radiant gems international plc

RADIANT GEMS INTERNATIONAL PLC

ANNUAL REPORT 2019/2020

2 RADIANT GEMS INTERNATIONAL PLC ANNUAL REPORT 2019-2020


CONTENTS

Corporate information 01

Chairman’s Review 02

Board of Directors 03

Annual Report of the Board of Directors on the affairs of the Company 04-05

Statement of Directors’ Responsibility 06

Corporate Governance 07-14

Risk Management 15-16

Independent Auditor’s Report 17-20

Statement of Comprehensive Income 21

Statement of Financial Position 22

Statement of Changes in Equity 23

Cash flow Statement 24-26

Significant Accounting Policies 27-35

Notes to the Financial Statement 36-44

List of 20MajorShareholders 45

Analysis of Shareholders as at 31stMarch2019 46-47

Five Year Summary 48-49


CORPORATE INFORMATION AS AT 31ST MARCH 2020 LEAGAL FORM A public quoted company with limited liability, incorporated in Sri Lanka in 1979, as Rainbow Gems Limited. The company subsequently changed its name to Radiant Gems International Limited in 1989. Under the requirement of new Companies Act No.7 of 2007, the company has been re- registered as Radiant Gems International PLC. BOARD OF DIRECTORS Mr. S.H. Munasinghe Chairman/Managing Director/CEO Mr.S.R.D.M.Abhayawardhane Independent Non-Executive Director Mr.A.D.Madushanka Independent Non-Executive Director REGISTERED OFFICE Dehigahapitiya, Getahetta, Sri Lanka Tel: 0362 230616 Fax: 0362 230990 E-mail: [email protected] AUDITORS Messrs. Carter De Costa & Company Chartered Accountants No. 18-1/7, State Bank of India Building, Sir Baron Jayathilaka Mawatha, P.O Box 232, Colombo 01. SECRATARIES SSP Corporate Service (Private) Limited 101, Inner Flower Road Colombo 03 BANKERS Commercial Bank of Ceylon PLC Bank of Ceylon COMPANY REGISTRATION NUMBER PQ 197

mailto:[email protected]


CHAIRMAN’S REVIEW – 2019/2020

The financial performance of your company - Radiant Gems International PLC for the year ended 31 March 2020 has been circulated among all shareholders and is in your hands. With your permission, I take them as read. As with the prior year the sentiment in the international market for coloured stones has continued to be challenging. Despite these difficult conditions, the company has managed to significantly reduce the loss in the year under review. Turnover Turnover was LKR 80.8m in the year under review. This is a25% increase year on year due to an increase in the number of orders received from our clients, particularly from the European market. Future prospects The Covid-19 Global Pandemic has resulted in an unprecedented slowdown in all markets in which the company operates. We have seen a significant reduction in orders received following the year under review and we expect 2020/2021 to be extremely challenging year. We will put in place measures to help us weather the storm and protect cash flow until normalcy returns. Wages The direct staff costs have increased by 7% year on year due to two factors, namely the increased wages paid to production staff to support the higher volume of orders received as they are paid on a piece rate basis. Additionally, the company recruited thirty six new staff members during the year.

Finance Costs Finance costs have reduced by 34% (LKR 3.5m) Year on Year due to the reduced exchange rate loss in the period under consideration. Indirect Costs Costs have remained broadly flat year on year at LKR 44.4m Profitability Whilst the Company made a loss of LKR 1.9m during the year, this is a LKR 14.4m improvement in profitability compared to the prior year.

S. H. Munasinghe Chairman/ Managing Director/ CEO


BOARD OF DIRECTORS S H Munasinghe (G G) GIA Chairman/ Managing Director/ CEO Mr. S H Munasinghe is a graduate gemologist from Gemological Institute of America. He started his career at Radiant Gems International in 1995 under his father’s tutelage the past Chairman /Managing Director Mr. D S Munasinghe. He has been working at every point of production in the factory and then promoted to factory manager in 1995. He has a very good understanding of the production process at every stage of production, and is an accomplished gem cutter himself. Mr. Munasinghe took over the chairman of Radiant Gems in 2006. He has been instrumental in company’s progress in many fronts of innovation and production methods that have benefitted the company immensely. S.R.D.M.Abhayawardhane Independent Non-Executive Director Mr. Abhayawardhane was appointed to the Board in August 2018.He is just about to complete MBA, University of Wales, UK. A.D.Madushanka Independent Non-Executive Director Mr.Madushanka is an Associate Member of the Institute of Chartered Accountants of Sri Lanka and Graduated from the University of Colombo with a BBA (sp) degree and hands on over seven years of experiences in Finance and Auditing professions in manufacturing services and international businesses. He has a Diploma in ICT from Aquinas University College and international certificate in Financial English from University of Cambridge.


08 DIRECTORS’ INTEREST IN SHARES OF THE COMPANY

Directors’ interests in shares of the Company were as follows:

No. of Shares 31.03.2020 31.03.2019 Mr. S.H. Munasinghe 5,000 5,000 Mr. S.H. Munasinghe 26,547 26,547 (Jointly with H. Abhayawardhana) Mr. S.H. Munasinghe 14,311 14,311 (Jointly with K.V. Munasinghe) Mr. S.H. Munasinghe 11,000 11,000 (Jointly with K.V. Munasinghe&S.Munasinghe) 09 DIRECTORS’ INTERESTS IN CONTRACT OF THE

COMPANY The Directors have no direct or indirect interest in contracts of / with the Company other than those stated in the Note 30 to the financial statements. These interests in contract have been duly declared at meeting of the directors.

10 DIRECTORS’ REMUNERATION AND OTHER BENEFIT Directors’ remuneration in respect of the Company for the financial year ended 31 March 2020 is given in Note 30 a to the Financial Statements.

11 CONTRIBUTIONS During the year the Company made no contributions for charitable or political purposes other than those disclosed under Note to the Financial Statements.

ANNUAL REPORT OF BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY – 2019 / 2020

The Directors have pleasure in presenting herewith their Report together with the Audited Financial Statements for the year ended 31 March 2020.

01 PRINCIPAL ACTIVITY AND NATURE OF OPERATIONS The Principal activity of the Company which remains unchanged since the previous year is cutting and polishing of coloured gemstones, heat treatment and marketing of gem stones.

02 FINANCIAL STATEMENT The Financial Statements of the Company are given on pages 21 to 44.

03 AUDITOR’S REPORT The Auditor’s Report on the Financial Statements is given on page 17-20

04 ACCOUNTING POLICIES The accounting policies and notes are given on page 27 to 35 There were no changes in the accounting policies adopted from previous financial year.

05 STATE OF AFFAIRS The state of affairs of the Company as at 31 March 2020 is set out in the Statement of Financial Position of the Financial Statements.

06 DIVIDEND The Directors do not recommended a dividend for the year ended 31 March 2020.

07 DIRECTORS The Directors of the Company as at 31 March 2020. Mr. S.H. Munasinghe- (Chairman/Managing Director/ CEO)

Mr.S.R.DeMel Abhayawardhane (Independent Non-Executive Director)

Mr.A.D.Madushanka (Independent Non-Executive Director)

Pursuant to Article 84 (6) of the Articles of Association of the Company, Mr. M.D.M.R.S. Madappuli, Independent Non Executive Director vacated office with effect from 30th October 2019. Mr. S.R. De Mel Abhayawardhane, Director retires by rotation in terms of Article 85 and 86 of the Articles of Association of the Company and being eligible offers himself for re-election.


ANNUAL REPORT OF BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY – 2019 / 2020(Cont….)

12 POST BALANCE SHEET EVENTS No circumstances have arisen since the balance sheet date, with would require adjustments to, or disclosure in the financial statements.

13 TAXATION Income Tax has been considered in accordance with the provision of Inland Revenue Act No.10 of 2006 and disclosed under the Note no 1.6 to the financial statements.

14 STATUTORY PAYMENTS The Directors to the best of their knowledge and belief are satisfied that all statutory payments in relation to the Government and the employees have been made on time.

15 MARKET VALUES OF THE COMPANY’S ORDINARY SHARES.

The market value of the Company’s ordinary shares as at 31 March 2020 was Rs.19.00 per share.( As at 31 March 2019 was Rs. 16.10)

31.03.2020 31.03.2019 Highest market value (Rs.) 31.00 33.00

Lowest market value (Rs.) 12.10 15.60

16 INVESTOR RATIOS 31.03.2020 31.03.2019 Earnings Per Share (Rs.) (0.79) (6.75) (0.79) (6.75) Dividend Per Share (Rs.) - - Net Asset Value Per Share (Rs.) 3.26 6.04 17 AUDITORS

A resolution for the appointment of M/s Kreston MNS & Company, Chartered Accountants in place of M/s Carter De Costa & Company, Chartered Accountants the existing auditors will be proposed at the Annual General Meeting of the Company.

18 ANNUAL GENERAL MEETING

The Annual General Meeting of the

Company will be held at the Board Room of

the United Tractors and Equipment Limited

of No.683, Negombo Road, Mabole, Wattala

on Wednesday 18thMay 2021.

BY ORDER OF THE BOARD OF DIRECTORS OF RADIANT GEMS INTERNATIONAL PLC

Director Director


STATEMENT OF DIRECTORS’RESPONSIBILITY

The following statement, which should be read in conjunction with the Auditor’s Statement of their responsibilities set out in their report, is made with a view to distinguish the respect responsibilities of the Directors and of the Auditors, in relation to the financial statements. The directors are required by the companies Act no. 07 of 2007, to prepare financial statements for each financial year, which give a true and fare view of the state of the affairs of the company as at the end of the financial year and the profit and losses for the financial year. The directors are required to prepare these financial statements on going concern basis, unless it is not appropriate. Since the Directors are satisfy that the company has resources to continue in business for the foreseeable future, the financial statements continue to be prepared on the said basis. The Directors consider that in preparing the financial statements on pages to the company used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimated and that all accounting standards, which they considered to be applicable, are followed.

