Alufab PLC_Annual Report_2014-2015_2

Transcription

CONTENTS
About us1 Chairman’s Review 2 Managing Director’s Review 3 Directors Profiles 5 Annual Report of
the Board of Directors on the Affairs of the Company 7 Corporate Governance 12 Statement of directors'
responsibility 17 Audit Committee Report 18 Auditors Report 19 Financial Statements & Accounting
Policies 21 Share Information 52 Notice of the Meeting 54 Form of Proxy-Attached Corporate
Information-Inner Back Cover
ABOUT US
Alufab PLC is a leading manufacturer cum
supplier of quality architectural aluminum
joinery systems in Sri Lanka, specializing in the
custom-made manufacture and professional
installation of aluminum windows and doors,
enclosures, shop fronts, facades, louvers and
awnings.
01 Alufab PLC | Annual Report 2015
CHAIRMAN’S
REVIEW
Dear Shareholder,
I take pleasure in presenting you the Annual Report
and Audited Financial Statements of Alufab PLC for the
financial year ended 31 March 2015.
Hayleys PLC acquired a controlling stake in your
company during October 2014.
At the time of
acquisition, the company had incurred a loss of
Rs.8Mn, and I am pleased to inform you that the
company has turnaround, ending the year with a profit
of Rs. 12.2Mn after three years of consecutive losses.
Although the year was a challenging one, the
company performed well, surpassing expectations
during the second half of the financial year. A turnover of Rs. 187Mn was generated this year which was
a noteworthy 95% increase when compared with the previous year’s turnover of Rs. 96Mn. Profit after
tax for the year was Rs. 12.2Mn when compared with the loss of Rs. 61.4Mn the previous year.
Industry Overview
During the year 2014 the Sri Lankan economy recorded a GPD growth of 7.4 percent, with the
construction sector growing significantly by 20.2 percent. There was a momentous involvement by the
private sector towards this growth, which was reflected by a 22.3 per cent increase in credit to the
private sector by commercial banks for construction activities during 2014, growing from Rs. 384Bn to
Rs. 470Bn. The aluminum fabrication industry benefitted through extensive construction projects led by
the private sector which mainly consisted of large scale mixed developments, hotels and residential
apartment complexes.
Change in Directorate
As a result of the acquisition, Mr. P. J. Claesson stepped down in November 2014, where in the undersigned was appointed as the Chairman of Alufab PLC w.e.f. Nov 2014. Mr. T.N. Dole relinquished his
position as the Managing Director w.e.f. Jan 2015.
Mr. S. J. Wijesinghe was appointed as Managing Director while Mr. S. C. Ganegoda was appointed to the
board as Non-Executive Director.
Mr. P. J. Claesson and Mr. D.V. Press would continue to remain as Non-Executive Directors in the
company. Mr. A. S. Jayatilleka and Mr. S. Munaweera were appointed as Independent Non-Executive
Directors to the board.
Way forward
We are confident that your company is poised do well in the years to come with the synergies gaining
from Hayleys Group’s financial strength along with aligning to the Group’s core values , and adhering to
the best practices of corporate governance . This would be a strategic advantage for Alufab PLC
creating opportunities for the company to engage in larger construction projects.
Maintaining a positive momentum the financial year closed with Alufab venturing into its first ever
overseas undertaking in the Maldives. The new management will continue to deliver its strategic
commitments to drive operational performance and create value for our shareholders.
In conclusion I wish to acknowledge my thanks to the Board of Directors and to the employees at all
levels for their diligence and hard work, and to our Clients, Developers, Main Contractors, Consultants,
Architects, and Engineers for their continuous patronage .
Mohan Pandithage
Chairman
15 May, 2015
MANAGING DIRECTOR’S
REVIEW
Performance
It is with a sense of pride I note, that subsequent to the
acquisition of the controlling stake of Alufab PLC by
the Hayleys Group and the introduction of the new
Management, the Company has shown immense
potential both operationally and financially during the
last 5 months of the financial year 2014/15. During the
year under review the Company recorded a profit
before tax (PBT) of Rs.7.1 million compared with a loss
of Rs.57.9 million in the previous year. In terms of profit
after tax (PAT) the Company recorded a profit of
Rs.12.2 million against a loss of Rs.61.4 million recorded in the previous year.
Reviewing specifically the 5 month period since the acquisition by Hayleys, the Company recorded a
PBT of Rs.15.4 million and a PAT of Rs.20.5 million.
The agility with which new processes were adopted, inventory controls implemented and operational
procedures introduced, was a key element during the period of transition that contributed to effect the
turnaround in Alufab PLC. Identifying the inherent skill, knowledge and expertise of the workforce and
combining it with the proven strength and stability of Hayleys provided the fresh dynamism to steer the
Company towards a new era.
Since the acquisition, the Company focused on quality and timely completion of projects whilst ensuring profitability to the organization. Towards this, project planning was considered a key component.
Close coordination between design teams, cost management and procurement personnel and the
production floor were introduced. Inventory control and supply chain was stringently managed. The
organization expanded its base of suppliers whilst driving stringent productivity measures and favourable terms of procurement. New sources for primary products such as Aluminium, Glass and accessories
were secured.
Alufab has been successful in securing several major projects in Sri Lanka for supply and installation of
Aluminium sun louvers, joinery systems, shower cubicles and other commercial applications in the
construction industry. The projects are primarily new hospitality ventures that are currently taking place
in several locations spread over Sri Lanka. Alufab has focused on overseas markets and in the 3rd quarter of the year secured a contract for an international project.
Sustainable, Profitable Growth into the Future
Looking ahead, the Company has focused on several critical success factors. Most importantly attention
is being paid to enhance the knowledge of the employees. A rigorous skills development program with
assistance from experienced trainers, who will impart international best practices in fabrication and
installation of Aluminium systems, will be undertaken. Marketing will remain a key focus area and a fresh
and vibrant look will add a new edge to its dimension. This area will be further strengthened with experienced marketing personnel being added to the team. International markets will be pursued vigorously.
Competiveness is vital to be successful in international markets. Towards this cost management with
duty free concessions based on value added exports will be pursued. The fabrication facility will see the
addition of state of the art machinery and a highly automated production line that will enhance capacity,
enable delivery of precision quality, minimize wastage and improve overall productivity.
MANAGING DIRECTOR’S
REVIEW CONTD...
We will continue to focus on delivering shareholder value through our existing portfolio whilst also looking to the future with new growth businesses. This is the path to a sustainable future for Alufab.
Appreciation
My appreciation goes out to each and every member of the Company for their renewed efforts to steer
Alufab to new heights. The loyalty and dedication I have witnessed so far gives me confidence that the
Company will overcome any challenge posed and reach its goals and targets in the years ahead.
I also wish to thank the Chairman and Board of Directors of the Company for the trust placed in me and
the support given in every aspect of managing Alufab PLC.
Johann Wijesinghe
Managing Director
15 May 2015
DIRECTORS
PROFILES
A.M. PANDITHAGE - CHAIRMAN
Chairman & Chief Executive of Hayleys PLC. Appointed to the Board of Alufab PLC in November 2014.
Fellow of the Chartered Institute of Logistics &Transport (UK). Honorary Consul of United Mexican
States (Mexico) to Sri Lanka, Committee Member of the Ceylon Chamber of Commerce. Council
Member Of the Employers’ Federation of Ceylon. Member of the Advisory Council of the Ceylon
Association of Ship’s Agents. Recipient of the Best Shipping Personality award by the Institute of
Chartered Shipbrokers. Corporate Excellence Leadership Recognition - Institute of Chartered
Accountants of Sri Lanka
S.J. WIJESINGHE (MANAGING DIRECTOR)
Joined the Group in 2008 and was appointed to the Hayleys Group Management Committee in 2011.
Appointed to the Board in November 2014. Currently serves as Managing Director of Alufab PLC and
Hayleys Leisure Holdings and Executive Director of S&T Interiors (Pvt) Ltd.
Mr. Wijesinghe holds an MBA from the University of Leicester (UK) and is a Member of the Chartered
Institute of Marketing (UK). Holds over 20 years’ experience in the Aviation industry with the National
Carrier SriLankan Airlines. Prior to joining Hayleys, served as the Head of Worldwide Cargo at SriLankan
Airlines responsible for the entire air freight business sector of the organisation. Held several senior
positions for the airline including management positions in Europe, Middle East and the Far East and
the Head Office in Colombo. Possesses over 5 years’ experience in the Hotel industry, having served as
the Director, Marketing and Sales at The Lanka Oberoi. He is responsible for the Aviation, Travels and
hotel development in Leisure & Aviation Sector. Is also responsible for the Aluminum fabrication and
interior fit-out business of the Group.
S.C.GANEGODA
Mr. Ganegoda rejoined Hayleys Group in March 2007 and was appointed to the Hayleys Group
Management Committee in July 2007. He was appointed to the Board of Alufab PLC in November 2014.
He is a Fellow of the Institute of Chartered Accountants of Sri Lanka and a Member of the Institute of
Certified Management Accountants of Australia and holds an MBA from the Postgraduate Institute of
Management, University of Sri Jayewardenepura. He has worked for Hayleys and Diesel & Motor
Engineering Co. between 1987 and 2002, ultimately as an Executive Director of the latter.
Subsequently, he held several senior management positions in large private sector entities in Sri
Lanka and overseas. Mr. Ganegoda has responsibility for the Strategic Business Development Unit and
the Consumer Sector of the Hayleys Group.
P.J. CLAESSON
Mr P J Claesson is the holder of a Master’s Degree in Economics from the University of Stockholm,
Sweden. He is a Director of several diverse business entities both Public and Private in Sweden and
Europe. He is presently Chairman of Claesson & Anderzen AB of Sweden, a real estate owning and
developing company. He is also Chairman of Catella AB of which is listed in Swedish Stock Exchange.
Catella also owns Banque Invik which is a Luxembourg based bank. He is the Chairman of Catella AB.
He is also a majority owner and Director of the Leeds Group PLC companies listed in the London Stock
Exchange and engaged in Software Development, textile trading and other activities. He holds a Master
of Science degree in Economics and Business Administration from the University of Stockholm,
Sweden.
DIRECTORS
PROFILES CONTD...
D.V. PRESS
Mr. D. V. Press is Director and majority owner of ACNE AB and Chairman of ACNE Advertising. ACNE AB
involved in Communications consisting of media, advertising, and film production. He is also Director of
Natumin Pharma AB a leading healthcare company, as well as Director and majority owner of Rengorare
Naslund AB a janitorial services company. He holds a Masters Degree in Economics and Business from
the Stockholm School of Economics.
A.S. JAYATILLEKA
Appointed to the Board in March 2015. Mr. Ananda Sunil Jayatilleka is a specialist in Rubber Technology and Industrial Engineering being a Licentiate of the Institute of Plastics & Rubber Industry
(L.P.R.I.(London)) and a Graduate of the Institute of Work Study & Organisation and Methods
(F.M.S.(UK)).
He is presently the Chairman/Managing Director of Latex Green Private Limited, a BOI Company
manufacturing Latex Mattresses & Pillows for export.
Mr. Jayatilleka has been a Director of Richard Pieris & Co. Ltd and also the Managing Director of Richard
Pieris Exports Ltd for over 15 years and has served on various Boards within the Richard Pieris Group. He
has also served as a Board member of Aviva Global Services Pvt Ltd. His vast experience also includes
work in Zambia Consolidated Copper Mines and Pigott Maskew Ltd (Subsidiary of General Tire - South
Africa). Presently he serves as a Non-Executive Director of Tea Small Holder Factories PLC under the
John Keells group.
Mr. Jayatilleka has been a recipient of the merit certificate awarded by the Plastics & Rubber Institute
(PRI) of Sri Lanka for the outstanding contribution made to the Rubber Industry of Sri Lanka.
S. MUNAWEERA
Appointed to the Board in March 2015. Mr. Munaweera is the Precedent Partner of S. Munaweera &
Company, Chartered Accountants and also serves as the Managing Director of Southern Management
and Corporate Services (Pvt) Ltd, Director of SM Bentley Corporate Services (Pvt) Ltd and Independent
Non Executive Director of Alumex Plc. He also serves as a Member of the Governing Council of
Association of Accounting Technicians (AAT). He holds a Bachelor of Commerce (Special) Degree from
the University of Colombo and a Master of Business Administration degree from the University of Sri
Jayewardenepura.
