Access Engineering PLC. 2011/12 Annual Report
Annual Report 2011/12
www.accessengsl.com CORPORATE INFORMATION
Name of Company Bankers Access Engineering PLC Bank of Ceylon Nations Trust Bank PLC Registered Office Sampath Bank PLC Level 8, Access Towers Hatton National Bank PLC 278, Union Place Commercial Bank of Ceylon PLC Colombo 02. People’s Bank Tel: +94 11 2302302 The Hongkong and Shanghai Banking Corporation Limited Fax: +94 11 2302333 Web - www.accessengsl.com Secretaries E-mail - [email protected] P W Corporate Secretarial (Pvt) Ltd 3/17, Kynsey Road Legal Form Colombo 08. A public limited liability company incorporated in Sri Lanka on Tel: +94 11 4640360 July 31, 2001 under the Companies Act No. 17 of 1982 and Re- Fax: +94 11 4740588 registered under the Companies Act No. 07 of 2007 on February 06, 2008. Auditors Messrs KPMG Ordinary Voting Shares are listed on the Dirisavi Board of the Chartered Accountants Colombo Stock Exchange. 32A, Sir Mohamed Macan Markar Mawatha Colombo 03. Company Registration Number Tel: +94 11 2426426 PB 200 PQ Fax: +94 11 2445872
Board of Directors S J S Perera J C Joshua D A R Fernando S H S Mendis T A G Fernando S D Munasinghe R J S Gomez A I Lovell Prof. K A M K Ranasinghe N D Gunaratne
Financial Highlights 2 The Planet 54 Chairman’s Message 4 Accreditations, Awards & Accolades 58 Management Discussion & Analysis 8 Independent Auditor’s Report 63 Corporate Governance 18 Income Statement 64 Annual Report of the Board of Directors 21 Balance Sheet 65 Audit Committee Report 23 Statement of Changes in Equity 66 Risk Management 24 Cash Flow Statement 67 Board of Directors 26 Notes to the Financial Statements 68 Corporate Management Team 28 Share Information 96 Engineering Projects 34 Notice of Meeting 99 Engineering Services 42 Form of Proxy Enclosed Designed and produced by emagewise People & Communities 48 Corporate Information IBC Digital plates and printing by Aitken Spence Printing & Packaging (Pvt) Ltd. Vision “To be the foremost Sri Lankan business enterprise in value engineering”
Mission “To meet the challenges in the development of multi sector civil engineering projects, providing innovative solutions whilst developing long term progressive relationships with all our stakeholders”
Our vision to ‘be the foremost Sri Lankan business enterprise in value engineering’ means more to us than operational excellence and investor value alone. We deal with people’s lives - their hopes, their dreams, their visions of building better prospects for themselves and for their children.
From bridges and flyovers to roads and highways, harbour projects, water supply schemes and optical fibre backbone projects; Access Engineering has been the invisible strength behind scores of massive infrastructure programmes that have directly affected the lives of thousands of Sri Lankans across the island, from urban cities to the remotest reaches of our island. Every day, our operations enable trade and transport, offer access to education and healthcare and simply bring people together, wherever they are. Our work is all about delivering hope.
1 GROUP REVENUE Rs.7,315 Million 2010 / 2011 : 3,651 Million
STATED CAPITAL Rs.9,000 Million 2010 / 2011: 3,000 Million
PROFIT BEFORE TAX Rs.2,032 Million 2010 / 2011 : 1,381 Million
TOTAL ASSETS Rs.14,243 Million 2010/ 2011 : 5,767 Million
STATED CAPITAL CONSOLIDATED REVENUE TOTAL ASSETS Rs. millions Rs. millions Rs. millions
14,243 9,000 7,315
3,651 3,175 5,767 3,000 4,386
1,000 2009/10 2010/11 2011/12 2009/10 2010/11 2011/12 2009/10 2010/11 2011/12
2 Access Engineering PLC. Annual Report 2011/12 FINANCIAL HIGHLIGHTS
2011/12 2010/11 Change Group Company Group Company Group Company
Earnings Highlights & Ratios Revenue Rs. Mn 7,315 6,956 3,651 3,518 100.4% 97.7% Gross Profit Rs. Mn 2,111 1,952 1,296 1,199 62.9% 62.9% EBITDA Rs. Mn 2,157 1,855 1,498 1,267 44.0% 46.4% Earnings before tax Rs. Mn 2,032 1,723 1,381 1,144 47.2% 50.6% Earnings after tax Rs. Mn 1,735 1,436 1,167 936 48.7% 53.4% Earnings attributable to Equity Rs. Mn 1,731 1,436 962 936 80.0% 53.4% Dividends Rs. Mn - 162 - 200 - -19.0% Earnings per share Rs. 1.83 1.52 1.20 1.17 52.5% 29.9%
Balance Sheet Highlights & Ratios Total Assets Rs. Mn 14,243 13,129 5,767 5,751 147.0% 128.3% Stated Capital Rs. Mn 9,000 9,000 3,000 3,000 200.0% 200.0% Retained earnings/ Accumulated profit Rs. Mn 1,627 1,503 1,116 1,139 45.9% 31.9% Equity attributable to Equity Holders of Parent Rs. Mn 10,656 10,531 4,344 4,367 145.3% 141.1% Total Equity Rs. Mn 10,792 10,531 4,344 4,367 148.4% 141.1% Total Liabilities Rs. Mn 3,451 2,598 1,423 1,384 142.5% 87.8% Current Assets Rs. Mn 8,059 6,698 1,738 1,830 363.6% 266.0% Current Liabilities Rs. Mn 3,277 2,454 898 863 264.8% 184.2% Net asset per share Rs. 10.66 10.53 7.24 7.28 47.2% 44.7%
Investor Highlights & Ratios Market Capitalisation Rs. Mn - 26,700 - - - - Market Price Rs. - 26.70 - - - - Price Earning Ratio (x) - 17.57 - - - - Debt/Total assets % 0.09% 0.1% 10.8% 10.9% 99.2% 99.1% Current asset ratio (x) 2.5 2.7 1.9 2.1 27.1% 28.8% Quick asset ratio (x) 1.9 2.3 1.6 1.8 20.0% 29.7%
3 CHAIRMAN’S MESSAGE
When I look back on the year that was, I see one where embarked upon, the initiatives for expansion, the knowledge opportunities came to fruition and strengths as a people, were culture and the professionalism we displayed were a positive honed; I also observe that we became a nation that truly believed influence in the investor mindset. It also brought into play in a country that could produce results, despite the world the facets of governance, ethics, principles, transparency and undergoing unprecedented challenges, while the country in itself accountability, which form the nucleus of a sustainable business ensured that the trajectory it had planned could be met with concern, aiming to showcase consistent results on a platform pragmatism and visionary foresight. We all became ingenues in an of excellence. To us at Access Engineering, this was more than arena where hope became the catalyst and delivery of that hope a successful IPO; it was an exceedingly proud moment for us resulted in the consummation of building a nation that would be because this proved that we are held in high repute by our peers conjoined with strong economic and social bonds. and stakeholders.
To us at Access Engineering, this year has been a watershed. We continued our good growth performance as can be seen While the nation charted its path for the future, building on that in our exemplary figures for the year ending March 31st 2012. platform of ‘Hope Delivered’, we opened a brand new chapter Revenue for the year recorded a mammoth 100% and 98% in our corporate annals. The historic IPO transformed us from a growth over the previous year at Group and Company level to home grown entrepreneurial venture to assuredly place us as a mark Rs.7.3 billion and Rs.7 billion respectively. Profits attributable leader, spearhead and pioneer in the larger corporate sphere of to the equity holders of the parent were Rs.1.7 billion and the country. Rs.1.4 billion respectively at the Group and Company level. This turns out to a 80% and 53% growth over the previous year. The It is in this background, dear Shareholder, that I welcome you with total asset base of the Group and the Company witnessed an great pleasure to the inaugural Annual General Meeting of Access exemplary growth to end the year at Rs.14.2 billion and Rs.13.1 Engineering PLC, following our listing on the Colombo Stock billion respectively. A notable growth during the year came from Exchange and present to you on behalf of the Board of Directors, the Company’s stated capital which saw a growth of 200% over the Annual Report and consolidated audited accounts for the year the previous year which was the result of the successful private ended 31st March 2012. placement and the subsequent IPO. Your company is cash rich with cash and cash equivalents of Rs.1.6 billion and Rs.1.1 billion I’m most excited as I write this message as this has been a year at the Group and Company level. This is also reflected in the that has truly been a landmark in our history of just a decade, healthy current asset ratio of 2.5 times and 2.7 times at the both quantitatively and qualitatively. Our maiden IPO on the Group and Company level. Colombo Stock Exchange for twenty million Ordinary Voting Shares was oversubscribed in record time, which signaled that Having always retained a reputation as a company that delivered our reputation within not only the industry sectors we operate on our promise all the time, every time, we continued this in but in an overall corporate context, is undoubtedly held in premise this year as well. We have carved a niche for ourselves as high esteem. It also proved that the plans and projects we had a dynamic and progressive entity that leads the civil engineering
4 Access Engineering PLC. Annual Report 2011/12 sector in Sri Lanka, having imbued innovative value engineering of Directors and announce the retirement of Mr. Dilhan Perera solutions from the A to Z of construction, spanning design, from the board in 2012. I wish to thank Dilhan for his immense procurement, construction and commissioning of multi- support and dedication extended to Access Engineering and wish disciplinary engineering projects. Our partnerships with world him all the best for the future. renowned construction companies have seen us secure many civil engineering projects islandwide since our inception in 2001. Our strong team of over 3000 employees that is helmed by a management that is one of the best in the industry, has surely In synopsis, Access Engineering’s completed engineering feats given us the confidence to lead and fearlessly tread into newer encompass the Hambantota and Batticaloa Water Supply areas and avenues. Your dynamism and tireless pursuit of Projects, North East Bridge Rehabilitation, Greater Colombo excellence will always remain our greatest asset. Flood Control Project – Phase II, Southern Highway Project, Kukuleganga Hydro Power Project, Hikkaduwa Fishery Harbour, To our shareholders, I would like to extend a sincere promise that Kelaniya, Nugegoda and Dehiwala Flyovers, Unnachchai Tank Bund your company will live up to or beyond your expectations and Project and Colombo Sewerage Rehabilitation among others, deliver on the promises we have made to you. Thank you for the some of which have involved partnerships with international confidence and trust you placed in us. contractors and strategic joint ventures. Our valued business partners and customers have been the Our subsidiary, Access Realties (Pvt) Limited, the catalyst for strong conduit that has ensured we remain in leadership, the iconic Access Tower, will soon begin construction on Access perpetually innovating, continuously improving and constantly Tower 2, yet another state of the art office complex. reaching towards ambitious goals. Thank you for your unwavering partnership in the myriad spheres we work in. During February 2012, we acquired Sathosa Motors PLC (SML) which we believe has significant potential to contribute The communities in which we have our projects have been true to the growth of our company and we hope to benefit from supporters of our endeavours, taking on the mantle of community the envisaged synergies in the coming years. The SML portfolio partnership whenever the need arose. You have always made includes the importation and sale of Isuzu commercial vehicles our operations easier and we hope, these relationships we have which was ranked 76 among the 100 leading brands in Sri Lanka nurtured will continue to remain strong. for the year 2012. We have firmly established ourselves as a partner to the We continue to etch indelible marks in the construction and country’s progress, given the interventions we already have in engineering sectors, true to our vision of being ‘The Foremost both the economic and social spheres. We see amazing potential Business Enterprise in Value Engineering’, constantly upping in the thrust areas which will see the construction sector posit benchmarks in standards and quality excellence. even more growth this year, as we remain a crucial player in infrastructure, due to the vast expertise, capability, knowledge and The commitment to ‘Green Engineering’ concepts is also well competencies we possess, in addition to proven experience in founded not only through the fact that we are accredited by handling myriad diverse projects. We will continue to aggressively ISO for practicing environmentally friendly standards and quality seek growth opportunities in the short to medium term in our initiatives, but also for being a signatory to the UN Global proven capabilities which include road and bridge construction, Compact, the first construction company in Sri Lanka to be so. ports and related work, water management and civil engineering Therefore, these ensures that Access Engineering continues to works. Another key driver we see potential in is the property remain at the zenith of our disciplines and core competencies, as development market, emerging due to rapid urbanisation and evidenced by the accolades we have accrued. lifestyle change.
We gained a listing among the Top 20 of Sri Lanka’s Most Respected Entities by premier business magazine LMD this year, while being conferred numerous awards at the ICTAD Awards and the National Business Excellence Awards as well. At the former, we were accorded three National Awards for Construction Performance for the Nugegoda and Sangupiddy Flyovers and the bridge across Maoya on the Pannala- SUMAL PERERA Maningamuwa-Mellawagedara Road. At the NBE Awards, Access Chairman Engineering collected three awards and a record for being conferred the Gold award for the second consecutive year as the Best Knowledge Integrator. Our governance tenets were also recognised when Sting Consultants together with LMD awarded us Gold Status within the Corporate Accountability Index.
I’m most appreciative of the exemplary guidance, knowledge and support I gained through my able Board of Directors especially in this year of transition. I would like to welcome Mr. Alexis Lovell, Prof. Malik Ranasinghe and Mr. Niroshan Gunaratne to the Board
5 Sangupiddy Bridge across Kilali Lagoon
6 Access Engineering PLC. Annual Report 2011/12 Thinking Ahead The strategic thinking infused by us into every project we embark upon is truly the hallmark of Access Engineering’s success. We have broken the mould through our customised solutions, permeating sustained growth at myriad levels and our stakeholders, thus are rewarded with better results.
MANAGEMENT DISCUSSION & ANALYSIS Management Discussion & Analysis 08
7 MANAGEMENT DISCUSSION & ANALYSIS
Providing innovative solutions through multi-sector civil engineering projects being our core business, we have been involved in over a hundred engineering projects since the inception of Access Engineering in 2001.
Overview of the economy both the government and private sectors taking advantage of Sri Lanka’s extraordinary foresight and pragmatic initiatives once the milieu of better investor confidence, a growing economy and again bore fruit when for the second year in succession and for an absence of war to grow the primary infrastructure sectors. the first time in post independence history, it rode rapid growth The industry was also significantly responsible for the decline in waves to post a GDP of 8%, which is quite unprecedented given unemployment, as employment generation gained massive ground, that global GDP and in general, countries around the world were with the sector having employed 7.2% of the total workforce, feeling the downward spiral of the economic downturn. Gross which amounts to nearly 600,000 persons. Undeniably, the National Product also grew 8.4% in real terms in 2011, while GDP infrastructure related construction sector has much prospect and per capita increased by 18.17% to reach US$ 2,386. growth potential.
Improved investor confidence, accelerated development, For a period of two years until 2012, the Government’s favourable macroeconomic conditions and renewed economic investment in roads and transportation was earmarked at Rs.269 activity from geographic areas that for long remained laggards due Bn, given that an efficient road network is an imperative to to the conflict, were among the factors influencing these positive achieve the nation’s vision for the future. One of the initiatives results. Unemployment too continued decelerating, recording its within this sphere is the National Road Master Plan 2007 to lowest levels at 4.2% due to expanded economic activity and a 2017, a long term plan formulated by the RDA focusing on road concerted drive to promote the SME sector and entrepreneurial modernisation and construction, including highways, expressways, ventures. bridges and flyovers, improvements and widening of roads. This is further augmented with the maritime and aviation hubs requiring Operating Environment fast-tracked development, which will include substantial increases Augmenting the government’s Vision for accelerated development in overall cargo handling capacity and the development of airports was further entrenched with the unveiling of Sri Lanka’s five year and ports around the country. vision aimed at positioning it as South Asia’s Economic Hub. The five pronged economic drivers strategically mapped out a path Aligned to meeting the governments development plans, there’s that would ensure that Sri Lanka would surely and steadily achieve a concerted national effort in improving access to safe water this status within the hubs of aviation, energy, maritime, knowledge sources and a national goal has been formulated to achieve 100% and commercial. These five hub areas assuredly present our coverage by 2025 with an immediate objective of 85% of the Company with immense and infinite opportunities for growth and population by 2015. Similarly, while connectivity is truly a unifying development, given that we are already involved quite extensively factor in nation building, it also remains the axis upon which the in infrastructure development of the aviation, energy and maritime five growth hubs would be built upon. The building and expansion industries directly, while with our prowess in infrastructure of the fibre optic infrastructure in addition to continuously construction, roads, highways, bridges, telecommunication and improving and modernising existing technology, remains atop the similar connection networks, the other hub areas too have the national agenda. Access Engineering expertise and input. It is pertinent to note that the emphasis on infrastructure development embarked upon Portfolio of Projects by the government in the last year to add fillip to this goal, saw Providing innovative solutions through multi-sector civil public investment on infrastructure development programmes engineering projects being our core business, we have been amount to Rs.407.5 billion or 6.2 per cent of the GDP in 2011. involved in over a hundred engineering projects since the inception of Access Engineering in 2001. These projects cover all One of the highest growth sectors in 2011 was the construction the civil engineering sectors including Water Supply and Sanitation, sector, growing 1.3 times of the GDP and showcased at 9.3%, Bridges and Flyovers, Roads and Highways, Harbour and Marine, buoyed greatly by the accelerated infrastructure and thrust Telecommunication Infrastructure and Piling and Building sectors. industry development the country embarked upon. The Our relentless pursuit of perfection and value addition for our tourism industry, roads, highways, bridges, airports, ports and clients have led to many success stories in projects undertaken by telecommunication sectors gained massive fillip post war, with us for both us and our clients.
8 Access Engineering PLC. Annual Report 2011/12 We continue to be engaged in many disciplines of construction Taisei Corporation of Japan, a giant in the international and have further enhanced our position as a major and specialist construction industry has recently employed us as their trusted contractor with the highest accreditation in the respective partner to undertake piling works for the Outer Circular categories of construction. The volume of work handled by Highway (OCH) Project – Northern Section at a value of Rs.3.1 us almost doubled during the year 2011/12 compared to the Bn. The piling works are currently underway and expected to be previous year. completed by late 2013.
As the key contributor to our income we have undertaken and Access Engineering takes pride in having a stake in most of the completed numerous road projects among which, the Rs.2.3 major development projects in the country, and the construction Bn Jaffna Roads rehabilitation project is currently underway. The of the International Airport in Mattala, Hambantota is no project is due to be completed ahead of schedule in December exception to this hypothesis. We have undertaken the design and 2012. The Kanthale Trincomalee Road Project, Dayata Kirula construction of the Access Road to the Airport, the construction Road Rehabilitation Project in the Anuradhapura District, of Fire Rescue and Cargo Buildings, construction of water tower Anuradhapura Padeniya Road Project, rehabilitation of A15 under and water supply mains for the airport and the construction the Trincomalee Integrated Infrastructure Development Project of Fuel Hydrants for a combined value of over Rs.1.5 Bn in and Navathkulai-Karaitivu-Mannar Road (A32) Project are among partnership with China Harbour Engineering Company of China. the other ongoing projects during the year 2011/12. We have also been awarded the contracts for Ibbagamuwa-Madagalla Road In order to relocate the underserved settlements in the Rehabilitation Project at a value of Rs.2.8 Bn and Galagedara- Colombo metropolitan area, the government embarked on a Rambukkana Road Rehabilitation Project at a value of Rs.1.25 Bn. project through Urban Development Authority, providing better housing to the underserved settlement dwellers in the city of Among the Bridge Projects under the period of review is the Colombo. We were invited to participate in this project, and Sangupiddy Bridge which connected the Jaffna Peninsula to the was awarded the design and build of five 12 storey apartment mainland through the Kilali lagoon, Aravi Aru Bridge and the blocks comprising of 1137 housing units at a value of Rs.2.9Bn. Eastern and North Central Provincial Bridge Project – Phase I for This project is currently underway and will further enhance our the construction of 4 bridges and 6 multi cell culverts. capacity in high rise building construction.
As one of the very first companies to form a joint venture Financial Performance in water sector, Access Engineering joined hands with Salcon The prospect of ‘Hope Delivered’ was carried through with much Berhard of Malaysia and China Geo Engineering Corporation of emphasis this year too when Access Engineering together with China in undertaking the two largest water supply projects in its two subsidiaries notched yet another year of solid financial post war Sri Lanka, Batticaloa Water Supply Project at a value of performance. Our shareholders and indeed our stakeholders will Rs. 4.14 Bn and Hambantota Water Supply Project at a value of be pleased that our revenue doubled, bottom line growth was Rs.1.7 Bn. These projects provide potable water to thousands showcased at 80%, liquidity position continued to be healthy as in the rural community who were previously denied access to did profitability and promising new investments were entered into clean drinking water. We have also undertaken the responsibility during the year. of constructing the gated Salinity Barrier across Walawe River at Ambalantota to prevent the intrusion of saline water at the intake The core business for Access Engineering is in construction, while of Hambantota water supply scheme at a value of over Rs.1 Bn. its fully owned subsidiary, Access Realties (Pvt) Limited is engaged This project is expected to be completed by the end of 2012. in high-rise real estate development and management, extending its purview to leasing, renting or selling these developed projects The projects in the Marine Sector during the current period in whole or in part. Access Engineering acquired Sathosa Motors include the Mega Port Phase III project and the rehabilitation PLC adding the importation and sale of Isuzu commercial vehicles work at the Unity Container Terminal at the Colombo Port. and spare parts, repair and maintenance into its business portfolio, on 29th February 2012 and therefore consolidating of the results Our relationship with our long term client Dialog Axiata PLC of Sathosa Motors was effective from this date. continued to thrive. We installed over 750 km of optical fibre cables helping Sri Lanka progress to the next stage of global Composition of Company Revenue communication by connecting every corner of the country in to Rs. millions one giant web of information network. During the period under 7,000 review we completed Dialog Backbone Project from Wadduwa 6,000 to Matara and Colombo Metro Optical Fibre Network Project 5,000 – Phase II. Total value of the projects completed for Dialog Production income within the last year amounts to Rs.1 Bn. We have also recently 4,000 Marine construction completed the first phase of Dialog Aerial Optical Fibre Network 3,000 Te lecommunication infrastructure Building and other construction project employed by the main contractor Huawei Technologies of 2,000 Bridge & Flyover construction China, and second phase of the project is currently underway. 1,000 Water and drainage construction 0 Highways construction 2010/112011/12
9 MANAGEMENT DISCUSSION & ANALYSIS
The value engineering ethos which the Company remains very focused upon, infused the required results as is seen in the satisfactory GP and NP margins, due to the improved efficiencies that continue in a milieu of continuously raising the bar.
Profitability continued to gain ground with Earnings Before PLC pays 28% on income tax and the total taxation liability stands Tax increasing by 51% to Rs.1,723 Mn, while Group EBT at Rs.68.9 Mn for this year. increased 47% to Rs.2,032 Mn. Due to the additional comfort on profitability with no burden of interest obligations. It should be Earnings before Tax noted that this year’s profitability gained unreservedly from the Rs. millions large scale projects embarked upon during the year. Earnings After 2,500 Tax gained 53% to be notched at Rs.1,436 Mn, while earnings attributable to the equity of the Group, stood at Rs.1,731 Mn, 2,000 increasing 80% over last year. 1,500
1,000 Group Revenue 500 Rs. millions 8,000 0 7,000 07/0808/09 09/1010/11 11/12 6,000 EBT - Group EBT - Company 5,000 4,000 Earnings after Tax 3,000 Rs. millions 2,000 2,000 1,000 1,800 0 1,600 07/0808/09 09/1010/11 11/12 1,400 1,200 1,000 800 600 Access Realties (Pvt) Limited also took full advantage of the 400 increased demand for office space, coupling it with fair value gains 200 from investment property. Sathosa Motors PLC too benefited 0 07/0808/09 09/1010/11 11/12 from the increased demand for commercial vehicles enjoying tax Earnings after tax-Group Earnings after tax-Company concessions and unbridled industry growth.
The value engineering ethos which the Company remains very Liquidity has remained above par with a current ratio of 1:2.5 focused upon, infused the required results as is seen in the for the Group and 1:2.7 for the Company depicting sound satisfactory GP and NP margins, due to the improved efficiencies working capital management. Negligible levels of gearing, further that continue in a milieu of continuously raising the bar. strengthened this liquidity position for the Group.
Access Engineering’s income tax liability is at the concessionary Cash flow meanwhile notched a net cash generation of Rs.229 rate of 12% on construction income and 28% on other income. Mn from its operations for 2011/12, with Rs.214 Mn showcased Income tax this year stands at Rs.202 Mn. at Company level. Total net increase in cash and cash equivalent was Rs.1,422 Mn at Group level, primarily due to the new capital The BOI registered Access Realties (Pvt) Limited enjoyed a tax infusion Rs.5 Bn which negated the impact of major investments holiday of seven years which expired in 2010/2011, thereafter it in property, plant and equipment and strategic initiatives which is liable to income tax at the concessionary tax rate of 2% on amounted to Rs.1,530Mn turnover applicable for 15 years. Accordingly the company paid Rs.3.5 Mn as income tax for the current year. Sathosa Motors
10 Access Engineering PLC. Annual Report 2011/12 Liquidity while NAPS (Net Assets Per Share) is Rs.10.66. At Company times level this is posted at Rs.1.52 and Rs.10.53 respectively. The 3.5 positive earnings coupled with the strong asset base remain the fundamentals in prompting positive investor sentiment. 3.0
2.5 ROCE (Return On Capital Employed) and ROE (Return On 2.0 Equity) have remained at very healthy levels, despite expansion as well as a very competitive operating environment. A considerable 1.5 increase in the capital base saw a decrease in ROCE and ROE 1.0 for the current year however, it is crucial to note, that these 0.5 investments and new equity are yet to deliver full scale results. 07/0808/09 09/1010/11 11/12 Current asset ratio Quick asset ratio PE Ratio (Price Earnings Ratio) and PBV (Price to Book Value) stands at 17.5 times and 2.5 times respectively. Despite the fact Working capital management that for most of the year the CSE showcased a somewhat bearish Rs. millions sentiment and considerable volatility, Access Engineering’s stability, 10,000 consistency and governance facets augured well in maintaining positive investor sentiment. 8,000 Economic Value Distribution 6,000 As depicted in the table below both at the group and company 4,000 level more than 50% of the economic value generated are retained within to be utilized for future business expansion, while 2,000 more than 30% has been distributed among the employees.
0 07/0808/09 09/1010/11 11/12 Current asset Value Addition - Group Current liabilities Rs. millions
The capital structure remains equity based. At the beginning of the year, the Company capitalised its reserves, increasing its share capital by Rs.1 Bn, followed by the issue of 200 million new shares, 979 worked through a private placement of 180 million shares and the groundbreaking IPO collating 20 million shares. The two share issues raised Rs.5 Bn, collated from Rs.4.5 Bn from the private 1,714 To employees placement and Rs.0.5 Bn from the IPO. This increased the stated 16 To providers of finance capital to Rs.9 Bn represented by 1 billion shares. 232 To Government 162 Diviend paid to share holders This strong balance sheet detailing Rs.9 Bn in stated capital and Retained in the business Rs.10.65 Bn in equity, certainly adds pragmatic promise for future potential, while augmenting consistency and sustainability into its business persona. Value Addition - Company Rs. millions Possessing a negligible level of borrowing of only Rs.12.5 Mn as an outstanding on a loan, both the Company and Group have a Net debt/equity ratio at an extremely low 0.1%. Similarly, interest 962 cover is a remarkable 104 times at Company level and 123 times at Group level. Financing of our expansion and diversification initiatives during the year was predominantly equity based. 1,571 Operating in a milieu that is dealing with volatility in both the To employees interest rates and financial risk, the fact that the Company and 16 To providers of finance 223 To Government Group already have the rudiments of a low risk environment 162 Diviend paid to share holders in its operations and strategic planning, augurs well for our Retained in the business stakeholders. This low risk profile reiterates our ability to work towards the plans and objectives already set out, with minimal or Investments no financing challenges. As mentioned above, Access Engineering acquired 77% stake in Sathosa Motors PLC for Rs.1.1Bn leveraging further on the The Company declared and paid a dividend of Rs.0.25 per share, synergies prevalent within the Group. This acquisition is expected encompassing Rs.250 Mn from profits posted in 2011/12. At to contribute towards revenue and profitability, while also Group level, EPS (Earnings Per Share) stands at Rs.1.83 basic, signalling a pragmatic move in managing risk through diversification.
