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Over the ages, Singer’s enterprise has been “music to the ears” of stakeholders across all strata of society in Sri Lanka. The Company holds a unique, pre-eminent position in the lives of Sri Lankans from every walk of life and circumstance, touching lives with products and services of value delivered from a stable platform of long–term sustainability. Given the extremely strong positioning of the Company today, we can claim the role of “lead singer” in “the band” that is the current commercial arena of the country.

Singer (Sri Lanka) PLC

No. 112, Havelock Road, Colombo 5, Sri LankaHot Line: (+94) (011) 5 400 400E-Mail: [email protected]: [email protected]

THE LEAD

SINGEROver the ages, Singer’s enterprise has been

“music to the ears” of stakeholders across all strata of society in Sri Lanka. The Company holds a unique,

pre-eminent position in the lives of Sri Lankans from every walk of life and circumstance, touching lives with products

and services of value delivered from a stable platform of long-term sustainability. Given the extremely strong

positioning of the Company today, we can claim the role of “lead singer” in “the band” that is the current commercial

arena of the country.

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SINGER (SRI LANKA) PLCANNUAL REPORT 2018/19

13SINGER’S LEADERSHIP

25BUSINESS MODEL

35MANAGEMENT DISCUSSION AND ANALYSIS

CONTENTS

5SINGER AT A GLANCE

5Singer at a Glance

6 Vision/Mission/Values and Objectives

8 History

9 Awards and Accolades

10 Highlights 2018/19

12 Review Period at a Glance

4About this report

13Singer’s Leadership

14 Chairman’s Message

16 CEO’s Review

18 Board of Directors

22 Management Team

25Business Model

26 Operating Environment

31 Stakeholder Engagement

33 Materiality

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271SUPPLEMENTARY INFORMATION

161FINANCIAL REPORTS

CONTENTS

www.singersl.com

35Management Discussion and Analysis

36 Financial Capital

50 Institutional Capital

63 Customer Capital

69 Employee Capital

86 Social and Environmental Capital

101Stewardship

102 Corporate Governance

148 Audit Committee Report

150 Remuneration Committee Report

151 Nomination Committee Report

152 Related Party Transactions Review Committee Report

154 Risk Management

161Financial Reports

162 Financial Calendar

163 Annual Report of the Board of Directors on the Affairs of the Company

170 Statement of Directors’ Responsibility

171 Independent Auditors’ Report

176 Statement of Profit or Loss and Other Comprehensive Income

177 Statement of Financial Position

178 Statement of Changes in Equity

181 Statement of Cash Flows

183 Notes to the Financial Statements

271Supplementary Information

272 Parent, Subsidiaries and Related Companies

273 A Decade in perspective

275 Share Information

280 Independent Assurance Report

282 Certificate of the director/principal officer/precedent partner on transfer pricing

283 Global Reporting Initiatives (GRI) Standard Disclosures Index

289 Distribution Network

291 Service Network and Fashion Academy Network

293 Glossary

294 Notice of Annual General Meeting

Enclosed Form of Proxy

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ABOUT THIS REPORT

Report PeriodThe Annual Report 2018/19 of Singer (Sri Lanka) PLC covers the 12-months period from 1st April 2018 to 31st March 2019. This period is consistent with the Company’s usual annual reporting cycle for both financial and sustainability reporting.

Report Boundary and Content Unless otherwise stated, the 2018/19 Annual Report is limited to the Company’s operations in Sri Lanka. Therefore, the operations of our Subsidiaries, Singer Finance (Lanka) PLC, Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Limited, Regnis (Lanka) PLC, Regnis Appliances (Pvt) Limited, Singer Industries (Ceylon) PLC, and Reality Lanka Limited, and Domus Lanka (Pvt) Limited are included in the Annual Report.

Economic, social, and environmental parameters that affect our business and stakeholders have been considered in deciding the content of this Report.

Data Measurement Techniques and Base of CalculationFinancial data presented in this Report have been extracted from Audited Financial Statements. The accounting policies adopted in preparation of the Financial Statements including the basis of preparation and significant assumptions are given on pages 184 to 201. The man hours in respect of training extended to employees is computed based on the scheduled time for each training session.

The scope, boundary and measurement methods used in the preparation of this Report are the same as those used in our previous Report for the fifteen months ended 31st March 2018. The information presented in this Report in respect of prior periods has not been restated.

Our Response to Precautionary Approach We remain committed to safeguarding the public in conducting our business operations. Therefore, every effort is taken to keep our customers and the communities informed of any potential risk they may face as a result of our operations. Precautionary approach is practiced in introducing new products by the Company. In our efforts to be proactive, we anticipate possible health or environmental risks in advance and take apt measures to address them. This is why we adopted CFC-free gas at a very early stage and used zero ozone impact R600a natural refrigerants. We were prompted to adopt these measures out of our concern towards the environment.

Our voluntary partnership with the Central Environmental Authority in the National Cooperate E-Waste Management Project was driven by this same conviction. As detailed in the Social and Environmental Capital section, we are forerunners in e-waste collection. We also attempt to increase the recyclable content of all our products and packaging. This is the reason we substituted Styrofoam with natural recycled paper packaging, well before it was regulated.

ComplianceSinger Sri Lanka’s Annual Report for 2018/19 adopts the Global Reporting Initiative (GRI) Guidelines and covers the economic, environmental and social performance for the financial year ended 31st March 2019.

Our first Report based on GRI G3 Guidelines was published in 2010. Thereafter, in 2013 we adopted GRI G3.1 Guidelines to report our sustainability performance. The 2015 Annual Report was based on GRI G4 Guidelines. This report is prepared in accordance with the requirements of the Global Reporting Initiative “In accordance” – Core Guidelines.

Messrs. Ernst & Young provides sustainability assurance for the organisation.

ComparabilityThe basis for reporting on subsidiaries, joint ventures and other entities, leased facilities, outsourced operations as well as any restatements and significant changes from previous reporting periods in the scope, boundary or measurement methods are disclosed where appropriate. They are in compliance with the reporting standards disclosed in the Financial Reports.

QueriesWe will be pleased to respond to any queries on this Report. You may contact:

Finance Division,Singer (Sri Lanka) PLC,No. 112, Havelock Road,Colombo 5.

5SINGER AT A GLANCE

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SINGER AT A GLANCE

AS THE UNDISPUTED LEADER IN THE CONSUMER DURABLES MARKET OF SRI LANKA, SINGER

SRI LANKA IS PERFECTLY POSITIONED TO INNOVATE, EXCITE, AND MAINTAIN OUR DOMINANT POSITION

WELL INTO THE FUTURE.

6VISION/MISSION/

VALUES AND OBJECTIVES

8HISTORY

9HIGHLIGHTS 2018

10REVIEW PERIOD

AT A GLANCE

12AWARDS AND

ACCOLADES

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SINGER AT A GLANCE

HISTORY

1851Isaac Merrit Singer incorporated I. M. Singer & Company (Singer) and commenced production of sewing machines in the United States.

1877Singer commenced operations in Sri Lanka introducing sewing machines.

1974Incorporated as a Limited Liability Company.

1981Listed in the Colombo Stock Exchange.

1988Singer commenced manufacturing refrigerators in Sri Lanka through Regnis (Lanka) PLC.

1992Singer commenced manufacturing of furniture and agricultural products at the Piliyandala factory.

1998First Singer Mega store opened in Sri Lanka.

2000Acquired the local brand, SISIL.

2001First Singer Homes store opened in Sri Lanka.

2004Established Singer Finance (Lanka) PLC.

2010Singer Finance (Lanka) PLC listed via Rs. 400 million IPO.

2011Singer entered large scale smart phone business in Sri Lanka.

2013Subsidiary Company Regnis (Lanka) PLC introduced a range of refrigerators with R600a refrigerant technology (Natural hydro-carbon technology) being the first Company in South Asia.

2016Conducted a group restructuring and acquired majority stakes of Regnis (Lanka) PLC and Singer Industries (Ceylon) PLC from its common parent, Retail Holding Sri Lanka BV (Formerly known as Singer (Sri Lanka) BV).

2017Hayleys PLC, acquired the controlling stake of Singer (Sri Lanka) PLC, making Hayleys PLC the parent company of Singer with effect from 15th September 2017.

2018Changed the Financial year of the Company to 31st March with the approval of the Registrar of Companies.

2019Singer Head Office and Registered Office was located to No. 112, Havelock Road,Colombo 5.

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AWARDS AND ACCOLADES

Peoples Durable Brand of the Year 2019

Peoples Award – SLIM Nielsen People’s Brand of the Year 2019

Great Place to Work – Sri Lanka’s Top 25 Best Companies to work for

Elite member in “Hall of Fame”

Dell partner awards – Best distributor of the year

Gold Award – Trading Category: The Institute of Chartered Accountants, Sri Lanka

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SINGER AT A GLANCE

HIGHLIGHTS

Current financial period 2018/19 – Twelve months period from 1st April 2018 to 31st March 2019.

Comparative financial period 2017/18 – Fifteen months period from 1st January 2017 to 31st March 2018.

Group Company

For Twelve months ended

31st March 2019Rs. ’000

For Fifteen months ended

31st March 2018 Rs. ’000

Increased/(Decreased)

%

For Twelve months ended

31st March 2019Rs. ’000

For Fifteen months ended

31st March 2018 Rs. ’000

Increased/(Decreased)

%

Group Revenue – Net 58,505,395 65,122,305 (10.2) 43,617,889 50,910,033 (14.3)

Net Finance Cost 3,033,076 2,531,375 19.8 2,320,956 2,149,727 8.0

Profit Before Tax 672,129 2,049,052 (67.2) 88,713 1,105,879 (92.0)

Profit For the Period 385,981 1,220,295 (68.4) 140,550 999,023 (85.9)

Total Comprehensive Income for the Period (Net of Tax) 1,006,328 691,655 45.5 447,850 794,117 (43.6)

Stated Capital 626,048 626,048 – 626,048 626,048 –

Revenue Reserves 5,035,831 5,495,478 (8.4) 2,851,601 3,326,088 (14.3)

Capital Reserves 1,118,123 577,919 93.5 1,158,333 847,555 36.7

Statutory Reserves 163,096 136,009 19.9 – – –

Non-Controlling Interest 1,508,546 1,349,114 11.8 – – –

Total Equity 8,451,644 8,184,569 3.3 4,635,982 4,799,692 (3.4)

Property, Plant & Equipment – Net 6,704,649 5,649,424 18.7 3,498,021 3,082,598 13.5

Other Investments 17,061 17,061 – 616,203 929,110 (33.7)

Net-Current Assets 4,101,153 327,895 1,150.8 5,288,761 675,683 682.7

Gross Dividends* N/A N/A – 244,159 826,383 (70.5)

Dividend per Share – Rs. N/A N/A – 0.65 2.20 (70.5)

Dividend Payout Ratio – % N/A N/A – 1.74 0.83 110.0

Earnings per Share – Rs. 0.67 2.78 (76.0) 0.37 2.66 (85.9)

Price Earnings Ratio – times N/A N/A – 66.81 15.12 342.0

Net Assets per Share – Rs. 18.48 18.20 1.6 12.34 12.78 (3.4)

Market Price per Share – Rs. 31st March 2019 – (31st March 2018) N/A N/A – 25.00 40.20 (37.8)

Net Income to Net Turnover – % 0.66 1.87 (64.8) 0.32 1.96 (83.6)

Return on Average Net Assets/Equity – % 4.64 13.76 (66.3) 2.98 18.62 (84.0)

Debt Ratio – % 68.21 83.82 (18.6) 87.51 85.89 1.9

Debt to Equity 3.32 3.62 (8.3) 4.49 3.54 26.9

Gearing Ratio (Times) 0.77 0.79 (2.4) 0.83 0.79 4.7

Interest Cover (Times) 1.21 1.76 (31.3) 1.03 1.44 (28.5)

Dividend Cover (Times) N/A N/A – 0.58 1.21 (52.4)

Current Ratio (Times) 1.12 1.01 10.6 1.23 1.03 19.8

Acid Ratio (Times) 0.72 0.65 10.2 0.70 0.59 18.0

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HIGHLIGHTS

Financial Capital

Employee Capital

Social and Environmental Capital

Institutional Capital

Customer Capital

Rs. 58,505 million

2,798 Employees

CSR – Dedicated to improve education, sports and health.

442 retail shops across the country

over 9 million customers

Rs. 0.67

Core Competences

unmatched after sales services

Rs. 672 million

5th consecutive year singer recognised as “Great Place to Work”

Multiple brands, products portfolio

and multiple financing options

over 1.3 million loyalty members

Rs. 0.65

Unique culture

Group revenue Group profit before tax Group earnings per share dividend per share

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SINGER AT A GLANCE

REVIEW PERIOD AT A GLANCE

2018

AprilUpgraded satellite shop in Ginigathhena to Singer Plus showroom and opened a new satellite shop in Katupotha.

MayOpened a new service centre in Vauniya.

JuneOpened a SISIL shop in Galewela and upgraded satellite shop in Thalawa to Singer Plus showroom.

JulyAnnual Digital Media Convention 2018.

5th Installation Ceremony of Singer Rotaract Club.

Upgraded satellite shop in Kosgama to Singer Plus showroom.

AugustOpened a Singer Plus showrooms in Puthukkuduirippu and upgraded satellite shop in Kodikamnam to Singer Plus showroom.

SeptemberAnnual Fashion Show and Awards Ceremony.

Launched of new Sony Audio Range.

Upgraded satellite shop in Kalawana to Singer Plus showroom.

October8th Installation Ceremony of Singer Sri Lanka Toastmasters Club.

Singer Finance Annual Awards Ceremony.

Launched Sony “BRAVIA OLED” TV.

NovemberSinger Life Style Fiesta – 2018.

Launched Singer Epic AI TV Kids Art Competition.

DecemberOpened a new SISIL shop in Moratuwa. Upgraded two satellite shops in Polpithigama and Diyathalawa to Singer Plus showroom and opened a new satellite shop in Labuduwa.

2019

JanuaryAnnual religious ceremony.

FebruaryOpened a new SISIL shop in Hingurakgoda. Upgraded satellite shop in Natthandiya to Singer Plus showroom.

MarchWon “People’s Brand of the year” for the 13th consecutive year and “Durable Brand of the Year” at Slim-Nielsen Peoples Awards.

Opened three Singer Plus showrooms in Moratuwa, Gampola, and Kurunegala and opened a new satellite shop in Tissapura. Opened new Mega shop in Kaduwela.

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SINGER’S LEADERSHIP

SINGER IS LED BY LEADERSHIP DEDICATED TO MAXIMISING LONG-TERM VALUE TO ALL OUR

STAKEHOLDERS. OUR BOARD DETERMINE THE STRATEGY AND DIRECTION OF THE COMPANY AND

OVERLOOK ITS EXECUTION WHILE MANAGING RISK.

14CHAIRMAN’S

MESSAGE

16CEO’S REVIEW

18BOARD OF

DIRECTORS

22MANAGEMENT

TEAM

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5SINGER AT A GLANCE

CHAIRMAN’S MESSAGE

Singer Sri Lanka will continue to build the pipeline towards future growth and will ensure that the “Singer” brand name continues to be in the hearts and minds of the people.

Dear Shareholder,

I am pleased to present the Annual Report and Audited Financial Statements of Singer (Sri Lanka) PLC for the Financial Year 2018/2019.

The year under review was a challenging year. Lower growth in GDP and per capita income together with continuous drought in the dry zone of the country in first half of the year coupled with political instability during the latter part of the year 2018 adversely affected consumer purchasing power of large market segment. Depreciation of Sri Lankan Rupee against the US Dollar was one of the key adverse impacts, due to the lagging effect to adjust the market prices. The Interest rates too remained at a higher levels than expected.

All these facts resulted in an adverse impact to the local Consumer Durables industry, in which Singer Sri Lanka operates. The Consumer Durables industry is more susceptible to market and economic conditions than other business sectors. When the customer’s disposable income and markets sentiments decrease, the demand for consumer durables is well below that of the general market and vice versa.

PerformanceThe Singer Group recorded a revenue of Rs. 58.5 billion for the twelve-month period 2018/19, compared to Rs. 53.1 billion for same period in the prior year with a growth of 10% , whilst

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CHAIRMAN’S MESSAGE

compared to Rs. 65.1 billion revenue during the fifteen month period of 2017/2018 as appears in the Financial Statements given in page 176.

The Group posted an Operating profit of Rs. 3,997million for the twelve months ending 31st March 2019 and a profit of Rs. 672 million before tax and Rs. 386 million after tax for the twelve month period compared to Profit Before Tax of Rs. 2,049 million and Profit After Tax of Rs. 1,220 million for the fifteen month period in prior year.

OutlookSinger (Sri Lanka) Group is the largest retailer, financier and manufacturer of consumer durables in Sri Lanka, with 442 retail stores and a fast growing online e-commerce platform representing a wide range of international consumer durable brands. The company also serves over 2,800 dealers/sub retailers. It is also renowned for its after-sales service network with 14 Regional Service Centres and over 300 service agents. Apart from its household brands, the company is exclusive distributor for many well-known international consumer durable brands.

Despite the externalities having negatively impacted the business, Singer Sri Lanka will continue to build the pipeline towards future growth and will ensure that the “Singer” brand name continues to be in the hearts and minds of the people, by expanding the customer base through our branch network; serving Singer’s customers by providing innovative and exciting product offerings together with a greater shopping experience.

Key StrategiesSinger Sri Lanka enjoys market leadership in many categories. Over the last 140 years, Singer has remained the market leader in sewing machines and today it has successfully branched out to be the market leader in consumer durables – namely in refrigerators, televisions, fans, and small appliances etc. Today Singer is the market leader in smartphones, domestic computers and laptops in Sri Lanka, a product that is closely associated with the youth of this country.

Furniture will be a key focus area going forward, and many initiatives are in place to enhance competitiveness. The company intend to partner with new suppliers, to introduce world class brands along with a wider range to suit the needs of our customers. The Company will step up its efforts in e-commerce, where we have introduced web access to all stores. Singer Sri Lanka has to contend with an intense competition from both large and established retailers as well as a growing wholesale trade with many new players joining the industry encouraged by open market access to imports of home branded or generic brand products. The Consumer durables and mobile phone pricing in the market place is very competitive. However, we would differentiate with our quality offering and after sales service. We encourage competition, as it makes us be ahead of our strategies, ensuring that we are neither complacent nor satisfied with mediocrity. Leveraging the trust in the Singer brand and offering customers a wide range of consumer durables along with outstanding customer service and after sales service are Singer’s key differentiation factors which has enabled us to build trust and long-lasting relationships with our customers.

The financing arm Singer Finance (Lanka) PLC which commenced operations in 2004 has evolved as a medium to large scale Finance Company in the last decade. The Company performed reasonably well despite the intense competition. Total assets of Singer Finance grew by 21.1% to Rs. 19.5 billion, YoY to 31st March 2019. Over the years, Singer Finance was conservative in their growth plans. However, this notion has changed after Hayleys PLC took over the ownership of Singer Sri Lanka PLC; Singer Finance has now more ambitious plans of branch expansion, where the company expanded its presence by opening 4 new branches and relocating 3 window operations.

In the year under review, macro-economic conditions were not as conducive for the industry due to multiple reasons as elaborated earlier and the new tax levy imposed directly on the financial sector.

The country faced an unexpected tragedy with terrorist attacks by an extremist group on the Easter day – 21st April 2019. The impact of this attack was severe and perhaps the most sever in this decade. The country needs to recover fast from this setback, where I am hopeful of the capability and resilience of Sri Lankans to bounce back from tragedies as proven throughout our history. I take this opportunity to thank Mr. Asoka Pieris former Group Chief Executive Officer for his contribution, long service and leadership during his tenure at the Company. I welcome Mr. Mahesh Wijewardene to the Group as Chief Executive Officer. Mr. Mahesh Wijewardene has been with Singer for 22 years and I wish him continued success with the Singer Group.

I would like to acknowledge Mr. Gavin Walker’s contribution to the company on his resignation from the Board after serving as a Director to the Board from year 2005 and pleased to welcome Ms. Otara Gunewardhana as Non-Executive Director to the Board.

Mr. Stephen Goodman who was reappointed to the Board on 26th June 2018 has intimated that he does not wish to present himself for reappointment at the forthcoming Annual General Meeting and would thus cease to be a Director on conclusion of the Annual General Meeting on 25th June 2019. I take this opportunity to acknowledge his contribution and long service to the Board and Singer Group.

I place my appreciation to all Senior Management Team, and all staff members for their continued dedication and commitment. I wish to express my heartfelt gratitude to the members of the Board for their support and commitment. Last but not least, I thank our customers and shareholders for their continued trust in Singer (Sri Lanka) PLC.

Sincerely,

Mohan PandithageChairman

16th May 2019

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5SINGER AT A GLANCE

CEO’S REVIEW

The year under review proved to be a challenging year due to sluggish market conditions impacted by many macro-economic factors. Despite this, Singer was able to grow the top line by 10% to reach Rs. 58.5 billion in revenue compared to the twelve months period 2017/18 a commendable achievement under tough conditions. Our margins were impacted due to a variety of factors including rising interest rates, pricing under low consumer disposable income to maintain volumes in a weak market. Being reliant on imports, the devaluation of the Sri Lanka Rupee was not favourable to us and change to new accounting standard (IFRS 9 and 15) with additional provisioning requirements.

Since assuming my position as Chief Executive Officer in November 2018, our overall approach has been to create a company that runs on the highest professional and global standards which we firmly believe is the way to thrive in markets. We have focused on every individual operation in detail and established a stringent set of KPIs to achieve. We are gradually aligning ourselves to most of the strategies we set out for ourselves and happy to note that our efforts over the past several months have turned out positive results. We believe that an improved market condition will trigger these KPI’s to deliver much stronger results in future.

2018 also marked a year since Hayleys PLC acquired Singer (Sri Lanka) PLC, and it has been an extremely productive year

Since assuming my position as Chief Executive Officer in November 2018, our overall approach has been to create a company that runs on the highest professional and global standards which we firmly believe is the way to thrive in markets.

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CEO’S REVIEW

of business synergies as well as establishing strategies for us to align ourselves to some group strategies. Singer expanded the diversification of the conglomerate into a new retail segment and we anticipate certain synergies as being part of a large conglomerate; there will be many opportunities for us to work together. Day-to-day operations, administrative, and HR functions stand to benefit from the sharing of knowledge and best practices. As of now, approximately 60% of our logistics are managed by Hayleys Advantis, and Singer has been able to conduct sales for the majority of employees from the Hayleys Group. We continue to seek further synergies and efficiencies between the companies.

During the past year, we took a more proactive stance towards the future of Singer Sri Lanka with regard to our operations and performance. We are consolidating our retail channels by converting SISIL World stores into Singer Plus stores. The wholesale channel operation was restructured to better manage those operations and achieve increased operational efficiencies. We also looked to lower administrative costs without negatively impacting functionality. We are looking to extend our reach to more townships, building further on our strength of having one of the largest branch networks in the country; retail spaces in certain areas also received significant enhancements. We see increasing potential from e-commerce and will place a greater focus on having a more efficient online platform. Although our primary strength has been as a brick and mortar retail business, the increasing importance of online shopping and how customers are embracing new channels for shopping cannot be ignored. We will give more focus on B2B and commercial business, as there is immense potential to develop the channel to cater to the needs of corporate clients with complete solutions. A more customer-oriented approach is being driven across the company that will help to differentiate us from the rest of the industry; as products become more and more commoditised, a well-trained and knowledgeable salesforce and after sales support will bring us that extra advantage. We will continue to expand our product portfolio, improve product mix and margins, and look to have more product diversification to cater to different industries, such as agricultural and heavy equipment, and IT equipment solutions.

We are looking at a rapid expansion of Singer Finance from a med size company to reach to big league. Singer Finance has gained a very good name and a reputation in the industry and we are confident that they will boost their position in the market. Our factories are now geared to bring in new technologies and introduce new/advanced products at a faster pace. We have already lined up a new range of world-class and cost-competitive refrigerators and washing machines line-up for the coming year from Regnis. The Furniture factory is focused on their production output, quality, and competitiveness of their products in the marketplace; we see great opportunities in the market for pantry cupboards. The Call Centre is now being used as an integrated operational division of the Company to support many other functions such as after sales service,

quality assurance, and online sales. We are investing in process development, particularly for logistics management, demand planning and forecasting. We will also be revamping the website with the assistance of foreign consultants to take our online business to the next level.

Singer has long had Corporate Social Responsibility (CSR) initiatives, particularly in the areas of education, health, and youth development. What we intend to do now is to focus on those sectors in a more structured and sustainable manner. We have recruited a dedicated person who will work on the sustainability of the Company and as part of that initiative, we will bring more focus to those areas of CSR. We are also taking greater responsibility in the disposal of e-waste by taking extended producer responsibility (EPR) seriously, that is to focus on the responsible disposal of our products beyond the period of ownership and usage by our customers.

Our continued performance, exemplary customer services, and CSR efforts were recognised in 2018. Singer Sri Lanka moved up a place to overall 11th position as one of the most valuable consumer brands in Sri Lanka and number one in the Retail sector (LMD Brands Annual). We were awarded for the 13th consecutive year as the “People’s Brand of the Year” at the SLIM-Nielsen People’s Awards, in addition to the “Consumer Durables Brand of the Year”. We also picked up the Gold award for our 2017 Annual Report in the Trading Companies category at the CA Sri Lanka Annual Report Awards.

