 years
3-4 years
4-5 years
5 years
Total
and borrowings
Other financial liabilities
Trade and other
4,144,437,836 3,777,682,210 3,517,675,155 1,573,134,513 1,617,996,492 2,513,360,565 17,144,286,771
6,260,352
6,260,352
payables
5,751,656,616
-
-
-
-
-
5,751,656,616
parties
19,508,602
19,508,602
- 11,822,115,977
Public deposits
7,418,343,338 1,659,008,444 226,393,565
- 9,303,745,347
Bank overdrafts
2,551,874,570
- 2,551,874,570
31,707,936,939 5,436,690,654 3,750,329,072 1,573,134,513 1,617,996,492 2,513,360,565 46,599,448,235
Contingent gross
commitment on put
option
-
- 1,812,828,000
-
-
-
1,812,828,000
The table below summarises the maturity profile of the Company’s financial liabilities at 31 March 2015 based on contractual
undiscounted payments.
Within
Between
Between
Between
Between
More than
1 year
1-2 years
2-3 years
3-4 years
4-5 years
5 years
Total
903,062,884
50,000,000
672,132,048
50,000,000
650,650,922
50,000,000
766,652,445
309,915,332
8,136,783,256
509,915,332
and borrowings
Other financial liabilities
Trade and other
payables
2,368,998,068 2,775,286,889
50,000,000
29,531,350
-
-
-
-
-
29,531,350
148,005,634
4,191,598,768
-
-
-
-
-
148,005,634
4,191,598,768
83,041,714
-
-
-
-
-
83,041,714
6,821,175,534 2,825,286,889
953,062,884
722,132,048
parties
Bank overdrafts
700,650,922 1,076,567,777 13,098,876,054
163
The table below summarises the maturity profile of the Company’s financial liabilities at 31 March 2014 based on contractual
undiscounted payments.
Within
Between
Between
Between
Between
More than
1 year
1-2 years
2-3 years
3-4 years
4-5 years
5 years
743,675,727 1,449,097,231
254,760,724
647,792
-
-
-
743,675,727 1,449,097,231
254,760,724
647,792
Total
and borrowings
Trade and other
1,455,262,816
payables
14,569,828
parties
946,657,314
Bank overdrafts
55,388,092
6,392,688,822
-
- 3,903,444,290
-
14,569,828
- 946,657,314
- 3,920,810,772
55,388,092
- 8,840,870,296
13.4 Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in
order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the
capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2015.
The Group monitors capital using a gearing ratio for company and subsidiary level, which is net debt divided by total capital plus net
debt which is monitored very closely by the senior management officials. Net debt of the Group includes, interest bearing loans and
borrowings, short term borrowings and bank overdrafts (excluding discontinued operations).
Group
As at 31 March
Company
2015
2014
2015
2014
Interest bearing loans and borrowings
Total debt
43,906,434,348
43,906,434,348
31,518,277,317
31,518,277,317
12,921,339,070
12,921,339,070
7,879,643,152
7,879,643,152
Equity
Total capital
15,781,972,613
15,781,972,613
13,350,744,771
13,350,744,771
5,630,413,224
5,630,413,224
5,311,998,017
5,311,998,017
Capital and total debt
59,688,406,961
44,869,022,088
18,551,752,294
13,191,641,169
0.74
0.70
0.70
0.60
Gearing ratio-(X)
164
14
FINANCIAL INSTRUMENTS
Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.
Financial assets by categories - Group
In Rs
Financial assets fair value through
profit or loss
As at 31 March
2015
2014
2015
2014
3,460,146,640
3,669,327,302
1,598,806,695
3,762,890,106
-
-
6,622,803,106
5,524,162,085
2,881,969,879
572,053
5,600,345,437
1,926,725,822
29,686,052,324
5,070,927,688
2,077,038,702
4,616,673,500
778,460
3,038,042,580
1,762,101,994
21,927,259,725
2,656,395,983
2,656,395,983
3,320,288,084
3,320,288,084
Financial instruments in non current assets
Financial instruments in current assets
Loans and advances
Total
Financial liabilities by categories - Group
In Rs
As at 31 March
Financial instruments in non current liabilities
Public deposits
Financial instruments in current liabilities
Public deposits
Bank overdrafts
Total
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
•
•
Fair value of quoted equities, debentures and bonds is based on price quotations in an active market at the reporting date
The fair value of unquoted instruments, loans from banks and other financial liabilities, obligations under finance leases, as well as
other non current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar
terms, credit risk and remaining maturities
165
Available for sale financial assets
•
Total
2015
2014
2015
2014
2015
2014
5,397,343,129
-
4,342,420,083
-
230,159,910
-
225,680,936
-
9,087,649,679
3,669,327,302
6,166,907,714
3,762,890,106
135,699,732
5,533,042,861
4,342,420,083
230,159,910
225,680,936
6,622,803,106
5,524,162,085
2,881,969,879
572,053
8,392,441,152
1,926,725,822
38,105,651,078
5,070,927,688
2,077,038,702
4,616,673,500
778,460
6,358,330,664
1,762,101,994
29,815,648,828
Financial liabilities at fair value through
Financial liabilities measured at
profit or loss (FVPTPL)
amortised cost
Total
2015
2014
2015
2014
2015
2014
6,260,352
-
6,260,352
-
25,450,268
22,844,291,422
2,214,295,787
12,999,848,935
1,885,402,009
31,710,620
22,844,291,422
2,214,295,787
6,260,352
12,999,848,935
1,885,402,009
6,260,352
6,260,352
7,041,840,113
15,970,784
14,787,184,778
4,616,956,512
9,838,760,403
1,658,001,636
63,042,751,703
5,751,656,616
19,508,602
11,822,115,977
4,144,437,836
7,418,343,338
2,551,874,570
46,593,187,883
7,041,840,113
15,970,784
14,787,184,778
4,616,956,512
9,838,760,403
1,658,001,636
63,049,012,055
5,751,656,616
19,508,602
11,822,115,977
4,144,437,836
7,418,343,338
2,551,874,570
46,599,448,235
Fair value of the unquoted ordinary shares has been estimated using a Discounted Cash Flow (DCF) model. The valuation requires
management to make certain assumptions about the model inputs, including forecast cash flows, the discount rate, credit risk and volatility.
The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value
for these unquoted equity investments.
•
Fair value of loans and advances, rental receivable on lease assets and hire purchase approximately 70% of the portfolio has a remaining
maturity of less than one year. Therefore fair value of lending portfolio approximates to the carrying value as at the reporting date. All loans
and advances are granted with a fixed interest rate terms.
166
14
FINANCIAL INSTRUMENTS
Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.
Financial assets by categories - Company
In Rs
Financial assets fair value through
profit or loss
As at 31 March
2015
2014
2015
2014
1,275,418,884
55,268,900
-
-
241,724,591
2,290,507,881
2,199,540,683
42,695,145
6,049,887,184
167,169,840
2,453,097,064
1,513,376,439
279,766,916
4,468,679,159
1,346,207,455
1,346,207,455
5,619,616
5,619,616
Financial instruments in non current assets
Financial instruments in current assets
Total
Financial liabilities by categories - Company
In Rs
As at 31 March
Financial instruments in non current liabilities
Financial instruments in current liabilities
Bank overdrafts
Total
167
Available for sale financial assets
Total
2015
2014
2015
2014
2015
2014
-
-
2,528,664
2,528,664
1,277,947,548
57,797,564
125,000,000
125,000,000
125,000,000
125,000,000
2,528,664
2,528,664
241,724,591
2,290,507,881
3,670,748,138
42,695,145
7,523,623,303
167,169,840
2,453,097,064
1,643,996,055
279,766,916
4,601,827,439
Financial liabilities measured at
Total
amortised cost
2015
2014
2015
2014
5,767,785,189
509,915,332
2,448,181,474
-
5,767,785,189
509,915,332
2,448,181,474
-
29,531,350
148,005,634
4,191,598,768
2,368,998,067
83,041,714
13,098,876,054
14,569,828
946,657,314
3,920,810,772
1,455,262,816
55,388,092
8,840,870,296
29,531,350
148,005,634
4,191,598,768
2,368,998,067
83,041,714
13,098,876,054
14,569,828
946,657,314
3,920,810,772
1,455,262,816
55,388,092
8,840,870,296
168
FAIR VALUE HIERARCHY
14.1 Financial assets and liabilities by fair value hierarchy - Group
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1
- Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2
- Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly
observable
Level 3
- Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
The Group held the following financial instruments carried at fair value in the statement of financial position:
In Rs.
As at 31 March
Level 1
2015
Level 2
2015
2014
Level 3
2015
2014
2014
Assets measured at fair value
Financial assets held for trading
Available for sale
Total
2,656,395,983 3,320,288,084
5,258,012,261 4,067,389,483
7,914,408,244 7,387,677,567
275,000,000
275,000,000
275,000,000
275,000,000
30,600
30,600
30,600
30,600
31,710,620
31,710,620
31,710,620
31,710,620
-
-
Liabilities measured at fair value
Total
-
-
During the reporting period ended 31 March 2015, there were no transfers between Level 1 and Level 2 fair value measurements.
Financial assets and liabilities by fair value hierarchy - Company
In Rs.
As at 31 March
Level 1
2015
Level 2
2015
2014
Level 3
2015
2014
2014
Financial assets held for trading
Total
1,346,207,455
1,346,207,455
5,619,616
5,619,616
125,000,000
125,000,000
125,000,000
125,000,000
-
-
During the reporting period ended 31 March 2015, there were no transfers between Level 1 and Level 2 fair value measurements.
14.2 Non financial assets - Group
In Rs.
As at 31 March
Level 1
2015
2014
Level 2
2015
2014
Level 3
2015
2014
Land and buildings
Buildings on leasehold land
Investment property
Total
-
-
-
- 11,264,632,760 7,745,483,022
- 5,128,906,334 2,285,165,523
94,848,000 2,266,146,000
- 16,488,387,094 12,296,794,545
Non financial assets - Company
In Rs.
As at 31 March
Level 1
2015
2014
Level 2
2015
2014
Level 3
2015
2014
Investment property
Total
-
-
-
-
442,641,386
442,641,386
394,000,000
394,000,000
In determining the fair value, highest and best use of the property including the current condition of the properties, future usability and
associated redevelopment requirements have been considered. Also, the valuers have made reference to market evidence of transaction
prices for similar properties, with appropriate adjustments for size and location. The appraised fair values are rounded within the range of
values.
169
14.2.1 Details of Group’s land and buildings stated at valuations are indicated below;
Group
Company
Property
Method of
valuation
Effective date
of valuation
Property
valuer
Extent
Significant
unobservable
inputs
Sensitivity of
fair value to
unobservable
inputs
19-03-2015
R S Wijesuriya
Incorporated
Valuer
0 A 0 R 22.45 P Estimated price Positively
per perch
correlated
Rs.6,500,000
sensitivity
Land of
Softlogic
Holdings PLC
14, De Fonseka Open market
Place, Colombo value method
05
Softlogic
Dharmapala
Properties (Pvt) Mw., Colombo
Ltd
03
Open market
value method
30-09-2013
R S Wijesuriya
Incorporated
Valuer
correlated
per perch
Rs.8,500,000
sensitivity
Odel Lanka
(Pvt) Ltd
Open market
value method
01-11-2014
PB
Kalugalgedara
Chartered
Valuation
Surveyor
1 A 1 R 7.39 P
Softlogic
Information
Technologies
(Pvt) Ltd
14, De Fonseka Direct capital
Place, Colombo comparison
05
method
19-03-2015
R S Wijesuriya
Incorporated
Valuer
- Estimated
value per
square foot
Rs.8,500
Positively
correlated
sensitivity
Asiri Surgical
Hospital PLC
21,
Kirimmandala
Mw., Colombo
05
31-05-2012
PB
Kalugalgedara
Chartered
Valuation
Surveyor
- Estimated
value per
square foot
Rs.3,500 Rs.8,000
Positively
correlated
sensitivity
271 & 271F,
Kaduwela
Road,
Thalangama
Estimated price Positively
correlated
per perch
Rs.1,000,000 - sensitivity
Rs.2,250,000
Building of
Depreciated
replacement
cost method
Land and Building of
Softlogic
Holdings PLC
262, Gagarama Open market
Rd., Piliyandala value method/
direct capital
comparison
method
26-03-2015
R S Wijesuriya
Incorporated
Valuer
1 A 2 R 30 P
Estimated price
per perch
Rs.275,000
Estimated
value per
square foot Rs.
800 - Rs.5,500
Positively
correlated
sensitivity
Positively
correlated
sensitivity
Softlogic Retail
(Pvt) Ltd
Galle Road,
Colombo 03
Open market
value method/
direct capital
comparison
method
30-09-2012
R S Wijesuriya
Incorporated
Valuer
0 A 0 R 30 P
Estimated price
per perch
Rs.7,000,000
Estimated
value per
square foot
Rs.7,500
Positively
correlated
sensitivity
Positively
correlated
sensitivity
Asiri Hospital
Holdings PLC
181,
Kirula Road,
Colombo 05
Open market
value method/
direct capital
comparison
method
31-05-2012
PB
Kalugalgedara
Chartered
Valuation
Surveyor
1 A 0 R 17.23 P Estimated price
per perch
Rs.3,250,000
Estimated
value per
square foot
Rs.1,500 Rs.5,000
Positively
correlated
sensitivity
Positively
correlated
sensitivity
170
Company
Property
Method of
valuation
Effective date
of valuation
Property
valuer
Extent
Open market
value method/
direct capital
comparison
method
31-03-2015
PB
Kalugalgedara
Chartered
Valuation
Surveyor
1 A 0 R 21.03 P Estimated price
per perch
Rs.5,500,000
Estimated
value per
square foot
Rs.2,000 Rs.9,000
Positively
correlated
sensitivity
Positively
correlated
sensitivity
15, Dharmapala Open market
Mw.,
value method/
Uyanwatta
direct capital
comparison
method
31-03-2015
PB
Kalugalgedara
Chartered
Valuation
Surveyor
1 A 2 R 1.5 P
Positively
correlated
sensitivity
10, Ward Place, Open market
Colombo 07
value method
direct capital
comparison
method
01-11-2014
PB
Kalugalgedara
Chartered
Valuation
Surveyor
correlated
per perch
Rs.3,000,000 - sensitivity
Rs.10,000,000
29 A, Jayatilake Open market
Mw., Panadura value method
direct capital
comparison
method
01-11-2014
PB
Kalugalgedara
Chartered
Valuation
Surveyor
0 A 1 R 2.16 P
Odel Properties 475/32, Kotte
Open market
(Pvt) Ltd
Road, Rajagiriya value method
direct capital
comparison
method
01-11-2014
PB
Kalugalgedara
Chartered
Valuation
Surveyor
0 A 1 R 7.39 P
Central Hospital 114, Norris
Ltd
Canal Road,
Colombo 10
Asiri Hospital
Matara (Pvt)
Ltd
Odel PLC
Significant
unobservable
inputs
Estimated price
per perch
Rs.500,000 Rs.750,000
Estimated
value per
square foot
Rs.2,000 Rs.9,000
Estimated
value per
square foot
Rs.1,000 Rs.3,750
Sensitivity of
fair value to
unobservable
inputs
Positively
correlated
sensitivity
Positively
correlated
sensitivity
correlated
per perch
sensitivity
Rs.1,000,000
Estimated
value per
square foot
Rs.2,000 Rs.3,750
Positively
correlated
sensitivity
Estimated price
per perch
Rs.3,000,000
Estimated
value per
square foot
Rs.4,000 Rs.5,000
Positively
correlated
sensitivity
Positively
correlated
sensitivity
171
14.2.2 Valuation details of investment property
14.2.2.1Group
Company
Property
Method of
valuation
Effective date
of valuation
Property
valuer
Extent
Significant
unobservable
inputs
Sensitivity of
fair value to
unobservable
inputs
Dekatana,
Gampaha
Open market
value method
31-03-2015
R S Wijesuriya
Incorporated
Valuer
18 A 2 R 4 P
per perch
correlated
Rs.30,000
sensitivity
37, Horton
Open market
Place, Colombo value method/
07
direct capital
comparison
method
31-03-2015
PB
Kalugalgedara
Chartered
Valuation
Surveyor
1 A 3 R 10 P
Estimated price
per perch
Rs.9,000,000
Estimated
value per
square foot
Rs.100 Rs.1,500
Positively
correlated
sensitivity
Positively
correlated
sensitivity
Property
Effective date
of valuation
Property
valuer
Extent
Significant
unobservable
inputs
Sensitivity of
fair value to
unobservable
inputs
19-03-2015
R S Wijesuriya
Incorporated
Valuer
0 A 0 R 22.45 P
per perch
correlated
Rs.6,500,000
sensitivity
26-03-2015
R S Wijesuriya
Incorporated
Valuer
1 A 2 R 30 P
Estimated price
per perch
Rs.275,000
Estimated
value per
square foot
Rs.800 Rs.5,500
Land of
Softlogic Retail
(Pvt) Ltd
Asiri Central
Hospital Ltd
14.2.2.2Company
Company
Method of
valuation
Land of
Softlogic
Holdings PLC
14, De Fonseka Open market
Place, Colombo value method
05
Softlogic
Holdings PLC
262, Gagarama Open market
Rd., Piliyandala value method/
direct capital
comparison
method
Positively
correlated
sensitivity
Positively
correlated
sensitivity
172
15
PROPERTY, PLANT AND EQUIPMENT
15.1
Group
In Rs.