11 MANAGEMENT DISCUSSION & ANALYSIS
Given the challenging delivery timelines and continuous need to improve efficiency, speed and economical advantage, Access Engineering’s investment in property, plant and machinery also diminished the dependency on external suppliers in some vital areas.
Access Engineering also increased investment in property, plant ARL’s turnover summary for the last five years is depicted in the and machinery by Rs.1,530 Mn with the objective of building graph below: capacity and adding to its value engineering ethos, in response to the increased demand emanating from the market. Given the Turnover challenging delivery timelines and continuous need to improve Rs. millions efficiency, speed and economical advantage, Access Engineering’s 200 investment in property, plant and machinery also diminished the dependency on external suppliers in some vital areas, while adding 150 knowledge, expertise and competencies into the team, which now stands over 3000 and forms the ideal trusses for future earning 100 potential and exploitation of market opportunities. 50 Subsidiary Performance 0 Access Realties (Pvt) Limited (ARL) 07/0808/09 09/1010/11 11/12 Commencing commercial operations in March 1998, it was on the 31st of March 2011 that ARL became a fully owned subsidiary of Access Engineering. Engaged in real estate development and the holding company of the 12 storey modern office complex Access Increase in topline growth was partially due to the high rates of Towers, ARL increased its turnover by 10% to Rs.163 Mn during occupancy, which has been maintained at an almost 100%, for this financial year. The increase in rental income is attributed to the past five years. This topline growth was also reflected in the the 9% increase in rates charged from clientele, competitively bottom line, while substantial savings in direct and administration placing the complex at the forefront in the demand for office expenses compared to the previous year also augured well. space. Sathosa Motors PLC (SML) Revenue Incorporated on March 11, 1982, SML is a public limited liability Rs. millions company listed on the Colombo Stock Exchange. It holds the 180 franchise for Isuzu motor vehicles and spare parts manufactured 160 by Isuzu Motors Limited of Japan, in Sri Lanka and the Republic 140 of the Maldives. Augmenting Access Engineering’s diversification 120 strategy, the majority stake of SML was acquired from ITOCHU 100 Corporation Japan in February 2012 and as at 31st March 2012, 80 Access Engineering holds 77% of the company. 60 40 20 Over this year, turnover increased by 31.3% mainly due to the 0 waiver of duty and VAT on trucks and buses as mandated by the 2010/112011/12 Fiscal Budget 2011, resulting in an increase demand for new vehicles. Service Charges Rental Income As seen in the below graph, 81% of the turnover emanated from the sale of new vehicles, while 10% was contributed from the sale of spare parts, 8% from the workshop department and 1% from agency commissions. Commercial trucks was the highest contributor in new vehicle sales. Sale of spare parts is primarily operated through dealers, fleet owners, corporate and government institutions.
12 Access Engineering PLC. Annual Report 2011/12 Revenue Composition Workforce Composition Numbers 0% 9% 12% 3500 1% 3000 8% 10% 2500 2000
2010/11 2011/12 1500 Management & Professional 1000 Operational Operational 81% 500 Te chnical New vehicles 0 Skilled and unskilled Work shop 2010/112011/12 79% Agency commission
During 2011/2012, SML sold 427 brand new Isuzu motor vehicles, In order to consolidate our premier position in the industry and posting an increase of 27% over the previous year, driven primarily continue to aggressively seek growth opportunities in the short by the duty concessions effected by the Budget and the rapid and medium term, heavy investment was made in modernising infrastructure development permeating the country. and adding to our plant and heavy machinery, while staff requirements, both present and future forecast, too were focused Details of Land and Investment Property of Access upon. Engineering Group Location Extent Carrying Value The staff was increased by 1,500 during the year with new of Revalued/ recruitment effected mostly in operational, technical and workmen Amortised categories, gaining the advantage of some of the country’s best A R P Assets (Rs.) human capital and reiterating Access Engineering’s status as a Access Engineering preferred employer in the industry. During 2011/12, Access Engineering provided external training, both local and foreign, No.336/1, Low Level Road, in addition to the ongoing on-the-job training and job rotation. Jalthara, Ranala - 3.0 38.4 35,500,000 The focus on human resource development continued with the No.267, Dehiwala Road, company developing a team of 22 competent trainers from within Maharagama - 3.0 1.0 120,000,000 the Company to undertake in-house training programmes and No. 278, Alubogahalanda, commitment to an ambitious in-house training plan for the next Jalthara, Ranala 3.0 3.0 4.6 40,000,000 two years with over 40,000 employee training hours. No.117, Dehiwala Road, Boralesgamuwa - 2.0 37.0 100,000,000 The most notable capacity building initiative is in plant and Dickowita - Hendala 3.0 3.0 10.2 15,800,000 machinery, which amounts to an investment of Rs. 1.2 Bn, a Diddeniya - Hanwella 2.0 - 16.5 2,000,000 significant increase over last year. This includes investments in Weliwita - Kaduwela* 2.0 - - 28,185,640 Asphalt and concrete batching plants and crusher plants to augment raw material sourcing for the road improvement and development projects as well as other civil engineering projects Access Realties engaged islandwide, eliminating dependency on external suppliers. Investment property - Any excess production is made available for purchase by external Colombo 2 1.0 - 12.4 3,000,000,000 customers. The 8% contribution from production income towards revenue is due to the investments made in these plants, further Sathosa Motors justifying return on investment. Peliyagoda - Leasehold land 2.0 - 24.0 5,667,610 With the recent additions made to the fleet of machinery and * Stated at cost since the land was purchased during the year plants, Access Engineering was able to strengthen its capacity in under review. terms of services provided. Our Asphalt plants in Jaffna, Kanthale, Kotadeniyawa, and Thalawa together boasts of a production Capacity Building capacity of 456 Tonnes Per Hour (TPH). Access Engineering The energised and revitalised economic milieu posed a plethora Crusher Plants holding a total capacity 280 TPH are located in of opportunities for Access Engineering and in order to exploit Northern and North Central provinces of the country. With these opportunities, it became essential that Access Engineering the addition of the latest plant in Mabima, the total capacity of builds capacity to meet the demand that began emerging. Access concrete production increased to 175 m3/hr. Engineering is one of the largest civil engineering construction companies in the country with the expertise, specialty and The fleet of heavy machinery was also strengthened with competency to undertake the massive infrastructure projects that the purchase of new piling machines, pile drivers, Horizontal are currently being earmarked as part of the national economic Directional Drilling (HDD) machines, cranes, motor graders, development agenda.
13 MANAGEMENT DISCUSSION & ANALYSIS
Access Engineering has truly broken records, been honoured and recognised for this excellence and we are truly proud to have been selected as the best among the best.
pavers and concrete pumps during this financial year. This was Business Development added to with an investment of Rs.151 Mn and Rs.111 Mn in An integral feature in the consistent growth paradigm of the motor vehicles and relevant tools. Company, business development remains the foundation that seeks opportunities via new projects and identifies the apt Value Engineering international partners who would assuredly add value to these Value engineering remains the backbone of Access Engineering’s projects, based on their core competencies. Over the years, the operations as this is the foundation upon which we construct judgment and foresight we have displayed in not only identifying the trusses of providing total construction solutions in a timely, potential projects, but also in choosing the apt partner has efficient and economical conflate, with innovation placed as the proved to be extremely successful given our results both in overarching rudiment. This innovative technology and mindset financial tangibility and in increasing positive perception in our has in turn, imbued continuous improvement and development of delivery promise. We have successfully formulated and secured systems and processes, presenting the end result of excellence in joint ventures with some reputed international companies and project execution and delivery. elevated our status as the preferred construction partner to most international companies mobilised in Sri Lanka. Access Engineering has pioneered new technology, introduced state of the art comprehensive systems and been an ideologue Given our prowess in resources, reputation and tangible results, in launching the latest and most modern equipment into the aided even further by our public listing, we will now strive to country in civil construction, which has naturally permeated to attract the world’s best multi-national contractors to Sri Lanka, augmenting and strengthening the Company’s value engineering thus Business Development will continue to be a catalyst in our capabilities. expansion and consolidation charter.
Horizontal Directional Drilling – a method employing trenchless We foresee a prosperous business environment in the short technology to install underground ducts and cables, Cable Jetting to medium term where national development will position the by blowing cables replacing conventional manual methods, construction industry as a key driver in meeting its agenda. This a new guard rail installation method, use of Controlled Low will naturally see our business development purview expand, Strength Material, flowable and non-shrinking, to backfill road adding further value to the sustainable growth of the Company. trenches which eliminated subsequent settlements, use of Ground Penetrating Radar to detect underground utilities, Awards and Accolades Hydrogen Leak Detection method for Testing of pipes and When our peers and other recognised national and international Ducts for leakages soon after installation are some of the value organisations confer honours on us, we know that we have truly engineering techniques adopted by us. These techniques helped delivered on our promise and that ‘hope delivered’ is not merely us achieve cost reduction, increasing the pace of construction and an euphemism to be proclaimed, but rather a theme that we ‘walk heightened efficiency of projects we were involved in. the talk’.
Access Engineering excels in being a ‘design-build contractor’, Excellence in construction performance is not easy to attain due thriving on the unremitting innovative features within its business to challenges, the competitiveness and the sustained performance domain. The focus on value engineering efforts has given Access companies must maintain. However, Access Engineering has Engineering the advantages of presenting unique designs, improved truly broken records, been honoured and recognised for this quality and the ability to reuse resources for better efficiencies. excellence and we are truly proud to have been selected as the This value engineering philosophy hence cascades in effect to the best among the best. customer and in the larger sense to the communities and nation, making Access Engineering a responsible corporate steward • National Business Excellence Awards (2011) focused on the fundamentals of sustainable development. • Winner - Best Knowledge Integrator • Runner up - Construction Sector • Merit - Extra Large category
14 Access Engineering PLC. Annual Report 2011/12 • National ICTAD Awards (2011) opportunities, based on the platform of developing our resource • ‘Construction Performance – Civil Engineering Sector’ base and reinforcing our competitive advantage in the market place. for construction of the bridge across Maoya on Pannala-Maningamuwa-Mellawagedara road We have been looking at business opportunities beyond our • ‘Construction Performance – Civil Engineering Sector’ shores, however the opportunities, in the local market has for construction of the Nugegoda flyover resulted in the maximum utilisation of all our resources. We will • ‘Construction Performance – Civil Engineering Sector’ continue to pursue the opportunities available to us in overseas for construction of the Sangupiddy flyover markets with the view of taking our business beyond our shores.
• Access ranked Number 11 among LMD’s ‘Most Respected Hope is an evolving word and one which tends to present Entities in Sri Lanka for 2011’ bigger and broader horizons. For Sri Lanka, we know that Access Engineering continues its ethos of delivering hope, whether • Awarded gold status and ranked Number 09 in the in ensuring that villages have the basic necessities of water, Corporate Accountability Index conducted by Sting or in enhancing economic development by interconnecting Consultants and published by LMD transportation and telecommunication infrastructure through • Golden Award for ‘Quality and Business Prestige’ from both rural and urban areas, to improve trade and economic Otherways International Research and Consultants at Berlin, development. In being ‘Green’, we ensure that our business Germany practices and impact on the environment are as environmentally friendly as possible, while we create an empowering milieu for our A Promising Future stakeholders, whether it be our communities, our investors or Our team continues to be one of the most skilled and talented our team, to thrive and grow. within the industry and we are indeed proud to have honed their professionalism and specialties to further enhance our capacity and develop our business. Our secured Order Book will provide the platform to sustain our enhanced capacities and further improve on same in the forthcoming years.
For Access Engineering, the future is undoubtedly promising, but Christopher Joshua Rohana Fernando the future is also about maintaining consistency and improving Executive Director Director/ COO on the platform of excellence that we work upon. We will aggressively pursue those opportunities we see, be aware of 24th July 2012 the trends, challenges and threats emerging from the macro Colombo environment, strengthen our leadership status and emphasize our pioneering stance. Our value engineering philosophy will work on a bar of continuous improvement that is aligned to the emerging opportunities, capacity building will continue.
Our proven prowess in roads, highway and bridge construction, ports and related competencies, water management, building and telecom infrastructure will form the platform for growth, aligned to the country’s accelerated development agenda and the Economic Hub status envisaged for 2016. The pragmatic strategies, strong balance sheet, astute investments, conformance to best practices and emphasis on governance tenets, well position Access Engineering to gain further investor confidence, raise the required financing and proceed unhindered with the expansion and diversification drive it has planned.
Opportunity is envisaged in township establishments, mixed development and residential projects in earmarked metropolises as are community development projects in collaboration with the Government based on Public-Private Partnerships in the areas of water management and electricity generation. PPP based projects generate stable and secure long term business, which will also present us a springboard to develop capacity, expertise and innovation, while creating additional business opportunities by leveraging on the synergies of these partnerships. Inorganic avenues will be pursued to explore lucrative strategic investment
15 Our team members at Asphalt plant in Kotadeniyawa
16 Access Engineering PLC. Annual Report 2011/12 Building Trust At Access Engineering, stakeholder relationships are driven by an unwavering commitment to honesty, trust, ethics, transparency, accountability and sincerity of action. Our governance strategy has always been founded on these principles, which assuredly remain the trusses upon which our reputation as a corporate steward remains firm.
GOVERNANCE Corporate Governance 18 Annual Report of the Board of Directors 21 Audit Committee Report 23 Risk Management 34 Board of Directors 26 Corporate Management Team 28
17 CORPORATE GOVERNANCE
Our governance and operating model facilitates efficient and timely decision making coupled with pragmatic resource allocations.
Constructed on a philosophy of responsible governance, The Board of Directors of Access Engineering endeavors to ethics, values, accountability and sincerity of action, Access provide entrepreneurial leadership through effective formulation Engineering’s corporate governance ethos works within a culture and execution of policies and procedures, designed to attain the of performance that emphasizes a framework of conformance objectives of the company. The Board comprises of ten Directors, and compliance. To us, corporate governance goes beyond the of whom six are Executive Directors, one a Non-Executive tenets of conformance and compliance into a milieu where our Director and three Independent Non-Executive Directors. The business is grown and nurtured into a sustainable and equitable Independent Non-Executive Directors were appointed this one, presenting all our stakeholders with a future to grow with year to further entrench independent non-partial judgment, us. Maximizing shareholder wealth on a sustainable basis while which in turn is designed to embed the strong fundamentals of safeguarding the rights of multiple stakeholders are fundamentals transparency into the decision making process. which are permeated through all levels of our management and staff. They in turn work on the trusses of truth, trust, principles, During the year, the Company established the Strategic Planning good morals and honesty to ensure that the end justifies the Committee, Audit Committee and Remuneration Committee means and remain strategically aligned to the core principles of as per the regulatory requirements and Compliance Committee our corporate governance practice. designed to strengthen Access Engineering’s unwavering commitment to corporate governance. Our governance and operating model facilitates efficient and timely decision making coupled with pragmatic resource Audit Committee allocation. These are integrated into a transparent, accountable Appointed by the Board of Directors, the Committee comprises and ethical framework that is compliant not only with the three (03) Independent Non-Executive Directors and One (01) laws of the country but also with self-imposed codes of ethics, Non-Executive Director of the Board. standards and regulations that position us on a platform of critical governance features to ensure a culture that goes beyond Members of the Audit Committee: compliance. This is thus manifested in the composition of the Niroshan Dakshina Gunaratne Independent Non-Executive corporate management team, division of powers and duties and (Chairman) Director the promotion of sound corporate ethics across the company. Independent Non-Executive Alexis Indrajit Lovell Director The company’s vision and mission remain firmly embedded in our future journey with the Board of Directors and Corporate Prof. Kulatilleke Arthanayake Independent Non-Executive Management, providing the necessary stewardship to our team Malik Kumar Ranasinghe Director and other stakeholders to achieve our objectives. Evaluating Ranjan John Suriyakumar Gomez Non-Executive Director and setting the direction of the Company’s strategic initiatives, performance objectives and targets also remain entrenched The Audit Committee Charter formalises the authority, within the leadership. In addition, this leadership is tasked with responsibilities and specific duties pertaining to the Committee strengthening the overarching company principle of protecting as follows; the interests of all stakeholders and consolidation of business • Overseeing preparation, presentation and adequacy of activities to ensure continuity and sustainability. disclosures in the financial statements of the Company, in accordance with Sri Lanka Accounting Standards;
18 Access Engineering PLC. Annual Report 2011/12 • Ensuring compliance with financial reporting requirements, The Committee’s mandate includes: information requirements of the Companies Act and other • Formulating criteria and guidelines for assessing existing and relevant financial related regulations and requirements; new investments
• Ascertaining that the Company’s internal controls and risk • Planning investments periodically, targeting at optimum management processes are adequate and meet the Sri Lanka utilization of resources Auditing Standards requirements; • Reviewing existing investments • Assessing the independence and performance of the Company’s external auditors; • Assessing new investments for strategic fit, risk profile, profitability and future potential • Making recommendations to the Board pertaining to • Making recommendations to the Board on investment appointment, re-appointment and removal of external portfolio, contingency planning and desired future corporate auditors and to approve remuneration and terms of goals engagement of the external auditors. Compliance Committee Remuneration Committee The Compliance Committee is appointed by the Chief Operating Comprising two Independent Non-Executive Directors and Officer and is set up to further strengthen good governance at one Non-Executive Director of the Board, this Committee is Corporate Management level. This mechanism will bridge the appointed by the Board. gap between the senior management and the Board of Directors when important decisions are to be made on operational issues. Members of the Remuneration Committee:
Ranjan John Suriyakumar Gomez Non-Executive Director Members of the Compliance Committee (Chairman) Prof. Kulatilleke Arthanayake Independent Non-Executive Rohana Fernando (Chairman) Chief Operating Officer / Malik Kumar Ranasinghe Director Executive Director Independent Non-Executive V.K. Manatunge (Convener) Senior General Manager Niroshan Dakshina Gunaratne Director Palitha Wanigasundara General Manager (Projects Office III) With the primary objective of the Company’s remuneration Manoaj Jayahsuriya General Manager (Projects policy being effective enough to attract and retain the best human Office I) capital to sustain operations while rewarding performance, the Kosala Wickramasinghe Deputy General Manager Remuneration Committee is tasked with recommending the (Projects Office II) remuneration payable to the Executive Directors and Chief Executive Officer of the Company and/or equivalent position A.A. Fernando Deputy General Manager thereof. This recommendation is made to the Board, which is (Project Coordinating) responsible for the final determination upon consideration of Niroshan Thilakaratne Deputy General Manager such recommendations. (Commercial) Prabath Karunanayake Head of HR Strategic Planning Committee Essentially focusing on assessing existing and new investments, The Committee’s mandate includes: this Committee is responsible for identifying, appraising and Establish and monitor if the organisation’s objectives are met monitoring the investment purview, in order to ensure optimum • resource allocation by the Company. • Evaluate company policies, formulate new policies, advise and take the initiative to revise existing policies Members of the Strategic Planning Committee: • Ensure that policies are in compliance with laws and Sumal Joseph Sanjiva Perera Chairman regulations (Chairman) Joseph Christopher Joshua Executive Director • Ensure that project management, accounting, procurement, Dalpadoruge Anton Rohana Executive Director/Chief stores and human resource functions are carried out Fernando Operating Officer according to established processes and procedures Independent Non-Executive Alexis Indrajit Lovell • Ensure that control systems are laid down and operated to Director promote the most economic, efficient and effective use of Prof. Kulatilleke Arthanayake Independent Non-Executive resources as well as safeguard assets Malik Kumar Ranasinghe Director
19 CORPORATE GOVERNANCE
We have also infused a milieu of increased participation by middle management to permeate the need for a more responsible, transparent and accountable administration, which will strengthen • Ensure the proper implementation of management systems the financial discipline of the Company. The permeating culture (ISO 9001, ISO 14001 and OHSAS 18001) through strict of empowerment and accountability emanates quick responses monitoring and guidance by the internal audit team to customer requirements, which has kept Access Engineering • Review the performance of the internal audit team far ahead of most competitors and has been the cornerstone of our competitive advantage. This permeation of authority and • Collect and review financial and operational information that accountability has spawned empowerment even at shop-floor is meant to be disclosed to external parties and verify the level and the front-line, enabling top management to dwell more reliability of the means that are used to identify, measure and importantly on the more strategic and conceptual inputs. report such information Driving a team branded on excellence, people remain centric to Access Engineering’s Corporate Management team is committed our entire operational capabilities and engineering competencies. to achieving sustained value creation for the benefit of all The experience and professionalism within our team have been stakeholders, through adherence to a set of well-defined the catalysts in integrating our core competencies into strategic corporate governance principles, coupled with maintaining partnerships. Maintaining a healthy work life balance with an effective structures and processes within the Company. The team environment of superior human resource development via a helmed by the Chief Executive Officer, has the input of the Chief comprehensive Quality Management System inculcates the Operating Officer, Board Members and Senior Management who culture of meritocracy, while performance oriented individuals meet regularly to discuss the management of business activities. who make up an excellent team are driven to achieve ambitious goals. Project implementation is driven by Projects Offices, wherein the Project Director, General Managers and Deputy General Managers work on plans and targets, matching those to realistic time frames and ensuring any shortfalls or delays are speedily rectified. Authority is exercised within an ethical framework of business practices established by the Board, which demands compliance to existing laws and regulations as well as best practices in dealing with employees, customers, suppliers and the community at large.
20 Access Engineering PLC. Annual Report 2011/12 ANNUAL REPORT OF THE BOARD OF DIRECTORS
The Board of Directors of Access Engineering PLC has the pleasure Mr. S D Perera resigned as a Director on 6th October 2011. in presenting their Annual Report together with the Audited Prof. K A M K Ranasinghe, Mr. N D Gunaratne and Mr. A I Lovell Financial Statements of the Company for the year ended 31st March who were appointed to the Board on 1st July 2011 are due to retire 2012. at the forthcoming Annual General Meeting in terms of Article 95 of the Articles of Association of the Company, and being eligible offer General themselves for re-election. The Company was incorporated in terms of the Companies Act No.17 of 1982 on 31st July 2001 and was re-registered as per the Interests Register Companies Act No.7 of 2007 on 6th February 2008 with PB 200 The Company maintains an Interests Register in terms of the as the new number assigned to the Company. Thereafter, the Companies Act, No. 7 of 2007, which is deemed to form part and Company obtained a listing on the Diri Savi Board of the Colombo parcel of this Annual Report and available for inspection upon request. Stock Exchange on 27th March 2012 and changed its name to Access Engineering PLC on 12th June 2012. The registration number of the All related party transactions which encompass the transactions of Company changed to PB 200 PQ. Directors who were directly or indirectly interested in a contract or a related party transaction with the Company during the accounting Principal activities and review of performance during the period are recorded in the Interests Register in due compliance year with the applicable rules and regulations of the relevant Regulatory Refer note 1.2 of Notes to the Financial Statements for principle Authorities. activities of the company and its subsidiaries. This Report together with the Financial Statements, reflect the state of affairs of the Directors’ Remuneration Company and its subsidiaries. The aggregate remuneration paid to the Directors’ of the company during the year under review has been disclosed in the Note 35.2 to Financial Statements the Financial Statements. The complete Financial Statements of the Group, duly signed by two Directors on behalf of the Board are included in this Annual Report Directors’ responsibility for Financial Reporting and forms part and parcel hereof. The Directors are responsible for the preparation of the Financial Statements of the Company to reflect a true and fair view of the Accounting Policies state of its affairs. A further statement in this regard is included on The principal accounting policies adopted by the Group in the page 63. preparation of Financial Statements are consistent with those of the previous year. Auditors Messrs KPMG, Chartered Accountants served as the Auditors of the Purchase of majority shareholding in Sathosa Motors PLC Company. The Auditors do not have any interest in the Company The Company acquired 3,600,000 shares which represented 59.67% other than that of Auditor and provider of tax related services. of the shares in issue at a price of Rs.236.44/- per share in Sathosa Motors PLC on 29th February 2012 and acquired a further 1,332,303 The Auditors remuneration payable by the Group has been shares up to 24th July 2012 increasing its total holding to 81.75%. disclosed in the Note 12 to the Financial Statements. Directors The payments for the Non-Audit services have been disclosed in The names of the Directors of the Company who held office as at Note 12 to the Financial Statements. the end of the accounting period are: Stated Capital Executive Directors The Stated Capital of the Company is Rs.9,000,000,000 representing Mr. S J S Perera Chairman 1,000,000,000 Ordinary Shares. Mr. J C Joshua Mr. D A R Fernando Chief Operating Officer Issue of Shares by way of a Prospectus Mr. S H S Mendis The Company had an Issue of Shares by way of a Prospectus on Mr. T A G Fernando 9th June 2011 of 180,000,000 (180 Mn) Ordinary Voting Shares at Mr. S D Munasinghe Rs.25.00 each. Non Executive Directors A description on the utilization of the said funds is found on page 96. Mr. R J S Gomez Mr. S D Perera Resigned on 06/10/2011 Initial Public Offer The Company had an Initial Public Offer (IPO) on 6th March 2012 Non Executive Independent Directors of 20,000,000 (20 Mn) Ordinary Voting Shares at Rs.25.00 each Prof. K A M K Ranasinghe Appointed w.e.f 01/07/2011 which were listed on the Diri Savi Board of the Colombo Stock Mr. N D Gunaratne Appointed w.e.f 01/07/2011 Exchange. Resulting from the said IPO, the Stated Capital increased Mr. A I Lovell Appointed w.e.f 01/07/2011 by Rs.500,000,000.
In terms of Article 88(i) of the Articles of Association, Mr. R J S Gomez Proceeds from the said IPO are being utilized to part finance the shall retire by rotation and being eligible, is recommended by the development and construction of five 12 storied buildings at Board for re-election at the forthcoming Annual General Meeting. Henamulla in Colombo 15.
21 ANNUAL REPORT OF THE BOARD OF DIRECTORS and its subsidiaries as at the Balance Sheet date have been paid or, where relevant provided for, except as specified in note 37 to the financial statements covering commitments and contingencies.
Land Holdings The details of the Company’s land holdings are given on page 13. Director’s shareholding The relevant interests of Directors in the shares of the Company Material Foreseeable Risk Factors as at 31st March 2012 as recorded in the Interests Register are as The details of the Material Foreseeable Risk Factors are given under follows; the ‘Risk Management’ report on page 24 of this report.
Directors Share holding Share holding Events occurring after the Balance Sheet date as at 31/03/2012 as at 31/03/2011 Except for the matters disclosed in Note 38 to the Financial Statements on page 92 there are no material events as at 31st March Mr. S J S Perera 250,000,000 269,999,988 2012 which require adjustment to, or disclosure in the Financial Mr. R J S Gomez 120,000,000 149,999,994 Statements. Mr. J C Joshua 100,000,000 149,999,994 Mr. D A R Fernando 24,000,000 Nil Corporate Governance Mr. S H S Mendis 24,000,000 Nil Corporate Governance Practices with respect to the management Mr. S D Munasinghe 24,000,000 Nil and operations of the Company is set out on pages 18 to 20 of this Mr. T A G Fernando 6,400,000 Nil report. The Directors confirm that the Company is in compliance Prof. K A M K Ranasinghe Nil Nil with the rules on corporate governance contained in the listing rules Mr. N D Gunaratne Nil Nil of the Colombo Stock Exchange. Mr. A I Lovell 16,000,000 Nil An Audit Committee, Remuneration Committee and Strategic Shareholders Planning Committee function as the Board’s sub-committees with There were 1838 Shareholders registered as at 31st March 2012 Directors who possess the requisite qualifications and experience. The composition of the said Committees is as follows:
Major Shareholders, Distribution Schedule and other Audit Committee information Mr. N D Gunaratne - Chairman Information on the distribution of shareholding, analysis of Mr. A I Lovell shareholders, market values per share, earnings, dividends, net assets Prof. K A M K Ranasinghe per share, twenty largest shareholders of the Company, Directors’ Mr. R J S Gomez shareholding, percentage of shares held by the public as per the Listing Rules of the Colombo Stock Exchange are given under Share Remuneration Committee Information on pages 3 and 96 to 98 respectively. Mr. R J S Gomez - Chairman Prof. K A M K Ranasinghe Auditor’s Report Mr. N D Gunaratne The Report of the Auditors on the Financial Statements of the Group is attached with the Financial Statements in page 63. Strategic Planning Committee Mr. S J S Perera - Chairman Reserves Mr. J C Joshua The reserves of the Group, with the movements during the year, are Mr. D A R Fernando given in the Statement of Changes in Equity on page 66. Mr. A I Lovell Prof. K A M K Ranasinghe Property, Plant and Equipment Annual General Meeting Details of property, plant and equipment and changes during the The Annual General Meeting will be held on 13th September 2012 year are given in Note 16 ‘Notes to the Financial Statements’ in page at the Ballroom, Taj Samudra Hotel, 25, Galle Face Centre Road, 77 and 78. Colombo 3 from 3.00 p.m. to 5.00 p.m. Donations The Notice of the Annual General Meeting appears on page 99. The Company made donations amounting to Rs.14,315,336 during This Annual Report is signed for and on behalf of the Board of the period under review. Directors by
Dividends An Interim Dividend of twenty five cents (cents 0.25) per share was declared on 18th May 2012 and paid to the shareholders on 8th June S J S Perera D A R Fernando 2012. Chairman Director / COO
Statutory Payments The Directors confirm that, to the best of their knowledge, all taxes, P W Corporate Secretarial (Pvt) Ltd duties and levies payable by the Company and its subsidiaries, all Secretaries contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and its subsidiaries and all other 24th July 2012 known statutory dues as were due and payable by the Company Colombo
22 Access Engineering PLC. Annual Report 2011/12 AUDIT COMMITTEE REPORT
Formation Support to the committee The audit committee was formed in October 2011 following the The committee received information and support from corporate governance best practices and also as a part of the the management as required in enabling them to fulfill their process in making the company a public entity. responsibilities.
