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Sustainable Differentiation Haycarb PLC continues to be one of the world’s leading manufacturers of coconut shell based activated carbon with a 16% share of the global market. The Company’s rapid diversification into water purification systems and carbon regeneration has added to its reputation as a trusted specialist in its field. We believe Haycarb to be ‘ahead of the curve’ because years of specialisation in our field have helped us offer a discerning clientele with superior product differentiation augmented by a total solution approach. We have achieved this within a strict regime of sustainability – an aspect we’ve maintained since Haycarb PLC - Annual Report 2015/16 Haycarb PLC - inception. In tandem we live our brand values of innovation, technical excellence and customer centricity. The ‘whole’ Haycarb experience is really second to none! CONTENTS 1 Global Presence 2 Strategy 4 Joint Statement from the Chairman and the Managing Director 12 Financial Review 18 CSR 26 Governance and Compliance 28 Board of Directors 32 Management Team 36 Corporate Governance 46 Annual Report of the Board of Directors on the Affairs of the Company 50 Statement of Directors’ Responsibilities 51 Related Party Transactions Review Committee Report 52 Audit Committee Report 54 Financial Statements 56 Independent Auditors’ Report 57 Income Statements 58 Statements of Comprehensive Income 59 Statements of Financial Position 60 Statements of Changes in Equity 61 Consolidated Statements of Cash Flow 62 Notes to the Financial Statements 118 Statement of Group Value Added 119 Investor Information 121 Ten Year Financial Review 122 Group Profile 124 Glossary Haycarb PLC - Annual Report 2015/16 125 Notice of Meeting Form of Proxy Enclosed Corporate Information Inner Back Cover Sustainable Differentiation Haycarb PLC continues to be one of the world’s leading manufacturers of coconut shell based activated carbon with a 16% share of the global market. The Company’s rapid diversification into water purification systems and carbon regeneration has added to its reputation as a trusted specialist in its field. We believe Haycarb to be ‘ahead of the curve’ because years of specialisation in our field have helped us offer a discerning clientele with superior product differentiation augmented by a total solution approach. We have achieved this within a strict regime of sustainability – an aspect we’ve maintained since inception. In tandem we live our brand values of innovation, technical excellence and customer centricity. The ‘whole’ Haycarb experience is really second to none! CONTENTS 1 Global Presence 2 Strategy 4 Joint Statement from the Chairman and the Managing Director 12 Financial Review 18 CSR 26 Governance and Compliance 28 Board of Directors 32 Management Team 36 Corporate Governance 46 Annual Report of the Board of Directors on the Affairs of the Company 50 Statement of Directors’ Responsibilities 51 Related Party Transactions Review Committee Report 52 Audit Committee Report 54 Financial Statements 56 Independent Auditors’ Report 57 Income Statements 58 Statements of Comprehensive Income 59 Statements of Financial Position 60 Statements of Changes in Equity 61 Consolidated Statements of Cash Flow 62 Notes to the Financial Statements 118 Statement of Group Value Added 119 Investor Information 121 Ten Year Financial Review 122 Group Profile 124 Glossary 125 Notice of Meeting Form of Proxy Enclosed Corporate Information Inner Back Cover Global Presence Kielce, Poland Moscow, Russia Beijing, China Seoul, South Korea Bristol, UK Germany Ontario, Canada Spain Turkey Tokyo, Japan Texas, USA Pittsburgh, USA Taipei, Taiwan Bitung, Palu, Indonesia Accra, Ghana Colombo, Sri Lanka Parent Company Kuala Lumpur, Manufacturing/ Malaysia Marketing Santiago, Chile Perth Melbourne Johannesburg, South Africa Bangkok, Chonburi, Ratchaburi Thailand Melbourne, Perth, Australia Marketing Subsidiary Distributor Manufacturing 42,500 Metric Tons Activated Carbon manufacturing capacity per annum 2015/16. Key Performance Indicators Statement of Income Return to Shareholders Cash Flows Ratios Revenue EPS Capital Overheads 11,934 11,706 32.00 1,024 14 15 15 Rs. million Rs. Expenditure Cost to 13 10,150 10,339 27.00 Rs. million Income Ratio 23.00 23.00 660 % 640 595 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 NAV per Share Dividend ROCE Gross Profit 3,014 199.00 208 21 2,956 Rs. 192.00 Payment 178 178 178 % Rs. million 2,733 2,564 Rs. million 18 160.00 16 147.00 13 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 7.00 1,275 32 32 26 DPS Operating Gearing Gross Profit 6.00 6.00 6.00 1,034 25 25 25 Rs. Cash Flow Ratio 30 Margin Rs. million % % 621 29 287 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 EBITDA to 14.9 14.6 Profit 945 Sales 13.8 13.6 Attributable to 788 % Equity 695 681 Shareholders Rs. million 2013 2014 2015 