As at 31 March
Freehold assets
Cost or Valuation
Additions
Acquisition through business
combinations
Disposals
Transfers*
Impairment/ derecognition
Revaluations
Effect of movements in
exchange rates
Leasehold assets
Cost
Additions
combinations
Disposals
Transfers
Total value of assets
Land and
buildings
Buildings on
leasehold
land
Plant and
machinery
Computer,
Equipment,
furniture and
fittings
Motor Capital work in
vehicles
progress
264,252,113
60,844,833
Total
2015
Total
2014
7,933,933,817
41,564,500
2,423,404,289
665,816,693
3,796,287,148
670,791,686
3,633,774,340
1,050,638,042
3,278,312,756 21,329,964,463 17,669,281,400
1,794,025,417 4,283,681,171 3,505,412,862
3,389,004,962
(376,398,034)
92,085,754
(24,250,626)
2,345,833,431
(48,251,602)
(31,875,534)
772,241,209
(37,530,922)
(10,796,819)
369,616,947
-
-
(8,270,465)
-
-
11,357,722,192
(96,687)
5,502,792,854
4,386,951,698
(1,255,629)
5,398,799,756
311,650,545
-
-
68,511,367
90,904,858
4,297,487
-
247,005,373
63,896,762
-
319,814,227
154,801,620
252,427,100
98,507,144
-
-
159,416,225
4,297,487
4,718,750
(28,531,601)
(4,718,750)
282,370,534
-
4,718,750
(28,531,601)
(4,718,750)
446,084,246
(19,902,142)
(11,217,875)
319,814,227
11,357,722,192
5,502,792,854
4,546,367,923
5,403,097,243
594,021,079
37,897,164
46,468,896
(56,001,045)
4,657,480 (2,143,175,455)
(502,023)
-
4,337,697,985
(166,034,195)
(211,754,931)
(139,184,278)
11,217,875
(8,772,488)
369,616,947
(29,691,599)
313,990,550
(1,352,316)
(1,062,347)
2,975,129,591 29,933,046,636 21,329,964,463
2,975,129,591 30,379,130,882 21,649,778,690
173
In Rs.
As at 31 March
Freehold assets
Accumulated depreciation
Charge for the year
combinations
Disposals
Transfers*
Effect of movements in
exchange rates
Leasehold assets
Charge for the year
combinations
Disposals
Transfers
Total accumulated depreciation
Carrying value
As at 31 March 2015
As at 31 March 2014
Land and
buildings
Buildings on
leasehold
land
Plant and
machinery
Computer,
Equipment,
furniture and
fittings
Motor Capital work in
vehicles
progress
Total
2015
Total
2014
188,450,795
99,510,503
138,238,766
160,116,605
1,903,666,918
350,034,918
1,632,509,672
505,347,375
131,894,674
30,293,841
-
3,994,760,825
1,145,303,242
3,210,440,908
866,463,360
9,004,962
(203,876,828)
-
60,442,635
(6,224,653)
21,358,993
-
(27,552,317)
(10,919,919)
-
380,933,023
(11,916,213)
(10,439,075)
(7,245,560)
20,384,579
(35,439,579)
3,877,673
-
-
470,765,199
(81,132,762)
(199,999,156)
(7,245,560)
(87,475,496)
6,230,971
-
93,089,432
(45,826)
373,886,520
2,215,229,600
(1,100,522)
2,488,088,700
151,011,188
-
(1,146,348)
5,321,305,440
(898,918)
3,994,760,825
-
-
2,010,408
9,667,439
4,297,486
-
110,432,692
35,027,238
-
116,740,586
44,694,677
102,615,018
35,373,491
-
-
11,677,847
4,297,486
4,482,813
(13,751,848)
(3,877,673)
132,313,222
-
4,482,813
(13,751,848)
(3,877,673)
148,288,555
(15,016,953)
(6,230,970)
116,740,586
93,089,432
373,886,520
2,226,907,447
2,492,386,186
283,324,410
-
5,469,593,995
4,111,501,411
11,264,632,760
7,745,483,022
5,128,906,334
2,285,165,523
2,319,460,476
1,959,121,189
2,910,711,057
2,001,264,669
310,696,669
268,930,120
2,975,129,591 24,909,536,887
3,278,312,756
17,538,277,279
* Transfers include the accumulated depreciation as at revaluation date that was eliminated against the gross carrying amount of the
revalued assets.
174
15
PROPERTY, PLANT AND EQUIPMENT
15.2 Company
In Rs.
As at 31 March
Freehold assets
Cost
Additions
Disposals
Transfers
Furniture and Computer and
fittings
Office
equipment
Motor
vehicles
Total
2015
Total
2014
20,255,760
1,524,137
(2,128,213)
19,651,684
38,596,492
3,888,467
(373,230)
1,721,423
(6,085,004)
37,748,148
46,812,766
126,488
(5,076,797)
41,862,457
105,665,018
5,539,092
(5,450,027)
1,721,423
(8,213,217)
99,262,289
103,273,891
14,782,876
(16,296,875)
3,905,126
105,665,018
-
-
142,002,523
(21,930,535)
120,071,988
142,002,523
(21,930,535)
120,071,988
133,274,077
29,910,714
(17,277,142)
(3,905,126)
142,002,523
19,651,684
37,748,148
161,934,445
219,334,277
247,667,541
7,881,775
1,972,593
(1,840,805)
8,013,563
12,570,922
3,951,572
(128,760)
(224,949)
(5,377,164)
10,791,621
36,479,127
2,546,870
(5,076,797)
33,949,200
56,931,824
8,471,035
(5,205,557)
(224,949)
(7,217,969)
52,754,384
58,234,274
8,238,987
(13,446,563)
3,905,126
56,931,824
-
-
40,410,206
15,768,620
(11,137,251)
45,041,575
40,410,206
15,768,620
(11,137,251)
45,041,575
39,756,731
17,213,054
(12,654,453)
(3,905,126)
40,410,206
8,013,563
10,791,621
78,990,775
97,795,959
97,342,030
11,638,121
12,373,985
26,956,527
26,025,570
82,943,670
111,925,956
121,538,318
Leasehold assets
Cost
Additions
Disposals
Transfers
Total value of assets
Freehold assets
Charge for the year
Disposals
Transfers
Leasehold assets
Charge for the year
Disposal
Transfers
Total accumulated depreciation
Carrying value
As at 31 March 2015
As at 31 March 2014
150,325,511
175
15.3 Land and Buildings
In Rs.
Group
As at 31 March
At cost
At valuation
Company
2015
2014
2015
2014
3,192,566,590
13,200,972,504
16,393,539,094
629,800,066
9,400,848,479
10,030,648,545
-
-
15.4 Carrying value
In Rs.
Group
As at 31 March
At cost
At valuation
On finance lease
Company
2015
2014
2015
2014
11,410,768,692
13,200,972,504
297,795,691
24,909,536,887
7,934,355,159
9,400,848,479
203,073,641
17,538,277,279
46,507,905
75,030,413
121,538,318
48,733,194
101,592,317
150,325,511
15.5 Details of group’s land and buildings stated at valuations are indicated below;
Revaluation of land and buildings
The Group uses the revaluation model of measurement of land and buildings. The Group engaged independent expert values, to
determine the fair value of its land and buildings. Fair value is determined by reference to market-based evidence. Valuations are based on
active market prices, adjusted for any difference in the nature, location or condition of the specific property. The date of the most recent
revaluation was 31 March 2015.
Details of Group’s land and building stated at valuation are indicated in the note no 14.2.1
As a result of the valuations of the land and buildings the surplus arising from the change in fair value was Rs.369.62 mn
(2014 - Rs.313.99 mn) has been credited to the revaluation reserve.
15.6 The carrying amount of revalued land and buildings if they were carried at cost less depreciation, would be as follows;
In Rs.
As at 31 March
Cost
Carrying value
15.7
Group
2015
2014
8,423,755,965
(737,964,528)
7,685,791,437
6,511,552,386
(543,494,520)
5,968,057,866
Group land and buildings with a carrying value of Rs.11,833 mn (2014 - Rs.7,344 mn) have been pledged as security for term loans
obtained, details of which are disclosed in note 48.
15.8
Group property, plant and equipment with a cost of Rs.1,295.24 mn (2014 - Rs.676.32 mn) have been fully depreciated and continue to
be still in use by the Group. The cost of fully depreciated assets of the company amounts to Rs.1.67 mn (2014 - Rs.13.56 mn).
15.9
Odel PLC, a subsidiary of Softlogic Holdings PLC is in the process of consolidating the premises no bearing 10, 15, 21/5, 25/2 , 3, 5, 6
& 6B and 17, 17/1, 17/1A,1 9 & 19A situated at Colombo 07. The consolidated survey plan has been already submitted to the relevant
authorities to obtain necessary approvals.
176
16
LEASE RENTALS PAID IN ADVANCE
In Rs.
Group
As at 31 March
Additions during the year
Amortisation for the year
16.1
2015
2014
153,312,184
702,520,660
(1,036,939)
854,795,905
154,349,111
(1,036,927)
153,312,184
Prepaid lease rentals paid to acquire land use rights have been classified as lease rental paid in advance and are amortised over the lease
term in accordance with the pattern of benefits provided.
16.2 Details of prepaid lease rentals
In Rs.
Group
As at 31 March
Asiri Surgical Hospital PLC - Colombo 05
Asiri Hospital Kandy (Pvt) Ltd - Mulgampala
17
Extent
2 A 1 R 11.6 P
2 A 1 R 13.84 P
Lease period
50 years from 29 March 2000
50 years from 01 January 2015
2015
2014
87,275,245
767,520,660
854,795,905
88,312,184
65,000,000
153,312,184
INVESTMENT PROPERTY
In Rs.
As at 31 March
Additions during the year
Change in fair value during the year
Transfers to assets held for sale
Group
Note
17.1
Company
2015
2014
2015
2014
2,266,146,000
526,702,000
(2,698,000,000)
94,848,000
2,175,045,500
91,100,500
2,266,146,000
394,000,000
7,904,500
40,736,886
442,641,386
333,699,500
60,300,500
394,000,000
17.1 Assets held for sale
During the financial year 2014-15, Asiri Central Hospitals Ltd, a subsidiary of Softlogic Holdings PLC approved and authorised, as a special
resolution and as required by Section 185 of the Companies Act No. 07 of 2007, the sale of the land and premises located at No. 37,
Horton Place, Colombo 07 at a total consideration of Rs.2,600,000,000/- or to such other purchaser approved by the Board of Directors of
the Company at a minimum consideration reflecting the value of the said land and premises as arrived at by an independent valuer.
The said transaction was completed on 09 July, 2015 for a total consideration of Rs.2,700,000,000/-.
17.2 Fair value of investment property
Fair value of the investment property was appraised in accordance with SLFRS 13, LKAS 40 and 8th edition of International Valuation
Standards published by the International Valuation Standards Committee (IVSC), by the independent valuer.
The market value has been used as the fair value. In determining the fair value, the current condition of the properties, future usability and
associated redevelopment requirements have been considered. Also valuer has made reference to market evidence of transaction prices
for similar properties, with appropriate adjustments for size and location. The appraised fair values are approximated within appropriate
range of values.
17.3 Valuation details of investment property
Details of Group’s and Company’s investment property stated at fair value are indicated in the note no 14.2.2.1 and 14.2.2.2
17.4 Investment property generated rental income
In Rs.
For the year ended
Amounts recognised in income statement
Revenue
Direct operating expenses
Group
Company
2015
2014
2015
2014
15,494,196
60,870,540
25,917,469
18,780,000
6,454,244
5,468,864
7,009,385
5,349,631
177
18
INTANGIBLE ASSETS
In Rs.
Group
2015
As at 31 March
Goodwill
Lease right
PVIB Brand name
2014
Others
Company
2015
2014
Computer Software
Cost / carrying value
At the beginning
of the year
Additions
Acquisition through
4,115,823,525 874,405,830 1,980,619,826 735,402,648
-
614,102,277 8,320,354,106 8,017,307,696
312,911,256 312,911,256 305,007,400
7,563,029
1,861,900
7,563,029
129,481,860 1,127,662,071
5,316,607
5,316,607
(27,614,808) (27,614,808)
-
(2,855,443)
-
-
(1,960,990)
-
-
4,115,823,525 874,405,830 1,980,619,826 1,733,582,859 1,031,789,147 9,736,221,188 8,320,354,106
6,569,486
7,563,029
business combinations
Transfers
Impairment/ Derecognition
Exchange translation
-
-
-
998,180,211
-
difference
-
-
-
-
(2,408,044)
(2,408,044)
Accumulated amortisation
and impairment
At the beginning
of the year
Amortisation
Acquisition through
-
67,893,858
21,921,133
319,787,576
123,788,739
-
201,260,099
102,339,754
588,941,533
248,049,626
386,477,075
204,045,351
2,221,133
2,624,845
2,221,133
business combinations
-
-
-
-
44,634,198
44,634,198
-
-
-
difference
-
-
-
-
(2,408,044)
(2,408,044)
(1,580,893)
-
-
-
89,814,991
443,576,315
-
345,826,007
879,217,313
588,941,533
4,845,978
2,221,133
4,115,823,525 784,590,839 1,537,043,511 1,733,582,859 685,963,140 8,857,003,875
4,115,823,525 806,511,972 1,660,832,250 735,402,648 412,842,178
7,731,412,573
1,723,508
Carrying value
As at 31 March 2015
As at 31 March 2014
5,341,896
18.1Goodwill
Goodwill acquired through business combinations have been allocated to six cash generating units (CGU’s) for impairment testing as
follows:
In Rs.
As at 31 March
Communication and Information Technologies
Retail
Travel and Leisure
Others
Financial Services
Healthcare
2015
2014
14,086,631
742,615,817
182,206,628
14,086,631
742,615,817
182,206,628
31,462,743
817,741,917
2,327,709,789
31,462,743
817,741,917
2,327,709,789
4,115,823,525
4,115,823,525
178
The recoverable amount of all CGUs have been determined based on the higher of its fair value less costs to sell and its Value in Use
(VIU) calculation. VIU was determined by discounting the future cash flows generated from the continuing use of the unit. The key
assumptions used are given below:
Business growth
Volume growth has been budgeted on a reasonable and realistic basis by taking into account the growth rates
of one to five years immediately subsequent to the budgeted year based on industrial growth rates. Cash flows
beyond five year period are extrapolated using 0% growth rate.
Inflation
The basis used to determine the value assigned to the budgeted cost inflation, is the inflation rate, based on
projected economic condition.
Discount rate
The discounting rate used is the risk free rate adjusted by the additional appropriate risk premium.
Margin
The basis used to determine the value assigned to the budgeted gross margins is the gross margins achieved in
the year preceding the budgeted year adjusted for projected market conditions and business plans.
18.2 Present Value of acquired-In -force Business (PVIB)
Upon acquiring controlling stake in Asian Alliance Insurance PLC (AAI), the group has recognised in the consolidated financial statements
an intangible assets representing the present value of future profits on AAI’s portfolio of long term life insurance contracts , known as the
present value of acquired in-force business (PVIB) at the acquisition date, PVIB recognised at the acquisition date will be amortised over
life of the business acquired and reviewed annually for any impairment in value.
19
INVESTMENTS IN SUBSIDIARIES
In Rs.
Group
As at 31 March
Company
2015
2014
2015
2014
-
-
6,416,364,048
4,176,536,124
10,592,900,172
5,385,313,619
3,622,036,138
9,007,349,757
2015
2014
2015
2014
26,216,105
26,216,105
24,746,404
24,746,404
11,000,000
11,000,000
11,000,000
11,000,000
Group quoted investments
Group unquoted investments
19.1 Investment in equity accounted investee
In Rs.
Group
As at 31 March
Investment in equity accounted investee
Company
19.2 Group quoted investments
In Rs.
As at 31 March
Group
2015
No of shares
Company
2015
Effective
No of shares
holding%
Cost
Odel PLC
Softlogic Capital PLC
22,212,836
565,964,414
389,391,719
254,172,871
503,151,380
32,968,978
43.32%
51.23%
37.75%
93.39%
73.12%
47.84%
2014
Effective
holding%
17,555
505,914,144
503,151,380
779,969
0.05%
46.03%
73.12%
1.53%
1,559,884
3,793,288,077
2,596,738,846
24,777,241
6,416,364,048
2014
2015
1,559,884
3,655,303,107
1,709,831,037
18,619,591
5,385,313,619
19.3 Group quoted investments
In Rs.
As at 31 March
Market Value
Asiri Central Hospitals Ltd
Odel PLC
Group
2015
Company
2014
2,932,094,352 1,801,461,000
2,317,260
1,423,711
- 5,547,666,930
11,432,481,163 12,410,612,809 10,219,465,709 11,077,496,815
5,918,754,129 4,555,883,112
5,591,803,162
3,018,908,280
844,123,714 3,018,908,280
844,123,714
1,150,617,332
734,830,196
27,220,918
17,643,720
30,044,658,418 25,894,577,761 13,267,912,167 11,940,687,960
179
19.4 Group unquoted investments
In Rs.