Role of the audit committee External Auditors The Audit Committee’s authority, responsibilities and specific duties The Committee after evaluating the independence and performance have been formalized through an audit committee charter. The of the external Auditor has decided to recommend to the Board the role of the Audit Committee is to assist the Board in fulfilling its reappointment of Messrs KPMG as the external Auditors for the oversight responsibilities for the integrity of the financial statements financial year ending 31st March 2013, subject to the approval of the of the company and the Group, the internal control and risk shareholders at the Annual General Meeting. management systems of the Group and its compliance with legal and regulatory requirements, the external auditors’ performance, Conclusion qualifications and independence. The audit committee with their initial reviews is satisfied that the company’s accounting policies and operational controls are sufficient Composition of the committee and provide reasonable assurance that the affairs of the company The Audit Committee of AEL is appointed by the Board of are managed in accordance with the group policies and that group Directors and the present committee comprises of three assets are properly accounted for and adequately safeguarded. Independent Non-Executive Directors and one Non-Executive Director of the Board.
Members of the Audit Committee and attendance are as follows.
Name Designation Attended / Eligible to attend Mr. Niroshan Dakshina Independent 1 / 1 N.D.Gunaratne Gunaratne (Chairman) Non-Executive Chairman Audit Committee Director Mr. Alexis Indrajit Lovell Independent 0 / 1 24th July 2012 Non-Executive Colombo Director Prof. Kulatilleke Independent 1 / 1 Arthanayake Malik Non-Executive Kumar Ranasinghe Director Mr. Ranjan John Non-Executive 0 / 1 Suriyakumar Gomez Director
Meetings and Activities The committee met once and in addition to the members the meeting was attended by the DGM (Finance) and the COO of the company and the secretaries. The committee performed the following tasks in relation to the financial year under review.
• Finalizing the audit charter
• Reviewing the financial statements and the management letter and recommended obtaining an independent opinion about the depreciation policy of the company
• Recommended to carry out a gap analysis on the company’s financial statements and their presentation with the adaptation of IFRS
• Reviewing the internal controls
23 RISK MANAGEMENT
The success and sustained growth seen at Access Engineering affirms the efficacy of our risk management initiatives, despite operating in volatile and competitive milieus.
Risk management has always been a key priority within the conducted in various areas of the business which gain an Group’s strategic decision making process as it forms the unrelenting focus on risk potential and solutions. The strategies bedrock to the entity’s sustainability and business continuity. Risk implemented are most often triggered through experience and management is embedded in the organisation’s management infuse strategic planning processes and best practices to minimise, practices, culture and values. Access Engineering’s culture and prevent or assuage risk. Given the constantly transforming macro value system emphasise the dichotomy of risk management environment and the constant changes experienced internally due and the need to take risks in astute fashion, while transforming to new business opportunities arising, newer thought processes them into opportunities and therefore advantages for business, and innovation, Access Engineering has begun augmenting its whenever possible. risk management strategy, having formulated and documented a formal risk management enterprise framework for the Group. The effectiveness of risk management is measured by the achievement of organisational goals and objectives. The success The broad categorisation of some of the key risks identified as and sustained growth seen at Access Engineering affirms the applicable to the organisation and which are deemed relevant to efficacy of our risk management initiatives, despite operating the current reporting period, are given in the table below: in volatile and competitive milieus. Risk management strategies are employed based on constant analyses, reviews and previews
Risk Risk Impact Response Category Business & Project delays and cost Could lead to penalties and negative image. This • Detailed project planning Operational over-runs also could affect securing of future projects • Project review meetings risks negatively • Customer relationship management
Quality Faulty construction or sub-standard output • Detailed project planning could lead to negative image, penalties and • Regular internal audits hazards to third parties • Adherence to quality and safety standards Product portfolio (Less Could lead to high income volatility • Venturing into areas identified diversity in income as related and unrelated streams) diversification Dependence on clients Dependence on a few clients could lead to • Customer Relationship Managers authoritarian terms and high income volatility regularly communicate with the client • Approaching both public and private sector projects
24 Access Engineering PLC. Annual Report 2011/12 Risk Risk Impact Response Category Loss of key employees Loss of key staff especially to competitors may • Providing a challenging work lead to future loss of business and decline in environment quality of service • Training and development • Providing employees with highly competitive compensation and incentive packages Dependence on Quality issues could arise and dependence • Backward integration partners/suppliers could lead to unfavorable terms in contracting • Working with a range of suppliers
Health and safety of Could lead to workplace accidents, penalties, • Providing necessary safety employees negative image and hiring challenges for future equipment to all sites projects • Focused training on Health and safety to all employees • Insurance coverage to mitigate risks form unforeseeable risks Competition Increased competition has the possibility of • Efforts to maintain industry reducing market share and margins positioning (certification/ accreditations etc) • Practice of value engineering philosophy ensuring value addition to clientele Impact on environment Construction inherently results in changes to • Green engineering philosophy the natural environment, which damage will be • R&D into new techniques in viewed negatively by stakeholders construction for less impact to environment Financial risks Interest rate risk Potential high interest cost lowering net • Maintaining low gearing earnings and difficulty of financing new projects • Capital structure guideline designed for each project at the planning stage Investment risk New investments could materialize to lower • Board input for investment decisions yields than expected. Also certain synergies through the Strategic Planning planned will be difficult to obtain due to issues Committee of value alignment • Investment screening and adherence to predetermined criteria Credit risk Potential defaults and delay of payments • Credit policy/approvals triggering negative impact on earnings • Creditworthy client base • Payments being backed by Guarantees Fraud and Error Permeating a negative impact on earnings, bad • Authority limits and internal precedence to other employees and negative controls impact on image • Focused recruitment process Legal and Instability of This industry is highly prone to these risks; • Close relationship with relevant Regulatory Government Policy adverse changes can lead to difficulties in government officials in order to Risks project planning and execution gain a better understanding of policy trends Tax rates Changes in tax rates might lead to possible • Forecasting and tax planning reduction in earnings/margins Compliance Non compliance to applicable laws and • Adherence to corporate governance contracts could lead to fines and negative practices impact on corporate image • Careful review of agreements
25 BOARD OF DIRECTORS
Sumal Perera Christopher Joshua Rohana Fernando Shevantha Mendis Gration Fernando
Sumal Joseph Sanjiva Perera Director of Access International (Pvt) Ltd. He is a Corporate Chairman Member of Institution of Engineers, Sri Lanka (IESL) and has a BSc The Founder Chairman of the Access group of companies founded Degree in Civil Engineering from the University of Peradeniya. in 1989, he is also the Founder Chairman and a shareholder of Access Engineering. He continues to be the Chairman of all Shevantha Harindra Sudharaka Mendis companies under the umbrella of the Access group and Managing Executive Director/Director – Business Development Director of Sathosa Motors PLC, a company that gained a public Having held many executive and management positions within the listing in 1993. He is a Fellow Member of the Chartered Institute of Access group, he has functioned within the Engineering Division Management Accountants - UK. It is under his vision and leadership since its inception. With the genesis of Access Engineering, he that the Access Group of Companies has grown to be a diversified became a part of that unit and was appointed as Director- and successful business enterprise, in a short span of over 2 Business Development in 2002. He is also a Director of Access decades. International (Pvt) Ltd., and an alternate Director of Sathosa Motors PLC. Joseph Christopher Joshua Executive Director Thiththalapitige Anton Gration Fernando One of the founder Directors of the Access Group of Companies, Executive Director/Director – Projects he was instrumental in heading some of the most successful Joining Access International (Pvt) Ltd as the Manager-Marine business units within the group. A founder shareholder, he was the Works in September 1997 and doubling as Project Manager Joint Managing Director/CEO of the Company for a considerable as well, he was subsequently promoted to Assistant General period of time. It was under his leadership that Access Engineering Manager at Access Holdings (Pvt) Ltd in March 2003. He joined achieved these significant milestones in growth over the last Access Engineering in January 2004 and was appointed to the decade. Since 1997, he has also functioned as the Joint Managing Board of Access Engineering as the Director - Projects. He Director of the Access Group. Companies under his purview possesses over ten years of service as a commissioned officer include Access Realties (Pvt) Ltd., Access Energy (Pvt) Ltd., Access in the Sri Lanka Navy and holds a Bachelor of Arts Degree in Natural Water (Pvt) Ltd., Eco Friendly Power Developers (Pvt) Defence Studies from Sir John Kothalawala Defence University. Ltd., and business units of Access International (Pvt) Ltd. He is also a Director of Sathosa Motors PLC. Saumaya Dharshana Munasinghe Executive Director/Director – Business Development Dalpadoruge Anton Rohana Fernando He joined Access International (Pvt) Ltd as a Sales Executive of Executive Director/ COO the Packaging Division in 1996 and was promoted to the position Joining the Access Group in 1998 as an Engineer based in the of Assistant Manager in 1999. In 2001, he assumed duties as Engineering Division of Access International (Pvt) Ltd., he played Manager - Special Projects in Access International (Pvt) Ltd and a vital role in enabling the division to become a separate business was promoted as General Manager - Special Projects in 2004. entity, encompassing the name and persons of Access Engineering. He joined Access Engineering in 2006, and was appointed to the Having held senior management positions in Access Engineering, Board of Access Engineering as Director - Business Development. he was appointed to the Board in 2002. In 2007, he was appointed He is also a Director of Access International (Pvt) Ltd., and an as the Director / COO of Access Engineering. He is also a alternate Director of Sathosa Motors PLC.
26 Access Engineering PLC. Annual Report 2011/12 Dharshana Munasinghe Ranjan Gomez Malik Ranasinghe Alexis Lovell Niroshan Gunaratne
Ranjan John Suriyakumar Gomez Alexis Indrajit Lovell Non-Executive Director Independent Non-Executive Director One of the founder Directors of the Access group of companies Appointed to the Access Engineering Board in 2011, he counts and has functioned as the Joint Managing Director of the over 30 years experience in Finance and Investment Banking. Group since 1997. Companies under his purview include ATSL Currently he also functions as the Chairman of Union Bank International (Pvt) Ltd., ATSL Telesoft (Pvt) Ltd., Access Energy of Colombo PLC, a position he has held since May 2012, into Solutions (Pvt) Ltd., Think Cube Systems (Pvt) Ltd., Science Land which he was appointed as Non Executive Director in 2007. A Information Technology (Pvt) Ltd., e-buy (Pvt) Ltd., and business Chartered Management Accountant, UK with a Postgraduate units of Access International (Pvt) Ltd. He is also a Director of Degree in Business Administration, he was awarded the MBE Sathosa Motors PLC. (Most Distinguished Order of the British Empire) by Her Majesty the Queen of England for his services to Investment Banking. He Prof. Kulatilleke Arthanayake Malik Kumar Ranasinghe is also a Director of Sathosa Motors PLC. Independent Non-Executive Director A member of the Access Engineering Board since 2011, he Niroshan Dakshina Gunaratne is a Senior Professor in Civil Engineering at the University of Independent Non-Executive Director Moratuwa, a Chartered Engineer and International Professional Appointed to the Access Engineering Board in 2011, he is also the Engineer, a Fellow of the Institution of Engineers, Sri Lanka and Finance Director of ASCOT Holdings PLC., an Associate Member the National Academy of Sciences, Sri Lanka. An immediate past of the Chartered Institute of Management Accountants (UK). He Vice-Chancellor of the University of Moratuwa, he functions possesses over eighteen years of experience in the field of finance as an independent non-executive Director of Sampath Bank and accounting and has been at MB Financial Services (Private) PLC, Hemas Power PLC and Textured Jersey Lanka PLC. He is a Ltd, a primary dealer appointed by the CBSL and Jewelknit, a former Fellow of The National University of Singapore and has subsidiary of Mast Industries USA. been a Non-Executive Director of the Colombo Stock Exchange and Lanka IOC PLC.
He was conferred his PhD in Civil Engineering Economics in 1990 from the University of British Columbia, Vancouver, Canada. His research focus is to combine applications in Engineering Economics and Environmental Economics with Project Management. He has published over 110 research publications, of which over 60 are international refereed publications. He has been honoured with the Sri Lanka Association for the Advancement of Science (SLAAS) General Research Committee Award for Outstanding Contribution to Sri Lankan Science and Trinity Prize for Engineering in recognition of the outstanding contributions made to his chosen profession.
27 CORPORATE MANAGEMENT TEAM
Vasantha Manatunge Dharmasiri Chandrapala Manoaj Jayahsuriya Srimal Fernando Palitha Wanigasundara
Sumal Joseph Sanjiva Perera Manoaj Jayahsuriya Chairman General Manager (Projects Office - I) Manoaj joined the Company in March 2006 as General Joseph Christopher Joshua Manager (Projects Office I). He has 29 years of experience Executive Director in diversified fields such as the Sri Lanka Navy, operations, apparel manufacturing, corporate planning and human resources Dalpadoruge Anton Rohana Fernando management. He holds a MBA from the Postgraduate Institute Executive Director/ COO of Management (PIM) of University of Sri Jayewardenepura, BSc (Hons) from University of Colombo and a Postgraduate Diploma Shevantha Harindra Sudharaka Mendis in Psychology as well as several naval professional qualifications. Executive Director/Director – Business Development Srimal Fernando Thiththalapitige Anton Gration Fernando General Manager (Projects Office - II) Executive Director/Director – Projects Srimal joined the Company in August 1999 as a civil engineer and was promoted to Manager Engineering in January 2004 and as Saumaya Dharshana Munasinghe General Manager in January 2008. Currently, he delivers his duties Executive Director/Director – Business Development as the Head of Projects Office II. He holds a Bachelor’s Degree in Civil Engineering from the University of Peradeniya and is a For the profiles of the above Directors, please refer to the previous page. Corporate Member of the Institute of Engineers, Sri Lanka.
Vasantha Manatunge During the period of his service, he was involved with major Senior General Manager projects in many diversified fields such as Roads and Highways, V. K. Manatunge joined the Company in early 2003 and is currently Bridges, Telecommunication, Water and Waste Water, Piling and functioning as the Senior General Manager of Access Engineering. Buildings in a senior level management capacity. He obtained his Degree in Civil Engineering from the University of Moratuwa in 1978 and has been a Corporate Member of the Palitha Wanigasundara Institution of Engineers, Sri Lanka since 1982. He counts about 33 General Manager (Projects Office - III) years of experience in the civil engineering field and has worked Palitha joined the Company in 2007 as Deputy General Manager in various capacities in the state sector as well as private sector. (Construction) and currently functions as the General Manager (Projects Office III). He holds a Master of Science Degree in Dharmasiri Chandrapala Civil Engineering (USSR), a Master of Engineering Degree in General Manager (Technical) Construction Management (University of Moratuwa) and a T.D.D. Chandrapala Joined the Company in 2002 and counts over Master of Business Administration Degree (Postgraduate Institute 9 years of experience at the senior management level of the of Management (PIM) of University of Sri Jayewardenepura). Company. He holds a BSc Degree in Civil Engineering and he is He is a Fellow Member of Institute of Engineers, Sri Lanka and also a Chartered Civil Engineer. He has 35 years of experience in a Corporate Member of the Institute of Engineers (Australia). the fields of Irrigation and Drainage, Building Construction, Water Prior to joining the Company, He served in the National Water Supply and Roads and Bridges.
28 Access Engineering PLC. Annual Report 2011/12 Aariadasa Fernando Kosala Wickramasinghe Niroshan Thilakarathne Neranjala Priyadarshani Prabath Karunanayake
Supply and Drainage Board for 20 years in the capacities of Chief years of experience before joining Access having worked in a Engineer, Project Manager, Assistant General Manager and a professional firm which provides Audit, Tax, Finance and Advisory Project Director. services. He is also a Finalist of the Institute of Chartered Accountants of Sri Lanka. Aariadasa Fernando Deputy General Manager (Project Coordination) Neranjala Priyadarshani A. A. Fernando joined the Company in August 2003 and presently Deputy General Manager (Finance) serves as Deputy General Manager (Project Coordination). He Neranjala joined the Company in 2005 and presently serves is also functioning as the Company’s Lead Auditor of the ISO in the capacity of the Deputy General Manager (Finance) of systems. He has 38 years of experience in civil engineering to his the Company. She is an Associate of the Institute of Chartered credit and has worked in a number of government institutions Accountants of Sri Lanka and an Associate of the Society of such as Public Works Department, Highways Department, Certified Management Accountants of Sri Lanka. She holds a Road Development Authority and Road Construction and Special Degree in Accountancy and Financial Management from Development Company (Ministry of Highways) before joining the University of Sri Jayewardenepura. the private sector. He holds a Graduateship in Civil Engineering from City and Guilds, London and possesses several other Prabath Karunanayake qualifications in civil engineering and is a Member of the Institute Head of Human Resources of Incorporated Engineers, Sri Lanka. Prabath is the latest addition to the Corporate Management Team of Access Engineering and functions in the capacity of Head Kosala Wickramasinghe of Human Resources. He holds a MBBS from the University of Deputy General Manager (Projects Office – II) Colombo and a MBA in HR from the same University. Currently, Kosala joined the Company as a Project Manager in 2007 and he is reading for his Doctorate in Organizational Psychology. He currently functions as the Deputy General Manager (Projects is an Associate Member of the Institute of Certified Professional Office - II). He holds a Bachelor of Science Degree in Civil Managers. He accounts for over 12 years of experience in training Engineering from University of Moratuwa and a Postgraduate and human resource management in both private and public Diploma in Structural Engineering from University of Moratuwa. sector institutions. He has served as a consultant for local and He is also a Corporate Member of the Institution of Engineers, multinational companies in HR and occupational health & safety. Sri Lanka and a Corporate Member of the Society of Structural Prabath also serves as a Student Mentor and a Member of the Engineers Sri Lanka. He has 12 years experience in the field of Industry-Academic Consultative Committee at the University of civil engineering including Structural Engineering and Project Moratuwa. Management.
Niroshan Thilakarathne Deputy General Manager (Commercial) Niroshan presently serves in the capacity of the Deputy General Manager (Commercial) after serving in various capacities in the Company over a period of almost 9 years. Also, he has over 5
29 Being the Best Empowerment and inclusivity are the strong kinetics that have proudly labeled us the best in what we do. The philosophy of accessibility is deep rooted in our mindset and it is this that drives us to connect people across the nation, which in turn, affirms us as a caring responsible corporate entity.
PROCESS INTEGRATION Engineering Projects 34 Engineering Services 42 People and Communities 48 The Planet 54 Accreditations, Awards & Accolades 58
Work in progress at Salinity Barrier across Walawe River, Ambalantota.
30 Access Engineering PLC. Annual Report 2011/12 31 BEING THE BEST
We are a Group that focuses on delivering hope and promise to a nation that has for too long dealt with despair and destruction. This quest has seen Access Engineering climb to the zenith of its industry as a spearhead, leader and champion. We have taken on the mantle of innovator, a pioneer, a harbinger of change and a benchmark initiator, believing strongly in the ethos that we are tasked with shaping the future for the nation, rather than joining an already chartered course. To be thus bold and courageous, we have to be confident that we can run the course ahead of everyone and therefore, over our short but eventful history, have ensured that our Group determines paradigms and maps the macro journey. We therefore have rightfully emerged as a maven for both industry and country, proudly carrying the laurel of ‘Being the Best’ in the myriad dimensions in which we influence the way we work and conduct our business.
32 Access Engineering PLC. Annual Report 2011/12 Infrastructure is the mainstay to physical and economical aspects of nation building and while it quantitatively presents means of economic upliftment to communities who for long suffered through the debilitating impacts of a thirty year war, the qualitative impacts are wide ranging, diverse and numerous. In the context of nation Engineering Projects building, infrastructure brings together communities, adds economic and social value through access to amenities and facilities, opens new avenues of employment generation and most of all, introduced social equity into communities. We at Access Engineering, are proud to be at the helm of this nation building process, spearheading infrastructure development aligned to the Government’s accelerated development agenda, truly espousing our euphemism of, ‘Hope Delivered’.
33 ENGINEERING PROJECTS Improvement of Jaffna – Kankasanthurai Road, Puttur – Meesalai Road & Jaffna – Palali Road as a subcontractor to China Railway No 5, while rehabilitation work is being implemented under the supervision of the Road Development Authority. Work on the Jaffna-Kankesanthurai Road was begun in February 2011, followed by the Puttur-Meesalai Road and the Jaffna-Palali Road. Considering the importance and magnitude of the project, Access Engineering invested in critical support services which included adding an Asphalt plant, a crusher plant, a concrete batching plant and dedicated laboratory services to expedite the projects. The thirty month timeline for completion Roads and Highways Sector will be well ahead of schedule, with the project earmarked for The name of Access Engineering goes hand in hand with Roads completion in November 2012. At completion the road network and Bridges in the mind of the public due to the numerous will provide a boost to the economy and living standards of the Road, Highway, Bridge and Flyover Projects we have handled people in Jaffna. over the years, flagging them as the icons of Access Engineering’s achievements. Government undertook the upgrading and improvement of the existing roadway between Padeniya and Anuradhapura at Roads and highways as a sector is the main contributor to a value of Rs.8 Bn with the aim of facilitating tourists visiting Access Engineering turnover with Roads and Highway projects world heritage sites in Anuradhapura, Kandy and Polonnaruwa. accounting for 56% of the turnover during the year 2011/12. At completion, this project will provide high mobility transport between Padeniya and Anuradhapura. We undertook works of The government of Sri Lanka has placed a special emphasis in widening and improvement of Padeniya-Anuradhapura road rehabilitation, restoration and developing the road infrastructure with two lanes with an addition of four lanes in town areas from in war-torn areas and Access Engineering is actively participating 50+000 km to 80+000 km from the main contractor Keangnam in the road development programme of the Jaffna peninsula. Enterprises Ltd. Access Engineering has undertaken Rehabilitation and
Construction of a box culvert at Navatkuli - Karaitivu - Laying asphalt at Kanthale – Trincomalee Road Mannar Road
34 Access Engineering PLC. Annual Report 2011/12 Rehabilitation and improvement of road sections on Ambepussa- Deyata Kirula Exhibition Area.- Zone F carrying out works worth Kurunegala-Trincomalee Road (A 06) is underway under the over a Rs. 850 Mn within a strict timeline in time for the initiation World Bank funded Resettlement and Action Plan and Access of Dayata Kirula 2012 on 04th February 2012. Engineering secured the Project for Rehabilitation and Improvement of Road Section from 157+000 to 167+280 Our skills in innovative road design were utilised in the designing & Kanthale to Parathuweli (B 196) Road at a project of the over 2.5 km long Access Road to the Hambantota value of Rs. 850 Mn. Construction works began in July 2011 International Airport. Access Engineering is proud to and scheduled for completion in 18 months and currently the be involved in this mega development project. Design and processes of widening the existing road and providing adequate construction work of higher traffic intensity 4 lane road was shoulder, side and cross drainage systems as well as a utility subcontracted to Access Engineering by the main contractor service corridor are in progress, under the guidance of the Road China Harbour Engineering Company. Road consists of 4 lanes Development Authority of Sri Lanka. On commissioning, this road 3.2m wide carriageways on either side, a 2m wide central median will increase connectivity across Central, Sabaragamuwa, North and 1.1m wide walkways on either side. Total width of the road is Western and Eastern provinces. Apart from the regular traffic 18.4m. flow which includes passenger buses, heavy vehicles and private vehicles, tourists and devotees visiting Trincomalee, Anuradhapura, Access Engineering also undertook the rehabilitation and Polonnaruwa, Dambulla and Sigiriya will also gain considerable improvement works of internal roads in Katunayaka and advantage from the outcome of this project. Biyagama Export Processing Zones. Over Rs. 350 Mn worth road improvement works were completed in May 2012 with Almost habitually Access Engineering has a stake in any major significant contributions from our support services. development project that takes place, as is the case with Dayata Kirula 2012. Under Deyata Kirula 2012 programme activities, Bridge and Flyover Sector the development of Highways, provincial roads and improvements Access Engineering has pioneered in employing speedy erection in rural areas of Anuradhapura District have been initiated and technologies and methods in the construction of bridges and Access Engineering was involved in this programme by way of flyovers in Sri Lanka. Kelaniya, Nugegoda and Dehiwala implementing Rehabilitation and Improvements to several roads flyovers and Sangupiddy Bridge, where prefabricated steel in North Central Province and Construction of Internal Roads at superstructures were used can be given as the best examples. All
Completed Anuradhapura – Padeniya Road
Road compaction in progress at Navatkuli - Karaitivu - Temporary bridge being installed on the Batticaloa Ayittiyamalai Mannar Road Road at Valayaravu
35 ENGINEERING PROJECTS The unfamiliar subsoil conditions in the area and the difficult terrain were some unique challenges encountered and overcome. At completion, the bridge created a unique landmark in the Northern Province, adding another facet to the nation building process.
In keeping with the government’s plans of providing all necessary infrastructure for the people before commencing resettlement in Musali Divisional Secretariat Division, Mannar, it was decided to build Aravi Aru Bridge across Malwatuoya. The project commenced under financial aid from the British Government. of the above flyovers were constructed in busy road junctions Employed by the Road Development Authority and partnered by with minimum disruption to traffic by utilizing the fast assembly Mabey Bridge UK, Aravi Aru Bridge was constructed by Access technologies. These flyovers and Sangupiddy Bridge were Engineering across Malwathuoya at Arrippu on Thallady-Arippu- constructed in partnership with Mabey Bridge UK, one of the Marichchukaddi road. When completed 259 meter long steel leading steel bridge experts in the world. deck bridge consisting of six bays helped reduce the difficulties experienced by the communities living in Tallady areas to reach Access Engineering was entrusted with the challenge of Mannar when the Malwathu-oya overflows owing to the rains connecting the Jaffna Peninsula to the mainland through the experienced in the upstream areas. Kilali lagoon with the construction of a bridge, Sangupiddy Bridge, designed to replace the ferry operated during the pre- As a part of government initiated development initiative in the war era linking Sangupiddy and Karaitivu on A32. In partnership Northern region and funded by Asian Development Bank, Eastern with Mabey Bridge Limited UK, construction works began and North Central Provincial Bridge Project – Phase 1 is in December 2009 under the “Regional Bridge Programme” currently underway. Access Engineering’s scope of work includes with funding from the British Government. The bridge is a the design and construction of four bridges and six multi cell prefabricated steel girder structure with an anti-skid steel deck culverts. At completion in the beginning of the year 2013 this system erected on a RCC structure founded on piled foundations, project will help further strengthen the road network in the region. 288m in length and accommodating a 7.35m wide carriageway.
