MISSION CONTENTS
Key Milestones 2
Chairman’s Review 4
CEO’s Review 6
Board of Directors 10
Senior Management 14
Managers 15
Human Resources Development 16
Management Discussion & Analysis 18
Financial Review 20
Brand Performance 22
Group Structure & Subsidiaries 26
Corporate Social Responsibility 30
Risk Management 32
Report of the Directors 35
Corporate Governance 40
Audit Committee Report 42
Statement of Directors’ Responsibility 46
Independent Auditors’ Report 48
Statement of Comprehensive Income 49
Statement of Financial Position 50
Statement of Changes of Equity 51
Cash Flow Statements 52
Notes to Financial Statements 53
Value Added Statement 87
Share Holders & Investors Information 88
Ten Year Summary 90
Notice of Meeting 92
Form of Proxy 93
Notes 95 Millennium Housing Developers PLC 2 Annual Report 2013/14
Key Milestones
The journey so far 2014 & beyond MHDL listed in CSE Dirisavi Board Activated the construction under the name of Millennium Housing Construction Limited
2013 2012
Launch of Millennium Urban Entry into urban Range in Maharagama/Piliyandala and semi urban Launch a project in Seeduwa development Launch of project projects “Millennium Terrace”, which includes land sales
2010 2011
Change in parent’s Turnaround of MHDL ownership with new directorship, (Nation Lanka followed by the Finance PLC) restructuring of parent
2009 2008 Abandoning commercial Exposure to Ceylinco operations of Ceylinco Group crisis MHDL's margins Construction Company were affected Limited
2003 2004
Incorporating three subsidiaries Incorporation of Millennium Villa Housing Development Millennium Housing Limited Limited (MVHDL) (418 Units) Ceylinco Housing Corporation Limited Launch of Millennium Villa Ceylinco Construction Company Limited Housing range (192 Units)
1999 1998 Launch of Island's first Mega Township Incorporated as Ceylinco Project – Athurugiriya (1,600 Units) Developers Limited 2nd phase of Athurugiriya project (270 more Units) Millennium Housing Developers PLC Annual Report 2013/14 3 Millennium Housing Developers PLC 4 Annual Report 2013/14
CHAIRMAN’S REVIEW
t gives me a great pleasure to welcome you on behalf working towards expanding into mini housing programme Iof the Board of Directors, in presenting the Millennium known as urban range projects catering to small gated Housing Developers PLC Annual Report and Audited communities within the Greater Colombo area and to Financial Statements for the year ended 31st March 2014. expand to other parts of the country subsequently. Three programs under urban range projects were started in SRI LANKAN ECONOMY Piliyandala, Seeduwa, Athurugiriya, and Homagama to cater this demand. Our economy was resilient. It has recovered strongly since the end of the fight against terrorism in mid – 2009, and the STRATEGIES country’s economy has been on a strong growth trajectory led by rebuilding measures, development of infrastructure, Millennium Housing Developers PLC pursues a strategy surging tourism, and increased investor confidence ever of product differentiation, a known strategy for marketing since. The momentum of growth began during the 2Q as well as for the actual differentiation in terms of special of 2009 with declining interest rates, expansionary fiscal product features. policy, and large inflows of foreign capital into government securities. Our marketing strategy is based on positioning the Millennium City brand as a township that meets the The sustained momentum went on to record 8% GDP lifestyle needs of diverse customer verticals. The houses growth in 2010 and 8.3% in 2011. However this growth are further sub branded as Paradis, Olympus, Heartland, dropped to 6.4% in 2012 and re-bounced to 7.3% in Tulip, Shop Houses, Gardenia, and Villa. Through this 2013, according to Central Bank of Sri Lanka (CBSL). branding strategy Millennium Housing Developers PLC Inflation was maintained at single digit level for the fourth has achieved a competitive edge over its competitors. High consecutive year. Sri Lankan economy grew at 7.3% profile marketing communication through newspapers, TV, outpacing most regional economies amidst a general slow radio and internet has helped our product offering to stand recovery in global economic activities in 2012 & 2013. apart from the rest of the market.
Today, the country is considered as one of the fastest The actual differentiation lies in quality and the additional growing economies in the world. According to International product features offered at all the projects of Millennium Monetary Fund’s (IMF) growth predictions, Sri Lanka is Housing Developers PLC, which pursues a competitive expected to record a GDP growth of 7.5% in 2014 and will strategy of product differentiation. The main business maintain the inflation single digit through out. The country’s strategy of pre-selling acts as a buffer against temporary post conflict growth has been buoyed by construction, liquidity issues and minimizes the finance cost by reducing which has increased its share of GDP from 6.6% in 2009 the requirement for external financing, which will directly to 8.1% in 2012. result in reduction in prices of houses.
Compared with the 2012 growth rate of 21.6% in the I am pleased to mention that with the gradual growth of construction subsector, from 14.2% in 2011 it suffered in the Company we had the opportunity to go for an Initial 2013, by registering a growth of only 14.4%, in general Public Offer in February 2014 and list at Colombo Stock infrastructure, housing and commercial buildings Exchange under Land and Property Sector. segments. COMPANY PERFORMANCE Despite this industrial set back experienced in 2013, the potential demand for affordable middle income housing During the period, revenue increased by 23.43% in the continue to surge due to rapid urbanization, high price FY 2013/14 from Rs.578.7 million in 2012/13 to Rs.714.4 on renting or lease housing and decline in housing loan million in 2013/14. When the new Director Board took interest rates. over the company in 2011 February, the 2010 /11 group revenue stood at Rs.218.4 million and over the last three Looking ahead, the government is focused on achieving years the revenue has increased by 327%. A substantial a per capita of US$4,000 by 2016; highly encouraging for amount of revenue came from expatriate workers who housing sector where household income increases while bought houses for their families and parents. However, the housing loan interest is coming down. there is a decline in house purchases especially from the Sri Lankan expatriates working in Europe and the Middle COMPANY POSITIONING East. Despite all these macro economic factors Millennium Housing Developers Limited Group maintained its position With the success of the Mega Township Project at as market leader in individual housing segments recording Millennium City – Athurugiriya with 1,600 housing units a profit before tax of Rs.169.4 million 30.14% up from the and Ja Ela with 832 housing units, your company is previous year. Millennium Housing Developers PLC Annual Report 2013/14 5
IN SINCERE APPRECIATION “With the success of the Mega Township I deeply appreciate my colleagues in the board for their Project at Millennium City – Athurugiriya valued contribution to the progress of the company. Their guidance of new ideas have remained, unbowed in the face with 1,600 housing units and Ja Ela of numerous challenges. I convey my sincere appreciation with 832 housing units, your company to Share Holders for the understanding our goals and the trust placed on us. is working towards expanding into mini housing programme known as urban The hard work, talent, commitment, loyalty and unwavering service of the team including the CEO, management & range projects catering to small gated staff of all levels was the key to our success. communities within the Greater Colombo Finally, I thank our customers, for the faith and the trust placed on us by investing in MHDL houses are much more area and to expand to other parts of the than just the value of your respective purchases. country subsequently.”
U. Harshith Dharmadasa Chairman
26th June 2014
Millennium Housing Developers PLC 6 Annual Report 2013/14
CEO’S REVIEW
MACRO ECONOMIC ENVIRONMENT
ri Lanka continued to grow as a formidable force in the SAsian Economy even though there were setbacks due to global effects. Our growth rebounded last year to a GDP growth of 7.3% in 2013 despite the various global setbacks that were expected to retard the growth. As inflation eased to a single digit during last four years and the Central Bank relaxing monetary policy the lending rate of housing loans have come down from banks average of 15.5% to 16% per annum to 11.5% to 12.5% in early 2014. The domestic savings have increased during last year. These factors are conducive environment for people to think about having a their own houses.
In addition the development of infrastructure such as roads, water supply, power and stable cost of building materials contributed to the growth in the sector which led to an increase in demand of residential housing units.
REVIEW OF THE BUSINESS
Millennium Housing Developers Director Board was changed in 2011 March and under the new Directors’ vision and guidance we have expanded activities from Township projects to mini housing projects i.e. Urban Range houses to cater for specific housing segment consisting of 40– 50 housing units and land sales. During last three years, company acquired four such new projects: at Ja Ela Our 2013/14 results, Revenue Rs.714.3 million growth of Seeduwa to build 50 housing units, Athurugiriya Land 23.4% and Net Profit before tax Rs. 169.5Mn 30.2% growth Sales Project with 56 blocks, Piliyandala Housing Projects from 2012/13 confirm that we are well positioned to evolve of 34 housing units and Homagama Housing Project of 78 as a distinctive market leader in housing development who units. This along with existing township projects the Group cater to wide range of income earning categories with a managed to increase its sales revenue by 327% over the selection of housing designs to choose from. last three years. Millennium Housing Developers PLC Annual Report 2013/14 7
INITIAL PUBLIC OFFER AND LISTING
Today, we stand confident with expanding our horizon to a firmer solid foundation by being a Public Limited Company listed on the Diri Savi Board of the Colombo Stock Exchange by issuing 16 million new ordinary shares at Rs. 6.00 per Share raised Rs.96 million to our Share Capital with this issue. The Total Equity of the Group is now Rs.625.9 million. This has strengthened the Capital, Liquidity and Stability of the company to go into further expansion in to new housing projects.
“Our 2013/14 results, Revenue Rs.714.3 million growth of 23.4% and Net Profit before tax Rs. 169.5Mn 30.2% growth from 2012/13 confirm that we are well positioned to evolve as a distinctive market leader in housing development who cater to wide range of income earning categories with a selection of DIVIDEND & SHARE HOLDERS FUND housing designs to choose from.” The Group managed to pay dividends continuously during the last three years; in 2011/12 Rs.14.8 million 2012/13 Rs.19.8 million and we have recommended to the Board 25 cents dividend per share amounts to Rs.33.7million to be paid for the FY 2013 /14 Millennium Housing Developers PLC 8 Annual Report 2013/14
KEY STRENGTHS Raw materials used such as the cement, sand, bricks and timber are all regularly checked for quality. Finishing Construction expertise, resources, equipment & materials such as tiles, fittings, paints also undergoes a infrastructure similar process and only high quality products are used.
Possessing the expertise in the construction industry, At every stage of the project, the Millennium City project which spans over 14 years and having the required team will evaluate and assess the progress of home equipment, resources, manpower & infrastructure, construction to ensure that timely delivery and quality coupled with modern technology gives us the competitive standards are maintained. edge in the housing market & the capacity to undertake large scale housing projects. construction and the labour HOUSING THAT MEETS THE NEEDS OF LOCAL employed in the construction sites and the equipments. HOUSEHOLDS This has enable your company to offer houses at lower rates than the competitors. The key attraction for customers of Millennium Housing Developers is that its ability to construct houses that suits RANGE OF ATTRACTIVE HOUSING DESIGNS TO the needs of different income category of Sri Lankan SELECT FROM households. Conventional methods of construction are employed so as to suit the taste of Sri Lankan households. We offer our customers a range of housing designs to Materials, such as high quality clay bricks and class one suit varying needs of each customer segments. Some timber are used in the houses constructed. However, We of the designs and architecture of these houses are by continuously employ modern methods and technology in reputed foreign & local architects. Although the housing keeping with the international standards whilst maintaining designs are standard, Millennium Housing Developers local and cultural aspects in their house designs. team which comprises of professional engineers and architects are always ready to make any amendments to the standard designs based on customer’s requirement and preferences.
EMPLOYEE FORCE & TEAM STRENGTH
Millennium Housing Developers Limited has 51 permanent employees specializing in marketing ,designs, construction, quantity surveying, finance & costing and a separate team for liaising with government authorities & other institutions in obtaining approvals and arranging housing loans to provide assistance for the prospective customers.
HUMAN RESOURCES
The driving force behind the success of Millennium Housing Developers is the vitality and the team spirit of its workforce. The open door policy and excellent communication network between the management and the staff are an integral part of the Millennium Housing Developers culture. Employee suggestions and queries are accommodated in a timely manner and without any prejudice. This aspect of our management we are proud to say has made our staff ever more committed and motivated towards achieving their targets not only at the RIGOROUS QUALITY CONTROL PROCESS functional team standard but also at the Company’s level as well. One of the factors that encourage home buyers to invest in a Millennium City homes is the strict and rigorous quality Extrinsic motivational factors such as performance control process that is put into operation during all stages based incentive schemes are in place to ensure that the of construction. Thus ensuring high quality workmanship employees work toward achieving the objectives of the and a durable and long lasting end product. organization. The company also organizes various social Millennium Housing Developers PLC Annual Report 2013/14 9
events each year as a means of intrinsic motivation. More details on our human resources can be found in this annual report.
In conclusion, I would like to convey my sincere appreciation to the Chairman and Board of Directors for their guidance and foresight for their continuous support and co-operation extended throughout the year. A special note of thanks goes to our management and the staff for their dedication and commitment during this challenging period. Last but not least, my gratitude is extended to our customers whose trust and confidence has contributed to the success of your company, the leader in township development.
Sisira Weerabhahu Chief Executive Officer
26th June 2014 Millennium Housing Developers PLC 10 Annual Report 2013/14
BOARD OF DIRECTORS
Mr.Dharmadasa was appointed to the Board on 11th March 2011. He is an Associate Member of the Institute of Certified Professional Managers and a young business professional with over 18 years experience in executive management. He has acquired extensive experience in the fields of trading, manufacturing and construction sector. He also served as a Director at the Export Development Board of Sri Lanka and Sathosa Retail Ltd, during 2003/04 period. Currently, Mr.Dharmadasa serves as a Director of Nawaloka Holdings Company and all other ventures under its umbrella, including Nawaloka Hospitals PLC.
Harshith Dharmadasa Chairman / Non-Executive Director
Mr.Weerabahu joined your company at its inception as the General Manager and was appointed to the Board in 2002. He holds a Bachelors Degree in Engineering from University of Moratuwa. He is a member of Institute of Engineers of Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants (FCMA). Mr.Weerabahu possesses 31 years experience in the capacity of a senior executives in both private and public sectors. Currently, he serves as a Director of Millennium Housing Limited and Millennium Villa Housing Development Limited.
Sisira S. Weerabahu Chief Executive Officer / Executive Director
Mr.Seresinhe joined MHDL in 1999 and was appointed to the Board in 2003 as the Director Of Marketing. He counts over 26 years of experience in the field of marketing with a proven track record. He is an advance certificate holder of the Chartered Institute of Marketing (CIM) UK and also a member of the Sri Lanka Institute of Marketing (SLIM). Currently, Mr.Seresinhe serves as a Director for Millennium Housing Limited and Millennium Villa Housing Development Limited.
M.K.W.J. Seresinhe Executive Director Millennium Housing Developers PLC Annual Report 2013/14 11
Mr.Jayetileke was appointed to the Board as an Non-Executive Director in 2011. He is a graduate of Army Command and Staff College and later obtained a Masters Degree in Management and strategic studies at the Kothalawala Defense University. Mr.Jayathileke is a member of the Institute of Transport and Logistics in Australia and also a member of the Institute of Material Management of Sri Lanka. He also possess a Diploma in Quality Management in Sri Lanka Standard Institute, Diploma in Human Resource Management at Monterey University of California in USA, Diploma in Human Rights at Institute of Human Rights. Mr.Jayetileke a IATA qualified in Air Craft Load Distribution and has obtained Air Load Master Qualification from the Keiv Aviation plant in Ukraine.
Nalin Priyantha Jayetileke Non-Executive Director
Mr.Pasqual was appointed to the Board in 2011. He holds a B.Sc. in economics and business from Manchester College, Indiana, U.S.A. He Possesses over 31 years of banking experience of which spans over 23 years at HSBC culminating as Head of Corporate Banking and eight years as General Manager/ CEO, Seylan Bank PLC.
A. M. Pasqual Non-Executive Independent Director
Mr.De Zoysa was appointed to the Board in March 2011. He was an Associate Director and Consultant for Taru Villas (Pvt.) Limited during 2007 – 2010 and is currently handling Anilana Hotels and Properties Ltd. He is in charge of Special Projects and Technical Services. He has more than 23 years experience in building construction, hotel construction and hotel maintenance management. He has worked overseas in the Seychelles, United Kingdom and Sri Lanka. He has work experience with International Non–Governmental Organizations (INGOs’) in rebuilding Houses, medical centers and hospitals. He excelled as a leading sportsman his schooling days.
Gihan De Zoysa Non-Executive Director Millennium Housing Developers PLC 12 Annual Report 2013/14
BOARD OF DIRECTORS
Mr.Perera was appointed to the board of MHDL in 2011. He counts over 20 years of experience in marketing, property and real estate business, both in the United Kingdom and Sri Lanka. Mr.Rajiv is currently a Director of Nation Lanka Equities, Nation Lanka Promotions and Nation Lanka Capital. He worked as the Head of Marketing of Primer Communication International London & Directors of Capital CLS, Air Line Suppliers in UK.
Rajiv Perera Non-Executive Independent Director
Mr.Palihakkara was appointed to the Board in 2011. He holds nearly 40 years of post qualifying experience in divers fields. He has worked in a number of private and public sector organizations in Sri Lanka and overseas, which includes; Chairman, Acland Insurance Services, Deputy Chairman, Ceylon Electricity Board, Director/General Manager People’s Merchant bank, Deputy General Manager DFCC, Financial Specialist Commonwealth Secretariat (CFTC). He has also worked in a number of projects funded by the World Bank (WB), Asian Development bank (ADB), African Development Bank (AFDB), International Fund for Agricultural Development (IFAD), and Commonwealth Secretariat and JIAC.He was the former president of the Institute of Chartered Accountants of Sri Lanka and the Sri Lanka branch of Chartered Institute U. H. Palihakkara of Management Accountants (CIMA) UK, and the Chartered Association of Non-Executive Certified Accountants (ACCA) UK. He was a Council member of the Securities Independent Director Council of Sri Lanka for four years, Post Graduate Institute of Management, Open University of Sri Lanka and the Central Culture Fund National Institute of Business Management, CINTEC. He was the President of the Organization of the Professional Associations (OPA) in Sri Lanka (2010/2011).
W.B.B.C.J. Fernando Mr.Fernando was appointed to Board in 1998. Prior to joining the Board, he Non-Executive Director was employed at Bank of Ceylon and DFCC Bank. He also served as an Executive Director of Nations Lanka PLC from 2000 till 2013. He holds a (Retired with effect from Bachelor of Science (Hons) degree in Natural Science from the University of 28th May 2014) Colombo and is an Associate Member of Institute of Bankers. He counts over 28 years in commercial banking, development banking, and financial services including stock broking and primary dealership. Millennium Housing Developers PLC Annual Report 2013/14 13 THE MANAGEMENT Millennium Housing Developers PLC 14 Annual Report 2013/14
SENIOR MANAGEMENT
M.K.W.J. Seresinhe - Director Marketing (from left), Thebuwana A.C.H. J. - General Manager Engineering and Projects, S.S. Weerabahu - Chief Executive Officer, and W.A. Indunil Rangana Perera - Financial Controller Millennium Housing Developers PLC Annual Report 2013/14 15
MANAGERS
R.M.R. Jayawardena H.G. Vipula K.D.S. Fernando M. Sonnadara Manager Senior Manager Senior Manager Manager Plant Nursery Material Control & Stores - Sales – Purchasing
M.A.D. S. Fernando B.N.J. Mendis W.A.L. Ajith Kumara A.M.K. Sepali Manager Marketing Construction Engineer Manager – Security Legal Officer Communication & Sales
A.M. Darshana Bandara P. N. A. Wijeyarathna N.W.P. Dilruks Manager - Sales Architect Manager - Sales Millennium Housing Developers PLC 16 Annual Report 2013/14
HUMAN RESOURCES DEVELOPMENT
illennium Housing Developers PLC is driven by a Mteam of highly motivated and technically qualified staff focused on core Company activities which encompass internal engineering, technical support, sales and marketing and product and service diversification.