Group
As at 31 March
2015
No of shares
Company
2015
Effective
No of shares
holding %
Asian Alliance Insurance General Ltd
Asiri Diagnostics Services (Pvt) Ltd
Asiri Hospital Kandy (Pvt) Ltd
BSL International (Pvt) Ltd
Ceysand Resorts Ltd - Voting
- Non voting
Dai-Nishi Securities (Pvt) Ltd
Future Automobiles (Pvt) Ltd
Greenfield Trading (Pvt) Ltd
Odel Apparels (Pvt) Ltd
Odel Information Technology Services (Pvt) Ltd
Odel Lanka (Pvt) Ltd
Odel Properties (Pvt) Ltd
Silk Route Foods (Pvt) Ltd
Softlogic Automobiles (Pvt) Ltd
Softlogic B P O Services (Pvt) Ltd
Softlogic Brands (Pvt) Ltd
Softlogic Communications (Pvt) Ltd
Softlogic Communication Services (Pvt) Ltd
Softlogic Computers (Pvt) Ltd
Softlogic Destination Management (Pvt) Ltd
Softlogic Information Technologies (Pvt) Ltd
Softlogic International (Pvt) Ltd
Softlogic Mobile Distribution (Pvt) Ltd
Softlogic Real Estate (Pvt) Ltd
Softlogic Restaurants (Pvt) Ltd
Softlogic Retail (Pvt) Ltd
Softlogic Retail One (Pvt) Ltd
Softlogic Solar (Pvt) Ltd
10,000,000
22,265,721
273,221
4,000,000
25,999,999
298,400
194,121,930
8,587,669
134,250
49,999,998
19,300,000
1
2
1
27,000,002
1,081,002
5,100
400,002
5,000,000
100,000
249,998
116,344,836
534,699
99
199,998
2,725,002
100,000
1,464,997
4,999,999
1,000,000
230,748,208
100,000
25,000,000
169,345,616
100,000
99
19,700,000
43.32
51.08
34.09
51.23
51.23
93.39
46.18
99.79
96.16
99.99
100.00
93.39
93.39
93.39
93.39
93.39
51.00
100.00
100.00
100.00
93.39
99.83
99.00
99.00
100.00
100.00
100.00
99.99
99.99
100.00
99.83
100.00
100.00
99.99
100.00
99.00
73.12
2014
Effective
holding %
19,300,000
400,002
5,000,000
100,000
534,699
99
199,998
2,725,002
100,000
1,464,997
4,999,999
1,000,000
230,748,208
100,000
25,000,000
169,345,616
100,000
99
-
100.00 195,675,000
52,675,000
100.00
4,604,600
4,604,600
100.00
50,000,000
50,000,000
100.00
1,000,000
1,000,000
99.00
5,978,490
5,978,490
99.00
990
990
100.00
2,354,365
2,354,365
100.00
10,393,962
10,393,962
100.00
1,000,000
1,000,000
99.99
16,465,336
16,465,336
99.99
49,999,990
49,999,990
100.00
10,000,000
99.83 1,911,484,085 1,911,484,085
100.00
100.00 250,000,000
250,000,000
99.99 1,666,579,306 1,266,079,320
100.00
1,000,000
99.00
4,176,536,124 3,622,036,138
180
19.5 Group investment in equity accounted investees
In Rs.
Group
As at 31 March
Company
2015
2014
2015
2014
21,168,381
3,578,024
5,290,016
(2,912,685)
(1,000,000)
134,233
(41,864)
26,216,105
41,863,087
1,201,160
13,280,969
(4,537,430)
(27,000,000)
(85,252)
23,870
24,746,404
9,750,000
2,699,800
1,250,000
(2,699,800)
11,000,000
9,750,000
2,699,800
1,250,000
(2,699,800)
11,000,000
Unquoted
Abacus International Lanka (Pvt) Ltd
Gerry's Softlogic (Pvt) Ltd
Nextage (Pvt) Ltd
Share of profit accruing to the group
Share of associate companies tax
Share of associate companies dividend
Share of OCI accruing to the group
Share of associate OCI tax
Less: impairment of investment in Gerry's Softlogic (Pvt) Ltd
The Directors’ valuation of unquoted equity accounted investees amounts to Rs.26,216,105/- (2014 - Rs.24,746,404/-) and
Rs.11,000,000/- (2014 - Rs.11,000,000/-) for the group and company respectively.
19.6 Summarised financial information of equity accounted investees
In Rs.
Group
As at 31 March
2015
2014
81,620,456
(74,462,600)
750,542
7,908,398
93,166,414
(81,048,685)
841,470
12,959,199
134,233
(41,864)
92,369
(85,252)
23,870
(61,382)
73,125,516
(40,098,293)
33,027,223
(893,645)
(5,917,473)
26,216,105
83,904,537
(51,902,360)
32,002,177
(1,338,301)
(5,917,472)
24,746,404
Nil
Nil
Nil
Nil
Group share of;
Revenue
Operating expenses
Other income
Profit for the year
Group share of;
Actuarial gains/ (loss) on retirement benefits
Share of associate OCI tax
Net share of OCI for the year
Group share of;
Total assets
Total liability
Net assets
Unrealised profits
Deferred tax on undistributable profits
Contingent liabilities
Capital commitments
20
OTHER NON CURRENT FINANCIAL ASSETS
In Rs.
Group
Company
As at 31 March
Note
2015
2014
2015
2014
Other quoted equity investments
Other unquoted equity investments
Other non equity investments
20.1
20.2
20.3
611,778,969
150,217,000
8,325,653,710
9,087,649,679
600,882,720
150,217,000
5,415,807,994
6,166,907,714
1,277,947,548
1,277,947,548
57,797,564
57,797,564
181
20.1 Other quoted equity investments
In Rs.
As at 31 March
Access Engineering PLC
ACL Cables PLC - Bonus shares
Expo Lanka Holdings PLC
F L C Holdings PLC
Hatton National Bank PLC
National Development Bank PLC
Seylan Bank PLC - Non voting
Group
Company
No of Shares
2015
2014
2015
2014
308
950,900
21,841
2,414,835
102,571
23,408
1,521,440
4,848,702
598,882,418
6,503,001
611,778,969
46,000,000
18,788
22,109,310
1,996,890
3,276,150
516,191,328
11,290,254
600,882,720
-
-
20.2 Other unquoted equity investments
In Rs.
Group
As at 31 March
Voyages Jean Mermoz Ltd
Ceylon Lexcon Services Ltd
Cargills Bank Ltd
Company
2015
2014
2015
2014
10,000
207,000
150,000,000
150,217,000
10,000
207,000
150,000,000
150,217,000
-
-
20.3 Other non equity investments
In Rs.
As at 31 March
Placement with banks and financial institutions
Debentures
Deposits
Other investments and receivables
Receivable from related parties
Loans and advances
Group
Note
26
Company
2015
2014
2015
2014
30,600
953,348,819
3,877,841,032
47,098,956
3,447,334,303
8,325,653,710
30,600
627,299,943
3,189,701,356
9,217,655
39,625,867
1,549,932,573
5,415,807,994
2,528,664
1,275,418,884
1,277,947,548
2,528,664
55,268,900
57,797,564
182
21.
RENTAL RECEIVABLE ON LEASE ASSETS AND HIRE PURCHASE
21.1 Receivable from one to five years
In Rs.
Group
As at 31 March
Rental receivables
Rentals received in advance
Unearned income
2015
2014
Rental
receivable on
lease assets
Rental
receivable on
hire purchase
Total
Rental
receivable on
lease assets
Rental
receivable on
hire purchase
Total
1,240,601,550
(174,045,323)
1,066,556,227
2,762,934,665
(160,163,590)
2,602,771,075
4,003,536,215
(334,208,913)
3,669,327,302
1,640,137,792
(2,907,286)
(418,603,862)
1,218,626,644
3,355,608,059 4,995,745,851
(2,907,286)
(811,344,597) (1,229,948,459)
2,544,263,462 3,762,890,106
21.2 Receivable within one year
In Rs.
Group
As at 31 March
Rental receivables
Rentals received in advance
Unearned income
Impairment
22.
2015
2014
Rental
receivable on
lease assets
Rental
receivable on
hire purchase
Total
1,061,084,992
(2,289,650)
(232,356,717)
(38,152,991)
788,285,634
1,854,841,861
3,202,694,206 4,263,779,198
(2,289,650)
(989,012,131) (1,221,368,848)
(119,997,830)
(158,150,821)
2,093,684,245 2,881,969,879
4,696,455,320 6,551,297,181
Rental
receivable on
lease assets
Total
1,620,311,137 4,516,044,966 6,136,356,103
(1,004,987)
(1,004,987)
(419,281,098) (1,006,285,853) (1,425,566,951)
(15,861,663)
(77,249,002)
(93,110,665)
1,184,163,389 3,432,510,111 4,616,673,500
2,402,790,033 5,976,773,573 8,379,563,606
OTHER NON CURRENT ASSETS
In Rs.
Group
As at 31 March
Rent advances
Deferred expenditure
23.
Rental
receivable on
hire purchase
2015
2014
192,728,934
100,064,032
292,792,966
50,548,070
92,418,471
142,966,541
DEFERRED TAX ASSETS
In Rs.
As at 31 March
Group
Company
2015
2014
2015
2014
Deferred tax reversal on depreciation impact
307,629,785
2,328,157
230,672,828
-
-
-
of revaluation
Charge and release
382,651
8,186,983
318,527,576
76,956,957
307,629,785
68,817,557
68,817,557
-
183
23.1 The closing deferred tax asset balance relates to the following:
In Rs.
Group
As at 31 March
23.2
Company
2015
2014
2015
2014
Losses available for offset against future
(228,318,844)
(17,885,081)
(126,767,753)
21,794,070
(43,506,894)
8,587,525
-
taxable income
Others
536,006,351
28,725,150
318,527,576
430,560,572
(17,957,104)
307,629,785
86,540,231
17,196,695
68,817,557
-
The group has tax losses amounting to Rs.10,669 mn (2014 - Rs.7,849 mn) that are available indefinitely to offset against future taxable
profits of the companies in which the tax losses arose.
24.INVENTORIES
In Rs.
Group
As at 31 March
Finished goods
Other stocks
25.
2014
6,391,162,278
1,278,400,567
7,669,562,845
4,065,928,317
1,043,425,533
5,109,353,850
TRADE AND OTHER RECEIVABLES
In Rs.
Group
As at 31 March
Loans to executives
Other receivables
26.
2015
Company
2015
2014
2015
2014
5,934,141,688
226,767,434
16,370,946
445,523,038
6,622,803,106
4,091,247,027
160,845,746
22,702,451
796,132,464
5,070,927,688
129,814,305
774,677
111,135,609
241,724,591
100,729,787
6,503,850
59,936,203
167,169,840
LOANS AND ADVANCES
In Rs.
Group
As at 31 March
Note
Gross
Unearned
2015
Total
2014
Total
income
Short term lending
Personal loans
Pawning debtors
Policyholders loans
Revolving loans
Consumer loans
SME loans
Other loans
Allowance for impairment
143,256
3,941,844,666
385,236,606
135,501,276
524,830,914
338,280,852
5,389,527,897
2,286,142
143,256
(1,112,938,655) 2,828,906,012
385,236,606
135,501,276
524,830,914
(48,338,426)
289,942,425
(378,238,902) 5,011,288,995
2,286,142
(206,639,238)
10,717,651,609 (1,539,515,983) 8,971,496,388
252,018
2,234,669,849
407,488,720
114,342,102
429,130,543
107,530,596
463,170,570
(129,613,123)
3,626,971,275
5,524,162,085
3,447,334,303
8,971,496,388
2,077,038,702
1,549,932,573
3,626,971,275
Loans and advances
Receivable within one year
Receivable after one year
20.3
184
27.
OTHER CURRENT ASSETS
In Rs.
Group
As at 31 March
Prepayments, advances & non cash receivables
Tax refunds & receivables
Other receivables
28.
Company
2015
2014
2015
2014
1,665,955,848
559,933,805
1,534,207,555
3,760,097,208
1,000,564,401
637,573,888
1,135,762,161
2,773,900,450
2,589,114
19,134,987
21,724,101
4,588,156
26,548,108
31,136,264
SHORT TERM INVESTMENTS
In Rs.
Note
As at 31 March
Group
Company
2015
2014
2015
2014
Quoted equities at market value
Unquoted equity investments
Other investments (more than 3 months
28.1
28.2
2,545,608,628
125,000,000
1,651,035,281
125,000,000
1,346,207,455
125,000,000
5,619,616
125,000,000
and less than 1 year)
28.3
342,510,302
3,013,118,930
2,092,484,280
3,868,519,561
1,471,207,455
130,619,616
2,490,405,967
2,852,658,229
36,258,026
5,379,322,222
8,392,441,152
1,690,000,000
528,000,000
271,811,103
2,489,811,103
6,358,330,664
2,199,540,683
2,199,540,683
3,670,748,138
985,376,439
528,000,000
1,513,376,439
1,643,996,055
Other investments (less than 3 months)
Commercial papers
Short term deposits
Fixed deposits
185
28.1 Quoted equities at market value
In Rs.
As at 31 March
Access Engineering PLC
ACL Cables PLC
Aitken Spence Hotel Holdings PLC
Aitken Spence PLC
Alumex PLC
Asia Capital PLC
Bairaha Farms PLC
Ceylinco Insurance PLC
Commercial Bank of Ceylon PLC Group
No of Shares Company
2015 2014 No of Shares 2015 2014
132
20,000
114,269
3,401,850
23,866
89
10,032
1,340,000
11,369,766
53,749,230
2,587,074
150,561
1,912,500
8,052
11,186,935
49,700,000
9,235,556
124,600
-
-
-
- non voting
DFCC Bank PLC
Dialog Axiata PLC
Dunamis Capital PLC
504,482
415
868,600
38
22,443
66,188,038
30,014
9,033,440
7,290
4,982,346
48,021,984
42,594
7,817,400
3,843
3,366,450
-
-
-
- non voting
Hemas Holdings PLC
John Keells Holdings PLC
Lanka IOC PLC
Lanka Tiles PLC
Laugfs Gas PLC
Odel PLC
Panasian Power PLC
People's Leasing & Finance PLC
Renuka City Hotel PLC
Richard Pieris & Company PLC
Richard Pieris Exports PLC
Sampath Bank PLC
Seylan Bank PLC
Seylan Bank PLC - non voting
Textured Jersey Lanka PLC
Tokyo Cement Company (Lanka) PLC
Union Bank of Colombo PLC
408,505
334
63,200
13,497
67,403,325
66,600
2,652,642
1,325,000
2,140,074,762
15,946,000
2,210,000
13,165
557,220
26,060
2,718,142
13,500
22,717,551
140,436,870
2,545,608,628
43,020,600
188,500
75,818
3,896,200
69,292
237,226
1,456,008,281
13,165
1,386
11,020
1,963,402
8,600
11,777,877
2,054,000
290,000
1,651,035,281
63,200
61,231,769
10,782
135
32,822
-
2,546,960
1,338,847,938
2,718,142
13,500
2,080,915
1,346,207,455
2,433,200
1,963,402
8,600
1,214,414
5,619,616
8,629,342
4,690,000
100,000
50
75,210
200
10,782
135
358,321
5,827,256
28.2 Unquoted equity investments
In Rs.
As at 31 March
Cargills Bank Ltd
Group
Company
2015
2014
2015
2014
125,000,000
125,000,000
125,000,000
125,000,000
125,000,000
125,000,000
125,000,000
125,000,000
186
28.3 Other investments
In Rs.
As at 31 March
Group
Company
2015
2014
2015
2014
236,574,432
13,150,916
92,576,655
208,299
342,510,302
1,007,282,330
256,147,490
247,463,938
31,924,215
549,666,307
2,092,484,280
-
-
More than 3 months and less than 1 year
Fixed deposits
Debentures maturing within a year
Placement with banks and financial institution
Investment in commercial papers
Others - Investment in Unit Trust
29.
STATED CAPITAL
In Rs.
As at 31 March
2015
2014
Number of Value of shares
shares
Fully paid ordinary shares
30.
779,000,000
779,000,000
5,089,000,000
5,089,000,000
Number of Value of shares
shares
779,000,000
779,000,000
5,089,000,000
5,089,000,000
OTHER COMPONENTS OF EQUITY
In Rs.
Group
As at 31 March
Note
2015
2014
Treasury shares
Revaluation reserve
Foreign currency translation reserve
Available for sale reserve
Statutory reserve fund
Other reserves
30.1
30.2
30.3
30.4
(55,921,185)
1,636,375,397
(26,775,781)
200,328,059
116,532,044
(502,197,708)
1,368,340,826
(55,921,185)
1,461,774,873
(75,358,862)
176,573,503
149,167,942
(572,303,697)
1,083,932,574
30.5
30.1
Investment in treasury shares reserve reflects the cost of investment made by Asian Alliance Insurance PLC in Softlogic Holdings PLC.
30.2
Revaluation reserve consists of the net surplus on the revaluation of property.
30.3
Foreign currency translation reserve comprises the net exchange movement arising on the currency translation of foreign operations and
net equity investments of other currency denominated associates into Sri Lankan rupees.
30.4
Available for sale reserve includes changes on fair value of financial instruments designated as available for sale financial assets.
30.5
Other reserve is used to recognise goodwill or gain from a bargain purchase on subsequent acquisitions of further equity interest in its
subsidiaries and gains or losses arising from fully/ partial and deemed disposals in its subsidiaries.
31.
INSURANCE CONTRACT LIABILITIES
In Rs.
As at 31 March
Provision - life
Group
2015
2014
5,129,272,339
5,129,272,339
4,184,923,357
4,184,923,357
187
Valuation of Life Insurance Fund
The valuation of the long term life insurance fund as at 31 December 2014 was conducted by Mr. M. Poopalanathan of Actuarial &
Management Consultants (Pvt) Ltd, for an behalf of Asian Alliance Insurance PLC (AAI).
