Annual Report 2014/15 Access Engineering PLC This is an integrated Annual Report capturing economic, social and environmental performance Contents 1 PREAMBLE About Us 3 Portfolio at a Glance 4 Highlights of the Year 6 About This Report 8 2 MESSAGE A Message from the Chairman 10 3 MANAGEMENT DISCUSSION & ANALYSIS Joint Statement of the Managing Director ( 12 Review of Business Operations 17 Value Creation and Capital Formation 55 Internal Capital Formation 58 External Capital Formation 63 4 STEWARDSHIP Board of Directors 86 Corporate Management Team 90 Corporate Governance 95 Report of the Audit Committee 121 Enterprise Risk Management 123 5 FINANCIAL REPORTS Annual Report of the Board of Directors on the Affairs of the Company 134 Statement of Directors’ Responsibility 140 Directors’ Statement on Internal Control 141 Independent Auditors’ Report 143 !" !! #!$$ ! $%& ! 144 Statement of Financial Position 145 Statement of Changes in Equity 146 Statement of Cash Flows 147 Notes to the Financial Statements 148 6 ANNEXES Five Year Summary 194 Operating Structure 195 Awards and Accolades 196 Milestones 197 GRI Content Index 198 Notice of Meeting 202 Form of Proxy Enclosed Corporate Information Inner Back Cover Build Quality A key distinguishing feature of Access Engineering PLC is its premium build quality. From inception, the Company has built a premium enterprise – from strategy and infrastructure, through the professionalism and high-level skills of its people to ‘expectation exceeding’ execution of projects. This base has allowed Access Engineering to build quality in the life of the Nation and its people, through the value addition our efforts impart via our diverse and comprehensive portfolio of products and services. Excellent build quality allows us to...build quality. Vision To be the foremost Sri Lankan business enterprise in value engineering. Mission To meet the challenges in the development of multi-sector civil engineering projects, providing innovative solutions whilst developing long-term progressive relationships with all our stakeholders. About Us Access Engineering PLC '$ $())*+ $$' $ %' ( listed in the Colombo Stock Exchange. Its track record includes over 100 major projects successfully completed; among these are Bridges and Flyovers, Roads and Highways, Harbours, Water Treatment Plants and Water Supply Projects, Land Drainage and Irrigation Schemes and Telecommunication Infrastructure Projects. Through its project implementation and services, Access Engineering has been a force behind many multidisciplinary infrastructure projects across the country. AEL, as it is familiarly known, specializes in advanced engineering solutions, for which it possesses unmatched technical know how and resources. The in-house services of AEL offer its customers fully-integrated project solutions including Project Design, Laboratory Testing, Piling etc., whilst the Company also has its own materials supply chain, an island-wide network of quarries, crusher plants, asphalt plants and ! / $2&$ ! )!$ 4 56 coupled with some of the best human resources in the industry brings to bear the most cost-effective solutions which give a distinct advantage to AEL to be the preferred contractor in the industry. The Company presently employs over 1,800 workers comprising more than 150 Engineering and Technical Professionals, Skilled Personnel, Tradesmen, Skilled and Unskilled Workers. Access Engineering’s fully-owned subsidiaries are, Access Realties (Private) Limited < !<$ $$=!< ( + $$>$(?" %@# +K%! of the proposed Access Tower II which is currently under construction. Its 84% owned subsidiary Sathosa Motors PLC holds the franchise for Isuzu commercial vehicles. The latest addition under the AEL umbrella is a 80% owned Access Projects Private Limited, a leader in the leisure related building construction and interior solutions. ZPMC Lanka Company Private Limited is an Associate Company of AEL with a 30% stake in a Joint Venture with Shanghai Zhenhua Heavy Industries Company Limited (ZPMC) of China, the world’s largest Container Handling Equipment Manufacturer. Access Engineering is recognized as a ‘specialist contractor’ by the National Contractors’ Association of Sri Lanka and as a ‘major contractor’ by Construction Industry Development Authority (ICTAD – Institute of Construction Training and Development), with ‘C1’ (highest) grading for multiple engineering disciplines. It is compliant to ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 accreditations for its quality, environmental-and health and safety management systems and is a signatory to the UN Global Compact. It is also a TRACE Member in good standing. ENGINEERING PROJECTS Roads and Highways Bridges and Flyovers Water and Wastewater Building Projects