Singer (Sri Lanka) Plc Plc Lanka) (Sri Singer Annual Report 2018/19 Report Annual

SINGER (SRI LANKA) PLC PLC LANKA) (SRI SINGER ANNUAL REPORT 2018/19 REPORT ANNUAL

SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 THE LEAD SINGER Over the ages, Singer’s enterprise has has enterprise Singer’s the ages, Over of stakeholders ears” to the “music been in Sri Lanka. all strata of society across a unique, holds The Company in the lives of position pre-eminent and walk of life from every Sri Lankans touching lives with circumstance, services of value delivered products and platform of long–term from a stable Given the extremely strong sustainability. the Company today, positioning of the role of “lead singer” we can claim that is the current in “the band” of the country. commercial arena Singer (Sri Lanka) PLC No. 112, Havelock Road, Colombo 5, Sri Lanka Hot Line: (+94) (011) 5 400 400 [email protected] E-Mail: [email protected] E-Mail:

THE LEAD SINGER Over the ages, Singer’s enterprise has been “music to the ears” of stakeholders across all strata of society in Sri Lanka. The Company holds a unique, pre-eminent position in the lives of Sri Lankans from every walk of life and circumstance, touching lives with products and services of value delivered from a stable platform of long-term sustainability. Given the extremely strong positioning of the Company today, we can claim the role of “lead singer” in “the band” that is the current commercial arena of the country. 2 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

CONTENTS

4 5 13 25

About this report Singer at a Glance Singer’s Leadership Business Model

6 Vision/Mission/Values 14 Chairman’s Message 26 Operating Environment and Objectives 16 CEO’s Review 31 Stakeholder Engagement 8 History 18 Board of Directors 33 Materiality 9 Awards and Accolades 22 Management Team 10 Highlights 2018/19

12 Review Period at a Glance 101 161 271 3 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Contents

www.singersl.com

35 101 161 271

Management Discussion Stewardship Financial Reports Supplementary and Analysis Information

36 Financial Capital 102 Corporate Governance 162 Financial Calendar 272 Parent, Subsidiaries and Related Companies 50 Institutional Capital 148 Audit Committee Report 163 Annual Report of the Board of Directors 273 A Decade in perspective 63 Customer Capital 150 Remuneration on the Affairs of the Committee Report 275 Share Information 69 Employee Capital Company 151 Nomination Committee 280 Independent Assurance 86 Social and 170 Statement of Directors’ Report Report Environmental Capital Responsibility 152 Related Party 282 Certificate of the 171 Independent Auditors’ Transactions Review director/principal Report Committee Report officer/precedent partner 176 Statement of Profit on transfer pricing 154 Risk Management or Loss and Other 283 Global Reporting Comprehensive Income Initiatives (GRI) 177 Statement of Financial Standard Disclosures Position Index

178 Statement of Changes in 289 Distribution Network Equity 291 Service Network and 181 Statement of Cash Flows Fashion Academy Network 183 Notes to the Financial Statements 293 Glossary

294 Notice of Annual General Meeting

Enclosed Form of Proxy 4 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

ABOUT THIS REPORT

Report Period The Annual Report 2018/19 of Singer (Sri Lanka) PLC covers Our voluntary partnership with the Central Environmental the 12-months period from 1st April 2018 to 31st March 2019. Authority in the National Cooperate E-Waste Management This period is consistent with the Company’s usual annual Project was driven by this same conviction. As detailed in the reporting cycle for both financial and sustainability reporting. Social and Environmental Capital section, we are forerunners in e-waste collection. We also attempt to increase the recyclable content of all our products and packaging. This is Report Boundary and Content the reason we substituted Styrofoam with natural recycled Unless otherwise stated, the 2018/19 Annual Report is limited paper packaging, well before it was regulated. to the Company’s operations in Sri Lanka. Therefore, the operations of our Subsidiaries, Singer Finance (Lanka) PLC, Singer Digital Media (Pvt) Limited, Singer Business School Compliance (Pvt) Limited, Regnis (Lanka) PLC, Regnis Appliances (Pvt) Singer Sri Lanka’s Annual Report for 2018/19 adopts the Limited, Singer Industries (Ceylon) PLC, and Reality Lanka Global Reporting Initiative (GRI) Guidelines and covers the Limited, and Domus Lanka (Pvt) Limited are included in the economic, environmental and social performance for the Annual Report. financial year ended 31st March 2019.

Economic, social, and environmental parameters that affect Our first Report based on GRI G3 Guidelines was published in our business and stakeholders have been considered in 2010. Thereafter, in 2013 we adopted GRI G3.1 Guidelines to deciding the content of this Report. report our sustainability performance. The 2015 Annual Report was based on GRI G4 Guidelines. This report is prepared in accordance with the requirements of the Global Reporting Data Measurement Techniques Initiative “In accordance” – Core Guidelines. and Base of Calculation Financial data presented in this Report have been extracted Messrs. Ernst & Young provides sustainability assurance for from Audited Financial Statements. The accounting policies the organisation. adopted in preparation of the Financial Statements including the basis of preparation and significant assumptions are given on pages 184 to 201. The man hours in respect of training Comparability extended to employees is computed based on the scheduled The basis for reporting on subsidiaries, joint ventures and time for each training session. other entities, leased facilities, outsourced operations as well as any restatements and significant changes from previous The scope, boundary and measurement methods used in the reporting periods in the scope, boundary or measurement preparation of this Report are the same as those used in our methods are disclosed where appropriate. They are in previous Report for the fifteen months ended 31st March 2018. compliance with the reporting standards disclosed in the The information presented in this Report in respect of prior Financial Reports. periods has not been restated. Queries Our Response to Precautionary Approach We will be pleased to respond to any queries on this Report. We remain committed to safeguarding the public in conducting You may contact: our business operations. Therefore, every effort is taken to Finance Division, keep our customers and the communities informed of any Singer (Sri Lanka) PLC, potential risk they may face as a result of our operations. No. 112, Havelock Road, Precautionary approach is practiced in introducing new Colombo 5. products by the Company. In our efforts to be proactive, we anticipate possible health or environmental risks in advance and take apt measures to address them. This is why we adopted CFC-free gas at a very early stage and used zero ozone impact R600a natural refrigerants. We were prompted to adopt these measures out of our concern towards the environment. 101 161 271 5 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

SINGER AT A GLANCE AS THE UNDISPUTED LEADER IN THE CONSUMER DURABLES MARKET OF SRI LANKA, SINGER SRI LANKA IS PERFECTLY POSITIONED TO INNOVATE, EXCITE, AND MAINTAIN OUR DOMINANT POSITION WELL INTO THE FUTURE.

6 VISION/MISSION/ VALUES AND OBJECTIVES

8 9 10 12 HISTORY HIGHLIGHTS 2018 REVIEW PERIOD AWARDS AND AT A GLANCE ACCOLADES

8 13 25 35 SINGER’S BUSINESS MANAGEMENT DISCUSSION LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer At a glance

HISTORY 1851 2004 Isaac Merrit Singer incorporated I. M. Singer & Company Established Singer Finance (Lanka) PLC. (Singer) and commenced production of sewing machines in the United States. 2010 1877 Singer Finance (Lanka) PLC listed via Rs. 400 million IPO. Singer commenced operations in Sri Lanka introducing sewing machines. 2011 1974 Singer entered large scale smart phone business in Sri Lanka. Incorporated as a Limited Liability Company. 2013 Subsidiary Company Regnis (Lanka) PLC introduced a 1981 range of refrigerators with R600a refrigerant technology (Natural hydro-carbon technology) being the first Company in Listed in the Colombo Stock Exchange. South Asia. 1988 2016 Singer commenced manufacturing refrigerators in Sri Lanka Conducted a group restructuring and acquired majority stakes through Regnis (Lanka) PLC. of Regnis (Lanka) PLC and Singer Industries (Ceylon) PLC from its common parent, Retail Holding Sri Lanka BV (Formerly 1992 known as Singer (Sri Lanka) BV). Singer commenced manufacturing of furniture and agricultural 2017 products at the Piliyandala factory. Hayleys PLC, acquired the controlling stake of Singer (Sri Lanka) PLC, making Hayleys PLC the parent company of 1998 Singer with effect from 15th September 2017. First Singer Mega store opened in Sri Lanka. 2018 2000 Changed the Financial year of the Company to 31st March with the approval of the Registrar of Companies. Acquired the local brand, SISIL. 2019 2001 Singer Head Office and Registered Office was First Singer Homes store opened in Sri Lanka. located to No. 112, Havelock Road, Colombo 5. 101 161 271 9 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

AWARDS AND ACCOLADES

Great Place to Work – Dell partner awards – Elite member in Sri Lanka’s Top 25 Best Best distributor of the year “Hall of Fame” Companies to work for

Gold Award – Peoples Award – Peoples Durable Trading Category: SLIM Nielsen People’s Brand of the The Institute of Brand of the Year 2019 Year 2019 Chartered Accountants, Sri Lanka 10 13 25 35 SINGER’S BUSINESS MANAGEMENT DISCUSSION LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer At a glance

HIGHLIGHTS

Current financial period 2018/19 – Twelve months period from 1st April 2018 to 31st March 2019.

Comparative financial period 2017/18 – Fifteen months period from 1st January 2017 to 31st March 2018.

Group Company For Twelve For Fifteen Increased/ For Twelve For Fifteen Increased/ months ended months ended (Decreased) months ended months ended (Decreased) 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. ’000 Rs. ’000 % Rs. ’000 Rs. ’000 %

Group Revenue – Net 58,505,395 65,122,305 (10.2) 43,617,889 50,910,033 (14.3) Net Finance Cost 3,033,076 2,531,375 19.8 2,320,956 2,149,727 8.0 Profit Before Tax 672,129 2,049,052 (67.2) 88,713 1,105,879 (92.0) Profit For the Period 385,981 1,220,295 (68.4) 140,550 999,023 (85.9) Total Comprehensive Income for the Period (Net of Tax) 1,006,328 691,655 45.5 447,850 794,117 (43.6) Stated Capital 626,048 626,048 – 626,048 626,048 – Revenue Reserves 5,035,831 5,495,478 (8.4) 2,851,601 3,326,088 (14.3) Capital Reserves 1,118,123 577,919 93.5 1,158,333 847,555 36.7 Statutory Reserves 163,096 136,009 19.9 – – – Non-Controlling Interest 1,508,546 1,349,114 11.8 – – – Total Equity 8,451,644 8,184,569 3.3 4,635,982 4,799,692 (3.4) Property, Plant & Equipment – Net 6,704,649 5,649,424 18.7 3,498,021 3,082,598 13.5 Other Investments 17,061 17,061 – 616,203 929,110 (33.7) Net-Current Assets 4,101,153 327,895 1,150.8 5,288,761 675,683 682.7 Gross Dividends* N/A N/A – 244,159 826,383 (70.5) Dividend per Share – Rs. N/A N/A – 0.65 2.20 (70.5) Dividend Payout Ratio – % N/A N/A – 1.74 0.83 110.0 Earnings per Share – Rs. 0.67 2.78 (76.0) 0.37 2.66 (85.9) Price Earnings Ratio – times N/A N/A – 66.81 15.12 342.0 Net Assets per Share – Rs. 18.48 18.20 1.6 12.34 12.78 (3.4) Market Price per Share – Rs. 31st March 2019 – (31st March 2018) N/A N/A – 25.00 40.20 (37.8) Net Income to Net Turnover – % 0.66 1.87 (64.8) 0.32 1.96 (83.6) Return on Average Net Assets/Equity – % 4.64 13.76 (66.3) 2.98 18.62 (84.0) Debt Ratio – % 68.21 83.82 (18.6) 87.51 85.89 1.9 Debt to Equity 3.32 3.62 (8.3) 4.49 3.54 26.9 Gearing Ratio (Times) 0.77 0.79 (2.4) 0.83 0.79 4.7 Interest Cover (Times) 1.21 1.76 (31.3) 1.03 1.44 (28.5) Dividend Cover (Times) N/A N/A – 0.58 1.21 (52.4) Current Ratio (Times) 1.12 1.01 10.6 1.23 1.03 19.8 Acid Ratio (Times) 0.72 0.65 10.2 0.70 0.59 18.0 101 161 271 11 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Highlights

Financial Capital

Rs. 58,505 million Rs. 672 million Rs. 0.67 Rs. 0.65 Group revenue Group profit before tax Group earnings per share dividend per share

Institutional Capital

442 retail shops Multiple brands, unmatched across the country products portfolio after sales services and multiple financing options

Customer Capital

over 9 million over 1.3 million customers loyalty members

Employee Capital

2,798 5th consecutive year singer Core Unique Employees recognised as “Great Place to Work” Competences culture

Social and Environmental Capital

CSR – Dedicated to improve education, sports and health. 12 13 25 35 SINGER’S BUSINESS MANAGEMENT DISCUSSION LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer At a glance

REVIEW PERIOD AT A GLANCE

2018

April September

Upgraded satellite shop in Ginigathhena to Singer Plus Annual Fashion Show and Awards Ceremony. showroom and opened a new satellite shop in Katupotha. Launched of new Sony Audio Range. Upgraded satellite shop in Kalawana to Singer Plus showroom. May

Opened a new service centre in Vauniya. October 8th Installation Ceremony of Singer Sri Lanka Toastmasters Club. June Singer Finance Annual Awards Ceremony. Launched Sony “BRAVIA OLED” TV. Opened a SISIL shop in Galewela and upgraded satellite shop in Thalawa to Singer Plus showroom. November

July Singer Life Style Fiesta – 2018. Annual Digital Media Convention 2018. Launched Singer Epic AI TV Kids Art Competition. 5th Installation Ceremony of Singer Rotaract Club. Upgraded satellite shop in Kosgama to Singer Plus showroom. December

Opened a new SISIL shop in Moratuwa. Upgraded two August satellite shops in Polpithigama and Diyathalawa to Singer Plus showroom and opened a new satellite shop in Labuduwa. Opened a Singer Plus showrooms in Puthukkuduirippu and upgraded satellite shop in Kodikamnam to Singer Plus showroom.

2019

January March

Annual religious ceremony. Won “People’s Brand of the year” for the 13th consecutive year and “Durable Brand of the Year” at Slim-Nielsen Peoples Awards. February Opened three Singer Plus showrooms in Moratuwa, Gampola, Opened a new SISIL shop in Hingurakgoda. Upgraded and Kurunegala and opened a new satellite shop in Tissapura. satellite shop in Natthandiya to Singer Plus showroom. Opened new Mega shop in Kaduwela. 101 161 271 13 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

SINGER’S LEADERSHIP SINGER IS LED BY LEADERSHIP DEDICATED TO MAXIMISING LONG-TERM VALUE TO ALL OUR STAKEHOLDERS. OUR BOARD DETERMINE THE STRATEGY AND DIRECTION OF THE COMPANY AND OVERLOOK ITS EXECUTION WHILE MANAGING RISK.

14 16 18 22 CHAIRMAN’S CEO’S REVIEW BOARD OF MANAGEMENT MESSAGE DIRECTORS TEAM 14 5 25 35 SINGER AT BUSINESS MANAGEMENT DISCUSSION A GLANCE MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer’s Leadership

CHAIRMAN’S MESSAGE

Singer Sri Lanka will continue to build the pipeline towards future growth and will ensure that the “Singer” brand name continues to be in the hearts and minds of the people.

Dear Shareholder, I am pleased to present the Annual Report and Audited Financial Statements of Singer (Sri Lanka) PLC for the Financial Year 2018/2019.

The year under review was a challenging year. Lower growth in GDP and per capita income together with continuous drought in the dry zone of the country in first half of the year coupled with political instability during the latter part of the year 2018 adversely affected consumer purchasing power of large market segment. Depreciation of Sri Lankan Rupee against the US Dollar was one of the key adverse impacts, due to the lagging effect to adjust the market prices. The Interest rates too remained at a higher levels than expected.

All these facts resulted in an adverse impact to the local Consumer Durables industry, in which Singer Sri Lanka operates. The Consumer Durables industry is more susceptible to market and economic conditions than other business sectors. When the customer’s disposable income and markets sentiments decrease, the demand for consumer durables is well below that of the general market and vice versa.

Performance The Singer Group recorded a revenue of Rs. 58.5 billion for the twelve-month period 2018/19, compared to Rs. 53.1 billion for same period in the prior year with a growth of 10% , whilst 101 161 271 15 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Chairman’s Message compared to Rs. 65.1 billion revenue during the fifteen month The financing arm Singer Finance (Lanka) PLC which commenced period of 2017/2018 as appears in the Financial Statements given operations in 2004 has evolved as a medium to large scale in page 176. Finance Company in the last decade. The Company performed reasonably well despite the intense competition. Total assets of The Group posted an Operating profit of Rs. 3,997million for the Singer Finance grew by 21.1% to Rs. 19.5 billion, YoY to 31st twelve months ending 31st March 2019 and a profit of Rs. 672 million March 2019. Over the years, Singer Finance was conservative in before tax and Rs. 386 million after tax for the twelve month period their growth plans. However, this notion has changed after Hayleys compared to Profit Before Tax of Rs. 2,049 million and Profit After Tax PLC took over the ownership of Singer Sri Lanka PLC; Singer of Rs. 1,220 million for the fifteen month period in prior year. Finance has now more ambitious plans of branch expansion, where the company expanded its presence by opening 4 new Outlook branches and relocating 3 window operations. Singer (Sri Lanka) Group is the largest retailer, financier and manufacturer of consumer durables in Sri Lanka, with 442 In the year under review, macro-economic conditions were not as retail stores and a fast growing online e-commerce platform conducive for the industry due to multiple reasons as elaborated representing a wide range of international consumer durable earlier and the new tax levy imposed directly on the financial sector. brands. The company also serves over 2,800 dealers/sub retailers. It is also renowned for its after-sales service network with The country faced an unexpected tragedy with terrorist attacks 14 Regional Service Centres and over 300 service agents. Apart by an extremist group on the Easter day – 21st April 2019. The from its household brands, the company is exclusive distributor impact of this attack was severe and perhaps the most sever in for many well-known international consumer durable brands. this decade. The country needs to recover fast from this setback, where I am hopeful of the capability and resilience of Sri Lankans Despite the externalities having negatively impacted the business, to bounce back from tragedies as proven throughout our history. Singer Sri Lanka will continue to build the pipeline towards future growth and will ensure that the “Singer” brand name continues I take this opportunity to thank Mr. Asoka Pieris former Group Chief to be in the hearts and minds of the people, by expanding the Executive Officer for his contribution, long service and leadership customer base through our branch network; serving Singer’s during his tenure at the Company. I welcome Mr. Mahesh customers by providing innovative and exciting product offerings Wijewardene to the Group as Chief Executive Officer. Mr. Mahesh together with a greater shopping experience. Wijewardene has been with Singer for 22 years and I wish him continued success with the Singer Group. Key Strategies I would like to acknowledge Mr. Gavin Walker’s contribution to Singer Sri Lanka enjoys market leadership in many categories. the company on his resignation from the Board after serving as a Over the last 140 years, Singer has remained the market leader Director to the Board from year 2005 and pleased to welcome Ms. in sewing machines and today it has successfully branched Otara Gunewardhana as Non-Executive Director to the Board. out to be the market leader in consumer durables – namely in refrigerators, televisions, fans, and small appliances etc. Today Mr. Stephen Goodman who was reappointed to the Board on Singer is the market leader in smartphones, domestic computers 26th June 2018 has intimated that he does not wish to present and laptops in Sri Lanka, a product that is closely associated with himself for reappointment at the forthcoming Annual General the youth of this country. Meeting and would thus cease to be a Director on conclusion of the Annual General Meeting on 25th June 2019. I take this Furniture will be a key focus area going forward, and many initiatives opportunity to acknowledge his contribution and long service to are in place to enhance competitiveness. The company intend the Board and Singer Group. to partner with new suppliers, to introduce world class brands along with a wider range to suit the needs of our customers. I place my appreciation to all Senior Management Team, and all The Company will step up its efforts in e-commerce, where we staff members for their continued dedication and commitment. have introduced web access to all stores. Singer Sri Lanka has I wish to express my heartfelt gratitude to the members of the to contend with an intense competition from both large and Board for their support and commitment. Last but not least, established retailers as well as a growing wholesale trade with I thank our customers and shareholders for their continued trust in many new players joining the industry encouraged by open market Singer (Sri Lanka) PLC. access to imports of home branded or generic brand products. The Consumer durables and mobile phone pricing in the market place Sincerely, is very competitive. However, we would differentiate with our quality offering and after sales service. We encourage competition, as it makes us be ahead of our strategies, ensuring that we are neither complacent nor satisfied with mediocrity. Leveraging the trust in the Singer brand and offering customers a wide range of consumer durables along with outstanding customer service and after sales Mohan Pandithage service are Singer’s key differentiation factors which has enabled us Chairman to build trust and long-lasting relationships with our customers. 16th May 2019 16 5 25 35 SINGER AT BUSINESS MANAGEMENT DISCUSSION A GLANCE MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer’s Leadership

CEO’S REVIEW

The year under review proved to be a challenging year due to sluggish market conditions impacted by many macro-economic factors. Despite this, Singer was able to grow the top line by 10% to reach Rs. 58.5 billion in revenue compared to the twelve months period 2017/18 a commendable achievement under tough conditions. Our margins were impacted due to a variety of factors including rising interest rates, pricing under low consumer disposable income to maintain volumes in a weak market. Being reliant on imports, the devaluation of the Sri Lanka Rupee was not favourable to us and change to new accounting standard (IFRS 9 and 15) with additional provisioning requirements.

Since assuming my position as Chief Executive Officer in November 2018, our overall approach has been to create a company that runs on the highest professional and global standards which we firmly believe is the way to thrive in markets. We have focused on every individual operation in detail and established a stringent set of KPIs to achieve. We are gradually aligning ourselves to most of the strategies we set out for ourselves and happy to note that our efforts over the past several months have turned out positive results. We believe that an improved market condition will trigger these KPI’s to deliver much stronger results in future.

2018 also marked a year since Hayleys PLC acquired Singer (Sri Lanka) PLC, and it has been an extremely productive year 101 161 271 17 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 CEO’s review of business synergies as well as establishing strategies for us quality assurance, and online sales. We are investing in process to align ourselves to some group strategies. Singer expanded development, particularly for logistics management, demand the diversification of the conglomerate into a new retail planning and forecasting. We will also be revamping the segment and we anticipate certain synergies as being part of website with the assistance of foreign consultants to take our a large conglomerate; there will be many opportunities for us online business to the next level. to work together. Day-to-day operations, administrative, and HR functions stand to benefit from the sharing of knowledge Singer has long had Corporate Social Responsibility (CSR) and best practices. As of now, approximately 60% of our initiatives, particularly in the areas of education, health, and logistics are managed by Hayleys Advantis, and Singer has youth development. What we intend to do now is to focus on been able to conduct sales for the majority of employees from those sectors in a more structured and sustainable manner. the Hayleys Group. We continue to seek further synergies and We have recruited a dedicated person who will work on the efficiencies between the companies. sustainability of the Company and as part of that initiative, we will bring more focus to those areas of CSR. We are also During the past year, we took a more proactive stance towards taking greater responsibility in the disposal of e-waste by the future of Singer Sri Lanka with regard to our operations taking extended producer responsibility (EPR) seriously, that is and performance. We are consolidating our retail channels to focus on the responsible disposal of our products beyond by converting SISIL World stores into Singer Plus stores. the period of ownership and usage by our customers. The wholesale channel operation was restructured to better manage those operations and achieve increased operational Our continued performance, exemplary customer services, and efficiencies. We also looked to lower administrative costs CSR efforts were recognised in 2018. Singer Sri Lanka moved without negatively impacting functionality. We are looking to up a place to overall 11th position as one of the most valuable extend our reach to more townships, building further on our consumer brands in Sri Lanka and number one in the Retail strength of having one of the largest branch networks in the sector (LMD Brands Annual). We were awarded for the 13th country; retail spaces in certain areas also received significant consecutive year as the “People’s Brand of the Year” at the enhancements. We see increasing potential from e-commerce SLIM-Nielsen People’s Awards, in addition to the “Consumer and will place a greater focus on having a more efficient online Durables Brand of the Year”. We also picked up the Gold award platform. Although our primary strength has been as a brick for our 2017 Annual Report in the Trading Companies category and mortar retail business, the increasing importance of online at the CA Sri Lanka Annual Report Awards. shopping and how customers are embracing new channels for I would like to acknowledge the direction and guidance of our shopping cannot be ignored. We will give more focus on B2B parent company, Hayleys. Our Chairman and Co-Chairman and commercial business, as there is immense potential to have been extensively involved in developing strategies and develop the channel to cater to the needs of corporate clients helped greatly to drive their inputs into the Company; thank with complete solutions. A more customer-oriented approach is you for your continued confidence in Singer. Special thanks being driven across the company that will help to differentiate go to our former CEO, Mr. Asoka Pieris, for his services us from the rest of the industry; as products become more rendered to the Company spanning 26 years, eight of which and more commoditised, a well-trained and knowledgeable he served as CEO; his efforts have undoubtedly helped to put salesforce and after sales support will bring us that extra Singer on the pedestal it is today. I extend my appreciation advantage. We will continue to expand our product portfolio, to our employees who have been supportive throughout this improve product mix and margins, and look to have more difficult year and helped to maintain our market leadership product diversification to cater to different industries, such as position, and we hope you will continue to take us forward in agricultural and heavy equipment, and IT equipment solutions. the coming year. I want to express my sincere gratitude to the We are looking at a rapid expansion of Singer Finance from a Board of Directors and shareholders for having confidence in med size company to reach to big league. Singer Finance has me to take the Company forward. Finally, I wish to express my gained a very good name and a reputation in the industry and appreciation to our customers for your continued support and we are confident that they will boost their position in the market. loyalty to Singer, and we pledge to always serve you with the Our factories are now geared to bring in new technologies highest standards. and introduce new/advanced products at a faster pace. We Sincerely, have already lined up a new range of world-class and cost- competitive refrigerators and washing machines line-up for the coming year from Regnis. The Furniture factory is focused on their production output, quality, and competitiveness of their products in the marketplace; we see great opportunities in the market for pantry cupboards. The Call Centre is now being Mahesh Wijewardene used as an integrated operational division of the Company Group Chief Executive Officer to support many other functions such as after sales service, 16th May 2019 18 5 25 35 SINGER AT BUSINESS MANAGEMENT DISCUSSION A GLANCE MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer’s Leadership

BOARD OF DIRECTORS

Mr. Mohan Pandithage Mr. Dhammika Perera Mr. Mahesh Wijewardene Executive Chairman Non-Executive Co-Chairman Group Managing Director/ Group CEO Joined to the Board of Singer Joined to the Board of Singer (Sri Lanka) (Sri Lanka) PLC on 2nd October 2017. PLC on 2nd October 2017. Joined to the Board of Singer (Sri Lanka) PLC on 1st June 2006. Joined Hayleys Group in 1969. Appointed to Mr. Dhammika Perera is the quintessential strategist the Hayleys PLC Board in 1998. Chairman and and business specialist with interests in a variety of Mr. Mahesh Wijewardene was appointed Chief Executive of Hayleys PLC since July 2009. key industries including manufacturing, banking and as an Executive Director and the Chief Fellow of the Chartered Institute of Logistics finance, leisure, aluminum extrusion, packaging, Executive Officer of Singer (Sri Lanka) PLC and Transport (UK). Honorary Consul of United plantations, lifestyle, healthcare, consumer and and its subsidiary companies with effect Mexican States (Mexico) to Sri Lanka. Council hydropower generation. from 1st November 2018. Mr. Wijewardene Member of the Employers’ Federation of holds a Master’s Degree in Business He has over 30 years of experience in building Ceylon. Member of the Advisory Council of the Administration from the University of Southern formidable businesses through unmatched strategic Ceylon Association of Ships’ Agents. Queensland and received the Dean’s Award foresight and extensive governance experience for Outstanding Academic Achievement. He Recipient of the Best Shipping Personality gained through membership of the Boards of also holds a Diploma in General Management Award by the Institute of Chartered Ship quoted and unquoted companies. brokers, Excellence Leadership Recognition – from the Open University of Sri Lanka. Institute of Chartered Accountants of Sri Lanka; Mr. Perera is the Chairman of Vallibel One PLC, Mr. Wijewardene is the past Chairman of the Honoured with life time achievement award at Royal Ceramics Lanka PLC, Lanka Tiles PLC, Ceylon Chamber of Commerce – Import Seatrade – Sri Lanka ports, Trade and logistics; Lanka Walltiles PLC, The Fortress Resorts PLC, section and Sri Lanka – China Business Life time award for most outstanding logistics Vallibel Power Erathna PLC, Greener Water Ltd, Council and is a member of the Hayleys and transport personality of the year Chartered Unidil Packaging Ltd, Delmege Limited, and LB Group Management Committee. Microfinance Myanmar Company Limited. He is the Institute of Logistics Transport. Mr. Mahesh Wijewardene has served on Co-Chairman of Hayleys PLC, and The Kingsbury Singer (Sri Lanka) PLC board previously as PLC. Executive Deputy Chairman of LB Finance an Alternate Director from 1st June 2006 to PLC, Deputy Chairman of Horana Plantations PLC. 31st October 2018. He is also an Executive Director of Vallibel Finance PLC and serves on the Boards of Amaya Leisure Mr. Wijewardene serves as a Director of Singer PLC, Haycarb PLC, Hayleys Fabric PLC and Dipped Industries (Ceylon) PLC, Singer Finance (Lanka) Products PLC. PLC, Regnis (Lanka) PLC, Regnis Appliances (Pvt) Limited, Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Limited, Reality Lanka Limited, Domus Lanka (Pvt) Limited and CSR Lanka (Guarantee) Limited. 101 161 271 19 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 BOARD OF DIRECTORS

Mr. Deepal Sooriyaarachchi Mr. Dumith Fernando Mr. Mohamed Hisham Independent Non-Executive Director Independent Non-Executive Jamaldeen Director Independent Non-Executive Director Joined to the Singer (Sri Lanka) PLC Board on the 1st October 2015. Joined to the Board of Singer Joined to the Board of Singer (Sri Lanka) (Sri Lanka) PLC on 2nd October Mr. Deepal Sooriyaarachchi is a Chartered PLC on 2nd October 2017. 2017. Marketer, a Fellow of the Chartered Institute He is a finance professional with over 17 years of Marketing UK and holds an MBA from the Mr. Fernando is Chairman of Asia of wide-ranging experience as a commercial University of Sri Jayewardenepura and an Securities (Pvt) Ltd, a leading property investor and advisor. He is a Fellow Accredited Master Coach and a Master Mentor. independent Investment Banking, of the Association of Certified Chartered Mr. Sooriyaarachchi, counts over thirty years of Research and Stock Broking firm in Accountants, UK and holds a Degree in experience in the fields of sales, advertising, Sri Lanka. Mr. Fernando has over two Engineering and Business from the University marketing, human resource development decades’ experience in international of Warwick, UK. He is the Founder/Managing and strategy. He is a renowned Management Investment Banking, based in New Director of Steradian Capital Investments (Pvt) Consultant Speaker Trainer Author and an Executive York and Hong Kong, with the U.S. Ltd, responsible for Financing, Corporate Coach and a Mentor. Before embarking on full bank JPMorgan Chase & Co. and Structurers, Acquisitions’ and Development. the Swiss bank Credit Suisse AG. time consultancy work he was the Managing He serves as a Director of Singer Industries Previously, he was Managing Director Director of AVIVANDB Insurance PLC (now (Ceylon)PLC, Regnis (Lanka) PLC, Hayleys and Group Chief Operating Officer for known as AIA Insurance). He had received PLC, Talawakelle Tea Estates PLC, Haycarb the Asia Pacific region at Credit Suisse extensive management training and exposure PLC and Lanka Relity Investments PLC. He is – a business with over USD 2.5 billion here and overseas including National University also Executive Director of numerous real estate in revenues across 12 countries. of Singapore, Asian Institute of Management and companies focusing commercial property Stanford Business School USA. Mr. Fernando is a Director of the investment and development. Mr. Sooriyaarachchi serves as a Non-Executive Colombo Stock Exchange. Independent Director of; AIA Insurance Lanka He holds a BA (Honors) in Physics and PLC, Sampath Bank PLC, Pan Asian Power PLC. Economics from Middlebury College, He is a consulting partner of RBL USA. U.S.A. and an MBA from Harvard He is a Past President of the Sri Lanka Institute of Business School. Marketing, and a Past Commissioner of Sri Lanka Inventors Commission. 20 5 25 35 SINGER AT BUSINESS MANAGEMENT DISCUSSION A GLANCE MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer’s Leadership BOARD OF DIRECTORS

Mr. Dilip Kumar De Silva Ms. Otara Gunewardene Mr. Sarath Ganegoda Wijeyeratne Independent Non-Executive Director Non-Executive Director Independent Non-Executive Director Joined to the Board of Singer (Sri Lanka) Joined to the Board of Singer Joined to the Board of Singer (Sri Lanka) PLC on the 1st August 2018. (Sri Lanka) PLC on 2nd October 2017. PLC on the 1st April 2018. Ms. Otara Gunewardene rose to fame as Fellow Member of The Institute of Chartered Mr. Wijeyeratne is an Associate member of The Sri Lanka’s leading female entrepreneur, fashion Accountants of Sri Lanka and Member Institute of Chartered Accountants of Sri Lanka icon and philanthropist. Her lifestyle store, Odel, of the Institute of Certified Management (ACA), Fellow Member of the Chartered Institute became renown throughout Asia as a top retailer Accountants of Australia. Holds an MBA from of Management Accountants, UK, (FCMA) and and Otara was the first female entrepreneur to the Postgraduate Institute of Management, a Graduate Member of the Australian Institute of take her company public in Sri Lanka in 2010. University of Sri Jayewardenepura. He has wide-ranging experience in several Senior Company Directors (GAICD). After 25 years of hard work and dedication Management positions in large private sector that spearheaded Odel as Sri Lanka’s number He moved as a finance professional to Price entities in Sri Lanka and internationally. He also one department store, Otara sold her shares Waterhouse, Bahrain, and has extensive experience served the Hayleys Group between 1987 and to Softlogic PLC in 2014, marking the end of a in audit and advisory services. Commenced a 2002 and re-joined in 2007. Mr. Ganegoda glorious era. Banking career at HSBC Bank Middle East, as Head was appointed to the Hayleys Group of Finance and Operations and latterly, was Head of During her tenure at Odel, Otara initiated Embark Management Committee in July 2007. Global Markets and Treasury for the group offices of – a brand that would be synonymous with street Mr. Ganegoda serves as a Director of Singer HSBC Group in the Kingdom of Bahrain. A member dog welfare in Sri Lanka. Otara revolutionised the Industries (Ceylon) PLC, Regnis (Lanka) PLC, of the Senior Management team. Responsible for idea of street dog welfare in Sri Lanka by using Regnis Appliances (Pvt) Limited, Singer Digital Corporate Treasury Sales and management of all profits from Embark’s brand and merchandise Media (Pvt) Limited, Reality Lanka Limited, Asset and Liability Management (ALCO) for three towards rescue and treatment operations. With Singer Business School (Pvt) Limited and legal entities of HSBC group operating in Bahrain. the progression of Embark as an organisation Hayleys PLC since 2009 and has responsibility In 2010, joined Third Wave International WLL (TWI) that works towards rescuing, treating, rehoming for the Strategic Business Development Unit of as an equity partner and CEO and embraced and improving the lives of street dogs, Otara has Hayleys PLC. entrepreneurship. Leads a team of consultants also branched out to animal welfare in general, and facilitates consultancy offerings in Financial environmental conservation and social welfare Advisory, Human Resources, Marketing, Project and through both Embark and the Otara Foundation. Quality Management, Research and Learning and Development to the private and public sector entities in Bahrain and Oman.

Mr. Wijeyeratne serves as a Non-Executive Director of Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC, Hayleys Fibre PLC and Sampath Bank PLC. 101 161 271 21 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 BOARD OF DIRECTORS

Mr. S.H. Mr. L.N.S. Kumar Mr. Lalith Yatiwella Mr. H.P. Sujeewa Goodman Samarasinghe Alternate Director to Perera Non-Executive Alternate Director to Mr. S. Ganegoda Alternate Director to Director Mr. M.H. Jamaldeen Mr. Mahesh Wijewardene Joined the Board of Singer Re-appointed to the Re-appointed to the Board of (Sri Lanka) PLC on 8th August 2014. Re-appointed to the Board of Singer Singer (Sri Lanka) PLC on Board of Singer Director Finance of Singer (Sri Lanka) (Sri Lanka) PLC on 22nd January 2019. PLC. He is also a Director of Singer (Sri Lanka) PLC on 26th June 2018. 22nd January 2019. Director – Marketing Singer (Sri Digital Media (Pvt) Ltd., Singer Business Mr. Goodman is an Lanka) PLC. Holds a Diploma School (Pvt) Ltd. Alternate Director of Mr. Sujeewa Perera is the Executive Director in Business Administration and Singer Finance (Lanka) PLC. Factory Director of Singer and Chairman of Diploma in Marketing and MBA from Mr. Yatiwella is an Associate Member of (Sri Lanka) Factory complex the Board of Sewko University of London. The Institute of Chartered Accountants in Piliyandala. Holdings Limited and Mr. Samarasinghe has served of Sri Lanka and holds a BSc He joined the Singer Group is Chairman of the on Singer (Sri Lanka) PLC Board (Hons) Special Degree in Business in September 1994 as Board of Singer Asia previously as an Alternate Director Administration from the University of an Internal Auditor after Limited. He is also from February 2011 to October 2018. Sri Jayewardenepura. completing articles at KPMG Director, Chairman, and joined Singer Sri Lanka President and Chief Factory as an Assistant Executive Officer of Accountant in June 1997 Retail Holdings N.V. and risen through the Mr. Goodman has Corporate ladder. held such similar positions within the Mr. Perera has served on Group since 1998. Singer (Sri Lanka) PLC He holds a BS Board previously as an (Economics) from Alternate Director from May the Cornell University 2016 to March 2018. and an MA, Mph (Economics) from the Yale University.

Not in picture 22 5 25 35 SINGER AT BUSINESS MANAGEMENT DISCUSSION A GLANCE MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer’s Leadership

MANAGEMENT TEAM

Mr. S. Ramanathan Mr. J. Mendis Mr. L.A.D.K. Perera Mr. B.T.L. Mendis Director – Logistics Credit Director Director – Information Technology Director – Commercial

Mr. K.D.J.M. Perera Mr. T. Amarasuriya Mr. V. Tennakoon Mr. R. Kulasuriya Director – Operations Chief Executive Officer – Director – Sales Director – Human Resources and Singer Finance (Lanka) PLC Business Integration

Mr. A.P. Manorathna Mr. D.B. Wijesundara Mr. M.I. Carder Mr. G.A.K. Weerasuriya Deputy Director – Services Deputy Director – Marketing Head of Treasury and Senior Manager – Inventory Investor Relations

Mr. A.U. Karunarathne Mr. T.G.S. Perera Mr. I.A.S. Kolombage Mr. M.M.C. Priyanjith Senior Manager – Merchandising Senior Manager – Field Inventory Commercial Manager Head of Risk Management and Promotions Operations 101 161 271 23 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Team

Mr. V. Gomes Mr. W. L.I.A. Gunathilake Mr. K.R.L. Perera Mr. A.R.N.P.K. Wijesundara Head of Financial Services Business Development Manager – Group Administration Manager Sales Manager – Agro and Mega and Singer Homes Channel Transportation

Mr. S.H. Perera Mr. T.J. Martyn Mr. A.A. Sathiyamoorthy Mr. P. Jayatilake Senior Manager – Budget and Senior Manager – Apparel Senior Manager – Trade Credit Marketing Manager – Electronics Planning Solutions

Mr. T.L. Senaviratne Mr. D.D.W. Dassanayake Mr. K.P. Peramunugamage Mr. L.R.P. Perera Senior Manager – Information Senior Manager – Credit Head of Business School Business Development Manager – Technology Retail Channel

Mr. N.I. Kuruppuarachchi Mr. S. Serasinghe Mr. N.B. Ranasinghe Mrs. P.T.K. Liyanage Senior Manager – Legal Senior Manager – Distribution Senior Manager – Revenue and Finance Manager Margin 24 5 25 35 SINGER AT BUSINESS MANAGEMENT DISCUSSION A GLANCE MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Singer’s Leadership Management Team

Mr. R.B. Gaspe Mr. K.I.S. Perera Mr. E.R.A. Silva Mr. K.D.S. Kanishka Head – Strategic Business Business Development Mananger Business Development Manager – Senior Manager – Promotions Development Unit – Whole Sale (South) Institutional Sales

Mr. T.U.S. Peiris Mr. S.M.D.S.K. Jayatilake Mr. M. Hanas Mr. G.T. Galagederage Business Development Manager – Senior Manager – Human Business Development Manager – Senior Manager – Research and SISIL Channel Resources Digital Media Development

Mr. T.W.S.M. Perera Dr. M. Balasuriya Mr. U. Ganehiarachchi Senior Manager – Digital Media Head of Regulatory and Quality Business Development Manager – Assuarance Whole Sale (North) 101 161 271 25 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

BUSINESS MODEL SINGER HAS ESTABLISHED A UNIQUE BUSINESS MODEL THAT ENCOMPASSES A VAST OFFERING OF BRANDS, PRODUCTS, AND SERVICES, AFFORDING UNPARALLELED CHOICE TO OUR CUSTOMERS.

26 31 33 OPERATING STAKEHOLDER MATERIALITY ENVIRONMENT ENGAGEMENT 26 5 13 35 SINGER AT SINGER’S MANAGEMENT DISCUSSION A GLANCE LEADERSHIP AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Business Model

OPERATING ENVIRONMENT While South Asia is the fastest growing region in the world at an estimated economic growth of 6.9% in 2018, Sri Lanka faced challenges that hindered economic growth from reaching its potential, falling short of IMF projections of 4.2% to a recorded 3.2%, down from 3.4% in 2017.

The global economy declined in 2018 to a projected 3.7% growth, a result of the decline in trade and manufacturing activity following trade tensions between major economies. Growth in advanced economies continued to decline, hitting 2.2% in 2018 against 2.3% in 2017, due to slower net export activity in the Euro area and fiscal stimulus in the United States. Borrowing costs for emerging market and developing economies (EMDEs) increased as the US Dollar strengthened, energy prices fluctuated, financial market volatility increased, and risk premiums rose, leading to increased capital outflows and currency pressures. Growth for EMDEs declined to an estimated 4.2%. 101 161 271 27 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Operating environment

While South Asia is the fastest growing region in the world The finance subsidiary of Singer (Sri Lanka) PLC, Singer at an estimated economic growth of 6.9% in 2018, Sri Lanka Finance, was incorporated in 2004. Subsidiary companies, faced challenges that hindered economic growth from Regnis (Lanka) PLC and Singer Industries (Ceylon) reaching its potential, falling short of IMF projections of 4.2% PLC, manufacture washing machines, refrigerators, and to a recorded 3.2%, down from 3.4% in 2017. The country’s sewing machines. service industry and agriculture industry largely supported growth at 4.7% and 4.8% respectively. Consumption and In September 2017, Hayleys PLC and its subsidiaries acquired investment expenditure also supported growth. The total 61.73% of shares in Singer (Sri Lanka) PLC in what was the size of the Sri Lankan economy was estimated at USD 88.9 single largest acquisition for a listed company in Sri Lanka in billion and per capita GDP at USD 4,102. The country faced recent history. Hayleys PLC made a mandatory offer thereafter additional burdens from a period of political instability towards in October 2017, and holds 80.96% of the total shares in issue the end of 2018 which led to increased pressure on exchange at the first stage of acquisition. The acquisition has been a rates and a downgrade in the Sovereign rating. Despite a smooth transition for both companies owing to similar cultures growth in export earnings, import expenditure increased, and opportunities for business synergies. leading to the trade deficit crossing USD 10 billion. The Central Bank and Government addressed the widening trade On 15th October 2018, Hayleys PLC purchased the balance deficit by increasing tariffs on non-essential imports, imposing 35,562,883 (9.47%) ordinary shares held by Retail Holdings margin requirements, tightening loan-to-value ratios on certain (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47.00 types of lending, and suspending the issuance of letters of per share upon Retail Holdings (Sri Lanka) BV exercising credit on concessionary permits for vehicle imports. their option to sell its shares to Hayleys PLC as previously agreed at the time of the Mandatory Offer made in 2017. After Government regulations imposing a 100% cash margin on accepting this offer, Hayleys PLC together with its Group the import of most consumer durables affected the operating Companies holds 90.43% of Singer (Sri Lanka) PLC. cash flows of Sri Lankan consumer durable retailers. Demand for consumer durables had considerably declined The combined companies share over 280 years of experience towards the end of 2018 as a result of the country’s lowered in the Sri Lankan market. discretionary income levels and rise in interest rates. Retailers were compelled to absorb some costs to stay competitive Operational Structure and reduce the impact on demand but had to endure even The Singer Group comprises nine companies and a separate weaker operating margins. The measures applied to finished manufacturing division. goods, however, which gave Singer an advantage due to its large local assembly operations for refrigerators and washing Singer (Sri Lanka) PLC and Singer Digital Media (Private) machines. Middle income earners were pressured to be Limited serve as the Sri Lankan distributors for its home more conservative with their spending, leading to the market brands of “Singer” and “SISIL” and several major international for electrical goods to decline between 10%-20% by the first brands, and purchase materials and components from quarter of 2019. overseas suppliers. Additionally, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, and Regnis Appliances (Pvt) The first quarter of 2019 also saw the measures the Limited purchase materials and components from overseas Government implemented help the Sri Lankan Rupee to suppliers. The rest of Singer (Sri Lanka) PLC’s operations fall appreciate against major currencies and the IMF resumed the exclusively within Sri Lanka. Extended Fund Facility (EFF) arrangement, helping to improve investment sentiments. However, the country continues to The Singer Group is spread across every geographical region face a challenging operating environment which will lead to in Sri Lanka. During the year, we opened 11 new showrooms in conservative outlooks for the remainder of 2019. Puthukudirippu, Kurunegala, Galewela, 2 shops in Moratuwa, Hinguruakgoda, Kaduwela, Gampola, Katupotha, Labuduwa Business Model/Strategy and and Tissapura. 8 Singer Plus stores received upgrades. Execution History The history of Singer goes back to the introduction of sewing machines in 1851 by the Singer Corporation. Singer embarked on the journey of establishing itself as a leader in the local consumer durables industry in 1877 when it started the sale of home appliances in Sri Lanka, and was incorporated as a public liability company, Singer (Sri Lanka) PLC, in 1974. The Company was listed under the Colombo Stock Exchange in January 1981. 28 5 13 35 SINGER AT SINGER’S MANAGEMENT DISCUSSION A GLANCE LEADERSHIP AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Business Model Operating environment

Operating Environment

Inputs Outputs Outcomes Registrar of Companies

Financial Capital For Investors zz Stability Internal Controls zz Shareholders’ funds Board Charters zz Growth zz Dividends and interest

zz zz zz Borrowed funds Sri Lanka Profits Capital gains through share price

zz Distribution rights for renowned brands Risk Management Central Environmental zz A Great Place to Work zz Work life balance zz Property, plant and equipment Digital Media zz Reputation and ethical practises zz Ethical practise zz Maintains real time ERP system and zz Singer Reputation Data base Processes Authority

Resources put into the processes zz Suppliers and business partners For Suppliers and zz Awards and accolades zz A market place Business Partners zz Credit ratings Mission zz Growth opportunities zz Access to Singer’s branch network zz Activities undertaken zz

Unique hire purchase system to Results generated through the processes An integrated supply chain zz A market place for their products Impact of the outputs on stakeholders provide customer financing zz Undisputed relationship for value creation zz Standards and assurance Industires

Singer certifications zz Trading Employee Capital zz Long-term relationship and security

zz 2,798 employees Code of Ethics zz Financial services (Fair Trading Commission Act)

zz Core competencies zz Manufacturing Anti-competitve regulations For Government zz Tax revenue zz zz zz Company unique culture Values Taxes, duties and levies Economic growth zz Assembling zz Singer Business zz zz Governance Framework

Great place to work Regulatory Environment Economic opportunities Employment zz Educational services zz Innovation School Customer Capital zz Customer base of millions of Sri Lankans and hire purchase customers

For Customers zz A loyal and satisfied zz Over one million loyalty card members Articles of Association Strategic Imperatives zz Quality products and services customer base zz Singer call centre and Facebook fans zz Flexible financing options for purchases zz Choice of products and services zz Reputed after sales service

Regnis zz zz Group Payment of utility bills through Affordability

zz Over 1,080 dealers and distributors Corporate Governance branch network zz Enhanced living standards zz 14 Service centres and 384 service zz Unmatched after sales services zz Peace of mind

franchise agents Colombo Stock zz Better return, trust and security on zz Exchange customer deposits Better return for deposit holders Social and Environmental Capital zz Land For Society and environment zz Community development zz Water zz Community investments zz Environmental consciousness zz Energy zz Shared value zz Financial inclusion zz Air zz “Social license” to operate 101 161 271 29 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Operating environment

Operating Environment

Inputs Outputs Outcomes Registrar of Companies

Financial Capital For Investors zz Stability Internal Controls zz Shareholders’ funds Board Charters zz Growth zz Dividends and interest

zz zz zz Borrowed funds Sri Lanka Profits Capital gains through share price

Singer appreciation zz Customer Deposits zz Dividend zz A loyal shareholder base Central Bank of Sri Lanka zz Growth in market share Institutional Capital zz Strong Peoples Brand of the country Finance zz Strong house brands Singer For Employees zz A satisfied workforce zz 442 retail network zz Remuneration and benefits zz Career development zz Product portfolio Framework Vision zz Training and development zz Realised “dreams” zz Distribution rights for renowned brands Risk Management Central Environmental zz A Great Place to Work zz Work life balance zz Property, plant and equipment Digital Media zz Reputation and ethical practises zz Ethical practise zz Maintains real time ERP system and zz Singer Reputation Data base Processes Authority

Singer certifications zz Trading Employee Capital zz Long-term relationship and security zz 2,798 employees Code of Ethics zz Financial services (Fair Trading Commission Act) zz Core competencies zz Manufacturing Anti-competitve regulations For Government zz Tax revenue zz zz zz Company unique culture Values Taxes, duties and levies Economic growth zz Assembling zz Singer Business zz zz Governance Framework

Regnis zz zz Group Payment of utility bills through Affordability zz Over 1,080 dealers and distributors Corporate Governance branch network zz Enhanced living standards zz 14 Service centres and 384 service zz Unmatched after sales services zz Peace of mind

franchise agents Colombo Stock zz Better return, trust and security on zz Exchange customer deposits Better return for deposit holders Social and Environmental Capital zz Land For Society and environment zz Community development zz Water zz Community investments zz Environmental consciousness zz Energy zz Shared value zz Financial inclusion zz Air zz “Social license” to operate 30 5 13 35 SINGER AT SINGER’S MANAGEMENT DISCUSSION A GLANCE LEADERSHIP AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Business Model Operating environment

Unique Business Model Since its inception, Singer has branched out from a single associations and perceptions. These efforts have culminated product to a wide range of products aimed at satisfying in Singer’s eminent position in the Sri Lankan consumer modern consumer needs in the area of consumer durables. durables retail market. This is the result of Singer having developed a unique business model, one that no competitor has been able to Through over 40 world renowned brands, Singer offers successfully emulate, be it our culture or processes. customers of any social strata the widest range of products and services that cater to their lifestyles, tastes, expectations, The origins of Singer (Sri Lanka) PLC go back to 1877 to a and aspirations. The result is that we deliver unprecedented small store based in Pettah. Singer (Sri Lanka) PLC’s parent value to our customers, helping them to raise their company established in parallel Singer Industries (Ceylon) living standards. PLC and Regnis (Lanka) PLC, while Singer (Sri Lanka) PLC established the Singer (Sri Lanka) Piliyandala Factory Singer Omni Channel Presence between 1963 to 1995, leading to an impressive line of locally manufactured/assembled items – sewing machines, Singer’s extensive network of distribution channels across televisions, refrigerators, washing machines, solid and layered Sri Lanka is one of the most comprehensive distribution furniture, and domestic/agro water pumps. networks in the nation. It is an invaluable asset that few other corporates can claim to match. Singer ventured into the field of financial services, initially offering hire purchase financing to its customers and later From conventional bricks and mortar stores to electronic establishing a finance company. Singer Finance (Lanka) PLC channels, the distribution network encompasses a variety offers customers the convenience of settling utility bills from of channels that enable customers to purchase goods in a any Singer store island wide. More recently, Singer ventured manner most convenient to them. The omni channel strategy into the e-commerce business via company owned website has allowed us to offer multiple brands and a wide range of “Singersl.” facilitating for e-commerce online purchase of products and services in tandem with emerging consumer products from any part of the country or world through Internet tastes and preferences and the rapid pace of development in access. The Company has seen a lot of success as a result of information and communications technology. this unique business model encompassing a vast offering of brands, products, and services, affording unparalleled choice Furthermore, Singer has prioritised the development of to the customer. e-commerce channels to offer more convenience to customers. While this addresses the changing preferences of our customers, it also enables us to realise operational Strategy and Execution efficiencies from a corporate perspective. Beyond Singer’s unique business model, its strategy and its execution are instrumental to defining its success. The Company has a large and knowledgeable workforce, skilled, and experts in the fields of retail, manufacturing, and finance. This workforce is adept at escalating ideas and first-hand operational information to top management, essential for formulating strategies and making decisions to meet customer needs effectively. The business model enables the flow of information through to key decision-makers in a timely manner, thus facilitating information to be analysed and utilised in time to achieve successful results.

Multi-brand Strategy Singer Sri Lanka has consciously embraced a multi-brand strategy that leverages the brand equity of Singer. This opens up multiple segments of Sri Lankan consumers to Singer, enabling us to target different demographics through a variety of high quality, market leading, innovative products at affordable prices and achieving economies of scale through our wide network of distribution channels. This strategy has enabled us to strengthen our brand by enhancing customer 101 161 271 31 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

STAKEHOLDER ENGAGEMENT

Stakeholder Identification Stakeholder Engagement We identify our stakeholders as individuals or groups who Singer actively seeks to ascertain valuable feedback through can affect the value creation process of the Company over open dialogue with internal and external stakeholders. time. These stakeholders may significantly be affected by our Details of how we engage with our stakeholders are provided business operations, and likewise their actions may have an throughout this Report. Continuing our GRI journey, we are impact on our ability to achieve our objectives. engaging with our stakeholders this year through our GRI Standards reporting and CSR programmes. This will help us to Accordingly, we have identified our primary stakeholders obtain more specific feedback on our approach, which will be to be our customers, employees, shareholders, suppliers, shared in future reports. community, and Government authorities. Other key stakeholders can include bankers, financial institutions, depositors, assurance services providers and competitors.

Stakeholder Method of engagement Frequency

Customers Advertising and promotions, retail channels, call centre, field programmes, after sales Ongoing Service, consumer financing Employees Management and Divisional Meetings, initiatives by HR Division, various Meetings and Ongoing/Daily Collective Agreements with Unions Shareholders Annual General Meetings Annually Quarterly Reports and correspondence Quarterly/ Ongoing Suppliers Visits, consultations, workshops Ongoing Community Various projects Ongoing Government Authorities Timely tax payments, complying with all regulations Ongoing

Through feedback obtained from stakeholder engagement, we have identified the topics that are of concern to our key stakeholders, which is disclosed in the following section:

Topics and Concerns of Key Stakeholders Upon identifying our stakeholders, we identify their expectations and concerns and assess them. We have listed their primary expectations and concerns and our response to them below:

Stakeholder Concern Response

Customers Product availability Singer ensures products are widely available through its island-wide distribution network.

Enhanced customer service Singer provides an enhanced customer service to its customers through its knowledgeable and courteous staff and extensive branch network.

Reliable quality of products Singer provides dealership to many world-renowned brands with high quality and assures quality of locally assembled Singer brand products.

After sales service Singer provides island wide after sale service franchise network and call centre facilities to attend after sales services on urgent basis.

Financing options Singer offers various financing options including hire purchase, credit terms, and credit card options. 32 5 13 35 SINGER AT SINGER’S MANAGEMENT DISCUSSION A GLANCE LEADERSHIP AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Business Model Stakeholder Engagement

Stakeholder Concern Response

Employees Increased salaries and wages Singer offers a wide range of financial and non-financial benefits to employees.

Job satisfaction and motivation All employees of the Group undergo performance appraisals to facilitate career management, mapping of development paths, and enhancing their effectiveness and motivation.

Training and continuous career We encourage our employees to pursue career development development opportunities and continuously support their professional growth through training and professional development initiatives.

Suppliers Long-term contracts for purchases Singer maintains an effective relationship with suppliers.

Receive prompt payments Singer honours supplier payments on a timely manner.

Shareholders Growth in profits Singer commits to fulfil shareholder concerns and maintains robust dividend policy.

Dividend growth Singer maintains a stable dividend policy.

Increase in share price Singer experienced above the industry in share prices in the long-term period.

Government Compliance with rules and regulations Singer adheres to Government’s rules and regulations in including tax payments conducting its operations and pays due taxes and duties in a timely manner.

Creation of job opportunities Singer caters direct and indirect job opportunities, island wide helping Sri Lankan economy and society.

Society Minimising threats to the environment Singer engages in all activities in an environment-friendly manner and safeguards the interests of the society and engages heavily in CSR activities.

Creation of job opportunities Singer caters direct and indirect job opportunities. 101 161 271 33 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

MATERIALITY

Materiality Assessment We consider an aspect to be material if it substantially affects our Company’s ability to create value over the short, medium, and long term. This assessment helps us to focus on issues that matter most to us and our stakeholders.

Aspect Indicator Significance Aspect Indicator Significance To Organisation To Stakeholder To Organisation To Stakeholder (High/Medium/ (High/Medium/ (High/Medium/ (High/Medium/ Low) Low) Low) Low) 1. Energy 302 High High 20. Marketing and 417 High High Labelling 2. Biodiversity 304 Medium Medium 21. Diversity and Equal 405 High High 3. Water 303 High Medium Opportunity 4. Emissions 305 Medium Medium 22. Non-Discrimination 406 High Medium 5. Effluents and Waste 306 High High 23. Child Labour 408 High High 6. Environmental 307 High High 24. Forced or 409 High High Compliance Compulsory Labour 7. Employment 401 High High 25. Socioeconomic 419 Medium Medium 8. Freedom of 407 High High Compliance Association and 26. Anti-Competitive 206 High High Collective Bargaining Behaviour 9. Labour/Management 401 High High Relations

402 High High

10. Occupational Health 403 High High Materiality Matrix and Safety

11. Training and 404 High High 1, 5, 6, 7, 8, Education 9, 10, 11, 12, 19 14, 15, 16, 17,

12. Procurement 204 High High High Practises 18, 20, 21, 23, 24, 26 13. Supplier 308 Medium Medium Environmental Assessment 14. Materials 301 High High 2, 4, 13, 25 3, 22 15. Economic 201 High High Medium Performance

204 High High Significance to Stakeholder 16. Customer Health and 416 High High Safety Low 17. Customer Privacy 418 High High

18. Local Communities 413 High High Low Medium High 19. Public Policy 415 Medium High Significance to Singer 34 5 13 35 SINGER AT SINGER’S MANAGEMENT DISCUSSION A GLANCE LEADERSHIP AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Business Model Materiality

Economic Performance Statement of Value Added – Group

Category Twelve months Fifteen months ended ended 31st March 2019 31st March 2018 Rs. ’000 % Rs. ’000 %

Group Turnover – Gross 62,752,757 70,302,397

Other Income 338,062 360,258

Less – Cost of Material and Services 46,116,888 48,487,872

Value Added 16,973,931 100 22,174,783 100

Distribution of Value Added to Employees and Dealers

Salaries, Commissions and Other Benefits 6,114,252 36 7,100,184 32

To Government

Income Taxes, Turnover Taxes, Value Added Tax and 6,854,969 40 10,665,486 48 Other Taxes

To Banks, Deposit Holders and Other Lenders

Interest and Bank Charges on Borrowings and Customer 3,033,076 18 2,531,374 11 Deposits

To Suppliers of Capital

Dividends to Shareholders 244,159 1 826,383 4

Retained for Reinvestment and Future Growth

Depreciation, Amortisation and impairment 600,940 4 670,036 3

Retained Profits 126,535 1 381,321 2

Value Distributed 16,973,931 100 22,174,783 100

Source and Distribution

Sources of Income Distribution of Income

2018/19

2017/18

% 100 80 60 40 20 0 20 40 60 80 100

Value Added Salaries, Commissions Income Taxes, Turnover Taxes, Interest and Bank Charges on and Other Benefits Value Added Tax and Other Taxes Borrowings and Customer Deposits Dividends to Shareholders* Depreciation, Amortisation Retained Profits and impairment 101 161 271 35 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

MANAGEMENT DISCUSSION AND ANALYSIS THE VALUE SINGER SRI LANKA GENERATES AND DERIVES BENEFIT FROM CAN BE IDENTIFIED IN THE FORM OF DIFFERENT CAPITALS WHICH ARE DISCUSSED IN DETAIL IN OUR MANAGEMENT DISCUSSION AND ANALYSIS.

36 50 63 69 86 FINANCIAL INSTITUTIONAL CUSTOMER EMPLOYEE SOCIAL AND CAPITAL CAPITAL CAPITAL CAPITAL ENVIRONMENTAL CAPITAL 36 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis

FINANCIAL CAPITAL

The Singer Group recorded a revenue of Rs. 58.5 billion for the twelve-month period 2018/19, compared to Rs. 53.1 billion for same period in the prior year with a growth of 10%.

Financial Review Preface The following discussion and analysis should be read The Singer Group recorded a revenue of Rs. 58.5 billion for in conjunction with the Audited Consolidated Financial the twelve-month period 2018/19, compared to Rs. 53.1 billion Statements of the Group and the Company for the period for same period in the prior year with a growth of 10% whilst ended 31st March 2019. In this Report, “Group” refers to compared to Rs. 65.1 billion revenue during the fifteen month Singer (Sri Lanka) PLC and its eight subsidiary companies period of 2017/2018 as appears in the Financial Statements and “Company” refers to Singer (Sri Lanka) PLC. given on page 176.

The Singer Group reported operating profit of Rs. 3,997 Basis of Preparation and Comparative Figures million for the twelve months period ended 31st March 2019 The Financial Statements have been prepared in accordance compared to Rs. 3,782 million for same period in prior year with Sri Lankan Accounting Standards (hereafter, referred to with a growth of 5.7% whilst compared to Rs. 4,839 million as SLFRSs and LKASs) issued by The Institute of Chartered during the fifteen months period of 2017/18 as appears in the Accountants of Sri Lanka (CA Sri Lanka) and the requirements Financial Statements. of the Companies Act No. 07 of 2007 and Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995. The Group encountered multiple challenges including a prolonged drought and sluggish market conditions which With the approval of the Registrar of Companies, the lasted throughout the year. The compressed consumer reporting period of Singer (Sri Lanka) PLC was changed disposable income due to high indirect taxes, rupee from 31st December to 31st March with effect from Financial devaluation, and political uncertainty during the third quarter of Year 2017/18 in order to align it with the parent company’s the financial year and import restrictions led to sluggish overall reporting period. Therefore, the comparative year information consumer demand in the economy. Additionally, increased comprises a period of fifteen months from 1st January 2017 borrowings due to imposition of 100% LC margins, higher to 31st March 2018. The current year figures comprise as at impairment costs arising from new accounting standards and and for the period of twelve months ended 31st March 2019. new levies on Financial Sector were key contributory factors Therefore, amounts presented in the Financial Statements are which resulted in a slow growth potential and profit earnings not readily comparable. during the year under review.

Net Turnover Analysis 5% 11% 5% 13%

Consumer Electronics Financial Services 13% 12% Furniture Home Appliances 4% 2018/19 6% 2017/18 IT Products 5% 6% Sewing Other 33% 29% 28% 30% 101 161 271 37 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Capital

The Company was compelled to increase the prices in (15 months). Included in direct interest cost is interest cost stage by stage and recover the cost partially due to sharp for customer deposits and interest on debentures at Singer depreciation of the LKR against the USD and its ripple effect Finance (Lanka) PLC. Customer deposits at Singer Finance on imports which caused significant pressure on product (Lanka) PLC increased from Rs. 5,238 million to Rs. 5,953 margins and the price revisions were a strain on consumers million and bank borrowings increased over prior year to who were already affected by the decline in disposable strengthen the balance sheet position and to fund growth in income. This was a difficult decision but yet necessary to lease receivables and loans. restore lost margins in the interest of long-term sustainability of the business. Gross Profit Gross profit of the Group for the twelve months period reached Revenue Rs. 16,100 million, compared to Rs. 18,209 million in the The Singer Sri Lanka Group recorded a revenue of fifteen months period of the previous year. The Group’s gross Rs. 58.5 billion for the twelve months period compared to margin percentage decreased from 28.0% to 27.5% over the Rs. 65.1 billion for the fifteen months period of 2017/18 whilst prior year. The gross profit of the Company for the period revenue of the Company was Rs. 43.6 billion for the twelve under review was Rs. 12,297 million as against Rs. 14,182 months period compared to Rs. 50.9 billion for the fifteen million in the previous year. Gross margin percentage of the months period of 2017/18. The IT Products segment made Company was 28.2% (12 months) vs 27.9% (15 months). a commendable contribution to boost revenue with a 33% contribution while home appliances, consumer electronics Gross margin percentage of both the Group and the Company and furniture contributed 29%, 11% and 4% respectively. was impacted by lower mix of high margin product lines, Singer Digital Media (Pvt) Limited specialising in mobile phone especially the significant growth of lower margin products – sales to the trade channel, contributed Rs. 11.1 billion through mobile phones compared to the negative growth rate of other revenue from sales to external parties. Singer Finance (Lanka) traditional high margin product lines such as refrigerators, PLC’s contribution to the revenue was 6.5% amounting to sewing machines and televisions. Discounts to flush out slow Rs. 3.8 billion. moving inventory and provision for excess and damaged inventory also contributed to the drop in percentage margins. Categories that grew in the period were Air conditioners However, there is gradual improvement in margin as a result by 12%, Computers by 12%, Mobile phones by 6% and of the price adjustments made in selected product categories Washing Machines by 26%. Some key product lines such as at the later part of the year. In addition, it was increasingly Refrigerators, Flat panel, Water pumps and Sewing machines challenging to protect the product margins in the competitive were performed below that of prior year by 3%, 4%, 28% market conditions that the Company faced in the period under and 10% respectively compared to twelve months period review. The Company was intent in retaining and expanding of 2017/18. market share with the aim of reaping benefits in the long-term.

Group Net Turnover Operating Profit The Group recorded operating profit of Rs. 3,997 million for

75,000 the twelve months period ended 31st March 2019 compared to Rs. 4,839 million for the fifteen months of prior year. The

60,000 Group operating profit margin declined to 6.8% from 7.4% in 2017/18 mainly due to the margin drop in main product lines. 45,000 A modest growth in operational expenditures and decrease in other income compared to prior year, limited the growth 30,000 in operational margins. Selling and administrative expenses of the Group for the twelve months period decreased over 15,000 prior year by 11% from Rs. 13,362 million in 2017/18 fifteen months period to Rs. 11,920 million in twelve months in 0 2018/19 mainly due to the different period of comparisons. Rs. million 2014 2015 2016 2017/18* 2018/19 As a percentage of revenue, Group administrative and selling 2017/18 – Rs. 65,122 million Rs. 58,505 million expenses decreased from 20.5% to 20.3%; this was driven by a few concentrated efforts towards cost rationalisation during *15-months ended 31st March 2018 a challenging period.

Direct Interest Cost Managing costs in a dynamic business environment is Direct interest cost of the Group was Rs. 1,265 million at the a challenge since the Management needs to maintain a end of twelve months, against Rs. 1,281 million in 2017/18 balanced approach on maintaining operational efficiency as 38 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Financial Capital well as catering to the growth of business prospects. Both Profit before Tax the Group and the Company carefully managed costs without sacrificing business expansion and opportunities. 3,500 The Group’s as well as the Company’s results were adversely impacted due to the significant increase of impairment losses 2,800 on trade and hire purchase receivables consequent to the implementation of SLFRS 9 with effect from 1st April 2018. 2,100 Primarily due to differences in impairment methodology under SLFRS 9 that requires impairment allowances to be based 1,400 on forward looking expected credit loss model compared 700 to LKAS 39 where the impairment allowance was made on incurred loss method, the Group’s impairment loss on trade 0 receivables for the twelve months period increased by 42% Rs. million 2014 2015 2016 2017/18* 2018/19 to Rs. 521 million compared to Rs. 368 million in fifteen months in 2017/18 while Company’s impairment loss on trade 2017/18 – Rs. 2,049 million Rs. 672 million receivables increased by 55% to Rs. 213 million from Rs.137 *15-months ended 31st March 2018 million in prior year fifteen months period. Net Finance Cost In addition, the cumulative impact of impairment allowance as at 1st April 2018 arising from the change in methodology The 26% increase in the Group’s total borrowings together with from LKAS 39 to SLFRS 9 (day 1 impact) and the deferred the relatively high cost of funds in the economy, additional tax impact thereon amounting to Rs. 284 million was borrowings and foregoing supplier credit due to 100% LC charged against the retained earnings as at 1st April 2018. margin compelled us to obtain additional borrowings. Further to that net exchange loss of Rs. 186 million due to rupee Consequently, cumulative impairment allowance for Trade devaluation resulted in the increase of net finance cost by Receivable increased to Rs. 1,423 million as at 31 March 2019 20% to Rs. 3,033 million for the twelve months period ended (under SLFRS 9) compared to Rs. 653 million as at 31st March 31st March 2019 from Rs. 2,531 million in fifteen months 2018 (under LKAS 39). period ended 31st March 2018.

Earnings Before Interest, Tax, Depreciation and Similarly, the Company’s net finance costs increased by Amortisation (EBITDA) 8% to Rs. 2,321million for the twelve months period ended The Group’s EBITDA for twelve months period ended 31st March 2019 from Rs. 2,150 million in fifteen months 31st March 2019 was Rs. 4,473 million compared to period of 2017/18. Rs. 5,380 million for the fifteen months of prior year. Whilst Finance income of the Group increased from Rs. 176 million to Group EBITDA margin was 7.6% vs 8.3% in prior period. Rs. 208 million. At the Company level, finance income increased from Rs. 345 million to Rs. 454 million due to increase in interest Operating Profit income from Subsidiary Companies, Singer Finance (Lanka) PLC and Singer Digital Media (Pvt) Limited on their borrowings

5,000 from the Parent Company, Singer (Sri Lanka) PLC and interest income for debenture investment in Singer Finance (Lanka)

4,000 PLC. However, these incomes are offset in the Consolidated Financial Statements. Despite the said challenges, the strong 3,000 business position and the credit rating enable the Company to borrow at relatively competitive interest rates from the banks. 2,000 Income Tax 1,000 The Group’s total tax expense for the period under review decreased to Rs. 286 million from Rs. 829 million in the 0 fifteen months period as a result of the decrease in taxable Rs. million 2014 2015 2016 2017/18* 2018/19 profits and reversal of deferred tax expenses during the 2017/18 – Rs. 4,839 million Rs. 3,997 million current period due to the increase of origination of timing differences. Tax on dividend income for the twelve months *15-months ended 31st March 2018 ended 31st March 2019 was Rs. 70 million compared to the Rs. 112 million in the prior year, this amount was incurred for the interim dividends received from subsidiary companies during 2018/19. 101 161 271 39 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Capital

Total Comprehensive Income for the Period Taxation The Group recorded a total comprehensive income of Rs. 1,006 million after tax for the twelve months period 1,000 50 against Rs. 692 million for fifteen months period, which was above prior year by Rs. 314 million. Singer (Sri Lanka) PLC’s 800 40 total comprehensive income for the period under review was Rs. 448 million vs Rs. 794 million in the fifteen months 600 30 period of 2017/18, a decrease of Rs. 346 million. Group’s Total Comprehensive Income for the twelve months period 400 20 increased over prior year mainly due to the revaluation gain from property, plant and equipment. 200 10 Earnings per Share 0 0 Rs. million 2014 2015 2016 2017/18* 2018/19 % Group Earnings per Share (EPS) for the twelve months period under review was Rs. 0.67 vs. Rs. 2.78 during fifteen months Net Tax Expenses** (Rs. million) Net Effective Tax Rate (%) period in 2017/18. Earnings per share of the Company were **Net Tax expenses include Income Tax, VAT on ECC, Deferred Tax and WHT on Dividend. Rs. 0.37 vs. Rs. 2.66 in year 2017/18. *15-months ended 31st March 2018 Earnings per Share Profit for the Period The Group recorded a profit for the twelve months of 6.25 Rs. 386 million while the profit for the fifteen months period of 2017/18 was Rs. 1,220 million. 5.00

Singer (Sri Lanka) PLC’s profit for the twelve months period 3.75 was Rs. 141 million vs. Rs. 999 million for the fifteen months period of previous year. Both Group and Company profitability 2.50 were impacted by the lower margins mainly due to the 1.25 sluggish market conditions, higher interest and high exchange losses following rupee depreciation and import restrictions and 0 significant provisions for impairment losses on trade and hire Rs. 2014 2015 2016 2017/18* 2018/19 purchase receivables as a result of changing methodology from LKAS 39 to SLFRS 9. 2017/18 – Rs. 2.78 Rs. 0.67

*15-months ended 31st March 2018 In the Group, profit attributable to owners of the Company was Rs. 250 million vs Rs. 1,044 million in 2017/18. Profit Dividend attributable to non-controlling interest was Rs. 136 million Company paid an interim dividend of Rs. 0.65 per share vs. Rs. 177 million in 2017/18. amounting to Rs. 244 million during the financial period ended 31st March 2019.

Profit after Tax Dividend per Share

2,500 3.00

2,000 2.40

1,500 1.80

1,000 1.20

500 0.60

0 0 Rs. million 2014 2015 2016 2017/18* 2018/19 Rs. 2014 2015 2016 2017/18* 2018/19

2017/18 – Rs. 1,220 million Rs. 386 million 2017/18 – Rs. 2.20 Rs. 0.65

*15-months ended 31st March 2018 *15-months ended 31st March 2018 40 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Financial Capital

The Group recorded a total comprehensive income of Rs. 1,006 million after tax for the twelve months period against Rs. 692 million for fifteen months period, which was above prior year by Rs. 314 million.

Return on Equity Dividends Payout Ratio Return on Group equity for the twelve months period under review was 4.6%, whilst in the fifteen months period it was 200 13.8%. Return on equity of the Company was 3.0%, compared to 18.6% in 2017/18. Return on equity has been computed by 160 dividing the profit for the period by the average of total equity as at the beginning and the end of each financial year. 120

80 Return on Equity

40 30.00

0 % 2014 2015 2016 2017/18* 2018/19 24.00

2017/18 – 83% 174% 18.00

*15-months ended 31st March 2018 12.00

Dividends Paid 6.00

0 1,250 % 2014 2015 2016 2017/18* 2018/19

1,000 2017/18 – 13.76% 4.64%

*15-months ended 31st March 2018 750

500 Total Assets Asset growth was mainly due to the capacity expansion in 250 the manufacturing sector, revaluation of property, plant and equipment and increase in inventories. The Group total assets 0 increased by 15% to Rs. 58.0 billion compared to 31st March Rs. million 2014 2015 2016 2017/18* 2018/19 2018 with non-current and current assets growing by 22% and 2017/18 – 826 million 244 million 12% respectively. Group total assets base comprised 39% of non-current assets (2017/18 – 30%) and 61% of current *15-months ended 31st March 2018 assets (2017/18 – 70%). The growth of non-current assets was due to the revaluation and additions made into property, Solvency plant and equipment, mainly in Singer Finance (Lanka) PLC Section 56 of the Companies Act No. 07 of 2007 requires and the manufacturing segment. Increase in operational that a solvency test be carried out prior to the payment of activities accounts for the growth of working capital mainly in dividends. The Board of Directors obtained a Certificate of the Company, Singer Finance (Lanka) PLC and Singer Digital Solvency from the Auditors, prior to the date of dispatch of Media (Pvt) Limited. the interim dividends paid. 101 161 271 41 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Capital

Financial Position Structure Total Liabilities Total liabilities of the Group represented 28% (17% in 2017/18) 100 of long-term liabilities and 72% (83% in 2017/18) of current liabilities. Long-term liabilities of the Group has increased 80 by Rs. 6,862 million to Rs. 14,181 million. This increase was mainly attributable to the increase in long-term interest bearing 60 loans and borrowings by three times over the prior year and increase of deferred tax liability due to the revaluation of 40 property, plant and equipment. Group and Company current

20 liabilities have decreased compared to prior year due to the forgone supplier credit followed by the restrictions imposed

0 on shipping margins and the shifting of short-term debt to % 2017/18 2018/19 2017/18 2018/19 long-term debt of both the Company and the Group during Assets Liabilities the current year.

Assets Liabilities PPE Shareholders’ Funds Total Equity Investments Long-Term Borrowings Inventories Short-Term Borrowings Total assets base was funded by 15% of Group equity Receivables Trade Creditors including non-controlling interest, decreased by Rs. 3% over Cash and Others Other Liabilities 2017/18 to stand at Rs. 8,452 million as at 31st March 2019. The change over prior year was mainly due to the increase in surplus on revaluation of Rs. 636 million (net of tax), and Growth in Property, Plant and Equipment Rs. 386 million net profit which was offset by the adjustments made for the retained earnings of Rs. 472 million due to the 7,500 adoption of IFRS 9 and IFRS 15 and the payment of interim dividend of Rs. 244 million. 6,000

4,500 Capital Structure

3,000 100

1,500 80

0 60 Rs. million 2014 2015 2016 2017/18 2018/19

2017/18 – Rs. 5,649 million Rs. 6,705 million 40

Net Assets per Share 0 % 2014 2015 2016 2017/18 2018/19 25.00 2017/18 Shareholders’ equity 21% Shareholders’ equity 18% 20.00 Total borrowings 79% Total borrowings 82%

15.00 Total borrowings Shareholders’ equity

10.00

5.00

0 Rs. 2014 2015 2016 2017/18 2018/19

2017/18 – Rs. 18.20 Rs. 18.48 42 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Financial Capital

operational risk into consideration. Singer Finance is well Net Assets per Share Vs. Market Price per Share above the minimum Core Capital requirement and maintains adequate Capital Adequacy above the minimum required 25 50 by CBSL. The regulator also took measures to control credit by imposing stringent loan to value ratios resulting in major 20 40 challenges to expand credit.

15 30 After a considerable period of time, weather gods were kind by providing adequate water, resulting in bumper harvests 10 20 being recorded throughout the country in latter part of year 2018. This was a silver lining on a year which had so many 5 10 negatives. However, the country faced an unexpected calamity with terrorist attacks by an extremist group on 21st April 2019. 0 0 Rs. 2014 2015 2016 2017/18 2018/19 Rs. The impact of this attack was severe and perhaps the most sever in this decade. The country needs to recover fast from 2017/18 this setback, we are hopeful of the capability and resilience Net Assets per Share Rs. 18.20 Net Assets per Share Rs. 18.48 of Sri Lankans to bounce back from calamities as proven Market Price per Share Rs. 40.20 Market Price per Share Rs. 25.00 throughout our history. Net Assets per Share (LHS) Market Price per Share (RHS) As SLFRS 9 took effect, the company had to book the day one adjustment amounting to Rs.109 million in the equity statement Cash Flow and a further Rs. 35 million adjustment to the income Group net operating cash outflow was Rs. 6,444 million, statement in the year under review. The Management has compared to Rs. 4,688 million in prior period. This is taken steps to re-align their credit and recoveries processes attributable to the high working capital requirements and with the IFRS model to reduce the effect on impairment based relatively high interest payments. Net cash flow from investing on SLFRS 9. Further, the financial services sector was affected activities of the Group decreased over prior year by Rs. 570 by the Debt Recovery Levy imposed by the Government in million. Proceeds from new borrowings and customer deposits October 2018, the impact to the Company from this levy was resulted in a net inflow from financing activities amounting to Rs. 48 million from October 2018 to March 2019. Rs. 6,570 million from Rs. 4,525 million in prior period. Singer Finance has not been overly dependent on funds from Overview of Performance of Subsidiaries the fixed deposit market in the past, however, with new growth plans, an area that Company has focused is to increase its Singer Finance (Lanka) PLC Deposit base in order to fund the growth of the Company. Singer Finance (Lanka) PLC is an subsidiary of Singer The Company has already done the changes required to (Sri Lanka) PLC with an ownership of 79.93%. Incorporated boost the Deposit base, and has already shown results by in April 2004, the Company is a licensed finance company increasing its fixed deposit base by 13% over last year. registered with the Central Bank of Sri Lanka. Singer Finance has grown its portfolio steadily over the years, ensuring that The Company performed reasonably well despite the its income earning receivable portfolio is among the top economic outlook not being the most favourable. Total finance companies. The standalone rating of BBB with a assets of Singer Finance grew by 21.1% to Rs. 19.5 billion, positive outlook by Fitch Ratings signifies the credit quality YoY to 31st March 2019. With income earning assets of the Company. growing by 24.2% YoY. 91% of the Company’s total assets are income earning, illustrating how the Company has Macroeconomic conditions play a pivotal role in the finance maintained its status quo of sticking to the bread and butter business. In the year under review, macroeconomic of its core business. Total equity of the Company grew by conditions were not as conducive for business due to 6.3% to Rs. 3.5 billion. The Company declared a dividend multiple reasons such as increase in tax rates for Motor of 1.10 cents in March 2019. Total revenue grew by 26.4% Vehicles, fluctuating liquidity positions in the market, rupee to Rs. 4.1 billion in the year under review. The profit after depreciating significantly, and rise in interest rates. This was tax of Rs. 541 million grew by 22.2% in comparison to the further aggravated by political instability and a new tax levy corresponding year. The increase in provisioning for bad debts imposed directly on the financial sector. Central Bank of and the increase in interest costs were two major inhibiting Sri Lanka (CBSL) directions on NBFI’s were further stretched, expense categories that prevented a more stellar bottom line as they were required to maintain a minimum Core Capital of growth during the period under review. Rs. 2 billion by 1st January 2019, a more stringent method of calculating Capital Adequacy was introduced by taking 101 161 271 43 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Capital

The HUAWEI P30 PRO World’s first Leica Quad Rear Camera, Borderless designed to rewrite the rules of photography with 50X superior zoom The Leica Quad Camera System accommodates Frame your photography to help see the world in its entirety. This unmatched super camera system The world in focus – capturing includes a SuperZoom Lens, a 40 MP Super Sensing Camera, a 20 MP Ultra Wide Angle Lens, life’s every moment – unfettered and a HUAWEI TOF Camera, giving you the “communication-ability” – a single, freedom to capture your incredible moment hand held ‘piece of magic’ – the smart phone.

SAMSUNG S10+ The next generation Galaxy has arrived Galaxy S10 is designed for those who want a premium smartphone with powerful performance and sets the stage for the next generation of mobile experiences. Galaxy S10 is made with Samsung’s best screen yet, the world’s first Dynamic AMOLED display. Galaxy S10 offers an Ultra Wide Lens with a 123-degree field of view, like the human eye, so what you see is what’s in frame.

IPHONE XS MAX Welcome to the big screens The iPhone XS Max is the biggest smartphone Apple has ever made. The iPhone X ushered in a new era for the iPhone: glass and stainless steel design, an edge-to-edge OLED screen, Face ID, wireless charging, and the controversial notch. 44 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Financial Capital

With two very strong Parent Companies; Singer (Sri Lanka) PLC and Hayleys PLC on top, Singer Finance is well poised to position itself to a significant place in the business of financing in the years ahead.

