WEALTH CREATION FOR VALUE CREATION
Vallibel One PLC Annual Report 2015/16 WEALTH CREATION FOR VALUE CREATION
Vallibel One PLC Annual Report 2015/16 VISION Achieve uniqueness through diversity, leadership, creativity and inspiration.
MISSION To run healthy core businesses, leverage strengths into new ventures, work together with people to be Sri Lanka’s corporate leader.
Business Today Top 25 - 2014/15 CIMA LMD 100 - 2014/15 And itisthrough thecreation ofwealth The tree creates awealth ofoxygen A business powers economies and that thebusiness can create value for theplanet;oxygen thatpowers and empowers usatVallibel One. communities bycreating wealth. This philosophy iswhatdrives for allits stakeholders. the entire eco-system.
VALLIBEL ONE PLC 1 2015 | 16 ANNUAL REPORT Contents
04-05 06-09 10-15 Highlights Chairman’s Chief Executive Officer’s Message Review
16-71 Management Discussion and Analysis
16-47 48-61 62-71
Our Guiding Philosophy Our Business Impact Our Business Portfolio Wealth creation is our reason We strive to have a positive Creating wealth and value for being. It drives us to create business impact on all for all stakeholders means value for our stakeholders. It stakeholders including the being on a mission to run is a vision that is powered by Sri Lankan economy, our healthy businesses, power our core guiding philosophy; shareholders, business new ventures while utilising a uniqueness that stems partners, employees and our strengths and working from three essential values: customers. together with people to become leadership, diversity and Sri Lanka’s corporate leader. innovation.
zz Leadership 18 zz The Economy 50 zz Royal Ceramics Lanka PLC 66 zz Diversity 30 zz Shareholders 52 zz L B Finance PLC 67 zz Innovation 38 zz Business Partners 54 zz Delmege Limited 68
zz Employees 58 zz Greener Water Limited 69
zz Customers 60 zz The Fortress Resorts PLC 70
zz Sampath Bank PLC 71 72-84 85-190 191-198 Stewardship Financial Reports Annexes
zz Board of Directors 72 zz Independent zz Five Year Summary - Auditors’ Report 86 Company 192 zz Corporate Governance 74 zz Statement of zz Group Value Added zz Statement on Risk 75 Financial Position 87 Statement 193 zz Annual Report of the zz Statement of zz Shareholder Information 194 Board of Directors on the Comprehensive Income 89 Affairs of the Company 76 zz GRI Content Index 196 zz Statement of zz Report of the zz Changes in Equity 91 Notice of Annual Related Party Transactions General Meeting 198 Review Committee 81 zz Consolidated zz Statement of Cash Flow 94 Form of Proxy Enclosed zz Directors’ Responsibility for Financial Reporting 82 zz Notes to the Financial Statements 96 zz Report of the Audit Committee 84
Scan to view the PDF version of this Annual Report 4 GROUP FINANCIAL HIGHLIGHTS
2016 2015 Change Rs. '000 Rs. '000 % HIGHLIGHTS For the Year ended 31st March Turnover 47,667,846 43,449,784 9.71 Profit Before Tax 10,969,687 7,348,664 49.27 Profit After Tax 7,456,720 5,201,892 43.35 Profit Attributable to Equity Holders of the Company 4,227,980 2,891,094 46.24
As at 31st March Shareholders' Funds 38,091,062 34,736,706 9.66 Market Capitalisation - Company 19,340,756 22,057,155 (12.32) Total Assets 150,871,742 129,517,572 16.49
Per Share (Issued and Fully paid Shares 1,086,559,353) Earnings (Rs.) 3.89 2.66 46.24 Net Assets (Rs.) 35.06 31.97 9.66 Market Value - Company (Year-end) (Rs.) 17.80 20.30 (12.32) Price Earnings (Year-end) (No. of Times) 4.57 7.63 (40.04) Gross Profit (%) 44.38 40.55 9.45
Total Assets and Revenue Profit Before Tax and Profit After Tax
Rs. Mn Rs. Mn Rs. Mn
3,100
3,832
3,062
5,202
4,183 7,349
4,028
7,457
5,234
10,970
97,119
82,657
150,872
124,998
129,518
60,000 160,000 12,000
45,000 120,000 9,000
30,000 80,000 6,000
15,000 40,000 3,000
48,331
43,450
47,668
33,110 0 27,227 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
Revenue (Rs. Mn) (left Y axis) Profit Before Tax
VALLIBEL ONE PLC ANNUAL REPORT Total Assets (Rs. Mn) (right Y axis) Profit After Tax 2015 | 16 Return onEquity(ROE) (%) Return onAssets (ROA) (%) Net Assets Per Share (Rs.) Earnings Per Share (Rs.) Shareholders' Funds (Rs. Mn) Total Assets (Rs. Mn) Profit After Tax (Rs. Mn) Profit Before Tax (Rs. Mn) growth hadoccurred ataconstant rate eachyear over thattimeperiod. Compound AnnualGrowth Rate (CAGR) istheaverage growth rate over aspecifiednumberofyears asifthe * Taking 2012asthebaseyear. Revenue (Rs. Mn) Indicator RECORD GROUP GROWTH 12 16 % 0 4 8 RO RO A E
0221 0421 2016 2015 2014 2013 2012 4.87 11.80 ROA andRO 3.19 8.53
2.45 6.87 E
4.02 10.84
4.94 13.64 Rs. Mn 10,000 20,000 30,000 40,000 Shareholders' Funds andNetAssetsPerShare 0 Shareholders' Funds (Rs. Mn.) Net AssetsPerShare (Rs.) 0221 0421 2016 2015 2014 2013 2012 28,979 26.67 28,979 82,657 27,227 4,028 5,234 11.80 26.67 4.87 2.34 30,347 28.22 2012
32,492 29.90 150,872 38,091 10,970 47,668 7,457 13.64 35.06 4.94 3.89
34,737 31.97 2016
38,091 35.06 4-year CAGR* 13.56% 16.23% 16.65% 20.32% 15.03% 3.69% 0.35% 7.07% 7.07% 10.00 Rs 20.00 0 30.00 40.00 .
VALLIBEL ONE PLC HIGHLIGHTS 5 2015 | 16 ANNUAL REPORT VALLIBEL ONE PLC CHAIRMAN’S MESSAGE 6 2015 | 16 ANNUAL REPORT CHAIRMAN DHAMMIKA PERERA 7 CHAIRMAN’S MESSAGE CHAIRMAN’S
A large part of our success in wealth creation is owed to the resilience we derive through diversity.
VALLIBEL ONE PLC ANNUAL REPORT 16 2015 | 8
Wealth and value have been at the heart of our business proposition since the inception of Vallibel One in 2010. In fact, they are the fundamental core pillars CHAIRMAN’S MESSAGE CHAIRMAN’S of our business. This wealth value proposition has been propelled through innovation across business sectors, and our shareholders and stakeholders will agree that innovation is indeed the spark that differentiates how we do business and the business that we do.
For Vallibel One, wealth creation has always been about value creation through innovation. We recognise that wealth creation is the outcome of the judicious deployment of capital to create value, and it is this constant exploration to invest towards enhancing our resources, enlarging our capacity for value creation that has been the bedrock for our continued growth.
We view this wealth-value proposition as a conduit in creating ‘advantage’ as a means to be a step ahead, as a catalyst to amplifying the impact of our operations on not just our balance sheet but also in transcending sustainable business practice across all stakeholders.
A large part of our success in wealth creation is owed to the resilience we derive through diversity. The potent mix of diverse businesses under the Vallibel One umbrella, have, and continues to deliver value, balancing out the impact of socio-economic constraints and contractions. These well-known businesses and brands, both old and new, have succeeded in winning hearts and minds in their respective markets.
Truly, the law of 2+2=5, a concept that I have elaborated on in previous years, continues to validate the case for diversity, with Vallibel One witnessing persistent growth, as we leverage greater returns across core sectors. In looking to the future, Vallibel One’s onus will be to further extrapolate returns by VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 meaning inthecontextofourbeliefs. I closewiththesewisewordsfromBenjaminFranklin,whichresonate members ofourBoardDirectorsfortheircommitmentandsupport. Business Partnersforamuchvaluedandmutuallybeneficialrelationship I wouldliketothankourShareholdersfortheircontinuedfaithinus, benefits allourstakeholders. convincing proofofourabilitytoachievestrongandsustainablegrowththat cautiously optimisticaboutourfutureoutlook.Ourperformancethisyearis Given ourstrongperformancedespiteadifficultsocio-economicclimate,Iam innovate toensurewecanbuildourcapabilityingrowthareas. towards diversification.Wealsounderstandthatweneedtocontinue amplifying thislearningcurve,withtheexecutionofastrategyinvestment such words as improvement, achievement and success have no meaning.” meaning.” no have success and achievement improvement, as words such “Without continual growth and progress, progress, and growth continual “Without CHAIRMAN/MANAGING DIRECTOR DHAMMIKA PERERA DHAMMIKA
VALLIBEL ONE PLC CHAIRMAN’S MESSAGE 9 2015 | 16 ANNUAL REPORT VALLIBEL ONE PLC 10 CHIEF EXECUTIVE OFFICER’S REVIEW 2015 | 16 ANNUAL REPORT CHIEF EXECUTIVE OFFICER YOGADINUSHA BHASKARAN 11 CHIEF EXECUTIVE OFFICER’S REVIEW CHIEF EXECUTIVE OFFICER’S
The unwavering focus on wealth creation for value creation constructed on a ‘continuing business’ formula, has enabled the Group to post phenomenal results this year.
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 12
A corporate spearhead such as ours has a crucial responsibility within our stakeholders’ overarching development matrix. It is we who must formulate the pathways of growth, innovation, best practices and continuous improvement and thereby ensure that the wealth creation is prompted by this singular focus.
CHIEF EXECUTIVE OFFICER’S REVIEW CHIEF EXECUTIVE OFFICER’S Looking at Vallibel One, we have done just that and within that formula, become the champion of value creation in each of our businesses and the industries we operate in. This has naturally set in motion the wheels for the Group to achieve very impressive results, in which backdrop, it gives me great pleasure to present to you a comprehensive review of our strategy, performance and outlook in this Annual Report for the financial year 2015/16.
A well established feature in the Vallibel One philosophy is the steadfast approach we adopt towards investments that garner long term value. This indisputably assures that we create sustainable value to our diverse stakeholder groups and our strategy is designed to ensure that we balance competing stakeholder needs in an equitable manner.
The unwavering focus on wealth creation for value creation constructed on a ‘continuing business’ formula, has enabled the Group to post phenomenal results this year. The Vallibel One Group posted an impressive Profit After Tax of Rs. 7.456 Bn, which is a substantial 43.35% growth over last year’s Rs. 5.201 Bn. The Group has also focused on strengthening its presence in our growth industries including tile and sanitaryware, banking, finance and leisure. This growth focus has enabled us to achieve positive results from these entities, especially in the manufacturing and finance sectors, whose financial performance
has been outstanding, despite the local and global marketplace showcasing unpredictable paradigms.
Generally favourable macroeconomic conditions and a booming construction sector added significant fillip to Rocell, the country’s market leader in tile manufacturing. Resultantly, Rocell recorded an impressive Net Profit After Tax of Rs. 4.091 Bn during the year under review. Rocell and its subsidiaries across all sectors, excluding the plantation sector, which was impacted negatively due to VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 among the market leaders in deposits, leasing and gold loans in the Non Banking among themarketleadersindeposits,leasingandgoldloansNonBanking Loans ratioof3.28%,wellbelowindustryaverage,LBFinancecontinuestobe with theCompany’sconsistentfocusonmaintainingahealthyNon-Performing while depositsexperiencedarobustgrowthof17.50%.Thesestrengths,together Net InterestIncomegrowthof11.86%duetotheefficientmanagementfunds, Despite contendingwithshrinkingnetinterestmargins,theCompanyrecordeda commendable giventheuncertaintiesandadversitiesinindustrylandscape. Net ProfitAfterTaxincreasedtoRs.3.717Bnfrom2.182Bn,whichishighly consolidating itsmarketshareandstrengtheningstakeholderrelationships. resilience toachievearecordof70.37%NetProfitAfterTaxgrowth,further over theyear.LBFinance,ourfinancialservicearm,thusshowcasedexceptional afforded usastablefoundationwhenoperatinginvolatileexternalenvironment consistent andreliableoperationsinthefinancialservicessector,whichhas fundamentals. Theserudimentsremainextremelycrucialtomaintaining We havealwaysembracedacultureofresponsibleandaccountablebusiness Karachi inPakistanandtheMaldivesarealsobeingpursued. earmarked forfurtherexpansionacrossthatcontinent,whilethenewmarketsof which wasfirstmootedwithitsconceptstoreinVictoria,Australia,isbeing of 33.41%.Meanwhiletop-lineinclinedby11.28%.Rocell’sinternationalfootprint, volatile globalcommodityprices,alsoexperiencedanotablebottomlinegrowth all recordingremarkablegrowthinexcessof 100%NetProfitAfterTax. cluster, constructionproducts,insurancebrokers, shipping,freightandtravels, these initiativeshavealreadybornefruitwith Delmegeinteriors,thehealthcare with theobjectiveofdrivingsustainablegrowth. Iamhumbledtoreportthat the Company’soverallbusinessstrategyand initiatedseveralleadershipchanges Vallibel Groupafewyearsago.Duringtheyear underreview,wereformulated performance oftheDelmege,a165-yearold entity thatwasbroughtunderthe Furthermore, wehaveplacedstrategicemphasis onstrengtheningthe Financial InstitutionsectorinSri
Lanka. Lanka.
VALLIBEL ONE PLC 13 CHIEF EXECUTIVE OFFICER’S REVIEW 2015 | 16 ANNUAL REPORT 14
Our leisure investment arm, Greener Water will soon change the landscape of the hospitality industry in Sri Lanka, painting a unique canvas with its first of a kind super luxury integrated resort in Sri Lanka. The BOI agreement for Grand Beach Hotel located in Negombo, on 18 acres of freehold land, was signed
CHIEF EXECUTIVE OFFICER’S REVIEW CHIEF EXECUTIVE OFFICER’S in October last year, while the project construction team that will spur the construction of this hotel nestled between the Maha Oya River and the Indian Ocean, began work in earnest in January 2016. Piling is in progress and the super structure construction will commence in June 2016.
The award winning 53 roomed Small Luxury Hotel in Koggala, The Fortress Resorts continued to perform admirably in an environment in which the hospitality and leisure industries continue to showcase better prospects. The Company’s inclusion in the Vallibel One portfolio as an Associate Company has further strengthened the Group’s business portfolio. The property, which hosts some of the world’s most discerning clientele, continues to raise the bar in product and service offerings, which also brought in ample rewards this year including the hospitality industry's most prestigious food and beverage laurel, the Bocuse d'Or Sri Lanka.
Wealth creation for value creation continues to lie at the core of our business strategy. This is a single-minded application for the entirety of our Group, where each of our entities uncompromisingly continues to move upwards and outwards, etching market leadership along the way. However, to achieve our ambitious goals, we continue to inculcate a culture of continuous improvement, best practices and excellence, while nurturing accountability and transparency
as an imperative expected of a responsible corporate entity. The absolute professionalism and emphasis on good governance will augment the sound fundamentals we have in place to take this Group to the next level of excellence. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 grow exponentially,asweforgenewpathwaysformutualbenefit,together. been strongtrussesinourjourney.Ihopethesepartnershipswillcontinueto To ourvaluedbusinesspartnersandthecommunitiesweworkin,youhavetruly our corporatevaluesandfacilitatingvaluecreationprocess. recognise ourteamasbeingthebestthereis,fordrivingstrategy,embodying team, whichweareproudtopossess.ItiswithimmenseappreciationthatI The makingofagreatcompanyinvolvestheabsolutecommitmentwinning the barinourinnovations,productandserviceofferings. displaying immenseloyalty,adynamicwhichhaspushedustocontinuallyraise Our shareholdersandcustomershavecontinuedtoconfidenceinus, CHIEF EXECUTIVE OFFICER YOGADINUSHA BHASKARAN
VALLIBEL ONE PLC 15 CHIEF EXECUTIVE OFFICER’S REVIEW 2015 | 16 ANNUAL REPORT 16 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT Our Guiding Philosophy
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 leadership from threeessentialvalues: philosophy; auniquenessthatstems is poweredbyourcoreguiding for ourstakeholders.Itisavisionthat being. Itdrivesustocreatevalue Wealth creationisourreasonfor , diversity and innovation
.
VALLIBEL ONE PLC 17 MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 18 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
LEADERSHIP 20-23 Market Leadership
24-27 Thought Leadership
28-29 People Leadership VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 “Leadership isthecapacitytotranslate vision intoreality.” - Warren Bennis-
VALLIBEL ONE PLC 19 LEADERSHIP MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 20 MARKET LEADERSHIP A market leader is one who has etched an indelible presence in the market, working on the fundamentals of innovation and product
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT and service excellence, pushing boundaries beyond the possible and contributing inimitably to the development of both industry and country. The market leadership Vallibel One espouses, is all this and more!
REVOLUTIONISING INTERIORS Instilling leadership through uncompromising declining sharply compared to previous years. In LEADERSHIP excellence, which embraces the uniqueness of the addition, Rocell’s strong fundamentals continued to ‘Made in Sri Lanka’ concept, Rocell has trailblazed augment performance, which in turn, reiterated its pathways with its top of the line production facilities presence as the market leader in the local market. manufacturing some of the world’s most elegantly With quality and innovation being the two primary stylish products, infusing best in class technology dynamics that energise the brand, the highly and standards. The brand denotes an aesthetic that motivated team of vibrant individuals remain the
remains unique to the industry, constructed on the backbone of this high performing portfolio. platforms of design, innovation and craftsmanship, which have all enabled the product portfolio to With a product portfolio that has gained in expanse build a sustainable growth paradigm. as it has in design and innovation, having entered the market to solely produce ceramic and porcelain The plummeting global oil prices had a positive tiles, the concentration on diversification in impact on the tile and sanitaryware industries; production and manufacturing has enabled the bringing down the production costs advantageously. brand to conquer the most discerning clientele. With energy costs being one of the largest The concentration on infusing constantly evolving expenditure components in the production technology into the manufacturing process this process, the industry and the Company gained year saw a new powder mixing system installed to VALLIBEL ONE PLC ANNUAL REPORT considerable advantages with production costs improve the quality of tiles. 2015 | 16 VALLIBEL ONE PLC 21 LEADERSHIP MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 22 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT LEADERSHIP 'CRETA' Digital Printing Machine – Eheliyagoda
In complimenting the extensive focus on design, The brand has always maintained an inherent development and manufacturing to build a portfolio green ethos, an ecological commitment that of products that are truly superior, Rocell has also marries cutting edge production processes and
implemented a robust marketing framework that global standards with permeating environmental comprises a continually expanding network of best practices throughout the entirety of the franchise dealers and dealers, transformations product life cycle, to ensure that the brand’s carbon of existing showrooms aligned to global design footprint continues to decline. concepts and ensuring accessibility and reach through the establishment of showrooms ADVANCED CERTIFICATION in strategic locations. Into this is added an A definite imperative that drives market leadership experienced team of trend forecasters whose is the unwavering focus on stringent quality market knowledge enables the brand to be standards, that vouch for an entity’s sincerity of cognisant of emerging trends, ensuring that its action, principles, governance and most of all, creative portfolio matches the expectations of the
VALLIBEL ONE PLC ANNUAL REPORT the need to constantly etch a leadership stance. ever evolving customer mindset. 2015 | 16 reinforces its position asmarket leader. business have written new chapters andwell corporate steward whoseethics andways ofdoing also cements theCompany’s status asarespected of products theCompanycontinues to develop. It stakeholder confidence intheexpansive portfolio forms adefinite value additionininstilling of theseassurances ofqualityandbest practices The continuing prominence given bytheCompany Institution (SLSI). 1181:2005 conferred bytheSri Lanka Standards Standards Specification for ceramic tiles, SLS Certification, hasalsogainedtheSri Lanka to theISO9001:2008QualityManagementSystem The Company, whichcurrently conforms stringently in EUmemberstates. including tiles andtile adhesives, beingmarketed is anessential precursor to certain products, EN 144411:2012andISO13006:2012.TheCEMark the CEMarks Certification for products against sustainable building materials andproducts and the prestigious Green LabellingCertification for emphasis onstandard certifications, gaining consolidate its market leadership withthis Royal Ceramics Lanka PLC hascontinued to hallmark ofatruemarket leader. SMEs andindividualsalike. Thissurely isthe which have garnered theacceptance ofcorporates, innovative technologically driven financial solutions while continuing to present aportfolio oftimely, strengthening its financialfoundations. Allthis confidence dueto its uncompromising stance on L BFinance commands trust, loyalty and NBFI sector in thecountry for over four decades, A Companythathascontinued to shapethe LEADING THE SECTOR leadership inits most complete form. showcases theemphasisitplaces onthis holistic to theenvironment evidenced bythiscertification, quantifiable facets, theCompany’s commitment characteristic andshould notsimply bebasedon Believing strongly thatleadership isaholistic the country to beconferred withsuchalaurel. again trailblazing asthefirst finance company in L BFinance beingcertified carbon neutral, once One ofthebiggest highlights for theyear was an upward trajectory intop-line growth. primarily dueto expanded portfolios andheralded The increase seeninlease rental receivables, was 60.59% ofinterest income to performance figures. Company, theleasing portfolio showcased anotable Emerging asthelargest interest contributor to the order to improve thedepositmix. funding sources andconsolidate thedeposit base in resulted from thestrategy employed to diversify an impressive 63.16%.Thegoodperformance has funding, whichsawtheassets portfolio inclineby sector (LFC) isindeposits, theprimarysource of its presence isintheLicensed Finance Company Another area ofbusiness inwhichitfirmly stamped 146 touchpoints across thecountry. Gold LoanCentres to count acomplete network of Company openedninenew branches andtwo new Entrenching ouraccessibility andreach further, the established itself asaleader ingold loans. is now atRs 13,136.35Mn.TheCompanyhasfirmly in its gold loans advances portfolio. Thisportfolio gained fruitionwithanimpressive growth of26.55% concentrate onits gold loans, whichstrategy worked onauniqueformula thatcontinued to by thefallout oftheglobal gold market, LBFinance Having operated through thenegativitiesprompted
VALLIBEL ONE PLC 23 LEADERSHIP MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 24 THOUGHT LEADERSHIP The Vallibel One mindset is trained to think and act beyond parameters; this is the seed that plants itself within the psyche of the team
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT of leaders we have nurtured. These collective thinkers inspire, innovate and pioneer pathways that shape the business, industry and the nation. It is this unique brand of thought leadership that gives Vallibel One its unmatched competitive advantage. LEADERSHIP
OUR JOURNEY SO FAR Instigating new ideas through innovative Working with a thought leadership team that experiences is the formula that Rocell has been includes professionals in research, creativity, instilling since its inception. These experiences are design and production, creating and manufacturing prompted by fashioning personal spaces that are high quality bathware that complies with stringent
more than simply functional, but rather crafted to international standards, the end products become depict individuality. Encouraging thought processes a true tour de force that continues to increase its that become inventive in design to initiate this presence in a highly competitive market space. The individuality, is how the journey from thought to state-of-the-art technology infused manufacturing execution begins at Rocell. plant continues to set benchmarks locally and internationally, ensuring that the high expectations Rocell’s entry into bathware manufacture of creative collaborator, Italian Designer Dr. Stefano heralded a completely new mindset in the way Giovannoni are always exceeded. these personal spaces are viewed. Depicted as one would a panoramic canvas, Rocell Bathware This need to always be ahead, to lead and pioneer fills these spaces with a masterpiece in artistry is well demonstrated with the addition of the VALLIBEL ONE PLC ANNUAL REPORT and functionality. Australian Watermark Certification for the WC
2015 | 16 Rocell Concept Store –Nawala
VALLIBEL ONE PLC 25 LEADERSHIP MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 26 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT LEADERSHIP
Robotic High Pressure Casting Machine-Rocell Bathware Factory – Homagama
range, which augments the Company’s unrelenting emphasis to conquer international markets. The Green Certification for its entire product range underscoring the ecological ethos which remains a strong thread within the Company’s leadership Instigating new ideas psyche is another. The unrelenting focus on continuing to add value into its expansive product through innovative portfolio available across the country and in some experiences is the formula earmarked foreign spaces as well, is undoubtedly that Rocell has been due to a thought leadership that is founded on VALLIBEL ONE PLC ANNUAL REPORT building continued success. instilling since its inception. 2015 | 16 has beenexpanded through ashowroom network of and product experience. Reach andaccessibility strategies thatwould enhance theoverall brand design anddelivery, butalsoto introducing thought This innovative stance notonly appliesto product added impressive value to theselegendary brands. strategies founded onstrong innovation thathas product nichesandhence, construct business Lanka Tiles Group, have always maintained their with greater vigour. continued to focus ontheirown business strategies Lanka Walltiles andLanka Tiles (Lanka Tiles Group) Even after theacquisition byRocell Group, STRIKING A DISTINCT PATH and internationally. made its products more competitive bothlocally enabled theGroup to maintain prices whichin turn add value to theteam’s mindset.Theseinitiatives cost managementandworking environments that cascading across theGroup hasresulted inastute The introduction oflean managementpractices products andinstituting cost efficiencies. enabling timely information onavailability of to automate thedealer anddistribution networks excellence. ITinfrastructure hasbeenaugmented teams trained underasingularstrategy ofservice 47 across thecountry, allofwhichare manned by Lanka Tiles MainShowroom –Nawala
VALLIBEL ONE PLC 27 LEADERSHIP MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 28 PEOPLE LEADERSHIP Building a winning team can be challenging; it involves identifying, nurturing and strengthening people who are trained to think
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT and act unconventionally. Our empowered team of leaders at Vallibel One don’t believe in boundaries nor convention; for them leading means being different, unique, trailblazing pathways and being pioneers.
BUILDING TOMORROW’S LEADERS TODAY Earmarking leadership in highly competitive knowledge gaining culture, empowering team territories is not an easy task, but it is a leadership members to harness knowledge, skills and that L B Finance has perfected. Given the highly competencies for better opportunity. This year, LEADERSHIP competitive environment the Company operates in, the team at L B Finance enjoyed a total of 30,467 being acknowledged by peers as one of the major hours of training and development in numerous players in the challenging gold loans, leasing and competencies including technical, functional, NBFI sector deposits areas has certainly set it language, IT, soft skills, life skills, general apart as a differentiator. This differentiation has management training through workshops, undoubtedly been driven by its people, leaders who short tutorials, symposiums, conferences and web based training. are not afraid to think differently, act differently and are unafraid to move into unknown territory. Strongly believing in nurturing holistic leaders, The employee development programme at ‘L B Volunteering’ which was launched this year, L B Finance is designed to equip and empower creates a pathway for team members to tap into the team to continue reaching new heights. From their inherent resources and talent, sharing it with recruitment to succession planning, rewards disadvantaged communities. Team members are and recognition, training and development, each encouraged to volunteer as part of their character team member gains the individual attention building process, an initiative that has seen of mapping their career path aligned to the immense dedication and commitment emerge, Company's goals and vision. The well founded where 2,094 volunteer hours were contributed to VALLIBEL ONE PLC ANNUAL REPORT training and development calendar excels in its 62 corporate social responsibility projects this year. 2015 | 16 VALLIBEL ONE PLC 29 LEADERSHIP MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 30 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
DIVERSITY 32-33 Entrepreneurial Courage
34-37 Enhanced
Creativity VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 “Diversity istheartofthinking independently, together.” - Malcolm Forbes -
VALLIBEL ONE PLC 31 DIVERSITY MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 32 ENTREPRENEURIAL COURAGE Entrepreneurs are known to have spark, spirit and a touch of the audacious; they are fearless, undaunted and defy the odds. The diversity
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT that is a hallmark of Vallibel One has nurtured a unique brand of entrepreneurial courage within the Group, girding it with valour, fortitude and determination to venture into unchartered domains with enthusiasm and a sense of purpose.
DIVERSITY VENTURING OVERSEAS Entrepreneurship is inherent in the Rocell persona. of yet another Rocell Concept Store, under the It is the perfect example of a brand that has architectural prowess of Italian architect Simone ventured where others feared to tread, launching Cagnazzo. This includes a Rocell Gallery imbuing its presence in international markets, standing futuristic vignettes in design, which will be added shoulder to shoulder with global giants and building into the same locale soon. With this strategy, a successful business that’s destined to grow. Rocell would have augmented its presence in the
State of Victoria, giving it a strong brand presence The thirst for exploration began with the genesis which it can build on as it moves into other of the very first international concept store in Australian states. Oakleigh, Melbourne in Australia. Using the creative artistry of renowned architect Terry Davis, Further plans are being etched for entry into the sophistication of this contemporary Rocell Karachi in Pakistan and the Maldives, both markets Concept Store matched the infinite modernity of the that have immense potential and are defining products within, garnering the attention and loyalty the concepts of new age living into its lifestyles. of a discerning Australian clientele. Displaying the Thus, Rocell will be offering these markets a innate entrepreneurial trait of a need to explore comprehensive portfolio of customised products further, building on its initial success, Rocell designed specifically to meet the emerging trends VALLIBEL ONE PLC ANNUAL REPORT has already begun the framework for the launch seen in these countries. 2015 | 16 Concept Store –Oakleigh, Melbourne, Australia
VALLIBEL ONE PLC 33 DIVERSITY MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 34 ENHANCED CREATIVITY A palette of diverse hues in creativity and innovation forms the quintessence of the Group’s enabling factors, presenting a portfolio
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT of total solutions that only diversity in form, product and style can offer.
TOTAL SURFACE SOLUTIONS An expansive portfolio of total solutions from process to ensure conformity to international roofs to floors, countertops to interior and exterior standards which call for stringent resource and walls has enabled the Group to continue building environmental management, has thus become an
DIVERSITY a product range that is always ahead of trends everyday imperative within the Group. and customer expectations. This year, heralded yet another chapter when a slew of new products The health hazards posed by the use of asbestos were manufactured, cementing the status of the has been gaining increased public awareness Rocell Group as a one-stop-shop of total solutions with the State declaring its intention to ban the for all surface finishing materials. Using the importation of the material, encouraging corporate enhanced creativity it possesses within its diverse stewards to seek a healthier alternate for roofing.
solutions portfolio, the Group intends to optimise Having already identified fibre cement and steel on the rapidly growing construction industry in roofing material as the ideal alternative, given the country, playing a key role in transforming the its wide use in other countries, the Group is now skyscape of the metropolis and key cities around seeking to expand the business potential this the country. brings into the equation. Fibre cement exterior wall cladding and internal wall partitioning are While total solutions continue to remain at the fore, two additional products that can be added into the Group is much aware of its use of resources, the Group’s total solutions portfolio and given the ensuring that raw material usage is managed advantage of a significant decrease in construction efficiently and green practices are infused wherever cost this imparts, a noteworthy benefit for the possible. Continuing to upgrade and introduce new country as a whole. VALLIBEL ONE PLC ANNUAL REPORT technology and machinery into the manufacturing 2015 | 16 Through ColorBrite paints we enamel andemulsionpaints, paints includingdecorative, offer customers arange of Our floor andwall tiles are madeto European standards usingthe latest technology and thinners Floor Tile Paint with atile’s needto absorbwater cement, tile mortar keeps pace A slow dryingreplacement for before resting inplace SOLUTIONS SURFACE Tile Mortar TOTAL
Frames Aluminium sliding doors for casement windows and wide range ofusesincluding made to measure andputto a Our aluminiumframes are choose from customers awiderange to European designers offering are designedbylocal and Our floor andwall tiles Wall Tiles Fibre Cement for regular cement an asbestos-free replacement extremely creative product and fibre cement willbean Currently indevelopment,
VALLIBEL ONE PLC 35 DIVERSITY MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 36
The diversity, which the Group embraces, will also DIVERSE PLANTATIONS herald a diversification of our product portfolio to Being in an industry whose profitability to a great optimise on emerging new opportunities. Swisstek extent is dependent on the weather and global Aluminium Limited (subsidiary of Royal Ceramics) paradigms, Horana Plantations (subsidiary of which manufactures aluminium extrusions with Royal Ceramics) took a defining step this year to powder coating, wood graining and anodised restrategise its business model based on a blueprint
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT finishes for architectural applications including of long term profitability. The year in itself saw the doors, windows, facades, shop facades and entire industry struggle with the vagaries of the partitions, has plans to enhance the creativity weather and the global challenge of declining prices of its product portfolio aligned with developing for synthetic rubber cascading to less demand for requirements of its clientele. natural rubber and political upheavals in the Middle East and other key importing nations adding to the industry’s woes. The drop in production combined with lacklustre demand in export markets thus impacted the Company’s bottom line as well. This led the Company to implement a diversification strategy into its portfolio, replacing some low yielding rubber growing areas with oil palm, ancillary crops and timber.
Being one of the largest producers of quality Ceylon DIVERSITY Tea, cultivating a total extent of 2,324 hectares, to produce approximately 4.2 million kgs of tea, the Company encompasses eight high grown and two low grown estates. This year, the yield per hectare declined considerably from 1,606 kgs to 1,418 kgs due to the permeating challenges that continued The Swisstek Plant – Dompe to ensue. The State’s decision to establish a ceiling
on the importation of fertilizer was also a cause for concern, given that the shortage it prompted An expansive portfolio of impacted leaf quality.
total solutions has enabled Horana Plantations is one of Sri Lanka’s leading the Group to continue natural rubber producers. The year’s results however saw a decline in production due to the building a product range extreme weather conditions from dry to heavy that is always ahead of rains, which disrupted the tapping of latex. Rubber trends and customer production hence plunged to 843,000 kgs from VALLIBEL ONE PLC ANNUAL REPORT 1.1 million kgs last year, with the yield per hectare expectations. also plummeting to 548 kgs. 2015 | 16 practices andsustainability. in biodiversity, instilling responsible business recognising thecommitment to minimiseloss certification bytheForest Stewardship Council been conferred withNon-Timber Forest Products practices. Itiscommendable thatevery estate has maintaining its emphasisoninternational best 45.72 hectares ofrubberinto its portfolio, while programmes, adding17hectares oftea and However, theCompanycontinued its replanting ISO 9001:2008QMSandSGSProduct Certification. Company certified withHACCP, ISO22000:2005, Ethical Tea Partnership Certification andthe excellence suchasRainforest Alliance, Fair Trade, with internationally recognised certification of impressive numberofourestates beingbestowed and environmental conservation hasseenan sourcing to manufacturing, systems, processes standards inthetotality ofthebusiness, from In addition,thepledge to maintaining highquality
VALLIBEL ONE PLC 37 DIVERSITY MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 38 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
INNOVATION 40-43 Innovative New Ventures
44 Creative
Business Solutions
45-47 Strategic Use of Brands VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 “Innovation distinguishesbetween a leaderandfollower.” - Steve Jobs-
VALLIBEL ONE PLC 39 INNOVATION MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 40 INNOVATIVE NEW VENTURES There remains an inherent need within Vallibel One to innovate, leading us to pioneer new ideas into strong partnerships. This
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT innovative stance gives us critical insights into expanding our business to create wealth and add value.
UNIQUELY DIFFERENT Having observed the hospitality and leisure landscape in the country, which is now seeing burgeoning investment and a slew of diverse
INNOVATION product and service offerings, charting a new path through a super luxury integrated resort was deemed as the niche that would be an incisive and defining chapter in the Group’s annals. This innovative new venture which will include an indoor water park is Greener Water Limited’s maiden investment into the hospitality sector and will be
fuelled by world renowned architects and leisure industry specialists.
Grand Beach Hotel, a landmark project will be the very first in Sri Lanka, promising experiences that are uniquely different. Work on the project has already begun, with the Board of Investment agreement already signed and piling work in progress. Grand Beach Hotel is billed to open its doors for commercial operations in April 2019, while construction is to be completed by VALLIBEL ONE PLC ANNUAL REPORT February 2019. 2015 | 16 41 MANAGEMENT DISCUSSION AND ANALYSIS AND DISCUSSION MANAGEMENT
INNOVATION
VALLIBEL ONE PLC ANNUAL REPORT
Beach view, Grand Beach Hotel - Negombo 2015 | 16 42
CONNECTING TWO GIANTS company of Lanka Walltiles PLC, the pathway to new ventures being the champions of innovation By the mid 2000s, Royal Ceramics Lanka PLC and was being forged. After this acquisition, the the Lanka Walltiles PLC Group were the two ultimate parent company of Lanka Walltiles Group largest ceramic tile manufacturers in Sri Lanka. became Vallibel One PLC, which today wears the Together, they comprised of the entirety of the laurel of being one of the most innovative corporate locally produced tile and bathware industry.
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT spearheads in the country, having strategically created a corporate portfolio of diverse business In May 2013, when Royal Ceramics Lanka PLC sectors in various industries to dominate the and its affiliates acquired the controlling stake of corporate landscape of Sri Lanka. 77% in Lanka Ceramic PLC, which is the parent INNOVATION
Combining the strengths, experience, knowledge and capabilities of these
acquisitions, Royal Ceramics began innovating with greater agility and expansive creativity. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 a firmplatform ofsoundfinancials,well founded greater efficiencies,bothbusinesses now stand on With knowledge sharing,higher productivity and quality standards into its systems andprocesses. further permeated international best practices and and expansive creativity, while Lanka Walltiles Ceramics beganinnovating withgreater agility and capabilities oftheseacquisitions, Royal Combining thestrengths, experience, knowledge competitive advantages. marketing, designedto augmenteachCompanies’ while retaining theirindividualityinsales and operational features andconstant innovation, Lanka Tiles Factory -Ranala
VALLIBEL ONE PLC 43 INNOVATION MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 44 CREATIVE BUSINESS SOLUTIONS Business solutions encompass a formula of ideas, creativity, innovation, strategy, resourcefulness and practicality. It is this
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT combination that has enabled Vallibel One to articulate business solutions that are pioneering, timely, profitable and sustainable.
INNOVATIVE BREAKTHROUGHS TILE MORTAR The ceramic and porcelain tile industry in Sri Lanka Innovative business solutions most often stem from
INNOVATION has seen a slew of pioneering business solutions thinking beyond paradigms. The introduction of emerge from the Group, which have shaped the tile mortar by the Lanka Tiles Group, the pioneer entire industry to set its benchmarks higher. This producer of tile mortar in the country, has heralded will continue as a fundamental feature in the a significant development to the Group’s total Group’s business operations, where developing surface solutions portfolio. Tile mortar has better and innovating breakthroughs from the moment bonding and water repellent properties and it of the conceptual idea to final product will ensure replaces conventional cement used for tiling. Given
a better, technologically superior, high quality the slow drying characteristics, it allows enough uniquely differentiated product. This is well time for tiles to absorb water bringing about a exampled in the polished tile devoid of any nano proper adhesion resulting in even surfaces with no application, with zero staining qualities, developed hollow spaces between the tile and cement. by Royal Porcelain (subsidiary of Royal Ceramics). Creating awareness on the positives of the product Plans are being mooted for the manufacture of the has included educating both tile layers and largest floor tile to a size of 600 mm x 1200 mm customers. Given the demand growth since its once the new press is operational. While utilising launch five years ago, capacity has been expanded, the existing production facilities, Royal Porcelain while emphasising on quality standards, with will also manufacture thin wall tiles in rectangular periodic laboratory tests conducted independently VALLIBEL ONE PLC ANNUAL REPORT format to meet a growing demand for this tile genre. to ensure conformance.
2015 | 16 Vallibel Oneethos. the into legacies iconic etch that tools powerful leaders, gainedatimelessnessandevolvedinto have influencedourstakeholders,become mission andobjectives,overtimeourbrands and theheartofwhatweespouseinourvision, In encapsulatingtheGroup’scorporatesoul for concept, designandfinishes,TheFortress A resort that hasbeenarchitecturally lauded brands inthecountry. ‘Made inSri Lanka’ exemplars thatare renowned the best ofSri Lanka bystrategically displaying (International Hotel Awards 2016/17),showcases Sri Lanka 2015andBest SmallHotel inSri Lanka Luxury Hotel Awards 2015,theGold at Bocused’Or Luxury Boutique Hotel inSri Lanka attheWorld Luxury Spa Hotel intheIndianOcean andBest donned manyacrown includingthatoftheBest This SmallLuxury BoutiqueResort whichhas luxury and history withinits bastion ofhospitality. hospitality, capturing theidealsofmodernity, reputation ofbeinganiconic brand inSri Lankan beyond, TheFortress Resort &Spahasearneda and thebuzzofKoggala afishingvillagejust Embracing the azure waters oftheIndianOcean TO THE WORLD SHOWCASING SRI LANKA USE OF BRANDS STRATEGIC
for thesecommunities. which garners asupplementary income generation vicinity are alsosourced to perform cultural shows, the expansive artistic poollivingin andaround the carvings andpaintingscreated bylocal artistes, gift shoppromotes andmarkets handicrafts, wood sugar) andSri Lankan delicacies. While theresort’s and micro entrepreneurs for honey, jaggery(palm by sourcing fruitandvegetables, dairyproducts forged strong relationships withlocal communities locally sourced organic produce, whichinturnhas innovative gourmetpalette, promoting theuseof The property hasalsobuiltits brand around an and technological prowess iswell renowned. Ceramics Lanka PLC whosedegree ofinnovation bathware, floor andwall tiles sourced from Royal Resort &Spaproudly exhibits creative artistry inits
VALLIBEL ONE PLC 45 INNOVATION MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 46 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT INNOVATION
The brand has established itself as a firm partner TOTAL PACKAGING SOLUTIONS in the community and has gained the support A brand that has firmly established itself as a of the Koggala Three Wheeler and Taxi Drivers leading corrugated carton manufacturer in Association, which, together with the Fortress Sri Lanka, UniDil’s (subsidiary of Royal Ceramics) team, implemented an innovative, safe convenient superior environmentally friendly packaging range commuting option for hotel guests to experience has captured a significant share in both local the historic and diverse attractions in and around and export sectors serving diverse industries. the Galle and Matara cities. Specialising in standard cartons, printed Die Cut, trays and hangar packs, the customisation and detailed attention has enabled the brand to The Fortress Resort & Spa become a strategic partner to leading industries has earned a reputation in the country. With an uncompromising stance of being an iconic brand in on quality and standards, the Company is certified with ISO 9001:2008 for manufacturing processes, VALLIBEL ONE PLC ANNUAL REPORT Sri Lankan hospitality. ISO 14001:2004 for its commitment to astute 2015 | 16 company inSri Lanka. being recognised asthenumberone packaging and Imperial.Hence UniDilisnow ontheverge of Ansell aswell asindustry giants Dilmah,Brandix multinationals inthecountry includingNestlé and garner theconfidence ofsometheleading The Companymanagedto build its brand to this year withthehighest turnover andprofitability. UniDil hasposted thebest results inits history Administration (USFDA). are approved bytheUnited States Food &Drug leading raw material suppliers intheworld ensures thatallraw materials are sourced from Management System for food safety. TheCompany environmental managementandISO22000Quality
that presence thebrand hasetched inthemarket. of whichaddsimmenseadvantage to thestrong trained to amass comprehensive knowledge, all the experienced sales andmarketing team are also training overseas priorto certification. Inaddition, agenda withallbio-medical engineers undergoing development remains highonthe Company’s of bothcustomers andmachinery, training and Given thespecialtyandneedfor expert handling landscape inthecountry. innovation thathastransformed theophthalmology surgery isperformed onAlcon machines,another Cataract, vitreo-retinal andimproved LASIK drapes, pre andpost–operative eye drops. which includestheLens,Viscoelastics, blades, purchasing theentire surgical procedure pack, at showroom itself andare given theoptionof Intraocular Lenses can take theirbiometrytesting edge. Patients prescribed withAcrySof® Delmege, addingto theCompany’s competitive customer optionswhichare only provided by seen theintroduction ofexciting andconvenient emphasis theGroup places oninnovation, has The infinite possibilities thatemerge from the ophthalmologists andhealthcare providers. diverse optionsintotal eye care solutionsto in ophthalmicsurgical procedures, proffering portfolio haschartered innovative business routes in theeye care industry. Theexpansive product that enables usto build astrong brand portfolio manufacturing company isastrategic venture partnership forged withthispharmaceutical renowned Alcon Laboratories Inc.,thebusiness Building onthetangible positives ofglobally THE TOTAL SOLUTION IN EYE CARE
VALLIBEL ONE PLC 47 INNOVATION MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 48 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
Our Business Impact
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 employees andcustomers. shareholders, businesspartners, Sri stakeholders includingthe business impactonall We strivetohaveapositive
Lankan economy,our
VALLIBEL ONE PLC 49 MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 50 THE ECONOMY
We deliver value to our stakeholders over time in the context of the socio-economic environment in which we operate. MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
ECONOMIC VALUE ADDED We foster an entrepreneurial culture in our them plus a reasonable risk premium given our risk enterprise and encourage the management too profile. As a result, going beyond the conventional to think like shareholders in their decisions. We measures, we evaluate our performance in terms constantly ask ourselves whether our investment of Economic Value Added (EVA). True value is
generates a return that outweighs the risk and created only when the return on the invested capital truly generates value. We champion the idea that a exceeds the cost of such capital (opportunity cost). business is only profitable when it creates wealth It is only then that the investment is worthwhile and returns for shareholders, which requires from the shareholders’ perspective. performance above its cost of capital. We believe that EVA is a measure of financial Accordingly, we continue our efforts to evolve as a performance that calculates the true economic corporate that truly creates and delivers sustainable profit and also provides valuable insights about value to our shareholders. Shareholders have a our financial performance and ways for improving multitude of alternative investment avenues. So, same. The Capital intensive nature of our it is imperative that we create a return in excess of businesses is another factor that makes EVA VALLIBEL ONE PLC ANNUAL REPORT what these alternatives would have generated for most appropriate. 2015 | 16 Minority Interest). Taxation (before deductingwhatisattributable to funds (includingminorityinterest) andProfit after five years, taking into account total shareholders' Given below isourEVA computation for thepast equity andtheearningsthereon. effected afew adjustments to arrive attheinvested order to better reflect theeconomic value, we have (risk free return) plus2%for theriskpremium. In the 12monthweighted average Treasury Billrate which theopportunitycost isbasedon,inourcase, earnings thereon andthecost ofinvested equity EVA takes into account thetotal invested equity, Nevertheless, ascan beseenfrom thesignificant but made“economic losses” insomeoftheyears. reporting accounting profits throughout the period feet, to operate ataloss. Inourcase, we have been is notuncommon for abusiness still findingits in EVA isas valuable astheabsolute EVA itself. It holding company incorporated in2010,thetrend Given thatwe are a relatively new diversified Treasury*Based on12months weighted average Billrate plus2%for theriskpremium. Economic Value Added Cost ofAverage Equity Cost ofEquity*(%) Less: LoanLosses Written-off Add: ImpairmentCharges for Loans Profit after Taxation Earnings: Add: Provision for Impairment Shareholders' Funds Invested Equity: For endedMarch theyear 31, 54,670.528 57,312.286 5,397.385 2,641.758 7,430.847 2,033.461 7,456.720 433.145 407.272 10.00% Rs. '000 2016 47,967.790 50,635.422 1,912.349 5,201.891 4,199.369 1,807.587 2,667.632 6,111.718 creation goingforward. are determined to substantially improve thevalue so far withsatisfaction andassure you thatwe Accordingly, inEVA terms too, we view ourprogress of truevalue. to improve ourperformance, signifyingcreation 2015/16, we are pleased to report thatwe continue continuing positive economic value addedin improvement in2014/15over 2013/14andthe 897.760 8.66% Rs. '000 2015 44,592.787 46,347.693 -1,728.399 3,062.067 5,300.728 1,754.906 3,572.329 573.665 12.63% 63.403 Rs. '000 2014 36,346.800 37,590.993 -1,638.070 3,018.062 5,067.940 1,244.193 3,429.870 411.808 13.97% Rs. '000 2013 - 34,135.866 34,963.618 4,027.839 3,170.204 4,114.180 943.976 827.752 86.341 9.53% Rs. '000 2012 -
VALLIBEL ONE PLC 51 THE ECONOMY MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 52 SHAREHOLDERS
Creating wealth in order to create value for shareholders.