Mr. Munaweera is a Fellow Member of The Institute of Chartered Accountants of Sri Lanka (FCA) and the
Institute of Certified Management Accountants of Sri Lanka (FCMA). He counts over 30 years of
experience in mercantile and audit sector.
ANNUAL REPORT OF THE BOARD OF DIRECTORS
ON THE AFFAIRS OF THE COMPANY
The Directors of Alufab PLC have pleasure in presenting to the Shareholders their report together with
the Audited Accounts of the Company for the year ended 31 March 2015.
PRINCIPAL ACTIVITIES
The principal activities of the company are manufacturing and supplying of architectural aluminium
joinery systems. This includes manufacture and installation of aluminium windows and doors, enclosures, shop fronts, facades, louvers and awnings.
BUSINESS REVIEW
The Chairman’s review and the Managing Director’s review describes briefly the Company’s activities
during the year under review. The results for the year are set out in the Statement of the Profit and Loss
and Other Comprehensive Income.
The Directors, to the best of their knowledge and belief, confirm that the Company has not engaged in
any activities that contravene laws and regulations.
FINANCIAL STATEMENTS
The Financial Statements of the Company during the year under review are given on page 21 to 51 in
the Annual Report.
ACCOUNTING POLICIES
The accounting polices adopted in the preparation of financial statements are given on pages 25 to 39.
There were no changes in the accounting polices adopted of the Company.
INTERESTS REGISTER
The Company, in compliance with the Companies Act No.7 of 2007, maintains an Interests Register.
Particulars of entries in the Interests Register are detailed below.
Director’s Interest in Transactions
The Directors of the Company have made the general disclosures provided for in Section 192(2) of the
Companies Act No.7 of 2007. Note 28 to the Financial Statements dealing with related party disclosures.
Director’s Interest in Shares
Directors of the Company, who have relevant interest in the shares have disclosed their shareholdings
and any acquisitions / disposals in compliance with section 200 of the Companies Act.
The details of the Directors` shareholdings in the Company are given later in this report.
Director’s Remuneration
The total remuneration of Directors for the year ended 31 March 2015 is Rs. 2.3mn determined according to scales of payment decided upon by the Board. The Board is satisfied that the payment of this
remuneration is fair to the company.
ON THE AFFAIRS OF THE COMPANY CONTD...
CORPORATE DONATIONS
At the last Annual General Meeting, shareholders approved a sum not exceeding Rs.100,000/- in
respect of donations. Donations made during the year was Rs.54,900/(2013/2014 – Rs.159,010/-)
DIRECTORATE
The names of the Directors who held office during the financial year are given below and their
brief profiles appear on page 5 & 6
MR. A. M. Pandithage
MR. S. J. Wijesinghe
MR. S. C. Ganegoda *
MR. P. J. Claesson *
MR. D. V. Press *
MR. A. S. Jayatilleka **
MR. S. Munaweera **
KEY
* Non – Executive Director
** Independent Non – Executive Director
Messrs. A. M. Pandithage, S. J. Wijesinghe and S. C. Ganegoda were appointed as Directors to
the Board effective 07 November 2014.
Mr. T. N. Dole who served as a Director of the Company resigned w.e.f. from 16th January 2015.
Mr. A. S. Jayatilleka and Mr. S. Munaweera were appointed to the Board since the last Annual
General Meeting and in terms of Article No.24(2) of the Article of Association the shareholders
are requested to re-elect them at this Annual General Meeting.
Mr. P. J. Claesson retires by rotation and being eligible offer himself for re-election in terms of
Article 24(6) of the Article of Association of the Company.
AUDITORS
The financial statements for the year have been audited by Messrs. Ernst & Young, Chartered
Accountants.
The Auditors, Messrs. Ernst & Young, Chartered Accountants, were paid Rs. 363,000/- by the
Company.
In addition, they were paid Rs. 85,000/- by the Company for non- audit related work, which
consisted mainly of tax consultancy services.
As far as the Directors are aware, the Auditor does not have any relationships (other than that of
an Auditor) with the Company.other than those disclosed above. The auditors also do note
have any interests in the company.
Messrs. Ernst & Young, Chartered Accountants, are deemed re- appointed as Auditors of the
company for the year 2015/2016, in terms of section 158 of the Companies Act No.7 of 2007.
A resolution proposing the directors be authorized to determine their remuneration will be
submitted at the AGM.
RESULTS OF OPERATIONS
The Company profit before taxation amounted to Rs. 7,177,993/- after crediting Rs. 5,097,732/for taxation, company atributed Rs. 12,275,725/- to equity holders of the company.
CAPITAL EXPENDITURE
Purchase and construction of property, plant & equipment during the year amounted to
Rs. 9,620,372/-. The movement in property plant, plant & equipment is set out in Note 5 to the
Financial Statements.
SHARE CAPITAL AND RESERVES
The Stated Capital of the company is Rs. 347 Mn comprising 12,058,200 Shares. There were no
changes in the stated capital during the year.
TAXATION
It is the policy to provide for deferred taxation on all temporary differences on the liability
method.
The tax liability on profits derived on business is explained under Note 23 to the financial
Statements.
SHARE INFORMATION
Information relating to earnings, per share and share trading is given in the Financial
Statements on the page 42 & 52
EVENTS OCCURING AFTER THE REPORTING DATE
No circumstances have arisen since the reporting date which would require adjustment to, or
disclosure to the Financial Statements.
KEY INDICATORS
Market Value
Highest Price
Lowest Price
Closing Price
2014/15
2013/14
PRICE
RS.
DATE
PRICE
RS.
DATE
33.40
13.10
25.20
17.10.2014
22.04.2014
31.03.2015
20.80
10.70
12.90
08.05.2013
09.09.2013
31.03.2014
SHAREHOLDERS
It is the policy to endeavor to ensure equitable treatment of its shareholders.
STATUTORY PAYMENTS
The Directors to the best of their knowledge and belief are satisfied that all statutory payments
in relation to employees and the Government Institutions have been made up to-date.
CORPORATE GOVERNANCE/INTERNAL CONTROL
Adoption of good governance practices has become an essential requirement in today’s corporate culture. The practices carried out by the Company is explained in the Corporate
Governance statement on pages 12 to 17.
GOING CONCERN
The Directors, after making necessary inquiries and reviews including reviews of the Company
budget for the ensuing year, capital expenditure requirements, future prospects and risks, cash
flows and borrowing facilities, have a reasonable expectation that the Company have adequate
resources to continue in operational existence for the foreseeable future. Therefore the going
concern basis has been adopted in the preparation of the Financial Statements.
DIRECTORS’ SHAREHOLDINGS
MR.S. C. Ganegoda
MR. T. N. Dole -(Resigned w.e.f. 16/01/2015)
MR. P. J. Claesson
MR. D. V. Press ( Through Metro Incentives Inc)
MR. A. S. Jayatilleka - ( Appointed w.e.f. 30/03/2015 )
MR. S. Munaweera - ( Appointed w.e.f. 30/03/2015 )
AS AT
31/03/2015
AS AT
01/04/2014
NIL
NIL
5,825
151,050
1,500
10
NIL
5,000
NIL
NIL
NIL
151,050
3,661,078
3,658,579
NIL
NIL
Directors’ Dealings of shares during the year are given below
• Mr. S. C. Ganegoda purchased 5,825 shares
• Mr. S. Munaweera purchased 5,000 shares
• Mr. P. J. Claesson disposed 3,659,578 shares
• Mr. D. V. Press through Metro Incentives Inc. disposed 3,658,569 shares
ANNUAL GENERAL MEETING
The Annual General Meeting will be held at the Registered Office of the Company, No. 400,
Deans Road, Colombo 10, Sri Lanka at 10.00 a.m. on Monday, 22nd June, 2015. The Notice of
the Annual General Meeting appears on page 54.
For and on behalf of the board
Mohan Pandithage
Chairman
Johann Wijesinghe
Managing Director
Hayleys Group Services (Private) Limited
Secretaries
Colombo
15 May 2015
CORPORATE
GOVERNANCE
Set out below are the Corporate Governance Practices adopted and practiced by Alufab PLC
(Alufab) against the background of the Code of Best Practice on Corporate Governance issued
jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange
Commission of Sri Lanka and the Risting Rules of the Colombo Stock Exchange.
The Board of Directors
The Board of Directors of Alufab acts in the best interests of the Company, its shareholders and
other stakeholders on a basis of responsibility, transparency and accountability. The Board
ensures that the objectives of the Company are achieved lawfully and ethically.
1.Composition of the Board
The Board comprises seven Directors, of whom two are Executive Directors (including the Managing Director), three are Non-Independent Non-Executive Directors and two are Independent
Non-Executive Directors. Non-Executive Directors comprise a majority on the Board.
• Messrs. A. M. Pandithage, S. J. Wijesinghe and S. C. Ganegoda were appointed as
Directors to the Board with effective 07th November 2014.
• Mr. A. M. Pandithage was also appointed as Executive Chairman of the Company with
effect from 07th November 2014, in place of Mr. P.J. Claesson who resigned from that
post with effect from 07th November 2014.
• Mr. S. J. Wijesinghe was appointed as Managing Director of the Company with effect
from 11th November 2014, in place Mr. T.N. Dole who resigned from that post with
effect from 11th November 2014.
• Mr. T. N. Dole who served as a Director of the Company resigned with effect from 16th
January 2015.
• Mr. A. S. Jayatilleka and Mr. S. Munaweera were appointed to the Board with effect from
30th March 2015.
2. Responsibilities of the Board
The Board is responsible for the formulation of overall business policy and strategy, agreeing
on priorities and setting standards for the management and the conduct of the business. It
reviews exposure to key business risks, the strategic direction and annual budget, their progress towards achieving such budget and capital expenditure. The Board, in the furtherance of
its duties, takes independent professional advice, if necessary, at Company expense.
The Board is ultimately responsible for the Company’s performance. It is in control of the Company’s affairs and is mindful of its obligations to all stakeholders.
3.Meetings and Attendance
The Board had two scheduled meetings for the year ended 31 March 2015 and has scheduled
CORPORATE
GOVERNANCE CONTD...
four meetings per year from 2015/16 onwards, and would meet further if necessary to consider
any specific matter.
The following table shows the number of Board meetings held during the year and the
attendance of individual Directors.
Number of meetings
A.M. Pandithage
Chairman / Executive Director
(Appointed w.e.f. 07/11/2014)
S. J. Wijesinghe
Managing Director- Executive Director
S. C. Ganegoda
Non - Executive Director
T.N. Dole
Executive Director
(Resigned w.e.f. 16/01/2015)
P.J. Claesson
Non- Executive Director
D.V.Press
Non - Executive Director
A. S. Jayatilleka
Independent Non-Executive Director
S. Munaweera
Independent Non-Executive Director
Board Meetings
2
1/2
1/2
1/2
2/2
2/2
2/2
-
-
4.Board Balance
The blend and balance between Executive Directors, Non-Independent Non-Executive Directors and Independent Non-Executive Directors on the Board ensures that no individual Director
or small group of Directors dominates Board discussions and decision-making. Two of the
Non-Executive Directors are considered independent, having no material relationship with the
Company.
The Independent Directors’ Profiles reflect their calibre and the weight their views carry in
Board deliberations. Each is independent of management and free from any relationship that
can interfere with independent judgment.
5.Financial Acumen
The Non-Executive Directors are from varied business and professional backgrounds. Their rich
experience enables them to exercise independent judgment on the Board and their views carry
substantial weight in decision-making. The Board includes senior finance professionals, who
possess the necessary knowledge to offer the Board guidance on matters of finance.
6.Company Secretary
The services and advice of the Company Secretaries are available to Directors when necessary.
The Company Secretaries keep the Board informed of new laws, regulations and requirements
coming into effect which are relevant to them as individual Directors and collectively to the
Board.
CORPORATE
GOVERNANCE CONTD...
7.Supply of Information
Prior to each meeting, the Directors are provided with all management information and background material relevant to the agenda to enable informed decision-making. Board papers are
submitted in advance on Company performance, new investments, capital projects and other
matters that require Board approval.
Directors receive quarterly reports of performance and minutes of Board meetings.