Over the years, Singer Finance was conservative in their received from our Parent Company, Singer (Sri Lanka) PLC growth plans. However, this notion has changed after the based on data analysis using artificial intelligence and other parent company was acquired by the Hayleys Group; the methods helped us to identify customer requirements, their company drew plans to grow more aggressively. As a result, expectations and new market trends better. the company expanded its presence by opening 4 new branches and relocating 3 window operations. Further, the Products Company increased their field staff of existing locations in Since its inception, the Regnis Group has consistently brought order to support the growth of the existing business. The innovative solutions to the market, both in the refrigerator and Company also introduced Gold loans at the end of the Singer offers a washing machine lines. In 2018, Regnis introduced a smart previous financial year to its portfolio and will be focused refrigerator with an inbuilt power guard and many other new on rolling out this product to the existing branch network in wide range of features like energy saving depending on the load in it and 2019/20. A debit card will be launched mid-year with plans the number of times its door is opened. Two new 260 and to grow the savings product. smartphones to 300 Litre. capacity refrigerators with higher energy efficiency were also introduced to cater to different market segments. In instantly connect The new ownership has rightfully given directions for Singer addition, Regnis Appliances introduced three bright coloured Finance to grow to its true potential and the Management has new fully automatic, memory function PCB washing machine you to those that embarked on this journey with confidence. The Management models with transparent top cover. remains optimistic and confident of the future plans for growth. matter most to With two very strong Parent Companies; Singer (Sri Lanka) Group’s product range now comprises 27 refrigerator models PLC and Hayleys PLC on top, Singer Finance is well poised to and 13 washing machine models. you in today’s position itself to a significant place in the business of financing in the years ahead. fast-paced world. . Financial Highlights for the Year Ended 31st March 2019 Regnis (Lanka) PLC – Group The Regnis Group operated in a not so conducive operating environment during the year. Sharp depreciation of the The Regnis Lanka PLC Group comprises the Company and Sri Lankan Rupee had a substantial impact on cost of its fully-owned Subsidiary Regnis Appliances (Pvt) Ltd. which imported materials. With Government tariff changes, Regnis is engaged in the manufacture of washing machines, plastic had to keep 100% cash margins on import of washing chairs and plastic components for refrigerators. machines and certain raw materials used for refrigerator manufacturing. In line with the new tariff policy Government Regnis is Sri Lanka’s leading manufacturer of white removed 15% cess on refrigerator imports, thereby reducing goods and the undisputed leader among the refrigerator the gap between locally manufactured and imported and washing machine manufacturers. The goods are refrigerators. Competitive landscape limited the extent up to manufactured under Singer and SISIL brands and distributed which prices could be passed on. As a result, Regnis Group to customers through Singer’s extensive distribution reported only a marginal growth in revenue to Rs. 5.4 Billion network. Despite intensifying competitive pressure, Regnis for the year. continued to sustain its dominant market position by understanding and effectively responding to emerging Despite a number of initiatives to gain cost efficiencies and customer needs through innovative product solutions. enhance employee productivity such as waste minimisation, Regnis’s excellent track record over the past three decades enhancing production lines, improving quality to minimise has armed it with deep insights into customer behaviour warranty costs and reducing inventory holding period, cost of and allowed it to persistently refine its operating model sales increased due to the increase in cost of materials. This to capture emerging opportunities. In addition, insights coupled with an increase in net financing cost, partly set off by 101 161 271 45 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Capital a decrease in selling and distribution expenses caused a drop Digital Media Channel is ready to accept challenges while in profit before tax to Rs. 82 million for the year compared to following market best practices. Demarcation of regions in two Rs. 123 million reported for 2017/18. Profit after tax amounted areas North and South under the supervision of two Assistant to Rs. 63 million compared to Rs. 89 million. Area Managers and 6 Territory Managers, establishing 11 brand shops in urban areas island wide i.e., Maharagama, Future Outlook Liberty Plaza, Anuradhapura, Jaffna etc., appointment of direct dealers, managing field credit exposure, usage Despite the impact of headwinds caused by volatile external of management information system to access real time sector developments, Government fiscal policy decisions and information for better management of operations and planning recent terrorism related incidents on the economic growth of assisted the remarkable performance in 2018/19. the country and the disposable incomes of Sri Lankans, we envisage the demand for consumer durables to sustain, in Among the key pillars of success is the Distributor network particular among the middle class. This is because consumers associated with the channel since the commencement of the are likely to continue to move to technologically advanced business. We ensured and believed in win-win situation where products to upgrade their living standards and realise cost it was our pleasure to witness Distributors, pull together the savings. Hence, the Company will continue to invest in benefits of the collaboration with Singer. product development and capacity extensions to deliver on customer expectations and secure operational efficiencies. Taking hold of the opportunities available for maximum potential was successfully proven by the Corporate Team of Singer Industries (Ceylon) PLC Digital Media Company. The Corporate Team partnered with The company’s product range consists of the traditional Telecommunication giants in the country and has placed product line of straight stitch and zig-zag sewing machines its presence deeply in the corporate sector to offer device together with a new portfolio of portable and digital solutions to many corporate projects. Year 2018/19 was sewing machines, washing machine components and air significant, Corporate team achieved the annual sales of conditioning brackets. Rs. 1.5 billion with much commitment and hard work.

The sewing machines are manufactured and marketed solely None of the achievements would have been a reality if not for to our parent, Singer (Sri Lanka) PLC. Furthermore, washing the team spirit, commitment, loyalty towards the Company and machine components are manufactured as a subcontract business by the Team Digital Media. Digital Media Company operation to our affiliated Company – Regnis Appliances (Pvt) is truly a “Team work” by example. Team attributes are visible. Ltd. During the financial year, the Company started supplying Motivation is spread across the channel for the ultimate air conditioning brackets to its Parent Company, Singer achievement regardless of the competitiveness. (Sri Lanka) PLC. Singer Business School (Pvt) Ltd. Singer Digital Media (Private) Limited Established in 2015, Singer Business School is the education Singer, the leader in Sri Lanka’s consumer electronics and arm of Singer (Sri Lanka) PLC and aims to provide world-class other white good market introduced Digital Media products education to Sri Lankan youth at affordable prices across the to its product portfolio with the objective of serving our island. Coupled with a rich heritage and a wide reach, Singer customers in line with dynamic market trends. Digital Media Business School reaches its students through 62 Fashion (Private) Limited which embarked on its journey in 2012 with Academies and eight Computer Academies. world renowned mobile phone brand Huawei, that placed their trust and confidence to partner with Singer for their Operation Singer Business School recorded a revenue of Rs. 63 million in Sri Lanka, achieved the majority of market share which was for the year compared to Rs. 46 million, for the previous year, over 40% according to GFK Reports. a significant 39% growth.

The Management together with a dedicated sales force who New Fashion Designing Programme worked with much commitment and responsibility contributed Highlights of the year included introduction of a new to this success story. The dedication of the team towards the programme on Fashion Designing consisting of a six months channel was paid off with a record sale of Rs. 11.4 billion for certificate level foundation course, a one year diploma and the calendar year, making Digital Media the 2nd distribution a final one year Advanced Diploma, with an exit path at each arm to surpass Rs. 10 Billion annual sales in the history of level. Part one will be offered in all 62 locations while the Singer Group. Growth of the channel is 28% compared to the Diploma and the Advanced Diploma levels will be offered in performance in 2017/18. Colombo. The certificate programme has been validated by the Chartered Society of Designers (UK) and the Diploma and the Advanced Diploma programs will be recognised by them once the programs commence. 46 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Financial Capital

The in-depth curriculum for each stage has been especially Overview of Performance of Distribution Channels curated, taking into account international and industry Singer’s extensive network of distribution channels across standards. With the syllabus up to the Advanced Diploma Sri Lanka is an invaluable asset that few other corporates stage being equivalent to the first two years of learning in can match. Encompassing a variety of channels, the network a university programme under the UK curriculum, upon ranges from conventional brick and mortar stores to electronic completion of it, students can join a university of their choice channels, empowering customers with the choice and and complete the final year to graduate with a Degree in flexibility to purchase goods in a way most convenient to them. Fashion Designing. The entire programme therefore affords a competitive advantage over other available courses and is This section will cover the different channels we operate and extremely affordable with easy monthly instalment payments. their performance during the year. We deliver unparalleled customer convenience through these channels, thus enabling Course Validation by Chartered Society of Designers (UK) customers to raise their standard of living. Helping local students studying fashion to embark on a successful international career, the Singer Fashion Academy Singer Plus recently became the first Sri Lankan institute to receive Singer Plus is the main distribution channel of Singer validation for six of its courses from the Chartered Society (Sri Lanka) PLC. of Designers (CSD), UK within its Course Endorsement Programme (CEP). Singer Fashion Academy students who The Channel contributed nearly 45 % of the overall revenue follow a CSD Validated Course can easily apply for Student of the Company and also a high percentage of hire Membership status from the Society with no application purchase sales. Significant growth was shown from the or joining fee applicable and they will also enjoy clear mobile phones with the expansion of Digital Corners in progression to other membership levels offered. Singer Plus outlets supported by the increase in market demand for smart phones. Further thrust product categories Annual Fashion Show and Awards Ceremony such as washing Machines, Freezers & Coolers and Kitchen Giving the Diploma students an opportunity to showcase Appliances showed good growth. their creative work with a sense of confidence via a cat walk to a larger audience and also allowing them to forge for Singer Plus retail channel continued to expand its retail themselves a platform that will pave way for a wider range space by adding new showrooms, upgrading and shop of business opportunities, Singer Fashion Show and Awards space enhancements in 2018/19. Singer Plus presence Ceremony 2018 was held at the Bishops College Auditorium is felt in every nook and corner of the country with 271 on 11th September 2018. Showrooms and 58 Satellite Shops. In the year under review, the channel added four new showrooms and Annual Diploma Examination upgraded eight satellite shops to Singer Plus retail stores. Channel worked on continuous development by focusing Annual Diploma Examination was held from 12th to on improved merchandising and displays, overall shop 16th November 2018 at Havelock City Club House. The exam administration, staff training and development, to serve our was for those who were completing the Diploma in Scientific customers better. Dressmaking and Diploma in Machine Embroidery. Total of 80 students sat for the exam this year. Singer Plus channel carries out innovative sales promotional activities and field programmes. The channel uses group The Singer Fashion Academy offers over 20 different sewing sales to institutions and many outdoor selling activities courses, which include 3 diploma programmes, 8 certificate to reach their customers. Singer Plus channel was able courses, and several other sewing courses to anyone who is to successfully conduct life style exhibitions in Colombo, passionate about sewing. In the period ended, approximately Galle, Bandarawela, Kandy and Jaffna during the year, 80 students completed 2 diploma programmes and the demonstrating the strength of Singer’s multi brand – multi current student base increased to 6,000 students. product offering to the consumers. Singer Plus channel is promoted as the most convenient place to shop for all consumer durable products through ATL and BTL medium to attract customers. 101 161 271 47 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Capital

Singer Mega – The Big Experience Singer Mega focused on offering high quality customer service All Singer Mega showrooms continued with various throughout the year and initiated a number of customer promotions, events and activations in order to showcase our engagement programmes for our existing customers and to Product, Brand and Service strengths. One new showroom attract new customers. This helped us to increase sales even were added in 2018/2019 in order to extend our services to under the tough market conditions that prevailed. our valued consumers and increase our reach. Singer Homes – The Furniture Store Singer Homes focused on improving the lifestyle of our consumers by introducing a variety of new Furniture and Accessories. Each Singer Homes showroom carried out targeted customer engagement programmes island wide in order to take the “Singer Homes” brand to our consumers and promote all our seasonal offers. This helped us generate additional sales under tough market conditions.

SISIL The SISIL World continued to consolidate its position as a premier consumer durables retailer during the year. Its retail space was expanded with the addition of new showrooms and shop space enhancements. The SISIL channel added three new showrooms at Moratuwa, Galewela and Hingurakgoda and shop space enhanced at Gampola and Chilaw during the period under review. 48 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Financial Capital

Development of the SISIL channel continues with a focus J Plus Channel especially on overall shop administrations and staff training Similar to the Wholesale Channel, the J Plus Channel was and development with the goal of serving our customers formed to cater to dealers who serve the lower end of the better. Furniture, air conditioners, mobile phones, bottle market. This Channel focuses on sales around brands like coolers, gas range and washing machines in particular have Sony, Hitachi, Sharp and Dell as well as Singer’s furniture and generated positive growth compared to last year. mattress products.

The SISIL channel reaches customers through field promotions J Plus enabled Singer to expand its presence in wholesale and focusing more on BTL activities and group and bulk sales. market segments that were not previously catered to. The Channel handles: Wholesale Channel 1. The sale of furniture to wholesale dealers, including The Singer Wholesale Dealer network was established in specialised furniture dealers. the latter part of 1986, to serve wholesale dealers in an 2. The sale of computers to wholesale dealers, including organised manner as many of the dealers had to buy their specialised computer dealers. products via the Pettah market and Singer stepping in has helped the dealers and at the same time our Wholesale Dealers have helped the Company to strengthen its brand Institutional Channel name in the market. From a mere handful of dealers at The Institutional Sales Channel caters to bulk orders from the time of its inception, this dealer network has grown B2B clients, including hotels, hospitals, and Government and over the past 33 years and there are 400 dealers within this private sector organisations. During the year under review, the network today. Channel tied up with four corporate giants in Sri Lanka such as Fonterra and Cargills. The main question posed by the dealers at that time was whether Singer would give them the opportunity to sell Agro Channel Singer sewing machines and it was a trump card which The Agro business which was re-launched in 2013 in helped to move out other products such as white goods Singer Group consists of a number of new machinery along with the sewing machines and that was one of the and equipment that made the channel expand its product main objectives of the corporate company because Singer portfolio as at today. The Channel was initiated with the retail channel was in good control of the sewing machine name ‘’Special Project Channel’’ and was re-launched as sales at that time. By establishing contacts with the Agro Channel with the new entrants of machinery items wholesale dealers, we learnt that the dealers themselves to the Channel. Starting from water pumps, the business had a separate clientele who were serviced by the dealers has now expanded to a vast range of products like; and who did not come to Singer shops, and it provided a water pumps, two wheel tractors, combine harvesters, good opportunity for the Company to serve that clientele wood working machines, bush cutters, motorbikes, and add them to our customer base. paddy threshers, scales, bicycles, fans, irons, kitchen appliances etc. In the latter part of 2018 and early 2019, Being very careful in establishing new channels, new product we gave enough ammunition to sales people in the field to ranges, etc., Singer developed this channel by maintaining counteract the competition by introducing low cost water strict controls on administrative areas which many of our pumps, plastic impeller tube well pumps, low cost bush dealers appreciated that Singer services all types of dealers cutters to the field which were a timely requirement laid by whether big or small in the same manner where pricing and the sales team in mid 2018. These new introductions further promotions are of critical importance. strengthened the range of products in the Channel.

Since the establishment of the dealer network, Singer has Various field activities have helped the Channel to expand continued to strengthen and support the dealers and their its popularity among remote villages of which the Channel is shop assistants by sharing technology and know-how via proud of its contribution made as a Channel to bring Singer training programmes, refrigerator and sewing machine clinics the crown of “Best People’s Brand” for the 13th consecutive to service their clientele and providing technical support year. Plumber training programmes, tractor free service wherever necessary. The Dealer Assistants’ Day is a much campaigns, wood working trainings, dealer assistant trainings looked forward to event by all and the annual Wholesale etc., are a few, out of those services extended to the public. Dealer Convention are some of the events which are organised by the Company to reward their efforts and support to the Company. 101 161 271 49 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Capital e-Commerce Channel – www.singer.lk Singer hosts multiple online competitions around the year The Singer Sri Lanka e-Commerce platform experienced using our multiple brands to engage fans and customers. exponential growth in the period under review. Singer Sri Lanka Competitions during the period included the Singer Super e-Commerce aims to be the No. 1 consumer durables website Chef Competition Season 2, Singer Homes Furniture in Sri Lanka. Featuring more payment methods and platforms, Competition, Singer All I Want for Christmas Competition, and Singer will offer quality products to customers with value Upgrade your Kitchen with Singer. Through our Facebook added discounts and offers. page, we carried out “Special Hot Deals” and “48-hour Flash Deal” promotions that reached a wide audience. Events The Information & Technology Department continued to including product launches and the Singer Lifestyle Exhibition enhance the customer experience. The Singer (Sri Lanka) were covered through updates and live video streams. PLC website was revamped with a creative and user- friendly interface that appeals to customers, who are With the aim of building an audience and directing them to becoming increasingly tech savvy. The website now features our website, these digital activities allowed us to target our conveniences such as cash on delivery, online reservation audience based on their interests and personal preferences. system through shops, up to 52 monthly interest-free Through the Google advertising platforms, we were able to instalment plans, and special seasonal product promotions. create a campaign which continuously allowed the audience to engage with our website even after making a purchase or As a leading household name for home appliances and leaving the website. Dynamic re-marketing efforts focused on consumer durables, Singer has harnessed its energies to customers who have visited or shown interest in our products develop unique and innovative approaches to reach out to the but not made a purchase – a method that has proven to be target market via Digital Marketing. effective with the digital consumer.

The Singer Sri Lanka Facebook page aims to explore new opportunities for product promotions and real time association with existing and potential customers by engaging with them via activities such as competitions, posts, product launches, and events.

To maximise our online brand presence and generate sales through e-commerce, we have commenced digital activities. Main campaigns include Facebook advertising & Google Ad Words campaigns, search engine campaigns, display marketing and dynamic re-marketing campaigns. We also started using YouTube to raise product and brand awareness through pre-roll advertisements of brands available at Singer, new products, and recipe and quick tips videos that use kitchen appliances available at Singer. 50 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis

INSTITUTIONAL CAPITAL

Singer brand has been spearheading as the undisputed leader in the consumer durables market in Sri Lanka.

Since its inception, Singer has amassed institutional capital the majority of the market share at over 40%, according to GFK that it leverages to benefit all stakeholders. As Sri Lanka’s reports. Since the introduction of Huawei to the local market leading consumer durables retailer, Singer is responsible for in 2012, Singer was appointed as the exclusive national the distribution of local and globally renowned brands through distributor for Huawei-branded mobile phones in both retail one of the most comprehensive branch and distribution and wholesale, contributing to the increase in brand loyalty networks in the country. throughout Sri Lanka.

2018/19 saw significant market share growth for Huawei through Overview of Brands the expansion of the distribution network, disrupting array Singer (Sri Lanka) PLC handles the distribution of its of products, novel additions to the existing brand portfolio, own Singer, SISIL and Regnis brands, as well as leading enhanced consumer service, and innovative promotional offers international brands through its distribution channels. and activities together with Singer (Sri Lanka) PLC.

Singer: Trusted Excellence Sony: Be Moved Singer brand has been spearheading as the undisputed leader Sony Corporation is a leading manufacturer of audio, in the consumer durables market in Sri Lanka. Singer brand video, game, communications, key device, and information extends a wide range of product categories such as sewing technology products for the consumer and professional machines, consumer electronics, household appliances, markets. With its music, film, computer entertainment, and air conditioners, furniture, kitchen appliances, personal online businesses, Sony is uniquely positioned to be the computers and agricultural equipments. Our uncompromised leading electronics and entertainment company in the world. commitment in providing excellent pre-sales and after sales service to our consumers scattered all over the Country has Singer was appointed to be the distributor for Sony Electronics enabled Singer to live up to its brand promise of “Trusted in Sri Lanka. Since December 2014, we are the retail distributor Excellence” year after year with continuous improvement. of a wide range of Sony products including LED TVs, smart TVs, 4K TVs, high-tech audio systems, cameras, and other SISIL: The Cooling Specialist electronic products. SISIL was established 56 years ago as the first refrigerator brand to be manufactured in Sri Lanka and holds a dominant Dell: Power to Do More marker share in the refrigerator, kitchen appliance, and Dell empowers countries, communities, customers, and washing machine segments. Singer purchased the SISIL people everywhere to use technology to realise their dreams. brand in year 2000 and leveraged the strength of this Customers trust Dell to deliver technology solutions that help brand. SISIL is also renowned for service excellence and them to do and achieve more, whether they are at home, work, durability, outperforming many global brands in terms of school, or anywhere in the world. trust and reliability. Partnering with Dell in 2014, Singer has demonstrated a rapid Huawei: Make it Possible growth in Dell sales resulting in an increased market share Huawei is the leading global information and communications in Sri Lanka within the first phase of operations. Accordingly, technology solutions provider and the number one growing Dell has grown exponentially in Sri Lanka over a short period smartphone brand in Sri Lanka. The brand continued to hold to become the leading PC brand in the local market for three 101 161 271 51 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Institutional Capital 52 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Institutional Capital consecutive years as per data released by International Data Hitachi: Inspire the Next Corporation (IDC). Singer won the “Best Consumer Distributor” With the latest advanced Japanese technology and trust that award as a result of the Company’s significant contribution comes with a 100-year reputation for reliability, Hitachi home towards Dell’s business in the consumer segment during appliances and electronics are the ultimate choice for every the period. room in every home. Featuring smart human-friendly designs, advanced eco-conscious technologies, and quality materials, Samsung: Turn on Tomorrow Hitachi home appliances and electronics accentuate Samsung Electronics is a global leader in high-tech your everyday life. Singer has brought to Sri Lanka a wide electronics manufacturing and digital media. As one of the range of Hitachi products, including inverter refrigerators, world’s leading appliance brands, Samsung continued domestic inverter air conditioners, vacuum cleaners, and 4K to dominate the market with its cutting-edge technology smart televisions. in televisions, refrigerators, mobile phones, and a host of other product categories. The Samsung brand has over Mitsubishi: Creating Your Comfort the years attracted consumers of all categories regardless Mitsubishi Heavy Industries – Mahajak Air Conditoners Co. Ltd. of their gender or socio-economic status. Samsung is (MACO) is one of the leaders in Thailand’s air conditioning ranked on top when it comes to advanced smart televisions industry, manufacturing superior quality domestic, light and energy saving digital inverter technology refrigerators commercial centralised air conditioners. Singer partnered and smartphones. with Mitsubishi brand in year 2012 and the Brand has gained the trust and reliance of its customers for its high- Zoje quality products, on-time delivery, reasonable prices, and Zoje Sewing Machine Company Ltd. is one of the largest environment-friendly technologies. industrial sewing machine manufacturers in China since its inception in 1994 and houses the famous Zoje brand. Zoje Moulinex: Cooking Made Easy is well-accepted in the Sri Lankan industrial sewing machine Singer introduces innovative and versatile kitchen appliances market due to its quality and reliable performance. Zoje as an under the reputed French brand, Moulinex, every year. industrial sewing machine brand continues to grow in market These appliances are designed to enhance the efficiency share since its partnership with Singer in 2002, backed by and effectiveness in cooking and food preparation, Singer’s service excellence. enabling modern housewives to reduce the time they spend in the kitchen. Beko: Official Partner of Everyday Since 2013, Singer has been the sole distributor and Tefal: Ideas You Can’t Live Without authorised service partner for Beko in Sri Lanka. Beko Singer offers products from world renowned French brand continues to be the number one free-standing home Tefal across multiple product categories – kitchen appliances, appliances brand in Europe, offering smart technologies irons, vacuum cleaners, and fans. Tefal is also known for combined with stylish functional design that are both its global market leadership in the cookware category eco-friendly and user-friendly with enhanced functionalities with products designed to give consumers the optimal and efficiency. Singer, together with Beko, offers a premium performance in their designated tasks and durability. experience through a range of cutting edge Beko appliances for the modern home. Beko products marketed in Sri Lanka Kenwood: The Number 1 Food Preparation Brand in Europe include refrigerators, free-standing and built-in electric and gas ovens, washing machines, built-in hoods and hobs, Singer offers a variety of kitchen appliances and household dishwashers, and dryers. appliances under Europe’s Number 1 food preparation brand, Kenwood. Since 2008, Singer has offered a variety of Kenwood products including blenders, smoothie makers, TCL: The Creative Life choppers, sandwich makers, juicers, kitchen chef, food Founded 37 years ago, TCL is one of the fastest growing processors, hand beaters, irons, and vacuum cleaners which brands in China and USA. It makes a wide range of consumer are available at Singer outlets around the island. Recent electronics products and appliances including televisions, introductions included the all-new Kenwood Chef Major which refrigerators, washers, dryers, air conditioners, Blu-Ray is designed to make light food work preparation and helps players, and cell phones in different regions across the world. create an array of dishes with ease. By offering great products at reasonable prices through Singer, TCL has gained the trust of Sri Lankan customers. 101 161 271 53 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Institutional Capital

The Cool Option Cool = Fresh... and SINGER SIDE BY SIDE Nutritious...and Healthful - SN-SBSH2-66 • Net Capacity – 514L – a really ‘cool’ box – • Mirror Finish the refrigerator. • Eco Friendly R600A Refrigerant • No Frost • Low Noise Compressor

SAMSUNG – RS72R5001M9 • 690L extra large capacity • Digital Inverter compressor for super energy save • Toughened glass shelves for durability • Ten year warranty on Compressor

HITACHI H-RW690GBK • Side by Side • Capacity – 540L • Four Door • Inverter • Dual Fan Cooling 54 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Institutional Capital

Singer became the pioneer of using modern Internet and Communication Technology (ICT) for our after sales operations by covering the SFA network with a web-based software application and mobile-based Android application.

Prestige: Delighting the Homemaker through Innovation the family. Nikai Brand is built on the promise of reliability from Established in the United Kingdom in 1938, Prestige offers product to performance. Reliability is the foundation on which premium kitchenware including items such as cookware, the Brand stands tall. pressure cookers, and electricals. A high level of quality is paramount at Prestige which leads to a lifetime guarantee for Unic: The Company Owned House Brand certain products on offer. Singer is partnered with Prestige Unic offers a wide range of products including televisions, to be their sole agent in Sri Lanka and is home to a diverse rice cookers, and air conditioners. The brand continues to selection of items ranging from pressure cookers to grinders grow in Sri Lanka. and gas burners. Asus: In Search of Incredible Sharp: Be Original Singer was appointed as a consumer notebook distributor and Sharp Corporation of Japan is a leading innovator, having the exclusive Large Format Retailer (LFR) for Asus laptops in Singer Sri Lanka created many world-first products. Products from the Sri Lanka. Asus is a multinational computer hardware giant Japanese manufacturer include its signature four-colour with a focus on creating products for today’s and tomorrow’s offers a wide array “Quattron Pro” LED TVs, “Plasmacluster” air purifiers, and smart life. It is the world’s No. 1 motherboard and gaming “Healsio” microwave ovens. laptop brand and among the top three consumer notebook of eco-friendly vendors. Asus will introduce a range of laptops at various price Singer partnered with Sharp as their sole agent for electronics points and specifications to cater to the requirements of the refrigerator and home appliances in Sri Lanka and as the preferred retail customers. Singer serves, and the products will be available partner for office equipment since 2013. This has enabled us through all Singer channels. options for every to offer the Sri Lankan market a range of cutting edge Sharp branded products including LED TVs, microwave ovens, air Indesit lifestyle and purifiers, vacuum cleaners, fans, multifunction printers/copiers, and cash registers. Singer introduced the world-renowned “Indesit” brand while budget to keep adding their latest products to the Singer product portfolio. The brand is famous for home appliances including free- Skyworth: Lead the Future food fresh and standing gas cookers, hoods and hobs, dishwashers, and Skyworth is a large-scale high-tech company primarily washing machines. Singer is the sole and exclusive distributor nutritious. engaged in manufacturing consumer electronics. Singer is an for the Indesit brand in Sri Lanka, opening the doors for authorised dealer to the Skyworth Brand in Sri Lanka and the Sri Lankan customers to experience European products at brand has grown steadily over the past few years in Sri Lankan affordable prices. The products will be available mainly at consumer segments. Singer Mega and select Singer Plus showrooms.

Nikai: Transforming Houses into Homes Thermos and Regnis Vacuum Flasks Singer introduced the Nikai brand in August 2018 with a To penetrate the gift market of the country, Singer introduced range of kitchen appliances, audio-visual equipment, and Thermos flasks as a heritage international brand of vacuum home appliances. Envisioned to meet all the appliance and flasks. Recognising the growing demand for such product, electronics needs of every homemaker, Nikai is a one-stop Singer introduced another series of vacuum flasks under brand that is geared to meet the needs all members of Regnis, one of its house brands, adding vibrancy to the range 101 161 271 55 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Institutional Capital with more colours and designs. This has led to increased Singer became the pioneer of using modern Internet impulse purchases by shoppers, opening avenues to enter and Communication Technology (ICT) for our after sales the gift segment of the country. operations by covering the SFA network with a web-based software application and mobile-based Android application Farmmaster for processing, maintaining, and finishing service work orders online. With this new system, repair follow-ups, parts Singer Sri Lanka PLC has a long history of contributing to availability, and repair turnaround time reduced drastically the local agriculture segment by introducing many kinds of compared to the previous system. agricultural machinery. The Minitiller was introduced to farmers upcountry who required lightweight heavy-duty machinery. During 2018/19, Singer Service continuously trained our The Minitiller can be used in paddy fields, vegetable fields, staff members to be well-versed in technical knowledge and potato fields in mountainous areas for rotary tillage, deep imperative to offer excellent customer care through various plowing, ditching earth, and riding. overseas training programmes conducted by first class consumer product manufacturers such as TCL, Sony, Hitachi, Singer introduced the Viknyo Farmmaster in 2013 with the Beko, and Panasonic. FMRC certificate, which is highly recognised in the agricultural sector. With its quality and Singer’s excellent after sales service, the Farmmaster became the highest selling two-wheel Apparel Solutions tractor in the country in 2015 and has held that crown for the The Singer Industrial Sewing Machine Division, formerly past four years. known as the “Industrial Product Division”, was relaunched as “Apparel Solutions” after a strategic decision in 2005. The The Farmmaster Combine Harvester is a versatile machine Division imports and distributes industrial sewing machines, designed to efficiently harvest a variety of grain crops. laser machines, bonding machines, spreading machines, and It covers the three main harvesting operations: reaping, cutting and embroidery machines. In line with Singer’s multi- threshing, and winnowing. After introducing the Farmmaster brand strategy, the Division followed suit by adding several Combine Harvester in 2015, it has gained wide acceptance international brands to its product portfolio, including Sunstar, and popularity amongst Sri Lankan farmers. ZOJE, Megasew, SDY, Sansiko, and TSM. The Division’s sales mix consists of two segments: one segment leverages the Kito existing retail and wholesale channels, and the other segment focuses on direct sales to factories on indent basis. Kito brand was introduced in year 2018/19 to the furniture range by bringing up the modern appearance for display units. Kito mainly offers smart wall storage solutions to the Singer Research and Development consumers with added benefits; easy to use, easily mounted Under the guidance of new corporate management, the on walls. Singer Research and Development unit expanded with the recruitment of three new technical officers and an engineer for the Research and Development (R&D) fleet along with a new Overview of Performance of Strategic Business Units 1,500 sq. ft. facility located at Singer Industries Ratmalana Singer Service Centres for refrigerators, washing machines, and electrical products. Singer operates 14 service centres across the island, 391 It further expanded the R&D operations of new products Consumer Products Service Franchise Agents (SFA), 92 introduced by local and foreign factories with customised motorbike service franchise agents, and 36 furniture service designs. The Agro after sales division was also attached under franchise agents. Each service centre is well-equipped to R&D for continuous improvement of their product portfolio provide the highest standard in customer care with skilled and through combined research with local and foreign factories. competent service agents. In line with continuous efforts to maintain the highest standards, the Vavuniya service centre Singer Call Centre was opened in 2018 and the foundation laid for the new South Singer commenced the first phase of the Service Dedicated Colombo regional service centre at the heart of the South Call Centre operation with 12 dedicated call agents for Colombo region, Maharagama. The project is expected to inbound and outbound call centre operations. Within the conclude at the end of July 2019, introducing a new concept first phase, all direct customer complaints and Cash & Carry in after sales service experience for customers with state-of- dealer customer complaints are registered and work orders the-art technologies and facilities. created through the call centre after a customer validation process. The second phase of the call centre operations will see it expanded for customer complaints received through the Singer retail network. 56 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Institutional Capital

E-commerce catalogue is hosted on a large screen TV at the branch and Omni Channel Strategy updated centrally via head office. We recognise that the new generation of customers enjoy Customers can browse through the catalogue using a remote shopping online as much as they do visiting retail stores. control and viewing more information about products via As a result, we introduced new functionalities to our website: a user-friendly interface that organises products in easily zz Store Locator – Customers can check for availability of searchable categorisations. This project is currently launched products by searching for stores within their proximity as a pilot project in 20 branches. on the website product page. zz Customers also can visit the store to complete a purchase Sanasuma and Extended Warranty if a product is out of stock on the website. We are proud to announce that we are the only e-commerce business in Sri Lanka to offer extended warranty and coverage As a formal strategy to improve e-commerce business to in case of a natural disaster. serve future needs, following developments were done in year 2018/19 to improve e-commerece platform. Information Technology Division Singer has embraced mobile technology to enhance our Website business functions and better serve our customers. As web technology is increasingly supporting the retail business, we have fully revamped the www.singer.lk website Mobile Field Collections and implemented Cash on Delivery (COD) functionality. We launched a pilot project to implement web sales stations zz Marks the first time in Sri Lanka that a consumer durables in selected shops with the help of large screen TVs and company has introduced hire purchase instalment collection improved telecommunication links. The project aims to provide through a mobile app. The app provides an interface to customers with better service by displaying and recording the ERP system, enabling transactions to be processed sales for products which are not physically available in-store. electronically in the field, and produce a receipt using a mobile printer.

Service Franchise Agents System zz Electronic collection process in the field eliminates manual To improve the after-sales service operations, the IT collections at shops, resulting in cash flow improvements Department together with the Process Improvement for the Company. Department implemented the Service Franchise Agents zz We have implemented the solution in all locations covering System (SFAS) to cater to Service Franchise Agents, service more than 800 collectors. centres, the branch network, and head office. The system brings with its various benefits, including: Singer Express Pay zz A common system to raise service requests zz Online updates of Work Order status zz Online dashboard and automation zz End-to-end communication between all stakeholders via SMS and email The Singer Express Pay service allows customers to make a wide range of bill payments, including credit cards, mobile zz Removal of data entry operations at service centres phones, insurance, utility bills, and Ez Cash and Mcash top-ups and withdrawals at over 442 retail outlets across the The system features an HTML5 web application and Android island. With extended timings on weekdays and weekends, application which can be used to access specific features. customers can avail of Singer Express Pay’s services through The SFAS applications are implemented across all Singer Singer’s retail outlets without being dependent on their bank or Service Centres, branches, and the entire Service Franchise service provider’s operating hours. Agents network. The latest additions to the Singer Express Pay service include Digital Product Catalogue tie-ups with many insurance and lease companies, including Singer (Sri Lanka) PLC is in the process of implementing a AIA Insurance, Union Assurance, Sri Lanka Insurance, Allianz Digital Product Catalogue in retail stores around the country. Insurance, MBSL Insurance, Janashakthi Insurance, and This project has been launched to provide product details CDB Lease. Singer’s commitment to building customer and product features to visiting customers and can be used relationships is mirrored in the partnerships it has developed as a tool to showcase models not in stock at the branch. The with the companies and institutions involved in the Singer 101 161 271 57 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Institutional Capital

Express Pay service, with many of Sri Lanka’s leading with the ambition of becoming a key Air Conditioning solutions companies offering their customers an added dimension of provider in the market. professionalism and convenience. Globally reputed commercial air conditioner brands have On the payments side, Singer Express Pay continues its tied-up with Singer as solution providers to the Industrial Air relationship with Western Union Money Transfer to enable Conditioning Division. The Company entered into exclusive foreign remittances. For this service, Singer has tied up with distributorships with Japanese brand Mitsubishi inverter/ NDB Bank, who acts as the Principal Agent. standard unitary products and VRF systems, and Fujiair Air Conditioners with a full range of heating, ventilation, and air Singer Express Pay gives Singer’s customers the convenience, conditioning (HVAC) products that have helped the Division to innovation, and service they deserve, and is another example provide world class solutions to its clientele. of how Singer strives to make life easier, more convenient, and more enjoyable to its valued customers. With increasing demand in the country, the Industrial Air Conditioning Division is poised to grow rapidly in the future. Singer Distribution Centre The state-of-the-art Distribution Centre commissioned in Singer Factory Complex – Piliyandala 2004 at Piliyandala is now in its 14th year of operations. In The Agro Factory introduced six new water pumps in 2018/19: 2017, distribution operations were decentralised with the plastic impeller 3-inch diameter tube well pump series 0.5 HP opening of a 75,000 sq. ft. Logistics Hub in the Matale District , 0.75 HP, and 1.0 HP pumps designed for 4-inch diameter of Dambulla to cater to requirements for the North and the tube wells, a low cost pump range 0.5 HP and 0.75 HP under East Provinces and part of the Central Province, with the key the Regnis brand specially for the Hardware Channel. Also a objective of providing better and faster service in keeping with domestic-oriented 0.75 HP automatically controlled pressure the expected increase of volume of new and existing products pump for increasing water pressure in domestic usage. In year 2018/19, the Company further expanded distribution To promote the pumps, several outdoor programmes were operations by decentralising its operations to Ekala joining with conducted, including plumbers/farmers day programmes and leading logistic provider Logiwiz Limited and entered into an door to door awareness campaigns in several towns across agreement to increase capacity by 14,930 cubic meters and the country. to handle inbound and outbound CBM of 6,400 each. Singer factory has invested Rs. 11.5 million on dry paint The Distribution Centre has maintained the ISO 9001:2008 booths from Spray Technics India. These paint booths are standard for the last 13 years. equipped with state-of-the-art air circulation and filtration systems to minimise emissions. The dust-free environment The Distribution Centre is one of the key contributors to enables high gloss painting for modern furniture. The Singer’s Green Initiative programme, serving as the main Factory has also invested in two Sames-Kremlin spray guns Collection Hub for the Company. All employees actively to enhance paint quality. Sames- Kremlin is a leading brand contribute to the collection of e-waste by the Company’s from France for spray painting equipment and own the collection centres. Furthermore, keeping in line with global patent for Air Spray technology. Transfer efficiency of these technological advancements and to minimise our carbon spray guns has been enhanced with this new technology footprint and environmental impact, we commenced repairs of and provides a better finish and coverage for wood surfaces. LED television panels locally in 2016 using the latest electronic equipment. The initiative is currently progressing well. Solid Furniture Factory sanding capacity expanded with the newly introduced Opera 5 wide belt sander, an investment Industrial Air Conditioning Division of Rs. 12.3 million. Single pass 1mm high material removal rate can be achieved due to the combined mechanism of Singer successfully entered the central/industrial air spiral cutter head and sanding roller. A four-foot feeding belt conditioning market with the formation of the Singer provides the flexibility to sand a wide range of tabletops with Industrial Air Conditioning Division in 2012. Singer Industrial a smooth surface finish. Air Conditioning Division, which is supported by a group of professional engineers, has already acquired major The Modular Furniture Factory invested Rs. 26.5 million in commercial projects such as the Platinum 1 Apartment project, a new CNC router/drilling machine, the Skipper 100L and Commercial Bank branch network, Wayamba University Rs. 7.8 million in an automatic edge banding machine and Auditorium project, Aira Lagoon Hotel project, Analytical manual edge banding machine as replacements of old Properties (Pvt) Ltd. project, Mandarina Hotel project, and machinery. Simultaneously, the factory layout was changed Prime Grand Residencies project, to name a few. The Division to be compatible with the new machinery while focusing on has shown considerable progress within a short span of time efficient production processes. 58 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Institutional Capital

The eagerly anticipated event drew in large crowds who came to check out a wide range of appliances, furniture, electronic goods, smartphones, and computers.

As an initiative to increase the market and gain more market share by product differentiation, seven new bedroom sets were introduced with the collaboration of Spacewood Furniture Group in India.

Efforts to increase pantry cupboard sales continued in 2018/19 and as a result, YoY revenue in 2018/19 went up by 8%. With a primary strategy of focusing on apartment projects, the Factory was awarded three Prime Land apartment projects with a total of 160 apartments. Extending service support (from measurements to installation) to shops and driving pantry sales through the Singer Plus channel with the introduction of block pantry units were some of the other strategies employed.

A two-day training programme was carried out by the Singer Piliyandala Factory in each quarter to enhance the product knowledge of the staff members of Singer Homes, Singer Mega, and Singer Plus channels. Apart from the study sessions, a hands-on experience was provided to all participants.

Marketing Initiatives Singer Lifestyle Exhibition The 8th Singer Lifestyle Fiesta was held at the BMICH on the 23rd to 25th of November 2018. The eagerly anticipated event drew in large crowds who came to check out a wide range of appliances, furniture, electronic goods, smartphones, and computers that were showcased under one roof and take advantage of attractive discounts. Ticket sales proceeds were Singer Lifestyle Fiesta 2018 contributed towards the Company’s CSR fund which funds the numerous CSR activities launched during the year. Bathiya and Santhush Appointed as Brand Ambassadors for Sony Audio Products Singer (Sri Lanka) PLC together with Sony International appointed Sri Lanka’s leading musical duo, Bathiya and Santhush (BNS), as brand ambassadors for Sony audio products in the country. Since the 1990s, the pop duo have been one of the biggest musical acts in the Sri Lankan musical scene, mixing Sinhala, Tamil, and English lyrics in their original music while also using Hindi and remixing songs to bring out their contemporary style and revolutionising the country’s music industry in the process. Lighting Traditional Oil Lamp – Singer Lifestyle Exhibition 2018 101 161 271 59 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Institutional Capital

Bata, Nolimit, Vision Care, DSI, and Sarasavi Bookshop to occasionally offer exclusive offers and discounts to Singer Loyalty customers.

Interflash 2019 Sony was the title sponsor for Interflash 2019, the main finance project organised by the Interact District 3220, which successfully concluded on the 25th of January 2019 at the Nelum Pokuna outdoor premises. The event catered to the biggest crowd a musical show in Sri Lanka has ever seen with over 8,000 individuals gathered to enjoy the concert.

Music Legends, Bhathiya and Santhush appointed as Brand Ambassadors for Sony brand in Sri Lanka Annual Fashion Show and Awards Ceremony The Singer Fashion Show and Awards Ceremony 2018/19 was Commenting on the partnership, Bathiya Jayakody stated, held at the Bishops College Auditorium in September 2018 “As musicians, we are always conscious about the quality of and marked the annual showcase of designs and creations the sound that we listen to as well as what we produce for of diploma students from the Singer Fashion Academy. Their our legions of fans. By using Sony audio products, you are efforts were rewarded during the awards ceremony which took guaranteed to get the very best in sound technology and place simultaneously during the course of the fashion show. experience a new level of audio excellence. This makes it The Fashion Show included seven glamorous segments: a perfect fit for us as striving for that next level of musical Kandyan Wear, Office Wear, Kids Wear, Gents Wear, Evening excellence is what we always aim for.” Wear, Casual Wear, and Indian Wear. The awards ceremony also presented respective certificates to students who had Singer Sri Lanka offers a wide range of Sony audio products successfully completed their Diploma in Scientific Dress through the largest distribution network in Sri Lanka, including Making and Diploma in Machine Embroidery. headphones, wireless speakers, MP3 players, high-resolution audio systems, digital voice recorders, boomboxes, radios, portable CD players, home theatre systems, and accessories.

Customer Loyalty Programme The Singer Customer Loyalty programme is a flexible and convenient programme for Singer customers. Singer Loyalty customers are eligible to earn points through cash sales, hire purchase sales, monthly instalments, and when paying utility and credit card bills through Singer Express Pay counters. One Loyalty Point is equivalent to Rs. 1 and members can redeem their Loyalty Points against new purchases. Singer Loyalty Customers are also eligible for seasonal discounts from various partner merchants.

Singer’s superior Enterprise Resource Planning (ERP) system facilitates the recording of Loyalty Points earned and redeemed on customers’ receipts and customers receive SMS updates. The One-Time Password (OTP) system assures customers of safety and a convenient shopping experience, allowing them to redeem their Loyalty Points without carrying their Loyalty cards by sending the OTP to their mobile phone at the point of sale.

At the end of 2018/19, total customer enrolments surpassed 1.3 million and more customers than ever redeemed their points to the value of Rs. 89 million. Singer has rewarded Rs. 523 million worth of Loyalty Points at the end of 2018/19. Showcasing students’ talents at the Annual Fashion Show 2018 Singer has tied up with prestigious establishments including 60 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Institutional Capital

The Fashion Show and Awards ceremony are conducted every Singer Sri Lanka Social Media Presence year and are considered as the main events for the Singer Singer Sri Lanka uses its Facebook page as a main platform Fashion Academy as well as the highlight of the Academy to communicate directly with the fans and customers. where diploma students receive the opportunity to showcase Facebook is an integral part of the CRM cycle and can help their creative streaks via a catwalk to an audience. The event customers to build trust, engage with the brand, ask queries allows them to forge for themselves a platform that gives them regarding products and services, and place complaints, a sense of confidence and paves the way for wider range of which we can directly contact the customer and resolve business opportunities. issues. Singer collects leads and information about its fan base and determines how to best communicate with its target audience. The Singer Facebook Page acts as a CRM tool which can be used to manage interactions with customers, The clients, and sales prospects. Facebook helps to nurture and retain customers, entice former clients back into the fold, and “Retina” reduce the costs of marketing and advertising. of Life Singer Sri Lanka was able to increase and maintain its 100% response rate as a result of a 24-hour Problem Solving policy, through which Singer endeavours to answer all queries received within 24 hours. We continue to use the 3A mechanism – Acknowledge, Apologise, Address – as a problem-solving technique. The technique has helped to build trust and perception of reliability and strengthen the relationship between the brand and its customers.

Awards and Accolades Great Place to Work Singer (Sri Lanka) was recognised as one of the best workplaces in Sri Lanka for the fifth consecutive year, becoming an elite member in the “Hall of Fame” in July 2018 at the exclusive award ceremony held at Hilton Colombo by the Great Place to Work Institute, Sri Lanka. Each year, Great Place to Work conducts the largest annual set of workplace culture studies in the world to develop and recognise high- trust workplaces, and the survey was carried out for the sixth time in 2018.

At the Award Ceremony – Great Place to Work 2018 101 161 271 61 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Institutional Capital

The

“Retina” SINGER EPIC – SLE75G6B 75” GOOGLE ANDROID AI TV of Life Singer Epic 75” 4K HDR Google Android AI Smart TV follows the design language of Entertainment, information simple & flow. Every major part of the design is and everything in between – covered by aluminium alloy , protecting from scratch and damages by any hard object. delivered via the “retina” of Besides, metal is hard to be distorted, the world – television ensuring that we have the top level product quality in our industry. The TV comes with |Google Assistant application to get the real life smart TV experience.

KD-65A9F Sony Master TV series meet the strict criteria of top engineers and make beautiful images a reality.

SAMSUNG – SMGQA65Q8CNA Brilliant Quantum dot colour, immersive curved viewing, ten year burn in free warranty. 62 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Institutional Capital

SLIM-Nielsen People’s Brand of the Year Singer (Sri Lanka) celebrated its 13th consecutive win as Sri Lanka’s popular brand at the SLIM-Nielsen People’s Awards held in 2019. The Company won the “People’s Durable Brand of the Year” and the coveted “SLIM-Nielsen People’s Brand of the Year 2019” award.

Continuing the Journey – Peoples Brand of the year 2019

Dell Partner Awards FY19 Singer (Sri Lanka PLC) won the most coveted “Best Distributor of the Year FY19 (Consumer)” and “Best Large Format Retailer FY19 (Consumer)” accolades at the Dell Partner Awards as a result of the excellent contribution the Company made towards the Dell business under the consumer segment during FY19. Singer also won the “Best Consumer Distributor Salesperson (FY19)” and “Salesperson of the Year – Client Solutions (Runner Up)” awards. Experience the golden age of television with the perfect television to suit your budget from Singer Sri Lanka. Dell Partner Awards Ceremony – Best Distributor of the Year

Annual Report Awards by the Institute of Chartered Accountants of Sri Lanka Singer won the gold award in the trading sector at the annual report awards ceremony organised by The Institute of Chartered Accountants of Sri Lanka.

Annual Report Awards Ceremony 2018 101 161 271 63 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

CUSTOMER CAPITAL

Singer delivers a slate of new, cutting-edge products to Sri Lankan customers from several world-renowned brands.

True to our vision and mission, Singer continues to offer The new A8F series inherits Sony’s unique 4K HDR picture customers a comprehensive product and service portfolio processor, the X1 Extreme, and Acoustic Surface technology through our expansive network of distribution channels. As to give high quality visuals and awe-inspiring sound. As the times have progressed, our customers have evolved. an OLED TV, the A8F series produces incredibly detailed Our product portfolio has expanded accordingly to provide images with deep blacks, rich and realistic colours, and an customers with the products they desire. 2018/19 saw Singer exceptionally wide viewing angle. deliver a slate of new, cutting-edge products to Sri Lankan customers from several world-renowned brands. The new X9000F series, equipped with the X1 Extreme processor, will be available in 85”, 75”, 65”, 55”, and 49” screen sizes. Both the A8F and X9000F series support Dolby Product Portfolio Vision, the premium HDR format from Dolby Laboratories Sony OLED and 4K HDR Televisions which creates an even more immersive, engaging cinematic Singer, together with Sony International, launched a new range experience with striking highlights, deeper darks, and of OLED and 4K HDR televisions along with the MASTER vibrant colours. Series, the A9F and Z9F televisions. The new televisions are designed to deliver enhanced contrast, colour, and In addition, the A9F and Z9F series are part of the new clarity. The A8F and X9000F series are the newest options MASTER Series, a name Sony reserves exclusively for its to enjoy a refined 4K HDR picture quality through Sony’s highest picture quality TV models. Developed to follow a very proprietary innovations.

Launching new Sony Bravia OLED series to Sri Lankan customers 64 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Customer Capital strict set of product evaluation criteria by its most experienced Sony Home Audio Systems picture quality engineers, Sony is confident the flagship Singer, together with Sony International, launched six new MASTER Series delivers the highest picture quality possible high-power Home Audio Systems, including Shake 3-box in a home setting. From 4K film, video, and still cameras, models (MHC-M60D, MHC-M40D) and the all-in-one box style to game consoles, mobile phones, and televisions like the (MHC-V81D, MHC-V71D, MHC-V41D, MHC-V21D), all of which MASTER Series, Sony is the only consumer electronics are guaranteed to fill any room with booming sounds. manufacturer capable of providing 4K solutions to consumers “from the lens to the living room”.

Singer Epic 4K AI Televisions with Google Android Singer launched the all-new Singer Epic 4K Artificial Intelligence TV range, the most affordable premium products yet from Singer. The TVs are available in 43-inch, 49-inch, 58-inch, 65-inch, and 75-inch sizes with Android TV, making Singer the first local TV brand to partner with Google Android. Android TV comes built-in with Google Assistant, enabling users to simply say “OK Google” or press the mic button on the remote control to find the information they require.

The all-metal 75-inch TV is marketed at around a third of the price of similar sized models from other brands with picture quality defined by features such as IPS panel, local dimming, and support for HDR10 and HLG high dynamic range formats. The television boasts a vast array of picture enhancements including scene modification, picture smoothening, colour compensation, skin colour improvement, and HDR+ technology that delivers outstanding images with high contrast and accurate details.

Singer is the first in Sri Lanka to introduce the 58-inch 4K Ultra HD Smart TV at the same price as 55-inch models in the market today. The 43 and 49-inch models feature a front-facing sound bar that gives the audience crisp and clear sound. The TV range comes with a 3-year fully comprehensive Launching SONY SHAKE HiFi Audio Series product warranty and is backed by Singer’s renowned after-sales service.

Launching Singer Epic AI google android TV 101 161 271 65 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Customer Capital

Sony Home Audio Systems The 3-box models provide wide stereo sound for both The Y9 2018 entered the market with its superior display Singer, together with Sony International, launched six new day-to-day audio needs and weekend house parties with and photographical capabilities, using four cameras to high-power Home Audio Systems, including Shake 3-box high power amplifiers providing an impressive level of sound capture stunning photos with the ability for the user to models (MHC-M60D, MHC-M40D) and the all-in-one box style pressure. Music can be played from any source such as CD, control the depth of field to make truly mesmerising portraits (MHC-V81D, MHC-V71D, MHC-V41D, MHC-V21D), all of which DVD, HDMI OUT (ARC), USB, Bluetooth, as well as mic and and landscapes. are guaranteed to fill any room with booming sounds. The Y7 Pro expanded consumer’s visions with a wide DewDrop display, classic design, and an astonishing 16-megapixel front camera. An impressive 4000 mAh battery with AI power saving technology enables worry-free travelling without the need for frequent recharging.

The Y6 Prime’s 5.7-inch HD+ (1440x720) FullView display boasts an impressive resolution with an ultra-high screen-to- body ratio, bringing a larger world into your view. A sleek 2.5D screen design harmonises perfectly with the soft matte back, highlighting the flash of colour with the camera frame.

The Y5 Lite 2018 is the first ever Huawei entry-level smartphone with a 5.45-inch HD+ FullView display. The exceptional display has won over the attention of youth around the world, providing an ideal platform for video streaming, gaming, and an entertainment hub ideal for the young spirit.

guitar input. Users can also enjoy Wireless Party Chain via Bluetooth® and Party King mode.

Additionally, Singer and Sony unveiled the new SRS-XB41, SRS-XB31, and SRS-XB21 EXTRA BASS wireless speakers. Launching Huawei Smartphone Y-series The speakers are promising audio devices for parties, with exciting features such as live music mode, “Party Booster” Asus Laptops feature, multi-colour line lights, speaker lights, and flashing Singer introduced several Asus laptops upon the official strobe lights. Up to 100 speakers can be connected to create announcement of the partnership with the multinational a Wireless Party Chain via Bluetooth. The sound quality of the computer hardware giant. The range of laptops will be speakers are designed to sustain and focus on “deep bass” introduced at various price points and specifications to cater and “punchy bass”, which perfectly complement bass-heavy to the requirements of different customers. The products are music such as the popular music genres of EDM, grime, and powered by the latest Intel 8th generation Core processors hip-hop. and genuine Windows 10 operating system and come loaded with features including Full HD anti-glare screens, fingerprint Huawei Y-series readers, Asus’ fast-charging technology, and NVIDIA Huawei launched the much-anticipated Y9 2018, Y7 Pro, GeForce graphics technology. All Asus laptops offer a 2-year Y6 Prime, Y5 Prime, and Y5 Lite models as additions to the manufacturer’s warranty and customers can take advantage of thriving Huawei Y-series. Singer’s 2-year extended warranty at a special rate to obtain a 4-year warranty for all Asus laptops. The products are available through all Singer channels. 66 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Customer Capital

Singer also introduced an European-made stylish free- standing oven with a capacity of 62 litres. The oven features Italian-made Sabaf burners with an electric oven compartment at an affordable price compared to other leading brands in the market.

Beko Built-in Solutions Beko offers an array of built-in solutions that seamlessly integrate into any kitchen design, providing a clean, modern, and elegant feel to the kitchen. From hoods and hobs to microwaves, ovens, refrigerators, and washers, Beko fulfils the voids in any modern kitchen. As Europe’s No. 1 brand and equipped with the latest European technology, Beko’s built-in solutions are targeted primarily at the high-end market.

Unic Rice Cookers Unic introduced a range of rice cookers in four colours and four capacities from 0.6 litres to 2.8 litres. The range introduces colour variance to Singer’s existing rice cooker range and are sold at attractive prices aimed towards the price-conscious market.

Partnering with ASUS brand Samsung Smart Convertible Refrigerators Retro Microwave Oven Sri Lankan customers can now experience the all-new Singer introduced the newest addition to their microwave technology of smart convertible inverter refrigerators. The range, the Retro Microwave oven. The oven comes in a red revolutionary “Smart Convertible 5-in-1” range caters to vintage design with modern performance. the diverse storage needs of consumers. The refrigerator is powered by Twin Cooling Plus technology that enables Fitness Equipment Range consumers to be flexible with cooling storage based on their needs. The true independent cooling system allows turning Singer introduced a new range of fitness equipment as a the freezer into a fridge when required. The new refrigerator is category expansion to the fitness range in January 2019. energy efficient, durable, and addresses the unique storage An Orbitrack and a bike were introduced in the first phase. needs of consumers while offering the ultimate convenience.

Singer Built-in Samsung also introduced the Smart Digital Inverter range Singer Built-in, a new addition to the kitchen appliances range, of refrigerators, which offer a blend of freshness, energy offers an exquisite selection of hoods and hobs to match efficiency, even cooling, and durability. It offers the perfect the requirements of our customers at affordable prices. The solution to provide savings on electricity bills, retain hoods are inclusive of flat and chimney-type and the hobs uninterrupted cooling, and freshness during power cuts. come in different sizes and couple with the hoods. Samsung is committed to addressing the diverse consumer needs and preferences of consumers through meaningful Singer Industrial Rice Cooker innovation. The new range of Samsung convertible inverter The Singer Industrial Rice Cooker comes with a 10-litre refrigerators come in 320 litre and 345 litre capacities and are capacity with the ability to cook up to 6kg of rice. The rice priced competitively. They are available at over 442 Singer cooker is ideal for small scale businesses and is the most outlets across the island and are backed with unmatched affordable model in the market amongst similarly capable service by Singer. rice cookers. Philips Personal Care Products Singer Electric Oven and Free-standing Gas Oven The business of grooming/personal care products is an The Singer 38-litre electric oven is the largest capacity oven in emerging segment in the consumer durables industry. Singer the entire Singer tabletop electric oven range, with a spacious entered the business in March 2018 through the reputed cavity that allows for baking up to 2.5kg. brand, Philips. From then to now, the business has expanded in terms of the product range and distribution opening new avenues to its retail business. Singer offers a range of 101 161 271 67 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Customer Capital

As a large customer-centric organisation, our customer service representatives across the country strive to deliver the best quality products and services.

male and female products to fulfil the grooming needs of Customer Satisfaction Surveys our customers. Customer Surveys conducted 12 Casio Musical Instruments Customer complaints received 18,998 Casio musical instruments ranging from mini keyboards to Customer complaints resolved 18,998 digital pianos were introduced to fill the void in the entry range segment in the musical instrument product category. The range is to be expanded in terms of distribution and Singer Contact Centre products in the upcoming financial year. A variety of products Singer was the first consumer durables retailer in Sri Lanka to including mini keyboards, standard keyboards, high-grade establish a Contact Centre to offer our customers unparalleled keyboards, arranger keyboards, and pianos will be added to after sales service. The Contact Centre initially began its the existing range. operations in year 2008. Today the Singer Contact Centre is a larger business unit which consists of 22 staff members. The Singer Contact Centre operation facilitates customers through Customer Feedback and Research inbound, outbound calling, and processing of online sales. Singer’s customers seek to purchase quality products from Our inbound operation mainly involves handling all incoming genuine companies that meet their standards of value and customer calls related to products and services, customer demand transparency in sourcing. As a large customer-centric complaints, and general inquiries. Our outbound operation organisation, our customer service representatives across the consists of handling hire purchase verifications and customer country strive to deliver the best quality products and services satisfaction surveys related to after sales service. and maintain or exceed expectations through collecting customer feedback. We also invest in obtaining data through The Singer Contact Centre operation was further extended in feedback forms, informal surveys, product surveys, data 2018/19 by registering all product-related complaints received mining, mystery shoppers, local and international research through dealers and service franchises. We also introduced teams, and our Contact Centre that records and reports all a telesales unit which conducts operations to convert all customer complaints and feedback. Occasionally, we utilise Contact Centre sales leads into successful sales and to the services of research agencies such as Nielsen and LMRB conduct special campaigns for brand management; the team to conduct consumer market research or product-specific increased sales volumes during the year. In order to improve research to identify evolving consumer trends and needs. We the customer experience in after sales service, the Singer also perform data mining on loyalty members to identify their Contact Centre facilitates the registering of all product-related preferences and improve our products and services. complaints and a mechanism to follow up such inquiries with the Service Centre management. In 2018, the Contact Centre Customer retention served over 400,000 customers.

Customers at the beginning of the period 8,788,899 Furthermore, the Contact Centre provides relevant and Customers acquired during the period 454,009 continuous training to staff on its operations and services through internal and external training programmes designed to Customers at end of period 9,242,908 enhance the customer experience.

Customer Satisfaction Survey Contact Centre 2018/19 2017/18 As a customer-centric company, Singer is dedicated to enhancing customer satisfaction, convenience, and Outbound 871,229 535,000 service quality. We regularly conduct customer satisfaction Inbound 333,995 306,070 surveys to keep track of the pulse of our customers and respond accordingly. Total 1,205,224 841,070 68 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Customer Capital

Our Retail Presence Greet up to March 2019 We greet customers with a warm and reassuring smile to make them feel welcomed and ready to be heard.

Listen Intently We listen to the customer and never interrupt them Northern as they need to tell their story and feel they have 21 been heard.

Apologies North Central We sincerely convey our apologies to the customer for the inconvenience caused. 35

North Western Reach Agreement Eastern 40 We seek to agree on the solution that will resolve the 27 situation to their satisfaction. Our best intentions can Central miss the mark completely if we still fail to deliver what the customer wants. 51

Western Uva 145 31 Follow-up Sabaragamuwa We follow-up to ensure the customer is completely 39 satisfied.

Southern Thank Them 53 We thank the customer for bringing the problem

to our attention. We can’t resolve something we Singer Singer Singer Satellite SISIL Total aren’t completely aware of, or may make faulty Mega Plus Homes Shops World assumptions about. Central 2 28 3 10 8 51 Eastern – 21 – 4 2 27 Seek the Best Solution Northern – 17 – – 4 21 We determine the customer requirement by inquiring to North Central – 25 1 4 5 35 provide a solution. North Western – 28 2 5 5 40 Sabaragamuwa – 20 2 6 11 39 Take Quick Action Southern – 33 1 13 6 53 We act on the solution with a sense of urgency. Uva – 14 1 11 5 31 Customers will often respond more positively to our Western quick resolution of the matter. 21 85 9 5 25 145 Total 23 271 19 58 71 442 101 161 271 69 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

EMPLOYEE CAPITAL

Singer is committed to providing an exemplary work environment for its employees with employment practices that are geared towards attracting and retaining talent-based on merit.

Singer is committed to providing an exemplary work Part B Male Female Total environment for its employees with employment practices that are geared towards attracting and retaining talent-based Western Province 1,277 301 1,578 on merit. We enhance the skills of our employees through Central Province 235 38 273 extensive training and development programmes, and our work environment is benchmarked against the highest North Central standards for health and safety. Province 87 10 97 Eastern Province 58 5 63 Employee Profile Southern Province 232 43 275 Part A Male Female Total North Western Permanent 2,174 401 2,575 Province 150 24 174 Temporary 175 48 223 Uva Province 99 11 110 Total 2,349 449 2,798 Sabaragamuwa Province 143 17 160

Part B Male Female Total Northern Province 64 4 68

Full time 2,349 449 2,798 Total 2,345 453 2,798 Part time – – – Recruitment and Turnover Total 2,349 449 2,798 18-28 29-39 40-50 50 Above Total M F M F M F M F M F Labour Practises and Decent Work Recruitment 256 119 135 20 23 6 11 6 426 151 Compliance with all statutory provisions governing labour practices and decent work is ensured across the organisation Turnover 171 42 117 28 43 7 29 5 359 82 and Group of Companies. The minimum number of weeks’ notice provided to employees and their elected representatives prior to the implementation of significant operational changes that could substantially affect them is determined based on the situation. 70 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Employee Capital

18-28 29-39 40-50 50 Above Total Number % Number % Number % Number % Number %

Key and Senior – – 4 0.14 29 1.04 26 0.93 59 2.11 Middle Management 1 0.04 42 1.50 52 1.86 25 0.89 120 4.29 Junior Management 17 0.61 131 4.68 41 1.47 24 0.86 213 7.61 Executive 17 0.61 42 1.50 14 0.50 3 0.11 76 2.72 Non-management 747 26.70 841 30.06 512 18.30 230 8.22 2,330 83.27 Total 782 27.90 1,060 37.88 648 23.16 308 11.01 2,798 100.00

Governance Body

Female Male Total Number % Number % Number %

Key Management – – 14 100 14 100

18-28 29-39 40-50 50 Above Total Number % Number % Number % Number % Number %

Key Management – – 1 7.14 3 21.43 10 71.43 14 100

Identifying Skills Required for the Future culture of continuous learning, innovation, and team building, The recruitment and training of employees who have the which is vital for a sustainable workplace. Empowering staff potential to lead the Company in the future ensures the though training and the development of new skills can result in continued growth of the business. Beyond academic the Company retaining high performing, loyal staff and avoid credentials and skill levels, various other factors are also the high costs associated with the recruitment and training of taken into consideration when making recruitment and new employees. training decisions. Training successors can increase the productivity, skill, and It can be impractical to list the ideal skill sets, “hard” or “soft”, innovation of the workforce, enabling the Company to better that are required in future leaders. A company culture is nearly retain top talent and creating a faster, more effective response impossible to replicate; every organisation has envisioned its mechanism to change. Finding new leaders is critical to the own “ideal” professionals. Yet, certain soft skills can suggest successful growth of the Organisation, and growth is greatly the suitability of an individual for a leadership position, such as affected by the number of leaders we recruit. the ability to take responsibility and get work done. Succession Plan: The 3x3x3 Initiative Training and Development This initiative selects up to three employees for every Management position. Three areas of development are Turnover costs can range from anywhere between 10% to 30% identified, and the employees are groomed over a three- of an employee’s annual salary. These costs can include direct year period to take on critical Management roles whenever expenses such as recruitment and the expenses incurred due they become available. Our Development and Succession to the loss of productivity and institutional knowledge. Programme, the 3x3x3 initiative, seeks to ensure all key managers, including Senior Managers, middle managers, Although there can be several reasons for leaving an and selected junior managers, have identified and developed organisation, managers who focus on grooming their their successors. successors can avoid many of these reasons. When a manager recognises the potential in an employee with the required personality traits, they build skills and leadership training into their daily interactions with staff. This can have an immense effect on the corporate culture, as staff understand they are valued by their Manager and the Company. It fosters a 101 161 271 71 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Employee Capital

Recruitment and Turnover % 18-28 29-39 40-50 50 Above M F M F M F M F

Recruitment 44.37 20.62 23.57 3.47 3.99 1.04 1.91 1.04 Turnover 38.55 9.52 26.76 6.35 9.30 1.59 6.80 1.13

Diversity Total Employees

Female Male Total Number % Number % Number % Key and Senior 2 0.07 57 2.04 59 2.11 Middle Management 10 0.36 110 3.93 120 4.29 Junior Management 35 1.25 178 6.36 213 7.61 Executive 14 0.50 62 2.22 76 2.72 Non-management 388 13.86 1,942 69.41 2,330 83.27 Total 449 16.04 2,349 84.00 2,798 100.00

Province Recruitment Turnover Male % Female % Total % Male % Female % Total %

Western Province 202 35.01 93 16.12 295 51.13 171 38.78 52 11.79 223 50.57 Central Province 47 8.15 13 2.25 60 10.40 45 10.20 4 0.91 49 11.11 North Central Province 14 2.43 3 0.52 17 2.95 16 3.63 3 0.68 19 4.31 Eastern Province 7 1.21 3 0.52 10 1.73 15 3.40 1 2.03 16 3.63 Southern Province 38 6.59 14 2.43 52 9.01 38 8.62 7 1.59 45 10.20 North Western Province 45 7.80 11 1.91 56 9.71 21 4.76 5 1.13 26 5.90 Uva Province 11 1.91 4 0.69 15 2.60 16 3.63 5 1.13 21 4.76 Sabaragamuwa Province 35 6.07 8 1.39 43 7.45 14 3.17 3 0.68 17 3.85 Northern Province 27 4.86 2 0.35 29 5.03 23 5.22 2 0.45 25 5.67 Total 426 73.83 151 26.17 577 100.00 359 81.41 82 18.59 441 100.00

Permanent Temporary Total

Western Province 1,530 82 1,612 Central Province 232 29 261 North Central Province 94 4 98 Eastern Province 55 6 61 Southern Province 235 29 264 North Western Province 147 24 171 Uva Province 94 18 112 Sabaragamuwa Province 127 26 153 Northern Province 61 5 66 Total 2,575 223 2,798 72 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Employee Capital

The Singer Training Philosophy

Catch the Vision of Identify Potential Multiplication Look for potential in people. Early identification of potential is the key to be focused and to offer One cannot sell something unless they believe in it appropriate training to individuals.

Be Intentional Create an Environment

A conscious decision must be made to replace oneself. Conducive to Producing Multiplication should be a part of one’s strategy and there must be a system of leadership recruitment. Leaders

Commitment to creating an environment that is conducive for learning and development is vital. An environment that welcomes engagement could lead to Start Early the creation of good leadership, shared responsibility and collective growth. Leaders must be replaced before they are needed. Leaders must invest in their own personal growth. One cannot lead unless they have been there. Recruit

Identify and recruit the best quality of people, adhering Humble Yourself to the ‘recruitment of quality’ principle.

Leaders must not fear new leaders being better leaders than them. People must be allowed to shine under one’s leadership; this will advance one’s ability to lead. A team will follow their leader if there is a direct benefit Lead for Life Change to them and if they trust the integrity of the leader. Identifying and nurturing potential leaders who have the potential to be bold, mature and responsible decision makers is part of our focus areas in creating Share Responsibilities a quality workforce. Early

Sharing responsibility at an early stage is the easiest way to foster learning. When more ownership is given to people on tasks, they will be more motivated to participate and learn. 101 161 271 73 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Employee Capital

Conditioning Life Creating ambience – producer of an optimal aura supporting SINGER productivity and liveability • 12,000 BTU – 24,000 BTU – the air conditioner. • Blue fin technology • Refrigerant R410A • Curved Design • Copper Condenser • Inverter

SISIL

• 9,000 BTU – 24,000 BTU • Refrigerant R410A. • Anti-corrosive blue fin technology. • Copper Condenser.

HITACHI

• R32 Eco green Refrigerant • Filter Clean Indicator • Blue fin technology • Kaimin Function – Provides optimum cooling without chill effect. 74 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Employee Capital

Learning Management System is known as “Selfy” (Singer E-Learning for You!) and was launched on the 16th of January 2019.

Our Approach to Employee’s Progression and Territory Training Career Development To increase customer satisfaction at the showroom level, Singer places emphasis on the career development of it is vital to keep the showroom staff updated on the latest employees, encouraging them to reach their personal and products and correct practices. In order to achieve this professional goals. This serves to make their work lives objective, the Human Resources Development Department more satisfying while ensuring the continued success of implemented territory trainings to diffuse knowledge effectively the Company. among showroom staff. 1,185 showroom employees underwent training and mentoring at the showroom level As a responsible employer, we encourage our employees to through this initiative in the period during April 2018 – Stay cool and enjoy pursue career development opportunities and continuously March 2019. support their professional growth. We continue to invest time greater comfort and and money, even in challenging times, for the training and Training on Sales and Customer Care professional development initiatives of our employees. Aimed at retail showroom staff in the field, the programme productivity with covers sales techniques, the importance of customer Singer conducts six categories of training: external training, care, and self-motivation techniques. The programme was operational training, product training, sales, customer care Singer Sri Lanka’s conducted covering all branches. training, territory training, and service centre trainings. Most air conditioning training programmes are conducted at the state-of-the-art training centre at the Group’s Head Office. Field training is Industrial Sewing Machine Training solutions. conducted according to the convenience and requirement of Upon request, a selected number of Industrial Sewing Machine the trainees and trainers. Furthermore, we have invested in trainings were conducted, in liaison with the Industrial Products the infrastructure development of our regional service centres, Division. The programme covers the selling, assembling, and which can accommodate approximately 25 employees at a time. basic troubleshooting of industrial sewing machines.

External Training Product Knowledge – White Goods External training covers programmes such as seminars, These training programmes cover white goods including conferences, and technical or function-specific training that refrigerators and deep freezers, washing machines, water addresses the needs of employees that are identified during pumps, air conditioners, sewing machines, and ovens. These the year. These programmes enable our employees to stay programmes focus on demonstrating the latest products such up to date with industry best practices in varied functions. as Geo SMART refrigerators. Singer Plus, SISIL World, and Line Managers have the flexibility to request specific training Singer Mega staff received this training, as did all new recruits programmes based on requirements at any given time. as a part of their Singer Retail Academy (SRA) training.

External training is conducted by the British Council, IPM Product Knowledge – Brown Goods Sri Lanka, Ceylon Chamber of Commerce, Employers’ This is a monthly programme which provides new recruits/ Federation of Ceylon, CIMA Sri Lanka, CA Sri Lanka, McQuire appointees such as Trainee District Managers, Trainee Branch Rens & Jones, Life Skills Academy, and other resource Managers, Approved Dealers, Sales Agents, Customer persons. Customised training programmes are organised Care Assistants and Shop Assistants with the necessary by the HR Division based on employee’s specific job product knowledge of brown goods, such as televisions, requirements. Training programmes cover areas such as audios, computers and other electronic devices. Apart from motivational techniques, basic IT Knowledge, customer care, the product knowledge, trainees are also educated on the marketing, and networking. latest technologies and the essentials of selling electronic appliances. 101 161 271 75 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Employee Capital

Latest Product Introductions management, auditing, best practices, and the Sales ERP All Branch Managers and selected Assistants receive (Enterprise Resource Planning) module were conducted with the training on newly introduced products. The programme was aim of enabling staff to provide superior service to our customers. conducted to educate field staff about the latest products in the aforementioned categories, as well as the essentials Service Centre Training Programmes of selling consumer durables. The main products under the It is vital for the after-sales service staff of Singer to gain a latest product introduction for the period during April 2018 – thorough and clear understanding of the technical aspects March 2019 include the Singer Epic AI Televisions and latest of the products as well as customer service. Therefore, 256 Sony products. service personnel were trained in the last financial year.

Training Programme on Furniture Other Training Programmes This training programme updates employees on furniture Orienting to the Organisation operations and familiarises them with the product range. It is important and useful for our employees to have a macro Participants were given a hands-on experience and real site picture of Singer’s operations. The formal induction and visits experience in furniture assembly, dismantling, designing of to the retail outlets of the Company’s channels of distribution pantry sets, basic drawing concepts, material selection, and offers a broad overview of the whole business upon joining. product costing. They are given a basic understanding of the Guided visits to Company locations such as the factories and communication process of the factory to deliver the goods to warehouses provide a much-needed real life visual element customers on time. The programme was conducted with the and exposure that help them remember and relate better support of the SSL factory, and 174 showroom employees through their jobs to the Organisation’s grander objectives. received the training during the year. A programme to address this necessity was conducted for staff who had not visited these locations. Operational Training Singer Retail Academy Diplomas Lean Management Training The Singer Retail Academy, originally a Singer Asia initiative, The Management staff of the Group underwent Lean aims to develop our employees who are involved in field Management Training in 2018. The training covered the basic operations. The Academy currently conducts five diploma concepts of lean management and Six-Sigma. A Green programmes for Customer Care Assistants, Auditors, Credit Belt Training Programme was also conducted for select Officers, Sales Promotion Officers, and Executive Retail employees and shared further insight into lean Management Managers respectively. The programmes consider aspects of concepts and Six-Sigma concepts. The training included a each group that need to be strengthened for the effective and practical project to improve a current process or implement a efficient functioning of operations. These aspects constitute new concept. the modules of the programmes, culminating in 164 modules being conducted under these diplomas that have benefited Language Development Programme over 2,700 employees. We believe that effective business communication is critical to successful businesses. Selected staff members from the Hire Purchase credit and service functions underwent a 72-hour programme Trainings on hire purchase were conducted for Branch staff to develop their linguistic skills. across our Retail Channels to educate them and refresh their knowledge on procedures and best practices of the hire New Initiatives purchase payment option for customers. Over 805 employees were trained under 23 Hire Purchase Training Programmes in 2018/19. The Human Resources Development Division of the Organisation introduced an online platform for Shop Assistants and Customer Care Assistants to gain knowledge of the Western Union Training products and daily operations of the branches through an Singer offers the facility to transfer money through Western easy and cost-effective method. This Learning Management Union. Trainings were organised for our Retail Channels staff to System is known as “Selfy” (Singer E-Learning for You!) and familiarise them with the protocols involved in performing this was launched on the 16th of January 2019 by introducing a service for customers. 319 employees underwent 14 Western mobile application named “Selfy” for the branch staff. It was Union trainings. introduced in phases; the first phase was launched at the start of the LMS launch, where 64 locations in Colombo were Treasury, Audit, and System Training covered with over 500 users of the mobile application. Phase Knowledge about the internal functions associated with the two will be launched in May 2019 where the Colombo and sales process is important for our field staff. Trainings on cash Central areas will be covered with over 1,200 users. 76 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Employee Capital

Investment in Training and Employees Trained 2018/19

Category General Product Operational External TTO Service SRA Sales and Total Training Training Training Training Training Centre Training Customer Training Care Training

Investment (Rs.) 3,400,287 1,911,349 3,580,690 2,070,158 – 1,402,571 1,321,387 5,658,771 19,345,213 No. of Programmes 29 78 61 50 213 12 170 26 639 No. of Participants 728 1,817 1,476 199 993 435 2,809 1,593 10,050 No. of Training Hours 7,039 14,325 13,036 1,679 8,124 2,040 11,953 9,460 67,656 Investment per Participant 4,671 1,052 2,426 10,403 – 3,224 470 3,552 1,925

Average Training Hours by Employment Category

Employment category Male Female

Managerial 6.75 7.17 Executives 12.46 8.40 Others 7.37 13.88

Performance Appraisal Employee Facilities All employees of the Group undergo performance appraisals We offer our employees a wide range of facilities, including excluding interns, trainees, and temporary employees. The 42 days of leave per annum, 3-day excursions, uniforms, process facilitates career management, mapping development staff discounts for Singer products, staff loans, training paths, and enhancing the effectiveness and motivation of and development opportunities, and sports activities. our employees. It helps to achieve better results, manage Some of these benefits vary by employee grade and nature employees effectively, and identify the training needs of job functions, while some facilities are common to all of individuals. employee categories.

Strategic information is provided to employees through the Ergonomics Company’s internal magazine, “Sinera”, and staff meetings Employees spend a significant amount of time at work. with the Management. Therefore, we ensure a conducive work environment. We look into aspects such as workspace-to-employee ratio, Special emphasis is given to managerial development as air conditioning, noise pollution, desk and chair alignment, we understand that a good leader is able to build a well- sanitary needs, and provide adequate space for meals integrated and effective team. and relaxation. Individual performance appraisals are conducted semi-anually with the final appraisal at the end of every year. Each Line Professional Subscriptions Manager assesses their subordinates’ strengths, weaknesses, As a company benefit scheme, subscription fees are paid to and training and development needs, which are incorporated professional bodies on behalf of our employees. This helps to into the training plan for the upcoming year. enrich their careers and many managers have benefited from this scheme. Divisional Heads at Singer are required to give a detailed account of their division’s training requirements in the third Internship Programme quarter each year. The Training Department schedules and Attracting and retaining the right talent within the Organisation implements tailor-made programmes to address training is a key challenge. We have partnered with several state needs, either through external training programmes or through and private sector institutions to initiate brand building internally conducted programmes. activities of our Company. Singer’s internship programme helps to attract youth into the Organisation and give them an Evaluation techniques such as “Mystery Shopper” and “Call understanding of our Company, business practices, policies, Centre Complaint” are used to assess field employees’ skill and vision for the future. This also acts as a CSR project for levels and provide training as necessary. students following local and foreign degree programmes in 101 161 271 77 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Employee Capital

Sri Lanka and pursuing professional qualifications (Chartered Housing Loans Institute of Management Accountants, UK and The Institute Employees who have completed five years of service are of Chartered Accountants of Sri Lanka). Students following eligible to receive financial assistance from the Company. This Finance, Marketing, Supply Chain, and Human Resource assistance is given to cover the initial expenses of building a Management degrees are incorporated into the programme. house while they await a loan facility from a financial institution. Interns are given a comprehensive orientation of the Organisation’s operations and in-depth practical training within Distress Loans their specialised areas. We are also focusing our attention on evaluating our remuneration packages to be at par with Distress loans are given to employees in the case of the industry. emergencies such as a sudden illness, death of a family member, damage to homes due to floods or other natural In an effort to retain talent within the Company, a new reward causes, urgent home repairs, or a family wedding, etc. scheme to recognise achievements, with rewards such as overseas tours for high scoring shop assistants, will be Vehicle/Motorcycle Loans launched under the product knowledge evaluation programmes. Permanent employees in specified categories are eligible to apply for interest-free or low-interest vehicle loans through the Employee Benefits Singer Management. A wide range of benefits are provided to the permanent Educational Aid Scheme staff members of our Company. Two mechanisms are in place to support employees with their studies: Medical Benefits Medical expenses of our employees are reimbursed up to 1. A lump sum of Rs. 225,000 is granted on the condition predetermined amounts calculated according to employee the employee serves the Company for eight years. The grade. If the expenses exceed this amount, the employee and facility should be repaid only if the employee leaves the the Company share the balance equally. However, in certain Company before the expiration of the eight years. This is cases, Singer reimburses the medical expenses in full. We mostly granted for postgraduate studies. also provide hospitalisation and OPD treatment coverage 2. Two-thirds of the cost of a particular course fee is to all Management staff members and their immediate reimbursed by the Company on the successful completion family members. of the final examination.

Accident Cover Death Donation This facility is extended to staff members who are exposed In the event of the death of an employee, the family to accidents either at the workplace or as a result of members of the deceased will receive a donation of extensive travel. Rs. 50,000 in addition to six months’ salary. In the event of the death of an employee’s spouse, child, parent, or Travel Expenses unmarried sibling, the employee will be granted a sum of Several facilities are extended to employees engaged in Rs. 25,000. The Death Donation Fund is a contributory fund official travel, including vehicle maintenance, transport maintained by permanent employees. allowances, and reimbursement of travel expenses. Employees in the field staff and base staff categories Maternity receive travel benefits based on their responsibilities and All female employees are entitled to maternity leave. employment grade. Number of Employees Discounted Sales All staff members enjoy convenient access to all products Total number of employees who took maternity 22 marketed by Singer (Sri Lanka) PLC at special discounted leave in 2018/19 prices and easy payment schemes. Total number of employees who returned to work 13 after maternity leave ended in 2018/19 Lodging Total number of employees who returned to work 12* Expenses incurred by field staff members staying at after maternity leave ended and were still employed Company-approved hotels while on official business 12 months after returning to work in 2018/19 are reimbursed. *Five employees have resigned. Five employees are still on leave. 78 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Employee Capital

We encourage open dialogue within our Organisation as it builds trust among all employees.