Fixing of gates at Salinity Barrier across Walawe River, Hambantota Water Supply Scheme in operation Ambalantota
36 Access Engineering PLC. Annual Report 2011/12 Water Sector In parallel with the implementation of Hambantota Water Supply As another key area of infrastructure development, Access Project, the Government of Sri Lanka took initiatives to increase Engineering continued to be involved in major water supply the water intake capacity to the treatment plant to align the projects in the country supplying and increasing the supply of capacity of the plant to meet the long term development targets potable water to rural population of the country. Among the of the region. The Asian Development Bank funded Gated recent water supply projects aimed at raising the living standard Salinity Barrier Across Walawe River – Ambalantota of rural Sri Lanka are Batticaloa Water Supply Project and involves the construction of a gated salinity barrier across the Hambantota Water Supply Project. Access Engineering Walawe River downstream of the existing water intake for the performed a pivotal role in the success of both projects. Ambalantota water treatment plant. Scheduled for completion by the end 2012, it is billed to increase the intake of the existing As a major design and build water supply contract in Sri Lanka treatment plant by 28,000 m3/day and meet drinking water with, Hambantota Water Supply Project was aimed at requirement of the Hambantota district up to the year 2025. providing potable water to the rural communities in Southern The project, which is Rs. 1 Bn in value, is yet another landmark Sri Lanka. Access Engineering joined hands with China Geo water project which incorporates numerous value engineering Corporation of China and Salcon Engineering Berhard of Malaysia techniques including the use of gabion structures to build the to form Access-China Geo-Salcon Joint Venture and the JV coffer dam, instead of the much costlier and harder to implement designed and constructed head works, raw water transmission original option of sheet piles. main, treatment plant and water pumping main as well as the rehabilitation of the existing water treatment plant. Implemented Initiated by the government as one of the key development under the supervision of the National Water Supply and Drainage projects in the Eastern Province in 2007 with the aid of Asian Board of Sri Lanka, apart from being a successful collaboration Development Bank, Batticaloa Water Supply Project is with two major international companies, the use of stainless steel now providing potable water to nearly 85% of the population Lamella Plate Process Technology for the clarification of raw (450,000) of Batticaloa town and suburbs. The rural population water was another significant feature which speaks highly of our of the area now have access to clean drinking water without value engineering ethos. having to walk for miles. We carried out the construction of raw water intake, laying 800 mm diameter Ductile Iron transmission mains of about 26 km and 800 & 600 mm diameter High Density
Excavation work at Unity Container Terminal Renovation at Colombo Harbour
Mattala Airport Water Tower close to completion Sangupiddy Bridge across Kilali Lagoon
37 ENGINEERING PROJECTS Along with the unprecedented damage caused to human lives and livelihoods, 2004 Tsunami also managed to cripple infrastructure in the coastal region of the country. Among these was the damage to the Unity Container Terminal at Colombo harbour, which coupled with pre-existing design failures, made it essential for the terminal to undergo renovations.
Unity Container Terminal Project began with the intention of providing urgent renovations to restore failures incurred in the west and north revetments of the Unity Container Terminal, rehabilitate the yard and have a fully functional terminal. Access Polyethylene (HDPE) pipes across the lagoon of about 1.2 km Engineering’s scope of work includes dredging and constructing each in partnership with China Geo-Engineering Corporation a rubble mounted embankment to protect the quay settlement, of China and Salcon Engineering Berhad of Malaysia. Water is rectification of the settlement with anchor rods and tie rods, pumped from the Unachchiya Tank through raw water pipeline removal of existing graded rock mound along the existing North to the Treatment Plant to be purified and distributed among the revetment and restoration of the yard area, while adding the people of the Batticaloa District. amenities of water, electricity and gantry crane rail foundation. Funded by Japanese Non-Project Grant Aid Counterparts Funds Harbour and Marine Sector and valued at Rs. 416 Mn, Access Engineering is employed by the With the completion of Mega Port Phase I and Phase II, and Sri Lanka Ports Authority for the implementation of the project. adding to Access Engineering’s technical knowhow of latest The project is progressing ahead of schedule due to a surfeit of technology on most up-to-date development in harbour security value engineering solutions being added to the features, processes was Mega Port III, which was completed during 2011. Past year and systems. also marked the use of innovative and value engineering solutions being implemented in harbour and marine projects undertaken by Building Sector Access Engineering. Believing that change and the new are essential to the sustainability of any business, Access Engineering ventured
Cable connection work at Dialog Aerial Optical Fibre Work continues till dusk at Low Cost Housing Project, Network Project in Trincomalee Henamulla
38 Access Engineering PLC. Annual Report 2011/12 into building construction in 2011. With this step forward we units under the Henamulla Low Cost Housing Project. were able to acquire and develop the expertise and specialised Design and installation of mechanical, electrical and plumbing knowledge required to excel in this most competitive sector of works, landscaping and rehabilitation of the access road to the construction industry in-house, gearing up to meet the future the housing settlement also fall within the scope of Access challenges and the changes in economic climate would bring to Engineering. On completion, the project extends housing to our doorstep. families who are currently living in Under-served Settlements in and around Colombo. This is the first large scale housing project Access Engineering was one of the few construction companies undertaken by Access Engineering and also marks the successful selected to partner one of Sri Lanka’s most exhilarating implementation of a new formwork system, which has enhanced infrastructure projects, the new International Airport at Mattala speed and efficiencies of the construction and improved quality, in Hambantota. Currently Access Engineering is in the process of while entrenching a firm commitment to sustainable building constructing the Cargo and Fire Rescue Buildings, scheduled technology. for completion in September 2012, which gains extreme Telecom Infrastructure Sector priority in terms of quality assurance. Similar to the design and Our relationship with our long term client Dialog Axiata PLC construction of Airport Access Road, Airport Water Tower continued to thrive. We installed over 750 km of optical fibre and the Pipe Laying Project undertaken by Access Engineering cables helping Sri Lanka progress to the next stage of global at Mattala Airport Project, this project too is in partnership with communication by connecting every corner of the country in China Harbour Engineering Company Ltd under the supervision to one giant web of information network. During the period of Airport and Aviation Services (Sri Lanka) Ltd. The project also under review we completed Dialog Backbone Project from marks our entry into the highly competitive building construction Wadduwa to Matara and Colombo Metro Optical Fibre sector of the industry, a significant step in achieving our future Network Project – Phase II. Total value of the projects vision. completed for Dialog within the last year amounts to Rs. 1 Bn. We have also recently completed the first phase of Dialog Funded by the Urban Development Authority at a project value Aerial Optical Fibre Network Project employed by the main of Rs.2.9 Bn, Access Engineering is working on the structural contractor Huawei Technologies of China, and Second phase of design and construction of all the civil engineering works of the project is currently underway. five 12-storey apartment blocks comprising 1,137 housing
Tower crane in operation at Low Cost Housing Project, Henamulla
Finishing work underway in Fire Rescue Building at Mattala Work on the prefabricated roof underway in Cargo Airport Building at Mattala Airport
39 ENGINEERING PROJECTS
On the premise that Access Engineering has been fundamentally focused on ‘Hope Delivered’, the fact that the Company is metastasizing its presence in all areas of the country encompassing all competencies and sectors of the construction industry, further proves that Access Engineering’s intervention in the country’s progress is strong and focused. A detailed purview of the Company’s geographic presence whether in water and sanitation, roads, highways, bridges, flyovers or buildings is given below for the financial year 2011/12.
Projects
Roads & Highways Water & Waste Water Bridges & Flyovers Harbours & Marine Works Dredging & Reclamation Telecommunication Infrastructure Buildings
40 Access Engineering PLC. Annual Report 2011/12 Access Engineering’s underlying premise in ensuring that quality remains paramount in each project we embark on, is in demanding the best, not only in hardware encompassing infrastructure and raw material, but also in ensuring that skills, competencies and knowledge in optimising the best resources available is high on Engineering Services the agenda. Backward integration therefore forms the backbone to our concept of A to Z Engineering Solutions, propelling Access Engineering to enter into spheres which would not only support the work we are engaged in, but also raise benchmarks and add value to the entire industry. Given overleaf are the new initiatives we embarked upon and those already implemented which we continue to improve, ensuring that our brand of supreme quality deliverables form the kinetics to ‘Hope Delivered’.
41 ENGINEERING SERVICES integration feature of Asphalt Mixing Plants, which would not only supply our own projects but will also have enough production available for external customers. The new Asphalt plants are established in Kotadeniyawa, Jaffna, Kanthale and Thalawa. The Kotadeniyawa plant has a capacity of 96 TPH (tonnes per hour) and is now operating at full capacity, supplying to external customers as well. The other three encompass a much higher capacity of 120 TPH and cater to our requirements.
With a view to adding value and enhancing the highest The A to Z of design and construction is augmented due to a contributor to our revenue portfolio, Access Engineering made highly experienced reputed and skilled design division whose substantial investments in machinery, equipment and plants to aid execution of complex projects has included the design of bridges, the construction of new roads and highways and the rehabilitation flyovers, buildings, roads and highways. Equipped with the latest and improvement of existing roads. The Quarry Operations, state of the art technology in both analysis and design, the situated in locations convenient and adjacent to ongoing projects Engineering Design Division undertook the design of Ramp 9 include some which are owned by Access Engineering. These are and Bridge 19 for the Outer Circular Highway project (Southern the Thalawa Quarry in Anuradhapura, Sarvodaya Quarry in Section), which involved the design of a complex box girder Vavuniya and Kabithigollawa Quarry in Vavuniya. Within the structure, curved in both vertical and horizontal plains. The design last year, 3 new Crusher Plants holding a capacity of 50 TPH, 80 was carried out and implemented successfully at the Kottawa TPH and 150 TPH were added to enhance the existing quarry Interchange of the Outer Circular Highway Road Project. operations in Anuradhapura, Kanthale and Vavuniya, not only providing raw material for Road Pavements and Asphalt, but also With the Access Engineering business portfolio expanding, the the aggregate required for manufacturing ready-mix concrete. Company saw a considerable increase in the road development project sector which prompted us to invest in the backward
Asphalt production plant at Kotadeniyawa New concrete batching plant in Mabima, Kaduwela
42 Access Engineering PLC. Annual Report 2011/12 Yet another new addition to the Access Engineering portfolio, 1000 mm. Our piling division also undertook the Piling Work of the plant which was initially established to supply concrete for Low Cost Housing Project at Henamulla. This project with ongoing projects including piling projects and low cost housing over 400 piles to be cast is currently nearing completion. Bauer project in Henamulla, saw a further investment to the existing BG 24 and 25 rigs are employed in above projects and the work fleet of Concrete Batching Plants with an infusion of a 60 m3/ scopes of both projects include pile testing as well. The piling hr capacity plant. The plant’s assets now include a truck mounted division is currently being reinforced with further investments in boom concrete pump, a front end loader, 10 transit truck machinery and equipment to gear up the division, to handle the mixtures and accessories. These are complemented with the upcoming large scale piling projects. latest technology, upgraded expertise and vigorous quality control, adding the dimension of supplying to external customers in large Within a few years of its establishment, the Geotechnical scale as well. Laboratory Services Division has become a valuable asset to the company portfolio by providing support services A Bauer BG 25 rotary drilling rig was added to the Piling in a timely and cost effective manner. Currently, this division Division of Access Engineering in 2011. In addition, a De-sander supports our numerous projects with various services. Some of was acquired for the Division through which the quality of the main services provided by this division include soil testing drilling fluid is maintained to enhance the quality of piling works. and geo technical investigations for the Hambantota Airport Among many piling projects undertaken were two major projects Access Road Project, Low Cost Housing Project at Henemulla undertaken by the Division - Piling Work for the Proposed and the Hambantota Water Tower Project, field investigation Medical Faculty Building Complex at Sir John Kotelawala (DCP testing etc) for A32 Road Project and quality control and Defence University at Rathmalana and Piling Work for quality assurance for Kothalawala Defence University Piling, the Construction of 500 Housing Units at Dematagoda. UDA Housing Project Piling at Dematagoda and Mega Port Piling works at KDU included installation of 277 numbers cast Project. Investigations for deep/shallow foundations, traffic in-situ bored piles of diameters ranging from 500 to 750 mm and surveys, topographical and contour surveys, concrete testing, field scope of work of UDA piling project is to install 386 numbers testing for earth and road works, testing of aggregates and sand, cast in-situ bored piles of diameters varying from 500 mm to laboratory tests for soil and testing of Bituminous and Asphalt
Sourcing material from Vavuniya Quarry
Testing in progress at Geotechnical Laboratory Piling work in progress at Kothalawala Defence University Building
43 ENGINEERING SERVICES this division has expanded its operations into various other ventures. Fabrication of various components with the acquisition of new machinery, customisation of machines and equipment to better suit the needs of individual projects, installation of mechanical equipment, designing and fabrication works, fulfilling different types of pile casting requirements of piling division, design and manufacturing, washing plants for DBST material, manufacturing semi-automatic pipe benders for large sized Iron pipes, fabricating and installation of fuel tanks and design and fabrication of water bowsers are among some of the other works among other services being provided by the division. As a valuable undertaken by the Mechanical Workshop. Progress of this division support service of Access Engineering, the capacity of this division was achieved by our hard working team comprising of skilled and enables us to do testing more frequently, economically and competent personnel including mechanical engineers and other reliably but also helps us establish the innovative techniques and technical and management staff. processes we have developed within the industry by providing the required proof of quality and standards. Horizontal Directional Drilling (HDD) is a technique, which employs a trenchless method to install pipes, ducts or cables Over the last few years Mechanical Workshop has turned underground. This trenchless method becomes very versatile into one of the most crucial operations within our organisation during the installation of underground utilities along the roads in by handling the operation and maintenance of all the heavy built-up areas since the disturbance to traffic is very minimal. With machinery, equipment and the fleet of vehicles owned by us. the recent acquisition of 2 HDD machines, our strength was However, management of this division was committed to increased to 3 machines. We have so far installed underground expanding the operations of the workshop beyond the supply ducts of around 37 km within the city of Colombo and in built-up of support services to the existing machinery and vehicles. With areas along the Galle Road under the Optical Fibre Network ambitious forward planning and innovative out of the box thinking, Projects of Dialog Axiata PLC.
Finished products leave the Crusher Plant in Vavuniya Horizontal Directional Drilling (HDD) machine at work
44 Access Engineering PLC. Annual Report 2011/12 Fibre Optic Cable installation by Cable Jetting, is the process of installing a cable in a duct by pushing the cable into the duct whilst blowing air through the duct. This is made possible with the use of a cable jet machine and compressors with moist separators ensuring minimum tension to the cables and enhancing productivity. This is a much better alternative than the installation of cables by conventional manual cable pulling methods, which helps save time and enhances quality by way of eliminating cable damages that may occur due to manual cable pulling forces. We have been successful in installing and reaching a distance of approximately 4 km of optical fibre cables on average per day.
As the only construction company to own a Cutter Suction Dredger, we have been able to complete a variety of Dredging and Dredging Related Activities in an economical and efficient manner. We have successfully completed dredging projects in Hikkaduwa, Mirissa and Puranwella Fishery Harbours and the Lunawa lagoon. One of the recently completed dredging project is the dredging of the Dutch canal, which was initiated as part of the Katunayake Expressway project to mitigate the risk of flooding of lower level land due to Expressway construction. We carried out the re-channelling works of the Old Dutch Canal at Muthurajawela along the Colombo – Katunayake Expressway from Ch 10+900 to Ch 13+546 (Total re-channeling length of the canal is 2,646 m and the width of the canal is 40 m).
Production underway in Asphalt plant in Kanthale
Dredger at work in Dutch Canal, Negombo Sheet metal fabrication in Mechanical work shop at Ranala
45 ENGINEERING SERVICES
A fundamental feature in the total solutions kinetics that Access Engineering espouses, our services which were initially begun as a support feature for the expansive projects undertaken, have now evolved into efficient service centers that extend their competencies and capacities to external customers as well. Detailed below are the geographic locations of the Company’s Asphalt, Crusher and Concrete Plants and as well as the quarries which now play a significant role in extending the capacities available in the entirety of the construction industry.
Services
Piling Asphalt plants Crusher plants Batching plants Quarries
46 Access Engineering PLC. Annual Report 2011/12 They are hardworking and dedicated, loyal and enthusiastic. They are, and will always be, our greatest asset and they hoped that one day, they would become a bigger part of the company that they are so devoted to. We believed we could make a difference in their lives and we did. A stake worth Rs.3 Billion was gifted People and to the employees by the three Founder Shareholders, in recognition of their valued and devoted contributions. We showed them that they are more than Communities just employees and provided them with a sustainable gift for the future. We delivered hope.
47 PEOPLE & COMMUNITIES We are most proud that this year we took our employees to new heights, espousing our corporate responsibility and stewardship into truly imbuing the sense of ownership among our team. In a bid to appreciate the loyalty and commitment displayed by the members of the team, we presented Company shares to some The teamwork, dynamism, motivation and most of all the drive of our loyal and long standing team members. This undoubtedly to win have propelled our people to push boundaries, create heralds a new chapter in Sri Lanka’s corporate history, while paradigms, innovate solutions and become a force in not only also paving the way for others in the team to aspire towards our industry but in Sri Lanka’s corporate annals. This also means claiming ownership eventually. Access Engineering awarded share that Access Engineering must attract and retain the best in the ownership to over 1,000 team members comprising managers, industry and over the years, we have done just that. We have assistant managers, executives, clerical and support staff. Given the infused HR best practices into the way we do business and way standing and value of the Access Engineering share, this outright we manage our people. We continue to create and develop an gift of ownership makes more than 250 of these team members empowering milieu for them, where achievements are rewarded rise to the monetary ranks of millionaires, while impacting and performance is recognised. positively on their families as well.
We imbue a knowledge culture which becomes central to our HR Management working environment, as we strongly believe that the honing The HR function at Access Engineering is decentralised, with a of skills and talent, while improving levels of knowledge remain dedicated Head of HR working from Head Office overseeing the bedrock to an empowered workforce. Into this is added the Group’s HR operations, while HR at each Project Office also the additional tenets of responsibility and accountability, which comes under individual HR Managers. Our HR Policy works on permeates naturally from the levels of empowerment granted to the ethos of ‘Best people, producing their best work, under the our team, presenting our team with options of maximising their best conditions’, which means that from identifying the role to capabilities, honing their competencies and being accountable recruitment, selection, training and development, each individual for their actions. This also showcases leadership, highlights team is earmarked to achieve their full potential, equipped with the apt players and fires an entrepreneurial spark which activates a sense knowledge, skills and tools to optimise performance. of ownership for the success of the organisation.
On the job training in progress The spirit of teamwork
48 Access Engineering PLC. Annual Report 2011/12 Personnel policies, processes and procedures are aligned to categorically prohibit our suppliers and valued business partners the diktats of the International Labour Organisation, the UN in engaging in these practices. We will not engage in any business Declaration on Human Rights and the applicable regulatory with any organisation or individual that does not conform to environment prevalent in Sri Lanka. However, it must be noted accepted labour practices. that Access Engineering constantly strives to work in a culture that goes beyond compliance, which is fully endorsed by the When delivery timelines loom, there is a necessity sometimes, existing monitoring system implemented through the Code of especially during the last three months, when teams may have Ethics and Working Standards to trigger higher productivity and to work longer hours. If this need arises, Project Officers are a better work life balance in the team, which in turn ensures the mandated to ensure that those engaged in additional hours meeting of individual aspirations and company goals. are not exploited, gain adequate rest between shifts and are monetarily rewarded adequately. Rights and Policies Our Recruitment and Selection Policy adheres to Access Recruitment and retention Engineering being the preferred employer in the industry, where As at March 31st 2012, the total team increased to 3,174 at those joining our team have the potential to make a positive and Access Engineering with almost 35% based in the technical and valued contribution. Meritocracy is the underlying fundamental in operational categories, which has seen very positive sentiments both recruitment and career mobility, while non-discriminatory emanating from our team, who are now empowered with practices are in high focus. There is no bias in gender, marital responsibilities in the day to day operations, decision making status, race, ethnic, political or religious belief, disability or age. If and planning. Net employment fluctuation, evidenced by data an individual shows potential and is ‘the right person for the right over the course of several years is an important indicator of the job’, recruitment is guaranteed. organization’s contribution to the overall economic development and sustainability of the workforce. Over the last three years, Similarly, we do not condone child labour or illegal labour there has been an exponential increase in net employment as practices in any form and remain firmly committed to an ethical seen at 16.6% in the year 2010/11 and 94.7% in the year 2011/12. process in HR management. Given the nature of our industry, there are instances where child labour has been used in the past Another indicator monitored closely is employee attrition, by suppliers in quarries, crusher plants and road construction which is an apt benchmark to judge levels of uncertainty and work. However, we have eschewed this practice fully and dissatisfaction, requiring fundamental changes in the structure of
Attention to detail
Safety first Employing youth from local communities
49 PEOPLE & COMMUNITIES closest competitor and 7 index points above the industry average. The research also showed that Access Engineering is strongly perceived on parameters such as financial stability, competitive salaries, performance-based benefits and challenging work environment. core operations. An uneven pattern highlighting age or gender can indicate incompatibility or potential inequity in the workplace. Training & Development It must be noted that attrition in the construction industry is From selection onwards, all team members undergo a very high, primarily due to the structure of the industry which comprehensive orientation in which they are given an extensive has a transient workforce, migratory nature of workstations, awareness and induction programme on the Code of Ethics and employment opportunities abroad and the influx of international Working Standards within the company. A high level of integrity, contractors whose remuneration is above market rates for short conformance to ethics, morals and principles are expected and is term contracts. These remain elements beyond our control. strongly embedded into the working culture. However, despite these disadvantages, we have maintained staff turnover at single digit levels of 6.8%, way below industry average Training & Development (T&D) is paramount to the sustainability which counts at a high 20% to 30% and a significant improvement of our business. The HR division creates and implements the over the Company’s levels of 10.9% in 2010/11. These improved training calendar annually, charted against individual aspirations retention rates attest to the Access Engineering work ethic and divisional goals and objectives, current and future projects, of responsibility, authority and accountability, coupled with apt trends, challenges and opportunities where knowledge and skills rewards and remuneration aligned to performance. are matched.
The superior status enjoyed by Access Engineering in terms of T&D works on the triad of external, internal and on-the-job being a preferred employer in the construction industry was practical training, all of which saw an investment of Rs.8.3 Mn further highlighted by an independent survey carried out by expended on T&D this year. TNS Lanka, the global leader in customized market research. The research which was conducted on a sample of over 250 current Epitomising on the philosophy of not being content with what and prospective employees of the industry, revealed that Access we achieve and always striving to reach further heights, a Engineering is the Employer of Choice, 2 index points above the comprehensive training needs analysis was undertaken at the
Work hard and play harder, unwinding at leisure world Participants at Training of Trainers
50 Access Engineering PLC. Annual Report 2011/12 beginning of 2012. Accordingly, an in-house training plan was Health, Safety and Welfare drawn up which identified 82 training areas with a total of 150 Work life balance remains paramount in our working culture programmes covering 225 training days and 5,000 participants. and into this equation, we emphasize immense importance This plan will supplement the current programme of local and to occupational health and safety. While we conform and in foreign training through external bodies. most cases exceed the applicable health and safety regulations applicable to the construction industry, it is vital that we are In order to deliver this ambitious training plan, a team of 22 very attentive to ensuring that our workplaces are safe and executives were developed as trainers through a Training of healthy. Access Engineering has an established Health & Safety Trainers (TOT) programme conducted over a period of three Management System (HSMS) that stringently adheres to all safety months. The TOT programme covered the basics of adult learning measures and has a zero tolerance attitude to carelessness and and corporate training, and concluded with practical sessions which negligence. The HSMS which was launched in November 2011, provided them the opportunity to sharpen their skills as trainers. was subjected to an Initial Review by the certifying body Det Norske Veritas (DNV) and found to meet the requirements The knowledge based culture we promote is further encouraged of OHSAS 18001:2007 international standard. The System is by Access Engineering supporting team member’s pursuance implemented in all operational locations of the Company and it of higher studies and professional qualifications. In addition, will be subject to a Certifying Audit in September 2012. promotions form a springboard for career development based on performance and meeting goals and objectives. This year, the Welfare initiatives increased this year with insurance covers for number of staff promotions increased to 47. team members and their families continuing, in addition to the food and accommodation for project staff, annual entertainment We also inculcate a strong spirit of cross-skilling, as this also and sporting activities. The Head Office Team made their annual helps in expanding knowledge horizons while also identifying three day trip to Bentota, while the Projects Staff ventured to individual skills and competencies. Therefore, job rotation is key to Nuwara Eliya, Bandarawela, Galle and Kandalama. The annual continuous professional development at Access Engineering and Access Christmas Carnival was held at Havelock Grounds on in the last three years, there have been a total of 52 instances of 11th December 2011 bringing together team members and their rotation. families for a fun filled event brimming with festive joy.
Helping hand to those in need
Industrial trainees learning the finer points of surveying Inspiring the next, mock interviews at Kelaniya University
51 PEOPLE & COMMUNITIES the university premises. During the event we interviewed more than 15 students and indentified talented individuals among them who have the potential of becoming a member of Access family in future. While providing an employment opportunity for some students, our inputs certainly would improve their interview skills Communities which would in turn prepare them better for the job market. Our communities remain integral to the success of each of our projects and sustainability of our business. The formula is one Health and wellness is yet another focus area for our social in which we inculcate a win-win situation for the communities responsibility initiatives where we engage in projects to promote and ourselves, where we ensure a permeating economic value physical, psychological, social and spiritual wellness of the society, for both, while the ensuing social equity is designed to imbue including our own employees and their families, through health and a change in lifestyle and uplift entire communities. We remain wellness education, infrastructure development, dissemination of inextricably entwined with our communities and make an healthcare services and contributions to other medical services. emphatic effort to engage them through various initiatives. These engagement initiatives are mooted by project management teams During the period of concern, a key focus area was on wellbeing and supported by the relevant project offices and the head office. of differently-abled children in special care institutions. We designed and constructed a playground with a pavilion for the Social responsibility projects are worked on four primary benefit of the differently-abled children at the Daya Mina Center platforms: local community relations, capacity building, health and for Differently Abled Children at Embuldemiya, Nugegoda. Daya wellness and industry advancement. To maintain transparency Mina is a day center for young boys and girls and currently has and equity in the chosen social responsibility projects, a series attendance of over 40 students from the Colombo District. The of evaluations and reviews are conducted by the Corporate playground has brought about an enormous benefit in terms of Sustainability Team to ensure that these initiatives are aligned to their psychosocial development. We also contributed in many the social responsibility platforms, that goals and objectives can be ways to the Ceylon School of Deaf and Blind and Ratmalana. The met and that resources and investment is available and applicable. School looks after about 600 impaired children and we have made donations for the provision of hearing aids and meals for impaired We continuously work to support the wellbeing of the children. community, contribute to the enrichment of the society and make a tangible contribution to their economic and social development We commenced work on another capacity building project of the localities where our projects and plants are located. We in Methodist Madya Maha Vidyalaya, Hakmana where we have have also taken initiatives to mitigate health & safety impacts of undertaken to design and build an Auditorium Building with a floor infrastructure, hazardous materials, emissions and discharges; area of 8,600 sq. ft. and a seating capacity of 700. The proposed counteract social impacts of involuntary resettlement, physical and Auditorium will provide the students in around the school with economic displacement and livelihood disturbances; and honour the very best facilities to showcase their talents in performing arts the local culture, cultural heritage and indigenous peoples. and speech. The project is to be handed over by the end of 2012.