The Directors are responsible for ensuring that the company keeps the accounting records, which will disclose with reasonable accuracy the financial position of the company and which will enable them to ensure that the financial statements comply with the companies Act No. 07 of 2007. The Directors are generally responsible for taking such steps that are reasonable for them to safeguard the assets of the company and to prevent and detect fraud and other irregularities. The Directors are confident that they discharge their responsibilities as set out in this statement. They also confirm that to the best of their knowledge all statutory payment payable by the company as at the Balance Sheet Date, are paid or where relevant, provide or it. By order of the Board, Mr. S H Munasinghe Chairman/ Managing Director/ CEO A.D. Madushanka Director.


CORPORATE GOVERNANCE

The Board of Directors is responsible for the Governance of the Company whilst the Shareholders role in Governance is to appoint the Directors and the Auditors and to satisfy themselves that an appropriate governance structure is in place. The Board of Directors is committed towards enhancing long term shareholder value whilst upholding the highest standards of integrity, accountability and ethical conduct. Compliance with the Code of Best Practice and Listing Rules The Company currently complies with key areas of the Code of Best Practice for Corporate Governance issued by the Institute of Chartered Accountants of Sri Lanka and the Rule son Corporate Governance contained in the Listing Rules of the Colombo Stock Exchange. Board of Directors The Board of Directors takes responsibility for good governance of the Company. The Company’s Board consists of 3 Directors, the name of the members of the Board appear under Corporate Information on page 1of this Report. One Third of Directors retire by rotation at each Annual General Meeting and those eligible are recommended for re-election. The Board Meets to review matters of importance and also the performance of the Company. The Directors retain full and effective control of the Company and provide strategic direction to the Company, monitors operational and management performance periodically reviews the effectiveness of the Company’s risk management and internal control systems and ensures that there is compliance with all relevant laws, regulations and codes of business practice.

The Board had met 03 times during the year under review.

The Directors are responsible for preparing and presenting the Financial Statements which are prepared in accordance with the Sri Lanka Accounting Standards and in accordance with the requirements of the Colombo Stock Exchange. A Statement of Directors’ Responsibilities for the preparation of Financial Statements is set out on of this Report.

Board Sub-Committees The Board sub-committees scrutinize and analyze the areas under their purview and ensure application of strict control over the affairs of the Company. The Sub committees make recommendations to the Board on necessary adjustments and modifications to the internal systems of the Company. The Board has constituted an Audit sub- Committee and a Remuneration sub-Committee, each of The Sub committees make Reports of the Remuneration Committee the Audit Committee and Related Party Transactions Review Committee are set out in the page 11 to 14 of the Annual Report. • Remuneration Committee

Mr.A.D.Madushanka - Chairman Mr. S.R.D.M.Abhayawardhane – Member • Audit Committee

Mr.A.D.Madushanka – Chairman

Mr. S.R.D.M.Abhayawardhane – Member

• Related Party Transactions Review Committee

Mr. S.R.D.M.Abhayawardhane– Chairman

Mr.A.D.Madushanka – Member

Company Secretaries SSP Corporate Service (Private) Limited, provides Corporate Secretarial Services to the Company. The Company Secretaries advises the Board on matters relating to the Companies Act, the Colombo Stock Exchange regulations and other applicable rules and regulations in order to ensure that the Best Governance practices are adopted by the Board and its Committees. Compliance with Legal Requirements All Directors have access to the Financial and Management Information of the Company. The Directors makes every endeavor to ensure that the Company complies with Laws and Regulations and to exercise due diligence in managing the affairs of the Company. Additionally, checks and controls are in place to ensure that the policies of the Board are complied with. The manner and the extent to which the Company has applied the principles of good Corporate Governance practices during the period under review is set out in the following table.


RuleNo.

Subject

Applicable requirement

Compliance Status

Details

7.10.1

Non Executive Directors

At least 1/3 of the total number of Directors should be Non-

executive Directors

Complied

2out of 3Directoris Non-executive Director

7.10.2

Independent Directors

2 or 1/3 of Non-executive Directors, which is higher

shouldbe independent

Complied

Two Non-executive Director is independent.

Independent Declaration

Each Non executive Director should submit a declaration of independence / Non independence in the prescribed format.

Complied

Independent Non-Executive Director has submitted the declarations.

7.10.3

Disclosure relating to Directors

Names of Independent Directors should be disclosed in

the Annual Report.

Complied

Please refer information pertaining to the Directors and Board sub Committees on page 07 of the Annual Report.

7.10.5 Remuneration Committee

A listed Company shall have a Remuneration Committee.

Complied Board had established a Remuneration Committee.

(a) Composition of the Remuneration Committee

The Remuneration Committee shall comprise of Non-executive Directors and majority of which

shall be independent.

Complied

The Remuneration Committee has 2 Non-Executive Directors

all are independent.

b) Functions of the Remuneration Committee

The Remuneration Committee shall recommend the remuneration of the Key Management Personnel and Executive Directors

Complied Please refer to the Remuneration

Committee Report on page 13 of the Annual Report.

(c) Disclosure in the Annual Report relating to Remuneration

Committee

The Annual Report should set out:

a) Names of Directors comprising the Remuneration Committee

Complied

Please refer the Remuneration Committee Report on page 13 for a brief statement of policy.

b) Statement of Remuneration policy

Complied Please refer the Remuneration Committee Report on for a brief statement of policy.

c) Aggregate Remuneration paid to Executive and Non-Executive Directors

Complied

Please refer Notes to the Financial Statements on page 41-43

7.10.6 Audit Committee The Company shall have an Audit Committee.

Complied The Board has constituted an Audit Committee.

(a) Composition of Audit Committee

a) Shall Comprise of non-executive Directors a majority of whom shall be independent.

Complied

Audit Committee consists of 2 Non- Executive Director All are independent

b)The Chairman of the Audit Committee or one member should be a member of a Professional Accounting Body.

Complied

Chairman of the Audit Committee is a member of a Professional Accounting Body.

(b) Audit Committee Functions.

Should be as outlined in the section 6oftheListing Rules.

Complied

Please refer page 13

(c) Disclosure in the Annual Report relating to the Audit

Committee.

a)Names of the Directors comprising the Audit Committee.

Complied

Please refer Information of the Board of Directors and the Board- sub Committees on page 13 of the

Annual Report.


Rule No. Subject

Applicable requirement Compliance Status

Details

b)The Audit Committee shall make a determination of the independence of the Auditors and disclose such determination.

Complied Please refer to Audit Committee Report on page 13 of the Annual Report.

c)The Annual Report shall contain a Report of the Audit Committee setting out the manner of compliance

of the functions.

Complied

Please refer to Audit Committee Report on page 13 of the Annual Report.

7.6 (v) Statement of Directors and Chief Executive Officers Share- holding.

A Statement of each Director’s

holding and Chief Executive Officer’s holding in shares of the Company at the beginning and end of the financial year.

Complied

Please refer page no 04

7.6 (vii) Details of Material Issues pertaining to employees and

industrial relations

The Annual Report shall include details of such maters

Complied

There is no any Material Issues pertaining to employees and industrial relations

9.2 Related Party Review Committee

The Company shall have Related Party Review Committee

Complied

The Board has constituted a Related Party Review Committee

9.2.2 Composition of Related Party Transactions Review Committee (RPTRC)

The Committee should comprise a combination of non-executive directors and independent non- executive directors. The composition of the Committee may also include executive directors, at the option of the Listed Entity. One independent nonexecutive director shall be appointed as Chairman of the Committee.

Complied

The Related Party Transactions has 2 Non-Executive Directors all are independent.

9.3.2D Related Party Transactions

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 has not entered into any Related Party Transaction/s.

Complied

Report Of the Directors


CORPORATE GOVERNANCE (Cont….)

OTHER POLICIES AND PRACTICES

Obtaining Independent Professional Advice

The Board in discharging its duties seeks independent

professional advice from external parties when

necessary, at the company’s expenses.

Internal Controls and Risk Management The Board has introduced adequate internal controls and risk management systems to safeguard the shareholder investments and the Company’s assets. The Board is fully aware that internal controls have inherent limitations and do not provide absolute assurance against fraud and error. Dedication to matters of the Board and the Company The Board of Directors devotes adequate time to the fulfillment of its duties. The Board has delegated the day to day operations of the Company to the Management Committee. The Management Committee comprises the Managing Director and a professional team of senior managers of the Company. Division of Responsibilities between the Chairman and the Managing Director The functions of the Chairman and the Managing Director are clearly segregated. The Chairman is responsible for the leading and ensuring the effective functioning of the Board.

The Managing Director is responsible for the management of the business, monitoring its progress and implementing The strategies of the company within the framework of the policies formulated by the Board.

The role of the Chairman The Chairman ensures that Board Meetings are conducted efficiently by encouraging and ensuring the effective contribution to the deliberations by all directors. Their individual contributions and concerns are objectively assessed before major decisions aremade.