2016 2013 2014 2015 2016 2014/15 Report 15 months results of some of the subsidiary companies due to transitional adjustments made last year to comply with Sri Lanka Financial Reporting Standards (SLFRS 10) 'Consolidated Financial Statements’ – Refer Note 1 of page 15. Key Performance Indicators Statement of Income Return to Shareholders Cash Flows Ratios Revenue EPS Capital Overheads 11,934 11,706 32.00 1,024 14 15 15 Rs. million Rs. Expenditure Cost to 13 10,150 10,339 27.00 Rs. million Income Ratio 23.00 23.00 660 % 640 595 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 NAV per Share Dividend ROCE Gross Profit 3,014 199.00 208 21 2,956 Rs. 192.00 Payment 178 178 178 % Rs. million 2,733 2,564 Rs. million 18 160.00 16 147.00 13 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 7.00 1,275 32 32 26 DPS Operating Gearing Gross Profit 6.00 6.00 6.00 1,034 25 25 25 Rs. Cash Flow Ratio 30 Margin Rs. million % % 621 29 287 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 EBITDA to 14.9 14.6 Profit 945 Sales 13.8 13.6 Attributable to 788 % Equity 695 681 Shareholders Rs. million 2013 2014 2015 2016 2013 2014 2015 2016 2014/15 Report 15 months results of some of the subsidiary companies due to transitional adjustments made last year to comply with Sri Lanka Financial Reporting Standards (SLFRS 10) 'Consolidated Financial Statements’ – Refer Note 1 of page 15. Strategy Formulating and following a well-engineered strategic plan has and Development, Marketing and Business Development and provided us with sustained growth in the past; this year was no Manufacturing Technologies resulted in a range of innovative, different. We took an aggressive approach to positioning our new, high-value products expanding and enhancing our existing products in emerging markets where we have traditionally enjoyed portfolio. These products include special grades of Chloramine a strong position. In addition we reinforced our status in developed Removal Carbon, Cabin Air Carbon, Heavy Metal Removal markets, particularly in key application and customer segments. Carbon, Super Capacitor Carbon and Respirator Carbons. Further we focused our attention to expand our Environmental Engineering business to have selective regional presence and Our sustainability initiatives gathered further momentum through growth in water/wastewater treatment systems. additional projects to reduce fossil fuel usage in all manufacturing facilities, expansion in environmental friendly charcoaling in The sustained development in key markets was achieved Thailand and Sri Lanka and the execution of the flagship Corporate through upgrading the technology and quality systems of our Social Responsibility Initiative ‘Puritas Sath Diyawara’ to provide manufacturing plants to ensure we continued to be much needed purified drinking water to villages affected by customer-centric industry leaders. Our focus on Research Chronic Kidney Disease. 2 | Haycarb PLC | Annual Report 2015/16 By continuing to focus on our core product portfolio, implementing lean initiatives, adopting new technology and machinery, successfully enhancing capacity and aggressively expanding our market reach whilst enlarging our footprint in Environmental Engineering business segment, we were able to maintain our position as a world leader in the manufacture of coconut shell based activated carbon and provider of innovative purification solutions. Joint Statement from the Chairman 04 and the Managing Director Financial Review 12 CSR 18 Annual Report 2015/16 | Haycarb PLC | 3 JOINT STATEMENT FROM THE CHAIRMAN AND THE MANAGING DIRECTOR We reiterate our confidence that was elaborated in “ the last year’s report that along with the emphasis that is placed on environmental sustainability across the world, that the activated carbon industry and environmental engineering services of Haycarb Group is in a position of strength and stability to experience good progress and growth in the years ahead. ” 4 | Haycarb PLC | Annual Report 2015/16 We are pleased to present the Annual Report of Haycarb PLC previous year, when the effects of the transitional adjustments for the financial year 2015/16. effected last year to comply with Sri Lanka Financial Reporting Standards (SLFRS 10 - Consolidated Financial Statements) Haycarb Group surpassed the Rs. 1 billion PBT mark for are excluded, the turnover has increased by 14% over the the fourth consecutive year in spite of a challenging external comparable 12-month period. Similarly when the effects of environment, signalling the stability of our business model transitional entries are removed, the profit before tax has suitably backed by the long-term strategic direction. increased by 10% compared to the previous period. The earnings per share stood at Rs. 22.93 and net assets per Review of operations 2015/16 share increased to Rs. 199.11. Financial performance Haycarb recorded a turnover of Rs.