I would like to acknowledge the direction and guidance of our parent company, Hayleys. Our Chairman and Co-Chairman have been extensively involved in developing strategies and helped greatly to drive their inputs into the Company; thank you for your continued confidence in Singer. Special thanks go to our former CEO, Mr. Asoka Pieris, for his services rendered to the Company spanning 26 years, eight of which he served as CEO; his efforts have undoubtedly helped to put Singer on the pedestal it is today. I extend my appreciation to our employees who have been supportive throughout this difficult year and helped to maintain our market leadership position, and we hope you will continue to take us forward in the coming year. I want to express my sincere gratitude to the Board of Directors and shareholders for having confidence in me to take the Company forward. Finally, I wish to express my appreciation to our customers for your continued support and loyalty to Singer, and we pledge to always serve you with the highest standards.

Sincerely,

Mahesh WijewardeneGroup Chief Executive Officer

16th May 2019

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5SINGER AT A GLANCE

BOARD OF DIRECTORS

Mr. Mohan PandithageExecutive Chairman

Joined to the Board of Singer (Sri Lanka) PLC on 2nd October 2017.

Joined Hayleys Group in 1969. Appointed to the Hayleys PLC Board in 1998. Chairman and Chief Executive of Hayleys PLC since July 2009. Fellow of the Chartered Institute of Logistics and Transport (UK). Honorary Consul of United Mexican States (Mexico) to Sri Lanka. Council Member of the Employers’ Federation of Ceylon. Member of the Advisory Council of the Ceylon Association of Ships’ Agents.

Recipient of the Best Shipping Personality Award by the Institute of Chartered Ship brokers, Excellence Leadership Recognition – Institute of Chartered Accountants of Sri Lanka; Honoured with life time achievement award at Seatrade – Sri Lanka ports, Trade and logistics; Life time award for most outstanding logistics and transport personality of the year Chartered Institute of Logistics Transport.

Mr. Dhammika PereraNon-Executive Co-Chairman


Mr. Dhammika Perera is the quintessential strategist and business specialist with interests in a variety of key industries including manufacturing, banking and finance, leisure, aluminum extrusion, packaging, plantations, lifestyle, healthcare, consumer and hydropower generation.

He has over 30 years of experience in building formidable businesses through unmatched strategic foresight and extensive governance experience gained through membership of the Boards of quoted and unquoted companies.

Mr. Perera is the Chairman of Vallibel One PLC, Royal Ceramics Lanka PLC, Lanka Tiles PLC, Lanka Walltiles PLC, The Fortress Resorts PLC, Vallibel Power Erathna PLC, Greener Water Ltd, Unidil Packaging Ltd, Delmege Limited, and LB Microfinance Myanmar Company Limited. He is the Co-Chairman of Hayleys PLC, and The Kingsbury PLC. Executive Deputy Chairman of LB Finance PLC, Deputy Chairman of Horana Plantations PLC. He is also an Executive Director of Vallibel Finance PLC and serves on the Boards of Amaya Leisure PLC, Haycarb PLC, Hayleys Fabric PLC and Dipped Products PLC.

Mr. Mahesh WijewardeneGroup Managing Director/ Group CEO

Joined to the Board of Singer (Sri Lanka) PLC on 1st June 2006.

Mr. Mahesh Wijewardene was appointed as an Executive Director and the Chief Executive Officer of Singer (Sri Lanka) PLC and its subsidiary companies with effect from 1st November 2018. Mr. Wijewardene holds a Master’s Degree in Business Administration from the University of Southern Queensland and received the Dean’s Award for Outstanding Academic Achievement. He also holds a Diploma in General Management from the Open University of Sri Lanka. Mr. Wijewardene is the past Chairman of the Ceylon Chamber of Commerce – Import section and Sri Lanka – China Business Council and is a member of the Hayleys Group Management Committee.

Mr. Mahesh Wijewardene has served on Singer (Sri Lanka) PLC board previously as an Alternate Director from 1st June 2006 to 31st October 2018.

Mr. Wijewardene serves as a Director of Singer Industries (Ceylon) PLC, Singer Finance (Lanka) PLC, Regnis (Lanka) PLC, Regnis Appliances (Pvt) Limited, Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Limited, Reality Lanka Limited, Domus Lanka (Pvt) Limited and CSR Lanka (Guarantee) Limited.

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BOARD OF DIRECTORS

Mr. Dumith FernandoIndependent Non-Executive Director


Mr. Fernando is Chairman of Asia Securities (Pvt) Ltd, a leading independent Investment Banking, Research and Stock Broking firm in Sri Lanka. Mr. Fernando has over two decades’ experience in international Investment Banking, based in New York and Hong Kong, with the U.S. bank JPMorgan Chase & Co. and the Swiss bank Credit Suisse AG. Previously, he was Managing Director and Group Chief Operating Officer for the Asia Pacific region at Credit Suisse – a business with over USD 2.5 billion in revenues across 12 countries.

Mr. Fernando is a Director of the Colombo Stock Exchange.

He holds a BA (Honors) in Physics and Economics from Middlebury College, U.S.A. and an MBA from Harvard Business School.

Mr. Mohamed Hisham JamaldeenIndependent Non-Executive Director


He is a finance professional with over 17 years of wide-ranging experience as a commercial property investor and advisor. He is a Fellow of the Association of Certified Chartered Accountants, UK and holds a Degree in Engineering and Business from the University of Warwick, UK. He is the Founder/Managing Director of Steradian Capital Investments (Pvt) Ltd, responsible for Financing, Corporate Structurers, Acquisitions’ and Development.

He serves as a Director of Singer Industries (Ceylon)PLC, Regnis (Lanka) PLC, Hayleys PLC, Talawakelle Tea Estates PLC, Haycarb PLC and Lanka Relity Investments PLC. He is also Executive Director of numerous real estate companies focusing commercial property investment and development.

Mr. Deepal SooriyaarachchiIndependent Non-Executive Director

Joined to the Singer (Sri Lanka) PLC Board on the 1st October 2015.

Mr. Deepal Sooriyaarachchi is a Chartered Marketer, a Fellow of the Chartered Institute of Marketing UK and holds an MBA from the University of Sri Jayewardenepura and an Accredited Master Coach and a Master Mentor.

Mr. Sooriyaarachchi, counts over thirty years of experience in the fields of sales, advertising, marketing, human resource development and strategy. He is a renowned Management Consultant Speaker Trainer Author and an Executive Coach and a Mentor. Before embarking on full time consultancy work he was the Managing Director of AVIVANDB Insurance PLC (now known as AIA Insurance). He had received extensive management training and exposure here and overseas including National University of Singapore, Asian Institute of Management and Stanford Business School USA.

Mr. Sooriyaarachchi serves as a Non-Executive Independent Director of; AIA Insurance Lanka PLC, Sampath Bank PLC, Pan Asian Power PLC. He is a consulting partner of RBL USA.

He is a Past President of the Sri Lanka Institute of Marketing, and a Past Commissioner of Sri Lanka Inventors Commission.

20


BOARD OF DIRECTORS

25BUSINESS MODEL



5SINGER AT A GLANCE

Mr. Dilip Kumar De Silva WijeyeratneIndependent Non-Executive Director

Joined to the Board of Singer (Sri Lanka) PLC on the 1st April 2018.

Mr. Wijeyeratne is an Associate member of The Institute of Chartered Accountants of Sri Lanka (ACA), Fellow Member of the Chartered Institute of Management Accountants, UK, (FCMA) and a Graduate Member of the Australian Institute of Company Directors (GAICD).

He moved as a finance professional to Price Waterhouse, Bahrain, and has extensive experience in audit and advisory services. Commenced a Banking career at HSBC Bank Middle East, as Head of Finance and Operations and latterly, was Head of Global Markets and Treasury for the group offices of HSBC Group in the Kingdom of Bahrain. A member of the Senior Management team. Responsible for Corporate Treasury Sales and management of Asset and Liability Management (ALCO) for three legal entities of HSBC group operating in Bahrain. In 2010, joined Third Wave International WLL (TWI) as an equity partner and CEO and embraced entrepreneurship. Leads a team of consultants and facilitates consultancy offerings in Financial Advisory, Human Resources, Marketing, Project and Quality Management, Research and Learning and Development to the private and public sector entities in Bahrain and Oman.

Mr. Wijeyeratne serves as a Non-Executive Director of Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC, Hayleys Fibre PLC and Sampath Bank PLC.

Ms. Otara GunewardeneIndependent Non-Executive Director

Joined to the Board of Singer (Sri Lanka) PLC on the 1st August 2018.

Ms. Otara Gunewardene rose to fame as Sri Lanka’s leading female entrepreneur, fashion icon and philanthropist. Her lifestyle store, Odel, became renown throughout Asia as a top retailer and Otara was the first female entrepreneur to take her company public in Sri Lanka in 2010.

After 25 years of hard work and dedication that spearheaded Odel as Sri Lanka’s number one department store, Otara sold her shares to Softlogic PLC in 2014, marking the end of a glorious era.

During her tenure at Odel, Otara initiated Embark – a brand that would be synonymous with street dog welfare in Sri Lanka. Otara revolutionised the idea of street dog welfare in Sri Lanka by using all profits from Embark’s brand and merchandise towards rescue and treatment operations. With the progression of Embark as an organisation that works towards rescuing, treating, rehoming and improving the lives of street dogs, Otara has also branched out to animal welfare in general, environmental conservation and social welfare through both Embark and the Otara Foundation.

Mr. Sarath GanegodaNon-Executive Director


Fellow Member of The Institute of Chartered Accountants of Sri Lanka and Member of the Institute of Certified Management Accountants of Australia. Holds an MBA from the Postgraduate Institute of Management, University of Sri Jayewardenepura. He has wide-ranging experience in several Senior Management positions in large private sector entities in Sri Lanka and internationally. He also served the Hayleys Group between 1987 and 2002 and re-joined in 2007. Mr. Ganegoda was appointed to the Hayleys Group Management Committee in July 2007.

Mr. Ganegoda serves as a Director of Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Regnis Appliances (Pvt) Limited, Singer Digital Media (Pvt) Limited, Reality Lanka Limited, Singer Business School (Pvt) Limited and Hayleys PLC since 2009 and has responsibility for the Strategic Business Development Unit of Hayleys PLC.

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101STEWARDSHIP



BOARD OF DIRECTORS

Mr. L.N.S. Kumar Samarasinghe Alternate Director to Mr. M.H. Jamaldeen

Re-appointed to the Board of Singer (Sri Lanka) PLC on 22nd January 2019.

Director – Marketing Singer (Sri Lanka) PLC. Holds a Diploma in Business Administration and Diploma in Marketing and MBA from University of London.

Mr. Samarasinghe has served on Singer (Sri Lanka) PLC Board previously as an Alternate Director from February 2011 to October 2018.

Mr. H.P. Sujeewa PereraAlternate Director to Mr. Mahesh Wijewardene

Re-appointed to the Board of Singer (Sri Lanka) PLC on 22nd January 2019.

Mr. Sujeewa Perera is the Factory Director of Singer (Sri Lanka) Factory complex in Piliyandala.

He joined the Singer Group in September 1994 as an Internal Auditor after completing articles at KPMG and joined Singer Sri Lanka Factory as an Assistant Accountant in June 1997 and risen through the Corporate ladder.

Mr. Perera has served on Singer (Sri Lanka) PLC Board previously as an Alternate Director from May 2016 to March 2018.

Mr. Lalith YatiwellaAlternate Director to Mr. S. Ganegoda

Joined the Board of Singer (Sri Lanka) PLC on 8th August 2014.

Director Finance of Singer (Sri Lanka) PLC. He is also a Director of Singer Digital Media (Pvt) Ltd., Singer Business School (Pvt) Ltd. Alternate Director of Singer Finance (Lanka) PLC.

Mr. Yatiwella is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and holds a BSc (Hons) Special Degree in Business Administration from the University of Sri Jayewardenepura.

Mr. S.H. GoodmanNon-Executive Director

Re-appointed to the Board of Singer (Sri Lanka) PLC on 26th June 2018.

Mr. Goodman is an Executive Director and Chairman of the Board of Sewko Holdings Limited and is Chairman of the Board of Singer Asia Limited. He is also Director, Chairman, President and Chief Executive Officer of Retail Holdings N.V. Mr. Goodman has held such similar positions within the Group since 1998. He holds a BS (Economics) from the Cornell University and an MA, Mph (Economics) from the Yale University.

Not in picture

22


25BUSINESS MODEL



5SINGER AT A GLANCE

Mr. G.A.K. WeerasuriyaSenior Manager – Inventory

Mr. D.B. WijesundaraDeputy Director – Marketing

Mr. T.G.S. PereraSenior Manager – Field Inventory Operations

Mr. M.I. CarderHead of Treasury and Investor Relations

Mr. L.A.D.K. PereraDirector – Information Technology

Mr. S. RamanathanDirector – Logistics

Mr. J. MendisCredit Director

MANAGEMENT TEAM

Mr. M.M.C. PriyanjithHead of Risk Management

Mr. A.P. ManorathnaDeputy Director – Services

Mr. T. AmarasuriyaChief Executive Officer – Singer Finance (Lanka) PLC

Mr. B.T.L. MendisDirector – Commercial

Mr. R. KulasuriyaDirector – Human Resources and Business Integration

Mr. V. TennakoonDirector – Sales

Mr. K.D.J.M. PereraDirector – Operations

Mr. A.U. KarunarathneSenior Manager – Merchandising and Promotions

Mr. I.A.S. KolombageCommercial Manager

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101STEWARDSHIP



MANAGEMENT TEAM

Mr. A.A. SathiyamoorthySenior Manager – Trade Credit

Mr. N.B. RanasingheSenior Manager – Revenue and Margin

Mr. T.L. SenaviratneSenior Manager – Information Technology

Mr. N.I. KuruppuarachchiSenior Manager – Legal

Mr. P. JayatilakeMarketing Manager – Electronics

Mr. S.H. PereraSenior Manager – Budget and Planning

Mrs. P.T.K. LiyanageFinance Manager

Mr. D.D.W. DassanayakeSenior Manager – Credit

Mr. S. SerasingheSenior Manager – Distribution

Mr. K.R.L. PereraGroup Administration Manager

Mr. V. GomesHead of Financial Services

Mr. T.J. MartynSenior Manager – Apparel Solutions

Mr. W. L.I.A. GunathilakeBusiness Development Manager – Mega and Singer Homes Channel

Mr. A.R.N.P.K. WijesundaraSales Manager – Agro and Transportation

Mr. K.P. PeramunugamageHead of Business School

Mr. L.R.P. PereraBusiness Development Manager – Retail Channel

24


MANAGEMENT TEAM

25BUSINESS MODEL



5SINGER AT A GLANCE

Mr. K.I.S. PereraBusiness Development Mananger – Whole Sale (South)

Mr. U. GanehiarachchiBusiness Development Manager – Whole Sale (North)

Dr. M. BalasuriyaHead of Regulatory and Quality Assuarance

Mr. T.U.S. Peiris Business Development Manager – SISIL Channel

Mr. M. HanasBusiness Development Manager – Digital Media

Mr. R.B. GaspeHead – Strategic Business Development Unit

Mr. E.R.A. SilvaBusiness Development Manager – Institutional Sales

Mr. K.D.S. KanishkaSenior Manager – Promotions

Mr. S.M.D.S.K. JayatilakeSenior Manager – Human Resources

Mr. G.T. GalagederageSenior Manager – Research and Development

Mr. T.W.S.M. PereraSenior Manager – Digital Media

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101STEWARDSHIP



BUSINESS MODEL

SINGER HAS ESTABLISHED A UNIQUE BUSINESS MODEL THAT ENCOMPASSES A VAST OFFERING OF BRANDS, PRODUCTS, AND SERVICES, AFFORDING

UNPARALLELED CHOICE TO OUR CUSTOMERS.

26OPERATING

ENVIRONMENT

31STAKEHOLDER ENGAGEMENT

33MATERIALITY

26




BUSINESS MODEL

5SINGER AT A GLANCE

OPERATING ENVIRONMENT

The global economy declined in 2018 to a projected 3.7% growth, a result of the decline in trade and manufacturing activity following trade tensions between major economies. Growth in advanced economies continued to decline, hitting 2.2% in 2018 against 2.3% in 2017, due to slower net export activity in the Euro area and fiscal stimulus in the United States. Borrowing costs for emerging market and developing economies (EMDEs) increased as the US Dollar strengthened, energy prices fluctuated, financial market volatility increased, and risk premiums rose, leading to increased capital outflows and currency pressures. Growth for EMDEs declined to an estimated 4.2%.

While South Asia is the fastest growing region in the world at an estimated economic growth of 6.9% in 2018, Sri Lanka faced challenges that hindered economic growth from reaching its potential, falling short of IMF projections of 4.2% to a recorded 3.2%, down from 3.4% in 2017.

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101STEWARDSHIP




While South Asia is the fastest growing region in the world at an estimated economic growth of 6.9% in 2018, Sri Lanka faced challenges that hindered economic growth from reaching its potential, falling short of IMF projections of 4.2% to a recorded 3.2%, down from 3.4% in 2017. The country’s service industry and agriculture industry largely supported growth at 4.7% and 4.8% respectively. Consumption and investment expenditure also supported growth. The total size of the Sri Lankan economy was estimated at USD 88.9 billion and per capita GDP at USD 4,102. The country faced additional burdens from a period of political instability towards the end of 2018 which led to increased pressure on exchange rates and a downgrade in the Sovereign rating. Despite a growth in export earnings, import expenditure increased, leading to the trade deficit crossing USD 10 billion. The Central Bank and Government addressed the widening trade deficit by increasing tariffs on non-essential imports, imposing margin requirements, tightening loan-to-value ratios on certain types of lending, and suspending the issuance of letters of credit on concessionary permits for vehicle imports.

Government regulations imposing a 100% cash margin on the import of most consumer durables affected the operating cash flows of Sri Lankan consumer durable retailers. Demand for consumer durables had considerably declined towards the end of 2018 as a result of the country’s lowered discretionary income levels and rise in interest rates. Retailers were compelled to absorb some costs to stay competitive and reduce the impact on demand but had to endure even weaker operating margins. The measures applied to finished goods, however, which gave Singer an advantage due to its large local assembly operations for refrigerators and washing machines. Middle income earners were pressured to be more conservative with their spending, leading to the market for electrical goods to decline between 10%-20% by the first quarter of 2019.

The first quarter of 2019 also saw the measures the Government implemented help the Sri Lankan Rupee to appreciate against major currencies and the IMF resumed the Extended Fund Facility (EFF) arrangement, helping to improve investment sentiments. However, the country continues to face a challenging operating environment which will lead to conservative outlooks for the remainder of 2019.

Business Model/Strategy and Execution HistoryThe history of Singer goes back to the introduction of sewing machines in 1851 by the Singer Corporation. Singer embarked on the journey of establishing itself as a leader in the local consumer durables industry in 1877 when it started the sale of home appliances in Sri Lanka, and was incorporated as a public liability company, Singer (Sri Lanka) PLC, in 1974. The Company was listed under the Colombo Stock Exchange in January 1981.

The finance subsidiary of Singer (Sri Lanka) PLC, Singer Finance, was incorporated in 2004. Subsidiary companies, Regnis (Lanka) PLC and Singer Industries (Ceylon) PLC, manufacture washing machines, refrigerators, and sewing machines.

In September 2017, Hayleys PLC and its subsidiaries acquired 61.73% of shares in Singer (Sri Lanka) PLC in what was the single largest acquisition for a listed company in Sri Lanka in recent history. Hayleys PLC made a mandatory offer thereafter in October 2017, and holds 80.96% of the total shares in issue at the first stage of acquisition. The acquisition has been a smooth transition for both companies owing to similar cultures and opportunities for business synergies. On 15th October 2018, Hayleys PLC purchased the balance 35,562,883 (9.47%) ordinary shares held by Retail Holdings (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47.00 per share upon Retail Holdings (Sri Lanka) BV exercising their option to sell its shares to Hayleys PLC as previously agreed at the time of the Mandatory Offer made in 2017. After accepting this offer, Hayleys PLC together with its Group Companies holds 90.43% of Singer (Sri Lanka) PLC.

The combined companies share over 280 years of experience in the Sri Lankan market.

Operational StructureThe Singer Group comprises nine companies and a separate manufacturing division.

Singer (Sri Lanka) PLC and Singer Digital Media (Private) Limited serve as the Sri Lankan distributors for its home brands of “Singer” and “SISIL” and several major international brands, and purchase materials and components from overseas suppliers. Additionally, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, and Regnis Appliances (Pvt) Limited purchase materials and components from overseas suppliers. The rest of Singer (Sri Lanka) PLC’s operations fall exclusively within Sri Lanka.

The Singer Group is spread across every geographical region in Sri Lanka. During the year, we opened 11 new showrooms in Puthukudirippu, Kurunegala, Galewela, 2 shops in Moratuwa, Hinguruakgoda, Kaduwela, Gampola, Katupotha, Labuduwa and Tissapura. 8 Singer Plus stores received upgrades.

28





BUSINESS MODEL

5SINGER AT A GLANCE

Financial Capital For Investors

Employee Capital

For Suppliers and Business Partners

Customer Capital

For Government


For Customers

For Society and environment


For Employees

zz Shareholders’ fundszz Borrowed fundszz Customer Deposits

zz Growthzz Profitszz Dividend

zz Stabilityzz Dividends and interest zz Capital gains through share price

appreciationzz A loyal shareholder basezz Growth in market share

zz 2,798 employeeszz Core competencieszz Company unique culturezz Great place to work

zz Access to Singer’s branch networkzz A market place for their productszz Standards and assurance

certificationszz Long-term relationship and security

zz A market placezz Growth opportunitieszz An integrated supply chainzz Undisputed relationship

zz Customer base of millions of Sri Lankans and hire purchase customers

zz Over one million loyalty card memberszz Singer call centre and Facebook fanszz Reputed after sales servicezz Over 1,080 dealers and distributorszz 14 Service centres and 384 service

franchise agents

zz Taxes, duties and levieszz Economic opportunities

zz Tax revenuezz Economic growthzz Employmentzz Innovation

zz Landzz Waterzz Energyzz Air

zz Quality products and serviceszz Flexible financing options for purchaseszz Payment of utility bills through

branch networkzz Unmatched after sales serviceszz Better return, trust and security on

customer deposits

zz A loyal and satisfied customer base

zz Choice of products and serviceszz Affordabilityzz Enhanced living standardszz Peace of mind

zz Better return for deposit holders

zz Community investmentszz Shared value

zz Community developmentzz Environmental consciousnesszz Financial inclusionzz “Social license” to operate

zz Strong Peoples Brand of the countryzz Strong house brandszz 442 retail networkzz Product portfoliozz Distribution rights for renowned brandszz Property, plant and equipmentzz Maintains real time ERP system and

Data basezz Suppliers and business partnerszz Awards and accoladeszz Credit ratingszz Unique hire purchase system to

provide customer financing

zz Remuneration and benefitszz Training and developmentzz A Great Place to Work

zz Reputation and ethical practises

zz A satisfied workforcezz Career developmentzz Realised “dreams”zz Work life balancezz Ethical practise zz Reputation

Res

ourc

es p

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ults

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Impa

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out

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Inputs

Operating Environment

Processes

Outputs Outcomes

Reg

ulat

ory

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ronm

ent

Gov

erna

nce

Fram

ewor

k

Registrar of

Com

paniesInternal Controls

Board C

hartersVision

Mission

ValuesS

trategic Imperatives

Articles of A

ssociation

Colom

bo Stock

ExchangeC

entral Bank

of Sri Lanka

Singer

Sri Lanka

Singer

FinanceS

inger D

igital Media

Singer

Industires

Cor

pora

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Cod

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Eth

ics

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anag

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Singer B

usiness S

chool

Central Environm

ental A

uthorityA

nti-competitve regulations

(Fair Trading Com

mission A

ct)

Activities undertaken for value creationzz Trading

zz Financial services

zz Manufacturing

zz Assembling

zz Educational services

29


101STEWARDSHIP




Financial Capital For Investors

Employee Capital

For Suppliers and Business Partners

Customer Capital

For Government


For Customers

For Society and environment


For Employees

zz Shareholders’ fundszz Borrowed fundszz Customer Deposits

zz Growthzz Profitszz Dividend

zz Stabilityzz Dividends and interest zz Capital gains through share price

appreciationzz A loyal shareholder basezz Growth in market share

zz 2,798 employeeszz Core competencieszz Company unique culturezz Great place to work

zz Access to Singer’s branch networkzz A market place for their productszz Standards and assurance

certificationszz Long-term relationship and security

zz A market placezz Growth opportunitieszz An integrated supply chainzz Undisputed relationship

zz Customer base of millions of Sri Lankans and hire purchase customers

zz Over one million loyalty card memberszz Singer call centre and Facebook fanszz Reputed after sales servicezz Over 1,080 dealers and distributorszz 14 Service centres and 384 service

franchise agents

zz Taxes, duties and levieszz Economic opportunities

zz Tax revenuezz Economic growthzz Employmentzz Innovation

zz Landzz Waterzz Energyzz Air

zz Quality products and serviceszz Flexible financing options for purchaseszz Payment of utility bills through

branch networkzz Unmatched after sales serviceszz Better return, trust and security on

customer deposits

zz A loyal and satisfied customer base

zz Choice of products and serviceszz Affordabilityzz Enhanced living standardszz Peace of mind

zz Better return for deposit holders

zz Community investmentszz Shared value

zz Community developmentzz Environmental consciousnesszz Financial inclusionzz “Social license” to operate

zz Strong Peoples Brand of the countryzz Strong house brandszz 442 retail networkzz Product portfoliozz Distribution rights for renowned brandszz Property, plant and equipmentzz Maintains real time ERP system and

Data basezz Suppliers and business partnerszz Awards and accoladeszz Credit ratingszz Unique hire purchase system to

provide customer financing

zz Remuneration and benefitszz Training and developmentzz A Great Place to Work

zz Reputation and ethical practises

zz A satisfied workforcezz Career developmentzz Realised “dreams”zz Work life balancezz Ethical practise zz Reputation

Res

ourc

es p

ut in

to th

e pr

oces

ses

Res

ults

gen

erat

ed th

roug

h th

e pr

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ses

Impa

ct o

f the

out

puts

on

the

stak

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ders

Inputs

Operating Environment

Processes

Outputs Outcomes

Reg

ulat

ory

Envi

ronm

ent

Gov

erna

nce

Fram

ewor

k

Registrar of

Com

paniesInternal Controls

Board C

hartersVision

Mission

ValuesS

trategic Imperatives

Articles of A

ssociation

Colom

bo Stock

ExchangeC

entral Bank

of Sri Lanka

Singer

Sri Lanka

Singer

FinanceS

inger D

igital Media

Singer

Industires

Cor

pora

te

Gov

erna

nce

Cod

e of

Eth

ics

Ris

k M

anag

emen

t Fr

amew

ork

Regnis

Group

Singer B

usiness S

chool

Central Environm

ental A

uthorityA

nti-competitve regulations

(Fair Trading Com

mission A

ct)

Activities undertaken for value creationzz Trading

zz Financial services

zz Manufacturing

zz Assembling

zz Educational services

30





BUSINESS MODEL

5SINGER AT A GLANCE

Unique Business ModelSince its inception, Singer has branched out from a single product to a wide range of products aimed at satisfying modern consumer needs in the area of consumer durables. This is the result of Singer having developed a unique business model, one that no competitor has been able to successfully emulate, be it our culture or processes.