The Chairman also satisfies himself that the Directors are provided with sufficient information so as to facilitate their effective contribution at Board Meetings. Directors Remuneration

The total remuneration of Directors is disclosed in Note30.4 to the Financial Statements. The Board has delegated powers to the Remuneration Committee to oversee implementation of policies with regard to the Remuneration of Executive Directors and Executive Employees. The Names of the Remuneration Committee are disclosed in page07. Relationship with shareholders The Annual Report and the Annual General Meeting form the principle means of communication with the shareholders. Quarterly Financial Statements of the company has been uploaded to the CSE web site within the stipulated time frame. Directors’ Attendance Record Board Meetings Mr.S.R.D.M.Abhayawardhane 03/03 Mr.A.D.Madushanka 03/03

Audit Committee Meetings

Mr.S.R.D.M.Abhayawardhane 02/02 Mr.A.D.Madushanka 02/02

Remuneration Committee Meetings

Mr.S.R.D.M.Abhayawardhane 02/02 Mr.A.D.Madushanka 02/02

Related Party Transaction Review Committee Meetings Mr.S.R.D.M.Abhayawardhane 02/02 Mr.A.D.Madushanka 02/02



AUDIT COMMITTEE CHAIRMAN’S STATEMENT

All members of the Audit Committee appreciate the

crucial role the committee plays in helping the Board to

discharge its overall responsibility to protect as far as

possible the long-term success of Radiant Gems

International PLC (here after referred to as “the

Company”) by appropriately managing the risks to the

business. We do this by monitoring, reviewing and

challenging the effectiveness of the Company’s systems

of internal control and processes in areas such as

financial reporting, risk management, business

continuity, and international market operations. The

committee also monitors and reviews the appointment

of the Company’s external and internal auditors, the

nature and scope of their work, and their independence

and effectiveness. It is vital that we as a committee

assess what processes and systems make the Company

more effective, robust and sustainable in the long term,

while preserving and fostering the business’ agility,

adaptability and growth.

Audit Committee composition

The Audit Committee currently comprises two

independent non-executive directors. The table below

sets out the date of committee meetings held during the

financial year ended 31st March 2020.

-Audit Committee

Mr. A.D. Madushanka – Chairman

Mr. S. Abhayawardhana – Member

Meetings held on,

30th October 2019 24th January 2020

Principal responsibilities of the Audit committee

The committee’s principal responsibilities are:

• Monitoring the integrity of the Company’s

financial statements in relation to the

Company’s financial performance

• Reviewing the effectiveness of the internal

and external audit processes

• Reviewing the effectiveness of the

Company’s financial and internal controls,

including the process for the evaluation,

assessment and management of risk

• The Audit Committee met two times for

scheduled meetings during the year. Its

activities included:

• Reviewing and approving the Quarterly

financial statements, Monthly management

report and Audited financial statement for

the year ended 31st March 2020.

• Considering reports from the external

auditors and reviewing the reports

• Overseeing the appointment of and

relationship with the external auditors

• Reviewing and considering reports on the

work of the internal audit function

• Reviewing and approving the Company’s tax

liabilities and any other statutory liabilities

and obligations

• Reviewing the capitalization process for fixed

assets

• Reviewing the Company’s Business Risk

Register and the risk mitigation actions

undertaken during the year



Financial reporting

Serious loss of Capital

The Company reported a loss of Rs 1,890,111 during the

financial year ended 31st March 2020, which intern

resulted, the Company to suffer from serious loss of

capital. As per the Section 220 of the Companies Act, the

Company has scheduled EGM to be held within the

specified period in order to meet the requirements of the

Section 220 of the Companies Act.

Movement of Current Assets

Trading stock of gem stones Rs.4.4 M which were

classified under the current assets have moved minimally

during the year. However, as per the fact given by the

Company, the sale of gem stock is not the core business

of the Company and these inventories were held for

Exhibition purpose.

Valuation of Trading (Current) Stock of Gems as at 31st

March 2019

As per the 31st March 2019 Audit report, the auditor

stated under emphasis of matters, the trading stock of

gems was not re-valued. The company obtained a

valuation of these items as at 31.03.2020 from the Sri

Lanka Gem Authority.

External audit

The external audit of the company was carried out by

carter de costa & co. the Company’s external auditor.

Risk management and internal controls

The Board oversees risk management and has a policy of

continuous identification and review of principal business

risks. This includes the use of key internal controls and

processes to identify key risks, and to consider how those

risks may affect the achievement of business objectives

and determine appropriate mitigation actions, taking into

account the Company’s risk appetite.

The Executive Board implements the internal

controls and processes to put the Board’s policies

on risk and control into effect, and provides

assurance on compliance with these policies and

processes. As part of our risk management

framework, our Business Risk Register is reviewed

regularly using a consistent approach to identify the

impact and likelihood of any material risk to the

business, as well as any mitigating factors or

controls. The output of the risk review is reported

on a regular basis to the Audit Committee.

Internal audit

Our internal audit function has been outsourced to

SCB Corporate (Chartered Accountant), who

updates the committee at each meeting on their

ongoing reviews. The committee reviewed the

schedule of planned internal audits undertaken

during the year and monitored progress in fixing the

management actions highlighted by these audits.

Priorities for the next financial year

During 2021, the committee will continue to focus

on the integrity of the financial controls, risk

management systems and robustness of the

Company’s international market risk management

and operational risk management under the COVID

19 global pandemic situation, to make sure they

reflect the changing risks of the business. The

security of our customer data will be a key focus in

the financial year ahead, and this will be regularly

monitored by the committee.

A D Madushanka Chairman – Audit Committee 18thJanuary 2021



Report of the Remuneration Committee Dear Shareholder, I am pleased to present you the report on Remuneration Committee of the Board of Directors for the financial year ended 31st March 2020including the way how Remuneration Committee of the Company discharged the responsibility and it contains the objectives, the policy and the key areas covered during the period. TERMS OF REFERENCE This Policy covers the remuneration for the Company’s executive team. The remuneration policy for members of the Board and for Management of Radiant Gems International PLC aims at improving the performance and enhancing the value of the Company by motivating and retaining the management team and to attract the right persons to the management team of the Company. THE PURPOSE The object of this Remuneration Policy is to make the Company a desirable workplace for competent employees and management team thereby secure competitiveness, future development and acceptable profitability foe Radiant Gems International PLC. In order to achieve this, it is imperative that the Company is in a position to offer attractive remuneration. Remuneration of executives and other key employees shall take into consideration the remuneration of other employees of the Company and thereby aim to secure coordinated and fair Remuneration Policy for the Company. REMUNERATION POLICY OF THE BOARD OF DIRECTORS The Executive and working Directors shall be paid a monthly salary where as non-executive directors shall be paid a monthly fixed director fee according to decision taken at remuneration committee meetings in that respect and additional payments would be made to the chairman of the Audit committee for special duties and responsibilities performed pertaining to the position. The Board of directors shall take into account the time spent by the Board members on their duties, their responsibilities, as well as the operational and economic performance of the Company.

COMMITTEE ROLE AND RESPONSIBILITIES

• Make recommendations to the Board regarding the remuneration policy of the Company in respect of the Board Chairman, Executive & Non-Executive Directors as well as the other members of senior management.

• Obtain information about remuneration in other companies and, in this regard, select, appoint and determine the terms of reference for independent remuneration consultants, to advise on remuneration policy and levels of remuneration.

• Review and determine the remuneration of the Chairman of the Board and the terms of employment and remuneration of individual Executive Directors and Non-Executive Directors.

• Review and recommend to management the level and structure of senior management remuneration.

• Ensure that remuneration arrangements for all employees are commensurate with promoting ethical behavior.

• Monitor and recommend to management the level and structure of remuneration for senior management and, other than in respect of Board members, approve exceptional remuneration activity for senior Management including the Board.

COMPOSITION OF THE COMMITTEE AND MEETINGS DURING THE PERIOD Remuneration Committee Composition and meetings held during the financial year ended 31st March 2020 are as follows. Chairman – A D Madushanka (Non – Executive Independent Director) Member – S R D M Abhayawardhan (Non – Executive Independent Director) Remuneration Committee meetings were held on following dates with the participation of above Directors. 30th October 2019 24th January 2020 DIRECTORS’ EMOLUMENTS The Directors’ emoluments are disclosed in Note 30 a on page 43 Mr.A.D.Madushanka–Chairman–Remuneration Committee 25th January 2021



Report of Related Party Transactions Review Committee Dear Shareholder, I am pleased to present you the report on Related Party Transaction Review for the year ended 31st March 2020. Through this report, I wish to share with you as to how Related Party Transactions Review Committee discharged their responsibilities and policies & procedures pertaining to Related Party Transactions. PURPOSE OF THE COMMITTEE The committee oversight related party transactions on behalf of the Board complying with Listing Rules of the Colombo Stock Exchange and code of Best Practices issued by the Securities and Exchange Commission. The committee also review all related party transactions carried out by the company on behalf of the Board. COMPOSITION OF THE COMMITTEE AND MEETINGS Related Party Transactions Review Committee Composition and meetings held during the financial year ended 31st March 2020 are as follows. Chairman – S R D M Abhayawardhane (Non – Executive Independent Director) Member – A D Madushanka ( Non – Executive Independent Director) Related Party Transactions Review Committee meetings were held on following dates with the participation of above Directors. 30th October 2019 24th January 2020 SCOPE OF THE COMMITTEE INCLUDE:

• Reviewing existing policies and procedures and

adopting new policies and procedures to review

related party transactions of the company.

• Reviewing in advance all proposed related party

transactions of the company except those

exempted by the Terms of Reference.

• Establishing guidelines foe senior management for

following in its ongoing dealings with the relevant

party if the related party transactions are Recurrent

Related Party Transactions.

• Ensuring that no Directors of the company may

participate in terms of discussing the proposed

related party transactions for which he or she is a

related party, unless the Committee requests such

Director to involve with it as it is necessary for such

director to involve.

• Deciding whether the approval of the Board or shareholders of the company is needed for proposed or ongoing Related Party Transactions

• Ensuring that immediate market disclosures and disclosures in the Annual Report as required by Listing Rules of the Colombo Stock Exchange are made in a timely and detailed manner.

• Recommending the creation of a special committee to review and approve the proposed related party Transactions in the event of any potential conflict of interest.