Your Company remains committed in developing the skills and knowledge base of its employees at all levels. Training programs are organized on a regular basis and employees have been provided with opportunities for developing their knowledge and skills in keeping with the Company’s focus on continuous professional development. Millennium Housing Developers PLC’s core values of integrity and ethics viewed as of paramount importance are embedded into the corporate culture of Millennium Housing Developers PLC.
Being a knowledge based entity, Millennium Housing Developers PLC continuously strife to create a knowledge gaining culture by encouraging team members to pursue higher studied and professional qualifications, which the company sponsors, as it adds value to the pool of knowledge available within the company for it to draw upon. Millennium Housing Developers PLC periodically reviews staff welfare in order to uplift the quality of work -life of its staff. Life insurance covers, comprehensive medical covers and recreational facilities are some of the welfare facilities available to all employees and their families.
Current staff strength of Millennium Housing Developers PLC is 118. The employees of the Company are not members of any trade union and the Company has not entered into any agreements with any trade union.
HUMAN RESOURCES OF MHD PLC
No of Category of Employees Employees Management & Professional 15 Operation & Technical 39 Skilled & Semiskilled work force 64 Total 118 Millennium Housing Developers PLC Annual Report 2013/14 17 Millennium Housing Developers PLC 18 Annual Report 2013/14
MANAGEMENT DISCUSSION & ANALYSIS
he market for real estate assets in Sri Lanka has low quality houses, resettlement and confirmation of Tshown a significant growth phenomenon since 2009 property rights. with a marked increase in price levels of real estate assets including bare lands, residential housing, commercial During the year, many families island wide benefited from premises and condominium style apartments. housing programs carried out under the above initiatives. Meanwhile, the Ministry of Construction, Engineering Increased foreign investment interest in prime blocks Services, Housing and Common Amenities released of commercial lands in the city of Colombo and the the ‘National Housing Policy’ for public comments in suburbs, the acquisition and resale of leisure properties September 2013, which they plan to finalize during 2014. by private investors and a general increase in confidence This will ensure the right of living in a stable, affordable levels of household investors is likely to have fueled the and quality house with all facilities in an environmentally development of Sri Lanka’s property market during the friendly atmosphere several housing development past 24 months. programs were continued in 2013 to increase housing facilities in the country. The changing landscape of Sri Lanka’s real estate market is likely to be further elaborated by shifting lifestyles The Ministry of Construction, Engineering Services, of real estate buyers including broader acceptance for Housing and Common Amenities spent over Rs.7 apartment style living, further cities becoming accessible billion in 2013 on 12 programs that were initiated by and equipped with necessary infrastructure and a growing the National Housing Development Authority (NHDA), leisure sector across a number of districts in Sri Lanka. Urban Settlement Development Authority (USDA), Further transformation is also likely to take place in the city Condominium Management Authority (CMA) and Ocean of Colombo, which moves to becoming a picturesque and View Development Private Limited. Over 21,000 families yet commercial city which could emerge as a trade hub for benefited from the Janasevena Housing Development South Asia. program of NHDA to complete their houses. Further, the ‘Nagamu Purawara’ housing infrastructure rehabilitation program under the NHDA commenced rehabilitation of 26 housing schemes and CMA renovated 12 housing schemes benefiting 6,933 dwellers during the year. Meanwhile, freehold deeds were issued by the NHDA to 2,581 dwellers who reside in government housing schemes without proper ownership rights. The ‘Mihindu Senpura’ housing scheme in Dematagoda, which were constructed by Urban Development Authority (UDA) was opened in November, 2013 which offered 500 housing units for underserved families. Additional 5,000 housing units through 10 other projects for underserved families are expected to be completed by UDA in 2014. The USDA commenced construction work of 1,019 housing units under Thalawakele-Lindula, Chilaw, Angulana and Lunawa housing programs and Janasevena Diriya programs during the year. Further, the USDA continued Janasewana Swashakthi Human Development program with the objective of empowering communities in undeserved settlements. Initiatives were taken under this program to support 35,000 low facility urban settlements through a A number of emerging opportunities could result from the participatory approach. development of Sri Lanka’s real estate market for both the institution and the individual. Recent growth trends have Urban development is one of the major drivers of shown increasing activity in the construction industry, economic growth. Well-planned, economically productive, housing, property sales and apartment projects. Individuals environmentally sustainable, clean and healthy, and are also likely to have benefited from increasing property well-secured cities and towns throughout the country will prices and appear to continue to invest in tangible real provide multi-faceted benefits to all stakeholders while estate assets both state and the private sector. boosting economic development.
The government has taken many steps in 2013 in line with Urban development is essential in attracting foreign the ‘Mahinda Chintana’ to realize the national policy of direct investments and private sector investments and ‘house ownership for all’ by 2020. The government strategy establishment of world-renowned companies. In addition, consists of a multidimensional approach of construction a better working environment, comfortable and diverse of new houses, renovation of existing housing facilities, leisure activities, reduced vulnerabilities to natural financial assistance to construct houses, relocation from disasters is expected to enhance the living conditions of urban societies. Millennium Housing Developers PLC Annual Report 2013/14 19
The contribution of the UDA in the advancement of urban infrastructure, healthy living environment and improving the urban lifestyle has been commendable. During the year, many large-scale projects were accomplished while several more projects were at various levels of implementation, striding towards a significant change in the landscape of cities in the country.
“The changing landscape of Sri Lanka’s real estate market is likely to be further elaborated by shifting lifestyles of real estate buyers including broader Sri Lanka’s second international conference hall “Magam Ruhunupura International Conference Hall’ in Hambantota, acceptance for apartment style living, which is equipped with state-of-the-art facilities, were declared open in November 2013.Further, the UDA further cities becoming accessible and has completed 35 other projects countrywide providing facilities for business activities, public utilities, township equipped with necessary infrastructure development, improving recreational facilities and city and a growing leisure sector across a beautification. During the year, UDA has invested around Rs.8.3 billion on 238 projects. number of districts in Sri Lanka. Further
The Colombo city beautification and countrywide township transformation is also likely to take place development projects continued in collaboration with both local authorities as well as international organisations. in the city of Colombo, which moves The Wetland Park in Nugegoda,Waters Edge Hotel to becoming a picturesque and yet Landscaping in Battaramullaand beautification of Independence Square were some of the projects commercial city which could emerge as a completed by the UDA in 2013with the aim of beautifying the city of Colombo. Further, the township projects such as trade hub for South Asia.” re-development of the Racecourse Ground and its Grand Stand was completed in 2013. During the year, several types of projects, such as the construction of shopping complexes, bus stands, children parks, sports complexes, playgrounds, vehicle parks, renovations of sacred areas and historical places in the capital city of Colombo as well in main cities countrywide were completed by the UDA. Millennium Housing Developers PLC 20 Annual Report 2013/14
FINANCIAL REVIEW
Group Company Results for the Year 2014 2013 Change 2014 2013 Change RS RS % RS RS % Revenue 714,363,392 578,745,720 23.43 245,872,805 224,860,364 9.34 Results from Operating Activities 149,999,317 111,906,601 34.04 45,058,766 57,361,285 (21.45) Profit before Tax 169,535,542 130,206,892 30.20 59,448,896 71,076,863 (16.36) Income tax on profit (42,454,090) (32,674,170) 29.93 (14,157,709) (14,032,709) 0.89 Net profit after income Tax 127,081,452 97,532,722 30.30 45,291,187 57,044,154 (20.60)
Cash Flow Net Cash Generated from Operating Activities 40,228,430 62,496,491 (35.63) (21,172,740) 75,797,858 (127.93) Net cash used in Investing Activities (13,952,713) 6,771,018 (306.07) 12,410,779 (727,992) (1,804.80) Net cash used in Financing Activities 49,857,508 (24,457,191) (303.86) 50,434,727 (28,955,190) (274.18) Net Increase/(Decrease) in cash and cash Eq 76,133,224 44,810,318 69.90 41,672,768 46,114,675 (9.63)
Key financial Indicators Return on Equity Capital - % 20.38 21.86 (6.77) 9.10 14.19 (35.89) Profit Margin on sales - % 17.79 16.85 5.56 18.42 25.37 (27.39) Return on Gross Assets - % 12.45 10.91 14.15 6.73 9.83 (31.56) Earning per share - Rs 1.06 0.82 28.98 0.38 0.48 (21.79)
Revenue and profitability Margin for the year has improved mainly due by 10 days. The cash conversion period of the to the improved sales mix, with the high margin company and the group has increased by 63% Group turnover has increased By 23.43% and luxury houses contributing a sizeable portion and 5% respectively due to these reasons net profit after tax also has increased by 30% of sales. The improvement in mix was able to over year 2012/13 due to the directions given offset the rising construction costs during the Asset Management by Chairman and the Board of Directors. A quick year. breakdown of the sales revenue indicates that Turnover to Property Plant and Equipment has the new brand introduced in year 2012/2013 Liquidity and Working Capital declined marginally from 1.63 to 1.34 during the Lotus has contributed 35% to total revenue and Management year under review. The acquisition of the afore- other main brands Paradis, Olympus and Villa said land, which has not generated any income has contributed 40% of the revenue. Innovation Liquidity has improved during the year as during the year, was the main reason for this is very important to our business continuity, and reflected in the current ratio of 2.68x. The decline. we hope to modify our product offering to suit improvement however was not a result of customer requirements and offer new products working capital improvements but a result Debt Management in order to boost revenues. of cash Infusion during the year by way of a Initial Public Offer. Our inventory conversion The company has been able to reduce the period has increased from 309 days to 324 Borrowings To Equity Ratio to 5.24% in 2013/14 days and debt collection period has increased from 7.25% in 2012/03. This is due to the funds Millennium Housing Developers PLC Annual Report 2013/14 21
Group Company At the Year End 2014 2013 Change 2014 2013 Change RS. RS. % RS RS % Shareholders Funds 623,690,886 446,252,044 39.76 497,846,171 402,005,674 23.84 Non-current Assets 64,256,181 24,219,084 165.31 182,736,814 179,618,027 1.74 Current Assets 956,411,510 869,952,654 9.94 490,198,372 400,471,157 22.41 Current Liabilities 356,462,174 406,568,405 (12.32) 155,992,280 164,455,854 (5.15) Total Assets 1,020,667,691 894,171,738 14.15 672,935,186 580,089,184 16.01
Liquidity & Working Capital Management Current Ratio (X) 2.68 2.14 25.39 3.14 2.44 29.05 Quick Ratio (X) 1.22 0.78 57.03 1.90 1.36 39.56 Cash Conversion Period (Days) 324.73 309.59 4.89 306.85 187.51 63.64 Inventory Convertion Period (Days) 444.71 525.48 (15.37) 426.84 396.38 7.69 Debt Collection Period 128.51 117.56 9.32 180.35 182.47 (1.16) Paybles Deferred Period (Days) 248.49 333.45 (25.48) 300.34 391.34 (23.25)
Assets Management Inventory Turnover (X) 1.37 1.05 31.27 1.27 1.27 (0.39) Debt Turnover (X) 2.44 2.76 (11.56) 1.85 2.05 (9.88) Fixed Asset Turnover (X) 15.96 79.34 (79.88) 38.46 40.37 (4.74) Total Asset Turnover (X) 0.70 0.65 8.14 0.37 0.39 (5.74)
Debt Management Total Liabilities : Total Assets - % 38.54 50.09 (23.07) 25.46 30.70 (17.05) Interest Cover (X) 30.72 27.39 12.14 412.94 292.51 41.17
raised from IPO year 2013/14 and right issue Summary of Fund received and allocation Rs. Mn from year 2012/13 and high retained earnings, Funds Raised from IPO 96.00 which also has led to safeguard the lenders Share Issue Cost (11.90) and the interest cover improved to 30.72x in Available for Allocation 84.10 2013/14 from 27.39x in 2012/13. Allocation/Utilisation of Funds Allocated Utilised Balance Raising Capital Rs. Mn Rs. Mn Rs. Mn In February 2014 company listed its shares at MHDL Housing Ja-Ela Project 25.00 12.50 12.50 the Colombo Stock Exchange Diri Savi Board MHDL Housing Homagama Project 26.00 2.10 23.90 by issuing 16 million new shares at Rs. 6 Per Millennium Housing Seeduwa Project 20.00 0.20 19.80 share. A sum of Rs.96 million was raised from Millennium Villa Ja-Ela Project 13.10 8.40 4.70 the IPO and funds were allocated according to the pre planned objectives stated in our Total 84.10 23.20 60.90 prospectus. Millennium Housing Developers PLC 22 Annual Report 2013/14
BRAND PERFORMANCE
HDL’s first township development project was done All the housing projects are delivered with the following Min Athurugiriya, which is conveniently located in standard amenities and the facilities will be upgraded close proximity to the Colombo - Kandy highway in the depending on the selection of house categories. picturesque Sri Jayawardenepura Kotte area, Millennium City Athurugiriya caters to the needs of a range of Electricity from the main national grid homebuyers. Moreover, The Millennium City Township Pipe - borne water is made up of 1600 houses, which spaced out over 125 acres. Wide access roads with green belts Garbage & sewerage disposal systems Millennium City Ja-Ela, located close to the Colombo - Negombo highway is in close proximity to the airport and to the metropolitan areas of Colombo. This township project comprises of 900 houses aimed at serving the residential needs of a range of income groups. In addition to the Paradis, Olympus and Tulip residencies, the Heartland Residential complex will be made up of single storeyed houses catering to a middle income group.
At Ja-Ela housing project, the Heartland Residential complex will be made up of single storeyed houses catering to a middle income group.
The Millennium Villas is a dedicated segment exclusively designed as super luxury holiday homes into the Sri Lankan market. Further, this township project includes landscaped parks, lakes & fountains, club house, swimming pools, tennis, basket ball court, gymnasium and children’s play area.
Product Range of MHD Group
Villas
Millennium Villas is the Premium brand in our portfolio. This 180 units exclusive project is located just adjoining Millennium City main Project in Ja- Ela. There are 11 designs developed to a blend of European architecture with Eastern touch. The Villas are primary targeted to the housing/ investment needs of expatriate Sri Lankans community and affluent domestic market. Since the Ja Ela area has made a remarkable development within last few years with new expressway, superior infrastructure and shopping malls there is a growing demand for Villas. This brand contributed 17% to the revenue is 2012/13 while it contributed 6% in the year 2013/14. Millennium Housing Developers PLC Annual Report 2013/14 23
Paradis
Paradis is a premium brand offered by MHD PLC. The The free membership to Millennium City’ exclusive brand was launched at the inception of Millennium City clubhouse, swimming pool, gymnasium, basketball and and caters to the high income earning segments of society, tennis courts enhance the premium positioning of the especially the business class. Paradis is sub-divided in to brand. two categories; Paradis Esteem and Paradis Prestige. The luxury houses consist of four bedrooms, set in an Throughout the last five years, Paradis has made the eco friendly environment within a secured area adds to significantt contribution to the bottom-line of MHDL Group the tranquility of high class living. The facilities such as a compared to the other brands and during the year under private lake and a landscaped park within the compound review Paradis has contributed to 15% of the total revenue itself with broad well tarred roadways, drainage and street and its contribution to revenue has increased by 124% lights makes it the preferred luxury brand of house to live when compared to the previous year. in.
Olympus
This is a two-storied, three bedroom luxury detached Total revenue of the brand has increased by 68% houses are set in an eco friendly environment with private compared to the previous and Olympus remain one of the lakes and parks and includes two sub-brands, Olympus core brand contributing significantly towards the revenue Crystal and Olympus Classic. Olympus is synonymous and profitability of the organization. The Olympus brand with easy living. contributed to 19% of the total revenue during the year under review. Millennium Housing Developers PLC 24 Annual Report 2013/14
Tulip / Gardina
Tulip is a single stoyered three bedroom brand of houses living dinning, car porch etc. Gardinia is a similar structural targeted at upper middle income group and those design of Tulip but with additional features such as air customers who do not like to climb stairs but yet requires conditioning fully covered front wall with wire cut brick space like three bedrooms, two toilets, effect, superior tile option.
Lily/ Carnation/ Sakura/ Lotus
MHD Groups focus is to cater to the widest market These brands show tremendous success over the last segment possible within its selected line of business. Thus three years and has contributed 44% of total revenue we do not limit our offering to the premium segments in the for the current year under review and 41% for the year market. In addition to Heartland we have launched new 2013/14. brands, Lily,Carnation, Sakura, and Lotus that caters to prospective homeowners with smaller budgets than our Heartland customers. Millennium Housing Developers PLC Annual Report 2013/14 25
Heartland
As a strategy to capture market share, MHD Group The MHD group has successfully sold over 1,250 Heartland launched the Heartland brand in 1999, and has since houses, and the Heartland brand was the highest selling gone through many product development stages. A home individual brand during the last 10 years. to your Heart’s desire” is the theme of the Heartland brand, which is subdivided in to four categories namely Heartland, During the there was a significant drop in the number Orchid, Rose, Anthurium and Dahlia. The Heartland range of sales of Heartland category because of MHD group provides value for money and is an affordable option introduced low cost new bands Lily, Carnation, Sakura and targeting the lower middle class and the working class. The Lotutus houses. Heartland Contribution to total revenue two bedroom expandable designs, attracts newly married was 1% compared to 10 % in the previous year. couples who are employed as well as elderly couples due to the compact design. Heartland range could easily be the widest selling of the branded houses in the country. Millennium Housing Developers PLC 26 Annual Report 2013/14
GROUP STRUCTURE AND SUBSIDIARIES
illennium Housing Developers PLC is a subsidiary With the success of initial projects, MHD PLC’s objective Mof Nation Lanka Finance PLC, formally known as was further extended to upper - middle income group Ceylinco Developers Limited was incorporated in 1998 housing requirement by providing more houses in and commenced business in 1999. MHD PLC’s first project Athurugiriya, closer to the existing project. Ja-Ela and was Millennium City, Country’s pioneered Mega township Ekala housing project was 90 acre land catering to middle project in Athurugiriya, revolutionized the concept of and upper income level in the town east of Colombo. suburban neighbourhoods around Colombo. The success of Athurugiriya project led to MHDL’s second township project launched in Ja-Ela. MHD PLC is registered with the Board of Investments where the company was allowed to import project related material on duty free basis.
Group Structure Nation Lanka Finance PLC
68.13 %
Millennium Housing Developers PLC
100% 100% 100% 100%
Millennium Villa Millennium Housing Ceylinco Housing Housing Development Millennium Housing Limited Corporation Limited Limited Counstruction Limited Millennium Housing Developers PLC Annual Report 2013/14 27
Millennium Housing Limited (MHL) Millennium Housing Constructio Limited (MHCL) Established in March 2003, MHL is a fully owned subsidiary of Millennium Housing Developers Limited. MHL currently Company was established on 28th October 2003. Initially, operates in Ja-Ela and Piliyandala. MHL is engaged in MHCL operated as a fully owned subsidiary of Nation constructing the Heartland category houses in Ja-Ela. Total Lanka Finance PLC and ownership has transferred land area of the Ja-Ela project is approximately twenty nine to Millennium Housing Developers PLC on 1st March acres of which eight acres are reserved for parks, green 2007. MHCL mainly engaged in construction of Houses, pockets, roads and other common reservations and 418 Roads, Drains, Retaining walls etc of Ceylinco group of houses will be constructed over the allocated land area. companies and Millennium Housing Developers PLC and its subsidiaries. In Piliyandala site Hearltland, Olympus and Paradis houses will be constructed. Directors of the company
Company is planning to construct houses in Seeduwa N. Priyantha Jayathilake sites as well. Gihan De Zoysa
Directors of the company Ceylinco Housing Corporation Limited (CHCL)
S. S. Weerabahu Established on 25th March 2003, Company operates as a M. K. W. J. Seresinhe fully owned subsidiary of Millennium Housing Developers N. Priyantha Jayathilake PLC. The Company was formed to handle Piliyandala Gihan De Zoysa housing project and land area of the project was approximately twenty five acres. However UDA acquired Millennium Villa Housing Development the land for public purposes in 2008 and compensation Limited (MVHDL) was received in return. Compamy was liquated during the current financial year. Established in February 2004, the MVHDL operates as a fully owned subsidiary of Millennium Housing Developers Directors of the company Limited. This subsidiary is responsible for the Villa branded houses that were introduced in the Ja-Ela project. Eight S. S. Weerabahu exclusive Villa designs were launched to cater to the M. K. W. J. Serasinhe housing needs of the upper income segment of the Market. N. Priyantha Jayathilake MVHDL currently operates only in Ja-Ela, a total land area Gihan De Zoysa of approximately thirty one acres is being developed of which nine acres are reserved for parks, green pockets, roads and other common reservations. 192 houses will be constructed over the allocated land area.