The origins of Singer (Sri Lanka) PLC go back to 1877 to a small store based in Pettah. Singer (Sri Lanka) PLC’s parent company established in parallel Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC, while Singer (Sri Lanka) PLC established the Singer (Sri Lanka) Piliyandala Factory between 1963 to 1995, leading to an impressive line of locally manufactured/assembled items – sewing machines, televisions, refrigerators, washing machines, solid and layered furniture, and domestic/agro water pumps.

Singer ventured into the field of financial services, initially offering hire purchase financing to its customers and later establishing a finance company. Singer Finance (Lanka) PLC offers customers the convenience of settling utility bills from any Singer store island wide. More recently, Singer ventured into the e-commerce business via company owned website “Singersl.” facilitating for e-commerce online purchase of products from any part of the country or world through Internet access. The Company has seen a lot of success as a result of this unique business model encompassing a vast offering of brands, products, and services, affording unparalleled choice to the customer.

Strategy and ExecutionBeyond Singer’s unique business model, its strategy and its execution are instrumental to defining its success. The Company has a large and knowledgeable workforce, skilled, and experts in the fields of retail, manufacturing, and finance. This workforce is adept at escalating ideas and first-hand operational information to top management, essential for formulating strategies and making decisions to meet customer needs effectively. The business model enables the flow of information through to key decision-makers in a timely manner, thus facilitating information to be analysed and utilised in time to achieve successful results.

Multi-brand StrategySinger Sri Lanka has consciously embraced a multi-brand strategy that leverages the brand equity of Singer. This opens up multiple segments of Sri Lankan consumers to Singer, enabling us to target different demographics through a variety of high quality, market leading, innovative products at affordable prices and achieving economies of scale through our wide network of distribution channels. This strategy has enabled us to strengthen our brand by enhancing customer

associations and perceptions. These efforts have culminated in Singer’s eminent position in the Sri Lankan consumer durables retail market.

Through over 40 world renowned brands, Singer offers customers of any social strata the widest range of products and services that cater to their lifestyles, tastes, expectations, and aspirations. The result is that we deliver unprecedented value to our customers, helping them to raise their living standards.

Singer Omni Channel PresenceSinger’s extensive network of distribution channels across Sri Lanka is one of the most comprehensive distribution networks in the nation. It is an invaluable asset that few other corporates can claim to match.

From conventional bricks and mortar stores to electronic channels, the distribution network encompasses a variety of channels that enable customers to purchase goods in a manner most convenient to them. The omni channel strategy has allowed us to offer multiple brands and a wide range of products and services in tandem with emerging consumer tastes and preferences and the rapid pace of development in information and communications technology.

Furthermore, Singer has prioritised the development of e-commerce channels to offer more convenience to customers. While this addresses the changing preferences of our customers, it also enables us to realise operational efficiencies from a corporate perspective.

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101STEWARDSHIP



Stakeholder IdentificationWe identify our stakeholders as individuals or groups who can affect the value creation process of the Company over time. These stakeholders may significantly be affected by our business operations, and likewise their actions may have an impact on our ability to achieve our objectives.

Accordingly, we have identified our primary stakeholders to be our customers, employees, shareholders, suppliers, community, and Government authorities. Other key stakeholders can include bankers, financial institutions, depositors, assurance services providers and competitors.

STAKEHOLDER ENGAGEMENT

Stakeholder EngagementSinger actively seeks to ascertain valuable feedback through open dialogue with internal and external stakeholders. Details of how we engage with our stakeholders are provided throughout this Report. Continuing our GRI journey, we are engaging with our stakeholders this year through our GRI Standards reporting and CSR programmes. This will help us to obtain more specific feedback on our approach, which will be shared in future reports.

Stakeholder Method of engagement Frequency

Customers Advertising and promotions, retail channels, call centre, field programmes, after sales Service, consumer financing

Ongoing

Employees Management and Divisional Meetings, initiatives by HR Division, various Meetings and Collective Agreements with Unions

Ongoing/Daily

Shareholders Annual General Meetings Annually

Quarterly Reports and correspondence Quarterly/Ongoing

Suppliers Visits, consultations, workshops Ongoing

Community Various projects Ongoing

Government Authorities Timely tax payments, complying with all regulations Ongoing

Through feedback obtained from stakeholder engagement, we have identified the topics that are of concern to our key stakeholders, which is disclosed in the following section:

Topics and Concerns of Key StakeholdersUpon identifying our stakeholders, we identify their expectations and concerns and assess them. We have listed their primary expectations and concerns and our response to them below:

Stakeholder Concern Response

Customers Product availability Singer ensures products are widely available through its island-wide distribution network.

Enhanced customer service Singer provides an enhanced customer service to its customers through its knowledgeable and courteous staff and extensive branch network.

Reliable quality of products Singer provides dealership to many world-renowned brands with high quality and assures quality of locally assembled Singer brand products.

After sales service Singer provides island wide after sale service franchise network and call centre facilities to attend after sales services on urgent basis.

Financing options Singer offers various financing options including hire purchase, credit terms, and credit card options.

32


STAKEHOLDER ENGAGEMENT



BUSINESS MODEL

5SINGER AT A GLANCE

Stakeholder Concern Response

Employees Increased salaries and wages Singer offers a wide range of financial and non-financial benefits to employees.

Job satisfaction and motivation All employees of the Group undergo performance appraisals to facilitate career management, mapping of development paths, and enhancing their effectiveness and motivation.

Training and continuous career development

We encourage our employees to pursue career development opportunities and continuously support their professional growth through training and professional development initiatives.

Suppliers Long-term contracts for purchases Singer maintains an effective relationship with suppliers.

Receive prompt payments Singer honours supplier payments on a timely manner.

Shareholders Growth in profits Singer commits to fulfil shareholder concerns and maintains robust dividend policy.

Dividend growth Singer maintains a stable dividend policy.

Increase in share price Singer experienced above the industry in share prices in the long-term period.

Government Compliance with rules and regulations including tax payments

Singer adheres to Government’s rules and regulations in conducting its operations and pays due taxes and duties in a timely manner.

Creation of job opportunities Singer caters direct and indirect job opportunities, island wide helping Sri Lankan economy and society.

Society Minimising threats to the environment Singer engages in all activities in an environment-friendly manner and safeguards the interests of the society and engages heavily in CSR activities.

Creation of job opportunities Singer caters direct and indirect job opportunities.

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101STEWARDSHIP



MATERIALITY

Materiality AssessmentWe consider an aspect to be material if it substantially affects our Company’s ability to create value over the short, medium, and long term. This assessment helps us to focus on issues that matter most to us and our stakeholders.

Aspect Indicator Significance

To Organisation (High/Medium/Low)

To Stakeholder (High/Medium/Low)

20. Marketing and Labelling

417 High High

21. Diversity and Equal Opportunity

405 High High

22. Non-Discrimination 406 High Medium

23. Child Labour 408 High High

24. Forced or Compulsory Labour

409 High High

25. Socioeconomic Compliance

419 Medium Medium

26. Anti-Competitive Behaviour

206 High High

Materiality Matrix

Hig

h

High

Med

ium

Low Medium

Low

Sig

nific

ance

to S

take

hold

er

Significance to Singer

3, 22

1, 5, 6, 7, 8, 9, 10, 11, 12,

14, 15, 16, 17, 18, 20, 21, 23,

24, 26

2, 4, 13, 25

19

Aspect Indicator Significance

To Organisation (High/Medium/Low)

To Stakeholder (High/Medium/Low)

1. Energy 302 High High

2. Biodiversity 304 Medium Medium

3. Water 303 High Medium

4. Emissions 305 Medium Medium

5. Effluents and Waste 306 High High

6. Environmental Compliance

307 High High

7. Employment 401 High High

8. Freedom of Association and Collective Bargaining

407 High High

9. Labour/Management Relations

401 High High

402 High High

10. Occupational Health and Safety

403 High High

11. Training and Education

404 High High

12. Procurement Practises

204 High High

13. Supplier Environmental Assessment

308 Medium Medium

14. Materials 301 High High

15. Economic Performance

201 High High

204 High High

16. Customer Health and Safety

416 High High

17. Customer Privacy 418 High High

18. Local Communities 413 High High

19. Public Policy 415 Medium High

34


MATERIALITY



BUSINESS MODEL

5SINGER AT A GLANCE

Economic PerformanceStatement of Value Added – Group

Category Twelve months ended 31st March 2019

Rs. ’000 %

Fifteen months ended 31st March 2018

Rs. ’000 %

Group Turnover – Gross 62,752,757 70,302,397

Other Income 338,062 360,258

Less – Cost of Material and Services 46,116,888 48,487,872

Value Added 16,973,931 100 22,174,783 100

Distribution of Value Added to Employees and Dealers

Salaries, Commissions and Other Benefits 6,114,252 36 7,100,184 32

To Government

Income Taxes, Turnover Taxes, Value Added Tax and Other Taxes

6,854,969 40 10,665,486 48

To Banks, Deposit Holders and Other Lenders

Interest and Bank Charges on Borrowings and Customer Deposits

3,033,076 18 2,531,374 11

To Suppliers of Capital

Dividends to Shareholders 244,159 1 826,383 4

Retained for Reinvestment and Future Growth

Depreciation, Amortisation and impairment 600,940 4 670,036 3

Retained Profits 126,535 1 381,321 2

Value Distributed 16,973,931 100 22,174,783 100

Source and Distribution

% 0 20100

Sources of Income Distribution of Income

4080 6060 8040 10020

2018/19

2017/18

Value Added Salaries, Commissions and Other Benefits

Income Taxes, Turnover Taxes, Value Added Tax and Other Taxes

Interest and Bank Charges on Borrowings and Customer Deposits

Dividends to Shareholders* Depreciation, Amortisation and impairment

Retained Profits

35


101STEWARDSHIP



MANAGEMENT DISCUSSION

AND ANALYSISTHE VALUE SINGER SRI LANKA GENERATES AND DERIVES BENEFIT FROM CAN BE IDENTIFIED IN

THE FORM OF DIFFERENT CAPITALS WHICH ARE DISCUSSED IN DETAIL IN OUR MANAGEMENT

DISCUSSION AND ANALYSIS.

36FINANCIAL

CAPITAL

50INSTITUTIONAL

CAPITAL

63CUSTOMER

CAPITAL

69EMPLOYEE

CAPITAL

86SOCIAL AND

ENVIRONMENTAL CAPITAL

36



25BUSINESS MODEL

MANAGEMENT DISCUSSION AND ANALYSIS

5SINGER AT A GLANCE

FINANCIAL CAPITAL

Financial ReviewThe following discussion and analysis should be read in conjunction with the Audited Consolidated Financial Statements of the Group and the Company for the period ended 31st March 2019. In this Report, “Group” refers to Singer (Sri Lanka) PLC and its eight subsidiary companies and “Company” refers to Singer (Sri Lanka) PLC.

Basis of Preparation and Comparative FiguresThe Financial Statements have been prepared in accordance with Sri Lankan Accounting Standards (hereafter, referred to as SLFRSs and LKASs) issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the requirements of the Companies Act No. 07 of 2007 and Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995.

With the approval of the Registrar of Companies, the reporting period of Singer (Sri Lanka) PLC was changed from 31st December to 31st March with effect from Financial Year 2017/18 in order to align it with the parent company’s reporting period. Therefore, the comparative year information comprises a period of fifteen months from 1st January 2017 to 31st March 2018. The current year figures comprise as at and for the period of twelve months ended 31st March 2019. Therefore, amounts presented in the Financial Statements are not readily comparable.

PrefaceThe Singer Group recorded a revenue of Rs. 58.5 billion for the twelve-month period 2018/19, compared to Rs. 53.1 billion for same period in the prior year with a growth of 10% whilst compared to Rs. 65.1 billion revenue during the fifteen month period of 2017/2018 as appears in the Financial Statements given on page 176.

The Singer Group reported operating profit of Rs. 3,997 million for the twelve months period ended 31st March 2019 compared to Rs. 3,782 million for same period in prior year with a growth of 5.7% whilst compared to Rs. 4,839 million during the fifteen months period of 2017/18 as appears in the Financial Statements.

The Group encountered multiple challenges including a prolonged drought and sluggish market conditions which lasted throughout the year. The compressed consumer disposable income due to high indirect taxes, rupee devaluation, and political uncertainty during the third quarter of the financial year and import restrictions led to sluggish overall consumer demand in the economy. Additionally, increased borrowings due to imposition of 100% LC margins, higher impairment costs arising from new accounting standards and new levies on Financial Sector were key contributory factors which resulted in a slow growth potential and profit earnings during the year under review.

The Singer Group recorded a revenue of Rs. 58.5 billion for the twelve-month period 2018/19, compared to Rs. 53.1 billion for same period in the prior year with a growth of 10%.

Net Turnover Analysis

4%

5%

33%

11%

13%

5%

29%

2018/19 6%

5%

28%

13%

12%

6%

30%

2017/18

Consumer Electronics

Financial Services

Furniture

Home Appliances

IT Products

Sewing

Other

37


101STEWARDSHIP



FINANCIAL CAPITAL

The Company was compelled to increase the prices in stage by stage and recover the cost partially due to sharp depreciation of the LKR against the USD and its ripple effect on imports which caused significant pressure on product margins and the price revisions were a strain on consumers who were already affected by the decline in disposable income. This was a difficult decision but yet necessary to restore lost margins in the interest of long-term sustainability of the business.

RevenueThe Singer Sri Lanka Group recorded a revenue of Rs. 58.5 billion for the twelve months period compared to Rs. 65.1 billion for the fifteen months period of 2017/18 whilst revenue of the Company was Rs. 43.6 billion for the twelve months period compared to Rs. 50.9 billion for the fifteen months period of 2017/18. The IT Products segment made a commendable contribution to boost revenue with a 33% contribution while home appliances, consumer electronics and furniture contributed 29%, 11% and 4% respectively. Singer Digital Media (Pvt) Limited specialising in mobile phone sales to the trade channel, contributed Rs. 11.1 billion through revenue from sales to external parties. Singer Finance (Lanka) PLC’s contribution to the revenue was 6.5% amounting to Rs. 3.8 billion.

Categories that grew in the period were Air conditioners by 12%, Computers by 12%, Mobile phones by 6% and Washing Machines by 26%. Some key product lines such as Refrigerators, Flat panel, Water pumps and Sewing machines were performed below that of prior year by 3%, 4%, 28% and 10% respectively compared to twelve months period of 2017/18.

Group Net Turnover

Rs. million 2014 2015 2016 2017/18* 2018/19

75,000

60,000

45,000

30,000

15,000

0

2017/18 – Rs. 65,122 million Rs. 58,505 million

*15-months ended 31st March 2018

Direct Interest CostDirect interest cost of the Group was Rs. 1,265 million at the end of twelve months, against Rs. 1,281 million in 2017/18

(15 months). Included in direct interest cost is interest cost for customer deposits and interest on debentures at Singer Finance (Lanka) PLC. Customer deposits at Singer Finance (Lanka) PLC increased from Rs. 5,238 million to Rs. 5,953 million and bank borrowings increased over prior year to strengthen the balance sheet position and to fund growth in lease receivables and loans.

Gross ProfitGross profit of the Group for the twelve months period reached Rs. 16,100 million, compared to Rs. 18,209 million in the fifteen months period of the previous year. The Group’s gross margin percentage decreased from 28.0% to 27.5% over the prior year. The gross profit of the Company for the period under review was Rs. 12,297 million as against Rs. 14,182 million in the previous year. Gross margin percentage of the Company was 28.2% (12 months) vs 27.9% (15 months).

Gross margin percentage of both the Group and the Company was impacted by lower mix of high margin product lines, especially the significant growth of lower margin products – mobile phones compared to the negative growth rate of other traditional high margin product lines such as refrigerators, sewing machines and televisions. Discounts to flush out slow moving inventory and provision for excess and damaged inventory also contributed to the drop in percentage margins. However, there is gradual improvement in margin as a result of the price adjustments made in selected product categories at the later part of the year. In addition, it was increasingly challenging to protect the product margins in the competitive market conditions that the Company faced in the period under review. The Company was intent in retaining and expanding market share with the aim of reaping benefits in the long-term.

Operating ProfitThe Group recorded operating profit of Rs. 3,997 million for the twelve months period ended 31st March 2019 compared to Rs. 4,839 million for the fifteen months of prior year. The Group operating profit margin declined to 6.8% from 7.4% in 2017/18 mainly due to the margin drop in main product lines. A modest growth in operational expenditures and decrease in other income compared to prior year, limited the growth in operational margins. Selling and administrative expenses of the Group for the twelve months period decreased over prior year by 11% from Rs. 13,362 million in 2017/18 fifteen months period to Rs. 11,920 million in twelve months in 2018/19 mainly due to the different period of comparisons. As a percentage of revenue, Group administrative and selling expenses decreased from 20.5% to 20.3%; this was driven by a few concentrated efforts towards cost rationalisation during a challenging period.

Managing costs in a dynamic business environment is a challenge since the Management needs to maintain a balanced approach on maintaining operational efficiency as

38


FINANCIAL CAPITAL


25BUSINESS MODEL


5SINGER AT A GLANCE

well as catering to the growth of business prospects. Both the Group and the Company carefully managed costs without sacrificing business expansion and opportunities.

The Group’s as well as the Company’s results were adversely impacted due to the significant increase of impairment losses on trade and hire purchase receivables consequent to the implementation of SLFRS 9 with effect from 1st April 2018. Primarily due to differences in impairment methodology under SLFRS 9 that requires impairment allowances to be based on forward looking expected credit loss model compared to LKAS 39 where the impairment allowance was made on incurred loss method, the Group’s impairment loss on trade receivables for the twelve months period increased by 42% to Rs. 521 million compared to Rs. 368 million in fifteen months in 2017/18 while Company’s impairment loss on trade receivables increased by 55% to Rs. 213 million from Rs.137 million in prior year fifteen months period.

In addition, the cumulative impact of impairment allowance as at 1st April 2018 arising from the change in methodology from LKAS 39 to SLFRS 9 (day 1 impact) and the deferred tax impact thereon amounting to Rs. 284 million was charged against the retained earnings as at 1st April 2018. Consequently, cumulative impairment allowance for Trade Receivable increased to Rs. 1,423 million as at 31 March 2019 (under SLFRS 9) compared to Rs. 653 million as at 31st March 2018 (under LKAS 39).

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) The Group’s EBITDA for twelve months period ended 31st March 2019 was Rs. 4,473 million compared to Rs. 5,380 million for the fifteen months of prior year. Whilst Group EBITDA margin was 7.6% vs 8.3% in prior period.

Operating Profit

Rs. million 2014 2015 2016 2017/18* 2018/19

5,000

4,000

3,000

2,000

1,000

0



Profit before Tax

Rs. million 2014 2015 2016 2017/18* 2018/19

3,500

2,800

2,100

1,400

700

0

2017/18 – Rs. 2,049 million Rs. 672 million


Net Finance CostThe 26% increase in the Group’s total borrowings together with the relatively high cost of funds in the economy, additional borrowings and foregoing supplier credit due to 100% LC margin compelled us to obtain additional borrowings. Further to that net exchange loss of Rs. 186 million due to rupee devaluation resulted in the increase of net finance cost by 20% to Rs. 3,033 million for the twelve months period ended 31st March 2019 from Rs. 2,531 million in fifteen months period ended 31st March 2018.

Similarly, the Company’s net finance costs increased by 8% to Rs. 2,321million for the twelve months period ended 31st March 2019 from Rs. 2,150 million in fifteen months period of 2017/18.

Finance income of the Group increased from Rs. 176 million to Rs. 208 million. At the Company level, finance income increased from Rs. 345 million to Rs. 454 million due to increase in interest income from Subsidiary Companies, Singer Finance (Lanka) PLC and Singer Digital Media (Pvt) Limited on their borrowings from the Parent Company, Singer (Sri Lanka) PLC and interest income for debenture investment in Singer Finance (Lanka) PLC. However, these incomes are offset in the Consolidated Financial Statements. Despite the said challenges, the strong business position and the credit rating enable the Company to borrow at relatively competitive interest rates from the banks.

Income TaxThe Group’s total tax expense for the period under review decreased to Rs. 286 million from Rs. 829 million in the fifteen months period as a result of the decrease in taxable profits and reversal of deferred tax expenses during the current period due to the increase of origination of timing differences. Tax on dividend income for the twelve months ended 31st March 2019 was Rs. 70 million compared to the Rs. 112 million in the prior year, this amount was incurred for the interim dividends received from subsidiary companies during 2018/19.

39


101STEWARDSHIP



FINANCIAL CAPITAL

Taxation

Rs. million %2014 2015 2016 2017/18* 2018/19

1,000

800

600

400

200

0

50

40

30

20

10

0

Net Tax Expenses** (Rs. million) Net Effective Tax Rate (%)

**Net Tax expenses include Income Tax, VAT on ECC, Deferred Tax and WHT on Dividend.


Profit for the PeriodThe Group recorded a profit for the twelve months of Rs. 386 million while the profit for the fifteen months period of 2017/18 was Rs. 1,220 million.

Singer (Sri Lanka) PLC’s profit for the twelve months period was Rs. 141 million vs. Rs. 999 million for the fifteen months period of previous year. Both Group and Company profitability were impacted by the lower margins mainly due to the sluggish market conditions, higher interest and high exchange losses following rupee depreciation and import restrictions and significant provisions for impairment losses on trade and hire purchase receivables as a result of changing methodology from LKAS 39 to SLFRS 9.

In the Group, profit attributable to owners of the Company was Rs. 250 million vs Rs. 1,044 million in 2017/18. Profit attributable to non-controlling interest was Rs. 136 million vs. Rs. 177 million in 2017/18.

Total Comprehensive Income for the PeriodThe Group recorded a total comprehensive income of Rs. 1,006 million after tax for the twelve months period against Rs. 692 million for fifteen months period, which was above prior year by Rs. 314 million. Singer (Sri Lanka) PLC’s total comprehensive income for the period under review was Rs. 448 million vs Rs. 794 million in the fifteen months period of 2017/18, a decrease of Rs. 346 million. Group’s Total Comprehensive Income for the twelve months period increased over prior year mainly due to the revaluation gain from property, plant and equipment.

Earnings per ShareGroup Earnings per Share (EPS) for the twelve months period under review was Rs. 0.67 vs. Rs. 2.78 during fifteen months period in 2017/18. Earnings per share of the Company were Rs. 0.37 vs. Rs. 2.66 in year 2017/18.

Earnings per Share

Rs. 2014 2015 2016 2017/18* 2018/19

6.25

5.00

3.75

2.50

1.25

0

2017/18 – Rs. 2.78 Rs. 0.67


DividendCompany paid an interim dividend of Rs. 0.65 per share amounting to Rs. 244 million during the financial period ended 31st March 2019.

Dividend per Share

Rs. 2014 2015 2016 2017/18* 2018/19

3.00

2.40

1.80

1.20

0.60

0

2017/18 – Rs. 2.20 Rs. 0.65


Profit after Tax

Rs. million 2014 2015 2016 2017/18* 2018/19

2,500

2,000

1,500

1,000

500

0

2017/18 – Rs. 1,220 million Rs. 386 million


40


FINANCIAL CAPITAL


25BUSINESS MODEL


5SINGER AT A GLANCE

Dividends Payout Ratio

% 2014 2015 2016 2017/18* 2018/19

200

160

120

80

40

0

2017/18 – 83% 174%


Dividends Paid

Rs. million 2014 2015 2016 2017/18* 2018/19

1,250

1,000

750

500

250

0

2017/18 – 826 million 244 million


SolvencySection 56 of the Companies Act No. 07 of 2007 requires that a solvency test be carried out prior to the payment of dividends. The Board of Directors obtained a Certificate of Solvency from the Auditors, prior to the date of dispatch of the interim dividends paid.