Holding true to our reason for being, which is Vallibel One PLC grew to Rs. 808 Mn compared to create wealth, Vallibel One Group posted an to Rs. 632 Mn received last year. In addition to dividend income, results for 2014/15 also
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT outstanding overall performance in the financial year 2015/16, crossing the milestone of Rs. 10 Bn included a one off gain of Rs. 144 Mn on disposal in profit before tax for the first time within a short of Orit Apparels Lanka (Pvt) Limited, a subsidiary span of six years after incorporation. All the company. Administration expenses increased by companies in the Group, Royal Ceramics Lanka PLC 15Mn to Rs. 109 Mn and a fair value adjustment and L B Finance PLC in particular, continued strong of Rs. 138 Mn on account of deemed disposal of growth during the year. With a strong commitment Waskaduwa Beach Resorts PLC increased other to improving performance, all the companies operating expenses, during the year. Finance cost in the Group are constantly exploring their for 2015/16 comprised a fall in value of trading trajectory for growth, diligently integrating their investments only, compared to a fall in value of businesses, creating efficiencies and improving trading investments of Rs. 13 Mn and a fair value customer service. loss on the shares of The Fortress Resorts PLC of Rs. 66 Mn included in 2014/15. On the other hand, A 10% growth in revenue with a mere 3% growth finance income for 2015/16 amounted to Rs. 206 in cost of sales contributed to a 45% growth in Mn compared to Rs. 186 Mn in 2014/15. However, the profit from operating activities. This coupled finance income for 2014/15 also included an with an increase in the share of profit of equity increase in the fair value of trading investments accounted Investees caused the profit before tax to and an adjustment on available-for-sale investment increase by 49% to Rs. 10,970 Mn and profit after in an associate. tax to increase by 43% to Rs. 7,457 Mn for the year. As a result, Earnings per Share grew from Rs. 2.66 Consequently, profit before tax for the year in 2014/15 to Rs. 3.89 in 2015/16. Return on Assets amounted to Rs. 721 Mn compared to Rs. 893 Mn and Return on Equity too improved to 4.94% and recorded in 2014/15. Profit after tax for the year was 13.64% from 4.02% and 10.84% respectively in the Rs. 664 Mn compared to Rs. 759 Mn reported last previous year. year. Consequently, Earnings per Share dropped to Rs. 0.61 in 2015/16 from Rs. 0.70 in 2014/15.
In Economic Value Added terms too, we generated Rs. 2,033 Mn over and above the cost of funds of The drop in profit after tax coupled with the invested equity taken at 5,397 Mn (details given unrealised loss on available-for-sale investments. on page 51). During the financial year, the Company paid Rs. 65 Mn as super gains tax. The Company’s net Reflecting primarily the growth in business assets value reduced to Rs. 27,575 Mn, compared volumes of L B Finance PLC, total assets of the to Rs. 27, 713 Mn in 2014/15, resulting in the net Group reached Rs. 151 Bn as at 31st March 2016, assets value per share dropping to Rs. 25.38 as at a growth of 16% compared to Rs. 130 Bn a year 31st March 2016 compared to Rs. 25.51 a year ago. ago. The Group is financially strong and operationally reliable. Stated capital as well as the number of shares in issue of the Company remained unchanged during
VALLIBEL ONE PLC ANNUAL REPORT At the Company level, reflecting the improving the year. There were no significant changes in the performance of the related companies, dividend shareholding structure either. income, the primary source of income of 2015 | 16 53 MANAGEMENT DISCUSSION AND ANALYSIS AND DISCUSSION MANAGEMENT
SHAREHOLDERS
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 54 BUSINESS PARTNERS
Building a strategic business portfolio designed to create wealth and add value to the corporate environment we function in, has been at the
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT forefront of the Vallibel One formula for success. Each business partnership is forged on a mutually beneficial platform, designed to craft a sustainable relationship that will establish new avenues of leadership, innovation and growth.
OPHTHALMIC SOLUTIONS Delmege continues to strengthen its presence in the industry as the sole agent for Alcon lenses and The 25 year partnership established between surgical equipment. Delmege and the undisputed market leader in ophthalmology Alcon, has enabled it to shape the INSURANCE SOLUTIONS industry’s growth paradigm with a best in class offering of complete eye care solutions. Alcon, With its premium portfolio of Rs 1 Bn, Delmege which is owned by Novartis, the world’s premier Insurance Brokers (Pvt) Limited has constructed pharmaceutical company, has gained immense a strong and vibrant presence in Sri Lanka’s recognition and established an unparalleled competitive insurance space as a leading insurance reputation among the country’s leading eye broker. Building on a partnership of over two specialists. Their trust in Alcon Intraocular lenses decades, Delmege uses its partnership with global is well evidenced with the high recommendations risk management, insurance and reinsurance given for use of this product in cataract surgery. brokerage, human resources solutions and The state-of-the-art ophthalmic instruments used outsourcing services provider Aon, to influence and for surgery in both state and private healthcare lead the insurance brokering industry in the country. VALLIBEL ONE PLC ANNUAL REPORT entities are also sourced from Alcon. 2015 | 16 healthcare services. services, manufacturing, plantations, leisure and MNCs andcorporate entitiesengagedinfinancial collating Sri Lanka’s largest conglomerates, gain credence withanexceptional track record solutions espousedbyDelmegehascontinued to integral facet withinthestructure, theend-to-end With market leading claimsadvocacy beingan claims specialists andplacement specialists. between insurers, riskengineeringspecialists, in providing seamless clientcentric services Delmege hasnow firmly established its expertise an annualrevenue exceeding US$10Bn, employees inmore than120countries holding As correspondent for Aon,whichhas72,000 Corporate Offices andGovernment Institutions. International andLocal Banks, Diplomatic Missions, sourced byStar Class Hotels, Healthcare Entities, Systems andWall Coverings andcontinues to be Flooring, Office Furniture, Ceilings,Partition Carpets, Vinyl,Healthcare Flooring, Timber/Sports providing theworld’s most renowned brands of Sri Lanka for interior solutionsandhave been firmly established itself asthemarket leader in the world’s best brands, DelmegeInteriors has business partners since 1980,somewhorepresent Having nurtured anexpansive collective ofvalued INTERIOR AND FLOORING SOLUTIONS “Balmoral”, TheKingsbury –CarpetsuppliedbyDelmegeLifestyle
VALLIBEL ONE PLC 55 BUSINESS PARTNERS MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 56
A few of the global brands we represent are to gain the absolute confidence of the Sri Lankan Carpets - Brintons, Interface, Shaw, Vinyl/ consumer. Motha, which has now become a generic Healthcare/Sports Flooring - Gerflor, Laminate name for jelly and dominates the jelly market with Flooring - Quick-Step, Office Furniture - an impressive market share of 85%, in addition to Haworth, Ceilings - Hunter Douglas, Partition commanding market leadership for its continually System - Hufcor. expanding portfolio of premixed desserts and
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT beverages and cake ingredients. MARKET LEADER IN PREMIXED DESSERT MIXES Having always recognised the crucial imperative of growing a partnership for mutual benefit, Delmege A strong brand that carries with it a legacy of nearly is currently supporting Motha in R&D for new sixty years, the partnership that Motha has with products, while also venturing into emerging new Delmege for almost three decades is one which opportunities overseas. has grown the business of premixed desserts exponentially in that time. The brand is the undisputed market leader, having always espoused a high quality value for money product persona,
Motha Laboratory BUSINESS PARTNERS PARTNERS BUSINESS
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 and practical functionality. bathware solutionscombining creative artistry which continues to make inroads through its tribute to thegrowing Rocell product portfolio, and retail Grohe sanitary fittings,addingafitting partnership enables Rocell to directly import leader anddesignerofbathware solutions.This towards its ultimate visionofbeing aworld Bathware Limited addedimpetusinclimbing sanitary fittingsGrohe AG ofGermany, gives Rocell world’s largest designportfolio ofsingle branded The stylish andelegant transformer ofthe SPACE IN BATHWARE EYEING THE GLOBAL
VALLIBEL ONE PLC 57 BUSINESS PARTNERS MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 58 EMPLOYEES
Employees are Our Greatest Asset. MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT Over the last six years, Vallibel One has benefited from a dedicated team of employees across the Group who work hard to understand and meet the needs of our customers. Our 13,653 employees work in sectors ranging from Ceramics and Finance to Leisure and Consumer.
We are proud to be an equal opportunity employer who ensures that its employees receive the skills development and career planning assistance required to be motivated and dedicated to both, the organisation and their own communities.
Within the various organisations of our Group we conduct team-building activities and channel our people’s dedication to give back to the community and the environment by organising Corporate Social Responsibility programmes.
Lanka Tiles Factory – Ranala
GENDER ANALYSIS
Around 8,600 of our staff are males and 5,000 are females.
VONE RCL LB Delmege GW Total Years Male Female Male Female Male Female Male Female Male Female Male Female 18 -30 8 10 1,853 740 1,303 827 229 57 4 2 3,397 1,636
31-40 - 2 2,060 1,361 350 129 191 32 4 1 2,605 1,525
41-50 1 2 1,458 1,041 84 21 92 22 - - 1,635 1,086
51-55 - - 536 442 14 8 22 6 - - 572 456
over 55 - - 400 306 8 - 19 7 1 - 428 313
VALLIBEL ONE PLC ANNUAL REPORT 9 14 6,307 3,890 1,759 985 553 124 9 3 8,637 5,016 2015 | 16 under 40years ofage. A large numberofouremployees –over 9,000–are of thecommunities inwhichwe operate. creation for value creation andare anintegral part hire people whoare committed to ourgoalofwealth At every possible opportunitywe make itapointto Company trips,specialstaff loan facilities etc. compensation coverage), hotel discounts, annual (including surgical hospitalisation andworkman enjoy arange ofbenefits suchashealthcare Permanent employees across theGroup respective companies for five years or less. Over 6,600employees have beenwiththeir AGE ANALYSIS 18 -30 31-40 41-50 51-55 over 55
- - 18 VONE 23 2 3 10,197 2,593 3,421 2,499 RCL 978 706 2,130 2,744 479 105 LB 22 8 Delmege 286 223 114 677 28 26 GW GW 12 6 5 1 - - 13,653 5,033 4,130 2,721 1,028 Total 741
VALLIBEL ONE PLC 59 EMPLOYEES MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 60 CUSTOMERS
Undoubtedly a vital rudiment in our formula for success, it is our customers who continue to drive us to venture into the unfamiliar, break
MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT moulds, craft paradigms and map new courses. Their expectations must be exceeded and their aspirations met because it is their confidence, trust and loyalty that help us create wealth and add value in the businesses we operate in.
ENDURING PRODUCTS that can be further strengthened. This customer engagement process is conducted throughout the In any business, understanding customer entire network across the country and gives Rocell requirements is the key to meeting or exceeding a comprehensive idea of customer perceptions, customer expectations. With customers now trends and expectations. being exposed to international trends, demands are more as are their expectations, which spurs This open dialogue also opens an inclusive pathway Rocell to be continually vigilant about its clientele. of communication when dealing with customer The multichannel distribution strategy through a complaints, which is dealt with through a dedicated network of 51 showrooms, over 100 direct dealers centralised unit. A formal complaint management and 350 sub dealers across the country enhances process assists in identifying areas that require accessibility and reach of our diverse and expansive immediate attention for both product and service. portfolio of over 700 products. A knowledgeable
team of project and service professionals augment A culture of regular quality testing and continuous our high benchmarks of customer service through product development and improvement has interactive relationship building, which has enabled encouraged Rocell to set unparalleled benchmarks Rocell to build a significant clientele of repeat in quality and safety standards as well. customers.
Constant customer engagement is an imperative ENDEARING EXPERIENCE that fuels customer relationships. The continuous Being a key player in gold loans, deposits and dialogue through feedback and other modes of leasing in the NBFI sector, L B Finance has over communication enables Rocell to be cognisant four decades of remarkable history, cultivated VALLIBEL ONE PLC ANNUAL REPORT of its strengths, weaknesses, gaps and threats, unequivocal confidence and trust among a large highlighting areas that require attention and others and expansive client portfolio. This is primarily 2015 | 16 financial inclusion, believing strongly thatevery a single roof, LBFinance works onanethosof supermarket to meetthefinancingneeds under With theultimate aimofbecoming afinancial every customer. building atotal solutionsportfolio thatwillbenefit Company negligible returns, butremain crucialto international money transfer services gives the some services includingutility payments and relationship withtheCompany. Asaresult, oriented services designedto enrichacustomer’s its core business, includesahost ofcustomer and financingproducts andmargin trading as by LBFinance whichnurtures its investment The widerange ofproducts andservices offered levels builtonuncompromising excellence. governance, its socialconsciousness andservice stance ontransparency, accountability and due to its sound financialfoundation, unwavering firmly established inourproduct portfolio. products andservices, someofwhichare now encourages team members to suggest innovative Company strategy for long term value creation, also Development Committee, whichfacilitates avenues ofstakeholder engagement,theProduct experiences andexpectations. Using established used bytheCompanyto addfillipto customer Product development hasalways beenatool as well. around thecountry to become financially sound beneficial inpersuading unbanked communities The country-wide network hasproved to bea sustainable economic foundation for theirbusiness. savings mindsetamongthemwhichconstructs a them access to finance, while inculcating a to boost micro andSMEentrepreneurs, giving development. Thishasspurred theCompany Sri Lankan should have access to fundsfor self
VALLIBEL ONE PLC 61 CUSTOMERS MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 62 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
Our Business Portfolio
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 among CorporateSriLanka. and thecontinuedprestige itgarners d’etre are extremelyproudof.This isthe the variousentitiesinGroup,afactwe in, hasalsobroughtinmultipleawardsfor spearhead ineachindustryweareinvolved contribute towardsthisobjective.Beinga acquired, strengthenedandnurturedto Each ofourbusinesseshavebeenbuilt, ensure wealthandvaluetoourstakeholders. drivers thatVallibelOnehasemployedto sustainability atitscore,havebeenthekey portfolio thathasdiversificationand Building arobustandvibrantbusiness forVallibelOne’scompetitive edge raison raison
VALLIBEL ONE PLC 63 MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 64 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
21%
GREENER 100% DELMEGE 51% ROYAL 51% WATER GROUP CERAMIC LIMITED LANKA PLC 26.10%
ROCELL 100% EVERPAINT & 100% PTY. LIMITED CHEMICAL INDUSTRIES (PVT) LIMITED
LWL DEVELOPMENT 100% (PVT) LIMITED VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 (PVT) LIMITED LIMITED ALUMINUM SWISSTEK CEYLON PLC SWISSTEK PORCELAIN ROYAL PLC LB FINANCE 0.30% 87.38% 47.80% 100% 51% 0.03% 3.65% 39% PLC PLANTATIONS HORANA LIMITED BATHWARE ROCELL RESORTS PLC FORTRESS THE COLLECTION LIMITED BEYOND PARADISE
11.48% 18.02% 100% 61% 61% (PVT) LIMITED TILES PLC LANKA WALLTILES PLC LANKA PAPERSACKS UNI-DIL LIMITED PACKAGING UNI-DIL LIMITED MANAGEMENET VALLIBEL PLANTATION PLC CERAMIC LANKA PLC BANK SAMPATH
68.22% 62.19% 76.93% 14.95% 99.83% 3.33% 100% 100%
VALLIBEL ONE PLC 65 MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 66 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
ROYAL CERAMICS LANKA PLC
A public quoted company listed on the Colombo Constructing a solid foundation for our core Stock Exchange, Royal Ceramics Lanka PLC business in the manufacture of floor tiles, wall has earned a reputation as a true market leader tiles and bathware, the best in class technology due to its uncompromising stance on quality, and exceptional expertise we have infused into innovative mindset and sound fundamentals. our systems, processes and overall operations Delivering the best in state-of-the-art surface and ensures that our portfolio is strong in efficiencies, bathware solutions constructed on a platform of productivity and function. We have reshaped the contemporary style and elegance, the portfolio of industry by introducing contemporary trends to products today commands the largest market share design and in setting benchmarks that have led the in the industry. industry to emulate our blueprint.
The two decade journey embarked on by As undisputed as the Group stands as a Royal Ceramics Lanka PLC has seen the benchmarked leader which contributes to the Company augment its skills, knowledge, stature national economy significantly through employment and experience in an industry where expertise and proactive wealth creation, the synergies we and knowledge remains key to producing have leveraged has enabled us to build a robust uncompromising quality. The diversification of the balance sheet that permeates positives across Group is well evinced in its expansive portfolio, our multiple stakeholders. The continued need ranging from wall and floor tiles to bathware, to remain at the zenith will drive the Group’s aluminium extrusions, plantations and packaging, objectives into crafting a business that will add VALLIBEL ONE PLC ANNUAL REPORT while eyeing emerging opportunities that will value and create wealth sustainably. augment both Company’s growth trajectory and nation’s economic growth. 2015 | 16 sustainable and consistent. to ensure aholistic growth strategy thatremains L BFinance focuses emphatically onits four pillars loans, leasing anddeposits intheNBFIsector, the market share sizeithasgainedinthegold trailblazer inthefinancialservices sector, given Now donningthelaurel astheundisputed People, Reach, Technology and QualityofService. Company isconstructed onthefour pillars of individuals, thegrowth strategy permeatingthe have gainedthe trust ofcorporates, SMEsand portfolio offinancialservices solutionswhich formidable fundamentals. Collatinganexpansive to reiterate its strength andresilience through Stock Exchange, anentitythathascontinued licensed finance company listed ontheColombo financial industry space, LBFinance PLC isa Heralding alegacy of45years inthecompetitive L B FINANCE PLC maintain constant growth. fueling furtherimpetusto its determined efforts to financial stewardship hasearneditmanyalaurel, the way itoperates, theCompany’s uniquebrand of defining economic and socialfundamentals into adding furthervalue to customer offerings. Adding arena, furtherentrenching its market share and This led itto venture into thelucrative lending while analysing emerging paradigms judiciously. Company continues to seeknew opportunities, interactive customer service formula, the multiple customer segments through its unique Having garnered theconfidence andtrust of
VALLIBEL ONE PLC 67 MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 68 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
DELMEGE LIMITED
Encompassing a rich corporate heritage of over leverage on its synergies to reinforce its presence 165 years, the Delmege's diversified business as a forceful and formidable business strategist scope continues to enrich the country’s corporate and driver in the larger milieu. While retaining landscape. The conglomerate’s influence in the their original business of imports, the Group has macro environment is well evidenced in its Ceylon diversified into FMCG, Healthcare, Interior Décor, Chamber of Commerce membership dating back Construction Products, Insurance Brokering, over a century and the prominent role it plays in Exports, Airline Services, Travel, Shipping and Corporate Sri Lanka. Freight Forwarding.
Having already constructed a firm foundation that
combines its historic strengths with an eye on emerging business opportunities, the Group will VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 From theleisure investment armofVallibel One the river andocean. sitting onthecuspofpicturesque meetingof water park,stands on18acres offreehold land, star beachresort withthefirst ofits kindindoor for Sri Lanka. Thesuper-luxury fully-integrated five will herald theetching ofacompletely new chapter comes undertheumbrella ofGreen Water Limited Grand BeachHotel inNegombo2019,which Sri Lanka’s hospitality milieu.Theopeningofthe will emerge thenewest product offering into GREENER WATER LIMITED excelling against regional counterparts. to thecountry’s plansingrowing theindustry and as aworld class destination, addingimmensefillip landscape inSri Lanka, propositioning thecountry be thefirst step to transforming thehospitality This maideninvestment byGreener Water will
VALLIBEL ONE PLC 69 MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 70 MANAGEMENT DISCUSSION AND ANALYSIS DISCUSSION MANAGEMENT
THE FORTRESS RESORTS PLC
The Fortress Resort & Spa located on the tranquil d’Or Culinary Challenge Sri Lanka in 2015 and also Southern Coast of Sri Lanka, unfolds its modernity gain the 5 Crowns Certification in Food Hygiene. and contemporary indulgence through an The Spa embraces the traditional age old science architectural canvas of beauty, grace and comfort. of Ayurveda as well as the more contemporary spa The multi award winning 53-roomed boutique therapies within its calming milieu of plush and property, a member of Small Luxury Hotels of the restful interiors. World illustrates cameos of Galle’s famed Dutch Fort, blending the colonial influences of both the Cementing its presence as a leader in the small Dutch and the Portuguese architecture, married luxury boutique hotel sphere in Sri Lanka’s through indigenous motifs and furnishing derived hospitality industry, the resort now proudly dons
from Old Ceylon and the chic minimalist style of the laurels of being the Best Luxury Spa Hotel in modern Sri Lanka. the Indian Ocean category presented at the World Luxury Hotel Awards, gained a Trip Advisor’s With six distinct interior styles in the guest rooms Traveller’s Choice Award, won the International and residences echoing understated elegance Hotel Award for the Best Small Hotel in Sri Lanka which is the resort’s hallmark, each room enjoys an and was conferred with an International Five Star unadulterated view of the Indian Ocean or the lush Hotel Standards Certification. gardens from private balconies and patios. Product and service offerings continue to be unique with the three restaurants offering gastronomic excellence, VALLIBEL ONE PLC ANNUAL REPORT which has seen the resort win Gold at the Bocuse 2015 | 16 Sri Lanka’s BankoftheYear 2015.Inaddition,the the globally acclaimed Banker Award andas base FinancialTimesawarding theBankwith lauded repeatedly aswas seenintheLondon The Bank’s sustainable business modelhasbeen reputation asaneminentcorporate spearhead. local andinternational laurels, cementing its ground-breaking milestones thathasseenitamass has beenbuiltonastrong platform ofconstant state-of-the-art innovations, theBank’s progress ago. Combiningtraditional Sri Lankan values with an edgeithonedsince its inception two decades banking initiatives that gives itacompetitive edge, Sampath BankPLC hascontinued to pioneer most powerful indigenousbanks inthecountry, Stranding strong andvibrant asoneofthe SAMPATH BANK PLC highly committed banking industry trailblazer. diverse stakeholders, gives ittheapt reputation ofa options SampathBankcontinues to present to its journey, thefuturistic bankingproducts andservice excellence. Itiswell observed then,thatthrough its product development and customer service by theindustry for its best practices, innovative banking milieu.TheBankisnow beingemulated a multi-channelenvironment revolutionised the provide customers withseamless connectivity in the uni-bankingmodelmooted bySampathto The very first fully-automated BankinSri Lanka, Best Corporate CitizenSustainability Awards. Award bytheCeylon ChamberofCommerce atthe the coveted Overall Best Corporate Citizen2015 Bank’s corporate stewardship was applaudedwith
VALLIBEL ONE PLC 71 MANAGEMENT DISCUSSION AND ANALYSIS 2015 | 16 ANNUAL REPORT 72 BOARD OF DIRECTORS STEWARDSHIP
5 1 4 3 6 2
1. MR. DHAMMIKA PERERA Mr. Dhammika Perera is the quintessential business leader, with interests in a variety CHAIRMAN/MANAGING DIRECTOR of key industries including Hydropower generation, Manufacturing, Hospitality, Entertainment, Banking and Finance. He has over 27 years of experience in building formidable businesses through unmatched strategic foresight.
Mr. Perera is the Chairman of Sampath Bank PLC, Vallibel Power Erathna PLC, Royal Ceramics Lanka PLC, The Fortress Resorts PLC and Delmege Limited. He is the Co-Chairman of Hayleys PLC, Co-Chairman (Non-Executive) of The Kingsbury PLC. Executive Deputy Chairman of L B Finance PLC. Deputy Chairman of Horana Plantations PLC and Lanka Ceramic PLC. He is the Executive Director of Vallibel Finance PLC. He also serves on the Boards of Amaya Leisure PLC,
VALLIBEL ONE PLC ANNUAL REPORT Lanka Tiles PLC, Haycarb PLC, Hayleys Fabric PLC, Dipped Products PLC, Sun Tan Beach Resorts Limited and Hayleys Global Beverages (Pvt) Limited. 2015 | 16 2. 6. 5. 4. 3. DIRECTOR INDEPENDENT NON-EXECUTIVE NON-EXECUTIVE DIRECTOR CHAIRMAN DEPUTY DIRECTOR INDEPENDENT NON-EXECUTIVE DIRECTOR INDEPENDENT NON-EXECUTIVE MR. NIMAL PERERA MR. RAJAN ASIRWATHAM MRS. KIMARLI FERNANDO MR. HARSHA AMARASEKERA MR. SUMITH ADHIHETTY Private Limited. PLC, Colombo CityHoldings PLC, Peninsular Properties (Pvt)Limited andYaal Hotels Renuka Hotels Private Limited, Mercantile Merchant Bank,Dankotuwa Porcelain Aitken Spence PLC, Aitken Spence Hotels PLC, DialTex Industries Private Limited, Boards of Royal Ceramics Lanka PLC, Ceylon Tea Services PLC, CICHoldings PLC, Board ofManagement Post Graduate Institute ofMedicine.Healsoserves onthe Sri Lanka. HeisalsoamemberoftheCouncilUniversity ofColombo andthe Mr. Asirwatham isafellow memberoftheInstitute ofChartered Accountants of the Presidential Commission onTaxation, appointed byHisExcellency thePresident. Project fundedbytheWorld Bankfor theMinistry ofTourism andalsoamemberof 2008. Hewas theChairman oftheSteering Committee for theSustainable Tourism Mr. Rajan Asirwatham was aSeniorPartner andCountryHeadofKPMGfrom 2001to Standard Chartered Bank,Sri Lanka andDeutsche BankAG, Sri Lanka. Delmege Limited. Shehasheld seniorpositionsatPan AsiaBankingCorporation PLC, serves asaDirector ofLBFinance PLC, NationalDevelopment BankPLC and She hasmore than25years experience inthefield ofbanking.Shecurrently is aBarrister-at-Law, Lincoln’s Inn,UK.(1987)andanAttorney-at-Law, Sri Lanka. (Hons) from theLondonSchoolof Economics andPolitical Science, London,UK.She Mrs. KimarliFernando bringsto theBoard herindepthexperience holds aLLB (Private) Limited. PLC andVallibel Power Erathna PLC. HeisalsotheChairmanofCICAgriBusiness Lubricants Lanka PLC, Keells Food Products PLC, AmanaBankPLC, Amaya Leisure PLC (Chairman),Royal Ceramics Lanka PLC, ExpoLanka Holdings PLC, Chevron in theColombo Stock Exchange includingCICHoldings PLC (Chairman),Chemanex Property Law. Healsoserves asanIndependentDirector inseveral listed companies in Commercial Law, Business Law, SecuritiesLaw, BankingLawandIntellectual a widepractice intheOriginalCourts aswell asintheAppellate Courts, specialising Mr. Harsha Amarasekera, President Counselisaleading Lawyer inSri Lanka having Tours Limited, SecurityCeylon (Pvt)Limited andPan AsiaBankingCorporation PLC. Limited, Grand Hotel (Pvt)Limited, Royal Palm BeachHotels Limited, Tangerine Investments Limited andserved asaDirector ofNuwara Eliya Hotels Company (Private) Limited. Hewas formerly theDeputyManagingDirector ofMercantile Summer SeasonResidencies Limited, SummerSeasonLimited andLaFortressee L BFinance PLC andTheFortress Resorts PLC. Healsoserves ontheBoards of over 34years ofexperience inthefinance sector. HeistheManagingDirector of Mr. SumithAdhihettyisawell-known professional inthemarketing field. Hehas in thecountry. He isarenowned business magnate, stock trader andshareholder ofmanycompanies Haycarb PLC, Thalawakele Tea Estates PLC, KingsburyPLC andAmaya Leisure PLC. The Fortress Resorts PLC asAlternate Directors. Holds directorships in,Hayleys PLC, Director. LBFinance PLC astheExecutive Director, Vallibel Power Erathna PLC and N Capital (Pvt)Limited astheChairman,Royal Ceramics Lanka PLC astheManaging Limited, Vallibel Plantations Limited, UniDilPackaging Limited, NPCapital Limited, Ceramics PLC, Horana Plantations PLC, Swisstek Ceylon PLC, Swisstek Aluminum of Pan AsiaBankingCorporation PLC, Lanka Tiles PLC, Lanka Walltiles PLC, Lanka member oftheSri Lanka Institute ofMarketing. Mr. NimalPerera serves oftheBoard Operations, Manufacturing, Marketing andManagementServices. Mr. Perera, isa Mr. Perera counts over 32years ofexperience inthefields ofFinance, Capital Market
VALLIBEL ONE PLC 73 BOARD OF DIRECTORS STEWARDSHIP 2015 | 16 ANNUAL REPORT 74 CORPORATE GOVERNANCE
STEWARDSHIP “If management is about running the business, governance is about seeing that it is run properly.”
- R Tricker
We conduct our affairs and manage our resources responsiveness to the needs of all stakeholders, with utmost intellectual honesty and diligence effective and efficient utilisation of resources, for achieving our strategic corporate objectives, equitability and inclusiveness and compliance with with due care to corporate ethics and our social the rule of law in the spirit of good governance. responsibility. Members of our Board of Directors are fully aware of the responsibilities of their Accordingly, we are pleased to confirm that, directorships to ensure the Company's prosperity as at the date of this annual report, we have by collectively directing its affairs. The Board as a complied with all the Corporate Governance Rules
whole remains responsible for its actions and as enumerated in Section 7.10 and Section 9 of the a result, ensures that executive authority is only Listing Rules of the Colombo Stock Exchange. granted to appropriate persons with unblemished track records and that adequate reporting systems We do periodically review the principles of our and other effective processes are in place to governance system to assess its effectiveness and maintain overall control. As you would find detailed refine it as necessary to suit the evolving needs of in this report, we are bold in our ambitions and it our enterprise and the regulatory environment. makes good governance even more relevant.
Our governance system is characterised by participatory decision making, accountability to VALLIBEL ONE PLC ANNUAL REPORT all stakeholders, transparency in our dealings, 2015 | 16 have couragetolosesightoftheshore.” “You cannotswimfornewhorizonsuntilyou management functions,we atVallibel OnePLC Company have established separate risk While thesubsidiariesandassociates ofthe may generate opportunitiesfor wealth creation. Conversely, effective management ofsuchrisks affecting ourstrategic objective ofwealth creation. regulators –amongotherimpacts –allnegatively or lead to penaltiesand reprimands bythe our reputation, affect ourfinancialperformance general. Failure to managethemmay damage externally orthesocietyandenvironment in affect ouroperations internally, ourstakeholders One PLC cannot beoveremphasised. Risks may need to successfully manageriskatVallibel planning process. Beingadiversified entity, the such risks forms anintegral partofthebusiness internal orexternal events. Themanagementof types andmagnitudesthey may arisefrom Corporate organisations face risks ofdifferent STATEMENT ON RISK establish astructured riskmanagementprocess. framework furtherandwillbetaking steps to We are cognisant oftheneedto strengthen this well astheshareholders’ perspectives. risk managementmeasure from theCompany’s as sectors, industries, markets, products etc. too asa of theBoard. We view diversification into various management measures, withappropriate oversight risks andfor theimplementation ofeffective risk responsible for identifyingspecificcritical business The Managementofallourcompanies are Company’s financialreporting anddisclosures. accountability andsafeguards theintegrity ofthe conflict ofinterest, promotes transparency and with allapplicable rules andregulations, avoids into theday-to-day operations, ensures compliance framework thatintegrates managementcontrol manage theserisks through agovernance - WilliamFaulkner
VALLIBEL ONE PLC 75 STEWARDSHIP 2015 | 16 ANNUAL REPORT 76 ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY
STEWARDSHIP The Directors of Vallibel One PLC have pleasure ACCOUNTING POLICIES AND in presenting their Annual Report together with CHANGES DURING THE YEAR the Audited Financial Statements of the Company The accounting policies adopted in the preparation and the Consolidated Financial Statements of the of the Financial Statements are given on pages Company and its subsidiaries for the year ended 96 to 124. There were no significant changes 31st March 2016. to the accounting policies used by the Company and/or its subsidiaries during the year under review GENERAL vis-à-vis those used in the previous year. The Company was incorporated as a limited liability company on 09th June 2010. It obtained a listing STATED CAPITAL for its shares on the Diri Savi Board of the Colombo The Stated Capital of the Company as at Stock Exchange on 08th July 2011 and consequent 31st March 2016 was Rs. 27,163,983,720/- thereto the name of the Company was changed to represented by 1,086,559,353 ordinary shares. Vallibel One PLC on 25th August 2011. MAJOR SHAREHOLDERS, DISTRIBUTION PRINCIPAL ACTIVITIES OF SCHEDULE AND OTHER INFORMATION THE COMPANY AND REVIEW OF Information on the distribution of shareholding, PERFORMANCE DURING THE YEAR analysis of shareholders, net assets per share, The Company carried on business as a diversified twenty largest shareholders of the Company, investment holding company during the year Directors’ shareholding, public holding as per the under review. Listing Rules of the Colombo Stock Exchange are given on pages 194 to 195 under Shareholders’ Principal activities of the subsidiary companies are Information. set out in Note 1.2 of the Financial Statements. DIRECTORS This Report together with the Financial Statements, DIRECTORS OF THE COMPANY Chairman's Message and Chief Executive Officer's The names of the Directors who held office Review reflect the state of affairs of the Company as at the end of the accounting period are - and its subsidiaries. Mr. K D D Perera Chairman/Managing Director FINANCIAL STATEMENTS Mr. W D N H Perera The Financial Statements of the Company and the Deputy Chairman Consolidated Financial Statements of the Company and its subsidiaries, duly signed by two Directors Mr. S H Amarasekera on behalf of the Board are included in this Annual Independent Non-Executive Director Report and form part and parcel hereof. Mr. J A S S Adhihetty Non-Executive Director AUDITORS’ REPORT Mrs. K Fernando The Report of the Auditors on the Financial Independent Non-Executive Director Statements is on page 86. Mr. R N Asirwatham Independent Non-Executive Director VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Director on16thMay 2016] [Mr. LalitNDeSWijeyeratne was appointed a Director Mrs. NRThambiayah Director Mr. SHAmarasekera Director Mr. RNAsirwatham Director Mr. MDSGoonatilleke (Resigned on12thMay 2016) Director Mr. RDPGodawatta Arachchige Director Mr. LTSamarawickrema Executive Director Mr. TGThoradeniya Managing Director Mr. WDNHPerera Deputy Chairman Mr. AMWeerasinghe Chairman Mr. KDPerera ROYAL CERAMICSLANKAPLC COMPANIES ASATTHEREPORTINGDATE DIRECTORS OFTHEPRINCIPALSUBSIDIARY of Mr. RNAsirwatham. the CompaniesActinregard to thereappointment before theshareholders interms ofSection211 Act No.07of2007.Aresolution willbeplaced in pursuance ofSection210theCompanies reached theageof73years, willvacate office General MeetingMr. RNAsirwatham whohas At theconclusion oftheforthcoming Annual recommended bytheDirectors for re-election. Articles ofAssociation andbeingeligible are by rotation interms ofArticles 87and88ofthe Mr. JASAdhihettyandMrs. KFernando retire
Executive Director Mr. BDAPerera Executive Director Mr. NUdage Executive Director Mr. WDNHPerera Managing Director Mr. JASAdhihetty Director Mr. LNdeSWijeyeratne Executive DeputyChairman Mr. KDPerera Chairman* Mr. THewage L BFINANCEPLC Director Mr. TGThoradeniya Director Mr. KDHPerera Director Mr. KDAPerera Director Mr. JASAdhihetty GREENER WATERLIMITED appointedwas theActingChairperson, effective from thesaiddate. *Stepped down asChairmanon17thMay 2016andMrs. KFernando Director Mrs. YBhaskaran Director Mrs. AKGunawardhana Director Mrs. SJayasekara Director Mrs. KFernando Executive Director Mr. Ravi Yatawara
VALLIBEL ONE PLC 77 ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY STEWARDSHIP 2015 | 16 ANNUAL REPORT 78
STEWARDSHIP DELMEGE LIMITED DIRECTORS’ REMUNERATION Mr. K D D Perera The Directors’ remuneration is disclosed under Key Chairman Management Personnel compensation in Note 40.1 Mr. A M Pandithage to the Financial Statements on page 181. Director Mr. T G Thoradeniya AUDITORS Director Messrs Ernst &Young, Chartered Accountants Mrs. K Fernando served as the Auditors of the Company and also Director provided tax compliance services and other permitted non-audit services. Except those, the Mr. S H Amarasekera Auditors do not have any interest in the Company. Director Mr. Sean Wilson A total amount of Rs. 1,944,937/- is payable by Director the Company to the Auditors for the year under Mrs. Y Bhaskaran review comprising Rs. 209,790/- as audit fees and Director Rs. 1,735,147/- for non-audit services. Mr. D J Silva Director DONATIONS The Company has paid a sum of Rs. 237,000/- as INTERESTS REGISTER donations during the year under review. The Company maintains an Interests Register in terms of the Companies Act No. 07 of 2007, which DIVIDENDS is deemed to form part and parcel of this Annual An interim dividend of 50 cents per share was paid Report and available for inspection upon request. for the year under review on 14th September 2015.
All related party transactions which encompass PROPERTY, PLANT AND EQUIPMENT
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY THE OF AFFAIRS THE ON DIRECTORS OF BOARD THE OF REPORT ANNUAL the transactions of Directors who were directly or indirectly interested in a contract or a related Details of property, plant and equipment and
party transaction with the Company during the changes during the year are given in Note 16 to the accounting period are recorded in the Interests Financial Statements. Register in due compliance with the provisions of the Companies Act. LAND HOLDINGS The Company does not own any land or buildings. DIRECTORS’ AND CEO'S SHAREHOLDING The Board is of the view that the land and buildings The relevant interests of Director's and CEO's in the owned by subsidiaries are reflected in their shares of the Company as at 31st March 2016 as respective Financial Statements at their market recorded in the Interests Register are given on values and there are no significant changes in the page 194 of the Annual Report under Directors’ Company’s or its subsidiaries' fixed assets. VALLIBEL ONE PLC ANNUAL REPORT and CEO's Shareholding. 2015 | 16 Listing Rules oftheColombo Stock Exchange. the Corporate Governance Rules contained inthe financial periodtheCompanyisincompliance with The Directors confirm that,asattheapplicable discussions anddecisions. PLC facilitating independentjudgmentinBoard Independent Directors to theBoard ofVallibel One In linewiththis,theCompanyhasappointed three governance withintheorganisation. committed to thehighest standards ofcorporate on soundcorporate governance practices andare The Directors place ahighdegree ofimportance CORPORATE GOVERNANCE capitalise onopportunities. achievement ofobjectives includingthefailure to impact ofpotential events whichmightaffect the quantitative methodsto evaluate thelikelihood and The Managementconsiders qualitative and Holding’. which theprimarybusiness lineis‘Investment Vallibel OnePLC isadiversified conglomerate of MATERIAL FORESEEABLERISKFACTORS Colombo Stock Exchange. the criteria setoutintheListing Rules ofthe Mr. RNAsirwatham are ‘Independent’ asper Mr. SHAmarasekera, Mrs. KFernando and determined thatthree Non-Executive Directors – Non-Executive Directors, theBoard has Based onthedeclarations submitted bythe Managing Director. Directors. TheChairmanserves asthe six members, five ofwhomare Non-Executive The Board ofVallibel OnePLC comprises COMPOSITION OFTHEBOARD Independent Directors. the saidDirectors indischarging theirfunctionsas compromise theindependence andobjectivityof on thebasisthataforesaid factor donot nevertheless betreated asIndependentDirectors, The Board hasdecidedthatthoseDirectors shall Company serve asDirectors. Lanka PLC, amajorityoftheDirectors ofthe that inbothLBFinance PLC andRoyal Ceramics Independent Director ofLBFinance PLC and Lanka PLC whilst Mrs. KFernando serves asan serve asIndependentDirectors ofRoyal Ceramics Mr. SHAmarasekera andMr. RNAsirwatham the Board hastaken into consideration that In determining theDirectors’ independence, z z z z z z The Committee isresponsible for thefollowing: Mr. SHAmarasekera andMrs. KFernando. Mr. RNAsirwatham (ChairmanoftheCommittee), Independent Non-Executive Directors. They are The AuditCommittee consists ofthree AUDIT COMMITTEE BOARD SUB–COMMITTEES z z z z z z of theirimplementation andeffectiveness accounting policies andtheongoingmonitoring Reviewing andapproving offinance and statutory reporting Reviewing theCompany’s management and External Auditors Recommending to theBoard theappointmentof Committee bybothAuditors andmanagement Reviewing thereports presented to the scope ofinternal andexternal audits Overseeing andreviewing thequality, cost and environment andriskmanagementfunction Evaluating andmonitoring theCompany’s control
VALLIBEL ONE PLC 79 ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY STEWARDSHIP 2015 | 16 ANNUAL REPORT 80
STEWARDSHIP zz Ongoing financial monitoring of the Company’s The Related Party Transactions Review Committee various disclosure obligations was formed during the year under review in
zz The review and pre-approval of any non-audit compliance with Section 9 of the Listing Rules of services provided by the External Auditors to the Colombo Stock Exchange. The report of the ensure their independence is maintained at Related Party Transactions Review Committee all times appears on page 81.
The report of the Audit Committee appears on The Board confirms that during the quarter ended page 84. 31st March 2016, the Company has not entered into any Related Party Transactions which fall within REMUNERATION COMMITTEE the ambit of the Listing Rules of the Colombo Stock Exchange. The Remuneration Committee consists of a Non-Executive Director and two Independent ANNUAL GENERAL MEETING Non-Executive Directors. They are Mr. S H Amerasekera (Chairman of the Committee), The Annual General Meeting will be held on Mr. J A S S Adhihetty and Mrs. K Fernando. 12th July 2016 at 9.30 a.m. at The Kingsbury, No. 48, Janadhipathi Mawatha, Colombo 01. The Committee is responsible for making recommendations to the Board on - The Notice of the Annual General Meeting appears on page 198. zz Remuneration framework of the Senior Management This Annual Report is signed for and on behalf of zz Senior Management performance and the Board of Directors by, equity-based remuneration plans including performance incentives
zz Remuneration of Executive Directors Dhammika Perera
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY THE OF AFFAIRS THE ON DIRECTORS OF BOARD THE OF REPORT ANNUAL The Remuneration policy is to attract and retain a Chairman/Managing Director
highly–qualified and experienced Staff.