Directors of the company
S. S. Weerabahu M. K. W. J. Seresinhe N. Priyantha Jayathilake Gihan De Zoysa Millennium Housing Developers PLC 28 Annual Report 2013/14 Millennium Housing Developers PLC Annual Report 2013/14 29 Millennium Housing Developers PLC 30 Annual Report 2013/14
COPORATE SOCIAL RESPONSIBILITY
SR is not about giving money to your neighborhood Moving on with our CSR initiatives, we have also developed Ccharity, or just asking people not to print emails using a public road adjoining our premises at Ekala Ja-Ela for the office printer for the sake of Mother Earth! CSRis both the public as well as the residents use. The Uttararama beyond what you see and what you could imagine. Road, which was developed by us stretched over ½ km connecting the Millennium City and the Nivasipura. Primarily businesses are there to make profit. The reality is such that no organization operates in isolation; there is interaction with employees, customers, suppliers and all stakeholders. CSR is about managing these relationships to produce an overall positive impact on the society, whilst making money.
During the period in focus, your company engaged in several CSR activities. These projects varied from a simple tree planting campaign to construction of a public road. Let us elaborate them for your information.
Pollution and the environmental impact is a serious problem wherever we go. The best we could do was to reduce the damage to the Mother Nature and to help sustain the eco balance. We expect to reduce our carbon footprint while creating an ecofriendly environment launching a tree planting campaign throughout the year, proven a success. Finally yet importantly, we have given due interest to health sector as well by lending a hand for the painting of the Athurugiriya Hospital and conducting a dengue prevention program. Millennium Housing Developers PLC Annual Report 2013/14 31 Millennium Housing Developers PLC 32 Annual Report 2013/14
RISK MANAGEMENT
e have achieved MHD PLC’s mission of becoming 3. Taking steps to reduce the severity if it occurs. Wan internationally renowned large scale township developer. Strategies have been designed after analyzing 4. Transfer the risk or its consequences to another all both external and internal risk factors in detail. It is a must party. for any company to analyze risk factors while developing strategies to accomplish their objectives. A poor analysis Operational Risk of risk factors may lead to natural and/or man-made crises. Operational Risk is an inherent risk of day-to-day business Therefore, risk analysis and management is an integral activities due to human errors, frauds, and failures in part of any organization. These relationships are clearly systems and procedures and deviations from designed depicted in the following diagram. procedures; any of which could result in financial and non- financial loss.
The Company has designed and implemented a comprehensive and sound system of internal controls to minimize operational risk. Regular reviews of systems and controls by the management ensure the quality, effectiveness and efficiency of the system of controls. Finally the updating of all information ensures that the appropriate changes are in line with the changing business environment. The continuous internal audits carried out by the internal audit division of our parent company Nation Lanka Finance PLC to ensure the adequacy and strength of the designed system.
The construction and development activities of the site is directly supervised by qualified and well-experienced team of Consultants/Engineers/Architects who see to it that the quality standards of the construction activities are strictly enforced.
Specific and general provisions have been made to In business, risk can be defined as any event or incident that meet any unexpected price increases without disturbing if occurs will adversely affect the achievement of expected the ongoing operations of the company. Finally, all the goals and objectives including missed opportunities. Risk pre-emptive steps such as adequate insurance cover, Management is the selection of those risks a business collection of performance bonds and guarantees from should take, and those, which should be avoided or contractors, safekeeping of important documents and mitigated, followed by action to avoid or reduce risk. backup of important files have been implemented to face any unforeseen disaster. Managing Risk at MHD PLC Credit Risk Risk management is an integral part of decisions and business processes in the Company. All the planning, Credit risk is connected with the potential losses arising reporting, information systems, and audit reviews from the failure of customers to perform contractual provide the basis for integrating risk management into agreements with the Company by way of default. the management of the business. Millennium Housing Developers PLC approaches risk management in a We have minimized credit risk by employing the following proactive manner and has implemented systems where procedures in relation to sales. possible to avoid or mitigate risk. Control mechanisms are in place to track the exposure to risk as well, giving Cash customers - Execution of the transfer the management signals as to when and where control deed and handing over of the house for is needed. Risk management MHDL PLC involves a four occupation is done only upon receipt of the steps process; entire sales consideration.
1. Taking steps to eliminate the risk.
2. Reducing the probability of its occurrence. Millennium Housing Developers PLC Annual Report 2013/14 33
Credit customers - The lending institutions PLC has realized the importance of maintaining a sound disburse the loan directly to MHD PLC after reputation to retain and improve its customer base, and signing the mortgage bond in the case of also to have a better public image in the eyes of all stake credit customers who may opt to use holders. bridge financing. The handing over of the house also is done after receiving the full Meeting customer expectations is the biggest challenge consideration. faced by the Company. MHD PLC has employed team of qualified and well-experienced professionals of the industry Overall, the Company carefully designs the payment to ensure the utilization of standardized raw material and structure from customers to ensure a well-balanced cash adherence to the standards of the construction industry flow over time, and also monitors the collection ofdues so as to deliver quality houses to the customer in a timely through the recoveries division. manner.
Interest Rate Risk The Company always entertains and accommodates customer queries. Special care is taken to safeguard the Interest rate risk specific to MHD PLC is connected with reputation of the company in the eyes of the customer. its borrowing cost (interest rate) being higher than the A separate customer care unit is in place under the prevailing rate in the market. supervision of a Customer Relationship Manager to coordinate customer complaints in a very positive manner. During the year the group was able to negotiate better Regular newsletters and meetings with customers’ welfare rates than previous occasions to reduce interest rate risk. societies also strengthen the customer relationship. Further Initial public offer also has mitigated the interest Special emphasis has also been given to the constructive rate risk. suggestions made by the customers, contractors and staff members. Legal Risk
Legal risk is the risk resulting from the legal or regulatory The firm commitment of MHD PLC to serve the community while liaising with various individuals and organizations framework that governs the Company and its transactions over the years has helped MHD PLC to build its reputation with third parties. MHD PLC uses a three-pronged approach as a corporate entity that takes social responsibility to mitigate legal risk; ie: in-house, parent company and seriously. Further, Millennium Housing Developers PLC external third party counsel. The while we have access to takes all necessary steps to ensure compliance with all expert legal advice through an experienced in-house legal legal, statutory requirements and special attention has officer and the highly capable officers of the legal division been given to maintain ethics, standards and transparency. of Nation Lanka Finance PLC, we can also seek expert Competition Risk Opinions from external senior legal counselors in special circumstances to ensure the legal safety of the Company. The competitive advantage we have enjoyed during past being the pioneer township developer in the country has Liquidity Risk reduced within the last two year due to growing competition from new smaller scale house constructors in the market. Liquidity risk is connected with the inability or difficulties This situation has eroded our overall market share. the Company may face to meet its financial obligations as they become due without affecting normal operations. Competition comes not only for a share in the housing market, but also for the increasingly scarce supply of land. The regular preparation of cash flows and close monitoring The source of this competition is real estate companies of deviations will ensure the smooth matching of collection who purchase, develop and sell bare land in addition to and borrowings against the expenses of the Company. other house constructors. The strategy of pre- selling has also reduced the potential for liquidity problems in the Company. Being a BOI Company, MHD PLC benefited from a 12 year tax holiday not available to its non-BOI competitors. Timely preparation of MIS reports also minimizes the Large-scale development has its own inherent advantages liquidity risk by identifying the strengths and weaknesses like economies of scale, which are enjoyed by MHD in relation to cash flows and financing. PLC. Expertise gained over the years has strengthened our capabilities, enabling us to deliver more value Reputation Risk to our customers. Construction that meets customer requirements, focused marketing strategies, and a wide Goodwill is one of the most important intangible assets range of products with unique branding has enabled us of the Company, and Millennium Housing Developers to achieve the desired position in the minds of customers. Millennium Housing Developers PLC 34 Annual Report 2013/14
MHDL PLC entered the premium segment of the housing or the desired quality or volumes may be insufficient. All market through the launch of the Villa houses that were the construction activities are dependent upon on the introduced through its subsidiary. Villas are luxury houses availability of raw material such as cement, bricks, sand, priced at premium rates and cater to the top-end segment timber, steel, rubble, and roofing sheets. Any shortage of the market in Sri Lanka. So far we have not encountered in the supply may lead to a crisis by badly affecting the significant competition within this segment. However, the bottom-line. This may be a result of purchasing supplies market attractiveness may lure new competition into this at excessively high prices and loss of customer goodwill. segment. With this new addition to its product portfolio, the MHD Group was able to expand its market reach and MHD PLC manage the procurement risk through contractual diversify risk. agreements, long-term relationships with suppliers, and reduced dependency on individual suppliers. Furthermore, As a result of price increases in the housing market due timely settlement of suppliers’ bills and advance payments to increase in raw material prices aggravated by heated prior to supply has ensured timely delivery of quality raw demand leading to additional increase in the prices material at the right quantity. A separate supply division completed finished houses, a segment in the market has has been established to ensure smooth operations at all lost their purchasing power. Having identifying this gap, the sites minimizing idle time of the workforce as well. All MHD PLC is now planning to introduce a house at a lower these have lead to efficient supply chain management price to exploit the existing market opportunity, which strengthening the overall operations of the company. definitely enhances the competitiveness of the company among its rivals. Dependence on Contractors
Environmental Risk In the past MHD PLC dealt with many contractors. However, a few contractors handled the bulk of the construction. There is a risk faced by any construction firm that its activities This reliance will negatively affect the profits, company could cause permanent damage to the environment. Once reputation and customer expectations should a contractor a site has been selected for development, the trees are become non-performing. removed, exposing the earth directly to the rays of the sun. The result of this is environmental pollution as well as Now MHD PLC has established a separate construction drying up of the surface water in that area. team with qualified and experienced people to handle any type of crisis due to a discontinuation of a contractor. From In order to control this situation and minimize environmental next year onwards involvement of a fully own subsidiary damage, MHD PLC; Millennium Housing Construction Ltd. in construction activities and tying up with a number of smaller contractors • Makes it a point to minimize the removal of trees have further mitigated this risk. as much as possible
• Minimizes the disturbance to the existing/natural drain paths
• Has designed a garbage collection system and a solid waste disposal system
• Complies with legal requirements such as obtaining approval from the Central Environmental Authority for the construction of buildings, developing the project according to UDA (Urban Development Authority) regulations
In addition to the basic guidelines outlined above, each project is planned with specifications as to the reservations for the drainage system, percentage of open spaces, reservation for green pockets.
Procurement Risk
The construction of houses and other infrastructure facilities in the townships are carried out subject to the risk that raw materials and other applicable inputs may be unavailable Millennium Housing Developers PLC Annual Report 2013/14 35
REPORT OF THE DIRECTORS’
The Directors of Millennium Housing Developers Plc have pleasure in presenting their Report, together with the Audited Accounts for the year ended 31st March 2014.
Mission Statement and Corporate Goals
The Mission Statement and Corporate goals are set out in the front inner cover to this report.
Principal activity
The principal activity of the Company is Construction and sale of houses, bungalows, flats, housing units and condominium units.
Review of the Operations
Millennium Housing Developers Plc, a BOI approved Company being the pioneer township developer in Sri Lanka has continued its stellar performance by achieving a remarkable profit during the year under review as well as by being the leading profit maker of the Nation Lanka Finance Plc.
The “Millennium City” housing project in Athurugiriya and Ja-Ela offers fourteen types of residential complexes that differ in size, type and price accordingly. MHD Plc also pioneered in introducing the unique “Shop House” concept in Sri Lanka, where commercial space is incorporated into residential space. Further “Villa” houses at Ja – Ela are exclusive supreme quality house constructed with additional land area, allowing our customers to have a wide range of houses to match their needs.
There is a continuous demand for housing in and around Colombo and its suburbs. In addition to the two main projects MHD Plc has embarked on new projects at Piliyandala, Seeduwa and Homagama in order to exploit this potential market opportunity.
Review of the Year
The Chairman’s review and Chief Executive Officer’s review describe in detail the Company’s performance, affairs and important events of the year.
Profitability
The profit before tax of the group amounted to Rs.169.5 million while the Company made a profit (before tax) of Rs.59.4 million. Company profit include dividend of Rs.10.7 million from fully own subsidiaries and these subsidiaries, Millennium Housing Limited has recorded remarkable profit before tax Rs.114 million and Millennium Villa Housing Development Limited has recorded Rs.6.9 million during the year under review. Overall group profit has increased by 30% when compared with previous year.
Turnover
The total turnover of the Group for the year under review was Rs.714.4 million. The Company’s turnover is Rs.245.8 million of which details are disclosed in note 5 to the Financial Statements.
Millennium Housing Developers PLC 36 Annual Report 2013/14
Financial Results and Appropriations
Group Company 2013/14 2012/13 2013/14 2012/13 Rs. '000' Rs. '000' Rs. '000' Rs. '000'
Net Profit after taxation 127,081,452 97,532,722 45,291,186 57,044,154 Profit brought forward 182,449,844 104,697,737 138,203,474 100,939,935 Share Issue cost (11,894,943) - (11,894,943) - Funds available for the appropriation 297,636,353 202,230,459 171,599,717 157,984,089
Appropriations Dividends - Ordinary (33,670,549) (19,780,615) (33,670,330) (19,780,615) Un-Appropriated Profit carried forward 263,965,804 182,449,844 137,929,387 138,203,474
Provision for Taxation
The tax status of the Group and the Company has been explained in note 9 to the Financial Statements.
Stated Capital and Reserves
The total Stated Capital and Reserves of the Group is Rs.623.7 million while the Company’s stood at Rs.497.8 million as at 31st March 2014.
Share Capital
The Share Capital of the Company is stated in Note 21 to the Financial Statements.
Share Holdings
There were 367 registered Share Holders, holding voting Ordinary Shares as at 31st March 2014. The composition of the major Share Holdings is given below.
As at 31st March 2014 As at 31st March 2013 No of shares Holding % No of shares Holding %
Nation Lanka Finance PLC 91,754,028 68.13 91,754,028 77.31 Anilana Hotels & Properties Limited 11,925,072 8.85 11,925,072 10.05 Arrow International (Pvt) Ltd 6,000,000 4.45 6,000,000 5.06 Investor Access Equities (Pvt) Ltd 3,778,300 2.81 - - Bank Of Ceylon A/C Ceybank Unit Trust 2,042,600 1.52 - - Mr. H. J. C. Perera 1,833,300 1.36 - - Mr. V. R. Rmanan 1,666,600 1.24 - - National Development Bank of Sri Lanka 1,500,000 1.11 1,500,000 1.26 DFCC Bank A/C No 1 1,500,000 1.11 1,500,000 1.26 Serendib Engineering & Agencies (Pvt) Ltd 1,417,904 1.05 1,500,000 1.26 Mr. K.C.C. Perera 1,300,000 0.97 - - Ceylinco Insurance PLC A/C No 2 (General Fund) 1,200,000 0.89 1,200,000 1.01 The Finance Company PLC A/C No 1 1,200,000 0.89 1,200,000 1.01 Ceylinco Homes International Ltd 900,000 0.67 900,000 0.76 Dunimis Capital Plc 833,000 0.62 - -
Millennium Housing Developers PLC Annual Report 2013/14 37
Directorate
The Members of the Board during the year under review were as follows,
Directors U. Harshith Dharmadasa Chairman / Non Executive Director S. S. Weerabahu CEO/Executive Director N. Priyantha Jayathilake Non Executive Director W.B.B.C.J. Fernando Non Executive Director Gihan De Zoysa Non Executive Director Rajiv Perera Non Executive Independent Director M.K.W.J. Seresinhe Executive Director A.M. Pasqual Non Executive Independent Director
U.H. Palihakkara Non Executive Independent Director
The Profile of the Board of Directors of the Company are given in page 10 to 12
Directors and CEO’s Share Holdings
The particulars of the Directors are stated on the page 10 to 12 to the Annual Report and their Share Holdings in the Company as at 31st March 2014 are given bellow.
Director Ordinary shares 31-Mar-14 31-Mar-13 U. Harshith Dharmadasa - - S. S. Weerabahu 50,000 - N. Priyantha Jayathilake 2,000 - W.B.B.C.J. Fernando 1,620 - Gihan De Zoysa - - Rajiv Perera - - M.K.W.J. Seresinhe 50,000 - A.M. Pasqual 10,000 -
U.H. Palihakkara 100,000 -
Directors Interest in Contracts with the Company
The Directors have no direct or indirect interest in contracts with the company other than those disclosed Note 27 to the Financial Statements and the same have been declared at the meetings of the board.
Retirement of Directors by rotation or otherwise and their Re-election
In accordance with Articles 95 of the Articles of Association of the Company U.H. Palihakkara, who is over Seventy years of age retired by rotation and Gihan De Soyza retired by rotation is eligible for re-election.
Resignation of Director
W.B.B.C.J. Fernando resigned from the Board with effect from 28th May 2014. The Board wishes to place on record appreciation for the valuable services rendered by him during the financial year under review.
Internal Control System
Designed Internal Control System of the Company is discussed in the Corporate Governance Report of this annual report.
Millennium Housing Developers PLC 38 Annual Report 2013/14
Property Plant & Equipment
Group has incurred Rs. 2.4 million on acquisition of fixed assets during the year and information relating to fixed assets has given in note 11 to financial statements and fully own subsidiary Millennium Housing Limited has invested Rs.36.4 million in Land at Athurugiriya. This is mainly to construct commercial complex at Athurugiriya Site.
Audit Committee
MHD Plc uses same audit committee of its parent, Nation Lanka Finance PLC and the present committee comprises of three (3) Non Executive Directors of the NLF PLC.
Remuneration Committee
MHD Plc uses same Remuneration Committee of its parent, Nation Lanka Finance Plc.
Member of the Remuneration Committee of MHD Plc
H. Dharmadasa Chairman/Non Executive Director A.C. Senevirathe Non Executive Director A.M.Pasqual(By Invitaion) Non Executive Independent Director P.M.L.K. Karunarathne Non Executive independent Director
The main objective of the remuneration policy of MHD Plc is to attract and retain the required human resource talent in order to sustain its operations and to reward their performance.
Remuneration committee of MHD Plc shall recommend the remuneration payable to the Executive Directors and CEO of the Company and/or equivalent position thereof, to the Board of the Company which will make the final determination upon consideration of such recommendations.
Directors Remuneration
The remuneration paid to the Executive and Non Executive Directors during the financial year under review is given in note 7 to the financial statements
Subsidiaries
The performance and information of the subsidiaries are presented in page 28 to 29 to the annual report.
Segmental Reporting
There are no specific segments that can be identified in the group, although we operate in three separate sites. The risk and returns from those three sites cannot be differentiated. Therefore we have not presented segmental reports.
Events After the Reporting Date
There were no material Events after the reporting date which require adjustment to or disclosure to the Financial Statements.
Litigations and Claims
In the opinion of the Directors and the Company’s lawyers, pending litigation against the Company will not have a material impact on the reported financial results or future operations of the Company.
Statutory Payments
The statutory payments relating to employees and the Government have been made up to date or provided for the same.
Millennium Housing Developers PLC Annual Report 2013/14 39
Employment
The employee’s details are described in Human Resource Management Report included in this annual report.
Auditors
The Accounts for the year have been audited by M/s KPMG, Chartered Accountants, who retire and are eligible for re-appointment. The Directors recommend their re-appointment.
Directors Responsibility and financial reporting
The directors are responsible for the preparation of the Financial Statements to reflect a true and fair view of the state of its affairs. The Directors are of the view that these financial statements have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards, Companies Act No 17 of 1982, Sri Lanka Accounting and Auditing Standards Act No 15 of 1995.