Singer – A Great Place to Work held with the participation of all key senior and relevant subject For the fifth consecutive year, Singer (Sri Lanka) PLC was managers. We maintain an open-door policy to facilitate a recognised as one of the best places to work in Sri Lanka culture where employees of all levels can freely express their in 2018 at an exclusive ceremony by Great Place to views and recommendations to the Management staff. Work Institute. We attribute Singer’s success to having a motivated Each year, Great Place to Work (GPTW) conducts the largest workforce. Therefore, “doing good” cascades throughout the annual set of workplace culture studies in the world to develop communities in which we conduct business. and recognise high-trust workplaces. Encouraging Open Dialogue Singer continuously strives to create a great work ambience We encourage open dialogue within our Organisation as it for its employees, through a range of team activities to builds trust among all employees. This is essential to drive build camaraderie among departments. Activities include operational excellence and strengthen employee integrity and staff training and development programmes, recreational credibility. Sincere and comprehensive dialogue on any issue and cultural activities, and the engagement of families of in the Company helps builds trust. staff members. Promoting Employee Performance Singer introduced flexi hours in certain locations to improve Several employee and team recognition schemes are in place, the work-life balance of employees. The annual family outings, such as the annual conference, and the list of winners are Christmas parties, and children’s art competitions are some published in the Sinera magazine. of the most popular events in the Company calendar. Grievance Handling Retaining our best talents through developing and retaining Singer follows a formal process in handling grievances. There top performers and the dynamic Management team have were no grievances about labour practices reported through made Singer the employer of choice; three of our Executive the formal grievance mechanism during the year under review. Directors initially joined the junior grade of the Company and rose up the ranks over their tenures. Equal Remuneration Many of the Company’s initiatives have contributed to creating Remuneration is determined through a transparent a vibrant team of happy and committed people driving the best performance evaluation mechanism. Hence, there is customer experiences. These include, establishing the world’s no disparity between the salaries of men and women in first Corporate Rotaract Club, having an active Corporate our Organisation. Toastmasters Club, and holding inter-departmental competitions including a novel talent show titled “Singer Got Talent”. Occupational Health and Safety Safety and Health Committee Sporting Activities Taking into consideration the magnitude of our Group and Singer encourages employees to participate in a range of the diversity of our activities, several proactive and reactive sports activities including cricket, badminton, volleyball, and measures have been implemented to ensure the highest netball. Employees can participate in Mercantile and Inter- standards of occupational safety and health. Our employees Departmental competitions held every year. are the backbone of our Organisation and we strive to ensure they are treated with great respect and care. A wide spectrum of health and safety measures, including hygiene HR Policies and Procedures and accident-safety practices, are implemented by our Safety Employees can communicate with the Board through their and Health Committee, whose members are representatives respective Divisional Heads. Monthly management review of the entire Company and meet once a quarter or in meetings, sales review meetings and operations meetings are case of emergencies. 101 161 271 79 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Employee Capital

A New “Spin” to WHIRLPOOL WP-WM31278 • 14 Kg Capacity Fully Auto Top Loader • 360 Tumble Motion Life • Care Move Technology • 6th Sense Technology A single resource that frees up • In-Built Heater ‘space’ in a busy life – ‘wash, rinse, spin’ relegated – to the washing machine.

SAMSUNG - WD80K6410 • Capacity - 8 Kg (Wash), 6 Kg • AddWash™ Option - Simply add during wash with AddWash™ door • Eco Bubble Technology • Diamond Drum • Sanitise Your Clothes With Air Wash Technology

SISIL – SL-FLE047R • Fully Auto 7kg Front Loader • Pre-Wash • Extra Rinse • Child Lock • Extra 15 Minute Quick Wash 80 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Employee Capital

Monitoring Health and Safety Performance Employee Engagement The Committee assists in the development, monitoring, Singer Sri Lanka Toastmasters Club and review of health and safety policies and procedures In line with the Toastmasters mission, the Singer Sri Lanka of the Group. They also look into proposals, changes to Toastmasters Club since 2011 has nurtured, supported, the workplace, policies, work practices, and procedures and empowered our membership in developing their which may affect the health and safety of the employees. communication and leadership skills by introducing and A successful health and safety programme requires strong initiating thought provoking themed meetings and providing Management commitment and worker participation. Therefore, ample opportunities for interaction and networking through the Committee actively promotes the importance of health and joint meetings. This expands their ability to think out of the safety among employees. box and creativity, thus leading to greater self-confidence and personal growth. Benefits of Promoting a Healthy Workforce The Organisation receives numerous benefits through a The Club continued to engage members in 2018 with creative well-managed health and safety programme, including a themed meetings including “All that is Irish” commemorating positive and caring image, improved staff morale, reduction St. Patrick’s Day, Chinese New Year, and providing a fun in staff turnover and absenteeism, increased productivity, environment with outdoor meetings and creative themes such reduction in healthcare/insurance costs, and risk of fines and as “Mad Hats and False Noses” at The Arcade, Independence litigation to the Company. Square, and an Area Meeting based on the Avurudu theme where the Toastmasters meeting given the Avurudu turn. Employees benefit from a safe and healthy work environment, The Club continued to engage with other clubs through joint Singer Sri Lanka enhanced self-esteem, reduced stress, improved morale, meetings such as “Cupids of Area C2” with HSBC TMC who increased job satisfaction, increased skills for health organised a Valentine-themed joint meeting, AMW with a offers modern protection, improved health, and a sense of well-being. Father’s Day meeting, and Sampath Bank with a Christmas- themed meeting. washing machines Factory Workforce Injuries in 2018/19 Toastmaster Rolinka Perera was selected to compete in the that clean clothes Accidents Division C Impromptu Speech Competition and members had the privilege of participating in Ovation 2018 which provided Cut injuries 48 gently but opportunities for networking. thoroughly. Eye injuries 22 Other 7 The Singer Sri Lanka Toastmasters Club will continue to empower and enrich our members with the core values of Total 77 Respect, Integrity, Service, and Excellence.

Installation Ceremony of Singer Toastmasters Club 101 161 271 81 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Employee Capital

Rotaract Club The Rotaract Club of Singer was the first corporate Rotaract Club in the world. The 2018/19 tenure marked the successful 5th installation ceremony of the Club held at the Company’s Head Office. The Club has always had the passion and focus in serving society. Several successful projects have been organised by the Club to support the needy through avenues such as community service, public relations, club service, and international service. The Club has also been dedicated to developing the skills of their members along with the Company staff. Industry experts have conducted sessions for members to develop their leadership and public speaking skills and becoming good citizens to our nation. The Rotaract Club of Singer will continue its service to society, members, and Company staff.

5th Installation Ceremony of Rotaract Club of Singer

New Year at Singer The New Year was embraced by our employees with the prayers and blessings of all religions at the Head Office and branches.

Sinera Magazine The official newsletter of Singer Sri Lanka, the Sinera magazine is distributed to our employees free of charge to keep them informed of the activities of our Organisation. Published twice a year, the magazine is packed with corporate news, Company bulletins, and photographs.

The Sinera Facebook page has 931 employees who are active on the page.

Kids Art Competition 2018/19 The Kids Art Competition was organised for the 8th consecutive year. Over 150 children participated in three differently themed categories, with prizes awarded to all participants and special prizes for the winners. Kids Art Competition 2018 82 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Employee Capital

Gent’s Picnic 2018/19 Annual Christmas Party The gents of Singer Sri Lanka enjoyed their annual excursion We held two Christmas parties at Golden Rose Hotel in at the Amaya Lake Hotel in Dambulla in two batches from 8-10 December 2018, due to the large number of participants. Over June and 22-24 June. Participants visited the Pidurangala 1,750 employees and their families participated in the parties Temple in Sigiriya while on their holiday, and a total of 460 gents joined the excursion.

Sports and Recreational Facilities The Singer Inter-Departmental Cricket Tournament 2018 was organised by the HR team at the P. Saravanamuthhu (Oval) Ladies’ Picnic 2018/19 Grounds in August 2018. The event saw the participation 150 ladies and 50 children under the age of 12 participated of 54 gents’ teams and 8 ladies’ teams. The Singer in the annual excursion to the beautiful beaches of Passikuda Finance Accounts Division were the winners under the at Hotel Amaya Beach during 18-20 May. Participants enjoyed Gents category and SLMO A Team were winners under the boat rides and dives to see the amazing corals on the shallow Ladies category. The Singer Digital Media – Team A and the seabed, Fancy Dress competitions, a Baila competition, SLMO B Team became runners-up in the Gents and Ladies Drama competition, and other fun games. categories respectively. 101 161 271 83 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Employee Capital

The Singer Finance Team were crowned champions at the A collective agreement for the upcoming two years was signed Inter-Departmental Badminton Team Championship 2018, between the Management and the factory employees of while Sales were 1st runners-up, Operations were 2nd Singer Factory Complex Piliyandala with the presence of the runners-up, and SLMO 1 were 3rd runners-up. representatives from the Inter-Company Employees Union in March 2018. Singer Sri Lanka represented two major tournaments in Mercantile Cricket organised by the Mercantile Cricket A collective agreement between the Regnis Factory Association (MCA). The Singer “A” team played for the MCA management and the Branch Union of CMU was signed in “B” division Limited Overs Tournament and Singer “B” team March 2018 for the next two years. participated in the “G” division 25 Overs Tournament. The Singer “A” Team couldn’t qualify for the semi-finals in the Approximately, 33% of Singer employees are covered by League Tournament but spotted 6th place in the points table these collective agreements. In addition to signing Collective with three match wins. Singer Masters also participated in the Agreements, the Management meets with branch unions to MCA Over 40 Masters sixes and lost the quarterfinal against discuss any concerns and provide satisfactory solutions. Union Assurance. The cordial relations maintained with our employees prevent disputes arising in the workplace. The Singer Soccer Team participated in the Mercantile Football League Tournament division “D” held during March-April 2019. Employee Recognition Singer won two matches against Commercial Bank and HSBC and lost against NTB and WNS. Digital Media Convention The Singer Digital Media Convention was held in July 2018 at The Singer Hockey Team became “B” division champions in the Shangri-La Hotel, Colombo under the theme, “Leading the Mercantile Annual Seven-a-side hockey tournament held excellence”. The convention acknowledged and highlighted in October 2018 and won the Challenge Trophy sponsored by the journey of the Digital Media channel to be the market Singer (Sri Lanka) PLC. leader in the smartphone business, with a keynote from former CEO Mr. Asoka Peiris and an address by Mr. Alex Lin, CEO of Asia Pacific Region Terminal Department – Huawei Technologies Lanka (Pvt) Ltd.

Mr. M. Ramiz Rashid, Territory Promotion Officer – Pettah, received the award for Territory Promotion Officer, and Mr. Rangana Naotunna, Territory Manager – South, received the Territory Manager award.

Collective Agreements Three separate Memorandums of Settlement (MOS) signed in 2016 and were effective for 2018 with the following branch/ parent unions pertaining to a salary revision: zz Commercial and Industrial Workers Union Clerical Branch – applicable to clerical allied and technical grade employees. zz Commercial and Industrial Workers Union Non-Clerical Branch – applicable to manual workers. zz Inter-Company Employees Union – applicable to manual workers attached to our factories. 84 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Employee Capital

Annual Service Awards The Annual Service Awards ceremony was held in April 2018 at the BMICH to recognise the longstanding service of Singer staff. 274 employees received awards and gift vouchers under six different categories, and three employees – Mr. Janaka Mendis, Mr. Sujith Ariyapala, and Mr. Gamini Attanayake – were appreciated for 35 years of service to the Company.

Year of Service Number of Employees

5 134 10 65 15 12 20 36 25 14 30 10 35 3 Total 274

Appreciation for 35 years of service to the Company 101 161 271 85 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Employee Capital

The Ultimate Portal Turn it on – fire it up – in a couple of ‘clicks’ you’re DELL INSPIRON 5570 15-inch laptop delivering an exceptional accessing and communicating viewing experience, a head-turning finish and with the world – the laptop. an array of options designed to elevate your entertainment, wherever you go. Fully immersive, completely impressive Responsive performance and Seismic Storage Crowd-pleasing features Designed for the real world – because that’s where life happens.

ASUS ZENBOOK FLIP 14 UX461UN The world’s thinnest 2-in-1 laptop with discrete graphics Slim, stylish and sophisticated Precision-engineered versatility Unbounded vision with the NanoEdge display

SINGER DUO 2 IN 1 DETACHABLE NOTEBOOK A detachable 2-in-1 is Notebook 3 essentially a slate with a keyboard dock You can remove the keyboard portion of the tablet and leave it behind when you desire maximum portability. Powered by Intel Processor and Genuine Windows 10 OS 86 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis

SOCIAL AND ENVIRONMENTAL CAPITAL

Supporting the educational development of Sri Lanka has long been a key aspect of Singer’s CSR agenda.

As a responsible corporate citizen, Singer works for the believe that our employees can provide a better perspective benefit of society. We have established close ties to the on the progress of our CSR agenda and seek their input to communities in which we operate in through our extensive enhance our CSR efforts. branch network. We aim to support these communities through our community support projects by giving a portion Feedback from our employees keeps them engaged and of value addition back to them. improves our CSR practices on an ongoing basis. Increasing accessibility to corporate sustainability leads to enhanced Moreover, we take care to mitigate any damage to the employee involvement and ultimately elevates the Company’s Singer Sri Lanka environment and work to create and contribute to a more performance. Employees benefit from developing new skills sustainable environment. We constantly assess our that can boost their performance and thrive in an environment offers a wide manufacturing processes for their environmental impacts which fosters a responsible and socially alert workforce. and regularly evaluate the processes of our suppliers range of mobile and manufactures. Upon approval of a proposed CSR project by the Company’s CSR Committee, the related Singer Group companies ensure the project is financed and resourced until completion. The computing Memberships in Associations initiator of the project takes on the responsibility of kick solutions so you are The Singer Group of Companies is affiliated with various starting activity around the project and ensuring its success. business and public policy associations in our area of The Company also solicits proposals from our communities. never at a loss when business, as well as community associations. We are members of the following associations: The Singer CSR Committee evaluates, oversees, and you’re on the go. monitors all CSR projects carried out by the Company to zz The Ceylon Chamber of Commerce maintain best practices in our dealings with the communities, zz Sri Lanka-China Business Council and takes on the responsibility of ensuring that our CSR zz Import Section of the Ceylon Chamber of Commerce activities cover the entire spectrum of economic, social, and environmental concerns. zz Sri Lanka-Canada Business Council

zz The Employers’ Federation of Ceylon Engagement in philanthropic activities not directly associated

zz CSR Lanka Guarantee Limited to our employees can have a significant influence in their work attitudes and behaviours. Singer has benefited greatly zz The Industrial Association of Sri Lanka by facilitating employees to engage in CSR projects they are passionate about, as evidenced by the commitment Corporate Social Responsibility (CSR) and passion they exude. Branches and departments that implement CSR projects have proven to perform better in the Corporate Social Responsibility is an important aspect of Organisation due to the strong team spirit nurtured through Singer Sri Lanka’s long-term strategy. In a world where involvement in CSR activities. consumers are increasingly conscious of where their products are sourced from and employees seek a sense of pride, fulfilment, and substance from their workplace beyond a pay Singer’s Commitment Towards Education cheque, there has to be a congruence of values between the Supporting the educational development of Sri Lanka has Company and its employees. long been a key aspect of Singer’s CSR agenda. Singer is of the belief that we have to go beyond the traditional focus We encourage our employees to submit written proposals for on responsible supply chain management, waste reduction, a CSR project of their choosing, be it a one-off project or an and water stewardship, because the nation is in dire need of activity that can be integrated into the business process. We development of a sustainable pool of talent that will ultimately 101 161 271 87 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Social and Environmental Capital benefit the nation as a whole. We actively seek to elevate the Sipmansala Seminar Series level of education in our nation through meaningful action, “Sipmansala” project which started in 2013 and extended particularly in rural communities. around the country have been conducted successfully during the period covering 70 schools under 29 centres of Institute of Learning is a lifelong process and supporting the educational Higher National Diploma In Engineering. development of Sri Lanka’s children and youth is an extremely gratifying endeavour for us. We have forged strong The seminar series conducted sharing knowledge among relationships with rural communities and teachers, parents, more than 3,000 students of less facilitated schools Island and officials who work tirelessly to upkeep the education wide and they were provided stationeries including file covers, sector in the country. We believe education is one of the model papers, past papers, pens, compass sets, short note greatest gifts one can give to society and are especially proud books and refreshments. to engage our wide network to take the gift of education to rural Sri Lanka in the hope of building a promising future with educated and accomplished individuals.

School Projects In 2018/19, we renewed our commitment to education by continuing our efforts to uplift the education of schools and systematically building their infrastructure, supplying furniture, appliances, stationery, musical instruments, and more.

School Description

Lahiru Scholarships Foundation Providing 500 Instruments Kehelwarawa Vidyalaya Donation of five Computer Tables Mahanama Vidyalaya, Vavuniya Donation of 300GPD RO Purifier Alakoladeniya Buddhist Vidyalaya, Kurunegala Construction of a Water Tank and Toilets Wanduramba Central College, Wanduramba Donation of Musical Instruments Dadagamuwa Junior School, Veyangoda Donation of Stationery Items Aluthwewa Kumara, Vidyalaya, Anuradhapura Donation of Musical Instruments Veeriyagama Maha Vidyalaya, Suriyawewa Providing Water Supply System Weediyawatte Senarath Junior School, Udugampola Donating Library Books Tissamaharama Vidyalaya, Tissamaharama Providing Water Supply/Purification System Handugala Maha Vidyalaya, Handugala, Matara Providing Desks and Chairs Thalakiriyagama Maha Vidyalaya, Thalakirigama Construction of Toilets Pussella Navodya School, Naula Repairing Multimedia and providing a Water Supply System Weralugahamula Vidyalaya, Rakwana Renovation of a Library Dayagama Sinhala Vidyalaya Dayagama Providing a Water Supply System and Water Pump Dadagamuwa Junior School, Veyangoda Donation of 100 chairs, filing cabinets, desks, book racks Sri Dhammarathana K.V. Ihala Diyadora, Wewagama Donation of Library Books Walala A. Ratnayake Madya Maha Vidyalaya, Menikhinna Donation of Track Kits Home Science Centre at National Institute of Education, Maharagama Donation of Drawered Unit, Base Unit, Oven Base Unit, Sink unit Maspotha Maha Vidyalaya, Maspotha Donation of 100 Ving Chairs Sri Rahula Maha Vidyalaya, Ratmalana Supply of a Refrigerator Hartley College, Point Pedro Rebuilding of School Pore Junior School, Athurugiriya Renovation of a Library, Desk, and Chairs Galthambarawa Vidyalaya, Polonnaruwa Supplying 17 pairs of School Shoes Sri Jinaratana Bhikshu Vidyala Providing 40 units of Unic Audio Systems R/Bla/Laduyaya Vidyalaya, Belihuloya Providing Library Cupboards and Books Meewanapalana Maha Vidyalaya, Horana Providing Drinking Water System Horahinna Maha Vidyalaya, Walasmulla Providing Library Cupboards and Books Lahiru Scholarships Foundation Providing School Uniform Materials to students in the rural area C W W Kannangara Vidyalaya, Colombo 08 Construction of a Playground 88 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Social and Environmental Capital

2013, donating its first two Dialysis CRRT machines to the Polonnaruwa Hospital five years ago. Rs. 100/- from each purchase of a water filter at Singer showrooms across the island contributed to the project. Each machine costs approximately Rs. 3 million and the project has set up eight machines at hospitals across the country, including the Colombo National Hospital, Jaffna Hospital, Wathupitiwala Hospital, and Medawachchiya Hospital.

The Thirst for Life project also conducts awareness and irradiation programmes for water-related infections in rural areas with the aim of uplifting the health standards of our communities.

“Thirst for Life” – donating dialysis CRRT machine

Donations of televisions were made to the District General Hospital, Hambantota, and an air conditioner unit to the Cardiac Unit of Base Hospital, Wathupitiwala. Humanitarian assistance was provided to the National Cancer Hospital, Maharagama by the Digital Media Company.

Team Digital Media sponsored a meal and provided rations to the Children’s Ward and selected adult patient wards at the National Cancer Hospital, Maharagama in April 2018.

Other Projects “Sipmansala” Seminar Series 2018 Donation of Equipment to Archdiocesan Apostolate for Drug/Alcohol Demand Reduction Service Health Sector Equipment donated include TVs, pedestal fans, ceiling Singer helps to ease challenging health issues faced in fans etc. Sri Lanka such as chronic kidney diseases and diabetes. In 2018/19, Singer donated a Dialysis CRRT machine to Flood Relief Programmes Batticaloa Teaching Hospital under the “Thirst for Life” We experienced floods in several areas in the island due to programme. The Batticaloa region is greatly affected by kidney bad weather in May 2018. Hence, those of the Rotaract Club disease and patients transferred from the nearby regions of Singer Sri Lanka, Rotaract Club of Colombo North, Rotaract too are treated at the Batticaloa Teaching Hospital. As the Club of Colombo Fort collaboration of Student Activity Club hospital’s Dialysis CRRT machine alone was not sufficient A.P.I.I.T. got together to help the flood victims. to meet the demand, there had long been the need for another machine. They collected water bottles, dry rations, sanitary items, medicines and other necessities from friends and colleagues. Among the CSR projects carried out by Singer, The money collected was used to buy necessary items for “Thirst for Life” is a prominent programme. The project the victims. aims to provide Dialysis CRRT machines to identified hospitals in need in the country. The project started in Stationery was donated to flood affected children in Madampe. 101 161 271 89 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Social and Environmental Capital

Home Science in Schools the next generation of cricketers. Our Singer League is a long- Singer successfully completed the 4th Phase of the “Singer standing cricket league held in partnership with the Sri Lanka Soopa Shasthra” programme jointly with the Ministry of Schools Cricket Association. Singer not only provides financial Education. The programme aims to boost the standard of assistance but also equipment, with a focus on rural schools. Home Science education in schools across the country while We also support the development of school players into also paving the way for school leavers to step into a career in professional status with our association with the Mercantile the fast-growing hospitality industry. Cricket Association, supporting the MCA Premier League and MCA Knockout Tournament. Singer initiated the Singer Soopa Shasthra programme in partnership with the Ministry of Education in 2015 with a focus on supporting the Home Science subject in schools by emphasising the importance of nutritious home cooking as a vital part of a healthy lifestyle and a happy family in today’s busy world. The programme provides guidance on how to use modern kitchen appliances to quickly create healthy, tasty meals, thereby empowering Sri Lankan families to cook right and eat right without sacrificing traditional values and taste.

Over 1,000 home science teachers had received training whilst 150 more schools-in-need across all nine provinces received Singer appliances to boost their home science classes.

Sports Singer is Sri Lanka’s largest sports promoter. For over 20 years, we have backed several sports events at the school, mercantile, and national level, providing all Sri Lankans the platform to excel in the sport of their choice. Over the years, Singer has developed sports infrastructure and uplifted Sri Lankan sportsmen and women, especially in rural Sri Lanka. We also assist in the upkeep of sporting facilities, support international tournaments, and nurture the passion for sports in children. Our continued active participation in sports Singer Schools Rugby has uplifted our relationship with communities as well. Singer is a proud supporter of rugby at all competitive levels and has been involved in the development of the sport Singer believes in the power of sports to turn lives around and for over a decade. We provide infrastructure assistance to create well-rounded future leaders and ultimately a developed schools: everything from scoreboards to building rugby nation. Singer continued its long-term relationships with stadiums. The Singer Schools Rugby League is one of our Sri Lanka Schools Rugby Associations, Sri Lanka Schools biggest investments in sports, amounting to over Rs. 50 Cricket Association, Mercantile Cricket Association, Gajaba million each year. We also sponsored the Bradby Shield, the Super cross, Hill Club Tennis Tournament, and Royal College oldest competitive rugby encounter in Sri Lanka, for the 28th Hockey Tournament. consecutive year, and supported the Kandy Sports Club.

We are greatly involved in the areas of Rugby and Cricket in order to impact youth and sports in a larger and more meaningful scale. Apart from the above-mentioned sports, over the last 20 years, we have also looked to utilise our resources to enhance other areas of sports. We have been involved in school, mercantile, and national level sporting events in hope of giving the youth of our nation more opportunities to excel in a sport of their choice.

Singer Schools Cricket Singer has been associated with Sri Lankan cricket since 1996 with our support for the World Cup winning national team. We support cricket at school and club levels, helping to develop 90 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Social and Environmental Capital

Singer Fashion Academy Grievance Handling and Sexual Harassment Policies The Singer Fashion Academy conducted 40 free workshops These two policies ensure the emotional well-being of our to raise awareness amongst youth about the fashion industry. employees. The grievances policy provides employees the The Academy hosted over 800 participants through the free right to forward their grievances and dissatisfactions to the workshops. The key purpose of the workshops was for future Management and obtain a fair hearing. Our sexual harassment fashion entrepreneurs to fully understand the scope and policy takes note of the distinct nature of a claim and provides opportunities available in the field of fashion design and to disciplinary measures, depending on the degree of sensitivity create a pathway for them to become independent creative of the matter at hand. thinkers who can come up with innovative design collections to manage a successful fashion business in an evolving and competitive industry. The workshops are uniquely tailored to Code of Business Conduct involve both conceptual and trend driven design work through All Key and Senior Managers are bound by the Company’s experimentation with creative cutting techniques, traditional written Code of Business Conduct, which is an agreement pattern cutting, textiles, research, illustration, conceptualisation signed as part of their written Contract of Employment. As and visualisation techniques, sketching, colour study, and per the agreement, the signatory is responsible to comply understanding the use of different fabrics. This was done in line with the Code and ensure employees reporting to them also with the “13-year guaranteed education programme” initiated comply with the Code. The Code of Business Conduct is by the Ministry of Education where students were offered 26 signed annually to refresh their knowledge on the contents vocational subjects after their ordinary level examinations. and update themselves on new clauses and amendments to Fashion Designing is one of the 26 subjects offered under the Code. the programme and Singer Business School offered their support in conducting an awareness programme for selected Whistle-blower Policy principals of government schools as well. Singer Business School is planning to continue with the programme this year. The Whistle-Blower Policy illustrates procedures for any employee of the Company to make a written or verbal complaint on any experiences or suspicion of illegal or Public Policy unethical employment or business practices exercised by Singer does not fund or make contributions of any kind a colleague in any capacity in the governance hierarchy. to political parties, politicians or related institutions. The All employees upon induction into the Group are taken Company is regularly invited by the Government of Sri Lanka through the policy procedures and assured of confidentiality to submit proposals for consideration when formulating the and anonymity. National Budget. The Group takes necessary actions to prevent corruption or illegal activities and the Management takes necessary actions on the Government Assistance above, where it is implemented for Whistle-Blower procedures. The Group did not receive any assistance from the Government during the year. Non-discrimination There were no incidents of discrimination reported in the Anti-competitive Behaviour and Compliance Company in the period under review. The Company did not encounter any legal action for anti- competitive behaviour, anti-trust, and monopoly practices during 2018/19. We always obtain the necessary local Fostering Human Rights and Equal Opportunity authority approval and strictly adhere to rules and regulations Singer is recognised as a compassionate and benevolent pertaining to display of materials, audio/video materials, company. People’s affinity towards Singer draws many and branding among other factors, when conducting our requests from religious, educational, and other institutions, as marketing/sales promotional activities. well as individuals.

Through our island-wide reach, we are present in some of Human Rights the most remote areas of our country, giving us a unique Singer follows employment practices which enshrine human perspective on the issues that affect the lives of less fortunate rights. As such we facilitate freedom of association, strict citizens. Our employees are often the biggest champions elimination of all forms of compulsory labour, abolishment of community relations projects and initiatives, and we of child labour, and elimination of sexual harassment in encourage them to propose solutions that answer their own the workplace. There were no incidents of human rights communities’ needs. reviews/grievances reported during the fiscal year. 101 161 271 91 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Social and Environmental Capital

Environmental Performance the accumulated solid waste isn’t dumped in naked lands or Singer Factories Integrating Sustainable Eco Practices bodies of water, and that they enter the chain of accepted solid waste management systems handled by reputed parties. Singer aspires to be the leading appliance retailer in Sri Lanka. The solid waste that is collected is used for wood briquetting, How we go about achieving that vision is of utmost importance burners, and filling up of marsh lands. to us. We care about the lasting impact we leave on the planet and the communities we operate in. We take every effort to create a more sustainable environment, extending to Sawdust Collection even the smallest procedures, reflecting our visionary, green Singer actively makes efforts to reduce, reuse, and recycle contributions to society. The products we manufacture and saw dust, smoke, paint fumes, wood cut-offs, particle boards, market are increasingly eco-friendly. We constantly evaluate plastic, and iron scraps. These waste materials are channelled our manufacturing processes for their environmental impacts into water troughs and thereafter collected, treated, and and actively promote recycling and waste management disposed of in a responsible manner. A dust collection system processes within our Organisation. is installed in our sofa factory and prevents air pollution through a fine filtration process. As a responsible corporate citizen, Singer has undertaken several initiatives to mitigate any damage to the environment. A third-party supplier handles the recycling of saw dust Our factory in Piliyandala is licensed under the Environment disposed in our Piliyandala factory to be used as fuel for Protection Licenses (Section 23B of the National Environment boilers and ovens. The supplier collects the saw dust thrice a Act No. 47 of 1980) and has acquired the licenses and week from the factory from specially fitted chambers designed certifications required to comply with Central Environmental to collect the sawdust. The process enables us to support the Authority (CEA) regulations. Our Regnis (Lanka) PLC supplier and optimise the use of waste from our manufacturing refrigerator plant converts refrigerators to R600 high-efficiency processes. In recognition of our efforts to reduce Sri Lanka’s and energy-saving GEO and ECO products, and is well ahead carbon footprint, we received a token of appreciation from the in the region for implementation of practices that have zero Central Environmental Authority. impact on the ozone. Total waste – Singer Regnis Regnis Singer Group Non-hazardous (Sri Lanka) (Lanka) Appliance Industries The Piliyandala factory staff adhere to environmentally friendly (kg) PLC PLC (Pvt) (Ceylon) practices to preserve the lush environment surrounding the Limited PLC premises. Noise pollution, air pollution, and water pollution are controlled, with solid waste management and chemical Reuse 267,750 – 45,102 6,980 319,832 management practices followed with energy and resource Recycling 462,044 136,152 9,963 14,991 623,150 conservation kept in mind. Composting – – – – – We strictly follow guidelines by local and international Recovery 219,400 56,700 – 44,605 320,705 authorities for the storage and transportation of certain Incineration hazardous materials we use for production and store all (mass burn) – – 6,070 – 6,070 chemicals in a sealed warehouse with restricted access. The furniture factory and agro factory undergo two Landfill 8,668 920 – – 9,588 independent environmental audits annually for the renewal Other 563,218 3,345 24,385 14,104 605,052 of the CEA certification. This signifies our stance as an Total 1,521,080 197,117 85,520 80,680 1,884,397 eco-friendly company.

In addition to ensuring the factory is compliant with all Island-wide e-Waste Collection Points environmental certifications, we also carry out all our internal As a respected and responsible distributor of electrical operations in conformance with these guidelines. For instance, appliances in Sri Lanka, our e-waste management campaign our conventional paint booths were replaced with water was well-received by the general public and our customers. curtain paint booths, thus reducing air and toxic emissions Through our wide network, we placed e-waste collection bins caused by spray painting. Sanding activities are carried out in all Singer Plus, SISIL World, Singer Mega, Singer Home Showrooms, and Singer Service Centres. Awareness was in an enclosed area equipped with a dust extraction system, raised through Below-The-Line (BTL) promotions, Public facilitating a safe environment for employees working in this Relations (PR) articles, print advertisements, posters, area while carrying out main operations without polluting the and billboards. air. Solid waste, such as saw dust, that is a by-product of our operations is removed in an environmentally safe manner through responsible third-party contractors in consultation with the relevant authorities. We take steps to ensure that 92 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Social and Environmental Capital

Biodegradable Packaging Trade-in Offers to Reduce Carbon Footprint As part of Singer’s eco-friendly initiatives, all Singer factories As the largest consumer durables retailer in the country, Singer have replaced the use of rigifoam as a packing material with strives to instil environmentally friendly habits in our customers corrugated cardboard. The expanded use of biodegradable while nurturing strong relationships with them. Trade-in offers materials, including in shopping bags, is being researched provide consumers with convenient opportunities to not only and planned. recycle their old electronics but also avail of discounts on the latest products. This can motivate customers to trade-in their Continuing e-Waste Management Leadership old electrical appliances for newer, more energy efficient and In line with the Government’s vision and Singer’s corporate environmentally products which contribute to the reduction of business values, we strive to minimise the effects of our their carbon footprint. operations and that of our customers through sustainable business models. In 2010, Singer signed a Memorandum Pioneering and Promoting R600a Gas Refrigeration of Understanding with the Central Environmental Authority to assist local authorities in the management of e-waste In line with the Singer Group, subsidiary Regnis (Lanka) PLC on a national scale. The Singer Group follows UN BASEL adopts our commitment to creating and sustaining a greener convention regulations in collecting, transporting, and storing future in Sri Lanka. Regnis manufactures the Singer GEO and e-waste for recycling. SISIL ECO series of energy efficient refrigerators. The Singer GEO range was the first range of refrigerators to adopt R600a Singer strives to make recycling electronics as easy as gas technology, a 100% environmentally friendly substitute for purchasing them. To date, we have removed a significant the HFC refrigerants that contribute heavily to the depletion quantity of e-waste which would otherwise have the potential of the ozone layer, thereby contributing to global warming. to cause damage to the environment and the well-being of The move to R600a was made two decades in advance of communities. We spend a significant amount annually to the mandatory deadline for its adoption in 2040 under the ensure the proper disposal of e-waste through approved Montreal Protocol, further highlighting our commitment to e-waste disposal companies, and we increase our capacity of the environment. e-waste collection every year. The Company promoted its R600a gas refrigerators heavily Category Volume of e-waste disposed by Singer in Sri Lanka, emphasising its benefits and importance in (Units) marketing communications. The Company discontinued the Televisions 47,692 sale of R134a gas refrigerators and completely switched to the manufacture of R600a refrigerators, contributing to advancing Refrigerators 10,354 the nation’s steps towards energy efficiency. Washing Machines 6,607 Others 4,094 Promoting Energy Efficient Inverter Technology Singer has heavily promoted products based on inverter Given below are details of the usage of recycled materials for technology that can consume 30-50% less energy than Regnis (Lanka) PLC in 2018/19: non-inverter-based products. Although inverter technology is more expensive, we promote these products due to Total (kg) their high energy efficiency that can not only contribute to HIPS Offcuts 172,998 lower electricity bills but is crucial for a greener planet. The most popular inverter technology-based products include Metal Offcuts 58,515 Singer Inverter air conditioners, Samsung refrigerators, Beko Plastic and Polythene 14,988 refrigerators, Hitachi refrigerators, and Hitachi air conditioners. Cardboard 84,771 Aluminium 181 Copper 380 Total 331,833

Percentages of recycled material used is as follows. zz Singer (Sri Lanka) PLC – 6% zz Regnis (Lanka) PLC – 10% zz Regnis Appliances (Pvt) Limited – 3% 101 161 271 93 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Social and Environmental Capital

VOLGA SOFA When • Fabric upholstered • Treated oak wood frame • Cushion – PU foam and polyfiber you’re not • 3(2R):1R:1R combination standing Sitting, lounging, reclining – times when you need real quality and comfort around you – times when you need “good”... furniture.

DAYSTAR SOFA • Sofa with 3:1:1 combination • Treated rubber wood frame • Fabric and PU upholstered • Leg : Polypropylene plastic

BELIZE SOFA • 2 seater sofa with storage • 3 step conversion sofa, lounger & bed position • Straps to keep it down when it is in the upright position • Frame – wood base and plywood • Legs – solid wood 94 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Social and Environmental Capital

Materials Used by Weight/Volume Renewable Materials

Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt) Ltd Singer Industries (Ceylon) PLC

Timber SQFT 649,938 HIPS (Plastic) KG 244,501 PP (Plastic) KG 515,376 Steel KG 2,173,921 Particle KG 1,223,924 – – – GPPS (Plastic) KG 156,385 Wood KG 470,191 Boards Casting KG 98,392 – – – ABS (Plastic) KG 123,323 – – – MDF KG 89,900 – – – – – – – – – Corrugated Nos 54,409 Corrugated Cartons KG 194,721 Corrugated Cartons KG – – – – Cartons

Non-renewable Materials

Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt) Ltd Singer Industries (Ceylon) PLC

Diesel Litres 22,512 Hermetic Nos. 88,512 PCB for Nos. 244,291 Plastic KG 479,881 Compressor Fully Auto Washers Motors KG 179,520 PCM/VCM KG 1,099,613 Steel Tub for Nos. 4,460 Polythene KG 2,700 Steel Sheet Fully Auto Washers Engines KG 32,000 Evaporator Nos. 88,512 – – – Alloy KG 67,289 Make a statement Plate Edge Mtr 589,688 Isocyanate KG 232,817 – – – – – – with a wide range Bands of furniture from PU NOS 119,220 Polyol KG 177,336 – – – – – – Foam Singer Sri Lanka to match your Total Weight of Materials used to Produce and Package Refrigerators at Regnis (Lanka) PLC (Weight) kg 2018/19 (Weight) kg 2017/18 taste and lifestyle. Model Direct Materials Packing Materials Total Weight Direct Materials Packing Materials Total Weight

RGS 150 15,037 1,233 16,270 38,400 3,148 41,548 ECO 55 363,256 26,710 389,966 418,302 30,758 449,060 GEO 182S/SM 185 242,239 22,915 265,154 420,838 39,809 460,647 ECO 72/ECO 72 WR 776,295 69,668 845,963 1,041,261 93,447 1,134,708 GEO 200D/SM 205 664,390 58,870 723,260 1,181,011 104,647 1,285,658 ECO 192/WR 192 1,478,762 131,030 1,609,792 1,765,413 156,429 1,921,842 GEO 242D/SM 255 232,732 22,432 255,164 307,598 29,648 337,246 ECO 245 249,208 24,020 273,228 383,834 36,996 420,830 GEO 260NF/SM 265 429,088 37,312 466,400 368,322 32,028 400,350 ECO 251NF/251 WR 480,286 41,764 522,550 552,000 48,000 600,000 GEO 262 I/252 I 61,824 5,376 67,200 142,554 12,396 154,950 GEO 282 NF 612 48 660 37,638 2,952 40,950 GEO SM 267 NF 45,034 3,916 48,950 – – – RBC 501 20,160 264 20,424 14,868 3,147 18,015 Total 5,058,922 445,556 5,504,478 6,672,039 593,405 7,265,444 101 161 271 95 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Social and Environmental Capital

Total Electricity and Diesel Consumption from Non-renewable Sources by Regnis (Lanka) PLC

Energy Consumption 2018/19 2017/18

Diesel (Litres) 9,128 15,400 Electricity (kWh) 1,070,214 1,334,354 Diesel Energy Consumption in Kj (million) 340 574 Electricity Consumption in Kj (million) 3,852 4,803 Total Energy Consumption in Kj (million) 4,192 5,377 Diesel Energy Intensity Ratio Kj/unit 3,105 3,479 Percentage Reduction in Diesel Consumption per unit (%) 12.05 71.8 Electricity energy intensity ratio Kj per unit 35,156 29,117 Total energy intensity ratio 38,261 32,597

Consumption by Source

Non-Renewable Sources Singer (Sri Lanka) Regnis (Lanka) Regnis Appliances Singer Industries Singer Finance Group PLC PLC (Pvt ) Ltd. (Ceylon) PLC (Lanka) PLC

Electricity (kWh) 15,938,000 1,070,214 1,278,470 408,696 806,984 19,502,364 Water (Litres) 67,095,010 18,616,573 5,034,999 1,704,000 12,734,815 105,185,397 Diesel (Litres) 22,512 9,128 5,020 – – 36,660

Water Withdrawal by Source

Water withdrawal by Source (Litres) Singer (Sri Lanka) Regnis (Lanka) Regnis Appliances Singer Industries Singer Finance Group PLC PLC (Pvt ) Ltd. (Ceylon) PLC (Lanka) PLC

Ground Water 6,804,000 12,959,000 – 1,278,000 – 21,041,000 Municipal Lines 60,291,010 4,748,000 5,034,999 426,000 12,734,815 83,234,824 Total 67,095,010 17,707,000 5,034,999 1,704,000 12,734,815 104,275,824

Water Discharge by Destination

Water Discharge by Destination (Litres) Singer (Sri Lanka) Regnis (Lanka) Regnis Appliances Singer Industries Singer Finance Group PLC PLC (Pvt ) Ltd (Ceylon) PLC (Lanka) PLC

Municipality Sewerage, Drainage Lines 54,202,200 1,537,000 4,774,599 1,704,000 12,734,815 74,952,614 To Ground through Soakage Pits 12,892,810 16,170,000 260,400 – – 29,323,210 Total 67,095,010 17,707,000 5,034,999 1,704,000 12,734,815 104,275,824

Reduction in Energy Consumption at Regnis

Diesel (Kj) Electricity (Kj) million million

Reduction in energy consumption at Regnis (Lanka) PLC per month 233.77 79.23

Reduction in Diesel Consumption and CO2 Emissions at Regnis 2018/19 2017/18

Diesel Saving in the Factory (l) 6,272 2,413

CO2 Emission per Diesel Litre (kg) 2.68 2.82

Reduction in carbon footprint at Regnis (Lanka) PLC is 39 tCO2e in 2018/19. 96 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Social and Environmental Capital

CO2 Emission details are as follows.

tCO2 Scope 1 Scope 2 Scope 3

Singer (Sri Lanka) PLC 0.45 60.81 38.74 Singer Finance (Lanka) PLC – 90.42 9.58 Singer Industries (Ceylon) PLC 2.68 87.75 9.58 Regnis (Lanka) PLC 4.86 84.52 10.62 Regnis Appliances (Pvt) Limited 1.65 88.92 9.43 Dream Environmental Investment

Environmental Investment (Rs.) Singer (Sri Lanka) Regnis (Lanka) Singer Industries Group Weaver PLC PLC (Ceylon) PLC

Prevention and Environmental Management Cost 4,167,009 54,545 335,287 4,556,841 Investment in Special Initiatives – Waste management, Emission Treatment etc. 1,667,009 – 384,494 2,051,503 Total 5,834,018 54,545 719,781 6,608,344

Total units of production is as follows.

Singer (Sri Lanka) Regnis (Lanka) Regnis Appliances Singer Industries Group PLC PLC (Pvt) Ltd (Ceylon) PLC

Total units of Production/Service 110,122 109,575 77,753 117,362 414,812

The Battle for Solar Energy the use of only A-grade panels which come with a 25-year During a time where the world has come together in search of guarantee and the most efficient inverters which come with a a solution for the global energy crisis, Sooryabala Sangramaya 10-year guarantee. Singer uses the highest quality European (The battle for solar energy), a power generation project which brands that make the most suitable and efficient products was implemented by the Sri Lanka Sustainable Energy Authority in terms of DC cables, surge protection, and other tools to (SLSEA) under the purview of the Sri Lankan Ministry of Power get the maximum efficiency from these solar power systems. and Renewable Energy, has been deemed a success. Singer PV systems come with a long-term guarantee and more information can be obtained from our Singer Plus, Singer Solar power has been recognised as the most suitable and Mega, Homes, and SISIL branches across the island. environmentally friendly solution to the energy crisis prevalent in the island. The Government has taken an active role in this Grievances on Environmental Impacts initiative by introducing low interest loan schemes with the The Singer Group believes in the importance and value of support of the CEB and LECO. protecting and preserving biodiversity. To this extent, the Company does not own, lease, or manage any operational For 12 years, Singer has joined hands with SLSEA to provide sites in or adjacent to protected areas and areas of high the ultimate solution for the nation’s solar power needs. biodiversity value outside of protected areas. The Group takes Singer Solar System has taken an active involvement in the every effort to prevent environmental harm. Sooryabala Sangramaya which is implemented under the purview of the Ministry of Power and Renewable Energy and No grievances were filed on environmental impacts through SLSEA and can be introduced as the most suitable solution to formal grievance mechanisms during the reporting period. satisfy every Sri Lankan’s solar power needs. Neither were any monetary or non-monetary sanctions imposed for non-compliance with environmental laws and The initiative has been successful in designing and regulations. All suppliers are required to adhere to the Singer implementing Solar PV systems on any scale, from the Code of Conduct and environmental standards. smallest home to large scale factories, with the expertise of the most skilled engineers in the industry. The initiative strives maintain a strict adherence to the highest standards with 101 161 271 97 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Social and Environmental Capital

Dream MC2868 Weaver • 18 stitch patterns • 6mm Stitch width It’s probably the world’s • Four Step button hole • Stable and durable alloy body first ever single appliance • Dual operating Facility that allows you to (Motor Driven & Manual) “weave a dream” – bring • Carrying case provided materiality to vision – the sewing machine.

MC8280

• 08 Built in stitches • 04 Step Buttonhole • Snap on Presser Feet • Colour Code Treading System • Free Arm Sewing

MC990

Auto Threader • Tread Cutter • 25 Built in stitches • 04 step button hole • Free Arm Sewing • LED Light • Drop Feed 98 5 13 25 SINGER AT SINGER’S BUSINESS A GLANCE LEADERSHIP MODEL SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Management Discussion and Analysis Social and Environmental Capital

Product Responsibility We use customer feedback and market trends to develop A combination of the highest customer benefit, the new products with the support of our long-standing third- highest safety standards, and maximum environmental party local suppliers. Customers are assured about the and climate compatibility are what constitute product quality of our products which are subject to stringent quality responsibility for Singer. assurance by our Quality Assurance Division, manned by professional engineers. From sample evaluations to post-sale We strive to continuously provide consumers with products evaluations, our products are continuously enhanced with a and services of world class repute. Therefore, the safety of lengthy life cycle. our products is of paramount importance through all stages of their life cycle, including production, product use, disposal, Organisation Supply Chain and recycling. Own Manufacturing Facilities We adopt the same considerations where product sourcing is The Singer Piliyandala Factory is equipped with the latest concerned, where we measure for environmental compatibility technology. These modern manufacturing facilities allow us to and energy efficiency through the entire product life cycle. operate locally on a large scale and we constantly upgrade our facilities to offer the best manufacturing processes. We inform our customers about the properties of our products and conditions of usage, and actively ensure product safety Highly Reputed Suppliers throughout their entire life cycle to minimise adverse impacts As part of our agenda to deliver the best products to our on people and the environment. customers, we ensure sourcing is done only from reputed Singer sewing suppliers. Taking into consideration the suppliers’ ranking Approximately 23% of revenue of Singer is generated from in the industry, we visit their factories and evaluate their machines have products manufactured in our state-of-the-art local factories. credibility before entering into business agreements with The factories are certified by ISO Standards and are manned them. Some of our original equipment manufacturing sources enabled individuals by the country’s most qualified and skilled production include Polytron, Indonesia; Skyworth, Galanz, TCL and managers, engineers, and manual workforce, who are capable Huawei, China; Pensonic, Malaysia; Arçelik, Turkey; and and businesses of producing advanced and innovative products. Whirlpool, India. to transform their Details of suppliers and payments are as follows. innovative ideas Profile of Suppliers Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt ) Ltd Singer Industries (Ceylon) PLC Group Number Payments Number Payments Number Payments Number Payments Number Payments into creative of of of of of suppliers (Rs.) suppliers (Rs.) suppliers (Rs.) suppliers (Rs.) suppliers (Rs.) masterpieces Small and Medium for over a century. Scale Suppliers 1,228 3,855,259,464 366 1,125,043,475 220 32,981,514 230 90,065,144 2,044 5,103,349,597 Large Scale Suppliers 659 26,966,608,222 524 2,705,357,493 65 1,842,843,945 32 412,562,498 1,280 31,927,372,158

Sub Contractors 33 89,625,132 36 112,217,827 10 54,611,243 4 4,853,991 83 261,308,193

B2B suppliers – – – – – – 8 7,982,707 8 7,982,707

Total 1,920 30,911,492,818 926 3,942,618,795 295 1,930,436,702 274 515,464,340 3,415 37,300,012,655

Profile of Suppliers Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt ) Ltd. Singer Industries (Ceylon) PLC Group

Payments to local suppliers 4,317,209,707 1,777,839,078 376,298,950 191,474,961 6,662,822,696 Payments to international suppliers 26,594,283,111 2,164,779,717 1,554,137,751 323,989,378 30,637,189,957

Total 30,911,492,818 3,942,618,795 1,930,436,701 515,464,339 37,300,012,655 101 161 271 99 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Social and Environmental Capital

Product Sourcing for Our Own Brands We employ strong measures to source products from the world’s leading manufacturers by evaluating them on key areas. These include industry ranking, company reputation, management style, financial stability, quality consciousness, delivery capabilities, and more.

Freedom of Association and Collective Bargaining There have been no operations and suppliers identified in which right to exercise freedom of association and collective bargaining may be violated or at significant risk.

Compliance Customer Privacy During the year, the Group did not encounter any substantiated complaints regarding breaches of customer privacy and losses of customer data.

Health and Safety of Products There were no incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of our products and services during the year.

There were no incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling during the year.

There were no incidents of non-compliance with laws and regulations in the social and economic area.

Marketing Communications There were no incidents of non-compliance with regulations and voluntary codes pertaining to marketing communications, including advertising, promotions and sponsorships during the year. The Company does not engage in the sale of banned products.

Product and Service Usage The Company was not subject to monetary fines for non-compliance with laws and regulations concerning the provision and use of products and services and labelling during the year. 100 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 101 161 271 101 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

STEWARDSHIP THE SINGER GROUP COMPLIES WITH ESTABLISHED BEST PRACTICES IN CORPORATE GOVERNANCE AND ENSURES THE HIGHEST ETHICAL STANDARDS IN THE CONDUCT OF ITS BUSINESS.

102 148 CORPORATE AUDIT COMMITTEE GOVERNANCE REPORT

150 151 152 154 REMUNERATION NOMINATION RELATED PARTY RISK MANAGEMENT COMMITTEE REPORT COMMITTEE REPORT TRANSACTIONS REVIEW COMMITTEE REPORT 102 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship

CORPORATE GOVERNANCE

Group/Company ensures to comply with established best The following developments took place during the period: practices in corporate governance and ensures the highest ethical standards in conduct of its business. The Board adopts zz Mr. S.H. Goodman (in terms of Section 211 of the core values and standards which set out the conduct of staff Companies Act No. 07 of 2007 was appointed as a Non- in their dealings with shareholders, customers, colleagues, Executive Director with effect from 26th June 2018) suppliers and other stakeholders. Once the core values are zz Mr. D.K. de S. Wijeyeratne (Appointed as Independent set and communicated to all levels of the Organisation, the Non-Executive Director with effect from 1st April 2018) Group/Company is of the belief that the highest standards of integrity will be maintained in business. zz Ms. O. Gunewardene (Appointed as Independent Non-Executive Director with effect from 1st August 2018)

Governance Policy and Framework zz Mr. H.A. Pieris – Group CEO/Director (Resigned with effect from 31st October 2018) Governance framework covers both corporate governance and the business governance. Corporate governance and zz Mr. M.H. Wijewardene (Appointed as Group CEO/Director business governance are interrelated processes and one with effect from 1st November 2018) process is always linked to and dependent on the other zz Mr. G.J. Walker (Resigned with effect from 29th November 2018) process. Business governance enables us to focus on areas of value creation to the business. Corporate governance zz Mr. M.H. Wijewardene (Ceased to be Alternate Director to process is to safeguard and ensure that the Group/Company Mr. G.J. Walker with effect from 29th November 2018) achieve business performance maintaining a balance between zz Mr. L.N.S. Kumar Samarasinghe – (Ceased to be accountability and assurance of the business process. Alternate Director to Mr. H.A. Pieris with effect from Thus, we believe our business governance and corporate 31st October 2018. Appointed as Alternate Director to governance are interlinked to each other as depicted below: Mr. M.H. Jamaldeen with effect from 22nd January 2019)

In line with the above governance framework, the Group/ zz Mr. H.P.S. Perera (Appointed as Alternate Director to Company believes that successfully run business enterprises Mr. M.H. Wijewardene with effect from 22nd January 2019) are founded on a set of fundamental qualities – those that embed transparency, accountability and responsibility within Minimum Public Holding the core of its business operations. Translated into action, The public holding of the company as at 31st March 2019 the Group’s/Company’s strong core qualities and guiding was 7.72%, which is below the minimum requirement of corporate governance functions ensure that we remain “law 20% as specified by the Listing Rules of the Colombo Stock abiding”, strictly adhering to the laws and regulations of the Exchange (CSE). country. Business integrity and accountability to stakeholders are top of the mind factors that we inculcate right across – In terms of Rule No. 7.13.3 (iii) (ii) of the Listing Rules, the from the Board of Directors to the shop floor. Company sought an extension from CSE on complying with the minimum public holding on the basis that the public Statement of Compliance holding was reduced consequent to the Mandatory Offer made under the Takeovers and Mergers Code 1995 (as Singer Group is fully-compliant with the Code of Best amended) in September 2017. Practices on Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka as well In response, the CSE by their letter dated 5th February 2019 as the Rules on Corporate Governance published by the has communicated to the Company that an exemption has Colombo Stock Exchange, except which are specifically been granted up to 2nd August 2019. mentioned in the corporate governance report. In addition to the above, our Subsidiary Company Singer Finance (Lanka) PLC is fully-compliant with the requirement set out by the Finance Companies Act No. 78 of 1988 and subsequent amendments and Finance Companies Corporate Governance Direction No. 3 of 2008 issued by the Central Bank of Sri Lanka (CBSL). 161 271 103 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Purchase of shares On 15th October 2018, Hayleys PLC purchased the balance and approved by the Board. The Group CEO and Executive 35,562,883 (9.47%) ordinary shares held by Retail Holdings Committee review the strategic plan and budgets against the (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47.00 actual performance on a monthly basis and at more frequent per share upon Retail Holdings (Sri Lanka) BV exercising their intervals, as needed and Chairman and Board of Directors option to sell its shares to Hayleys PLC as previously review actual performance at each Board meeting. agreed at the time of the Mandatory Offer made in 2017. After accepting this offer, Hayleys PLC together with its Group IT Governance Companies, holds 90.43% of Singer (Sri Lanka) PLC. IT governance process of the Company ensures that IT objectives are aligned with the business objectives that will Business Governance meet its strategic and operational objectives. IT governance Business governance (performance governance) is linked from is an integral part of the corporate governance process and Company’s Vision Statement to Final Objective level of grass which deals primarily with optimising the linkage between root level. Business governance process is started at the point Strategic Directions and Information Management of the of preparing the annual plan and annual plan is focused on Company. Competent and dedicated staff are deployed to future strategic direction, long-term objectives, medium-term support this need. Company investment in IT resources covers objectives and short-term set targets. Annual plan is initially resources operated and managed centrally and resources approved by the Parent Company and subsequently reviewed deployed in various places. IT resources include ERP system, other related business systems, Internet, emails and other Company-wide data communication system.

Impact of the IT governance to diverse functional areas of the Company is driven by certain core objectives which are set below:

Compliance Investing in licensed software deployed in compliance with Intellectual Property Law with a view to educate and mandate compliance to such laws throughout the Company.

Operational Efficiency Streamlining of inventory management, logistic management and credit management process so that integrity is maintained across the value chain through near real-time processing.

Prudent Capital Expenditure All major IT investments are carefully evaluated by the IT team and built into the business plan and carefully scrutinised at the planning level, and approval is granted by the Board.

Customer Convenience Ensuring process efficiencies to increase the contribution to customer convenience.

Green IT Protecting the environment by reducing print through migration to emails, SMS, social media and soft copies.

Governance Structure

External Regulations Internal Regulations

Companies Act No. 07 of 2007 Articles of Association of the Company

Continues Listing Requirements of the Colombo Stock Exchange Singer Finance Manual

Code of Best Practice of Corporate Governance issued in year 2017 by Code of Ethics, Human Resources Policies The Institute of Chartered Accountants of Sri Lanka and Procedures

Directives/ Regulations of the Securities and Exchange Commission of Sri Lanka. Information Technology and Other Internal Manuals

In case of Subsidiary Company Singer Finance (Lanka) PLC, requirements set out Standing Instructions, Policy and by the Finance Companies Act No. 78 of 1988 and Subsequent Amendments and Procedures (P&P) Finance Companies Corporate Governance – Direction No. 3 of 2008 issued by the Central Bank of Sri Lanka 104 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

As diagrammatically presented above, Group governance structure is set up to create a distinction between the functions of the Board and Management team but ensuring effective cooperations and communication between two groups. Shareholders Group Chief Executive Officer exercises triangular linking role between Board, Executive Management Committee and other Stakeholders, i.e., Shareholders, Employees, Customers, Community and Environment. Group’s Chief Executive Officer is the main communication link with the Board and Executive of Parent Compnay Board of Directors Management Committee. He also acts as a defacto officer Board of Directors to maintain a fair role on behalf of shareholders, employees, customers, community and environment. Audit Committee

Business Ethics

The Group enshrines the highest ethical standards in the Group Chief conduct of its business affairs and its Board of Directors are Executive Officer tasked with ensuring that the resultant regime of exemplary governance across all aspects of business are in the best interests of stakeholders. Ethically correct conduct comprising integrity, honesty, fair play and loyalty pervade all Group Committee Nomination actions. Executive Committee Transparency is encouraged in all public disclosures, as well as in the way business and communication take place with all stakeholders. A “whistle-blowing policy” introduced internally in 2009 has increased the level of transparency towards a wider dimension. Employees Committee Related party All employees are bound by the Company’s written Code of Transactions Review Transactions Ethics that includes the following aspects:

zz Exercise honesty, objectivity and diligence when performing ones duties. Customers zz Avoid situations where personal interest might conflict with the interest of the Company; and if so, disclose such

Committee interest in advance. Remuneration

zz Maintain confidentiality of commercial and price-sensitive information. Community zz Work within applicable laws and regulations.

zz Safeguard the Company’s assets.

zz Avoid conduct that will reflect badly on the person concerned or the Company’s image.

Environment zz Strictly avoid giving or accepting any kind of bribe, either directly or indirectly.

zz Strictly avoid making contributions for political funds, either directly or indirectly.

zz Strictly avoid any kind of sexual harassment. 161 271 105 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

The Company has implemented a formal whistle-blowing Environment procedure and encourages any employee who suspect Social responsibility is regarded as a fundamental aspect wrongdoing at work, whether by Management, peers or any of the Company’s strategy and it is one of the core values other employee, to raise their concerns. of the business. As stated in our value statement ‘we make every effort to ensure that the environment is protected Other Policies and conserved for future generations’ and in line with this core value, the Company is committed to minimising any In addition, the Company implements policies covering – adverse impact the conduct of the business may have on zz Recruitment and selection the environment. Further to that, this core value encourages and ensures our products, processes and business does not zz Financial integrity unnecessarily damage the environment. zz Use of Company property including computers zz Non-harassment in the workplace The Company is proud to present in this Annual Report, based on the Global Reporting Initiatives (GRI) Guidelines. zz Environment, safety and health The Company’s Social and Environment Management zz Security of IT system Initiations are more-fully described on pages 50 to 99 and pages 283 to 288. Responsibility to Customers The Company maintains an island-wide network of outlets Code of Best Practice on Corporate Governance and provides a wide choice of products and brands to its We set out below the corporate governance practices adopted customers, augmented by easy payment opportunities. and practiced by the Company, the extent of adoption of Outstanding customer care and world class after-sales service the Code of Best Practice on Corporate Governance issued are two of seven propositions substantiating our claim to be in year 2017 by The Institute of Chartered Accountants of a world-class company. What is salient about the widespread Sri Lanka and the Rules set out in Section 7.10 of the Colombo nature of our distribution is that in most instances, a consumer Stock Exchange Listing Rules on Corporate Governance. living in any part of the country need not travel more than 10 km to obtain goods and services from the Company. Section A Products sold by the Company are of the highest quality This section covers Company’s extent of adherence to the and are rigorously tested prior to introduction. The Company requirements of the Code of Best Practice on Corporate extends warranties on its products. It maintains an island- Governance issued in year 2017 by The Institute of Chartered wide network of service centres and franchise agents to Accountants of Sri Lanka. This reflects Company’s governance facilitate product repairs. Customer grievances, if any, are in following eight fundamental aspects: handled promptly and solutions provided with exchange of zz Directors merchandise in the unlikely event of a manufacturing defect. zz Director Remuneration

Among developments relevant to customer relations in the zz Relationship with Shareholders year under review was the growing popularity of our Contact zz Accountability and Audit Centre established in 2006 to deal with customer complaints and product performance issues as well as to provide zz Institutional Investors customer-related information. In addition to this, the Company zz Other Investors conducts customer-loyalty programmes and Customer-Service Clinics across the country where any customer can relate their zz Internet of things and cyber-security grievances or obtain service for their product on site. zz Environment, society and governance

In service to our differently-abled customers, wheelchair ramps These are discussed in the sections that follows. and other such infrastructure modifications and facilities are being added to the Company’s retail outlets progressively as part of routine showroom renovations. 106 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

A. Directors A.1 – The Board Main Principle Every public company should be headed by an effective Board, which should direct, lead and control the company.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Board A.1.1 The Board should meet The Board meets at least four times a year and additional  Meeting regularly, at least once meetings are held as necessary. The Board Subcommittees also in every quarter. met on a regular basis. Circular Resolutions are passed as per the requirements. The Board met four times during the period ended 31st March 2019. Details of the meetings and attendance of the members are set out on pages 146 and 147. The meetings convened by the Board Subcommittees during 2018/19 are also provided on pages 146 and 147.

The regularity of A board pack containing all relevant information is submitted to  Board meetings and board of directors. the structure and process of submitting information should be agreed to and documented by the Board.

Responsibility A.1.2 Board should be The Board is responsible for the strategic planning process of  of the Board responsible for matters the Company. This includes the responsibility for the formulation including: of the strategic vision and mission of the Company, setting the overall corporate policy and strategy, monitoring performance Ensuring the and reviewing risks and major investments. The Board also takes formulation and on the added responsibility of directing Company performance implementation of towards achieving the best results possible and increasing a sound business shareholder value. The Board sets the broad parameters of the strategy. Company’s business. The Company’s business units are then tasked with their application, in achieving specific targets and objectives.

Appointing the Not applicable since Group CEO is the apex executive in charge  Chair and the Senior of the day-to-day management of operations and business of the Independent Director if Company. relevant.

Ensuring that the CEO The profile of the CEO is provided in this Annual Report on page 18.  and Management While the Board of Directors is ultimately responsible for the Team possess the operations and financial soundness of the Company, the skill, experience day-to-day management of the Company is entrusted to the Group and knowledge to CEO. There is extensive staff participation in decision-making at all implement strategy. levels, with strategic recommendations on material matters flowing to the Board for final decision. The Group CEO chairs the Executive Committee. The Executive Management Committee, comprising all Key Managers who are divisional heads and two Deputy Directors and Group CEO meets every week for performance review and decision-making. 161 271 107 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

The Company’s Annual Plan addresses the requirements of all business units and divisions. This ensures that the entire Company follows the set plans and objectives as articulated in the Annual Plan. These in turn become the primary objectives of the Management Committee which is represented by all Heads of Divisions, and are shared with Divisional Heads and Heads of all SBUs. The Management Committee together with the Heads of Divisions and SBUs have the autonomy and freedom to translate these objectives to specific goals that are achievable. Key programmes are identified by the Group CEO for each year in line with the Annual Plan after they are discussed at Executive Committee meetings. A review of progress on plan implementation is a key item on the agenda of the monthly Management Review meetings.

Ensuring the adoption Succession planning is given due recognition in the corporate  of an effective CEO and culture. Effective succession planning is a criterion in the Senior Management performance appraisals of the Senior Management and Key succession strategy. Management. Addition to that, as part of the development and succession programme, the “3x3x3” initiative seeks to ensure that all positions of Key Managers, Senior Managers, Middle Managers and Junior Managers have been identified and are groomed for succession.

Approving budgets Budgets and major capital expenditure are reviewed and approved  and major capital by the Board. expenditure.

Determining the The Board has agreed and reserved power to determine matters  matters expressively including approving of major capital expenditure, appointing the reserved to the Board secretary to the Board and seeking professional advice as and and those delegated when needed. to the Management Limits of authority and financial delegation are agreed by the including limits of Board in order to manage affairs efficiently. authority and financial delegation.

Ensure effective The Board has delegated this responsibility to the Audit Committee.  systems to secure The Audit Committee is empowered to review and monitor the integrity of information, financial reporting process of Singer Group so as to provide internal control and risk additional assurance on the reliability of Financial Statements management. through a process of independent and objective review.

As such, the Audit Committee acts as an effective forum in  assisting the Board of Directors in discharging their responsibilities on ensuring the quality of financial reporting and related communication to the shareholders and the public. 108 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Audit Committee framework, composition, responsibilities and duties are given in the Audit Committee Report on pages 148 and 149. Risk Management framework is given in the Risk Management Report appearing from pages 154 to 159.

Ensuring compliance The Board follows a policy of strict compliance with laws and  with laws, regulation regulatory requirements and ensures that stakeholder interests are and ethical standards. considered in key corporate direction. A compliance checklist is provided to Audit Committee and Board members in every quarter by the Compliance Officer indicating compliance with applicable laws, regulations etc. The Company has also issued a Code of Ethics and Human Resources Policies and Procedures applicable to all employees.

All stakeholders’ The Board adopted core values and standards which set out the  interests are conduct of staff in their dealings with shareholders, customers, considered in community, environment, suppliers and other stakeholders. corporate decisions. Once the core values are set and communicated to all levels of the Organisation, there is a belief that the highest standards of integrity are maintained in business. The Board relies on the integrity and due diligence of Key Managers, Senior Managers, Auditors and Advisors to oversee the Group’s overall performance objectivities, financial plans and annual budgets, investments, financial performance reviews, risk management and corporate governance practices.

Recognising Development of sustainable value is embedded in the  sustainable business corporate strategies. development in corporate strategy, decisions and activities and consider the need for adopting “integrated reporting”.

The Company’s values The Group enshrines the highest ethical standards in the conduct  and standards are of its business affairs and its Board of Directors are tasked with set with emphasis on ensuring that the resultant regime of exemplary governance across adopting appropriate all aspects of business are in the best interests of stakeholders. accounting policies Ethically correct conduct comprising integrity, honesty, fair play and fostering and loyalty pervade all Group actions. compliance with Accounting policies are reviewed annually in light of changing financial regulations. business requirements, evolving international and local accounting standards and industry best practice. As mentioned above, significant emphasis is placed on compliance with applicable regulations. Group continues to adopt same accounting policies adopted in year 2017/18 and which are given as part of the Financial Reports on pages 184 to 209. 161 271 109 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Establish a process of monitoring Performance and progress of strategy  and evaluation of progress on implementation, budgets, plans and risks are strategy implementation, budgets, monitored through a formal reporting process. plans and related risks.

Ensuring that a process is The Board ensures compliance to annual and  established for corporate reporting quarterly corporate reporting requirements. on annual and quarterly basis or more regularly as relevant to the Company.

Fulfilling such other Board functions The Board makes every endeavour to ensure  as relevant to the Organisation. a balanced and objective assessment of the Company’s position, performance and prospects. Members from professional accounting bodies are on the Board ensuring financial and economic acumen, knowledge and other Board members from the professional marketing bodies ensure stimulation of marketing knowledge of the Board members.

Compliance A.1.3 The Board collectively, and Directors As mentioned above, there is a significant emphasis  with laws individually, must act in accordance across the Organisation to ensure compliance with and seeking with the laws of the country and applicable laws and regulations. independent there should be a procedure agreed The Board members are permitted to obtain professional by the Board of Directors to obtain independent professional advice from a third party advices independent professional advice including the Company’s External Auditors and where necessary, at the Company’s other professional consultants whenever deemed expense. necessary at the expense of the Company. Independent professional advice were obtained during the year 2018/19 as below: During the year under review, Board has obtained independent advice from KPMG on the implementation of SLFRS 9 and SLFRS 15.

Company A.1.4 All Directors should have access The Company Secretary ensures that all Board  Secretary to the advice and service of the Terms of Reference are followed and applicable Company’s Secretary, who is rules and regulations are adhered to. The Company responsible to the Board in ensuring, Secretary advices the Board and ensures that the that the Board procedures are Company complies with its Articles of Association, followed and that the applicable Companies Act and such regulatory publication, rules and regulations are complied Board procedures and other applicable rules with. Any question of the removal of and regulations are followed. All Directors have the Company Secretary should be a access to the Company Secretary. The Secretary matter for the Board as a whole. possesses the required qualifications as set out in the Companies Act.

The Company should obtain Insurance cover has been obtained.  appropriate insurance cover as recommended by the Nomination Committee for the Board, Directors and Key Management Personnel. 110 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Independent A.1.5 All Directors should bring The Chairman conducts Board meetings in a manner  judgement of independent judgement to which ensures that there is effective participation Directors bear on issues of strategy, from all Directors, their individual contribution and performance, resource allocation, concerns are objectively assessed prior to making risk management, compliance and key decisions and that the balance of power is standards of business conduct. maintained. In advance of every Board meeting, each Director receives a comprehensive set of Board papers and any additional information requested by the Directors. It is the Group CEO’s duty to ensure that all members are properly briefed. None of the Independent Directors have held executive responsibilities in the Company, and have submitted a declaration confirming their independence in accordance with Section 7 of the CSE Listing Rules on Corporate Governance as at 31st March 2019.

Dedication A.1.6 Every Director should dedicate The Board met on four occasions during the year.  of adequate adequate time and effort to The Board is satisfied that the Chairman and the time and matters of the Board and the Non-Executive Directors committed sufficient time effort by the Company, to ensure that the during 2018/19 to fulfil their duties. Directors duties and responsibilities owned to the Company are satisfactorily discharged.

A.1.7 One-third of Directors can call for As per Articles of Association, resolutions could be  a resolution to be presented to the passed with majority voting. Board where they feel it is in the best interest to the Company to do so.

Training for A.1.8 Every Director should receive The Directors are given the opportunities to  new and appropriate training when first familiarise and obtain an in-depth understanding of existing appointed to the Board of a the Company’s business, its strategies, risks and Directors company, and subsequently as processes, at their discretion. necessary. The training curricular Training is provided to Executive Directors and should encompass both general Alternate Directors to equip themselves to discharge aspects of directorship and matters their responsibilities effectively. This includes specific to the particular industry/ training provided by principles, external and in- company concerned. A Director must house training. Training and development needs are recognise that there is a need for reviewed on a regular basis. continuous training and expansion of the knowledge and skill required Directors are briefed on changes in laws and to effectively perform his duties as a regulations, tax laws and accounting standards from Director. The Board should regularly time to time either during the Board meetings or at review and agree on the training and specially convened sessions. development needs of the Directors. 161 271 111 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

A.2 Chairman and Group Chief Executive Officer (Group CEO) Main Principle

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Separation of A.2.1 The positions of Chairman Although Chairman acts as Executive Chairman, the  the roles of and Group CEO are separated Chairman’s and Group CEO’s functions are separated to Chairman and to ensure a balance of ensure a balance of power of authority and this dual panel Group CEO power and authority and to structure has been continued throughout the year 2018/19. prevent any one individual The Chairman of the Board of Directors functions in an from possessing unfettered executive capacity. The Group Chief Executive Officer decision-making authority. functions as an Ex-Officio Director of the Board and is the apex executive in charge of the day-to-day management of operations and business of the Company, while providing the link between the, Board of the Parent Company and Divisional Heads (Key Management).

A.3 Chairman’s Role Main Principle The Chairman’s role in preserving good corporate governance is crucial. As the person responsible for running the Board, the Chairman should preserve order and facilitate the effective discharge of Board functions.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Role of A.3.1 The Chairman should conduct Chairman Board proceedings in a proper manner and ensure, inter alia, that – zz The agenda for Board zz Agenda for Board meetings is developed in consultation  meetings is developed with the Group CEO, Directors, CFO and the Company in consultation with the Secretary. CEO, Directors and the Company Secretary taking into consideration matters relating to strategy, performance, resource allocation, risk management and compliance.

zz Sufficiently detailed zz Required information are provided to Directors in a  information of matters timely manner. included in the agenda should be provided to Directors in a timely manner.

zz All Directors are made zz All Directors are aware of their duties and responsibilities  aware of their duties and and Chairman and Group CEO provide a comprehensive responsibilities and the overview of the Company and its operations once a new Board and Committee Director is appointed to the Board. structures through which it will operate in discharging its responsibilities. 112 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

zz The effective participation zz The Chairman is responsible for leading the Board  of both Executive and and for its effectiveness. In practice, this means taking Non-Executive Directors is responsibility for the Board’s composition, ensuring secured. that the Board focuses on its key tasks and supports the Group CEO in managing the day-to-day running of the Company. The Chairman is also the ultimate point of contact for shareholders, particularly on corporate governance issues.

zz All Directors are encouraged zz The Chairman satisfies himself that the information  to make an effective available to the Board is sufficient to make an informed contribution, within their assessment of the Company’s affairs as well as to respective capabilities, for discharge their duties to all stakeholders. the benefit of the Company.

zz All Directors are encouraged zz Necessary information and presentations are done if  to seek information necessary to the agenda items. All Directors are free to considered necessary to communicate with Divisional Heads and Head of Risk discuss matters on the Management to call additional information necessary. agenda of meetings and to request inclusion of matters of corporate concern on the agenda.

zz A balance of power between zz The Chairman conducts Board meetings in a manner  Executive and Non-Executive which ensures that there is effective participation from all Directors is maintained. Directors, their individual contribution and concerns are objectively assessed prior to making key decisions and that the balance of power is maintained.

zz The views of Directors on zz Chairman ensures that regular meetings are conducted at  issues under consideration least once a quarter and the minutes of the meetings are are ascertained; and accurately recorded.

zz The Board is in complete zz Chairman approves the agenda prepared by the control of the Company’s Company Secretary. affairs and alert to its obligations to all shareholders and other stakeholders. 161 271 113 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

A.4 Financial Acumen Main Principle The Board should ensure the availability within it of those with sufficient financial acumen and knowledge to offer guidance on matters of finance.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Financial A.4.1 Availability of sufficient financial The Board includes a member who is a Fellow Member  acumen and acumen and knowledge. of the Association of Certified Chartered Accountants, knowledge UK, a member who is a Fellow Member of The Institute of Chartered Accountants of Sri Lanka and a member of the Institute of Certified Management Accountants of Australia, a member who is an Associate Member of The Institute of Chartered Accountants of Sri Lanka (ACA) and Fellow Member of the Chartered Institute of Management Accountants, UK, (FCMA). Other members of the Board have the ability to offer guidance on matters of finance to the Board. The profiles of the Board of Directors are provided in this Annual Report from pages 18 to 21.

A.5 Board Balance Main Principle It is preferable for the Board to have a balance of Executive and Non-Executive Directors such that no individual or small group of individuals can dominate the Board’s decision-taking.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Presence of A.5.1 The Board should include Non- Eight out of ten Directors on the Board are Non-Executive  strong team of Executive Directors of sufficient Directors which is well above the minimum prescribed by Non-Executive calibre and number for their the Code. This ensures views of Non-Executive Directors Directors views to carry significant weight carry a significant weight in the decisions made by in the Board’s decisions. the Board. The Board should include at least three Non-Executive Directors or such number of Non-Executive Directors equivalent to one-third of total number of Directors, whichever is higher. In the event, the Chairman and CEO is the same person, Non-Executive Directors should comprise a majority of the Board. 114 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Independent A.5.2 Where the constitution of the Board Five out of eight Non-Executive Directors  Non-Executive of Directors includes only three on the Board are independent based on the Directors Non-Executive Directors, all three criteria set by this Code and the Listing Rules Non-Executive Directors should be of the Colombo Stock Exchange. However, the “independent”. In all other instances Board has determined Mr. M.H. Jamaldeen three or two-third of Non-Executive as an independent Non-Executive Director Directors appointed to the Board of notwithstanding that he is a Director of Hayleys Directors whichever is higher should PLC, the Parent Company as the objectivity of his be “independent”. role is not compromised by being on both Boards. The Names of the Independent Non-Executive Directors are disclosed in Code A.5.5 and on the back page of the Annual Report.

Independence A.5.3 For a Director to be deemed The Company maintains the “Interest Register”  of Non- “independent” such Director should required by the Companies Act No. 07 of 2007, Executive be independent of management which also shows details of Director Interest in Directors and free of any business or other Contracts/Company or Group. relationship that could materially A disclosure on related party transactions is interfere with or could reasonably be available on pages 267 to 269. perceived to materially interfere with the exercise of their unfettered and independent judgement.

Annual A.5.4 Each Non-Executive Director Every Non-Executive Independent Director of the  Declaration should submit a signed and dated Company has made written submissions as to declaration annually of his/her their independence against the specified criteria independence or non-independence set out by the Company, which is in line with the against the specified criteria set out requirements of Schedule K of this Code. in the Specimen in Schedule K.

Determination of A.5.5 The Board should make a The Board has determined the independence of  Independence determination annually as to the Directors based on the declarations submitted of Director independence or non-independence by the Non-Executive Directors, as to their of each Non-Executive Director independence, as a fair representation and will based on such a declaration continue to evaluate their independence on this made of decided criteria and other basis annually. No circumstances have arisen information available to the Board, for the determination of independence by the and should set out in the Annual Board, beyond the criteria set out in the Code. Report the names of Directors Independent Non-Executive Directors are: determined to be “independent”.

The Board should specify the Mr. D. Sooriyaarachchi criteria not met and the basis for its Mr. M.H. Jamaldeen* determination in the Annual Report, Mr. D.H. Fernando if it determines that a Director is independent notwithstanding Mr. D.K. de S.Wijeyeratne the existence of relationships or Ms. O. Gunewardene circumstances which indicate *The Board has determined Mr. M.H. Jamaldeen the contrary. as an Independent Non-Executive Director notwithstanding that he is a Director of Hayleys PLC, the Parent Company as the objectivity of his role is not compromised by being on both Boards. 161 271 115 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Appointment A.5.6 If an Alternate Director is Independent Non-Executive Director has appointed  of Alternate appointed by a Non-Executive an Executive Director within the Singer Group as Director Director such Alternate Director his Alternate Director. However any decision by the should not be an executive of the Alternate Director is arrived at in consultation with Company. If an Alternate Director his appointor and hence there is no compromise is appointed by an Independent of the independence of his appointor during Board Director, the person who is proceedings. appointed also should meet the Alternative Directors to the Non-Executive Directors are criteria of Independence and the executives of the Company. However, Board balance is provision on minimum number of not affected since the Board complies with Code A.5.2 independent Directors also should be satisfied.

Requirement A.5.7 In the event the Chairman and Not applicable since Group CEO is the apex Executive  to appoint CEO is the same person, or the in charge of the day-to-day management of operations “Senior Non- Chairman is not an Independent and business of the Company. Executive Director or the Chairman is Director” immediately preceding CEO, the Board should appoint one of the Independent Non-Executive Directors to be the “Senior Independent Director” (SID) and disclose this appointment in the Annual Report.

Confidential A.5.8 The Senior Independent Director Not Applicable.  discussion should make himself available for with Senior confidential discussions with other Independent Directors who may have concerns Director which they believe have not been properly considered by the Board as a whole and which pertain to significant issues that are detrimental to the Company.

Chairman’s A.5.9 The Chairman should hold Chairman meets with Non-Executive Directors without  meetings with meetings with the Non-Executive the presence of Executive Directors, whenever Non-Executive Directors only, without the necessary. Directors Executive Directors being present, as necessary and at least once each year.

Recording of A.5.10 Where Directors have concerns Concerns raised by the Directors during the period,  concerns in about the matters of the Company if any, are recorded in the minutes of Board meetings Board Minutes which cannot be unanimously with adequate details by the Company Secretary. resolved, they should ensure their concerns are recorded in the Board minutes. 116 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

A.6 Supply of Information Main Principle The Board should be provided with timely information in a form and of a quality appropriate to enable it to discharge its duties.

Corporate SEC and Requirement of the Code Compliant with the Code Compliance Governance CA Sri Lanka Principle Code Reference

Management A.6.1 Management has an obligation to provide the The Company ensures that the Directors  obligation Board with appropriate and timely information, receive adequate information in a timely to provide but information volunteered by management manner. On urgent matters, every effort appropriate may not be enough in all circumstances and is made to provide the information, as and timely Directors should make further inquiries where early as possible. information to necessary. The Chairman should ensure The Board receives a standard set of the Board all Directors are properly briefed on issues documents, which are timely, accurate, arising at Board meetings. relevant and comprehensive. These papers include a detailed analysis of financial and non-financial information. The Board may call for additional information or clarify issues with any member of the Executive Committee. If necessary, all Directors are adequately briefed by the Group CEO on matters arising at Board meetings. The Secretary and the Compliance Officer ensure that Board papers are circulated in advance prior to Board meeting. If necessary, members of the Executive Committee, External Auditors and Outside Consultancies makes presentations on issues of importance. The Chairman ensures that all Directors are briefed adequately on issues arising at Board meetings. Adequate The minutes, agenda and papers required for The minutes, agenda and papers  time for a Board meeting should ordinarily be provided required for Board meeting are provided effective to Directors at least seven (7) days before in advance to facilitate its effective conduct the meeting, and the minutes of the meeting conduct. of Board should ordinarily be provided to Directors at meetings least two weeks after the meeting date.

A.7 Appointments to the Board Main Principle There should be a formal and transparent procedure for the appointment of new Directors to the Board.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Nomination A.7.1 A Nomination Committee should be established The Committee consists of one  Committee to make recommendations to the Board on all Independent Non-Executive Director, new Board appointments. Terms of Reference one Non-Executive Director, Chairman for Nomination Committees are set out in who is also an Executive Director and Schedule A. The Chairman and members of the Group CEO. Nomination Committee should be identified in Please refer page 151 for new the Annual Report. appointments in year 2018/19. 161 271 117 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference A separate section of the Annual Report Details of work of the Nomination  should describe the work of the Nomination Committee are given in page 151. Committee including the process it has used in relation to Board appointments.

Assessment A.7.2 The Nomination Committee should annually Board as a whole annually assessed  of Board assess Board-composition to ascertain the composition of the Board to ensure composition by whether the combined knowledge and that the combined knowledge and the Nomination experience of the Board matches the experience of the Board matches the Committee strategic demands facing the Company. The strategic demand facing the Company. findings of such assessment should be taken The findings of such assessments are into account when new Board appointments taken into account when new Board are considered and when incumbent appointments are considered. Directors come up for re-election.

Disclose of A.7.3 Upon the appointment of a new Director to All new appointments are communicated  required details the Board, the Company should forthwith to the shareholders via the Colombo of new Directors disclose to shareholders: Stock Exchange. to shareholders zz a brief résumé of the Director; The details of the current Board of

zz the nature of his expertise in relevant Directors and new appointments are functional areas; provided on pages 18 to 21 in this Annual Report. zz the names of companies in which the Director holds directorships or memberships in Board committees; and

zz whether such a Director can be considered “independent”.

A.8 Re-election Main Principle All Directors should be required to submit themselves for re-election at regular intervals and at least once in every three years.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Re-election of A.8.1 Non-Executive Directors should be In terms of the Articles of Association, one-  Non-Executive appointed for specified terms subject to third of the Directors, except for Chairman, Directors, re-election and to the provisions in the Managing Director/CEO, retire by rotation Chairman and Companies Act relating to the removal of and may offer themselves for re-election at CEO a Director, and their reappointment should the AGM. By virtue of being the Chairman, not be automatic. Managing Director/CEO are not required to make themselves available for re- election as per the Articles of Association. The Company’s Articles of Association provides that any Director appointed by the Board during the period to hold office until the next Annual General Meeting and seek reappointment by the shareholders at the said AGM. 118 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

A.8.2 All Directors including the Chairman of Based on the article and the current  the Board, should be subject to election composition of the Board, a Director has by shareholders at the first opportunity to come forward for re-election, every after their appointment, and to re-election three years. thereafter at intervals of no more than three A résumé of the Directors coming up years. The names of Directors submitted for re-election at the AGM, 2018/19 is for election or re-election should be available on pages 18 to 21. accompanied by a résumé minimally as set out in paragraph A.7.3 above, to enable The Chairman and Chief Executive Officer shareholders to make an informed decision do not retire by rotation. on their election. Resignation A.8.3 In the event of a resignation of a Director Written communications are provided to  prior to completion of his appointed term, the Board by Directors who resign prior to the Director should provide a written completion of his appointed term. communication to the Board of his reasons for resignation.

