Singer (Sri Lanka) Plc Annual Report 2015

WINNER OF THE PEOPLE’S BRAND 2006 - 2015

SINGER (SRI LANKA) PLC ANNUAL REPORT 2015

SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 01

A DECADE AS SRI LANKA’s

It’s a staggering performance! For the tenth consecutive year Singer has been chosen Sri Lanka’s No.1 Brand at the SLIM Nielsen People’s Awards. Best Brand…Best Consumer Durables Brand…Best Youth Brand…the accolades keep pouring in…year after year.

Could it be because…WE ARE THE BEST? 02 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC SINGER ON A WINNING STREAK DELIVERING ON STEWARDSHIP GROUP GROUP AT A GLANCE GROUP CHIEF EXECUTIVE OFFICERS’ REVIEW 2015 PERFORMANCE IN CONTEXT CHAIRMAN’S CHAIRMAN’S LETTER

12 30 114 6

54 8 23

7 18 52 62 TEAM MANAGEMENT YEAR YEAR FINANCIAL BOARD BOARD HIGHLIGHTS FORMING A FORMING A TOMORROW AT A GLANCE SUSTAINABLE SUSTAINABLE OF DIRECTORS SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 03 SERVICE NETWORK AND SERVICE NETWORK AND FASHION ACADEMY NETWORK BOARD NOMINATION BOARD NOMINATION COMMITTEE REPORT REMUNERATION REMUNERATION COMMITTEE REPORT NOTICE OF ANNUAL NOTICE OF ANNUAL GENERAL MEETING SHARE INFORMATION SHARE INFORMATION

246 163 162 241 248

152

161 Enclosed 165 245 247 OUR PRUDENT BALANCING ACT AUDIT AUDIT REPORT REPORTS COMMITTEE FINANCIAL NETWORK GLOSSARY OF GLOSSARY OF FORM OF PROXY DISTRIBUTION FINANCIAL TERMS FINANCIAL TERMS 04 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC VISION To be the foremost appliance retailer in #UKC2CEKſE

VALUES Consumers Shareholders Employees We live up to the expectations of a responsible We provide a reasonable We respect each other as organisation by contributing to the improvement return while safeguarding individuals and encourage in the quality of life of our customers through their investment cross functional teamwork while outstanding products and services providing opportunities for career development OBJECTIVES

To be the market leader in our Product Provide our consumers with the Best Provide our Consumers with and Market Segment Service and Shopping Experience in Products of Latest Technology the Island SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 05 MISSION To improve quality of life by providing comforts and conveniences at fair prices

Suppliers Competitors Community Environment We develop our suppliers We respect our competitors We conduct our business We make every effort to be partners in progress and recognise their by conforming to the ethics to ensure that the and we share our growth contribution to market value of our country and share environment is protected with them the social responsibility of and conserved for future the less fortunate generations

Develop our Employees to Provide our Shareholders Grow our Revenue and achieve their real Potential with steady Asset Growth and 3URʀWVDWDUDWHDERYH Return on Investment above the Industry Norm our Industry Norm 06 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

GROUP AT A GLANCE

Our Retail Presence

Province Singer Mega Singer Plus Singer Homes Satellite Shops SISIL World Total

Central 2 23 1 14 7 47 Eastern - 21 - 3 2 26 North Central - 18 1 11 2 32 North Western - 20 2 11 5 38 Northern - 12 1 4 17 Sabaragamuwa - 17 2 9 11 39 Southern - 29 1 15 6 51 Uva - 13 1 10 3 27 Western 18 77 7 12 24 138 Total 20 230 15 86 64 415

Singer Distribution Jaffna

Kilinochchi Mullaitivu

Vavuniya Market Mannar Trincomalee Capitalisation Puttalam Anuradhapura Rs. 17.3 billion Polonnaruwa

Batticaloa

Matale Kurunegala Ampara Kegalle Over 1 million Over 4.5 million 1,905 Kandy Gampaha Nuwara Eliya Badulla Online and Mobile Users Household Users Singer Staff Members Monaragala Colombo

Ratnapura Kalutara

Galle Hambanthota

Matara 25.4

Rs. Billion 22.0 2012 16.0 2011

11.9 2010

2009 SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 07

FINANCIAL HIGHLIGHTS

Group Company 2015 2014 Increased/ 2015 2014 Increased/ Rs. ’000 Rs. ’000 (Decreased) Rs. ’000 Rs. ’000 (Decreased) %%

Revenue - Net 38,710,834 29,699,602 30.3 33,311,395 27,130,594 22.8 Net Finance Cost 974,548 991,328 (1.7) 930,688 1,047,408 (11.1) 6KDUHRI3URʀWRI(TXLW\$FFRXQWHG Investees (Net of Income Tax) 2,042 1,963 4.0 – –– 3URʀWEHIRUH7D[ 1,895,275 1,155,608 64.0 1,195,682 660,261 81.1 3URʀWIRUWKH

* Includes proposed Final Dividends of the Company.

2015 29.7

25.5 2014

2013 38.7 CAGR of Group Net Revenue reported 21.7% from year 2009 to 2015 08 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Dear Shareholders,

The year 2015 began with a change in the political regime in Sri Lanka. A new leader emerged and a new Government was established and further consolidated in the third quarter of the year. With the implementation of some of the promises made in the 100 day programme of the Government, there was a surge in people’s purchasing power. This was consequent to the wage increase in the public sector, reduction of fuel prices and the lessening of certain taxes on a basket of commodities. The relaxed monetary policy stance maintained by the Government throughout the SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 09

85% amounting to Rs. 859 million. competitive. The challenge is to survive Singer (Sri Lanka) PLC’s Subsidiaries in this market, maintaining our brand Singer Finance and Singer Digital name through our superior customer Media (Pvt) Ltd., also showed service and branch network. Our VLJQLʀFDQWLQFUHDVHLQSURʀWV branch network continues to be a major strength. We are spread island- All segments recorded a commendable wide creating over 4,000 direct and performance, especially the consumer indirect employment opportunities. electronics and sewing category followed by the communication and the Singer Lifestyle Exhibition was a digital media segments. Exceptional resounding success which drew the growth was seen in the product lines largest crowd to BMICH. For the 5th of refrigerators (25%), panel TVs consecutive year, our vast product (24%) and sewing machines (15%). range was displayed under one roof. A surge in sales was seen in smart phones (138%), deep freezers (82%), With the aim of strengthening computers (50%), washing machines its corporate leadership, Singer (42%) and air conditioners (33%). (Sri Lanka) PLC acquired controlling year also supported this momentum. stakes of domestic consumer durable Consumer borrowing increased and Despite a 9% depreciation of the manufacturers Regnis (Lanka) PLC spending rose on account of the low Rupee vis-à-vis the US Dollar during and Singer Industries (Ceylon) PLC interest rate regime. All these factors the year, the exceptional overall from the Parent Company-Singer (Sri resulted in a consumption boom which performance was in my opinion due to Lanka) PLC B.V. in year 2016. These impacted the whole economy. Singer (Sri Lanka) PLC’s strong market companies now are Subsidiaries of standing in the country. Singer (Sri Lanka) PLC and promise to showcase stronger results in the Our Performance coming years. Expansion In this milieu, we pursued an and Restructuring aggressive growth strategy, including, Operations establishing of new shops, improving Gaining Recognition and renovating shops, securing new We have been increasing the number brands and the introduction of new of branches over the last year. products. These efforts enabled us Our network was augmented with I am proud of the fact that Singer to record a strong performance in the the addition of six Singer Plus, one (Sri Lanka) PLC won a number of Singer Mega and three SISIL World awards during the year under review, ʀVFDO\HDU showrooms. Since the end of the war, HVSHFLDOO\WKHRYHUDOOʀUVWUXQQHUVXS Group revenue increased by 30% to we have made satisfactory inroads to at the Best Corporate Citizens Award the North and East in terms of opening organised by the Ceylon Chamber of 5VELOOLRQZKLOVW*URXSQHWSURʀW surged to Rs. 1.2 billion recording a branches. Going forward, we will Commerce. This was in recognition of year-on-year increase of 58%. This is continue to keep this momentum of the Corporate Social Responsibility (CSR) activities and sustainability WKHVHFRQGKLJKHVWSURʀWJHQHUDWHGLQ ʀOOLQJWKHJDSLQWKRVHWZRSURYLQFHV the history of the Group. The Group’s practices. Going forward, we will major company Singer (Sri Lanka) PLC We note that the electronic and white relook at some of the CSR areas and goods market is becoming increasingly go into new areas according to the VKRZHGDQLQFUHDVHLQQHWSURʀWE\ 10 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Chairman’s Letter

I am proud of the fact that Singer (Sri Lanka) PLC won a number of awards during the year under review, GURGEKCNN[VJGQXGTCNNſTUVTWPPGTUWRCV the Best Corporate Citizens Award organised by the Ceylon Chamber of Commerce.

requirements of the society. A Look Ahead expanding middle class segment Ranked among the best employers DQGWKHH[SDQVLRQRIHOHFWULʀFDWLRQ in the country, we continuously strive in the country, enabling more than to create a great work ambience for Due to the consumption boom that 95% of Sri Lankans to gain access our employees, creating positive prevailed in 2015, Sri Lanka is now to electricity. This in turn, means that engagement through a range facing a tight economic situation, as people can use the Singer range of activities involving team work UHʁHFWHGE\WKHGHSOHWLRQRIIRUHLJQ of products. and building camaraderie among reserves and emerging balance of departments. These and our many payments problem. Therefore, the In addition, we will have better control other human resources related Government has approached the of our supply systems and do the endeavours were recognised, by IMF and with this, tighter economic needed adjustments to face the the Great Place to Work Institute by conditions and austerity measures challenges ahead. Singer is used to being included as one of Sri Lanka’s are going to come into effect in 2016. going through turbulent periods and Top 20 Workplaces for the second This means that Sri Lanka will not emerging successfully in the past. consecutive year. I am indeed happy experience a consumption boom in that we received above average 2016 similar to the previous year. Emphasising FDI and export led industry ratings in credibility, respect, industrialisation, the Government is fairness, pride and camaraderie when However, given Singer’s brand embarking on a number of Free Trade compared to 2014 results. name and market standing, we are Agreements (FTA) with the growing very optimistic about maintaining a economies of Asia. In particular, it Our brand continued to gather growth momentum which however, has been announced that Sri Lanka momentum during the year. Clinching would be lower than 2015. This is stepping into the next stage of a the coveted SLIM-Nielsen People’s optimism is triggered by a number Economic and Technical Co-operation %UDQGRIWKH

Chairman’s Letter

ʀQDOLVHWKH)7$ZLWK&KLQDLQDGGLWLRQ The Company has a strong Board to contemplating FTAs with Singapore which is committed to the highest and Japan. levels of governance, ensuring that we balance and protect the long-term This is welcome because some of our interests of our many stakeholders. major export markets, especially the In addition, they keep close track European Union and the USA are in of the changing responsibilities, recession. Therefore, catering to the Code of Ethics and new governance growing region in the world, especially requirements and effect the necessary targeting our exports is welcome. adjustments. However, an FTA does not give market access to us only; it is market access to our partner as well. In this context, Thank you it is imperative to safeguard domestic industries, especially those that have On behalf of the Board and myself, been doing well and catering to the I especially wish to thank Mr. Hemaka domestic market. Therefore, the FTAs Amarasuriya who retired after should be prepared in a way it doesn’t serving the Group for 42 years, of adversely affect the well-functioning which 30 years as the Chairman domestic import substitution industries and Managing Director. We deeply especially items that have been making value his exemplary leadership and a name in this country. exceptional service which made a lasting contribution to the strength of the Company. We wish him the Directors very best.

We were saddened by the death I thank our Group CEO, Mr. Asoka of our Board member, Dr. Uditha Pieris, senior management and all Liyanage in mid-2015. We valued staff members for their excellent deeply the contribution he made to performance during the year and the the Board as a marketing expert. The co-operation they have extended to YRLGFUHDWHGE\KLPZDVʀOOHGE\ the Board. I also thank the colleagues Mr. Deepal Sooriyaarachchi another on the Board including the external expert in marketing. He joined the Directors of Singer Asia for their Board in October 2015. Deshabandu continued support. Ajit Jayaratne who served the Board for nearly 9 years retired on 31 March A special thank you is extended to DQGKLVSODFHZDVʀOOHGE\ our customers island-wide for their Mr. Ranil De Silva, a well reputed business and trust. We are grateful to Chartered Accountant. I welcome both our shareholders for their support and these new members to our Board. WKHFRQʀGHQFHLQWKH&RPSDQ\

Dr. Saman Kelegama Chairman

25th February 2016 12 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

12 Annual Report 2014 SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 13

Dear Shareholders, If not for the change of Government in distributorships and securing long-term 2015, and positive actions on foreign leases on lower rents. relations and reconciliation, the country The Environment and may have had to face adverse actions In 2015, we initiated actions, by western Governments. In such event, to capitalise on the favourable Business Conditions the economy and business conditions HQYLURQPHQWDQGSURʀWVDQGUHDS would have been severely affected. the returns on our investments and initiatives. These are elaborated below During the year 2015, we witnessed At the same time, several on-going DQGDUHUHʁHFWHGLQWKHʀQDQFLDOUHVXOWV an increase in consumer spending infra structure projects slowed down. in most sectors of the economy. The 7KH*RYHUQPHQWVHQWFRQʁLFWLQJ As in past years we continued to increase in consumer spending was signals creating confusion in the improve our products, brands, due to several factors – continuous business sector and the public about channels and infrastructure. low interest regime; electricity tariff Government action and policy and reduction and gas price reduction in there was a slowdown in the decision- September of 2014; lower fuel prices making and implementation by the Key Strategic from January 2015; public sector salary Government. increases and a good harvest both in Initiatives March and September. On the technological front, technology continued to have rapid changes, Our Key Strategic Initiatives were as There was a gradual devaluation especially in the electronics and follows: of exchange rates during the year digital media sectors. The and a sharp devaluation of around 1. Growth in Sri Lankan consumer kept pace with 5% in September, resulting in a total Mobile Phone Business these changes. During the year, 32" devaluation of over 9% during the year. television replaced the 24" television Interest rates were steady for most of We re-entered the mobile phone as the product most demanded in the the year, but increased marginally in business in 2010 for the following mass market. We also saw a very rapid the 4th quarter. reasons: movement where feature phones were D 7KHPRELOHSKRQHLVWKHʀUVW replaced by smart phones. The current year was an important purchase by a youth and it was year for Sri Lanka politics, where at important for Singer to cater to the elections, the President who was Strategic Direction mobile phones in order to tie in the in power since 2005 was changed. young consumers. This was followed by a parliamentary of the Business b) The mobile phone market is one HOHFWLRQFRQʀUPLQJWKHFKDQJHRI of the largest segments in the power and the formation of a coalition Our thrust of the business during the consumer durable industry. Government. year was different from that of the two Since our re-entry, we had success As a result of these political prior years. In the two prior years of with mobile phones as shown in the developments there was greater 2013 and 2014, we took defensive growth of unit sales below: freedom for the citizens, better measures to counter the adverse business environment, such as strict relationships with most foreign 2011 3,000 Governments, better relationships control of inventory, emphasis on 2012 16,000 between communities and the passing collections, control of arrears, etc. At same time, we also took advantage RQPDQ\EHQHʀWVWRWKHSXEOLFDV 2013 79,000 of the opportunities brought up mentioned above. 2014 226,000 by the challenging environment, such as getting new brands and 2015 437,000

Annual Report 2014 13 14 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

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Singer, continued to look at tying up Under the Singer Business School, 7KHVHJPHQWļ2WKHUȺLQFUHDVHGE\ with new brands and distributorships Singer plans to set up Computer and at same time rationalise by giving Schools concurrently with Fashion The Singer Lifestyle Exhibition, which up certain distributorships and brands. Academies. showcased the vast array of our products and brands to the public, Singer also carries out hundreds of In 2014 and 2015, Singer was made was held once again at the BMICH in training programmes for their staff distributor for the brands of DELL, Colombo. We also conducted a lower and with the Singer Business School 621<6+$53DQG0,768%,6+,,Q scale exhibition in Matara in the month intends to extend this training to 2015, the revenue from these brands of April, under the Sisil brand. outside customers. were Rs. 3.6 billion compared to By using our strength and breath in revenue of Rs. 0.8 billion in 2014. This Over the medium term, Singer will sourcing of products, Singer continued is an increase of 450%. also look at other options and will to supply high quality products at appropriately move into other areas In 2015, the revenue of the HUAWEI reasonable prices. We continued to within the education sector. brand with which we tied up in 2012 bring the latest models and latest increased by 167% over the prior year. technology within each product line. Products, Brands 4. Introduction of Credit Card by Singer Finance and Sourcing Channels and Distribution During the year the Company’s We continued to position ourselves to Subsidiary, Singer Finance (Lanka) be the preferred consumer durable Singer continued to strengthen its PLC introduced a Singer branded retailer/wholesaler to meet the requirements of the customers. Distribution channels. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 15

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The Digital Media channel which was Singer Facebook Page counting over great emphasis on the motivation, introduced a few years ago continued 250,000 fans. engagement, training and development to grow with a 115% growth in 2015. of Human Resources. Details of these It is now one of our major channels. The new loyalty programme linked are given in the sustainability report. The channel works through distributors to our ERP system increased its and reaches over 1,800 small outlets membership to 540,000. Loyalty The Company continued to have very selling mobile phones, accessories programme customers were offered good industrial relations. The Company and connections. special terms at our outlets and continued its engagement activities and DOVRRIIHUHGEHQHʀWVIURPRWKHU events for employees as well as their The Central Air Condition channel organisations. Loyalty programme families and increased the development continued to win new contracts. Singer customers were able to purchase items and training for its staff as well as for is now recognised as a strong player in by redeeming their loyalty points. our partners and their staff. this sector. Singer continued to be placed among Singer Plus channel opened 6 new Financial Services the Top 20 Great Places to Work in outlets including Satellite showrooms Sri Lanka and also won the highest and upgraded 6 Satellite showrooms and Consumer Credit award for the Large Enterprises to Singer Plus showrooms. Sisil World category. channel opened 3 new showrooms Under Financial Services, customers and Mega channel opened 1 new can enjoy the following services at all showroom. Singer shops: After Sales Service

The Company also commenced y Pay utility bills, credit card bills and Singer continued to have the best opening ‘Mini Shops’ in rural towns insurance premiums, After Sales Offering to the consumers operated under a branch. Some of y Obtain mobile phone reloads, in Sri Lanka. A new Regional Service these were seasonal, while others y Collect funds remitted through Centre was added in Aluthgama. continued throughout the year. Western Union and During the year we took steps to further The Company renovated 24 existing y Upload funds and withdraw funds improve our service by improving shops. With the upgrades, new shops using mobile cash. collection time and to give timely and renovations a total of 41 new feedback to customers on repairs shops were provided with a complete During the year, the Company using SMS and Call Centre. uplift to reach the high merchandising expanded its services to include standards practiced by the Company. M Cash of Mobitel and accept credit In addition, we had a facelift for 120 card settlements of Singer Finance. Manufacturing locations where the facades were Financial Services volumes increased changed to modern signage, lighting The manufacturing division of the by 5%, while the number of and pictures. Company Consists of Agro and transactions declined marginally. It is Furniture factories. The value of The Wholesale Network too continued noteworthy that an average of 210,000 production increased by 23% over the to strengthen with the addition of transactions took place in our shops prior year. new dealers. each month and we collected/paid out 5VELOOLRQRQʀQDQFLDOVHUYLFHV The production of domestic pumps The furniture section of the wholesale had a marginal decline from the huge channel expanded further and added The Company continued to offer a increase last year. Furniture production new exclusive furniture dealers. The wide range of easy-payment plans increased by 31%. furniture wholesale channel grew by through its own, through Singer 240% over the prior year off a Finance, through other banks and The factory introduced 12 new models small base. ʀQDQFHFRPSDQLHVDQGWKURXJKFUHGLW for furniture and three new models debit cards. for water pumps and continued to The Company continued to expand its upgrade the machinery including a B2B operations especially in computers, The Company had several promotions CNC Turret Lathe Machine and Edge to increase the consumer credit furniture and air conditioners. 3URʀOH6DQGHU given by the Company and the number The Company’s E-commerce business of accounts increased by 8% during also grew sharply on a small base. the year. Information and Improvements were made to our website to have a hot deals section, accept cash Communication on delivery and to have the website in Human Resources Technology Sinhala and Tamil. We also partnered with leading E-commerce sites offering Human Resources is the biggest asset We continue to make enhancements to our products on these sites. of the Company, since all other assets the on-line real-time ERP system. are managed and operated by this Singer continued to increase its resource. Therefore, Singer places Key enhancements done futher presence in social media with the enabled mobile interphase with the 16 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

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ERP system. In 2016, this would Sustainability and Acquisition of lead to automating some functions GRQHRXWVLGHRIVKRSVLQWKHʀHOG,Q Corporate Social Associate Companies addition, the mobile phone repairs are Responsibility now tracked using a Mobile Phone App In January and February 2016, Singer at the distributor level. (Sri Lanka) PLC acquired majority Singer believes that it is our duty to stakes in its Associate Companies, The Company continued to send out safeguard the environment and to carry Singer Industries (Ceylon) PLC and reminders to customers via SMS on out Social Responsibility Projects. Regnis (Lanka) PLC from its common their instalments due for payment. This The work done on these areas is Parent, Singer (Sri Lanka) B.V. making state-of-the-art technology used by us very extensive and are described these companies subsidiaries of Singer is not even used by many banks and in pages 62 to 113. We encourage (Sri Lanka) PLC. ʀQDQFLDOLQVWLWXWLRQV,QWKHFXUUHQW\HDU as many employees as possible, to we commenced using SMS to notify participate in CSR activities. It was a conclusion of a long process most customers on completed repairs. commenced mid-year of 2015 and Singer is very proud to have won the included an independent valuation of The Company also continued to Runner-up award for Best Corporate these companies and the approval send marketing and promotional Citizen. The Company has been in the from various regulating institutions. news to our customer data base. top ten Best Corporate Citizens in the Outside of telecommunication country for many years. In addition, Singer Industries (Ceylon) PLC was companies, Singer probably has the 6LQJHUZRQWKHļ6HFWRU:LQQHUȷ acquired for Rs. 664.1 million. There largest communication by SMS to its Other’ award. is a gain on bargain purchase of customers. Rs. 162.2 million. While earnings of Singer Industries (Ceylon) PLC The Call Centre had close to 446,000 The Financial have been low for many years, the inbound/outbound calls compared to Results for the Year consideration is on the value of the 344,000 in prior year. These related assets of the Company, especially to after sales service, marketing and the land which we intend to put to promotions and follow-up on hire Since the details, are given in the better use. purchase credit. Financial Review, we will highlight only WKHVLJQLʀFDQWDUHDVLQWKLVVHFWLRQ Regnis (Lanka) PLC was acquired for Singer Finance The Singer Group revenue reached Rs. 722.5 million and at a goodwill of Rs. Rs. 38.7 billion in 2015 - a growth of 73.8 million. Regnis has continued to (Lanka) PLC Rs. 9 billion over the prior year and in KDYHKLJKSURʀWVIRUODVWIHZ\HDUVDQG percentage terms a growth 30%. has good prospects to continue this.

The Company’s public listed Subsidiary We expect that with the addition 7KH*URXSQHWSURʀWIRUWKH\HDUZDV Singer Finance (Lanka) PLC also of these two companies, Singer Rs. 1,236 million, which is an increase recorded a strong performance. Its (Sri Lanka) PLC Group would show of 58% when compared with prior year. UHYHQXHLQFUHDVHGDQG1HW3URʀW even stronger results in 2016 and ,QFDVHRIWKH&RPSDQ\QHWSURʀWIRU increased 24%, for the year. Despite thereafter. the good volume growth of business, the year was Rs. 859 million, which is the low revenue growth is due to the an increase of 85%. reduction in lending rates. However, The Group total comprehensive income Medium-Term correspondingly the lower borrowing for the year was Rs. 1,206 million, Prospects for rates and better credit performance, which is a 35% growth when compared lead to growth in Net Income. with prior year. In case of the Company, the Industry One of its key achievements was the total comprehensive income is and Company launch of the credit card as mentioned Rs. 830 million, which is a 44% growth. under key initiatives. The Company The comprehensive income growth is The medium-term prospects for the also commenced factoring business lower as prior year had a revaluation industry are excellent due to the including invoice discounting in 2015. of property, plant & equipment and following: no revaluation was done in current Singer Finance (Lanka) PLC opened year. The revaluation is done once in Firstly, as the per capita income of the two new branches in Negombo and two years. country grows, the consumer durable Kaduwela. industry is likely to grow at a higher The earnings per share increased to rate than many other sectors of The Company continued to do hire Rs. 9.21 from Rs. 5.70 in prior year. the market. purchase lending operations at the 6LQJHU0HJDRXWOHWVʀQDQFHYHU\ 7KHJURZWKLQUHYHQXHDQGSURʀWVFDQ Secondly, the Government has plans large consumer durable group sales be attributed to an improvement in the to make Sri Lanka a Retail Hub, so DQGʀQDQFHWZRZKHHOWUDFWRUVVROG overall business environment as well as that consumers from our neighbouring by Singer, thus capitalising on the due to initiatives taken by the Group, countries will come to Sri Lanka strengths of the Parent Company. which are mentioned in the preceding WRVKRSIRUļ6PDOO+DQG&DUULHGȺ sections of this review. consumer durable items such as SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 17

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mobile phones, laptops, small TV’s, Deshabandu Ajit Jayaratne who joined I thank Mr. Premalal De Silva and Mr. small appliances, etc. the Board of Singer (Sri Lanka) PLC Chitral Perera, for the excellent work in June 2006, did not seek re-election done by them for many years to the 7KLUGO\HOHFWULʀFDWLRQRIKRXVHKROGV at the Annual General Meeting. Late Singer Group. now is over 95% and is growing. Professor Uditha Liyanage, who joined Consumers, who did not have the the Board of Directors in May 2014, Mr. Chandana Samarasinghe opportunity of using a refrigerator resigned with effect from July 2015. succeeded as Director – Operations or a television as they did not have I wish to record my appreciation of with effect from 1st July 2015. He electricity now have an opportunity of Deshabandu Ajit Jayaratne and of Late joined the Company in August 1992. using these items. Professor Uditha Liyanage for their Mr. Neminda Karunaratne succeeded valuable advice and guidance during Fourthly, the current low penetration as Director – Human Resources with their term as Independent Directors of of consumer durables at homes would effect from 1st January 2016. He joined the Board. mean there is room for consumers to the company in September 1991. purchase these items. For example the Mr. Ranil De Silva joined the Board of I wish Mr. Chandana Samarsinghe and current refrigerator penetration is 55%, Directors as an Independent Director Mr. Neminda Karunaratne continued washers 20%, computers 26% and air on 1st April 2015. He is the Managing success with the Singer Group in the conditioners 5%. Director of Serendib Hotels PLC and coming years. carries a wide experience locally and Fifthly, in the consumer durable overseas. industry, especially in electronics and IT/Mobile Phone sector, there is rapid Mr. Deepal Sooriyaarachchi joined the Conclusion development by way of improved Board of Directors as an Independent features and lower costs resulting Director on 1st October 2015. He I wish to place on record my in new models and new technology counts over 30 years of experience in appreciation of all our staff for their introduced each year. This encourages Marketing and General Management. contribution and commitment in consumers to replace items faster. achieving these outstanding results. I wish to welcome both Mr. Ranil De There was exceptional contribution Singer, as the leading consumer Silva and Mr. Deepal Sooriyaarachchi across all ranks and all divisions and durable retailer would be at the and wish them all the best. departments in the Group. forefront to cater to the growing market. The Board of Directors recommended I also thank the Chairman, Dr. Saman to the shareholders, the appointment Kelegama and former Chairman, Changes in the Board of Mr. Stephen Goodman to the Board. Mr. Hemaka Amarasuriya and the and the Management Mr. Stephen Goodman is the Chairman Chairman of Singer Asia, Mr. Stephen of Retail Holdings N.V., which is the *RRGPDQDQG&KLHI([HFXWLYH2IʀFHU ultimate Parent Company of Singer of Singer Asia, Mr. Gavin Walker for During the year, Mr. Hemaka (Sri Lanka) PLC and was a member of their continued guidance, support and Amarasuriya, retired as Chairman of the Board of Directors of Singer encouragement. Singer (Sri Lanka) PLC after a very (Sri Lanka) PLC in the past. distinguished career spanning 42 years. I also thank the Board of Directors Mr. Hemaka Amarasuriya amongst other Subject to shareholders approval, I of the Company and the Board of achievements, expanded the product wish to welcome Mr. Stephen Goodman Directors of Singer Asia for their portfolio of Singer, made it a multi- back on the Board and to wish him all valuable support and guidance. branded and multi-channel retailer and the best. set up the manufacturing complexes I also thank all our Shareholders for In the management, Mr. Premalal De both at Singer (Sri Lanka) PLC and their continued trust in the Board of Silva, Director – Operations, retired on Associate Companies during his tenure Directors and the Management of 30th June 2015. Mr. De Silva retired RIRIʀFH6LQJHU)LQDQFH /DQND 3/& the Company. after 35 years of distinguished service also commenced operations during this having joined the Company in May Sincerely, period. I thank Mr. Hemaka Amarasuriya 1980 as a Trainee Executive. During his for his immense and valuable tenure he was responsible for setting contribution to the Singer Group. up many sales channels of Dr. Saman Kelegama succeeded the Company. Mr. Hemaka Amarasuriya as Chairman. Mr. Chitral Perera, Director – Human Dr. Saman Kelegama was associated Resources retired on 31st December with the Singer Group since June 2015. Having joined Singer in 2006 and was the Chairman of Singer November 1997, he took over as Finance (Lanka) PLC. I welcome Asoka Pieris Director – Human Resources in Dr. Saman Kelegama and wish him &KLHI([HFXWLYH2IʀFHU January 2001. He has headed the the very best as Chairman of Human Resource Management function Singer Group. 25th February 2016 in a very successful manner during his WHQXUHRIRIʀFH 18 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Strategists behind

our 01

Dr. Saman Kelegama success CHAIRMAN Joined the Board of Singer (Sri Lanka) PLC as Director on 1st June 2006. - BOARD OF DIRECTORS Chairman of Singer Finance (Lanka) PLC., and Until 31st March 2015 was a Director of Regnis (Lanka) PLC. Was appointed the Chairman of Singer (Sri Lanka) on 01st April 2015 and became Chairman of Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC and other Subsidiaries of Singer (Sri Lanka) PLC.

An Independent Director of S C Securities, the Postgraduate Institute of Management (PIM) and the Gamini Corea Foundation.

Executive Director, Institute of Policy Studies of Sri Lanka, Fellow, National Academy of Sciences in Sri Lanka, former President and Honourary Fellow of the Sri Lanka Economic Association and author of several publications on the economy of Sri Lanka and South Asia.

D.Phil (Economics), Oxford University, UK. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 19

Board of Directors

Ranil De Silva DIRECTOR

Joined the Board of Singer (Sri Lanka) PLC on 1st April 2015.

Director of Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Dolphin Hotels PLC, Hotel Sigiriya PLC and Managing Director of Serendib Hotels PLC. He has wide experience locally in diverse industries, having previously held the position of Group CEO of the DCSL Group.

He is a Fellow Member of the Chartered Institute of Management Accountants UK, Associate member of the Institute of Chartered Accountants of Sri Lanka and a Member of the Chartered Institute of Marketing UK.

02 03

Deepal Sooriyaarachchi DIRECTOR Joined the Board of Singer (Sri Lanka) PLC on 1st October 2015. Deepal Sooriyaarachchi is a Chartered Marketer, a Fellow of the Chartered Institute of Marketing UK and holds a MBA from the University of Sri Jayawardenepura.

Mr. Sooriyaarachchi, counts over thirty \HDUVRIH[SHULHQFHLQWKHʀHOGVRI sales, advertising, marketing, human Peter O’Donnell resource development and strategy. He DIRECTOR is a renowned Management Consultant Joined the Board of Singer (Sri Lanka) Speaker Trainer and an Author. Before PLC on 1st October 2003. embarking on full-time consultancy work, he was the Managing Director of Managing Director of UCL Asia Ltd., AVIVANDB Insurance PLC (now known as (Hong Kong), Director Singer Asia Ltd., AIA Insurance). He had received extensive and Sewko Holdings Ltd. management training and exposure here and overseas including the National Mr. O’Donnell is an alumnus of University of Singapore, Asian Institute both Harvard College and Harvard of Management and Stanford Business Business School. School USA.

Mr. Sooriyaarachchi serves as a Non-executive Independent Director of; AIA Insurance Lanka PLC, Sampath Bank PLC, Pan Asian Power PLC, and Hemas Manufacturing (Pvt) Ltd. He is a consulting partner of RBL USA.

He is a Past President of the Sri Lanka Institute of Marketing and a past Commissioner of Sri Lanka Inventors Commission. He had served on a number of national bodies such as the National 04 Administrative Reforms Commission, The Presidential Task Force for English, The Councils of Moratuwa and Kelaniya Universities. He had also served UNDP in Nepal. 20 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Board of Directors

Gavin J. Walker DIRECTOR Joined the Board of Singer (Sri Lanka) PLC, as Director on 1st November 2005.

Mr. Walker is the President and Chief ([HFXWLYH2IʀFHURI6LQJHU$VLD/WGDQG was appointed to this position in August 2005. Prior to joining the Company, 0U:DONHUKHOGRIʀFHVDV0DQDJLQJ 'LUHFWRUDQG&KLHI([HFXWLYH2IʀFHURI public quoted and private companies in the United Kingdom and South Africa. Mr. Walker, served as Chief Executive 2IʀFHURIDPXOWLEUDQGUHWDLOHURIHOHFWULFDO appliances and furniture with operations in 16 African countries and Australia (including SINGER® brand electrical appliances under license). Mr. Walker serves on the Board of a number of Singer Asia Subsidiaries.

John Hyun DIRECTOR

Joined the Board of Singer (Sri Lanka) PLC on 10th June 2011.

John Hyun is the Managing Director of 07 UCL Asia, one of Hong Kong’s larger direct investment groups in terms of liquid capital. Asoka Pieris DIRECTOR/GROUP CHIEF EXECUTIVE 0U+\XQEHJDQKLVFDUHHULQʀQDQFH more than 20 years ago, as part of OFFICER Bankers Trust’s Asia Private Equity Joined the Board of Singer (Sri Lanka) Investment team based in Hong Kong, PLC, on 1st August 2004. Appointed before relocating to Seoul to help as Managing Director and Group Chief establish its Mergers, Acquisitions & ([HFXWLYH2IʀFHURI6LQJHU*URXSRI Advisory Group with BT Wolfensohn. Companies on 1st July 2010. He returned to Hong Kong in 1999 Director of Singer Industries (Ceylon) with Investor Asia, the Asian operations PLC., Regnis (Lanka) PLC, Reality of Investor AB, the Swedish industrial (Lanka) Ltd., Regnis Appliances (Pvt) holding group. Mr. Hyun joined UCL Ltd., Singer Digital Media (Pvt) Ltd., in 2003. Singer Business School (Pvt) Ltd., and Mr. Hyun serves on the Board of Sewko Director of Equity Investments Lanka Ltd. Holdings Ltd., Singer Finance (Lanka) Vice-President of Singer Asia Ltd. and PLC, Whittington Group Pte Ltd., and Retail Holdings N.V. VHYHUDOQRQSURʀWRUJDQLVDWLRQVDFWLYHLQ Prior to the present appointment, Asia. He is an alumnus of the University Mr. Asoka Pieris was Chief Financial of Chicago. 2IʀFHURI6LQJHU$VLD/WGDQG&RQWUROOHU of Retail Holdings N.V. in Associate Member of The Institute of Chartered Accountants of Sri Lanka, Fellow Member 06 of the Chartered Institute of Management $FFRXQWDQWV8.DQGDFHUWLʀHG*OREDO Management Accountant. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 21

Board of Directors

Mahesh Wijewardene ALTERNATE DIRECTOR Joined the Board of Singer (Sri Lanka) PLC on 1st June 2006.

Director of Singer Digital Media (Pvt) Ltd. and Singer Business School (Pvt) Ltd.

Director Marketing and Commercial of Singer (Sri Lanka) PLC and Member of the Singer Asia Sourcing Committee.

Serves in the Board of CSR Lanka (Guarantee) Ltd.

Past Chairman of the Ceylon Chamber of Commerce-Import Section and Sri Lanka-China Business Council.

Holds a Masters in Business Administration from the University of Southern Queensland, Diploma in General Management.

08 10

Lalith Yatiwella ALTERNATE DIRECTOR Joined the Board of Singer (Sri Lanka) PLC on August 8, 2014.

Finance Director of Singer (Sri Lanka) PLC. Director of Singer Digital Media (Pvt) Ltd., Singer Business School (Pvt) Ltd. Alternate Director of Singer Finance (Lanka) PLC.

Kumar Samarasinghe ALTERNATE DIRECTOR Joined the Board of Singer (Sri Lanka) PLC on 14th February 2011.

Director of Sales and Sewing Marketing of Singer (Sri Lanka) PLC.

Holds a Diploma in Business Administration and Diploma in Marketing and MBA from University of London. 22 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Board of Directors

Ajith P. Paranavaitane PLC as Deputy Director IT. in 2000. He ALTERNATE DIRECTOR was subsequently promoted to Director IT Joined the Board of Singer (Sri Lanka) in 2005. PLC on 13th November 2014. He graduated from the University of Director – Information & Technology Colombo of Sri Lanka in 1982 with a of Singer (Sri Lanka) PLC and Bachelor of Science and from the National Vice-President Information Service Institute of Business Management of Singer Asia Ltd. Sri Lanka in 1984 with a Diploma in Computer Systems Design. He also has Mr. Paranavitane has worked in the IT a post-graduate Diploma in Business and Industry for over 30 years, starting as Financial Administration from Institute of a software engineer in 1983. He joined Chartered Accountant of Sri Lanka Singer (Sri Lanka) PLC in 1987 and was in association with University of responsible for setting up the IT Division Wageningen, Holland in 1997 and from inception. is a Chartered IT Professional and Fellow of the British Computer Society, Mr. Paranavitane also spent a year in United Kingdom. the United States working as a senior consultant for a software and engineering ʀUPEHIRUHUHWXUQLQJWR6LQJHU 6UL/DQND

A.C.M. Irzan SECRETARY TO THE BOARD (SINCE 15TH MAY 2008) Alternate Director, Singer Industries (Ceylon) PLC and Head of Treasury - Singer (Sri Lanka) PLC.

Company Secretary of Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC which are public quoted companies and Regnis Appliances (Pvt) Ltd.

A Fellow of the Chartered Institute of Management Accountants, UK, Associate of Chartered Institute of Marketing, UK and holds an MBA in Marketing from the University of Colombo, Sri Lanka.

122 SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 23 Leaders behind our success

- MANAGEMENT TEAM

R.S. Wijeweera S. Ramanathan CHIEF EXECUTIVE OFFICER/DIRECTOR – DIRECTOR – LOGISTICS SINGER FINANCE (LANKA) PLC

J. Mendis H.A.P.S. Perera CREDIT DIRECTOR FACTORY DIRECTOR – PILIYANDALA FACTORY

C.A. Samarasinghe N.B. Karunaratne &+4'%61412'4#6+105 DIRECTOR – HUMAN RESOURCES 24 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Management Team

L.A.D.K. Perera A.P. Manoratne DEPUTY DIRECTOR – INFORMATION DEPUTY DIRECTOR – SERVICE & LOGISTICS TECHNOLOGY

R.C. De La Motte D.B. Wijesundera BUSINESS DEVELOPMENT MANAGER – MARKETING MANAGER – WHOLESALE CHANNEL WHITE GOODS

G.A.K. Weerasuriya A.U. Karunaratne SENIOR MANAGER – INVENTORY SENIOR MANAGER – MERCHANDISE & PROMOTIONS

T.G.S. Perera B.T.L. Mendis SENIOR MANAGER – RECOVERIES HEAD OF PROCUREMENT SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 25

Management Team

I.A.S. Kolambage C.L.T.P. Rupasinghe COMMERCIAL MANAGER – PILIYANDALA HEAD OF FINANCIAL SERVICES FACTORY

M.M.C. Priyanjith R.S. Singhabahu HEAD OF RISK MANAGEMENT BUSINESS DEVELOPMENT MANAGER – INSTITUTIONAL SALES

M. Mahesharatnam T.M.V. Tennekoon BUSINESS DEVELOPMENT MANAGER – MARKETING MANAGER – SISIL CHANNEL ELECTRONICS & DIGITAL MEDIA

O.D. Amarathunga W.L.I.A. Gunathilake SENIOR MANAGER – SERVICE BUSINESS DEVELOPMENT MANAGER – SINGER MEGA & SINGER HOMES 26 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Management Team

K.R.L. Perera A.R.N.P.K. Wijesundera GROUP ADMINISTRATION MANAGER SALES MANAGER – AGRO & TRANSPORTATION

H.S. Perera T.S. Martyn SENIOR MANAGER – BUDGET & PLANNING SENIOR MANAGER – APPAREL SOLUTIONS

K.D.J.M. Perera N.L.D.W. Amarathunga BUSINESS DEVELOPMENT OPERATIONS MANAGER – FURNITURE – MANAGER – DIGITAL MEDIA PILIYANDALA FACTORY

A.A. Sathyamoorthy J.P. Jayatilaka SENIOR MANAGER – SENIOR MANAGER – DIRECT MARKETING TRADE CREDIT SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 27

Management Team

T.L. Seneviratne D.D.W. Dassanayake SENIOR MANAGER – SENIOR MANAGER – CREDIT INFORMATION TECHNOLOGY

K.P. Peramunugamage L.R.P. Perera SENIOR MANAGER – BUSINESS DEVELOPMENT MANAGER – RETAIL HUMAN RESOURCES DEVELOPMENT CHANNEL

N.I. Kuruppuarchchi S. Serasinghe SENIOR MANAGER – LEGAL SENIOR MANAGER – DISTRIBUTION

N.B. Ranasinghe L.D.P.T.K. Liyanage SENIOR MANAGER – REVENUE & MARGIN FINANCE MANAGER 28 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

2004 2010

EstablishedEstablished SingerSinger SingerSinger FinanceFinancece (Lanka) FinanceFinance (Lanka)(Lan(Lankak ) PLC PLCPPLLCLC listedlisted viavia Rs.400mnRss.400mn IPO.IPO.

200303 20012001

SingerSinger CorporationCorporation formed FirstFirst SingerSinger HomesHomes store SSingeringer Asia ttoo hold openedoopenedened inin SriSri Lanka.LaL nka. intereststtiSiLk in Sri Lanka

1815 1877 18741874

Isaac Merrit Singer incorporatedd Singer commenced IncorporatedIncorporated asas a Limited I. M. Singer & Company (Singer)r)) operations in Sri Lanka Liabilityy CompanyCompaany and commenced production of introducing sewing sewing machines in the United States. machines. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 29

Conducted a group restructuring and purchasing of Regnis (Lanka) PLC and Singerg Industries (Ceylon) PLC

2016

Singer Finance (Lanka) PPLCLC 2015 launched credit cards.ds. 400

20112011 2014

SingerSinger enteredentered largelarge SinSingerger opeopenednned scalesscaleale smartsmart phonephhono e its 400th00th00th retailt il stostore.t ree. businessbuusiness inin SriSri Lanka.LLanka.

20002000 1998

First Singer Mega Acquired the locallocal store opened in brandbrand,, Sisil. Singernger commcommencedeennced Sri Lanka manufacturing of furniture and 1992 agricultural products at the Piliyandala factory

1981 19881988

Listed in the Colombo Co Stock SingerSinger commecommencednced manufacturinmanufacturingg Exchange refrigerators in Sri Lanka through Regnis (Lanka) PLC 30 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

It’s A Strategic Journey

A Proud Heritage Regnis (Lanka) PLC and Singer The Singer brand has been in Industries (Ceylon) PLC engaged in Sri Lanka since 1877 with the manufacturing washing machines, introduction of sewing machines to refrigerators and sewing machines. the domestic market by the Singer In 2015, Singer (Sri Lanka) PLC Corporation. In 1957, the Singer along with Singer Asia commenced a Corporation commenced the sale of restructuring process to amalgamate home appliances to the Sri Lankan all the local operations under Singer market. Thereafter, it evolved to (Sri Lanka) PLC. This is to enable Unique Business Model become a familiar name in the local Singer Asia to operate through one consumer durables space. holding company in each country it has Singer has successfully developed interests in. It currently holds multiple an unique business model which has Singer (Sri Lanka) PLC was interests in Sri Lanka. Consequently, stood the Company in good stead for incorporated by the Singer Corporation Singer (Sri Lanka) PLC acquired 84% time immemorial, although, competition in 1974 and was listed in the Colombo and 58% stakes in Singer Industries tried to replicate our business model Stock Exchange in January 1981. (Ceylon) PLC and Regnis (Lanka) PLC they could not achieve any progress, respectively in the months of January thus proving that, business culture Singer (Sri Lanka) PLC incorporated and February of 2016. Approximately, and processes are unique and hard DʀQDQFHVXEVLGLDU\6LQJHU)LQDQFH 31% of products sold by Singer (Sri to be emulated, more so, the Singer LQ7KHDIʀOLDWH&RPSDQ\RI Lanka) PLC are manufactured locally. Business Model. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 31

From the little Acorns, grow mighty Oaks of Singer (Sri Lanka) PLC matched the products have achieved success, thanks - Singer turned its hand from a single great Oaks of our parent. From 1963 to to the unique business model that the product to a host of items, carefully 1995, we established Singer Industries Company possess. chosen to satisfy modern day consumer (Ceylon) PLC., Regnis Lanka PLC and needs in the area of the home. Singer Singer (Sri Lanka) Piliyandala factory Astute Strategy and (Sri Lanka) PLC had its origins in 1877 IURPZKHQFHʁRZHGDQLPSUHVVLYHOLQH in a store in Pettah. Like our parent of locally manufactured items - Sewing Meticulous Execution company that Pettah store was our little Machines, Televisions, Refrigerator, For an organisation to succeed, it Acorn. The growth over the years Washing Machines, solid and layered requires all cogs in its wheel to move furniture and domestic/agro Water in harmony, having an unique business Pumps. Singer also ventured into a model alone does not spell success UDQJHRIʀQDQFLDOVHUYLFHVLQFOXGLQJ as strategy has to be transformed setting up of a Finance Company and operationally and executed into action. offering customers the convenience of The Company possesses a large settling utility bills from any Singer store workforce containing vast knowledge, island wide. The latest addition to the most of the Singer family have been in vast portfolio of channels, products and the organisation since joining as school brands is the digital media channel which ensures that the modern OHDYHUVRUʀUVWWLPHMREVHHNHUVDIWHU graduation and are equipped with a customer expectations are met. high level of skill and are experts in This vast offering of brands and WKHʀHOGVRIUHWDLOPDQXIDFWXULQJDQG ʀQDQFH7KLVHQRUPRXVWDOHQWEDVH LVDGHSWDWHVFDODWLQJLGHDVDQGʀUVW hand operational information to the top management to formulate strategic ideas and take decisions based on the needs of the customer. The business model is VXFKWKDWLQIRUPDWLRQʁRZVWKURXJKWRWKH organisation’s decision makers in a timely basis so that the information could be analysed and utilised in time, to achieve success.

Our Leadership Position

%HLQWKHʀHOGRIVSRUWVSROLWLFVTXDOLW\ maintenance or trust, to achieve a leadership position and to sustain it over a long period of time is not an easy task, you are certain to be straddled up, in the bandwagon of cyclical change which has its natural inclination of giving turns for success. However, Singer has ridden this bandwagon by claiming a Leadership position throughout a very long period of time, navigating through many challenges, standing the test of time.

Singer has not only been the leader of the consumer electronics retail business in Sri Lanka over a considerable time period, but they have also led in terms of quality, brand promise, operational HIʀFLHQF\LQWHJULW\DQGVRFLDO responsibility, this leadership position has been endorsed by being awarded with the People’s Durable Brand of the

Singer on A Winning Streak

Multi-Brand The Singer brand encompasses a edge technology in TVs, Refrigerators, wide range of product categories such Mobile Phones as well as a host of Strategy as consumer electronics, household other product categories. Specialty of appliances, sewing machines, air the Samsung brand over the years has Primarily being B2C corporate, Singer conditioners, furniture, agricultural been the ability to attract consumers of (Sri Lanka) PLC has consciously implements, motor cycles, digital all categories regardless of the gender been following a multi-brand strategy media products and personal or socio-economic levels. Samsung which is leveraging the brand equity computers. The strong interactions we is ranked on top when it comes to of Singer. This strategy was adopted maintain with our customers, coupled most advanced Smart TVs and energy to target multiple segments of the with our aggressive brand development saving Digital inverter Technology Sri Lankan consumer spectrum. It and CSR activities, have enabled us Refrigerators. has enabled Singer to introduce high to achieve greater success over the quality, brand leading, innovative years. In addition, we passionately products at affordable prices and promote sports in Sri Lanka. Our close realise economies of scale from the association with Sri Lanka Cricket, wide network of distribution channels. Schools Cricket League, Schools Inspire the Next We have been able to successfully Rugby and the Bradby Shield is a execute this strategy and fully testament to this fact. Hitachi is the largest electronic realise the advantages thereof. It has company in Japan and is among helped Singer to enhance customer Our uncompromised commitment to the top 100 companies in the world, associations and perceptions and providing excellence in pre-sales and manufacturing high quality refrigerators strengthen the Singer brand. This has after sales service to our Sri Lankan with innovative technologies. We undoubtedly enabled us to reach the consumers across the entire social unveiled the Hitachi range of inverter eminent position that we have reached spectrum has enabled us to uphold our refrigerators and inverter range of in the consumer durables retailing brand promise - ‘Trusted Excellence’ domestic air conditioners in Sri Lanka, market space in Sri Lanka today. year after year. We speak it, we live it The brand presents advanced and it has helped our reputation soar. Japanese technologies such as the Singer (Sri Lanka) PLC now boasts of While delivering on our brand promise inverter X dual fan cooling technology; over 40 brands of international repute, on a daily basis, we constantly look for anti-bacterial, anti-mold and giving the widest possible choice to the room to enhance deliverables behind deodorising nano technology; energy- customer of any social strata whatever that promise. saving and eco-friendly, eco thermo their lifestyles, tastes, expectations sensors and R600a refrigerant; and and aspirations may be. Given below ʁH[LEOHKXPLGLW\FRQWUROOHGDQGPLQXV is a brief introduction to the brands we zero freezer compartments. retail, how we manage those brands, our relationship with the principals, our initiatives under each brand and their The Cooling Specialist performance during the year. Through these brands, we believe that we were 6,6,/ZDVWKHʀUVWUHIULJHUDWRUEUDQG able to deliver unprecedented value to to be manufactured in Sri Lanka, 50 the customer and help them raise their years ago. We have leveraged on the living standards. strength of this brand, after purchasing The Creative Life the SISIL brand in the year 2000. It now holds a dominant market share Founded 32 years ago, TCL is one in refrigerator, kitchen appliance and of the fastest growing brands in washing machine. China and is the third largest TV ‘Trusted Excellence’ manufacturer in the world today. It SISIL has outperformed many of the makes a wide range of consumer global brands in terms of trust and Singer has been built on a strong electronics products and appliances reliability. It is also renowned for foundation of brand development. like refrigerators, washers/dryers, air service excellence and durability. Therefore, we continually strive to conditioners, Blu-ray players and cell deliver excellence in brand quality. phones in different regions across 7KLVLVDIʀUPHGE\WKHPDQ\DFFRODGHV the world. By offering great products we have won over the years. These at reasonable prices through Singer, include the People’s Brand of the TCL has gained the trust of Sri Lankan

Singer on A Winning Streak

saving products of Sharp, includes its signature 4 colour ‘Quattron Pro’ /('79Vȹ3ODVPDFOXVWHUȺDLUSXULʀHUV Change for the Better Make it Possible and ‘Healsio’ microwave ovens. We are happy to partner Sharp as their Huawei as a brand has successfully sole agent for electronics and home SINGER is the sole distributor and GLYHUVLʀHGZRUOGZLGHZLWKDOPRVWKDOI appliances in Sri Lanka and as the authorised service partner for Beko of its shipments going outside of China. SUHIHUUHGUHWDLOSDUWQHUIRURIʀFH in Sri Lanka since 2013. Based on its ,QIDFWWKLVGLYHUVLʀFDWLRQKDVKHOSHG equipment. This has enabled us to brand philosophy of addressing all the Huawei reach the global number three offer the Sri Lankan market a range of needs of the new smart generation by smartphone brand in Q4 and overall at cutting edge Sharp brand products offering smart technologies with stylish the end of 2015 to become the number including LED TVs, microwave ovens, one brand in China. In 2015 Huawei functional design that both save the DLUSXULʀHUVYDFXXPFOHDQHUVIDQV world by reducing the impact of its experienced growth in global markets multifunction printers/copiers and products on the environment and save and became the top 3 smartphone cash registers. at home by enhanced functionality and brand in the World. The company HIʀFLHQF\%HNRRIIHUVDZLGHDUUD\ experienced a record-breaking 2015 of household appliances for cooling, with 70% revenue increase year-over- washing during and cooking needs. year giving. Our revenues exceeded 20 billion dollars in 2015, as we shipped 108 million smartphones globally. Recently the brand was named the 70th most valuable global Our Technologies brand according to the the BrandZ 100 Your Tomorrow Be Moved list and was ranked 88th in Interbrand’s Top 100 Global Brands list. One of the new brands introduced 621<WKHZRUOGUHQRZQHGHOHFWURQLFV manufacturer and supplier of world to SINGER’s branded portfolio is According to IDC 2015 Q4 report the MITSUBISHI brand Air Conditioners class and innovatively tech-savvy Sri Lankan market grew by 100% for Japanese electronics, has held a from Mitsubishi Heavy Industries (MHI). Huawei in the smartphone market, MHI’s air conditioners manufacturing profound position in Sri Lanka not only it is the only smartphone vendor to company is located in Thailand as as a preferred brand amongst the achieve this feat. Huawei Sri Lanka Mitsubishi Heavy Industries – Mahajak masses but also as an ever-evolving smartphone sales reached 23.08% Air Conditioners Co. Ltd. (MACO). provider of state-of-the-art products. by 2015 Q4. Huawei’s popularity and 621

Singer on A Winning Streak

presence has enabled Singer to offer satellite were upgraded to be Company SINGER Homes multiple brands and an eclectic range showrooms. In addition, 35 New Sales of products and services. Being Agents were also appointed to the Singer Homes channel reached another mindful of the emerging customer Sales Network. milestone of its journey by reaching tastes and preferences and the Rupees one billion in sales revenue unprecedented pace of development In the year 2015, Singer Plus made a during the year 2015, recording a growth in information and communication VLJQLʀFDQWFRQWULEXWLRQWRWKHRYHUDOO of 29.4% compared to previous year. technology, going forward, Singer will performance of the Company by be devoting more and more attention recording positive achievement in Novel range of stylish and high quality and resources for further development every KPI. Despite its high base, it products including Sofas, Living Room of electronic channels to make it even ended the year with a 26% growth Suites, Bedroom Suites, Dining Room more convenient to the customer. in revenue. In terms of units, the Suites, Wardrobes, Children’s Furniture Apart from meeting changing customer Channel managed to record very high and customised Pantry Cupboards preferences, from a corporate sales of all major product lines and have given greater choice for the perspective these channels will be achievement of sales of Refrigerators, valued customers who patronise economical to operate and help us to Televisions, Sewing Machines, Singer Homes. UHDOLVHRSHUDWLRQDOHIʀFLHQFLHV Computers, Mobile Phones, Washing Machines, Furniture, Small and Kitchen Singer Homes serves in 15 major Given below is a brief introduction to Appliances is commendable. towns of the country helping its the different channels we operate in, customers to uplift their lifestyles with how we manage those channels, our Success behind the Singer Plus high quality products yet affordable initiatives under each channel and their Channel is based on many well in price. The newly relocated Singer performance during the year. Through planned ATL and BTL campaigns and Homes showroom in Maharagama and these channels, we believe that we LQYROYHPHQWRIWKHʀHOGVWDIIDQGIRFXV refurbished Singer Homes in Kalutara were able to deliver unparalleled given for those programmes. Periodic have received a very impressive convenience to the customer and help novel promotions such as ‘Nawa Divi customer feedback with the modern them raise their living standards. ThilinaȺDQGFRQWLQXRXVʀHOGDFWLYLWLHV retail outlook which will be rolled out in boosted the channel’s contribution and other locations too in the near future. the multi-brand, multi-product strategy SINGER Plus with modernised shops too helped the Singer’s unique Hire Purchase scheme channel to grow. The contribution from is available for Singer Homes furniture digital media products, such as mobile enabling our consumers to enjoy the phones, computers and wooden luxury by paying in installments. furniture was also remarkable and helped to attract a new customer base to the Channel.

SISIL World

Singer Plus is the main distribution A prime example of our successful It is our fervent hope that we help our channel of Singer (Sri Lanka) PLC. differentiation strategy, SISIL World customers to enhance their life styles continued to further consolidate with Singer furniture. Providing them Today Singer Plus channel has its position as a premier consumer with high quality products over the expanded its network in every part durables retailer during the year. The competition at a competitive price was of the country and comprises 230 channel opened 3 new showrooms. our main scope in the year 2015. Singer Plus Showrooms, 86 Satellite This has enhanced customer shopping shops, 135 Sales Agents. During the experience and all SISIL World year channel opened 6 new outlets showrooms now have a customer including satellite show rooms and six friendly ambiance. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 35

Singer on A Winning Streak

the key highlights of its commitment towards society at large.

Digital Media

The Singer Digital Media Channel was introduced in the year 2012 in order to focus on providing today’s tech-savvy customer the latest devices such as mobile phones, computers and digital cameras. Today, this channel has grown rapidly and is now one of the leading players in Sri Lanka’s mobile phone industry. Several key attributes have enabled Singer to reach this position, most notably, the unparalleled strength of the ‘Singer’ brand as well as the passion and commitment demonstrated by the Company’s operational staff, together with the ,QZHUHFRUGHGDVLJQLʀFDQW Singer Mega added its 20th branch everexpanding distributor network. growth of 27% over 2014 from furniture to the tally during the year with category. Total domestic furniture Sony/Beko Flagship store in As in the previous year, the main market is estimated over Rs. 30 billion No 6, Dudley Senanayake Mawatha, emphasis of Singer’s Digital Media per annum and our share of it is Colombo 8, adding new dimensions Channel was mobile phones, most Rs. 2.2 billion, which represents a to consumer durable products in the notably smartphones, which have market share of 7.3%. SINGER has the country. First ever Singer Mega store become one of the most important opportunity to expand this business into in Peradeniya Road, Kandy too was product lines at Singer. VXEFDWHJRULHVOLNHRIʀFHIXUQLWXUHSODVWLF refurbished and re-opened during the furniture, commercial and institutional year providing customers a bigger and With Sri Lankans being more inclined furniture where its current involvement better shopping experience. to adopt technology and showing is low. We will seriously consider remarkable agility when using electronic expanding into these areas in the 6LQJHU0HJDȺVʁH[LEOHSD\PHQWSODQV gadgets, for example smartphone usage year 2016. help its customers to take home to name one main segment, Singer has and experience the state-of-the-art opted to market world renowned brands SINGER Mega technological products with minimum such as Huawei, Samsung and Sony GRZQSD\PHQWZKLOHEHQHʀWWLQJIURP which already are established makes SINGER Mega has shown a very strong its Customer Loyalty Program ‘Mega in the overall Sri Lankan smartphone and steady 20% growth in revenue Money’ that adds further value and a market. This has helped form a win-win during the year 2015 over 2014. UDQJHRIEHQHʀWV situation for international brands due to The widest array of world-renowned Singer’s strong retail setting in Sri Lanka. brands, superior customer service Singer Mega’s partnership with Through the aggressive marketing and pleasing shopping ambiance at Sri Lanka Diabetes Federation for strategy for brands such as Huawei, Singer Mega gives a truly big shopping Diabetes Free Tomorrow’ was one of Samsung and Sony, Singer is today held experience to its valuable customers. 36

high as a business that can be named both quality and affordability. as the vanguard in mobile phone sales Additionally, Singer stands out in Sri Lanka. These three brands are also from its competitors by offering widely known to be the country's leading a 2-year warranty for all Huawei smartphone brands with a variety of and Sony smartphones, a models that suit the budget and lifestyle unique attribute that makes us the of every customer category. SUHIHUUHGFKRLFHIRUDVLJQLʀFDQW segment of smartphone buyers in At Singer, smartphones have become the island. RQHRIWKHPRVWVLJQLʀFDQWDQGPDMRU product segments and the smartphone Within three years from its launch, the business can be seen concentrated channel has appointed 28 Distributors at both, retail and dealer operations as well as 17 Direct Dealers to provide island wide. The smartphone business a steady stream of Huawei and Sony concentrated on driving sales volumes products that are in demand across the WKURXJKWKHHIʀFLHQWPDQDJHPHQWRI 1,400 outlets spread island wide. both retail and dealer operations. With the commencement of sales via Singer retail shops, smartphone sales showed Industrial Air an upward trend, helping to generate Conditioners and VLJQLʀFDQWUHYHQXHGXULQJWKHFRXUVH Central Air Conditioners of the year. Singer (Sri Lanka) PLC entered in to Singer retail shops have commenced a partnership with Mitsubishi Heavy selling these products and generating Industries - Mahajak Air Conditioners large-scale revenues. Customers will be Co., Ltd. for marketing and servicing DEOHWRʀQGDQDIIRUGDEOHVPDUWSKRQH Mitsubishi Heavy Industries Industrial WKDWZRXOGʀWWKHLUEXGJHW6LQJHUDOVR /Commercial and Residential use focuses on adding amenity based air conditioners. The product range Industrial Air services in the form of dedicated ‘after- includes Single and Multi-Split Inverter Conditioning Division sales’ and this offering sets Singer apart /Non-inverter types of residential from its competitors. air conditioners, Single and Multi- Demonstrating true customer Split Inverter/Non-inverter types of commitment, Singer (Sri Lanka) PLC When purchasing from Singer, the Industrial/Commercial air conditioners launched the Singer Industrial Air customer is guaranteed to get a and VRF (Variable Refrigerant Flow) all Conditioning Division in early 2012. smartphone with the right balance of inverter type commercial use solutions. The primary role of the division is to

Mate 8 Sony Z5

TheT world's most advanced smart phone technology )GVTGCF[HQTVJGYQTNFŏUſTUV-UOCTVRJQPG GXGTYKVJſPIGTRTKPVUGPUQTU6JG/CVGVCMGUG with a 5.5" 4K ultra HD display, the phone tthe look and feel of the Mate series to a whole new QHVQOQTTQYKUJGTG0GZVIGPGTCVKQP level.l Boasting a vivid 6” FHD display, an ultra smartphone camera experience designed UNKOFGUKIPCTGFGUKIPGFſPIGTRTKPVUGPUQTVJCVU with Sony’s interchangeable lens camera isi faster and more reliable, and a sleek aluminium 6/VGEJPQNQI[DWKNVVQECRVWTGURNKVUGEQPF unibodyu design, the Mate 8 is sure to impress. moments – a brand new 23MP Exmor RSTM for mobile sensor, supporting the fastest autofocus in a leading smartphone. 37

work closely with the customer from the point of making accurate product recommendations to providing a professional Taking a ‘selfie’ design, installation, commissioning and KUCNNCDQWVEQPſFGPEG+VŏU[QWT maintenance service, and beauty; it’s your radiance; your the timely completion of projects and island-wide ŎUGNſGŏKUCNNCDQWV[QWTŎUGNHŏ after-sales support. This LQLWLDWLYHH[HPSOLʀHV a visual representation of Singer’s undisputed reputation for yourself. You need a smart delivering superior device that ‘has what it quality solutions as well as effective takes’ to do justice to this and speedy customer and portray it in crisp, clear imagery via a multitude of platforms. Singer markets a range of some of the world’s most renowned smart phone VJCVFQ[QWTEQPſFGPEG a world of good!

Huawei P8 Lite Sony Xperia Dual M5

With its smooth outer contour, slim 7.7 21.5 MP main camera with hybrid autofocus technology OOGFIGCPFƀCYNGUUNKPGUVJG2NKVG and 13MP front camera in a waterproof design. Capture sits perfectly balanced in the palm of URGEVCEWNCTUWRGTUJCTRKOCIGUQPVJGƀ[6JGRQYGT your hand. The P8lite is powered by an of a 21.5MP camera with Sony’s unique hybrid autofocus QEVCEQTGDKV-KTKPRTQEGUUQTVJCV technology that is both pinpoint accurate and fast supports HDR photography, and 1080p HD (0.25 sec). It’s all you need for sharp photos and videos, video encoding and decoding. The chipset GXGPYJGPVJGUWDLGEVKUOQXKPIQT[QWCTG(WUU[ CNUQUWRRQTVUWNVTCHCUV.6'%CVYKVJ about details? Zoom in and keep the quality with 5x downlink speeds up to 150Mbp Clear Image Zoom or record 4K video with amazing sharpness. 38 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

The world's most advanced smart phone technology ever ZLWKʀQJHUSULQWVHQVRUV

The Mate 8 takes the look and feel of the Mate series to a whole new level. Boasting a vivid 6” (*&&KURNC[CPWNVTCUNKOFGUKIPCTGFGUKIPGF ſPIGTRTKPVUGPUQTVJCVKUHCUVGTCPFOQTGTGNKCDNG and a sleek aluminium unibody design, the Mate 8 is sure to impress.