Going Concern
The Board of Directors of the company is satisfied that the company has adequate resources to continue its operation in the forceable future. Therefore the company continues to adopt going concern concept in preparing the accounts of the company.
Dividends
The Board of Directors has declared first and final dividend Rs. 00.25 per share totaling to Rs. 33.6 Million for the financial year 2013/14.
Environment Protection
Millennium Housing Developers Plc has obtained the approvals of the Environment Authority in doing their business and has not engaged in any activities, which have caused detriment to the environment. Further we have developed Lakes, Parks, and Green pockets to ensure the Eco-friendly environment of the Athurugiriya and Ja-Ela projects.
Contribution to Charities
The Company has not contributed to charities during the financial year under review.
BY ORDER OF THE BOARD
S.S. Weerabahu M.K.W.J. Serersinhe Chief Executive Officer/Executive Director Director
FIRST CORPORATE SOLUTION LIMITED Company Secretaries 26th June 2014 Millennium Housing Developers PLC 40 Annual Report 2013/14
CORPORATE GOVERNANCE
e at Millennium Housing Developers Plc believe A detailed business plan and budget is developed Wthat corporate governance is a solid combination annually with the participation of the Board and the Senior of the integrity based concepts such as transparency, Management. Targets are set for financial and non- accountability and self-governance. MHD Plc has complied financial factors and the performance is monitored against with the majority of the good corporate governance set targets from the previous years and other benchmarks practices recommended by The Institute of Chartered through monthly and quarterly reporting systems. Accountants of Sri Lanka and the requirements listed by the Securities and Exchange Commission (SEC). Over the last year the Company held regular weekly Corporate governance deals with: the systems by which meetings with the participation of Executive Directors companies are lead, directed and controlled, the role of and the Senior Managers in order to monitor the overall Board of Directors, the frame-work of internal controls and activities of the Company. All the meetings were held in the relationship between the Board, Shareholders and accordance with the detailed agenda and records of such Auditors. With the strong belief that “Ethical Conduct will meetings are properly maintained. pave the way to better corporate governance” we present the following details. While the Board is aware of the importance of an appropriate relationship with shareholders in the form of Board of Directors a two way communication process, the Annual General Meeting (AGM) is used as an avenue to communicate The Board consists of The Chairman, / CEO- Executive with shareholders and encourage their participation in Director / Director- Marketing, and Seven non-executive the management of the Company. The board is willing to Directors including chairman. The non-executive Directors answer the questions raised by shareholders at AGM. bring with them considerable wealth of knowledge and experience from various sectors and are well respected The board is further conscious of their responsibilities with individuals in the business field. The functions of regards to the Financial Statements and thus gives good Chairman and CEO are clearly separated and defined as attention on the complete disclosure of financial and non- recommended in the code of practice of the Institute of financial information within the limits of commercial reality. Chartered Accountants of Sri Lanka. The names of the The statements of Director’s responsibilities in relation to non-executive and executive Directors and their profiles are given in Page No 12 of this report. the financial statements are setout on the Page No11 of this report. The main functions / responsibilities of Directors are as follows, Audit/Finance Committee The Finance Committee comprising of executive directors, senior managers, internal auditors of Parent company • Formulating and communicating strategies, Nation Lanka Finance Plc participate in decision-making direction and goals for management within the in relation to various finance commitments of the company. framework of the Company’s Vision, Mission and This collective decision making leads to optimal decisions Corporate Strategies. being taken for the benefit of the Company.
• Approving annual budgets in accordance with Each and every division in MHD Plc, i.e. Engineering set goals and monitor performance against the division, Finance division, Purchasing division, Marketing budgets including revisions when and where division and Internal Audit division meet regularly to necessary. discuss operations. Here the representative of each division gets the opportunity to present their case and • Implementing sound internal control systems and constructive criticism is highly encouraged. The combined the maintaining of highest ethical standards (good participation of each division in decision making will corporate governance). lead to harmonization in the decision-making process. Brainstorming sessions are also carried out to get the best • Identification of key business risks and ensuring ideas out of the employees. that adequate controls; monitoring and reporting system are in place.
• Appoint/recruit senior managers who are competent and have the necessary experience and monitor their performance. Millennium Housing Developers PLC Annual Report 2013/14 41
Internal Controls
The Board is responsible for the Company’s system of internal controls and reviewing its effectiveness. The Company has established a set of comprehensive procedures and policies, which include all controls namely financial, operational, compliance control and risk management. These controls are regularly reviewed and updated and are designed to safeguard Company assets against unauthorized use or disposal and to ensure that the transactions are executed in accordance with management’s general or specific authorization.
Audit Committee
MHD Plc uses same audit committee of its parent, Nation Lanka Finance PLC and the present committee comprises of three (3) Non Executive Directors of the company.
Member of the Audit Committee of MHD PLC
P.M.L.K. Karunarathne Non Executive Director
K. M. Kandegedara Non Executive Director
P. Polwatte Secretary
Audit committee report include in Page 42 of Annual Report. Millennium Housing Developers PLC 42 Annual Report 2013/14
AUDIT COMMITTEE REPORT
COMPOSITION OF THE AUDIT COMMITTEE TERMS OF REFERENCE
he board appointed audit committee as at the end Terms of References are explained in the Internal Audit Tof the year comprised of 03 Non-Executive directors Charter which was based on the Finance Companies of the company. The Committee was chaired by U. H. (Corporate Governance)Direction No 03 of 2008 issued by Palihakkara until 09th January 2013 and on his retirement the Central Bank of Sri Lanka. P.M.L.K. Karunaratne, an Associate Member of the Institute of Chartered Accountants, Sri Lanka has been appointed ROLE OF THE AUDIT COMMITTEE as the Chairman of the Audit Committee.The members of the Board appointed Audit Committee are The audit committee played a major role in corporate governance. The Committee has identified the followings P.M.L.K. Karunaratne as its main functions. Chairman – Independent Non Executive Director INTERNAL AUDIT & INTERNAL CONTROLS (With effect from 1st March 2013) The audit committee reviewed the Internal Audit Reports K.M. Kandegedara and recommendations.A summarized report is forwarded Member – Independent to the Board on a regular basis by taking into account all Non Executive Director the Internal Audit reports. Chairman of the Audit Committee obtains the comments of the General Manager for all the W.B.B.C.J. Fernando salient points when preparing the summarized report. Member – Non Executive Director. • Respective officers at various levels were summoned J.P. Polwatte to the Audit Committee for clarifications on certain Secretary – Chief Internal Auditor. issues. Accordingly, the Chief Finance Officer and General Manager participated on invitation. MEETINGS • Direct the internal audit division for obtaining a better service. Six Audit Committee meetings were held during the • Evaluate the performance of the internal audit division. financial year under review. • Perused all the Operation Manuals for making it more effective and practical. SCOPE OF THE AUDIT COMMITTEE FINANCIAL STATEMENTS • The Audit Committee shall assist the Board of Directors in the oversight of the; • Reviewing the annual financial statements to assess • Integrity of the financial statements of the Company, whether they are in line with the Sri Lanka Accounting • Effectiveness of the internal control over financial Standards. reporting. • Reviewing the financial performances with a view of • The Company’s Internal Audit functions. making constructive recommendations. • Company’s compliance with legal and regulatory requirements. ADHERENCE TO THE STATUTORY AND REGULATOR’S REQUIREMENTS OBJECTIVE OF THE AUDIT COMMITTEE • The Internal Audit Division has been a driving force The primary objective of the Committee is to assist the in maintaining the timeliness,accuracy of financial board in pursuing its Statutory and Fiduciary duties statements required under various acts and directions relating to the financial management of the Company and of regulators’ and adherence to best practices and the the products it manages with respect to internal controls, compliances to the regulator’s rules , guidelines and accounting and reporting practices, and to ensure those regulations. duties are carried out in accordance with the legal and regulatory requirements and guidelines, policies and procedures laid down by the Company. Millennium Housing Developers PLC Annual Report 2013/14 43
REVIEWING THE INTERNAL AUDIT REPORTS RELEVANT TO THE SUBSIDIARIES
• The Audit Committee reviewed the Internal Audit reports prepared by the Group Internal Audit division relevant to subsidiary companies. • Followed up on the recommendations made by the Internal Audit Division.
LIAISE WITH THE EXTERNAL AUDITORS
• The Audit Committee discussed the nature and scope of the audit with the External Auditors. • The Audit Committee has recommended to the Board of Directors that M/S KPMG Chartered Accountants be re-appointed for the financial year ending 31st March 2015. • Review the Management letter submitted by the External Auditors.
LIAISE WITH THE INTERNAL AUDITORS
Followed up on the recommendations made by The Internal Audit Division.
AUDIT COMMITTEE EFFECTIVENESS
The Audit Committee reviewed the adequacy of the scope, functions and resources of the internal audit division, the results of the internal audit process and their evaluation of the company’s internal control system. The Audit Committee also reviewed and approved the adequacy of coverage of the internal audit programme.
P.M.L.K. Karunratne Chairman, Audit Committee Colombo 26th June 2014 Millennium Housing Developers PLC 44 Annual Report 2013/14 Millennium Housing Developers PLC Annual Report 2013/14 45 Millennium Housing Developers PLC 46 Annual Report 2013/14
STATEMENT OF DIRECTORS’ RESPONSIBILITY
n terms of Section 150(1), 151, 152(1) & 153 of the COMPLIANCE REPORT ICompanies Act No.07 of 2007, the Directors are responsible to ensure compliance with the requirements The Directors confirm that to the best of their knowledge, set out therein to prepare Financial Statements for each all statutory payments relating to employees and the financial year giving a true and fair view of the stateof Government that were due in respected of the Company the affairs of the Company and the Group as at the end and its Subsidiaries as at the reporting date have been of financial year and of the profit & Loss of the Company paid or provided for, in arriving at the financial results for and the Group for the financial year. The Directors are the year under review. also responsible, in terms of Section 148 for ensuring that proper accounting records are maintained to disclose with reasonable accuracy, the financial position and to enable BY ORDER OF THE BOARD the preparation of Financial Statements.
The Board accepts responsibility for the integrity and objectivity of the Financial Statements presented. The First Corporate Solution Limited Company Secretaries Directors confirm that in preparing the Financial Statements, appropriate accounting policies have been so that the form 26th June 2014 and substance of transactions are properly reflected. The Financial Statements provide the information required by the Companies Act, Listing Rules of the Colombo Stock Exchange and the Sri Lanka Accounting Standards. The Directors have taken reasonable measures to safe guard the assets of the group and in that concepts have instituted appropriate system of internal control with a view to prevent and defect fraud and other Irregularities.
The external Auditors, Messrs KPMG, were re-appointed in accordance with a resolution passed at the last Annual General Meeting, and they were provided with every opportunity to undertaken the inspection they considered appropriate to enable them to form their opinions on the Financial Statements. The Report of the Auditor, shown on page 57 & 58 sets out their responsibilities in relation to the Financial Statements. Millennium Housing Developers PLC Annual Report 2013/14 47 FINANCIAL STATEMENTS Millennium Housing Developers PLC 48 Annual Report 2013/14
INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF MILLENNIUM HOUSING We have obtained all the information and explanations DEVELOPERS PLC which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore Report on the Financial Statements believe that our audit provides a reasonable basis for our opinion. We have audited the accompanying financial statements of Millennium Housing Developers PLC (“the Company”) Opinion- Company and the consolidated financial statements of the Company In our opinion, so far as appears from our examination, the and its subsidiaries (“the Group”), which comprise the Company maintained proper accounting records for the statements of financial position as at 31st March 2014, year ended 31st the statements of comprehensive income, changes in March 2014 and the financial statements give a true and fair view of the financial position of the equity and cash flows for the year then ended, and notes, Company as at 31st March 2014, and of its financial comprising a summary of significant accounting policies performance and its cash flows for the year then ended in and other explanatory information set out on pages 49 to accordance with Sri Lanka Accounting Standards. 86 of financial statements. Opinion- Group Management’s Responsibility for the Financial Statements In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company Management is responsible for the preparation and fair and its Subsidiaries dealt with thereby as at 31st March presentation of these financial statements in accordance 2014 and of its financial performance and its cash flows with Sri Lanka Accounting Standards. This responsibility for the year then ended in accordance with Sri Lanka includes: designing, implementing and maintaining Accounting Standards. internal control relevant to the preparation and fair presentation of financial statements that are free from Without qualifying our opinion, we draw attention to Note material misstatement, whether due to fraud or error; 31 to the consolidated financial statements which more fully describes the existence of doubt on the going concern selecting and applying appropriate accounting policies; of Millennium Housing Construction Limited, a Subsidiary and making accounting estimates that are reasonable in of the Group, and the steps taken by the management the circumstances. to improve the financial position and performance of the Company. Scope of Audit and Basis of Opinion Report on Other Legal and Regulatory Requirements Our responsibility is to express an opinion on these financial statements based on our audit. We conducted These financial statements also comply with the our audit in accordance with Sri Lanka Auditing Standards. requirements of Sections 153(2) to 153(7) of the Those standards require that we plan and perform the Companies Act No. 07 of 2007. audit to obtain reasonable assurance whether the financial statements are free from material misstatements.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the Chartered Accountants accounting policies used and significant estimates made 26th June 2014 by management, as well as evaluating the overall financial Colombo statement presentation. Millennium Housing Developers PLC Annual Report 2013/14 49
Statement of Comprehensive Income
STATEMENT OF TOTAL COMPREHENSIVE INCOME
Group Company 2014 2013 2014 2013 FOR THE YEAR ENDED 31ST MARCH Notes Rs. Rs. Rs. Rs.
Revenue 5 714,363,392 578,745,720 245,872,805 224,860,364 Cost of sales (440,237,960) (361,952,127) (158,471,572) (150,770,364) Gross profit 274,125,432 216,793,593 87,401,233 74,090,000
Other Operating Income 6 3,865,956 249,256 12,940,588 24,242,720 Administration expenses (104,145,033) (88,820,898) (44,310,342) (34,351,853) Selling and marketing expenses (23,847,038) (16,315,350) (10,972,713) (6,619,582) Results from operating activities 7 149,999,317 111,906,601 45,058,766 57,361,285
Finance income 25,241,040 23,233,764 14,534,444 13,959,398 Finance costs (5,704,815) (4,933,473) (144,315) (243,819) Net finance income 8 19,536,225 18,300,291 14,390,129 13,715,579
Profit before income tax 169,535,542 130,206,892 59,448,895 71,076,864
Income tax expense 9 (42,454,090) (32,674,170) (14,157,709) (14,032,710)
Profit for the Year 127,081,452 97,532,722 45,291,186 57,044,154
Other comprehensive income
Actuarial Gain / (Loss) on Retirement Benefit Obligation 25 (80,483) - 159,144 - Tax Effect on Actuarial Gain on Retirement Benefit Obligation 9 3,365 - (44,560) - Other Comprehensive Income / (Expenses) net of Tax (77,118) - 114,584 -
Total comprehensive income for the year 127,004,334 97,532,722 45,405,770 57,044,154
Profit attriburtable to ; Owners of the Company 127,081,452 97,532,722 45,291,186 57,044,154 Non-controlling interest - - - - Profit for the year 127,081,452 97,532,722 45,291,186 57,044,154
Total comprehensive income attributable to: Owners of the Company 127,004,334 97,532,722 45,405,770 57,044,154 Non-controlling interest - - - - Total comprehensive income for the year 127,004,334 97,532,722 45,405,770 57,044,154
Earnings per share Basic Earnings per share 10 1.06 0.82 0.38 0.48
Dividend per share 10 0.25 0.17 0.25 0.17
The Notes to the Financial Statements set out on pages 53 to 86 form an integral part of these Financial Statements. Figures in brackets indicate deductions. Millennium Housing Developers PLC 50 Annual Report 2013/14
Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Group Company AS AT 31ST MARCH 2014 2013 2014 2013 Notes Rs. Rs. Rs. Rs. ASSETS Non-current assets Property, plant and equipment 11 8,378,959 7,294,823 6,418,621 5,570,014 Invesment Property 12 36,399,000 - - - Intangiable Assets 13 375,000 - 375,000 - Investment in subsidiaries 14 - - 157,470,000 157,470,000 Held to Marurity Investment 15 - - - - Available for sale investments 16 13,000,000 13,000,000 13,000,000 13,000,000 Deferred tax asset 24 6,103,222 3,924,261 5,473,193 3,578,013 64,256,181 24,219,084 182,736,814 179,618,027 Current assets Inventories 17 519,873,138 552,883,950 193,958,054 176,684,350 Trade and other receivables 18 247,591,166 209,976,218 87,970,080 109,779,279 Amounts due from related companies 19 47,089,294 4,348,841 111,939,040 58,475,162 Cash and cash equilvalents 20 141,857,912 102,743,645 96,331,198 55,532,366 956,411,510 869,952,654 490,198,372 400,471,157 Total assets 1,020,667,691 894,171,738 672,935,186 580,089,184
EQUITY AND LIABILITIES Equity Stated capital 21 293,802,200 197,802,200 293,802,200 197,802,200 Capital reserve 41,000,000 41,000,000 41,000,000 41,000,000 Capital redemption reserve 25,000,000 25,000,000 25,000,000 25,000,000 Retained earnings 263,888,686 182,449,844 138,043,971 138,203,474 Equity attributable to owners of the Company 623,690,886 446,252,044 497,846,171 402,005,674 Total equity 623,690,886 446,252,044 497,846,171 402,005,674
Non-current liabilities Interest bearing borrowings 23 18,991,000 26,240,000 - - Retirement benefit obligation 25 21,523,631 15,111,289 19,096,735 13,627,656 40,514,631 41,351,289 19,096,735 13,627,656 Current liabilities Trade and other payables 26 266,420,695 333,382,524 111,730,312 149,438,347 Interest bearing borrowings 23 13,680,000 7,008,000 - - Debentures 22 3,250,000 3,250,000 3,250,000 3,250,000 Amounts due to related company 27 24,290,663 830,937 23,459,726 - Income tax payable 41,635,458 17,892,629 15,743,558 9,084,887 Bank overdraft 20 7,185,358 44,204,315 1,808,684 2,682,620 356,462,174 406,568,405 155,992,280 164,455,854 Total liailities 396,976,805 447,919,694 175,089,015 178,083,510 Total equity and liabilities 1,020,667,691 894,171,738 672,935,186 580,089,184
The Notes to the Financial Statements set out on pages 53 to 86 form an integral part of these Financial Statements.
It is certified that the Financial Statements have been prepared in compliance with the requirements of the Companies Act No. 7 of 2007.