A.9 Appraisal of Board Performance Main Principle Boards should periodically appraise their own performance in order to ensure that Board responsibilities are satisfactorily discharged.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Annual A.9.1 The Board should have in place a formal The performance of the Board and the  performance and rigorous process for annually reviewing Subcommittee is reviewed and evaluated evaluation of the the performance of the Board and its by the Board and Chairman based on a Board and its committees and should address any self-appraisal basis. Committee matters that may arise from such review, in the discharge of its key responsibilities as set out in A.1.2. A.9.2 The Board should also undertake an annual Not Complied.  self-evaluation of its own performance and that of its committees. The evaluation should be carried out by each Director individually. The collective outcome should be compiled and made available to Nomination Committee, which should make recommendations to the Board on initiatives and actions required to improve the balance of skills, experience, independence, industry and company knowledge, training of Directors, governance processes, strategy review and other factors relevant to its effectiveness. A.9.3 The Board should have a process to Not Complied.  review the participation, contribution and engagement of each Director at the time of re-election A.9.4 The Board should state how such Not Complied.  performance evaluations have been conducted, in the Annual Report. 161 271 119 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

A.10 Disclosure of Information in Respect of Directors Main Principle Shareholders should be kept advised of relevant details in respect of Directors.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Details in A.10.1 The Annual Report of the Company should set respect of out the following information in relation to each Directors Director:

i. Name, qualifications and brief profile; Available on pages 18 to 21 of Board of  Directors.

ii. The nature of his/her expertise in relevant Available on pages 18 to 21 of Board of  functional areas; Directors.

iii. Immediate family and/or material business Not Applicable.  relationships with other Directors of the Company;

iv. Whether Executive, Non-Executive and/or Available on pages 18 to 21 of Board of  Independent Director Directors.

v. Names of listed companies in Sri Lanka in Available on pages 18 to 21 of Board of  which the Director concerned serves as a Directors. Director;

vi. Names of other companies in which the Director Available on pages 18 to 21 of Board of  concerned serves as a Director, provided that Directors. where he/she holds directorships in companies within a Group of which the Company is a part, their names need not be disclosed; it is sufficient to state that he/she holds other directorships in such companies;

vii. Number/percentage of Board meetings of the Available on page 147.  Company attended during the year;

viii. The total number of Board seats held by Not disclosed in the Annual report.  each Director indicating listed and unlisted But can be obtained from Company companies and whether in an executive or non- Secretary. executive capacity;

ix. Committees in which the Director serves as Available on pages 164 and 165.  Chairman or a member;

x. Number/percentage of Committee meetings Available on page 146.  attended during the year. 120 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

A.11 Appraisal of Group Chief Executive Officer Main Principle The Board should be required, at least annually, to assess the performance of the Group CEO.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Setting annual A.11.1 At the commencement of every fiscal year, The Annual Business Plan is prepared setting  targets and the the Board in consultation with the CEO, up short-term, medium-term and long- appraisal of should set, in line with the short, medium term financial and non-financial goals. The performance and long-term objectives of the Company, Annual Business Plan is initially approved by of the CEO reasonable financial and non-financial the Board. targets that should be met by the Group CEO during the year.

A.11.2 The performance of the Group CEO should Assessment of performance of the Group  be evaluated by the Board at the end CEO is carried out by the Board at the end of each fiscal year to ascertain whether of each year to ensure that pre-agreed the targets set by the Board have been targets have been achieved or if not whether achieved and if not, whether the failure to there are acceptable reasons for not meet such targets was reasonable in the achieving them. circumstances.

B. Directors’ Remuneration B.1 Remuneration Procedure Main Principle Companies should establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. No Director should be involved in deciding his/her own remuneration.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Establishment B.1.1 To avoid potential conflicts of interest, The scope of the Committee is to consider  of the the Board of Directors should set up and recommend to the Board remuneration Remuneration a Remuneration Committee to make and perquisites of Independent Directors, Committee recommendations to the Board, within Executive Directors of the Board of the agreed terms of reference, on the Company including Key Managers and Company’s framework of remunerating approve recommendations made by the Executive Directors. (These also include Group Chief Executive Officer and the Post-Employment Benefits as well as Parent Company. Terminal Benefits.) Terms of Reference for Remuneration and perquisites of Group Remuneration Committees are set out in CEO is considered and recommended Schedule C. by the Parent Company – Hayleys PLC Remuneration Committee.

Composition B.1.2 Remuneration Committees should consist The Committee consists of three Independent  of the exclusively of Non-Executive Directors Non-Executive Directors. The Committee is Remuneration with a minimum of three Non-Executive chaired by an Independent Non-Executive Committee Directors of whom the majority should be Director. Finance Director serves as the Independent. The Chairman should be an Secretary to the Committee. Chairman to independent Non-Executive Director and the Company participates as an observer to should be appointed by the Board. the Committee. Group CEO and the Finance Director assist the Committee by providing the relevant information and participating in its analysis and deliberations. 161 271 121 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference Chairman B.1.3 The Chairman and members of the Please refer page 150 of the Remuneration  and Members Remuneration Committee should be listed Committee Report for details of the Chairman of the in the Annual Report each year. and members of the Board Remuneration Remuneration Committee. Committee

Determination B.1.4 The Board as a whole, or where After consideration of the recommendation  of required by the Articles of Association made by the Group Chief Executive Officer remuneration the shareholders, should determine the and the Parent Company., the Committee of Non- remuneration of Non-Executive Directors, as a whole decides the remuneration of the Executive including members of the Remuneration Non-Executive Directors. The Non-Executive Directors Committee, within the limits set in the Directors receive a fee for being a Director of Articles of Association. Where permitted the Board and separate fee for either chairing by the Articles, the Board may delegate or being a member of a Board Subcommittee. this responsibility to a subcommittee of the They do not receive any performance/ Board, which might include the CEO. incentive payments.

Consultation of B.1.5 The Remuneration Committee should The Committee has the authority to  the Chairman consult the Chairman and/or CEO about its seek internal and external independent and access to proposals relating to the remuneration of professional advice on matters falling within professional other Executive Directors and have access its purview, at the Company’s expense. Views advice to professional advice from within and of the Chairman and Group CEO are obtained outside the Company, in discharging their as they too assist and participate in its responsibilities. analysis and deliberations to the said Board Subcommittee.

B.2 Level and Make – Up of Remuneration Main Principle Levels of remuneration of both Executive and Non-Executive Directors should be sufficient to attract and retain the Directors needed to run the Company successfully. A proportion of Executive Directors’ remuneration should be structured to link rewards to corporate and individual performance.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Executive B.2.1 The Remuneration Committee should provide the The Board Remuneration Committee  Directors’ packages needed to attract, retain and motivate and also the Board ensure that remuneration Executive Directors of the quality required but Executive Directors – (Alternate package should avoid paying more than is necessary for Directors to the Non-Executive this purpose. Directors) who are on the Board and Key Management are provided with an attractive remuneration package. Remuneration package of the Group CEO is considered at Parent Company Remuneration Committee.

B.2.2 Executive Directors’ remuneration should be Executive Directors’ and Key  designed to promote the long-term success of Management’s remuneration is the Company. designed to promote the long-term success of the Company/Group. 122 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Comparison of B.2.3 The Remuneration Committee should judge A primary objective of compensation  remuneration where to position levels of remuneration of packages is to attract and retain a with other the Company, relative to other companies. It highly qualified and experienced companies/ should be aware what comparable companies workforce and reward performances. Other are paying and should take account of relative These compensation packages companies in performance, but should use such comparisons should provide compensation the Group with caution, mindful of the risk that they can appropriate for each business within result in an increase of remuneration levels with the Group and commensurate with no corresponding improvement in performance. each employee’s level of experience and contribution, bearing in mind the business performance and long-term shareholder returns.

B.2.4 The Remuneration Committee should be Remuneration and annual salary  sensitive to remuneration and employment increases are decided considering conditions elsewhere in the Company or Group industry practices, performance of the of which it is a part, especially when determining Company/Group, each employee’s annual salary increases. level of experience and contribution bearing in mind the business performance and the long-term shareholder returns.

Performance- B.2.5 The performance-related elements of Objectives for Group CEO, Executive  based remuneration of Executive Directors should be Directors and Key Management remuneration designed and tailored to align their interests with are set at the beginning of the year of Executive those of the Company and main stakeholders and the remuneration including the Directors and to give these Directors appropriate performance bonus is decided based incentives to perform at the highest levels. upon the degree of achievement of The performance-related elements should be such pre-set targets subject to the transparent, stretching and rigorously applied. remuneration policy.

Executive B.2.6 Executive share options should not be offered Presently the Company does not have  share options at a discount (i.e., less than market price an Executive Share Option Scheme. prevailing at the time the exercise price is determined), save as permitted by the Listing Rules of the Colombo Stock Exchange. Shares granted under share options schemes should not be exercisable in less than three years and the Remuneration Committee should consider requiring Directors to hold a minimum number of shares and to hold shares for a further period after vesting or exercise.

Designing the B.2.7 In designing schemes of performance-related Please refer Remuneration Committee  remuneration remuneration, Remuneration Committees should Report on page 150. of Executive follow the provisions set out in Schedule E. The Directors schemes should include provisions that would enable the Company to recover sums paid or withhold a portion of such performance-related remuneration and specify the circumstances in which a company may not be entitled to do so. 161 271 123 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Early B.2.8 Remuneration Committee should consider Not applicable to the Board except  termination what compensation commitments (including for Group CEO and other Executive of Executive pension contributions) their Directors’ contracts Directors (Alternate Directors to the Directors of service, if any, entail in the event of early Non-Executive Directors) who are termination. Remuneration Committee should in employees of the Company, and their particular, consider the advantages of providing terms of employment are governed by explicitly for such compensation commitments the contract of service/employment. to apply other than in the case of removal for misconduct, in initial contracts.

B.2.9 Where the initial contract does not explicitly Not applicable.  provide for compensation commitments, Remuneration Committees should, within legal constraints, tailor their approach in early termination cases to the relevant circumstances. The broad aim should be, to avoid rewarding poor performance while dealing fairly with cases where departure is not due to poor performance.

Level of B.2.10 Levels of remuneration for Non-Executive Non-Executive Directors of the  remuneration Directors should reflect the time commitment Company are paid nominal fees of Non- and responsibilities of their role, taking into commensurate with their time and Executive consideration market practices. Remuneration role in the Company and taking into Directors for Non-Executive Directors should not normally consideration market practices. include share options. If exceptionally options are Non-Executive Directors are not granted, shareholder approval should be sought included in share options as there is no in advance and any shares acquired by exercise scheme in existence. of the options should be held until at least one year after the Non-Executive Director leaves the Board. Holding share options could be relevant to the determination of a Non-Executive Director’s independence. (as set out in provision A.5.5).

B.3 Disclosure of Remuneration Main Principle The Company’s Annual Report should contain a Statement of Remuneration Policy and details of remuneration of the Board as a whole.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Disclosure of B.3.1 The Annual Report should set out the names of Please refer Remuneration Committee  Remuneration Directors (or persons in the Parent Company’s Report on page 150 for disclosure on Committee in the case of a Group Company) the names of Remuneration Committee comprising the Remuneration Committee, contain members and Remuneration Policy of a statement of remuneration policy and set out the Company. the aggregate remuneration paid to Executive Please refer Note 8 to the Financial and Non-Executive Directors. Statements on page 214 for aggregate remuneration paid to Executive and Non-Executive Directors. 124 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

C. Relations with Shareholders C.1 Constructive use of Annual General Meeting (AGM) and Conduct of General Meetings Main Principle Boards should use the AGM to communicate with shareholders and should encourage their participation.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Adequate C.1.1 Companies should arrange for the Notice of AGM and related A copy of the Annual  Notice of the papers to be sent to shareholders at least as determined by Report including AGM statute, before the meeting. Financial Statements, Notice of Meeting and the Form of the Proxy are sent to shareholders 15 working days prior to the date of the AGM, as requested by statute, in order to provide the opportunity to all the shareholders to attend the AGM.

Separate C.1.2 Companies should propose a separate resolution at the AGM Company proposes  resolution for on each substantially separate issue and should in particular a separate resolution all separate propose a resolution at the AGM relating to the adoption of the at the AGM on each issues at the report and accounts. For each resolution, proxy appointment substantially separate AGM forms should provide shareholders with the option to direct their issue. proxy to vote either for or against the resolution or to withhold Further, adoption of their vote. The Proxy Form and any announcements of the the Annual Report of results of a vote should make it clear that a “vote withheld” is the Board of Directors not a vote in law and will not be counted in the calculation of on the affairs of the the proportion of the votes for and against the resolution. Company and Audited Financial Statements together with the Report of the Auditors thereon are considered as a separate resolution.

C.1.3 The Company should ensure that all valid proxy appointments The Company ensures  received for General Meetings are properly recorded and that all valid proxy counted. For each resolution where a vote has been taken on a appointments received show of hands, the Company should ensure that the following for General Meetings information is given at the Meeting and made available as soon are properly recorded as reasonably practicable on a website which is maintained by and counted. or on behalf of the Company:

zz The number of shares in respect of which proxy appointments have been validly made;

zz The number of votes for the resolution;

zz The number of votes against the resolution; and

zz The number of shares in respect of which the vote was directed to be withheld; 161 271 125 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

zz When, in the opinion of the Board a significant proportion of votes have been cast against a resolution at any General Meeting, the Board should take steps to understand the reasons behind the vote results and determine if any actions are required.

Availability C.1.4 The Chairman of the Board should arrange for the Chairmen The Chairman of the  of all of the Audit, Remuneration, Nomination and Related Parties Company ensures that Subcommittee Transactions Review Committees and the Senior Independent Chairmen of all Board Chairmen Director where such appointment has been made, to be Subcommittees namely, available to answer questions at the AGM if so requested by the Audit, Remuneration, Chairman. Nomination and Related Party Transactions Review Committees are present at the AGM to answer the questions under their purview.

Procedures of C.1.5 Companies should circulate with every Notice of General A summary of the  Voting at AGM Meeting, a summary of the procedures governing voting at procedures governing General Meetings. voting at General Meeting is circulated to shareholders with every Notice of General Meeting.

C.2 Communication with Shareholders Main Principle The Board should implement effective communication with shareholders.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Channel to reach C.2.1 There should be a The primary modes of communication between Company  all shareholders channel to reach all and the shareholders are the CSE announcements. of the Company shareholders of the Interim Financial Statements, Shareholders Circulars/ Company in order to Notices , Annual Report and AGM. Information is provided disseminate timely to the shareholders prior to the AGM to give them an information. opportunity to exercise the prerogative to raise any issues relating to the business of Company, either verbally or in writing prior to the AGM. The Company used the following channels to disseminate timely information;

zz Shareholders meetings

zz Financial and other notices as and when required through the Colombo Stock Exchange

zz Corporate website

zz Press notices. 126 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Policy and C.2.2 The Company should The Company will focus on open communication and fair  methodology for disclose the policy disclosure, with emphasis on the integrity, timeliness and communication and methodology for relevance of the information provided. The Company will with shareholders communication with ensure information is communicated accurately and in such a shareholders. way as to avoid the creation or continuation of a false market.

Implementation C.2.3 The Company should Printed copies of Annual Report are provided to all  of the Policy and disclose how they shareholders without charge. methodology for implement the above All other announcements are posted on the CSE website. communication policy and methodology. with shareholders

Contact C.2.4 The Company should Details of Company Secretary are disclosed in Corporate  person for the disclose the contact Information Section. Shareholders may, at any time, direct communication person for such questions, request for publicly available information communication. and provide comments and suggestions to Directors or Management of the Company. In addition, Head of Investor Relations is assigned to handle communications related to investor relations. Such questions, requests and comments should be addressed to the Company Secretary and in the absence of him the Group Chief Executive Officer.

Process to make C.2.5 The Company should The Company Secretary shall maintain a record of all  Directors aware have a process to make correspondence received and will deliver as soon as of major issues all Directors aware practicable such correspondence to the Board or individual and concerns of of major issues and Director/s as applicable. The Board or individual Director/s, shareholders concerns of shareholders as applicable, will generate an appropriate response to and this process should all validly received shareholder correspondence and will be disclosed by the direct the Company Secretary to send the response to the Company. particular shareholder.

C.2.6 The Company should Company Secretary or head of Investor Relations can be  decide the person to contacted in relation to shareholders’ matters. contact in relation to shareholders’ matters.

C.2.7 The process for Company Secretary is assigned to respond to shareholders  responding to by the Board and update the Board on such matters. shareholders matters should be formulated by the Board and disclosed. 161 271 127 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

C.3 Major Transactions Main Principle Further to compliance with the requirements under the Companies Act, Directors should disclose to shareholders all proposed corporate transactions, which if entered into, would materially alter/vary the Company’s net assets base or in the case of a Company with subsidiaries, the consolidated Group net asset base.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference Disclosure on C.3.1 Prior to a company engaging in or committing to a During the year, there were  “Major “Major Related Party Transaction”, with a related party, no major transactions as Transaction” involving the acquisition, sale or disposition of greater defined by Section 185 of the than one third value of the Company’s assets or that of a Company’s Act No. 07 of 2007 subsidiary which has a material bearing on the Company which materially affect the Net and for consolidated net assets of the Company, or a Assets Base of the Company or transaction which has or is likely to have the effect of Consolidated Group Net Asset the Company acquiring obligations and liabilities, of Base. greater than one third of the value of the Company’s assets, the Directors should disclose to shareholders Transactions which materially the purpose and all material facts of such transaction affect the net assets base of the and obtain shareholders’ approval by ordinary resolution Company will be disclosed in at an EGM. It also applies to transactions or series of the Quarterly/Annual Financial related transactions which have the purpose or effect of Statements, if any. substantially altering nature of the business carried on by the Company. C.3.2 Public listed companies should in addition comply with Not applicable since no such  the disclosure requirements and shareholder approval transactions were carried out by special resolution as required by the Rules and during the period. Regulations of the Securities and Exchange Commission and by the Colombo Stock Exchange.

D. Accountability and Audit D.1 Financial Reporting Main Principle The Board should present a balanced and understandable assessment of the Company’s financial position, performance and prospects.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Board’s D.1.1 The Board should present an annual An annual report is presented including Financial  responsibility report including Financial Statements Statements that is true and fair, balanced and for Statutory that is true and fair, balanced and understandable and prepared in accordance with and understandable and prepared in the relevant laws and regulations. Regulatory accordance with the relevant laws Reporting and regulations and any deviation being clearly explained.

D.1.2 The Board’s responsibility to present The Board is well aware of its responsibility to  a balanced and understandable present regulatory and statutory reporting in a assessment extends to interim and balanced and understandable manner and a other price-sensitive public reports statement to this effect is given in the Statement of and reports to regulators, as well Directors’ Responsibility on page 170 confirming this as to information required to be position. presented by statutory requirements. 128 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

The Company had strictly complied with the requirements of the Companies Act No. 07 of 2007 in the preparation of Quarterly and Annual Financial Statements which are prepared and presented in conformity with Sri Lanka Accounting Standards. Further, Company has complied with the reporting requirements prescribed by the regulatory authority such as the Colombo Stock Exchange.

In case of Subsidiary Company – Singer  Finance (Lanka) PLC has also complied with the requirements of the Finance Companies Act No. 78 of 1988 and amendments thereto and reporting requirements prescribed by the regulatory authorities such as the Central Bank of Sri Lanka and the Colombo Stock Exchange. Given below is a table containing the dates on which the Annual and Interim Financial Statements were uploaded to the CSE website/dispatched to the shareholders in the year under review:

Report Date of Dispatch or Status Upload

Annual Report for the 4th June 2018 Compliant 15 months ended 31st March 2018

1st Quarter 2018 8th August 2018 Compliant

2nd Quarter 2018 12th November 2018 Compliant

3rd Quarter 2018 8th February 2019 Compliant

4th Quarter 2019 16th May 2019 Compliant

D.1.3 The Board should, before it approves It is assigned to Chief Financial Officer, Head of  the Company’s Financial Statements Risk Management and compliance officers of the for a financial period, obtain from respective subsidiary companies. its Chief Executive Officer and Chief Financial Officer, Head of Risk Management Chief Financial Officer a declaration and compliance officers (financial accountants) that, in their opinion, the financial review quarterly and year end Financial Statements records of the entity have been before submitting to the Audit Committee and Board properly maintained and that the and ensure that, the financial records of the entity Financial Statements comply with the have been properly maintained and that the Financial appropriate accounting standards Statements comply with the appropriate accounting and give a true and fair view of the standards and give a true and fair view. financial position and performance of the Company and that the system of risk management and internal control was operating effectively. 161 271 129 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Directors’ D.1.4 The Directors’ Report, which forms part of the Annual The Annual Report of the Board  Report in Report, should contain declarations by the Directors of Directors on the Affairs of the the Annual to the effect that: Company given on pages 163 to 169 Report covers all of these sections. zz the Company has not engaged in any activity which contravenes laws and regulations; In addition to that Company has established procedures zz the Directors have declared all material interests to ensure compliance with all in contracts involving the Company and refrained applicable statutory and regulatory from voting on matters in which they were requirements. The Accountants of materially interested; respective companies within the zz the Company has made all endeavours to ensure Group act as Compliance Officers the equitable treatment of shareholders; and are responsible for ensuring

zz the Directors have complied with best practices of proper compliance with applicable corporate governance laws and regulations.

zz Property. plant and equipment is reflected at fair A compliance statement is tabled value, where it is different from fair value adequate at each Board meeting by the disclosures are made Compliance Officer.

zz the business is a going concern, with supporting The Company’s compliance with assumptions or qualifications as necessary; and Section 7.10 of the Colombo Stock Exchange Listing Rules on Corporate zz they have conducted a review of the internal controls, covering financial, operational and Governance and details of such compliance controls and risk management, compliance are discussed on pages and have obtained reasonable assurance of 144 and 146 of this Report. their effectiveness and successful adherence therewith, and, if it is unable to make any of these declarations, to explain why it is unable to do so.

Statements D.1.5 The Annual Report should contain a statement The “Statement of Directors’  of Directors’ setting out the responsibilities of the Board for Responsibility” is given on page 170. and Auditors’ the preparation and presentation of Financial The “Independent Auditors’ Report” Responsibility Statements, together with a statement by the on pages 171 to 175 states the for the Auditors about their reporting responsibilities. Further Auditor’s responsibility. Financial the Annual Report should contain a report/statement Statements on internal control. The Statement on Internal Control is given on page 170 in the Statement of Director’s Responsibilities. 130 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Management D.1.6 The Annual Report should contain a “Management Discussion Please refer Chairman’s  Discussion and Analysis”, discussing, among other issues: Letter on pages 14 and and Analysis 15, Group Chief Executive zz business model; Officer’s Review on pages zz industry structure and developments; 16 and 17, Review of Operation (Management zz opportunities and threats; Discussion and Analysis) zz risk management ; on pages 35 to 99 of this zz internal control systems and their adequacy; Annual Report.

zz governance; Management Discussion and Analysis is structured zz stakeholder relationships; based on the Integrated zz social and environmental protection activities carried out by Reporting Framework in this the Company; Annual Report. zz financial performance;

zz investment in physical and intellectual capital;

zz human resource/industrial relations activities carried out by the company; and

zz prospects for the future.

The Management Discussion and Analysis may be structured based on the integrated reporting framework issued by International Integrated Reporting Council and “a preparer’s guide to integrated Corporate Reporting” issued by CA Sri Lanka. Summon on D.1.7 In the event the net assets of the Company falling below Likelihood of such  EGM to notify 50% of the value of the Company’s shareholders’ funds, the occurrence is remote. serious loss Directors shall forthwith summon an Extraordinary General However, should the of capital Meeting of the Company to notify shareholders of the position situation arises, an EGM and of remedial action being taken. The Directors should will be called for and report periodically to the shareholders progress on these shareholders will be notified. remedial actions. Disclosure of D.1.8 The Board should adequately and accurately disclose the Each Company within  related party Related Party Transactions in its Annual Report: the Singer Group has transaction submitted signed and dated Each Company within the Group to submit signed and dated declarations mentioning quarterly declarations mentioning whether they have related whether they had related party transactions with the Company as defined in this Code; party transactions with the The Company Secretary keeps a record on related party Company during the period transactions and make necessary disclosures accordingly; ended 31st March 2019. There should be a process to capture related parties Related Party Transactions and related party transactions. This process needs to be Review Committee reviewed operationalised and related party transactions should be related party transactions properly documented: of the Singer Group which is described in this Annual A record/register either in hard or soft form on related party and Report in pages 152 and 153. related party transaction should be maintained by the Company; Related parties and related This record should ensure that the company captures party transactions are information to comply with the respective related party captured and documented disclosure requirements imposed by SEC/Accounting by the Company. Standards/Auditing Standards and similar regulations. 161 271 131 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

D.2 Risk Management and Internal Control Main Principle The Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. The Board should have a process of risk management and a sound system of internal control to safeguard shareholders’ investments and the Company’s assets. Broadly, risk management and internal control is a process, effected by a company’s Board of Directors and Management, designed to provide reasonable assurance regarding the achievement of Company’s objectives.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Annual D.2.1 The Board should monitor The Company’s Directors are responsible for instituting  Review of the the Company’s risk a system of internal controls to ensure the effective effectiveness management and internal implementation of all policies and decisions of the Board. of Group’s control systems and, at This framework is designed to provide reasonable but not system of least annually, carry out a absolute assurance that all aspects are safeguarded. internal review of their effectiveness, The Company has its own internal audit processes, control and report on that review implemented to ensure that effective controls are in place. in the Annual Report. The These processes extend across all Company operations. monitoring and review should cover all material The internal audit function is headed by the Head of Risk controls, including financial, Management, who reports to the Board Audit Committee and operational and compliance Group CEO. controls.

In relation to the retail network, the internal audit function  includes an individual risk assessment for every outlet directly operated by Singer (Sri Lanka) PLC, based on five criteria – 1. Receivables management 2. Inventory management 3. Cash management 4. Internal checks and balances 5. Effectiveness of internal controls Each location is graded by the Internal Audit Department based on its adherence to controls and its administrative performance on the management of the five criteria mentioned above.

Review the D.2.2 The Directors should Please refer pages 154 to 159 in the Risk Management report.  need for confirm in the Annual Report internal audit that they have carried out function a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The Directors should describe those risks and explain how they are being managed or mitigated. 132 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

D.2.3 Companies should have an Risk Management and Internal Audit are responsible for  internal audit function. internal audit functions.

Review of the D.2.4 The Board should require The Internal Audit Division of the Company carries out regular  process and the Audit Committee to carry reviews on the risk management function and internal control effectiveness out reviews of the process system including internal control over financial reporting. of risk and effectiveness of risk The Audit Committee monitors, reviews and evaluates the management management and internal effectiveness of internal control system including the internal and internal controls, and to document controls over financial reporting. In the reporting period ended controls to the Board and Board 31st March 2019, the Board of Directors was satisfied with takes the responsibility the effectiveness of the system of internal controls of the for the disclosures on risk Company. Refer the Directors’ Statement on Internal Control management and internal on page 170 for details. controls.

D.3 Audit Committee Main Principle The Board should establish formal and transparent arrangements for considering how they should select and apply accounting policies, financial reporting, determine the structure and content of corporate reporting, implement internal control and risk management principles and for maintaining an appropriate relationship with the Company’s Auditors.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Composition D.3.1 The Board should establish an Audit Committee All members of the Board Audit  of the Audit exclusively of Non-Executive Directors with a minimum Committee are Independent Committee of three Non-Executive Directors of whom at least two Non-Executive Directors. should be independent. If there are more Non-Executive Details of the members, Directors. The majority should be independent. The invitees and Secretary of the Committee should be chaired by an Independent Committee are found on pages Non-Executive Director. The Board should satisfy itself that 148 and 149 of the “Audit at least one member of the Audit Committee has recent Committee Report” under the and relevant experience in financial reporting and control. heading “Composition of the Committee”.

Terms of D.3.2 The Audit Committee should have a written Terms of Company established written  Reference Reference, dealing clearly with its authority and duties. Audit Committee charter which of the Audit The Audit Committee’s written Terms of Reference addressed Terms of Reference Committee must address: of the Audit Committee and further details are disclosed The Committee’s purpose – which, at minimum, in Audit Committee Report must be to – on pages 148 and 149 of this zz Assist Board oversight of the: Annual Report.

zz Preparation, presentation and adequacy of disclosures in the Financial Statements, in accordance with the Sri Lanka’s Accounting Standards;

zz Compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements; 161 271 133 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Terms of zz Process to ensure that the Company’s internal controls Reference and risk management procedures are adequate to meet of the Audit the requirements of the Sri Lanka Auditing Standards; Committee zz Assessing the Company’s ability to continue as a going concern in the foreseeable future:

zz Performance of the Company’s internal audit function;

zz Process to the identification, monitoring and management of significant business/financial risk; and

zz Independence and performance of the Company’s external audit.

zz The duties and responsibilities of the Audit Committee should at a minimum include those set out below:

zz Making recommendations to the Board, pertaining to appointment, reappointment and removal of External Auditors and to approve the External Auditors;

zz To develop and implement policy on the engagement of the External Auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm; and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken;

zz To review and monitor the External Auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant Sri Lankan professional and regulatory requirements;

zz Discussion of the audit plan, key audit issues, their resolution and management responses;

zz Review the Company’s annual Audited Financial Statements and Quarterly Financial Statements with management and the Auditor to ensure compliance with the Sri Lanka Accounting Standards and other relevant laws and regulations;

zz To review significant financial reporting judgements;

zz Review the Company’s earnings press releases and financial information and earnings guidance provided to analysts and rating agencies;

zz Discussion of policies and practices with respect to risk assessment and risk management;

zz Ensuring that a process of sound system of internal control is in place; 134 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

zz Ensuring that at least once in every three years an review of the Board’s risk management, internal controls, business continuity, planning and information security systems are carried out and appropriate remedial action recommended to the Board;

zz Ensuring that an effective internal audit function is in place and monitor and review the internal audit activities;

zz Meeting separately, periodically, with Management, auditors and internal auditors;

zz Ensuring that there is a mechanism for the confidential receipt, retention and treatment of complaints alleging fraud, received from internal/external sources and pertaining to accounting, internal control or other such matters;

zz Assuring confidentiality to whistle-blowing employees;

zz Setting clear hiring policies for employees or former employees of the Auditors; and

zz Reporting regularly to the Board of Directors.

Disclosure D.3.3 zz A separate section of the Annual Report should Names of the members of the  of names of describe the work of the Committee in discharging its Audit Committee are given on the members responsibilities. The report should include – page 148 under the section of the Audit on the “Composition of the zz The names of the Directors (persons in the Parent Committee Company’s Committee in the case of a Group Committee” and disclosure Company) comprising the Audit Committee should be on the independence of the disclosed in the Annual Report. Auditors is found on page 169 under the Auditors’ in the zz The number of meetings held and attendance of “Annual Report of the Board of each Director; Directors on the Affairs of the zz The scope of work and how its roles and responsibilities Company” on pages 163 to 169. were discharged;

zz An explanation of how it has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external audit, and information on the length;

zz If the External Auditor provides non-audit services, an Report by the Audit Committee  explanation of how audit objectivity and independence is given on pages 148 and 149. are safeguarded; and the Committee should also make a determination of the independence of the Auditors and should disclose the basis of such determination in the Annual Report.

zz The Annual Report should contain a Report by the Audit Report by the Audit Committee  Committee, setting out the manner of compliance by is given on pages 148 and 149. the Company, in relation to the above, during the period to which the Annual Report relates. 161 271 135 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

D.4 Related Party Transactions Review Committee Main Principle The Board should establish a procedure to ensure that the Company does not engage in transactions with “related parties” in a manner that would grant such parties “more favourable treatment” than that accorded to third parties in the normal course of business.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Disclosure of D.4.1 A related party and related party transactions Related party and related party  Related Party will be as defined in LKAS 24. transactions are defined as per Transactions LKAS 24. Review Committee

D.4.2 The Board should establish a Related Party Transactions In compliance with Section 9  (RPT) Review Committee consisting exclusively of Non- of the Listing Rules of the CSE, Executive Directors with a minimum of three Non-Executive The Committee comprises two Directors of whom the majority should be independent. Independent Non-Executive Executive Directors may attend by invitation. The Chairman Directors, and one Executive should be an Independent Non-Executive Director Director appointed by the Board. The Committee is chaired by an Independent Non-Executive Director.

D.4.3 RPT Review Committee should have written terms of The Related Party Transactions  reference dealing clearly with its authority and duties Review Committee Report which should be approved by the Board of Directors. sets out the functions of the The RPT Review Committee’s written terms of reference Committee which is given on must address – pages 152 and 153.

zz A procedure for documenting related parties in accordance with the definitions in LKAS 24 and the CSE Listing Rules.

zz A procedure to obtain a statement of related party interest from each such related party at least once in each quarter, when there’s a change in the status and in any event prior to entering into any transaction between such related parties and the Company, its parent or any of subsidiaries, sub-subsidiaries, fellow subsidiaries, associates, joint ventures and any other entities which are considered related parties as defined in LKAS 24 unless they are exempted related party transactions as defined in CSE Listing Rules. zz Key Management Personnel of the Company responsible for contracting, procurement, payments, and any other channel through which an inflow or outflow of resources can result, should have a list of all related parties and have a process in place to capture and report any related party transaction within their area of responsibility.

zz A procedure to inform all related parties of what constitutes exempted related party transactions. 136 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

zz A procedure and guideline to delegate to Key Management Personnel to deal with recurrent related party transactions as defined in the CSE Listing Rules. zz A procedure for the RPT Review Committee to review and recommend to the Board matters relating to such transactions. zz Any interested Directors should not participate at the meeting at which the transaction relating to him/ her is discussed unless invited to seek clarification/ information. zz A procedure and definition of disclosure required to be made by the Company on an annual basis, those requiring immediate disclosure and those requiring shareholder approval. zz A procedure to identify related party transactions which require immediate disclosure as per the CSE listing rules and to ensure that required disclosures are made by the Company to the Colombo Stock Exchange in accordance with the CSE Listing Rules. zz A procedure to identify related party transactions which require shareholder approval by special resolution at an Extraordinary General Meeting. zz The Company Secretary should maintain a permanent record in manual or electronic form of such statements, submissions, approvals, and minutes. zz Review and recommend to the Board the related party disclosures to be made in the Annual Report of the Company.

D.5 Code of Business Conduct and Ethics Companies must adopt a Code of Business Conduct and Ethics for Directors, Key Management Personnel and all other employees including but not limited to; dealing with shares of the Company; compliance with listing rules; bribery and corruption; confidentiality; encouraging that any illegal, fraudulent and unethical behaviour be promptly reported to those charged with governance. The Company must disclose waivers of the code for Directors, if any –

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Disclosure D.5.1 All companies must disclose whether they have a Code Company has an internally-  of Code of of Business Conduct and Ethics for Directors and Key developed Code of Conduct. Business Management personnel and if they have such a code, All employees including Conduct and make an affirmative declaration in the Annual Report that Directors, Key Managers and Ethics all Directors and Key Management Personnel have Senior Managers are bound declared compliance with such code, and if unable to by the Company’s written make that declaration, state why they are unable to do so. Code of Ethics that includes the following aspects: Each company may determine its own policies in the formulation of such a code, but all companies zz Exercise honesty, objectivity should address the following important topics in their and diligence when respective codes: performing one’s duties.

zz Conflict of interest;

zz Bribery and corruption; 161 271 137 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate Governance CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Principle Code Reference

zz Entertainment and gift; zz Avoid situations where personal interest might

zz Accurate accounting and conflict with the interest of the Company; and if record-keeping; so, disclose such interest in advance. zz zz Fair and transparent procurement Maintain confidentiality of commercial and price practices; sensitive information. zz zz Corporate opportunities; Work within applicable laws and regulations. zz zz Confidentiality; Safeguard the Company’s assets. zz zz Protection and proper use of Avoid conduct that will reflect badly on the company assets including person concerned or the Company’s image. information assets; zz Strictly avoid giving or accepting any kind of

zz Compliance with laws, rules and bribe, either directly or indirectly. regulations (including insider zz Strictly avoid making contributions for political trading laws); and funds, either directly or indirectly.

zz Encouraging the reporting zz Strictly avoid any kind of sexual harassment. of any illegal, fraudulent or The Company has implemented a formal whistle- unethical behaviour. blowing procedure and encourages any employee who suspects wrong doing at work, whether by Management, peers or any other employee, to raise their concerns. Other Policies In addition, the Company implements policies covering:

zz Recruitment and selection

zz Financial integrity/Financial Manual

zz Use of Company property including computers

zz Non-harassment in the work place

zz Environment, safety and health

zz Security of IT system

D.5.2 The Company should have a Company has established policy and process to  process in place to ensure that ensure that material and price sensitive information material and price sensitive is immediately disclosed to the Colombo Stock information is promptly identified Exchange immediately after relevant decisions and reported in accordance with are made by the Board of Directors. This task is the relevant regulations. assigned to the Company Secretary and it is a prime responsibility of the Company Secretary.

D.5.3 The Company should establish a The policy in place and any share transaction  policy, process for monitoring and done by Board Director need to be immediately disclosure of shares purchased disclosed to the Company Secretary and Company by any Director, Key Management Secretary will inform such transactions to the Personnel or any other employee Colombo Stock Exchange. Any share transaction involved in financial reporting. done by Key Management Personnel other than Board Directors should inform such transactions to Compliance Officer of the Company. 138 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Corporate Governance CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Principle Code Reference

Affirmative D.5.4 The Chairman must affirm in the Please refer Chairman’s Letter on pages 14 and  Statement by the Company’s Annual Report that 15 in this Report. Chairman a code of conduct and ethics has been introduced company- wide and the procedure for disseminating, monitoring and compliance with that code. He must also disclose that he is not aware of any violation of any of the provisions of the code of business conduct and ethics.

D.6 Corporate Governance Disclosures Directors should be required to disclose the extent to which the Company adheres to established principles and practices of good Corporate Governance.

Corporate Governance CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Principle Code Reference

Disclosure D.6.1 The Directors should include in This Report from page 102 to 147 sets out the  of Corporate the Company's Annual Report, manner and extent to which Singer (Sri Lanka) PLC Governance a Corporate Governance Report has complied with the principles and provisions of setting out the manner and the Code. extent to which the Company has complied with the principles and provisions of this Code.

Shareholders E. Institutional Investors E.1 Shareholder Voting Main Principle Institutional shareholders have a responsibility to make considered use of their votes and should be encouraged to ensure their voting intentions are translated into practice.

Corporate Governance CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Principle Code Reference

Communication E.1.1 A listed Company should conduct In order to avoid conflict of interest by nurturing  with Shareholders a regular and structured dialogue the mutual understanding, the Board carries with shareholders based on out dialogues with its shareholders at General a mutual understanding of Meetings. In this regards, the Annual General objectives. Arising from such Meeting (AGM) and Extraordinary General Meetings dialogue, the Chairman should (EGM) of the Company plays a critical role. ensure the views of shareholders Voting of the shareholders is crucial in carrying a are communicated to the Board resolution at the AGM/EGM. The Chairman who as a whole. plays the role of the agent and communicates the views and queries of the shareholders to the Board and the Key and Senior Management in order to ensure that the views are properly communicated to the Company. 161 271 139 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate Governance CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Principle Code Reference

Head of Investor Relations is a dedicated position to communicate with shareholders if necessary. Investors and Shareholders can directly communicate and share their views and it will be communicated to the Board for necessary actions.

Shareholders are provided with Quarterly Financial Statements and the Annual Report, which the Company considers as its principle communication with them and other stakeholders. These reports are also available on the Company’s website – www.singersl.com and are provided to the Colombo Stock Exchange. Any information that the Board considers as price sensitive is disseminated to the shareholders as necessary.

E.2 Evaluation of Governance Disclosures

Corporate Governance CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Principle Code Reference

Due weight E.2.1 When evaluating Companies’ The Institutional Investors are at liberty to give due  by Institutional governance arrangements, weight to matters relating to the Board structure Investors particularly those relating to and composition, when they consider resolutions Board structure and composition, relating to Board structure and composition. institutional investors should be encouraged to give due weight to all relevant factors drawn to their attention.

F. Other Investors F.1 Investing/Divesting Decision

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

Individual F. 1 Individual shareholders, investing Individual investors are encouraged to carry out  Shareholders directly in shares of companies adequate analysis or seek independent advice in should be encouraged to carry investing or divesting decisions. out adequate analysis or seek independent advice in investing or divesting decisions.

Individual F. 2 Individual shareholders should Individual shareholders are encouraged to  Shareholder be encouraged to participate in participate in General Meeting of the Company and Voting General Meetings of companies exercise their voting rights. and exercise their voting rights. 140 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

G. Internet of things and Cyber Security

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

G.1 The Board should have a process to identify The Board assigned this responsibility to  how in the organisation’s business model, IT the Information Technology Division and devices within and outside the organisation Director – IT is mainly assigned to complete can connect to the organisation’s network this task. to send and receive information and the IT policy and Cyber security policies consequent cyber security risks that may have been developed and needs to be affect the business. presented to the Board for approvals. Internal and external parties could have computing devices embedded in everyday objects which may enable them to interconnect with the Company’s network to send and receive data. Such access could be authorised or unauthorised.

G.2 The Board should appoint a Chief Information Director IT is appointed as a Chief  Security Officer (CISO) with sufficient Information Security Officer. expertise, authority and budgetary allocation IT policy and cybersecurity policy has to introduce and implement a cybersecurity been developed risk management policy which should be approved by the Board. The policy should include a robust cybersecurity risk management process, incident response system, vendor management system, disaster recovery plan and a governance structure to monitor effective implementation, reporting and the need for cybersecurity insurance.

G.3 The Board should allocate regular and Not Complied.  adequate time on the Board meeting agenda IT policies and Cybersecurity policies are to for discussions about cyberrisk management: be presented to the Board. zz The matters taken up for the discussion on the Board meeting agenda may include; Potential cybersecurity risks in the Company’s business model. zz CISO’s security strategy and status of the current projects. zz Compliance with the cybersecurity risk management process and incident report. zz Findings and recommendations from independent reviewers.

G.4 The Board should ensure the effectiveness of Not Complied.  the cybersecurity risk management through Security assessment has been carried independent periodic review and assurance. out and in the process of taking the The scope and the frequency of the corrective actions. independent periodic reviews could be determined based on the industry vulnerability, Company’s business model and incident findings. 161 271 141 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

G.5 The Board should disclose in the Annual IT Risk assessments are carried out  Report, the process to identify and manage according to ISO 27001:2013 and ISO cybersecurity risks. 31000:2018 standards, at least annually to identify the risks on the IT environment of SSLP. Identified risks will be evaluated and proper measures are taken by the SSLP IT team to mitigate or minimise the threats. The Board of Directors shall be updated regarding the controls in place to mitigate cyber risks, and on possible cyberrisks that the company is exposed to.

H. Environment Society and Governance (Esg) H.1 ESG Reporting Main Principle The Company’s Annual Report should contain sufficient information to enable investors and other stakeholders to assess how ESG risks and opportunities are recognised, managed, measured and reported.

Environmental, social and governance considerations can affect a company’s ability to execute its business strategy and create value. While many ESG factors are “non-financial”, their management and likely impact have financial consequences. Hence, they are important factors to be built into a company’s business model, strategy, governance and risk management framework. ESG factors relevant to the Company could impact the followings: zz Access to financial capital zz Cost savings and productivity zz Brand value and reputation zz Employee recruitment zz Employee retention zz Access to markets zz License to operate zz Market capitalisation

Integrating ESG policies and practices into a company’s strategy, business model, governance and risk management, and reporting its likely impact and implications are increasingly seen by investors as material to their investment decisions. Further, investors want to understand the risks associated with ESG issues, as this is seen as a the risks associated with ESG issues, as this is seen as a how well companies are managing how well companies are managing key test of the long-term sustainability of the Company. They are also increasing interested in the opportunities presented by companies that are well equipped to benefit from this.

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

H.1.1 Companies should provide information in Sustainability principles related to ESG  relation to – factors are embedded in the operations of the Company and initiatives implemented zz The relevance of environmental, social to ensure adherence by the Company are and governance factors to their business discussed in the Management Discussion models and strategy. and Analysis and compliance section of zz How ESG issues may affect their business. this report. zz How risks and opportunities pertaining to ESG are recognised managed, measured and reported. 142 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

H.1.2 Environmental Factors

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

H.1.2 Environmental governance of an organisation Sustainability principles related  should adopt an integrated approach that takes into to environmental factors are consideration the direct and indirect economic. Social, embedded in the operations health, and health and environmental implications of their of the Company and initiatives decisions and activities, including: implemented to ensure adherence to environmental zz pollution prevention. governance by the Company are zz sustainable resource use discussed in the Management (e.g: water, energy). Discussion and Analysis zz climate change. and Compliance section of

zz protection of environment. this report.

zz biodiversity.

zz restoration of natural resources.

H.1.3 Social Factors

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

H.1.3.1 Social governance of an organisation should include its Sustainability principles related to  relationship with the community, customers, employees, social factors are embedded in suppliers, outsourced providers and any other party that the operations of the Company can influence or be influenced by the organisation’s and initiatives implemented business model. to ensure adherence to social governance by the Company are zz The organisation should adopt an integrated approach discussed in the Management to building a relationship with the community and Discussion and Analysis striving for sustainable development including and Compliance section of responsible community engagement, fair competition, this report. thereby demonstrating corporate social responsibility.

zz The organisation should adopt an integrated approach to building a relationship with customers. This includes establishing a process for customer engagement, product responsibility and product recall and other matters relevant to the organisation’s business model.

zz The labour practice related governance of an organisation should encompass all policies and practices in relation to work performed by or on behalf of the organisation in accordance with its business model, and should also include policies and practices such as equal opportunity, career development and training, reward and recognition, conditions of work, work-life balance and industrial relations.

zz The organisation should have policies and procedures to ensure that suppliers and outsourced providers comply with social governance norms of the Company. 161 271 143 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

H.1.4 Governance

Corporate CA Sri Lanka Requirement of the Code Compliant with the Code Compliance Governance Code Principle Reference

H.1.4.1 zz Companies should establish a governance Process of managing risks in line with  structure to support its ability to create value ESG aspects is discussed in the Risk and manage risks in the short, medium and management report. longterm, recognising managing and reporting on all pertinent aspects of ESG.

zz The Company should recognise the key resources/capitals deployed in its business and establish financial and non-financial measures for resource/capital management and related outputs and outcomes.

zz The Company should have a process to ascertain, assess and mange risks which have an impact on the sustainability of the Company.

zz The Company should have a process to recognise material matters relating to significant stakeholders and a method of engagement relevant to their level of interest and influence.

zz The disclosures should deal with how the Company has complied with the mandatory and voluntary codes of corporate governance and how its leadership structure, organisational culture, code of conduct and business model supports sustainability of the Company in the short, medium and long-term.

H.1.5 Board’s Role on ESG Factors

Corporate SEC and Requirement of the Code Compliant with the Code Compliance Governance CA Sri Lanka Principle Code Reference

H.1.5.1 ESG reporting is a Board’s responsibility and it The Company follows ESG reporting  is designed to add value by providing a credible and is disclosed in line with Global account of the Company’s economic, social Reporting Initiatives (GRI) guidelines in and environmental impact. ESG reporting and this annual report and described from disclosure should be formalised as part of the pages 283 to 288. Company’s reporting process and take place on a regular basis. ESG reporting should link sustainable issues more closely with strategy. ESG reporting may be built on a number of different guidelines, such as –

zz Integrated Reporting Framework

zz The Global Reporting Initiative Guidelines 144 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Section B This section covers the Company’s extent of adherence to the requirements of the Continuous Listing Requirements Section 7.10 on Corporate Governance Rules for Listed Companies issued by the Colombo Stock Exchange. This reflects the Company’s level of conformity to CSE’s Listing Rules which comprise the following fundamental principles: zz Non-Executive Directors zz Independent Directors zz Disclosures Relating to Directors zz Remuneration Committee zz Audit Committee

The following table presents the details of the Company’s compliance with Section 7.10 and Section 9 of the CSE Listing Rules on Corporate Governance as at 31st March 2019:

Section Rule No. Corporate Governance Rule Details of Compliance Compliance

Board of Directors Non-Executive 7.10.1 Number of Non-Executive Directors – One-third The Board of Directors comprises  Directors of the total number of Directors, subject to a ten Directors, eight of whom are minimum of two. Non-Executive Directors. Independent 7.10.2 (a) Number of Independent Directors – One-third Five of the Non-Executive Directors are  Directors of Non-Executive Directors, subject to a independent. minimum of two. 7.10.2 (b) Each non-Executive Director should submit a All Non-Executive Directors have  declaration of independence/non-independence. submitted declarations. Independent Non-Executive Directors have submitted declarations confirming their independence. Disclosures 7.10.3 (a) Names of Independent Directors should be Please refer page 114.  relating to disclosed in the Annual Report. Directors 7.10.3 (b) The Board shall make a determination annually The Board has determined Mr. M.H.  as to the Independence or Non-independence of Jamaldeen as an Independent Non- each Non-Executive Director. Executive Director notwithstanding that he is a Director of Hayleys PLC, the Parent Company as his role is not compromised by being on both Boards. 7.10.3 (c) A brief résumé of each Director should be Please refer Board of Directors section  included in the Annual Report including the area of this report on pages 18 to 21. of experience. 7.10.3 (d) Provide brief résumé of any new Director Please refer Board of Directors section  appointed to the Board. of this report on pages 18 to 21.

Remuneration Committee Composition 7.10.5 (a) Number of Independent Non-Executive Directors in the Committee to be – zz a minimum of two (where a Company has only The Committee comprises three  two Directors on the Board), or Independent Non-Executive Directors.

zz in all other instances majority of whom to be independent. 161 271 145 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Section Rule No. Corporate Governance Rule Details of Compliance Compliance Separate Committee to be formed for the A separate Remuneration Committee  Company or the Listed Parent’s Remuneration was formed for the Company. Committee to be used. Chairman of the Committee to be a Non-Executive The Committee is chaired by an  Director. Independent Non-Executive Director. Function 7.10.5 (b) Function of the Committee. The Remuneration Committee Report  sets out the functions of the Committee. Disclosure 7.10.5 (c) The Annual Report should set out – Please refer page 150.  in the Annual Names of Directors comprising the Report Remuneration Committee Statement of Remuneration policy Please refer Remuneration Committee  report on page 150. Aggregate remuneration paid to Executive and Please refer page 150.  Non-Executive Directors

Audit Committee Composition 7.10.6 (a) Number of Independent Non-Executive Directors in the Committee to be – zz a minimum of two (where a Company has only The Committee comprises three  two Directors on the Board), or Independent Non-Executive Directors.

zz in all other instances of Non Executive Directors a majority of whom to be independent. Separate Committee to be formed for the Company A separate Audit Committee was formed  or the Listed Parent’s Committee to be used. for the Company and the Singer Group. Chairman of the Committee to be a Non-Executive The Committee is chaired by an  Director. Independent Non-Executive Director. Chairman or one member of the Committee The Chairman of the Committee is a  to be a member of a recognised professional member of a recognised professional accounting body. accounting body. CEO and CFO to attend Committee meetings, unless Group CEO attends by invitation.  otherwise determined by the Audit Committee. CFO attends by invitation. Function 7.10.6 (b) Function of the Committee. The Audit Committee Report sets out  the functions of the Committee. Disclosure 7.10.6 (c) zz Names of Directors comprising the Please refer pages 148 and 149.  in the Annual Audit Committee Report zz The Audit Committee shall make a Please refer Audit Committee Report  determination of the independence of on pages 148 and 149. the Auditors and disclose the basis for such determination zz The Annual report shall contain a Report of the Please refer Audit Committee Report  Audit Committee in the prescribed manner. on pages 148 and 149. 146 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Corporate Governance

Section Rule No. Corporate Governance Rule Details of Compliance Compliance

Related Party Transactions Review Committee Composition 9.2.2 Combination of Non-Executive Directors and The Committee comprises two  Independent Non-Executive Directors and may Independent Non-Executive Directors, include Executive Directors at the option of the and one Executive Director. Comapny. 9.2.3 Separate Committee to be formed for the A separate Related Party Transactions  Company or the Listed Parent’s Committee to Review Committee was formed for the be used. Company and the Singer Group . Function of the Committee. The Related Party Transactions Review  Committee Report sets out the functions of the Committee. Disclosure 9.3.2 (c) The Annual Report shall contain a Report of the Please refer Related Party Transactions  in the Annual Related Party Transactions Review Committee in Review Committee Report on pages 152 Report the prescribed manner. and 153.

Board, Audit Committee, Remuneration Committee, Nomination Committee and Related Party Transactions Review Committee Attendance The number of meetings of the Board, Audit Committee, Remuneration Committee and Related Party Transactions Review Committee and individual attendance by members are as follows:

Number of Meetings, Circular Resolutions and Dates

Board Meetings 4 Audit Committee Meetings 4 Remuneration Committee Meetings 1 Nomination Committee Meetings – Related Party Transactions Review Committee Meetings 3

Board Meetings Audit Committee Meetings Remuneration Committee Meetings Nomination Committee Meetings Related Party Transactions Review Committee Meetings

14th May 2018 14th May 2018 25th July 2018 – 6th August 2018 8th August 2018 6th August 2018 7th November 2018 9th November 2018 7th November 2018 5th February 2019 7th February 2019 5th February 2019 161 271 147 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Corporate Governance

Individual Attendance

Name of Director Directorship status Board Audit Related Party Transaction Nomination Remuneration Members Committee Review Committee Committee Committee [Singer (Sri Lanka) PLC]

Mr. A.M. Pandithage – ED Executive 4/4 – – –

Mr. K.D.D. Perera – NED Non-Executive 3/4 – – –

Mr. M.H. Wijewardene – CEO/ED – Executive 2/2 – Appointed to the – appointed w.e.f. 1st November 2018 Committee on 5th February 2019 1/1

Mr. D.H. Fernando – INED Independent 3/4 – – – Non-Executive

Mr. S.C. Ganegoda – NED* Non-Executive 3/4 – – –

Mr. Deepal Sooriyaarachchi – INED Independent 4/4 4/4 3/3 – 1/1 Non-Executive

Mr. M.H. Jamaldeen – INED Independent 3/4 3/4 – – 0/1 Non-Executive

Mr. D.K. de S. Wijeyeratne – INED – Independent 4/4 4/4 Appointed to the – 1/1 appointed w.e.f. 1st April 2018 Non-Executive Committee on 14th May 2018 3/3

Ms. O.D. Gunewardene – INED – Independent 2/3 – – – – Appointed w.e.f. 1st August 2018 Non-Executive

Mr. S.Goodman – NED – Appointed Non-Executive 0/3 – – – – w.e.f. 26th June 2018

Mr. G.J. Walker – NED – Resigned Non-Executive 0/2 – 0/1 – – w.e.f. 29th November 2018**

Mr. H.A. Pieris – ED – Resigned Executive 2/2 2/2 1/1 – – w.e.f. 31st October 2018

*Mr. K.K.L.P. Yatiwella (Alternate Director to Mr. S.C. Ganegoda) attended one meeting. **Mr. M.H. Wijewardene – (Ceased to be Alternate Director to Mr. G.J. Walker w.e.f. 29th November 2018) attended two meetings. ED – Executive Director NED – Non-Executive Director INED – Independent Non-Executive Director 148 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship

AUDIT COMMITTEE REPORT

Preamble Activities in 2018/19 The Committee is empowered to review and monitor the Financial Reporting financial reporting process of Singer Group so as to provide The Committee along with the Board, internal audit and additional assurance on the reliability of the Financial external audit reviewed the Interim Financial Statements and Statements through a process of independent and objective the Annual Financial Statements to ensure compliance with review. As such, the Audit Committee acts as an effective mandatory, statutory and other regulatory requirements laid forum in assisting the Board of Directors in discharging its down by the authorities, prior to publication. responsibilities on ensuring the quality of financial reporting and related communications to the shareholders and the Internal Audit, Risk and Control public. The Committee also provides a forum for the impartial review of the reports of internal and external audits and to take into Composition of the Committee consideration findings and recommendations stated therein The Audit Committee consists of three Independent Non- relating to significant business risks and control issues. Executive Directors and is chaired by an Independent Non- Executive Director. The Committee reviewed the Group audit plan for the year and agreed its budget and resource requirements. It reviewed Audit Committee Members interim and year-end summary reports and management’s responses. The Committee carried out an evaluation of the Mr. D.K. de S. Wijeyeratne – Chairman – Independent performance of the internal audit function and was satisfied Non-Executive Director (Appointed w.e.f. 1st April 2018). with the effectiveness of the function. Mr. D. Sooriyaarachchi – Independent Non-Executive Director Mr. M.H. Jamaldeen – Independent Non-Executive Director The Committee reviewed the Compliance Officer’s Report on the Singer Group’s compliance with the applicable laws Brief profiles of the Directors are given on pages 18 to 21 of and regulations, including internal policy codes of conduct this Annual Report. of its employees.

Hayleys Group Services (Private) Limited functions as Meetings of the Committee the Secretary to the Committee. The Finance Director/ During the reporting period, Four Audit Committee meetings Compliance Officer, Head of Risk Management, Audit Staff, were held to discuss the Reports of the Internal and Representatives of External Auditors and when necessary, the External Auditors and Interim Financial Statements. The Chairman, the Group Chief Executive and relevant Operational Financial Statements for the twelve months period ended Directors and Managers attend the meetings by invitation. 31st March 2019 were also discussed at the meeting held on the 14th May 2019. The minutes of the meetings were tabled Responsibilities and Duties of the Committee at the meetings of the Board of Directors for information and The Audit Committee’s authority, responsibilities and specific necessary action. duties have been formalised through an Audit Committee Charter. By this, the Audit Committee is empowered among The attendance of the Audit Committee meetings held during other things, to examine any matters relating to the financial the reporting period ended 31st March 2019 under review is affairs of the Singer Group and to review the adequacy given on page 147 of this Annual Report: of the internal control procedures, coverage of internal and external audit programmes, disclosure of accounting policies and compliance with statutory and corporate governance requirements. 161 271 149 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Audit Committee Report

External Audit Appreciation The external audit approach and scope was reviewed and I appreciate the contribution made by Mr. H.A. Peiris former discussed by the Committee with the External Auditors and Group CEO of the Company who assisted the Committee Management prior to the commencement of the audit. The participating by invitation. External Auditors informed the Committee on an ongoing basis regarding matters of significance that were pending resolution. I wish to thank all members who served in the Committee Before the conclusion of the audit, the Committee met with the during the period and for their contribution to the deliberations External Auditors without Management being present. External of the Committee. Auditors discussed the audit issues with the Audit Committee and the Management to agree on audit issues.

The Audit Committee recommended to the Board of Directors that Messrs KPMG, Chartered Accountants be reappointed as the External Auditors for the financial year 2019/20, subject Dilip Kumar de Silva Wijeyeratne Chairman – Audit Committee to the approval of the shareholders at the Annual General Meeting (AGM) and the required resolution will be put to the 16th May 2019 shareholders at the AGM. Colombo

Sri Lanka Accounting Standards Committee reviewed the revised policy decisions relating to adoption of new and revised Sri Lanka Accounting Standards (SLFRS/LKAS) applicable to the Group companies and made recommendations to the Board of Directors.

Progress of implementation of SLFRS 9 and SLFRS 15: The Committee continuously monitored the progress of implementation of SLFRS 9 and SLFRS 15 that have been issued with effective date being 1st January 2018.

The Committee would continue to monitor the compliance with relevant Accounting Standards and keep the Board of Directors informed at regular intervals.

The Committee has pursued the support of Messrs KPMG to assess and review the existing SLFRS policies and procedures adopted by the Group. 150 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship

REMUNERATION COMMITTEE REPORT

Composition of the Committee Meetings of the Committee Remuneration Committee consists of three Independent Non- The Committee meets from time to time and reviews the Executive Directors and is chaired by an Independent Non- Group’s remuneration and fee structures to assure alignment Executive Director. with strategic priorities and with compensation offered by competitor companies. Remuneration Committee Members The Committee met once during the period and the Mr. M.H. Jamaldeen – Chairman – Independent Non-Executive attendance of the members given on page 147 of this Director Annual Report. Mr. D. Sooriyaarachchi – Independent Non-Executive Director Mr. D.K. de S. Wijeyeratne – Independent Non-Executive Director (Appointed on 14th May 2018) Appreciation I appreciate the contribution made by Mr. H.A. Peiris former Brief profiles of the Directors are given on pages 18 to 21 of Group CEO of the Company who assisted the Committee this Annual Report. participating by invitation.

Finance Director functions as the Secretary to the Committee. I wish to take this opportunity to thank all members who served in the Committee during the period and for their The Chairman of the Company participated as an observer to contribution to the deliberations of the Committee. the Committee. Group CEO assist the Committee by providing the relevant information and participate in its analysis and deliberations except when their own compensation packages are reviewed.

Responsibilities and Duties of the Committee Mohamed Hisham Jamaldeen The scope of the Committee is to “look into fees, remuneration Chairman – Remuneration Committee and perquisites of Independent Directors, Executive Directors of the Board of the Company and Key Management and 16th May 2019 approve recommendations made by the Group CEO. Colombo

Remuneration and perquisites of Group CEO is reviewed and approved by the Parent Company Remuneration Committee (Hayleys PLC) and it is not under the scope of the board remuneration Committee of the Company.

The Committee also reviews the policies pertaining to the remuneration and perquisites of the executives of the Group.

Remuneration Policy A primary objective of compensation packages is to attract and retain a highly qualified and experienced work force, and reward performance. These compensation packages should provide compensation appropriate for each business within the Group and commensurate with each employee’s level of experience and contribution, bearing in mind the business performance and long-term shareholder returns. 161 271 151 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

NOMINATION COMMITTEE REPORT

Composition of the Committee Re-election of Directors at the Annual General Nomination Committee consists of one Independent Non- Meeting Executive Director, one Non-Executive Director and two Mr. M.H. Wijewardene and Ms. O.D. Gunawardena being Executive Directors as at the end of the reporting period, Directors appointed to the Board during the financial year 31st March 2019. being eligible would present themselves for re-election at the forthcoming Annual General Meeting in terms of Article 24 (10) Nomination Committee Members of the Articles of Association of the Company. Mr. A.M. Pandithage – Chairman – Executive Director In terms of Article 24 (4) of the Articles of Association of the Mr. K.D.D. Perera – Non-Executive Director Company, Mr. D. Sooriyaarachchi retire by rotation and being Mr. M.H. Jamaldeen – Independent Non-Executive Director eligible offer himself for re-election and the shareholders Mr. H.A. Pieris – Group CEO – Executive Director (Resigned will be requested to re-elect him at the forthcoming Annual w.e.f. 31st October 2018 General Meeting.

Brief profiles of the Directors are given on pages 18 to 21 of Appointment of Over 70 Years Director this Annual Report. Mr. S.H. Goodman being over 70 years of age was appointed as a Director at the last Annual General Meeting Responsibilities and Duties of the Committee held on 26th June 2018 for a period of one year in terms of Section 211 of the Companies Act No. 07 of 2007. zz Consideration of making any appointment of new Directors Mr. Goodman has intimated that he does not wish to present or re-electing current Directors. himself for re-appointment in terms of Section 211 of the zz Provide advice and recommendations to the Board on any Companies Act No. 07 of 2007 at the forthcoming Annual such appointment. General Meeting and would thus cease to be a Director on conclusion of the Annual General Meeting on 25th June 2019. zz Review criteria such as qualifications, experience and key attributes required for eligibility to be considered for appointment to the Board and Key Management Personnel Appreciation in the Company. I also appreciate the contribution made by Mr. H.A. Pieris who zz Consider if a Director is able to and has been adequately served as a member of the Committee and resigned w.e.f. carrying out his or her duties as a Director taking into 31st October 2018. consideration the Director’s number of listed Company Boards on which the Director is represented and other I wish to take this opportunity to thank all members who principal commitments. served in the Committee and for their contribution to the deliberations of the Committee during the period. zz Review the structure, size, compensation and competencies of the Board and make recommendations to the Board with regard to any changes. zz Recommend the requirements of new expertise and succession arrangements for retiring Directors. Mohan Pandithage zz Recommend on any other matter referred to it by the Board Chairman – Nomination Committee of Directors. 16th May 2019 Colombo Meetings of the Committee During the reporting period, Nomination Committee meetings were not held, whereas appointments were approved by the Board via circular resolutions. 152 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship

RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

Preamble Role and Responsibilities The Board established the Related Party Transactions Review The mandate of the Committee is derived from the Code and Committee (RPTRC) in terms of the Code of Best Practice the Rules and is as follows: on Related Party Transactions issued by the Securities and zz To review in advance all proposed related party transactions Exchange Commission of Sri Lanka (the “Code”) and Section of the Group either prior to the transaction being entered 9 of the Listing Rules of the Colombo Stock Exchange into or, if the transaction is expressed to be conditional on (the “Rules”). such review, prior to the completion of the transaction.

zz Seek any information the Committee requires from Composition of the Committee Management, employees or external parties with regard to The Related Party Transactions Review Committee consists any transaction entered into with a related party. of two Independent Non-Executive Directors, and one zz Obtain knowledge or expertise to assess all aspects of Executive Director and is chaired by an Independent proposed related party transactions where necessary Non-Executive Director. including obtaining appropriate professional and expert advice from suitably qualified persons.

The following Directors serve on the Committee: zz To recommend, where necessary, to the Board and obtain Mr. D. Sooriyaarachchi – their approval prior to the execution of any related party Chairman Independent Non-Executive Director transaction. Mr. D.K. de S. Wijeyeratne – Independent Non-Executive zz To monitor that all related party transactions of the entity Director (Appointed w.e.f. 14th May 2018) are transacted on normal commercial terms and are not prejudicial to the interests of the entity and its minority Mr. M.H. Wijewardene – Executive Director – appointed w.e.f. shareholders. 5th February 2019 Mr. G.J. Walker Non-Executive Director – Resigned zz Meet with the Management, Internal Auditors/External 29th November 2018 Auditors as necessary to carry out the assigned duties. Mr. H.A. Pieris – Group CEO Executive Director – Resigned zz To review the transfer of resources, services or obligations 31st October 2018 between related parties regardless of whether a price is charged.

Mr. J.A. Sethukavalar Independent Non-Executive Director zz To review the economic and commercial substance of both of Singer Finance (Lanka) PLC – participating by invitation recurrent/non-recurrent related party transactions represents Singer Finance (Lanka) PLC. zz To monitor and recommend the acquisition or disposal of substantial assets between related parties, including Brief profiles of the members are given on pages 18 to 21 of obtaining “competent independent advice” from this Annual Report. independent professional experts with regard to the value of the substantial assets of the related party transaction. The above composition is in compliance with the provisions of the Code regarding the composition of the Related Party Policies and Procedures Adopted by the RPTRC for Transactions Review Committee. Reviewing Related Party Transactions (RPTs) Hayleys Group Services (Pvt) Ltd. functions as the Secretary to 1. Relevant information to capture RPTs are fed into the the Related Party Transactions Review Committee. Company Data Collection System. 2. All officers concerned are informed of the applicable Meetings of the Committee regulatory requirements relating to the reporting of RPTs. During the year ended 31st March 2019, the Committee 3. Key Management Personnel (KMPs) and their Close Family met three times. Attendance by the Committee Members Members (CFMs) are identified half yearly together with at these meetings is given in the table on page 147 of the their NIC numbers and business registration numbers. This Annual Report. information is in the system. 161 271 153 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Related Party Transactions Review Committee Report

4. Systems are updated with KMP and their CFM details on a half yearly basis or as and when the need arises in the event of a material change. 5. Data is extracted from the system, verified and validated. 6. All Managers are advised to report RPTs to the Finance Director who has been identified as the Focal Point, for this purpose. 7. Data is shared with the Finance Director and the Company Secretaries to meet the regulatory requirements if required.

Task of the Committee The Committee reviewed the related party transactions and their compliance and communicated to the Board.

The Committee in its review process recognised the adequacy of the content and quality of the information forwarded to its members by the Management and in compliance with Section 9 of the CSE Listing Rules.

Related Party Transactions are disclosed in the Note 39 to the Financial Statements.

Reporting to the Board The Minutes of the RPTRC meetings are tabled at Board meetings enabling all Board members to have access to same.

Appreciation I appreciate the contribution made by Mr. G. J. Walker and Mr. H. A. Pieris who served as members of the Committee and resigned during the year.

I Wish to take this opportunity to thank all members who served in the Committee and for their contribution to the deliberations of the Committee during the period.

Deepal Sooriyaarachchi Chairman – Related Party Transactions Review Committee 16th May 2019 Colombo 154 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship

RISK MANAGEMENT

Protecting Ourselves

Risk is an integral part of any business. It is a matter of zz To optimise risk/return decisions by taking them as closely identifying the sources of risk, their likelihood of occurrence as possible to the business, while establishing strong and and impact, and then developing a comprehensive framework independent review and challenge structures. to address them. Such a systematic approach also raises a zz To ensure that business growth plans are properly few questions, like determining one’s appetite for risk and supported by effective risk infrastructure. establishing thresholds, bearing in mind that risk and return go hand in hand. So it’s a question of striking a balance and zz To manage risk profile to ensure that specific financial managing risk. deliverables remain possible under a range of adverse business conditions.

Over the years, Singer has developed a set of clear risk zz To help executives improve the control and co-ordination of management objectives and a well-established strategy to risk taking across the business. deliver them, through core risk management processes. The Company’s approach is to provide direction on At a strategic level, our risk management objectives are – understanding the principal risks to achieving the Company strategy; establishing risk appetite; and establishing and zz To identify the Company’s significant risks. communicating the risk management framework. The process zz To formulate the Company’s risk appetite and ensure that is then broken down into five steps: identify, assess, control, business profile and the plans are consistent with it. report, and manage/challenge.

The Company’s risk management strategy is broadly unchanged from 2011.

The Risk Management Process During the year under review, the Company continued to review and improve its risk management function in line with its risk management objectives.

Steps Activities

Data Collection and Analysis zz The Management Information System (MIS) to pick-up relevant business-critical information.

zz Review and validation before it is submitted to Senior Management.

Assess zz Agree and implement measurement and reporting standards and methodologies.

Control zz Establish key control processes and practices, including limit structures, impairment allowance criteria and reporting requirements.

zz Monitor the operation of the controls and adherence to risk direction and limits.

zz Provide early warning of control or appetite breaches.

zz Ensure that risk management practices and conditions are appropriate for the business environment.

Report zz Interpret and report on risk exposures, concentrations and risk-taking outcomes.

zz Interpret and report on sensitivities and Key Risk Indicators.

zz Communicate with relevant parties.

Manage zz Review aspects of the Company’s risk profile.

zz Assess new risk-return opportunities.

zz Advise on optimising the Company’s risk profile.

zz Review and challenge risk management practices. 161 271 155 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Risk Management

Internal, External and Corporate Audit Internal, external and corporate audits are crucial in the risk The Group’s system of internal controls covers all policies management process. Reports on the Group’s operational and procedures, enabling significant strategic and operational and financial systems by these audits are reviewed and risks to be managed. action taken to manage any risks that have been identified. Significant audit findings by the Auditors are immediately The internal audit team meets with the Finance Department reviewed by the Board-appointed Audit Committee. every month to share information and exchange perspectives. Issues identified at these discussions as being a potential risk are immediately subjected to a fuller investigation.

Risk Mitigation Activities

Macroeconomic Factors Economic Environment

The Group’s business operations are sensitive to zz A diversified portfolio of products and brands with a wide range of offers economic conditions and in particular to levels targeted at different consumer groups. of consumer spending. Any delay in economic zz A Broad geographic spread. recovery could affect consumer expenditure and zz The Board and the Senior Management Team regularly review the impact of therefore our revenue. There is an ongoing risk the economic conditions on the Group’s budget and strategic plans. to our business in terms of increases in the cost of products due to rupee depreciation. zz Emphasise excellent quality, service, value for money and up-to-date product offers, we aim to broaden our appeal to customers.

zz Renewal and transformation plan to improve our business performance irrespective of macroeconomic factors strategy and business planning which takes into account varying economic scenarios.

Market Specific Characteristics

Seasonality – A substantial proportion of revenue zz Financial planning takes into account expected peaks and troughs during and operating profit is generated during the the year and the business is run accordingly. fourth financial quarter, which includes the zz Increasing the proportion of internal promotion and various offers, which Christmas and New Year season. Adverse gives a regular stream of income over the course of the year. trading in this relatively short period is likely to impact significantly the full year’s results.

Adverse Weather-Frequent floods, droughts zz Rescheduling of HP in affected areas. and other extreme weather conditions affected zz Insurance scheme for HP customers. consumers income levels and paying ability zz Discount offer for repairs and replacement. specially in agricultural area affect achieving planed revenue and collections.

Price Deflation – Price deflation has been a zz Effective launches of new technologically evolved products as it becomes common feature across most electrical goods available to the market. categories for a number of years, primarily zz Growth of services-related business to increase the number and value of driven by technological advances and improved non-product sales. production efficiencies. zz Improve gross profit in renovated showrooms.

zz Control of stock and strong management of clearance and exit routes. 156 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Risk Management

Risk Mitigation Activities

Competition

Competitors reduce the Group’s market share zz Renovation and transformation plan is improving our showrooms, cost and/or drive down margins in specific markets. structure and service across all channels.

zz Continuing development of strong international brands.

zz Ensuring our prices offer good value, including a customer price index.

zz Building stronger relationships with suppliers.

zz Expand and improve after-sales service network.

The e-commerce sites driven slowly by revenue zz Revamp the Company web site and increased promotional awareness valuations are selling products well below the through the web site. costs, thereby forcing all parties to reduce zz Make existing network to free delivery for web purchase. the margins. zz Set up pick-up store with additional discount for selected items.

zz Combine with deal sites.

zz Active engagement and promotion on social media.

Risk that we fail to capitalise on new technology zz Strong supplier relationships. or emerging trends to maximise revenues and zz Delivery of Customer Plan to respond to identified changes in technology. fail to meet the expectations of customers. zz Showroom renovation to take into account emerging trends in showroom layouts.

zz Exciting product launches to make our showrooms the destination for the latest technology.

zz Continued focus on ensuring an excellent range across all price points.

zz Customer service training for sales staff and product workshops to improve product knowledge.

zz A loyalty programme that encourages customers to stay with the Singer Brand and its products.

Product Risk

Products could turn out to be defective or zz The Company’s plant and machinery are rigorously maintained and inappropriate for the market in terms of price, upgraded whenever necessary. functionality or perceived value. They are zz Established quality control measures as well as product testing through also liable to be rendered obsolete. In such sampling are performed on all product lines. instances, the Company is exposed to market zz The in-house Quality Surveillance Unit tests samples of new products or risks arising from consumer dissatisfaction and components from external suppliers before order placement. consequent rejection of its products.

Operational Risk People

A failure to attract, retain, develop and motivate zz Company endeavours to recruit the best people with the right skills at all the best employees across all our showrooms times. and head office may impact our ability to deliver zz Offer training and development programmes to ensure that we retain them. our operational and strategic objectives. Labour zz Remuneration packages are benchmarked to ensure that they remain issues can affect product quality, output, market competitive, including incentive arrangements where appropriate. share as well as the Company goodwill and reputation. zz Collective agreements are in place with the labour unions to maintain an equitable balance between the interests of employer and employee and provide a basis for negotiations when issues arise.

zz Procedures have also been laid down in responding to grievances and staff complaints. 161 271 157 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Risk Management

Risk Mitigation Activities

As the business grows in size and geographical zz Clear behavioural guidance given to employees through operational scope, the potential for fraud and dishonest manuals. activity by our suppliers, customers and zz Appropriate procedures and controls set out and audited across the employees increase. business to reduce fraud risks; Internal Audit and Corporate Audit undertake detailed investigations into all business areas and report their findings to the Audit Committee.

zz Regular update and new introduction of relevant policies and procedures.

zz Whistle-blower Policy.

zz Periodical review of the internal controls by outsourced consultants.

IT Systems and Infrastructure

Any significant failure in the IT processes of our zz The Company has installed comprehensive network security. retail operations would impact our ability to trade. zz Regular backups of all databases and mission-critical information.

zz Off-site disaster-recovery system.

zz Regular follow-up reviews are conducted on recommendations given by external IT risk assessment team.

zz Investment in IT system improvements and innovating to improve business efficiency.

zz Extensive controls and reviews to maintain integrity and efficiency of IT infrastructure and data.

Supply Chain

Timely distribution of products to our retail zz Regular review of distribution plan. outlets is crucial. We work with a number of zz Monthly operational meetings to review the forecast, level of inventory and key overseas and local suppliers our business, procurement requirement etc. could be at risk of both interruption of supply zz Long-standing relationships with many suppliers help to minimise risks in and of failure of such key suppliers and service this area. providers. zz Reduce dependability on a single service provider.

Asset Risk

Risks associated with the physical assets of the zz All such assets are insured against all identifiable risks.

Company include the destruction, loss or theft zz The relevant insurance policies are subject to a comprehensive annual as well as technical and other defects. review, with modifications made as deemed necessary.

zz Procedures in place to control technical and other defects include purchasing from reputable suppliers who comply with acceptable standards on product and service quality; active, standards-based (ISO 9001) quality assurance at all manufacturing facilities, distribution centres and service centres; and the maintenance of adequate spare parts.

zz Provisioning is also made against obsolete inventory, warranty claims and doubtful debtors. Warranty costs are shared with the Company’s partners. The extended warranty cost is comprehensively covered by a well-reputed insurance company. 158 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Stewardship Risk Management

Risk Mitigation Activities

Financial Risk Liquidity Risk

Inadequate liquidity can have an adverse zz The liquidity position of the Company is regularly reviewed and reported to impact on ongoing operations, marketing and the Board. investment in new products and brands. zz Projected net borrowings are covered by committed banking facilities and a healthy industry-related gearing ratio is maintained.

zz The Company’s good relationships and facilities with many banks and other sources of finance ensure reliable access to funds.

Interest Rate Risk

Increase in interest rates will have an adverse zz Fluctuating interest rates are minimised by striking a balance between short impact to the profitability. and long-term borrowings.

zz Floating-rate debentures are sometimes issued to capitalise on existing interest rates.

zz The Company’s strong brand strength and financial dependability help ensure ready access to funds at attractive rates.

Credit Risk

The Company is exposed to credit risk in the zz Branch Managers act as del credere agents. form of financial loss when a customer reneges zz Management undertakes a thorough appraisal of the client before credit is on a hire purchase agreement. Such exposure extended. cannot be avoided entirely since consumer zz Credit appraisals of dealers are undertaken to ascertain whether they have credit is an integral part of the Company’s retail the capacity to pay for goods ordered; in doubtful cases, a bank guarantee operations and is used to encourage and enable or security deposit is requested. consumers to purchase. zz Details of customers and dealers who have defaulted on payments are recorded in a database, accessible to those staff whose duty is to undertake credit evaluations of customers and dealers.

zz Risk-adjusted pricing.

zz A fully-equipped and trained Credit Supervision team is available.

Investment Risk

While investment in new products and zz Appraisals are carried out before an investment is made. geographical expansion is vital for the Company zz A due diligence study ensures that projected budgets and forecasts can to remain competitive, it raises fresh risks. be met and examines the impact of technological and other factors on the investment decision.

zz Post-investment analysis and performance tracking is in place including financial and customer measures through balance scorecard. 161 271 159 FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Risk Management

Risk Mitigation Activities

Other Risk Governance Risk

These are risks to the Company arising from zz Preventive action has been designed by the Company’s Legal Department. non-compliance with relevant health, safety and zz Frequent internal, external and corporate audits-monitor compliance. environmental statutes and leading to loss of zz The Company’s Management culture stresses ethical performance in this reputation and goodwill, possible litigation and area. International best practices are followed wherever possible. financial loss. zz Quality surveillance helps protect the Company against litigation and warranty claims. Provisioning ensures that such claims do not have an adverse impact on operational and other aspects of the Company.

zz Detailed, established procedures to ensure product integrity.

zz Group Compliance Officer reviews reports forwarded to the Audit Committee to ensure compliance with laws and policies.

Socio-economic Risks

Sri Lanka’s socio-economic and political zz Management reviews prices in comparison to inflation and negotiates with environment has an impact on the consumer suppliers for lower prices and credit terms. durables business as well as the investment climate.

Environment and Climate Change

Aside from the general risks to humankind zz The use of alternative materials mitigates this risk while simultaneously posed by climate change, a specific business opening up new marketing opportunities. risk to which the Company is exposed concerns zz Collaborate with Central Environmental Authority to assist in e-waste project. possible shortages of essential raw materials, zz All factories, warehouse and service centres complied with the requirement such as wood for the manufacture of furniture of environment regulations. and risks of environment pollution due to waste material. zz Introduction of energy saving appliances.

Caveat

Although the key sources of risk and their zz The Company is confident that all material risk factors have been adequately mitigation have been discussed in this assessed and managed to ensure the uninterrupted and profitable document, no assurance can be given that the continuance of the business. Company is fully-protected against all possible risks. As noted in the opening paragraph, the best that can be achieved is reasonable management of risks through a sound operational framework that identifies, evaluates and mitigates the negative impacts in a timely manner at multiple levels. 160 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 101 161 271 161 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

FINANCIAL REPORTS

162 FINANCIAL CALENDAR

163 170 171 176 ANNUAL REPORT OF THE BOARD OF STATEMENT OF INDEPENDENT STATEMENT OF PROFIT DIRECTORS ON THE AFFAIRS OF DIRECTORS’ AUDITORS’ OR LOSS AND OTHER THE COMPANY RESPONSIBILITY REPORT COMPREHENSIVE INCOME

177 178 181 183 STATEMENT OF FINANCIAL STATEMENT OF STATEMENT OF NOTES TO THE POSITION CHANGES IN EQUITY CASH FLOWS FINANCIAL STATEMENTS 162 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports

FINANCIAL CALENDAR

Financial Calendar – 2018/19

Annual Report 2017/18 Approved 14th May 2018 Forty Third Annual General Meeting 26th June 2018

Interim Financial Statements in Terms of Rule 7.4 of the Colombo Stock Exchange Released to CSE For the three months ended 30th June 2018 (Unaudited) 8th August 2018

For the six months ended 30th September 2018 (Unaudited) 12th November 2018 For the nine months ended 31st December 2018 (Unaudited) 8th February 2019 For the twelve months ended 31st March 2019 (Unaudited) 16th May 2019

Annual Report and Annual General Meeting Annual Report 2018/19 Approved 16th May 2019 Forty Fourth Annual General Meeting 25th June 2019 101 271 163 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

The Board of Directors of Singer (Sri Lanka) PLC has The Financial Statements duly signed by the Directors are pleasure in presenting their Report on the Affairs of the provided on pages 176 to 270 in this Annual Report. Company together with the Audited Financial Statements of Singer (Sri Lanka) PLC and the Audited Consolidated Accounting Policies Financial Statements of the Group for the 12 months ended 31st March 2019. The accounting policies adopted in preparation of the Financial Statements are provided in detail in the Notes to the Financial Statements on pages 183 to 209 The Company/ Review of the Year Group has consistently applied the accounting policies as set Chairman’s Message, (pages 14 to 15), the Group Chief out in Note 2 to all periods presented in these Consolidated Executive Officer’s Review, (pages16 to 17) and Management Financial Statements. Discussion and Analysis (pages 35 to 99), describe the Company’s affairs and the Group’s business and mention Property, Plant and Equipment important events that occurred during the year and up to the date of this Report. Financial results of the Company/Group During the period under review, the Company and the are elaborated on pages 35 to 42 These reports together with Group invested a sum of Rs. 459,376,293/- (2017/18 – the Audited Financial Statements reflect the state of affairs of Rs. 600,451,154/-) and Rs. 733,580,136/- (2017/18 – the Company/Group. Rs. 887,107,521/-) in property, plant and equipment.