8.Appointments to the Board
The Board as a whole decides on the appointment of Directors. and also responsible for succession planning for the Board as well as reviewing its structure, size and composition.
9.Re-election of Directors
The Company’s Articles of Association require a Director appointed during the year by the
Board to hold office until the next Annual General Meeting and to seek re-appointment by the
shareholders at that meeting.
The Articles call for one-third of the Directors in office to retire at each Annual General Meeting.
The Directors who retire are those longest in office since their appointment (or re-appointment).
Retiring Directors are eligible for re-election by the shareholders.
10.Remuneration Procedure
The Remuneration Committee of Hayleys PLC who is the ultimate parent of Alufab PLC acts as
the Remuneration Committee of the Company.
Remuneration Committee of Hayleys PLC Consists of:
Dr. H.Cabraal PC - Chairman**
Dhammika Perera *
Nimal Perera *
M.D.S. Goonatilleke **
M. H. Jamaldeen**
Non - Executive Director * Independent Non - Executive Director **
The Remuneration Committee recommends the remuneration payable to Managing Director
and Executive Director(s) and sets guidelines for the remuneration of the management staff
within the Company. The Board makes the final determination after consideration of such
recommendation and performance of the senior management staff.
11.Audit Committee
The Audit Committee consists entirely of Independent Non-Executive Directors. It is chaired by
Mr. S. Munaweera, a Chartered Accountant, who possesses a wealth of knowledge and experience with respect to financial accounting. The Audit Committee is empowered to examine any
matter relating to the financial affairs of the Company and its internal and external audits.
CORPORATE
GOVERNANCE CONTD...
Management Structure
The Board has delegated to management the authority to implement the policy and achieve
the strategic objectives it has laid down. This ensures greater focus on strategy and planning
and empowers managers to run their businesses effectively.
Internal Controls
The Directors are responsible for the Company’s system of internal controls. The system in
place is designed to safeguard Company assets against unauthorised use or disposal, to
ensure that proper records are maintained and that reliable financial information is generated.
However, no system can provide absolute assurance that errors and irregularities are prevented or detected in time. Key control procedures in place are as follows:
•Financial Reporting & Disclosures
The Board places great emphasis on complete disclosure of financial and non-financial information within the bounds of commercial reality, and on the adoption of sound reporting practices. Financial information is disclosed in accordance with the Sri Lanka Accounting Standards. Revisions to existing accounting standards and adoption of new standards are carefully
monitored.
The Annual Report includes descriptive, non-financial content through which an attempt is
made to provide stakeholders with information to assist them make more informed decisions.
The Statement of Directors’ Responsibilities for the financial statements is given in page 17 of
this report.
•Monitoring
The Audit Committee reviews the plans and activities of Internal Audit and the management
letters of the External Auditors. In addition to considering and recommending to the Board any
remedial action required in respect of control issues raised by the Auditors, the Audit Committee also monitors the process by which all major risks to which the business is exposed are identified.
•Investment Appraisal
The Board has established policies in areas of investment and treasury management. Beyond
agreed authorisation levels, expenditure is subject to detailed written proposals submitted to
the Board for approval.
•Quality and Integrity of Personnel
The Company carefully selects and trains employees and provides appropriate channels of
communication to foster a control-conscious environment.
CORPORATE
GOVERNANCE CONTD...
•Ethical Conduct
To ensure the well-being of all stakeholders, the Company requires the application of acceptable business and industry practices and encourages its employees to be aware of and adhere
to relevant rules and regulations. The Board has reviewed the effectiveness of the system of
financial control for the period up to the date of signing the accounts.
Shareholder Value and Return
The Board constantly strives to enhance shareholder value. It has been the policy of the Board
to maintain a dividend rate in line with the expectations of shareholders, considering its level of
performance and profit.
Going Concern
The Directors believe, after reviewing the financial position and the cash flow of the Company,
that the Company has adequate resources to continue in operation for the foreseeable future.
For this reason, they continue to adopt the going concern basis in preparing the Financial
Statements.
Corporate Governance Principles
Non-Executive Directors
Independent Directors
Disclosures relating to Directors
Remuneration Committee
Audit Committee
CSE Rule
Reference
7.10.1 (a)
7.10.2 (a)
Compliance
Status
Complied
Complied
7.10.2 (b)
Complied
7.10.3 (a)
Complied
7.10.3 (b)
Complied
7.10.3 (c)
Complied
7.10.5 (a)
Complied
7.10.5 (b)
Complied
7.10.5 (c)
Complied
7.10.6 (a)
Complied
7.10.6 (b)
Complied
7.10.6 (c)
Complied
Details
Five of the Seven directors are Non-Executive Directors.
Two of the Five Non-Executive Directors are Independent.
Non- executive Directors have submitted the declaration
of their independence/non-independence.
Names of the Independent Directors are disclosed on
page 13.
Criteria for independence have been met by the
Independent Directors.
Brief resumes of the Directors are given on page 05 and
06.
The Remuneration Committee of Hayleys PLC who is the
ultimate parent of Alufab acts as the Remuneration
Committee of the Company.
The Committee has recommended the remuneration for
Executive Directors and sets guidelines for the
remuneration of the management staff within the
Company.
Please refer page14 for names of the committee
members, and for the statement of remuneration policy.
The aggregate remuneration paid to Executive and NonExecutive Directors is given under Note 22 to the
Financial Statements on page 45
The Audit Committee comprises two Non-Executive
Directors, all of whom are independent. The Chairman of
the Committee is a Member of a recognised professional
accounting Body. The Chairman, MD and other Executive
Directors attended Committee meetings by invitation.
Please refer page18 for the functions of the Audit
committee.
The names of the Audit Committee members and the
basis of determination of the independence of the auditor
are givenen in page 14 & 08.
STATEMENT OF
DIRECTORS’ RESPONSIBILITIES
The Directors are responsible, under Sections 150 and151of the Companies Act No. 07 of 2007, to
ensure compliance with the requirements set out therein to prepare Financial Statements for each financial year giving a true and fair view of the state of affairs of the Company as at the end of the financial year
and of the profit & loss of the Company for the financial year. The Directors are also responsible, under
Section 148 for ensuring that proper accounting records are kept to disclose, with reasonable accuracy,
the financial position and enable preparation of the Financial Statements.
The Board accepts responsibility for the integrity and objectivity of the Financial Statements presented.
The Directors confirm that in preparing the Financial Statements, appropriate accounting policies have
been selected and applied consistently while reasonable and prudent judgments have been made so
that the form and substance of transactions are properly reflected.
They also confirm that the Financial Statements have been prepared and presented in accordance with
the Sri Lanka Financial Reporting Standards/Sri Lanka Accounting Standards(SLFRS/LKAS). The
Financial Statements provide the information required by the Companies Act and the Listing Rules of
the Colombo Stock Exchange.
The Directors have taken reasonable measures to safeguard the assets of the Company, and in that
context, have instituted appropriate systems of internal control with a view to preventing and detecting
fraud and other irregularities.
The External Auditors, Messrs. Ernst & Young, who are deemed re-appointed in terms of Section 158 of
the Companies ACT No. 7 of 2007 were provided with every opportunity to undertake the inspections
they considered appropriate to enable them to form their opinion on the Financial Statements. The
Report of the Auditors, shown on page 19 & 20 sets out their responsibilities in relation to the Financial
Statements.
COMPLIANCE REPORT
The Directors confirm that to the best of their knowledge, all statutory payments relating to employees
and the Government that were due in respect of the Company as at the reporting date have been paid
or where relevant, provided for.
By Order of the Board,
Hayleys Group Services (Pvt) Ltd.
Secretaries
15 May 2015
REPORT OF THE
AUDIT COMMITTEE
COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee is appointed by and responsible to the Board of Directors, comprises Two
Non-Executive Directors. The Chairman of the Audit Committee is a senior Chartered Accountant.
MEETINGS
The Committee was appointed During March 2015 and planning to meet four times a year.
Managing Director, Director Marketing & Operations, Group Chief Financial Officer and Finance
Manager as well as the external auditors when required will present at discussions where appropriate.
The proceedings of the Audit Committee are regularly reported to the Board of Directors.
TASKS OF THE AUDIT COMMITTEE
FINANCIAL REPORTING SYSTEM
The Committee reviewed the financial reporting system adopted by the Company in the preparation of
its quarterly and annual Financial Statements to ensure reliability of the processes and consistency of
the accounting policies and methods adopted and their compliance with the Sri Lanka Accounting
Standards. The methodology included obtaining statements of compliance from Finance Manager and
Directors-in-charge of operations. The Committee recommended the Financial Statements to the Board
for its deliberations and issuance. The Committee, in its evaluation of the financial reporting system also
recognized the adequacy of the content and quality of routine management information reports
forwarded to its members.
INTERNAL AUDIT
The Committee reviewed the process to assess the effectiveness of the Internal Financial Controls that
have been designed to provide reasonable assurance to the Directors that assets are safeguarded and
presentation of Financial Statements. The Committee also reviewed the adequacy of provisions made
for possible liabilities and compliance with relevant statutory requirements. The Group Management
Audit & Systems Review Department reports on key control elements and procedure in Group
companies selected according to the annual plan were reviewed.
EXTERNAL AUDIT
The queries issued by the external auditors and actions taken by the management in response to issues
raised by external auditors were also examined. The Committee discussed the effectiveness of the
internal controls in place and recommended remedial action where necessary.
APPOINTMENT OF EXTERNAL AUDITORS
The audit committee has recommended to the board that Messers. Ernst & Young continue as auditors
for the year ending 31 March 2016.
SUPPORT TO THE COMMITTEE
The Committee received information and support from management during the period to enable it to
carry out its duties and responsibilities effectively.
CONCLUSION
The audit Committee is satisfied that the Company’s accounting policies and operational controls
provide reasonable assurance that the affairs of the Company is in accordance with Company policies
and that Company assets are properly accounted for and adequately safeguarded.
Chairman
Audit Committee
15 May 2015
INDEPENDENT
AUDITORS’ REPORT
Ernst & Young
Chartered Accountants
201 De Saram Place
P.O. Box 101
Colombo 10
Sri Lanka
Tel
: +94 11 2463500
Fax Gen : +94 11 2697369
Tax : +94 11 5578180
[email protected]
ey.com
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF ALUFAB PLC
Report on the Financial Statements
We have audited the accompanying financial statements of Alufab PLC (“Company”), which comprise
the statement of financial position as at 31 March 2015, and the statement of profit and loss and other
comprehensive income, statement of changes in equity and statement of cash flows 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
control 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.
Partners: A D B Talwatte FCA FCMA M P D Cooray FCA FCMA R N de Saram ACA FCMA Ms. N A De Silva FCA Ms. Y A De Silva FCA W R H Fernando FCA FCMA
W K B S P Fernando FCA FCMA Ms. L K H L Fonseka FCA A P A Gunasekera FCA FCMA A Herath FCA D K Hulangamuwa FCA FCMA LLB (Lond) H M A Jayesinghe FCA FCMA
Ms. A A Ludowyke FCA FCMA Ms. G G S Manatunga FCA N M Sulaiman ACA ACMA B E Wijesuriya FCA ACMA
A member firm of Ernst & Young Global Limited
INDEPENDENT
AUDITORS’ REPORT CONTD...
Opinion
In our opinion, financial statements give a true and fair view of the financial position of the Company 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.
Other Matters
The financial statements of the company for the year ended 31 March 2014 were audited by another
auditor who expressed a modified opinion on 24 September 2014. The modifications made in the prior
year have been removed in the current year on account of required adjustments made as prior year
corrections. Please refer Note 29 for information relating to the said prior year adjustments.
Some of the salient modifications pertaining to modified opinion in prior year are disclosed in Note 30.
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 and 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, comply with the requirements of section 151
of the Companies Act.
15 May 2015
Colombo
STATEMENT OF
FINANCIAL POSITION
As at 31 March
Note
2015
Rs.
2014
Rs.
