Vallibel One PLC | Annual Report 2012/13 trademark: innovation | Annual Report 2012/13 We like doing things…differently. Vallibel One has made a name for itself as one of the fastest growing diversified conglomerates in Sri Lanka - owning interests in a range of high value industry sectors including financial services, tile and sanitaryware manufacture, apparel and leisure including the well known Delmege Group of Companies. We’re known to be bold, visionary and highly competitive. We’re also known for our original approach to the work we do, building value for every stakeholder through innovation inspired strategic investments that have proved growth oriented and successful. Innovation remains our trademark. We like doing things… differently. Who makes up Vallibel One ? Our Vision Achieve uniqueness through diversity, Royal Ceramics Lanka PLC - 51% leadership, creativity and inspiration. LB Finance PLC - 51% Delmege Limited - 51% Our Mission Orit Apparels Lanka (Private) Limited - 50% Greener Water Limited - 100% To run healthy core businesses, leverage Waskaduwa Beach Resorts PLC - 20% strengths into new ventures, work together Sampath Bank PLC - 15% with people to be Sri Lanka’s corporate leader. Contents Group Financial Highlights ..................................................................5 Statement of Financial Position .........................................................40 Chairman’s Review ..............................................................................6 Statement of Income .........................................................................42 Board of Directors ...............................................................................8 Statement of Comprehensive Income ................................................43 Subsidiary Review ..............................................................................14 Statement of Changes in Equity ........................................................44 Annual Report of the Board of Directors ...........................................30 Statement of Cash Flows ...................................................................47 Statement on Directors’ Responsibility ..............................................34 Notes to the Financial Statements .....................................................52 Report of the Audit Committee ........................................................35 Shareholder Information .................................................................146 Financial Calendar .............................................................................38 Corporate Information .....................................................................149 Independent Auditors’ Report ...........................................................39 Notice of Annual General Meeting ..................................................150 Form of Proxy .................................................................................151 page 4 trademark: innovation Group Financial Highlights 2013 2012 Change Rs’000 Rs’000 % For the year ended 31 March Turnover 32,908,025 27,226,737 20.8 Profit after tax 3,109,181 4,027,839 (25.0) Profit attributable to equity holders of the Company 2,154,043 2,545,366 (15.3) As at 31 March Shareholders’ Funds 30,662,699 28,978,607 5.8 Company Market Capitalization 17,384,950 20,644,628 (15.7) Total Assets 97,119,106 82,657,487 17.5 Per Share (Issued and fully paid shares, 1,086,559,353 ) Earnings (Rs.) 1.98 2.34 (15.3) Net Assets (Rs.) 28.22 26.67 5.8 Market Value (Year-end) (Rs.) 16.00 19.00 (15.7) Price earnings (year-end) (times) 8.07 8.12 (0.6) Gross Profit (%) 30.65 33.49 (8.4) Vallibel One PLC l Annual Report 2012/13 page 5 Chairman’s Review Pursuing a vision Ceramics Group in May 2013. The integration of Lanka Ceramics Group to the RCL business, fully complements our stance on creating synergies. Two years into commercial operations, Vallibel One has moved with If our shareholders recall, back in 2010/2011 as we launched Vallibel conviction towards the realization of our vision to be one of the most One, I spoke on the concept of synergy, and how we look to accrue value dynamic diversified holding companies in Sri Lanka. Of course, we are still that is more than the sum of the Group’s parts. Indeed, the inclusion of very young, but I believe that this is to our advantage because it defines Lanka Ceramics Group to one of our key strategic pillars through Royal our character as a Group. We are daring, we believe in the impossible and Ceramics well demonstrates the concept, given the investment’s alignment most of all we pursue a vision with stern determination. with existing commercial interests. Today, the presence of two dynamic brands in the flooring industry – Rocell and Lanka Tiles – both fall under 2012/2013 has been a year in which we have continued to explore avenues your Group’s purview. Hence, we have a formidable opportunity to create to judiciously expand our scope of operations. We have scoured an array of a global presence through these two world-class operations. new business opportunities, with a view to enlarge the scope of activities within our key strategic sectors, in the long and medium term. Whilst we We focused on concerted business re-engineering of the operations of made no material investments in the year under review, it must be noted Delmege and Orit Apparels during the financial year. Whilst widespread that a key highlight of our strategic focus this year – which will remain change has been the norm at both of these sectors during the year, we going forward – was to continually be aware of future opportunities, both remain hopeful that consolidation of positive returns will be evident in the global and local. In view of this, we have in place a dynamic team that medium term. With reference to Greener Water, we have been diligently engages with various industries and R&D teams across the world to secure exploring the ROI for the venture and conscientiously working towards access to technologies and innovations that will impact across growth realizing the full potential of the project. We remain keen to wait for the themes, benefiting not only Vallibel One’s future growth but also national ripe moment to expedite progress. development. Our role as business innovators has enabled us to continue investing From an operational performance perspective, we witnessed strong towards R&D in pursuit of commercial successes. We continue to do contribution from both LB Finance PLC and Royal Ceramics Lanka PLC, business differently. Yardsticks that are very different to the conventional during the financial year. often assess our measures of success. We do not measure ourselves against everyone else, but only against our own expectations and this I believe has Despite a slowing in credit growth, which plagued the financial services been the foundation to our strategy towards deconstructing established industry, LB Finance posted an impressive growth of 42% in interest norms, a strategy that has delivered in more ways than one for our stellar income, driven by a 22% growth in the lending portfolio, which performers, Royal Ceramics Lanka and LB Finance. Sampath Bank, one significantly outpaced industry growth. As a result, LB Finance posted a of our strategic associate investments, is yet another commercial icon that commendable Rs. 11.1 billion turnover and a PAT of Rs. 1.7 billion. represents the power of doing things differently. The Royal Ceramics Group’s revenues stood at Rs. 7.6 billion during Vallibel One as a result, has posted commendable results for this financial the reporting period with Group PAT at Rs. 1.73 billion. Rising costs year, especially in light of the fact that we are still very much at infancy in of production, however, dogged the Group’s performance capacity and terms of our growth milestones. The Group in 2012/2013 posted a Net continued to be a key growth constraint. A significant, post-balance sheet Profit of Rs. 3.1 billion. Our Net Assets now stand at approximately Rs. event, however, which we are confident is strategic to Royal Ceramics 30.6 billion. I must, once again reiterate to our shareholders that this is Group’s future enlargement, was its majority-share investment into Lanka just our beginning. page 6 trademark: innovation As we look into the future, we will without doubt be challenged by that we can become a great nation. Vallibel One is just one component, a adversities, we will first experience dips before we reach hiatus, we will single cog in a wheel that has the potential to turn our small nation into be confronted by challenges that may defy our capabilities to garner one big player in the global economy. continued growth. However, the fact remains that success is not always constant, and our acceptance of this fact, and capability to look beyond The future awaits, let’s realize a dream. the negativities to the positive outcomes that are assured in the medium term is the essence of thinking big. This concept is something that applies not just to business but also to life in general, and I believe is a precept that should drive our belief in our capabilities for the nation. Dhammika Perera Big thinking will precede our future achievements, and I call upon every Chairman Sri Lankan to make this their motto. It is only by having a great vision Vallibel One PLC l Annual Report 2012/13 page 7 Board of Directors Mr. Dhammika Perera Mr. Nimal Perera Mr. Sumith Adhihetty page 8 trademark: innovation Mr. Rajan Asirwatham Ms. Kimarli