During the heavy rains experienced during the early part of 2011, Finally, we consider industry advancement also to be one of our we took leadership in providing relief for the affected areas in close key responsibilities. In this respect, we have taken leadership proximity to our projects. Especially, the project staff of A15 road in the advancement of the construction industry to take up rehabilitation project took the initiative to distribute dry food and the future challenges through the introduction of modern water among flood victims and our employees were the first relief technology, development of human resources and dissemination team to reach the area due to the inundation of access roads. of best practices in construction management. During the tear, we commenced a project to address one of the critical The Mechanical Workshop conducted a community relations human resource issues in the construction industry – dearth of project at the Sanasa Welfare & Funeral Support Society in competent laboratory technicians. Lack of a formal education Jalthara, Ranala where they donated Tor steel bars to construct programme has resulted in the construction laboratories being a new two-storey building at the premises of the Society. The handled by technicians who have learned the craft by experience objective of this project was to facilitate and strengthen the local but with inadequate technical knowledge. As a solution, we mechanism of providing financial assistance to people of the area selected a group of 10 school-leavers with good educational and organizing social activities. background and enrolled them in an apprenticeship programme to be trained as laboratory technicians. The company will bear Another area where we have actively engaged in is building a cost of over Rs. 300,000 per apprentice without any financial human capacity and developing human resources in the society, bond, but only with the objective of providing competent human including our own employees and their families, focusing our resource to the industry. attention on pre-school, school, technical and tertiary education by means of transferring knowledge, mentoring and coaching, apprenticeships, scholarships and other financial contributions. Some of the capacity building activities carried out during the last year included industrial training and career guidance. We provided industrial training for 25 students from Universities and Technical Colleges. We also took part at the Inspiring the Next – Career Fair 2011 which was organized by the University of Kelaniya at
52 Access Engineering PLC. Annual Report 2011/12 We categorically make decisions throughout our value chain to ensure that while standard building practices are guided by short term economic considerations, our ethos of sustainable construction will always be founded on best practices, emphasising long term affordability, quality and efficiency. We have adopted a The Planet philosophy of Going Green, which requires every level of the company to adopt and implement an eco-friendly concept in all standards, systems, processes and practices. In tandem, this decreases the negative impacts on the environment and increases the sustainability of the project and thereby our business.
53 THE PLANET Engineering has been much more conscious and aware of the negative impacts permeating from this industry from inception. Given that Sri Lanka’s island status leaves limited scope for use of resources and in turn, calls for a more responsible management of these resources and the impact that ensues from the work we do, The construction industry has for long been viewed as a Green Management was consciously introduced and implemented controversial one in the context of being harmful to the into our strategic business plan. environment. In fact, the negativities are believed to have increased and in some cases become incendiary due to these impacts not We categorically make decisions throughout our value chain being actively managed. As per ‘The Impacts of Construction and to ensure that while standard building practices are guided by the Built Environment’ (www.willmottdixongroup.co.uk) due short term economic considerations, our ethos of sustainable to the industry’s massive usage of natural resources, which is construction will always be founded on best practices, emphasising believed to be about 50% of global resources and approximately long term affordability, quality and efficiency. In tandem, this 70% of the world’s timber, there certainly is some verity to decreases the negative impacts on the environment and increases justifying these viewpoints. Add the fact that the industry is economic sustainability of the project and thereby our business.
responsible for most CO2 emissions and pollution, creating the largest volumes of waste and is the most colossal user of huge Environmental Management System amounts of non-energy related resources, the industry really We are extremely proud to be the pioneer in adopting a formal deserves its squalid reputation. Environmental Management System and gaining ISO 14001:2004 certification back in September 2009 within the entire However, over the years, there has been a concerted effort by construction industry. This certification included implementing the industry towards sustainable construction, infusing a wide a stringent but comprehensive analysis of all our systems and ranging plethora of green initiatives and much more responsibility procedures. The EMS too continues being strictly adhered to with towards the use of resources, waste management, initiatives similar vigour and enthusiasm and ascertained its certification to reduce pollution and waste and in turn, being conscious of by successfully completing the surveillance audit carried out by impacts on communities and planet. It must be noted that Access certifying body Det Norske Veritas (DNV) in November 2011.
Access employees participate in a tree planting programme at a church in Athurugiriya
54 Access Engineering PLC. Annual Report 2011/12 This absolute commitment to ensuring that we practice a true for roofs, introducing an energy saving/surge protection system, brand of sustainable construction is imbued stringently in all introducing LCD monitors for desktop computers and switching projects. For example, the Company prepares Environmental to laptop computers. The success of the programme was surely Compliance Plans for all major projects to ensure that showcased, when we exceeded our target and reduced electricity environmental facets are pragmatically managed and executed consumption by 4%. according to these plans during construction. In addition, Environmental Rehabilitation Plans have also been introduced into In 2011, we introduced a LED bulb systems with structural our management planning processes, where we are compelled changes and the usage of AC was further reduced by adjusting the to restore the environment surrounding the localities of our operational hours. This thus brought in a reduction of a further quarries, crusher plants and asphalt plants to the original state it 2% in consumption. was in, prior to our intervention, to the best of our ability. Going Green Energy Management Access Engineering has adopted a philosophy of Going Green, The EMS imposes stringent operational controls on the use and which requires every level of the company to adopt and management of electricity, which is implemented at the Head implement an eco-friendly concept in all standards, systems, Office and all Project Offices. Initially, the operational controls processes and practices used in its construction work. The green included generic actions including creating awareness among the initiatives ranged from eco-friendly designs and construction team on energy saving initiatives and encouraging participation procedures to paper re-use and tree planting. as well as suggestions. However, given that these programmes have inculcated an energy saving mindset among our team, From a design perspective, we have had the opportunity to Access Engineering set itself a target of reducing electricity contribute our expertise in several bridge and building designs, consumption by a further 2% by the end of 2011. The initiatives aligned to our green ethos. In the Trincomalee Integrated that were implemented to meet our goal was in isolating the Infrastructure Project, five major bridges were designed using board room Air Conditioner from the central system, dividing the high strength Grade 50 concrete for the superstructure and high lighting system into several zones with spate switches, installing strength strands. In addition, the most economical beam sections a power factor correction capacitor, using thermal insulation were selected for use, while couplers instead of reinforcement
E- Waste Management Programme at Access Engineering Use of safety nets to control falling dust and debris
Water sprinklers used to control dust emission at a Drain takes a detour to save the tree crusher plant
55 THE PLANET in the construction process and natural light and ventilation was optimised to minimise energy usage.
Concrete is a conventional mainstay in the construction process, even though it is not a sustainable means, due to high energy lappings were used in order to reduce the use of material, consumption and by-products causing immense pollution. Access re-usable material and locally available resources were also Engineering’s solution to this enduring challenge was to promote introduced. In controlling slope erosion, Reno mattresses and the use of steel construction, which comparatively has low energy rubble pitching, river training works and Gabion retaining walls consumption levels, causes minimum harm through its byproducts were the solutions we infused. and has the unique persona of being 100% reusable. Partnering Mabey Bridge UK, a pioneer in introducing prefabricated steel In building design, we adopt a range of techniques including the flyovers to Sri Lanka which were constructed in record time with concept of multifunctional spaces at intermediate floor levels, minimum disruption to traffic flow, this environmentally friendly maximum utilization of natural ventilation and lighting, ‘Passive concept of steel construction can be seen in the Kelaniya Flyover, Soar Building Design’, increasing efficiency of lighting systems and Dehiwala Flyover and Nugegoda Flyover. This technology was AC systems, water conservation and rainwater harvesting. extended to the recently completed Sangupiddy Bridge. Several construction projects we have undertaken in the dry Given the huge burden placed on the natural resources in zone of Sri Lanka including, the Aravi Aru bridge in the Mannar producing construction material, we explored the contribution District, the raising of Unnachchai tank in Batticaloa District and we could make in making our construction material more eco- Kantale Trincomalee Road Project in Trincomalee District which friendly. One such initiative was replacing river sand with quarry brought in some unique ‘green’ practices. The temporary project dust, which is a by-product in metal crushing process, in concrete offices and other facilities which were located in areas where production. During the year we used a total of 315.2 cubes of day temperatures soared above 35oC, were designed to take full river sand and 300 cubes of quarry dust. Which means that we advantage of the natural vegetation in the areas, not only cooling have used 48.8% recycled material in our concrete production. the surrounds but also preserving the flora and trees. There was a considerable increase in the use of recycled and waste material
Energy efficient site office at Kanthale Asphalt plant where Green site office at Unnachchi Tank Rehabilitation Project containers are being reused
56 Access Engineering PLC. Annual Report 2011/12 Our environmental consciousness translates from the genesis of used paper. By re-using paper for copying and printing, we saved design to ultimate completion of the project. This includes ground 645 kg of new paper in 2011/12, compared to 472 kg last year. preparation, which may involve the felling of trees, which becomes almost an imperative in the industry. At Access Engineering, we Another green initiative involved Electronic Waste (E-Waste). remain kinetically focused to conceptualise our architecture and Having realized the enormity of the harmful effects of disposing design to bring in maximum preservation of the trees. This is E-Waste in an irresponsible manner in landfills or burning them done in conjunction with our client, where our engineering team without proper safety precautions, we joined hands with Ceylon not only presents alternative designs to ensure minimum impact, Waste Management (Pvt) Ltd, the only BOI approved organization but also permeates an environmental consciousness to the client for waste recycling in the country to collect and recycle E-Waste and valued business partners as well. For example, in widening from our offices and the general public. Over 2.4 Tonnes of and improving the Padeniya-Anuradhapura road and Kantale- electrical and electronic waste was collected during this project Trincomalee road, there were over 200 instances where trees and was handed over for recycling. were saved due to our astute design changes, which included the shift of the center line and diverting drains. When trees are Our committed efforts to increase the country’s forest cover felled, we ensure that new trees are planted in as close proximity continued with 550 mango, kumbuk, mahogany, naa, teak and as possible to the original location of the tree, as effected in this halmilla trees being planted at various locations, collating a total project, where trees were planted on either side of the road. of over 6,000 saplings planted since 01/09/2008. This year, the planting initiatives were implemented at Rattanapitiya Maha Our paper saving and recycling efforts saw us re-use 953 kg of Vidyalaya, Ratmalana Technical College, Pannipitiya Doowa Temple, paper either reused or recycled in 2011/12, which is a definite Bokundara Dhamma Samadhi Temple, Attiduya Police Academy increase over 2010 where we reused 472 kg of paper and Modara-Mattakkuliya road.
These are resultant to proactive features we have introduced including the installation of software that monitors the number of copies and printouts, having two copier/printers using exclusively
Slope protection at A15 Road Project
Used paper being recycled at Head office at Access Towers Steel replaces less environmentally friendly reinforced concrete in bridges and flyovers
57 ACCREDITATIONS, AWARDS & ACCOLADES • National Construction Association of Sri Lanka (NCASL) – Major and Specialist Contractor
Our management systems which have been developed and aligned with international standards have been certified by DNV Our emergence as a pioneer, an initiator and an innovator for as meeting the requirements of these standards. The Quality the construction industry in Sri Lanka, while carrying the laurel Management System (QMS) is certified with ISO 9001: 2008 of ‘Being the Best’ in the way we work and conduct our business, and the Environmental Management System (EMS) is certified has been recognized in numerous ways during the short history with ISO 14001:2004. The documentation of the Health & Safety of the Company’s existence. When we are honoured with Management System (HSMS) has been subject to the Initial accreditations, awards and accolades, it authenticates that our Review and the system is scheduled to be certified with OHSAS tireless efforts to deliver hope has made an impression in the 18001:2007 in September this year. hearts and minds of our diverse stakeholders. We do take serious note of the recognitions we have received, because for us, it is not The technical expertise and the competence possessed by the only a garland for what we have achieved in the past, but also a Company is well recognised by professional bodies. The Institution challenge of raised expectations for the future. of Engineers of Sri Lanka (IESL) has recognised Access Engineering for training graduate engineers for IESL Engineering Charter and Accreditations the Institute of Chartered Accountants of Sri Lanka (ICASL) has As a company in the forefront of the construction industry of Sri approved us as a training institution at Certificate Level. Lanka, Access Engineering has received the following accreditations: In addition, Access Engineering has been granted membership • Institute of Construction Training and Development (ICTAD) of United Nations Global Compact (the first Sri Lankan – C1 grades for Highway, Bridge, Water Supply and Drainage, construction company to be selected as a member), National Irrigation and Land Drainage, Dredging and Reclamation and Chamber of Commerce of Sri Lanka and Sri Lanka Business Groynes Revetments and Reclamation Coalition for HIV and AIDS. • ICTAD – GP- B1 grade for piling, EM I for telecommunication
58 Access Engineering PLC. Annual Report 2011/12 Awards Epitomizing our efforts to deliver excellence in everything we Our contribution to the construction industry has been undertake, we received the Gold award for the ‘Stall with Best continuously recognised by the ICTAD and 2011 was no Display of Engineering Services’ at the National Engineering exception. At the National ICTAD Awards 2011, Access and Technology Awards 2011 conducted by the Institution of Engineering won three awards: Engineers of Sri Lanka for our stall at Techno 2011.
• ‘Construction Performance – Civil Engineering Sector’ Recognition of our unwavering efforts has come from beyond for construction of the bridge across Maoya on Pannala- the shores of the country as well. In 2011 Access Engineering Maningamuwa road received the Golden Award for ‘Quality and Business Prestige’ from Otherways International Research and Consultants in Berlin, • ‘Construction Performance – Civil Engineering Sector’ for Germany. construction of Nugegoda Flyover • ‘Construction Performance – Civil Engineering Sector’ for Accolades construction of Sangupiddy Bridge Lanka Monthly Digest (LMD), with its unique corporate honour roll that benchmarks the country’s most respected business Not only are we recognised as a construction company but also entities rated Access with its premier multi sector engineering as a business entity, by the business community of Sri Lanka. expertise within the top 20 of its most respected business Our continuous performance in the National Business Awards entities. conducted by National Chamber of Commerce Sri Lanka is clear evidence of this recognition. In 2011, we received the awards for: Access Engineering also won gold status in Corporate Accountability Index Survey conducted by Sting Consultants for • Winner – Best Knowledge Integrator the LMD magazine. Access Engineering was ranked 9 among all the corporate entities surveyed, which was due recognition for • Runner-up – Construction Sector the Company’s good governance, transparency and accountability. • Merit – Extra Large Category
59 Delivering Expectations We have always been ideologues of creating wealth for all stakeholders, delivering on our promise of quality products, pioneering services and long lasting solutions through multiple dimensions. The strong customer relationships we have thus nurtured remain the axis upon which our business is constructed.
FINANCIAL INFORMATION Independent Auditor’s Report 63 Income Statement 64 Balance Sheet 65 Statement of Changes in Equity 66 Cash Flow Statement 67 Notes to the Financial Statements 68
Access road to the Hambantota International Airport, Mattala
60 Access Engineering PLC. Annual Report 2011/12 61 62 Access Engineering PLC. Annual Report 2011/12 INDEPENDENT AUDITORS’ REPORT
TO THE SHAREHOLDERS OF ACCESS ENGINEERING PLC Report on the Financial Statements We have audited the accompanying Financial Statements of Access Engineering PLC, (the “Company”), the Consolidated Financial Statements of the Company and its subsidiaries as at 31st March 2012 which comprise the Balance Sheet as at 31st March 2012, and the Income Statement, Statement of Changes in Equity and Cash Flow Statement for the year then ended, and a Summary of Significant Accounting Policies and Other Explanatory Notes as set out on pages 64 to 93 of this Annual Report.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these Financial Statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Scope of Audit and Basis of Opinion Our responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the Financial Statements are free from material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall Financial Statement presentation.
We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.
Opinion Company In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31st March 2012 and the Financial Statements give a true and fair view of the Company’s state of affairs as at 31st March 2012 and its Profit and Cash Flows for the year then ended in accordance with Sri Lanka Accounting Standards.
Group In our opinion, the Consolidated Financial Statements give a true and fair view of the state of affairs as at 31st March 2012 and its Profit and Cash Flows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiaries dealt with thereby, so far as concerns the shareholders of the Company.
Report on Other Legal and Regulatory Requirements These Financial Statements also comply with the requirements of Sections 153(2) to 153(7) of the Companies Act No. 07 of 2007.
CHARTERED ACCOUNTANTS 24th July 2012
Colombo
63 INCOME STATEMENT
FOR THE YEAR ENDED 31ST MARCH 2012 Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs. Note Revenue 8 7,315,093,022 3,650,698,835 6,955,749,584 3,518,039,270 Cost of Sales (5,204,470,563) (2,354,891,731) (5,003,587,507) (2,319,484,338)
Gross Profit 2,110,622,459 1,295,807,104 1,952,162,077 1,198,554,932 Net Gain from Fair Value adjustment of Investment Property 18.2 171,068,469 290,977,447 - - Other Income 9 81,632,207 24,548,140 81,331,957 175,766,019 Administrative Expenses (382,109,125) (249,804,846) (354,639,317) (243,837,462) Other Expenses (51,623,477) (17,269,791) (51,623,477) (17,269,791) Net Finance Income 10 102,169,864 21,895,788 96,081,024 16,538,205 Profit from Jointly Controlled Operations 11 - 14,399,517 - 14,399,517
Profit before Tax 12 2,031,760,397 1,380,553,359 1,723,312,264 1,144,151,420 Income Tax Expense 13 (296,662,186) (213,246,819) (287,406,381) (208,299,898) Profit for the Year 1,735,098,211 1,167,306,540 1,435,905,883 935,851,522
Profit attributable to: Equity Holders of the Parent 1,731,292,122 961,805,268 1,435,905,883 935,851,522 Minority Interest 3,806,089 205,501,272 - - Profit for the Year 1,735,098,211 1,167,306,540 1,435,905,883 935,851,522
Earnings Per Share 14 1.83 1.20 1.52 1.17 Dividend Per Share 15 0.27 2.00 0.27 2.00
The Accounting Policies and Notes from pages 68 to 93 form an integral part of these Financial Statements. Figures in brackets indicate deductions.
64 Access Engineering PLC. Annual Report 2011/12 BALANCE SHEET
AS AT 31ST MARCH 2012 Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs. Note Assets Non-Current Assets Property, Plant and Equipment 16 2,672,490,773 1,228,903,278 2,634,564,270 1,224,126,696 Leasehold Land 17 5,667,610 - - - Investment Properties 18 3,000,000,000 2,800,000,000 - - Investment in Subsidiary 19 - - 3,796,894,818 2,696,901,280 Long Term Investments 20 - - - - Goodwill 21 505,987,018 - - - Total Non-Current Assets 6,184,145,401 4,028,903,278 6,431,459,088 3,921,027,976 Current Assets Short Term Investments 22 49,215,032 3,120,076 49,215,032 3,120,076 Inventories 23 1,817,406,555 312,423,317 1,102,734,941 312,423,317 Trade and Other Receivables 24 3,607,512,435 1,013,369,402 3,464,802,479 997,986,742 Amount due from Related Parties 25 60,222,648 88,082,744 104,906,144 221,173,278 Short Term Deposits 883,314,855 96,290,109 883,314,855 96,290,109 Cash and Cash Equivalents 26 1,641,207,130 224,978,007 1,092,737,038 199,106,020 Total Current Assets 8,058,878,655 1,738,263,655 6,697,710,489 1,830,099,542 Total Assets 14,243,024,056 5,767,166,933 13,129,169,577 5,751,127,518 Equity and Liabilities Stated Capital 27 9,000,000,000 3,000,000,000 9,000,000,000 3,000,000,000 Revaluation Reserve 28,063,987 228,063,987 28,063,987 228,063,987 Retained Earnings 1,627,399,651 1,115,935,763 1,503,435,182 1,139,426,974 Equity attributable to Equity Holders of the Parent 10,655,463,638 4,343,999,750 10,531,499,169 4,367,490,961 Minority Interest 136,278,114 - - - Total Equity 10,791,741,752 4,343,999,750 10,531,499,169 4,367,490,961 Non-Current Liabilities Deferred Grant 28 7,239,819 - - - Interest Bearing Borrowings 29 5,978,150 452,828,967 5,978,150 452,828,967 Employee Benefits 30 61,692,703 27,796,471 39,089,433 23,123,143 Deferred Taxation 31 98,910,750 44,185,273 98,144,541 44,185,273 Total Non-Current Liabilities 173,821,422 524,810,711 143,212,124 520,137,383 Current Liabilities Interest Bearing Borrowings 29 6,608,397 171,755,936 6,608,397 171,755,936 Trade and Other Payables 32 3,038,877,835 594,939,350 2,243,767,949 570,718,747 Current Taxation Payable 33 189,315,327 107,318,533 163,231,175 102,371,611 Amounts due to Related Parties 34 23,889,020 1,520,249 23,776,264 1,313,108 Dividend Payable 1,695,804 - - - Bank Overdraft 26 17,074,499 22,822,404 17,074,499 17,339,772 Total Current Liabilities 3,277,460,882 898,356,472 2,454,458,284 863,499,174 Total Liabilities 3,451,282,304 1,423,167,183 2,597,670,408 1,383,636,557 Total Equity and Liabilities 14,243,024,056 5,767,166,933 13,129,169,577 5,751,127,518 The Accounting Policies and Notes from pages 68 to 93 form an integral part of these Financial Statements. I certify that these Financial Statements have been prepared in compliance with the requirements of the Companies Act No. 7 of 2007.
P T N Priyadarshani Deputy General Manager - Finance The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Approved and signed for and on behalf of the Board of Directors of Access Engineering PLC.
J C Joshua D A R Fernando Executive Director Executive Director/ COO 24th July 2012 Colombo. 65 STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31ST MARCH 2012 Group
Attributable to Equity Holders of the Parent Stated Revaluation Retained Minority Total Capital Reserve Earnings Total Interest Equity Rs. Rs. Rs. Rs. Rs. Rs.
Balance at 01st April 2010 1,000,000,000 - 1,954,130,495 2,954,130,495 812,490,357 3,766,620,852 Revaluation Surplus - 628,063,987 - 628,063,987 - 628,063,987 Bonus Shares Issued During the Year 2,000,000,000 (400,000,000) (1,600,000,000) - - - Profit for the Year - - 961,805,268 961,805,268 205,501,272 1,167,306,540 Dividend Paid to Minority - - - - (38,829,798) (38,829,798) Adjustment Due to Change in Holding - - - - (979,161,831) (979,161,831) Dividend Paid - - (200,000,000) (200,000,000) - (200,000,000) Balance at 31st March 2011 3,000,000,000 228,063,987 1,115,935,763 4,343,999,750 - 4,343,999,750 Bonus Issue 1,000,000,000 (200,000,000) (800,000,000) - - - Issue of Ordinary Shares 5,000,000,000 - - 5,000,000,000 - 5,000,000,000 Profit for the Year - - 1,731,292,122 1,731,292,122 3,806,089 1,735,098,211 Acquisition of Subsidiary - - - 132,472,025 132,472,025 Adjustment Due to Change in Holding - - (147,930,558) (147,930,558) - (147,930,558) Dividend Paid - - (162,000,000) (162,000,000) - (162,000,000) Share Issue Expenses - - (109,897,676) (109,897,676) - (109,897,676) Balance at 31st March 2012 9,000,000,000 28,063,987 1,627,399,651 10,655,463,638 136,278,114 10,791,741,752
Company Stated Revaluation Retained Capital Reserve Earnings Total Rs. Rs. Rs. Rs.
Balance at 01st April 2010 1,000,000,000 - 2,003,575,452 3,003,575,452 Revaluation Surplus - 628,063,987 - 628,063,987 Bonus Shares Issued during the Year 2,000,000,000 (400,000,000) (1,600,000,000) - Profit for the Year - - 935,851,522 935,851,522 Dividend Paid - - (200,000,000) (200,000,000) Balance at 31st March 2011 3,000,000,000 228,063,987 1,139,426,974 4,367,490,961 Bonus Issue 1,000,000,000 (200,000,000) (800,000,000) - Issue of Ordinary Shares 5,000,000,000 - - 5,000,000,000 Profit for the Year - - 1,435,905,883 1,435,905,883 Dividend Paid - - (162,000,000) (162,000,000) Share Issue Expenses - - (109,897,676) (109,897,676) Balance as at 31st March 2012 9,000,000,000 28,063,987 1,503,435,182 10,531,499,169
The Accounting Policies and Notes from pages 68 to 93 form an integral part of these Financial Statements. Figures in brackets indicate deductions.
66 Access Engineering PLC. Annual Report 2011/12 CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH 2012 Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
Note Cash Flows from Operating Activities Profit Before Tax 2,031,760,397 1,380,553,359 1,723,312,264 1,144,151,420
Adjustments for: Depreciation 228,090,254 139,391,001 227,354,677 139,128,200 Provision for Employee Benefits 16,823,209 10,377,908 16,205,290 6,908,448 Provision for Fall in Value of Investment 26,855,311 415,224 26,855,311 415,224 (Reversal) of Bad and Doubtful Debts (931,510) (5,200,541) (994,010) (5,200,541) Provision for Related Party Receivable - 13,843,107 - 13,843,107 Impairment Loss on Property, Plant and Equipment - 9,143,909 - 9,143,909 (Gain)/Loss on Sale of Property, Plant and Equipment 23,758 (10,827,223) 105,008 (10,827,223) Loss on Sale of Investment in Unit Trust 56,310,680 - 56,310,680 - Profit on Disposal of Investment (1,382,709) (939,890) (1,382,709) (939,890) Goodwill Written Off - 195,298,612 - - Gain on Revaluation of Investment Property (171,068,469) (486,276,059) - - Dividend Income (105,068,466) - (105,068,466) (151,301,740) Net Finance Income (102,169,864) (21,895,788) (96,081,024) (16,538,205) 1,979,242,591 1,223,883,619 1,846,617,021 1,128,782,708 Changes in Working Capital (Increase)/Decrease Inventories (790,311,624) (200,289,770) (790,311,624) (200,289,770) (Increase)/Decrease Trade and Other Receivables (2,467,153,546) (443,484,457) (2,465,821,727) (376,324,665) Increase/(Decrease)Trade and Other Payables 1,651,052,621 124,308,474 1,673,049,204 137,304,136 (Increase)/Decrease Due from Related Parties 27,860,096 135,529,099 116,267,134 99,464,715 Increase/(Decrease) Due to Related Parties 22,368,771 (13,561,972) 22,463,156 (13,735,737) Cash Generated from Operating Activities 423,058,909 826,384,993 402,263,164 775,201,388 Interest Paid (15,710,763) (6,523,815) (15,710,763) (6,523,815) Tax Paid (178,078,913) (74,061,369) (172,587,549) (74,061,369) Gratuity Paid (239,000) (1,054,878) (239,000) (1,054,878) Net Cash from Operating Activities 229,030,233 744,744,931 213,725,852 693,561,326 Cash Flows from Investing Activities Acquisition of Property, Plant and Equipment (1,530,147,081) (401,949,289) (1,530,147,081) (401,562,485) Investment in Capital Work in Progress (115,294,765) - (115,294,765) - Investment in Investment Properties (28,931,531) - - - Proceeds from Sale of Property, Plant and Equipment 7,625,836 18,287,738 7,544,586 18,287,738 (Investment in) Shares (87,950,266) - (87,950,266) - Proceeds from Sale of Shares 16,382,709 7,115,750 16,382,709 7,115,750 Investment in Unit Trust Fund (2,058,252,427) - (2,058,252,427) - Proceeds from Sale of Investment in Unit Trust 2,001,941,748 - 2,001,941,748 - Payment for Shares Acquired from Minority - (979,161,831) - - Acquisition of Subsidiary 39 (564,455,743) - (1,099,993,540) (958,760,480) Investments in Short Term Deposit (787,024,746) (2,364,085) (787,024,746) (2,364,085) Dividend Income 105,068,466 - 105,068,466 142,093,008 Interest Income 117,880,627 29,284,619 111,791,787 23,927,036 Net Cash Used in Investing Activities (2,923,157,173) (1,328,787,099) (3,435,933,529) (1,171,263,518) Cash Flows from Financing Activities Loan Obtained During the Year - 610,000,000 - 610,000,000 Dividends Paid (162,000,000) (200,000,000) (162,000,000) (200,000,000) Dividend Paid to Minority - (78,378,668) - - Share Issue Expenses Paid (109,897,676) - (109,897,676) - Repayment of Loan (611,374,987) (10,189,636) (611,374,987) (10,189,636) Payment of Finance Lease Liabilities (623,369) (12,071,742) (623,369) (12,071,742) Proceeds from Share Issue 5,000,000,000 - 5,000,000,000 - Net Cash from Financing Activities 4,116,103,968 309,359,954 4,116,103,968 387,738,622 Net Increase/(Decrease) in Cash and Cash Equivalents 1,421,977,028 (274,682,212) 893,896,291 (89,963,570) Cash and Cash Equivalent at 01st April 202,155,603 476,837,815 181,766,248 271,729,818 Cash and Cash Equivalent at 31st March 26 1,624,132,631 202,155,603 1,075,662,539 181,766,248
The Accounting Policies and Notes from pages 68 to 93 form an integral part of these Financial Statements. Figures in brackets indicate deductions. 67 NOTES TO THE FINANCIAL STATEMENTS 2.3 Functional and Presentation Currency The Consolidated Financial Statements are presented in Sri Lankan Rupees (Rs.), which is the Group’s functional currency. 1. Reporting Entity 2.4 Use of Estimates and Judgments Access Engineering PLC (“Company”) is a Company The preparation of Financial Statements in conformity with domiciled and operating in Sri Lanka and listed on the Sri Lanka Accounting Standards (SLAS) laid down by the Colombo stock Exchange. The Company’s registered office Institute of Chartered Accountants of Sri Lanka requires the and the principal place of business are located at “Access management to make judgments, estimates and assumptions Towers”, 278, Union Place, Colombo – 02. that effect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates The Consolidated Financial Statements of Access Engineering and associated assumptions are based on historical PLC as at and for the year ended 31st March 2012 comprise experience and various other factors that are believed to be the Company and its subsidiaries, (together referred to as the reasonable under the circumstance, the results of which form “Group”). The Financial Statements of all Companies in the the basis of making the judgments about carrying values of Group have a common financial year which ends on March assets and liabilities that are not readily apparent from the 31st. other sources. Actual results may differ from these estimates, 1.2 Principal Activities and Nature of Operations The estimates and underlying assumptions are reviewed Access Engineering PLC (AEL) is primarily involved in the on an ongoing basis. Revisions to accounting estimates are business of construction activities. recognized in the period in which the estimates are revised if the revision affects only that financial year or in the period Access Realties (Private) Limited, a fully owned subsidiary of of the revision and future periods if the revision affects both AEL engage in the development of high rise buildings and current and future financial years. manage the same or otherwise (lease/rent/sale) in whole or in part. 2.5 Going Concern The Directors have made an assessment of the group’s ability Sathosa Motors PLC which is also a subsidiary of AEL is in to continue as a going concern in the foreseeable future and the business of importing and sale of motor vehicles and they do not foresee a need for liquidation or cessation of spare parts together with the repair and maintenance of such business. motor vehicles.
