annual report 2018/19 - cdn.cse.lk · 2 r i l property plc / annual report 2018/19 contents...

Annual Report 2018/19

The tangram is an ancient Chinese puzzle that can be rearranged to create hundreds of patterns and shapes and is a fitting symbol to exemplify the year we’ve had. With a new acquisition under our belt, we rearranged, yet again in order to face the challenges and opportunities that are unique to this new avenue, while maintaining our pace and steady progress in our overall journey to achieve our bigger goals. How we manage to balance our diverse investments is not a puzzle at all but merely a way of discovering the infinite possibilities it holds, as we prove that being faceted is our strength.

Tangram ( 七巧板 )

The tangram (literally meaning: ‘seven boards of skill’) is a dissection puzzle

consisting of seven flat shapes, called tans, which are put together to form

shapes. The objective of the puzzle is to form a specific shape (given only an

outline or silhouette) using all seven pieces, which can not overlap.

Over 6500 different tangram problems have been created from 19th century texts

alone, and the current number is ever-growing.

2 R I L PROPERTY PLC / ANNUAL REPORT 2018/19

ContentsOVERVIEWThis is Who we are 4This is What we do 5Milestones 6Organisational Structure 7Board of Directors 10Senior Management 14

STEWARDSHIPFinancial Highlights 16Chairman’s Message 18CEO’s Message 24

MANAGEMENT REVIEWR I L Property PLC 29United Motors Lanka PLC 34FoodBuzz (Private) Limited 37Sustainability Report 40Team R I L 48

RISK AND GOVERNANCERisk Management 50Corporate Governance 56Report of the Board Audit Committee 94Report of the Board Nominations and Remuneration Committee 98Report of the Board Related Party Transactions Review Committee 101Annual Report of the Board of Directors on the Affairs of the Company 103

FINANCIAL REPORTSFinancial Calendar 112Statement of Directors’ Responsibility for Financial Reporting 113Responsibility Statement of Chief Executive Officer and Chief Finance Officer 114Directors’ Statement on Internal Controls 116Independent Auditor’s Report 117Statement of Financial Position 120Statement of Profit or Loss and Other Comprehensive Income 121Statement of Changes In Equity 122Statement of Cash Flows 125Accounting Policies 127Notes to the Financial Statements 143

SUPPLEMENTARY INFORMATIONShareholder Information 193Financial Year Summary 196Glossary of Financial Terms 197Glossary of Financial Terms 198Notice of Meeting 199Form of Proxy 203Corporate Information Inner Back Cover

3OVERVIEWR I L PROPERTY PLC / ANNUAL REPORT 2018/19

Navigating this Report

OVERVIEW4 - 14

STEWARDSHIP16 - 27

RISK AND GOVERNANCE50 - 110

MANAGEMENT REVIEW29 - 49

FINANCIAL REPORTS112-192

SUPPLEMENTARY INFO193 - Inner Back Cover

FOODPAGE 37-38

PROPERTYPAGE 29-33

AUTOMOBILESPAGE 34-36


INCORPORATED IN 2009,

R I L IS AN OWNER, DEVELOPER AND MANAGER OF GRADE “A” COMMERCIAL OFFICE SPACE IN SELECT CORE MARKETS IN COLOMBO.

This is Who we are


R I L FOCUSES ON OFFERING MULTI-FACETED REAL ESTATE SOLUTIONS

INCLUDING FACILITIES MANAGEMENT, LEASING, LAND ACQUISITION,

CONSTRUCTION MANAGEMENT SERVICES, CONSULTING AND STRATEGIC

INVESTMENT. OUR BUSINESS MODEL AIMS TO CAPITALISE ON THE

CONDUCIVE DYNAMICS PREVALENT IN THE COLOMBO OFFICE MARKET TO

ELICIT COMPETITIVE ADVANTAGE.

This is What we do


2009

2011

2016

2017

2018

2012R I L Property PLC (R I L)incorporated as a Private Limited

Liability Company

The Company received BOI approval to

setup a mixed development project

The status of the Company was changed from a “Private

Limited” to a “Limited” Liability Company.

Obtained lease hold rights from READYWEAR Industries (Private) Limited in respect of the property to construct PARKLAND

2015Obtained freehold rights on the land (in which PARKLAND was constructed) from READYWEAR Industries (Private) Limited

FoodBuzz (Private) Limited (FoodBuzz) became a wholly owned subsidiary of R I L

Acquired the property situated in Morganroad land for investment purposes

Construction of PARKLANDsuccessfully completed andcommenced operations

R I L commenced construction ofPARKLAND building

Company achieved 100% occupancy in PARKLAND

The Company was listed on the Main Board of the Colombo Stock Exchange

Acquired a 51% share inUnited Motors Lanka PLC ( UML)Completed the

renovation and expansion of PARKLAND 1

Install solar panels in PARKLAND 1 Company achieved 72% occupancy in PARKLAND 1

Milestones


Organisational Structure

Parent Company

100% 51%

UNIMO ENTERPRISES LTD

UML PROPERTY DEVELOPMENTS LTD

ORIENT MOTOR COMPANY LTD

UML HEAVY EQUIPMENT LTD

FOODBUZZ (PRIVATE) LIMITED

100%

100%

100%

100%


Company Shareholding %

Registration Number

Chairman Board of Directors Registered Address

Activities

Pare

nt

R I L Property PLC

Not applicable

PV/PB 68365 PQ Mr. S. G. Wijesinha

Ms. L. K. A. H. Fernando – Chief Executive Officer/ Executive DirectorMs. L. E. M. YaseenMr. L. W. D. AbeyarathneMs. C. G. RanasingheProfessor. N. D. GunawardenaMs. C. R. Kariyawasam

33, Park Street, Colombo 02

Develop and manage Grade ‘A’ commercial office space in selected core markets in the Colombo Business District (CBD) whilst offering multi-faceted real estate solutions including facilities management, leasing, land acquisition, construction management services, consulting and strategic investment.

Subs

idia

ry

FoodBuzz (Private) Limited

100 PV 80535 Not applicable Ms. H. A. P. A. Sanjeewani - Chief Executive Officer/ Executive DirectorMs. R. R. YaseenMs. L. K. A. H. Fernando

525, Union Place, Colombo 02

Operate a chain of BreadTalk™ restaurants under a franchise agreement

provide food processing and other related services.

United Motors Lanka PLC

51 PQ 74 Mr. S. G. Wijesinha

Mr. C. Yatawara – Group Chief Executive Officer/ Executive DirectorMr. A. W. AtukoralaMr. R. H. Yaseen – Executive Director – After Sales servicesMs. L. K. A. H. FernandoProf. K. A. M. K. RanasingheMr. S. A. ChapmanMr. H. Inoue

100, Hyde Park Corner, Colombo 02

Import and distribution of brand new Mitsubishi and Fuso vehicles, genuine spare parts of brands represented by the Group, provision of workshop facilities for repairs and lubrication services of vehicles.

Import and distribution of Valvoline Lubricants and Simoniz car care products.

Import and distribution of 3D printing equipment.

Import and distribution of LiuGong concrete mixing equipment.

Fully

Ow

ned

Subs

idia

ries

of U

nite

d M

otor

s La

nka

PLC

Unimo Enterprises Ltd

100 PB 218 Mr. S. G. Wijesinha

Mr. M. Gunatilake (Chief Executive Officer/ Executive Director)Mr. C. YatawaraMr. R. H. YaseenMs. L. K. A. H. FernandoMr. A.W. Atukorala


Import and distribution of Perodua cars, Brilliance vans, JMC commercial vehicles and Yokohama tyres.

Assembly and marketing DFSK and Z100 vehicles

Orient Motor Company Ltd


Mr. C. YatawaraMs. L. K. A. H. Fernando


Import and distribution of DFSK Trucks.

Hiring of motor vehicles

UML Property Developments Ltd


Mr. C. Yatawara 100, Hyde Park Corner, Colombo 02

Construction of warehouse complex for hiring purpose.

Development of Company owned properties.

UML Heavy Equipment Ltd.


Mr. C. YatawaraMs. L. K. A. H. FernandoProf. K. A. M. K. Ranasinghe


Import and distribution of JCB earth moving equipment and power generators.

Organisational Structure


Company Shareholding %

Registration Number

Chairman Board of Directors Registered Address

Activities

Pare

nt

R I L Property PLC

Not applicable

PV/PB 68365 PQ Mr. S. G. Wijesinha

Ms. L. K. A. H. Fernando – Chief Executive Officer/ Executive DirectorMs. L. E. M. YaseenMr. L. W. D. AbeyarathneMs. C. G. RanasingheProfessor. N. D. GunawardenaMs. C. R. Kariyawasam

33, Park Street, Colombo 02

Develop and manage Grade ‘A’ commercial office space in selected core markets in the Colombo Business District (CBD) whilst offering multi-faceted real estate solutions including facilities management, leasing, land acquisition, construction management services, consulting and strategic investment.

Subs

idia

ry


100 PV 80535 Not applicable Ms. H. A. P. A. Sanjeewani - Chief Executive Officer/ Executive DirectorMs. R. R. YaseenMs. L. K. A. H. Fernando

525, Union Place, Colombo 02

Operate a chain of BreadTalk™ restaurants under a franchise agreement

provide food processing and other related services.


51 PQ 74 Mr. S. G. Wijesinha

Mr. C. Yatawara – Group Chief Executive Officer/ Executive DirectorMr. A. W. AtukoralaMr. R. H. Yaseen – Executive Director – After Sales servicesMs. L. K. A. H. FernandoProf. K. A. M. K. RanasingheMr. S. A. ChapmanMr. H. Inoue


Import and distribution of brand new Mitsubishi and Fuso vehicles, genuine spare parts of brands represented by the Group, provision of workshop facilities for repairs and lubrication services of vehicles.

Import and distribution of Valvoline Lubricants and Simoniz car care products.

Import and distribution of 3D printing equipment.

Import and distribution of LiuGong concrete mixing equipment.

Fully

Ow

ned

Subs

idia

ries

of U

nite

d M

otor

s La

nka

PLC

Unimo Enterprises Ltd


Mr. M. Gunatilake (Chief Executive Officer/ Executive Director)Mr. C. YatawaraMr. R. H. YaseenMs. L. K. A. H. FernandoMr. A.W. Atukorala


Import and distribution of Perodua cars, Brilliance vans, JMC commercial vehicles and Yokohama tyres.

Assembly and marketing DFSK and Z100 vehicles

Orient Motor Company Ltd


Mr. C. YatawaraMs. L. K. A. H. Fernando


Import and distribution of DFSK Trucks.

Hiring of motor vehicles

UML Property Developments Ltd


Mr. C. Yatawara 100, Hyde Park Corner, Colombo 02

Construction of warehouse complex for hiring purpose.

Development of Company owned properties.

UML Heavy Equipment Ltd.


Mr. C. YatawaraMs. L. K. A. H. FernandoProf. K. A. M. K. Ranasinghe


Import and distribution of JCB earth moving equipment and power generators.


S. G. WIJESINHAChairman / Independent Non-Executive Director

Appointment to the Board 1 March 2016

Memberships in Board Sub- CommitteesChairman BNRC

Member BAC

Member BRPTRC

% of shares held* Nil

Number of Directorships in other companies**

11

Sunil G. Wijesinha is a Chartered Engineer and a Fellow member of the Chartered Institute of Management Accountants, UK. He also holds a Master of Business Administration from the University of Sri Jayewardenepura.

Sunil brings over 40 years of significant multi-sector experience across industry, commerce, consultancy, training and financial services, where he has held Directorships on the boards of many leading blue chip companies and served as a high-profile management consultant.

His multi-disciplinary international training includes industrial and systems engineering, management and corporate governance. As a proponent of productivity improvement techniques and Japanese Management techniques, he is credited with pioneering several such practices in Sri Lanka.

He notably led the Employees’ Trust Fund Board, Employers’ Federation of Ceylon and NDB Bank PLC as the Chairman and the Merchant Bank of Sri Lanka PLC and Dankotuwa Porcelain PLC, as the Managing Director. He also held the Presidency of the National Chamber of Commerce of Sri Lanka. At present, Sunil currently chairs the boards of selected listed entities.

Board of Directors

L. K. A. H. FERNANDOCHIEF EXECUTIVE OFFICER/ EXECUTIVE DIRECTOR

Appointment to the Board 12 June 2009

Memberships in Board Sub - Committees

Nil



6

Hiroshini Fernando is a Fellow of the Institute of Chartered Accountants of Sri Lanka and a Member of the Institute of Certified Management Accountants of Sri Lanka.

She brings over 20 years of expertise in finance and management across a diverse commercial spectrum. Hiroshini began her career at Kreston MNS & Co.- Sri Lanka Division, a correspondent firm of Grant Thornton International, a leading global firm of Chartered Accountants, which laid a sound foundation for her core expertise in accounting, auditing and strategic finance. The Company and the Board further benefit from her insights and extensive knowledge of financial transparency and governance requirements.


L. E. M. YASEENNON INDEPENDENT NON-EXECUTIVE DIRECTOR

Appointment to the Board

12 June 2009 and ceased

to be a Director on 7 July

2018. (under section 211 of

the Companies Act No.07

of 2007) Re –appointed

by the Shareholders on 17

September 2018

Memberships in Board Sub - CommitteesMember BRPTRC

% of shares held* 19.15

Number of Directorships in other companies

Nil

Lorraine Estelle Marlene Yaseen is a strategic investor in both public and private equity with 30 years of investment management experience. Lorraine’s entrepreneurial and strategic initiatives span diverse sectors including real estate, manufacturing, apparel and food and beverages. Her exposure as an astute long-term investor includes significant transactions resulting in change of control which take into account capital market strategy, governance and market regulatory requirements.

As a founding investor and board member appointed from the Company’s inception in 2009, Lorraine has been instrumental in spearheading the Company’s flagship PARKLAND development. Her leadership skills drove the design concept from idea stage to reality. The Company and the Board benefit from her wide ranging tactical perspectives evidenced by a track record of successful direct equity investments and ventures.

L. W. D. ABEYARATHNENON - INDEPENDENT NON - EXECUTIVE DIRECTOR

Appointment to the Board

12 June 2009 as an

Executive Director /

Finance Director. Following

his retirement on 5 March

2019, was re –appointed

w.e.f 6 March 2019 as a

Non –Executive Director

Memberships in Board Sub - CommitteesMember BAC



5

Dhammika Abeyarathne is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka, Member of the Institute of Certified Management Accountants of Sri Lanka, Senior Member of the Association of Accounting Technicians of Sri Lanka and a Registered Company Secretary. He is also a Business Management Graduate from the University of Sri Jayewardenepura.

Dhammika counts nearly 40 years of extensive exposure in finance, accounting, taxation and management consultancy in private and public sector organisations with diverse business interests.


Board of Directors

C. R. KARIYAWASAMINDEPENDENT NON – EXECUTIVE DIRECTOR

Appointment to the Board 1 November 2018

Memberships in Board Sub - CommitteesChairperson BAC

Member BRPTRC



Nil

Chamali Kariyawasam has a Bachelor of Science (Combined Honours) in Mathematics, Economics and Management from Royal Holloway University of London and a Master of Science in Economics from University College London.

C. G. RANASINGHE INDEPENDENT NON-EXECUTIVE DIRECTOR

Appointment to the Board 1 September 2016

Memberships in Board Sub - CommitteesChairperson BRPTRC

Member BAC

Member BNRC



Nil

Chiranga Ranasinghe is an Attorney-at-Law and holds a Diploma in Human Resources Management from the Institute of Personnel Management of Sri Lanka as well as a Master of Laws from the University of Colombo.

She possesses extensive legal expertise spanning over 20 years. Apprenticing first at Gunawardene & Ranasinghe Associates, Chiranga joined F.J. & G. de Saram in 1995 as a Professional Assistant gaining exposure in several disciplines of law including commercial law, banking and finance, real estate and investment projects, mergers and acquisitions.

She currently heads Corporate Law Chambers, an independent legal practice active across Business and Commercial Law, Banking and Finance, Land Laws and Conveyancing, Company Law and Company Secretarial Practice, Civil Litigation and Commercial Arbitration.

Chamali counts 17 years in a diverse spectrum including capital markets and investment banking. Her foundational experience comprised equity research, economic analysis and financial analysis in the local capital market and the U.K. energy sector.

She has held varied roles in financial institutions including DFCC Bank, Bank of Ceylon and NDB Investment Bank. Her investment banking experience includes strategically significant deals in capital raising via public and private offers, State-sector buy-side acquisition and strategic advisory across telecom, energy, real-estate and banking sectors.

As an independent consultant, Chamali has engaged in project management and tactical assignments for capital market participants, infrastructure operators and regulators including the Securities and Exchange Commission of Sri Lanka and the Colombo Stock Exchange with advisory-focus on capital market product design and risk analysis, post-trade risk infrastructure, capital market policy and service positioning.


PROFESSOR N. D. GUNAWARDENAINDEPENDENT NON - EXECUTIVE DIRECTOR

Appointment to the Board 1 November 2018

Memberships in Board Sub - CommitteesMember BNRC


Number of Directorships in other companies **

1

Professor. Niranjan Gunawardena is a Chartered Engineer, Corporate Member of the Institute of Engineers Sri Lanka and Fellow of the Institute of Project Managers, Sri Lanka (IPMSL). He obtained his BSc. in Engineering from the University of Moratuwa, MSc. in Construction Technology and a PhD in Project Management from Loughborough University of Technology, United Kingdom.

At present, he acts as the President of IPMSL and the Dean of the Faculty of Business at the University of Moratuwa.As a Project Management Consultant, he has over 25 years of experience in the construction Industry and has been involved with a large number of building

construction projects during this period.At present, Niranjan serves as a consultant attached to the Project Management Unit of the Ministry of Home affairs monitoring and managing large construction projects handled by all District Secretariats in the country.

During his career, he has served as the Head of the Department of Interdisciplinary Studies as well as the Deputy Vice Chancellor at the University of Moratuwa.

R. WEUDAGEDARACOMPANY SECRETARY

Appointment 1 December 2017

Roshini Weudagedara is an Attorney-at-Law and holds a Bachelor of Science in Biological Science from the University of Colombo. She is also a Registered Company Secretary, Notary Public and Commissioner of Oaths.

Prior to joining the Company, she has received extensive training on Secretarial and Legal fields at a leading law firm. During her career she has overlooked the Company Secretarial requirements of a number of listed and unlisted companies and has advised clients on matters relating to Exchange Control, Banking, BOI, Companies Act and Listing Rules. At present, in addition to functioning as the Company Secretary for the Company as well as FoodBuzz (Private) Limited, Roshini extends her expertise to the Company in legal and HR related matters.

* Excluding the shareholding of Close Family Members** Please refer page 66 for details of Directorships

BAC - Board Audit CommitteeBRPTRC - Board Related Party Transactions Review CommitteeBNRC - Board Nominations and Remuneration Committee


Senior Management

Standing Left to Right

K. D. C. RodrigoSenior Manager Human Resources

Y. M. K. Y. BandaraSenior Manager Engineering

U. A. KitulgodaSenior Manager Legal

W. A. I. R. PereraChief Finance Officer

B. T. EswatteSenior Manager Business Operations

S. HendawitharanaSenior Manager Finance & Administration

S. K. M. D. WijesekaraSenior Manager Risk & Compliance

U. P. A. B. KarunanayakaSenior Manager - IT

R. WeudagedaraCompany Secretary

We’re establishing our core and looking at future expansion strategies


SynopsisFinancial Highlights R I L Group Company 31 March 31 March Change 31 March 31 March Change 2019 2018 2019 2018

EARNING HIGHLIGHTS AND RATIOSRevenue LKR ‘Mn 13,956 4,477 212% 762 704 8%Gross profit LKR ‘Mn 3,655 1,588 130% 693 648 7%Results from operating activities LKR ‘Mn 2,047 2,495 -18% 1,420 1,364 4%Profit before tax LKR ‘Mn 1,321 3,736 -65% 1,015 1,143 -11%Profit after tax LKR ‘Mn 1,120 3,744 -70% 804 1,182 -32%Profit attributable to owners of the parent LKR ‘Mn 906 3,638 -75% 804 1,182 -32%Gross profit margin % 26.19 35.47 -26% 90.92 92.00 -1%Operating profit margin % 14.67 55.73 -74% 186.35 193.66 -4%Net profit margin % 8.02 83.63 -90% 105.46 167.79 -37%Earning per share LKR 1.15 6.12 -81% 1.02 1.99 -49%Return on assets (ROA) % 3.36 11.99 -72% 4.14 6.46 -36%Return on capital employed (ROCE) % 3.64 12.92 -72% 4.42 6.77 -35%Interest cover No of Times 2.55 10.57 -76% 3.12 4.80 -35%

FINANCIAL POSITION HIGHLIGHTS & RATIOSStated capital LKR ‘Mn 7,360 5,760 28% 7,360 5,760 28%Shares in issue No. Mn 800 600 33% 800 600 33%Reserves & retained earnings/(loss) LKR ‘Mn 10,078 9,182 10% 7,550 6,713 12%Equity attributable to equity holders of the parent LKR ‘Mn 17,438 14,942 17% 14,910 12,473 20%Non controlling interest LKR ‘Mn 6,311 6,223 1% - - -Total assets LKR ‘Mn 33,351 31,233 7% 19,403 18,303 6%Total debt LKR ‘Mn 7,048 7,818 -10% 3,295 4,985 -34%Debt to equity % 40.42 52.32 -23% 22.10 39.97 -45%Gearing % 22.89 26.97 -15% 18.10 28.55 -37%Current asset LKR ‘Mn 10,552 10,551 0% 326 932 -65%Current liability LKR ‘Mn 5,287 5,548 -5% 475 1,560 -70%Inventory LKR ‘Mn 6,253 6,572 -5% 6 4 50%Current asset ratio No of Times 2.00 1.90 5% 0.69 0.60 15%Quick asset ratio No of Times 0.81 0.72 13% 0.67 0.59 13%Net asset per share LKR 21.80 24.90 -12% 18.64 20.79 -10%

MARKET /SHARE HOLDERS INFORMATIONMarket value per share LKR - - - 6.40 7.30 -12%Company market capitalisation LKR ‘Mn - - - 5,120.00 4,380.00 17%Market price to book value % - - - 0.34 0.35 -2%Price earnings ratio No of Times - - - 6.26 3.67 70%Dividend per share LKR - - - 0.15* 0.10 50%Dividend yield ratio % - - - 2.34 1.37 71%Dividend payout ratio % - - - 0.15 0.05 200%

*Proposed dividend for the 2018/19

17STEWARDSHIPR I L PROPERTY PLC / ANNUAL REPORT 2018/19

2016

/17

2017

/18

2018

/19

3,000

12,000

9,000

18,000

21,000

15,000

6,000

0

24,000

Share Capital

Shareholders Fund

LKR Mn.

Share Capital & Share Holder Fund

21,1

65 23,7

49

10,4

29

5,7

60 7,36

0

4,80

0

2016

/17

2017

/18

2018

/19

20

80

60

40

0

100

Borrowings

Shareholders Fund

%

Capital Employed

19,4

0391%

27%

73%

23%

77%

9%

LKR13,956 Mn.

Group Revenue

LKR1,120 Mn

Group Profit

LKR840 Mn

Gain in InvestmentProperty

2016

/17

2017

/18

2018

/19

5,000

20,000

15,000

30,000

35,000

25,000

10,000

0

40,000

Total Assets

Total Borrowings

LKR Mn.

Total Assets Vs Total Borrowings

31,2

33

33,3

51

12,5

67

7,8

18

7,04

8

1,06

6

2016

/17

2017

/18

2018

/19

2,000

8,000

6,000

14,000

12,000

10,000

4,000

0

16,000

Revenue

Profit After Tax

LKR Mn.

Revenue Vs Net Profit After Tax

3,74

4

1,12

0

1,20

6

4,47

7

960

13,9

56


Chairman’s Message


PARKLAND, has made a name for itself as a world class commercial complex and the year under review remains fully occupied with no movement in our clientele throughout this period.

Dear Shareholder Presenting to you the Annual Report for the year ended 31 March 2019, I am quite pleased to announce that the R I L Group as a whole performed well, despite some notable challenges. However, before I proceed to elaborate on the financial results, I would like to first bring some context regarding the general operating environment in 2018, which I believe will provide for a better understanding of our performance.



Macroeconomic ReviewHaving hit a rough patch in 2016 after years of sustained growth, Sri Lanka’s economy continued its cyclical downturn in 2018 as well, with GDP expanding only by 3.2% in the twelve months as domestic consumption fell for the second year running. Lower disposable incomes resulting from two consecutive years of unfavourable weather conditions resulting in weak agricultural output is thought to be one of the main reasons for the weakening domestic consumption. Encouragingly though the Service Sector, which grew at a steady pace of 4.7% in 2018, continued to maintain its position as a key engine of growth for the Sri Lankan economy.

The country’s external sector remained under pressure mainly due to rising import expenditure (10.4% year on year expansion), while export income grew more slowly, by 4.7% year on year.

Meanwhile, FDI inflows in 2018 including loans received by companies registered under the Board of investment (BOI), reached an all time record high of US dollars 2,366.9 Mn., an impressive 38.4% more that the US dollars 1,710.3 Mn. registered in 2017. Nearly 75% of total inflows for 2018 was on account of the infrastructure for port container terminals, telephone and telecommunication networks as well as towards the Hambantota port project. Regrettably however FDI inflows to the manufacturing sector and the services sector both declined comparative to the previous year.

The constitutional crisis that erupted in October 2018 and its resultant policy uncertainty applied severe stress on the Sri Lanka economy towards the end of the year. As investor confidence waned in the immediate aftermath of the events, the country’s sovereign rating was downgraded by three leading international rating agencies. The IMF’s Extended Fund Facility was also suspended. Nonetheless steps taken earlier in the year by the government have helped to stabilize the economy, with the currency strengthening and foreign outflows abating.


Group and the Company has recorded a Net profit after tax (NPAT) of LKR 1,120 Mn. and LKR 804 Mn. respectively, for the year. While UML positively contributed LKR 436 Mn. to the NPAT, FoodBuzz has recorded a Loss of LKR 45 Mn.

Local Commercial Property MarketWhile it may not be obvious to a casual observer, there is a very strong correlation between the demand for commercial property and the country’s economic performance and its ability to attract FDI’s. In fact the expansion of the services sector over the past few years and the steady inflow of FDI’s, together have had a tremendous impact on the demand for commercial property in Colombo metropolis area. A quick comparison of the Colombo skyline over the past decade or so, I believe testifies to the country response to the growing demand for commercial property in the recent years.

Key Business Highlights for 2018The growing demand for Grade “A” commercial property in particular augers well for R I L, especially since it is our core business. Having first entered the market in 2016, I believe our timing was near perfect, for it was when the demand for Grade “A” property was at its peak, which helped our flagship property - PARKLAND to secure several high profile local conglomerates and a number of MNC’s. Since then PARKLAND, has made a name for itself as a world class commercial complex and the year under review remains fully occupied with no movement in our clientele throughout this period.

You may recall that in the previous Financial Year, we took a strategic decision to expand our commercial property portfolio and began work on renovating and expanding PARKLAND 1 (formerly known as the READYWEAR building) located within our existing premises. The project went ahead, despite some delays due and a 46% increase in costs owing to extra works and improvements to add in another 9,500 sqft to the building (apart from additional roof top space), which was not included in the original plan, and was completed and launched to the market in March 2019 as PARKLAND 1. I am very pleased to note the strong uptake for PARKLAND 1 has enabled us to secure 72% confirmed occupancy at the pre-launch stage, mostly from existing clients occupying PARKLAND building.

In another notable development, we initiated a Rights issue in April 2018 where 200 Mn. new shares were issued at the rate of LKR 8/- per share enabling R I L to raise LKR 1.6 Bn. which was fully utilized to settle part of the debts pertaining to the acquisition of United Motors Lanka PLC (UML) in December 2017.


Financial PerformanceFor the year under review, the Group has recorded a Turnover of LKR 13,956 Mn. out of which LKR 762 Mn. from R I L, LKR 12,769 Mn. and LKR 445 Mn. from UML and FoodBuzz (Private) Limited (FoodBuzz), respectively.

R I L

Food

Bu

zz

UM

L

0

2,000

8,000

6,000

12,000

14,000

10,000

4,000

(2,000)

16,000

Revenue

NPT

LKR Mn.

Revenue Vs Net Profit After Tax

(45)

436

804

445

12,7

69

762

Group and the Company has recorded a Net profit after tax (NPAT) of LKR 1,120 Mn. and LKR 804 Mn. respectively, for the year. While UML has positively contributed LKR 436 Mn. to the NPAT, FoodBuzz has recorded a Loss of LKR 45 Mn.

Earnings per share for the Group and Company is LKR 1.15 and 1.02 respectively.

DividendsThe Company did not declare any interim dividend during the Financial Year. However, the Board of Directors has proposed a First and Final Dividend of LKR 0.15 per share for the Financial Year 2018/19, in May 2019.

Although it is not required under the Company’s Articles to seek shareholder approval for the payment of Dividends, in line with the best practice, the Company will be seeking the shareholder approval at the upcoming Annual General Meeting.

Outlook and ProspectsAs the macroeconomic strategies implemented by the government strengthen the fundamentals of the economy and growth strategies to boost trade and FDI gather momentum, I expect Sri Lanka’s economy to graduate towards achieving more balanced

and consistent economic growth over the next few years. Having said that, I believe the next step would be to increase the skew towards FDI inflows to country. This would require a coordinated effort by the government as well as the private sector to create a more robust investment proposition that would differentiate Sri Lanka from peers in South and South-East Asia as well as the African region. Actively promoting the country as a prospective investment destination, will be also be equally important.

As a supplier of Grade “A” commercial space, I believe R I L has an important role to play in strengthening Sri Lanka’s position as a key investment hub in Asia. For our part, we will focus on continuously upgrading our USP to ensure our PARKLAND properties stay on par with world class Grade “A” standards.

Meanwhile, we will also likely consider additional investments to develop other properties in our land bank, mainly the UML property in Hyde Park and the 196 perch property on Morgan Road, both of which are highly sought after locations within Colombo’s Central Business District. These are however very long term considerations, which will largely depend on how the market pans out over the next few years.

Board ChangesMr. Eardley Perera and Mrs. Yaseen both ceased to become Directors on the R I L Board in July 2018. This is in accordance with section 211 of the Companies Act No. 07 of 2007, which stipulates the appointment of Directors by the Shareholders over 70 years of age, is valid only for one year.

Mrs. Yaseen was reappointed to the Board by the shareholders at the AGM held on 17 September 2018. Two new Board appointments were also made during the year, namely Professor. Niranjan Gunawardena and Ms. Chamali Kariyawasam both with effect from 01 November 2018. Ms. Chamali Kariyawasam was also appointed to Chair the Board Audit Committee, a position that was previously held by Mr. Richard Ebell, who resigned from the Board in June 2018.

Mr. Dhammika Abeyarathne who served as an Executive Director retired from the R I L Board with effect from 5 March 2019 and was reappointed to the Board as a Non-Executive Director with effect from 6 March 2019.

AppreciationsI take this opportunity to thank my fellow Directors on the Board for the invaluable support extended to me during the year under review.



I also wish to thank our CEO, Ms. Hiroshini Fernando, who has led from the front to deliver the consistent results. My heartfelt appreciation goes to each and every member of the R I L team as well the teams from UML and FoodBuzz for their commitment towards achieving corporate goals. I rely on their passion and professionalism to realize the future aspirations of the Group and all its stakeholders.

In conclusion, I wish to thank our shareholders for the trust and confidence placed in the Group and seek your continued patronage in the years ahead.

S. G. WijesinhaChairman

26 June 2019Colombo


CEO’s Message


WE COMPLETED RENOVATION AND EXPANSION WORK ON PARKLAND 1, AN AMBITIOUS PROJECT THAT WE UNDERTOOK IN DECEMBER 2017 TO REVAMP THE FORMER READYWEAR BUILDING LOCATED WITHIN PARKLAND PREMISES. THE PROJECT ADDS A CONSIDERABLE BOOST TO OUR OVERALL PORTFOLIO BY INCREASING RENTABLE SPACE BY AS MUCH AS 35%.

It has been an eventful twelve months for the R I L Group as we took steps to implement our strategy to ensure consistent returns and also build resilience for the long term. Throughout the year we maintained a disciplined approach to bolster our financial performance, by focusing on two key pivots; growing asset returns and improving our client experience.


CEO’s Message

Growing Asset ReturnsI am happy to report that PARKLAND, our flagship property maintained 100% occupancy levels throughout the year, with no changes in the existing client base. As a Grade A commercial property, PARKLAND continues to maintain a high-profile client list consisting of large conglomerates and multinational companies representing a broad spectrum of industries. Having come on board since the inception in 2016, many of our clients continue to express their appreciation of our competitive pricing and premium services. Our client centric leasing strategies are expected to hold us in good stead in view of anticipated expiries in the ensuing year.

In what is perhaps the most significant development for the year, we completed renovation and expansion work on PARKLAND 1, an ambitious project that we undertook in December 2017 to revamp the former READYWEAR building located within PARKLAND premises. The project adds a considerable boost to our overall portfolio by increasing rentable space by as much as 35%.

Despite delays in project approvals which required some realignment of our layout plans, I am happy to announce that the project was fully completed and formally launched to the market in March 2019, just prior to the conclusion of the Financial Year. It is also very encouraging to see the strong market response towards PARKLAND 1, which is evidenced by the fact that we were able to secure 72% confirmed occupancy in the pre-launch stage itself.

We have secured a WALE (Weighted Average Lease Expiry) of approximately (4) years on PARKLAND at inception, on par with industry. Our consolidated core portfolio also anticipates maintaining equivalent WALE with the addition of PARKLAND 1, going forward.

Our facilities management business continues to benefit from the synergies derived through our expertise in managing two large scale commercial properties.

Improving the Client Experience PARKLAND portfolio of institutional grade real estate represents client-centrism and articulates our singularity. In the year under review, we continued to make further investments to refine our customer service model with a view to improving the client experience. While no major infrastructure upgrades were required owing to the fact that PARKLAND complex itself was designed and constructed incorporating state-of-the-art technology, we did however invest in a new fully automated vertical parking solution that increases lot capacity by 4%, synchronised with PARKLAND 1 becoming active within our core portfolio.

Financial Performance From a Company perspective, our top line increased by 8% from LKR 704 Mn. in 2017/18 to LKR 762 Mn. in 2018/19. The income for the year under review also includes LKR 25 Mn. generated from PARKLAND 1 during last quarter of the period.

The Company Net Profit after Tax (NPAT) however showed a decline in the year under review to LKR 804 Mn. from LKR 1182 Mn. in the previous Financial Year. This was mainly due to the increase in finance costs from LKR 300 Mn. in the previous year to LKR 479 Mn. in the current Financial Year. The higher finance costs are attributed to the LKR 4.3 Bn. facility taken to fund the United Motors PLC (UML) acquisition in the previous Financial Year. In a bid to relieve the pressure, R I L raised equity capital of LKR 1,600 Mn through a Rights Issue in April 2018 which led to the issuance of an additional 200 Mn shares at the rate of LKR 8 per share. The proceeds of the Rights Issue were utilised in full to part-settle the long term loan facilities.

Another contributory factor for the lower PAT was the reduced Dividend received from our subsidiary - UML which remained under pressure due to several regulatory and macroeconomic factors. As a result, R I L received Dividend of only LKR 1.50 per share in the current Financial Year on its controlling stake, translating into LKR 72 Mn, compared to LKR 167 Mn. (LKR 3.50 per share) received in the previous Financial Year.

On a positive note however, the fair value gain from the investment property increased to LKR 840 Mn. in 2018/19 from LKR 748 Mn. in the previous Financial Year.

Meanwhile reflecting the post-acquisition consolidation with UML, Group revenue achieved for the Financial Year 2018/19 amounted to LKR 13,956 Mn., while Group NPAT was LKR 1,120 Mn.

UML contributed LKR 12,769 Mn. to Group revenue and LKR 435 Mn. to Group NPAT respectively. Our fully owned subsidiary, FoodBuzz (Private) Limited contributed LKR 445 Mn to the top line in 2018/19, but recorded LKR 45 Mn Net loss after tax for the year.

I am glad to state that the Board has declared a Dividend of LKR 0.15 per share for the year 2018/19 (LKR 0.10 - 2017/18) subject to shareholder approval at the AGM.

Performance of Subsidiaries United Motors Lanka PLC (UML)UML, which we acquired in December 2017, completed its first full year of operations under the R I L umbrella. Despite having suffered through what is easily one of the most difficult periods for the Company as increasing regulatory pressure saw Motor Vehicle importers across the country facing tough times, UML’s performance while below forecasts, was nonetheless well ahead of peers in the industry. Amidst this backdrop, UML was unable to meet our Dividend expectations. Fortified by a strong land bank which continues to appreciate, UML’s Net Asset Value remains solid, proving that the investment is consistent with R I L’s long terms strategic plan to cement its presence in Sri Lanka’s premium commercial property domain.


From a Company perspective, our top line increased by 8% from LKR 704 Mn. in 2017/18 to LKR 762 Mn. in 2018/19. The income for the year under review also includes LKR 25 Mn. generated from PARKLAND 1 during last quarter of the period.

FoodBuzz (Private) Ltd (FoodBuzz)Our fully owned subsidiary, FoodBuzz, which holds the franchise for the distinctive Singapore-based brand BreadTalk™, also made steady progress in the year under review. In line with the strategy to expand its reach to key suburbs in the Western Province, a new BreadTalk™ outlet was opened in Ratmalana, bringing the total network up to 9 as at 31 March 2019. The Company also further expanded its portfolio adding several new product variants and enhancing seasonal offerings, while ensuring that each new addition remains uniquely differentiated from other mainstream products in the market.

Future OutlookGoing forward, I have no doubt that competitive pressures will be one of the key challenges for our commercial property portfolio, especially with several ongoing projects in the Colombo Metropolis area scheduled to be completed in the next 12 - 18 month time frame.

With our first batch of contracts for PARKLAND up for renewal in 2020, we will focus on further strengthening the client proposition with the aim of achieving a 100% renewal rate. Moreover by extending the same premium service standards, I am confident that we will soon achieve our 100% occupancy target for PARKLAND 1 as well.

I believe these strategies will create a solid foundation for R I L to enhance returns in the forthcoming year and beyond. Like the Tangram, in the long term we intend to pursue opportunities to augment value accretion in our core business.

AppreciationsFirst and foremost I would like to thank our clients for their acceptance of and commitment towards PARKLAND offering. I invite you to be a part of our journey towards bigger and better things in the years to come.

I also wish to thank the Chairman and members of the Board for their support and counsel extended at all times.

My grateful thanks also, to the senior management and the entire R I L team for their commitment and dedication towards the Company.

Finally, I wish to express my appreciation to you, our investors, for your ongoing investment in R I L.

L. K. A. H. FernandoChief Executive Officer/ Executive Director

26 June 2019Colombo

We’re exploring our flexibility through our diverse holdings

29MANAGEMENT REVIEW R I L PROPERTY PLC / ANNUAL REPORT 2018/19

LKR 762 MnRevenue

LKR 804 MnNPAT

LKR 1,420 MnEBIT

Overview PARKLAND is R I L’s flagship commercial property. With its distinctive post-modernist exterior the 22-floor PARKLAND building is now seen as a major landmark in Colombo’s Central Business District. Strategically located at no. 33, Park Street, Colombo 02, PARKLAND was first launched to market in 2015 offering premium Grade “A” rentable commercial space to cater to the needs of large conglomerates and multinationals. Consisting over 202,000 square feet of rentable space spread over 14 floors, the interior layout of the building has been designed to benchmark global best practices for space utilisation, giving clients the ability to customise their floor area.

Being a fully fledged commercial complex, PARKLAND consists of a 8-level car park consisting of over 370 parking spaces, with clients being allocated 1 slot for every 1,000 square feet of space rented. An intelligent car park management and guidance system is also in place to provide information on availability of vacant parking slots on each floor. Other facilities on offer include central air-conditioning provided free of charge to clients during office hours, centralized PA systems, pre-installed voice, data and digital TV infrastructure facilities with 24 core fibre optic connectivity and 1,500 KVA generators which have been commissioned to provide 100% backup power and ensure zero downtime to clients. Furthermore clients also have access to the building’s Board Room,

meetings rooms, training room and rooftop terrace area, at a fee.

PARKLAND is fitted with five high-speed elevators, each with a carrying capacity of 21 passengers. Two service elevators are also available along with two escalators at the main entrance lobby. The building is also equipped with state-of-the-art safety features supported by a central command centre which provides 24/7-365 monitoring of CCTV feed uploaded from cameras installed in common areas and the elevator.

Other value added services offered at PARKLAND include a 24-hour help line and tenant services manned by experienced and courteous staff.

Management ReviewPARKLAND


Review of Operations Occupancy LevelsPARKLAND remained fully occupied in the year under review, thanks to the competitive pricing structures and the all inclusive facilities that provide an unparalleled client experience. Since the inception, PARKLAND has succeeded in maintaining a high-profile client list consisting of large conglomerates and multinational companies representing a broad spectrum of industries. Having come on board from the latter part of 2015, many of these clients have now completed 3 full years of their 4 year occupancy contracts, and continue to indicate their 100% satisfaction with PARKLAND value proposition.

New InvestmentsBeing a relatively new complex, no major infrastructure upgrades were undertaken in the year under review other than for the investments to commission a new state-of-the-art automated vertical parking solution, which increases the available parking capacity by a further 4%. The mechanism which came into operation with effect from January 2019 is made available to all clients based on availability.

Service EnhancementsEfforts to further develop the existing client servicing model saw pest control services, IT services and storage facilities being added to list of value added service provided at a nominal fee. Clients can also secure the services of the company’s

Management Review

contracted pest control specialist for their specific needs and IT division for any IT related services.

Safety SystemsWith safety management an integral part of PARKLAND value proposition, a full scale safety review was done in the year under review by the company’s in-house safety team. The annual fire drill was also conducted in collaboration with the Fire Department and with the participation of the company’s safety team as well as the client-nominated fire wardens.

Several safety awareness sessions were held throughout the year as part of a focused effort to strengthen the safety culture among employees. Clients were also invited to participate in these sessions conducted by renowned safety experts.

Facilities ManagementThe Facilities Management Business which was carved out as an independent business vertical in 2016/17, leverage on R I L’s expertise in managing commercial property to offer comprehensive solutions

to cater to the growing needs of the commercial property market in Colombo. Facility management services were provided for four properties in Colombo for the year under review.

Focus for the Future The immediate priority going forward, is to maintain consistently high service standards that would not only meet but exceed client expectations. The main goal here is to ensure 100% client retention ratio at all times.

Given the ever growing demand for commercial space, the focus for the long term would be to grow market share that would ultimately position R I L as the market leader in the. Country’s Grade “A” commercial property segment. This would mean further strengthening the company’s footprint in the commercial space by increasing the portfolio of Grade “A” properties under the R I L banner. In this context, the company would consider outright acquisition of property that presents significant potential for future capital appreciation. At the same time R I L will also remain open to pursuing strategic alliances that would provide access to suitable sites within or in close proximity to Colombo’s Central Business District.

Developing the Facilities Management arm is also seen as a key focus area for the future.

PARKLAND


OverviewPARKLAND 1 is the latest addition to the company’s portfolio of commercial properties. Formally known as READYWEAR building, which was later renamed as PARKLAND 1 is located adjacent to PARKLAND building.

Construction of PARKLAND 1 which commenced in November 2017 was completed in January 2019.

PARKLAND 1 has rentable floor space of approximately 64,000 square feet spread over 6 floors. In addition, another 2,000 square feet has been allocated for the rooftop terrace area. Furthermore, PARKLAND 1 building has been designed and constructed in line with globally accepted space economy principles where the floor can be easily converted to cater to the limited space requirements of smaller corporate clients. Aside from the green principles applied throughout the design and construction phase, a further investment of LKR 20 Mn. was made in a new solar energy system to cover approximately 25% of the energy needs of PARKLAND 1.

All facilities and value added services available at PARKLAND are available at PARKLAND 1 as well.

Review of OperationsOccupancy LevelsPending its official launch, PARKLAND 1 managed to secure 72% confirmed occupancy as at 31st March 2019. Most notably, over 50% of the confirmations were received from existing high profile clients keen to benefit from the premium client serving model offered at PARKLAND. Meanwhile, in an effort to achieve 100% confirmed occupancy ahead, a series of highly focused activities were also carried out to increase market visibility and tap into potential new clients.

Financial ReviewRevenueR I L Property PLC recorded a revenue of LKR 762 Mn. in 2018/19, up 8.19% from the LKR 704 Mn. reported in the previous Financial Year. There were two main contributory factors for the increase in revenue.

1) the contracted increase in monthly rental from existing PARKLAND occupants and

2) additional revenue of LKR 25 Mn. generated through the newly launched PARKLAND 1 complex from last quarter of the period

PARKLAND’s occupancy remained unchanged at 100% throughout the year, while PARKLAND 1 secured 72% occupancy as at 31st March 2019, with a majority of these reservations coming from current occupants of PARKLAND.

2016

/17

2017

/18

2018

/19

200

800

600

1,200

1,000

400

0

1,400

Revenue

Profit After Tax

LKR Mn.

Revenue Vs Profit After Tax

1,18

2

804

1,24

3

704 76

2

609

Cost of Sale (COS)In the year under review, COS increased by LKR 13 Mn. to LKR 69 Mn. from LKR 56 Mn. in the previous year. The higher COS is attributed to several reasons, key among them; increase in occupancy and the cost of the new services and maintenance agreements which came into effect in mid of year 2018 following the end of the three-year free comprehensive warranty period. The additional maintenance associated with PARKLAND 1 during the last quarter also contributed towards the higher overall COS in 2018/19.

2016

/17

2017

/18

2018

/19

40

60

20

0

80 120

100

80

60

50

40

20

0

Cost of Sales

Average occupancy

LKR Mn. %

Cost of Sales Vs Average Occupancy

5698 10

0

8130

69

PARKLAND 1


Management Review

charged only for a period of 3 - 4 months in 2017/18. In contrast a full year of interest cost was charged in 2018/19, leading to a substantially higher interest costs in the current Financial Year.

Finance income declined to LKR 73 Mn. in the year under review from LKR 79 Mn. in 2017/18 as the Company took a decision to liquidate approximately 70% of its investments in order to fund the incremental construction cost of PARKLAND 1. The Company invested all remaining funds in leading commercial banks and units trust.

However, this was only a 1% increase in cost of sale against the last year (2018 - 8%) due to implementing robust systems and procedures to curtail cost.

Other Income and Gains Including Dividend IncomeOther income, consisting mainly of the revenue generated through R I L’s Facilities Management business and other sundry income, increased to LKR 18 Mn. in 2018/19 from the LKR14 Mn. in 2017/18. Meanwhile dividend income received from R I L’s subsidiary -UML, declined significantly. In the year under review, UML declared dividend of LKR 1.5 per share compared to LKR 3.50 per share for the year ended 31st March 2018. UML has announced dividend per LKR 4 per share for year 2018/19 in May’2019.

2016

/17

2017

/18

2018

/19

20

80

60

120

160

140

100

40

0

180

Dividend

Other Income

LKR Mn.

Dividend Income

14 18

7

167

72

Finance Cost and Finance IncomeFinance expenses increased to LKR 478 Mn. in the year under review, from LKR 300 Mn. in the previous Financial Year. This increase of 59% is mainly due to the loan facility taken to fund the UML acquisition. The loan was negotiated at a fixed rate of 13.5% and was obtained in two instalments in November and December 2017 respectively, with interest cost being

2016

/17

2017

/18

2018

/19

700

850

800

750

650

900 15,000

10,000

5,000

0

Fair Value gain

Investment property

Inve

stm

ent p

rope

rty

Fair

Valu

e ga

in

LKR Mn. LKR Mn.

Fair Value Gain on Investment Property

748

12,3

98

14,1

06

11,5

8685

9

840

Fair Value Gain on Investment PropertyFair value of the investment property as at 31st March 2019 was LKR 14,106 Mn., a notable 12% appreciation from the LKR 12,398 Mn. reported at the end of the previous Financial Year.

This increase is attributed mainly to the post-refurbishment value of PARKLAND 1. However despite the appreciation in fair value gain, the net impact to the profit or loss account declined compared to the previous year. This was mainly due to the increase in deferred tax provision. This has also contributed to decrease in NPAT

Description 2018/19 2017/18 %Investment property value at the end of the year 14,106 12,398 14%Fair value increase 840 748 12%Deferred Tax provision/(reversal) (183) 51 -459%Net impact for the year on fair value gain 657 799 -18%

Group Key Business Highlights During The YearTotal LKR

Mn.Increased by

LKR Mn.Increased

By %

Revenue 13,956 9,479 211%

Gross Profit 3,655 2,067 130%

Investment Property 14,106 1,708 14%

Total Assets 33,351 2,117 7%

Stated Capital 7,360 1,600 28%

Equity Attributable to Equity Share Holders 17,438 2,497 17%

PARKLAND 1


Global commercial real estate markets which have been growing for over half a century, have gathered considerable momentum in the past two decades or so. The demand for office space in particular continues to remain elevated despite a steady stream of new properties coming into the market each year. Led by a 8% year on year growth, the global demand for commercial real estate in 2018 is estimated to have reached its highest level since 2007.

From a regional perspective, Asia Pacific showed the strongest activity levels in 2018. The region reported a 24% year on year increase in volumes backed by robust leasing activity throughout the year from financial and technology firms in China, India and the Philippines.

Europe continued to maintain a steady growth pace, reporting a 5% year on year increase in leasing volumes compared to 2017. Consistent demand saw European office vacancy levels drop to its lowest level since 2002, even amidst a significant increase in inventory levels.In the U.S. while leasing volumes increased by 5% year on year, a higher vacancy rate was observed mainly as a result of the increase in the supply of commercial real estate across the country.