Details of Property, Plant and Equipment and Intangible Assets Principal Activities and their movements are given in Notes 11 and 12 to the The Company is engaged in Retail and Wholesale Marketing, Financial Statements respectively. Details of freehold land and Financing, Assembling and Manufacturing and in Financial buildings are given in Note 11.7 to the Financial Statements. Services. The Company markets Consumer Electronics, Home Appliances, Mobile and smart Phones, Personal Computers, Market Value of Properties Laptops, Furniture, Domestic and Industrial Sewing Machines, Agriculture Equipment, and provides Financing through Hire The freehold property of the Company/Group is revalued by Purchase. In addition, the Company manufactures and sells an Independent Qualified Valuer when there is a substantial Furniture, Water Pumps and assembles and sells Motor Cycles difference between the fair value and the carrying amount of and Two Wheel Tractors. The Company also acts as a Bill the freehold property. Company/Group reviews its assets once Collection Agent for banks, Mobile service providers, National in each reporting date. Water Supply and Drainage Board, Ceylon Electricity Board and is also a sub agent for Western Union. The most recent valuation was carried out as at 31st March 2019. The details of the valuation are given in Note 11.6 to the Financial Statements on page 219. in this Annual Report. Independent Auditors’ Report The Independent Auditors’ Report on the Financial Statements Directors’ Responsibilities is given on pages 171 to 175 in this Annual Report. The Statement of the Directors’ Responsibilities is given on page 170. Financial Statements The Financial Statements for the twelve months ended 31st Corporate Governance March 2019 are in accordance with the Sri Lanka Accounting Standards, SLFRSs/LKASs, issued by The Institute of Chartered The Company has complied with Corporate Governance Accountants of Sri Lanka and the requirements of Section 151 rules laid down by The Institute of Chartered Accountants of (and Section 153 for consolidated entity) of the Companies Sri Lanka, and listing rules of the Colombo Stock Exchange Act No. 07 of 2007. The Corporate Governance Section on pages 102 to 147 describes the good Corporate Governance Principles adopted by the Company. 164 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

Profit and Appropriations

For Twelve Months Ended For Fifteen Months Ended 31st March 2019 31st March 2018 Rs. Rs.

Group Profit Before Tax for the Twelve Months Ended 31st March after Deducting all Expenses, Providing for Known Liabilities and Depreciation Amounts to 672,129,112 2,049,052,146 From this has to be deducted the Income Tax Expenses (286,148,528) (828,757,533) Non-controlling Interest (207,123,452) (111,429,890) Making a Profit for the Period 178,857,132 1,108,864,723 Total Other Comprehensive Income/(Loss) (15,510,222) (11,626,151) Total Other Comprehensive Income/(Loss) – Non-controlling Interest 71,263,960 (65,182,518) To this has to be added a Balance Brought Forward from the Previous Year 2,795,477,725 2,600,892,894 Interim Dividend for the Period – Gross – Rs.0.65 per Share (2017/18 – Rs. 2.20 per share) (244,158,740) (826,383,426) Adjustment on WHT on dividend paid in terms of Bonus Issue (8,788,026) – Adjustment due to Realisation on Revaluation Surplus 24,389,920 28,213,846 Adjustment due to changes in ownership interest in subsidiaries (9,940,099) 1,347,099 Adjustment on error correction in prior year 43,358,242 – Adjustment of initial application of SLFRS 9 and SLFRS 15, Net of Tax (472,032,585) – Leaving a Total Available for Appropriation 2,362,917,307 2,836,126,468 Transfer to Reserve Fund (27,086,695) (40,648,742) Final Dividend Approved 2018/19 – Nil (2017/18 – Nil) – – Making a total Appropriation of (27,086,695) (40,648,742) Leaving a balance on Group Basis to be Carried Forward of 2,335,830,612 2,795,477,725 The Balance to be Carried Forward on Company Only Basis will be 151,601,145 626,088,413

Dividends Commitments and Contingencies In terms of Article 7 of the Articles of Association of the Commitments and Contingent Liabilities of the Group are Company, an interim dividend of Rs.0.65 per share was paid disclosed in the Note 37 to the Financial Statements. on 18th April 2019 for the twelve months financial period ended 31st March 2019. The Board signed a Certificate Events after the Reporting Period of Solvency stating that the Company would satisfy the Solvency Test immediately after the said distribution is made No circumstances have arisen since the reporting date, which in accordance with Section 57 of the Companies Act No. would require adjustment or disclosure except for the details 07 of 2007. The Board of Directors obtained a Certificate of given in Note 38 to the Financial Statements on page 267. Solvency from the Auditors prior to the date of dispatch of the dividend payment. Statutory Payments The declaration relating to statutory payments is made in the Reserves (Excluding Non-controlling Interest) Statement of Directors’ Responsibility on page 170. Group reserves and retained equity as at 31st March 2019 amounted to Rs. 6,317 million vs Rs. 6,209 million as at 31st Board Committees March 2018. The break-up and movement are shown in the Audit Committee Statement of Changes in Equity in the Financial Statements. Following are the names of the Directors comprising the Audit Committee of the Board: Stated Capital Mr. D.K. de S. Wijeyeratne – As per the terms of the Companies Act No. 07 of 2007, the Chairman (Appointed w.e.f. 1st April 2018) Stated Capital of the Company was Rs. 626,048,050/- as at 31st March 2019 and was unchanged during the twelve Mr. D. Sooriyaarachchi months period. Details are given in Note 21 to the Financial Mr. M.H. Jamaldeen Statements on page 237. 101 271 165 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

The Report of the Audit Committee on pages 148 to 149 sets Directors’ Indemnity and Insurance out the manner of compliance by the Company in accordance The Directors and Officers of the Company and subsidiaries with the requirements of the Rule 7.10 of the Listing Rules of are covered in respect of Directors’ and Officers’ liability by the Colombo Stock Exchange on Corporate Governance. the Insurance Policy obtained by the Company, as per the provisions in Article 44. Remuneration Committee Following are the names of the Directors comprising the Issue of Listed Debentures Remuneration Committee of the Board: The Company has issued 12% three year debentures of Mr. M.H. Jamaldeen – Chairman Rs. 656.8 million at fixed rate during the year. Mr. D. Sooriyaarachchi Mr. D.K. de S. Wijeyeratne(Appointed w.e.f. 14th May 2018) Share Information and Substantial Shareholdings Mr. A.M Pandithage – Observer The distribution of shareholdings, public holding percentage, market value of shares, twenty largest shareholders and The Report of the Remuneration Committee on page 150 record of scrip issues are given on pages 275 to 279. contains a statement of the remuneration policy. The details of the aggregate remuneration paid to the Executive and Earnings per share, dividends per share, dividend pay out and Non-Executive Directors during the period under review are net assets value per share are given in the Financial Highlights given in Note 8 to the Financial Statements on page 214. on page 10 of this Annual Report.

Board Nomination Committee Directorate and Shareholding Following are the names of the Directors comprising the Nomination Committee of the Board: The names of the Directors of the Company as at 31st March 2019 and their brief profiles are shown on pages 18 to 21 and Mr. A.M. Pandithage – Chairman the Inner Back Cover. Mr. K.D.D. Perera Mr. H.A. Pieris (Resigned w.e.f. 31st October 2018) Mr. M.H. Wijewardene was appointed as the Chief Executive Officer of Singer (Sri Lanka) PLC on 1st November 2018. Mr. M.H. Jamaldeen Mr. D.K. de S. Wijeyeratne was appointed as an Independent The Report of the Board Nomination Committee on page Non-Executive Director with effect from 1st April 2018. 151 sets out the manner of compliance by the Company in accordance with the requirements of the Code of Best Ms. O.D. Gunewardene was appointed as an Independent Practice on Corporate Governance issued by The Institute Non-Executive Director with effect from 1st August 2018. of Chartered Accountants of Sri Lanka. Mr. L.N.S.K. Samarasinghe was appointed as the Alternate Related Party Transactions Review Committee Director to Mr. M.H. Jamaldeen and Mr. H.P.S. Perera was Following are the names of the Directors comprising the Board appointed as the Alternate to M.H. Wijewardene with effect Related Party Transactions Review Committee: from 22nd January 2019. Mr. D. Sooriyaarachchi – Chairman, Mr. H.A. Pieris resigned from the Board with effect from Mr. D.K. de S. Wijeyeratne – Appointed w.e.f. 14th May 2018, 31st October 2018 and Mr. L.N.S.K. Samarasinghe the Mr. M.H. Wijewardene – Appointed w.e.f. 6th February 2019 Alternate Director to Mr. H.A. Pieris ceased to be on the Mr. H.A. Pieris – Resigned 31st October 2018, Board with effect from 31st October 2018. Mr. G.J. Walker – Resigned 29th November 2018, Mr. G.J. Walker resigned from the Board with effect from By Invitation – 29th November 2018. Mr. J.A. Sethukavalar – Director of Singer Finance (Lanka) PLC participating on invitation to represent Singer Finance (Lanka) PLC. Mr. S.H. Goodman being over 70 years of age was appointed as a Director at the last Annual General Meeting held on The Board of Directors formed the Related Party Transactions 26th June 2018 for a period of one year in terms of Section Review Committee to assist the Board in reviewing all related 211 of the Companies Act No. 07 of 2007. Mr. Goodman party transactions in accordance with the requirements of has intimated that he does not wish to present himself for Section 9 of the Listing Rules of the Colombo Stock Exchange. reappointment in terms of Section 211 of the Companies Act No. 07 of 2007 at the forthcoming Annual General Meeting and The Report of the Board-Related Party Transactions Review would thus cease to be a Director on conclusion of the Annual Committee on pages 152 to 153 sets out the manner of General Meeting on 25th June 2019. compliance by the Company. 166 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

Mr. M.H. Wijewardene and Ms. O.D. Gunawardena being Messrs A.M. Pandithage, K.D.D. Perera, S.C. Ganegoda and Directors appointed to the Board during the Financial year M.H. Jamladeen were common Directors of Hayleys PLC and being eligible would present themselves for re-election at the Singer (Sri Lanka) PLC. forthcoming Annual General Meeting in terms of Article 24 (10) of the Articles of Association of the Company. Singer Industries PLC Mr. V.G.K. Vidyaratne acquired 16 shares and Mr. K.D. In terms of Article 24 (4) of the Article of Association of the Kospelawatta acquired 320 shares as a result of capitalisation Company, Mr. D. Sooriyaarachchi retires by rotation and being of reserves made on 11th September 2018 in the ratio of 8:5 eligible offer himself for re-election and the shareholders Ordinary Shares held as at 11th September 2018. will be requested to re-elect him at the forthcoming Annual General Meeting. Singer (Sri Lanka) PLC

Directors’ Interests and Interest Register Shareholding 31st March 2019 Details of transactions with Director related entities are Number of Shares disclosed in Note 39. to the Financial Statements on pages 267 to 269 and have been declared at the Board meetings, Mr. A.M. Pandithage – pursuant to Section 192 (2) of the Companies Act No. 07 of Mr. K.D.D. Perera 6,935,913 2007. Mr. D. Sooriyaarachchi – Mr. D.H. Fernando – Directors’ Remuneration Executive Directors remuneration is structured within an Mr. M.H. Jamaldeen – established framework by the Board’s Remuneration Mr. M.H. Wijewardene (CEO) – Committee to whom this task has been entrusted. The Appointed w.e.f. 1st November 2018 – Directors are of the opinion that the framework assures Mr. S.C. Ganegoda – appropriateness of remuneration and fairness for the Company. The total remuneration of the Executive Directors Mr. S.H. Goodman – for the reporting period ended 31st March 2019 is given on Appointed w.e.f 26th June 2018 – Note 8 and 39.3 includes the value of perquisites granted to Ms. D.K. De S. Wijeyeratne – them as part of their terms of service. Appointed w.e.f 1st April 2018 –

The total Directors fees of Non-Executive Directors for the Mr. O.D. Gunewardene – reporting period ended 31st March 2019 is given in Note 8 Appointed w.e.f 1st August 2018 – is determined according to the scales of payment decided Mr. K.K.L.P. Yatiwella upon by the Board. The Board is satisfied that the payment (Alternate to Mr. S.C. Ganegoda) – of remuneration is fair to the Company. Mr. L.N.S.K. Samarasignhe (Alternate to Mr. M.H. Jamaldeen) – Directors’ Interest in Shares Appointed 22nd January 2019 17,372 The following transactions of shares of the Directors/Alternate Mr. H.P.S. Perera (Alternate Directors of the respective companies were reported during to Mr. M.H. Wijewardene) – the reporting period. Appointed w.e.f 22nd January 2019 – Mr. G.J. Walker – Singer (Sri Lanka) PLC Resigned w.e.f 29th November 2018 – On the 15th of October 2018, Hayleys PLC purchased the Mr. M.H. Wijewardene balance 35,562,883 (9.47%) ordinary shares held by Retail (Alternate to Mr. G.J. Walker) – Holdings (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price Ceased to be Alternate Director w.e.f. of Rs. 47.00 per share upon Retail Holdings (Sri Lanka) BV 29th November 2018 – exercising their option to sell its shares to Hayleys PLC as previously agreed at the time of the Mandatory Offer made in Mr. H.A. Pieris – 2017. After accepting this offer, Hayleys PLC together with its Resigned w.e.f. 31st October 2018 6,000 Group Companies holds 90.43% of Singer (Sri Lanka) PLC. Mr. L.N.S.K. Samarasignhe (Alternate to Mr. H.A. Pieris) – Messrs. S.H. Goodman and G.J. Walker were representatives Ceased to be Alternate Director of Retail Holdings (Sri Lanka) BV. w.e.f 31st October 2018 17,372 101 271 167 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

Subsidiaries

Shareholding of Singer Shareholding of Singer Shareholding of Finance (Lanka) PLC Industries (Ceylon) PLC Regnis (Lanka) PLC 31st March 2019 31st March 2019 31st March 2019 Number of Shares Number of Shares Number of Shares

Common Directors of the Singer Group Companies Mr. A.M. Pandithage – – – Mr. K.D.D. Perera – – – Mr. M.H. Wijewardene (CEO Singer Group) – – – Mr. H.A. Pieris (Resigned) 102,335 – 1,000 Mr. D. Sooriyaarachchi – – Mr. M.H. Jamaldeen – – – Mr. D.H. Fernando – – – Mr. D.K. de S. Wijeyeratne – – – Ms. O.D. Gunewardene – – – Mr. G.J. Walker (Resigned) – – – Mr. S.C. Ganegoda – – – Mr. S.H. Goodman – – – Mr. L.N.S.K. Samarasinghe (Alternate) 325,000 10,670 14,000 Mr. H.P.S. Perera (Alternate) 79,008 Mr. K.K.L.P. Yatiwella (Alternate) – – – Directors of Singer Finance (Lanka) PLC Mr. M.Y.A. Perera – – – Mr. J.A. Setukavalar – – – Mr. M.P.A. Salgado 12,224 – – Mr. T.A. Amarasuriya (CEO) 50,155 – – Mr. R.S. Wijeweera (Retired) 37,892 – – Mr. J.M.J. Perera – – 800 Ms. D.G. Talpahewa – – – Mr. L.S.S. Perera – – – Mr. C.A. Samararasinghe (Alternate) (Resigned) – – – Mr. S. Ramanathan (Alternate) (Resigned) – 17329 35,102 Directors of Singer Industries (Ceylon) PLC/ Regnis (Lanka) PLC Mr. V.G.K. Vidyaratne 250,555 260 60,155 Mr. K.D.G. Gunaratne – – – Mr. N.L.S. Joseph – – – Mr. K. Kospelawatte – 520 Mr. A.C.M. Irzan (Alternate) – – – 168 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

Debentures Regnis (Lanka) PLC There were no debentures held by Directors of the Company. Mr. A.M. Pandithage – Chairman Mr. M.H. Wijewardene – Group CEO Independence of Directors Mr. D.K. de S. Wijeyeratne Mr. D. Sooriyaarachchi Mr. V.G.K. Vidyarathne Mr. M.H. Jamaldeen Mr. M.H. Jamaldeen Mr. D.H. Fernando Mr. K.D.G. Gunaratne Mr. D.K. de S. Wijeyeratne Mr. N.L.S. Joseph Ms. O.D. Gunewardene Mr. S.C. Ganegoda Mr. K.D. Kospelawatta In accordance with Rule 7.10.2 (b) of the Colombo Stock Mr. A.C.M. Irzan (Alternate to Mr K.D. Kospelawatta) Exchange (CSE) Listing Rules, Independent Directors have submitted a signed and dated declaration as per the Reality Lanka Limited specimen given in Appendix 7A of continuing Listing Rules of CSE. Mr. A.M. Pandithage Mr. M.H. Wijewardene Although, Mr. M.H. Jamaldeen serves on the Board of Mr. S.C. Ganegoda Hayleys PLC, the Parent Company, the Board of Directors of the Company has determined that Mr. M.H. Jamaldeen Singer Digital Media (Pvt) Limited nevertheless be independent as the objectivity of his role is not compromised by being on both Boards: Mr. A.M. Pandithage – Chairman Mr. M.H. Wijewardena Subsidiaries Mr. K.K.L.P. Yatiwella The names of the Directors holding office at the end of the Mr. S.C. Ganegoda reporting period ended 31st March 2019 in respect of the Mr. K.D.J.M. Perera subsidiaries are given below: Singer Business School (Pvt) Limited Singer Finance (Lanka) PLC Mr. A.M. Pandithage – Chairman Mr. M.Y.A. Perera – Chairman Mr. M.H. Wijewardena Mr. J.A. Setukavalar Mr. K.K.L.P. Yatiwella Mr. M.P.A. Salgado Mr. S.C. Ganegoda Mr. T.A. Amarasuriya (CEO) Mr. J.M.J. Perera Regnis Appliances (Pvt) Limited Ms. D.G. Talpahewa Mr. A.M. Pandithage – Chairman Mr. L.S.S. Perera Mr. M.H. Wijewardene Mr. M.H. Wijewardene Mr. K.D. Kospelawatta Mr. K.K.L.P. Yatiwella (Alternate to Ms. D.G. Talpahewa) Mr. S.C. Ganegoda Mr. N.M.P. Fernando Singer Industries (Ceylon) PLC Mr. A.M. Pandithage – Chairman Domus Lanka (Pvt) Limited Mr. D.K. de S. Wijeyeratne Mr. A.M. Pandithage – Chairman Mr. M.H. Wijewardene – Group CEO Mr. M.H. Wijewardene Mr. V.G.K. Vidyarathne Mr. M.H. Jamaldeen Employment Mr. N.L.S. Joseph The number of persons employed by the Group and the Mr. K.D.G. Gunaratne Company as at 31st March 2019 was 2,798 (2017/18– 2,617) Mr. S.C. Ganegoda and 1,827 (2017/18 – 1,781), respectively. Mr. K.D. Kospelawatta 101 271 169 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

Details of human resource initiatives are given in the The audit and non-audit fees paid to the Auditors by the Employees section of the Sustainability Report. Company and Group are disclosed in Note 8 on page 214. in this Annual Report. Corporate Governance Directors’ Declarations As far as the Directors are aware, the Auditors do not have any The Directors declare that having considered all information relationship or interest in the Company or its subsidiaries. The and explanations made available to them that – Auditors have confirmed that they do not have any relationship (a) the Company complied with all applicable laws and (other than that of Auditors) with or interest in the Company or regulations in conducting its business; any of its subsidiaries other than those disclosed above. (b) they have declared all material interests in contracts involving the Company and refrained from voting on Notice of Meeting matters in which they were materially interested; The Forty-Fourth Annual General Meeting will be held at (c) the Company has made all endeavours to ensure the Hayleys PLC, No. 400, Deans Road, Colombo 10, Sri Lanka equitable treatment of shareholders; on Tuesday 25th of June 2019 at 3.00 p.m. (d) the business is a going concern with supporting assumptions or qualifications as necessary: and The Notice of the Annual General Meeting to the shareholders is given on page 294. (e) they have conducted a review of internal controls covering financial, operational and compliance controls and risk For and on behalf of the Board, management and have obtained a reasonable assurance of their effectiveness and successful adherence herewith.

The Corporate Governance Report is given under the governance section of this Annual Report. Mohan Pandithage Donations (For Approved and Non-Approved Chairman Charities/Organisations) During the year, donations amounting to Rs. 466,250/- (2017/18 – Rs. 763,465/-) were made by the Group and donations made by the Company were Rs. 360,000/- (2017/18 – Rs. 335,220/-). Donations made by the Group and M.H. Wijewardene Company are given in Note 8. Director/Chief Executive Officer

Auditors The Financial Statements for the period under review were audited by Messrs KPMG, Chartered Accountants who offer themselves for reappointment for the ensuing year. Hayleys Group Services (Pvt) Ltd The Directors propose the reappointment of Messrs KPMG, Company Secretaries Chartered Accountants as Auditors of the Company for the Singer (Sri Lanka) PLC year 2019/20 subject to the approval of the shareholders at the Annual General Meeting. Colombo 16th May 2019 The Audit Committee reviews the appointment of the Auditor, its effectiveness and its relationship with the Company including the level of audit and non-audit fees paid to the Auditors. Details on the work of the Audit Committee are set out in the Audit Committee Report. 170 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports

STATEMENT OF DIRECTORS’ RESPONSIBILITY

The Directors are responsible under sections 150 (1), 151, The External Auditors, Messrs KPMG, Chartered Accountants 152 (1), and 153 of the Companies Act No. 07 of 2007, who will be proposed to be reappointed as the Auditors of to ensure compliance with the requirements set out therein the Company at the Annual General Meeting were provided and to prepare Financial Statements for the twelve months with every opportunity to undertake the inspections they financial period ended 31st March 2019 giving a true and fair considered appropriate to enable them to form their opinion view of the state of affairs of the Company and the Group on the Financial Statements. The report of the Auditors, shown and of the profit of the Company and the Group for the said on pages 171 to 175 sets out their responsibilities in relation financial period. to the Financial Statements. The Board has recommended that Messrs KPMG be reappointed as Auditors for the year The Directors are also responsible, under Section 148, for 2019/2020. ensuring that proper accounting records are kept to enable, determination of financial position with reasonable accuracy, Compliance Report preparation of Financial Statements and audit of such statements to be carried out readily and properly. The Directors confirm that to the best of their knowledge, all statutory payments relating to employees and the The Board accepts responsibility for the integrity and Government that were due in respect of the Company objectivity of the Financial Statements presented. The and its subsidiaries as at the balance sheet date have Directors confirm that in preparing the Financial Statements, been paid or where relevant, provided for. appropriate accounting policies have been selected and applied consistently while reasonable and prudent judgements By Order of the Board, have been made so that the form and substance of transactions are properly reflected.

The Directors confirm that the Financial Statements have been prepared and presented in accordance with the Sri Lanka Hayleys Group Services (Pvt) Ltd. Accounting Standards (SLFRSs/LKASs), Companies Act Company Secretaries No. 07 of 2007 and the Listing Rules of the Colombo Stock Singer (Sri Lanka) PLC Exchange. Further, the Financial Statements provide the Colombo information required by the Companies Act and the Listing Rules of the Colombo Stock Exchange. 16th May 2019

The Directors are of the opinion, based on their knowledge of the Company, key operations and specific inquiries, that adequate resources exist to support the Company and the Group on a going concern basis over the next year. These Financial Statements have been prepared on that basis.

The Directors have taken reasonable measures to safeguard the assets of the Company and the Group and, in that context, have instituted appropriate systems of internal control with a view to preventing and detecting fraud and other irregularities.

The Board of Directors declared an interim Dividend for the twelve month period ended 31st March 2019 and paid on 18th April 2019 in terms of the Articles of Association of the Company and in line with Section 56 of the Companies Act No. 07 of 2007. The Solvency Test was satisfied immediately after such distribution in accordance with Section 57 of the Act. 171

SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

INDEPENDENT AUDITOR’S REPORT

KPMG Tel : +94 - 11 542 6426 (Chartered Accountants) Fax : +94 - 11 244 5872 32A, Sir Mohamed Macan Markar Mawatha, : +94 - 11 244 6058 P. O. Box 186, Internet : www.kpmg.com/lk Colombo 00300, Sri Lanka.

To the Shareholders of Singer (Sri Lanka) PLC Report on the Audit of the Financial Statements Opinion Basis for Opinion We have audited the financial statements of Singer (Sri Lanka) We conducted our audit in accordance with Sri Lanka PLC (“the Company”) and the consolidated financial Auditing Standards (SLAuSs). Our responsibilities under statements of the Company and its subsidiaries (“the Group”), those standards are further described in the Auditor’s which comprise the statement of financial position as at 31st Responsibilities for the Audit of the Financial Statements March 2019, and the statement of profit or loss and other section of our report. We are independent of the Group in comprehensive income, statement of changes in equity and accordance with the Code of Ethics issued by CA Sri Lanka statement of cash flows for the year then ended, and Notes (Code of Ethics), and we have fulfilled our other ethical to the financial statements, including a summary of significant responsibilities in accordance with the Code of Ethics. We accounting policies and other explanatory Notes set out on believe that the audit evidence we have obtained is sufficient pages from 176 to 270. and appropriate to provide a basis for our opinion.

In our opinion, the accompanying financial statements of Key Audit Matters the Company and the Group give a true and fair view of the Key audit matters are those matters that, in our professional financial position of the Company and the Group as at 31st judgement, were of most significance in our audit of the March 2019, and of their financial performance and cash Company financial statements and the consolidated financial flows for the year then ended in accordance with Sri Lanka statements of the current period. These matters were Accounting Standards. addressed in the context of our audit of the Company financial statements and the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

M.R. Mihular FCA P.Y.S. Perera FCA C.P. Jayatilake FCA T.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph FCA Ms. S.M.B. Jayasekara ACA W.K.D.C Abeyrathne FCA S.T.D.L. Perera FCA G.A.U. Karunaratne FCA R.M.D.B. Rajapakse FCA Ms. B.K.D.T.N. Rodrigo FCA R.H. Rajan FCA M.N.M. Shameel ACA Ms. C.T.K.N. Perera ACA Principals - S.R.I. Perera FCMA(UK), LLB, Attorney-at-Law, H.S. Goonewardene ACA 172

SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

Risk Description Our response

01. Adoption of and Transition to SLFRS 15 (Revenue Recognition) Refer to Note 2.8.1 (accounting policy) and Note 3 to these Our audit procedures included; Financial Statements.

zz Evaluating the appropriateness of the selection of The Group has adopted SLFRS 15 using the cumulative effect accounting policies and management approach over method (without practical expedients) on 1st April 2018. adoption and transition applied for SLFRS 15, including Accordingly, the information presented for 2017/2018 has not the key accounting estimates and judgements made been restated and continued to be reported under LKAS 18. by the management based on the requirements of the new standards. The Group has complex and multiple revenue streams which requires significant judgements when assessing the performance zz Challenging the reasonableness of management’s key obligations and recognition of revenue under SLFRS 15. We judgements and estimates made in adopting SLFRS 15 focused on this area as recognition of revenue involved significant and preparing the transition adjustments including selection judgement and estimates made by the management including, of methods, models, assumptions and data sources. whether contracts contains multiple performance obligations. zz Evaluating the completeness, accuracy and relevance This comprises allocation of consideration to the individual of data used in adopting SLFRS 15 and preparing the performance obligation of multi-element contract as noted above, transition adjustments. assessing whether performance obligations are satisfied at a zz Communicating our views about the significant point in time or over time. qualitative aspects of the entity’s accounting practises, including accounting policies, estimates and financial Given the level of subjectivity nature of assumptions/judgements statement disclosures. involved and transition adjustments are likely to be subject to scrutiny from investors/ regulators resulted in revenue has being zz Assessing the adequacy of the financial statements considered as a key audit matter. disclosure required by SLFRS 15.

02. Impairment allowance for Trade and other Receivables including transition to SLFRS 9 Our audit procedures included: Refer to Note 2.4.5 (accounting policy) and Note 18.3 to these Financial Statements. zz Challenging the appropriateness of the selection of accounting policies based on the requirements of The Group has recognised impairment provisions relating to the new standards, our business understanding and trade and other receivables which amounts to Rs. 2,348 million industry practice. (Company – Rs. 1,654 million). zz Evaluating the appropriateness of the management Impairment allowances represent management’s best estimate of approach over adoption, transition and practical the losses expected within receivables as at the financial position expedients applied for SLFRS 9. date. They are calculated for specific assets and on a collective zz Assessing management’s new or revised processes, basis for portfolios of receivables of a similar nature. systems and controls implemented over classification, measurement and impairment assessment. The calculation of impairment allowances is inherently zz Challenging the reasonableness of management’s judgemental for any institution and the Group use subjective key assumptions/judgements over classification and assumptions/ judgements made to determine the classification measurement decisions, adopting of and preparing the category (e.g. business model and SPPI assessment), and ECL transitional adjustments. modelling (e.g. macro-economic inputs) with the adoption of SLFRS 9 on 1st April 2018. zz Identifying and testing the relevant key controls and evaluating the completeness, accuracy and relevance Accordingly, the audit was focused on impairment due to the of data used. materiality of the balances, significant management judgement zz Evaluating the appropriateness and tested the relating to classification decisions and determining expected mathematical accuracy of models applied and post- credit loss outcomes and the subjective nature of the calculation. model adjustments. 173

SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

Risk Description Our response

Given the level of subjectivity nature of significant management zz Assessing the completeness, accuracy and relevance judgements involved and transition adjustments are likely to of the disclosures required by SLFRS 9 for adoption be subject to scrutiny from investors/regulators resulted in and transition. impairment of trade receivables being considered as a key audit matter.

03. Carrying Value of Inventory Our audit procedures included: Refer to Note 2.5 (accounting policy) and Note 16 to these Financial Statements. zz Challenging the management with regard to the calculation methodology, the basis for provision and the The Group has recognised a total inventory provision of process with respect to inventory provision. Rs. 904 million (Company – Rs. 869 million) in arriving at a total inventory value of Rs. 14,126 million (Company – zz Testing the design, implementation and operating Rs. 12,135 million) effectiveness of the key controls management has established for provision computations and to ensure The Group has significant levels of inventories and significant the accuracy of the inventory provision. management judgements are taken with regard to categorisation zz Assessing the adequacy of, and movements in, of inventories into obsolete and/or slow moving and which should inventory provisions held, by recalculating a sample be therefore be considered for provision. Estimates are then of items included within the provision to ensure involved in arriving at provisions against cost in respect of slow appropriate basis of valuation. moving and obsolete inventories to arrive at valuation based on zz Evaluating, on a sample basis, whether inventories lower of cost and net realisable value. were stated at the lower of cost or net realisable value at the reporting date by comparing the sales prices of Given the level of significant management judgements and inventories subsequent to the reporting date. estimates involved this is considered to be a key audit matter. zz Evaluating the appropriateness of the assumptions used based on our knowledge and information of the client and the industry.

04. Revaluation of the Land and Buildings Refer to Note 2.3 (accounting policy) and Note 11.1 and 11.10 to Our audit procedures included: these financial statements.

zz Assessing appropriateness of the key assumptions The Group has recorded a revaluation gain of Rs. 883 million used against externally published market comparable or (Company – Rs. 454 million) by revaluing the land and buildings. industry data where available.

Management’s assessment of fair value of these land and zz Assessing the objectivity, independence, competence buildings are based on valuations performed by a qualified and qualifications of the external valuer. independent property valuer in accordance with recognised zz Assessing the adequacy of the disclosures in the industry standards. financial statements.

Estimating the fair value is a complex process which involves a significant degree of judgement and estimates in respect of price per perch of the land, capitalisation rates, value per square feet, diversity of locations and nature of the properties.

We identified assessing the valuation of land and building and investment properties owned by the Group as a key audit matter because of the complexity of the valuation, significant judgement and estimation. 174

SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

Risk Description Our response

05. Contingent Liability on Deemed VAT Assessment Refer to Note 37.4 in these Financial Statements. Our audit procedures included:

The Group has tax assessments which requires disclosures in the zz Discussions with management and those who charged financial statements. The Assessment Notice received by Singer with governance to understand the nature and status of (Sri Lanka) PLC, relating to deemed VAT is significant. tax assessment.

Commissioner General of Inland Revenue has issued assessment zz Inspecting correspondence with tax consultants and notices on Singer (Sri Lanka) PLC pertaining to an additional lawyer’s opinions obtained by the management in VAT Liability/Payment on account of Deemed VAT for seven assessing the likelihood of outflow of resources have quarters for the period 1st January 2014 to 30th September become probable. 2015. The assessment was for a Deemed VAT payment of Rs. zz 1,076 million and Penalty of Rs. 423 million totalling to Rs. 1,499 Assessing the adequacy and appropriateness of the million. Commissioner General of Inland Revenue has given Group’s disclosure on deemed VAT assessment in the determination on the appeal. Accordingly, Rs.791 million of accordance with accounting standards. Deemed VAT liability and penalty of Rs. 395 million totalling to Rs. 1,186 million is payable as a Deemed VAT liability for seven quarters for the period 1st January 2014 to 30th September 2015. The Company after carefully reviewing the advice of tax consultants, is of the opinion that there is no basis for the Company to be made liable for Deemed VAT and accordingly company has decided to appeal to the Tax Appeal Commission against the determination. Hence, no provision has been made in the Financial Statements. The outcome of the deemed VAT assessment is uncertain and as it requires the management to make significant judgements and estimates in relation to the likely outcome of these tax issues and exposures. Given the significant value relating to the Deemed VAT assessment and judgemental nature of this contingent liability, this is considered to be a key audit matter.

Other Information Responsibilities of Management and Those Charged with Management is responsible for the other information. The Governance for the Financial Statements other information comprises the information included in the Management is responsible for the preparation of Financial Annual Report, but does not include the Financial Statements Statements that give a true and fair view in accordance with and our Auditor’s Report thereon. Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the Our opinion on the Financial Statements does not cover preparation of Financial Statements that are free from material the other information and we do not express any form of misstatement, whether due to fraud or error. assurance conclusion thereon. In preparing the Financial Statements, management is In connection with our audit of the Financial Statements, responsible for assessing the Group’s ability to continue as our responsibility is to read the other information and, a going concern, disclosing, as applicable, matters related in doing so, consider whether the other information is to going concern and using the going concern basis of materially inconsistent with the Financial Statements or our accounting unless management either intends to liquidate the knowledge obtained in the audit or otherwise appears to be Group or to cease operations, or has no realistic alternative materially misstated. but to do so.

When we read the annual report, if we conclude that there Those charged with governance are responsible for overseeing is a material misstatement there in, we are required to the Company’s and the Group’s financial reporting process. communicate the matter to those charged with governance. 175

SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

whether the Financial Statements represent the underlying Auditor’s Responsibilities for the Audit of the transactions and events in a manner that achieves Financial Statements fair presentation. Our objectives are to obtain reasonable assurance about zz Obtain sufficient appropriate audit evidence regarding the whether the Financial Statements as a whole are free from financial information of the entities or business activities material misstatement, whether due to fraud or error, and within the Group to express an opinion on the Consolidated to issue an Auditor’s Report that includes our opinion. Financial Statements. We are responsible for the direction, Reasonable assurance is a high level of assurance, but is supervision and performance of the group audit. We remain not a guarantee that an audit conducted in accordance with solely responsible for our audit opinion. SLAuSs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and We communicate with those charged with governance are considered material if, individually or in the aggregate, regarding, among other matters, the planned scope and they could reasonably be expected to influence the timing of the audit and significant audit findings, including economic decisions of users taken on the basis of these any significant deficiencies in internal control that we identify Financial Statements. during our audit.

As part of an audit in accordance with SLAuSs, we exercise We also provide those charged with governance with a professional judgement and maintain professional skepticism statement that we have complied with ethical requirements in throughout the audit. We also: accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other zz Identify and assess the risks of material misstatement of the matters that may reasonably be thought to bear on our Financial Statements, whether due to fraud or error, design independence, and where applicable, related safeguards. and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate From the matters communicated with those charged with to provide a basis for our opinion. The risk of not detecting governance, we determine those matters that were of most a material misstatement resulting from fraud is higher than significance in the audit of the Financial Statements of the for one resulting from error, as fraud may involve collusion, current period and are therefore the key audit matters. We forgery, intentional omissions, misrepresentations, or the describe these matters in our Auditor’s Report unless law or override of internal control. regulation precludes public disclosure about the matter or zz Obtain an understanding of internal control relevant to when, in extremely rare circumstances, we determine that a the audit in order to design audit procedures that are matter should not be communicated in our report because appropriate in the circumstances, but not for the purpose of the adverse consequences of doing so would reasonably expressing an opinion on the effectiveness of the Company be expected to outweigh the public interest benefits of and the Group’s internal control. such communication.

zz Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and Report on Other Legal and Regulatory Requirements related disclosures made by management. As required by section 163 (2) of the Companies Act No. 07 of

zz Conclude on the appropriateness of management’s use 2007, we have obtained all the information and explanations of the going concern basis of accounting and, based on that were required for the audit and, as far as appears from the audit evidence obtained, whether a material uncertainty our examination, proper accounting records have been kept exists related to events or conditions that may cast by the Company. significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty CA Sri Lanka membership number of the engagement exists, we are required to draw attention in our Auditor’s partner responsible for signing this independent auditor’s Report to the related disclosures in the Financial Statements report is 3272. or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditor’s Report. However, future events or conditions may cause the Group to cease to continue as a going concern. CHARTERED ACCOUNTANTS zz Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and Colombo, Sri Lanka 16th May 2019 176 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Note Rs. Rs. Rs. Rs.

Revenue 3 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892 Cost of Sales (41,139,965,111) (45,632,148,268) (31,320,692,490) (36,728,240,797) Direct Interest Cost (1,265,014,487) (1,281,563,416) – – Gross Profit 16,100,415,639 18,208,592,838 12,297,196,939 14,181,792,095 Other Income 5 338,061,691 360,258,175 590,066,636 1,088,431,100 Selling and Administrative Expenses (11,919,695,025) (13,361,827,374) (10,233,588,367) (11,824,669,954) Impairment Loss on Trade Receivables 8.1 (521,421,384) (367,607,130) (212,806,334) (137,147,306) Operating Profit 3,997,360,921 4,839,416,509 2,440,868,874 3,308,405,935 Finance Income 6 207,670,679 175,549,720 453,906,643 344,598,049 Finance Cost 7 (3,240,746,377) (2,706,924,672) (2,774,862,229) (2,494,325,151) Net Finance Cost (3,033,075,698) (2,531,374,952) (2,320,955,586) (2,149,727,102) Value Added Tax on Financial Services (292,156,111) (258,989,411) (31,200,000) (52,800,000) Profit Before Tax 8 672,129,112 2,049,052,146 88,713,288 1,105,878,833 Income Tax Expense 9 (286,148,529) (828,757,533) 51,837,151 (106,855,559) Profit for the Period 385,980,583 1,220,294,613 140,550,439 999,023,274 Other Comprehensive Income Items that will not be Reclassified to Profit or Loss Revaluation of Property, Plant and Equipment 882,824,365 – 453,751,963 – Re-measurement of Employee Benefit Obligation 27 (21,158,221) (18,910,000) (26,947,676) (9,478,416) Related Taxes Tax on Other Comprehensive Income 9.4 5,871,651 6,319,485 7,545,349 2,653,957 Deferred Tax on Revaluation of Property, Plant and Equipment 9.4 (247,190,822) (516,049,055) (127,050,550) (198,082,001) Other Comprehensive Income for the period, Net of Tax 620,346,973 (528,639,570) 307,299,086 (204,906,460) Total Comprehensive Income for the Period, Net of Tax 1,006,327,556 691,655,043 447,849,525 794,116,814 Profit Attributable to: Owners of the Company 250,121,091 1,043,682,205 140,550,439 999,023,274 Non-Controlling Interests 135,859,492 176,612,408 – – Total Comprehensive Income Attributable to: 385,980,583 1,220,294,613 140,550,439 999,023,274 Owners of the Company 799,204,104 580,225,153 447,849,525 794,116,814 Non-Controlling Interests 207,123,452 111,429,890 – – 1,006,327,556 691,655,043 447,849,525 794,116,814 Earnings per Share – Basic (Rs.) 10.2 0.67 2.78 0.37 2.66 Dividend per Share (Rs.) – – 0.65 2.20

The Notes on pages 183 through 270 form an integral part of these Financial Statements. 16th May 2019 Colombo 101 271 177 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

STATEMENT OF FINANCIAL POSITION

Consolidated Company

As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Note Rs. Rs. Rs. Rs.

Assets Property, Plant and Equipment 11 6,704,648,597 5,649,423,644 3,498,021,139 3,082,597,562 Intangible Assets 12 268,296,168 281,316,991 201,000,888 207,145,304 Investment in Subsidiaries 13 – – 2,900,872,703 2,925,222,314 Other Non-Current Assets 14 63,219,073 64,520,322 – – Other Investments 15.1 17,061,300 17,061,300 616,202,652 929,110,000 Trade and Other Receivables 18.1 11,478,309,145 9,162,979,851 1,432,236,418 1,341,906,019 Deferred Tax Assets 26 – – 264,757,033 69,642,532 Non-Current Assets 18,531,534,283 15,175,302,108 8,913,090,833 8,555,623,731 Inventories 16 14,125,716,969 12,573,709,862 12,135,241,818 10,741,281,063 Loans Due from Related Parties 17 – – 1,215,819,977 1,219,150,767 Income Tax Receivables 31 70,953,640 46,635,361 240,187,686 157,630,474 Trade and Other Receivables 18.2 22,672,158,380 20,685,222,631 12,860,387,063 12,142,047,361 Amounts due from Related Parties 19 – 788,000 3,310,666 185,396,027 Other Financial Assets 35.2 85,648,063 – 85,648,063 – Deposits with Banks 83,323,971 81,504,012 – – Other Investments 15.2 623,372,330 671,382,640 312,090,000 – Cash and Cash Equivalents 20.1 1,849,642,830 1,339,006,740 1,337,712,692 1,017,627,946 Current Assets 39,510,816,183 35,398,249,246 28,190,397,965 25,463,133,638 Total Assets 58,042,350,466 50,573,551,354 37,103,488,798 34,018,757,369 Equity Stated Capital 21 626,048,050 626,048,050 626,048,050 626,048,050 Capital Reserves 22 1,118,122,637 577,919,322 1,158,333,041 847,555,412 Statutory Reserves 23 163,096,146 136,009,451 – – Revenue Reserves 24 5,035,830,612 5,495,477,725 2,851,601,145 3,326,088,413 Total Equity Attributable to Owners of the Company 6,943,097,445 6,835,454,548 4,635,982,236 4,799,691,875 Non-Controlling Interests 40 1,508,546,318 1,349,113,961 – – Total Equity 8,451,643,763 8,184,568,509 4,635,982,236 4,799,691,875

Liabilities Interest-Bearing Loans and Borrowings 25 10,640,159,470 4,319,898,408 7,373,929,275 2,532,149,832 Employee Benefit Obligations 27 871,971,129 794,644,981 630,757,966 574,009,152 Security Deposits 28 1,388,433,021 1,199,127,333 1,332,128,051 1,199,127,333 Deferred Tax Liability 26 246,869,202 467,235,592 – – Other Financial Liabilities 35.1 804,555,534 411,393,904 – – Deferred Revenue 30 85,928,321 126,328,596 85,928,321 126,328,596 Other Non-Current Liabilities 29.3 143,126,349 – 143,126,349 – Non-Current Liabilities 14,181,043,026 7,318,628,814 9,565,869,962 4,431,614,913 Trade and Other Payables 29 7,321,038,209 8,112,971,678 5,114,175,724 6,003,703,096 Deferred Revenue 30 188,044,737 119,961,349 182,534,759 119,961,349 Dividends Payables 32 88,496,948 220,838,973 49,212,196 166,754,628 Amounts Due to Related Parties 34 256,020,865 389,037,813 2,762,311,875 3,012,216,978 Other Financial Liabilities 35.1/35.2 5,148,467,467 4,826,583,524 – 8,337,510 Interest-Bearing Loans and Borrowings 25 19,491,167,297 19,268,269,452 13,376,313,438 14,239,388,295 Bank Overdrafts 20.2 2,916,428,154 2,132,691,242 1,417,088,608 1,237,088,725 Current Liabilities 35,409,663,677 35,070,354,031 22,901,636,600 24,787,450,581 Total Liabilities 49,590,706,703 42,388,982,845 32,467,506,562 29,219,065,494 Total Equity and Liabilities 58,042,350,466 50,573,551,354 37,103,488,798 34,018,757,369 The Notes on pages 183 through 270 form an integral part of these Financial Statements. I certify that the Financial Statements of the Company comply with the requirements of the Companies Act No. 07 of 2007.

Lalith Yatiwella Finance Director The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by,

Mohan Pandithage Mahesh H Wijewardene Chairman Director/Group Chief Executive Officer 16th May 2019 Colombo 178 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports

STATEMENT OF CHANGES IN EQUITY

Consolidated Attributable to Equity Holders of the Company Stated Reserve Revaluation General Retained Total Non-Controlling Total Capital Fund Reserves Reserves Earnings Interest Note Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance at 1st January 2017 626,048,050 95,360,709 1,057,964,069 2,700,000,000 3,674,443,725 8,153,816,553 1,401,088,060 9,554,904,613 Realisation of Revaluation Surplus 22.1 – – (28,213,846) – 28,213,846 – – – Transferred to/(from) During the Period – 40,648,742 – – (40,648,742) – – – Total Comprehensive Income for the Period Profit for the Period – – – – 1,043,682,205 1,043,682,205 176,612,408 1,220,294,613 Other Comprehensive Income Re-measurement of Employee Benefit Obligation 27 – – – – (17,615,944) (17,615,944) (1,294,056) (18,910,000) Related Taxes Tax on Other Comprehensive Income 9.4 – – – – 5,989,793 5,989,793 329,692 6,319,485 Deferred Tax on Revaluation of Lands 9.4 – – (451,830,901) – (451,830,901) (64,218,154) (516,049,055) Total Other Comprehensive Income for the Period – – (451,830,901) – (11,626,151) (463,457,052) (65,182,518) (528,639,570) Total Comprehensive Income for the Period – – (451,830,901) – 1,032,056,054 580,225,153 111,429,890 691,655,043 Transactions with Owners of the Company, Recognised Directly in Equity Distributions to Owners of the Company Final Dividend – 2016 33 – – – – (1,101,844,568) (1,101,844,568) (120,545,099) (1,222,389,667) Interim Dividend – 2017/18 33 – – – – (826,383,426) (826,383,426) (92,297,193) (918,680,619) Total Distributions to Owners of the Company – – – – (1,928,227,994) (1,928,227,994) (212,842,292) (2,141,070,286) Changes in Ownership interest in Subsidiaries Right Issue Cost – – – – (1,989,651) (1,989,651) – (1,989,651) Right Issue to Non-Controlling Interest – – – – – – 77,732,040 77,732,040 Gain on Acquisition of additional shares in Right issue – – – – 3,336,750 3,336,750 – 3,336,750 Effect of Change in Holding in Subsidiaries – – – – 28,293,737 28,293,737 (28,293,737) – Balance at 31st March 2018 626,048,050 136,009,451 577,919,322 2,700,000,000 2,795,477,725 6,835,454,548 1,349,113,961 8,184,568,509 Adjustment on Error Correction (Note 11.2) – – – – 43,358,242 43,358,242 6,069,758 49,428,000 Adjustment of Initial Application of SLFRS 9 net of tax – – – – (283,954,015) (283,954,015) (21,946,844) (305,900,859) Adjustment of Initial Application of SLFRS 15 net of tax – – – – (188,078,569) (188,078,569) – (188,078,569) Adjusted Balance as at 1st April 2018 626,048,050 136,009,451 577,919,322 2,700,000,000 2,366,803,383 6,406,780,206 1,333,236,875 7,740,017,081 Realisation on Revaluation Surplus – – (24,389,920) – 24,389,920 – – – Transferred to/(from) during the year – 27,086,695 – – (27,086,695) – – – Total Comprehensive Income for the Year Profit for the Year – – – – 250,121,091 250,121,091 135,859,492 385,980,583 Other Comprehensive Income Revaluation of Property, Plant and Equipment 22.1 – 784,157,271 – – 784,157,271 98,667,094 882,824,365 Re-measurement of Employee Benefit Obligation 27 – – – (21,499,348) (21,499,348) 341,127 (21,158,221) Related Taxes – – Tax on Other Comprehensive Income 9.4 – – 5,989,126 5,989,126 (117,475) 5,871,651 Deferred tax on Revaluation of Property, Plant and Equipment 9.4 – – (219,564,036) – (219,564,036) (27,626,786) (247,190,822) Total Other Comprehensive Income for the Year – – 564,593,235 – (15,510,222) 549,083,013 71,263,960 620,346,973 Total Comprehensive Income for the Year – – 564,593,235 – 234,610,869 799,204,104 207,123,452 1,006,327,556 Transactions with Owners of the Company, Recognised Directly in Equity Distributions to Owners of the Company Dividend paid in terms of bonus issue – – – – (8,788,026) (8,788,026) (1,230,244) (10,018,270) Interim Dividend – 2018/19 33 – – – – (244,158,740) (244,158,740) (78,922,778) (323,081,518) Total Distributions to Owners of the Company – – – – (252,946,766) (252,946,766) (80,153,022) (333,099,788) Changes in Ownership interest in Subsidiaries Effect of Change in Holdings in Subsidiaries – – – – (9,940,099) (9,940,099) 48,339,013 38,398,914 Total Transactions with owners of the Company – – – – (262,886,865) (262,886,865) (31,814,009) (343,039,887) Balance at 31st March 2019 626,048,050 163,096,146 1,118,122,637 2,700,000,000 2,335,830,612 6,943,097,445 1,508,546,318 8,451,643,763

The Notes on pages 183 through 270 form an integral part of these Financial Statements. 101 271 179 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Statement of Changes in Equity

The Notes on pages 183 through 270 form an integral part of these Financial Statements. 180 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Statement of Changes in Equity

Company Stated Capital Revaluation General Retained Total Reserves Reserves Earnings Note Rs. Rs. Rs. Rs. Rs.

Balance as at 1 January 2017 626,048,050 1,065,542,144 2,700,000,000 1,542,212,861 5,933,803,055 Realisation on Revaluation Surplus 22.1 – (19,904,731) – 19,904,731 – Profit for the Period – – – 999,023,274 999,023,274 Other Comprehensive Income Remeasurement of Employee Benefit Obligations 27 – – – (9,478,416) (9,478,416) Related Taxes Tax on Other Comprehensive Income 9.4 – – – 2,653,957 2,653,957 Deferred Tax on Revaluation of Lands 9.4 – (198,082,001) – – (198,082,001) Total Other Comprehensive Income – (198,082,001) – (6,824,459) (204,906,460) Total Comprehensive Income for the period – (198,082,001) – 992,198,815 794,116,814 Transactions with owners of the Company, Recognised Directly in Equity Distributions to Owners of the Company – Final Dividend – 2016 33 – – – (1,101,844,568) (1,101,844,568) Interim Dividend – 2017/18 33 – – – (826,383,426) (826,383,426) Total Distributions to Owners of the Company – – – (1,928,227,994) (1,928,227,994) Balance as at 31st March 2018 626,048,050 847,555,412 2,700,000,000 626,088,413 4,799,691,875 Adjustment of Initial Application of SLFRS 9 net of tax (179,321,855) (179,321,855) Adjustment of Initial Application of SLFRS 15 net of tax (188,078,569) (188,078,569) Restated Balance as at 1st April 2018 626,048,050 847,555,412 2,700,000,000 258,687,989 4,432,291,451 Realisation on Revaluation Surplus 22.1 – (15,923,784) – 15,923,784 – Profit for the Year – – – 140,550,439 140,550,439 Other Comprehensive Income Revaluation of Property, Plant and Equipment – 453,751,963 – – 453,751,963 Re-measurement of Employee Benefit Obligation 27 – – – (26,947,676) (26,947,676) Related Taxes Tax on Other Comprehensive Income 9.4 – – – 7,545,349 7,545,349 Deferred Tax on Revaluation of Property, Plant and Equipment 9.4 – (127,050,550) – – (127,050,550) Total Other Comprehensive Income – 326,701,413 – (19,402,327) 307,299,086 Total Comprehensive Income for the Period – 326,701,413 – 121,148,112 447,849,525 Transactions with Owners of the Company, Recognised Directly in Equity Distributions to Owners of the Company Interim Dividend – 2018/19 33 – – – (244,158,740) (244,158,740) Total Distributions to owners of the Company – – – (244,158,740) (244,158,740) Balance at 31st March 2019 626,048,050 1,158,333,041 2,700,000,000 151,601,145 4,635,982,236

The Notes on pages 183 through 270 form an integral part of these Financial Statements. 101 271 181 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

STATEMENT OF CASH FLOWS

Cash Flows from/(used in) Operating Activities Profit before Income Tax Expense 672,129,112 2,049,052,146 88,713,288 1,105,878,833 Adjustments for: Depreciation on Property, Plant and Equipment 11.2 579,242,530 632,735,522 453,474,287 509,249,151 12.2, Amortisation of Intangible Assets 12.3 21,698,455 31,694,467 11,947,019 22,343,871 Impairment of Software 12.2 – 5,605,554 – – Amortisation of Leasehold Rights 14 1,301,249 542,188 – – (Gain)/Loss on Disposal of Property, Plant and Equipment 5 279,943 10,851,256 483,591 11,220,725 Changing Fair Value of Derivative (Assets)/Liabilities (93,985,573) 8,337,510 (93,985,573) 8,337,510 (Gain)/Loss on Disposal of Shares 5 – – (14,049,303) – Interest Expense 7 3,240,746,377 2,706,924,672 2,774,862,239 2,494,325,151 Interest Income 6 (207,670,679) (175,549,720) (453,906,643) (344,598,049) Impairment of Inventory 16.1 172,995,327 15,211,882 174,028,852 44,233,025 Impairment on Trade and Other Receivables 18.3 783,159,310 652,643,612 474,683,286 422,183,787 Dividend Income 5 (206,400) (180,000) (462,621,207) (923,613,843) Provision for Employee Benefit Obligations 27 144,669,128 161,489,696 103,310,278 114,418,462 Operating Profit Before Working Capital Changes 5,314,358,779 6,099,358,785 3,056,940,114 3,463,978,623 (Increase)/Decrease in Inventories (1,725,002,433) (3,048,593,785) (1,567,989,606) (2,992,019,040) (Increase)/Decrease in Debtors falling due after one Year (2,317,799,858) (956,898,739) (92,800,964) 546,560,764 (Increase)/Decrease in Debtors falling due within one Year (3,149,966,224) (4,749,047,702) (1,436,627,030) (2,648,991,630) (Increase)/Decrease in dues from Related Parties 788,000 (788,000) 182,085,361 (110,613,182) Increase/(Decrease) in dues to Related Parties 14,543,920 16,182,262 (102,344,235) 1,762,442,545 Increase/(Decrease) in Security Deposits 189,305,688 180,675,482 133,000,718 180,675,483 Increase/(Decrease) in Trade and Other Payables (786,452,908) 1,746,166,960 (884,046,810) 1,211,050,044 Increase/(Decrease) in Deferred Liabilities (61,290,490) (192,699,301) (66,800,467) (192,699,301) Cash Generated from (used in) Operations (2,521,515,526) (905,644,038) (778,582,919) 1,220,384,306 Finance Costs Paid (3,156,107,807) (2,706,924,670) (2,737,523,238) (2,494,325,153) Employee Benefits Paid 27 (88,501,201) (36,898,710) (73,509,140) (26,642,192) Income Tax Paid 31 (686,410,946) (1,039,106,287) (237,898,052) (380,519,169) Net Cash from/(used in) Operating Activities (6,452,535,480) (4,688,573,705) (3,827,513,349) (1,681,102,208) 182 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports STATEMENT OF CASH FLOWS

Cash Flows from Investing Activities Acquisition of Property, Plant and Equipment and Intangible Assets 11/12 (742,257,768) (944,186,483) (465,178,897) (616,783,182) Proceeds from Disposal of Property, Plant and Equipment 50,307,074 20,938,048 43,746,800 20,188,759 Investment in shares in Subsidiary Company – – – (470,042,325) Investment in leasehold rights – (65,062,510) – – Proceeds from disposal of shares/Investment in Debentures in Subsidiary Company 38,398,914 – 38,398,914 – (Acquisition)/Disposal of Marketable Securities 48,010,310 (156,127,059) – – Investment/(Withdrawal) in Bank Deposits (1,819,959) (346,333) – – Net Cash flows from Loans Given to Related Companies – – 2,000,000 158,923,929 Interest Received 207,670,678 175,549,720 453,906,643 344,598,049 Dividend Received 206,400 180,000 462,621,207 923,613,843 Net Cash Flows used in Investing Activities (399,484,349) (969,054,617) 535,494,667 360,499,073 Cash Flows from Financing Activities Proceeds From Interest – Bearing Loans and Borrowings 59,084,657,219 41,272,217,086 38,845,046,556 28,182,883,821 Repayment of Interest – Bearing Loans and Borrowings (52,626,136,881) (37,442,108,649) (34,903,680,972) (26,001,752,260) Decrease in Customer Deposit Liabilities 723,383,081 2,196,030,528 – – Proceeds from Right Issue Purchased by Minority Shareholders – 81,068,790 – – Right Issue Cost – (1,989,651) – – Net Payment to Minority Shareholders (78,922,778) (212,842,292) – – Dividends Paid (524,061,633) (1,358,992,630) (509,262,040) (1,409,141,672) Net Cash Flows Generated from Financing Activities 6,578,919,008 4,525,045,672 3,432,103,545 763,652,379 Net Increase/(Decrease) in Cash and Cash Equivalents (273,100,822) (1,132,582,650) 140,084,863 (556,950,756) Cash and Cash Equivalents at the Beginning of the Year (793,684,502) 338,898,148 (219,460,779) 337,489,977 Cash and Cash Equivalents at the End of the Year 20 (1,066,785,324) (793,684,502) (79,375,916) (219,460,779)

The Notes on pages 183 through 270 form an integral part of these Financial Statements. 101 271 183 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

NOTES TO THE FINANCIAL STATEMENTS

Note 1 Corporate Information 184 Note 2 Significant Accounting Policies 187 Note 3 Revenue 210 Note 4 Operating Segments Information 211 Note 5 Other Income 213 Note 6 Finance Income 213 Note 7 Finance Cost 214 Note 8 Profit Before Tax 214 Note 9 Income Tax Expense 215 Note 10 Earnings Per Share 217 Note 11 Property, Plant and Equipment 218 Note 12 Intangible Assets 226 Note 13 Investments in Subsidiaries – Company 229 Note 14 Other Non-Current Assets 230 Note 15 Other Investments 230 Note 16 Inventories 232 Note 17 Loans Due from Related Parties 232 Note 18 Trade and Other Receivables 233 Note 19 Amounts Due from Related Parties 237 Note 20 Cash and Cash Equivalents 237 Note 21 Stated Capital 237 Note 22 Capital Reserves 238 Note 23 Statutory Reserves 238 Note 24 Revenue Reserves 239 Note 25 Interest-Bearing Loans and Borrowings 240 Note 26 Deferred Tax Assets/(Liabilities) 244 Note 27 Employee Benefit Obligations 246 Note 28 Security Deposits 248 Note 29 Trade and Other Payables 248 Note 30 Deferred Revenue 249 Note 31 Income Tax Payables/(Receivables) 250 Note 32 Dividend Payables 250 Note 33 Dividends 250 Note 34 Amounts due to Related Parties 250 Note 35 Other Financial Liabilities 251 Note 36 Financial Instruments 252 Note 37 Commitments and Contingencies – Group/Company 265 Note 38 Events Occurring after the Reporting Period 267 Note 39 Related Party Transactions 267 Note 40 Non-Controlling Interest 270 184 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

1. Corporate Information reporting period. Therefore, the comparative year information 1.1 Reporting Entity comprises a period of fifteen months from 1st January 2017 to 31st March 2018. The current year amounts comprise as at 1.1.1 General and for the period of twelve months ended 31st March 2019. Singer (Sri Lanka) PLC is a public limited liability company Therefore, amounts presented in the Financial Statements are incorporated and domiciled in Sri Lanka. The Registered not entirely comparable. The disclosures pertaining to change Office of the Company is located at No 112, Havelock Road, of the financial reporting period has been made in accordance Colombo 05, and the principal place of business is situated at with LKAS 1 on “Presentation of Financial Statements”. The the above address. Consolidated Financial Statements of Singer (Sri Lanka) PLC as at and for the period ended 31st March 2019 comprise the In the Report of the Directors and in the Financial Statements, Company and its Subsidiaries namely, Singer Finance (Lanka) “the Company” refers to Singer (Sri Lanka) PLC as the Holding PLC, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Company and “the Group” refers to the Consolidated Financial Reality Lanka Limited, Regnis Appliances (Pvt) Limited, Singer Statements of Singer (Sri Lanka) PLC and its Subsidiaries, Digital Media (Pvt) Limited, Singer Business School (Pvt) Singer Finance (Lanka) PLC, Singer Industries (Ceylon) PLC, Limited and Domus Lanka (Pvt) Limited. Regnis (Lanka) PLC, Reality Lanka Limited, Regnis Appliances (Pvt) Limited, Singer Digital Media (Pvt) Limited, Singer Subsidiaries Business School (Pvt) Limited and Domus Lanka (Pvt) Limited. Singer Finance (Lanka) PLC The ordinary shares of the Company are listed on the Singer Finance (Lanka) PLC, was incorporated on 19th Colombo Stock Exchange of Sri Lanka. April 2004 under the Companies Act No. 17 of 1982 and re-registered under the Company’s Act No. 07 of 2007 and its Hayleys PLC together with its subsidiaries, Volanka (Pvt) Ltd., commercial operations commenced on 8th July 2004. Singer and Carbotels (Pvt) Ltd., acquired on 15th September 2017 (Sri Lanka) PLC owns 79.93% of its equity shares. a total of 231,864,362 ordinary shares in Singer (Sri Lanka) PLC, constituting approximately 61.73% of the total shares in Singer Industries (Ceylon) PLC issue at a price of Rs. 47/- per share, making Hayleys PLC the Singer Industries (Ceylon) PLC was incorporated on ultimate controlling party of Singer (Sri Lanka) PLC with effect 13th December 1963 and re-registered under the Companies from 15th September 2017. Act No. 07 of 2007 and its commercial operations commenced on 13th December 1963. Singer (Sri Lanka) PLC Consequent to the purchase of 210,587,766 shares, a owns 87.7% of its equity shares. mandatory offer was made by Hayleys PLC on 31st October 2017 as Hayleys PLC triggered the Company takeovers and Regnis Lanka PLC Mergers Code 1995, published under the rules made by the Securities and Exchange Commission of Sri Lanka under Regnis (Lanka) PLC was incorporated on 8th October 1987 Section 53 of the Securities and Exchange Commission of under the Companies Act No. 17 of 1982 and re-registered Sri Lanka, Act No. 36 of 1987 as amended, and in terms of under the Companies Act No. 07 of 2007 and its commercial Rule 31 (1) (a) of the Code. Accordingly subsequent to the operations commenced on 8th October 1987. Singer mandatory offer, Hayleys PLC, with parties acting in concern (Sri Lanka) PLC owns 58.3% of its equity shares. holds 304,108,410 shares constituting approximately 80.96% of the total shares in issue . Reality Lanka Limited Reality Lanka Limited was incorporated on 29th On 15th October 2018, Hayleys PLC purchased the balance September 2006 under the Companies Act No. 17 of 1982 35,562,883 (9.47%) ordinary shares held by Retail Holdings and re-registered under the Companies Act No. 07 of (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47.00 2007 and its commercial operations commenced on 29th per share upon Retail Holdings (Sri Lanka) BV exercising their September 2006. Singer (Sri Lanka) PLC directly, indirectly option to sell its shares to Hayleys PLC as previously agreed. owns 88.2% of its equity shares. After accepting this offer, Hayleys PLC together with its Group Companies holds 90.43% (80.96% previously) of Singer Regnis Appliances (Pvt) Limited (Sri Lanka) PLC. Regnis Appliances (Pvt) Limited, was Incorporated on 18th January 2010 under the Companies Act No. 07 of 2007 1.1.1.1 Changing the Reporting Period and commenced its commercial operations on 1st October The reporting period of Singer (Sri Lanka) PLC, has been 2010. Singer (Sri Lanka) PLC indirectly owns 58.3% of its changed from 31st December to 31st March with effect equity shares. from Financial Year 2017/18 in order to align with the parents 101 271 185 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Singer Digital Media (Pvt) Limited Subsidiary Singer Digital Media (Pvt) Limited was incorporated on 16th Singer Industries (Ceylon) PLC May 2014 under the Companies Act No. 07 of 2007 and its The principal activities of the Company are assembling sewing commercial operations commenced on 8th July 2014. Singer machines and manufacturing of cabinets and stands for Digital Media (Pvt) Limited is a fully-owned Subsidiary. sewing machines.

Singer Business School (Pvt) Limited Subsidiary A fully-owned Subsidiary, Singer Business School (Pvt) Limited Regnis Lanka PLC was incorporated on 5th May 2015 under the Companies Act The principal activities of the Company are manufacturing of No. 07 of 2007 and its commercial operations commenced on Refrigerators and Bottle Coolers. 5th May 2015

Subsidiary Domus Lanka (Pvt) Limited Reality Lanka Limited Domus Lanka (Pvt) Limited was incorporated on 4th January The principal activities of the Company are renting of company 2018 under the Company Act No. 07 of 2007. property and property development.

Associates (Equity Accounted Investees) Subsidiary Associate companies of the Group, whose results have been Regnis Appliances (Pvt) Limited included in the Consolidated Financial Statements are: Telshan Network (Pvt) Limited. Principal activities of Regnis Appliances (Pvt) Limited are manufacturing and assembling of Washing Machines, producing All above companies are incorporated in Sri Lanka. plastic components for Refrigerators and Plastic Chairs.

1.1.3 Principal Activities and Nature of Operations Subsidiary The Company Singer Digital Media (Pvt) Limited The Company is engaged in Retail and Wholesale Marketing, The principal activity of the Company is marketing mobile and Financing, Assembling, Manufacturing and Financial Services. smart phones. The Company markets Consumer Electronics, Home Appliances, Mobile and smart Phones, Personal Computers, Subsidiary Laptops, Furniture, Domestic and Industrial Sewing Machines, Singer Business School (Pvt) Limited Agricultural Equipment, and provides Financing through Hire The principal activity of the Company is provisioning of Purchase. In addition, the Company manufactures and sells educational services. Furniture, Water Pumps and assembles and sells Motor Cycles and Two Wheel Tractors. The Company also acts as a Bill Subsidiary Collection Agent for banks, mobile service providers, National Domus Lanka (Pvt) Limited Water Supply and Drainage Board, Ceylon Electricity Board and is also a sub-agent for Western Union. Domus Lanka (Pvt) Limited was incorporated on 4th January 2018 (formerly known as D.V.D. Lanka (Pvt) Limited. The principal activity of the Company is carrying on the business Subsidiary of designing, manufacturing and trading furniture. However Singer Finance (Lanka) PLC no commercial operations have been commenced as of the The principal activities of the Company consist of finance reporting period. leasing, hire purchase financing, gold loan, financing of consumer durables under loan scheme and granting loans, 1.1.4 Parent Enterprise factoring, credit card, authorised foreign currency dealer and The Company’s Parent undertaking is Hayleys PLC. mobilising fixed deposits and savings.

Singer Finance (Lanka) PLC (“Company”), regulated under 1.1.5 Number of Employees the Finance Business Act No. 42 of 2011, was incorporated The number of employees of the Group at the end of the on 19th April 2004 as a Public Limited Liability Company year was 2,798 (2017/18 – 2,617), Company – 1,827 domiciled in Sri Lanka under the provisions of the Companies (2017/18 – 1,781). Act No. 17 of 1982 and re-registered under the Companies Act No. 07 of 2007. 186 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

1.2 Basis of Accounting Information about significant areas of estimation uncertainty 1.2.1 Statement of Compliance and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in The Financial Statements have been prepared in accordance the Financial Statements is included in the following Notes: with Sri Lanka Accounting Standards (hereinafter referred to as SLFRSs/LKASs ) issued by The Institute of Chartered zz Note 11 – Valuation of Land and Building

Accountants of Sri Lanka (CA Sri Lanka) and the requirements zz Note 12 – Measurement of Intangible Assets of the Companies Act No. 07 of 2007. zz Note 16 – Provision for Inventories 1.2.2 Responsibility for Financial Statements zz Note 18 – Impairment of Trade and other receivables The Board of Directors is responsible for preparation and zz Note 9/26 – Current Tax and Deferred Tax assets and Liabilities presentation of the Financial Statements of the Company as zz Note 27 – Measurement of Employee Benefit Obligations per the provisions of the Companies Act No. 07 of 2007 and Sri Lanka Accounting Standards. The Directors’ Responsibility zz Note 29 – Provision for Warranty over Financial Statements is set out in detail in the Statement zz Note 36 – Financial Instrument of Directors’ Responsibility. zz Note 37 – Commitments and Contingencies

1.2.3 Approval of Financial Statements Measurement of Fair Value The Financial Statements for the year ended 31st March 2019 A number of the Group’s accounting policies and disclosures were authorised for issue in accordance with a resolution of require the measurement of fair value for both financial and the Board of Directors on 16th May 2019 . non-financial assets and liabilities.

1.2.4 Basis of Measurement The Company regularly reviews significant unobservable The Financial Statements have been prepared on accrual inputs and valuation adjustments. If third party information basis and under the historical cost convention, except for is used to Measure fair values, The Company assesses financial assets at FVOCI financial liabilities at PNL (FVTPL) the evidence obtained from the third parties to support the and items of Property, Plant and Equipment, which are conclusion that such valuations meet the requirements of measured at fair value and Defined Benefit Plans which SLFRSs/LKASs, including the level in the fair value hierarchy in are measured at present value of the Retirement Benefit which such valuations should be classified . Obligations as explained in the respective Notes to the Financial Statements. Further, the external valuers are involved for valuation of significant assets, such as land and building. Selection criteria 1.2.5 Functional and Presentation Currency for external valuers include market knowledge, reputation, independence and whether professional standards are The Financial Statements are presented in Sri Lankan maintained. The Group decides, after discussions with the Rupees which is the functional currency of the Company and external valuers, which valuation techniques and inputs to use its Subsidiaries. for individual assets

1.2.6 Use of Estimates and Judgements Significant valuation issues are reported to the Group’s Audit The preparation of the Financial Statements in conformity with Committee. When measuring the fair value of an asset or SLFRSs/LKASs requires management to make judgements, liability, the Group uses observable market data as far as estimates and assumptions that affect the application of possible. Fair values are categorised into different levels in a accounting policies and the reported amounts of assets, fair value hierarchy based on the inputs used in the valuation liabilities, income and expenses. Actual results may differ from techniques as follows: these estimates. • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are • Level 2: Inputs other than quoted prices included in Level recognised prospectively. 1 that are observable for the asset or liability either directly (i.e. prices) or indirectly (i.e. derived from prices) • Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). 101 271 187 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

If the inputs used to measure the fair value of an asset or • Expected to be realised within twelve months after the liability fall into different levels of the fair value hierarchy, then reporting period, or the fair value measurement is categorised in its entirety in the • Cash or cash equivalent unless restricted from being same level of the fair value hierarchy as the lowest input level exchanged or used to settle a liability for at least twelve that is significant to the entire measurement. months after the reporting period.

The Group recognises transfers between levels of the fair All other assets are classified as non-current. value hierarchy at the end of the reporting period during which the change has occurred. A liability is current when it is: • It is expected to be settled in the normal operating cycle 1.2.7 Materiality and Aggregation • It is held primarily for the purpose of trading Each material class of similar items is presented separately in • It is due to be settled within twelve months after the the Consolidated Financial Statements. Items of a dissimilar reporting period, or nature or function are presented separately unless they are immaterial as permitted by the Sri Lanka Accounting Standard • There is no unconditional right to defer the settlement of the – LKAS 1 on “Presentation of Financial Statements”. liability for at least 12 months after the reporting period.

All other liabilities are classified as non-current. 1.2.8 Going Concern The Directors have made an assessment of the Group’s ability 2.1 Basis of Consolidation to continue as a going concern in the foreseeable future, and they do not intend either to liquidate or cease trading. 2.1.1 Subsidiaries Subsidiaries are entities controlled by the Group. The Group 1.2.9 Comparative Information “controls” an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the The amounts presented in the Financial Statements are not ability to affect those returns through its power over the entity. entirely comparable due to changes of the reporting period. The Financial Statements of Subsidiaries are included in the Please refer Note 1 for further clarifications. Consolidated Financial Statements from the date on which control commences until the date when control ceases. 2. Significant Accounting Policies The Company has applied SLFRS 15 and SLFRS 9 from 2.1.2 Non-Controlling Interests (NCI) 1st April 2018. Due to the transition methods chosen by the NCI are measured at their proportionate share of the Company in applying these standards, comparative information acquiree’s identifiable net assets at the acquisition date. throughout these Financials Statements has not been restated to reflect the requirements of the new standards. Changes in the Group’s interest in a Subsidiary that do not result in a loss of control are accounted for as equity Except for the above, the accounting policies set out below transactions. have been applied consistently to all periods presented in these Financial Statements. 2.1.3 Loss of Control When the Group losses control over Subsidiary derecognises Other significant accounting policies not covered with the assets and liabilities of the Subsidiary, any non-controlling individual notes. interests and other components of equity. Any surplus or Following accounting policies, which have been applied deficit arising on the loss of control is recognised in the profit consistently by the Group, are considered to be significant but or loss. Any interest retains in the previous Subsidiary, is not covered in any other sections. measured at fair value as at the date that control is lost.

Current versus non-current classification The Group presents 2.1.4 Interest in Equity Accounted Investees assets and liabilities in Statement of Financial Position based on current/non-current classification. The Group’s interest in equity accounted investees comprise interest in Associate. Associates are those entities in which An asset is current when it is: the Group has significant influence, but not control or joint control, over the financial and operating policies. Interests in • Expected to be realised or intended to be sold or Associates are accounted for using the equity method. They consumed in the normal operating cycle are initially recognised at cost, which include transaction cost. • Held primarily for the purpose of trading Subsequent to initial recognition the Consolidated Financial 188 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Statements includes the Group’s share of profit or loss and Increases in the carrying amount on revaluation is recognised Other Comprehensive Income of equity accounted investees, in other comprehensive income and accumulated in equity until the date on which significant influence ceases. in the revaluation reserve, unless it reverses a previous revaluation decrease relating to the same asset, which was 2.1.5 Transactions Eliminated on Consolidation previously recognised as an expense. In these circumstances the increase is recognised as income to the extent of the Intra-group balances and transactions, and any unrealised previous write down. income and expenses arising from intra-group transactions are eliminated in preparing the Consolidated Financial Statements. Decreases in the carrying amount on revaluation that offset Unrealised gains arising from transactions with equity previous increases of the same individual asset are charged accounted investees are eliminated against the investment to against revaluation reserve directly in equity. All other decreases the extent of the Group’s interest in the investee. Unrealised are recognised in profit and loss. losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. The relevant portion of the revaluation reserve is transferred to retained earnings as the asset is depreciated with the balance 2.2 Foreign Currency Transactions being transferred on ultimate disposals. Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the (c) Subsequent Costs exchange rates at the dates of the transactions. The cost of replacing part of an item of Property, Plant and Equipment is recognised in the carrying amount of the item Monetary assets and liabilities denominated in foreign if it is probable that the future economic benefits embodied currencies at the reporting date are translated into the within that part will flow to the Group and its cost can be functional currency at the exchange rate at the reporting measured reliably. The carrying amount of the replaced part date. Non-monetary assets and liabilities that are measured is derecognised. The costs of the day-to-day servicing of at fair value in a foreign currency are translated into the Property, Plant and Equipment are recognised in profit and functional currency at the exchange rate when the fair value loss as incurred. was determined. Foreign currency differences are generally recognised in profit and loss. Non-monetary items that are measured based on historical cost in a foreign currency are (d) Depreciation not translated. Depreciation is calculated to write-off the cost of items of Property, Plant and Equipment less their estimated residual 2.3 Property, Plant and Equipment values using the straight-line method over their estimated 2.3.1 Recognition and Measurement useful lives, and is generally recognised in profit or loss. Land is not depreciated. Items of property, plant and equipment are measured at cost/fair value, less accumulated depreciation and any The estimated useful lives are as follows: accumulated impairment losses. Freehold Buildings Over 38 to 50 years If a significant part of an item of Property, Plant and Equipment has different useful lives, then they are accounted for as Motor Vehicles Over 5 to 7 years separate items (major components) of Property, Plant and Furniture and Equipment Over 10 years Equipment. Any gain or loss on disposal of an item of Plant and Machinery Over 10 years Property, Plant and Equipment is recognised in profit or loss. EDP Equipment Over 5 to 10 years (a) Cost Model Improvement on Leasehold The Group applies the cost model to Property, Plant and Premises Over 4 to 10 years Equipment except for freehold land and buildings. Shop Furniture and Equipment Over 7 years EDP Equipment – Over 7 years (b) Revaluation Model Computer Servers The Group applies the revaluation model to the entire class of freehold land and buildings. A revaluation is carried out Depreciation of an asset commences when the asset is when there is a substantial difference between the fair value available for use and ceases at the earlier of the date the and the carrying amount of the property, and is undertaken by asset is classified as held-for-sale and the date that the asset professionally qualified valuers. Group reviews its assets once is derecognised. in two years. 101 271 189 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Depreciation methods, useful lives and residual net disposal proceeds and the carrying amount of the values are reviewed at each financial year end and asset and are recognised in profit and loss when the adjusted if appropriate. asset is derecognised.

2.3.2 Intangible Assets Intangible assets with indefinite useful lives represent trade (a) Recognition and Measurement marks purchased and were recorded at cost. These intangible assets are assessed for impairment annually. An intangible asset is recognised if it is probable that future economic benefits will flow to the entity and the cost of the 2.4 Financial Instruments asset can be measured reliably in accordance with LKAS 38 – on “Intangible Assets”. Intangible assets with finite useful lives (a) Financial Assets are measured at cost, less accumulated amortisation and (i) Recognition and Measurement accumulated impairment losses. A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity The useful lives of intangible assets are assessed to be either instrument of another entity. finite or indefinite. Receivables and debt securities issued are initially recognised (b) Subsequent Expenditure when they are originated. All other financial assets and Subsequent expenditure is capitalised only when it increases financial liabilities are initially recognised when the Group the future economic benefits embodied in the specific asset becomes a party to the contractual provisions of the to which it relates. All other expenditure, including expenditure instrument. on internally generated goodwill and brands are recognised in profit or loss as incurred. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair (c) Amortisation value through profit or loss (FVTPL), transaction costs that Intangible assets with finite lives are amortised over the useful are directly attributable to its acquisition or issue. A trade economic life and assessed for impairment whenever there receivable without a significant financing component is initially is an indication that the intangible asset may be impaired. measured at the transaction price. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at Policy Applicable from 1st April 2018 each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic (ii) Classification and subsequent measurement of benefits embodied in the asset is accounted for by changing financial assets the amortisation period or method, as appropriate, and treated On initial recognition, a financial asset is classified as as changes in accounting estimates. Amortisation expense measured at: amortised cost; fair value through other on intangible assets with finite lives is recognised in profit and comprehensive income (FVOCI) – debt investment; fair loss on a straight-line basis over the estimated useful lives, value through other comprehensive income (FVOCI) – equity from the date they are available for use. investment; or fair value through profit or loss (FVTPL).

The estimated useful lives of intangible assets with finite lives Financial assets are not reclassified subsequent to their initial are as follows: recognition unless the Group changes its business model for managing financial assets, in which case all affected financial The Class of Intangible Assets Useful Life assets are reclassified on the first day of the first reporting Computer Software 10 years period following the change in the business model. Other Intangible Assets A financial asset is measured at amortised cost if it meets both Externally Acquired 5 years of the following conditions and is not designated as at FVTPL:

Intangible assets with indefinite useful lives are tested – it is held within a business model whose objective is to hold for impairment annually either individually or at the cash- assets to collect contractual cash flows; and generating unit level. Such intangible assets are not amortised. – its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on Gains or losses arising from derecognition of an intangible the principal amount outstanding. asset are measured as the difference between the 190 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Group financial assets classified and measured at amortised zz the risks that affect the performance of the business model cost are limited to its Non Current financial Assets – (and the financial assets held within that business model) Investments in debt instruments ,other receivables, short-term and how those risks are managed; investments and cash & cash equivalent. zz how managers of the business are compensated - e.g. A debt investment is measured at FVOCI if it meets both of the whether compensation is based on the fair value of the following conditions and is not designated as at FVTPL: assets managed or the contractual cash flows collected; – it is held within a business model whose objective is and

achieved by both collecting contractual cash flows and zz the frequency, volume and timing of sales of financial selling financial assets; and assets in prior periods, the reasons for such sales and – its contractual terms give rise on specified dates to cash expectations about future sales activity. flows that are solely payments of principal and interest on the principal amount outstanding. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales The Group has not designated any debt instruments as FVOCI. for this purpose, consistent with the Company’s continuing recognition of the assets. On initial recognition of an equity investment that is not held-for-trading, the Group may irrevocably elect to present Financial assets that are held for trading or are managed and subsequent changes in the investment’s fair value in OCI. This whose performance is evaluated on a fair value basis are election is made on an investment-by-investment basis. measured at FVTPL. These instruments comprise quoted and unquoted shares that had been previously classified as Available for sale under zz Financial assets – Assessment whether LKAS 39. contractual cash flows are solely payments of principal and interest. All financial assets not classified as measured at amortised For the purposes of this assessment, ‘principal’ is defined cost or FVOCI as described above are measured at FVTPL. as the fair value of the financial asset on initial recognition. This includes all derivative financial assets. On initial ‘Interest’ is defined as consideration for the time value of recognition, the Company may irrevocably designate a money and for the credit risk associated with the principal financial asset that otherwise meets the requirements to be amount outstanding during a particular period of time and measured at amortised cost or at FVOCI as at FVTPL if doing for other basic lending risks and costs (e.g. liquidity risk and so eliminates or significantly reduces an accounting mismatch administrative costs), as well as a profit margin. that would otherwise arise. In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers The Group has not designated any equity investments as FVTPL. the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual zz Financial assets – Business model assessment term that could change the timing or amount of contractual The Group makes an assessment of the objective of the cash flows such that it would not meet this condition. In business model in which a financial asset is held at a portfolio making this assessment, the Company considers: level because this best reflects the way the business is – contingent events that would change the amount or timing managed and information is provided to management. The of cash flows; information considered includes: – terms that may adjust the contractual coupon rate, zz the stated policies and objectives for the portfolio and the including variable-rate features; operation of those policies in practice. These include whether – prepayment and extension features; and management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, – terms that limit the Company’s claim to cash flows from matching the duration of the financial assets to the duration specified assets (e.g. non-recourse features). of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets; A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount zz how the performance of the portfolio is evaluated and substantially represents unpaid amounts of principal and reported to the Group’s management; interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par 101 271 191 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition. zz Financial assets – Subsequent measurement and gains and losses Financial assets at These assets are subsequently measured at fair value. Net gains and losses, including any interest or FVTPL dividend income, are recognised in profit or loss. Financial assets at These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Debt investments at These assets are subsequently measured at fair value. Interest income calculated using the effective FVOCI interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. Equity investments These assets are subsequently measured at fair value. Dividends are recognised as income in profit or at FVOCI loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Policy Applicable before 1st April 2018 2.4.1.2 Loans and Receivables (ii) Classification and subsequent measurement of financial Loans and receivables are financial assets with fixed or assets (Continued) determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus At inception, a financial asset is classified in one of the any directly attributable transaction costs. following categories: Subsequent to initial recognition loans and receivables are – Loans and Receivables measured at amortised cost using the effective interest – Held-to-Maturity method, less any impairment losses. – Available-for-Sale – At Fair Value through Profit or Loss Loans and receivables comprise of hire purchase and lease receivable, consumer loans, vehicle loans, distress loans As at the year end the Group did not have assets categorised and temporary refund loans, related party loans, staff loans, as fair value through profit or loss. deposits with banks, cash and cash equivalents and trade and other receivables. 2.4.1.1 Held-to-Maturity Financial Assets 2.4.1.3 Available-for-Sale Financial Assets A non-derivative financial asset with fixed or determinable payments with fixed maturity where Group intends to hold to Available-for-sale financial assets are non-derivative financial maturity is classified under this category. assets that are recognised as available-for-sale or not classified in any previous categories. Available-for-sale Held-to-maturity financial assets are recognised initially at financial assets are recognised initially at fair value plus any fair value plus any directly attributable transaction costs. directly attributable transaction costs. Subsequent to initial recognition held-to-maturity financial assets are measured at amortised cost using the effective Subsequent to initial recognition, they are measured at fair interest method. value and changes therein, other than impairment losses, are recognised in the Other Comprehensive Income and Held-to-maturity financial assets had comprised of treasury presented in the available-for-sale reserve in equity. When an bills, treasury bonds and debenture investments. investment is derecognised, the cumulative gain or loss in Other Comprehensive Income is transferred to profit or loss.