Long duration contract liabilities included in the Life insurance fund, result primarily from traditional participating and non-participating
life insurance products. Short duration contract liabilities are primarily group term, accident and health insurance products. The actuarial
reserves have been established based upon the following.
- Interest rates which vary by product and as required by Regulations issued by the Insurance Board of Sri Lanka (IBSL)
- Mortality rates based on published mortality tables adjusted for actual experience as required by
- Regulations issued by the IBSL Surrender rates based upon actual experience.
Recommendation of Surplus Transfer
In accordance with the Consultant’s Actuary Report as at 31 December 2014, the sum of provision Rs.4,999.00 mn (2013 - Rs.3,746.00
mn) includes the liability in respect of policy holders bonus as well. In the opinion of the consultant actuary, the provision is adequate to
cover the liabilities pertaining to long term insurance.
The actuary recommended to transfer a sum of Rs.368.45 mn (2014 - Rs.300.00 mn) to the share holders of AAI as at 31 December 2014
and transferred further Rs.197.76 mn (2014 - Rs.168.50 mn) for the three months period ending 31 March 2015.
Solvency Margin
In the opinion of the consultant actuary, the Admissible Assets of the Life Insurance fund as at 31 December 2014 is adequate to cover
the liabilities of the fund and the solvency margin requirement prescribed under section 26 of the Regulation of Insurance Industry Act No
43 of 2000.
Actuarial Assumptions as at 31 December
Interest Rate
Mortality Table Used
2014
2013
7.5%
A67/70
7.5%
A67/70
31.1 Movement in life insurance fund
In Rs.
As at 31 March
Increase in life fund
Transfer to shareholders
Group
2015
2014
4,184,923,357
1,510,562,982
(566,214,000)
5,129,272,339
3,218,377,437
1,435,045,920
(468,500,000)
4,184,923,357
188
32.
INTEREST BEARING BORROWINGS
In Rs.
Group
As at 31 March
Finance leases
2015
Debentures
Loans
Total
Finance leases
2014
Debentures
Loans
Total
Additions
196,989,817
128,786,077
1,290,000,000
1,465,000,000
15,697,835,748
17,073,930,076
17,184,825,565
18,667,716,153
178,256,750
99,822,625
1,290,000,000
12,252,681,765
6,256,880,910
12,430,938,515
7,646,703,535
combinations
Transfers
Repayments
Unamortised Loan
217,807
(108,702,282)
-
338,392,188
(8,691,196,932)
338,609,995
(8,799,899,214)
(81,089,558)
-
531,800,000
(3,473,066,469)
531,800,000
(3,554,156,027)
-
-
(26,921,683)
(26,921,683)
-
-
(9,042,764)
(9,042,764)
3,988,016
(5,547,116)
-
-
(5,547,116)
3,988,016
(22,250,837)
(9,245,193)
-
-
(9,245,193)
(22,250,837)
difference
221,279,435
2,749,452,884
98,476,218
24,490,515,615
98,476,218
27,461,247,934
174,738,980
1,280,754,807
129,539,542
15,688,792,984
129,539,542
17,144,286,771
Repayable within one year
Repayable after one year
69,898,505
151,380,930
221,279,435
2,749,452,884
2,749,452,884
4,547,058,007
19,943,457,608
24,490,515,615
4,616,956,512
22,844,291,422
27,461,247,934
63,913,478
110,825,502
174,738,980
1,280,754,807
1,280,754,807
4,080,524,358
11,608,268,626
15,688,792,984
4,144,437,836
12,999,848,935
17,144,286,771
Processing cost
Unamortisation of debenture
issue expense
Finance charges
Security pledged and interest rates pertaining to interest bearing borrowings are disclosed in note 48 to the financial statements.
32.1 INTEREST BEARING BORROWINGS
In Rs.
Company
As at 31 March
Finance leases
2015
Debentures
Loans
Total
Finance leases
2014
Debentures
Loans
Total
Additions
Repayments
Amortisation of debenture
96,024,466
(40,664,689)
1,000,000,000
-
2,833,429,597
5,738,547,537
(1,477,317,214)
3,929,454,063
5,738,547,537
(1,517,981,903)
90,234,752
44,122,626
(38,332,912)
1,000,000,000
-
2,286,592,789
1,000,000,000
(453,163,192)
2,376,827,541
2,044,122,626
(491,496,104)
issue expense
Finance charges
(7,689,325)
47,670,452
(5,547,116)
994,452,884
7,094,659,920
(5,547,116)
(7,689,325)
8,136,783,256
(16,764,580)
79,259,886
(9,245,193)
990,754,807
2,833,429,597
(9,245,193)
(16,764,580)
3,903,444,290
Repayable within one year
Repayable after one year
23,440,536
24,229,916
47,670,452
994,452,884
994,452,884
2,345,557,531
4,749,102,389
7,094,659,920
2,368,998,067
5,767,785,189
8,136,783,256
28,983,625
50,276,261
79,259,886
990,754,807
990,754,807
1,426,279,191
1,407,150,406
2,833,429,597
1,455,262,816
2,448,181,474
3,903,444,290
Security pledged and interest rates pertaining to interest bearing borrowings are disclosed in note 48 to the financial statements.
189
32.2 Details regarding the listed debentures are as follows;
Debenture category
Annual interest rate
Interest
payment
frequency
Allotment
date
Maturity
date
Amortised
cost as at
31-03-2015
Amortised
cost as at
31-03-2014
Company
Listed, unsecured debentures
16.70%
Quarterly
09-09-2013
09-09-2016
994,452,884
994,452,884
990,754,807
990,754,807
16.70%
Quarterly
09-09-2013
09-09-2016
864,452,884
860,754,807
Listed, unsecured, Type "A" debentures
17.00%
Annually
Listed, unsecured, Type "B" debentures
16.50% Semi-annually
Listed, unsecured, Type "C" debentures
16.00%
Monthly
Listed, secured, Type "A" debentures*
10.00%
Quarterly
Listed, secured, Type "B" debentures* 3 month TB net+1.50%
Quarterly
Unlisted, unsecured, subordinated
28-08-2013
28-08-2013
28-08-2013
29-08-2014
29-08-2014
27-08-2016
27-08-2016
27-08-2016
28-08-2019
28-08-2019
167,840,000
100,160,000
152,000,000
949,870,000
450,130,000
167,840,000
100,160,000
152,000,000
-
debentures
29-11-2013
28-11-2018
Group
Listed, unsecured debentures
15.50%
Quarterly
65,000,000
2,749,452,884 1,280,754,807
* Secured by a 100% guarantee provided by “GuarantCo” upto an aggregate of Rs.1,400 mn (Rupee equivalent of USD 10 mn)
32.3 Interest rate of comparable government securities as at 31 March, 2015 8.26% (net of tax) (2014 - 7.85% (net of tax))
32.4 Debenture trading information,
For the year ending
31-03-2015
31-03-2014
No. of transactions
No. of debentures traded
Value of debentures traded
Highest price
Lowest price
Last traded price
Interest yield
Yield to maturity
09
100,500
108,822,759
110.53
106.00
108.05
14.60%
9.74%
-
32.5 Derivative financial instruments
In Rs.
Group
As at 31 March
2015
Cross currency interest rate Swap - Cash flow hedges
2014
Asset
Liability
Asset
Liability
Nil
Nil
Nil
11,484,342
Interest rate SWAP - Cash flow
The objective of the cash flow hedge is to reduce the variability of the cash flows of a foreign currency denominated borrowing. Cash
flow hedge has effectively mitigated the interest rate risk and foreign currency risk arising from the variability in the cash flow of the
borrowing attributable to change in LIBOR interest rates and the USD/LKR exchange rate.
Hedging instrument - Non deliverable interest rate cross currency SWAP.
Hedged item
- The 4 Year USD Denominated floating rate borrowing amounting to USD 4.8 mn.
Cash flow hedge has a notional amount of USD 4.8 mn and cash flows are expected to occur as at 15 April and 15 October of 2014,
2015, 2016 and 2017 in USD 1.2 mn capital repayments at every 15 of April in each year and interest repayments at 15 April and
15 October of each year.
190
In respect of cash flow hedge instrument following balance has been recognised under Other Comprehensive Income Statement (OCI)
as the fair value loss on hedging instrument.
Group
Net change in fair value on derivative financial instruments
2015
2014
30,540,342
(30,540,342)
On the hedged item (USD denominated borrowing), attributable to the hedged risk, following balance has been recognised in Group
Income Statement.
Group
2015
2014
31,599,480
21,489,510
53,088,990
22,205,775
Nil
22,205,775
19,056,000
19,056,000
Nil
-
Under cost of sales
Interest expense
Early settlement fee *
Under administrative expenses
Loss in fair value on derivative financial instruments
* In December 2014, cash flow hedge instrument has been settled in fully and charged Rs.21,489,510/- as early settlement fee.
33.
PUBLIC DEPOSITS
In Rs.
As at 31 March
Deposits maturing after one year
Deposits maturing within one year
34.
Group
2015
2014
2,214,295,787
9,838,760,403
12,053,056,190
1,885,402,009
7,418,343,338
9,303,745,347
DEFERRED TAX LIABILITIES
In Rs.
As at 31 March
Deferred tax reversal on depreciation impact of revaluation
Provision/(reversal)
Group
2015
2014
332,324,498
31,848,115
(2,944,973)
(46,970,357)
314,257,283
366,359,147
(34,034,649)
332,324,498
34.1 The closing deferred tax liability balance relates to the following:
In Rs.
As at 31 March
Revaluation of land and building to fair value
Losses available for offset against future taxable income
Others
Group
2015
2014
282,412,981
207,639,248
(72,319,553)
(119,443,821)
15,968,428
314,257,283
238,477,938
157,674,363
(45,993,219)
(30,457,417)
12,622,833
332,324,498
191
35.
EMPLOYEE BENEFIT LIABILITIES
In Rs.
As at 31 March
Current service cost
Interest cost on benefit obligation
(Gain) / loss arising from changes in assumptions
Transfers from/ (to) related companies
Payments
Exchange translation difference
At the End of the year
Group
Company
2015
2014
2015
2014
444,467,274
90,716,857
49,370,095
84,380,473
58,279,692
(71,288,846)
655,925,545
378,903,000
71,066,278
34,488,725
(931,713)
(38,898,992)
(160,024)
444,467,274
30,083,785
4,099,580
2,420,921
2,634,545
(5,801,288)
(2,767,813)
30,669,730
21,435,500
3,897,509
2,421,516
3,531,852
132,908
(1,335,500)
30,083,785
The employee benefit liability of the Group is based on the actuarial valuations carried out by Messrs. Actuarial & Management
Consultants (Pvt) Ltd, actuaries. The principal assumptions used in determining the cost of employee benefits were:
Discount rate
Future salary increases
2015
2014
8% - 11%
8% - 10%
9% - 11%
8% - 10%
35.1 Sensitivity of assumptions used
If one percentage point changes in the assumptions, would have the following effect:
In Rs.
Group
Company
2015
2014
2015
2014
(42,271,289)
46,732,737
(35,683,948)
29,389,895
(1,929,997)
2,175,460
(2,531,545)
2,224,485
49,061,768
(44,115,972)
34,632,599
(31,634,966)
2,284,654
(2,057,925)
2,669,107
2,377,544
Effect on the defined benefit obligation liability;
Increase by one percentage point in discount rate
Decrease by one percentage point in discount rate
Effect on the defined benefit obligation liability;
Increase by one percentage point in salary increment rate
Decrease by one percentage point in salary increment rate
35.2 Maturity analysis of the payments
The following payments are expected on employees benefit liabilities in future years.
In Rs.
35.3
Group
Company
2015
2014
2015
2014
- within the next 12 months
- between 1 and 2 years
102,812,944
98,248,275
141,817,585
145,429,487
64,840,554
58,081,394
85,795,810
97,518,826
1,102,112
3,146,122
14,574,994
4,870,292
695,852
1,994,476
11,145,608
8,894,659
- beyond 10 years
Total expected payments
167,617,254
655,925,545
138,230,690
444,467,274
6,976,210
30,669,730
7,353,190
30,083,785
The Group and Company’s weighted average duration of defined benefit obligation is 6.95 years (2014 - 8.78 years) and 7.22 years
(2014 - 8.52 years) respectively.
192
36.
OTHER DEFERRED LIABILITIES
Group
In Rs.
Within one year
As at 31 March
Deferred revenue
Warranty provision
37.
2014
2015
2014
77,529,960
48,230,093
125,760,053
19,098,215
39,983,537
59,081,752
2,503,695
540,738
3,044,433
4,048,380
1,427,829
5,476,209
OTHER NON CURRENT FINANCIAL LIABILITIES
In Rs.
37.1
After one year
2015
Group
Company
As at 31 March
Note
2015
2014
2015
2014
Other liabilities
Deposits
Payable to related party
37.1
6,260,352
25,450,268
31,710,620
6,260,352
-
-
6,260,352
509,915,332
509,915,332
-
Softlogic Holdings PLC (“SH”), Softlogic Capital PLC (“SC”) and Asian Alliance Insurance PLC (“AAI”) entered into a “Shareholders
Agreement” and “Share Purchase Agreement” dated 20 December 2012 as amended 13 February 2013 with Deutsche Investitions Und Entwicklungsgesellschaft MBH (“DEG”) and Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (“FMO”) to
sell 19% of the ordinary shares of AAI, held by SH to FMO and 19% of the AAI ordinary shares held by SC to DEG. As per the above
agreements, SC has granted a ‘Put Option’ to FMO and DEG which will be valid for a three year period with effect from 7 March 2017 to
repurchase 38% of the shares held by DEG and FMO based on a ‘Put Option’ price as specified in the amended agreements.
As per the Sri Lankan Accounting Standards framework (SLFRS/LKAS) adopted by the group with effect from 1 April 2012 the Investment
in AAI sold to FMO and DEG by SH and SC did not met the de-recognition criteria in LKAS 39, and continued to be recognised as an
Investment and the proceeds received under this transaction with FMO and DEG was recognised as a financial liability in the group
financial statements as of 31 March 2013.
Subsequent to the further amendments made to the “Shareholders Agreement” on 31 March 2014, the group met the de-recognition
criteria as per LKAS 39, and the said 38% stake held by SH and SC in AAI and the financial liability which initially recognised in the group
financial statements were de recognised in the group financial statements as at 31 March 2014.
As at 31 March, 2015, the group has pledged 52,368,036 shares (2014 – 52,368,036 shares) of Asiri Hospital Holdings PLC owned by
Softlogic Holdings PLC and 2,000 shares (2014 – 2, 000 shares) of Asian Alliance Insurance PLC owned by Softlogic Capital PLC as
collaterals to the said transaction.
38.
TRADE AND OTHER PAYABLES
In Rs.
As at 31 March
Reinsurance payables
Insurance provision - general
Sundry creditors including accrued expenses
Group
Company
2015
2014
2015
2014
4,538,968,017
219,282,604
1,134,071,314
1,149,518,178
7,041,840,113
3,385,866,377
94,989,789
944,664,510
1,326,135,940
5,751,656,616
29,531,350
29,531,350
14,569,828
14,569,828
193
39.
INCOME TAX LIABILITIES
In Rs.
Group
As at 31 March
Charge for the year
Payments and set off against refunds
40.
Group
As at 31 March
2015
Loans
Commercial papers
Margin trading loans
174,142,951
343,408,401
59,914,563
(254,809,524)
322,656,391
234,890,927
332,759,233
(393,507,209)
174,142,951
Company
2014
2015
2014
7,454,147,000 3,976,934,513
7,333,037,778 7,830,931,792
14,249,672
14,787,184,778 11,822,115,977
182,851,146
4,008,747,622
4,191,598,768
84,619,125
3,821,941,975
14,249,672
3,920,810,772
OTHER CURRENT LIABILITIES
In Rs.
As at 31 March
Advances received
Other taxes payables
Other liabilities
42
2014
SHORT TERM BORROWINGS
In Rs.
41.
2015
Group
Note
36
Company
2015
2014
2015
2014
1,347,640,363
160,074,088
697,417,282
125,760,053
2,330,891,786
142,536,919
120,373,841
449,874,086
59,081,752
771,866,598
10,514,607
13,494,730
24,009,337
18,028,769
18,028,769
RELATED PARTY TRANSACTIONS
The Group and Company carried out transactions in the ordinary course of business with the following related entities.
42.1 Amounts due from related parties
In Rs.
Group
Company
As at 31 March
Note
2015
2014
2015
2014
Subsidiaries
Associates
Key management personnel
42.3
42.4
373,316
198,737
572,053
579,913
198,547
778,460
2,290,290,201
217,680
2,290,507,881
2,452,716,329
380,735
2,453,097,064
42.2 Amounts due to related parties
In Rs.
Group
Company
As at 31 March
Note
2015
2014
2015
2014
Subsidiaries
Associates
Key management personnel
42.3
42.5
4,333,114
11,637,670
15,970,784
5,234,509
14,274,093
19,508,602
146,013,477
1,992,157
148,005,634
945,639,488
1,017,826
946,657,314
194
42.3Subsidiaries
Company
In Rs.