RELATED PARTY TRANSACTIONS REVIEW COMMITTEE W D N H Perera The Related Party Transactions Review Deputy Chairman Committee consists of three Independent Non-Executive Directors. They are Mr. S H Amarasekera (Chairman), Anusha Wijesekara Mrs. K Fernando and Mr. R N Asirwatham. P W Corporate Secretarial (Pvt) Limited Secretaries
VALLIBEL ONE PLC ANNUAL REPORT 08th June 2016 2015 | 16 PARTY TRANSACTIONS REVIEW COMMITTEE REPORT OF THE RELATED Independent Non-Executive Director Mr. RNAsirwatham Independent Non-Executive Director Mrs. KFernando Independent Non-Executive Director (Chairman) Mr. SHAmarasekera Executive Directors: of theCompanycomprises thefollowing Non- The Related Party Transactions Review Committee Related Party Transactions oftheCompany. independent review, approval andoversight of to ensure compliance withthoseRules facilitating the Listing Rules oftheColombo Stock Exchange 12th February 2016inaccordance withSection9of of theCompanywas formed bythe Board on The Related Party Transactions Review Committee identifying partiesrelated to them. are obtained from eachDirector for thepurposeof In accordance withtheRPT Policy, self-declarations considered as‘related parties’ have beenidentified. the categories ofpersons/entities whoshallbe Related Party Transactions (RPT) Policy whereby the Board on12thFebruary 2016.Itincludesa The Charter oftheCommittee was adopted by POLICIES AND PROCEDURES COMPOSITION OF THE COMMITTEE
set outonpage80oftheAnnualReport. Colombo Stock Exchange, anegative statement is In terms ofRule 9.3.2(d)oftheListing Rules ofthe reviewed bytheCommittee. ended 31st March 2016thatwere required to be Related Party Transactions duringthequarter Transactions, theCompanydidnotenter into any under review. Except therecurrent Related Party The Committee metonce duringthe financialyear 08th June2016 Related Party Transactions Review Committee Chairman S HAmarasekera DECLARATION MEETINGS
VALLIBEL ONE PLC 81 STEWARDSHIP 2015 | 16 ANNUAL REPORT 82 DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING STEWARDSHIP
The following statement sets out responsibility of In preparing the Financial Statements, the Directors the Directors in relation to the Financial Statements are responsible to ensure that appropriate of the Company and its subsidiaries prepared in accounting policies have been selected and applied accordance with the provisions of the Companies consistently, reasonable and prudent judgments Act No. 07 of 2007. and estimates have been made and all applicable accounting standards have been complied with. The responsibility of the External Auditor in relation
to the Financial Statements are set out in the The Directors are also required to ensure that report of the Auditors given on page 86 of the the Company and its subsidiaries have adequate Annual Report. resources to continue in operation to justify applying the going concern basis in preparing these As per the provisions of sections 150 (1), 151, 152 Financial Statements. (1) and (2), and 153 (1) and (2) of the Companies Act No. 07 of 2007, the Directors are required to Further, the Directors have a responsibility to prepare Financial Statements for each financial ensure that the Companies within the Group year, which should give a true and fair view of the maintain sufficient accounting records to disclose state of affairs of the Company as at the reporting with reasonable accuracy, the financial position of date and its profit or loss for the financial year then the Company and the subsidiaries. VALLIBEL ONE PLC ANNUAL REPORT ended and place them before a General Meeting. 2015 | 16 Section 152(1)(c)oftheCompanies Act. by two Directors oftheCompanyasrequired by Section 152(1)(b)andthey have alsobeensigned responsible for theirpreparation asrequired bythe Financial Officer oftheCompany, theofficer its subsidiaries have beencertified bytheChief The FinancialStatements of theCompanyand Statements presented inthisAnnualReport. for theintegrity andobjectivityoftheFinancial The Board ofDirectors accepts responsibility the Board AuditCommittee. release following areview andrecommendation by the Interim FinancialStatements priorto their Committee. TheBoard ofDirectors alsoapproves regular meetingsandalsothrough theBoard Audit financial reporting system directly bythemattheir maintain proper books ofaccounts and review the ensure thattheCompanyandits subsidiaries The Directors have taken appropriate steps to the year. significant risks faced bytheCompany throughout identifying, recording evaluating andmanagingthe comprehensive systems ofinternal control for The Directors have alsoinstituted effective and Colombo Stock Exchange. Act No.16of1995andtheListing Rules ofthe 2007, Sri Lanka Accounting andAuditingStandards Accounting Standards, CompaniesActNo.7of conformity withtherequirements ofSri Lanka with theunderlying books ofaccount andare in to effect from 01st January2012andare consistent Accounting Standards (SLFRS/LKAS)whichcame this Report have beenprepared basedonSri Lanka Financial Statements prepared andpresented in Vallibel OnePLC By Order oftheBoard, this Statement. discharged theirresponsibilities assetoutin The Directors are oftheview thatthey have date have beenpaidorwhere relevant, provided for. Company andits subsidiariesasatthereporting authorities whichwere dueandpayable bythe relation to allrelevant regulatory andstatutory belief, are satisfiedthatallstatutory payments in The Directors to thebest oftheirknowledge and 08th June2016 Company Secretaries P WCorporate Secretarial (Pvt)Limited
VALLIBEL ONE PLC 83 DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING STEWARDSHIP 2015 | 16 ANNUAL REPORT 84 REPORT OF THE AUDIT COMMITTEE STEWARDSHIP
The Audit Committee appointed by and responsible The Committee along with the Board reviewed to the Board of Directors comprise the following the Consolidated Financial Statements for the members: year ended 31st March 2016 to ensure compliance with mandatory and statutory requirements. The Mr. R N Asirwatham Managing Director, Chief Executive Officer (from Chairman - Independent Non-Executive Director 01st February 2016) and the Accountant attend the Mr. S H Amarasekera meetings by invitation. Independent Non-Executive Director
Mrs. K Fernando The Audit Committee is of the view that the Independent Non-Executive Director internal controls prevalent within the Company are satisfactory and provides reasonable assurance The Chairman, Mr. R N Asirwatham is a Fellow that the financial position of the Company is well Member of The Institute of Chartered Accountants monitored and the assets are safeguarded. of Sri Lanka. The Committee reviewed the non-audit services The Audit Committee is empowered to review and provided by the External Auditors to ensure that monitor the financial reporting process of the the provision of these services do not impair their Company, so as to provide additional assurance independence. on the reliability of the Financial Statements through a process of independent and objective The Committee has recommended to the Board of review. As such, the Audit Committee acts as an Directors that Messrs Ernst & Young, Chartered effective forum in assisting the Board of Directors Accountants be reappointed the Auditors for the in discharging their responsibilities of ensuring year ending 31st March 2017 subject to the approval the quality of financial reporting and related of the Shareholders at the Annual General Meeting. communications to the Shareholders and the public.
The Audit Committee is empowered, to examine any matters relating to the financial affairs of R N Asirwatham the Company and to review the adequacy Chairman – Audit Committee of the internal control procedures and the
VALLIBEL ONE PLC ANNUAL REPORT 08th June 2016 Risk Management function. 2015 | 16 Income Comprehensive Statement of 89 Financial Position Statement of 87 Auditors’ Report Independent 86 FINANCIAL CALENDAR 5th AnnualGeneral Meeting Annual Report 2015/16 Interim FinancialStatements -2015/164thquarter Interim FinancialStatements -2015/163rd quarter Interim FinancialStatements -2015/162ndquarter Rs. 0.50Per Share Interim Dividend2015/16 Interim FinancialStatements -2015/161st quarter Financial Statements Notes to the 96 Statement ofCashFlow Consolidated 94 Changes inEquity Statement of 91 FINANCIAL REPORTS 14th September 2015 13th November 2015 12th February 2016 11th August 2015 08th June2016 12th July 2016 31st May 2016
VALLIBEL ONE PLC 2015 | 16 ANNUAL REPORT 86 INDEPENDENT AUDITORS’ REPORT FINANCIAL REPORTS FINANCIAL
BW/CSW/SJJC TO THE SHAREHOLDERS OF internal control. An audit also includes evaluating the VALLIBEL ONE PLC appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, REPORT ON THE FINANCIAL STATEMENTS as well as evaluating the overall presentation of the We have audited the accompanying financial statements financial statements. of Vallibel One PLC, (the “Company”), and the consolidated financial statements of the Company We believe that the audit evidence we have obtained is and its subsidiaries (the “Group”), which comprise the sufficient and appropriate to provide a basis for our statement of financial position as at 31 March 2016, and audit opinion. the statement of comprehensive income, statement of changes in equity and, cash flow statement for the year OPINION then ended, and a summary of significant accounting In our opinion, the consolidated financial statements give policies and other explanatory information. a true and fair view of the financial position of the Group as at 31 March 2016, and of its financial performance and BOARD’S RESPONSIBILITY cash flows for the year then ended in accordance with FOR THE FINANCIAL STATEMENTS Sri Lanka Accounting Standards. The Board of Directors (the “Board”) is responsible REPORT ON OTHER LEGAL AND for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka REGULATORY REQUIREMENTS Accounting Standards and for such internal control as As required by Section 163 (2) of the Companies Act No. 07 Board determines is necessary to enable the preparation of 2007, we state the following: of financial statements that are free from material a. The basis of opinion and scope and limitations of the misstatement, whether due to fraud or error. audit are as stated above. AUDITORS’ RESPONSIBILITY b. In our opinion: Our responsibility is to express an opinion on these - we have obtained all the information and financial statements based on our audit. We conducted explanations that were required for the audit and, our audit in accordance with Sri Lanka Auditing as far as appears from our examination, proper Standards. Those standards require that we comply with accounting records have been kept by the Company. ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial - the financial statements of the Company give a true statements are free from material misstatement. and fair view of the financial position as at 31 March 2016, and of its financial performance and cash An audit involves performing procedures to obtain audit flows for the year then ended in accordance with evidence about the amounts and disclosures in the Sri Lanka Accounting Standards, and financial statements. The procedures selected depend - the financial statements of the Company and the on the auditors’ judgment, including the assessment Group, comply with the requirements of Sections of the risks of material misstatement of the financial 151 and 153 of the Companies Act No. 07 of 2007. statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing 08th June 2016
VALLIBEL ONE PLC ANNUAL REPORT an opinion on the effectiveness of the Company’s Colombo 2015 | 16 STATEMENT OF FINANCIAL POSITION Total Liabilities Deferred Income andCapital Grants Deferred Tax Liabilities Leasehold Rights Over MiningLands Investment Property Biological Assets Property, PlantandEquipment Intangible Assets Inventories Income Tax Liabilities Retirement Benefit Liability Dividend Payable Other Non-FinancialLiabilities Trade andOtherPayables Interest BearingLoansandBorrowings Due to Customers Due to Banks LIABILITIES Income Tax Recoverable Deferred Tax Assets Amount Duefrom Related Parties Investment inAssociate Investments inSubsidiaries Other Non-FinancialAssets Deposits andPrepayments Trade andOtherDebtors, Other FinancialAssets Financial Assets –Available-for-Sale Stock OutonHire Lease Rentals Receivables and Loans andReceivable As at 31stMarch Total Assets Short Term Investments Profit orLoss Financial Assets –Fair Value through Cash andBank ASSETS 16.5/16.6 Notes 4.1 4.2 12 17 18 16 15 14 25 24 23 22 21 20 19 12 13 11 10 29 9 8 7 6 5 27,599,276,324 16,501,650,646 7,392,900,690 2,021,783,465 251,709,172 640,082,179 375,000,000 236,350,258 24,114,675 43,625,191 87,259,655 41,298,454 3,006,581 9,407,476 6,411,679 3,416,899 6,783,826 1,499,893 1,204,936 2016 – – – – – – – – – – – – – Rs. Company 27,734,246,873 16,501,650,646 7,710,662,861 1,895,468,651 189,853,664 654,775,200 375,000,000 264,800,891 20,915,282 28,865,605 88,370,462 19,885,841 4,090,703 6,827,757 4,708,245 2,369,044 5,017,421 2,610,359 204,808 2015 – – – – – – – – – – – – – Rs. 150,871,741,660 96,201,213,227 22,013,782,828 13,130,583,151 14,984,759,603 52,733,622,292 17,039,812,212 45,102,039,180 26,824,169,365 1,222,007,882 1,392,211,517 2,356,319,273 8,670,793,592 1,192,535,325 1,967,060,622 5,364,778,349 1,687,060,466 5,389,838,754 4,360,564,843 9,700,149,230 1,375,604,261 8,578,411,050 134,299,000 238,714,000 170,126,424 722,993,211 469,734,310 169,891,753 73,011,893 8,080,500 2016 – – Rs. 129,517,571,643 81,549,780,649 19,717,584,739 13,173,051,382 16,522,220,471 44,665,615,455 10,466,126,998 33,691,338,393 22,637,761,408 2,180,121,273 8,792,756,134 1,127,384,613 1,617,739,093 5,466,723,449 1,875,423,381 5,079,531,604 2,265,837,328 9,214,980,398 1,141,498,788 7,869,209,297 Group 121,613,000 739,509,051 715,063,885 239,404,000 107,784,635 730,674,734 495,294,985 295,327,213 105,529,431 11,735,655 511,500 2015 – Rs.
VALLIBEL ONE PLC 87 FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 88
Company Group As at 31st March 2016 2015 2016 2015 FINANCIAL FINANCIAL REPORTS Notes Rs. Rs. Rs. Rs. Shareholders' Funds Equity Attributable to Equity Holders of the Parent Stated Capital 26 27,163,983,720 27,163,983,720 27,163,983,720 27,163,983,720 Reserves 27 411,177,929 549,347,871 10,927,177,794 7,572,722,659 27,575,161,649 27,713,331,591 38,091,161,514 34,736,706,379 Non-Controlling Interest – – 16,579,366,919 13,231,084,615 Total Equity 27,575,161,649 27,713,331,591 54,670,528,433 47,967,790,994 Total Equity and Liabilities 27,599,276,324 27,734,246,873 150,871,741,660 129,517,571,643
These Financial Statements are in compliance with the requirements of Companies Act No. 07 of 2007.
Shyamalie Weerasooriya Chief Financial Officer
The Board of Directors is responsible for the preparation and presentation of these Financial Statements.
STATEMENT OF FINANCIAL POSITION FINANCIAL OF STATEMENT Signed for and on behalf of the Board by;
Dhammika Perera Nimal Perera
Chairman/Managing Director Deputy Chairman
The Accounting Policies and Notes on pages 96 through 190 form an integral part of these Financial Statements.
08th June 2016 Colombo VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 STATEMENT OF COMPREHENSIVE INCOME For ended31stMarch theyear Non-Controlling Interest Equity Holders oftheParent Attributable to: Profit for theYear Discontinued Operations Loss after Tax for theYear from Discontinued Operation ContinuingOperations Profit for theYear from Income Tax Expense Profit before Tax Value AddedTax onFinancialServices Value AddedTax Operating Profit before Accounted Investees Share ofResults ofEquity Finance Income Finance Cost Result from Operating Activities Gold LoanAuctionLosses Other Operating Expenses Distribution Expenses Administrative Expenses Other Operating Income Dividend Income Gross Profit Cost ofSales Revenue Notes 32 31 30 35 36 34 33 (138,434,488) (109,531,107) 808,133,606 664,199,028 664,199,028 720,859,364 206,195,328 664,199,028 720,859,364 560,168,011 664,199,028 (56,660,336) (45,503,975) 2016 – – – – – – – – – Rs. Company (134,233,776) 632,401,641 144,183,081 759,141,076 759,141,076 893,374,853 302,578,994 759,141,076 893,374,853 670,051,931 759,141,076 (79,256,072) (12,500,000) (94,032,791) 2015 – – – – – – – – Rs. (26,513,404,828) 47,667,846,114 10,969,686,616 11,563,138,172 10,975,227,073 21,154,441,286 (3,512,967,015) (1,214,178,636) (2,119,721,357) (4,404,991,834) (3,950,800,512) 4,227,980,081 7,456,719,601 7,456,719,601 7,456,719,601 3,228,739,520 1,532,686,923 (593,451,556) 301,147,331 269,402,812 (29,358,088) 24,510,247 2016 – Rs. (25,831,623,050) 43,449,784,018 17,618,160,968 (2,003,137,060) (1,312,382,468) (3,185,069,111) (4,018,167,725) (3,155,194,318) 2,891,094,095 5,201,891,648 7,348,664,345 5,345,527,285 7,663,896,442 7,546,424,020 5,201,891,648 2,310,797,553 1,145,562,925 Group (214,928,977) (315,232,097) (143,635,637) 483,331,162 284,291,965 18,292,022 2015 Rs.
VALLIBEL ONE PLC 89 FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 90
Company Group For the year ended 31st March 2016 2015 2016 2015 FINANCIAL FINANCIAL REPORTS Notes Rs. Rs. Rs. Rs. Other Comprehensive Income To be Reclassified to Profit or Loss in Subsequent Period Share of Other Comprehensive Income of Equity Accounted Investees – – (28,439,832) (129,002,994) Net Gain/(Loss) on Available-for-Sale Financial Assets (194,020,704) 32,738,760 (187,087,477) 32,521,484 Reclassification of Loss on Available-for-Sale Financial Assets to Profit or Loss – 65,786,663 4,626,984 65,786,663 Income Tax Effect – – – 11,635,643 Exchange Difference on Translation of Foreign Operations – – 4,470,186 (16,830,141)
Not to be Reclassified to Profit or Loss in Subsequent Period Share of Other Comprehensive Income of Equity Accounted Investees – – 17,140,822 (104,898,564) Income Tax Effect – – (4,777,928) 31,546,648 Revaluation of Land and Building – – 1,779,778,000 165,260,000 Income Tax Effect – – (210,965,690) – Revaluation Reserve on Disposal of Land and Building – – – (10,185,000) Acturial Gain/(Loss) on STATEMENT OF COMPREHENSIVE INCOME COMPREHENSIVE OF STATEMENT Retirement Benefit Obligation (34,879) (23,263) 51,620,881 (9,082,272) Income Tax Effect 9,766 6,514 (8,166,573) 3,423,255 Other Comprehensive Income for the Year, Net of Tax (194,045,817) 98,508,674 1,418,199,373 40,174,721 Total Comprehensive Income for the Year, Net of Tax 470,153,211 857,649,750 8,874,918,974 5,242,066,369
Total Other Comprehensive Income Attributable to: Equity Holders of the Parent 470,153,211 857,649,750 4,428,847,903 2,804,131,701 Non-Controlling Interest – – 4,446,071,071 2,437,934,668 470,153,211 857,649,750 8,874,918,974 5,242,066,369
Basic Earnings Per Share 37 0.61 0.70 3.89 2.66 Basic Earnings Per Share for Continuing Operations 37 0.61 0.70 3.89 2.72
The Accounting Policies and Notes on pages 96 through 190 form an integral part of these VALLIBEL ONE PLC ANNUAL REPORT Financial Statements. 2015 | 16 Financial Statements. The Accounting Policies andNotes onpages96through 190form anintegral partofthese COMPANY STATEMENT OF CHANGES IN EQUITY Balance asat31st March 2016 Other Comprehensive Income/(Loss) Dividend Paid Net Profit for theYear Adjusted Balance asat01st April2015 Super GainTax 2013/2014 Balance asat31st March 2015 FinancialAssets to Profit orLoss Reclassification ofLoss onAvailable-for-Sale Other Comprehensive Income/(Loss) Dividend Paid Net Profit for theYear Balance asat01st April2014 For ended31stMarch theyear
27,163,983,720 27,163,983,720 27,163,983,720 27,163,983,720 Capital Stated – – – – – – – – Rs. Available for sale (351,118,193) (157,097,489) (255,622,912) (157,097,489) (194,020,704) 65,786,663 32,738,760 Reserve – – – – – Rs. (434,623,741) (543,279,677) 762,296,122 706,445,360 381,944,774 641,401,883 759,141,076 664,199,028 (65,043,477) Earnings (16,749) (25,113) Retained – Rs.
27,575,161,649 27,713,331,591 27,290,305,582 27,648,288,114 (434,623,741) (194,045,817) (543,279,677) 759,141,076 664,199,028 (65,043,477) 32,722,011 65,786,663 Equity Total Rs.
VALLIBEL ONE PLC 91 FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 92
GROUP
FINANCIAL FINANCIAL REPORTS For the year ended 31st March Capital Reserves Other Component of Equity Stated Capital Treasury Reserve Investment Available-for- Foreign Revaluation Shares Fund Fund Reserve Sale Reserve Currency Reserve Translation Reserve Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Balance as at 01st April 2014 27,163,983,720 (67,671,631) 628,231,500 378,195,795 (753,125,339) 158,816,801 721,251,545 Profit for the Year – – – – – – –
Other Comprehensive Income Share of Other Comprehensive Income of Equity Accounted Investees – – – – (129,778,556) 775,562 7,973,450 Revaluation of Land and Buildings – – – – – – 23,647,755 Exchange Difference on Translation of Foreign Operations – – – – – (8,457,181) – Net Gain/(Loss) on Available-for-Sale Financial Assets – – – – 105,867,433 – – Actuarial Gain or Loss on Retirement - Benefit Obligations – – – – – – – Total Other Comprehensive Income – – – – (23,911,123) (7,681,619) 31,621,204
Disposal of Subsidiary – 21,850,000 – – – (152,486,439) – Dividend Write-back – – – – – – – Transfer to/(from) during the Year – – 280,621,424 (378,195,795) – – – Treasury Share Adjustment – 1,709,915 – – – – – Effect of Change in Holding – – – – – – – Dividend Paid – – – – – – – Balance as at 31st March 2015 27,163,983,720 (44,111,716) 908,852,924 – (777,036,462) (1,351,257) 752,872,749 STATEMENT OF CHANGES IN EQUITY IN CHANGES OF STATEMENT
Balance as at 01st April 2015 27,163,983,720 (44,111,716) 908,852,924 – (777,036,462) (1,351,257) 752,872,749 Super Gain Tax 2013/2014 – – – – – – – Profit for the Year – – – – – – –
Other Comprehensive Income Share of Other Comprehensive Income of Equity Accounted Investees – – – – (33,469,429) 5,029,598 – Revaluation of Land and Buildings – – – – – – 391,000,368 Exchange Difference on Translation of Foreign Operations – – – – – 2,378,932 – Net Gain/(Loss) on Available-for-Sale Financial Assets – – – (186,465,613) – – Actuarial Gain or Loss on Retirement - Benefit Obligations – – – – – – – Total Other Comprehensive Income – – – – (219,935,042) 7,408,530 391,000,368
Dividend Write-back – – – – – – – Transfer to/(from) during the Year – – 524,453,100 – – – – Effect of Change in Holding – – – – – – – Dividend Paid – – – – – – –
VALLIBEL ONE PLC ANNUAL REPORT Balance as at 31st March 2016 27,163,983,720 (44,111,716) 1,433,306,024 – (996,971,504) 6,057,273 1,143,873,117
The Accounting Policies and Notes on pages 96 through 190 form an integral part of these Financial Statements. 2015 | 16 578,449,249 523,263,455 50,178,869 50,178,869 50,178,869 5,006,925 Reserve General Revenue Reserve Rs. – – – – – – – – – – – – – – – – – – – – – – – 2,891,094,095 4,262,036,872 6,738,821,098 6,738,821,098 4,227,980,081 (1,047,716,555) 8,839,684,930 (151,930,975) (434,177,977) (534,677,228) (543,740,381) 152,486,439 (81,319,297) (81,319,297) 97,574,371 3,057,570 (982,085) Retained Earnings Rs. – – – – – – – – – – – – (32,983,859) (49,706,269) (55,377,827) (55,377,827) 12,367,767 22,393,968 10,026,201 (5,671,558) (5,671,558) Gain/(loss) Actuarial Reserve Rs. – – – – – – – – – – – – – – – – – – – – (125,718) (125,718) (125,718) (125,718) Reserve Hedge Rs. – – – – – – – – – – – – – – – – – – – – 38,091,161,514 32,492,066,143 34,736,706,379 34,736,706,379 2,891,094,095 4,227,980,081 Shareholders' (202,348,841) (434,177,977) (151,930,975) (534,677,228) (186,465,613) (543,740,381) 105,867,433 391,000,368 200,867,823 (86,962,392) (16,072,065) 23,647,755 21,850,000 10,026,201 (8,457,181) (5,671,558) 3,057,570 1,709,915 2,378,932 5,006,925 (982,085) Fund – – Rs. 16,579,366,919 12,100,720,953 13,231,084,615 13,231,084,615 2,310,797,553 3,228,739,520 1,177,811,942 1,217,331,551 (585,708,438) (703,322,986) (275,624,268) (822,109,300) 131,427,245 127,137,114 (20,542,402) 33,428,108 (8,372,959) Controlling 2,002,821 4,076,357 2,091,254 4,005,120 (968,227) 913,028 Interest 12,540 (6,069) (4,873) Non- – – – Rs. 54,670,528,433 44,592,787,096 47,967,790,994 47,967,790,994 (1,137,500,963) (1,365,849,681) 5,201,891,648 7,456,719,601 1,568,812,310 1,418,199,373 (202,354,910) (563,858,438) (172,473,377) (810,301,496) (182,460,493) 155,075,000 109,943,790 (16,830,140) (16,076,938) 40,174,721 43,454,309 (5,659,018) (1,950,312) 5,060,391 1,709,915 4,470,186 5,919,953 Equity Total – – Rs.
VALLIBEL ONE PLC 93 STATEMENT OF CHANGES IN EQUITY FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 94 CONSOLIDATED STATEMENT OF CASH FLOW
Company Group For the year ended 31st March 2016 2015 2016 2015 FINANCIAL FINANCIAL REPORTS Rs. Rs. Rs. Rs. CASH FLOWS FROM OPERATING ACTIVITIES Net Profit before Taxation 720,859,364 893,374,853 10,969,686,616 7,348,664,345 Discontinued Operation – – – (143,635,637)
ADJUSTMENTS FOR Profit/(Loss) on Sale of Property, Plant and Equipment – – 20,292,675 (39,413,007) Depreciation 8,647,432 9,157,511 1,613,036,153 1,561,319,934 Provision for Fall in Value of Investments 45,503,975 13,469,477 74,341,859 4,374,573 Amortisation – – 87,801,129 69,828,866 Share of Results of Equity Accounted Investees – – (1,532,686,923) (1,145,562,925) Loss on Deemed Disposal of Equity Accounted Investees 138,434,488 – 39,467,878 – Gain/(Loss) on Foreign Exchange – – (13,703,794) (16,830,141) Provision for Impairment of Subsidiaries – 12,500,000 – – Provision for Impairment of Assets – – 456,409,083 908,629,399 Provision for Defined Benefit Plan Costs 1,012,976 569,425 216,999,264 204,189,192 Deferred Income/Capital Grants Amortisation – – (4,953,000) (4,653,000) Gain on Disposal of Financial Assets – Available-for-Sale – – – 67,818,662 Loss on Disposal of Subsidiary – – – (75,122,107) Profit/(Loss) from Sale of Investments – (259,915,701) – – Profit/(Loss) from Sale of Financial Assets – Fair Value through Profit or Loss – – – (20,071,960) Fair Value Change of Biological Assets – – 40,768,000 (56,640,000) Provision for Inventory – – 75,316,305 53,783,348 Dividend Received – – (18,292,022) Finance Cost – 65,786,663 1,214,178,636 1,235,579,159 Finance Income (206,195,328) (186,846,374) (269,402,812) (138,849,977)
Operating Profit/(Loss) before Working Capital Changes 708,262,907 548,095,852 12,987,551,068 9,795,116,704
(Increase)/Decrease in Loans and Advances – – 4,186,407,957 (3,529,839,973) (Increase)/Decrease in Trade and Other Debtors, Deposits and Prepayments 20,996,392 (179,175) (358,931,841) 310,082,145
(Increase)/Decrease in Other Financial Assets – – (2,094,727,515) 2,985,135,695 (Increase)/Decrease in Lease Rental Receivable – – (11,758,851,568) (4,148,938,992) (Increase)/Decrease in Other Non-Financial Assets – – 188,362,915 (330,295,909) Increase/(Decrease) in Due to Banks – – 7,157,601,793 4,438,228,573 Increase/(Decrease) in Due to Customers – – 8,068,006,837 (667,042,192) Increase/(Decrease) in Trade and Other Payables (1,110,468) 1,484,924 101,945,100 1,323,591,859 (Increase)/Decrease in Other Non-Financial Liabilities – – 349,321,529 487,530,540 (Increase)/Decrease in Inventories – – 46,646,237 (835,407,628) Increase/(Decrease) in Amounts Due to Related Companies – – – (91,602,247) Increase/(Decrease) in Amounts Due from Related Companies (68,343,397) (65,716,234) 11,735,655 (11,735,655) Cash Generated from Operations 659,805,433 483,685,366 10,308,362,054 9,724,822,920 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Financial Statements. The Accounting Policies andNotes onpages96through 190form anintegral partofthese Cash andEquivalents attheendof the Year theYear Cash andEquivalents atthebeginning of Net Increase/(Decrease) inCashandEquivalents Net CashusedinFinancingActivities Dividend Paid Dividend Written Back Capital Grant Received Repayment ofInterest-Bearing LoansandBorrowings DisposalofStake inSubsidiary Proceeds from Non-Controlling Interest on Acquisition ofNon-Controlling Interest Proceeds from Interest-Bearing LoansandBorrowings Principal Payment underFinance LeaseLiability CASH FLOWS FROM FINANCINGACTIVITIES Net CashusedinInvesting Activities Dividend Received Proceeds from Sale of Property, PlantandEquipment Purchase ofIntangible Assets Purchase ofProperty, PlantandEquipment CASH FLOWS FROM INVESTINGACTIVITIES Net Cashfrom Operating Activities Taxes Paid Super GainTax Paid Interest Received Finance Cost Paid Retirement Benefits LiabilitiesPaid For ended31stMarch theyear Net Proceeds from Available-for-Sale FinancialAssets Proceeds from Leasehold RightonMining Investment inAssociate Disposal ofSubsidiary Loss FinancialAssets Net Proceeds ofFair Value through Profit and Net ChangeShortTerm Investments (541,513,272) (541,513,272) (166,775,175) (126,314,814) 729,701,059 191,797,506 (23,407,019) (56,858,404) (65,043,477) (17,053,342) 41,298,454 19,885,841 21,412,613 2016 – – – – – – – – – – – – – – – – Rs. Company (125,231,145) (433,264,925) (433,264,925) (120,851,325) (705,005,411) (125,430,731) 545,071,645 186,617,425 748,546,681 (36,212,296) 19,885,841 28,930,447 (2,749,566) (9,044,605) 2015 – – – – – – – – – – – – – – Rs. (1,624,287,804) (3,589,230,188) (1,303,507,891) (1,960,123,797) (1,214,178,636) (8,015,186,475) 5,416,561,035 4,123,442,703 1,293,118,332 5,707,855,945 2,561,378,036 6,842,472,318 (810,301,497) (234,105,473) (100,228,406) 283,106,606 133,526,349 695,567,879 (41,295,698) 51,093,600 17,639,000 (1,950,309) (8,080,000) 5,919,542 4,547,583
2016 – – – – Rs. (20,147,490,097) 18,469,970,053 (1,971,856,605) (2,940,374,387) (1,079,837,180) (1,235,579,159) 7,576,892,393 4,123,442,703 4,364,603,186 1,415,974,519 (241,160,483) (944,125,115) (271,914,820) (750,961,322) (107,076,230) (164,330,640) (125,430,731) Group 138,849,977 129,430,744 748,546,681 201,037,705 154,592,762 (73,248,573) (46,046,929) 15,417,182 4,088,225 7,855,000 2015 Rs.
VALLIBEL ONE PLC 95 CONSOLIDATED STATEMENT OF CASH FLOW FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 96 NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION GREENER WATER LIMITED
FINANCIAL FINANCIAL REPORTS 1.1 GENERAL Greener Water Limited is an intended hotel operator. Vallibel One PLC (“Company”) is a public limited DELMEGE LIMITED GROUP liability Company incorporated and domiciled in (FORMERLY KNOWN AS LEWIS BROWN Sri Lanka. The ordinary shares of the Company are & COMPANY (PRIVATE) LIMITED) listed on the Colombo Stock Exchange of Sri Lanka. Delmege Limited is managing its subsidiaries, The registered office of the Company is located carrying out investment activities and providing at 29, West Tower, World Trade Center, Echelon management and administration services to Square, Colombo - 01. the companies within the Group. Subsidiaries of the Group were engaged in the business of 1.2 PRINCIPAL ACTIVITIES AND NATURE OF OPERATIONS manufacturing, trading, shipping, logistics, airline and travel and insurance brokering. A principal activity of the Company is holding investments in other companies. In addition to the above Company holds investments in Sampath Bank PLC and The VALLIBEL ONE PLC Fortress Resorts PLC which are accounted as Group holding company manages a portfolio of investment in associates. diversified business holdings. 1.3 PARENT ENTITY AND ROYAL CERAMICS LANKA PLC GROUP ULTIMATE PARENT ENTITY Royal Ceramics Lanka PLC (RCL) is engaged in Vallibel One PLC does not have an identifiable manufacturing and marketing of floor and wall parent of its own. The Group’s ultimate controlling tiles. Subsidiaries of RCL were engaged in the party is Mr. K D D Perera. business of property holding, manufacturing and marketing of floor and wall tiles, raw material 1.4 CONSOLIDATED to the ceramic industry, sanitaryware, paints FINANCIAL STATEMENTS and allied products, cartons and paper sacks The Consolidated Financial Statements of Vallibel for packing, aluminium extrusions, agricultural
One PLC, as at and for the year ended 31st March production and providing management services to 2016 encompass the Company, its subsidiaries the plantation industry. (together referred to as the “Group”) and the Group’s interest in Equity Accounted Investees (Associates). L B FINANCE PLC The Company provides a comprehensive range of 1.5 DATE OF AUTHORISATION FOR ISSUE financial services encompassing acceptance of The Consolidated Financial Statements of Vallibel deposits, granting lease facilities, hire purchase, One PLC and its subsidiaries for the year ended mortgage loans, gold loans, personnel loans, 31st March 2016 were authorised for issue in factoring, margin trading, trade finance loans, accordance with a resolution of the Directors on microfinance and other credit facilities, real estate
VALLIBEL ONE PLC ANNUAL REPORT 08th June 2016. development and other related services. 2015 | 16 Companies Act No. 07 of 2007. Companies ActNo.07of2007. Sri Lanka (CA Sri Lanka) andtherequirements ofthe issued byTheInstitute ofChartered Accountants of Sri Lanka Accounting Standards (SLFRS/LKAS)as Statements) have beenprepared inaccordance with with theaccounting policiesandnotes (theFinancial Equity andtheCashFlows Statements, together of FinancialPosition, Statements ofChangesin Statements ofComprehensive Income, Statements The FinancialStatements whichcomprise the 2.1 STATEMENT OF COMPLIANCE 2. BASIS OF PREPARATION this AnnualReport. Statement ofDirectors’ Responsibility Report in to theFinancialStatements issetoutin the The responsibility oftheDirectors inrelation 1.6 RESPONSIBILITY otherwise indicated. presented inSri Lankan Rupeesexcept when The Consolidated FinancialStatements are hedged ineffective hedgerelationships. fair values attributable to therisks thatare being at amortisedcost are adjusted to changesinthe fair value hedgesthatwould otherwisebecarried liabilities thatare designated ashedgeditems in The carrying values ofrecognised assets and measured atfair value. available-for-sale financialassets thathave been value through profit orloss financialassets and & buildings, derivative financialinstruments, fair prepared onahistorical cost basis,except for land The Consolidated FinancialStatements have been 2.2 BASIS OF MEASUREMENT FOR FINANCIAL STATEMENTS
presented inNote 41. 12 monthsafter theReporting date (non-current) is after theReporting date (current) andmore than regarding recovery orsettlement within12months Position broadly inorder ofliquidity. Ananalysis The Group presents its Statement ofFinancial and to becomparable withthoseofthecurrent year. amended, where relevant for better presentation Statements oftheprevious years have been The presentation andclassification oftheFinancial Comprehensive Income. of monetary items are recognised inStatement of Differences arisingonsettlement ortranslation at theReporting date. functional currency spotrate ofexchange ruling in foreign currencies are retranslated atthe Monetary assets andliabilities denominated date the transaction first qualifiesfor recognition. respective functionalcurrency spotrate atthe recorded bytheGroup entities/Company attheir Transactions inforeign currencies are initially that arisesfrom usingthismethod. reclassified to profit orloss reflects theamount of aforeign operation; thegainorloss thatis the direct methodofconsolidation andondisposal using thatfunctionalcurrency. TheGroup uses Financial Statements ofeachentityare measured the functionalcurrency anditems includedinthe Limited. For eachentity, theGroup determines Group’s functionalcurrency except for Rocell Pty are presented inSri Lankan Rupees,whichis The Group’s Consolidated FinancialStatements 2.3 FOREIGN CURRENCIES COMPARATIVE INFORMATION TRANSACTIONS AND BALANCES
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Non-monetary items that are measured in terms of subsidiaries as at 31st March 2016. Subsidiaries as
FINANCIAL FINANCIAL REPORTS historical cost in a foreign currency are translated at 31st March 2016 are as follows:
using the exchange rates as at the dates of the Company Name Year of Ownership initial transactions. Non-monetary items measured Incorporation Percentage at fair value in a foreign currency are translated Royal Ceramics Lanka PLC 1990/91 51.01% using the exchange rates at the date when the fair L B Finance PLC 1971/72 64.30% value is determined. The gain or loss arising on Greener Water Limited 2010/11 100% Delmege Limited 1915/16 61.20% translation of non-monetary items measured at fair value is treated in line with the recognition of gain The Consolidated Financial Statements comprise or loss on change in fair value in the item. the Financial Statements of the Group and its
GROUP COMPANIES subsidiaries as at 31st March 2016. Control is achieved when the Group is exposed, or has rights The assets and liabilities of foreign operations to variable returns from its involvement with the are translated into Sri Lankan Rupees at the investee and has the ability to affect those returns rate of exchange at the Reporting date and through its power over the investee. Specifically, their Statement of Comprehensive Income are the Group controls an investee if, and only if, the translated at exchange rates prevailing at the dates Group has: of the transactions. The exchange differences arising on the translation are recognised in zzPower over the investee (i.e., existing rights that other comprehensive income. On disposal of give it the current ability to direct the relevant a foreign operation, the component of other activities of the investee) comprehensive income relating to that particular zzExposure, or rights, to variable returns from its involvement with the investee NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES foreign operation is recognised in the Statement of
Comprehensive Income. zzThe ability to use its power over the investee to affect its returns 2.4 MATERIALITY AND AGGREGATION Each material class of similar items is presented Generally, there is a presumption that a majority separately in the Financial Statements. Items of voting rights result in control. To support this
of dissimilar nature or function are presented presumption and when the Group has less than separately unless they are immaterial as permitted a majority of the voting or similar rights of an by the Sri Lanka Accounting Standard (LKAS) 1 - investee, the Group considers all relevant facts and ‘Presentation of Financial Statements’. circumstances in assessing whether it has power over an investee, including: 2.5 BASIS OF CONSOLIDATION zzThe contractual arrangement with the other The Consolidated Financial Statements comprise vote holders of the investee the Financial Statements of the Group and its zzRights arising from other contractual arrangements
zzThe Group’s voting rights and potential VALLIBEL ONE PLC ANNUAL REPORT voting rights 2015 | 16 goodwill), liabilities,non-controlling interests and it derecognises therelated assets (including If theGroup loses control over asubsidiary, equity transaction. without aloss ofcontrol, isaccounted for asan A changeintheownership interest ofasubsidiary, full onconsolidation. between members oftheGroup are eliminated in expenses andcash flows relating to transactions intra-group assets andliabilities,equity, income, into linewiththeGroup’s accounting policies.All of subsidiariesto bringtheiraccounting policies adjustments are madeto theFinancialStatements interests havingadeficitbalance. Whennecessary, interest, even ifthisresults inthenon-controlling parent oftheGroup andto thenon-controlling (OCI) are attributed to theequityholders ofthe component ofothercomprehensive income Statement ofComprehensive Income and each subsidiary. until thedate theGroup ceases to control the Statements from thedate theGroup gainscontrol year are includedintheConsolidated Financial subsidiary acquired ordisposedofduringthe Assets, liabilities, income andexpenses ofa control ofthesubsidiary. subsidiary andceases whentheGroup loses begins whentheGroup obtains control over the elements ofcontrol. Consolidationofasubsidiary that there are changesto oneormore ofthethree an investee iffacts andcircumstances indicate The Group reassesses whetherornotitcontrols investment retained isrecognised atfair value. or loss isrecognised incomprehensive income. Any other components ofequitywhile anyresultant gain financial year ended 31st December eachyear. PLC prepares theirFinancialStatements for the end 30thJuneeachyear andSampathBank their FinancialStatements for thefinancialyear ends on31st March. Rocell PtyLimited prepares are prepared for acommon financialyear which Sampath BankPLC (Associate ofVallibel OnePLC) in theGroup otherthanRocell PtyLimited andthe The FinancialStatements ofallthesubsidiaries acquisition date. circumstances andpertinentconditions asatthe accordance withthecontractual terms, economic appropriate classification anddesignationin the financialassets andliabilitiesassumed for When theGroup acquires abusiness, itassesses and includedinadministrative expenses. Acquisition-related costs are expensed asincurred acquiree's identifiable netassets. at thefair value orattheproportionate share ofthe value orattheproportionate share oftheacquiree the non-controlling interests intheacquiree atfair combination, theGroup elects whetherto measure interest intheacquiree. For eachbusiness fair value andtheamountofanynon-controlling transferred, measured attheacquisition date is measured astheaggregate oftheconsideration the acquisition method.Thecost ofanacquisition Business combinations are accounted for using 2.5.1 BUSINESS COMBINATIONS AND GOODWILL COMPANIES WITH DIFFERENT ACCOUNTING YEARS
VALLIBEL ONE PLC 99 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 100
Goodwill is initially measured at cost, being the associate is included in the carrying amount
FINANCIAL FINANCIAL REPORTS excess of the aggregate of the consideration of the investment and is neither amortised nor transferred and the amount recognised for non- individually tested for impairment. controlling interests over the net identifiable assets acquired and liabilities assumed. If the fair value of The Statement of Comprehensive Income reflects the net assets acquired is in excess of the aggregate the Group's share of net of tax results of operations consideration transferred, the gain is recognised in of the associates. When there has been a change the Statement of Comprehensive Income. recognised directly in the equity of the associates, the Group recognises its share of any changes, After initial recognition, goodwill is measured at when applicable, in the Statement of Changes in cost less any accumulated impairment losses. Equity. Unrealised gains and losses resulting For the purpose of impairment testing, goodwill from transactions between the Group and the acquired in a business combination is, from the associate are eliminated to the extent of the acquisition date, allocated to each of the Group's interest in the associate. cash-generating units. The Group's share of the Statement of Where goodwill has been allocated to a cash- Comprehensive Income of an associate is shown on generating unit and part of the operation within that the face of the Statement of Comprehensive Income. unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying Equity method of accounting has been applied amount of the operation when determining the for associates Financial Statements using their gain or loss on disposal of the operation. Goodwill corresponding/matching 12 month financial disposed of in this circumstance is measured period. In the case of associates, where the NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES based on the relative values of the operation Reporting dates are different to Group Reporting disposed of and the portion of the cash-generating dates, adjustments are made for any significant unit retained. transactions or events up to 31st March.