Outlook Buoyant end-user demand is likely to fuel global construction activity, with new development over the next two years (2019-2020) forecasted to be 20%-25% higher than the 10-year average. New deliveries will peak during 2019 in the U.S, and during 2020 in Europe and Asia Pacific.

In the longer term however, the demand for commercial real estate is predicted to moderate as the global inventory reaches a peak, pushing the market towards saturation point. Hence, the global office vacancy rate is anticipated to rise gradually over the next two years, slowing further rental growth.

Source: JLL Global Research

Commercial Real Estate Market in Sri LankaThe Commercial Real Estate Market in Sri Lanka is a growing one. The demand for commercial real estate in Colombo has continued to grow exponentially in recent years on the back of the rapid expansion activities by local business conglomerates as well as the increased presence of Multinational Corporations (MNC’s). More emphasis on government-led economic development and infrastructure programs have also helped fuel the demand for commercial space within the Central Business District (CBD) as well as in key Suburban Business Districts (SBD) around the greater Colombo area.

A recent study by local industry experts indicate that ‘A’ grade commercial space available in Colombo is little over 1.5 Mn. ft², comprising of both CBD and SBD areas, but excluding existing IT Parks. In contrast, the demand is estimated to be around 5 Mn. ft², pointing to a shortage of some 200%. Amidst this backdrop, all the premier ‘A’ grade buildings located primarily in Colombo’s central business district continue to run at full occupancy, despite annual rental appreciations. This trend is often mirrored even in ‘B’ grade and ‘C’ grade buildings in and around the wider Colombo metropolis, as occupiers run out of class A options and are forced to compromise with alternatives. Traffic congestion surrounding the CBD and the cost of commuting to the city are a few of the important factors that appear to be influencing many Companies to seek out ‘B’ grade buildings in emerging suburbs.

More recently, several new trends have also been emerging, key among them the growing demand for flexible workspaces and co-working spaces, which offer greater convenience and are also considerably less expensive.

The outlook for the sector remains positive, with the demand for commercial space set to grow in the years ahead. A recent report by the real-estate advisory firm Research Intelligence Unit (RIU), suggest that the expansion of key sectors of the economy, including communication, trade, banking and other services will continue to drive the demand for commercial space in the coming years, which will likely lead to new properties in the A and B grades being added to the existing inventory.

Competitor AnalysisCompetitor Profile Direct

CompetitorsSubstitute Competitors

Potential Competitors

Competitor Profile (Large-scale suppliers of Grade “A” Commercial Space within the CBD)

(“B” and “C” grade Commercial Space in the SBD)

(Suppliers offering alternatives to Grade “A” Commercial Space in the CBD)

Rivalry between existing players

H H H

Bargaining power of Suppliers

H M L

Bargaining power of Customers

L H H

Threat of new entrants M H H

High - H Moderate - M Low- L

Global Real Estate Market Update


Management Review

LKR 12,769 Mn.Revenue

LKR 436 Mn.NPAT

LKR 2,762 Mn.EBIT

OverviewUnited Motors PLC (UML), is one of the pioneer automobile companies in Sri Lanka with a long standing reputation spanning 70+ years of trusted excellence. First established in 1945, the Company has since grown significantly and today stands as one of the leading automobile retailers in the country being recognised in the top 25 listed companies twice in the last 7 years by Business Today. The UML Group represents a range of top global brands, including Mitsubishi of Japan,


Mr. C. YatawaraGroup Chief Executive Officer/ Executive Director

Daimler FUSO Truck & Buses, Perodua of Malaysia, Zotye of China, JCB heavy construction equipment, Liugong Concrete Equipment, JMC trucks, Brilliance Vans, DFSK Commercial and passenger vehicles, Valvoline lubricants,Yokohama tyres and Simonise car care products.

In addition to the head office in Hyde Park Colombo, the Company is represented across the island through branches in Anuradapura, Kandy, Kurunegala, Matara, Nugegoda, Nuwara Eliya, Ratnapura and Jaffna. These branches house vehicles sales, spare parts & workshop facilities all in each location and serve as a one stop shop to their customers. In addition, the Company maintains two main workshops; one on a 7 acre property in Orugodawatte and another on a 10 acre property in Ratmalana, where over 120,000 vehicles are serviced and repaired yearly. Furthermore UML also maintains ties with a network of over 2,000 dealers island-wide for the distribution of tires, genuine parts & lubricants.

Over the years the automobile industry in Sri Lanka has become increasingly competitive, with almost all the top global vehicle brands being represented here from Europe, Japan, India, China and Malaysia to name a few. UML has largely succeeded in overcoming these competitive challenges thanks to its diversified product range and the efforts


Company too was similarly affected, with Turnover for 2018/19 down to LKR 7.9 Bn from LKR 9 Bn in 2017/18, while profits declined to LKR 729 Mn from LKR 1.4 Bn in the previous Financial Year. It is noteworthy however that the profits for the previous year include a capital gain of LKR 826 Mn. arising from the disposal of investment in TVSL in 2018.

The other major challenge the Company had to contend with was the accumulated stocks resulting from unforeseen changes in the duty structure relating to the under 1,000 CC category. With orders being placed at the beginning of the year based on the previous years results, the Company struggled to cope with a significant stock build up as sales for this category averaged only 350 units per month in the year under review, compared to a monthly average of 1,500 units in the previous Financial Year and as much as 3,500 units two years ago.

Review of OperationsProduct PortfolioWith multiple factors impacting UML’s prospects in the year under review, a strategic decision was taken to diversify the portfolio in order to better respond to current market dynamics and thereby create a platform from which to grow the business sustainably even under tough conditions. Leveraging on UML’s long standing ties with its key principals, several new low engine capacity models were launched for different segments of the market. The Mitsubishi Eclipse range launched in November 2018 includes the Eclipse Cross, a 1.5 litre turbo coupe-like SUV and the Xpander also a 1.5 litre multi-purpose vehicle, both target the mid-segment of the mainstream market. Furthermore Unimo Enterprises was granted approvals to commence assembling a mid size SUV that will enter the market at a price tag of LKR 6,18 Mn which will be one of the most reasonably priced SUV’s in this category.

New Business LinesWith the core business under pressure for the last few years, steps were taken to explore alternative business opportunities, which saw UML enter into a strategic distributorship with JCB the world’s leading manufacturer of construction and earthmoving equipment. The showroom for JCB products including excavators, compactors, wheeled loaders, telescopic handlers and power generators and the after sales facility was launched in June 2018 at an event held at the newly commissioned JCB sales and care centre in Peliyagoda.

In yet another attempt to tap into emerging business opportunities, UML ventured into the renewable energy sector following a long term agreement with the Ministry of Power and Renewable Energy to supply 2MGW of solar power to the national grid. To operationalise the project, a total of LKR 226 Mn was invested to commission roof top solar panels at UML’s Orugodawatte and Ratmalana workshop buildings.

The Company also opened their 3D printing showroom at Hyde Park, The services that are offered in addition to the printer sales include: import and supply of 3D printing raw materials , manufacturing of proto types for customers and training & educational programs etc.

Other New DevelopmentsThe SAP ERP roll out, which commenced in the previous Financial Year was completed during the year and will be fully operationalised in the year 2019/2020

taken to offer their customers a superior after sales service experience.

In recent times however competitive pressures have become a secondary concern amidst widespread regulatory controls that are restricting the progress of the industry. In fact, the year 2018 proved to be one of the most challenging years in the last decade, with an unprecedented number of regulatory changes being enforced. Most notable among them, the decision to increase import duties on higher engine capacity vehicles, the introduction of a luxury tax, the decision to disallow imports of vehicles imported on permits issued to state sector officials, 200% LC margin all of which had a direct impact on UML and the industry as a whole.

Meanwhile the Fuso truck range too took a hit following the directive issued to enforce Euro 4 standards for trucks and buses, leaving the Company with no choice but to discontinue sales of the existing range which did not comply with the newly imposed standard.

Financial ReviewThese cumulative factors had a negative impact on the Company’s performance in the 2018/19 Financial Year, with both top line and bottom line falling below the previous years’ results. In the year under review, Group Turnover declined from LKR14.7 Bn to LKR12.8 Bn, while the profits fell from LKR 669 Mn to LKR 436 Mn. The


Management Review

Focus for the FutureWhile the prospects for the core business will be largely dependent on the regulatory framework in place at the time, it is hoped that the measures taken during the year to improve the market responsiveness of the product portfolio will strengthen UML’s resilience against negative market impacts and help the Company to maintain a consistent growth trajectory over next few years. The reintroduction of duty concessionary permits for government servants and the fact that the truck range will be ready for import with the new Euro 4 engines this year, should improve the operating circumstances for the business. Furthermore the newly launched business lines will also likely create a solid platform to scale up operations in the medium term. The demand for the new line of JCB construction equipment in particular is expected to grow on the back of the projected pick up in the construction sector over the next 12 - 18 months.

United Motors Lanka PLC (UML)


FoodBuzz (Private) Limited (FoodBuzz)

Ms. H. A. P. A. SanjeewaniChief Executive Officer/ Executive Director

OverviewA fully owned subsidiary of the R I L Group, FoodBuzz (Pvt) Ltd holds the franchise rights for the Singapore-based bakery chain - BreadTalk™ in Sri Lanka. Since coming under the R I L umbrella in 2015, FoodBuzz has revolutionised Sri Lanka’s bakery product market and has been singularly responsible for raising the bar for the local industry to bring it on par with international standards.

Operating through a network of 9 high-end boutique style outlets mainly in

Colombo and key suburbs, BreadTalk™ serves thousands of customers annually. BreadTalk™’s signature range of fine breads, gourmet desserts, and premium bakery items have captured the hearts and minds of discerning local customers in search of world-class baked products, while the consistent and uncompromising commitment to service quality continues to attract an ever growing number of loyal patrons to all BreadTalk™ outlets.

With baked goods essentially classified under the process foods category, BreadTalk™’s immediate operating environment remains challenged by stiff market competition mainly from established local players. However there is notable evidence to suggest that the demand for baked goods in Sri Lanka and particularly in Colombo is a growing one, fuelled by the increase in per capita income and changing population demographics favouring ready-to-eat convenience foods. Contextually this provides a very real opportunity for BreadTalk™ to extend its premium model to target a wider customer base in the Western Province.

Review of OperationsProduct RangeIn line with the ongoing strategy to increase BreadTalk™s’ bandwidth across mainstream markets while maintaining the same premium quality value proposition, a

LKR 445 MnRevenue

LKR (45) MnNPAT

LKR (55) MnEBIT


number of new products were introduced under special seasonal themes. The “Spring in the Garden” sweet range was launched in early April 2018 to coincide with the Sinhala and Tamil new year, while the “Messy Bun” a range of sweet Tea buns was rolled out in December, in time for the 2018 Christmas season. In addition, the usual one-off promotional events were also held to celebrate routine events such as mother’s day, fathers’ day, Children’s day etc. . Each product launch and event was preceded by a highly focused social media awareness campaign.

Meanwhile, having identified a strong demand for low-budget products, a new savoury “Mini Bun” range was launched in September 2018. The range was introduced to all outlets but aggressively promoted in the suburban outlets where a more robust demand for such products was seen.

Branch NetworkContinuing with efforts to strengthen market presence, the 9th BreadTalk™ outlet was opened in Ratmalana in early February 2018. Maintaining the iconic BreadTalk™ design and layout followed across all outlets elsewhere in the world, the 1,200 square foot Ratmalana outlet has a seating capacity to accommodate 20 patrons at any given time.

Service EnhancementsService excellence remains a key underpinning factor of the BreadTalk™ business model. In seeking to further improve on existing standards, a new delivery service was introduced in partnership with leading service providers specializing in doorstep delivery such as Uber Eats and Quickee.lk.

Other New DevelopmentsThe groundwork for implementing the ISO 22000 Food Safety Management Standards also commenced during the year, with the final audit scheduled for June 2019.

Additional investments will also be made in a new POS system with the aim of accommodating more customer oriented services in the future.

Focus for the FutureThe key focus going forward would be to improve the versatility of the product range to appeal to a broader customer demographic. This would mean taking action on multiple fronts; widening the budget range and incorporating conventional products along with more innovative additions to continuously revamp the premium range. Hand-in-hand with these efforts, strengthening the BreadTalk™ presence will be another important priority. This will however be undertaken selectively with a greater focus on penetrating areas with a high population density in the Colombo and its suburbs.

Financial ReviewFoodBuzz reported revenue of LKR 445 Mn for the year under review, a commendable increase of 11% over the LKR 402 Mn recorded in 2017/18. Revenue growth was achieved thanks to the Company’s broad ranging strategies to strengthen market share.

Despite the revenue growth however, the GP margin declined in direct correlation to the increase in Cost of Sales. GP Margin declined by 8% in the year under review as Cost of Sales rose by 32% to LKR 223 Mn in 2018/19 from LKR 169 Mn in the previous Financial Year.

Notwithstanding the net loss generated for the Financial Year 2018/19, the Company continues to operate as a going concern.

In terms of cash position based on the Company’s cash flow statement, a significant cash inflow of LKR 15 Mn was recorded following the disposal of assets and unit trust investments, while LKR

7.1 Mn was spent to acquire PPE during 2018/19. Meanwhile driven by the high cost of Sales, the Company’s working capital reached negative territory by the end of the current Financial Year. Total inventory, receivable and payable amounted to LKR 16.3 Mn as at 31st March 2019 compared to LKR 2.2 Mn recorded at the end of 2017/18. However, the Company’s liquidity position was stable as indicated by the current ratio of 5.07 and quick asset ratio of 3.60 as at 31st March 2019.

Management Review



PROPERTY AUTOMOBILES FOOD

FOODBUZZ (PRIVATE) LIMITED

762(LKR Mn.)

693(LKR Mn.)

1,420(LKR Mn.)

14,106(LKR Mn.)

19,403(LKR Mn.)

18.64(LKR)

12,769(LKR Mn.)

2,761(LKR Mn.)

754(LKR Mn.)

-

17,952(LKR Mn.)

127.82(LKR)

443(LKR Mn.)

221(LKR Mn.)

(56)(LKR Mn.)

-

556(LKR Mn.)

4.74(LKR)

Profit fromOperations

Investment Property

Total Assets

Net Assets per Share

Revenue

Gross Profit

Analysis of Sector Wise Financial Highlights


Sustainability ReportWe are convinced that companies that include sustainability in their operations and business decisions are more successful in the long term. Accordingly, we strive to address sustainability issues that are relevant and meaningful for all businesses across the R I L Group.

We take a broad based approach to integrate sustainability into all our activities and also work towards identifying and seizing opportunities that have the potential to make a positive impact on the environment and society at large. Our systems and processes as well as our policies and procedures are all designed in line with this thinking.

In addition, we aim to promote awareness, knowledge and innovation by educating and motivating employees as well as our customers. Furthermore, we also maintain regular monitoring and follow up activities to determine the effectiveness of our policies and procedures in reaching our sustainability goals.

Green BuildingsWe recognise the value of designing and constructing sustainable buildings and as such remain committed to managing construction, refurbishment and post completion occupancy of all our buildings in order to ensure that the adverse environmental impacts are minimised and opportunities for delivering environmental improvements are maximised. In doing so, we are also seeking to enhance the well being of customers, employees and other users of our buildings.

Premised on this, we strive to design, construct and maintain sustainable buildings and undertake all construction as well as subsequent refurbishment / maintenance activities based on the following principles:

� Comply with the requirements of environmental legislation, including the Urban Development Authority and Municipal Council requirements

� Ensure all contractors/consultants operate according to specified environmental parameters. Wherever possible we work with only ICTAD certified Grade C-1 contractors.

� Design for flexibility to allow ease of changes to use in the future

� Integrate passive design features such as orientation, glazing, insulation and natural ventilation. The external walls of both PARKLAND and PARKLAND 1 have been constructed in line with the double wall concept with an inbuilt gap of 150 mm. This helps to minimise the thermal impact to the interior of the building and reduce the need for extensive cooling in turn lowering the electricity consumed by in air conditioners. Moreover we have also invested in double glazed, bronze body tinted float glass and solar control coating on window glasses, which provide natural light to the buildings, while safeguarding against excessive solar radiation.

� Design for climate change impacts to ensure the building design takes account of predicted climate change impacts on temperature and rainfall.

� Design to minimise waste both during construction and subsequent use. All projects will have a Site Waste Management Plan, while all buildings will have all appropriate waste storage/collection facilities for day to day use

� Minimise energy consumed in the production and transport of construction materials

� Incorporate energy efficient solutions in design, including passive systems using natural light, air movements, as well as solutions involving energy produced from renewable sources. Both buildings are fitted with LED lighting, while PARKLAND 1 has a roof solar panel system, with the capacity to generate 25% of the electricity requirements of the building.

Green Buildings

Lean Resource Management

Human Capital Development

Corporate Citizenship


� Design for increased water efficiency in building services and water conservation within the built environment. Both our building have sensor taps and low flush systems in the toilets to reduce water usage, while a rainwater harvesting system is also in place at PARKLAND 1 building.

� Consider polluting emissions and releases resulting from our construction and refurbishment activities and ban the use of hazardous substances where appropriate. Both buildings are equipped with CO2 censors with a “Demand Control Ventilation System” for clean purified air.

� Where possible and practical, use recycled and/or environmentally sound materials that have been approved by the relevant authorities

� Look for opportunities through the construction phase, to improve landscaping of buildings

� Invest in more efficient equipment that will enable the achievement of key performance indicators for sustainability, such as energy and water use and waste management

� Provide regular training to staff and customers to raise awareness on contemporary sustainability practices.

Lean Resource Management (LRM) Lean Resource Management is a significant concept that is an important part of our business model which reflects firm commitment to operational excellence and continuous improvement. Through the employment of lean management principles, we seek to improve our business practices and promote sustainable continuous improvement throughout the entire company.

Our goal is to constantly enhance our internal work procedures and processes and to eliminate - or at least reduce - the wastefulness at all levels of the business, which we believe will not only reduce our carbon footprint, but also help us to remain competitive in the market.

Given our business scope, our LRM agenda focuses on three core areas; energy use, water saving and managing paper waste. The success of our LRM program relies on our employees, their awareness of our LRM agenda and their willingness to engage, challenge and to further improve existing processes.

Our Policies and Procedures

Conserving Electricity � Staff at all levels are required to turn off lighting in areas that are not in use

� Enable any standby features to limit energy consumption on all computers and monitors

� Ensure all computer monitors and base units are switched off at the end of each day

� Ensure screen savers are disabled

� Ensure all monitors are switched off when users are away from their desk for longer periods

� Only switch on printers when required

� Ensure all printers are switched off at the end of every day

Water Saving � Ensure daily cleaning activities are carried out according to a strict schedule

� Use of rainwater for gardening and landscaping purposes

Manage Paper Consumption � Set default printing to double sided (duplex)

� Print in black and white when printing internally

� Encourage staff to use print preview functions for checking layout and style before printing

� Encourage staff to plan and print in batches where possible

� Printouts are taken only on an absolute need basis

� Access to photocopier is restricted to authorised personnel to monitor and control usage


Human Capital DevelopmentThe success of the R I L Group is the cumulative result of our professional, dedicated workforce. Recognizing the contribution of our employees we aim to treat each and every employee fairly and consistently throughout their employment life-cycle.

Our CommitmentAs a responsible employer, we comply with all labour laws and remain aligned to globally accepted best practices, including the ILO Convention and the principles on Labour principles under the UN Global Compact. Accordingly we condemn child labour and forced or compulsory labour and as an equal opportunity employer seek to promote diversity in all aspects of our business, while our non-discriminatory policy ensures that all employees are treated fairly with regard to remuneration, benefits and working hours. Demonstrative of our intention to honour the human rights of all employees we have put in place appropriate workplace policies to prevent any form of harassment in the workplace. Moreover, we remain committed to nurture our employees by providing them with the training and development tools needed for them to advance their careers within the Company and the Group. As a part of this process, we regularly review and update our employment practices to remain competitive in the market and ensure we continue to fulfill the needs of our employees. Ultimately our aim is to build a talented and highly motivated workforce to drive our corporate ambitions.

NewRecruits (Male)

NewRecruits (Female)

Total Employees

(Male)

Total Employees

(Female)

Total Employees

R I L 34 5 64 26 90

FoodBuzz 65 36 131 59 190

UML 262 19 947 74 1021

Group 361 60 1,142 159 1301

Employees Age Analysis Age

Between 18 - 30 years

(Male)

Age Between

18 - 30 years

(Female)

Age between

30 - 55 years

(Male)

Age Between

30 - 55 years

(Female)

Age over 55 years

(Male)

Age over 55 years

(Female)

Total

(Male)/(Female)

R I L 27 10 34 16 3 - 90

FoodBuzz 103 46 27 12 1 1 190

UML 404 29 498 40 45 5 1,021

Group 534 85 559 68 49 6 1,301

Human Resource Governance Given the diversity of the R I L Group, each subsidiary maintains their own independent human resources department. This aims to provide a more focused approach which ensures that each company is able to recruit and retain employees with the skill set and expertise relevant to their specific businesses.

Human CapitalAge Analysis

18 - 30 years (Male) 534

18 - 30 years (Female) 85

30 - 55 years (Male) 559

30 - 55 years (Female) 68

Over 55 years (Male) 49

Over 55 years (Female) 06

Sustainability Report

Human CapitalGender Analysis

Total employees (Male) 1,142

Total employees (Female) 159


Each company works according to a pre-approved Human Capital Plan to facilitate their manpower planning process. Accordingly, Heads of Divisions (HOD’s) are required to conduct a thorough review in their respective operations to identify the human resource requirements for the upcoming Financial Year and submit such requirements to the Head of the Human Resources Department in the respective companies for necessary approval.

A Distinct Culture Our core values and principles underpin our expectations of employees. As such we expect our employees to conduct themselves with utmost integrity at all times. R I L and UML employees have access to an Employee Handbook that informs employees regarding our stance on Ethics and Integrity. All new recruits of these Companies are presented with a copy of this handbook at their induction program, with regular refresher programs conducted to reinforce the contents of the code.

A breach of the code may result in the employee being subject to disciplinary action under R I L’s disciplinary policy framework, which has been formulated in line with the principles of Disciplinary Procedure under the country’s Labour Laws. Meanwhile our Whistle-Blowing policy also aims to encourage responsible and secure reporting, inter alia of any incident of violation or suspected violation of code of conduct such as unethical or illegal practices. In case of any such incident, employees are encouraged to report to either their respective HOD or HR Manager. Alternatively, employees can also report directly to the CEO.

Alongside these uncompromising ethics, we require all R I L Group employees to focus on being performance driven. For our part this means recruiting and retaining highly skilled and motivated employees

who will drive the success of our businesses. To achieve this objective, the same underlying human resource principles are applied across the Group regardless of the diversity of each business.

Recruitment and RetentionIt is mandatory that all new recruitments are made as per the pre-approved Human Capital Plan for each subsidiary. There are some exceptions, where recruitments may be required for a new position that may have opened up or to replace an employee who has resigned during the course of the year. Meanwhile to be able to access the best in-class talent, we use multiple sources to tap into the external job market, while all vacancies are advertised internally as well to give existing employees the opportunity to apply for these positions.

Our recruitment process considers all qualified candidates without discrimination of gender, age, ethnicity or religion. Job applicants are treated fairly and equally. Employment is purely merit-based and offered only to the best qualified applicants with reference to their capabilities and competencies to meet the requirements of the job.

Across the Group, all new recruits are subject to an appropriate probationary period, after which they are either confirmed as a permanent employee or may have their probationary period extended, depending on their performance until that point.

Benefits and CompensationOur staff receive competitive salaries in line with market standards applicable to each business across the Group. We maintain a baseline remuneration package for each job category based on the scope and scale of work under that particular category. Using this baseline standard each individual’s compensation package is determined based on position, competency and performance. This ensures that all employees in the same job category are remunerated equally and fairly. On promotion to a higher grade, a


promotional increase which is equitable to other employees of the new grade will be worked out by the respective Heads of Division and the Human Resources Division, subject to the approval of the CEO. Furthermore, employees are entitled to a variety of benefits including a comprehensive medical insurance covering their immediate family as well. In the case of unmarried employees, the insurance cover is extended to their parents notwithstanding their age. At the beginning of the year, R I L also provides the school books of children of the non – executive staff members.

No of female employees taking maternity Leave

Percentage who have returned to work after

Maternity Leave (%)R I L 1 100.00

FoodBuzz 2 50.00

UML 9 66.67

Group 12 62.50

Training and DevelopmentIn a dynamic business environment, we recognise the need to continuously update our employees with the skills necessary for growth and therefore promote an active approach to learning. Based on the Group-wide annual training needs analysis, we now use the 70:20:10 training model as a benchmark, where 70% of learning is through job-related experiences, 20% through knowledge sharing , and 10% through formal classroom training (Internal or External) activities. To ensure they are aligned with the learning needs of our employees, we continue to fine-tune our training programmes with each Company having their own method to evaluate if training activities are delivering the desired results.

R I L’s Human Resources Department regularly evaluates and updates training content, ensuring that it meets our latest operational needs and can build relevant employee capacities.

At UML where the staff cadre is large, mandatory post training evaluation is carried out vis-a-vis detailed action plans developed for individuals and teams. These action plans are monitored in intervals of three and six months with follow-up sessions conducted by the same trainer to evaluate the success of the training. Similarly, at FoodBuzz, one-on-one training reviews are conducted with employees to analyse gaps and also to identify any new focus areas.

Investment on Training (LKR)

Total Training Hours

R I L 238,050 1,078

FoodBuzz 30,000 343

UML 7, 500,000 11,520

Group 7,768,050 12,941

Performance ManagementAs a policy, an annual performance review is done to determine employees’ performance and career goals to support the professional growth of our employees. The performance of R I L employees’ are evaluated annually against a series of pre-determined qualitative and

quantitative KPIs jointly agreed upon by the individual employee and the management at the start of the year. The results of the annual performance review go on to support the annual pay review process as well as the determination of bonus entitlement, promotions and secondments. A similar process is followed at FoodBuzz.

Meanwhile at UML, KPIs set at the beginning of the Financial Year, are linked to divisional and organisational goals vis-a-vis the annual performance evaluation process where employees are assigned a rating based on three key criteria; performance, competencies and customer care. This is followed by competency mapping for individuals and divisions based on the rating achieved at the annual performance appraisal.



No. of employees receiving the annual performance

appraisal

Total number of promotions

R I L 74 23

FoodBuzz 94 31

UML 748 47

Group 916 101

Career AdvancementAll employees are given equal opportunity to advance their career either within their respective companies or across the Group. The annual performance evaluation program offered by each company serves as the main facilitator in this regard. Accordingly identified high performers are offered promotions depending on available vacancies, with such promotions resulting in either vertical or lateral movement. However in the event no immediate vacancy exists, high performers are earmarked for development and encouraged to undertake special projects, cross functional assignments and participate in leadership training to prepare them for future roles. In addition, the Company also undertakes to reimburse the cost of up-skilling activities that provide the opportunity for R I L employees to deepen their knowledge either in their existing field or even in another sphere related to R I L’s core business.

At UML, succession planning includes; Individual Development Plans that provide a structured approach towards grooming the next level of leaders who will take up the stewardship of the company.

Employee RelationsWe believe strong employee relations to be the foundation of our success. Accordingly, we advocate openness and maintain an open door policy to encourage our employees to be forthcoming about raising any concerns they may have regarding

investigated by the grievance committee appointed specifically for the task. The grievance handling committee typically consists of the HR Manager, relevant HOD, and an independent Senior Manager. All proceedings of the grievance handling committee are conducted independently and treated in strictest confidence. The decision by the committee is considered final and is communicated to the aggrieved employee accordingly. The committee is required to maintain a detailed record of the investigative process, with a written report of the conclusion presented to the CEO. In a new development, R I L conducted their first-ever employee engagement survey in the year under review, with employees of companies being given the opportunity to directly meet with their respective CEO and express their views. UML too conducted its annual employee engagement survey for the 8th consecutive year. Managed internally, the survey targeted all 1021 UML employees and sought to rate their satisfaction with regard to certain key areas; relationship with immediate superior, compensation, rewards, career prospects etc.

Employee EngagementWe encourage our employees to look beyond their immediate job scope and stay engaged and connected to all aspects of the business. Our aim is to deepen team spirit and inspire a sense of heightened loyalty among employees towards their respective Companies as well as the Group.

Given the scale of their business, UML has for the past few years adopted a formal business-centric approach towards team building by reorienting everyone in the organisation through an underlying focus on customer service. The effort is driven by a Cross Functional Team of 24 members, who are tasked with ensuring customer

their work. In addition the following channels are made available for employees to communicate their views, express their opinions, and raise their concerns either verbally or in writing:

� Staff briefing sessions

� Private interviews with superiors or Human Resources personnel

� Suggestions box

� Training and development activities

If in the event an employee considers that his /her grievance is unlikely to be resolved through discussions, they can make use of the formal grievance procedure to escalate their grievance directly to the CEO. All such grievances are formally


service activities are implemented throughout the company with the support of 55 ACT coordinators who ensure that the members of their respective cells are fully aligned to UML’s Customer Service goals. Each cell is required to meet weekly to review the customer service activities under their purview, with their progress measured monthly using a specially designed customer survey program.

Nov

-18

Dec

-18

Jan- 19

Feb- 19

Mar

-19

20

60

40

80

0

100%

Overall Results

8986

90 92 92

Customer Service Measurement 2018/19

Informal engagement activities too remain very popular and provide employees across the Group with the opportunity to engage with their colleagues in a relaxed setting away from work pressure. These include; ceremonies to celebrate all key religious festivals, annual staff get-together, annual staff trip.

During the year, R I L organised the Annual Get-together as well as our annual outing, which saw the enthusiastic participation of all staff. An event to usher in the new year was also held on 1 January 2019.

Health and SafetyWe recognise our responsibility to provide a safe and healthy working environment for our employees. Accordingly, we have

established standard safety procedures and contingency plans. These procedures are supported by regular fire safety audits and drills. Equipment is inspected and upgraded whenever necessary to ensure that they are in sound working condition, along with timely renewal of licenses for fire safety installations and maintenance contracts for lifts and escalators. We continuously monitor and manage the health and safety in the workplace and provide an open channel of communication across all levels to gather feedback on issues relating to health and safety. In addition, we aim to inculcate a culture of ownership for health and safety among employees through regular safety education and training.

During the year, 1 external and 3 in- house trainings were organised for employees of R I L as well as our tenants, on fire safety. A fire drill too was conducted.

Corporate CitizenshipRecognizing the fact that our corporate responsibility does not end with our business processes and their direct impact, we have always taken keen interest to impart greater social change for the betterment of society as a whole. In fact it is our deep sense of social responsibility that drives R I L’s corporate citizenship initiatives. Accordingly, the CSR activities we undertake aim to deliver change not only at a molecular level but also work on broader level to contribute towards long term national progress.



Senehe Siyapatha Housing projectR I L and BreadTalk™ joined hands with Dialog Axiata PLC (Dialog) to offer support to Dialog’s special housing project. The main aim of the project was to assist in the reconstruction off houses for landslide victims in a remote area at Sabaragamuwa Province.

Blood Donation Camp The Company’s annual blood drive was held in February 2018 at PARKLAND building. The effort was a tremendous success with a total of 114 individuals, including R I L staff as well as tenants of PARKLAND buildings, donating blood.

Given the high level of participation, the initiative was recognised at a national level

with R I L being awarded an appreciation certificate at a ceremony organised by the Blood Bank to commemorate world blood donors day, on 14 June 2019.The special award recognises successful blood donation campaigns with over 100 participants.

Beach Cleaning Project and Installing Permanent Garbage Collection Bins at Beach AreaR I L staff organised a beach clean-up targeting a 4 - 6 km stretch of the Negombo beach area. Held on 26 February 2018, the project saw the participation of Company employees as well as guests in surrounding hotels and resorts. In addition, with the approval of the Negombo Municipal Council, the Company also installed permanent garbage collection bins at key points along this same stretch.

Annual Report Award

R I L won the bronze award at the Annual Report Award Competition 2017/18 (under land and property sector) organised by the Institute of the Chartered Accountants of Sri Lanka.


Team R I L


Risk ManagementIntroductionThe emphasis on prudent risk management is vital, when positioning R I L Property PLC (R I L/ the Company) to prepare for and respond to, developments in the wider competitive, economic and regulatory environment.

As such, we operate in an integrated framework that facilitates effective risk management, which ensures that necessary tools are in place to identify, evaluate and manage both internal and external threats, as well as emergent risks.

Risk appetite, which defines the level and types of risk we are willing to accept, is set in line with overall strategy and the responsibility in determining the nature and the extent of the risks it is willing to take is with the Board of Directors.

Risk Management Risk Management is a process effected by the Board of Directors as well as the Management, designed to provide reasonable assurance regarding the achievement of Company objectives. To effectively manage risk, we recognise risks and opportunities impacting the Company’s core business of real estate development and its investment strategy.

The Board holds quarterly meetings at which strategy and performance as against embedded risk management are focal aspects. The Board retains overall authority regarding the determination of risk appetite and risk parameters in the course of achieving corporate objectives. The Board’s interest rests prevalently on the principal risks detailed in the Risk Matrix detailed on page 51.

Acting within delegated authority of the Board, the Board Audit Committee (BAC) is mandated to monitor and review the array of financial and non-financial risks we are

exposed to. The BAC also evaluates the risk management process and effectiveness of the systems of internal control in place.

The Company’s Senior Manager Risk and Compliance provides a bi-annual risk assessment and report on significant exposures to the BAC. Risk management structures at investee company level, both at FoodBuzz (Private) Limited (FoodBuzz) and United Motors Lanka PLC (UML), the latter being a listed entity, are self-governing.

Subsidiaries are primarily responsible for managing risk within their respective business. Investee companies ensure that adequately designed, effective risk management frameworks are in place. The risk reporting structure allows for the risk assessment of FoodBuzz to be reviewed by the BAC of the Company. The substantially held subsidiary UML’s own audit committee assesses its enterprise risk via a cohesive framework.

While the Management supports the entity’s Risk Management philosophy by identifying, assessing and managing key risks, the BAC reviews and assesses the adequacy and effectiveness of the Risk Management function and reports to the Board periodically.

Furthermore, internal audits are carried out in accordance with the pre - approved internal audit plan. The BAC reviews and makes recommendations on the internal audit reports submitted on a quarterly basis, in order to strengthen the internal control procedures across the Company.

The Board Related Party Transactions Committee (BRPTRC) headed by an Independent Non-Executive Director reviews transactions involving directors’ interests and related-party exposures, thus integrating with the risk framework by assimilating the oversight of legal

and compliance risk arising through the requirements of financial transparency.

The Board Nominations and Remuneration Committee (BNRC) effectively integrates into the risk framework through its salutary role in mitigating people and retention risk.

Control & Monitoring

Senior Management

Employees

RiskIdentification

RiskAssessment

Risk Management & Compliance

Internal Audit

Overall Business Optimisation

Board Sub Committees

BRPTRCBAC BNRC

Board

Stra

tegi

c &

oper

atio

nal o

bjec

tives

Compliance & reporting objectives

51RISK AND GOVERNANCER I L PROPERTY PLC / ANNUAL REPORT 2018/19

Our Approach in Managing RisksWe approach risk management through processes designed to provide reasonable, but not absolute assurance that our assets are safeguarded, the risks impacting the business are continuously assessed and mitigated and all information required to be disclosed is reported to the senior management.

The Management team identifies all possible risks and uncertainties arising from internal and external vulnerabilities and ranks and prioritises those by considering the likelihood of occurrence and the potential impact.

Under the Company’s Impact/Probability methodology, risk impact varies as High, Moderate and Low.

Upon assessment of each risk, a risk heat map is developed to derive the nature and extent of action required. Strategies are then set in place to mitigate the assessed risks and control exposure.

Investee Risk GovernanceUnited Motors Lanka PLC (UML)Being a regulated entity, UML operates within the stringent governance and risk management frameworks, with operations conducted under the highest standards of integrity and transparency. UML’s Board is primarily responsible for the oversight of management of risks faced by the business. Delegated authority lies with the UML Board Audit Committee.

FoodBuzz (Private) Limited (FoodBuzz)As a wholly owned subsidiary, FoodBuzz (Private) Limited (FoodBuzz) the consistent application of risk management practices is ensured through the commonalities in policy frameworks and reporting lines to R I L.

Risk MatrixDue to the diversity between the Company’s core business and investee portfolio, the following risk matrix focuses on the key risks of the Company, except where the materiality of such information is considered insufficient to warrant detailed disclosure.

As a listed entity, UML’s Annual Report publicises in detail its enterprise risk management framework. In cognisance of independent risk governance, the Risk Matrix excludes risks material to this investee company while acknowledging solely ‘strategic risk’ arising from our investment.

CreditRisk

1. Credit Risk

OtherRisk

OperationalRisk

MarketRisk

13. Reputational Risk

14. Strategic Risk

15. Ongoing development project Risk

6. People andretention Risk

7. Health andsafety Risk

8. Risk of damage to physical assets

9. Legal and Compliance

10. Obsolescence risk of Inventory

11. Customer satisfaction Risk

12. Business continuity Risk

2. Interest Rate Risk

3. Liquidity Risk

4. Exchange Rate Risk

5. Macro Risk

IMPACT� HighLow

LI

KELI

HO

OD�

Hig

hLo

w

1

2

313

4

5

6

7

8910

1112

1415


Significant risks identified during the Financial Year 2018/2019Description of risk Mitigation strategies Risk profile

2018/2019 2017/20181. Credit risk

Credit risk is the risk that a counter-party will not meet its obligations under financial instrument or customer contract, leading to financial loss. The Company is mainly exposed to credit risk arising from the rent receivable from its tenants and also from investment activities with financial institutions.

Creditworthiness of a new tenant is evaluated prior to signing of the Lease Agreement.

A refundable security deposit as well as a rental advance is secured to cover potential rental arrears.

The Company maintains a high profile tenant base.

R I L ensures that excess funds are invested in financial institutions with institutional credit rating of investment grade and above, and/or in government securities.

Low Low

2. Interest rate riskInterest Rate Risk refers to the probability that financing activities would be affected by fluctuations in market interest rates.

R I L’s exposure to the risk of changes in market interest rates relates primarily to short term/ long term floating rate based debt.

Interest rates are closely monitored and interest rates renegotiated where possible. Additionally, alternative options are frequently evaluated to mitigate the adverse impact through various strategies.

The Company diversifies its existing portfolio by investing in different types of investments with short term tenure.

Gearing is kept at optimal level.

Moderate Moderate

3. Liquidity riskLiquidity risk refers to the risk that the Company may not have sufficient liquid financial resources to meet its obligations as they fall due in the normal course of business.

We administer liquidity management in a controlled manner. Cash flow forecasts are prepared to identify the future cash requirements and proper working capital management is carried out on a frequent basis.

We maintain diverse sources of finance.Strong relationships have been built with banks to ensure that urgent borrowing needs are met at short notice.

Facilities are in place to cover forecasted cash needs for at least for a period of twelve months. Additionally, solvency related analyses is carried out periodically by the Finance division.

Low Low

4. Exchange rate riskThis risk arises when future commercial transactions are denominated in a currency that is not the entity’s functional currency.

R I L does not hold any foreign currency assets/liabilities. Hence, the direct impact on foreign exchange volatility is low.

Low Low

Risk Management


Description of risk Mitigation strategies Risk profile2018/2019 2017/2018

5. Macro risk Macro risk refers to the financial risk emanating from macroeconomic and other factors including changes in government policies, market conditions, political changes or instability.

R I L frequently monitors tenant behavior and provides differential rates to key customers and signs long term contracts to retain long term business relationships.

The Board and Management keep abreast of various policy changes of the Government and legislative changes.

Low Low

6. People and retention riskThis risk arises from the inability to attract and retain qualified and experienced staff which can adversely affect operations, productivity and financial results.

Our recruitments are non – discriminatory. Recruiting the best talent, retaining them and providing an adequate career development plan are critical to our HR policy.

An effective Board Nominations and Remuneration Committee is in place. Remuneration is kept at competitive levels relative to market.

A balance of fixed and variable performance based incentives are offered to employees.

Best HR practices along with a whistle blowing policy are in place to create better employee relations.

Close dialogue with employees helps identify areas of concerns and maintaining an open door policy for employees creates accessibility at senior level for an effective work atmosphere.

Moderate Moderate

7. Health and safety riskHealth and safety risk arises from inadequate procedures and systems in maintaining the highest standards of health and safety to minimise the risk of accidents and incidents to customers, contractors, visitors and employees.

We maintain essential health and safety programmes.

Safety protocols have been established which need to be adhered to while on duty and necessary training is provided. Awareness is created regarding occupational safety and health through training.

We require compliance by contractors and employees on-site and as such maintain and monitor the on-site accident register, taking preventive actions where necessary

Low Low

8. Risk of damage to physical assets This refers to losses arising from loss or damage to physical assets from natural disasters or other unforeseeable events.

Annual risk surveys are carried out and recommended improvements are implemented where necessary.

The Company follows fire prevention regulations and other national standards and best practices in fire safety.

Adequate and appropriate insurance covers are in place for coverage in case of an eventuality in order to minimise financial loss.

Moderate Moderate



9. Legal and compliance riskThis encompasses risk arising from non-compliance with laws and regulations.

Statutory compliance is reported periodically to the Board.

To the maximum extent possible, all relevant statutes that the entity has to comply with have been identified and updated as and when necessary.

Under the Employees’ Code of Conduct, employees are obligated to comply with the statutory requirements.

Financial transparency requirements relating to related party exposure is overseen by the BRPTRC.

Low Low

10. Obsolescence risk of inventory / High stock holding riskInventory items may run the risk of being obsolete due to low demand, giving rise to obsolescence risk.

R I L holds only stationery and maintenance related inventory stock, hence impact due to obsolescence/ high stock holding is very low.Obsolete and damaged items are identified during physical inventory verifications and actions are taken to dispose aged and damaged items.

Low Low

11. Customer satisfaction riskLoss of customer satisfaction will impact negatively the current and future performance of the Company.

Continuous training on customer care is carried out to improve soft skills.High levels of customer engagement is carried out to understand areas of concern.A Customer complaint register is maintained to understand the areas requiring further improvement.

Low Not Assessed

12. Business continuity riskThis risk refers to the capability of the Company to continue the delivery of products or services at acceptable pre-defined levels following a disruptive incident.

The Company has obtained insurance cover for loss of income.

The Company has also identified key contractors in the event of urgent refurbishments becoming necessary as a result of disruptive incidents.

Moderate Moderate

13. Reputational riskReputational risk refers to the potential loss of earnings and adverse impact on market capitalisation resulting from negative client and public opinion regarding the Company/ Group and its actions and the damage caused by the failure in managing customer, shareholder and public expectations.

Sound HR practices and robust governance practices are in place to embed a system of shared values and integrity for the betterment of the stakeholders.

As a listed company, adherence to statutory and regulatory compliance is effected under dedicated controls.

Adequate attention is given to customer complaints and dealt with, without undue delay.

The Company Secretary acts as the investor liaisons officer to effectively manage any issues faced by shareholders regarding their shareholding and the Company.

Low Low

Risk Management



14. Strategic riskStrategic risk refers to the uncertainties and untapped opportunities embedded in our core business and investment strategies and how well they are executed.

The Board holds quarterly meetings at which strategy and performance are considered pivotal.

Periodic performance reviews headed by the CEO are held to assess and monitor the effective implementation of strategy.

Acquisitions and investment strategy is executed via a defined evaluation process.

The Company considers Key Performance Indicators (KPIs) including expected Return on Investment, to measure results. In case of an acquisition, the Company evaluates performance of such investments on a continual basis. This includes monitoring performance against pre-defined variables, assessing possible avenues to increase the return to the Company in case of low return.

Further in case of future negative outlook, the Company will evaluate potential exit strategies.

Moderate Moderate

15. Ongoing development project riskRefers to the risk of financing projects not meeting due completion according to the target time plan or proposed building plan and delayed regulatory approvals inter-alia.

R I L selects an appropriate Contractor prior to the commencement of any development project based on the assigned contractor grading.

R I L enters into a Contract with the selected Contractor and appoints a Project Manager to oversee the entire project. Independent Consultants are appointed to oversee specialised key areas (ex: architecture, structural, electrical etc.) to ensure construction quality.

R I L monitors site progress by holding weekly discussions with the Contractor, Sub contractors and Consultants and takes corrective/remedial action based on the outcome of such discussions.

R I L has assigned the responsibility of obtaining all required Regulatory Approvals to Senior Manager Operations.

Moderate Not Assessed


Corporate GovernanceDear Shareholder,It gives me pleasure to present the Corporate Governance Report for the year 2018/19, on behalf of the Board of Directors of R I L Property PLC. This report details our approach to Corporate Governance principles and practices.

Corporate Governance is the system by which companies are directed and controlled. We believe that sound governance should be entrenched across the entire business. Therefore, the Board remains strongly committed to maintaining and continuously improving the structures and processes, to ensure the level of risk management, internal controls and accountability that would support the Company’s long term growth strategy. Our Corporate Governance processes are regularly reviewed to align with regulatory changes and to reflect best practices.

We operate within a clearly defined governance framework approved by the Board. Through this framework, the Board has delegated some of its functions to Board Sub –Committees based on clearly documented and defined Terms of References, without abdicating the Board’s responsibility.

Concluding, as the Chairman, I confirm that the members of the Board and all employees have acted in compliance with the applicable regulatory and statutory requirements and have discharged their duties in accordance with the policies, procedures and standards set by the Code of Conduct introduced Company-wide and to the best of my knowledge, there are no material violations.

S. G. WijesinhaChairman

26 June 2019Colombo

Message from the Chairman


Changes in the Board of Directors during the year 2018/19

19 June 2018 Mr. R. A. Ebell resigned from the Board

7 July 2018 Ms. L. E. M. Yaseen and Mr. A. D. E. I. Perera ceased to be Directors in accordance with section 211 of the Companies Act No. 07 of 2007

17 September 2018 Ms. L. E. M. Yaseen re -appointed as a Director to the Board, by the Shareholders at the AGM

1 November 2018 Ms. C. R. Kariyawasam and Professor. N.D. Gunawardena appointed to the Board as Non – Executive Directors

5 March 2019 Mr. L. W. D. Abeyarathne retired in his capacity as an Executive Director

6 March 2019 Mr. L. W. D. Abeyarathne re – appointed to the Board as a Non – Executive Director

Annual Report of the Board of Directors on the affairs of the Company and its subsidiaries for the year ended 31 March 2018, received and adopted;

Donations approved for the period ending 31 March 2019;

Ms. L. E. M. Yaseen re –appointed as a Director;

Ms. C. G. Ranasinghe who retired by rotation, re-elected as a Director;

M/S. Ernst & Young, retiring auditors, re appointed to hold office until conclusion of the next AGM;

Highlights from the previous Annual General Meeting (AGM) held on 17 September 2018:


Key Corporate Governance initiatives taken during the year

Training for Directors

An external resource person engaged for a briefing on the

impact of SLFRS 9, 15 and LKAS 17;

Knowledge sharing sessions covering

(i) trends, insights, forecasts(ii) opportunities in the real estate

sector;

Statutory compliance

Compliance Policy introduced;

Reporting process on statutory compliance reviewed and improved;

Governance

Directors’ and Officers’ Liability Cover implemented;

All Terms of References of Board Sub – Committees reviewed in accordance with

new regulations and best Practices;

IT Governance

IT Procedure and Policy Manual introduced Company-wide;

IT Steering Committee constituted with the purpose of formulating an IT Strategy;

Conducted an Information Systems Audit;

Human Resources

Sessions organised for employees to educate on the Code of Conduct, Whistle

-Blowing Policy etc.

Employee satisfaction survey conducted for employees of all categories;

Related Party Transactions (RPTs)

Related Party Transactions Policy Manual reviewed and further improved;

Frequency in reviewing the recurrent RPTs reviewed;

The criteria to establish arms - length principle was clarified and set out in

detail;

Board performance Appraisal

The questionnaire to assess the Board performance was further

detailed and improved;

Questionnaires to evaluate Sub – Committee performance were

developed;

Performance of the Board and that of Sub – Committees evaluated;

Trading in Company Shares

A “Policy prohibiting Insider Trading” applicable to all employees and Directors introduced;

“Closed periods” on the trading of Company Shares imposed in every quarter and Directors and employees notified to refrain from carrying out trading activities during this period;

Policies and Procedures

Corporate Governance


Our Corporate Governance FrameworkR I L Property PLC ‘s (R I L/ Company) Governance framework is founded on two pillars. The first pillar is the external regulatory benchmarks on Corporate Governance which comprises of laws, regulations and guidelines issued by regulators. The Second pillar consists of internal benchmarks on Corporate Governance which integrate the external regulations in to the Company’s processes by way of Board approved policies.

External Regulations

� Companies Act No. 07 of 2007 (as amended) (CA 2007) Mandatory compliance

� Listing Rules of the Colombo Stock Exchange (CSE) (Listing Rules)

Mandatory compliance

� Code of Best Practice on Related Party Transactions December 2013


� Securities and Exchange Commission of Sri Lanka Act No. 36 of 1987 (as amended)


� Board of Investment of Sri Lanka Law No.04 of 1978 (as amended)


� The Code of Best Practice on Corporate Governance issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka 2017 (CG Code 2017)

Voluntary compliance

Internal Regulations

� Articles of Association Mandatory compliance

� Code of Ethical Business Conduct for employees and Directors


� Compliance Policy Mandatory compliance

� Terms of References of Board Sub – Committees Mandatory compliance

� Policy prohibiting Insider Trading Mandatory compliance

� Risk Management policies and procedures Mandatory compliance

� Internal control processes and procedures Mandatory compliance

� Code of ethical business conduct for employees Mandatory compliance

Our Corporate Governance Structure The Board of Directors, along with the Chairman, are the apex body responsible and accountable for the stewardship function. The Directors are collectively responsible for upholding and ensuring the highest standards of Corporate Governance and inculcating ethics and integrity across the Company.