At the forefront of many of Completed several landmark bridge/ Providing safe drinking water, Providing engineering services in the road rehabilitation and ] better sanitation and ensuring building projects improvement projects minimal pollution The scope of work includes All Engineering services, including The work involves utility shifting, Engineering design, construction of The work involves civil construction, structural designs, piling, all civil road widening, improvements to the substructure, approaches, service mechanical and electrical works of works, design and installation of existing drainage systems, town roads, erection and launching of the water treatment plants. mechanical, electrical and plumbing improvements, rehabilitation and super structure. works, landscaping etc. are being improvement of road pavements, page 26 provided using in-house expertise and road safety and environmental page 24 capabilities. improvements. page 32 page 20 Telecommunication Harbour and Marine Works Airport and Aviation Infrastructure A catalyst of growth in the Completed the renovation and One of the key contractors at the telecommunication sector through rehabilitation of the Unity Mattala International Airport Project their long-term partnership Container Terminal of SLPA at the with the country’s leading mobile Port of Colombo This project included the construction service providers ! !( $ 6 6 The work included construction the Airport as well as infrastructure The scope work includes construction of Rubber Mounted Embankment, work such as apron fuel hydrant of telecommunication towers including ( !!$ $< system, water supply mains, water transmission facilities, installation anchor rods, Construction of an tower, roads etc. ! $+6 $+! ( underwater Mask Concrete Curtain telecommunication networks etc. wall and providing essential amenities. page 40 ENGINEERING SERVICES Geotechnical and Engineering Design Piling HDD and Cable Jetting Services Laboratory Services Provides investigations services for Provides a competitive edge in Engages in construction of cast, Involved in telecommunication internal and external projects turnkey and design-and-build in-situ bored piles for buildings, infrastructure work underground contracts bridges, etc. The services include testing of raw Horizontal directional drilling (HDD) and process materials and products, The team is skilled in the design Access Engineering is one of the is a drilling technique used to aggregate testing, geotechnical ! $+)5!% $%6 $+ leading piling contractors in install underground utilities without investigations and soil testing, roads and highways, buildings, Sri Lanka, renowned for its reliability, disturbing the structures and without surveying and levelling, quality dams and other water-retaining { $652=) trenching. Cable jetting is the process assurance services for infrastructure structures, foundations and ground includes hydraulic rotary drilling rigs !$ ( ! $6 projects, pile load testing and improvements. and associated equipment. through blowing. concrete mix design. page 44 page 45 page 50 page 48 Dredging Production Plants Mechanical and Steel Fabrication Workshops Involved in dredging and excavation Established several quarries and Maintains and repairs all Company’s crusher plants to ensure timely heavy machinery and equipment Dredging is a process that involves supply and greater sustainability ] the aquatic excavation of water beds of operations to remove sediments, pollutants and In addition, they provide support other material. Crushed rock aggregates required services to construction projects for road construction works; asphalt carried out by the Company. page 51 concrete and cement concrete are The in-house fabrication division produced under this operation. customizes machinery and designs Apart from providing for internal and manufactures various objects requirements, products of these and devices. plants also cater to external demand. page 54 page 52 Portfolio at a Glance Please refer Access Engineering PLC indicated pages for details on the respective Projects www.accessengsl.com and Services Page 6 1 Preamble Access Engineering PLC / Annual Report 2014/15 Highlights of the Year Financial Highlights 16,514 16,269 22,328 16,373 14,916 20,204 13,900 12,486 16,642 10,833 14,284 7,320 4,344 5,767 3,651 2010/11 2011/12 2012/13 2013/14 2014/15 2010/11 2011/12 2012/13 2013/14 2014/15 2010/11 2011/12 2012/13 2013/14 2014/15 Consolidated Revenue (Rs. Mn) Total Assets (Rs. Mn) Net Assets (Rs. Mn) Group Earnings Stated Capital Revenue per Share Rs. 16,514 Mn Rs. 2.35 Rs. 9,000 Mn 2014/15 2013/14 Change (%) Group Company Group Company Group Company Earnings Highlights and Ratios Revenue Rs. Mn 16,514 11,245 16,373 13,188 0.9 -14.7