3. Significant Accounting Policies 1.3 Date of Authorisation for Issue The Accounting Policies set out below have been applied The Consolidated Financial Statements were authorized consistently to all periods presented in these Financial for issue by the Board of Directors in accordance with the Statements and have been applied consistently by the group. resolution passed by the Board of Directors on 24th July 2012.
3.1 Basis of Consolidation 2. Basis of Preparation The Consolidated Financial Statements comprise the 2.1 Statement of Compliance Company and its subsidiaries. The Consolidated Financial Statements of the Company and the Group comprise the Balance Sheet and the Statements 3.1.1 Subsidiaries of Income, Changes in Equity and Cash Flows together Subsidiaries are entities controlled by the group. Control with the Accounting Policies and Notes to the Financial exists when the group has the power to govern the financial Statements. These Consolidated Financial Statements and operating policies of an entity. So as to obtain benefits have been prepared in accordance with the Sri Lanka from its activities. In assessing control, potential voting rights Accounting Standards (SLAS) laid down by the Institute of that are currently excisable are also taken in to accounts. Chartered Accountants of Sri Lanka, and the requirements of Companies Act No.07 of 2007. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date when 2.2 Basis of Measurement control effectively commences and until control effectively The Consolidated Financial Statements have been ceases. prepared on the historical cost basis except for Short Term Investments, Investment Properties and certain item of 3.1.2 Minority Interest Property, Plant and Equipment of Company (Note 16.2) The proportion of the profit or loss after taxation applicable which are measured at fair value and Employee Benefit to outside shareholders of subsidiary companies is reflected Obligations which are measured at the present value of the under ‘Minority Interest’ in the Consolidated Income defined benefit plan. Statements.
68 Access Engineering PLC. Annual Report 2011/12 The interest of the outside shareholders in the net assets (b) Subsequent Expenditure employed of those companies are reflected under the Subsequent expenditure incurred is capitalized only when it heading ‘Minority Interest’ in the Balance Sheet. is probable that the future economic benefits embodied with the expenditure will flow to the group. All other expenditure 3.1.3 Goodwill is recognized in the Income Statement as an expense as and Goodwill represents the excess of the cost of acquisition when incurred. over the Group’s interest in the net fair value of the identifiable assets, liability and contingent liabilities acquired. (c) Revaluation Goodwill is initially recognized at cost. Such goodwill is The Group revalues Property, Plant and Equipment at least identified into cash-generating units is annually tested for once in every three years which is stated at its fair value at impairments. After initial recognition goodwill is stated at cost the date of revaluation less depreciation and impairment less accumulated impairment losses . losses, if any. On revaluation of Property, Plant and Equipment any increase in the revaluation amount is credited to the 3.1.4 Intra-Group Transactions revaluation reserve unless it offsets a previous decrease in Intra-Group balances and Intra-Group transactions and value of the same assets that was recognized in the Income resulting unrealized profits are eliminated in full in the Statement. A decrease in value is recognized in the Income Consolidated Financial Statements. Unrealized losses resulting Statement where it exceeds the increase in the previous year from Intra-Group transactions are eliminated unless the cost recognized in the revaluation reserves. Upon disposal, any cannot be recovered. related revaluation reserve is transferred from the revaluation reserve to accumulated profits and is not taken into accounts 3.1.5 Translation of Foreign Currency in arriving at the gain or loss on disposal. All transactions involving foreign currencies are retranslated into Rupees at the foreign exchange rate prevailing at the (d) Impairment time of such transactions were affected. For transactions The carrying amounts of the Group’s assets are reviewed covered by forward exchange contracts, translation into at each reporting date to determine whether there is any Rupees is at the contracted rate of exchange. Monetary indication of impairment. If any such indication exists then assets and liabilities denominated in foreign currencies at the the asset’s recoverable amount is estimated. An impairment Balance Sheet date are translated into Rupees at the foreign loss is recognized if the carrying amount of an asset or cash exchange rates prevailing on that date. Non-monetary assets generating unit (CGU) exceeds its recoverable amount. A and liabilities which are stated at historical cost denominated cash generating unit (CGU) is the smallest identifiable asset in foreign currencies are translated to Sri Lanka Rupees at group that generates cash flows that are largely independent the exchange rate prevailing at the dates of the transactions. from other asset groups. Impairment losses are recognized in The foreign exchange differences arising on translation are the Income Statement. recognized in the Income Statement. An impairment loss in respect of goodwill is not reversed. 3.2 Assets and Bases of their Valuation In respect of other assets, impairment losses recognized in Assets classified as current assets in the Balance Sheet are prior periods are assessed at each reporting date for any cash and bank balances and those, which are expected to indications that the loss has decreased or no longer exists. An be realized in cash during the normal operating cycle, or impairment loss is reversed only to the extent that the asset’s within one year from the Balance Sheet date, whichever is carrying amount does not exceed the carrying amount shorter. Assets other than current assets are those, which that would have been determined, net of depreciation or the Company intends to hold beyond the one year period amortization, if no impairment loss had been recognized. calculated from the Balance Sheet date. (e) Depreciation 3.2.1 Property, Plant & Equipment Depreciation is not charged on Freehold Land and Capital (a) Recognition and Measurement Work in Progress. Depreciation is charged to the Income Statement on all Property, Plant and Equipment on the Property, Plant & Equipment are measured at cost (or at straight-line basis over the estimated useful lives. The fair value in the case of certain items of the Company) less estimated useful lives are as follows: accumulated depreciation and impairment losses. The cost of an item of Property, Plant & Equipment comprises its Asset Category Useful Lives (Years) purchase price and any directly attributable costs of bringing Freehold Building 10 – 50 years the asset to working condition for its intended use. The cost Computer 3-5 years of self-constructed assets includes the cost of materials, direct Plant & Machinery 3-10 years labour and any other costs directly attributable to bringing Motor Vehicles 4 - 8 years the asset to the working condition for its intended use. This Office Equipment 3 -5 years also includes cost of dismantling and removing the items and Furniture & Fittings 3 -5 years restoring in the site on which they are located. Tools 3 -5 years
69 NOTES TO THE FINANCIAL STATEMENTS (b) Valuation Investment properties are stated at ‘Fair Value’ accounting which describes value or amount for which land and buildings could be exchanged between knowledgeable, willing parties at an arm length transaction. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. (c) Initial Recognition Depreciation of an asset begins when it is available for use whereas depreciation of an asset ceases at the earlier of the Investment Property will be recognized based on a valuation date that the asset is classified as held for sale (or included done by an Independent Professional Valuer and the in a disposal group that is classified as held for sale) and the differences between the Cost and revalue amount will be date that the asset is derecognised. transferred to Revaluation Reserve.
(f) Leased Assets (d) Subsequent Recognition Assets obtained under the finance lease, which effectively Subsequent to initial recognition, investment properties are transfers substantial risks and benefits incidental to ownership stated at fair value, which reflects market conditions as at of the leased assets, are treated as if they have been the Balance Sheet date. Formal valuations are carried out at purchased outright and are capitalised at their cash price. least every 3 years by a qualified valuer. Gains or losses arising from changes in the fair values of Investment Properties are Assets held under finance lease are amortised over the included in the Income Statement in the year in which they shorter of the lease period or the useful lives of equivalent arise. owned assets, unless ownership is not transferred at the end of the lease period. (e) Derecognition Investment Properties are derecognised when either they The principal / capital elements payable to the Lessor is have been disposed of or when the Investment Property is shown as liability / obligation. The lease rentals are consisting permanently withdrawn from use and no future economic of capital and interest elements. The capital element in the benefit is expected from its disposal. Any gains or losses on rental that is applied to reduce the outstanding obligation and the retirement or disposal of an Investment Property are interest element is charged against profit, in proportion to recognized in the Income Statement in the year of retirement the reducing capital element outstanding. or disposal.
The cost of improvements to or on leased property is 3.2.4 Investments capitalised, disclosed as improvements to leasehold property (a) Classification and depreciated over the unexpired period of the lease, or Investment in subsidiary of the company are treated as Long the estimated useful lives of the improvements, whichever is Term Investments and stated at cost. Other Investments shorter. which are held for yield or capital appreciation are also classified as Long Term Investment; the investments that (g) Capital Work in Progress intended to be held for trading purpose are classified as Capital expenses incurred during the year which are not Short Term Investments. completed as at the Balance Sheet date are shown as Capital Work-in-Progress, whilst the capital assets which have been (b) Valuation completed during the year and available to use have been Quoted and unquoted investments in shares held on long transferred to Property, Plant and Equipment. term basis are stated at cost. In the Parent Company’s Financial Statements, investment in subsidiaries is carried out 3.2.2 Leasehold Property – Land at cost less impairment losses. Provision for diminution in Leasehold property comprising of land use rights and is value is made when in the opinion of the Directors there amortised on a straight line basis over the 99 years lease has been a decline other than temporary in the value of the period. Leasehold property is tested for impairment annually investment. and is written down where applicable. The impairment loss if any is recognised in the Income Statement. Quoted and unquoted investments in shares held on short term basis are measured at cost and provision has been 3.2.3 Investment Properties made for the fall in value of investments based on the fair (a) Classification value of the investments. The land and buildings held either to earn rental income or for capital appreciation or for both but not for the sale in 3.2.5 Inventories the ordinary course of business, use in production or supply Inventories are stated at the lower of cost and net realizable of goods or services or for the administrative purpose, are value, after making due allowance for obsolete and slow classified as investment properties. moving items. Net realisable value is the estimated selling price in the normal course of business less estimated cost of
70 Access Engineering PLC. Annual Report 2011/12 realization and/or cost of conversion from their existing state 3.3.1 Employee Benefits to saleable condition. (a) Defined Benefit Plans A defined benefit plan is a post-employment benefit plan The cost of each category of inventory of the company is other than a defined contribution plan. The liability recognized determined on the following basis: in the Balance Sheet in respect of defined benefit plan is the present value of defined benefit obligation at the Balance Spare parts - at actual cost on a weighted Sheet date. average basis Brand New Vehicles - at actual cost The defined benefit obligation of Access Engineering PLC Goods in Transit - at actual cost and its subsidiary Sathosa Motors PLC are calculated by independent actuaries using Project Unit Credit (PUC) Inventory movement is reviewed at the end of each year method as recommended by SLAS 16 (Revised 2006) - by an expert to assess the recoverability of inventory and ‘Employee Benefits’. The present value of the defined benefit the items that are identified as irrecoverable are written off obligation is determined by discounting the estimated future during the year. cash flows. The gratuity liability was based on the actuarial (a) Work in Progress valuation carried out.
Work in Progress is recognized on actual cost incurred in The Companies expects to carry out actuarial valuation once relation to the uncertified work done as at the Balance Sheet in every three years. However, according to the Payment date. It includes cost of work performed and direct overhead of Gratuity Act No. 12 of 1983, the liability for the gratuity expenses. payments to an employee arise only on the completion of 5 years of continued service with the Company. 3.2.6 Receivables Receivables are stated at their estimated realizable amounts Defined Benefit Plan - Access Realties (Private) after providing for bad and doubtful debts. Limited The gratuity liability of Access Realties (Private) Limited is 3.2.7 Short Term Deposits arrived as per SLAS -16 Employee Benefit using Formula Short Term Deposits represents fixed deposits which the Method described in appendix (E). Company has invested and which will be matured within one year from the Balance Sheet date. However, according to the Payment of Gratuity Act No. 12 of 1983, the liability for gratuity payment to an employee arises 3.2.8 Cash and Cash Equivalents only after the completion of 5 years of continued service. Cash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquid investments, The liability is not externally funded nor actuarially valued. readily convertible to known amounts of cash and subject to insignificant risk of changes in value. (b) Defined Contribution Plans - Employees Provident Fund & Employees Trust Fund For the purpose of Cash Flow Statement, cash and cash A defined contribution plan is a post-employment benefit equivalents consist of cash in hand, investment in repurchase plan under which an entity pays a fixed contribution into agreements and deposits in banks net of outstanding bank a separate entity and will have no legal or constructive overdrafts. obligation to pay further amounts.
3.3 Liabilities and Provision All the employees who are eligible for Employees’ Provident Liabilities recognized in the Balance Sheet when there is a Fund and Employees’ Trust Fund are covered by relevant present obligation arising from a past event, the settlement contribution funds in line with the respective statutes. of which is expected to result in an outflow of resources Employers’ contribution to defined contribution plans are embodying accounting benefits. Obligations payable at the recognized as an expense in the Income Statement when demand of the creditor or within the one year of the Balance incurred. Sheet date are treated as Current Liabilities in the Balance Sheet. Liabilities payable after one year from the Balance 4. Income Statement Sheet date are treated as Non-Current Liabilities in the 4.1 Revenue Balance Sheet. Revenue represents the amounts derived from the provision of services, which fall within the companies’ ordinary activities A provision is recognized in the Balance Sheet when the net of trade discounts and turnover related taxes. group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic 4.2 Revenue Recognition benefits for which a reliable estimate could be made is Revenue is recognized to the extent that it is probable required to settle the obligation. that the economic benefits will flow to the Group and the
71 NOTES TO THE FINANCIAL STATEMENTS (i) Assets Related Grants Assets Related Grants for the purchase of Property, Plant and Equipment are amortised and credited to the Income Statement over the useful lives of the related assets. revenue and the associated costs incurred or to be incurred 4.3 Expenditure Recognition can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade (a) Construction Contracts discounts and sales taxes, and after eliminating sales within Total cost incurred in respect of each contract during the the Group. The following specific criteria are used for the year, which can be attributed to the work certified, has been purpose of recognition of revenue. included in the cost of sales.
(a) Construction Contracts When the outcome of the contract can be measured reliably, When the outcome of the contract can be measured contract expense is recognized by reference to stage of reliably, contract revenue is recognized by reference to stage completion of the contract activity at the Balance Sheet date. of completion of the contract activity at the Balance Sheet date. Further, the company recognizes construction revenue (b) Other Expenses only after receiving the work done certification from the All expenditure incurred in the running of the business and customer. Any expected losses on specific contracts are in maintaining the Property, Plant and Equipment in a state recognized immediately by a corresponding reduction in their of efficiency has been charged to revenue in arriving at the revenue. profit for the year.
(b) Rental Income For the purpose of presentation of Income Statement the Revenue represents the rental income derived from letting Directors are of the opinion that function of expenses out the Company’s premises. Rental income is accrued method presents fairly the elements of the enterprises on a time proportion basis and is matched with related performance; hence such presentation method is adopted. expenditure in accordance with Sri Lanka Accounting Standard No 29, “Revenue” (c) Recognition of Expected Losses Expected Losses are recognized as an expense when it (c) Goods Sold is probable that the total cost pertaining to construction Revenue from the sale of goods is recognized in the Income contracts will exceed its revenue. Statement when significant risks and rewards of ownership have been transferred to the buyer. (d) Borrowing Costs Borrowing costs are recognized as an expense in the period (d) Services Rendered in which they are incurred except those that are directly Revenue for services rendered is recognized in the Income attributable to the construction or development of Property, Statement after completion of the service. Plant and Equipments which are capitalized as part of the cost of those assets during the period of construction or (e) Agency Commissions development. Agency Commissions is recognized on accrual basis. 4.4 Income Tax Expense (f) Interest Income Income tax expense for the year comprises current and deferred tax and is recognised in the Income Statement. Interest income is recognized on accrual basis unless collectability is in doubt. Interest from bank deposits are 4.4.1 Current Taxation recognized on a time proportion basis from the date of deposit to the Balance Sheet date. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the Balance (g) Dividend Income Sheet date and any adjustment to tax payable in respect of previous years. Dividend income is accounted when the shareholders’ right to receive payment is established. 4.4.2 Deferred Taxation (h) Other Income Deferred tax is provided using the Balance Sheet liability method, providing for tax effect of temporary differences Other income is recognised on accrual basis. Gains or between the carrying amounts of assets and liabilities for losses on the disposal of Property, Plant and Equipment is financial reporting purposes and the amounts used for recognised in the Income Statement. taxation purposes.
72 Access Engineering PLC. Annual Report 2011/12 Deferred tax is measured at the tax rates that are expected These Sri Lanka Accounting Standards comprise of to be applied to the temporary differences when they accounting standards prefixed both SLFRS and LKAS which reverse, based on the laws that have been enacted or correspond to relevant IFRS and IAS. Application of Sri Lanka substantively enacted by the Balance Sheet date. Accounting Standards prefixed SLFRS and LKAS for the first time shall be deemed to be an adoption of SLFRS’s. 5. Segmental Reporting The Segment is a distinguishable component of the Group The Group is currently in the process of evaluating the that is engaged either in providing related Products or potential effects of these standards on its financial statements, Services (business segment), or in providing Products with the assistance of an independent consultant. or Services within a particular Economic Environment (Geographical Segment), which is subject to risks and returns that are different from those of the Segments. Segment Information is presented in respect of the Group’s Business and Geographical Segments. The Group’s Primary Format for segment reporting is based on business Segments. The Business segments are determined based on the Group’s management and internal reporting structure.
6. Other General Accounting Policies 6.1 Related Party Transactions Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/ decisions of the other, irrespective of whether a price is being charged.
6.2 Comparative Figures Where necessary, comparative figures have been reclassified to conform to the current year’s presentation.
6.3 Capital Commitment and Contingent Liabilities Capital commitments and contingent liabilities of the Group are disclosed in the respective notes to the Financial Statements.
6.4 Events Occurring after the Balance Sheet Date All material post balance sheet events have been considered and where appropriate adjustment to or disclosures have been made in the Financial Statements.
6.5 Earnings Per Share The Group presents and diluted Earnings Per Share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary share holders of the company by the weighted average number of ordinary shares outstanding during the period.
7. New Accounting Standards Issued But Not Effective as at the Balance Sheet Date The Institute of Chartered Accountants of Sri Lanka has issued a new volume of Sri Lanka Accounting Standards which have become applicable for financial periods beginning on or after 1st January 2012. Accordingly, these Standards have not been applied in preparing these Financial Statements as they were not effective for the year ended 31st March 2012.
73 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 2012 Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
8. Revenue Highways Construction 4,477,446,155 2,471,327,814 4,477,446,155 2,471,327,814 Water and Drainage Construction 479,835,984 319,278,139 479,835,984 319,278,139 Bridge Construction 17,934,360 667,011,860 17,934,360 667,011,860 Building and Other Construction 1,429,555,606 60,421,457 1,429,555,606 60,421,457 Rental Income 129,899,856 118,613,610 - - Service Charges 16,897,634 14,045,955 - - Sale of Construction Related Material 550,977,479 - 550,977,479 - Vehicle Sales and After Sales Services 212,545,948 - - - 7,315,093,022 3,650,698,835 6,955,749,584 3,518,039,270
9. Other Income Dividend Income 105,068,466 - 105,068,466 151,301,740 Loss on Disposal of Investments (56,310,680) - (56,310,680) - Rent Income 2,811,984 2,748,714 2,811,984 2,748,714 Profit/(Loss) on Disposal of Property, Plant and Equipment (23,758) 10,889,723 (105,008) 10,827,223 Foreign Exchange Gain 15,032,240 5,772,956 18,894,319 5,778,086 Hiring Income 3,755,932 2,780,333 3,755,932 2,780,333 Profit on Sale of Shares 1,382,709 939,890 1,382,709 939,890 Sundry Income 9,915,314 1,416,524 5,834,235 1,390,033 81,632,207 24,548,140 81,331,957 175,766,019
10. Net Finance Income 10.1 Interest Income on Fixed Deposits 62,771,940 8,530,487 62,771,940 8,530,487 Interest Income on Repurchase Agreements 54,387,661 9,711,566 48,298,821 9,711,566 Other Interest Income 721,026 11,094,011 721,026 5,736,428 Finance Income 117,880,627 29,336,064 111,791,787 23,978,481
10.2 Interest on Finance Leases (15,900) (916,461) (15,900) (916,461) Interest on Bank Overdraft (1,038,618) (220,209) (1,038,618) (220,209) Bank Loan Interest (14,656,245) (6,303,606) (14,656,245) (6,303,606) Finance Cost (15,710,763) (7,440,276) (15,710,763) (7,440,276)
Net Finance Income 102,169,864 21,895,788 96,081,024 16,538,205
11. Profit from Jointly Controlled Activities The Company has signed an agreement with China Geo - Engineering Corporation and Salcon Engineering Berhad to provide construction services to National Water Supply & Drainage Board for the Construction and completion of Head Works, Raw Water Transmission and Main Treatment Plants. The Company’s Share of Profit of this Jointly Controlled Operation is based on the scope of work allocated and performed in accordance with the agreement and agreement has been lapsed in year 2011.
Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
Profit from Jointly Controlled Operations - 14,399,517 - 14,399,517
74 Access Engineering PLC. Annual Report 2011/12 FOR THE YEAR ENDED 31ST MARCH 2012 Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
12. Profit before Tax Is stated after charging all expenses including following: Auditor’s Remuneration - Statutory Audit 1,912,500 1,600,000 1,400,000 1,200,000 - Non-Audit Services 594,199 27,063 589,407 27,063 Provision for Fall in Value of Investments 26,855,311 415,224 26,855,311 415,224 (Reversal) of Bad and Doubtful Debts (931,510) (5,200,541) (994,010) (5,200,541) Provision for Related Party Receivable - 13,843,107 - 13,843,107 Impairment loss on Property, Plant and Equipment - 9,143,909 - 9,143,909 Donations 14,315,336 4,412,809 14,315,336 4,412,809 Depreciation 228,090,254 139,391,001 227,354,677 139,128,200 Write off Inventories 193,536 - - - Personal Cost Including, Defined Benefit Plan Costs - Gratuity 16,823,209 10,377,908 16,205,290 6,908,448 Defined Contribution Costs - EPF 46,087,416 21,383,256 45,039,981 20,767,082 - ETF 11,445,897 5,457,585 11,184,037 5,303,541 Staff Cost 921,130,424 451,877,636 905,963,934 442,903,060 Number of Employees 3,330 1,660 3,174 1,630
13. Income Tax Expense 13.1 Current Tax Expense (Note 13.2) 211,555,679 169,932,721 202,219,032 164,985,800 Adjustment for Prior Years 31,049,868 - 31,228,082 - Deferred Tax Expense (Note 31) 54,056,639 43,314,098 53,959,268 43,314,098 296,662,186 213,246,819 287,406,381 208,299,898
13.2 Reconciliation between Accounting Profit and Taxable Profit Accounting Profit before Income Tax Expense 2,031,760,397 1,380,553,359 1,723,312,264 1,144,151,420 Aggregate Disallowed Items 251,195,221 284,219,548 371,195,832 284,219,548 Aggregate Allowable Items (604,872,898) (815,417,210) (601,125,357) (386,116,403) Total Statutory Income 1,678,082,720 1,195,956,049 1,493,382,739 1,042,254,565 Exempted Income (106,763,970) - (106,763,970) Taxable Income 1,571,318,750 1,195,956,049 1,386,618,769 1,042,254,565
Tax on Revenue at 2% 162,997,490 148,247,593 - Tax on Construction Income at 12% 1,162,713,898 1,011,207,559 1,162,713,898 1,011,207,559 Tax on Other Income at 28% 245,607,362 36,500,897 223,904,871 31,047,006 1,571,318,750 1,195,956,049 1,386,618,769 1,042,254,565
Tax @ 2% 3,259,950 2,964,952 - - Tax @ 12% 139,525,668 151,681,134 139,525,668 151,681,134 Tax @ 28% 68,770,061 12,775,314 62,693,364 10,866,452 Total Income Tax 211,555,679 167,421,400 202,219,032 162,547,586 Social Responsibility Levy @ 1.5% - 2,511,321 - 2,438,214 Current Income Tax Expenses 211,555,679 169,932,721 202,219,032 164,985,800
75 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 2012 13.3 Income Tax Company Under the provisions of the Inland Revenue Act No.10 of 2006 and amendments thereto, the Company is liable for income tax at the concessionary rate of 12% on construction income, and 28% on other income.
Subsidiaries Access Realties (Private) Limited In accordance with the section 17 of the Board of Investments Act No 4 of 1978, the Company is exempted from Income Tax for a period of seven (07) years from the year of assessment in which the Enterprise commences to make profits in relation to the transaction in that year or any year of assessment not later than five (05) years reckoned from the date of its operation whichever year is earlier.
Accordingly, the seven (07) years Income Tax exemption period was enforce from 01st April 2003 to 31st March 2010. Thereafter the Company is liable for a concessionary rate of Income Tax of 2% on its turnover for the period of fifteen years from the year of assessment 2010/2011. However, the Company is liable to pay Income Tax at 28% on other income.
Sathosa Motors PLC In accordance with the provision of the Inland Revenue Act No 10 of 2006 and amendments there to the company is liable for Income Tax at 28% on its taxable profit.
14. Basic Earnings Per Share The calculation of Basic Earnings Per Share at 31st March 2012 was based on the profit attributable to Ordinary Shareholders and Weighted Average Number of Ordinary Shares in issue during the year. The comparative number of Shares have been restated by incorporating the 200,000,000 Shares capitalised as at 11th May 2011.
Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
Profit Attributable to Equity Holders of the Company (Rs.) 1,731,292,122 961,805,268 1,435,905,883 935,851,522 Weighted Average Number of Shares as at the Year end 946,958,904 800,000,000 946,958,904 800,000,000 Earnings Per Share (Rs.) 1.83 1.20 1.52 1.17
15. Dividend Per Share The calculation of the Dividend Per Share is based on the Dividend Paid for the year divided by the number of ordinary shares in issue as at the time of Dividend Paid out.
Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
Dividend Paid (Rs.) 162,000,000 200,000,000 162,000,000 200,000,000 Number of Ordinary Shares 600,000,000 100,000,000 600,000,000 100,000,000 Dividend Per Share (Rs.) 0.27 2.00 0.27 2.00
15.1 Proposed Dividend The Directors have recommended the payment of a Interim Dividend of Rs.0.25 per share declared on 18th May 2012.
In accordance with the Sri Lanka Accounting Standard 12 - “Events after balance sheet date “this proposed Interim Dividend has not been recognized as a liability in the Financial Statements for the year ended 31st March 2012.