W.A.Indunil Rangana Perera Financial Controller The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Approved and signed for and on behalf of the Board ;
U.H. Dharmadasa S.S. Weerabahu Chairman Chief Executive Officer / Executive Director
26th June 2014 Colombo Millennium Housing Developers PLC Annual Report 2013/14 51
Statement of Changes of Equity STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31ST MARCH 2014
Group Attributable to owners of the Company Total Stated Capital Capital Retained Total Equity Capital Reserve Redemption Earnings Reserve Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at 1st April 2012 197,802,200 41,000,000 25,000,000 104,697,737 368,499,937 368,499,937 Total Comprehensive Income for the year Profit for the Year - - - 97,532,722 97,532,722 97,532,722 Other Comprehensive Income (Net of Tax) ------Total Comprehensive Income for the year - - - 97,532,722 97,532,722 97,532,722 Dividend Paid - - - (19,780,615) (19,780,615) (19,780,615) st Balance as at 31 March 2013 197,802,200 41,000,000 25,000,000 182,449,844 446,252,044 446,252,044 Profit for the year - - - 127,081,452 127,081,452 127,081,452 Other Comprehensive Income (Net of Tax) - - - (77,118) (77,118) (77,118) Total Comprehensive Income for the year - - - 127,004,334 127,004,334 127,004,334 Ordinary Shares issued during the year 96,000,000 - - - 96,000,000 96,000,000 Share Issue Expenses - - - (11,894,943) (11,894,943) (11,894,943) Dividend Paid - - - (33,670,549) (33,670,549) (33,670,549) Balance as at 31st March 2014 293,802,200 41,000,000 25,000,000 263,888,686 623,690,886 623,690,886
Company Stated Capital Capital Retained Total Total Capital Reserve Redemption Earnings Equity Reserve Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at 1st April 2012 197,802,200 41,000,000 25,000,000 100,939,935 364,742,135 364,742,135 Total Comprehensive Income for the year Profit for the Year - - - 57,044,154 57,044,154 57,044,154 Other Comprehensive income ------Total Comprehensive Income for the year - - - 57,044,154 57,044,154 57,044,154 Dividend Paid - - - (19,780,615) (19,780,615) (19,780,615) Balance as at 31st March 2013 197,802,200 41,000,000 25,000,000 138,203,473 402,005,673 402,005,674
Profit for the Year - - - 45,291,186 45,291,186 45,291,186 Other Comprehensive Income (Net of Tax) - - - 114,584 114,584 114,584 Total Comprehensive income for the year - - - 45,405,770 45,405,770 45,405,770 Ordinary Shares issued during the year 96,000,000 - - 96,000,000 96,000,000 Share Issue Expenses - - - (11,894,943) (11,894,943) (11,894,943) Dividend paid - - - (33,670,330) (33,670,330) (33,670,330) Balance as at 31st March 2014 293,802,200 41,000,000 25,000,000 138,043,971 497,846,171 497,846,171
Capital Redemption Reserve Capital Redemption reserve built up which is equal to the nominal value of the preference shares already redeemed by the Millennium Housing Developers PLC Capital Reserve This was created to facilitate the infrastructure activities of the Athurugiriya site of Millennium Housing Developers PLC The Notes to the Financial Statements set out on pages 53 to 86 form an integral part of these Financial Statements. Figures in brackets indicate deductions. Millennium Housing Developers PLC 52 Annual Report 2013/14
Cash Flow Statements
CASH FLOW STATEMENT
Group Company FOR THE YEAR ENDED 31ST MARCH 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Cash Flows from Operating Activities Profit before Tax 169,535,542 130,206,892 59,448,895 71,076,864
Adjustments for: Depreciation on Property, Plant and Equipment 1,310,617 808,850 875,058 687,815 Amortisation on Intangible assets 25,000 - 25,000 - Interest Expense 5,704,815 4,933,473 144,315 243,819 Provision for Retirement benefit obligation 6,960,322 3,285,080 6,256,685 2,995,095 Interest Income (25,241,040) (23,233,764) (14,534,444) (13,959,398) Reversal of Provision for Impairment of Trade and Other Receivables - (501,836) - (501,836) Provision for Amounts Due from Related Party - - 364,167 - Written off amount receivable from Liquidated Subsidiary - - (115,507) - Write off of Trade and Other Receivables (1,249,087) - (1,249,087) - Provision for Obsolete Inventories - (37,129) - - Operating Profit before Working Capital Changes 157,046,170 115,461,567 51,215,082 60,542,359
(Increase)/Decrease in Inventories 33,010,812 (63,551,455) (17,273,704) (25,905,712) (Increase)/Decrease in Trade and Other Receivables (36,365,861) (46,640,745) 23,058,285 5,768,528 (Increase)/Decrease in Amounts Due from Related Companies (42,740,453) 79,666,550 (53,712,538) 66,393,863 Increase/(Decrease) in Trade and Other Payables (66,961,829) 5,442,451 (37,708,035) (24,421,590) Decrease in Amounts Due to Related Companies 23,459,726 - 23,459,726 - Cash Generated from/(Used in) Operations 67,448,565 90,378,368 (10,961,184) 82,377,449
Income Tax Paid (20,886,858) (22,487,603) (9,438,779) (6,016,722) Gratuity Paid (628,463) (460,800) (628,463) (319,050) Interest Paid (5,704,815) (4,933,473) (144,315) (243,819) Net Cash flow Generated from/(Used in) Operating Activities 40,228,430 62,496,491 (21,172,740) 75,797,858
Cash Flows from Investing Activities Purchase of Property, Plant and Equipment (2,394,753) (3,462,746) (1,723,665) (1,687,390) Purchase of Intangible assets (400,000) - (400,000) - Purchase of Investment Property (36,399,000) - - - Investments in Available for Sale Investments - (13,000,000) - (13,000,000) Interest Received 25,241,040 23,233,764 14,534,444 13,959,398 Cash Generated from/(Used in) Investing Activities (13,952,713) 6,771,018 12,410,779 (727,992)
Cash Flows from Financing Activities Loans Obtained 20,000,000 35,000,000 - - Re-payment of Borrowings (20,577,000) (39,676,575) - (9,174,575) Proceeds from Share Issue 96,000,000 - 96,000,000 - Share issue expenses paid (11,894,943) - (11,894,943) - Dividend paid (33,670,549) (19,780,615) (33,670,330) (19,780,615) Cash Generated from/(Used in) Financing Activities 49,857,508 (24,457,191) 50,434,727 (28,955,190)
Net Increase in Cash and Cash Equivalents 76,133,224 44,810,318 41,672,768 46,114,676 Cash and Cash Equivalents at the beginning of the year 58,539,330 13,729,012 52,849,746 6,735,070 Cash and Cash Equivalents at the end of the year (Note 20) 134,672,554 58,539,330 94,522,514 52,849,746
The Notes to the Financial Statements set out on pages 53 to 86 form an integral part of these Financial Statements.
Figures in brackets indicate deductions. Millennium Housing Developers PLC Annual Report 2013/14 53
Notes to Financial Statements NOTES TO THE FINANCIAL STATEMENTS
1 CORPORATE INFORMATION
1.1 Domicile and Legal Form
Millennium Housing Developers PLC is a Public listed Company incorporated and domiciled in Sri Lanka. The registered office of the company is situated at No.28, Sir Lester James Peiris Mawatha, Colombo 5.
The consolidated Financial Statements of Millennium Housing Developers PLC for the year ended 31st March 2014 comprise the Company and its subsidiaries (together referred to as “Group”).
All the subsidiaries of the Group are limited liability companies, incorporated and domiciled in Sri Lanka.
1.2 Principal Activities and Nature of Operation
The principal activities of the Company and its subsidiaries are construction and sale of constructed houses.
1.3 Parent Company and Ultimate Parent Company
The Company's parent undertaking and the ultimate controlling party is Nation Lanka Finance PLC, which is incorporated and domiciled in Sri Lanka.
2 BASIS OF PREPARATION
2.1 Statement of Compliance
The consolidated financial statements have been prepared in accordance with Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka and the requirements of the Companies Act No. 07 of 2007.
2.2 Basis of Measurement
The financial statements of the Group are prepared and presented on the historical cost basis except for the available for sale financial assets which are measured at fair value and defined benefit liability measured at present value of obligations to employees. The financial statements have been prepared on a going concern basis.
2.3 Functional and Presentation Currency
The consolidated financial statements are presented in Sri Lankan Rupees, which is also the Group’s functional currency. These financial statements are presented in Sri Lanka Rupees (Rs.), unless stated otherwise.
2.4 Use of Estimates and Judgements
The preparation of the Financial Statements in conformity with Sri Lanka Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Millennium Housing Developers PLC 54 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS
2 BASIS OF PREPARATION (CONTINUED)
2.4 Use of Estimates and Judgements (Continued)
Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the Company’s Financial Statements is included in the respective notes.
2.1 Transactions in Foreign Currencies
All transactions in foreign currencies are translated at the rate of exchange prevailing at the time the transaction was effected. All monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non monetary assets and liabilities which are carried in terms of historical cost denominated in foreign currencies are translated using the exchange rate at the date of transaction. The resulting gains or losses on translations are dealt with in the statement of comprehensive income.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements unless otherwise stated in these consolidated financial statements. The Financial Statements of the group represents the consolidation of the Financial Statements of the company and its subsidiaries disclosed below.
1. Millennium Housing Limited 2. Millennium Villa Housing Development Limited 3. Ceylinco Housing Corporation Limited 4. Millennium Housing Construction Limited
3.1 Basis of Consolidation
(a) Subsidiaries
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
The financial statements have been prepared using uniform accounting policies for like transaction and other events in similar circumstances.
The consolidated financial statements are prepared to common financial year end of 31st March.
All Subsidiaries of the Group have been incorporated in Sri Lanka.
3.1.1 General
The Consolidated Financial Statements are the Financial Statements of the Group, prepared by consistent application of consolidation procedures, which includes amalgamation of the Financial Statements of the parent and subsidiaries. Thus, the consolidated Financial Statements present financial information about the Group as a single entity distinguishing the equity attributable to the parent (Controlling Interest) and attributable to minority shareholders (Non-Controlling Interest).
Millennium Housing Developers PLC Annual Report 2013/14 55
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.2 Financial assets and financial liabilities
(a) Non-derivative financial assets
The Group initially recognizes loans and receivables and deposits on the date that they originated. All other financial assets are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial assets are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognized as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts intends either to settle on a net basis or realize the assets and settle the liability simultaneously.
The Group has the following non-derivative financial assets: loans and receivables and available-for-sale financial assets.
(i) Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. Loans and receivable comprise cash and cash equivalents, investment in debenture and trade and other receivables, including related party receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call and fixed deposits with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
(ii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for sale and that are not classified as any of the other financial assets. The Group’s investments in equity securities are classified as available-for sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, are recognized in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss. Available-for-sale financial assets comprise group instrument in equity securities.
Millennium Housing Developers PLC 56 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.2 Financial assets and financial liabilities (Continued)
(b) Non-derivative financial liabilities
The Group initially recognizes debt securities issued on the date that they are originated. All other financial liabilities are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognizes a financial liability when its contracted obligations are discharged, cancelled or expired.
The Group classifies non-derivative financial liabilities in to the other financial liabilities category. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost.
(c) Non-derivative financial liabilities (continued)
Other financial liabilities comprise: loans and borrowings, bank overdraft, debt securities and trade and other payables.
Stated Capital Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity net of any tax effects.
3.3 Impairment
3.3.1 Financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.
The Group considers evidence of impairment for receivables at a specific asset level. All individually significant receivables are as assessed for specific impairment.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reserved through profit or loss. Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative loss that has been recognised in other comprehensive income, and presented in the fair value reserve in equity, to profit or loss.
Millennium Housing Developers PLC Annual Report 2013/14 57
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.3.1 Financial assets (Continued)
The cumulative loss that is removed from other comprehensive income and recognised in profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to time value are reflected as a component of interest income.
3.3.2 Non-financial assets
The carrying amounts of the Group’s non-financial assets other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.4 Property, Plant and Equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
The cost of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. This also includes costs of dismantling and removing the items and restoring the site on which they are located.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property plant and equipment.
be measured reliably. All other costs are recognized in the statement of Comprehensive Income as an expense as incurred.
Millennium Housing Developers PLC 58 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.4.1 Subsequent Expenditure
The Group recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other cost are recognized in the statement of Comprehensive Income as an expenses as incurred.
3.4.2 De-recognition
The carrying amount of an item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within “other income” in profit or loss.
3.4.3 Depreciation
Depreciation is recognised in profit and loss on a straight line basis over the estimated useful lives of each component. Depreciation is not provided on free hold land and assets under construction. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.
Depreciation of an asset begins when it is available for use and ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised.
The estimated useful lives are as follows:
Class of Assets Useful Lifetime (Years)
Building 5 Motor Vehicles 5 Furniture and Fittings 5 Generator 5 Air Conditioner and Installation 5 Office Equipment 5 Play Equipment 5 Computers 4
3.4.4 Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
For operating leases the leased assets are not recognised on the Group’s statement of financial position.
Millennium Housing Developers PLC Annual Report 2013/14 59
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.5 Investment Property
Investment Property, principally comprise freehold land and building held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at fair value with any change therein recognized in profit or loss.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investments property includes the cost of materials and direct labour, any other costs directly attributable to bring the investment property to a working condition for their intended use and capitalized borrowing costs. Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss. When an investment property that was previously classified as property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings.
When the use of a property changes such that it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.
Investment Property is carried at fair value determined annually by an independent valuer. A gain or loss arising from a change in the fair value of investment property is recognized in profit or loss for the period in which it arises.
3.6 Employee benefits
(a) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which contributions are made into a separate fund and the entity will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plan are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Defined Contribution Plans - Employees Provident Fund and Employees Trust Fund
All employees who are eligible for Employees Provident Fund contribution and Employees Trust Fund contribution are covered by relevant contribution funds in line with respective statutes and regulations. The Group contributes 12 % and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively
(b) Defined Benefit Plan - Gratuity
A defined benefit plan is a post employment benefit plan other than a defined contribution plan.
Retiring Gratuity
The Retirement Benefit Plan adopted is as required under the Payment of Gratuity Act No. 12 of 1983. This item is grouped under Retirement Benefit Obligation in the Statement of Financial Position. However, under the Payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of 5 years of continued service.
The Company and Group has adopted Sri Lanka Accounting Standard 19 “Employee Benefits”. Defined benefit plans define an amount of benefit that an employee will receive on Millennium Housing Developers PLC 60 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Defined Benefit Plan - Gratuity (Continued)
retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognized in the statement of Financial Position in respect of defined benefit plans is the present value of the defined benefit obligation at the reporting date, together with adjustments for unrecognized past service cost.
The key assumptions used in the computation are stated in the Note 25 to the Financial Statements.
The Company and Group adopted LKAS 19 “Employee Benefits” (Revised in 2013) with effect from 1st January 2013 in accordance with the transitional provisions in the standard and changed its basis for determining the income or expense related to defined benefit plans.
As a result of change, the Company now recognizes all the re-measurements of the net defined benefit liability in other comprehensive income. Re-measurement of the net defined benefit liability comprises actuarial gain or loss. Previously, the Company recognized actuarial gain or loss in profit. The impact on change in accounting policy has not been applied retrospectively as the impact to financial statements is immaterial.
The Company and Group have adopted Sri Lanka Accounting Standard 19 “Employee Benefits”. Defined benefit plans define an amount of benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognized in the statement of financial position respect of defined benefit plans at the present value of the defined benefit obligation at the reporting date, together with adjustments for unrecognized past service cost.
The key assumptions used in the computation are stated in the Note 25 to the Financial Statements.
However, according to the payment of Gratuity Act No 12 of 1983, the liability for gratuity to an employee arises only on completion of five years continued service with the company.
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
3.7 Provisions
Provisions are recognized if as a result of a past event the Group has a present legal or constructive Obligation that can be estimated reliably and it is probable that an outflow of economic benefit will be required to settle the obligation. Provisions and liabilities are recognized in the Statement of Financial Position.
3.8 Statement of comprehensive Income
3.8.1 Revenue
Houses The income from sale of houses is recognized when the risks and rewards incidental to ownership is transferred to the buyer. It is deemed to have been transferred when the sale agreement is signed between the buyer and the Group the 100% of the construction of the house is completed. Millennium Housing Developers PLC Annual Report 2013/14 61
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.8.1 Revenue (Continued)
Land The income from sale of land is recognized when the risks and rewards incidental to ownership is transferred to the buyer. It is deemed to have been transferred when the sale agreement is signed between the buyer and the Group and the 30% of the sale value received from the customer.
3.8.2 Finance income and expenses
Finance income comprises interest income on easy payment loans granted and interest on fixed deposits and related party receivables, Interest income is recognized as it accrues in profit or loss using effective interest method.
Finance expenses comprise interest expense on borrowings.
3.8.3 Other income
Other income comprises of dividend income, gains on the disposal of available for sale financial assets. Other income is recognized as it accrues in profit or loss on the date that the Group’s right to receive payment is established.
3.8.4 Expenditure Recognition
a) All expenditure incurred in running of the business and in maintaining the Property, Plant and Equipment in a state of efficiency has been charged to revenue in arriving at the profit for the year.
b) For the purpose of presentation of Statement of comprehensive income, the Directors are of the opinion that the function of expenses method present fairly the elements of the enterprise’s performance, hence such presentation method is adopted.
3.8.5 Borrowing Costs
Borrowing costs are recognized as an expense in the period in which they are incurred, except to the extent that they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalized as part of the cost of that asset.
3.8.6 Income Tax Expense
Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity or other comprehensive income.
(a) Current Taxation
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividend.
Millennium Housing Developers PLC 62 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS
3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Deferred Taxation
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Income tax expense for the year comprises current and deferred tax. Income tax is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
3.9 Earnings per share
The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.
3.10 Related Party Transactions
Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is being charged.
3.11 Cash Flow Statement
The cash flow statement is prepared under the Indirect Method. Interest paid is classified as operating cash flows whereas interest received and dividend received are classified as investing cash flows.
3.12 Events after the Reporting Date
All material events after the reporting date have been considered and where appropriate adjustments or Disclosures have been made in the Financial Statements.
3.13 Commitments and Contingencies
Commitments and contingencies as at the reporting date are disclosed in the Financial Statements.
Millennium Housing Developers PLC Annual Report 2013/14 63
NOTES TO THE FINANCIAL STATEMENTS
4 NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT THE REPORTING DATE
The Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become applicable for financial periods beginning and after the 1st of January 2014 and 2015. Accordingly, these standards have not been applied in preparing these Financial Statements.
4.1 SLFRS 9 Financial Instruments: Classification and Measurement
The objective of this SLFRS is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows. SLFRS 9, as issued, reflects the first phase of work on replacement of Sri Lanka Accounting Standards (LKAS 39) - “Financial Instruments Recognition and Measurements” and applies to classification and measurement of financial assets and liabilities. The application of this standard has been currently deferred by the Chartered Accountants of Sri Lanka consequently to the International Accounting Standard Board’s (IASB) decision to defer the mandatory effective date of IFRS 9. However SLFRS 9 will be available for early adoption.
4.2 SLFRS 13: Fair Value Measurement
This SLFRS defines fair value, set out in a single SLFRS framework for measuring fair value and requires disclosures about fair value measurements. This SLFRS will become effective to the Bank from 1st of January 2014. Early adoption is permitted. This SLFRS shall be applied prospectively as of the beginning of the annual period in which it is initially applied. The Disclosure requirements of this SLFRS need not be applied in comparative information provided for periods before initial application of this SLFRS.
4.3 SLFRS 10 - Consolidated Financial Statements
The objective of this SLFRS is to establish principles for the presentation and preparation of Consolidated Financial Statements when an entity controls one or more other entities. SLFRS 10 will become effective from 1st January 2014 for the Group with early adoption permitted. This SLFRS will supersede the requirements relating to Consolidated Financial Statements in LKAS 27 ’Consolidated and Separate Financial Statements’.