POLICIES AND PROCEDURES

Self declarations are obtained from each director and key management personnel of the company for the purpose of identifying related parties for each director and key management personnel. Based on the information furnished in these declarations, the Committee reviews data on related party transactions from the database of the company. RELATED PARTY TRANSACTIONS DURING THE YEAR During the financial year 2019/2020, there were no recurrent or non recurrent related party transactions with Directors or Key Management Personnel of the company that exceeded the respective threshold mentioned in the Listing Rules requiring disclosure in the Annual report. Details of other related party transactions entered into by the company during the period is disclosed in note 29 and 30 to the financial statements. DECLARATION A declaration by the Board of Directors in the Annual Report as a negative statement to the effect that, no related party transactions falling within the ambit of the rule 9.3.2 of Listing Rules of the Colombo Stock Exchange was entered into by the company during the year, is given in the Annual report of the Board of Directors on page 43 Mr. S. Abhayawardhana – Chairman – Related Party Transaction Review Committee 25th January 2021


RISK MANAGEMENT

Type of Risk faced Impact on the Company Steps taken by the Company to minimize the impact

Market Risk and

Competition

Reduction in the profit level Risk Rating - Moderate

• Innovating and trend setting while benchmarking with

global competition.

• Providing best service to the customer, improving

service delivery and focusing on consistent quality.

• Participation in global and regional trade promotions and

events in existing, potential and emerging markets and

maintaining relationships with key overseas industry

partners.

due to the increased

Difficulty of increasing expenditure.

the market share in

the competitive

environment

Business Risk Adverse impact on planned Risk Rating - Low

• Corporate plans are formulated on an annual basis and

formally approved by the Board. These plans are there

after monitored and reviewed by the Board on an

ongoing basis.

• Implementation of stringent cost control procedures

and innovative cost saving initiatives.

• Ongoing review of cost and expenditure by the Board of

Directors to determine appropriate revision of rates.

The inability of the profitability and cash flow

Company to achieve its

business objectives

Increase in operating and asset replacement costs due

to fluctuation in exchange

rates

Brand Equity and Reputation Any event that could undermine the brand equity and the reputation of the company the appeal of the company brand to its customers

Decline in customer base, loss of market share, market penetration and ability to develop the business Inability to maintain rate differentiation and competitive advantage Erosion in confidence may damage customer relationship

Risk Rating – Low

• Promoting the Radiant Gems brand in overseas

• The Company ensures that key managerial positions are held by suitably qualified and trained staff with sufficient experience in the Lapidary industry.

• Ongoing attention to environment, health and safety concerns by obtaining appropriate recognized quality certification standards.

• Initiatives to preserve water and energy resources to ensure long term sustainability

Type of Risk faced Impact on the Company Steps taken by the Company to minimize the impact

Radiant Gems International PLC view Enterprise Risk Management as the identification, assessment and prioritization of risk accompanied by a co-ordinate and economical application of resources to minimize, monitor and control the probability and/or impact of their adverse effects or maximize the realization of opportunities they bring over the years, Risk Management has become an integral part of the company’s business processes which has enabled the company’s objectives to be met whilst mitigating the adverse effects of risk on its capital.

and earnings and also, safeguarding its reputation of being a good corporate citizen. The company appreciates the importance of balancing reward with risk as without risk, reward is often elusive. The Risk Management Process recognizes the different categories of risks to which the group companies are exposed to, the table below indicates the key risks which the companies face and the mitigating action currently in place.


Statutory & Legal Risk

Implications that arise due to non-compliance with regulatory requirements

Risk of litigation from customers, suppliers, staff and regulatory authorities

Loss which may arise due to non-compliance with statutes

Enhanced incidence and potential exposure due to proposed legislation

Loss arising from flawed contracts

Risk Rating - Low

• Statutory returns, including taxes, are regularly monitored, reviewed and scrutinized and settled up to date. A comprehensive financial and operational compliance checklist is reviewed by senior management on a quarterly basis.

• Active engagement with industry advisory and policy making bodies to articulate concerns and make representations

• Upon invitation advice and direction is taken from experts to safeguard the Company against exposure to unexpected losses arising from the legal consequences of its transactions.

• Continuous review and development of information systems which detect and report deviations.

Operational Risk - Personnel

The risk of losing highly skilled staff and key personnel due to industry growth, Inappropriate labour action.

Shortage of appropriately skilled staff in the market to meet the growing need of the Company.

Inability to maintain quality standards and meet customer production requirements

Higher operational costs and loss of business

Risk Rating – Low

• Structured training and proper performance appraisal process.

• Developing a spirit of unity by organizing staff gatherings and trips.

• Recognizing and rewarding superior performance.

• Continuous monitoring of motivation and satisfaction through surveys and initiating corrective actions where necessary

Internal operational processes

Risk of financial loss due to breakdown in internal controls

Disruption of operations, loss of profits and ineffective use of assets and resources

Risk Rating - Low

• Clearly defined systems and procedure are in place to ensure compliance with internal controls, which are monitored and reviewed for their continued efficiency and effectiveness.

• Quarterly confirmation of compliance with financial, operational and sustainability procedures and requirements which include any incidence of fraud.

• A formal process is in place to review and monitor all audit findings.


INDEPENDENT AUDITOR’S REPORT

No. 18 -1/7, State Bank of India Bldg., Sir Baron Jayathilaka Mawatha, Colombo 01. Tel.: 0112324513/2422526 Fax: 0112472552 E Mail: [email protected]: http://carterdecosta.com

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF RADIANT GEMS INTERNATIONAL PLC

Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Radiant Gems International Plc. which comprise the Statement of Financial Position as at 31st March 2020, and the statement of Comprehensive Income, Statement of Cash Flows for the year then ended, Statement Changes in Equity and notes to the Financial Statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the company as at 31st March 2020 and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. Basis for Opinion We 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 company in accordance with the ethical requirements of the Code of Ethics issued by CA Sri Lanka (Code of Ethics), that are relevant to our audit of the financial statements, 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.

Key Audit Matters Key audit matters are those matters that in our professional judgment, were of most significance in the audit of the financial statements Of the current Period. These matters were addressed in the context of the audit of the financial statements as a whole, and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements, The results of our audit procedures, including the procedures performed to address the matters below. provide the basis for our audit opinion on the accompanying financial statements.

mailto:[email protected]

http://carterdecosta.com/


Key audit matter How our audit addressed the key audit matter

1. Bank of Ceylon FCBU Term Loan overdue settlements.

Our audit procedures included, among others the following; 1. Verify bank confirmation for accuracy.

2. Verify repayments during the year.

2.Movement of Current Assets - Trading stock of gem stones Rs.4.4M

These items are classified under current assets. However, these items have moved during the past several years minimally. The company has attributed following reasons for slow moving nature of this stock. 1. Local sales of gem stones is not the core business of the company. 2. These items are used as exhibits at trade exhibitions annually.

3. Valuation of Trading (Current) Stock of Gems. As at 31st March 2019, the audit report stated under emphasis of matters, the trading stock of gems was not re-valued.

The company obtained a valuation of these items as at 31.03.2020 from the Sri Lanka Gem Authority.

Emphasis of matter

Serious Loss of Capital – Section 220 of the Companies Act

As per the balance sheet at year end, the company has suffered serious loss of capital as defined in Section 220 of the companies act. The company is required to initiate appropriate action as prescribed in the Act.

Settlement of FCBU Term Loan-BOC

-Note 26.

Over 30 Installments are in arrears as at31.03.2020.


INDEPENDENT AUDITOR’S REPORT (Cont…..)

Responsibilities of management and those charged with governance in the financial statement Management 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 Company'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 Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the audit of the Financial Statements Our 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 Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reason abler 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 Company's ability to continue as a going concern, If we conclude that a material uncertainty exists, w 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 Company 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.


INDEPENDENT AUDITOR’S REPORT (Cont…..)

We Communicate with those charged with governance regarding, among Other ma Hers, 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 relevant ethical requirements 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 or most significance in the audit of the financial statements of the currentperiodandarethereforethekeyauditmatters.Wedescribethesemattersin 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 he 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 Requirements As 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.

CARTER DE COSTA & CO. Chartered Accountants 17th December 2020 Colombo


STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31ST MARCH 2020 2019

Rs. Rs.

Notes

Turnover

80,807,519.51

64,505,126.95

Cost of Sales 12

(38,909,317.06)

(36,401,237.84)

Gross profit

41,898,202.45

28,103,889.11

Other Income 13

588,964.72

160,073.60

Administration Expenses 14

(37,290,430.07)

(33,884,498.98)

Distribution Expenses 15

(313,191.30)

(285,098.47)

Profit / (Loss) from operation

4,883,545.80

(5,905,634.74)

Finance Income 16.1

5,071.12

1,392.80

Finance Costs 17

(6,778,728.19)

(10,294,609.55)

Net Finance costs

(6,773,657.07)

(10,293,216.75)

Profit/(Loss) Before Taxation

(1,890,111.27)

(16,198,851.49)

Income Tax Expenses -

(155.51)

Profit/(Loss) for the year

(1,890,111.27)

(16,199,007.00)

Other Comprehensive Income

Subsequently not re classified to profit or loss

Actuarial Gain / (Loss) 27 -

(55,390.20)

Total Comprehensive Income

(1,890,111.27)

(16,254,397.20)

Earning / (Loss) Per Share (0.79) (6.75)


FINANCIAL POSITION

AS AT 31ST MARCH 2020 2019

Notes Rs. Rs. ASSETS NON CURRENT ASSETS Property Plant & Equipment 21 51,884,582.43 53,217,769.43

51,884,582.43 53,217,769.43

Investment in Stock of Gems Stones 23 a 7,828,534.00 7,743,064.00

7,828,534.00 7,743,064.00 CURRENT ASSETS Stock 23 b 4,031,566.74 3,576,768.00 Trade & Other Receivables 18 5,070,199.14 8,515,224.96

Related Party Receivable 29 82,059.59 - Deposits & Prepayments 19 852,908.51 863,621.52

Cash & Cash Equivalents 20 3,620,960.69 346,016.00

13,657,694.67 13,301,630.48

TOTAL ASSETS 73,370,811.10 74,262,465.91

EQUITY LIABILITIES Stated Capital 24,000,000.00 24,000,000.00

Retained Earnings (118,224,649.47) (116,334,538.20) Other component of Equity 25 102,048,584.00 102,048,583.27

7,823,934.53 9,714,045.07 NON CURRENT LIABILITIES Interest Bearing Borrowing 26 33,402,466.31 26,841,462.01 Related party payables 29 - 1,122,825.26 Deferred Liability- Gratuity Provision 27 9,040,845.00 7,783,440.00

42,443,311.31 35,747,727.27 CURRENT LIABILITIES Bank overdraft 20.1 11,968,139.60 11,632,563.22

Creditors & Accrued Expenses 28 7,227,265.31 10,023,853.07 Interest Bearing Borrowing 26 3,908,161.40 7,144,274.58

23,103,566.31 28,800,692.87

73,370,811.15 74,262,466.21

The Financial Statements are in compliance with the requirements of the Companies Act No. 07 of 2007.