The Board has delegated some of its functions to Board Sub Committees, enabling the Committees to focus on their delegated areas of responsibility and impart knowledge and experience in areas where they have greater expertise, while retaining final decision rights pertaining to matters under the purview of these Committees.

The Senior Management, under the leadership and direction of the Chief Executive Officer (CEO), implements the policies and strategies determined by the Board.


The Board Structure and composition*As at 31 March 2019, the Board comprises of 7 members, whose profiles are given on pages 10 to 13.

The proportion of Independent Non – Executive Directors on the Board is high. Our Board members have a broad range of experience and industry expertise. The make - up of the Board reflects diversity of gender and age.

Independent Non – Executive Chairman

Non – Independent Non –Executive Directors

Independent Non –Executive Directors

Executive Directors

Mr. S. G. Wijesinha Ms. L. E. M. Yaseen Ms. C. G. Ranasinghe Ms. L. K. A. H. FernandoMr. L. W. D. Abeyarathne Ms. C. R. Kariyawasam

Professor. N. D. Gunawardena

*Please refer page 57 for the changes to the Directorate during the year under review.

Declaration on IndependenceAt the time of appointment, each new Non – Executive Director is required to submit a declaration as to his/ her independence/ non –independence, against the criteria laid down under the Listing Rules as well as the CG Code 2017. Firstly, the Board Nominations and Remuneration Committee (BNRC) and thereafter, the Board then evaluates the new Director’s independence.

Annual declarations are obtained from each Non –Executive Director and these declarations are tabled at a Board meeting by the Company Secretary and the independence of each Non –Executive Director is then reviewed against the said criteria. A record of these declarations is maintained by the Company Secretary.

As at 31 March 2019, the following Directors were deemed to be independent in character and judgment:

Mr. S. G. Wijesinha;Ms. C. G. Ranasinghe;Ms. C. R. Kariyawasam; andProfessor. N. D. Gunawardena

Regulators

Board Audit Committee

Internal Audit, Risk and Compliance Function

External Regulations

Internal Regulations

Senior Management

Shareholders

Board Related Party Transactions Review

Committee

Management Committees

Chief Executive Officer/Executive Director

Board of Directors

Auditors

Board Nominations and Remuneration Committee

Company SecretaryRole of an Independent Director

� Brings an objective view as necessary in the best interests of the Company, while evaluating the performance of the Board and Management;

� Safeguards the interests of all stakeholders;

� Questions, scrutinises and debates constructively;

� In situations of conflicts between Management and shareholder’s interests, aims towards the solutions which are in the best interest of the Company;

� Improves corporate credibility and governance standards;



Board Composition

Independent Non-Executive Chairman 1

Executive Directors 1

Non-Executive Directors 2

Independent Non-Executive Directors 3

Distribution of Executive and Non Executive Directors


Non-Executive Directors 6

Distribution of Independent Directors

Independent 4

Non-Independent 2

40-5

0Ye

ars

50-6

0Ye

ars

60-7

0Ye

ars

70<

1

2

3

0

4Nos

Age Analysis

2

3

1 1

Gender Diversity

Male 3

Female 4 <3Ye

ars

3-6

Year

s

6<Ye

ars

1

2

0

Tenure

3

1

3


5

3

7

1

2

4

3

4

4

2

3

2

Operations Management

Multi Sector


Legal and Compliance

International

Accountancy and Finance

Investment/ Portfolio management

Capital Market Strategy

Public and private equity

Technology/ Engineering

Strategic and business panning

Current recent Chair/ CEO

Responsibilities of the Board � Formulating, implementing and monitoring the business strategy;

� Reviewing the financial performance of the Company and that of its subsidiaries;

� Placing effective systems to secure the integrity of information, internal controls, business continuity and risk management;

� Ensuring compliance with Laws, regulations and ethical standards;

� Considering the interests of all stakeholders in corporate actions;

� Approving budgets and capital expenditure

Key areas and activities considered by the Board during the year

Strategy and Business Finance Risk and oversightApprove the annual budget; Approve the Interim and Audited Financial

Statements;Compliance review;

Discuss on funding arrangements; Monitor and discuss the financial performance of the Company regularly;

Review risks faced in the business;

Approve the issue of Rights; Review the performance of subsidiaries Board Sub – Committee Chairmen/ Chairpersons provide updates on matters discussed at Committee meetings regularly;Review and approve policies;



Human Resources (HR) Governance Stakeholder engagement

Review the new initiatives taken by the HR Department to retain employees as well as learning and development aspects;

Resignations, re-elections, appointments to the Board and re – constitution of the Board Sub – Committee compositions;

Review shareholder communications

Monitor the employee turn - over; Evaluate the effectiveness of Board and Sub – Committee performance and make action plans to implement recommendations;

Review of regulatory reviews

Approve the HR Policy Manual Review and approve the Terms of References of Board Sub – Committees;

Approve salary increments, bonuses and promotions Disclosures of Directors’ interests in shares

and contracts;

Approve the “Policy prohibiting Insider Trading”

Appointments/ Re –elections/Resignations

Immediate market disclosure to the Colombo Stock Exchange on

the new appointmentto the Board

Induction given

to new Directors

BNRC* assesses the

composition ofthe Board

BNRC recommends Directors to

retire at the AGM and eligible for re-election by Shareholders

The recommendations of the BNRC are reviewed

and approved bythe Board

BNRC makes a recommendation

to the Board

The Director retires at the AGM and is then elected / re-elected / re-appointed by the

Shareholders

Nomination is reviewed and

approved by the Board of Directors

BNRC recommends the re-appointment

of Directors who are over 70 years, by

shareholders

* Board Nominations and Remuneration Committee


Board Performance Evaluation There is a formal process for assessing the Board performance annually. These appraisals are carried out through a detailed questionnaire responded to by the individual Directors.

The completed questionnaire is then submitted to the Company Secretary who in turn compiles and tables a summary to the BNRC for discussion. The BNRC is responsible for evaluating the summary and making recommendations to the Board on actions and initiatives required for areas that need improvement.

During the year under review, the Board carried out a comprehensive evaluation of its’ own performance.

Board MeetingsFrequency Board meetings are usually held on a quarterly basis. Special Board meetings are convened whenever necessary. Urgent matters are referred to the Board via circulation.

There is flexibility in terms of the Articles of Association, for the Directors to attend meetings via video/tele conferencing.

Effectiveness of Board MeetingsPrior to Board meetings During Board meetings

� All Board meetings are informed to the Board at the beginning of the year. Directors are given the opportunity to include matters in the agenda

� The Chairman facilitates the constructive dialogue between all Directors at Board meetings

� The Chairman draws up the agenda in consultation with the CEO, Directors and the Company Secretary

� Board Sub – Committee Chairmen/ Chairpersons provide updates on matters discussed at Committee meetings

� Notice of meetings, agenda, Board papers are dispatched at-least 7 days prior to the meeting

� Directors have access to the Senior Management who are regularly present and explain matters relating to their areas, to the Board

� Directors have independent access to the Company Secretary and the discretion to obtain external advise at the expense of the Company

� The Company Secretary attends all meetings and ensures that applicable rules, regulations and Board procedures are complied with

� Directors can participate either via tele/ video conferencing � A Director who has a conflict of interest in a matter to be considered abstains from voting/ does not participate in discussions and is also not considered in the quorum.

Information on Board meeting attendance is detailed below*:

Name of Director Board status Status of Independence Date of appointment

Board meeting attendance

Eligible to attend

Attended

Mr. S. G. Wijesinha Chairman/ Non-Executive Independent 01.03.2016 6 6Ms. L. K. A. H. Fernando Executive/CEO N/A 12.06.2009 6 6Ms. L. E. M. Yaseen Non-Executive Non- Independent 12.06.2009 5 5Mr. L. W. D. Abeyarathne Non-Executive Non- Independent 12.06.2009 6 6Mr. A. D. E. I. Perera Non-Executive Independent 19.05.2016 3 2Mr. R. A. Ebell Non-Executive Independent 19.05.2016 3 3Ms. C. G. Ranasinghe Non-Executive Independent 01.09.2016 6 6Ms. C. R. Kariyawasam Non-Executive Independent 01.11.2018 2 2Professor. N. D. Gunawardena Non-Executive Independent 01.11.2018 2 2

*Please refer page 57 for details on changes to the Directorate

Structure of the Questionnaire:Overall performance by the Board;Self - evaluation by each Director;Evaluation of the Chairman;Evaluation of the Non –Executive Directors by Executive Directors

Some of the areas evaluated during 2018/19 include:Board composition;Skills and experience of the members;Proceedings at meetings;Quality of reports and material submitted;Relationship with the Management



Pursuant to the changes in the Directorate indicated in page 57, the level of compliance on the Board composition, under the CG Code 2017, is set out below:

Requirement under the CG Code

Status during 19 June 2018 – 6 July 2018

Status during 7 July 2018 – 16 September

2018

Status during 17 September 2018 – 31

October 2018 Non –Executive Directors 3 4 2 3Independent Directors 3 or 2/3 of the Non- Executive

Directors whichever is higher 3 2 2

Compliance status Non – Executive X Independent X X

The non – compliances were rectified following the appointments of Ms. C. R. Kariyawasam and Professor. N. D. Gunawardena. The Company was however in line with the Listing Rules on Board composition throughout the year.

Key Appointments of Directors and Conflict of InterestsThe Directors are strongly aware of their responsibility to act at all times in the interest of the Group and the Company and its shareholders as a whole and of their obligation to avoid conflicts of interest.

To avoid potential conflicts of interests or bias, Directors adhere to a process where review takes place prior to appointment, once appointed and during Board meetings.

Prior to appointment Nominees are requested to make known their various interests

Once appointedChairman is notified of any changes to the current Board representations or interests. Declarations are obtained on a quarterly basis as well.

Board is notified prior to engaging in any transaction that could create or potentially create a conflict of interest

During Board meetingsDirectors who have an interest in a matter under discussion:

Excuse and leave the Boardroom when discussing the subject matter;

Refrain from voting on the subject matter and properly minute such actions

The Company maintains a register of interests declared which is available for inspection by the Shareholders, as required by section 119 (1) of the CA 2007.

Details of companies in which Board members hold Board positions are available within the Company for inspection by the Shareholders, upon request.


The directorships of the Board members in other companies is provided below:

Name of Director No. of Board seats in Listed companies (excluding R I L )

No. of Board Seats in unlisted companies

Names of listed companies in which Directors concerned hold directorshipsExecutive

CapacityNon-Executive Capacity

Executive Capacity

Non-Executive Capacity

Mr. S.G. Wijesinha - 3 - 8 United Motors Lanka PLCWatawala Plantations PLCHatton Plantations PLC

Ms. L. K .A. H. Fernando - 2 - 4 DFCC Bank PLCUnited Motors Lanka PLC

Ms. L. E. M. Yaseen - - - - -

Mr. L. W. D. Abeyarathne - - - 5 -

Ms. C. G. Ranasinghe - - - - -

Ms. C. R. Kariyawasam - - - - -

Professor. N. D. Gunawardena - - - 1 -

Board Induction and Training On appointment, the Directors are provided with an orientation pack with all relevant external and internal regulations. Site visits are arranged upon request of newly appointed Directors.

The Company Secretary informs the Directors on the training avenues available, matters that are current and relevant to the Board’s effective performance, which also include matters specific to the industry and the Company. These training programs may be conducted either by the Company’s internal experts in the relevant field or by external agencies.

The Directors are also encouraged to attend sessions of the Sri Lanka Institute of Directors and other corporate forums on relevant matters.

Further, Board members are also given insights into regulatory changes that may impact the industry at Board meetings.

The annual self – assessment by Directors also identifies if there are any training needs of Directors.

Delegation of Authority and Board Sub – Committees The Board has delegated some of its functions to Board Sub - Committees, enabling the Committees to focus on their delegated areas of responsibility and impart knowledge and experience in areas where they have greater expertise, while retaining final decision rights pertaining to matters under the purview of these Committees.

At present the Board is supported by the following Board Sub –Committees: � Board Audit Committee (BAC);

� Board Nominations and Remuneration Committee (BNRC);

� Board Related Party Transactions Review Committee (BRPTRC)



A brief description of each Board Sub –Committee* is provided below:

Composition (as at 31 March 2019)

Areas of oversight

Frequency of meetings

Terms of Reference

03 members

All comprise of Independent Non – Executive Directors

Financial reporting Risk management Internal controls

External AuditInternal Audit

Statutory compliance Whistle –Blowing

Quarterly

Available

03 members

All comprise of Independent Non – Executive Directors

Recommending nominations to the Board and

remuneration for Directors and executive employees

Bi – annually

Available

04 members

3 Independent Non – Executive Directors

1 Non - Independent Non – Executive Director

Review all Related Party Transactions (RPTs) other

than those exempted under the Listing Rules and CG Code 2017 and recommend for Board

approval where necessary

Quarterly

Available

BAC BNRC BRPTRC

*Detailed Board Sub Committee reports are on Pages 94 to 102.

The Committee composition, together with attendance at Committee meetings during the year under review, are summarized below:

Name of Director Board Audit Committee** Board Related Party Transactions Review Committee**

Board Nominations and Remuneration Committee**

Status Date of Appointment

Attendance Status Date of Appointment

Attendance Status Date of Appointment

Attendance Eligible Attended Eligible Attended Eligible Attended

Mr. S. G. Wijesinha M 06.09.2016 4 3 M 06.09.2016 4 4 C 06.09.2016 3 3

Ms. L. K. A. H. Fernando

Not applicable 4 4* Not applicable 4 4* Not applicable 3 3*

Ms. L .E. M. Yaseen Not applicable M 06.09.2016 3 3 Not applicable

Mr. L. W. D. Abeyarathne

Not applicable 4 4* Not applicable 4 4* Not applicable

Mr. A. D. E. I. Perera Not applicable Not applicable M 06.09.2016 0 0

Mr. R. A. Ebell C 06.09.2016 1 1 M 06.09.2016 1 1 Not applicable

Ms. C. G. Ranasinghe M 06.09.2016 4 4 C 06.09.2016 4 4 M 06.09.2016 3 3

Ms. C. R. Kariyawasam

C 01.11.2018 2 2 M 01.11.2018 2 2 Not applicable


Not applicable Not applicable M 01.11.2018 3 3

C – Chairman/Chairperson M – Member

*Attended by Invitation;** Please refer the Committee reports for changes in Committee compositions on pages 94 to 102.


Role of Chairman and Chief Executive Officer (CEO)The roles of Chairman and the CEO are segregated, ensuring appropriate balance of power and authority. The Chairman is a Non –Executive Director and provides leadership to the Board, while the CEO provides executive leadership and expertise in the implementation and achievement of the strategies. The CEO is responsible for the overall performance of the Company.

Responsibilities of the Chairman Responsibilities of the CEO

� Lead the Board and preserve order and facilitate the effective discharge of Board functions

� Formulate, obtain approvals and implement the Company strategies and manage the day to day operations with the help of the Senior Management

� Ensure that all Directors are made aware of their duties and responsibilities � Develop and recommend budgets to the Board

� Encourage the effective participation of both Non –Executive and Executive Directors within their respective capabilities for Company’s benefit

� Continuously monitor and report to the Board on the performance of the Company

� Develop the agenda in consultation with the CEO, Directors and the Company Secretary

� Ensure compliance with all applicable Laws and regulations

� Ensure that the Board members receive accurate, timely information to enable them to make clear and sound decisions

� Identify the potential risks and manage the financial and business risks of the Company.

� Ensure regular meetings, the minutes of which are accurately recorded and where appropriate, include the individual and collective views of Directors

� Facilitate and encourage discussions among all Directors in decision making

� Maintain a balance between Non – Executive and Executive Directors

As a practice, the Chairman meets with the CEO from time to time in between Board meetings, to set the Board agenda and to discuss current and future developments and any material issues pertaining to the Company.

Content captured in Board Minutes

Summary of information used for Board deliberations;Matters considered by the Board;Issues of contention or dissent;Confirmations and assurances from the Senior Management;Board’s knowledge on non – compliances/ deviations with all external and internal regulations;Decisions and Board resolutions;

Role of the Company SecretaryMs. R. Weudagedara, Attorney – At – Law (whose profile is given on page 13) plays a proactive role in implementing the Corporate Governance benchmarks within the Company.

Although the Company Secretary directly reports to the Chairman, all Directors may call upon at any time, to seek advice and assistance in respect of their duties and the effective operation of the Board and the Board Sub –Committees. The Company Secretary also plays a critical role in maintaining the relationship between the Company and its’ Shareholders and regulators.

The Company Secretary assists the Chairman and the CEO in setting up the agenda for Board Meetings and ensure proper record of the Board Minutes.

Board Minutes are recorded in sufficient detail and are circulated among the Board members well before the next meeting, allowing them ample time for consideration/ clarifications and amendments where needed, with the consent of the Chairman.

The appointment and removal of the Company Secretary is a matter for the Board as a whole.



Internal Controls and Risk Management The Board recognises the overall responsibility for securing the integrity of the information, managing risks and implementing an effective internal control system.

The Board takes the necessary steps to ensure that there is an effective system of internal controls, so that the interests of the Shareholders’ investment and the Group’s assets are safeguarded. The BAC conducts a review on the adequacy and effectiveness of the system of internal controls and reports its’ findings to the Board. The review covers all material controls including operational, financial, compliance controls and risk management systems.

Monitoring and reporting risks to the BAC is the responsibility of the Senior Manager Risk & Compliance. The BAC bi –annually reviews the risks in the context of likelihood and their impact along with the effectiveness of the system of internal controls to address them to a satisfactory level.

Please refer the Board Audit Committee report on page 94 for more details.

Code of Business Conduct and EthicsR I L has developed a “Code of Ethical Business Conduct” applicable to all employees including the Senior Management.

Some areas covered

under the code

Conflicts of interest

Confidentiality

Briberyand

corruption

Use ofcompanyproperty

Security of Company

Information

The Code is based on the following principles:

� The Company is committed to conducting its’ business operations with honesty, integrity and with respect to the rights and interests of all stakeholders;

� Compliance with all laws and regulations of the country;

� Every employee is individually responsible for the implementation and compliance with the Code

A Board approved “Code of Ethical Business Conduct” is also available for Directors.

Shareholder RelationsThe Company is committed to having regular, proactive and effective communication with the investors as well as Shareholders. The Company communicates with the Shareholders through the following means of communication.


Subsidiary GovernanceUnited Motors Lanka PLC (UML) being a regulated entity, operates within the stringent governance and risk management frameworks, with operations conducted with highest standards of integrity and transparency.

Since FoodBuzz (Private) Limited (FoodBuzz) is a wholly owned subsidiary of R I L, the consistent application of governance and risk management practices are ensured through the commonalities in policy frameworks and reporting lines to R I L.

Our Future FocusTo be on par with the Corporate Governance principles set by the regulators

More prominence to be given in improving the Corporate Governance culture within the Company

Shareholder meetings

The Annual General Meeting (AGM) is the main event for the Shareholders to meet

with the Board which allows a reasonable opportunity for

informed Shareholders to communicate their views on various matters affecting the

Company.

Announcements to the CSE

Announcements of quarterly Interim/ Annual financial results, press releases and various announcements on corporate actions are disclosed to the CSE in a

prompt and a timely manner in compliance with the

Listing Rules.

Company website

Information on financial performance, press releases, Annual Reports, all relevant announcements to CSE and other corporate information

is made available on the Company website at http://

www.rilproperty.lk/.

Designated officer for shareholder communication

Shareholders may contact the Company Secretary or in her absence the Chairman, on matters related to their

shareholding and the Company, at any time.



Appendix 1: Compliance with the Code of Best Practice on Corporate Governance 2017 issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka (CG Code 2017/Code)

The table below summarizes the status of compliance in R I L Property PLC (R I L / the Company) with the Code as at 31 March 2019.

Corporate Governance Code reference

Principle and implementation Compliance Status

The Company

A. Directors

A.1 The Board

A.1 Effective Board As at 31 March 2019, the Board of Directors comprised of 7 Directors, out of which 6 are Non –Executive Directors including the Chairman.

Please refer page 60 for Board structure and composition.

A.1.1 Regular MeetingsDuring the year under review six Board Meetings were held. Please refer page 64 for attendance of Board members at Board meetings.Notice, agenda and Board papers are dispatched at-least 7 days prior to the meeting.

� Board papers would inter alia cover the following information:

� Financial Statements for the relevant quarter and year to date together with comparatives for the corresponding period of the previous Financial Year and budgets for the Company and the subsidiaries;

� Compliance statements confirming regulatory compliance and any pending litigation matters;

� Board Matters resolved by Circulation;

� Affixation of Common Seal;

� Human Resources Information;

A.1.2 Board responsibilities

Ensure the formulation and implementation of a sound business strategy The Board provides strategic direction to the development of a sound business strategy which is aimed at the long-term sustainability of the Company.

Appointing the Chair and the Senior Independent Director (if relevant)The Chairman has been appointed by the Board of Directors.

The circumstances to appoint a Senior Independent Director have not arisen under the Code.

CEO and the Management team possess the skills, experience and knowledge to implement the strategyThe Board Nominations and Remuneration Committee (BNRC) ensures that the Senior Management led by the Chief Executive Officer (CEO) have the required skills, experience and knowledge to implement strategies.




Effective CEO and Key Management Personnel succession strategyThe Board ensures that there is a formulated clear procedure for the selection and appointment of the CEO.

Approving budgets and major capital expenditureThe CEO presents the budget, including capital expenditure, for Board approval annually.

Determining matters expressly reserved to the Board and those delegated to the Management including limits of authority and financial delegationWhere necessary, the Board has delegated this power to the Senior Management led by the CEO.

Compliance with laws, regulations and ethical standardsDuring the year, a Compliance policy was introduced. This was to ensure that the Company complies with all applicable external and internal regulations, policies and procedures. Under the Policy, the Senior Manager Legal in consultation with the Heads of Divisions identifies the laws and regulations applicable to our business from time to time and annually submit a list of laws to the Board. Any changes to the list is notified by the Senior Manager Legal, to the Board. There is a collective responsibility for the Senior Manager Legal and the Heads of Divisions to be updated on any new legislations as well as any amendments to the existing legislation.

Senior Manager Risk and Compliance, which is an independent compliance function, is entrusted with the overall responsibility to monitor the compliance with the laws. A confirmation on a quarterly basis is obtained from the Heads of Divisions on the compliance with all external and internal regulations. A declaration confirming compliances is submitted to the Board on a quarterly basis. Any deviations are separately reported.

Stakeholder interests are considered in corporate decisionsThe Board of Directors considers the views/impact on all stakeholders of the Company when decisions are made at Board meetings. Further, there is a Board Related Party Transactions Review Committee (BRPTRC) in place, in order to uphold the interests of the stakeholders.

Sustainable business development in Corporate Strategy, decisions and activities and adopting “integrated reporting”Sustainable business development is recognised in corporate strategy, decisions and activities of the Company.

Adopting “integrated reporting” will be considered in the future. To be complied

Company’s values and standards set with emphasis on adopting appropriate accounting policies and fostering compliance with financial regulationsThe BAC and the Board review accounting policies annually or as and when required, to ensure that they are in line with the business model of the Company and evolving local and international accounting standards and industry best practices.

Process to monitor and evaluate progress on strategy implementation, budgets, plans and other related risksProcesses are in place for monitoring and evaluating the progress on strategy implementation, budgets, plans and related risks.





Process for corporate reportingThe Company ensures that all disclosures are made within the prescribed statutory time limits.

A.1.3 Compliance with Laws and access to independent professional adviceCompliance with laws and regulationsPlease refer Principle A.1.2 above.

Independent professional advice A clearly formulated Board approved procedure for the Directors to seek independent professional advice as and when required, at the expense of the Company, is available. Any Director who wishes to obtain independent professional advice on any issue should make a request verbally or otherwise (in writing/SMS/e-mail etc.) to the Board through the Company secretary.

A.1.4 Services of Company Secretary and Insurance cover

Services of Company SecretaryPlease refer page 68 for the role of the Company Secretary.

Insurance CoverR I L, at the recommendation of the BNRC obtained a Directors’ and Officers’ liability cover during the year.

A.1.5 Independent judgmentAll Directors bring independent judgment and in particular the Independent Non- Executive Directors provide an unbiased, independent, varied and experienced perspective to the Board.

They also scrutinise the proposals/suggestions made by the Senior Management led by the CEO/Executive Director on issues of strategy, performance, resource allocation, risk management, compliance and standards of business conduct, where necessary.

A.1.6 Adequate time and effort to matters of the Board and CompanyDates of regular Board and Board Sub – Committee meetings are scheduled well in advance and the relevant papers are circulated at least 7 days prior to the meeting, giving sufficient time to review. There is provision to circulate papers closer to the meeting on an exceptional basis.

It is estimated that Non – Executive Directors dedicate approximately not less than 400 hours per annum for the affairs of the Group.

A.1.7 Call for resolutionsAny Director can call for a resolution to be presented to the Board, where necessary.

The need did not arise during the year under review.

Not applicable

A.1.8 Board induction and trainingPlease refer page 66.

The training initiatives taken during the year are indicated on page 58.




A.2 Chairman and Chief Executive Officer (CEO)

A.2 Division of responsibilities between the Chairman and the CEOAt R I L, the role of the Chairman is separated from that of the CEO which is in line with the best practices on Corporate Governance, ensuring that no Director has unfettered power or authority.

The Chairman, Mr. S. G. Wijesinha, is a Non – Executive Director, while the CEO, Ms. L. K. A. H. Fernando is an Executive Director appointed by the Board.

The functions of the Chairman and the CEO are clearly documented, defined and separated by the Board. This ensures the balance of power and authority. Please refer page 68 for more details, on their roles.

A.3 Chairman’s role

Please refer Principle A.2 above and page 68 for the role of the Chairman.

A.4 Financial acumen

A.4 Availability of sufficient financial acumenOur Board members have a broad range of expertise and bring skills and experience from a diverse range of backgrounds. Comprising of 2 Chartered Accountants and 1 Director who is a fellow member of the Chartered Institute of Management Accountants, the Board possesses adequate financial acumen and knowledge.

The expertise, experience and qualifications each of Board members possess, are mentioned in their respective profiles on pages 10 to 13.

A.5 Board balance

A.5.1 & A.5.2 Non –Executive Directors of sufficient calibre and numberThe Board comprises of 6 Non –Executive Directors including the Chairman and one Executive Director who is the CEO. The Non –Executive Directors are professionals, academics and business leaders, holding senior positions in their respective fields and are therefore deemed to be of sufficient and appropriate calibre. As the majority of the Board comprises of the Non –Executive Directors, their views and opinions carry a significant weight in Board decisions. Please refer page 60 for the details of the Non –Executive Directors.

Board Balance


Non - Executive Directors 6

Please refer page 65 for level of compliance with the Code, during the year.





A.5.3 Independent Directors Out of the 6 Non – Executive Directors, 4 are independent of management and free of any business or other relationships that could materially interfere with or could reasonably perceived to materially interfere with the exercise of their unfettered and independent judgment.

Independent 4

Non - Independent 2

Independent Directors

Please refer page 60 for the role of the Independent Directors. Please refer page 60 for the details of the Independent Directors.Please also refer page 65 for level of compliance with the Code, during the year.

A.5.4 Annual declarations of the independence of Directors Annual declarations of independence have been obtained from the Non- Executive Directors for 2018/19. No circumstances arose for the determination of independence beyond the criteria set out therein.

A.5.5 Annual Evaluation on Independence The Board made an annual evaluation of independence based on the annual declarations submitted.

A.5.6 Alternate DirectorsNo Alternate Directors were appointed during the year under review.

Not applicable

A.5.7 – A. 5. 8 Senior Independent DirectorOur Chairman, Mr. S. G. Wijesinha is a Non –Executive Independent Director while the CEO, Ms. L. K. A. H. Fernando is an Executive Director.

Therefore, the need to appoint a Senior Independent Director does not arise under the Code.

Not applicable

A.5.9 Meetings with the Non – Executive Directors without Executive Directors being present The Chairman discusses matters relevant to the Board with Non – Executive Directors as and when the need arises. No such meetings took place during the year

Not applicable

A.5.10 Recording Directors’ concerns in Board MinutesBoard Minutes were prepared in order to record any concerns of the Board as a whole or those of individual Directors regarding matters placed for their approval/ guidance/ action. These Minutes were circulated and formally approved at a subsequent Board Meeting. Directors have access to past Board Papers and Minutes in case of need at all times, via the Company Secretary.




A.6 Supply of information

A.6.1 Provision of appropriate and timely information The Management provides comprehensive information including both qualitative and quantitative, for quarterly Board meetings. The Directors also have free access to Management at all levels to obtain further information or clarify any of their concerns. Any request for additional information can be made to the Company Secretary. The relevant member of staff is then informed by the Company Secretary and the relevant information is forwarded.

As discussed under Principle A.1.3 above, a formulated procedure is also place for Directors to seek independent professional advice.

Chairman to ensure that all Directors are properly briefed on issues arising at Board meetings All Directors are adequately briefed on matters arising at Board meetings through comprehensive Board papers. Additionally, relevant members of the Senior Management are on stand by for further clarifications as may be required by the Directors or will make representations at the Board meetings.

Non–Executive Directors have the opportunity to interact with the Senior Management after Board Meetings.

The agenda and the “Matters Arising Paper” is prepared by the Company Secretary in consultation with the CEO and the Chairman. The Chairman ensures that all matters that require follow up are discussed at the succeeding Board meeting under “Matters Arising”.

Any Director who does not attend a meeting is updated on proceedings prior to the next meeting through:

� Formally documented Minutes and decisions;

� By clarifying matters with the Company Secretary;

� Separate discussions at start of meeting regarding matters arising from the previous meeting

A.6.2 Board papers and Agenda to be circulated prior to seven days of the Meeting All Board papers/Sub Committee papers are dispatched to the Directors at least 7 days prior to the date of the meeting, to provide them with adequate time to review the Board papers. There is provision for circulation of urgent Board papers or papers on highly sensitive matters within a shorter notice, but such instances are the exception and not the rule. Company Secretary ensures that a draft of Minutes is submitted for Chairman’s review within 07 working days for approval.

A.7 Appointments to the Board

A.7.1 The Board has a formal and transparent process in place for appointing Directors. While the appointments are a matter for the Board as a whole, the responsibility to oversee the nomination process has been delegated to the BNRC. A Board approved Terms of Reference in place for this Committee.

Please refer the Board Nominations and Remuneration Committee report on page 98 for relevant information.





A.7.2 Annually assess Board compositionThe BNRC annually assesses its composition to ascertain whether the combined knowledge and experience of the Board match the strategic demands faced by the Company and is satisfied that it meets the criteria and has taken steps to satisfy itself on same.

Please refer the Board Nominations and Remuneration Committee report on page 98 for relevant information.

A.7.3 Disclosure of information to Shareholders upon appointment of new DirectorsThe Company ensures that the following details, in case of new appointments, are immediately disclosed to the Colombo Stock Exchange (CSE).

� Brief resume of the Director;

� Nature of his expertise in relevant functional areas;

� The names and companies in which the Director holds directorships or memberships in Board Sub – Committees;

� Whether such Director can be considered “independent’;

These details were duly disclosed to the Shareholders via the CSE, at the time of appointments of new Directors during the year.

A.8 Re – election

A.8.1 All Directors to submit themselves for re – election at regular intervals As per the Articles of Association, one –third of the Directors (other than the Executive Directors and those who are over 70) should retire and be subjected to re-election by the Shareholders. The Directors who retire by rotation are those who have been longest in office since their election/ re- election. The Directors eligible for re-election at the AGM are recommended by the BNRC to the Board.

A brief resume of Ms. C. G. Ranasinghe who is coming up for retirement by rotation is provided on page 12 to enable Shareholders to make an informed decision.

A.8.2 Non – Executive Directors are appointed for specified terms subject to re – electionIn terms of the Articles of Association, a Director appointed by the Board holds office until the next AGM, where he must retire and stand for election by Shareholders at the immediately succeeding AGM.

Ms. C. R. Kariyawasam, Professor. N. D. Gunawardena and Mr. L. W. D. Abeyarathne will be offering themselves for election by Shareholders at the AGM. Their resumes are indicated on pages 11 to 13 .

A.8.3 Written communication in case of resignation by a DirectorIf a Director resigns over an unresolved issue, the Chairman will bring the same to the attention of the Board. The Director concerned is also required to provide a written statement to the Chairman for circulation to the Board.

Not applicable




A.9 Appraisal of Board Performance

A.9.1 –A.9.4 Formal and rigorous process for annual appraisal of Board performanceThere is a formal process for the appraisal of Board performance. Please refer page 64 for more details.

The Board carried out a comprehensive evaluation of its performance in the last quarter of 2018/19.

A.10 Disclosure of information in respect of Directors

A.10.1 Annual Report to disclose specified information regarding DirectorsPlease refer pages 10 to 13 for “Profiles of Directors” which details the name, qualifications, nature of expertise of Directors, whether Executive/ Non –Executive, independence and membership in Board Sub –Committees.

Please refer page 66 for details of directorships held by each Director in other companies.

Please refer pages 64 and 67 respectively for attendance at Board and Sub- Committee meetings.

A.11 Appraisal of Chief Executive Officer (CEO)

A.11.1 Set reasonable financial and non – financial targets to be met by the CEOAt the beginning of the Financial Year, the Board discusses and set financial and non-financial targets to be achieved by the CEO during the year, in line with the short, medium and long- term objectives of the Company.

A.11.2 Evaluate performance of the CEO with reference to targets The Board has delegated to the BNRC to carry out the annual appraisal of the CEO against the pre –agreed performance targets, at the end of each Financial Year.

During the year under review, the performance of the CEO was appraised by the BNRC.

B Directors’ remuneration

B.1 Remuneration procedure

B.1.1 Establishing a Remuneration CommitteeThe Board has established a BNRC to develop policies and determine remuneration for the Non – Executive and Executive Directors, CEO and all other executive employees. No Director is involved in determining his own remuneration.

B.1.2 – B.1. 3 Remuneration Committee to comprise exclusively of Non – Executive DirectorsAs at 31 March 2019, the BNRC consists of 3 Non – Executive Directors all of whom are independent. The Chairman, Mr. S. G. Wijesinha, Independent Non –Executive Director was appointed by the Board.

Note: Pursuant to Mr. A. D. E. I. Perera, Independent Non – Executive Director ceasing to be on the Board, the Committee composition was below the number prescribed by the Code during the period from 7 July 2018 – 31 October 2018. However, the composition was in line with the Listing Rules of the CSE.

B.1.4 Remuneration for Non –Executive DirectorsRemuneration for Non – Executive Directors is determined by the BNRC for approval of the Board in line with the market practices. A Board approved policy on Directors’ remuneration is in place.





B.1.5 Ability to consult the Chairman and/or CEO and to seek professional advice by the CommitteeThe input of the Chairman/ CEO is obtained where necessary. External professional advice is sought on a need basis.

B.2 The Level and make up of remuneration

B.2.1 – B.2.2 Remuneration for Executive DirectorsRemuneration for Executive Directors is designed to attract, retain and encourage enhanced performance and to ensure that they are rewarded for their individual contribution to the long- term success of the Company in a fair and responsible manner.

Their remuneration comprises of salary, bonuses and allowances. The BNRC takes in to account market practices and seeks professional advice when required.

B.2.3 – B.2.4 Positioning Company remuneration levels relative to other companies The remuneration levels of the Company are reviewed from time to time and compared with those of peers in the industry.

When recommending annual salary increases, the BNRC takes into consideration the remuneration and employment conditions of the market. When doing so, the BNRC will recommend salary surveys to be conducted, if necessary.

B.2.5 Performance related elements of remuneration for Executive Directors During the year, the Company did not offer performance related remuneration for Executive Directors.

Not applicable

B.2.6 Share option schemes No Executive share options were granted during the year.

Not applicable

B.2.7 Designing schemes of performance related remunerationPlease see Principle B. 2.5 above.

Not applicable

B.2.8 – B.2.9 Early termination of employment of Directors Not applicable to the Board except to the CEO who is an Executive Director and her terms of employment are governed by her Contract of Employment.

Not applicable

B.2.10 Level of remuneration for Non –Executive DirectorsThe BNRC determines the levels of remuneration for Non –Executive Directors taking into account the time commitment, responsibilities of their role and the market practices. Remuneration for Non –Executive Directors does not include share options.

B.3 Disclosure of remuneration

B.3.1 Composition of the BNRC, Remuneration Policy and the disclosure on aggregate remuneration paid to Directors Please refer the “Board Nominations and Remuneration Committee Report” on page 98 for the Remuneration policy and the Committee composition.

Please refer note 30.2.2 to the Financial Statements on page 179 for details of aggregate remuneration paid to Executive and Non- Executive Directors.




C Relations with Shareholders

C.1 Constructive use of AGMs and conduct of General Meetings

C.1.1 & C.1.5 Notice of Meeting and related papers to be sent to shareholders The Annual Report, together with the Notice of Meeting and related documents, if any, is circulated to the Shareholders at least fifteen (15) working days prior to the date of the AGM.

A summary of procedures governing voting at the AGM is provided in the Proxy Form which is circulated to Shareholders together with the Notice of Meeting.

C.1.2 Separate resolutions for each substantially separate issue The Company proposes separate resolutions on each substantially separate issue, giving Shareholders the opportunity to vote on each issue separately.

The adoption of the Annual Report of the Board of Directors, the Financial Statements of the Company and the Report of the Auditors thereon are laid before the shareholders as separate agenda items at the AGM.

C.1.3 Count of all proxy votes lodgedThe Company has an effective mechanism to record all proxy votes to indicate to the Chairman the level of proxies lodged on each resolution and the number of votes cast for and against each resolution.

As a matter of practice, proxy votes together with the votes of Shareholders present at the AGM, are considered for each resolution and duly recorded in the Minutes.

C.1.4 Presence of Board Sub – Committee Chairman/ Chairperson The Company ensures the presence of the Chairmen of the Sub-Committees to answer questions at the AGM.

Additionally as a good practice, the Company ensures the presence of the CEO’s of the subsidiaries, at the AGM.

C.2 Communication with Shareholders

C.2.1 Channels to reach Shareholders The Company has many channels to reach all shareholders of the Company in order to disseminate timely information of which the primary channels are the Annual Report and the AGM.

Additionally, the Company makes disclosures on material and price sensitive matters from time to time to the CSE for dissemination to the public.

Copies of the Annual Report, Interim Financials and CSE announcements are published on the Company’s website.

C.2.2 – C.2.3 Policy and methodology for communicationThe Company focuses on open communication and fair disclosures with emphasis on the integrity, timeliness and relevance of the information provided.





C.2.4 – C.2.7 Contact person in relation to shareholder mattersShareholders may contact the Company Secretary or in her absence the Chairman, on matters related to their shareholding and the Company at any time.

The Company Secretary maintains records of all correspondence received and will deliver, as soon as is practicable, such correspondence to the Board or individual Director as applicable. The Board or the individual Director will direct the Company Secretary to send responses to the shareholder.

C.3 Major and material transactions

C.3.1 – C.3.2 Disclosure of major transactionsDuring the year, the Company did not engage in or commit any “Major Transaction” which materially affected its Net Asset base. In the event the Company enters in to a Major transaction, the same would be duly disclosed, as required by the regulators and shareholder approval would be sought.

Not applicable

D Accountability and Audit

D.1 Financial and business reporting (Annual Report)

D.1 Balanced and understandable assessment of the Company’s financial position, performance, opportunities and prospects

Please refer the following for relevant information:

Chairman’s message on page 18.

CEO’s message on page 24.

Management Review on page 29.

D.1.1 – D.1.2 Board’s responsibility for statutory and regulatory reportingInterim Financial Statements were published within 45 days of end of each quarter (Other than the last quarter which was submitted within the permitted two months period) which included information to assist the Shareholders gain an understanding of the state of affairs of the Company.

Price sensitive information were disclosed in a comprehensive but concise manner to the CSE on a timely basis.

All reports required by the regulators including the Department of Inland revenue, Registrar of Companies, CSE were all filed in a timely manner in compliance with the relevant requirements.

D.1.3 Declaration from the CEO and CFOThe BAC was provided with a declaration from the Chief Finance Officer (CFO) before the Financial Statements were approved and recommended to the Board. This declaration provided an assurance on:

� Proper maintenance of financial records;

� Compliance with appropriate accounting standards and that the Financial Statements give a true and fair view of the financial position of the Company;

� Effectiveness of the internal control system and risk management




D.1.4 Declarations by Directors in the Directors’ ReportPlease refer “The Annual Report of the Board of Directors on the affairs of the Company” on page 108 for the declarations required by the Code.

D.1.5 Statements by Directors’ and Auditors’ on responsibility for financial reportingPlease refer “The Statement of Directors’ Responsibility on Financial Reporting” on page 113.

Please refer page 117 for the Independent Auditor’s Report.

Please also refer the “Director’s Statement on Internal Controls” on page 116.

D.1.6 Management Discussion and AnalysisPlease refer page 29 for the Management Review that cover the aspects in the Code.

D.1.7 Notify Shareholders in case the Net Assets of the Company fall below 50%This situation did not arise during the year under review. Had the situation arisen, the Company would have duly notified the Shareholders.

Not Applicable

D.1.8 Related Party TransactionsPlease refer the Board Related Party Transactions Review Committee on page 101 for relevant disclosures under the Code.

All Related Party Transactions as defined in the Sri Lanka Accounting Standards – LKAS 24 (Related Party Transactions) are disclosed on note 30 to the Financial Statements on page 178.

D.2 Risk Management and Internal Control

D.2.1 Maintain a sound system of internal control to safeguard the Shareholders’ investments and the Company’s assets

The Board is responsible for formulating and implementing appropriate internal control systems. The BAC has the responsibility to the Board to ensure that the system of internal controls is sufficient and effective.

D.2.2 Confirmation by Directors on robust assessment of the principal risks facing the Company

Please refer “Board Audit Committee Report” on page 94.

D.2.3 Internal Audit FunctionThe Internal Audit function is headed by Senior Manager Risk and Compliance whose functioning is independent of the Management.

D.2.4 Review of the process and the effectiveness of the risk management and internal controls by Board Audit CommitteePlease refer “Board Audit Committee Report” on page 94.

D.2.5 Compliance with schedule L of the CodePlease refer the “Directors’ statement on internal controls” on page 116.





D.3 Audit Committee

D.3.1 Composition of the Board Audit Committee As at 31 March 2019, the BAC consists of 3 Independent Non –Executive Directors. The Chairperson is an independent Non –Executive Director appointed by the Board. Members are selected to provide a broad set of financial, commercial and other relevant experience to meet the Committee objectives.

Note: Following the resignation of Mr. R. A. Ebell, Independent Non –Executive Director, the Committee composition was below the number prescribed by the Code, during the period from 19 June 2018 - 31 October 2018. However, the composition was in line with the Listing Rules of the Colombo Stock Exchange.

D.3.2 Terms of Reference The Terms of Reference of the BAC is clearly defined and approved by the Board of Directors. This clearly explains the purpose of the Committee, its duties and responsibilities and the scope and functions of the Committee.

D.3.3 Disclosures in the Annual ReportPlease refer the “Board Audit Committee Report” on page 94 for relevant disclosures under the Code.

Please refer page 67 for attendance of Directors at BAC meetings.

D.4 Related Party Transactions Review Committee (BRPTRC)

D.4.1 Related Party and Related Party TransactionsThe Company follows LKAS 24, the Listing Rules and the Code of Best Practice on Related Party Transactions in identifying Related Parties of the Company and the Related Party Transactions.

D.4.2 Composition of the Related Party Transactions Review CommitteeAs at 31 March 2019, the BRPTRC consisted exclusively of Non – Executive Directors of whom the majority is independent. The Chairperson of the Committee is an Independent Non – Executive Director.

The CEO/ Executive Director attended meetings by invitation.

Note: Subsequent to Ms. L. E. M. Yaseen ceasing to hold office the Committee composition was below the number prescribed by the Code during the period from 7 July 2018 to 31 October 2018. However, the composition was in line with the Listing Rules of the CSE.

Please refer Board Related Party Transactions Review Committee report on page 101 for composition.

D.4.3 Terms of Reference The Committee has in place a written Terms of Reference, approved by the Board.




D.5 Code of Business Conduct and Ethics

D.5.1 Availability of a Code of Business Conduct and EthicsPlease refer page 69 for more details.

The Company organises bi –annual sessions on the employees Code of Conduct, to raise awareness and to ensure consistent compliance.

D.5.2 Disclosure of material and price sensitive informationA clear process is in place to ensure that immediate disclosures are made to the CSE on any price- sensitive information.

D.5.3 Disclosures of shares purchased by Directors, KMPs and employees involved in financial reporting In order to streamline the process, R I L introduced a Policy prohibiting Insider Trading which deals with the trading practices of Directors, Officers and employees. The Policy raises awareness on the prohibitions under the law and specifies the restrictions relating to trading by designated officers in specific circumstances on price sensitive information not available to the public.

Directors are constantly educated by the Company Secretary to timely inform of any trading in Company shares by them or their Close Family members. As an additional measure, quarterly declarations are also obtained from Directors to ensure that disclosures are properly made to the CSE.

Note: There was a delay on the part of the Company in making the disclosure regarding the exact holding accruing to Ms. L. E. M. Yaseen and her Close Family Members post allotment of the Rights issue in April 2018. However, the relevant information was subsequently disclosed to the market on 19 October 2018.

D.5.4 Affirmative declaration by Chairman of compliance with Code of Business Conduct and EthicsPlease refer “Chairman’s message on Corporate Governance” on page 56.

D.6 Corporate Governance disclosures

D.6.1 Corporate Governance ReportThe Corporate Governance Report given on page 56 to page 102 provides information regarding Corporate Governance practices in the Company which is in compliance with the CG Code 2017.

Shareholders

E Institutional Investors

E.1 Shareholder voting

E.1.1 Regular and structured dialogue with ShareholdersPlease refer page 69 on “Shareholder relations”.

E.2 Evaluation of Governance disclosures

E.2 Evaluation of Corporate Governance initiatives of the CompanyInstitutional investors are encouraged to provide feedback on governance- related issues.





F Other investors

F.1 Investing/divesting decision

F.1 Individual shareholders encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisionsThe Annual Report contains sufficient information for potential investors to carry out their own analysis. This together with the Interim Financial Statements provided in each quarter, provide sufficient information to enable retail investors to make informed judgments regarding the Company performance.

Additionally, a separate part of Company website is dedicated for Investors which provides relevant information to all investors.

Shareholders can at any time contact the Company Secretary for further information when required.

F.2 Shareholder voting

F.2 Encourage Shareholders to participate and vote at the AGMThe Company encourage Shareholders to participate and vote at the AGM.

At the AGM held for the year 2017/18, a total of 80 Shareholders attended the AGM while a further 25 Shareholders exercised their voting rights through proxy.

G Internet of things and Cybersecurity

G.1 – G.5 Internet of things and Cybersecurity The Board has identified the need for management of IT and cyber risks, the responsibility of which is vested with the Senior Manager IT. Since the last reporting date, the Company has successfully implemented the IT Policy, across the Company. This Policy covers inter alia cybersecurity risk management, disaster recovery etc.

Annually, the Senior Manager IT briefs the Board on potential cybersecurity risks to the Company’s business model as well as the mechanisms adopted to overcome such threats.

Pursuant to the independent annual IT audit, an IT Steering Committee headed by the Senior Manager IT, is in place. The purpose of this Committee would include inter alia the formulation of the IT Strategic Plan. IT audits are carried out on an annual basis by an outsourced party and the findings and recommendations are submitted to the BAC.

In consultation with the Senior Manager Legal, Senior Manager IT has identified laws and regulations applicable and at the end of each quarter, a confirmation is submitted to Senior Manager Risk and Compliance confirming compliance with the applicable laws and regulations.




H Environment, Society and Governance

H.1 ESG Reporting The ESG reporting framework has not been applied by the Company. However, the Company ensures that the business is carried out in accordance with the ESG principles and considered in formulating our business strategy.

Information required by the Code is given in the Corporate Governance report on pages 56 - 102 and Sustainability Report on pages 40 to 47.

To be complied

H.1.2 Environmental factors

H.1.3 Social factors

H.1.4 Governance

H.1.5 Board’s role on ESG factors



Appendix 2: Compliance with section 7.6 of the Listing Rules of the CSE The table below summarizes the status of compliance with section 7.6 of the Listing Rules of the CSE, as at 31 March 2019.

CSE Rule reference and description Status of compliance

Section reference in the Annual Report

7.6 Contents of the Annual Report

(i) Names of persons who were directors of the Company during the Financial Year

Annual Report of the Board of Directors on page 103.

(ii) Principal activities of the Company and its subsidiaries during the year and any changes therein


(iii) The names and the number of shares held by the 20 largest holders of voting and non-voting shares and the percentage of such shares held as at the end of the Financial Year

Shareholder information on page 193.

(iv) The float adjusted market Capitalisation, the public holding percentage, number of public shareholders and option under which the Company complies with the minimum public holding requirement


(v) A statement of each Directors’ and Chief Executive Officer’s holding in shares of the Company at the beginning and end of the Financial Year



(vi) Information pertaining to material foreseeable risk factors Not applicable

The Company does not foresee any material risks affecting its business in the foreseeable future.

(vii) Details of material issues pertaining to employees and industrial relations

Not applicable

During the year under review, there were no material issues pertaining to employees and industrial relations of the Company.

(viii) Extents, locations, valuations and the number of buildings of the land holdings and investment properties

Notes 6 and 7 to the Financial Statements.