76 Access Engineering PLC. Annual Report 2011/12 ------Rs. 2011 (64,367,467) (47,763,043) 492,803,246 847,688,673 138,311,206 181,943,989 401,949,289 139,391,001 (446,119,998) 1,367,214,484 1,228,903,278
- - - - - 2012 (960,406) (8,610,000) 138,311,206 468,422,910 228,090,254 136,867,353 102,981,856 2,672,490,773 1,367,214,484 1,645,441,846 3,140,913,683
Rs. ------Capital Progress Work in Work 4,331,153 4,331,153 119,625,918 119,625,918 115,294,765 Rs. ------Rs. Motor Vehicles Vehicles 113,629 2,177,275 (2,290,904) 11,000,000 10,886,371 (11,000,000)
- - - - Rs. Tools 3,729,928 3,289,967 (4,973,176) 25,113,783 41,145,504 16,031,721 39,780,229 16,349,555 (14,560,501) 141,306,849 101,526,620 110,991,918
------Rs. Fittings 6,308,116 6,999,219 6,570,030 76,043,271 31,793,676 27,350,663 38,101,795 48,692,608 30,942,257 10,328,902 Furniture &
- - - - Office (260,000) (260,000) 67,572,696 29,490,956 82,998,150 15,425,454 22,932,169 12,250,496 28,371,997 24,988,168 Equipment 134,042,316 104,551,360 Rs. - - Rs. Motor Vehicles Vehicles (643,425) 3,048,499 2,290,904 25,878,714 (7,700,000) Leasehold 82,229,053 51,654,361 11,000,000 34,150,556 403,225,626 320,996,573 214,661,348 211,612,852 151,113,722
------Rs. Plant & 267,123 Dredger 7,767,123 7,500,000 75,000,000 67,232,877 75,000,000 74,732,877 Machinery
- - Rs. Plant & (56,981) (650,000) 9,472,897 4,973,176 8,997,090 8,200,791 Machinery 14,560,501 467,176,534 457,703,637 142,950,982 120,361,099 1,530,843,701 1,673,794,683 1,183,710,558
------Rs. Building 928,903 7,468,466 2,270,817 42,451,555 54,618,563 34,054,186 176,389,380 133,937,825 119,500,000 118,571,097
------Rs. Land 28,185,640 341,485,640 341,485,640 313,300,000 313,300,000 March 2012 March March 2011 st st March March April April st st st st MARCH 2012 ST Cost or Valuation Balance at 01 Balance at 31 Depreciation Accumulated Balance at 31 at 31 Value Carrying at 31 Value Carrying Balance at 01 Property, Plant and Equipment Property, Freehold
Revaluation Reserve Revaluation Reserve Charge Addition Transfers Transfers On Acquisition On On Acquisition On Disposals/ Impairment Disposals/ Impairment
16.1 Group AS AT AS AT 31 16.
77 NOTES TO THE FINANCIAL STATEMENTS ------Rs. 2011 (60,605,643) (44,001,219) 826,510,994 476,278,146 181,943,989 125,285,129 125,285,129 401,562,485 139,128,200 1,224,126,696 (446,119,998) 1,349,411,825
- - - - - 2012 (960,405) (8,610,000) 125,285,129 351,679,401 227,354,677 1,349,411,825 2,634,564,270 2,986,243,671 1,645,441,846
Rs. ------March 2011. The surplus arising March 2011. th Capital Progress Work in Work 115,294,765 115,294,765 115,294,765 Rs. ------Rs. Motor Vehicles Vehicles 113,629 2,177,275 (2,290,904) 11,000,000 10,886,371 (11,000,000)
- - - - Rs. Tools (4,973,176) 25,113,783 41,145,504 16,031,721 36,485,490 16,344,883 (14,560,501) 101,091,431 137,576,921 110,991,918
------Rs. Fittings 6,301,078 26,929,142 65,261,029 28,017,694 34,318,772 38,331,887 30,942,257 10,314,193 Furniture &
- - - - Rs. Total Office (260,000) (260,000) 25,950,787 65,031,935 80,019,001 14,987,066 76,740,383 22,932,169 11,968,448 Equipment 102,691,170 998,263,055 474,551,219 (523,711,836)
Rs. - - Rs. Rs. Motor Motor vehicle Vehicles Vehicles (643,424) 2,915,151 2,290,904 (7,700,000) Leasehold -Freehold 55,857,182 51,294,551 11,000,000 82,941,133 313,084,540 368,941,722 214,528,000 211,612,849 151,113,722 221,977,367 (139,036,234)
------Rs. Rs. Plant & Plant & 267,123 Dredger Dredger 7,767,123 7,500,000 67,232,877 75,000,000 75,000,000 74,732,877 Machinery- 81,387,684 32,844,950 Machinery (48,542,734)
- - Rs. Plant & Plant & (56,981) (650,000) 2,896,911 4,973,176 Machinery 14,560,501 460,600,548 457,703,637 128,146,690 120,333,584 540,798,281 226,018,838 (314,779,443) 1,530,074,917 1,658,221,607 1,183,710,558 Rs.
------Rs. Building Building 928,903 8,350,646 2,270,817 7,421,743 51,875,177 30,521,752 (21,353,425) 113,420,171 119,500,000 118,571,097 121,770,817 Rs.
Machinery
------Rs. Rs. Land 28,185,640 313,300,000 341,485,640 313,300,000 341,485,640 102,224,546 102,224,546 Freehold land March 2012 March March 2011 st st March March April st st st MARCH 2012 ST Cost or Valuation Balance at 01 Balance at 31 Depreciation Accumulated Balance at 31 at 31 Value Carrying at 31 Value Carrying Balance at 01st April Balance at 01st Property, Plant and Equipment (Contd.) Property, Freehold valuer as at 18 an independent professional (Sri Lanka), F.I.V. K.T.D.Tissera, 1,180,207,048/- by Plant & Machinery had been revalued at Rs. of the company and Motor vehicle Building, The Land , Cost Carrying Value Accumulated Depreciation Accumulated from the revaluation amounting to Rs.628,063,987/- was transferred to Revaluation Reserve. Plant & Equipment being carried under cost model. had Property, been recognized have that would Vehicles Plant & Machinery are the carrying and Motor Following Buildings, amount of Land, Assets
Revaluation Reserve Revaluation Reserve Addition Charge Transfers Transfers Disposals/ Impairment Disposals/ Impairment
16.2 Company AS AT AS AT 31 16.
78 Access Engineering PLC. Annual Report 2011/12 AS AT 31ST MARCH 2012 Group 2012 2011 Rs. Rs.
17. Leasehold Land Cost On Acquisition 7,550,366 -
Accumulated Amortization On Acquisition 1,882,756 -
Carrying Value 5,667,610 -
17.1 Leasehold Land disclosed above relate to the land at Peliyagoda acquired by Sathosa Motors PLC on a 99 years lease commencing from 1989 and building on acquisition represents work shop put up on the said land.
Group 2012 2011 Rs. Rs.
18. Investment Property Balance at 01st April 2,800,000,000 2,313,723,941 Change in Fair Value (Note 18.1 & 18.2) 171,068,469 486,276,059 Acquisition of Investment Property 28,931,531 - st Balance at 31 March 3,000,000,000 2,800,000,000
18.1 The fair value of the Investment Property as at 27th February 2012 is ascertained by an independent valuation carried out by Mr. K. J. D. Tissera, an independent valuer on an open market value for existing use basis.
Location : The lands - Access Towers and Land of M/S Access Realties (Private) Limited, are located at Nos. 266, 268 and 278, Dr. Colvin R. De Silva Mawatha (Union Place), and Nos. 116 and 118, Dawson Street, Colombo 02.
Extent : (i) Lot 1 in Plan No. 5754 : 1A - or - 07.87P (0.4246 Hectares). (ii) Lot 1 in Plan No. 2824 : 0A - or - 04.50P (0.01138 Hectares). Total Extent : 1A - or - 12.37P (0.43598 Hectares).
Floor area The total gross floor area of the Access Towers is 216,718 sq.ft.
Group 2012 2011 Rs. Rs.
18.2 Change in Fair Value Change in Fair Value 171,068,469 486,276,059 Impairment of Goodwill (Note 21) - (195,298,612) Net Change in Fair Value 171,068,469 290,977,447
79 NOTES TO THE FINANCIAL STATEMENTS
AS AT 31ST MARCH 2012 2012 2011 % No. of Cost % No. of Cost Holding Shares Rs. Holding Shares Rs.
19 Investment in Subsidiary Company Access Realties (Private) Limited 100% 67,422,532 2,696,901,280 100% 67,422,532 2,696,901,280 Sathosa Motors PLC 77% 4,652,085 1,099,993,538 - - - 3,796,894,818 2,696,901,280
19.1 Acquisition of Sathosa Motors PLC The Company has purchased 3,600,000 shares representing 60% of the issued number of shares of Sathosa Motors PLC on 29th February 2012, from its major shareholder ITOCHU Corporation of Japan at a price of Rs.236.44/- per share. The Company further acquired 1,052,085 shares up to 31st March 2012, being 17% of the issued number of shares.
20. Long Term Investment
Group / Company 2012 2011 No. of Cost No. of Cost Shares Rs. Shares Rs.
Unquoted Investments Asia Pacific Golf Course Limited - Preference Shares 6 1,500,000 6 1,500,000 Less: Provision for Investment (1,500,000) (1,500,000) - -
Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
21. Goodwill Balance at 01st April - 215,699,963 - - On Acquisitions 505,987,018 (20,401,351) - - At the End of the Year 505,987,018 195,298,612 - - Impairment of Goodwill (Note 21.1) - (195,298,612) - - st Balance at 31 March 505,987,018 - - -
21.1 The subsidiary ,Sathosa Motors PLC has revalued its property at Peliyagoda work shop on 19th April 2012 by a professional valuer Mr. R. T. K. Sirisena. However, following values have not been considered for accounting purpose during the current year and shall be obtained a ruling from UITF on this.
Land Rs.120 Mn Building Rs.20 Mn Plant and machinery Rs.3.5 Mn
Therefore, Goodwill on acquisition of Sathosa Motors PLC has been calculated on provisional basis in accordance with Sri Lanka Accounting Standard - 25 ‘Business Combination’ and the necessary amendments on revaluation and impairment if any, will be adjusted during twelve months from the acquisition date.
An impairment loss has not been recognized for Sathosa Motors PLC for which the Goodwill is allocated since there is no indication of impairment as per the Sri Lanka Accounting Standard - 41 ‘Impairment’ .
80 Access Engineering PLC. Annual Report 2011/12 AS AT 31ST MARCH 2012 2012 2011 No. of Cost Market No. of Cost Market Shares Rs. Value Shares Rs. Value Rs. Rs. 22. Short Term Investment Group / Company Quoted Investments Nation Lanka Finance PLC 12,300 453,009 124,230 12,300 453,009 136,530 Lanka Indian Oil Corporation PLC 36,600 1,035,414 710,040 36,600 1,035,414 644,160 Tess Agro Company PLC 60 - 162 60 - 156 Touchwood Investments PLC 14,400 414,108 223,200 14,400 414,108 338,400 Horana Plantation PLC 7,500 538,464 188,250 7,500 538,464 542,250 The Colombo Fort Land & Building Company PLC 5,000 499,533 169,500 1,000 499,533 400,400 Namunukula Plantation PLC 3,300 527,231 198,000 3,300 527,240 378,180 Richard Peiris & Co PLC 50,000 798,848 375,000 50,000 798,848 680,000 Free Lanka Capital Holdings PLC 15,600 78,000 31,200 - - - Expo Lanka Holdings PLC 89,100 1,247,400 552,420 - - - Commercial Bank of Ceylon PLC 2,200 207,334 220,000 - - - Peoples Merchant PLC 100 1,976 1,290 - - - CIC Holdings PLC 204,000 23,517,007 19,502,400 - - - Softlogic Holdings PLC 208,500 6,110,307 2,335,200 - - - Vallibel One PLC 123,300 3,210,051 2,342,700 - - - Textured Jersey Lanka PLC 889,600 13,469,001 6,404,400 - - - Central Investments & Finance Company PLC 1,000,000 10,000,000 6,100,000 - - - Peoples Leasing Company PLC 839,400 15,109,200 9,737,040 - - - Total 5,446,460 77,216,883 49,215,032 125,160 4,266,616 3,120,076 Less Provision for Fall in Value (28,001,851) - (1,146,540) - Carrying Value as at the End of the Year 49,215,032 49,215,032 3,120,076 3,120,076
Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
23. Inventories New Vehicles 266,119,180 - - - Spare Parts 86,549,749 - - - Goods in Transit 358,698,267 - - - General Stores 1,935,063 - - - Work in Progress 1,104,104,296 312,423,317 1,102,734,941 312,423,317 1,817,406,555 312,423,317 1,102,734,941 312,423,317
24. Trade and Other Receivables Trade Receivable (Note 24.1) 3,049,451,494 866,960,053 2,974,125,225 855,049,028 Interest Receivable 18,533,022 3,997,760 18,533,022 3,997,760 Deposits and Prepayments 36,691,471 5,900,980 35,934,797 5,900,980 Margin on Bid Bond 1,399,346 1,991,035 1,399,346 1,991,035 Advances 50,630,728 19,969,561 50,630,728 19,969,561 Retention Receivable 332,878,880 101,566,346 332,878,880 101,566,346 Staff Loan (Note 24.2) 14,245,096 9,498,833 12,387,527 9,498,833 Short Term Lending (Note 24.3) 1,237,755 1,337,755 - - Refundable Deposits 12,349,026 1,768,846 10,560,180 - VAT Receivable 61,482,608 - 14,325,744 - Other Receivables 28,613,009 378,233 14,027,030 13,199 3,607,512,435 1,013,369,402 3,464,802,479 997,986,742
81 NOTES TO THE FINANCIAL STATEMENTS
AS AT 31ST MARCH 2012 Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
24. Trade and Other Receivables (Continued) 24.1 Trade Receivable Trade Receivable 3,050,682,514 867,954,063 2,974,125,225 856,043,038 Less: Provision for Bad and Doubtful Debts (1,231,020) (994,010) - (994,010) 3,049,451,494 866,960,053 2,974,125,225 855,049,028
24.2 Staff Loan Balance at 01st April 9,498,833 13,129,109 9,498,833 13,129,109 Loan Granted during the Year 9,297,349 7,947,165 9,297,349 7,947,165 On Acquisition 1,857,569 - - - 20,653,751 21,076,274 18,796,182 21,076,274 Repayment during the Year (6,408,655) (11,577,441) (6,408,655) (11,577,441) st Balance at 31 March 14,245,096 9,498,833 12,387,527 9,498,833
24.3 An Interest free loan has been given to Trans Continental Security Services (Private) Limited by Access Realties (Private) Limited.
25. Amount Due from Related Parties China Geo - Salcon - Access JV 53,609,436 78,766,240 53,609,436 78,766,240 Access Energy Solutions (Private) Limited 3,796,708 5,500,000 3,796,708 5,500,000 Access Realties Tower II (Private) Limited 2,816,504 2,816,504 - - Forestree Investments Limited - 1,000,000 - 1,000,000 Access Realties (Private) Limited (Note 25.1) - - 47,500,000 135,907,038 Asia Pacific Golf Course (Private) Limited 13,843,107 13,843,107 13,843,107 13,843,107 74,065,755 101,925,851 118,749,251 235,016,385 Less: Provision for Bad & Doubtful Debts (13,843,107) (13,843,107) (13,843,107) (13,843,107) 60,222,648 88,082,744 104,906,144 221,173,278
25.1 Loans Granted to Related Parties This is an interest free short term loan given to Access Realties (Private) Limited which is a subsidiary of the Company.
26. Cash and Cash Equivalents Favourable Balances Cash at Bank 163,978,498 144,399,512 125,579,956 123,547,527 Cash in Hand 57,177,082 67,948,003 57,157,082 67,928,002 Cash in Transit - 5,000,000 - - Investment in Repos 1,420,051,550 - 910,000,000 - Fixed Deposits - 7,630,492 - 7,630,491 1,641,207,130 224,978,007 1,092,737,038 199,106,020 Unfavourable Balances Bank Overdrafts (17,074,499) (22,822,404) (17,074,499) (17,339,772) Cash and Cash Equivalents for the purpose of Cash Flow Statement 1,624,132,631 202,155,603 1,075,662,539 181,766,248
82 Access Engineering PLC. Annual Report 2011/12 AS AT 31ST MARCH 2012 Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
27. Stated Capital Issued and Fully Paid Balance at 01st April 3,000,000,000 1,000,000,000 3,000,000,000 1,000,000,000 600,000,000 Ordinary Shares (2011-100,000,000 Ordinary Shares)
Bonus Shares Issued during the Year 1,000,000,000 2,000,000,000 1,000,000,000 2,000,000,000 200,000,000 Ordinary Shares (2011-200,000,000 Ordinary Shares)
Shares Issued on Private Placement 4,500,000,000 - 4,500,000,000 - 180,000,000 Ordinary Shares
Shares Issued on Initial Public Offering 500,000,000 - 500,000,000 - 20,000,000 Ordinary Shares
Balance at 31st March 9,000,000,000 3,000,000,000 9,000,000,000 3,000,000,000 1,000,000,000 Ordinary Shares (2011- 600,000,000 Ordinary shares)
27.1 Pursuant to a special resolution adopted at a Extra Ordinary General Meeting held on 31st March 2011,Shareholders of the Company resolved that 300,000,000 ordinary shares held by share holders as at 31st March 2011 were subdivided in to two ordinary shares The subdivision has increased the total number of ordinary shares to 600,000,000 without a change to the Stated Capital.
27.2 Pursuant to a Ordinary resolution adopted on 11th May 2011 at a Extra Ordinary General Meeting, Shareholders of the Company resolved that an amount of Rs.1,000,000,000/- be transferred from Reserve accounts (Retained Earnings Rs.800,000,000/- and Revaluation Reserve Rs.200,000,000) to the Stated Capital and the said amount be utilized to make a bonus issue of 200,000,000 shares allotted and issued to the existing shareholders of the Company on 1:3 basis (One new share issued for each existing three shares).
27.3 Pursuant to a ordinary resolution adopted at an Extra Ordinary General Meeting held on 25th May 2011, Company has issued 180,000,000 shares through Private Placement for a consideration of Rs.4,500,000,000/-
27.4 Pursuant to a Ordinary resolution adopted at an Extra Ordinary General Meeting held on 10th January 2012, Company has issued 20,000,000 shares through Initial Public Offering for a consideration of Rs.500,000,000/-
Group 2012 2011 Rs. Rs.
28. Deferred Grant On Acquisition 7,239,819 - st Balance at 31 March 7,239,819 -
The above represents a Government grant received to Sathosa Motors PLC, for the construction of work shop at Peliyagoda and are amortised over a period of fifty (50) years.
83 NOTES TO THE FINANCIAL STATEMENTS
AS AT 31ST MARCH 2012 Group / Company 2012 2011 Rs. Rs.
29. Interest Bearing Borrowings Payable Within One Year Term loan (Note 29.1) 6,608,397 171,132,567 Finance Lease Obligation (Note 29.2) - 623,369 6,608,397 171,755,936
Payable After One Year Term loan (Note 29.1) 5,978,150 452,828,967 Finance Lease Obligation (Note 29.2) - - 5,978,150 452,828,967
29.1 Term Loan Balance at 01st April 623,961,534 24,151,710 Obtained during the Year - 610,000,000 Repayment during the Year (611,374,987) (10,190,176) Balance at 31st March 12,586,547 623,961,534
Loan Payable Within One Year 6,608,397 171,132,567 Loan Payable After One Year 5,978,150 452,828,967 12,586,547 623,961,534
29.2 Finance Lease Obligation Balance at 01st April 639,269 12,711,011 Repayments during the Year (639,269) (12,071,742) - 639,269 Less: Interest In Suspense - (15,900) st Balance at 31 March - 623,369
Payable Within One Year - 623,369
29.3 Term Loan Balance as at Repayment Balance as at Lender 01.04.2011 During the year 31.03.2012
DFCC Bank PLC Loan 01 205,333,333 (205,333,333) - Loan 02 400,000,000 (400,000,000) -
People’s Leasing Corporation PLC Loan 01 18,628,201 (6,041,654) 12,586,547 623,961,534 (611,374,987) 12,586,547
84 Access Engineering PLC. Annual Report 2011/12 AS AT 31ST MARCH 2012 29. Interest Bearing Borrowings (Contd.) 29.4 Details of securities (i)Lender : Peoples Leasing Corporation PLC (ii)Approved Facility : Rs.30,000,000/- (iii)Amount Obtained : Rs.30,000,000/- (iv)Securities Pledged : Corporate Guarantee and Promissory Note Guarantor - Access Realties (Private) Limited Letter of Assignment Demand Promissory Note - Between Peoples Leasing Corporation PLC and Access Realties (Private) Limited (v) Interest Rate : 25% until the reimbursement of Central Bank 9% after reimbursement 36% annual interest rate for failing of payments (vi)Repayment : Sixty (60) months Six (06) months grace period
Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
30. Employee Benefits Balance at 01st April 27,796,471 18,473,441 23,123,143 17,269,573 Current Service Cost 5,453,029 5,668,923 5,227,272 3,462,018 Interest Cost 2,934,396 2,011,068 2,312,314 1,726,745 Actuarial Loss 8,435,784 2,697,917 8,665,704 1,719,685 On Acquisition 17,312,023 - - - 61,931,703 28,851,349 39,328,433 24,178,021 Less: Payments made during the Year (239,000) (1,054,878) (239,000) (1,054,878) st Balance at 31 March 61,692,703 27,796,471 39,089,433 23,123,143
30.1 Expense Recognised in the Income Statement Current Service Cost 5,453,029 5,668,923 5,227,272 3,462,018 Interest Cost 2,934,396 2,011,068 2,312,314 1,726,745 Actuarial (Gain)/Losses 8,435,784 2,697,917 8,665,704 1,719,685 16,823,209 10,377,908 16,205,290 6,908,448
30.2 Company An independent actuarial valuation of the retirement benefit obligation was carried out as at 31st March 2012 by professional actuaries - M/S K.A.Pandit, Professional consultants and actuaries.
The valuation method used by the Actuaries to value the Retirement Benefit Obligation is the “Projected Unit Credit Method”. The method recommended by the Sri Lanka Accounting Standard No.16 (Revised 2006)- ‘Employee Benefits’.
The Key Assumptions used by Actuary include the following: 2012 2011
(i) Discount Rate 10% 10% (ii) Expected Annual Average Salary Increment Rate 8.50% 8.50% (iii) Staff Turnover Factor 1% 1% (iv) Retirement Age 55 Years 55 Years (v) The Company will Continue as a Going Concern.
85 NOTES TO THE FINANCIAL STATEMENTS
AS AT 31ST MARCH 2012 30. Employee Benefits (Contd.) 30.3 Group a. Sathosa Motors PLC The actuarial valuation have been carried out by Actuarial & Management Consultants (Private) Limited, professional actuaries. The valuation method used by the actuaries to value the retirement benefit obligation is the “Projected Unit Credit Method”. The method recommended by the Sri Lanka Accounting Standard No.16 (Revised 2006)- ‘Employee Benefits’.
The Key Assumptions used by Actuary include the following: 2012
(i) Discount Rate 11% ` (ii) Expected Annual Average Salary Increment Rate 10.00% (iii) Retirement Age 55 Years (iv) The Company will Continue as a Going Concern b. Access Realties (Private) Limited The gratuity liabilities of Access Realties (Private) Limited calculated applying the formula method. The following Key Assumptions were used in arriving at the retirement benefit liability under Projected Unit Credit (PUC) method.
2012 2011
(i) Discount Rate 10% 10% (ii) Expected Annual Average Salary Increment Rate 16.70% 16.90% (iii) Staff Turnover Factor 1% 1% (iv) Retirement Age 55 Years 55 Years (v) The Company will Continue as a Going Concern
Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
31. Deferred Taxation Balance at 01st April 44,185,273 871,175 44,185,273 871,175 Provision During the Year 54,056,639 43,314,098 53,959,268 43,314,098 On Acquisition 668,838 - - - st Balance at 31 March 98,910,750 44,185,273 98,144,541 44,185,273
Deferred Tax Provision as at the year end is made up as follows, Property, Plant and Equipment 108,460,467 46,960,050 102,835,273 46,960,050 Defined Benefit Obligation (9,549,717) (2,774,777) (4,690,732) (2,774,777) 98,910,750 44,185,273 98,144,541 44,185,273
31.1 Company Provision has been made for Deferred Taxation under the liability method in respect of temporary differences arising from difference between accounting and tax base. Deferred Tax has been computed at the rate of 12%.
31.2 Group Access Realties (Pvt) Limited No provisions has been made for Deferred Taxation, since the Company is liable for Income Tax at 2% on its Revenue for next fifteen (15) years after completing the seven (07) years of income tax exemptions. The tax exemption ends at the end of 2010/11 year of assessment..
Sathosa Motors PLC Provision has been made for Deferred Taxation under the liability method in respect of temporary differences arising from difference between accounting and tax base. Deferred Tax has been computed at the rate of 28%.
86 Access Engineering PLC. Annual Report 2011/12 AS AT 31ST MARCH 2012 Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
32. Trade and Other Payables Trade Creditors 1,151,699,673 83,731,028 441,440,821 83,756,083 Mobilization Advances 1,592,906,907 257,570,776 1,592,906,907 257,570,776 VAT Payable - 50,091,366 - 50,091,366 Accrued Expenses 189,457,478 41,971,187 157,658,492 39,423,116 Advances Received 82,459,880 142,120,426 41,578,302 133,725,693 ESC Payable 10,183,427 6,151,713 10,183,427 6,151,713 Security Deposit 12,170,470 13,302,854 - - 3,038,877,835 594,939,350 2,243,767,949 570,718,747
33. Current Taxation Payable Balance at 01st April 107,318,533 24,346,410 102,371,611 24,346,410 Notional Tax (4,829,882) (971,156) (4,829,882) (971,156) WHT Recoverable (13,221,470) (9,033,532) (13,122,606) (9,033,532) ESC Recoverable (21,341,208) (22,234,567) (20,790,163) (22,234,568) Provision made During the Year 211,555,679 169,932,721 202,219,032 164,985,800 Adjustment for the Prior Year 31,120,045 - 31,228,082 Payments made During the Year (138,686,353) (54,721,343) (133,844,899) (54,721,343) On Acquisition 17,399,983 - - - st Balance at 31 March 189,315,327 107,318,533 163,231,175 102,371,611
34. Amount Due to Related Party Access Natural Water (Private) Limited 146,485 - 133,633 - Access International (Private) Limited 23,573,102 1,313,108 23,573,102 1,313,108 Access Projects (Private) Limited 69,529 - 69,529 - Access Industrial Systems (Private) Limited 99,904 207,141 - - 23,889,020 1,520,249 23,776,264 1,313,108
87 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 2012 35. Related Party Transactions 35.1 Company
The following transactions were carried out with related party companies during the year ended 31st March 2012.
Amount (Paid)/Received Name of the Company Name of the Directors Nature of Interest Nature of the Transaction 2012 2011 Rs. Rs. Access International (Private) Limited Mr. S. J. S. Perera Chairman Purchase of Construction Mr. J. C. Joshua Director Plant and Equipment (109,839,500) - Mr. R. J. S. Gomez Director Clearing Charges Paid ( 567,060) (18,660) Mr. D. A. R Fernando Director Purchase of Road Marking Material (817,883) Mr. S. H. S Mendis Director Sub Contractor Chargers (609,213) (618,940) Mr. S. D Munasinghe Director Loan Settlement - 119,109,446 Machinery Hiring Income 147,873 - Purchase of Gabion, Fibertex , Geo MX & Tie Wire (8,580,700) (13,963,419)
Forestree Investments Limited Mr. S. J. S. Perera Chairman Loan (Given)/Settlement 1,000,000 (1,000,000) Mr. J. C. Joshua Director Mr. R. J. S. Gomez Director
Access Realties (Private) Limited Mr. S. J. S. Perera Chairman Loan (Given)/Settlement 7,500,000 (45,000,000) Mr. J. C. Joshua Director Dividend Received - 151,301,740 Mr. R. J. S. Gomez Director Office Rentals (19,364,571) (14,807,490) Reimbursements Telephone and air conditioner charges (984,715) (780,538) Supply & Installation of Power Socket (874,286) -
Access Natural Water (Private) Mr. S. J. S. Perera Chairman Purchase of Water Bottles (2,073,803) (1,606,250) Limited Mr. J. C. Joshua Director Mr. R. J. S. Gomez Director
Access Agencies (Private) Limited Mr. S. J. S. Perera Chairman Subcontractor charges (4,620,096) -
Access Projects (Private) Limited Mr. S. J. S. Perera Chairman Reimbursement of electricity bill (406,313) - Machinery hiring income 48,324 -
Access Energy Solutions (Private) Mr. S. J. S. Perera Chairman Advance payment for the (3,796,708) - Limited Mr. J. C. Joshua Director Supply and Installation of Electrical Work Mr. R. J. S. Gomez Director
Reprographics (Private) Limited Mr. S. J.S. Perera Chairman Purchase of Toner (250,880) (167,867) Mr. J. C. Joshua Director Photocopy Machine Spare Parts and Service (251,130) (110,688) Mr. R. J. S. Gomez Director
88 Access Engineering PLC. Annual Report 2011/12 FOR THE YEAR ENDED 31ST MARCH 2012 35. Related Party Transactions (Contd.)