Chief accounting officer

The Board of Directors is responsible for the preparation of the Financial Statements. Approved and signed for and on behalf of the board.

Chairman/ Managing Director Director


STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST MARCH 2020

Description Notes Stated Capital Retained Earnings Other component of Equity Total

Balance as at 01-04-2017 24,000,000.00 (113,772,045.00) 104,709,232.00

14,937,187.00

Profit for the period - 3,951,476.50 -

3,951,476.50

Actuarial Gain 27 - 190,812.00 -

190,812.00

Revaluation Gain on PPE 21 - - 7,308,525.00

7,308,525.00

Revaluation Gain on Investment Stock 23-a - - 371,326.00

371,326.00

Furnace Process Stock-Written Off 22 - (790,885.00) -

(790,885.00)

Balance as at 31-03-2018 24,000,000.00 (110,420,641.50) 112,389,083.00

25,968,441.50

Balance as at 01-04-2018 24,000,000.00 (110,420,642.00) 112,389,083.00

25,968,441.00

Adjustment - - -

-

Revaluation Reserve 21 - 10,340,499.00 (10,340,499.00)

-

Actuarial Loss 27 - (55,390.20) -

(55,390.20)

Loss for the period - (16,199,007.00) -

(16,199,007.00)

Balance as at 31-03-2019 24,000,000.00 (116,334,538.20) 102,048,584.00

9,714,041.80

Balance as at 01-04-2019 24,000,000.00 (116,334,538.20) 102,048,584.00

9,714,041.80

Loss for the period - (1,890,111.27) - -

Balance as at 31-03-2020 24,000,000.00 (118,224,649.47) 102,048,584.00

9,714,041.80


STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH 2020 2019

Notes Rs. Rs.

Net (Loss)/Profit before Taxation

(1,890,111.27)

(16,198,851.49)

Adjustments for

Depreciation 21

3,700,741.00

3,574,645.00

Gratuity Provision 14

1,591,655.00

1,191,984.62

Fixed Asset Disposal Loss -

67,017.40

Finance Cost & Exchange loss Adjustment 16

6,778,728.19

10,294,609.55

Finance Income 17

(3,696.22)

(1,393.00)

Profit from Sale of Gems

(46,479.00) -

12,020,948.97

15,126,863.57

Operating Profit /(Loss) Before Working Capital Changes

10,130,837.70

(1,071,987.92)

Changes in Working Capital

(Increases)/Decrease in Debtors & Other Receivable 18

3,445,025.82

(3,911,762.96)

(Increases)/Decrease in Deposits & Prepayments 19

10,713.01

(72,660.52)

(Increases)/Decrease in Stock 23

(454,798.74)

927.00

Increase /(Decrease) in Creditors & Accrued Expenses 28

(2,807,297.76)

(4,876,247.93)

Changes In Working Capital

193,642.33

(8,859,744.41)

Cash generated from operational activities

10,324,480.03

(9,931,732.33)

Interest Paid

(3,119,707.62)

(3,467,464.00)

Interest Received

3,696.22

1,393.00

Gratuity Paid 27

(334,250.00)

(254,250.00)

Exchange Loss

(1,466,465.76)

(6,811,662.06)

Income Tax Payment -

(155.51)

Net Cash Used Operating Activities

5,407,752.87

(20,463,870.90)


STATEMENT OF CASH FLOWS(Cont….) CASH FLOW FROM INVESTING ACTIVITIES

Acquisition of Fixed Assets

(2,367,554.00)

(1,049,901.15)

Disposal Fixed Asset -

11,655,200.00

Sale of Gems Proceeds

87,989.00 -

Investment in Stock of Gems Stones 23

(116,270.00)

119,850.00

Net Cash from (used in) Investing Activities

(2,395,835.00)

10,725,148.85

CASH FLOW FROM FINANCING ACTIVITIES

BOC Loan Repayment

(1,025,721.10)

4,992,114.00

Term loan Repayment 26

(1,800,080.00)

(2,178,748.00)

Lease Rental Payment 26

(541,862.94)

(865,720.00)

Related Party Loan (Payment)/Received 30

(1,204,884.85)

1,062,634.26

Obtained of Finance Lease

4,500,000.00

Net Cash from (used in) Financing Activities

(72,548.89)

3,010,280.26

Net (Increase) in Cash & Cash Equivalents

2,939,368.98

(6,728,441.79)

Cash & Cash Equivalent at the Beginning of the period

Cash at Bank

204,635.06

17,190.00

Cash in Hand

141,380.59

25,686.00

Overdraft

(11,632,563.22)

(4,672,982.00)

Cash and cash equivalent at the beginning of the period

(11,286,547.57)

(4,630,106.00)

Cash & Cash Equivalent at the End of the period

Cash at Bank 20

3,448,788.10

204,635.06

Cash in Hand 20

172,172.59

141,380.59

Overdraft 20

(11,968,139.60)

(11,632,563.22)

Cash and cash equivalent at the end of the period

(8,347,178.91)

(11,286,547.57)


Note

All values are in Sri Lankan Rupees. Figures in brackets indicate deductions .The above figures are subject to audit. The above figures are subject to audit.


SIGNIFICANT ACCOUNT POLICIES

1. GENERAL INFORMATION

1.1 Reporting Entity

Radiant Gems International PLC is a Company

incorporated and domiciled in Sri Lanka and

listed in the Colombo Stock Exchange and

registered as a BOI Company.

1.2 Principal Activities and Nature of Operations

The principal activity of the company is processing of gem stones which involve cutting, polishing and setting of gem stones according to buyers’ requirement.

1.3 Date of Authorization for Issue The Financial Statements of Radiant Gems International PLC for the year ended 31st March 2020 was authorized for issue, in accordance with a circular resolution of the Board of Directors on 15thDecember 2020.

1.4 Basis of Preparation

1.4.1 Statement ofCompliance

The financial statements have been prepared in accordance with Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, which requires compliance with Sri Lanka Accounting Standards (SLFRS’s and LKAS’s) promulgated by the Institute of Chartered Accountants of Sri Lanka (CASL), and with the requirements of the Companies Act No. 7 of 2007.

1.4.2 Functional & presentation currency The financial statements are presented in Sri Lankan Rupees (Rs.), which is the Company's functional and presentational currency.

1.4.3 Materiality and Aggregation Each material class of similar assets is presented separately in the financial statements of the Company. Items of a dissimilar nature of function are presented separately unless they are immaterial.

1.4.4. Going Concern

The Directors have made an assessment of the Company's ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern basis.

1.5 Foreign Currency Transactions Transactions in foreign currencies are translated to Sri Lankan Rupees at the foreign exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to Sri Lankan Rupees at the foreign exchange rate ruling as at the reporting date. Foreign exchange differences arising on the settlement or reporting of the Company’s monetary items at rates different from those which were initially recorded are dealt with in the Statement of Comprehensive Income.

Non monetary assets & liabilities that are stated at fair value, denominated in foreign currencies are translated to Sri Lanka Rupees at the exchange rate ruling at the dates that the values were determined. Foreign exchange differences arising on translation are recognized in the Statement of Comprehensive Income.

1.6 Taxation The company is exempted from Income Tax in accordance with the provision of Inland Revenue Act No 24 of 2017 and amendments. Therefore, no adjustment has been made in the accounts for deferred taxation.

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted by the Balance Sheet date.


1.7 Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such time the assets are substantially ready for their intended use. Borrowing Cost include foreign exchange differences to the extent that such differences are regarded as an adjustment to interest cost as permitted by the accounting standards.

1.8 Events Subsequent to the Reporting Period The materiality of the Events after the Reporting Period have been considered and appropriate adjustments and provisions have been made in the Financial Statements wherever necessary.

2. Financial Assets The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available for sale and held to maturity investment. The classification depends on the purpose for which the financial assets were acquired.

Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. At the reporting date there were no financial assets at fair value through profit or loss, available for sale and held to maturity investments.

Regular purchases and sales of financial assets are recognized on the trade date – the date on which the Company commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Loans and receivables are carried at amortised cost using the effective interest method.

The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount or the loss is recognized in the statement of comprehensive income. Cash flows relating to loans and receivables falling due within a period of less than one year are not discounted if the effect of discounting is immaterial.

2.1 Cash & Cash Equivalents For the purposes of the cash flow statement, cashand cash equivalents comprise cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, net of bank overdrafts. In the Statement of financial position, bank overdrafts are included in borrowings in current liabilities.