2.5.2 INVESTMENT IN EQUITY After application of the equity method, the Group ACCOUNTED INVESTEES determines whether it is necessary to recognise an The Group investment in associates is accounted impairment loss on its investment in its associates. for using the equity method. An associate is an The Group determines at each Reporting date entity in which the Group has significant influence. whether there is any objective evidence that the investment in the associate is impaired. If this Under the equity method, the investment is initially is the case, the Group calculates the amount recognised at cost. The carrying amount of the of impairment as the difference between the investment is adjusted to recognise changes recoverable amount of the associate and its in the Group's share of net assets of associate carrying value and recognises the amount in since acquisition date. Goodwill relating to the 'share of losses of an associate' in the Statement of Comprehensive Income. Upon loss of significant VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 an associate oftheGroup interms ofLKAS28. Statements withSampathBankPLC beingtreated the preparation andpresentation ofFinancial The Board, considering theabove factors, approved Sampath BankPLC. significant influence byVallibel One PLC in All ofwhichdemonstrate theexistence of . Dhammika Perera whoistheChairman and - allibel OnePLC isthesingle largest - Equity Accounted Investee oftheGroup ortress Resort PLC The basisfor Accounting SampathBankasan - - Equity accounted investees asat31st March 2016 of Comprehensive Income. proceeds from disposalisrecognised inStatement and thefair value oftheretaining investment and of theassociate uponloss ofsignificant influence value. Anydifference between thecarrying amount and recognises anyretained investment atits fair influence over theassociate, theGroup measures ond largest shareholder ofSampath - . Dhammika Perera, also serves asthe -
shares oftheBank. Bank PLC holds less than10%oftheissued Nominations Committee oftheBank. of SampathBankPLC andamemberofthe Chairman oftheStrategic PlanningCommittee Bank PLC. of Vallibel OnePLC, istheChairmanofSampath Managing Director andthemajorshareholder issued shares oftheBank. 25,765,740 shares representing 14.95%ofthe shareholder ofSampathBankPLC owning Mr V The F Sampath BankPL The sec Mr C asset orliabilityaffected infuture periods. material adjustment to thecarrying amountofthe estimates could result inoutcomes thatrequire a However, uncertainty abouttheseassumptions and liabilities, attheendofReporting period. and liabilities,thedisclosure ofcontingent reported amounts ofrevenues, expenses, assets estimates andassumptions thataffect the it requires managementto make judgments, and assumptions relative to thefuture. Further, the application ofcertain critical accounting The preparation ofFinancialStatements requires 3.1 SIGNIFICANT ACCOUNTING 3. SUMMARY OF SIGNIFICANT reflected intheassumptions whenthey occur. beyond thecontrol oftheGroup. Suchchangesare due to market changesorcircumstances arising about future developments, however, may change prepared. Existing circumstances andassumptions available whentheFinancial Statements were based assumptions andestimates onparameters financial year, are describedbelow. TheGroup amounts ofassets andliabilities withinthenext of causing amaterial adjustment to thecarrying the Reporting date, thathave asignificant risk other key sources ofestimation uncertainty at The key assumptions concerning thefuture and in theFinancialStatements. estimates indetermining theamounts recognised policies, managementhasexercised judgmentand In theprocess ofapplying theGroup's accounting ESTIMATES AND ASSUMPTIONS JUDGMENTS ASSUMPTIONS JUDGMENTS, ESTIMATES AND ESTIMATES, ASSUMPTIONS AND POLICIES ACCOUNTING JUDGMENTS,
VALLIBEL ONE PLC 101 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 102
The most significant uses of judgments and Loans and advances that have been assessed
FINANCIAL FINANCIAL REPORTS estimates are as follows: individually and found to be not impaired and all
I. TAXATION individually insignificant loans and advances are then assessed collectively, in groups of assets with The Group is subject to income taxes and similar risk characteristics, to determine whether other taxes including VAT on financial services. provision should be made due to incurred loss Significant judgment was required to determine events for which there is objective evidence, but the the total provision for current, deferred and other effects of which are not yet evident. taxes pending the issue of tax guidelines on the treatment of the adoption of SLFRS in the Financial The collective assessment takes in to account data Statements and the taxable profit for the purpose from the loan portfolio (such as levels of arrears, of imposition of taxes. Uncertainties exist, with credit utilisation, loan-to-collateral ratios, etc.), respect to the interpretation of the applicability of and judgments on the effect of concentrations tax laws, at the time of the preparation of these of risks and economic data (including levels of Financial Statements. unemployment, inflation, interest rates).
The Group recognised assets and liabilities III. IMPAIRMENT OF for current, deferred and other taxes based on AVAILABLE-FOR-SALE INVESTMENTS estimates of whether additional taxes will be due. The Group reviews its assets classified as Where the final tax outcome of these matters available-for- sale investments at each Reporting is different from the amounts that were initially date to assess whether they are impaired. This recorded, such differences will impact the income requires similar judgment as applied on the and deferred tax amounts in the period in which the individual assessment of loans and advances. NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES determination is made.
The Group also records impairment charges on II. IMPAIRMENT LOSSES ON LOANS AND ADVANCES (LEASES, available- for -sale equity investments when there HIRE PURCHASE AND OTHER LOANS) has been a significant or prolonged decline in the fair value below their cost. The determination The Group reviews individually significant loans
of what is ‘significant’ or ‘prolonged’ requires and advances at each Reporting date to assess judgment. In making this judgment, the Group whether an impairment loss should be recorded evaluates, among other factors, historical share in the Statement of Comprehensive Income. In price movements, duration and extent up to which particular, management’s judgment is required in the fair value of an investment is less than its cost. the estimation of the amount and timing of future cash flows when determining the impairment loss. IV. DEFERRED TAX ASSETS These estimates are based on assumptions about a number of factors and actual results may differ, Deferred tax assets are recognised in respect of resulting in future changes to the impairment tax losses to the extent it is probable that future allowance. taxable profits will be available against which such tax losses can be set off. Judgment is required to VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Comprehensive Income. obligation isrecognised intheStatement ofOther gain/loss arisingonthevaluation ofdefinedbenefit future salary increase rate of theGroup. Actuarial on expected future inflationrates andexpected mortality tables. Future salaryincreases are based The mortality rate isbasedonpublicly available of thedefinedbenefitobligation. maturities corresponding to theexpected duration Sri Lanka Government Bondswithextrapolated management considers theinterest rates of In determining theappropriate discount rate, reviewed ateachReporting date. changes intheseassumptions. Allassumptions are a definedbenefitobligationishighly sensitive to underlying assumptions andtheirlong term nature, etc. Dueto thecomplexity ofthevaluation, the rate, future salaryincreases, mortality rates These includethedetermination ofthediscount differ from actualdevelopments inthefuture. involves makingvarious assumptions whichmay using actuarialvaluations. Anactuarialvaluation The cost ofdefinedbenefitplansare determined to uncertainty. values, rates, methodsandhence they are subject each Reporting date. Managementestimate these lives andmethods ofdepreciation ofassets at The Group reviews theresidual values, useful future tax-planning strategies. level offuture taxable profits, together withthe can berecognised, basedonthelikely timingand determine theamountofdeferred tax assets that VI. DEFINED BENEFIT PLANS THE PROPERTY AND EQUIPMENT V. USEFUL LIFETIME OF
and thegrowth rate usedfor extrapolation purposes. model aswell as theexpected future cash inflows discount rate usedfor thediscounted cash flow The recoverable amountismost sensitive to the cash-generating unitbeingtested. will enhance theasset’s performance ofthe committed to orsignificant future investments that restructuring activitiesthattheGroup isnotyet budget for thenext five years anddonot include flow model.Thecash flows are derived from the use calculation isbasedonadiscounted cash costs for disposingoftheasset. Thevalue in or observable market prices less incremental in anarm’s length transaction, ofsimilarassets based onavailable data from anactive market, The fair value less costs to sellcalculation is value less costs to sellandits value inuse(VIU). recoverable amount,whichisthehigherofits fair an asset orcash-generating unitexceeds its Impairment exists whenthecarrying value of available basedonthenature oftheproperty. where there was lackofcomparable market data market values anddiscounted cash flow method The valuer hasusedvaluation techniques suchas Financial Statements. at fair value are summarised intheNote 3to the value related disclosures for assets measured determine fair value oflandandbuildings. Fair Group engagedindependentvaluation experts to and intheStatement ofChangesinEquity. The being recognised inOtherComprehensive Income revalued amounts withchangesinfair value The Group measures landandbuildings at VII. IMPAIRMENT OF NON-FINANCIAL ASSETS CONSUMABLE BIOLOGICAL ASSETS EQUIPMENT, INVESTMENT PROPERTIES AND VIII. VALUATION OF PROPERTY, PLANT AND
VALLIBEL ONE PLC 103 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 104
The determined fair values of investment RECOGNITION AND MEASUREMENT INITIAL RECOGNITION
FINANCIAL FINANCIAL REPORTS properties, using investment method, are most sensitive to the estimated yield as well as the Property and equipment is stated at cost, excluding long term occupancy rate. The methods used the costs of day-to-day servicing, less accumulated to determine the fair value of the investment depreciation and accumulated impairment in value. properties, are further explained in Note 18. Such cost includes the cost of replacing part of the equipment when that cost is incurred, if the The fair value of managed timber determined recognition criteria are met. based on discounted cash flow method using various financial and non-financial assumptions. SUBSEQUENT MEASUREMENT The growth of the trees is determined by various These are costs that are recognised in the carrying biological factors that are highly unpredictable. Any amount of an item, if it is probable that the future change to the assumptions will impact to the fair economic benefits embodied within that part will value of biological assets. Key assumptions and flow to the Group and it can be reliably measured. sensitivity analysis of the biological assets are given in Note 16.7. DEPRECIATION Depreciation is calculated using the straight-line IX. PROVISION FOR SLOW-MOVING INVENTORIES method to write down the cost of property and A provision for slow-moving inventories is equipment to their residual values over their recognised based on the best estimates available estimated useful lives and full depreciation is to management on their future usability/sale. charged for the month of purchase of such property As management uses historical information as and equipment and no depreciation is charged in
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES the basis to determine the future usability and the month of disposal. recoverability, actual future losses on inventories could vary from the provision made in these The rates of depreciation based on the estimated Financial Statements (Note 14). useful lives are as follows:
Category of Asset Period 3.2 SIGNIFICANT ACCOUNTING POLICIES Building 50 years
3.2.1 STATEMENT OF FINANCIAL POSITION Furniture and fittings 6.67 years (I) PROPERTY, PLANT AND EQUIPMENT Equipment 5 years Property, Plant and Equipment are recognised Motor vehicles and accessories 4-8 years if it is probable that future economic benefits Computer hardware 5 years associated with the asset will flow to the entity and Air condition 5 years the cost of the asset can be measured reliably in Telephone system 5 years accordance with LKAS 16 – ‘Property, Plant and Fire protection equipment 5 years Equipment’. Initially property and equipment are Leasehold improvement 6.67 years measured at cost. Fixtures & fittings 3 years VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 they are incurred. Statement ofIncome duringtheperiodin which of repairs andmaintenance are charged to the recognised intheasset revaluation reserve. Cost it offsets anexisting surplusonthesameasset the Statement ofIncome, except to theextent that of Income. Arevaluation deficit is recognised in case the increase isrecognised intheStatement recognised intheStatement ofIncome, inwhich revaluation decrease ofthesameasset previously reserve, except to theextent thatitreverses a accumulated inequitytheasset revaluation recognised inOtherComprehensive Income and its carrying amount. Anyrevaluation surplusis of arevalued asset doesnotdiffer materially from sufficient frequency to ensure thatthefair value the revaluation. Valuations are performed with impairment losses recognised after thedate of less accumulated depreciation onbuildings and Land andbuildings are measured atfair value if appropriate, ateachfinancialyear end. methods ofdepreciation are reviewed, andadjusted The asset’s residual values, usefullives and are expected from its use.Anygainorloss arising on disposalorwhennofuture economic benefits Property, PlantandEquipmentisderecognised DERECOGNITION REVALUATION communication equipment &machinery, moulds & Factory equipment,plant Household items -Light Tools &sundryinventory & heavy distribution, household items – Water supply scheme,electricity Category ofAsset 10 –20years 25 –40years 02 years Period derecognised. Comprehensive Income intheyear theasset is in ‘Otheroperating income' intheStatement of the carrying amountoftheasset) isrecognised difference between thenetdisposalproceeds and on derecognition oftheasset (calculated asthe intended use. plant andequipmentthatare notready for their civil construction work notcompleted andproperty, Capital work-in-progress represents thecost of biological assets. other plantations andnurseries are classified as attained harvestable specifications. Tea, rubber, biological assets are thosethathave notyet able to sustain regular harvests. Immature have attained harvestable specifications orare assets. Mature biological assets are thosethat biological assets andimmature biological Biological assets are classified into mature AND CONSUMERBIOLOGICALASSETS 1. BEARERBIOLOGICALASSETS (II) BIOLOGICAL ASSETS those assets. Such borrowing costs are capitalised aspartof of timeto getready for its intended useorsale. production ofassets thattakes asubstantial period directly attributable to acquisition, construction or to theextent where borrowing cost thatare in theperiodwhichthey are incurred except Borrowing costs are recognised asanexpense CAPITAL WORK-IN-PROGRESS BORROWING COST
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The cost of land preparation, rehabilitation, new The managed timber trees are measured on initial
FINANCIAL FINANCIAL REPORTS planting, replanting, crop diversifying, inter- recognition and at the end of each Reporting period planting and fertilizing, etc., incurred between the at its fair value less cost to sell in terms of LKAS time of planting and harvesting (when the planted 41. The cost is treated as approximation to fair area attains maturity), are classified as immature value of young plants as the impact on biological plantations. These immature plantations are transformation of such plants to price during this shown at direct costs plus attributable overheads, period is immaterial. including interest attributable to long term loans used for financing immature plantations. The fair value of timber trees are measured using DCF method taking into consideration the current Biological assets are further classified as bearer market prices of timber, applied to expected timber biological assets and consumable biological assets. content of a tree at maturity by an independent Bearer biological asset includes tea and rubber professional valuer. trees, those that are not intended to be sold or harvested, however used to grow for harvesting The main variables in DCF model concerns, agricultural produce from such biological assets. Variable Description of the variable Consumable biological assets includes managed Timber Estimate based on physical timber trees those that are to be sold as biological content verification of girth, height and assets. considering the growth of the each species. Factor all the prevailing statutory regulations enforced against The expenditure incurred on bearer biological harvesting of timber coupled with assets (Tea and Rubber) fields, which come into forestry plan of the Company. bearing during the year, has been transferred NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Economic Estimate based on the normal life to mature plantations. Expenditure incurred on useful life span of each species by factoring the consumable biological assets is recorded at cost at forestry plan of the Company. initial recognition and thereafter at fair value at the Selling Estimate based on prevailing end of each Reporting period. price Sri Lankan market price. Factor all the conditions to be fulfilled in bringing the trees into saleable condition
The entity recognise the biological assets when, Planting Estimated costs for further and only when, the entity controls the assets as cost development of immature arrears are a result of past event, it is probable that future deducted. economic benefits associated with the assets will Discount Discount rate reflects the possible flow to the entity and the fair value or cost of the rate variations in the cash flows and the assets can be measured reliably. risk related to the biological assets.
The bearer biological assets are measured at cost Nursery cost includes the cost of direct materials, less accumulated depreciation and accumulated direct labour and an appropriate proportion of impairment losses, if any, in terms of LKAS 16 – directly attributable overheads, less provision for ‘Property Plant & Equipment’ as per the option overgrown plants. VALLIBEL ONE PLC ANNUAL REPORT provided by the ruling issued by CA Sri Lanka. 2015 | 16 Income intheyear inwhichthey are incurred. charged to theStatement ofComprehensive Infilling costs thatare notcapitalised have been period, whichever islower. relevant mature plantation, ortheunexpired lease assessed remaining usefuleconomic life ofthe so capitalised are depreciated over thenewly infilling performance assessment. Infillingcosts future benefits from thatfield, beyond its pre- mature field, only ifitincreases the expected of infillinghave been capitalised to therelevant The landdevelopment costs incurred intheform 2. INFILLINGCOSTONBIOLOGICALASSETS after ascertaining theloss. amounts ofsuchasset intheyear ofoccurrence Income infullandreduced to thenetcarrying are charged to theStatement ofComprehensive Permanent impairments to biological assets arises. Comprehensive Income for theperiodinwhichit biological assets are includedintheStatement of from achangeinfair value less cost to sellof biological assets atfair value less cost to selland The gainorloss arisingoninitialrecognition of measured. and cost oftheinvestment property can bereliably with theinvestment property willflow to theGroup that future economic benefits thatare associated Investment property isrecognised ifitisprobable BASIS OFRECOGNITION classified asInvestment Property. properties held to earnrental income have been Properties held for capital appreciation and (III) INVESTMENT PROPERTIES impairment losses. accumulated depreciation andanyaccumulated investment properties are stated at cost less any Accordingly, landandbuildings classified as Standard (LKAS)-“Investment Property”. properties inaccordance withSri Lanka Accounting The Group appliesthecost modelfor investment the construction ordevelopment iscomplete. constructed investment isits cost atthedate when attributable expenditure. Thecost ofaself- comprises ofits purchase price andanydirectly cost. Thecost ofapurchased investment property An investment property ismeasured initially atits MEASUREMENT accumulated impairmentlosses. cost less anyaccumulated amortisationandany initial recognition, intangible assets are carried at measured on initialrecognition atcost. Following Intangible assets acquired separately are flow to theGroup. economic benefits thatare attributable to itwill reliably anditisprobable thattheexpected future recognised only whenits cost can bemeasured on business combination. Anintangible asset is of computer software, brand nameandgoodwill The Group’s intangible assets includethevalue (IV) INTANGIBLE ASSETS the date ofpurchase upto thedate ofdisposal. over theestimated life oftheclass ofasset from Depreciation isprovided onastraight-line basis SUBSEQUENT MEASUREMENT INITIAL MEASUREMENT DEPRECIATION Buildings Class oftangible assets Over 50years Useful life
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USEFUL LIVES OF INTANGIBLE ASSETS is considered impaired and is written down to its
FINANCIAL FINANCIAL REPORTS The useful lives of intangible assets are assessed recoverable amount. In assessing value in use, to be either finite or indefinite. Intangible assets the estimated future cash flows are discounted with finite lives are amortised over the useful to their present value using a pre-tax discount economic life. The amortisation period and the rate that reflects current market assessments amortisation method for an intangible asset with of the time value of money and the risks specific a finite useful life are reviewed at least at each to the asset. In determining fair value less costs financial year-end. Changes in the expected useful to sell, an appropriate valuation model is used. life or the expected pattern of consumption of These calculations are corroborated by valuation future economic benefits embodied in the asset are multiples, quoted share prices for publicly traded accounted for by changing the amortisation period subsidiaries or other available fair value indicators. or method, as appropriate, and they are treated as changes in accounting estimates. The amortisation For assets, an assessment is made at each expense on intangible assets with finite lives is Reporting date as to whether there is any indication recognised in the Statement of Comprehensive that previously recognised impairment losses may Income in the expense category consistent with the no longer exist or may have decreased. If such function of the intangible asset. indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised AMORTISATION impairment loss is reversed only if there has been Amortisation is calculated using the straight-line a change in the assumptions used to determine method to write down-the cost of intangible assets the asset’s recoverable amount since the last to their residual values over their estimated useful impairment loss was recognised. The reversal is limited so that the carrying amount of the asset NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES lives as follows: does not exceed its recoverable amount, nor The Class of Intangible Assets Useful Life Amortisation Method exceeds the carrying amount that would have been Computer software 5 Years Straight line method determined, net of depreciation, had no impairment Brand name 20 Years Straight line method loss been recognised for the asset in prior years. Such reversal is recognised in the Statement of
(V) IMPAIRMENT OF NON-FINANCIAL ASSETS Comprehensive Income. The Group assesses at each Reporting date whether there is an indication that an asset may (VI) FINANCE AND OPERATING LEASES be impaired. If any indication exists, or when The determination of whether an arrangement annual impairment testing for an asset is required, is a lease or it contains a lease, is based on the the Group estimates the asset’s recoverable substance of the arrangement and requires an amount. An asset’s recoverable amount is the assessment of whether the fulfilment of the higher of an asset’s or cash-generating unit’s arrangement is dependent on the use of a specific (CGU’s) fair value less costs to sell and its value asset or assets and the arrangement conveys a in use. Where the carrying amount of an asset or right to use the asset. CGU exceeds its recoverable amount, the asset VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 interest ontheremaining balance oftheliability. implicit inthelease soasto give aconstant rate of the periodoflease basedontheinterest rate payable are recognised in ‘Netinterest income’ over of theminimumlease payments. Finance charges fair value oftheasset or, iflower, thepresent value corresponding liabilityare recognised initially atthe loans andother borrowings. Afinance lease andits liability to thelessor isincludedininterest-bearing ‘Property andequipment’ andthecorresponding the leased assets are capitalised andincludedin When theGroup isalessee underfinance leases, rate ofreturn onthenetinvestment intheleases. the periodsofleases soasto give aconstant income receivable isrecognised in‘Revenue’ over receivables andstock outonhire’. Thefinance unearned charges, are includedin‘Leaserentals amounts dueundertheleases, after deduction of the Group isalessor underfinance leases the legal title, are classified asfinance leases. When to theownership ofassets, butnotnecessarily substantially alltherisks andrewards incidental Agreements whichtransfer to counterparties FINANCE LEASE recognised ontheStatement ofFinancialPosition. When theGroup is the lessee, leased assets are not thereby impaired. recoverable andthecarrying value oftheassets is to theextent thatresidual values are notfully accordingly. Impairmentlosses are recognised Plant andEquipment’ andaccounts for them assets subjectto operating leases in‘Property, When actingaslessor, theGroup includesthe All otherleases are classified asoperating leases. OPERATING LEASE income’, respectively. ‘other operating expenses’ and‘otheroperating over theperiodsofleases andare includedin leases are accounted for onastraight-line basis Rentals payable andreceivable underoperating Income netofanyreimbursement. is presented intheStatement ofComprehensive obligation. Theexpense relating to anyprovision reliable estimate can bemadeoftheamount will berequired to settle theobligationanda outflow ofresources embodyingeconomic benefits result ofapast event, anditisprobable that an a present obligation(legal orconstructive) asa Provisions are recognised whentheGroup has (VII) PROVISIONS by qualifiedactuaries. The valuation was carried outasat31st March 2016 served inexcess of5years. year ofcompleted service, for thosewhohave employment isterminated orresigned, for each the last monthofthefinancialyear inwhichthe rate ofonehalfthe Gross Salaryapplicable to the Payment ofGratuity ActNo.12of1983 atthe are eligible to receive theterminal gratuity under services are terminated otherthanbyretirement Employees thosewhohave resigned orwhose of 1983. gratuity under thePayment ofGratuity ActNo.12 All theemployees oftheGroup are eligible for (1) GRATUITY (VIII) EMPLOYEE BENEFIT OBLIGATIONS
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RECOGNITION OF ACTUARIAL LOSSES/GAINS - EMPLOYEES’ TRUST FUND
FINANCIAL FINANCIAL REPORTS Company/Group recognise the total actuarial gain The Company contributes 3% of the employee’s and losses that arise in calculating the Company’s/ monthly gross salary excluding overtime to Group’s obligation in respect of the plan in Other the Employees’ Trust Fund maintained by the Comprehensive Income during the period in which Employees Trust Fund Board. it occurs. (IX) NON-CURRENT ASSETS HELD FOR RECOGNITION OF PAST SERVICE COST SALE/DISTRIBUTION TO OWNERS AND (APPLICABLE ONLY WHEN A PLAN HAS BEEN CHANGED) DISCONTINUED OPERATIONS Past service cost are recognised as an expense on a The Group classifies non-current assets and straight-line basis over the average period until the disposal groups as held for sale/distribution to benefits become vested. If the benefits have already owners if their carrying amounts will be recovered been vested, immediately following the instruction principally through a sale/distribution rather than of, or changes to the plan, past service costs are through continuing use. Non-current assets and recognised immediately. disposal groups are measured at the lower of their carrying amount and fair value less costs to FUNDING ARRANGEMENTS sell. The criteria for held for sale classification The gratuity liability is not externally funded. is regarded as met only when the sale is highly probable and the asset or disposal group is (2) DEFINED CONTRIBUTION PLAN available for immediate sale in its present condition. The Group also operates a defined contribution Management must be committed to the sale, which plan. The contribution payable to a defined should be expected to qualify for recognition as a completed sale within one year from the date of
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES contribution plan is in proportion to the services rendered to the Group by the employees and classification. Discontinued operations are excluded is recorded as an expense under ‘Personnel from the results of continuing operations and are expenses’. Unpaid contributions are recorded presented as a single amount as profit or loss after as a liability. tax from discontinued operations in the Statement of Comprehensive Income. Property, Plant and
The Group contributes to the following Schemes: Equipment and intangible assets once classified - EMPLOYEES’ PROVIDENT FUND as held for sale/distribution to owners are not depreciated or amortised. The Group and employees contribute 12%-15% and 8%-10% respectively of the employee’s monthly (X) FINANCIAL ASSETS gross salary (excluding overtime) to the Ceylon FINANCIAL ASSETS – INITIAL RECOGNITION Planters’ Provident Society (CPPS), Estate Staff’s AND SUBSEQUENT MEASUREMENT Provident Society (ESPS) and Employees’ Provident Financial assets within the scope of LKAS 39 are Fund (EPF). classified as financial assets held for trading, loans and receivables, lease rentals receivable and VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 fair value through profit orloss. except inthecase offinancialassets recorded at initially attheirfair value plustransaction costs, acquiring them.Allfinancialassets are measured characteristics andthemanagement’s intention in recognition dependsontheirpurposeand The classification of financial assets atinitial (2) INITIAL MEASUREMENTOF FINANCIAL ASSETS by regulation orconvention inthemarketplace. assets withinthe timeframe generally established sales offinancial assets thatrequire delivery of This includes’regular way trades’: purchases or instrument. a partyto thecontractual provisions ofthe trade date, i.e.,thedate thattheGroup becomes All financialassets are initially recognised onthe (1) DATE OF RECOGNITION financial assets. sale, financialassets held-to-maturity andother stock outonhire, financialassets available-for- right to thepayment hasbeenestablished. according to theterms ofthecontract, orwhenthe is recorded infinance income orfinance cost income’. Interest anddividendincome orexpense Changes infair value are recognised in‘Finance the Statement ofFinancialPosition atfair value. Financial assets held for trading are recorded in at fair value through profit ofloss. profit orloss ifitisheld for trading orisdesignated A financialasset isclassified asfair value through (3) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
the following circumstances: management atfair value through profit orloss in Financial assets may bedesignated by z z established. income’ whentherightto thepayment hasbeen (EIR), while dividend income isrecorded in‘finance ‘Interest income’ usingtheeffective interest rate or loss. Interest earnedorincurred isaccrued in instrument designated atfair value through profit are recorded in‘Netgainorloss’ onfinancial Position atfair value. Changesinfair value loss are recorded intheStatement ofFinancial Financial assets atfair value through profit or ‘finance cost’. in theStatement ofComprehensive Income line impairment ofsuchinvestments are recognised Comprehensive Income. Thelosses arisingfrom included in‘Interest income’ in the Statement of are anintegral partoftheEIR.Theamortisationis discount orpremium onacquisition andfees that cost iscalculated bytaking into account any interest rate (EIR),less impairment.Amortised are measured atamortisedcost usingtheeffective recognition, held-to-maturity financial investments and abilityto hold to maturity. Subsequentto initial fixed maturities,whichtheGroup hastheintention assets withfixed ordeterminable payments and Held to maturityfinancialinvestments are financial (4) HELD-TO-MATURITY FINANCIAL ASSETS z z basis and theirperformance evaluated onafair value financial liabilitiesorboth,whichare managed the assets are partofagroup offinancialassets, gains orlosses onthemadifferent basisor arise from measuringtheassets orrecognising the inconsistent treatment thatwould otherwise designation eliminates orsignificantly reduces
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If the Group were to sell or reclassify more than value. Unrealised gains and losses are recognised
FINANCIAL FINANCIAL REPORTS an insignificant amount of held-to-maturity directly in equity in the ‘Available-for-sale-reserve’. investments before maturity (other than in certain When the investment is disposed of, the cumulative specific circumstances), the entire category would gain or loss previously recognised in equity is be tainted and would have to be reclassified as recognised in the Statement of Comprehensive available-for-sale. Furthermore, the Group would Income in ‘Finance Income’. Where the Group holds be prohibited from classifying any financial asset as more than one investment in the same security, held-to-maturity during the following two years. they are deemed to be disposed of on a first-in first-out basis. Interest earned whilst holding (5) LOANS, LEASE RENTAL RECEIVABLES, available for sale financial investments is reported STOCK OUT ON HIRE AND OTHER FINANCIAL ASSETS as interest income using the EIR. This includes the financial assets with fixed or determinable payments that are not quoted in an Dividends earned whilst holding available-for- active market. sale financial investments are recognised in Statement of Comprehensive Income as Finance After initial measurement, subsequently is Income when the right of the payment has been measured at amortised cost using the EIR, less established. The losses arising from impairment of allowance for impairment. Amortised cost is such investments are recognised in the Statement calculated by taking into account any discount or of Comprehensive Income in ‘Finance Cost’ and premium on acquisition and fees and costs that removed from the ‘Available-for-sale-reserve’. are an integral part of the EIR. The amortisation is included in ‘Revenue’ in the Statement of (7) ‘DAY 1’ PROFIT OR LOSS Comprehensive Income. The losses arising from When the transaction price differs from the NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES impairment are recognised in the Statement of fair value of other observable current market Comprehensive Income in other operating expenses. transactions in the same instrument, or based on a valuation technique whose variables include (6) AVAILABLE-FOR-SALE FINANCIAL ASSETS only data from observable markets, the Group Available-for-sale financial assets include equity immediately recognises the difference between the
and debt securities. Equity investments classified transaction price and fair value (a ‘Day 1’ profit or as available-for-sale are those which are neither loss) in ‘Statement of Comprehensive Income’. classified as held-for-trading nor designated at fair value through profit or loss. Debt securities in this (8) RECLASSIFICATION OF FINANCIAL ASSETS category are intended to be held for an indefinite The Group may reclassify financial assets (other period of time and may be sold in response to than those designated at FVTPL) upon initial needs for liquidity or in response to changes in the recognition, in certain circumstances: market conditions. The Group has not designated - Out of the ‘held for trading’ category and into the any loans or receivables as available-for-sale. After ‘available-for-sale’, ‘loans and receivables’, or initial measurement, available-for-sale financial ’held-to-maturity’ categories. investments are subsequently measured at fair VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 basis. and isdetermined onaninstrument byinstrument Reclassification isattheelection ofmanagement, date of the changeinestimate. recognised asanadjustment to theEIR from the those cash receipts, theeffect ofthatincrease is receipts asa result ofincreased recoverability of subsequently increases its estimates offuture cash If afinancialasset isreclassified, andiftheGroup asset for theforeseeable future oruntilmaturity. has theintention andabilityto hold thefinancial definition ofloans and receivables andtheGroup ‘loans andreceivables’ category ifitmeets the Out ofthe‘held for trading’ category andinto the Statement ofComprehensive Income. the amountrecorded inequityisrecycled to the subsequently determined to beimpaired, then life oftheasset usingtheEIR.Ifasset is cash flows isalsoamortisedover theremaining between thenew amortisedcost andtheexpected of theinvestment usingtheEIR.Anydifference Comprehensive Income over theremaining life recognised inequityisamortisedto Statement of previous gainorloss onthatasset thathasbeen out ofthe’available-for-sale’ category, any amortised cost. For afinancialasset reclassified date ofreclassification, whichbecomes thenew Reclassifications are recorded atfair value atthe - determined byreference to quoted market prices or traded inactive markets ateachReporting date is The fair value offinancialinstruments thatare Fair Value ofFinancial Instruments
category’ or‘held-to-maturity’. the ‘loans andreceivables’, ‘held for trading Out ofthe‘av ailable-for-sale’ category andinto may include: appropriate valuation techniques. Suchtechniques market, thefair value isdetermined using For financialinstruments nottraded inanactive deduction for transaction costs. and askprice for shortpositions),withoutany dealer price quotations (bidprice for long positions z z z z z are provided intheFinancialStatements. and furtherdetails asto how they are measured An analysis offair values offinancialinstruments assets) isderecognised when: financial asset orpartofagroup ofsimilarfinancial A financialasset (or, where applicable apartof Derecognition ofFinancialAssets z z z z z instrument that issubstantially thesame Reference to thecurrent fair value ofanother Using recent arm’s length market transactions ‘pass-through’ arrangement; andeither: without material delay to a third partyundera obligation to pay thereceived cash flows infull cash flows from theasset orhasassumed an The Group hastransferred its rights to receive have expired The rights to receive cash flows from theasset valuation models. A discounted cash flow analysis orother Or oup hasneithertransferred nor oup hastransferred substantially all The Gr The Gr control oftheasset rewards of theasset, but hastransferred retained substantially alltherisks and the risks andrewards oftheasset
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When the Group has transferred its rights to occurred. Impairment allowances are calculated
FINANCIAL FINANCIAL REPORTS receive cash flows from an asset or has entered on individual loans and for groups of loans, this is into a pass-through arrangement, and has neither done collectively. Impairment losses are recorded transferred nor retained substantially all of the as charges to the Statement of Comprehensive risks and rewards of the asset nor transferred Income. The carrying amount of impaired loans on control of the asset, the asset is recognised to the the Reporting date is reduced through the use of extent of the Group’s continuing involvement in the impairment allowance accounts. Losses expected asset. In that case, the Group also recognises an from future events are not recognised. associated liability. The transferred asset and the associated liability are measured on a basis that Individually Assessed Loans and Advances and Lease and Stock Out on Hire reflects the rights and obligations that the Group has retained. For all loans that are considered individually significant, the Group assesses on a case-by- Continuing involvement that takes the form of a case basis at each Reporting date whether there guarantee over the transferred asset is measured is any objective evidence that a loan is impaired. at the lower of the original carrying amount of the The criteria used to determine that there is such asset and the maximum amount of consideration objective evidence includes: that the Group could be required to repay. – Known cash flow difficulties experienced by the borrower; (9) IMPAIRMENT OF FINANCIAL ASSETS – Past due contractual payments of either The Group assesses at each Reporting date, principal or interest; whether there is any objective evidence that a – Breach of loan covenants or conditions; financial asset or a group of financial assets is NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES impaired. A financial asset or a group of financial – The probability that the borrower will enter assets is deemed to be impaired if, and only if, there bankruptcy or other financial realisation; and is objective evidence of impairment as a result of – A significant downgrading in credit rating by an one or more events that have occurred after the external credit rating agency. initial recognition of the asset (an ‘incurred loss
event’) and that loss event (or events) has an impact For those loans where objective evidence of on the estimated future cash flows of the financial impairment exists, impairment losses are asset or the group of financial assets that can be determined considering the following factors: reliably estimated. – Group’s aggregate exposure to the customer; – The viability of the customer’s business model (a) Loans and Advances to Customers and Lease and Stock Out on Hire and their capacity to trade successfully out of financial difficulties and generate sufficient cash Losses for impaired loans are recognised flow to service debt obligations; promptly when there is objective evidence that impairment of a loan or portfolio of loans has – The amount and timing of expected receipts and recoveries; VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Advances and Lease and Stock Out on Hire on Out Stock and Lease and Advances a reduction intheestablished loss estimate. when there isreasonable andobjective evidence of assessed impairment allowances are only released of actualandanticipated receipts. Individually of anycollateral held andthetimingamount encompasses re-assessment oftheenforceability when circumstances require. Thisnormally significant accounts are reviewed more regularly amount. Theimpairmentallowances onindividually present value withtheloan’s current carrying original interest rate andcomparing theresultant the expected future cash flows ofaloan atits ely deductionofanycosts involved in Impairment losses are calculated bydiscounting ealisable value ofsecurityandlikelihood of – – omplexity ofdetermining theaggregate – to theircredit riskcharacteristics for thepurpose individual basisare grouped together according of loss hasbeenspecifically identifiedonan Impairment Individually assessed loans for whichnoevidence Identified yet not but Incurred or homogeneousgroups ofloans thatisnot – o cover losses whichhave beenincurred but – circumstances: Impairment isassessed onacollective basisintwo and Loans Assessed Collectively
considered individually significant. individual assessment; and have notyet beenidentifiedonloans subjectto recovery ofamounts outstanding; successful repossession; and uncertainties are evident; and theextent to whichlegal andinsurance amount andranking ofallcreditor claims The lik The r The c F T
Advances and Lease and Stock Out on Hire on Out Stock and Lease and Advances after taking into account: The collective impairmentallowance isdetermined an individualbasisfor impairment. loans are removed from theGroup andassessed on losses onindividualloans withintheGroup, those information becomes available whichidentifies be individually identifiedinthefuture. Assoonas can bereliably estimated. Theselosses willonly to identifyonanindividualloan basis,andthat the Reporting date, whichtheGroup isnotable incurred asaresult ofevents occurring before reflects impairmentlosses thattheGroup has of calculating anestimated collective loss. This ow rate method − loss experience on acollective basis: Following method isusedto calculate historical they are removed from thegroup. when individualloans are written off, atwhichpoint groups ofloans are recorded onanindividualbasis homogeneous groups ofloans. Losses inthese impairment losses onacollective basisfor Statistical methodsare usedto determine and Loans of Groups Homogeneous – torical loss experience inportfolios ofsimilar –
experience. or less thanthatsuggested byhistorical at theReporting date islikely to begreater are suchthattheactuallevel ofinherent losses whether current economic andcredit conditions credit risk;and Net fl Management His ’s experienced judgmentasto
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Under this methodology the movement in the impairment was recognised, the excess is written
FINANCIAL FINANCIAL REPORTS outstanding balance of customers into bad back by reducing the loan impairment allowance categories over the periods are used to estimate account accordingly. The write-back is recognised the amount of loans that will eventually be written in the Statement of Comprehensive Income. off as a result of the events occurring before the Statement of Financial Position date which the (b) Available-for-Sale Financial Assets Group is not able to identify on an individual loan For available-for-sale financial investments, the basis, and that can be reliably estimated. Group assesses at each Reporting date whether there is objective evidence that an investment Under above methodology, loans are grouped into is impaired. In the case of debt instruments ranges according to the number of days in arrears classified as available-for-sale, the Group assesses and statistical analysis is used to estimate the individually whether there is objective evidence of likelihood that loans in each range will progress impairment. through the various stages of delinquency, and ultimately prove irrecoverable. However, the amount recorded for impairment is the cumulative loss measured as the difference Current economic conditions and portfolio risk between the amortised cost and the current factors are also evaluated when calculating the fair value, less any impairment loss on that appropriate level of allowance required covering investment previously recognised in the Statement inherent loss. of Comprehensive Income. Future interest income is based on the reduced carrying amount and These additional macro and portfolio risk factors is accrued using the rate of interest used to may include: discount the future cash flows for the purpose NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES − Recent loan portfolio growth and product mix, of measuring the impairment loss. The interest − Unemployment rates, Gross Domestic income is recorded as part of ‘Interest income’. Production (GDP) growth, inflation If, in a subsequent period, the fair value of a debt − Exchange rates, interest rates instrument increases and the increase can be − Changes in Government laws and regulation objectively related to a credit event occurring
after the impairment loss was recognised in Write-off of Loans and Advances the Statement of Comprehensive Income, the Loans (and the related impairment allowance impairment loss is reversed through the Statement accounts) are normally written off, either partially of Comprehensive Income. or in full, when there is no realistic prospect of recovery. Where loans are secured, this is generally In the case of equity investments classified as after receipt of any proceeds from the realisation of available-for-sale, objective evidence would also security. include a ‘significant’ or ‘prolonged’ decline in the fair value of the investment below its cost. Where Reversals of Impairment there is evidence of impairment, the cumulative If the amount of an impairment loss decreases loss measured as the difference between the VALLIBEL ONE PLC ANNUAL REPORT in a subsequent period, and the decrease can be acquisition cost and the current fair value, less related objectively to an event occurring after the 2015 | 16 Comprehensive Income. impairment loss isreversed through Statement of of impairmentloss to decrease, thedecrease in When asubsequentevent caused theamount be recognised through theunwindingofdiscount. Income. Interest onimpaired assets continues to and isrecognised inStatement ofComprehensive cash flows discounted attheasset’s originalEIR amount andthepresent value ofestimated future calculated asthedifference between its carrying financial assets measured atamortisedcost is An impairmentloss inrespect ofheld-to-maturity (c) Held-To-Maturity FinancialAssets Comprehensive Income. value after impairment are recognised inOther Comprehensive Income; increases inthefair are notreversed through theStatement of Impairment losses onequityinvestments the Statement ofComprehensive Income. Income isremoved from equityandrecognised in recognised intheStatement ofComprehensive any impairmentloss onthatinvestment previously sources. as independentvaluers andotherindependent valued basedondata provided bythird partiessuch Non-financial collateral, suchasreal estate, is guidelines issued bytheCentral BankofSri Lanka. at aminimum,inception and basedonthe The fair value ofcollateral isgenerally assessed, estate, receivables, andothernon-financialassets. securities, letters ofcredit/guarantees, gold, real collateral comes invarious forms suchascash, to mitigate its risks onfinancialassets. The The Group seeks to usecollateral, where possible, Valuation Collateral or losses includedin ‘Revenue’. trading’ andmeasured atfair value withanygains a shortsale within‘Financial liabilitiesheld for obligation to return thesecuritiesisrecorded as resell are subsequently sold to third parties,the If securitiespurchased underagreement to of theagreement usingtheEIR. is recorded in‘Revenue’ andisaccrued over thelife difference between thepurchase andresale prices economic substance asaloan bytheGroup. The Financial Assets’ reflecting thetransaction’s the Statement ofFinancial Position, within‘Other paid, includingaccrued interest, isrecorded in Statement ofFinancial Position. Theconsideration a specifiedfuture date are notderecognised inthe Securities purchased underagreements to resell at Agreements Repurchase value oftheoriginalsecured asset. lower oftheirrepossessed value orthecarrying transferred to theirrelevant asset category atthe to beusefulfor theinternal operations are operations orshould besold. Assets determined repossessed asset isbest usedfor its internal The Group’s policy isto determine whethera Repossessed Collateral liabilities atinitialrecognition. Group determines theclassification ofits financial and otherfinancialliabilitiesasappropriate. The to banks, debtissued andotherborrowed funds are classified asdueto customers (Deposits), due Financial liabilitieswithinthescope ofLKAS39 INITIAL RECOGNITIONANDMEASUREMENT (XI) FINANCIAL LIABILITIES
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The Group classifies financial liabilities as OFFSETTING OF FINANCIAL INSTRUMENTS
FINANCIAL FINANCIAL REPORTS other financial liabilities in accordance with the Financial assets and financial liabilities are offset substance of the contractual arrangement and the and the net amount reported in the Consolidated definitions of financial liabilities. Statement of Financial Position if, and only if:
zzThere is a currently enforceable legal right to The Group recognises financial liabilities in the offset the recognised amounts and Statement of Financial Position when the Group zz becomes a party to the contractual provisions of There is an intention to settle on a net basis, the financial liability. or to realise the assets and settle the liabilities simultaneously.