Millennium Housing Developers PLC 64 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31ST MARCH
5 Revenue Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Income from Sale of Houses 616,749,175 560,486,930 185,090,600 216,792,955 Income from Sale of Land 76,757,106 - 56,467,106 - Income from Extra Work of Houses 20,857,111 18,258,790 4,315,099 8,067,409 714,363,392 578,745,720 245,872,805 224,860,364
6 Other Operating Income 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Dividend Income - - 10,659,500 24,018,611 Gain on Liquidation - Ceylinco Housing Corporation Ltd 206,834 - - - Sundry Income 3,659,122 249,256 2,281,088 224,109 3,865,956 249,256 12,940,588 24,242,720
7 Results from Operating Activities 2014 2013 2014 2013 Rs. Rs. Rs. Rs. Results from operating Activities is stated after charging all expenses including the following ; Director's Remuneration 10,978,504 9,370,020 10,378,504 8,770,020 Auditor's Remuneration 750,000 750,000 525,000 450,000 Depreciation on Property, Plant and Equipment 1,310,617 808,850 875,058 687,815 Personnel Costs (Note 7.1) 64,602,734 49,182,964 26,896,178 18,236,800
7.1 Personnel Costs Salaries and Wages 41,612,037 36,072,320 10,745,331 9,317,269 Defined Contribution Plan Cost - EPF and ETF 6,050,737 5,190,834 1,518,195 1,289,706 Defined Benefit Plan Cost - Retirement Gratuity 7,040,806 3,285,080 6,097,542 2,995,095 Bonus 9,899,154 4,634,730 8,535,110 4,634,730 64,602,734 49,182,964 26,896,178 18,236,800
8 Net Finance Income 2014 2013 2014 2013 Rs. Rs. Rs. Rs. Finance Income Interest on Easy Payment Schemes 7,706,283 7,471,962 3,946,744 6,223,039 Interest on Fixed Deposits 1,793,412 1,921,273 1,041,850 667,628 Interest on Nation Lanka Finance PLC - Loan 466,849 1,505,882 466,849 1,505,882 Interest on Nation Lanka Equities (Pvt) Ltd - Loan 179,658 - 179,658 - Interest on Anilana Hotels & Properties Ltd - Commercial paper 377,260 - 377,260 - Interest on Nation Lanka Finance PLC - Fixed Deposit 12,578,943 12,164,647 6,951,898 5,562,849 Interest on Investor Access (Pvt) Ltd - Loan 447,185 - 447,185 - Customer Interest - Late Payments 1,691,450 170,000 1,123,000 -
25,241,040 23,233,764 14,534,444 13,959,398 Finance Expense
Overdraft Interest 255,879 40,740 - - Loan Interest 5,448,936 4,892,733 144,315 243,819
5,704,815 4,933,473 144,315 243,819
Net Finance Income 19,536,225 18,300,291 14,390,129 13,715,579 Millennium Housing Developers PLC Annual Report 2013/14 65
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31ST MARCH
9 Income Tax Expense Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs. Recognized in the profit or Loss Current Income Tax (Note 9.2) 44,629,685 32,424,609 16,097,449 13,817,064 Provision/(Reversal) for deferred taxation (Note 24) (2,175,595) 249,561 (1,939,740) 215,646 42,454,090 32,674,170 14,157,709 14,032,710
Recognized in the Other Comprehensive Income Provision/(Reversal) for deferred taxation (Note 24) (3,365) - 44,560 - (3,365) - 44,560 -
42,450,725 - 14,202,269 -
9.1 Current Tax on Income
Millennium Housing Developers PLC The Company has entered into an agreement with the Board of Investment of Sri Lanka (BOI) on 26th November 1998. Under Section 17 of the BOI Law No. 4 of 1978, the Company's profit has been exempt from income tax for a period of 12 years reckoned from the year of assessment 1999/2000 till 2010/2011. After the expiration of the exempt period, the provisions of the Inland Revenue Laws for the time being in force shall apply to the Company in relation to the said business.
Millennium Housing Limited The Company has entered into an agreement with the Board of Investment of Sri Lanka (BOI) on 21st May 2003. Under Section 17 of the BOI Law No. 4 of 1978, the Company's profit will be exempted from income tax for a period of 3 years reckoned from the year of assessment 2004/2005 till 2006/2007. After the expiration of the aforesaid tax exemption period, the profits and income of the Company shall be charged at the rate of 10% for a period of two years from the year of assessment 2007/2008 till 2008/2009. After the expiration of the aforesaid concessionary tax rate of 10%, the profits and income of the Company shall be charged at the rate of 20% for any year of assessment.
Millennium Villa Housing Development Limited The Company has entered into an agreement with the Board of Investment of Sri Lanka (BOI) on 12th February 2003. Under Section 17 of the BOI Law No. 4 of 1978, the Company's profit will be exempted from income tax for a period of 3 years reckoned from the year of assessment 2004/2005 till 2006/2007. After the expiration of the aforesaid tax exemption period, the profits and income of the Company shall be charged at the rate of 10% for a period of two years from the year of assessment 2007/2008 till 2008/2009. After the expiration of the aforesaid concessionary tax rate of 10%, the profits and income of the Company shall for any year of assessment be charged at the rate of 20%.
Millennium Housing Construction Limited The Companies are liable for income tax at the rate of 28% (2013 : 28%) in terms of the provisions of the Inland Revenue Act No 10 of 2006 and subsequent amendments thereto. Millennium Housing Developers PLC 66 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
9.2 Reconciliation of the Accounting Profit to Group Company Income Tax Expense 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Accounting Profit before Taxation 169,535,542 130,206,892 59,448,895 71,076,864 Add : Aggregate Disallowed Expenses 20,493,582 12,294,593 12,081,402 5,258,587 Less : Aggregate Allowable Expenses (4,024,052) (3,161,984) (3,539,052) (2,720,183) 186,005,072 139,339,501 67,991,245 73,615,268 Exempt Income / Non Business Income (11,497,000) (250,000) (10,659,500) (24,268,611) Interest Income (16,911,860) (15,489,343) (9,464,700) (7,736,358) Taxable Profit from Business 157,596,212 123,600,158 47,867,045 41,610,299
Other income liable for tax @ 28% 4,735,321 4,337,016 2,650,116 2,166,180 Business Income liable for tax @ 20% & 28% 39,894,364 28,087,593 13,447,333 11,650,884 Income Tax Expense 44,629,685 32,424,609 16,097,449 13,817,064
10 Basic Earnings / Didivend Per Share
10.1 Basic Earnings Per Share Basic Earnings per share is calculated based on the profit after tax attributable to the ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the year.
Group Company 2014 2013 2014 2013
Profit attributable to Ordinary Shareholders (Rs.) 127,081,452 97,532,722 45,291,186 57,044,154
Weighted Average Number of Ordinary shares 120,434,745 118,681,320 120,434,745 118,681,320 Basic Earnings Per Share (Rs.) 1.06 0.82 0.38 0.48
10.2 Dividend Per Share Group Company 2014 2013 2014 2013
Dividend Proposed/Paid to - Ordinary Shareholders (Rs.) 33,670,330 19,780,615 33,670,330 19,780,615
Number of Ordinary shares 134,681,320 118,681,320 134,681,320 118,681,320
Dividend Per Share (Rs.) 0.25 0.17 0.25 0.17 Millennium Housing Developers PLC Annual Report 2013/14 67 - - - - 808,850 Rs. Total 7,294,823 3,462,746 2,394,753 8,378,959 1,310,617 72,259,742 64,964,919 72,259,742 64,964,919 74,654,495 66,275,536 68,796,996 64,156,069
------Rs. 5,802,039 5,802,039 5,802,039 5,802,039 5,802,039 5,802,039 5,802,039 5,802,039 Machinery
Construction ------Rs. 2,155,497 2,155,497 2,155,497 2,155,497 2,155,497 2,155,497 2,155,497 2,155,497
Containers ------Rs. Motor Vehicles
8,378,768 8,378,768 8,378,768 8,378,768 8,378,768 8,378,768 8,378,768 8,378,768
------6,724 Rs. Play 1,877,237 1,877,237 1,877,237 1,877,237 1,877,237 1,877,237 1,877,237 1,870,513
Equipment - - - - Rs. 512,834 955,022 1,754,338 2,394,753 2,904,981 4,344,712 44,877,631 41,972,650 44,877,631 41,972,650 47,272,384 42,927,672 43,123,293 41,459,816 Equipment Equipment
Office & Site & Site Office - - - - - Rs. 289,292 355,595 1,708,408 6,444,102 4,778,728 6,444,102 4,778,728 1,665,374 6,444,102 5,134,323 1,309,779 4,735,694 4,489,436 Freehold Buildings
------Rs. Land 2,724,468 2,724,468 2,724,468 2,724,468 2,724,468 2,724,468 Freehold
March 2014 March 2014 March 2014 March 2013 March 2013 March 2013 March April 2013 April 2013 April st st st st st st April 2012 April 2012 April st st st st MARCH 2013 MARCH ST Disposals year during the Cost 1 as at Balance year during the Additions Disposals year during the 31 as at Balance as at 1 Balance the during year Additions Disposals the during year as at 31 Balance Depreciation Accumulated 1 as at Balance Charge for year the 31 as at Balance as at 1 Balance the year for Charge as at 31 Balance Net Value Book 31 as at Balance as at 31 Balance Note 58 perch Land Extent Kahapola. , Pilyandala at situated no 01, No plan 2327 Lot in Depicted company the by Land owned Property, Plant and Equipment Property, Group Disposals the during year NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) STATEMENTS FINANCIAL THE TO NOTES AS AT 31 11 11.1 Millennium Housing Developers PLC 68 Annual Report 2013/14 - - - -
687,815 875,058
1,687,390 1,723,665 5,570,014 6,418,621
Rs. 59,943,956 54,373,942 61,667,621 55,249,000 58,256,566 53,686,127 59,943,956 54,373,942
Total
------
2,155,497 2,155,497 2,155,497 2,155,497 2,155,497 2,155,497 2,155,497 2,155,497
Rs. Containers
------Rs. Rs. 2013
4,059,437 8,361,377 8,361,377 8,361,377 8,361,377 8,361,377 8,361,377 8,361,377 8,361,377 1,589,836 8,361,377 2,155,497 Motor 38,207,795 54,373,942
Vehicles
------Company
5,224 4,073,351 1,589,836 1,589,836 1,589,836 1,589,836 1,589,836 1,584,612 1,589,836 1,589,836 1,589,836 8,361,377 2,155,497
Rs. Rs. 39,068,939 55,249,000 2014 Play
Equipment
- - - -
861,144 505,834 1,687,390 1,723,665 4,778,728 2,831,632 3,694,153 1,877,237 8,378,768 2,155,497 5,802,039 Rs.
Rs. 41,039,427 38,207,795 42,763,092 39,068,939 39,352,037 37,701,961 41,039,427 38,207,795 41,972,650 64,964,919 2013
Office Office Equipment
Group ------
13,914 13,914
176,757
5,134,323 4,073,351 4,059,437 4,073,351 4,073,351 4,073,351 3,882,680 4,073,351 4,059,437 1,877,237 8,378,768 2,155,497 5,802,039
Rs. Rs. 42,927,672 66,275,536 2014
Freehold Buildings
------
Rs. 2,724,468 2,724,468 2,724,468 2,724,468 2,724,468 2,724,468
Land Freehold
March 2014 March 2014 March 2014 March 2013 March 2013 March 2013 March April 2013 April 2013 April st st st st st st April 2012 April 2012 st st st st MARCH 2014 MARCH ST Property, Plant and Equipment Property, Company Cost Disposals year during the year the during Disposals Balance as at 1 Balance at as year Additions during the 31 Balance at as 1 Balance as at year the during Additions 31 Balance as at Depreciation Accumulated 1 Balance at as year Charge for the 31 Balance at as 1 Balance as at year the Charge for 31 Balance as at Net Book Value 31 Balance at as 31 Balance as at Assets Depreciated Fully Freehold Buildings Disposals year during the year the during Disposals Office & Site equipment Play Equipment Play Motor Vehicles Motor Containers Construction Machinery Construction NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) STATEMENTS THE FINANCIAL TO NOTES AS AT 31 11. 11.2 Millennium Housing Developers PLC Annual Report 2013/14 69
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH
12 Investment Property Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Balance as at 1st April - - - - Purchases during the Year 36,399,000 - - - st Balance as at 31 March 36,399,000 - - - The Investment Properties of the Group includes the following, which was valued by chartered valuer Mr. H.A. Jayarathne Land in 2014 2013 Owning Company Location Extent Rs. Rs. Millennium Housing Limited Athurugiriya 0A-2R-20.0P 36,399,000 - 36,399,000 - 13 Intangible Assets Group Company 2014 2013 2014 2013 Cost Rs. Rs. Rs. Rs.
Balance as at 1st April 2013 - - - - Additions during the Period 400,000 - 400,000 - Disposals during the Period - - - - st Balance as at 31 March 2014 400,000 - 400,000 - Accumulated Depreciation Balance as at 1st April 2013 - - - - Additions during the year 25,000 - 25,000 - Disposals during the year - - - - Balance as at 31st March 2014 25,000 - 25,000 -
st Balance as at 31 March 2014 375,000 - 375,000 -
The intangible assets represents cost of acquisition of Computer software.
14 Investment in Subsidiaries Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Millennium Housing Limited - - 25,010,000 25,010,000 Ceylinco Housing Corporation Limited (Note 14.1) - - - 10,000 Millennium Villa Housing Development Limited - - 132,460,000 132,460,000 Millennium Housing Construction Limited - - 3,500,000 3,500,000 - - 160,970,000 160,980,000 Less: Provision for impairment (Note 14.2) - - (3,500,000) (3,510,000) - - 157,470,000 157,470,000
14.1 Ceylinco Housing Corporation Limited was Liquidated and ceased operations with effect from 30th December 2013
14.2 Provision for impairment Balance as at 1st April 2013 - - 3,510,000 3,510,000 Write off of Liquidated Investments - - (10,000) - st Balance as at 31 March 2014 - - 3,500,000 3,510,000
15 Held to Maturity Investments Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Investment in Preference Shares (Note 15.1) ------15.1 Investment in Preference Shares Tropical Foliage and Flowers Limited 2,500,000 2,500,000 2,500,000 2,500,000 Less: Provision for impairment (2,500,000) (2,500,000) (2,500,000) (2,500,000) - - - - Millennium Housing Developers PLC 70 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH
16 Available for Sale Investments Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Seraka Investment Limited 250,000 250,000 250,000 250,000 Ceylinco Investments Limited 125,000 125,000 125,000 125,000 CeylincoTravels and Tours Limited 400,000 400,000 400,000 400,000 CEG Holdings (Private) Limited 125,000 125,000 125,000 125,000 Ceylinco Profit Sharing Investment Corporation Limited 125,000 125,000 125,000 125,000 Ceylinco CISCO Ranawiru Services (Private) Limited 125,000 125,000 125,000 125,000 E.Ceylinco Company Limited 87,500 87,500 87,500 87,500 IC & CS Software Solution Co. (Private) Limited 50,000 50,000 50,000 50,000 The Finance & Guarantee Co. Limited 250,000 250,000 250,000 250,000 Corporate Finance Limited 250,000 250,000 250,000 250,000 Ceylinco Venture Capital Limited 140,000 140,000 140,000 140,000 CTV Creation (Private) Limited 40,000 40,000 40,000 40,000 Economic Resurgence Association (Private) Limited 1,000,000 1,000,000 1,000,000 1,000,000 Ceylinco Niranjan Invention (Private) Limited 37,500 37,500 37,500 37,500 Ceylinco Coloured Stone (Private) Limited 1,400,000 1,400,000 1,400,000 1,400,000 Ceylinco Cellular Communications (Private) Limited 200,000 200,000 200,000 200,000 The Sitar (Private) Limited 65,000 65,000 65,000 65,000 People's Realty Limited 29,516 29,516 29,516 29,516 Ceylinco Pharmaceuticals Limited 250,000 250,000 250,000 250,000 Nation Lanka Promotions Limited 13,000,000 13,000,000 13,000,000 13,000,000 17,949,516 17,949,516 17,949,516 17,949,516 Less: Provision for impairment (4,949,516) (4,949,516) (4,949,516) (4,949,516) 13,000,000 13,000,000 13,000,000 13,000,000
17 Inventories Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Raw Materials 45,094,430 46,361,340 18,527,050 22,279,513 Work in Progress 262,376,778 308,025,182 66,084,468 88,870,229 Finished Goods-Houses 10,284,863 1,789,289 - - Land Stock 206,074,728 200,665,800 110,102,608 66,290,680 523,830,799 556,841,611 194,714,126 177,440,422 Less : Provision for Slow Moving Inventories (Note 17.1) (3,957,661) (3,957,661) (756,072) (756,072) 519,873,138 552,883,950 193,958,054 176,684,350
17.1 Provision for Slow Moving Inventories Balance as at 1st April 3,957,661 3,994,790 756,072 756,072 Reversal during the year - (37,129) - - Balance as at 31st March 3,957,661 3,957,661 756,072 756,072
18 Trade and Other Receivables Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Trade Receivables 223,296,154 174,975,135 83,946,178 103,919,412 Other Receivables 41,689,742 53,644,900 19,411,112 22,496,164 264,985,896 228,620,035 103,357,290 126,415,576 Less : Provision for Impairment (Note 18.1) (17,394,730) (18,643,817) (15,387,210) (16,636,297) 247,591,166 209,976,218 87,970,080 109,779,279
18.1 Provision for Impairment Balance as at 1st April 18,643,817 19,145,652 16,636,297 17,138,133 Reversal during the Year - (501,835) - (501,836) Write off during the year (1,249,087) - (1,249,087) - Balance as at 31st March 17,394,730 18,643,817 15,387,210 16,636,297 Millennium Housing Developers PLC Annual Report 2013/14 71
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH
19 Amount Due from Related Companies Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Nation Lanka Finance PLC - 4,148,381 - 4,148,381 Ceylinco Housing Corporation Limited - - - 115,507 Millennium Housing Limited - - 57,854,419 42,328,281 Millennium Housing Construction Limited - - 15,674,098 15,437,633 MC Urban Developers Limited 1,214,931 - 98,739 - Ceylinco Real Estate Developers Limited 200,460 200,460 200,460 200,460 Anilana Hotels & Properties Limited 17,377,260 - 17,377,260 - Millennium Villa Housing Development Limited - - 8,111,519 11,670,338 Nation Lanka Equities (Pvt) Limited 5,179,658 - 5,179,658 - Investor Access (Pvt) Limited 23,116,985 - 23,116,985 - 47,089,294 4,348,841 127,613,138 73,900,600 Less: Provision for impairment (Note 19.1) - - (15,674,098) (15,425,438) 47,089,294 4,348,841 111,939,040 58,475,162
19.1 Provision for Impairment Balance as at 1st April - - 15,425,438 15,425,438 Charge for the year - - 364,167 - Write off during the year - - (115,507) - Balance as at 31st March - - 15,674,098 15,425,438
20 Cash and Cash Equivalents Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs. Favorable Balances Cash in Hand 7,068,780 7,688,699 5,594,900 5,581,830 Cash at Bank 40,980,231 1,391,786 35,669,894 1,307,790 Fixed Deposits 93,808,901 93,663,160 55,066,404 48,642,746 141,857,912 102,743,645 96,331,198 55,532,366 Unfavorable Balances Bank Overdrafts (7,185,358) (44,204,315) (1,808,684) (2,682,620) Net Cash and Cash Equivalents for the Cash Flow Purpose 134,672,554 58,539,330 94,522,514 52,849,746
21 Stated Capital Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Ordinary Shares 293,802,200 197,802,200 293,802,200 197,802,200
21.1 Movement in Stated Capital Balance as at 1st April 197,802,200 197,802,200 197,802,200 197,802,200 Ordinary share issue during the year 96,000,000 - 96,000,000 - Balance as at 31st March 293,802,200 197,802,200 293,802,200 197,802,200
22 Debentures Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Matured Debentures 3,250,000 3,250,000 3,250,000 3,250,000 3,250,000 3,250,000 3,250,000 3,250,000
The Company has issued these debentures at an interest rate of 13.5% per annum and they were matured on 31st March 2009. The Company has not accrued interest on these debentures from the date of maturity since the management is of the view that interest need not be accrued since they are matured. Millennium Housing Developers PLC 72 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH
23 Interest bearing Borrowings Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Commercial Bank of Ceylon PLC (Note 23.1) - - - - Commercial Bank of Ceylon PLC (Note 23.2) 16,007,000 33,248,000 Commercial Bank of Ceylon PLC (Note 23.3) 16,664,000 - - - 32,671,000 33,248,000 - -
Amount payable within one year 13,680,000 7,008,000 - - Amount payable after one year 18,991,000 26,240,000 - - 32,671,000 33,248,000 - -
23.1 Commercial Bank of Ceylon PLC Balance as at 1st April - 28,750,000 - - Loan obtained during the year - - - - Repayments during the year - (28,750,000) - - Balance as at 31st March - - - -
Security Primary Mortgage over lease hold right of 99 years of the Land allotted to Millennium Housing Limited depicted in plan No 2094
23.2 Commercial Bank of Ceylon PLC Balance as at 1st April 33,248,000 - - - Loan obtained during the year - 35,000,000 - - Repayments during the year (17,241,000) (1,752,000) - - Balance as at 31st March 16,007,000 33,248,000 - - Security Primary Mortgage of land owned by Millennium Housing Limited depicted in plan No 5537
23.3 Commercial Bank of Ceylon PLC Balance as at 1st April - - - - Loan obtained during the year 20,000,000 - - - Repayments during the year (3,336,000) - - - Balance as at 31st March 16,664,000 - - -
Security Primary Mortgage of land owned by Millennium Housing Limited depicted in plan No 6534 24 Deferred Taxation Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Balance as at 1st April 3,924,261 4,173,822 3,578,013 3,793,659 Recognized in the Profit and Loss Charge/(Reversal) during the year 2,175,595 (249,561) 1,939,740 (215,646) Recognized in Other Comprehensive Income Charge/(Reversal) during the year 3,365 - (44,560) - Balance as at 31st March (Note 24.1) 6,103,221 3,924,261 5,473,193 3,578,013
24.1 The provision for deferred tax of the Group and Company is attributable to the followings. 2014 2013 Group Temporary Tax Temporary Tax Difference Effect Difference Effect Rs. Rs. Rs. Rs. On Property, Plant and Equipment 648,491 76,605 (601,430) (188,209) On Retirement Benefit Obligation 21,523,631 6,026,617 15,111,289 4,112,470 22,172,122 6,103,222 14,509,859 3,924,261 Company
On Property, Plant and Equipment 450,384 126,108 (849,037) (237,730) On Retirement Benefit Obligation 19,096,735 5,347,085 13,627,656 3,815,743 19,547,119 5,473,193 12,778,619 3,578,013 Millennium Housing Developers PLC Annual Report 2013/14 73
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH
25 Retirement Benefit Obligation Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Balance as at 1st April 15,111,289 12,287,009 13,627,656 10,951,611 Recognized in the Profit and Loss Current Service Cost 5,462,028 3,285,080 4,904,328 2,995,095 Interest Cost 1,498,294 - 1,352,358 - Recognized in Other Comprehensive Income Actuarial (Gain)/Loss 80,483 - (159,144) - Payments made during the year (628,463) (460,800) (628,463) (319,050) Balance as at 31st March 21,523,631 15,111,289 19,096,735 13,627,656
The Retirement Benefit Obligation of the company as at 31st March 2014 is based on an internally developed method in accordance with Sri Lanka Accounting Standard No. 19 - (Revised 2014) "Employee Benefits"
Key assumptions used in the computation includes the following; 2014 2013
Rate of Discount 10.50% 11.00% Salary Incremental Rates 12.00% 10.00% Employee Turnover Factor 10.00% 10.00% Retirement Age 55 Years 55 Years
25.1 Sensitivity of Assumptions Employed in the Valuation of the Retirement Benefit Obligation The following table demonstrates the sensitivity to a reasonably possible change in the key assumptions employed with all other variables held constant in the employment benefit liability measurement.