(ix) Number of shares representing the stated capital Note 16 to the Financial Statements.

(x) A distribution schedule of the number of holders in each class of equity securities and the percentage of their total holdings

No. of holders Holdings Total Holdings %1 - 10001,001 – 10,000 shares10,001 – 100,000 shares100,001 – 1, 000,000 sharesOver 1,000,000 shares


(xi) Ratios and market price information on:1. Dividend per share;2. Dividend pay-out;3. Net Asset Value per share;4. Market value per share; - Highest lowest values and value as at end of Financial Year - Value as at end of the Financial Year

Shareholder information on pages 194 and 196.

Financial highlights on page 16.


CSE Rule reference and description Status of compliance

Section reference in the Annual Report

(xii) Significant changes in the Company’s or its subsidiaries’ fixed assets and the market value of land, if the value differs substantially from the book value

Note 6 to the Financial Statements

(xiii) Details of funds raised through a public issue, Rights Issue and a private placement during the year;

a. A statement as to the manner in which proceeds of such issue have been utilized;

b. If any shares or debentures have been issued, the number, class and consideration received and the reason for the issue;

c. Any material change in the use of funds raised through an issue of securities

Note 16 to the Financial Statements

(xiv) a. and b. Information in respect of Employee Share Option or Share

Purchase Schemes

Not applicable

The Company does not have any Employee Share Option or Share Purchase Schemes at present.

(xv) Disclosures pertaining to Corporate Governance Practices in terms of Rules 7.10.3, 7.10.5 c. and 7.10.6 c. of Section 7 of the Listing Rules

Corporate Governance Report on page 60 for names of independent Directors;

Directors’ profiles on pages 10 to 13.

“Board Nominations and Remuneration Committee Report” on page 98 for composition and remuneration policy;

Note 30.2.2 of the Financial Statements for Director’ aggregate remuneration.

“Board Audit Committee Report” on page 94.

(xvi) Related Party transactions exceeding 10% of the Equity or 5% of the total assets of the Entity as per Audited Financial Statements, whichever is lower.

Details of investments in a Related Party and/or amounts due from a Related Party to be set out separately.

The details shall include, as a minimum: i The date of the transaction; ii The name of the Related Party; iii The relationship between the Company and the Related Party; iv The amount of the transaction and terms of the transaction; v The rationale for entering into the transaction.

Not applicable

There were no Related Party Transactions which exceeded 10 % of the Equity or 5 % of the Total Assets, during the year under review.



Appendix 3: Compliance with section 7.10 of the Listing Rules of the Colombo Stock Exchange The table below summarizes the status of compliance with section 7.10 of the Listing Rules of the CSE as at 31 March 2019.

CSE Rule reference and description Status of Compliance Section reference in the Annual Report

7.10.1 Non –Executive Directors At least 2 or 1/3 of the total number of directors should be Non-Executive Directors

As at 31 March 2019, there are 6 Non – Executive Directors, out of the total of 7 Directors.

Corporate Governance Report on page 60.

7.10.2.a Independent Directors At least 2 or 1/3 of Non-Executive Directors whichever is higher should be independent

As at 31 March 2019, there are 4 independent Non – Executive Directors, out of the total of 6 Non – Executive Directors


7.10.2.b Declaration of independenceEach Non –Executive Director should submit a declaration of independence/ non – independence, in the prescribed format.

Non – Executive Directors submitted declarations in the prescribed format.

Copies of the same are under the custody of Company Secretary for review.


7.10.3.a Names of Independent DirectorsNames of independent Directors should be disclosed in the Annual Report.


7.10.3.b Criteria for independence The basis for determining the independence of Non –Executive Directors, if criteria for independence is not met

There were no circumstances which arose for the Board to determine the independence of the Directors outside the criteria specified in the Listing Rules.

Not applicable

7.10. 3.c Brief resume of DirectorsA brief resume of each Director should be included in the Annual Report including his area of expertise

Directors’ profiles from pages 10 to 13

7.10.3.d Brief resumes of new appointments to the Board Upon appointment of a new Director a brief resume of the Director should be submitted to the Exchange

At the time of appointment of Ms. C. R. Kariyawasam and Professor. N. D. Gunawardena, their resumes were submitted to the CSE. Their resumes included the disclosures required under section 7.10.3.

Not applicable

7.10.4 (a-h) Criteria for determining independence Requirements for meeting the criteria to be an independent Director

Requirements specified under this section were considered when determining independence of Directors.

Not applicable



Remuneration Committee

7.10.5.a Committee compositionThe Remuneration Committee shall comprise of a minimum of two Independent Non –Executive Directors or of Non – Executive Directors, a majority of whom shall be independent

The Chairman of the Committee shall be a Non –Executive Director.

The Remuneration committee consist of 3 Non –Executive Directors and all including the Chairman, are independent.

Board Nominations and Remuneration Committee report on pages 98 to 100.

7.10.5.b Committee functionsThe Committee shall recommend the remuneration for Executive Directors, CEO and /or equivalent role

The Committee recommends remuneration of both Non – Executive and Executive Directors.

Board Nominations and Remuneration Committee report on pages 98 to 100

7.10.5.c Disclosure in the Annual ReportThe Annual Report should set out the names of the members of the Committee, a statement of the remuneration policy and the aggregate remuneration paid to the Executive and Non –Executive Directors

Board Nominations and Remuneration Committee report on pages 98 to 100 for composition and remuneration policy

Note 30.2.2 to the Financial Statements for aggregate remuneration paid to Directors

Audit Committee

7.10.6. a Committee composition The Committee shall comprise a minimum of 2 independent Non –Executive Directors or of Non – Executive Directors, a majority of whom shall be independent;

The Chairman of the Committee shall be a Non –Executive Director;

Unless otherwise determined by the Committee, CEO and CFO shall attend meetings;

Chairman or one member of the Committee should be a member of a recognised professional accounting body

As at 31 March 2019, the Audit Committee consisted of three independent Non –Executive Directors.

With effect from 1 June 2019, Mr. L. W. D. Abeyarathne, Non – Executive Director, was appointed to the Committee.

The Chairperson of the Committee is an independent Non –Executive Director.

CEO and CFO attends meetings by invitation.

Mr. S. G. Wijesinha is a fellow member of the Chartered Institute of Management Accountants, while Mr. L. W. D. Abeyarathne is a Chartered Accountant.

Board Audit Committee report on page 94.




7.10.6.b Functions of the Committee(i) Overseeing the preparation, presentation and adequacy of

disclosures in the Financial Statements of the Company in accordance with Sri Lanka Accounting standards;

(ii) Overseeing the Company’s Compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements;

(iii) process to ensure that the Company’s internal control and risk management are adequate to meet the requirements of the Sri Lanka Auditing standards;

(iv) Assessment of the independence and performance of the Company’s External Auditors;

(v) Recommendations to the Board pertaining to appointment, re-appointment and to approve the remuneration and terms of engagement of the External Auditors

The Terms of Reference of the Board Audit Committee covers the areas outlined.

Board Audit Committee report on page 94.

7.10.6.c Disclosures in the Annual Report

The names of the members of the Audit Committee;

The basis of determination of the independence of Auditors;

A report of the Committee setting out the manner of compliance with their functions

Board Audit Committee report on page 94


Appendix 4:Compliance with section 9 of the Listing Rules of the Colombo Stock Exchange as well as the Code of Best Practice on Related Party Transactions issued by the Securities and Exchange Commission of Sri Lanka w.e.f 1 January 2016

The table below summarizes the status of compliance with section 9 of the Listing Rules of the CSE and the Code of Best Practice on Related Party Transactions issued by the Securities and Exchange Commission of Sri Lanka 2013, as at 31 March 2019.

CSE Rule reference and description Status of compliance Section reference in the Annual Report

9.3.2 Disclosures in the Annual Report

9.3.2. (a) Non – Recurrent Related Party TransactionsIn the case of Non -recurrent Related Party Transactions, if aggregate value of the Non - recurrent Related Party Transactions exceeds 10% of the equity or 5% of the total assets, whichever is lower, of the Company as per the latest Audited Financial Statements following information must be presented in the Annual Report:

� Name of the Related Party;

� Relationship;

� Value of the Related Party Transactions entered into during the year;

� Value of Related Party Transactions as a % of Equity and as a % of Total Assets;

� Terms and conditions of the Related Party Transactions

� The rationale for entering into the transactions

There were no Non – recurrent Related Party Transactions which exceeded 10 % of the Equity or 5 % of the Total Assets, during the year under review.

Not applicable

9.3.2.(b) Recurrent Related Party TransactionsIn the case of Recurrent Related Party Transactions, if the aggregate value of the Recurrent Related Party Transactions exceeds 10% of the Gross revenue/Income (or equivalent term in the Income Statement and in the case of Group Company consolidated revenue) as per the latest Audited Financial Statements, the Company must disclose the aggregate value of Recurrent Related Party Transactions entered into during the Financial Year under review in its Annual Report with the following information:

� Name of the Related Party;

� Relationship;

� Nature of the transaction

� Aggregate value of the Related Party Transactions entered in to during the Financial Year

� Aggregate value of Related Party Transactions as a % of Net revenue/ Income

� Terms and conditions of the Related Party Transactions

There were no recurrent Related Party Transactions which exceeded 10 % of the consolidated revenue or income, during the year under review.

Not applicable



CSE Rule reference and description Status of compliance Section reference in the Annual Report

9.3.2. (c) Disclosures in the Annual ReportThe Annual Report should contain a report by the Related Party Transactions Review Committee, setting out the following:

� The names of the Directors comprising the committee;

� A statement to the effect that the Committee has reviewed the Related Party Transactions during the Financial Year and has communicated the comments/observations to the Board of Directors;

� The policies and procedures adopted by the Committee for reviewing the related party transactions;

� The number of times the Committee has met during the Financial Year

Board Related Party Transactions Review Committee report on page 101

9.3.2. (d) Declaration A declaration by the Board of Directors in the Annual Report as an affirmative statement of the compliance with these rules pertaining to Related Party Transactions or a negative statement in the event the entity does not have Related Party Transactions



Dear Shareholder,This report is provided by the Board Audit Committee (BAC/ the Committee) for the year ended 31 March 2019 as required by the Listing Rules of the Colombo Stock Exchange (Listing Rules) (CSE).

Date of establishment of the Committee:1 September 2016

Requirement - Listing Rules / The Code of Best Practice on Corporate Governance issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka 2017 (CG Code 2017)

Committee Composition As at 31 March 2019, the Committee comprised of the following members:

Member Board Status


Chairperson / Independent Non - Executive

Mr. S. G. Wijesinha

Member / Independent Non - Executive

Ms. C. G. Ranasinghe


Note: Mr. L. W. D. Abeyarathne, Non - Executive Director, was appointed to the Committee w.e.f. 1 June 2019.

During the year under review, the Committee composition consisted of all Independent Non - Executive Directors.

Report of the Board Audit Committeeunder consideration. However, during the period 19 June 2018 - 31 October 2018, the Committee composition was not in compliance with the CG Code 2017.

Secretary to the CommitteeMs. R. Weudagedara - Company Secretary functions as the Secretary to the Committee.

MeetingsDuring the year, the Committee met four times and the meeting attendance of the Committee members is set out on page 67. Where necessary, matters were recommended to the Committee via circulation.

Frequency of meetings Terms of Reference (TOR)

Regular attendees by invitation during the year:Ms. L. K. A. H. Fernando - CEO/ED;Mr. L. W. D Abeyarathne - FD; and Ms. M. Wijesekara - Senior Manager Risk and Compliance

CEO - Chief Executive OfficerED - Executive DirectorFD - Finance Director

In addition, the Committee summoned relevant officials to participate in proceedings on a needs basis.

Reporting to the BoardThe proceedings of the Committee meetings are regularly reported to the Board via the Committee Chair’s report outlining proceedings, outcomes and recommendations. Over the year, the Committee provided four reports to the Board. The minutes of BAC meetings are tabled at successive Board meetings for informational purposes.

While Committee Member Mr. S. G. Wijesinha, is a fellow member of the Chartered Institute of Management Accountants, Ms. C. G. Ranasinghe is an Attorney-at- Law.

As outlined in the Directors’ profiles set out on pages 10 to 13, members bring a balance of expertise requisite for the Committee’s evolving scope of work.

Changes to the Committee Composition During the Year:1 April 2018 – 18 June 2018

Member Board status

Mr. R. A. Ebell * Chairman/ Independent Non - Executive

Mr. S. G. Wijesinha




*Ceased to be a member w.e.f 19 June 2018

19 June 2018 – 31 October 2018

Member Board status

Ms. C. G. Ranasinghe*

Chairperson / Independent Non - Executive

Mr. S. G. Wijesinha


*Appointed as Chairperson w.e.f 5 July 2018

1 November 2018 – 31 March 2019

Member Board status

Ms. C. R. Kariyawasam*

Chairperson/ Independent Non - Executive

Mr. S. G. Wijesinha




*Appointed as Chairperson/member w.e.f 1 November 2018

The Committee composition was in line with the Listing Rules throughout the year


Terms of Reference (TOR) The Committee operates within a Board approved written TOR dealing with its authority and duties and carefully designed to discharge the Committee’s purpose. The TOR is annually reviewed to ensure that the new developments pertaining to the Committee are duly addressed. The TOR was reviewed during the year under consideration.

Scope of Committee in relation to SubsidiariesThe Company’s BAC performs the Audit Committee function for its wholly owned subsidiary FoodBuzz (Private) Limited (FoodBuzz). United Motors Lanka PLC (UML) in which the Company has 51% ownership, is a listed entity with its own Audit Committee. Proceedings of the Audit Committee of UML is tabled at the Company’s BAC meetings.

Summary Role of the CommitteeThe Committee is established to assist the Board in fulfilling its supervisory responsibility for the:

� preparation, presentation and disclosures in the Company’s Financial Statements, in keeping with the Sri Lanka Accounting Standards and other relevant statues;

� adequacy of the internal controls and risk management processes;

� adequacy and efficiency of the Internal Audit function;

� independence and performance of the External Auditors;

� compliance with the statutes and regulations;

� Whistle-Blowing Policy and processes that have been instated.

Financial Reporting The Committee monitors the integrity of the Financial Statements of the Group and any formal announcement relating to the Group’s financial performance, reviewing significant financial reporting judgements contained in them. The BAC reviews and recommends for Board approval the Interim Financial Statements proposed for publication and the Annual Financial Statements proposed for inclusion in the Annual Reports to Shareholders.

The reviews include: � appropriateness and changes in

accounting policies;

� significant estimates and judgements made by the Management;

� compliance with relevant Accounting Standards and applicable regulatory requirements;

� issues arising from internal and external audits;

� statements and reports to be included in the Annual Report

The Management has been delegated the planning and implementation of the system of internal control over financial reporting. Internal control over financial reporting is a process designed by Management to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of published Financial Statements for external reporting purposes in accordance with applicable accounting standards.

The Group’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and provide reasonable assurances that transactions are recorded as necessary to permit preparation of Financial Statements in accordance with the Accounting Standards.

The Committee’s considerations on internal controls are further detailed under “Internal Controls”.

Significant Considerations in view of Financial StatementsThe Committee met the External Auditors in an Audit-opening meeting to discuss the audit scope, objectives and plan. The approach in respect to the material areas of valuation of investment properties and deferred taxation on investment properties was also discussed.

The Committee subsequently reviewed the perspectives of both the Auditor and the independent valuer in view of assumptions utilised in the valuation of investment properties. The assurance approach related to the valuation was detailed. Given their subjectivity, varied considerations relating to the assumptions used in the valuation were reviewed by the Committee. The Committee is satisfied that the disclosures as detailed in notes 3.10, 3.12, 6, 7 related to the valuation of investment property, are adequate.

The External Auditors retain an Emphasis of Matter paragraph in their review report drawing the reader’s attention to the other key area of deferred taxation on investment properties. The Committee is satisfied that the disclosures as detailed in note 21.3 related to this matter are adequate.

The Committee received a report from the External Auditors on their audit of the Financial Statements. The said report included the Auditors’ review of the areas of audit risk and focus in relation to the Financial Statements. The report and the discussion did not reveal additional material concerns.

External Audit Ernst & Young, Chartered Accountants (Ernst & Young) acts as the Group’s External Auditor. They have been the External


Auditors since 2016. Ernst & Young also provides audit services to the subsidiary, FoodBuzz. PricewaterhouseCoopers acts as the Auditors of the Company’s other subsidiary, UML.

In terms of the TOR of the BAC, in the interest of good governance, the BAC can make recommendations to change the Auditor at intervals not exceeding seven years. A new engagement partner was appointed due to retirement of the predecessor. Customarily, engagement partner rotation takes place each seven years.

The Committee reviewed the level of non-audit services performed by the External Auditor during the current year.

The Committee has received a declaration from Ernst & Young confirming that having exercised their professional judgement, they are not aware of any relationship or interest in the Group that can reasonably be thought as having a bearing on their independence within the meaning of the Code of Conduct and Ethics of the Institute of Chartered Accountants of Sri Lanka.

Having considered the engagement letter, the Committee approved and recommended to the Board the audit fees for the current engagement, as commensurate with the scope agreed upon. The Committee also recommended to the Board the reappointment of Ernst & Young, as External Auditors for the Financial Year ending 31 March 2020, subject to the approval of the Shareholders at the Annual General Meeting.

Discussions are ensured between the Committee, the Management, Internal Auditor and the External Auditors regarding the coordination of the audit to assure that the External Auditors have access to required information and co-operation from all employees.

Report of the Board Audit Committee

At least once each year, the Committee and the External Auditors discuss, without Management present, matters relating to its remit and any issues arising from the audit.

The External Auditors have unrestricted access to the Chairperson of the Committee.

Internal Audit With the culmination of the outsourcing arrangement in December 2017, the Company instated an in-house internal audit function headed by the Senior Manager Risk and Compliance in January 2018. The internal audit team of the Company is constituted of appropriately experienced members to ensure the efficacy of the function.

During the period under consideration, the BAC recommended appropriate key performance indices for the evaluation of the performance of the Senior Manager Risk and Compliance. An enhanced work plan was formulated during the year in order to establish comprehensive coverage of scope by the internal audit team and to assist in tasking and performance evaluation

At the beginning of the year, the internal audit plan is submitted to the Committee for approval. The BAC ensures that the scope of the Internal Auditor’s review on internal controls cover all significant operating procedures in the Company’s business model.

The internal audit team carries out checks in accordance with the pre-approved audit plan and reports to the Committee, on a quarterly basis. The reports cover significant findings and recommendations together with the Management responses of the review of the internal controls as well as recommendations for further improvement.

Findings of any surprise checks conducted are reported to the Committee separately. The Committee adopts a risk based approach to assess internal audit review, prioritised by risk rating.

Internal ControlsEffectiveness of the internal control system is evaluated through internal audit reports pertaining to the Company and the wholly owned subsidiary, provided by the Internal Auditors, the Management as well as the External Auditors. The key findings from these reviews were reported to the Committee during the year. The recommendations from these reviews have been or are being implemented by the Management of the Company and that of its wholly owned subsidiary.

The Committee is satisfied that an effective system of internal control is in place to provide reasonable assurance in safeguarding the Company’s assets and reliability of Financial Statements.

Risk Management The Group has identified and documented critical risks to the business, including key operational risks and related controls in the risk matrix maintained by the Senior Manager Risk and Compliance. Bi - annually, the Senior Manager Risk and Compliance reports to the Committee on the status of significant risks and the progress on actions taken to ensure that the appropriate focus is maintained.

During the year, the risk matrix was refined to capture risks other than those captured traditionally, so as to represent enterprise level risk more comprehensively. The Group’s risk matrix was amended given strategic risk relating to the investment portfolio and operational risk. The Committee also advised that solvency risk be assessed on a more frequent basis for time efficient monitoring of this risk.


The risk matrix together with the controls in place for risk mitigation are set out on pages 50 to 55 .

During the year, the Committee did not review key Group insurance policies. The Board has however reviewed a summary of the Company’s insurance policies post - reporting date, leading up to the publication of this Annual Report.

Compliance with Rules and Regulations A Compliance Policy has been introduced where the Senior Manager Legal, in consultation with the Heads of Divisions would identify and report the laws and regulations applicable to the business, on an annual basis. The Heads of Divisions together with the Senior Manager Legal has a collective responsibility to keep track of amendments to the existing legislation as well as new laws.

The Senior Manager Risk and Compliance is entrusted with the responsibility to ensure compliance with all such identified laws and regulations. Confirmations are obtained from all Heads of Divisions on compliance with the laws relevant to them and a statutory compliance report is prepared on a quarterly basis. Deviations and non - compliances would be reported separately. The Committee is satisfied that all applicable laws and regulations are duly complied with and all statutory payments are paid on a timely basis.

Whistle-Blowing The Company has a Whistle-Blowing Policy in place that enables employees to confidentially contact and report any wrongdoing in the workplace to any member of the Committee, CEO or the Senior Manager Risk and Compliance. No communications were received by the Committee during the year. Awareness-raising sessions on the Whistle-Blowing

Policy were conducted to all employees during the year.

Evaluation of the CommitteeNotwithstanding the re-composition of the Committee over the year, a self-evaluation was initiated by way of a structured questionnaire circulated among the members. Results were summarised by the Company Secretary and presented to the Committee. Areas needing further review and enhancement were identified and will be addressed in the ensuing year.

Future Focus The Committee recognises the guidance and principles set out in the CG Code 2017 under voluntary compliance assumed by the Company as part of its governance framework.

Having listed on the CSE in the year 2017, this clarifies the path towards enhanced governance.

The Committee envisages augmentation in its scope and performance by continuing to integrate more expansively the applicable principles and guidance of the CG Code 2017 in its future work.

C. R. Kariyawasam Chairperson Board Audit Committee

26 June 2019Colombo


Report of the Board Nominations and Remuneration Committee

Dear Shareholder,I am pleased to present the report of the Board Nominations and Remuneration Committee (BNRC/Committee) for the year ended 31 March 2019. Through this report, it is endeavoured to share with you how the BNRC worked towards discharging its’ responsibilities within the Terms of Reference.

Date of establishment of the Committee: 1 September 2016

Requirement – Listing Rules of the Colombo Stock Exchange (CSE)/ Code of Best Practice on Corporate Governance 2017 issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka (CG Code 2017)

Committee compositionAs at 31 March 2019, the Committee comprised of the following members:

Member Board Status

Mr. S. G. Wijesinha

Chairman / Independent Non – Executive


Member / Independent Non – Executive



All 3 members are independent Non – Executive Directors

Changes to the Committee composition7 July 2018 – 31 October 2018

Member Board Status

Mr. S. G. Wijesinha

Chairman/ Independent Non – Executive



Mr. A. D. E. I. Perera*


*Ceased to be a member w.e.f 7 July 2018

1 November 2018 – 31 March 2019Member Board Status

Mr. S. G. Wijesinha

Chairman/ Independent Non – Executive



Professor. N. D. Gunawardena*


*Appointed w.e. f 1 November 2018

The Committee composition was in line with the Listing Rules of the CSE throughout the year under consideration. However, during the period 7 July 2018 – 31 October 2018, the Committee composition was not in compliance with the CG Code 2017.

Secretary to the CommitteeMs. R. Weudagedara – Company Secretary functioned as the Secretary to the Committee.

Meetings During the year, the Committee met thrice and the meeting attendance of the Committee members is set out on page 67.

Where necessary, matters were recommended to the Board via circular resolution.

Frequency of meetingsTerms of Reference

Regular attendees by invitation:

Ms. L. K. A. H. Fernando - CEO/ED

CEO - Chief Executive Officer;ED - Executive Director;

In addition, the Committee summoned other relevant officials to participate the Committee proceedings, on a need basis.

Key areas focused during the year 2018/19Board appointments and other Board related matters

� Assessed the Board composition and two new Board appointments, Ms. C. R. Kariyawasam and Professor. N. D. Gunawardena recommended to the Board;

� Following his retirement, Mr. L. W. D. Abeyarathne recommended to be re –appointed as a Non – Executive Director;

� Recommended the election of newly appointed Directors/ re-election of retiring Directors by the Shareholders at the upcoming AGM;

� Directors’ and Officers’ liability cover reviewed and recommended for Board approval;

� Terms of Reference amended to accommodate desired changes;

� Evaluated the summary on Board performance evaluation and made recommendations to the Board on actions and initiatives required for areas that needed improvement

� Performance evaluation of the CEO

Remuneration related matters � Criteria for bonuses/ annual salary

increments reviewed and approved;

� Reviewed and made recommendations to the Organisation Structure;

� Approved promotions;

� Recommended the remuneration to be paid to the newly appointed Directors;

� Reviewed the retirement age of employees;


Purpose of the CommitteeThe BNRC was established to assist the Board in

� Designing a framework for the remuneration of the Board of Directors and employees.

� Reviewing the appropriateness and relevance of the ongoing remuneration policies in terms of the structure of the compensation package at each staff category and ensure that the compensation structures are in line with the market and industry practices;

� Regularly reviewing the structure, size, composition and competencies of the Board and make recommendations to the Board on new Board appointments

Scope of the Committee in relation to subsidiaries The Company’s BNRC functions for its’ wholly owned subsidiary, FoodBuzz (Private) Limited (FoodBuzz). United Motors Lanka PLC in which the Company has a 51% ownership, is a listed entity with its’ own Committees, for this purpose.

Terms of Reference (TOR)The Committee operates within a Board approved TOR. The TOR is annually reviewed to ensure that the new developments pertaining to the Committee are duly addressed.

Reporting to the Board The proceedings of the Committee meetings are regularly reported to the Board and makes whatever recommendations to the Board it deems appropriate on any area within its purview, where action or improvement is needed.

Board appointments The Committee when making recommendations to the Board on new appointments, assesses the Board composition against the skills and

knowledge requirements to ascertain whether the combined knowledge and experience of the Board meets the strategic demands of the Company.

Remuneration Policy The BNRC is entrusted with the responsibility to determine and agree with the Board the policy for remuneration. The objective of such policy is to ensure that all are provided with appropriate incentives to encourage enhanced performance and are in a fair and responsible manner rewarded for their individual contributions to the success of the Company.

The Committee ensures that the remuneration of executives of each level of management is competitive and in line with their performance. Surveys are conducted as and when necessary to ensure that remuneration is competitive with those of comparative companies.

The proposals relating to remuneration where necessary are arrived at, in consultation with the Chairman and the CEO. No Director is involved in deciding his own remuneration.

Remuneration packageA. Employees

The remuneration package of the employees consists of a fixed component, variable component and other benefits as described below:

Fixed component

Variable component

Other benefits

Basic salary Annual bonus

Insurance benefits

Training/ educational course fee reimbursement

Fixed component Basic salary is the fixed component which is based on the scope and complexity of the role. Employees are informed of the Key Performance Indicators (KPIs) in advance and annual performance appraisals are conducted to evaluate performance against such pre agreed KPIs. Increments and promotions are granted purely based on the results of such appraisals.

Variable Component Annual bonus is the variable pay which is reviewed by the Committee from time to time.

Other Employee BenefitsOther benefits provided to employees include reimbursement of costs incurred for educational courses/ training and insurance benefits.

B. Directors

No remuneration is paid to Non –Executive Directors other than the monthly Directors’ fee and the fee paid for the participation at Board meetings and other Board Sub –Committee meetings. Non –Executive Directors’ remuneration is based on the time, commitment and responsibilities of their roles, taking into consideration the prevailing market rates. Share options are not included in the remuneration of Non –Executive Directors.

The Executive Directors’ remuneration in the capacity of an employee comprises of salary, bonuses and other benefits, as appropriate. During the year, no performance related remuneration was paid to the Executive Directors.


Share option plans for Directors Currently, the Company does not have any share option plans for Directors.

Directors’ EmolumentsThe Directors’ emoluments are disclosed in note 30.2.2 to the Financial Statements.

Evaluation of the CommitteeA self – evaluation of the Committee was conducted during the year by circulating a structured questionnaire among the members. Results were summarized by the Company Secretary and was presented to the Committee. The review concluded that the Committee continues to operate effectively.

S. G. WijesinhaChairmanBoard Nominations and Remuneration Committee

26 June 2019Colombo

Report of the Board Nominations and Remuneration Committee


Report of the Board Related Party Transactions Review Committee

Dear Shareholder,I am pleased to present the report of the Board Related Party Transactions Review Committee (BRPTRC/ Committee) for the year ended 31 March 2019. Through this report, it is endeavoured to share with you how BRPTRC worked towards discharging its’ responsibilities within its Terms of Reference.

Date of establishment of the Committee: 1 September 2016

Requirement – Listing Rules of the Colombo Stock Exchange (CSE) /Code of Best Practice on Corporate Governance issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka (CG Code 2017)/ Code of best practice on Related Party Transactions December 2013

Committee compositionAs at 31 March 2019, the Committee comprised of the following members:

Member Board status


Chairperson / Independent Non – Executive

Mr. S. G. Wijesinha


Ms. L. E. M. Yaseen

Member/ Non – Executive



Independent Non –Executive members

Non – Executive member

Chairperson, Ms. C. G. Ranasinghe, is anindependent Non –Executive Director.

Changes to the Committee composition during the year under review:

19 June 2018 – 6 July 2018Member Board statusMs. C. G. Ranasinghe


Mr. S. G. Wijesinha


Ms. L. E. M. Yaseen


Mr. R. A. Ebell* Member/ Independent Non –Executive*

*Ceased to be a member w.e.f 19 June 2018 7 July 2018 – 31 October 2018 Member Board statusMs. C. G. Ranasinghe


Mr. S. G. Wijesinha


Ms. L. E. M. Yaseen*

Member / Non – Executive

*Ceased to be a member w.e.f 7 July 2018

1 November 2018 – 31 March 2019Member Board statusMs. C. G. Ranasinghe


Mr. S. G. Wijesinha


Ms. L. E. M. Yaseen *


Ms. C. R. Kariyawasam*


*Appointed w.e. f 1 November 2018

The Committee composition was in line with the Listing Rules of the CSE throughout the year under consideration. However, during the period from 7 July 2018 – 31 October 2018, the Committee composition was not in compliance with the CG Code 2017.

Secretary to the CommitteeMs. R. Weudagedara, Company Secretary functioned as the Secretary to the Committee.

Activities in 2018/19During the year,

� All Related Party Transactions (RPTs) (other than those exempted under the Listing Rules) were reviewed;

� Changes proposed to the frequency in reviewing the recurrent RPTs;

� RPT Manual reviewed and updated;

� The criteria to establish arms - length principle was clarified and set out in detail.

� Disclosures to be made in the Annual Report reviewed and recommended to the Board;

� TOR amended to accommodate desired changes

MeetingsDuring the year, 4 Committee meetings were held. The attendance of Committee members at the meetings is provided on page 67.

Frequency of meetings Listing Rules Terms of Reference

Regular attendees by invitation:Ms. L. K. A. H. Fernando - CEO/ED;Mr. L. W. D. Abeyarathne - ED/FD

Other Management officers who attended the sittings on a need basis, by invitation.

Mr. I. Perera - CFO;Ms. M. Wijesekara - Senior Manager Risk & Compliance

CEO – Chief Executive Officer;ED – Executive Director;CFO – Chief Finance Officer;FD – Finance Director

In addition, the Committee summoned other relevant officials to participate in the Committee proceedings, on a need basis.


Purpose of the CommitteeThe Committee is established to assist the Board in fulfilling its oversight responsibility of

� evaluating and considering all transactions with Related Parties (RPs) before they are undertaken, in order to ensure that RPs are treated on par with other Shareholders and stakeholders;

� reviewing transactions with RPs according to the applicable rules and regulations and to this extent to ensure that necessary processes are in place to identify, approve, disclose and monitor RPTs according to the Board approved Related Party Transactions Policy;

� ensuring compliance with section 9 of the Listing Rules when carrying out the approval of RPs and RPTs.

Terms of Reference (TOR)The Committee operates within a Board approved Terms of Reference which covers aspects relating to matters prescribed in the Listing Rules of the CSE as well as the Code of Best Practice on Related Party Transactions.

The TOR is reviewed annually to ensure that the new statutory and operational requirements pertaining to the Committee are duly addressed. The TOR was reviewed during the year under review.

Meeting proceedings and reporting to the BoardThe proceedings of the Committee meetings are regularly reported to the Board.

If a member has a personal material interest in a matter being considered or a RPT involves directly or indirectly one of the members of this Committee, the conflicted member informs the Committee immediately and excuse himself at the meeting and such member is not present while the matter is being considered at the meeting and abstains from voting on the matter.

Policies and Procedures A Board approved Manual on Related Party Transactions is in place with the objective to establish a frame work for the Company for identification of RPs and RPTs. The Manual also assists in setting up procedures under which RPTs should be reviewed, approved and

disclosed appropriately in order to comply with the Sri Lanka Accounting Standards, Listing Rules and the Code of Best Practice on Related Party Transactions.

Identification of RPsRPs are identified in accordance with the criteria set out in the Sri Lanka Accounting Standards (LKAS 24) as well as the Listing Rules. In terms of the Manual, CFO is entrusted with the responsibility to submit to the Committee, a list of RPs identified, on a quarterly basis.

The Company adopts a disclosure based approach in identifying RPs. The members of the Board have been identified as Key Management Personnel (KMPs). In accordance with the Related Party Transactions Policy, self - declarations are obtained at the time of joining the Board and thereafter annually, from the KMPs of the Company, for the purpose of identifying parties related to the KMPs.

Quarterly declarations are then obtained to capture any changes to the annual declarations submitted by the KMPs. These declarations would disclose any existing or potential RPTs carried out by them or their Close Family Members (CFM) or any changes to the position already disclosed. A record of these declarations is maintained by the Company Secretary.

Further there is a system in place to obtain confirmations on any new appointments accepted by the Directors in other entities as KMPs, to identify and capture such transactions carried out by the Company with those entities.

Reporting and Reviewing RPTsThe information received from the KMPs are entered in to the Enterprise Resource Planning (ERP) system and the Company would retrieve data on Related Party Transactions from the Company’s database. Company Secretary would monitor the transactions of the Company with the identified RPs to ascertain transactions which triggers shareholder/Board approval as well as immediate disclosures.

All Related Party Transactions (other than those exempted) are submitted to the Committee on a quarterly basis for Committee’s review. The Committee has established guidelines to follow, when reviewing these RPTs.

Internal Audit division ensures to monitor compliance with the Manual through detailed audits and surprise checks.

Related Party Transactions During the Year All transactions with RPs (other than those exempted) during the year 2018/19 were reviewed by the Committee. During the year, there were no non –recurrent or recurrent RPTs which exceeded the respective thresholds mentioned in the Listing Rules mandating disclosure in the Annual Report.

Details of other RPTs entered into by the Company are disclosed in note 30 to the Financial Statements.

Evaluation of the CommitteeA self – evaluation of the Committee was conducted during the year by circulating a structured questionnaire among the members. Results were summarized by the Company Secretary and was presented to the Committee. The review concluded that the Committee continues to operate effectively.

DeclarationA declaration by the Board of Directors in the Annual Report as a negative statement to the effect that no RPTs falling within the ambit of the Rule 9.3.2 of the Listing Rules of the CSE, was entered into by the Company during the year, is given in the Annual Report of the Board of Directors on page 106.

C. G. RanasingheChairpersonBoard Related Party Transactions Review Committee

26 June 2019Colombo

Report of the Board Related Party Transactions Review Committee


Annual Report of the Board of Directors on the Affairs of the CompanyThe Board of Directors of R I L Property PLC (R I L/ the Company) have the pleasure in presenting to its Shareholders the Annual Report of the Company which covers and includes the Audited Financial Statements for the Financial Year ended 31 March 2019, Chairman’s message, CEO’s message, Corporate Governance together with the Sub –Committee reports, Risk Management, Statements of responsibility, Auditors Report together with other relevant information.

This Report provides the information required by the Companies Act No. 07 of 2007 (CA 2007), the Code of Best Practice on Corporate Governance issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka (CG Code 2017) as well as the Listing Rules of the Colombo Stock Exchange (Listing Rules) (CSE).

The Annual Report of the Company including the Annual Report of the Board of Directors was adopted by the Board of Directors on 26 June 2019 The required number of copies of the Company’s Annual Report have been submitted to the CSE and to the Sri Lanka Accounting and Auditing Standards Monitoring Board within the stipulated time.

As set out under Section 168 of the CA 2007, the following information is disclosed in this Annual Report prepared for the Financial Year ended 31 March 2019.

Reference Information required to be disclosed Annual Report page reference and necessary disclosuresSection 168 (1) (a) The nature of the business of the Company and

its subsidiaries together with any change thereof during the accounting period

Please refer 104

Section 168 (1) (b) Completed and signed Financial Statements of the Company and the Group for the accounting period completed in accordance with section 152

The Financial Statements for the Company and the Group for the year ended 31 March 2019 have been prepared in accordance with the requirements of the Sri Lanka Accounting Standards and comply with the requirements of the CA 2007 as well as Listing Rules, duly certified by the Chief Finance Officer and signed by two (02) members of the Board as appearing on pages 120 to 192 which form an integral part of this report.

Section 168 (1) (c) Auditors’ Report on Financial Statements of the Company and the Group

Please refer page 117.

Section 168 (1) (d) Any changes made to Accounting Policies during the year under review

Please refer page 104 for the significant accounting policies adopted in the preparation of the Company and Group.

Other than those disclosed in note 4.2, there were no changes to the accounting policies used by the Company during the year.

Section 168 (1) (e) Particulars of the entries in the Interest Registers of the Company and its subsidiaries during the accounting period

Please refer 108.

Section 168 (1) (f ) Remuneration and other benefits paid to the Directors of the Company and its subsidiaries during the accounting period

Please refer note 30.2.2 to the Financial Statements on page 179.

Also refer the “Board Nominations and Remuneration Committee Report” on page 98.

Section 168 (1) (g) Total amount of donations made by the Company during the accounting period

Please refer 25 to the Financial Statements on page 173.

Section 168 (1) (h) Information on the Directorate of the Company and its subsidiaries during and at the end of the accounting period

Please refer pages 8, 9, 107.


Reference Information required to be disclosed Annual Report page reference and necessary disclosuresSection 168 (1) (i) Separate disclosure of amounts payable by the

Company and its subsidiaries to the Auditor as audit fees and fees for other services rendered during the accounting period

Please refer note 25 to the Financial Statements on page 173.

Section 168 (1) (j) Auditors’ relationship or any interest in the Company and its subsidiaries

Auditors do not have any other relationship or interest in contracts with the Company and it’s subsidiaries other than that of the Auditor.

Section 168 (1) (k) Acknowledgment of the contents of this report/signatures on behalf of the Board by two Directors and the Secretary of the Company

Please refer page 110.

GeneralThe Company was incorporated on 15 July 2009 as a Private Limited Liability company and subsequently converted to a Public Limited Liability Company on 13 September 2016 under the CA 2007.

The ordinary shares of the Company are quoted on the Main Board of the CSE since 4 May 2017.

Principal ActivitiesThe principal business activities of the Group are into different sectors.

The principal activity of the parent company, R I L is developing and managing Grade ‘A’ commercial office space in selected core markets in the Colombo Business District (CBD) whilst offering multi-faceted real estate solutions including facilities management, leasing, land acquisition, construction management services, consulting and strategic investment.

Subsidiary, FoodBuzz (Private) Limited (FoodBuzz) is operating a chain of BreadTalk™ restaurants under a franchise agreement and provide food processing and other related services.

Subsidiary, United Motors Lanka PLC (UML) continues to be the sole distributor for brand new Mitsubishi and Fuso Vehicles and genuine Mitsubishi parts and provides after sales services.

There were no significant changes in the nature of the principal activities of the Company and the Group during the Financial Year under review.

Changes to Group StructureThe Group Structure is demonstrated on pages 8 to 9 of the Annual Report.

During the year, there were no changes to the Group Structure.

Review of Performance A review of the Company and its subsidiaries’ performance during the Financial Year together with the future outlook is available in the Chairman’s message, CEO’s message and Management Review on pages 18,24,29 respectively.

Financial Statements The Financial Statements of the Company and the Group have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRs/ LKASs) issued by the Institute of Chartered Accountants of Sri Lanka and comply with the requirements of the CA 2007 as well as the Listing Rules.

These Financial Statements, duly certified by the Chief Finance Officer, were approved by the Board of Directors and signed by two (02) members of the Board and are given on pages 120 to 192 of the Annual Report.

Directors’ Responsibility for Financial ReportingThe Directors are responsible for the preparation of the Financial Statements of the Company and the Group which reflect a true and fair view of the financial position and the performance of the Company and the Group.

The “Director’s responsibility statement for Financial Reporting” provided on page 113 of this Annual Report and forms an integral part of this Report.

Auditors’ Report The Auditors’ Report on the Financial Statements of the Company and the Group are given on pages 117 to 119 of the Annual Report.

Significant Accounting Policies The Accounting Policies adopted in the preparation of the Financial Statements of the Company and the Group are given on pages 127 to 142 of the Annual Report.

Other than those disclosed in note 4.1, there were no changes in Accounting Policies during the year under review.

Going Concern The Board of Directors after considering the financial position, operating conditions, regulatory and other factors to be addressed in the CG Code 2017, have a reasonable expectation that the Company and its subsidiaries possess adequate resources to continue operations in the foreseeable future.

Annual Report of the Board of Directors on the Affairs of the Company


Accordingly, the Financial Statements are prepared based on “Going Concern Concept”.

Stated Capital As at 31 March 2019, the stated capital of the Company was LKR 7,360 Mn. comprising of 800 Mn. ordinary shares.

Rights Issue 200,000,000 shares by way of Rights were issued in the proportion of 1:3 during the year for a consideration of LKR 8.00/- per share. The objective of the Rights Issue was to raise funds for the part settlement of the long term loan facilities obtained by the Company.

Financial Results 2018/19

(LKR)(Mn.)2017/18

(LKR)(Mn.)Company

Revenue 762 704

Profit before Tax 1,015 1,143

Profit after Tax 804 1,182

Group

Revenue 13, 956 4,477

Profit before Tax 1,321 3,736

Profit after Tax 1,120 3,744

Reserves

2018/19(LKR)(Mn.)

2017/18(LKR)(Mn.)

Company

Reserves 7550 6,712

Capital Reserve 170 134

Revenue Reserve

7380 6,578

Group*

Reserves 10, 078 9,182

* The composition of the Reserves is shown in the statement of changes in equity on pages 122 to 123.

Segmental Reporting Segmental reporting is disclosed in note 27 to the Financial Statements on page 175.

Provision for Taxation Provision for taxation has been computed at the prescribed rates and details are given in note 26 to the Financial Statements on page 173.

DividendsOn 30 May, 2019, a First and Final Dividend of LKR 0.15 per share for the Financial Year 2018/19, was recommended by the Board for the approval of Shareholders at the upcoming Annual General Meeting (AGM). Since the said Dividends will be paid from the exempted profits, there will be no withholding tax deducted from the Dividend payment.

In terms of section 56 (2) of CA 2007, the Board of Directors have certified that the Company satisfies the Solvency Test in accordance with section 57 of the CA 2007 and have obtained a certificate from the Auditors to this effect.

Events Occurring after the Reporting Date There have been no material events subsequent to the reporting date that would require adjustment to or disclosure in the Financial Statements other than those disclosed in note 32 to the Financial Statements on page 180.

DonationsDonations given by the Company are disclosed in note 25 to the Financial Statements on page 173.

Property, Plant and Equipment Capital expenditure during the year on Property Plant and Equipment by the Company and the Group were LKR 0.85 Mn. (LKR 2 Mn. (2017/18) and LKR 482 Mn.

(LKR 50 Mn. – 2017/18), respectively. Details relating to Property Plant and Equipment, Investment properties and intangible assets are detailed in notes 6, 7 and 8 to the Financial Statements, on pages 146 to 152.

Value of the owner occupied area of the investment property is LKR 344 Mn. (LKR 318 Mn. – 2017/18) and is disclosed separately under Property Plant and Equipment note 6 to the Financial Statements on pages 146 to 149.

Extents, locations, number of the buildings and the valuation of the properties of the Company and the Group are given in note 6.10 and 7.4 to the Financial Statements on pages 148 to 150.

All freehold land of the Group, were revalued by professionally independent valuers and brought into the Financial Statements. The investment properties are accounted using the fair value method.

Details of fair values of investment properties are given on note 7.4 to the Financial Statements. Details of revaluation of land are given in note 6.10 and 7.4 to the Financial Statements.

Contingent Liabilities and Capital Commitments There has been no capital commitments or contingent liabilities other than those disclosed in notes 33 and 34 to the Financial Statements on page 181 of the Annual Report.

Employment The Company’s and the Group’s strength of manpower as at 31 March 2019 is 90 and 1,301 respectively.

The Group’s practices and policies inter alia relating to recruitment, training and development, career advancement and employee relations, are discussed in detail under “Human Capital” under sustainability report on page 42.


There were no material issues pertaining to employees and industrial relations in the year under review.

Share Information There were 1089 (1114 – 2017/18) registered shareholders as at 31 March 2019.

Distribution schedule of ShareholdersDetails are given on page 194.

Information on Ratios and Market Price Information Disclosures under section 7.6 (xi) of the Listing Rules is indicated on pages 16, 194 and 196.

Substantial Shareholdings and Other Share Information The names of the twenty largest Shareholders, the number of shares held and the percentages are given on page 193 of the Annual Report.

Disclosures required under section7.6 (iv) of the Listing Rules is indicated on page 193.

Related Party TransactionsNon –recurrent Related Party TransactionsThere were no non –recurrent Related Party Transactions of which the aggregate value exceeded 10% of the Equity or 5% of the Total Assets of the Company during the year ended 31 March 2019, which require specific disclosures in the Annual Report in terms of section 9.3.2 of the Listing Rules and the Code of Best Practices on Related Party Transactions issued by the Securities and Exchange Commission of Sri Lanka December 2013.

Recurrent Related Party TransactionsThere were no recurrent Related Party Transactions which in aggregate exceeded 10% of the consolidated revenue of the

Group as per latest audited Financial Statements, which require specific disclosures in the Annual Report in terms of section 9.3.2 of the Listing Rules of the CSE and the Code of Best Practice on Related Party Transactions issued by the Securities and Exchange Commission of Sri Lanka, December 2013.

The identified Related Parties as well as the Related Party transactions undertaken during the year are set out in note 30 to the Financial Statements on pages 178 to 180.

The members of the Board have been identified as ‘Key Management Personnel” of the Company. There were no Related Party transactions by the Key Management Personnel with the Company.

As required by the Listing Rules, the Board confirms that the Company has complied with all requirements as per section 9 of the Listing Rules.

Corporate Governance The Company has complied with the CG Code 2017 as well as the Listing Rules. The measures taken and the extent to which the Company has complied with the CG Code 2017 as well as the Listing Rules are set out under the “Corporate Governance Report” from pages 56 to 102.

Board of DirectorsAs at 31 March 2019, the Board of Directors of R I L consisted of seven (07) Directors.

Mr. S. G. Wijesinha - Independent Non – Executive ChairmanMs. L. K. A. H. Fernando - Chief Executive Officer/Executive DirectorMs. L. E. M. Yaseen - Non-Independent Non – Executive DirectorMr. L. W. D. Abeyarathne - Non-Independent Non – Executive Director Ms. C. G. Ranasinghe - Independent Non – Executive DirectorMs. C. R. Kariyawasam - Independent Non – Executive DirectorProfessor. N. D. Gunawardena - Independent Non – Executive Director

The Directors’ profiles are given on pages 10 to 13 of the Annual Report.The names of the Directors of the subsidiary companies are given on pages 8 to 9.



Changes in the DirectorateNew Appointments and Resignations The following Directors ceased to be Directors during the year under review:

Name of Director Executive/ Non – Executive status

Date of cessation Reason

Mr. R. A. Ebell Independent Non –Executive 19 June 2018 ResignationMs. L. E. M. Yaseen Non - Independent Non –

Executive7 July 2018 Section 211 of the CA 2007

Mr. A. D. E. I. Perera Independent Non –Executive 7 July 2018 Section 211 of the CA 2007

The following appointments were made during the year.

Name of Director Executive/ Non – Executive status Date of appointmentMs. L. E. M. Yaseen* Non - Independent Non –Executive 17 September 2018Professor. N. D. Gunawardena Independent Non –Executive 1 November 2018Ms. C. R. Kariyawasam Independent Non –Executive 1 November 2018Mr. L. W. D. Abeyarathne** Non - Independent Non –Executive 6 March 2019

*Appointed by the Shareholders at the AGM held on 17 September 2018 in terms of section 211 of CA 2007, at the recommendation of the Board;**Retired as an Executive Director/ Finance Director on 5 March 2018 and was appointed as a Non – Independent Non -Executive Director w.e.f 6 March 2019

There were no changes in the Directorate of the subsidiary companies during the year under review.

Retirement and re-election of DirectorsMr. L. W. D. Abeyarathne, Professor. N. D. Gunawardena and Ms. C. R. Kariyawasam who were appointed during the Financial Year 2018/19, will retire in terms of Article 89 of the Articles of Association of the Company. On the unanimous recommendation of the Board Nominations and Remuneration Committee (BNRC) and the Board of Directors, these Directors are eligible for election by the Shareholders at the forthcoming AGM. The Agenda of the AGM has three separate ordinary resolutions dealing with the election of these Directors.

In terms of Article 83, Ms. C. G. Ranasinghe will retire by rotation and being eligible,

will offer herself for re-election on the unanimous recommendation of the BNRC and the Board of Directors.

In terms of section 211 of the CA 2007, Mr. S. G. Wijesinha and Ms. L. E. M. Yaseen who will be retiring due to being over the age of 70 years, will offer themselves for re-appointment on the unanimous recommendation of the BNRC and the Board of Directors. The Agenda of the AGM has two separate ordinary resolutions for the re- appointment of Mr. S. G. Wijesinha who has reached 70 years and Ms. L. E. M. Yaseen who has reached 77 years of age.