Restated
ASSETS
Non-Current Assets
Property, Plant and Equipment
5
Current Assets
Inventories
Construction Work-in-Progress
Trade and Other Receivables
Cash and Cash Equivalents
122,957,908
122,957,908
136,970,977
136,970,977
6
7
8
9
14,006,742
9,745,523
24,981,505
143,852,449
192,586,219
315,544,127
10,448,033
23,549,116
21,972,321
131,798,162
187,767,632
324,738,609
10
346,672,723
57,211,207
74,623,055
(210,571,874)
267,935,111
346,672,723
67,419,583
74,623,055
(222,847,599)
265,867,762
Total Assets
EQUITY AND LIABILITIES
Capital and Reserves
Stated Capital
Revaluation Reserve
Contribution towards Equity
Revenue Reserves
Total Equity
Non-Current Liabilities
Interest Bearing Loans and Borrowings
Deferred Tax Liability
Retirement Benefit Obligations
Current Liabilities
Interest Bearing Loans and Borrowings
Trade and Other Payables
Deferred Income
Amounts Due to Related Parties
Amounts Due to Directors
Income Tax Payables
Bank Overdraft
Total Liabilities
Total Equity and Liabilities
11
13
15
16
2,480,252
8,084,616
1,763,390
12,328,258
3,839,402
18,727,570
5,212,960
27,779,933
13
17
14
18
1,359,150
17,393,299
4,507,519
4,478,826
1,575,299
5,966,665
35,280,758
48,609,016
1,254,715
27,831,908
16,730
1,483,395
504,166
31,090,914
58,870,847
315,544,127
2
324,738,609
0
9
It is certified that the financial statements have been prepared in compliance with the requirements of the Companies
Act No. 7 of 2007
Finance Manager
Sadun Balasooriya
The Directors are responsible for the preparation and presentation of these financial statements. Signed for
and on behalf of the Board,
Chairman
Mohan Pandithage
Managing Director
Johann Wijesinghe
The accounting policies and notes on pages 25 to 51 form an integral part of these financial statements.
15 May 2015
Colombo
STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
Notes
2015
Rs.
19
186,693,890
(143,463,921)
43,229,969
2014
Rs.
Restated
95,859,371
(130,010,608)
(34,151,236)
3,760,810
(6,029,788)
(39,161,895)
1,799,096
(950,284)
6,329,181
5,378,897
7,177,993
5,097,732
12,275,725
318,345
(2,739,794)
(26,990,202)
(4,850,819)
(68,413,707)
(7,662,896)
18,151,606
10,488,710
(57,924,997)
(3,486,070)
(61,411,067)
Other Comprehensive Income
Not to be Reclassified to Profit and Loss
Revaluation Surplus /(Deficit)
Income Tax on Other Comprehensive Income
Other Comprehensive Income for the year, net of tax
(14,178,300)
3,969,924
(10,208,376)
70,671,485
(17,671,701)
52,999,784
Total Comprehensive Income for the year, net of tax
2,067,349
(8,411,284)
For the Year Ended 31 March
Revenue
Cost of Sales
Gross Profit
Other Income
Distribution Expenses
Administrative Expenses
Other Expenses
Results From Operating Activities
Finance Costs
Finance Income
Net Finance Cost
Profit / (Loss) Before Tax
Income Tax (Expense) / Reversal
Profit /(Loss) for the year
Earning /(Loss) Per Share - Basic/ Diluted
21
20
23
12
1.02
(5.09)
STATEMENT OF
CHANGES IN EQUITY
For the Year Ended 31 March
Balance as at 01 April 2013
Loss for the Year - Restated
Revaluation Surplus - Restated
Income Tax on Other Comprehensive Income - Restated
Total Other Comprehensive Income
Total Comprehensive Income
Stated
Capital
Rs.
Revaluation
Reserve
Rs.
346,672,723
-
-
14,419,799
-
Accumulated
Cotribution
Profit/(Loss) towards Equity
Rs.
Rs.
(161,436,532)
(61,411,067)
-
70,671,485
(17,671,701)
52,999,784
-
52,999,784
(61,411,067)
74,623,055
-
-
-
Total
Rs.
274,279,045
(61,411,067)
70,671,485
(17,671,701)
52,999,784
(8,411,283)
Balance as at 31 March 2014
346,672,723
67,419,583
(222,847,599)
74,623,055
265,867,762
Balance as at 01 April 2014 as previously stated
Prior Year Adjustments Note 29
Balance as at 01 April 2014 -Restated
Profit for the Year
346,672,723
346,672,723
-
89,591,284
(22,171,701)
67,419,583
-
(204,367,791)
(18,479,808)
(222,847,599)
12,275,725
74,623,055
74,623,055
-
306,519,271
(40,651,509)
265,867,762
12,275,725
Revaluation Deficit
Income Tax on Other Comprehensive Income
Total Other Comprehensive Income
-
(14,178,300)
3,969,924
(10,208,376)
Total Comprehensive Income
-
(10,208,376)
Balance as at 31 March 2015
346,672,723
57,211,207
12,275,725
(210,571,874)
-
(14,178,300)
3,969,924
(10,208,376)
-
2,067,349
74,623,055
267,935,111
STATEMENT OF
CASH FLOWS
2015
Rs.
Operating Activities
Net Profit / (Loss) before Income Tax
2014
Rs.
Restated
7,177,993
(57,924,997)
Adjustments for
Depreciation
Asset Impairment Loss
Provision for Retirement Benefit Obligations
Operating Profit before Working Capital Changes
9,455,141
155,500
16,788,634
4,311,314
4,850,819
1,522,482
(47,240,382)
Income Tax Paid
Retirement Benefit Obligation Paid
Net Cash from/ (used in) Operating Activities
(3,558,709)
13,803,593
(3,009,183)
(5,931,089)
4,462,096
22,555,342
(1,483,395)
(3,605,070)
17,466,877
(3,918,006)
32,905,319
(2,455,148)
(4,129,523)
(24,837,740)
(6,066,286)
(30,904,026)
Investing Activities
Acquisition of Property, Plant & Equipment
Net Cash Flow Used in Investing Activities
(9,620,372)
(9,620,372)
(1,086,852)
(1,086,852)
Financing Activities
Repayment of Interest Bearing Loans & Borrowings
Net Cash Flow from /(Used in) Financing Activities
(1,254,715)
(1,254,715)
(1,125,357)
(1,125,357)
Net Increase/(Decrease) in Cash and Cash Equivalents
6,591,789
(33,116,235)
For the Year Ended
Note
Decrease / (Increase) in Inventories
Decrease / (Increase) in Construction Work-in-Progress
Increase in Trade and Other Receivables
Increase / (Decrease) in Trade and Other Payables
Increase / (Decrease) in Amounts due to Related parties
Cash and Cash Equivalents at the beginning of the year
Cash and Cash Equivalents at the end of the year
9
131,293,996
137,885,785
164,410,231
131,293,996
NOTES TO THE
FINANCIAL STATEMENTS
1.Corporate Information
1.1Reporting entity
Alufab PLC (“Company”) is a Company incorporated and domiciled in Sri Lanka. The ordinary shares of
the Company are listed on the Colombo Stock Exchange of Sri Lanka. The address of the Company’s
registered office and the principal place of business are given on inner back cover.
1.2 Nature of operations and principal activities of the Company
During the year, the principal activities of the company were manufacturing and supplying of architectural aluminium joinery systems. This includes manufacture and installation of aluminium windows and
doors, enclosures, shop fronts, facades, louvers and awnings.
1.3 Ultimate Parent Entity
In the opinion of the Directors, the Company’s ultimate parent undertaking and controlling party is
Hayleys PLC, which is incorporated in Sri Lanka.
1.4 Approval of Financial Statements.
The Financial Statements of Alufab PLC for the year ended 31 March 2015 were authorised for issue by
the Directors on 15 May 2015.
1.5 Responsibility for Financial Statements.
The responsibility of the Directors in relation to the Financial Statements is set out in the Statement of
Directors’ Responsibility Report in the Annual Report.
2. Basis of preparation
2.1 Statement of compliance
The Financial Statements have been prepared in accordance with the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, which requires compliance with Sri Lanka Accounting Standards
promulgated by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), and with the requirements of the Companies Act No. 7 of 2007.
2.2. Basis of measurement
The Financial Statements have been prepared on the historical cost basis, except for the following
material items in the Statement of Financial Position.
•Land and building which are recognized as property plant and equipment are measured at cost
at the time of the acquisition and subsequently land and building are carried at fair value.
•Financial instruments- fair value through profit or loss are measured at fair value.
•Financial instruments- available-for-sale financial assets are measured at fair value.
Where appropriate, the specific policies are explained in the succeeding notes.
No adjustments have been made for inflationary factors in the Financial Statements.
NOTES TO THE
FINANCIAL STATEMENTS CONTD...
2.3. Functional and presentation currency
The Financial Statements are presented in Sri Lankan Rupees (Rs), which is the Company’s functional
and presentation currency, except when otherwise indicated.
2.4 Materiality and Aggregation
Each material class of similar items is presented separately in the Financial Statements. Items of a
dissimilar nature or function are presented separately unless they are immaterial.
2.5 Comparative Information
The accounting policies have been consistently applied by the Company and, are consistent with
those used in the previous year. Previous year’s figures and phases have been re arranged wherever
necessary to conform current presentation.
2.6 Critical accounting estimates and judgements
2.6.1 Use of estimates & judgments
The preparation of Financial Statements in conformity with SLFRS/LKAS’s requires management to
make judgements, estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Judgements and estimates are based
on historical experience and other factors, including expectations that are believed to be reasonable
under the circumstances. Hence actual experience and results may differ from these judgements and
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised if the revision affects only that
period and any future periods.
Information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amounts recognised in the financial
statements is included in the following notes.
2.6.2 Going Concern
The Directors have made an assessment of the Company’s ability to continue as a going concern and is
satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Company’s
ability to continue as a going concern. Therefore, the Financial Statements continue to be prepared on
the going concern basis.
2.6.3 Taxation
Uncertainties exist with respect to the interpretation of complex tax regulation, changes in tax laws, and
the amount and timing of future taxable income. The long-term nature and the 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. The Company establish provisions, based on reasonable estimates, for possible
consequents of audits by the tax authorities. The amount of such provisions is based on various factors,
NOTES TO THE
such as experience of previous tax audits and differing interpretations of tax regulations by the taxable
entity and the responsible tax authority.
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based on upon the
likely timing and the level of future taxable profits together as with future tax planning strategies.
2.6.4 Measurement of the defined benefit obligations
The present value of the defined benefit obligations depends on a number of factors that are
determined on an actuarial basis using a number of assumptions. Key assumptions used in determining
the defined retirement benefit obligations are given in note 16. Any changes in these assumptions will
impact the carrying amount of defined benefit obligations.
2.7 Impairment of property, plant and equipment
The impairment analysis is principally based upon discounted estimated cash flows from the use and
eventual disposal of the assets. Factors like lower than anticipated sales and resulting decreases of net
cash flows and changes in the discount rates could lead to impairment.
2.8 Revaluation of Land and Building
The Company measures land and building at revalued amount with change in value being recognized
in the Statement of Other comprehensive income. The valuer has used valuation techniques such as
open market value.
3 Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in the
Financial Statements.
3.1. Foreign currency
3.1.1 Foreign currency transactions
Transactions in foreign currencies are translated to the functional currencies of the Company at
exchange rates applicable on the dates of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated
at the functional currency spot rate of exchange ruling at the reporting date. Foreign currency differences arising on retranslation are recognised in the statement of profit and loss and other comprehensive
income. All differences arising on settlement or translation of monetary items are taken to statement of
profit & loss. Non-monetary assets and liabilities which are carried in terms of historical cost in a foreign
currency are translated at the exchange rate that prevailed at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the
date when the fair value is determined. The gain or loss arising on retranslation of non-monetary items is
treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in the other comprehensive income or
statement of profit & loss also recognised in Other Comprehensive Income or statement of profit & loss,
respectively).
NOTES TO THE
3.2 Current versus non-current classification
The Company presents assets and liabilities in Statement of Financial Position based on
current/non-current classification. An asset as current when it is:
• Expected to be realised or intended to 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 Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
3.3 Assets and bases of their valuation
3.3.1 Property, plant & equipment
The Company applies the requirements of LKAS 16 on ‘Property Plant and Equipment’ in accounting for
its owned assets which are held for and use in the provision of the services, for rental to other or for
administration purpose and are expected to be used for more than one year.
3.3.1.1 Basis of Recognition.
Property Plant and Equipment is recognised if it is probable that future economic benefit associated
with the assets will flow to the Company and cost of the asset can be reliably measured.