Huawei Samsung Sony Xperia Samsung P8 Galaxy A7 C5 Ultra Dual Galaxy J7

The Huawei P8 seamlessly 6JGſTUV5COUWPIUOCTVRJQPG 9KVJVYQOGICRKZGNECOGTCU The GALAXY J7 is equipped brings elegance and comfort with a full metal body, the CPFCUWRGTXKXKFŒFKURNC[ to give you a spectacular 4G together with a stunning piece Samsung GALAXY A7 boasts the Xperia C5 Ultra enables experience and is designed QHVGEJPQNQI[ETCHVGFGHſEKGPE[ an innovative, luxurious design [QWVQVCMGUWRGTKQTUGNſGUCV for blazing speed. It makes in mind. The Huawei P8 and a stunning 5.5inch FHD any time. The Xperia C5 Ultra OWNVKVCUMKPIKPUVCPVCPGQWU TGFGſPGUVJGUOCTVRJQPGD[ sAMOLED display. You can feel brings your best moments to life and ensures that content loads effortlessly delivering top of the the premium quality of the sleek with breathtaking clarity, using up swiftly. This product is with line performance at unparalleled full metal body in your hand. front and back cameras that are Super AMOLED display delivers speeds. Let the phone do the equally powerful. Packed full brighter colors and deeper hard work while you focus on of Sony camera expertise, the EQPVTCUVIKXGU[QWCVTWGVQNKHG your brilliant ideas. :RGTKC%7NVTCDGPGſVUHTQO viewing experience. Superior Auto, autofocus and 241UGNſGŠUQ[QWECPVCMGVJG UJCTRGUVUGNſGUKOCIKPCDNG

visit www.singersl.com for more details...

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Singer on A Winning Streak

service. Singer (Sri Lanka) PLC product portfolio to 30 active SKUs in and services more and more green and launched the Institutional Air Water Pump category while introducing HQHUJ\HIʀFLHQWJRLQJIRUZDUG Conditioning Division equipped with new products like Wood Working a team of marketers to support its PDFKLQHV*UDVV&XWWHUV

Launching Technological Excellence from the best of brands. 40 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Singer on A Winning Streak

SONY Action Cam line-up in Sri Lanka, bringing you The power and capability of PS4 allows stylish headphones and a Walkman® the Singer team to push the boundaries Encouraging your efforts to breathe in ZLWKDGLVWLQFWʀQLVKDQGDYDVWDUUD\RI further than what was previously the great outdoors, Sony Representative colours that allows you to match your thought possible in interactive 2IʀFH6UL/DQNDWRJHWKHUZLWK6LQJHU style. Revel in your music like never entertainment. (Sri Lanka) PLC unveiled an innovative before as High Resolution Audio range of ‘point of view’ cameras brings your favourite tunes so much To celebrate the launch, Singer titled Sony Action Cam, in October closer to the true sound the artist organized a gaming competition for at the Singer Mega, Rajagiriya. The originally intended. guests and PlayStation enthusiasts Sony Action Cam is a state-of-the art at its Singer Mega showroom in innovation designed with a wide range Mount Lavinia. Five gaming booths of high-tech features, all packed into World’s Most Powerful showcasing this next generation one simple yet powerful, hand sized Console – The console enabled PlayStation fans to device. The Action Cam comes in a Playstation®4 experience the power of the platform. number of models, with its own set Trophies were awarded to the winners. of unique functions that are easily adaptable to diverse activities and different shooting scenes.

SONY Smart Android TV

The latest line up of BRAVIA™ 4K and Full HD series from Sony is here to add real value to your viewing experience. With sensational picture quality and super slim features, the new models are an essential form of luxury for your home. The new BRAVIA ™ W800C series and X series televisions UHSUHVHQWDVLJQLʀFDQWPLOHVWRQHLQ Singer (Sri Lanka) PLC introduced the Mitsubishi Air Conditioners home entertainment. The experiences PlayStation®4 (PS4), the successor that you love on your smartphone or Singer (Sri Lanka) PLC, entered in to to the PS3 to Sri Lanka in 2015. tablet can now be enjoyed bigger and a partnership with Mitsubishi Heavy PlayStation®4 brings high quality better than ever, on the new BRAVIA ™ Industries - Mahajak Air Conditioners Android TV. Co. Ltd.

Through this partnership Singer (Sri Lanka) PLC will be marketing and servicing Mitsubishi Heavy Industries air conditioners for industrial/ commercial and residential use. Models such as single and multi-split inverter/non-inverters as well as Single VRF (Variable Refrigerant Flow) inverter type commercial air conditioners will be marketed by us.

In an era of technological innovation, technology and graphics, and visually it is important to offer the very SONY High realistic gaming experiences to the best of solutions to our customers Resolution Personal players. island wide. We are extremely Audio Range (MDR) particular that we partner brands Backed by its dominant position that conforms to stringent quality and abundant industry experience standards and environmental safe Sony launched MDR – Music Deserves in the electronic consumer products technology. Backed by the Singer Respect, its high resolution personal distribution sector, Singer offers trusted service pledge and technical audio range, launched by Singer Sri Lankan consumers this next assistance, our customers will be Sri Lanka PLC in November. With its generation console which boasts WKHXOWLPDWHEHQHʀFLDU\RIWKLVWUXO\ new range of personal audio products, exclusive games, and content and fresh experience. Mitsubishi Heavy 6RQ\UHLJQLWHVWKHʀUHLQLWVDXGLR provides experience that will surpass Industries - Mahajak Air Conditioners PlayStation enthusiasts’ wildest Co.,Ltd., is one of the global leaders in expectations. the air conditioning industry. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 41

Singer on A Winning Streak

technologies, launched the VISTA range of Smart TVs to the local market. This was in keeping with its strategic intent to deliver world-class products, at an affordable price, to enhance the lifestyle of Sri Lankans from all walks of life.

The launch of the VISTA range of Smart TVs heralds yet another milestone in the remarkable journey of Singer TV and brand Singer. The all new range of Singer VISTA Smart TVs provide a totally interactive experience to the viewers at an unbelievably affordable price with an unmatched warranty and after sales service. These are packed Huawei Mate 8 With a powerful new 16 MP Sony with technologically advanced features sensor and smart camera features and enhanced viewing pleasure, The world’s most advanced such as Optical Image Stabilisation combining the convenience and VPDUWSKRQHWHFKQRORJ\HYHUZLWKʀQJHU (OIS) and Huawei's new Image Sensor features of a computer. print sensors Processor (ISP), the Mate 8 delivers sharpness and clarity in every image. A unique feature of the new Singer The Mate 8 tagged as the “New style VISTA range is the customised app – RIEXVLQHVVRQJOREDOSODWIRUPȽ7KH ‘Vista Life App,’ which enables users device features ground-breaking 5KPIGTNCWPEJGUVJGCNNPGY to engage at a higher level through KDUGZDUHDQGLVWKHʀUVWVPDUWSKRQH VISTA range of Smart TVs to run the Kirin 950 chipset, The Kirin 950 chipset is more streamlined, more HQHUJ\HIʀFLHQWDQGPXFKIDVWHUZKHQ it comes to everyday tasks such as browsing the web, watching videos or launching apps.

The Huawei Mate 8 introduces a new JHQHUDWLRQRIʀQJHUSULQWVHFXULW\ZLWK enhanced protection technology. The FLUFXODUʀQJHUSULQWVHQVRULPSURYHV WKHHIIHFWLYHLGHQWLʀFDWLRQDUHDE\ SHUFHQW,QDGGLWLRQWKHʀQJHUSULQW friction ridge matching has three levels Singer, in its continuous quest to their TV. The many functionalities of security, providing higher protection innovate, enhancing its product includes an internet connectivity for users. The new sensor design also portfolio, with the latest in cutting edge for web browsing, in built games, a increases the unlock speed by 100%. chat function for video calls through Viber and Skype, live streaming and downloading of music and videos, news alerts and weather reports and a special tab for recipes and handy hints. The app also features a music menu which could be customised, enabling users to store and play their favourite tunes.

'HYHORSHGVSHFLʀFDOO\IRU6LQJHUWKH ‘Vista Life App’ will continue to evolve, based on customer feedback, with added features in the upcoming months.

The Singer VISTA series of Smart TVs are available with screens ranging from ȽWRȽWRVXLWFRQVXPHUVȺLQGLYLGXDO preferences. The VISTA range is also DYDLODEOHLQDQXPEHURIFRQʀJXUDWLRQV 42 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Singer on A Winning Streak

UDQJLQJIURPVOLPʁDWVFUHHQWRFXUYHG Moulinex is the global kitchen mouth watery ice cream. Pre freezing screen models and are equipped with specialist, introducing versatile of the cylinder or mixer bowl and the state-of-the-art Harman Kardon sound DSSOLDQFHVWKDWIXOʀOOWKHFXOLQDU\ ice cream custard is required before systems, 4K image resolution and ultra requirements of the household in putting it to the appliance to get the KLJKGHʀQLWLRQ 8+' EXLOWLQ WKHPRVWHIʀFLHQWPDQQHU,WVODWHVW optimum output. introduction, 12-in-1 Multi cooker is Small Appliances revolutionary product which goes Tefal brand is synonymous for beyond a traditional rice cooker, innovative household care solutions Category which facilitates 12 different cooking with its high quality kitchen appliances, functions including baking, frying, non-stick cookware, linen care range Moulinex, Tefal and Krups steaming, slow cooking and even and home comfort range. Singer Appliances making baby food and yoghurt. With took the initiative of introducing a its Fuzzy Logic feature, the consumers dual purpose vacuum cleaner and Every year, Singer introduces can set convenient times to prepare a low noise pedestal fan with an innovative kitchen appliances under food, where no supervision is required elegant design identifying the market reputed international appliance afterwards and the appliance does the gaps in the home comfort product brands, for which the Company entire job perfectly. segment. Tefal vacuum cleaner is holds the exclusive distributorship in for both wet and dry purposes, with the country. With its brands such as Another unique introduction under PDQ\DFFHVVRULHVWRIXOʀOODOOFOHDQLQJ Moulinex, Tefal and Krups, Groupe Krups brand is the Ice Cream Maker. UHTXLUHPHQWVRIDKRXVHHJʁRRU SEB, the world market leader in small With this appliance, ice cream and carpets, sofas, vehicle interiors, wet appliances stays in the forefront of sorbet making at home is proven reality surfaces, outside places like the house introducing innovative and versatile and it takes only 20 to 30 minutes for back yards etc. Tefal Harmony is a low kitchen appliances, in-line with the the ice cream custard to turn in to a noise pedestal fan, elegantly designed latest global market trends in food for modern home interior architecture consumption, food preparation and which comforts consumers with cool related consumer habituations. breeze and allows them to enjoy buzz free sleep overnight. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 43

Singer on A Winning Streak

Yamaha and Singer on a Milestone Retail Collaboration Prestige products are manufactured and exported by TTK Prestige Ltd., India’s largest kitchen appliances company. The Company invests heavily on R&D and has unanimously left a positive mark in the hearts of every households across the UK, the US, Australia, the EU and Asian export markets.

Singer unveiled a host of new high quality Prestige products further extending its brand portfolio, to cater to the growing needs of the modern family. The unveiling of the Prestige Gas Cooker with glass top, Prestige Mixer Grinder,

Singer TVs are really all about making the visual experience as real as possible and how well the viewer ‘lives the experience’. It’s why we have the latest and the best from some of the world’s most LFRQLFPDUTXHVȷIURP/&'WR/('ʁDWVFUHHQWRFXUYHGVFUHHQ 3D to Ultra HD, … and everything in between! Viewing doesn’t get more real and enjoyable than this! 06 ANNUAL REPORT 2015 SINGER (SRI LANKA) PLC 44 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

SINGER - Vista

The No. 1 TV brand in Sir Lanka introduces the technologically advanced VISTA series of 5/#46#0&41+&68U'ZRGTKGPEGVJGCNN new VistaLife app that gives you access to the internet and chat on Viber and Skype, recipes and handy hints, games streaming video and music and more for you to explore!

Available in: 65” | 55” | 50” | 43” | 32”

SAMSUNG SUHD SHARP - AQUOS SONY - KD-65X9000C CURVED SMART TV Sharp AQUOS® continues its legacy Ultra slim beauty that complements every living “All new Samsung SUHD Curved Smart of best in class engineering and design space. There is no other TV quite like this. Its Ultra TV brings you the ultimate viewing with our exceptional LED TVs. New models UNKOUQRJKUVKECVGFFKURNC[OQWPVUƀWUJVQVJGYCNN experience with endless opportunities to in screen size classes from 32" to 80" (diag.) like an exquisite canvas and plays all your content explore the world” and with innovative smart platform. Sharp in breathtaking 4K Ultra HD Resolution Corporations unique ‘Quattron Pro’ 4 colour panel technology delivers unsurpassed picture quality beyond UHD quality

visit www.singersl.com for more details...

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Singer on A Winning Streak

Vedamuluwa’ program earlier this year. The message of healthy cooking and eating is spread through Home Science classes in schools across the country. The program gives guidance on using modern kitchen appliances to create nutritious meals with less time, empowers Sri Lankan families to cook right and eat right.

In order to create real and sustainable change, the 1st phase of the program was focused on educating Regional Directors and Assistant Directors at the Ministry of Education. Thereafter, workshops were organised across the island for eight hundred Home Science teachers, teaching them about the latest kitchen appliances and time-saving, nutrition maximising Singer has been associated with the Submersible Range cooking methods, in accordance with Prestige brand for over two decades We have recently introduced the national curriculum. through an exclusive distributor 2Hp 2 inches and 1Hp 2 inches partnership. Prestige as a product is of submersibles to the submersible Students also received hands-on very high quality and it is considered range to cater to the needs of the training on modern kitchen appliances as a ‘prestige’ for customers to own new customers Northern, Eastern and at Singer showrooms island wide. By these products which are essential for Central provinces. the end of the year, Singer provided their lifestyle. training to over 1,000 schools around the country. Adding further value Safari X2 Motor Cycle Innovative to the initiative, the Company also donated Singer kitchen appliances Singer introduced Safari X2 motorcycle Marketing Initiatives and equipment worth a total of in April 2015 in order to expand the Rs. 4.5 million to 150 underprivileged product portfolio as well as to improve Home Science in schools schools during the year. The donations the Company revenue while taking care were handed over to school principals of its product quality.

This motorcycle is powered by a 70 CC, four-stroke petrol engine with a four forward gear transmission system, which enables the user to carry a heavy load as well as to ride it on hilly terrains. Safari X2 is assembled in motorcycle unit of the 'LVWULEXWLRQ&HQWUHDQGWKHʀQDOTXDOLW\ of the product is checked thoroughly to ensure release of a high quality product to the end user.

Water pumps

Tube Well Range Singer introduced tube well pump In an effort to educate Sri Lankans on by Hon. Akila Viraj Kariyawasam – range of 0.5Hp/0.75Hp/1.0Hp for the the importance of better nutrition and Minister of Education and Mr. Asoka domestic water pump market. These give them access to the knowledge Pieris – CEO of the Singer Group at tube well pumps are fully made from and tools they need to change a ceremony held at the Ministry of stainless steel and are equipped with their lives, Singer (Sri Lanka) PLC DIWORQJZLUHJLYLQJDVLJQLʀFDQW joined the Ministry of Education to advantage to the user compared to launch the ‘Singer Soopa Shasthra competitive products. 46 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Singer on A Winning Streak

Education. A total of 250 selected million through its Facebook page alone. These numbers have steadily driven all of schools throughout the island received 6LQJHUȺVRQOLQHDQGRIʁLQHSURPRWLRQVDQGDGGHGYDOXHLQWHUPVRIFXPXODWLYHDQG Singer kitchen appliances and cyclical sales as well. equipment by the end of the year. This helped to strengthen Sri Lankan food education whilst empowering thousands of Sri Lankan school girls. TOTAL NO. OF Social Media Presence The social media revolution, while a 250,674 relatively new phenomenon, is rapidly catching hype amidst businesses and marketers alike. It’s not just about LIKES tapping into new avenues of reaching people but also actively engaging AS AT interested masses with the brand. 25 FEB 2016 As a result, Singer embarked on a journey to capitalise its presence on Facebook in the past year 2015/16. This was undertaken with the aim to explore new opportunities for product Customer Relationship and determine how to target its promotions, real time association Management (CRM) communication accordingly. with existing and potential customers A presence on social media and initiate fresh campaigns and 7KHEHQHʀWVRI6LQJHUȺVVRFLDOPHGLD networks such as Facebook has FRPSHWLWLRQVERWKRQOLQHDQGRIʁLQH presence can be viewed through created a platform for Singer fans to turnaround response rates. Facebook communicate directly with the brand, The Singer (Sri Lanka) PLC Facebook is a very interactive platform where as well as established a means page has proved to be a pivotal fans and existing and potential for Singer to collect information platform for Singer’s social media customers seek information, as well as about its fan base, for example SUHVHQFH,QWKHSDVWʀQDQFLDO\HDU provide feedback. Therefore there is an how geographically dispersed Singer has successfully reached a inclination that the brand is susceptible or concentrated the audience considerable audience of over six to receiving both positive and negative comments.

3A’S OF ACKNOWLEDGE CONVERTING 7KHʀUVWVWHSRIUHVSRQGLQJWRFXVWRPHU queries is to acknowledge their queries/ CUSTOMER issues and keeping track of them PERSPECTIVE APOLOGISE The second step is to apologise for any inconvenience caused in the case of a 3A’S complain

MODEL ADDRESS 7KHʀQDOVWHSLVWRDGGUHVVWKHLVVXHZLWKDQ understanding of the customer situation. SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 47

Singer on A Winning Streak

However, Singer has proactively This exclusive and adaptive model possible because of the stringent 30 uses this to its advantage by KDVVLJQLʀFDQWO\LPSURYHGWKHZD\ hours problem solving policy followed quickly implementing a unique Singer customers now perceive by Singer, which ensures that all homegrown mechanism of 3As to the brand; and has been critical queries on the Singer (Sri Lanka) PLC resolving concerns. The 3As refer to in forming trustworthy and reliable Facebook page are addressed within a Acknowledge, Apologise and Address; relationships with them. This is made period of 30 hours or less. the model is explained below:

HOURS PROBLEM SOLVING POLICY We were able to increase and maintain 80% response rate as we follow a 30 HR RTQDNGOUQNXKPIRQNKE[KPYJKEJYGVGPF to attend each and every query that we receive within a 30 HR time period

Singer Sri Lanka facebook page indicated a response rate of 80%. 48 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC

Singer on A Winning Streak

Campaigns, Singer Finance impact, Company achieved a bottom Competitions, (Lanka) PLC OLQHJURZWKUDWHRI

and Credit With the Island’s economy improving, LQWHUHVWUDWHVGHFHOHUDWHGLQʁDWLRQDU\ Under Financial Services, customers pressure narrowed down and key cost can enjoy the following services at all drivers such as fuel, gas and electricity Singer shops: did not escalate as in the past. Long expected government sector salary y Pay utility bills and credit card bills; hikes were delivered by the new SINGER Fashion Academy y Obtain mobile phone reloads; Government; all these positive factors y Collect funds remitted through had a direct bearing in provisioning Every year students who follow the Western Union; and for bad debt receding by 79% to VFLHQWLʀFGUHVVPDNLQJDQGPDFKLQH y Upload funds and withdraw funds Rs. 42.3 million. As the liquidity in embroidery in Singer Fashion using mobile cash the market improved paying-in ratios Academy, can sit for the diploma too, improved. From a Management examination held in November. In the year 2015, Financial Services perspective, Singer Finance improved Students who successfully complete business volumes increased by 5%. its recovery processes by increasing the examination are awarded with It is noteworthy that an average of the call centre operations for arrears LQWHUQDWLRQDOO\UHFRJQLVHGFHUWLʀFDWHV 208,000 transactions took place in our follow up and also concentrated in and the best performing students are shops each month and we transacted disposing most of the repossessed absorbed in to the fashion academies Rs. 6.8 billion on Financial Services. vehicles in the vehicle yards. These as trainee instructresses. Students who efforts resulted in a 13% improvement in obtain diplomas and others who follow The Company continued to offer a wide bad debt recoveries over the prior year. different curriculums use their wide range of easy payment plans on its Despite all these positive contributions knowledge in self-employment. own, through Singer Finance, through to business operations, the income tax RWKHUEDQNVDQGʀQDQFHFRPSDQLHVDV charge for the year increased compared well as through credit and debit cards. to the prior year, mainly due to certain The Company has also tied up with revenue taxes and crop insurance levy $P¥QD%DQNWRSURYLGHʀQDQFLQJWR etc being recognised as disallowed our customers. expenses for tax. Regardless of this SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 49

Singer on A Winning Streak

SINGER Fashion faster service with the ever-expanding Show 2015 volumes of existing products and new brand and models to be added. This year too, Singer Fashion Academy held a grand ceremony for awarding Keeping in-line with global technological advancements and in FHUWLʀFDWHVWRVWXGHQWVZKRVXFFHVVIXOO\ order to minimise the carbon footprint FRPSOHWHGWKHGLSORPDLQ6FLHQWLʀF Dress-Making and Machine Embroidery. and the environmental impact, we have commenced repair of LED The highlight of the ceremony was a Convenience at consumer Finger Tips grand fashion show competition which television panels locally using the brought in a lot of interest and attention latest electronic equipment, instead of the whole audience. All dresses for of destroying the damaged panels In the meantime, Singer’s presence in the fashion show were done by past and which was done previously. The social media strengthened further with the present students of Singer Fashion continuity of maintaining the ISO the number of fans increasing to 250,674 Academies. The format of the fashion 9001:2008 standards for 10 years by the year end, enabling us to connect show was changed by including a at the Distribution Centre is proof of with more customers and establish competitive aspect where a competition adherence and conformance to quality. lasting relationships. It is a great source was organised amongst the students of of learning since we can listen to what the respective academies. As was done Being the main collection hub, customers are saying about our products in the previous years, the competition Distribution Centre is one of the key and services and has helped us to contributors to the Company’s Green ZDVGLYLGHGLQWRʀYHVHJPHQWVQDPHO\ ʀQGRXWZKDWZHDUHGRLQJULJKWDV initiative programme and all employees well as what we need to work on, in VDUHH.DQG\DQRIʀFHZHDUNLGVZHDU evening wear and sports. The three best are actively contributing on collection order to improve. of e-waste from the Company collection RXWʀWVIURPHDFKFDWHJRU\ZHUHDZDUGHG prizes which included a Singer sewing centres, storing and handing them over SINGER Life Style to relevant authorities for disposal. PDFKLQHIRUWKHʀUVWSODFHGZLQQHUDQG Exhibition WURSKLHVIRUWKHʀUVWDQGVHFRQG runners-up. This successful and colorful IT Developments event will encourage more students to The Singer Lifestyle Fiesta was enroll in following a variety of courses Information and Technology organised for the 5th consecutive year offered by Singer Fashion Academies. Department of Singer continued its from 27th to 29th November at the With great success of the event, Singer efforts during the year to enhance BMICH. This continued to be a much (Sri Lanka) PLC will look forward to customer experience by diligently looked forward to event by the many conducting it as an annual event in the leveraging on the emerging consumers which tends to draw the future with more colour and glamour. technologies. Major developments capacity crowd to BMICH. A myriad during the year, included enabling of appliances, furniture, electronic trilingual feature in www.singersl. goods and computers were showcased SINGER Service and com, developing an Android app for under one roof included with attractive Distribution Centre Singer which can be downloaded discounts, some as much as 50%. The from Google Play Store, developing event took of the hue of a fun fair with The state-of-the art Distribution Centre an IOS app, introducing a new and numerous cookery demonstrations, commissioned in 2004 at Piliyandala is WUHQG\IXQFWLRQDOLW\FDOOHGȹ+RW'HDOVȽ live performances by popular artists, now in its 12th year of operation on the website to offer attractive fashion shows and fun activities for and is looking forward to decentralise its discounts and deals on selected kids. The exhibition was ceremonially operations by opening up a products, introducing cash on delivery opened by the Group CEO Asoka 75,000 sq. ft. warehouse in Dambulla functionality to provide service to Pieris, Chairman Dr. Saman Kelegama in the Matale District in the latter part of cash paying customers and signing and Non-Executive Director Gavin 2016. Opening up of this new warehouse up for partnerships with other online John Walker. ZLOOHQDEOHWKHSURYLVLRQRIHIʀFLHQWDQG merchants to expand their reach. 50 2015 ANNUAL REPORT SINGER (SRI LANKA) PLC SINGER (SRI LANKA) PLC ANNUAL REPORT 2015 51 52 April Opened the following showrooms. Singer Plus – Akurana. SISIL World – Kandy February Upgraded a satellite shop The Annual Marketing in Manipay to Singer Plus Convention was held at showroom. Waters Edge Hotel in March Battaramulla. The Annual Wholesale Upgraded a satellite shop Channel Dealer Convention in Beliatta to Singer Plus was held at Waters Edge showroom. Hotel in Battaramulla.

Upgraded a satellite shop in Udugama to Singer Plus showroom

January Annual Religious ceremony was held in January.

December November Opened the following Singer Lifestyle Fiesta, showrooms. exhibition and funfair was Singer Plus – Samanthurai Singer Mega – Beko & Sony held for the 5th SISIL World – Kiribathgoda consecutive year. Opened a new Regional Service Center in Aluthgama. Singer (Sri Lanka) PLC Annual Report 2015 53 April May Opened the following Digital Media Channel Awards June showrooms. Night at Waters Edge Hotel in Singer Plus – Akurana. Opened the following Battaramulla. SISIL World – Kandy showrooms. Huawei Honor G Play, Honor 4 X Singer Plus – Issadeen Town Upgraded a satellite shop and Honor 6 Plus were launched. SISIL World – Minuwangoda in Manipay to Singer Plus showroom. Upgraded a satellite shop in Passara to Singer Plus showroom.

July Introduced Playstation ® 4 (Ps4)

August The Annual Award Ceremony & Fashion Show was held at September BMICH. Opened a new Singer Plus October 2nd Installation ceremony showroom in Pugoda. of Rotract Club was held in September. Opened theshowrooms. following Upgraded a satellite shop in Redeegama to Singer Plus Singer Plus – Badulla B showroom. Singer Plus Parakramapura. Mitsubishi Air Conditioner was Upgraded a satelliteshowroom. shop in launched. Nochchiyagama to Singer Plus Credit Card. Singer Finance launched a Financial Review consumer durable market, while further strengthening its strong brand image The following discussion and analysis and brand value in the retail business. should be read in concurrence with The fact that, Singer was declared the the Audited Consolidated Financial People’s Brand of the year for the 10th Statements of the Group and consecutive year bears testimony to the Company for the year ended this claim. 31st December 2015. In this Report, ‘Group’ refers to Singer (Sri Lanka) PLC Sri Lankan and its subsidiary companies, Singer Finance (Lanka) PLC, Singer Digital Economic Outlook Media (Pvt) Ltd., Singer Business The Sri Lankan economy has recorded School (Pvt) Ltd. and affiliate company an annual Gross Domestic Product Reality (Lanka) Ltd. and ‘Company’ (GDP) growth of 6.0% for the year 2015, refers to Singer (Sri Lanka) PLC. compared to 7.4% in the previous year. There was a pick-up in demand for Preamble credit at the beginning of the year 2015, which is a useful indication of business The Singer Group continued its expansion and consumption growth. aggressive growth drive posting There seems to inevitably be a strong Basis of impressive results for the year with link between performance of the local Group recording its highest ever consumer durable industry and that of Preparation revenue of Rs. 38.7 billion and the economy, especially the participation and Comparative Company too recording Rs. 33.3 billion. of the private sector. This was showcased Figures The bottom line of both Group and by greater economic performance Company reached to Rs. 1,236.0 million, and private participation improving The Group Financial Statements for and Rs. 859.7 million, respectively performance, particularly during the the year 2015, include the Financial which is an increase respectively of year with higher private sector credit Statements of Singer (Sri Lanka) PLC, 85%, against prior year. A favourable growth. Consumption is expected to Singer Finance (Lanka) PLC, Singer improvement in the local business experience a temporary slowdown in the Digital Media (Pvt) Ltd. and Singer environment during the year contributed first half of 2016 owing to the expected Business School (Pvt) Ltd. together with to the growth of the Group. In spite monetary and fiscal tightening measures. the share of profit or loss of associate, of the Rupee devaluation, the macro Furthermore, interest rates are expected calculated on the equity method. economic environment and market to rise from current low levels in the short The Company’s Financial Statements conditions in general can be described to medium term. Accordingly, the industry represent the Financial Statements of as improved relative to the prior is expected to witness a slight slowdown Singer (Sri Lanka) PLC only. year. The Group experienced an from growth levels witnessed in recent enthusiastic consumer buying pattern years, particularly in 2015. However, the The Financial Statements have been which escalated leaps and bounds economic environment is not expected prepared in accordance with Sri Lankan in the months of November and to witness volatilities similar to pre- Accounting Standards (hereafter December. Contributing significantly conflict period and interest rates are not referred to as SLFRSs and LKASs) to the dominant revenue and profit expected to rise dramatically – we expect issued by The Institute of Chartered results, were a range of initiatives and treasury bill yields to remain in single Accountants of Sri Lanka (CA Sri expansion plans that were successfully digits in the near to medium term. Lanka) and the requirements of the executed by the management Companies Act No. 7 of 2007 and during the year under review. These Sri Lanka Accounting and Auditing initiatives further enabled the Group Standards Act No. 15 of 1995. to sustain its leadership position in the Comparative figures were not restated and presented in-line with Singer (Sri Lanka) PLC Annual Report 2015 55

Revenue gains due to significant volume growth in products such as mobile phones, The Group recorded Rs. 38.7 billion furniture and air conditioners business in revenue, a 30% surge in the categories. 2015 financial year, compared to the previous year, whilst revenue Revenue growth in each channel was for the Company increased by significant and all segments witnessed 23% to reach Rs. 33.3 billion. The remarkable growth; Home appliance strong growth was supported by the segment grew 32%, IT products growth in the communication and 86%, consumer electronics 16%, Digital media segment along with Furniture 27%. The Company’s new recent restructuring in Digital Media subsidiary Singer Digital Media (Pvt) distribution channel under newly Ltd. Specialising in mobile phone sales formed subsidiary company Singer and computers to the trade channel, Digital Media (Pvt) Ltd. Digital Media contributed Rs. 3,523.9 million through sales were primarily accounted for revenue from sales to external parties. under the Company line in the first half of 2014. Revenue Rs. million Singer Group managed to sustain its volume growth in traditional product 38,711 lines such as sewing machines, 2015 the presentation made in the refrigerators, washing machines, panel Financial Statements for the year televisions etc. and there were major Rs.million ended 31st December 2014. + 30%

42,000 Net Turnover Analysis

35,000

2015 2014 38,711 28,000

5% 5% 16% 29,700 9% 9% 19% 21,000

25,441

25,486

14,000 22,032

19% 13% 16,029 12% 7,000 15% 11,914 0 5% ’10’09 ’11’12 ’13’14 ’15

34% 34% Revenue from the Group’s public listed subsidiary Singer Finance (Lanka)

Consumer Electronics IT products PLC was negatively affected by the Financial Services Sewing reduction in lending rates, resulting in Furniture Other only a marginal increase of 4.6% Home Appliances in revenues. 56 2015 Annual Report Singer (Sri Lanka) PLC

Performance in Context

Direct Interest Cost Singer Finance (Lanka) PLC. Selling Managing costs in a dynamic business and administrative expenses of the environment is a challenge since the Direct interest cost of the Group Group increased over prior year by management needs to maintain a decreased from Rs. 711.0 million in 15% from Rs. 7,345.5 million in 2014 balanced approach on operational the previous year to Rs. 644.5 million, to Rs. 8,433.4 million in 2015 in line efficiency as well as catering to the which is a decrease of 10.3%. Included with the expansion of operational growth of business prospects. Both in direct interest cost is interest cost activities and aggressive marketing Group and Company carefully managed for customer deposits and interest on and promotional plans to sustain costs without sacrificing expansion debentures at Singer Finance (Lanka) and expand market share, whereas of the business for future business PLC. Customer deposits at Singer increases in other expenses was prospects. Finance (Lanka) PLC decreased from marginal. As a percentage of revenue, Rs. 4,428 million to Rs. 3,368 million. Group and Company administrative Net Finance Cost However, bank borrowings increased and selling expenses decreased from over prior year to strengthen the 24.7% to 21.7% and 24.4% to 23.0% Group net finance costs declined by balance sheet position and to fund respectively. 1.7% to Rs. 1,091.2 million. Similarly, growth in lease receivables and loans. Company’s net finance costs declined by 11.1% to Rs. 1,094.7 million despite Operating Proﬁt Gross Profit Rs. million a 36.6% increase in total Group borrowings to Rs. 15,135.5 million Gross profit of the Group for 2,978 to fund business expansions and the year under review reached 2015 working capital growth, specially an Rs. 11,464.3 million compared with increase in trade receivables and Rs.million Rs. 9,723.0 million in the previous 34% inventory. Finance income of the Group year, an increase of 18%. The Group’s increased from Rs. 112.4 million to Rs. 116.7 million. At the Company gross margin percentage marginally 3,000 decreased from 32.7% to 29.6% over level, finance income increased from

the prior year. The gross profit of 2,500 2,978 Rs. 64.1 million to Rs. 164.1 million

the Company is Rs. 9,780.1 million 2,745 due to increase in interest income from

2,545 as against Rs. 8,466.3 million in the 2,000 Subsidiary Company Singer Finance

previous year, an increase of 16%. 2,222 (Lanka) PLC on its borrowings from the

2,033 Gross margin percentage of the 1,500 2,004 Parent Company, Singer (Sri Lanka) Company was 29.4% (2015) vs 31.2% PLC. However, this income is offset in

(2014), a decrease of 1.8%. In absolute 1,000 1,399 the Consolidated Financial Statements. terms, gross margin of both Group and Company increased over prior year 500 Share of Profit of Equity- supported by revenue growth. 0 Accounted Investee (Net ’10’09 ’11’12 ’13’14 ’15 Gross margin percentage of both the of Income Tax) Group and the Company is impacted by lower mix of high margin product The share of profit of Equity-Accounted lines and discounts to flush out slow Proﬁt Before Tax Investee after tax is applicable only to moving inventory and provision for Rs. million Group results and share of profit for excess inventory. In addition, it was the period is Rs. 2.0 million vs. profit 1,895 of Rs. 1.9 million in 2014. Equity- increasingly challenging to protect the 2015 product margins in the competitive accounted investments in the Group market conditions that the Company Rs.million + 64% are limited to Reality Lanka Ltd. generated in the year under review and the Company focused more on retaining Income Tax Expense and expanding market share with the 2,100 aim of reaping long term benefits. 1,800 Income tax expense of the Group

1,990 was Rs. 659.2 million as against

1,895 Operating Profit 1,500 1,777 Rs. 374.0 million in 2014. Income tax expense for the Company 1,200 During the year under review, increased from Rs. 196.6 million to Rs. 336.0 million. The Current year

1,168 Group Operating profit increased by 900 1,156 34.0% to Rs. 2,978.2 million (2014: income tax expense on ordinary 600

Rs. 2,221.9 million) driven by revenue 728 activities of both Group and Company has grown due to the increase in profit growth. Growth in other income was 300 significant due to increase in financial from ordinary business.

0 248 service income and miscellaneous ’10’09 ’11’12 ’13’14 ’15 income in the Subsidiary company, Singer (Sri Lanka) PLC Annual Report 2015 57

Performance in Context

over prior year. This is a commendable Total Comprehensive Taxation improvement and recovery of Income for the Year Net Tax Expenses EffectiveTax Rate operational performance compared to Rs.million the previous year. 38% The Group recorded a total +770 2015 comprehensive income of Rs. 1,206.3 million after tax for the year Proﬁt After Tax Rs.million Rs. million v.s. Rs. 891.3 million which was above prior year by Rs. 315.0 million. 1,236 Singer (Sri Lanka) PLC’s total 900 90 2015 comprehensive income for the year was Rs. 830.7 million vs. 750 75 Rs.million + 58%+ 58% Rs. 574.8 million reported in the

770 738 previous year, an increase of 600 60 Rs. 255.9 million. In the Group, total

611 1,400

560 450 45 comprehensive income attributable to

54%

36% 1,200

451 equity holders was Rs. 1,123.2 million

33%

1,309

46%

1,236 v.s. Rs. 824.2 million in 2014. Total

300 30 1,216 1,000

38%

37% comprehensive income attributable

150 252 15 800 to non-controlling interest was

157 Rs. 83.1 million v.s. Rs. 67.1 million

782 0 0 600 in 2014. ’10’09 ’11’12 ’13’14 ’15 669

400 522 Net Tax Expenses ()Rs. million Net Effective Tax Rate (%) 200 Total Comprehensive Income Rs. milloin

0 133 ’10’09 ’11’12 ’13’14 ’15 Net Tax Expenses include – Income 1,206 2015 Tax, Vat on Financial Services, Differed Tax and WHT on Dividend Received. In the Group, profit attributable to Rs.million 35% equity holders was Rs. 1,152.8 million Group effective tax rate for the year is v.s. Rs. 714.2 million in 2014. Profit 34.8% vs. 32.4% in 2014, effective tax attributable to non-controlling interest 1,500 rate of the Company was 28.1% v.s. was Rs. 83.3 million v.s. Rs. 67.4 million 1,250 29.9% in 2014. Including Value Added in 2014. Non-controlling interest

1,320 Tax on Financial Services, Group’s pertains to Singer Finance (Lanka) PLC 1,309

1,000 1,206 effective tax for the year is 38.3% vs. and is effective from 22nd December 36.6% whereas Company’s effective 2010 after allotment of shares following 750 891 tax rate for the year is 30.0% v.s. the IPO. 33.6% in the last year. The effective 500 tax rate increased at the Group level

519 due to add back of expenses in Other 250 Singer Finance (Lanka) PLC whilst the Comprehensive Income decrease in effective tax rate at the 0 Company level is mainly due to the Other comprehensive income for ’10’09 ’11’12 ’13’14 ’15 income in operating profit at lower add- the year is limited to actuarial loss back expenses. of retirement benefit obligation at both Group and Company level and Earnings per Share revaluation gain of land and buildings Profit for the Year of the Company. Land and buildings Group Earnings per Share (EPS) for of the Company were revalued in the The Group recorded a profit for the the period under review was Rs. 9.21 financial year 2014 by Mr. Chulananda year of Rs. 1,236.0 million after tax for v.s. Rs. 5.70 in year 2014. Earnings per Wellappili, an Independent Valuer. The the financial year 2015. This represents share of the Company was Rs. 6.87 next valuation will fall due in financial a growth of Rs. 454.5 million or 58% v.s. Rs. 3.70 in year 2014. year 2016. over last year.

Singer (Sri Lanka) PLC’s net profit for the year was Rs. 859.7 million v.s. Rs. 463.6 million reported in the previous year, which is an increase of Rs. 396.1 million, a growth of 85% 58 2015 Annual Report Singer (Sri Lanka) PLC

Performance in Context

Dividend Earnings Per Share Dividend Per Share Rs. Company paid a final dividend of Rs. Rs. 2.50 per share amounting to 9.21 Rs. 313.0 million during the year 4.20 2015 2015 in respect of the year ended Rs. + 62% 31st December 2014. The Directors Rs. + 68% have proposed a final dividend of Rs. 4.20 per share amounting to 12.00 Rs. 525.9 million for the year ended 9.00

10.11 31st December 2015. Subject to the

7.50

9.26 7.50 10.00 9.21 shareholder at the Annual General

Meeting. In accordance with LKAS 6.00 8.00 10 on “Events after the Reporting 6.00

4.50

5.70 Period” the proposed final dividend

4.20

5.34 4.50 6.00 subsequent to the reporting date is not recognised as a liability in the Financial

2.50 4.00 3.00 2.50 Statements as at 31st December 2015. The Company has access to necessary 2.00 3.69 1.50 1.06 funds to finance the payment of the final

0 dividend. 0 ’10’09 ’11’12 ’13’14 ’15 ’10’09 ’11’12 ’13’14 ’15

Dividend Pay Out Ratio

Price Earnings Ratio Dividends Paid 61% Rs. million The price-to-earnings ratio of the 2015 Company as at 31st December 2015 526 was 20.07 times against 31.86 times as % 2015 at 31st December 2014. Rs.million During the year under review, the + 68% Company’s share price ranged 120

104 between Rs. 105.50 and Rs. 152.00, 1,050 100 closing the year at Rs. 137.90.

Respective figures for 2014 were 80 900

80 939

68 Rs. 82.00, Rs. 128.90 and Rs. 117.90. 67 750 60

751 600

61 40 450

526 Price Earnings Ratio 20 Times 300

313 313 0 150 282 20.072015 ’10’09 ’11’12 ’13’14 ’15 0 ’10’09 ’11’12 ’13’14 ’15 Times

42.00 Solvency

36.93

36.10 35.00 Section 56 of the Companies Act No.

31.86 07 of 2007, requires that a solvency 28.00 test be carried out prior to the payment of dividends. The Board of Directors 21.00 20.07 18.30 will obtain a Certificate of Solvency from the Auditors prior to the date of 14.00 dispatch of the final dividend payment.

7.00 14.30

12.50

0 ’10’09 ’11’12 ’13’14 ’15 Singer (Sri Lanka) PLC Annual Report 2015 59

Performance in Context

Return on Equity Financial Position Structure Net Assets Per Share Return on Group equity for the year Rs. under review is 19.5% whilst in the previous year it was 13.9%. Return % 50.20 2015 on equity of the Company was 17.8% Assets Liabilities compared to 10.2% in the previous Rs.* 100 + 15% year. Return on equity has been computed by dividing the profit for the year by the average total equity 80 60.00 as at the beginning and end of each

50.20 financial year. 60 50.00

43.73

41.98

39.65 40.00 37.80 40

Return on Equity 31.03 30.00 20 24.07 19.5% 20.00 2015 0 ’14 ’15 ’14 ’15 10.00 % Assets Liabilities 0 ’10’09 ’11’12 ’13’14 ’15

29.3 PPE Shareholders’ Funds 30.00 Investments Long-Term Borrowings * Excluding non-controlling interest Inventories Short-Term Borrowings 25.00 22.9 Receivables Trade Creditors

18.8 19.5 Cash and Others Other Liabilities Total Equity 20.00 Total Group equity including 15.00 13.9 non-controlling interest increased by

9.5 Growth in Property, Rs. 852.8 million over 2014 to 10.00 Rs.million Plant & Equipment stand at Rs. 6,769.9 million as at

4.4 31st December 2015. The increase 5.00 2,715 2015 was mainly due to increase in 0 retained earnings over the prior year. ’10’09 ’11’12 ’13’14 ’15 Rs.million + 2% Total Company equity increased by * Including non-controlling interest Rs. 517.7 million over the previous year to Rs. 5,096.4 million. 3,000 Total Assets 2,500 Capital Structure

2,715 Total assets of the Group increased 2,668 by 18.3% to reach Rs. 32,262.3 million 2,000 2,505 compared to the 31st December 2014 2,151 while Company total assets increased 1,500

1,691 by 19.6% to reach Rs. 23,438.7 million, 1,564 % 1,000 result in additions to property plant 1,286 and equipment to improve leasehold premises, shop renovations, trade 500 100

43%

49%

47%

40%

35%

37% and other receivables and inventories. 32% 0 At the Company level other major ’10’09 ’11’12 ’13’14 ’15 80 investments included a Rs. 450 million debenture investment in Singer 60

68%

Finance (Lanka) PLC. 65%

63%

60%

57%

53%

40 51%

0 ’10’09 ’11’12 ’13’14 ’15

Total Borrowings Shareholders Equity 60 2015 Annual Report Singer (Sri Lanka) PLC

Performance in Context

During the year under review, the Net Assets Per Share vs. Group net cash used in investing Singer excelled yet Market Price Per Share Rs. activities decreased to Rs. 184 million compared to Rs. 496.1 million in 2014, again at the ‘SLIM- 50.20 vs 137.90 this was attributable to disposal of 2015 marketable securities by subsidiary Nielsen People’s Rs. Rs. company, Singer Finance (Lanka) PLC. Net cash flow from financing activities Award Ceremony by at Group level was Rs. 3,328 million as being crowned the 210 60 195.00 against Rs. 518.4 million of net cash inflows reported in prior year same ‘People’s Brand of 175 50 period; this is attributable to the issue of Rs. 3 billion worth of debentures the Year’ for 2015.

50.20 140 132.70 40 during the year under review.

43.73

41.98 Singer also walked 105 39.65 30

137.90

37.91 76.50 Accounting Policies away with the People’s

31.03 70 117.90 20 102.30 Durable Brand of the 89.00 Group and Company Financial 35 24.70 10 Statements for the period ended Year’ and ‘People’s 31st December 2015 presented in this 0 0 Annual Report is prepared and illustrated ’10’09 ’11’12 ’13’14 ’15 Youth Brand of in accordance with SLFRSs and LKASs Net Assets Per Share (RHS) and applicable accounting policies the Year’ Awards Market Price Per Share (LHS) with effect from 1st January 2012 and the requirements of the Colombo Stock reaffirming Exchange and the Companies Act No. its position as the Total Liabilities 07 of 2007, respectively. Sri Lankan consumer’s Total liabilities of the Group increased by 19.3% to reach Rs. 25,492.3 million go to brand. compared to the 31st December 2014 while company total liabilities increased by 22.1% to reach L to R Rs. 18,342.2 million. This increase was mainly attributable to the increase in 1. Annual Report Award 2015 interest bearing loans and borrowings by CA Sri Lanka following the issue of new listed debentures of Rs. 3 billion during the 2. Top 20 Best Companies year under review by the Company and to work for in Sri Lanka in interest in trade payables. 2015 by the Great Place to Work Institute Cash Flow

Group cash and cash equivalents 3. Top Ten Corporate Citizen decreased by 716.2 million to Award in 2015 by Ceylon Rs. 111.8 million by the end of the year Chamber of Commerce. under review. At the Company level, cash and cash equivalents decreased 4. Best Corporate Citizen – by Rs. 348.1 million to Rs. 259.6 million First Runner – Up in 2015 for the same period. by Ceylon Chamber of Commerce Group net operating cash outflow was Rs. 3,860 million compared to Rs. 954.4 million inflows in 2014 this 5. Sector winner in the other is attributable to the increase in level Business Category in 2015 of inventories to meet a high seasonal by Ceylon Chamber of demand, trade and other debtors and Commerce. decrease in customer deposits in Singer Finance (Lanka) PLC. 6. CIMA LMD 100. No. 01 in the trading sector in 2015. Singer (Sri Lanka) PLC Annual Report 2015 61

Awards and Accolades 62 2015 Annual Report Singer (Sri Lanka) PLC

44% 32% 10% (2014 – 44%) (2014 – 31%) (2014 – 12%)

Salaries, Commissions and Other Income Taxes, Turnover Taxes, Interest and Bank Charges Benefits paid to Employees and Value Added Tax and Other on Borrowings and Customer Dealers Taxes paid to the Government Deposits paid to Banks and other Lenders Singer (Sri Lanka) PLC Annual Report 2015 63

5% 3% 6% (2014 – 4%) (2014 – 4%) (2014 – 5%)

In Dividends to Shareholders Retained Profits for Reinvestment Retained for Reinvestment and and Future Growth Future Growth – Depreciation, Amortisation 64 2015 Annual Report Singer (Sri Lanka) PLC Chairman's Statement

Dear Shareholders,

The Sustainability Report highlights the Company’s progress over the past financial year toward being a better steward of our people, products and planet. We are well-knit into the very fabric of Sri Lankan society as we touch millions of Sri Lankan lives daily in our efforts to improve their quality of life.

We made significant progress in our efforts to nurture lifelong relationships with customers which extend beyond an ordinary sales contract. Our CSR framework allows us to continuously hone where and how we can make the most positive and holistic impact on Sri Lankan society. Our strong support of educational initiatives is underscored by the Singer Fashion Academy which addresses women empowerment and facilitates entrepreneurship and employment among Sri Lankan women. Singer employees constantly demonstrate their willingness to help others, whether it is donating their blood or supporting a cause within a rural school that encourages education.

With our large supply chain, we have embedded sustainability requirements into our procurement and supplier lifecycle management processes to increase procurement efficiency and enhance the sustainability capabilities of our suppliers.

For the second consecutive year we were recognised as one of Sri Lanka’s top 20 workplaces by the Great Place to Work Institute. Our CSR activities were recognised at the Best Corporate Citizen Awards Ceremony organised by the Ceylon Chamber of Commerce by being granted the title of one of Sri Lanka's Top Ten Best Corporate Citizens and the Sector Award for the Corporate in the 'Other Category'.

I invite you to explore in detail this Sustainability Report to learn more about our performance in our own operations and for our customers, our growing number of business partners, and how the people of Singer daily demonstrate our dedication to sustainability.

Dr. Saman Kelegama Chairman 25th February 2016 Colombo Singer (Sri Lanka) PLC Annual Report 2015 65

Forming A Sustainable Tomorrow

Victorious Singer contingent at the Best Corporate Citizen Sustainability Awards.

The Parameters Report Boundary Financial Statements. The accounting policies adopted in preparation of the of this Report and Content Financial Statements including the basis of preparation and significant This Report covers the economic, Unless otherwise stated, the Annual assumptions are given on pages 179 environmental and social performance Report 2015 covers the sustainability to 239. The man hours in respect of of Singer (Sri Lanka) PLC for the impacts arising from the Company’s training extended to employees is financial year ended 31st December activities in Sri Lanka. It includes the computed based on the scheduled 2015. The Company adopts an annual operations of our Subsidiaries, Singer time for each training session. reporting cycle based on the calendar Finance (Lanka) PLC, Singer Digital year. Media (Pvt) Ltd.,Singer Business The scope, boundary and measurement School (Pvt) Ltd. and also the methods used in the preparation of this This Report adopts the Global Associate Company, Reality Lanka Ltd. Report coincide with our Annual Report Reporting Initiative (GRI) Guidelines, in 2015. The information presented in version G4. In 2010 we published This Report includes economic, social this Report in respect of prior periods our Annual Report based on GRI G3 and environmental parameters that has not been restated. Guidelines. Thereafter, in the 2013 affect our business and stakeholders. Annual Report we adopted GRI G3.1 They are therefore material and Guidelines to report our sustainability recognised for their impact on our Products impacts including last year’s Annual business and the stakeholders. and Services Report.

We will be pleased to respond to any Data Measurement Our business operations are diverse. queries on this Report. Our contact They include, marketing domestic and details are as follows: Techniques and industrial sewing machines, consumer Bases of Calculation electronics, household appliances, Finance Division, air conditioners, furniture, agricultural Singer (Sri Lanka) PLC, equipment, motor cycles, two-wheel No. 80, Nawam Mawatha, Financial data presented in this Report tractors, personal computers, digital Colombo 2. have been extracted from Audited media products and smart phones etc. 66 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

We are engaged in the manufacture of components from overseas suppliers, furniture, agricultural equipment, water its own operations fall exclusively pumps, assembled motor cycles and within Sri Lanka. two wheel tractors as well. In addition, we extend hire purchasing and other Singer (Sri Lanka) financial services to customers. Singer Umbrella

Outsourcing functions are limited to Covers More Areas PLC was a triple after sales services of our products crown winner at which are managed through a The Singer group serves all service franchise network, under geographical regions of Sri Lanka. this year’s Best the Company’s 14 Regional Service During the year, our reach was Centres. These are strategically expanded by the opening of 10 Corporate Citizen located in key cities in Sri Lanka. showrooms. The showrooms were The principal activities of our opened in, Akurana, Issadeen Town, Sustainability Subsidiary, Singer Finance (Lanka) Pugoda, Badulla, Parakramapura, PLC include, acceptance of deposits Samanthurei, Kandy,Minuwangoda, Awards organised from the general public and financing Kiribathgoda and Borella. goods, articles, vehicles or other items, by the Ceylon either on hire, hire purchase, leasing or Please refer page … of the Report for Chamber of another method of financing. the distribution network. Commerce. Our fully-owned Subsidiary; Singer Digital Media (Pvt) Ltd., is engaged Winner of in the marketing of mobile phones, computers and digital cameras through Multiple Awards an island-wide distribution network.

Our newly formed fully owned subsidiary Singer Business School (Pvt) Ltd. is engaged in providing of educational services.

We provide a wide range of products, of both local and international brands. These brands are given on page … of this Report.

Operational Structure

Singer crowned as the ʻBest Youth Brand’ at the Peoples awards. Singer Group consists of five companies and a separate manufacturing division. The five Singer (Sri Lanka) PLC was recognised These accolades not only recognize companies are Singer (Sri Lanka) as one of Sri Lanka’s top 20 workplaces our outstanding contribution to the PLC, Singer Finance (Lanka) PLC, for the second consecutive year at an community through the numerous CSR which is a 80.4% owned subsidiary, exclusive ceremony by the Great Place Projects but also our sustainability Singer Digital Media (Pvt) Ltd., Singer to Work Institute. Singer also won the initiatives in receptiveness Business School (Pvt) Ltd. a fully- Gold award in the Large Enterprises to employees, environmental owned subsidiaries and Reality Lanka category, for over 750 employees. consciousness, customer-supplier Ltd., an associate company. Singer relations and good governance. Manufacturing Factory in Piliyandala Singer (Sri Lanka) PLC was a triple All these contribute to making Singer operates as a separate division. Other crown winner at this year’s Best (Sri Lanka) a well-balanced company. than the formation of new subsidiary Corporate Citizen Sustainability Company Singer Business School (Pvt) Awards organised by the Ceylon Singer was crowned as the Best Brand Ltd., there were no significant changes Chamber of Commerce. The event was for the 10th consecutive year, Best from the previous Reporting period. held at Cinnamon Grand, Colombo Consumer Durables Brand and the While Singer (Sri Lanka ) PLC serves where 3 Awards were won, namely; Best Youth Brand at the SLIM-Nielsen as the Sri Lankan distributor for several First Runner-up, Top Ten Corporate Peoples Awards 2015. major international brands apart from Citizens Award and the Sector Winner purchasing certain materials and in the Other Businesses category. Singer (Sri Lanka) PLC Annual Report 2015 67

Forming A Sustainable Tomorrow

Year 2014 Annual Report won the Gold Given the size of our Company, we The Executive Committee, comprising Award under trading category in the believe General Meetings are the most of all key managers and two Deputy 51st Annual Report Award competition effective avenue for shareholders Directors, meets weekly to discuss and which was conducted by CA Sri Lanka. to forward recommendations or address current operational matters directions. Shareholders can also and issues of strategic nature and take Good Governance communicate in writing directly with prompt action. our Compliance Officer or our Non- Executive Chairman. Singer employs dynamic governance. Governance, Commitments This is a non-authoritarian and Engagements All key, senior and relevant subject organisational operating structure that managers participate in the monthly empowers people to make policy within Singer enshrines the highest ethical management review meetings their established domains, fostering standards in conducting its business and operations meetings. We also better and clearer decisions. The operations. It is the responsibility of the encourage and foster a culture Company culture allows leadership Board of Directors to ensure exemplary which enables employees at all to spring up when it is most needed, governance across all aspects of levels to express their views and enabling the business to take effective business is in the best interests of recommendations freely to the action when needed. stakeholders. management. The management staff has regular interactions with This obviates the under utilisation The Chairman of the Board functions the Group CEO and other Directors. of the knowledge, expertise and in a non-executive capacity. This Other employees communicate with experience of lower-level employees strengthens the independence of the the Board through their respective in decision-making. In dynamic Board and Non-Executive Directors. divisional heads. governance, every voice is heard for creating policies - and a management The Board comprises seven (7) hierarchy exists for daily operations. Directors including the Chairman and the Chief Executive Officer. The unique characteristic of dynamic governance is that it encompasses both horizontal and vertical governance. Both the manager and the hierarchy stay in place and everybody has a voice that can’t be ignored.

Dynamic governance often leads to higher staff morale, increased productivity and better decisions. More good ideas are generated for decision making purposes and people give their utmost to carrying them out. Dynamic governance makes Singer more vibrant, making available the needed information from the entire organisation.

Triumphant Singer Team at the Great Place To Work Awards. Performance-Based Compensation

The Board has established four governance committees.

Audit Committee

The Audit Committee is empowered to review and monitor the financial reporting process of the Group. It provides additional assurance on the reliability of the Financial Statements through a process of independent and objective review.

Clinching the Gold Award in the Trading Category at the 51st Annual Report Award Competition. 68 2015 Annual Report Singer (Sri Lanka) PLC

This Committee acts as an effective forum in assisting the Board of Directors in discharging their responsibilities. This is done by ensuring the quality of financial reporting and related communication to the shareholders and the public. The Audit Committee comprised of three Non-Executive Independent Directors and the Head of Risk Management, functions as the Secretary to the Committee.

The Financial Director/Compliance Officer, Audit Staff, Representatives of External Auditors and when necessary, the Group CEO and relevant operation Directors and Managers attend the meetings by invitation.