Board Sub CommitteesThe Board, while assuming overall responsibility and accountability for the management of the Company, has appointed 3 Board Sub-Committees, Board Audit Committee, Board Related Party Transactions Review Committee and the Board Nominations and Remuneration

Committee, to ensure oversight and control over certain affairs of the Company.

The Board approved Terms of References of these Sub Committees conform to the recommendations made by various regulatory bodies such as the Institute of Chartered Accountants of Sri Lanka, The Securities and Exchange Commission of Sri Lanka and the CSE.


Changes to the Sub – Committee compositions during the year as well as the current Committee compositions is indicated in the respective Committee reports:

Board Sub – Committee Page reference

Board Audit Committee 94Board Nominations and Remuneration Committee 98Board Related Party Transactions Review Committee 101

Directors MeetingsThe attendance of Directors at Board and Board Sub Committee meetings are given on pages 64 and 67 respectively.

Review of Performance of Board and Board Sub – CommitteesThe performance of the Board and its’ Sub –Committees were reviewed during the year by circulating a questionnaire among Directors.

Directors’ Remuneration Details of Directors’ remuneration and other benefits in respect of the Company and the Group for the Financial Year ended 31 March 2019 are given in note 30.2.2 to the Financial Statements, on page 179.

Directors’ interest in shares

Name of the Director Number of shares held as at 31 March

Percentage (%) of shares held as at 31 March

2018 2019 2018(%)

2019(%)

Mr. S. G. Wijesinha - - - -Ms. L. K. A. H. Fernando - - - -Ms. L. E. M. Yaseen 148,800,000 153, 232,711 24.80 19.15Mr. L. W. D. Abeyarathne - - - -Mr. A. D. E. I. Perera - Not

applicable- Not

applicableMr. R. A. Ebell - Not

applicable- Not

applicableMs. C. G. Ranasinghe - - - -Ms. C. R. Kariyawasam Not

applicable- Not

applicable-


Not applicable

- Not applicable

-

Directors’ Interests RegisterThe Company, in compliance with the CA 2007, maintains an Interests Register. Where applicable, all necessary entries were made in the Interests Register during the year under review.

The Interests Register is available at the Registered Office of the Company in keeping with the requirements of section 119 (1) (d) of the CA 2007.

Directors’ Interest in Contracts All Directors of the Company make the necessary declarations of their interests in other companies, to the Board and such interests are duly recorded in the Directors Interests Register. The Directors will have no direct or indirect interest in any contracts or proposed contracts with the Company other than those disclosed in the Interests Register.

During the year, there were no such interested transactions warranting disclosure.

The Directors disclose transactions, if any, that could be classified as Related Party Transactions in terms of the Sri Lanka Accounting Standard – LKAS 24 on “Related Party disclosures”.

As a practice of good governance, Directors refrain from voting on matters in which they are materially interested.

Directors’ Insurance During the year under review, the Company has obtained a Directors’ and Officers’ liability.

Declaration The Directors declare that:1. The Company has not engaged in any

activity which contravenes the laws and regulations;

2. All material interests in contracts involving the Company have been declared and the Directors have refrained from voting on matters they were materially interested;

3. The Company has made all endeavours to ensure equitable treatment to Shareholders;



4. The Business is a Going Concern and that the Board of Directors have reviewed the Company’s business plans and is satisfied that the Company has adequate resources to continue its’ operations in the foreseeable future.

Accordingly, Financial Statements of the Company and the subsidiaries have been prepared Going Concern assumption;

5. A review of the internal controls covering financial, operational, compliance controls and risk management were conducted and have obtained a reasonable assurance from the internal audit of their effectiveness and successful adherence.

Risk Management and Internal ControlsThe Board of Directors, through the involvement of the internal audit, have taken steps to ensure and have obtained reasonable assurance, that an effective and comprehensive system of internal controls are in place that cover the financial, operational and compliance controls required to carry on the business in an orderly manner, safeguard the Company’s assets and secure, as far as possible, the accuracy and reliability of the financial records.

The Board is satisfied with the effectiveness of the system of internal controls that were in place during the year under review. The “Directors’ Statement on Internal Control” is contained on page 116 and forms an integral part of this report.

The Directors periodically review and evaluate the risks that are faced by the Company. The various exposures to risks by the Company and specific steps taken by the Company in managing risks are detailed under the “Risk Management” on page 50 of this Annual Report.

Code of Conduct and Ethics The Company has in place a Code of Ethical Business Conduct applicable for all employees. The compliance is mandatory at all levels across the Company, without any exemptions.

A Code of Conduct and Ethics is also available for the Directors.

There were no material violations reported in the respective Codes, during the year.

Whistle-Blowing A Whistle Blowing Policy operates within the Company and the same has been communicated to employees. Bi –annual awareness sessions are conducted by the Company to educate the employees on the importance of this Policy. The Whistle Blowing Policy, enables any employee to raise issues with the Management and the Board in order to identify possible risks faced by the Company at an early stage.

Corporate Social Responsibility The Board is fully committed to and considers it a key priority to act responsibly towards all stakeholders and to manage economic, environmental and social impacts during value creation activities efficiently and effectively.

Please refer Sustainability report on page 40 for more details.

Material foreseeable risk factors Please refer the Risk Management Report on page 50.

Environmental protection The Company has made its best endeavours to comply with the relevant environment laws and regulations.

The Company has not engaged in any activity harmful or hazardous to the environment and has taken all possible

steps necessary to safeguard the environment from any pollution that could arise when carrying out its business operations.

Statutory Payments The Directors confirm that to the best of their knowledge, all payments due to the government and regulatory institutions and those related to employees have been made on time, during the year under review.

Outstanding LitigationThe Directors confirm that there is no outstanding litigation other than those disclosed under note 34 to the Financial Statements, of this Annual Report.

Employee Share Ownership plansThe Company did not have any employee share ownership/option plans during the year.

Auditors AppointmentRetiring Auditors, Messrs. Ernst & Young, Chartered Accountants, have indicated their willingness to continue as External Auditors of the Company and a resolution to re-appoint them as Auditors and authorising the Directors to fix their remuneration, will be proposed at the forthcoming AGM.

IndependenceIndependence confirmation has been provided by Messrs. Ernst & Young, Chartered Accountants as required by section 163(3) of the CA 2007 in connection with the audit for the Financial Year ended 31 March 2019, confirming that Messrs. Ernst & Young is not aware of any relationship or of any interests with the Company or its’ subsidiaries, that in their professional judgment may reasonably be thought to have a bearing on their independence within the meaning of the


Code of Conduct and Ethics issued by the Institute of Chartered Accountants of Sri Lanka. Based on the declaration provided by Messrs. Ernst & Young, and as far as the Directors are aware, the Auditors do not have any relationship (other than that of Auditor) or interest with or in the Company or any of its subsidiaries that may have a bearing on their independence.

RemunerationThe fees paid to Auditors, Messrs. Ernst & Young for audit and other services are given in note 25 to the Financial Statements.

Annual General MeetingThe 10th Annual General Meeting of the Company will be held on 26 July 2019. The Notice of meeting is given on page 199 of the Annual Report.

Acknowledgement of the contents of the Annual report As required by section 168 (1) (k) of the CA 2007, the Board of Directors hereby acknowledge the contents of this Annual Report.

This Annual Report is signed for and on behalf of the Board of Directors

S. G. Wijesinha L. K. A. H. FernandoChairman Chief Executive Officer/ Executive Director


26 June 2019Colombo


R I L PROPERTY PLC / ANNUAL REPORT 2018/19

We’re moving forward and embracing change as a catalyst for further development


Financial ReportsFINANCIAL CALENDER – 2018/1909th Annual General Meeting 17 September 2018

Unaudited Interim Financial Statements submitted to the Colombo Stock Exchange in terms of Rule 7.4

� First Quarter ended 30 June 2018 14 August 2018

� Second Quarter ended 30 September 2018 14 November 2018

� Third Quarter ended 31 December 2018 13 February 2019

� Fourth Quarter ended 31 March 2019 31 May 2019

PROPOSED FINANCIAL CALENDER – 2019/2010th Annual General Meeting 26 July 2019

Payment of First and Final Dividend for the Financial Year 2018/19 06 August 2019

Unaudited Interim Financial Statements to be submitted to the Colombo Stock Exchange in terms of Rule 7.4

� First Quarter ended 30 June 2019 On or before 15 August 2019

� Second Quarter ended 30 September 2019 On or before 15 November 2019

� Third Quarter ended 31 December 2019 On or before 15 February 2019

� Fourth Quarter ended 31 March 2020 On or before 31 May 2020

113FINANCIAL REPORTS R I L PROPERTY PLC / ANNUAL REPORT 2018/19

Introduction The following statement fulfills the requirement to publish the Directors’ statement on Financial Reporting as per section D.1.5 of the Code of Best Practice on Corporate Governance 2017 issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka. (CG Code 2017)

Responsibility The responsibility of the Board of Directors in relation to the Financial Statements of the Company and the Group is set out in this statement, which should be read in conjunction with the Auditors’ statement set out in their report on pages 117 to 119 of this Annual Report.

The Companies Act No. 07 of 2007 (CA 2007) requires the Directors to prepare the Financial Statements for each Financial Year, giving a true and fair view of the state of affairs of the Company and the Group as at the end of the Financial Year, the profit and loss of the Company and the Group for the Financial Year and present the same to the Shareholders.

The Financial Statements comprise of:

� The statement of financial position;

� The statements of profit or loss and other Comprehensive Income;

� The statement of changes in equity and cash flows for the year ended;

� Accounting policies and notes thereto

The Board of Directors confirm that the Financial Statements of the Company and the Group give a true and fair view, as at 31 March 2019, of the

� Financial position of the Company and its subsidiaries; and

STATEMENT OF DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING

� Financial performance of the Company and its subsidiaries

The Directors have ensured that in preparing these Financial Statements:

� The appropriate accounting policies have been selected and applied in a consistent manner and material departures, if any, have been disclosed and explained; and

� All applicable accounting standards in accordance with Sri Lanka Accounting Standards (SLFRS/ LKAS) as relevant have been applied; and

� Reasonable and prudent judgements and estimates have been made so that the form and substance of transactions are properly reflected; and

� To the best of their knowledge, the statements provide the information required by and otherwise comply with, the CA 2007, the Listing Rules of the Colombo Stock Exchange and the requirements of any other regulations applicable to the Company and the Group.

The Directors have a responsibility to ensure that the Company and the Group maintains sufficient accounting records to disclose, with reasonable accuracy, the financial position of the Company and the Group.

The Board of Directors accept full responsibility for the integrity and objectivity of the Financial Statements presented. The Directors are also responsible for taking reasonable steps to safeguard the assets of the Company/Group and in this regard to give proper consideration to the establishment of appropriate internal control systems with a view to preventing and detecting frauds and other irregularities.

The Directors are required to provide the Auditors with every opportunity to take whatever steps and undertake whatever inspections they may consider appropriate to enable them to express their audit opinion.

The Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company and the Group and all contributions, levies and taxes payable relating to the employees of the Company and the Group, which were due and payable as at the reporting date, have been paid or, where relevant, provided for.

Following a review of the Company’s financial and related information including cash flows and borrowing facilities, the Directors are satisfied that the Company and the Group have adequate resources to continue in operation and have continued to adopt Going Concern basis in preparing these Financial Statements.

By order of the Board


26 June 2019Colombo


Compliance With Laws and Regulations The Financial Statements of R I L Property PLC (the Company/ R I L) and the Group for the Financial Year 2018/19 have been prepared and presented in compliance with the requirements of the following:

� Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka (SLFRS/LKAS);

� The Companies Act No. 07 of 2007 (CA 2007);

� Listing Rules of the Colombo Stock Exchange (Listing Rules) (CSE);

� Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995;

� Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka (CG Code 2017); and

� requirements of any other regulatory authority as applicable to the Company and the Group

Financial Reporting The accounting policies used in the preparation of these Financial Statements are appropriate and are consistently applied except where otherwise stated in the Notes to the Financial Statements. The significant accounting policies and estimates that involved a high degree of judgement and complexity were discussed with the Board Audit Committee (BAC) as well as the Company’s External Auditors. Comparative information has been reclassified wherever necessary to comply with the current presentation.

The Board of Directors and the Management assume full responsibility for the integrity and objectivity of the Financial Statements presented. The estimates and judgments relating to

Financial Statements were made on a prudent and reasonable basis, in order that the Financial Statements reflect in a true and fair manner, the form and substance of transactions and reasonably present the Group’s state of affairs. To ensure this, the Group has taken proper and sufficient care in implementing a system of internal controls for safeguarding assets and for preventing and detecting frauds as well as other irregularities.

We the undersigned, confirm that to the best of our knowledge, R I L and its’ subsidiaries maintain sufficient accounting records, to disclose with reasonable accuracy, the financial position and performance of the R I L Group. We also confirm that the Company and the Group have adequate resources to continue in operation and have applied Going Concern basis in preparing these Financial Statements.

System of Internal ControlsThe Group has taken proper and sufficient care in installing a system of internal control and accounting records, for safeguarding assets and for preventing and detecting frauds as well as other irregularities which are reviewed, evaluated and updated on an ongoing basis. We have evaluated the internal controls and procedures of the Company for the Financial Year under review and confirm, based on such evaluations there were no significant deficiencies and material weaknesses in the design and implementation or operation of internal controls and frauds that involves the Management or other employees.

Company’s Internal Audit function headed by the Senior Manager Risk & Compliance conducts periodic audits in accordance with the audit plan and provides comfort on the efficiency and effectiveness of the internal control system. However, there are inherent limitations that should be

recognised in weighing the assurances provided by any system of internal control and accounting.

The Company acts as the BAC for its subsidiary FoodBuzz (Private) Limited, while United Motors Lanka PLC has its own BAC on which the Company relies for the efficiency and effectiveness of their internal control systems. The involvement of the Company’s BAC is limited to receipt and review of their BAC meeting minutes, with appropriate inquiries following as and when necessary.

Report of Independent AuditorsMessrs. Ernst & Young, Chartered Accountants, the External Auditors of the Company have examined the Financial Statements made available together with the relevant financial records, related data and Minutes of meetings and accordingly expressed their opinion in their report. Their report is given on pages 117 to 119.

Board Audit CommitteeThe BAC pre – approves the audit services provided by Messrs. Ernst & Young, Chartered Accountants. The Committee also reviews the level of non-audit services performed by the External Auditor.

The BAC meets periodically with the Internal Auditors and the Independent External Auditors to review the manner in which their responsibilities are discharged and to discuss matters on internal controls identified by the Internal Auditors, the independent External Auditors and the Management and evaluates the adequacy and effectiveness of the internal control system.

To ensure complete independence, the Internal Auditors and the External Auditors have full and free access to the members of the BAC to discuss any matter of substance.

RESPONSIBILITY STATEMENT OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCE OFFICER


ConclusionWe confirm that to the best of our knowledge

� The Financial Statements reflect in a true and fair manner, the form and substance of transactions and reasonably present the Group’s state of affairs and have applied Going Concern basis in preparing these Financial Statements;

� The system of internal controls is operating effectively;

� The Group has complied with all applicable laws and regulations and there is no material litigation against Group other than those disclosed under note 34 to the Financial Statements;

� All taxes, duties, levies and all statutory payments by the Group and all contributions, levies and taxes payable on behalf and in respect of the employees of the Group as at 31 Mach 2019 have been paid or provided for, where relevant.

L. K. A. H. Fernando I. PereraChief Executive Officer/ Executive Director Chief Finance Officer

26 June 2019Colombo


Introduction The following statement fulfills the requirement to publish the Directors’ statement on Internal Controls as per section D.1.5 of the Code of Best Practice on Corporate Governance 2017 issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka (CG Code 2017).

Responsibility Maintaining a sound system of internal controls to safeguard the investment of the Shareholders and the assets of the Company, is the responsibility of the Board of Directors.

The Board has established an ongoing process for identifying, evaluating and managing significant risks faced by the Company and this process includes enhancing the system of internal controls as and when there are changes to the business operations as well as regulations. This process was in place during the year under review and was periodically reviewed by the Board through the Board Audit Committee (BAC).

However, such system is designed to manage the Company’s key areas of risk within an acceptable risk profile, rather than to eliminate the risk of failure to achieve the business objectives. Therefore, the system of internal controls can only provide reasonable and not absolute assurance on the successful management of risks, financial losses or frauds.

The Board is of the view that the system of internal controls in place is sound and adequate to provide reasonable assurance regarding the reliability of financial reporting and that the preparation of Financial Statements is in accordance with the applicable accounting standards and regulatory requirements.

Summarised below are the key processes adopted for the review of adequacy and effectiveness of the system of internal controls related to financial reporting:

DIRECTORS’ STATEMENT ON INTERNAL CONTROLS

� Board Sub - Committees are established to assist the Board

i. in ensuring the effectiveness of the operations;

ii. that the operations are in accordance with the business direction/strategies;

iii. that the Company’s operations are in line with the annual budget and approved policies;

� The internal audit function headed by Senior Manager Risk and Compliance, is in-house comprising of appropriately experienced staff with the aim to provide objective assurance. Internal audit function reviews on an ongoing basis, the design and effectiveness of the Company’s internal control systems including systems for compliance with applicable laws and regulations and highlight areas of non –compliances and provide recommendations on areas of improvement;

� Audits are conducted according to the audit plan approved by the BAC. Frequency of the audits is determined based on the level of risk assessed. Findings of the internal audits are submitted to the BAC on a quarterly basis;

� The BAC reviews the internal control issues highlighted by the Internal Auditors and evaluates the adequacy and effectiveness of the risk management and internal control systems. The BAC review internal audit functions with particular emphasis on the scope and quality of audits. The minutes of BAC meetings are tabled at successive Board meetings for informational purposes.

The Company acts as the BAC for its subsidiary, FoodBuzz (Private) Limited. United Motors Lanka PLC has it’s own BAC on which the Company relies for the efficiency and effectiveness of their internal control systems. The involvement of the Company’s BAC is limited to receipt and review of their BAC meeting minutes, with appropriate inquiries following as and when necessary.

� IT audits are conducted by independent external parties to ensure the integrity of the financial information, data security and adequate access controls with regard to processing data;

� Recommendations by the External Auditors in connection with the internal control systems are reviewed and appropriate steps are taken to implement them.

Confirmation Based on the above processes, the Board of Directors of R I L Property PLC confirm that the financial reporting system of the Company and the Group have been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for external purposes, and has been carried out in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS), Companies Act No.07 of 2007, Listing Rules of the Colombo Stock Exchange, Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, CG Code 2017 and requirements of any other regulatory authority as applicable to the Company and the Group.

S. G. Wijesinha Chairman

L. K. A. H. FernandoChief Executive Officer/ Executive Director

C. R. KariyawasamChairpersonBoard Audit Committee

26 June 2019Colombo


INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS OF R I L PROPERTY PLCReport on the audit of the consolidated Financial Statements

OpinionWe have audited the Financial Statements of R I L Property PLC (“the Company”) and the consolidated Financial Statements of the Company and its subsidiaries (“the Group”), which comprise the statement of financial position as at 31 March 2019, and the statement of profit or loss and comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the Financial Statements, including a summary of significant accounting policies.

In our opinion, the accompanying Financial Statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as at 31 March 2019 and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Basis for opinionWe conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics) and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of MatterWe draw attention to Note 21.3 of the Financial Statements wherein the Group has considered all land held and used in business as Investment Assets for the purpose of determining the calculation of deferred tax liability relating to the fair value gain. Based on our understanding of the Inland Revenue Act and advices provided by the experts, there is significant judgement involved in determining whether the land held by the entity and used in business are to be considered as capital assets or investment assets due to the uncertainties that exist with respect to the interpretation of the application. In the event the Group’s position is not held by the Authorities, the impact on the Group is disclosed in note 21.3 to the Financial Statements. Our opinion is not modified in respect of this matter.

Key Audit Matter How our audit addressed the KAM

Valuation of lands and buildings

As at 31 March 2019, land and buildings carried at fair value, classified as Property, Plant and Equipment and Investment Property amounted to LKR 6,928 Mn. and LKR 14,106 Mn. respectively. Further the fair value gain recognised in statement of profit or loss amounts to LKR 840 Mn. and the revaluation surplus recognised in the other comprehensive income by the Group and the Company is LKR 54 Mn. and LKR 44 Mn. respectively. The fair value of such property was determined by an external valuer engaged by the Group. The valuation of land and buildings was significant to our audit due to their magnitude, and high dependency on significant unobservable estimates (such as current market price per perch, yield rate) which are based on current and future market or economic conditions.

Our audit procedures focused on the valuation performed by the external valuer, which included among others, the following procedures:

� We evaluated the competence, capabilities and objectivity of the external valuer appointed by the management. We read the valuation report signed by the valuer to obtain an understanding of the work of the valuer and evaluated the appropriateness as audit evidence for the recorded valuation of investment properties in the financial statement.

� We engaged our internal specialists to assist us in evaluating the appropriateness of the valuation method used by the external valuer and assessing the reasonableness of range of values per perch and, yield rate in comparison to market data and recent transaction prices of comparable properties.

� Verified the land values considered by the valuer by corroborating with property market information independently.

In addition, we evaluated the adequacy of the related financial statement disclosures in notes 3.10 and 3.12.


Other Information included in the 2019 Annual ReportOther information consists of the information included in the Annual Report, other than the Financial Statements and our auditor’s report thereon. Management is responsible for the other information.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

Responsibilities of the management and those charged with governanceManagement is responsible for the preparation of Financial Statements that give a true and fair view in accordance with Sri Lanka Accounting Standards and for such internal control as management determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

� Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

� Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls of the Company and the Group.

� Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

� Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

� Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

� Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated Financial Statements.

We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

INDEPENDENT AUDITOR’S REPORT


We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirementsAs required by section 163 (2) of the Companies Act No. 07 of 2007, we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.

CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 1420.

26 June 2019Colombo


Statement of Financial Position Group CompanyAs at 31 March 2019 2019 2018 2019 2018 Note LKR’000 LKR’000 LKR’000 LKR’000

ASSETSNon-current assetsProperty, plant and equipment 6 7,892,174 7,625,861 362,277 352,128Investment property 7 14,106,000 12,397,500 14,106,000 12,397,500Intangible assets 8 205,670 155,483 9,810 13,131Investments in subsidiaries 9 - - 4,556,740 4,556,740Other investments 14.1 256,411 356,309 - -Employee benefits 18.4 72,923 84,082 - -Deferred tax assets 21.2.1 223,269 13,633 - -Other receivables 12.5 42,267 49,828 42,267 51,364Total non-current assets 22,798,714 20,682,696 19,077,094 17,370,863

Current assetsInventories 11 6,253,093 6,572,374 5,896 3,937Trade and other receivables 12 3,238,097 1,821,080 92,036 81,609Income tax receivable 13 9,818 5,854 - -Other investments 14.2 456,415 249,241 205,380 151,173Cash and bank 15.1 594,677 1,902,118 22,810 694,990Total current assets 10,552,100 10,550,667 326,122 931,709Total assets 33,350,814 31,233,363 19,403,216 18,302,572

EQUITY AND LIABILITIESEquityStated capital 16.1 7,360,000 5,760,000 7,360,000 5,760,000Revaluation reserve 16.4 251,107 204,284 170,543 134,151Other components of equity (60,572) (5,526) - -Retained earnings 16.3 9,887,632 8,982,769 7,379,649 6,578,499Total equity attributable to equity holders of the company 17,438,167 14,941,527 14,910,192 12,472,650

Non controlling interests 6,310,762 6,223,062 - -Total equity 23,748,929 21,164,589 14,910,192 12,472,650

Non-current liabilitiesInterest bearing loans and borrowings 17 3,141,410 3,539,207 3,141,410 3,539,207Employee benefits 18.1 232,052 211,448 6,475 4,350Deferred tax liabilities 21.2.2 841,534 623,370 764,123 574,293Rent received in advance 19.1 16,837 20,178 17,045 20,178Customer deposits 20 82,566 126,304 89,243 131,936Total non-current liabilities 4,314,399 4,520,507 4,018,296 4,269,964

Current liabilitiesTrade and other payables 19 1,295,064 1,179,047 313,550 111,773Interest bearing loans and borrowings 17 3,746,611 4,164,226 135,183 1,445,793Income tax payable 13 85,414 90,561 7,209 2,392Bank overdrafts 15.2 160,397 114,433 18,786 -Total current liabilities 5,287,486 5,548,267 474,728 1,559,958Total equity and liabilities 33,350,814 31,233,363 19,403,216 18,302,572

These Financial Statements are in compliance with the requirements of the Companies Act No :07 of 2007.

I. PereraChief Finance Officer

The Board of Directors is responsible for these Financial Statements. Signed for and on behalf of the board by:

S. G. Wijesinha L. K. A. H. Fernando Chairman Chief Executive Officer / Executive Director

The accounting policies and notes on pages 127 to 192 form an integral part of the Financial Statements.Figures in brackets indicate deductions

26 June 2019Colombo


Statement of Profit or Loss and Other Comprehensive Income Group CompanyFor the year ended 31 March 2019 2018 2019 2018 Note LKR’000 LKR’000 LKR’000 LKR’000

Revenue 22 13,955,664 4,476,968 762,179 704,471Cost of sales (10,300,396) (2,888,990) (69,197) (56,323)Gross profit 3,655,268 1,587,978 692,982 648,148Other income and gains 23 177,134 1,177,351 90,323 180,404Fair value gain on investment property 7 840,282 747,909 840,282 747,909Marketing and promotional expenses (375,310) (128,086) (1,009) (1,681)Administrative expenses (2,250,464) (890,223) (202,232) (210,488)Profit from operating activities 2,046,910 2,494,929 1,420,346 1,364,292Finance expenses 24.1 (853,423) (390,371) (478,678) (300,665)Finance income 24.2 127,868 112,424 73,169 79,462Net finance income / (expenses) (725,555) (277,947) (405,509) (221,203)Net results from equity accounted investees 10.1 - 1,519,035 - -Profit before tax 25 1,321,355 3,736,017 1,014,837 1,143,089Income tax (expense) / reversal 26 (201,830) 7,931 (211,032) 38,963Profit for the year 1,119,525 3,743,948 803,805 1,182,052

Profit for the year attributable to:Owners of the parent 905,923 3,638,005 803,805 1,182,052Non-controlling interest 213,602 105,943 - - 1,119,525 3,743,948 803,805 1,182,052

Other comprehensive incomeItems that will not be reclassified to the profit or loss in subsequent periods :Share of other comprehensive income from equity accounted investees (net of tax) - (5,570) - -Changes in fair value of other investments at fair value through other comprehensive income 14.1.3 (107,825) - - -Revaluation of land and buildings 6.1 & 6.2 53,775 85,649 43,672 14,909Actuarial gain / (loss) on retirement benefit obligation 18.1 & 18.4.1 3,343 (2,026) (1,004) 117Tax effects on other comprehensive income 21.1 (8,384) 247 (6,999) 560

Items that will be reclassified profit or loss in subsequent periodsNet change in available for sale financial assets 14.1 - (10,836) - -Other comprehensive income for the year, net of tax (59,091) 67,464 35,669 15,586Total comprehensive income for the year, net of tax 1,060,434 3,811,412 839,474 1,197,638

Total comprehensive income for the year attributable to:Owners of the parent 898,572 3,712,257 839,474 1,197,638Non-controlling interest 161,862 99,155 - - 1,060,434 3,811,412 839,474 1,197,638

Earnings per share 28 1.15 6.12 1.02 1.99



Group Stated Revaluation Other components of equity Retained Shareholder’s Non- Total capital reserve Available for FVOCI earnings funds controlling equity sale reserve interest reserve Note LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

As at 01 April 2017 4,800,000 119,242 - - 5,510,131 10,429,373 - 10,429,373

Profit for the year - - - - 3,638,005 3,638,005 105,943 3,743,948

Other comprehensive incomeShare of profit of equity accounted investees (net of tax) - - - - (5,056) (5,056) (514) (5,570)Revaluation of land and buildings - 85,649 - - - 85,649 - 85,649Actuarial gain / (loss) on retirement benefit obligation (net of tax) - - - - (1,085) (1,085) (941) (2,026)Net change in available for sale financial assets - - (5,526) - - (5,526) (5,310) (10,836)Tax effects on other comprehensive income - (607) - - 878 271 (24) 247Total comprehensive income for the year - 85,042 (5,526) - 3,632,742 3,712,258 99,154 3,811,412

Acquisition of subsidiary with non-controlling interest - - - - - - 6,296,952 6,296,952Share issued during the year 16.1 960,000 - - - - 960,000 - 960,000Share issue expenses 16.3 - - - - (40,104) (40,104) - (40,104)Dividends to equity holders - - - - (120,000) (120,000) (173,044) (293,044)As at 31 March 2018 5,760,000 204,284 (5,526) - 8,982,769 14,941,527 6,223,062 21,164,589Impact of adopting SLFRS 9 - - 5,526 (5,526) - - - -

As at 01 April 2018 5,760,000 204,284 - (5,526) 8,982,769 14,941,527 6,223,062 21,164,589

Profit for the year - - - - 905,923 905,923 213,602 1,119,525

Other comprehensive incomeChanges in the fair value of other investments at fair value through other comprehensive income 14.1.3 - - - (54,991) - (54,991) (52,834) (107,825)Net gains on disposal of FVOCI instruments - - - (55) 55 - - -Revaluation of land and buildings - 53,775 - - - 53,775 - 53,775Actuarial gain / (loss) on retirement benefit obligation - - - - 1,529 1,529 1,814 3,343Tax effects on other comprehensive income - (6,952) - - (712) (7,664) (720) (8,384)Total comprehensive income for the year - 46,823 - (55,046) 906,795 898,572 161,862 1,060,434

Share issued during the year 16.1 1,600,000 - - - - 1,600,000 - 1,600,000Share issue expenses 16.3 - - - - (1,932) (1,932) - (1,932)Dividends to equity holders - - - - - - (74,162) (74,162)As at 31 March 2019 7,360,000 251,107 - (60,572) 9,887,632 17,438,167 6,310,762 23,748,929

Statement of Changes in Equity


Group Stated Revaluation Other components of equity Retained Shareholder’s Non- Total capital reserve Available for FVOCI earnings funds controlling equity sale reserve interest reserve Note LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

As at 01 April 2017 4,800,000 119,242 - - 5,510,131 10,429,373 - 10,429,373

Profit for the year - - - - 3,638,005 3,638,005 105,943 3,743,948

Other comprehensive incomeShare of profit of equity accounted investees (net of tax) - - - - (5,056) (5,056) (514) (5,570)Revaluation of land and buildings - 85,649 - - - 85,649 - 85,649Actuarial gain / (loss) on retirement benefit obligation (net of tax) - - - - (1,085) (1,085) (941) (2,026)Net change in available for sale financial assets - - (5,526) - - (5,526) (5,310) (10,836)Tax effects on other comprehensive income - (607) - - 878 271 (24) 247Total comprehensive income for the year - 85,042 (5,526) - 3,632,742 3,712,258 99,154 3,811,412

Acquisition of subsidiary with non-controlling interest - - - - - - 6,296,952 6,296,952Share issued during the year 16.1 960,000 - - - - 960,000 - 960,000Share issue expenses 16.3 - - - - (40,104) (40,104) - (40,104)Dividends to equity holders - - - - (120,000) (120,000) (173,044) (293,044)As at 31 March 2018 5,760,000 204,284 (5,526) - 8,982,769 14,941,527 6,223,062 21,164,589Impact of adopting SLFRS 9 - - 5,526 (5,526) - - - -

As at 01 April 2018 5,760,000 204,284 - (5,526) 8,982,769 14,941,527 6,223,062 21,164,589

Profit for the year - - - - 905,923 905,923 213,602 1,119,525

Other comprehensive incomeChanges in the fair value of other investments at fair value through other comprehensive income 14.1.3 - - - (54,991) - (54,991) (52,834) (107,825)Net gains on disposal of FVOCI instruments - - - (55) 55 - - -Revaluation of land and buildings - 53,775 - - - 53,775 - 53,775Actuarial gain / (loss) on retirement benefit obligation - - - - 1,529 1,529 1,814 3,343Tax effects on other comprehensive income - (6,952) - - (712) (7,664) (720) (8,384)Total comprehensive income for the year - 46,823 - (55,046) 906,795 898,572 161,862 1,060,434

Share issued during the year 16.1 1,600,000 - - - - 1,600,000 - 1,600,000Share issue expenses 16.3 - - - - (1,932) (1,932) - (1,932)Dividends to equity holders - - - - - - (74,162) (74,162)As at 31 March 2019 7,360,000 251,107 - (60,572) 9,887,632 17,438,167 6,310,762 23,748,929


Company Stated Revaluation Retained Total capital reserve earnings LKR’000 LKR’000 LKR’000 LKR’000

As at 01 April 2017 4,800,000 119,242 5,555,874 10,475,116

Profit for the year - - 1,182,052 1,182,052

Other comprehensive incomeRevaluation of land and buildings - 14,909 - 14,909Actuarial gain / (loss) on retirement benefit obligation - - 117 117Tax effects on other comprehensive income - - 560 560Total comprehensive income for the year - 14,909 1,182,729 1,197,638

Share issued during the year 16.1 960,000 - - 960,000Share issue expenses 16.3 - - (40,104) (40,104)Dividends to equity holders 29 - - (120,000) (120,000)As at 31 March 2018 5,760,000 134,151 6,578,499 12,472,650

Profit for the year - - 803,805 803,805

Other comprehensive incomeRevaluation of land and buildings - 43,672 - 43,672Actuarial gain / (loss) on retirement benefit obligation - - (1,004) (1,004)Tax effects on other comprehensive income - (7,280) 281 (6,999)Total comprehensive income for the year - 36,392 803,082 839,474

Share issued during the year 16.1 1,600,000 - - 1,600,000Share issue expenses 16.3 - - (1,932) (1,932)As at 31 March 2019 7,360,000 170,543 7,379,649 14,910,192


Statement of Changes in Equity


Group CompanyYear ended 31 March 2019 2018 2019 2018 Note LKR’000 LKR’000 LKR’000 LKR’000

Cash flows from / (used in) operating activitiesProfit before Tax 1,321,355 3,736,017 1,014,837 1,143,089

Adjustments for;Depreciation, amortisation 6 & 8 270,077 114,446 37,632 37,857(Increase) / decrease in fair value of investments property 7 (840,282) (747,909) (840,282) (747,909)Loss / (gain) on disposal of property, plant and equipment 23 (36,774) (25,875) (4,431) (57)Loss / (gain) on disposal of equity accounted investee 23 - (82,078) - -Net gain on disposal of other assets at the fair value through profit or loss 24.1 & 24.2 17,921 (3,557) - -Fair value adjustment on unit trust (187) - - -Net gain on disposal of available for sale financial assets 24.2 - (1,309) - -Provision for slow moving / obsolete inventories 11.2 49,327 60,409 - -Impairment of trade receivables and losses on warranty claims 12.1 (2,938) - - -Negative goodwill on acquisition of associate and acquiring the control - (4,007,936) - -Loss on disposal of equity accounted investees - 1,494,139 - -Finance costs 24.1 835,502 390,371 478,678 300,665Interest income 24.2 (127,868) (107,558) (73,169) (79,462)Dividend income 23 - - (72,087) (166,728)Share of results of equity accounted investees 10.1 - (51,242) - -Provision for defined benefit obligations 18 47,563 15,413 2,205 1,796Return expected from defined benefit plans 18.4.1 (9,195) (4,530) - -Operating profit / (loss) before working capital changes 1,524,501 778,801 543,383 489,251

(Increase) / decrease in inventories 269,954 612,468 (1,959) 839(increase) / decrease in trade and other receivables (1,402,709) 180,453 (1,330) (44,744)Increase / (decrease) customer deposits 40,610 16,551 41,655 16,551Increase / (decrease) in trade and other payables 16,158 (437,859) 102,125 (188,995)Cash generated from operations 448,514 1,150,414 683,874 272,902

Finance cost paid (823,331) (379,316) (466,507) (289,610)Income tax paid (210,797) (89,847) (23,384) (11,526)Employee benefits paid by the plan 18.4.1 18,424 15,065 - -Gratuity paid 18 (21,686) (15,653) (1,084) -Net cash from / (used in) operating activities (588,876) 680,663 192,899 (28,234)

Statement of Cash Flows


Group CompanyYear ended 31 March 2019 2018 2019 2018 Note LKR’000 LKR’000 LKR’000 LKR’000

Cash flows from / (used in) investing activitiesAcquisition of property, plant and equipment 6 (482,312) (49,599) (847) (2,289)Acquisition of intangible assets 8 (63,300) (130,765) (1,530) (3,709)Proceeds from sale of property, plant and equipment 49,584 27,295 6,020 275Proceeds from disposal of equity accounted investee 10.4 - 1,000,000 - -Expenditure incurred on investment property 7 (868,218) (63,972) (868,218) (63,972)Acquisition of subsidiary - (3,771,544) - (4,279,727)Net investment in unit trust 14 (224,908) (162,038) (54,207) (151,173)Proceeds / (investment in) from fixed deposits 545,000 (545,000) 545,000 (545,000)Net investment in money market investments 661,310 (726,017) - -(Investment in) / proceeds from disposal of shares (7,923) 41,970 - -Net investments in call deposits (232) (94) - -Dividend income 23 - - 72,087 166,728Interest received 24.2 124,054 107,558 73,169 79,462Net cash flows from / (used in) investing activities (266,945) (4,272,206) (228,526) (4,799,405)

Cash flows from (used in) financing activitiesProceeds from interest bearing loans and borrowings 17 36,480,600 22,456,805 78,508 4,677,080Repayment of interest bearing loans and borrowings 17 (37,296,012) (18,930,418) (1,786,915) (603,082)Proceed from issue of shares (net of issue cost) 16.1 & 16.3 1,598,068 919,896 1,598,068 919,896Dividend paid 29 - (120,000) - (120,000)Dividend paid to non controlling interest (74,162) (173,044) - -Net cash flows from / (used in) financing activities 708,494 4,153,239 (110,339) 4,873,894

Net Increase / (decrease) in cash and cash equivalents (147,327) 561,696 (145,966) 46,255

Cash and cash equivalents at the beginning of the year 15 516,574 (45,122) 149,990 103,735Cash and cash equivalents at the end of the year 15 369,247 516,574 4,024 149,990


Statement of Cash Flows


Accounting Policies

1. REPORTING ENTITYR I L Property PLC (the Company) is a public limited liability Company listed on the Colombo Stock Exchange incorporated and domiciled in Sri Lanka. The Company’s registered office and the principle place of business located at No 33, Park Street Colombo 02.

R I L Property PLC is registered with the Board of Investment of Sri Lanka under section 17 of the BOI ACT no. 4 of 1978.R I L Property PLC does not have an identifiable parent of its’ own. The Company is the ultimate parent of the Group.

2. BASIS OF PREPARATION2.1. Statement of complianceThe consolidated Financial Statements of the Group and the separate Financial Statements of the company have been prepared in accordance with the Sri Lanka Accounting Standards (herein referred to as SLFRSs/LKASs), laid down by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and in compliance with the requirements of Companies Act No. 07 of 2007 and the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995.

These Financial Statements were authorised for issue by the Company’s Board of Directors on 26 June 2019.

2.2. Consolidated Financial StatementsThe consolidated Financial Statements of the Company as at and for the year ended 31 March 2019, encompasses the Company and its’ subsidiaries (together referred to as the “Group” and individually as “Group Entities”)

Principal business activities and nature of operations

Entity Principal business activities

Company R I L Property PLC Develop and manage Grade ‘A’ commercial office

space in selected core markets in the Colombo Business District (CBD) whilst offering multi-faceted real estate solutions including facilities management, leasing, land acquisition, construction management services, consulting and strategic investment.

Subsidiaries FoodBuzz (Private) Limited Operating a chain of BreadTalk restaurants under

franchise agreement United Motors Lanka PLC Importation and sale of brand new Mitsubishi and

Fuso vehicles, spare parts, lubricants, after sales services , 3D Printers and related services.

Subsidiaries of United Motors Lanka PLC Unimo Enterprises Ltd Importation and sale of vehicles, spare parts and

tyres and assembling of vehiclesOrient Motor Company Ltd Importation and sale of vehicles and construction

machinery and hiring of vehiclesUML Heavy Equipment Ltd Importation and distribution of heavy equipmentsUML Property Developments Ltd Renting of premises

There were no other significant changes in the nature of the principal activities of the Company and the Group during the Financial Year under review.

All subsidiaries of the Company have been incorporated in Sri Lanka.

The Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future and they do not intend to liquidate or to cease activities in any of the Group Entities.

2.3. Basis of measurementThe consolidated Financial Statements have been prepared on the historical cost for following material items in the statement of financial position.

� Financial assets at fair value through profit or loss are measured at fair value.

� Financial assets measured at fair value through other comprehensive income are measured at fair value (from 1 April 2018)

� Available for sale financial assets are measured at fair value (Up to 31 March 2018).

� Defined benefit obligation is measured after actuarially valuing and the present value of the defined benefit obligation is recorded

� Defined benefit asset is measured at fair value

� Freehold land measured at cost at the time of acquisition and subsequently at revalued amounts which are the fair value at the date of valuation.

� Investment property is measured at fair value

� Owner occupied building are measured at fair value.


2.4. Functional and presentation currency

These consolidated Financial Statements are presented in Sri Lankan Rupees (LKR) which is the Group’s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

2.5. Use of judgements and estimatesIn preparing these consolidated Financial Statements, management has made judgements, estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

2.5.1. JudgementsIn the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the Financial Statements.

i) Classification of propertyThe Group determines whether a property is classified as Investment Property, owner occupied property using significant judgement as disclosed in note 6 and note 7.

Investment Property comprises land and buildings which are not occupied substantially for use by, or in the operations of the Group, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation.

The Group determines whether a property qualifies as Investment Property by considering whether the property generates cash flows largely independently

of the other assets held by the entity. Owner-occupied properties generate cash flows that are attributable not only to property but also to other assets used in the production or supply process.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions can be sold separately (or leased out separately under a finance lease), the Group accounts for the portions separately. If the portions cannot be sold separately, the property is accounted for as Investment Property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is applied in determining whether ancillary services are so significant that a property does not qualify as Investment Property. The Group considers each property separately in making its judgement.

ii) Deferred taxationDeferred taxation on Investment PropertyAs per the LKAS 12, deferred tax on investment property carried at fair value is required to be measured using a rebuttable presumption that the carrying amount will be recovered through sale.

The investment property of the Group consists of freehold land and buildings. With regard to the building, the presumption is rebutted, as the Group’s business model is to consume substantially all the economic benefits embodied in the building over time, rather than through sale.

Tax base in respect of the investment property has been made in line with new Inland Revenue Act.

2.5.2. Critical accounting estimates and assumptions

The key assumptions concerning the future and other key sources of estimation of uncertainty at the reporting date, that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities within the next Financial Year are discussed below. The respective carrying amounts of assets and liabilities are given in related notes to the Financial Statements.

i. Estimation of fair value of investment properties

The Group carries its investment properties at fair value, with changes in fair values being recognised in the Statement of profit or loss. The Group engaged an independent valuer to determine the fair value as at 31 March 2019. The valuation of investment property, management require to make significant estimates such as current market price per perch, yield rate which are based on current and future market or economic conditions.

ii. Principal assumptions for management’s estimation of fair value

If information on current or recent prices of assumptions underlying the discounted cash flow approach of Investment Properties is not available, the fair values of Investment Properties are determined using discounted cash flow valuation techniques. The Group uses assumptions that are mainly based on market conditions existing at each reporting date.

The principal assumptions underlying management’s estimation of fair value are those related to: the future rentals, maintenance requirements, and appropriate capitalisation rates / yields and voids. These valuations are regularly compared to actual market yield data and actual transactions by the Group and those reported by the market.

Accounting Policies


iii. Deferred taxationCompany and its subsidiaries hold properties which are either rented out or used for the main business activities of the respective entities. With the enactment of the New Inland Act. No. 24 of 2017, gains and losses resulting from realisation of capital assets are subject to at rates prescribed in the Act. The significance judgement made in the application of the tax provision and the resulting impact if such positions are not accepted by the tax authority is more fully described in note 21.

2.6. Operating segmentsAn operating segment is a distinguishable component of Group that is engaged in either in providing products or services (business segment) or in providing products and services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

The Group has three reportable segments. These segments offer different products and services and are managed separately as they require different marketing strategies.

The business segments of the Group are highlighted below:

� Rental and other related services

� Food processing and other related services

� Automobile sales and other related services

Segment results, assets and liabilities include items directly attributable to a segment. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, Investment property and Intangible assets.

Inter-segment pricing is determined on an arm’s length basis.

The activities of the Group are within Sri Lanka. Consequently, the economic environment in which the Company operated is not subject to risk and rewards that are significantly different on a geographical basis. Hence, disclosure by geographical region is not provided.

2.7. Fair value of financial instrumentsThe fair values of financial instruments where no active market exists or where quoted prices are not otherwise available are determined by using valuation techniques. In these cases, the fair values are estimated from observable data in respect of similar financial instruments or using models. Where market observable inputs are not available, they are estimated based on appropriate assumptions.

2.8. Materiality and aggregationEach material class of similar items is presented separately in the Financial Statements. Items of dissimilar nature or function are presented separately, unless they are immaterial as permitted by the LKAS 1 and amendments to LKAS 1 on “Disclosures initiatives”

2.9. Comparative informationComparative information including quantitative, narrative and descriptive information is disclosed in respect of the previous year in the Financial Statements in order to enhance the understanding of the current year’s Financial Statements and to enhance the inter period comparability. The presentation and classification of the Financial Statements of the previous year is reclassified, where relevant for better presentation and to be comparable with those of the current year.

The Group / Company has not restated the comparative information of previous Financial Year for financial

instruments within the scope of Sri Lanka Accounting Standard – SLFRS 9 on “Financial Instruments” (SLFRS 9). Therefore, the comparative information for 2017/18 is reported under Sri Lanka Accounting Standard – LKAS 39 on “Financial Instruments: Recognition and Measurement” (LKAS 39) and is not comparable to the information presented for 2018/19. Differences arising from adoption of SLFRS 9 have been recognised directly in equity as of 1 April 2018 and are disclosed in note 05 on pages 143 to 145.


3. SIGNIFICANT ACCOUNTING POLICIESThe Group has consistently applied the following accounting policies to all periods presented in these consolidated Financial Statements.

Set out below is an index of the significant accounting policies, the details of which are available on the pages that follow

No. Accounting policy Page no.

3.1 Basis of consolidation 130

3.2 Foreign currency 131

3.3 Revenue 131

3.4 Employee benefits 132

3.5 Finance income and finance costs 132

3.6 Warranties 133

3.7 Expenditure 133

3.8 Income tax 133

3.9 Inventories 134

3.10 Property, plant and equipment 134

3.11 Intangible assets and goodwill 136

3.12 Investment property 136

3.13 Financial instruments 137

3.14 Fair value measurement 139

3.15 Impairment – non financial assets 139

3.16 Liabilities and provisions 140

3.17 Leases 140

3.18 Capital commitments and contingencies 140

3.19 Events after the reporting date 140

3.20 Basic earnings per share 141

3.21 Related party transactions 141

3.22 Cash flow statement 141

3.1. Basis of consolidationI. Business combinationsThe Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is measured at the acquisition date fair value. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transactions costs are expensed as incurred and included in administrative expenses.

If the business combination is achieved in stages, the previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration which is deemed to be an asset or liability that is a financial instrument and within the scope of LKAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value either in profit or loss or as a change to other comprehensive income (OCI). If the contingent consideration is not within the scope of LKAS 39, it is measured in accordance with the appropriate SLFRS. Contingent consideration that is classified as equity is not re measured and subsequent settlement is accounted for within equity.

II. SubsidiariesSubsidiaries are investees that are controlled by the Group. Control exists when the Company is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power to govern the financial and operating policies over the investee. The Financial Statements of subsidiaries are included in the consolidated Financial Statements from the date that control commences until the date that control ceases.

A list of the Group’s subsidiaries is set out in note 9 to the Financial Statements.

There are no significant restrictions on the ability of subsidiaries to transfer funds to the Company (the Parent) in the form of cash dividend or repayment of loans and advances.

III. Non-controlling interestNon-controlling interests are measured at their proportionate share of the acquires identifiable net assets at the date of acquisition.

Accounting Policies


Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted as equity transactions.

IV. Transactions eliminated on consolidation

Intra-Group balances and transactions, and any unrealised income and expenses arising from intra-Group transactions are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

V. Loss of controlUpon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any gains or losses arising on the loss of control is recognised in the income statement. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date the control is lost. Subsequently it is accounted for as an equity accounted investee or in accordance with the Group’s accounting policy for financial instruments depending on the level of influence retained.

VI. Accounting under separate financial statement

Investments in subsidiaries, associates and joint ventures are measured at cost less accumulated impairment in the separate Financial Statements.

3.2. Foreign currencyI. Foreign currency transactionsTransactions in foreign currencies are translated to Sri Lanka Rupees at the exchange rate prevailing at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated to Sri Lanka Rupees at the exchange rate prevailing as at the reporting date. The foreign currency gains or losses on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year and the amortised cost in foreign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities which are measured at historical cost denominated in foreign currencies are translated to Sri Lanka Rupees at the exchange rate prevailing at the dates of the transactions. Non-monetary assets and liabilities that are measured at fair value denominated in foreign currencies are translated to Sri Lanka Rupees at the exchange rate prevailing at the dates that the fair values were determined. Foreign exchange differences arising on translation are recognised in the statement of comprehensive income.