3.3.1.2 Basis of measurement.
Items of property, plant & equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any, whilst land and building is measured at fair value.
3.3.1.3 Owned assets
The cost of property, plant & equipment includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any
other costs directly attributable to bringing the asset to a working condition for its intended use, and the
costs of dismantling and removing the items and restoring the site on which they are located, and
borrowing costs on qualifying assets. Purchased software that is integral to the functionality of the related equipment is capitalised as a part of that equipment.
When significant parts of plant and equipment are required to be replaced at intervals, the Company
depreciates them separately based on their specific useful lives.
Revaluation of land and building is done with sufficient frequency to ensure that the fair value of the
land and building dose not differ materially from its carrying amount, and is undertaken by professionally qualified valuers.
NOTES TO THE
Any revaluation surplus is recorded in Other Comprehensive Income and credited to the asset revaluation reserve in equity, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the statement of profit and loss and other comprehensive income in which case, the
increase is recognised in the statement of profit and loss and other comprehensive income. A revaluation deficit is recognised in the statement of profit and loss and other comprehensive income, except to
the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation
reserve. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred
to retained earnings.
3.3.1.4 Subsequent costs
The cost of replacing a component of an item of property, plant & equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will
flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is
derecognised in accordance with the derecognition policy given below.
The costs of the repair and maintenance of property, plant & equipment are recognised in statement of
profit and loss and other comprehensive income as incurred.
3.3.1.5 Derecognition
The carrying amount of an item of property, plant & equipment is derecognised on disposal; or when no
future economic benefits are expected from its use. Any gains and losses on derecognition are
recognised in statement of profit & loss and gains are not classified as revenue. When revalued assets
are sold, any amount related to the particular asset included in the revaluation reserve is transferred to
retained earnings.
3.3.1.6 Depreciation
Depreciation is recognised in statement of profit & loss on a straight-line basis over the estimated useful
lives of each part of an item of property, plant & equipment, since this most closely reflects the expected
pattern of consumption of the future economic benefits embodied in the asset.
The estimated useful lives for the current and comparative periods are as follows:
Buildings
Software
Plant & machinery
Motor vehicles
Furniture, fittings & office equipment
- 20 – 25 years
- 03 – 05 years
- 05 – 10 years
- 04 – 05 years
- 04 – 10 years
Depreciation of an asset begins when it is available for use and ceases at the earlier of the dates on
which the asset is classified as held for sale or is derecognized.
The asset’s residual values, useful lives are reviewed, and adjusted if appropriate, at each financial year
end and adjusted prospectively, if appropriate.
3.3.1.7 Leased assets
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at inception date, whether fulfilment 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.
NOTES TO THE
3.4 Financial instruments – initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability
or equity instrument of another entity.
3.4.1 Financial assets
3.4.1.1 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 Company
determines the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss.
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e.,
the date that the Company commits to purchase or sell the asset.
The Company’s financial assets include cash and short-term deposits, trade and other receivables,
amounts due from related companies. Accordingly the company’s financial assets do not include financial assets at fair value through profit & loss, held maturity investment available for sale financial assets
and derivatives designated as hedging instruments in an effective hedge.
3.4.1.2 Subsequent measurement
The subsequent measurement of financial assets depends on their classification as described below:
a) 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 statement of
profit and loss and other comprehensive income. The losses arising from impairment are recognised in
the statement of profit and loss and other comprehensive income in finance costs for loans and in other
operating expenses for receivables.
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
or
• The Company 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 Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all
NOTES TO THE
the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the asset is recognised to the extent of the Company’s
continuing involvement in the asset. In that case, the Company also recognises an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Company 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
Company could be required to repay.
3.4.1.4 Impairment of Financial Assets
The Company 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
when 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.
3.4.1.4.1 Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Company first assesses whether 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 Company 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’s 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 EIR.
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 statement of profit and loss and other comprehensive income. 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 statement of profit and loss and other comprehensive income. 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 Company. If, in
a subsequent year, the amount of the estimated impairment loss increases or decreases because of an
NOTES TO THE
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 statement of profit and loss and other comprehensive
income.
3.4.2Financial liabilities
3.4.2.1 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 Company determines the classification of its financial liabilities at initial
recognition.
All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings,
directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables, bank overdrafts, loans and borrowings, financial guarantee contracts and amounts due to related parties.
3.4.2.2 Subsequent measurement
The measurement of financial liabilities depends on their classification as described below:
a)Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial
liabilities are classified as held for trading if they are acquired for the purpose of selling in the near
term. This category includes derivative financial instruments entered into by the Company that are not
designated as hedging instruments in hedge relationships as defined by LKAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging
instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss and other
comprehensive income. Financial liabilities designated upon initial recognition at fair value through
profit and loss so designated at the initial date of recognition, and only if criteria of LKAS 39 are satisfied.
b)Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised
cost using the EIR method. Gains and losses are recognised in the statement of profit and loss and other
comprehensive income when the liabilities are derecognised as well as through the 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 in the
Statement of Profit & Loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires.
NOTES TO THE
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 the derecognition of the original liability and the recognition of a new liability. The difference
in the respective carrying amounts is recognised in the statement of profit and loss and other comprehensive income.
3.4.3 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the 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
3.4.4 Current Assets
Assets classified as current assets on the Statement of Financial Position are cash and bank balances
and those which are expected to be realised in cash during the normal operating cycle or within one
year from the reporting date, whichever is shorter.
3.4.4.1 Inventories
Inventories are measured at the lower of cost and net realisable value. Costs incurred in bringing each
product to its present location and condition are accounted for as follows:
• All inventory items, except manufactured inventories and work-in-progress are measured at
weighted average directly attributable cost.
• Manufactured inventories and work-in-progress are measured at weighted average factory cost
which includes all direct expenditure and appropriate share of production overhead based on
normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business less, the estimated
cost of completion and the estimated costs necessary to make the sale.
3.4.4.2 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are
repayable on demand and form an integral part of the Company's cash management are included as a
component of cash and cash equivalents for the purpose of the Statement of Cash Flows.
3.5 Liabilities and Provisions
3.5.1 Employee benefits
3.5.1.1 Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity and will have no legal or constructive obligation to pay further
amounts. Obligations for contributions to Provident and Trust Funds covering all employees are
recognised as an employee benefit expense in profit or loss in the periods during which services are
rendered by employees.
The Company contributes 12% and 3% of gross emoluments to employees as Provident Fund and Trust
Fund contribution respectively.
NOTES TO THE
3.5.1.2 Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The
defined benefit is calculated by independent actuaries using Projected Unit Credit (PUC) method as
recommended by LKAS 19 – “Employee benefits”. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows using interest rates that are denominated
in the currency in which the benefits will be paid, and that have terms to maturity approximating to the
terms of the related liability. The present value of the defined benefit obligations depends on a number
of factors that are determined on an actuarial basis using a number of assumptions. Key assumptions
used in determining the defined retirement benefit obligations are given in note 16. Any changes in
these assumptions will impact the carrying amount of defined benefit obligations.
Provision has been made for retirement gratuities from the beginning of service for all employees, in
conformity with LKAS 19 on employee benefit. However, under the Payment of Gratuity Act No. 12 of
1983, the liability to an employee arises only on completion of 5 years of continued service.
The liability is not externally funded. This liability is computed on the following basis:
Length of service
(Years)
No. of month’s salary for each
completed year of service
Up to 20
20 up to 25
25 up to 30
30 up to 35
Over 35
1/2
3/4
1
1 1/4
1½
3.5.2 Recognition of Actuarial Gains or losses
Actuarial gains or losses are recognised in full in the Other Comprehensive Income.
3.5.3 Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
the related service is provided.
3.5.4 Provisions
Provisions are recognised when the Company 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. When the
Company expects some or all of a provision to be reimbursed, 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 statement of profit and loss and other comprehensive income net of any
reimbursement.
3.5.5 Warranties
A provision for warranties is recognised when the underlying products or services are sold. The
provision is based on historical warranty data and a weighing of possible outcomes against their
associated probabilities.
NOTES TO THE
3.5.6 Capital commitments and contingencies
Capital commitments and contingent liabilities of the Company are disclosed in the respective Note 24
& 25 to the Financial Statements.
3.5.7 Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity, net of any tax effects.
3.6 Statement of Profit and Loss and Other Comprehensive Income
For the purpose of presentation of the Statement of Profit & Loss, the function of expenses method is
adopted.
3.6.1 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured, regardless of when the payment is being made.
The specific recognition criteria described below must also be met before revenue is recognized.
a)Sale of goods
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable,
net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the
significant risks and rewards of ownership have been transferred to the buyer, recovery of the
consideration is probable, the associated costs and possible return of goods can be estimated reliably,
there is no continuing management involvement with the goods, and the amount of revenue can be
measured reliably.
b)Rendering of services
Revenue from services rendered is recognised in profit and loss in proportion to the stage of completion
of the transaction at the reporting date.
c)Gains and losses
Gains and losses on disposal of an item of property, plant & equipment are determined by comparing
the net sales proceeds with the carrying amounts of property, plant & equipment and are recognised
net within “other operating income” in statement of profit & loss.
d)Other income
Other income is recognized on an accrual basis.
3.6.2 Expenses
Expenses are recognized in the statement of profit & loss on the basis of a direct association between
the cost incurred and the earnings of specific items of income. All expenditure incurred in the running of
the business has been charged to income in arriving at the profit for the year. Repairs and renewals are
charged to profit and loss in the year in which the expenditure is incurred.
NOTES TO THE
3.6.2.1 Borrowing costs
Borrowing costs are recognized as an expense in the period in which they are incurred, except to the
extent that they are directly attributable to the acquisition, construction or production of a qualifying
asset, in which case they are capitalized as part of the cost of that asset.
3.6.2.2 Finance income and finance costs
Finance income comprises interest income on funds invested (including available-for-sale financial
assets), dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair
value of financial assets at fair value through profit or loss, and gains on hedging instruments that are
recognised in statement of profit and loss and other comprehensive income. Interest income is
recognised as it accrues in statement of profit and loss and other comprehensive income. Finance costs
comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair
value of financial assets at fair value through profit or loss, and losses on hedging instruments that are
recognised in statement of profit and loss and other comprehensive income.
The interest expense component of finance lease payments is allocated to each period during the lease
term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Foreign currency gains and losses are reported on a net basis.
3.6.3 Tax expense
Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in
statement of profit & loss except to the extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.
3.6.3.1 Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the
reporting date and any adjustments to tax payable in respect of previous years.
Current tax relating to items recognised directly in Other Comprehensive Income is recognised in Other
Comprehensive Income and not in the statement of profit and loss and other comprehensive income.
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.
3.6.3.2 Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or 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
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused
tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable
NOTES TO THE
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:
•When 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 taxable profit or loss
The carrying amount of deferred 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 asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside statement of profit and loss and other comprehensive
income is recognised outside Statement of Profit & Loss. Deferred tax items are recognised in correlation
to the underlying transaction either in other comprehensive income or directly in equity.
3.6.3.3 Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax, except:
• When 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
•Receivables and payables that are stated with the amount of sales tax. 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.
4. General
4.1 Events occurring after the Reporting date
All material post occurred after the reporting date events have been considered and where appropriate
adjustments or disclosures have been made in the respective notes to the Financial Statements.
4.2 Earnings per share
The Company presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined
by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of
ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
NOTES TO THE
4.3 Cash Flow Statement
The Cash Flow Statement has been prepared using the "indirect method".
Interest paid is classified as an financing cash flow. Grants received, which are related to purchase
and construction of property, plant & equipment are classified as investing cash flows. Dividend is
classified as cash flows from investing activities.
4.4 Standards issued but not yet effective
Standards issued but not yet effective up to the date of issuance of the Company’s Financial Statements
are listed below. This listing of standards and interpretations issued are those that the Company reasonably expects to have an impact on disclosures, financial position or performance when applied at a
future date. The Company intends to adopt these standards when they become effective.
Pending the completion of detailed review, the financial impact is reasonably estimatable at the date of
the publication of these 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 classi
fication and measurement of financial assets and liabilities.
This standard was originally effective for annual periods commencing on or after 01 January 2015.
However the effective date has been deferred subsequently and the revised effective date is yet to
be announced.