OTHER FINANCIAL LIABILITIES Other financial liabilities including due to (XII) CASH AND CASH EQUIVALENTS customers (Deposits), due to banks, debt issued Cash and cash equivalents are cash at bank and other borrowed funds and other financial and in hand, call deposits and short term highly liabilities are initially measured at fair value less liquid investments readily convertible to known transaction cost that are directly attributable to amounts of cash and subject to insignificant risk the acquisition and subsequently measured at of changes in value. For the purpose of Statement amortised cost using the EIR method. of Cash Flows, cash and cash equivalents consist of cash in hand, cash at bank, deposits in banks, Amortised cost is calculated by taking into account net of outstanding bank overdrafts. Investments any discount or premium on the issue and costs with short maturities (i.e. three months or less that are an integral part of the EIR. from date of acquisition) are also treated as cash equivalents. Bank overdrafts are disclosedunder
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES DERECOGNITION OF FINANCIAL LIABILITIES due to banks in the Statement of Financial Position. A financial liability is derecognised when the obligation under the liability is discharged or 3.2.2 STATEMENT OF COMPREHENSIVE INCOME cancelled or expires. Where an existing financial (I) REVENUE RECOGNITION liability is replaced by another from the same Revenue is recognised to the extent that it is
lender on substantially different terms, or the probable that the economic benefits will flow terms of an existing liability are substantially to the Group/Company and the revenue can be modified, such an exchange or modification is reliably measured, regardless of when the payment treated as a derecognition of the original liability is being made. Revenue is measured at the fair and the recognition of a new liability. The difference value of the consideration received or receivable, between the carrying value of the original financial taking into account contractually defined terms of liability and the consideration paid is recognised in payment and excluding taxes or duty. The Group/ Statement of Comprehensive Income. Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Group/Company VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 expenses incurred are eligible to berecovered. revenue isrecognised only to theextent thatthe the contract outcome cannot bemeasured reliably, estimated labourhours for eachcontract. When hours incurred to date asapercentage oftotal completion ismeasured byreference to labour by reference to thestage ofcompletion. Stage of Revenue from rendering ofservices isrecognised RENDERING OFSERVICES delivery ofthe goods. the goodshave passed to thebuyer, usually on the significant risks andrewards ofownership of Revenue from thesale ofgoodsisrecognised when SALE OFGOODS revenue isrecognised. recognition criteria must alsobemetbefore of its revenue arrangements. Thefollowing specific has concluded thatitisactingasaprincipalinall financial asset orfinancialliability. appropriate, to thenetcarrying amount of the the financialinstrument orashorter period,where payments orreceipts through theexpected life of rate thatexactly discounts estimated future cash expense isrecorded using theEIR.EIRis Comprehensive Income, interest income or designated atfair value through Statement of as available-for-sale andfinancialinstruments cost, interest bearingfinancialassets classified For allfinancialassets measured atamortised INTEREST INCOMEANDEXPENSE under cost ofsales. Interest expense from finance sector isrecorded the finance sector isrecorded underRevenue. Interest income andcommission fee income from INTEREST INCOMEANDCOMMISSIONFEE the purposeofmeasuringimpairmentloss. interest usedto discount thefuture cash flows for continues to berecognised usingtherate of due to animpairmentloss, interest income group ofsimilarfinancialassets hasbeenreduced Once therecorded value ofafinancialasset ora EIR from thedate ofthechangeinestimate. that increase isrecognised asanadjustment to the recoverability ofthosecash receipts, theeffect of of future cash receipts asaresult ofincreased Company subsequently increases its estimates for areclassified financialasset for whichthe ’Interest expense’ for financialliabilities.However, as ’Interest income’ for financialassets and EIR andthechangeincarrying amountisrecorded carrying amountiscalculated basedontheoriginal estimates ofpayments orreceipts. Theadjusted liability isadjusted iftheCompanyrevises its carrying amountofthefinancialasset orfinancial part oftheEIR,butnotfuture credit losses. The attributable to theinstrument andare anintegral any fees orincremental costs thatare directly terms ofthefinancialinstrument andincludes The calculation takes into account allcontractual advisory fees. management, custody andothermanagement These fees includecommission income andasset a periodoftimeare accrued over thatperiod. Fees earnedfor theprovision ofservices over (A) FEE INCOME EARNED FROM SERVICES following two categories: customers. Fee income can bedividedinto the from adiverse range ofservices itprovides to its The Group earnsfee andcommission income FEE ANDCOMMISSIONINCOME THAT ARE PROVIDED OVER A CERTAIN PERIOD OF TIME
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(B) FEE INCOME FROM expense item, it is recognised as income on a PROVIDING TRANSACTION SERVICES
FINANCIAL FINANCIAL REPORTS systematic basis over the periods that the costs, Fees arising from negotiating or participating in the which it is intended to compensate, are expensed. negotiation of a transaction for a third party, such Where the grant relates to an asset, it is recognised as the purchase or sale of business is recognised as income in equal amounts over the expected on completion of the underlying transaction. Fees useful life of the related asset. or components of fees that are linked to a certain performance are recognised after fulfilling the When the Group/Company receives non-monetary corresponding criteria. grants, the asset and the grant are recorded gross at nominal amounts and released to Statement of Dividends Comprehensive Income over the expected useful Revenue is recognised when the Group's/ life in a pattern of consumption of the benefit of Company's right to receive the payment is the underlying asset by equal annual instalments. established, which is generally when shareholders When loans or similar assistance are provided by approve the dividend. the Governments or related institutions with an interest rate below the current applicable market Rental Income rate, the effect of this favorable interest is regarded Rental income arising from operating leases as a Government grant. on investment properties is accounted for on a straight-line basis over the lease term and is (III) EXPENDITURE RECOGNITION included in revenue due to its operating nature. a. Expenses are recognised in the Statement of Comprehensive Income on the basis of a Dividends on Ordinary Shares
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES direct association between the cost incurred Dividends on ordinary shares are recognised as a and the earning of specific items of income. liability and deducted from equity when they are All expenditure incurred in the running of the approved by the Company’s shareholders. Interim business and in maintaining the Property, Plant dividends are deducted from equity when they are and Equipment in a state of efficiency has been declared and no longer at the discretion of the charged to income in arriving at the Profit/(Loss)
Company. Dividends for the year that are approved for the year. after the Reporting date are disclosed as an event b. For the purpose of presentation of Statement after the Reporting date. of Comprehensive Income the Directors are of the opinion that function of expenses method (II) GOVERNMENT GRANTS presents fairly the elements of the Group’s Government grants are recognised where there performance, and hence such presentation is reasonable assurance that the grant will be method is adopted. received and all attached conditions will be complied with. When the grant relates to an VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 provisions oftheInlandRevenue ActNo.10of2006. are enjoying tax exemptions inaccordance withthe The statutory tax rates ofbelow companies which appropriate. interpretation andestablishes provisions where in whichapplicable tax regulations are subjectto taken inthetax returns withrespect to situations The Managementperiodically evaluates positions not intheStatement ofComprehensive Income. directly inequityisrecognised inequityand Current income tax relating to items recognised Reporting date. that are enacted orsubstantially enacted bythe and tax laws usedto compute theamountare those tax payable inrespect ofprioryears. Thetax rates respect ofthecurrent year andanyadjustment to to theCommissioner General ofInland Revenue in of amounts expected to berecovered from orpaid Current income tax assets andliabilitiesconsist CURRENT INCOMETAX (IV) TAXES export profit. tax at28%onlocal sales and12%onqualified The profits ontheexisting business isliable for commencing from theYear ofAssessment 2012/13. is exempted for income tax for seven years amendments, theprofits from new undertakings Amendment ActNo.10of2006andits subsequent In terms ofSection17(A)theInlandRevenue ROYAL PORCELAIN(PVT)LIMITED from theYear of Assessment 2012/13. income tax for aperiodoffive years, commencing Swisstek AluminiumLimited isexempted from SWISSTEK ALUMINIUMLIMITED
assessment at therate of15%. of theenterprise shallbecharged for anyyear of of tax exemption periodtheprofits andincome of Assessment 2016/17andafter theexpiration earlier. Thetax expiration periodexpires onYear of commercial operations whichever year is years reckoned from thedate ofcommencement or anyyear ofassessment notlater thantwo which theCompanycommences to make profits period ofsixyears from theYear ofAssessment in and recovery ofincome tax shallnotapply for a Revenue Actrelating to theimposition,payment Section 17oftheBoard ofInvestment Law, Inland entered into withBoard ofInvestment under Pursuant to agreement dated 07thJuly 2006 ROCELL BATHWARELIMITED statutes. pays suchtaxes in accordance withtherespective and NationBuilding Tax (NBT). TheCompany/Group Turnover basedtaxes includeValue AddedTax (VAT) TURNOVER BASEDTAXES four years. set-off against theincome tax payable for further unclaimed liabilitycan becarried forward and is deductible from theincome tax liability. Any the liable turnover atspecifiedrates. ESCpaid Charges ActNo.13of2006,ESCispayable on As pertheprovisions oftheEconomic Service ECONOMIC SERVICECHARGE(ESC) subsequent amendmentthereto. with Value AddedTax ActNo.14of2002and VAT onfinancialservices iscalculated inaccordance VAT ONFINANCIALSERVICES
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Revenue, expenses and assets are recognised net it is probable that taxable profits will be available
FINANCIAL FINANCIAL REPORTS of the amount of sales tax except where the sales against which the deductible temporary differences tax incurred on a purchase of assets or services and the carry forward of unused tax credits and is not recoverable from the taxation authorities in unused tax losses can be utilised, except: which case the sales tax is recognised as a part a. When the deferred tax asset relating to the of the cost of the asset or part of the expense deductible temporary difference arises from items as applicable and receivable and payable are the initial recognition of an asset or liability in a stated with the amount of sales tax included. The transaction that is not a business combination amount of sales tax recoverable and payable to and, at the time of the transaction, affects taxation authorities is included as a part of other neither the accounting profit nor taxable receivables and other payables in the Statement of profit or loss Financial Position. b. In respect of deductible temporary differences
DEFERRED TAX associated with investments in subsidiaries, associates and interests in joint ventures, Deferred tax is provided using the liability method deferred tax assets are recognised only to the on temporary differences at the Statement of extent that it is probable that the temporary Financial Position date between the tax bases of differences will reverse in the foreseeable future assets and liabilities and their carrying amounts and taxable profit will be available against which for financial reporting purposes. Deferred tax the temporary differences can be utilised. liabilities are recognised for all taxable temporary differences, except: The carrying amount of a deferred tax asset is a. When the deferred tax liability arises from the reviewed at each Statement of Financial Position NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES initial recognition of goodwill or an asset or date and reduced to the extent it is no longer liability in a transaction that is not a business probable that sufficient taxable profit will be combination and, at the time of the transaction, available to allow all or part of the deferred tax affects neither the accounting profit nor taxable asset to be utilised. Unrecognised deferred tax profit or loss. assets are reassessed at each Reporting date and b. In respect of taxable temporary differences are recognised to the extent that is probable that
associated with investments in subsidiaries, future taxable profit will allow the deferred tax associates and interests in joint ventures, when asset to be recovered. the timing of the reversal of the temporary differences can be controlled and it is probable Deferred tax assets and liabilities are measured that the temporary differences will not reverse in at the tax rate that are expected to apply in the the foreseeable future. year when the assets are realised or the liabilities are settled, based on tax rates and tax laws that Deferred tax assets are recognised for all have been enacted or subsequently enacted at the deductible differences. Carry forward of unused tax Statement of Financial Position date. credits and unused tax losses, to the extent that VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 3.3.2 SEGMENT REPORTING period. number ofordinary shares outstanding duringthe shareholders oftheGroup bytheweighted average dividing theprofit orloss attributable to ordinary for its ordinary shares. BasicEPSiscalculated by The Group presents basicearningsper share (EPS) 3.3.1 EARNINGS PER SHARE 3.3 GENERAL of acquisition are alsotreated ascash equivalents. maturities i.e.three monthsorless from thedate bank overdrafts andinvestments withshort equivalents comprise cash inhand,cash atbank, 7- “Statement ofCashFlows”. Cashandcash the indirect method,asstipulated inLKAS The cash flows statement isprepared using 3.2.3 STATEMENT OF CASH FLOWS than goodwill. Plant andEquipment,intangible assets other incurred duringtheperiodto acquire Property, basis. Segmentcapital expenditure is thetotal cost as thosethatcan beallocated onareasonable items directly attributable to asegmentaswell results thatare reported to theChairman include discrete financialinformation isavailable. Segment segment andassess its performance, andfor which decisions aboutresources to beallocated to the reviewed regularly bytheChairmanto make All operating segments’ operating results are with anyoftheGroup’s othercomponents. revenues andexpenses thatrelate to transactions may earnrevenues andincurexpenses, including that engagesinbusiness activitiesfrom whichit An operating segment isacomponent oftheGroup Financial Statements. Company andmay have animpactonthefuture the accounting policiescurrently adopted bythe Statements. ThoseSLFRSwillhave aneffect on not beenappliedinpreparing theseFinancial that have aneffective date inthefuture andhave Institute ofChartered Accountants ofSri Lanka The following SLFRShave beenissued byThe 3.4 STANDARDS ISSUED BUT beginning onorafter 01st January2016. This Standard iseffective for the annualperiods such balances, willnot beaffected bythisStandard. apply SLFRS,orthatdonototherwiserecognise Statements ofrate regulated entitiesthatalready Financial Statements. Consequently, theFinancial regulatory deferral account balances intheir time adopters ofSLFRSthat already recognise The scope ofthisStandard islimited to first- adoption permitted. beginning onorafter 1st January2018,withearly SLFRS 9iseffective for annualreporting periods derecognition offinancialinstruments from LKAS39. carries forward theguidance onrecognition and general hedge accounting requirements. Italso calculating impairmentonfinancialassets, andnew instruments, anew expected credit loss modelfor on theclassification andmeasurement offinancial Measurement. SLFRS9includesrevised guidance 39 FinancialInstruments: Recognition and SLFRS 9replaces theexisting guidance inLKAS SLFRS 14 – REGULATORY DEFERRAL ACCOUNTS CLASSIFICATION AND MEASUREMENT SLFRS 9 -FINANCIALINSTRUMENTS: NOT YET EFFECTIVE
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SLFRS 15 – ‘REVENUE FROM CONTRACTS WITH CUSTOMERS’ FINANCIAL FINANCIAL REPORTS SLFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. Under SLFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in SLFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under SLFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1st January 2018 with early adoption permitted. The Company is currently assessing the impact of SLFRS 15 and plans to adopt the new Standard on the required effective date.
AMENDMENT TO LKAS 41 – AGRICULTURE AND LKAS 16 – PROPERTY, PLANT AND EQUIPMENT This amendment define a bearer plant and NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES accordingly, require bearer plants to be accounted for as Property, Plant and Equipment and include within the scope of LKAS 16, instead of LKAS 41. Entities are required to apply the amendments for annual period beginning on or after 01st January
2016. However, this amendment has no impact on Group's current accounting treatment on recognition and measurement. Since, currently the group continued to recognise and measure bearer plant in accordance with LKAS 16. Further, the above amendment requires entity to recognise agricultural produce at fair value separately from its bearer plants prior to harvest. Determining the point at which to recognise the agricultural produce separately will require judgment. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 4.1 FINANCIAL ASSETS – AVAILABLE-FOR-SALES 4. FINANCIAL INVESTMENTS Soy Foods (F&W)PLC Lanka MilkFoods PLC Keells Food Products PLC Beverages, Food andTobacco Seylan BankPLC Merchant BankPLC Commercial BankofCeylon PLC Bank,Finance andInsurance Hunter PLC Stores andSupplies Softlogic Finance PLC Trading Waskaduwa BeachResort PLC Palm Garden Hotels PLC Hotel Sigiriya PLC Aitken Spence Hotel Holdings PLC Hotels andTravels SamsonInternational PLC Dankotuwa Porcelain PLC Ceylon Grain Elevators PLC Central Industries PLC BlueDiamondJewellery PLC Manufacturing Hayleys PLC Diversified Holding Quoted Investments Total Waskaduwa BeachResorts PLC Hayleys PLC Quoted Investments As at 31stMarch, GROUP COMPANY 33,643,581 31,460,997 31,460,997 2,182,584 2,090,000 2,183,806 Number of 32,512 5,899 4,092 5,500 2,538 Shares 500 272 700 308 22 61 10 36 44 74 722,688,511 536,260,889 640,082,179 103,821,290 103,821,290 536,561,134 2016 80,047,000 619,395 221,082 351,094 629,750 218,268 85,000 34,136 67,200 16,324 8,030 4,005 1,076 3,032 622 74 Rs. 2,182,584 2,182,584 2,090,000 2,183,806 Number of 14,450 5,363 5,500 Shares 500 270 700 308 61 22 10 36 44 74 – – - 730,370,034 654,775,200 654,775,200 655,141,800 2015 72,941,000 557,752 161,840 770,000 54,150 44,659 61,530 20,636 7,165 3,900 1,652 1,672 964 103 – – Rs. -
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As at 31st March, 2016 2015 Number of Number of FINANCIAL FINANCIAL REPORTS Shares Rs. Shares Rs. Unquoted Investments Credit Information Bureau 1,047 104,700 1,047 104,700 Finance House Association 20,000 200,000 20,000 200,000 304,700 304,700 Total 722,993,211 730,674,734
4.2 FINANCIAL ASSETS – FAIR VALUE THROUGH PROFIT OR LOSS
As at 31st March, 2016 2015 Number of Number of Shares Rs. Shares Rs. COMPANY Quoted Investments Lanka Ceramics PLC 1,000,000 130,000,000 1,000,000 116,600,000 The Kingsbury PLC 3,216,146 48,242,190 2,242,048 36,321,178 Citrus Leisure PLC 8,672,846 58,108,068 8,672,810 111,879,713 Total 236,350,258 264,800,891
GROUP Quoted Investments Bank, Finance and Insurance Softlogic Finance PLC 8 310 1,414,414 49,363,049 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Seylan Bank PLC (Non-Voting) 93,032 5,861,016 93,032 5,898,228 Food Processing Bairaha Farms PLC 17,600 2,534,400 17,600 1,907,840 Manufacturing Lanka Walltiles PLC – – 19,740 1,891,092 Kelani Cables PLC – – 7,000 560,000 Hotels and Travels Aitken Spence PLC 225,000 16,537,500 225,000 22,387,500 Hotel Developers (Lanka) PLC – – 71,200 6,749,760 Royal Palms Beach Hotels PLC 4,299 131,120 4,299 154,764 John Keells Hotels PLC 45,009 540,108 45,009 643,629 The Kingsbury PLC 3,216,146 48,242,190 2,242,048 36,321,178 Citrus Leisure PLC 11,441,122 77,209,173 11,441,086 147,603,806 Citrus Leisure PLC - Warrant 2015 – – 10 2 Waskaduwa Beach Resorts PLC 1,400,145 4,620,479 1,400,145 7,140,740 Serendib Hotels PLC 16,000 440,000 16,000 448,000 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 fair value. Hence theabove carrying amounts ofGroup's financialinstruments are reasonable approximation oftheir current financialinstruments. variable-rate borrowings approximate attheircarrying amounts dueto theshortterm maturitiesofthese Cash andshortterm deposits, trade receivables, trade payables andotherfinancialliabilities,long term participant would make whenvaluing the financialinstruments. at fair value usingvaluation techniques. Theseincorporate theGroup estimate ofassumptions thatamarket The following isadescriptionofhow fair values are determined for financialinstruments thatare recorded 4.3 FAIR VALUE OF FINANCIAL INSTRUMENTS Bank ofSriLanka andFair value ofquoted equityshares isbasedonprice quotations attheReporting date. that useobservable data. Government debtsecuritiesare valued usingyield curves publishedbytheCentral securities are valued usingvaluation techniques orpricingmodels.Theseassets are valued usingmodels Financial Investments -Available-for-Sale, primarily consist ofequitysecuritiesandGovernment debt Fair value ofquoted equityshares isbasedonprice quotations atthereporting date. FINANCIAL ASSETS – AVAILABLE-FOR-SALE FINANCIAL ASSETS – FAIR VALUE THROUGH PROFIT OR LOSS ASSUMPTIONS WERE USED TO ESTIMATE THE FAIR VALUE THE FOLLOWING METHODS AND Total MBSL Insurance CompanyLimited Unquoted Investments TheLanka Hospital Corporation PLC HealthCare Ascot Holding PLC Free Lanka Capital Holdings Limited Browns Investments PLC Diversified Holdings As at 31stMarch,
4,666,667 1,161,600 Number of 522,619 45,519 30,000 Shares 161,225,086 169,891,753 2016 2,321,469 8,666,667 1,393,920 714,000 679,403 Rs. 4,666,667 1,161,600 Number of 522,619 45,519 30,000 Shares 286,660,546 295,327,213 2015 1,816,208 1,080,000 8,666,667 1,858,560 836,190 Rs.
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DETERMINATION OF FAIR VALUE AND FAIR VALUE HIERARCHY
FINANCIAL FINANCIAL REPORTS The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques.
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
As at 31 March 2016, the Group held the following financial instruments carried at fair value in the Statement of Financial position: Group As at 31st March 2016 Level 1 Level 2 Level 3 Total Rs. Rs. Rs. Rs. Financial Assets Financial Assets - Fair Value Through Profit or Loss Quoted Equities 161,225,086 – – 161,225,086 Unquoted Equities – – 8,666,667 8,666,667
Financial Assets - Available-for-Sale Quoted Equities 722,688,511 – – 722,688,511 Unquoted Equities – 304,700 – 304,700 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Total 883,913,597 304,700 8,666,667 892,884,964
As at 31st March 2015 Level 1 Level 2 Level 3 Total Rs. Rs. Rs. Rs. Financial Assets Financial Assets - Fair Value Through Profit or Loss Quoted Equities 286,660,546 – – 286,660,546 Unquoted Equities – – 8,666,667 8,666,667
Financial Assets - Available-for-Sale Quoted Equities 730,370,034 – – 730,370,034 Unquoted Equities – 304,700 – 304,700 Total 1,017,030,580 304,700 8,666,667 1,026,001,947 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 5. LOANS AND RECEIVABLES 5.1 ALLOWANCE FOR IMPAIRMENT LOSSES Debentures Gross AmountofLoans Collectively Assessed for theImpairment before DeductingtheIndividually Assessed ImpairmentAllowance Gross AmountofLoans Individually Determined to beImpaired, Total Collective Impairment Individual Impairment 5.1.2 At theendofYear Interest Accrued onImpaired LoansandReceivables Amounts Written Off Charge/(Reversal) for theYear At thebeginningofYear 5.1.1 Net LoansandReceivables Less :Allowance for ImpairmentLosses (Note 5.1) Vehicle Loans Power Drafts Factoring Receivable Margin Trading Quick Loans Term Loans Real Estate Loans Gold Loans Debentures 13,164,981,736 27,548,132,445 26,195,978,605 26,824,169,365 27,548,132,445 1,352,153,840 5,348,694,709 1,509,408,857 6,506,958,677 (723,963,080) (723,963,080) 375,000,000 375,000,000 375,000,000 723,963,080 634,805,654 723,963,080 676,939,363 558,513,684 (14,425,779) 89,157,426 61,449,496 69,864,158 12,558,183 2,152,442 2016 2016 2016 Rs. Rs. Rs. - Company 10,436,665,984 23,314,700,770 22,094,622,481 22,637,761,408 23,314,700,770 1,220,078,289 7,449,736,527 3,839,069,484 Group Group (676,939,362) (676,939,362) 375,000,000 375,000,000 375,000,000 676,939,362 109,155,057 567,784,305 676,939,362 185,850,697 516,642,315 544,935,747 605,831,788 (27,067,804) 54,808,517 1,514,154 5,367,759 3,284,964 2015 2015 2015 Rs. Rs. Rs.
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The recorded loans and receivables that were impaired at 31st March 2016 and 2015 were 3.60% of
FINANCIAL FINANCIAL REPORTS receivables, and 3.68% of receivables, respectively. Lease Rentals Receivable and Stock Out on Hire that were impaired at 31st March 2016 and 2015 were 4.39% of receivables, and 7.56% of receivables, respectively.
Group 2016 2015 Rs. Rs. 5.1.3 Gold Loans 28,630,528 55,961,947 Vehicle Loans 249,131,282 254,240,384 Quick Loans 217,619 410,717 Margin Trading 52,064,238 51,935,662 Term Loans 235,458,035 174,908,403 Power Drafts 54,151,072 41,922,039 Factoring Receivable 104,310,305 97,560,210 Total 723,963,080 676,939,362
5.2 TERM LOANS INCLUDE LOANS GRANTED TO COMPANY OFFICERS, THE MOVEMENT OF WHICH IS AS FOLLOWS
Group 2016 2015 Rs. Rs. At the beginning of the Year 81,281,511 6,402,791 Add: Loans granted during the Year 227,502,752 79,603,957
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Less: Repayments during the Year (30,756,372) (4,725,237) At the end of the Year 278,027,891 81,281,511
5.3 CONTRACTUAL MATURITY ANALYSIS OF LOANS AND RECEIVABLES
As at 31st March 2016 Within One Year 1-5 Years Over 5 Years Total Rs. Rs. Rs. Rs.
Debentures 225,000,000 150,000,000 – 375,000,000 Gold Loans 13,164,981,736 – – 13,164,981,735 Vehicle Loans 2,379,617,315 2,927,877,379 41,200,015 5,348,694,709 Medium and Short Term Loans 1,999,942,909 578,872,820 – 2,578,815,729 Mortgage Loans 894,719,995 2,112,151,349 921,271,606 3,928,142,950 Quick Loans 12,299,037 259,146 – 12,558,183 Power Drafts 1,084,601,337 424,807,519 – 1,509,408,857 Margin Trading 69,864,158 – – 69,864,158 Factoring Receivable 554,449,223 4,064,461 – 558,513,684 Real Estate Loans 2,152,442 – – 2,152,442 Gross Loans and Receivables 2,038,762,815 6,198,032,673 962,471,620 27,548,132,445 VALLIBEL ONE PLC ANNUAL REPORT Allowance for Impairment Losses (Note 5.1.3) (723,963,080) Net Loans and Receivables 26,824,169,365 2015 | 16 6. LEASE RENTALS RECEIVABLE AND STOCK OUT ON HIRE contractual maturities. Loans andreceivables are prepayable, soprepayments may cause actualmaturitiesto differ from Total NetRentals Receivable (Note 6.2 (a)&6.2(b)) Allowance for ImpairmentLosses (Note 6.1) Rentals Received inAdvance Net rentals receivable Unearned Income - Amounts Receivable from Hirers - LeaseRentals Gross Rentals Receivables Net LoansandReceivables Allowance for ImpairmentLosses (Note 5.1.3) Gross LoansandReceivables Real Estate Loans Factoring Receivable Margin Trading Power Drafts Quick Loans Mortgage Loans Medium andShortTerm Loans Vehicle Loans Gold Loans Debentures As at 31stMarch 2015 10,436,665,984 15,905,543,466 1,052,954,528 3,002,445,324 WithinOneYear 535,539,156 134,208,105 680,960,323 54,808,517 3,054,208 4,907,320 – Rs. 1,338,562,749 4,415,959,583 6,986,723,546 471,623,683 375,489,745 375,000,000 9,396,591 230,756 460,439 1-5Years – – Rs. (13,054,924,139) 45,102,039,180 47,028,291,515 60,083,215,654 56,665,353,550 (1,926,252,336) (1,917,795,205) 3,417,862,104 390,633,266 422,433,760 31,331,620 (8,457,131) Over 5Years 468,873 2016 – – – – – – – Rs. Rs. 10,436,665,984 23,314,700,770 22,637,761,408 (10,082,076,108) 2,410,156,338 1,428,913,146 7,449,736,527 33,691,338,393 35,689,316,643 45,771,392,751 38,033,006,105 (1,997,978,251) (1,990,693,724) Group (676,939,362) 7,738,386,646 544,935,747 605,831,788 375,000,000 54,808,517 3,284,964 5,367,759 (7,284,527) Total 2015 Rs. Rs.
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6.1 ALLOWANCE FOR IMPAIRMENT LOSSES
FINANCIAL FINANCIAL REPORTS Group 2016 2015 Rs. Rs. At the beginning of the Year 1,990,693,724 1,238,264,799 Charge for the Year 345,823,896 1,621,737,090 Amounts Written Off (418,722,415) (870,693,597) Effect of Interest Unwinding – 1,385,432 At the end of the Year 1,917,795,205 1,990,693,724
Individual Impairment 1,577,761,902 1,804,560,595 Collective Impairment 340,033,303 186,133,129 1,917,795,205 1,990,693,724 Gross Amount of Loans Individually Determined to be Impaired, before Deducting the Individually Assessed Impairment Allowance 2,063,714,137 2,697,097,024 Gross Amount of Loans Collectively Assessed for the Impairment 44,964,577,378 32,992,219,619 47,028,291,515 35,689,316,643
6.2 (a) AS AT 31ST MARCH 2016
Lease Hire Purchase Within 1-5 Over Total Within 1-5 Over Total one year years 5 years one year years 5 years Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Gross Rentals Receivables 22,975,143,108 33,681,865,006 8,345,435 56,665,353,550 1,914,035,067 1,499,513,958 4,313,079 3,417,862,104
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Unearned Income (6,190,912,232) (6,323,327,964) (650,225) (12,514,890,422) (338,765,753) (201,098,189) (169,775) (540,033,717) Net Rentals Receivables 16,784,230,876 27,358,537,042 7,695,210 44,150,463,128 1,575,269,314 1,298,415,769 4,143,304 2,877,828,387
Rentals Received in Advance (8,457,131) – Allowance for Impairment Losses (1,552,549,785) (365,245,420) Total Net Rentals
Receivable 42,589,456,212 2,512,582,968 Total Net Rentals Receivable from Lease and Hire Purchase 45,102,039,180 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 7. OTHER FINANCIAL ASSETS 6.3 LEASE AND HIRE PURCHASE FACILITIES GRANTED TO COMPANY OFFICERS, THE MOVEMENT OF WHICH IS AS FOLLOWS: Purchase LeaseandHire Receivable from Total NetRentals Receivable Total NetRentals ImpairmentLosses Allowance for inAdvance Rentals Received Receivables Net Rentals Unearned Income Receivables Gross Rentals 6.2 (b) AS AT 31ST MARCH 2015 Others Investment inFixed Deposits Insurance Premium Receivables Treasury Bills/Repurchases As attheendofYear Less: Repayments duringtheYear Add: LoansGranted duringtheYear As atthebeginningofYear 13,047,528,317 17,603,492,108 (4,555,963,791) one year Within Rs. 16,538,597,679 20,424,295,501 (3,885,697,822) years Rs. 1-5 Lease 4,848,407 5,218,496 (370,089) 5 years Over Rs. 28,034,699,824 29,590,974,402 38,033,006,105 (1,548,990,052) (8,442,031,703) (7,284,527) Total Rs. 2,603,099,346 3,460,234,730 (857,135,384)
one year Within Rs. 3,476,148,736 4,257,564,812 (781,416,076) 4,360,564,843 3,343,819,535 819,319,827 141,511,198 168,628,400 Hire Purchase years (89,470,010) 28,797,081 94,924,872 42,883,684 1-5 Rs. 2016 2016 19,094,159 20,587,106 Rs. Rs. (1,492,945) 5 years Over Rs. 2,265,837,328 Group 1,258,985,351 875,190,762 141,511,198 134,211,105 129,742,674 (37,487,983) 33,691,338,393 (1,640,044,406) 5,656,638,569 6,098,342,241 7,738,386,648 44,788,076 1,918,541 (441,703,672) 2015 2015 Total Rs. Rs. – Rs.
VALLIBEL ONE PLC 133 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 134
8. TRADE AND OTHER DEBTORS, DEPOSITS AND PREPAYMENTS
FINANCIAL FINANCIAL REPORTS Company 2016 2015 Rs. Rs. Deposits 15,072,664 40,022,664 Interest Receivable 57,705,113 36,819,401 Other Advances 13,582,302 10,715,401 Other Receivable 899,576 812,996 87,259,655 88,370,462
Group 2016 2015 Rs. Rs. Trade Receivables 4,155,461,554 4,179,142,273 Deposits 125,179,065 117,584,451 Other Advances 60,831,302 48,666,401 Interest Receivables 46,841,493 25,853,064 Other Receivables 1,001,525,341 708,285,414 5,389,838,754 5,079,531,604
9. OTHER NON-FINANCIAL ASSETS
Company 2016 2015 Rs. Rs. NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Advances and Prepayments 1,204,936 204,808 1,204,936 204,808
Group 2016 2015 Rs. Rs.
Receivable From Inland Revenue Department 11,896,945 35,441,828 Real Estate Stock 161,181,726 317,176,363 Advance for Vehicle Stock 118,631,840 527,494,240 Advances & Prepayments 1,266,686,914 923,329,816 Gold Stock 5,563,739 6,203,219 Stationery Stock 10,243,935 7,568,046 Sundry Debtors 4,000,891 841,837 Prepaid Staff Cost 3,497,384 6,084,302 Receivables and Others 78,072,092 23,998,729 Advance Company Tax Receivable 27,285,000 27,285,000 1,687,060,466 1,875,423,381 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 10. INVESTMENT IN SUBSIDIARIES Total Provision for Impairment Greener Water Limited Delmege Limited Unquoted Investments L BFinance PLC Royal Ceramics Lanka PLC Quoted Investments Greener Water Limited Delmege Limited Unquoted Investments L BFinance PLC Royal Ceramics Lanka PLC Quoted Investments Company 14,554,061,670 16,501,650,646 1,947,588,976 1,592,025,326 5,325,333,098 9,228,728,572 368,063,650 (12,500,000) 100 2016 2016 2016 51 51 51 Rs. Rs. 14,554,061,670 16,501,650,646 Holding (%) 1,947,588,976 1,592,025,326 5,325,333,098 9,228,728,572 Cost Cost 368,063,650 (12,500,000) 100 2015 2015 2015 51 51 51 Rs. Rs. 13,067,712,000 15,015,300,976 1,947,588,976 1,592,025,326 7,417,452,000 5,650,260,000 368,063,650 (12,500,000) 36,673,000 70,642,400 56,502,600 253,314 Number ofShares 2016 2016 2016 Rs. Rs. Market Value Directors Valuation 11,686,505,920 13,634,094,896 1,947,588,976 1,592,025,326 5,301,712,120 6,384,793,800 368,063,650 (12,500,000) 36,673,000 35,321,200 56,502,600 253,314 2015 2015 2015 Rs. Rs.
VALLIBEL ONE PLC 135 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 136
11. INVESTMENT IN ASSOCIATES
FINANCIAL FINANCIAL REPORTS 11.1 COMPANY
Number of Shares 2016 2015 2016 2015 % % Quoted Investments Sampath Bank PLC 14.95 14.95 25,765,740 25,107,454 Waskaduwa Beach Resorts PLC – 20.22 – 31,460,997 The Fortress Resorts PLC 18.02 18.02 19,977,345 19,977,345
Cost Market Value 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Sampath Bank PLC 6,987,009,370 6,987,009,370 5,823,057,240 6,352,185,862 Waskaduwa Beach Resorts PLC – 317,762,171 – 160,451,085 The Fortress Resorts PLC 405,891,320 405,891,320 259,705,485 303,655,644 7,392,900,690 7,710,662,861 6,082,762,725 6,816,292,591
11.2 GROUP
Waskaduwa Beach Sampath The Fortress Total Resort PLC Bank PLC Resorts PLC Rs. Rs. Rs. Rs. Balance at the 31st March 2014 321,781,392 8,047,058,826 – 8,368,840,218 Transfers from AFS/FVTPL Investments – – 369,959,427 369,959,427 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Investments made during the Year – – 125,430,731 125,430,731 Share of Profit Net of Tax and Dividend (72,901,043) 583,323,289 41,709,219 552,131,465 Share of Other Comprehensive Income 7,973,450 (210,236,564) (91,795) (202,354,910) Share of Other Equity Items – 973,467 – 973,467 Balance at the 31st March 2015 256,853,799 8,421,119,018 537,007,582 9,214,980,398 Investments made during the Year – 1,130 – 1,130
Share of Profit Net of Tax and Dividend (38,058,238) 853,164,602 21,272,270 836,378,634 Share of Other Comprehensive Income – (16,003,241) (73,696) (16,076,938) Share of Other Equity items – (116,338,434) – (116,338,434) Loss on disposal of Investments (39,467,878) – – (39,467,878) Transfer to Available-for-Sale Financial Assets (179,327,683) – – (179,327,683) Balance as at 31st March 2016 – 9,141,943,075 558,206,155 9,700,149,230 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 11.4.1 STATEMENT OF PROFIT OR LOSS 11.4 SUMMARISED FINANCIAL INFORMATION OF EQUITY the investment inWaskaduwa BeachResort anavailable-for-sale FinancialAsset. 31st December 2015.Hence, theCompanydiscontinued theuseofequitymethodaccounting andfair value 15.59% form 20.22%.Therefore Waskaduwa BeachResort isnotanAssociate oftheGroup witheffect from has notsubscribedto suchrights issue theholding percentage in Waskaduwa BeachResort reduced to Consequent to thenew share issue ofWaskaduwa BeachResort PLC (Rights Issue) where theCompany 11.3 DEEMED DISPOSAL OFACCOUNTED EQUITY INVESTEES 11.4.2 STATEMENT OF FINANCIAL POSITIONS ACCOUNTED INVESTEES HAS NOT BEEN ADJUSTED FOR GROUP SHARE, NetAssets Current Liabilities Non-Current Liabilities Current Assets Non-Current Assets Other Comprehensive Income Profit after Tax Income Tax Value AddedTax onFinancialServices Finance Cost Expenses (IncludesOperating, Administration &Distribution expenses) Income (IncludesOtherIncome, Finance Income) Cost ofSales Revenue
452,800,178,875 520,481,542,139 (17,719,771,964) (23,328,922,785) 10,071,782,124 43,225,925,792 41,243,385,404 78,660,499,183 52,222,521,323 (3,316,363,486) (2,051,834,035) 6,718,285,147 (162,530,499) (67,947,054) 2016 2016 Rs. Rs. 363,669,458,473 363,251,347,082 (14,050,728,760) (21,480,790,217) 54,979,749,063 42,202,174,738 37,589,891,340 92,151,529,012 (1,367,248,940) (2,284,116,122) (1,730,592,406) 5,400,115,730 2,908,368,490 (164,199,994) 2015 2015 Rs. Rs.
VALLIBEL ONE PLC 137 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 138
11.4.3 COMMITMENTS AND CONTINGENCIES
2016 2015 FINANCIAL FINANCIAL REPORTS Rs. Rs. Capital Expenditure Approved and Contracted for 76,247,000 117,527,000 Approved and but not Contracted for 108,528,000 141,553,000
Commitments Commitment for Unutilised Facilities 98,004,556,000 51,227,794,715 Finance Lease Commitment in Present Value Term – 12,451,958 Operating Lease Commitments – 58,259,732
Contingent Liabilities 72,778,944,000 106,358,179,897
12. DEFERRED TAX ASSETS (LIABILITIES)
Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs. At the beginning of the Year (4,090,703) (3,601,776) (244,214,067) (84,260,125) Recognised in Profit or Loss 1,074,356 (495,442) (288,927,242) (152,089,923) Recognised in Other Comprehensive Income 9,766 6,514 (219,132,263) 15,058,897 Deferred Tax on Disposal of Subsidiaries – – – (22,922,917) At the end of the Year (3,006,581) (4,090,703) (752,273,572) (244,214,067)
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Deferred Tax Assets – – 469,734,310 495,294,985 Deferred Tax Liabilities (3,006,581) (4,090,703) (1,222,007,882) (739,509,051) (3,006,581) (4,090,703) (752,273,572) (244,214,067)
12.1 THE CLOSING NET DIFFERED TAX LIABILITY RELATE TO THE FOLLOWING:
Company Group
2016 2015 2016 2015 Rs. Rs. Rs. Rs. Property, Plant and Equipment (3,963,313) (4,754,035) (2,072,308,669) (1,482,165,384) Defined Benefit Obligation 956,732 663,332 253,093,142 233,538,841 Provisions – – 38,321,000 278,753,322 Unutilised Tax Losses – – 1,028,620,955 725,659,153 (3,006,581) (4,090,703) (752,273,572) (244,214,067) VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 14. INVENTORIES 13. AMOUNTS DUE FROM RELATED PARTIES Slow-Moving Inventory Less: Provision for Obsolete and Goods inTransit Finished Goods Seat Covers andAccessories Harvested crops Work InProgress Spares andConsumables Construction Consumables Raw Materials Queensberry Leisure Limited Delmege Limited Greener Water Limited Subsidiary Subsidiary Relationship Company Related 251,709,172 251,709,172 2016 2016 – – – – – – – – – – – Rs. Rs. Company 156,630,119 189,853,664 11,735,655 21,487,890 2015 2015 – – – – – – – – – Rs. Rs. 8,980,862,912 8,670,793,592 4,674,012,881 1,746,998,304 1,549,003,059 (310,069,320) 542,301,951 254,961,320 142,645,000 56,238,297 14,702,100 2016 2016 – – – – Rs. Rs. 9,027,509,149 8,792,756,134 5,479,263,422 1,515,159,127 Group (234,753,015) 302,063,118 410,421,235 280,617,367 831,940,131 196,866,000 11,735,655 11,735,655 11,178,749 2015 2015 – – Rs. Rs.
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15. INTANGIBLE ASSETS
FINANCIAL FINANCIAL REPORTS Group Software Brand Name Goodwill Total Rs. Rs. Rs. Rs. Cost As at 31st March 2014 295,509,197 904,891,300 12,313,661,197 13,514,061,694 Acquired during the Year 71,216,773 – 2,031,800 73,248,573 Disposal of Subsidiaries (26,014,415) – – (26,014,415) As at 31st March 2015 340,711,555 904,891,300 12,315,692,997 13,561,295,852 Acquired during the Year 41,295,698 – – 41,295,698 Effect of Change in Exchange Rate – – 171,200 171,200 As at 31st March 2016 382,007,253 904,891,300 12,315,864,197 13,602,762,750
Amortisation As at 31st March 2014 70,614,812 154,585,598 96,524,136 321,724,546 Disposal during the Year (1,903,942) – – (1,903,942) Charge for the Year 23,179,300 45,244,566 – 68,423,866 As at 31st March 2015 91,890,170 199,830,164 96,524,136 388,244,470 Charge for the Year 38,690,564 45,244,565 – 83,935,129 As at 31st March 2016 130,580,734 245,074,729 96,524,136 472,179,599 Net Book Value Net Book Value as at 31st March 2015 248,821,385 705,061,136 12,219,168,861 13,173,051,382 Net Book Value as at 31st March 2016 251,426,519 659,816,571 12,219,340,061 13,130,583,151 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES
15.1 GOODWILL Goodwill allocated through business combination, has been allocated to four Cash Generating Units (CGU) for impairment testing as follows: 2016 2015 Rs. Rs.
Royal Ceramic Lanka PLC and its Subsidiaries 7,446,877,764 7,446,706,564 L B Finance PLC 3,966,204,093 3,966,204,093 Greener Water Limited 3,419,869 3,419,869 Delmege Limited and its Subsidiaries 802,838,335 802,838,335 12,219,340,061 12,219,168,861
The recoverable amount of all CGU's have been determine based on the fair value less to cost to sell or the value in use (VIU) calculation. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 16.1 COMPANY 16.1 COMPANY 16. PROPERTY, PLANT AND EQUIPMENT rates. Cashflows beyond thefive years periodare extrapolated using0%growth rate. growth rates ofonefour years immediately subsequentto thebudgeted year basedonindustry growth Volume growth hasbeenbudgeted onareasonable andrealistic basisbytaking into account to account the projected economic conditions. The basisusedto determine thevalue assigned to budgeted cost inflation,istheinflationrate basedon The discount rate usedistheriskfree rate, adjusted bytheadditionofanappropriate riskpremium. in theyear preceding thebudgeted year adjusted for projected market conditions. The basisusedto determine thevalue assigned to thebudgeted gross margins isthegross margins achieved VOLUME GROWTH DISCOUNT RATE GROSS MARGIN KEY ASSUMPTIONS USED IN VIU CALCULATION INFLATION As at31st March 2015 As at31st March 2014 Net BookValue Balance asat31st March 2015 Depreciation Charge for theYear Balance asat31st March 2014 Depreciation Balance asat31st March 2015 Additions Balance asat31st March 2014 Gross CarryingAmounts 14,112,490 18,834,394 16,120,828 2,713,566 4,164,159 9,948,331 Computers Rs. 12,388,578 32,475,632 32,439,632 3,246,961 9,141,617 & Fittings Furniture 36,000 Rs. 1,634,428 1,634,428 Equipments 163,443 417,486 580,929 Office – Rs. 1,582,948 3,328,642 7,914,740 7,914,740 4,911,590
Vehicles Motor – Rs. 28,865,605 35,273,551 22,836,077 60,859,193 58,109,627 31,993,588 2,749,566 9,157,511 Total Rs.
VALLIBEL ONE PLC 141 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 142
Computers Furniture Office Motor Total & Fittings Equipments Vehicles
FINANCIAL FINANCIAL REPORTS Rs. Rs. Rs. Rs. Rs. Gross Carrying Amounts Balance as at 31st March 2015 18,834,394 32,475,632 1,634,428 7,914,740 60,859,194 Additions 2,354,977 752,042 – 20,300,000 23,407,019 Balance as at 31st March 2016 21,189,370 33,227,674 1,634,428 28,214,740 84,266,212
Depreciation Balance as at 31st March 2015 14,112,490 12,388,579 580,929 4,911,591 31,993,589 Depreciation Charge for the Year 2,539,902 3,294,472 163,443 2,649,615 8,647,433 Balance as at 31st March 2016 16,652,393 15,683,052 744,372 7,561,205 40,641,022
Net Book Value As at 31st March 2015 28,865,605 As at 31st March 2016 43,625,191
16.2 GROUP GROSS CARRYING AMOUNTS
Balance Additions Increase/ Exchange Balance as at During the (Decrease)/ Transfers/ Translation As at 01.04.2015 Year Revaluation Disposals Difference 31.03.2016 Rs. Rs. Rs. Rs. Rs. Rs.
Cost/Valuation
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Land & Building 11,255,257,456 691,916,696 1,403,749,482 (31,820,230) – 13,319,103,404 Furniture & Fittings 787,941,667 115,722,158 – (3,564,449) 48,532 900,147,908 Equipment 1,219,231,416 109,225,888 – 170,396 762,844 1,329,390,543 Fire Protection Equipment 13,384,589 2,593,379 – – – 15,977,968 Motor Vehicles and Accessories 1,013,473,861 123,069,924 – (401,539,169) 692,080 735,696,696 Computer Hardware 397,717,545 65,108,467 – (9,015,622) – 453,810,389
Air Conditioning 127,548,082 43,597,949 – (1,587,052) – 169,558,978 Telephone System 72,989,862 3,009,400 – (358,753) – 75,640,509 Leasehold Improvements 563,741,657 165,162,499 – (1,363,845) – 727,540,312 Fixtures and Fittings 564,642,556 125,424,107 – – – 690,066,663 Water Supply Scheme 343,984,893 36,084,000 – 3,750,000 – 383,818,893 Electricity Distribution 30,086,845 204,900 – – – 30,291,745 Tools and Implements 666,400,794 87,490,901 – (13,280,000) 16,463 740,628,158 Plant and Machinery - Polishing Plant 10,693,221,834 423,138,395 – (1,460,000) – 11,114,900,230 Moulds 128,779,909 64,409 – – – 128,844,318 Household Item - Light 209,490 – – – – 209,490 Stores Buildings on Leasehold Land 317,886,106 48,435,096 – – 3,818,830 370,140,032 VALLIBEL ONE PLC ANNUAL REPORT Civil Construction 93,681,489 62,067,924 – – – 155,749,413 28,290,180,051 2,102,316,092 1,403,749,482 (460,068,725) 5,338,749 31,341,515,649 2015 | 16 CAPITAL WORK-IN-PROGRESS DEPRECIATION Leasehold Land Stores Buildings on Depreciable Assets Total Value of Motor Vehicle Equipment Communication Transport & Leasehold Land Plant &Machinery Assets onFinance Lease Capital Work-In-Progress Household Item -Light Molds Plant andMachinery Tools andImplements Electricity Distribution Water Supply Scheme Fixtures andFittings Leasehold Improvements Telephone System Air Conditioning Computer Hardware Accessories Motor Vehicles and Fire Protection Equipment Equipment Furniture andFittings Building 28,453,295,161 9,428,049,443 5,243,332,459 163,115,111 578,053,365 578,053,365 474,687,558 222,087,757 191,229,728 269,509,608 285,492,821 573,201,191 810,675,900 426,582,753 673,142,079 23,862,601 33,075,224 59,164,000 14,600,000 56,275,887 86,083,230 54,978,044 76,121,968 8,297,552 8,635,471 01.04.2015 01.04.2015 01.04.2015 128,723 Balance Balance Asat asat asat Rs. Rs. Rs. 1,521,757,769 2,129,312,092 946,655,113 946,655,113 118,772,913 135,744,104 104,646,175 673,120,434 139,840,152 18,636,575 26,996,000 13,883,000 13,113,000 10,443,963 80,007,850 21,777,000 41,495,016 82,892,637 10,087,678 26,016,931 54,037,962 1,259,971 2,952,275 Duringthe Duringthe Additions Additions 26,132 Charge for the Year Year Year – – Rs. Rs. Rs. 1,403,749,482 (376,028,000) (376,028,000) Revaluation Revaluation Revaluation Transfer to (Decrease)/ (Decrease)/ Increase/ Increase/ Reserves – – – – – – – – – – – – – – – – – – – – – – – Rs. Rs. Rs. (341,284,142) (511,749,492) (856,105,688) (856,105,688) (286,292,903) (51,680,767) (13,162,767) (38,518,000) (15,738,000) (15,856,846) (11,248,913) (1,345,486) (5,518,781) (1,739,725) (2,257,518) Transfers/ Transfers/ Disposals Disposals (927,217) (358,753) Disposal Transfer – – – – – – – – – Rs. Rs. Rs. Translation Translation Translation 5,338,749 1,692,520 1,692,520 Difference Difference Difference Exchange Exchange Exchange 405,398 210,779 85,234 11,533 87,527 10,324 – – – – – – – – – – – – – – – – – Rs. Rs. Rs. 10,232,900,468 31,479,945,993 5,905,203,979 138,430,344 670,295,310 670,295,310 538,968,941 243,864,757 232,724,744 351,475,028 100,793,413 334,012,003 405,768,728 930,773,937 529,499,527 434,696,713 42,584,410 33,795,457 59,164,000 14,600,000 30,870,887 11,587,747 96,527,194 64,706,969 9,557,523 31.03.2016 31.03.2016 31.03.2016 154,855 Balance Balance Balance Asat Asat asat Rs. Rs. Rs.