Available-for-sales financial assets comprise equity investments. 192 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

(c) Financial liabilities (iv) Offsetting Classification, subsequent measurement and gain and losses Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, Financial liabilities are classified as measured at amortised and only when, the Group currently has a legally enforceable cost or FVTPL. A financial liability is classified as at FVTPL if right to set off the amounts and it intends either to settle them it is classified as held – for – trading, it is a derivative or it is on a net basis or to realise the asset and settle the liability designated as such on initial recognition. Financial liabilities simultaneously. at FVTPL are measured at fair value and gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured 2.4.2 Non-Derivative Financial Liabilities at amortised cost using the effective interest method. The Group initially recognises debt securities issued and Interest expense and foreign exchange gains and losses are subordinated liabilities on the date that they are originated. recognised in profit or loss. Any gain or loss on derecognition All other liabilities are recognised initially on the trade date is also recognised in profit or loss. at which the Company becomes a party to the contractual provisions of the instrument. (iii) Derecognition The Group classifies non-derivative financial liabilities into Financial assets other financial liabilities category. Such financial liabilities are The Group derecognises a financial asset when the contractual recognised initially at fair value plus any directly attributable rights to the cash flows from the financial asset expire, or it transaction costs. Subsequent to initial recognition, these transfers the rights to receive the contractual cash flows in a financial liabilities are measured at amortised cost using the transaction in which substantially all of the risks and rewards of effective interest method. ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks Other financial liabilities comprise interest-bearing borrowings, and rewards of ownership and it does not retain control of the bank overdrafts, amount due to related parties, security financial asset. The Group enters into transactions whereby it deposits, trade and other payables and other financial transfers assets recognised in its statement of financial position, liabilities due to customers. but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets Bank overdrafts that are repayable on demand and form are not derecognised. an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the Financial liabilities Statement of Cash Flows. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. 2.4.3 Derivative financial instruments The Company also derecognises a financial liability when its The Group holds derivative financial instruments to hedge its terms are modified and the cash flows of the modified liability foreign currency and interest rate risk exposures. Embedded are substantially different, in which case a new financial liability derivatives are separated from the host contract and based on the modified terms is recognised at fair value. accounted for separately if certain criteria are met.

On derecognition of a financial liability, the difference between Derivatives are initially measured at fair value; any directly the carrying amount extinguished and the consideration attributable transaction costs are recognised in profit or loss paid (including any non-cash assets transferred or liabilities as incurred. Subsequent to initial recognition, derivatives are assumed) is recognised in profit or loss. measured at fair value, and changes therein are generally recognised in profit or loss.

2.4.4 Stated Capital 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. 101 271 193 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

2.4.5 Impairment ECLs are discounted at the effective interest rate of the 2.4.5.1 Policy Applicable from 1st April 2018 financial asset. (a) Financial Assets zz Credit-impaired financial assets The Group except for Singer (Finance) PLC recognises loss At each reporting date, the Group assesses whether financial allowances for ECLs on: assets carried at amortised cost and equity investments at – financial assets measured at amortised cost; FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ – debt investments measured at amortised cost when one or more events that have a detrimental impact on – equity investments measured at FVOCI the estimated future cash flows of the financial asset have occurred. The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at Evidence that a financial asset is credit-impaired includes the 12-month ECLs: following observable data: – debt securities that are determined to have low credit risk at – significant financial difficulty of the borrower or issuer; the reporting date; and – a breach of contract such as a default in payments – other debt securities and bank balances for which credit – the restructuring of a loan or advance by the Company on risk (i.e. the risk of default occurring over the expected life terms that the Company would not consider otherwise; of the financial instrument) has not increased significantly – it is probable that the borrower will enter bankruptcy or other since initial recognition. financial reorganisation; or – the disappearance of an active market tor a security Loss allowances for trade receivables is always measured at because of financial difficulties. an amount equal to lifetime ECLs.

When determining whether the credit risk of a financial asset zz Presentation of allowance for ECL in the has increased significantly since initial recognition and statement of financial position when estimating ECLs, the Group considers reasonable and Loss allowances for financial assets measured at amortised cost supportable information that is relevant and available without are deducted from the gross carrying amount of the assets. undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the group’s For debt securities at FVOCI, the loss allowance is charged to historical experience and informed credit assessment and profit or loss and is recognised in OCI. As at the year end the including forward-looking information. Group did not have assets categorised as FVOCI.

The Group considers a financial asset to be in default when: zz Write-off – the borrower is unlikely to pay its credit obligations to the The gross carrying amount of a financial asset is written Company in full, without recourse by the Company to off when the Group has no reasonable expectations of actions such as realising security (if any is held); or recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing Lifetime ECLs are the ECLs that result from all possible default off the gross carrying amount based on historical experience events over the expected life of a financial instrument. of recoveries of similar assets. For corporate customers, the Company individually makes an assessment with respect to 12-month ECLs are the portion of ECLs that result from the timing and amount of write-off based on whether there is default events that are possible within the 12 months after the a reasonable expectation of recovery. The Company expects reporting date (or a shorter period if the expected life of the no significant recovery from the amount written off. However, instrument is less than 12 months). financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s The maximum period considered when estimating ECLs is procedures to recovery of amounts due. the maximum contractual period over which the Company is exposed to credit risk. zz Measurement of ECLs ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive). 194 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Singer Finance (Lanka) PLC – financial guarantee contracts: the expected payments The Company recognises loss allowances for ECL on the to reimburse the holder less any amounts that the Company following financial instruments that are not measured at FVTPL: expects to recover. – financial assets that are debt instruments; The key inputs used for measurement of ECL is likely to be the – lease and loan receivables; term structures of the following variables: – financial guarantee contracts issued; and – loan commitments issued. Probability of Default (PD) PD estimates are estimates at a certain date, which are No impairment loss is recognised on equity investments. calculated based on statistical models, and assessed using various categories based on homogeneous characteristics of The Company measures loss allowances at an amount equal exposures. These statistical models are based on internally to lifetime ECL, except for the following, compiled data comprising both quantitative and qualitative factors. The Company forecast PD by incorporating forward for which they are measured as 12-month ECL: looking economic variables (unemployment, GDP growth, – debt investment securities that are determined to have low infation, interest rate and using lag effect of these variables). credit risk at the reporting date; and – other financial instruments (other than lease receivables) on Loss Given Default (LGD) which credit risk has not increased significantly since their LGD is the magnitude of the likely loss if there is a default. initial recognition. The Company estimates LGD parameters based on the history of recovery rates of claims against defaulted counterparties. Loss allowances for lease receivables are always measured at an amount equal to lifetime ECL. The Company considers a Exposure at Default (EAD) debt investment security to have low credit risk when its credit EAD represents the expected exposure in the event of a risk rating is equivalent to the globally understood definition default. The Company derives the EAD from the current of ‘investment grade’. The Company does not apply the low exposure to the counterparty and potential changes to credit risk exemption to any other financial instruments. the current amount allowed under the contract including amortisation. The EAD of a financial asset is its gross carrying Financial instruments for which a 12-month ECL is recognised amount. are referred to as “Stage 1 financial instruments”.

The Company has used these parameters from Life-time ECL are the ECL that result from all possible default internally-developed statistical models using historical data. events over the expected life of the financial instrument. All inputs were adjusted to reflect forward-looking information Financial instruments for which a lifetime ECL is recognised and future economic scenarios. but which are not credit-impaired are referred to as “Stage 2 financial instruments”. Impairment losses and releases are accounted for and disclosed separately from modification losses or gains that are Measurement of ECL accounted for as an adjustment of the financial asset’s gross ECL are a probability-weighted estimate of credit losses. They carrying value. are measured as follows: – financial assets that are not credit-impaired at The mechanics of the ECL method are summarised the reporting date: as the present value of all cash below: shortfalls (i.e. the difference between the cash flows due • Stage 1: The 12month ECL is calculated as the portion to the entity in accordance with the contract and the cash of LTECLs that represent the ECLs that result from default flows that the Company expects to receive); events on a financial instrument that are possible within – financial assets that are credit-impaired at the the 12 months after the reporting date. The Company reporting date: as the difference between the gross calculates the12 month ECL allowance based on the carrying amount and the present value of estimated future expectation of a default occurring in the 12 months cash flows; following the reporting date. These expected 12-month – undrawn loan commitments: as the present value of default probabilities are applied to a forecast EAD and the difference between the contractual cash flows that are multiplied by the expected LGD and discounted by an due to the Company if the commitment is drawn down and approximation to the original EIR. the cash flows that the Company expects to receive; an 101 271 195 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

• Stage 2: When a loan has shown a significant increase A loan that has been renegotiated due to a deterioration in in credit risk since origination, the Company records an the borrower’s condition is usually considered to be credit- allowance for the LTECLs. The mechanics are similar impaired unless there is evidence that the risk of not receiving to those explained above, including the use of multiple contractual cash flows has reduced significantly and there are scenarios, but PDs and LGDs are estimated over the no other indicators of impairment. In addition, a retail loan that lifetime of the instrument. The expected cash shortfalls are is overdue for 180 days or more is considered credit-impaired discounted by an approximation to the original EIR. even when the regulatory definition of default is different. • Stage 3: For loans considered credit-impaired the Company recognises the lifetime expected credit losses. In making an assessment of whether an investment in The method is similar to that of Stage 2 assets, with the PD sovereign debt is credit-impaired, the Company considers the set at 100%. following factors. – The market’s assessment of creditworthiness as reflected in Restructured financial assets the bond yields. If the terms of a financial asset are renegotiated or modified – The rating agencies’ assessments of creditworthiness. or an existing financial asset is replaced with a new one due – The country’s ability to access the capital markets for new to financial difficulties of the borrower, then an assessment is debt issuance. made of whether the financial asset should be derecognised – The probability of debt being restructured, resulting in and ECL are measured as follows. holders suffering losses through voluntary or mandatory – If the expected restructuring will not result in derecognition debt forgiveness. of the existing asset, then the expected cash flows arising – The international support mechanisms in place to provide from the modified financial asset are included in calculating the necessary support as “lender of last resort” to that the cash shortfalls from the existing asset. country, as well as the intention, reflected in public – If the expected restructuring will result in derecognition statements, of governments and agencies to use those of the existing asset, then the expected fair value of mechanisms. This includes an assessment of the depth of the new asset is treated as the final cash flow from the those mechanisms and, irrespective of the political intent, existing financial asset at the time of its derecognition. This whether there is the capacity to fulfil the required criteria. amount is included in calculating the cash shortfalls from the existing financial asset that are discounted from the Presentation of allowance for ECL in the statement of financial expected date of derecognition to the reporting date using position. the original effective interest rate of the existing financial asset. Loss allowances for ECL are presented in the Statement of Financial Position as follows: Credit-impaired financial assets – financial assets measured at amortised cost as a deduction At each reporting date, the Company assesses whether from the gross carrying amount of the assets; financial assets carried at amortised cost and debt financial – loan commitments and financial guarantee contracts: assets carried at FVOCI, and finance lease receivables are generally, as a provision; credit-impaired (referred to as ‘Stage 3 financial assets’). A financial asset is “credit-impaired” when one or more events – where a financial instrument includes both a drawn and an that have a detrimental impact on the estimated future cash undrawn component, and the Company cannot identify the flows of the financial asset have occurred. Evidence that ECL on the loan commitment component separately from a financial asset is credit-impaired includes the following those on the drawn component: the Company presents observable data: a combined loss allowance for both components. The combined amount is presented as a deduction from the – significant financial difficulty of the borrower or issuer; gross carrying amount of the drawn component. Any – a breach of contract such as a default or past due event; excess of the loss allowance over the gross amount of the – the restructuring of a loan or advance by the Company on drawn components presented as a provision; and terms that the Company would not consider otherwise; – debt instruments measured at FVOCI. - no loss allowance is – it is becoming probable that the borrower will enter recognised in the Statement of Financial Position because bankruptcy or other financial reorganisation; or the carrying amount of these assets is their fair value. – the disappearance of an active market for a security However, the loss allowance is disclosed and is recognised because of financial difficulties. in the fair value reserve. 196 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Write-off Further, higher purchase debtors of Singer (Sri Lanka) PLC are Loans and debt securities are written off (either partially or in also assessed for impairment at collective level. full) when there is no reasonable expectation of recovering a financial asset in its entirety or a portion thereof. This is Losses are recognised in profit or loss and reflected in generally the case when the Company determines that the an allowance account against loans and receivables. If a borrower does not have assets or sources of income that subsequent event (e.g. repayment by a debtor) causes could generate sufficient cash flows to repay the amounts the amount of impairment loss to decrease, the decrease subject to the write-off. This assessment is carried out at in impairment loss is reversed through profit or loss. When the individual asset level. Recoveries of amounts previously the Company considers that there is no realistic process of written off are included in “impairment losses on financial recovery of the asset, the relevant amounts are written off. instruments” in the statement of profit or loss and OCl. Impairment losses on assets carried at amortised cost are Financial assets that are written off could still be subject to measured as the difference between the carrying amount of the enforcement activities in order to comply with the Company’s financial asset and the present value of estimated future cash procedures for recovery of amounts due. flows discounted at the asset’s original effective interest rate.

When the Group considers that there are no realistic prospects Policy Applicable before 1st April 2018 of recovery of the asset, the relevant amounts are written-off. Impairment of Non-Derivative Financial Assets Financial assets other than those measured at fair value are Impairment losses are recognised in profit or loss and assessed for indicators of impairment at the end of each reflected in an allowance account against loans and reporting period. Financial assets are considered to be advances. When a subsequent event causes the amount of impaired when there is objective evidence that as a result of impairment loss to decrease, the decrease in impairment loss one or more events that occurred after the initial recognition of is reversed through profit or loss. the financial assets, the estimated future cash from the asset have been affected. (b) Impairment Losses on Available-for-Sale Impairment losses on available-for-sale investment securities The Group assesses at each reporting date whether there are recognised by the reclassifying losses accumulated in is any objective evidence that a financial asset or a group the fair value reserve to profit or loss. The amount reclassified of financial assets are impaired. A financial asset or a group is the difference between the acquisition cost (net of any of financial assets are deemed to be impaired if, and only if, principal repayment and amortisation), and the current fair there is objective evidence of impairment as a result of one or value, less any impairment loss previously recognised in profit more events that have occurred after the initial recognition of or loss. If the fair value of an impaired available-for-sale debt the asset and that loss event have an impact on the estimated security subsequently increases and the increase can be future cash flows of the financial asset or the group of financial related objectively to an event occurring after the impairment assets that can be reliably estimated. loss was recognised, then the impairment loss is reversed through profit or loss, otherwise it is reversed through Other (a) Impairment Losses on Financial Assets Carried at Comprehensive Income. Amortised Cost The Group except for Singer Finance (Lanka) PLC (c) Impairment – Equity-Accounted Investees considers evidence for these assets at individual asset level. All individually significant assets are individually An impairment in respect of an equity-accounted investee assessed for impairment. is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is Singer Finance (Lanka) PLC considers evidence of impairment recognised in profit or loss, and is reversed if there has been for receivables at collective level. Loans and receivables are a favourable change in the estimates used to determine the collectively assessed for impairment by grouping together recoverable amount. receivables with similar risk characteristics. In assessing collective impairment, the Company uses historical trends 2.4.5.2 Impairment of Non-Financial Assets of the probability of default, the timing of recoveries and The carrying amount of the Group’s non-financial assets other the amount of loss incurred, adjusted for Management’s than inventories and deferred tax assets are reviewed at each judgements as to whether current economic and credit reporting date to determine whether there is an indication conditions are such that the actual losses are likely to be of impairment. If any such indication exists or when annual greater or less than suggested by historical trends. impairment testing for an asset is required, then the asset’s recoverable amount is estimated. 101 271 197 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

For impairment testing, assets are grouped into the smallest Contingent rents are recognised as revenue in the period in group of assets that generates cash inflows from continuing which they are earned. use that are largely independent of the cash flows of other assets or other cash-generating units (CGU). Goodwill 2.4.6.2 Finance Leases arising from business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the (a) Finance Leases – Company as a Lessee synergies of combination. Finance leases that transfer substantially all risks and benefits incidental to ownership of the leased item to the Company, are The recoverable amount of an asset or cash-generating unit is capitalised at the commencement of the lease at the fair value the greater of its value in use and its fair value less costs to sell. of the leased property or, if lower, at the present value of the In assessing value in use, the estimated future cash flows are minimum lease payments. Lease payments are apportioned discounted to their present value using a pre-tax discount rate between finance charges and reduction of the lease liability that reflects current market assessments of the time value of so as to achieve a constant rate of interest on the remaining money and the risks specific to the asset. In determining fair balance of the liability. value, less costs to sell, an appropriate valuation model is used. A leased asset is depreciated over the useful life of the asset. An impairment loss is recognised if the carrying amount of However, if there is no reasonable certainty that the Company an asset or cash-generating unit exceeds its estimated will obtain ownership by the end of the lease term, the asset is recoverable amount. Impairment losses are recognised n profit depreciated over the shorter of the estimated useful life of the and loss. An impairment loss is reversed if there has been a asset and the lease term. change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that (b) Finance Leases – Company as a Lessor the asset’s carrying amount does not exceed the carrying When the Company is the lessor under the finance leases amount that would have been determined, net of depreciation the amounts due under the finance leases, after deduction of or amortisation, if no impairment loss had been recognised. unearned charges, are included in “lease rentals receivables”, as appropriate. The finance income receivable is recognised 2.4.6 Leases in “interest income” over the periods of the leases so as The determination of whether an arrangement is lease to give a constant rate of return on the net investment or it contains a lease, is based on the substance of the in the leases. arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a 2.5 Inventories specific asset or assets and the arrangement conveys a right Inventories are measured at the lower of cost and net to use the asset. realisable value, after making due allowances for obsolete and slow-moving items. Net realisable value (NRV) is the 2.4.6.1 Operating Leases estimated selling price in the ordinary course of business, less (a) Operating Leases – Company as a Lessee the estimated cost of completion and selling expenses. Group assess the NRV by giving consideration to future demand and Leases that do not transfer to the Company substantially condition of inventory and make adjustments to the value by all risks and benefits incidental to ownership of the leased making required provisions. assets are operating leases. Operating lease payments are recognised as an expense in the Income Statement on a The cost of each category of inventory is determined on the straight-line basis over the lease term. Contingent rental following basis: payable is recognised as an expense in the period in which they are incurred. Raw Materials At actual cost on first-in first-out basis Finished Goods Weighted average cost (b) Operating Leases – Company as a Lessor (Excluding Factory) Leases where the Company does not transfer substantially Finished Goods and At the cost of direct materials, direct all risks and benefits of ownership of the asset are classified Work-in-Progress at labour and an appropriate proportion as operating leases. Initial direct costs incurred in negotiating Piliyandala Factory of fixed production overheads, based operating leases are added to the carrying amount of the on normal operating capacity leased asset and recognised over the lease term on the same basis as rental income. Goods-in-Transit At actual cost Supplies and Parts Weighted average cost Repossessed Goods 75% of its weighted average cost 198 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

2.6 Provisions immediately in OCI. The Group determines the net interest A provision is recognised in the Statement of Financial Position expense on the net defined benefit liability for the period when the Company has a legal or constructive obligation as by applying the discount rate used to measure the defined a result of a past event and it is probable that an outflow of benefit obligation at the beginning of the annual period to the economic benefits will be required to settle the obligation then – net defined liability, taking into account any changes and the amount of the provision can be measured reliably in the net defined benefit liability during the period as a result in accordance with LKAS 37 – “Provisions, Contingent of contributions and benefit payments. Net interest expense Liabilities and Contingent Assets”. The amount recognised is and other expenses related to defined benefit plans are the best estimate of the consideration required to settle the recognised in profit or loss. present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation at the The liability is not externally funded. date. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount 2.7.2 Defined Contribution is determined based on the present value of those cash flows. Plans – Employees’ Provident Fund/Mercantile Services Provident Society and Employees’ Trust Fund 2.6.1 Provisions for Warranties A defined contribution plan is a post-employment benefit plan A provision for warranties is recognised when the underlying under which an entity pays fixed contributions into a separate products or services are sold. The provision is based on entity and will have no legal or constructive obligation to pay historical warranty data and a weighing of all possible further amounts. Employees are eligible for contributions to outcomes against their associated probabilities. Provision is Employees’ Provident Fund/Mercantile Services Provident utilised to settle the actual claims made by the customers. Society and Employees’ Trust Fund in line with the respective statutes and regulations. The Company contributes 12%, 12% 2.6.2 Dividend Payables and 3% of gross emoluments of employees to the Employees’ Dividends on ordinary shares are recognised as a liability Provident Fund, Mercantile Services Provident Society and the and deducted from equity when they are recommended and Employees’ Trust Fund, respectively and is recognised as an declared by the Board of Directors. expense in profit and loss in the periods during which services are rendered by employees. 2.6.3 Deposits due to Customers 2.7.3 Short-Term Benefits These include term deposits and certificates of deposits of Singer Finance (Lanka ) PLC. Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service Subsequent to initial recognition, deposits are measured is provided. A liability is recognised for the amount expected at their amortised cost using the effective interest method, to be paid under short-term cash bonus if the Group has a except where the Company designates liabilities at fair value present legal or constructive obligation to pay this amount as through profit or loss. Interest paid/payable on these deposits a result of past services provided by the employee and the recognised in profit or loss obligation can be measured reliably.

2.6.3 Capital Commitments and Contingencies 2.8 Statement of Profit or Loss and Other Comprehensive Income Capital commitments and contingent liabilities of the Group are disclosed in the respective Notes, to the Financial 2.8.1 Revenue Recognition Statements. The Group has initially applied SLFRS 15- “Revenue from Contracts with Customers” from 1st April 2018. 2.7 Employee Benefits Performance obligations and revenue recognition policies 2.7.1 Defined Benefit Plan The Group net obligation in respect of defined benefit plan SLFRS 15 establishes a comprehensive framework for is calculated by estimating the amount of future benefits determining whether, how much and when revenue is that employees have earned in current and prior periods recognised. discounting that amount. As per the standard, revenue is measured based on the The calculation of defined benefit obligation is performed consolidation specified in a contact with a customer. The Group annually by a qualified actuary using the projected unit credit recognises revenue when it transfers control over a good or method. Remeasurement of the net defined benefit liability, service to a customer. Determining the timing of the transfer of which comprise actuarial gains and losses are recognised control at a point in time or over time require judgment. 101 271 199 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

2.8.1.1 Disaggregation of Revenue The company’s contracts with customers are in similar SLFRS 15 requires an entity to disaggregate revenue nature and revenue from these contracts are not significantly recognised from contracts with customers into categories affected by economic factors apart from the product and that depict how the nature, amount, timing and uncertainty service categories. The Company believes objective of this of revenue and cash flows are affected by economic factors. requirement will be met by using two type of category – timing of revenue and type of goods and services (Note 3.b. ii).

Sale of Goods Company sells goods to Revenue is recognised when the goods Revenue from sale of goods is (Normal Trading the customers on cash or are delivered to the customers. recognised when the significant Transactions) credit basis. At the time of risks and rewards of ownership delivery of the goods to the of the goods have passed to the customers, Company meets customers. its performance obligation. Sale of Goods Company sells its products to Revenue is recognised when the At the time of effecting hire (Hire Purchase its customers by entering into goods are delivered to the customers. sales the cash sales value is Transactions) Hire Purchase Agreements. Transaction price is estimated by recognised as sales. At the time of delivery of the adjusting the consideration for the time goods to the customers, value of money. As the HP agreements Company meets its are based on market interest rates performance obligations. the cash price and the adjusted consideration has no significant difference. Sale of Goods The Company sells goods At the time of delivering the goods At the time of delivering the (Consignment to the customers though to the end-customers, the revenue is goods to the end-customers, the Arrangements) consignment arrangements recognised. revenue is recognised. with third parties. At the time of delivering the goods to the end-customers, the Company meets its performance obligations. Extended Warranty Company provides extended The extended warranty fee income (net A portion of extended warranty Income warranty for certain products of taxes) is recognised over the period fee income is recognised upfront by charging additional of contact. Unrecognised income is to the revenue based on the pre- consideration from the accounted for as deferred revenue. determined rate. Unrecognised client. The Company meets income is accounted for as its performance obligations deferred revenue. over the period of extended warranty. Income on Suraksha When the Company sells Revenue is recognised over the period Revenue is recognised over & Service Fees goods under hire purchases, of hire purchase contact using effective the period of hire purchase an additional fee is charged interest rate. Unrecognised income is contact using effective interest as Suraksha and service accounted for as unearned income. rate. Unrecognised income fee. This fee is calculated is accounted for as unearned based on the value of the income. product. The Company meets its performance obligations over period of hire purchase contact. 200 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Type of product/service Nature and timing of satisfaction Revenue recognition under Revenue recognition under LKAS 18 of performance obligations, SLFRS 15 (applicable from 1st April 2018) (applicable prior to 1st April 2018) including significant payment terms Revenue on The Company provides Revenue is deferred at the time of Revenue recognised at the point Customer Loyalty loyalty points where they earning the loyalty points based in the of redeeming the points. Programme could redeem such points for expected redemption rate. Based on future purchases. the actual redemptions the revenue is recognised. Installation fee The Company provides Based on the stage of completion, Based on the stage of charged on AC AC installation services to installation fee is charged as revenue. completion, installation fee is products the customers at the time charged as revenue. of selling the AC products. The Company meets its performance obligations over period of AC Installation contacts.

2.8.2 Revenue Recognition Policy of Singer Finance PLC (d) Net Gain/(Loss) from Trading (a) Hire Purchase, Lease , Loans and Advances Net gain/(loss) from trading’ comprise gains less losses related to trading assets and liabilities, and include all realised The excess of aggregated contract receivables over the cost and unrealised fair value changes and dividends. of the hired assets constitutes the total unearned income at the commencement of a contract. The unearned income is recognised as revenue as it is earned , using the effective 2.8.3 Regulatory Provisions interest rate method. (a) Deposit Insurance Scheme In terms of the Finance Companies Direction No. 2 of (b) Interest 2010 “Insurance of Deposit Liabilities” issued on Interest income and expense are recognised in profit or loss 27th September 2010 all Registered Finance Companies using the Effective Interest Rate (EIR) method. The EIR is the are required to insure their deposit liabilities in the Deposit rate that exactly discounts the estimated future cash payments Insurance Scheme operated by the Monetary Board in terms and receipts through the expected life of the financial asset or of Sri Lanka Deposit Insurance Scheme Regulations No. 1 of liability (or, where appropriate, a shorter period) to the carrying 2010 issued under Sections 32A to 32E of the Monetary Law amount of the financial asset or liability. When calculating the Act with effect from 1st October 2010. EIR, the Company estimates future cash flows considering all contractual terms of the financial instrument, but not future Deposits to be insured include demand, time and savings credit losses. deposit liabilities and exclude the following.

zz Deposit liabilities to member institutions The calculation of the EIR includes transaction costs and fees and points paid or received that are an integral part of the EIR. zz Deposit liabilities to Government of Sri Lanka Transaction costs include incremental costs that are directly zz Deposit liabilities to shareholders, directors, key attributable to the acquisition or issue of a financial asset or management personnel and other related parties as defined financial liability. in Finance Companies Act Direction No. 03 of 2008 on Corporate Governance of Registered Finance Companies Interest income and expense presented in the Income zz Deposit liabilities held as collateral against any Statement include: accommodation granted Interest on financial assets and financial liabilities measured at amortised cost calculated using EIR method; Over Due zz Deposit liabilities falling within the meaning of dormant Interest have been accounted for on a cash received basis. deposits in terms of the Finance Companies Act, funds of which have been transferred to Central Bank of Sri Lanka (c) Fees and Commission Income and Expense Registered Finance Companies are required to pay a premium of 0.15% on eligible deposit liabilities as at end of Fees and commission income and expense that are integral the month to be payable within a period of 15 days from the to the EIR on a financial asset or liability are included in the end of the respective month. measurement of the EIR. Other fees and commission income are recognised as the related services are performed. 101 271 201 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

(b) Debt Securities Issued and Subordinated Term Debts (a) Current Tax These represent the funds borrowed by the Company for The current tax is the expected tax payable on the taxable long-term funding requirements. Subsequent to initial income for the year, using tax rates enacted or substantially recognition debt securities issued are measured at their enacted at the reporting date, and any adjustment to tax amortised cost using the effective interest method, except payable in respect of previous years. where the Company designates debt securities issued at fair value through profit or loss. Interest paid/payable is (b) Deferred Taxation recognised in profit or loss. Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for 2.8.4 Reserve Fund financial reporting purposes and the amounts used for taxation Singer Finance (Lanka) PLC is maintaining a reserve fund purposes. in compliance with Direction No. 01 of 2003 – Central Bank (Capital Funds) issued to Finance Companies and it will be Deferred tax is measured at the tax rates that are expected to used for only the purpose specified in the said Direction above. be applied to temporary differences when they reverse, based The details of the reserve fund are disclosed in Note 23.1. on tax laws that have been enacted or substantively enacted by the reporting date. 2.8.5 Expenditure Recognition A deferred tax asset is recognised for unused tax losses (a) Expenses are recognised in Profit and Loss on the basis and deductible temporary differences, to the extent that it is of a direct association between the cost incurred and the probable that future taxable profits will be available against earning of specific items of income. All expenditure incurred which they can be utilised. The carrying amount of deferred in the running of the business and in maintaining the Property, tax assets is reviewed at each reporting date and is reduced Plant and Equipment in a state of efficiency has been charged to the extent that it is no longer probable that the related tax to income in arriving at the profit for the year. benefit will be realised. (b) For the purpose of presentation of the Income Statement, Deferred tax assets and liabilities are offset if there is a legally the Directors are of the opinion that “function of expenses enforceable right to offset deferred tax assets and liabilities method” presents fairly the elements of the Company’s and when the deferred tax relates to income tax levied on the performance and hence such presentation method is adopted. same tax authority on the same taxable entity or on different tax entity but then intends to settle relevant tax liabilities and 2.8.6 Net Finance Cost assets on a net basis or their tax assets and liabilities will be Finance income comprises interest income on funds invested simultaneously realised. interest income from related parties and which is recognised as it accrues in profit or loss, using the effective interest rate method. Tax withheld on dividend income from Subsidiaries and Associates is recognised as an expense in the Consolidated Finance cost comprises interest payable on borrowings, Income Statement at the same time as the liability to pay the interest on security deposits. Borrowing costs that are related dividend is recognised. not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss (c) Value Added Tax (VAT) on Financial Services using the effective interest method. VAT on Financial Services is calculated in accordance with the amended Value Added Tax (Amendment) Act, No. 20 of 2016. Foreign currency gains and losses are reported on a net The base for the computation of Value Added Tax ion Financial basis as either finance income or finance cost depending on Services is the accounting profit before income tax adjusted whether foreign currency movements are in net gain or net for the economic depreciation and emolument of employees loss position. computed on prescribed rate.

2.8.7 Income Tax (d) Nation Building Tax on Financial Services (NBT) Income tax expense comprises both current and deferred tax. With effect from 1st January 2014, NBT of 2% was introduced Income tax expense is recognised in profit and loss, except to on supply of financial services via an amendment to the NBT the extent that it relates to items recognised directly in equity, Act No. 09 of 2009. NBT is chargeable on the same base or in Other Comprehensive Income. used for calculation of VAT on Financial services as explained in notes to the Financial Statements. 202 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

(e) Crop Insurance Levy Segment information is presented in the respective Notes to As per the provisions of the Section 14 of the Finance Act the Financial Statements. No. 12 of 2013, the CIL was introduced with effect from April 01, 2013 and is payable to the National Insurance Trust Fund. 2.12 Statement of Cash Flows Currently, the CIL is payable at 1% of the profit after tax. The Cash Flow Statement has been prepared using the indirect method. (f) Debt Repayment Levy (DRL) As per the Finance Act No. 35 of 2018, with effect from 2.13 Changes in Accounting Policy 1st October 2018, DRL of 7% was introduced on the value The Company has applied SLFRS 15 (refer sub note A) and addition attributable to the supply of financial services by each SLFRS 9 (refer sub note B) from 1st April 2018.A number of financial institution. DRL is chargeable on the same base used other new standards are also effective from 1st April 2018 for calculation of VAT on financial services as explained in but they do not have material impact on companies financial Note 3.16 above. statements due to the transition methods chosen by the Group in applying these standards, comparative information (g) Withholding Tax on Dividends Distributed by the Company throughout these financial statements has not been restated to Withholding tax that arises from the distribution of dividends by reflect the requirements of the new standards. the Company is recognised at the time the liability to pay the related dividend is recognised. A. SLFRS 15 Revenue from Contracts with Customers SLFRS 15 establishes a comprehensive framework for 2.9 Events After the Reporting Period determining whether, how much and when revenue is All material events after the reporting date have been recognised. It replaced LKAS 18 Revenue, LKAS 11 Construction considered and where necessary adjustments made in these contracts and related interpretations. Under SLFRS 15, revenue Financial Statements. is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer control-at a point in time or over time- requires judgment. 2.10 Earnings Per Share The Group presents basic Earnings Per Share (EPS) for its The Company has adopted SLFRS 15 using the cumulative effect ordinary shares. Basic EPS is calculated by dividing the Profit method (without practical expedients), with the effect of initially or Loss attributable to ordinary shareholders of the Company applying this standard recognised at the date of initial application by the weighted number of ordinary shares outstanding during (i.e. 1st April 2018). Accordingly, the information presented for the period. 2017 has not been restated – i.e. it is presented, as previously reported, under LKAS 18, and related interpretations, additionally, 2.11 Segment Reporting the disclosures requirements in SLFRS 15 have not generally An operating segment is a component of the Company been applied to comparative information. that engages in business activities from which it may earn revenues and incur expenses, including revenues and The effect of initially applying these standards is mainly expenses that relate to transactions with any of the Company’s attributes to the following, other components. All operating results are reviewed regularly zz Earlier recognition of revenue from extended warranties by the Group Chief Executive Officer to make decisions regarding resources to be allocated to the segments and zz Earlier recognition of revenue from option to purchase to assess its performance and for which discrete finance additional goods information is available.

Segment results that are reported to the Group CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to acquire Property, Plant and Equipment and intangible assets other than goodwill. 101 271 203 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

The following table summarises the impact net of tax of transition to SLFRS 15 on retained earnings Group/Company as at 1st April 2018.

Group Company Retained Earnings Impact of adopting Impact of adopting SLFRS 15 as at SLFRS 15 as at 1st April 2018 1st April 2018 Rs. Rs.

On over the time recognition of Extended Warranty 169,198,605 169,198,605 Impact on over the time recognition of Loyalty 57,420,784 57,420,784 (Less) Related Tax (38,540,820) (38,540,820) Total Impact on Retained Earnings as at 1st April 2018 188,078,569 188,078,569

The following tables summarise the impact of adopting SLFRS 15 on the Group/Company’s Statement of Financial Position as at 31st March 2019 and its Profit or Loss for the year then ended for each line item affected.

Impact on Consolidated statement of financial position

Amounts without Adjustment As Reported adoption of SLFRS 15 Rs. Rs.

31st March 2019 Assets Deferred Tax Assets – 57,905,549 57,905,549 Other Assets – – 57,984,444,907 Total assets 57,926,539,359 – 58,042,350,466 Revenue reserves 5,210,729,482 (174,898,866) 5,035,830,616 Non-controlling interest 1,508,546,318 – 1,508,546,318 Others 1,907,267,831 – 1,907,267,831 Equity 8,626,543,631 – 8,451,643,766 Other Non-Current Liabilities – 143,126,349 143,126,349 Others 4,037,916,677 – 4,037,916,677 Non-Current Liabilities 4,181,043,026 – 4,181,043,026 Trade Payables 7,257,359,014 63,679,183 7,321,038,197 Deferred Revenue 186,536,023 1,508,714 188,044,737 Tax Liability – 24,490,169 24,490,169 Others 27,853,709,603 – 27,853,709,603 Current Liabilities 28,188,644,067 – 35,409,663,665 Total Equity, Minority Interest and Liabilities 57,926,539,359 – 58,042,350,466 204 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Impact on Company statement of financial position

Amounts without\ Adjustment As Reported adoption of SLFRS 15 Rs. Rs.

31st March 2019 Assets Deferred Tax Assets – 57,905,549 57,905,549 Other Assets – – 37,045,583,249 Total Assets 37,045,583,249 – 37,103,488,798 Revenue reserves 3,026,500,012 (174,898,866) 2,851,601,146 Others 1,784,381,091 – 1,784,381,091 Equity 4,810,881,103 – 4,635,982,237 Other Non-Current Liabilities – 143,126,349 143,126,349 Others 9,422,743,613 – 9,422,743,613 Non-Current Liabilities 9,422,743,613 – 9,565,869,962 Trade Payables 5,050,496,541 63,679,183 5,114,175,724 Deferred Revenue 181,026,045 1,508,714 182,534,759 Tax Liability – 24,490,169 24,490,169 Others 17,580,435,947 – 17,580,435,947 Current Liabilities 22,896,677,791 – 22,901,636,599 Total equity, minority interest and Liabilities 37,045,583,249 – 37,103,488,798

Impact on consolidated statement of Profit or Loss

Amounts without\ Adjustment As Reported adoption of SLFRS 15 SLFRS 15 Rs. Rs.

For the year ended 31st March 2019 Revenue 58,310,926,027 194,469,213 58,505,395,240 Cost of sales (41,070,805,367) 69,159,745 (41,139,965,112) Direct Interest Cost (1,265,014,488) – (1,265,014,488) Gross Profit 16,100,415,639 – 16,100,415,639 Other Income 445,066,015 (107,004,324) 338,061,691 Total Administration and Selling Expense (12,441,116,410) – (12,441,116,410) Others (3,325,231,809) – (3,325,231,809) Income tax expenses (281,023,088) 5,125,440 (286,148,528) Profit for the period 498,110,347 – 385,980,583 101 271 205 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Impact on Company Statement of Profit or Loss

Amounts without\ Adjustment As Reported adoption of SLFRS 15 SLFRS 15 Rs. Rs.

For the year ended 31st March 2019 Revenue 43,423,420,216 194,469,213 43,617,889,429 Cost of sales (31,251,532,745) 69,159,745 (31,320,692,490) Gross Profit 12,171,887,471 – 12,297,196,939 Other Income 697,070,960 (107,004,324) 590,066,636 Total Administration and Selling Expense (10,446,394,702) – (10,446,394,702) Others (2,352,155,586) – (2,352,155,586) Income tax expenses 56,962,592 5,125,440 51,837,152 Profit for the period 127,370,735 – 140,550,439

Key Changes to the Accounting Policies on the Adoption of IFRS 15 Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determination of the timing of the transfer of control at a point or over time requires judgements.

The details of the new significant accounting policies and the nature of the changes to previous accounting policies in relation to the Company’s various goods and services are set out below:

Type of product/service New revenue/cost criteria Change from previous accounting policy

Extended Warranty The extended warranty fee income (net of taxes) The Company has recognised the full warranty Income is recognised over the period of extended income as revenue over the period of extended warranty. Unrecognised income is accounted for warranty without recognising a portion of as deferred revenue. revenue upfront. Revenue on Customer Revenue is deferred at the time of earning the Revenue is deferred at the time of earning Loyalty Programme loyalty points based in the expected redemption the loyalty points based in the expected rate. Based on the actual redemptions the redemption rate. revenue is recognised.

B. SLFRS 9 Financial Instruments SLFRS 9 set out requirements for recognised and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces LKAS 39 Financial Instruments: Recognition and Measurement. As a result of the adoption of SLFRS 9, the Group has adopted consequential amendments to LKAS 1 Presentation of Financial Instruments, which require impairment of financial assets to be presented in separate line item in the statement of profit or loss and OCI. The Company has adopted consequential amendments to SLFRS 7 Financial Instruments: Disclosures that are applied to disclosures about 2019 but have not been generally applied to comparative information.

SLFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, FVOCI and FVTPL. The classification of financial assets under SLFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. SLFRS 9 eliminates the previous LKAS 39 categories of held to maturity, loans and receivables and available for sale. SLFRS 9 largely retains the existing requirements in LKAS 39 for the classification and measurement of financial liabilities. 206 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

The Company has used an exemption not to restate comparative information for prior periods with respect to classification and measurement (including impairment) requirements. Differences in the carrying amounts of financial assets resulting from the adoption of SLFRS 9 are recognised in retained earnings as at 1st April 2018. Accordingly, the information presented for 2017/18 does not generally reflect the requirements of SLFRS 9, but rather those of LKAS 39.

The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application. zz The determination of the business model within which a financial asset is held. zz The designation and revocation of previous designations of certain financial assets and financial liabilities as measured at FVTPL. zz The designation of certain investments in equity instruments not held for trading as at FVOCI. zz If an investment in a debt security had low credit risk at the date of initial application of SLFRS 9, then the Group has assumed that the credit risk on the asset had not increased significantly since its initial recognition.

Accordingly, the following table summarises the impact, net of tax, of transition to SLFRS 9 on the opening balance of reserves, retained earnings and NCI as at 1st April 2018.

Group Company Impact on adoption Impact on adoption of SLFRS 9 on of SLFRS 9 on opening balances opening balances Rs. Rs.

(Reversal)/Charge of Impairment allowance on expected credit losses recognised under SLFRS 9 5,495,477,725 3,326,088,413 – Trade and other receivables (360,394,885) (248,222,744) Related Tax (76,440,870) (68,900,890) As at 1st April 2018 retained earnings after SLFRS 9 adjustment only 5,058,641,970 3,008,964,779 Non-Controlling interest as at 1st April 2018 1,349,113,963 – (Reversal)/Charge of Impairment allowance on expected credit losses recognised under SLFRS 9 – – Trade and other receivables (21,946,844) – Related Tax – – As at 1st April 2018 Non-Controlling interest after SLFRS 9 adjustment only 1,327,167 –

Group

Original classification New classification Original carrying New carrying Under LKAS 39 under SLFRS 9 amount under amount under LKAS 39 SLFRS 9 Rs. ’000 Rs. ’000

Financial Assets Investments in Non Quoted equity Available For Sale Fair Value through OCI 17,061,300 17,061,300 HP receivables Loans and Receivables Amortised Cost 7,534,792,738 7,507,269,105 Lease Receivables Loans and Receivables Amortised Cost 11,383,225,323 11,344,294,699 Loan Receivables Loans and Receivables Amortised Cost 2,900,362,916 2,830,777,250 Loan Receivables Loans and Receivables Amortised Cost 788,000 788,000 Trade debtors Loans and Receivables Amortised Cost 5,361,912,649 5,134,999,363 Other Debtors Loans and Receivables Amortised Cost 1,673,053,244 1,673,053,244 Cash and Cash equivalents Loans and Receivables Amortised Cost 1,339,006,740 1,339,006,740 Total financial assets 30,210,202,910 29,847,249,701 101 271 207 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Original classification New classification Original carrying New carrying Under LKAS 39 under SLFRS 9 amount under amount under LKAS 39 SLFRS 9 Rs. ’000 Rs. ’000

Financial Liabilities Trade and Other Payables Amortised Cost Amortised Cost 8,112,971,679 8,112,971,679 Derivatives Financial Liability FVTPL FVTPL 8,337,510 8,337,510 Debentures Amortised Cost Amortised Cost 6,983,551,005 6,983,551,005 Bank Loans Amortised Cost Amortised Cost 16,418,864,972 16,418,864,972 Bank Overdraft Amortised Cost Amortised Cost 2,132,691,242 2,132,691,242 Amount Due to Related Party Amortised Cost Amortised Cost 389,037,813 389,037,813 Dividend Payable Amortised Cost Amortised Cost 220,838,973 220,838,973 Total financial liabilities 34,266,293,194 34,266,293,194

Company

Original classification New classification Original carrying New carrying Under LKAS 39 under SLFRS 9 amount under amount under LKAS 39 SLFRS 9 Rs. ’000 Rs. ’000

Financial assets Investments in Non Quoted equity Available For Sale Fair Value through OCI 17,020,000 17,020,000 Investments in Debentures Held to Maturity Amortised Cost 912,090,000 911,272,652 Related Party Loans Loans and Receivables Amortised Cost 1,219,150,767 1,217,819,977 HP receivables Loans and Receivables Amortised Cost 7,451,947,830 7,425,246,259 Amount due from Related Party Loans and Receivables Amortised Cost 185,396,027 185,396,027 Trade debtors Loans and Receivables Amortised Cost 3,979,170,189 3,795,796,884 Other Debtors Loans and Receivables Amortised Cost 1,208,065,613 1,208,065,613 Cash and Cash equivalents Loans and Receivables Amortised Cost 1,017,627,946 1,017,627,946 Total financial assets 15,990,468,372 15,742,245,628

Financial liabilities Trade and Other Payables Amortised Cost Amortised Cost 6,003,703,094 6,003,703,094 Derivatives Financial Liability FVTPL FVTPL 8,337,510 8,337,510 Debentures Amortised Cost Amortised Cost 4,991,435,763 4,991,435,763 Bank Loans Amortised Cost Amortised Cost 11,707,742,249 11,707,742,249 Bank Overdraft Amortised Cost Amortised Cost 1,237,088,725 1,237,088,725 Amount Due to Related Party Amortised Cost Amortised Cost 3,012,216,978 3,012,216,978 Dividend Payable Amortised Cost Amortised Cost 166,754,628 166,754,628 Total financial liabilities 27,127,278,947 27,127,278,947

SLFRS 9 replaces the “incurred loss” model in LKAS 39 with an “expected credit loss” (ELC) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investment at Amortised cost,

For assets in scope of the SLFRS 9 impairment model, impairment losses are generally expected to increase and become more volatile. The Company has determined that the application of SLFRS 9’s impairment requirements at 1st April 2018 results in an additional allowances for impairment as follows. 208 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

The following table reconcile the carrying amounts of financial assets under LKAS 39 to the carrying amounts under SLFRS 9 on transition on 1st April 2018 Group.

LKAS 39 Reclassification Remeasurement SLFRS 9 Carrying amounts Carrying amounts at 31st march 2018 at 31st march 2019 Rs. Rs.

Financial assets Amortised cost Trade and other receivable Brought forward: trade receivables 5,361,912,649 Remeasurement (246,301,807) Carried forward: amortised cost 5,115,610,842

Trade and other receivable Brought forward: Hire purchases 7,534,792,738 Remeasurement (27,523,633) Carried forward: amortised cost 7,507,269,105

Trade and other receivable Brought forward: Loan debtors 2,900,362,916 Remeasurement (69,585,666) Carried forward: amortised cost 2,830,777,250

Trade and other receivable Brought forward: lease receivable 11,383,225,323 Remeasurement (38,930,624) Carried forward: amortised cost 11,344,294,699 Total Amortised cost 27,180,293,626 (382,341,279) 26,797,952,347

The following table reconcile the carrying amounts of financial assets under LKAS 39 to the carrying amounts under SLFRS 9 on transition on 1st April 2018 Company.

LKAS 39 Reclassification Remeasurement SLFRS 9 Carrying amounts Carrying amounts at 31st March 2018 at 31st march 2019 Rs. Rs. Rs. Rs.

Financial assets Amortised cost Trade and other receivable Brought forward: trade receivables 3,979,170,189 Remeasurement (219,373,305) Carried forward: amortised cost 3,759,796,884 Trade and other receivable Brought forward: Hire purchases 7,451,947,830 Remeasurement (26,701,301) Carried forward: amortised cost 7,425,246,529 101 271 209 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

LKAS 39 Reclassification Remeasurement SLFRS 9 Carrying amounts Carrying amounts at 31st March 2018 at 31st march 2019 Rs. Rs. Rs. Rs. Trade and other receivable Brought forward: related party 1,219,150,767 Remeasurement (1,330,790 ) Carried forward: amortised cost 1,217,819,977 Debenture Brought forward: Debenture 912,090,000 Remeasurement (817,348) Carried forward: amortised cost 911,272,652 Total Amortised cost 13,562,358,786 (248,222,744) 13,314,136,042

2.14 Standards issued but not yet effective (A) SLFRS 16 Leases Effective Date – 1st January 2019 SLFRS 16 sets out the principles for the recognition, IFRIC 23 Uncertainty over Tax Treatments. measurement, presentation and disclosure of leases and – Prepayment features with negative compensation requires lessees to account for all leases under a single (Amendments to SLFRS 9). on-balance sheet model similar to the accounting for finance leases under LKAS – 17. The objective is to ensure that – Long-term interests in Associates and Joint Ventures lessees and lessors provide relevant information in a manner (Amendments to LKAS 28). that faithfully represents those transactions. The information – Plan Amendment, Curtailment or settlement gives a basis for the users of Financial Statements to assess (Amendment to LKAS 19). the effect that leases have on the financial position. – Annual Improvements to SLFRS Standards 2015-2017 Cycle- various standards. SLFRS 16 is effective for annual reporting periods beginning – Annual Improvements to SLFRS 3-Business combinations, on or after 1st January 2019, with early adoption permitted. SLFRS 11 – Joint Arrangements, LKAS12 Income Taxes. The Group is assessing the potential impact on its consolidated Financial Statements resulting from the Effective Date – 1st January 2020 application of SLFRS 16. – Amendments to References to Conceptual Framework in SLFRS standards (B) Other standards – Amendments to LKAS 1 and LKAS 8 The following amended standards and the interpretations – Amendments to SLFRS 3 are not expected to have a significant impact on the Group’s – Effective Date – 1st January 2022 consolidated financial statements. 210 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

3. Revenue The effect of initially applying SLFRS 15 on the Group’s revenue from the contracts with customers is described in Note 2.13 Due to the cumulative effect method chosen in applying SLFRS 15, comparative information has not been restated to reflect the new requirements.

(a) Revenue Streams Group generates revenue primarily from the sale of consumer electronic, home appliance, mobile phones, personal computer, laptops, furnitures, domestic and industrial sewing machines, agricultural equipment and provide services of financing through hire purchases, leasing, gold loans etc. (See Note 1.13 in Policies) to its customers.

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Revenue from Contracts with customers 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892 Total Revenue 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

3.1 Revenue from Contracts with Customers Sale of Goods 51,191,440,621 57,084,528,259 40,103,798,429 46,530,148,517 Rendering of Services (Note 3.2) 7,313,954,619 8,037,776,263 3,514,091,000 4,379,884,375 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

3.2 Rendering of Services Interest Income on Hire Purchase 2,787,475,281 3,589,628,519 2,780,170,190 3,533,706,112 Interest Income on Leasing 2,630,826,396 2,500,541,881 – – Interest Income on Loans 837,927,774 785,572,115 – – Service Income 1,057,725,168 1,162,033,748 733,920,810 846,178,263 7,313,954,619 8,037,776,263 3,514,091,000 4,379,884,375

(b) Disaggregation of revenue from contract with customers In the following table, revenue from contracts with customers is disaggregated by major products, service lines and timing of revenue recognition.

Consolidated Company (i) Major Products/Service Lines For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Consumer Electronics 6,482,904,635 8,210,121,000 6,480,471,000 8,210,121,000 Financial Services 7,313,954,619 8,037,776,263 3,514,091,000 4,379,884,375 Furniture 2,681,806,000 3,416,843,000 2,681,806,000 3,416,843,000 Home Appliances 17,202,756,000 19,785,509,468 17,196,056,000 19,774,100,000 IT products 19,461,519,686 18,524,320,790 8,383,589,429 7,971,414,000 Sewing 2,585,372,000 3,615,763,000 2,585,372,000 3,615,762,517 Other 2,777,082,300 3,531,971,000 2,776,504,000 3,541,908,000 Revenue from contract with customers 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892 101 271 211 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Consolidated Company (ii) Timing of Revenue Recognition For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Products transferred at a point in time 51,477,248,203 57,400,383,744 40,065,801,653 46,530,148,517 Products and Services transferred Over Time 7,028,147,037 7,721,920,778 3,552,087,776 4,379,884,375 Revenue from Contracts with Customers 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

(c) Contract Balances Following table provides information about receivables, contract liabilities from contracts with customers.

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Receivables which are included in “trade and other receivables” 528,961,365 226,607,130 212,806,334 137,147,305 Contract Liabilities (Note 29.1)* 36,921,881 19,638,343 36,921,881 19,638,343

*Contract Liabilities primarily relate to the advance consideration received from customers for Air Conditioning installation projects, for which revenue is recognised over time.

4. Operating Segment Information 4.1 Segment Products and Services

Consumer Electronics Televisions, Audios, DVD and Other Electronic Products Financial Services Leasing, Hire Purchase and Loans Furniture Wood and Layered Furniture, Sofa Sets, Steel Furniture and Mattresses Home Appliances Refrigerators, Washing Machines, Deep Freezers, Bottle Coolers, Air Conditioners, Fans, Small Appliances and Kitchen Ranges IT Products Laptops, mobile and Smart Phones Sewing Domestic and Industrial Sewing Machines and General Merchandise Other Motor Bikes, Bicycles, Water Pumps, Paddy Threshers and Tractors 212 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

4.2 Segmental Analysis of Revenue is as follows:

Consumer Electronics 6,482,905 8,210,121 6,480,471 8,210,121 Financial Services 7,313,954 8,037,776 3,514,091 4,379,884 Furniture 2,681,806 3,416,843 2,681,806 3,416,843 Home Appliances 17,202,756 19,785,509 17,196,056 19,774,100 IT Products 19,461,520 18,524,322 8,383,589 7,971,414 Sewing 2,585,372 3,615,763 2,585,372 3,615,763 Other 2,777,082 3,531,971 2,776,504 3,541,908 58,505,395 65,122,305 43,617,889 50,910,033

4.3 Segmental Analysis of Profit Before Tax is as follows:

Consumer Electronics 477,627 376,366 345,016 370,412 Financial Services 1,847,124 2,093,507 602,802 767,812 Furniture 133,296 127,445 115,396 125,432 Home Appliances 997,565 1,240,300 751,790 858,837 IT Products 839,225 1,078,101 154,857 114,025 Sewing 135,028 158,142 119,240 160,020 Other 103,998 132,982 87,904 125,402 Dividend – 180 462,621 923,614 Gain on Sale of Shares in Subsidiary (Note 5) – – 14,050 – Impairment Loss on Trade Receivables (Note 5) (521,421) (367,607) (212,806) (137,147) Operating Profit 3,997,361 4,839,416 2,440,869 3,308,406 Net Finance Cost (3,033,076) (2,531,375) (2,320,956) (2,149,727) VAT on Financial Services (292,156) (258,989) (31,200) (52,800) Profit Before Tax 672,129 2,049,052 88,713 1,105,879

4.4 There are no separately distinguishable assets and liabilities for the above segments. 101 271 213 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

5. Other Income

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Dividend Income – Quoted – – 198,601,207 509,613,843 – Unquoted 206,400 180,000 264,020,000 414,000,000 Gain/(Loss) on Disposal of Property Plant & Equipment (279,943) (10,851,256) (483,591) (11,220,725) Gain on Sale of Shares in Subsidiary Company (Note 5.1) – – 14,049,303 – Miscellaneous Income 259,479,830 281,899,877 35,250,696 87,008,428 Income from Financial Services 78,655,404 89,029,554 78,629,021 89,029,554 338,061,691 360,258,175 590,066,636 1,088,431,100

5.1 Gain on Sale of Shares in Subsidiary Company On 31st August 2018, the Company disposed 2,754,174 shares of its subsidiary Singer Finance (Lanka) PLC (1.36%) to general public for a consideration of Rs. 38.3 million, which has resulted in diluting its ownership of Company from 81.29% to 79.93%.

6. Finance Income

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Interest Income – Related Parties – – 387,330,579 273,523,543 – Others 83,820,431 123,584,230 22,711,282 25,926,776 Unwinding Interest Income on Interest Free Employee Loans 51,530,147 46,067,134 43,864,782 45,147,730 Foreign Exchange Gain 72,320,101 5,898,356 – – 207,670,679 175,549,720 453,906,643 344,598,049 214 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

7. Finance Cost

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Interest on Overdrafts and Loans (2,834,533,161) (2,515,226,927) (2,345,567,628) (2,261,875,743) Interest on Security Deposits (148,317,161) (168,619,531) (146,162,296) (168,619,532) Foreign Exchange Loss (257,896,055) (23,078,214) (11,964,773) (21,561,543) Interest Expense on Related Party Payables – – (271,167,532) (42,268,333) (3,240,746,377) (2,706,924,672) (2,774,862,229) (2,494,325,151) Net Finance Cost* (3,033,075,698) (2,531,374,952) (2,320,955,586) (2,149,727,102)

* Finance Cost (Note 7) Less Finance Income (Note 6).

8. Profit Before Tax

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Stated After Charging all Expenses Including the Following: Executive Directors’ Emoluments 108,140,247 197,578,515 72,346,480 136,714,404 Non-Executive Directors’ Fees 16,918,890 16,676,920 8,522,000 8,306,800 Auditors’ Remuneration – Statutory Audit 5,725,000 4,510,000 2,100,000 2,100,000 – Audit-Related Services 525,000 4,250,000 – 990,000 – Non-Audit Services 375,000 640,000 – – Impairment on Trade and Other Receivables (Note 8.1) 783,159,310 652,643,612 474,683,286 422,183,788 Impairment of Inventories (Note 16.1) 172,995,327 15,211,882 174,028,852 44,233,025 Software Impairment (Note 12.2) – 5,605,554 – – Amortisation of Intangible Assets (Note 12.8) 21,698,455 31,694,467 11,947,021 22,343,871 Depreciation on Property, Plant and Equipment (Note 11.2/11.11) 579,242,530 632,735,522 453,474,284 509,249,151 Personnel Costs (Note 8.2) 6,114,251,526 7,100,184,259 4,924,654,157 5,832,223,437 Operating Lease Rentals 1,155,691,416 1,253,040,814 683,045,000 1,191,322,880 Donations 466,250 763,465 360,000 335,220 Royalty 649,952,432 611,084,317 484,717,794 513,552,753 101 271 215 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

8.1 Impairment on Trade and Other Receivables Impairment for Hire Purchase Receivables (Note 18.3) 14,854,732 22,044,710 17,380,351 33,294,359 Impairment for Lease Receivables (Note 18.3) 143,871,915 68,944,048 – – Impairment for Loan Debtors (Note 18.3) 140,642,025 156,665,425 – – Impairment for Trade Debtor (Note 18.3) 222,052,712 119,952,947 195,425,983 103,852,947 Impairment Loss on Trade Receivables 521,421,384 367,607,130 212,806,334 137,147,306 Impairment for Other Debtors (Note 18.3) 261,737,926 285,036,482 261,876,952 285,036,482 783,159,310 652,643,612 474,683,286 422,183,788

8.2 Personnel Costs

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Staff Costs 5,506,018,143 6,320,971,861 4,435,268,258 5,175,603,185 Provision for Employee Benefit Obligations 144,669,128 161,489,696 103,310,278 114,418,462 Defined Contribution Plan Costs – EPF, ETF and MSPS 463,564,254 617,722,702 386,075,621 542,201,790 6,114,251,526 7,100,184,259 4,924,654,157 5,832,223,437

9. Income Tax Expense

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Current Income Tax Expense Current Tax Expense (Note 9.1) 477,606,668 614,776,454 143,238,137 224,296,133 Under/(Over) Provision in Respect of Previous Year (Note 31) 104,474,835 20,055,084 12,102,703 359,716

Tax on Dividend Income WHT on Dividend Received from Subsidiary Companies 69,992,896 112,358,820 – – 652,074,399 747,190,358 155,340,840 224,655,849

Deferred Tax Expense/(Income) (Note 9.2) (365,925,870) 81,567,175 (207,177,991) (117,800,290) 286,148,529 828,757,533 (51,837,151) 106,855,559 216 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

9.1 Reconciliation Between Accounting Profit and Taxable Profit

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Profit Before Tax 672,129,112 2,049,052,146 88,713,288 1,105,878,833 Aggregate Accounting Profit 672,129,112 2,049,052,146 88,713,288 1,105,878,833 Aggregate Disallowable Expenses 7,587,638,573 8,373,267,670 1,318,882,157 1,347,270,689 Aggregate Tax Deductible Expenses (6,570,053,369) (8,191,887,563) (896,030,671) (728,478,061) Income Not Liable for Tax – – – (923,613,843) Tax Losses B/f 12,637,687 24,825,242 – – Adj: Tax Loss Claimed During the Period (12,637,687) (14,694,244) – – Tax Loss Carried Forward 13,860,390 12,637,687 – – Qualifying Payments Relief for Investments – (1,997,909) – – Unrealised Profit 2,163,404 (23,849,698) – – 1,705,738,100 2,227,353,331 511,564,774 801,057,618 Taxable Profit 20% – 111,030,990 – – Taxable Profit 28% 1,705,738,100 2,116,322,341 511,564,774 801,057,618 1,705,738,100 22,227,353,331 511,564,774 801,057,618 Current Income Tax 20% – 22,206,198 – – Current Income Tax 28% 477,606,668 592,570,256 143,238,137 224,296,133 Current Income Tax 477,606,668 614,776,454 143,238,137 224,296,133

The Group tax expense is based on the taxable profit of each company in the Group. Singer (Sri Lanka) PLC and six subsidiary companies – Singer Finance (Lanka) PLC, Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC, Reality (Lanka) Limited, Singer Digital Media (Pvt) Limited and Singer Business School (Pvt) Limited are liable to pay Income Tax at 28% on taxable profit and Regnis Appliances (Pvt) Limited is liable at a rate of 20%.

The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience.

9.2 Deferred Tax Expense/(Income)

Consolidated Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Deferred Tax Charge/(Credit) Arising due to – Origination and Reversal of Temporary Differences (Note 26.1) (356,631,694) 82,215,026 (200,985,408) (110,059,561) Deferred Tax Impact on Unrealised Profit in Inventory (Note 26.1) 190,793 7,092,878 – – Deferred Tax Impact on Realisation of Revaluation Surplus (Note 26.1) (9,484,969) (7,740,729) (6,192,583) (7,740,729) (365,925,870) 81,567,175 (207,177,991) (117,800,290) 101 271 217 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

9.3 Deferred Tax has been computed using the enacted tax rates of 28% and 20% applicable for the entities in the Group.

9.4 Tax Recognised in Other Comprehensive Income

For twelve months ended 31st March 2019 For fifteen months ended 31st March 2018 Before Tax Tax Expense Net of Tax Before Tax Tax Expense Net of Tax Rs. Rs. Rs. Rs. Rs. Rs.

Group Revaluation Gain on Property, Plant and Equipment 882,824,365 (247,190,822) 635,633,543 – (516,049,055) (516,049,055) Actuarial Gain/(Loss) on Employee Benefit Obligations (Note 27) (21,158,221) 5,871,651 (15,286,570) (18,910,000) 6,319,485 (12,590,515) 861,666,144 (241,319,171) 620,346,973 (18,910,000) (509,729,570) (528,639,570)

Company Revaluation Gain on Property, Plant and Equipment (Note 22.1) 453,751,963 (127,050,550) 326,701,413 – (198,082,001) (198,082,001) Actuarial Gain/(Loss) on Employee Benefit Obligations (Note 27) (26,947,676) 7,545,349 (19,402,327) (9,478,416) 2,653,957 (6,824,459) 426,804,287 (119,505,201) 307,299,086 (9,478,416) (195,428,044) (204,906,460)

10. Earnings Per Share 10.1 Basic Earnings Per Share is calculated by dividing the profit for the period attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

10.2 The following reflects the income and share data used in the Basic Earnings per Share computations:

Consolidated Company For fifteen For twelve For fifteen For twelve months ended months ended months ended months ended 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Profit Attributable to Ordinary Equity Holders of the Parent Profit for the Period (Rs.) 385,980,583 1,220,294,613 140,550,439 999,023,274 Profit Attributable to Ordinary Equity Holders of the Parent (Rs.) 250,121,091 1,043,682,205 140,550,439 999,023,274

Weighted Average Number of Ordinary Shares Weighted Average Number of Ordinary Shares 375,628,830 375,628,830 375,628,830 375,628,830 Basic Earnings per Share (Rs.) 0.67 2.78 0.37 2.66 218 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

11. Property, Plant and Equipment 11.1 Gross Carrying Amounts – Consolidated

Balance as at Additions/ Increase/(Decrease) Disposals/ Balance as at 1st April 2018 Transfers in Revaluation Transfers 31st March 2019 Rs. Rs. Rs. Rs. Rs.

At Cost Motor Vehicles 312,700,081 30,958,330 – 77,989,546 265,668,865 Furniture and Equipment 342,260,204 59,887,400 – 1,201,483 400,946,121 Plant and Machinery 1,132,946,964 339,947,672 – 4,801,670 1,468,092,965 Culinary School Equipment 75,814 – – – 75,814 E.D.P. Equipment 460,745,984 90,907,738 – 7,927,321 543,726,401 Shop Furniture 658,284,574 50,879,138 – – 709,163,712 Shop Equipment 996,799,353 151,342,786 – – 1,148,142,139 Improvements on Leasehold Premises 930,078,677 116,557,941 – – 1,046,636,618 4,833,891,651 840,480,394 – 91,920,020 5,582,452,636

At Valuation Freehold Land 2,297,611,701 – 606,566,750 – 2,904,178,451 Freehold Buildings 1,030,693,329 75,006,193 276,257,615 100,224,444 1,281,732,693 3,328,305,030 75,006,193 882,824,365 100,224,444 4,185,911,144 Gross Carrying Amount Excluding Capital WIP 8,162,196,681 915,486,587 882,824,365 192,144,464 9,768,363,780

Capital Work-In-Progress Machinery and Equipment 136,611,420 82,674,298 – 213,485,434 5,800,284 Improvements on Leasehold Premises 2,267,202 25,206,043 – 7,931,912 19,541,333 Total Capital Work-in-Progress 138,878,622 107,880,341 – 221,417,346 25,341,617 Total Gross Carrying Amount 8,301,075,303 1,023,366,928 882,824,365 413,561,810 9,793,705,397

11.2 Depreciation and Impairment Losses – Consolidated

Balance as at Charge for the Disposals Balance as at 1st April 2018 Year 31st March 2019 Rs. Rs. Rs. Rs.

Freehold Buildings 65,572,166 42,300,544 100,224,446 7,648,264 Motor Vehicles 152,163,236 25,466,155 28,509,594 149,119,797 Furniture and Equipment 234,663,907 24,985,266 1,149,148 258,500,025 Plant and Machinery 578,126,684 89,443,423 4,271,103 663,299,004 Culinary School Equipment 75,814 – – 75,814 E.D.P. Equipment 276,522,024 51,531,814 7,683,098 320,370,741 Shop Furniture 354,573,820 89,662,572 – 444,236,392 Shop Equipment 449,390,749 142,768,808 – 592,159,557 Improvements on Leasehold Premises 540,563,259 113,083,947 – 653,647,206 Total Depreciation and Impairment Loss 2,651,651,659 579,242,530 141,837,390 3,089,056,800 101 271 219 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

11.3 Carrying Amounts

Group As at As at 31st March 2019 31st March 2018 Rs. Rs.

At Cost 2,518,736,842 2,386,690,780 At Valuation 4,185,911,755 3,262,732,864 Total Carrying Amount of Property, Plant and Equipment 6,704,648,597 5,649,423,644

11.4 Prior year Error Correction on Singer Industries (Ceylon) PLC Property Valuation Due to an oversight Company has not revalued its building to reflect its value in its financial statements over the years. The building is brought in to financial statements by obtaining a value through an independent professionally qualified valuer. Accordingly building was valued at Rs. 68 million and was incorporated as part of Buildings under Property Plant and Equipment through retained earnings. Due to the impracticability of determining the specific effects of the error on comparative information for one or more prior periods presented no restatement of prior year financial statements has been made.

Rs.

Fair Value as at 31st March 2019 68,650,000 Deferred Tax relating to Revaluation (19,222,000) Net Impact on retained Earnings as at 31st March 2019 49,428,000

11.5 During the financial year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs. 733,580,136/- (2017/2018 – Rs. 887,107,521/-) on cash basis.

11.6 Lands and Buildings were revalued during the financial year 2018/19 by Messrs Chulananda Wellappili, an Independent Valuer who holds degrees of B.Sc State Management and Valuation, M.Sc Town and Country planning and PG. Dip. in Regional Planning. Further he is a Graduate Member of Institute of Valuers of Sri Lanka, A member of Institute of Town and Country Planning Sri Lanka, Senior certified valuer of international Real Estate Institute of USA. A Corporate Member of the Institute of Revenues, Rating and Valuations of UK. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st March 2019. The surplus arising from the revaluation was transferred to a revaluation reserve.

11.7 The carrying amount of the revalued assets that would have been included in the Financial Statements had the assets been carried at cost would be as follows:

Carrying Amount Rs.

Land 112,593,796 Building 337,602,186 Total Carrying Amount 450,195,982

11.8 The amount of the Property, Plant and Equipment includes fully-depreciated assets value would be as follows:

As at As at 31st March 2019 31st March 2018 Rs. Rs.

Fully Depreciated Assets 1,319,162,323 1,031,206,991 220 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

11.9 Depreciation charge for the year is included in the following line items in the Statement of Profit or Loss and Other Comprehensive Income:

For twelve For fifteen months ended months ended 31st March 2019 31st March 2018 Rs. Rs.

Cost of Sales 125,378,081 124,148,542 Administration Expenses 453,864,449 508,586,980 579,242,530 632,735,522

11.10 Gross Carrying Amounts – Company

Balance as at Additions/ Increase/ Disposals/Transfers Balance as at 1st April 2018 Transfers (Decrease) in 31st March 2019 Revaluation Rs. Rs. Rs. Rs. Rs.

At Cost

Motor Vehicles 285,341,588 30,958,330 – 67,809,546 248,490,372 Furniture and Equipment 260,667,140 10,369,307 – – 271,036,447 Plant and Machinery 306,098,212 84,765,872 – – 390,864,084 Culinary School Equipment 75,814 – – – 75,814 E.D.P. Equipment 352,913,798 73,441,896 – 150,549 426,205,145 Shop Furniture 658,284,574 50,879,138 – – 709,163,712 Shop Equipment 996,799,354 151,342,786 – – 1,148,142,140 Improvements on Leasehold Premises 799,006,950 54,745,326 – – 853,752,276 3,659,187,430 456,502,655 – 67,960,095 4,047,729,990

At Valuation Freehold Land 810,774,200 – 284,984,250 – 1,095,758,450 Freehold Buildings 654,640,626 2,873,637 168,767,713 61,928,953 764,353,023 1,465,414,826 2,873,637 453,751,963 61,928,953 1,860,111,473 Total Gross Carrying Amount 5,124,602,256 459,376,292 453,751,963 129,889,048 5,907,841,463

101 271 221 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

11.11 Depreciation and Impairment Losses – Company

Balance as at Charge for the Disposals Balance as at 1st April 2018 Year 31st March 2019 Rs. Rs. Rs. Rs.

Freehold Buildings 34,483,985 27,444,968 61,928,953 – Motor Vehicles 135,073,701 16,801,858 23,718,046 128,157,513 Furniture and Equipment 194,476,799 22,095,529 – 216,572,328 Plant and Machinery 200,686,289 21,784,279 – 222,470,568 Culinary School Equipment 75,814 – – 75,814 E.D.P. Equipment 211,161,448 37,519,680 11,655 248,669,473 Shop Furniture 354,573,819 89,662,572 – 444,236,391 Shop Equipment 449,390,751 142,768,808 – 592,159,559 Improvements on Leasehold Premises 462,082,088 95,396,590 – 557,478,678 Total Depreciation and Impairment Losses 2,042,004,694 453,474,284 85,658,654 2,409,820,324

11.12 Carrying Amounts

As at As at 31st March 2019 31st March 2018 Rs. Rs.

At Cost 1,637,909,664 1,651,666,721 At Valuation 1,860,111,475 1,430,930,841 Total Carrying Amount of Property, Plant and Equipment 3,498,021,139 3,082,597,562

11.13 During the financial year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs. 459,376,292/- (2017/2018 – Rs. 600,451,154/-) on cash basis.

11.14 Lands and Buildings were revalued during the financial year 2018/19 by Messrs Chulananda Wellappili, an Independent Valuer. who holds degrees of B.Sc State Management and Valuation, M.Sc Town and Country Planning and PG. Dip. in Regional Planning. Further he is a Graduate Member of Institute of Valuers of Sri Lanka, A member of Institute of Town and Country Planning Sri Lanka, Senior certified Valuer of international Real Estate Institute of USA. A corporate member of Institute of Revenues, Rating and Valuations of UK. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st March 2019. Such assets were valued on contractors method for existing use basis. The surplus arising from the revaluation was transferred to a revaluation reserve.

11.15 The carrying amount of the revalued assets that would have been included in the Financial Statements had the assets been carried at cost would be as follows:

Carrying Amount Rs.

Land 100,851,000 Building 268,429,761 Total carrying amount 369,280,761 222 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

11.16 The amount of the property, plant and equipment includes fully depreciated assets value would be as follows:

As at As at 31st March 2019 31st March 2018 Rs. Rs.

Fully Depreciated Assets 1,008,975,247 771,566,098

11.17 Depreciation charge for the year is included in the following line items in the Statement of Profit or Loss.

For twelve months For fifteen months ended 31st March ended 31st March 2019 2018 Rs. Rs.

Cost of Sales 38,361,507 39,135,949 Administration Expenses 415,112,777 470,113,202 453,474,284 509,249,151

11.18 Information on the Freehold Land and Buildings of the Group

Location Extent Buildings Cost or Cost or Total Value (Perches) (Square Revaluation of Revaluation of Feet) Land Buildings Rs. Rs. Rs. Attidiya No. 190, Main Road, Attidiya, Dehiwala 6.2 2260 18,600,000 9,153,000 27,753,000 Ahangama No. 24A, Matara Road, Ahangama 14 1630 25,200,000 6,825,875 32,025,875 Ambalantota Main Street, Ambalantota 6.6 1885 16,500,000 5,278,000 21,778,000 Ambanpola No. 108, Yaluwewa, Ambanpola. 10 – 2,000,000 – 2,000,000 Balangoda Ratnapura Road, Balangoda 6.2 2080 20,150,000 7,722,000 27,872,000 Bandarawela Main Street, Bandarawela 4.1 2660 10,250,000 11,510,000 21,760,000 Borella D.S. Senanayaka Mawatha, Borella 4.64 2310 69,600,000 9,240,000 78,840,000 Chilaw Bazaar Street, Chilaw 13.05 4120 42,412,500 15,656,000 58,068,500 Colpetty No. 143, Galle Road, Colombo 03 3.35 1440 56,950,000 6,156,000 63,106,000 Eheliyagoda Ratnapura Road, Eheliyagoda 5.73 1660 11,460,000 4,316,000 15,776,000 Embilipitiya Colombo Road, Pallegama, Embilipitiya 4.6 2070 16,100,000 7,917,750 24,017,750 Galle Main Street, Galle 2.84 2250 11,360,000 9,112,500 20,472,500 Galle No. 13 and 15, Wackwella Road, Galle 12 – 54,000,000 – 54,000,000 Gampaha Colombo Road, Gampaha 17.87 7870 62,545,000 30,220,800 92,765,800 101 271 223 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Location Extent Buildings Cost or Cost or Total Value (Perches) (Square Revaluation of Revaluation of Feet) Land Buildings Rs. Rs. Rs. Hikkaduwa Galle Road, Hikkaduwa 8.74 2400 24,035,000 8,160,000 32,195,000 Kadawatha Kandy Road, Kadawatha 3.8 1150 8,250,000 11,980,000 20,230,000 Kadawatha No. 430/1, Ganemulla Road, Ihala-Karagahamuna, Kadawatha 4.38 – 10,425,000 – 10,425,000 Kalawana No. J63A, Watapotha Road, Nivithigala, Ratnapura 258.66 – 7,000,000 – 7,000,000 Kandy No. 129, Kotugodella Veediya, Kandy 9.55 2900 42,975,000 6,960,000 49,935,000 Kandy – Mega Sirimavo Bandaranaike Mawatha, Kandy 15.7 12840 36,715,000 69,336,000 106,051,000 Katugastota Madawala Road, Katugastota 4.875 1620 10,106,250 6,743,250 16,849,500 Kirindiwela Gampaha Road, Kirindiwela 8.1 2940 20,250,000 9,922,500 30,172,500 Kurunegala Bodhiraja Mawatha, Kurunegala 7.66 2810 26,810,000 10,010,625 36,820,625 Maharagama High Level Road, Maharagama 6.2 2700 37,200,000 10,800,000 48,000,000 Maradana No. 51/57, Brandiyawatta, Wellampitiya 10 – 3,500,000 – 3,500,000 Matara Anagarika Dharmapala Mawatha, Matara 10 3520 37,800,000 14,520,000 52,320,000 Middeniya Katuwana Road, Middeniya 8.25 2670 14,850,000 8,624,100 23,474,100 Moratuwa No. 17, New Galle Road, Moratuwa 13.09 2990 39,270,000 5,793,000 45,063,000 Mount Lavinia Galle Road, Mount Lavinia 7.5 1900 33,750,000 7,445,625 41,195,625 Mount Lavinia – Mega Galle Road, Mount Lavinia 18.47 15500 92,350,000 83,006,466 175,356,466 Nawalapitiya Kotmale Road, Nawalapitiya 4.7 2760 12,704,700 7,176,000 19,880,700 Negombo Greens Road, Negombo 6 2040 24,000,000 6,885,000 30,885,000 Nuwara Eliya Kandy Street, Nuwara Eliya 4.65 1700 18,600,000 6,375,000 24,975,000 Panadura Galle Road, Panadura 6.15 2940 18,450,000 10,584,000 29,034,000 Piliyandala Gonamaditta Road, Piliyandala 1,144.35 118450 228,870,000 342,566,563 571,436,563 Pussellawa Nuwara Eliya Road, Pussellawa 12.43 3295 24,860,000 11,553,094 36,413,094 224 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Location Extent Buildings Cost or Cost or Total Value (Perches) (Square Revaluation of Revaluation of Feet) Land Buildings Rs. Rs. Rs. Ratnapura Colombo Road, Ratnapura 5.8 3075 20,300,000 11,685,000 31,985,000 Ratmalana No. 52, Ferry Road, Off Borupana Road, Ratmalana 705 120615 423,000,000 257,097,795 680,097,795 Ratmalana No. 02, 5th Lane, Ratmalana 362.5 75365 952,100,000 162,900,000 1,115,000,000 Ratmalana No. 435, Galle Raod, Ratmalana 50 – 226,350,000 68,650,000 295,000,000 Tangalle Matara Road, Tangalle 4.6 1285 13,800,000 3,822,875 17,622,875 Trincomalee North Coast Road, Trincomalee 5.58 2335 19,530,000 9,007,874 28,537,874 Trincomalee Nayanmarthidal, Thampalakamam, Trincomalee 60 – 4,000,000 – 4,000,000 Wellawatta Galle Road, Wellawatta 4.6 2700 55,200,000 7,020,000 62,220,000 2,904,178,451 1,281,732,693 4,185,911,114

11.19 Information on the Freehold Land and Buildings of the Company

Location Extent Buildings Cost or Cost or Total Value (Perches) (Square Revaluation of Revaluation of Feet) Land Buildings Rs. Rs. Rs. Ambalantota Main Street, Ambalantota 6.6 1885 16,500,000 5,278,000 21,778,000 Balangoda Ratnapura Road, Balangoda 6.2 2080 20,150,000 7,722,000 27,872,000 Bandarawela Main Street, Bandarawela 4.1 2660 10,250,000 11,510,000 21,760,000 Borella D.S. Senanayaka Mawatha, Borella 4.64 2310 69,600,000 9,240,000 78,840,000 Chilaw Bazaar Street, Chilaw 13.05 4120 42,412,500 15,656,000 58,068,500 Colpetty No. 143, Galle Road, Colombo 03 3.35 1440 56,950,000 6,156,000 63,106,000 Eheliyagoda Ratnapura Road, Eheliyagoda 5.73 1660 11,460,000 4,316,000 15,776,000 Galle Main Street, Galle 2.84 2250 11,360,000 9,112,500 20,472,500 Gampaha Colombo Road, Gampaha 17.87 7870 62,545,000 30,220,800 92,765,800 Hikkaduwa Galle Road, Hikkaduwa 8.74 2400 24,035,000 8,160,000 32,195,000 Embilipitiya Colombo Road, Pallegama, Embilipitiya 4.6 2070 16,100,000 7,917,750 24,017,750 101 271 225 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Location Extent Buildings Cost or Cost or Total Value (Perches) (Square Revaluation of Revaluation of Feet) Land Buildings Rs. Rs. Rs. Kadawatha Kandy Road, Kadawatha 3.8 1150 8,250,000 11,980,000 20,230,000 Kandy – Mega Sirimavo Bandaranaike Mawatha, Kandy 15.7 12840 36,715,000 69,336,000 106,051,000 Katugastota Madawala Road, Katugastota 4.875 1620 10,106,250 6,743,250 16,849,500 Kirindiwela Gampaha Road, Kirindiwela 8.1 2940 20,250,000 9,922,500 30,172,500 Kurunegala Bodhiraja Mawatha, Kurunegala 7.66 2810 26,810,000 10,010,625 36,820,625 Maharagama High Level Road, Maharagama 6.2 2700 37,200,000 10,800,000 48,000,000 Matara Anagarika Dharmapala Mawatha, Matara 10 3520 37,800,000 14,520,000 52,320,000 Middeniya Katuwana Road, Middeniya 8.25 2670 14,850,000 8,624,100 23,474,100 Mount Lavinia Galle Road, Mount Lavinia 7.5 1900 33,750,000 7,445,625 41,195,625 Mount Lavinia – Mega Galle Road, Mount Lavinia 18.47 15500 92,350,000 83,006,466 175,356,466 Nawalapitiya Kotmale Road, Nawalapitiya 4.7 2760 12,704,700 7,176,000 19,880,700 Negombo Greens Road, Negombo 6 2040 24,000,000 6,885,000 30,885,000 Nuwara Eliya Kandy Street, Nuwara Eliya 4.65 1700 18,600,000 6,375,000 24,975,000 Panadura Galle Road, Panadura 6.15 2940 18,450,000 10,584,000 29,034,000 Piliyandala Gonamaditta Road, Piliyandala 1144.35 118450 228,870,000 342,566,563 571,436,563 Pussellawa Nuwara Eliya Road, Pussellawa 12.43 3295 24,860,000 11,553,094 36,413,094 Ratnapura Colombo Road, Ratnapura 5.8 3075 20,300,000 11,685,000 31,985,000 Tangalle Matara Road, Tangalle 4.6 1285 13,800,000 3,822,875 17,622,875 Trincomalee North Coast Road, Trincomalee 5.58 2335 19,530,000 9,007,875 28,537,875 Wellawatta Galle Road, Wellawatta 4.6 2700 55,200,000 7,020,000 62,220,000 1,095,758,450 764,353,023 1,860,111,473 226 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

11.20 Measurement of Fair Value (i) Fair Value Hierarchy The fair value of property was determined by external independent property valuer having appropriate recognized professional qualifications and recent experience in the location and category of the property being valued.