•SLFRS 14 Regulatory Deferral Accounts
The scope of this standard is limited to first-time adopters of SLFRS that already recognise
regulatory deferral account balances in their financial statements. Consequently, the financial
statements of rate regulated entities that already apply SLFRS, or that do not otherwise recognise
such balances, will not be affected by this standard.
SLFRS 14 is effective for annual periods beginning on or after 1 January 2016. Since the Company
is an existing SLFRS preparer, this standard would not apply.
•SLFRS 15 -Revenue from Contracts with Customers
SLFRS 15 establishes a comprehensive framework for determining whether, how much and when
revenue is recognised. It replaces existing revenue recognition guidance, including LKAS 18 Reve
nue, LKAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. This standard
is effective for the annual periods beginning on or after 01 January 2017.
4.5 New and amended standards and interpretations
4.5.1 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 Company re-assessed its policies for measuring fair values. Application of SLFRS 13 has not materially impacted the fair
NOTES TO THE
value measurements of the Company. Additional disclosures where required, are provided in the
individual notes relating to the assets and liabilities whose fair values were determined.
4.5.3 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 statement of profit and loss and other comprehensive
income 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 affect presentation only and have no impact on the Company’s financial position or
performance.
NOTES TO THE
5.
PROPERTY, PLANT AND EQUIPMENT
5.1 Gross Carrying Amounts
Cost or Revaluation
Land
Building
Plant & Machinery
Furniture, Fittings & Equipment
Motor Vehicles
5.2 Depreciation
2014
Rs.
21,563,000
66,965,000
38,566,044
8,545,123
7,124,094
142,763,261
2014
Rs.
Building
Plant & Machinery
Motor Vehicles
36,815
4,575,384
1,180,087
5,792,286
Additions
Rs.
Revaluation
Rs.
766,446
1,541,028
1,162,898
6,150,000
9,620,372
Charge for
the year
Rs.
2,813,146
3,987,316
789,999
1,864,680
9,455,141
2015
Rs.
(16,131,446)
21,563,000
51,600,000
40,107,073
9,708,021
13,274,094
136,252,188
Revaluation
2015
Rs.
Rs.
(16,131,446)
-
(1,953,146)
(1,953,146)
860,000
4,024,130
5,365,383
3,044,767
13,294,280
5.3 Net Book Values
Land
Building
Plant & Machinery
Motor Vehicles
2015
Rs.
2014
Rs.
21,563,000
50,740,000
36,082,943
4,342,638
10,229,327
122,957,908
21,563,000
66,965,000
38,529,230
3,969,739
5,944,008
136,970,977
5.4
Property, plant and equipment includes fully depreciated assets having a gross carrying amount of Rs. 4,348,323/-.
(2013/14 - Rs. 3,877,200/-)
5.5
Company's land and buildings were revalued as at 31st December 2014 by Mr. P.B. Kalugalagedera, an independent Chartered valuation Surveyor. The results of such valuation were incorporated in these Financial Statements.
Such assets were valued on an open market value for existing use basis. The surplus/(Deficit) arising from the
valuation was transferred to the revaluation reserve.
5.6 Information About Fair Value Measurements Using Significant Unobservable Inputs.
Non Financial
Asset
Valuation
Technique
unobservable
inputs
Range of
unobservable
inputs
Relationship of
Unobservable inputs to
Fair Value
Land
Open Market
Value
Price per Perch
Rs. 50,000/-
The higher the price per
perch, higher the fair value
Buildings
Open Market
Value
Price per Sq:ft
Rs. 1,000/- to Rs.
2,000/-
The higher the price per
Sq:ft, higher the fair value
NOTES TO THE
5.7 Company real estate details
Location
Buildings
In Sq.ft
Land in
Acres
34,550
2A:2R:31.26P
41B, Sasanathilaka Rd, Opatha, Kotugoda.
Net carrying
amount
2015
Rs.
72,303,000
Net carrying
amount
2014
Rs.
88,528,000
5.8 The carrying amount of revalued assets that would have been included in the Financial Statements had the assets been carried at
cost less depreciation is as follows:
Class of Asset
Land
Buildings
6
Cost
Cumulative
Depreciation if
Assets were Carried
at Cost
3,134,394
28,317,192
31,451,586
Net Carrying
Amount 2015
3,398,063
3,398,063
Net Carrying
Amount 2014
3,134,394
24,919,129
28,053,523
INVENTORIES
2015
Rs.
Raw Materials
(-) Provision for Slow Moving & Obsolete Stocks
21,456,192
(7,478,900)
13,977,292
29,450
14,006,742
Consumables
7
Balance as at
01/04/2014
Rs.
Construction Work-in-Progress
Expenses
Cost incurred during
recognized during
the year
the year
Rs.
Rs.
23,549,116
TRADE AND OTHER RECEIVABLES
Trade Receivables
(-) Impairment of Trade Receivables
Net Trade Receivables
Advances, Deposits and Prepayments
Other Receivables
9
2014
Rs.
10,253,828
10,253,828
194,205
10,448,033
CONSTRUCTION WORK-IN-PROGRESS
Description
8
3,134,394
25,485,473
28,619,867
72,371,678
86,175,271
2015
Rs.
20,928,088
(2,976,057)
17,952,031
6,029,476
999,998
24,981,505
Balance as at
31/03/2015
Rs.
9,745,523
2014
Rs.
17,850,752
17,850,752
3,778,362
343,207
21,972,321
CASH AND CASH EQUIVALENTS
Components of Cash and Cash Equivalents
9.1 Favourable Balance
Bank Balances & Cash in hand
9.2 Unfavourable Balances
Bank Overdrafts
Total Cash and Cash Equivalents for the Purpose of Cash Flow Statements
2015
Rs.
2014
Rs.
143,852,449
131,798,162
(5,966,665)
(504,166)
137,885,784
131,293,996
NOTES TO THE
10 STATED CAPITAL
2015
Fully Paid Ordinary Shares
Number of Shares
At the beginning of the Year
At the end of the Year
12,058,200
12,058,200
2014
Rs.
346,672,723
346,672,723
11 CONTRIBUTION TOWARDS EQUITY
Mr. T.V. Press
Fastighets AB Bremia
Mr.P.J.Claesson
12
Number of Shares
12,058,200
12,058,200
2015
Rs.
7,695,490
20,459,155
46,468,410
74,623,055
Rs.
346,672,723
346,672,723
2014
Rs.
7,695,490
20,459,155
46,468,410
74,623,055
EARNINGS /(LOSS) PER SHARE
12.1 Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding
during the year and the previous year are adjusted for events that have changed the number of ordinary shares outstanding,
without a corresponding change in the resources such as a Bonus Issue.
12.2 The income and share data used in the basic earning per share computation as follows.
Amounts Used as the Numerators:
Net Profit/(Loss) attributable to Ordinary Shareholders for basic Earnings /(Loss) Per Share
2015
Rs.
2014
Rs.
12,275,725
(61,411,067)
Numbers of Ordinary Shares Used as Denominator:
Weighted Average number of Ordinary Shares in issue
12,058,200
12,058,200
1.02
1.02
(5.09)
(5.09)
12.3 Earnings/(Loss) Per Share - Basic
12.4 Earnings/(Loss) Per Share - Diluted (Note 12.5)
12.5 Diluted Earnings/ (Loss) Per Share
Diluted earnings /(Loss) per share is calculated by dividing the net profit/ (Loss) for the year attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding during the year after adjustment for the effects of all dilutive
potential ordinary shares.
As at 31st March 2015 and 31st March 2014 there were no dilutive potential ordinary shares. Hence diluted earnings per share is
same as basic earnings /(Loss) per share.
13
INTEREST - BEARING LOANS AND BORROWINGS
2015
Rs.
2014
Rs.
Current Interest-Bearing Loans and Borrowings
Bank Overdraft (Un Secured)
Finance Lease (Note 13.1)
Total Current Interest-Bearing Loans and Borrowings
5,966,665
1,359,150
7,325,815
504,166
1,254,715
1,758,881
Non-Current Interest-Bearing Loans and Borrowings
Finance Leases (Note 13.1)
Total non Current Interest-Bearing Loans and Borrowings
2,480,252
2,480,252
3,839,402
3,839,402
Total Interest-Bearing Loans and Borrowings
9,806,067
5,598,283
NOTES TO THE
13.1 Finance Leases
Net Lease Liability
Balance as at
01.04.2014
5,094,117
Obtained
during the
year
-
Repayable with in one year (13.2)
Repayable after one year but less than five years (13.3)
Repaid during
the year
Balance as at
31.03.2015
(1,254,715)
3,839,402
2015
Rs.
2014
Rs.
1,359,150
2,480,252
3,839,402
1,254,715
3,839,402
5,094,117
13.2 Repayable with in one year
Gross Lease Liability
Finance Charge - Unamortized
Net Lease Liability
1,925,040
(565,890)
1,359,150
2,045,968
(791,253)
1,254,715
13.3 Repayable after one year but less than five years
Gross Lease Liability
Finance Charge - Unamortized
Net Lease Liability
2,817,081
(336,829)
2,480,252
4,742,121
(902,719)
3,839,402
14
DEFERRED INCOME
Deferred Income on:
Retention on Construction Contracts (Note 14.1)
14.1 Retention on Construction Contracts
Balance as at the beginning of the year
Recognized during the year
Released during the year
Balance as at the end of the year
2015
Rs.
4,507,519
4,507,519
2015
Rs.
7,321,755
(2,814,236)
4,507,519
2014
Rs.
-
2014
Rs.
-
14.2 Amount retained on completed contracts, but not due is recognized as deferred income. Those are recognized in the statement of profit
and loss once they income due.
15
DEFERRED TAX LIABILITIES
15.1 Balance as at the beginning of the year
Origination/(reversal) of Temporary Difference (15.2)
Balance as at the end of the year (15.3)
15.2 Reconciliation of Deferred Tax Charge / (Reversal)
Deferred Tax Charge /(Reversal) recognized under Profit and Loss
Deferred Tax Charge /(Reversal) recognized under Other Comprehensive Income
15.3 Deferred Tax (Asset)/ Liability Arises Due to
Property, Plant and Equipment
Tax Losses carried forward
Retirement Benefit Obligation
2015
Rs.
18,727,570
(10,642,954)
8,084,616
2015
Rs.
(6,673,030)
(3,969,924)
(10,642,954)
2015
Rs.
16,363,485
(7,785,120)
(493,749)
8,084,616
2014
Rs.
873,391
17,854,179
18,727,570
2014
Rs.
182,478
17,671,701
17,854,179
2014
Rs.
20,187,199
(1,459,629)
18,727,570
NOTES TO THE
16
RETIREMENT BENEFIT OBLIGATION
The company measures the present value of Defined Benefit Obligation (PVDBO) which is a defined benefit plan with the advice of an
actuary using Projected Unit Credit Method.
Changes in the present value of the defined benefit obligation is as follows
2015
Rs.
Balance as at the beginning of the year
Current Service Cost (16.1)
Benefits paid during the year
Balance as at the end of the year
5,212,960
155,500
(3,605,070)
1,763,390
2015
Rs.
16.1 The expenses recognised in the Statement of the Profit and Loss
155,500
2014
Rs.
3,690,478
1,522,482
5,212,960
2014
Rs.
1,522,482
16.2 The PVDBO at 31 March 2015 was carried out by Messers. NMG Consulting and The key assumptions used by them are as follows
Discount Rate
Salary Escalation Rate
Retirement Age
Mortality Rate
Expected Future Working Life
16.3
10%
9%
55 Years
As per table - A1967/70 Mortality Table
5.5 Years
Sensitivity Analysis - Salary Escalation Rate as at 31st March 2015
16.4 Sensitivity Analysis - Discount Rate as at 31st March 2015
17
Present Value of Defined Benefit Obligation
If the Salary Escalation Rate is
Base - 9%
8%
10%
1,763,390
1,655,921
1,881,486
Present Value of Defined Benefit Obligation
If the Discount Rate is
Base - 10%
9%
11%
1,763,390
1,880,275
1,658,850
TRADE AND OTHER PAYABLES
2015
Rs.
Contract Mobilization Advances
Trade Payables
Accrued Expenses / Other Payables
18
7,058,864
10,334,435
17,393,299
AMOUNTS DUE TO RELATED PARTIES
Hayleys PLC
Hayleys Business Solution International (Pvt) Ltd
Alumex PLC
Hayleys Leisure Holdings (Pvt) Ltd
Relationship
Parent Company
Affiliate Company
Affiliate Company
Affiliate Company
2015
Rs.