The sensitivity of the total comprehensive income and Financial Position is the effect of the assumed changes in discount rate and salary increment rate on to total comprehensive income and employment benefit obligation for the year. Sensitivity Effect on Total Comprehensive Employment Benefit Income Increase/ Obligation Increase/ (Reduction) (Reduction) in the Liability Rs. Rs. Increase in Discount Rate (1%) 1,001,282 (1,001,282) Decrease in Discount Rate (1%) (1,084,390) 1,084,390
Increase in Salary Escalation Rate (1%) 1,058,418 (1,058,418) Decrease in Salary Escalation Rate (1%) (1,051,338) 1,051,338 Millennium Housing Developers PLC 74 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH
26 Trade and Other Payables Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Trade Payables 70,687,227 66,740,567 37,650,724 39,735,268 Accrued Expenses 40,344,379 39,580,145 17,106,722 26,873,702 Advance Received from Customers 130,326,849 203,840,809 46,743,374 73,707,427 Other Payables 25,062,240 23,221,003 10,229,492 9,121,950 266,420,695 333,382,524 111,730,312 149,438,347
27 Amounts Due to Related Company Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Nation Lanka Finance PLC 24,290,663 830,937 23,459,726 - 24,290,663 830,937 23,459,726 - Millennium Housing Developers PLC Annual Report 2013/14 75 4,148,381 Rs. 2013 11,670,338 42,328,281
Rs. 2014 8,111,519 57,854,419 (23,459,726) Outstanding as at 31st March 31st at Outstanding as
- Rs. 180,000 2013 3,308,302 5,025,840 5,668,054 3,096,766 5,000,000 5,014,820 1,378,804 1,511,755 (3,143,493) (2,476,761) (7,604,955) (2,892,369) (4,500,000) (1,176,000) 24,120,185 33,848,279 10,710,727 20,008,000 (15,295,396) (66,498,120) (52,223,000) (44,800,367)
Amount - 180,000 904,873 Rs. (294,000) 2014 2,308,215 5,531,837 7,503,000 6,964,104 7,410,819 3,190,802 1,578,250 (2,613,150) (5,155,539) (2,701,252) 54,569,735 19,328,859 36,400,741 10,652,229 (22,938,507) (56,481,879) (40,700,000) (10,626,155) (13,653,771) (17,000,000)
Nature of the Transactions Transactions of the Nature Settlements By made Payments TransfersFund by made TransfersFund to TransfersFund by made TransfersFund to Head OfficeHead - Expense Electricity and Rent Rent Expense Complex Commercial - Income Store Rent Settlements Deposit Fixed Term Loan Short Loan Term Short on Interest Dividend TransfersMaterial from TransfersMaterial to Dividend Apportionment Expenditure TransfersMaterial from TransfersMaterial to Apportionment Expenditure Dividend received Payments made By By made Payments Payments made on behalf of made Payments on behalf of made Payments Parent Subsidiaries Subsidiaries Relationship Names of Directors Names of Directors Mr.W.B.B.C.J.Fernando Mr.U.H.Palihakkara Mr.N.P.Jayathilaka Mr.M.K.W.J.Seresinhe Mr.S.S.Weerabahu Mr.M.K.W.J.Seresinhe Mr.S.S.Weerabahu Mr.Gihan De Zoyza Mr.Gihan De Zoyza Mr.Gihan Mr.N.P.Jayathilaka MARCH 2014 MARCH Name of the Company Name of the Company ST Related Party Disclosures Party Related Nation Lanka Finance PLC Finance Lanka Nation Limited Housing Millennium Villa Housing Millennium Limited Development Transactions withTransactions Parties Related 27 27.1
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) STATEMENTS NOTES TO THE FINANCIAL
AS AT 31 Millennium Housing Developers PLC 76 Annual Report 2013/14 - - - - 115,507 Rs. 2013 15,437,633
- 98,739 5,179,658 Rs. 2014 23,116,985 17,377,260 15,674,098 Outstanding as at 31st March Outstanding
- - - - - 79,891 (33,312) 140,741 Rs. (125,150) 2013
Amount 70,911 98,739 236,465 (186,418) 5,179,658 Rs. 2014 23,116,985 17,377,260
Nature of the Transactions Transactions Naturethe of Payments made on behalf made Payments Payments made on behalf made Payments on behalf made Payments Material Transfers Material Transfers Fund by made by made Payments Loan and Interest Loan and Interest paper and Interest Commercial Investing Relationship Subsidiaries Director Director Company Parent Director Company Parent Subsidiaries Subsidiaries Names of Directors Directors of Names Mr.S.S.Weerabahu Drarmadasa H. U. Mr. Mr.S.S.Weerabahu Mr.N.P.Jayathilaka De Zoyza Mr.Gihan RajivMr. Perera Pasqual A.M. Mr. Mr.M.K.W.J.Seresinhe RajivMr. Perera Mr. W.B.B.C.J.Fernando Janaka Panapathwala Mr. Mohomed Sharifa Ms. Punchihewa Ajahn Mr. Senaviratne Asanga Mr. Senaviratne Manjula Ms. Senaviratne Asanga Mr. Senaviratne Manjula Ms. wickramanayake G.G. Mr. punchihewa Gardiye A. Mr. Mr.Gihan De Zoyza Mr.Gihan Mr.N.P.Jayathilaka De Zoyza Mr.Gihan Mr.N.P.Jayathilaka Name of the Company MARCH 2014 MARCH ST MC UrbanMC Developers Ltd Transactions with Related Parties (Continued) Parties Related with Transactions Millennium Housing Millennium Limited Construction Housing Ceylinco Limited Corporation Related Party Disclosures (Continued) Disclosures Party Related Nation Lanka Equities (Pvt) Ltd Lanka Equities Nation (Pvt) Ltd AccessInvester Equities Ltd Properties & Hotels Anilana 27 27.1
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) STATEMENTS FINANCIAL THE TO NOTES
AS AT 31 Millennium Housing Developers PLC Annual Report 2013/14 77
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH 2014
28 Financial Risk Management
Overview
The Group has exposure to the following risk arising from the financial instruments
a. Credit risk b. Liquidity risk c. Market risk
The note presents information about the Group's exposure to each of the above risks, the Group's risk management objectives, policies and processes for measuring and managing risk, and the Group's management of capital.
Risk management Framework The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. Parent Company has established the Risk Management Committee, which is responsible for developing and monitoring the Group’s risk management policies. The committee reports regularly to the Board of Directors on its activities.
The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
28.1 Credit Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.
Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows Millennium Housing Developers PLC 78 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH 2014
28 Financial Risk Management (Continued) Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Available for Sale Investments 13,000,000 13,000,000 13,000,000 13,000,000 Trade and other receivables 264,968,426 209,976,218 105,347,340 109,779,279 Amounts due from related companies 45,099,244 19,736,051 125,623,088 89,287,810 Cash at bank 134,789,132 95,054,946 90,736,298 49,950,536 457,856,802 337,767,215 334,706,725 262,017,625
The maximum exposure to credit risk for loans and receivables at reporting date by geographic region was:
Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Athurugiriya 51,573,995 59,053,911 51,573,995 57,804,824 Ja-Ela 163,085,049 115,921,224 32,372,183 44,865,501 Piliyandala 8,637,110 - - - 223,296,154 174,975,135 83,946,178 102,670,325
The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group’s customer base, as these factors may have an influence on credit risk. The majority of the Group’s revenue was attributable to sales transactions with Ja-Ela geographical region .However there is no concentration on credit risk attributable to a single customer.
Properties are sold subject to retention of title causes, so that in the event of non payment the Group have a secured claim. Hence the Group does not keep an additional collateral in respect of trade receivable.
When granting easy payment loan facility, the Group has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes earning patterns of individuals and bank references. Millennium Housing Developers PLC Annual Report 2013/14 79
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH 2014
28 Financial Risk Management (continued)
Impairment losses
The aging of trade and other receivables at the reporting date is as follows.
2014 2013 Group Gross Impairment Gross Impairment 2014 2014 2013 2013 Rs. Rs. Rs. Rs. Current balance 159,339,340 - 112,171,315 - Past due 1 - 3 Months 10,809,449 - 12,613,048 - Past due 4 - 6 Months 8,324,045 - 7,606,691 - Past due 6 - 9 Months 9,848,545 - 6,095,040 - Past due 9 - 12 Months 5,647,736 - 2,457,824 - Over 12 Months 29,327,039 (2,007,520) 34,031,217 (1,249,087) 223,296,154 (2,007,520) 174,975,135 (1,249,087)
2014 2013 Company Gross Impairment Gross Impairment 2014 2014 2013 2013 Rs. Rs. Rs. Rs. Current balance 65,770,100 - 64,222,012 - Past due 1 - 3 Months 2,436,046 - 6,021,752 - Past due 4 - 6 Months 2,908,088 - 2,572,073 - Past due 6 - 9 Months 4,906,496 - 10,616,086 - Past due 9 - 12 Months 1,096,187 - 4,215,111 - Over 12 Months 6,829,261 - 16,272,378 (1,249,087) 83,946,178 - 103,919,412 (1,249,087)
The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows.
Group Company 2014 2013 Rs. Rs. Rs. Rs. Individual impairment Balance at 1st April 1,249,087 1,750,923 1,249,087 1,750,923 Reversal during the year (501,836) - (501,836) Write off during the year (1,249,087) - (1,249,087) - Balance at 31st March - 1,249,087 1,249,087 1,249,087 Millennium Housing Developers PLC 80 Annual Report 2013/14 ------Rs years More than 5
- - - - Rs 5,311,000 5,311,000 2-5 years
- - - - Rs 13,680,000 13,680,000 1-2 years 1-2 years
- - - - Rs 6,840,000 6,840,000 6-12 months 6-12
Rs 3,250,000 6,840,000 7,185,358 41,635,458 24,290,663 266,420,695 349,622,175
6 months or less months 6 3,250,000 7,185,358 Rs 32,671,000 41,635,458 24,290,663 flows 266,420,695 375,453,175
Contractual cash cash Contractual Rs 3,250,000 7,185,358 32,671,000 41,635,458 24,290,663 amount Carrying Carrying 266,420,695 375,453,175
MARCH 2014 MARCH ST Interest bearing borrowings bearing Interest Considering prevailing market conditions, the Group has mutually agreed with some of its customers to reviseof of its receivables. the terms its customers some receivables in the group Included with agreed mutually has Group the conditions, prevailingConsidering market provided been has no significant for allowance forno credit date the in reporting change the at as there was which impaired not but due are past which balances are customer recoverable. as are still considered amounts the and of customers the quality equivalents and cash Cash assets. these on exposure credit its maximum represents The which equivalents cash and Rs. 102,743,645), cash (2013: held 2014 Group of March 31 as at Rs. 141,857,912 The financial and bank equivalents cash and cash counterparties. institution with are held delivering its financial or another cash by settled are liabilities that with associated obligations the difficulty encounter meeting in will Group the risk that risk is the Liquidity both under due, have when its liabilities sufficient meet to always far as ensure, is to liquidity it will that financial possible, as liquidity The asset. to managing approach Group’s reputation. Group’s the to losses or risking damage unacceptable incurring without conditions, stressed and normal of agreements. netting the impact excluding and ofThe payments interest financial maturities contractual following are the estimated including liabilities, Group March at 31st 2014 As liabilities financial Non-derivative Trade payables other and Debentures payable tax Income Financial Risk Management Risk Financial (Continued) risk Liquidity Amounts due to related companies to related due Amounts Bank overdraftBank 28 28.2 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) STATEMENTS NOTES TO THE FINANCIAL AS AT 31 Millennium Housing Developers PLC Annual Report 2013/14 81 ------
Rs Rs Rs years years years More thanMore 5 thanMore 5 thanMore 5
------
830,937
Rs Rs Rs 20,782,937 19,952,000
2-5 years 2-5 years 2-5 years
------
Rs Rs Rs 7,008,000 7,008,000 1-2 years 1-2 years 1-2 years 1-2 years
------
Rs Rs Rs 3,144,000 3,144,000
6-12 months 6-12 months 6-12 months
-
3,144,000 3,250,000 3,250,000 1,808,684 3,250,000 9,084,887 2,682,620 Rs Rs Rs
17,892,629 44,204,315 15,743,558 23,459,726
333,382,524 111,730,312 149,438,347 401,873,468 155,992,279 164,455,854 6 months or less 6 months or less 6 months or less 6 months or
830,937
3,250,000 3,250,000 1,808,684 3,250,000 9,084,887 2,682,620
33,248,000 17,892,629 44,204,315 15,743,558 23,459,726 Rs Rs Rs
333,382,524 111,730,312 149,438,347 432,808,405 155,992,279 164,455,854 flows flows flows
Contractual cash Contractual cash Contractual cash
830,937 Rs Rs Rs
3,250,000 3,250,000 1,808,684 3,250,000 9,084,887 2,682,620
33,248,000 17,892,629 44,204,315 15,743,558 23,459,726 amount amount amount Carrying Carrying Carrying
333,382,524 111,730,312 149,438,347 432,808,405 155,992,279 164,455,854
MARCH 2014 MARCH ST Financial Risk Management (Continued) Management Risk Financial Group at2013 31st March As financialNon-derivative liabilities Trade and other payables borrowings bearing Interest Debentures payable tax Income companies related due to Amounts overdraftBank Company at2014 31st March As financialNon-derivative liabilities Trade and other payables Debentures payable tax Income companies related due to Amounts overdraftBank Company at2013 31st March As financialNon-derivative liabilities Trade and other payables Debentures payable tax Income overdraftBank and which management purposes for risk held liabilities financial to relating flows cash undiscounted contractual above the the represent in tables disclosed The inflows/(outflows) gross maturity. contractual prior to out closed not are usually 28 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) STATEMENTS FINANCIAL THE TO NOTES AS AT 31 Millennium Housing Developers PLC 82 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH 2014
28 Financial Risk Management (Continued)
28.3 Market risk
Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest rate risk At the reporting date, the interest rate profile of the group's interest - bearing financial instruments are as follows.
Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs. Fixed rate instruments Financial Assets - Fixed deposit 93,808,901 93,663,160 55,066,404 48,642,746 93,808,901 93,663,160 55,066,404 48,642,746
Variable rate instruments Bank over draft 7,185,358 44,204,315 1,808,684 2,682,620 Financial liability - Term loan 32,671,000 33,248,000 - - 39,856,358 77,452,315 1,808,684 2,682,620
Cash flow sensitivity analysis for variable rate instruments
The Company is exposed to changes in market interest rates through Bank overdraft borrowings which were borrowed at a variable interest rate
Profit or Loss Equity 100 bp 100 bp increase decrease 100 bp increase 100 bp decrease Rs. Rs. Rs. Rs. 31st March 2014
Variable rate instruments (4,719,406) (3,546,319) - - (4,719,406) (3,546,319) - -
31st March 2013
Variable rate instruments (356,481) 355,244 - - Cash flow sensitivity (Net) (356,481) 355,244 - - Millennium Housing Developers PLC Annual Report 2013/14 83
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH 2014
28.4 Financial Risk Management (Continued)
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of ordinary shares and retained earnings of the Group. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.
The Group's main objective is when managing capital are: 01) to safeguarded the Group ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders 02) to provide an adequate return to shareholders by pricing products commensurately with the level of risk.
Further, the Board seeks to maintain a balance between higher targeted returns that might be possible with higher level of borrowing, and the advantages and security afforded by the strong capital position of the group.
The Group’s net debt to adjusted equity ratio at the reporting date was as follows.
Group Company 2014 2013 2014 2013 Rs. Rs. Rs. Rs.
Total liabilities 396,976,805 447,919,694 175,089,015 178,083,510 Less: Cash and cash equivalents (141,857,912) (102,743,645) (96,331,198) (55,532,366) Net debt 255,118,893 345,176,049 78,757,818 122,551,144
Total equity 623,690,886 446,252,044 497,846,171 402,005,674 623,690,886 446,252,044 497,846,171 402,005,674
Net debt to adjusted equity ratio at 31st March 0.41 0.77 0.16 0.30 Millennium Housing Developers PLC 84 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH 2014
29 Fair values
The Company and Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.
Level I: Quoted market price (unadjusted) in an active market for an identical instrument.
Level II: Valuation techniques based on observable inputs, either directly – i.e. as prices or indirectly – i.e. derived from prices. This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
Level III: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
Available for sale investments as at the reporting date includes unquoted equity investments whose fair value cannot be reliably measured. So they are subsequently measured at historical cost in accordance with LKAS 39 "Financial Instruments Recognition and Measurement".
Fair values versus the Carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the Statement of Financial Position, are as follow;
Group Company 31st March 2014 31st March 2014 Carrying Fair Value Carrying Fair Value Amount Amount Rs. Rs. Rs. Rs. Assets carried at amortized cost Trade and Other Receivables 264,968,426 264,968,426 105,347,340 105,347,340 Amounts due from related companies 29,712,034 29,712,034 94,561,780 94,561,780 Cash and Cash Equivalents 141,857,912 141,857,912 96,331,198 96,331,198 436,538,372 436,538,372 296,240,318 296,240,318
Liabilities carried at amortized cost Trade and Other Payables 266,420,695 266,420,695 111,730,312 111,730,312 Debt Securities 3,250,000 3,250,000 3,250,000 3,250,000 Borrowings 32,671,000 32,671,000 - - Income Tax Payable 41,635,458 41,635,458 15,743,558 15,743,558 Amounts Due to Related Company 24,290,663 24,290,663 23,459,726 23,459,726 Bank Overdraft 7,185,358 7,185,358 1,808,684 1,808,684 375,453,174 375,453,174 155,992,280 155,992,280 Millennium Housing Developers PLC Annual Report 2013/14 85
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH 2014
30 Categorization of Financial Assets and Liabilities as at the Reporting Date
The Group has classified the following financial assets and liabilities to each respective financial instrument category explained in LKAS 39 "Financial Instruments - Recognition and Measurement"
Company
Financial Assets Classification Available for Loans and Sale Receivables Investments Rs Rs
Investment in unquoted companies - 13,000,000 Trade and Other Rececivables 105,347,340 - Amounts due from related companies 94,561,780 - Cash at bank and in hand 96,331,198 -
Financial Liabilities Classification Amortised Cost Rs.