As at 31 March
Ceysand Resorts Ltd
Softlogic B P O Services (Pvt) Ltd
Softlogic Mobile Distribution (Pvt) Ltd
Softlogic Real Estate (Pvt) Ltd
Softlogic Restaurant (Pvt) Ltd
Softlogic Retail One (Pvt) Ltd
Less - Provision for impairment
Amount due to
2015
31,562,127
27,121,755
707,965
503,631
1,117,999
61,013,477
61,013,477
Amounts due from
2015
2014
2014
35,917,856
22,888,811
142,511
372,890,263
204,694,175
7,605,872
644,139,488
644,139,488
370,241,895
64,592,158
3,714,411
77,733,865
240,707
633,274
674,038
17,511,505
1,259,507
7,358,981
3,799,681
8,147,076
538,211
192,459,790
74,468
79,654,313
79,486,932
34,391,891
942,512,703
(84,391,891)
858,120,812
519,833,119
53,510,599
7,866,170
6,674,515
3,219,480
41,249,959
32,343
19,606,300
180,615
5,414,184
164,794,165
22,097,912
392,668,763
22,975,122
1,260,123,246
(22,975,122)
1,237,148,124
42.3.1Subsidiaries
Company
In Rs.
For the year ended
Loans received
2015
2014
Loans given
2015
2014
Loans - current
Total
85,000,000
85,000,000
85,000,000
95,500,000
121,000,000
301,500,000
179,694,692
526,798,030
29,766,350
27,957,723
27,995,900
32,427,681
56,324
607,472,689
1,432,169,389
137,911,574
350,664,035
246,929,824
1,584,606
4,376,012
2,225,332
471,876,822
1,215,568,205
146,013,477
945,639,488
2,290,290,201
2,452,716,329
195
42.4 Amounts due from related parties
In Rs.
Group
As at 31 March
Company
2015
2014
2015
2014
373,316
373,316
579,913
579,913
217,680
217,680
380,735
380,735
2015
2014
2015
2014
4,333,114
4,333,114
5,234,509
5,234,509
-
-
2015
2014
2015
2014
-
-
19,841,281
378,449,744
(3,512,615)
132,223,001
76,146,109
22,477,477
960,371,765
77,702,041
9,525,800,000
(16,203,937)
330,606,590
(12,668,394)
862,622,047
301,540,484
17,230,000
379,542,198
1,440,000
8,274,478,000
2,851,064
6,308,272
-
26,466,211
6,462,771
-
12,251,592
900,000
11,568,000
24,300,000
(11,438,933)
(14,075,546)
(1,361,000,000) (1,551,000,000)
(44,212,192)
(6,139,846)
(1,992,157)
(130,000,000)
-
(1,017,826)
(230,000,000)
-
-
-
Associates
42.5 Amounts due to related parties
In Rs.
Group
As at 31 March
Company
Associates
Gerry's Softlogic Pakistan
42.6 Transactions with related parties
In Rs.
Group
Company
Subsidiaries
(Purchases) / sales of goods
(Receiving) / rendering of services
(Purchases) / sale of property plant & equipment
Loans given / (obtained)
Interest received / (paid)
Rent received / (paid)
Dividend received
Guarantee charges received
Guarantees given / (obtained)
Associates
(Purchases) / sale of property plant & equipment
Dividend received
Key management personnel (KMP)
Loans given / (received)
Guarantees given / (obtained)
Loans given / (deposits received)
Close family members of KMP
-
-
42.7 Terms and conditions of transactions with related parties
Transactions with related parties are carried out in the ordinary course of the business. Outstanding current account balances at year end
are unsecured, interest free and settlement occurs in cash. Interest bearing borrowings are at pre-determined interest rates and terms.
42.8 Compensation of key management personnel
Key management personnel include members of the Board of Directors of Softlogic Holdings PLC and its subsidiary companies.
In Rs.
Group
Company
2015
2014
2015
2014
Short term employee benefits
203,187,470
203,187,470
174,197,317
174,197,317
13,580,000
13,580,000
37,260,000
37,260,000
196
43 OPERATING SEGMENT INFORMATION
REVENUE AND PROFIT
Leisure
2015
2014
2015
9,912,024,862
6,403,570,630
(660,043,444)
(421,239,755)
9,251,981,418
705,335,615
Retail
2014
2015
2014
704,941,030
132,423,798 12,925,183,030
8,658,972,526
(76,887,251)
(40,676,542)
5,982,330,875
628,053,779
91,747,256 12,334,289,525
505,411,875
(58,680,236)
(98,372,924)
Revenue
Total revenue
Inter group
Total external revenue
Operating profit/ (loss)
Finance income
Finance cost
(590,893,505) (1,120,264,669)
878,265,229
7,538,707,857
594,282,485
4,788,785
5,730,967
6,584,627
9,217,727
76,771,232
113,408,796
(302,058,048)
(481,368,010)
(90,195,304)
(1,882,058)
(627,715,710)
(523,027,200)
-
-
-
-
13,338,000
7,410,000
Share of results of associates
-
-
-
-
-
-
-
-
-
-
-
-
Profit/ (loss) before taxation
408,066,352
29,774,832
(142,290,913)
(91,037,255)
340,658,751
192,074,081
Taxation
(137,462,759)
(10,390,349)
(486,175)
14,763,485
(69,453,877)
(38,604,022)
Profit/ (loss) after taxation
270,603,593
19,384,483
(142,777,088)
(76,273,770)
271,204,874
153,470,059
Depreciation of property, plant & equipment
(PPE)
47,744,677
34,027,729
104,096,529
564,045
200,924,164
94,785,419
Amortisation of lease rentals paid in advance
-
-
-
-
-
4,641,721
Amortisation of intangible assets
13,146,053
3,764,778
47,629,767
47,588,114
33,283,406
Retirement benefit obligations and related cost
20,102,679
20,098,130
2,056,554
77,692
18,549,287
9,361,371
Purchase and construction of PPE
54,752,664
107,308,111
2,092,996,338
2,045,795,408
786,544,835
483,296,847
3,662,518
125,781,610
314,826
-
267,976,420
157,422,822
-
-
-
-
-
-
Additions to intangible assets
Additions to lease rentals paid in advance
197
Auto Mobiles
Financial Services
Healthcare Services
Others
2015
Group
2015
2014
2015
2014
2015
2014
2014
2015
780,445,604
439,380,205
8,133,617,536
7,639,711,388
8,591,960,503
7,765,208,318
424,290,305
365,318,819 41,472,462,870 31,404,585,684
(37,001,897)
(15,808,864)
(131,853,450)
(182,201,701)
-
(19,408,252)
(411,899,213)
(358,550,317) (1,908,578,760) (2,158,150,100)
743,443,707
423,571,341
8,001,764,086
7,457,509,687
8,591,960,503
7,745,800,066
12,391,092
6,768,502 39,563,884,110 29,246,435,584
(43,633,906)
(15,598,806) 1,022,155,789
747,916,440
1,810,926,609
1,895,460,923
(62,675,930)
(5,885,092) 4,251,693,170
3,623,214,901
7,407,608
1,156,974,990
1,122,173,265
2014
99,955
7,767
935,095,599
971,900,078
91,275,550
49,302,047
7,557,517
(53,890,522)
(39,901,477)
(168,137,069)
(352,467,432)
(635,347,411)
(553,342,061)
(815,465,490)
-
-
-
-
513,364,000
83,690,500
-
-
526,702,000
-
-
-
-
-
-
5,290,016
13,280,969
5,290,016
13,280,969
-
-
(944,348,980)
(966,545,920)
-
-
-
-
(944,348,980)
(966,545,920)
(97,424,473)
(55,492,516)
844,765,339
400,803,166
1,780,218,748
1,475,111,409
(865,293,887)
(693,234,879) 2,268,699,917
1,257,998,838
(8,889,061)
15,238,087
(60,292,650)
(63,229,742)
(163,562,844)
(152,884,263)
(9,470,660)
(106,313,534)
(40,254,429)
784,472,689
337,573,424
1,616,655,904
1,322,227,146
(874,764,547)
28,925,768
5,213,793
117,172,301
84,505,964
660,951,774
653,281,972
30,182,706
29,457,929
1,189,997,919
901,836,851
-
-
-
-
1,036,939
1,036,927
-
-
1,036,939
1,036,927
204,045,351
(708,038,364) (2,692,809,554) (2,660,026,602)
(14,057,009)
91,100,500
(449,618,026)
(249,163,813)
(707,291,888) 1,819,081,891
1,008,835,025
-
-
142,843,678
137,307,727
8,521,877
8,521,877
2,624,845
2,221,134
248,049,626
1,885,619
2,038,930
20,582,591
15,827,191
70,250,850
51,580,366
6,659,372
6,571,323
140,086,952
105,555,003
283,818,892
128,922,594
275,807,176
433,644,779
930,849,409
361,963,301
13,713,477
42,988,966
4,438,482,791
3,603,920,006
-
-
39,095,592
14,239,939
-
-
1,861,900
7,563,029
312,911,256
305,007,400
-
-
-
-
702,520,660
-
-
702,520,660
-
198
43 OPERATING SEGMENT INFORMATION
As at 31 March
Property, plant and equipment
Lease rentals paid in advance
Investment property
Intangible assets
Rental receivable on lease assets and hire
purchase
Segment non current assets
Investments in associates
Goodwill
Intangible assets through business combinations
Deferred tax assets
Eliminations/ adjustment
Total non current assets
Inventories
Investment property held for sale
Loans and advances
Segment current assets
Total current assets
Leisure
Retail
2015
2014
2015
2014
2015
2014
226,953,170
233,000,000
172,487,509
5,023,408
159,032,690
225,300,000
125,328,306
10,736,443
6,278,865,626
1,045,292,349
356,760
-
3,713,905,587
757,492,349
-
4,618,394,111
94,848,000
387,674,115
7,403,862
1,132,134,602
81,510,000
152,781,100
42,342,867
12,706,949
650,171,036
937,385
521,334,824
1,456,000
7,325,970,735
1,455,999
4,472,853,935
126,505,603
172,101,507
5,406,927,198
24,197,630
41,005,220
1,473,971,419
650,171,036
521,334,824
7,325,970,735
4,472,853,935
5,406,927,198
1,473,971,419
1,357,795,215
1,893,274,480
347,502,003
273,773,507
299,506,237
4,171,851,442
772,240,418
1,066,543,206
249,395,077
24,305,264
95,216,569
2,207,700,534
18,730,434
163,100,663
128,769,657
332,460
131,561,486
442,494,700
271,532
26,892,425
380,854,430
124,600
101,276,817
509,419,804
4,831,209,253
3,182,598,483
1,237,152,558
124,778,113
326,103,928
9,701,842,335
3,059,829,268
2,577,477,901
410,527,140
21,811,103
398,005,784
6,467,651,196
4,171,851,442
2,207,700,534
442,494,700
509,419,804
9,701,842,335
6,467,651,196
103,404,274
95,782,724
1,065,277
25,450,268
225,702,543
199,598,401
56,284,746
2,434,550
258,317,697
3,211,708,823
9,134,018
3,220,842,841
2,471,430,887
4,190,878
2,475,621,765
4,313,107,439
99,296,869
1,979,156
4,414,383,464
337,250,829
40,135,117
3,041,659
380,427,605
225,702,543
258,317,697
3,220,842,841
2,475,621,765
4,414,383,464
380,427,605
1,507,752,162
2,947,855,009
95,757,208
296,889,800
70,521,669
4,918,775,848
754,007,370
2,364,068,501
104,707,592
78,423,878
96,051,644
3,397,258,985
201,077,037
194,143,391
77,916,408
31,895,624
505,032,460
159,724,034
8,812,033
908,136
31,238,545
200,682,748
2,035,910,916
5,516,758,202
418,579,581
207,006,468
311,887,092
8,490,142,259
1,942,204,873
2,518,062,113
77,775,799
209,153,431
687,855,291
5,435,051,507
4,918,775,848
3,397,258,985
505,032,460
200,682,748
8,490,142,259
5,435,051,507
4,822,022,478
5,144,478,391
2,729,035,358
3,655,576,682
7,768,465,435
3,725,875,301
4,982,273,739 15,108,769,533
2,676,304,513 12,904,525,723
7,941,622,615
5,815,479,112
Total assets
Insurance contract liabilities
Public deposits
Segment non current liabilities
Total non current liabilities
Public deposits
Bank overdrafts
Segment current liabilities
Total current liabilities
Total liabilities
Total segment assets
Total segment liabilities
199
Auto Mobiles
Financial Services
2015
2014
2015
377,645,319
-
126,715,473
-
780,512,241
87,691,123
8,473,811,327
2014
Healthcare Services
2015
Others
Group
2014
2015
2014
2015
2014
639,084,976 10,823,681,819 10,287,141,045
854,795,905
153,312,184
- 2,184,636,000
58,404,700
5,680,300,612
598,882,418
430,999,128
122,259,126
442,641,387
1,723,508
2,528,664
150,728,002 23,228,311,412 16,208,742,375
854,795,905
153,312,184
394,000,000 1,815,781,736 3,642,938,349
5,341,896
649,933,015
341,856,002
2,528,664 9,087,649,679 6,166,907,714
2,327,169
379,972,488
- 3,542,821,699 3,738,692,476
97,868,006
92,234,601
6,333,335
7,333,336
126,715,473 12,982,704,396 10,208,717,365 12,283,693,477 13,063,421,693
569,152,685
379,972,488
126,715,473 12,982,704,396 10,208,717,365 12,283,693,477 13,063,421,693
569,152,685
- 3,669,327,302
292,792,966
552,598,562 39,598,592,015
26,216,105
4,115,823,525
4,091,247,335
318,527,576
(39,708,261)
552,598,562 48,110,698,295
437,289,869
135,578,478
215,829,612
1,500,000
17,335,786
807,533,745
258,882,616
643,475,335
662,793,833
53,447,666
835,695,086
899,003,312
- 5,524,162,085 2,077,038,702
- 2,881,969,879 4,616,673,500
123,695,495 1,438,401,554 1,348,527,338
- 4,628,754,611 5,653,252,963
27,486,059
887,298,353
667,360,092
463,511,836 16,839,756,903 15,924,649,740
381,062,739
2,698,000,000
300,561,558
375,083,931
1,031,151,896
218,238,185
5,004,098,309
355,052,697
371,391,759
228,555,867
192,422,009
1,147,422,332
807,533,745
463,511,836 16,839,756,903 15,924,649,740
5,004,098,309
1,147,422,332
3,762,890,106
142,966,541
30,419,613,271
24,746,404
4,115,823,525
3,273,733,046
307,629,785
(47,257,445)
38,094,288,586
283,486 7,669,562,845 5,109,353,850
- 2,698,000,000
111,994,358
76,171,419 6,622,803,106 5,070,927,688
- 5,524,162,085 2,077,038,702
- 2,881,969,879 4,616,673,500
17,357,893
32,345,103 3,760,097,208 2,773,900,450
2,332,150,565
658,836,734 8,392,441,152 6,358,330,664
46,681,847
280,334,664 1,926,725,822 1,762,101,994
2,508,184,663 1,047,971,406 39,475,762,097 27,768,326,848
572,053
778,460
2,508,184,663 1,047,971,406 39,476,334,150 27,769,105,308
87,587,032,445 65,863,393,894
143,009,930
4,142,559
147,152,489
3,132,559
3,132,559
5,129,272,339
2,448,174,951
2,214,295,787
71,639,427
6,260,352
9,869,642,856
4,184,923,357
2,169,747,391
1,885,402,009
71,993,574
6,260,352
8,318,326,683
7,067,100,816
344,721,139
7,411,821,955
5,889,307,057
238,394,313
6,127,701,370
147,152,489
3,132,559
9,869,642,856
8,318,326,683
7,411,821,955
6,127,701,370
273,945,919
277,919,687
28,977,351
5,609,903
27,658,863
614,111,723
19,880,500 2,360,310,618 2,434,433,358
79,164,603 3,199,590,318 4,938,910,384
492,471,999 1,182,022,442
56,477,520
378,186,433
272,648,703
- 9,838,760,403 7,418,343,338
33,554,932
876,193,386
515,644,064
189,077,555 17,145,513,157 16,762,002,289
632,777,866
1,076,324,813
1,341,102,283
256,724,918
3,306,929,880
431,876,287
591,957,381
1,350,530,887
134,331,686
1,131,293,129
3,639,989,370
614,111,723
189,077,555 17,145,513,157 16,762,002,289
3,306,929,880
3,639,989,370
- 5,129,272,339
5,767,785,191 2,453,597,715 23,054,291,424
- 2,214,295,787
31,208,809
30,336,087
655,925,545
3,044,433
31,710,620
5,798,994,000 2,483,933,802 31,088,540,148
314,257,283
(210,000,002)
5,798,994,000 2,483,933,802 31,192,797,429
4,184,923,357
13,520,932,280
1,885,402,009
444,467,274
5,476,209
6,260,352
20,047,461,481
332,324,498
(521,083,345)
19,858,702,634
30,065,595
9,530,194 7,041,840,113
4,191,598,768 3,920,810,771 16,133,721,984
2,368,998,068 1,457,670,016 4,675,252,411
24,180,491
19,923,244 2,330,891,786
- 9,838,760,403
83,120,084
56,236,965 1,658,001,636
6,697,963,006 5,464,171,190 41,678,468,333
322,656,391
15,970,784
(1,404,833,105)
6,697,963,006 5,464,171,190 40,612,262,403
5,751,656,616
14,421,785,786
4,172,706,736
771,866,598
7,418,343,338
2,551,874,570
35,088,233,644
174,142,951
19,508,602
(2,627,938,709)
32,653,946,488
71,805,059,832 52,512,649,122
1,187,506,233
761,264,212
590,227,309 29,822,461,298 26,133,367,105 17,287,791,786 14,210,844,025 3,077,337,348 1,600,569,968 79,074,354,111 58,187,940,119
192,210,114 27,015,156,013 25,080,328,972 10,718,751,835 9,767,690,740 12,496,957,006 7,948,104,992 72,741,558,213 55,135,695,125
200
44
MATERIAL PARTLY-OWNED SUBSIDIARIES
Financial information of subsidiaries that have material non controlling interest (NCI) is given below.