3.3. RevenueI. Revenue from contracts with

customersRevenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

Goods transferred at a point in timeUnder SLFRS 15, revenue is recognised upon satisfaction of a performance obligation. The revenue recognition occurs at a point in time when control of the asset is transferred to the customer, generally, on delivery of the goods.

Services transferred over timeUnder SLFRS 15, the Group determines, at contract inception, whether it satisfies the performance obligation over time or at a point in time. For each performance obligation satisfied over time, the Group recognises the revenue over time by measuring the progress towards complete satisfaction of that performance obligation.

II. Rental incomeRental income includes rental income from properties leased out to tenants under operating leases and income from other related services. Rental income from operating leases is recognised on a straight-line basis over the lease term in accordance with the Sri Lanka Accounting Standards LKAS 17. Revenue from other related services are recognised in the accounting period in which the services are rendered or performed.

III. Other income � Profit or loss on disposal of property,

plant and equipment

The gains or losses on the sale of property, plant and equipment are determined on the difference between the carrying amount of the property, plant and equipment at the time of disposal and the proceeds of disposal, net of expenses incurred on disposal. This is recognised in the year in which significant risks and rewards of ownership are transferred to the buyer.

� Gains / losses on the disposal of investments

Gains / losses on the disposal of investments held by the parent have been accounted under other income after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.


� Sundry income

Gains and losses arising from activities incidental to the main revenue generating activities and those arising from a Group of similar transactions which are not material are aggregated, reported and presented under sundry income on a net basis.

� Facilitation fee

Facilitation fee is recognised in the statement of comprehensive income at the point of invoicing to the supplier.

3.4. Employee benefitsI. Short term employee benefitsShort term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short term cash bonus or profit sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

II. Defined contribution plansA defined contribution plan is a post-employment plan under which an entity pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in the statement of comprehensive income in the periods during which services are rendered by employees.

Employees’ Provident Fund

The Group and its employees contribute 12% and 8% respectively of the salary of each employee to the employees provident fund manage by the Central bank of Sri Lanka.

The United Motors Lanka PLC and its employees contribute 12% and 10% respectively of the salary of each employee to the approved Private Provident fund.

Employees’ Trust FundThe Group contribute 3% of the salary of each employee to the Employees’ Trust Fund managed by Central Bank of Sri Lanka.Contributions to defined contribution plans are recognised as an expense in the statement of comprehensive income as incurred.

III. Defined benefit plans - retiring gratuity

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group is liable to pay retirement benefits under the Payment of Gratuity Act, No 12 of 1983. The liability for the gratuity payment to an employee arises only on the completion of 5 years of continued service with the Group. The net obligation of the Group in respect of defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods and discounted to determine its present value. Any unrecognised past service costs and fair value of any plan assets are deducted.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the Projected Unit Credit (PUC) method. Re-measurement of the net defined benefit liability, which comprises actuarial gains and losses, are recognised immediately in OCI. The Group determines the net interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined liability, taking in to account any changes in the net defined benefit liability during the period as a result

of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

The Group recognises all actuarial gains and losses arising from defined benefit plan immediately in other comprehensive income and all expenses related to defined benefit plan in employee benefit expenses in profit or loss.

Key actuarial assumptions used have been disclosed in note 18.5 to the Financial Statements.

Subsidiaries and equity accounted investeeAll the subsidiaries and equity accounted investees have adopted actuarial valuation method in line with Group accounting policies.

UML’s liability arising on retirement benefits of employees is partly externally funded.

3.5. Finance income and finance costsI. Finance costs comprise interest

payable on all financial liabilities such as term loans, overdrafts and finance leases and fair value losses on financial assets at fair value through profit or loss. Interest expenses are recognised using the effective interest method.

II. Finance income comprises interest income, income from unit trusts, profit from disposal of marketable securities, dividend income, foreign exchange gains, fair value gains on financial assets at fair value through profit or loss and all other income received or receivable as a result of holding financial asset.

III. Interest income is recognised as it accrues using the effective interest method in the statement of comprehensive income.

IV. The interest component of finance lease payment is recognised in the

Accounting Policies


Financial Statements using effective interest rate method.

V. Foreign currency gains and losses are reported separately as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

3.6. WarrantiesCosts incurred by the subsidiaries under the terms of the warranty agreement between principal suppliers are reimbursed to the subsidiaries. Any amounts that are not reimbursed under the warranty agreement are charged to the statement of comprehensive income.

3.7. ExpenditureI. Capital expenditureAll expenditure incurred in running of the business and in maintaining the property, plant and equipment has been charged to revenue in arriving at the profit for the year. For the purpose of presentation of statement of comprehensive income, the Directors are of the opinion that function of expense method present fairly the elements of the enterprise’s performance, hence such presentation method is adopted. Expenditure incurred for the purpose of acquiring, expanding or improving assets of a permanent nature by means of which to carry on the business or for the purpose of increasing the earning capacity of the business has been treated as capital expenditure

II. Repairs and maintenance expensesAll expenditure incurred in maintaining the property, plant and equipment in a state of efficiency has been charged to the statement of profit or loss in arriving at the profit of the year.

III. Other expensesOther expenses are recognised in the statement of profit or loss on the basis of a direct association between the cost incurred and the earning of specific

items of income. Provisions in respect of other expenses are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

3.8. TaxationI. Income taxIncome tax on the profit for the year comprises current and deferred tax. Income tax is recognised directly in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity or other comprehensive income.

R I L Property PLCPursuant to a letter dated 26 April 2016 received from Board of Investment of Sri Lanka, R I L Property PLC (formerly known as R I L Property Limited) qualifies for a tax exemption period of 12 years under Sec 17 (A) of the Inland Revenue Act No. 10 of 2006 as amended by Inland Revenue (Amendment) Act No. 08 of 2012 subject to the condition that LKR 2,500 Mn. investment is made in the project within a period of 24 Months from the date of supplementary agreement (i.e. 5 December 2013).

For the above purpose, the years of Assessment shall be reckoned from the year in which the enterprise commences to make profits (2015/16).

Other Income is liable for income tax at normal rate.

FoodBuzz (Private) LtdPursuant to agreement dated 22 November 2011 and subsequent amendments there to on 15 May 2012 entered into with Board of Investment of Sri Lanka, the company will be entitled for a tax exemption period of 06 years as stipulated in the Inland

Revenue Act No.08 of 2012 (Section 16C) based on proposed investment not less than LKR 200 Mn. in fixed assets in the Project.

For the above purpose “the year of assessment” shall be reckoned from the year in which the enterprises commences to make profit or any year of assessment not later than two years reckoned from the date of commencement of commercial operation which ever come first.

Other income is liable for income tax at applicable rates.

United Motors Lanka PLCIncome tax provision for UML Group has been made using the tax rate enacted at the reporting date.

Current taxCurrent tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date, and any adjustment made to tax payable in respect of previous years.

Tax exposuresIn determining the amount of current and deferred tax, the Group considers the impact of tax exposures, including whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities. Such changes to tax liabilities would impact tax expense in the period in which such a determination is made.

II. Deferred taxDeferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the tax base of the assets and liabilities as at the reporting date.


Deferred tax is not recognised for; � Temporary differences on the initial

recognition of assets and liabilities in transactions that are not a business combination and at the time of transaction that affect neither accounting nor taxable profit or loss,

� Temporary differences relating to investments in subsidiaries, to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

� Taxable temporary differences arising on the initial recognition of goodwill

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the reporting date.

The principal temporary difference arise from depreciation on property, plant and equipment, tax losses carried forward and provision for defined benefit obligations.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that the future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised, based on the level of future taxable profit forecasts and tax planning strategies.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to

settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

III. Sales taxRevenue, expenses and assets are recognised net of the amount of sales tax except where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authorities in which case the sales tax is recognised as a part of the cost of the asset or part of the expense items as applicable and receivable and payables that are stated with the amount of sales tax included. The amount of sales tax recoverable and payable in respect of taxation authorities is included as a part of receivables and payables in the Statement of Financial Position.

IV. Withholding tax on dividends (WHT)

� Withholding tax on dividends distributed by the subsidiaries

� Dividends received by the Company out of taxable profit of the subsidiaries are subject to 14% deduction at source

� Withholding tax on dividends distributed by the Company

Withholding tax that arises from the distribution of dividends by the Company is exempted as per section 10 (1) g of the Inland Revenue Act No.10 of 2006.

Withholding tax that arises from the distribution of dividends by the subsidiaries are recognised at the time the liability to pay the related dividend is recognised.

V. Value Added Tax (VAT)The Company and its subsidiaries are liable to pay Value Added Tax on taxable supplies and services at the specified rates where applicable.

VI. Economic Service Charge (ESC)The Company and its subsidiaries are liable to pay Economic Service Charge at specified rates where applicable.

VII. Nations Building Tax (NBT)The Company and its subsidiaries are liable to pay Nation Building Tax (NBT) at specified rates where applicable.

3.9. InventoriesInventories are measured at the lower of cost and net realisable value. The cost of inventories that are not interchangeable are recognised by using specific identification of their individual cost and other inventories are based on weighted average cost formula. The cost of inventories includes expenditure incurred in purchasing the inventories and other costs incurred in bringing them to their present location and condition. It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses. Accordingly, the costs of inventories are accounted as follows:

Raw materials - At actual cost on Weighted Average BasisPacking materials - At actual cost on Weighted Average BasisMotor vehicles - At actual costGoods-in-transit - At actual costWork-in-progress - At costOther stocks -At purchase cost on a first in first out basis

Provisions are made for all non-moving and obsolete items of inventory to reflect the lower of cost or net realisable value.

3.10. Property, plant and equipmentProperty, plant and equipment are tangible items that are held for servicing, or for administrative purposes and are expected to be used during more than one period.

I. Basis of recognitionProperty, plant and equipment are recognised if it is probable that future economic benefits associated with the assets will flow to the Company and cost of the asset can be measured reliably.

Accounting Policies


Purchased software that is integral to the functionality of the related equipment is capitalised as part of computer equipment.

II. MeasurementAn item of property, plant and equipment that qualifies for recognition as an asset is initially measured at its cost. Cost includes expenditure that is directly attributable to the acquisition of the asset and subsequent costs. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for their intended use and the costs of dismantling and removing the items and restoring the site on which they are located.

III. Cost modelThe Group applies cost model to property, plant and equipment except for freehold land and records at cost of purchase or construction together with any incidental expenses thereon less accumulated depreciation and any accumulated impairment losses.

IV. Revaluation modelFreehold land and buildings are stated at cost at the time of acquisition and subsequently measured at fair value at the next valuation. Freehold land and building of the Group is revalued at regular intervals to ensure that the carrying amounts do not differ materially from the fair values at the reporting date.

On revaluation of an asset, any increase in the carrying amount is recognised in other comprehensive income and accumulated in equity under the heading of revaluation surplus or used to reverse a previous revaluation decrease relating to the same asset, which was charged to the profit or loss. In this circumstance, the increase is recognised as income to the extent of the previous write down.

Any decrease in the carrying amount is recognised as an expense in comprehensive income or is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation reserve in respect of that asset. Upon disposal or retirement, any balance remaining in the revaluation reserve in respect of an asset is transferred directly to retained earnings.

V. Subsequent costsThe cost of replacing significant parts of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within that part will flow to the Company and its cost can be measured reliably. The costs of day-to-day servicing of property, plant and equipment are charged to the statement of comprehensive income as incurred.

VI. De-recognitionThe carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The gains or losses arising from derecognition of an item of property, plant and equipment is included in statement of comprehensive income when the item is derecognised. When replacement costs are recognised in the carrying amount of an item of property, plant and equipment, the remaining carrying amount of the replaced part is derecognised. Major inspection costs are capitalised. At each such capitalisation, the remaining carrying amount of the previous cost is derecognised.

VII. DepreciationDepreciation is calculated over the depreciable amount, which is the cost of an asset or other amount substituted for cost, less its residual value. Depreciation is recognised in the statement of comprehensive income on straight-line basis over the estimated useful lives of each item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease terms and useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease period. Freehold land is not depreciated.

The estimated useful lives are as follows:

Asset Category Group CompanyFreehold buildings 20 - 40 years 20 yearsPlant and machinery 4 - 10 years -Office equipment 4 - 5 years 5 yearsFurniture and fittings 5 - 10 years 5 yearsMotor vehicles 4 - 5 years 4 yearsComputers and accessories 4 - 5 years 4 yearsFixtures 4 – 10 years 5 yearsElectronic equipment 5 years 5 yearsAir conditioners 5 years -Tools and utensils 4 – 10 years 5 yearsMaintenance equipment 5 years 5 yearsReference books 10 years -


The asset’s useful lives are reviewed and adjusted if appropriate at the end of each reporting period.

Depreciation methods, useful lives and residual values are reviewed at each reporting date. Depreciation of an asset begins when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale (or included in a disposal Group that is classified as held for sale) and the date that the asset is derecognised.

All classes of property, plant and equipment together with the reconciliation of carrying amounts and accumulated depreciation at the beginning and at the end of the year are given in note 6.

Leasehold improvements are capitalised and depreciated over the life time of the lease or useful life whichever is shorter.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately.

VIII. Borrowing costAs per LKAS 23 on “Borrowing costs”, the Group capitalises borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of the asset. A qualifying asset is an asset which takes a substantial period of time to get ready for its intended use or sale. Other borrowing costs are recognised in the statement of comprehensive income in the period it is incurred.

IX. Capital work-in-progressCapital expenses incurred during the year which are not completed as at the reporting date are shown as capital work-in-progress, whilst the capital assets which

and any accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss when incurred.

IV. Useful economic lives and amortisation

Computer software are amortised over 2-5 years which is their estimated useful economic life on a straight-line basis. They are assessed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation method, useful lives and residual values are reviewed at each reporting date and adjusted if required.

V. De-recognitionAn intangible asset is derecognised on disposal or when no future economic benefits are expected from its use and subsequent disposal. Gains and losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss.

3.12. Investment propertyI. Basis of recognitionInvestment Property comprises freehold land, freehold buildings together with the integral parts of such properties.

II. MeasurementInvestment Property is measured initially at its cost, including related transaction costs. After initial recognition, Investment Property is carried at fair value.

The fair value of Investment Property reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions, as appraised by an independent valuer, annually.

Accounting Policies

have been completed during the year and in use have been transferred to property, plant and equipment.

3.11. Intangible assets and goodwillAn intangible asset is an identifiable non-monetary asset without physical substance held for use in the production or supply of goods or services, or for administrative purpose.

I. Basis of recognitionIntangible assets are recognised if it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the assets can be measured reliably.

II. GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. If the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree less the net amount of the fair value of the assets acquired and liabilities assumed is recognised. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. The negative goodwill is recognised immediately in the statement of comprehensive income. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold net of disposal proceeds

III. SoftwareAll licensed computer software costs incurred by the Group, which are not integrally related to associated hardware, which can be clearly identified, reliably measured and is probable that they will lead to future economic benefits, are included in the statement of financial position under the category of intangible assets and carried at cost less amortisation


Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the statement of profit or loss during the financial period in which they are incurred.

Gains or losses arising from changes in the fair values of investment properties are included in the profit or loss in the period in which they arise. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the SLFRS 13.

If an Investment Property becomes owner occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its cost for accounting purposes.

III. De-recognitionInvestment properties are derecognised when disposed, or permanently withdrawn from use because no future economic benefits are expected.

IV. Reclassification of investment property

When the use of a property changes from owner-occupied to investment property, the transfers are recorded at carrying amount following the cost model as per LKAS 40 Accounting for Investment Property

3.13. Financial instrumentsI. Non derivative financial assetsInitial recognition and measurementFinancial assets are recognised when and only when the Company becomes a party to the contractual provisions of the financial instruments. The Company determines the classification of its financial assets at initial recognition.

From 1 April 2018 as per SLFRS 9, the Group classifies its financial assets based on business model for managing the financial assets and the contractual terms of the cash flows measured at either;

� Amortised cost.

� Fair value (either through OCI or through statement of profit or loss)

Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

All financial instruments are measured initially at their fair value plus transaction costs that are directly attributable to acquisition or issue of such financial instruments, except in the case of financial assets designated at fair value through profit or loss according to Sri Lanka Accounting Standard - SLFRS 09 on “Financial Instruments”. Transaction costs in relation to financial assets at fair value through profit or loss are dealt with through the statement of profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

The financial assets include cash and cash equivalents, short term deposits, investments in unit trusts, treasury bills, equity shares and trade and other receivables.

Classification and subsequent measurementAt inception, a financial asset is classified into one of the following categories;

� Amortised cost.

� Fair value through OCI

� Fair value through profit or loss

The subsequent measurement of financial assets depends on their classification as follows;

Financial assets measured at amortised costA financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

� The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

� The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Cash and cash equivalents, trade and other receivables and receivables from related parties are measured at amortised cost.

Financial assets measured at FVOCIAssets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains / (losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains / (losses) and impairment expenses are presented as separate line item in the statement of profit or loss.


Investment in long term equity securities are measured at FVOCI. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established.

Financial assets measured at FVTPLAs per SLFRS 9, all financial assets other than those classified at amortised cost or FVOCI are measured at FVTPL.

Financial assets at fair value through profit or loss include financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis as they are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets and financial assets designated upon initial recognition at fair value through profit or loss.

Changes in the fair value of financial assets at FVTPL are recognised in other gains / (losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Investments in unit trust and equity securities acquired for the purpose of trading are measured at FVTPL.

Details of the impact on reclassification and measurement from LKAS 39 to SLFRS 9 are disclosed in transition disclosures given in note 5.

Equity instrumentsThe Group subsequently measures all equity investments at fair value. The Group’s

management has elected to present fair value gains and losses on equity investments in OCI with no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the company’s right to receive payments is established.

Changes in the fair value of financial assets at FVPL are recognised in other gains / (losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

De-recognitionThe Company and Group derecognise a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

ImpairmentFrom 1 April 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables, see note 12 for further details.

II. Non derivative financial liabilitiesInitial recognition and measurementFinancial liabilities within the scope of SLFRS / LKAS are recognised when and only when the Company becomes a party to the contractual provisions of the financial instrument. Financial liabilities are recognised initially at fair value plus transaction cost that are directly attributable to the issue of the financial liability, which are not at fair value through profit or loss. Financial liabilities can be classified in to two categories as financial liabilities at fair value through profit or loss and other financial liabilities. The Company has classified its financial liabilities into other financial liability category.

Subsequent measurementThe Group classifies non derivative financial liability into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Such financial liabilities measured at amortised cost includes trade and other payables, interest bearing borrowings, overdrafts, amounts due to related companies etc.

De recognitionA financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the Statement of Comprehensive Income..

Accounting Policies


Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount is presented in the Statement of Financial Position when and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

3.14. Fair value measurementFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

� In the principal market for the asset or liability or

� In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Group.The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

� Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities

� Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

� Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable for the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

For assets and liabilities that are recognised in the Financial Statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The Management of the Group determines the policies and procedures for both recurring fair value measurement, such as investment properties and property, plant and equipment-buildings.

External valuer, Mr. J.M.S. Bandara is involved in valuation of significant assets, such as Investment properties and Buildings.

Involvement of external valuers is decided upon annually by the Management.

At each reporting date, the Management analyses the movements in the values of assets which are required to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

The Management, in conjunction with the Group’s external valuer, also compares the change in the fair value of each asset with relevant external sources to determine whether the change is reasonable.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

3.15. Impairment - non financial assetsThe carrying value of the Group’s non-financial assets, other than inventories, and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Units. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.


The recoverable amount of an asset or cash-generating unit is the greater of if it’s value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (“Cash-Generating Unit or CGU”) for the purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the Group of CGUs that is expected to benefit from the synergies of the combination. This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal reporting purposes.

An impairment loss is recognised if the carrying amount of asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of comprehensive income.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation, if no impairment loss had been recognised.

3.16. Liabilities and provisionsI. ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as separate assets but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

II. Dividend payableProvision for final dividends is recognised at the time the dividend is approved by the shareholders. Interim dividends payable is recognised when the Board approves such dividend in accordance with the provisions of the Companies Act No. 07 of 2007.Dividends for the year that are approved after the reporting period are disclosed under Events after the reporting period in accordance with the Sri Lanka Accounting Standard LKAS 10.

3.17. LeasesI. Group as a lessorLeases in which the Group does not transfer substantially all the risks and rewards of ownership of are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating

lease added to the carrying amount of the leased asset and recognised over the lease term on the same basis rental income. Contingent rents are recognised as revenue in the period in which they are earned.

II. Finance leasesLeases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

III. Operating leasesOther leases are operating leases. Payments made under operating leases are recognised in profit or loss on straight line basis over the term of the lease. Any prepayments are recognised in the consolidated statement of Financial Position as leasehold rights.

When an operating lease is terminated before the lease period has expired, any payment required to be made to lessor by way of penalty is recognised as an expense in the period in which termination takes place.

3.18. Capital commitments and contingencies

Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events or present obligations where the transfer of economic benefits is not probable or cannot be measured reliably. Capital commitments and contingent liabilities of the Group are disclosed in the respective notes to the Financial Statements.

3.19. Events after the reporting dateThe materiality of the events after the reporting date has been considered and

Accounting Policies


appropriate adjustments and provisions have been made in the Financial Statements wherever necessary.

3.20. Basic earnings per shareThe Financial Statements present basic earnings per share (EPS) for its ordinary shares. The basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.

The weighted average number of ordinary shares outstanding during the year and the previous year are adjusted for events that have changed the number of ordinary shares outstanding during the year.

3.21. Related party transactionsDisclosure 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 charged.

3.22. Cash flow statementThe statements of cash flows has been prepared by using the “indirect method” of preparing cash flows in accordance with the Sri Lanka Accounting Standard - LKAS 7 on ‘Statement of cash flows’.

I. Cash and cash equivalentsCash and cash equivalents comprise of cash at bank balances and cash in hand balances. Cash and cash equivalents as referred to in the statement of cash flows comprised of those items as explained in note 15.

Bank overdrafts are included as a component of cash and cash equivalents for the purpose of the cash flow statement.The statements of cash flows are given on pages 125 and 126.

4. EFFECT OF SRI LANKA ACCOUNTING STANDARDS (SLFRS)

4.1. New accounting standards adopted by the Company

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2018:

� SLFRS 9 Financial Instruments

� SLFRS 15 Revenue from Contracts with Customers

I. SLFRS 9 Financial instruments and associated amendments to various other standards

SLFRS 9 replaces the multiple classification and measurement models in LKAS 39 Financial instruments: Recognition and measurement with a single model that has initially only two classification categories: amortised cost and fair value.

Classification of debt assets will be driven by the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. A debt instrument is measured at amortised cost if: a) the objective of the business model is to hold the financial asset for the collection of the contractual cash flows, and b) the contractual cash flows under the instrument solely represent payments of principal and interest.

All other debt and equity instruments, including investments in complex debt instruments and equity investments, must be recognised at fair value.

All fair value movements on financial assets are taken through the statement of profit or loss, except for equity investments that are not held for trading, which may be recorded in the statement of profit or loss or in reserves (without subsequent recycling to profit or loss).

For financial liabilities that are measured under the fair value option entities will need to recognise the part of the fair value change that is due to changes in the their own credit risk in other comprehensive income rather than profit or loss.

The new hedge accounting rules align hedge accounting more closely with common risk management practices. As a general rule, it will be easier to apply hedge accounting going forward. The new standard also introduces expanded disclosure requirements and changes in presentation.

Further changes introduced to the classification and measurement rules and also introduced a new impairment model to SLFRS 9. The changes introduced:

i. a third measurement category (FVOCI) for certain financial assets that are debt instruments

ii. a new expected credit loss (ECL) model which involves a three-stage approach whereby financial assets move through the three stages as their credit quality changes. The stage dictates how an entity measures impairment losses and applies the effective interest rate method. A simplified approach is permitted for financial assets that do not have a significant financing component (eg trade receivables). On initial recognition, entities will record a day-1 loss equal to the 12 month ECL (or lifetime ECL for trade receivables), unless the assets are considered credit impaired.

The standard is effective for the annual periods beginning on or after 01 January 2018.


II. SLFRS 15 Revenue from contracts with customers and associated amendments to various other standards

SLFRS 15 will replace LKAS 18 which covers contracts for goods and services and LKAS 11 which covers construction contracts.

The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer – so the notion of control replaces the existing notion of risks and rewards.

A new five-step process must be applied before revenue can be recognised:i. identify contracts with customers

ii. identify the separate performance obligation

iii. determine the transaction price of the contract

iv. allocate the transaction price to each of the separate performance obligations, and

v. recognise the revenue as each performance obligation is satisfied.

Key changes to current practice are:i. Any bundled goods or services that are

distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements.

ii. Revenue may be recognised earlier than under current standards if the consideration varies for any reasons (such as for incentives, rebates, performance fees, royalties, success of an outcome etc) – minimum amounts must be recognised if they are not at significant risk of reversal.

iii. The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a

point in time at the end of a contract may have to be recognised over the contract term and vice versa.

iv. There are new specific rules on licenses, warranties, non-refundable upfront fees and, consignment arrangements, to name a few.

v. There are also increased disclosures.

These accounting changes may have flow-on effects on the entity’s business practices regarding systems, processes and controls, compensation and bonus plans, contracts, tax planning and investor communications.

Entities will have a choice of full retrospective application, or prospective application with additional disclosures.

Amendments to SLFRS 15, ‘revenue from contracts with customers’

These amendments comprise clarifications of the guidance on identifying performance obligations, accounting for licenses of intellectual property and the principal versus agent assessment (gross versus net revenue presentation permitted).

This standard and the amendment is effective for the annual periods beginning on or after 01 January 2018.

4.2. Effect of Sri Lanka Accounting Standards (SLFRS) issued but not yet effective

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s Financial Statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

This listing of standards and interpretations issued are those that the Group reasonably

expects to have an impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards when they become effective.

I. SLFRS 16 – Leases

SLFRS 16 provides a single lessee accounting model, requiring leases to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value even though lessor accounting remains similar to current practice. This supersedes: LKAS 17 Leases, IFRIC 4 determining whether an arrangement contains a Lease, SIC 15 Operating Leases- Incentives; and SIC 27 evaluating the substance of Transactions Involving the Legal form of a Lease. Earlier application is permitted for entities that apply SLFRS 15 revenue from Contracts with customers.

SLFRS 16 is effective for annual reporting periods beginning on or after 01 January 2019. There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on the foreseeable future transactions.

Accounting Policies


5 TRANSITIONAL DISCLOSUREAdoption of SLFRS 9The following notes set out the impact of adopting Sri Lanka Accounting Standard – SLFRS 9 (Financial Instruments) at transition date, 01 April 2018 on the Statement of Financial Position.

Reclassification:These adjustments reflect the movement of the balances between categories on the Statement of Financial Position with no impact to shareholders’ equity. There is no change to the carrying value of the balances as a result of the reclassification.

Reconciliation between the carrying amounts under LKAS 39 to the balances reported under SLFRS 9 as of 01 April 2018.

GroupAs at 01 April 2018 LKAS 39 measurement Reclassification SLFRS 9 measurement Category LKR’000 LKR’000 Category LKR’000

Financial assetsFinancial assets available for sale note A AFS 356,309 (356,309) - -Financial assets - FVOCI note A N/A - 356,309 FVOCI 356,309

Financial assets fair value through profit or loss (FVTPL)Other investments FVTPL 249,241 - FVTPL 249,241Trade and other receivables L&R 1,821,080 - AC 1,821,080Other receivables L&R 49,828 - AC 49,828Cash and bank L&R 1,902,118 - AC 1,902,118 4,378,576 - 4,378,576

Non financial assetsProperty, plant and equipment N/A 7,752,528 - N/A 7,752,528Investment property N/A 12,397,500 - N/A 12,397,500Intangible assets N/A 28,816 - N/A 28,816Defined benefit plans N/A 84,082 - N/A 84,082Inventories N/A 6,572,374 - N/A 6,572,374Income tax receivable N/A 5,854 - N/A 5,854Deferred tax assets N/A 13,633 - N/A 13,633 26,854,787 - 26,854,787Total assets 31,233,363 - 31,233,363

Equity and liabilitiesEquityStated capital N/A 5,760,000 - N/A 5,760,000Revaluation reserve N/A 204,284 - N/A 204,284Other components of equity N/A (5,526) - N/A (5,526)Retained earnings N/A 8,982,769 - N/A 8,982,769Total equity attributable to equity holders of the Company 14,941,527 - 14,941,527Non controlling interest 6,223,062 - 6,223,062Total equity 21,164,589 - 21,164,589

Notes to the Financial Statements


Group Contd.

LKAS 39 measurement Reclassification SLFRS 9 measurement Category LKR’000 LKR’000 Category LKR’000

Financial liabilitiesInterest bearing loans and borrowings AC 7,703,433 - AC 7,703,433Trade and other payables AC 1,179,047 - AC 1,179,047Rent received in advance AC 20,178 - AC 20,178Customer deposits AC 126,304 - AC 126,304Bank overdrafts AC 114,433 - AC 114,433 9,143,395 - 9,143,395

Non financial liabilitiesEmployee benefits N/A 211,448 - N/A 211,448Deferred tax liabilities N/A 623,370 - N/A 623,370Income tax payable N/A 90,561 - N/A 90,561 925,379 - 925,379Total equity and liabilities 31,233,363 - 31,233,363

CompanyAs at 01 April 2018 LKAS 39 measurement Reclassification SLFRS 9 measurement Category LKR’000 LKR’000 Category LKR’000

Financial assets fair value through profit or loss (FVTPL)Other investments FVTPL 151,173 - FVTPL 151,173Trade and other receivables L&R 81,609 - AC 81,609Other receivables L&R 51,364 - AC 51,364Cash and bank L&R 694,990 - AC 694,990 979,136 979,136

Non financial assetsProperty, plant and equipment N/A 352,128 - N/A 352,128Investment property N/A 12,397,500 - N/A 12,397,500Intangible assets N/A 13,131 - N/A 13,131Investments in subsidiaries N/A 4,556,740 - N/A 4,556,740Inventories N/A 3,937 - N/A 3,937 17,323,436 17,323,436Total assets 18,302,572 - 18,302,572

Equity and liabilitiesEquityStated capital N/A 5,760,000 - N/A 5,760,000Revaluation reserve N/A 134,151 - N/A 134,151Retained earnings N/A 6,578,499 - N/A 6,578,499Total equity attributable to equity holders of the Company 12,472,650 - 12,472,650



Company Contd.

LKAS 39 measurement Reclassification SLFRS 9 measurement Category LKR’000 LKR’000 Category LKR’000 LKR’000 LKR’000 LKR’000

Financial liabilitiesInterest bearing loans and borrowings AC 4,985,000 - AC 4,985,000Trade and other payables AC 111,773 - AC 111,773Rent received in advance AC 20,178 - AC 20,178Customer deposits AC 131,936 - AC 131,936 5,248,887 - 5,248,887

Non financial liabilitiesEmployee benefits N/A 4,350 - N/A 4,350Deferred tax liabilities N/A 574,293 - N/A 574,293Income tax payable N/A 2,392 - N/A 2,392 581,035 - 581,035Total equity and liabilities 18,302,572 - 18,302,572

L&R - Loans and Receivables ,AFS - Available for Sale, FVTPL - Fair Value through P&L, FVOCI - Fair value through Other Comprehensive Income, AC - Amortised Cost, N/A - Not Applicable

Financial assets previously classified under available for sale category have been reclassified as financial assets fair value through other comprehensive income (FVOCI) upon adoption of SLFRS 9.

Note A : The Group elected to present in OCI changes in the fair value of all its equity investments previously classified as available-for-sale, because these investments are held as long-term strategic investments that are not expected to be sold in the short to medium term. As a result, assets with a fair value of LKR 356 Mn. (Group) Nil (company) were classified from available for sale financial assets to financial assets at FVOCI on 01 April 2018.

Impact of Transition to SLFRS 9 on reserves and retained earnings

Impact of transition to SLFRS 9Impact of adopting SLFRS 9 has not been recognised as revision of opening reserves as it is considered immaterial.

Adoption of SLFRS 15Impact of transition to SLFRS 15 (refer note 23)The Group has adopted SLFRS 15 “Revenue from Contract with Customers” from 01 April 2018.In adopting SLFRS 15, the Group reclassified revenue from “facilitation fees”, LKR 3.5 Mn. received from foreign suppliers as other income. According to the definition and scope of the standard, Income from facilitation fees is not falling under the definition of “Revenue from contract with customers”.

SLFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERSSLFRS 15 supersedes LKAS 11 Construction Contracts, LKAS 18 revenue and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under SLFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled to in exchange for transferring goods or services to a customer.The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.

The Group adopted SLFRS 15 using the full retrospective method of adoption. Based on the assessment performed, the Group concluded that SLFRS 15 does not have a material impact on the Group’s consolidated Financial Statements.


6 PROPERTY, PLANT AND EQUIPMENT6.1 Group

Land Buildings Plant andmachinery

Office equipment

Furnitureand

fittings

Motorvehicles

Computers and

accessories

Fixture andfittings

Electronicequipment

Airconditioners

Tools andutensils

Maintenanceequipment

Referencebooks

Electricalfixtures and

fittings

Solar PV system

Work inprogress

Total

LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

At cost / valuationAs at 01 April 2018 5,784,122 1,285,020 389,333 54,264 86,833 524,369 163,073 204,513 25,306 12,694 27,750 4,139 107 133,844 - 27,000 8,722,367Additions - 24,838 17,255 25,399 4,049 133,928 20,851 2,005 1,060 877 1,168 - - 2,029 18,185 230,668 482,312Revaluation 7,500 46,275 - - - - - - - - - - - - - - 53,775Transfers, reclassifications and adjustments / disposals

- (19,275) - (46) (81) (44,923) (251) - - - - - - - - - (64,576)

Transfer from capital work in progress - 43,916 - - - - - 2,989 - - - - - 1,515 208,259 (256,679) -As at 31 March 2019 5,791,622 1,380,774 406,588 79,617 90,801 613,374 183,673 209,507 26,366 13,571 28,918 4,139 107 137,388 226,444 989 9,193,878

Accumulated depreciationAs at 01 April 2018 - 199,293 196,374 40,251 62,191 293,492 128,772 64,947 10,739 7,805 21,790 1,114 107 69,631 - - 1,096,506Charge for the year - 65,076 30,316 6,407 7,896 99,543 15,612 20,731 2,038 1,373 2,191 828 - 10,602 - - 262,613Transfers, reclassifications and adjustments / disposals

- (19,275) - (22) (238) (37,880) (248) 168 - (2) - - - 82 - - (57,415)

As at 31 March 2019 - 245,094 226,690 46,636 69,849 355,155 144,136 85,846 12,777 9,176 23,981 1,942 107 80,315 - - 1,301,704

Carrying amount as at 31 March 2019 5,791,622 1,135,680 179,898 32,981 20,952 258,219 39,537 123,661 13,589 4,395 4,937 2,197 - 57,073 226,444 989 7,892,174Carrying amount as at 31 March 2018 5,784,122 1,085,727 192,959 14,013 24,642 230,877 34,301 139,566 14,567 4,889 5,960 3,025 - 64,213 - 27,000 7,625,861

6.2 CompanyBuildings Office

equipmentFurniture

and fittingsMotor

vehiclesComputers

and accessories

Fixture and fittings

Electronic equipment

Tools and utensils

Maintenance equipment

Total

LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

At Cost / valuationAs at 01 April 2018 318,000 3,851 3,481 53,890 10,931 363 1,750 1,429 4,139 397,834Additions - 75 134 54 530 - - 54 - 847Revaluation 43,672 - - - - - - - - 43,672Transfers, reclassifications and adjustments / disposals

(17,672) - (12) (4,891) - - - - - (22,575)

As at 31 March 2019 344,000 3,926 3,603 49,053 11,461 363 1,750 1,483 4,139 419,778

Accumulated depreciationAs at 01 April 2018 - 1,761 1,224 36,070 4,098 156 759 524 1,114 45,706Charge for the year 17,672 708 702 9,382 2,778 72 350 289 828 32,781Transfers, reclassifications and adjustments / disposals

(17,672) - (6) (3,308) - - - - - (20,986)

As at 31 March 2019 - 2,469 1,920 42,144 6,876 228 1,109 813 1,942 57,501

Carrying amount as at 31 March 2019 344,000 1,457 1,683 6,909 4,585 135 641 670 2,197 362,277Carrying amount as at 31 March 2018 318,000 2,090 2,257 17,820 6,833 207 991 905 3,025 352,128



Location / Address Owned by Buildings Land Extent Valuation date

Method Fair value hierarchy No.of

building units

Sq.Ft Cost /carrying

valueLKR'000

Change for the period

LKR'000

Total value

LKR'000

Acre Rood Perch Cost / Carrying value

LKR'000


LKR'000

Total value

LKR'000

Park Street, Colombo 02 R I L Property PLC (R I L) 1 8,549 300,328 43,672 344,000 - - - - - - 31.03.2019 Income Approach Level 3

84,84A Thimbirigasyaya RoadColombo 05

Foodbuzz (Pvt) Ltd (FBPL)

1 3,856 23,397 2,603 26,000 - - 14.89 126,499 7,500 133,999 31.03.2019 Market value basis Level 3

100 & 100A, Hyde Park Corner,Colombo 02

United Motors Lanka PLC Group (UML)

10 81,794 32,899 - 32,899 1 3 0.54 3,384,900 - 3,384,900 08.11.2017 Market value basis Level 3

143 & 145 Majeed Place, Orugodawatte 27 126,382 86,146 - 86,146 7 - 15.14 995,570 - 995,570 08.11.2017 Market value basis Level 3

Vauxhall Street, Colombo 02 2 825 6,174 - 6,174 - 1 10.35 577,875 - 577,875 08.11.2017 Market value basis Level 3

Meetotamulla, Orugodawatte 1 3,494 2,597 - 2,597 - 1 28.86 84,711 - 84,711 08.11.2017 Market value basis Level 3

Maligawa Road, Ratmalana 25 89,262 314,792 - 314,792 9 3 36.50 586,714 - 586,714 08.11.2017 Market value basis Level 3

Navatkuli, Jaffna 3 9,475 39,144 - 39,144 1 - 25.69 27,853 - 27,853 08.11.2017 Market value basis Level 3

70 805,477 46,275 851,752 5,784,122 7,500 5,791,622

* Buildings on leasehold land amounting to LKR 284 Mn. as at 31 March 2019.

6.3 During the Financial Year, the Group acquired property, plant and equipment to the aggregate value of LKR 482 Mn. (2017/18 - LKR 50 Mn.). Cash payments amounting to LKR 482 Mn. (2017/18 - LKR 50 Mn.) were made during the year for purchase of property, plant and equipment.

6.4 During the Financial Year, the Company acquired property, plant and equipment to the aggregate value of LKR 0.847 Mn. (2017/18 - LKR 2.3 Mn.). Cash payments amounting to LKR 0.847 Mn. (2017/18 - LKR 2.3 Mn.) were made during the year for purchase of property, plant and equipment.

6.5 The revalued building during the year consist of the owner occupied area of the investment property comprising 8,549Sq.Ft. The details of valuation are disclosed in note 6.10.

6.6 There were no compensation received / receivable from third parties for items of property, plant and equipment that were impaired, lost or given up. There were no capitalised borrowing costs related to the acquisition of property plant and equipment during the year.

6.7 No restrictions existed on the title of the property, plant and equipment of the Group as at the reporting date, and there were no temporarily idle property, plant and equipment as at the reporting date. There was no permanent fall in value of property, plant and equipment which requires a provision for impairment as at reporting date.

6.8 There were no items of property, plant and equipment pledged as security for liabilities, other than disclosed in note 17.

6.9 Valuation of the land and buildings was carried out by Mr. J. M. Senanayaka Bandara, a chartered valuation surveyor, who has recent experience in valuing properties of similar location and categories.

6.10 Details of land and buildings owned by the Group are as follows.



6.11 Cost of fully depreciated assets which are still in use as at reporting date is as follows.

Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Buildings 42,978 42,978 - -Plant and machinery 52,425 50,208 - -Office equipment 30,353 26,591 662 -Furniture and fittings 51,064 37,924 - -Motor vehicles 289,385 270,230 18,408 13,868Computers and accessories 113,785 83,337 293 -Electronic equipment 40,920 39,961 - -Air conditioners 6,391 6,391 - -Tools and utensils 18,263 17,182 - -Reference books 107 107 - - 645,671 574,909 19,363 13,868

6.12 The carrying amount of revalued land and buildings if they were carried at cost model, would be as follows,


Cost 6,930,531 6,861,777 175,233 175,233Accumulated depreciation and impairment (296,289) (237,353) (49,590) (31,918)Carrying value 6,634,242 6,624,424 125,643 143,315

Location / Address Owned by Buildings Land Extent Valuation date

Method Fair value hierarchy No.of

building units

Sq.Ft Cost /carrying

valueLKR'000


LKR'000

Total value

LKR'000

Acre Rood Perch Cost / Carrying value

LKR'000


LKR'000

Total value

LKR'000

Park Street, Colombo 02 R I L Property PLC (R I L) 1 8,549 300,328 43,672 344,000 - - - - - - 31.03.2019 Income Approach Level 3

84,84A Thimbirigasyaya RoadColombo 05

Foodbuzz (Pvt) Ltd (FBPL)

1 3,856 23,397 2,603 26,000 - - 14.89 126,499 7,500 133,999 31.03.2019 Market value basis Level 3

100 & 100A, Hyde Park Corner,Colombo 02

United Motors Lanka PLC Group (UML)

10 81,794 32,899 - 32,899 1 3 0.54 3,384,900 - 3,384,900 08.11.2017 Market value basis Level 3

143 & 145 Majeed Place, Orugodawatte 27 126,382 86,146 - 86,146 7 - 15.14 995,570 - 995,570 08.11.2017 Market value basis Level 3

Vauxhall Street, Colombo 02 2 825 6,174 - 6,174 - 1 10.35 577,875 - 577,875 08.11.2017 Market value basis Level 3

Meetotamulla, Orugodawatte 1 3,494 2,597 - 2,597 - 1 28.86 84,711 - 84,711 08.11.2017 Market value basis Level 3

Maligawa Road, Ratmalana 25 89,262 314,792 - 314,792 9 3 36.50 586,714 - 586,714 08.11.2017 Market value basis Level 3

Navatkuli, Jaffna 3 9,475 39,144 - 39,144 1 - 25.69 27,853 - 27,853 08.11.2017 Market value basis Level 3

70 805,477 46,275 851,752 5,784,122 7,500 5,791,622

* Buildings on leasehold land amounting to LKR 284 Mn. as at 31 March 2019.


7 INVESTMENT PROPERTY Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

As at 01 April 12,397,500 11,585,619 12,397,500 11,585,619

- Subsequent expenditure on investment property 14,094 17,691 14,094 17,691 - Expenditure incurred on new building complex 854,124 46,281 854,124 46,281 13,265,718 11,649,591 13,265,718 11,649,591Net gain from fair value adjustment 840,282 747,909 840,282 747,909As at 31 March 14,106,000 12,397,500 14,106,000 12,397,500

7.1 Investment properties consist of freehold land and commercial units given on rental in buildings constructed on freehold land at No 33, Park Street, Colombo 02 and No 45 Morgan Road, Colombo 02.

7.2 Expenditure incurred on new building complex includes initial expenditure incurred on designing of new building and construction payment for PARKLAND 1 at No. 33, Park Street, Colombo 02.

7.3 There were no items of investment property pledged as security for liabilities, other than disclosed in note 17.

7.4 Details of investment properties - Group / Company

Property Extent Valuationdate

Value as at31 March 2019

Value as at31 March 2018

Method Fair value hierarchy

LandNo. 33, Park Street, Colombo 02

2A-2R-14.87P 31 March 2019 LKR 13 Mn. per perch LKR 12.5 Mn. per perch Market value basis Level 3

Morgan Road, Colombo 02 1A-0R-36.37P 31 March 2019 LKR 9.9 Mn. per perch

LKR 9.5 Mn. per perch Market value basis Level 3

BuildingsNo. 33, Park Street, Colombo 02PARKLAND building 193,318 Sq.Ft 31 March 2019 LKR 275-375 per

Sq. FtLKR 250-350 per Sq. Ft Income approach Level 3

PARKLAND 1 building 68,343 Sq. Ft 31 March 2019 LKR 225-425 per Sq. Ft

LKR 250 per Sq. Ft Income approach Level 3

The READYWEAR building has been rebranded as PARKLAND 1 with effect from 01 December 2018 for uniform identification of our core commercial properties under the PARKLAND name.

7.5 The significant assumptions used by the valuer are as follows :

2019 2018 Sensitivity

Anticipated maintenance cost: 35% from rental income 35% from rental income increase will result in decrease in fair value gainYield / discount rate 5.6% - 6.00% 5.5% - 5.75% increase will result in decrease in fair value gainRisk and other factors 2.5% from net annual rent 2.5% from net annual rent increase will result in decrease in fair value gainPrice per Perch LKR Mn. 13.00 12.50 increase will result in increase in fair value gainPrice per Perch LKR Mn. 9.90 9.50 increase will result in increase in fair value gain



7.6 Fair value of the investment property is ascertained by independent valuations carried out by Mr. J. M. Senanayaka Bandara, a chartered valuation surveyor, who has recent experience in valuing properties of similar locations and category in determining the fair value of building the capitalisation of net income method have been used, which is based upon assumptions including future rental income, anticipated maintenance costs, appropriate discount rate and in determine the fair value of land, make reference to market evidence of transaction prices for similar properties, with appropriate adjustments for size and location. The appraised fair values are approximated within appropriate range of values.

7.7 Using the DCF method, fair value is estimated using assumptions regarding the benefits and liabilities of ownership over the asset’s life including an exit or terminal value. This method involves the projection of a series of cash flows on a real property interest. To this projected cash flow series, a market-derived discount rate is applied to establish the present value of the income stream associated with the asset. The exit yield is normally separately determined and differs from the discount rate.

7.8 The duration of the cash flows and specific timing of inflows and outflows are determined by events such as rent reviews, lease renewal, redevelopment, or refurbishment. The appropriate duration is typically driven by market behavior that is a characteristic of the class of real estate property. Periodic cash flow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance cost, agent and commission costs and other operating and management expenses. The series of periodic net operating income, along with an estimate of the terminal value anticipated at the end of the projection period, is then discounted.

7.9 Rental income and direct operating expenses for the investment property

Company 2019 2018 LKR’000 LKR’000

Rental income from the investment property 680,020 634,894Other related services 82,159 69,577 762,179 704,471Direct operating expenses for the investment property (69,197) (56,323)

7.10 The carrying amount of revalued land and buildings under investment property if they were carried at cost model, would be as follows,


Cost 6,755,931 5,887,713 6,755,931 5,887,713Accumulated depreciation and impairment - - - -Carrying value 6,755,931 5,887,713 6,755,931 5,887,713


8 INTANGIBLE ASSETS Group Company Computer Capital work Goodwill Total Computer Total software in progress software Summary LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

CostBalance as at 01 April 50,664 126,667 6,895 184,226 18,369 18,369Additions 3,673 59,627 - 63,300 1,530 1,530Reclassification and adjustments - (5,649) - (5,649) - -Balance as at 31 March 54,337 180,645 6,895 241,877 19,899 19,899

Amortisation / ImpairmentBalance as at 01 April 28,743 - - 28,743 5,238 5,238Amortisation for the year 7,464 - - 7,464 4,851 4,851Balance as at 31 March 36,207 - - 36,207 10,089 10,089

Carrying value as at 31 March 2019 18,130 180,645 6,895 205,670 9,810 9,810Carrying value as at 31 March 2018 21,921 126,667 6,895 155,483 13,131 13,131

8.1 The goodwill consist of two acquisitions made by R I L Property PLC.1. Arose from the acquisition of subsidiary Foodbuzz (Pvt) Ltd which is amounting to LKR 4 Mn.

2. Arose from the acquisition of subsidiary United Motors Lanka PLC amounting to LKR 2.89 Mn. on 29 December 2017 which had acquired 50% shares in Unimo Enterprise Ltd (formerly known as Associated United Motors Limited) which was acquired on 03 October 2002.

8.2 During the Financial Year, the Group acquired intangible assets to the aggregate value of LKR 63.3 Mn. (2017/18 - LKR 130.7 Mn.). Cash payments amounting to LKR 63.3 Mn. (2017/18 - LKR 130.7 Mn.) were made during the year for purchase of intangible assets.

8.3 During the Financial Year, the Company acquired intangible assets to the aggregate value of LKR 1.5 Mn. (2017/18 - LKR 3.7 Mn.). Cash payments amounting to LKR 1.5 Mn. (2017/18 - LKR- 3.7 Mn.) were made during the year for purchase of intangible assets.

8.4 No condition has arisen that results in an impairment of intangible assets that requires a provision.

8.5 Cost of fully amortised computer software of Group amounting to LKR 20.4 Mn. (2017/2018 - LKR 16.7 Mn.) as at the reporting date and there were no computer software assets of the company fully amortised as at the reporting date.

8.6 There were no restrictions existed on the title of the intangible assets of the Group / Company as at the reporting date. Further there were no items pledged as security for liabilities.

8.7 There were no significant intangible assets controlled by the entity but not recognised as assets because they did not meet recognition criteria or because they were acquired or generated before SLFRS 3 – Business Combinations was effective.

8.8 Capital work-in progress includes expenses incurred on ERP system (SAP) implementation which is expected to be implemented during 2019.