Return on EquityReturn on Group equity for the twelve months period under review was 4.6%, whilst in the fifteen months period it was 13.8%. Return on equity of the Company was 3.0%, compared to 18.6% in 2017/18. Return on equity has been computed by dividing the profit for the period by the average of total equity as at the beginning and the end of each financial year.

Return on Equity

% 2014 2015 2016 2017/18* 2018/19

30.00

24.00

18.00

12.00

6.00

0

2017/18 – 13.76% 4.64%


Total AssetsAsset growth was mainly due to the capacity expansion in the manufacturing sector, revaluation of property, plant and equipment and increase in inventories. The Group total assets increased by 15% to Rs. 58.0 billion compared to 31st March 2018 with non-current and current assets growing by 22% and 12% respectively. Group total assets base comprised 39% of non-current assets (2017/18 – 30%) and 61% of current assets (2017/18 – 70%). The growth of non-current assets was due to the revaluation and additions made into property, plant and equipment, mainly in Singer Finance (Lanka) PLC and the manufacturing segment. Increase in operational activities accounts for the growth of working capital mainly in the Company, Singer Finance (Lanka) PLC and Singer Digital Media (Pvt) Limited.

The Group recorded a total comprehensive income of Rs. 1,006 million after tax for the twelve months period against Rs. 692 million for fifteen months period, which was above prior year by Rs. 314 million.

41


101STEWARDSHIP



FINANCIAL CAPITAL

Financial Position Structure

%

100

80

60

40

20

0

2017/18 2018/19 2017/18 2018/19

Assets Liabilities

Assets

PPE Investments Inventories Receivables Cash and Others

Liabilities

Shareholders’ Funds Long-Term Borrowings Short-Term Borrowings Trade Creditors Other Liabilities

Growth in Property, Plant and Equipment

Rs. million 2014 2015 2016 2017/18 2018/19

7,500

6,000

4,500

3,000

1,500

0


Net Assets per Share

Rs. 2014 2015 2016 2017/18 2018/19

25.00

20.00

15.00

10.00

5.00

0

2017/18 – Rs. 18.20 Rs. 18.48

Total LiabilitiesTotal liabilities of the Group represented 28% (17% in 2017/18) of long-term liabilities and 72% (83% in 2017/18) of current liabilities. Long-term liabilities of the Group has increased by Rs. 6,862 million to Rs. 14,181 million. This increase was mainly attributable to the increase in long-term interest bearing loans and borrowings by three times over the prior year and increase of deferred tax liability due to the revaluation of property, plant and equipment. Group and Company current liabilities have decreased compared to prior year due to the forgone supplier credit followed by the restrictions imposed on shipping margins and the shifting of short-term debt to long-term debt of both the Company and the Group during the current year.

Total EquityTotal assets base was funded by 15% of Group equity including non-controlling interest, decreased by Rs. 3% over 2017/18 to stand at Rs. 8,452 million as at 31st March 2019. The change over prior year was mainly due to the increase in surplus on revaluation of Rs. 636 million (net of tax), and Rs. 386 million net profit which was offset by the adjustments made for the retained earnings of Rs. 472 million due to the adoption of IFRS 9 and IFRS 15 and the payment of interim dividend of Rs. 244 million.

Capital Structure

% 2014 2015 2016 2017/18 2018/19

100

80

60

40

20

0

2017/18 Shareholders’ equity 21%Total borrowings 79%

Shareholders’ equity 18% Total borrowings 82%

Total borrowings Shareholders’ equity

42


FINANCIAL CAPITAL


25BUSINESS MODEL


5SINGER AT A GLANCE

Net Assets per Share Vs. Market Price per Share

Rs. Rs.2014 2015 2016 2017/18 2018/19

25

20

15

10

5

0

50

40

30

20

10

0

2017/18 Net Assets per Share Rs. 18.20Market Price per Share Rs. 40.20

Net Assets per Share Rs. 18.48 Market Price per Share Rs. 25.00

Net Assets per Share (LHS) Market Price per Share (RHS)

Cash FlowGroup net operating cash outflow was Rs. 6,444 million, compared to Rs. 4,688 million in prior period. This is attributable to the high working capital requirements and relatively high interest payments. Net cash flow from investing activities of the Group decreased over prior year by Rs. 570 million. Proceeds from new borrowings and customer deposits resulted in a net inflow from financing activities amounting to Rs. 6,570 million from Rs. 4,525 million in prior period.

Overview of Performance of SubsidiariesSinger Finance (Lanka) PLC Singer Finance (Lanka) PLC is an subsidiary of Singer (Sri Lanka) PLC with an ownership of 79.93%. Incorporated in April 2004, the Company is a licensed finance company registered with the Central Bank of Sri Lanka. Singer Finance has grown its portfolio steadily over the years, ensuring that its income earning receivable portfolio is among the top finance companies. The standalone rating of BBB with a positive outlook by Fitch Ratings signifies the credit quality of the Company.

Macroeconomic conditions play a pivotal role in the finance business. In the year under review, macroeconomic conditions were not as conducive for business due to multiple reasons such as increase in tax rates for Motor Vehicles, fluctuating liquidity positions in the market, rupee depreciating significantly, and rise in interest rates. This was further aggravated by political instability and a new tax levy imposed directly on the financial sector. Central Bank of Sri Lanka (CBSL) directions on NBFI’s were further stretched, as they were required to maintain a minimum Core Capital of Rs. 2 billion by 1st January 2019, a more stringent method of calculating Capital Adequacy was introduced by taking

operational risk into consideration. Singer Finance is well above the minimum Core Capital requirement and maintains adequate Capital Adequacy above the minimum required by CBSL. The regulator also took measures to control credit by imposing stringent loan to value ratios resulting in major challenges to expand credit.

After a considerable period of time, weather gods were kind by providing adequate water, resulting in bumper harvests being recorded throughout the country in latter part of year 2018. This was a silver lining on a year which had so many negatives. However, the country faced an unexpected calamity with terrorist attacks by an extremist group on 21st April 2019. The impact of this attack was severe and perhaps the most sever in this decade. The country needs to recover fast from this setback, we are hopeful of the capability and resilience of Sri Lankans to bounce back from calamities as proven throughout our history.

As SLFRS 9 took effect, the company had to book the day one adjustment amounting to Rs.109 million in the equity statement and a further Rs. 35 million adjustment to the income statement in the year under review. The Management has taken steps to re-align their credit and recoveries processes with the IFRS model to reduce the effect on impairment based on SLFRS 9. Further, the financial services sector was affected by the Debt Recovery Levy imposed by the Government in October 2018, the impact to the Company from this levy was Rs. 48 million from October 2018 to March 2019.

Singer Finance has not been overly dependent on funds from the fixed deposit market in the past, however, with new growth plans, an area that Company has focused is to increase its Deposit base in order to fund the growth of the Company. The Company has already done the changes required to boost the Deposit base, and has already shown results by increasing its fixed deposit base by 13% over last year.

The Company performed reasonably well despite the economic outlook not being the most favourable. Total assets of Singer Finance grew by 21.1% to Rs. 19.5 billion, YoY to 31st March 2019. With income earning assets growing by 24.2% YoY. 91% of the Company’s total assets are income earning, illustrating how the Company has maintained its status quo of sticking to the bread and butter of its core business. Total equity of the Company grew by 6.3% to Rs. 3.5 billion. The Company declared a dividend of 1.10 cents in March 2019. Total revenue grew by 26.4% to Rs. 4.1 billion in the year under review. The profit after tax of Rs. 541 million grew by 22.2% in comparison to the corresponding year. The increase in provisioning for bad debts and the increase in interest costs were two major inhibiting expense categories that prevented a more stellar bottom line growth during the period under review.

43


101STEWARDSHIP



Financial capital

The Borderless

FrameThe world in focus – capturing

life’s every moment – unfettered “communication-ability” – a single,

hand held ‘piece of magic’ – the smart phone.

HUaWEi p30 pROWorld’s first Leica Quad Rear Camera,

designed to rewrite the rules of photography with 50X superior zoom

The Leica Quad Camera System accommodates your photography to help see the world in its

entirety. This unmatched super camera system includes a SuperZoom Lens, a 40 MP Super

Sensing Camera, a 20 MP Ultra Wide Angle Lens, and a HUAWEI TOF Camera, giving you the freedom to capture your incredible moment

SaMSUnG S10+The next generation Galaxy has arrived

Galaxy S10 is designed for those who want a premium smartphone with powerful

performance and sets the stage for the next generation of mobile experiences. Galaxy S10 is made with Samsung’s best screen yet, the

world’s first Dynamic AMOLED display. Galaxy S10 offers an Ultra Wide Lens with a

123-degree field of view, like the human eye, so what you see is what’s in frame.

ipHOnE XS MaXWelcome to the big screens

The iPhone XS Max is the biggest smartphone Apple has ever made. The iPhone X ushered in a new era for the iPhone: glass and stainless steel design, an edge-to-edge OLED screen, Face ID,

wireless charging, and the controversial notch.

44


Financial capital


25BUSINESS MODEL

ManaGEMEnt DiScUSSiOn anD analySiS

5SINGER AT A GLANCE

Over the years, Singer Finance was conservative in their growth plans. However, this notion has changed after the parent company was acquired by the Hayleys Group; the company drew plans to grow more aggressively. As a result, the company expanded its presence by opening 4 new branches and relocating 3 window operations. Further, the Company increased their field staff of existing locations in order to support the growth of the existing business. The Company also introduced Gold loans at the end of the previous financial year to its portfolio and will be focused on rolling out this product to the existing branch network in 2019/20. A debit card will be launched mid-year with plans to grow the savings product.

The new ownership has rightfully given directions for Singer Finance to grow to its true potential and the Management has embarked on this journey with confidence. The Management remains optimistic and confident of the future plans for growth. With two very strong Parent Companies; Singer (Sri Lanka) PLC and Hayleys PLC on top, Singer Finance is well poised to position itself to a significant place in the business of financing in the years ahead. .

Regnis (Lanka) PLC – GroupThe Regnis Lanka PLC Group comprises the Company and its fully-owned Subsidiary Regnis Appliances (Pvt) Ltd. which is engaged in the manufacture of washing machines, plastic chairs and plastic components for refrigerators.

Regnis is Sri Lanka’s leading manufacturer of white goods and the undisputed leader among the refrigerator and washing machine manufacturers. The goods are manufactured under Singer and SISIL brands and distributed to customers through Singer’s extensive distribution network. Despite intensifying competitive pressure, Regnis continued to sustain its dominant market position by understanding and effectively responding to emerging customer needs through innovative product solutions. Regnis’s excellent track record over the past three decades has armed it with deep insights into customer behaviour and allowed it to persistently refine its operating model to capture emerging opportunities. In addition, insights

received from our Parent Company, Singer (Sri Lanka) PLC based on data analysis using artificial intelligence and other methods helped us to identify customer requirements, their expectations and new market trends better.

ProductsSince its inception, the Regnis Group has consistently brought innovative solutions to the market, both in the refrigerator and washing machine lines. In 2018, Regnis introduced a smart refrigerator with an inbuilt power guard and many other new features like energy saving depending on the load in it and the number of times its door is opened. Two new 260 and 300 Litre. capacity refrigerators with higher energy efficiency were also introduced to cater to different market segments. In addition, Regnis Appliances introduced three bright coloured new fully automatic, memory function PCB washing machine models with transparent top cover.

Group’s product range now comprises 27 refrigerator models and 13 washing machine models.

Financial Highlights for the Year Ended 31st March 2019The Regnis Group operated in a not so conducive operating environment during the year. Sharp depreciation of the Sri Lankan Rupee had a substantial impact on cost of imported materials. With Government tariff changes, Regnis had to keep 100% cash margins on import of washing machines and certain raw materials used for refrigerator manufacturing. In line with the new tariff policy Government removed 15% cess on refrigerator imports, thereby reducing the gap between locally manufactured and imported refrigerators. Competitive landscape limited the extent up to which prices could be passed on. As a result, Regnis Group reported only a marginal growth in revenue to Rs. 5.4 Billion for the year.

Despite a number of initiatives to gain cost efficiencies and enhance employee productivity such as waste minimisation, enhancing production lines, improving quality to minimise warranty costs and reducing inventory holding period, cost of sales increased due to the increase in cost of materials. This coupled with an increase in net financing cost, partly set off by

With two very strong Parent Companies; Singer (Sri Lanka) PLC and Hayleys PLC on top, Singer Finance is well poised to position itself to a significant place in the business of financing in the years ahead.

Singer offers a wide range of smartphones to instantly connect you to those that matter most to you in today’s fast-paced world.

45


101STEWARDSHIP



Financial capital

a decrease in selling and distribution expenses caused a drop in profit before tax to Rs. 82 million for the year compared to Rs. 123 million reported for 2017/18. Profit after tax amounted to Rs. 63 million compared to Rs. 89 million.

Future OutlookDespite the impact of headwinds caused by volatile external sector developments, Government fiscal policy decisions and recent terrorism related incidents on the economic growth of the country and the disposable incomes of Sri Lankans, we envisage the demand for consumer durables to sustain, in particular among the middle class. This is because consumers are likely to continue to move to technologically advanced products to upgrade their living standards and realise cost savings. Hence, the Company will continue to invest in product development and capacity extensions to deliver on customer expectations and secure operational efficiencies.

Singer Industries (Ceylon) PLCThe company’s product range consists of the traditional product line of straight stitch and zig-zag sewing machines together with a new portfolio of portable and digital sewing machines, washing machine components and air conditioning brackets.

The sewing machines are manufactured and marketed solely to our parent, Singer (Sri Lanka) PLC. Furthermore, washing machine components are manufactured as a subcontract operation to our affiliated Company – Regnis Appliances (Pvt) Ltd. During the financial year, the Company started supplying air conditioning brackets to its Parent Company, Singer (Sri Lanka) PLC.

Singer Digital Media (Private) LimitedSinger, the leader in Sri Lanka’s consumer electronics and other white good market introduced Digital Media products to its product portfolio with the objective of serving our customers in line with dynamic market trends. Digital Media (Private) Limited which embarked on its journey in 2012 with world renowned mobile phone brand Huawei, that placed their trust and confidence to partner with Singer for their Operation in Sri Lanka, achieved the majority of market share which was over 40% according to GFK Reports.

The Management together with a dedicated sales force who worked with much commitment and responsibility contributed to this success story. The dedication of the team towards the channel was paid off with a record sale of Rs. 11.4 billion for the calendar year, making Digital Media the 2nd distribution arm to surpass Rs. 10 Billion annual sales in the history of Singer Group. Growth of the channel is 28% compared to the performance in 2017/18.

Digital Media Channel is ready to accept challenges while following market best practices. Demarcation of regions in two areas North and South under the supervision of two Assistant Area Managers and 6 Territory Managers, establishing 11 brand shops in urban areas island wide i.e., Maharagama, Liberty Plaza, Anuradhapura, Jaffna etc., appointment of direct dealers, managing field credit exposure, usage of management information system to access real time information for better management of operations and planning assisted the remarkable performance in 2018/19.

Among the key pillars of success is the Distributor network associated with the channel since the commencement of the business. We ensured and believed in win-win situation where it was our pleasure to witness Distributors, pull together the benefits of the collaboration with Singer.

Taking hold of the opportunities available for maximum potential was successfully proven by the Corporate Team of Digital Media Company. The Corporate Team partnered with Telecommunication giants in the country and has placed its presence deeply in the corporate sector to offer device solutions to many corporate projects. Year 2018/19 was significant, Corporate team achieved the annual sales of Rs. 1.5 billion with much commitment and hard work.

None of the achievements would have been a reality if not for the team spirit, commitment, loyalty towards the Company and business by the Team Digital Media. Digital Media Company is truly a “Team work” by example. Team attributes are visible. Motivation is spread across the channel for the ultimate achievement regardless of the competitiveness.

Singer Business School (Pvt) Ltd.Established in 2015, Singer Business School is the education arm of Singer (Sri Lanka) PLC and aims to provide world-class education to Sri Lankan youth at affordable prices across the island. Coupled with a rich heritage and a wide reach, Singer Business School reaches its students through 62 Fashion Academies and eight Computer Academies.

Singer Business School recorded a revenue of Rs. 63 million for the year compared to Rs. 46 million, for the previous year, a significant 39% growth.

New Fashion Designing ProgrammeHighlights of the year included introduction of a new programme on Fashion Designing consisting of a six months certificate level foundation course, a one year diploma and a final one year Advanced Diploma, with an exit path at each level. Part one will be offered in all 62 locations while the Diploma and the Advanced Diploma levels will be offered in Colombo. The certificate programme has been validated by the Chartered Society of Designers (UK) and the Diploma and the Advanced Diploma programs will be recognised by them once the programs commence.

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The in-depth curriculum for each stage has been especially curated, taking into account international and industry standards. With the syllabus up to the Advanced Diploma stage being equivalent to the first two years of learning in a university programme under the UK curriculum, upon completion of it, students can join a university of their choice and complete the final year to graduate with a Degree in Fashion Designing. The entire programme therefore affords a competitive advantage over other available courses and is extremely affordable with easy monthly instalment payments.

Course Validation by Chartered Society of Designers (UK)Helping local students studying fashion to embark on a successful international career, the Singer Fashion Academy recently became the first Sri Lankan institute to receive validation for six of its courses from the Chartered Society of Designers (CSD), UK within its Course Endorsement Programme (CEP). Singer Fashion Academy students who follow a CSD Validated Course can easily apply for Student Membership status from the Society with no application or joining fee applicable and they will also enjoy clear progression to other membership levels offered.

Annual Fashion Show and Awards CeremonyGiving the Diploma students an opportunity to showcase their creative work with a sense of confidence via a cat walk to a larger audience and also allowing them to forge for themselves a platform that will pave way for a wider range of business opportunities, Singer Fashion Show and Awards Ceremony 2018 was held at the Bishops College Auditorium on 11th September 2018.

Annual Diploma ExaminationAnnual Diploma Examination was held from 12th to 16th November 2018 at Havelock City Club House. The exam was for those who were completing the Diploma in Scientific Dressmaking and Diploma in Machine Embroidery. Total of 80 students sat for the exam this year.

The Singer Fashion Academy offers over 20 different sewing courses, which include 3 diploma programmes, 8 certificate courses, and several other sewing courses to anyone who is passionate about sewing. In the period ended, approximately 80 students completed 2 diploma programmes and the current student base increased to 6,000 students.

Overview of Performance of Distribution ChannelsSinger’s extensive network of distribution channels across Sri Lanka is an invaluable asset that few other corporates can match. Encompassing a variety of channels, the network ranges from conventional brick and mortar stores to electronic channels, empowering customers with the choice and flexibility to purchase goods in a way most convenient to them.

This section will cover the different channels we operate and their performance during the year. We deliver unparalleled customer convenience through these channels, thus enabling customers to raise their standard of living.

Singer PlusSinger Plus is the main distribution channel of Singer (Sri Lanka) PLC.

The Channel contributed nearly 45 % of the overall revenue of the Company and also a high percentage of hire purchase sales. Significant growth was shown from the mobile phones with the expansion of Digital Corners in Singer Plus outlets supported by the increase in market demand for smart phones. Further thrust product categories such as washing Machines, Freezers & Coolers and Kitchen Appliances showed good growth.

Singer Plus retail channel continued to expand its retail space by adding new showrooms, upgrading and shop space enhancements in 2018/19. Singer Plus presence is felt in every nook and corner of the country with 271 Showrooms and 58 Satellite Shops. In the year under review, the channel added four new showrooms and upgraded eight satellite shops to Singer Plus retail stores. Channel worked on continuous development by focusing on improved merchandising and displays, overall shop administration, staff training and development, to serve our customers better.

Singer Plus channel carries out innovative sales promotional activities and field programmes. The channel uses group sales to institutions and many outdoor selling activities to reach their customers. Singer Plus channel was able to successfully conduct life style exhibitions in Colombo, Galle, Bandarawela, Kandy and Jaffna during the year, demonstrating the strength of Singer’s multi brand – multi product offering to the consumers. Singer Plus channel is promoted as the most convenient place to shop for all consumer durable products through ATL and BTL medium to attract customers.

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Singer Mega focused on offering high quality customer service throughout the year and initiated a number of customer engagement programmes for our existing customers and to attract new customers. This helped us to increase sales even under the tough market conditions that prevailed.

Singer Homes – The Furniture StoreSinger Homes focused on improving the lifestyle of our consumers by introducing a variety of new Furniture and Accessories. Each Singer Homes showroom carried out targeted customer engagement programmes island wide in order to take the “Singer Homes” brand to our consumers and promote all our seasonal offers. This helped us generate additional sales under tough market conditions.

SISIL The SISIL World continued to consolidate its position as a premier consumer durables retailer during the year. Its retail space was expanded with the addition of new showrooms and shop space enhancements. The SISIL channel added three new showrooms at Moratuwa, Galewela and Hingurakgoda and shop space enhanced at Gampola and Chilaw during the period under review.

Singer Mega – The Big ExperienceAll Singer Mega showrooms continued with various promotions, events and activations in order to showcase our Product, Brand and Service strengths. One new showroom were added in 2018/2019 in order to extend our services to our valued consumers and increase our reach.

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Development of the SISIL channel continues with a focus especially on overall shop administrations and staff training and development with the goal of serving our customers better. Furniture, air conditioners, mobile phones, bottle coolers, gas range and washing machines in particular have generated positive growth compared to last year.

The SISIL channel reaches customers through field promotions and focusing more on BTL activities and group and bulk sales.

Wholesale ChannelThe Singer Wholesale Dealer network was established in the latter part of 1986, to serve wholesale dealers in an organised manner as many of the dealers had to buy their products via the Pettah market and Singer stepping in has helped the dealers and at the same time our Wholesale Dealers have helped the Company to strengthen its brand name in the market. From a mere handful of dealers at the time of its inception, this dealer network has grown over the past 33 years and there are 400 dealers within this network today.

The main question posed by the dealers at that time was whether Singer would give them the opportunity to sell Singer sewing machines and it was a trump card which helped to move out other products such as white goods along with the sewing machines and that was one of the main objectives of the corporate company because Singer retail channel was in good control of the sewing machine sales at that time. By establishing contacts with the wholesale dealers, we learnt that the dealers themselves had a separate clientele who were serviced by the dealers and who did not come to Singer shops, and it provided a good opportunity for the Company to serve that clientele and add them to our customer base.

Being very careful in establishing new channels, new product ranges, etc., Singer developed this channel by maintaining strict controls on administrative areas which many of our dealers appreciated that Singer services all types of dealers whether big or small in the same manner where pricing and promotions are of critical importance.

Since the establishment of the dealer network, Singer has continued to strengthen and support the dealers and their shop assistants by sharing technology and know-how via training programmes, refrigerator and sewing machine clinics to service their clientele and providing technical support wherever necessary. The Dealer Assistants’ Day is a much looked forward to event by all and the annual Wholesale Dealer Convention are some of the events which are organised by the Company to reward their efforts and support to the Company.

J Plus ChannelSimilar to the Wholesale Channel, the J Plus Channel was formed to cater to dealers who serve the lower end of the market. This Channel focuses on sales around brands like Sony, Hitachi, Sharp and Dell as well as Singer’s furniture and mattress products.

J Plus enabled Singer to expand its presence in wholesale market segments that were not previously catered to. The Channel handles:

1. The sale of furniture to wholesale dealers, including specialised furniture dealers.

2. The sale of computers to wholesale dealers, including specialised computer dealers.

Institutional ChannelThe Institutional Sales Channel caters to bulk orders from B2B clients, including hotels, hospitals, and Government and private sector organisations. During the year under review, the Channel tied up with four corporate giants in Sri Lanka such as Fonterra and Cargills.

Agro ChannelThe Agro business which was re-launched in 2013 in Singer Group consists of a number of new machinery and equipment that made the channel expand its product portfolio as at today. The Channel was initiated with the name ‘’Special Project Channel’’ and was re-launched as Agro Channel with the new entrants of machinery items to the Channel. Starting from water pumps, the business has now expanded to a vast range of products like; water pumps, two wheel tractors, combine harvesters, wood working machines, bush cutters, motorbikes, paddy threshers, scales, bicycles, fans, irons, kitchen appliances etc. In the latter part of 2018 and early 2019, we gave enough ammunition to sales people in the field to counteract the competition by introducing low cost water pumps, plastic impeller tube well pumps, low cost bush cutters to the field which were a timely requirement laid by the sales team in mid 2018. These new introductions further strengthened the range of products in the Channel.

Various field activities have helped the Channel to expand its popularity among remote villages of which the Channel is proud of its contribution made as a Channel to bring Singer the crown of “Best People’s Brand” for the 13th consecutive year. Plumber training programmes, tractor free service campaigns, wood working trainings, dealer assistant trainings etc., are a few, out of those services extended to the public.

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e-Commerce Channel – www.singer.lkThe Singer Sri Lanka e-Commerce platform experienced exponential growth in the period under review. Singer Sri Lanka e-Commerce aims to be the No. 1 consumer durables website in Sri Lanka. Featuring more payment methods and platforms, Singer will offer quality products to customers with value added discounts and offers.

The Information & Technology Department continued to enhance the customer experience. The Singer (Sri Lanka) PLC website was revamped with a creative and user-friendly interface that appeals to customers, who are becoming increasingly tech savvy. The website now features conveniences such as cash on delivery, online reservation system through shops, up to 52 monthly interest-free instalment plans, and special seasonal product promotions.