Trade and other payables 111,730,312 Debt Securities 3,250,000 Amounts due to related companies 23,459,726 Income tax payable 15,743,558 Bank overdraft 1,808,684
Group
Financial Assets Classification Available for Loans and Sale Receivables Investments Rs Rs
Investment in unquoted companies - 13,000,000 Trade and Other Rececivables 264,968,426 - Amounts due from related companies 29,712,034 - Cash at bank and in hand 141,857,912 -
Financial Liabilities Classification Amortised Cost Rs.
Trade and Other Payables 266,420,695 Debt Securities 3,250,000 Borrowings 32,671,000 Income Tax Payable 41,635,458 Amounts Due to Related Company 24,290,663 Bank Overdraft 7,185,358 Millennium Housing Developers PLC 86 Annual Report 2013/14
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 31ST MARCH 2014
31 Going Concern Millennium Housing Construction Limited, a Subsidiary of the Group, has reported accumulated losses of Rs. 21,258,548 as at 31st March 2014 and the total liabilities exceeded its total assets by Rs. 17,757,848 as at the same date. These indications raise substantial doubts whether this subsidiary will be continuing as going concern and expect that following strategic initiatives will improve the financial results and the position of the Company in the future.
However, the Parent Company will provide financial assistance to this subsidiaries to continue the operation of the company.
1. The Company is expecting Rs. 20Mn worth of projects from its parent company and other related companies which include construction of houses, roads, drains and retaining walls during next financial year. 2. The company has started negotiations with former customers for new contractors for the next year.
32 Contingent Liabilities There were no significant contingent liabilities at the reporting date which require adjustment to or disclosure in the Financial Statements.
33 Capital Commitments There are no capital commitments outstanding as at the reporting date.
34 Events Occurring after the Reporting Date No events have occurred since the reporting date which would require any adjustments to or disclosure in the Financial Statements.
34 Operating Leases Future minimum lease payments under operating leases as at the reporting date are as follows, Group Company Rs. Rs. Not later than one year 6,570,169 2,181,304 Later than one year and not later than five years 26,280,677 8,725,217 Later than five years 24,099,361 6,543,913 56,950,207 17,450,434
29 Millennium Housing Developers PLC Annual Report 2013/14 87
VALUE ADDED STATEMENT VALUE ADDED STATEMENT Group Company
For the year ended 31st March, 2014 2013 2014 2013 Rs. 000 Rs. 000 Rs. 000 Rs. 000
Income from Operation 714,363 578,746 245,873 224,860 Income from Investments & Others 3,866 249 12,941 24,243 Cost of External Suppliors & Services (489,128) (393,863) (183,070) (158,858) 229,101 185,132 75,743 90,245
Group Company Value Distribution Rs. 000 Rs. 000 Rs. 000 Rs. 000
To employees 64,522 49,183 27,055 18,237 To Lenders as interest & charges 5,705 4,933 144 244 To Government as Taxes 42,454 32,674 14,158 14,033 To shareholders as dividend 33,671 19,781 33,670 19,781
Retained in the business Depreciation 1,311 809 875 688 Reserves 81,439 77,752 (160) 37,264 229,101 185,132 75,743 90,245
Group Value Distribution Company Value Distribution
2013/14 2013/14
-0.2 1.2
28.2 35.6
26.6 20 2012/13 35.5 2012/13 42 44.5 41.3 2.7 0.3 2.5
15.5
17.6 0.4 10.7 21.9 0.2 0.6 0.8 14.7 18.5 18.7
To employees as remuneration Dividend To employees as remuneration Dividend
To Lenders as interest & charges As Depreciation set To Lenders as interest & charges As Depreciation set
To Government as Taxes As reserves To Government as Taxes As reserves Millennium Housing Developers PLC 88 Annual Report 2013/14
SHARE HOLDERS & INVESTORS INFORMATION SHARE HOLDERS & INVESTORS INFORMATION
01 TWENTY TWO LARGEST SHARE HOLDERS 31-Mar-14
No Name of the Share Holder No of Shares Percentage 1 Nation Lanka Finance PLC 91,754,028 68.13% 2 Anilana Hotels & Properties Limited 11,925,072 8.85% 3 Arrow International (Pvt) Ltd 6,000,000 4.45% 4 Investor Access Equities (Pvt) Ltd 3,778,300 2.81% 5 Bank Of Ceylon A/C Ceybank Unit Trust 2,042,600 1.52% 6 Mr. H. J. C. Perera 1,833,300 1.36% 7 Mr. V. R. Rmanan 1,666,600 1.24% 8 National Development Bank of Sri Lanka 1,500,000 1.11% 9 DFCC Bank A/C No 1 1,500,000 1.11% 10 Serendib Engineering & Agencies (Pvt) Ltd 1,417,904 1.05% 11 Mr. K.C.C. Perera 1,300,000 0.97% 12 Ceylinco Insurance PLC A/C No 2 (General Fund) 1,200,000 0.89% 13 The Finance Company PLC A/C No 1 1,200,000 0.89% 14 Ceylinco Homes International Ltd 900,000 0.67% 15 Dunimis Capital Plc 833,000 0.62% 16 Miss. N.U. Rajakanthan 620,000 0.46% 17 Mr. K.D.H. Palihakkara 600,000 0.45% 18 Mr. K. Rajakanthan 500,000 0.37% 19 The Goden Key Company Ltd 300,000 0.22% 20 The Finance & Guarantee Company Ltd 300,000 0.22% 21 Ceylinco International Reality (Pvt) Ltd 300,000 0.22% 22 Mrs. D. S. Palihakkara 300,000 0.22%
02 SHARE HOLDERS 31-Mar-13
No Name of the Share Holder No of Shares Percentage 01 Nation Lanka Finance PLC 91,754,028 77.31% 02 Anilana Hotels & properties Limited 11,925,072 10.05% 03 Arrow International 6,000,000 5.06% 04 Serendib Engineering & Agencies (Pvt) Ltd 1,500,000 1.26% 05 National Development Bank of Sri Lanka 1,500,000 1.26% 06 DFCC Bank 1,500,000 1.26% 07 Ceylinco Insurance PLC 1,200,000 1.01% 08 The Finance Company PLC 1,200,000 1.01% 09 Ceylinco Homes International Ltd 900,000 0.76% 10 The Finance & Guarantee Company Ltd 300,000 0.25% 11 The Goden Key Company Ltd 300,000 0.25% 12 Ceylinco International Reality (Pvt) Ltd 300,000 0.25% 13 Ceylinco Universal Ltd 150,000 0.13% 14 Asian Investment & Factoring (Pvt) Ltd 60,000 0.05% 15 Ceylinco Consultancy & Allied Services (Pvt) Ltd 60,000 0.05% 16 Ceylinco Building Society Ltd 30,000 0.03% 17 Directors 2,220 0.00% 118,681,320 Millennium Housing Developers PLC Annual Report 2013/14 89
02 STOCK EXCHANGE LISTING
Millennium Housing Developers Plc Listed in Colombo Stock Exchange on 19th February 2014
03 STATED CAPITAL 31-Mar-14
Number of shares represented by the share capital 134,681,320 (31-03-2014 - 134,681,320) Percentage of shares held by public 17.74%
04 SHARE PRICE
Market Price Per Share - Last Traded - Rs. 6.20 Market Price Per Share - Highest - Rs. 6.60 Market Price Per Share - Lowest - Rs. 5.80
05 BOOK VALUE
Net Asset Per Share Rs. 5.20
06 DISTRIBUTION OF SHAREHOLDINGS AS AT 31ST MARCH
Resident Non - Resident Total
Value Band No of Share No of No of Shares % No of Shares % No of Shares % Holders Share No of Share Holders Holders 1 - 1,000 257 81,400 0.06 - - - 257 81,400 0.06 1,001 - 5,000 67 194,248 0.14 - - - 67 194,248 0.14 5,001 - 10,000 18 167,200 0.12 - - - 18 167,200 0.12 10,001 - 50,000 24 658,858 0.49 - - - 24 658,858 0.49 50,001 - 100,000 7 573,810 0.43 - - - 7 573,810 0.43 100,001 - 500,000 11 2,935,000 2.18 - - - 11 2,935,000 2.18 500,001 - 1,000,000 4 2,953,000 2.19 - - - 4 2,953,000 2.19 1,000,001 - 50,000,000 11 33,697,176 25.02 1 1,666,600 1.24 12 35,363,776 26.26 50,000,001 - 75,000,000 ------0 - 0.00 75,000,001 - 100,000,000 1 91,754,028 68.13 - - - 1 91,754,028 68.13 Total 400 133,014,720 98.76 1 1,666,600 1.24 401 134,681,320 100.00
Financial Calendar
Dividend for ordinary shares for 2013/14 30-07-2014 Interium Financial Statement 2014/15 1st quarter ended 30-06-2014 (Unaudited) 15-08-2014 2nd quarter ended 30-09-2014 (Unaudited) 15-11-2014 3rd quarter ended 31-12-2014 (Unaudited) 15-02-2015 4th quarter ended 31-03-2015 (Unaudited) 15-05-2015 Millennium Housing Developers PLC 90 Annual Report 2013/14
TEN YEAR SUMMARY GROUP
For The Year Ended 31st March 2013/14 2012/13 2011/12 Rs. Rs. Rs. Result Turnover 714,363,392 578,745,720 320,234,240 Net Profit/(loss) Before Tax 169,535,542 130,206,892 34,312,166 Income Tax (42,454,090) (32,674,170) (3,132,367) Net Profit/(Loss) After Tax 127,081,452 97,532,722 31,179,799
Equity & Liabilities Ordinary share capital 293,802,200 197,802,200 197,802,200 Preference share capital - - - Capital reserves 66,000,000 66,000,000 66,000,000 Availabke for sale - - - Revenue reserves 263,888,686 182,449,844 104,697,737 Equity Attributable to owners of the Company 623,690,886 446,252,044 368,499,937 Non Controlling Interest - - - Total Equity 623,690,886 446,252,044 368,499,937 Borrowings (both long & short terms) 32,671,000 33,248,000 37,924,575 Debentures 3,250,000 3,250,000 3,250,000 659,611,886 482,750,044 409,674,512
Assets Employed Non-current assets 64,256,181 24,219,084 8,814,751 Current assets 956,411,510 869,952,654 761,884,214 Current liabilities net of borrowings (339,532,174) (396,310,405) (348,737,444) Deferred liability (21,523,631) (15,111,289) (12,287,009) Capital employed 659,611,886 482,750,044 409,674,512
Cash Flow Net Cash inflow/ (outflow) from operating activities 40,228,430 62,496,491 (78,909,910) Net Cash inflow/ (outflow) investing activities (13,952,713) 6,771,018 10,971,624 Net Cash inflow/ (outflow) financing activities 49,857,508 (24,457,191) 79,842,739 Increase/(decrease) in cash and equivalents 76,133,224 44,810,318 11,904,454
Key Indicators Earnings per share (basics) (Rs) 1.06 0.82 0.28 Net assets per share (Rs) 5.18 3.76 3.36 Return on Equity (%) 20.38 21.86 8.46 Return on Capital Employed (Equity+Debt) (%) 19.27 20.20 7.61 Return on gross assets (%) 12.45 10.91 4.05 Interest cover (times covered) 30.72 27.39 13.33 Dividend per Share (Rs) 0.28 0.17 0.75 Current ratio (times) 2.71 2.14 2.03 Quick ratio (times) 0.99 0.78 0.72 Turnover to Equity (times) 1.15 1.30 0.87 Property, Plant & Equipment to Equity (%) 1.34 1.63 1.26 Turnover to Property,Plant & Equipent (Rs) 85.26 79.34 69.00 Borrowings to equity ratio (%) 5.24 7.45 10.29 Equity to total assets ratio (%) 61.11 49.91 47.81 Millennium Housing Developers PLC Annual Report 2013/14 91
2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 2004/05 Rs. Rs. Rs. Rs. Rs. Rs. Rs.
218,421,221 150,889,212 337,407,533 646,875,417 833,027,854 867,810,119 1,015,435,211 14,943,279 (64,403,303) (147,657,539) (20,105,043) 76,945,717 72,962,749 63,585,402 (113,732) (525,552) (1,978,900) (3,532,816) (1,279,905) (3,267,199) (633,492) 14,829,547 (64,928,855) (149,636,439) (23,637,859) 75,665,812 69,695,550 62,951,910
98,901,100 98,901,100 98,901,100 98,901,100 98,901,100 80,001,100 75,001,100 - - - - 9,000,000 - - 66,000,000 66,000,000 66,000,000 66,000,000 123,385,334 123,385,334 66,000,000 19,977,512 ------91,940,031 119,849,203 186,040,572 321,531,911 281,090,957 211,598,211 145,770,413 276,818,643 284,750,303 350,941,672 486,433,011 512,377,391 414,984,645 286,771,513 35,635,063 51,378,438 - 16,240,036 - - - 312,453,706 336,128,741 350,941,672 502,673,047 512,377,391 414,984,645 286,771,513 41,152,874 16,217,019 24,463,521 262,490,562 679,114,107 126,796,592 135,179,648 3,250,000 3,388,116 8,480,000 50,090,000 75,069,000 157,280,000 81,480,000 356,856,580 355,733,876 383,885,193 815,253,609 1,266,560,498 699,061,237 503,431,161
64,169,945 46,195,683 83,743,241 164,177,749 321,597,802 238,927,554 162,407,485 583,666,119 601,291,116 698,826,712 1,986,574,994 2,599,598,777 1,524,022,580 1,186,329,410 (280,627,955) (279,585,734) (384,588,720) (1,318,798,527) (1,640,360,701) (1,058,015,597) (841,507,607) (10,351,529) (12,167,189) (14,096,041) (16,700,607) (14,275,380) (5,873,300) (3,798,127) 356,856,580 355,733,876 383,885,193 815,253,609 1,266,560,498 699,061,237 503,431,161
913,664 (64,612,771) (138,273,605) 268,591,191 (17,200,415) (65,176,904) (40,848,278) 8,551,097 80,732,629 108,341,598 65,834,567 (11,453,497) (8,613,430) (94,513,057) (14,067,413) (13,600,545) (165,235,579) (105,217,040) 25,286,872 70,073,119 114,691,461 (4,602,652) 2,519,313 (195,167,585) 229,208,718 (3,367,038) (3,717,215) (20,669,874)
1.50 (6.57) (13.70) (2.39) 7.65 8.71 8.13 27.99 28.79 35.48 49.18 51.81 51.87 38.24 5.36 (22.80) (42.64) (4.86) 14.77 16.79 21.95 4.16 (18.25) (38.98) (2.90) 5.97 9.97 12.50 2.29 (10.03) (19.12) (1.10) 2.59 3.95 4.67 2.77 (2.05) (2.19) 0.81 2.38 3.07 2.58 ------2.00 1.80 2.06 1.74 1.33 1.31 1.40 1.29 0.52 1.03 0.97 0.59 0.61 0.73 0.78 0.79 0.53 0.96 1.33 1.63 2.09 3.54 1.71 2.81 3.74 17.31 38.31 37.95 28.69 46.03 18.86 25.74 7.68 4.24 5.51 12.34 14.87 5.70 6.97 53.96 120.21 30.55 47.14 42.73 43.98 44.84 22.62 17.54 23.54 21.26 Millennium Housing Developers PLC 92 Annual Report 2013/14
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN THAT THE 15TH ANNUAL GENERAL MEETING OF THE SHARE HOLDERS OF MILLENNIUM HOUSING DEVELOPERS PLC WILL BE HELD ON 22ND JULY 2014 AT 10.00 A.M. AT THE BCIS AUDITORIUM OF THE BANDARANAIKE MEMORIAL INTERNATIONAL CONFERENCE HALL (B.M.I.C.H.) SITUATED AT BAUDDALOKA MAWATHA, COLOMBO-07, FOR THE FOLLOWING PURPOSES;
Agenda
1) To read the Notice convening the Meeting.
2) To consider and adopt the Annual Report of the Board and the Statements of Accounts for the year ended 31st March 2014, with the report of the auditors thereon.
3) To re-appoint U.H. Palihakkara, as a Director who is over Seventy years of age.
4) To re-elect Mr. Gihan De Soyza, who retires by rotation at the Annual General Meeting, a Director.
5) To re-elect Mr. A.M. Pasqual, who retires by rotation at the Annual General Meeting, a Director
6) To authorized the Directors to determine contributions to charities for the financial year 2014/15.
7) To re-appointed M/S KPMG, Chartered accountant as Auditors of the company, for the ensuing financial year 2014/15 and to authorize the Board of Directors to determine their remuneration.
8) To declare dividend of Rs.0.25 per share to the existing shareholders for the year ended 31st March 2014.
9) To consider any other business of which due notice has been given.
By Order of the Board
First Corporate Solutions Ltd Company Secretaries
Colombo 26th June 2014
Millennium Housing Developers PLC Annual Report 2013/14 93
FORM OF PROXY I/we*...... of...... being a shareholder/shareholders* of MILLENNIUM HOUSING DEVELOPERS PLC hereby appoint, ...... of ...... or failing him/them,* UGITHA HARSHITH DHARMADASA (Chairman of the Company) of Colombo, or failing him, one of the Directors of the Company as my/our* Proxy to attend and vote as indicated hereunder for me/us* and on my/our* behalf at the 15th Annual General Meeting of the company to be held on Tuesday, 22nd July 2014 and at every poll which may be taken in consequence of the aforesaid meeting and at any adjournment hereof:
For Against
1) To consider and adopt the Annual Report of the Board and the Statements of Accounts for the year ended 31st March 2014, with the report of the auditors thereon
2) To re-appoint U.H. Palihakkara, as a Director who is over Seventy years of age.
3) To re-elect Mr. Gihan De Soyza, who retires by rotation at the Annual General Meeting, a Director.
4) To re-elect Mr. A.M. Pasqual, who retires by rotation at the Annual General Meeting, a Director.
5) To authorized the Directors to determine contributions to charities for the financial year 2014/15.
6) To re-appoint M/S KPMG , Chartered Accountant as Auditors of the company, for the ensuing financial year 2014/15 and to authorize the Board of Directors to Determine their remuneration. .
7) To declare dividend of Rs.0.25 per share to the existing shareholders for the year ended 31st March 2014.
(**) The proxy may vote as he thinks fit on any other resolution brought before the Meeting.
As Witness my /our* hands this ...... day of ...... 2014.
...... NIC / REG NO. SIGNATURE
Millennium Housing Developers PLC Annual Report 2013/14 94
INSTRUCTIONS FOR THE COMPLETION OF THE FORM OF PROXY
1. Please perfect the form of proxy overleaf, after filling in legibly your full name and address, by signing in the space providing of filling the date of signature and your National Identity Card No.
2. The completed form of Proxy should be deposited at the office of the company Secretaries, First Corporate Solutions Limited No. 540, R.A. De Mel Mawatha, Colombo 03, 48 hours before the time appointed for the holding of the meeting.
3. If an Attorney has signed the form of Proxy, the relative Power of Attorney should also accompany the completed form of proxy for registration, if such Power of Attorney has not already been registered with the company.
4. If the share holder is a company or a corporate body, the proxy should be executed under its common seal in accordance with its Articles of Association or constitution.
5. If there is any doubt as to how to vote is to be exercised, by reason of the manner in which the form of proxy has been completed, no vote will be recorded by the form of proxy.
Millennium Housing Developers PLC Annual Report 2013/14 95
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