Remuneration Committee

This Committee comprises of the 3 Non-Executive Independent Directors and the committee is chaired by President/Chief Executive Officer of Singer Asia Ltd. The Finance Director functions as the Secretary to the Committee which is chaired by a Non- Executive Director. The Group CEO and the Finance Director provides the relevant information and participates in its analysis and deliberations. The scope of the Committee is to look into fees, remuneration and perquisites of Chairman, Group CEO, Independent Directors and the Executive Directors of the Board, including Alternate Directors and approve recommendations made by the Group Singer (Sri Lanka) PLC Annual Report 2015 69

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Forming A Sustainable Tomorrow

CEO and the Corporate Office of as part of their written Contract of Memberships in Singer Asia Ltd., is the intermediate Employment. As per the agreement the Associations Parent of the Company. The Committee signatory is responsible to comply with also reviews the policies pertaining to the Code and also ensure employees Singer (Sri Lanka) PLC and subsidiary, the remuneration and perquisites of the reporting to him/her also comply with Singer Finance (Lanka) PLC are Key Managers of the Company. the Code. The Code of Business members of the following associations: Conduct is signed annually to refresh yy The Ceylon Chamber of Commerce Nomination Committee their knowledge on the contents and update themselves on new clauses and yy Sri Lanka-China Business Council amendments to the Code. This Committee comprise of Two yy Import Section of the Ceylon Non-Executive Independent Directors Chamber of Commerce In addition, the Whistle-Blower Policy together with the Chief Executive y and the collective agreement signed y Sri Lanka-Canada Business Council Officer of the Group. The Chairman with the labour unions have further yy The Employers’ Federation of Ceylon of the Committee is a Non-Executive strengthened our stance of avoiding y Independent Director appointed by the y CSR Lanka Guarantee Ltd. conflicts. Board. Secretary to Board functions as the Secretary to the Committee. The Whistle-Blower Policy, introduced Fundamental Framework – The main role and responsibilities in 2009, enhances transparency and of the Committee are to propose a Our Vision, Mission, promotes adherence to the Code suitable charter for the appointment Values and Objectives of Ethics. It encourages employees and re-appointment of directors to to raise concerns on any misdoing the Board and to act in accordance Please refer pages 4 and 5 of the at work. The Collective Agreements with such Charter in proposing Report for our vision, mission, values with our labour unions facilitates appointments and re-appointments. and objectives. Being a company an equitable balance between the Such Charter shall cover areas such committed to creating shared interests of Singer (Sri Lanka) PLC as qualifications, competencies, value, we ensure that our business and the employees. The welfare independence, relationships which practices are aligned with our social facilities provided by the Company have potential to give rise to conflict goals. Such values are built into the to the employees helps to keep them vis–a–vis the business of the company corporate culture and structure of motivated, averting potential conflicts etc. Further, the committee reviews the organisation and are routinely of interest. the structure, size, composition and evaluated in the process. competencies (including the skills, knowledge and experience) of the Eligibility of We believe in working closely with our Board and makes recommendations to Board Members suppliers in order to create shared the Board with regard to any changes if values, for both parties. As detailed in necessary. New members are appointed to the the Customer and Supplier Relations Board based on qualifications and section, we strive to enable our Related Party Transaction expertise in adherence to the rules suppliers reach new standards and and regulations of the Colombo Stock also share our market intelligence with Review Committee Exchange, the Code of Best Practice them to improve existing products and on Corporate Governance issued develop new ones. The committee comprises of the jointly by The Institute of Chartered two Non Executive Independent Accountants of Sri Lanka and the Directors, one Non Executive Director Overseeing Economic, Securities and Exchange Commission and Executive Director/Group Chief Social and Environmental of Sri Lanka and the Companies Executive Officer. The Finance Director Act No. 07 of 2007. Performance functions as the secretary of the committee. The Board of Directors We also identify and groom our As the highest governance body, the formed the Board Related Party executives for possible appointment to Board of Directors are responsible for Transactions Review Committee to the Board based on a well-structured the strategic planning of the Group. assist the Board in reviewing all related process that includes extensive This includes the formulation of our party transactions in accordance with training and development. This may strategic vision and mission, setting the requirements of the Code of Best involve overseas assignment and the overall corporate policy, monitoring Practice on Related Party Transactions training at foreign universities and performance and reviewing risks and issued by the Securities and Exchange other institutions. all major investments. Commission of Sri Lanka. Opportunities are provided for The Board provides a mechanism for Avoiding Board members to be exposed the critical evaluation of the Company’s Conflicts of Interest to new developments in key operations. Board members exercise areas through regular training independent judgment in executing their responsibilities, which include All key and senior managers are programmes and getting them serve strategy and risk management. bound by the written Code of Business in related committees. Conduct which is an agreement signed 72 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Both, the Chairman and Group Ratings and LMD’s ‘Most Respected Stakeholder Engagement CEO ensure that good governance Entities’, and the ‘Best Corporate is practiced in the organisation, Citizen’ rankings, provide useful Singer actively seeks to engage with ensuring that both the Executive and external evaluations of the Board’s both internal and external stakeholders Non-Executive Directors participate performance. through ongoing proactive dialogue effectively in decision-making and and ascertain valuable feedback. bring independent judgment on issues The Executive Directors are very much Throughout this report we provide pertaining to strategy, performance involved in the day-to-day operations more details on how we engage with and risk. The Board also seeks of the business, constantly meeting key our stakeholders in sharing the Singer independent professional advice from stakeholders. These include meeting story. In the ensuing year, we plan third parties such as the External customers during field visits; suppliers to continue the GRI G4 journey by Auditors and other professional at their manufacturing locations engaging with our stakeholders more consultants when deemed necessary. (overseas and local) and also during deeply on our GRI G4 reporting and suppliers’ visit to the Company; regular CSR programmes which enables us to Alternate Directors with expertise in interactions with employees; and other obtain more specific feedback on our diverse fields also provide additional external bodies; such as Chamber approach. This feedback will be shared information and expertise to the Board. of Commerce, rating agencies, in our future reports: Operational decisions are taken by the Governmental agencies, industrial Executive Committee that meets every associations, which enables direct Stakeholder Method of Frequency Monday. In addition, a Management feedback. Engagement Review meeting is held once a month. Customers Retail Channels, Ongoing Our Response to Call Centre Our annual plan sets out the objectives Advertising and Ongoing and plans for all our business units and Precautionary Approach Promotion divisions. Management committees We understand the need to translate these objectives into tasks for Employees Management Ongoing/ safeguard the public in conducting Divisional Heads to implement. and Divisional Daily our businesses. Therefore, we make Meetings every effort keep our customers and We abide by internationally-agreed Initiatives by the communities informed of any standards, Codes of Conduct and HR Division potential risk they may face as a principles. For example, the section result of our operations. We believe in Shareholders Annual General Annually on ‘Forming A Sustainable Tomorrow,’ being proactive. Hence, we anticipate Meetings in Annual Report is based on Global possible health or environmental risks Quarterly Quarterly, Reporting Initiative Guidelines. in advance and take apt measures to Reports and Ongoing address them. This is why we replaced Correspondence Evaluating Board UV-based paints with water-based Suppliers Visits, Ongoing Members’ Performance paints in our furniture manufacturing Consultations, plant and adopted CFC free gas at Workshops The Board does self evaluation on its very early stage and used zero ozone own performance. Our interactions impact R600a natural refrigerants. Community Various Projects Ongoing with stakeholders also enable us We were prompted to adapt these Government Timely Tax Ongoing to assess our economic, social measures out of our concern towards Authorities Payments, and environmental performance. the environment. Complying with In addition, critical self-analysis, all Regulations stakeholder communication, Our voluntary partnership with the independent judgments from external Central Environmental Authority in The other key stakeholders include entities also enables evaluation of the National Co-operate E-Waste Bankers, Financial, Institutions, Board performance. Management Project was driven by Depositors and Competitors. this same conviction. As detailed in In addition, the Company’s the Environmental Relations section, Based on feedback received from performance is evaluated by the Singer we are forerunners in e-waste stakeholders through the means of Asia Board at corporate level against collection which could pose serious engagement described in the table the annual business plan. environmental and health risks one day. above, Singer has identified topics and concerns of key stakeholders. Through the implementation of the We also attempt to increase the This information is provided in the Global Reporting Initiative Guidelines recyclable content of all our products following table. and our participation in forums, such and packaging. For example, we as Annual Report Competition, we are substitute natural recyclable materials able to get feedback on our Board’s like recycled paper for styrofoam in performance as well. Competitions, our packaging. This was adopted way such as SLIM AC Nielsen People’s before the regulatory requirements Brand of the Year Awards, Fitch came to effect. Singer (Sri Lanka) PLC Annual Report 2015 73

Forming A Sustainable Tomorrow

Topics and Concerns of Key Stakeholders

Stakeholder Concern Response

Customers Product availability, Enhanced customer Singer ensures products are widely available via our island service, Reliable quality of products wide distribution network. Further, Singer provides an enhanced customer service to its customers. Singer provides dealership to many world renowned brands with high quality and assures quality of locally assembled Singer brand products Employees Increased salaries & wages, Job Singer offers a wide range financial and non-financial of satisfaction & motivation, Training and benefits to employees along with continuous training and career continuous career development development opportunities Suppliers Long term contracts for purchases, Ability Singer maintains an effective relationship with suppliers to obtain payments promptly Shareholders Growth in profits, Dividend growth, Growth Singer commits to fulfill shareholder concerns in share price Government Compliance to rules and regulations Singer adheres to rules and regulations of the government in including tax payments, Creation of job conducting its operations opportunities Society Minimizing threats to the environment, Singer engages in all activities in an environmental friendly Creation of job opportunities manner and safeguards the interests of the society

Aspect Indicator Significance To Organisation To Stakeholder (Very High/High/Medium) (Very High/High/Medium)

1 Economic Performance G4-EC1 Very High Very High G4-EC3 G4-EC4 2 Materials G4-EN1 Very High High 3 Energy G4-EN3 High Medium G4-EN7 4 Water G4-EN8 Medium Medium 5 Biodiversity G4-EN12 Medium Medium 6 Emissions G4-EN20 Medium Medium 7 Effluents and Waste G4-EN22 High High G4-EN23 8 Products and Services G4-EN27 High High 9 Compliance G4-EN29 High Medium 10 Supplier Environmental Assessment G4-EN32 Medium Medium 11 Environmental Grievance Mechanisms G4-EN34 High High 12 Employment G4-LA1 Very High Very High G4-LA2 G4-LA3 13 Labour/ Management Relations G4-LA4 High High 14 Occupational Health and Safety G4-LA5 High High G4-LA6 15 Training and Education G4-LA9 High High G4-LA10 G4-LA11 74 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Aspect Indicator Significance To Organisation To Stakeholder (Very High/High/Medium) (Very High/High/Medium)

16 Diversity and Equal Opportunity G4-LA12 Medium Medium 17 Equal Remuneration for Women and Men G4-LA13 High High 18 Labor Practices Grievance Mechanisms G4-LA16 High High 19 Non-Discrimination G4-HR3 High High 20 Freedom of Association and Collective G4-HR4 High High Bargaining 21 Child Labour G4-HR5 High High 22 Forced or Compulsory Labor G4-HR6 High High 23 Human Rights Grievance Mechanisms G4-HR12 High High 24 Local Communities G4-SO1 High High 25 Anti-competitive Behaviour G4-SO7 High Medium 26 Customer Health and Safety G4-PR1 Very High Very High G4-PR2 27 Product and Service Labelling G4-PR3 Very High Very High G4-PR5 28 Marketing Communications G4-PR7 High High 29 Customer Privacy G4-PR8 Very High Very High 30 Compliance G4-PR9 High High

Very High 1, 12, 29

7, 8, 11, 13, 14, 15, 17, High 18, 19, 20, 21, 22, 23, 2 24, 26, 27, 28, 30

Medium 4, 5, 6, 10, 16 3, 9, 25

Medium High Very High Significance to Stakeholder Significance to Singer

Economic Performance

Statement of Value Added – Group

Category 2015 2014 Rs. ’000 % Rs. ’000 %

Group Turnover – Gross 41,082,588 31,663,069 Other Income 240,935 124,311 Less – Cost of Material and Services 31,511,232 23,807,817 Value Added 9,812,291 100 7,979,563 100

Distribution of Value Added To Employees and Dealers Salaries, Commissions and Other Benefits 4,266,832 44 3,548,600 44

To Government Income Taxes, Turnover Taxes, Value Added Tax and Other Taxes 3,122,195 32 2,438,709 31 Singer (Sri Lanka) PLC Annual Report 2015 75

Forming A Sustainable Tomorrow

Category 2015 2014 Rs. ’000 % Rs. ’000 %

To Banks, Deposit Holders and Other Lenders Interest and Bank Charges on Borrowings and Customer Deposits 974,548 10 991,328 12

To Suppliers of Capital Dividends to Shareholders 525,880 5 313,024 4

Retained for Reinvestment and Future Growth Depreciation, Amortisation 325,500 3 311,004 4 Retained Profits 597,336 6 376,898 5 Value Distributed 9,812,291 100 7,979,563 100

Sources and Distribution of Income

Sources of Income Distribution of Income

2014 Value Added To Employees and Dealers

To Government To Banks, Deposit Holders and Other Lenders 2015 To Suppliers of Capital

Retained for Reinvestment and Future Growth

100 80 60 40 20 020 40 60 80 100

Defined Benefit Obligation we promote recycling and waste Whilst ensuring that the factory is management processes. compliant with all environmental The Group net obligation in respect certifications, we conduct our of defined benefit plan of employees As a responsible corporate citizen, internal operations in line with these is disclosed in Note 28 in pages 220 we have taken many initiatives guidelines as well. Accordingly, all and 221. to mitigate any damage to the our conventional paint booths were environment. Our staff members at replaced with water curtain paint the Piliyandala Factory adhere with booths, thereby reducing air emission environmental-friendly practices caused by spray painting to a greater Environmental to preserve the lush environment extent and reducing toxic emission Performance surrounding the factory. They are as well. focused on controlling noise pollution, air pollution and water pollution. We The sanding activities are carried Singer Factory also follow solid waste management out in an enclosed area incorporated Integrating Sustainable and sound chemical management with a proper dust extraction system. Eco Practices to the extent of energy and resource This enables to do our main operation conservation. without polluting the air and also The environment is our heritage creating a safe environment for the and our inheritance. Therefore, Guidelines given by local and employees who work in this area. we make every effort to create a international authorities are strictly The emission control system is well more sustainable and beautiful followed in storing and transporting maintained to ensure its sound planet. We ensure that even the certain hazardous materials which are operations. smallest procedures carried out by used for production. All chemicals us reflect visionary, green are stored in sealed warehouse with Environmentally sustainable policies contributions to our society. The restricted access. In order to obtain are instilled in our suppliers and products marketed and manufactured the CEA certification, two independent manufacturers during on-site by us are increasingly geared to environmental audits are conducted evaluations of their processes which be eco-friendly. Our manufacturing annually for the furniture factory and are conducted regularly. In the event of processes are constantly evaluated the agro factory. The fact that our non-compliance, we either discontinue for their environmental impacts and factories operates under all these set their services or take instant measures standards signify our stance as an eco- to upgrade their standards. friendly company 76 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Solid waste including sawdust arising by placing e-waste collection bins in is a major area of focus and a priority from our operations is removed in all Singer Plus, SISIL World, Singer for us, being a leading manufacturer an environmentally safe manner. Mega, Singer Home Showrooms and and retailer of appliances and In consultation with the relevant Singer Service Centres. Awareness consumer electronics. Given below are authorities, we dispose solid waste was created through Below The Line details of e-waste recycling by Singer though responsible third party (BTL) promotions, Public Relations (PR) for 2015, from our e-waste recycling contractors. The solid waste is used for articles, print advertisements, posters programme. wood briquetting, burners and filling up and billboards. of marsh lands etc. Given below are details of e-waste disposal by Singer for the year 2015: We also keep evaluating our suppliers and manufacturers and help them to Category Volume upgrade their standards. We instill environmentally sustainable policies in CRT TVs 12,635 them and conduct onsite evaluations of LCD TV 2,244 their process on a regular basis. Refrigerators 1,483 Washing Machines 4,241 Saw Dust Collection Other 1,057 We continuously focus on reducing, reusing and recycling saw dust, Trade in Offers to Reduce smoke, paint fumes, wood cut-offs, Biodegradable Packaging Carbon Footprint particle boards and plastic and iron scraps. The waste materials Singer factories have replaced As the largest consumer durables are channeled into water troughs, regifoam as a packing material with retailer in the country, we take our where they are collected, treated and corrugated cardboard. Research and responsibility very seriously. We disposed in a proper manner. planning are underway to expand maintain long-standing and continuous In addition, a dust collection system the use of biodegradable materials. relationships with our customers. is installed in our sofa factory to In addition, we have strategised Whilst providing goods and services, prevent air pollution through a fine to use shopping bags made out of we strive to instill environmentally filtration process. biodegradable materials. friendly habits in our customers. The newly established Singer trade in To recycle the saw dust disposed offers motivates customers to trade in at our factory in Piliyandala, we Reducing Waste their old electrical appliances for more collaborated with a third party that energy-efficient and environmentally supply saw dust for boilers and ovens. friendly products. This helps to reduce Our factory has two chambers to Continuing e-Waste the impact on carbon footprints. collect saw dust prior to handing over to the supplier who voluntarily collects Management Leadership the saw dust thrice a week. Through Pioneering and Three years ago, we went beyond our this initiative, we are not only helping operational responsibilities to sign a Promoting R600a Gas this supplier but also optimising the Memorandum of Understanding with Refrigeration use of waste from our manufacturing the Central Environmental Authority processes. In recognition of our to address e-waste management. Singer's sister company Regnis contribution and support to reduce Accordingly, we became one of the few (Lanka) PLC demonstrates our Sri Lanka’s carbon footprints, we Sri Lankan companies to take on this commitment to creating and sustaining received a token of appreciation from responsibility. Under the guidance of a greener future in Sri Lanka. Regnis the Central Environmental Authority. the Central Environmental Authority, manufactures two of the most the Group secured a license that energy efficient and valued ranges follows the UN BASEL Convention of refrigerators, the Singer GEO and Island-Wide e-Waste Regulations in collecting, transporting SISIL ECO ranges. The Singer GEO Collection Points and storing e-waste for recycling. Thus range became the first to adopt far, we have collaborated with Green R600a gas technology, which is a Link and Ceylon Waste Management 100% environment-friendly substitute Having earned a reputation as a who work in co-operation with e-waste for previous HFC refrigerants that respected and responsible distributor recyclers in Singapore, China, South contribute heavily to the depletion of of electrical appliances in Sri Lanka,the Korea and the UK to reduce the world’s the ozone layer and global warming. general public and our customers carbon footprints. Although the use of R600a gas joined the e-waste management becomes compulsory in year 2040 campaign organised by us. Ease of Singer strives to reduce waste under the Montreal Protocol, our access was facilitated through the vast wherever possible complying with all commitment to the environment has Singer network. Our e-waste campaign environmental regulations related to seen us meet this goal more than two was brought closer to the customers waste management. E-waste recycling decades ahead. Singer (Sri Lanka) PLC Annual Report 2015 77

Forming A Sustainable Tomorrow

The Company took aggressive to the middle-income consumers. On average, the Piliyandala Factory steps to promote R600a gas We availed them the opportunity to consumed 2,000 litres of Diesel per refrigerators in Sri Lanka. All marketing invest in energy efficient technology month in its operations in the year communications were targeted to within their purchasing capacity. in review. The average electricity promote the benefits and importance of The Samsung and Hitachi range of consumption for a month was 104,000 R600a refrigerators. Following that the refrigerators utilise inverter technology. kW/h. Company discontinued the sale of all The most popular products that use R134a gas refrigerators and switched inverter technology include the Singer As a result of the change to energy to R600a refrigerators only. The entire Inverter Air conditioners, Samsung efficient new refrigerators, the total nation was benefited through this refrigerators, Hitachi refrigerators and power saving to the society per annum marketing revolution. Hitachi Air conditioners. amounted to 8,930,225 kW/h. The reduction in carbon dioxide emissions Given below is the estimated power Grievances on was 3,833,608 Kg. saving per annum to the nation through total sale of R600a refrigerator in the Environmental Impacts Singer uses ground water only for year 2015: human consumption and not for any No grievances were filed on manufacturing processes. We keep environmental impacts through formal Total Power consumption per annum the Municipal water supply line only as grievance mechanisms during the R134a R600a Saving in a stand by source for our operations.. Reporting period. (kWh) (kWh) kWh due to On average, the Piliyandala Factory change withdrew 2,000 litres per day of ground to R600a There were no monetary or non- water during the 2015 reporting period. monetary sanctions imposed for non- 39,886,952 30,832,696 9,054,256 compliance with environmental laws It is estimated that a similar volume and regulations Singer Now Represents of planned and unplanned water was discharged through the common drain All suppliers are required to adhere Global Leaders of system. This water was not reused by to the Singer Code of conduct and Sustainable Home another organisation. environmental standards. Appliances While Singer Group believes in the Singer partnered with Arçelik A.S, Materials Used by importance and value of protecting and the leader in home appliances in Weight/Volume preserving biodiversity, the Company Turkey, Romania and South Africa, does not have operational sites owned, and the third largest company in its Give below are the total volumes and leased, managed in, or adjacent to, sector in Europe. Arçelik too values weights of non renewable materials protected areas and areas of high sustainability like we do. Therefore, we used to produce and package biodiversity value outside protected partnered this global leader and we products of the Piliyandala Factory. areas. The Group makes every effort to offer their prized brand, BEKO to the prevent environmental harm as well. local market. Material Avg. QTY/per month Liters All BEKO products are energy efficient. SOCIAL Paints 1,500 The washers consume less water, and PERFORMANCE the ovens consume up to 20% less Thinner 1,200 energy than the other products in the Base Coat 350 'A-class' energy efficiency category. Labour Practices This brand also enjoys the number Acetone 300 one status in the UK, and is positioned Rexin 9,000 and Decent Work second in Europe. We are committed to employee engagement that upholds individual Total renewable materials used to Promoting Energy dignity and respect human rights. Our produce and package the products of employment practices are premised Efficient Inverter the Piliyandala Factory. Technology on attracting and retaining talent based only on merit. The capability Material Avg. QTY/per month We have been heavily involved in development agenda ensures the skill promoting products that utilise inverter Particle Board 3,500 boards enhancement of all employees through technology which consumes at least customised training and development. Wood 35,000 Cubic feet 30% – 50% less energy than standard All our employees operate in a work products. Although inverter technology environment that is bench marked During 2015, approximately, 12,500 kg is more expensive, we promote these for the quality of its safety and health of packaging card board was reused products as they are energy efficient standards. by the Singer Warehouse – Piliyandala. and are crucial for a greener planet. This saved valuable resources and Last year, we introduced the Hitachi money spent on new cardboard. inverter refrigerator which caters 78 2015 Annual Report Singer (Sri Lanka) PLC

How cool is that? The outdoor experience indoors? With Singer air conditioners you can b e as cool as you like in any situation and in any location. Singer’s multi brand portfolio of world class air conditioners are keeping more areas cool and comfortable than ever before. Singer (Sri Lanka) PLC Annual Report 2015 79

Singer – A Great Place to Work

Minimum number of weeks’ notice provided to employees and their elected representatives prior to Singer (Sri Lanka) PLC once again the implementation of significant earned a coveted spot as one of operational changes that could Sri Lanka’s top 20 workplaces for substantially affect them will be the second consecutive year at an considered depending on the situation. exclusive ceremony by the Great Place to Work Institute. Singer also won the Gold award in the Large Enterprises HR Policies and category. Procedures The Company received above average It is the overall responsibility of the Employees can communicate with industry ratings in credibility, respect, Group Chief Executive Officer, through the Board through their respective fairness, pride, and camaraderie the members of the management Divisional Heads. Monthly management compared to 2014 results. Noteworthy committees and human resources review meetings and operations among the key highlights was functions, to ensure that employment meetings are held with the participation employees trust in management. practices are in accordance with the of all key senior and relevant subject HR policy in all Singer Units. They managers. We maintain an open Ranked among the best employers also ensure total compliance with all door policy to facilitate a culture in the country, Singer continuously statutory provisions governing labour where employees of all levels could strives to create a great work ambience practices and decent work. Specific freely express their views and for its employees. An integral part responsibilities are assigned to recommendations to the management of Singer’s work culture is creating different individuals based on the roles staff. positive engagement through a range performed by them. of activities involving team work Singer is a successful Company and building camaraderie among Monitoring and Follow-up: The human because we have a motivated departments. Amongst these activities resources regularly monitor progress workforce. Therefore, ‘doing good’ are staff training and development to ensure proper implementation of cascades throughout the communities programmes, career development and these policies. The unit heads and the in which we conduct business. It is one the engagement of families of staff Divisional Management Committees Company that embeds sustainability members. In addition, recreational and follow-up periodically to ensure full whilst motivating employees in its cultural activities are held throughout compliance. business operations. the year. 80 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

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Forming A Sustainable Tomorrow

Establishing the first Corporate Special emphasis is made to develop Rotaract Club in the world, having managers. This is because we believe an active Corporate Toastmasters that a good leader is able to build a Club, holding inter-departmental well-integrated and effective team. competitions including a novel talent show titled ‘Singer Got Talent’ Accomplishment contributed to creating a vibrant team of happy and committed people driving of Employees the best customer experiences. Singer Asia’s Most Singer gives a prominent place for Valuable Player sports and encourages employee participation in a range of sporting The Singer Most Valuable Player activities including cricket, badminton, Performance awards which are volleyball and netball. The employees given to key managers recognized participate in both mercantile and the indispensably performance and inter-departmental competitions. contribution of Mr. Kelum Kospelawatte Singer provides continuous support for (Winner of MVP Award) and Mr. Lalith inter-school sports activities and is the Yatiwella (Runner up of the MVP Award) proud sponsor of the Sri Lanka schools rugby tournament for over 25 years.

In order to optimise the work-life balance of employees, Singer introduced flexi hours in certain locations. In addition, annual family outings, Christmas parties and Children’s’ art competitions are some of the highly popular events in the calendar.

Retaining its best talents through developing and retaining top performers and the dynamic management team has made the Company the employer of choice. Among its Directors are three staff members who joined the organisation as junior clerks and have risen up the ranks.

Employee Appraisal System Supporting Work Engagement

Performance appraisals are conducted on all employees except interns, trainees and temporary employees. The annual performance appraisal system facilitates career management, mapping development paths and enhancing the effectiveness and motivation of our employees. It helps to achieve better results, manage employees effectively and Diamond Club and identify high performance and President Club Awards training needs of individuals. Diamond club award 2015 was won by All strategic information is provided Mr. Manjula Silva while Mr. Iman Perera to employees through an internal and Mr. Indika Perera were presented magazine and meetings with the the covered president club award 2015. management. 82 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Encouraging Open Dialogue

We encourage open dialogue in our organisation as it leads to building trust amongst all employees. This is essential to drive operational excellence, and uphold employees integrity and credibility. The ability carry a sincere and comprehensive dialogue about any issue in the Company is essential to building trust.

Promoting Employee Performance

High performing employees and teams are given recognition through the annual conference through the awarding of accolades. In addition, the list of winners is published in the Sinera magazine as well.

Grievance Handling

Grievance handling in the Company is done according to the SSL Procedure. No grievances about labour practices were reported via formal grievance mechanisms during the year under review.

Equal Remuneration

We do not differentiate salary for men and women. Remuneration is determined through a transparent performance evaluation mechanism.

Employment

Company’s total staff strength stood at 1,905 as at end 2015, and 83% were Best Executive – 2015 male. A total of 294 employees were recruited during the year; 238 male During the 29th Management Conference, Best Executive of the year Award was and 56 female. Of the new recruits,a awarded to Mr. Jagath Perera, Business Development Manager Digital Media. majority of 203 employees were in the age category of 18 to 29 years, followed by 72 employees from the 29 to 39 age category. Total employee turnover amounted to 156, and 127 of them were male employees.

The human resources statistics of our Company are given below: Singer (Sri Lanka) PLC Annual Report 2015 83

Forming A Sustainable Tomorrow

Staff Strength Employee Benefits

Description 2015 2014 2013 2012 2011 2010 A wide range of benefits are given to the permanent staff members Key and Senior 47 46 43 42 41 38 Management of our Company. Detailed below are such benefits that are given to Middle Management 88 89 93 92 63 58 facilitate a safe and comfortable work Junior Management 174 171 170 146 145 133 environment. Executive 33 27 10 – – – Non-Management 1,563 1,429 1,321 1,195 979 918 Facilities Total 1,905 1,762 1,637 1,475 1,228 1,147 We offer our employees a wide range of facilities. These include, 42 days leave, 3 day excursions, uniforms , staff Gender Diversity discounts for Singer products, loan

Description Female Male Total facilities, training and development opportunities, sports and tea served Key and Senior Management 1 46 47 thrice a day. Middle Management 8 80 88 Junior Management 29 145 174 Ergonomics Executive 8 25 33 Our employees spend a significant Non-Management 280 1,283 1,563 amount of time at work. Therefore, we Total 326 1,579 1,905 ensure a conducive work environment. We look into aspects such as Age Analysis of Staff work space to employee ratio, air conditioning, noise pollution, desk Description 18 - 28 29 - 39 40 - 50 Above 50 Total and chair alignment, sanitary needs Key and Senior Management 6 20 21 47 and adequate space for meals and relaxation. Middle Management 1 31 40 16 88 Junior Management 33 95 34 12 174 Professional Subscriptions Executive 3 28 2 – 33 Non-Management 511 627 322 103 1,563 As a company benefit scheme Total 548 787 418 152 1,905 subscription fees are paid to professional bodies on behalf of our employees. This helps to enrich their Description 2015 2015 2014 2013 2012 2011 2010 careers. Many managers in particular have benefited from this scheme. Staff Growth (%) 8.12 7.64 10.98 20.10 7.06 2.78 Turnover per employee 20,321 16,856 15,568 17,248 17,924 13,974 (Rs. ’000) Internship Programme Profit after Tax per Employee (Rs. ’000) 649 444 319 830 1,064 583 Attracting the right talent and retaining that talent within the organisation is Asset per Employee 16,936 15,478 15,005 14,522 14,213 11,232 a major challenge. Several brand (Rs. ’000) building activities have been initiated Personal cost per 2,251 2,013 1,852 1,891 2,064 1,616 by partnering state and private sector Employee (Rs. ’000) institutions. In an effort to attract youth into the organisation and give them an understanding of our brand and business practices, policies and vision for the future, we use the internships programme. This also translates into a CSR project, for students following local and foreign degree programmes in the country and also other professional bodies (CA Sri Lanka/CIMA).

This included students from Finance, Marketing, Supply Chain and Human Resource Management Degrees. 84 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Interns are provided a comprehensive Accident Cover Lodging orientation to the operations of the organisation and an in-depth practical This facility is extended to all staff All expenses incurred by field staff training within their specialised areas. members whose line of work exposes when staying at approved hotels of the We are also focusing our attention on them to a greater risk of accidents, Company while on official business are evaluating remuneration packages to either at the workplace or as a result of reimbursed. be on par with industry norms. With extensive travel. respect to retaining talent, we will be introducing new reward schemes to Housing Loans recognise achievements. For example Travel Expenses Employees who have completed we are offering a foreign tour to the Several facilities are extended to five years of service are eligible for shop assistants who scored highly employees engaged in travel for financial assistance from the Company. at product knowledge evaluation official purposes, including vehicle This assistance is given to cover the programmes. maintenance, transport allowances initial expenses of building a home and reimbursement of travel expenses. while they await a loan facility from a Medical Benefits Employees who are divided into field financial institution. staff and base staff categories receive Medical expenses of our employees travel benefits depending on their are reimbursed up to predetermined responsibilities and the respective Distress Loans amounts calculated according to grade of employment. Distress loans are given to employees employee grade. If the expenses in the case of emergencies such as a exceed this specific amount, the sudden illness, a death in the family, employee and the Company share Discounted Sales damage to homes due to flooding or the balance equally. In some All staff members enjoy the other natural causes, urgent home special cases, reimburse in full all convenience and added benefit of repairs or a family wedding, etc. medical expenses. We also provide having access to all products marketed hospitalisation and OPD treatment by Singer (Sri Lanka) PLC at special coverage to all staff members and their discounted prices and easy payment immediate family members. schemes.

Refrigeration today is not just about ‘keeping things cool’. It’s about the way individual qualities are imparted to different items in the refrigeration mix. So…salads must remain crisp…fruits must remain fresh and juicy….meats and dairy products must be maintained at optimum temperature for sustained freshness…and so it goes. Singer delivers on all fronts with an extensive range of the world’s best and most modern refrigerators. Singer (Sri Lanka) PLC Annual Report 2015 85

Forming A Sustainable Tomorrow

Vehicle/Motorcycle Loans 2. Two-thirds of the cost of a particular the death of an employee’s spouse, course fee is reimbursed by child, parent or unmarried sibling, the Permanent employees in specified the Company on the successful employee will be granted a sum of Rs. categories are eligible to apply for completion of the final examination. 25,000/-. The Death Donation Fund is interest-free or low-interest loans a contributory fund maintained by the through the Singer management to Death Donation permanent employees. obtain a vehicle. In the event of the death of an Educational Aid Scheme employee, his/her family will receive a donation of Rs. 50,000/- in addition Two mechanisms are in place to to six month’s salary. In the event of support employees with their studies.

1. A lump sum of Rs. 225,000/- is granted on the condition the employee serves the Company for eight years. The facility should be repaid only if the employee leaves the Company before the expiration of the eight years. This is mostly granted for postgraduate studies. 86 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

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Forming A Sustainable Tomorrow

Maternity Singer Sri Lanka We believe the recognition for our Toastmasters’ club club and its continued success All female employees are entitled to comes from the commitment and maternity leave. Singer (Sri Lanka) PLC Toastmasters’ passion of our members. We have club has gathered significant seen more people showing interest No. of in becoming participative members. Employees momentum since its charter in 2011. There were several activities We are also proud that some of our The total number of 12 conducted through the club during the talented toastmasters have taken our employees who took year. We are proud to be recognised Club’s name to the divisional level of maternity leave, as a ‘President’s Distinguished Club’ Toastmasters through their participation in international, impromptu & humorous The total number of 9 for the second consecutive year which employees who returned is one of the highest recognitions by speech contests and speech to work after maternity Toastmasters International. evaluation contest. leave ended, The total number of 9 Communication and leadership skills Toastmasters employees who returned are essential for an individual’s growth Speech Contests to work after maternity within any organisation. Toastmasters leave ended who were still Club provided a platform to do harness Singer (Sri Lanka) PLC Toastmasters employed twelve months these attributes at a pace comfortable after their return to work, also provided guidance and to the employee. We are happy expertise in organising and hosting that two of our members completed the Singer Speech Contest for communicator stage and another two Employee Engagement employees in collaboration with our completed the leadership stage. Human Resources. Many passionate Singer individuals come forward to compete, Poson Udanaya The effectiveness of the Club comes enhancing their skills through the from the comfortable and enjoyable We celebrated Poson Poya from 1st to experience irrespective of winning. learning environment that it creates. the 3rd of June 2015. This is the third The event also served as a Some of the members participated in consecutive year the Singer Poson communication platform to express the annual and mid – year conferences of Udanaya was organised in collaboration individual thoughts on many subjects. with other companies such as Nawaloka Toastmasters District 82 which gave them exposure to Toastmasters outside and NDB Bank etc. There were several We believe in continuous improvement. of our country. Apart from having activities including Poson Bethi Gee Therefore, we train our officers to guest speakers, the members were at the Seema Malakaya in Colombo, enhance their capability to serve involved in numerous creative and a lantern competition as well as an as members. Apart from training team-building activities such as the ice cream and beli mal dansala. The the officers, the members who had Toastmasters drama festival, divisional latter was organised by the Rotaract progressed further in their educational Christmas party, themed meetings Club of Singer (Sri Lanka) PLC next tracks were trained to be judges of and joint educational meeting with to the Gangarama Temple. The event competitions in other toastmasters clubs. was a resounding success with the other clubs. participation of both employees and the general public. Rotaract Club

We made history by becoming the first ever corporate to initiate a Rotaract Club. The club caters to a young audience between the ages of 18 and 30 years and provides opportunity for ‘Self-Development – Fellowship through Service.’The Rotaract Club enables our young employees to advance in professional development, international relations, communication and network, by continuously making them thrive beyond the confinements of their jobs.

Several events were organised by the Club during the year. A coastal clean up campaign, was organised in collaboration with the Kinross Swimming Club. ‘Do you love Creations by Singer employees illuminating the streets at ʻPoson Udanaya’ 2015 yourself?’ an awareness programme on consumerism and contemporary 88 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

lifestyles was organised targeting the SLMO staff members. An internal campaign was organised to collect essentials to be sent to Nepal to support the earthquake victims. In addition several other activities were also conducted, such as ‘The Zoo’ a professional development programme and participating in the ‘Run for Their Lives 2105,’ District Rotaract Conference and the Governor’s Visit.

Champions of Singer Got Talent 2015 with Group CEO, Factory Director and the panel of judges.

SINGER Employees Crowned Stars at ‘Singer Got Talent Season 02’

The Singer Talent Show was organised to recognise employee talent, encourage a healthy work-life balance and boost employee engagement.

For the second consecutive year, we offered our staff members across all business units an exciting opportunity to showcase their talents.

A total of 60 employees representing Second installation ceremony of the first ever corporate Rotaract Club. Subsidiaries – Singer (Sri Lanka) PLC, Singer Finance, Singer (Sri Lanka) PLC Factory and sister company Regnis Lanka PLC participated in this event.

The grand finale of ‘Singer Got Talent Season 02’ took place in October at the prestigious Tower Hall Theatre in Colombo. The senior management and hundreds of employees participated in the event. Mr. Asoka Pieris, Chief Executive Officer of the Singer Group, graced the occasion as the Chief Guest.

Singer Tostmaster EXCO – 2015 Singer (Sri Lanka) PLC Annual Report 2015 89

Forming A Sustainable Tomorrow

New Year at Singer Monthly Movie Kids Art Competition 2015 Giving wings to the imagination The New Year was embraced by To make, Singer a “Great Place to Work’, and creative skills of the younger our employees with the prayers and the Human Resources Department generations we organised a children’s blessings of all religions at the head focused on many areas to increase the art competition on 8th November 2015 office as well as at the branches. work life balance of our staff members. at SLMO Conference Room. The ‘Monthly Movie’ was one such Sinera Magazine concept that was introduced. Approximately, 150 children participated in this competition. Initially, a particular movie will be The Sinera Magazine is distributed Special prizes were awarded by shown on the last Friday of every free to our employees to keep them Mr. Asoka Pieris to the winners from month at the conference hall which will informed of the activities of the three categories, namely, Ages 4-6, be converted into a movie theater. This Company. Published twice an year, the Ages 7-9 and Ages 10-12. will be a high quality HD movie. magazine is packed with employee news, Company bulletins and photographs. Flexi Hours

The Sinera Facebook page was also We believe healthy minds are created launched with the electronic version of through an enhanced work life balance. the magazine. A total of 365 employees In this context, we introduced flexible are active members of this page. work hours for the staff working in the management office. Free Health Camp and Ultimate Product Awareness Program Gents Excursion Demonstrator Competition For the second year, Human Resources The employees spent two enjoyable Department organised a ‘Free Health This is an ongoing competition that nights at the Club Bay Palm Hotel and Camp’ for the SLMO employees on covers all Singer and SISIL Channels Cinnamon Bay Hotel. A total of 432 2nd November 2015, at the Singer throughout the island. It was launched employees participated in the excursion. Head Office.The camp was conducted to evaluate the product knowledge, by Nawaloka Hospitals PLC. Over competitor awareness, selling skills 200 employees obtained free medical and customer care of the shop staff Ladies Picnic 2015:An advice and care at the Camp. A series members. We have conducted this Excursion to the Hills of checks including, blood sugar competition in the Sabaragamuwa and tests, blood pressure, BMI checks Eastern Provinces so far. The annual Ladies Picnic was held and eye check-ups were conducted. from the 15th-17th May 2015. This In addition, a dietician gave advice year’s excursion included a trip to on healthy diet patterns to suits the Cinnamon Citadel in Kandy as well as lifestyles of employees. a visit to the Temple of the Tooth Relic. A total of 128 employees and 48 children enjoyed a weekend with a host of games and fun activities for the entire family. The event provided the employees with a refreshing break and it was thoroughly enjoyed by all.

Fostering the imagination and creativity of the younger generations. 90 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Singer Blood Donation Campaign

For the 4th consecutive year, a blood donation campaign was organised by the HR Department at the Singer Head Office. A total of 70 blood donors The Sinera Magazine is distributed free selflessly donated their blood. to our employees to keep them informed of the activities of the Company.

Annual Christmas Party

Singer employees extending love and peace during Christmas.

The Annual Christmas Party was held Sports and Recreational Facilities at the Water’s Edge Hotel on the 06th of December. Employees and the family members of Singer Management office, Singer Finance and Singer Piliyandala factory enjoy the most colorful event in the company’s event calendar. Approximately, 1800 gathered for this annual event which was compeered by Priyantha Senevirathne and the music provided by Gamani Mendis. Mr. Asoka Pieris was the Chief Guest for the event. There were fun games, Christmas carols sung by the company choir and a Baila competition as well. Singer (Sri Lanka) PLC Annual Report 2015 91

Forming A Sustainable Tomorrow

The annual cricket tournament of SSL Commercial and Industrial Workers Benefits of Promoting a Factory was held at Philip Attigala Union Non-Clerical Branch – applicable Healthy Workforce Maha Vidyalaya in July 2015. to manual workers. Inter-Company Employees Union – applicable to manual The organisation receives numerous Singer was the proud sponsor of the workers attached to our factories. benefits through a well-managed Mercantile League Netball Tournament health and safety programme. These 2015. The Singer team emerged the 34% of Singer employees fall include, a positive and caring image, 2nd Runners-up in the B Division. under these collective agreements. improved staff morale, reduction in In addition to signing Collective staff turnover and absenteeism, The Singer Inter-Departmental Agreements, the management meets increased productivity, reduction in Badminton Championship Tournament with branch unions to discuss any healthcare/insurance costs and risk of 2015 was held on 15th November 2015 concerns and provide satisfactory fines and litigation. at the Royal College Indoor Sports solutions. The amicable relations Complex. This tournament enabled maintained with our employees prevent The benefits for the employee include, to identify the most skillful player disputes arising in the work place. a safe and healthy work environment, who would advance to the upcoming enhanced self-esteem, reduced Mercantile Games 2016. Occupational stress, improved morale, increased job Health and Safety satisfaction, increased skills for health The annual Carom Tournament of the protection, improved health and a SSL Factory was held in November sense of well-being. 2015. Mr. S.M. Ajith emerged the Safety and Health winner for the 2nd consecutive year. Committees The total workforce in Piliyandala Factory Singer Shuttlers secured the 3rd place Considering the wide composition at the MBA Inter Firm Team Badminton of our Group and the diversity of our Total workforce Male Female Championships under Men’s E Division. activities, several proactive measures Permanent 128 12 as well as keenly researched reactive Trainees 74 – The Mercantile Athletic Meet 2015 measures have been instituted to was held at the Mahinda Rajapakshe ensure the highest standards of Given below are the number of Stadium. Our staff members did proud occupational safety and health. employees who were injured and the by securing one Gold, five Silver Our employees are considered types of injury during the year. A total and five Bronze medals at the meet. the backbone of our organisation. of 10 employees underwent no pay All the winners were selected to Therefore, they are treated with great absenteeism in 2015. represent Sri Lanka at the Masters respect and care. A wide spectrum of Meet in Malaysia. health and safety measures, including Accidents 2015 hygiene and accident safety practices 05 Team Singer emerged victorious at the are implemented by our Safety and Cut Injury MCA Annual Over 40 cricket 'Sixes' Welfare Committee. Its members are Eye Injury 01 2015 at MCA and D.S. Senanayake representatives of the entire Company Other 04 College grounds. In addition to and meet once a quarter or in case 10 clinching the Trophy, the team also of emergencies. Their responsibilities received two special awards, namely include - the awards for the most number of Our Approach to sixes and man of the final. Monitoring Health and Employees’ Progression and Career Development Collective Agreements Safety Performance yy Assisting the development, Singer gives significant emphasis to Three separate Memorandums of monitoring and review of health and career development of employees, Settlement (MOS) which have been safety policies or procedures. encouraging them to reach their signed in the year 2014 were effective personal and professional goals not yy Considering any proposals, changes for the year 2015 as well with the only to make their work lives more to the workplace, policies, work following branch/parent unions satisfying, but also to ensure the practices or procedures which may pertaining to a salary revision: continued success of the Company. In affect the health and safety of the this regard, we motivate our employees employees. Commercial and Industrial Workers to give their utmost. Union Clerical Branch – applicable yy Promoting the importance of health to clerical allied and technical grade and safety amongst employees. As a responsible employer, we employees. yy A successful health and safety encourage our employees to pursue program requires strong career development opportunities and management commitment and continuously support their professional worker participation. growth. Even in challenging times, 92 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

we invest time and money for training valued by both their manager and Humble Yourself and other professional development the Company. It facilitates a culture Leaders must not fear of the new initiatives. of continuous learning, innovation leaders being better leaders than them. and team building, which is vital for a People must be allowed to shine under Training is conducted to improve sustainable workplace. By empowering one's leadership; this will advance their current skills. There are four staff through training and developing one’s ability to lead. The team will categories of training, namely, major new skills, companies can retain high follow the leader if there is a direct training, external training, operational performing, loyal staff and avoid the benefit to them and also if they trust the training and product training. Training high costs of recruiting and training a integrity of the leader. is conducted at the state-of-the-art new employee. training centre at the Group’s Head Share Responsibilities Early Office in Nawam Mawatha. Training successors will increase the This facility can accommodate up to productivity, skill and innovation of Sharing responsibility at an early stage 200 staff members at a given time. the workforce, allowing the Company is the easiest way to foster learning. Field training is conducted according to better retain top talent and give When more ownership is given to to the convenience and requirement a faster, more effective response people on tasks, they will be motivated of the trainees and trainers. In mechanism to change. more to participate and learn. addition, we have invested in infrastructure development of our Finding new leaders is critical to Identify Potential seven regional centres, which can the successful growth of any Look for potential in people. Early accommodate about 25 employees at organisation and growth is greatly identification of potential is the key to a time. impacted by the number of leaders be focused and to offer appropriate we recruit. Following are the steps training to individuals. External training is conducted by the we adopt though the concept of British Council, Sponge Learning, multiplying our leadership base: Create an Environment IPM Sri Lanka, Ceylon Chamber of Conducive to Produce Leaders Commerce, Employees’ Federation of Succession Plan Commitment to creating an Ceylon, CIMA Sri Lanka, McQuireRens (3 x 3 x 3) and Jones, CINEC and other resource environment that is conducive for persons. Our HR Division arranges For every management position, learning and development is vital. customised training programmes this initiative aims at select up to 3 An environment that welcomes depending on the specific job employees, identifying 3 areas of engagement could lead to the requirements of each employee. development and grooming them over creation of good leadership, shared Programs include areas such as a 3-year period to take up critical responsibility and collective growth. motivational techniques, creative management roles when they become thinking, customer care, marketing available. As part of our Development Recruit and networking. and Succession Programme, the 3 x 3 x 3 initiative seeks to ensure Identify and recruit the best quality that all key managers, including of people, adhering to ‘recruitment of Training and senior managers, middle managers quality’ principle. Development and selected junior managers have identified and developed their Lead for Life Change Our Training Philosophy successors. Identifying and nurturing potential leaders who have the potential to be Turnover has high costs that range Catch the Vision of Multiplication bold, mature and responsible decision makers is part of our focus areas in from 10% to 30% of the employee’s One cannot sell something unless creating a quality workforce. annual salary. This includes direct he/she believes in it. expenses such as recruiting and the expense of the loss of productivity and Investment in Training institutional knowledge. Be Intentional A conscious decision must be made and Number of People The reasons for leaving the to replace oneself. Multiplication Trained organisation can be many. Managers should be a part of one’s strategy and who focus on grooming their there must be a system of leadership Lean Six Sigma Training successors can avoid many of these recruitment. reasons at every opportunity. When An organisation wide Lean Six Sigma a manager sees the potential in an Start Early training program was launched during employee with the required personality the year. The training sessions were Leaders must be replaced before they traits, he builds skills and leadership conducted at three different levels. are needed. Leaders must invest in training into their daily interactions yy Lean Six Sigma White Belt (4 hrs) their own personal growth. One cannot with staff. The impact of this method yy Lean Yellow Belt 3 days (24 hrs) lead unless he/she has been their. on corporate culture can be immense, yy Lean Six Sigma Green Belt 12 Half as staff understand they are highly Day sessions (48 hrs) Singer (Sri Lanka) PLC Annual Report 2015 93

Forming A Sustainable Tomorrow

Lean Six Sigma White Belt the future leaders. A company culture Organisation This program was conducted on is almost impossible to replicate and Supply Chain 3rd July 2015 at SLMO with the every organisation will have an image participation of 48 key and Senior of their ideal professionals. However, Management of the Singer Group. there are certain soft skills that are Own Manufacturing The objective of the training was to likely to suggest the suitability of an Facilities introduce the concepts of Lean Six individual for a leadership position. Sigma and process improvements to The ability to take responsibility and The Singer Piliyandala Factory is the top management. get work done is one such attribute. equipped with the latest technology. These modern manufacturing facilities allow us to operate on a large scale Lean Yellow Belt Program Singer’s Approach to locally and we constantly upgrade our 45 employees were trained in Training and Development facilities to offer the best manufacturing 3 batches with 15 participants for each processes. batch. The training programs were Performance Appraisal conducted on the following dates. Highly Reputed Suppliers Batch 1 - 22nd to 24th July 2015 Individual performance appraisals are conducted quarterly with the final Batch 2 - 12th to 14th August 2015 In order to ensure the very best is appraisal at the end of every year. delivered to our customers, we ensure Batch 3 - 21st to 23rd September 2015 Each Line Manager assess their that we only source from reputed subordinates’ strengths, weakness and suppliers. Taking into consideration the training and development needs, which 3 batches comprised of two suppliers' ranking in the industry, we are analysed and incorporated into the management staff members and visit their factories and evaluate their training plan for the upcoming year. one batch from the general staff. credibility before entering into business The program duration was 3 days with them. Some of the original Divisional Heads at Singer are with one day of practical training equipment manufacturing sources are required to give a detailed account of conducted at the SSL Factory in Polytron, Indonesia; Skyworth, Galanz their division’s training requirements Piliyandala such as the waste walk. and TCL, China; Pensonic, Malaysia; in the third quarter each year. The Each participant was requested to Arçelik, Turkey; and Whirlpool, India. submit an individual project upon Training Department schedules and completion of the programme. implements tailor-made programmes to address training needs, either through Organization values Lean Six Sigma Green Belt external training programs or through internally conducted programmes. The 15 managers were selected and Consumers external programs include seminars, trained in 3 batches. The first batch conferences and technical sessions. In We live up to the expectations of a commenced training on 30th October addition, training needs are identified responsible organisation by contributing 2015 and still ongoing. at the annual performance appraisal to the enhancement of the quality of life as well. The Line Managers have the of our customers through the offer of Projects flexibility to request specific training outstanding products and services. The Lean Yellow Belt programs are programs based on requirements being evaluated at present and one at any given time. Methods such as project has been already implemented ‘Mystery Shopper’ and ‘Call Centre Employees contributing to an annual cost saving of Complaint’ evaluations are used to We respect each other as individuals Rs. 4 million. assess employees’ skill levels and and encourage cross functional provide training as necessary. teamwork whilst providing opportunities Identifying Skills that will be for career development. Department Heads are also Required for the Future responsible for assessing skill shortages of the respective Shareholders Recruiting and training employees who departments based on the annual have the potential to lead the Company performance appraisals and We provide a reasonable return whilst in the future, will enable a business the needed skill requirements safeguarding their investment. to grow. Apart from the academic to successfully navigate future credentials and skill levels, there are challenges. The Department Heads, many other factors that needs to be Suppliers in consultation with the Training taken into consideration when making Department decides on the training recruitment and training decisions. We develop our suppliers to be needed in the upcoming year. partners in progress and share our It is not practical to list an ideal skills growth with them. set, both ‘hard’ and ‘soft’, needed in 94 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Competitors Language Development Operational Training Programmes We respect our competitors and recognise their contribution to We believe effective communication is Singer Retail Academy market value. key to customer service. Therefore, a 24 hour English language development The Academy was established in Community program was conducted for the 2009, to develop our employees who general staff members and trainee are the most valuable asset of the organisation. Areas of training include, We conduct our business by branch managers to develop their retail, call centre, shop management, conforming to the ethics of our country linguistic skills. service centre administration, accounts and share the social responsibility of verification, retail internal audit, retail the less fortunate. Outward Bound Training district management and retail area management. Environment To encourage cross-functional team work and build self confidence in We make every effort to ensure that employees, two outward bound training the environment is protected and programs were conducted during conserved for future generations. the year with Sri Lanka Business Development Center (SLBDC) at Dambulla. The activities included Major Training rock climbing, abseiling, raft building, rafting and various other team building and confidence building activities. It Financial Management was a 3 day/2 night program where for Business Managers the participants got to know each other very well with lot of entertainment Programme activities conducted in the evenings This is one on the most looked forward such as drama competitions and to programs in the Company’s training singing competitions. calendar. Over 40 individuals from diverse departments participated in the program.

Graduate Training

Supporting the educational institutes in Sri Lanka, we provide internship opportunities to fully or partially qualified students. They are placed in a suitable capacity within the Company and are given the necessary exposure with a comprehensive orientation and an in depth practical training. Students following marketing, finance, production, supply chain management, human resources and other management avenues are given this opportunity. Singer (Sri Lanka) PLC Annual Report 2015 95

Forming A Sustainable Tomorrow

SRA Diplomas for CCA HR Best Practices Inventory Handling

SRA Diploma consisting of 11 modules This was conducted for Singer Mega The program provided useful insights was offered throughout the year for the ERM's in the month of July 2015. on inventory handling procedures. customer care assistants of the Mega The program was very useful to the channel. Around 20 CCAs completed Hire Purchase participants who were trainee branch the requirement for the diploma by managers new sales agents, approved the end of the year. They will receive The training on hire purchase was dealers and Mega customer care their diploma certificates in the conducted for selected branch Assistants under the SRA diploma. upcoming years. managers Singer Mega customer care assistants and selected branches of Credit Card and Singer Retail Diploma is awarded to certain districts under Singer Retail Treasury exceptional customer care assistants Academy (SRA) diploma program. who undergo the training programmes. Functions This will be extended to other channels SIS and Singer Footprint as well. Resource This was conducted for branches personnel from customer care assistants and district the Treasury Sales and Customer Care managers . Department conducted Sales and customer care programmes training on which was launched in 2013, continued Foot Print and treasury in 2015 as well. The program was Loyalty conducted in several geographical Programme areas during the year. The program was rated ‘very good’ by all This was conducted participants. in Jaffna for the operations division district managers and SISIL Branch managers.

When cutting edge technology and premium quality reside within your very core, as it does with Singer, every experience that you afford, has the potential to become a ‘life event’ for your customers. Singer helps customers from all walks of life to meaningfully experience the possibilities offered by such cutting edge technologies. 96 2015 Annual Report Singer (Sri Lanka) PLC

SWMA4505SL3 SINGER FRONT LOADER

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7 kg washing machine Semi auto washing machine This top loader washing Top loader washing machine washes more linen and with twin tube for washing and machine contains with the is 6.5 kg capacity comes from easy the work of humans. drying. Fiber body will help to top sink for soft fabric and world renowned Beko brand. Stainless steel inner tube use the machine for longer period hard stains comes with 6.5kg This machine fights with heavy does a spotless washing without rusting. New elegant for extra load of linen. stains with 2 levels of water flows cycle. The rust free fiber transparent lid stands out the due to duel power rain system. It body is for long lasting. visibility of the process. saves 35% energy, 30% time and 26% water.

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SCAN to view more washing Machines http://www.singersl.com/products/index.asp?PC=washing_machines Singer (Sri Lanka) PLC Annual Report 2015 97

Forming A Sustainable Tomorrow

functions of employees. This was Training & Development. This training Training Programme conducted for trainee branch was conducted in 24 districts during on Latest Products managers, new sales agents, approved the year. dealers and Mega customer care and Technologies – Assistants under the SRA diploma. Total Staff Training Wholesale Channel Brown Goods After Sales and This was a special program for the dealer channel. It was focused on Customer Care Training This program was developed with the selected sets of products including, objective of training all staff members Washing machines, Smart TV's, Programmes on providing after of a given retail location. These training Blue Ray Players', mobile phones sales and customer care training sessions were also conducted district and laptops. The participants were is conducted for customer care wise with two days allocated for each educated on energy conservation assistants, trainee branch managers & district. The program covered a range through the use of efficient products. shop staff throughout the year. of items including, televisions, audios, home theatres, DVD/Blu-ray players, Kitchen Appliances Factory Visit computers, mobile phones, digital cameras and electronic scales. This A training program including live The objective of this program was to training was conducted in 22 districts during the year. demonstrations was conducted make every employee aware of our for branches of Kegalle, Ampara, business operations and enable them Batticoloa, Anurdhapura and Badulla. to align their effort towards achieving Digital Media This was organsied due to the the organisational goals. The program increasing number of inquires on was conducted for all newly joined staff Digital media workshops are kitchen appliances. of Head office. conducted due to the dynamic nature of the product line. With the rise of the digital media product range, Hands-on Product Product Training this novel methodology of training Trainings on New was introduced. The sessions are Arrivals interactive and practical and are Sewing Machine Sales accommodated with digital cameras With the addition of newer brands and Technical and mobile phones. The program and products to the Singer portfolio, is designed to enhance product the Training Department gave the Series of technical training programs knowledge, developing leadership showroom staff a comprehensive were conducted island wide on trouble skills, team work, communication and training with hands-on experience. The shooting repairs of sewing machines, presentation skills. training was carried out in selected including the new portable range. locations with the presence of forging The program was conducted with the Industrial Sewing trainers representing the particular support of SIC factory with experienced Machine brands. technician supporting the training program with knowledge transfer. Industrial sewing machine market is Digital Media and one of the rapidly developing markets Electronics/ Digital Media Total Staff Training in Sri Lanka. Therefore, it was essential and Home Appliances White Goods to develop the knowledge pertaining to models available and the technical This program was initiated by aspects of the sewing machines. This program was developed with combining electronics and home Apart from the sales staff, the sewing the objective of training all staff appliances to the digital media instructresses and the technicians were members of a given retail location. production training. This is based on trained on usage and the technical Training sessions were conducted the request made by the area sales aspects of these machines. The district wise with the allocation of staff. Prior to organisation the program, programs were conducted in several two days for a district. The program training specifics are decided after districts of the country. covered refrigerators & deep freezers, consulting the field supervision. washing machines, water pumps, The final hour of the program is air conditioners and instant shower Samsung Televisions allocated for questions and answers heaters. These programs focused on encouraging more engagement with demonstration of latest products such A model wise training was conducted the participants. as front loader washing machines. on Samsung televisions to the Furthermore, the program included representatives of Singer Plus, Singer a special module on Company Mega and SISIL World. The locations Achievements and Importance of of the program were selected based on sales performance. 98 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Training Programme on Furniture

The training includes an update on furniture operations and familiarization of the product rage. The participants are given a hands-on experience and real site experience in furniture assembly, dismantling, designing pantry sets, basic drawing concepts, material selection and product costing. There are given a basic understanding about the communication process of the factory to deliver the goods to customers on time.

Investment in Training A true illustration of company loyalty. and Number of People Trained

and the employees expect more from Category Major Product Operational External Total Training Training Training Training their employer than a mere paycheck. They need a sense of pride and Investment (Rs.) 4,382,373 3,299,416 3,132,341 1,183,763 11,997,892 fulfillment from their workplace. This No. of Programmes 24 70 161 68 323 requires congruence in values between No. of Participants 683 2,654 4,386 149 7,872 the Company and the employees. No. of Training Hours 292 560 1,089 217 2,158 In our commitment to be ‘socially Investment per Participant (Rs.) 6,416 1,243 714 7,944 1,524 responsible’, we encourage all employees to submit written proposals The award ceremony recognised the of a CSR project of their choice. Service Awards contributions of 232 Singer employees Employees have the freedom to who received Service Awards as propose a CSR activity that is an one-off well as gift vouchers under seven project or one that can be integrated Service Awards categories. into the business processes. After all, ceremony 2015 we believe that better perspectives on the progress of our CSR agenda could No. of years completed No. of employees This is an annual event in the Company be given by our employees themselves. calendar to appreciate the loyalty 5 Years 88 and dedication of the Singer family. 10 Years 64 We seek input from our employees The Singer Service Awards 2015 15 Years 19 regarding what they can do to enhance was organised by the HR Division to their CSR efforts. Employee engagement 20 Years 38 appreciate the outstanding service – in the form of feedback helps our of employees and their loyalty to the 25 Years 10 Company to constantly improve our CSR Company. It was held on 16th March 30 Years 07 practices. By increasing accessibility 2015 at the Auditorium of the Sri Lanka 35 Years 06 to corporate sustainability, our aim is Foundation Institute, Colombo 7. to crowd source the ideas that will take Total 232 us to the next level of performance. We The Singer Group CEO, Mr. Asoka believe their involvement in the CSR Peiris, graced the event as the Chief practices, enables them to be exposed Guest, whilst the Company Directors SOCIETY to new skills that they could bring back attended as well. A highlight of to their regular roles within the Company, the event was the mesmerising whilst fostering a responsible and performances by Singer staff members Shared Values vs. socially-alert workforce. who showcased their talents at the Corporate Social Singer Talent Show. Recording another Once an employee, department or first was the inclusion of a Theme Song Responsibility branch submits a written proposal that enlivened the event. for a CSR project and it is approved ’Corporate Social Responsibility’ is by our CSR Committee, the related fast becoming a crucial aspect of any Singer umbrella company ensures that large company’s long-term strategy. the project is financed and resourced Consumers have become increasingly until completion. Meanwhile, it is the concerned where products come from Singer (Sri Lanka) PLC Annual Report 2015 99

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responsibility of the employees who understand that if companies do not initiated the CSR project to kick-start take meaningful action soon, there the activities and to ensure its success. could be severe shortages in labour In order to We also solicit proposals from our supplies. In this regard, we have community members. identified and given priority towards maintain best supporting education in Sri Lanka. In order to maintain best practices practices when when dealing with the communities, We believe that learning is a lifelong dealing with the the Singer CSR Committee evaluates, process. Supporting the educational oversees and monitors all CSR development of Sri Lankan children communities, projects carried out by the Company. and youth has proved to be an It is also the responsibility of the CSR extremely gratifying endeavour the Singer CSR Committee to ensure that CSR activities for Singer. We have been able to cover the entire spectrum of economic, forge strong relationships with rural Committee social and environmental concerns. communities as well as teachers, parents and officials who work tirelessly evaluates, oversees We have found that philanthropic to upkeep the education sector in the responsibility, is not directly related to country. We believe education is one and monitors all employees, they’ve had a significant of the greatest gifts that one can give influence on their work attitudes and a society. We are especially proud CSR projects behaviours. By facilitating engagement to use our vast network to take the carried out by on CSR projects our employees gift of education to rural Sri Lanka are passionate about, the Company in the hope of building a future the Company. has benefited immensely from the society that consists of educated and commitment and passion of the accomplished individuals. employees. Branches and departments that implement CSR projects have School Projects proved to be the better performing divisions within the organisation as the In 2015, we renewed our commitment CSR activities have been an effective to eduction by continuing our efforts up team building exercise as well. on identifying particular needs for 71 schools and systematically providing Equipment was handed over to the for them by way of infrastructure Archdiocesan Apostolate for drug and furniture, appliances, stationery alcohol demand reduction service musical instrument and much more. under the guidance of the Colombo Archdiocese of the Catholic Church to School Description give vocational training to recovered dependents of alcohol and drug abuse. Kithulgoda Junior School, Construction of 35 meter road leading to the school. Agalawatta The road to the school was in a very bad shape. The main school building of the Padiyathalawa Junior This was an under priviledged school which didn't Nalanda Junior School, Thanamalwila School, Dolosbage have proper sanitary facilities. Contruction of Toilets built in 1972 was renovated as it was in for the School dire need of maintenance. Dummaladeniya School, Renovation of School Building and Class Rooms The only school building at Wennappuwa Godakumbura Junior School at Kotapola, Kokilai Sinhala School, The schools didin't have proper water supply system. Deniyaya was repaired to a conducive Pulmudai We provided them with a water supply system environment for the students to carry on Malabe Madel School Donation of chairs, cupboards and books for their studies as it was infested by bats the library which was a hazard for the children. Hettigama Junior School Construction of Class Room and an assembly stage for the school Singer Commitment Diyalape Junior School Building 2 Toilets and Music Room. towards Education Sri Padavi Gamunupura Providing a water supply system. 40% of the School population in the area has kidney problems. Donated Businesses are shifting their resources including tables, books, racks to the library focus to responsible supply chain of the school. management, waste reduction and water stewardship. However, the need Bellana Maha Vidyalaya The school's computer lab was not functioning. 5 to ensure a sustainable pool of talent Agalawatta computers, software and a printer was donated. remains a great need that needs to be Sri Somananda Maha This was an under priviledged school which didn't given more recognition in the corporate Vidyalaya have proper chairs. We donated chairs to the school. sustainability agenda. We at Singer 100 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

90 participants were selected for the finals and 6 sewing machines were gifted to the six best students. The chief guests at the event were, The Minister of Sports, Youth affairs, Women, Rural development, and Industries Hon. Premitha Bandara Thennakoon and the Central Province Governor Ms. Surangani Ellawala. We uplift the lives of the participants and empowered them to be self-employed. In addition the quality of their work was also enhanced.

Singer Fashion Academy Annual Award Ceremony & Fashion Show -2015

Strengthening ICT education of Bellana Maha Vidyalaya. Every year students who follow scientific dressmaking and machine embroidery are eligible to sit for Partners Logos Floating the diploma examinations held in Book-Fair November. Students who successfully complete these examinations are awarded internationally recognised certificates and the best students are absorbed to the fashion academies as trainee instructresses. The knowledge they gain here helps them in their self employment endeavors.

This year too, the Singer Fashion Academy held a grand award ceremony for the students who successfully completed the diploma in Scientific Dressmaking and Machine Embroidery. The highlight of the ceremony was a grand fashion show competition which captured the attention of the audience. All the dresses for the fashion show were done by past & the present students Empowering the floating book fair Logos Hope. of the Academies.

An inter academy fashion competition Singer (Sri Lanka) PLC demonstrated its The Youth Ministry was included in the agenda. The continuous commitment to supporting Fashion Show three best outfits from each of the 5 the education sector by coming forward categories were awarded prizes with On a request made by The Youth as the Chief Sponsor of the Logos Hope a sewing machine for the winner. Ministry, 180 students from three Floating Book Fair. The Logos Hope is We look forward to conducting such districts in the Central province were the world’s largest floating book fair and events in the future. The chief guests made capable of sewing and pattern was docked at the Colombo harbor as at this event were Mrs. Goodman, wife making in five different segments. The part of its tour of Asia. The ship opened of the of Singer worldwide Chairman instructresses of the Singer Fashion its doors to the Sri Lankan public from and Mrs. Pieris wife of Chief Executive Academy gave maximum support and 22nd October 12th November. Through Officer of Singer (Sri Lanka) PLC. training to the students. On completion this initiative, Singer (Sri Lanka) PLC of the 15 day program, the students powered the crew of the Logos Hope sewed outfits on their own with a in their mission to bring knowledge helping hand from the instructresses. to the hands of millions of people the worldwide. Singer (Sri Lanka) PLC Annual Report 2015 101

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Health Sector eating. We provide guidance on using food while empowering thousands of modern kitchen appliances to prepare Sri Lankan girls. Singer has always kept a keen eye nutritious meals in less time. The on the health issues faced in the program empowers Sri Lankan families We aim to place the home-cooked country such as kidney diseases and to cook right and eat right. meal to its rightful place as the heart of diabetes. In the year 2015 Singer has the modern, healthy Sri Lankan family. helped following hospitals by donating In order to create a sustainable The retailer’s range of appliances equipments for the hospitals which in change, the 1st phase of the program enables easier, faster and more return benefited the patients. was focused on educating Regional exciting cooking techniques, making Directors and Assistant Directors cooking less of an everyday chore by Hospitals at the Ministry of Education on the providing time management solutions. - Divisional Hospital Pahala Giribawa objectives and the means of achieving Our dedication to uplifting Sri Lankan them. Thereafter, workshops were living standards has been recognised - Divisional Hospital Mahananeriya organised across the island for eight time and time again, with the winning of - Divisional Hospital Minuwangoda hundred Home Science teachers. They the “People’s Brand of the Year” award - General Hospital Peradeniya were updated about the latest kitchen for 10 consecutive years. We are one - Base Hospital Thambuthtegama appliances and time-saving, nutrition- of the ten “Best Corporate Citizens” in maximising cooking methods, all in-line the country as well. with the national curriculum. Philanthropic Projects Weave for Success Students will also receive hands-on Undertaken A handloom sale was organised at training on modern kitchen appliances SSL Head Office to support Mr. Uditha, at Singer showrooms island-wide. who excels in the creation of handloom Donation of Water Tanks By the year end, we have provided items irrespective of his blindness. Water Tanks were donated on the training to over 1,000 schools around This sale was organised for the 35th request of villagers from 3 Villages, the country. Adding further value consecutive year by us. namely, Parakumyaya, Kudapokuna to the initiative, we also donated and Mahawalithanna in the Pollonaruwa Singer kitchen appliances and District during the drought period. They equipment worth Rs. 4.5 million to 150 Helping a Children’s Home had to walk miles to collect water for underprivileged schools. The donations We donated dry rations to prepare their daily needs. were handed over to school principals lunch for the children and care givers by Hon. Akila Viraj Kariyawasam – at the Preethi Pura Children’s Home Minister of Education and Mr. Asoka during Vesak. Pieris – Chief Executive Officer of the Singer Group at a ceremony held at the Ministry of Education. A total of 250 Recycled Saree Project selected schools throughout the island A box of sarees was handed over to will receive Singer kitchen appliances Ms. Fumi Ito, Project Co-ordinator and equipment. This enabled to of the Pacific Asia Resource Centre strengthen education on Sri Lankan Interpeoples Corporation to be distributed to women in the North.

Card for War Heros A privilege card was issued for the war heros to facilitate the purchasing Singer Products with a discount.

Boosting Home Science Education in Schools In an effort to educate Sri Lankans on the importance of better nutrition, and equipping them with the required knowledge and tools, we partnered the Ministry of Education to launch the “Singer Soopa Shasthra Vedamuluwa” early this year. The program supports Home Science classes in schools across the country to spread the message of healthy cooking and

Showcasing sewing mattery at Fashion Academy – Annual Awards. 102 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Other Projects Singer Sri Lanka Rugby No. 1 Sports Promoter MaSevana We sponsored the Singer League Tournament which is Sri Lanka’s largest Ma Sevana is an organization which We are Sri Lanka’s largest sports school rugby event since 2004. We looked after sexually abused young promoter. For over 20 years, Singer has been intertwined with annual sports facilitated 69 schools to participate in mothers. Singer Fashion Academy in events, develop sports infrastructure the event that spans over 226 games collaboration with Standard Chartered and also uplift Sri Lankan sportsmen across 3 1/2 months. This is organised Bank conducted a sewing program and women. Our aim is to harness by the Sri Lanka Schools Rugby which will help them to be occupied in the talent of sports, especially in rural Football Federation. their daily life. Sri Lanka. We do this by supporting long-term development of sports and Sponsoring the Bradby Shield Lanka Mahila Samithi providing employment to our national This is Sri Lanka’s oldest and most sportsmen/women, helping the upkeep Lanka Mahila Samithi is an organization prestigious rugby fixture. This year which is established to serve women in marketd our 26th year of sponsorship rural areas. In 2015 Singer donated 6 of the event. sewing machines to this organisation.