The fair value measurement for all of properties has been categorized as level 3 fair value based on the input to the valuation technique used.

(ii) Valuation Technique and Significant Unobservable Inputs The following table shows the valuation technique used in measuring the fair value of property, as well as the significant unobservable inputs used.

Valuation Technique Significant Unobservable Inputs Interrelationship between Key Unobservable Inputs and Fair Value Measurements

Land value is based on the market prices zz Market value of land (Price per The Estimated fair value would of each land respectively. Value of property Perch). Valuer has used range of increase (decrease) if – is considered as summation of land & prices for respective lands based zz Market Value per perch was higher Building value. on their recently transacted cost. (lower) zz Contractors Method: The contractor’s method Construction cost per Square feet zz Cost per square feet was higher works on the basis that a property’s value can of a building. (lower) zz be equated to its cost. Valuer assess the cost Depreciation rate for the usage zz Depreciation rate for usage lower of the building if it would have constructed in of assets. (higher) current year, and deduct margin for usage of the property based on their year of construction.

12. Intangible Assets

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Trade Mark (Note 12.1) 93,512,500 93,512,500 93,512,500 93,512,500 Software (Note 12.2) 128,351,748 141,372,571 61,056,468 67,200,884 Other Intangible Assets Externally Acquired (Note 12.3) 46,431,920 46,431,920 46,431,920 46,431,920 268,296,168 281,316,991 201,000,888 207,145,304

12.1 Trade Mark with Infinite Useful Life

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Cost As at the Beginning of the Period 93,512,500 93,512,500 93,512,500 93,512,500 As at the End of the Period 93,512,500 93,512,500 93,512,500 93,512,500 Less: Accumulated Impairment Losses – – – – Net Carrying Amount 93,512,500 93,512,500 93,512,500 93,512,500

Trade mark consists of SISIL brand name Rs. 55,000,000/- (Note 12.4) and UNIC brand name Rs. 38,512,500/- (Note 12.5) Please refer Notes 12.4 and 12.5 for SISIL and UNIC impairment respectively. 101 271 227 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

12.2 Software

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Cost As at the Beginning of the Period 382,493,545 325,414,584 227,780,562 211,448,534 Acquired/Incurred During the Period 8,677,632 57,078,961 5,802,605 16,332,028 As at the End of the Period 391,171,177 382,493,545 233,583,167 227,780,562

Amortisation As at the Beginning of the Period 241,120,974 203,820,953 160,579,678 138,235,807 Software Impairment – 5,605,554 – – Amortisation Charge for the Period 21,698,455 31,694,467 11,947,021 22,343,871 As at the End of the Period 262,819,429 241,120,974 172,526,699 160,579,678

Carrying Amount As at the Beginning of the Period 141,372,571 121,593,631 67,200,884 73,212,727 As at the End of the Period 128,351,748 141,372,571 61,056,468 67,200,884

12.3 Other Intangible Assets Externally Acquired

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Cost As at the Beginning of the Period 78,431,920 78,431,920 78,431,920 78,431,920 Acquired/Incurred During the Period – – – – As at the End of the Period 78,431,920 78,431,920 78,431,920 78,431,920

Amortisation As at the Beginning of the Period 32,000,000 32,000,000 32,000,000 32,000,000 Amortisation Charge for the Period – – – – As at the End of the Period 32,000,000 32,000,000 32,000,000 32,000,000

Carrying Amount As at the Beginning of the Period 46,431,920 46,431,920 46,431,920 46,431,920 As at the End of the Period 46,431,920 46,431,920 46,431,920 46,431,920

Other Intangible Assets externally includes Sony distribution rights amounting to Rs. 46,431,920/- and Hayleys Brand Amounting to Rs. 32,000,000/-. Hayleys Brand is fully amortised as at 31st March 2019. Refer Note 12.6 and 12.7 for amortisation of Hayleys and impairment of Sony. 228 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

12.4 SISIL Trademark The Company had acquired the “SISIL” trade mark in December 2000, amounting to Rs. 55 million. The management is of the opinion that the aforementioned trademark has an indefinite useful life as their associated brand awareness and recognition has existed over 50 years and the Company intends to utilise the said trademark for the foreseeable future. There are no legal, regulatory, contractual, competitive, economic or other factors that may limit its useful life and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for any impairment as at 31st March 2019:

Annual Sales Growth for Next Five Years 14% Gross Margin 27% Discount Rate 11% Indefinite Growth Rate after Year 2024 2%

12.5 UNIC Trademark The Company had acquired the “UNIC” Trade mark in 2006 amounting Rs. 38,512,500/-. This trade mark is also considered to have an indefinite useful life due to the factors mentioned in the preceding paragraph and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st March 2019:

Annual Sales Growth for Next Five Years 14% Gross Margin 25% Discount Rate 11% Indefinite Growth Rate after Year 2024 2%

12.6 Hayleys Brand Name The Company took over the showrooms, retail operation of the Hayleys Electronic Retail Limited, from 2nd January 2008 and agencies of Philips and Kenwood from Hayleys Electronic Limited for Rs. 32 million. The entire purchase consideration is treated as Goodwill and is amortised over the determined useful life of 5 years commencing from the period beginning 1st January 2009.

12.7 SONY Distribution Rights The company had acquired the distribution rights of brand “SONY” in 2014 amounting Rs. 46,431,920/- This assets are now carried at cost subject to annual impairment test and carrying amount as at 31st March 2019 is Rs.46,431,920/-.This distribution right also considered to have an indefinite useful life due to the factors mentioned in the preceding paragraph accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st March 2019:

Annual Sales Growth for Next Five Years 15% Gross Margin 22% Discount Rate 11% Indefinite Growth Rate after Year 2024 2%

12.8 Amortisation Charge for the Period

Consolidated Company For twelve months For fifteen months For twelve months For fifteen months ended 31st March ended 31st March ended 31st March ended 31st March 2019 2018 2019 2018 Rs. Rs. Rs. Rs.

Amortisation of Software 21,698,455 31,694,467 11,947,021 22,343,871 21,698,455 31,694,467 11,947,021 22,343,871 101 271 229 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

13. Investment in Subsidiaries – Company

Number of Shares Carrying Value Country of As at As at As at As at Incorporation 31st March 31st March 31st March 31st March 2019 2018 2019 2018 Rs. Rs.

Quoted Singer Finance (Lanka) PLC Sri Lanka Investment at the Beginning of the Period 164,267,209 132,931,054 1,452,283,921 982,241,596 Investment Made During the Period – 31,336,155 – 470,042,325 Investment Disposed During the Period (2,754,174) – (24,349,611) – Investment at the End of the Period 161,513,035 164,267,209 1,427,934,310 1,452,283,921

Singer Industries (Ceylon) PLC Sri Lanka Investment at the Beginning of the Period 3,373,967 3,373,967 692,407,683 692,407,683 Investments Made During the Period – – – – Investment at the End of the Period 3,373,967 3,373,967 692,407,683 692,407,683

Regnis Lanka PLC Sri Lanka Investment at the Beginning of the Period 6,568,461 6,568,461 722,530,710 722,530,710 Investments Made During the Period – – – – Investment at the End of the Period 6,568,461 6,568,461 722,530,710 722,530,710

Non-Quoted Singer Digital Media (Pvt) Limited Sri Lanka Investment at the Beginning of the period 500,000 500,000 5,000,000 5,000,000 Investment Made During the Period – – – – Investment at the End of the period 500,000 500,000 5,000,000 5,000,000

Singer Business School (Pvt) Limited Sri Lanka Investment at the Beginning of the Period 500,000 500,000 5,000,000 5,000,000 Investment Made During the Period – – – – Investment at the End of the Period 500,000 500,000 5,000,000 5,000,000

Reality Lanka Limited Sri Lanka Investment at the Beginning of the Period 4,800,000 4,800,000 48,000,000 48,000,000 Investment Made During the Period – – – – – Investment at the End of the Period 4,800,000 4,800,000 48,000,000 48,000,000 Total Investment in Subsidiaries 2,900,872,703 2,925,222,314 230 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

14. Other Non–current Assets Prepaid Operating Leases – Leasehold right Prepaid operating lease relates to operating lease paid in advance for the land acquired by Regnis Appliances (Pvt) Limited from Board of Investment (BOI) in Sri Lanka. The Group amortise the leasehold land over the lease period of 50 years, on straight line basis. The reconciliation of prepaid operating lease is as follows:

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

At the Beginning of the Period 64,520,322 – – – Acquisitions During the Period – 65,062,510 – – Amortisation for the Period (1,301,249) (542,188) – – At the end of the Period 63,219,073 64,520,322 – –

15. Other Investments 15.1 Non–current Financial Assets

Consolidated Company Number of Shares Amount Amount Non-Quoted As at As at As at As at As at As at 31st March 31st March 31st March 31st March 31st March 31st March 2019 2018 2019 2018 2019 2018 Rs. Rs. Rs. Rs.

Available-for-Sale Financial Assets (AFS) Equity Investment Lanka Limited 1,665,000 17,020,000 17,020,000 Credit Information Bureau of Sri Lanka 100 41,300 – 1,665,100 17,061,300 17,020,000 Financial Assets at Fair Value through Other Comprehensive Income (FVOCI) Equity Investment Lanka Limited 1,665,000 17,020,000 17,020,000 Credit Information Bureau of Sri Lanka 100 41,300 – 1,665,100 17,061,300 17,020,000

Consolidated Company Amount Amount As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Investments in Debentures Held to Maturity Financial Assets Fixed Rate 9.95% Senior Unlisted, Unsecured Redeemable, Rated Debentures Redeemable on 18th June 2020 – – – 450,000,000 48 Months 12% Secured Debentures Redeemable on 6th April 2020 – – – 150,000,000 36 Months 11.5% Secured Debentures Redeemable on 6th April 2019 – – – 312,090,000 – – – 912,090,000 101 271 231 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Consolidated Company Amount Amount As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Financial Assets at Amortised Cost Fixed Rate 9.95% Senior Unlisted, Unsecured Redeemable, Rated Debentures Redeemable on 18th June 2020 – – 450,000,000 – 48 Months 12% Secured Debentures Redeemable on 6th April 2020 – – 150,000,000 – (Less) Impairment provision on Investment in Debentures – – (817,348) – – – 599,182,652 – Total Non Current Financial Assets 17,061,300 17,061,300 616,202,652 929,110,000

15.2 Short-Term Investments

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Held to Maturity Financial Assets Investment in Treasury Bills – 580,351,485 – – Investment in Treasury Bonds – 91,031,155 – – – 671,382,640 – –

Financial Assets at Amortised Cost 36 Months 11.5% Secured Debentures Redeemable on 6th April 2019 – – 312,090,000 – Investment in Treasury Bills 529,920,590 – – – Investment in Treasury Bonds 93,451,740 – – – 623,372,330 – 312,090,000 – Total Short-term Investments 623,372,330 671,382,640 312,090,000 –

Further details relating to fair valuation and carrying value is provided in Note 35 to these Financial Statements. 232 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

16. Inventories

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Raw Materials 1,103,130,403 1,179,159,152 270,592,000 380,487,000 Work-in-Progress 176,221,424 177,062,951 74,591,000 71,995,000 Finished Goods 11,941,110,167 10,600,546,593 10,970,091,634 9,800,343,616 Supplies and Parts 647,659,048 572,820,285 633,329,719 561,886,869 Goods-in-Transit 1,238,774,794 854,455,933 1,055,824,318 621,714,686 15,106,895,836 13,384,044,914 13,004,428,671 11,436,427,171 Less: Impairment of Inventory (Note 16.1) (904,020,201) (731,024,874) (869,161,410) (695,132,558) Unrealised Profit in Inventory (77,133,223) (79,296,628) – – Consignment Inventory (25,443) (13,550) (25,443) (13,550) Total Inventories 14,125,716,969 12,573,709,862 12,135,241,818 10,741,281,063

16.1 Impairment of Inventory

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance at the Beginning of the Period 731,024,874 715,812,992 695,132,558 650,899,533 Amount Recognised During the Period (Note 8) 172,995,327 15,211,882 174,028,852 44,233,025 Balance at the End of the Period 904,020,201 731,024,874 869,161,410 695,132,558

17. Loans Due from Related Parties

Consolidated Company Relationship As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Regnis Lanka PLC Subsidiary – – 150,000,000 150,000,000 Reality Lanka Limited Subsidiary – – 62,150,767 69,150,767 Singer Business School (Pvt) Limited Subsidiary – – 5,000,000 – Singer Finance (Lanka) PLC Subsidiary – – 1,000,000,000 1,000,000,000 Provision for Impairment – – (1,330,790) – – – 1,215,819,977 1,219,150,767

Regnis Lanka PLC Company granted this facility based on the fund requirement of Regnis Lanka PLC and will be recovered on demand. Interest is charged based on the highest AWPLR prevail in the respective month + 0.5% to 2.0%.

Reality Lanka Limited Company granted this facility based on the fund requirement of reality Lanka Limited and it will be recovered on demand. 101 271 233 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Singer Finance (Lanka) PLC Company granted this facility based on the fund requirement of Singer Finance (Lanka) PLC and will be recovered on demand. Interest is charged based on the highest AWPLR prevail in the respective month + 0.5% to 2.0%.

18. Trade and Other Receivables The effect of initially applying SLFRS 9 on the Group's Financial Assets is described in Note 2.13 (B) due to the transition method chosen in applying SLFRS 9. Comparative information has not been restated to reflect the new requirement.

18.1 Non-current

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Note Rs. Rs. Rs. Rs.

Hire Debtors – Instalment Receivables 489,531,443 393,938,607 485,038,473 372,752,597 Less: Unearned hire debtors interest income (44,715,142) (43,108,652) (43,736,178) (40,629,947) Provision for Impairment (2,470,564) – (2,470,564) – 442,345,737 350,829,955 438,831,731 332,122,650

Lease Rental Receivables Gross Instalments in Lease 11,685,901,512 9,416,110,605 – – Rental Received in Advance (89,159) (89,159) – – 11,685,812,353 9,416,021,446 – – Less: Unearned Income (2,674,594,017) (2,070,449,248) – – 9,011,218,336 7,345,572,198 – –

Loan Debtors Consumer and Personal Loans 1,068,634,832 480,410,919 – – Rental Received in Advance – – – – Less: Unearned Loan Interest Income (96,935,776) (77,006,387) – – 971,699,056 403,404,532 – –

Other Debtors Rent Paid in Advance 747,600,000 767,235,953 747,600,000 763,656,794 Other Receivables – 15,450,423 – 2,989,000 Loans to Employees 18.4 305,446,016 280,486,790 245,804,687 243,137,575 1,053,046,016 1,063,173,166 993,404,687 1,009,783,369 11,478,309,145 9,162,979,851 1,432,236,418 1,341,906,019 234 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

18.2 Current

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Note Rs. Rs. Rs. Rs.

Hire Debtors Hire Debtors – Instalments Receivables 8,704,710,568 8,582,637,814 8,683,389,508 8,498,528,903 Rental Received in Advance (84,188) (84,188) – – Less: Unearned hire debtors interest income (1,400,039,779) (1,333,704,665) (1,398,448,966) (1,325,607,580) Provision for Impairment (90,961,816) (64,886,178) (82,385,651) (53,096,143) 7,213,624,785 7,183,962,783 7,202,554,891 7,119,825,180

Lease Rental Receivables Gross Instalments in Lease 7,333,492,114 5,885,499,839 – – Less: Unearned Income (2,146,116,729) (1,721,535,607) – – Provision for Impairment 18.3 (248,345,208) (126,311,107) – – 4,939,030,177 4,037,653,125 – –

Loan Debtors Consumer and Personal Loans 3,432,153,576 2,909,032,853 – – Less: Unearned Loan Interest Income (264,926,628) (285,970,584) – – FD Loans 68,229,423 42,000,185 – – Net Receivable 3,235,456,371 2,665,062,454 – – Less: Provision for Impairment 18.3 (323,203,252) (168,104,070) – – 2,912,253,119 2,496,958,384 – –

Trade Debtors Trade Receivables 18.3 5,811,614,548 5,655,684,133 4,370,734,959 4,214,116,152 Less: Provision for Impairment (758,362,703) (293,771,484) (645,981,951) (234,945,963) 5,053,251,845 5,361,912,649 3,724,753,008 3,979,170,189

Other Debtors Advance and Other Receivables 2,734,863,828 1,661,417,605 2,600,357,987 1,509,870,839 Less: Provision for Impairment (924,243,104) (666,561,992) (922,921,231) (665,101,091) 1,810,620,724 994,855,613 1,677,436,756 844,769,748 Shipping Guarantees – 27,092,217 – – Prepayments 619,011,838 467,275,531 163,192,642 105,832,478 Loans to Employees 124,365,893 115,512,329 92,449,765 92,449,765 743,377,731 609,880,077 255,642,407 198,282,244 22,672,158,380 20,685,222,631 12,860,387,063 12,142,047,361 101 271 235 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

18.3 Provision for Impairment

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Trade Receivables Impairment Provision for Impairment – Hire Debtors Movement Balance as at the Beginning of the Period 64,886,178 50,985,870 53,096,143 25,491,954 Impact of Adopting SLFRS 9 – Financial Instruments 27,523,634 – 26,701,301 – Provided During the Period (Note 8.1) 14,854,732 22,044,710 17,380,351 33,294,359 Write-off/Transfer During the Period (13,832,164) (8,144,402) (12,321,580) (5,690,170) Balance as at End of the Period 93,432,380 64,886,178 84,856,215 53,096,143

Provision for Impairment – Lease Rental Receivable Movement Balance at the Beginning of the Period 126,311,107 93,696,290 – – Impact of Adopting SLFRS 9 – Financial Instruments 46,251,037 – – – Provided During the Period (Note 8.1) 143,871,915 68,944,048 – – Write-off/Transfer During the Period (68,088,853) (36,329,231) – – Balance at the End of the Period 248,345,206 126,311,107 – –

Provision for Impairment – Loan Debtors Movement Balance at the Beginning of the Period 168,104,070 43,421,919 – – Impact of Adopting SLFRS 9 – Financial Instruments 62,265,251 – – – Provided During the Period (Note 8.1) 140,642,025 156,665,425 – – Write-off/Transfer During the Period (47,808,094) (31,983,274) – – Balance at the End of the Period 323,203,252 168,104,070 – –

Provision for Impairment – Trade Debtors Movement Balance at the Beginning of the Period 293,771,484 182,167,047 234,945,963 139,441,526 Impact of Adopting SLFRS 9 – Financial Instruments 246,301,807 – 219,373,305 – Provided During the Period (Note 8.1) 222,052,712 119,952,947 195,425,983 103,852,947 Write-off/Transfer During the Period (3,763,300) (8,348,510) (3,763,300) (8,348,510) Balance at the End of the Period 758,362,703 293,771,484 645,981,951 234,945,963 Total Provision for Trade Receivables 1,423,343,541 653,072,839 730,838,166 288,042,106

Provision for Impairment – Other Debtors Movement Balance at the Beginning of the Period 666,561,993 477,353,779 665,101,091 476,152,244 Provided During the Period (Note 8.1) 261,737,926 285,036,482 261,876,952 285,036,482 Write-off/Transfer During the Period (4,056,815) (95,828,269) (4,056,812) (96,087,635) Balance at the End of the Period 924,243,104 666,561,992 922,921,231 665,101,091 Total Provision for Impairment 2,347,586,645 1,319,634,832 1,653,759,397 953,143,197 236 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

18.4 Loans to Employees

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance as at the Beginning of the Period 395,999,119 350,147,224 335,587,340 296,152,856 Loans granted During the Period 193,240,400 231,456,517 126,460,000 178,835,350 Less: Repayments (159,427,610) (185,604,622) (123,792,889) (139,400,865) Balance as at the End of the Year 429,811,908 395,999,119 338,254,452 335,587,340 Due Within One Year 124,365,893 115,512,329 92,449,765 92,449,765 Due After One Year 305,446,015 280,486,790 245,804,687 243,137,575

18.5 Maturity Analysis of Hire Purchase, Lease and Loans Consolidated – As at 31st March 2019

Less than 3-12 1-3 3-5 Over 2019 3 Months Months Years Years 5 Years Total Rs. Rs. Rs. Rs. Rs. Rs.

Hire Debtors 2,866,548,769 4,436,453,886 352,118,564 849,301 – 7,655,970,520 Lease Rental Receivables 1,612,711,611 3,326,229,408 6,873,472,451 2,110,972,176 26,862,868 13,950,248,514 Loan Debtors 425,057,532 2,487,195,587 329,994,550 640,921,909 782,598 3,883,952,175 4,904,317,911 10,249,878,881 7,555,585,565 2,752,743,386 27,645,466 25,490,171,209

Consolidated – As at 31st March 2018

Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years Rs. Rs. Rs. Rs. Rs. Rs.

Hire Debtors 3,821,993,586 3,361,969,197 348,744,379 2,085,575 – 7,534,792,738 Lease Rental Receivables 1,098,056,091 2,939,597,034 5,727,692,782 1,606,990,995 10,888,421 11,383,225,322 Loan Debtors 743,438,665 1,753,519,719 336,626,139 65,647,645 1,130,748 2,900,362,916 6,413,063,300 8,055,085,950 5,663,488,342 1,674,724,215 12,019,169 21,818,380,976

Company – As at 31st March 2019

Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years Rs. Rs. Rs. Rs. Rs. Rs.

Hire Debtors 2,857,154,007 4,433,932,341 350,300,274 – – 7,641,386,622 2,857,154,007 4,433,932,341 350,300,274 – – 7,641,386,622

Company – As at 31st March 2018

Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years Rs. Rs. Rs. Rs. Rs. Rs.

Hire Debtors 3,797,473,732 3,322,351,448 332,122,650 – – 7,451,947,830 3,797,473,732 3,322,351,448 332,122,650 – – 7,451,947,830 101 271 237 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

19. Amounts Due from Related Parties

Consolidated Company Relationship As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Hayleys PLC Parent – 788,000 – – Singer Finance (Lanka) PLC Subsidiary – – – 173,772,072 Singer Business School (Pvt) Limited Subsidiary – – 3,310,666 11,623,955 – 788,000 3,310,666 185,396,027

20. Cash and Cash Equivalents Components of Cash and Cash Equivalents

20.1 Favourable Cash and Cash Equivalents Balances

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Cash at Banks 749,758,092 514,254,469 527,301,613 366,536,513 Cash in Hand 1,099,884,738 824,752,271 810,411,079 651,091,433 1,849,642,830 1,339,006,740 1,337,712,692 1,017,627,946

20.2 Unfavourable Cash and Cash Equivalent Balances Bank Overdrafts (2,916,428,154) (2,132,691,242) (1,417,088,608) (1,237,088,725) Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement (1,066,785,324) (793,684,502) (79,375,916) (219,460,779)

21. Stated Capital

As at Subdivision As at 1st January 2017 of Shares 31st March 2018

Number of Shares – Ordinary Shares (Nos.) 125,209,610 250,419,220 375,628,830

Rupees – Ordinary Shares (Rs.) 626,048,050 – 626,048,050

1st April 2018 31st March 2019

Number of Shares – Ordinary Shares (Nos.) 375,628,830 – 375,628,830

Rupees – Ordinary Shares (Rs.) 626,048,050 – 626,048,050

The holders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share at meetings of the Company.

As per the resolution passed at the Extra Ordinary General Meeting held on 31st March 2017, the issued and fully paid Ordinary shares of the Company was subdivided, by subdividing each issued Ordinary share of the Company in the proportion of three (03) shares for every One (01) shares held, thus increasing the number of existing issued Ordinary shares of the Company from 125,209,610 to 375,628,830 without effecting an increase in the Stated Capital of the Company of Rupees six hundred and twenty six million forty eight thousand and fifty only (Rs. 626,048,050/-). 238 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

22. Capital Reserves

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Revaluation Reserve 1,118,122,637 577,919,322 1,158,333,041 847,555,412 Revaluation Reserve (Note 22.1) 1,118,122,637 577,919,322 1,158,333,041 847,555,412

22.1 Revaluation Reserves

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance at the Beginning of the Period 577,919,322 1,057,964,069 847,555,412 1,065,542,144 Revaluation Gain on Property, Plant and Equipment 784,157,271 – 453,751,963 – Deferred Tax on Revaluation Gain on Property, Plant and Equipment (Note 9.4) (219,564,036) (451,830,901) (127,050,550) (198,082,001) Realisation of Revaluation Surplus (24,389,920) (28,213,846) (15,923,784) (19,904,731) Balance at the End of the Period 1,118,122,637 577,919,322 1,158,333,041 847,555,412

The revaluation reserve relates to revaluation of freehold land and buildings and represents the fair value of the land and buildings as at the date of revaluation.

23. Statutory Reserves

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

(a) Reserve Fund Reserve Fund (Note 23.1) 163,096,146 136,009,451 – – 163,096,146 136,009,451

23.1 Reserve Fund

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance at the Beginning of the Period 136,009,451 95,360,709 – – Transfer of Surplus During the Period 27,086,695 40,648,742 – – Balance at the End of the Period 163,096,146 136,009,451 – –

The balance in the reserve fund will be used only for the purpose specified in the Central Bank Direction No. 1 of 2003. The Reserve Fund is maintained in compliance with Direction No. 1 of 2003 Central Bank of Sri Lanka (Capital Funds) issued to Finance Companies. 101 271 239 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

As per the said Direction, every Licensed Finance Company shall maintain a Reserve Fund and transfer to such reserve fund out of the net profits of the each year after due provisions has been made for taxation and bad and doubtful debts on following basis:

Capital Funds to Deposit Liabilities % of Transfer to Reserve Fund

Not less than 25% 5 Less than 25% and not less than 10% 20 Less than 10% 50

Accordingly, Singer Finance (Lanka) PLC has transferred 5% of its net profit after taxation to the Reserve Fund as Company’s Capital Funds to Deposit Liabilities, belongs to not less than 25%.

24. Revenue Reserves

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Summary (a) General Reserve (Note 24.1) 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

(b) Retained Earnings 2,335,830,612 2,795,477,725 151,601,145 626,088,413 2,335,830,612 2,795,477,725 151,601,145 626,088,413 Revenue Reserves 5,035,830,612 5,495,477,725 2,851,601,145 3,326,088,413

24.1 General Reserves The general reserve which is a revenue reserve represents set aside by the Directors for general application.

The movement of general reserve is as follows:

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance at the Beginning of the Period 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000 Transferred from Retained Earnings – – – – At the End of the Period 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000 240 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

25. Interest-Bearing Loans and Borrowings 25.1 Loans and Borrowings – Consolidated

As at As at Total As at As at Total 31st March 2019 31st March 2019 As at 31st 31st March 2018 31st March 2018 As at 31st Amount Repayable Amount Repayable March 2019 Amount Repayable Amount Repayable March 2018 Within 1 Year After 1 Year Within 1 Year After 1 Year Rs. Rs. Rs. Rs. Rs. Rs.

Debentures (Note 25.2) 97,210,000 2,137,906,386 2,235,116,386 5,408,103,763 1,575,448,576 6,983,552,339 Bank Loans (Note 25.3 a,b) 18,554,647,218 7,197,055,004 25,751,702,222 13,674,415,140 2,744,449,832 16,418,864,972 Securitisation Loans (Note 25.4) 568,920,960 1,305,198,080 1,874,119,040 – – – 19,220,778,178 10,640,159,470 29,860,937,648 19,082,518,903 4,319,898,408 23,402,417,311 Accrued Interest for interest Bearing Loans and Borrowings 270,389,119 – 270,389,119 185,750,549 – 185,750,549 19,491,167,297 10,640,159,470 30,131,326,767 19,268,269,452 4,319,898,408 23,588,167,860

25.2 Debentures – Consolidated

As at New Issues Redemption As at 1st April 2018 31st March 2019 Rs. Rs. Rs. Rs.

Fixed Rate 8.60% Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 7th June 2018 2,929,980,000 – (2,929,980,000) – Variable Rate – 1 year Net TB+1.25% (Floor 7% Capital 9.5%) Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 7th June 2018 70,020,000 – (70,020,000) – Fixed Rate 14.50% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 10th September 2018 416,668,000 – (416,668,000) – Fixed Rate 10.5% Senior, Listed, Unsecured, Redeemable, Rated Debentures Redeemable on 15th March 2019 460,560,000 – (460,560,000) – Variable Rate – 6 Months Gross TB + 1.50% (Floor 9.50% Cap 12.50%) Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 15th March 2019 1,539,440,000 – (1,539,440,000) – Fixed Rate 12.00%. Senior, listed, Unsecured, Redeemable, Rated Debentures Redeemable on 28th September 2021 – 656,800,000 – 656,800,000 Fixed Rate 11.50% Senior, Listed, Secured, Redeemable, Rated Debentures Redeemable on 6th April 2019 409,300,000 – – 409,300,000 Fixed Rate 12% Senior, Listed, Secured, Redeemable, Rated Debentures Redeemable on 6th April 2020 590,700,000 – – 590,700,000 Fixed Rate 9.95% Senior, Listed, Secured, Redeemable, Rated Debentures Redeemable on 16th June 2020 1,500,000,000 – – 1,500,000,000 Transaction Cost (21,025,661) 11,432,048 – (9,593,614) Less: Investment in debenture in subsidiary (912,090,000) – – (912,090,000) 6,983,552,339 668,232,048 (5,416,668,000) 2,235,116,386 101 271 241 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

25.3 Bank Loans – Consolidated

Balance as at Loans Obtained Repayment Balance as at 1st April 2018 31st March 2019 Rs. Rs. Rs. Rs.

(a) Bank Loans Repayable within one Year – Consolidated Bank Loans 13,674,415,140 50,662,126,131 (45,781,894,053) 18,554,647,218 13,674,415,140 50,662,126,131 (45,781,894,053) 18,554,647,218

The bank loans repayable within one year consist of short-term loans obtained from Hatton National Bank PLC, People’s Bank, Nations Trust Bank PLC, Commercial Bank of Ceylon PLC, Sampath Bank PLC, Seylan Bank PLC, Standard Chartered Bank Sri Lanka Limited, National Development Bank PLC, Deutsche Bank Sri Lanka and Muslim Commercial Bank Sri Lanka.

These loans bear interest rate between 10.35% to 13.55% and due for settlement at maturity.

(b) Bank Loan Repayable After One Year – Consolidated

Company Lender/Rate of Interest (p.a.) Repayment Security As at As at 31st March 2019 31st March 2018 Rs. Rs.

Singer (Sri Lanka) PLC Standard Chartered Bank Sri Lanka Limited Quarterly Negative pledged (Fixed rate 12.95%) 220,375,004 657,149,832 Singer (Sri Lanka) PLC Commercial Bank of Ceylon PLC Annually Negative pledged (AWPLR +1%, Rate Reviewed monthly) 1,250,000,000 1,875,000,000 Singer (Sri Lanka) PLC Commercial Bank of Ceylon PLC Quarterly Negative Pledged (Variable rate) (PLR + 1% – Floor 13.25%) 2,000,000,000 – Singer (Sri Lanka) PLC Sampath Bank PLC (Variable rate) Quarterly Negative Pledged (PLR + 1%) Over Fixed Assets of the company 1,750,000,000 – Singer (Sri Lanka) PLC Hatton National Bank PLC Quarterly Negative Pledged (Variable rate) (PLR + 1%) 1,500,000,000 – Singer Finance (Lanka) PLC Seylan Bank PLC (AWPLR + 2.5%) Monthly Negative pledged 383,380,000 – Singer Finance (Lanka) PLC Sampath Bank PLC AWPLR + 1.75 Monthly Negative pledged Rate review Monthly 93,300,000 – Singer Finance (Lanka) PLC Sampath Bank PLC (AWPLR +1.5%) Monthly Negative pledged Repayment – 192,900,000 Singer Finance (Lanka) PLC Seylan Bank PLC (AWPLR +2%) Monthly Negative pledged Repayment – 19,400,000 7,197,055,004 2,744,449,832

25.4 Securitisation Loans – Consolidated (a) Securitisation Loans Repayable within One Year

As At New Redemption As At 1st April 2018 Issues 31st March 2019

Securitisation Loans – 2,050,000,000 (153,500,000) 1,896,500,000 Transaction Cost – (22,380,960) – (22,380,960) Total – 2,027,619,040 (153,500,000) 18,741,119,040 242 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

(b) Securitisation Loans Repayable after One Year – Consolidated

Company Lender/Rate of Interest Repayment Security As at As at 31st March 2019 31st March 2018

Singer Finance Hatton National Bank PLC Lease and Hire (Lanka) PLC (Fixed 13.32% AWPLR + 1.75%) Structured Purchase receivable 461,880,737 – Singer Finance Hatton National Bank PLC Lease and Hire (Lanka) PLC (Rate review monthly AWPLR + 2.5%) Quarterly Purchase receivable 1,112,238,303 – Singer Finance Hatton National Bank PLC Lease and Hire (Lanka) PLC (Rate review monthly) Monthly Purchase receivable 300,000,000 – 1,874,119,040 –

25.5 Bank Facilities – Consolidated

As at 31st March 2019 As at 31st March 2018 Utilised Total Facility Utilised Total Facility Rs. Rs. Rs. Rs.

Overdrafts 2,916,428,154 3,220,000,000 2,132,691,242 3,495,000,000 Term loans 7,197,055,004 7,828,333,336 2,744,449,832 4,355,000,000 Short-term loans and current portion of long-term loans 18,554,647,218 18,744,772,224 13,674,415,140 19,914,000,000 Total Debt Facility 28,668,130,376 29,793,105,560 18,551,556,214 27,764,000,000 Guarantees 561,769,119 1,800,000,000 524,894,785 2,200,000,000 Letter of credits 4,319,720,459 7,275,605,110 4,511,447,444 10,645,000,000 Total Debt and Other Facilities 33,549,619,954 38,868,710,670 23,587,898,443 40,609,000,000

25.6 Interest-Bearing Loans and Borrowings – Company

As at 31st As at 31st Total As at 31st As at 31st Total March 2019 March 2019 As at 31st March 2018 March 2018 As at 31st Amount Repayable Amount Repayable March 2019 Amount Repayable Amount Repayable March 2018 Within 1 Year After 1 Year Within 1 Year After 1 Year Rs. Rs. Rs. Rs. Rs. Rs.

Debentures (Note 25.7) – 653,554,271 653,554,271 4,991,435,763 – 4,991,435,763 Bank Loans (Note 25.8 a,b) 13,266,614,322 6,720,375,004 19,986,989,326 9,175,592,417 2,532,149,832 11,707,742,249 13,266,614,322 7,373,929,275 20,640,543,597 14,167,028,180 2,532,149,832 16,699,178,012 Accrued Interest for interest Bearing Loans and Borrowings 109,699,116 – 109,699,116 72,360,115 – 72,360,115 13,376,313,438 7,373,929,275 20,750,242,713 14,239,388,295 2,532,149,832 16,771,538,128

25.7 Debentures – Company

As At New Issues Redemption As At 1st April 2018 31st March 2019 Rs. Rs. Rs. Rs.

Fixed Rate 8.60% Senior, Listed, Unsecured, Redeemable,Rated Debentures redeemable on 7th June 2018 2,929,980,000 – (2,929,980,000) – Variable Rate 1 year Net TB+1.25% (Floor 7% Cap 9.5%) Senior,Listed, Unsecured, Redeemable, Rated Debentures redeemable on 7th June 2018 70,020,000 – (70,020,000) – 101 271 243 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

As At New Issues Redemption As At 1st April 2018 31st March 2019 Rs. Rs. Rs. Rs. Fixed Rate 10.50% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 15th March 2019 460,560,000 – (460,560,000) –

Variable Rate – 6 Months Gross TB + 1.50% (Floor 9.50% Cap 12.50%) Senior, Listed, Unsecured, Redeemable, Rated Debentures Redeemable on 15th March 2019 1,539,440,000 – (1,539,440,000) – Fixed rate 12.00%. Senior,listed, Unsecured, Redeemable, Rated Debentures Redeemable on 28th September 2021 – 656,800,000 – 656,800,000 Transaction Cost (8,564,237) 5,318,508 – (3,245,729) 4,991,435,763 662,118,508 (5,000,000,000) 653,554,271

25.8 Bank Loans – Company

As at Loan Repayment As at 1st April 2018 Obtained 31st March 2019 Rs. Rs. Rs. Rs.

(a) Bank Loans Repayable within One Year – Company Bank Loans, Short-Term Loans and Current Portion of Long-Term Loans 9,175,592,417 32,932,928,049 (28,841,906,144) 13,266,614,322 9,175,592,417 32,932,928,049 (28,841,906,144) 13,266,614,322

The bank loans repayable within one year consist of short term loans obtained from Hatton National Bank PLC, Nations Trust Bank PLC, Commercial Bank of Ceylon PLC, Sampath Bank PLC, Deutsche Bank Sri Lanka, Seylan Bank PLC, Standard Chartered Bank Sri Lanka Limited, People’s Bank and Muslim Commercial Bank Sri Lanka. These loans bears interest rate between 10.3% to 11.45% and due for settlement of maturity.

(b) Bank Loan Repayable After One Year – Company

Lender Repayment Security As at As at 31st March 2019 31st March 2018 Rs. Rs.

Standard Chartered Bank Sri Lanka Limited Quarterly Negative Pledged (Fixed Rate 12.95%) 220,375,004 657,149,832 Commercial Bank of Ceylon PLC Annually Negative Pledged (AWPLR + 1 Rate review Monthly) 1,250,000,000 1,875,000,000 Commercial Bank of Ceylon PLC Quarterly Negative Pledged (Variable rate) (PLR + 1% – Floor 13.25%) 2,000,000,000 – Sampath Bank PLC (Variable rate) (PLR + 1%) Quarterly Negative Pledged Over Fixed Assets of the company 1,750,000,000 – Hatton National Bank PLC (Variable rate) (PLR + 1%) Quarterly Negative Pledged 1,500,000,000 – 6,720,375,004 2,532,149,832 244 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

25.9 Bank Facilities – Company

As at 31st March 2019 As at 31st March 2018 Utilised Total Facility Utilised Total Facility Rs. Rs. Rs. Rs.

Overdraft 1,417,088,608 2,195,000,000 1,237,088,725 2,295,000,000 Term Loans 6,720,375,004 6,628,333,336 2,532,149,832 3,655,000,000 Short-Term Loans and Current Portion of Long-Term Loans 13,266,614,322 17,105,377,334 9,175,592,417 12,615,000,000 Total Debt Facility 21,404,077,934 25,928,710,670 12,944,830,974 18,565,000,000 Guarantees 561,769,119 1,800,000,000 524,894,785 1,750,000,000 Letter of Credit 3,621,720,459 7,130,000,000 2,504,862,843 6,630,000,000 Total Debt and Other Facilities 25,587,567,512 34,858,710,670 15,974,588,602 26,945,000,000

26. Deferred Tax Assets/(Liabilities)

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Note Rs. Rs. Rs. Rs.

26.1 Deferred Tax Balance at the Beginning of the Period (467,235,592) 124,061,153 69,642,532 147,270,286 Adjustment on Error Correction (19,222,000) – – – Amount (Originating)/Reversal During the Period – Recognised in Profit or Loss 9.2 356,631,694 (82,215,026) 200,985,408 110,059,561 Amount (Originating)/Reversal During the Period – Recognised in Statement of Other Comprehensive Income Profit and Loss 9.4 5,871,651 6,319,485 7,545,349 2,653,957 Deferred Tax on Revaluation of PPE 9.4/26.3 (247,190,822) (516,049,055) (127,050,550) (198,082,001) Deferred Tax Impact on Realisation of Revaluation Surplus 9.2 9,484,969 7,740,729 6,192,583 7,740,729 Deferred tax adjustment on SLFRS 9 and SLFRS 15 114,981,691 – 107,441,711 – Deferred Tax Impact on Unrealised Profit in inventory 9.2 (190,793) (7,092,878) – – Balance as at the End of the Period (246,869,202) (467,235,592) 264,757,033 69,642,532 101 271 245 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

26.2 Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against tax liabilities and when the deferred tax relate to the same fiscal authority.

Deferred tax is computed using the tax rate which was enacted by the end of the reporting period which is 28% and Regnis Appliances (Pvt) Limited at 20%.

26.3 As per the newly enacted Inland Revenue Act No. 24 of 2017, business income includes gains from realisation of capital assets and liabilities of a business. Accordingly, the gain from the realisation of an asset or liability shall be the amount by which the sum of the consideration received for the asset or liability exceeds the acquiring cost of the asset or liability at the time of realisation. The Group has recognised a revaluation reserve on free hold land (Capital asset of the Group) amounting to Rs. 606,566,750/- (2018 – Rs. 1,843,032,339/-), Company 284,984,250/- as at 31st March 2018 which is the amount by which the sum of the carrying value of the freehold land exceeds the acquiring cost of the land based on the revaluation carried out and accounted for as at the balance sheet date. Hence, the Group has recognised a deferred tax liability of Rs. 685,887,745/- (2018 – Rs. 516,049,055/-), Company Rs. 277,877,591/- (2018 – Rs. 198,082,001/- on revaluation reserve of freehold lands which is computed at the corporate tax rate of 28%.

26.3.1 Consolidated

As at 31st March 2019 As at 31st March 2018 Assets Liabilities Assets Liabilities Rs. Rs. Rs. Rs.

(a) Composition of Deferred Tax Property, Plant and Equipment – 1,361,085,819 – 1,071,132,890 Intangible Assets – 34,029,561 – 26,353,008 Lease Rentals 1,007,875 133,123,515 139,257,459 Tax Losses 954,073 – 6,078,222 – Provision for Inventories 275,554,201 – 222,864,788 – Provision on Receivables 656,954,137 – 286,217,145 – Employee Benefit Obligations 257,787,290 – 222,225,372 – Provision for Warranty 89,112,116 – 32,122,238 – 1,281,369,693 1,528,238,895 769,507,764 1,236,743,357 Net deferred tax 246,869,202 467,235,592 246 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

26.3.2 Company

As at 31st March 2019 As at 31st March 2018 Assets Liabilities Assets Liabilities Rs. Rs. Rs. Rs.

(a) Composition of Deferred Tax Property, Plant and Equipment – 683,818,578 – 564,113,342 Intangible Assets – 17,608,992 – 16,308,898 Provision for Inventories 243,365,195 – 194,637,116 – Provision on Receivables 463,052,631 – 266,880,095 – Employee Benefit Obligations 176,612,230 – 160,722,563 – Provision for Warranty 83,154,547 – 27,824,998 – 966,184,603 701,427,571 650,064,772 580,422,240 Net Deferred Tax 264,757,033 – 69,642,532

27. Employee Benefit Obligations

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Note Rs. Rs. Rs. Rs.

Present Value of Unfunded Gratuity 871,971,129 794,644,981 630,757,966 574,009,152 Total Present Value of the Obligation 871,971,129 794,644,981 630,757,966 574,009,152

Provision for Retiring Gratuity At the Beginning of the Period 794,644,981 651,143,995 574,009,152 476,754,466 Adjustment due to transfer of employees out of Company (13,970,000) – (13,970,000) – Actuarial (Gain)/Loss on Obligation 9.4 21,158,221 18,910,000 26,947,676 9,478,416 Current Service Costs 57,258,140 67,788,899 40,169,233 46,279,839 Interest Costs 87,410,988 93,700,797 63,141,045 68,138,623 946,502,330 831,543,691 690,297,106 600,651,344 Benefits Paid During the Period (74,531,201) (36,898,710) (59,539,140) (26,642,193) At the End of the Period 871,971,129 794,644,981 630,757,966 574,009,152

The Group and Company maintains a non-contributory defined benefit plan providing for gratuity benefits payable to employees who will get eligible upon their retirement.

As at 31st March 2019, the gratuity liability was valued under the Projected Unit Credit (PUC) method by a professionally qualified actuary Mr. Pushpakumar Gunasekara of Smiles Global (Pvt) Limited who is qualified Actuary, Associate of the Institute of Actuaries of Australia (AIAA). 101 271 247 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Following key assumptions were made in arriving at the above figures:

2019 2018

(a) Rate of Discount 11.0% p.a. (net of tax) 11.0% p.a. (net of tax) (b) Salary Increment Rate Year 1 10% 10% Year 2+ 10% 9% (c) Retirement Age All Staff Members (Other than Factory Non-Management Staff) 60 years 60 years Branch Managers 55 years 55 years Factory Non-Management Staff – Singer Industries (Ceylon) PLC 60 years 60 years Other Factory Non-Management Staff 55 years 55 years

(d) Assumptions regarding future mortality are based on A1967/70 Mortality Table, issued by the Institute of Actuaries, London. The demographic assumptions underline the valuation are with respect to retirement age, early withdrawal from service and retirement on medical grounds. The expense is recognised in the following line items in the Income statement. Expense is recognised in the following line items in the Income statement.

Consolidated Company For twelve months For twelve months For twelve months For twelve months ended 31st March ended 31st March ended 31st March ended 31st March 2019 2018 2019 2018 Rs. Rs. Rs. Rs.

Cost of Sales 19,587,673 61,695,402 10,961,702 12,420,280 Selling and Administration Expenses 125,081,455 99,794,294 92,348,576 101,998,182 144,669,128 161,489,696 103,310,278 114,418,462

27.1 Sensitivity Analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the benefit obligation by the amounts shown below:

Consolidated Company As at 31st March 2019 As at 31st March 2019 Increase Decrease Increase Decrease Rs. Rs. Rs. Rs.

Discount Rate (1% Movement) (43,945,630) 48,889,476 (32,619,543) 36,416,058 Future Salary (1% Movement) 49,458,488 (45,209,771) 37,188,452 (33,874,786) 248 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

28. Security Deposits

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance at the Beginning of the Period 1,199,127,333 1,018,451,850 1,199,127,333 1,018,451,850 Contribution During the Period 138,960,799 108,243,347 84,810,694 108,243,347 Interest Charges 148,317,161 168,619,531 146,162,296 168,619,531 Shortages Recovered (43,263,080) (58,152,701) (43,263,080) (58,152,701) ESD Releases (54,709,192) (38,034,694) (54,709,192) (38,034,694) Balance at the End of the Period 1,388,433,021 1,199,127,333 1,332,128,051 1,199,127,333

29. Trade and other Payables

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Trade Payables 4,606,937,477 5,234,301,866 3,218,426,890 3,835,415,978 Value Added Tax Payable 52,964,929 78,224,110 (11,478,512) 14,216,669 MSPS Payable 38,937,714 94,291,306 38,417,044 94,031,975 ETF Payable 8,919,478 20,503,576 8,919,478 20,460,848 Advances Received from Customers (Note 29.1) 287,775,219 284,604,628 257,382,652 284,604,628 Accrued Expenses 1,314,537,407 1,378,838,308 1,048,277,442 1,113,729,765 Other Payables 810,047,047 880,560,560 400,376,205 541,868,243 Warranty Provisions (Note 29.3) 200,918,938 141,647,324 153,854,524 99,374,992 7,321,038,209 8,112,971,678 5,114,175,724 6,003,703,096

29.1 Advance Received From Customers

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Contract Liabilities 36,921,881 19,638,343 36,921,881 19,638,343 Other Advances 250,853,339 264,966,285 220,460,772 264,966,285 287,775,219 284,604,628 257,382,652 284,604,628 101 271 249 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

29.2 Warranty Provision

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance at the Beginning of the Period 141,647,324 125,513,307 99,374,992 94,074,992 Reclassification from Deferred Revenue on initial application of SLFRS 15 137,645,787 – 137,645,787 – Provision Made During the Period 148,950,254 63,075,541 113,004,086 5,300,000 Utilised During the Period (84,198,078) (46,941,524) (53,043,992) – Balance at the End of the Period 344,045,287 141,647,324 296,980,873 99,374,992

29.3 Warranty Provision

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Due after One Year 143,126,349 – 143,126,349 – Due within One Year 200,918,938 141,647,324 153,854,524 99,374,992 344,045,287 141,647,324 296,980,873 99,374,992

*Warranty Provisions have been recognised for expected warranty claims on products. See the accounting policies in Note 2.6.1.

30. Deferred Revenue

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance as at Beginning of the Period 246,289,945 438,989,246 246,289,945 438,989,246 Adjustment on initial application of SLFRS 15 226,619,389 – 226,619,389 – Reclassification to warranty on initial application of SLFRS 15 (137,645,787) – (137,645,787) – Amounts recognised During the Period 105,722,629 (220,658,167) 106,942,451 (220,658,167) Amounts Transferred During the Period (167,013,118) 27,958,866 (173,742,918) 27,958,866 Balance as at the End of the Period 273,973,058 246,289,945 268,463,080 246,289,945

Due within One Year 188,044,737 119,961,349 182,534,759 119,961,349 Due after One Year 85,928,321 126,328,596 85,928,321 126,328,596 273,973,058 246,289,945 268,463,080 246,289,945

30.1 Deferred Revenue includes deferred service fee on air conditioners, Sanasuma Extended Warranty Scheme and amount deferred on motor bike services income as at 31st March 2019. 250 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

31. Income Tax Payables/(Receivables)

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Notes Rs. Rs. Rs. Rs.

Balance at the Beginning of the Period (46,635,361) 245,280,570 (157,630,474) (1,767,152) Charge for the Period 9 477,606,670 614,776,454 143,238,137 224,296,133 (Over)/Under Provision in respect of Previous Year 9 104,474,835 20,055,084 12,102,703 359,716 Payments Made During the Period (606,399,784) (926,747,469) (237,898,052) (380,519,171) Balance at the End of the Period (70,953,640) (46,635,361) (240,187,686) (157,630,474)

32. Dividend Payables

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Unclaimed Dividends 88,496,948 220,838,973 49,212,196 166,754,628 88,496,948 220,838,973 49,212,196 166,754,628

33. Dividends

Company As at 31st March 2019 As at 31st March 2018 Rs. Rs.

Ordinary Shares Final Dividend 2018/19 – Nil (2016 – Rs. 8.80 ) – 1,101,844,568 Interim Dividend 2018/19 – Rs. 0.65 (2017/18 – Rs. 2.20) 244,158,740 826,383,426 244,158,740 1,928,227,994 Dividend Per Share (Rs.) 0.65 2.20

34. Amounts Due to Related Parties 34.1 Amounts Due to Related Parties – Trade

Consolidated Company Relationship As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Singer Industries (Ceylon) PLC Subsidiary Company – – 65,450,436 105,987,239 Regnis (Lanka) PLC Subsidiary Company – – 667,743,445 363,661,515 Regnis Appliances (Pvt) Limited Subsidiary Company – – 213,374,482 185,500,241 Singer Finance (Lanka) PLC Subsidiary Company – – 78,738,426 –

Singer Digital Media (Pvt) Limited Subsidiary Company – – 1,482,650,928 1,969,146,333 Hayleys Travels and Tours (Pvt) Affiliate Company Limited – 7,087,599 – 7,087,599 – 7,087,599 2,507,957,717 2,631,382,927 101 271 251 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

34.2 Amounts Due to Related Parties – Non Trade

Consolidated Company Relationship As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Hayleys PLC Parent Company 200,549,783 195,311,266 198,883,053 194,195,103 Hayleys Advantis Limited Affiliate Company 24,132,979 81,198,192 24,132,979 81,198,192 Volanka (Pvt) Limited Affiliate Company 7,537,234 25,359,894 7,537,234 25,359,894 Hayleys Aventura (Pvt) Limited Affiliate Company 6,845,718 23,033,298 6,845,737 23,033,298 Carbotels (Pvt) Limited Affiliate Company 6,292,553 21,172,021 6,292,557 21,172,021 Hayleys Agriculture Holdings Limited Affiliate Company 6,154,255 20,706,702 6,154,255 20,706,702 Mr. K.D.D. Perera Key Management Personnel (KMP) 4,508,343 15,168,842 4,508,343 15,168,842 256,020,865 381,950,214 254,354,158 380,834,051 Total 256,020,865 389,037,813 2,762,311,875 3,012,216,978

35. Other Financial Liabilities

Consolidated Company As at 31st March 2019 As at 31st March 2018 As at 31st March 2019 As at 31st March 2018 Rs. Rs. Rs. Rs.

Deposits from Customers (Note 35.1) 5,953,023,001 5,229,639,918 – – Due within One Year 5,148,467,467 4,826,583,524 – – Due after One Year 804,555,534 411,393,904 – – Derivative Financial Liabilities (Note 35.2) (85,648,063) 8,337,510 (85,648,063) 8,337,510

35.1 Deposits from Customers Balance at the Beginning of the Period 5,229,639,918 3,041,946,900 New Deposits 5,673,100,303 5,433,583,327 Capitalisation of Interest 309,184,127 668,667,381 11,211,924,348 9,144,197,608 Repaid Deposits (5,242,547,096) (3,788,119,165) Less: Investment in Fixed Deposits in Subsidiary (16,354,251) (126,438,525) Balance at the End of the Period 5,953,023,001 5,229,639,918 Payable within One Year 5,148,467,467 4,813,246,014 Payable after One Year 804,555,534 411,393,904 Deposit Classification Fixed Deposits at Amortised Cost 5,899,267,301 5,161,466,477 Saving Deposits 53,755,700 68,173,441 5,953,023,001 5,229,639,918

35.2 Derivative Financial Liabilities/(Assets) Fair Value of Cross Currency interest SWAP (85,648,063) 8,337,510 (85,648,063) 8,337,510 252 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

During 2017/18 Period Company has entered into a borrowing contract with Standard Chartered Bank (Mauritius) Limited to borrow a USD 10 million at an interest rate of 3 Months LIBOR+3.5%. In order to mitigate the currency and interest rate risks, company has entered to a separate cross currency interest rate SWAP with Standard Chartered Bank (Sri Lanka) Limited. Accordingly the instalments are fixed to be settled Sri Lankan Rupees. Derivative financial liabilities include the fair value of cross currency SWAP as at 31st March 2019. The resultant fair value of the cross currency interest SWAP is accounted as a derivative assets in these financial statements.

Derivative liabilities include the fair value of cross currency SWAP as at 31st March 2019.

36. Financial Instruments Financial Risk Management Overview The Group has exposure to the following risks from its use of financial instruments: Credit Risk Liquidity Risk Market Risk Operational Risk

The note presents information about Group’s exposure to each of above risks, the Group’s objectives, policies and processes measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these Consolidated Financial Statements.

Risk Management Framework The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risk faced by the Group, to set appropriate risks 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 Group’s activities.

The Board of Directors oversees how management monitor compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Company’s Directors are assisted in their oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of the risk management controls and producers, the result of which are reported to the Company’s Directors.

Credit Risk Credit risk is the risk of financial loss to the Group if a customer of counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s trade and other receivables.

Treasury Bills Singer Finance (Lanka) PLC invests not less than 7.5% of the public deposits in Treasury Bills to comply with the Central Bank of Sri Lanka Direction No. 1 of 2009.

Trade and Other Receivables The Group’s exposure to credit risk relates to sale of products on instalment credit/hire purchase which is an integral part of the business of the Group.

The Group’s exposure to credit risk on instalment credit/hire purchase contracts is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risks of the country in which customers reside, has a lesser influence on credit risk. 101 271 253 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Geographically, there is no concentration of credit risk. Goods are sold, subject to collateral undertakings so that in the event of non-payment, the Group can have a secured claim. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposure and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified.

Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’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 Group’s reputation.

Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income. The objective of market risk management is to manage and control market risk exposure within the acceptable parameters, while optimising the return.

Currency Risk The Group is exposed to currency risk on purchases that are denominated in a currency other than the respective financial currencies of Group entities. The currency in which these transactions primarily are denominated in US Dollars. The currency risk is limited by the short-term nature of the period between the dates of the purchase and settlements of the related liability.

Interest Rate Risk The Group manages interest rate risk on borrowings by using a combination of fixed and floating interest rate.

Operational Risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all Group’s operations.

The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity

The primary responsibility for the development and implementation of controls to address operational risks is assigned to Senior Management within each business unit. This responsibility is supported by the development of overall Group standards for the managements of operational risk in the following areas: zz Requirements for the appropriate segregation of duties, including the independent authorisation of transactions. zz Requirements for the reconciliation and monitoring of transactions. zz Compliance with regulatory and other legal requirements. zz Documentation of controls and procedures. zz Requirements for the periodic assessment of operational risks faced and the adequacy of controls and procedures to address the risks identified. zz Requirements for the reporting of operational losses and proposed remedial action. zz Development of contingency plans. zz Training and professional development. zz Ethical and business standards. zz Risk mitigation, including insurance where this is effective.

Compliance with Group standards is supported by a programme of periodic reviews undertaken by internal audit. The results of internal audit reviews are discussed with the management of the business unit to which they relate, Senior Management of the Group and the Board of Directors. 254 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Credit Risk 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:

Carrying Amount – Consolidated Carrying Amount – Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Trade and other Receivables 34,150,467,520 29,848,202,484 14,292,623,480 13,483,953,379 Cash at Bank 1,849,642,830 1,339,006,740 1,337,712,692 1,017,627,946 Amounts due from Related Parties – 788,000 3,310,666 185,396,027 Loans due from Related Parties – – 1,215,819,977 1,219,150,767 Other Financial Assets 726,081,693 688,443,940 928,292,652 3,854,332,314 Deposits at Bank 83,323,971 81,504,012 – – 36,809,516,014 31,957,945,176 17,777,759,467 19,760,460,433

The Maximum exposure to credit risk for receivables at the reporting date by type of counterparty was:

Carrying Amount – Consolidated Carrying Amount – Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Retail Customers 25,490,171,209 21,818,380,977 7,641,386,622 7,451,947,830 Wholesale Customers 5,053,251,844 5,361,912,649 3,724,753,008 3,979,170,189 Others 3,607,044,467 2,667,908,857 2,926,483,851 2,052,835,360 Total 34,150,467,520 29,848,202,483 14,292,623,480 13,483,953,379

Impairment Analysis The aging of receivables at the Reporting date:

Group As at 31st March 2019 As at 31st March 2016 Gross Impairment Net Receivable Gross Impairment Net Receivable Rs. Rs. Rs. Rs. Rs. Rs.

Not Past due 23,168,391,826 (197,247,975) 22,971,143,851 14,765,214,878 – 14,765,214,878 Past due 0-30 Days 4,999,720,394 (142,998,749) 4,856,721,645 4,609,373,702 (11,994,276) 4,597,379,426 Past due 31-120 Days 4,178,363,059 (221,406,838) 3,956,956,221 9,831,177,826 (112,743,713) 9,718,434,113 Past due more than 120 Days 4,151,578,886 (1,785,933,083) 2,365,645,803 1,962,070,908 (1,194,896,842) 767,174,066 Total 36,498,054,165 (2,347,586,647) 34,150,467,520 31,167,837,314 (1,319,634,831) 29,848,202,484 101 271 255 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Company As at 31st March 2019 As at 31st March 2018 Gross Impairment Net Receivable Gross Impairment Net Receivable Rs. Rs. Rs. Rs. Rs. Rs.

Not Past due 12,115,787,669 (184,996,111) 11,930,791,558 4,324,534,873 – 4,324,534,873 Past due 0-30 Days 938,809,693 (45,780,584) 893,029,109 2,230,705,807 (11,903,850) 2,218,801,957 Past due 31-120 Days 1,176,147,691 (118,910,367) 1,057,237,324 3,426,993,657 (107,493,355) 3,319,500,302 Past due more than 120 Days 1,715,643,821 (1,304,072,331) 411,571,490 4,454,862,239 (833,745,992) 3,621,116,247 Total 15,680,955,734 (1,653,759,397) 14,292,629,480 14,437,096,576 (953,143,197) 13,483,953,379

The movement in the allowance for impairment in respect of receivables during the year was as follows:

Consolidated Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2019 31st March 2018 Rs. Rs. Rs. Rs.

Balance at the Beginning of the Period 1,319,634,831 847,624,904 953,143,197 641,085,725 Impact of Adopting SLFRS 9 “Financial instruments” 374,801,748 – 246,074,606 – Impairment Loss Recognised 790,699,290 652,643,612 474,683,286 422,183,787 Amounts Written-off (137,549,222) (180,633,685) (20,141,692) (110,126,315) Balance at the End of the Period 2,347,586,647 1,319,634,831 1,653,759,398 953,143,197

Total impairment for the period resulted from following counterparties.

Group Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2018 31st March 2018 Rs. Rs. Rs. Rs.

Impairment for Hire Debtors 93,432,380 64,886,178 84,856,215 53,096,143 Impairment for Lease Rental Receivables 248,345,208 126,311,107 – – Impairment for Loan Debtors 323,203,252 168,104,070 – – Impairment for Trade Debtors 758,362,703 293,771,484 645,981,951 234,945,963 Impairment for Other Debtors 924,243,104 666,561,993 922,921,232 665,101,091 Total 2,347,586,648 1,319,634,831 1,653,759,398 953,143,197

A committee respective functional managers groups established a credit policy under which each new customer is analysed individually for credit worthiness before the Group’s standard payment and delivery terms and conditions offered for wholesale customers, sale limits are established for each customer and reviewed periodically. Any sales exceeding these limits require approvals from Directors based on amount enhanced.

The Group establishes an allowance for impairment that represent its estimate of incurred losses in respect of trade and other receivables.

All bank deposits and current accounts maintained at licensed commercial banks, which are subject to close supervision of Central Bank.

All related party receivables are from Subsidiary companies which are controlled by the same Board of Directors of Singer (Sri Lanka) PLC. 256 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Liquidity Risk The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Group 31st March 2019 Carrying Contractual 6 Months or 6-12 1-2 2-5 More than Amount Cash Flows Less Months Years Years 5 Years Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Secured bank loans 2,135,101,795 2,445,118,576 1,784,956,584 114,268,056 335,795,544 210,098,392 –

Unsecured bank loans 23,616,600,427 23,263,862,358 10,772,384,092 5,023,751,604 5,083,515,428 2,384,211,233 – Unsecured Debenture issues 653,554,271 853,516,099 39,515,967 39,300,033 774,700,099 – –

Secured Debenture issues 1,581,562,115 1,959,194,435 167,092,972 692,069,255 1,100,032,208 – –

Bank overdraft 2,916,428,154 2,916,428,154 2,916,428,154 – – – –

Securitisation 1,874,119,040 2,176,654,310 433,024,310 372,141,600 1,371,488,400 – –

Trade and Other Payables 7,321,038,197 7,321,038,197 7,321,038,197 – – – –

Public Deposits 5,953,023,001 6,827,313,671 4,140,592,184 1,785,099,672 537,648,464 349,373,747 14,599,604

Total 46,051,427,000 47,763,125,800 27,575,032,460 8,026,630,220 9,203,180,143 2,943,683,372 14,599,604

Derivative Financial Liabilities

Interest Rate SWAP (85,648,063) (85,648,063) – (85,648,063) – – –

Total (85,648,063) (85,648,063) – (85,648,063) – – –

31st March 2018 Carrying Contractual 6 Months or 6-12 1-2 2-5 More than Amount Cash Flows Less Months Years Years 5 Years Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Secured Bank Loans 1,312,300,000 1,317,724,996 955,424,996 75,000,000 75,000,000 212,300,000 –

Unsecured bank loans 15,106,564,972 16,386,261,741 6,270,965,319 7,210,711,091 1,243,531,470 1,661,053,861 – Unsecured Debenture issues 4,483,352,339 4,772,302,590 2,673,505,135 2,098,797,455 – – – Secured Debenture issues 2,500,000,000 2,567,378,286 67,378,286 – 409,300,000 2,090,700,000 –

Bank overdraft 2,132,691,242 2,132,691,242 2,132,691,242 – – – –

Trade and Other Payables 8,112,971,679 8,112,971,679 8,112,971,679 – – – –

Public Deposits 5,229,639,918 5,356,078,444 3,573,003,590 1,379,223,153 279,720,244 111,990,210 12,141,247

Total 38,877,520,150 40,645,408,978 23,785,940,247 10,763,731,699 2,007,551,714 4,076,044,071 12,141,247

Derivative Financial Liabilities

Interest Rate SWAP 8,337,510 8,337,510 – 8,337,510 – – –

Total 8,337,510 8,337,510 – 8,337,510 – – – 101 271 257 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Company 31st March 2019 Carrying Contractual 6 Months or 6-12 1-2 2-5 More than Amount Cash Flows Less Months Years Years 5 Years Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Unsecured bank loans 19,986,989,326 22,236,336,833 9,744,858,567 5,023,751,604 5,083,515,428 2,384,211,233 – Unsecured Debenture issues 653,554,271 853,516,099 39,515,967 39,300,033 774,700,099 – –

Trade and Other Payables 5,114,175,724 5,114,175,724 5,114,175,724 – – – –

Bank overdraft 1,417,088,608 1,417,088,608 1,417,088,608 – – – –

Total 27,171,807,929 29,621,117,264 16,315,638,867 5,063,051,637 5,858,215,527 2,384,211,233 –

Derivative Financial Liabilities

Interest Rate SWAP (85,648,063) (85,648,063) – (85,648,063) – –

Total (85,648,063) (85,648,063) – (85,648,063) – – –

31st March 2018 Carrying Contractual 6 Months or 6-12 1-2 2-5 More than Amount Cash Flows Less Months Years Years 5 Years Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Unsecured Bank Loans 11,707,742,249 12,829,049,278 5,723,593,430 4,200,870,517 1,243,531,470 1,661,053,861 Unsecured Debenture issues 4,991,435,763 5,255,895,879 3,157,098,424 2,098,797,455 – – –

Trade and Other Payables 6,003,703,094 6,003,703,094 6,003,703,094 – – – –

Bank Overdraft 1,237,088,725 1,237,088,725 1,237,088,725 – – – –

Total 23,939,969,831 25,325,736,976 16,121,483,673 6,299,667,972 1,243,531,470 1,661,053,861

Derivative Financial Liabilities

Interest Rate SWAP 8,337,510 8,337,510 – 8,337,510 – – –

Total 8,337,510 8,337,510 – 8,337,510 – – –

The outflows disclosed in the above table represent the contractual undiscounted cash flows relating to non-derivative financial liabilities held for risk management purposes and which are not closed out before contractual maturity.

Market Risk Currency Risk The summary quantitative data about the Group’s exposure to currency risk as reported to the management of the Group is as follows.

As at 31st March 2019 As at 31st March 2018 USD CNY EURO USD CNY EURO

Trade Payables 11,381,413 2,027,261 1,028 17,178,724 1,535,074 17,914 Net Exposure 11,381,413 2,027,261 1,028 17,178,724 1,535,074 17,914

* USD – United States Dollars * CNY – Chinese Yuan * Euro – EU Euro 258 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

The following significant exchange rates have been applied:

Average Rate Period End Sopt Rate As at As at 2019 2018 31st March 2019 31st March 2018

USD 178.42 152.92 176.13 155.97 CNY 26.14 23.26 26.27 21.92 Euro 201.67 163.8 197.80 192.22

Sensitivity Analysis A reasonably possible strengthening (weakening) of the USD, CNY or EURO against all other currencies at reporting date would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Profit or Loss Equity net of Tax Strengthening Weakening Strengthening Weakening Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

2019 USD (5% Movement) (100,230) 100,230 (72,166) 72,166 CYN (5% Movement) (2,663) 2,663 (1,917) 1,917 EURO (5% Movement) (10) 10 (7) 7

2018 USD (5% Movement) (133,968) 133,968 (96,457) 96,457 CYN (5% Movement) (1,683) 1,683 (1,212) 1,212 EURO (5% Movement) (172) 172 (124) 124

Interest Rate Risk Profile At the Reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was:

Group Company As at 31st March As at 31st March As at 31st March As at 31st March 2019 2018 2019 2018 Rs. Rs. Rs. Rs.

Fixed Rate Instruments Financial Assets 25,490,171,209 21,818,381,007 8,553,476,622 8,364,037,830 Financial Liabilities (29,989,255,113) (21,813,982,972) (20,643,789,326) (15,098,282,249) (4,499,083,904) 4,398,035 (12,090,312,704) (6,734,244,419)

Variable Rate Instruments Financial Assets – – – – Financial Liabilities – (1,609,460,000) – (1,609,460,000) – (1,609,460,000) – (1,609,460,000) 101 271 259 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Cash Flow Sensitivity for Variable Rate Instruments A reasonably possible change of 100 basis points in interest rate at the reporting date would have increased (Decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant:

Profit or Loss Equity Net of Tax 1% Increase 1% Decrease 1% Increase 1% Decrease Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

31st March 2019 Variable Rate Instruments – – – – Cash Flow Sensitivity (Net) – – – –

31st March 2018 Variable Rate Instruments (16,094) 16,094 (11,587) 11,587 Cash Flow Sensitivity (Net) (16,094) 16,094 (11,587) 11,587

Fair Values Fair Values Versus Carrying Amounts The fair values of financial assets and liabilities, together with the carrying amounts in the Balance Sheet, are as follows:

Group 31st March 2019` Financial Financial Financial Other Total Carrying Fair Value Fair Value Assets/ Assets/ Liabilities at Financial Value Measurement Liabilities at Liabilities at FVTPL Liabilities Level FVOCI amortised cost Note Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Investment in Equity Securities 15.1 17,061,300 17,061,300 Level 2

Derivatives 85,648,063 85,648,063 Level 2

Hire Debtors 18 7,655,970,520 7,655,970,522 –

Lease Debtors 18 13,950,248,514 13,950,248,513 –

Loan Debtors 18 3,883,952,175 3,883,952,174 –

Trade Debtors 18 5,053,251,844 5,053,251,844 –

Other Debtors 18 3,607,044,467 3,607,044,467 –

Cash and Cash Equivalents 20.1 1,849,642,830 1,849,642,830 –

Investment in Treasury Bills 15.2 623,372,330 623,372,330 – Level 2

Deposits with Banks 83,323,971 83,323,971 –

Total 17,061,300 36,706,806,651 85,648,063 – 36,809,516,014 –

Debentures 25.2 – – – 2,235,116,386 2,235,116,386 –

Bank Loans 25.3 – – – 25,751,702,222 25,751,702,222 –

Bank Overdraft 20.2 – – – 2,916,428,154 2,916,428,154 –

Trade and Other Payables 29 – – – 7,321,038,197 7,321,038,197 –

Dividend Payable 32 – – – 88,496,948 88,496,948 –

Amounts due to Related Parties 34 – – – 256,020,866 256,020,866 –

Deposits from Customers 35 – – – 5,148,467,467 5,148,467,467

Total 43,717,270,240 43,717,270,240 260 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Group 31st March 2018 Note Available- Loans and Financial Other Financial Total Fair Fair Value for-Sale Receivables Assets/ Liabilities Carrying Value Value Measurement Liabilities Level at FVTPL Rs. Rs. Rs. Rs. Rs. Rs.

Investment in Equity Securities 15.1 17,061,300 – – – 17,061,300 17,061,300 Level 2 Hire Debtors 18 – 7,534,792,738 – – 7,534,792,738 – Lease Debtors 18 – 11,383,225,322 – – 11,383,225,323 – Loan Debtors 18 – 2,900,362,916 – – 2,900,362,916 – Trade Debtors 18 – 5,361,912,649 – – 5,361,912,649 – Other Debtors 18 – 2,667,908,857 – – 2,667,908,857 – Amounts due from Related Parties 19 – 788,000 – – 788,000 – Cash and Cash Equivalents 20.1 – 1,339,006,740 – – 1,339,006,740 – Investment in Treasury Bills 15.2 – 671,382,640 – – 671,382,640 671,382,640 Level 2 Deposits with Banks – 81,504,012 – – 81,504,012 – Total 17,061,300 31,940,883,875 – – 31,957,945,175 – Derivatives 8,337,510 8,337,510 8,337,510 Level 2 Debentures 25.2 – – – 6,983,551,005 6,983,551,005 – Bank Loans 25.3 – – – 16,418,864,972 16,418,864,972 – Bank Overdraft 20.2 – – – 2,132,691,242 2,132,691,242 – Trade and Other Payables 29 – – – 8,112,971,679 8,112,971,679 – Dividend Payable 32 – – – 220,838,973 220,838,973 – Amounts due to Related Parties 34 – – – 389,037,813 389,037,813 Deposits from Customers 35 – – – 5,229,639,918 5,229,639,918

Total – – 8,337,510 39,487,595,602 39,495,933,112 –

Company Note Financial Financial Financial Other Total Carrying Fair Value Fair Value Assets/ Assets/ Assets/ Financial Value Measurement Liabilities at Liabilities at Liabilities at Liabilities Level 31st March 2019 FVOCI amortised FVTPL cost Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Investment in Equity Securities 15.1 17,020,000 17,020,000 17,020,000 Level 2

Investment in Debentures 15.1 912,090,000 912,090,000

Derivatives 85,648,063 85,648,063

Loans due from Related Parties 17 1,215,819,977 1,215,819,977

Hire Debtors 18 7,641,386,622 7,641,386,622

Trade Debtors 18 3,724,753,008 3,724,753,008

Other Debtors 18 2,926,483,851 2,926,483,851

Amounts due from Related Parties 19 3,310,666 3,310,666

Cash and Cash Equivalents 20.1 1,337,712,692 1,337,712,692

Total 17,020,000 16,849,466,816 85,648,063 17,864,224,879 – 101 271 261 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Debentures 25 653,554,271 653,554,271

Bank Loans 25 19,986,989,326 19,986,989,326

Bank Overdraft 20.2 1,417,088,608 1,417,088,608

Trade and Other Payables 29 5,114,175,724 5,114,175,724

Dividend Payable 32 49,212,196 49,212,196

Amounts due to Related Parties 34 2,762,311,876 2,762,311,876

Total – – 29,983,332,001 29,983,332,001 –

Company Note Available- Held-to- Loans and Financial Other Financial Total Carrying Fair Fair Value for-Sale Maturity Receivables Liabilities at Liabilities Value Value Measurement FVTPL Level 31st March 2018 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Investment in Equity Securities 15.1 17,020,000 – – – – 17,020,000 17,020,000 Level 2 Investment in Debentures 15.1 – 912,090,000 – – – 912,090,000 – Loans due from Related Parties 17 – – 1,219,150,767 – – 1,219,150,767 –

Hire Debtors 18 – – 7,451,947,830 – – 7,451,947,830 –

Trade Debtors 18 – – 3,979,170,189 – – 3,979,170,189 –

Other Debtors 18 – – 2,052,835,360 – – 2,052,835,360 – Amounts due from Related Parties 19 – – 185,396,027 – – 185,396,027 Cash and Cash Equivalents 20.1 – – 1,017,627,946 – – 1,017,627,946

Total 17,020,000 912,090,000 15,906,128,119 – – 16,835,238,119 –

Derivatives 8,337,510 – 8,337,510 8,337,510 Level 2

Debentures 25 – – – – 4,991,435,763 4,991,435,763 –

Bank Loans 25 – – – – 11,707,742,249 11,707,742,249 –

Bank Overdraft 20.2 – – – – 1,237,088,725 1,237,088,725 Trade and Other Payables 29 – – – – 6,003,703,094 6,003,703,094 –

Dividend Payable 32 – – – – 166,754,628 166,754,628 – Amounts due to Related Parties 34 – – – – 3,012,216,978 3,012,216,978 –

Total – – – 8,337,510 27,118,941,437 27,127,278,947 –

Where ever the assets and liabilities are not fair valued, it was assume that the caring value of such assets and liabilities are a reasonable approximation to this fair value as majority of such assets and liabilities are with shorter maturity periods. 262 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

(I) Fair Value Versus Carrying Amounts The following table show the valuation techniques used in measuring Level 2 fair values, as well as significant unobservable inputs used:

Type Valuation Technique Significant Unobservable Inputs

Treasury Bills Discount Cash Flows Forecasted Annual Cash Inflows and Outflows Derivative The fair value is calculated as the present Not Applicable value of the estimated future cash flows. Estimates of future floating-rate cash flows are based on forward interest ratio and forward currency rates. Estimated cash flows are discounted using a yield curve constructed from similar sources.

Capital Management The Board’s policy is to maintain a strong capital base to maintain confidence of the investors, creditors and the market while sustaining future development of the business capital consists to total equity. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Board of Directors seeks to maintain a balance between higher returns facilitated through a higher level of borrowings and the benefits and security afforded by a sound capital position.

The Capital Structure of the Group consists of debt and equity of the Group. The capital structure of the Group is reviewed by the Board of Directors.

The Group monitors capital using the ratio of net debt to equity. For this purpose adjusted net debt is defined as total liabilities comprising interest bearing loans and borrowings and obligation under finance leases, less cash and cash equivalents.

Group Company As at As at As at As at 31st March 2019 31st March 2018 31st March 2018 31st March 2018 Rs. Rs. Rs. Rs.

Total Borrowings 39,000,777,922 30,958,836,530 22,167,331,321 17,953,168,484 Less: Cash and Cash Equivalents (1,849,642,830) (1,339,006,740) (1,337,712,692) (1,017,627,946) Adjusted Net Borrowings 37,151,135,092 29,619,829,790 20,829,618,629 16,935,540,538 Total Equity 8,451,643,776 8,184,568,509 4,635,982,237 4,799,691,875 Net Debt to Equity Ratio 4 4 4 4

The Regulatory Capital requirements for the Finance Companies are set by the Central Bank of Sri Lanka. The details of the computation of risk weighted assets, capital and the ratios of the Singer Finance PLC are given below:

Capital Adequacy Capital adequacy is a measure of financial institutions financial strength and stability. This widely accepted concept tries to specify the limit up to which a business can expand in terms of its risk – weighted assets. Finance companies in pursuit of business expansion, could engage themselves in activities that regularly change their risk profile. In light of this, regulatory capital requirements have been established to avoid undue expansion beyond specified limits keeping a hold on companies’ exposure to risk. Capital serves as a comfort to absorb unexpected losses, providing a degree of security to depositors and other key stakeholders. 101 271 263 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

This measure has been introduced by the Central Bank of Sri Lanka to protect the interest of the various stakeholders of the Company while ensuring the maintenance of confidence and stability of the financial system.

The capital adequacy ratio is calculated as a percentage on company’s capital to its risk weighted assets as specified by the direction No 03 of 2018 with the effect from 1st July 2018 . Previously, Capital Adequacy ratio was computed based on the Direction No.02 of 2006 and by the circular issued by the Central Bank of Sri Lanka dated 15/03/2017.

Based on the Direction No. 03 of 2018 the Listed Finance Companies which are having asset base less than 100 Billion need to be have minimum Core Capital Ratio (Tier-I) of 6% and 10% based on the Total Capital Ratio (Tier-II). This minimum requirement will increase to 6.5% and 10.5% respectively with the effect from 1st July 2019.

The core capital represents the permanent shareholders’, equity and reserves created or increase by appropriations of retained earnings or other surpluses and the total capital includes in addition to the core capital, the revaluation reserves, general provisions and other hybrid capital instruments and unsecured subordinated debts.

The Risk Weighted Assets have been calculated by multiplying the value of each category of asset using the risk weight specified by the Central Bank of Sri Lanka.

Details of the computation and the resulting rations are given below: Balance Risk-Weighted Balance As at As at Risk-Weighted 2019 2018 31st March 2019 31st March 2018 Factor Rs. Rs. % Rs. Rs.

Assets Risk Weighted Amount for Credit Risk Notes and Coins 99,120,778 – 0 – – Cash Items in the Process of Collection 186,977,852 – 20 37,395,570 – Fixed Assets 221,000,510 – 100 221,000,510 – Other Assets/Exposures 518,006,872 – 100 518,006,872 – Investment in Government Securities 623,372,330 – 0 – – Bank deposits 83,323,970 – 20 16,664,794 – Retail claims in respect of motor vehicles and machinery 7,935,770,584 – 100 7,935,770,584 – Claims Secured by Gold Outstanding claim portion up to 70% of the market value 145,163,225 – 0 – – Remaining outstanding claim portion over 70% of the market value 5,714,871 – 100 5,714,871 – Other retail claims 9,964,474,589 – 125 12,455,593,236 – Other Non-Performing Assets Specific provisions are equal or more than 20% 358,797,879 – 100 358,797,879 – 264 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Balance Risk-Weighted Balance As at As at Risk-Weighted 2019 2018 31st March 2019 31st March 2018 Factor Rs. Rs. % Rs. Rs.

Total Risk-Weighted Assets Computation Cash and Bank Balance – 295,702,611 0 – – Investment in Government Securities – 671,382,400 0 – – Bank deposits – 81,504,012 20 – 16,300,802 Loans against fixed deposits – 42,550,184 0 – – Staff Loans Secured by Provident Fund Balances – 74,962,608 0 – – Loans against Real Estate – 86,415,980 50 – 43,207,990 Loans and advances – 3,943,771,917 100 – 3,943,771,917 Finance lease receivable – 11,294,077,299 100 – 11,294,077,299 Hire purchase receivable – 74,762,408 100 – 74,762,408 Other assets – 323,859,164 100 – 323,859,164 Fixed assets – 170,007,501 100 – 170,007,501 Total Risk – Weighted Assets 20,141,723,461 17,058,996,084 21,548,944,316 15,865,987,082

Risk Weighted Amount for Operational Risk Interest Income 2,918,214,497 – 15 437,732,175 – Interest Expenses (1,296,290,577) – 15 (194,443,587) – Non-interest income 445,271,279 – 15 66,790,692 – 2,067,195,199 – 310,079,280 – Risk-Weighted Amount for operational Risk under the Basic Indicator Approach 3,100,792,798 – Total Risk – Weighted Assets 22,208,918,660 17,058,996,084 24,649,737,114 15,865,987,082

Total Capital Base Computation Stated Capital 1,996,444,457 1,996,444,457 Reserved Fund 136,009,451 113,852,174 Published Retained Earnings 1,202,658,012 986,177,932 Less:- Other Intangible Assets (net) 46,293,490 Total Core Capital 3,288,818,430 3,096,474,563 Supplementary Capital – – Total Supplementary Capital – – Capital Base 3,288,818,430 3,096,474,563 101 271 265 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

Capital Adequacy Ratio

As at 31st March 2019 2018 % %

Core Capital Ratio Core Capital Risk-Weighted Assets 13.34 19.52 Total Capital Ratio Capital Base Risk-Weighted Assets 13.34 19.52

The previous capital adequacy directions was adopted in 2006 for LFCs in line with the Capital Adequacy Accord recommended by the Basel Committee on Banking Supervision (BCBS)issued for banks in 1988.Under this direction risks were confined to credit risk and no capital requirements for other risks such as Market and operational risks. The new capital adequacy framework covers both credit risk and operational risk. Since the change in the basis and coverage of risks for capital adequacy impacted the tire one capital and total capital computation drastically, and for the purpose of disclosing the comparable correspondence figures, the below presentation is also noted.