In Rs.
Healthcare Services
Asiri Hospital Holdings PLC Asiri Surgical Hospital PLC
2015
2014
2015
2014
2015
2014
Summarised income statement for
the year ending 31 March
Revenue
Other income
Operating cost
Finance income
Finance cost
Profit before tax
Taxation expense
Profit for the year
Profit attributable to material NCI
Dividend paid to NCI
2,440,580,228 2,333,174,129 2,653,704,728 2,508,490,641 2,869,533,166 2,519,646,603
448,493,363
726,535,377
9,817,000
11,165,641
22,524,436
21,832,227
(1,800,900,602) (1,631,005,263) (2,271,473,024) (2,073,140,572) (2,356,791,849) (1,966,495,689)
67,381,467
74,998,914
73,381,946
132,259,531
2,418,042
1,171,774
(413,793,612)
(386,985,466)
(58,945,894)
(73,270,368)
(195,429,028)
(313,685,437)
741,760,844 1,116,717,691
406,484,756
505,504,873
342,254,767
262,469,478
(76,592,406)
(104,601,364)
1,692,734
(32,169,706)
(48,058,113)
(43,284,364)
665,168,438 1,012,116,327
408,177,490
473,335,167
294,196,654
219,185,114
156,100,462
30,661,117
(14,314,030)
(5,145,563)
281,937,807
234,855,500
821,268,900 1,042,777,444
393,863,460
468,189,604
576,134,461
454,040,614
135,250,163
194,838,669
254,397,190
296,286,172
159,500,075
151,163,394
91,117,008
298,626,341
131,582,501
517,026,498
125,051,081
-
1,796,255,276 1,323,149,687
11,491,750,349 11,258,102,665
13,288,005,625 12,581,252,352
626,880,855
3,834,849,555
4,461,730,410
1,598,814,918
2,878,157,192
4,476,972,110
387,767,727
6,088,553,626
6,476,321,353
441,782,941
5,659,342,066
6,101,125,007
Summarised statement of financial
position as at 31 March
Current assets
Non current assets
Total assets
Current liabilities
Total liabilities
1,372,669,403
4,860,402,150
6,233,071,553
2,266,713,636
3,531,327,390
5,798,041,026
412,635,571
845,572,399
1,258,207,970
978,227,003
479,531,270
1,457,758,273
692,235,977
2,136,757,184
2,828,993,161
544,800,940
2,252,993,097
2,797,794,037
Accumulated balance of material NCI 3,440,401,993
3,350,907,145
1,994,140,433
1,893,518,405
1,963,095,844
1,799,001,238
1,064,455,440
233,016,320
761,918,371
549,273,245
739,925,325
495,054,640
activities
Cash flows from / (used in) financing
299,737,517
(1,772,971,556)
(164,455,548)
47,486,546
(519,274,814)
(153,401,106)
activities
Net increase / (decrease) in cash and
(69,242,522)
1,737,767,860
102,142,446
(1,011,961,713)
(341,850,334)
2,279,872
1,294,950,435
197,812,624
699,605,269
(415,201,922)
(121,199,823)
343,933,406
Summarised cash flow information
for the year ending 31 March
Cash flows from operating activities
Cash flows from / (used in) investing
cash equivalents
201
In Rs.
2015
Financial Services
Asian Alliance
Insurance PLC
2014
2015
Asian Alliance
General Insurance Ltd
2014
2015
2014
3,673,994,558 3,338,542,921 3,849,478,287 4,258,872,792
290,172,434
132,349,170
585,911,655
239,363,099
(3,704,400,200) (3,258,626,350) (3,670,387,777) (3,880,938,193)
(944,348,981)
(966,545,920)
8,735,408
20,001,414
967,687,589
976,749,580
(47,840,955)
(40,841,902)
(27,915,165)
(14,311,997)
220,661,245
191,425,253
760,425,608
613,189,361
(4,171,605)
(25,771,363)
(7,887,006)
(36,753,715)
216,489,640
165,653,890
752,538,602
576,435,646
22,304,794
(4,520,823)
(135,627,403)
(81,627,037)
238,794,434
161,133,067
616,911,199
494,808,609
385,464,589
6,093,350
(440,482,470)
5,898,925
(1,546,859)
(44,572,465)
(2,724,147)
(47,296,612)
(25,491,445)
(72,788,057)
-
Summarised income statement for the
year ending 31 March
Revenue
Other income
Operating cost
Finance income
Finance cost
Profit before tax
Taxation expense
Profit for the year
Profit / (loss) attributable to material NCI
90,722,921
87,750,869
412,019,478
143,483,124
(26,808,275)
-
-
30,466,226
213,259,131
103,520,951
-
-
position as at 31 March
Current assets
Non current assets
Total assets
14,596,440,276 10,917,835,034
5,417,393,545 7,341,904,270
20,013,833,821 18,259,739,304
2,904,967,830
5,593,512,741
8,498,480,571
4,725,329,940
3,364,671,317
8,090,001,257
1,299,666,637
1,036,693,876
2,336,360,513
-
Current liabilities
Total liabilities
13,542,569,559 13,083,292,160
4,521,628,870 3,866,898,514
18,064,198,429 16,950,190,674
1,072,182,055
5,173,001,907
6,245,183,962
1,845,609,116
4,233,006,726
6,078,615,842
1,599,287,105
10,361,465
1,609,648,570
-
Dividend paid to NCI
Summarised statement of financial
Accumulated balance of material NCI
1,017,011,587
698,576,478
1,277,124,186
1,156,780,729
411,886,031
-
activities
Cash flows from / (used in) investing
(3,230,105,331)
2,680,678,188
375,663,645
1,242,721,094
862,709,088
-
activities
Cash flows from / (used in) financing
1,383,701,778
(1,558,731,054)
(139,591,380) (1,171,950,390) (1,781,647,788)
-
401,292,330
(56,180,927)
(223,978,515)
(180,000,000)
799,500,000
-
(1,445,111,223)
1,065,766,207
12,093,750
(109,229,296)
(119,438,700)
-
Summarised cash flow information for
the year ending 31 March
Cash flows from/ (used in) operating
activities
Net increase / (decrease) in cash and
cash equivalents
44.1
The above information is based on amounts before inter company eliminations.
202
45
CONTINGENT LIABILITIES
There were no significant contingent liabilities as at the date of the statement of financial position other than what is disclosed below,
which require adjustments to or disclosures in the financial statements.
45.1 Softlogic Holdings PLC
Softlogic Holdings PLC received an income tax assessments from The Department of Inland Revenue for the years of assessment
2009/10 and 2010/11. The company has lodged an appeal against the said assessment and The Department of Inland Revenue has
issued their determination. The Management and the tax consultants has submitted an appeal to the Tax Appeal Commission on that
determination.
Based on the information available and the advice of the tax consultants, the directors are confident that the ultimate resolution of the
above contingency is unlikely to have a material adverse effect on the company or on the group.
45.2 Asiri Hospital Holdings PLC, Asiri Surgical Hospital PLC and Asiri Hospital Matara (Pvt) Ltd
Pending litigations against Asiri Hospital Holdings PLC, Asiri Surgical Hospital PLC and Asiri Hospital Matara (Pvt) Ltd with a maximum
liability of Rs.43 mn, Rs.50 mn and Rs.51 mn respectively exist as at 31 March 2015 (2014 - Asiri Hospital Holdings PLC : Rs.43 mn, Asiri
Surgical Hospital PLC : Rs.Nil and Asiri Hospital Matara (Pvt) Ltd - Rs.51 mn).
Although there can be no assurance, the directors believe, based on the information currently available, that the ultimate resolution of
such legal procedures would not likely to have a material adverse effect on the company or on the group. Accordingly, no provision for
any liability has been made in these financial statements.
45.3 Asian Alliance Insurance PLC
VAT Assessments were received by Asian Alliance Insurance PLC in October 2011 and April 2013 in relation to taxable periods ended 31
December 2009 and 31 December 2010.
The Company has filed an appeal in November 2011 on the basis that the underlying computation includes items which are exempt /out
of scope of the Value Added Tax Act. The Commissioner General of Inland Revenue has determined the assessment and the Company is
in the process of appealing to the Tax Appeals Commission and awaiting the final decision.
above contingency is unlikely to have a material adverse effect on the company or on the group.
45.4 Odel PLC, Odel Information Technology Services (Pvt) Ltd, Odel Properties (Pvt) Ltd
Odel PLC, Odel Information Technology Services (Pvt) Ltd, Odel Properties (Pvt) Ltd received an income tax assessments from The
Department of Inland Revenue for the years of assessment 2009/10 & 2010/11,. 2007/08, 2008/09, 2009/10, 2010/11 & 2011/12 and
2011/12 & 2012/13 respectively.
The group has lodged appeals against the said assessments and The Department of Inland Revenue has issued their determinations.
The Management and the tax consultants have submitted appeals to the Tax Appeal Commission on that determinations.
above contingencies is unlikely to have a material adverse effect on the respective companies or on the group.
203
46
CAPITAL AND OTHER COMMITMENTS
46.1 Capital commitments
Group
Capital commitments approved but not provided for
Company
2015
2014
2015
2014
4,567,654,857
3,360,750,088
-
-
As at 31 March
46.2 Guarantees issued and in-force
Group
Guarantees issued and in-force
46.3
Company
2015
2014
2015
2014
12,250,000
14,650,000
9,525,800,000
8,274,478,000
As at 31 March
As at 31 March 2015, outstanding currency forward agreement amount of Rs.507,960,000/- (USD 4,000,000) (2014 - Rs.1,455,676,658/,
USD 11,041,177) exist for the group.
47
POST BALANCE SHEET EVENTS
There were no significant events subsequent to the date of the statement of financial position, which require disclosure in the financial
statements other than the following.
47.1 Dividend announcement – Softlogic Holdings PLC
The directors of Softlogic Holdings PLC declared a final dividend of Rs.0.25 per share for the financial year ended 31 March 2015.
As required by section 56 (2) of the companies Act No. 07 of 2007, the board of directors has confirmed that the company satisfies the
solvency test in accordance with section 57 of the Companies Act No. 07 of 2007, and has obtained a certificate of solvency from the
auditors to this effect.
47.2 Sub division of ordinary shares – Asian Alliance Insurance PLC
The directors of Asian Alliance Insurance PLC, a subsidiary of Softlogic Holdings PLC resolved subject to the approval at a general
meeting and any other regulatory approvals (if any) to sub divide its ordinary shares in the ratio of one (01) existing ordinary share in to ten
(10) sub divided ordinary shares.
So that the existing thirty seven million five hundred thousand (37,500,000) shares will be sub divided in to three hundred and seventy
five million (375,000,000) new shares, there being no change to the Stated Capital of the company.
47.3 Sale of land – Asiri Central Hospitals Ltd
On 09 July, 2015, the directors of Asiri Central Hospitals Ltd, a subsidiary of Softlogic Holdings PLC approved and authorised the
completion of sale of the land and premises located at No. 37, Horton Place, Colombo 07 for a total consideration of Rs.2,700,000,000/-.
INTEREST BEARING BORROWINGS
Term loan AWPLR + 2%
Seylan Bank
PLC
Softlogic
Holdings
PLC
Term loan AWPLR + 1.5%
Commercial
Bank of Ceylon
PLC
Term loan 8%
Nature of Interest rate
facility
Lending
institution
Company
48.1 Security and Repayment Terms
48
2015
Rs.
4,761,000
-
-
502,445,171
12,539,373
58,393,897
107,731,039
2014
Rs.
Outstanding balance
59 equal monthly
42,856,000
installments of Rs.4,770,000
and final installment of
Rs.4,696,000 commencing
from January 2011
47 equal monthly
18,133,900
installments of Rs.3,027,000
and final installment
Rs.2,998,000 commencing
from November 2011
8,255,720
67 equal monthly
installments of Rs.305,766
and final installment
Rs.305,804 commencing
from October 2010
47 equal monthly installments 395,082,659
of Rs. 10,416,667 and final
installment Rs. 10,416,667
commencing from June 2014
20 equal monthly installments 968,865,498
of Rs. 50,000,000 each
commencing on completion
of grace period of one year
or upon drawing the facility in
full, whichever occurs first
71 equal monthly installments 1,960,199,620
of Rs. 27,780,000 and a final
installment of Rs. 27,620,000
commencing after one
year of grace period from
November 2014
48 equal monthly
installments of Rs. 1,382,000
and final installment of
Rs. 1,334,000 commencing
from January 2010
Repayment term
• Mortgage of 62,000,000 Asiri Hospital Holdings PLC
shares and additional Rs.500.00 mn (20,840,000 shares)
worth Asiri Hospital Holdings PLC shares owned by
Softlogic Holdings PLC in Seylan Bank slash account
• Personal guarantee of Mr. A. K. Pathirage for Rs.30.00 mn
• Secondary concurrent mortgage for Rs.80.00 mn (Seylan
Bank's interest Rs.30.00 mn) over land and building at No.
14, De Fonseka Place Colombo - 05
• Primary concurrent mortgage for Rs.200.00 mn (Seylan
Bank's interest Rs.70.00 mn) over land and building at No.
14, De Fonseka Place Colombo - 05
Security
• Primary mortgage bond for Rs. 750.00 mn over
100,000,000 shares of Softlogic Capital PLC owned by
• Mortgage of Rs. 100.00 mn over 11,547,000 shares of
Asiri Hospital Holdings PLC owned by Softlogic Holdings
PLC
• Secondary concurrent mortgage for Rs. 80.00 mn
(Commercial Bank's interest Rs. 50.00 mn) over land and
building at No. 14, 14B De Fonseka Place, Colombo - 05
1,013,249,400 • Primary concurrent mortgage for Rs. 200.00 mn
(Commercial Bank's interest Rs. 130.00 mn) over land and
building at No. 14 and 14B De Fonseka Place Colombo - 05
• Mortgage of 63,200 shares of Lanka IOC PLC owned by
2,284,966,960 • Mortgage of Rs.500.00 mn (66,670,000 shares) worth
Softlogic Capital PLC shares owned by Softlogic Holdings
PLC in Seylan Bank slash account
Carrying value
of collaterals
204
Company
facility
Sri Lanka
Savings Bank
Nations Trust
Bank PLC
Term loan 9.50%
83 monthly installment and
final installment of
Rs. 576,622 commencing
from September 2010
24,305,992
36,133,441
123,967,574
-
-
2014
Rs.
1,342,276,569
Term loan AWPLR + 1.25% Rs. 750.00 mn bullet
payment before end of 24th
month from the first date of
disbursement and balance to
be paid in 20 equal quarterly
installments of Rs. 5.00 mn
from the month 27 to 84
(during the period of year
3 to 7)
1,445,194,682
Term loan AWPLR + 1.25% Rs. 1,400.00 mn bullet
payment before end of 24th
month from the first date of
disbursement and balance to
be paid in 20 equal quarterly
installments of Rs. 20.00
mn from the month 27 to
84 (during the period of year
3 to 7)
Term loan AWPLR + 1.0% 59 monthly installments of
71,939,280
Rs. 4,166,667 each and final
installment of
from September 2011
2015
Rs.
Outstanding balance
449,990,000
29 monthly equal
installments of Rs. 16.67 mn
and a final installment of
Rs. 16.57 mn from January
2014 after an initial grace
period of 6 months
Repayment term
249,950,000
Hatton National Term loan AWPLR + 1.5%
Bank PLC
Lending
institution
d) Softlogic International (Pvt) Ltd - 2,454,354 shares
c) Softlogic Communications (Pvt) Ltd - 72,108 shares
b) Softlogic Information Technologies (Pvt) Ltd - 2,163,753
shares
a) Softlogic Holdings PLC - 8,393,785 shares
Mortgage of 13,084,000 shares (total) of Asiri Hospital
Holdings PLC lodged in slash account owned by:
e) Softlogic International (Pvt) Ltd - 21,235,500 shares of Asiri
Hospital Holdings PLC
(shared security given by Softlogic Holdings PLC and
Softlogic Retail (Pvt) Ltd to finance the acquisition of Odel
PLC)
d) Softlogic Information Technologies (Pvt) Ltd - 19,233,030
shares of Asiri Hospital Holdings PLC
c) Softlogic Retail (Pvt) Ltd - 126,817,359 shares of Odel PLC
b) Softlogic Holdings PLC - 209,965,897 shares of Asiri
Hospital Holdings PLC
264,296,800 10,638,739,221
Mortgage of 504,069,145 shares (total) of Asiri Hospital
Holdings PLC and Odel PLC lodged in slash account
owned by:
Mortgage of 87,041,230 shares of Asiri Hospital Holdings
PLC owned by Softlogic Holdings PLC
Security
a) Softlogic Holdings PLC - 126,817,359 shares of Odel PLC
1,758,232,846 Carrying value
of collaterals
205
Company
facility
Repayment term
Term loan AWPLR + 1.25% 13 equal installments
of Rs. 4,000,000 each
from December 2013 to
December 2014, a bulk
repayment of
Rs. 750,000,000 before
31 December 2014 and
balance to be paid in 33
equal monthly installments
of Rs. 6,200,000 and final
commencing from January
2014
Bank of Ceylon Term loan AWPLR + 2.5% 63 equal monthly
(floor of 14.5%) installment of Rs. 1,666,667
commencing from February
2013
Peoples Bank Term loan AWPLR + 1.0% 48 monthly installment of
from June 2012
Sampath Bank
PLC
Lending
institution
2014
Rs.