3. Property, Plant &Equipment

3.1 Owned Assets All items of Property Plant and Equipment are initially recorded at cost where items of Property Plant and Equipment are subsequently revalued, the entire class of such assets is revalued. Revaluations are made with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair values at the Balance Sheet date. Subsequent to the initial recognition as an asset at cost, revalued property, plant and equipment are carried at revalued amounts, less any subsequent depreciation thereon.


When an asset is revalued, any increase in the carrying amount is credited directly to a revaluation surplus unless it reverses a previous revaluation decrease relating to the same asset, which was previously recognized as an expense. In these circumstances, the increase is recognized as income to the extent of the previous write down. When an asset carrying amount is decreased as a result of a revaluation, the decrease is recognized as an expense unless it reverses a previous increment relating to that asset, in which case it is charged against any related revaluation surplus, to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that same asset. Any balance remaining in the revaluation surplus in respect of an asset, is transferred directly to the retained earnings on retirement or disposal of the asset.

Investment in Stock of Gem Stones

These stocks were introduced by the promoters at the inception of the business. These stocks are not related to the main business function of the company which is specialized service cutting of gem stones for international buyers. These stones are used as exhibits at gem exhibitions and professionally valued every two years.

3.2 Leased Assets a) Finance Leases Property, Plant and Equipment on finance leases which effectively transfer to the company substantially all of the risk and benefits incidental to ownership of the leased item are capitalized at the inception of the lease at the fair value of leased property or if lower, at the present value of minimum lease payments. Capitalized leased assets are disclosed as finance leases under property, plant and equipment and depreciated over the period the company is expected to benefit from the use of the leased assets.

The corresponding principal amount payable to the lessor together with interest payable over the period of lease shown as a liability. Lease payments are apportioned between the finance charges and

reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. The interest payable over the period is transferred to an interest in suspense account. The interest element of the rental obligations pertaining to each financial year is charged to income statement over the period of the lease.

3.3 Subsequent Costs The company recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item, when the cost is incurred, if it is probable that the future economic benefits embedded in the item will flow to the company and the cost of the item can be measured reliably. All other costs are recognized in the income statement as an expense incurred.

3.4 Depreciation Depreciation is recognized in Statement of Comprehensive Income on a straight-line basis over the estimated useful lives of each part of an item of Property, Plant and Equipment. The estimated useful lives of the assets are as follows.

The principal annual rates used are; Land 0%

Building 5%

Furniture and Fittings 10%

Plant and Machinery 10%

Office Equipment 10%

Motor Vehicle 10%

Software 20% 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 Company that is classified as held for sale) and the date that the asset is derecognized.

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

4. Stated Capital Ordinary Shares are classified as equity.

5. Trade Payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts Payables are classified as current liabilities if payment is due within one year or less(or in the normal operating cycle of the business if longer). If not, they are presented as non- current liabilities.


Trade payables are recognized initially at fair value (which is the purchase cost of the company) and subsequently measured at amortised cost using the effective interest method.

6. Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceed (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other Borrowing costs are recognized in statement of comprehensive income in the period in which they are incurred.

7. Employee Benefits

7.1 Defined Contribution Plans

A 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 a further amount. Obligations for contributions to defined contribution plans are recognized as expense in the Statement of Comprehensive Income in the period during which related services are rendered by employees.

a) Employees’ Provident Fund The Company and Employees’ contribute 12% &8% respectively on the salary of each employee respectively. The said provident fund is being managed by the Central Bank of Sri Lanka.

b) Employees Trust Fund The company contributes 3% of the salary of each employee to the Employees’ Trust Fund. Contributions to defined contribution plans are recognized as an expense in the Statement of Comprehensive Income as incurred.

7.2 Defined Benefit plans Retiring Gratuity A defined benefit plan is a post employment benefit plan other than a defined contribution plan. The calculation is performed annually by a qualified actuary using the projected unit credit method. The Company’s net obligation in respect of a defined pension 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, that benefit is discounted to determine its present value.

However, under the payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of 5 years of continues service.

The Company applies faster recognition of actuarial gains/ losses in the Statement of Comprehensive Income. Accordingly all actuarial gains/ losses are recognized immediately in Statement of Comprehensive Income.

The liability was not externally funded.

8. Capital Commitments & 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 reliably measured.

Capital commitment and contingent liabilities of the Company are disclosed in the respective notes to the Financial Statements.

9. Statement of Comprehensive Income

9.1 Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue and associated costs incurred or to be incurred can be reliably measured.


Revenue is measured at the fair value of the consideration received or receivable net of trade discounts and sales taxes. Following specific criteria are used for the purpose of recognition of revenue.

a) Cutting Charge The Principle activity of the Company is to provide the service of cutting and polishing gemstones. The revenue is recognized, when the amount of cutting charge can be reliably measured and percentage of completion of the order can be measured reliably.

b) Interest Interest income is recognized on an accrual basis.

c) Others Other income is recognized on an accrual basis. Net losses of a revenue nature arising from the disposal of Property, Plant and Equipment and other non- current assets, including investments, are accounted

for in the Statement of Comprehensive Income, after deducting from the proceeds from disposal, the carrying amount of such assets and the related selling expenses.

Gains and losses arising from incidental activities to main revenue generating activities and those arising from a Company of similar transactions which are not material, are aggregated, reported and presented on a netbasis.

9.2 Expenditure All expenditure incurred in running of the business and in maintaining the Property, Plant & Equipment in a state of efficiency 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.

Repairs and renewals are charged to revenue in the year in which the expenditure is incurred.

9.3 Finance Income & Finance Cost Finance income comprises interest income on funds invested (including available for sale financial assets), gains on the disposal of available for sale

financial assets. Interest income is recognized as it accrues in the Statement of Comprehensive Income, using the effective interest method.

Finance cost comprise interest expenses on borrowings, unwinding of the discount on provisions and contingent consideration, losses on disposal of available for sale financial assets, impairment losses recognized on financial assets (other than trade receivables).

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest rate method.

Foreign currency gains and losses are reported as either finance income or finance cost depending on whether foreign currency movements are in a gain or loss position.

9.4 Income Tax Expenses Income tax expenses comprises current and deferred tax. An income tax expense is recognized directly in Statement of Comprehensive Income except to the extent that if relates to items recognized directly in equity, in which case it is recognized in equity.

a) Current Taxation Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

b) Deferred Taxation Deferred tax is provided using the balance sheet liability method, providing for the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the tax base of assets and liabilities, which is the amount attributed to those assets and liabilities for tax purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted by the reporting date.

Deferred tax assets including those related to temporary tax effects of income tax losses and credits available to be carried forward, are recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. 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 realized.

9.5 Basic Earnings Per Share The Financial Statements present basic earnings per share (EPS) data for its ordinary shareholders.

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 period.

10-a. Cash Flow Statement For the purpose of Cash Flow Statement, cash and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents.

The Cash Flows Statements has been prepared using the “indirect method”.

Interest paid are classified as operating cash flows, interest and dividend received are classified as investing cash flows while dividends paid are classified as financing cash flows for the purpose of presenting of cash flow statement.

10-b. Related Party Transactions Disclosures are made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating decisions/polices of the other, irrespective of whether a price is being charged or not.

11. Changes in accounting policy and disclosures 11-(a)

New standards and amendments –

applicable 1st January2017 The following standards and interpretations apply for the first time to financial reporting periods commencing on or after 1st January 2017:

11-(a)-(i) Amendments to LKAS 7 - Disclosure Initiative An entity will be required to explain changes in their liabilities arising from financing activities. This includes changes arising from cash flows (eg. draw downs and repayments of borrowings) and non-cash changes such as acquisitions, disposals, accretion of interest and unrealized exchange differences.

Changes in financial assets must be included in this disclosure if the cash flows were, or will be, included in cash flows from financing activities. This could be the case, for example, for assets that hedge liabilities arising from financing liabilities Entities may include changes in other items as part of this disclosure, for example by providing a ‘net debt’ reconciliation. However, in this case the changes in the other items must be disclosed separately from the changes in liabilities arising from financing activities.

11-(b) New standards and amendments effective after 1st January 2018

The following standards and interpretations had been issued but not mandatory for annual reporting periods ending 31 March 2018.

11-(b)-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 amortized 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 recognized 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 recognize 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 introduce: 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 1 January 2018.

Amendments to SLFRS 9 Financial Instruments -Prepayment Features with Negative Compensation.

This amendment confirm that when a financial liability measured at amortized cost is modified without this resulting in de-recognition, a gain or loss should be recognized immediately in profit or loss. The gain or loss is calculated as the difference between the original contractual cash

flows and the modified cash flows discounted at the original effective interest rate. This means that the difference cannot be spread over the remaining life of the instrument which may be a change in practice from LKAS.

The amendment is effective for annual periods beginning on or after 1 January 2019.

11-(b)-(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 recognized 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 recognized:

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. recognize 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 recognized, and any discounts or rebates on the contract price must generally be allocated to the separate elements.

ii. Revenue may be recognized 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


recognized if they are not at significant risk of reversal.

iii. The point at which revenue is able to be recognized may shift: some revenue which is currently recognized at a point in time at the end of a contract may have to be recognized 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).

The standard and the amendment is effective for the annual periods beginning on or after 1 January 2018.

11-(b)-(iii) SLFRS 16 - Leases SLFRS 16 will affect primarily the accounting by lessees and will result in the recognition of almost all leases on balance sheet. The standard removes the current distinction between operating and financing leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for virtually all lease contracts. An optional exemption exists for short-term and low-value leases.

The income statement will also be affected because the total expense is typically higher in the earlier years of a lease and lower in later years. Additionally, operating expense will be replaced with interest and depreciation, so key metrics like EBITDA will change.

Operating cash flows will be higher as cash payments for the principal portion of the lease liability are classified within financing activities. Only the part of the payments that reflects interest can continue to be presented as operating cash flows.