As at 31st March 2019 2018 2019 Based on Direction Based on Direction Based on Direction No. 03 of 2018 No. 03 of 2018 No. 02 of 2006

Core Capital Ratio 13.34% 16.04% 19.52% Total Capital Ratio 13.34% 16.04% 19.52%

37. Commitments and Contingencies – Group/Company 37.1 Financial Contingencies Documentary Credits effected for foreign purchases amounting to Group and Company respectively Rs. 1,723,258,909/- (2018 – Rs.4,511,447,444/-) and Rs.1,392,145,399/- (2018 – Rs.2,504,862,843/-)

37.2 Commitments There were no significant capital commitments which have been approved or contracted for by the Company/Subsidiary as at Reporting date except for following:

Singer (Sri Lanka) PLC Operating lease commitment as at 31st March 2019 is as follows: Within One Year – Rs. 149.06 million Between One to Five Years – Rs. 446.85 million Over Five Years – Rs. 358.24 million

As at 31st March 2019, unutilised credit card credit limit is Rs. 268,073,446/- (2018 – Rs. 722,821,725/-) of Singer Finance (Lanka) PLC.

As at 31st March 2019, unutilised Revolving loan facility amount is Rs. 296,662,710 (2018 – Rs. 71,561,460/-) of Singer Finance (Lanka) PLC.

37.3 Assets Pledged Singer (Sri Lanka) PLC has given a negative pledge over the bank loans obtained from commercial bank of Ceylon PLC, Standard Chartered Bank Sri Lanka Limited, Sampath Bank PLC and Hatton National Bank PLC which has carrying value of Rs,4,875,000,000 /-, Rs.641,666,670/-, Rs. 2,750,000,000/- and Rs.2,500,000,000/- respectively as at 31 March 2019.

Singer Finance (Sri Lanka) PLC has given the Securitization and negative pledge over the Company’s Lease receivable and Hire Purchase receivable, for the following banks over the Loans, Overdrafts & Debentures having a carrying value of Rs. 11,131,477,000/- against Loans, Overdraft & Trust Deed obtained to the value of Rs. 8,620,640,000/- respectively, as at the year end: 266 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

As at 31st March Outstanding Carrying Credit Facility Value Rs. Rs.

Sampath Bank 130% of the Banks’s exposure Loan 392,900,000 Overdraft Facility 300,000,000 935,415,000

Commercial Bank 150% of the Banks’s exposure Overdraft Facility 200,000,000 300,000,000

Seylan Bank 130% of the Banks’s exposure Loan 502,740,000 Overdraft Facility 250,000,000 978,562,000

Nations Trust Bank 130% of the Banks’s exposure Loan 930,000,000 Overdraft Facility 70,000,000 1,300,000,000

National Development 130% of the Banks’s exposure Loan 200,000,000 Bank Overdraft Facility 100,000,000 390,000,000 Deutsche Bank 110% of the Debenture Debenture explosure 2,500,000,000 3,100,000,000 Hatton National Bank 130% of the Banks’s exposure Securitisation 2,175,000,000 2,827,500,000 8,620,640,000 9,831,477,000

37.4 Contingencies (a) Commissioner General of Inland Revenue has issued assessment notices on Singer (Sri Lanka) PLC pertaining to an additional VAT Liability/Payment on account of Deemed VAT for seven quarters for the period 1st January 2014 to 30th September 2015. The assessment was for a Deemed VAT payment of Rs. 1,076 million and Penalty of Rs. 423 million totalling to Rs. 1,499 million. Commissioner General of Inland Revenue has given the determination on the appeal. Accordingly, Rs. 791 million of Deemed VAT liability and penalty of Rs. 395 million totalling to Rs. 1,186 million is payable as a Deemed VAT liability for seven quarters for the period 1st January 2014 to 30th September 2015. The Company after carefully reviewing the advice of tax consultants, is of the opinion that there is no basis for the Company to be made liable for Deemed VAT and accordingly company has decided to appeal to the Tax Appeal Commission against the determination. Hence, no provision has been made in the Financial Statements. The Company previously sought a clarification from the Inland Revenue Department on the interpretation of the Act and did not receive the required clarification. Deemed VAT is removed with effect from 1st January 2016 under VAT Amendment Act No. 20 of 2016. (b) Singer (Sri Lanka) PLC has provided bank guarantees amounting to Rs.287 million to Director General of Customs to clear imports during the years 2008 to March 2019. The bank guarantee related to alleged additional duty payable on imports, claimed by the customs and is being contested by the company in courts. The Court of Appeal ordered that the Director General of Customs continue with the investigations. The Company being aggrieved by the decision has filed an appeal, which is pending before the Supreme Court. The company lawyers are of the opinion that there is no basis that the Company is liable for the additional duty and hence, no provision is made in the Financial Statements. . (c) Under the finance companies (single borrowers limit) direction no 4 of 2006/1, the value of unsecured accommodations granted to and outstanding at any point of time from all borrowers should not exceed 5% of the capital funds as shown in the last audited balance sheet. However as of 31st March 2019, the balance has been exceed in the credit card product by Rs. 363 million. (d) Singer Finance (Lanka) PLC has provided letters of guarantees to banks totalling to Rs. 1 million against Fixed Deposits of Rs.1 million. (e) Regnis Lanka PLC has provided Corporate guarantees to banks on behalf of Regnis Appliances (Pvt) Ltd amounting to Rs. 410 million for the purpose of obtaining banking facilities. (f) Regnis Lanka (Pvt) Limited cleared a shipment of imported goods during the year 2008 on provision of a bank guarantee amounting to Rs. 6 million/- to the Director of Customs. The bank guarantee relates to alleged additional duty payable on imports which is contested by the Company. The customs inquiry initiated in 2008 is still pending. The management is of the opinion that there is no basis that the Company is liable for the additional duty and hence, no provision is made in the financial statements. 101 271 267 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

38. Events Occurring after the Reporting Period There have been no material events occurring after the reporting date, which require adjustments to or disclosure in the Financial Statements to or Disclosure in the Financial Statements.

39. Related Party Transactions 39.1 Parent and Ultimate Controlling Party The Company’s Parent undertaking and Controlling Party is Hayleys PLC.

39.2 (a) Transaction with Parent Company Hayleys PLC

Name of the Company Nature of Transaction For twelve For fifteen months ended months ended 31 March 2019 31 March 2018 Rs. million Rs. million

Hayleys PLC Expenses Reimbursed 30.7 9.1 Dividends Paid 169.8 186.2 Balance Payable 200.5 195.3

On 15th October 2018, Hayleys PLC purchased the balance 35,562,883 (9.47%) ordinary shares held by Retail Holdings (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47/- per share upon Retail Holdings (Sri Lanka) BV exercising their option to sell its shares to Hayleys PLC as previously agreed. After accepting this offer, Hayleys PLC together with its Group Companies holds 90.43% (80.9% previously) of Singer (Sri Lanka) PLC.

39.2 (b) Transactions with Subsidiary Companies

Name of the Company Nature of Transaction For twelve For fifteen months ended months ended 31 March 2019 31 March 2018 Rs. million Rs. million

Singer Finance (Lanka) PLC Sales financed through Singer Finance (Lanka) PLC 733.5 937.1 Cash remittance from Singer ( Sri Lanka ) PLC 3,364.0 4,059.8 Interest Income/(Expense) 170.0 61.9 Dividend Received – Gross 177.7 300.2 Cash Collection through Singer (Sri Lanka) PLC 5,124.0 5,303.4 Debenture Interest Expense 99.4 98.7 Expenses paid 468.5 475.6 Royalty Expenses Charged during the period 42.1 36.6 Collecting Commission paid through Singer (Sri Lanka) PLC 43.0 43.5 Rent Reimbursed 26.5 21.4 Royalty paid through Singer (Sri Lanka) PLC – 29.8 Loans settled during the period 625.0 600.0 Loans Obtained during the period 625.0 1,400.0 Service Charge Income 24.8 22.1 Loan Receivables – 1,000.0 Other Receivables/(Payables) 13.7 172.9 268 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

Name of the Company Nature of Transaction For twelve For fifteen months ended months ended 31 March 2019 31 March 2018 Rs. million Rs. million

Regnis (Lanka) PLC Purchases 3,766.3 4,859.8 Sales Taxes 653.4 855.6 Corporate Guarantees given 455.5 455.5 Interest Expense 31.3 18.9 Non Trade Settlement 209.5 10.0 Trade Credit Settled 4,162.6 5,550.1 Expenses Reimbursed 84.7 96.6 Fixed Assets Purchases 0.6 1.2 Loans Obtained during the period – 150.0 Transfer of Staff Loan – 0.1 Balance Payable 667.7 363.6 Loan Receivables 150.0 150 Singer Industries (Ceylon) PLC Purchases 526.0 892.3 Lease rental paid 22.5 14.9 Trade Creditor Settled 569.3 889.3 Expenses Reimbursed 20.5 16.3 Balance Payable 65.3 105.8 Singer Digital Media (Pvt) Limited Purchases 3,212.8 3,476.2 Expenses Reimbursed 183.0 385.0 Interest Charged 203.3 37.0 Royalty paid through Singer (Sri Lanka) PLC 123.0 60.7 Loan Granted 11,635.7 7,625.5 Loan Settlements 11,742.0 4,458.0 Balance Payable – Trade 1,050.9 1,463.4 Regnis Appliances (Pvt) Limited Purchases 1,629.1 1,420.1 Trade Settlements 1,887.5 1,666.4 Expenses paid 16.8 33.6 Finance charged 0.8 1.1 Non-Trade Settlement 21.0 22.7 Balance Payable 213.3 185.5 Reality (Lanka) Limited Rent Expenses 7.7 9.6 Loan Receivable 62.2 69.2 Singer Business School (Pvt) Services Provided 6.35 0.32 Limited Expenses Reimbursed 2.81 3.12 Balance Receivable 8.3 11.6 101 271 269 STEWARDSHIP SUPPLEMENTARY INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Notes To The Financial Statements

39.2 (c) Transactions with Companies under Common Control of Hayleys PLC

Name of the Company Nature of Transaction For twelve For fifteen months ended months ended 31 March 2019 31 March 2018 Rs. million Rs. million

Hayleys Travels (Pvt) Limited Balance payable – 7.1 Expenses Reimbursed 14.5 Hayleys Electronic Lightning Expenses Reimbursed (Pvt) Limited 1.1 – Volanka (Pvt) Limited Dividend Payable 7.5 – Carbotels (Pvt) Limited Dividend Payable 6.3 21.1 Toyo Cushion (Pvt) Limited Expenses Reimbursed 22.1 – Hayleys Advantis Limited Dividend Payable 24.1 81.2 Hayleys Aventura (Pvt) Limited Dividend Payable 6.8 23.1 Hayleys Agriculture Holdings Limited Dividend Payable 6.1 20.7

39.2 (d) Transactions with Associate Companies Telshan Network (Pvt) Limited is an Associated company of Singer (Sri Lanka) PLC, with whom Singer (Sri Lanka) PLC or its Subsidiary Companies had no transactions. Further, the investment of Rs. 20,000,000/- has been fully impaired due to negative net assets position.

39.3 Transactions with Key Management Personnel According to Sri Lanka Accounting Standard (LKAS) 24 – “Related Party Disclosure”, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Directors (Including Executive and Non-Executive Directors) of the Company and their immediate family members have been classified as Key Management Personnel of the Company.

For twelve For fifteen months ended months ended 31 March 2019 31 March 2018 Rs. million Rs. million

(i) Transactions with Key Management Personnel or Close Family Members Deposits kept by Key Management Personnel or their Close Family Members at Singer Finance (Lanka) PLC 57.0 57.0

Group Company For twelve For fifteen For twelve For fifteen months ended months ended months ended months ended 31 March 2019 31 March 2018 31 March 2019 31 March 2018 Rs. million Rs. million Rs. million Rs. million

(ii) Compensation of Key Management Personnel Short-Term Employee Benefits 108.1 197.6 72.3 136.7 Post-Employment Benefits Paid 40.0 12.4 40.0 12.4 270 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Financial Reports Notes To The Financial Statements

40. Non-Controlling Interest The following table summarises the information relating to each of the Group’s subsidiaries that has material NCI.

31st March 2019 Singer Finance Singer Industries Regnis Other individually Total (Lanka) PLC (Ceylon) PLC (Lanka) PLC immaterial subsidiaries Rs. Rs. Rs. Rs. Rs. NCI Percentage 20.01 12.30 41.7 Non-Current Assets 10,320,797,812 1,475,340,276 1,404,802,424 Current Assets 9,218,270,692 384,366,249 1,551,490,880 Non-Current Liabilities 4,756,285,102 382,469,854 340,320,755 Current Liabilities 11,238,847,877 174,313,129 1,312,606,063 Net Assets 3,543,935,525 1,302,923,542 1,303,366,485 6,150,225,552 Net Assets attributable to NCI 710,913,466 160,259,596 543,503,824 Revenue 3,799,862,979 569,563,309 3,775,421,375 Profit 541,733,895 (5,029,314) 63,904,711 OCI (1,290,192) 183,207,936 113,965,216 Total Comprehensive Income 540,443,703 178,178,621 177,869,928 Profit Allocated to NCI 105,855,772 (617,600) 26,652,252 3,969,067 135,859,492 OCI Allocated to NCI (258,972) 22,497,934 47,530,607 1,494,391 71,263,960 Cash flows from Operating Activities (2,542,934,361) (44,690,625) (102,346,124) Cash flows from Investment Activities (26,000,520) (6,203,201) (110,326,261) Cash flows from Financing Activities 2,132,622,715 8,572,226 247,374,447 Net Increase/(Decrease) in Cash and Cash Equivalents (436,312,166) (42,321,600) 34,702,063

31st March 2018 Singer Finance Singer Industries Regnis Other individually Total (Lanka) PLC (Ceylon) PLC (Lanka) PLC immaterial subsidiaries Rs. Rs. Rs. Rs. Rs. NCI Percentage 18.7 12.3 41.7 Non-Current Assets 8,061,266,409 1,094,910,644 1,027,137,949 Current Assets 8,070,338,941 389,584,253 1,322,480,391 Non-Current Liabilities 3,312,984,331 51,386,123 270,535,916 Current Liabilities 9,483,509,089 408,316,088 1,040,681,233 Net Assets 3,335,111,930 1,024,792,686 1,038,401,191 Net Assets attributable to NCI 623,979,745 125,846,503 433,078,094 166,209,619 1,349,113,961 Revenue 3,646,695,138 863,950,676 4,871,270,012 Profit 522,789,849 8,706,871 224,641,402 OCI (6,506,346) (233,028,907) (83,836,121) Total Comprehensive Income 516,283,503 (224,322,036) 140,805,281 Profit Allocated to NCI 97,810,893 1,069,220 93,689,483 (15,957,188) 176,612,408 OCI Allocated to NCI (1,217,299) (28,616,396) (34,964,894) (383,929) (65,182,518) Cash flows from Operating Activities (2,209,531,117) (3,098,279) 231,421,154 Cash flows from Investment Activities (219,729,676) 4,321,657 (54,116,647) Cash flows from Financing Activities 2,204,591,667 (72,866,841) (164,070,351) Net Increase/(Decrease) in Cash and Cash Equivalents (224,669,126) (71,643,463) 13,234,156

40.1 Share Disposal Note In the month of August 2018 the company sold 2,754,174 shares of its subsidiary singer finance (Lanka) PLC to general public for a consideration of Rs. 38.3 million, which has resulted in diluting ownership of company from 81.29% to 79.93%. 101 161 271 271 STEWARDSHIP FINANCIAL SUPPLEMENTARY REPORTS INFORMATION SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

SUPPLEMENTARY INFORMATION THE INFORMATION CONTAINED IN THIS SECTION CONTAINS EXTRANEOUS DETAILS ABOUT OUR OPERATIONS. INFORMATION PERTAINING TO SHAREHOLDERS AND CORPORATE INFORMATION IS ALSO CONTAINED IN THIS SECTION.

272 273 PARENT, SUBSIDIARIES AND A DECADE IN RELATED COMPANIES PERSPECTIVE

275 280 282 283 SHARE INDEPENDENT ASSURANCE CERTIFICATE OF THE DIRECTOR/ GLOBAL REPORTING INFORMATION REPORT PRINCIPAL OFFICER/PRECEDENT INITIATIVES (GRI) PARTNER ON TRANSFER PRICING STANDARD DISCLOSURES INDEX

289 291 293 294 DISTRIBUTION SERVICE NETWORK AND GLOSSARY NOTICE OF ANNUAL NETWORK FASHION ACADEMY NETWORK GENERAL MEETING 272 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information

PARENT, SUBSIDIARIES AND RELATED COMPANIES

Company Name Principal Activity Directors

Hayleys PLC zz Global market and manufacturing, Mr. A.M. Pandithage – Chairman and Chief Executive Parent Company agriculture, power and energy, Mr. K.D.D. Perera – Co-Chairman domestic and industrial lighting, Mr. S.C. Ganegoda transportation and logistics, leisure and Mr. H.S.R. Kariyawasan aviation, consumer, investments and Dr. H. Cabral services Mr. L.R.V. Waidyaratne Mr. M.H. Jamaldeen Mr. M.Y.A. Perera Mr. N.L.S. Joseph Ms. J. Dharmasena Singer Finance (Lanka) PLC zz Leasing Mr. M.Y.A. Perera – Chairman Singer – Interest 79.9% zz Hire Purchasing Mr. J.A. Setukavalar Mr. M.P.A. Salgado zz Lending and Accepting Deposits Mr. J.M.J. Perera Mr. T.A.Amarasuriya Ms. D.G. Talpahewa Mr. L.S.S. Perera Mr. M.H. Wijewardene Mr. K.K.L.P. Yatiwella – (Alternate to Ms. D.G. Talpahewa) Singer Industries (Ceylon) PLC zz Manufacturing and Assembling Sewing Mr. A.M. Pandithage – Chairman Singer – Interest 87.7% Machines Mr. M.H.Wijewardene Mr. V.G.K. Vidyaratne Mr. M.H. Jamaldeen Mr. N.L.S. Joseph Mr. K.D.G. Gunarathne Mr. S.C. Ganegoda Mr. K.D. Kospelawatte Mr. D.K. de Silva Wijeyeratne Regnis (Lanka) PLC zz Manufacturing Refrigerators Mr. A.M. Pandithage Singer – Interest 58.3% Mr. M.H. Wijewardene Mr. S.C. Ganegoda Mr. V.G.K. Vidyaratne Mr. M.H. Jamaldeen Mr. N.L.S. Joseph Mr. K.D.G. Gunaratne Mr. K.D. Kospelawatta Mr. D.K. de S. Wijeyeratne Mr. A.C. M Irzan (Alternate to K.D. Kospelawatta) Reality Lanka Limited zz Investment on Properties Mr. A.M. Pandithage – Chairman Singer – Interest 88.2% (Indirect) Mr. S.C. Ganegoda Mr. M.H. Wijewardene Regnis Appliances (Private) Limited zz Manufacturing Washing Machines Mr. A.M. Pandithage – Chairman Singer – Interest 58.3% (indirect) Mr. K.D. Kospelawatte Mr. S.C. Ganegoda Mr. N.M.P. Fernando Mr. M.H. Wijewardene Singer Digital Media (Private) Limited zz Marketing Mobile Phones, Computers Mr. A.M. Pandithage – Chairman Singer – Interest 100% and Cameras Mr. S.C. Ganegoda Mr. M.H. Wijewardene Mr. K.K.L.P. Yatiwella Mr. K.D.J.M. Perera Singer Business School (Private) Limited zz Educational Services Mr. A.M. Pandithage – Chairman Singer – Interest 100% Mr. M.H. Wijewardene Mr. K.K.L.P. Yatiwella Mr. S.C. Ganegoda Domus Lanka (Pvt) Limited zz Designing, Manufacturing and Trading Mr. A.M. Pandithage – Chairman Subsidiary – Interest 100% Furniture Mr. M.H. Wijewardene 101 161 273 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

A DECADE IN PERSPECTIVE

Period Ended/As at 31st 31st 31st 31st 31st 31st 31st 31st 31st 31st March March December December December December December December December December 2019 2018 2016 2015 2014 2013 2012 2011 2010 2009 (12 Months) (15 Months) (12 Months) (12 Months) (12 Months) (12 Months) (12 Months) (12 Months) (12 Months) (12 Months) (Restated) Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

GDP Growth – % 3.2 3.4 4.1 6.00 7.40 7.30 6.00 8.30 7.00 3.50 Market Capitalisation Growth – % (37.81) (4.44) (8.48) 17.00 32.50 (13.00) (22.90) 36.10 102.00 123.00

Trading Results Group Turnover – Net 58,505,395 65,122,305 46,924,144 38,710,834 29,699,602 25,485,561 25,441,494 22,031,653 16,028,534 11,913,503 Profit before Tax 672,129 2,049,052 3,126,233 1,895,275 1,155,608 728,440 1,777,160 1,990,012 1,167,862 247,729 Taxation 286,149 828,758 768,477 659,236 373,974 206,375 561,451 681,181 499,042 114,830 Profit for the Year 385,981 1,220,295 2,357,756 1,236,039 781,634 522,066 1,215,710 1,308,831 668,819 132,899 Total Comprehensive Income for the Year 1,006,328 691,655 2,623,507 1,206,343 891,279 519,059 1,320,383 1,308,831 – – Property, Plant & Equipment 6,704,649 5,649,424 5,426,841 2,715,401 2,667,909 2,505,355 2,151,208 1,691,107 1,564,240 1,285,728 Investment in Equity Accounted Investees – – – 54,831 55,189 53,226 52,663 46,886 23,525 24,541 Other Investments 17,061 17,061 17,061 17,061 17,061 17,061 17,061 17,061 17,061 18,490 Deferred Tax Assets – – 124,061 259,733 185,024 119,022 150,284 143,450 110,226 143,053 Other Non-Current Assets 11,809,824 9,508,817 8,467,619 7,472,596 6,021,845 5,867,311 5,234,046 4,385,767 2,687,281 2,205,263 Total Non-Current Assets 18,531,534 15,175,302 14,035,582 10,404,803 8,947,028 8,561,974 7,605,262 6,284,271 4,402,333 3,677,075 Current Assets 39,510,816 35,398,249 28,214,282 21,857,494 18,444,957 16,000,553 13,795,274 11,164,888 8,477,132 7,176,378 Current Liabilities 35,409,664 35,070,354 22,189,446 15,417,138 15,213,903 13,030,817 12,849,830 10,043,948 6,602,195 6,392,896 Net Current Assets 4,101,153 327,895 6,024,836 6,440,356 3,231,054 2,969,736 945,444 1,120,940 1,874,937 783,482 Total Assets Less Current Liabilities 22,632,687 15,503,197 20,060,398 16,959,979 12,178,083 11,531,711 8,550,706 7,405,211 6,277,270 4,460,557 Security Deposits 1,388,433 1,199,127 1,018,452 851,794 732,124 651,765 576,648 487,449 403,894 359,516 Interest bearing Loans and Borrowings re-payable after one Year 10,640,159 4,319,898 8,381,885 8,091,907 4,226,596 4,334,165 1,633,823 1,110,385 1,287,291 763,936 Employee Benefit Obligations 871,971 794,645 651,144 486,465 383,912 320,033 270,539 204,787 181,876 158,546 Other Financial Liabilities re-payable after one Year 804,556 411,394 454,013 645,008 798,492 756,232 342,535 503,142 195,995 150,001 Deferred Tax Liability 246,869 467,236 – 114,820 119,789 109,540 113,926 95,805 99,339 – Net Assets 8,451,644 8,184,568 9,554,905 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799 274 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information PARENT, SUBSIDIARIES AND

Share Capital and Reserves Stated Capital 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 Capital Reserves 1,118,123 577,919 1,057,964 857,580 870,358 762,034 773,312 655,454 664,542 412,127 Statutory Reserves 163,096 136,009 95,361 37,318 136,128 128,447 78,425 44,408 10,748 – Revenue Reserves 5,035,831 5,495,478 6,374,444 4,728,455 3,842,675 3,447,544 3,778,395 3,421,739 2,583,363 1,975,624 Shareholders’ Funds 6,943,097 6,835,455 8,153,817 6,285,401 5,475,208 4,964,073 5,256,181 4,747,648 3,884,701 3,013,799 Non-Controlling Interest 1,508,546 1,349,114 1,401,088 484,584 441,960 395,902 357,054 255,995 224,174 – Total Equity 8,451,644 8,184,569 9,554,905 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799

Ratio and Statistics Profitability Earning per Share – Rs.* 0.67 2.78 5.65 3.07 1.90 1.23 3.09 3.37 1.78 0.35 Net Assets per Share – Rs.* 18.48 18.20 21.70 16.73 14.58 13.22 14.00 12.64 10.34 8.02 Return on Average Net Assets – % 4.64 13.76 28.89 19.50 13.90 9.50 22.90 29.30 18.80 4.40

Dividends Amount – Rs. ’000 244,159 826,383 1,101,845 525,880 313,024 313,024 751,258 939,072 281,722 – Per Share – Rs. * 0.65 2.20 2.93 1.40 0.83 0.83 2.00 2.50 1.50 – Cover 0.58 1.21 1.00 1.63 1.48 0.96 1.37 1.20 1.50 –

Others Market Price per Share – Rs. 25.00 40.20** 126.20 137.90 117.90 89.00 102.30 132.70 195.00 76.50 Price Earnings Ratio 66.81 15.11 14.31 20.10 31.90 36.90 12.50 14.30 18.30 36.10 Annual Sales Growth – % N/A*** 38.78 21.22 30.30 16.50 0.20 15.50 37.30 34.50 (13.30) Current Ratio 1.12 1.01 1.27 1.40 1.20 1.20 1.10 1.10 1.30 1.10 Average Annual Inflation – % 4.30 4.20 3.75 0.90 3.30 7.30 7.60 6.70 6.90 4.80 Net Income to Net Turnover – % 0.66 1.87 5.02 3.20 2.60 2.00 4.80 5.90 4.20 1.10

* Information for the previous years have been restated to reflect the subdivision of shares in March 2017. ** Market price per share for 31st March 2018 was after subdivision of shares. *** Not comparable due to change in financial year in 2017/2018. 101 161 275 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

SHARE INFORMATION

Stated Capital

31st March 2019 31st March 2018

Stated Capital (Rs.) : 626,048,050 626,048,050 Number of Ordinary Shares : 375,628,830 375,628,830 Class of Shares : Ordinary Shares Voting Rights : One Vote per Ordinary Share

Stock Exchange Listing The issued ordinary shares of Singer (Sri Lanka) PLC are listed with the Colombo Stock Exchange of Sri Lanka.

Distribution of Shareholding – 31st March 2019 Number of Shareholders: 31st March 2019 – 2,713 (31st March 2018 – 2,597).

Resident Non-resident Total Number of Number of % Number of Number of % Number of Number of % Shareholders Shares Shareholders Shares Shareholders Shares

1 – 1,000 1,449 390,647 0.10 12 5,457 0.00 1,461 396,104 0.11 1,001 – 10,000 790 3,101,774 0.83 10 37,035 0.01 800 3,138,809 0.84 10,001 – 100,000 387 11,427,788 3.04 10 241,465 0.06 397 11,669,253 3.11 100,001 – 1,000,000 42 9,199,128 2.45 1 196,200 0.05 43 9,395,328 2.50 Over – 1,000,001 12 351,029,336 93.45 – – 0.00 12 351,029,336 93.45 Total 2,680 375,148,673 99.87 33 480,157 0.13 2,713 375,628,830 100.00

31st March 2019 31st March 2018 Categories of Shares Number of Number of Number of Number of Shares Shareholders Shares Shareholders

Individuals 30,420,624 2,548 30,233,417 2,432 Institutions 345,208,206 165 345,395,413 165 Total 375,628,830 2,713 375,628,830 2,597

Dividends Interim Dividend 2018/19 Rs. 0.65 (2017/18 – Rs.2.20) Final Dividend 2018/19 – Nil (2017/18 – Nil) 276 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information Share Information

Market Value Per Share

Twelve Months Ended Fifteen Months Ended 31st March 2019 31st March 2018 Rs. Rs.

Highest during the Year 41.00 – 10th April 2018 149.90 – 6th March 2017 Lowest during the Year 24.50 – 12th March 2019 38.50 – 21st February Last Traded Price as of Period Ending 29th March 2019 25.00 40.20

Twenty Largest Shareholders

As at 31st March 2019 Name Number of Shares %

1. National Savings Bank/Hayleys PLC 85,147,054 22.67 People’s Bank/Hayleys PLC 85,147,053 22.67 Hayleys PLC 50,679,271 13.49 Hatton National Bank PLC/Hayleys PLC 40,293,659 10.73 2. Hayleys Advantis Limited 37,127,660 9.88 3. Volanka (Pvt) Limited 11,595,745 3.09 4. Hayleys Aventura (Private) Limited 10,531,915 2.80 5. Carbotels (Pvt) Limited 9,680,851 2.58 6. Hayleys Agriculture Holdings Limited 9,468,085 2.52 7. Mr. Kulappuarachchige Don Dhammika Perera 6,935,913 1.85 8. Deutsche Bank AG as Trustee for JB Vantage Value Equity Fund 2,492,130 0.66 9. Mrs. Mihiri Virani Fernando 1,930,000 0.51 10. Commercial Bank of Ceylon PLC/Andaradeniya Estate Private Limited 669,849 0.18 11. Mrs. Anoma Kamalika Amarasuriya 536,910 0.14 12. Mr. Nai Kaluge Anura Deepal De Silva 441,582 0.12 13. Ms. Nai Kaluge Ruvani Hemamala De Silva 397,638 0.11 14. Mr. Nalin Amita De Silva 378,978 0.10 15. Jafferjee Brothers (Exports) Limited 375,600 0.10 16. Mr. Abeysiri Hemapala Munasinghe 328,644 0.09 17. Mrs. Enoka Kamali Wickramasinghe 319,857 0.09 18. Mr. Leslie Premal Mendis and Mrs. M.S. Mendis 274,934 0.07 19. Mr. Hemaka Devapriya Senarath Amarasuriya 268,446 0.07 20. Mr. Murtaza Ali Jafferjee 230,600 0.06 355,252,374 94.58 Others 20,376,456 5.42 Total 375,628,830 100 101 161 277 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Share Information

As at 31st March 2018 Name Number of Shares %

1. National Savings Bank/Hayleys PLC 85,147,054 22.67 People’s Bank/Hayleys PLC 85,147,053 22.67 Hatton National Bank PLC/Hayleys PLC 40,293,659 10.73 Hayleys PLC 15,116,388 4.02 2. Hayleys Advantis Limited 37,127,660 9.88 3. Retail Holdings (Sri Lanka) 35,562,883 9.47 4. Volanka (Pvt) Limited 11,595,745 3.09 5. Hayleys Aventura (Private) Limited 10,531,915 2.80 6. Carbotels (Pvt) Limited 9,680,851 2.58 7. Hayleys Agriculture Holdings Limited 9,468,085 2.52 8. Mr. Kulappuarachchige Don Dhammika Perera 6,935,913 1.85 9. Deutsche Bank AG as Trustee for JB Vantage Value Equity Fund 2,492,130 0.66 10. Mrs. Mihiri Virani Fernando 1,890,000 0.50 11. Andaradeniya Estate Private Limited 669,849 0.18 12. Mrs. Anoma Kamalika Amarasuriya 536,910 0.14 13. Mr. Nai Kaluge Anura Deepal De Silva 441,582 0.12 14. Ms. Nai Kaluge Ruvani Hemamala De Silva 397,638 0.11 15. Mr. Nalin Amita De Silva 378,978 0.10 16. Jafferjee Brothers (Exports) Limited 375,600 0.10 17. Mr. Abeysiri Hemapala Munasinghe 328,644 0.09 18. Mrs. Enoka Kamali Wickramasinghe 319,857 0.09 19. Mr. Leslie Premal Mendis 274,934 0.07 20. Mr. Hemaka Devapriya Senarath Amarasuriya 268,446 0.07 Others 20,647,056 5.50 Total 375,628,830 100

Share Trading

For the Period Ended As at 31st March As at 31st March 2019 2018 (12 Months) (15 Months)

Number of Transactions 1,735 3,107 Number of Shares Traded 36,380,607 247,193,250 Value of Shares Traded (Rs.) 1,699,125,679 11,602,291,501 278 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information Share Information

Public Holding as at 31st March 2019 The percentage of shares held by the public is 7.72% (2018 – 7.72%). Number of Shareholders representing public holding – 2,702 Float adjusted market capitalisation – Rs. 724,963,641.9

The Company is not in compliance with option 5 of the Listing Rule 7.13.1 (a) which requires a Company with a Float Adjusted Market Capitalisation of less than Rs. 2.5 billion to maintain a minimum public Holding of 20%.

Record of Scrip Issues

Year ended 31st March Issue Basis Number Cumulative of Shares Share Capital Rs. ’000

1981 Prior to Public Issue – 1,855,200 18,552 1982 Public Issue – 463,800 23,190 1984 Bonus 2:01 1,159,500 34,785 1985 Bonus 3:01 1,159,500 46,380 1989 Bonus 1:01 4,638,000 92,760 1992 Bonus 4:01 2,319,000 115,950 1992 Rights (at Rs. 40.00) 8:01 1,449,375 130,444 1994 Bonus 5:01 2,608,875 156,533 1996 Bonus 9:02 3,478,500 191,318 1996 Rights (at Rs. 50.00) 9:02 1,855,766 209,875 1998 Bonus 11:03 5,723,868 267,114 2000 Bonus 5:01 5,342,276 320,537 2004 Bonus 4:01 8,013,415 400,671 2005 Bonus 4:01 10,016,769 500,838 2006 Bonus 4:01 12,520,961 626,048 2011 Subdivision 1 for 1 62,604,805 – 2017 Subdivision 3 for 1 250,419,220 – Total Number of Shares – 375,628,830 626,048 101 161 279 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Share Information

All Share Price Index vs Market Price Per Share

7,000 50

6,600 40

6,200 30

5,800 20

5,400 10

5,000 0 Index Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Rs. 2018 2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019

Market Price Per Share (RHS) All Share Price Index (LHS)

12 months ended 31st March 2018

Listed Debentures Details regarding the listed debentures issued during the year. Interest Rate of Comparable Government Securities as at Issue Date (%)

12% senior rated listed unsecured redeemable on 28th September 2021 9.51

Interest Rate of Comparable Government Securities as at 31st March 2019 was 10.67%.

Utilisation of Funds Raised Via Debentures

Objective Objective as per Amount allocated as per Proposed Date of Amount allocated % of Total Amounts % of Clarification if not fully Number Prospectus Prospectus in Rupees Utilisation as per from proceed in Proceed utilised utilisation utilised including where Prospectus Rupees (A) Rupees (B) against the funds are invested allocation (eg: whether lent to (B/A) related party/s etc.)

1. Refinancing Initial issue of Rs. 1.0 Immediately upon 656.8 100 656.8 100% N/A of short term billion and a maximum allotment of the million million bank facilities issue of Rs. 1.5 billion Debentures

Highest traded price, lowest traded price, last traded price as at 31st March 2019, interest yield and yield to maturity of trade are as follows:

Highest Lowest Last Interest Yield to Traded Price Traded Price Traded Price Yield Maturity (Rs.) (Rs.) (Rs.) (%) (%)

17% senior rated unsecured redeemable debentures 99.98 99.98 99.98 17.00 17.01 4.5% senior rated unsecured redeemable debentures 100.00 100.00 100.00 14.50 14.50 8.25% senior rated unsecured redeemable debentures 100.00 100.00 100.00 8.25 8.25

Debt/equity ratio, interest cover and quick asset ratio are given in Financial Highlights on page 10 of this Report. 280 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information

INDEPENDENT ASSURANCE REPORT

Ernst & Young Tel : +94 11 2463500 Chartered Accountants Fax Gen : +94 11 2697369 201 De Saram Place Tax : +94 11 5578180 P.O. Box 101 [email protected] Colombo 10 ey.com Sri Lanka

Independent Assurance Report to Singer Our engagement provides limited assurance as well as (Sri Lanka) PLC on the Sustainability reasonable assurance. A limited assurance engagement Reporting Criteria Presented in the Integrated is substantially less in scope than a reasonable assurance Annual Report – 2018/19 engagement conducted in accordance with SLSAE-3000 and consequently does not enable to obtain assurance Introduction and scope of the engagement that we would become aware of all significant matters that The management of Singer (Sri Lanka) PLC (“the Company”) might be identified in a reasonable assurance engagement. engaged us to provide an independent assurance on the Accordingly, we do not express an opinion providing following elements of the sustainability reporting criteria reasonable assurance. presented in the annual report – 2018/19 (“the Report”).

Management of the Company’s responsibility zz Reasonable assurance on the information on financial for the Report performance as specified on page 34 of the Report. The management of the Company is responsible for the zz Limited assurance on other information presented preparation of the self-declaration, the information and in the Report, prepared in accordance with the statements contained within the Report, and for maintaining requirements of the Global Reporting Initiative adequate records and internal controls that are designed to GRI Standards: “In accordance” – Core guidelines. support the sustainability reporting process in line with the GRI Sustainability Reporting Guidelines. Basis of our work and level of assurance We performed our procedures to provide limited assurance Ernst & Young’s responsibility in accordance with Sri Lanka Standard on Assurance Engagements (SLSAE 3000): “Assurance Engagements Our responsibility is to express a conclusion as to whether Other than Audits or Reviews of Historical Financial we have become aware of any matter that causes us to Information”, issued by the Institute of Chartered believe that the Report is not prepared in accordance with Accountants of Sri Lanka (“ICASL”). the requirements of the Global Reporting Initiative, GRI Standards: “In accordance” – Core guidelines. This report The evaluation criteria used for this limited assurance is made solely to the Company in accordance with our engagement are based on the Sustainability Reporting engagement letter dated 19 March 2019. We disclaim any Guidelines (“GRI Guidelines”) and related information in assumption of responsibility for any reliance on this report particular, the requirements to achieve GRI Standards to any person other than the Company or for any purpose “In accordance” - Core guideline publication, publicly other than that for which it was prepared. In conducting our available at GRI’s global website at “www.globalreporting.org”. engagement, we have complied with the independence requirements of the Code for Ethics for Professional Accountants issued by the ICASL.

Partners: W R H Fernando 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 K B S P Fernando FCA FCMA Ms. K R M Fernando FCA ACMA 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 Ms. P V K N Sajeewani FCA N M Sulaiman ACA ACMA B E Wijesuriya FCA FCMA Principal T P M Ruberu FCMA FCCA A member firm of Ernst & Young Global Limited 101 161 281 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 INDEPENDENT ASSURANCE REPORT

Key assurance procedures We planned and performed our procedures to obtain the information and explanations considered necessary to provide sufficient evidence to support our limited assurance conclusions. Key assurance procedures included:

zz Interviewing relevant the company’s personnel to understand the process for collection, analysis, aggregation and presentation of data.

zz Reviewing and validation of the information contained in the Report.

zz Checking the calculations performed by the Company on a sample basis through recalculation.

zz Reconciling and agreeing the data on financial performance are properly derived from the Company’s audited financial statements for the year ended 31 March 2019.

zz Comparison of the content of the Report against the criteria for a Global Reporting Initiative, GRI Standards: “In accordance” – Core guidelines.

Our procedures did not include testing electronic systems used to collect and aggregate the information.

Limitations and considerations Environmental and social performance data are subject to inherent limitations given their nature and the methods used for determining, calculating and estimating such data.

Conclusion Based on the procedures performed, as described above, we conclude that:

zz The information on financial performance as specified on page 34 of the Report are properly derived from the audited financial statements of the Company for the year ended 31 March 2019.

zz Nothing has come to our attention that causes us to believe that other information presented in the Report are not fairly presented, in all material respects, in accordance with the Company’s sustainability practices and policies some of which are derived from Sustainability Reporting Guideline, GRI Standards – “In accordance” Core.

Ernst & Young Chartered Accountants 16th May 2019 Colombo 282 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information

CERTIFICATE OF THE DIRECTOR/PRINCIPAL OFFICER/PRECEDENT PARTNER ON TRANSFER PRICING

Singer (Sri Lanka) PLC TIN 124008026

(As per Regulation 10 of the Extraordinary Gazette No. 1960/39, dated 31st March 2016 issued under Section 104 of the Inland Revenue Act No. 10 of 2006)

It is certified that the Company has complied with the Transfer Pricing Regulations issued under Section 104 of the Inland Revenue Act No. 10 of 2006. The information pursuant to these Regulations is given in Approved Accountant's Certificate produced under Section 107(2) (a) of the said Inland Revenue Act.

We believe that the record of transaction entered into with associated undertaking during the period from 1st April 2017 to 31st March 2018 is at arm’s length, not prejudicial to the interests of the Company and not carried out for profit shifting purposes.

Records and information of alI transactions have been submitted to the Approved Accountant who reviewed the transfer pricing records and no adverse remarks have been in the certificate done by the Approved Accountant.

Note: The submission of record and information of transactions to the Approved Accountant is not required, in relation to a company which makes transactions with any associated undertaking where the aggregate value of such transactions is Sri Lankan rupees ten million or less.

For and on behalf of the Board of Directors/Principal Officer, Singer (Sri Lanka) PLC, 80, Nawam Mawatha, Colombo 2 23rd November 2018 101 161 283 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

GLOBAL REPORTING INITIATIVES (GRI) STANDARD DISCLOSURES INDEX

GRI Index No. Description Reported Section Page No.

GRI 102: General Disclosures

Organisational Profile

102-1 Name of the Organisation Corporate Information Inner Back Cover

102-2 Activities brands, products and services Institutional Capital 50 to 55

102-3 Location of headquarters Corporate Information Inner Back Cover

102-4 Location of operations Business Model 27

102-5 Ownership and legal form Business Model 27 Corporate Information Inner Back Cover

102-6 Markets served Business Model 27, 289 to 292

102-7 Scale of the reporting Organisation Financial Highlights 10

102-8 Information on other employees and other workers Employee Capital 69 to 70

102-9 Organisation’s supply chain Social and Environmental Capital 98

102-10 Significant changes to the organisation and its supply chain Annual Report of the Board of 163 to 169 Directors of the affairs of the Company

102-11 Precautionary principle or approach About this Report 4

102-12 External initiatives About this Report 4, 103 and 104

102-13 Membership of associations Social and Environmental Capital 86

Strategy and Analysis

102-14 Statement from senior decision-maker Chairman/CEO Statement 16 and 17

Ethics and Integrity

102-16 Values, principles, standards and norms of behaviour Singer at a Glance 7 Corporate Governance 103 to 105

Governance

102-18 Governance structure Corporate Governance 104

Stakeholder Engagement

102-40 List of stakeholder groups Business Model 31 and 32

102-41 Report the percentage of total employees covered by collective bargaining Employee Capital 83 agreements

102-42 Identifying and selecting stakeholders Business Model 31

102-43 Approach to stakeholder engagement Business Model 31

102-44 Key topics and concerns raised Business Model 31 and 32 284 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index No. Description Reported Section Page No.

Reporting Practice

102-45 Entities included in the consolidated financial statements Business Model 27

102-46 Defining report content and topic boundaries About this Report 4 and 33

102-47 List of material topics Business Model 33

102-48 Restatements of information About this Report 4

102-49 Changes in reporting About this Report 4

102-50 Reporting period About this Report 4 102-51 Date of most recent report About this Report 4 102-52 Reporting cycle About this Report 4 102-53 Contact point for questions regarding the report Supplementary Information 4

102-54 Claims of reporting in accordance with the GRI Standards About this Report, 4 Supplementary Information 282 102-55 GRI content index Supplementary Information 282 to 288 102-56 External assurance Supplementary Information 4 and 282

GRI Specific Disclosures

Economic Topics

GRI 201: Economic Performance 103-1 Explain the material topics and its boundary Business Model 34 103-2 The Management Approach and its components Business Model 34 103-3 Evaluation of the Management approach Business Model 34 201-1 Direct Economic Value generated and distributed Business Model 34 201-3 Defined benefit plan obligations and other retirement plans Notes to the Financial Statements 246 201-4 Financial assistance received from government Social and Environmental Capital 90

GRI 206: Anti-competitive Behaviour

103-1 Explain the material topics and its boundary Social and Environmental Capital 90 103-2 The Management Approach and its components Social and Environmental Capital 90 103-3 Evaluation of the Management approach Social and Environmental Capital 90 206-1 Legal actions for anti-competitive behaviour, anti-trust Social and Environmental Capital 90 and monopoly practices

Environmental Topics

GRI 301: Materials 103-1 Explain the material topics and its boundary Social and Environmental Capital 91 103-2 The Management Approach and its components Social and Environmental Capital 91, 92 and 94 103-3 Evaluation of the Management approach Social and Environmental Capital 91, 92 and 94 301-1 Materials used by weight or volume Social and Environmental Capital 94 301-2 Recycled input materials used Social and Environmental Capital 91 and 92 101 161 285 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index No. Description Reported Section Page No.

GRI 302: Energy 103-1 Explain the material topics and its boundary Social and Environmental Capital 91 103-2 The Management Approach and its components Social and Environmental Capital 95 103-3 Evaluation of the Management approach Social and Environmental Capital 95 302-1 Energy consumption within the Organisation Social and Environmental Capital 95 302-3 Energy intensity Social and Environmental Capital 95 302-4 Reduction of energy consumption Social and Environmental Capital 95 302-5 Reduction in energy requirements of products and services Social and Environmental Capital 92

GRI 303: Water 103-1 Explain the material topics and its boundary Social and Environmental Capital 91 103-2 The Management Approach and its components Social and Environmental Capital 95 103-3 Evaluation of the Management approach Social and Environmental Capital 95 303-1 Water withdrawal by source Social and Environmental Capital 95

GRI 304: Biodiversity 103-1 Explain the material topics and its boundary Social and Environmental Capital 91 103-2 The Management Approach and its components Social and Environmental Capital 96 103-3 Evaluation of the Management approach Social and Environmental Capital 96 304-1 Operational sites owned, leased, managed in, or adjacent to, Social and Environmental Capital 96 protected areas and areas of high biodiversity value outside protected areas

GRI 305: Emissions 103-1 Explain the material topics and its boundary Social and Environmental Capital 91 103-2 The Management Approach and its components Social and Environmental Capital 96 103-3 Evaluation of the Management approach Social and Environmental Capital 96 305-1 Direct (Scope 1) GHG emissions Social and Environmental Capital 96

305-2 Direct (Scope 2) GHG emissions Social and Environmental Capital 96 305-3 Direct (Scope 3) GHG emissions Social and Environmental Capital 96 305-5 Reduction of greenhouse gas (GHG) emissions Social and Environmental Capital 95

GRI 306: Effluents and Waste 103-1 Explain the material topics and its boundary Social and Environmental Capital 91 103-2 The Management Approach and its components Social and Environmental Capital 91, 92 and 95 103-3 Evaluation of the Management approach Social and Environmental Capital 91, 92 and 95 306-1 Water discharge by quality and destination Social and Environmental Capital 95 306-2 Waste by type and disposal method Social and Environmental Capital 91 and 92

GRI 307: Environmental Compliance 103-1 Explain the material topics and its boundary Social and Environmental Capital 91 103-2 The Management Approach and its components Social and Environmental Capital 96 103-3 Evaluation of the Management approach Social and Environmental Capital 96 307-1 Non-compliance with environmental laws and regulations Social and Environmental Capital 96 286 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index No. Description Reported Section Page No.

GRI Specific Disclosures

Social Topics

GRI 401: Employment 103-1 Explain the material topics & its boundary Employee Capital 69 and 70 103-2 The Management Approach and its components Employee Capital 70 to 77 103-3 Evaluation of the Management approach Employee Capital 70 to 77 401-1 New employee hires and employee turnover Employee Capital 69 and 71 401-2 Benefits provided to full-time employees that are not provided to Employee Capital 77 temporary or part time employees 401-3 Parental leave Employee Capital 77

GRI 402: Labour/Management Relations

103-1 Explain the material topics & its boundary Employee Capital 69

103-2 The Management Approach and its components Employee Capital 69 103-3 Evaluation of the Management approach Employee Capital 69

402-1 Minimum notice periods regarding operational changes Employee Capital 69

GRI 403: Occupational Health and Safety

103-1 Explain the material topics and its boundary Employee Capital 78 and 80

103-2 The management approach and its components Employee Capital 78 and 80 103-3 Evaluation of the Management approach Employee Capital 78 and 80

403-2 Type of injury and rate of injury, occupational diseases, lost days and Employee Capital 80 absenteeism and number of work related fatalities

GRI 404: Training and Education

103-1 Explain the material topics and its boundary Employee Capital 74 to 76

103-2 The management approach and its components Employee Capital 74 to 76

103-3 Evaluation of the Management approach Employee Capital 74 to 76

404-1 Average hours of training per year per employee Employee Capital 76

404-2 Programmes for upgrading employee skills and transition assistance Employee Capital 70, 74 and 75 programmes

404-3 Percentage of employees receiving regular performance and career Employee Capital 76 development reviews

GRI 405: Diversity and Equal Opportunity

103-1 Explain the material topics and its boundary Employee Capital 70 and 78

103-2 The management approach and its components Employee Capital 70 and 78 103-3 Evaluation of the Management approach Employee Capital 70 and 78

405-1 Diversity of governance bodies and employees Employee Capital 70 and 71

405-2 Ratio of basic salary and remuneration of women to men Employee Capital 78 101 161 287 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index No. Description Reported Section Page No.

GRI 406: Non-discrimination

103-1 Explain the material topics and its boundary Social and Environmental Capital 90

103-2 The management approach and its components Social and Environmental Capital 90 103-3 Evaluation of the Management approach Social and Environmental Capital 90

406-1 Incidents of discrimination and corrective actions taken Social and Environmental Capital 90

GRI 407: Freedom of Association and Collective Bargaining

103-1 Explain the material topics and its boundary Social and Environmental Capital 83 and 99

103-2 The management approach and its components Social and Environmental Capital 83 and 99 103-3 Evaluation of the Management approach Social and Environmental Capital 83 and 99

407-1 Operations and suppliers in which the right of freedom of Social and Environmental Capital 99 association and collective bargaining may be at risk

GRI 408: Child Labour

103-1 Explain the material topics and its boundary Social and Environmental Capital 90

103-2 The management approach and its components Social and Environmental Capital 90 103-3 Evaluation of the Management approach Social and Environmental Capital 90

408-1 Operations and suppliers at significant risk for incidents of child labour Social and Environmental Capital 90

GRI 409 : Forced or Compulsory Labour

103-1 Explain the material topics and its boundary Social and Environmental Capital 90

103-2 The management approach and its components Social and Environmental Capital 90 103-3 Evaluation of the Management approach Social and Environmental Capital 90

409-1 Operations and suppliers at significant risk for incidents of forced or Social and Environmental Capital 90 compulsory labour

GRI 412: Human Rights Assessment

103-1 Explain the material topics and its boundary Social and Environmental Capital 90

103-2 The management approach and its components Social and Environmental Capital 90 103-3 Evaluation of the Management approach Social and Environmental Capital 90

412-1 Operations that have been subjected to human rights reviews or impact Social and Environmental Capital 90 assessment

GRI 413: Local Communities

103-1 Explain the material topics and its boundary Social and Environmental Capital 86 to 89

103-2 The management approach and its components Social and Environmental Capital 86 to 89 103-3 Evaluation of the Management approach Social and Environmental Capital 86 to 89

413-1 Operations with local community engagement, impact assessment and Social and Environmental Capital 86 to 89 development programmes 288 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index No. Description Reported Section Page No.

GRI 415: Public Policy

103-1 Explain the material topics and its boundary Social and Environmental Capital 90

103-2 The management approach and its components Social and Environmental Capital 90 103-3 Evaluation of the Management approach Social and Environmental Capital 90

415-1 Political contributions Social and Environmental Capital 90

GRI 416: Customer Health and Safety

103-1 Explain the material topics and its boundary Social and Environmental Capital 98 and 99

103-2 The management approach and its components Social and Environmental Capital 98 and 99 103-3 Evaluation of the Management approach Social and Environmental Capital 98 and 99

416-1 Assessment of health and safety impacts of product and service categories Social and Environmental Capital 98

416-2 Incidents of non-compliance concerning the health and safety impacts of Social and Environmental Capital 99 products and services

GRI 417: Product and Service Labelling

103-1 Explain the material topics and its boundary Social and Environmental Capital 98 and 99

103-2 The management approach and its components Social and Environmental Capital 98 and 99 103-3 Evaluation of the Management approach Social and Environmental Capital 98 and 99

417-2 Incidents of non-compliance concerning product and services information and Social and Environmental Capital 99 labelling

417-3 Incidents of non-compliance concerning marketing communications Social and Environmental Capital 99

GRI 418: Customer Privacy

103-1 Explain the material topics and its boundary Social and Environmental Capital 99

103-2 The management approach and its components Social and Environmental Capital 99 103-3 Evaluation of the Management approach Social and Environmental Capital 99

418-1 Complaints received concerning breaches of customer privacy Social and Environmental Capital 99 and losses of customer data

GRI 419: Socioeconomic Compliance

103-1 Explain the material topics and its boundary Social and Environmental Capital 99

103-2 The management approach and its components Social and Environmental Capital 99 103-3 Evaluation of the Management approach Social and Environmental Capital 99

419-1 Non-compliance with laws and regulations in the social and economic area Social and Environmental Capital 99 101 161 289 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

DISTRIBUTION NETWORK

Singer Plus Shops Gothatuwa Minuwangoda Poojapitiya Monaragala Homagama Mirigama Rikillagaskada Bibile Ampara Kaduwela Negombo Wattegama Buttala Akkaraipattu Katubedda Nittambuwa Kataragama Ampara “A” Kirulapona Pasyala Kegalle Monaragala Ampara “B” Kohuwala Pugoda Deraniyagala Siyabalanduwa Dehiattakandiya Kotahena Ragama Kegalle ‘A’ Wellawaya Kalmunai “A” Kottawa Seeduwa Kegalle ‘B’ Kalmunai “B” Kosgama Veyangoda Mawanella Nuwara Eliya Padiyatalawa Maharagama “A” Wattala Rambukkana Ginigathhena Pottuvil Maharagama “B” Weliweriya Ruwanwella Hatton Samanthurai Malabe Yakkala Warakapola Maskeliya Uhana Maradana Yatiyanthota Nuwara Eliya “A” Mattakkuliya Hambantota Nuwara Eliya “B” Anuradhapura Merit – Moratuwa Agunakolapelessa Kurunegala Pussellawa Anuradhapura “A” Milagiriya Ambalantota Alawwa Talawakelle Anuradhapura “B” Moratuwa Beliatta Bingiriya Anuradhapura “C” Nugegoda Hambantota Galgamuwa Polonnaruwa Eppawela Padukka Middeniya Giriulla Aralanganwila Galenbindunuwewa Pelawatte Suriyawewa Hiripitiya Bakamuna Habarana Peliyagoda Tangalle Ibbagamuwa Hingurakgoda Horowpathana Pettah Tissamaharamaya Kuliyapitiya Kaduruwela “A” Kahatagasdigiliya Piliyandala “A” Kurunegala “A” Kaduruwela “B” Kebithigollawa Pitakotte Jaffna Kurunegala “B” Medirigiriya Kekirawa Pliyandala “B” Chavakachcheri Kurunegala “C” Minneriya Medawachchiya Rajagiriya Chenkanai Maho Polonnaruwa Nochchiyagama Ratmalana Chunnakam Mawathagama Welikanda Rambewa Thimbirigasyaya Hospital Road, Jaffna Melsiripura Tambuththegama Udahamulla – Merit Jaffna Narammala Puttalam Thirappane Union Place Manipay Nikaweratiya Anamaduwa Thalawa Ward Place Nelliady Pannala Chilaw Wellampitiya Point Pedro Polgahawela Dankotuwa Badulla Wellawatta Puthukkudiyirippu Pothuhera Norochcholai Badulla Kodikamam Polpithigama Puttalam Badulla “B” Galle Rideegama Wennappuwa Bandarawela “A” Ahangama Kalutara Wariyapola Nattandiya Bandarawela “B” Ambalangoda Agalawatta Diyathalawa Baddegama Aluthgama Matara Ratnapura Girandurukotte Elpitiya Bandaragama Akuressa Balangoda Hali-Ela ElPitiya New Town Beruwala Deniyaya Dehiowita Mahiyanganaya Galle “A” Bulathsinghala Dikwella Eheliyagoda Passara Galle “B” Darga Town Hakmana Embilipitiya Welimada Hikkaduwa Horana Issadeen Town Godakawela Imaduwa Ingiriya Kamburupitiya Kahawatta Batticaloa Neluwa Kalutara “A” Matara “A” Kuruwita Batticaloa “A” Pinnaduwa Kalutara “B” Matara “B” Nivitigala Batticaloa “B” Udugama Matugama Morawaka Pelmadulla Chenkaladi Wanduramba Panadura Urubokka Ratnapura “A” Kalawanchikudi Wadduwa Weligama Ratnapura “B” Kattankudy Gampaha Kalawana Valaichchenai Delgoda Kandy Mannar Divulapitiya Akurana Mannar Trincomalee Colombo Dompe Digana Kanthalai Angoda Gampaha Galaha Matale Trincomalee “A” Athurugiriya Ganemulla Gampola Dambulla Trincomalee “B” Attidiya Ja-Ela Gampola “B” Galewela Vakarai Avissawella Kadawatha “A” Gelioya Matale Battaramulla Kadawatha “B” Kandy Naula Vavuniya Boralesgamuwa Kandana Katugastota Rattota Mallavi Borella Kiribathgoda “B” Kundasale Wilgamuwa Murunkan Colpetty Kirindiwela Nawalapitiya Parakramapura Dehiwela Kochchikade Peradeniya Vavuniya Delkanda Mawaramandiya Pilimatalawa Galle Face Court 290 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information DISTRIBUTION NETWORK

Kilinochchi Katugastota Satellite Shops Matale Kilinochchi Kegalle Pallepola Ampara Kekirawa Hingurana Mullaitivu Kilinochchi Matara Mullaitivu Kiribathgoda Pitabeddara Anuradhapura Kirindiwela Telijjawila Galnewa Kuliyapitiya Thihagoda Wilachchiya Samsung Showroom Kurunegala Nugegoda Maharagama Monaragala Badulla Ratmalana Mahiyanganaya Badalkumbura Ettampitiya Matale Thanamalwila Haldemmulla Matara Singer Homes Haputhale Matugama Nuwara Eliya Hasalaka Anuradhapura Mawanella Pundaluoya Meegahakivula Badulla Minuwangoda Ragala Udapussellawa Chilaw Mirigama Walapane Ududumbara Godagama Monaragala Tissapura Kadawatha Moratuwa Polonnaruwa Kalutara Mount Lavinia Diyabeduma Colombo Kandy Narammala Jayanthipura Hanwella Kegalle Negombo Diyasenpura Moragahahena Kottawa Nikaweratiya Kotte Nittambuwa Puttalam Galle Kurunegala Nuwara Eliya Hettipola Batapola Maharagama Panadura Kobeigane Karandeniya Matale Pelmadulla Pitigala Matara Pilimathalawa Ratnapura Talgaswala Negombo Piliyandala Kiriella Uragasmanhandiya Nuwara Eliya Ratnapura Pallebadda Yakkalamulla Ratmalana Ruwanwella Rakwana Labuduwa Ratnapura Talawathugoda Wellawatta Thambuttegama Trincomalee Gampaha Tissamaharamaya Muttur Katana Trincomalee SISIL World Marandagahamulla Union Place Other Niwala Akuressa Vavuniya Apparel Solutions and Ambalantota Veyangoda Katunayake Duty Free Store Hambantota Ampara Warakapola Ranna Anuradhapura Welimada Walasmulla Avissawella Weeraketiya Badulla Balangoda Singer Mega Kalutara Bandarawela Beko & Sony Baduraliya Battaramulla Boralesgamuwa Borella Duplication Road Kandy Chilaw Gampaha Alawathugoda Chunnakam Kalutara Ankumbura Dambulla Kandy Galagedara Dickwella Kandy Mall Hatharaliyadda Digana Kiribathgoda Kadugannawa Eheliyagoda Kottawa Menikhinna Embilipitiya K-Zone – Ja-Ela Polwatta Galewela K-Zone – Moratuwa Galle Maharagama Kegalle Gampaha Malabe Bulathkohupitiya Gampola Mt. Lavinia Hemmatagama Godakawela Negombo Kotiyakumbura Hingurakgoda Nugegoda Homagama Panadura Kurunegala Horana Rajagiriya Abanpola Ja-Ela Thalawathugoda Dummalasuriya Jaffna Thurstan Road Katupotha Kadawatha Wattala Kaduwela Kaduwela Kahawatta Singer warehouse Kalutara Kandy 101 161 291 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

SERVICE NETWORK AND FASHION ACADEMY NETWORK

Singer Service Derrick Motors Issuru Kaveen Engineers Kandy Vijitha Motors Regional Service Centres Indika Auto Service Centre J & U Electricals and Sathsara Sound Victor Cycle Works, Aluthgama Janith Motors Electronics I Tec Electronics Nuwan Motors Ampara Kurunegala Motors Life Cool AC Engineers Senadeera Ref Centre Lal Honda Service Anuradhapura Lahiru Motors Nuwan Engineering Thushara Electronics Chathuranga Motors Badulla Neel Motors Ruwan Electricals Super Air Electrical Works Nimal Ingineers Colombo Nihal Motors S.K.Electricals Sandamini Multi Electrical K.S.Motors Jaffna Power Wash S.N.A. Ref Air Engrs S D Machine Service Centre Kandy Ravi Motors Samagi Ref Centre Vimod Electricals Priyantha Ref Engineers Kuliyapitiya Royal Motors Sharp Electronics New Vision Electronics Super Cool Air Matara Sampath Auto Care Super Tech Ref Engineers Samarawickrama Cushion Pasyala Shantha Motors Technicold Electronics Kuliyapitiya Works Peliyagoda Tharanga Motors GB Electrical Anuradha Electricals Leyard Furniture Polonnaruwa Wijesinghe Motors Smart Ref Engineers Chandu Electricals C J Electricals Ratnapura Lakmal Motores Anjana Electricals Freezair H L Nuwan Sameera Union Place LAL Enterprises Mr. H G Lalith Mahesh Electricals Amila Pathum Architectures & Nawam Mawatha Lahiru Motors Mr. C L S Ananda Samodha Electronics Furniture Vavuniya Amila Furniture Ushan Electricals Techno Frost Sachee Cushion Works S L K Cushion Designer Keerthi De Jayasinghe Engi. Moderni Air Condition Lion Electronic Aluthgama Sandanayake Wood Works Mr. D U Jayasinghe New Leeds Electronics Siri Electrical & Ref Eng. Pujana Electrical & Cellular Econ Air World Air Conditioner Pasyala Air Tech Engineering Hashen Electrical & Ref Dinu Electricals Chandana Motor Garage New PC House Multi Tech Engineering Engineer Dushadi Sofa Centre Dasuna Motors Thilak Electricals Amal Ref & Electricals D J Furniture Rathnayake Enterprises Nipuna Auto Mobile Techno Ref & Air Enterprices Eranda Multi Electricity Ran Sri Electronics Sandaruwan Cool Engineers Sahana Motors Kavia Engineering Gulf Motors Indrani Cushion Mr. Muthugalage Saman Service Technico Electronic Perera & Service Dream Home Furniture Flemingo Cushion House Wijesinghe Motors Aloka Engineers Dilshan Motors Mr. W.W.M.S. Gihan Mr. W Kulasiri Fernando Peo Motors S.N.A.Ref Air Nanayakkara Electronics Chandrarathna Welagedara Engineering Ravindra Motors Saleena Electronics Premalal Motors Super Cool Ref Sanjeewa Auto Works Silicone Electronics Suranjith Motors Badulla Yoshitha Machine Centre Sathsara Auto Works Kavindu Ref N Air A.K. Motors Marriott Electricals Kapila Machine Repair Nalinda Mechine Centre Tech Way Services Sola Edge Colling & Power Tharindu Electricals Gap Machine Centre Mihidum Juki Machine Sumith Motor Works Solution Cool air engineering Technicians Raja Motors Dinan Machine Centre Aruna Electricals Jaffna Bandara Auto Mobile Nushan Ref and Air Centre Thushara Motors TV Centre Ambiha Electricals Susantha Ref Electricals U.D. Ref Engineering Hiruna Electronics City Link Coolers Matara SESENI Engineers Telstar Electronic SSV Cool Air Service Janapriya Electronics Nishani Motors Sameera Cooling Service Institute of Ace Lal Electronics Super Electronics & Air Ampara Chamari Ref NPM Electricals New Shiney Electronics Technics Aira Motors Refco Electrical Cool Air Kings New Lion Radio S T S Technical Service Ruckshan Mechanicle Shop Saman Motors Anton Service Station Silver Dale Elecronics Ariyathilaka Electrical & Musthafa Motors Mec Mohan Motors Welcome Motors (Hero Chaminda Air Ref Eng.Ser. Engineering S S H Motors Yasas Motors Garage) New Freeze Air Mr. P P Wickramasinghe Aruna Ref and Electrical Gunathilake Motors Panchu Garage Penguine International Zuhail Brothers Eastern Tech Institute Piyal Motors Ragu Mechanic Centre Prince Electricals Janudha Ref & Electrical Lal Motors Vageetha Motors Uduwella Ref Polonnaruwa Chil Air Kesala Electricals New Asia Centre K.U.K Sper Cool Service Ashoka Ref Sahana Motors Hemantha Motors Viji Air Conditioners NilanKa Pathirana Ref Center DJ Engineers Isuru Sameera Cushion Works New Gamini Agro Centre Jetcool Engineering Service Ruhunu Ref & Air Services J & P Electronics V T Cushion Works Ravi Service Technology Snow Eagles [Ref & Air Con Sampath Engineering Works Mahaweli Electronics E Sampath Asela Engineers] Rohan Ref Centre Mayura Ref & Electricals Life Line Enterprises Colombo Suvil Cushion Centre Max Cool Electricals Mudalige Electronics Magic Cool Aircon Ben Refrigerators TNR Electricals & Electronics G.A. Auto Electricles Sanath AC Engineering Chamath Enterprises Raj Motor Winding Hemantha Motors Thilak Electronics Anuradhapura Chatu Spray Paint The Best Chill Air Conditioning Indika Motors Subasinghe Ref Engineers Buddhika Electricals Chirathma Electricals Mr. Santhalingam Janahitha Motors Kinnya AC Mechanics Indunil Ref & Electricals Cool Tech Engineers Mr. Srijeevan Thayarupan Rahula Motors B.N.R. Enterprises Luck cool Ref Engineers Dineth Electronics Sarani Motors Karunarathne Motors Shalini Auto Cool E.M.P Electricals Sampath Motor Service Nissanka Motors Udani Electronics Electro Frost Susantha Motors Techno Engineering Chandana Entreprises G.M.Electricals Sunil Motors Thilanka Motors 292 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information SERVICE NETWORK AND FASHION ACADEMY NETWORK

Udarata Motors E R Engineers NW Net Computer Systems Matara-A Janith Motors New Ashen Electrical Web Com Computers Mawanella Priyankara Motors Sure Ref E-Team Technologies Mega-Thalawathugoda Sampath Motors Sun Cool Enterprises Millennium Web Mega-Kandy Udaya Motors Air Cool Temp Rapid Computer Systems Mega-Mount Lavinia S. M. Motors Melona Aircon Services R & D Engenerings Minuwangoda Ananda Electricals Cool Rite Service EZ Tec Computers Nawalapitiya Jayathilaka Motors United Air Cool Comtal Manpower Systems Negombo Dissanayake Lathe Shop Thilina Electro Tec Nittambuwa Chaminda Sewing Mechanics Motor Bike service – Leem Technologies Nugegoda Indika Motora Peliyagoda ATN Computers Nuwaraeliya A Gautham Cushion Works Athula Motor Works Aruna Computers Panadura Ravindra Motors Brito Motors Serendib Computer System Peliyagoda Niluka Ref & Electricals Diaz Motors Stamina IT Pelmadulla Sassitha Motors Ransak Service Centre MC Link Pilimathalawa Saman Motors Sinethma Motors K2 Computers Piliyandala B Sujeewa Engineers Wimal Motor Works N.R.Outchoon Polonnaruwa Manahara Electricals SP Computers Rathnapura A Ratnapura Western Digital Computers Ruwanwella Highcool Air & Ref Centre Stock Franchise at Gold Lion Electronics Shomes-Kegalle Roshan Electronics Distribution Centre G.P.W.Electronic Tissamaharama High Frost Mr.Ranjan Amarasinghe Warakapola Pathirana Ref Engineering Hi-Tech Electronics Fashion Academies Wellawatta Star Ref Electricals Mr.Pradeep Chaminda Ambalangoda Wellawaya Sanjaya Electronics Sampath Electricals Ampara Wennappuwa Quick Cool Mr. Kariyawasam Angoda Senadeera Multy Ref Tele Technics Anuradhapura B Solanta Electronics K V Electronics Avissawella Samagi Diesel Engineering Hiru Service Baddegama SM Electricals Kumara Electronics Badulla B PSD Motors T S Electronics Bandarawela Indika Ref Engineers R J Enterprises Battaramulla Ranjith Electronics Ultra Cool Ref Centre Borella Amangi Electronics Sunimal Perera Chilaw Ruhunu Cushion Work K.Tronic Dambulla Saman Wood Danushka Ref Dickwella Smart Wood Creation C K Electronics Eheliyago Shashei Service Embilipiti New Town D G Services Mobile Phone Service Galewela Dinuka Re Fashion Centre Franchise Agents Galle B Damruwan Cushion Works Colombo Trading Gampaha Sampath Electronics Apogee International Gampola Ontas Hatton Air Conditioning Division Nalin Celular Hingurakgoda Alwis Engineering Centre Yurani Technology Homagama Air Mech Airconditioning I Tech Electronics Horana Company Colombo Trading (Kandy) Ja-Ela New Dynamic Ref Engineers Jaffna-Hospital Road Lahiru Ref Computers Service Kaduwela Re Cool Franchise Agents Kalutara A R&T Ref Engineering Inet Computer Systems Kandana Ref Air Electricals Omex Computers Technology Kandy Royal Cool Enterprises ST Computers Katubedda Sewwandi Ref Engineers PC System Katugastota Tempcool Engineering A Soft Computer Kiribathgoda B Yellowma Airconditioning Sabaragamuwa IT Solution Kirindiwela Qualitcool Easy Technology Kurunegala A Sri Lankan Engineering Nano Technologies Mahiyangana Sun Ref Engineers HP Computer Systems Malabe Cool Way Sakun Technologies Maradana 101 161 293 STEWARDSHIP FINANCIAL REPORTS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

GLOSSARY Accounting Policies Cash Equivalents Dividend Cover Gross Dividend Price Earnings Ratio Specific principles, Liquid investments with Profit attributable to Portion of profits Closing market price bases, conventions, original maturity periods ordinary shareholders inclusive of tax of a share divided by rules and practices of three months or less. divided by gross withheld, distributed to earnings per share as at adopted by an dividend. Measures shareholders. reporting date. enterprise in preparing the number of times Contingent Liabilities and presenting Financial dividend is covered by Held-to-Maturity Related Parties Statements. Conditions or situations distributable profit. at reporting date the Debt assets acquired by Parties who could financial effect of which the entity with positive control or significantly Acid Ratio are to be determined by Dividend Payout intention to be held-to- influence the financial Current asset less future events which may Dividend per share maturity. and operating policies inventory divided by or may not occur. divided by earnings per of the business. current liabilities. share of the Company. Interest Cover Credit Rating Profit before tax plus Return on Average Amortisation An evaluation of a Earnings Per Share net finance cost divided Net Assets Equity The expense of writing corporate’s ability to Profits attributable to by net finance cost. Profits for the year off over a fixed period, repay its obligations ordinary shareholders Measure of an entity’s divided by average total the initial value of an or the likelihood of not divided by the weighted debt service ability. equity. intangible asset such as defaulting, carried out average number of goodwill, patents etc. by an independent ordinary shares in issue. Impairment rating agency. Revenue Reserves This occurs when Reserves considered Available-for-Sale Equity recoverable amount as being available All assets not in any of Current Ratio Shareholders’ funds. of an asset is less its for distributions and the three categories Current assets divided carrying value. investments. namely held to maturity by current liabilities. Fair Value fair value through profit A measure of liquidity. Market Capitalisation or loss and loan and Fair value is the amount Segment receivables. It is a for which an asset could Number of shares in Constituent business Debt residual category does be exchanged between issue multiplied by the units grouped in not mean that the entity Total liabilities, excluding a knowledgeable, market value of a share terms of similarity of stands ready to sell deferred income. willing buyer and a at the reporting date. operations and location. these all the time. knowledgeable, willing seller in an arm’s length Debt to Equity Net Assets Per transaction. Value Addition Borrowings Total borrowings Share The quantum of All interest bearing less cash and cash The equity attributable to wealth generated by Financial loans, fixed deposits equivalents divided by owners of the Company the activities of the and saving deposits. total equity. Instruments divided by the weighted Group measured as Financial instrument is average number of the difference between any contract that gives ordinary shares in issue. turnover and the cost of Debt Ratio Capital Employed rise to both financial materials and services Total of interest bearing Total liabilities divided by assets in one entity bought in. Non-Controlling loans and borrowings, total assets. and a financial liability bank overdraft and total or equity instrument in Interest Equities in subsidiary Working capital equity. Deferred Taxation another entity. not attributable, directly Capital required to The net tax effect on or indirectly to a parent. finance the day-to-day Capital Reserves items which have been Gearing Ratio operations computed Reserves identified for included in the Income Proportion of borrowings as the excess of current specific purposes and Statement, which would to capital employed. assets over current considered not available only qualify for inclusion liabilities. for distribution. on a tax return at a future date. 294 5 13 25 35 SINGER AT SINGER’S BUSINESS MANAGEMENT DISCUSSION A GLANCE LEADERSHIP MODEL AND ANALYSIS SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19 Supplementary Information

NOTICE OF ANNUAL GENERAL MEETING

SINGER (SRI LANKA) PLC (Company Registration No. PQ 160)

NOTICE IS HEREBY GIVEN THAT THE FORTY- FOURTH ANNUAL GENERAL MEETING OF SINGER (SRI LANKA) PLC will be held on Tuesday, 25th June 2019 at 3.00 pm at Hayleys PLC at No. 400, Deans Road, Colombo 10, Sri Lanka.

1. To receive, consider and adopt the Annual Report of the Board of Directors and the Statement of Accounts for the 12 months ended 31st March 2019 with the Report of the Auditors thereon.

2. To re-elect, Mr. D. Sooriyaarachchi, who retires by rotation at the Annual General Meeting, a Director in terms of Article 24 (4) of the Articles of Association of the Company.

3. To re-elect Ms. O.D. Gunewardene who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

4. To re-elect Mr. M.H. Wijewardene who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

5. To authorise Directors to determine contributions to Charities.

6. To reappoint Messrs. KPMG, Chartered Accountants as the Auditors of the Company for the year 2019/20 and to authorise the Directors to determine their remuneration.

By Order of the Board, Singer (SRI LANKA) PLC

HAYLEYS GROUP SERVICES (PVT) LTD. Secretaries Colombo 16th May 2019

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 with the Company Secretaries, Hayleys Group Services (Pvt) Ltd., No. 400, Deans Road, Colombo 10, Sri Lanka not less than 48 hours before the time fixed for the meeting. SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

FORM OF PROXY

Singer (Sri Lanka) PLC (Company Registration No. PQ160)

I/We* ……...... ……………………………………………………………………………………… (full name of Shareholder**)

NIC No./Reg. No. of Shareholder (**) ………………………………………… of ………………………………………………………….

…………………………………………..…………… being Shareholder/Shareholders* of SINGER (SRI LANKA) PLC hereby appoint:

……………………………………………………………..……………………………………….…………… (full name of proxyholder**)

NIC No. of Proxyholder (**) ……………….…………………………… of …………………………………………………………………

………………………….………………………………………………….……………….……………………………… or, failing him/them,

ABEYAKUMAR MOHAN PANDITHAGE of Colombo (Chairman of the Company) 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 Forty Fourth Annual General Meeting of the Company to be held on Tuesday, 25th June 2019 at 3.00 p.m. and at every poll which may be taken in consequence of the aforesaid meeting and at any adjournment thereof.

For Against 1. To adopt the Annual Report of the Board of Directors and the Statements of Accounts for the 12 months ended 31st March 2019 with the Report of the Auditors thereon. 2. To re-elect Mr. D. Sooriyaarachchi, who retires by rotation at the Annual General Meeting, a Director in terms of Article 24 (4) of the Article of Association of the Company. 3. To re-elect Ms. O.D. Gunewardene who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Articles 24 (10) of the Articles of Association of the Company. 4. To re-elect Mr. M.H. Wijewardene who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company. 5. To authorise Directors to determine contributions to Charities.

6. To reappoint Messrs. KPMG, Chartered Accountants as the Auditors of the Company for the year 2019/20 and to authorise the Directors to determine their remuneration.

(**) The proxy may vote as he thinks fit on any other resolution brought before the Meeting of which due notice has been given. As witness my/our* hands this ……………………. day of …………………………….2019.

Witnesses: ……………………………… Signature: ………………………………...... Signature of Shareholder

Name: ………………………………...... Address: ………………………………...... ………………………………......

NIC No: ………………………………...... SINGER (SRI LANKA) PLC ANNUAL REPORT 2018/19

Notes:

(a) *Please delete the inappropriate words.

(b) A shareholder entitled to attend and vote at the Annual General Meeting of the Company, is entitled to appoint a proxy to attend and vote instead of him/her and the proxy need not be a shareholder of the Company.

**Full name of shareholder/proxy holder and their NIC Nos. and Witness are mandatory. Your Proxy Form will be rejected if these details are not completed.

(d) Instructions are noted below.

(e) This Form of Proxy is in terms of the Articles of Association of the Company.

INSTRUCTIONS AS TO COMPLETION : 1. To be valid, the completed Form of Proxy must be deposited with the Company Secretaries, Hayleys Group Services (Pvt) Ltd. at No.400, Deans Road, Colombo 10, Sri Lanka not less than 48 hours before the start of the Meeting.

2. In perfecting the Form of Proxy, please ensure that all requested details are filled in legibly including mandatory details. Kindly Sign and fill in the date of signing.

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. The proxy need not be a member of the Company.

4. Please indicate with an X in the space provided how your proxy is to vote on the resolutions. If no indication is given, the proxy in his discretion will vote as he thinks fit.

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.

In the case of the individual shareholders, the signature of the shareholder should be witnessed by any person over 18 years of age.

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.

7. In case of Marginal Trading Accounts (slash accounts), the Form of Proxy should be signed by the respective authorised Fund Manager/Banker with whom the account is maintained. CORPORATE INFORMATION

Name of the Company Lawyers Mr. A.A. Sathiyamoorthy – Senior Manager – Trade Singer (Sri Lanka) PLC Neelakandan & Neelakandan Credit Attorneys-at-Law & Notaries Public Mr. P. Jayatilake – Marketing Manager – Electronics Legal Form M&N Building (Level 5), No. 2, Deal Place, Mr. T.L. Senaviratne – Senior Manager – Public company with limited liability. Colombo 3 Information Technology Incorporated as a public company in Sri Lanka Mr. D.D.W. Dassanayake – Senior Manager – Credit Directorate on 30th December 1974 under the Companies Mr. K.P. Peramunugamage – Head of Business Ordinance and Re-registered under the Mr. A.M. Pandithage – Chairman (Executive) School Companies Act No. 07 of 2007 on 13th June 2008. Mr. K.D.D. Perera – Co-Chairman (Non-Executive) Mr. L.R.P. Perera – Business Development Mr. M.H. Wijewardene – Chief Executive Officer Founded in 1877 as a Branch of Singer Sewing Manager – Retail Mr. D. Sooriyaarachchi Machine Company, USA the shares of the Mr. N.I. Kuruppuarachchi – Senior Manager – Legal Mr. D.H. Fernando Company are listed on the Colombo Stock Mr. S. Serasinghe-Senior Manager – Distribution Mr. M.H. Jamaldeen Exchange. Accounting Year: 31st March. Mr. N.B. Ranasinghe – Senior Manager – Revenue Mr. D.K. de. S. Wijeyeratne and Margin Registered Office Ms. O.D. Gunewardene Mrs. P.T.K. Liyanage – Finance Manager Mr S.C. Ganegoda Telephone: +94-11-2316316 (13 lines) Mr. R.B. Gaspe – Head – Strategic Business Mr. S.H. Goodman Facsimile: +94-11-2423544 Development Unit Mr. L.N.S.K. Samarasinghe E-mail: [email protected] Mr. K.I.S. Perera – Business Development (Alternate to Mr. M.H. Jamaldeen) Website: www.singer.lk Mananger – Whole Sale (South) Company Registration Number Mr. K.K.L.P. Yatiwella (Alternate to Mr. S.C. Ganegoda) Mr. E.R.A. Silva – Business Development New – PQ 160 Mr. H.P.S. Perera Manager – Institutional Sales Old – PBS 802 (S.P.) (Alternate to Mr. M.H. Wijewardene) Mr. K.D.S. Kanishka –Senior Manager – Promotions Mr. T.U.S. Peiris – Business Development Tax Payer Identification Number Senior Management Manager – SISIL 124008026 Mr. M.H. Wijewardene – Chief Executive Officer Mr. S.M.D.S.K. Jayatilake – Senior Manager – Mr. L.N.S.K. Samarasinghe – Director Marketing Human Resources Bankers Mr. S. Ramanathan-Director – Logistics Mr. M. Hanas – Business Development Manager – Bank of Ceylon Mr. J. Mendis – Credit Director Digital Media Commercial Bank of Ceylon PLC Mr. H.A.P.S. Perera-Factory Director – Mr. G.T. Galagederage – Senior Manager – Deutsche Bank Sri Lanka Piliyandala Factory Research & Development Hatton National Bank PLC Mr. K.K.L. Yatiwella – Finance Director Mr. T.W.S.M. Perera – Senior Manager – MCB Bank Sri Lanka Mr. L.A.D.K. Perera-Director – Digital Media Nations Trust Bank PLC Information Technology Dr. M Balasuriya – Head of Regulatory & Quality NDB Bank PLC Mr. B.T.L. Mendis-Director – Commercial Assuarance Pan Asia Bank PLC Mr. K.D.J.M. Perera – Director – Operations Mr. U. Ganehiarachchi – Business Development People’s Bank Mr. T. Amarasuriya – Chief Executive Officer – Manager – Whole Sale (North) Seylan Bank PLC Singer Finance (Lanka) PLC Sampath Bank PLC Mr. V. Tennakoon – Director – Sales Standard Chartered Bank (Sri Lanka) Limited Mr. R. Kulasuriya – Director – Human Resources The Hongkong & Shanghai Banking Corporation and Business Integration Union Bank PLC Mr. A.P. Manorathna – Deputy Director – Services Mr. D.B. Wijesundara – Deputy Director – Marketing Auditors Mr. M.I. Carder – Head of Treasury & Investor KPMG Relations Chartered Accountants Mr. G.A.K. Weerasuriya-Senior Manager Inventory No. 32A, Sir Mohamed Macan Markar Mawatha, Mr. A.U. Karunarathne-Senior Manager – P.O. Box 186, Merchandising & Promotions Colombo 3 Mr. T.G.S. Perera-Senior Manager – Field Sri Lanka Inventory Operations Registrars Mr. I.A.S. Kolombage – Commercial Manager Mr. Priyanjith Meegoda – Head of Risk Management Hayleys Group Services (Pvt) Limited Mr. V. Gomes – Head of Financial Services No. 400, Deans Road, Mr. W.L.I.A. Gunathilake – Business Development Colombo 10, Manager – Mega & Singer Homes Channel Sri Lanka. Mr. K.R.L. Perera – Group Administration Manager Company Secretaries Mr. A.R.N.P.K. Wijesundara-Sales Manager – Hayleys Group Services (Pvt) Limited Agro & Transportation No. 400, Deans Road, Mr. S.H. Perera – Senior Manager – Colombo 10, Budget & Planning Sri Lanka Mr. T.J. Martyn-Senior Manager – Apparel Solutions