As a leading household name for home appliances and consumer durables, Singer has harnessed its energies to develop unique and innovative approaches to reach out to the target market via Digital Marketing.

The Singer Sri Lanka Facebook page aims to explore new opportunities for product promotions and real time association with existing and potential customers by engaging with them via activities such as competitions, posts, product launches, and events.

To maximise our online brand presence and generate sales through e-commerce, we have commenced digital activities. Main campaigns include Facebook advertising & Google Ad Words campaigns, search engine campaigns, display marketing and dynamic re-marketing campaigns. We also started using YouTube to raise product and brand awareness through pre-roll advertisements of brands available at Singer, new products, and recipe and quick tips videos that use kitchen appliances available at Singer.

Singer hosts multiple online competitions around the year using our multiple brands to engage fans and customers. Competitions during the period included the Singer Super Chef Competition Season 2, Singer Homes Furniture Competition, Singer All I Want for Christmas Competition, and Upgrade your Kitchen with Singer. Through our Facebook page, we carried out “Special Hot Deals” and “48-hour Flash Deal” promotions that reached a wide audience. Events including product launches and the Singer Lifestyle Exhibition were covered through updates and live video streams.

With the aim of building an audience and directing them to our website, these digital activities allowed us to target our audience based on their interests and personal preferences. Through the Google advertising platforms, we were able to create a campaign which continuously allowed the audience to engage with our website even after making a purchase or leaving the website. Dynamic re-marketing efforts focused on customers who have visited or shown interest in our products but not made a purchase – a method that has proven to be effective with the digital consumer.

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inStitUtiOnal capital

Since its inception, Singer has amassed institutional capital that it leverages to benefit all stakeholders. As Sri Lanka’s leading consumer durables retailer, Singer is responsible for the distribution of local and globally renowned brands through one of the most comprehensive branch and distribution networks in the country.

Overview of BrandsSinger (Sri Lanka) PLC handles the distribution of its own Singer, SISIL and Regnis brands, as well as leading international brands through its distribution channels.

Singer: Trusted ExcellenceSinger brand has been spearheading as the undisputed leader in the consumer durables market in Sri Lanka. Singer brand extends a wide range of product categories such as sewing machines, consumer electronics, household appliances, air conditioners, furniture, kitchen appliances, personal computers and agricultural equipments. Our uncompromised commitment in providing excellent pre-sales and after sales service to our consumers scattered all over the Country has enabled Singer to live up to its brand promise of “Trusted Excellence” year after year with continuous improvement.

SISIL: The Cooling SpecialistSISIL was established 56 years ago as the first refrigerator brand to be manufactured in Sri Lanka and holds a dominant marker share in the refrigerator, kitchen appliance, and washing machine segments. Singer purchased the SISIL brand in year 2000 and leveraged the strength of this brand. SISIL is also renowned for service excellence and durability, outperforming many global brands in terms of trust and reliability.

Huawei: Make it PossibleHuawei is the leading global information and communications technology solutions provider and the number one growing smartphone brand in Sri Lanka. The brand continued to hold

the majority of the market share at over 40%, according to GFK reports. Since the introduction of Huawei to the local market in 2012, Singer was appointed as the exclusive national distributor for Huawei-branded mobile phones in both retail and wholesale, contributing to the increase in brand loyalty throughout Sri Lanka.

2018/19 saw significant market share growth for Huawei through the expansion of the distribution network, disrupting array of products, novel additions to the existing brand portfolio, enhanced consumer service, and innovative promotional offers and activities together with Singer (Sri Lanka) PLC.

Sony: Be MovedSony Corporation is a leading manufacturer of audio, video, game, communications, key device, and information technology products for the consumer and professional markets. With its music, film, computer entertainment, and online businesses, Sony is uniquely positioned to be the leading electronics and entertainment company in the world.

Singer was appointed to be the distributor for Sony Electronics in Sri Lanka. Since December 2014, we are the retail distributor of a wide range of Sony products including LED TVs, smart TVs, 4K TVs, high-tech audio systems, cameras, and other electronic products.

Dell: Power to Do MoreDell empowers countries, communities, customers, and people everywhere to use technology to realise their dreams. Customers trust Dell to deliver technology solutions that help them to do and achieve more, whether they are at home, work, school, or anywhere in the world.

Partnering with Dell in 2014, Singer has demonstrated a rapid growth in Dell sales resulting in an increased market share in Sri Lanka within the first phase of operations. Accordingly, Dell has grown exponentially in Sri Lanka over a short period to become the leading PC brand in the local market for three

Singer brand has been spearheading as the undisputed leader in the consumer durables market in Sri Lanka.

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consecutive years as per data released by International Data Corporation (IDC). Singer won the “Best Consumer Distributor” award as a result of the Company’s significant contribution towards Dell’s business in the consumer segment during the period.

Samsung: Turn on TomorrowSamsung Electronics is a global leader in high-tech electronics manufacturing and digital media. As one of the world’s leading appliance brands, Samsung continued to dominate the market with its cutting-edge technology in televisions, refrigerators, mobile phones, and a host of other product categories. The Samsung brand has over the years attracted consumers of all categories regardless of their gender or socio-economic status. Samsung is ranked on top when it comes to advanced smart televisions and energy saving digital inverter technology refrigerators and smartphones.

ZojeZoje Sewing Machine Company Ltd. is one of the largest industrial sewing machine manufacturers in China since its inception in 1994 and houses the famous Zoje brand. Zoje is well-accepted in the Sri Lankan industrial sewing machine market due to its quality and reliable performance. Zoje as an industrial sewing machine brand continues to grow in market share since its partnership with Singer in 2002, backed by Singer’s service excellence.

Beko: Official Partner of EverydaySince 2013, Singer has been the sole distributor and authorised service partner for Beko in Sri Lanka. Beko continues to be the number one free-standing home appliances brand in Europe, offering smart technologies combined with stylish functional design that are both eco-friendly and user-friendly with enhanced functionalities and efficiency. Singer, together with Beko, offers a premium experience through a range of cutting edge Beko appliances for the modern home. Beko products marketed in Sri Lanka include refrigerators, free-standing and built-in electric and gas ovens, washing machines, built-in hoods and hobs, dishwashers, and dryers.

TCL: The Creative Life Founded 37 years ago, TCL is one of the fastest growing brands in China and USA. It makes a wide range of consumer electronics products and appliances including televisions, refrigerators, washers, dryers, air conditioners, Blu-Ray players, and cell phones in different regions across the world. By offering great products at reasonable prices through Singer, TCL has gained the trust of Sri Lankan customers.

Hitachi: Inspire the NextWith the latest advanced Japanese technology and trust that comes with a 100-year reputation for reliability, Hitachi home appliances and electronics are the ultimate choice for every room in every home. Featuring smart human-friendly designs, advanced eco-conscious technologies, and quality materials, Hitachi home appliances and electronics accentuate your everyday life. Singer has brought to Sri Lanka a wide range of Hitachi products, including inverter refrigerators, domestic inverter air conditioners, vacuum cleaners, and 4K smart televisions.

Mitsubishi: Creating Your ComfortMitsubishi Heavy Industries – Mahajak Air Conditoners Co. Ltd. (MACO) is one of the leaders in Thailand’s air conditioning industry, manufacturing superior quality domestic, light commercial centralised air conditioners. Singer partnered with Mitsubishi brand in year 2012 and the Brand has gained the trust and reliance of its customers for its high-quality products, on-time delivery, reasonable prices, and environment-friendly technologies.

Moulinex: Cooking Made EasySinger introduces innovative and versatile kitchen appliances under the reputed French brand, Moulinex, every year. These appliances are designed to enhance the efficiency and effectiveness in cooking and food preparation, enabling modern housewives to reduce the time they spend in the kitchen.

Tefal: Ideas You Can’t Live WithoutSinger offers products from world renowned French brand Tefal across multiple product categories – kitchen appliances, irons, vacuum cleaners, and fans. Tefal is also known for its global market leadership in the cookware category with products designed to give consumers the optimal performance in their designated tasks and durability.

Kenwood: The Number 1 Food Preparation Brand in EuropeSinger offers a variety of kitchen appliances and household appliances under Europe’s Number 1 food preparation brand, Kenwood. Since 2008, Singer has offered a variety of Kenwood products including blenders, smoothie makers, choppers, sandwich makers, juicers, kitchen chef, food processors, hand beaters, irons, and vacuum cleaners which are available at Singer outlets around the island. Recent introductions included the all-new Kenwood Chef Major which is designed to make light food work preparation and helps create an array of dishes with ease.

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The Cool OptionCool = Fresh... and

Nutritious...and Healthful – a really ‘cool’ box –

the refrigerator.

SaMSUnG – RS72R5001M9• 690L extra large capacity

• Digital Inverter compressor for super energy save

• Toughened glass shelves for durability

• Ten year warranty on Compressor

HitacHi H-RW690GBK• Side by Side

• Capacity – 540L

• Four Door

• Inverter

• Dual Fan Cooling

SinGER SiDE By SiDE - Sn-SBSH2-66• Net Capacity – 514L

• Mirror Finish

• Eco Friendly R600A Refrigerant

• No Frost

• Low Noise Compressor

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Prestige: Delighting the Homemaker through InnovationEstablished in the United Kingdom in 1938, Prestige offers premium kitchenware including items such as cookware, pressure cookers, and electricals. A high level of quality is paramount at Prestige which leads to a lifetime guarantee for certain products on offer. Singer is partnered with Prestige to be their sole agent in Sri Lanka and is home to a diverse selection of items ranging from pressure cookers to grinders and gas burners.

Sharp: Be OriginalSharp Corporation of Japan is a leading innovator, having created many world-first products. Products from the Japanese manufacturer include its signature four-colour “Quattron Pro” LED TVs, “Plasmacluster” air purifiers, and “Healsio” microwave ovens.

Singer partnered with Sharp as their sole agent for electronics and home appliances in Sri Lanka and as the preferred retail partner for office equipment since 2013. This has enabled us to offer the Sri Lankan market a range of cutting edge Sharp branded products including LED TVs, microwave ovens, air purifiers, vacuum cleaners, fans, multifunction printers/copiers, and cash registers.

Skyworth: Lead the FutureSkyworth is a large-scale high-tech company primarily engaged in manufacturing consumer electronics. Singer is an authorised dealer to the Skyworth Brand in Sri Lanka and the brand has grown steadily over the past few years in Sri Lankan consumer segments.

Nikai: Transforming Houses into HomesSinger introduced the Nikai brand in August 2018 with a range of kitchen appliances, audio-visual equipment, and home appliances. Envisioned to meet all the appliance and electronics needs of every homemaker, Nikai is a one-stop brand that is geared to meet the needs all members of

the family. Nikai Brand is built on the promise of reliability from product to performance. Reliability is the foundation on which the Brand stands tall.

Unic: The Company Owned House BrandUnic offers a wide range of products including televisions, rice cookers, and air conditioners. The brand continues to grow in Sri Lanka.

Asus: In Search of IncredibleSinger was appointed as a consumer notebook distributor and the exclusive Large Format Retailer (LFR) for Asus laptops in Sri Lanka. Asus is a multinational computer hardware giant with a focus on creating products for today’s and tomorrow’s smart life. It is the world’s No. 1 motherboard and gaming laptop brand and among the top three consumer notebook vendors. Asus will introduce a range of laptops at various price points and specifications to cater to the requirements of the customers. Singer serves, and the products will be available through all Singer channels.

IndesitSinger introduced the world-renowned “Indesit” brand while adding their latest products to the Singer product portfolio. The brand is famous for home appliances including free-standing gas cookers, hoods and hobs, dishwashers, and washing machines. Singer is the sole and exclusive distributor for the Indesit brand in Sri Lanka, opening the doors for Sri Lankan customers to experience European products at affordable prices. The products will be available mainly at Singer Mega and select Singer Plus showrooms.

Thermos and Regnis Vacuum FlasksTo penetrate the gift market of the country, Singer introduced Thermos flasks as a heritage international brand of vacuum flasks. Recognising the growing demand for such product, Singer introduced another series of vacuum flasks under Regnis, one of its house brands, adding vibrancy to the range

Singer became the pioneer of using modern Internet and Communication Technology (ICT) for our after sales operations by covering the SFA network with a web-based software application and mobile-based Android application.

Singer Sri Lanka offers a wide array of eco-friendly refrigerator options for every lifestyle and budget to keep food fresh and nutritious.

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with more colours and designs. This has led to increased impulse purchases by shoppers, opening avenues to enter the gift segment of the country.

FarmmasterSinger Sri Lanka PLC has a long history of contributing to the local agriculture segment by introducing many kinds of agricultural machinery. The Minitiller was introduced to farmers upcountry who required lightweight heavy-duty machinery. The Minitiller can be used in paddy fields, vegetable fields, and potato fields in mountainous areas for rotary tillage, deep plowing, ditching earth, and riding.

Singer introduced the Viknyo Farmmaster in 2013 with the FMRC certificate, which is highly recognised in the agricultural sector. With its quality and Singer’s excellent after sales service, the Farmmaster became the highest selling two-wheel tractor in the country in 2015 and has held that crown for the past four years.

The Farmmaster Combine Harvester is a versatile machine designed to efficiently harvest a variety of grain crops. It covers the three main harvesting operations: reaping, threshing, and winnowing. After introducing the Farmmaster Combine Harvester in 2015, it has gained wide acceptance and popularity amongst Sri Lankan farmers.

KitoKito brand was introduced in year 2018/19 to the furniture range by bringing up the modern appearance for display units. Kito mainly offers smart wall storage solutions to the consumers with added benefits; easy to use, easily mounted on walls.

Overview of Performance of Strategic Business UnitsSinger Service CentresSinger operates 14 service centres across the island, 391 Consumer Products Service Franchise Agents (SFA), 92 motorbike service franchise agents, and 36 furniture service franchise agents. Each service centre is well-equipped to provide the highest standard in customer care with skilled and competent service agents. In line with continuous efforts to maintain the highest standards, the Vavuniya service centre was opened in 2018 and the foundation laid for the new South Colombo regional service centre at the heart of the South Colombo region, Maharagama. The project is expected to conclude at the end of July 2019, introducing a new concept in after sales service experience for customers with state-of-the-art technologies and facilities.

Singer became the pioneer of using modern Internet and Communication Technology (ICT) for our after sales operations by covering the SFA network with a web-based software application and mobile-based Android application for processing, maintaining, and finishing service work orders online. With this new system, repair follow-ups, parts availability, and repair turnaround time reduced drastically compared to the previous system.

During 2018/19, Singer Service continuously trained our staff members to be well-versed in technical knowledge imperative to offer excellent customer care through various overseas training programmes conducted by first class consumer product manufacturers such as TCL, Sony, Hitachi, Beko, and Panasonic.

Apparel SolutionsThe Singer Industrial Sewing Machine Division, formerly known as the “Industrial Product Division”, was relaunched as “Apparel Solutions” after a strategic decision in 2005. The Division imports and distributes industrial sewing machines, laser machines, bonding machines, spreading machines, and cutting and embroidery machines. In line with Singer’s multi-brand strategy, the Division followed suit by adding several international brands to its product portfolio, including Sunstar, ZOJE, Megasew, SDY, Sansiko, and TSM. The Division’s sales mix consists of two segments: one segment leverages the existing retail and wholesale channels, and the other segment focuses on direct sales to factories on indent basis.

Singer Research and DevelopmentUnder the guidance of new corporate management, the Singer Research and Development unit expanded with the recruitment of three new technical officers and an engineer for the Research and Development (R&D) fleet along with a new 1,500 sq. ft. facility located at Singer Industries Ratmalana for refrigerators, washing machines, and electrical products. It further expanded the R&D operations of new products introduced by local and foreign factories with customised designs. The Agro after sales division was also attached under R&D for continuous improvement of their product portfolio through combined research with local and foreign factories.

Singer Call CentreSinger commenced the first phase of the Service Dedicated Call Centre operation with 12 dedicated call agents for inbound and outbound call centre operations. Within the first phase, all direct customer complaints and Cash & Carry dealer customer complaints are registered and work orders created through the call centre after a customer validation process. The second phase of the call centre operations will see it expanded for customer complaints received through the Singer retail network.

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E-commerceOmni Channel StrategyWe recognise that the new generation of customers enjoy shopping online as much as they do visiting retail stores. As a result, we introduced new functionalities to our website:

zz Store Locator – Customers can check for availability of products by searching for stores within their proximity on the website product page.

zz Customers also can visit the store to complete a purchase if a product is out of stock on the website.

As a formal strategy to improve e-commerce business to serve future needs, following developments were done in year 2018/19 to improve e-commerece platform.

WebsiteAs web technology is increasingly supporting the retail business, we have fully revamped the www.singer.lk website and implemented Cash on Delivery (COD) functionality. We launched a pilot project to implement web sales stations in selected shops with the help of large screen TVs and improved telecommunication links. The project aims to provide customers with better service by displaying and recording sales for products which are not physically available in-store.

Service Franchise Agents SystemTo improve the after-sales service operations, the IT Department together with the Process Improvement Department implemented the Service Franchise Agents System (SFAS) to cater to Service Franchise Agents, service centres, the branch network, and head office. The system brings with its various benefits, including:

zz A common system to raise service requests

zz Online updates of Work Order status

zz Online dashboard and automation

zz End-to-end communication between all stakeholders via SMS and email

zz Removal of data entry operations at service centres

The system features an HTML5 web application and Android application which can be used to access specific features. The SFAS applications are implemented across all Singer Service Centres, branches, and the entire Service Franchise Agents network.

Digital Product CatalogueSinger (Sri Lanka) PLC is in the process of implementing a Digital Product Catalogue in retail stores around the country. This project has been launched to provide product details and product features to visiting customers and can be used as a tool to showcase models not in stock at the branch. The

catalogue is hosted on a large screen TV at the branch and updated centrally via head office.

Customers can browse through the catalogue using a remote control and viewing more information about products via a user-friendly interface that organises products in easily searchable categorisations. This project is currently launched as a pilot project in 20 branches.

Sanasuma and Extended Warranty We are proud to announce that we are the only e-commerce business in Sri Lanka to offer extended warranty and coverage in case of a natural disaster.

Information Technology DivisionSinger has embraced mobile technology to enhance our business functions and better serve our customers.

Mobile Field Collections

zz Marks the first time in Sri Lanka that a consumer durables company has introduced hire purchase instalment collection through a mobile app. The app provides an interface to the ERP system, enabling transactions to be processed electronically in the field, and produce a receipt using a mobile printer.

zz Electronic collection process in the field eliminates manual collections at shops, resulting in cash flow improvements for the Company.

zz We have implemented the solution in all locations covering more than 800 collectors.

Singer Express Pay

The Singer Express Pay service allows customers to make a wide range of bill payments, including credit cards, mobile phones, insurance, utility bills, and Ez Cash and Mcash top-ups and withdrawals at over 442 retail outlets across the island. With extended timings on weekdays and weekends, customers can avail of Singer Express Pay’s services through Singer’s retail outlets without being dependent on their bank or service provider’s operating hours.

The latest additions to the Singer Express Pay service include tie-ups with many insurance and lease companies, including AIA Insurance, Union Assurance, Sri Lanka Insurance, Allianz Insurance, MBSL Insurance, Janashakthi Insurance, and CDB Lease. Singer’s commitment to building customer relationships is mirrored in the partnerships it has developed with the companies and institutions involved in the Singer

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Express Pay service, with many of Sri Lanka’s leading companies offering their customers an added dimension of professionalism and convenience.

On the payments side, Singer Express Pay continues its relationship with Western Union Money Transfer to enable foreign remittances. For this service, Singer has tied up with NDB Bank, who acts as the Principal Agent.

Singer Express Pay gives Singer’s customers the convenience, innovation, and service they deserve, and is another example of how Singer strives to make life easier, more convenient, and more enjoyable to its valued customers.

Singer Distribution CentreThe state-of-the-art Distribution Centre commissioned in 2004 at Piliyandala is now in its 14th year of operations. In 2017, distribution operations were decentralised with the opening of a 75,000 sq. ft. Logistics Hub in the Matale District of Dambulla to cater to requirements for the North and the East Provinces and part of the Central Province, with the key objective of providing better and faster service in keeping with the expected increase of volume of new and existing products In year 2018/19, the Company further expanded distribution operations by decentralising its operations to Ekala joining with leading logistic provider Logiwiz Limited and entered into an agreement to increase capacity by 14,930 cubic meters and to handle inbound and outbound CBM of 6,400 each.

The Distribution Centre has maintained the ISO 9001:2008 standard for the last 13 years.

The Distribution Centre is one of the key contributors to Singer’s Green Initiative programme, serving as the main Collection Hub for the Company. All employees actively contribute to the collection of e-waste by the Company’s collection centres. Furthermore, keeping in line with global technological advancements and to minimise our carbon footprint and environmental impact, we commenced repairs of LED television panels locally in 2016 using the latest electronic equipment. The initiative is currently progressing well.

Industrial Air Conditioning Division Singer successfully entered the central/industrial air conditioning market with the formation of the Singer Industrial Air Conditioning Division in 2012. Singer Industrial Air Conditioning Division, which is supported by a group of professional engineers, has already acquired major commercial projects such as the Platinum 1 Apartment project, Commercial Bank branch network, Wayamba University Auditorium project, Aira Lagoon Hotel project, Analytical Properties (Pvt) Ltd. project, Mandarina Hotel project, and Prime Grand Residencies project, to name a few. The Division has shown considerable progress within a short span of time

with the ambition of becoming a key Air Conditioning solutions provider in the market.

Globally reputed commercial air conditioner brands have tied-up with Singer as solution providers to the Industrial Air Conditioning Division. The Company entered into exclusive distributorships with Japanese brand Mitsubishi inverter/standard unitary products and VRF systems, and Fujiair Air Conditioners with a full range of heating, ventilation, and air conditioning (HVAC) products that have helped the Division to provide world class solutions to its clientele.

With increasing demand in the country, the Industrial Air Conditioning Division is poised to grow rapidly in the future.

Singer Factory Complex – PiliyandalaThe Agro Factory introduced six new water pumps in 2018/19: plastic impeller 3-inch diameter tube well pump series 0.5 HP , 0.75 HP, and 1.0 HP pumps designed for 4-inch diameter tube wells, a low cost pump range 0.5 HP and 0.75 HP under the Regnis brand specially for the Hardware Channel. Also a domestic-oriented 0.75 HP automatically controlled pressure pump for increasing water pressure in domestic usage. To promote the pumps, several outdoor programmes were conducted, including plumbers/farmers day programmes and door to door awareness campaigns in several towns across the country.

Singer factory has invested Rs. 11.5 million on dry paint booths from Spray Technics India. These paint booths are equipped with state-of-the-art air circulation and filtration systems to minimise emissions. The dust-free environment enables high gloss painting for modern furniture. The Factory has also invested in two Sames-Kremlin spray guns to enhance paint quality. Sames- Kremlin is a leading brand from France for spray painting equipment and own the patent for Air Spray technology. Transfer efficiency of these spray guns has been enhanced with this new technology and provides a better finish and coverage for wood surfaces.

Solid Furniture Factory sanding capacity expanded with the newly introduced Opera 5 wide belt sander, an investment of Rs. 12.3 million. Single pass 1mm high material removal rate can be achieved due to the combined mechanism of spiral cutter head and sanding roller. A four-foot feeding belt provides the flexibility to sand a wide range of tabletops with a smooth surface finish.

The Modular Furniture Factory invested Rs. 26.5 million in a new CNC router/drilling machine, the Skipper 100L and Rs. 7.8 million in an automatic edge banding machine and manual edge banding machine as replacements of old machinery. Simultaneously, the factory layout was changed to be compatible with the new machinery while focusing on efficient production processes.

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As an initiative to increase the market and gain more market share by product differentiation, seven new bedroom sets were introduced with the collaboration of Spacewood Furniture Group in India.

Efforts to increase pantry cupboard sales continued in 2018/19 and as a result, YoY revenue in 2018/19 went up by 8%. With a primary strategy of focusing on apartment projects, the Factory was awarded three Prime Land apartment projects with a total of 160 apartments. Extending service support (from measurements to installation) to shops and driving pantry sales through the Singer Plus channel with the introduction of block pantry units were some of the other strategies employed.

A two-day training programme was carried out by the Singer Piliyandala Factory in each quarter to enhance the product knowledge of the staff members of Singer Homes, Singer Mega, and Singer Plus channels. Apart from the study sessions, a hands-on experience was provided to all participants.

Marketing InitiativesSinger Lifestyle ExhibitionThe 8th Singer Lifestyle Fiesta was held at the BMICH on the 23rd to 25th of November 2018. The eagerly anticipated event drew in large crowds who came to check out a wide range of appliances, furniture, electronic goods, smartphones, and computers that were showcased under one roof and take advantage of attractive discounts. Ticket sales proceeds were contributed towards the Company’s CSR fund which funds the numerous CSR activities launched during the year.

Lighting Traditional Oil Lamp – Singer Lifestyle Exhibition 2018

Singer Lifestyle Fiesta 2018

Bathiya and Santhush Appointed as Brand Ambassadors for Sony Audio ProductsSinger (Sri Lanka) PLC together with Sony International appointed Sri Lanka’s leading musical duo, Bathiya and Santhush (BNS), as brand ambassadors for Sony audio products in the country. Since the 1990s, the pop duo have been one of the biggest musical acts in the Sri Lankan musical scene, mixing Sinhala, Tamil, and English lyrics in their original music while also using Hindi and remixing songs to bring out their contemporary style and revolutionising the country’s music industry in the process.