VALLIBEL ONE PLC 143 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 144
Balance Charge Transfer to Transfers/ Exchange Balance as at for the Revaluation Disposals Translation as at FINANCIAL FINANCIAL REPORTS 01.04.2015 Year Reserves Difference 31.03.2016 Rs. Rs. Rs. Rs. Rs. Rs. Assets on Finance Lease Plant & Machinery 23,165,376 6,570,000 – (10,895,000) – 18,840,376 Leasehold Land 974,000 487,000 – – – 1,461,000 Transport & Communication Equipment 36,704,000 9,674,000 – – – 46,378,000 Motor Vehicle 14,883,970 6,297,383 – (7,314,723) – 13,866,630 75,727,347 23,028,383 – (18,209,723) – 80,546,007 Total 9,503,776,790 1,544,786,153 (376,028,000) (359,493,865) 405,398 10,313,446,475
Net Book Value As at 31st March 2015 18,949,518,371 As at 31st March 2016 21,166,499,518
Capital Work-in-Progress As at 31st March 2015 578,053,365 As at 31st March 2016 670,295,310
CARRYING AMOUNT
As at As at 31st March 2016 31st March 2015 Note Rs. Rs. Property, Plant and Equipment 21,836,794,828 19,527,571,739 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Immovable JEDB/SLSPC Estate Assets on Finance Leases (other than Right to Bare Land) 16.3 64,001,000 73,160,000 Leasehold Right to Bare Land of JEDB/SLSPC Estates 16.4 112,987,000 116,853,000 22,013,782,828 19,717,584,739
16.3 IMMOVABLE JEDB/SLSPC ESTATE ASSETS ON FINANCE LEASES (OTHER THAN RIGHT TO BARE LAND)
Bearer Biological Assets Permanent Buildings Plant & 2016 2015 Immature Mature Land Machinery Plantations Plantations Development Cost Rs. Rs. Rs. Rs. Rs. Rs. Rs. Revaluation As at 22nd June 1992 – 214,810,000 4,014,000 47,173,000 6,818,000 272,815,000 272,815,000 Transfers to Mature At the beginning of the Year – 145,993,000 – – – – – At the end of the Year – 360,803,000 4,014,000 47,173,000 6,818,000 272,815,000 272,815,000 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Institute ofChartered Accountants ofSriLanka. For this purposelandshave beenrevalued atRs. 204.931Mn after formation ofHPPLC, interms oftheopinionobtained from theUrgent Issue Task Force (UITF)ofThe lease) have beentaken into thebooks ofHorana Plantations PLC (HPPLC), asat22ndJune1992, immediately The leasehold rights to thebare landon allestates (except for Dumbara Estate whichisunderanoperating 16.4 LEASEHOLD RIGHT TO BARE LAND OF JEDB/SLSPC ESTATES Biological Assets. (Immature Plantations). mature theadditionalinvestment to bringthemto maturitywillbemoved from theNote 16.5-Bearer shown under“ Note 16.5Bearer Biological Assets (Immature Plantation). Whentheseplantations become Further investments insuchaBearer Biological Assets (Immature to mature bringthemto maturityare by way ofestate lease, are shown underBearer Biological Assets -immature (Revalued asat22.06.1992). Investments inBearer Biological Assets whichwere immature, atthetimeofhandingover to theCompany the day immediately preceding thedate offormation ofHorana Plantation PLC. revalued attheirbookvalues asthey appearinthebooks ofthelessor (JEDB/SLSPC),asthecase may beon of Horana Plantation PLC retrospective to 22ndJune1992.For thispurposeallestate immovable have been All immovable estate Property, PlantandEquipmentunderfinance leases have beentaken into thebooks At theendofYear Carrying Amount At theendofYear Charge for theYear Opening Balance Amortisation As at22ndJune1992 Capitalised Value At theendofYear Written Down Value At theendofYear During thePeriod Opening Balance Amortisation Plantations Immature Bearer Biological Assets – – – – Rs. 206,839,000 153,964,000 146,804,000 Plantations 7,160,000 Mature Rs. Development Permanent 3,162,000 3,050,000 852,000 112,000 Land Cost Rs. 44,870,000 42,983,000 2,303,000 1,887,000 Buildings Rs. 6,818,000 6,818,000 Machinery Plant& 112,987,000 – – Rs. 91,944,000 88,078,000 204,931,000 3,866,000 208,814,000 199,655,000 64,001,000 9,159,000 2016 Rs. 2016 Rs. 116,853,000 88,078,000 84,212,000 204,931,000 199,655,000 190,473,000 73,160,000 3,866,000 9,182,000 2015 2015 Rs. Rs.
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being the value established for these lands by Valuation Specialist, D R Wickremasinghe just prior to the
FINANCIAL FINANCIAL REPORTS formation of HPPLC. However, The Institute of Chartered Accountants of Sri Lanka has withdrawn the UITF ruling with the implementation of SLFRS/LKAS and introduced Statement of Alternative Treatment (SoAT) on right to use land. As per the SoAT right to use land does not permit further revaluation.
16.5 BEARER BIOLOGICAL ASSETS
Tea Rubber Oil Palm Diversification Total Total 2016 2015 Rs. Rs. Rs. Rs. Rs. Rs. Immature Plantations Cost or Valuation: Opening Balance 170,018,000 525,998,000 65,200,000 6,549,000 767,754,273 734,851,000 Additions 45,765,000 96,210,000 17,022,000 28,982,000 187,979,000 231,854,273 Transfers to Mature (60,672,000) (145,986,000) (30,397,000) (1,396,000) (238,451,000) (198,951,000) At the end of the Year 155,111,000 476,222,000 51,825,000 34,135,000 717,282,273 767,754,273 Mature Plantations Cost or Valuation: Opening Balance 576,721,000 799,510,000 – 23,822,000 1,400,053,000 1,201,102,000 Transfers from Immature 60,672,000 145,986,000 30,397,000 1,396,000 238,451,000 198,951,000 At the end of the Year 637,393,000 945,496,000 30,397,000 25,218,000 1,638,504,000 1,400,053,000 Accumulated Amortisation Opening Balance 106,242,000 224,915,000 – 6,042,000 337,199,000 287,174,000 Charge for the Year 17,302,000 39,975,000 – 1,124,000 58,401,000 50,025,000 At the end of the Year 123,544,000 264,890,000 – 7,166,000 395,600,000 337,199,000 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Written Down Value 513,849,000 680,606,000 30,397,000 18,052,000 1,242,904,000 1,062,854,000 Total Bearer Biological Assets 668,960,000 1,156,828,000 82,222,000 52,187,000 1,960,186,273 1,830,608,273
These are investments in immature/mature plantations since the formation of Horana Plantations PLC. The lease liability over the assets (including plantations) taken over by way of estate leases are set out in
Note 16.3. Further investments in the immature plantations taken over by way of these lease are also shown in the above. When such plantations become mature, the additional investments since take over to bring them to maturity have been (or will be) moved from immature to mature under this category as and when the field become mature. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 carried covering alltheestates. using Discounted CashFlow (DFC) method. Inascertaining thefair value oftimber, physical verification was The mature consumable biological assets were valued byChartered Valuers Mr. SMWijepalafor 2015/16 additional investments since taken over to bringthemto maturityare transferred from immature to mature. impact ofthebiological transformation onprice isnotmaterial. Whensuchplantation become mature, the approximate fair value, particularly ontheground thatlittle biological transformation hastaken place andthe assets, amounting Rs. 24.669Mnasat31st March 2016.Thecost ofimmature trees istreated as Managed trees whichare less thanthree years old are considered to beimmature consumable biological timber plantations asat31st March 2016comprised approximately 276.27hectares. Under LKAS41theCompanyhasvalued its managedplantations atfair value less cost to sell,managed 16.7 BASIS OF VALUATION 16.6 CONSUMABLE BIOLOGICAL ASSETS
INFORMATION ABOUT FAIR VALUE MEASUREMENT USING UNOBSERVABLE INPUTS (LEVEL 3) Discounting Rate Unobservable Inputs Total Consumable Biological Assets At theendofYear Change inFair Value Less Costs to Sell Increase dueto New Plantations At thebeginningofYear Cost: Mature Plantations At theendofYear Transfers to Mature Plantations Additions At thebeginningofYear Cost: Immature Plantations 10% -12% Range ofUnobservable Inputs The higherthediscount rate, thelesser willbethefair value. Relationship ofUnobservable Inputs to Fair Value 326,077,000 396,133,000 371,434,000 24,699,000 23,436,000 40,768,000 (4,589,000) 5,852,000 4,589,000 2016 Rs. 263,012,000 349,513,000 326,077,000 23,436,000 20,916,000 56,640,000 (6,425,000) 8,945,000 6,425,000 2015 Rs.
VALLIBEL ONE PLC 147 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 148
OTHER KEY ASSUMPTION USED IN VALUATION;
FINANCIAL FINANCIAL REPORTS - The prices adopted are net of expenditure.
The valuation, as presented in the external valuation model based on the net present value, takes into accounts the long term exploitation of the timber plantation. Because of the inherent uncertainty associated with the valuation at fair value of the biological assets due to the volatility of the variables, their carrying value may differ from their realisation value. The Board of Directors retains their view that commodity markets are inherently volatile and their long term price projection are highly unpredictable. Hence, the sensitivity analysis regarding the selling price and discount rate variation as included in this note allows every investor to reasonably challenge the financial impact of the assumptions used in the valuation against his own assumptions.
The biological assets of the Company are mainly cultivated in leased lands. When measuring the fair value of the biological assets it was assumed that these concession can and will be renewed at normal circumstances. Timber content expects to be realised in future and is included in the calculation of the fair value that takes into account the age of the timber plants and not the expiration date of the lease.
THE GROUP IS EXPOSED TO THE FOLLOWING RISKS RELATING TO ITS TIMBER PLANTATION: REGULATORY AND ENVIRONMENTAL RISKS The Company is subject to laws and regulations in Sri Lanka. The Company has established environmental policies and procedures aimed at compliance with local environmental and other laws. Management
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES performs regular reviews to identify environmental risks and to ensure that the systems in place are adequate to manage those risks.
SUPPLY AND DEMAND RISKS The Company is exposed to risks arising from fluctuations in the price and sales volume of timber. When possible the Company manages this risk by aligning its harvest volume to market supply and demand.
Management performs regular industry trend analyses to ensure that the Company’s pricing structure is in line with the market and to ensure that projected harvest volumes are consistent with the expected demand. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 rate of7.50%(7.58%in 2014/15). biological assets (immature plantations) have beencapitalised duringthe period,atanaverage borrowing Borrowing costs amountingto Rs. 46.886 Mn(Rs. 48.664Mnin2014/15)directly relating to investment in biological assets. decrease by1%oftheestimated future discount rate hasthefollowing effect onthenetpresent value ofthe sensitive to changesinthediscount rate applied.Simulationsmadefor timbershow thatanincrease or Net present value ofthebiological assets asappearingintheStatement ofFinancialPosition are very the biological assets. or decrease by10%oftheestimated future sellingprice hasthefollowing effect ontheNetPresent Value of sensitive to changesintheaverage sales price applied.Simulationsmadefor timbershow thatanincrease Net present value ofthebiological assets asappearingintheStatement ofFinancialPosition are very VariationSensitivity Price onSales mitigating thoserisks, includingregular forest healthinspectionsandindustry pest anddiseasesurveys. fires andothernatural forces. TheCompanyhasextensive processes inplace aimedatmonitoring and The Company’s timberplantations are exposed to theriskofdamagefrom climaticchanges,diseases,forest CAPITALISATION OF BORROWING COST VARIATIONSENSITIVITY ON DISCOUNT RATE ANALYSISSENSITIVITY CLIMATE AND OTHER RISKS Managed Timber Managed Timber
2015 2015 2016 2016 Rs. 340.37Mn Rs. 293.47Mn Rs. 391.41Mn Rs. 284.22Mn -10% -1% Rs. 326.08Mn Rs. 326.08Mn Rs. 371.43Mn Rs. 371.43Mn Rs. 312.82Mn Rs. 358.69Mn Rs. 363.65Mn Rs. 458.64Mn 10% 1%
VALLIBEL ONE PLC 149 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 150
16.8 FAIR VALUE HIERARCHY - NON FINANCIAL ASSETS
FINANCIAL FINANCIAL REPORTS The following properties are revalued and recorded under freehold land and clay mining land. Fair Value measurement disclosure for revalued land based on un-observable input as follows:
A. Quoted Price (unadjusted) in active markets for identical assets or liabilities (Level -1). B. Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is derived from prices) (Level - 2) C. Input for the assets or liability that are not based on observable market data (that is, unobservable inputs) (Level -3).
Company Location Extent Valuer Valuation Valuation Significant unobservable Fair Value Date Details input: price per perch/ measurement acre/range using Significant unobservable inputs (Level 3) Rs. Mn
Factory at Ehaliyagoda A49-R1-P29.45 Rs. 31,534/- per perch 247.150 Mn Showroom and Cutting Centred Land at Kottawa A1-R1-P30.72 Rs. 457,199/- per perch 105.485 Mn Land at Meegoda Royal Ceramics Mr. A A M Market based Warehouse A2-R2-P24 30.04.12 Rs. 119,043/- per perch 46.6 Mn Lanka PLC Fathihu evidence Land at Nawala for Nawala New Showroom P24.96 Rs. 3,491,586/- per perch 87.150 Mn Land at Nattandiya A10 Rs. 12,500/- per perch 20 Mn Land at Kaluthara A04-R3-P8.16 Rs. 15,003/- per perch 11.525 Mn NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Royal Porcelain Mr. A A M Market based (Pvt) Limited Factory Land at Horana A13-R3-P27.07 Fathihu 31.03.12 evidence Rs. 40,000/- per perch 89.088 Mn Factory land at Rocell Bathware Homagama A1-R2-P19.60 Mr. A A M 01.04.12 Market based Rs. 85,000/- per perch 22.066 Mn Limited Land at Meegoda Fathihu evidence Warehouse R3 01.04.12 Rs. 90,000/- per perch 10.8 Mn Ever Paint And Chemical
Industries (Pvt) Factory land at Mr. A A M Market based Limited Hanwella A1-R2-P22.75 Fathihu 31.03.12 evidence Rs. 24,689/- per perch 6.487 Mn Market based No. 215, Nawala Road, A1-R1-P2.1 evidence Rs. 4,000,000/- per perch 808.4 Mn Narahenpita, Colombo Contractor's 05 35,990 Square feet basis method Rs.1,000/-to Rs 3,500/- building Mr. Ranjan J valuation per square feet 87.151 Mn Lanka Walltiles PLC 31.03.16 Samarakone Contractor's Plan No. 2205 Situated basis method at Mawathgama and A23-R1-P24.16 valuation Rs. 150,000/- per perch 561.624 Mn Galagedara Village 279,361 Square Market based Rs. 2,000/-to Rs. 4,000/- Feet building evidence per square feet 716.716 Mn VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Limited Swisstek Aluminum PLC Swisstek (Ceylon) (Pvt)Limited Uni DilPaper Sacks Limited Uni DilPacking Lanka Ceramic PLC Lanka Tiles PLC Company
Dompe Land atPahala Dompe, Imbulgoda-Building Road, Belummahara, No. 334/5,Colombo Imbulgoda-Building Belummahara, Factory Complex, Imbulgoda-Land Road, Belummahara, No. 334/5,Colombo Imbulgoda-Land Belummahara, Factory Complex, Deketana road, Moragala, Building atNarampola Meetiyagoda mine office building at Factory building & Deketana road, Moragala, Land atNarampola Meetiyagoda Land situated at Moragala, Deketana Narampola road, improvement at Building andland Dediyawala Mining Landat Deketana Road, Moragala, Land atNarampola Meetiyagoda Mining Landat Kalutara Ball Clay landat mine office building atOwala Factory building & Land situated atOwala Marawila silica land Mining LandatOwala stores Ranala Biyagama Factory atJaltara, Dompe, Dompe Building atPahala Location A08-R02-P20 1,384 sq.ft 54,647 sq.ft 20 Perches 980 Perches 25,551 sq.ft 39,512 sq.ft A2-R2-P35 7A-2R-28P 25,551 sq.ft 50A-0R-05.48P A9-R0-P17.8 35A-7R-124.33P A5-R01-P0.83 7038 Sq.ft 1A-1R-02.0P A13-R0-P02 25A-2R-15P A38-R03-P23.28 Extent Tissera Mr. KTD Mr. DGNewton Mr. DGNewton Kalugalagedera Mr. PB Samarakone Mr. Ranjan J Valuer Mr. TJTissera 31.03.16 31.03.16 31.03.16 31.03.16 31.03.16 Date Valuation 30.03.16 method Contractor's method Contractor's evidence Market based evidence Market based cost Replacement Depreciated cost method Depreciated evidence Market based evidence Market based cost replacement Depreciated evidence Market based evidence Market based evidence Market based cost method Depreciated evidence Market based evidence Market based evidence Market based working Method of Contractors Details Valuation evidence Market based Rs. 217/-persquare feet feet Rs. 1,372/-persquare Rs. 335,000/-perperch Rs. 612,245/-perperch per square feet Rs.1,750/- to Rs. 2,500/- square feet Rs. 100/-to Rs. 500/-per Rs. 60,000/-perperch 1,750,000/- peracre Rs. 750,000/-to Rs. per square feet Rs. 650/-to Rs. 2,000/- Rs. 200,000/-peracre Rs. 70,000/-perperch Rs. 1,000,000/-peracre Rs. 300,000/-to Rs. 62.50perperch per square feet Rs. 200/-to Rs. 1,000/- Rs. 400,000/-peracre Rs. 17,187.50perperch Rs. 250,000/-peracre Rs. 100,000/-to Rs. 175,000/-perperch Rs. 40,000/-to acre/range input: price perperch/ Significant unobservable Rs. 130,434/-peracre unobservable measurement 179.250 Mn 102.046 Mn 218.354 Mn 524.639 Mn 229.627 Mn Significant 46.596 Mn 13.557 Mn 12.931 Mn 10.007 Mn 17.051 Mn 35.784 Mn Fair Value 5.157 Mn 4.809 Mn 26.1 Mn (Level 3) 600 Mn 180 Mn Rs. Mn inputs 0.3 Mn 6.7 Mn 0.5 Mn 75.Mn using
VALLIBEL ONE PLC 151 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 152
16.9 THE USEFUL LIVES OF THE ASSETS ARE ESTIMATED AS FOLLOWS:
FINANCIAL FINANCIAL REPORTS 2016 2015 Years Years Non-Plantation Assets Buildings on Freehold Land and Roadway 25,40 & 50 25,40 & 50 Plant and Machinery 5-20 5-20 Water Supply and Electricity Distribution Scheme 5-25 5-25 Tools, Implements and Furniture and Fittings 2,4,5 & 10 2,4,5 & 10 Transport and Communication Equipment 4 to 12 4 to 12
Plantation Assets The Leasehold Rights to JEDB/ SLSPC are Amortised in Equal Amounts Over the following Years Bare Land 53 53 Mature Plantations 30 30 Permanent Land Development Costs 30 30 Buildings 25 25 Plant and Machinery 15 15
Mature Plantation (Re-planting and New Planting) Mature Plantations (Tea) 33 1/3 33 1/3 Mature Plantations (Rubber) 20 20 Mature Plantations (Coconut) 50 50
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Mature Plantations (Cinnamon) 15 15 Mature Plantations (Coffee and Pepper) 4 4 Mature Plantations (Pineapple) 3 3
17. LEASEHOLD RIGHT OVER MINING LAND
Group 2016 2015
Rs. Rs. Cost At the beginning of the Year 7,800,000 7,800,000 Acquisition 8,080,000 – At the end of the Year 15,880,000 7,800,000
Accumulated Depreciation At the beginning of the Year 7,288,500 6,573,500 Charge for the Year 511,000 715,000 At the end of the Year 7,799,500 7,288,500 Written Down Value 8,080,500 511,500 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 of land. is theDirect Capital ComparisonMethodusingthedepreciated value ofbuildings and current market value independent professionally qualifiedvaluer (Valuation report dated 31st March 2016).Thebasisofvaluation The fair value offreehold landandbuildings were determined byPBKalugalagedara andAssociates an 18.1 FAIR VALUE OF INVESTMENT PROPERTY reference to market basedevidence. were determined byPBKalugalagedara andAssociates anindependentprofessionally qualifiedvaluer in 696 3/1,4/1,Kollupitiya Road, Colombo 03(1R- 1.12P).Thefair value offreehold landandbuildings As at31st March 2016,theinvestment property includeslandandbuilding atNo.696,6961/1,2/1, 18. INVESTMENT PROPERTY 18.2 in asignificantly higher(lower) fair value. Significant increases (decrease) inestimated price perperch/ price persquare feet inisolationwould result (2015 -Rs. 1.2Mn). (2015 -Rs. 36.75Mn). Direct operating expenses incurred bytheGroup amounted to Rs. 2.0Mn LANKA CERAMICSLANKA PLC Price perSquare Feet Price perPerch Significant Unobservable Input: Building atFair Value Land atFair Value Date ofValuation At theendofYear Depreciation ofInvestment Property At thebeginningofYear Rental Income earned from Investment Property bytheGroup amounted Rs. 36.37Mn Significant unobservable inputs (Level 3) 2,000 -3,250 238,714,000 239,404,000 452,250,000 11,000,000 75,000,000 Fair Value measurement using 31 March (690,000) 2016 2016 Rs. Rs. Group Group 2,000 -3,250 239,404,000 240,094,000 370,000,000 75,000,000 9,000,000 (690,000) 07 May 2015 2015 Rs. Rs.
VALLIBEL ONE PLC 153 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 154
19. DUE TO BANKS
FINANCIAL FINANCIAL REPORTS Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Bank Overdrafts – – 3,161,850,015 3,745,766,594 Syndicated Loans and Other Bank Facilities – – 13,877,962,197 6,720,360,404 – – 17,039,812,212 10,466,126,998
19.1 SECURITISED BORROWINGS, SYNDICATED LOANS AND OTHER BANK FACILITIES
As at Loans Interest Repayments As at 01.04.2015 Obtained Recognised Capital Interest 31.03.2016 Rs. Rs. Rs. Rs. Rs. Rs. Syndicated Loans Syndication 2 341,839,797 – 25,776,179 (70,312,500) (26,019,682) 271,283,794 Syndication 3 – 2,238,187,500 147,380,815 – (129,615,616) 2,255,952,698 Syndication 4 – 3,281,036,939 41,694,293 – – 3,322,731,232 341,839,797 5,519,224,439 214,851,287 (70,312,500) (155,635,298) 5,849,967,724
Term Loans Bank of Ceylon 1 29,801,253 – 1,550,940 (29,767,000) (1,585,193) – Bank of Ceylon 3 83,006,300 – 4,284,077 (82,500,000) (4,790,376) – Bank of Ceylon 5 1,880,676,368 – 139,337,899 (500,000,004) (140,531,392) 1,379,482,871 Commercial Bank 1 2,002,876,712 – 175,479,452 – (175,479,452) 2,002,876,712 Commercial Bank 2 – 989,205,567 91,334,834 – (85,150,685) 995,389,716 Nations Trust Bank 402,208,217 – 31,064,047 – (31,070,080) 402,202,184 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Hatton National Bank 1,979,951,757 – 149,261,999 (399,960,000) (151,992,002) 1,577,261,753 NDB Bank 1 – 446,810,700 16,934,413 – – 463,745,113 NDB Bank 2 – 148,936,900 5,284,188 – – 154,221,088 NDB Bank 3 – 322,696,617 5,846,608 – – 328,543,225 Union Bank – 495,956,333 24,265,816 (72,916,669) (22,545,872) 424,759,608 Habib Bank – 297,873,800 8,090,354 – (6,451,950) 299,512,203
6,378,520,606 2,701,479,917 652,734,627 (1,085,143,673) (619,597,004) 8,027,994,473
6,720,360,404 8,220,704,356 867,585,914 (1,155,456,173) (775,232,302) 13,877,962,197 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 20.1 CONTRACTUAL MATURITY ANALYSIS OF CUSTOMER DEPOSITS 20. DUE TO CUSTOMERS We don’thave pre-termination optionsfor Syndicated LoansandOtherBankFacilities. terminations may cause actualmaturitiesto differ from contractual maturities. We have raised fixed deposits withapre-termination optionto thecustomers, sofixed depositpre- 19.2 CONTRACTUAL MATURITY ANALYSIS OF SYNDICATED LOANS AND OTHER BANK FACILITIES Savings Deposits Certificates ofDeposit Fixed Deposits As at 31stMarch 2015 Savings Deposits Certificates ofDeposit Fixed Deposits As at 31stMarch 2016 Saving Deposit Certificates ofDeposit Fixed Deposits Term Loans Syndicated Loans As at 31stMarch 2015 Term Loans Syndicated Loans As at 31stMarch 2016 41,688,440,412 38,907,561,767 35,681,329,115 33,037,476,443 2,598,793,532 2,699,816,991 3,484,477,849 1,109,119,154 1,036,810,607 2,441,209,520 WithinOneYear WithinOneYear WithinOneYear WithinOneYear 784,660,858 182,085,113 202,643,152 72,308,547
2016 – – – – Rs. Rs. Rs. Rs. Rs. 11,045,181,880 11,042,019,441 10,393,484,348 5,065,306,866 5,328,177,482 Company 8,984,286,340 5,611,241,250 5,341,710,000 8,979,683,303 269,531,250 3,162,439 4,603,037 1-5Years 1-5Years 1-5Years 1-5Years 2015 – – – – – – Rs. Rs. Rs. Rs. Rs. 52,733,622,292 49,949,581,208 2,598,793,532 185,247,552 Over 5Years Over 5Years Over 5Years Over 5Years 2016 – – – – – – – – – – – – – – Rs. Rs. Rs. Rs. Rs. 52,733,622,292 49,949,581,208 13,877,962,197 44,665,615,455 44,665,615,455 42,017,159,746 42,017,159,746 5,849,967,724 2,598,793,532 8,027,994,473 6,720,360,404 6,378,520,607 2,441,209,520 2,441,209,520 Group 185,247,552 207,246,189 341,839,797 207,246,189 Total Total Total Total 2015 Rs. Rs. Rs. Rs. Rs.
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21. INTEREST-BEARING LOANS AND OTHER BORROWINGS
FINANCIAL FINANCIAL REPORTS 2016 2015 Amount Amount Total Amount Amount Total Repayable Repayable Repayable Repayable Within 1 Year After 1 Year Within 1 Year After 1 Year Rs. Rs. Rs. Rs. Rs. Rs. Finance Leases (Note 21.1) 18,993,521 120,356,497 139,350,018 22,338,963 119,711,580 142,050,543 Bank Loans/Term loans 1,933,952,170 6,018,160,957 7,952,113,126 3,665,729,834 7,553,910,745 11,219,640,579 Short Term Loan 4,292,013,955 – 4,292,013,955 2,563,479,932 – 2,563,479,932 Unsecured Debentures (Note 21.3) 606,429,073 1,994,853,432 2,601,282,504 64,447,122 2,532,602,295 2,597,049,417 Others – – – – – 6,851,388,718 8,133,370,885 14,984,759,603 6,315,995,851 10,206,224,620 16,522,220,471
21.1 FINANCE LEASES
2016 2015 Rs. Rs. JEDB/SLSPC Estates (21.1.1) 151,614,000 156,840,000 Other Finance Lease Creditors (21.1.2) 60,127,886 61,162,009 Gross Liability 211,741,886 218,002,009 Finance Charges Allocated to Future Periods (72,389,869) (75,951,466) Net Liability 139,352,018 142,050,543
Payable Within 1 Years 18,993,521 22,338,963 Payable Within 1 Years before 5 Years 120,356,497 119,711,580 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Total 139,350,018 142,050,543
21.1.1 JEDB/SLSPC ESTATES
2016 2015 Rs. Rs. At the beginning of the Year 156,840,000 162,068,000
New Leases Obtained during the Year 13,294,000 12,393,000 Repayments during the Year (18,520,000) (17,621,000) At the end of the Year 151,614,000 156,840,000
21.1.1.1 The lease rentals have been amended with effect from 22nd June 1996 to an amount substantially higher than the previous nominal lease rental of Rs. 500/-per estate per annum. The basic rental payable under the revised basis is Rs. 5.228 Mn per annum. This amount is to be inflated annually by the Gross Domestic Product (GDP) deflater in the form of contingent rent. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 21.1.2 OTHER FINANCIAL LEASE CREDITORS the current rate would beestimated to Rs. 385,459,532/-asat31st March 2016. Rs. 13,291,708/-andthegross liabilityto make contingent rentals for theremaining 29years oflease term at The contingent rental charged duringthecurrent year to Statement ofComprehensive Income amounted to The netpresent value asatdate isrepresented by: Net Present Value ofthisliabilityata4%discounting rate would result inaliabilityofRs. 87.953Mn. thereafter from 22ndJune2008,annuallease payment willremain atRs. 5.228Mn,until21st June2045.The Future liabilityontherevised annuallease payment ofRs. 7.472Mnwillcontinue until21st June2008,and order to reflect thefuture netliabilityinthefollowing manner: at Rs. 2.244Mnperannumuntil21st June2008.Accordingly, theFinancialStatements have beenadjusted, in for aperiodofsixyears commencing from 22ndJune2002.Hence, theGDPDeflater adjustment willbefrozen This lease agreement was furtheramendedon10thJune2005,freezing theannuallease rental atRs. 7.472Mn At theendofYear Repayments duringtheYear New LeasesObtained duringtheYear On Acqusition ofSubsidiaries At thebeginningofYear Net Present Value Less: Interest inSuspense Gross Liability - 29Years @Rs. 5.228Mnperannum - Overdue (32,982,220) 60,127,886 32,042,727 61,067,379 2016 – Rs. 114,133,391 (87,080,382) 61,162,009 34,109,000 151,612 151,612 (63,659) 87,953 2015 2016 – – Rs. Rs.
VALLIBEL ONE PLC 157 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 158
21.2 DETAILS OF THE LONG TERM LOANS – GROUP
FINANCIAL FINANCIAL REPORTS Lender Approved Repayment Terms Security Facility Rs. Delmege Limited Group Standard Chartered Bank 676 Mn 3 months Fixed Deposit National Development 1,173.6 Mn 2 months Fixed Deposit, Stock & Debtors Mortgage Bank PLC Commercial Bank of 54 Mn – Corporate Guarantee - DF & Co. Limited Ceylon PLC DFCC Bank PLC 175 Mn 2 months Letter of Comfort/Negative Pledge/Fixed Deposit 79 Mn 54 instalments with Land & Buildings 6 month grace period Nation Trust Bank PLC – 100 Mn 4 months Land & Building Factor Union Bank PLC 150 Mn 4 months Stock & Debtor Mortgage Union Bank PLC – 75 Mn 4 months Corporate Guarantee – Delmege Frosyth & Co. Factor (Shipping) Limited Union Bank PLC 200 Mn 24 Instalment Biona Stock MCB 250 Mn 3 months Letter of Comfort – Delmege Limited Hatton National Bank PLC 1,303 Mn 3 months Mortgage – Land & Building 700 Mn 95 instalments with 12 months grace period Amãna Bank PLC 600 Mn 3 months Corporate Guarantee – Delmege Limited NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Pan Asia Bank 80 Mn – – Corporation PLC Seylan Bank PLC 25 Mn – Corporate Guarantee
Royal Ceramics Lanka PLC Commercial Bank of 500 Mn 60 equal monthly Tripartite Agreement with Company, Ceylon PLC instalments share broker and the Bank over 10.5 Mn
shares of L B Finance PLC Corporate Guarantee of Royal Porcelain (Pvt) Limited Commercial Bank of 175 Mn 48 equal monthly 174.9 Mn in mortgage over properties at Ceylon PLC instalments Baddegedaramulla, Meegoda, No. 101, Nawala Road, Nawala and No. 472, High Level Road Kottawa Corporate Guarantee of Royal Porcelain (Pvt) Limited Commercial Bank of 41 Mn 48 monthly Primary Mortgage Bond for 41 Mn over the Ceylon PLC instalments Polishing line
VALLIBEL ONE PLC ANNUAL REPORT Corporate Guarantee of Royal Porcelain (Pvt) Limited 2015 | 16 Hatton National BankPLC Ceylon PLC Commercial Bankof Royal Porcelain (Pvt)Limited HSBC Bank Hatton NationalBankPLC Hatton NationalBankPLC Hatton NationalBankPLC Hatton NationalBankPLC Hatton NationalBankPLC Hatton NationalBankPLC Ceylon PLC Commercial Bankof Ceylon PLC Commercial Bankof Ceylon PLC Commercial Bankof Ceylon PLC Commercial Bankof Lender USD 4Mn Approved 280 Mn 100 Mn 109 Mn 260 Mn 3.0 Bn 34 Mn 14 Mn 07 Mn 23 Mn 50 Mn 24 Mn 75 Mn Facility Rs. Repayment Terms instalments 60 equalmonthly instalments 59 equalmonthly instalments 59 equalmonthly instalments 59 equalmonthly instalments 59 equalmonthly instalments 59 equalmonthly instalments 59 equalmonthly instalments 59 equalmonthly instalments 60 equalmonthly of Rs. 42.5Mneach) monthly instalments and subsequent48 of Rs. 20Mneach monthly instalments 8 years –(first 48 instalments 60 equalmonthly instalments 60 equalmonthly instalments 59 equalmonthly Security executed the manufacturing plantinEheliyagoda to be Mortgage Bond(between HNB&HSBC)over Pari-Pasu Concurrent Registered Primary (Pvt) Limited Corporate Guarantee ofRoyal Porcelain (Pvt) Limited Corporate Guarantee ofRoyal Porcelain (Pvt) Limited Corporate Guarantee ofRoyal Porcelain (Pvt) Limited Corporate Guarantee ofRoyal Porcelain factory premises atEheliyagoda to beexecuted Rs. 650Mn–(HSBC500Mn/HNB150Mn)over Primary registered concurrent mortgage bondof factory premises atEheliyagoda to beexecuted Rs. 650Mn–(HSBC500Mn/HNB150Mn)over Primary registered concurrent mortgage bondof (Pvt) Limited Corporate guarantee ofRoyal Porcelain at No.20,R.A.DeMelMawatha, Colombo 03. Primary Mortgage Bondover LandandBuilding value asat15.09.2014–Rs. 3,905Mn) 7,545,422 shares ofLBFinance PLC (Market 23,009,036 shares ofLanka Ceramics PLC and custodian company andbankover aportfolio of Tripate agreement between theCompany/ (Pvt) Limited Corporate Guarantee ofRoyal Porcelain two LPGasTanks Primary Mortgage Bondfor 24Mnover the together withexisting machinery therein over thefactory premises ofRPLinHorana Floating Mortgage Bond (between HNB&DFCC) Pari-Pasu Concurrent Registered Primary Lanka PLC Corporate Guarantee from Royal Ceramics Lanka PLC Corporate Guarantee from Royal Ceramics
VALLIBEL ONE PLC 159 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 160
Lender Approved Repayment Terms Security Facility
FINANCIAL FINANCIAL REPORTS Rs. DFCC Bank PLC 150 Mn 60 equal monthly Corporate Guarantee from Royal Ceramics instalments Lanka PLC Pari-Pasu Concurrent Registered Primary Floating Mortgage Bond (between HNB & DFCC) over the factory premises of RPL in Horana together with existing machinery therein Commercial Bank of 80 Mn 59 equal monthly Corporate Guarantee from Royal Ceramics Ceylon PLC instalments Lanka PLC Commercial Bank of 56 Mn 59 equal monthly Mortgage over line Sorting Palertizer Machine. Ceylon PLC instalments Corporate Guarantee from Royal Ceramics Lanka PLC Commercial Bank of 67 Mn 59 equal monthly Corporate Guarantee from Royal Ceramics Ceylon PLC instalments Lanka PLC Mortgage over Tile Printing Machine Commercial Bank of 48 Mn 60 equal monthly Mortgage over Glazed Polishing Line Ceylon PLC instalments Corporate Guarantee from Royal Ceramics Lanka PLC Commercial Bank of 67 Mn 60 equal monthly Motgage over Digital Ceremic Printing Machine Ceylon PLC instalments Corporate Guarantee from Royal Ceramics Lanka PLC Commercial Bank of 200 Mn 60 equal monthly Mortgage over warehouse premises at Meegoda NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Ceylon PLC instalments owned by Rocell Bathware Limited Commercial Bank of 48.56 Mn 60 equal monthly Mortgage over 4 units 4 wheel Forklifts and 4 Ceylon PLC instalments units reach trucks Commercial Bank of 53 Mn 60 equal monthly Mortgage over the Nano coating line, Unloading Ceylon PLC instalments Polythene Machine, Batching and Mill Feeding commencing from Machine and Air Compressor
March 2014 Corporate Guarantee from Royal Ceramics Lanka PLC Commercial Bank of 37 Mn 59 equal monthly Primary Mortgage over the Automatic easy Line Ceylon PLC instalments Sorting Line Corporate Guarantee from Royal Ceramics Lanka PLC Hatton National Bank PLC 300 Mn 54 equal monthly Primary Mortgage over machinery instalments Commercial Bank of 28 Mn 59 equal monthly Corporate Guarantee from Royal Ceramics Ceylon PLC instalments Lanka PLC VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Ceylon PLC Commercial Bank of Ceylon PLC Commercial Bankof Hatton National BankPLC Hatton National BankPLC Lanka Walltiles PLC Hatton NationalBankPLC Lanka Ceremic PLC Ceylon PLC Commercial Bankof Industries (Pvt) Limited Ever Paint andChemical Hatton NationalBankPLC Commercial BankPLC Hatton NationalBankPLC Hatton NationalBankPLC Rocell Bathware Limited Lender USD 1.8Mn 584Mn 500Mn Approved 200 Mn 300 Mn 100 Mn 160 Mn 20Mn 25Mn 70Mn Facility Rs. Repayment Terms instalments 08 annual instalment 59 monthly instalments 64 equalmonthly instalments 53 equalmonthly instalments 54 monthly 54 monthly instalment instalments 60 monthly instalments 60 monthly instalments 60 monthly instalments 60 monthly Security shares Mortgage for Rs. 500Mnover Lanka Walltiles PLC Corporate guarantee ofRCL furniture fittingsatMalabe mortgage over movable machineryequipment, in trade andassignment over bookdebts and Company Factory premise atHanwella, stocks Primary concurrent Mortgage Bondover Corporate guarantee ofRCL machine for 25Mn Primary Martgage Bondover Water closet casting Corporate guarantee ofRCL Estate, Panagoda to beexecuted (excluding Unimack) atTempleburg Industrial leasehold landandbuilding andmachinery Primary Mortgage Bondfor Rs. 250Mnover Corporate guarantee ofRCL Estate, Panagoda to beexecuted (excluding Unimack)atTempleburg Industrial leasehold landandbuilding andmachinery Primary Mortgage Bondfor Rs. 250Mnover property situated at215,Nawala Road, Colombo 5 Primary Mortgage Bondfor Rs. 200Mnover the Lanka Tiles PLC (Pan AsiaBank)over 7,210,000share of Bank, Lanka Walltiles PLC andthecustodian Tripartite agreement for Rs. 392.8Mnbetween and machineryatMeepe over the project assets comprising land,building Secondary Mortgage Bondfor USD1.8million machinery atMeepe the project assets comprising land,building and Primary Mortgage Bondfor Rs. 390millionover
VALLIBEL ONE PLC 161 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 162
Lender Approved Repayment Terms Security Facility
FINANCIAL FINANCIAL REPORTS Rs. Commercial Bank of 80 Mn 60 monthly Primary Mortgage Bond for Rs. 80 Mn over the Ceylon PLC instalments ceramic printer DFCC Bank PLC 200 Mn 60 monthly Primary Mortgage over movable machinery instalments at Meepe
Lanka Tiles PLC DFCC Bank PLC 150 Mn 48 monthly A primary mortgage over land, building and plant instalments and machinery of Lanka Floortiles PLC at Ranala amounting to Rs. 300 Mn 165 Mn 84 monthly A primary mortgage over land, building and plant instalments and machinery of Lanka Floortiles PLC at Ranala amounting to Rs. 300 Mn 287.71 Mn 85 monthly A primary mortgage over land, building and plant instalments and machinery of Lanka Floortiles PLC at Ranala amounting to Rs. 300 Mn (USD 3 Mn) 80 Mn 59 monthly A primary mortgage over land, building and plant instalments and machinery of Lanka Floortiles PLC at Ranala amounting to Rs. 300 Mn
Uni Packaging Limited Central Finance PLC 42.5 Mn LKR 991,106 monthly Mortgage Bond for Rs. 42.5 Mn over Movable instalments machinery USD US$ 7,380.95 monthly Mortgage Bond for USD 310,000 over Movable
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES HSBC 310,000 instalments machinery HSBC USD US$ 7,380.95 monthly Mortgage Bond for USD 310,000 over Movable 310,000 instalments machinery Hatton National Bank PLC 10 Mn LKR 308,300 monthly Concurrent Mortgage Bond for LKR 110 Mn instalments over immovable property
Horana Plantations PLC
Hatton National Bank PLC 550 Mn 72 monthly Primary Mortgage for 550 Mn over the leasehold instalments rights of Frocestor Estate Indian Bank 75 Mn 54 monthly Primary Mortgage over leasehold rights of instalments Tillicoultry Estate Hatton National Bank PLC 100 Mn 60 monthly Primary Mortgage over leasehold rights of Alton, instalments Bambarakelly, Eildon Hall and Gouravilla Hatton National Bank PLC 130.114 Mn 60 monthly Primary Mortgage over leasehold rights of instalments Bambarakelly Estate
Swisstek (Ceylon) PLC Bank of Ceylon 25.817 58 equal monthly Mortgage over Immovable property at
VALLIBEL ONE PLC ANNUAL REPORT instalments Balummahara, Imbulgoda 2015 | 16 Habib Bank Union Bank NDB Bank3 NDB Bank2 NDB Bank1 Hatton National BankPLC Nations Trust BankPLC Ceylon PLC 2 Commercial Bankof Ceylon PLC 1 Commercial Bankof Bank ofCeylon 3 Bank ofCeylon 2 Bank ofCeylon 1 Direct BankBorrowings Syndication 3 Syndication 2 Syndication 1 Syndicated Loans L BFinance PLC Ceylon PLC Commercial Bankof ManagementLimited Vallibel Plantation DFCC BankPLC Swisstek AluminiumLimited Lender Approved 145 Mn 290 Mn 10 Mn 50 Mn Facility Rs. Repayment Terms instalments 60 equalmonthly instalments 48 equalmonthly instalments 48 equalmonthly instalments 48 equalmonthly instalments 48 equalmonthly instalments 48 equalmonthly instalments 96 equalmonthly instalments 60 monthly instalments 60 monthly instalments 60 monthly instalments 78 equalmonthly instalments 12 equalmonthly instalments 48 equalmonthly instalments 12 equalmonthly instalments 12 equalmonthly instalments 12 equalmonthly instalments 60 equalmonthly instalments 36 equalmonthly instalments 60 equalmonthly Security Mortgage over Hire Purchase receivables Mortgage over Hire Purchase receivables Mortgage over Hire Purchase receivables Mortgage over Leasereceivables Mortgage over Lease,Hire Purchase receivables Mortgage over Lease,Hire Purchase receivables Mortgage over Landand Building 12,750,000 shares ofHorana Plantation PLC Stocks andBookDebts Mortgage over Land,Building, Plant&Machinery Mortgage over Lease,Hire Purchase receivables Mortgage over Lease,Hire Purchase receivables Mortgage over Lease,Hire Purchase receivables Mortgage over Lease,Hire Purchase receivables Mortgage over Lease,Hire Purchase receivables Mortgage over Hire Purchase receivables Mortgage over Hire Purchase receivables Mortgage over Lease,Hire purchase receivables
VALLIBEL ONE PLC 163 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 164
21.3 DEBT INSTRUMENTS ISSUED AND OTHER BORROWED FUNDS
FINANCIAL FINANCIAL REPORTS 2016 2015 Rs. Rs. Unsecured Debentures (Note 21.3.1) 2,601,282,504 2,597,049,417 2,601,282,504 2,597,049,417
21.3.1 UNSECURED DEBENTURES The terms and features of Unsecured Redeemable Subordinated Debentures are as follows:
Category Interest Payable Features Amortised Cost Face Value Interest Rate Issued date Maturity Date Rs. Rs. RUSRD II Annually Unlisted 223,628,261 215,000,000 12.68% p.a. 05.12.11 04.12.16 RUSRD I Bi Annually Unlisted 103,890,646 100,000,000 12.30% p.a. 05.12.11 04.12.16 RUSRD I Bi Annually Unlisted 232,223,106 230,000,000 12.30% p.a. 01.03.12 01.03.17 Type A Monthly Listed 637,568,384 640,140,000 14.00% p.a. 29.11.13 29.11.18 Type B Bi Annually Listed 781,150,903 757,010,000 14.50% p.a. 29.11.13 29.11.18 Type C Annually Listed 622,821,204 602,850,000 15.00% p.a. 29.11.13 29.11.18 Total 2,601,282,504 2,545,000,000
22. TRADE & OTHER PAYABLES
Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Trade & Other Payables 215,000 50,000 3,452,239,414 3,705,882,141
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Accrued Expenses 1,284,893 2,560,359 1,912,538,935 1,760,841,308 1,499,893 2,610,359 5,364,778,349 5,466,723,449
23. OTHER NON-FINANCIAL LIABILITIES
Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs.