18,687
15,857
4,263,187
181,095
4,478,826
2014
Rs.
12,441,640
542,493
14,847,775
27,831,908
2014
Rs.
-
NOTES TO THE
19
20
REV EN U E
117,393,078
79,563,848
Powder Coating Project Income
Total Revenue
69,300,812
186,693,890
16,295,522
95,859,370
FIN AN C E IN C O M E
FINANCE COST
Interest on Loans and Borrowings
Interest on Finance Lease
Overdraft Interest
22
2014
Rs.
Contract Sales
Interest Income Fixed Deposit
Intrest Income Saving Account
Investment Income
21
2015
Rs.
PROFIT BEFORE TAX
Stated after charging/(crediting)
Directors’ Emoluments
Auditors’ Remuneration - Statutory Audit Services
Non Audit Related Services
Depreciation
Personnel Costs include
Salaries and Wages
Defined Contribution Plan Costs
Retirement Benefit Obligation Cost
Legal Fees
Donations
Tax Write-Off
Provision for Slow Moving Stocks
Surcharges
Bad Debts
2015
Rs.
2,845
6,326,336
6,329,181
2015
Rs.
158,002
791,253
1,028
950,284
2015
Rs.
2014
Rs.
15,343,836
791,111
2,016,659
18,151,606
2014
Rs.
7,145,784
517,112
7,662,896
2014
Rs.
2,328,468
394,850
381,000
9,455,142
2,625,000
346,110
300,000
4,311,314
23,937,225
2,575,308
155,500
323,200
54,900
397,247
6,659,174
2,954,738
2,976,057
19,786,118
1,980,344
1,522,482
150,680
159,010
852,150
1,068,004
NOTES TO THE
23
INCOME TAX EXPENSE
23.1
Reconciliation between the Tax Expense/ (Income) and the Product of Accounting Profit/ (Loss)
2015
Rs.
Accounting Profit Before Tax
Adjustments Relating to Disallowances
Adjustments to Allowable Items
Interest Income
Utilisation of Tax Losses
Taxable Profit
Statutory Tax Rate - 28%
Current Tax on Ordinary Activities for the year
Deferred Tax Charge/ (Reversal)
Current Income Tax
24
25
2014
Rs.
7,177,993
10,610,162
(15,461,850)
6,329,181
(3,029,420)
5,626,066
(57,924,997)
19,860,943
(4,629,712)
18,151,606
(6,352,062)
11,799,544
1,575,299
(6,673,030)
(5,097,732)
3,303,592
182,478
3,486,070
CAPITAL EXPENDITURE COMMITMENTS
There were no material capital commitments which have been approved or contracted for as at reporting date.
CONTINGENT LIABILITIES
• Sanken Construction (Pvt) Ltd by their letter dated 02 January 2014 has claimed a sum of Rs.1,007,149.39 from Alufab PLC.
In respect of the Alufab PLC subcontract of the Institute of Chartered Accountants of Sri Lanka.
• Performance bond guarantees to the customers as at the reporting date is amounting to Rs. 10,679,000/-.
26
EVENTS OCCURRING AFTER THE REPORTING DATE
No circumstances have arisen since the reporting date which require adjustment to or disclosure in the
financial statements.
27
ASSETS PLEDGED
There were no assets pledged as at the reporting date
28
RELATED PARTY DISCLOSURES
28.1
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Key management personnel comprise of directors of the company and the key employees holdings directorship in
parent company. The emoluments made on behalf of them has been disclosed in Note 22 to the financial statements.
28.2
TRANSACTIONS WITH RELATED COMPANIES
The following table provides the total transactions taken place during the year with related Companies. The resulted
closing balances are disclose in the Note 18
Company
Relationship
Nature of the Transaction Amount Paid / (Received)
2015
Rs.
Parent Company
Hayleys PLC
Hayleys Business Solution International (Pvt) Ltd Affiliate Company
Affiliate Company
Alumex PLC
Affiliate Company
Alumex PLC
Affiliate Company
Hayleys Leisure Holdings (Pvt) Ltd
Rent Paid
Services Obtained
Materials Purchased
Sales
Reimburesement of Expenses
1,033,296
85,427
26,627,000
(20,327,000)
147,175
2014
Rs.
Nil
Nil
Nil
Nil
Nil
NOTES TO THE
The sales to and purchases from related parties are made at terms equivalent to those that prevail in arm’s length
transactions. Outstanding balances at the year-end are unsecured and interest free. There have been no guarantees
provided or received for any related party receivables or payables. For the year ended 31 March 2015, the Company has
not recorded any impairment of receivables relating to amounts owed by related parties (2014 - Nil ). This assessment is
undertaken in each financial year by examining the financial position of the related party and the market in which the
related party operates.
29
PRIOR YEAR ADJUSTMENTS
The Financial Statements for the Year ended 31 March 2014, have been restated in accordance with Sri Lanka Accounting
Standard LKAS 8- Accounting Policies, Changes in Accounting Estimates & Errors to reflect the followings:
29.1 Impact to the Statement of Financial Position as at 31 March 2014
Property, Plant
& Equipment
As per annual report published for 2013/14
Impact of Restatement
Impact of Reclassification
146,321,796
(9,350,818)
136,970,977
Trade &
Other
Receivable
24,364,167
(1,068,004)
(1,323,842)
21,972,321
Revaluation
Reserve
89,591,284
22,171,701
67,419,583
Work In
Progress
34,118,546
(10,569,430)
23,549,116
1. Property, Plant & Equipment - Balances were overstated by Rs.4.5Mn and an impairment in value, pertaining
to an asset was recognized amounting to Rs. 4.8Mn.
2. Trade & Other Receivables - Rs. 1.06Mn was written off as an impairement of Trade Receivable.
3. Revaluation Reserve - Recognition of Deferred tax liability pertaining to revaluation surplus on Property
Plant and Equipment. Further Revaluation surplus was overstated by Rs. 4.5Mn
4. Work In Progress- Balances were overstated by Rs. 3Mn. and Rs. 7.4Mn worth work in progress written off
as irrecoverable.
29.1 Impact to the Statement of Financial Position as at 31 March 2014 Cont:
Retained
Earnings
Deferred
Tax
(204,367,791)
1,702,465
(18,479,808) 17,025,105
222,847,599
18,727,570
Trade & Other
Payable
26,517,596
852,150
462,162
27,831,908
1. Retained Earnings - Represents the net impact of correction of errors pertaining to Statement of Profit &
Loss.
2. Deferred Tax - Recognition of Deferred tax liability pertaining to revaluation surplus on Property ,Plant &
Equipment.
29.2 Impact to the Statement of Profit and Loss for the year ended 31 March 2014
Revenue
Cost of Sales
97,963,718
76,673,687
(1,786,002)
10,569,430
(318,345)
42,767,491
95,859,371 130,010,608
Distribution
Expenses
1,573,230
1,068,004
98,560
2,739,794
Administrative
Expenses
25,553,037
852,150
585,015
26,990,202
NOTES TO THE
1. Revenue- Rs. 1.7Mn worth retentions were recorded as revenue and hence revenue was overstated by Rs.
1.7Mn.
2. Cost of Sales - Overstated amount of Work In Progress of Rs. 3Mn and irrecoverable work in progress of
Rs. 7.4Mn written off to the cost of sales.
3.Disrtibution Expenses Rs. 1.06Mn
worth Trade Receivables were written off and categorized under
Disrtibution expenses.
4. Administrative Expenses - Rs. 0.85 worth expenses were not recorded in previous Financial Statements.
29.2 Impact to the Statement of Profit & Loss for the year ended 31 March 2014 Cont:
Factory &
Project
Expenses
42,767,491
(42,767,491)
-
Other
Expenses
4,850,819
4,850,819
Income Tax
expenses
4,132,666
(646,596)
Basic/ Diluted
Earing Per
Share
(3.56)
(1.53)
3,486,070
(5.09)
1. Other Expenses - Recognition of impairment loss pertatining to Property,Plant & Equipment.
2. Income Tax Expenses- Deferred tax charge for the year was overstated. by Rs. 0.6Mn
29.3 Impact to the Statement of Other Comprehensive Income for the year ended 31 March 2014
Revaluation Income Tax
Surplus
on OCI
75,171,485
(4,500,000)
17,671,701
70,671,485
17,671,701
1. Revaluation Surplus - Balance was overstated by Rs. 4.5Mn.
2. Income Tax on OCI - Deferred tax on revaluation surplus of Property,Plant & equipment was not recognized
As described in the Independent Auditors report under other matters, following are the salient modifica
tions pertaining to modified Audit opinion in previous year
1. The gross margin does not reflect the factory and project expenses and factory overhead costs
2. The recoverability of the Maga Engineering (Pvt) Ltd Work-in-Progress amounting to Rs.7, 487, 000/- was
in doubt and was not provided.
3. The company was unable to accurately verify when contract revenue and expenditure should be
determined. Therefore the revenue and expenses indicated in the “Statement of Comprehensive Income”
do not conform to LKAS 11 Construction Contracts. Also the expenses related to Construction
Work-in-Progress cannot be verified accurately.
4. The recoverability of the amount receivable from Swisstek Aluminum Ltd amounting to Rs.1,068,004/- was
in doubt and was not provided.
5. Internal Control/ Finance Manual was not made available
6. A factory generator revalued at Rs.4.5 million was not in a usable condition. The Colombo office generator
purchased in 2012/13 for Rs.160, 705 has not been revalued even though it falls under a similar class of
assets.
NOTES TO THE
31 FINANCIAL INSTRUMENTS FINANCIAL RISK MANAGEMENT
Overview
The Company has exposure to the following risks arising from financial instruments
• Credit risk
• Liquidity risk
• Market risk.
This note presents information about the Company’s exposure to each of the above risks, the
Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital.
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the
Company’s risk management framework.
The Company’s risk management policies are established to identify and analyze the risks faced by
the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to
limits. Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and the Company’s activities. The Company, through its training and management
standards and procedures, aims to develop a disciplined and constructive control environment in
which all employees understand their roles and obligations.
The Company Audit Committee monitors the process through which business risks are identified
for action by management and for the Board’s attention and monitors the effectiveness of the Company’s internal controls. The Company Audit Committee is assisted in its role by Internal Audit.
Internal Audit undertakes both regular and ad hoc reviews of controls and procedures, the results
of which are reported to the Audit Committee.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Company’s
receivables from customers and investment securities.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum
Exposure to credit risk at the reporting date was as follows.
Rs.
Trade and Other Receivables
Cash and Cash Equivalents
Total
2015
24,981,505
137,885,784
162,867,289
2014
21,972,321
131,293,996
153,266,317
NOTES TO THE
Trade and other receivables
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. However, management also considers the demographics of the Company’s customer
base, including the default risk of the industry and country in which customers operate, as these
factors may have an influence on credit risk.
Each new customer is analyzed individually for creditworthiness before the Company’s standard
payment and delivery terms and conditions are offered. Customers that fail to meet the Company’s
benchmark creditworthiness may transact with the Company only on a prepayment basis.
The Company establishes an allowance for impairment that represents its estimate of incurred losses
in respect of trade and other receivables. The main components of this allowance are a specific loss
component that relates to individually significant exposures, and a collective loss component established for companys of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for
similar financial assets.
Impairment losses
Trade and other receivables at the reporting date was neither past due nor impaired. Except for the
impaired debtors worth of Rs. 2,976,057/- for which full impairment provision been made.
The aging analysis of trade receivables is a follows
Neither Past due
nor impaired
As at 31 March 2015
As at 31 March 2014
17,912,652
17,850,752
<60 days
61-120
days
83,406
-
458,781
-
121-365 > 365 days
days
2,433,870
-
39,379
-
Total
20,928,088
17,850,752
Provision for
Doubtful
Debts
(2,976,057)
-
Total (Net)
17,952,031
17,850,752
Cash and cash equivalents
The Company held cash and cash equivalents of Rs. 138Mn at 31st March 2015 (2014:131Mn),
which represents its maximum credit exposure on these assets. The cash and cash equivalents are
held with Hatton national bank PLC. Credit rating of Hatton National Bank PLC is AA-(lka).
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company’s reputation.