The eagerly anticipated event drew in large crowds who came to check out a wide range of appliances, furniture, electronic goods, smartphones, and computers.

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Music Legends, Bhathiya and Santhush appointed as Brand Ambassadors for Sony brand in Sri Lanka

Commenting on the partnership, Bathiya Jayakody stated, “As musicians, we are always conscious about the quality of the sound that we listen to as well as what we produce for our legions of fans. By using Sony audio products, you are guaranteed to get the very best in sound technology and experience a new level of audio excellence. This makes it a perfect fit for us as striving for that next level of musical excellence is what we always aim for.”

Singer Sri Lanka offers a wide range of Sony audio products through the largest distribution network in Sri Lanka, including headphones, wireless speakers, MP3 players, high-resolution audio systems, digital voice recorders, boomboxes, radios, portable CD players, home theatre systems, and accessories.

Customer Loyalty ProgrammeThe Singer Customer Loyalty programme is a flexible and convenient programme for Singer customers. Singer Loyalty customers are eligible to earn points through cash sales, hire purchase sales, monthly instalments, and when paying utility and credit card bills through Singer Express Pay counters. One Loyalty Point is equivalent to Rs. 1 and members can redeem their Loyalty Points against new purchases. Singer Loyalty Customers are also eligible for seasonal discounts from various partner merchants.

Singer’s superior Enterprise Resource Planning (ERP) system facilitates the recording of Loyalty Points earned and redeemed on customers’ receipts and customers receive SMS updates. The One-Time Password (OTP) system assures customers of safety and a convenient shopping experience, allowing them to redeem their Loyalty Points without carrying their Loyalty cards by sending the OTP to their mobile phone at the point of sale.

At the end of 2018/19, total customer enrolments surpassed 1.3 million and more customers than ever redeemed their points to the value of Rs. 89 million. Singer has rewarded Rs. 523 million worth of Loyalty Points at the end of 2018/19. Singer has tied up with prestigious establishments including

Bata, Nolimit, Vision Care, DSI, and Sarasavi Bookshop to occasionally offer exclusive offers and discounts to Singer Loyalty customers.

Interflash 2019Sony was the title sponsor for Interflash 2019, the main finance project organised by the Interact District 3220, which successfully concluded on the 25th of January 2019 at the Nelum Pokuna outdoor premises. The event catered to the biggest crowd a musical show in Sri Lanka has ever seen with over 8,000 individuals gathered to enjoy the concert.

Annual Fashion Show and Awards CeremonyThe Singer Fashion Show and Awards Ceremony 2018/19 was held at the Bishops College Auditorium in September 2018 and marked the annual showcase of designs and creations of diploma students from the Singer Fashion Academy. Their efforts were rewarded during the awards ceremony which took place simultaneously during the course of the fashion show. The Fashion Show included seven glamorous segments: Kandyan Wear, Office Wear, Kids Wear, Gents Wear, Evening Wear, Casual Wear, and Indian Wear. The awards ceremony also presented respective certificates to students who had successfully completed their Diploma in Scientific Dress Making and Diploma in Machine Embroidery.

Showcasing students’ talents at the Annual Fashion Show 2018

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The Fashion Show and Awards ceremony are conducted every year and are considered as the main events for the Singer Fashion Academy as well as the highlight of the Academy where diploma students receive the opportunity to showcase their creative streaks via a catwalk to an audience. The event allows them to forge for themselves a platform that gives them a sense of confidence and paves the way for wider range of business opportunities.

Singer Sri Lanka Social Media PresenceSinger Sri Lanka uses its Facebook page as a main platform to communicate directly with the fans and customers. Facebook is an integral part of the CRM cycle and can help customers to build trust, engage with the brand, ask queries regarding products and services, and place complaints, which we can directly contact the customer and resolve issues. Singer collects leads and information about its fan base and determines how to best communicate with its target audience. The Singer Facebook Page acts as a CRM tool which can be used to manage interactions with customers, clients, and sales prospects. Facebook helps to nurture and retain customers, entice former clients back into the fold, and reduce the costs of marketing and advertising.

Singer Sri Lanka was able to increase and maintain its 100% response rate as a result of a 24-hour Problem Solving policy, through which Singer endeavours to answer all queries received within 24 hours. We continue to use the 3A mechanism – Acknowledge, Apologise, Address – as a problem-solving technique. The technique has helped to build trust and perception of reliability and strengthen the relationship between the brand and its customers.

Awards and AccoladesGreat Place to WorkSinger (Sri Lanka) was recognised as one of the best workplaces in Sri Lanka for the fifth consecutive year, becoming an elite member in the “Hall of Fame” in July 2018 at the exclusive award ceremony held at Hilton Colombo by the Great Place to Work Institute, Sri Lanka. Each year, Great Place to Work conducts the largest annual set of workplace culture studies in the world to develop and recognise high-trust workplaces, and the survey was carried out for the sixth time in 2018.

At the Award Ceremony – Great Place to Work 2018

The “Retina”

of Life

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The “Retina”

of LifeEntertainment, information

and everything in between – delivered via the “retina” of

the world – television

SinGER Epic – SlE75G6B 75” GOOGlE anDROiD ai tV

Singer Epic 75” 4K HDR Google Android AI Smart TV follows the design language of

simple & flow. Every major part of the design is covered by aluminium alloy , protecting from scratch and damages by any hard object.

Besides, metal is hard to be distorted, ensuring that we have the top level product quality in our industry. The TV comes with

|Google Assistant application to get the real life smart TV experience.

KD-65a9FSony Master TV series meet the strict

criteria of top engineers and make beautiful images a reality.

SaMSUnG – SMGQa65Q8cna

Brilliant Quantum dot colour, immersive curved viewing, ten year burn in free warranty.

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SLIM-Nielsen People’s Brand of the YearSinger (Sri Lanka) celebrated its 13th consecutive win as Sri Lanka’s popular brand at the SLIM-Nielsen People’s Awards held in 2019. The Company won the “People’s Durable Brand of the Year” and the coveted “SLIM-Nielsen People’s Brand of the Year 2019” award.

Continuing the Journey – Peoples Brand of the year 2019

Dell Partner Awards FY19Singer (Sri Lanka PLC) won the most coveted “Best Distributor of the Year FY19 (Consumer)” and “Best Large Format Retailer FY19 (Consumer)” accolades at the Dell Partner Awards as a result of the excellent contribution the Company made towards the Dell business under the consumer segment during FY19. Singer also won the “Best Consumer Distributor Salesperson (FY19)” and “Salesperson of the Year – Client Solutions (Runner Up)” awards.

Dell Partner Awards Ceremony – Best Distributor of the Year

Annual Report Awards by the Institute of Chartered Accountants of Sri LankaSinger won the gold award in the trading sector at the annual report awards ceremony organised by The Institute of Chartered Accountants of Sri Lanka.

Annual Report Awards Ceremony 2018

Experience the golden age of television with the perfect television to suit your budget from Singer Sri Lanka.

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True to our vision and mission, Singer continues to offer customers a comprehensive product and service portfolio through our expansive network of distribution channels. As the times have progressed, our customers have evolved. Our product portfolio has expanded accordingly to provide customers with the products they desire. 2018/19 saw Singer deliver a slate of new, cutting-edge products to Sri Lankan customers from several world-renowned brands.

Product PortfolioSony OLED and 4K HDR TelevisionsSinger, together with Sony International, launched a new range of OLED and 4K HDR televisions along with the MASTER Series, the A9F and Z9F televisions. The new televisions are designed to deliver enhanced contrast, colour, and clarity. The A8F and X9000F series are the newest options to enjoy a refined 4K HDR picture quality through Sony’s proprietary innovations.

Launching new Sony Bravia OLED series to Sri Lankan customers

The new A8F series inherits Sony’s unique 4K HDR picture processor, the X1 Extreme, and Acoustic Surface technology to give high quality visuals and awe-inspiring sound. As an OLED TV, the A8F series produces incredibly detailed images with deep blacks, rich and realistic colours, and an exceptionally wide viewing angle.

The new X9000F series, equipped with the X1 Extreme processor, will be available in 85”, 75”, 65”, 55”, and 49” screen sizes. Both the A8F and X9000F series support Dolby Vision, the premium HDR format from Dolby Laboratories which creates an even more immersive, engaging cinematic experience with striking highlights, deeper darks, and vibrant colours.

In addition, the A9F and Z9F series are part of the new MASTER Series, a name Sony reserves exclusively for its highest picture quality TV models. Developed to follow a very

Singer delivers a slate of new, cutting-edge products to Sri Lankan customers from several world-renowned brands.

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strict set of product evaluation criteria by its most experienced picture quality engineers, Sony is confident the flagship MASTER Series delivers the highest picture quality possible in a home setting. From 4K film, video, and still cameras, to game consoles, mobile phones, and televisions like the MASTER Series, Sony is the only consumer electronics manufacturer capable of providing 4K solutions to consumers “from the lens to the living room”.

Singer Epic 4K AI Televisions with Google AndroidSinger launched the all-new Singer Epic 4K Artificial Intelligence TV range, the most affordable premium products yet from Singer. The TVs are available in 43-inch, 49-inch, 58-inch, 65-inch, and 75-inch sizes with Android TV, making Singer the first local TV brand to partner with Google Android. Android TV comes built-in with Google Assistant, enabling users to simply say “OK Google” or press the mic button on the remote control to find the information they require.

The all-metal 75-inch TV is marketed at around a third of the price of similar sized models from other brands with picture quality defined by features such as IPS panel, local dimming, and support for HDR10 and HLG high dynamic range formats. The television boasts a vast array of picture enhancements including scene modification, picture smoothening, colour compensation, skin colour improvement, and HDR+ technology that delivers outstanding images with high contrast and accurate details.

Singer is the first in Sri Lanka to introduce the 58-inch 4K Ultra HD Smart TV at the same price as 55-inch models in the market today. The 43 and 49-inch models feature a front-facing sound bar that gives the audience crisp and clear sound. The TV range comes with a 3-year fully comprehensive product warranty and is backed by Singer’s renowned after-sales service.

Sony Home Audio SystemsSinger, together with Sony International, launched six new high-power Home Audio Systems, including Shake 3-box models (MHC-M60D, MHC-M40D) and the all-in-one box style (MHC-V81D, MHC-V71D, MHC-V41D, MHC-V21D), all of which are guaranteed to fill any room with booming sounds.

Launching SONY SHAKE HiFi Audio Series

Launching Singer Epic AI google android TV

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Sony Home Audio SystemsSinger, together with Sony International, launched six new high-power Home Audio Systems, including Shake 3-box models (MHC-M60D, MHC-M40D) and the all-in-one box style (MHC-V81D, MHC-V71D, MHC-V41D, MHC-V21D), all of which are guaranteed to fill any room with booming sounds.

The 3-box models provide wide stereo sound for both day-to-day audio needs and weekend house parties with high power amplifiers providing an impressive level of sound pressure. Music can be played from any source such as CD, DVD, HDMI OUT (ARC), USB, Bluetooth, as well as mic and

guitar input. Users can also enjoy Wireless Party Chain via Bluetooth® and Party King mode.

Additionally, Singer and Sony unveiled the new SRS-XB41, SRS-XB31, and SRS-XB21 EXTRA BASS wireless speakers. The speakers are promising audio devices for parties, with exciting features such as live music mode, “Party Booster” feature, multi-colour line lights, speaker lights, and flashing strobe lights. Up to 100 speakers can be connected to create a Wireless Party Chain via Bluetooth. The sound quality of the speakers are designed to sustain and focus on “deep bass” and “punchy bass”, which perfectly complement bass-heavy music such as the popular music genres of EDM, grime, and hip-hop.

Huawei Y-seriesHuawei launched the much-anticipated Y9 2018, Y7 Pro, Y6 Prime, Y5 Prime, and Y5 Lite models as additions to the thriving Huawei Y-series.

The Y9 2018 entered the market with its superior display and photographical capabilities, using four cameras to capture stunning photos with the ability for the user to control the depth of field to make truly mesmerising portraits and landscapes.

The Y7 Pro expanded consumer’s visions with a wide DewDrop display, classic design, and an astonishing 16-megapixel front camera. An impressive 4000 mAh battery with AI power saving technology enables worry-free travelling without the need for frequent recharging.

The Y6 Prime’s 5.7-inch HD+ (1440x720) FullView display boasts an impressive resolution with an ultra-high screen-to-body ratio, bringing a larger world into your view. A sleek 2.5D screen design harmonises perfectly with the soft matte back, highlighting the flash of colour with the camera frame.

The Y5 Lite 2018 is the first ever Huawei entry-level smartphone with a 5.45-inch HD+ FullView display. The exceptional display has won over the attention of youth around the world, providing an ideal platform for video streaming, gaming, and an entertainment hub ideal for the young spirit.

Launching Huawei Smartphone Y-series

Asus LaptopsSinger introduced several Asus laptops upon the official announcement of the partnership with the multinational computer hardware giant. The range of laptops will be introduced at various price points and specifications to cater to the requirements of different customers. The products are powered by the latest Intel 8th generation Core processors and genuine Windows 10 operating system and come loaded with features including Full HD anti-glare screens, fingerprint readers, Asus’ fast-charging technology, and NVIDIA GeForce graphics technology. All Asus laptops offer a 2-year manufacturer’s warranty and customers can take advantage of Singer’s 2-year extended warranty at a special rate to obtain a 4-year warranty for all Asus laptops. The products are available through all Singer channels.

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Retro Microwave OvenSinger introduced the newest addition to their microwave range, the Retro Microwave oven. The oven comes in a red vintage design with modern performance.

Fitness Equipment RangeSinger introduced a new range of fitness equipment as a category expansion to the fitness range in January 2019. An Orbitrack and a bike were introduced in the first phase.

Singer Built-inSinger Built-in, a new addition to the kitchen appliances range, offers an exquisite selection of hoods and hobs to match the requirements of our customers at affordable prices. The hoods are inclusive of flat and chimney-type and the hobs come in different sizes and couple with the hoods.

Singer Industrial Rice CookerThe Singer Industrial Rice Cooker comes with a 10-litre capacity with the ability to cook up to 6kg of rice. The rice cooker is ideal for small scale businesses and is the most affordable model in the market amongst similarly capable rice cookers.

Singer Electric Oven and Free-standing Gas OvenThe Singer 38-litre electric oven is the largest capacity oven in the entire Singer tabletop electric oven range, with a spacious cavity that allows for baking up to 2.5kg.

Singer also introduced an European-made stylish free-standing oven with a capacity of 62 litres. The oven features Italian-made Sabaf burners with an electric oven compartment at an affordable price compared to other leading brands in the market.

Beko Built-in SolutionsBeko offers an array of built-in solutions that seamlessly integrate into any kitchen design, providing a clean, modern, and elegant feel to the kitchen. From hoods and hobs to microwaves, ovens, refrigerators, and washers, Beko fulfils the voids in any modern kitchen. As Europe’s No. 1 brand and equipped with the latest European technology, Beko’s built-in solutions are targeted primarily at the high-end market.

Unic Rice CookersUnic introduced a range of rice cookers in four colours and four capacities from 0.6 litres to 2.8 litres. The range introduces colour variance to Singer’s existing rice cooker range and are sold at attractive prices aimed towards the price-conscious market.

Samsung Smart Convertible RefrigeratorsSri Lankan customers can now experience the all-new technology of smart convertible inverter refrigerators. The revolutionary “Smart Convertible 5-in-1” range caters to the diverse storage needs of consumers. The refrigerator is powered by Twin Cooling Plus technology that enables consumers to be flexible with cooling storage based on their needs. The true independent cooling system allows turning the freezer into a fridge when required. The new refrigerator is energy efficient, durable, and addresses the unique storage needs of consumers while offering the ultimate convenience.

Samsung also introduced the Smart Digital Inverter range of refrigerators, which offer a blend of freshness, energy efficiency, even cooling, and durability. It offers the perfect solution to provide savings on electricity bills, retain uninterrupted cooling, and freshness during power cuts. Samsung is committed to addressing the diverse consumer needs and preferences of consumers through meaningful innovation. The new range of Samsung convertible inverter refrigerators come in 320 litre and 345 litre capacities and are priced competitively. They are available at over 442 Singer outlets across the island and are backed with unmatched service by Singer.

Philips Personal Care ProductsThe business of grooming/personal care products is an emerging segment in the consumer durables industry. Singer entered the business in March 2018 through the reputed brand, Philips. From then to now, the business has expanded in terms of the product range and distribution opening new avenues to its retail business. Singer offers a range of

Partnering with ASUS brand

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male and female products to fulfil the grooming needs of our customers.

Casio Musical InstrumentsCasio musical instruments ranging from mini keyboards to digital pianos were introduced to fill the void in the entry range segment in the musical instrument product category. The range is to be expanded in terms of distribution and products in the upcoming financial year. A variety of products including mini keyboards, standard keyboards, high-grade keyboards, arranger keyboards, and pianos will be added to the existing range.

Customer Feedback and ResearchSinger’s customers seek to purchase quality products from genuine companies that meet their standards of value and demand transparency in sourcing. As a large customer-centric organisation, our customer service representatives across the country strive to deliver the best quality products and services and maintain or exceed expectations through collecting customer feedback. We also invest in obtaining data through feedback forms, informal surveys, product surveys, data mining, mystery shoppers, local and international research teams, and our Contact Centre that records and reports all customer complaints and feedback. Occasionally, we utilise the services of research agencies such as Nielsen and LMRB to conduct consumer market research or product-specific research to identify evolving consumer trends and needs. We also perform data mining on loyalty members to identify their preferences and improve our products and services.

Customer retention

Customers at the beginning of the period 8,788,899

Customers acquired during the period 454,009

Customers at end of period 9,242,908

Customer Satisfaction SurveyAs a customer-centric company, Singer is dedicated to enhancing customer satisfaction, convenience, and service quality. We regularly conduct customer satisfaction surveys to keep track of the pulse of our customers and respond accordingly.

Customer Satisfaction Surveys

Customer Surveys conducted 12

Customer complaints received 18,998

Customer complaints resolved 18,998

Singer Contact CentreSinger was the first consumer durables retailer in Sri Lanka to establish a Contact Centre to offer our customers unparalleled after sales service. The Contact Centre initially began its operations in year 2008. Today the Singer Contact Centre is a larger business unit which consists of 22 staff members. The Singer Contact Centre operation facilitates customers through inbound, outbound calling, and processing of online sales. Our inbound operation mainly involves handling all incoming customer calls related to products and services, customer complaints, and general inquiries. Our outbound operation consists of handling hire purchase verifications and customer satisfaction surveys related to after sales service.

The Singer Contact Centre operation was further extended in 2018/19 by registering all product-related complaints received through dealers and service franchises. We also introduced a telesales unit which conducts operations to convert all Contact Centre sales leads into successful sales and to conduct special campaigns for brand management; the team increased sales volumes during the year. In order to improve the customer experience in after sales service, the Singer Contact Centre facilitates the registering of all product-related complaints and a mechanism to follow up such inquiries with the Service Centre management. In 2018, the Contact Centre served over 400,000 customers.

Furthermore, the Contact Centre provides relevant and continuous training to staff on its operations and services through internal and external training programmes designed to enhance the customer experience.

Contact Centre 2018/19 2017/18

Outbound 871,229 535,000

Inbound 333,995 306,070

Total 1,205,224 841,070

As a large customer-centric organisation, our customer service representatives across the country strive to deliver the best quality products and services.

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GreetWe greet customers with a warm and reassuring smile to make them feel welcomed and ready to be heard.

Listen IntentlyWe listen to the customer and never interrupt them as they need to tell their story and feel they have been heard.

ApologiesWe sincerely convey our apologies to the customer for the inconvenience caused.

Reach AgreementWe seek to agree on the solution that will resolve the situation to their satisfaction. Our best intentions can miss the mark completely if we still fail to deliver what the customer wants.

Follow-upWe follow-up to ensure the customer is completely satisfied.

Thank ThemWe thank the customer for bringing the problem to our attention. We can’t resolve something we aren’t completely aware of, or may make faulty assumptions about.

Seek the Best SolutionWe determine the customer requirement by inquiring to provide a solution.

Take Quick ActionWe act on the solution with a sense of urgency. Customers will often respond more positively to our quick resolution of the matter.

Our Retail Presenceup to March 2019

Central

Sabaragamuwa

Southern

Uva

Eastern

Western

North Central

North Western

Northern

21

35

40

51

27

31

53

39145

Singer Mega

Singer Plus

Singer Homes

Satellite Shops

SISILWorld

Total

Northern – 17 – – 4 21

Central 2 28 3 10 8 51

North Western – 28 2 5 5 40Sabaragamuwa – 20 2 6 11 39

North Central – 25 1 4 5 35

Western 21 85 9 5 25 145

Eastern – 21 – 4 2 27

Uva – 14 1 11 5 31

Southern – 33 1 13 6 53

Total 23 271 19 58 71 442

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Singer is committed to providing an exemplary work environment for its employees with employment practices that are geared towards attracting and retaining talent-based on merit. We enhance the skills of our employees through extensive training and development programmes, and our work environment is benchmarked against the highest standards for health and safety.

Employee Profile

Part A Male Female Total

Permanent 2,174 401 2,575

Temporary 175 48 223

Total 2,349 449 2,798

Part B Male Female Total

Full time 2,349 449 2,798

Part time – – –

Total 2,349 449 2,798

Labour Practises and Decent WorkCompliance with all statutory provisions governing labour practices and decent work is ensured across the organisation and Group of Companies. The minimum number of weeks’ notice provided to employees and their elected representatives prior to the implementation of significant operational changes that could substantially affect them is determined based on the situation.

Part B Male Female Total

Western Province 1,277 301 1,578

Central Province 235 38 273

North Central Province 87 10 97

Eastern Province 58 5 63

Southern Province 232 43 275

North Western Province 150 24 174

Uva Province 99 11 110

Sabaragamuwa Province 143 17 160

Northern Province 64 4 68

Total 2,345 453 2,798

Recruitment and Turnover

18-28 29-39 40-50 50 Above Total

M F M F M F M F M F

Recruitment 256 119 135 20 23 6 11 6 426 151

Turnover 171 42 117 28 43 7 29 5 359 82

Singer is committed to providing an exemplary work environment for its employees with employment practices that are geared towards attracting and retaining talent-based on merit.

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18-28 29-39 40-50 50 Above Total

Number % Number % Number % Number % Number %

Key and Senior – – 4 0.14 29 1.04 26 0.93 59 2.11

Middle Management 1 0.04 42 1.50 52 1.86 25 0.89 120 4.29

Junior Management 17 0.61 131 4.68 41 1.47 24 0.86 213 7.61

Executive 17 0.61 42 1.50 14 0.50 3 0.11 76 2.72

Non-management 747 26.70 841 30.06 512 18.30 230 8.22 2,330 83.27

Total 782 27.90 1,060 37.88 648 23.16 308 11.01 2,798 100.00

Governance Body

Female Male Total

Number % Number % Number %

Key Management – – 14 100 14 100

18-28 29-39 40-50 50 Above Total

Number % Number % Number % Number % Number %

Key Management – – 1 7.14 3 21.43 10 71.43 14 100

culture of continuous learning, innovation, and team building, which is vital for a sustainable workplace. Empowering staff though training and the development of new skills can result in the Company retaining high performing, loyal staff and avoid the high costs associated with the recruitment and training of new employees.

Training successors can increase the productivity, skill, and innovation of the workforce, enabling the Company to better retain top talent and creating a faster, more effective response mechanism to change. Finding new leaders is critical to the successful growth of the Organisation, and growth is greatly affected by the number of leaders we recruit.

Succession Plan: The 3x3x3 InitiativeThis initiative selects up to three employees for every Management position. Three areas of development are identified, and the employees are groomed over a three-year period to take on critical Management roles whenever they become available. Our Development and Succession Programme, the 3x3x3 initiative, seeks to ensure all key managers, including Senior Managers, middle managers, and selected junior managers, have identified and developed their successors.

Identifying Skills Required for the FutureThe recruitment and training of employees who have the potential to lead the Company in the future ensures the continued growth of the business. Beyond academic credentials and skill levels, various other factors are also taken into consideration when making recruitment and training decisions.

It can be impractical to list the ideal skill sets, “hard” or “soft”, that are required in future leaders. A company culture is nearly impossible to replicate; every organisation has envisioned its own “ideal” professionals. Yet, certain soft skills can suggest the suitability of an individual for a leadership position, such as the ability to take responsibility and get work done.

Training and DevelopmentTurnover costs can range from anywhere between 10% to 30% of an employee’s annual salary. These costs can include direct expenses such as recruitment and the expenses incurred due to the loss of productivity and institutional knowledge.