Deaf and Blind Financial Assistance for employees In case of emergencies such as sudden death operations, accidents. Singer has financially aided its employees & their family members.

Singer Walks The Path Towards Preventing Diabetes In Sri Lanka

Singer – the passionate supporter of School Rugby.

of sporting facilities, supporting Club Rugby international tournaments and nurturing the passion for sports in children. Our We continue as the co-sponsor of the continued active participation in sports Kandy Sports Club. For the past 15 have enabled to uplift community years we have supported and assisted relations as well. the club.

Singer (Sri Lanka) PLC demonstrated Cricket its commitment to healthy lifestyles by coming forward as the Principal Sponsor of ‘A Sugar-free Sri Lanka: Taking Steps to Prevent Diabetes in Sri Lanka’. The walk, organised by the doctors of the Sri Lanka Diabetes Federation, marked World Diabetes Day and took place on the 14th November 2015.

Financial Assistance for Employees

In case of emergencies such as sudden death operations accidents Singer has financially aided to its Uplifting School Cricket in Sri Lanka. employees and their family members. Singer (Sri Lanka) PLC Annual Report 2015 103

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The Mercantile Division A Tournament Hockey Anti-Competitive which we have sponsored for the Behaviour and last 23 years is considered as one We have been diligently working to of the premier limited-overs cricket promote hockey in Sri Lanka for the Compliance tournaments in the country featuring past 30 years elevating it to the same The Company did not encounter National players. standing enjoyed by rugby and cricket any legal action for anti-competitive in the country. As such, the Mercantile behaviour, anti-trust and monopoly Our retail network maintains close ‘A’ Division Hockey Tournament has practices during 2015. We always relationships with the communities in been sponsored by us since 1978. obtain necessary local authority which they operate and cricket is a sport This year, we extended our support approval and strictly adhere to rules that they have been closely connected to the Royal College Hockey Club and regulations pertaining to display to. We sponsored a number of regional by sponsoring the prestigious Blue of materials, audio/video materials softball tournaments throughout the and Gold Hockey 7s, which we have and branding among other factors country, as we understand that these sponsored for the last 12 years where when conducting our marketing/sales tournaments give young cricketers an over 50 schools participate from promotional activities. opportunity to showcase their talents to around the country. Sri Lanka Cricket selectors. We have not been subjected to any Public Policy Singer sponsors school cricket since fines or sanctions during the year. 2014. A 3 years agreement has been Singer does not fund or make signed with Sri Lanka School Cricket contributions of any kind to political Association in the year 2014. All age parties, politicians or related HUMAN RIGHTS groups of schools playing cricket are institutions. The Company is regularly included in the sponsorship. Around invited by the Government of Sri Lanka Singer follows employment practices 6,000 matches are played per year. to submit proposals for consideration which enshrine human rights. As such Further, Singer sponsors school big when formulating the National Budget. we facilitate freedom of association, strict matches in selected provinces. Award elimination of all forms of compulsory ceremonies are organised by Singer Government Assistance labour, abolishing child labour and to recognize and appreciate school eliminating sexual harassment in the cricketers. Singer also donated cricket workplace. There were no incidents No financial assistance has been equipment and required materials to of human rights grievances reported received by the Group during the year. selected under privileged schools in during the fiscal year. Sri Lanka. Grievance Handling and Sexual Harassment Policies

These two policies ensure the emotional well-being of our employees. The grievances policy provides the right for employees to forward their grievances and dissatisfactions to the management and obtain a fair hearing. Our sexual harassment policy takes note of the distinct nature of a claim and provides disciplinary measures depending on the degree of sensitivity of the matter at hand.

Code of Business Conduct Empowering Mercantile Cricket in Sri Lanka. All key and senior managers are bound by the Company’s written Code of Business Conduct which is an agreement signed as part of their written Contract of Employment. As per the agreement, the signatory is responsible to comply with the Code and ensure employees reporting to him/her also comply with the Code. The Code of 104 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Business Conduct is signed annually to any experience or suspect of illegal The Group takes necessary actions refresh their knowledge on the contents or unethical employment or business to prevent corruption or illegal and update themselves on new clauses practices exercised by a colleague activities and the management takes and amendments to the Code. in any capacity in the governance necessary actions on the above where hierarchy. Upon induction to the Group, it is implemented for Whistle-Blower Whistle-Blower Policy all employees are taken through the Procedures. policy’s procedures and assured of the The Whistle-Blower Policy provides a confidentiality and anonymity. guided procedure for any employee to make a written or verbal complaint on Singer (Sri Lanka) PLC Annual Report 2015 105

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Non-Discrimination Fostering Human Rights Our island-wide reach means that we and Equal Opportunity are present in some of the more remote There were no incidents of areas of our country, giving us a unique discrimination reported in the Company perspective of the issues that affect in the financial year under review. Moving the Community the lives of the less fortunate citizens Forward in our country. It is also important to note that our employees are often As a result of the Sri Lankan people’s the biggest champions of community affinity to Singer, we receive many relations projects and initiatives and requests from religious, educational are empowered to propose solutions of and other institutions as well from their own communities’ needs. individuals. Singer is known as a compassionate and benevolent As a responsible corporate that works company and, as such, they often for the benefit of the community, we turn to us in their moment of need. have very close links with the society in which we operate. We work on the principle that we give something

So extensive is the range of high quality furniture marketed by Singer that the customer is truly spoiled for choice! From living room to kitchen and everywhere in between in the home…and beyond to the office, the Singer portfolio offers furniture of high quality, durability and eclectic design. 106 2015 Annual Report Singer (Sri Lanka) PLC

CANDY This verandah set made out of wrought iron and treated cane.

Hamilton Vegas Structure of this fabric sofa has been made out This genuine leather Sofa is an imported one of treated rubber and high density foams will from Malayasia. High level of comfort consists assure the comfort. with due to the Polly – Fiber cushions.

Diamond Lexus The six seated dinning suit has been made out This bed room set has been made out of of treated rubber and the table top glass is a Mahogany wood and stained of Mahogany color tempered one which is for more safety. to enhance the wooden color furnish PV glass.

visit www.singersl.com for more details...

SCAN to view more Furniture http://www.singersl.com/products/index.asp?PC=furniture Singer (Sri Lanka) PLC Annual Report 2015 107

Forming A Sustainable Tomorrow

back by means of conducting many third-party local suppliers. The Singer an immensely comprehensive research community support projects. This Geo and SISIL Eco series is the latest methodology and is as effective as Report provides ample examples of the range of locally developed products consulting third party organisations. projects conducted by the Company to enter the Sri Lankan eco-friendly For example, our 350,000 hire within this year. consumer durables market. Customers purchase customer base visits our are assured about the quality of showrooms and communicates with our our products which are subject to staff on a monthly basis. Product stringent quality assurance by our Quality Assurance Division manned by We also invest significant resources Responsibility professional engineers. From sample on feedback forms, informal surveys, evaluations to post-sale evaluations our product surveys, data mining, mystery For us, product responsibility is products are continuously enhanced shoppers, local and international a combination of three things: with a lengthy life cycle. research teams, as well as our call the highest customer benefit, the center that records and reports all highest safety standards, and Compliance customer complaints and feedback. maximum environmental and climate We periodically utilise the services of compatibility. Our measure for There were no incidence of research agencies such as Nielsen’s environmentally compatible and non-compliance with regulations and and LMRB to identify changing energy-efficient product sourcing takes voluntary codes concerning the health consumer trends and widen our into account the entire product life and safety impacts of products and knowledge on consumer needs by cycle - spanning production, product services during the year. conducting overall consumer market use, as well as disposal and recycling. research or product specific research. There were no incidence of non- For the purpose of improving our Our policy is to repeatedly provide our compliance with regulations and products and services we also perform consumers with products and services voluntary codes concerning product data mining on loyalty members of world class repute. The safety of the and service information and labeling to extract their preferences on a products provided to our customers is during the year. continuous basis, as well as obtaining essential right throughout the life cycle customs imports statistics to measure of products, down to their end-of-life market trends and market share and recycling. Product Sourcing movements as well. for Our Own Brands We keep our customers fully informed Compliance on Marketing about the properties of our products We take strong measures to source and the conditions of use. We play products from the world’s leading Communications an active role in ensuring product manufacturers by evaluating them There were no incidents of safety throughout its entire lifecycle to on key areas. These include industry non-compliance with regulations and minimise potential adverse impacts on ranking, company reputation, voluntary codes concerning marketing people and the environment. management style, financial stability, quality consciousness, delivery communications, including advertising, promotion, and sponsorship during the We visited overseas factories and capabilities and more. year. conducted extensive research and quality checks prior to adding some Customer Feedback and Breach of of the most respected and widely Research consumed brands in the world to Customer Privacy our repertoire. Our customers can The consumer’s quest for authenticity always count on Singer for the latest During the year, the Company did includes their desire to buy from technological developments. not encounter any substantiated genuine companies that that meet their complaints regarding breaches values standards. Consumers also Approximately 40% of products sold by of customer privacy and losses of demand transparency in sourcing. Singer are manufactured in our three customer data. Our best research tool is our state-of-the-art local factories (including employee base. our two sister companies). These are Compliance of Product certified by ISO standards and are As a large customer centric manned by the country’s most qualified and Service Usage organisation, our customer service and skilled production managers, representatives are spread across The Company was not subject to engineers and manual workforce who the country, providing a personalised monetary fines for non-compliance are capable of producing advanced service. They are trained to collect with laws and regulations concerning and innovative products. feedback that is directly absorbed from the provision and use of products and customers and communicated to brand services during the year. We also used customer feedback and managers who make presentations to market trends to develop new products our product and services research and with the support of our long-standing development teams. We believe this is 108 2015 Annual Report Singer (Sri Lanka) PLC

Forming A Sustainable Tomorrow

Customer Complaints/ and service quality. By expanding our Customer service should be practiced Suggestions and distribution channels, we make it easier on the shop floor as it is in any other for customers to get the products and sales environment. Avoiding/Reducing services they need. We also upgrade Negative Impacts of and refurbish our retail outlets at least Marketing Company’s Products/ once in every six/seven years. As a dynamic and evolving company with Outreach Programme Services on Customers the change in customer lifestyles, Our Singer Plus channel initiated a we always focus on new market Singer being a renowned customer unique marketing venture titled the developments and effect changes to centric company treats all customer ‘Marketing Outreach Programme.’ This our product range. complaints with genuine concern. is where we visit each home within Irrespective of the cause, unhappy target community clusters, discuss We reward customers with loyalty customers are still our guests and our with home owners the status of their programs and provide customer hope for future business. Therefore, we home appliances and offer advice on guidelines, merchandising manuals strive to satisfy them again. Although our latest products and services. The and recipe books. Our Sanasuma the customer may not always be right, overall objective of the program is to extended warranty program gives he/she will always be the customer we increase awareness of our Singer Plus shoppers confidence in their purchase. want and we need. As such, we need Channel and enhance its status to We also operate a call centre hotline to take control of customer complaints match that of Singer. to ensure that any issues are quickly and turn them to our advantage. directed to the relevant division so that Trusted Excellence is a brand promise a solution can be provided. Steps adopted in resolving customer that we seek to honour across all our complaints are stated below. We channels. Preliminary efforts of the always promptly attend on customer Customer Care Centre Marketing Outreach Programme have complaints. resulted in greater communication We were the first consumer goods 1. Listen Intently: Listen to the between Singer Plus customers and retailer in Sri Lanka to set up a call customer, and never interrupt them outlets. This program is geared to centre. Our call centres are linked to as they need to tell their story and boost the confidence and morale of service franchise agents. Therefore, feel they have been heard. our field staff apart from providing a customer issues are efficiently directed personalised service to our customers. 2. Thank Them: We thank the to the right people. Customers can customer for bringing the problem dial the hotline to make suggestions, to our attention. We can’t resolve as well as lodge complaints regarding something we aren’t completely Singer products and services. Our aware of, or may be making faulty customer representatives then assumptions about. liaises with our Service Centre or the 3. Apologise: We sincerely convey relevant Singer party to ensure that to the customer our apology for the customer’s complaint is attended the inconvenience caused by the to, tracking the internal progress of situation. the costumer’s complaint. Following a 4. Seek the Best Solution: We complaint we take proactive measures determine the customer requirement to ensure that we comply with the to provide a solution by inquiring. highest industrial standards. We also adopt our stringent internal product 5. Reach Agreement: We seek to agree quality standards speedily to mitigate on the solution that will resolve the the issue. situation to their satisfaction. Our best intentions can miss the mark completely if we still fail to deliver Call Center 2015 2014 what the customer wants. Out bound 275,721 195,451 6. Take Quick Action: We act on the In bound 170,537 148,623 solution with a sense of urgency. Customers will often respond more Total 446,258 344,074 positively to our quick resolution of the matter. Customer service is an integral part of our job. A company’s most vital asset 7. Follow-up: We follow-up to ensure is its customers. Without them, our the customer is completely satisfied. business would not and could not exist. When we satisfy our customers, they As a customer-centric company, we not only help us grow by continuing to are always focused on enhancing do business with us, but recommend customer satisfaction, convenience us to friends and associates. Singer (Sri Lanka) PLC Annual Report 2015 109

Independent Assurance Report to Singer (Sri Lanka) PLC on the Sustainability Reporting Criteria Presented in the Annual Report - 2015

Introduction and scope of engagement. Accordingly, we do yy Checking the calculations performed the engagement not express an opinion providing by the Company on a sample basis reasonable assurance. through recalculation. The management of Singer (Sri Lanka) yy Reconciling and agreeing the data PLC (“the Company”) engaged us to Management of the on financial performance are properly provide an independent assurance Company’s responsibility derived from the Company’s audited on the following elements of the for the Report financial statements for the year sustainability reporting indicators in the ended 31 December 2015. annual report – 2015 (“the Report”). The management of the Company yy Comparison of the content of the yy Reasonable assurance on the is responsible for the preparation of Report against the criteria for a information on financial performance the self-declaration, the information Global Reporting Initiative G4 ‘In as specified on pages … and … of and statements contained within the accordance’ – Core guidelines. the Report. Report, and for maintaining adequate records and internal controls that are Our procedures did not include testing yy Limited assurance on other designed to support the sustaining electronic systems used to collect and information presented in the Report, reporting process in line with the GRI aggregate the information. prepared in accordance with the Sustainability Reporting Guidelines. requirements of the Global Reporting Initiative G4 ‘In accordance’ – Core Ernst & Young’s responsibility Limitations and guidelines. considerations Our responsibility is to express a Basis of our work and conclusion as to whether we have Environmental and social performance level of assurance become aware of any matter that data are subject to inherent limitations causes us to believe that the Report is given their nature and the methods We performed our procedures not prepared in accordance with the used for determining, calculating and to provide limited assurance in requirements of the Global Reporting estimating such data. accordance with Sri Lanka Standard on Initiative G4 ‘In accordance’ – Core Assurance Engagements (SLSAE-3000): guidelines. This report is made solely Conclusion ‘Assurance Engagements Other than to the Company in accordance with our Audits or Reviews of Historical Financial engagement letter dated 27 January Based on the procedures performed, as Information’, issued by the Institute of 2016. We disclaim any assumption of described above, we conclude that; Chartered Accountants of Sri Lanka responsibility for any reliance on this (“CASL”). report to any person other than the yy The information on financial Company or for any purpose other performance as specified on pages The evaluation criteria used for than that for which it was prepared. 74 and 75 of the Report is properly this limited assurance engagement In conducting our engagement, we derived from the audited financial are based on the Sustainability have complied with the independence statements of the Company for the Reporting Guidelines (“GRI requirements of the Code for Ethics for year ended 31 December 2015. Guidelines”) and related information Professional Accountants issued by yy Nothing has come to our attention in particular, the requirements to the CASL. that causes us to believe that other achieve GRI G4 ‘In accordance’ - information presented in the Report Core guideline publication, publicly Key assurance procedures are not fairly presented, in all material available at GRI’s global website at respects, in accordance with the “www.globalreporting.org”. We planned and performed our Company’s sustainability practices procedures to obtain the information and policies some of which are Our engagement provides limited and explanations considered necessary derived from GRI-G4 ‘In accordance’- assurance as well as reasonable to provide sufficient evidence to support Core Sustainability Reporting assurance. A limited assurance our limited assurance conclusions. Key Guidelines. engagement is substantially less in assurance procedures included: scope than a reasonable assurance engagement conducted in accordance yy Interviewing relevant Company’s with SLSAE-3000 and consequently personnel to understand the process does not enable to obtain assurance for collection, analysis, aggregation that we would become aware of all and presentation of data. Chartered Accountants significant matters that might be yy Reviewing and validation of the 25th February 2016 identified in a reasonable assurance information contained in the Report. Colombo 110 2015 Annual Report Singer (Sri Lanka) PLC

Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index Description Reported Section Page No. Index No.

General Standard Disclsoures Strategy and Analysis G4-1 Statement from the most senior decision maker of the organisation Forming a Sustainable Tomorrow 64

Organizational Profile G4-3 Name of the Organisation Corporate Information Inner Back Cover G4-4 Primary Brands, products and services Forming a Sustainable Tomorrow/ 30-31 Singer on a Winning Streak G4-5 Location of the organization’s headquarters Corporate Information Inner Back Cover G4-6 Number of countries where the organisation operates and names Forming a Sustainable Tomorrow 66 of countries with either major operations or that are specifically relevant to the sustainability issues covered in the Report G4-7 Nature of ownership and legal form Forming a Sustainable Tomorrow Inner Back Cover G4-8 Markets served (including geographic breakdown, sectors served Group at a Glance/ Forming a 66 and types of customers/beneficiaries Sustainable Tomorrow G4-9 Scale of the reporting organization Forming a Sustainable Tomorrow 65 G4-10 Total workforce by employment type, employment contract, and Forming a Sustainable Tomorrow 83 region, broken down by gender G4-11 Report the percentage of total employees covered by collective Forming a Sustainable Tomorrow 91 bargaining agreements. G4-12 Organisation’s supply chain Forming a Sustainable Tomorrow 93 G4-13 Significant changes during the reporting period regarding size, Forming a Sustainable Tomorrow 66 structure, or ownership G4-14 Report whether and how the precautionary approach or principle is Forming a Sustainable Tomorrow 72 addressed by the organization. G4-15 List externally developed economic, environmental and social Forming a Sustainable Tomorrow 72 charters, principles, or other initiatives to which the organization subscribes or which it endorses. G4-16 List memberships of associations (such as industry associations) Forming a Sustainable Tomorrow 71 and national or international advocacy organizations in which the organization

Identified Material Aspects and Boundaries G4-17 Operational structure of the organisation Forming a Sustainable Tomorrow 66 G4-18 Process for defining report content Forming a Sustainable Tomorrow 65 G4-19 Material aspects identified in the process for defining report content Forming a Sustainable Tomorrow 73 G4-20 Aspect boundary for identified material aspects within the Forming a Sustainable Tomorrow 65 organisation G4-21 Aspect boundary for identified material outside the organisation Forming a Sustainable Tomorrow 65 G4-22 Report the effect of any restatements of information provided in Forming a Sustainable Tomorrow 65 previous reports, and the reasons for such restatements. G4-23 Report significant changes from previous reporting periods in the Forming a Sustainable Tomorrow 65 Scope and Aspect Boundaries.

Stakeholder Engagement G4-24 List of stakeholder groups engaged by the organization. Forming a Sustainable Tomorrow 72-73 G4-25 Report the basis for identification and selection of stakeholders with Forming a Sustainable Tomorrow 72-73 whom to engage. G4-26 Report the organization’s approach to stakeholder engagement, Forming a Sustainable Tomorrow 72-73 including frequency of engagement by type and by stakeholder group Singer (Sri Lanka) PLC Annual Report 2015 111 Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index Description Reported Section Page No. Index No.

G4-27 Report key topics and concerns that have been raised through Forming a Sustainable Tomorrow 72-73 stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting.

Report Profile G4-28 Reporting period Forming a Sustainable Tomorrow 65 G4-29 Most recent previous report Forming a Sustainable Tomorrow 65 G4-30 Reporting cycle Forming a Sustainable Tomorrow 65 G4-31 Contact point regarding the report Forming a Sustainable Tomorrow 65

GRI Content Index G4-32 Compliance with GRI G4 guidelines, GRI content index and external Forming a Sustainable Tomorrow 109-113 assurance report

Assurance G4-33 Policy and current practice with regard external assurance Forming a Sustainable Tomorrow 109

Governance G4-34 Report the governance structure of the organisation, including Forming a Sustainable Tomorrow 67-71 committees of the highest governance body and identify any committees responsible for decision-making on economic, environmental and social impacts.

Ethics and Integrity G4-56 The organisation’s values, principles, standards and norms of Forming a Sustainable Tomorrow 103-104 behavior such as codes of conduct and codes of ethics.

Specific Standard Disclsoures Catergory: Economic Aspect: Economic Performance G4-EC1 Economic value generated and distributed Forming a Sustainable Tomorrow 74-75 G4-EC3 Coverage of the organization’s defined benefit plan obligations Forming a Sustainable Tomorrow 75 G4-EC4 Financial assistance received from Government Forming a Sustainable Tomorrow 103

Category: Environmental Aspect: Materials G4-EN1 Materials used by weight or volume Forming a Sustainable Tomorrow 75-77 Aspect: Energy G4-EN3 Energy consumption within the organization Forming a Sustainable Tomorrow 75-77 G4-EN7 Reduction in energy requirements of products and services Forming a Sustainable Tomorrow 75-77 Aspect: Water G4-EN8 Total water withdrawal by source Forming a Sustainable Tomorrow 75-77 Aspect: Biodiversity G4-EN12 Direct and indirect impacts on biodiversity Forming a Sustainable Tomorrow 75-77 Aspect: Emissions G4-EN20 Emission of Ozone-Depleting substances Forming a Sustainable Tomorrow 75-77 Aspect: Effluents and Waste G4-EN22 total water discharge by quality and destination Forming a Sustainable Tomorrow 75-77 G4-EN23 Total weight of waste by type & disposal method Forming a Sustainable Tomorrow 75-77 Aspect: Products and Services G4-EN27 Mitigation of environmental impacts of products and services Forming a Sustainable Tomorrow 75-77 112 2015 Annual Report Singer (Sri Lanka) PLC Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index Description Reported Section Page No. Index No.

Aspect: Compliance G4-EN29 Monetary value of significant fines and total number of non- Forming a Sustainable Tomorrow 75-77 monetary sanctions Aspect: Supplier Environmental Assessment G4-EN32 Percentage of new suppliers that were screened using Forming a Sustainable Tomorrow 75-77 environmental criteria Aspect: Environmental Grievance Mechanisms G4-EN34 Number of grievances about environmental impacts Forming a Sustainable Tomorrow 75-77

Category: Social Sub Category: Labor Practices and Decent Work Aspect: Employment G4-LA1 Total number and rates of new employees hired and employee Forming a Sustainable Tomorrow 83 turnover by age group, gender and region G4-LA2 Benefits for full/part time employees Forming a Sustainable Tomorrow 83-85 G4-LA3 Return to work and retention rates after parental leave, by gender Forming a Sustainable Tomorrow 87 Aspect: Labour/Management Relations G4-LA4 Minimum notice period regarding operational changes including Forming a Sustainable Tomorrow 91 whether these are specified in collective agreements Aspect: Occupational Health and Safety G4-LA5 Joint management-worker health and safety committees Forming a Sustainable Tomorrow 91 Partially Reported G4-LA6 Type of injuries Forming a Sustainable Tomorrow 91 Aspect: Training and Education G4-LA9 Training details Forming a Sustainable Tomorrow 92-93 G4-LA10 Programs implemented and assistance provided to upgrade Forming a Sustainable Tomorrow 94-98 employee skills G4-LA11 Regular performance and career development review Forming a Sustainable Tomorrow 93 Aspect: Diversity and Equal Opportunity G4-LA12 Diversity categories Forming a Sustainable Tomorrow 83 Aspect: Equal Remuneration for Women and Men G4-LA13 Basic salary and remuneration of women to men Forming a Sustainable Tomorrow 82 Aspect: Labor Practices Grievance Mechanisms G4-LA16 Grievances about labor practices Forming a Sustainable Tomorrow 82

Sub Category: Human Rights Aspect: Non-descrimination G4-HR3 Incidents of discrimination Forming a Sustainable Tomorrow 103-107 Aspect: Freedom of Association and Collective Bargaining G4-HR4 Violation of exercise freedom of association or collective Forming a Sustainable Tomorrow 103-107 bargaining from Suppliers Aspect: Child Labor G4-HR5 Child labor related to operations & suppliers Forming a Sustainable Tomorrow 103-107 Aspect: Forced or Compulsory Labor G4-HR6 Incidents of forced or compulsory labor Forming a Sustainable Tomorrow 103-107 Singer (Sri Lanka) PLC Annual Report 2015 113 Global Reporting Initiatives (GRI) Standard Disclosures Index

GRI Index Description Reported Section Page No. Index No.

Aspect: Human Rights Grievance Mechanisms G4-HR12 Grievance mechanisms of human rights Forming a Sustainable Tomorrow 103-107 Sub Category: Society Aspect: Local Communities G4-SO1 Engagement with local community Forming a Sustainable Tomorrow 98-103 Aspect: Anti-competitive Behavior G4-SO7 Number of legal actions pending or completed Forming a Sustainable Tomorrow 103

Sub Category: Product Responsibility Aspect: Customer Health and Safety G4-PR1 Product and service categories for health and safety impacts Forming a Sustainable Tomorrow 107-108 G4-PR2 Non-compliance with regulations and voluntary codes Forming a Sustainable Tomorrow 107-108 concerning the health and safety Aspect: Product and Service Labeling G4-PR3 Product and service information and labeling Forming a Sustainable Tomorrow 107-108 G4-PR5 Customer satisfaction surveys Forming a Sustainable Tomorrow 107-108 Aspect: Marketing Communications G4-PR7 Non-compliance with regulations and voluntary codes Forming a Sustainable Tomorrow 107-108 concerning marketing communications Aspect: Customer Privacy G4-PR8 Complaints received concerning breaches of customer privacy Forming a Sustainable Tomorrow 107-108 Aspect: Compliance G4-PR9 Monetary value of fines for non-compliance with laws and Forming a Sustainable Tomorrow 107-108 regulations concerning products and services 114 2015 Annual Report Singer (Sri Lanka) PLC

Chairman’s Statement management can swiftly respond with confidence that our team will fulfil their corrective measures to sustain the obligations with the aim of creating status quo. This process of monitoring even stronger corporate governance Dear Shareholder, the internal controls are carried out and in the process increasing our We live in an era of rapid change in periodically and are considered corporate value. the economy and the environment perpetual safeguard against weakness around us. The established norms gaps if any. This action, exemplifies This Report on Corporate Governance too are subject to change and the the willingness and commitment of lays down the process through yardstick by which we measure the the Board of Directors and Senior which we implement our Corporate control environment needs constant Management to practice the highest Governance Ethics to safeguard review as well. The sustainability of standards of business ethics in the shareholder stake. We invite you to the Company’s future growth depends organisation. The Board’s Audit read the contents and learn more about on the extent to which management Committee has a huge responsibility the Corporate Governance practices in practices the Code of Corporate in ensuring that Corporate governance our Company. Governance in its fullness. standards are maintained in Sincerely, conformity to the Code of conduct. In order to recognise and respond to This Committee is composed of 3 the changes expected above, we have Non-Executive independent Directors. entrusted Chartered Accountants, The Executive Directors, Management Messrs Ernst & Young to identify and Staff, are the watchdogs at the any gaps in the existing internal gate of righteous conduct. As we Dr. Saman Kelegama controls system. These gaps arise enter an era of business prosperity Chairman from expansion of business and the and exponential growth, I have every 25th February 2016 Colombo SingerSinger (S(Sriri LLanka)anka) PLC AAnnunnualal RRepoeportrt 2015 115 116 2015 Annual Report Singer (Sri Lanka) PLC

Delivering on Stewardship

Corporate Statement Business Governance Governance of Compliance Business governance (Performance Governance) is linked from Company’s Group/Company ensures to comply Singer Group is fully compliant with the Vision Statement to Final Objective with established best practices in Code of Best Practices on Corporate level of grass root level. Business corporate governance and ensures the Governance issued in year 2013 governance process is started at highest ethical standards in conduct jointly by The Institute of Chartered the point of preparing the annual of its business. The Board adopts core Accountants of Sri Lanka and the plan and annual plan is focused on values and standards which set out the Securities and Exchange Commission future strategic direction, long-term conduct of staff in their dealings with of Sri Lanka as well as the Rules on objectives, medium-term objectives shareholders, customers, colleagues, Corporate Governance published and short-term set targets. Annual plan suppliers and other stakeholders. by the Colombo Stock Exchange. In is initially approved by the Singer Asia Once the core values are set and addition to the above, our Subsidiary Ltd., which is the Intermediate Parent communicated to all levels of the Company Singer Finance (Lanka) PLC Company and subsequently reviewed organisation, the Company is of the is fully compliant with the requirement and approved by the Board. The Group belief that the highest standards of set out by the Finance Companies CEO and Executive Committee review integrity will be maintained in business. Act No. 78 of 1988 and subsequent the strategic plan and budgets against amendments and Finance Companies the actual performance on a monthly Corporate Governance Direction No. 3 basis and at more frequent intervals, of 2008 issued by the Central Bank of Governance Policy as needed and Chairman and Board of Sri Lanka. and Framework Directors review actual performance at each Board meeting. The following developments took place Governance framework covers both in 2015: corporate governance and business yy Further, improved IFS-ERP system IT Governance governance. Corporate governance to enhance efficiency and integrity and business governance are of financial information and controls IT governance process of the Company interrelated processes and one over financial reports. process is always linked to and ensures that IT objectives are aligned yy Enhance internal audit resources dependent on the other process. with the business objectives that will and frequency of audits to ensure Business governance enables us to meet its strategic and operational that strategic and key operational focus on areas of value creation to objectives. IT governance is an integral risks are well-managed and any the business. Corporate governance part of the corporate governance deviations are escalated on a process is to safeguard and ensure process and which deals primarily timely basis. that the Group/Company achieve with optimising the linkage between business performance maintaining a yy Board of Directors appointed Strategic Directions and Information balance between accountability and Messrs Ernst & Young - Chartered Management of the Company. assurance of the business process. Accountants to carry out internal Competent and dedicated staff Thus, we believe our business systems and controls review and are deployed to support this need. governance and corporate governance to document said internal system Company investment in IT resources are interlinked to each other as and control procedures to enhance covers resources operated and depicted below: integrity of financial reporting, managed centrally and resources information and controls over deployed in various places. IT In line with the above governance financial reports. This assignment recourses include ERP system, other framework, the Group believes was completed in the year 2014, related business systems, internet, that successfully run business and some recommendations were e-mails and other Company-wide data enterprises are founded on a set of implemented in 2015. Internal communication system. fundamental qualities – those that auditors are advised to follow and embed transparency, accountability review the implementation during the and responsibility within the core of routing internal audit. its business operations. Translated into action, the Company’s strong core qualities and guiding corporate governance functions ensure that we remain ‘law abiding’, strictly adhering to the laws and regulations of the country. Business integrity and accountability to stakeholders are top of the mind factors that we inculcate right across – from the Board of Directors to the shop floor. Singer (Sri Lanka) PLC Annual Report 2015 117

Delivering on Stewardship

Impact of the IT governance to diverse functional areas of the Company is driven As diagrammatically presented by certain core objectives which are set below: above, Group governance structure is set up to create a distinction Compliance Investing in licensed software deployed in between the functions of the compliance with Intellectual Property Law with a Board and Management team but view to educate and mandate compliance to such ensuring effective co-operations laws throughout the Company. and communication between two Operational Efficiency Streamlining of inventory management, logistic groups. Group Chief Executive Officer management and credit management process so exercises triangular linking role that integrity is maintained across the value chain between Board Executive Management through near real-time processing. Committee and other stakeholders i.e., shareholders, employees, customers, Prudent Capital All major IT investments are carefully evaluated by community and environment. Group’s Expenditure the IT team and built into the business plan and carefully Chief Executive Officer is the main scrutinised at the planning level, and communication link with the Board and approval is granted by both, Board and Intermediate Executive Management Committee. Parent Company. He also acts as a de facto officer to maintain a fair role on behalf of Final approval of IT capital expenditure is sought from shareholders, employees, customers, the Group CEO and Intermediate Parent Company. community and Environment. Customer Convenience Ensuring process efficiencies to increase the contribution to customer convenience. Green IT Protecting the environment by reducing print through Business Ethics migration to e-mails and soft copies.

The Group enshrines the highest Governance Structure ethical standards in the conduct of its business affairs and its Board of Directors are tasked with ensuring External Regulations Internal Regulations that the resultant regime of exemplary Companies Act No. 07 of 2007 Articles of Association of governance across all aspects of the Company business are in the best interests of stakeholders. Ethically correct conduct Continues Listing Requirements of the Colombo Singer Finance Manual comprising integrity, honesty, fair play Stock Exchange and loyalty pervade all Group actions. Code of Best Practice of Corporate Governance Company’s Code of Ethics, issued in year 2008 jointly by The Institute of Human Resources Policies Transparency is encouraged in all Chartered Accountants of Sri Lanka and Securities and Procedures public disclosures, as well as in the and Exchange Commission of Sri Lanka way business and communication In case of Subsidiary Company Singer Finance Information Technology take place with all stakeholders. A (Lanka) PLC, requirements set out by the Finance and Other Internal Manual ‘whistle-blowing policy’ introduced Companies Act No. 78 of 1988 and subsequent internally in 2009 has increased the amendments and Finance Companies Corporate Company’s Standing level of transparency towards a wider Governance - Direction No. 3 of 2008 issued by the Institution and Policy and dimension. Central Bank of Sri Lanka Procedures (P&P)

Shareholders

Board Audit Board of Directors of Committee Board of Directors Intermediate Parent Company

Group Chief Executive Officer Board Nomination Board Remuneration Committee Committee Executive Committee Related Party Transactions Review Committee Employee

Customer

Community

Environment 118 2015 Annual Report Singer (Sri Lanka) PLC

Delivering on Stewardship

All employees are bound by the customer care and world class conduct of the business may have on Company’s written Code of Ethics that after-sales service are two of seven the environment. Further to that, this includes the following aspects: propositions substantiating our claim core value encourages and ensures to be a world-class Company. What is our products, processes and business yy Exercise honesty, objectivity salient about the widespread nature does not unnecessarily damage the and diligence when performing of our distribution is that in most environment. one's duties. instances, a consumer living in any yy Avoid situations where personal part of the country need not travel The Company is proud to present in interest might conflict with the more than 10 km to obtain goods and this Annual Report, the Embracing interest of the Company; and if so, services from the Company. Posterity based on the Global disclose such interest in advance. Reporting Initiatives (GRI) Guidelines yy Maintain confidentiality of Products sold by the Company are of for the fourth time. The Company’s commercial and price-sensitive the highest quality and are rigorously Social and Environment Management information. tested prior to introduction. The initiations are more fully described in yy Work within applicable laws and Company extends warranties on the Embracing the Future and Caring regulations. its products. It maintains an island- for Posterity on pages 62 to 92. wide network of service centres and yy Safeguard the Company’s assets. franchise agents to facilitate product yy Avoid conduct that will reflect badly repairs. Customer grievances, if Code of Best on the person concerned or the any, are handled promptly and Company’s image. solutions provided with exchange of Practice on yy Strictly avoid giving or accepting merchandise in the unlikely event of a Corporate any kind of bribe, either directly manufacturing defect. or indirectly. Governance yy Strictly avoid making contributions Among developments relevant to for political funds, either directly customer relations in the year under We set out below the corporate or indirectly. review was the growing popularity governance practices adopted and of our Contact Centre established in yy Strictly avoid any kind of sexual practiced by the Company, the extent 2006 to deal with customer complaints harassment. of adoption of the Code of Best and product performance issues as Practice on Corporate Governance well as to provide customer-related The Company has implemented a issued in year 2013 jointly by The information. In addition to this, the formal whistle-blowing procedure Institute of Chartered Accountants Company conducts customer-loyalty and encourages any employee who of Sri Lanka and the Securities and programmes such as the popular suspects wrongdoing at work, whether Exchange Commission of Sri Lanka Mega Money Programme, Singer Plus by management, peers or any other and the Rule set out in Section 7.10 of Reward Programme and Customer- employee, to raise their concerns. the Colombo Stock Exchange Listing Service Clinics across the country Rules on Corporate Governance. where any customer can relate their grievances or obtain service for their Other Policies product on site. Section A

In addition, the Company implements In service to our differently-abled policies covering: customers, wheelchair ramps and This section covers companies extent other such infrastructure modifications of adherence to the requirements of y y Recruitment and selection and facilities are being added to the the Code of Best Practice on Corporate yy Financial integrity Company’s retail outlets progressively Governance issued in year 2008 by the Securities and Exchange Commission yy Use of Company property including as part of routine showroom of Sri Lanka and The Institute of computers renovations. Chartered Accountants of Sri Lanka. yy Non-harassment in the workplace This reflects Company’s governance in yy Environment, safety and health Environment following six fundamental aspects: yy Security of IT system yy Directors Social responsibility is regarded as a yy Director Remuneration fundamental aspect of the Company’s yy Relationship with Shareholders Responsibility strategy and it is one of the core yy Accountability and Audit to Customers values of the business. As stated in our value statement ‘we make every yy Institutional Investors effort to ensure that the environment yy Other Investors The Company maintains an island- is protected and conserved for future wide network of outlets and provides generations’ and in line with this core a wide choice of products and brands value, the Company is committed to to its customers, augmented by easy minimising any adverse impact the payment opportunities. Outstanding Singer (Sri Lanka) PLC Annual Report 2015 119

Delivering on Stewardship

These are discussed in the sections that follow:

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 Governance SEC & CA Requirement of the Code Compliant with the Code Principle Sri Lanka Code Reference

Board Meeting A.1.1 The Board should meet The Board meets at least four times a year and additional regularly, at least once in meetings are held if required. The Board sub-committees every quarter. also met on a regular basis. Circular Resolutions are passed as per the requirements. The Board met six times during the financial year. Details of the meetings and attendance of the members are set out on page 151. The meetings convened by the Board sub-committees during 2015 are also provided on page 151.

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

Ensuring that the CEO The profile of the CEO is provided in this Annual Report and Management on page 20. team possess the skill, While the Board of Directors is ultimately responsible experience and knowledge for the operations and financial soundness of the to implement strategy. Company, the day-to-day management of the Company is entrusted to the Group CEO. There is extensive staff participation in decision-making at all levels, with strategic recommendations on material matters flowing to the Board for final decision.

The Group CEO chairs the Executive Committee and four key management members are Alternate Directors. The Executive Management Committee, comprising all Key Managers who are divisional heads, Three Deputy Directors and Group CEO, meets every week for a performance review and decision-making. The Group CEO chairs the meeting and four key Managers in the Committee are also Alternative Directors to the Main Board. 120 2015 Annual Report Singer (Sri Lanka) PLC

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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 of an Succession planning is given due recognition in the effective CEO and Senior corporate culture. Effective succession planning is a Management succession criterion in the performance appraisals of the Senior strategy. Management and Key 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.

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

Audit Committee framework, composition, responsibilities and duties are given in the Audit Committee Report on page 161.

Risk management framework is given in the Risk Management Report appearing from pages 152 to 157. Singer (Sri Lanka) PLC Annual Report 2015 121

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Ensuring compliance with The Board follows a policy of strict compliance with laws, regulations and ethical laws and regulatory requirements and ensures that standards. stakeholder interests are considered in key corporate direction.

A compliance checklist is provided to Board 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’ interests The Board adopted core values and standards which are considered in corporate set out the conduct of staff in their dealings with decisions. shareholders, customers, community, environment, colleagues, suppliers and other stakeholders. 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.

The Company’s values The Group enshrines the highest ethical standards in the and standards are set conduct of its business affairs and its Board of Directors with emphasis on adopting are tasked with ensuring that the resultant regime of appropriate accounting exemplary governance across all aspects of business policies and fostering are in the best interests of stakeholders. Ethically correct compliance with financial conduct comprising integrity, honesty, fair play and regulations. loyalty pervade all Group actions.

Accounting policies are reviewed annually in light of changing 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 2014 and which are given as part of the Financial Reports in pages 179 to 190. 122 2015 Annual Report Singer (Sri Lanka) PLC

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Fulfilling such other The Board makes every endeavour to ensure a balanced Board functions as relevant and objective assessment of the Company’s position, to the organisation. performance and prospects.

Members from professional accounting bodies and high scholar representatives from the field of economics 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 with A.1.3 The Board collectively, and As mentioned above, there is a significant emphasis laws and seeking Directors individually, must across the organisation to ensure compliance with independent act in accordance with applicable laws and regulations. professional advices the laws of the country The Board members are permitted to obtain independent and there should be a professional advice from a third party including the procedure agreed by the Company’s External Auditors and other professional Board of Directors to obtain consultants whenever deemed necessary at the expense independent professional of the Company. advice where necessary, at the Company’s expense. During the year under review, Board has obtained independent tax advice from Messrs Amarasekara and Company, Chartered Accountants.

Neither Board nor except above, no director obtained any independent professional advice during the year 2015.

Company Secretary A.1.4 All Directors should have The Company Secretary ensures that all Board Terms access to the advice and of Reference are followed and applicable rules and service of the Company’s regulations are adhered to. The Company Secretary Secretary, who is advices the Board and ensures that matters concerning responsible to the Board the Companies Act, Board procedures and other in ensuring, that the Board applicable rules and regulations are followed. All procedures are followed Directors have access to the Company Secretary. The and that the applicable Secretary possesses the required qualifications as set rules and regulations are out in the Companies Act. complied with. Any question of the removal of the Company Secretary should be a matter for the Board as a whole. Singer (Sri Lanka) PLC Annual Report 2015 123

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Independent A.1.5 All Directors should bring The Chairman conducts Board meetings in a manner judgment of Directors independent judgment to which ensures that there is effective participation from all bear on issues of strategy, Directors, their individual contribution and concerns are performance, resources objectively assessed prior to making key decisions and and standards of business that the balance of power is maintained. conduct. 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 07 of the CSE Listing Rules on Corporate Governance as at 31st December 2015.

A.1.6 Every Director should The Board met on 6 occasions during the year. The dedicate adequate time Chairman attended all meetings and the attendance of and effort to matters of the the other Directors is detailed on page 151. Board and the Company, to The Board is satisfied that the Chairman and the Non- ensure that the duties and Executive Directors committed sufficient time during responsibilities owned to the 2015 to fulfil their duties. Company are satisfactorily discharged.

Training for new and A.1.7 Every Director should The Directors are given the opportunities to existing Directors receive appropriate training familiarise and obtain an in-depth understanding when first appointed to of the Company’s business, its strategies, risks and the Board of a company, processes, at their discretion. and subsequently as Training is provided to Executive Directors and necessary. The training Alternate Directors to equip themselves to discharge curricular should their responsibilities effectively. This includes training encompass both general provided by principles, external and in-house training. aspects of directorship and matters specify to the Directors are briefed on changes in laws and particular industry/company regulations, tax laws and accounting standards from concerned. A Director time-to-time either during the Board meetings or at must recognise that there specially convened sessions. is a need for continuous training and expansion of the knowledge and skill required to effectively perform his duties as a Director.

124 2015 Annual Report Singer (Sri Lanka) PLC

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

Main Principle

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Separation of the A.2.1 The positions of Chairman The Chairman’s and Group CEO’s functions are roles of Chairman and Group CEO are separated to ensure a balance of power of authority and and Group CEO separated to ensure a this dual panel structure has been continued throughout balance of power and the year 2015. authority and to prevent any one individual from The Chairman of the Board of Directors functions in a possessing unfettered non-executive capacity with no activities involving the decision-making authority. direct supervision of staff or Senior Management. The Group Chief Executive Officer 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, Board of the Intermediate 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 Governance SEC & Requirement of the Code Compliant with the Code Principle Sri Lanka Code Reference

Role of Chairman A.3.1 The Chairman should The Chairman is responsible for leading the Board conduct Board proceedings and for its effectiveness. In practice, this means taking in a proper manner and responsibility for the Board’s composition, ensuring ensure, inter alia, that: that the Board focuses on its key tasks and supports yy the effective participation the Group CEO in managing the day-to-day running of of both Executive and the Company. The Chairman is also the ultimate point Non-Executive Directors is of contact for shareholders, particularly on corporate secured; governance issues. yy all Directors are encouraged to make an The Chairman satisfies himself that the information effective contribution, available to the Board is sufficient to make an informed within their respective assessment of the Company’s affairs as well as to capabilities, for the benefit discharge their duties to all stakeholders. of the Company; yy a balance of power The Chairman conducts Board meetings in a manner between Executive and which ensures that there is effective participation from Non-Executive Directors is all Directors, their individual contribution and concerns maintained; are objectively assessed prior to making key decisions y y the views of Directors on and that the balance of power is maintained. issues under consideration are ascertained; and Chairman ensures that regular meetings are conducted y y the Board is in complete at least once a quarter and the minutes of the meetings control of the Company’s are accurately recorded. affairs and alert to its obligations to all shareholders and other Chairman approves the agenda prepared by the stakeholders. Company Secretary. Singer (Sri Lanka) PLC Annual Report 2015 125

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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.

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Financial acumen and A.4.1 Availability of sufficient Chairman has obtained his doctorate – D.Phil (Econ) knowledge financial acumen and from Oxford University, UK. knowledge. Group CEO is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and Fellow of the Chartered Institute of Management Accountants – UK.

In addition, the Board includes a member who is an Associate member of The Institute of Chartered Accountants of Sri Lanka and a Fellow member of the Chartered Institute of Management Accountants UK, another member who is a Fellow of The Institute of Chartered Accountants of Sri Lanka. These members of the Board have the ability to offer guidance on matters of finance to the Board.

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.

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Presence of A.5.1 The Board should include Six out of seven Directors on the Board are strong team of Non-Executive Directors Non-Executive Directors which is well above the Non-Executive of sufficient calibre and minimum prescribed by the Code. This ensures views of Directors number for their views to Non-Executive Directors carry a significant weight in the carry significant weight in decisions made by the Board. the Board’s decisions.

The Board should include at least two 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. 126 2015 Annual Report Singer (Sri Lanka) PLC

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Independent A.5.2 Where the constitution of the Three out of six Non-Executive Directors on the Board Non-Executive Board of Directors includes are independent-based on the criteria set by this Code Directors only two Non-Executive and the Listing Rules of the Colombo Stock Exchange. Directors, both such Non- The Names of the Independent Non-Executive Executive Directors should Directors are disclosed on pages 18 to 22 and back be ‘independent’. In all other page of the Annual Report. instances two or one-third of Non-Executive Directors appointed to the Board of Directors whichever is higher should be ‘independent’.

Independence of A.5.3 For a Director to be deemed The Company maintains the ‘Interest Register’ required Non-Executive ‘independent’ such Director by the Companies Act No. 07 of 2007, which also shows Directors should be independent details of Director Interest in Contracts/Company or of management and free Group. of any business or other A disclosure on related party transactions is available on relationship that could pages 236 to 238. materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgment.

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

Determination of A.5.5 The Board should make a The Board has determined the independence of Independence of determination annually as Directors based on the declarations submitted by the Director to the independence or Non-Executive Directors, as to their independence,as non-independence of each a fair representation and will continue to evaluate their Non-Executive Director independence on this basis annually. No circumstances based on such a declaration have arisen for the determination of independence made of decided criteria by the Board, beyond the criteria set out in the Code. and other information Independent Non-Executive Directors are: available to the Board, Dr. Saman Kelegama and should set out in the Annual Report the names Mr. Ranil De Silva of Directors determined to Mr. Deepal Sooriyaarachchi be ‘independent’.The Board should specify the criteria not met and the basis for its determination in the Annual Report, if it determines that a Director is independent notwithstanding the existence of relationships or circumstances which indicate the contrary. Singer (Sri Lanka) PLC Annual Report 2015 127

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Appointment of A.5.6 If an alternate Director is Alternative Directors to the Non-Executive Directors are alternate director appointed by a Non- Executives of the Company. However, board balance is Executive Director such not affected since the board complies with code A 5.2 Alternate Director should Alternative directors are not appointed by the not be an executive of the independent directors. Company. If an Alternate Director is appointed by an Independent Director, the person who is appointed also should meet the criteria of Independence and the provision on minimum number of Independent Directors also should be satisfied.

Requirement to A.5.7 In the event the Chairman The requirement to appoint a Senior Independent appoint ‘Senior and CEO is the same Director does not arise as the roles of Chairman and Non-Executive person, the Board should Group CEO are separated. Director’ 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 Not Applicable. discussion with Director should make Senior Independent himself available for Director confidential discussions with other Directors who may have concerns 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 meetings A.5.9 The Chairman should Chairman meets with NEDs without the presence of with Non-Executive hold meetings with the Executive Directors, whenever necessary. Directors Non-Executive Directors only, without the Executive Directors being present, as necessary and at least once each year.

Recording of A.5.10 Where Directors have Concerns raised by the Directors during the year, if concerns in concerns about the matters any, are recorded in the minutes of Board meetings with Board Minutes of the Company which adequate details by the Company Secretary. cannot be unanimously resolved, they should ensure their concerns are recorded in the Board Minutes. 128 2015 Annual Report Singer (Sri Lanka) PLC

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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.

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Management A.6.1 Management has an The Company ensures that the Directors receive obligation to provide obligation to provide the adequate information in a timely manner. On urgent appropriate and Board with appropriate matters, every effort is made to provide the information, timely information and timely information, but as early as possible. to the Board information volunteered by The Board receives a standard set of documents, which management may not be are timely, accurate, relevant and comprehensive. These enough in all circumstances papers include a detailed analysis of financial and non- and Directors should make financial information. The Board may call for additional further inquiries where information or clarify issues with any member of the necessary. The Chairman Executive Committee. should ensure all Directors are properly briefed on If necessary, all Directors are adequately briefed by the issues arising at Board Group CEO on matters arising at Board meetings. The meetings. 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 time for A.6.2 The minutes, agenda and The minutes, agenda and papers required for Board effective conduct of papers required for a Board meetings are provided in advance to facilitate its Board meetings meeting should ordinarily effective conduct. be provided to Directors at least seven (7) days before the meeting, to facilitate its effective conduct.

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.

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Nomination A.7.1 A Nomination Committee The Committee consists of an independent Non- Committee should be established to Executive Director, Chairman who is also an independent make recommendations Non-Executive Director and Group CEO. Secretary to the to the Board on all new Board acts as the Secretary to the Committee. Board appointments. Please refer page 162 for new appointment in year 2015. Terms of Reference for Nomination Committees are set out in Schedule A. The Chairman and members of the Nomination Committee should be identified in the Annual Report. Singer (Sri Lanka) PLC Annual Report 2015 129

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

Disclose of A.7.3 Upon the appointment All new appointments are communicated to the required details of of a new Director to the shareholders via the Colombo Stock Exchange. new Directors to Board, the Company The details of the current Board of Directors and new shareholders should forthwith disclose to appointments are provided on pages 18 to 22 in this shareholders: Annual Report. yy a brief résumé of the Director; yy the nature of his expertise in relevant functional areas; yy the names of companies in which the Director holds directorships or memberships in Board committees; and yy whether such a Director can be considered ‘independent’. 130 2015 Annual Report Singer (Sri Lanka) PLC

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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.

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Re-election of Non- A.8.1 Non-Executive Directors In terms of the Articles of Association, one-third Executive Directors, should be appointed for of the Directors, except for Chairman, Managing Chairman and CEO specified terms subject Director/CEO, retire in rotation and may offer themselves to re-election and to the for re-election at the AGM. By virtue of being the provisions in the Companies Chairman, Managing Director/CEO are not required to Act relating to the removal make themselves available for re-election as the Articles of a Director, and their of Association. reappointment should not be automatic. The Company’s Articles of Association provides that any Director appointed by the Board to hold office until the A.8.2 All Directors including the next Annual General Meeting, may seek reappointment Chairman of the Board, by the shareholders at the said AGM. should be subject to election by shareholders Based on the article and the current composition of the at the first opportunity after Board, a Director has to come forward for re-election, their appointment, and to every three years. re-election thereafter at intervals of no more than A résumé of the below mention Directors coming up for three years. The names re-election at the AGM, 2016 is available on pages 18 to of Directors submitted 22. for election or re-election should be accompanied Name of the Director Directorship Status by a résumé minimally Mr. G.J. Walker Retires by rotation re-election as set out in paragraph P.J. O’Donnell Retires by rotation re-election A.7.3 above, to enable shareholders to make an Mr. Ranil De Silva Newly appointed - election informed decision on their Mr. Deepal Sooriyaarachchi Newly appointed - election election. The Chief Executive Officer does not retire by rotation. Singer (Sri Lanka) PLC Annual Report 2015 131

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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.

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Annual performance A.9.1 The Board should The performance of the Board and the sub-committee evaluation of the annually appraise itself is reviewed and evaluated by the Board and Chairman Board and its on its performance in based on a self-appraisal basis. Committee the discharge of its key responsibilities as set out in A.1.2.

A.9.2 The Board should also undertake an annual self-evaluation of its own performance and that of its Committees.

A.9.3 The Board should state how such performance evaluations have been conducted, in the Annual Report.

A.10 Disclosure of Information in Respect of Directors

Main Principle

Shareholders should be kept advised of relevant details in respect of Directors.

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

i. Name, qualifications and Available on pages 18 and 22 of Board of Directors. brief profile;

ii. The nature of his/ Available on pages 18 and 22 of Board of Directors. her expertise in relevant functional areas;

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

iv. Names of listed Available on pages 18 and 22 of Board of Directors. companies in Sri Lanka in which the Director concerned serves as a Director; 132 2015 Annual Report Singer (Sri Lanka) PLC

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v. Names of other companies Available on pages 18 and 22 of Board of Directors. in which the Director concerned serves as a Director, provided that 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;

vi. Number/percentage of Available on page 151. Board meetings of the Company attended during the year;

vii. Committees in which the Available on page 169. Director serves as Chairman or a member;

viii. Number/percentage Available on page 151. of Committee meetings attended during the year.

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.

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Setting annual A.11.1 At the commencement of The Annual Budget is prepared setting up short-term, targets and the every fiscal year, the Board medium-term and long-term financial and non-financial appraisal of in consultation with the CEO, goals. The Annual Budget is initially approved by the performance should set, in line with the Intermediate Parent Company, Singer Asia Ltd. and of the CEO short-medium and long-term subsequently approved by the Board. objectives of the Company, Assessment of performance of the Group CEO is carried reasonable financial and out by both Intermediate Parent Company’s Board and non-financial targets that the local Board at the end of each year to ensure that should be met by the Group pre-agreed targets have been achieved or if not whether CEO during the year. there are acceptable reasons for not achieving them. A.11.2 The performance of the Group CEO should be evaluated by the Board at the end of each fiscal year to ascertain whether the targets set by the Board have been achieved and if not, whether the failure to meet such targets was reasonable in the circumstances. Singer (Sri Lanka) PLC Annual Report 2015 133

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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.

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Establishment of B.1.1 To avoid potential conflicts The scope of the Committee is to ‘look into fees, the Remuneration of interest, the Board of remuneration and perquisites of the Chairman, Committee Directors should set up a Group CEO, Independent Directors and Executive Remuneration Committee to make Directors of the Board of the Company including recommendations to the Board, Alternate Directors and approve recommendations within agreed terms of reference, made by the Group Chief Executive Officer and the on the Company’s framework Corporate Office of Singer Asia Ltd.’. of remunerating Executive Singer Asia Ltd., is the Intermediate Partner of the Directors. (These also include Company. Post-Employment Benefits as well as Terminal Benefits.) Terms of Reference for Remuneration Committees are set out in Schedule C.

Composition of B.1.2 Remuneration Committees should The Committee consists of the three Independent the Remuneration consist exclusively of Non-Executive Directors and Chairman who is also Committee Non-Executive Directors, a Non-Executive Director. and should have a Chairman, who The Committee is chaired by a Non-Executive should be appointed by the Board. Director. Finance Director acts as the Secretary to the Committee. The Chairman, the Group CEO and the Finance Director assist the Committee by providing the relevant information and participating in its analysis and deliberations.

Chairman and B.1.3 The Chairman and Members of Please refer page 162 of the Remuneration Members of the the Remuneration Committee Committee Report for details of the Chairman and Remuneration should be listed in the Annual Members of the Board Remuneration Committee. Committee Report each year. 134 2015 Annual Report Singer (Sri Lanka) PLC

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

Consultation of the B.1.5 The Remuneration Committee The Committee has the authority to seek internal Chairman and access should consult the Chairman and external independent professional advice on to professional advice and/or CEO about its proposals matters falling within its purview, at the Company’s relating to the remuneration of expense. Views of the Group CEO are obtained as other Executive Directors and he is attorney to the said Board sub-committee, have access to professional by invitation. advice from within and outside the Company, in discharging their responsibilities.

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.

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Executive Directors’ B.2.1 The Remuneration Committee The Board Remuneration Committee and also the remuneration package should provide the packages Board ensure that Executive Director – Group CEO needed to attract, retain and and another four Executive Directors – (Alternate motivate Executive Directors Directors to the Non-Executive Directors) who of the quality required but are on the Board are provided with an attractive should avoid paying more than is remuneration package. necessary for this purpose. Singer (Sri Lanka) PLC Annual Report 2015 135

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Comparison of B.2.2 The Remuneration Committee A primary objective of compensation packages remuneration with should judge where to position is to attract and retain a highly qualified and other companies/other levels of remuneration of the experienced workforce and reward performances. companies in the Company, relative to other These compensation packages should provide Group companies. It should be aware compensation appropriate for each business what comparable companies are within the Group and commensurate with each paying and should take account employee’s level of experience and contribution, of relative performance, but bearing in mind the business performance and should use such comparisons long-term shareholder returns. with caution, mindful of the risk that they can result in an increase of remuneration levels with no corresponding improvement in performance.

B.2.3 The Remuneration Committee should be sensitive to remuneration and employment conditions elsewhere in the Company or Group of which it is a part, especially when determining annual salary increases.

Performance-based B.2.4 The performance-related elements Objectives for Executive Directors including Group remuneration of of remuneration of Executive CEO are set at the beginning of the year and the Executive Directors Directors should be designed and remuneration including the performance bonus is tailored to align their interests with decided based upon the degree of achievement of those of the Company and main such pre-set targets. stakeholders and to give these Directors appropriate incentives to perform at the highest levels.

Executive share B.2.5 Executive share options should Presently the Company does not have an Executive options not be offered at a discount (i.e., Share Option Scheme. less than market price prevailing at the time the exercise price is determined), save as permitted by the Listing Rules of the Colombo Stock Exchange.

Designing the B.2.6 In designing schemes Please refer Remuneration Committee Report remuneration of of performance-related on page 162. Executive Directors remuneration, Remuneration Committees should follow the provisions set out in Schedule D. 136 2015 Annual Report Singer (Sri Lanka) PLC

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Early termination of B.2.7 Remuneration Committee should Not applicable to the Board except for Group Executive Directors consider what compensation Chief Executive Officer and other Executive commitments (including pension Directors who are employees of the Company, contributions) their Directors’ and their terms of employment are governed contracts of service, if any, entail by the contract of service/employment. in the event of early termination. Remuneration Committee should in particular, consider the advantages of providing explicitly for such compensation commitments to apply other than in the case of removal for misconduct, in initial contracts.

Dealing with early B.2.8 Where the initial contract communication does not explicitly provide for compensation commitments, Remuneration Committee 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 remuneration B.2.9 Levels of remuneration for Non-Executive Directors of the Company are paid of Non-Executive Non-Executive Directors should nominal fees commensurate with their time and role Directors reflect the time commitment in the Company and taking into consideration market and responsibilities of their role, practices and recommendations made by the Group taking into consideration market Chief Executive Officer of Singer Asia Ltd., as the practices. Remuneration for Non- Intermediate Parent of the Company. Executive Directors should not Non-Executive Directors are not included in share normally include share options. options as there is no scheme in existence. If exceptionally options are granted, shareholder approval should be sought in advance and any shares acquired by exercise 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 independence. (as set out in provision A.5.5) Singer (Sri Lanka) PLC Annual Report 2015 137

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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 Governance SEC & Requirement of the Code Compliant with the Code Principle CA Sri Lanka Code Reference

Disclosure of B.3.1 The Annual Report should set Please refer Remuneration Committee Report Remuneration out the names of Directors (or on page 162 for disclosure on the names persons in the Parent Company’s of Remuneration Committee members and Committee in the case of a Remuneration Policy of the Company. Group Company) comprising the Please refer Note 38.3 to the Financial Statements Remuneration Committee, contain on page 238 for aggregate remuneration paid to a statement of remuneration Executive and Non-Executive Directors. policy and set out the aggregate remuneration paid to Executive and Non-Executive Directors.

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 Governance SEC & Requirement of the Code Compliant with the Code Principle CA Sri Lanka Code Reference

Use of Proxy Votes C.1.1 Companies should count all proxy The Company has in place an effective mechanism votes and should indicate the to count all proxy votes to indicate to the Chairman level of proxies lodged on each the level of proxies lodged on each resolution and resolution and the balance for the number of votes for and against the resolution. and against the resolution, after it has been dealt with on a show of hands except where a poll is called.

Separate resolution C.1.2 Companies should propose a Company proposes a separate resolution at the for all separate issues separate resolution at the AGM on AGM on each substantially separate issue. at the AGM each substantially separate issue Further, adoption of the Annual Report of the and should in particular propose Board of Directors on the affairs of the Company a resolution at the AGM relating and Audited Financial Statements together with the to the adoption of the report and Report of the Auditors thereon are considered as a accounts. separate resolution.

Availability of all C.1.3 The Chairman of the Board The Chairman of the Company ensures that Sub-committee should arrange for the Chairmen Chairmen of all Board Sub-committees namely, Chairmen of the Audit, Remuneration and Audit, Remuneration and nomination are present Nomination Committees to be at the AGM to answer the questions under their available to answer questions at purview. the AGM if so requested by the Chairman. 138 2015 Annual Report Singer (Sri Lanka) PLC

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

Adequate Notice of C.1.4 Companies should arrange for the A copy of the Annual Report including Financial the AGM Notice of AGM and related papers Statements, Notice of Meeting and the Form of to be sent to shareholders at least Proxy are sent to shareholders 15 working days as determined by statute, before prior to the date of the AGM, as requested by the meeting. statute, in order to provide the opportunity to all the shareholders to attend the AGM.

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

C.2 Communication with Shareholders

Main Principle

The Board should implement effective communication with shareholders.

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

Channel to reach all C.2.1 There should be a channel to The primary modes of communication between shareholders of the reach all shareholders of Company and the shareholders are the Annual company the Company in order to Report and AGM. Information is provided to the disseminate timely information shareholders prior to the AGM to give them an 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;

yy Shareholders meetings yy Financial and other notices as and when required through the Colombo Stock Exchange yy Corporate website yy Press notices.

Policy and C.2.2 The Company should disclose The Company will focus on open communication methodology for the policy and methodology for and fair disclosure, with emphasis on the integrity, communication communication with shareholders timeliness and relevance of the information with shareholders provided. The Company will ensure information is communicated accurately and in such a way as to avoid the creation or continuation of a false market. Singer (Sri Lanka) PLC Annual Report 2015 139

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

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

Contact person for the C.2.4 The Company should decide the Shareholders may, at any time, direct questions, communication C.2.6 person to contact in relation to request for publicly available information and shareholders’ matters and should provide comments and suggestions to Directors disclose the contact person for or management of the Company. Such questions, such communication requests and comments should be addressed to the Company Secretary and in the absence of him the Chief Executive Officer.

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

Process responding to C.2.7 Please refer C.2.5 above shareholders matters

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 Governance SEC & Requirement of the Code Compliant with the Code Principle Sri Lanka Code Reference

Disclosure on C.3.1 Prior to a company engaging During the year, there were no major transactions ‘Major Transaction’ in or committing to a ‘Major as defined by Section 185 of the Companies Act Transaction’, involving the No. 07 of 2007 which materially affect the net acquisition, sale or disposition of assets base of the Company or Consolidated greater than half of the net value Group net asset base. of the Company’s assets or that of Transactions which materially affect the net assets a subsidiary which has a material base of the Company will be disclosed in the bearing on the consolidated net Quarterly/Annual Financial Statements, if any. assets of the Company, Directors should disclose to shareholders all material facts of such transactions. 140 2015 Annual Report Singer (Sri Lanka) PLC

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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 Governance SEC & Requirement of the Code Compliant with the Code Principle CA Sri Lanka Code Reference

Board’s responsibility D.1.1 The Board’s responsibility The Board is well aware of its responsibility to for Statutory and to present a balanced and present regulatory and statutory reporting in a Regulatory Reporting understandable assessment balanced and understandable manner and a extends to interim and other statement to this effect is given in the Statement price-sensitive public reports of Directors’ Responsibility on page 172 and reports to regulators, as confirming this position. well as to information required The Company had strictly complied with the to be presented by statutory requirements of the Companies Act No. 07 of requirements. 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 Upload Status

Annual Report for the year ended 31st December 2014 27th February 2015 Compliant 1st Quarters 2015 6th May 2015 Compliant 2nd Quarters 2015 6th August 2015 Compliant 3rd Quarters 2015 26th October 2015 Compliant 4th Quarters 2015 25th February 2016 Compliant Singer (Sri Lanka) PLC Annual Report 2015 141

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

Directors’ Report in D.1.2 The Directors’ Report, which The Annual Report of the Board of Directors on the the Annual Report forms part of the Annual Report, Affairs of the Company given on pages 167 to 171 should contain declarations by the covers all of these sections. Directors to the effect that:- Addition to that Company has established yy the Company has not procedures to ensure compliance with all engaged in any activity applicable statutory and regulatory requirements. which contravenes laws and The Accountants of respective companies within regulations; the Group act as Compliance Officers and are responsible for ensuring proper compliance with applicable laws and regulations.