The Company maintains the level of its cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities (other than trade payables) over the succeeding 60 days. The
Company also monitors the level of expected cash inflows on trade and other receivables together
with expected cash outflows on trade and other payables.
NOTES TO THE
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates
and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return.
Currency risk
The Company is exposed to currency risk on sales, purchases and borrowings that are denominated
in a currency other than Sri Lankan Rupees.
Interest rate risk
The Company does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss, and the Company does not designate derivatives as hedging instruments under a fair
value hedge accounting model. Therefore a change in interest rates at the reporting date would not
affect profit or loss.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. Capital consists of ordinary shares,
retained earnings of the Company. The Board of Directors monitors the return on capital as well as
the level of dividends to ordinary shareholders.
The Company’s net debt to adjusted equity ratio at the reporting date was as follows
Rs.
Total liabilities
Less: cash and cash equivalents
Net debt
Total equity
Net debt to adjusted equity ratio at 31 March
2015
2014
47,609,015
58,870,847
137,885,784 131,293,996
(90,276,769) (72,423,149)
267,935,111 265,867,762
(0.34)
(0.27)
SHARE
INFORMATION
STOCK EXCHANGE LISTING
The stated capital comprising of Twelve million fifty eight thousand two hundred shares of Alufab PLC is listed with
the Colombo Stock Exchange of Sri Lanka.
Interim Financial Statements of the 4th Quarter for the year ended 31 March, 2015 have been submitted to the
Colombo Stock Exchange as required by the listing rules.
ORDINARY SHAREHOLDERS AS AT 31 MARCH 2015
No of Share Holders – 1,167 (As at 31.03.2014 – 1,180)
No. of shares held
RESIDENTS
No.of
%
No.of
Shareholders
1 _ 1,000
TOTAL
NON RESIDENTS
No.of Shares
No.of Shares
%
Shareholders
No.of
No.of Shares
%
Shareholders
849
223,760
1.86
11
5,033
0.04
860
228,793
1.90
1,001 _ 10,000
245
839,139
6.96
5
22,306
0.18
250
861,445
7.14
10,001 _ 100,000
46
1,248,274
10.35
1
67,142
0.56
47
1,315,416
10.91
100,001 _ 1,000,000
8
1,118,076
9.27
1
1,000,000
8.29
9
2,118,076
17.57
OVER 1,000,000
1
7,534,470
62.48
1
7,534,470
62.48
1,149
10,963,719
90.92
18
1,094,481
9.08
1,167
1,106
3,202,120
26.56
16
1,093,471
9.07
1,122
43
7,761,599
64.37
2
1,010
0.01
45
1,149
10,963,719
90.92
18
1,094,481
9.08
1,167
12,058,200 100.00
CATEGORY
Individuals
Institutions
SHARE TRADING INFORMATION
During the financial year
2015
2014
RS
RS
Highest Price
33.40
17.10.2014
20.80
Lowest Price
13.10
22.04.2014
10.70
25.20
31.03.2015
12.90
Closing Price
No. of Transactions
No. of shares traded
Value of shares traded
10,672
21,613,758
530,281,952.50
4,295,591
35.62
7,762,609
64.38
12,058,200 100.00
SHARE
INFORMATION CONTD...
TOP TWENTY SHAREHOLDERS AS AT 31 MARCH 2015
As at
31/03/2015
As at
31/03/2014
1 Hayleys Plc
7,534,470
62.48
2 MR.M.K.Chhapra
1,000,000
8.29
3 MR.M.S.M.A.Farook
273,086
2.26
4 MR.T.N.Dole
151,050
1.25
5 MR.S.R.Liyanaarachchi
150,051
1.24
-
-
6 MR.H.S.Dissanayake
147,150
1.22
-
-
7 MR.R.Pritamdas
125,610
1.04
87,224
0.72
8 MR.M.A.Junaid
108,514
0.90
50,000
0.41
9 MR.W.L.Gunasena
106,557
0.88
-
-
10 MR.R.G.Siriwardena
105,342
0.87
-
-
11 MR.M.H.H.Ossman
90,000
0.75
90,000
12 MR.M.Sendid
67,142
0.56
-
-
13 MR.H.U.W.Prasanna
65,242
0.54
-
-
14 MR.K.S.Jinadasa
55,378
0.46
55,378
15 MR.C.R.Narangoda
52,000
0.43
-
16 MR. M. A. Safiyullah & MRS. Y. Samsudeen
50,000
0.41
50,000
0.41
16 MR.A.S.Sideek
50,000
0.41
50,000
0.41
17 MR.M.S.R.Shamsudeen
46,200
0.38
50,200
0.42
18 MRS. M. V. J. Amadoru
37,550
0.31
-
19 MR. R. Somachandra & MRS. D. N. D. Jayathilaka
36,000
0.30
23,802
0.20
20 Merchant Bank of Srilanka/ S.M.P Jinapriya
34,309
0.28
1,407,654
11.67
Total
10,285,651
85.30
800,000
151,050
6.63
1.25
0.75
0.46
-
-
DIRECTORS’ SHAREHOLDINGS
31/03/2015
MR. S. C. Ganegoda
MR.T.N.Dole - (Resigned w.e.f. 16/01/2015)
MR. P. J. Claesson
MR. D. V. Press ( through METRO INCENTIVES INC)
MR. A. S. Jayatilleka - ( Appointed w.e.f. 30/03/2015 )
MR. S. Munaweera - ( Appointed w.e.f. 30/03/2015 )
NIL
NIL
5,825
151,050
1,500
10
NIL
5,000
01/04/2014
NIL
NIL
NIL
151,050
3,661,078
3,658,579
NIL
NIL
PUBLIC SHAREHOLDINGS
The percentage of share held by public as per the Colombo Stock Exchange Rules as at 31st March
2015, was 37.41% comprising 1162 shareholders.
NOTICE OF MEETING
ALUFAB PLC
Company No. PQ 229
ANNUAL REPORT 2014-2015
NOTICE IS HEREBY GIVEN that the 34th Annual General Meeting of Alufab PLC, will be held at the
Registered Office of the Company, No.400, Deans Road, Colombo 10, Sri Lanka on Monday, 22nd June,
2015 at 10.00 a.m. and the business to be brought before the meeting will be:
1) To consider and adopt the Annual Report of the Board and the Statements of Accounts for the year
ended 31st March, 2015, with the Report of the Auditors thereon.
2) To re-elect Mr. A. S. Jayatilleka, who has been appointed by the Board, since the last Annual General
Meeting, a Director.
3) To re-elect Mr. S. Munaweera, who has been appointed by the Board, since the last Annual General
4) To re-elect Mr. P. J. Claesson, who retires by rotation at the Annual General Meeting, a Director.
5) To authorize the Directors to determine contributions to charities for the financial year 2015/16.
6) To authorize the Directors to determine the remuneration of the Auditors, Messrs Ernst & Young, who
are deemed to have been re-appointed as Auditors in terms of Section 158 of the Companies Act No.
07 of 2007 for the financial year 2015/16.
7) To consider any other business of which due notice has been given.
Note :
A shareholder is entitled to appoint a proxy to attend and vote instead of himself and a proxy need not be
a shareholder of the Company. A form of proxy is enclosed for this purpose. The instrument appointing
a proxy must be deposited at the registered office No.400, Deans Road, Colombo 10, Sri Lanka by
10.00 a.m. on 20th June 2015.
By Order of the Board
ALUFAB PLC
Hayleys Group Services (Private) Limited
Secretaries
Colombo
15 May 2015
FORM OF PROXY
ALUFAB PLC
ANNUAL REPORT 2014-2015
I/We* …………………………………………………………......................………………………………………………………………………………………………of
……….……………………………………………………………………………………....................................................................................................
being a shareholder/shareholders* of ALUFAB PLC hereby appoint,
1. …………………………………………………………………………………………………………………………………………………………of
…………………………………………………………………………………………………………………………………………………………or
failing him/them,*
2. ABEYAKUMAR MOHAN PANDITHAGE (Chairman of the Company) of Colombo, or failing
him, one of the Directors of the Company as my/our* proxy to attend and vote as indicated
hereunder for me/us* and on my/our* behalf at the 34th Annual General Meeting of the
Company to be held on Monday, 22nd June, 2015 and at every poll which may be taken in
consequence of the aforesaid meeting and at any adjournment thereof:
For
1) To consider and adopt the Annual Report of the Board and the Statements
of Accounts for the year ended 31st March, 2015, with the Report of the
Auditors thereon.
2) To re-elect Mr. A. S. Jayatilleka, who has been appointed by the Board, since
the last Annual General Meeting, a Director.
3) To re-elect Mr. S. Munaweera, who has been appointed by the Board, since
the last Annual General Meeting, a Director.
4) To re-elect Mr. P. J. Claesson, who retires by rotation at the Annual General
5) To authorize the Directors to determine contributions to charities for the
financial year 2015/16.
6) To authorize the Directors to determine the remuneration of the Auditors,
Messrs. Ernst & Young, who are deemed to have been re-appointed as Auditors
for the financial year 2015/16.
(** ) The proxy may vote as he thinks fit on any other resolution brought before the Meeting.
As witness my/our* hands this …………………….. day of ………..……………………..2015.
Witnesses
……………………………….
……………………………….
NOTE : : * Please delete the inappropriate words.
1. A proxy need not be a shareholder of the Company.
2. Instructions as to completion appear on the reverse.
………………………………...............
Signature of Shareholder
Against
Form of Proxy
Instructions as to Completion
1. To be valid , this Form of Proxy must be deposited at the Registered Office of the Company, No.400,
Deans Road, Colombo 10, Sri Lanka by 10.00 a.m. on Saturday, 20th June, 2015.
2. In perfecting the Form of Proxy, please ensure that all details are legible
3. If you wish to appoint a person other than the Chairman of the Company (or failing him, one of the
Directors) as your proxy, please insert the relevant details at 1 overleaf and initial against this entry.
4. Please indicate with an X in the space 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. Please also delete (**) if you
do not wish your proxy to vote as he thinks fit on any other resolution brought before the Meeting.
5. In the case of a Company / Corporation, the proxy must be under its Common Seal which should be
affixed and attested in the manner prescribed by its Articles of Association.
6. Where the Form of Proxy is signed under a Power of Attorney (POA) which has not been registered
with the Company, the original POA together with a photocopy of same or a copy certified by a
Notary Public must be lodged with the Company along with the Form of Proxy.
CORPORATE
INFORMATION
Name of Company and Number
Alufab PLC – PQ 229
Legal Form
Pubic Listed Company
DIRECTORS
MR. A. M. Pandithage ( Chairman)
( Appointed w.e.f. 07/11/2014 )
MR. S. J. Wijesinghe ( Managing Director)
( Appointed w.e.f. 07/11/2014 )
MR. S. C. Ganegoda
( Appointed w.e.f. 07/11/2014 )
MR. P. J. Claesson
MR. D. V. Press
MR. A. S. Jayatilleke
( Appointed w.e.f. 30/03/2015 )
MR. S. Munaweera
( Appointed w.e.f. 30/03/2015 )
MR. T. N. Dole
(Resigned w.e.f. 16/01/2015)
REGISTERED OFFICE
400, Deans Road,
Colombo 10, Sri Lanka.
Telephone: (94-11) 4347474
Fax: (94-11) 2680274
Email: [email protected]
Web: www.alufabplc.com
FACTORY/WAREHOUSE
41B, Sasanathilake Road,
Opatha, Yagodamulla,
Kotugoda, Sri Lanka.
Tel
: +94 11 4347987
Fax
: +94 11 2281779
AUDITORS
Ernst & Young
Chartered Accountants,
201, De Saram Place
P.O. Box. 101, Colombo,
Sri Lanka.
COMPANY SECRETARY
BANKERS
Hayleys Group Services (Pvt) Limited
No. 400, Deans Road, Colombo 10,
Sri Lanka.
Telephone: (94-11) 2627650
Facsimile: (94-11) 2627645
E-mail: [email protected]
Hatton National Bank PLC
Head Office Branch,
HNB Tower,
479, T.B,Jayah Mawatha,
Colombo-10, Sri Lanka.
Please direct any queries about the
administration of shareholding to the
company secretaries.
www.alufabplc.com

Alufab PLC_Annual Report_2014-2015_2

Transcription

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