Although there can be several reasons for leaving an organisation, managers who focus on grooming their successors can avoid many of these reasons. When a manager recognises the potential in an employee with the required personality traits, they build skills and leadership training into their daily interactions with staff. This can have an immense effect on the corporate culture, as staff understand they are valued by their Manager and the Company. It fosters a

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Recruitment and Turnover %

18-28 29-39 40-50 50 Above

M F M F M F M F

Recruitment 44.37 20.62 23.57 3.47 3.99 1.04 1.91 1.04

Turnover 38.55 9.52 26.76 6.35 9.30 1.59 6.80 1.13

DiversityTotal Employees

Female Male Total

Number % Number % Number %

Key and Senior 2 0.07 57 2.04 59 2.11

Middle Management 10 0.36 110 3.93 120 4.29

Junior Management 35 1.25 178 6.36 213 7.61

Executive 14 0.50 62 2.22 76 2.72

Non-management 388 13.86 1,942 69.41 2,330 83.27

Total 449 16.04 2,349 84.00 2,798 100.00

Province Recruitment Turnover

Male % Female % Total % Male % Female % Total %

Western Province 202 35.01 93 16.12 295 51.13 171 38.78 52 11.79 223 50.57

Central Province 47 8.15 13 2.25 60 10.40 45 10.20 4 0.91 49 11.11

North Central Province 14 2.43 3 0.52 17 2.95 16 3.63 3 0.68 19 4.31

Eastern Province 7 1.21 3 0.52 10 1.73 15 3.40 1 2.03 16 3.63

Southern Province 38 6.59 14 2.43 52 9.01 38 8.62 7 1.59 45 10.20

North Western Province 45 7.80 11 1.91 56 9.71 21 4.76 5 1.13 26 5.90

Uva Province 11 1.91 4 0.69 15 2.60 16 3.63 5 1.13 21 4.76

Sabaragamuwa Province 35 6.07 8 1.39 43 7.45 14 3.17 3 0.68 17 3.85

Northern Province 27 4.86 2 0.35 29 5.03 23 5.22 2 0.45 25 5.67

Total 426 73.83 151 26.17 577 100.00 359 81.41 82 18.59 441 100.00

Permanent Temporary Total

Western Province 1,530 82 1,612

Central Province 232 29 261

North Central Province 94 4 98

Eastern Province 55 6 61

Southern Province 235 29 264

North Western Province 147 24 171

Uva Province 94 18 112

Sabaragamuwa Province 127 26 153

Northern Province 61 5 66

Total 2,575 223 2,798

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The Singer Training Philosophy

Catch the Vision of MultiplicationOne cannot sell something unless they believe in it

Be IntentionalA conscious decision must be made to replace oneself. Multiplication should be a part of one’s strategy and there must be a system of leadership recruitment.

Start EarlyLeaders must be replaced before they are needed. Leaders must invest in their own personal growth. One cannot lead unless they have been there.

Humble YourselfLeaders must not fear new leaders being better leaders than them. People must be allowed to shine under one’s leadership; this will advance one’s ability to lead. A team will follow their leader if there is a direct benefit to them and if they trust the integrity of the leader.

Share Responsibilities EarlySharing responsibility at an early stage is the easiest way to foster learning. When more ownership is given to people on tasks, they will be more motivated to participate and learn.

Identify PotentialLook for potential in people. Early identification of potential is the key to be focused and to offer appropriate training to individuals.

Create an Environment Conducive to Producing LeadersCommitment to creating an environment that is conducive for learning and development is vital. An environment that welcomes engagement could lead to the creation of good leadership, shared responsibility and collective growth.

RecruitIdentify and recruit the best quality of people, adhering to the ‘recruitment of quality’ principle.

Lead for Life ChangeIdentifying and nurturing potential leaders who have the potential to be bold, mature and responsible decision makers is part of our focus areas in creating a quality workforce.

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Conditioning Life

Creating ambience – producer of an optimal aura supporting

productivity and liveability – the air conditioner.

• 12,000 BTU – 24,000 BTU

• Blue fin technology

• Refrigerant R410A

• Curved Design

• Copper Condenser

• Inverter

• 9,000 BTU – 24,000 BTU

• Refrigerant R410A.

• Anti-corrosive blue fin technology.

• Copper Condenser.

• R32 Eco green Refrigerant

• Filter Clean Indicator

• Blue fin technology

• Kaimin Function – Provides optimum cooling without chill effect.

SinGER

SiSil

HitacHi

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Our Approach to Employee’s Progression and Career DevelopmentSinger places emphasis on the career development of employees, encouraging them to reach their personal and professional goals. This serves to make their work lives more satisfying while ensuring the continued success of the Company.

As a responsible employer, we encourage our employees to pursue career development opportunities and continuously support their professional growth. We continue to invest time and money, even in challenging times, for the training and professional development initiatives of our employees.

Singer conducts six categories of training: external training, operational training, product training, sales, customer care training, territory training, and service centre trainings. Most training programmes are conducted at the state-of-the-art training centre at the Group’s Head Office. Field training is conducted according to the convenience and requirement of the trainees and trainers. Furthermore, we have invested in the infrastructure development of our regional service centres, which can accommodate approximately 25 employees at a time.

External TrainingExternal training covers programmes such as seminars, conferences, and technical or function-specific training that addresses the needs of employees that are identified during the year. These programmes enable our employees to stay up to date with industry best practices in varied functions. Line Managers have the flexibility to request specific training programmes based on requirements at any given time.

External training is conducted by the British Council, IPM Sri Lanka, Ceylon Chamber of Commerce, Employers’ Federation of Ceylon, CIMA Sri Lanka, CA Sri Lanka, McQuire Rens & Jones, Life Skills Academy, and other resource persons. Customised training programmes are organised by the HR Division based on employee’s specific job requirements. Training programmes cover areas such as motivational techniques, basic IT Knowledge, customer care, marketing, and networking.

Territory TrainingTo increase customer satisfaction at the showroom level, it is vital to keep the showroom staff updated on the latest products and correct practices. In order to achieve this objective, the Human Resources Development Department implemented territory trainings to diffuse knowledge effectively among showroom staff. 1,185 showroom employees underwent training and mentoring at the showroom level through this initiative in the period during April 2018 – March 2019.

Training on Sales and Customer CareAimed at retail showroom staff in the field, the programme covers sales techniques, the importance of customer care, and self-motivation techniques. The programme was conducted covering all branches.

Industrial Sewing Machine TrainingUpon request, a selected number of Industrial Sewing Machine trainings were conducted, in liaison with the Industrial Products Division. The programme covers the selling, assembling, and basic troubleshooting of industrial sewing machines.

Product Knowledge – White GoodsThese training programmes cover white goods including refrigerators and deep freezers, washing machines, water pumps, air conditioners, sewing machines, and ovens. These programmes focus on demonstrating the latest products such as Geo SMART refrigerators. Singer Plus, SISIL World, and Singer Mega staff received this training, as did all new recruits as a part of their Singer Retail Academy (SRA) training.

Product Knowledge – Brown GoodsThis is a monthly programme which provides new recruits/appointees such as Trainee District Managers, Trainee Branch Managers, Approved Dealers, Sales Agents, Customer Care Assistants and Shop Assistants with the necessary product knowledge of brown goods, such as televisions, audios, computers and other electronic devices. Apart from the product knowledge, trainees are also educated on the latest technologies and the essentials of selling electronic appliances.

Learning Management System is known as “Selfy” (Singer E-Learning for You!) and was launched on the 16th of January 2019.

Stay cool and enjoy greater comfort and productivity with Singer Sri Lanka’s air conditioning solutions.

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Latest Product IntroductionsAll Branch Managers and selected Assistants receive training on newly introduced products. The programme was conducted to educate field staff about the latest products in the aforementioned categories, as well as the essentials of selling consumer durables. The main products under the latest product introduction for the period during April 2018 – March 2019 include the Singer Epic AI Televisions and latest Sony products.

Training Programme on FurnitureThis training programme updates employees on furniture operations and familiarises them with the product range. Participants were given a hands-on experience and real site experience in furniture assembly, dismantling, designing of pantry sets, basic drawing concepts, material selection, and product costing. They are given a basic understanding of the communication process of the factory to deliver the goods to customers on time. The programme was conducted with the support of the SSL factory, and 174 showroom employees received the training during the year.

Operational TrainingSinger Retail Academy DiplomasThe Singer Retail Academy, originally a Singer Asia initiative, aims to develop our employees who are involved in field operations. The Academy currently conducts five diploma programmes for Customer Care Assistants, Auditors, Credit Officers, Sales Promotion Officers, and Executive Retail Managers respectively. The programmes consider aspects of each group that need to be strengthened for the effective and efficient functioning of operations. These aspects constitute the modules of the programmes, culminating in 164 modules being conducted under these diplomas that have benefited over 2,700 employees.

Hire PurchaseTrainings on hire purchase were conducted for Branch staff across our Retail Channels to educate them and refresh their knowledge on procedures and best practices of the hire purchase payment option for customers. Over 805 employees were trained under 23 Hire Purchase Training Programmes in 2018/19.

Western Union TrainingSinger offers the facility to transfer money through Western Union. Trainings were organised for our Retail Channels staff to familiarise them with the protocols involved in performing this service for customers. 319 employees underwent 14 Western Union trainings.

Treasury, Audit, and System TrainingKnowledge about the internal functions associated with the sales process is important for our field staff. Trainings on cash

management, auditing, best practices, and the Sales ERP (Enterprise Resource Planning) module were conducted with the aim of enabling staff to provide superior service to our customers.

Service Centre Training ProgrammesIt is vital for the after-sales service staff of Singer to gain a thorough and clear understanding of the technical aspects of the products as well as customer service. Therefore, 256 service personnel were trained in the last financial year.

Other Training ProgrammesOrienting to the OrganisationIt is important and useful for our employees to have a macro picture of Singer’s operations. The formal induction and visits to the retail outlets of the Company’s channels of distribution offers a broad overview of the whole business upon joining. Guided visits to Company locations such as the factories and warehouses provide a much-needed real life visual element and exposure that help them remember and relate better through their jobs to the Organisation’s grander objectives. A programme to address this necessity was conducted for staff who had not visited these locations.

Lean Management TrainingThe Management staff of the Group underwent Lean Management Training in 2018. The training covered the basic concepts of lean management and Six-Sigma. A Green Belt Training Programme was also conducted for select employees and shared further insight into lean Management concepts and Six-Sigma concepts. The training included a practical project to improve a current process or implement a new concept.

Language Development ProgrammeWe believe that effective business communication is critical to successful businesses. Selected staff members from the credit and service functions underwent a 72-hour programme to develop their linguistic skills.

New InitiativesThe Human Resources Development Division of the Organisation introduced an online platform for Shop Assistants and Customer Care Assistants to gain knowledge of the products and daily operations of the branches through an easy and cost-effective method. This Learning Management System is known as “Selfy” (Singer E-Learning for You!) and was launched on the 16th of January 2019 by introducing a mobile application named “Selfy” for the branch staff. It was introduced in phases; the first phase was launched at the start of the LMS launch, where 64 locations in Colombo were covered with over 500 users of the mobile application. Phase two will be launched in May 2019 where the Colombo and Central areas will be covered with over 1,200 users.

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Investment in Training and Employees Trained 2018/19

Category General Training

Product Training

Operational Training

External Training

TTO Training

Service Centre

Training

SRA Training

Sales and Customer

Care Training

Total

Investment (Rs.) 3,400,287 1,911,349 3,580,690 2,070,158 – 1,402,571 1,321,387 5,658,771 19,345,213

No. of Programmes 29 78 61 50 213 12 170 26 639

No. of Participants 728 1,817 1,476 199 993 435 2,809 1,593 10,050

No. of Training Hours 7,039 14,325 13,036 1,679 8,124 2,040 11,953 9,460 67,656

Investment per Participant 4,671 1,052 2,426 10,403 – 3,224 470 3,552 1,925

Average Training Hours by Employment Category

Employment category Male Female

Managerial 6.75 7.17

Executives 12.46 8.40

Others 7.37 13.88

Employee FacilitiesWe offer our employees a wide range of facilities, including 42 days of leave per annum, 3-day excursions, uniforms, staff discounts for Singer products, staff loans, training and development opportunities, and sports activities. Some of these benefits vary by employee grade and nature of job functions, while some facilities are common to all employee categories.

ErgonomicsEmployees spend a significant amount of time at work. Therefore, we ensure a conducive work environment. We look into aspects such as workspace-to-employee ratio, air conditioning, noise pollution, desk and chair alignment, sanitary needs, and provide adequate space for meals and relaxation.

Professional SubscriptionsAs a company benefit scheme, subscription fees are paid to professional bodies on behalf of our employees. This helps to enrich their careers and many managers have benefited from this scheme.

Internship ProgrammeAttracting and retaining the right talent within the Organisation is a key challenge. We have partnered with several state and private sector institutions to initiate brand building activities of our Company. Singer’s internship programme helps to attract youth into the Organisation and give them an understanding of our Company, business practices, policies, and vision for the future. This also acts as a CSR project for students following local and foreign degree programmes in

Performance AppraisalAll employees of the Group undergo performance appraisals excluding interns, trainees, and temporary employees. The process facilitates career management, mapping development paths, and enhancing the effectiveness and motivation of our employees. It helps to achieve better results, manage employees effectively, and identify the training needs of individuals.

Strategic information is provided to employees through the Company’s internal magazine, “Sinera”, and staff meetings with the Management.

Special emphasis is given to managerial development as we understand that a good leader is able to build a well-integrated and effective team.

Individual performance appraisals are conducted semi-anually with the final appraisal at the end of every year. Each Line Manager assesses their subordinates’ strengths, weaknesses, and training and development needs, which are incorporated into the training plan for the upcoming year.

Divisional Heads at Singer are required to give a detailed account of their division’s training requirements in the third quarter each year. The Training Department schedules and implements tailor-made programmes to address training needs, either through external training programmes or through internally conducted programmes.

Evaluation techniques such as “Mystery Shopper” and “Call Centre Complaint” are used to assess field employees’ skill levels and provide training as necessary.

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Sri Lanka and pursuing professional qualifications (Chartered Institute of Management Accountants, UK and The Institute of Chartered Accountants of Sri Lanka). Students following Finance, Marketing, Supply Chain, and Human Resource Management degrees are incorporated into the programme. Interns are given a comprehensive orientation of the Organisation’s operations and in-depth practical training within their specialised areas. We are also focusing our attention on evaluating our remuneration packages to be at par with the industry.

In an effort to retain talent within the Company, a new reward scheme to recognise achievements, with rewards such as overseas tours for high scoring shop assistants, will be launched under the product knowledge evaluation programmes.

Employee BenefitsA wide range of benefits are provided to the permanent staff members of our Company.

Medical BenefitsMedical expenses of our employees are reimbursed up to predetermined amounts calculated according to employee grade. If the expenses exceed this amount, the employee and the Company share the balance equally. However, in certain cases, Singer reimburses the medical expenses in full. We also provide hospitalisation and OPD treatment coverage to all Management staff members and their immediate family members.

Accident CoverThis facility is extended to staff members who are exposed to accidents either at the workplace or as a result of extensive travel.

Travel ExpensesSeveral facilities are extended to employees engaged in official travel, including vehicle maintenance, transport allowances, and reimbursement of travel expenses. Employees in the field staff and base staff categories receive travel benefits based on their responsibilities and employment grade.

Discounted SalesAll staff members enjoy convenient access to all products marketed by Singer (Sri Lanka) PLC at special discounted prices and easy payment schemes.

LodgingExpenses incurred by field staff members staying at Company-approved hotels while on official business are reimbursed.

Housing LoansEmployees who have completed five years of service are eligible to receive financial assistance from the Company. This assistance is given to cover the initial expenses of building a house while they await a loan facility from a financial institution.

Distress LoansDistress loans are given to employees in the case of emergencies such as a sudden illness, death of a family member, damage to homes due to floods or other natural causes, urgent home repairs, or a family wedding, etc.

Vehicle/Motorcycle LoansPermanent employees in specified categories are eligible to apply for interest-free or low-interest vehicle loans through the Singer Management.

Educational Aid SchemeTwo mechanisms are in place to support employees with their studies:

1. A lump sum of Rs. 225,000 is granted on the condition the employee serves the Company for eight years. The facility should be repaid only if the employee leaves the Company before the expiration of the eight years. This is mostly granted for postgraduate studies.

2. Two-thirds of the cost of a particular course fee is reimbursed by the Company on the successful completion of the final examination.

Death DonationIn the event of the death of an employee, the family members of the deceased will receive a donation of Rs. 50,000 in addition to six months’ salary. In the event of the death of an employee’s spouse, child, parent, or unmarried sibling, the employee will be granted a sum of Rs. 25,000. The Death Donation Fund is a contributory fund maintained by permanent employees.

MaternityAll female employees are entitled to maternity leave.

Number of Employees

Total number of employees who took maternity leave in 2018/19

22

Total number of employees who returned to work after maternity leave ended in 2018/19

13

Total number of employees who returned to work after maternity leave ended and were still employed 12 months after returning to work in 2018/19

12*

*Five employees have resigned. Five employees are still on leave.

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Singer – A Great Place to WorkFor the fifth consecutive year, Singer (Sri Lanka) PLC was recognised as one of the best places to work in Sri Lanka in 2018 at an exclusive ceremony by Great Place to Work Institute.

Each year, Great Place to Work (GPTW) conducts the largest annual set of workplace culture studies in the world to develop and recognise high-trust workplaces.

Singer continuously strives to create a great work ambience for its employees, through a range of team activities to build camaraderie among departments. Activities include staff training and development programmes, recreational and cultural activities, and the engagement of families of staff members.

Singer introduced flexi hours in certain locations to improve the work-life balance of employees. The annual family outings, Christmas parties, and children’s art competitions are some of the most popular events in the Company calendar.

Retaining our best talents through developing and retaining top performers and the dynamic Management team have made Singer the employer of choice; three of our Executive Directors initially joined the junior grade of the Company and rose up the ranks over their tenures.

Many of the Company’s initiatives have contributed to creating a vibrant team of happy and committed people driving the best customer experiences. These include, establishing the world’s first Corporate Rotaract Club, having an active Corporate Toastmasters Club, and holding inter-departmental competitions including a novel talent show titled “Singer Got Talent”.

Sporting ActivitiesSinger encourages employees to participate in a range of sports activities including cricket, badminton, volleyball, and netball. Employees can participate in Mercantile and Inter-Departmental competitions held every year.

HR Policies and ProceduresEmployees can communicate with the Board through their respective Divisional Heads. Monthly management review meetings, sales review meetings and operations meetings are

held with the participation of all key senior and relevant subject managers. We maintain an open-door policy to facilitate a culture where employees of all levels can freely express their views and recommendations to the Management staff.

We attribute Singer’s success to having a motivated workforce. Therefore, “doing good” cascades throughout the communities in which we conduct business.

Encouraging Open DialogueWe encourage open dialogue within our Organisation as it builds trust among all employees. This is essential to drive operational excellence and strengthen employee integrity and credibility. Sincere and comprehensive dialogue on any issue in the Company helps builds trust.

Promoting Employee PerformanceSeveral employee and team recognition schemes are in place, such as the annual conference, and the list of winners are published in the Sinera magazine.

Grievance HandlingSinger follows a formal process in handling grievances. There were no grievances about labour practices reported through the formal grievance mechanism during the year under review.

Equal RemunerationRemuneration is determined through a transparent performance evaluation mechanism. Hence, there is no disparity between the salaries of men and women in our Organisation.

Occupational Health and SafetySafety and Health CommitteeTaking into consideration the magnitude of our Group and the diversity of our activities, several proactive and reactive measures have been implemented to ensure the highest standards of occupational safety and health. Our employees are the backbone of our Organisation and we strive to ensure they are treated with great respect and care. A wide spectrum of health and safety measures, including hygiene and accident-safety practices, are implemented by our Safety and Health Committee, whose members are representatives of the entire Company and meet once a quarter or in case of emergencies.

We encourage open dialogue within our Organisation as it builds trust among all employees.

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A New “Spin” to

LifeA single resource that frees up

‘space’ in a busy life – ‘wash, rinse, spin’ relegated – to the

washing machine.

SaMSUnG - WD80K6410 • Capacity - 8 Kg (Wash), 6 Kg

• AddWash™ Option - Simply add during wash with AddWash™ door

• Eco Bubble Technology

• Diamond Drum

• Sanitise Your Clothes With Air Wash Technology

SiSil – Sl-FlE047R • Fully Auto 7kg Front Loader

• Pre-Wash

• Extra Rinse

• Child Lock

• Extra 15 Minute Quick Wash

WHiRlpOOl Wp-WM31278• 14 Kg Capacity Fully Auto Top Loader

• 360 Tumble Motion

• Care Move Technology

• 6th Sense Technology

• In-Built Heater

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Monitoring Health and Safety PerformanceThe Committee assists in the development, monitoring, and review of health and safety policies and procedures of the Group. They also look into proposals, changes to the workplace, policies, work practices, and procedures which may affect the health and safety of the employees. A successful health and safety programme requires strong Management commitment and worker participation. Therefore, the Committee actively promotes the importance of health and safety among employees.

Benefits of Promoting a Healthy WorkforceThe Organisation receives numerous benefits through a well-managed health and safety programme, including a positive and caring image, improved staff morale, reduction in staff turnover and absenteeism, increased productivity, reduction in healthcare/insurance costs, and risk of fines and litigation to the Company.

Employees benefit from a safe and healthy work environment, enhanced self-esteem, reduced stress, improved morale, increased job satisfaction, increased skills for health protection, improved health, and a sense of well-being.

Factory Workforce Injuries in 2018/19

Accidents

Cut injuries 48

Eye injuries 22

Other 7

Total 77

Employee EngagementSinger Sri Lanka Toastmasters ClubIn line with the Toastmasters mission, the Singer Sri Lanka Toastmasters Club since 2011 has nurtured, supported, and empowered our membership in developing their communication and leadership skills by introducing and initiating thought provoking themed meetings and providing ample opportunities for interaction and networking through joint meetings. This expands their ability to think out of the box and creativity, thus leading to greater self-confidence and personal growth.

The Club continued to engage members in 2018 with creative themed meetings including “All that is Irish” commemorating St. Patrick’s Day, Chinese New Year, and providing a fun environment with outdoor meetings and creative themes such as “Mad Hats and False Noses” at The Arcade, Independence Square, and an Area Meeting based on the Avurudu theme where the Toastmasters meeting given the Avurudu turn. The Club continued to engage with other clubs through joint meetings such as “Cupids of Area C2” with HSBC TMC who organised a Valentine-themed joint meeting, AMW with a Father’s Day meeting, and Sampath Bank with a Christmas-themed meeting.

Toastmaster Rolinka Perera was selected to compete in the Division C Impromptu Speech Competition and members had the privilege of participating in Ovation 2018 which provided opportunities for networking.

The Singer Sri Lanka Toastmasters Club will continue to empower and enrich our members with the core values of Respect, Integrity, Service, and Excellence.

Singer Sri Lanka offers modern washing machines that clean clothes gently but thoroughly.

Installation Ceremony of Singer Toastmasters Club

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Rotaract ClubThe Rotaract Club of Singer was the first corporate Rotaract Club in the world. The 2018/19 tenure marked the successful 5th installation ceremony of the Club held at the Company’s Head Office. The Club has always had the passion and focus in serving society. Several successful projects have been organised by the Club to support the needy through avenues such as community service, public relations, club service, and international service. The Club has also been dedicated to developing the skills of their members along with the Company staff. Industry experts have conducted sessions for members to develop their leadership and public speaking skills and becoming good citizens to our nation. The Rotaract Club of Singer will continue its service to society, members, and Company staff.

5th Installation Ceremony of Rotaract Club of Singer

New Year at SingerThe New Year was embraced by our employees with the prayers and blessings of all religions at the Head Office and branches.

Sinera MagazineThe official newsletter of Singer Sri Lanka, the Sinera magazine is distributed to our employees free of charge to keep them informed of the activities of our Organisation. Published twice a year, the magazine is packed with corporate news, Company bulletins, and photographs.

The Sinera Facebook page has 931 employees who are active on the page.

Kids Art Competition 2018/19The Kids Art Competition was organised for the 8th consecutive year. Over 150 children participated in three differently themed categories, with prizes awarded to all participants and special prizes for the winners.

Kids Art Competition 2018

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Gent’s Picnic 2018/19The gents of Singer Sri Lanka enjoyed their annual excursion at the Amaya Lake Hotel in Dambulla in two batches from 8-10 June and 22-24 June. Participants visited the Pidurangala Temple in Sigiriya while on their holiday, and a total of 460 gents joined the excursion.

Ladies’ Picnic 2018/19150 ladies and 50 children under the age of 12 participated in the annual excursion to the beautiful beaches of Passikuda at Hotel Amaya Beach during 18-20 May. Participants enjoyed boat rides and dives to see the amazing corals on the shallow seabed, Fancy Dress competitions, a Baila competition, Drama competition, and other fun games.

Annual Christmas PartyWe held two Christmas parties at Golden Rose Hotel in December 2018, due to the large number of participants. Over 1,750 employees and their families participated in the parties

Sports and Recreational FacilitiesThe Singer Inter-Departmental Cricket Tournament 2018 was organised by the HR team at the P. Saravanamuthhu (Oval) Grounds in August 2018. The event saw the participation of 54 gents’ teams and 8 ladies’ teams. The Singer Finance Accounts Division were the winners under the Gents category and SLMO A Team were winners under the Ladies category. The Singer Digital Media – Team A and the SLMO B Team became runners-up in the Gents and Ladies categories respectively.

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The Singer Finance Team were crowned champions at the Inter-Departmental Badminton Team Championship 2018, while Sales were 1st runners-up, Operations were 2nd runners-up, and SLMO 1 were 3rd runners-up.

Singer Sri Lanka represented two major tournaments in Mercantile Cricket organised by the Mercantile Cricket Association (MCA). The Singer “A” team played for the MCA “B” division Limited Overs Tournament and Singer “B” team participated in the “G” division 25 Overs Tournament. The Singer “A” Team couldn’t qualify for the semi-finals in the League Tournament but spotted 6th place in the points table with three match wins. Singer Masters also participated in the MCA Over 40 Masters sixes and lost the quarterfinal against Union Assurance.