A compliance statement is tabled at each Board meeting by the Chief Compliance Officer.

yy the Directors have declared all The Company’s compliance with Section 7.10 material interests in contracts of the Colombo Stock Exchange Listing Rules involving the Company and on Corporate Governance and details of such refrained from voting on matters compliance are discussed on pages … and … of in which they were materially this Report. interested; yy the Company has made all endeavours to ensure the equitable treatment of shareholders; yy the business is a going concern, with supporting assumptions or qualifications as necessary; and yy they have conducted a review of the internal controls, covering financial, operational and compliance controls and risk management, and have obtained reasonable assurance of 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.1.3 The Annual Report should contain The ‘Statement of Directors’ Responsibility’ is given of Directors’ a statement setting out the on Page 167. and Auditors’ responsibilities of the Board for The ‘Independent Auditors’ Report’ on Page 173 Responsibility for the the preparation and presentation states the Auditor’s responsibility. Financial Statements of Financial Statements, together with a statement by the Auditors about their reporting responsibilities. 142 2015 Annual Report Singer (Sri Lanka) PLC

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

Management D.1.4 The Annual Report should contain Please refer Chairman’s Letter on Pages 8 to 11, Discussion and a ‘Management Discussion and Group Chief Executive Officer’s Review on Pages Analysis Analysis’, discussing, among 12 to 17, Review of Operation Singer at a winning other issues: streak on page 30 to 49, Forming a Sustainable Tomorrow on page 64 and Performance in context yy industry structure and on page 54 to 61 of this Annual Report. developments; yy opportunities and threats; yy risks and concerns; yy internal control systems and their adequacy; yy social and environmental protection activities carried out by the Company; yy financial performance; yy material developments in human resource/industrial relations; and yy prospects for the future.

Declaration by the D.1.5 The Directors should report that Please refer page 167 of this ‘Annual Report to the Board on going the business is a going concern, Board of Directors’ and the ‘Statement of Directors’ concern of the with supporting assumptions Responsibility’ on page 172 for the required business or qualifications as necessary. declaration. The matters to which the Board should give due consideration when adopting the going concern assumption are set out in Schedule E to this Code.

Summon on EGM to D.1.6 In the event the net assets of Likelihood of such occurrence is remote. However, notify serious loss of the Company falling below 50% should the situation arise, an EGM will be called for capital of the value of the Company’s and shareholders will be notified. shareholders’ funds, the Directors shall forthwith summon an Extraordinary General Meeting of the Company to notify shareholders of the position and of remedial action being taken. Singer (Sri Lanka) PLC Annual Report 2015 143

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

Disclosure of related D.1.7 Each related party to submit Each related party has submitted signed and party transaction signed and dated quarterly dated declarations mentioning whether they declarations mentioning had related party transactions with the Company whether they have related party during 2015. transactions with the Company as defined in this Code; yy All related party transactions as defined in Sri Lanka Accounting Standards. The Company Secretary keeps a record on related party yy LKAS 24 (Related Party Transactions) are transactions and make necessary disclosures in Note No. 38. disclosures accordingly; The Financial Statements on pages 236 to 238. A record/register in hard form on related party and related party transactions are kept by the Company;

The Company captures information to comply with the respective related party disclosure requirements imposed by SEC/ Accounting Standards/Auditing Standards and similar regulations.

D.2 Internal Control

Main Principle The Board should maintain a sound system of internal control to safeguard shareholders’ investments and the Company’s assets.

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

Annual Review D.2.1 The Directors should, at least The Company’s Directors are responsible for of the effectiveness of annually, conduct a review of instituting a system of internal controls to ensure Group’s system the effectiveness of the Group’s the effective implementation of all policies and of internal control system of internal controls, decisions of the Board. This framework is designed so as to be able to report to to provide reasonable but not absolute assurance shareholders as required in that all aspects are safeguarded. D.1.2. This could be made The Company employs personnel across different the responsibility of the Audit levels of operations to apply these internal Committee. controls, while the Internal Audit Department reviews the effectiveness of such controls.

The Company’s operations are also subject to review by the Corporate Internal Audit Division of Retail Holdings NV, the Ultimate Parent Company of Singer (Sri Lanka) PLC.

The Company has its own internal audit processes, implemented to ensure that effective controls are in place. These processes extend across all Company operations.

The internal audit function is headed by the Head of Risk Management, who reports to the Board Audit Committee and Group CEO and the Corporate Internal Auditor. 144 2015 Annual Report Singer (Sri Lanka) PLC

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

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 need for D.2.2 Companies which do not have This is not applicable as the Risk Management internal audit function an internal audit function should and Internal Audit is responsible for internal from time to time review the need audit functions. for one.

Review of the D.2.3 The Board should require the The Internal Audit Division of the Company carries process and Audit Committee to carry out regular reviews on the risk management effectiveness of risk out reviews of the process and function and internal control system including management and effectiveness of risk internal control over financial reporting. internal controls management and internal The Audit Committee monitors, reviews and controls, and to document to evaluates the effectiveness of internal control the Board system including the internal controls over financial reporting. In the year 2015, the Board of Directors was satisfied with the effectiveness of the system of internal controls of the Company. Refer the Directors’ Statement on Internal Control on pages 172 for details.

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 and internal control principles and maintaining an appropriate relationship with the Company’s Auditors.

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

Composition of the D.3.1 The Audit Committee should be All members of the Board Audit Committee are Audit Committee comprised with a minimum of Independent Non-Executive Directors. two Independent Non-Executive Details of the members, invitees and Secretary of Directors (in instances where a the Committee are found on page 161 of the ‘Audit company has only two Directors Committee Report’ under the heading ‘Composition on its Board) or exclusively of the Committee’. by Non-Executive Directors, a majority of whom should be independent, whichever is higher. The Chairman of the Committee should be a Non-Executive Director, appointed by the Board. Singer (Sri Lanka) PLC Annual Report 2015 145

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

Duties of the Audit D.3.2 The duties of the Audit Committee As stated in the Report of the Audit Committee of Committee should include keeping under the Company it regularly reviews scope, results review the scope and results of and effectiveness of the Audit. the audit and its effectiveness, Details of ‘Duties of the Audit Committee’ are found and the independence and on page 161 of the ‘Audit Committee Report’ under objectivity of the Auditors. the heading ‘Responsibilities and Duties of the Where the Auditors also supply Committee’. a substantial volume of non- audit services to the Company, the Committee should keep the nature and extent of such services under review, seeking to balance objectivity, independence and value for money.

Terms of Reference of D.3.3 The Audit Committee should Terms of Reference of the Board Audit Committee the Audit Committee have a written Terms of Reference, is clearly defined in the Charter of the Audit dealing clearly with its authority Committee approved by the Board of Directors. and duties. (As referred to in This clearly explains the purpose of the Committee, the Code)Detailed guidance on its duties and responsibilities together with the the scope and functions of the scope and functions of the Committee. The Audit Committee can be found Committee mainly deals with the matters pertaining in the Code of Best Practice on to statutory and regulatory compliance in financial Audit Committees issued by The reporting, matters with regard to the External Institute of Chartered Accountants Auditors, internal audit and risk management of Sri Lanka (CA Sri Lanka) in procedures of the Company. May 2002.

Disclosure of names D.3.4 The names of the Directors Names of the members of the Audit Committee of the members of the (persons in the Parent Company’s are given on page 161 under the section on the Audit Committee Committee in the case of a Group ‘Composition of the Committee’ and disclosure on Company) comprising the Audit the independence of the Auditors is found on page Committee should be disclosed in under the ‘Auditors’ in the ‘Annual Report of the the Annual Report. Board of Directors on the Affairs of the Company’ on pages 167 to 171. 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.

The Annual Report should contain a Report by the Audit Committee, setting out the manner of compliance by the Company, in relation to the above, during the period to which the Annual Report relates. 146 2015 Annual Report Singer (Sri Lanka) PLC

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D.4 Code of Business Conduct and Ethics

Main Principle

Companies must adopt a Code of Business Conduct and Ethics for Directors and members of the senior management team and must promptly disclose any waivers of the Code for Directors or others.

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

Disclosure of Code D.4.1 All companies must disclose Company has an internally-developed Code of Business Conduct whether they have a Code of of Conduct. and Ethics Business Conduct and Ethics for All employees including Directors, Key Managers Directors and members of the and Senior Managers are bound by the Company’s Senior Management Team and written Code of Ethics that includes the following if they have such a Code, make aspects: an affirmative declaration in the Annual Report that all Directors yy Exercise honesty, objectivity and diligence when and members of the Senior performing one’s duties. Management team have complied yy Avoid situations where personal interest might with such Code, and if unable to conflict with the interest of the Company; and if make that declaration, state why so, disclose such interest in advance. they are unable to do so. yy Maintain confidentiality of commercial and price sensitive information. yy Work within applicable laws and regulations. yy Safeguard the Company’s assets.

Each Company may determine its yy Avoid conduct that will reflect badly on the own policies in the formulation of person concerned or the Company’s image. such a Code, but all companies yy Strictly avoid giving or accepting any kind of should address the following bribe, either directly or indirectly. important topics in their respective yy Strictly avoid making contributions for political Codes: funds, either directly or indirectly. yy Conflict of interest; yy Strictly avoid any kind of sexual harassment. yy Corporate opportunities;

yy Confidentiality; The Company has implemented a formal whistle- yy Fair dealing; blowing procedure and encourages any employee yy Protection and proper use of who suspects wrong doing at work, whether by Company assets; management, peers or any other employee, to yy Compliance with laws, rules and raise their concerns. regulations (including insider trading laws); and Other Policies In addition, the Company implements policies yy Encouraging the reporting covering: of any illegal or unethical behaviour. yy Recruitment and selection yy Financial integrity yy Use of Company property including computers yy Non-harassment in the workplace yy Environment, safety and health yy Security of IT system

Affirmative Statement D.4.2 The Chairman must affirm in the Please refer Chairman’s Letter on page 8 to 11 by the Chairman Company’s Annual Report that he in this Report. is not aware of any violation of any of the provisions of the Code of Business Conduct and Ethics. Singer (Sri Lanka) PLC Annual Report 2015 147

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D.5 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 SEC & Requirement of the Code Compliant with the Code Principle CA Sri Lanka Code Reference

Disclosure D.5.1 The Directors should include in This Report from page 152 to 159 sets out the of Corporate the Company’s Annual Report a manner and extent to which Singer (Sri Lanka) PLC Governance Corporate Governance Report, has complied with the principles and provisions setting out the manner and of 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 SEC & Requirement of the Code Compliant with the Code Principle CA Sri Lanka Code Reference

Communication with E.1.1 A listed Company should conduct In order to avoid conflict of interest by nurturing 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) of the Company plays a critical dialogue, the Chairman should role. Voting of the shareholders is crucial in ensure the views of shareholders carrying a resolution at the AGM. The Chairman are communicated to the Board who plays the role of the agent and communicates as a whole. 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.

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. 148 2015 Annual Report Singer (Sri Lanka) PLC

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E.2 Evaluation of Governance Disclosures

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

Due weight by E.2.1 When evaluating Companies’ The Institutional Investors are at liberty to give due Institutional Investors governance arrangements, weight to matters relating to the Board structure 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 Governance SEC & Requirement of the Code Compliant with the Code Principle CA Sri Lanka Code 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 Voting be encouraged to participate in participate in General Meeting of the Company and General Meetings of companies exercise their voting rights. and exercise their voting rights.

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:

yy Non-Executive Directors yy Independent Directors yy Disclosures Relating to Directors yy Remuneration Committee yy Audit Committee Singer (Sri Lanka) PLC Annual Report 2015 149

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The following table presents the details of the Company’s compliance with Section 7.10 of the CSE Listing Rules on Corporate Governance as at 31st December 2015:

Section Rule No. Corporate Governance Rule Details of Compliance

Board of Directors

Non-Executive 7.10.1 Number of Non-Executive The Board of Directors comprises seven Directors, Directors Directors – One-third six of whom are Non-Executive Directors. of the total number of Directors, subject to a minimum of two.

Independent 7.10.2 (a) Number of Independent Directors Three of the Non-Executive Directors are Directors - One-third of Non-Executive independent. Directors, subject to a minimum of two.

7.10.2 (b) Each Non-Executive Director Independent Non-Executive Directors have should submit a declaration of submitted confirming their independence. independence/non-independence

Disclosures 7.10.3 (a) Names of Independence Directors Please refer page 170. relating to should be disclosed in the Annual Directors Report

7.10.3 (b) The Board shall make a Not Applicable. determination annually as to the Independence or Non- independence of each Non- Executive Director.

7.10.3 (c) A brief résumé of each Director Please refer Board of Directors should be included in the Annual section of this report on pages 18 to 22. Report including the area of experience

Remuneration Committee

Composition 7.10.5(a) Number of Independent Non- The Committee comprises Four Non-Executive Executive Directors in the Directors, three of whom are Independent Committee to be:- Non-Executive Directors. yy a minimum of two (where a Company has only two Directors on the Board), or yy in all other instances majority of whom yy to be independent.

Separate Committee to be formed A separate Remuneration Committee was formed for the Company or the Listed for the Company. Parent’s Remuneration Committee to be used.

Chairman of the Committee to be The Board of Directors has appointed a a Non-Executive Director. Non-Executive Director as the Chairman of the Committee.

Function 7.10.5 (b) Function of the Committee. The Remuneration Committee Report sets out the functions of the Committee. 150 2015 Annual Report Singer (Sri Lanka) PLC

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Section Rule No. Corporate Governance Rule Details of Compliance

Disclosure in the 7.10.5 (c) The Annual Report should set out; Please refer page 162. Annual Report yy Names of Directors comprising Please refer Remuneration Committee report on the Remuneration Committee page 162. yy Statement of Remuneration policy

yy Aggregate remuneration paid Please refer page Note No. 38.3 in page 238. to Executive and Non-Executive Directors

Audit Committee

Composition 7.10.6 (a) Number of Independent Non- The Committee comprise of three Directors who Executive Directors in the are Independent Non-Executive Directors. Committee to be:- yy a minimum of two (where a Company has only two Directors on the Board), or yy in all other instances majority of whom to be independent.

Separate Committee to be formed A separate Audit Committee was formed for the Company or the Listed for the Company. Parent’s Committee to be used.

Chairman of the Committee to be The Board of Directors has appointed an a Non-Executive Director. Independent Non-Executive Director as the Chairman of the Committee.

Chairman or one member of The Chairman of the Committee is a member of a the Committee to be a member recognised professional accounting body. of a recognised professional accounting body.

CEO and CFO to attend Group CEO attends by invitation. CFO attends by committee meetings, unless invitation. otherwise determined by the Audit Committee.

Function 7.10.6 (b) (b) Function of the Committee. The Audit Committee Report sets out the functions of the Committee.

Disclosure in the 7.10.6 (c) yy Names of Directors comprising Please refer page 161. Annual Report the Audit Committee yy The Audit Committee shall Please refer Audit committee report on page 161. make a determination of the independence of the Auditors and disclose the basis for such determination yy The Annual report shall contain Please refer Audit committee report on page 161. a Report of the Audit Committee in the prescribed manner. Singer (Sri Lanka) PLC Annual Report 2015 151

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Board, Audit Committee, Remuneration Committee and Nomination Committee Attendance

The number of meetings of the Board, Audit Committee and Remuneration Committee and individual attendance by members are as follows: Number of Meetings, Circular Resolutions and Dates

Board Meetings 06 Audit Committee Meetings 05 Remuneration Committee Meetings 02 Nomination Committee Meetings 02 Circular Resolutions Passed 33

Board Meetings Audit Committee Meetings Remuneration Committee Meetings Nomination Committee Meetings

27th February 2015 23rd February 2015 31st March 2015 9th March 2015 31st March 2015 24th April 2015 22nd July 2015 21st September 2015 7th May 2015 17th July 2015 24th June 2015 3rd August 2015 6th August 2015 22nd October 2015 26th October 2015

Individual Attendance

Name Directorship Status Board Audit Remuneration Nomination Committee Committee Committee

Dr. S. Kelegama – Chairman Independent 6/6 5/5 2/2 2/2 Non-Executive Mr. Ranil De Silva – Appointed on 01/04/2015 Independent 4/4 4/4 – 1/1 Non-Executive Mr. D. Sooriyaarachchi – Appointed on 1/10/2015 Independent 1/1 1/1 – – Non-Executive Mr. H.A. Pieris – Group CEO Executive 6/6 – 2/2 2/2 (Alternate Director Mr. L.N.S.K. Samarasinghe)* Mr. G.J. Walker Non-Executive 2/6 – 1/2 – (Alternate Director Mr. M.H. Wijewardene)** P.J. O’Donnell (Alternate Director Mr. Lalith Yatiwella)*** Non-Executive 2/6 – – – J. Hyun (Alternate Director Mr. A. S. Paranavitane)**** Non-Executive 2/6 – – –

*Alternate Director Mr. L.N.S.K. Samarasinghe did not attended any meetings. ** Alternate Director Mr. M.H. Wijewardene attended four meetings. *** Alternate Director Mr. Lalith Yatiwella attended four meetings. **** Alternate Director Mr. A.S. Paranavitane attended three meetings. 152 2015 Annual Report Singer (Sri Lanka) PLC

Risk is an integral part of any business. yy To help executives improve the It is a matter of identifying the sources control and co-ordination of risk of risk, their likelihood of occurrence taking across the business. and impact, and then developing a comprehensive framework to address The Company’s approach is to them. Such a systematic approach also provide direction on – understanding raises a few questions, like determining the principal risks to achieving the one’s appetite for risk and establishing Company strategy; establishing thresholds, bearing in mind that risk risk appetite; and establishing and and return go hand in hand. So it’s communicating the risk management a question of striking a balance and framework. The process is then broken managing risk. down into five steps: identify, assess, control, report, and manage/challenge. Over the years Singer has developed a set of clear risk management The Company’s risk management objectives and a well-established strategy is broadly unchanged strategy to deliver them, through core from 2011. risk management processes.

At a strategic level, our risk The Risk management objectives are – yy To identify the Company’s significant Management Process risks. yy To formulate the Company’s Risk During the year under review, the Appetite and ensure that business Company continued to review and profile and the plans are consistent improve its risk management function with it. in line with its Risk Management yy To optimise risk/return decisions by Objectives. taking them as closely as possible to the business, while establishing strong and independent review and challenge structures. yy To ensure that business growth plans are properly supported by effective risk infrastructure. yy To manage risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions. Singer (Sri Lanka) PLC Annual Report 2015 153

Steps Activities Internal, External

Data Collection and yy The management information system (MIS) to pick and Corporate Audit Analysis up relevant business-critical information. yy review and validation before it is submitted to senior Internal, external and corporate audits management. are crucial in the risk management process. Reports on the Group’s Assess y y Agree and implement measurement and reporting operational and financial systems standards and methodologies. by these audits are reviewed and Control yy Establish key control processes and practices, action taken to manage any risks including limit structures, impairment allowance that have been identified. Significant criteria and reporting requirements. audit findings by the Auditors are yy Monitor the operation of the controls and adherence immediately reviewed by the Board- to risk direction and limits. appointed Audit Committee. yy Provide early warning of control or appetite The Group’s system of internal controls breaches. covers all policies and procedures, yy Ensure that risk management practices and enabling significant strategic and conditions are appropriate for the business operational risks to be managed. environment. Report yy Interpret and report on risk exposures, The internal audit team meets with concentrations and risk-taking outcomes. the Finance Department every month to share information and exchange yy Interpret and report on sensitivities and perspectives. Issues identified at these Key Risk Indicators. discussions as being a potential risk yy Communicate with relevant parties. are immediately subjected to a fuller Manage yy Review aspects of the Company’s risk profile. investigation. yy Assess new risk-return opportunities. yy Advise on optimising the Company’s risk profile. yy Review and challenge risk management practices. 154 2015 Annual Report Singer (Sri Lanka) PLC

Our Prudent Balancing Act

Risk Mitigation Activities 1. Macroeconomic Factors Economic Environment The Group’s business operations are yy A diversified portfolio of products and brands with a wide range sensitive to economic conditions and in yy of offers targeted at different consumer groups. particular to levels of consumer spending. yy A Broad geographic spread. Any delay in economic recovery could affect consumer expenditure and therefore yy The Board and the Senior Management team regularly review the impact our revenue. There is an on going risk to yy of the economic conditions on the Group’s budget and strategic plans. our business of increases in the cost of key yy Emphasise excellent quality, service, value for money and up-to-date products. product offers, we aim to broaden our appeal to customers. yy 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 yy Financial planning takes into account expected peaks and troughs revenue and operating profit is generated yy during the year and the business is run accordingly. during the fourth financial quarter, which yy Increasing the proportion of internal promotion and various offers, includes the Christmas and New Year season. Adverse trading in this relatively yy which gives a regular stream of income over the course of the year. short period is likely to impact significantly yy Effective launches of new technologically involved products as the full year’s results. yy it becomes available to the market. yy Growth of services related business to increase the number and Price Deflation - Price deflation has been a common feature across most electrical yy value of non-product sales. goods categories for a number of years, yy Improve gross profit in renovated showrooms. primarily driven by technological advances yy Control of stock and strong management of clearance and exit routes. and improved production efficiencies.

2. Competitor and Marketplace Risk Competition Competitors reduce the Group’s market yy Renovation and transformation plan is improving our showrooms, share and/or drive down margins in specific yy cost structure and service across all channels. markets. yy Continuing development of strong international brands. yy Ensuring our prices offer good value, including a customer price index. yy Building ever stronger relationships with suppliers. yy Expand and improve after-sales service network. Singer (Sri Lanka) PLC Annual Report 2015 155

Our Prudent Balancing Act

Risk Mitigation Activities Changing Technology/ Consumer Preferences Risk that we fail to capitalise on new yy Strong supplier relationships. technology or emerging trends to maximise yy Delivery of Customer Plan to respond to identified changes in technology. revenues and fail to meet the expectations yy Showrooms renovation to take into account emerging trends in showroom of customers. layouts. yy Exciting product launches to make our showrooms the destination for the latest technology. yy Continued focus on ensuring we have an excellent range across all price points. yy Customer service training for sales staff and product workshops to improve product knowledge. yy A loyalty programme that encourages customers to stay with the Singer brand and its products.

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

3. Operational Risk People A failure to attract, retain, develop and yy Recruit the best people with the right skills. motivate the best employees across all our yy Offer training and development programmes to ensure that we retain them. showrooms and head office may impact our yy Remuneration packages are benchmarked to ensure that they remain ability to deliver our operational and strategic competitive, including incentive arrangements where appropriate. objectives. Labour issues can affect product quality, output, market share as well as the yy Collective agreements with the labour unions to maintain an equitable Company goodwill and reputation. balance between the interests of employer and employee and provide a basis for negotiations when issues arise. yy Procedures have also been laid down in responding to grievances and staff complaints. Fraud, Compliance and Internal Controls As the business grows in size and yy Clear behavioural guidance given to employees through operational geographical scope, the potential for fraud manuals. and dishonest activity by our suppliers, yy Appropriate procedures and controls set out and audited across the customers and 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. yy Regular update and new introduction of relevant policies and procedures. yy Whistle-blower policy. yy Periodical review of the internal controls by outsourced consultants. 156 2015 Annual Report Singer (Sri Lanka) PLC

Our Prudent Balancing Act

Risk Mitigation Activities IT Systems and Infrastructure Any significant failure in the IT processes of yy The Company has installed comprehensive network security. our retail operations would impact our ability yy Regular backups of all databases and mission-critical information. to trade. yy Off-site disaster-recovery system. yy Regular follow-up review on recommendation given by external IT risk assessment team. yy Investment in IT system improvements and innovating to improve business efficiency. yy Extensive controls and reviews to maintain integrity and efficiency of IT infrastructure and data. Supply Chain Timely distribution of products to our retail yy Regular review of distribution plan. outlets is crucial. We work with a number yy Monthly operational meeting to review the forecast, level of inventory, and of key overseas and local suppliers our procurement requirement etc. business, could be at risk of both interruption yy Long-standing relationships with many suppliers help to minimise risks in of supply and of failure of such key suppliers this area. and service providers. yy Reduce dependability on a single service provider.

Asset Risk Risks associated with the physical assets of yy Every such asset is insured against all identifiable risks. the Company include the destruction, loss or yy The relevant insurance policies are subject to a comprehensive annual theft as well as technical and other defects. review, with modifications made as deemed necessary. yy 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. yy 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.

4. Financial Risk Liquidity Risk Inadequate liquidity can have an adverse yy The liquidity position of the Company is regularly reviewed and reported to impact on ongoing operations, marketing the Board. and investment in new products and brands. yy Projected net borrowings are covered by committed facilities and a healthy industry-related gearing ratio is maintained. yy 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 yy Fluctuating interest rates are minimised by striking a balance between adverse impact to the profitability. short- and long-term borrowings. yy Floating-rate debentures are sometimes issued to capitalise on existing interest rates. yy The Company’s strong brand strength and financial dependability help ensure ready access to funds at attractive rates. Singer (Sri Lanka) PLC Annual Report 2015 157

Our Prudent Balancing Act

Risk Mitigation Activities Credit Risk The Company is exposed to credit risk in yy Branch managers act as del credere agents. the form of financial loss when a customer yy Undertaking a thorough appraisal of the client before credit is extended. reneges on a hire-purchase agreement. Such yy Credit appraisals of dealers are undertaken to ascertain whether they exposure cannot be avoided entirely since have the capacity to pay for goods ordered; in doubtful cases, a bank consumer credit is an integral part of the guarantee or security deposit is requested. Company’s retail operations, and is used to encourage and enable consumers yy Details of customers and dealers who have defaulted on payments to purchase. are recorded in a database, accessible to those staff whose duty is to undertake credit evaluations of customers and dealers. yy Risk-adjusted pricing. yy A fully equipped and trained Credit Supervision team is available. Investment Risk While investment in new products and yy Appraisal before an investment is made. geographical expansion is vital for the yy A due diligence study ensures that projected budgets and forecasts can Company to remain competitive, it raises be met and examines the impact of technological and other factors on the fresh risks. investment decision. yy Post-investment analysis and performance tracking is in place including financial and customer measures through balance score card.

5. Other Risk Governance Risk These are risks to the Company arising from yy Preventive action has been designed by the Company’s Legal Department. non-compliance with relevant health, safety yy Frequent internal, external and corporate audits-monitor compliance. and environmental statutes and leading to yy The Company’s management culture stresses ethical performance in this loss of reputation and goodwill, possible area. International best practices are followed wherever possible. litigation and financial loss. yy 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. yy Detailed, established procedures to ensure product integrity. yy Group Compliance Officer reviews report to the Audit Committee compliance with laws and policies. Socioeconomic Risks Sri Lanka’s socioeconomic and political yy Reviewing prices in light of inflation and by negotiating with suppliers for environment has an impact on the consumer lower input prices and credit terms. durables business as well as the investment climate. 158 2015 Annual Report Singer (Sri Lanka) PLC

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

Caveat Although the key sources of risk and their yy The Company is confident that all material risk factors have been mitigation have been discussed in this adequately assessed and managed to ensure the uninterrupted and document, no assurance can be given that profitable continuance of the business. the 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. Singer (Sri Lanka) PLC Annual Report 2015 159

When cutting edge technology and premium quality reside within your very core, as it does with Singer, every experience that you afford, has the potential to become a for your customers. Singer helps ‘life event’ customers from all walks of life meaningfully experience the possibilities offered by such cutting edge technologies. 160 2015 Annual Report Singer (Sri Lanka) PLC

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AUDIT COMMITTEE REPORT

Preamble External Auditors The Committee also provides a forum for the impartial review of the reports The Committee is empowered to review of internal and external audits and The Audit Committee recommended and monitor the financial reporting to take into consideration findings to the Board of Directors that Messrs process of Singer Group so as to and recommendations stated therein KPMG Chartered Accountants be provide additional assurance on the relating to significant business risks reappointed as the External Auditors reliability of the Financial Statements and control issues. for the year ending 31st December through a process of independent and 2016, subject to the approval of the objective review. As such, the Audit The Audit Committee reviews shareholders at the Annual General Committee acts as an effective forum significant business risks and internal Meeting. in assisting the Board of Directors control issues and suggests where in discharging their responsibilities necessary appropriate remedial on ensuring the quality of financial measures. reporting and related communications to the shareholders and the public. The Committee along with the Board, Internal Audit and External Audit review the Quarterly Financial Results Ranil De Silva Composition of to ensure compliance with mandatory, Chairman statutory and other regulatory Audit Committee the Committee requirements laid down by the authorities. Colombo As at year-end, the Audit Committee 25th February 2016 comprised three Independent The Audit Committee also reviews Non-Executive Directors of the Board the Corporate Audit Report of the namely Ranil De Silva, Corporate Internal Auditors of Singer Dr. Saman Kelegama and Deepal Asia Ltd. The Corporate Auditors carry- Sooriyaarachchi. The Head of out an audit at least once a year. Risk Management functions as the Secretary to the Committee. The The Compliance Officer monitors Finance Director/Compliance Officer, the Singer Group’s compliance with Audit Staff, Representatives of External the applicable laws and regulations, Auditors and when necessary, the including any internal policy Codes of Group Chief Executive Officer and Conduct of its employees. relevant operation Directors and Managers attend the meetings by invitation. Meetings of the Committee Responsibilities and During the year, five Audit Committee Duties of meetings were held to discuss the the Committee reports of the Internal and External Auditors and quarterly accounts. The final accounts were also discussed The Audit Committee’s authority, at the meeting held on 18th February responsibilities and specific duties 2016. The minutes of the meetings have been formalised through an Audit were tabled at the meetings of the Committee Charter. By this, the Audit Board of Directors for information and Committee is empowered among other necessary action. things, to examine any matters relating to the financial affairs of the Singer Group and to review the adequacy of the internal control procedures, coverage of internal and external audit programmes, disclosure of Accounting Policies and Compliance with Statutory and Corporate Governance requirements. 162 2015 Annual Report Singer (Sri Lanka) PLC

REMUNERATION COMMITTEE REPORT

The Remuneration Committee Dr. Saman Kelegama resigned consists of the three Non-Executive as Chairman of the Remuneration Independent Directors. The Committee Committee with effect from 31st March is chaired by Non-Executive Director 2015 and continued to be a member and President/Chief Executive Officer of the Remuneration Committee and of Singer Asia Ltd. The Finance President /Chief Executive Officer of Director acts as the Secretary to the Singer Asia Ltd., Mr. Gavin Walker Committee. The Group Chief Executive was appointed as Chairman to the Officer and the Finance Director Remuneration Committee with effect assist the Committee by providing the from 1st April 2015. relevant information and participate in its analysis and deliberations. With the retirement of Mr. H.D.S. Amarasuriya, Deshabandu Ajit The scope of the Committee is to “look Jayaratne and the resignation of into fees, remuneration and perquisites Professor Uditha Liyanage, of Chairman, Group Chief Executive Mr. Ranil De Silva and Mr. Deepal Officer, Independent Directors and the Sooriyaarachchi were appointed Executive Directors of the Board of the to the Committee as non-Executive Company including alternate Directors Independent Directors. I wish to and approve recommendations made place on record for their invaluable by the Group Chief Executive Officer contributions and deliberations and the Corporate Office of Singer made to the Committee by Mr. H.D.S. Asia Limited.” Singer Asia Ltd., is the Amarasuriya, Deshabandu Ajit Jayratne Intermediate Parent of the Company. and Professor Liyanage during their tenure as the members of the The Committee also reviews the Committee. policies pertaining to the remuneration and perquisites of the Executives of the I also wish to place on record Company. the invaluable contributions and deliberations to the Committee by A primary objective of compensation Dr. Saman Kelegama as the Chairman packages is to attract and retain a to the Remuneration Committee. highly-qualified and experienced work force, and reward performances. I wish to thank the other members These compensation packages should of the Committee for their valuable provide compensation appropriate contributions to the deliberations of for each business within the Group the Committee. and commensurate with each employee’s level of experience and I also wish to thank Mr. Asoka contribution, bearing in mind the Pieris for helping the Committee in business performance and long-term its deliberations by providing the shareholder returns. necessary information.

The Committee meets from time to time and reviews the Group’s remuneration and fee structures to assure alignment with strategic priorities and with compensation offered by competitor companies. Gawin J. Walker Chairman The Committee met twice during Remuneration Committee. the period.

25th February 2016 Singer (Sri Lanka) PLC Annual Report 2015 163

Board Nomination Committee Report

Role of the Appointment and Conclusion Committee Re-election of I wish to thank and record my Directors appreciation to all members who The main role and responsibilities served in the committee during the of the Committee are to propose a The Committee has nominated year for their contribution to the suitable charter for the appointment Mr. Stephen H. Goodman to be deliberations of the committee. and reappointment of Directors to appointed as a Non-Executive Director the Board and to act in accordance of the Company for a period of one with such a Charter in proposing year from the date of the Annual appointments and reappointments. General Meeting, notwithstanding him Such Charter shall cover areas such having attained the age of 71 years, as qualifications, competencies, subject to the due compliance of the independence, relationships which Dr. Saman Kelegama provisions of the Companies Act No. 7 have potential to give rise to conflict Chairman of 2007. vis-a-vis the business of the Board Nomination Committee

Company etc. In terms of Article 24 (4) of Article of Colombo Association of the Company, Mr. Gavin Further, the committee reviews the 25th February 2016 Walker and Mr. P.J. O’Donnell retire by structure, size, composition and rotation. The committee recommended competencies (including the skills, to the Board that Messrs. Gavin Walker knowledge and experience) of the and P.J. O’Donnell be proposed for Board and makes recommendations to re-election to the Board at the Annual the Board with regard to any changes General Meeting to be held on if necessary. 31st March 2016.

In terms of Article 24 (10) of the Composition Articles of Association of the Company, Mr. Ranil de Silva and Mr. Deepal The Committee comprise of Two Sooriyaarachchi were appointed Non-Executive Independent Directors as Directors of the Company on together with the Chief Executive 1st April 2015 and 1 st October Officer of the Group. The Chairman 2015 respectively. The Committee of the Committee is a Non-Executive recommended to the Board that Independent Director appointed by Messrs. Ranil De Silva and Deepl the Board. Sooriyaarachchi be proposed for re-election to the Board at the Annual Secretary to Board functions as the General Meeting to be held on Secretary to the Committee. 31st March 2016.

Meetings and Activities The recommendations were accepted by the Board. The Committee met twice during the year under review. 164 2015 Annual Report Singer (Sri Lanka) PLC Singer (Sri Lanka) PLC Financial Reports

Annual Report of the Board of Directors 167 on the Affairs of the Company Statement of Directors’ Responsibility 172 Independent Auditors’ Report 173 Statement of Profit or Loss and Other Comprehensive Income 174 Statement of Financial Position 175 Statement of Changes in Equity 176 Statement of Cash Flows 178 Notes to the Financial Statements 179

Financial Calendar – 2015 Proposed Financial Calendar – 2016 Annual Report 2014 Approved For the three months ending 27th February 2015 31st March 2016 (unaudited) May 2016 Fortieth Annual General Meeting 31st March 2015 For the six months ending 30th June 2016 (unaudited) Final dividend 2014 Paid August 2016 19th March 2015 For the nine months ending 30th September 2016 (unaudited) Interim Financial Statements November 2016 in Terms of Rule 8.3 of the Colombo Stock Exchange For the twelve months ending For the three months ended 31st December 2016 (unaudited) 31st March 2015 (unaudited) February 2017 06th May 2015 Annual Report and Accounts for 2016 For the six months ended (audited) 30th June 2015 (unaudited) March 2017 06th August 2015 Forty-second Annual General Meeting For the nine months ended March 2017 30th September 2015 (unaudited) 26th October 2015 For the twelve months ended 31st December 2015 (unaudited) 25th February 2016

Annual Report and Annual General Meeting Annual Report 2015 Approved 25th February 2016 Forty-first Annual General Meeting 31st March 2016 Final Dividend 2015 Payable 11th April 2016

Singer (Sri Lanka) PLC Annual Report 2015 167

Annual Report of the Board of Directors on the Affairs of the Company

The Board of Directors of Singer Supply & Drainage Board, Ceylon Details of Property, Plant & (Sri Lanka) PLC has pleasure in Electricity Board and is also a Equipment and Intangible Assets presenting their Report on the sub-agent for Western Union and their movements are given in affairs of the Company together Money Transfer. Notes 12 and 13 to the Financial with the Audited Financial Statements respectively. Statements of Singer (Sri Lanka) The Company has three Details of freehold land and PLC and the Audited Consolidated Subsidiaries and one Associate buildings are given in Note 12.15 Financial Statements of the Group Company and their activities are to the Financial Statements. for the year ended 31st December given on page 239 of this Annual Report. 2015. Market Value Review of the Year Independent of Properties Auditors’ Report The freehold property of the The Chairman’s Letter (pages 8 Company is revalued by an to 11), the Group Chief Executive The Independent Auditors’ Report Independent Qualified Valuer Officer’s Review (pages 12 to 17) on the Financial Statements is every two years and where there and Review of Operations titled given on page 173 in this Annual is a substantial gain between ‘Singer on a Winning Streak’ Report. the fair value and the carrying (pages 30 to 51), describe the Financial Statements amount of the freehold property, Company’s affairs and the Group’s it is transferred to a revaluation business and mention important The Financial Statements for reserve. If there is a revaluation events that occurred during the the year ended 31st December loss, it will be transferred to the year and up to the date of this 2015 are in accordance with the Statement of Profit or Loss and Report. Performance in context Sri Lanka Accounting Standards, Other Comprehensive Income. on pages 54 to 60 elaborates the SLFRS/LKAS, issued by The financial results of the Company/ Institute of Chartered Accountants The most recent valuation was Group. These reports together with of Sri Lanka and the requirements carried out as at 31st December the Audited Financial Statements of Section 151 (and Section 153 2014. The details of the valuation reflect the state of the affairs of the for consolidated entity) of the are given in Note 12.12 to the Company/Group. Companies Act No. 07 of 2007. Financial Statements on pages 199 to 200 in this Annual Report. Principal Activities The Financial Statements duly signed by the Directors are Investments The Company is engaged in provided on pages 174 to 239 in On 21st April 2015, the Company Retail and Wholesale Marketing, this Annual Report. Financing, Assembling and invested Rs. 5,000,000/- which Manufacturing and in Financial Accounting Policies 100% of initial Share Capital of Services. The Company markets newly formed Subsidiary Company The accounting policies adopted Domestic and Industrial Sewing Singer Business School (Pvt) Ltd. in preparation of the Financial Machines, Consumer Electronics, Movement in investments during Statements are provided in details Household Appliances, Air the year is disclosed under in the Notes to the Financial Conditioners, Furniture, Notes 14,15 and 16 to the Statements on pages 179 to 239. Agricultural Equipment, Motor Financial Statements. The Group has consistently applied Cycles, Two Wheel Tractors, the accounting policies as set out Mobile Phones, Personal Directors’ in Note 2 to all periods presented Computers, Laptops, Cameras in these consolidated Financial Responsibilities and provides Financing through Statements. The Statement of the Directors’ Hire Purchase. In addition, the Responsibility is given on page 172. Company manufactures Furniture, Property, Plant & Water Pumps and assembles Equipment Corporate Governance Motor Cycles and Two Wheel Tractors. The Company also acts During the year under review, the The Company has complied with as a Bill Collection Agent for HSBC Company and the Group invested Corporate Governance rules laid Credit Card, Amex Credit Card, a sum of Rs. 293,140,509/- down under the Listing Rules of Standard Chartered Credit Card, (2014 - Rs. 324,276,810/-) and Colombo Stock Exchange. The Singer Finance, Mobitel, Etisalat, Rs. 361, 999,991/- (2014 - Corporate Governance Section Airtel, Lankabell, Sri Lanka Rs. 332,269,114/-) respectively in on pages 114 to 151 describes Telecom, Dialog, Dialog Television, Property, Plant & Equipment. the good Corporate Governance Dialog Ez Cash, National Water Principles adopted by the Company. 168 2015 Annual Report Singer (Sri Lanka) PLC

Annual Report of the Board of Directors on the Affairs of the Company

Profit and Appropriations

2015 2014 Rs. Rs.

Group profit before tax for the year ended 31st December after deducting all expenses, providing for known liabilities and depreciation amounts to 1,895,274,564 1,155,608,457 From this has to be deducted the income tax expense (659,235,725) (373,974,230) Non-controlling interest (83,126,428) (67,119,509) Making a profit for the year of 1,152,912,411 714,514,718 Total Other Comprehensive Income (29,554,592) (9,651,405) Total Other Comprehensive Income – Non-Controlling Interest (141,121) (306,402) To this has to be added a balance brought forward from the previous year 929,650,601 634,520,185 Interim Divided Year 2015 Rs. Nil per share (Year 2014 – Rs. Nil per share) – – And adjustment due to realisation on revaluation surplus 12,778,068 11,278,572 Leaving a total available for appropriation of 2,065,645,367 1,350,355,668 The following appropriations have been proposed/approved: Transfer to General Reserve (100,000,000) (100,000,000) Transfer from Investment Fund 82,242,927 5,748,800 Transfer to Reserve Fund (19,433,312) (13,429,842) Final dividend proposed: Gross Rs. 4.20 per share (2014 - Rs. 2.50 per share) (525,880,362) (313,024,025) Making a total appropriation of (563,070,747) (420,705,067) Leaving a balance on Group basis to be carried forward of 1,502,574,620 929,650,601

The balance to be carried forward on Company only basis will be 386,898,364 169,277,182

Dividends 31st December 2014. The break-up Statutory Payments and movement are shown in the In terms of Article 7 of the Articles The declaration relating to Statement of Changes in Equity in of Association of the Company, statutory payments is made the Financial Statements. a final dividend of Rs. 4.20 per in the Statement of Directors’ share has been recommended by Responsibility on page 172. the Directors for the financial year Stated Capital ended 31st December 2015, for As per the terms of the Companies Directors’ Interests and payment on 11th April 2016. The Act No. 07 of 2007, the Stated Interest Register Board has reasonable grounds Capital of the Company was for believing that the Company Rs. 626,048,050/- as at 31st Details of transactions with would satisfy the Solvency Test December 2015 and was Director-related entities are immediately after the distribution unchanged during the year. disclosed in Note 38 to the is made and accordingly, the Details are given in Note 22 to the Financial Statements on pages 236 Board of Directors has signed Financial Statements on page 211. to 238 and have been declared at the Certificate of Solvency in the Board meetings, pursuant to accordance with Section 57 of the Events after the Section 192 (2) of the Companies Companies Act No. 07 of 2007. Reporting Period Act No. 07 of 2007. No circumstances have arisen The Board of Directors will obtain Interest in Shares since the Reporting date, which a Certificate of Solvency from would require adjustment or There were no share transactions the Auditors prior to the date of disclosure except for the details by the Directors during the despatch of the dividend payment. given in Note 37 to the Financial year in the Company and in the Statement on page 234. Subsidiaries Singer Finance Reserves (Excluding (Lanka) PLC, Singer Digital Media Non-Controlling Interest) (Pvt) Ltd. and Singer Business Group reserves and retained Schools (Pvt) Ltd. equity as at 31st December 2015 amounted to Rs. 6,285.4 million vs Rs. 5,475.2 million as at Singer (Sri Lanka) PLC Annual Report 2015 169

Annual Report of the Board of Directors on the Affairs of the Company

Board Committees of Sri Lanka and The Securities The Nomination Committee of and Exchange Commission of the Company has approved the Audit Committee Sri Lanka. appointment of Mr. Stephen Following are the names of the H. Goodman as a Non-Executive Directors comprising the Audit Related Party Transactions Director of the Company. Committee of the Board: Review Committee Mr. Goodman, who is over the Mr. Ranil De Silva – Chairman Following are the names of the age of 70 years, is the Chairman/ Dr. Saman Kelegama Directors comprising the Board CEO of Retail Holdings N.V. [the Mr. Deepal Sooriyaarachchi Related Party Transactions Review Ultimate Parent of Singer Mr. M.M.C. Priyanjith – Secretary Committee: Sri Lanka) PLC]. The Board Mr. Deepal Sooriyaarachchi – of Directors recommends the The Report of the Audit Committee appointment of Mr. Stephen on page 161 sets out the Chairman Mr. Gavin J. Walker H. Goodman to the Board, manner of compliance by the subject to due compliance of the Company in accordance with the Mr. Ranil De Silva Mr. Asoka Pieris provisions of the Companies Act requirements of the Rule 7.10 of No. 07 of 2007. the Listing Rules of the Colombo Mr. K.K.L.P. Yatiwella – Secretary Stock Exchange on Corporate The Board of Directors formed the The Board of Directors Governance. Board Related Party Transactions recommends that a resolution Review Committee to assist the be passed by the shareholders Remuneration Committee Board in reviewing all related declaring that the age limit party transactions in accordance Following are the names of stipulated in Section 210 of the with the requirements of the the Directors comprising the Companies Act No. 07 Code of Best Practice on Related Remuneration Committee of the of 2007 shall not apply to Party Transactions issued by Board: Mr. Stephen H. Goodman and the Securities and Exchange that, notwithstanding him having Mr. Gavin Walker – Chairman Commission of Sri Lanka. attained the age of 71 years on Dr. Saman Kelegama 28th May 2015, he be appointed Mr. Ranil De Silva Directors’ Indemnity to the Board of Directors for a Mr. Deepal Sooriyaarachchi and Insurance period of one year in terms of Mr. K.K.L.P. Yatiwella – Secretary The Directors and Officers of the Section 211 of the Companies The Report of the Remuneration Company and Subsidiaries are Act No. 07 of 2007. Committee on page 162 contains covered in respect of Directors’ a statement of the remuneration and Officers’ liability by the In terms of Article 24 (4) of the policy. The details of the Insurance Policy obtained by the Articles of Association of the aggregate remuneration paid to Ultimate Parent Company, as per Company, Mr. Gavin Walker the Executive and Non-Executive the provisions in Article 44. and Mr. P.J. O’Donnell retire by Directors during the financial rotation and being eligible, are year are given in Note 38.3 to the Share Information and recommended for re-election. Financial Statements on page 238. Substantial Shareholdings In terms of Article 24 (10) of the The distribution of shareholding, Articles of Association of the Board Nomination Committee public holding percentage, market Company, Mr. Ranil De Silva and value of shares, twenty largest Following are the names of Mr. Deepal Sooriyaarachchi were shareholders and record of scrip the Directors comprising the appointed as Directors of the issues are given on pages 241 Nomination Committee of the Company on 1st April 2015 and to 243. Board: 1st October 2015 respectively, and Dr. Saman Kelegama – Chairman Earnings per share, dividends per being eligible, are recommended Mr. Ranil De Silva share, dividend pay out and net for re-election. Mr. Asoka Pieris assets value per share are given in Mr. A.C.M. Irzan – Secretary the Financial Highlights on page 7 Mr. Hemaka Amarasuriya the The Report of the Board of the Annual Report. former Chairman, resigned with Nomination Committee on page 163 effect from 31st March 2015 sets out the manner of compliance Directorate following years of service in Singer by the Company in accordance and Shareholding (Sri Lanka) PLC. Directors place with the requirements of the Code on record their appreciation for The names of the Directors of the of Best Practice on Corporate the invaluable service rendered by Company as at 31st December Governance issued jointly by the Mr. Hemaka Amarasuriya during 2015 and their brief profiles are Institute of Chartered Accountants his tenure as the Chairman of the shown on pages 18 and 22 and Company. the Inner Back Cover. 170 2015 Annual Report Singer (Sri Lanka) PLC

Annual Report of the Board of Directors on the Affairs of the Company

Deshabandu Ajit Jayaratne resigned with effect from 31st March 2015.

Professor Uditha Liyanage resigned with effect from 31st July 2015. Directors place on record their appreciation for the invaluable service rendered by Deshabandu Ajit Jayaratne and Professor Uditha Liyanage during his tenure as a Director of the Company.

Shareholdings of Directors and Chief Executive Officer at the beginning of the year and as at the end of the year are as follows:

Shareholding Shareholding Debentures Debentures Shareholding of Shareholding of 01.01.2015 31.12.2015 held held Singer Finance Singer Finance No. of Shares No. of Shares 01.01.2015 31.12.2015 (Lanka) PLC (Lanka) PLC No. of No. of 01.01.2015 31.12.2015 Debentures Debentures No. of Shares No. of Shares

Dr. S. Kelegama – – – – – –

Mr. H.A. Pieris 2,000 2,000 – – 51,002 51,002

Mr. Ranil De Silva – – – – – –

Mr. Deepal Sooriyaarachchi – – – – – –

Mr. P.J. O’Donnell – – – – – –

Mr. J.J. Hyun – – – – – –

Mr. G.J. Walker – – – – – –

Mr. M.H. Wijewardene – – – – – –

Mr. L.N.S.K. Samarasinghe 4,124 4,124 – – 265,000 265,000

Mr. K.K.L.P. Yatiwella – – – – – –

Mr. Ajith P. Paranavitane – – – – – –

The names of Directors holding (a) His high standing in the accounting field will be an office at the end of the financial society and business sector. asset to the Company. year in respect of Subsidiaries and (b) His experience and (c) He does not participate in Associate Company are given on knowledge particularly in executive decision-making. page 239. the field of economics will (Mr. Ranil De Silva did not continue to be an asset to the Independence participate in these deliberations Company. and decisions taken pursuant of Directors (c) He does not participate in thereto as referred to above to In accordance with Rule 7.10.2 (b) executive decision-making. avoid conflict of interests.) of the Colombo Stock Exchange (Dr. S. Kelegama did not (CSE) Listing Rules, Dr. S. participate in these deliberations Independent Kelegama, Mr Ranil de Silva and and decisions taken pursuant Non-Executive Directors Mr. Deepal Sooriyaarachchi who thereto as referred to above to Dr. S. Kelegama are Non-Executive Directors of avoid conflict of interests.) Mr. Ranil De Silva the Company, have submitted Mr. Deepal Sooriyaarachchi a signed and dated declaration Although, Mr. Ranil De Silva has as per the specimen given in not met the criteria mentioned Employment Appendix 7A of continuing listing in item (g) of Rule 7.10.4 of the requirements of CSE. CSE Listing Rules, the Board of The number of persons employed Directors of the Company is of the by the Group and the Company as Although, Dr. S. Kelegama has not opinion that – at 31st December 2015 was 1,905 met the criteria mentioned in items (ii) Mr. Ranil De Silva is (2014 - 1,762) and 1,584 (e) and (g) of Rule 7.10.4 of the nevertheless independent on the (2014 - 1,512), respectively. CSE Listing Rules, the Board of following basis: Directors of the Company is of the Details of human resource (a) His high standing in business opinion that – initiatives are given in the sector. Employees’ section of the (i) Dr. S. Kelegama is nevertheless (b) His experience and Sustainability Report. independent on the following knowledge particularly in the basis: Singer (Sri Lanka) PLC Annual Report 2015 171

Annual Report of the Board of Directors on the Affairs of the Company

Corporate Governance Auditors Notice of Meeting Directors’ Declarations The Financial Statements for the The Forty-first Annual General period under review were audited Meeting will be held at the The Directors declare that having by Messrs KPMG, Chartered Registered Office of the Company, considered all information and Accountants who offer themselves No. 80, Navam Mawatha, explanations made available to for reappointment for the ensuing Colombo 2, on Thursday, them that – year. The Directors propose the 31st March 2016 at 10.00 am. (a) the Company complied with all reappointment of Messrs KPMG, applicable laws and regulations Chartered Accountants as Auditors The Notice of the Annual General in conducting its business; of the Company for the year Meeting to the shareholders is (b) the Directors have declared all 2016 subject to the approval of given on page 248. material interests in contracts the shareholders at the Annual involving the Company and General Meeting. For and on behalf of the Board, refrained from voting on matters in which they were materially The audit and non-audit fees paid interested; to the Auditors by the Company and Group are disclosed in Note 9 (c) the Company has made on page 193 in this Annual Report. all endeavours to ensure the equitable treatment of Dr. Saman Kelegama As far as the Directors are aware, shareholders; Chairman the Auditors do not have any (d) the business is a going concern relationship or interest in the with supporting assumptions Company or its Subsidiaries. or qualifications as necessary; and The Audit Committee reviews the (e) have conducted a review of appointment of the Auditor, its internal controls covering effectiveness and its relationship financial, operational and with the Company including the Ranil De Silva compliance controls and risk level of audit and non-audit fees Director management and have obtained paid to the Auditors. Details on a reasonable assurance of their the work of the Audit Committee effectiveness and successful are set out in the Audit Committee adherence herewith. Report. The Corporate Governance Report is given under the governance section of this Annual Report. A.C.M. Irzan, FCMA (UK) Donations Company Secretary Singer (Sri Lanka) PLC During the year, donations amounting to Rs. 285,000/- (2014 Colombo - Rs. 658,700/-) were made by the 25th February 2016 Group/Company. Donations made by the Group is given in Note 9. 172 2015 Annual Report Singer (Sri Lanka) PLC

Statement of Directors’ Responsibility

The Companies Act No. 07 of 2007 accuracy, the financial position records, related data, minutes requires Directors to ensure that of the Company and to be able of shareholders’ and Directors’ the Company keeps accounting to ensure that the Financial meetings and express their opinion records, which correctly record Statements of the Company in their Report on page 173 of this and explain the Company’s meet with the requirements of Annual Report. transactions and prepare Financial the Companies Act, Sri Lanka Statements that give a true and Accounting Standards (SLFRS/ Compliance Report fair view of the Company’s state LKAS) and the Rules of the Based on the Report of the of affairs as at the Reporting date Colombo Stock Exchange. Compliance Officer, the Directors and of the profit for the year. It confirm that to the best of their further requires the Financial The Directors have a reasonable knowledge and belief, all taxes, Statements of a Group to give a expectation, that the Company and duties and levies payable by the true and fair view of the state of Group have adequate resources to Company and its Subsidiaries, affairs of the Group and the profit continue in operational existence all contributions, levies and taxes of the Group for the year. for the foreseeable future and payable on behalf of and in therefore have continued to respect of the employees of the The Directors are also required adopt the going concern basis in Company and its Subsidiaries and to ensure that the Financial preparing the accounts. all other known statutory dues Statements have been prepared as were due and payable by the and presented in accordance As required by Section 56 (2) of Company and its Subsidiaries as with the Sri Lanka Accounting the Companies Act, the Board at the Reporting date have been Standards (SLFRS/LKAS) and of Directors has authorised paid or were provided. the Rules of the Colombo distribution of the dividend now Stock Exchange. They are also proposed, being satisfied based By Order of the Board, responsible for taking reasonable on information available to it measures to safeguard the assets that the Company would satisfy of the Company and in that the Solvency Test after such context, to have proper regard to distribution in accordance with the establishment of appropriate Section 57 of the Companies systems of internal control with a Act and have sought in respect view to prevention and detection of the dividend now proposed, A.C.M. Irzan, FCMA (UK) of fraud and other irregularities. a Certificate of Solvency from Company Secretary the Auditors. Singer (Sri Lanka) PLC The Directors are of the view that these Financial Statements have Messrs KPMG, Chartered Colombo been prepared in accordance Accountants, the Auditors of 25th February 2016 with the Sri Lanka Accounting the Company, have examined Standards (SLFRS/LKAS) as laid the Financial Statements made down by The Institute of Chartered available by the Board of Directors Accountants of Sri Lanka. together with all relevant financial

The Directors endeavour to ensure that the Company maintains sufficient records to be able to disclose, with reasonable Singer (Sri Lanka) PLC Annual Report 2015 173

Independent Auditors’ Report

To the Shareholders of obtain reasonable assurance about performance and cash flows for the Singer (Sri Lanka) PLC whether the financial statements are year then ended in accordance with Report on the Financial free from material misstatement. Sri Lanka Accounting Standards. Statements An audit involves performing Report on Other Legal and We have audited the accompanying procedures to obtain audit evidence Regulatory Requirements financial statements of Singer about the amounts and disclosures (Sri Lanka) PLC, (the “Company”), As required by section 163 (2) of in the financial statements. The and the consolidated financial the Companies Act No. 07 of 2007, procedures selected depend on statements of the Company and we state the following: the auditor’s judgment, including its subsidiaries (“Group”), which the assessment of the risks of a) The basis of opinion and scope comprise the statement of financial material misstatement of the and limitations of the audit are as position as at December 31, 2015, financial statements, whether due stated above. and the statement of profit or loss to fraud or error. In making those b) In our opinion: and other comprehensive income, risk assessments, the auditor – We have obtained all the statement of changes in equity and, considers internal control relevant information and explanations cash flow statement for the year then to the entity’s preparation of the that were required for the audit ended, and a summary of significant -financial statements that give and, as far as appears from our accounting policies and other a true and fair view in order to examination, proper accounting explanatory notes set out on pages design audit procedures that are records have been kept by the 174 to 239 of the annual report. appropriate in the circumstances, Company, but not for the purpose of – The financial statements of the Board’s Responsibility for the expressing an opinion on the Company give a true and fair Financial Statements effectiveness of the entity’s internal view of its financial position as The Board of Directors (“Board”) is control. An audit also includes at December 31, 2015, and of its responsible for the preparation of evaluating the appropriateness financial performance and cash these financial statements that give of accounting policies used and flows for the year then ended a true and fair view in accordance the reasonableness of accounting in accordance with Sri Lanka with Sri Lanka Accounting estimates made by Board, as Accounting Standards. Standards, and for such internal well as evaluating the overall – The financial statements of the control as Board determines is presentation of the financial Company, and the Group comply necessary to enable the preparation statements. with the requirements of sections of financial statements that are free 151 and 153 of the Companies from material misstatement, whether We believe that the audit evidence Act No. 07 of 2007. due to fraud or error. we have obtained is sufficient and appropriate to provide a basis for Auditors’ Responsibility our audit opinion. Our responsibility is to express an opinion on these financial Opinion statements based on our audit. We In our opinion, the consolidated conducted our audit in accordance financial statements give a true and Chartered Accountants with Sri Lanka Auditing Standards. fair view of the financial position Colombo Those standards require that we of the Group as at December 25th February 2016 comply with ethical requirements 31, 2015, and of its financial and plan and perform the audit to 174 2015 Annual Report Singer (Sri Lanka) PLC

Statement of Profit or loss and other comprehensive income

Consolidated Company

Year ended 31st December 2015 2014 2015 2014 Note Rs. Rs. Rs. Rs.

Revenue 3 38,710,833,576 29,699,602,382 33,311,395,189 27,130,594,150 Cost of Sales (26,602,061,231) (19,265,536,074) (23,531,268,883) (18,664,273,624) Direct Interest Cost (644,458,910) (711,017,007) – – Gross Profit 11,464,313,435 9,723,049,301 9,780,126,306 8,466,320,526 Other Income 5 240,934,743 124,310,642 296,622,470 165,714,877 Selling and Administrative Expenses (8,433,352,728) (7,345,509,358) (7,649,157,451) (6,625,967,276) Other Expenses 6 (293,712,931) (279,916,306) (269,521,578) (260,799,438) Operating Profit 2,978,182,519 2,221,934,278 2,158,069,747 1,745,268,688 Finance Cost 7.1 (1,091,234,852) (1,103,694,553) (1,094,741,462) (1,111,556,493) Finance Income 7.2 116,686,914 112,366,480 164,053,234 64,148,473

Net Finance Cost (974,547,938) (991,328,073) (930,688,228) (1,047,408,020) Share of Profits of Equity Accounted Investees (Net of Income Tax) 8 2,042,497 1,963,175 – – Value Added Tax on Financial Services (110,402,514) (76,960,923) (31,700,000) (37,600,001)

Profit Before Tax 9 1,895,274,564 1,155,608,457 1,195,681,519 660,260,668 Income Tax Expense 10 (659,235,725) (373,974,230) (335,976,573) (196,629,743)

Profit for the Year 1,236,038,839 781,634,227 859,704,946 463,630,925

Other Comprehensive Income Items that will not be Reclassified to Profit of Loss Revaluation of Property, Plant & Equipment 12 – 134,237,410 134,237,410 Remeasurement of Defined Benefit Obligation 28 (41,244,046) (13,830,288) (40,252,056) (11,658,866) Tax on Other Comprehensive Income 10.4 11,548,333 (10,762,072) 11,270,576 (11,370,070) Other Comprehensive Income for the Year Net of Tax (29,695,713) 109,645,050 (28,981,480) 111,208,474

Total Comprehensive Income for the Year 1,206,343,126 891,279,277 830,723,466 574,839,399

Profit Attributable to:

Owners of the Company 1,152,771,289 714,208,316 859,704,946 463,630,925 Non-Controlling Interests 83,267,550 67,425,911 – –

1,236,038,839 781,634,227 859,704,946 463,630,925

Total Comprehensive Income Attributable to:

Owners of the Company 1,123,216,698 824,159,768 830,723,466 574,839,399 Non-Controlling Interests 83,126,428 67,119,509 – –

1,206,343,126 891,279,277 830,723,466 574,839,399 Earnings per Share – Basic (Rs.)* 11.2 9.21 5.70 6.87 3.70 Dividends per Share (Including Proposed Final Dividend) – (Rs.) 32 4.20 2.50

The Notes on pages 179 through 239 form an integral part of these Financial Statements.