Provisions – – 82,816,382 68,741,982 Advances – – 763,839,741 516,174,275 Others – – 1,120,404,500 1,032,822,835 – – 1,967,060,622 1,617,739,093
24. DIVIDENDS PAYABLE Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Unclaimed Dividend 6,783,826 5,017,421 170,126,424 107,784,635
VALLIBEL ONE PLC ANNUAL REPORT 6,783,826 5,017,421 170,126,424 107,784,635 2015 | 16 26. STATED CAPITAL ‘Projected UnitCredit Method’, recommended byLKAS19. 2015 byafirmofprofessional actuaries.Thevaluation methodusedbytheactuaryto value theFund isthe An actuarialvaluation ofthegratuity ofsubsidiarycompanies was carried outasat31st March 2016and 25. RETIREMENT BENEFIT LIABILITY Balance asattheendof Year Balance asatthebeginning oftheYear Balance attheendofYear Benefits Payable (Payments)/Transfers MadeduringtheYear Disposal duringtheYear Actuarial Gain/Loss Interest Cost Amount Charged for theYear Balance atthebeginningofYear Retirement Age Staff Turnover Future SalaryIncrease Discount Rate Actuarial Assumptions 1,086,559,353 1,086,559,353 Voting Shares 3,416,899 2,369,044 Number of 236,904 776,072 34,879 2016 – – – Rs. Company 27,163,983,720 27,163,983,720 2016 2,369,044 1,776,356 177,636 391,789 23,263 2015 – – – Rs. Rs. 1,192,535,325 1,127,385,348 1,086,559,353 1,086,559,353 (100,228,406) 111,805,167 105,194,097 (51,620,881) 9.5% –12% Voting Shares 15%–30% Number of 55–60 10% 2016 2016 – – Rs. 27,163,983,720 27,163,983,720 1,127,384,613 1,146,769,617 Group (104,932,155) (122,156,983) 2015 106,939,661 9.5% –11% 97,249,530 (5,567,330) 9,082,272 10%–25% 5%–16% 55–60 2015 2015 Rs. Rs.
VALLIBEL ONE PLC 165 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 166
27. RESERVES
FINANCIAL FINANCIAL REPORTS 27.1 RESERVES – COMPANY
Retained Available-for- Retained Available-for- Profits/(Losses) Sale Reserve Total Profits/(Losses) Sale Reserve Total 2015 2015 2015 2016 2016 2016 Rs. Rs. Rs. Rs. Rs. Rs.
At the beginning of the Year 381,944,774 (255,622,912) 126,321,862 706,445,360 (157,097,489) 549,347,871 Super Gains Tax 2013/14 – – – (65,043,477) – (65,043,477) Profit for the Year 759,141,076 – 759,141,076 664,199,028 664,199,028 Other Comprehensive Income (16,749) 32,738,760 32,722,011 (25,113) (194,020,704) (194,045,817) Reclassification of Loss on Available-for-Sale Financial Assets to Profit or Loss – 65,786,663 65,786,663 – – – Dividend Paid (434,623,741) – (434,623,741) (543,279,677) – (543,279,677) At the end of the Year 706,445,360 (157,097,489) 549,347,871 762,296,122 (351,118,193) 411,177,929
27.2 RESERVES – GROUP
Capital Reserve Other Component of Equity Revenue Reserve Reserve Investment Revaluation Foreign Currency Available-for Treasury Actuarial General Retained Hedge Total Fund Fund Reserve Translation Sale Reserve Shares Gain/(Loss) Reserve Earnings Reserve Reserve Reserve Rs Rs Rs Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 2015 At the beginning of the Year 628,231,500 378,195,795 721,251,545 158,816,801 (753,125,339) (67,671,631) (49,706,269) 50,178,869 4,262,036,871 (125,718) 5,328,082,423 Profit for the Year – – – – – – – – 2,891,094,095 – 2,891,094,095 Other Comprehensive Income NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Share of Other Comprehensive Income of Equity Accounted Investees – – 7,973,450 775,562 (129,778,556) – – – (81,319,297) – (202,348,841) Revaluation of Land and Buildings 23,647,755 23,647,755 Exchange Difference – on Translation of Foreign Operations – – – (8,457,181) – – – – – – (8,457,181) Net Gain/(Loss) on Available-for-Sale Financial Assets – – – – 105,867,433 – – – – – 105,867,433 Actuarial Gain/(Loss) on Retirement Benefit Obligation – – – – – – (5,671,558) – – – (5,671,558) – – 31,621,204 (7,681,619) (23,911,123) – (5,671,558) – (81,319,297) – (86,962,393)
Disposal of Subsidiaries – – – (152,486,439) – 21,850,000 – – 152,486,439 – 21,850,000 Write Back of Unclaimed Dividends – – – – – – – – 3,057,570 – 3,057,570 Transfers to/(from) during the Year 280,621,424 (378,195,795) – – – – – – 97,574,371 – – Treasury Share Adjustment – – – – – 1,709,915 – – – 1,709,915 Effect of Change in Holding – – – – – – – – (151,930,975) – (151,930,975) Dividend Paid – – – – – – – – (434,177,977) – (434,177,977)
VALLIBEL ONE PLC ANNUAL REPORT At the end of the Year 908,852,924 – 752,872,749 (1,351,257) (777,036,462) (44,111,716) (55,377,827) 50,178,869 6,738,821,098 (125,718) 7,572,722,659 2015 | 16 27.2 RESERVES – GROUP 27.1 RESERVES – COMPANY 27. RESERVES BenefitObligation FinancialAssets At theendofYear Dividend Paid Effect ofChangeinHolding Treasury Share Adjustment Transfers to/(from) duringtheYear Write Back ofUnclaimedDividends Disposal ofSubsidiaries Actuarial Gain/(Loss) onRetirement Net Gain/(Loss) onAvailable-for-Sale Exchange Difference –onTranslation of Revaluation ofLandandBuildings ofEquityAccounted Investees Share ofOtherComprehensive Income Other Comprehensive Income Profit for the Year At thebeginningofYear 2015 At theendofYear Dividend Paid Assets to Profit orLoss Available-for-Sale Financial Reclas Other Comprehensive Income Profit for theYear Super GainsTax 2013/14 At thebeginningofYear Foreign Operations sification ofLoss on
Profits/(Losses) (434,623,741) 759,141,076 381,944,774 706,445,360 Retained (16,749)
2015 – – Rs.
(255,622,912) (157,097,489) Available-for- 908,852,924 280,621,424 628,231,500 Sale Reserve 32,738,760 65,786,663 Reserve 2015 Fund – – – Rs. – – – – – – – – – – – Rs Rs Capital Reserve (434,623,741) 759,141,076 126,321,862 549,347,871 (378,195,795) 32,722,011 65,786,663 378,195,795 Investment Total 2015 – Rs. Fund – – – – – – – – – – – – Rs Rs Profits/(Losses) (543,279,677) 664,199,028 706,445,360 762,296,122 (65,043,477) 752,872,749 721,251,545 Retained (25,113) 23,647,755 31,621,204 Revaluation 7,973,450 2016 – Rs. Reserve – – – – – – – – – – Rs Rs (194,020,704) (157,097,489) (351,118,193) Available-for- Sale Reserve OtherComponentofEquity Foreign Currency (152,486,439) 158,816,801 (1,351,257) (7,681,619) (8,457,181) 2016 Translation – – – Rs. 775,562 Reserve Rs. – – – – – – – – (194,045,817) (543,279,677) 664,199,028 549,347,871 411,177,929 (65,043,477) (777,036,462) (753,125,339) (129,778,556) 105,867,433 Total (23,911,123) 2016 Available-for Sale Reserve – Rs. Rs. – – – – – – – – – (44,111,716) (67,671,631) 21,850,000 1,709,915 Treasury Shares Rs. – – – – – – – – – –
(49,706,269) (55,377,827) (5,671,558) (5,671,558) Gain/(Loss) Actuarial Reserve Rs. – – – – – – – – – – 50,178,869 50,178,869 General Reserve Revenue Reserve Rs. – – – – – – – – – – – – 4,262,036,871 6,738,821,098 2,891,094,095 (434,177,977) (151,930,975) 152,486,439 (81,319,297) (81,319,297) 97,574,371 3,057,570 Retained Earnings Rs. – – – (125,718) (125,718) Reserve Hedge Rs. – – – – – – – – – – – – 5,328,082,423 7,572,722,659 2,891,094,095 (202,348,841) (434,177,977) (151,930,975) 105,867,433 (86,962,393) 23,647,755 21,850,000 (5,671,558) (8,457,181) 1,709,915 3,057,570 Total Rs. –
VALLIBEL ONE PLC 167 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 168
Capital Reserve Other Component of Equity Revenue Reserve Reserve Investment Revaluation Foreign Currency Available-for Treasury Actuarial General Retained Hedge Total FINANCIAL FINANCIAL REPORTS Fund Fund Reserve Translation Sale Reserve Shares Gain/(Loss) Reserve Earnings Reserve Reserve Reserve Rs Rs Rs Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 2016 At the beginning of the Year 908,852,924 – 752,872,749 (1,351,257) (777,036,462) (44,111,716) (55,377,827) 50,178,869 6,738,821,098 (125,718) 7,572,722,659 Super Gain Tax 2013/14 (534,677,228) (534,677,228) Profit for the Year – – – – – – – – 4,227,980,081 – 4,227,980,081 Other Comprehensive Income Share of Other Comprehensive Income of Equity Accounted Investees – – – 5,029,598 (33,469,429) – 12,367,767 – – – (16,072,065) Revaluation of Land and Buildings 391,000,368 391,000,368 Exchange Difference on Translation of Foreign Operations – – – 2,378,932 – – – – – – 2,378,932 Net Gain/(Loss) on Available-for-Sale Financial Assets – – – – (186,465,613) – – – – – (186,465,613) Actuarial Gain/(Loss) on Retirement Benefit Obligation – – – – – – 10,026,201 – – – 10,026,201 – – 391,000,368 7,408,530 (219,935,042) – 22,393,968 – – – 200,867,823
Dividend Written Back – – – – – – – 5,006,925 – – 5,006,925 Transfers to/(from) during the Year 524,453,100 – – – – – – 523,263,455 (1,047,716,555) – – Effect of Change in Holding – – – – – – – – (982,085) – (982,085) Dividend Paid – – – – – – – – (543,740,381) – (543,740,381)
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES At the end of the Year 1,433,306,024 – 1,143,873,117 6,057,273 (996,971,504) (44,111,716) (32,983,859) 578,449,249 8,839,684,930 (125,718) 10,927,177,794
Reserve Fund is a capital reserve which contains profits transferred as required by Section 3 (b) (ii) of Central Bank Direction No. 1 of 2003.
27.3 As per the provisions of Part III of the Finance Act No. 10 of 2015, the Company was liable for Super Gain Tax of Rs. 810,301,496/-. According to the Act, the Super Gain Tax shall be deemed to be an expenditure in the Financial Statements relating to the year of assessment which commenced on 1st April 2013. The Act supersedes the requirements of the Sri Lanka Accounting Standards and hence the expense of Super Gain Tax is accounted in accordance with the requirements of the said Act as recommended by the Statement of Alternative Treatment (SOAT) on Accounting for Super Gain Tax issued by the Institute of Chartered Accountants of Sri Lanka, dated 24th November 2015. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 BenefitObligation Foreign Operations FinancialAssets At theendofYear Dividend Paid Effect ofChangeinHolding Transfers to/(from) duringtheYear Dividend Written Back Actuarial Gain/(Loss) onRetirement Net Gain/(Loss) onAvailable-for-Sale Exchange Difference onTranslation of Revaluation ofLandandBuildings ofEquityAccounted Investees Share ofOtherComprehensive Income Other Comprehensive Income Profit for theYear Super GainTax 2013/14 At thebeginningofYear 2016
1,433,306,024 908,852,924 524,453,100 Reserve Fund – – – – – – – – – Rs Rs Capital Reserve Investment Fund – – – – – – – – – – – – Rs Rs 1,143,873,117 391,000,368 752,872,749 391,000,368 Revaluation Reserve – – – – – – – – – Rs Rs OtherComponentofEquity Foreign Currency (1,351,257) 6,057,273 7,408,530 2,378,932 5,029,598 Translation Reserve Rs. – – – – – – – (777,036,462) (996,971,504) (219,935,042) (186,465,613) (33,469,429) Available-for Sale Reserve Rs. – – – – – – – (44,111,716) (44,111,716) Treasury Shares Rs. – – – – – – – – – –
(32,983,859) (55,377,827) 22,393,968 10,026,201 12,367,767 Gain/(Loss) Actuarial Reserve Rs. – – – – – – – 578,449,249 523,263,455 50,178,869 5,006,925 General Reserve Revenue Reserve Rs. – – – – – – – – (1,047,716,555) 8,839,684,930 6,738,821,098 4,227,980,081 (534,677,228) (543,740,381) (982,085) Retained Earnings Rs. – – – – – – (125,718) (125,718) Reserve Hedge Rs. – – – – – – – – – – 10,927,177,794 7,572,722,659 4,227,980,081 (534,677,228) (543,740,381) (186,465,613) 391,000,368 200,867,823 (16,072,065) 10,026,201 5,006,925 2,378,932 (982,085) Total Rs. –
VALLIBEL ONE PLC 169 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 170
28. PRINCIPLE SUBSIDIARIES WITH NON–CONTROLING INTERESTS
FINANCIAL FINANCIAL REPORTS Summarised financial information in respect of Vallibel One PLC’s subsidiaries that have non-controlling interest, reflecting amounts before inter-company eliminations, is set out below:
Royal Ceramics L B Finance PLC Delmege Limited Lanka PLC Rs. Rs. Rs. Non-Controlling Interests in % 48.99 35.70 38.80 Accumulated Balance of Non-Controlling Interest 13,573,745,417 2,697,790,547 307,830,955
Summarised Statement of Profit or Loss for the Year ended 31st March 2016 Revenue 24,904,750,261 15,646,467,206 7,182,347,344 Cost of Sales (15,347,764,025) (5,773,255,097) (5,439,983,505) Administrative Expenses (1,399,337,726) (2,155,849,448) (734,917,945) Finance Cost (822,747,972) – (327,148,143) Finance Income 68,818,196 582,213 38,509,890 Profit/(Loss) before Tax 5,707,555,890 5,324,615,526 (187,871,142) Income Tax (1,615,810,868) (1,606,822,662) (26,678,144) Profit/(Loss) after Tax 4,091,745,022 3,717,792,864 (214,549,286) Attributable to Owners 1,496,803,386 2,390,540,812 (67,008,509) Attributable to Non-Controlling Interest 2,594,941,636 1,327,252,052 (147,540,777) Total Comprehensive Income 5,702,610,963 3,729,029,226 (214,274,571) Dividend paid to Non-Controlling Interest (550,136,503) (271,972,797) –
Summarised Statement of Financial Position
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES as at 31st March 2016 Current Assets 13,161,469,062 48,253,738,764 4,672,842,003 Non-Current Assets 26,011,568,976 36,262,897,967 2,745,597,026 Current Liabilities 9,144,864,643 50,333,797,277 5,216,615,643 Non-Current Liabilities 7,569,379,368 23,703,520,265 848,852,483 Total Equity 22,458,794,024 10,479,319,188 1,352,970,902
Attributable to: Equity Holders of Parent 7,462,662,647 6,738,202,238 458,931,265 Non-Controlling Interest 14,996,131,377 3,741,116,950 894,039,637
Summarised Statements of Cash Flows for the Year ended 31st March 2016 Operating Cash Flows 4,882,397,888 (5,272,850,502) (690,768,032) Investing Cash Flows (1,492,750,108) 4,108,465 (77,594,276) Financing Cash Flows (1,859,778,162) 5,535,615,475 244,360,362 Net Increase/(Decrease) in Cash and Cash Equivalents 1,529,869,619 266,873,438 (524,001,945) VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 32. OTHER OPERATING INCOME 31. DIVIDEND INCOME 30. REVENUE
29. CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS Profit onDisposalofInvestment Sundry Income Amortisation ofCapital &Revenue Grants Biological Assets Change inFair Value ofConsumable Rent Income Hiring Income Commission Income Real Estate Income (NetofCost) PlantandEquipment Profit onSale ofProperty, Income from OtherInvestments Income from Investment inRelated Parties Rendering ofServices Sale ofGoods Financial Services Sector Manufacturing Sector Summary attheendofYear Cash andEquivalents Bank Overdrafts (Note 19) Treasury Bill Repurchase Agreement Short Term BankDeposits Cash inHandandatBank
808,133,606 808,133,606 41,298,454 41,298,454 41,298,454 2016 2016 2016 2016 – – – – – – – – – – – – – – – – – – – Rs. Rs. Rs. Rs. Company Company Company Company 632,401,641 144,183,081 632,401,641 144,183,081 19,885,841 19,885,841 19,885,841 2015 2015 2015 2015 – – – – – – – – – – – – – – – – – Rs. Rs. Rs. Rs. 47,667,846,114 15,589,285,974 24,896,301,896 (3,161,850,015) 8,578,411,050 5,416,561,035 2,640,934,985 4,965,469,641 6,717,929,149 301,147,331 972,006,424 155,124,855 464,329,095 (20,292,675) 24,510,247 40,768,000 31,283,000 55,311,291 16,058,165 11,506,880 24,510,247 4,953,000 6,434,815 2016 2016 2016 2016 – Rs. Rs. Rs. Rs. (3,745,766,594) 43,449,784,018 14,646,909,976 22,379,069,222 7,869,209,297 4,123,442,703 2,688,692,895 5,168,796,070 5,968,329,002 Group 483,331,162 131,168,329 134,047,031 455,475,818 Group Group Group 39,413,007 18,292,022 11,720,332 56,640,000 26,988,000 14,763,381 18,292,022 75,122,107 4,653,000 536,306 2015 2015 2015 2015 – Rs. Rs. Rs. Rs.
VALLIBEL ONE PLC 171 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 172
33. FINANCE COST
FINANCIAL FINANCIAL REPORTS Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs.
Interest on Loans – – 1,000,413,960 1,069,579,380 Interest on Bank Overdrafts – – 104,864,749 143,984,597 Interest on Finance Leases – – 16,574,172 20,849,180 RTS international and Trade Card Charged – – 8,918,721 1,166,002 Net loss on Financial Assets at Fair Value through Profit or Loss 45,503,975 13,469,409 83,407,034 8,984,647 Net Loss on Available-for-Sale Financial Assets – 65,786,663 – 65,786,662 Write Off of Intercompany Balances – – – 2,032,000 45,503,975 79,256,072 1,214,178,636 1,312,382,468
34. FINANCE INCOME
Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs.
Exchange Gain – – 13,703,794 25,964,385 Interest Income 206,195,328 186,846,374 246,633,843 138,849,977 Appreciation in Market Value of Quoted Shares – 17,167,485 9,065,175 20,912,468 Realised Gain on Disposal of AFS Investment – 98,565,135 – 98,565,135 206,195,328 302,578,994 269,402,812 284,291,965 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES 35. INCOME TAX EXPENSE The major components of income tax expense for the year ended 31st March are as follows:
INCOME STATEMENT
Company Group
2016 2015 2016 2015 Rs. Rs. Rs. Rs. Current Income Tax Current Income Tax charge (Note 35.1) 57,734,692 52,316,984 2,428,882,569 1,448,436,070 Share of Associate Company Income Tax – – 562,702,990 410,685,775 Under/(Over) Provision of Current Taxes in Respect of Prior Years – 81,421,350 232,454,213 (8,074,710)
Deferred Income Tax Deferred Tax Charge/(Reversal) (1,074,356) 495,442 288,927,242 152,089,925
VALLIBEL ONE PLC ANNUAL REPORT Income Tax Expense Reported in the Income Statement 56,660,336 134,233,776 3,512,967,015 2,003,137,060 2015 | 16 35.1 RECONCILIATION TAX BETWEEN CHARGE AND THE PRODUCT OF ACCOUNTING PROFIT Income Tax onProfit @10% Income Tax onProfit ofExportSales @12% Income Tax onProfit ofLocal Sales @28% Taxable Income Qualifying Payment Relief Interest Income Tax Losses Utilised Deductible Expenses Non-Deductible Expenses Exempt Profit Share ofResults ofEquityAccounted Investees Accounting Profit (PBT) Income Tax onActurialGain/(Loss) Income Tax onRevaluation ofBuildings Income Tax onAvailable-for-Sale Comprehensive Income Consolidated Statements ofOther (808,133,606) 720,859,364 206,195,328 206,195,328 720,859,364 57,734,692 57,734,692 87,274,242 9,766 9,766 2016 2016 – – – – – – – – Rs. Rs. Company Company (895,547,932) 893,374,853 186,846,375 186,846,374 893,374,853 52,316,984 52,316,984 2,173,079 6,514 6,514 2015 2015 – – – – – – – – Rs. Rs. 10,969,686,616 (4,255,201,011) (1,532,686,923) 2,428,882,569 9,436,999,692 2,278,100,738 2,379,994,295 6,740,739,113 (219,132,263) (210,965,690) (265,421,634) (388,201,581) (414,064,491) 246,633,843 112,762,995 38,018,836 (8,166,573) 2016 2016 – Rs. Rs. (4,133,823,176) (2,433,528,621) (1,145,562,925) 1,448,436,070 6,203,101,420 1,356,580,272 2,751,035,090 2,312,824,861 7,348,664,345 (212,809,829) 138,849,977 Group Group 15,058,897 11,635,643 74,274,639 17,581,159 3,423,255 2015 2015 – – Rs. Rs.
VALLIBEL ONE PLC 173 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 174
36. PROFIT FROM OPERATION STATED AFTER THE FOLLOWING EXPENSES
FINANCIAL FINANCIAL REPORTS Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs.
Directors' Fees 1,800,000 7,200,000 40,713,486 41,581,119 Auditors' Remuneration (Fees and Expenses) 209,790 190,400 17,676,475 16,217,538 Depreciation 8,647,432 9,157,513 1,613,036,153 1,561,319,934 Amortisation – – 87,801,129 69,828,866 Employee Benefits including the following Other Staff Costs 22,504,565 13,248,898 5,580,467,406 5,220,351,908 Defined Benefit Plan Costs – Gratuity 1,012,976 569,425 216,999,264 204,189,192 Defined Contribution Plan Costs – EPF & ETF 2,633,579 1,504,489 523,541,838 477,471,020 Export Duty Rebate – – 4,248,609 (8,662,402) Loss on Translation of Foreign Currency – – 22,841,460 14,919,199 Donation 237,000 – 3,017,916 2,257,916 Damage Stocks Net of Insurance Claims Received – – 48,067,795 33,473,034
37. EARNINGS PER SHARE Basic Earnings Per Share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.
The following reflects the Income and Share data used in the Basic Earnings Per Share computation. NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Amounts Used as the Numerators: Net Profit Attributable to Ordinary Shareholders of the Parent for Basic Earnings Per Share 664,199,028 759,141,076 4,227,980,081 2,891,094,095
2016 2015 2016 2015 Number Number Number Number Number of Ordinary Shares Used as Denominators for Basic Earnings per share Weighted Average Number of Ordinary Shares in issue Applicable to Basic Earnings Per Share 1,086,559,353 1,086,559,353 1,086,559,353 1,086,559,353
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 provides theprofit/(loss) amountused: of ordinary shares for boththebasicanddiluted amounts isasperthetable above. TheFollowing table To calculate theearningspershare amounts for discontinued operation istheweighted average number ContinuingOperations Basic/Diluted EarningsPer Share for Basic/Diluted EarningsPer Share theEffect ofDilution Holders oftheParent Adjusted for Net Profit Attributable to Ordinary Equity Holders oftheParent for BasicEarnings Net Profit Attributable to Ordinary Equity Discontinued Operations EquityHolders oftheParent from Profit/(Loss) Attributable to Ordinary ContinuingOperations EquityHolders oftheParent from Net Profit Attributable to Ordinary Shares Adjusted for theEffect ofDilution Weighted Average NumberofOrdinary Effect ofDilution: Shares for BasicEarningsperShare Weighted Average NumberofOrdinary 1,086,559,353 1,086,559,353 664,199,028 664,199,028 664,199,028 0.61 0.61 2016 2016 2016 – Rs. Rs. Rs. Company 1,086,559,353 1,086,559,353 759,141,076 759,141,076 759,141,076 0.70 0.70 2015 2015 2015 – Rs. Rs. Rs. 4,227,980,081 4,227,980,081 4,227,980,081 1,086,559,353 1,086,559,353 3.89 3.89 2016 2016 2016 – Rs. Rs. Rs. 2,891,094,095 2,891,094,095 2,957,707,306 1,086,559,353 1,086,559,353 (66,613,211) Group 2.72 2.66 2015 2015 2015 Rs. Rs. Rs.
VALLIBEL ONE PLC 175 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 176
38. OPERATING SEGMENT INFORMATION
FINANCIAL FINANCIAL REPORTS Investment Sector Tiles Sector Sanitaryware Secor Plantation Sector Bank & Finance Hotel 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Revenue – – 16,986,148,546 14,824,351,788 1,578,465,557 1,353,789,249 1,799,830,000 2,164,859,000 15,597,411,280 14,646,909,976 – – Cost of Sales – – (9,216,184,520) (8,873,799,449) (948,032,602) (880,230,620) (1,798,215,000) (2,023,283,000) (5,726,657,184) (5,883,907,418) – – Gross Profit – – 7,769,964,025 5,950,552,339 630,432,955 473,558,628 1,615,000 141,576,000 9,870,754,096 8,763,002,558 – – Dividend Income 15,021,837 17,012,938 – 472,784 – – – – 6,754,204 806,300 – – Other Operating Income – 75,122,107 38,289,997 69,204,298 12,189,725 307,157 45,815,000 69,493,000 75,541,090 134,820,417 – – Administrative Expenses (109,089,146) (94,032,790) (1,073,929,218) (988,045,104) (26,491,396) (25,370,917) (88,386,000) (87,406,000) (2,147,724,143) (1,848,849,019) (20,910,279) (18,807,629) Distribution Expenses – – (2,654,136,757) (2,165,089,442) (223,933,604) (56,448,823) – – – – – – Other Operating Expenses (39,467,878) – (9,580,211) (8,393,707) – – – – (1,825,151,183) (3,121,280,057) – – Results from Operating Activities (133,535,187) (1,897,745) 4,070,607,837 2,858,701,168 392,197,680 392,046,046 (40,956,000) 123,663,000 5,980,174,064 3,928,500,199 (20,910,279) (18,807,629)
Finance Cost (58,903,975) (65,786,663) (579,577,495) (652,168,207) (37,682,400) (36,204,311) (48,539,000) (39,793,000) – – (64,950) (42,010) Finance Income 158,976,045 225,855,383 66,627,745 1,244,156 81,517 1,501 488,000 – 582,213 2,468,577 212,945 201,034 Net Finance Cost 100,072,071 160,068,720 (512,949,750) (650,924,051) (37,600,883) (36,202,810) (48,051,000) (39,793,000) 5,980,756,277 2,468,577 147,995 159,024 Share of Results of Equity Accounted Investees – – – – – – – – 1,516,547,494 1,167,035,242 16,139,429 (21,472,317) Gold Loans Auction Losses – – – – – – – – (29,358,088) (214,928,977) – – Profit Before Value Added Tax (33,463,117) 158,170,975 3,557,658,087 2,207,777,117 354,596,797 355,843,236 (89,007,000) 83,870,000 7,467,945,683 4,883,075,042 (4,622,855) (40,120,922) Value Added Tax on Financial Services – – – – – – – – (593,451,556) (315,232,097) – – Profit/(Loss) before Tax (33,463,117) 158,170,975 3,557,658,087 2,207,777,117 354,596,797 355,843,236 (89,007,000) 83,870,000 6,874,494,127 4,567,842,944 (4,622,855) (40,120,922) Income Tax Expense (101,192,678) (179,250,918) (1,079,856,671) (131,798,466) (16,169,195) (16,695,227) 2,906,000 (24,576,000) (2,156,656,550) (1,149,727,591) (12,964,661) (15,681) Profit/(Loss) for the Period (134,655,795) (21,079,943) 2,477,801,416 2,075,978,651 338,427,602 339,148,009 (86,101,000) 59,294,000 4,717,837,577 3,418,115,353 (17,587,516) (40,136,603)
Consumer Sector Life Style Sector Health Sector Other Group
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Revenue 2,549,973,671 2,834,295,409 1,839,747,124 1,394,165,857 2,277,781,349 1,691,265,122 5,038,488,587 4,540,147,616 47,667,846,114 43,449,784,018 Cost of Sales (2,057,474,460) (2,299,000,308) (1,387,530,773) (1,048,920,606) (1,856,756,846) (1,369,502,181) (3,522,553,443) (3,452,979,468) (26,513,404,828) (25,831,623,050) Gross Profit 492,499,211 535,295,101 452,216,351 345,245,251 421,024,503 321,762,942 1,515,935,145 1,087,168,148 21,154,441,286 17,618,160,968 Dividend Income – – – – – – 2,734,206 – 24,510,247 18,292,022 Other Operating Income 724,243 712,441 6,316,808 16,897,427 410,082 7,526 121,860,385 116,766,789 301,147,331 483,331,162
Administrative Expenses (172,252,270) (132,473,568) (123,138,856) (132,295,633) (62,665,540) (74,273,813) (580,404,986) (620,753,253) (4,404,991,834) (4,018,167,725) Distribution Expenses (320,637,702) (384,396,626) (160,256,950) (139,977,884) (193,546,682) (151,620,627) (398,288,819) (257,660,916) (3,950,800,512) (3,155,194,318) Other Operating Expenses – (51,465,736) (112,000,000) – – – (133,522,085) (3,929,612) (2,119,721,357) (3,185,069,111) Results from Operating Activities 333,483 (32,328,388) 63,137,354 89,869,161 165,222,363 95,876,027 528,313,845 321,591,156 11,004,585,161 7,761,352,998
Finance Cost (174,603,477) (200,121,503) (32,465,123) (47,411,967) (34,937,210) (55,300,532) (247,405,006) (215,554,274) (1,214,178,636) (1,312,382,468) Finance Income 7,386,233 12,413,729 8,872,794 10,672,890 399,114 5,131,481 25,776,207 26,303,214 269,402,812 284,291,965 Net Finance Cost (167,217,244) (187,707,775) (23,592,329) (36,739,077) (34,538,096) (50,169,050) (221,628,799) (189,251,060) (944,775,823) (1,028,090,502) Share of Results of Equity Accounted Investees – – – – – – – – 1,532,686,923 1,145,562,925 Gold Loans Auction Losses – – – – – – – – (29,358,088) (214,928,977) Profit Before Value Added Tax (166,883,761) (220,036,163) 39,545,024 53,130,084 130,684,267 45,706,977 306,685,046 132,340,096 11,563,138,172 7,663,896,442 Value Added Tax on Financial Services – – – – – – – – (593,451,556) (315,232,097)
VALLIBEL ONE PLC ANNUAL REPORT Profit/(Loss) before Tax (166,883,761) (220,036,163) 39,545,024 53,130,084 130,684,267 45,706,977 306,685,046 132,340,096 10,969,686,616 7,348,664,345 Income Tax Expense (1,371,645) – (1,774,662) (435,573) (770,280) – (145,116,673) (500,637,604) (3,512,967,015) (2,003,137,060) Profit/(Loss) for the Period (168,255,406) (220,036,163) 37,770,362 52,694,511 129,913,987 45,706,977 161,568,373 (368,297,508) 7,456,719,601 5,345,527,285 2015 | 16 38. OPERATING SEGMENT INFORMATION Profit/(Loss) for thePeriod Income Tax Expense Profit/(Loss) before Tax Value AddedTax onFinancialServices Profit Before Value Added Tax Gold LoansAuctionLosses Share ofResults ofEquityAccounted Investees Net Finance Cost Finance Income Finance Cost Results from Operating Activities Other Operating Expenses Distribution Expenses Administrative Expenses Other Operating Income Dividend Income Gross Profit Cost ofSales Revenue Profit/(Loss) for thePeriod Income Tax Expense Profit/(Loss) before Tax Value AddedTax onFinancialServices Profit Before Value AddedTax Gold LoansAuction Losses Share ofResults ofEquityAccounted Investees Net Finance Cost Finance Income Finance Cost Results from Operating Activities Other Operating Expenses Distribution Expenses Administrative Expenses Other Operating Income Dividend Income Gross Profit Cost ofSales Revenue (2,057,474,460) 2,549,973,671 (168,255,406) (166,883,761) (166,883,761) (167,217,244) (174,603,477) (320,637,702) (172,252,270) (134,655,795) (133,535,187) (109,089,146) (101,192,678) 492,499,211 (39,467,878) 100,072,071 158,976,045 (33,463,117) (33,463,117) (58,903,975) 15,021,837 (1,371,645) 7,386,233 333,483 724,243 2016 2016 – – – – – – – – – – – – – Rs. Rs. Investment Sector Consumer Sector (2,299,000,308) 2,834,295,409 (220,036,163) (220,036,163) (220,036,163) (187,707,775) (200,121,503) (384,396,626) (132,473,568) (179,250,918) 535,295,101 (32,328,388) (94,032,790) (51,465,736) 158,170,975 158,170,975 160,068,720 225,855,383 (65,786,663) (21,079,943) 12,413,729 17,012,938 75,122,107 (1,897,745) 712,441 2015 2015 – – – – – – – – – – – – – Rs. Rs. 16,986,148,546 (1,073,929,218) (1,387,530,773) (2,654,136,757) (9,216,184,520) (1,079,856,671) 1,839,747,124 4,070,607,837 7,769,964,025 3,557,658,087 3,557,658,087 2,477,801,416 (160,256,950) (123,138,856) (112,000,000) (579,577,495) (512,949,750) 452,216,351 (23,592,329) (32,465,123) 63,137,354 37,770,362 39,545,024 39,545,024 38,289,997 (1,774,662) (9,580,211) 66,627,745 6,316,808 8,872,794 2016 2016 – – – – – – – – Rs. Rs. Life Style Sector Tiles Sector 14,824,351,788 (1,048,920,606) (2,165,089,442) (8,873,799,449) 1,394,165,857 2,858,701,168 5,950,552,339 2,207,777,117 2,207,777,117 2,075,978,651 (139,977,884) (132,295,633) (988,045,104) (652,168,207) (131,798,466) (650,924,051) 345,245,251 (36,739,077) (47,411,967) 89,869,161 16,897,427 10,672,890 52,694,511 53,130,084 53,130,084 69,204,298 (8,393,707) 1,244,156 (435,573) 472,784 2015 2015 – – – – – – – – Rs. Rs. (1,856,756,846) 2,277,781,349 1,578,465,557 (193,546,682) (223,933,604) (948,032,602) 338,427,602 354,596,797 354,596,797 392,197,680 630,432,955 129,913,987 130,684,267 130,684,267 (62,665,540) (16,169,195) (37,600,883) (37,682,400) (26,491,396) (34,538,096) (34,937,210) 165,222,363 421,024,503 12,189,725 (770,280) 399,114 410,082 81,517 Sanitaryware Secor 2016 2016 – – – – – – – – – – Rs. Rs. Health Sector (1,369,502,181) 1,353,789,249 1,691,265,122 (151,620,627) (880,230,620) 355,843,236 355,843,236 392,046,046 473,558,628 321,762,942 339,148,009 (50,169,050) (55,300,532) (74,273,813) (16,695,227) (36,202,810) (36,204,311) (56,448,823) (25,370,917) 45,706,977 45,706,977 45,706,977 95,876,027 5,131,481 307,157 7,526 1,501 2015 2015 – – – – – – – – – – – Rs. Rs. (1,798,215,000) (3,522,553,443) 1,515,935,145 1,799,830,000 5,038,488,587 (221,628,799) (247,405,006) (580,404,986) (398,288,819) (145,116,673) (133,522,085) 121,860,385 161,568,373 306,685,046 306,685,046 528,313,845 (89,007,000) (89,007,000) (40,956,000) (86,101,000) (48,051,000) (48,539,000) (88,386,000) 45,815,000 25,776,207 1,615,000 2,906,000 2,734,206 488,000 2016 2016 – – – – – – – – – Rs. Rs. Plantation Sector (2,023,283,000) (3,452,979,468) 1,087,168,148 2,164,859,000 4,540,147,616 (368,297,508) (189,251,060) (215,554,274) (620,753,253) (257,660,916) (500,637,604) Other 116,766,789 132,340,096 132,340,096 321,591,156 123,663,000 141,576,000 (24,576,000) (39,793,000) (39,793,000) (87,406,000) 69,493,000 26,303,214 83,870,000 83,870,000 59,294,000 (3,929,612) 2015 2015 – – – – – – – – – – – Rs. Rs. (26,513,404,828) 10,969,686,616 11,563,138,172 11,004,585,161 21,154,441,286 15,597,411,280 47,667,846,114 (1,214,178,636) (4,404,991,834) (2,156,656,550) (2,147,724,143) (3,950,800,512) (5,726,657,184) (2,119,721,357) (3,512,967,015) (1,825,151,183) 7,456,719,601 4,717,837,577 6,874,494,127 7,467,945,683 5,980,174,064 9,870,754,096 5,980,756,277 1,532,686,923 1,516,547,494 (944,775,823) (593,451,556) (593,451,556) 301,147,331 269,402,812 (29,358,088) (29,358,088) 75,541,090 24,510,247 6,754,204 582,213 2016 2016 – – Rs. Rs. Bank &Finance (25,831,623,050) 17,618,160,968 14,646,909,976 43,449,784,018 (1,028,090,502) (1,312,382,468) (4,018,167,725) (1,149,727,591) (1,848,849,019) (3,155,194,318) (5,883,907,418) (3,185,069,111) (3,121,280,057) (2,003,137,060) 7,348,664,345 7,663,896,442 7,761,352,998 5,345,527,285 3,418,115,353 4,567,842,944 4,883,075,042 3,928,500,199 8,763,002,558 1,145,562,925 1,167,035,242 (214,928,977) (214,928,977) (315,232,097) (315,232,097) Group 483,331,162 134,820,417 284,291,965 18,292,022 2,468,577 2,468,577 806,300 2015 2015 – – Rs. Rs. (17,587,516) (20,910,279) (12,964,661) (20,910,279) 16,139,429 (4,622,855) (4,622,855) 212,945 147,995 (64,950) 2016 – – – – – – – – – Rs. Hotel (40,136,603) (40,120,922) (40,120,922) (18,807,629) (18,807,629) (21,472,317) 201,034 159,024 (42,010) (15,681) 2015 – – – – – – – – – Rs.
VALLIBEL ONE PLC 177 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 178
Investment Sector Tiles Sector Sanitary Secor Plantation Sector Bank & Finance Sectors Hotel Sector 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
FINANCIAL FINANCIAL REPORTS Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Assets and Liabilities Segment Assets 10,161,859,513 10,174,901,586 27,945,190,224 25,049,116,229 3,265,298,901 3,416,563,224 3,719,218,000 3,705,607,000 91,693,796,764 74,050,416,509 538,415,067 437,799,111 Total Assets 10,161,859,513 10,174,901,586 27,945,190,224 25,049,116,229 3,265,298,901 3,416,563,224 3,719,218,000 3,705,607,000 91,693,796,764 74,050,416,509 538,415,067 437,799,111
Segment Liabilities 24,760,512 21,561,119 11,438,593,095 11,849,888,841 600,640,830 721,123,027 2,093,094,000 2,070,230,000 73,380,274,718 58,850,490,836 26,720,253 23,285,854 Total Liabilities 24,760,512 21,561,119 11,438,593,095 11,849,888,841 600,640,830 721,123,027 2,093,094,000 2,070,230,000 73,380,274,718 58,850,490,836 26,720,253 23,285,854
Other Segment Information Total Cost Incurred during the Period to Acquire, Property, Plant and Equipment 23,407,019 2,749,566 1,499,635,295 1,147,936,735 118,103,367 111,748,626 205,803,000 277,779,000 499,456,226 260,481,444 66,042,381 48,870,199 Intangible Assets – – 12,090,377 60,194,091 – – – – 13,589,391 11,353,396 – – Depreciation and Amortisation 8,647,432 9,157,513 915,719,374 821,726,764 100,416,531 100,912,895 131,956,000 121,246,000 352,496,090 351,423,046 182,364 92,067 Provisions for Employment Benefit Liability 1,012,976 569,425 75,114,018 84,252,538 3,454,161 321,294 76,633,000 62,526,000 33,039,556 29,799,053 848,165 280,105
Consumer Sector Life Style Sector Health Sector Other Group 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Assets and Liabilities Segment Assets 2,043,474,095 2,018,150,792 1,133,932,167 948,671,117 1,795,872,192 1,846,302,748 8,574,684,737 7,870,043,325 150,871,741,660 129,517,571,643 Total Assets 2,043,474,095 2,018,150,792 1,133,932,167 948,671,117 1,795,872,192 1,846,302,748 8,574,684,737 7,870,043,325 150,871,741,660 129,517,571,643
Segment Liabilities 2,733,152,425 2,400,816,484 722,500,815 543,877,565 1,365,310,064 1,425,094,892 3,816,166,517 3,643,412,031 96,201,213,227 81,549,780,649 Total Liabilities 2,733,152,425 2,400,816,484 722,500,815 543,877,565 1,365,310,064 1,425,094,892 3,816,166,517 3,643,412,031 96,201,213,227 81,549,780,649
Other Segment Information NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Total Cost Incurred during the Period to Acquire, Property, Plant and Equipment 3,084,653 5,427,038 22,926,130 19,608,306 663,288 1,852,774 222,256,677 95,402,916 2,561,378,036 1,971,856,604 Intangible Assets 12,430,488 – – 257,141 3,185,441 1,443,945 – – 41,295,697 73,248,573 Depreciation and Amortisation 9,462,819 3,209,134 16,190,597 12,680,746 2,808,204 1,759,316 162,957,870 209,656,319 1,700,837,281 1,631,863,800 Amortisation of Leasehold Right Over Land – – – – – – – – – – Provisions for Employment Benefit Liability 1,743,355 2,659,658 4,302,660 1,593,099 1,844,125 2,579,117 19,007,247 19,608,902 216,999,264 204,189,192
39. COMMITMENTS AND CONTINGENCIES 39.1 CONTINGENT LIABILITIES
Company Group 2016 2015 2016 2015 Rs. Rs. Rs. Rs. Cases Pending Against the Company (Values Claimed) – – – 70,083,323 Guarantees issued to Banks and Other Institutions – – 22,660,000 18,150,000 Import LC and Ordinary Guarantees – – 182,361,157 254,449,909
VALLIBEL ONE PLC ANNUAL REPORT Total – – 205,021,157 342,683,232 2015 | 16 39.1 CONTINGENT LIABILITIES 39. COMMITMENTS AND CONTINGENCIES Total Import LC andOrdinary Guarantees OtherInstitutions Guarantees issued to Banks and (Values Claimed) Cases Pending Against theCompany Provisions for Employment BenefitLiability Amortisation ofLeasehold RightOver Land Depreciation andAmortisation Intangible Assets Property, PlantandEquipment Total Cost Incurred duringthePeriod to Acquire, Other SegmentInformation Total Liabilities Segment Liabilities Total Assets Segment Assets Assets andLiabilities Provisions for Employment BenefitLiability Depreciation andAmortisation Intangible Assets Property, PlantandEquipment Total Cost Incurred duringthePeriod to Acquire, Other SegmentInformation Total Liabilities Segment Liabilities Total Assets Segment Assets Assets andLiabilities 10,161,859,513 10,161,859,513 2,733,152,425 2,733,152,425 2,043,474,095 2,043,474,095 12,430,488 23,407,019 24,760,512 24,760,512 2016 1,743,355 9,462,819 3,084,653 1,012,976 8,647,432 – – – – Rs. 2016 2016 – – Rs. Rs. Company Investment Sector Consumer Sector 10,174,901,586 10,174,901,586 2,400,816,484 2,400,816,484 2,018,150,792 2,018,150,792 21,561,119 21,561,119 2015 – – – – 2,749,566 2,659,658 3,209,134 5,427,038 9,157,513 Rs. 569,425 2015 2015 – – – Rs. Rs. 205,021,157 182,361,157 22,660,000 11,438,593,095 11,438,593,095 27,945,190,224 27,945,190,224 1,499,635,295 1,133,932,167 1,133,932,167 915,719,374 722,500,815 722,500,815 75,114,018 16,190,597 22,926,130 12,090,377 2016 4,302,660 – Rs. 2016 2016 – – Rs. Rs. 342,683,232 254,449,909 Group 70,083,323 18,150,000 Life Style Sector Tiles Sector 11,849,888,841 11,849,888,841 25,049,116,229 25,049,116,229 1,147,936,735 543,877,565 543,877,565 948,671,117 948,671,117 821,726,764 84,252,538 12,680,746 19,608,306 60,194,091 2015 1,593,099 Rs. 257,141 2015 2015 – Rs. Rs. 1,365,310,064 1,365,310,064 3,265,298,901 3,265,298,901 1,795,872,192 1,795,872,192 100,416,531 118,103,367 600,640,830 600,640,830 1,844,125 2,808,204 3,185,441 3,454,161 663,288 2016 2016 Sanitary Secor – – Rs. Rs. Health Sector 1,425,094,892 1,425,094,892 1,846,302,748 1,846,302,748 3,416,563,224 3,416,563,224 100,912,895 111,748,626 721,123,027 721,123,027 2,579,117 1,759,316 1,443,945 1,852,774 321,294 2015 2015 – – Rs. Rs. 3,816,166,517 3,816,166,517 2,093,094,000 2,093,094,000 8,574,684,737 8,574,684,737 3,719,218,000 3,719,218,000 162,957,870 222,256,677 131,956,000 205,803,000 19,007,247 76,633,000 2016 2016 – – – Rs. Rs. Plantation Sector 3,643,412,031 3,643,412,031 Other 2,070,230,000 2,070,230,000 7,870,043,325 7,870,043,325 3,705,607,000 3,705,607,000 209,656,319 121,246,000 277,779,000 19,608,902 95,402,916 62,526,000 2015 2015 – – – Rs. Rs. 150,871,741,660 150,871,741,660 96,201,213,227 96,201,213,227 73,380,274,718 73,380,274,718 91,693,796,764 91,693,796,764 1,700,837,281 2,561,378,036 216,999,264 352,496,090 499,456,226 41,295,697 33,039,556 13,589,391 2016 2016 Bank &Finance Sectors – Rs. Rs. 129,517,571,643 129,517,571,643 81,549,780,649 81,549,780,649 58,850,490,836 58,850,490,836 74,050,416,509 74,050,416,509 1,631,863,800 1,971,856,604 Group 204,189,192 351,423,046 260,481,444 73,248,573 29,799,053 11,353,396 2015 2015 – Rs. Rs. 538,415,067 538,415,067 26,720,253 26,720,253 66,042,381 848,165 182,364 2016 – Rs. Hotel Sector 437,799,111 437,799,111 23,285,854 23,285,854 48,870,199 280,105 92,067 2015 – Rs.