The accounting by lessors will not significantly change. Some differences may arise as a result of the new guidance on the definition of a lease. Under

SLFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The standard is effective for annual periods beginning on or after 1 January 2019 with earlier application permitted if SLFRS 15, ‘Revenue from Contracts with Customers’, is also applied.

11-(b)-(iv) Amendments to SLFRS-1, ‘First Time Adoption of SLFRS’ SLFRS 1 - deleted short-term exemptions covering transition provisions of SLFRS 7, LKAS 19 and SLFRS 10 which are no longer relevant.

The amendment is effective for the annual periods beginning on or after 1 January 2018.

11-(b)-(v) IFRIC-22, ‘Foreign Currency Transactions and Advance Consideration’ The interpretation clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts.

For a single payment or receipt, the date of the transaction should be the date on which the


entity initially recognises the non-monetary asset or liability arising from the advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments or receipts for one item, a date of transaction should be determined as above for each payment or receipt. Entities can choose to apply the interpretation: i. retrospectively for each period presented ii. prospectively to items in scope that are initially recognized on or after the beginning of the reporting period in which the interpretation is first applied, or iii. prospectively from the beginning of a prior reporting period presented as comparative information. The amendment is effective for the annual periods beginning on or after 1 January 2018. The Company is continuing to assess the potential impact on its financial statements resulting from the application of the above standards and at this stage does not expect a significant impact on the financial statements due to the adoption of these standards.


NOTES TO THE FINANCIAL STATEMENT

FOR THE YEAR ENDED AND AS AT 31ST MARCH

2020 2019

Rs. Rs.

Notes

12 Cost of Service Cutting

Direct Expenses 12.1 31,889,643 29,921,584

Factory Expenses 12.2 4,863,272 4,435,058

Depreciation 21 2,156,402 2,044,596

38,909,317 36,401,238

12.1 Direct Expenses

Factory Wages 30,911,362 28,845,499

Electricity 639,875 617,524

Lapidary Expenses 338,406 458,562 31,889,643 29,921,584

12.2 Factory Expenses

Staff Welfare 2,107,199 1,785,870

Repairs & Maintenance-Machinery 495,462 591,469

Fuel For Generator 262,460 237,080

EPF & ETF Lapidary 1,998,151 1,820,640 4,863,272 4,435,058

13 Other Income

Asset Disposal Income - (67,017)

Miscellaneous Income 11,333 235,000

Income from Sale of Gem Stones 13.1 46,479 (7,909)

Import Export 531,153 - 588,965 160,074

13.1 Income from sale of gems

Sale of Gem Stones

87,989

112,868

Cost of Local Gem Sold (41,510) (120,777) 46,479 (7,909)


FOR THE YEAR ENDED AND AS AT 31ST MARCH

2020 2019

Rs. Rs.

14 Administration Expenses

Administration Salaries 8,182,252 7,263,685

Factory Staff Salary 7,752,569 7,708,614

Consultancy Fees 2,380,000 1,380,000

Administration EPF & ETF 1,376,985 1,416,309

Key Management Personnel Compensation 2,635,855 3,340,630

Leave Encasement - 782,649

Gratuity 1,591,655 1,191,985

Depreciation 21 1,544,340 1,530,049

Board Meeting & AGM Expenses 92,368 85,884

Vehicle Running Cost 3,387,318 2,614,319

Traveling & Transport Expenses 3,002,431 1,780,589

Repairs & Maintenance-Buildings 175,424 500,736

General Insurance 275,326 246,863

Rent Expenses 300,000 300,000

Electricity Expenses 472,149 508,693

Computer Maintenance 74,775 125,575

Printing & Stationary 317,717 245,986

Telephone & Fax Charges 782,478 586,106

Listing Fees 247,918 120,408

Audit Fees 185,000 175,000

Internal Audit Fee & Professional 143,000 126,000

Annual Chg, Subscrip. & Mem. Fees 588,375 569,083

Professional Service Fees 186,672 183,672

Secretarial Charges 400,163 330,260

Legal Expenses 107,500 15,000

Miscellaneous Expenses 112,396 559,169

Charity & Donations 23,730 42,000

Water 322,001 49,886

Valuation Fees 7,000 103,243

Postage 7,770 2,105

Entertainment 22,912 -

Ceremonial 153,305 -

Repair & Maintenance Tools & Equipment 21,000 -

Vehicle Rent 412,623 -

Rate & Taxes 5,425 - 37,290,430 33,884,499


FOR THE YEAR ENDED AND AS AT 31ST MARCH 2020

Rs.

2019

Rs.

15 Distribution Expenses

Advertisement & Other Sales Exp

313,191

285,098 313,191 285,098

16 Finance Income

Interest Income

3,696

1,393

Exchange Gain 1,375 - 5,071 1,393

17 Finance Costs

Bank Charges

124,825

244,347

Overdraft Interest 1,030,958 1,133,278

FCBU Loan Interest 992,915 1,004,516

Actuarial - 454,367

Interest on Lease 971,009 646,439

Exchange Loss 17.1 3,659,021 6,811,662 6,778,728 10,294,610

17.1 Exchange Loss

Commercial Bank FCBU

1,466,466

563,701

BOC Bank FCBU 2,192,555 6,247,961 3,659,021 6,811,662


FOR THE YEAR ENDED AND AS AT 31ST MARCH 2020 2019

Rs. Rs.

18 Trade Debtors & Other Receivables

Trade Receivables Note 18.1

2,948,205

7,207,677

Other Receivable Note18.2 2,121,994 1,307,548 5,070,199 8,515,225

18.1 Trade Receivables

Trade Receivables

2,893,798

7,207,677

Local Sale 54,406 - 2,948,205 7,207,677

18.2 Other Receivables

VAT Control 875,336 845,594

Staff Loan 103,150 197,150

Related Party Receivable 136,144 -

Economic Service Charge 648,129 210,567

Other - 54,236

Salary Advance 305,000 -

Account Receivable 54,236 -

2,121,994 1,307,548

19 Deposits &Prepayments

Insurance Prepayment 99,903 49,631

B O I Prepayment 251,652 247,486

Other Deposits 175,499 325,499

Advance Payment for Exhibitions - 86,606

Prepayments 28,313 97,563

Prepayment for Annual Fee & Sub - 56,835

Fuel 100,000 -

Factory Maintenance 150,000 -

Annual Fee & Sub 47,540 -

852,909 863,622

20 Cash & Cash Equivalents

Office Cash Float 73,630 42,838

IMP Cash Float 98,543 98,543

Commercial Bank FCBU 3,428,573 194,425

Money Market Account 3,697 1,393

DFCC-Avissawella 16,517 8,817 3,620,961 346,016

Bank Overdraft Commercial Bank 11,968,140 11,632,563



Rs.

2019

Rs.

23 a Investment Stock of Gems

Balance as at the beginning of the year

7,743,064

7,862,914

Purchase during the Year 116,270 -

Sold During the Year (30,800) (119,851)

7,828,534 7,743,064

23 b Trading Stock

Stones -Local Purchase 3,576,768 3,577,695

Local Purchase during the Year 199,532 -

Sold During the Year (10,710) (927)

Diamond Powder Stock 265,977 -

Balance as at the end of the year 4,031,567 3,576,768

25

OTHER COMPONENT OF EQUITY

Revaluation Reserve

Balance as at the beginning of the year - 112,389,083

Revaluation surplus transfer to Retained Earnings

- (10,340,499)

Balance as at the end of the year - 102,048,583

26 Interest Bearing Borrowings

26.1 BOC FCBU BANK LOAN

Balance as at Beginning of the Year 31,852,697 26,860,583 Capital Repaid During The Year (1,025,721) (969,700)

Exchange (Gain)/Loss for Capital 2,192,555 5,961,814

33,019,531 31,852,697

BOC FCBU BANK LOAN

Long Term Liability

30,152,663

26,508,502

Current Liability 2,866,867 5,344,195

33,019,531 31,852,697

26.2

Term loan - Com Bank 6M Loan

Current Liability

-

800,000

- 800,000

Com Bank 5M Loan

Long Term Liability - 332,960

Current Liability 332,960 1,000,080

332,960 1,333,040


FOR THE YEAR ENDED AND AS AT 31ST MARCH 2020 2019 Rs. Rs.

26.3 LEASE CREDITOR

Gross Liability as at the Beginning of the The Year

- 911,490

Finance Leases Obtained During the Year 7,003,949 -

Repayment During The Year (1,284,063) (911,490) Finance Costs Allocated to Future Years (1,761,749) - Net Liability as at the End Of the Year 3,958,137 -

Repayable within One Year

Gross Liability 1,400,796 - Finance Costs Allocated To Future Year (692,462) -

Net Liability 708,334 -

Repayable within Two to Five Years Gross Liability

4,319,090

- Finance Costs Allocated To Future Year (1,069,287) -

Net Liability 3,249,803 -

Total Repayable after One Year – Note 26.1,2,3

33,402,466

26,841,462

Total Repayable within One Year -Note 26.1,2,3

3,908,161 7,144,275

37,310,628 33,985,737

27 DEFERRED LIABILITIES- Gratuity Provision

Changes in the Present Value of Obligation (PVDBO) PVDBO at the beginning of the year 7,783,440

6,707,815

Interest Cost 934,013 804,938

Current Service Cost 544,841 469,547

Benefit paid (334,250) (254,250)

Actuarial(Gain)/Loss 112,801 55,390

PVDBO as at the end of the year 9,040,845 7,783,440

27.1 Liability Recognized in the Balance sheet

Present vale of Obligation at the end of the year 9,040,845 7,783,440

Net Liability in the Balance Sheet 9,040,845 7,783,440

27.2 Expenses Recognized in the Income Statement

Interest Cost 934,013 804,938

Current Service Cost 544,841 469,547

Net Actuarial (Gain) / Loss recognized immediately 112,801 55,390

Amount Recognized in the Income Statement 1,591,655 1,329,875


FOR THE YEAR ENDED AND ASAT 31STMARCH 2020 2019 Rs. Rs.