Colombo 25th February 2016 Singer (Sri Lanka) PLC Annual Report 2015 175

Statement of Financial Position

Consolidated Company As at 31st December 2015 2014 2015 2014 Note Rs. Rs. Rs. Rs. ASSETS Property, Plant & Equipment 12 2,715,400,922 2,667,908,506 2,600,437,050 2,603,690,913 Intangible Assets 13 249,891,580 243,646,117 200,296,513 205,413,030 Investment in Subsidiaries 14 – – 992,241,596 987,241,596 Equity - Accounted Investees 15 54,831,464 55,188,967 48,000,000 48,000,000 Other Investments 16.1 17,061,300 17,061,300 616,303,000 166,303,000 Trade and Other Receivables 19.1 7,222,704,746 5,778,199,328 1,620,582,297 1,564,675,080 Deferred Tax Assets 27 144,913,478 65,235,229 124,492,574 59,596,117 Non-Current Assets 10,404,803,490 8,827,239,447 6,202,353,030 5,634,919,736

Inventories 17 6,919,158,792 5,475,790,817 6,677,026,859 5,178,215,346 Loans due from Related Parties 18 65,890,881 65,134,631 1,122,638,197 717,068,549 Trade and Other Receivables 19.2 13,270,919,039 10,963,329,510 8,325,781,111 7,043,914,247 Amounts due from Related Parties 20 – – 234,256,922 108,956,605 Deposits with Banks 85,344,286 110,388,278 – – Other Investments 16.2 606,011,463 653,380,275 – – Cash and Cash Equivalents 21.1 910,169,077 1,176,933,623 876,593,992 914,488,142 Current Assets 21,857,493,538 18,444,957,134 17,236,297,081 13,962,642,889

Total Assets 32,262,297,028 27,272,196,581 23,438,650,111 19,597,562,625 Equity Stated Capital 22 626,048,050 626,048,050 626,048,050 626,048,050 Capital Reserves 23 857,580,019 870,358,087 857,580,019 870,358,087 Statutory Reserve 24 73,317,972 136,127,587 – – Revenue Reserves 25 4,728,454,981 3,842,674,626 3,612,778,716 3,082,301,207 Total Equity Attributable to Owners of the Company 6,285,401,022 5,475,208,350 5,096,406,785 4,578,707,344 Non-Controlling Interests 484,584,032 441,960,453 – – Total Equity 6,769,985,054 5,917,168,803 5,096,406,785 4,578,707,344 Liabilities Interest-Bearing Loans and Borrowings 26 8,091,906,878 4,226,596,072 6,250,000,000 3,146,637,155 Defined Benefit Obligation 28 486,465,251 383,912,062 457,181,699 362,593,372 Security Deposits 851,794,462 732,124,370 851,794,462 732,124,370 Other Financial Liabilities 34 645,007,596 798,492,414 – – Non-Current Liabilities 10,075,174,187 6,141,124,918 7,558,976,161 4,241,354,897

Trade and Other Payables 29 4,388,034,568 3,818,024,263 3,345,457,979 3,021,470,030 Deferred Revenue 30 318,459,902 235,333,686 318,459,902 235,333,686 Income Tax Payable 350,294,932 212,841,799 133,791,489 109,209,836 Dividends Payable 31 17,515,071 15,491,340 17,515,071 15,491,340 Amounts due to Related Parties - Trade 33.1 454,202,566 301,694,568 771,744,188 577,736,208 Amounts due to Related Parties - Non-Trade 33.2 122,214,032 90,246,223 125,239,131 90,246,223 Other Financial Liabilities 34 2,722,824,531 3,696,149,556 – – Interest-Bearing Loans and Borrowings 26 7,043,592,185 6,844,121,425 6,071,059,405 6,728,013,061 Current Liabilities 15,417,137,787 15,213,902,860 10,783,267,165 10,777,500,384 Total Liabilities 25,492,311,974 21,355,027,778 18,342,243,326 15,018,855,281 Total Equity and Liabilities 32,262,297,028 27,272,196,581 23,438,650,111 19,597,562,625

The Notes on pages 179 through 239 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,

Dr. Saman Kelegama Ranil De Silva Director Director Colombo 25th February 2016 176 2015 Annual Report Singer (Sri Lanka) PLC

Statement of Changes in Equity

Consolidated

Year ended 31st December 2015 Attributable to Equity Holders of the Company Note Stated Reserve Investment Revaluation General Retained Total Non- Total Capital Fund Fund Reserves Reserves Earnings Controlling Interest Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance at 31st December 2014 626,048,050 40,454,818 87,991,727 762,033,802 2,500,000,000 947,544,210 4,964,072,607 395,902,426 5,359,975,033 Realisation on Revaluation Surplus 23.1 – – – (11,278,572) – 11,278,572 – – – Transferred to/(from) during the Year – 13,429,842 (5,748,800) – 100,000,000 (107,681,042) – – –

Transactions with Owners of the Company – – Distributions – – – – Final Dividend – 2013 – – – – – (313,024,025) (313,024,025) – (313,024,025) Dividend Paid by Subsidiary Companies to Non-controlling interest – 2013 – (21,061,482) (21,061,482) Total Distributions – – – – – (313,024,025) (313,024,025) (21,061,482) (334,085,507)

Total Comprehensive Income for the Year Profit for the Year – – – – – 714,208,316 714,208,316 67,425,911 781,634,227 Other Comprehensive Income Revaluation of Property, Plant & Equipment – – – 134,237,410 – – 134,237,410 – 134,237,410 Re-measurement of Defined Benefit Obligation 28 – – – – – (13,404,729) (13,404,729) (425,558) (13,830,288) Related Taxes 10.4 – – – (14,634,553) 3,753,324 (10,881,229) 119,156 (10,762,072) Total Other Comprehensive Income for the Year – – – 119,602,857 – (9,651,405) 109,951,452 (306,402) 109,645,050 Total Comprehensive Income for the Year – – – 119,602,857 – 704,556,911 824,159,768 67,119,509 891,279,277 Balance at 31st December 2014 626,048,050 53,884,660 82,242,927 870,358,087 2,600,000,000 1,242,674,626 5,475,208,350 441,960,453 5,917,168,803 Realisation on Revaluation Surplus 23.1 – – – (12,778,068) – 12,778,068 – – – Transferred to/(from) during the Year – 19,433,312 (82,242,927) – 100,000,000 (37,190,386) – – –

Transactions with Owners of the Company – – Distributions – – – – Final Dividend – 2014 32 – – – – – (313,024,025) (313,024,025) – (313,024,025) Dividend paid by Subsidiary Companies to Non-controlling Interest – 2014 – – – – – – – (40,502,849) (40,502,849) Total Distributions – – – – – (313,024,025) (313,024,025) (40,502,849) (353,526,874) Total Comprehensive Income for the Year Profit for the Year – – – – – 1,152,771,290 1,152,771,290 83,267,550 1,236,038,839

Other Comprehensive Income Re-Measurement of Defined Benefit Obligation 28 (41,048,044) (41,048,044) (196,002) (41,244,046) Related Taxes 10.4 – 11,493,452 11,493,452 54,881 11,548,333 Total other Comprehensive Income for the Year – – – – – (29,554,592) (29,554,592) (141,121) (29,695,713) Total Comprehensive Income for the Year – – – – – 1,123,216,698 1,123,216,698 83,126,428 1,206,343,126 Balance at 31st December 2015 626,048,050 73,317,972 – 857,580,019 2,700,000,000 2,028,454,981 6,285,401,022 484,584,032 6,769,985,054

The Notes on pages 179 through 239 form an integral part of these Financial Statements.

*Investment Fund Account consists of 8% of the profits calculated for the payment of Value Added Tax on Financial Services and 5% of the Profit Before Tax calculated for payment of Income Tax purposes during the year. Singer (Sri Lanka) PLC Annual Report 2015 177

Statement of Changes in Equity

Company

Year ended 31st December 2015 Note Stated Revaluation General Retained Total Capital Reserves Reserves Earnings Rs. Rs. Rs. Rs. Rs.

Restated Balance at 31st December 2014 626,048,050 762,033,802 2,500,000,000 428,810,118 4,316,891,970

Realisation on Revaluation Surplus 23.1 – (11,278,572) – 11,278,572 –

Transferred to/(from) During the year 100,000,000 (100,000,000) – Transactions with Owners of the Company, Recognised directly in Equity –

Distributions to Owners of the Company –

Final Dividend – 2013 – – – (313,024,025) (313,024,025)

Total Distributions to Owners of the Company – – – (313,024,025) (313,024,025)

Total comprehensive income for the Year –

Profit for the Year – – – 463,630,925 463,630,925

Other Comprehensive Income –

Revaluation of Property, Plant & Equipment – 134,237,410 – – 134,237,410

Re-measurement of Defined Benefit Obligation 28 – – – (11,658,866) (11,658,866)

Related taxes 10.4 – (14,634,553) – 3,264,483 (11,370,070) Total Other Comprehensive Income – 119,602,857 – (8,394,383) 111,208,474

Total Comprehensive Income for the Year – 119,602,857 – 455,236,542 574,839,399

Balances at 31st December 2014 626,048,050 870,358,087 2,600,000,000 482,301,207 4,578,707,344

Realisation on Revaluation Surplus 23.1 – (12,778,068) – 12,778,068 –

Profit for the year – – – Transactions with Owners of the Company, Recognised Directly in Equity –

Distributions to Owners of the Company –

Final Dividend – 2014 32 – – – (313,024,025) (313,024,025)

Total Distributions to Owners of the Company – – – (313,024,025) (313,024,025)

Total Comprehensive Income for the Year 100,000,000 (100,000,000) –

Transferred to/(from) During the Year –

Profit for the Year – – – 859,704,946 859,704,946

Other Comprehensive Income –

Re-Measurement of Defined Benefit Obligation 28 (40,252,056) (40,252,056)

Related Taxes 10.4 – 11,270,576 11,270,576 Total Other Comprehensive Income – – (28,981,480) (28,981,480)

Total Comprehensive Income for the year – – – 830,723,466 830,723,466

Balance at 31st December 2015 626,048,050 857,580,019 2,700,000,000 912,778,716 5,096,406,785

The Notes on pages 179 through 239 form an integral part of these Financial Statements. 178 2015 Annual Report Singer (Sri Lanka) PLC

Statement of Cash Flows

Consolidated Company

Year ended 31st December 2015 2014 2015 2014 Note Rs. Rs. Rs. Rs.

Cash Flows from Operating Activities Profit before Income Tax Expense 1,895,274,591 1,155,608,457 1,195,681,519 660,260,668 Adjustments for: Depreciation on Property, Plant & Equipment 12 306,775,866 290,187,206 288,662,663 275,935,728 Share of Profit from Equity Accounted Investees 8 (2,042,497) (1,963,175) – – Amortisation of Intangible Assets 13.8 18,724,065 20,816,340 12,645,916 15,950,950 (Gain)/Loss on Disposal of Property, Plant & Equipment 5 (2,257,931) 6,220,984 (2,257,931) 6,220,984 Interest Expense 7.1 1,091,234,852 1,101,909,745 1,094,741,462 1,110,349,935 Interest Income 7.2 (116,686,914) (112,366,480) (164,053,234) (64,148,473) Impairment of Inventory 9 233,746,384 89,267,649 185,378,727 89,267,649 Impairment on Trade and Other Receivables 9 42,669,561 209,126,271 37,935,324 151,800,715 Dividend Income 5 (2,158,613) (36,227) (178,802,049) (77,764,894) Provision for Retiring Gratuity 9.1 74,737,355 64,626,429 67,675,845 59,729,162 Operating Profit Before Working Capital Changes 3,540,016,719 2,823,397,199 2,537,608,242 2,227,602,424

(Increase)/Decrease in Inventories (1,677,114,359) (409,392,486) (1,684,190,240) (111,817,015) (Increase)/Decrease in Debtors falling due after one Year (1,444,505,418) (108,970,208) (55,907,217) (50,543,533) (Increase)/Decrease in Debtors falling due within one Year (2,350,259,091) (1,685,303,496) (1,319,802,189) (827,007,674) (Increase)/Decrease in dues from Related Parties 45,072,914 (45,072,914) 64,131,813 (277,142,707) (Increase)/Decrease in dues to Related Parties 139,402,893 34,322,356 39,568,758 454,723,211 Increase in Security Deposits 119,670,092 80,359,272 119,670,091 80,359,281 Increase in Customer Deposit Liabilities (1,126,809,843) 726,412,251 – – Increase in Trade and Other Payables 570,010,304 558,534,373 323,987,949 184,125,383 Increase in Deferred Liability 83,126,216 214,455,336 83,126,216 214,455,336 Cash Generated from Operations (2,101,389,573) 2,188,741,683 108,193,423 1,894,754,696

Finance Costs Paid (1,155,337,912) (1,027,486,936) (1,156,140,836) (1,039,849,394) Retiring Gratuity Paid 28 (13,428,212) (14,577,523) (13,339,574) (14,577,523) Income Tax Paid (589,912,508) (192,323,374) (365,020,801) (81,600,637) Net Cash from/(Used in) Operating Activities (3,860,068,205) 954,353,850 (1,426,307,788) 758,727,142

Cash Flows from Investing Activities Acquisition of Property, Plant & Equipment and Intangible Assets (386,969,519) (398,649,905) (300,669,907) (379,539,787) Proceeds from Disposal of Property, Plant & Equipment 9,989,640 7,544,393 9,989,640 7,544,393 Investment in Subsidiary Companies – (5,000,000) (5,000,000) Investment Debenture in Subsidiary Companies – – (450,000,000) – (Acquisition)/Disposal of Marketable Securities 47,368,812 (225,494,854) – – Investment in Bank Deposits 25,043,992 3,571,231 – – Net Cash Flows from Loans Given to Related Companies (756,250) 4,500,000 (405,569,648) (647,433,918) Interest Received 116,686,914 112,366,480 164,053,234 64,148,473 Dividend Received 4,558,613 36,227 178,802,049 77,764,894 Net Cash Flows used in Investing Activities (184,077,798) (496,126,428) (808,394,632) (882,515,945)

Cash Flows from Financing Activities Proceeds From Interest-Bearing Loans and Borrowings 19,015,127,934 9,773,448,266 16,161,428,525 9,418,376,341 Repayment of Interest-Bearing Loans and Borrowings (15,335,617,902) (8,921,492,587) (13,963,745,984) (8,140,138,063) Proceeds from Rights issue purchased by Minority Holders – – Net payment to Minority Shareholders (40,502,877) (21,061,482) – Dividends Paid (311,000,294) (312,489,129) (311,000,294) (312,489,129) Net Cash Flows from Financing Activities 3,328,006,861 518,405,068 1,886,682,247 965,749,149

Net Increase/(Decrease) in Cash and Cash Equivalents (716,139,142) 976,632,490 (348,020,173) 841,960,356 Cash and Cash Equivalents at the beginning of the Year 21 827,988,154 (148,644,336) 607,656,851 (234,303,505)

Cash and Cash Equivalents at the end of the Year 21 111,849,012 827,988,154 259,636,678 607,656,851

The Notes on pages 179 through 239 form an integral part of these Financial Statements. Singer (Sri Lanka) PLC Annual Report 2015 179

Notes to the Financial Statements

1. Corporate Information Note 1 Corporate Information 179 1.1 Reporting Entity Note 2 Significant Accounting Policies 181 Note 3 Revenue 191 1.1.1 General Note 4 Operating Segments 191 Singer (Sri Lanka) PLC is a limited Note 5 Other Income 192 liability company incorporated Note 6 Other Expenses 192 and domiciled in Sri Lanka. The Note 7 Net Finance Cost 192 Registered Office of the Company is located at No. 80, Nawam Note 8 Share of Profit of Equity Accounted Investees - (Net of Income Tax) 193 Mawatha, Colombo 2, and the principal place of business is Note 9 Profit Before Tax 193 situated at the above address. Note 10 Income Tax Expense 194 Note 11 Earnings Per Share 195 In the Report of the Directors Note 12 Property, Plant & Equipment 196 and in the Financial Statements, Note 13 Intangible Assets 201 ‘the Company’ refers to Singer Note 14 Investments in Subsidiaries - Company 203 (Sri Lanka) PLC as the Holding Company and ‘the Group’ refers Note 15 Equity Accounted Investees 204 to the Consolidated Financial Note 16 Other Investment 205 Statements of Singer (Sri Lanka) Note 17 Inventories 206 PLC and its Subsidiaries, Singer Note 18 Loans Due from Related Parties 206 Finance (Lanka) PLC and Singer Note 19 Trade and Other Receivables 207 Digital Media (Pvt) Ltd. and Singer Note 20 Amounts Due from Related Parties 210 Business School (Pvt) Ltd. Note 21 Cash and Cash Equivalents 211 Note 22 Stated Capital 211 1.1.2 Companies in the Group Note 23 Capital Reserves 212 Subsidiaries Note 24 Statutory Reserves 212 Singer Finance (Lanka) PLC Note 25 Revenue Reserves 213 Singer Finance (Lanka) PLC, Note 26 Interest-Bearing Loans and Borrowings 215 was incorporated on 19th April Note 27 Deferred Tax Assets/(Liabilities) 219 2004 under the Companies Act Note 28 Defined Benefit Obligation 220 No. 17 of 1982 and its commercial operations commenced on Note 29 Trade and Other Payables 221 8th July 2004. Singer (Sri Lanka) Note 30 Deferred Revenue 221 PLC owns 80.4% of its equity Note 31 Dividend Payable 222 shares. Note 32 Dividends 222 Note 33 Amounts due to Related Parties 222 Singer Digital Media (Pvt) Ltd. Note 34 Other Financial Liabilities 223 Singer Digital Media (Pvt) Ltd. was Note 35 Financial Instruments 223 incorporated on 16th May 2014 Note 36 Commitments and Contingencies - Group/Company 233 under the Companies Act No. 07 of 2007 and its commercial Note 37 Events after the Reporting Period 234 operations commenced on Note 38 Related Parties 236 8th July 2014. Singer Digital Media Note 39 Subsidiaries/Associate and related Companies 239 (Pvt) Ltd. is a fully-own Subsidiary.

Singer Business School (Pvt) Ltd. A fully-owned Subsidiary, Singer Business School (Pvt) Ltd. was incorporated on 5th May 2015 under the Companies Act No. 07 of 2007 and its commercial operations commenced on 5th May 2015. 180 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Associates (Equity 1.1.4 Parent Enterprise and for-sale financial assets and items Accounted Investees) Ultimate Parent Enterprise of Property, Plant & Equipment, Associate companies of the The Company's Parent undertaking which are measured at fair value Group, whose results have been is Singer (Sri Lanka) BV. and Defined Benefit Plans which included in the Consolidated are measured at present value of Financial Statements are: The Company's Ultimate Parent the Retirement Benefit Obligations as explained in the respective Reality Lanka Ltd. undertaking and controlling Notes to the Financial Statements. Telshan Network (Pvt) Ltd. party is Retail Holdings NV, which is incorporated in the All above companies are Curacao. 1.2.4 Functional and incorporated in Sri Lanka. Presentation Currency 1.1.5 Number of Employees The Financial Statements are 1.1.3 Principal Activities and The number of employees of the presented in Sri Lankan Rupees Nature of Operations Group at the end of the year was which is the functional currency of 1,905 (2014 – 1,762), Company – the Company and its Subsidiaries. The Company 1,584 (2014 – 1,512). During the year, the principal 1.2.5 Use of Estimates activities of the Company 1.2 Basis of Accounting and Judgments were marketing domestic and industrial sewing machines, 1.2.1 Statement of Compliance The preparation of the Financial Statements in conformity with consumer electronics, home The Financial Statements have SLFRS requires management appliances, furniture, agricultural been prepared in accordance to make judgments, estimates equipment, personal computers with Sri Lanka Accounting and assumptions that affect the and manufacturing furniture and Standards (hereinafter referred to application of accounting policies agricultural equipment. as SLFRS) issued by The Institute and the reported amounts of of Chartered Accountants of assets, liabilities, income and Sri Lanka (CA Sri Lanka) and the Subsidiary – expenses. Actual results may differ requirements of the Companies Singer Finance (Lanka) PLC from these estimates. Act No. 07 of 2007. Principal activities of Singer Finance (Lanka) PLC are financing Estimates and underlying of the sale or purchase of any 1.2.2 Approval of Financial assumptions are reviewed on goods, articles, vehicles or other Statements an ongoing basis. Revisions items either by letting on hire, The Board of Directors is to accounting estimates are hire purchase, leasing and other responsible for preparation and recognised prospectively. methods of financing. In addition, presentation of the Financial Singer Finance (Lanka) PLC Statements of the Company as per Information about significant accepts deposits. Singer Finance the provisions of the Companies areas of estimation uncertainty (Lanka) PLC is a licensed finance Act No. 07 of 2007 and Sri Lanka and critical judgments in applying company under the Finance Accounting Standards. The accounting policies that have Companies act No. 78 of 1988. Directors’ responsibility over the most significant effect on Financial Statements is set out in the amounts recognised in the Subsidiary – detail in the Statement of Directors’ Financial Statements is included in the following Notes: Singer Digital Media (Pvt) Ltd. Responsibility. yyNote 13 – Measurement of The principal activity of the The Financial Statements for the Intangible Assets Company was marketing mobile year ended 31st December 2015 phones, computers and digital were authorised for issue yyNote 17 – Provision for cameras. in accordance with a resolution Inventories of the Board of Directors on yyNote 28 – Measurement of Singer Business School 25th February 2016. Retirement Benefit Obligations (Pvt) Ltd. yyNote 36 – Commitments and The principal activity of the 1.2.3 Basis of Measurement Contingencies Company was provisioning of y The Financial Statements have yFinancial Instrument Note 2.4 educational services. been prepared on the historical cost basis, except for available- Singer (Sri Lanka) PLC Annual Report 2015 181

Notes to the Financial Statements

Measurement of Fair Value The Group recognises transfers interests and other components A number of the Group’s accounting between levels of the fair value of equity. Any surplus or deficit policies and disclosures require the hierarchy at the end of the arising on the loss of control is measurement of fair value for both Reporting period during which the recognised in the Profit or Loss. financial and non-financial assets change has occurred. Any interest retains in the previous and liabilities. Subsidiary, is measured at fair 1.2.6 Going Concern value as at the date that control is lost. Company regularly reviews The Directors have made an significant unobservable inputs assessment of the Group’s ability and valuation adjustments. If to continue as a going concern in 2.1.4 Interest in Equity third party information is used to the foreseeable future, and they Accounted Investees measure fair values, Company do not intend either to liquidate or The Group’s interest in equity assesses the evidence obtained cease trading. accounted investees comprise from the third parties to support interest in Associate. Associates the conclusion that such valuations are those entities in which the meet the requirements of SLFRS, 2. Significant Group has significant influence, including the level in the fair value Accounting Policies but not control or joint control, hierarchy in which such valuations over the financial and operating The accounting policies set out should be classified. policies. Interests in Associates below have been consistently are accounted for using the applied to all periods presented in Significant valuation issues are equity method. They are initially these Financial Statements. reported to the Group’s Audit recognised at cost, which include Committee. When measuring the transaction cost. Subsequent to fair value of an asset or liability, 2.1 Basis of Consolidation initial recognition the Consolidated the Group uses observable market 2.1.1 Subsidiaries Financial Statements includes the data as far as possible. Fair values Group’s share of profit or loss and Subsidiaries are entities controlled are categorised into different levels Other Comprehensive Income by the Group. The Group ‘controls’ in a fair value hierarchy based on of equity accounted investees, an entity when it is exposed to, the inputs used in the valuation until the date on which significant or has rights to, variable returns techniques as follows: influence ceases. from its involvement with the entity yyLevel 1: Quoted prices and has the ability to affect those (unadjusted) in active markets returns through its power over the 2.1.5 Transactions Eliminated for identical assets or liabilities entity. The Financial Statements of on Consolidation yyLevel 2: Inputs other than Subsidiaries are included in the Intra-group balances and quoted prices included in Consolidated Financial Statements transactions, and any unrealised Level 1 that are observable from the date on which control income and expenses arising for the asset or liability either commences until the date when from intra-group transactions directly (i.e. prices) or indirectly control ceases. are eliminated in preparing the (i.e. derived from prices) Consolidated Financial Statements. yyLevel 3: Inputs for the asset 2.1.2 Non-Controlling Unrealised gains arising from or liability that are not based Interests (NCI) transactions with equity accounted on observable market data investees are eliminated against NCI are measured at their (unobservable inputs). the investment to the extent of the proportionate share of the Group’s interest in the investee. acquiree’s identifiable net assets If the inputs used to measure Unrealised losses are eliminated in at the acquisition date. the fair value of an asset or the same way as unrealised gains, Changes in the Group’s interest in liability fall into different levels but only to the extent that there is a Subsidiary that do not result in a of the fair value hierarchy, then no evidence of impairment. loss of control are accounted for the fair value measurement is as equity transactions. categorised in its entirety in 2.2 Foreign Currency the same level of the fair value Transactions hierarchy as the lowest input level 2.1.3 Loss of Control Transactions in foreign currencies that is significant to the entire When the Group losses control are translated into the respective measurement. over subsidiary derecognises functional currencies of Group the assets and liabilities of the Companies at the exchange rates Subsidiary, any non-controlling at the dates of the transactions. 182 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Monetary assets and liabilities (b) Revaluation Model The relevant portion of the denominated in foreign currencies The Group applies the revaluation revaluation reserve is transferred at the Reporting date are model to the entire class of to retained earnings as the asset translated into the functional freehold land and buildings. A is depreciated with the balance currency at the exchange rate revaluation is carried out when being transferred on ultimate at the Reporting date. Non- there is a substantial difference disposals. monetary assets and liabilities between the fair value and that are measured at fair value in the carrying amount of the (c) Subsequent Costs a foreign currency are translated property, and is undertaken by The cost of replacing part of into the functional currency at professionally qualified valuers. an item of Property, Plant & the exchange rate when the fair Group reviews its assets once in Equipment is recognised in the value was determined. Foreign each Reporting dates. carrying amount of the item if it is currency differences are generally probable that the future economic recognised in profit and loss. Non- Increases in the carrying amount benefits embodied within that part monetary items that are measured on revaluation is recognised in will flow to the Group and its cost based on historical cost in a other comprehensive income can be measured reliably. The foreign currency are not translated. and accumulated in equity in carrying amount of the replaced the revaluation reserve, unless it part is derecognised. The costs 2.3 Property, Plant & reverses a previous revaluation of the day-to-day servicing of Equipment decrease relating to the same Property, Plant & Equipment are asset, which was previously 2.3.1 Recognition and recognised in profit and loss as recognised as an expense. In Measurement incurred. these circumstances the increase Items of Property, Plant & is recognised as income to the Equipment are measured at extent of the previous write down. (d) Depreciation cost/fair value, less accumulated Depreciation is calculated to depreciation and any accumulated Decreases in the carrying amount write-off the cost of items of impairment losses. on revaluation that offset previous Property, Plant & Equipment less increases of the same individual their estimated residual values If a significant part of an item of asset are charged against using the straight-line method over Property, Plant & Equipment has revaluation reserve directly in their estimated useful lives, and is different useful lives, then they are equity. All other decreases are generally recognised in profit or accounted for as separate items recognised in profit and loss. loss. Land is not depreciated. (major components) of Property, Plant and Equipment. Any gain or loss on disposal of an item of The estimated useful lives are as follows: Property, Plant & Equipment is recognised in profit or loss. Freehold Buildings Over 38 to 50 years Motor Vehicles Over 07 years (a) Cost Model Furniture and Equipment Over 10 years The Group applies the cost Plant and Machinery Over 10 years model to Property, Plant & EDP Equipment Over 05 years Equipment except for freehold Improvement on Leasehold Premises Over 04 to 10 years land and buildings. Shop Furniture and Equipment Over 07 years EDP Equipment – Computer Servers 07 years Singer (Sri Lanka) PLC Annual Report 2015 183

Notes to the Financial Statements

Depreciation of an asset accounted for by changing the financial asset or a liability (other commences when the asset is amortisation period or method, than financial assets at fair value available for use and ceases at as appropriate, and treated as through profit or loss) are added the earlier of the date the asset changes in accounting estimates. or deducted from the fair value of is classified as held-for-sale Amortisation expense on the financial asset, as appropriate, and the date that the asset is intangible assets with finite lives on initial recognition. Transaction derecognised. is recognised in profit and loss costs that are directly attributable on a straight-line basis over the to the acquisition of financial Depreciation methods, useful lives estimated useful lives, from the assets at fair value through profit and residual values are reviewed date they are available for use. or loss are recognised immediately at each financial year end and in the Income Statement. adjusted if appropriate. The estimated useful lives of intangible assets with finite The Group derecognises financial 2.3.2 Intangible Assets lives are as follows: assets when the contractual rights to the cash flows from the asset The Class of Intangible Assets Useful Life (a) Recognition and expire, or it transfers the rights Measurement Computer Software 10 years to receive the contractual cash An intangible asset is recognised if Other Intangible Assets flows on the financial assets in a it is probable that future economic Externally Acquired 5 years transaction in which substantially benefits will flow to the entity all the risks and rewards of and the cost of the asset can be Intangible assets with indefinite ownership of the financial assets measured reliably in accordance useful lives are tested for impairment are transferred. Any interest in with LKAS 38 – 'Intangible Assets'. annually either individually or at the transferred financial assets that is Intangible assets with finite useful cash-generating unit level. Such created or retained by the Group lives are measured at cost, less intangible assets are not amortised. is recognised as a separate asset accumulated amortisation and or liability. accumulated impairment losses. Gains or losses arising from Financial assets and liabilities The useful lives of intangible derecognition of an intangible are offset and the net amount is assets are assessed to be either asset are measured as the presented when, and only when finite or indefinite. difference between the net disposal proceeds and the the Group has a legal right to carrying amount of the asset and offset the amount and intends (b) Subsequent Expenditure are recognised in profit and loss either to settle on a net basis or Subsequent expenditure is when the asset is derecognised. to realise the asset and settle the capitalised only when it increases liability simultaneously. the future economic benefits Intangible assets with indefinite embodied in the specific asset useful lives represent trade (b) Classification to which it relates. All other marks purchased and were At inception, a financial asset is expenditure, including expenditure recorded at cost. These classified in one of the following on internally generated goodwill intangible assets are assessed for categories: and brands are recognised in impairment annually. profit or loss as incurred. - Loans and Receivables 2.4 Financial Instruments - Held-to-Maturity (c) Amortisation - Available-for-Sale 2.4.1 Non-Derivative Intangible assets with finite lives Financial Assets - At Fair Value through Profit are amortised over the useful or Loss economic life and assessed for (a) Recognition and As at the year end the Group did impairment whenever there is an Measurement not have assets categorised as fair indication that the intangible asset The Group recognises financial value through profit or loss. may be impaired. The amortisation assets in its Statement of Financial period and the amortisation Position when the Group becomes method for an intangible asset with 2.4.1.1 Held-to-Maturity a party to the contractual a finite useful life are reviewed at Financial Assets provisions of the instrument. least at each financial year-end. A non-derivative financial asset Changes in the expected useful with fixed or determinable Financial assets & are initially life or the expected pattern of payments with fixed maturity where measured at fair value. Transaction consumption of future economic Group intends to hold to maturity is costs that are directly attributable benefits embodied in the asset is classified under this category. to the acquisition or issue of a 184 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Held-to-maturity financial assets an investment is derecognised, right to offset the amounts and are recognised initially at fair the cumulative gain or loss in intends either to settle on a net value plus any directly attributable Other Comprehensive Income is basis or to realise the asset or transaction costs. Subsequent to transferred to profit or loss. settle the liability simultaneously. initial recognition held-to-maturity financial assets are measured at Available-for-sales financial assets 2.4.3 Stated Capital amortised cost using the effective comprise of equity investments. Ordinary shares are classified as interest method. equity. Incremental costs directly 2.4.2 Non-Derivative attributable to the issue of ordinary Held-to-maturity financial assets Financial Liabilities shares are recognised as a comprise of Treasury Bills and The Group initially recognises debt deduction from equity, net of any Treasury Bonds. securities issued and subordinated tax effects. liabilities on the date that they 2.4.1.2 Loans and Receivables are originated. All other liabilities 2.4.4 Impairment Loans and receivables are are recognised initially on the financial assets with fixed or trade date at which the Company 2.4.4.1 Impairment of Non- determinable payments that becomes a party to the contractual Derivative Financial Assets are not quoted in an active provisions of the instrument. Financial assets other than market. Such assets are those measured at fair value recognised initially at fair value The Group classifies non-derivative are assessed for indicators of plus any directly attributable financial liabilities into other impairment at the end of each transaction costs. financial liabilities category. Such Reporting period. Financial assets financial liabilities are recognised are considered to be impaired Subsequent to initial recognition initially at fair value plus any directly when there is objective evidence loans and receivables are attributable transaction costs. that as a result of one or more measured at amortised cost using Subsequent to initial recognition, events that occurred after the the effective interest method, less these financial liabilities are initial recognition of the financial any impairment losses. measured at amortised cost using assets, the estimated future cash the effective interest method. from the asset have been affected. Loans and receivables comprise of HP and lease receivable, Other financial liabilities comprise The Group assesses at each consumer loans, vehicle loans, interest-bearing borrowings, bank Reporting date whether there is any distress loans and temporary overdrafts, amount due to related objective evidence that a financial refund loans, related party parties, trade and other payables asset or a group of financial assets loans, staff loans, cash and cash and other financial liabilities due to are impaired. A financial asset equivalents, and trade and other customers. or a group of financial assets are receivables. deemed to be impaired if, and only Bank overdrafts that are repayable if, there is objective evidence of 2.4.1.3 Available-for-Sale on demand and form an integral impairment as a result of one or Financial Assets part of the Company’s cash more events that have occurred Available-for-sale financial assets management are included as after the initial recognition of the are non-derivative financial assets a component of cash and cash asset and that loss event have an that are recognised as available- equivalents for the Statement of impact on the estimated future cash for-sale or not classified in any Cash Flows. flows of the financial asset or the previous categories. Available- group of financial assets that can for-sale financial assets are 2.4.2.1 Derecognition of be reliably estimated. recognised initially at fair value Financial Liability (a) Impairment Losses on plus any directly attributable The Group derecognises Financial Assets Carried at transaction costs. a financial liability when its Amortised Cost contractual obligations are Subsequent to initial recognition, discharged, cancelled or expired. The Group except of Singer they are measured at fair value Financial assets and liabilities Finance PLC considers evidence and changes therein, other than are offset and the net amount for these assets at individual asset impairment losses, are recognised presented in the Statement of level. All individually significant in the Other Comprehensive Income Financial Position when and only assets are individually assessed and presented in the available- when, the Company has a legal for impairment. for-sale reserve in equity. When Singer (Sri Lanka) PLC Annual Report 2015 185

Notes to the Financial Statements

Singer Finance PLC considers (b) Impairment Losses largely independent of the cash evidence of impairment for on Available-for-Sale flows of other assets or other receivables at collective Impairment losses on available- cash-generating units (CGU). level. Loans and receivables for-sale investment securities are Goodwill arising from business are collectively assessed for recognised by the reclassifying combination is allocated to impairment by grouping together losses accumulated in the fair CGUs or groups of CGUs that receivables with similar risk value reserve to profit or loss. are expected to benefit from the characteristics. In assessing The amount reclassified is the synergies of combination collective impairment, the difference between the acquisition Company uses historical trends cost (net of any principal The recoverable amount of an of the probability of default, the repayment and amortisation), asset or cash-generating unit timing of recoveries and the and the current fair value, less is the greater of its value in use amount of loss incurred, adjusted any impairment loss previously and its fair value less costs to for management’s judgments as recognised in profit or loss. If the sell. In assessing value in use, to whether current economic and fair value of an impaired available- the estimated future cash flows credit conditions are such that for-sale debt security subsequently are discounted to their present the actual losses are likely to be increases and the increase can value using a pre-tax discount greater or less than suggested by be related objectively to an event rate that reflects current market historical trends. occurring after the impairment assessments of the time value of loss was recognised, then the money and the risks specific to the Losses are recognised in profit impairment loss is reversed asset. In determining fair value, or loss and reflected in an through profit or loss, otherwise less costs to sell, an appropriate allowance account against loans it is reversed through Other valuation model is used. and receivables. If a subsequent Comprehensive Income. event (e.g. repayment by a debtor) An impairment loss is recognised causes the amount of impairment (c) Impairment – Equity if the carrying amount of an asset loss to decrease, the decrease Accounted Investees or cash-generating unit exceeds in impairment loss is reversed its estimated recoverable amount. An impairment in respect of through profit or loss. When the Impairment losses are recognised an equity-accounted investee Company considers that there is in profit and loss. An impairment is measured by comparing no realistic process of recovery of loss is reversed if there has been the recoverable amount of the the asset, the relevant amounts are a change in the estimates used investment with its carrying written off. to determine the recoverable amount. An impairment loss is amount. An impairment loss is recognised in profit or loss, and Impairment losses on assets reversed only to the extent that is reversed if there has been a carried at amortised cost are the asset's carrying amount favourable change in the estimates measured as the difference does not exceed the carrying used to determine the recoverable between the carrying amount of amount that would have been amount. the financial asset and the present determined, net of depreciation value of estimated future cash or amortisation, if no impairment flows discounted at the asset’s 2.4.4.2 Impairment of loss had been recognised. original effective interest rate. Non-Financial Assets The carrying amount of the Group’s 2.4.5 Leases When the Group considers that non-financial assets other than Operating Leases there are no realistic prospects of inventories and deferred tax assets recovery of the asset, the relevant are reviewed at each Reporting Assets held under other leases are amounts are written off. date to determine whether there classified as operating leases and is an indication of impairment. If are not recognised in the Group’s Impairment losses are recognised any such indication exists or when statement of financial position. in profit or loss and reflected in annual impairment testing for an an allowance account against asset is required, then the asset's Lease payments loans and advances. When recoverable amount is estimated. Payments made under operating a subsequent event causes leases are recognised in profit or the amount of impairment loss For impairment testing, assets are loss on a straight-line basis over to decrease, the decrease in grouped into the smallest group of the term of the lease. impairment loss is reversed assets that generates cash inflows through profit or loss. from continuing use that are 186 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

2.5 Inventories The Group determines the net Inventories are measured at the lower of cost and net realisable value, interest expense on the net after making due allowances for obsolete and slow moving items. Net defined benefit liability for the realisable value (NRV) is the estimated selling price in the ordinary course period by applying the discount of business, less the estimated cost of completion and selling expenses. rate used to measure the defined Group assess the NRV by giving consideration to future demand and benefit obligation at the beginning condition of inventory and make adjustments to the value by making of the annual period to the then required provisions. – net defined liability, taking into account any changes in the net The cost of each category of inventory is determined on the following defined benefit liability during the basis: period as a result of contributions and benefit payments. Net interest expense and other expenses Raw Materials – At actual cost on first-in first-out basis. related to defined benefit plans are Finished Goods – Weighted average cost. recognised in profit or loss. (Excluding Factory) Finished Goods and – At the cost of direct materials, direct labour and The liability is not externally Work-in-Progress at an appropriate proportion of fixed production funded. Piliyandala Factory overheads, based on normal operating capacity. Goods-in-Transit – At actual cost. 2.7.2 Defined Contribution Supplies and Parts – Purchase cost, less issues for the period valued Plans – Employees' Provident at a standard percentage of selling price (requires Fund/Mercantile Services revision). Provident Society and Repossessed Goods – 75% of its weighted average cost. Employees' Trust Fund A defined contribution plan is a post-employment benefit plan 2.6 Provisions warranty data and a weighing of under which an entity pays fixed all possible outcomes against their A provision is recognised in the contributions into a separate associated probabilities. Provision Statement of Financial Position entity and will have no legal or is utilised to settle the actual when the Company has a legal or constructive obligation to pay claims made by the customers. constructive obligation as a result further amounts. Employees of a past event and it is probable are eligible for contributions that an outflow of economic 2.6.2 Capital Commitments to Employees' Provident Fund/ benefits will be required to settle and Contingencies Mercantile Services Provident the obligation and the amount of Capital commitments and Society and Employees' Trust Fund the provision can be measured contingent liabilities of the Group in line with the respective statutes reliably in accordance with LKAS are disclosed in the respective and regulations. The Company 37 – ‘Provisions, Contingent Notes to the Financial Statements. contributes 12%, 12% and 3% of Liabilities and Contingent Assets’. gross emoluments of employees The amount recognised is the 2.7 Employee Benefits to the Employees' Provident Fund, best estimate of the consideration Mercantile Services Provident 2.7.1 Defined Benefit Plan required to settle the present Society and the Employees' obligation at the Reporting date, The Group net obligation in Trust Fund, respectively and is taking into account the risks and respect of defined benefit plan recognised as an expense in uncertainties surrounding the is calculated by estimating the profit and loss in the periods obligation at the date. Where a amount of future benefits that during which services are provision is measured using the employees have earned in rendered by employees. cash flows estimated to settle the current and prior periods present obligation, its carrying discounting that amount. 2.7.3 Short-Term Benefits amount is determined based on the present value of those cash flows. The calculation of defined benefit Short-term employee benefit obligation is performed annually obligations are measured on an undiscounted basis and are 2.6.1 Provisions for Warranties by a qualified actuary using the projected unit credit method. expensed as the related service A provision for warranties is Remeasurement of the net defined is provided. A liability is recognised when the underlying benefit liability, which comprise recognised for the amount products or services are sold. The actuarial gains and losses are expected to be paid under short- provision is based on historical recognised immediately in OCI. term cash bonus if the Group has Singer (Sri Lanka) PLC Annual Report 2015 187

Notes to the Financial Statements

a present legal or constructive (c) Interest – Other total unearned income at the obligation to pay this amount as a Interest income is recognised in commencement of a contract. The result of past services provided by profit and loss as it accrues and is unearned income is recognised as the employee and the obligation calculated by using the effective revenue as it is earned, using the can be measured reliably. interest rate method. effective interest rate method.

2.8 Statement of Profit or Loss (d) Dividends (b) Interest and Other Comprehensive Dividend income is recognised in Interest income and expense are Income profit and loss when the right to recognised in profit or loss using 2.8.1 Revenue Recognition receive dividends is established. the effective interest method. The effective interest rate is the Revenue is recognised to the rate that exactly discounts the extent that it is probable that the (e) Service Fee Income on estimated future cash payments economic benefits will flow to the Hire Purchase and receipts through the expected Company and the revenue and Service fee income is recognised life of the financial assets or associated costs incurred or to be over the length of hire purchase liability (or, where appropriate a incurred can be reliably measured. agreement using the effective shorter period) to the carrying Revenue is measured at the fair interest rate method. In the amount of the financial asset value of the consideration received event of early termination of the or liability. When calculating or receivable, net of returns, trade hire purchase contract or cash the effective interest rate, the discounts and turnover taxes. The conversion remaining deferred, Company estimates future cash following specific criteria are used service income is recognised flows considering all contractual for the purpose of recognition of when such contract is recognised terms of the financial instruments, revenue: or converted. but not future credit losses. (a) Sale of Goods (Normal Suraksha Trading Transactions) (f) Income on and The calculation of effective interest Extended Warranty Scheme rate includes all transaction Revenue from the sale of goods Income is recognised over the costs and fees and points paid is recognised when the significant period of contract. Unrecognised or received that are an integral risks and rewards of ownership of income is accounted for as part of the effective interest the goods have passed to buyers, deferred revenue. rate. Transaction costs include the recovery of the consideration incremental cost that are directly is probable, the associated costs attributable to the acquisition or and possible return of goods (g) Others issue of a financial asset or liability. can be estimated reliably, there Other income is recognised on an Interest income and expense is no continuing management accrual basis. presented in the Statement of involvement with the goods and Comprehensive Income include: the amount of revenue can be Net gains and losses of a measured reliably. Revenue is revenue nature on the disposal yyInterest on financial assets and measured net of returns and trade of Property, Plant & Equipment financial liabilities measured at discounts. and other non-current assets amortised cost calculated on an including investments have been effective interest basis. (b) Sale of Goods (Hire accounted for in profit and loss, yyInterest on available-for-sale Purchase Transactions) having deducted from proceeds financial instruments calculated on disposal, the carrying amount At the time of effecting hire sales, on an effective interest basis. of the assets and related selling the cash sales value is recognised expenses. as sales. (c) Fees and Commission Fees and commission income Subsequent to the initial 2.8.2 Revenue Recognition and expense that are integral recognition, hire purchase Policy of Singer Finance to the effective interest rate on receivables are measured (Lanka) PLC a financial asset or liability are at amortised cost using the (a) Hire Purchase, Lease and included in the measurement of effective interest method, less any Loans and Advances the effective interest rate. Other impairment losses. fees and commission income, The excess of aggregated contract including account servicing fees, receivables over the cost of are recognised as the related the hired assets constitutes the 188 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

services are performed. Other fees 2.8.4 Investment Fund Account (b) For the purpose of and commission expense relate As proposed in the Budget 2011, presentation of the Income mainly to transactions and service an investment fund has been Statement, the Directors are fees, which are expensed as the established and operated in the of the opinion that ‘function of services are received. manner described below. As and expenses method’ presents fairly when taxes are paid after the elements of the Company's 2.8.3 Regulatory Provisions 1st January 2011, following fund performance and hence such are transfer to the investment fund presentation method is adopted. (a) Deposit Insurance Scheme account and build a permanent In terms of the Finance Companies fund in the Company. 2.8.7 Net Finance Cost Direction No. 2 of 2010 – y y8% of the profits calculated for Finance income comprises interest ‘Insurance of Deposit Liabilities’ the payment of Value Added Tax income on funds invested and issued on 27th September 2010 (VAT) on financial services on the which is recognised as it accrues all Registered Finance Companies dates as specified in the VAT Act in Profit or Loss, using the effective are required to insure their for the payment of VAT. interest method. deposit liabilities in the Deposit yy5% of the profit before tax Insurance Scheme operated by calculated for payment of Finance cost comprises interest the Monetary Board in terms of income tax purposes on date payable on borrowings. Borrowing Sri Lanka Deposit Insurance specified in Section 113 of the costs that are not directly Scheme Regulations No. 1 of 2010 Inland Revenue Act for the Self- attributable to the acquisition, issued under Sections 32A to 32E Assessment Payment of tax. construction or production of a of the Monetary Law Act with effect qualifying asset are recognised from 1st October 2010. The Company shall utilise the in profit or loss using the effective funds in the investment fund interest method. Deposits to be insured include account as specified by the demand, time and savings direction. The operation of this Foreign currency gains and losses deposit liabilities and exclude fund was ceased with the effect are reported on a net basis as the following: from 1st October 2014. either finance income or finance yyDeposit liabilities to member cost depending on whether foreign institutions 2.8.5 Reserve Fund currency movements are in net y gain or net loss position. yDeposit liabilities to Government The Company is maintaining a of Sri Lanka reserve fund in compliance with yyDeposit liabilities to Directors, Direction No. 1 of 2003 – Central 2.8.8 Income Tax Key Management Personnel Bank (Capital Funds) issued to Income tax expense comprises and other related parties as Finance Companies and it will both current and deferred tax. defined in Finance Companies be used for only the purpose Income tax expense is recognised Act Direction No. 3 of 2008 specified in the said Direction in profit and loss, except to the on Corporate Governance of above. The details of the reserve extent that it relates to items Registered Finance Companies fund are disclosed in Note 24.1. recognised directly in equity, or in yyDeposit liabilities held Other Comprehensive Income. as collateral against any 2.8.6 Expenditure Recognition accommodation granted (a) Expenses are recognised in (a) Current Tax yyDeposit liabilities falling within Profit and Loss on the basis of a The current tax is the expected the meaning of dormant direct association between the tax payable on the taxable income deposits in terms of the Finance cost incurred and the earning for the year, using tax rates Companies Act, funds of which of specific items of income. All enacted or substantially enacted have been transferred to the expenditure incurred in the running at the Reporting date, and any Central Bank of Sri Lanka of the business and in maintaining adjustment to tax payable in yyRegistered Finance Companies the Property, Plant & Equipment respect of previous years. are required to pay a premium in a state of efficiency has been of 0.15% on eligible deposit charged to income in arriving at (b) Deferred Taxation liabilities as at end of the month the profit for the year. Deferred tax is recognised to be payable within a period in respect of temporary of 15 days from the end of the differences between the respective month carrying amount of assets and Singer (Sri Lanka) PLC Annual Report 2015 189

Notes to the Financial Statements

liabilities for financial reporting 2.9 Events After the Segment information is presented purposes and the amounts used Reporting Period in the respective Notes to the for taxation purposes. All material events after the Financial Statements. Reporting date have been Deferred tax is measured at the considered and where necessary 2.12 Cash Flow Statement tax rates that are expected to be adjustments made in these The Cash Flow Statement has applied to temporary differences Financial Statements. been prepared using the when they reverse, based on indirect method. tax laws that have been enacted 2.10 Earnings Per Share or substantively enacted by the Reporting date. The Group presents basic Earnings 2.13 New Accounting Per Share (EPS) for its ordinary Standards Issued but A deferred tax asset is recognised shares. Basic EPS is calculated Not Yet Effective for unused tax losses and by dividing the Profit or Loss A number of new standards and deductible temporary differences, attributable to ordinary shareholders amendments to the standards to the extent that it is probable of the Company by the weighted were issued but they were not that future taxable profits will be number of ordinary shares effective as at the year end. available against which they can outstanding during the period. be utilised. The carrying amount of deferred tax assets is reviewed 2.11 Segment Reporting at each Reporting date and is An operating segment is a reduced to the extent that it is no component of the Company that longer probable that the related engages in business activities tax benefit will be realised. from which it may earn revenues and incur expenses, including Deferred tax assets and liabilities revenues and expenses that relate are offset if there is a legally to transactions with any of the enforceable right to offset deferred Company’s other components. tax assets and liabilities and All operating results are reviewed when the deferred tax relates to regularly by the Group Chief income tax levied on the same Executive Officer (CEO) to make tax authority on the same taxable decisions regarding resources to entity or on different tax entity but be allocated to the segments and then intends to settle relevant tax to assess its performance and for liabilities and assets on a net basis which discrete finance information or their tax assets and liabilities is available. will be simultaneously realised. Segment results that are reported Tax withheld on dividend income to the Group CEO include items from Subsidiaries and Associates directly attributable to a segment is recognised as an expense in the as well as those that can be Consolidated Income Statement at allocated on a reasonable basis. the same time as the liability to pay the related dividend is recognised. Segment capital expenditure is the total cost incurred during the (c) Value added Tax on period to acquire Property, Plant & Financial Services. Equipment and intangible assets VAT on Financial Services is other than goodwill. calculated in accordance with the amended VAT Act No. 07 of 2013. The base for the computation of Value Added Tax ion Financial Services is the accounting profit before income tax adjusted for the economic depreciation and emolument of employees computed on prescribed rate. 190 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Accordingly, the Group has not applied the following new or amended standards in preparing these Consolidated Financial Statements:

Possible Impact on Consolidated Financial New or Amended Standards Summary of the Requirement Statements

SLFRS 9 – ‘Financial SLFRS 9, published in July 2014, replaces the The Group is assessing Instruments’ existing guidance in LKAS 39 – Financial Instruments: the potential impact on its Recognition and Measurement. SLFRS 9 includes Consolidated Financial Statements revised guidance on the classification and resulting from the application of measurement of financial instruments, a new expected SLFRS 9. credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from LKAS 39.

SLFRS 9 is effective for annual reporting periods beginning on or after 1st January 2018, with early adoption permitted.

SLFRS 15 – ‘Revenue SLFRS 15 establishes a comprehensive framework for The Group is assessing from Contracts with determining whether, how much and when revenue is the potential impact on its Customers’ recognised. It replaces existing revenue recognition Consolidated Financial Statements guidance, including LKAS 18 – ‘Revenue’, LKAS 11 – resulting from the application of ‘Construction Contracts’ and IFRIC 13 – ‘Customer SLFRS 15. Loyalty Programmes’

SLFRS 15 is effective for annual reporting periods beginning on or after 1st January 2018, with early adoption permitted.

Agriculture: Bearer Plants These amendments require a bearer plant, defined as None. (Amendments to LKAS 16 a living plant, to be accounted for as property, The Group does not have any and LKAS 41) plant and equipment and included in the scope of bearer plants. LKAS 16 – ‘Property, Plant and Equipment’, instead of LKAS 41 – ‘Agriculture’.

The amendments are effective for annual reporting periods beginning on or after 1st January 2016, with early adoption permitted.

SLFRS 14 Regulatory None. Deferral Accounts Singer (Sri Lanka) PLC Annual Report 2015 191

Notes to the Financial Statements

3. Revenue

Consolidated Company Year ended 31st December 2015 2014 2015 2014 Rs. Rs. Rs. Rs. 3.1 Summary Turnover 38,710,833,576 29,699,602,382 33,311,395,189 27,130,594,150

38,710,833,576 29,699,602,382 33,311,395,189 27,130,594,150

3.2 Revenue Sale of Goods 34,040,639,824 25,260,431,325 30,522,594,138 24,527,821,933 Rendering of Services (Note 3.3) 4,670,193,752 4,439,171,057 2,788,801,051 2,602,772,217

38,710,833,576 29,699,602,382 33,311,395,189 27,130,594,150

3.3 Rendering of Service Interest Income on Hire Purchase 2,847,249,621 2,827,160,435 2,476,212,210 2,303,002,594 Interest Income on Leasing 1,041,785,007 809,201,238 – – Interest Income on Loans 287,099,538 291,195,066 – – Service Income 494,059,586 511,614,318 312,588,841 299,769,623

4,670,193,752 4,439,171,057 2,788,801,051 2,602,772,217

4. 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 and Steel Furniture. Home Appliances Refrigerators, Washing Machines, Deep Freezers, Bottle Coolers, Air Conditioners, Fans Table Tops, Gas Ovens, Rice Cookers, Microwave Ovens, Electric Ovens, Grinders and Blenders. IT Products Computers, Laptops and Smart phones. Sewing Domestic and Industrial Sewing Machines and General Merchandise. Other Motor Bikes, Bicycles, Water Pumps, Paddy Threshers and Tractors.

4.2 Segmental Analysis of Revenue is as Follows:

Consolidated Company

2015 2014 2015 2014 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Consumer Electronics 6,375,231 5,512,795 6,375,230 5,512,795 Financial Services 4,664,161 4,439,171 2,788,801 2,602,772 Furniture 1,994,224 1,545,613 1,994,224 1,545,613 Home Appliances 12,989,596 9,862,458 12,989,596 9,862,458 IT Products 7,474,605 4,008,141 3,950,713 3,275,532 Sewing 3,311,345 2,734,643 3,311,345 2,734,643 Other 1,901,672 1,596,781 1,901,486 1,596,781

38,710,834 29,699,602 33,311,395 27,130,594 192 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

4.3 Segmental Analysis of Profit before Tax is as Follows:

Consolidated Company 2015 2014 2015 2014 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Consumer Electronics 244,492 160,309 244,492 160,610 Financial Services 667,897 489,998 178,802 77,465 Furniture 74,417 36,189 74,417 36,189 Home Appliances 484,234 244,425 484,234 244,425 IT Products 249,355 122,138 42,919 41,022 Sewing 117,847 69,800 117,847 69,800 Other 52,832 30,750 52,971 30,750 Dividend 2,159 36 – – Share of Profit on Equity Accounted Investees 2,042 1,963 – –

1,895,275 1,155,608 1,195,682 660,261

4.4 There are no separately distinguishable assets and liabilities for the above segments.

5. Other Income

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Dividend Income – Quoted 54,000 – 149,547,436 77,764,667 – Unquoted 2,104,613 36,227 29,254,613 227 Gain/(Loss) on Disposal of Property, Plant & Equipment 2,257,931 (6,220,984) 2,257,931 (6,220,984) Miscellaneous Income 83,701,149 59,828,524 28,983,747 23,504,091 Income from Financial Services 152,817,050 70,666,875 86,578,743 70,666,875

240,934,743 124,310,642 296,622,470 165,714,877

6. Other Expenses Depreciation on Property, Plant & Equipment (Notes 12.7 and 12.14) 274,988,866 259,099,966 256,875,662 244,848,488 Amortisation of Intangible Assets with Finite Useful Lives (Note 13.8) 18,724,065 20,816,340 12,645,916 15,950,950

293,712,931 279,916,306 269,521,578 260,799,438

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs. 7. Net Finance Cost 7.1 Finance Cost Interest on Overdrafts and Loans 997,430,547 1,022,683,730 1,000,937,157 1,031,123,920 Interest on Security Deposits 93,804,305 79,226,015 93,804,305 79,226,015 Loss on Translation of Foreign Currency – 1,784,808 – 1,206,558

1,091,234,852 1,103,694,553 1,094,741,462 1,111,556,493 Singer (Sri Lanka) PLC Annual Report 2015 193

Notes to the Financial Statements

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs. 7.2 Finance Income Interest Income – Related Parties – 1,369,067 107,839,548 22,504,030 – Others 64,298,959 76,480,444 15,867,412 15,657,633 Unwinding Interest Income on Interest Free Employee Loans 49,210,055 34,516,969 37,168,374 25,986,810 Gain on Translation of Foreign Currency 3,177,900 – 3,177,900 116,686,914 112,366,480 164,053,234 64,148,473

Net Finance Cost 974,547,938 991,328,073 930,688,228 1,047,408,020

8. Share of Profits of Equity Accounted Investees (Net of Income Tax)

Consolidated 2015 2014 Share of Profit Share of Profit Rs. Rs.

Reality Lanka Ltd. (Note 15) 2,042,497 1,963,175

9. Profit Before Tax

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Stated After Charging All Expenses Including the Following:

Executive Directors’ Emoluments 78,893,535 46,950,840 64,940,930 38,643,674 Non-Executive Directors’ Fees 11,189,835 9,737,937 6,523,335 6,897,537 Auditors' Remuneration – Statutory Audit 2,575,000 2,260,000 1,875,000 1,775,000 – Audit-Related Services 1,000,000 1,360,000 725,000 680,000 – Non-Audit Related Services – – – – Impairment on Trade and Other Receivables (Note 9.1) 260,713,094 348,789,004 193,630,858 150,000,203 Impairment of Inventories 185,378,758 89,267,649 185,378,727 89,267,649 Personnel Costs (Note 9.2) 4,287,912,713 3,546,556,529 3,953,182,637 3,308,806,302 Operating Lease Rentals 744,937,262 649,957,489 709,126,405 621,898,805 Donations 285,000 658,700 285,000 658,700 9.1 Impairment on Trade and Other Receivables Impairment for Hire Purchase Receivable 23,297,303 39,342,861 33,229,556 (1,930,740) Impairment for Lease Rental Receivable 27,038,321 132,747,779 – – Impairment for Loan Receivable 25,273,058 24,767,421 – – Impairment for Trade Debtor 53,544,994 30,900,000 28,841,884 30,900,000 Impairment for Other Receivable 131,559,418 121,030,743 131,559,418 121,030,943

260,713,094 348,789,004 193,630,858 150,000,203 194 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

9.2 Personnel Costs

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Staff Costs 3,856,156,011 3,185,338,410 3,548,562,365 2,969,148,393 Defined Benefit Plan Costs – Retiring Gratuity 74,737,355 64,626,429 68,076,781 59,729,162 Defined Contribution Plan Costs – EPF, ETF and MSPS 357,019,347 296,591,690 336,543,491 279,928,747

4,287,912,713 3,546,556,529 3,953,182,637 3,308,806,302

10. Income Tax Expense

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Current Income Tax Expense Current Tax Expense on Ordinary Activities for the Year - Singer (Sri Lanka) PLC (Note 10.1) 708,138,865 437,821,412 390,728,327 247,137,734 Under/(Over) Provision in Respect of Previous Year 11,408,728 (2,099,598) 10,144,703 (2,099,598)

Tax on Dividend Income WHT on Dividend Received from Singer Finance PLC and Digital Media (Pvt) Ltd. 19,366,382 8,640,518 – – 738,913,975 444,362,332 400,873,030 245,038,136

Deferred Tax Expense/(Income) (Note 10.2) (79,678,250) (70,388,102) (64,896,457) (48,408,393)

659,235,725 373,974,230 335,976,573 196,629,743

10.1 Reconciliation Between Current Tax Expense and the Product of Accounting Profit

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Profit Before Tax 1,895,274,564 1,155,608,457 1,195,681,519 660,260,667 Share of Profit of Associate (2,042,497) (1,963,175) – – Aggregate Accounting Profit 1,893,232,067 1,153,645,282 1,195,681,519 660,260,667 Aggregate Disallowable Expenses 3,019,018,467 1,854,855,058 450,826,544 346,841,083 Aggregate Tax Deductible Expenses (2,399,815,824) (1,484,880,229) (72,247,703) (46,702,093) Income Not Liable for Tax (2,158,613) – (178,802,049) (77,764,894) Unrealised Profit 18,791,278 43,027,789 – – 2,529,067,375 1,566,647,900 1,395,458,311 882,634,763

Taxable Profit 2,529,067,375 1,563,647,900 1,395,458,311 882,634,763

Current Income Tax 708,138,865 437,821,412 390,728,327 247,137,734

The Group tax expense is based on the taxable profit of each company in the Group. Singer (Sri Lanka) PLC and two subsidiary companies - Singer Finance (Lanka) PLC and Singer Digital Media (Pvt) Ltd. are liable to Income Tax at 28% on taxable profit.

Company and its subsidiaries are liable for income tax at a rate of 28%.

The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretation of tax law and prior experience. Singer (Sri Lanka) PLC Annual Report 2015 195

Notes to the Financial Statements

10.2 Deferred Tax Expense/(Income)

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Deferred Tax Charge/(Credit) Arising due to - Origination and Reversal of Temporary Differences (Note 27.1) (69,447,444) (53,954,437) (59,927,209) (44,022,573) Deferred Tax Effect on Unrealised Profit in Inventory (Note 27.1) (5,261,558) (12,047,845) – - Deferred Tax Effect in Realisation of Revaluation Surplus (4,969,248) (4,385,820) (4,969,248) (4,385,820)

(79,678,250) (70,388,102) (64,896,457) (48,408,393)

10.3 Deferred tax has been computed using the enacted tax rate of 28%.

10.4 Tax Recognised in Other Comprehensive Income

2015 2014 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 & Equipment (Note 23.1) – – – 134,237,410 (14,634,552) 119,602,858 Actuarial Loss on Obligation (Note 28) (41,244,046) 11,548,333 (29,695,713) (13,830,288) 3,872,480 (9,957,808)

(41,244,046) 11,548,333 (29,695,713) 120,407,122 (10,762,072) 109,645,050

Company Revaluation Gain on Property, Plant & Equipment (Note 23.1) – – – 134,237,410 (14,634,552) 119,602,858 Actuarial Loss on Obligation (Note 28) (40,252,056) 11,270,576 (28,981,480) (11,658,866) 3,264,482 (8,394,384)

(40,252,056) 11,270,576 (28,981,480) 122,578,544 (11,370,070) 111,208,474

11. Earnings Per Share

11.1 Basic earnings per share is calculated by dividing the profit for the year attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

11.2 The following reflects the income and share data used in the basic earnings per share computations:

Consolidated Company 2015 2014 2015 2014

Profit Attributable to Ordinary Shareholders

Profit for the Year (Rs.) 1,236,038,839 781,634,227 859,704,946 463,630,925 Profit Attributable to Ordinary Shareholders for Basic Earnings per Share (Rs.) 1,152,771,289 714,208,315 859,704,946 463,630,925

Weighted Average Number of Ordinary Shareholders Weighted Average Number of Ordinary Shares in Issue Applicable to Basic Earnings per Share 125,209,610 125,209,610 125,209,610 125,209,610

Basic Earnings per Share (Rs.) 9.21 5.70 6.87 3.70 196 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

12. Property, Plant & Equipment 12.1 Gross Carrying Amounts – Consolidated

Balance Additions/ Increase/ Disposals/ Balance as at Transfers (Decrease) Transfers Due as at 01.01.2015 in Revaluation to Revaluation 31.12.2015 Rs. Rs. Rs. Rs. Rs.

At Cost

Motor Vehicles 271,927,807 40,756,530 – (13,300,134) 299,384,203 Furniture and Equipment 235,926,823 22,959,841 – – 258,886,664 Plant and Machinery 237,431,893 19,616,623 – – 257,048,516 Culinary School Equipment 75,814 – – – 75,814 E.D.P. Equipment 220,474,474 55,872,952 – – 276,347,426 Shop Furniture 459,000,528 41,299,874 – (4,079,912) 496,220,492 Shop Equipment 534,946,550 88,398,114 – (5,460,926) 617,883,739 Improvements on Leasehold Premises 618,766,313 93,096,057 – (3,150,201) 708,712,169

2,578,550,202 361,999,991 – (25,991,170) 2,914,559,023

At Valuation Freehold Land 665,668,900 – – – 665,668,900 Freehold Buildings 597,102,548 – – (64,328) 597,038,220 1,262,771,448 – – (64,328) 1,262,707,120

Total Gross Carrying Amount 3,841,321,650 361,999,991 – (26,055,498) 4,177,266,143

12.2 Depreciation and Impairment Losses – Consolidated

Balance Charge for the Disposals/ Balance as at Year/ Transfers as at 01.01.2015 Transfer 31.12.2015 Rs. Rs. Rs. Rs.

Freehold Buildings – 24,745,764 (64,328) 24,681,436 Motor Vehicles 119,723,137 18,728,696 (5,569,731) 132,882,102 Furniture and Equipment 131,187,293 22,045,656 – 153,232,949 Plant and Machinery 143,216,941 18,377,394 – 161,594,335 Culinary School Equipment 75,814 – – 75,814 E.D.P. Equipment 141,803,683 28,007,367 – 169,811,050 Shop Furniture 151,012,358 58,698,564 (4,078,604) 205,632,319 Shop Equipment 187,726,009 65,936,378 (5,460,926) 248,201,461 Improvements on Leasehold Premises 298,667,908 70,236,047 (3,150,201) 365,753,755

Total Depreciation and Impairment Loss 1,173,413,144 306,775,867 (18,323,790) 1,461,865,221

12.3 Carrying Amounts

Group 31st December 31st December 2015 2014 Rs. Rs.

At Cost 1,452,693,802 1,405,137,058 At Valuation 1,262,707,120 1,262,771,448

Total Carrying Amount of Property, Plant & Equipment 2,715,400,922 2,667,908,506 Singer (Sri Lanka) PLC Annual Report 2015 197

Notes to the Financial Statements

12.4 During the financial year, the Group acquired Property, Plant & Equipment to the aggregate value of Rs. 361,999,991/- (2014 – Rs. 332,269,114/-) on cash basis.

12.5 Lands and buildings were revalued during the financial year 2014 by Messrs Chulananda Wellappili, an Independent Valuer. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2014. The surplus arising from the revaluation was transferred to a revaluation reserve.

12.6 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 583,697,750 Building 530,428,849

Total Carrying Amount 1,114,126,599

12.7 Depreciation charge for the year is included in the following line items in the Statement of Profit or Loss and Other Comprehensive Income:

2015 2014 Rs. Rs.

Cost of Sales 31,787,001 31,087,240 Other Expenses Excluding Amortisation of Software and Externally Acquired Intangible Assets 274,988,866 259,099,966

306,775,867 290,187,206

12.8 Gross Carrying Amounts – Company

Balance Additions/ Increase/ Disposals/ Balance as at Transfers (Decrease) Transfers as at 01.01.2015 in Revaluation to Revaluation 31.12.2015 Rs. Rs. Rs. Rs. Rs.