9 INVESTMENTS IN SUBSIDIARIES9.1 Company

2019 2018 Holding At cost Holding At cost LKR’000 LKR’000

Foodbuzz (Pvt) Ltd 100% 542,913 100% 277,013Investment made in Foodbuzz (Pvt) Ltd. (note 33.1) 100% - 100% 265,900 542,913 542,913United Motors Lanka PLC 51% 4,013,827 - -Acquisition of United Motors Lanka PLC (note 9.3) - 51% 4,013,827Total investments in subsidiaries 4,556,740 4,556,740

9.2 Summarised information of subsidiaries that have material non controlling interest is provided below,

UML Group 2019 2018 LKR’000 LKR’000

Revenue 12,769,409 3,390,825Profit after tax 435,923 216,211Other comprehensive income (105,592) (13,854)Total comprehensive income 330,331 202,357

Total comprehensive income,Owners of the parent 168,469 103,202Non controlling interest 161,862 99,155 330,331 202,357

Summary of the statement of financial positionNon-current assets 7,923,720 7,497,569Current assets 10,028,771 9,392,931Total assets 17,952,491 16,890,500

Non current liabilities 299,958 252,790Current liabilities 4,773,426 3,937,583Total liabilities 5,073,384 4,190,373

Total equity: Attributable to equity holders of the company 6,568,345 6,477,065Total equity: Attributable to non controlling interest 6,310,762 6,223,062Total equity 12,879,107 12,700,127

Summary of the statement of cash flowsNet cash inflow / (outflow) from operating activities (738,322) 1,086,974Net cash inflow / (outflow) from investing activities (663,654) 1,102,452Net cash inflow / (outflow) from financing activities 731,403 (1,595,634)Net increase / (decrease) in cash and cash equivalents (670,573) 593,792


9.3 Acquisition of United Motors Lanka PLCa) The Group acquired 30,271,000 ordinary shares (30%) of United Motors Lanka PLC (UML) from its major shareholder Mr. M. A. Yaseen at

a price of LKR 78 per share on 08 November 2017, the total cost being LKR 2.361 Bn. Pursuant to this, a mandatory offer at a price of LKR 78 per share was made to all remaining shareholders of UML to purchase their shares in terms of Rule 31 (1) (a) of the Takeovers and Mergers Code.

The following table summarises the acquisition date fair value of the equity accounted investee and the consideration transferred. Group 2019 2018 LKR’000 LKR’000

Consideration paid - 2,361,138Fair value of the associate as at the date of acquisition - 3,828,931Negative goodwill - 1,467,793

Share of profit of equity accounted investee, net of tax - 30,868Negative goodwill - 1,467,793Net results from equity accounted investee - 1,498,661

b) On 29 December 2017, the Group acquired additional 21% of the shares and voting interests in UML Motors Lanka PLC. As a result, the Group’s equity interest in UML increased from 30% to 51%, obtaining control in UML.

(i) Carrying value of the associate as at the date of acquiring the control - 3,855,277 Fair value of the associate as at the date of acquiring the control - (2,361,138) Loss on derecognition of associate - 1,494,139

The following table summarises the acquisition date fair value of each major class of consideration transferred.

(ii) Consideration paid - 1,652,689 Fair value of the associate as at the date of acquiring the control - 2,361,138 Total - 4,013,827

The following table summarises the recognised amounts of assets and liabilities assumed at the date of acquisition.

(iii) Property, plant and equipment - 6,975,149 Intangible assets - 11,144 Investments in equity accounted investees - 898,706 Other investments - 382,805 Defined benefit plan - 96,394 Deferred tax assets - 11,203 Inventories - 7,184,195 Trade and other receivables - 1,866,666 Amounts due from related parties - 18,626 Current tax receivables - 2,461 Other investments - 108,647 Cash and cash equivalents - 346,081 Employee benefits - (206,526) Deferred tax liabilities - (50,322) Interest bearing borrowings - (3,266,044) Trade and other payables - (1,295,351) Amounts due to related parties - (28) Current tax liabilities - (129,086) Bank overdrafts - (103,798) Total identifiable net assets acquired - 12,850,922



Group 2019 2018 LKR’000 LKR’000

(iii) Contd. Non controlling interest measured at proportionate share of acquiree’s identifiable net assets - (6,296,952) Negative goodwill arising on acquiring the control (note 9.3.b.iv) - (2,540,143)

Purchase consideration transferred - 4,013,827 Net cash acquired with the subsidiary - (242,283) Net cash flow on acquisition - 3,771,544

(iv) Loss on derecognition of associate (note 9.3.b.i) - (1,494,139) Negative goodwill arising on acquiring the control - 2,540,143 Net gain due to change in ownership (note 23) - 1,046,004

10 INVESTMENTS IN EQUITY ACCOUNTED INVESTEE Group Holding 2019 2018 % LKR’000 LKR’000

TVS Lanka (Pvt) Ltd - (interest in joint venture) - - - - - -

10.1 Net results from equity accounted investeeNegative goodwill recognised in profit or loss arising from UML - 1,467,793Share of profits from UML up to the date of obtaining the control - 30,868Total arising from UML (note 9.3.a) - 1,498,661Share of profit from TVS Lanka (Pvt) Ltd (“TVS”) from the date

acquisition of UML to the date of disposal of TVS (note 10.3) - 20,374 - 1,519,035

10.2 Pursuant to the share purchasing agreement entered into between UML and T V Sundaram Iyenger & Sons (Pvt) Limited, India, on 28 March 2018, UML disposed its entire shareholding of TVS Lanka (Pvt) Ltd amounting to 17,500,000 shares representing 50% of the stated capital for a total consideration of LKR 1 Bn.

10.3 Reconciliation of investment in equity accounted investee / TVS Lanka (Pvt) LtdReconciliation of the carrying amount of the equity accounted investee is as follows. Group 2019 2018 LKR’000 LKR’000

Balance as at 01 April - -Acquisition of subsidiary - 898,706Profit for the year recognised in statement of profit or loss - 20,374Other comprehensive income - (1,048)Group’s share of net result of equity accounted investee as at 28 March 2018 - 918,032


10.4 Profit on disposal of equity accounted investee / TVS Lanka (Pvt) Ltd

Group 2019 2018 LKR’000 LKR’000

Total consideration received - 1,000,000Group’s share of net assets recognised up to the date of disposal - (918,032)Remaining unrealised profit on purchase of goods from equity accounted investee - 110Profit on disposal of equity accounted investee - 82,078

Revenue - 12,060,850Profit or loss from continuing operations - 275,255Other comprehensive income - (4,314)Profit and other comprehensive income (100%) - 270,941

Profit and other comprehensive income (50%) - 135,471Elimination of unrealised profit - (16)Group’s share of profit and total comprehensive income - 135,455

Depreciation and amortisation - (18,044)Interest income - 21,125Interest expense - (325,565)Income tax expense - (40,417)

11 INVENTORIES Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Raw materials 17,273 25,761 - -Packing materials 11,284 9,921 - -Stock-in-trade (note 11.1) 5,594,899 5,541,215 - -Work-in-progress 93,277 72,890 - -Goods in transit (note 11.3) 499,579 871,824 - -Mosac tiles and staron sheets 11,851 11,852 - -Consumable stock 5,896 3,937 5,896 3,937Others 19,034 34,974 - - 6,253,093 6,572,374 5,896 3,937

11.1 Stock-in-tradeVehicles 3,766,727 4,187,343 - -Spare parts 1,296,721 872,087 - -Lubricants 262,075 335,084 - -Tyres 112,060 41,407 - -3D printers 2,966 - - -Equipment and machinery 92,997 63,430 - -Others 61,353 41,864 - - 5,594,899 5,541,215 - -

The stock-in-trade of each category has been shown after netting off the provision made for slow moving inventories in respect of each category.



11.2 Provision for slow moving inventories


Balance as at 01 April 273,259 - - -Acquisition of subsidiary - 212,850 - -Provision made during the year 49,327 64,094 - -Written off during the year - (3,685) - -Balance as at 31 March 322,586 273,259 - -

11.3 Goods in transit Vehicles 313,722 759,025 - -Spare parts and lubricants 185,857 112,799 - - 499,579 871,824 - -

11.4 Inventories and trade receivables pledged as security for liabilities of Group entities are as follows.

Company Bank FacilityAmount pledged

as securityLKR’000

Balance outstanding

LKR’000Orient Motor Company Ltd

Commercial Bank of Ceylon PLC Overdraft,Short term loan, Letter of credit 115,000 115,000Standard Chartered Bank Overdraft,Short term loan, Letter of credit 100,000 100,000

Unimo Enterprises Ltd Sampath Bank PLC Overdraft,Short term loan, Letter of credit 365,000 142,630National Development Bank PLC Overdraft,Short term loan, Letter of credit 105,000 105,000Commercial Bank of Ceylon PLC Overdraft,Short term loan, Letter of credit 525,000 525,000Standard Chartered Bank Overdraft,Short term loan, Letter of credit 500,000 500,000

UML Heavy Equipment (Pvt) Ltd Commercial Bank of Ceylon PLC Overdraft,Short term loan, Letter of credit 160,000 152,536

12 TRADE AND OTHER RECEIVABLES 12.1 Summary


Trade debtors 915,153 961,988 30,061 14,633Impairment allowance (note 12.4) (51,289) (54,227) - - 863,864 907,761 30,061 14,633Advances and prepayments 831,793 416,097 12,418 8,955Deposits 50,313 44,818 17,933 17,883Loans to employees (note 12.6) 19,254 16,742 4,220 4,580Other receivable (note 12.7) 357,853 381,254 27,404 35,558LC margin 1,030,340 - - -Other tax recoverable (note 12.8) 56,675 54,408 - -Facilitation fee receivable 28,005 - - - 3,238,097 1,821,080 92,036 81,609


12.2 The Group’s exposure to credit risk and impairment losses related to trade and other receivables are disclosed in note 36.1.

Classification as trade receivablesTrade receivables are amounts due from customers / tenants for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 60 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

Fair values of trade receivablesDue to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

Impairment and risk exposureInformation about the impairment of trade receivables and the Group’s exposure to credit risk, foreign currency risk and interest rate risk can be found in note 36

12.3 Trade receivables pledged as security for liabilities are given in note 11.4

12.4 Impairment allowance for trade receivables Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

At the beginning of the year 54,227 - - -Acquisition of subsidiary - 50,352 - -During the year provision 1,119 6,265 - -Bad debt written off during the year (4,057) (2,390) - -At the end of the year 51,289 54,227 - -

12.5 Lease rentals receivable on straight line adjustmentCurrent - - - -Non- current 42,267 49,828 42,267 51,364 42,267 49,828 42,267 51,364

12.6 Loans to employeesAt the beginning of the year 16,742 4,940 4,580 4,940Acquisition of subsidiary - 13,012 - -Loans disbursed during the year 12,641 - - -Recovered during the year (10,129) (1,210) (360) (360)At the end of the year 19,254 16,742 4,220 4,580

No loans have been granted to the Directors of the Company.

12.7 Other receivablesOther receivables 357,853 381,254 27,404 35,558Impairment of other receivables - - - - 357,853 381,254 27,404 35,558

12.8 Other tax recoverable Economic service charge 55,684 53,732 - -Withholding tax 991 676 - - 56,675 54,408 - -



13 INCOME TAX (RECEIVABLE) / PAYABLE Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

At the beginning of the year 84,707 2,210 2,392 2,083Income tax on current year profit (note 26) 224,038 49,240 28,201 11,835Acquisition of subsidiary - 126,625 - -(Over) provision in respect of prior periods (note 26) (22,352) (3,521) - -Income tax paid (210,797) (89,847) (23,384) (11,526)At the end of the year 75,596 84,707 7,209 2,392

Income tax receivable (9,818) (5,854) - -Income tax payable 85,414 90,561 7,209 2,392 75,596 84,707 7,209 2,392

14 OTHER INVESTMENTS14.1 Non current investments at fair value through other comprehensive income14.1.1 Classification of financial assets at fair value through other comprehensive incomeFinancial assets at fair value through other comprehensive income (FVOCI) comprise equity securities which are not held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category. These are strategic investments and the Group considers this classification to be more relevant.

Equity securities at fair value through other comprehensive income / available for sale Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Equity securities (note 14.1.5) 509,178 501,143 - -Decrease in market value (252,767) - - -Decrease in market value up to the date of obtaining the control of UML - (133,998) - -Decrease in market value after obtaining the control of UML - (10,836) - - 256,411 356,309 - -

14.1.2 In the prior Financial Year, the Group had designated equity securities as available-for-sale where management intended to hold them for the medium to long-term.

14.1.3 Amounts recognised in profit or loss and other comprehensive incomeDuring the year, the following gains / (losses) were recognised in profit or loss and other comprehensive income.


Changes in fair value recognised in other comprehensive income - FVOCI (107,825) - - -

Dividend from equity securities held at FVOCI / AFS recognised in profit or loss in other income (note 24.2) 6,435 9,639 - -

(101,390) 9,639 - -


14.1.4 Disposal of equity investmentsOn disposal of these equity investments, any related balance within the FVOCI reserve is reclassified to retained earnings.

Note 5 explains the change of accounting policy and the reclassification of equity investments from available-for-sale to at fair value through other comprehensive income.

14.1.5 Equity securities designated as fair value through other comprehensive income / available for sale

Group 2019 2018 No. of cost Market value No. of Cost Market value shares LKR’000 LKR’000 shares LKR’000 LKR’000

Aitken Spence PLC 561,648 51,346 23,028 361,647 41,596 18,299Bairaha Farms PLC 52,251 10,587 5,998 52,251 10,587 7,033Central Industries PLC 21,000 1,140 592 21,000 1,140 825Ceylon Grain Elevators PLC 5,000 471 261 5,000 471 358Citizens Development Business Finance PLC - - - 18,600 1,467 1,579Citizens Development Business Finance PLC (X) 10 1 1 10 1 1Commercial Bank of Ceylon PLC (X) 289,505 35,623 24,318 284,671 35,623 29,606Commercial Bank of Ceylon PLC 263,646 40,302 26,022 260,300 40,302 35,349DFCC Bank PLC 477,092 92,716 33,396 477,092 92,716 55,724Diesel & Motor Engineering PLC 109,883 90,211 33,481 109,883 90,211 51,085Lanka Walltiles PLC 82,116 9,760 4,927 82,116 9,760 8,080Laugfs Gas PLC 143,049 5,912 2,403 143,049 5,912 5,078MTD Walkers PLC 90,259 5,521 1,336 90,259 5,521 1,851National Development Bank PLC 464,602 54,298 43,766 440,550 54,298 58,637Nations Trust Bank PLC 254,874 24,689 22,913 249,463 24,689 20,132People’s Leasing & Finance PLC 179,704 4,066 2,408 179,704 4,066 2,839Renuka Foods PLC 388,211 9,210 5,086 388,211 9,210 6,289Seylan Bank PLC 42,908 4,130 2,695 41,862 4,130 3,634Singer Finance (Lanka) PLC 521,885 11,917 6,576 521,885 11,917 8,037Softlogic Finance PLC 89,709 5,171 1,938 89,709 5,171 3,140Softlogic Life Insurance PLC - - - 10,700 249 242The Lanka Hospitals Corporation PLC 9,000 652 393 9,000 652 540Three Acre Farms PLC 5,870 847 577 5,870 846 657Tokyo Cement Company (Lanka) PLC 690,634 50,608 14,296 690,634 50,608 37,294 509,178 256,411 501,143 356,309

14.2 Current investments at fair value through profit or loss


Investment in equity securities (note 14.2.2) 121,250 121,250 - -Decrease in market value (51,968) (34,047) - - 69,282 87,203 - -Investment in unit trust (note 14.2.3) 387,133 162,038 205,380 151,173 456,415 249,241 205,380 151,173




14.2.1 Amounts recognised in profit or lossChanges in fair value on equity securities at FVTPL (note 24.1) (17,921) 3,557 - -Dividend from equity securities held at FVTPL

recognised in profit or loss (note 24.2) 2,164 - - - (15,757) 3,557 - -

14.2.2 Equity securities designated as fair value through profit or loss

Group 2019 2018 No. of Cost Market value No. of Cost Market value shares LKR’000 LKR’000 shares LKR’000 LKR’000

Bairaha Farms PLC 68,849 13,137 7,904 68,849 13,137 9,267Central Industries PLC 11,796 638 333 11,796 638 464Ceylon Grain Elevators PLC 55,470 5,303 2,890 55,470 5,303 3,966Citizens Development

Business Finance PLC (X) 52,437 5,269 3,204 52,437 5,269 3,880Citizens Development

Business Finance PLC 73,224 8,447 5,646 73,224 8,447 6,217Kelani Cables PLC 30,000 4,247 2,022 30,000 4,247 2,790Kelani Tyres PLC 40,095 3,215 1,239 40,095 3,215 1,973Lanka IOC PLC 104,100 4,002 1,811 104,100 4,002 3,133Lanka Walltiles PLC 38,989 4,466 2,339 38,989 4,466 3,837Laugfs Gas PLC 25,000 885 420 25,000 885 888MTD Walkers PLC 70,000 4,204 1,036 70,000 4,204 1,435Nations Trust Bank PLC 87,415 8,249 7,859 85,559 8,249 6,905People’s Leasing and Finance PLC 395,694 8,779 5,302 395,694 8,779 6,252Renuka Foods PLC 457,001 11,398 5,987 457,001 11,398 7,403Sanasa Development Bank PLC 32,669 4,326 1,960 31,771 4,326 3,419Singer Finance (Lanka) PLC 679,224 15,683 8,558 679,224 15,683 10,460Softlogic Finance PLC 65,944 3,768 1,424 65,944 3,768 2,308Three Acre Farms PLC 50,000 7,584 4,915 50,000 7,584 5,600Vallibel One PLC 310,002 7,650 4,433 310,002 7,650 7,006 121,250 69,282 121,250 87,203

14.2.3 Investments in unit trust

2019 2018 No. of Market value No. of Market value units LKR’000 units LKR’000

GroupInvestment in unit trusts 18,382,487 387,133 9,188,743 162,038 18,382,487 387,133 9,188,743 162,038

CompanyInvestment in unit trusts 9,173,004 205,380 8,572,611 151,173 9,173,004 205,380 8,572,611 151,173


15 CASH AND BANK15.1 Favourable balances


Cash at bank 365,942 497,501 90 149,665Money market investments 64,707 726,017 22,395 -Investment in fixed deposits - 545,000 - 545,000Call deposits 326 94 - -Cash in hand 163,702 133,506 325 325Cash and bank balances 594,677 1,902,118 22,810 694,990

15.2 Unfavourable balancesOverdraft (160,397) (114,433) (18,786) -Total cash and cash equivalents for the purpose of cash flow statement 369,247 516,574 4,024 149,990

15.3 In September 2015 the Department of Inland Revenue issued seizure notice to all six bank accounts of Orient Motor Company Ltd (OMCL) to recover unpaid NBT of LKR 17.6 Mn. as per their records. OMCL has set-off this amount against a GST refund approved by Commissioner General of Inland Revenue (CGIR). Orient Motor Company Ltd has filed a fundamental rights case in the Supreme Court against the Department of Inland Revenue on the basis that these outstanding taxes are not payable as they have been set off against refunds approved by CGIR. The case is currently being heard in the Supreme Court and there are no developments that have arisen which require a provision in the accounts. Therefore no provision has been made in these Financial Statements for the year ended 31 March 2019, as OMCL has strong reasons to believe that they will not have to settle any assessments issued by the Department of Inland Revenue.

16 EQUITY16.1 Stated capital

Group Company2019 2018 2019 2018

Number’000 LKR’000 Number’000 LKR’000 Number’000 LKR’000 Number’000 LKR’000

Balance as at 01 April 600,000 5,760,000 480,000 4,800,000 600,000 5,760,000 480,000 4,800,000

Shares issued during the year 200,000 1,600,000 120,000 960,000 200,000 1,600,000 120,000 960,000

Balance as at 31 March 800,000 7,360,000 600,000 5,760,000 800,000 7,360,000 600,000 5,760,000

16.2 Ordinary sharesHolders of these shares are entitled to dividend as declared from time to time and are entitled to one vote per share at general meetings of the Company.

The Company issued 200,000,000 shares by way of a right issue at a consideration of LKR 8.00 per share in the proportion of one share for every three existing shares. The shares were allocated to the shareholders on 26 April 2018.



Objective Maximumamount

allocated(LKR ‘000)

Proposed date of utilisation

Amount allocated from

proceeds(LKR ‘000)

(A)

% of total proceeds

Amount utilised

(LKR ‘000)(B)

% of utilisation

against allocation

(B/A)

Clarification if not fully utilised including where the funds are invested (E.g. whether lent to related parties etc.)

Part settlement of the long term loan facilities

1,600,000 Within first quarter of 2018/19

1,600,000 100% 1,600,000 100% Rights issue objective has been achieved. Rights issue funds were fully utilised to part settlement of the long term loan facilities.

16.3 Retained earnings


Balance as at 01 April 8,982,769 5,510,131 6,578,499 5,555,874Profit for the year 905,923 3,638,005 803,805 1,182,052Other comprehensive income for the year 872 (5,263) (723) 677Share issue expenses (1,932) (40,104) (1,932) (40,104)Dividend paid - (120,000) - (120,000)Balance as at 31 March 9,887,632 8,982,769 7,379,649 6,578,499

16.4 Revaluation reserveThe revaluation reserve represents the surplus related to the revaluation of property, plant and equipment as explained in note 6.

16.5 Available-for-sale reserveThis represents the cumulative net change in the fair value of available for sale financial assets until the investments are derecognised or impaired (Under LKAS 39)

16.6 Fair value through other comprehensive income reserveFair value through other comprehensive income comprises the cumulative net change in the fair value of equity instruments until the investments are derecognised or impaired (Under SLFRS 9).


17 INTEREST BEARING LOANS AND BORROWINGS17.1 GroupLender As at

01 April 2018Loans

obtained andinterestaccrued

Repayment As at 31 March 2019

Balance as at 31 March 2019 Balance as at 31 March 2018 Term ofthe loan

Maturity period

Repayment terms Facility amount

Interest rateWithin

one yearAfter

one yearWithin

one yearAfter

one year

LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

Long Term LoansCommercial Bank - Facility I 749,920 1,427 125,040 626,307 126,467 499,840 125,040 624,880 9 Years Feb-2024 95 Equal monthly installments after one year

grace period1,000,000 AWPLR + 0.5%

Commercial Bank - Facility III 15,000 32 1,875 13,157 1,907 11,250 1,875 13,125 9 Years Feb-2026 800,000 AWPLR + 1.0%

Commercial Bank - Facility IV 2,501,653 25,427 1,257,400 1,269,680 3,278 1,266,402 1,125,400 1,376,253 8 Years Nov-2025LKR 1 Bn to be settled during 2018 and balance in 08 annual installments 2,600,000 13.5% Fixed

Commercial Bank - Facility V 1,718,427 51,622 402,600 1,367,449 3,531 1,363,918 193,478 1,524,949 8 Years Nov-2025 Capital to be settled in 08 annual installments 2,500,0004,985,000 78,508 1,786,915 3,276,593 135,183 3,141,410 1,445,793 3,539,207 -

Short Term Loans

Bank of Ceylon 750,925 10,325,519 10,268,192 808,252 808,252 - 750,925 - - - - - -

Peoples Bank - 1,560,725 1,060,000 500,725 500,725 - - - - - - - -

Commercial Bank 811,627 6,882,103 6,747,479 946,251 946,251 - 811,627 - - - - - -

Standard Chartered Bank 1,055,700 16,183,542 15,983,426 1,255,816 1,255,816 - 1,055,700 - - - - - -

Hatton National Bank - 750,000 750,000 - - - - - - - - - -

Sampath Bank 100,181 700,203 700,000 100,384 100,384 - 100,181 - - - - - -

2,718,433 36,402,092 35,509,097 3,611,428 3,611,428 - 2,718,433 - - - - - -

7,703,433 36,480,600 37,296,012 6,888,021 3,746,611 3,141,410 4,164,226 3,539,207 - - - - -

17.2 CompanyLender As at

01 April 2018Loans

obtained and interest accrued

Repayment As at31 March 2019

Balance as at 31 March 2019 Balance as at 31 March 2018 Term of the loan

Maturity period


Interest rateWithin

one yearAfter

one yearWithin

one yearAfter

one year


Long term loans

Commercial Bank - Facility I 749,920 1,427 125,040 626,307 126,467 499,840 125,040 624,880 9 Years Feb-2024 95 Equal monthly installments after one year grace period

1,000,000 AWPLR + 0.5%


Commercial Bank - Facility IV 2,501,653 25,427 1,257,400 1,269,680 3,278 1,266,402 1,125,400 1,376,253 8 Years Nov-20251 Bn to be settled during 2018 and balance in 08 annual installments 2,600,000 13.5% Fixed

Commercial Bank - Facility V 1,718,427 51,622 402,600 1,367,449 3,531 1,363,918 193,478 1,524,949 8 Years Nov-2025 Capital to be settled in 08 annual installments 2,500,000

4,985,000 78,508 1,786,915 3,276,593 135,183 3,141,410 1,445,793 3,539,207



17 INTEREST BEARING LOANS AND BORROWINGS17.1 GroupLender As at

01 April 2018Loans

obtained andinterestaccrued

Repayment As at 31 March 2019

Balance as at 31 March 2019 Balance as at 31 March 2018 Term ofthe loan

Maturity period


Interest rateWithin

one yearAfter

one yearWithin

one yearAfter

one year


Long Term LoansCommercial Bank - Facility I 749,920 1,427 125,040 626,307 126,467 499,840 125,040 624,880 9 Years Feb-2024 95 Equal monthly installments after one year

grace period1,000,000 AWPLR + 0.5%


Commercial Bank - Facility IV 2,501,653 25,427 1,257,400 1,269,680 3,278 1,266,402 1,125,400 1,376,253 8 Years Nov-2025LKR 1 Bn to be settled during 2018 and balance in 08 annual installments 2,600,000 13.5% Fixed

Commercial Bank - Facility V 1,718,427 51,622 402,600 1,367,449 3,531 1,363,918 193,478 1,524,949 8 Years Nov-2025 Capital to be settled in 08 annual installments 2,500,0004,985,000 78,508 1,786,915 3,276,593 135,183 3,141,410 1,445,793 3,539,207 -

Short Term Loans

Bank of Ceylon 750,925 10,325,519 10,268,192 808,252 808,252 - 750,925 - - - - - -

Peoples Bank - 1,560,725 1,060,000 500,725 500,725 - - - - - - - -

Commercial Bank 811,627 6,882,103 6,747,479 946,251 946,251 - 811,627 - - - - - -

Standard Chartered Bank 1,055,700 16,183,542 15,983,426 1,255,816 1,255,816 - 1,055,700 - - - - - -

Hatton National Bank - 750,000 750,000 - - - - - - - - - -

Sampath Bank 100,181 700,203 700,000 100,384 100,384 - 100,181 - - - - - -

2,718,433 36,402,092 35,509,097 3,611,428 3,611,428 - 2,718,433 - - - - - -

7,703,433 36,480,600 37,296,012 6,888,021 3,746,611 3,141,410 4,164,226 3,539,207 - - - - -

17.2 CompanyLender As at

01 April 2018Loans

obtained and interest accrued

Repayment As at31 March 2019

Balance as at 31 March 2019 Balance as at 31 March 2018 Term of the loan

Maturity period


Interest rateWithin

one yearAfter

one yearWithin

one yearAfter

one year


Long term loans

Commercial Bank - Facility I 749,920 1,427 125,040 626,307 126,467 499,840 125,040 624,880 9 Years Feb-2024 95 Equal monthly installments after one year grace period

1,000,000 AWPLR + 0.5%


Commercial Bank - Facility IV 2,501,653 25,427 1,257,400 1,269,680 3,278 1,266,402 1,125,400 1,376,253 8 Years Nov-20251 Bn to be settled during 2018 and balance in 08 annual installments 2,600,000 13.5% Fixed

Commercial Bank - Facility V 1,718,427 51,622 402,600 1,367,449 3,531 1,363,918 193,478 1,524,949 8 Years Nov-2025 Capital to be settled in 08 annual installments 2,500,000

4,985,000 78,508 1,786,915 3,276,593 135,183 3,141,410 1,445,793 3,539,207


Security offeredLong term loans

1 Commercial Bank - facility I

Primary Mortgage Bond No.1568 dated 23 October 2015 for LKR 1.5 Bn. executed over the property at No.33, Park Street, Colombo 02 owned by R I L Property PLC.

2 Commercial Bank - facility III

Tertiary Mortgage Bond No.126 for LKR 800 Mn. dated 08 January 2016 executed over the property at No.33, Park Street, Colombo 02 owned by R I L Property PLC.

3 Commercial Bank - facility IV and V

a. Quaternary Mortgage Bond No.1333 dated 18 December 2017 for LKR 2.6 Bn. executed over the property at No.33,Park Street,Colombo 02 owned by R I L Property PLC.

b. 30 Mn. shares held by R I L Property PLC in United Motors Lanka PLC held in a slash account in the name of Commercial Bank of Ceylon PLC / R I L Property PLC.

Short term loansBorrowings which are guaranteed through corporate guarantees given by, United Motors Lanka PLC, in favour of its subsidiaries and a related companies describes in note 34.3 to the consolidated Financial Statements.

18 EMPLOYEE BENEFITS18.1 Retirement benefits obligation - gratuity


As at 01 April 211,448 5,236 4,350 2,671Acquisition of subsidiary - 206,526 - -Current service cost 24,536 6,590 1,769 1,462Interest cost 22,843 8,822 436 334Actuarial (gain) / loss (5,089) (73) 1,004 (117)Payments made during the year (21,686) (15,653) (1,084) -As at 31 March (note 18.2) 232,052 211,448 6,475 4,350

18.2 The above retirement benefit obligation is attributable to following entities

R I L Property PLC 6,475 4,350 6,475 4,350Foodbuzz (Pvt) Limited 3,030 3,385 - -United Motors Lanka PLC (note 18.3) 222,547 203,713 - - 232,052 211,448 6,475 4,350

18.3 Retirement benefit obligation of UML is stated belowPresent value of unfunded obligations 1,990 1,818 - -Present value of funded obligations 220,557 201,895 - -Retirement benefit obligation 222,547 203,713 - -



Retiring gratuity is a defined benefit plan covering employees of the Company (UML). UML’s liability arising on retirement benefits of employees joined prior to 1992 / 93 is partly externally funded through investments in NDB Mutual Funds and the value of this fund as at 31 March 2019 is LKR 0.436 Mn. (2018 - LKR 0.619 Mn.). The gratuity liability of employees joined after 1992/93, is externally funded and an agreement has been entered in to with AIA Insurance PLC and covers 810 employees of the Company as at 31 March 2019.

18.4 Defined benefit plan asset Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Employees joined before 1992/93 mutual fund 436 620 - -Employees joined after 1992/93 defined benefit plan ( note 18.4.1) 72,487 83,462 - - 72,923 84,082 - -

18.4.1 Movement in fair value of defined benefit plan asset

At the beginning of the year 83,462 - - -Acquisition of subsidiary - 95,748 - -Expected return on plan 9,195 4,557 - -Benefits paid by the plan (17,223) (15,065) - -Benefits payable by the plan (1,201) 321 - -Dividend adjustment to the plan asset - 138 - -Actuarial gain / (loss) in other comprehensive income (1,746) (2,237) - -Fair value of the defined benefit plan at the end of the year 72,487 83,462 - -

18.5 An actuarial valuation was carried out by the professionally qualified actuary Mr. M. Poopalanathan of Actuarial & Management Consultants (Private) Limited. The valuation method used by the actuary is the “Projected Unit Credit Method”, the method recommended by LKAS 19 - Employee benefits.

Actuarial Assumptions R I L Property PLC Foodbuzz (Pvt) Limited United Motors Lanka PLC2019 2018 2019 2018 2019 2018

Discount rate assumed 11% 10% 11% 10% 11% 11%Future salary escalation 10% 10% 5% 8% 10% 10%Retirement age 55 Years 55 Years 55 Years 55 Years 55 or 60 55 or 60Staff turnover rate 20% 12.5% 7% 10% 5-9% 5%

Sensitivity of assumptions employed in actuarial valuationThe following table demonstrates the sensitivity to a reasonably possible change in the key assumptions employed with all other variables held constant in the employee benefits liability measurement.

The sensitivity of the statement of comprehensive income and statement of financial position is the effect of the assumed changes in discount rate and salary increment rate on the profit or loss and employment benefit obligation for the year.



“Increase / (Decrease) in discount rate”

“Increase / (Decrease) in salary escalation rate”

Effect on the present value of retirement benefit obligationGroup Company

2019 2018 2019 2018LKR’000 LKR’000 LKR’000 LKR’000

1% - (15,731) (11,102) (289) (263)(1)% - 17,799 12,430 317 297

- 1% 18,800 13,305 341 310- (1)% (16,871) (12,079) (316) (279)

*The figures in brackets indicate a decrease and the other figures indicate an increase.

18.6 Expense recognised in statement of profit or loss and other comprehensive income


Expense recognised in statement of profit or lossRetirement benefit obligationCurrent service cost 24,536 6,590 1,769 1,462Interest cost 22,843 8,822 436 334

Defined benefit plan assetExpected return on plan asset 9,195 4,557 - -

Expenses recognised in other comprehensive incomeRetirement benefit obligationActuarial (gain) / loss (5,089) (73) 1,004 (117)

Defined benefit plan assetActuarial gain / (loss) (1,746) (2,237) - -Dividend adjustment to the plan asset - 138 - -


19 TRADE AND OTHER PAYABLES Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Trade payable 378,442 385,620 8,853 254Retention payable 50,031 12,522 50,031 12,522Rent income received in advance (note 19.1) 40,913 25,354 42,003 25,354Customer deposits (note 20.1) 97,871 13,523 97,871 13,523Taxes payable 43,580 54,376 2,983 1,539Dividend payable 80,615 230,149 26 6,340Advances received from customers 187,018 86,592 28,771 18,565Accrued charges 8,862 204,646 - -Other payable 407,732 166,265 83,012 33,676 1,295,064 1,179,047 313,550 111,773

19.1 Rent received in advanceCurrent 40,913 25,354 42,003 25,354Non-current 16,837 20,178 17,045 20,178 57,750 45,532 59,048 45,532

20 CUSTOMER DEPOSITS Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Customer deposits 151,890 102,861 158,567 108,493Fair value adjustment 28,547 36,966 28,547 36,966 180,437 139,827 187,114 145,459

20.1 Classified under:Current liabilities -Customer deposits 97,871 13,523 97,871 13,523Non current liabilities -Customer deposits 82,566 126,304 89,243 131,936 180,437 139,827 187,114 145,459


21 DEFERRED TAX ASSETS / (LIABILITIES)The amount shown in the statement of financial position represents the followings,


Deferred tax assets (note 21.2.1) 223,269 13,633 - -Deferred tax liabilities (note 21.2.2) (841,534) (623,370) (764,123) (574,293)Net deferred tax liabilities (618,265) (609,737) (764,123) (574,293)

The movement in the deferred tax account is as follows,

At the beginning of the year (609,737) (624,515) (574,293) (625,651)Acquisition of subsidiary - (39,119) - -Recognised in profit or loss (note 21.1) (144) 53,650 (182,831) 50,798Recognised in other comprehensive income (note 21.1) (8,384) 247 (6,999) 560At the end of the year (618,265) (609,737) (764,123) (574,293)

21.1 “With the enactment of the new Inland Revenue Act No.24 of 2017, gains and losses arising from realisation of capital assets are subject to taxes, at normal business income rate of 28% or at investment tax rate of 10%. Accordingly deferred tax provision has been made to comply to the said act.“

Deferred tax arising from new Inland Revenue Act is stated below.

Profit or lossDeferred tax arising from new Inland Revenue Act No.24 of 2017 (182,831) (45,306) (28,963) (45,306)Deferred tax arising from other temporary differences 182,687 98,956 (153,868) 96,104 (144) 53,650 (182,831) 50,798

Other comprehensive incomeDeferred tax arising from other temporary differences (8,384) 247 (6,999) 560 (8,384) 247 (6,999) 560

21.2 Analysis of deferred tax assets and liabilities are stated below.Composition of deferred tax assets / liabilitiesDeferred tax arising from new Inland Revenue Act No.24 of 2017 (74,269) (45,306) (74,269) (45,306)Deferred tax arising from other temporary differences (543,996) (564,431) (689,854) (528,987) (618,265) (609,737) (764,123) (574,293)

21.2.1 Composition of deferred tax assetsProperty, plant and equipment 1,396 (3,462) - -Retirement benefit obligation 6,866 5,669 - -Provisions 13,041 11,426 - -Tax loss 201,966 - - -Deferred tax assets 223,269 13,633 - -

21.2.1.1 The Group recognise a deferred tax asset on a tax losses amounting to LKR 201.9 Mn. (2018 - Nil) that are available to offset against future taxable profits of the companies in which the tax losses arose.



21.2.2 Composition of deferred tax liabilities


Property plant and equipment (180,341) (140,877) (47,255) (39,975)Retirement benefit obligation 58,137 53,535 1,813 1,218Investment property (718,681) (535,465) (718,681) (535,536)Intangible assets (649) (563) - - Deferred tax liabilities (841,534) (623,370) (764,123) (574,293)

21.3 The Income Tax Act No. 24 of 2017 and new tax rates including capital gains taxes are effective from 01 April 2018. Accordingly, the income tax charge for the year ended 31 March 2019 has been computed on rates applicable in the year of assessment 2018/19.The provision for deferred tax at 31 March 2019 has been calculated at rates and on capital gains applicable post 01 April 2018. Due to uncertainties that exist on the interpretation of the new law relating to freehold land for tax purposes, significant judgement was exercised to determine the provision required for deferred taxes on capital gains applicable to freehold land. Having sought independent professional advices, the Group is of the view that the freehold land used in the business falls under the category of “Investment Assets” and accordingly deferred tax has been provided on the related gain on revaluation. In the event it is deemed that freehold land be considered as “Capital Assets used in the business”, the Company and the Group would have to make an additional deferred tax charge in the statement of profit or loss for the year ended 31 March 2019 amounting to LKR 987 Mn. (Company) and LKR 1.670 Mn. (Group), other comprehensive income amounting to LKR 21 Mn. (Group) and Non-controlling interest amounting to LKR 656 Mn. (Group) with a consequential increase in the deferred tax liability on the statement of financial position.

22 REVENUE Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Rental and other related services (note 22.1) 741,110 687,514 762,179 704,471Food processing and other related services (note 22.2) 445,145 402,104 - -Automobile sales and other related services (note 22.3) 12,769,409 3,387,350 - - 13,955,664 4,476,968 762,179 704,471

22.1 Rental and other related servicesRental 658,951 617,937 680,020 634,894Other related services 82,159 69,577 82,159 69,577 741,110 687,514 762,179 704,471

22.2 Food processing and other related servicesNet sales 468,843 424,693 - -Less: Royalty (23,698) (22,589) - - 445,145 402,104 - -

22.3 Automobile sales and other related servicesBrand new vehicles 9,067,547 2,482,041 - -Spare parts, repairs and service 2,451,753 586,342 - -Lubricants and car care products 665,333 188,487 - -Local charges 304,548 53,507 - -Equipment and machinery 97,523 29,600 - -Tyres 177,350 47,373 - -3D printers 5,355 - - - 12,769,409 3,387,350 - -


23 OTHER INCOME AND GAINS Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Rent income 1,514 460 - -Dividend income - - 72,087 166,728Profit on disposal of equity accounted investees (note 10.4) - 82,078 - -Profit on disposal of property, plant and equipment 36,774 25,875 4,431 57Award received from principal 19,083 - - -Incentives received from principal 55,709 3,161 - -Facilitation fee 32,904 3,475 - -Staff loan interest 1,118 269 - -Commission on insurance 2,944 658 - -Income on legal services 80 107 - -Valuation fee 64 13 - -Sundry income 26,668 12,685 13,805 11,054Scrap sales 276 2,566 - 2,565Net gain due to change in ownership (note 9.3.b.iv) - 1,046,004 - - 177,134 1,177,351 90,323 180,404

24 FINANCE EXPENSES AND INCOME24.1 Finance expensesOverdraft interest 1,283 2,039 - -Bank loan interest 820,193 377,256 466,507 289,610Finance charges on rent deposit 12,171 11,055 12,171 11,055Bank commission and charges 190 - - -Change in fair value - financial assets at fair value through profit or loss 17,921 - - -Foreign exchange losses 1,665 21 - - 853,423 390,371 478,678 300,665

24.2 Finance incomeInterest on repo / fixed deposits 43,696 17,289 38,907 16,619Income from unit trust investments 38,707 76,800 31,749 62,299Interest on call deposits 12,290 1,087 - -Money market Interest 3,413 544 2,513 544Foreign exchange gains 20,976 2,199 - -Net gain on disposal of available for sale financial assets - 1,309 - -Net change in fair value of unit trust investment 187 - - -Dividend income on financial assets at the fair value through profit or loss 2,164 - - -Dividend income on available for sale financial assets - 9,639 - -Dividend income on fair value through other comprehensive income 6,435 - - -Net change in fair value financial assets at fair value through profit or loss - 3,557 - - 127,868 112,424 73,169 79,462



25 PROFIT BEFORE TAXResult from operating activities is stated after charging all expenses including the following: Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Directors’ emoluments 122,755 133,982 22,516 20,428Depreciation 262,613 109,269 32,781 33,687Amortisation 7,464 5,177 4,851 4,170

Employees benefits including the followings,- Staff cost 1,000,798 946,455 98,106 76,657- Defined benefit plan costs - gratuity 47,379 15,412 2,205 1,796- Defined contribution plan costs - EPF and ETF 112,607 100,410 9,634 8,126Auditor’s remuneration - statutory audit and related services 4,998 5,098 900 900Auditor’s remuneration - non audit services 434 1,276 434 717Donations 393 478 - -

26 INCOME TAX EXPENSECurrent income tax charge (note 26.1) 224,038 49,240 28,201 11,835Under / (over) provision in respect of prior periods (22,352) (3,521) - - 201,686 45,719 28,201 11,835

Deferred income taxDeferred taxation charge (note 21.1) 144 (53,650) 182,831 (50,798)Income tax (reversal) / expense reported in the Statement of profit or loss 201,830 (7,931) 211,032 (38,963)

26.1 A reconciliation between tax expense and the product of accounting profit multiplied by the statutory tax rate is as follows:

Profit before tax 1,321,355 3,736,017 1,014,837 1,143,089

Share of profit from equity accounted investee - (20,374) - -Profit on disposal of equity accounted investee - (82,078) - -Exempt dividend and other non business income (131,392) (91,050) - - 1,189,963 3,542,515 1,014,837 1,143,089Add : Disallowable items 524,660 54,051 - -Deduct : Allowable and exempted items (1,396,772) (3,429,025) (914,118) (1,100,822)Profit from trade or business 317,851 167,541 100,719 42,267Interest income / tax profit or loss on disposal of property plant and equipment 135,595 31,686 - -Total statutory income / assessable income 453,446 199,227 100,719 42,267Tax losses set off against income tax (note 26.2) (529) (8,326) - -Taxable income net of tax losses 452,917 190,901 100,719 42,267Tax losses 472,920 92,081 - -Taxable income 925,837 282,982 100,719 42,267


26.1 A reconciliation between tax expense and the product of accounting profit multiplied by the statutory tax rate Contd.:


Taxable income liable at standard rate 774,773 126,445 100,719 42,267Taxable income liable at concessionary rate 151,064 156,537 - - 925,837 282,982 100,719 42,267

Income tax using the corporate tax ratesAt 28% 216,936 35,405 28,201 11,835At 10% or 14% - Withholding tax on inter company dividend 5,102 13,380 - -At 2% - on turnover 2,000 455 - -Current tax 224,038 49,240 28,201 11,835

Effective tax rate 17% 2% 3% 1%

26.2 Tax losses Group Company 2019 2018 2019 2018 LKR’000 LKR’000 LKR’000 LKR’000

Tax loss at the beginning of the year 625,322 269,880 - -Adjustment in respect of previous year 1,007 - - -Acquisition of subsidiary - 271,687 - -Tax loss made during the year 472,920 92,081 - -Tax loss set off during the year (529) (8,326) - -Tax loss at the end of the year 1,098,720 625,322 - -

As per the Inland Revenue Act No. 24 of 2017, tax losses can be deducted in full and the remaining losses can be carried forward only up to six years.

Current tax has been computed in accordance with the provisions of the Inland Revenue Act, No. 24 of 2017 and amendments thereto. Pursuant to a letter dated 26 April 2016 received from Board of Investment of Sri Lanka, R I L Property PLC (Company) qualifies for a tax exemption period of 12 years under Sec 17 (A) of the Inland Revenue Act No. 10 of 2006 as amended by Inland Revenue (Amendment) Act No. 08 of 2012 subject to the condition that LKR 2,500 Mn. investment is made in the project within a period of 24 months from the date of supplementary agreement (i.e. 05 December 2013).For the above purpose, the years of assessment shall be reckoned from the year in which the enterprise commences to make profits (2015/16).Other income of the company is liable for income tax at 28%.(2018-28%)

FoodBuzz (Pvt) Ltd qualifies for a tax exemption period of 06 years under Sec 16 (C) of the Inland Revenue (Amendment) Act No. 08 of 2012 subject to the condition that LKR 200 Mn. investment is made in the project within a period of 24 months from the date of execution of the principal agreement (i.e. 22 November 2011).For the above purpose, the years of assessment shall be reckoned from the year in which the enterprise commences to make profits , which has not yet begun as the company still generates losses till date. However, other income of the company is liable for income tax at 28%. (2018-28%)

Apart from above, ‘taxable profit’ of UML Property Development Ltd (UMPDL) which is a sub-subsidiary, liable at 2% on turnover in accordance with an agreement entered in to with the Board of Investments of Sri Lanka under Section 17 of the BOI Act No.4 of 1978 and will be liable at the said rate till the year 2022.



Deferred tax has been computed using the current tax rate of 28% (2018 - 28%) for the Company and the Group . Further information about deferred tax is presented in note 21 Deferred tax assets / liabilities.

The Department of Inland Revenue issued income tax assessments on the United Motors Lanka PLC (UML) for the years of assessment 2009/10 and 2010/11 disallowing 2/3 of the NBT expenses claimed by the UML. Additional assessment (excluding penalty) amounts to LKR 7.7 Mn. and LKR 18.3 Mn. respectively. On 13 November 2015, the UML filed a petition in Court of Appeal against the determination of the Commissioner General Inland Revenue (CGIR) for the year of assessment 2009/10. The determination of CGIR for the year of assessment 2010/11, dated on 21 January 2016 was appealed against with Tax Appeals Commission.

On 12 June 2018 the Tax Appeal Commission issued their determination in favour of the UML dismissing the assessment issued by CGIR. However CGIR has since filled action in the Court of Appeal against the said determination of the Tax Appeal Commission. However as per the latest independent judgement received is in favour of the UML the provision made has been reversed.

27 SEGMENT INFORMATIONSegment Business activity Principle place of business

R I L Property PLC (Company) Property leasing and other related services No.33,Park Street, Colombo 02.

Foodbuzz (Pvt) Ltd (Subsidiary) Engaged in food processing and other related services No.525, Union Place, Colombo 02.

United Motors Lanka PLC (Subsidiary) Importation and sale of vehicles, spare parts, lubricants, tyres, after sales services and other related services

No.100, Hyde Park Corner, Colombo 02.

Management monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment.


27 SEGMENT INFORMATION Contd.Segment results :

Rental and other related services

(Company)

Food processing andother related services

Automobile sales and other related services

Inter /intra segment eliminations

Consolidated

2019 LKR '000

2018 LKR '000

2019 LKR '000

2018 LKR '000

2019 LKR '000

2018 LKR '000

2019 LKR '000

2018 LKR '000

2019 LKR '000

2018 LKR '000

Revenue 762,179 704,471 445,344 402,459 12,769,409 3,387,350 (21,268) (17,312) 13,955,664 4,476,968

Inter-segment revenue (19,073) (16,957) (199) (355) (1,996) - 21,268 17,312 - -

Revenue from external customers 743,106 687,514 445,145 402,104 12,767,413 3,387,350 - - 13,955,664 4,476,968

Gross profit / (loss) 673,909 631,191 221,159 236,008 2,760,200 720,779 - - 3,655,268 1,587,978

Other income 90,323 180,404 6,015 1,441 152,883 1,162,234 (72,087) (166,728) 177,134 1,177,351

Overhead expenses (184,168) (195,212) (283,573) (262,759) (2,159,569) (560,338) 1,536 - (2,625,774) (1,018,309)

Fair value gain on investment property 840,282 747,909 - - - - - - 840,282 747,909

Net finance income / (expenses) (405,509) (221,203) 10,000 6,207 (330,046) (62,951) - - (725,555) (277,947)

Net results from equity accounted investees - - - - - 1,519,035 - - - 1,519,035

Net profit / (loss) before tax 1,014,837 1,143,089 (46,399) (19,103) 423,468 2,778,759 (70,551) (166,728) 1,321,355 3,736,017

Income tax (expenses) reversal (211,032) 38,963 1,849 230 12,455 (17,882) (5,102) (13,380) (201,830) 7,931

Profit / (Loss) for the year 803,805 1,182,052 (44,550) (18,873) 435,923 2,760,877 (75,653) (180,108) 1,119,525 3,743,948

Share of profit of equity accounted investees, net of tax - - - - - (5,570) - - - (5,570)

Changes in the fair value of financial assets at fair value through other comprehensive income - - - - (107,825) - - - (107,825) -

Revaluation of land and buildings 43,672 14,909 10,103 70,740 - - - - 53,775 85,649

Actuarial gain / (loss) on retirement benefit obligation (1,004) 117 644 (222) 3,703 (1,921) - - 3,343 (2,026)

Net change in available for sale financial assets - - - - - (10,836) - - - (10,836)

Tax effects on other comprehensive income (6,999) 560 85 (264) (1,470) (49) - - (8,384) 247

Total comprehensive income for the year, net of tax 839,474 1,197,638 (33,718) 51,381 330,331 2,742,501 (75,653) (180,108) 1,060,434 3,811,412

27.1 Segment assets and liabilities

Total assets 19,403,216 18,302,572 11,332 54,118 13,936,266 12,876,673 - - 33,350,814 31,233,363

Total liabilities 4,493,024 5,829,922 37,875 48,479 5,070,986 4,190,373 - - 9,601,885 10,068,774

Capital expenditure 870,595 69,970 7,155 72,109 536,080 102,257 - - 1,413,830 244,336

Depreciation and amortisation 37,632 37,857 38,294 32,320 194,151 44,269 - - 270,077 114,446

27.2 Inter-segment transactions are carried out on arms length basis.



28 EARNINGS PER SHARE (EPS)28.1 The computation of basic earning per share is based on the net profit attributable to ordinary shareholders divided by the weighted

average number of ordinary shares in issue during the year.