1,366,530,129
81,173,319
89,764,654
2,833,429,597
2015
Rs.
517,600,000
-
50,000,000
7,094,659,920
Outstanding balance
Security
306,641,386
Primary mortgage over warehouse land and building
complex at Piliyandala (extent Lot 3R 10P, Lot B 3R 20p)
owned by Softlogic Holdings PLC
• Corporate guarantees from Softlogic Capital PLC for
Rs. 1,631.00 mn
• Mortgage of 10,125,000 Asian Alliance Insurance PLC
shares owned by Softlogic Capital PLC
4,174,497,092 • Mortgage of 201,166,182 shares of Softlogic Capital PLC
owned by Softlogic Holdings PLC
Carrying value
of collaterals
206
Lending
institution
Softlogic
Hatton National
Retail (Pvt) Ltd Bank PLC
Company
AWPLR + 1.5%
AWPLR + 1.5%
AWPLR + 1.5%
AWPLR + 1.5%
AWPLR + 1.25%
AWPLR + 1.25%
Term loan
Term loan
Term loan
Term loan
Term loan
Interest rate
Term loan
Nature of
facility
Rs. 1,400.00 mn bullet payment
before end of 24th month from
the first date of disbursement
and balance to be paid in 20 equal
quarterly installments of Rs. 20.00
mn from the month 27 to 84 (during
the period of year 3 to 7)
1,350,000,000
-
1,350,000,000
1,500,000,000
• Corporate guarantees from Softlogic Holdings PLC for Rs.
1,350.00 mn and Rs. 1,500.00 mn
e)Softlogic International (Pvt) Ltd - 21,235,500 shares of Asiri
Hospital Holdings PLC (shared security given by Softlogic
Holdings PLC and Softlogic Retail (Pvt) Ltd to finance the
acquisition of Odel PLC)
d) Softlogic Information Technologies (Pvt) Ltd - 19,233,030
shares of Asiri Hospital Holdings PLC
c) Softlogic Retail (Pvt) Ltd - 126,817,359 shares of Odel PLC
b) Softlogic Holdings PLC - 209,965,897 shares of Asiri Hospital
Holdings PLC
a) Softlogic Holdings PLC - 126,817,359 shares of Odel PLC
• Mortgage of 504,069,145 shares (total) of Asiri Hospital
Holdings PLC and Odel PLC lodged in slash account owned by:
• Quaternary mortgage bond for Rs. 120.00 mn over the
property situated at No. 402, Galle Road Colombo - 03 owned
by Softlogic Retail (Pvt) Ltd
76,000,000
-
• Existing primary floating mortgage bond for Rs. 30.00 mn over
immovable property at Danawakanda Estate, Demalagama,
429,000,000
Dekatana owned by Softlogic Retail (Pvt) Ltd
19,000,000
• Existing primary floating mortgage bond for Rs. 179.00 mn
over property No. 402, Galle Road, Colombo - 03 owned by
Security
• Existing tertiary mortgage bond for Rs. 100.00 mn over
property situated at No. 402, Galle Road, Colombo - 03 owned
by Softlogic Retail (Pvt) Ltd
12,000,000
59 monthly installments of
Rs. 1,000,000 each and a final
installment of Rs. 2,000,000 plus
interest commencing from May 2010
24,985,000
Rs. 1,667,000 each plus interest
13,000,000
Rs. 500,000 each plus interest
52,000,000
Rs. 2,000,000 each plus interest
Rs. 750.00 mn bullet payment before 1,443,748,268
end of 24th month from the first date
of disbursement and balance to be
paid in 20 equal quarterly installments
of Rs. 5.00 mn from the month 27 to
84 (during the period of year 3 to 7)
Carrying value
of collaterals
44,989,000
2014
Rs.
Outstanding balance
2015
Rs.
Repayment term
207
Softlogic City
Hotels (Pvt)
Ltd
Bank of Ceylon
Term loan
7.00%
8.00%
AWPLR + 1.5%
Term loan
Commercial
Bank of Ceylon
PLC
Term loan
AWPLR + 3.0%
Term loan
Bank of Ceylon
AWPLR + 3%
AWPLR + 0.5%
Term loan
Term loan
AWPLR + 1.5%
Term loan
Commercial
Bank of Ceylon
PLC
Hatton National
Bank PLC
Interest rate
Nature of
facility
Lending
institution
Softlogic Solar Seylan Bank
(Pvt) Ltd
PLC
Softlogic
International
(Pvt) Ltd
Company
1,700,000
-
next 64 months @ USD 300,000
pm each
next 12 months @ USD 250,000 pm
each followed by
first 06 months @ USD 100,000 pm
each followed by
112 months including 30 months
capital repayment grace period
a final installment of Rs. 2,000,000
83 equal monthly installments of
Rs. 200,641.86 commencing from
September 2010
11 equal months @ Rs. 6,000,000
each followed by
each followed by
each followed by
each followed by
48 monthly installments commencing
from 13 November 2013 as follows
7,823,442
1,178,530,888
2,058,360,663
192,000,000
3,753,607
-
156,000,000
-
Rs. 2,080,000 and a final installment
of Rs. 2,240,000 with a grace period
of 1 year commencing from April
2009
Rs. 1,481,481.49 with a 6 months
grace period commencing from July
2009
-
4,320,000
2014
Rs.
2015
Rs.
Outstanding balance
Rs. 1,380,000 and final installment of
Rs. 1,700,000 together with interest
(as per amended facility offered dated
March 2011)
72 monthly installments as detailed
1,443,300,000
and annexed to the loan agreement
Repayment term
4,615,703,035
201,817,533
1,500,000,000
Carrying value
of collaterals
Mortgage of 9,990,967 shares (total) of Asiri Hospital Holdings
PLC owned by:
Primary mortgage bond over credit and debit card sales
receivables including installment sales of all outlets of Softlogic
Retail (Pvt) Ltd
• Lodgment of share certificates of Softlogic City Hotels (Pvt) Ltd
which is owned by Softlogic Properties (Pvt) Ltd
• Mortgage over freehold property of 2 R and 11.68 P owned by
Softlogic Properties (Pvt) Ltd and other project assets of Hotel
being constructed
• Softlogic Communications (Pvt) Ltd - 1,233,123 shares
• Softlogic International (Pvt) Ltd - 272,206 shares
• Softlogic Holdings PLC - 8,485,638 shares
Security
208
15.23%
13.08%
Securitisation
12.31%
AWPLR + 3.0%
Pan Asia
Securitisation
Banking
Corporation PLC Securitisation
Term loan
AWPLR + 2.5%
Term loan
Bank of Ceylon
AWPLR + 2.5%
Term loan
AWPLR + 3.25%
17.14%
Term loan
Term loan
17.14%
AWPLR + 1.25%
Term loan
People's Bank
Commercial
Bank of Ceylon
PLC
DFCC Bank
Softlogic
Finance PLC
Term loan
Sampath Bank
PLC
Softlogic
Capital PLC
Rs. 1,810,000 and final installment of
after a grace period of 6 months
Rs. 1,000,000, 2 monthly
installments of Rs. 500,000,
Rs. 6,800,000 and a final installment
of Rs. 5,216,000 commencing from
June 2012
Rs. 520,833 commencing on
September 2010
Rs. 1,041,667 commencing January
2011
Rs. 5,200,000 commencing from
August 2011
48 Equal monthly installments of
Rs.1,562,500 commencing from
September 2011
June 2011
September 2011
Within 48 months commencing from
October 2010
April 2011
May 2011
Term loan
Sampath Bank
PLC
Future
Automobiles
(Pvt) Ltd
AWPLR + 2 %
with a floor of
12%
5,25% + 6 Months 17 equal semi annual installments
LIBOR
(March and September) starting on
March 2016
Term loan
International
Finance
Corporation
Ceysand
Resorts Ltd
Repayment term
Interest rate
Nature of
facility
Lending
institution
Company
-
338,416,000
520,833
10,409,325
88,365,822
28,125,000
15,330,473
18,749,990
126,380,000
256,816,000
-
-
26,400,000
9,315,769
2,762,172
6,249,986
-
-
90,858,352
29,417,469
9,101,697
1,292,899,999
1,336,500,000
-
2014
Rs.
2015
Rs.
Outstanding balance
9,374,979
3,590,824
12,110,500
34,320,000
2,524,500,000
200,000,000
1,655,645,602
Carrying value
of collaterals
Mortgage of 19,125,000 shares of Asian Alliance Insurance
PLC owned by Softlogic Capital PLC
Hire purchase and finance lease receivables
• Mortgage over 60% Ceysand Resorts Ltd shares owned by
Corporate guarantee from Softlogic Holdings PLC for
Rs. 200.00 mn
• Mortgage over all movable assets held on the loan granted
date
• Primary mortgage over lease right over paradise Island land
and Hotel building to be refurbished/ constructed by Ceysand
Resorts Ltd
Security
209
Asiri Hospital
Holdings PLC
Company
Commercial
Bank of Ceylon
PLC
FMO
Deustche Bank
Lending
institution
AWPLR + 0.5%
LIBOR + 7%
Convertible to
equity
Term loan
13.76%
14.64%
Securitisation
Term loan
16.88%
Securitisation
13.18%
Securitisation
17.04%
14.64%
Securitisation
Securitisation
16.88%
Securitisation
13.17%
16.59%
Securitisation
Securitisation
16.59%
Securitisation
15.23%
13.17%
Securitisation
Securitisation
Interest rate
Nature of
facility
October 2011
November 2011
November 2012
May 2013
May 2013
November 2013
May 2011
November 2011
May 2013
May 2013
October 2013
Two year grace period from the date
of disbursement, repayable within 60
months of USD 1.2 mn commencing
from April 2014
Convertible option will be started
from August 2013 to August 2016
with an option of converting USD
1.00 mn per year
Rs. 333,000 together with interest
after a grace period of one year
Repayment term
507,960,000
507,960,000
5,292,758
774,460,487
-
-
-
-
-
-
-
279,907,904
297,894,855
135,145,557
43,750,000
89,509,961
24,584,781
2014
Rs.
77,150,844
42,526,067
16,415,638
22,187,513
5,824,222
-
-
-
-
-
-
2015
Rs.
Outstanding balance
115,726,266
63,789,101
24,623,457
33,281,270
8,736,333
Carrying value
of collaterals
Security
210
Company
PLR + 0.5%
PLR + 0.25%
PLR + 0.25%
Term loan
Term loan
Term loan
Term loan
Term loan
Amana Bank
Limited
Nation Trust
Bank PLC
AWPLR + 1.0%
AWPLR
AWPLR + 1%
AWPLR + 0.5%
Term loan
Term loan
AWPLR + 0.5%
Term loan
Hatton National
Bank PLC
AWPLR + 0.5%
Term loan
Commercial
Bank of Ceylon
PLC
Interest rate
Nature of
facility
Lending
institution
Rs. 3,334,000 and final installment
October 2008
October 2011
October 2010
installment of Rs. 5,520,000 together
with interest commencing from
April 2015
July 2014
80,000,000
after a grace period of one year
Rs. 24.72 mn commencing from 7th
month after first disbursement and
a final installment of Rs. 24.92 mn
commencing from August 2014
September 2013
2,405,635,414
together with interest commencing
from April 2015
47,500,000
-
3,294,000
-
77,500,000
-
322,074,390
-
-
536,789,462
-
446,669,000
2,225,000,000
2014
Rs.
Outstanding balance
2015
Rs.
Repayment term
482,520,000
550,000,000
3,287,500,000
Carrying value
of collaterals
• Corporate guarantee from Asiri Surgical Hospital PLC for
Rs. 380.52 mn
• Primary concurrent mortgage bond for Rs. 160.00 mn over
hospital property at No. 181, Kirula Road, Narahenpita owned
by Asiri Hospital Holdings PLC (Commercial Bank’s interest Rs. 100.00 mn)
• Corporate guarantee from Central Hospital Ltd for
Rs. 562.50 mn
Corporate guarantee from Asiri Surgical Hospital PLC for
Rs. 550.00 mn
• Corporate guarantee from Asiri Surgical Hospital PLC for
Rs. 500.00 mn
• Primary mortgage bond for Rs. 2,225.00 mn over 74,454,026
shares of Central Hospital Ltd held by Asiri Hospital Holdings
PLC
Security
211
Asiri Surgical
Hospital PLC
Company
AWPLR + 0.5%
PLR + 0.25%
Term loan
Term loan
DFCC Bank
Commercial
Bank of Ceylon
PLC
AWPLR + 1%
6.24%
Term loan
Term loan
AWPLR
Term loan
International
Financial
Corporation
AWPLR + 0.5%
Term loan
Sampath Bank
PLC
Interest rate
Nature of
facility
Lending
institution
August 2009 after one month
grace period from the date of first
disbursement
Rs. 1,670,000 and final installment
December 2009
April 2015
May 2012
April 2015
17 equal semi annual installments
commencing from April 2013
Repayment term
13,160,000
-
17,121,867
-
512,233,073
-
-
363,321,727
791,532,379
196,392,000
-
693,618,130
2014
Rs.
2015
Rs.
Outstanding balance
273,400,000
8,809,654,792
363,000,000
Carrying value
of collaterals
Corporate guarantee from Asiri Surgical Hospital PLC for
Rs. 363.00 mn
• Corporate guarantee from Asiri Hospital Holdings PLC for
Rs. 148.40 mn
• Primary concurrent mortgage bond for Rs. 200.00 mn over
hospital property at No. 181, Kirula Road, Narahenpita owned
by Asiri Hospital Holdings PLC (Commercial Bank’s interest Rs. 125.00 mn)
• 134,915,107 ordinary shares of Asiri Surgical Hospital PLC held
by Asiri Hospital Holdings PLC
(shared security given by Asiri Hospital Holdings PLC,Asiri
Surgical Hospital PLC and Central Hospital Ltd)
• Primary additional security mortgage in respect of movable
assets belonging to Asiri Surgical Hospital PLC and Central
Hospital Ltd
• Primary mortgage in respect of all shares of Central Hospital
Ltd, Asiri Diagnostics Services (Pvt) Ltd, Asiri Hospital Matara
(Pvt) Ltd belonging to Asiri Hospital Holdings PLC and all shares
of Central Hospital Ltd belonging to Asiri Central Hospitals Ltd
• Primary additional security mortgage in respect of the property
at Norris Canal Road, Colombo - 10 belonging to Central
Hospital Ltd ranking concurrently and pari passu with the
existing mortgage in respect of such property as further and
additional security to the mortgage bond above
• Primary mortgage in respect of leasehold rights over the
property at Krimandala Mawatha, Narahenpita belonging to
Asiri surgical Hospital PLC
Security
212
Central
Hospital Ltd
Asiri Central
Hospital Ltd
Company
6.24%
Term loan
Lease
International
Financial
Corporation
Board of
Investment
Sampath Bank
PLC
Term loan
Term loan
Sampath Bank
PLC
AWPLR + 0.5%
AWPLR + 0.75%
Syndication loan AWPLR + 2.5%
Bank of Ceylon
National
Development
Bank PLC
National Savings
Bank
Commercial
Bank of Ceylon
PLC
Hatton National
Bank PLC
Bank of Ceylon
AWPLR + 0.25%
Term loan
AWDR
AWPLR + 0.25%
Term loan
DFCC Bank
Interest rate
Nature of
facility
Lending
institution
25 years commencing from FY
2000/01
June 2008
June 2008
June 2008
June 2008
|Rs. 416,667 commencing from
June 2008
June 2008
July 2014 onwards after two years
grace period
commencing from October 2013
from April 2011 after one month
disbursement
September 2011 after four months
disbursement
Repayment term
54,072,354
-
42,416,666
98,166,657
64,999,990
75,000,000
49,999,990
8,999,990
68,499,990
960,055,519
179,000,000
38,344,666
-
-
-
-
-
-
878,882,177
-
224,431,880
85,538,200
-
196,671,295
2014
Rs.
2015
Rs.
Outstanding balance
960,000,000
Carrying value
of collaterals
Corporate guarantee of Asiri Hospital Holdings PLC for
Rs. 250.00 mn
Primary concurrent mortgage over the company's premises at
No. 114, Norris Canal Road, Colombo - 10
IFC loan securities given by Asiri Hospital Holdings PLC, Asiri
Surgical Hospital PLC and Central Hospital Ltd
Security
213
Term loan
Bank of Ceylon
7.5%
Term loan
Term loan
PLR + 0.25%
Term loan
Hatton National
Bank PLC
PLR + 0.25%
Term loan
59 equal monthly installments of Rs.
3,330,000 each and a final installment
March 2010
Rs. 201,700 and a final installment
of Rs. 199,300 commencing from
July 2014
Rs. 976,000 and a final installment
of Rs. 924,000 commencing from
July 2014
Bridging loan facility that is repayable
with in 6 months from the date of
granted and will be converted to term
borrowing to part finance lease value
of the property acquired from UDA
for the Asiri Hospital Kandy (Pvt) Ltd
project
84 equal monthly installments after a
grace period of 12 months from the
date of first disbursement
-
326,000,000
95 equal monthly installments of Rs.