At Cost

Motor Vehicles 264,947,807 40,756,527 – (13,300,134) 292,404,200 Furniture and Equipment 202,112,393 9,438,476 – – 211,550,869 Plant and Machinery 237,431,893 19,616,623 – – 257,048,516 Culinary School Equipment 75,814 – – – 75,814 E.D.P. Equipment 196,109,276 40,594,631 – – 236,703,907 Shop Furniture 459,000,529 41,299,874 – (4,079,911) 496,220,493 Shop Equipment 534,946,551 88,398,114 – (5,460,926) 617,883,740 Improvements on Leasehold Premises 556,367,614 53,036,264 – (3,150,201) 606,253,678

2,450,991,877 293,140,509 – (25,991,170) 2,718,141,216

At Valuation

Freehold Land 665,668,900 – – – 665,668,900 Freehold Buildings 597,102,548 – – (64,328) 597,038,220 1,262,771,448 – – (64,328) 1,262,707,120

Total Gross Carrying Amount 3,713,763,325 293,140,509 – (26,055,498) 3,980,848,337

198 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

12.9 Depreciation and Impairment Losses – Company

Balance Charge for the Disposals/ Balance as at Year/ Transfers as at 01.01.2015 Transfers 31.12.2015 Rs. Rs. Rs. Rs.

Freehold Buildings – 24,745,764 (64,328) 24,681,436 Motor Vehicles 118,206,947 18,160,124 (5,569,731) 130,797,340 Furniture and Equipment 118,415,364 18,467,808 – 136,883,172 Plant and Machinery 143,216,941 18,377,394 – 161,594,335 Culinary School Equipment 75,814 – – 75,814 E.D.P. Equipment 125,973,080 23,811,190 – 149,784,270 Shop Furniture 151,012,358 58,698,564 (4,078,604) 205,632,318 Shop Equipment 187,726,011 65,936,378 (5,460,926) 248,201,463 Improvements on Leasehold Premises 265,445,899 60,465,440 (3,150,201) 322,761,138

Total Depreciation and Impairment Losses 1,110,072,413 288,662,663 (18,323,789) 1,380,411,287

12.10 Carrying Amounts

31st December 31st December 2015 2014 Rs. Rs.

At Cost 1,362,475,694 1,340,919,465 At Valuation 1,237,961,356 1,262,771,448

Total Carrying Amount of Property, Plant & Equipment 2,600,437,050 2,603,690,913

12.11 During the financial year, the Company acquired Property, Plant & Equipment to the aggregate value of Rs. 293,140,509/- (2014 – Rs. 324,276,810/-) on cash basis.

12.12 Lands and buildings were revalued during the financial year 2014 by Messrs Chulananda Wellappili, an Independent Valuer. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2014. The surplus arising from the revaluation was transferred to a revaluation reserve.

12.13 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 583,697,750 Building 530,428,849

Total Carrying Amount 1,114,126,599

12.14 Depreciation charge for the year is included in the following line items in the Statement of Profit or Loss and Other Comprehensive Income:

2015 2014 Rs. Rs.

Cost of Sales 31,787,001 31,087,240 Other Expenses Excluding Amortisation of Software and Externally Acquired Intangible Assets 256,875,662 244,848,488

288,662,663 275,935,728 Singer (Sri Lanka) PLC Annual Report 2015 199

Notes to the Financial Statements

12.15 Information on the Freehold Land and Buildings of the Company Location Extent Buildings Cost or Cost or Total Value Accumulated Net Book Net Book (Perches) (Square Revaluation of Revaluation of Depreciation Value Value as a Feet) Land Buildings % of Revalued Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Amount

Ambalantota Main Street, Ambalantota 6.6 1885 8,250,000 4,241,250 12,491,250 1,486,648 11,004,602 88 Balangoda Ratnapura Road, Balangoda 6.2 2080 13,950,000 6,630,000 20,580,000 4,801,525 15,778,475 77 Bandarawela Main Street, Bandarawela 3.69 1535 5,535,000 4,585,500 10,120,500 2,090,109 8,030,391 79 Borella D.S. Senanayaka Mawatha, Borella 4.84 1700 30,160,000 6,693,750 36,853,750 4,992,690 31,861,060 86 Chilaw Bazaar Street, Chilaw 13.05 4120 22,837,500 13,132,500 35,970,000 4,503,630 31,466,370 87 Colpetty No. 143, Galle Road, Colombo 03 3.35 1560 21,775,000 5,760,000 27,535,000 1,272,728 26,262,272 95 Eheliyagoda Ratnapura Road, Eheliyagoda 5.73 1660 7,162,500 4,728,922 11,891,422 2,156,907 9,734,515 82 Galle Main Street, Galle 2.84 2250 7,831,000 9,000,000 16,831,000 2,729,854 14,101,146 84 Gampaha Colombo Road, Gampaha 19.45 7870 40,207,500 26,758,000 66,965,500 8,231,510 58,733,990 88 Hikkaduwa Galle Road, Hikkaduwa 8.74 2400 13,110,000 6,930,000 20,040,000 2,441,294 17,598,706 88 Hingurakgoda Main Road, Hingurakgoda 15.25 2145 15,250,000 6,448,407 21,698,407 3,081,038 18,617,369 86 Kadawatha Kandy Road, Kadawatha 3.8 1150 6,050,000 3,320,625 9,370,625 1,309,044 8,061,581 86 Kandy – Mega Sirimavo Bandaranaike Mawatha, Kandy 9.55 12840 26,225,000 44,424,000 70,649,000 13,906,833 56,742,167 80 Katugastota Madawala Road, Katugastota 4.875 535 6,431,200 4,280,000 10,711,200 321,026 10,390,174 97 Kirindiwela Gampaha Road, Kirindiwela 8.1 2940 12,150,000 8,232,000 20,382,000 2,818,073 17,563,927 86 Kurunegala Bodhiraja Mawatha, Kurunegala 7.66 2230 19,150,000 5,510,000 24,660,000 2,124,946 22,535,054 91 Maharagama High Level Road, Maharagama 6.2 2700 18,600,000 9,180,000 27,780,000 2,846,773 24,933,227 90 Matara Anagarika Dharmapala Mawatha, Matara 10 3520 25,200,000 12,516,000 37,716,000 12,515,991 25,200,009 67 Middeniya Katuwana Road, Middeniya 8.25 2670 9,900,000 7,008,250 16,908,250 2,470,446 14,437,805 85 Mount Lavinia Galle Road, Mount Lavinia 7.5 1900 26,250,000 6,460,000 32,710,000 2,232,193 30,477,807 93 Mount Lavinia – Mega Galle Road, Mount Lavinia 20 15840 64,644,700 65,713,728 130,358,428 63,240,012 67,118,416 51

Nawalapitiya Kotmale Road, Nawalapitiya 5.25 2760 8,460,000 5,796,000 14,256,000 2,583,839 11,672,161 82 200 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Location Extent Buildings Cost or Cost or Total Value Accumulated Net Book Net Book (Perches) (Square Revaluation of Revaluation of Depreciation Value Value as a Feet) Land Buildings % of Revalued Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Amount Negombo Greens Road, Negombo 6 2040 16,500,000 5,533,500 22,033,500 2,127,674 19,905,826 90 Nuwara-Eliya Kandy Street, Nuwara-Eliya 4.65 1700 13,020,000 5,440,000 18,460,000 1,983,589 16,476,411 89 Panadura Galle Road, Panadura 6.15 2940 12,300,000 8,820,000 21,120,000 3,026,315 18,093,685 86 Piliyandala Gonamaditta Road, Piliyandala 1151.95 116410 137,322,000 281,070,663 418,392,663 72,035,294 346,357,369 83 Pussellawa Nuwara-Eliya Road, Pussellawa 12.43 3295 15,537,500 8,402,250 23,939,750 3,503,279 20,436,471 85 Ratnapura Colombo Road, Ratnapura 5.8 2735 11,600,000 8,136,625 19,736,625 2,979,566 16,757,059 85 Tangalle Matara Road, Tangalle 4.6 1285 9,200,000 1,606,250 10,806,250 198,240 10,608,010 98 Trincomalee North Coast Road, Trincomalee 12.12 2.184 11,160,000 2,850,000 14,010,000 685,121 13,324,879 95 Wellawatta Galle Road, Wellawatta, 4.6 2700 29,900,000 7,830,000 37,730,000 3,133,944 34,596,056 92

665,668,900 597,038,220 1,262,707,120 233,830,129 1,028,876,991

12.16 Measurement of Fair Values (i) Fair Value Hierarchy The fair value of property was determined by external independent property valuer having appropriate recognised 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 categorised 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

Contractor's Method: The contractor’s yyMarket value of land (Price per The estimated fair value would method works on the basis that a property’s Perch). Valuer has used a range of increase/(decrease) if- value can be equated to its cost. Valuer prices for respective lands based yyMarket value per perch was assess the cost of the building if it would on their recently transacted cost. higher (lower) have constructed in current year, and yyConstruction cost per square feet yyCost per square feet was deduct margin for usage of the property of a building. based on their year of construction. higher (lower) yyDepreciation rate for the usage yyDepreciation rate for usage Land value is based on the market prices of assets. lower (higher) of each land respectively. Value of property is considered as summation of land and building value. Singer (Sri Lanka) PLC Annual Report 2015 201

Notes to the Financial Statements

13. Intangible Assets

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Trade Mark (Note 13.1) 93,512,500 93,512,500 93,512,500 93,512,500 Software (Note 13.2) 109,947,160 103,701,697 60,352,093 65,468,610 Other Intangible Assets Externally Acquired (Note 13.3) 46,431,920 46,431,920 46,431,920 46,431,920

249,891,580 243,646,117 200,296,513 205,413,030

13.1 Trade Mark with Infinite Useful Life

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Cost As at the Beginning of the Year 93,512,500 93,512,500 93,512,500 93,512,500 As at the End of the Year 93,512,500 93,512,500 93,512,500 93,512,500 Less: Accumulated Impairment Loss – – – –

Net Carrying Amount 93,512,500 93,512,500 93,512,500 93,512,500

Trade mark consist of SISIL brand name Rs. 55,000,000/- (Note 13.4) and Unic brand name Rs. 38,512,500/- (Note 13.5) Please refer Notes 13.4 and 13.5 for SISIL and Unic impairment respectively.

13.2 Software

Consolidated Company 2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Cost As at the Beginning of the Year 239,183,361 219,234,490 176,459,809 167,628,753 Transferred from Property, Plant & Equipment – – – – Acquired/Incurred During the Year 24,969,529 19,948,871 7,529,398 8,831,056 As at the end of the Year 264,152,890 239,183,361 183,989,207 176,459,809

Amortisation As at the Beginning of the Year 135,481,664 114,665,324 110,991,199 95,040,249 Amortisation Charge for the Year 18,724,065 20,816,340 12,645,915 15,950,950 Transferred from Property, Plant & Equipment – – – – As at the End of the Year 154,205,729 135,481,664 123,637,114 110,991,199

Carrying Amount As at the Beginning of the Year 103,701,697 104,569,166 65,468,611 72,588,503 As at the End of the Year 109,947,160 103,701,697 60,352,093 65,468,610 202 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

13.3 Other Intangible Assets Externally Acquired

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Cost As at the Beginning of the Year 78,431,920 32,000,000 78,431,920 32,000,000 Acquired/Incurred During the year – 46,431,920 – 46,431,920 Capitalised During the year – – – – As at the End of the Year 78,431,920 78,431,920 78,431,920 78,431,920

Amortisation As at the Beginning of the Year 32,000,000 32,000,000 32,000,000 32,000,000 Amortisation Charge for the Year – – – – As at the end of the Year 32,000,000 32,000,000 32,000,000 32,000,000

Carrying Amount As at the Beginning of the Year 46,431,920 – 46,431,920 – As at the End of the Year 46,431,920 46,431,920 46,431,920 46,431,920

13.4 SISIL Trademark The Company had acquired the ‘SISIL’ Trademark 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 30 years and the Company intends to utilise and 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 December 2015:

Annual Sales Growth for the Next Five Years 10% Gross Margin 24% Discount Rate 10.50% Indefinite Growth Rate After Year 2019 2%

13.5 UNIC Trademark The Company had acquired the ‘UNIC’ Trademark in 2006 amounting Rs. 38,512,500/-. This trademark 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 December 2015:

Annual Sales Growth for the Next Five Years 10% Gross Margin 28% Discount Rate 10.50% Indefinite Growth Rate After Year 2019 2%

13.6 The Company took over the showrooms, retail operation of the Hayleys Electronic Retail Ltd. from 2nd January 2008 and Agencies of Phillips and Kenwood from Hayleys Electronic Ltd. for Rs. 32 million. The entire purchase consideration was treated as Goodwill and is amortised over the determined useful life of 5 years commencing from the period beginning 1st January 2009. Singer (Sri Lanka) PLC Annual Report 2015 203

Notes to the Financial Statements

13.7 SONY Distribution Rights The Company had acquired the distribution rights of brand ‘SONY’ in 2014 amounting to Rs. 46,431,920/-. This assets are now carried at cost subject to annual impairment test and carrying amount as at 31st December 2015 was Rs. 46,431,920/-. This distribution right considered to have an indefinite useful life as the Company is intending to use the distribution right for the foreseeable future. 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 December 2015:

Annual Sales Growth for the Next Five Years 10% Gross Margin 24% Discount Rate 10.50% Indefinite Growth Rate After Year 2019 2%

Consolidated Company

31st December 31st December 31st December 31st December 2015 2014 2015 2014 Rs. Rs. Rs. Rs. 13.8 Amortisation Charge for the Year Amortisation of Software 18,724,065 20,816,340 12,645,916 15,950,950

18,724,065 20,816,340 12,645,916 15,950,950

14. Investment in Subsidiaries – Company

Country of No. of No. of Carrying Market Carrying Market Incorporation Shares Shares Value Value Value Value 31st December 31st December 31st December 31st December 31st December 31st December 2015 2014 2015 2015 2014 2014 Rs. Rs Rs. Rs.

Singer Finance (Lanka) PLC Sri Lanka

Investment on 1st January 132,931,054 132,931,054 982,241,596 3,203,638,401 982,241,596 1,855,293,332

Investment Made During the Year – – – –

Investment as at 31st December 132,931,054 132,931,054 982,241,596 3,203,638,401 982,241,596 2,252,690,026

Singer Digital Media (Pvt) Ltd. Sri Lanka

Investment on 1st January 500,000 500,000 5,000,000 221,038,698 – –

Investment Made During the Year – – – – 5,000,000 –

Investment as at 31st December 500,000 500,000 5,000,000 221,038,698 5,000,000 94,382,793.17

Singer Business School (Pvt) Ltd. Sri Lanka

Investment on 1st January – – – – –

Investment Made During the Year 500,000 – 5,000,000 – –

Investment as at 31st December 500,000 – 5,000,000 – –

Total Investment in Subsidiary – – – – – –

Total Investment in Subsidiaries 992,241,596 3,424,677,100 987,241,596 2,347,072,819

14.1 Company has invested 100% of the initial capital of Singer Business School (Pvt) Ltd., amounting to Rs. 5 million which engage in Educational Services. 204 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

15. Equity Accounted Investees 15.1 Equity Accounted Investees – Consolidated

Holding Consolidated Share of Consolidated % Carrying Profit/(Loss) Carrying Amount Net of Amount 31st 31st 31st Dividends 31st December December December Received for December 2015 2014 2015 the Year 2014 Rs. Rs. Rs.

Non-Quoted

Reality Lanka Ltd. (Note 15.2) 40 40 54,831,464 2,042,497 55,188,967 Telshan Network (Pvt) Ltd. 23.56 23.56 – – –

Total Non-Quoted Investments in Equity Accounted Investees 54,831,464 55,188,967

Net Carrying Amount of Investments in Equity Accounted Investees 54,831,464 55,188,967

15.2 Share of Equity Accounted Investee Retained Profit

Consolidated

31st December 31st December 2015 2014 Rs. Rs.

Reality Lanka Ltd.

Balance Brought Forward 7,188,967 5,225,789 Current Year Share of Profit/(Loss) 2,042,497 1,963,178 Less: Dividends Received – Gross (2,400,000) – 6,831,464 7,188,967 Total Share of Equity Accounted Investees Retained Profits 6,831,464 7,188,967 Cost of Equity Accounted Investees (Note 15.3) 48,000,000 48,000,000 Total Carrying Amount of Investment in Equity Accounted Investees 54,831,464 55,188,967

15.3 Movement of Investment – Cost

Consolidated Increase/ Consolidated Balance as at (Decrease) Balance as at 31st December in Investments 31st December 2014 2015 Rs. Rs. Rs.

Reality Lanka Ltd. 48,000,000 – 48,000,000 Telshan Network (Pvt) Ltd. (Note 15.6) – – – 48,000,000 – 48,000,000 Singer (Sri Lanka) PLC Annual Report 2015 205

Notes to the Financial Statements

15.4 Summarised Financial Information of Equity Accounted Investees

2015 2014 Rs. Rs.

Percentage of Ownership Interest 40% 40% Non-Current Assets 207,101,500 207,101,500 Current Assets 4,666,922 1,393,778 Non-Current Liabilities – (6,273,015) Current Liabilities (74,689,763) (64,249,845) Net Assets (100%) 137,078,659 137,972,418

Group Share of Net Assets (40%) 54,831,463 55,188,967

Revenue 7,434,350 5,140,800 Change in Fair Value of Investment Property – 6,607,868 Administrative Expense (342,250) (281,910) Income Tax Expense (1,985,858) (6,558,820) Profit for the year 5,106,242 4,907,938

Group Share of Revenue (40%) 2,042,497 1,963,175

15.5 Equity Accounted Investees – Company

Carrying Directors’ Carrying Directors’ No. of Shares Amount Valuation Amount Valuation 2015 2014 2015 2015 2014 2014 Rs. Rs. Rs. Rs.

Non-Quoted Telshan Network (Pvt) Ltd. (Note 15.6) 2,000,000 2,000,000 – – – – Reality Lanka Ltd. 4,800,000 4,800,000 48,000,000 54,831,464 48,000,000 55,188,967 Total Investments in Non-Quoted Equity Accounted Investees 48,000,000 54,831,464 48,000,000 55,188,967

Net Carrying Amount of Investment in Equity Accounted Investees 48,000,000 54,831,464 48,000,000 55,188,967

15.6 Investment in Telshan Network (Pvt) Ltd. amounting to Rs. 20,000,000/- had been written off since it carries negative net assets position.

16. Other Investments 16.1 Non-Current Financial Assets

Consolidated Company

No. of Shares Amount Amount 2015 2014 2015 2014 2015 2014 Rs. Rs. Rs. Rs. a. Available-for-Sale Financial Assets Non-Quoted Equity Investment Lanka Ltd. 1,665,000 1,665,000 17,020,000 17,020,000 17,020,000 17,020,000 Credit Information Bureau of Sri Lanka 100 100 41,300 41,300 – –

17,061,300 17,061,300 17,020,000 17,020,000 206 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Consolidated Company

No. of Shares Amount Amount 2015 2014 2015 2014 2015 2014 Rs. Rs. Rs. Rs. b. Held-to-Maturity Financial Assets Investments in Debentures (Fixed rate 14%, unsecured, redeemable, listed Debenture redeemable on 10th September 2016) – – 599,283,000 149,283,000

Total Other Investments 17,061,300 17,061,300 616,303,000 166,303,000

16.2 Short-Term Investments a. Held-to-Maturity Financial Assets Investment in Treasury Bills 606,011,463 653,380,275 – –

Further details relating to fair valuation in carrying value is providing in Note 35 to these Financial Statements.

17. Inventories

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Raw Materials 245,590,000 242,340,000 245,590,000 242,340,000 Work-in-Progress 86,666,000 33,410,000 86,666,000 33,410,000 Finished Goods 6,506,542,194 4,937,946,075 6,154,551,950 4,597,342,585 Supplies and Parts 486,956,001 404,285,186 486,627,359 404,285,186 Goods-in-Transit 206,962,890 218,830,187 206,962,890 218,830,188 URP 7,532,717,085 5,836,811,448 7,180,398,199 5,496,207,959 Less: Impairment of Inventories (548,685,705) (315,280,395) (500,318,048) (315,280,395) Unrealised Profit on Inventory (61,819,296) (43,028,018) – – Consignment Inventories (3,053,292) (2,712,218) (3,053,292) (2,712,218)

Total Inventories 6,919,158,792 5,475,790,817 6,677,026,859 5,178,215,346

Raw materials, consumable and change in work-in-progress and finished goods are recognised at cost of sales by the Group and Company to the amount of Rs. 26,604,861,906/- (2014 – Rs. 19,265,536,074/-) and Rs. 23,531,268,883/- (2014 – Rs. 18,664,273,624/-) respectively.

18. Loans Due from Related Parties

Consolidated Company

2015 2014 2015 2014 Relationship Rs. Rs. Rs. Rs.

Reality Lanka Ltd. Associate Company 65,890,881 65,134,631 65,890,881 65,134,631

Singer Digital Media (Pvt) Ltd. Subsidiary – – 756,747,316 651,933,918

Singer Finance (Lanka) PLC Subsidiary – – 300,000,000 –

65,890,881 65,134,631 1,122,638,197 717,068,549 Singer (Sri Lanka) PLC Annual Report 2015 207

Notes to the Financial Statements

18.1 Reality Lanka Ltd Company granted this facility based on the fund requirement of Reality Lanka Ltd. and will be recovered on demand.

Digital Media (Pvt) Ltd Company granted this facility based on the fund requirement of Singer Digital Media (Pvt) Ltd. and will be recovered on demand. Interest is charged based on the lowest AWPLR prevail in the respective month + 0.25%.

Singer Finance (Lanka) PLC Company granted this facility based on the fund requirement of Singer Finance PLC and will be recovered on demand. Interest is charged based on the lowest AWPLR prevail in the respective month + 0.25%.

19. Trade and Other Receivables 19.1 Non-Current

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Hire Debtors 1,775,778,961 2,960,649,432 1,034,472,113 1,018,829,160 Less: Deferred Profit on Hire Sales (276,653,626) (545,825,486) (166,963,799) (172,793,425) 1,499,125,335 2,414,823,946 867,508,314 846,035,735

Lease Rental Receivables Gross Installment in Lease 5,843,498,844 2,903,284,692 – – Rental Received in Advance (514,248) (921,061) – – 5,842,984,596 2,902,363,631 Less: Unearned Income (1,109,001,049) (562,541,165) – – 4,733,983,547 2,339,822,466 – –

Loan Debtors Consumer and Personal Loans 237,358,038 327,201,970 Rental Received in Advance (319,089) (5,101,919) Less: Unearned Loan Interest Income (31,772,631) (48,168,122) 205,266,318 273,931,929 – –

Rent Paid in Advance 535,938,702 498,712,004 535,938,702 498,712,004 Other Receivables 1,564,000 1,290,000 1,564,000 1,290,000 Loans to Employees (Note 19.4) 246,826,844 249,618,983 215,571,281 218,637,341 784,329,546 749,620,987 753,073,983 718,639,345

7,222,704,746 5,778,199,328 1,620,582,297 1,564,675,080 208 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

19.2 Current

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Hire Debtors 6,355,157,524 6,117,963,729 5,683,520,321 4,817,608,784 Rental Received in Advance (108,972) (143,203) – – Less: Deferred Profit on Hire Sales (1,128,866,598) (1,238,929,485) (968,407,730) (852,486,350) Provision for Impairment (Note 19.3) (67,975,323) (92,659,009) (32,861,711) (37,576,524) 5,158,206,631 4,786,232,032 4,682,250,880 3,927,545,910

Lease Rental Receivable Gross Installment in Lease 3,635,029,927 2,374,375,369 – – Less: Unearned Income (1,081,230,773) (697,858,695) – – Provision for Impairment (Note 19.3) (111,417,122) (129,875,011) – – 2,442,382,032 1,546,641,663 – –

Loan Debtors Consumer and Personal Loans 1,186,586,141 1,154,743,565 – – Less: Unearned Loan Interest Income (160,365,805) (201,458,974) – – FD Loans 36,108,569 63,873,506 – – Net Receivable 1,062,328,905 1,017,158,097 – – Less: Provision for Impairment (Note 19.3) (42,905,357) (35,524,073) – – 1,019,423,548 981,634,024 – –

Trade Debtors Trade Receivables 3,644,233,847 2,522,653,617 2,835,167,462 2,097,342,764 Less : Provision for Impairment (Note 19.3) (110,750,517) (59,371,589) (86,047,407) (59,371,589) 3,533,483,330 2,463,282,028 2,749,120,055 2,037,971,175

Other Debtors Advance and Other Receivables 1,272,618,033 1,345,004,731 1,144,176,973 1,330,778,373 Less : Provision for Impairment (19.3) (451,829,649) (435,855,329) (451,829,649) (435,855,329) 820,788,384 909,149,402 692,347,324 894,923,044

Shipping Guarantees 19,483,107 – 19,483,108 – Prepayments 165,066,080 172,781,199 90,259,195 94,073,634 Loans to Company Employees (Note 19.4) 112,085,927 103,609,164 92,320,549 89,400,485 296,635,114 276,390,363 202,062,852 183,474,119

13,270,919,039 10,963,329,512 8,325,781,111 7,043,914,248

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs. 19.3 Provision for Impairment – Hire Debtors Movement Balance as at the Beginning of the Year 92,659,009 70,663,320 37,576,524 35,052,000 Provided During the Period 23,297,303 39,342,861 33,229,556 (1,930,740) Write-off During the Period (47,980,989) (17,347,172) (37,944,369) 4,455,264 Balance as at nd of the Period 67,975,323 92,659,009 32,861,711 37,576,524 Singer (Sri Lanka) PLC Annual Report 2015 209

Notes to the Financial Statements

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Provision for Impairment – Lease Rental Receivable Movement Balance as at the Beginning of the Year 129,875,011 97,465,205 – Provided During the Period 27,038,321 132,747,779 Write-off During the Period (45,496,210) (100,337,973) Balance as at End of the Period 111,417,122 129,875,011 – –

Provision for Impairment – Loan Debtors Movement Balance as at the Beginning of the Year 35,524,073 30,079,487 – Provided During the Period 25,273,058 24,767,421 Write-off During the Period (17,891,774) (19,322,835) Balance as at end of the Period 42,905,357 35,524,073 – –

Provision for Impairment – Trade Debtors Movement Balance as at the Beginning of the Year 59,371,589 30,468,192 59,371,589 30,468,192 Provided During the Period 53,544,994 30,900,000 28,841,884 30,900,000 Write-off during the Period (2,166,066) (1,996,603) (2,166,066) (1,996,603) Balance as at end of the Period 110,750,517 59,371,589 86,047,407 59,371,589

Provision for Impairment – Other Debtors Movement Balance as at the Beginning of the Year 435,855,329 315,482,535 435,855,329 315,482,535 Provided During the Period 131,559,418 121,030,943 131,559,418 121,030,943 Write-off during the Period (115,585,099) (658,148) (115,585,099) (658,148) Balance as at end of the Period 451,829,648 435,855,329 451,829,649 435,855,329

19.4 Loans to Company Employees

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Movement Balance as at the Beginning of the Year 353,228,147 333,685,044 308,037,826 291,546,506 Loans Granted During the Year 130,511,377 114,683,000 109,870,460 97,440,860 Less: Repayments (124,826,753) (95,139,897) (110,016,456) (80,949,540) Balance as at the End of the Year 358,912,771 353,228,147 307,891,830 308,037,826 Due Within One Year 112,085,927 103,609,164 92,320,549 89,400,485

Due After One Year 246,826,844 249,618,983 215,571,281 218,637,341 210 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

19.5 Maturity Analysis of Lease and Loans Consolidated – 2015

Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years 2015 Rs. Rs. Rs. Rs. Rs. Rs.

Hire Debtors 1,670,296,174 3,487,910,457 1,431,403,645 67,721,690 – 6,657,331,966 Lease Rental Receivables 591,225,632 1,851,156,401 3,395,121,421 1,328,996,435 9,865,692 7,176,365,580 Loans Receivables 453,509,633 565,913,914 185,670,710 18,893,584 702,024 1,224,689,865

2,715,031,439 5,904,980,772 5,012,195,776 1,415,611,709 10,567,716 15,058,387,411

Consolidated - 2014

Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years 2014 Rs. Rs. Rs. Rs. Rs. Rs.

Hire Debtors 1,248,165,740 3,538,066,292 2,055,148,312 359,675,634 – 7,201,055,978 Lease Rental Receivables 402,433,468 1,144,208,195 1,928,839,223 408,709,140 2,274,102 3,886,464,129 Loans Receivables 501,900,298 479,733,726 249,993,357 23,938,572 – 1,255,565,954

2,152,499,506 5,162,008,213 4,233,980,892 792,323,346 2,274,102 12,343,086,061

Company - 2015

Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years 2015 Rs. Rs. Rs. Rs. Rs. Rs.

Hire Debtors 1,534,886,912 3,147,363,969 867,508,313 – – 5,549,759,194

1,534,886,912 3,147,363,969 867,508,313 – – 5,549,759,194

Company - 2014

Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years 2014 Rs. Rs. Rs. Rs. Rs. Rs.

Hire Debtors 1,315,604,833 2,611,941,077 846,035,735 – – 4,773,581,645

1,315,604,833 2,611,941,077 846,035,735 – – 4,773,581,645

20. Amounts Due from Related Parties

Consolidated Company

2015 2014 2015 2014 Relationship Rs. Rs. Rs. Rs.

Singer Finance PLC Subsidiary – – 98,474,822 63,473,324 Singer Digital Media (Pvt) Ltd. Subsidiary – – 135,782,100 45,483,281

– – 234,256,922 108,956,605

Singer (Sri Lanka) PLC Annual Report 2015 211

Notes to the Financial Statements

21. Cash and Cash Equivalents Components of Cash and Cash Equivalents

21.1 Favourable Cash and Cash Equivalents Balances

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Cash and Bank Balances 910,169,077 1,176,933,623 876,593,992 914,488,142

21.2 Unfavourable Cash and Cash Equivalent Balances Bank Overdrafts (Note 26.1 and 26.6) (798,320,065) (348,945,469) (616,957,314) (306,831,291)

Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement 111,849,012 827,988,154 259,636,678 607,656,851

22. Stated Capital

At the Issued for Issued for At the Beginning Cash During Non-Cash End of of the Year the Year Consideration the Year 01.01.2015 31.12.2015 Number Number Number Number

Number of Shares – Ordinary Shares 125,209,610 – – 125,209,610 125,209,610 – – 125,209,610

Rupees – Ordinary Shares 626,048,050 – – 626,048,050 626,048,050 – – 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 a meeting of the Company.

22.1 Shares Held by Group Companies The shares of the Company held by the Group Companies are as follows:

2015 2014 Number Number

Singer (Sri Lanka) B.V. 86% 107,812,850 107,812,850 212 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

23. Capital Reserves

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs. Revaluation Reserve

Revaluation Reserve (Note 23.1) 857,580,019 870,358,087 857,580,019 870,358,087 857,580,019 870,358,087 857,580,019 870,358,087

23.1 Revaluation Reserve Balance as at the Beginning of the Year 870,358,087 762,033,802 870,358,087 762,033,802 Revaluation During the Year – 134,237,410 – 134,237,410 Deferred Tax on Revaluation Surplus – (14,634,553) – (14,634,553) Realisation on Revaluation Surplus (12,778,068) (11,278,571) (12,778,068) (11,278,571)

Balance as at the End of the Year 857,580,019 870,358,088 857,580,019 870,358,088

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.

24. Statutory Reserves

Consolidated

2015 2014 Rs. Rs. (a) Reserve Fund

Reserve Fund (Note 24.1) 73,317,972 53,884,660

73,317,972 53,884,660

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.

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% Singer (Sri Lanka) PLC Annual Report 2015 213

Notes to the Financial Statements

Accordingly, Company 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%.

Consolidated

2015 2014 Rs. Rs. (b) Investment Fund

Investment Fund (Note 24.2) – 82,242,927 – 82,242,927

Total Statutory Reserves 73,317,972 136,127,587

From 1st January 2012 onwards, Bank transferred 8% of the profit calculated for the payment of value added tax and 5% of profit before tax calculated for payment of income tax purposes to the investment fund account. The operations of this fund was ceased with effect from 1st October 2014.

Consolidated

2015 2014 Rs. Rs. 24.1 Reserve Fund Balance as at the Beginning of the Year 53,884,660 40,454,818 Transfer of Surplus During the Year 19,433,312 13,429,842 Balance as at the End of the Year 73,317,972 53,884,660

24.2 Investment Fund Balance as at the Beginning of the Year 82,242,927 87,991,727 Transfers During the Year (82,242,927) (5,748,800) Balance as at the End of the Year – 82,242,927

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs. 25. Revenue Reserves Summary

(a) General Reserve (Note 25.1) 2,700,000,000 2,600,000,000 2,700,000,000 2,600,000,000 2,700,000,000 2,600,000,000 2,700,000,000 2,600,000,000

(b) Retained Earnings (Note 25.2) 2,028,454,981 1,242,674,626 912,778,716 482,301,207 2,028,454,981 1,242,674,626 912,778,716 482,301,207

Revenue Reserves 4,728,454,981 3,842,674,626 3,612,778,716 3,082,301,207 214 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

25.1 General Reserve The general reserve which is a revenue reserve represents the amounts set aside by the Directors for general application.

The movement of general reserve is as follows:

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

At the Beginning of the Year 2,600,000,000 2,500,000,000 2,600,000,000 2,500,000,000 Transferred from Retained Earnings 100,000,000 100,000,000 100,000,000 100,000,000 At the End of the Year 2,700,000,000 2,600,000,000 2,700,000,000 2,600,000,000

25.2 Retained Earnings

Singer (Sri Lanka) PLC 912,778,716 482,301,207 912,778,716 482,301,207 Equity Accounted Investees (Note 15.2) 6,831,464 7,188,967 – – Subsidiary Companies 1,174,846,962 763,033,322 – – Consolidation Adjustment on Profit in Inventory (44,509,895) (30,977,181) Gain on Dilution of Equity Holding of Singer Finance (Lanka) PLC 176,573,748 176,573,748 – – Acquisition of Subsidiary with Non-Controlling Interest (4,810,872) (4,810,872) – – Retained Earnings Attributable to Non-Controlling Interest (Note 25.3) (193,255,142) (150,631,563) – – 2,028,454,981 1,242,677,628 912,778,716 482,301,207

25.3 Retained Earnings Attributable to Non-Controlling Interest

Consolidated

2015 2014 Rs. Rs.

At the Beginning of the Year 150,631,563 104,573,536 Profit Attributable to Minority Shareholders - for the Year 83,126,428 67,119,509 Dividend for Minority Shareholders - for the Year (40,502,849) (21,061,482)

At the End of the Year 193,255,142 150,631,563 Singer (Sri Lanka) PLC Annual Report 2015 215

Notes to the Financial Statements

25.4 Reconciliation for Non-Controlling Interest

Singer Finance (Lanka) PLC

31st December 2015 2015 2014 Rs. Rs.

NCI Percentage (%) 19.60 19.60 Non-Current Assets 5,774,110,926 4,373,662,586 Current Assets 4,789,958,579 4,369,683,340 Non-Current Liabilities (5,886,175,964) (5,819,877,477) Current Liabilities (2,205,293,007) (668,355,795) Net Assets 2,472,600,535 2,255,112,654

Carrying Amount of NCI 484,584,032 441,960,453

Revenue 1,875,359,355 1,792,189,044 Profit 424,874,478 344,042,174 Other Comprehensive Income (720,075) (1,563,423)

Total Comprehensive Income 424,154,403 342,478,751

Profit Allocated to NCI 83,267,550 67,425,911 Other Comprehensive Income allocated to NCI 83,126,428 67,119,480 Cash Flow from Operating Activities (467,512,797) 751,739,869 Cash Flow from Investment Activities (113,944,588) (233,592,027) Cash Flow from Financing Activities 852,449,342 (529,334,361)

Net Increase in Cash and Cash Equivalents 270,991,958 (11,186,519)

26. Interest-Bearing Loans and Borrowings 26.1 Loans and Borrowings – Consolidated

2015 2015 2015 2014 2014 2014 Amount Amount Total Amount Amount Total Repayable Repayable Repayable Repayable Within 1 Year After 1 Year Within 1 Year After 1 Year Rs. Rs. Rs. Rs. Rs. Rs.

Debentures (Note 26.2) 1,316,666,667 6,234,050,333 7,550,717,000 2,000,000,000 3,500,717,000 5,500,717,000 Bank Loans (Note 26.3 a,b) 4,837,576,713 1,882,800,000 6,720,376,713 2,571,126,875 750,000,000 3,321,126,875 Bank Overdrafts (Note 21.2) 798,320,065 – 798,320,065 348,945,469 – 348,945,469 Commercial Papers (Note 26.4) – – – 1,750,000,000 – 1,750,000,000 6,952,563,445 8,116,850,333 15,069,413,778 6,670,072,344 4,250,717,000 10,920,789,344 Interest Payable 137,467,527 – 137,467,527 201,570,590 – 201,570,590 Transaction Cost (46,438,787) (24,943,455) (71,382,242) (27,521,509) (24,120,928) (51,642,437)

7,043,592,185 8,091,906,878 15,135,499,063 6,844,121,425 4,226,596,072 11,070,717,497 216 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

26.2 Debentures – Consolidated

As at New Redemption As at 01.01.2015 Issues 31.12.2015 Rs. Rs. Rs. Rs.

Fixed rate 15.50%. Senior, unlisted, unsecured, rated debentures redeemable on 09.05.2015 59,000,000 59,000,000 Six month Gross TB +2.75%. Senior, unlisted, unsecured, rated debentures redeemable on 09.05.2015 340,000,000 340,000,000 Fixed rate 15.50%. Senior, unlisted, unsecured, rated debentures redeemable on 24.07.2015 1,000,000 1,000,000 Fixed rate 17.00%. Senior, unlisted, unsecured, rated debentures redeemable on 30.09.2015 644,000,000 644,000,000 Fixed rate 17.00%. Senior, unlisted, unsecured, rated debentures redeemable on 30.09.2015 356,000,000 356,000,000 Fixed rate 14.50%. Senior, rated, unsecured, redeemable, listed debentures redeemable on 30.05.2015 600,000,000 600,000,000 Fixed rate 14.50%. Senior, rated, unsecured, redeemable, listed debentures redeemable on 30.05.2016 900,000,000 900,000,000 Fixed rate 8.25%. Senior, rated, unsecured, redeemable, listed debentures redeemable on 22.12.2017 1,500,000,000 1,500,000,000 Fixed rate 8.60%. Senior, unlisted, Unsecured, redeemable, Rated Debentures redeemable on 10.09.2016 2,929,980,000 2,929,980,000 Variable 7.53%. Senior, unlisted, Unsecured, redeemable Rated Debentures redeemable on 07.06.2018 70,020,000 70,020,000 Fixed rate 14.00%. Senior, unlisted, Unsecured, Redeemable, Rated Debentures redeemable on 10.09.2016 416,666,667 416,666,667 Fixed rate 14.25% Senior, unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 10.09.2017 416,666,667 416,666,667 Fixed rate 14.50% Senior, unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 10.09.2018 416,666,666 416,666,666 Fixed rate 9.95% Senior, unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 18.06.2020 1,500,000,000 1,500,000,000 Less: Investment in debentures in Subsidiary (149,283,000) (599,283,000)

5,500,717,000 4,500,000,000 2,000,000,000 7,550,717,000

26.3 Bank Loans – Consolidated

Balance as at Loans Repayment As at 01.01.2015 Obtained 31.12.2015 Rs. Rs. Rs. Rs. (a) Movement of Bank Loans Bank Loans 2,571,126,876 13,852,067,739 11,585,617,902 4,837,576,713

2,571,126,876 13,852,067,739 11,585,617,902 4,837,576,713

The bank loans repayable within one year consist of short term loans obtained from Hatton National Bank, Union Bank, National Development Bank, Nations Trust Bank, Commercial Bank, Sampath Bank, Deutsche Bank, Seylan Bank, Standard Chartered Bank, and Bank of Ceylon. These loans bears interest rates between 7.1% to 7.8% and due for settlement at maturity. Singer (Sri Lanka) PLC Annual Report 2015 217

Notes to the Financial Statements

(b) Bank Loan Repayable after One Year

Company Lender/Rate Repayment Security 2015 2014 of Interest (p.a.) Rs. Rs.

Singer (Sri Lanka) PLC Commercial Bank AWPLR Rate reviewed by quarterly At maturity No assets pledged 1,000,000,000 – Singer (Sri Lanka) PLC DFCC Bank AWPLR Rate reviewed by annually At maturity No assets pledged 750,000,000 750,000,000 1,750,000,000 750,000,000 Singer Finance Seylan Bank Monthly Hire Purchase (Lanka) PLC Fixed Rate 25.75% repayment receivable/Lease Debtors 132,800,000 – 132,800,000 –

1,882,800,000 750,000,000

26.4 Commercial Papers – Consolidated

As at New Redemption As at 01.01.2015 Issues 31.12.2015 Rs. Rs. Rs. Rs.

Commercial Papers 1,750,000,000 – 1,750,000,000 –

1,750,000,000 – 1,750,000,000 –

26.5 Bank Facilities – Consolidated

2015 2014 Utilised Total Facility Utilised Total Facility Rs. Rs. Rs. Rs.

Overdraft 798,320,065 2,510,000,000 348,945,469 2,665,000,000 Term Loans 1,882,800,000 1,950,000,000 750,000,000 950,000,000 Short-Term Loans 4,837,576,713 8,989,500,000 2,571,126,875 9,751,400,000

Total Debt Facility 7,518,696,778 13,449,500,000 3,670,072,344 13,366,400,000 Guarantees 406,291,029 430,000,000 210,172,019 550,000,000 Letter of Credit 3,331,291,451 7,250,000,000 2,643,750,504 2,525,000,000

Total Debt and Other Facilities 11,256,279,258 21,129,500,000 6,523,994,867 16,441,400,000

26.6 Interest-Bearing Loans and Borrowings – Company

2015 2015 2015 2014 2014 2014 Amount Amount Total Amount Amount Total Repayable Repayable Repayable Repayable Within 1 Year After 1 Year Within 1 Year After 1 Year Rs. Rs. Rs. Rs. Rs. Rs.

Debentures (Note 26.7) 900,000,000 4,500,000,000 5,400,000,000 2,000,000,000 2,400,000,000 4,400,000,000 Bank Loans (Note 26.8 a, b) 4,462,176,713 1,750,000,000 6,212,176,713 2,501,054,958 750,000,000 3,251,054,958 Bank Overdrafts (Note 21.2) 616,957,314 – 616,957,314 306,831,291 – 306,831,291 Commercial Papers (Note 26.9) – – – 1,750,000,000 – 1,750,000,000 5,979,134,027 6,250,000,000 12,229,134,027 6,557,886,249 3,150,000,000 9,707,886,249 Interest payable 136,248,948 136,248,948 197,648,321 197,648,321 Transaction Cost (44,323,570) – (44,323,570) (27,521,509) (3,362,845) (30,884,354)

6,071,059,405 6,250,000,000 12,321,059,405 6,728,013,061 3,146,637,155 9,874,650,216 218 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

26.7 Debentures – Company

As at New Redemption As at 01.01.2015 Issues 31.12.2015 Rs. Rs. Rs. Rs.

Fixed rate 15.50%. Senior, unlisted, unsecured, rated debentures redeemable on 09.05.2015 59,000,000 59,000,000 Six month Gross TB +2.75% Senior, unlisted, unsecured, rated debentures redeemable on 09.05.2015 340,000,000 340,000,000 Fixed rate 15.50%. Senior, unlisted, unsecured, rated debentures redeemable on 24.07.2015 1,000,000 1,000,000 Fixed rate 17.00%. Senior, unlisted, unsecured, rated debentures redeemable on 30.09.2015 644,000,000 644,000,000 Fixed rate 17.00%. Senior, unlisted, unsecured, rated debentures redeemable on 30.09.2015 356,000,000 356,000,000 Fixed rate 14.50%. Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 30.05.2015 600,000,000 600,000,000 Fixed rate 14.50%. Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 30.05.2016 900,000,000 900,000,000 Fixed rate 8.25%. Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 22.12.2017 1,500,000,000 1,500,000,000 Fixed rate 8.60%. Senior,Unlisted, Unsecured, Redeemable, Rated Debentures, Redeemable on 07.06.2018 2,929,980,000 2,929,980,000 Variable 7.53%. Senior,Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 07.06.2018 70,020,000 70,020,000 4,400,000,000 3,000,000,000 2,000,000,000 5,400,000,000

26.8 Bank Loans – Company

As at Obtained Repayment As at 01.01.2015 31.12.2015 Rs. Rs. Rs. Rs. (a) Movement of Bank Loans

Bank Loans – Short-Term 2,501,054,958 12,174,867,739 10,213,745,984 4,462,176,713 2,501,054,958 12,174,867,739 10,213,745,984 4,462,176,713

(b) Bank Loan Repayable after One Year

Lender/Rate of Interest (p.a.) Repayment Security 2015 2014 Rs. Rs.

Commercial Bank @ AWPLR At maturity No assets pledged 1,000,000,000 – DFCC Bank @ AWPLR At maturity No assets pledged 750,000,000 750,000,000 1,750,000,000 750,000,000

These short-term Bank loans has drawn under short-term facilities and will be settled within 1 year from the Reporting date.

26.9 Commercial Papers – Company

As at New Redemption As at 01.01.2015 Issues 31.12.2015 Rs. Rs. Rs. Rs.

Commercial Papers 1,750,000,000 – 1,750,000,000 –

1,750,000,000 – 1,750,000,000 – Singer (Sri Lanka) PLC Annual Report 2015 219

Notes to the Financial Statements

26.10 Bank Facilities – Company

2015 2014 Utilised Total Facility Utilised Total Facility Rs. Rs. Rs. Rs.

Overdraft 616,957,314 2,060,000,000 306,831,291 2,240,000,000 Term Loans 1,750,000,000 1,750,000,000 750,000,000 750,000,000 Short-Term Loans 4,462,176,713 8,489,500,000 2,501,054,957 9,251,400,000 Total Debt Facility 6,829,134,027 12,299,500,000 3,557,886,248 12,241,400,000

Guarantees 406,291,029 430,000,000 210,172,019 550,000,000 Letter of Credit 2,750,043,317 6,250,000,000 2,137,016,876 2,525,000,000

Total Debt and Other Facilities 9,985,468,373 18,979,500,000 5,905,075,143 15,316,400,000

27. Deferred Tax Assets

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs. 27.1 Deferred Tax Assets Balance as at beginning of the Year 65,235,228 9,481,679 59,596,117 25,858,276 Origination and Reversal of Timing Differences – Recognised in Statement of Comprehensive Income (Note 10.2) 69,447,444 53,954,437 59,927,209 44,022,573 Deferred Tax Impact on Revaluation 4,969,248 (10,248,732) 4,969,248 (10,284,732) Unrealised Profit (Note 10.2) 5,261,558 12,047,845 – –

Balance as at the end of the Year 144,913,478 65,235,229 124,492,574 59,596,117

27.2 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.

The movement in deferred tax assets during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows: Deferred tax is computed using the tax rate which was enacted by the end of the Reporting period which is 28%.

27.3.1 Consolidated

2015 2014 Assets Liabilities Assets Liabilities Rs. Rs. Rs. Rs.

(a) Composition of Deferred Tax Assets Property, Plant & Equipment – 332,397,237 – 301,372,015 Intangible Assets – 18,900,292 – 11,902,883 Lease Rentals 27,586,428 56,325,554 Inventories 170,941,391 – 98,913,476 – Provision on assets 176,958,835 – 228,426,726 – Deferred benefit obligations 136,210,270 – 107,495,479 – Provision for Warranty 39,686,939 523,797,435 378,883,957 434,835,681 369,600,452

Net Deferred Tax 144,913,478 – 65,235,229 – 220 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

27.3.2 Company

2015 2014 Assets Liabilities Assets Liabilities Rs. Rs. Rs. Rs.

Composition of Deferred Tax Assets Property, Plant & Equipment – 318,811,502 – 292,474,921 Intangible Assets – 10,513,338 – 5,938,800 Inventories 140,089,053 – 86,865,630 – Provision on Assets 159,806,855 – 169,617,962 – Deferred Benefit Obligations 128,010,876 – 101,526,246 – Provision for Warranty 25,910,631 453,817,414 329,324,840 358,009,838 298,413,721

Net Deferred Tax 124,492,574 – 59,596,117 –

28. Defined Benefit Obligations

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Present Value of Unfunded Gratuity 486,465,251 383,912,062 457,181,699 362,593,372

Provision for Retiring Gratuity At the beginning of the Year 383,912,062 320,032,869 362,593,735 305,782,867 Transfers to Subsidiary – (401,082) Actuarial (Gain)/Loss on Obligation 41,244,046 13,830,287 40,252,056 11,658,866 Current Service Cost 34,464,452 31,022,978 30,046,553 27,621,961 Interest on Obligation 40,272,903 33,603,451 38,030,020 32,107,201 499,893,463 398,489,585 470,521,282 377,170,895 Benefit Paid (13,428,212) (14,577,523) (13,339,583) (14,577,523)

At the end of the Year 486,465,251 383,912,062 457,181,699 362,593,372

The 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 December 2015, the gratuity liability was actuarial valued under the Projected Unit Credit (PUC) method by a professionally qualified actuary firm Messrs Actuarial and Management Consultants (Private) Limited. The required accounting provision of the Company as at 31st December 2015 has been determined based on the recommendation on their report.

Following key assumptions were made in arriving at the above figures:

2015 2014

(a) Rate of Discount 10.5% p.a. (net of tax) 10.5% p.a. (net of tax) (b) Salary Increment Rate Year 1 10% 10% Year 2+ 9% 9% (c) Retirement Age

Other than Factory Other than Factory General Staff General Staff

Males 60 years 60 years Females 60 years 60 years Singer (Sri Lanka) PLC Annual Report 2015 221

Notes to the Financial Statements

(d) Assumptions regarding future mortality are based on A67/70 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 so recognised is included in selling and administrative expenses in the Income Statement. Expense is recognised in the following line items in the Income Statement.

Consolidated Company Rs. Rs.

Cost of Sales 7,542,376 7,542,376 Selling and Administration Expenses 67,194,824 60,534,405

28.1 Sensitivity Analysis Reasonably possible changes at the Reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below:

Consolidated Company 31st December 2015 31st December 2015 Increase Decrease Increase Decrease Rs. Rs. Rs. Rs.

Discount rate (1% movement) (33,052,410) 37,709,360 (29,953,080) 34,001,825 Future Salary (1% movement) 39,267,178 (34,936,830) 35,469,464 (31,721,751)

29. Trade and Other Payables

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Trade Payables 2,051,508,915 2,253,162,876 1,631,823,262 1,667,709,746 Value Added Tax Payable 22,760,311 MSPS Payable 54,896,578 37,908,999 54,896,578 37,684,334 ETF Payable 13,141,105 9,480,639 13,141,105 9,480,639 Advances Received from Customers 254,706,761 292,308,523 254,706,761 292,308,523 Accrued Expenses 1,221,276,925 858,139,627 1,028,892,425 791,399,556 Other Payables 652,851,241 294,048,607 245,105,116 149,912,240 Warranty Provisions 116,892,732 72,974,992 116,892,732 72,974,992

4,388,034,568 3,818,024,263 3,345,457,979 3,021,470,030

29.1 Warranty provisions have been recognised for expected warranty claims on products sold by the Group.

30. Deferred Revenue

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Balance as at beginning of the year 235,333,686 20,878,350 235,333,686 20,878,350 Amounts recognised during the year (110,789,206) (30,505,936) (110,789,206) (30,505,936) Amounts transferred during the Year 193,915,422 244,961,272 193,915,422 244,961,272

Balance as at the end of the Year 318,459,902 235,333,686 318,459,902 235,333,686 222 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

30.1 Deferred Revenue includes deferred service fee on air Conditioners, Sanasuma Insurance Scheme and amount deferred on motorbike services income as at 31st December 2015.

31. Dividend Payable

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Unclaimed Dividends 17,515,071 15,491,340 17,515,071 15,491,340

17,515,071 15,491,340 17,515,071 15,491,340

32. Dividends

Company

2015 2014 Rs. Rs.

Ordinary Shares Interim Dividend 2015 Final Dividend 2014 Rs. 2.50 (2013 - Rs. 2.50) 313,024,025 313,024,025

313,024,025 313,024,025

33. Amounts Due to Related Parties

Consolidated Company

2015 2014 2015 2014 Relationship Rs. Rs. Rs. Rs. 33.1 Trade Singer Industries (Ceylon) PLC Related Entity 97,299,467 109,281,339 97,299,467 109,281,339 Regnis (Lanka) PLC Related Entity 216,631,070 147,001,739 216,631,070 45,411,490 Regnis Appliances (Pvt) Ltd. Related Entity 140,272,029 45,411,490 140,272,029 147,001,739 Singer Digital Media (Pvt) Ltd. Subsidiary Company 317,541,622 276,041,640

454,202,566 301,694,568 771,744,188 577,736,208

33.2 Non-Trade Singer Asia Ltd. Affiliate Company 122,214,032 90,246,223 122,214,032 90,246,223 Singer Business School Subsidiary Company – – 3,025,099 –

122,214,032 90,246,223 125,239,131 90,246,223 Singer (Sri Lanka) PLC Annual Report 2015 223

Notes to the Financial Statements

34. Other Financial Liabilities Other Financial Liabilities are the customer deposits at Singer Finance PLC which is carried at amortised cost.

Consolidated

2015 2014 Rs. Rs.

Balance as at beginning of the year 4,494,641,970 3,768,229,719 New Deposits 421,394,714 1,691,524,460 Capitalisation of Interest 82,994,409 217,825,326 4,999,031,093 5,677,579,505 Repaid Deposits (1,631,198,966) (1,182,937,535) Balance as at the end of the Year 3,367,832,127 4,494,641,970 Payable within One Year 2,722,824,531 3,696,149,556

Payable after One Year 645,007,596 798,492,414

34.1 Deposit Classification Fixed Deposits at Amortised Cost 2,572,772,541 3,478,711,702 Savings 795,059,586 1,015,930,268

3,367,832,127 4,494,641,970

35. Financial Instruments Financial Risk Management Overview The Group has exposure to the following risks from its use of financial instruments: yyCredit risk yyLiquidity risk yyMarket risk yyOperational 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. 224 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

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 installment credit/hire purchase which is an integral part of the business of the Group.

The Group’s exposure to credit risk on installment 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.

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. The collective loss allowance is determined, based on historical data of payment statistics for similar financial assets.

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 is US Dollars. The currency risk is the 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. Singer (Sri Lanka) PLC Annual Report 2015 225

Notes to the Financial Statements

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:

Requirements for the appropriate segregation of duties, including the independent authorisation of transactions. yyRequirements for the reconciliation and monitoring of transactions. yyCompliance with regulatory and other legal requirements. yyDocumentation of controls and procedures. yyRequirements for the periodic assessment of operational risks faced and the adequacy of controls and procedures to address the risks identified. yyRequirements for the reporting of operational losses and proposed remedial action. yyDevelopment of contingency plans. yyTraining and professional development. yyEthical and business standards. yyRisk 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.

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

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Trade and other Receivables 20,493,632,786 16,741,528,838 9,946,363,408 8,608,589,326 Cash at Bank 910,169,077 1,176,933,623 876,593,992 914,488,142 Amounts due from Related Parties 65,890,881 110,388,278 1,356,895,119 826,025,155 Other Financial Assets 623,072,763 670,441,575 1,656,544,596 1,206,544,596 Deposits at Bank 85,344,286 110,388,278 – –

22,178,100,793 18,809,680,591 13,836,397,115 11,555,647,219

The Maximum exposure to credit risk for receivables at the Reporting date by type of counterparty was:

Carrying Amount – Consolidated Carrying Amount - Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Retail Customers 15,058,387,411 4,808,339,523 5,549,759,194 4,773,581,644 Wholesale Customers 3,533,483,330 2,037,971,174 2,749,120,055 2,037,971,174 Others 1,901,753,045 9,895,218,141 1,647,484,159 1,797,036,508

Total 20,493,623,786 16,741,528,838 9,976,363,408 8,608,589,326 226 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Impairment losses The aging of receivables at the Reporting date was:

Group

Gross Impairment Gross Impairment 2015 2015 2014 2014 Rs. Rs. Rs. Rs.

Not past due 16,174,319,027 (4,158,450) 13,600,536,629 (2,667,653) Past due 0 - 30 Days 2,024,021,098 (3,229,153) 1,551,580,075 (2,236,870) Past due 31 - 120 Days 1,375,439,178 (15,887,654) 1,581,677,665 (38,094,991) Past due more than 120 Days 1,704,722,451 (761,602,711) 761,019,482 (710,285,497)

21,278,501,754 (784,877,968) 17,494,813,851 (753,285,011)

Company

Gross Impairment Gross Impairment 2015 2015 2014 2014 Rs. Rs. Rs. Rs.

Not past due 9,077,414,489 – 8,412,259,736 – Past due 0 - 30 Days 266,773,864 – 166,794,623 – Past due 31 - 120 Days 47,197,710 (7,880,710) 59,069,934 (29,534,967) Past due more than 120 Days 1,125,716,112 (562,858,056) 503,268,475 (503,268,475)

10,517,102,175 (570,738,766) 9,141,392,768 (532,803,442)

The movement in the allowance for impairment in respect of receivables during the year was as follows:

Consolidated Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Balance at the Beginning of the Year 753,285,011 544,158,740 532,823,442 381,022,727 Impairment Loss Recognised 260,713,094 357,699,531 193,610,858 158,910,730 Amounts Written off (229,120,137) (148,573,260) (155,695,534) (7,110,015)

Balance at the end of the Year 784,877,968 753,285,011 570,738,766 (532,823,442)

Total impairment for the period resulted form following counterparties.

Group Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Impairment for Hire Debtors 67,975,323 92,659,009 32,861,711 37,576,524 Impairment for Lease Rental Receivables 111,417,122 129,875,011 – – Impairment for Loan Debtors 42,905,357 35,524,072 – – Impairment for Trade Debtors 110,750,517 59,371,589 86,047,407 59,371,589 Impairment for Other Debtors 451,829,649 435,855,329 451,829,649 435,855,329

784,877,968 753,285,011 570,738,766 532,823,442

A committee of respective functional managers has established a credit policy under which each new customer is analysed individually for credit worthiness before the groups 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. Singer (Sri Lanka) PLC Annual Report 2015 227

Notes to the Financial Statements

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 and associate companies which controlled by the same board of Directors of Singer Sri Lanka PLC.

Liquidity Risk The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Group Carrying Contractual 6 months 6-12 1-2 2-5 More than Amount Cash Flows or Less Months Years Years 5 Years 31st December 2015 Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Secured Bank Loans 508,200,000 549,388,000 349,700,000 54,936,000 106,776,000 37,976,000 – Unsecured Bank Loans 6,212,176,712 6,477,998,425 4,462,176,710 – 859,499,798 1,156,321,918 – Debenture Bond Issues 7,550,717,000 7,893,146,864 953,987,671 582,666,514 2,728,895,662 3,627,597,017 – Trade and Other Payables 4,388,034,568 4,388,034,568 4,167,921,999 220,112,569 – – – Public Deposits 3,367,832,127 3,557,851,860 330,451,919 2,543,740,247 670,494,150 22,716,583 10,448,962 Bank Overdraft 798,320,065 659,071,492 659,071,492 – – – – Amounts due to related Parties - Trade 454,202,566 454,202,566 454,202,566 – – – – Amounts due to related Parties - Non-Trade 122,214,032 122,214,032 122,214,032 – – – –

23,401,697,072 24,121,907,847 11,499,726,388 3,401,455,330 4,365,665,610 4,844,611,517 10,448,962

Carrying Contractual 6 months 6-12 1-2 2-5 More than Amount Cash Flows or Less Months Years Years 5 Years 31st December 2014 Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Secured Bank Loans 70,071,918 74,446,918 74,446,918 – – – –

Unsecured Bank Loans 3,251,054,957 3,459,572,158 1,202,562,158 – 1,349,653,836 907,356,164 –

Debenture Issue 5,500,717,000 6,966,671,347 416,960,658 – 1,657,654,753 4,892,055,936

Commercial Papers 1,750,000,000 1,776,387,671 1,776,387,671 – – – –

Trade and Other Payables 3,696,149,556 3,818,044,264 423,392,201 3,394,652,063

Public Deposits 4,494,641,970 4,928,946,637 2,805,101,812 1,213,333,985 629,234,294 272,804,830 8,471,716

Bank Overdraft 348,945,469 348,945,469 348,945,469 Amounts due to Related Parties – Trade 301,694,568 346,767,482 346,767,482 Amounts due to Related Parties – Non-Trade 90,246,223 90,246,223 90,246,223

19,503,521,661 21,810,028,169 7,484,810,591 4,607,986,048 3,636,542,883 6,072,216,930 8,471,716 228 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Company

Carrying Contractual 6 months 6 - 12 1-2 2-5 More than Amount Cash Flows or Less Months Years Years 5 Years 31st December 2015 Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities Unsecured Bank loans 6,212,176,712 6,477,998,425 4,462,176,710 – 859,499,798 1,156,321,918 Unsecured Bond Issues 5,400,000,000 6,329,084,688 953,987,671 – 1,747,500,000 3,627,597,017 Trade and other Payables 3,345,457,979 3,345,457,979 3,345,457,979 – Bank Overdraft 616,957,314 616,957,314 616,957,314 Amounts due to Related Parties - Trade 771,744,188 771,744,188 771,744,188 – Amounts due to Related Parties - Non-Trade 125,239,131 125,239,131 125,239,131 –

16,471,575,324 17,666,481,724 10,275,562,992 – 2,606,999,798 4,783,918,935

Carrying Contractual 6 months 6 - 12 1-2 2-5 More than Amount Cash Flows or Less Months Years Years 5 Years 31st December 2014 Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial Liabilities

Unsecured bank loans 3,251,054,957 3,459,572,158 1,202,562,158 – 1,349,653,836 907,356,164 – Debenture Issue 4,400,000,000 5,235,309,219 416,960,658 – 1,142,331,438 3,676,017,123 – Commercial Papers 1,750,000,000 1,776,387,671 1,776,387,671 – – – – Trade ad other payables 3,021,470,030 3,021,470,030 – 3,201,470,030 – – – Bank overdraft 306,831,291 306,831,291 306,831,291 – – – – Amounts due to related parties - Trade 722,095,423 722,095,423 722,095,423 Amounts due to related parties - Non-Trade 90,246,223 90,246,223 90,246,223

13,721,697,924 14,791,912,015 4,515,083,424 3,201,470,030 2,491,985,274 4,583,373,288 –

The outflows disclosed in the above table represent the contractual undiscounted cashflows relating to 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. 31st December 2015 31st December 2014 USD CNY EURO USD CNY EURO

Trade payables 11,508,376 48,280,380 14,197 15,298,077 17,529 Net Exposure 11,508,376 48,280,380 14,197 15,298,077 17,529

* USD – United States Dollars * CNY – Chinese Yuan

The following significant exchange rates have been applied.

Average Rate Year End Sopt Rate Rs. 2015 2014 2015 2014

USD 137.93 130.56 146.18 133.37 CNY 22.38 21.32 22.38 21.32 Euro 153.88 173.47 160.47 163.11 Singer (Sri Lanka) PLC Annual Report 2015 229

Notes to the Financial Statements

Sensitivity analysis A reasonably possible strengthening (weakening) of the USD, CNY or EURO against all other currencies at 31st December 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 ' 0000 Rs ' 0000 Rs ' 0000 Rs ' 0000

2015 USD (5% movement) (84,115) 84,115 (60,563) 60,563 CYN (5% movement) (54,026) 54,026 (38,899) 38,899 EURO (5% movement) (114) 114 (82) 82

2014 USD (5% movement) (102,015) 102,015 (73,451) 73,451 CYN (5% movement) – – – – EURO (5% movement) (143) 143 (103) 103

Interest Rate Risk Profile At the Reporting date, the interest rate profile of the Group's interest-bearing financial instruments was:

Group Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Fixed Rate Instruments

Financial Assets 15,749,784,461 7,201,055,978 5,549,759,194 4,773,581,644 Financial Liabilities (14,017,235,202) (13,752,069,323) (7,479,134,027) (8,617,886,248)

1,732,549,259 (6,551,013,345) (1,929,374,833) (3,844,304,604)

Variable Rate Instruments

Financial Assets – – – – Financial Liabilities (4,807,423,258) (770,948,650) (4,750,000,000) (1,090,000,000)

(4,807,423,258) (770,948,650) (4,750,000,000) (1,090,000,000)

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 show below. This analysis assume 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 December 2015

Variable rate instruments (48,074) 48,074 (34,613) 34,613 Cash flow sensitivity (Net) (48,074) 48,074 (34,613) 34,613

31st December 2014 Variable rate instruments (7,709) 7,709 (5,551) 5,551 Cash flow sensitivity (Net) (7,709) 7,709 (5,551) 5,551 230 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

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

Note Available- Held-to- Loans and Other Total Carrying Fair Value Fair Value for-Sale Maturity Receivables Financial Value Measurement Liabilities Level 31st December 2015 Rs. Rs. Rs. Rs. Rs. Rs.