Group Company 2019 2018 2019 2018

Profit attributable to equity holders of the parent (LKR’000) 905,923 3,638,005 803,805 1,182,052Weighted average number of ordinary shares (In ‘000s) 786,301 594,411 786,301 594,411Basic earnings per share (LKR) 1.15 6.12 1.02 1.99

28.2 There were no potentially dilutive ordinary shares outstanding at any time during the year.

29 DIVIDEND PER SHARE (DPS) Company 2019 Company 2018 Dividend Dividend Dividend Dividend per share per share LKR LKR’000 LKR LKR’000

First and final dividend paid for 2016/2017 - - 0.10 60,000First and final dividend paid for 2017/2018 - - 0.10 60,000 - - 0.20 120,000

As required by Section 56(2) of the Companies Act No. 07 of 2007, the Board of Directors has confirmed that the Company satisfies the solvency test in accordance with Section 57 of the Companies Act No. 07 of 2007, prior to recommending the dividend and has obtained a certificate from the auditors, prior to the distribution.

30 RELATED PARTY DISCLOSURES30.1 Parent and ultimate controlling partyCompany does not have an identifiable parent of its own.

30.2 Transactions with Key Management Personnel (KMP)Transactions ,arrangements and agreements involving Key Management Personal (KMP) and their Close Family Members (CFM)

According to LKAS 24 “Related Party Disclosures”, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly Board of Directors (including executive and non -executive Directors ) have been classified as key Management Personnel of the Group.

Close Family Members (CFM) of the KMP are those family members who may be expected to influence, or be influenced by, that KMPs in their dealing with the entity. They may include;

(a) the individual’s domestic partner and children;

(b) children of the individual’s domestic partner; and

(c) dependents of the individual or the individual’s domestic partner

CFM are related parties to the entity. There were no transactions with CFM during the year.

30.2.1 Loans to DirectorsNo loans have been given to the Directors of the Group.



30.2.2 Key Management Personnel CompensationKey Management Personnel comprise the Directors of the Group and details of compensation are given below.


Short term employee benefits 121,672 133,490 21,433 19,936Post employment benefit 1,083 492 1,083 492 122,755 133,982 22,516 20,428

30.2.3 Other transactions with Key Management Personnel

30.2.3.1 The names of Directors of R I L Property PLC, who are also directors of subsidiaries are stated on page 103 (Annual report of the Board of Directors)

30.2.3.2 Details of Directors and their spouses share holdings are given on page 193 (shareholder information). There were no other transactions with Key Management Personnel other than those disclosed in note 30.2.2 to the Financial Statements.

30.3 Transactions with subsidiaries and related entities30.3.1 The Companies within the Group engage in trading transactions under relevant commercial terms and condition.

Terms and conditions of transactions with related parties

All related party transactions are carried out on usual commercial terms and on an arms length basis. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2019, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2018: Nil). This assessment is undertaken each Financial Year through examining the financial position of the related party and the market in which the related party operates.

30.3.2 Recurrent related party transactions with subsidiaries and equity accounted investee

Subsidiaries Equity accounted investee

Nature of Transaction Foodbuzz (Pvt) Limited United Motors Lanka PLC

Unimo Enterprises Ltd TVS Lanka (PVT) Ltd

2019 2018 2019 2018 2019 2018 2019 2018LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

As at 01 April (5,869) (10,000) - - - - - -Rent and other related income/expense 15,792 16,957 3,281 - - - - -Deposits and advances - - (2,343) - - - - -Expenses incurred on behalf of other companies

(5,102) (355) (314) - - - - -

Services obtained 199 - 1,161 984 491 - - -Purchase of property, plant and equipment

- - - - - - - 379

Settlements made during the year (10,133) (12,471) (4,048) (984) - - - (379)As at 31 March (5,113) (5,869) (2,263) - 491 - - -


Subsidiaries Equity accounted investee

Nature of Transaction Foodbuzz (Pvt) Limited United Motors Lanka PLC

Unimo Enterprises Ltd TVS Lanka (PVT) Ltd

2019 2018 2019 2018 2019 2018 2019 2018LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

Included underTrade and other receivables 519 526 55 - - - - -Trade and other payables - (763) (1,091) - - - - -Rental and customer deposits (5,632) (5,632) (1,227) - - - - -

(5,113) (5,869) (2,263) - - - - -

30.3.3 Non recurrent related party transactionsThere were no non recurrent related party transactions with subsidiaries during the year.

Subsidiary Investment made Value as a% of equity

Value as a % of total

assets

Rationale for entering into the transactions

Terms and conditions2019

LKR’0002018

LKR’000

United Motors Lanka PLC - 4,013,827 38% 32% Strategic Investment. Access to land bank of the company (UML)

None

Foodbuzz (Private) Limited - 265,900 3% 2% Strategic Investment.

None

31 ASSETS PLEDGEDThe assets pledged as at 31 March 2019 have been disclosed in note 11.4 and note 17 to these Financial Statements.

32 EVENTS AFTER THE REPORTING PERIOD32.1 After satisfying the solvency test, in accordance with Section 57 of the Companies Act, No.07 of 2007, The Board of Directors of

United Motors Lanka PLC which is a subsidiary of R I L Property PLC recommended a final dividend of LKR 4 per share for the year ended 31 March 2019 which is to be approved at the forth coming Annual General Meeting. In accordance with LKAS 10 - “Events after the reporting period” this dividend was not recognised as at 31 March 2019.

32.2 After satisfying the solvency test, in accordance with Section 57 of the Companies Act, No.07 of 2007, The Board of Directors of R I L Property PLC recommended a first and final dividend of LKR 0.15 per share for the year ended 31 March 2019 which is to be approved at the forth coming Annual General Meeting. In accordance with LKAS 10 - “Events after the reporting period” this dividend was not recognised as at 31 March 2019. There is no with holding tax impact for the declared dividend by R I L.

32.3 Subsequent to the reporting date, no circumstances have arisen, which would require adjustments or disclosures in the Financial Statements other than those disclosed above.



33 CAPITAL COMMITMENTS33.1 Company has collected IPO funds amounting to LKR 960 Mn. for the objectives stated in the prospectus. Current status of

the utilisation and the achievement of the said objectives are listed down below.

Objective as per prospectus

Objectivenumber

Amountallocated

as perprospectus

(LKR'000)

Proposed date of

utilisation as per

prospectus

Amountallocated

fromproceeds (LKR'000)

% ofTotal

proceeds

Amountsutilised

(LKR'000)

% ofutilisation

againstallocation

Clarification if not fullyutilised, including wherethe funds are invested

Refurbishment of READYWEAR building

1 694,100 By June 2019

694,100 72.3% 694,100 100% IPO objective has been achieved.

Expansion of BreadTalk outlets

2 265,900 FY2017/18-FY2018/19

265,900 27.7% 265,900 100% IPO objective has been achieved.

960,000 960,000 100.0% 960,000

The READYWEAR Building has been rebranded as PARKLAND 1 with effect from 01 December 2018 for uniform identification of our core commercial properties under the PARKLAND name.

33.2 As at 31 March 2019 UML has capital commitments amounting to LKR 111 Mn. and LKR 623 Mn. in relation to ERP system implementation (SAP) and operating lease respectively.

34 CONTINGENT LIABILITIES34.1 The Company has given corporate guarantees amounting to LKR 100 Mn. as security for the banking facilities obtained by Foodbuzz

(Pvt) Ltd from Commercial Bank.

34.2 As per the sale and purchase agreement dated 21 February 2011 between United Motors Lanka PLC (UML) and Janashakthi Insurance PLC, UML offered a guarantee that agreed to settle and / or mitigate any liability that may arise on Orient Finance PLC with regard to NDB Bank PLC claim over equipment taken on hire purchase agreement by the lessee of Orient Financial Services Corporation Ltd.

34.3 Corporate guarantees issued by United Motors Lanka PLC to its subsidiaries.

Name of Company Name of bank Facility Amount pledged as

security

Outstanding as at 31 March

2019

Outstandingas at 31 March

2018

Orient Motor Company Ltd. Standard Chartered Bank

Letter of credit, overdraft and term loan 750,000 440,927 427,000

Bank of Ceylon Letter of credit, overdraft and term loan 1,000,000 - -

Sampath Bank PLC Letter of credit, overdraft and term loan 330,000 - -

Unimo Enterprises Ltd Sampath Bank PLC Letter of credit, overdraft and term loan 325,000 - 147,353

Standard Chartered Bank

Letter of credit, overdraft and term loan 500,000 307,988 835,682

Bank of Ceylon Letter of credit, overdraft and term loan 1,000,000 814,374 845,597

UML Heavy Equipment (Pvt) Ltd

Commercial Bank of Ceylon PLC

Letter of credit, overdraft and term loan 1,000,000 70,000 -


34.4 Unimo Enterprises Ltd has given bank guarantees to Sri Lanka Customs amounting to LKR 404.1 Mn. for excise duty concession in respect of vehicles assembled but to be approved by the Cabinet appointed committee.

34.5 United Motors Lanka PLC has given bid bond / performance grantees amounting to LKR 44.7 Mn. as at the reporting date.

34.6 Details relating to certain tax assessments pertaining to the Group are reflected in notes 15 and 26 to the consolidated Financial Statements.

35 CONTINGENT ASSETSUnder and by virtue of Lease Agreement No.109 dated 04 May 2017 attested by U. A. Kitulgoda, Notary Public, Perpetual Treasuries Limited (PTL) has leased from R I L Property PLC (the Company) an area of 7852sq.ft. (Blocks B and D) on the 18th floor (“Office Space”) from and out of the building called ‘PARKLAND’, bearing Assessment Nos.33, 33A, 33B, 33C, 33D, 33D1/1 and 33D2/1, Park Street, Colombo 2, for a period of 4 years commencing from 01 May 2017 and ending on 30 April 2021. Since PTL has failed and neglected to pay rent and other charges pertaining to the use and occupation of the office space from January 2018, the Company has formally demanded the amounts outstanding from the lessee. In response PTL has by letter dated 13 June 2018, stated that “their ability to perform their obligations under the lease agreement under reference, have been frustrated by the conduct of “Central Bank of Sri Lanka”. In the circumstances, the Company has informed PTL that since it claims that its ability to perform its obligations under the lease agreement, has been frustrated, the said lease agreement remains discharged by frustration. Accordingly, the Company called upon PTL to immediately vacate the office space and to hand over possession thereof. However, blocks B and D on the 18th floor were handed over to the Company by PTL only on 12 December 2018 and 15 May 2019 respectively. Therefore, the Company intends to claim liquidated damages of LKR 23.98 Mn. for overstay, in terms of the lease agreement.

36 FINANCIAL RISK MANAGEMENTThe Group has exposure to the following risks arising from financial instruments:

1 Credit risk

2 Liquidity risk

3 Market risk

4 Operational risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for identifying, analysing, evaluating and monitoring the risk and the Group’s management of capital. Further, quantitative disclosures are included throughout these consolidated Financial Statements.

Risk management frameworkThe respective Board of Directors of each company has overall responsibility for the establishment and oversight of the respective company’s risk management framework.

Each company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk profile and controls, and to monitor risks and mitigate. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the company’s activities.



The Audit Committee oversees how management monitors compliance with their risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by each company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

The risk management has been further detailed in “Risk Management” given in pages 50 to 55.

36.1 Credit riskCredit risk is the risk that a customer or counterparty will not meet its contractual obligations under financial instrument or customer contract, leading to a financial loss.

The Group is exposed to credit risk from its operating activities (primarily from trade receivables) and from its financing activities, including deposits with banks and other financial instruments.

The Group does an extensive and continuous evaluation of credit worthiness of its customers / financial institutions by assessing external credit ratings (if available) or historical information about default rates and change the credit limits and payment terms where necessary.

36.1.1 Exposure to credit riskThe carrying amount of financial assets represents the maximum credit exposure.The maximum exposure to credit risk at the reporting date was:


Carrying amountTrade receivables 863,864 907,761 30,061 14,633Other receivables excluding advances and pre payments 1,542,440 497,222 49,557 58,021Cash at bank and financial institutions 430,975 1,768,612 22,485 694,665 2,837,279 3,173,595 102,103 767,319

36.1.2 Trade receivablesThe management assesses the credit quality of the customer, taking into account their financial position, past experience and other factors. Sources of credit risks are identified, assessed and monitored and the Group has policies to manage the risks within various subcategories. The utilisation of credit limits is regularly monitored.

Maximum exposure to credit risk for trade receivables at the reporting date by category wise are as follows:


Public Sector 184,836 277,632 2,380 426

Private SectorIndividual customers 178,794 - - -Corporate customers 161,996 117,368 27,681 14,207Dealers and distributors 160,902 162,284 - -Leasing companies 177,336 350,477 - - 863,864 907,761 30,061 14,633


36.1.3 Impairment lossesThe aging of the trade receivables and impairment allowance at the reporting date was,

2019 Group Company LKR’000 LKR’000

Neither past due nor impaired 283,131 27,588

Past due but not impaired61–120 days 41,325 348121–180 days 20,445 977181–240 days 6,568 270241-300 days 2,732 253301-360 days 2,162 306>360 days 507,501 319Allowance for impairment 51,289 -Gross carrying value 915,153 30,061Allowance for impairment (51,289) -Total 863,864 30,061

The cash and cash equivalents are held with banks and financial institutions which are rated above ‘BBB-(lka).

36.1.4 The allowance accounts in respect of cash at bank and financial institutions and financial assets at FVOCI and FVTPL are used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible.

At that point the amounts are considered irrecoverable and are written off against the financial assets directly.

36.2 Liquidity riskLiquidity risk is the risk that the Group may not have sufficient liquid financial resources to meet its obligations when they fall due. The Group manages the liquidity risk by carrying out cash flow forecasts and identifying future cash needs. Investments are planned ensuring money is available for settlements. Adequate banking facilities are approved and kept for use as and when necessary. Strong relationships have been built with banks to ensure that urgent borrowing needs are met at short notice.The table below summarises the maturity profile of the Group’s financial liabilities.

On Less than 3 to 12 1 to 5 More than Total demand 3 months months years 5 Years LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

Group 2019Interest bearing loans and borrowings - 33,188 3,713,423 3,139,535 1,875 6,888,021Trade and other payable - 154,428 1,001,853 - - 1,156,281Customer deposits - - 97,871 78,842 3,724 180,437Income tax payable - 85,414 - - 85,414Bank overdrafts 141,611 18,786 - - - 160,397 141,611 291,816 4,813,147 3,218,377 5,599 8,470,550



36.2 Liquidity risk contd.

On Less than 3 to 12 1 to 5 More than Total demand 3 months months years 5 Years LKR’000 LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

Group 2018Interest bearing loans and borrowings - 3,750,663 413,563 2,983,075 556,132 7,703,433Trade and other Payable - 1,069,516 70,654 - - 1,140,170Customer deposits - 87 13,436 122,581 3,723 139,827Income tax payable - 90,561 - - - 90,561Bank overdrafts 114,433 - - - - 114,433 114,433 4,910,827 497,653 3,105,656 559,855 9,188,424

Company 2019Interest bearing loans and borrowings - 33,188 101,995 3,139,535 1,875 3,276,593Trade and other payable - 76,352 97,324 - - 173,676Customer deposits - - 97,871 79,887 9,356 187,114Income tax payable - 7,209 - - - 7,209Bank overdrafts - 18,786 - - - 18,786 - 135,535 297,190 3,219,422 11,231 3,663,378

Company 2018Interest bearing loans and borrowings - 1,032,230 413,563 2,983,075 556,132 4,985,000Trade and other payable - 28,354 44,542 - - 72,896Customer deposits - 87 13,436 122,581 9,355 145,459Income tax payable - 2,392 - - - 2,392 - 1,063,063 471,541 3,105,656 565,487 5,205,747

36.3 Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks;- Foreign exchange risk

- Interest rate risk

- Equity price risk

The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.

36.3.1 Foreign exchange riskForeign currency risk arises when future commercial transactions are denominated in a currency that is not the entity’s functional currency. The Group is principally exposed to fluctuations in the value of the Japanese Yen (JPY), US Dollar (USD) and Singapore Dollar (SGD) against the Sri Lankan Rupee (LKR). The Group’s functional currency is LKR in which most of the transactions are denominated, and all other currencies are considered foreign currencies for reporting purposes.


Changes in foreign currency exchange rates affect the Group’s cost of purchases. Based on anticipated exchange rate movements forward booking is considered as a method to minimise risk.Import bills are negotiated at the most favourable time for the Group.

The exposure to currency risk as at the reporting date are as follows:

Group USD’000 JPY’000

Trade receivables as at 31 March 2019 34,454 35,969Trade payables as at 31 March 2019 718 97,507

Increase /decrease in exchange rate

Group Effect onprofit before tax

LKR’000

US Dollar (USD) + 5 % 293,648- 5% (293,648)

Japanese Yen (JPY) + 5 % (5,091)- 5% 5,091

36.3.2 Interest rate riskThe Group’s interest rate risk arises mainly from the short term borrowings and investment of excess funds in financial instruments. Borrowings at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash / investments held at variable rates. The Group has cash and bank balances including deposits placed with government and reputed financial institutions. All available opportunities are considered before making investment decisions.

Proper working capital management is done to ensure that borrowing needs and investment opportunities are foreseen. Market interest rates are monitored closely to ensure borrowings and investments are at the best rate for the Group.

At the end of the reporting period the interest rate profile of the Group / Company’s interest bearing financial instruments was as follows:

2019 2018 Group Company Group Company LKR’000 LKR’000 LKR’000 LKR’000

Fixed rate instrumentsFinancial assets - - 545,000 545,000Financial liabilities (2,637,129) (2,637,129) (4,220,080) (4,220,080) (2,637,129) (2,637,129) (3,675,080) (3,675,080)

Variable rate instrumentsFinancial assets 387,133 205,380 162,038 151,173Financial liabilities (4,250,892) (639,464) (2,845,348) (764,960) (3,863,759) (434,084) (2,683,310) (613,787)

Sensitivity analysisThe following table demonstrates the sensitivity to a reasonable possible change in variable interest, with all other variables held constant.



Increase /decrease in variable rate

GroupEffect on profit before tax

CompanyEffect on profit before tax

LKR’000 LKR’000 LKR’000

31 March 2019 Variable rate instruments +5% (16,121) (2,170)-5% 16,121 2,170

The Group does not account for any fixed rate financial liabilities and assets at fair value through profit or loss, and therefore a change in interest rates at the reporting date would not affect to the profit or loss.

36.3.3 Equity price riskListed equity securities are susceptible to equity price risk arising from uncertainties of future values of the investment securities. The Group manages the equity price risk through diversification of its portfolio to different business segments.

The Group’s equity risk management policies adopted are as follows; � Equity investment decisions are based on fundamentals rather than on speculation.

� Decisions are made based on in-depth industry and macroeconomic analysis as well as on research reports on the company performance.

The table below shows the diversification of equity investments;

Sector Group 2019 Group 2018 LKR’000 % LKR’000 %

Investment sharesBanks, finance and insurance 164,033 64.0 218,919 61.4Construction and engineering 1,336 0.5 1,851 0.5Diversified holdings 23,028 9.0 18,299 5.1Motor 33,481 13.1 51,085 14.3Beverage, food and tobacco 11,661 4.5 13,979 4.0Power and energy 2,403 0.9 5,078 1.4Health care 393 0.2 540 0.2Manufacturing 20,076 7.8 46,558 13.1Total 256,411 100 356,309 100

Trading sharesBanks, finance and insurance 33,953 49.0 39,441 45.2Diversified holdings 4,433 6.4 7,006 8.0Beverage, food and tobacco 18,806 27.2 22,270 25.5Construction and engineering 1,036 1.5 1,435 1.6Power and energy 2,231 3.2 4,021 4.6Manufacturing 8,823 12.7 13,030 15.1Total 69,282 100 87,203 100

Sensitivity AnalysisInvestments in equity securities are subject to the performance of investee Company and the factors that effects the status of the stock market.

The following table demonstrates the sensitivity of the Group equity to a reasonably possible change in the market prices of the listed equity securities, with all other variables held constant.


Group - 2019

Change in year 31 March 2019 share price of all

Companies in which the Group has invested

Effect on Profit before tax as a result of gains /

losses on equity securities classified as at FVTPL

Effect on other component of equity as a result of gains / losses on equity securities classified

as at FVOCILKR'000 LKR'000

31 March 2019 - Investments in equity securities + 5% 3,464 16,285

- 5% (3,464) (16,285)

36.4 Operational riskOperational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behavior. Operational risks arise from all of the Group’s operations. The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity. The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management within each business unit. This responsibility is supported by the development of overall Group standards for the management of operational risk in the following areas:

� Requirements for appropriate segregation of duties, including the independent authorisation of transactions;

� Requirements for the reconciliation and monitoring of transactions;

� Compliance with regulatory and other legal requirements;

� Documentation of controls and procedures;

� Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified;

� Requirements for the reporting of operational losses and proposed remedial action;

� Training and professional development;

� Ethical and business standards;

� Risk mitigation, including insurance when applicable.

Compliance with set procedures is supported by periodic reviews undertaken by Internal Audit. The results of internal audit reviews are discussed with the management of the business unit to which they relate, with summaries submitted to the Board Audit Committee and senior management of the Group.

36.5 Capital managementCapital includes equity attributable to the equity holders of the parent and interest bearing term loans. The primary objective of the Group’s capital management is to ensure that it maintains a healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions.

No changes were made in the objectives, policies or processes for managing capital during the year ended 31 March 2019.



37 FAIR VALUES OF FINANCIAL INSTRUMENTSFinancial instruments of the Company / Group include trade and other receivables, cash and cash equivalents, interest bearing loans and borrowings, trade and other payables and rentals, customer deposits and bank overdrafts. The fair values of these financial instruments are determined at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values;

(a) Cash and short-term deposits, trade receivables, trade payables and other current liabilities are approximate their carrying amounts largely due to the short-term maturities of these instruments.

(b) Rentals and customer deposits are fair valued by using the appropriate market interest rates.

(c) Long term variable-rate as well as fixed rate borrowings are approximate their carrying amounts largely due to the market based interest rates.

Hence the carrying amounts of Group’s / Company’s financial instruments are reasonable approximation of their fair values.

Fair value measurement hierarchyThe Group and the Company use the following hierarchy for determining and disclosing the fair value of assets and liabilities by valuation techniques:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilitiesLevel 2: inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly or indirectlyLevel 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data


The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities.

Fair value measurement hierarchy - GroupRecurring fair value measurementsAssets measured at fair value :

As at 31 March Level 1 Level 2 Level 3 TotalLKR ’000 LKR ’000 LKR ’000 LKR ’000

2019 2018 2019 2018 2019 2018 2019 2018

Property, plant and equipment- Freehold land - - - - 5,791,622 5,784,122 5,791,622 5,784,122- Building - - - - 1,135,680 1,085,727 1,135,680 1,085,727Investment property - - - - 14,106,000 12,397,500 14,106,000 12,397,500

Other investments - -- Quoted equity shares 325,693 443,512 - - - - 325,693 443,512- Unit trusts 387,133 162,038 - - - - 387,133 162,038

712,826 605,550 - - 21,033,302 19,267,349 21,746,128 19,872,899

Fair value measurement hierarchy - CompanyRecurring fair value measurementsAssets measured at fair value :As at 31 March Level 1 Level 2 Level 3 Total

LKR ’000 LKR ’000 LKR ’000 LKR ’0002019 2018 2019 2018 2019 2018 2019 2018

Property, plant and equipment- Building - - - - 344,000 318,000 344,000 318,000Investment property - - - - 14,106,000 12,397,500 14,106,000 12,397,500

Other investments- Unit trusts 205,380 151,173 - - - - 205,380 151,173

205,380 151,173 - - 14,450,000 12,715,500 14,655,380 12,866,673



37.1 Reconciliation of fair value measurement of “Level 3” financial instrumentsThe following table shows a reconciliation from the opening balance to the closing balance for level 3 fair values.

Group Company Land Building Investment Building Investment property property LKR’000 LKR’000 LKR’000 LKR’000 LKR’000

Carrying amount as at 01 April 2017 57,929 343,991 11,585,619 320,000 11,585,619Subsequent expenditure on investment property - - 63,972 - 63,972Assets acquired on acquisition of subsidiary (net) 5,657,623 750,006 - - -Assets additions - 1,507 - - -- Revaluation (unrealised) 68,570 17,079 - 14,909 -Transfers,reclassifications and adjustments (net of depreciation) - 285 - - -Depreciation charged - (27,141) - (16,909) -Net gain from investment property fair valuation - - 747,909 - 747,909Balance as at 31 March 2018 5,784,122 1,085,727 12,397,500 318,000 12,397,500

Subsequent expenditure on investment property - - 868,218 - 868,218Assets acquired on acquisition of subsidiary - - - - -Assets additions - 24,838 - - -- Revaluation (unrealised) 7,500 46,275 - 43,672 -Transfer from capital work in progress - 43,916 - - -Depreciation charged - (65,076) - (17,672) -Net gain from investment property fair valuation - - 840,282 - 840,282Balance as at 31 March 2019 5,791,622 1,135,680 14,106,000 344,000 14,106,000

Transfers between levels of fair value hierarchyThere were no transfers between Level 1, Level 2 and Level 3 during the year.


37.2 Valuation techniques and significant unobservable inputs The following table shows the valuation techniques used by both the Group and Company in measuring level 3 fair values and the significant unobservable inputs used.

Assets Valuation technique Significant unobservable inputs

Property plant and equipmentFreehold land and building

Market value basisFair value of land is based on available property market data, available facilities and services, planning restrictions, title status, size / shape & other physical factors of the land.

The valuer has used a range of prices for each land and price per square foot for building based on investigated prices in order to determine the market value.

Investment property Income approachIn determining the fair value of building the capitalisation of net income method have been used, which is based upon assumptions including future rental income, anticipated maintenance costs, appropriate discount rate and in determine the fair value of land, make reference to market evidence of transaction prices for similar properties, with appropriate adjustments for size and location. The appraised fair values are approximated within appropriate range of values.

� Anticipated maintenance cost

� Discount rate

� Risk and other factors

� Price per perch


193SUPPLEMENTARY INFOR I L PROPERTY PLC / ANNUAL REPORT 2018/19

Twenty major shareholdersName of shareholder As at 31 March 2019 As at 31 March 2018

Shareholding Percentage (%)

Shareholding Percentage (%)

1 Mr. M. A. Yaseen 238,058,848 29.76% 96,000,000 16.00%

2 Ms. L. E. M. Yaseen 153,232,711 19.15% 148,800,000 24.80%

3 Ms. S. M. Yaseen 76,070,528 9.51% 62,400,000 10.40%

4 Ms. R. R. Yaseen 64,000,000 8.00% 48,000,000 8.00%

5 Mr. S. D. Yaseen 58,000,000 7.25% 48,000,000 8.00%

6 Mr. R. H. Yaseen 52,433,430 6.55% 48,000,000 8.00%

7 Commercial Bank Of Ceylon PLC A/C No .01 26,128,266 3.27% 19,596,200 3.27%

8 Ayenka Holdings Private Limited 21,171,451 2.65% 749,000 0.12%

9 Melstacorp Plc 18,434,300 2.30% 18,434,300 3.07%

10 NDB Capital Holdings PLC 15,000,000 1.88% 15,000,000 2.50%

11 Mr. J. A. Yaseen 14,400,000 1.80% 14,400,000 2.40%

12 Mr. M. Andreno Yaseen 14,400,000 1.80% 14,400,000 2.40%

13 Sri Lanka Insurance Corporation Ltd-General Fund 10,000,000 1.25% 10,000,000 1.67%

14 Commercial Bank Of Ceylon PLC A/C No .03 3,333,333 0.42% 2,500,000 0.42%

15 Seylan Bank PLC / Pinnadoowage Aravinda De Silva 3,250,000 0.41% 3,250,000 0.54%

16 People's Leasing & Finance PLC / C. D. Kohombanwickramage 3,230,158 0.40% 3,196,525 0.53%

17 Peradiv Limited 3,125,000 0.39% 3,125,000 0.52%

18 Elgin Investments Limited 3,000,000 0.38% 5,000,000 0.83%

19 Mr. P. P. Gunasekara 2,000,000 0.25% - 0.00%

20 Ms. P. M. P. G. N. Priyadarshani 1,484,361 0.19% 1,484,361 0.25%

Public and non public shareholdingsDescription As at 31 March 2019 As at 31 March 2018

No. of shares No. ofshareholders

Percentage(%)

No. of shares No. ofshareholders

Percentage(%)

Issued number of ordinary shares and no of share holders

800,000,000 1089 100.00% 600,000,000 1114 100.00%

Less:- Shares held by non public 484,091,559 5 60.51% 244,800,000 2 40.80%

Shares held by the public and no of share holders

315,908,441 1084 39.49% 355,200,000 1112 59.20%

Float adjusted market capitalisation (under option 5 )LKR Mn.

2,022 - - 2,593 - -

Shareholder Information


Distribution of shareholders Shareholdings As at 31 March 2019 As at 31 March 2018

No. ofshareholders

No. ofshares

Percentage(%)

No. ofshareholders

No. ofshares

Percentage(%)

1 - 1,000 619 158,423 0.02% 598 167,815 0.03%

1,001 - 10,000 258 1,178,726 0.15% 271 1,218,217 0.20%

10,001 - 100,000 155 5,830,484 0.73% 182 6,719,664 1.12%

100,001 - 1,000,000 37 12,079,981 1.51% 42 14,557,690 2.43%

Over 1,000,000 20 780,752,386 97.59% 21 577,336,614 96.22%

Total 1,089 800,000,000 100.00% 1114 600,000,000 100.00%

Categories of shareholdersAs at 31 March 2019 As at 31 March 2018

Categories of Shareholdings No. ofshareholders

No. ofshares

Percentage (%)

No. ofshareholders

No. ofshares

Percentage(%)

Local Individuals 1,021 449,909,558 56.24% 1,044 401,272,499 66.88%

Local Institutions 56 105,947,151 13.24% 59 94,764,265 15.79%

Foreign Individuals 8 239,024,674 29.88% 7 96,833,826 16.14%

Foreign Institutions 4 5,118,617 0.64% 4 7,129,410 1.19%

Total 1,089 800,000,000 100.00% 1,114 600,000,000 100.00%

Performance at the CSE Market price per share for the year ended 31 March 2019

Price31 March 2018

Price

Highest 7.60 9.00

Lowest 6.30 7.00

Last traded price 6.40 7.30

Shareholder Information


Shareholdings of DirectorsName of The Director 31 March 2019 31 March 2018

No. of shares Percentage (%)

No. of shares Percentage (%)

1 Mr. S. G. Wijesinha (Chairman) - - - -

2 Ms. L. E. M. Yaseen 153,232,711 19.15% 148,800,000 24.80%

3 Ms. L. K. A. H. Fernando (CEO) - - - -

4 Mr. L. W. D. Abeyarathne - - - -

5 Ms. C. G. Ranasinghe - - - -

6 Professor N. D. Gunawardena - - - -

7 Ms. C. R. Kariyawasam - - - -

Share price 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Open 7.30 7.10 7.00 6.90

Close 7.10 7.00 6.90 6.40

Highest 7.70 7.60 7.30 7.00

Lowest 7.10 7.00 6.60 6.30


Group CompanyLKR ‘000 2019 2018 2017 2016 2019 2018 2017 2016 2015 2014 2013

Operating resultsRevenue 13,955,664 4,476,968 960,374 269,178 762,179 704,471 609,289 125,418 - - -EBIT 2,174,778 4,126,388 1,271,726 4,950,356 1,493,515 1,443,754 1,301,934 4,963,265 20,726 12,721 -Finance cost (853,423) (390,371) (128,010) (1,231) (478,678) (300,665) (122,118) (1,138) - (104) -Profit before tax 1,321,355 3,736,017 1,143,716 4,949,125 1,014,837 1,143,089 1,179,816 4,962,127 20,726 12,617 -Income tax expense (201,830) 7,931 62,764 1,138 (211,032) 38,963 62,831 (1,284) (2,168) (3,533) -Profit for the year 1,119,525 3,743,948 1,206,480 4,950,263 803,805 1,182,052 1,242,647 4,960,843 18,558 9,084 -

Capital employedStated capital 7,360,000 5,760,000 4,800,000 4,800,000 7,360,000 5,760,000 4,800,000 4,800,000 2,000,000 1,000,000 500,000Revaluation surplus 251,107 204,284 119,242 125,000 170,543 134,151 119,242 125,000 - - -Other component of equity (60,572) (5,526) - - - - - - - -Retained earnings 9,887,632 8,982,769 5,510,131 4,268,531 7,379,649 6,578,499 5,555,874 4,967,111 16,328 9,084 -Non controlling interest 6,310,761 6,223,062 - - - - - - - -Total borrowings 7,048,418 7,817,866 1,065,792 1,083,432 3,295,379 4,985,000 911,002 1,060,000 - - -Total capital employed 30,797,347 28,982,455 11,495,165 10,276,963 18,205,571 17,457,650 11,386,118 10,952,111 2,016,328 1,009,084 500,000

Assets employedProperty plant and equipment (PPE) 7,892,174 7,625,861 625,133 543,491 362,277 352,128 368,835 343,522 17,387 17,732 -Non current assets other than PPE 14,906,540 13,056,835 11,630,281 10,684,074 18,714,817 17,018,735 11,902,536 10,955,313 2,509,298 810,942 39,030Current assets 10,552,100 10,550,667 312,046 195,099 326,122 931,709 170,428 92,215 184,334 752,477 460,970Current liabilities 5,287,486 5,548,267 617,672 601,561 474,728 1,559,958 442,440 562,007 694,691 5,194 -

Cash flowNet cash flow from operating activities (588,876) 680,663 255,458 306,122 192,899 (28,234) 306,123 319,913 317,785 124,634 -Net cash flow from / (used in) investing activities (266,945) (4,272,206) (170,745) (3,738,472) (228,526) (4,799,405) (81,228) (3,746,155) (1,678,529) (779,183) -Net cash flow from / (used in) financing activities 708,494 4,153,239 (148,998) 3,449,372 (110,339) 4,873,894 (148,998) 3,449,940 895,000 1,000,000 -Net increase / (decrease) in cash and cash equivalents (147,327) 561,696 (64,285) 15,022 (145,966) 46,255 75,896 23,698 (465,744) 345,450 -

Key indicatorsBasic earnings per share 1.15 6.12 2.51 12.85 1.02 1.99 2.59 12.87 0.11 0.11 -Net assets per share 21.80 24.90 21.73 19.15 18.64 20.79 21.82 20.61 10.1 10.1 10.0Return on equity 6.4% 25.1% 11.6% 50.1% 5.4% 9.5% 11.9% 50.1% 0.9% 0.9% 0.0%Return on capital employed 3.6% 12.9% 10.5% 48.2% 4.4% 6.8% 10.9% 45.3% 0.9% 0.9% 0.0%Debt / equity ratio (%) 40.4% 52.3% 10.2% 11.0% 22.1% 40.0% 8.7% 10.7% 19.8% 49.5% 0.0%Gearing 22.9% 26.97% 9.3% 10.5% 18.1% 28.6% 8.0% 9.7% 0.0% 0.0% 0.0%

Financial Year Summary


Glossary of Financial Terms

Accounting PoliciesThe specific principles, bases, rules and practices adopted by an entity in preparing and presenting Financial Statements.

Actuarial Gain / Loss on Defined Benefit Plan Gain or loss arising from the difference between estimates and actual experience in an entity’s defined benefit plan.

AmortisationThe systematic allocation of the depreciable amount of an intangible asset over its useful life.

Contingent LiabilityA Liability or potential loss that may occur in the future depending on the outcome of a specific event.

Current Assets RatioCurrent assets divided by current liabilities.

Current Service CostIs the increase in the present value of the defined benefit obligation resulting from employee service in the current period.

Debt to Equity RatioDebt as a percentage of equity attributable to shareholders.

Deferred TaxationSum set aside for income tax in the current Financial Year that may become a liability or a receivable in a future Financial Year

DepreciationThe systematic allocation of the depreciable amount of an asset over its useful life.

Discount RateA rate used to place a current value on future cash flows. It is needed to reflect the fact that money has a time value.

Dividend Payout RatioDividends per share divided by earnings per share, indicates the percentage of the Company’s earning that is paid out to shareholders in cash.

Dividend YieldDividend per share divided by the market value of a share.

Dividend Per Share (DPS)Dividends paid and proposed, divided by the number of issued shares, which is entitle for those dividends.

Earnings Before Interest and Tax (EBIT)Earnings before interest and tax includes other operating income.

Earnings per Share (EPS)Profit attributable to equity holders of the parent divided by the weighted average number of ordinary shares in issue during the period.

Effective Rate of TaxationTax expense divided by profit before tax

Fair ValueThe price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

GearingProportion of total interest bearing to capital employed.

Interest CoverNumber of times interest charge is covered by earnings before interest and tax.

Key Management PersonnelKey Management personnel are those persons having authority and responsibility for planning and controlling the activities of the entity, directly or indirectly.

Market CapitalisationNumber of shares in issue at the end of the period multiplied by the market price at the end of the period.

Market Price to Book ValueMarket price per share over net asset value per share.

Net AssetsTotal assets minus current liabilities, long term liabilities, and non-controlling interests.

Net Assets Value Per ShareNet assets as at a Financial Year end divided by the number of shares in issue as at the current Financial Year end.

Non-Controlling InterestEquity in subsidiary not attributable to the parent.

Parent CompanyA Parent company is a company that owns enough voting stock in another entity firm to control management and operation by influencing or electing its Board of Directors.

Price Earnings Ratio (PE)Market price per share over earnings per share.


Quick Assets RatioCurrent assets excluding inventories, divided by current liabilities.

Related PartyA person or entity that is related to entity that is preparing its Financial Statements.

Return on AssetsProfit after tax divided by the total assets.

Return on Capital Employed (ROCE)Profit after interest and tax as a percentage of capital employed.

Return on Equity (ROE)Profit attributable to shareholders as a percentage of equity attributable shareholders.

Shareholders’ FundsTotal of stated capital, other components of equity and revenue reserves.

StewardshipThe role of supervising or taking care of the organisation.

Total EquityShareholders’ funds plus non-controlling interest.

Working CapitalCurrent assets minus current liabilities.

Glossary of Financial Terms


Notice is hereby given that the 10th Annual General Meeting of R I L PROPERTY PLC will be held on Friday, 26 July 2019 at 9.30 a.m. at the “Nawaloka Hospitals’ Auditorium & Banquet Hall”, 14th floor, New Nawaloka Specialist Center Building, Nawaloka Hospitals PLC, No. 23, Deshamanya H. K. Dharmadasa Mawatha, Colombo 02, for the following purposes:

(01) To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and its subsidiaries and the Statement of Accounts for the year ended 31 March 2019 together with the Report of the Auditors thereon;

(02) (i) To elect Ms. C. R. Kariyawasam, a Director of the Company, who was appointed during the Financial Year to fill a casual vacancy in terms of Article 89 of the Articles of Association of the Company;

(ii) To elect Professor. N. D. Gunawardena, a Director of the Company, who was appointed during the Financial Year to fill a casual vacancy in terms of Article 89 of the Articles of Association of the Company;

(iii) To elect Mr. L. W. D. Abeyarathne, a Director of the Company, who was appointed during the Financial Year to fill a casual vacancy in terms of Article 89 of the Articles of Association of the Company;

(03) (i) To pass the Ordinary Resolution set out below to re - appoint Mr. S. G. Wijesinha, who attained 70 years of age, as a Director of the Company.

“IT IS HEREBY RESOLVED that Mr. S. G. Wijesinha who has attained the age of 70 years be and is hereby re - appointed a Director of the Company for a period of one year or until the conclusion of the next Annual General Meeting whichever occurs first and it is hereby declared that the age limit of 70 years stipulated in Section 210 of the Companies Act No.7 of 2007 shall not apply to the said Director”

(ii) To pass the Ordinary Resolution set out below to re - appoint Ms. L.E.M. Yaseen, who is 77 years of age, as a Director of the Company.

“IT IS HEREBY RESOLVED that Ms. L. E. M. Yaseen who has attained the age of 77 years be and is hereby re - appointed a Director of the Company for a period of one year or until the conclusion of the next Annual General Meeting whichever occurs first and it is hereby declared that the age limit of 70 years stipulated in Section 210 of the Companies Act No.7 of 2007 shall not apply to the said Director”

(04) To re-elect Ms. C. G. Ranasinghe who retires by rotation pursuant to the provisions of Article 83 of the Articles of Association of the Company, as a Director;

(05) To declare a First and Final dividend of LKR 0.15 per share for the Financial Year ended 31 March 2019 as recommended by the Directors;

(06) To re-appoint the retiring Auditors, Messrs. Ernst & Young, Chartered Accountants to hold office until the conclusion of the next Annual General Meeting and to authorize the Directors to fix their remuneration;

(07) To authorize the Board of Directors to determine donations for the year ending 31 March 2020 and up to the date of the next Annual General Meeting;

(08) To consider any other business of which due notice has been given

BY ORDER OF THE BOARD


26 June 2019Colombo

Notes1. A duly registered and entitled holder of the Company’s shares is entitled to attend, speak and vote at the AGM and is entitled to

appoint a proxyholder to attend, speak and vote on his / her behalf;

2. A proxyholder need not be a Shareholder of the Company;

3. The Form of Proxy is enclosed for this purpose. The completed Form of Proxy must be deposited at the Registered Office of the Company situated at 33, Park Street, Colombo 02 not less than forty-eight (48) hours before the appointed hour of the meeting

Notice of Meeting


Notes


Form of Proxy

I / We................................................................................................................................................................................................................................................................................of........................................................................................................................

................................................................................................................................................................................................................................................................................... / being a member / members of R I L Property PLC, hereby

appoint........................................................................................................................ (N I C No.) ...........................................................of................................................................................................................................................ failing him / her

Mr. Sunil Gamini Wijesinha whom failingMs. Lorraine Estelle Marlene Yaseen whom failingMs. Ladduwa Kovisge Anne Hiroshini Fernando whom failingMr. Loku Walpolage Dhammika Abeyarathne whom failingMs. Chiranga Gimhani Ranasinghe whom failingMs. Chamali Rangadhara Kariyawasam whom failingProfessor. Niranjan Deepal Gunawardena whom failing

as my / our proxy to represent me / us and* .............................. to vote on my / our behalf at the 10th Annual General Meeting (AGM) of R I L Property PLC (the Company) to be held on Friday, 26 July 2019, at 9.30 a.m. at “Nawaloka Hospitals’ Auditorium & Banquet Hall”, 14th floor, New Nawaloka Specialist Center Building, Nawaloka Hospitals PLC, No. 23, Deshamanya H. K. Dharmadasa Mawatha, Colombo 02 and at any adjournment thereof and at every poll which may be taken in consequence of the above said meeting. I / We the undersigned hereby authorize my / our Proxy to vote on my / our behalf in accordance with the preference indicated below:

For Against(1) To receive consider the Annual Report of the Board of Directors on the affairs of the Company and its subsidiaries and the Statement of

Accounts for the year ended 31 March 2019 together with the Report of the Auditors thereon;

(2) To elect Ms. C. R. Kariyawasam, a Director of the Company, who was appointed during the Financial Year to fill a casual vacancy in terms of Article 89 of the Articles of Association of the Company;

(3) To elect Professor. N. D. Gunawardena, a Director of the Company, who was appointed during the Financial Year to fill a casual vacancy in terms of Article 89 of the Articles of Association of the Company;

(4) To elect Mr. L. W. D. Abeyarathne, a Director of the Company, who was appointed during the Financial Year to fill a casual vacancy in terms of Article 89 of the Articles of Association of the Company;

(5) To pass the Ordinary Resolution set out below to re -appoint Mr. S. G. Wijesinha, who is 70 years of age, as a Director of the Company.

“IT IS HEREBY RESOLVED THAT Mr. S. G. Wijesinha who has attained the age of 70 years be and is hereby re - appointed a Director of the Company for a period of one year or until the conclusion of the next Annual General Meeting whichever occurs first and it is hereby declared that the age limit of 70 years stipulated in Section 210 of the Companies Act No.7 of 2007 shall not apply to the said Director”

(6) To pass the Ordinary Resolution set out below to re - appoint Ms. L. E. M. Yaseen, who is 77 years of age, as a Director of the Company.

“IT IS HEREBY RESOLVED THAT Ms. L. E. M. Yaseen who has attained the age of 77 years be and is hereby re - appointed a Director of the Company for a period of one year or until the conclusion of the next Annual General Meeting whichever occurs first and it is hereby declared that the age limit of 70 years stipulated in Section 210 of the Companies Act No.7 of 2007 shall not apply to the said Director”

(7) To re-elect Ms. C. G. Ranasinghe who retires by rotation pursuant to the provisions of Article 83 of the Articles of Association of the Company, as a Director.

(8) To declare a First and Final dividend of LKR 0.15 per share for the Financial Year ended 31 March 2019 as recommended by the Directors.

(9) To re-appoint the retiring Auditors, Messrs. Ernst & Young, Chartered Accountants, to hold office until the conclusion of the next Annual General Meeting and to authorize the Directors to fix their remuneration.

(10) To authorize the Board of Directors to determine donations for the year ending 31 March 2020 and up to the date of the next Annual General Meeting.

Signed on this ..................................................................................... day of .............................................................................. Two Thousand and Nineteen.

....................................................................Signature / s

*If you wish your Proxy to speak at the meeting you should insert the words “to speak and” in the place indicated and initial such insertion.Notes:1. Instructions as to completion appear overleaf;2. Please indicate with an “x” in the space provided how your proxyholder is to vote;3. If there is in the view of the proxyholder doubt (by reason of the way in which the instructions contained in the proxy have been completed) as to the

way in which the proxyholder should vote, the proxyholder shall vote as he thinks fit;


Instructions as to completion

1. To be valid the completed Form of Proxy must be deposited at the Registered Office of the Company situated at 33, Park Street, Colombo 02 not less than forty-eight (48) hours before the appointed hour of the meeting.

2. The full name and address of the Shareholder and the proxyholder should be entered legibly in the Form of Proxy; Please fill in the date of signature

3. If you wish to appoint any person other than Directors as your proxy, please insert the relevant details in the space provided overleaf;

4. If the Form of Proxy is signed by the Power of Attorney, the respective Power of Attorney should accompany the completed Form of Proxy for registration, in the event it has already not being registered with the Company;

5. If the Shareholder is a company or a corporate body, the Form of Proxy should be executed under the common seal or be signed by its Attorney or by an Officer authorized to do so on behalf of such company / corporate body;

6. Every alteration or addition to the Form of Proxy must be duly authenticated by the full signature of the Shareholder signing the Form of Proxy. Such signatures should as far as possible be placed in proximity to the addition or alteration intended to be authenticated;

7. The use of the word “Member/s” herein is a reference to “Shareholder/s”;


Corporate Information

Name of the CompanyR I L Property PLC

Legal FormThe Company was incorporated in Sri Lanka on 15 July 2009 as a Private Limited Liability Company under the Companies Act No. 07 of 2007. Subsequently it was converted into a Public Limited Liability Company on 13 September 2016 under the Companies Act No. 07 of 2007. The Ordinary shares were listed on the Colombo Stock Exchange on 04 May 2017.

Company Registration NumberPV / PB 68365 PQ

Registered Office33, Park StreetColombo 02Tel : +94 11 233 2850-1Fax: +94 11 239 9915

Board of DirectorsMr. S. G. Wijesinha - Chairman

Ms. L. K. A. H. Fernando -Chief Executive Officer / Executive DirectorMs. L. E. M. YaseenMr. L. W. D. AbeyarathneMs. C. G. RanasingheProfessor. N. D. GunawardenaMs. C. R. Kariyawasam

Board Audit CommitteeMs. C. R. Kariyawasam – ChairpersonMr. S. G. Wijesinha – MemberMs. C. G. Ranasinghe – MemberMr. L. W. D. Abeyarathne – Member

Board Nominations & Remuneration CommitteeMr. S. G. Wijesinha - ChairmanMs. C. G. Ranasinghe – MemberProfessor. N. D. Gunawardena – Member

Board Related Party Transactions Review CommitteeMs. C. G. Ranasinghe – ChairpersonMr. S. G. Wijesinha – MemberMs. L. E. M. Yaseen – MemberMs. C. R. Kariyawasam – Member

AuditorsM/s Ernst & YoungChartered AccountantsNo 201, De Saram Place, Colombo 10Tel : +94 11 233 2850-1

SecretaryMs. R Weudagedara

RegistrarsP W Corporate Secretarial (Pvt) LtdNo.3/17, Kynsey Road, Colombo 08.Tel : +94 11 464 0360-3

BankerCommercial Bank of Ceylon PLC“Commercial House”, No.21,Sir Razik Fareed MwColombo 01Tel : +94 11 471 8248

SubsidiariesFoodBuzz (Private) LimitedNo.525,Union PlaceColombo 02

United Motors Lanka PLCNo. 100,Hyde Park CornerColombo 02

Websitewww.rilproperty.lk

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www.rilproperty.lk

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