3,396,000 each and a final installment
April 2015
1,165,114,596
15,600,000
-
-
-
-
-
12,704,700
61,436,000
630,600,000
57,142,828
66,000,000
151,405,095
24,490,515,615 15,688,792,984
80,120,000
-
1,329,474,705
2014
Rs.
Outstanding balance
2015
Rs.
Repayment term
Rs. 3.35 mn each and a final
installment of Rs. 2.35 mn
commencing from December 2011
1 to 2 year AWPLR 60 equal monthly installments of
Rs. 4.58 mn each commencing from
+ 1.5% p.a. 3 to
6 year AWPLR + January 2013
2.5% p.a.
AWPLR + 1.0%
p.a.
7.0%
AWPLR + 0.5%
Term loan
Term loan
6.24%
Term loan
DFCC Bank
AWPLR
Term loan
Odel PLC
Interest rate
Nature of
facility
Commercial
Bank of Ceylon
PLC
Commercial
Bank of Ceylon
PLC
International
Financial
Corporation
Sampath Bank
PLC
Lending
institution
Asiri Hospital
Kandy (Pvt)
Ltd
Asiri Hospital
Matara (Pvt)
Ltd
Company
287,800,000
531,000,000
116,000,000
630,600,000
73,460,000
30,000,000
326,000,000
Carrying value
of collaterals
Rs. 630.60 mn
Rs. 73.46 mn
Rs. 30.00 mn
IFC loan securities given by Asiri Hospital Holdings PLC,
Asiri Surgical Hospital PLC and Central Hospital Ltd
Rs. 326.00 mn
Primary mortgage over immovable property situated in Ward
3, Welikada, Sri Jayawardenapura, kotte with an extent of 1 R
12.25 P owned by Odel Properties (Pvt) Ltd
Primary floating mortgage over property situated in Kaduwela
Road, Thalangama, Battaramulla owned by Odel Lanka (Pvt)
Ltd
• Primary mortgage bond for Rs. 41.00 mn over an allotment
of land Lot A in Plan No. 3418 dated 24 July 1995 situated at
Cinnamon Gardens containing an extent of 2 R 36.12 P
• Primary mortgage bond for Rs. 55.00 mn over an allotment of
land Lot Y depicted in Plan No. 9150 dated 20 September 1991
situated at Panadura containing an extent of 1 R 2.16 P
Security
214
215
1GENERAL
Stated Capital
2
STOCK EXCHANGE LISTING
The ordinary shares of Softlogic Holdings PLC were listed in the Colombo Stock Exchange of Sri Lanka on 20 June 2011 and
the trading commenced on 12 July 2011.
3
Shares held by the public was 28.50 % as at 31 March 2015. The number of public shareholders as at 31 March 2015 was
14,161.
4
DISTRIBUTION OF SHAREHOLDING AS AT 31 MARCH 2015
There were 14,169 registered shareholders as at 31 March 2015.
No. of Shares held
% of
Total
% of Total
Shareholders
Shareholders
Holding
Holding
1-
1,000
8,517
60.11
5,671,763
0.73
1,001-
10,000
4,601
32.47
16,484,169
2.12
10,001 - 100,000
892
6.30
26,491,949
3.40
100,001 - 1,000,000
117
0.83
31,546,085
4.05
Over 1,000,000
42
0.30
698,806,034
89.71
14,169
100.00
779,000,000
100.00
Total
5
No. of
ANALYSIS REPORT OF SHAREHOLDERS AS AT 31 MARCH 2015
Category
No. of
% of
Total
% of Total
Shareholders
Shareholders
Holding
Holding
13,796
97.37
604,929,934
77.65
373
2.63
174,070,066
22.35
Total
14,169
100.00
779,000,000
100.00
Resident
14,115
99.62
720,525,030
92.49
Individual
Institutional
Non-resident
Total
54
0.38
58,474,970
7.51
14,169
100.00
779,000,000
100.00
216
6
TWENTY MAJOR SHAREHOLDERS AS AT 31 MARCH 2015
Shareholder
No. of Shares
%
as at 31/03/2015
7
1
Mr. A K Pathirage
2
Mr. H K Kaimal
323,983,569
41.59
64,870,800
8.33
3
Mr. R J Perera
60,836,700
7.81
4
Mr. G W D H U Gunawardena
57,527,300
7.38
5
Pemberton Asian Opportunities Fund
46,000,000
5.91
6
Commercial Bank of Ceylon PLC/A K Pathirage
38,950,000
5.00
7
HSBC INTL NOM LTD - UBS AG ZURICH
9,427,494
1.21
8
Employees Provident Fund
7,230,500
0.93
9
Bank of Ceylon A/C Ceybank Unit Trust
5,632,425
0.72
10
Asian Alliance Insurance PLC - A/C 02 (Life Fund)
4,591,702
0.59
11
Mrs. A Selliah
4,236,000
0.54
12
Arunodhaya Investments (Private) Limited
3,950,000
0.51
13
Arunodhaya Industries (Private) Limited
3,950,000
0.51
14
Arunodhaya (Private) Limited
3,950,000
0.51
15
Seylan Bank PLC/W D N H Perera
3,933,327
0.50
16
Miss. S Subramaniam
3,800,000
0.49
17
Mr. V Kailasapillai
3,800,000
0.49
18
Mrs. A Kailasapillai
3,800,000
0.49
19
Sampath Bank PLC A/C No. 1
3,594,000
0.46
20
Mr. K Aravinthan
3,500,000
0.45
SHARE TRADING INFORMATION
8 EQUITY INFORMATION
2014/2015
2014/2015
Highest (Rs.)
20.40
Earnings per share (Rs.)
0.72
Lowest (Rs.)
10.30
Dividend per share (Rs.)
0.25
Closing (Rs.)
13.20
Dividend pay out
-
Net Asset Value per share (Rs.)
-
Turnover (Rs.)
No. of shares Traded
No. of Trades
2,338,338,680.00
163,573,631.00
20,431.00
217
9
DEBT INFORMATION
10,000,000 rated, unsecured, redeemable debentures at the rate of 15.75% (annual effective rate of 16.70%) were issued
on 9 September 2013.
Highest (Rs.)
110.53
Lowest (Rs.)
106.00
Closing (Rs.)
108.05
Turnover (Rs.)
108,822,759.32
Last Traded Yield
9.74%
Yield to Maturity
14.58%
No. of Debentures Traded
No. of Trades
1,005,000
09
Lanka Rating Agency assigned the long- and short-term corporate credit ratings of A- and P2 to be assigned to Softlogic
Holdings PLC on 2 October 2014. Concurrently, LRA assigned an initial issue rating of A- to the Company’s existing Rs.1 Bn
Rated, Unsecured, Redeemable Debenture (2013/2016). All long-term ratings carry a stable outlook.
Interest rate of comparable government security - One Year Treasury Bill rate 8.26%
Debt/equity ratio (X)
2.80
Interest cover (X)
2.38
Quick asset ratio (X)
0.78
218
Corporate Directory
Date of
Registered office
Registration
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
25-02-1998
No. 14, De Fonseka Place, Colombo 05
Asian Alliance General Insurance Limited
Asiri Diagnostics Services (Pvt) Ltd
Asiri Hospital Kandy (Pvt) Ltd
BSL International (Pvt) Ltd
Capital Reach Portfolio Management (Pvt) Ltd
Ceysand Resorts Ltd
Dai-Nishi Securities (Pvt) Ltd
Digital Health (Private) Limited
Greenfield Trading (Pvt) Ltd
Nextage (Pvt) Ltd
Odel Apparels (Pvt) Ltd
Odel Information Technology Services (Pvt) Ltd
Odel Lanka (Pvt) Ltd
Odel PLC
Odel Properties (Pvt) Ltd
Silk Route Foods (Private) Limited
Softlogic B P O Services (Private) Limited
Softlogic Mobile Distribution (Private) Limited
Softlogic Real Estate (Private) Limited
Softlogic Restaurants (Private) Limited
Softlogic Retail One (Private) Limited
21-01-1999
28-03-2014
21-04-1999
07-09-1992
19-09-1995
29-09-1980
16-03-2007
17-04-2007
30-03-2000
22-07-2009
24-05-2006
14-09-2006
06-03-1973
26-07-1993
14-08-2015
06-12-2010
23-03-2012
11-04-2012
10-10-1991
30-11-2007
04-07-2006
31-10-1990
10-10-1991
10-10-2014
05-01-2000
02-04-2012
13-12-2013
08-11-1993
21-04-2005
30-06-2011
16-09-2009
30-10-2000
13-09-1995
24-06-2005
22-03-2012
24-08-1999
02-09-1992
09-06-1997
30-09-2014
04-01-2005
27-08-2014
05-08-2013
06-09-1969
04-07-2014
14-11-2002
26-11-2010
Softlogic Building, Level 4, No. 14, De Fonseka Place, Colombo 05
No. 65, Ward Place, Colombo 07
No. 283, R A De Mel Mawatha, Colombo 03
No. 114, Norris Canal Road, Colombo 10
No. 181, Kirula Road, Colombo 05
No. 181, Kirula Road, Colombo 05
No. 21, Kirimandala Mawatha, Colombo 05
No. 26, Esplanade Road, Uyanwatta, Matara
No. 21, Kirimandala Mawatha, Colombo 05
No. 475/32, Kotte Road, Rajagiriya
No. 114, Norris Canal Road, Colombo 10
No. 475, Union Place, Colombo 02
No. 79, C W W Kannangara Mawatha, Colombo 07
Unit 2, Building B, 18-24 Ricketts Road, Mount Waverley, Vic 3149 No. 14, De Fonseka Place, Colombo 05
No. 6, 37th Lane, Queens Road, Colombo 03
219
Notice of Meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Softlogic Holdings PLC will be held at the “Committee
Room C” of Bandaranaike Memorial International Conference Hall (BMICH), Bauddhaloka Mawatha, Colombo 07 on
Wednesday the 30th day of September 2015 at 10.30 a.m. for the following purposes:
1. To receive and consider the Annual Report of the Board of Directors and Financial Statements of the Company
and of the Group for the year ended 31 March 2015 together with the Report of the Auditors thereon.
2. To re-elect Mr. R J Perera who retires by rotation in terms of Article 87 of the Articles of Association of the
Company, as a Director.
3. To re-elect Mr. H K Kaimal who retires by rotation in terms of Article 87 of the Articles of Association of the
4. To re-elect Dr. S Selliah who retires by rotation in terms of Article 87 of the Articles of Association of the
5. To re-appoint the retiring Auditors, Messrs Ernst & Young, Chartered Accountants, as Auditors of the Company for
the ensuing year and to authorise the Directors to determine their remuneration.
6. To authorise the Directors to determine and make donations for the year ending 31 March 2016 and up to the
date of the next Annual General Meeting.
By Order of the Board
SOFTLOGIC CORPORATE SERVICES (PVT) LTD
SECRETARIES
31 July 2015
Colombo
Note:
A member entitled to attend and vote at the Meeting is entitled to appoint a Proxy who need not be a member, to
attend on behalf of him/her.
The Form of Proxy is enclosed in this Report.
The completed Form of Proxy should be deposited at the Registered Office of the Company, No. 14, De Fonseka
Place, Colombo 05 by 10.30 a.m. on Monday the 28th day of September 2015 being forty eight (48) hours before the
time appointed for the holding of the meeting.
220
Notes
221
222
Notes
223
Form of Proxy
*I/We .............................................................................................................................................................................................. of
............................................................................. being *a member/ members of SOFTLOGIC HOLDINGS PLC, do hereby appoint
.......................................................................................................................... (holder of N.I.C. No. ……………………………………)
of .............................................................. ………………………...................................................………………… or (whom failing)
Mr. A K Pathirage of Colombo Mr. G W D H U Gunawardena of Colombo Mr. R J Perera of Colombo Mr. H K Kaimal of Colombo
Mr. M P R Rassool of Colombo Dr. S Selliah of Colombo Mr. W M P L De Alwis, PC of Colombo Mr. G L H Premaratne of Colombo Mr. R A Ebell of Colombo
(whom failing)
(whom failing)
(whom failing)
(whom failing)
(whom failing)
(whom failing)
(whom failing)
(whom failing)
as *my/our Proxy to represent *me/us and to speak and vote for *me/us on *my/our behalf at the ANNUAL GENERAL MEETING
OF THE COMPANY to be held at the “Committee Room C” of Bandaranaike Memorial International Conference Hall (BMICH),
Bauddhaloka Mawatha, Colombo 07 at 10.30 a.m. on the 30th day of September 2015 and at any adjournment thereof, and at
every poll which may be taken in consequence thereof.
FOR
AGAINST
1)
To receive and consider the Annual Report of the Board of Directors and the Financial
Statements of the Company and of the Group for the year ended 31st March 2015
together with the Report of the Auditors thereon.
❏
❏
2)
To re-elect Mr. R J Perera who retires by rotation in terms of Article 87 of the Articles of
Association, as a Director of the Company.
3)
To re-elect Mr. H K Kaimal who retires by rotation in terms of Article 87 of the Articles of
4)
To re-elect Dr. S Selliah who retires by rotation in terms of Article 87 of the Articles of
5)
To re-appoint Messrs Ernst & Young, as Auditors and to authorise the Directors to
determine their remuneration.
6)
To authorise the Directors to determine and make Donations
❏
❏
❏
❏
❏
❏
❏
❏
❏
❏
……....................………………
……....................………………
*Signature/s
Date
Note:
1. *Please delete the inappropriate words.
2. Instructions as to completion are noted on the reverse hereof.
224
Instructions as to completion
1. Kindly perfect the Form of Proxy after filling in legibly your full name, address and the National Identity Card number and
signing in the space provided and filling in the date of signature.
2. A Member entitled to attend and vote at the Meeting is entitled to appoint a Proxy who need not be a member, to attend
and vote on behalf of him. Please indicate with an “X” in the boxes provided how your Proxy is to vote on each resolution.
If no indication is given, the Proxy in his discretion will vote as he thinks fit.
3. If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should also accompany the completed Form
of Proxy for registration, if such Power of Attorney has not already been registered with the Company.
4. In the case of a Corporate Member, the Form of Proxy must be executed in the manner prescribed by the Articles of
Association/Statute.
5. The completed Form of Proxy should be deposited at the Registered Office of the Company, No. 14, De Fonseka Place,
Colombo 05 by 10.30 a.m. on Monday the 28th day of September 2015 being forty eight (48) hours before the time
appointed for the holding of the meeting.
Please provide the following details:
Shareholder’s N.I.C./ Passport/
Company Registration No.
Shareholder’s Folio No.
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
Number of shares held
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
Proxy Holder’s N.I.C. No.
(if not a Director)
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
Corporate Information
NAME OF COMPANY
DIRECTORS
CONTACT FOR MEDIA
A K Pathirage - Chairman/ Managing
Director
G W D H U Gunawardena
R J Perera
H K Kaimal
M P R Rassool
Dr S Selliah
W M P L De Alwis, PC
G L H Premaratne
R A Ebell
14, De Fonseka Place,
Colombo 05
Sri Lanka
LEGAL FORM
Company was incorporated on 25th
February 1998 under the name of
Softlogic Holdings (Private) Limited
and re-registered on 17th December
2007 under the Companies Act No. 07
of 2007. Changed to a Public Limited
Liability Company on 10th December
2008. The shares of the Company were
listed on the Colombo Stock Exchange
on 20th June 2011 and the name of
the Company was changed to Softlogic
Holdings PLC w.e.f. 25th August 2011.
AUDIT COMMITTEE
R A Ebell - Chairman
Dr S Selliah
W M P L De Alwis, PC
G L H Premaratne
COMPANY REGISTRATION NO
PV 1536 PB/PQ
REMUNERATION COMMITTEE
REGISTERED OFFICE OF
THE COMPANY
W M P L De Alwis, PC - Chairman
G L H Premaratne
R A Ebell
Colombo 05
Sri Lanka
CONTACT DETAILS
Colombo 05
Sri Lanka
Tel
Fax
E-mail
Web
: +94 11 5575 000
: +94 11 2595 441
: [email protected]
: www.softlogic.lk
SECRETARIES AND REGISTRARS
Softlogic Corporate Services
(Pvt) Ltd
Colombo 05
Sri Lanka
INVESTOR RELATIONS
Colombo 05
Sri Lanka
Tel : +94 11 5575 176
Fax : +94 11 2595 441
Designed & produced by
Digital Plates & Printing by Printel (Pvt) Ltd
Photography by Danush De Costa & Dimitri Crusz
Tel
Fax
: +94 11 5575 000
: +94 11 2595 441
BANKERS
Sampath Bank PLC
Commercial Bank of Ceylon PLC
Seylan Bank PLC
National Savings Bank
Nations Trust Bank PLC
DFCC Bank Limited
Bank of Ceylon
Union Bank of Colombo PLC
Pan Asia Banking Corporation PLC
Hongkong And Shanghai Banking
Corporation Limited
People’s Bank
Cargills Bank Limited
MCB Bank Ltd.
AUDITORS
Ernst & Young
Chartered Accountants
No. 201, De Saram Place
Colombo 10
Sri Lanka
LAWYERS
Nithya Partners, Attorneys-at- Law
No. 97 A, Galle Road
Colombo 03
Sri Lanka
www.softlogic.lk
14, De Fonseka Place, Colombo 05, Sri Lanka
Tel : +94 (11) 557 5000, Fax : +94 (11) 259 5441
E-mail : [email protected]

Progressive Entrepreneurship

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