Amount (Paid)/Received Name of the Company Name of the Directors Nature of Interest Nature of the Transaction 2012 2011 Rs. Rs. Access Energy (Private) Limited Mr. S. J. S. Perera Chairman Purchase of Motor Vehicles (5,040,000) - Mr. J. C. Joshua Director Motor Vehicles Hiring Charges (1,120,000) - Mr. R. J. S. Gomez Director
China Geo-Salcon-Access Joint Mr. J. C. Joshua Partner Sub Contractor Income - 34,440,417 Venture Mr. S. H. S. Mendis Partner Profit from Joint Venture - 14,399,517 Mr. D. A. R. Fernando Partner
89 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 2012 35. Related Party Transactions (Contd.) 35.2 Group The following transactions were carried out between related party companies, within the Group.
Amount (Paid)/Received Name of the Company Name of the Directors Nature of Interest Nature of the Transaction 2012 2011 Rs. Rs. Access Realties (Private) Limited Access Industrial System (Private) Mr. S. J. S. Perera Chairman Lift Repair and (3,041,630) (920,000) Limited Mr. J. C. Joshua Director Maintenance Charges Mr. R. J. S. Gomez Director Mr. S. D. Perera Director Mr. C. K. Thambydorai Director Access International (Private) Mr. S. J. S. Perera Chairman Rental and Services 17,044,018 840,000 Limited Mr. J. C. Joshua Director Income made in the Mr. D. D. S. Ferdinando Director Ordinary Course of the Mr. T. T. B. C. Fernando Director Business. Mr. R. J. S. Gomez Director Mr. B. P. Obeysekara Director Mr. S. D. Perera Director Access Telecommunication (Private) Mr. S. J. S. Perera Chairman Rental and Services 13,608,000 3,360,000 Limited Mr. J. C. Joshua Director Income made in the Mr. R. J. S. Gomez Director Ordinary Course of the K.M. B. M. Kumarasinghe Director Business. Access Real Estate (Private) Limited Mr. S. J. S. Perera Chairman Rental and Services 1,928,000 - Mr. T. T. B. C. Fernando Director Income made in the Mr. S. D. Perera Director Ordinary Course of the Mr. S. J. S. Perera Director Business. Access Natural Water (Private) Mr. S. J. S. Perera Chairman Purchase of Mineral (28,276) - Limited Mr. J. C. Joshua Director Water Mr. R. J. S. Gomez Director Access Agencies (Private) Limited Mr. S. J. S. Perera Chairman Rental and Services - 1,800,000 Mr. J. C. Joshua Director Income made in the Ordinary Course of the Mr. S. D. Perera Director Business. Access Realties Tower 2 (Private) Mr. S. J. S. Perera Chairman Loan (Given)/Settlement - 4,600,000 Limited Mr. J. C. Joshua Director Mr. R. J. S. Gomez Director
This note should be read in conjunction with Note No. 25 and 34 to these Financial Statements.
Transactions with Key Management Personnel According to Sri Lanka Accounting Standard 30 (Revised 2005) ‘Related Party Disclosures’, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Board of Directors (including Executive and Non- Executive Directors) as key management personnel of the Company/Group have been classified Key Management Personnel.
Compensation paid to Key Management Personnel Group Company 2012 2011 2012 2011 Rs. Rs. Rs. Rs.
Salaries and other Employment Benefits 22,034,546 13,420,000 16,200,000 7,740,000
90 Access Engineering PLC. Annual Report 2011/12 FOR THE YEAR ENDED 31ST MARCH 2012 36. Comparative Information Comparative figures have been reclassified wherever necessary to conform to the current year’s presentation. 37. Commitments and Contingencies 37.1 Company There were no material Commitments and Contingent liabilities as at the Balance Sheet date except for the following, Legal case filed against the company The case of money recovery by GTB Colombo Corporation (Private ) Limited Vs. Three defendants, namely, 1st defendant : Asia Pacific Golf Course PLC, 2nd defendant: Access Engineering PLC and 3rd defendant: Urban Development Authority. (Case No- CHC706/10/ MR). The claim is made against the three defendants jointly and/or severally in the High Court of Western Province for non payment of material supplied and invoiced by the Plaintiff to the 1st defendant. Access Engineering PLC is contesting the case, since the material purportedly supplied by the plaintiff was not received by the 2nd defendant and not invoiced to the 2nd defendant. Further trial is on 17th September 2012 Bank guarantee issued by the bank on behalf of the Company is as follows; Bank Amount Rs.
Nations Trust PLC 801,685,049 Sampath Bank PLC 1,973,826,718 Bank of Ceylon 1,231,487,723 Hongkong & Shanghai Bank Corporation 213,345,102 37.2 Group Sathosa Motors PLC Labour Tribunal Cases against the Company Ms. Sujatha Silva Vs. Sathosa Motors PLC (Ref - Ct. 78(02)) An Ex-Employee Ms. Sujatha Silva, who stood retired upon her attaining the age of 55 years lodged a complaint to the termination of Employment Unit of the Commissioner of labour alleging that she has been unlawfully terminated. The Commissioner of Labour dismissed the application of Ms. Sujatha Silva. Subsequently she filed a special case in the District court bearing No. D.S.P./00137/09. The court delivered order on 11th January 2011 in favour of Sathosa Motors PLC by dismissing the action with costs. The plaintiff has now filed an appeal and the lawyers has received the notice appeal on 27th January 2011. The lawyers have not received any notices form the court thereafter. W.A. Siriwardane Vs. Sathosa Motors The above application was filed in the labour tribunal by an ex-employee Mr. W.A. Siriwardane who was a driver in the company for terminating his services and seeks reinstatement in service. The Company is vehemently resisting the claim. The further trial is fixed for 09th August 2012 Other Cases against the Company Customs Case No. POM/2280/2006 The Custom Department has initiated an inquiry regarding the payment of Duty on dividend paid to Itochu Corporation of Japan, who is the exporter of vehicles to the company as well as the major shareholder of the Company. The matter is still pending. Based on the above information and the current status of the above case, the Company is not in a position to quantity the potential Financial impact if any, as at the Balance Sheet date.
91 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH 2012 38. Events Occurring After the Balance Sheet Date There have been no material events occurring after the Balance Sheet date except for the following that would require adjustments to or disclosure in the Financial Statements. 38.1 Company Pursuant to resolution adopted on 18th May 2012, the Board of Directors of the Company approved the payment of an Interim Dividend of twenty five cents (0.25 cents) per share for the year ended 31st March 2012. Company has increased its stake in Sathosa Motors PLC from 77.10% to 81.56% at a consideration of Rs.63,107,370, subsequent to the Balance sheet date. 38.2 Group Sathosa Motors PLC The Board of Directors has recommended a first and final dividend of Rs.5/- per share amounting to Rs.30,168,110/- for the year ended 31st March 2012(2011 Rs.5/- per share), and this has been declared at the Annual General Meeting held on 20th July 2012. 39. Acquisition of Sathosa Motors PLC Access Engineering Ltd acquired 3,600,000 shares representing 60% of the issued number of shares of Sathosa Motors PLC on 29th February 2012, from its major shareholder ITOCHU Corporation of Japan at a price of Rs.236.44/- per share. The Company further acquired 1,052,085 shares up to 31st March 2012, being 17% of the issued number of shares. The acquisition had the following effect on the Group Assets and Liabilities. Amount Rs.
Property, Plant and Equipment 33,344,144 Leasehold Land 5,667,610 Inventories 714,671,614 Trade and Other Receivables 127,226,509 Cash and Cash Equivalents 535,537,797 Assets Related Grant (7,239,819) Employee Benefits (17,353,518) Deferred Taxation (766,209) Trade and Other Payables (771,075,321) Income Tax Payables (23,146,582) Dividend Payable (1,695,804) Net Identifiable Assets and Liabilities 595,170,421
Investment Allocated to Minority Interest (136,278,114) Goodwill on Acquisition 505,987,018 Loss on Acquisition 147,930,558 Current Year Profit (12,816,343) Cash consideration Paid on Acquisition of Subsidiary 1,099,993,540
Cash & Cash Equivalents Acquired (535,537,797) Net Cash Outflow on Acquisition of Subsidiary 564,455,743
92 Access Engineering PLC. Annual Report 2011/12 - - Rs. 2011 21,895,788 (80,907,038) (15,588,028) 401,949,289 486,276,059 139,391,001 (213,246,819) (100,000,000) (195,298,612) (151,301,740) (180,907,038) 3,666,286,863 3,650,698,835 1,218,981,864 1,380,553,359 1,167,306,540 1,604,074,221 1,423,167,183 8,644,975,251 5,767,166,933 (2,696,901,280) Group Total Group
- - - (47,500,000) 505,987,018 (16,200,000) (47,500,000) 171,068,469 228,090,254 102,169,864 (296,662,186) 7,331,293,022 7,315,093,022 1,758,522,064 2,031,760,397 1,735,098,211 3,498,782,304 3,451,282,304 1,678,608,806 (3,796,894,818) 17,581,431,856 14,243,024,056 Rs. ------Rs. ------Sathosa Motors PLC 541,357 5,587,208 4,235,429 (5,773,793) 16,809,017 22,396,225 16,622,432 212,545,948 821,277,253 821,277,253 212,545,948 1,416,447,665 1,416,447,665 Rs. ------386,804 262,801 5,357,583 (4,946,921) 91,368,649 (15,588,028) 148,247,593 583,002,291 578,055,370 220,437,664 220,437,664 132,659,565 486,276,059 2,893,847,733 2,893,847,733 Rs. ------194,220 501,632 (3,482,012) 79,834,643 79,834,643 28,931,531 (16,200,000) Access Realties (Private)Limited 162,997,490 114,481,807 286,051,908 282,569,896 146,797,490 171,068,469 3,035,814,614 3,035,814,614 Rs. ------16,538,205 935,851,522 401,562,485 139,128,200 (208,299,898) 3,518,039,270 1,127,613,215 1,144,151,420 5,751,127,518 1,383,636,557 1,383,636,557 3,518,039,270 5,751,127,518 Rs. ------Rs. 2012 2011 Access Engineering PLC 96,081,024 227,354,677 (287,406,381) 2,597,670,408 6,955,749,584 1,627,231,240 1,723,312,264 1,435,905,883 2,597,670,408 1,645,441,846 6,955,749,584 13,129,169,577 13,129,169,577 MARCH 2012 ST Segment Information Primary Segments (Business Segments) Segment Revenue Segment Results Tax Profit Before Year for the Profit Other information Segment Assets Segment Liabilities Capital Expenditure Inter Segment Revenue Gain from fair value adjustment Property of Investment Expense Tax Income Intersegment - Elimination Dividend Payable Intersegment - Elimination in SubsidiaryInvestment Depreciation Intercompany Loan Intercompany Goodwill Impairment of Goodwill Inter Company Dividend Inter Company Amount due from Related Parties Net Finance Income
FOR THE YEAR ENDED 31 THE FOR 40. Revenue
93 27th March 2012 - Debut at the Colombo Stock Exchange
94 Access Engineering PLC. Annual Report 2011/12 Sharing the Wealth Stakeholders create an inviolable thread that binds success with sustainability. The Access Engineering Group empowers both our shareholders by sharing wealth, on the premise that this principle is crucial to sustaining all our shareholders. SHARE INFORMATION Share Information 96
95 SHARE INFORMATION shareholders, while 64.7% of the total shareholders hold shares in the range of 1-10,000. This broad-basing of ownership was a direct result of the Initial Public Offering concluded in March 2012.
Share holding Number Number of The Colombo Stock Exchange range % holding of holders shares During the year under review, the Colombo Stock Exchange 1-1,000 0.03% 582 329,427 (CSE) yielded a negative return resulting from volatility, 1,001-10,000 0.25% 607 2,494,442 unwarranted speculation, negative sentiment and changes 10,001-100,000 1.35% 399 13,567,690 imposed by regulatory authorities. The benchmark All Share Price Index (ASPI) recorded a negative growth of 8.5% in 2011 100,001-1,000,000 7.94% 203 79,397,841 compared to 2010, while the more liquid Milanka Price Index Over 1,000,000 90.43% 47 904,210,600 recorded a negative growth of 25.9% in 2011. The market also 100.00% 1,838 1,000,000,000 witnessed a net foreign outflow of Rs.19 Bn, compared to Rs.26 Bn in the previous year. Distribution of shares 0.03% 1.35% The CSE facilitated the raising of Rs.19.2 Bn via Initial Public Offerings, warranting a mammoth 350% growth over the 7.94% corresponding period. The country saw 29 new companies obtaining listings on the CSE and as at the end of the year the total market capitalisation stood at Rs.2,214 Bn
Access Engineering Share • CSE Ticker symbol- AEL.N0000 1-1,000 90.43% 1,001-10,000 • Bloomberg symbol- AEL: SL 10,001-100,000 100,001-1,000,000 The Ordinary Voting Shares of the Company commenced trading Over 1,000,000 on the Dirisavi Board of the CSE under the ticker symbol AEL. N0000 on 27th March 2012. The shares are classified under the Category of Access Engineering shareholders ‘Construction and Engineering’ sector. As depicted in the graphs below, Access Engineering has a mix of local and foreign shareholders covering both institutions as well as individuals. More than 95% of the total number of shareholders AEL Share Price are local individuals who hold 86.5% of the total number of shares Price (Rs.) 26.8 in issue among themselves. This category is followed by local institutions who hold 12.3% of the shares. 26.6 Number of Number of 26.4 Category % holding holders shares
26.2 Local individuals 86.53% 1747 865,277,888 Local institutions 12.27% 81 122,674,812 26.0 Foreign individuals 0.31% 8 3,142,000 25.8 Foreign institutions 0.89% 2 8,905,300 27-Mar-1228-Mar-12 29-Mar-12 30-Mar-12 100.00% 1,838 1,000,000,000
The Access Engineering share recorded its highest and lowest Category of shareholders price for the year under review on 27th March 2012 which were 0% 1% Rs.29.30 and Rs.25 respectively. As at 31st March 2012, the price of the AEL share stood at Rs.26.70. 12% Market Capitalisation The market capitalisation of Access Engineering was Rs. 26.7 Bn as at 31st March 2012, representing 1.33% of the total market capitalisation of the CSE. Access Engineering was ranked 18th based on the market capitalisation of quoted companies on this end date. 87% Foreign institutions Local individuals Distribution of Access Engineering share Local institutions As indicated in the graphs below, over 90% of the total number Foreign individuals of shares in issue are held by 2.5% of the total number of
96 Access Engineering PLC. Annual Report 2011/12 Major shareholders 31-03-2012 31-03-2011 The major shareholders of Access Engineering as at 31st March Number of % Number of % 2012 together with their percentage holding are as follows: Name shares Holding shares Holding NAME OF NO. OF Mr. S J S % SHAREHOLDER SHARES Perera 250,000,000 25.00% 269,999,988 45.00% 1 Sumal Joseph Sanjiva Perera 250,000,000 25.00 Mr. R J S Gomez 120,000,000 12.00% 149,999,994 25.00% 2 Mr. R J S Gomez 120,000,000 12.00 Mr. J C 3 Mr. J C Joshua 100,000,000 10.00 Joshua 100,000,000 10.00% 149,999,994 25.00% 4 Mrs. R M N Joshua 70,000,000 7.00 Mr. S H S 5 Shamal Joseph Shavindra Perera 45,000,000 4.50 Mendis 24,000,000 2.40% - 0.00% 6 Mrs. D R S Malalasekera 45,000,000 4.50 Mr. D A R Fernando 24,000,000 2.40% - 0.00% 7 John Keells Holdings PLC 40,000,000 4.00 Mr. S D 8 Mr. S A A Gomez 25,000,000 2.50 Munasinghe 24,000,000 2.40% - 0.00% 9 Mr. R J Gomez 25,000,000 2.50 Mr. A I 10 Mr. S D Munasinghe 24,000,000 2.40 Lovell 16,000,000 1.60% - 0.00% 11 Mr. S H S Mendis 24,000,000 2.40 Mr. T A G Fernando 6,400,000 0.64% - 0.00% 12 Mr. D A R Fernando 24,000,000 2.40 Mr. K A M K 13 Mr. A I Lovell 16,000,000 1.60 Ranasinghe - 0.00% - 0.00% 14 Associated Electrical Mr. N D Corporation Ltd 13,000,000 1.30 Gunaratne - 0.00% - 0.00% 15 Barclays Bank PLC Singapore Branch Wealth Management 8,000,000 0.80 Public Holding st 16 Watapota Investments PLC 8,000,000 0.80 As at 31 March 2012, the percentage of shares held by the public as per the Listing Rules of CSE stands at 36.52%. 17 Mr. T A G Fernando 6,400,000 0.64 18 MAS Capital (Private) Limited 6,000,000 0.60 Dividend 19 Access Telecommunication On 18th May 2012, the Company declared a dividend of Rs.0.25 Services (Pvt) Ltd 4,000,000 0.40 per share for the financial year 2011/2012, amounting to Rs.250 20 Mr. S N F Irippuge 4,000,000 0.40 Mn to all holders of Ordinary Voting Shares as at end of trading of 29th May 2012. Payment of the dividend was completed by 8th 21 Indra Traders (Pvt) Ltd 4,000,000 0.40 June 2012. 861,400,000 86.14 Others 138,600,000 13.86 Total 1,000,000,000 100.00
Access Engineering shares held by Directors As at 31st March 2012, the total number of shares held by the Board of Directors of the Company amounted to 564,400,000. This was 56.44% of the total number of shares in issue as at that date. The following table illustrates the number of shares held by Directors, together with their percentage holding:
97 SHARE INFORMATION • Access Engineering on 29th Feb 2012 acquired 59.67% of Sathosa Motors PLC, a company listed on the Colombo Stock Exchange from its major shareholder Itochu Corporation of Japan, at a price of Rs.236.44 per share for a total consideration of Rs. 851.3 Mn. The Company increased Stated Capital its holding to 77.1% by 31st March 2012. The total investment As at the end of the financial year, the stated capital of the for this acquisition stands at Rs.1,099 Mn as at 31st March Company stood at Rs.9 Bn represented by 1,000,000,000 2012. Ordinary Voting Shares. The movement of stated capital during the year is illustrated below: • An investment of Rs.693 Mn was infused as additional working capital from June 2011 till the year end date. Number of Rs. Shares • The remaining portion of the funds raised through the two Balance as at March 31, 2011 600,000,000 3,000,000,000 share issues amounts to approximately Rs.1,526 Mn and is expected to be utilized to part-finance the Henamulla 12 Issue of Shares on May 11, 200,000,000 1,000,000,000 storeyed building project awarded to the Company by the 2011 @ Rs.5/- per Share Urban Development Authority and to finance the future working capital requirements of the Company in its ordinary (Issue of one (01) new course of business. This excess amount is currently held in Share for every three (03) short term investments until its actual utilization. existing Shares by way of a capitalization of reserves) Issue of Shares on June 9, 180,000,000 4,500,000,000 2011 @ Rs.25/- per Share through the Prospectus dated May 30, 2011 Issue of Shares on March 6, 20,000,000 500,000,000 2012 @ Rs.25/- per Share through the Prospectus dated February 10, 2012 Balance as at March 31, 2012 1,000,000,000 9,000,000,000
Utilisation of funds raised through Private Placement and IPO Access Engineering raised funds amounting to Rs. 4,500 Mn through the issue of 180 million shares at a price of Rs. 25/- per share on June 9, 2011, in terms of the Prospectus dated May 30, 2011. Access Engineering also raised funds amounting to Rs.500 Mn with the issue of 20 million shares at a price of Rs.25/- per share on March 6, 2012 in terms of the Prospectus dated February 10, 2012.
The funds raised through the above issues conducted have been utilized for the following purposes;
• A loan with an outstanding amount of approximately Rs. 596 Mn obtained on a long term basis from a LCB in Sri Lanka, was settled by Access Engineering on June 22, 2011.
• Investment in various equipment and machinery ranging from crusher plants, concrete batching plants, asphalt plants, hydraulic rock breakers, piling machines and other equipment in the form of capital expenditure to the amount of approximately Rs.1,086 million was made by Access Engineering during the period from June 2011 to March 2012, to build adequate capacity in view of the multitude of projects undertaken by the Company in various growth sectors of the economy.
98 Access Engineering PLC. Annual Report 2011/12 NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Notes: Access Engineering PLC will be held at the Ballroom, Taj Samudra 1. A member entitled to attend and vote at the meeting is Hotel, 25, Galle Face Centre Road, Colombo 3 from 3.00 p.m. to entitled to appoint a Proxy to attend and vote instead of 5.00 p.m. on the 13th of September 2012. Business to be brought him/her. before the meeting will be: 2. A Proxy need not be a member of the Company. 1. To receive and consider the Annual Report of the Board of 3. A Form of Proxy is enclosed for this purpose. Directors on the affairs of the Company and the Financial 4. The completed form of Proxy should be deposited at the Statements for the year ended 31st March 2012 and the Registered Office of the Company, No. 278, Union Place, Report of the Auditors thereon. Colombo 2, not less than thirty six (36) hours before the 2. To re-elect as a Director Mr. R J S Gomez who retires time fixed for the commencement of the Meeting. by rotation in terms of Article 88 (i) of the Articles of Association of the Company.
3. To elect as a Director Prof. K A M K Ranasinghe who retires by rotation in terms of Article 95 of the Articles of Association of the Company.
4. To elect as a Director Mr. N D Gunaratne who retires by rotation in terms of Article 95 of the Articles of Association of the Company.
5. To elect as a Director Mr. A I Lovell who retires by rotation in terms of Article 95 of the Articles of Association of the Company.
6. To authorise the Directors to determine donations for the ensuing year.
7. To re-appoint Messrs. KPMG, Chartered Accountants as Auditors of the Company and to authorise the Directors to determine their remuneration.
By Order of the Board Access Engineering PLC
P W CORPORATE SECRETARIAL (PVT) LTD Director/Secretaries
24th July 2012 Colombo
99 100 Access Engineering PLC. Annual Report 2011/12 FORM OF PROXY
I/We the undersigned ...... NIC No…...... of ...... being a member/s* of Access Engineering PLC hereby appoint: ...... of ......
Mr. Sumal Joseph Sanjiva Perera of Colombo or failing him* Mr. Joseph Christopher Joshua of Colombo or failing him* Mr. Shevantha Harindra Sudhakara Mendis of Colombo or failing him* Mr. Dalpadoruge Anton Rohana Fernando of Colombo or failing him* Mr. Tiththalapitige Anton Gration Fernando of Colombo or failing him* Mr. Saumaya Darshana Munasinghe of Colombo or failing him* Mr. Ranjan John Suriyakumar Gomez of Colombo or failing him* Prof. Kulatilleke Arthanayake Malik Kumar Ranasinghe of Colombo or failing him* Mr. Niroshan Dakshina Gunaratne of Colombo or failing him* Mr. Alexis Indrajit Lovell of Colombo my/our* Proxy to vote as indicated hereunder for me/us* and on my/our* behalf at the Annual General Meeting of the Company to be held on 13th September 2012 and at every poll which may be taken in consequence of the aforesaid Meeting and at any adjournment thereof:
For Against Resolution 1 To receive and consider the Report of the Directors and the Statement of Accounts for the year ended 31st March 2012 with the Report of the Auditors thereon.
Resolution 2 To re-elect Mr. R J S Gomez who retires in terms of Article No. 88 (i) of the Articles of Association of the Company, as a Director
Resolution 3 To elect Prof. K A M K Ranasinghe who retires in terms of Article No.95 of the Articles of Association of the Company, as a Director.
Resolution 4 To elect Mr. N D Gunaratne who retires in terms of Article No. 95 of the Articles of Association of the Company, as a Director.
Resolution 5 To elect Mr. A I Lovell who retires in terms of Article No. 95 of the Articles of Association of the Company, as a Director.
Resolution 6 To authorise the Directors to determine donations for the ensuing year.
Resolution 7 To re-appoint Messrs. KPMG, Chartered Accountants as Auditors of the Company and authorise the Directors to determine their remuneration.
In witness my/our* hands this ...... day of ...... Two Thousand and Twelve.
...... Signature of Shareholder/s * Please delete the inappropriate words. Instructions as to completion appear on the reverse. 101 FORM OF PROXY
INSTRUCTIONS AS TO COMPLETION
1. This Form of Proxy must be deposited at No. 278, Union Place, Colombo 2 not less than thirty six (36) hours before the time fixed for the Meeting.
2. In perfecting the Form of Proxy please ensure that all details are legible.
3. If you wish to appoint a person other than a Director of the Company as your proxy, please insert the relevant details in the space provided.
4. Please indicate with an ‘X’ in the space provided, how your proxy is to vote on the resolution. If no indication is given, the proxy in his discretion will vote as he thinks fit.
5. In the case of a Company/Corporation, the proxy must be under its Common Seal, which should be affixed and attested in the manner prescribed by its Articles of Association.
6. In the case of a Proxy signed by an Attorney, the Power of Attorney must be deposited at The Secretaries’ Office (i.e. P W Corporate Secretarial (Pvt) Ltd., 3/17, Kynsey Road, Colombo 8) for registration.
7. In the case of joint holders the Form of Proxy must be signed by the first holder.
102 Access Engineering PLC. Annual Report 2011/12 CORPORATE INFORMATION
Name of Company Bankers Access Engineering PLC Bank of Ceylon Nations Trust Bank PLC Registered Office Sampath Bank PLC Level 8, Access Towers Hatton National Bank PLC 278, Union Place Commercial Bank of Ceylon PLC Colombo 02. People’s Bank Tel: +94 11 2302302 The Hongkong and Shanghai Banking Corporation Limited Fax: +94 11 2302333 Web - www.accessengsl.com Secretaries E-mail - [email protected] P W Corporate Secretarial (Pvt) Ltd 3/17, Kynsey Road Legal Form Colombo 08. A public limited liability company incorporated in Sri Lanka on Tel: +94 11 4640360 July 31, 2001 under the Companies Act No. 17 of 1982 and Re- Fax: +94 11 4740588 registered under the Companies Act No. 07 of 2007 on February 06, 2008. Auditors Messrs KPMG Ordinary Voting Shares are listed on the Dirisavi Board of the Chartered Accountants Colombo Stock Exchange. 32A, Sir Mohamed Macan Markar Mawatha Colombo 03. Company Registration Number Tel: +94 11 2426426 PB 200 PQ Fax: +94 11 2445872
Board of Directors S J S Perera J C Joshua D A R Fernando S H S Mendis T A G Fernando S D Munasinghe R J S Gomez A I Lovell Prof. K A M K Ranasinghe N D Gunaratne
Financial Highlights 2 The Planet 54 Chairman’s Message 4 Accreditations, Awards & Accolades 58 Management Discussion & Analysis 8 Independent Auditor’s Report 63 Corporate Governance 18 Income Statement 64 Annual Report of the Board of Directors 21 Balance Sheet 65 Audit Committee Report 23 Statement of Changes in Equity 66 Risk Management 24 Cash Flow Statement 67 Board of Directors 26 Notes to the Financial Statements 68 Corporate Management Team 28 Share Information 96 Engineering Projects 34 Notice of Meeting 99 Engineering Services 42 Form of Proxy Enclosed Designed and produced by emagewise People & Communities 48 Corporate Information IBC Digital plates and printing by Aitken Spence Printing & Packaging (Pvt) Ltd. Access Engineering PLC. 2011/12 Annual Report
Annual Report 2011/12
www.accessengsl.com