VALLIBEL ONE PLC 179 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 180
LITIGATION
FINANCIAL FINANCIAL REPORTS Royal Ceramics Lanka PLC & Its Subsidiaries a) Companies within the Group issued corporate guarantees in favour of Royal Ceramics Lanka PLC, Royal Porcelain (Pvt) Limited, Rocell Bathware Limited and Ever Paint and Chemical Industries (Pvt) Limited guaranteeing loans, interest and other charges of the loans as stated in Note 21.
b) Horana Plantations PLC is defendant in lawsuits in respect of labour tribunal cases filed by employees for which maximum liability cannot be reliably measured as at the reporting date. Although there can be no assurance, the Directors believe, based on the information currently available, that the ultimate resolution of such legal procedures would not likely to have a material adverse effect on the results of operations, financial position or liquidity. Accordingly, no provision for any liability has been made in the Financial Statements.
c) Lanka Walltiles PLC As at the reporting date, Lanka Walltiles PLC has received assessments issued by the Department of Inland revenue in respect of Income tax, Value added tax and economic service charge totaling Rs. 52,581,411/- for the years of assessments 2008/09, 2009/10. The Company has appealed against the assessments in the appeal hearing branch.
The Directors believe, based on the information currently available, the ultimate resolution of such assessment is not likely to have a material adverse effect on the Company. Accordingly, no provision for liability has been made in these Financial Statement.
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES d) Horana Plantation PLC Unfulfilled condition on capital grants - Capital grants received from Ceylon Electricity Board for stand by power generators is subject to a condition of minimum usage of CEB power as against the Generator power. A liability will arise only if the above condition is not fulfilled.
Horana Planatation PLC - Contingent Rent (Refer Note 21.1.1.1 to the Financial Statements)
The case bearing No 27692/L filed by Rev. Hadapanagoda Mahinda Thero, claiming the possession of Dumbara Estate, on the basis that the terms of the indenture of the aforesaid lease agreement have been violated. The Thero also made the claims for the value of rubber trees excavated together with the interest. Furthermore the thero claims for the loss incurred due to the non-cultivation on the property leased.
The Directors believe, based on the information currently available, the ultimate resolution of such assessment is not likely to have a material adverse effect on the Company. Accordingly, no provision for liability has been made in these Financial Statements.
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 40.2 OTHER TRANSACTIONS WITH KEY MANAGERIAL PERSONNEL 40.1 COMPENSATION TO KEY MANAGERIAL PERSONNEL family members. transactions are entered between theCompanyandits Key ManagementPersonnel andtheirclose The Key Managerialpersonnel oftheCompanyare themembers ofits Board ofDirectors. Following 40. RELATED PARTY DISCLOSURES 39.2 COMMITMENTS of litigationswould notlikely to have amaterial impactontheGroup. buisness. Basedontheinformation currently available, theopinionofBoard thattheultimate resolution The above company hascontingent liabilitiesinrespect oflegal claimsarisingintheordinary course of Delmege Limited and its Subsidiaries TRANSACTIONS WITH KEY MANAGERIAL PERSONS Transport Charges Sales Rental Paid Interest ExpenseonFixed Deposits Fixed Deposits Accepted during the Year Post Employment Benefits Short Term Employment Benefits UnutilisedFacilities Contracted butNotProvided for - Ex - Non-Ex - Ex ecutive Directors ecutive Directors ecutive Directors
5,547,856 2,714,404 2016 2016 2016 – – – – – – – – – Rs. Rs. Rs. Company Company Company 4,800,000 2,400,000 2015 2015 2015 – – – – – – – – – Rs. Rs. Rs. 1,070,593,149 1,070,593,149 284,555,141 100,000,000 16,343,571 14,293,294 11,667,047 1,327,500 8,184,306 879,629 2016 2016 2016 – Rs. Rs. Rs. 939,953,007 287,316,147 833,384,923 106,568,084 287,547,120 Group Group Group 19,897,500 12,442,518 42,229,455 1,327,500 8,184,306 879,629 2015 2015 2015 Rs. Rs. Rs.
VALLIBEL ONE PLC 181 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 182
Transactions with entities that are controlled, jointly controlled or significantly influenced by Key Managerial
FINANCIAL FINANCIAL REPORTS Personnel or their close member of family, or shareholders who have either control, significant influences or joint control over entity.
Transactions with related parties other than disclosed above Note 40.2. Company Group 2016 2015 2016 2015 Nature of Transaction Note Rs. Rs. Rs. Rs. Fixed Deposits Accepted during the Period – – 20,022,498 37,483,545 Dividend Paid on Shareholding – – 663,600 3,259,718 Other Interest Income 40.3 163,345,717 116,140,472 163,345,717 116,140,472 Divedend Income 40.3 33,678,202 10,912,920 33,678,202 10,912,920 Investment in Fixed Deposits/ Debenture 40.3 1,775,604,261 1,510,350,843 1,775,604,261 1,510,350,843
40.3 RELATED COMPANIES
Company 2016 2015 Rs. Rs. Other Interest Income Vallibel Finance PLC 132,961,250 82,668,942 Pan Asia Banking Corporation PLC 30,384,467 33,471,531 163,345,717 116,140,472 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Dividend Income Hayleys PLC 13,095,504 10,912,920 The Kingsburry PLC 605,353 – The Fortress Resorts PLC 19,977,345 – 33,678,202 10,912,920
Investment in Fixed Deposits/Debenture Vallibel Finance PLC – Investment in Debentures 375,000,000 375,000,000 – Investment in Fixed Deposits 1,375,604,261 551,794,240 Pan Asia Banking Corporation PLC – Investment in Fixed Deposits – 571,556,603 – Investments in Repurchase Agreements 25,000,000 12,000,000 1,775,604,261 1,510,350,843 VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 40.5 TRANSACTION WITH RELATED ENTITIES 40.4 TRANSACTION WITH RELATED ENTITIES L BFinance PLC Delmege Limited Interest Received Lanka Ceramic PLC Royal Ceramics Lanka PLC L BFinance PLC Dividend Income Received L BFinance PLC Withdrawal ofFixed Deposit L BFinance PLC Investment madeinFixed Deposit ortress Resorts PLC Equity Investment inAssociates ortress Resorts PLC Dividend Income Associates Dividend Income Received Investment madeinFixed Deposit Interest Received Fund Transfers Subsidiaries The F The F Sampath BankPL C 40.5 40.5 40.5 Note 1,687,298,133 1,813,236,737 1,813,236,737 1,687,298,133 1,687,298,133 125,537,270 694,727,600 145,514,457 694,727,600 339,015,600 353,212,000 47,219,283 95,079,052 19,977,187 47,219,283 46,597,913 2,500,000 621,370 2016 2016 – – Rs. Rs. Company Company 1,522,117,808 1,500,000,000 1,500,000,000 1,522,117,808 1,522,117,808 200,859,632 455,598,200 200,859,632 455,598,200 226,010,400 229,587,800 125,430,731 125,430,731 56,575,800 72,076,819 72,076,819 65,588,929 6,487,890 2015 2015 – – Rs. Rs.
VALLIBEL ONE PLC 183 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 184
41. CURRENT AND NON CURRENT ANALYSIS OF ASSETS AND LIABILITIES
FINANCIAL FINANCIAL REPORTS The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled. 2016 2015 Within 12 After 12 Total Within 12 After 12 Total months months months months Rs. Rs. Rs. Rs. Rs. Rs. ASSETS Cash and Bank 8,578,411,050 – 8,578,411,050 7,869,209,297 – 7,869,209,297 Financial Assets - Fair Value through Profit or Loss 169,891,753 – 169,891,753 295,327,213 – 295,327,213 Short Term Investments 1,375,604,261 – 1,375,604,261 1,141,498,788 – 1,141,498,788 Loans and Receivables 20,162,628,148 6,661,541,217 26,824,169,365 15,558,330,588 7,079,430,820 22,637,761,408 Lease Rentals Receivables and Stock out on Hire 16,784,230,876 28,317,808,304 45,102,039,180 14,868,344,490 18,822,993,903 33,691,338,393 Financial Assets - Available-for-Sale 722,993,211 – 722,993,211 730,674,734 – 730,674,734 Other Financial Assets 4,360,564,843 – 4,360,564,843 2,265,837,328 – 2,265,837,328 Trade and Other Debtors, Deposits and Prepayments 5,389,838,754 – 5,389,838,754 5,079,531,604 – 5,079,531,604 Other Non-Financial Assets 1,687,060,465 – 1,687,060,465 1,875,423,380 – 1,875,423,380 Investment Associate – 9,700,149,230 9,700,149,230 – 9,214,980,398 9,214,980,398 Amount Due From Related Parties – – – 11,735,655 – 11,735,655 Deferred Tax Assets – 469,734,310 469,734,310 – 495,294,985 495,294,985 Income Tax Recoverable 73,011,893 – 73,011,893 105,529,431 – 105,529,431 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES Inventories 8,670,793,592 – 8,670,793,592 8,792,756,134 – 8,792,756,134 Intangible Assets – 13,130,583,151 13,130,583,151 – 13,173,051,382 13,173,051,382 Property, Plant and Equipment – 22,013,782,828 22,013,782,828 – 19,717,584,739 19,717,584,739 Biological Assets – 2,356,319,273 2,356,319,273 – 2,180,121,273 2,180,121,273 Investment Property – 238,714,000 238,714,000 – 239,404,000 239,404,000 Mining Lands – 8,080,500 8,080,500 – 511,500 511,500 Total Assets 67,975,028,847 82,896,712,813 150,871,741,660 58,594,198,640 70,923,373,003 129,517,571,643
LIABILITIES Due to Banks 6,646,327,864 10,393,484,348 17,039,812,212 4,854,885,753 5,611,241,245 10,466,126,998 Due to Customers 41,688,440,412 11,045,181,880 52,733,622,292 35,680,359,017 8,985,256,438 44,665,615,455 Interest Bearing Loans and Borrowings 6,244,959,645 8,739,799,958 14,984,759,603 6,251,548,728 10,270,671,742 16,522,220,470 Trade and Other Payables 5,364,778,349 – 5,364,778,349 5,466,723,449 – 5,466,723,449 Other Non-Financial Liabilities 1,967,060,622 – 1,967,060,622 1,617,739,093 – 1,617,739,093 Dividend Payable 170,126,424 – 170,126,424 107,784,635 – 107,784,635 Retirement Benefit Liability – 1,192,535,325 1,192,535,325 – 1,127,384,613 1,127,384,613 Income Tax Liabilities 1,392,211,517 – 1,392,211,517 715,063,885 – 715,063,885
VALLIBEL ONE PLC ANNUAL REPORT Deferred Tax Liabilities – 1,222,007,882 1,222,007,882 – 739,509,051 739,509,051 Deferred Income and Capital Grants – 134,299,000 134,299,000 – 121,613,000 121,613,000 Total Liabilities 63,473,904,834 32,727,308,393 96,201,213,227 54,694,104,560 26,855,676,089 81,549,780,649 2015 | 16 adjustment to ordisclosure intheFinancialStatements. There are noothercircumstances have arisensubsequentto thereporting date which would require 3. Market risk 2. Liquidityrisk 1. Credit risk 43. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (primarily for trade receivables) andfrom its financingactivities,including deposits withbanks. customer contract, leading to afinancialloss. TheGroup isexposed to credit riskfrom its operating activities Credit riskis theriskthatacounterparty willnotmeetits obligationsunder afinancialinstrument or 1. CREDIT RISK The following assets have beenpledged assecurityfor liabilitiesotherthanthatisdisclosed underNote 21.2. 42. ASSETS PLEDGED THE GROUP HAS EXPOSURE TO THE FOLLOWING RISKS FROM FINANCIAL INSTRUMENTS Deposits Freehold Building Real Estate Loan Inventory andDebtors Fixed Deposits Land andBuilding Inventory andDebtors Land andBuilding Fixed Deposits Stock outonHire Receivables and Lease Rental Nature ofassets Nature ofLiability Overdraft &Guarantee Syndicated loans Overdraft and Guarantee Finance, Shortterm loan Overdraft, LC, Import and Guarantee Finance, Shortterm loan Overdraft, LC, Import Guarantee Term Loan&Bank LC/Import Loan,Overdraft, Overdraft Guarantee Overdraft &Corporate Guarantee Overdraft &Corporate Syndicated Loan Loans, Overdrafts and 17,761,939,036 24,073,844,452 3,434,216,546 2,282,316,176 271,283,794 100,818,969 65,000,000 19,575,000 70,601,840 60,000,000 8,093,090 Carrying Pledged Amount 2016 Rs. 12,592,692,680 2,282,316,176 9,624,616,863 341,839,797 65,000,000 19,575,000 78,703,700 60,000,000 63,000,000 6,641,144 Carrying Pledged Amount 2015 – Rs. IncludedUnder Equipment Property, Plantand Assets Other Non-Financial Stock outonhire Receivables and Lease Rentals Receivables Inventory Trade &Other Cash andBank Equipment Property, Plantand Inventory &Receivables Equipment Property, Plantand Investment Investment
VALLIBEL ONE PLC 185 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 186
Credit risk constitutes the Group’s largest risk exposure category. This can be broadly categorised into three
FINANCIAL FINANCIAL REPORTS types; default, concentration and settlement risk.
DEFAULT RISK The risk of the potential financial loss resulting from the failure of customer or counterparty to meet its debt or contractual obligations and arises principally from the Group’s loans and advances to customers.
CONCENTRATION RISK The credit exposure being concentrated as a result of excessive build-up of exposure to a single counterparty, industry, product, geographical location or insufficient diversification.
SETTLEMENT RISK Settlement risk is the risk of loss arising from trading/investment activities when there is a mutual undertaking to deliver on a progressive basis.
COMMODITY PRICE RISK - GOLD LOAN Commodity risk refers to the uncertainties of future market values and of the size of the future income, caused by the fluctuation in the prices of commodities. Given the significance of the Gold Loans to the Company’s overall loan book, sharp fluctuations to the gold prices could have an adverse impact to earnings. Gold price risk could arise from either of adverse movements in the world prices, exchange rates, basis risk between local and world prices.
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES The Group currently manages the credit risk of lending's against gold by adopting following two strategies; zzQuicker repricing cycle: Group as a strategy grants for shorter periods, allowing it to reprice its cost promptly.
zzFrequent revisions of Loan-to-Value (LTV) ratio: the Group practices a process of revising advance offered per sovereign to reflect market value fluctuations to maintain the desired loan to value ratio.
TRADE RECEIVABLES Customer credit risk is managed by each business unit, subject to the Group’s established policy, procedures and control relating to customer credit risk management. Individual credit limits are defined in accordance with the prior experience with the customers. Outstanding customer receivables are regularly monitored. The requirement credit limits are defined in accordance with the prior experience with the customers. Outstanding customer receivables are regularly monitored.
The requirement for an impairment is analysed at each reporting date on an individual basis for major clients. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The maximum
VALLIBEL ONE PLC ANNUAL REPORT exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed 2015 | 16 3. MARKET RISK funding issufficiently available anddebtmaturingwithin12monthscan berolled over withexisting lenders. concentration ofriskwithrespect to refinancing its debtandconcluded itto below. Access to sources of and flexibility through theuseofbankoverdrafts, bankloans andfinance leases. TheGroup assessed the of safety inliquidassets aswell asGroup’s objective isto maintain abalance between continuity offunding liability managementcommittee (ALCO) analyses andmonitors liquidityrisk,maintains anadequate margin throughout market cycles, includingperiodsoffinancialstress. To achieve thisobjective theasset and The Group’s primaryobjective inliquidity riskmanagementisto ensure adequate fundingfor its businesses of thegrowing business volumes. liquidity iscritical to meettheGroup’s financialcommitment andto accommodate additionalfundingneeds This arisesprimarily dueto mismatches inthematurityprofile oftheGroup’s assets andliabilities.Adequate Liquidity riskrefers to thepossibility ofGroup nothavingsufficientcash to meetits payment obligations. 2. RISK LIQUIDITY customers are located inseveral jurisdictionsandindustries andoperate inlargely independentmarkets. The Group evaluates theconcentration ofriskwithrespect to trade receivables asbeinglow, since its in Statement ofFinancialPosition. TheGroup hold, collateral/bank guarantee assecuritywhenitnecessary. the basesofinterest rates. the maturitiesofassets andliabilities;basisriskwhich is thethreat to income arises dueto differences in give riseto interest rate risk;amongtheseare term structure risk,whicharisesdueto themismatches in mainly onthe earningsofthefinancingsegmentrather thanthemarket value ofportfolios. Several factors Due to thenature ofoperations ofthebusiness segmentof thegroup, theimpactofinterest rate riskis facilities, accepting deposits andissuing debtinstruments. unanticipated movements infuture interest rate whicharisesfrom core business activities;granting ofcredit Interest rate riskisakey constitute ofthemarket riskexposure oftheGroup dueto adverse and Group’s functionalcurrency). the Group’s operating activities(whenrevenue orexpense isdenominated inadifferent currency from the exchange rates. TheGroup’s exposure to theriskofchangesinforeign exchange rates relates primarily to Foreign currency riskisthethatchangesinfuture cash flows because ofchangesinforeign assets, equity investments classified asavailable-for-sale financialassets. risk includeloans and borrowings, equityinvestments classified asfair value through profit orloss financial commodity price riskandotherprice risksuchasequityprice risk.Financialinstruments affected bymarket of changesinmarket prices. Market prices comprise four typesofrisks: interest rate risk,currency risk, Market riskisthethatfair value offuture cash flows ofafinancialinstrument willfluctuate because INTEREST RATE RISK FOREIGN CURRENCY RISK
VALLIBEL ONE PLC 187 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 188
Excessive movements in market interest rate could result in severe volatility to Group’s net revenue and net
FINANCIAL FINANCIAL REPORTS margin. The Group’s exposure to interest rate risk is primarily associated with factors such as;
zzReprising risk arising from a fixed rate borrowing portfolio where reprising frequency is different to that of the lending portfolio.
zzYield curve risk arising from unanticipated shifts of the market yield curve
Interest rate risk is managed principally through minimising interest rate sensitive asset liability gaps. In order to ensure interest rate margin and spreads are maintained, the Group conducts periodic reviews and reprices its assets accordingly.
Company Group Change in basis Effect on Profit Effect on Profit points (+/-) Before Tax (+/-) Before Tax (+/-) Rs. '000 Rs. '000 2016 100 bps – 79,521 2015 100 bps – 137,831
EQUITY PRICE RISK The Group’s listed and unlisted equity securities are susceptible to market-price risk arising from uncertainties about future values of the investment securities. The Group manages the equity price risk through diversification of equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves all equity investment decisions. NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES
At the reporting date, the exposure to listed equity shares at fair value was Rs. 883,913,597/- (2015 – Rs. 1,017,030,580/-). A decrease of 10% on the ASPI could have a negative impact of approximately Rs. 16,122,509/- (2015 – Rs. 28,666,055/-) on the statement of comprehensive income (P&L) and Rs. 72,268,964/- (2015 – Rs. 73,037,003/-) on statement of comprehensive income (OCI) depending on whether or not the decline is significant or prolonged. An increase of 10% in the value of the listed
shares could have a positive impact of approximately Rs. 16,122,509/- (2015 – Rs. 28,666,055/-) on the statement of comprehensive income (P&L) and Rs. 72,268,964 (2015 – Rs. 73,037,003/-) on the statement of comprehensive income (OCI).
CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that it maintains a healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 adjustment to ordisclosure intheFinancialStatements. There are noothercircumstances have arisensubsequentto thereporting date whichwould require remaining respective contractual maturitydates/recovery cycle asatthereporting date are given below. An analysis oftheLBFinance PLC's assets employed andtotal liabilitiesattheyear end,basedonthe 43.1 ANALYSIS OF FINANCIAL ASSETS AND (Long term). The Group includeswithindebt,interest-bearing loans andborrowings, Dueto customers &Dueto Banks The Group monitors capital usingagearingratio, whichisnetdebtdividedbytotal capital plusdebt. LIABILITIES BY REMAINING CONTRACTUAL MATURITIES Gearing Ratio Total Capital NCI Equity Total Debt Due to Banks -LongTerm Loan(Note 19) Due to Customers (Note 20) Interest-Bearing LoansandBorrowings (Note 21) Total FinancialAssets Other FinancialAssets Available-for-Sale Financial Assets - andStock outonHire Lease Rentals Receivable Loans andReceivables Profit orLoss Fair Value through Financial Assets - Cash andBankBalances Financial Assets 8,652,402,410 2,640,832,834 4,578,657,700 1,086,429,072 197,425,481 138,411,349 10,645,973 OnDemand Rs. 23,154,886,555 10,224,120,713 1,920,905,925 6,020,750,629 4,989,109,288 03 Months Less than – – Rs.
25,526,342,663 16,296,902,196 2,152,431,694 7,077,008,773 Months 03-12 – – – Rs. 43,124,507,720 35,179,068,618 7,945,439,102 01-05 Years – – – – Rs. 136,266,872,525 54,670,528,433 16,579,366,919 38,091,161,514 81,596,344,092 13,877,962,197 52,733,622,292 14,984,759,603 1,367,219,565 1,354,542,979 12,676,586 Over 05 60% 2016 Rs. Years – – – – Rs.
115,875,987,322 47,967,790,994 13,231,084,615 34,736,706,379 67,908,196,330 44,665,615,455 16,522,220,471 101,825,358,914 60,150,230,863 31,179,769,268 6,720,360,404 4,270,763,100 6,075,538,360 138,411,349 10,645,973 Total 59% 2015 Rs. Rs.
VALLIBEL ONE PLC 189 NOTES TO THE FINANCIAL STATEMENTS FINANCIAL REPORTS 2015 | 16 ANNUAL REPORT 190
On Demand Less than 03-12 01-05 Over 05 Total 03 Months Months Years Years
FINANCIAL FINANCIAL REPORTS Rs. Rs. Rs. Rs. Rs. Rs. Financial Liabilities Due to Banks 699,271,523 575,308,097 4,019,824,217 11,925,243,402 – 17,219,647,240 Due to Customers 2,598,793,532 18,260,503,495 23,701,589,478 12,636,035,449 – 57,196,921,955 Debt Instruments Issued and Other Borrowed Funds – 83,438,125 819,227,425 2,549,753,900 – 3,452,419,450 Other Financial Liabilities 1,869,940,600 – – – – 1,869,940,600 Total Financial Liabilities 5,168,005,656 18,919,249,717 28,540,641,121 27,111,032,751 – 79,738,929,245 Total Net Financial Assets/(Liabilities) 3,484,396,754 4,235,636,838 (3,014,298,457) 16,013,474,970 1,367,219,565 22,086,429,669
44. EVENTS AFTER THE REPORTING DATE L B FINANCE PLC Subsequent to the reporting date, the Board of Directors of the Company recommended a first & final dividend of Rs. 7.50 per share for the year ended 31st March 2016.
ROYAL CERAMICS LANKA PLC Subject to the approval of the shareholders at the Annual General Meeting Directors recommended payment of a final dividend of Rs. 4/- per share for the year ended 31st March 2016.
Other than the above, there have been no material events occurring after the balance sheet date that require
NOTES TO THE FINANCIAL STATEMENTS FINANCIAL THE TO NOTES adjustment or disclosure in the Financial Statements.
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Information Shareholder 194 Statement Group Value Added 193 Company Five Year Summary- 192
Enclosed Form ofProxy General Meeting Notice ofAnnual 198 Index GRI Content 196
ANNEXES
VALLIBEL ONE PLC
2015 | 16 ANNUAL REPORT 192 FIVE YEAR SUMMARY - COMPANY
2016 2015 2014 2013 2012 ANNEXES Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Statement of Income Dividend Income 808,134 632,402 353,110 379,366 360,072 Other Income 206,195 446,762 299,963 368,887 347,691 Profit/(Loss) Before Tax 720,859 893,375 508,029 650,337 545,771 Tax Reversal/(Expenses) (56,660) (134,234) (48,258) (54,266) (73,853) Profit/(Loss) After Tax 664,199 759,141 459,771 596,071 471,918
Statement of Financial Position Stated Capital 27,163,984 27,163,984 27,163,984 27,163,984 27,163,984 Reserves 411,178 549,348 126,322 479,988 390,187 Shareholders' Fund 27,575,162 27,713,332 27,290,306 27,643,972 27,554,171 Assets 27,599,276 27,734,247 27,304,665 27,917,891 28,054,780 Liabilities 24,115 20,915 14,359 273,920 500,609
Ratios and Statistics Ordinary Dividends 543,280 434,624 760,592 325,968 – Dividend per Share 0.50 0.40 0.70 0.30 – Dividend Payout Ratio (%) 82 57 167 55 – Earnings per Share 0.61 0.70 0.42 0.55 0.44 Market Value per Share (Year-End) 17.80 20.30 17.00 16.00 19.00 Net Assets per Share 25.38 25.51 25.12 25.44 25.36
Earnings and Net Assets Per Share Market Capitalisation and Market Value
Rs.Rs. Rs.Rs.
0.44
0.55
0.42
0.70
0.61
19.00
16.00
17.00
20.30
17.80
25.60 0.80 25 25
20 20 25.40 0.60
15 15 25.20 0.40 10 10
25.00 0.20 5 5
22.06
17.38
18.47
20.64
19.34
25.36
25.12
25.51
25.38 24.80 25.44 0.00 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
VALLIBEL ONE PLC ANNUAL REPORT Net Assets Per Share (Rs.) Market Capitalisation (Rs.) Earning Per Share (Rs.) Market Value (Rs.) 2015 | 16 GROUP VALUE ADDED STATEMENT Retained Profit Retained for Future asDepreciation Lenders ofCapital Shareholders Government ofSriLanka Employees Less: Cost ofMaterial &Services boughtin Share ofAssociate Company'sProfit Finance &OtherIncome Turnover 2016 27% 20% 32% 8% 6% 7% Re tained for Future asDepreciation Government ofSriLank Lenders ofCapital Value Addition Re Shareholders Employees tained Profit (29,809,264) 19,986,330 19,986,330 49,795,593 47,667,846 6,321,009 5,449,245 1,613,036 1,130,772 1,365,850 4,106,419 1,532,687 595,060 a Rs.'000 Rs.'000 2016 2016 23% 10% 15% 37% 2015 8% 7% 100 32 27 20 8 6 7 % (29,619,333) 15,761,929 15,761,929 45,381,262 43,449,784 5,902,012 1,561,320 1,235,579 1,137,501 3,607,148 2,318,369 1,145,563 785,915 Rs.'000 Rs.'000 2015 2015 100 37 10 23 15 8 7 %
VALLIBEL ONE PLC 193 ANNEXES 2015 | 16 ANNUAL REPORT 194 SHAREHOLDER INFORMATION ANNEXES
1. GENERAL Stated Capital Rs. 27,163,983,720/-.
2. STOCK EXCHANGE LISTING Vallibel One PLC is a public quoted company, the ordinary shares of which are listed on the Diri Savi Board of the Colombo Stock Exchange. The date of listing was 08th July 2011.
3. PUBLIC HOLDING Shares held by the public as at 31st March 2016 was 19.243% comprising of 12,398 shareholders.
4. DISTRIBUTION OF SHAREHOLDERS AS AT 31ST MARCH 2016
From To No. of Holder No. of Shares % 1 1,000 9,096 2,730,851 0.25 1,001 10,000 2,577 7,249,409 0.67 10,001 100,000 594 21,265,088 1.96 100,001 1,000,000 119 31,912,856 2.94 Over 1,000,000 26 1,023,401,149 94.19 12,412 1,086,559,353 100.00
5. ANALYSIS OF SHAREHOLDERS AS AT 31ST MARCH 2016
No. of Holders No. of Shares % Local Individuals 11,979 741,038,123 68.20 Local Institutions 375 338,263,982 31.13 Foreign Individuals 50 2,275,625 0.21 Foreign Institutions 8 4,981,623 0.46 12,412 1,086,559,353 100.00
6. DIRECTORS' AND CEO'S SHAREHOLDING AS AT 31ST MARCH 2016
No of Shares %
Mr. K D D Perera 689,726,471 63.478 Mr. W D N H Perera – – Mr. J A S S Adhihetty 100,000 0.009 Mr. S H Amarasekara Shares held in the following manner Pan Asia Banking Corporation PLC/Mr. S H Amarasekara 1,000,000 0.092 Mrs. K Fernando 800,000 0.074 Mr. R N Asirwatham 800 0.000
VALLIBEL ONE PLC ANNUAL REPORT Mrs. Y Bhaskaran (CEO) – –
2015 | 16 Net asset per share oftheCompanyisRs. 25.38(2015–Rs. 25.51). 9. NET ASSET PER SHARE 8. SHARE PRICES FOR THE YEAR 7. SHAREHOLDERS MAJOR TWENTY Market price pershare As atendoftheYear Lowest duringtheYear Highest duringtheYear 20. 19. 18. 17. 16. 15. 14. 13. 12. 11. 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. Bank ofCeylon No.1Account Mellon BankN.A. –UPSGroup Trust National SavingsBank Mercantile Investments andFinance PLC Bank ofCeylon A/CCeybank UnitTrust Vallibel Leisure (Private) Limited Vallibel Investments (Pvt)Limited Employees' Provident Fund Mr. KDPerera People's Leasing&Finance PLC/L PHapangama Bartleet Asset Management(Pvt)Limited Mr. ASithampalam Prof. MTAFurkhan Employees' Trust Fund Board Sanka Ramoorthy Nadaraj Hatton NationalBankPLC/ Wickramaratnes (Pvt)Limited Mr. AMWeerasinghe Mr. HRSWijeratne Mr. KDAPerera Merrill JFernando &Sons(Pvt)Limited Total Others 09.03.2016 07.08.2015 Date 1,086,559,353 1,017,120,248 31st March 2016 101,549,200 689,726,471 91,929,063 91,966,451 69,439,105 No. ofShares 2015/16 2,427,704 2,800,000 3,143,693 5,176,000 8,850,404 1,203,700 1,314,000 1,567,000 1,672,000 1,722,140 1,760,383 1,865,000 2,000,000 2,069,000 2,079,039 2,299,000 Rs. 15.30 Rs. 26.70 Rs. 17.80 Price 100.000 63.478 93.609 6.391 0.223 0.258 0.289 0.476 0.815 8.461 8.464 9.346 0.111 0.121 0.144 0.154 0.158 0.162 0.172 0.184 0.190 0.191 0.212 % 07.04.2014 17.11.2014 1,086,559,353 1,010,281,699 31st March 2015 101,549,200 689,726,471 76,277,654 91,929,063 91,966,451 No. ofShares Date 1,567,604 2,800,000 3,330,000 5,176,000 6,497,409 1,314,000 1,567,000 1,672,000 1,722,140 1,865,000 2,000,000 2,069,000 1,231,361 2,299,000 2014/15 – - Rs. 16.70 Rs. 27.90 Rs. 20.30 100.000 63.478 92.980 7.020 8.461 8.464 0.144 0.258 0.306 0.476 0.598 9.346 0.121 0.144 0.154 0.158 0.172 0.184 0.190 0.113 0.212 Price – - %
VALLIBEL ONE PLC 195 SHAREHOLDER INFORMATION ANNEXES 2015 | 16 ANNUAL REPORT 196 GRI CONTENT INDEX ANNEXES
This report contains ‘Standard Disclosures from the GRI G4 Sustainability Reporting Guidelines’. This is the Organisation’s first attempt to comply with the Guidelines and hence is not in accordance with core or comprehensive criteria.
GRI Indicator Description Page No./ Explanations
General Standard Disclosures Strategy and Analysis G4-1 Statement from the most senior decision–maker 08
Organisational Profile G4-3 Name of the Organisation Back inner cover G4-4 Primary brands, products and services 64 and 65 G4-5 Location of the Organisation’s headquarters Back inner cover G4-6 Countries where the Organisation operates 32 G4-7 Nature of ownership and legal form Back inner cover G4-8 Markets served 12 to 14 G4-9 Scale of the reporting Organisation 04 G4-10 Workforce 58 and 59 G4-13 Changes during the reporting period regarding size, structure or ownership None G4-14 How the precautionary approach or principle is addressed by the Organisation 75 G4-16 List of memberships of associations Back inner cover
Identified Material Aspects and Boundaries G4-17 List of all entities included in the Organisation’s consolidation Financial Statements 64 and 65 G4-19 List of all material aspects identified in the process for defining report content 197 G4-20 Aspect boundary within the Organisation Vallibel One PLC Group is the boundary for the report
G4-22 Restatements of previous information None G4-23 Significant changes to the scope and boundary from This is the previous reporting periods first report in compliance with GRI guidelines
Stakeholder Engagement G4-24 List of stakeholder groups engaged by the Organisation 49
Report Profile G4-28 Reporting period 01st April 2015 to 31st March 2016
VALLIBEL ONE PLC ANNUAL REPORT G4-29 Date of most recent previous report This is the first report in compliance with GRI guidelines 2015 | 16 G4-PR5 Aspect: Product andService Labelling G4-PR1 Aspect: Customer HealthandSafety Sub-Category: Product Responsibility G4-SO1 Aspect: Local Communities Sub-Category: Society G4-LA12 Aspect: Diversity andEqualOpportunity G4-LA11 G4-LA10 G4-LA9 Aspect: Training andEducation G4-LA2 Aspect: Employment Sub-Category: LabourPractices andDecent Work Category: Social G4-EN27 Aspect: Products andServices G4-EN11 Aspect: Biodiversity Category: Environment G4-EC3 G4-EC2 G4-EC1 Aspect: Economic Performance Category: Economic Specific Standard Disclosures G4-34 Governance G4-32 GRI Content Index G4-31 G4-30 GRI Indicator Description Customer satisfaction surveys safety impacts are assessed for improvements Product and service categories for whichhealthand development programmes Engagement withthelocal community and Breakdown ofemployees according to diversity Regular performance andcareer development reviews upgrade employee skills Programmes implemented andassistance provided to Details ontraining provided for employees Benefits provided to full-timeemployees products andservices Impact ofmitigationenvironmental impacts of protected areas andareas ofhighbiodiversity Operational sites owned ormanagedinadjacent to Organisation’s definedbenefitplanobligations for theOrganisation’s activitiesdueto climate change Financial implications andotherrisks andopportunities Direct economic value generated anddistributed Governance structure oftheOrganisation Compliance withGRIG4Guidelines Contact pointregarding thereport Reporting cycle Page No./ Explanations 60 34, 37,47 28, 45 58 28 28 28 59 23, 26 37 109 and110 36 51, 193 74 196 Back innercover Annual
VALLIBEL ONE PLC 197 GRI CONTENT INDEX ANNEXES 2015 | 16 ANNUAL REPORT 198 NOTICE OF ANNUAL GENERAL MEETING ANNEXES
NOTICE IS HEREBY GIVEN that the Sixth (06th) 5. To re-appoint Messrs Ernst & Young, Chartered Annual General Meeting of the Company Accountants, as the Auditors of the Company will be held at "Balmoral" The Kingsbury, and to authorise the Directors to fix their No. 48, Janadhipathi Mawatha, Colombo 01 remuneration. on 12th July 2016 at 9.30 a.m. for the following purposes: 6. To authorise the Directors to determine donations for the year ending 31st March 2017 1. To receive the Annual Report of the Board of and up to the date of the next Annual General Directors on the affairs of the Company and Meeting. its subsidiaries and the Statement of Accounts for the period ended 31st March 2016 with the Report of the Auditors thereon. By Order of the Board, Vallibel One PLC 2. To re-elect as a Director Mr. J A S S Adhihetty who retires by rotation in terms of Articles 87 and 88 of the Articles of Association of the Company. P W Corporate Secretarial (Pvt) Limited Director/Secretaries 3. To re-elect as a Director Mrs. K Fernando who retires by rotation in terms of Articles 87 and 88 08th June 2016 of the Articles of Association of the Company. Colombo
4. To pass the ordinary resolution set out below to re-elect Mr. R N Asirwatham who is 73 years of Notes age, as a Director of the Company: 1. A Shareholder entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and “IT IS HEREBY RESOLVED THAT the age limit vote on behalf of him/her. stipulated in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. R N 2. A proxy need not be a Shareholder of the Company.
Asirwatham who is 73 years of age and that he 3. The Form of Proxy is enclosed for this purpose.
be and is hereby re-elected a Director of the 4. The completed Form of Proxy must be deposited at Company.” the Secretaries Office, P W Corporate Secretarial (Pvt) Limited, No. 3/17, Kynsey Road, Colombo 08 not later than 47 hours before the time appointed for the Meeting.
VALLIBEL ONE PLC ANNUAL REPORT 2015 | 16 Signed this...... day of...... Two ThousandandSixteen. o re-elect Mrs. KFernando asaDirector interms ofArticles 87and88of 2. o re-elect Mr. JASAdhihettyasaDirector interms ofArticles 87and88of 1. taken inconsequence oftheaforesaid Meetingandatanyadjournmentthereof. Sixth (6th)AnnualGeneral Meeting oftheCompanyto beheld on12thJuly 2016andatevery pollwhichmay be as my/our*proxy to represent andspeakvote asindicated hereunder for me/us* andonmy/our*behalfatthe Mr. RNAsirwatham Mrs. KFernando Mr. JASAdhihetty Mr. SHAmarasekera Mr. WDNHPerera Mr. KDPerera ...... (orfailing him)...... (NIC No...... )of...... being ashareholder/shareholders ofVALLIBEL ONEPLC hereby appoint...... (NIC No...... ) of...... I/We* ...... oxy neednot beaShareholder of theCompany. 2. 1. Notes: Signature of Shareholder/s ...... *Please delete asappropriate. o authorisetheDirectors to determine donationsfor theyear ending 5. o re-appoint Messrs Ernst &Young, Chartered Accountants, asAuditors of 4. o pass theordinary resolution setoutunderitem 4oftheNotice ofMeeting 3. FORM OF PROXY
for there-appointment ofMr. RNAsirwatham asaDirector. the Companyandto authorisetheDirectors to determine theirremuneration. 31st March 2017andupto thedate ofthenext AnnualGeneral Meeting. Instructions ast A pr T T T T T the Articles ofAssociation oftheCompany. the Articles ofAssociation oftheCompany.
o completion appearoverleaf.
of Col of Col of Col of Col of Col of Col ombo ombo orfailing her* ombo orfailing him* ombo orfailing him* ombo orfailing him* ombo orfailing him*
For
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VALLIBEL ONE PLC
2015 | 16 ANNUAL REPORT VALLIBEL ONE PLC FORM OF PROXY 2015 | 16 ANNUAL REPORT ease indicate witha‘X’how theproxy should vote oneachresolution. Ifnoindication isgiven, theproxy inhis 4. oxy shall– 3. ompleted proxy should be deposited attheSecretaries Office, PWCorporate Secretarial (Pvt)Limited, 2. 1. INSTRUCTIONS FOR COMPLETION
discretion willvote ashethinks fit. ase ofacompany orcorporate/statutory bodyeitherbeunderits CommonSealorsignedbyits (b) ase ofanindividualbesignedbytheshareholder orbyhisAttorney, andifsignedbyanAttorney, (a) duly signedanddated. and therelevant details oftheproxy should belegibly entered intheForm ofProxy whichshould be Pl The pr The c The fullname,NationalIdentityCar No. 3/17,Kynsey Road, Colombo 08notlater than47hours before thetimeappointed for theMeeting.
in thec in thec of Association ortheConstitution ortheStatute (asapplicable). Attorney orbyanOfficer onbehalfofthecompany orcorporate/statutory bodyinaccordance withits Articles already beenregistered withtheCompany. a notarially certified copy ofthePower ofAttorney should beattached to thecompleted proxy ifithasnot d numberandtheregistered address oftheshareholder appointingtheproxy
CORPORATE INFORMATION
NAME OF COMPANY HEAD OFFICE AND COMPANY SECRETARIES REGISTERED OFFICE Vallibel One PLC P W Corporate Secretarial (Pvt) Limited 29 West Tower, World Trade Center, No. 3/17, Kynsey Road, Colombo 8. Echelon Square, Colombo 1. LEGAL FORM Telephone: 011 464 0360 A public Quoted Company with limited Telephone: 011 244 5577 Fax: 011 474 0588 liability incorporated under the provision Fax: 011 244 1444 E-mail: [email protected] of the companies Act, No. 07 of 2007 Email: [email protected] Web: www.vallibelone.com AUDITORS DATE OF INCORPORATION Ernest & Young SUBSIDIARY COMPANIES 09th June 2010 Chartered Accountants QUOTED No. 201, De Saram Place, Colombo 10. L B Finance PLC COMPANY REGISTRATION NUMBER Royal Ceramic Lanka PLC BANKERS PB 3831 PQ Hatton National Bank PLC SUBSIDIARY COMPANIES Pan Asia Banking Corporation PLC NATURE OF THE BUSINESS UN-QUOTED Sampath Bank PLC Diversified holding company with Delmege Limited strategic investments. Greener Water Limited
BOARD OF DIRECTORS ASSOCIATE COMPANIES Mr. K D D Perera (Chairman/Managing Director) QUOTED Mr. W D N H Perera (Deputy Chairman) Sampath Bank PLC Mr. J A S S Adhihetty The Fortress Resorts PLC Mr. S H Amarasekara Mrs. K Fernando Mr. R N Asirwatham