Key assumptions for Actuarial Valuation :

(1) Rate of interest 12% Per Annum

(2) Rate of pay increase 7% Per Annum (3) Retirement age : (Assumed only for this calculation)

Male Employees 55Years

Female Employees 55Years

(4) The company will continue in business as a going concern

28 Creditors & Accrued Expenses

Creditors 28.1 - 437,015

Accrued Expenses 28.2 7,227,265 9,586,838

7,227,265 10,023,853

28.10 Creditors

Turbo Fan - Lap Purchase - 437,015

- 437,015

28.20 Accrued Expenses

EPF / ETF Payable 406,766 525,128

Salaries Deduction Payable

143,621 16,823

Administration Salary 793,958 -

Interest Payable 2,651,933 2,400,606

Leave Pay - 782,649

Other Payable 307,515 841,966 PAYE Payable - 16,474 Stamp Duty Payable 3,925 5,525

Salary 2,553,995 4,756,442

WHT Payable 17,920 17,920

Audit Fees Payable 185,000 175,000

Festival Advance 12,500 -

Other 1,993 -

Lenses 3,450 -

Uncollected Wages 48,304 48,304 Electricity 75,000 -

Export Advance Johanas 21,385 -

7,227,265 9,586,838


FOR THE YEAR ENDED AND AS AT 31ST MARCH 2020 2019 Rs. Rs.

29 Related party payables

Balance as at 01.04.2019 1,122,825 60,191

Borrowed - 2,000,000

Settlement (1,204,885) (937,366)

Balance as at 31.03.2020 (82,060) 1,122,825

30 Transactions with Key Management Personnel

The Key Management Personnel are the members of the Board of Directors of Radiant Gems International PLC.

a. Directors Emoluments 2,635,855 3,340,630

b. Transactions, Arrangements and Agreements involving Key Management Personnel

Renting of Premises for Operating Furnace

Rent Agreement Rental Agreement of Motor Vehicle

-

-

-

-

-

-

NUMBER OF EMPLOYEES

Average number of persons employed during the year

98

98


RADIANT GEMS INTERNATIONAL PLC.NOTES TO THE FINANCIAL STATEMENTS


21. PROPERTY, PLANT & EQUIPMENT

Land Building Plant & Machinery

Furniture & Fittings

Office Equipment

Leasehold assets

Tools & Equipment

Software

Total

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Year Ended 01.04.2018

Opening net book value

26,466,056

11,616,700 20,199,480 281,742 813,635 7,670,100 - 350,000 67,397,713

Additions - - 985,901 - 64,000 - - - 1,049,901

Disposal (11,655,200) - - - - - - - (11,655,200)

Depreciation charged for the year

-

(580,835)

(2,044,596)

(28,174)

(84,030)

(767,010)

-

(70,000)

(3,574,645)

Revaluation Gain/(Loss) -

Carrying value 14,810,856 11,035,865 19,140,786 253,568 793,605 6,903,090 - 280,000 53,217,769

As at 31.03.2019

Cost/ Revaluation 14,810,856 11,616,700 21,185,381 281,742 877,635 7,670,100 - 350,000 56,792,414

Accumulated Depreciation

- (580,835) (2,044,596) (28,174) (84,030) (767,010) - (70,000) (3,574,645)

Carrying value 14,810,856 11,035,865 19,140,786 253,568 793,605 6,903,090 - 280,000 53,217,769

Year Ended 01.04.2020

Cost/ Revaluation 14,810,856 11,616,700 21,185,381 281,742 877,635 7,670,100 - 350,000 56,792,414

Additions - 406,230 504,847 22,500 213,550 927,290 293,137 - 2,367,554

Depreciation charged for the year

-

(580,835)

(2,156,402)

(28,174)

(93,435)

(767,010)

(7,328)

(67,557)

(3,700,741)

Carrying value 14,810,856 11,442,095 19,533,826 276,068 997,750 7,830,380 285,809 282,443 55,459,227

As at 31.03.2020

Cost/ Revaluation - 12,022,930 21,690,228 304,242 1,091,185 8,597,390 293,137 350,000 59,159,968

Accumulated Depreciation

- (1,161,670) (4,200,998) (56,348) (177,465) (1,534,020) (7,328) (137,557) (7,275,386)

Carrying value - 10,861,260 17,489,231 247,894 913,720 7,063,370 285,809 212,443 51,884,582


LIST OF 20 MAJOURSHARE HOLDERSANALYSIS OF SHARE HOLDERS AS AT 31ST MARCH 2020 2020 2019

Name of Shareholder

No. of

Shares Percentage

No. of

Shares

Percentage

% % 1 Mr.K.E.H.DeAlwis/Dialog Finance

PLC 333,773

13.91 533,873 22.24

2

Mr.K.E.H.DeAlwis 200,000

8.33 - -

3

Mr.ENaftule 183,010

7.63 183,010

7.63

4

Mr.NNaftule 183,009

7.63 183,009

7.63

5

Mr.RNaftule 156,866

6.54 156,866

6.54

6

Orava (Pvt)Ltd 116,566

4.86 116,566

4.86

7 Mrs.A G N Kulartnepategay/G N

Kularathne /Miss.A G N Kularatne 80,000

3.33 80,000

3.33

8

Mr.W P Fernando 41,235

1.72 41,235

1.72

9

Seylan Bank PLC/A.R Investments 39,999

1.67 39,999

1.67

10

Dr.M.I.M.Muhseen 38,507

1.60 38,507

1.60

11

Mr.LKadirgamar 29,900

1.25 29,900

1.25

12 Mr.HAbhayawardhana / Mrs.K

Munasinghe 26,548

1.11 26,548 1.11

13 Mr.HAbhayawardhana /Mr.S H

Munasinghe 26,547

1.11 26,547 1.11

14 Mr.HAbhayawardhana / Ms.N V

Munasinghe 26,547

1.11 26,547 1.11

15 Mr.HAbhayawardhana /Ms.R V

Munasinghe 26,547

1.11 26,547 1.11

16

Mr.D Silva 25,000

1.04 - -

17

MrNassimHussainMohomadHussain 24,550

1.02 24,446

1.02

18

Mr.Ibrahim Abdul Rahuman 23,727

0.99 23,627

0.98

19

Mr.RNaftule 20,000

0.83 20,000

0.83

20

Mr.S.N.C.W.Kandegedara 19,999

0.83 19,999

0.83

1,622,330 67.60 1,597,226 66.55


Resident Non Resident Total

Shareholdings

No of Share Holders

No. of Shares

Percentage %

No of Share Holders

No. of Shares

Percentage %

No of Share Holders

No. of Shares

Percentage %

1 to 1,000 660 151,529 6.31 5 703 0.03 665 152,232 6.34

1,001 to 10,000 145 425,343 17.72 2 4,111 0.17 147 429,454 17.89

10,001 to 100,000 26 533,840 22.24 3 111,250 4.64 29 645,090 26.88

100,001 to 1,000,000 3 650,339 27.10 3 522,885 21.79 6 1,173,224 48.88

Over 1,000,000 - - - 0 - - - - -

834 1,761,051 73.38 13 638,949 26.62 847 2,400,000 100.00

Categories of No of No of Shares

Shareholders Shareholders

Individual 798 1,807,243

Institutional 49 592,757

847 2,400,000


Market and other information. 2020 2019

Earnings/(Loss) per share (LKR) (0.79)

(6.75)

Dividends per share (LKR) -

-

Net assets value per share (LKR) 3.26

4.04

Market value per share

- Highest value (LKR) 27.50

33.00

- Lowest value (LKR) 16.20

15.60

- Value as at the end of financial year (LKR) 19.00

16.10

Number of trades

607

Total number of shares traded 140,488

81,723

Total turnover (LKR) 3,260,381

1,746,628

Percentage of shares held by the public 95

95

Number of public shareholders 840

842

Flot adjusted market capitalization 43,534,320

36,889,608

The applicable option under CSE Rule 7.13.1 on minimum public holding is

Option 05

Option 05


FIVE YEAR SUMMERY

Trading Results Year Ended 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar

2020 2019 2018 2017 2016

LKR LKR LKR LKR LKR

Turnover

64,505,127

73,293,989

71,315,696

69,425,028

Profit / (Loss) Before Taxation

(16,198,852)

3,956,045

(1,797,596)

(3,800,581)

Income Tax Expenses

(156)

(4,569)

-

-

Profit / (Loss) for the Year

16,199,006

3,951,476

1,797,596

(3,800,581)

Balance Sheet As At 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar

2020 2019 2018 2017 2016

LKR LKR LKR LKR LKR

Non - Current Assets

Property, Plant &Equipments

53,217,769

67,397,714

63,475,184

70,311,278

Work-In-Progress

-

-

414,515

350,000

Furnance Process Stock

-

-

790,885

790,885

Investment in Stock of Gem Stones

7,743,064

7,862,914

7,538,779

8,839,240

Current Assets

13,301,630

9,086,994

12,611,466

16,259,650

74,262,463

84,347,622

84,830,829

96,551,053

Equity and Liabilities

Stated Capital

24,000,000

24,000,000

24,000,000

24,000,000


Reatained Earnings (116,334,538) (110,420,642) (113,772,045) (113,026,841)

Other Componenet of Equity

102,048,583

112,389,083

104,709,232

104,709,232

Non-Current Liabilites

35,747,727

33,170,339

42,549,650

54,338,394

Current Liabilities

28,800,693

25,208,842

27,343,992

26,530,268

74,262,465

84,347,622

84,830,829

96,551,053

radiant gems international plc

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