Investment in Equity Securities 16.1.a 17,061,300 – – – 17,061,300

Investment in Debentures 16.1.b – 599,283,000 – – 599,283,000

Loans due from Related Parties 18 – – 65,890,881 – 65,890,881

Hire Purchase Receivables 19 – – 6,657,331,966 – 6,657,331,966 –

Lease Debtors 19 7,176,365,580 7,176,365,580

Loan Debtors 19 1,224,689,865 1,224,689,865

Trade Debtors 19 3,533,483,330 3,533,483,330

Other Receivables 19 1,901,753,045 1,901,753,045

Amounts due from Related Parties 20 – – – – – –

Cash and Cash Equivalents 21.1 – – 910,169,077 – 910,169,077 –

Investment in Treasury Bills 16.2 – – 606,011,463 – 606,011,463 569,323,674 Level 2

Deposits with Banks – – 85,344,286 – 85,344,286 –

17,061,300 599,283,000 22,161,039,493 – 22,777,383,793 –

Debentures 26 7,550,717,000 7,550,717,000 7,330,140,833 Level 2

Bank Loans 26 6,720,376,713 6,720,376,713

Bank Overdraft 21 798,320,065 798,320,065

Trade and Other Payables 29 4,388,034,568 4,388,034,568

Dividend Payable 31 17,515,071 17,515,071

Amounts due to Related Parties 33 576,416,598 576,416,598

Fixed Deposits 34 3,367,832,127 3,367,832,127

Security Deposits 851,794,462 851,794,462

Income Tax Payable 350,294,932 350,294,932

24,621,301,536 24,621,301,536 Singer (Sri Lanka) PLC Annual Report 2015 231

Notes to the Financial Statements

Note Available- Held-to- Loans and Other Financial Total Fair Fair Value for-Sale Maturity Receivables Liabilities Carrying Value Value Measurement Level 31st December 2014 Rs. Rs. Rs. Rs. Rs. Rs.

Investment in Equity Securities 16.1.a 17,061,300 – 17,061,300

Investment in Debentures 16.1.b – – Loans due from Related Parties 18 65,134,631 65,134,631 Hire Purchase Receivables 19 7,201,055,978 7,201,055,978 Lease Debtors 19 3,886,464,128 3,886,464,128 Loan Debtors 19 1,255,565,953 1,255,565,953 Trade Debtors 19 2,463,282,027 2,463,282,027 Other Receivables 19 1,935,160,751 1,935,160,751 Amounts due from Related Parties 20 45,072,914 45,072,914 Cash and Cash Equivalents 21.1 1,176,933,623 1,176,933,623 Investment in Treasury Bills 16.2 653,380,279 – 653,380,279 Deposits with Banks 110,388,278 110,388,278

17,061,300 653,380,279 18,139,058,283 – 18,809,499,862

Debentures 26 5,500,717,000 5,500,717,000 5,653,403,955 Level 2

Bank Loans 26 3,321,126,875 3,321,126,875 Bank Overdraft 21 348,945,469 348,945,469 Commercial Papers 26 1,750,000,000 1,750,000,000 Trade and Other Payables 29 3,818,024,263 3,818,024,263 Dividend Payable 31 15,491,340 15,491,340 Amounts Due to Related Parties 33 301,694,970 301,694,970 Fixed Deposits 34 4,494,641,970 4,494,641,970 Security Deposits 732,124,371 732,124,371 Income Tax Payable 212,821,799 212,821,799

20,495,587,655 20,495,587,655

Company Note Available- Held-to- Loans and Other Financial Total Carrying Fair Fair Value for-Sale Maturity Receivables Liabilities Value Value Measurement Level 31st December 2015 Rs. Rs. Rs. Rs. Rs. Rs. .

Investment in Equity Securities 16.1.a 17,020,000 17,020,000 Investment in Debentures 16.1.b 599,283,000 599,283,000 554,140,700 Level 2 Loans due from Related Parties 18 65,890,881 65,890,881 Trade and Other Receivables 19 8,235,521,916 8,235,521,916 Amounts due from Related Party 20 234,256,922 234,256,922 Cash and Cash Equivalents 21 876,593,992 876,593,992 Investment in Treasury Bills 16 – – – Deposits with Banks – – –

17,020,000 599,283,000 9,412,263,711 – 10,028,566,711 Debentures 26.70 – – – 5,400,000,000 5,400,000,000 5,191,153,995 Level 2 Bank Loans 26.80 – – – 6,212,176,713 6,212,176,713 Bank Overdraft 21.20 – – – 616,957,314 616,957,314 Commercial Paper 26.90 – – – – – Trade and Other Payables 29.00 – – – 3,345,457,979 3,345,457,979 Dividend Payable 31.00 – – – 17,515,071 17,515,071.01 Amounts due to Related Parties 33.00 – – – 896,983,318 896,983,318 Security Deposits – – – 851,794,462 851,794,462 Income Tax Payable – – – 133,791,489 133,791,489 – – – 17,474,676,346 17,474,676,346 232 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

Note Available- Held-to- Loans and Other Financial Total Carrying Fair Fair Value for-Sale Maturity Receivables Liabilities Value Value Measurement Level 31st December 2014 Rs. Rs. Rs. Rs. Rs. Rs. .

Investment in Equity Securities 16.1.a 17,020,000 17,020,000 Investment in Debentures 16.1.b 149,283,000 149,283,000 153,272,834 Level 2 Loans due from Related Parties 18 65,134,631 65,134,631 Trade and Other Receivables 19 8,608,589,329 8,608,589,329 Amounts due from Related Parties 20 253,315,820 253,315,820 Cash and Cash Equivalents 21 914,488,142 914,488,142 Investment in Treasury Bills 16 – – Income Tax Receivable – – Deposits with Banks – – 17,020,000 149,283,000 9,841,527,922 – 10,007,830,922

Debentures 27 4,400,000,000 4,400,000,000 4,420,239,769 Level 2 Bank Loans 27 3,251,054,957 3,251,054,957 Bank Overdraft 21 306,831,291 306,831,291 Commercial Paper 27 1,750,000,000 1,750,000,000 Trade and Other Payables 29 3,021,400,030 3,021,400,030 Dividend Payable 31 15,491,340 15,491,340 Amounts due to Related Parties 33 812,341,646 812,341,646 Fixed Deposits 34 – Security Deposits 732,124,371 732,124,371 Income Tax Payable 109,209,836 109,209,836

– – – 14,398,453,472 14,398,453,472 4,420,239,769

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.

(I) Fair Value Versus Carrying Amounts The following table show the valuation techniques used in measuring Level 02 fair values , as well as significant unobservable inputs used:

Type Valuation Technique Significant Unobservable Inputs

Debentures Discount Cash Flows Forecasted Annual Cash inflows and outflows. Treasury Bills Discount Cash Flows Forecasted Annual Cash inflows and outflows.

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. Singer (Sri Lanka) PLC Annual Report 2015 233

Notes to the Financial Statements

Group Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

Total Liabilities 25,607,131,663 21,474,816,714 18,457,063,016 15,138,644,213 Less: Cash and Cash Equivalents (910,169,077) (1,176,933,623) (876,593,992) (914,488,142) Adjusted Net Debt 24,696,962,586 20,342,956,009 17,580,469,024 14,413,588,205 Total Equity 6,769,985,055 5,917,168,803 5,096,406,784 4,578,707,344 Net Debt to Equity Ratio 3.65 3.44 3.45 3.15

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 of Singer Finance PLC The company’s CAR remained well above the minimum ratio prescribed by the CBSL despite substantial increase in loans and advances.

Core Capital Ratio Total Capital Ratio 2015 2014 2015 2014 % % % %

31st December 24.15 25.95 24.15 25.95 30th September 25.68 26.10 25.68 26.10 30th June 27.18 24.85 27.18 24.85 31st March 24.96 23.53 24.96 23.53

36. Commitments and Contingencies – Group/Company 36.1 Financial Contingencies Documentary Credits effected for foreign purchases amounting to Group and Company respectively Rs. 3,331,291,451/- (2014 – Rs. 2,643,750,504/-) and Rs. 2,750,043,317/- (2014 – Rs 2,137,016,876/-).

36.2 Capital Commitments There were no significant capital commitments which have been approved or contracted for by the Company/ Subsidiary as at Balance Sheet date except for following:

Operating lease commitment as at 31st December 2015 is as follows: Within One Year - Rs. 75.2 million Between One to Five Years - Rs. 168.0 million Over Five Years - Rs. 317.6 million

36.3 Assets Pledged The Company has given negative pledge over the Company's total assets, except immovable assets for the following banks over the Loans and Overdrafts having a carrying value of Rs. 2,763.5 million as at the year end: yyCommercial Bank of Ceylon PLC yySeylan Bank PLC yySampath Bank PLC yyNations Trust Bank PLC yyDeutsche Bank AG yyNational Development Bank PLC yyDFCC Vardhana Bank PLC yyPeople's Bank yyMCB Bank yyUnion Bank 234 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

36.4 Contingencies (a) Guarantees given to banks and other lending institutions on behalf of Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC and Singer Digital Media (Pvt) Ltd. amounts to Rs. 75 million, Rs. 455.5 million and Rs. 50 million respectively. (b) The Company has provided bank guarantees amounting to Rs. 197.2 million to the Director General of Customs to clear imports 2008 to 2015. The bank guarantee related to alleged additional duty payable on imports, is being contested by the Company in Courts. The Court of Appeal made the order that the Director General of Customs to continue with the investigation. The Company being aggrieved by the decision of the Court of Appeal, has filed an appeal which is pending before Supreme Courts. 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) Singer Finance (Lanka) PLC has provided guaranties to its Fixed Deposit Holders amounting to Rs. 1,350,000/-, holding deposit holders' Fixed Deposits mounting to Rs. 1,558,492/- as Security.

37. Events after the Reporting Period 37.1 Acquisition of Subsidiary (I) Acquisition of Singer Industries (Ceylon) PLC Subsequent to obtaining all regulatory clearances, on 04th January 2016, the Group acquired 83.55% of the shares and voting interests in Singer Industries (Ceylon) PLC and obtaining control of Singer Industries.

Consideration Transferred Singer (Sri Lanka) PLC has paid Rs. 206/- per share for the acquisition and paid the consideration in cash. Total consideration is amounted to Rs. 664,070,355/-.

Identifiable Assets Acquired and Liabilities Assumed

As of the acquisition date following net assets were acquired by Singer (Sri Lanka) PLC:

Property, Plant & Equipment 613,339,700 Investment Property 126,000,000 Investment in Equity Accounted Investee 61,685,397 Other Receivables 609,246 Inventories 152,333,800 Trade and Other Receivables 101,023,661 Prepayments 13,500,633 Income Tax Recoverable 4,204,902 Investments in Fixed Deposits 100,838,788 Cash and Cash Equivalents 520,521 Deferred Tax Liabilities (3,877,490) Retirement Benefit Obligations (48,869,228) Trade and Other Payables (99,697,737) Provisions (9,188,328) Dividend Payable (844,956) Interest Bearing Loans and Borrowings (22,656,993) Total Net Assets Acquired 988,921,916 Singer (Sri Lanka) PLC Annual Report 2015 235

Notes to the Financial Statements

Goodwill arising from the acquisition has been recognised as follows:

Based on the acquired net Assets, Gain on Bargain purchase arises in Singer Industries (Ceylon) PLC acquisition. Total Net Assets as of the Acquisition Date 988,921,916 - Non Controlling Interest (162,673,451) Net Assets Attributable to Singer (Sri Lanka) PLC 826,248,465 Consideration Paid (664,070,355) Gain on Bargain Purchase 162,178,110

(II) Acquisition of Regnis (Lanka) PLC On 24th February 2016, the Group acquired 58.29% of the shares and voting interests in Regnis (Lanka) PLC and obtaining control of the Regnis.

Consideration Transferred Singer (Sri Lanka) PLC has paid Rs. 110/- per share for the acquisition and paid the consideration in cash. Total consideration is amounted to Rs. 722,530,710/-.

Identifiable Assets Acquired and Liabilities Assumed

As of the acquisition date following net assets has acquired by Singer (Sri Lanka) PLC:

Property, Plant & Equipment 624,311,428 Intangible Assets 534,271 Investment in Subsidiary 150,000,000 Available-for-Sale Financial Asset 20,561,799 Other Receivables 2,889,267 Inventories 505,132,026 Trade and Other Receivables 255,535,690 Other Taxes Recoverable 4,847,550 Prepayments 6,253,819 Cash at Bank and in Hand 6,292,703 Deferred Tax Liabilities (63,618,770) Employee Benefits (74,522,947) Loans and Borrowings (34,825,789) Trade and Other Payables (186,894,497) Provisions (32,740,300) Current Tax Liabilities (68,709,625) Dividends Payable (2,244,237) Total Net Assets Acquired 1,112,802,388

Goodwill arising from the acquisition has been recognised as follows: Based on the acquired net Assets, Goodwill arises in Regnis (Lanka) PLC acquisition. Total Net Assets as of the Acquisition Date 1,112,802,388 - Non-Controlling Interest (464,108,036) Net Assets Attributable to Singer (Sri Lanka) PLC 648,694,352 Consideration Paid 722,530,710 Goodwill on Acquisition 73,836,358 236 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

37.2 Final Dividend – 2015 Directors have proposed the payment of final dividend of Rs. 4.20 per share amounting to Rs. 525.9 million for the year ended 31st December 2015 which will be declared by the Annual General Meeting to be held on 31st March 2016. Company had the required solvency in accordance with Section 57 of Companies Act No. 07 of 2007. In accordance with Sri Lanka Accounting Standard No. 10 on “Events after reporting period”, the proposed final dividend has not been recognised as a liability at the Reporting date.

The dividend will be paid on 11th April 2016.

38. Related Party Transactions 38.1 Parent and Ultimate Controlling Party The Company's Parent Undertaking is Singer (Sri Lanka) B.V. The Company's Ultimate Parent Undertaking and controlling party is Retail Holdings N.V.

38.2 Related Party Transactions (a) During the year, the Company had the following transactions with its Parent Companies: Singer Asia Ltd. – (Intermediate Parent) 2015 2014 Rs. million Rs. million

Royalty Expenses 370.1 301.5 Royalty Payable Balance as at the Reporting date 130.6 98.1

Singer Asia Holdings B.V. (Intermediate Parent) Royalty paid to Singer Asia Ltd. through Singer Asia Holdings B.V.

38.2 (b) Transaction with Subsidiary Companies

Name of the Company Nature of 2015 2014 and Relationship Transaction Rs. million Rs. million

Singer Finance (Lanka) PLC Sales financed through Singer Finance (Lanka) PLC 412.8 312.2 Withdrawal of Rental Collections from Singer ( Sri Lanka ) PLC 1,661.6 1,501.7 Interest Income/(Expense) 2.3 12.9 Dividend Received – Gross 166.2 86.4 Cash Collection through Singer (Sri Lanka) PLC 2,313.4 2,018.1 Expenses Paid 249.6 208.0 Administrative Fee Charged/(Paid) – 0.1 Collecting Commission paid through Singer (Sri Lanka) PLC 21.3 19.3 Purchase of Assets 2.5 0.9 Rent Reimbursed 13.9 11.8 Royalty paid through Singer (Sri Lanka) PLC 12.7 19.2 Loans Obtained during the Period 300.0 – Balance Receivable 98.5 63.4 Loan Receivable 300.0 –

Singer Digital Media (Pvt) Ltd. Purchases 1,897.0 681.3 Expenses Reimbursed 95.3 – Interest Charged 62.6 11.0 Royalty paid through 39.2 8.0 Loan Granted 1,267.6 651.9 Loan Settlements 1,140.3 – Capital Invested – 5.0 Balance Receivable – Loans 756.7 651.9 Balance Payable – Trade 3,175 276.0 Balance Receivable – Non Trade 135.8 45.5 Corporate Guarantee Given 50.0 50.0 Singer (Sri Lanka) PLC Annual Report 2015 237

Notes to the Financial Statements

Name of the Company Nature of 2015 2014 and Relationship Transaction Rs. million Rs. million Singer Business School (Pvt) Ltd Services Provided 5.2 – Expenses Reimbursed 2.6 – Capital Invested 5.0 – Balance Payable 3.0 –

38.2 (c) Transactions with Associate Companies (a) During the year Company had following transactions with its Associate Companies:

Name of the Company Nature of 2015 2014 and Relationship Transaction Rs. million Rs. million

Reality (Lanka) Ltd. Loans Receivable 65.9 65.1 Rent Expense 4.9 5

(b) Telshan Network (Pvt) Ltd. is an Associate company of Singer (Sri Lanka) PLC, with whom Singer (Sri Lanka) PLC or Singer Finance (Lanka) PLC had no transactions.

38.2 (d) Transactions with Related Companies

Name of the Company Nature of 2015 2014 and Relationship Transaction Rs. million Rs. million

Singer Industries (Ceylon) Purchases PLC (Affiliate Company) 837.5 817.1 Corporate Guarantee given 75.0 75.0 Lease Rental Paid 4.2 3.8 Net Finance Charges 0.4 0.4 Trade Creditor Settled 848.4 814.0 Expenses Reimbursed 5.0 1.6 Balance Payable 97.3 109.3 Regnis (Lanka) PLC Purchases (Affiliate Company) 3,186.0 2,566.5 Sales Taxes 425.8 366.6 Corporate Guarantees given 455.5 455.5 Interest Expense 2.0 – Non Trade Settlement 25.0 50.0 Trade Credit Settled 3,522.4 2,941.5 Expenses Reimbursed 49.8 61.3 Fixed Assets Purchases 3.5 0.1 Transfer of Staff Loan 0.9 – Balance Payable 216.6 45.4

Regnis Appliances (Pvt) Ltd. Purchases (Affiliate Company) 933.7 608.1 Trade Settlements 961.7 711.7 Sales Taxes 123.9 86.9 Expenses paid 11.8 3.9 Finance charged 2.8 0.9 Non-Trade Settlement 8.3 2.7 Balance Payable 140.3 147.0 238 2015 Annual Report Singer (Sri Lanka) PLC

Notes to the Financial Statements

The amount receivable from or payable by above related parties as at 31st December 2015, are disclosed in Notes 18, 20 and 33 respectively.

38.2 (e) The Company is authorised to use the name “SINGER” as part of its corporate name so long as Singer Asia Ltd. continues to hold, directly or indirectly, at least a majority of the voting stock of the Company.

38.3 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.

2015 2014 Rs. million Rs. million

(i) Transactions with Key Management Personnel or Close Family Members Deposit kept by Key Management Personnel of their close family members at Singer Finance (Lanka) PLC 22.4 83.2

Group Company

2015 2014 2015 2014 Rs. Rs. Rs. Rs.

(ii) Compensation of Key Management Personnel

Short-Term Employee Benefits 78,893,535 46,950,840 64,940,930 38,643,674 Post-Employment Benefits Paid 9,261,000 7,865,000 9,261,000 7,865,000

In addition to their salaries the Company provides non-cash benefits to the Key Management Personnel and contributes to a post-employment defined benefit plan on their behalf. Directors' emoluments are disclosed in Note 9 to the Financial Statements.

(iii) No transactions were carried out during the year with the parties/entities in which Key Management Personnel or their close family members have control, joint control or significant influence. Singer (Sri Lanka) PLC Annual Report 2015 239

Notes to the Financial Statements

39. Subsidiaries/Associate and Related Companies Company Name Principal Activity Directors

Singer Finance (Lanka) PLC yy Leasing Dr. Saman Kelegama Singer – Interest 80.4% yy Hire Purchasing Mr. J.A. Setukavalar yy Lending and Accepting Deposits Mrs. Marina Tharmaratnam Mr. R.S. Wijeweera Mr. Gavin J. Walker Mr. John Hyun Mr. Joe Kan Mr. Janaka Mendis Mr. S. Ramanathan Mr. K.K.L.P. Yatiwella

Singer Digital Media (Pvt) Ltd. yy Marketing Mobile Phones, Computers and Cameras Singer – Interest 100% Mr. H.A. Pieris Mr. M.H. Wijewardena Mr. K.K.L.P. Yatiwella

Reality Lanka Ltd. Singer – Interest 40% yy Investment on Properties Dr. Saman Kelegama Mr. Gavin J. Walker Mr. H.A. Pieris

Singer Business School (Pvt) Ltd. Singer – Interest 100% yy Educational Services Mr. H.A. Pieris Mr. M.H. Wijewardena Mr. K.K.L.P. Yatiwella

Singer Industries (Ceylon) PLC yy Manufacturing Sewing Machines Dr. Saman Kelegama Mr. Ranil De Silva Mr. G.J. Walker Mr. H.A. Pieris Mr. V.G.K. Vidyarathne Mr. K.D. Kospelawatta

Regnis (Lanka) PLC yy Manufacturing Refrigerators Dr. Saman Kelegama Mr. Ranil De Silva Mr. G.J. Walker Mr. H.A. Pieris Mr. V.G.K. Vidyarathne Mr. K.D. Kospelawatta

Regnis Appliances (Pvt) Ltd. yy Manufacturing washing machines Dr. Saman Kelegama Mr. H.A. Pieris Mr. V.G.K. Vidyarathne Mr. K.D. Kospelawatta 240 2015 Annual Report Singer (Sri Lanka) PLC

A Decade in Perspective

Year ended 31st December 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 (Restated) Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

GDP Growth - % 6.0 7.4 7.3 6.0 8.3 7.0 3.5 6.0 6.8 7.7 Market Capitalisation Growth - % 17.0 32.5 (13.0) (22.9) 36.1 102.0 123.0 -40.4 42.6 42.9

Trading Results Group Turnover - Net 38,710,834 29,699,602 25,485,561 25,441,494 22,031,653 16,028,534 11,913,503 13,734,093 13,776,425 12,216,067 Profit before Tax 1,895,275 1,155,608 728,440 1,777,160 1,990,012 1,167,862 247,729 255,074 602,913 792,656 Taxation 659,236 373,974 206,375 561,451 681,181 499,042 114,830 89,616 232,698 302,356 Profit for the Year 1,236,039 781,634 522,066 1,215,710 1,308,831 668,819 132,899 165,458 370,215 490,300 Total Comprehensive Income for the Year 1,206,343 891,279 519,059 1,320,383 1,308,831 – – – – – Property, Plant & Equipment 2,715,401 2,667,909 2,505,355 2,151,208 1,691,107 1,564,240 1,285,728 1,445,078 1,198,303 1,063,614 Investment in Equity Accounted Investees 54,831 55,189 53,226 52,663 46,886 23,525 24,541 25,433 412,214 366,964 Other Investments 17,061 17,061 17,061 17,061 17,061 17,061 18,490 18,490 18,490 18,490 Deferred Tax Assets 259,733 185,024 119,022 150,284 143,450 110,226 143,053 96,481 68,642 48,363 Other Non-Current Assets 7,472,596 6,021,845 5,867,311 5,234,046 4,385,767 2,687,281 2,205,263 2,455,481 2,145,427 1,777,522 Total Non-Current Assets 10,519,623 8,947,028 8,561,974 7,605,262 6,284,271 4,402,333 3,677,075 4,040,963 3,843,076 3,274,953 Current Assets 21,857,494 18,444,957 16,000,553 13,795,274 11,164,888 8,477,132 7,176,378 8,612,254 8,219,439 7,477,565 Current Liabilities 15,417,138 15,213,903 13,030,817 12,849,830 10,043,948 6,602,195 6,392,896 7,668,414 5,853,413 4,555,752 Net Current Assets 6,440,356 3,231,054 2,969,736 945,444 1,120,940 1,874,937 783,482 943,840 2,366,026 2,921,813 Total Assets Less Current Liabilities 16,959,979 12,178,083 11,531,711 8,550,706 7,405,211 6,277,270 4,460,557 4,984,803 6,209,102 6,196,766 Security Deposit 851,794 732,124 651,765 576,648 487,449 403,894 359,516 334,837 301,558 270,623 Loans Re-payable after One Year 8,091,907 4,226,596 4,334,165 1,633,823 1,110,385 1,287,291 763,936 1,444,165 2,350,644 2,826,637 Provision for Gratuity 486,465 383,912 320,033 270,539 204,787 181,876 158,546 148,418 126,889 109,623 Public Deposits 645,008 798,492 756,232 342,535 503,142 195,995 150,001 81,077 443,444 235,006 Deferred Tax Liability 114,820 119,789 109,540 113,926 95,805 99,339 – 22,707 17,987 4,808 Net Assets 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799 2,953,599 2,968,580 2,750,069

Share Capital and Reserves Stated Capital 628,048 628,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 Capital Reserves 857,580 870,358 762,034 773,312 655,454 664,542 412,127 407,098 233,598 233,335 Statutory Reserves 37,318 136,128 128,447 78,425 44,408 10,748 – – – – Revenue Reserves 4,728,455 3,842,675 3,447,544 3,778,395 3,421,739 2,583,363 1,975,624 1,920,453 2,108,933 1,895,495 Shareholders’ Funds 6,285,401 5,475,208 4,964,073 5,256,181 4,747,648 3,884,701 3,013,799 2,953,599 2,968,579 2,754,878 Non-Controlling Interest 484,584 441,960 395,902 357,054 255,995 224,174 – – – – Total Equity 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799 2,953,599 2,968,580 2,750,069

Ratio and Statistics Profitability Earning per Share - Rs. 9.21 5.70 3.69 9.26 10.11 5.34 1.06 1.32 2.96 3.92 Net Assets per Share - Rs. 50.20 43.73 39.65 41.98 37.91 31.03 24.07 23.59 23.71 22 Return on Average Net Assets - % 19.5 13.9 9.5 22.9 29.3 18.8 4.4 5.6 12.9 19.1

Dividends Amount - Rs. ’000 525,880 313,024 313,024 751,258 939,072 281,722 – 250,419 125,210 156,512 Per Share - Rs. 4.20 2.50 2.50 6.00 7.50 4.50 – 4.00 2.00 2.50 Cover 1.63 1.48 0.96 1.37 1.2 1.5 – 1.8 1.7 2.7

Others Market Price per Share - Rs. 137.90 117.90 89.00 102.30 132.70 195.00 76.50 32.00 68.00 74.30 Price Earnings Ratio 20.1 31.9 36.9 12.5 14.3 18.3 36.1 12.1 11.5 9.5 Annual Sales Growth - % 30.3 16.5 0.2 15.5 37.3 34.5 -13.3 -0.3 12.8 12.4 Current Ratio 1.4 1.2 1.2 1.1 1.1 1.3 1.1 1.3 1.4 1.6 Average Annual Inflation - % 0.9 3.3 7.3 7.6 6.7 6.9 4.8 14.4 17.5 13.7 Net Income to Net Turnover - % 3.2 2.6 2.0 4.8 5.9 4.2 1.1 1.2 2.7 4.0 Singer (Sri Lanka) PLC Annual Report 2015 241

Share Information

1. Stated Capital

31st December 2015 31st December 2014

Stated Capital (Rs.) : 626,048,050 626,048,050 No. of Ordinary Shares : 125,209,610 125,209,610 Class of Shares : Ordinary Shares Voting Rights : One Vote per Ordinary Share Subdivision : New share for every 1 existing share : held on 31st March 2011

2. Stock Exchange Listing The issued ordinary shares of Singer (Sri Lanka) PLC are listed with the Colombo Stock Exchange of Sri Lanka.

3. Distribution of Shareholding – 31st December 2015 No. of Shareholders: 31st December 2015 - 2,447 (31st December 2014 - 2,523).

Resident Non-Resident Total No. of No. of No. of Share- No. of Share- No. of Share- No. of No. of Shares Held holders Shares % holders Shares % holders Shares %

1 - 1,000 1,479 352,397 0.28 18 5,771 0 1,497 358,168 0.29 1,001 - 10,000 711 2,471,931 1.97 8 36,692 0.03 719 2,508,623 2.00 10,001 - 100,000 208 5,715,052 4.56 7 298,179 0.24 215 6,013,231 4.80 100,001 - 1,000,000 14 3,985,459 3.18 – –– 14 3,985,459 3.18 Over - 1,000,001 1 4,531,279 3.62 1 107,812,850 86.11 2 112,344,129 89.72

Total 2,413 17,056,118 13.62 34 108,153,492 86.38 2,447 125,209,610 100.00

31st December 2015 31st December 2014 No. of No. of No. of No. of Categories of Shares Shares Shareholders Shares Shareholders

Individuals 9,282,959 2,277 9,680,195 2,356 Institutions 115,926,651 170 115,529,415 167

Total 125,209,610 2,447 125,209,610 2,523

4. Dividends Final Dividend 2015 - Rs. 4.20 (2014 - Rs. 2.50)

5. Market Value Per Share

2015 2014 Rs. Rs.

Highest during the Year 152.00 - 19th August 128.90 - 18th November Lowest during the Year 105.50 - 10th April 82.00 - 16th January 31st December 137.90 117.90 242 2015 Annual Report Singer (Sri Lanka) PLC

Share Information

6. Twenty Largest Shareholders as at 31st December

2015 Name No. of Shares %

1. Singer (Sri Lanka) BV 107,812,850 86.11 2. Bank of Ceylon A/c Ceybank Unit Trust 4,531,279 3.62 3. Deutsche Bank AG As Trustee for JB Vantage Value Equity Fund Deut 830,710 0.66 4. Bank of Ceylon A/c Ceybank Century Growth Fund 661,792 0.53 5. Mrs. Mihiri Virani Fernando 618,000 0.49 6. Mrs. Zohra Taher Jafferjee 330,890 0.26 7. Piere Lanka Exports Private Ltd. 232,496 0.19 8. People’s Bank 200,000 0.16 9. Dr. Nimal Ebenezer Herat Sanderatne 179,403 0.14 10. Mrs. Anoma Kamalika Amarasuriya 178,970 0.14 11. Mrs. Maria Tasneem Moosajee 154,257 0.12 12. Mrs. Kalutaravedage Jinangali Manel De Silva 131,248 0.10 13. Mr. Nalin Amita De Silva 126,326 0.10 14. Jafferjee Brothers (Exports) Ltd. 125,200 0.10 15. Mr. Abeysiri Hemapala Munasinghe 109,548 0.09 16. Mrs. Enoka Kamali Wickramasinghe 106,619 0.09 17. Mrs. Jasbinderjit Kaur Piara Singh 89,606 0.07 18. Mr. Hemaka Devapriya Senarath Amarasuriya 89,482 0.07 19. Merchant Bank of Sri Lanka Ltd./Union Investments Ltd. 88,894 0.07 20. Sri Lanka Insurance Corporation Ltd - General Fund 87,500 0.07 116,685,070 93.18 Others 8,524,540 6.82

Total 125,209,610 100.00

2014 Name No. of Shares %

1. Singer (Sri Lanka) BV 107,812,850 86.11 2. Bank of Ceylon A/C Ceybank Unit Trust 4,407,366 3.52 3. Bank of Ceylon A/C Ceybank Century Growth Fund 617,254 0.49 4. Mrs. Mihiri Virani Fernando 610,000 0.49 5. Deutsche Bank AG As Trustee for JB Vantage Value Equity Fund Deut 576,759 0.46 6. People’s Bank 350,000 0.28 7. Mrs. Zohra Taher Jafferjee 330,890 0.26 8. Dr. Nimal Ebenezer Herat Sanderatne 180,333 0.14 9. Mrs. Anoma Kamalika Amarasuriya 178,970 0.14 10. Mrs. Maria Tasneem Moosajee 154,257 0.13 11. Mrs. Kalutaravedage Jinangali Manel De Silva 131,248 0.11 12. Mr. Nalin Amita De Silva 126,326 0.10 13. Bank of Ceylon A/C Eagle Growth Fund 125,848 0.10 14. Jafferjee Brothers (Exports) Ltd. 125,200 0.10 15. Miss Nai Kaluge Ruvani Hemamala De Silva 118,195 0.09 16. Mrs. Enoka Kamali Wickramasinghe 112,644 0.09 17. Mr. Abeysiri Hemapala Munasinghe 109,548 0.09 18. Mrs. Jasbinderjit Kaur Piara Singh 91,268 0.07 19. Mr. Hemaka Devapriya Senarath Amarasuriya 89,482 0.07 20. Merchant Bank of Sri Lanka Ltd./Union Investments Ltd. 88,894 0.07 116,337,332 92.91 Others 8,872,278 7.09

Total 125,209,610 100.00 Singer (Sri Lanka) PLC Annual Report 2015 243

Share Information

7. Share Trading

For the year ended 31st December 2015 2014

Number of Transactions 2,332 2,168 Number of Shares Traded 2,248,222 2,795,975 Value of Shares Traded (Rs.) 300,569,544 275,587,204

8. Public Holdings The percentage of shares held by the public is 13.89% (2014 - 13.67%).

9. Record of Scrip Issues

Year ended 31st December Issue Basis No. of Shares Cumulative Share Capital Rs. ’000

1981 Prior to Public Issue – 1,855,200 18,552 1982 Public Issue – 463,800 23,190 1984 Bonus 1:2 1,159,500 34,785 1985 Bonus 1:3 1,159,500 46,380 1989 Bonus 1:1 4,638,000 92,760 1992 Bonus 1:4 2,319,000 115,950 1992 Rights (at Rs. 40/-) 1:8 1,449,375 130,444 1994 Bonus 1:5 2,608,875 156,533 1996 Bonus 2:9 3,478,500 191,318 1996 Rights (at Rs. 50/-) 1:9 1,855,766 209,875 1998 Bonus 3:11 5,723,868 267,114 2000 Bonus 1:5 5,342,276 320,537 2004 Bonus 1:4 8,013,415 400,671 2005 Bonus 1:4 10,016,769 500,838 2006 Bonus 1:4 12,520,961 626,048 2011 Subdivision 1 for 1 62,604,805 –

Total No. of Shares 125,209,610 626,048

All Share Price Index vs Market Price Per Share

Index Rs.

7,800 160

7,600 140

7,400 120

7,200 100

7,000 80

6,800 60

6,600 40

6,400 20

6,200 0 Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Market Price Per Share ()RHS All Share Price Index ()LHS 244 2015 Annual Report Singer (Sri Lanka) PLC

Share Information

10. Listed Debentures Details regarding the listed debentures are as follows:

Interest Rate of Comparable Government Securities as at Issue Date (%)

1. 15.5% senior rated unsecured redeemable on 24th July 2015. 14.62 2. 17% senior rated listed unsecured redeemable on 30th September 2015. 13.74 3. 17% senior rated listed unsecured redeemable on 24th December 2015 13.53 4. 14.5 % senior rated listed unsecured redeemable on 30th May 2016. 12.04 5. 8.25 % senior rated listed unsecured redeemable on 22th December 2017 6.66 6. 8.60 % senior rated listed unsecured redeemable on 07th June 2018. 6.97 7. 7.54 % senior rated listed unsecured redeemable on 07th June 2018. 6.97

Interest Rate of Comparable Government Security as at 31st December 2015 was 6.83%.

Highest traded price, lowest traded price, last traded price as at 31st December 2015, interest yield and yield to maturity of trade are as follows:

Highest Traded Lowest Traded Last Traded Interest Yield to Price Price Price Yield Maturity (Rs.) (Rs.) (Rs.) % %

1. 17% senior rated unsecured 104.51 101.94 99.98 16.68 7.52 2. 14.5% senior rated listed unsecured 105.44 100.00 101.57 14.28 3.78 3. 8.25% senior rated listed 100.7 100.7 100.7 8.00 8.00

Debt/equity ratio, interest cover and quick asset ratio are given in Financial Highlights on page 7 of this Report. Singer (Sri Lanka) PLC Annual Report 2015 245

Distribution Network As at 31st December 2015

Singer Plus Shops Rajagiriya Kandy Polonnaruwa Borella Satellite Shops Hemmatagama Ampara Ratmalana Akurana Bakamuna Chilaw Ampara Kotiyakumbura Thimbirigasyaya Chunnakam Akkaraipattu Digana Hingurakgoda Hingurana Udahamulla - Merit Dambulla Kurunegala Ampara ‘A’ Gampola Kaduruwela ‘A’ Union Place Dickwella Ampara ‘B’ Gelioya Kaduruwela ‘B’ Anuradhapura Bingiriya Ward Place Digana Aralanganwila Kandy Medirigiriya Dummalasuriya Wellampitiya Eheliyagoda Eppawela Dehiattakandiya Katugastota Minneriya Ibbagamuwa Wellawatta Embilipitiya Galnewa Kalmunai ‘A’ Kundasale Polonnaruwa Pannala Galle Kahatagasdigiliya Kalmunai ‘B’ Nawalapitiya Welikanda Polpithigama Galle Gampaha Kebithigollewa Padiyatalawa Peradeniya Hiripitiya Gampola Rambewa Pottuvil Ahangama Pilimatalawa Puttalam Homagama Thalawa Uhana Ambalangoda Poojapitiya Anamaduwa Matale Horana Thirappane Samanthurai Baddegama Rikillagaskada Chilaw Pallepola Ja-Ela Wilachchiya Elpitiya Wattegama Dankotuwa Wilgamuwa Jaffna Anuradhapura Galle ‘A’ Puttalam Kadawatha Badulla Galle ‘B’ Kegalle Wennappuwa Matara Anuradhapura ‘A’ Kaduwela Diyatalawa Hikkaduwa Kegalle ‘A’ Anuradhapura ‘B’ Kahawatta Ettampitiya Pitabeddara Neluwa Kegalle ‘B’ Ratnapura Anuradhapura ‘C’ Kalawana Haldemmulla Telijjawala Udugama Mawanella Balangoda Galenbindunuwewa Kalutara Hasalaka Thihagoda Horowpathana Rambukkana Eheliyagoda Gampaha Katugastota Hettipola Ruwanwella Embilipitiya Moneragala Kekirawa Kegalle Keppetipola Delgoda Warakapola Godakawela Medawachchiya Kekirawa Meegahakivula Badalkumbura Divulapitiya Kahawatta Tambuththegama Kilinochchi Udapussellawa Thanamalwila Gampaha Kurunegala Kuruwita Nochchiyagama Kuliyapitiya Ududumbara Ganemulla Nivitigala Alawwa Kurunegala Nuwara Eliya Badulla Ja-Ela Pelmadulla Galgamuwa Maharagama Colombo Ginigathhena Kadawatha ‘A’ Giriulla Ratnapura ‘A’ Badulla Mahiyanganaya Hanwella Maskeliya Kadawatha ‘B’ Kuliyapitiya Ratnapura ‘B’ Badulla ‘B’ Matale Kosgama Pundaluoya Kandana Kurunegala ‘A’ Yatiyantota Bandarawela ‘A’ Matara Moragahahena Ragala Kiribathgoda ‘B’ Kurunegala ‘B’ Bandarawela ‘B’ Matugama Nawam Mawatha Walapane Kirindiwela Trincomalee Girandurukotte Maho Mawanella Kochchikade Padukka Hali-Ela Mawathagama Kanthalai Mirigama Mawaramandiya Polonnaruwa Mahiyanganaya Melsiripura Trincomalee ‘A’ Mount Lavinia Minuwangoda Galle Diyabeduma Welimada Narammala Trincomalee ‘B’ Narammala Mirigama Batapola Diyasenpura Passara Nikaweratiya Vakarai Negombo Negombo Imaduwa Habarana Polgahawela Nikaweratiya Nittambuwa Karandeniya Jayanthipura Batticaloa Pothuhera Vavuniya Nittambuwa Pinnaduwa Pugoda Rideegama Batticaloa ‘A’ Vavuniya Nuwara Eliya Pitigala Puttalam Ragama Wariyapola Batticaloa ‘B’ Parakramapura Panadura Seeduwa Talgaswala Abanpola Chenkaladi Pannipitiya Uragasmanhandiya Veyangoda Matara Kobeigane Kalawanchikudi Kilinochchi Pelmadulla Wattala Wanduramba Nattandiya Kattankudy Akuressa Piliyandala Weliweriya Kilinochchi Yakkalamulla Norochcholai Deniyaya Ratnapura Valaichchenai Yakkala Dikwella Ruwanwella Mullaitivu Gampaha Ratnapura Colombo Hakmana Talawathugoda Hambantota Mullaitivu Dompe Issadeen Town Tissamaharamaya Dehiowita Angoda Agunakolapelessa Katana Kamburupitiya Trincomalee Kalawana Athurugiriya Ambalantota Samsung Showroom Marandagahamulla Matara ‘A’ Union Place Kiriella Attidiya Beliatta Pasyala Matara ‘B’ Nugegoda Vavuniya Pallebadda Avissawella Hambantota Morawaka Ratmalana Warakapola Rakwana Battaramulla Middeniya Hambantota Urubokka Welisara Boralesgamuwa Suriyawewa Weligama Singer Homes Kandy Ranna Trincomalee Borella Tangalle Anuradhapura Walasmulla Kiribathgoda Muttur Dehiwela Tissamaharamaya Mannar Badulla Minuwangoda Weeraketiya Delkanda Chilaw Mannar Galle Face Court Jaffna Other Godagama Singer Mega Jaffna Gothatuwa Chenkanai Kadawata Kodikamam Apparel Solutions Homagama Matale Duplication Road Chavakachcheri Kalutara Katunayake Duty Kaduwela Dambulla Gampaha Chunnakam Kegalle Free Store Katubedda Galewela Kandy Kalutara Jaffna Kotte Kandy Mall Kirulapona Matale Baduraliya Manipay Kurunegala Kiribathgoda Kohuwala Rattota Beruwala Nelliady Maharagama K-Zone - Ja-Ela Kollupitiya Ingiriya Point Pedro Matara Kotahena Moneragala K-Zone - Moratuwa Negombo Liberty Plaza Digital Kottawa Bibile Kandy Kalutara Nuwara Eliya Maharagama Maharagama ‘A’ Buttala Alawathugoda Agalawatta Ratmalana Malabe Maharagama ‘B’ Kataragama Ankumbura Aluthgama Ratnapura Mt. Lavinia Malabe Moneragala Galagedara Bandaragama Negombo Maradana Siyabalanduwa SISIL World Galaha Milagiriya Beruwala Nugegoda Wellawaya Akuressa Hatharaliyadda Moratuwa Bulathsinghala Panadura Ambalantota Kadugannawa Nugegoda Darga Town Rajagiriya Nuwara Eliya Ampara Menikhinna Pelawatte Horana Thalawathugoda Hatton Anuradhapura Peliyagoda Kalutara ‘A’ Thurstan Road Nuwara Eliya ‘A’ Avissawella Kegalle Pettah Kalutara ‘B’ Wattala Nuwara Eliya ‘B’ Badulla Bulathkohupitiya Piliyandala ‘A’ Matugama Beko& Sony Pussellawa Balangoda Deraniyagala Pliyandala ‘B’ Panadura Talawakelle Bandarawela Pitakotte Wadduwa Battaramulla 246 2015 Annual Report Singer (Sri Lanka) PLC

Service Network and Fashion Academy Network

Singer Service Colombo Saman Service Udani Electronics Udarata Motors Maradana Regional Service Centres Aloka Engineers Sanjeewa Auto Works Wijesinghe Motors Udaya Motors Matara Aluthgama Ben Refrigerators Sheahan Multi Service Wimalaweera Industries Wickramasinghe Motors Mawanella Techno Frost Ampara Chamath Enterprises Middeniya World Air Conditioner Ampara Air Conditioning Division Anuradhapura Chatu Spray Paint Minuwangoda Wijesinghe Motors Badulla Chirathma Electricals Aira Motors Alwis Engineering Centre Moratuwa Colombo Dineth Electronics Aruna Ref & Electrical Amal Ref & Electricals Nawalapitiya Matara Jaffna E.M.P. Electricals Chil Air New Dynamic Ref Negombo Kandy Electro Frost Ariyarathna Motor Garage Duminda Electricals Engineers Neluwa Kuliyapitiya G.M. Electricals Chaminda Air Ref Eng. Eastern Tech Institute Hot & Cold Nittambuwa Matara IssuruKaveen Engineers Ser. Hi Tech Electronics Lahiru Ref Engineers Nugegoda Peliyagoda J & U Electricals Chathuranga Motors Janudha Ref & Electricals Nushan Ref and Air Centre NuwaraEliya Polonnaruwa and Electronics Darshana Machine Mustafa Motors MEC R&T Ref Engineering Panadura Ratnapura Kavia Engineering G.A. Auto Electriclas Ruckshan Mechanical Re Cool Peliyagoda Industrial Product Service Life Cool AC Engineers Hemantha Motors Shop Ref Air Electricals Piliyandala (Upali Trade Centre - Union Place Nuwan Engineers Indika Motors S S H Motors Royal Cool Enterprises Centre) - Franchise Computer Repairing Pace Electronics Janahitha Motors Sahana Motors Air Mech Piliyandala B Centre - Ruwan Electricals Janapriya Electronics Sanjeewa Industries Serve Engineering Ratnapura A Nawam Mawatha S.K. Electricals Lal Electronics Speed Cool Services Ratmalana S.N.A. Ref Air Lal Honda Cervice Susantha Ref Electricals Thambuttegama Service Franchisee Agents Saleena Electronics Max Cool Electricals Ratnapura Temp Cool Engineers Tissamaharama Samagi Ref Centre New Shiney Electronics High Frost YellowmaAirconditioning Wellawatta Siri Electricals – Sharp Electronics New Freeze Air Highcool Air & Ref Center Wennappuwa Ambalangoda Silicon Electronics New Lion Radio Pathirana Ref Engineering Motor Bike Service - AK Motors - Ambalangoda Super Tech Ref Engineers NilankaPathirana Ref PSD Motors Peliyagoda Nanayakkara Electronics Tech Way Services Centre Quick Cool Ref Athula Motor Works – Elpitiya Technico Electronics Nuwan Motors Ranjith Electronics Brito Motors Premalal Motors – Elpitiya Technicold Electronics Penguine International Roshan Electronics Diaz Motors Sola Edge Cooling Cool Tech Engineers Prince Electricals Samagi Diesel Engineering Kumara Pannel Systems & power solution – Kavindu Ref N Air Rahula Motors SanjayaElectronoics Manahara Electricals Hikkaduwa GB Electrical Rohan Ref Centre Senadheera Multi Ref Nishani Motors Dinan Machine Centre – Smart Ref Engineers Ruhunu Ref & Air Services Sewing Tec Machinical & Raja Motors Hikkaduwa Anjana Electricals Sigma Electronics Electrical Sumith Motor Works Suraraiith motors – Econ Air Ushan Ref Centre Solenta Electronics Wimal Motor Works Baddegama Keerthi De Jayasinghe Sampath Engineering Star Ref Electricals IR Tech Engenirins – Eng. Works S MS Electrical Fashion Academies Horana Dinu Electricals Sampath Motor Service Ambalantota Multi Tech Engineering – Ushan Electricals Sarani Motors Jaffna Ampara Mathugama Sarasi Car Audio Angoda Perera Seryice – Ambiga Electricals Kandy Sausiri Electrical Anuradhapura Bulathsinhala Anton Service Station Sunil Motors Avissawella Amal Ref & Electricals – Frank Wood Works City Link Coolers Sunil Electronics Baddegama Aluthgama Fresh Cool enterprice Cool Air Kings Suranjith Motors Badulla Dilshan Motors – I Tec Electronics Institute of Ace Susantha Motors Bandarawela Kaluthara South Leshani electrical Murale Electronics Uduwella Ref Battaramulla Thushara Motors – Horana LionalWijesinhe MyDynamiva (Pvt) Ltd Victor Cycle Works Batticaloa Gulf Motors – Darga town New PC House NPM Electricals Vijitha Motors Borella Eranda Malti Electrical New SameeraElectrcal PanchuCarage Thisara Ref & Electricals Chilaw R. Centre – Boossa New Vision Electronics Pasific Cool Mount Dambulla EZY cool Ominda Electricals Engineering (Pvt) Ltd Anuradhapura Dehiattakandiya Silverdale Prabath Electrical Ragu Mechanic Centre Ayesha Electricals Dickwella U.D.Ref Sandamini Electrical SSV Cool Air Service Badulla Sathsara Sound Buddhika Electricals Vageetha Motors Eheliyagoda Senadeera Ref Centre B.T.T.Technology Elpitiya Tele Lab Welcome Morors (Hero Shehan Multi Service Chandana Entreprises Garage) Embilipitiya Rajapakshe Electricals Siva Motors Deikin Electricals Galewela Tharindu Electricals Super Air Electrical Works Derrick Motors Polonnaruwa Galle Marriott Electricals Tech Mart Ref Engineers Emil Electronics Ananda Electricals Gampaha Cool air engineering Techno Ref & Air Indika Auto Service Centre Ashoka Ref Gampola Hatton Aruna Electricals Enterprices Indunil Ref & Electricals B.N.R. Enterprises Thilak Electricals Janith Motors Hingurakgoda TV Centre Bandula Auto Cycle Works Thushara Electronics Kurunegala Motors Horana Hiruna Electronics Chaminda Sewing Thushara Engineers Lahiru Motors Mechanics Ja-Ela Telstar Electronic Vimod Electricals Lakmal Motors Dissnayake Lathe Shop Jaffna Sameera Cooling Service Luck Cool Ref Engineers DJ Engineers Kaduruwela Chamari Ref Kuliyapitiya Luxman Ref & Electrical I Mec Engineering Kaduwela Madushan Motors Kalutara Refco Electrical Adikari Electricals Janith Motors Malik Ref Electricals Kandana Saman Motors Anuradha Electricals J & P Electronics Nathan Motors Kandy CS Ref Engineers Jayathilaka Motors Mohan Motors Neel Motors Kandy Mega Chandana Motor Garage Karunarathne Motors Piyal Motors New Central Auto Service Kattankudy Dasun Motors Kinnya AC Mechanics Lal Motors Nihal Motors Katugastota Freezair Mahaweli Electronics Nilantha Motors Kegalle Kesala Electricals Mahesh Electricals Mayura Ref & Electricals Power Wash Kiribathgoda Dias Electricals Modern Air Condition Mudalige Electronics Premasiri Motors (New Welcome Store) Nalinda Machine Centre Nissanka Motors Yasas Motors Ravi Motors Kiribathogda - B New Leeds Electronics Priyankara Motors Sewing Tec Machine Royal Motors Kirindiwela Nipuna Auto Mobile Sanath AC Engineering Service Ruwani Trade Centre Kottawa Peo Motors Sampath Motors Wasantha Mechanical & Sampath Auto Care Kuliyapitiya Ravindrs Motors S.M.Motors Electrical Shalini Auto Cool Kurunegala SamodhaElecticals Subasinghe Ref Engineers Shantha Motors Mahiyanganaya Gunathilake Motors Sahana Motors Techno Engineering Sumudu Electricals Maho Sathsara Auto Works Thilak Electronics Tharanga Motors Thilanka Motors Malabe Singer (Sri Lanka) PLC Annual Report 2015 247

Glossary of Financial Terms

Accounting Policies Deferred Taxation Market Capitalisation Specific principles, bases, The net tax effect on items which Number of shares in issue multiplied conventions, rules and practices have been included in the Income by the market value of a share at the adopted by an enterprise in preparing Statement, which would only qualify reported date. and presenting Financial Statements. for inclusion on a tax return at a future date. Net Assets Per Share Amortisation Shareholders’ funds divided by the The expense of writing off over a fixed Dividend Cover weighted average number of ordinary period, the initial value of an intangible Profit attributable to ordinary shares in issue. A basis of share asset such as goodwill, patents etc. shareholders divided by gross valuation. dividend. Measures the number Available-for-Sale of times dividend is covered by Non-Controlling Interest All assets not in any of the three distributable profit. Equities in a subsidiary not attributable, categories namely held to maturity directly or indirectly, to a parent. fair value through profit or loss and Dividend Payout loan and receivables. It is a residual Dividend per share divided by earnings Price Earnings Ratio category does not mean that the entity per share. Market price of a share divided by stands ready to sell these all the time. earnings per share as reported at Earnings Per Share that date. Borrowings Profits attributable to ordinary All interest bearing liabilities. shareholders divided by the weighted Related Parties average number of ordinary shares in Parties who could control or Capital Employed issue. significantly influence the financial and Total assets less interest free liabilities, operating policies of the business. deferred income and provisions. Equity Shareholders’ funds. Return on Average Net Assets Equity Capital Reserves Attributable profits divided by average Reserves identified for specific Fair Value shareholders’ funds/total equity. purposes and considered not available Fair value is the amount for which an for distribution. asset could be exchanged between Revenue Reserves a knowledgeable, willing buyer and Reserves considered as being Cash Equivalents a knowledgeable, willing seller in an available Liquid investments with original arm’s length transactions. for distributions and investments. maturity periods of three months or less. Financial Instruments Segment Financial instrument is any contract Constituent business units grouped in Contingent Liabilities that gives rise to both a financial assets terms of similarity of operations and Conditions or situations at Reporting in one entity and a financial liability or location. date the financial effect of which are to equity instrument in another entity. be determined by future events which Value Addition may or may not occur. Gearing The quantum of wealth generated by Proportion of borrowings to capital the activities of the Group measured Credit Rating employed. as the difference between turnover An evaluation of a corporate’s ability to and the cost of materials and services repay its obligations or the likelihood Gross Dividend bought in. of not defaulting, carried out by an Portion of profits inclusive of tax independent rating agency. withheld, distributed to shareholders. Working Capital Capital required to finance the day- Current Ratio Held-to-Maturity to-day operations computed as the Current assets divided by current Debt assets acquired by the entity with excess of current assets over current liabilities. A measure of liquidity. positive intention to be held-to-maturity. liabilities.

Debt Interest Cover Total liabilities, excluding deferred Profit before tax plus net finance cost income. divided by net finance cost. Measure of an entity’s debt service ability. Debt Ratio Total liabilities divided by total assets. Impairment This occurs when recoverable amount of an asset is less than its carrying value. 248 2015 Annual Report Singer (Sri Lanka) PLC

Notice of Annual General Meeting

SINGER (SRI LANKA) PLC (Company Registration No. PQ 160)

NOTICE IS HEREBY GIVEN THAT THE FORTY FIRST ANNUAL GENERAL MEETING OF SINGER (SRI LANKA) PLC, will be held at the Registered Office of the Company, No. 80, Navam Mawatha, Colombo 02 on Thursday, 31st March 2016 at 10.00 a.m. for the following purposes:

1. To receive, consider and adopt the Report of the Directors and the Audited Financial Statements for the year ended 31st December 2015 with the Report of the Auditors thereon. 2. To declare a dividend as recommended by the Directors.

3. To resolve declaring that the age limit stipulated in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. Goodman who has attained the retirement age stipulated in Section 210 of the said Act and who has attained the age of 71 years on 28th May 2015 and that his appointment for a period of one year in terms of Section 211 of the said Act is approved and to elect him as a Director of the Company in terms of the said Section 211.

4. To re-elect as a Director, Mr. Gavin J. Walker, who retires by rotation in terms of Article 24 (4) of the Articles of Association of the Company and who being eligible is being recommended for re-election. A brief profile of Mr. Gavin Walker is contained in the Board of Directors Section of the Annual Report.

5. To re-elect as a Director, Mr. P.J. O'Donnell, who retires by rotation in terms of Article 24 (4) of the Articles of Association of the Company and who being eligible is being recommended for re-election. A brief profile of Mr. P.J. O'Donnell is contained in the Board of Directors Section of the Annual Report.

6. To re-elect as a Director, Mr. Ranil De Silva, who was appointed as a Director of the Company on 1st April 2015 in terms of Article 24 (10) of the Articles of Association of the Company and who being eligible is being recommended for re-election. A brief profile of Mr. Ranil De Silva is contained in the Board of Directors Section of the Annual Report.

7. To re-elect as a Director, Mr. Deepal Sooriyaarachchi, who was appointed as a Director of the Company on 1st October 2015 in terms of Article 24 (10) of the Articles of Association of the Company and who being eligible is being recommended for re-election. A brief profile of Mr. Deepal Sooriyaarachchi is contained in the Board of Directors Section of the Annual Report.

8. To authorise Directors to determine contributions to Charities.

9. To reappoint Messrs KPMG, Chartered Accountants as the Auditors of the Company for the ensuing year and to authorise the Directors to determine their remunerations.

By Order of the Board,

(Sgd.) A.C.M. Irzan, FCMA (UK) Secretary

Colombo 25th February 2016

Note

1. The Transfer Books of the Company will be kept open. 2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him/her and such proxy need not be a member of the Company. A Form of Proxy is enclosed for this purpose. The completed Form of Proxy should be deposited at the Registered Office of the Company not less than 48 hours before the time fixed for the Meeting. Singer (Sri Lanka) PLC Annual Report 2015

Form of Proxy

SINGER (SRI LANKA) PLC (Company Registration No. PQ 160)

I / We ...... of ..

...... being a member/ members of Singer (Sri Lanka) PLC hereby appoint -

Dr. Saman Kelegama (or failing him) Mr. Hiran Asoka Pieris (or failing him) Mr. Ranil De Silva (or failing him) Mr. Deepal Sooriyaarachchi (or failing him) Mr. Gavin John Walker (or failing him) Mr. Peter O'Donnell (or failing him) Mr. John J Hyun (or failing him) Mr. Mahesh Hiranya Wijewardene (or failing him) Mr. Loku Narangodage Sarath Kumara Samarasinghe (or failing him) Mr. Kukulu Korelege Lalith Priyantha Yatiwella (or failing him) Mr. Ajith Shirley Paranavitane (or failing him)

......

...... of ......

...... as my/our proxy to represent me/us on my/our behalf at the Annual General Meeting of the Company to be held on Thursday, 31st March 2016 at 10.00 a.m. at the Singer (Sri Lanka) PLC, Registered Office at No. 80, Navam Mawatha, Colombo 02, and at any adjournment thereof and at every poll, which may be taken in consequence thereof. I/We the undersigned hereby authorise my/our proxy to vote on my/our behalf in accordance with the preferences indicated below:

FOR AGAINST 1. To receive, consider and adopt of the Directors and the Audited Financial Statements for the year ended 31st December 2015 with the Report of the Auditors thereon. 2. To declare a dividend as recommended by the Directors 3. To resolve that Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. Stephe Goodman and to elect him as a Director. 4. To re-elect as a Director, Mr. Gavin J. Walker, who retires by rotation in terms of Article 24 (4) of the Articles of Association of the Company. 5. To re-elect as a Director Mr. P.J. O'Donnell, who retires by rotation in terms of Article 24 (4) of the Articles of Association of the Company. 6. To re-elect as a Director Mr. Ranil De Silva, who was appointed as a Director of the Company on 1st April 2015 in terms of Article 24 (10) of the Articles of Association of the Company. 7. To re-elect as a Director Mr. Deepal Sooriyaarachchi, who was appointed as a Director of the Company on 1st October 2015 in terms of Article 24 (10) of the Articles of Association of the Company. 8. To authorise Directors to determine contributions to Charities. 9. To reappoint Messrs KPMG, Chartered Accountants as the Auditors of the Company for the ensuing Year and to authorise the Directors to determine their remunerations.

As witness my/our hand this ...... day of ...... Two Thousand and Sixteen.

...... Signature 2015 Annual Report Singer (Sri Lanka) PLC

Instructions for Completion of Form of Proxy yy If a proxy other than the names mentioned above is preferred, delete the names printed and add the name of the proxy preferred and initial the alteration. yy Please indicate how your proxy should vote by marking an ‘X’ in the cage provided for each resolution. If no indication is given, or if there is, in the view of the proxyholder, any doubt (be reason of the manner in which the instructions contained in the proxy have been completed) as to the way in which the proxyholder should vote, the proxyholder in his/her discretion may vote as he/she thinks fit. yy A Company/Corporation should execute the proxy under its seal in the manner authorised by its Articles of Association or Statute creating it or under the hand of an Officer or Attorney duly authorised. yy If the Form of Proxy is signed by an Attorney, a certified copy (certified by a Notary Public) of the relative Power of Attorney should also accompany the completed Form of Proxy, if it has not already been registered with the Company and the original of the Power of Attorney should be produced for inspection at the meeting if required. yy Unless the completed Form of Proxy is deposited at the Registered Office of the Company at No. 80, Navam Mawatha, Colombo 02, Sri Lanka, not less than 48 hours before the time of the meeting the same will not be valid.

Corporate Information

Name of the Company Senior Management Singer (Sri Lanka) PLC H.A. Pieris – Director/Group Chief Executive Officer M.H. Wijewardene – Director - Marketing & Commercial Legal Form L.N.S.K. Samarasinghe – Director Sales & Sewing Marketing Public company with limited liability incorporated as a public R.S. Wijeweera – Chief Executive Officer/Director – company in Sri Lanka on 30th December 1974 under the Companies Singer Finance (Lanka) PLC Ordinance and re-registered under the Companies Act No. 07 of A.S. Paranavitane – Director – Information Technology 2007 on 13th June 2008. S. Ramanathan – Director – Logistics Founded in 1877 as a branch of Singer Sewing Machine Company, J. Mendis – Credit Director USA. The shares of the Company are listed on the Colombo Stock H.A.P.S. Perera – Factory Director – Piliyandala Factory Exchange. K.K.L.P. Yatiwella – Finance Director Accounting Year: 31st December C.A. Samarasinghe – Director – Operations N. B. Karunaratne – Director – Human Resources Registered Office L.A.D.K. Perera – Deputy Director – Information Technology No. 80, Nawam Mawatha, A.P. Manoratne – Deputy Director – Service & Logistics Colombo 2, Sri Lanka R.C. De La Motte – Business Development Manager – Wholesale Channel Telephone: 94-11-2316316 (13 lines) A.C.M. Irzan – Head of Treasury Facsimile: 94-11- 2423544 D.B. Wijesundera – Marketing Manager – White Goods E-mail: [email protected] G.A.K. Weerasuriya – Senior Manager – Inventory Website: www.singersl.com A.U. Karunaratne – Senior Manager – Merchandise & Promotions T.G.S. Perera – Senior Manager – Recoveries Company Registration Number B.T.L. Mendis – Head of Procurement Old – PBS 802 (S.P.) I.A.S. Kolambage – Commercial Manager – Piliyandala Factory New – PQ 160 C.L.T.P. Rupasinghe – Head of Financial Services M.M.C. Priyanjith – Head of Risk Management Tax Payer Identification Number R.S. Singhabahu – Business Development Manager – Institutional Sales 124008026 M. Mahesharatnam – Business Development Manager – SISIL Channel Bankers T.M.V. Tennekoon – Marketing Manager – Electronics & Digital Media Bank of Ceylon O.D. Amarathunga – Senior Manager – Service Commercial Bank of Ceylon PLC W.L.I.A. Gunathilake – Business Development Manager – Deutsche Bank Singer Mega & Singer Homes DFCC Vardhana Bank PLC K.R.L. Perera – Group Administration Manager Hatton National Bank PLC A.R.N.P.K. Wijesundera – Sales Manager – Agro & Transportation MCB Bank H.S. Perera – Senior Manager – Budget & Planning Nations Trust Bank PLC T.S. Martyn – Senior Manager – Apparel Solutions NDB Bank PLC K.D.J.M. Perera – Business Development Manager – Digital Media Pan Asia Bank PLC N.L.D.W. Amarathunga – Operations Manager – Furniture – Piliyandala Factory People’s Bank A.A. Sathyamoorthy – Senior Manager – Trade Credit Sampath Bank PLC J.P. Jayatilaka – Senior Manager – Direct Marketing Seylan Bank PLC T.L. Seneviratne – Senior Manager – Information Technology Standard Chartered Bank Ltd. D.D.W. Dassanayake – Senior Manager – Credit The Hongkong & Shanghai Banking Corporation PLC K.P. Peramunugamage – Senior Manager – Human Resources Development L.R.P. Perera – Business Development Manager – Retail Channel Auditors N.I. Kuruppuarchchi – Senior Manager – Legal KPMG Saman Serasinghe – Senior Manager – Distribution Chartered Accountants N.B. Ranasinghe – Senior Manager – Revenue & Margin No. 32A, Sir Mohamed Macan Markar Mawatha, L.D.P.T.K. Liyanage (Mrs) – Finance Manager P.O. Box 186, Colombo 3

Registrars Business Intelligence Ltd. No. 8, Tickell Road, Colombo 8

Secretary A.C.M. Irzan FCMA (UK)

Lawyers Neelakandan & Neelakandan Attorneys-at-Law & Notaries Public, M&N Building (Level 5), No. 2, Deal Place, Colombo 3

Directorate H.D.S. Amarasuriya – Chairman Retired on 31.03.2015 Dr. Saman Kelegama – Chairman Appointed on 01.04.2015 H.A. Pieris – Chief Executive Officer – Alternate L.N.S.K. Samarasinghe Ranil De Silva – Appointed on 01.04.2015 D. Sooriyaarachchi – Appointed on 01.10.2015 P.J. O’Donnell – Alternate K.K.L.P. Yatiwella G.J. Walker – Alternate M.H. Wijewardene J. Hyun – Alternate A.S. Paranavitane SINGER (SRI LANKA) PLC

NO. 80, NAWAM MAWATHA, COLOMBO 2. SRI LANKA. HOT LINE: (+94) (011) 5 400 400 E-MAIL: [email protected] E-MAIL: [email protected]