The Singer Soccer Team participated in the Mercantile Football League Tournament division “D” held during March-April 2019. Singer won two matches against Commercial Bank and HSBC and lost against NTB and WNS.

The Singer Hockey Team became “B” division champions in the Mercantile Annual Seven-a-side hockey tournament held in October 2018 and won the Challenge Trophy sponsored by Singer (Sri Lanka) PLC.

Collective AgreementsThree separate Memorandums of Settlement (MOS) signed in 2016 and were effective for 2018 with the following branch/parent unions pertaining to a salary revision:

zz Commercial and Industrial Workers Union Clerical Branch – applicable to clerical allied and technical grade employees.

zz Commercial and Industrial Workers Union Non-Clerical Branch – applicable to manual workers.

zz Inter-Company Employees Union – applicable to manual workers attached to our factories.

A collective agreement for the upcoming two years was signed between the Management and the factory employees of Singer Factory Complex Piliyandala with the presence of the representatives from the Inter-Company Employees Union in March 2018.

A collective agreement between the Regnis Factory management and the Branch Union of CMU was signed in March 2018 for the next two years.

Approximately, 33% of Singer employees are covered by these collective agreements. In addition to signing Collective Agreements, the Management meets with branch unions to discuss any concerns and provide satisfactory solutions. The cordial relations maintained with our employees prevent disputes arising in the workplace.

Employee RecognitionDigital Media ConventionThe Singer Digital Media Convention was held in July 2018 at the Shangri-La Hotel, Colombo under the theme, “Leading excellence”. The convention acknowledged and highlighted the journey of the Digital Media channel to be the market leader in the smartphone business, with a keynote from former CEO Mr. Asoka Peiris and an address by Mr. Alex Lin, CEO of Asia Pacific Region Terminal Department – Huawei Technologies Lanka (Pvt) Ltd.

Mr. M. Ramiz Rashid, Territory Promotion Officer – Pettah, received the award for Territory Promotion Officer, and Mr. Rangana Naotunna, Territory Manager – South, received the Territory Manager award.

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Annual Service AwardsThe Annual Service Awards ceremony was held in April 2018 at the BMICH to recognise the longstanding service of Singer staff. 274 employees received awards and gift vouchers under six different categories, and three employees – Mr. Janaka Mendis, Mr. Sujith Ariyapala, and Mr. Gamini Attanayake – were appreciated for 35 years of service to the Company.

Year of Service Number of Employees

5 134

10 65

15 12

20 36

25 14

30 10

35 3

Total 274

Appreciation for 35 years of service to the Company

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EMplOyEE capital

The Ultimate

PortalTurn it on – fire it up – in

a couple of ‘clicks’ you’re accessing and communicating

with the world – the laptop.

SinGER DUO 2 in 1 DEtacHaBlE nOtEBOOK

A detachable 2-in-1 is Notebook 3 essentially a slate with a keyboard dock

You can remove the keyboard portion of the tablet and leave it behind when you desire

maximum portability.

Powered by Intel Processor and Genuine Windows 10 OS

DEll inSpiROn 557015-inch laptop delivering an exceptional

viewing experience, a head-turning finish and an array of options designed to elevate your

entertainment, wherever you go.

Fully immersive, completely impressive

Responsive performance and Seismic Storage

Crowd-pleasing features

Designed for the real world – because that’s where life happens.

aSUS ZEnBOOK Flip 14 UX461Un

The world’s thinnest 2-in-1 laptop with discrete graphics

Slim, stylish and sophisticated

Precision-engineered versatility

Unbounded vision with the NanoEdge display

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SOcial anD EnViROnMEntal capital

As a responsible corporate citizen, Singer works for the benefit of society. We have established close ties to the communities in which we operate in through our extensive branch network. We aim to support these communities through our community support projects by giving a portion of value addition back to them.

Moreover, we take care to mitigate any damage to the environment and work to create and contribute to a more sustainable environment. We constantly assess our manufacturing processes for their environmental impacts and regularly evaluate the processes of our suppliers and manufactures.

Memberships in AssociationsThe Singer Group of Companies is affiliated with various business and public policy associations in our area of business, as well as community associations. We are members of the following associations:

zz The Ceylon Chamber of Commerce

zz Sri Lanka-China Business Council

zz Import Section of the Ceylon Chamber of Commerce

zz Sri Lanka-Canada Business Council

zz The Employers’ Federation of Ceylon

zz CSR Lanka Guarantee Limited

zz The Industrial Association of Sri Lanka

Corporate Social Responsibility (CSR)Corporate Social Responsibility is an important aspect of Singer Sri Lanka’s long-term strategy. In a world where consumers are increasingly conscious of where their products are sourced from and employees seek a sense of pride, fulfilment, and substance from their workplace beyond a pay cheque, there has to be a congruence of values between the Company and its employees.

We encourage our employees to submit written proposals for a CSR project of their choosing, be it a one-off project or an activity that can be integrated into the business process. We

believe that our employees can provide a better perspective on the progress of our CSR agenda and seek their input to enhance our CSR efforts.

Feedback from our employees keeps them engaged and improves our CSR practices on an ongoing basis. Increasing accessibility to corporate sustainability leads to enhanced employee involvement and ultimately elevates the Company’s performance. Employees benefit from developing new skills that can boost their performance and thrive in an environment which fosters a responsible and socially alert workforce.

Upon approval of a proposed CSR project by the Company’s CSR Committee, the related Singer Group companies ensure the project is financed and resourced until completion. The initiator of the project takes on the responsibility of kick starting activity around the project and ensuring its success. The Company also solicits proposals from our communities.

The Singer CSR Committee evaluates, oversees, and monitors all CSR projects carried out by the Company to maintain best practices in our dealings with the communities, and takes on the responsibility of ensuring that our CSR activities cover the entire spectrum of economic, social, and environmental concerns.

Engagement in philanthropic activities not directly associated to our employees can have a significant influence in their work attitudes and behaviours. Singer has benefited greatly by facilitating employees to engage in CSR projects they are passionate about, as evidenced by the commitment and passion they exude. Branches and departments that implement CSR projects have proven to perform better in the Organisation due to the strong team spirit nurtured through involvement in CSR activities.

Singer’s Commitment Towards EducationSupporting the educational development of Sri Lanka has long been a key aspect of Singer’s CSR agenda. Singer is of the belief that we have to go beyond the traditional focus on responsible supply chain management, waste reduction, and water stewardship, because the nation is in dire need of development of a sustainable pool of talent that will ultimately

Supporting the educational development of Sri Lanka has long been a key aspect of Singer’s CSR agenda.

Singer Sri Lanka offers a wide range of mobile computing solutions so you are never at a loss when you’re on the go.

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benefit the nation as a whole. We actively seek to elevate the level of education in our nation through meaningful action, particularly in rural communities.

Learning is a lifelong process and supporting the educational development of Sri Lanka’s children and youth is an extremely gratifying endeavour for us. We have forged strong relationships with rural communities and teachers, parents, and officials who work tirelessly to upkeep the education sector in the country. We believe education is one of the greatest gifts one can give to society and are especially proud to engage our wide network to take the gift of education to rural Sri Lanka in the hope of building a promising future with educated and accomplished individuals.

Sipmansala Seminar Series“Sipmansala” project which started in 2013 and extended around the country have been conducted successfully during the period covering 70 schools under 29 centres of Institute of Higher National Diploma In Engineering.

The seminar series conducted sharing knowledge among more than 3,000 students of less facilitated schools Island wide and they were provided stationeries including file covers, model papers, past papers, pens, compass sets, short note books and refreshments.

School ProjectsIn 2018/19, we renewed our commitment to education by continuing our efforts to uplift the education of schools and systematically building their infrastructure, supplying furniture, appliances, stationery, musical instruments, and more.

School Description

Lahiru Scholarships Foundation Providing 500 Instruments

Kehelwarawa Vidyalaya Donation of five Computer Tables

Mahanama Vidyalaya, Vavuniya Donation of 300GPD RO Purifier

Alakoladeniya Buddhist Vidyalaya, Kurunegala Construction of a Water Tank and Toilets

Wanduramba Central College, Wanduramba Donation of Musical Instruments

Dadagamuwa Junior School, Veyangoda Donation of Stationery Items

Aluthwewa Kumara, Vidyalaya, Anuradhapura Donation of Musical Instruments

Veeriyagama Maha Vidyalaya, Suriyawewa Providing Water Supply System

Weediyawatte Senarath Junior School, Udugampola Donating Library Books

Tissamaharama Vidyalaya, Tissamaharama Providing Water Supply/Purification System

Handugala Maha Vidyalaya, Handugala, Matara Providing Desks and Chairs

Thalakiriyagama Maha Vidyalaya, Thalakirigama Construction of Toilets

Pussella Navodya School, Naula Repairing Multimedia and providing a Water Supply System

Weralugahamula Vidyalaya, Rakwana Renovation of a Library

Dayagama Sinhala Vidyalaya Dayagama Providing a Water Supply System and Water Pump

Dadagamuwa Junior School, Veyangoda Donation of 100 chairs, filing cabinets, desks, book racks

Sri Dhammarathana K.V. Ihala Diyadora, Wewagama Donation of Library Books

Walala A. Ratnayake Madya Maha Vidyalaya, Menikhinna Donation of Track Kits

Home Science Centre at National Institute of Education, Maharagama Donation of Drawered Unit, Base Unit, Oven Base Unit, Sink unit

Maspotha Maha Vidyalaya, Maspotha Donation of 100 Ving Chairs

Sri Rahula Maha Vidyalaya, Ratmalana Supply of a Refrigerator

Hartley College, Point Pedro Rebuilding of School

Pore Junior School, Athurugiriya Renovation of a Library, Desk, and Chairs

Galthambarawa Vidyalaya, Polonnaruwa Supplying 17 pairs of School Shoes

Sri Jinaratana Bhikshu Vidyala Providing 40 units of Unic Audio Systems

R/Bla/Laduyaya Vidyalaya, Belihuloya Providing Library Cupboards and Books

Meewanapalana Maha Vidyalaya, Horana Providing Drinking Water System

Horahinna Maha Vidyalaya, Walasmulla Providing Library Cupboards and Books

Lahiru Scholarships Foundation Providing School Uniform Materials to students in the rural area

C W W Kannangara Vidyalaya, Colombo 08 Construction of a Playground

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“Sipmansala” Seminar Series 2018

Health SectorSinger helps to ease challenging health issues faced in Sri Lanka such as chronic kidney diseases and diabetes. In 2018/19, Singer donated a Dialysis CRRT machine to Batticaloa Teaching Hospital under the “Thirst for Life” programme. The Batticaloa region is greatly affected by kidney disease and patients transferred from the nearby regions too are treated at the Batticaloa Teaching Hospital. As the hospital’s Dialysis CRRT machine alone was not sufficient to meet the demand, there had long been the need for another machine.

Among the CSR projects carried out by Singer, “Thirst for Life” is a prominent programme. The project aims to provide Dialysis CRRT machines to identified hospitals in need in the country. The project started in

2013, donating its first two Dialysis CRRT machines to the Polonnaruwa Hospital five years ago. Rs. 100/- from each purchase of a water filter at Singer showrooms across the island contributed to the project. Each machine costs approximately Rs. 3 million and the project has set up eight machines at hospitals across the country, including the Colombo National Hospital, Jaffna Hospital, Wathupitiwala Hospital, and Medawachchiya Hospital.

The Thirst for Life project also conducts awareness and irradiation programmes for water-related infections in rural areas with the aim of uplifting the health standards of our communities.

“Thirst for Life” – donating dialysis CRRT machine

Donations of televisions were made to the District General Hospital, Hambantota, and an air conditioner unit to the Cardiac Unit of Base Hospital, Wathupitiwala. Humanitarian assistance was provided to the National Cancer Hospital, Maharagama by the Digital Media Company.

Team Digital Media sponsored a meal and provided rations to the Children’s Ward and selected adult patient wards at the National Cancer Hospital, Maharagama in April 2018.

Other ProjectsDonation of Equipment to Archdiocesan Apostolate for Drug/Alcohol Demand Reduction ServiceEquipment donated include TVs, pedestal fans, ceiling fans etc.

Flood Relief ProgrammesWe experienced floods in several areas in the island due to bad weather in May 2018. Hence, those of the Rotaract Club of Singer Sri Lanka, Rotaract Club of Colombo North, Rotaract Club of Colombo Fort collaboration of Student Activity Club A.P.I.I.T. got together to help the flood victims.

They collected water bottles, dry rations, sanitary items, medicines and other necessities from friends and colleagues. The money collected was used to buy necessary items for the victims.

Stationery was donated to flood affected children in Madampe.

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Home Science in SchoolsSinger successfully completed the 4th Phase of the “Singer Soopa Shasthra” programme jointly with the Ministry of Education. The programme aims to boost the standard of Home Science education in schools across the country while also paving the way for school leavers to step into a career in the fast-growing hospitality industry.

Singer initiated the Singer Soopa Shasthra programme in partnership with the Ministry of Education in 2015 with a focus on supporting the Home Science subject in schools by emphasising the importance of nutritious home cooking as a vital part of a healthy lifestyle and a happy family in today’s busy world. The programme provides guidance on how to use modern kitchen appliances to quickly create healthy, tasty meals, thereby empowering Sri Lankan families to cook right and eat right without sacrificing traditional values and taste.

Over 1,000 home science teachers had received training whilst 150 more schools-in-need across all nine provinces received Singer appliances to boost their home science classes.

SportsSinger is Sri Lanka’s largest sports promoter. For over 20 years, we have backed several sports events at the school, mercantile, and national level, providing all Sri Lankans the platform to excel in the sport of their choice. Over the years, Singer has developed sports infrastructure and uplifted Sri Lankan sportsmen and women, especially in rural Sri Lanka. We also assist in the upkeep of sporting facilities, support international tournaments, and nurture the passion for sports in children. Our continued active participation in sports has uplifted our relationship with communities as well.

Singer believes in the power of sports to turn lives around and create well-rounded future leaders and ultimately a developed nation. Singer continued its long-term relationships with Sri Lanka Schools Rugby Associations, Sri Lanka Schools Cricket Association, Mercantile Cricket Association, Gajaba Super cross, Hill Club Tennis Tournament, and Royal College Hockey Tournament.

We are greatly involved in the areas of Rugby and Cricket in order to impact youth and sports in a larger and more meaningful scale. Apart from the above-mentioned sports, over the last 20 years, we have also looked to utilise our resources to enhance other areas of sports. We have been involved in school, mercantile, and national level sporting events in hope of giving the youth of our nation more opportunities to excel in a sport of their choice.

Singer Schools CricketSinger has been associated with Sri Lankan cricket since 1996 with our support for the World Cup winning national team. We support cricket at school and club levels, helping to develop

the next generation of cricketers. Our Singer League is a long-standing cricket league held in partnership with the Sri Lanka Schools Cricket Association. Singer not only provides financial assistance but also equipment, with a focus on rural schools. We also support the development of school players into professional status with our association with the Mercantile Cricket Association, supporting the MCA Premier League and MCA Knockout Tournament.

Singer Schools RugbySinger is a proud supporter of rugby at all competitive levels and has been involved in the development of the sport for over a decade. We provide infrastructure assistance to schools: everything from scoreboards to building rugby stadiums. The Singer Schools Rugby League is one of our biggest investments in sports, amounting to over Rs. 50 million each year. We also sponsored the Bradby Shield, the oldest competitive rugby encounter in Sri Lanka, for the 28th consecutive year, and supported the Kandy Sports Club.

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Singer Fashion AcademyThe Singer Fashion Academy conducted 40 free workshops to raise awareness amongst youth about the fashion industry. The Academy hosted over 800 participants through the free workshops. The key purpose of the workshops was for future fashion entrepreneurs to fully understand the scope and opportunities available in the field of fashion design and to create a pathway for them to become independent creative thinkers who can come up with innovative design collections to manage a successful fashion business in an evolving and competitive industry. The workshops are uniquely tailored to involve both conceptual and trend driven design work through experimentation with creative cutting techniques, traditional pattern cutting, textiles, research, illustration, conceptualisation and visualisation techniques, sketching, colour study, and understanding the use of different fabrics. This was done in line with the “13-year guaranteed education programme” initiated by the Ministry of Education where students were offered 26 vocational subjects after their ordinary level examinations. Fashion Designing is one of the 26 subjects offered under the programme and Singer Business School offered their support in conducting an awareness programme for selected principals of government schools as well. Singer Business School is planning to continue with the programme this year.

Public PolicySinger does not fund or make contributions of any kind to political parties, politicians or related institutions. The Company is regularly invited by the Government of Sri Lanka to submit proposals for consideration when formulating the National Budget.

Government AssistanceThe Group did not receive any assistance from the Government during the year.

Anti-competitive Behaviour and ComplianceThe Company did not encounter any legal action for anti-competitive behaviour, anti-trust, and monopoly practices during 2018/19. We always obtain the necessary local authority approval and strictly adhere to rules and regulations pertaining to display of materials, audio/video materials, and branding among other factors, when conducting our marketing/sales promotional activities.

Human RightsSinger follows employment practices which enshrine human rights. As such we facilitate freedom of association, strict elimination of all forms of compulsory labour, abolishment of child labour, and elimination of sexual harassment in the workplace. There were no incidents of human rights reviews/grievances reported during the fiscal year.

Grievance Handling and Sexual Harassment PoliciesThese two policies ensure the emotional well-being of our employees. The grievances policy provides employees the right to forward their grievances and dissatisfactions to the Management and obtain a fair hearing. Our sexual harassment policy takes note of the distinct nature of a claim and provides disciplinary measures, depending on the degree of sensitivity of the matter at hand.

Code of Business ConductAll Key and Senior Managers are bound by the Company’s written Code of Business Conduct, which is an agreement signed as part of their written Contract of Employment. As per the agreement, the signatory is responsible to comply with the Code and ensure employees reporting to them also comply with the Code. The Code of Business Conduct is signed annually to refresh their knowledge on the contents and update themselves on new clauses and amendments to the Code.

Whistle-blower PolicyThe Whistle-Blower Policy illustrates procedures for any employee of the Company to make a written or verbal complaint on any experiences or suspicion of illegal or unethical employment or business practices exercised by a colleague in any capacity in the governance hierarchy. All employees upon induction into the Group are taken through the policy procedures and assured of confidentiality and anonymity.

The Group takes necessary actions to prevent corruption or illegal activities and the Management takes necessary actions on the above, where it is implemented for Whistle-Blower procedures.

Non-discriminationThere were no incidents of discrimination reported in the Company in the period under review.

Fostering Human Rights and Equal OpportunitySinger is recognised as a compassionate and benevolent company. People’s affinity towards Singer draws many requests from religious, educational, and other institutions, as well as individuals.

Through our island-wide reach, we are present in some of the most remote areas of our country, giving us a unique perspective on the issues that affect the lives of less fortunate citizens. Our employees are often the biggest champions of community relations projects and initiatives, and we encourage them to propose solutions that answer their own communities’ needs.

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Environmental PerformanceSinger Factories Integrating Sustainable Eco PracticesSinger aspires to be the leading appliance retailer in Sri Lanka. How we go about achieving that vision is of utmost importance to us. We care about the lasting impact we leave on the planet and the communities we operate in. We take every effort to create a more sustainable environment, extending to even the smallest procedures, reflecting our visionary, green contributions to society. The products we manufacture and market are increasingly eco-friendly. We constantly evaluate our manufacturing processes for their environmental impacts and actively promote recycling and waste management processes within our Organisation.

As a responsible corporate citizen, Singer has undertaken several initiatives to mitigate any damage to the environment. Our factory in Piliyandala is licensed under the Environment Protection Licenses (Section 23B of the National Environment Act No. 47 of 1980) and has acquired the licenses and certifications required to comply with Central Environmental Authority (CEA) regulations. Our Regnis (Lanka) PLC refrigerator plant converts refrigerators to R600 high-efficiency and energy-saving GEO and ECO products, and is well ahead in the region for implementation of practices that have zero impact on the ozone.

The Piliyandala factory staff adhere to environmentally friendly practices to preserve the lush environment surrounding the premises. Noise pollution, air pollution, and water pollution are controlled, with solid waste management and chemical management practices followed with energy and resource conservation kept in mind.

We strictly follow guidelines by local and international authorities for the storage and transportation of certain hazardous materials we use for production and store all chemicals in a sealed warehouse with restricted access. The furniture factory and agro factory undergo two independent environmental audits annually for the renewal of the CEA certification. This signifies our stance as an eco-friendly company.

In addition to ensuring the factory is compliant with all environmental certifications, we also carry out all our internal operations in conformance with these guidelines. For instance, our conventional paint booths were replaced with water curtain paint booths, thus reducing air and toxic emissions caused by spray painting. Sanding activities are carried out in an enclosed area equipped with a dust extraction system, facilitating a safe environment for employees working in this area while carrying out main operations without polluting the air. Solid waste, such as saw dust, that is a by-product of our operations is removed in an environmentally safe manner through responsible third-party contractors in consultation with the relevant authorities. We take steps to ensure that

the accumulated solid waste isn’t dumped in naked lands or bodies of water, and that they enter the chain of accepted solid waste management systems handled by reputed parties. The solid waste that is collected is used for wood briquetting, burners, and filling up of marsh lands.

Sawdust CollectionSinger actively makes efforts to reduce, reuse, and recycle saw dust, smoke, paint fumes, wood cut-offs, particle boards, plastic, and iron scraps. These waste materials are channelled into water troughs and thereafter collected, treated, and disposed of in a responsible manner. A dust collection system is installed in our sofa factory and prevents air pollution through a fine filtration process.

A third-party supplier handles the recycling of saw dust disposed in our Piliyandala factory to be used as fuel for boilers and ovens. The supplier collects the saw dust thrice a week from the factory from specially fitted chambers designed to collect the sawdust. The process enables us to support the supplier and optimise the use of waste from our manufacturing processes. In recognition of our efforts to reduce Sri Lanka’s carbon footprint, we received a token of appreciation from the Central Environmental Authority.

Total waste – Non-hazardous (kg)

Singer (Sri Lanka)

PLC

Regnis (Lanka)

PLC

Regnis Appliance

(Pvt) Limited

Singer Industries

(Ceylon) PLC

Group

Reuse 267,750 – 45,102 6,980 319,832

Recycling 462,044 136,152 9,963 14,991 623,150

Composting – – – – –

Recovery 219,400 56,700 – 44,605 320,705

Incineration (mass burn) – – 6,070 – 6,070

Landfill 8,668 920 – – 9,588

Other 563,218 3,345 24,385 14,104 605,052

Total 1,521,080 197,117 85,520 80,680 1,884,397

Island-wide e-Waste Collection PointsAs a respected and responsible distributor of electrical appliances in Sri Lanka, our e-waste management campaign was well-received by the general public and our customers. Through our wide network, we placed e-waste collection bins in all Singer Plus, SISIL World, Singer Mega, Singer Home Showrooms, and Singer Service Centres. Awareness was raised through Below-The-Line (BTL) promotions, Public Relations (PR) articles, print advertisements, posters, and billboards.

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Biodegradable PackagingAs part of Singer’s eco-friendly initiatives, all Singer factories have replaced the use of rigifoam as a packing material with corrugated cardboard. The expanded use of biodegradable materials, including in shopping bags, is being researched and planned.

Continuing e-Waste Management LeadershipIn line with the Government’s vision and Singer’s corporate business values, we strive to minimise the effects of our operations and that of our customers through sustainable business models. In 2010, Singer signed a Memorandum of Understanding with the Central Environmental Authority to assist local authorities in the management of e-waste on a national scale. The Singer Group follows UN BASEL convention regulations in collecting, transporting, and storing e-waste for recycling.

Singer strives to make recycling electronics as easy as purchasing them. To date, we have removed a significant quantity of e-waste which would otherwise have the potential to cause damage to the environment and the well-being of communities. We spend a significant amount annually to ensure the proper disposal of e-waste through approved e-waste disposal companies, and we increase our capacity of e-waste collection every year.

Category Volume of e-waste disposed by Singer(Units)

Televisions 47,692

Refrigerators 10,354

Washing Machines 6,607

Others 4,094

Given below are details of the usage of recycled materials for Regnis (Lanka) PLC in 2018/19:

Total (kg)

HIPS Offcuts 172,998

Metal Offcuts 58,515

Plastic and Polythene 14,988

Cardboard 84,771

Aluminium 181

Copper 380

Total 331,833

Percentages of recycled material used is as follows.

zz Singer (Sri Lanka) PLC – 6%

zz Regnis (Lanka) PLC – 10%

zz Regnis Appliances (Pvt) Limited – 3%

Trade-in Offers to Reduce Carbon FootprintAs the largest consumer durables retailer in the country, Singer strives to instil environmentally friendly habits in our customers while nurturing strong relationships with them. Trade-in offers provide consumers with convenient opportunities to not only recycle their old electronics but also avail of discounts on the latest products. This can motivate customers to trade-in their old electrical appliances for newer, more energy efficient and environmentally products which contribute to the reduction of their carbon footprint.

Pioneering and Promoting R600a Gas RefrigerationIn line with the Singer Group, subsidiary Regnis (Lanka) PLC adopts our commitment to creating and sustaining a greener future in Sri Lanka. Regnis manufactures the Singer GEO and SISIL ECO series of energy efficient refrigerators. The Singer GEO range was the first range of refrigerators to adopt R600a gas technology, a 100% environmentally friendly substitute for the HFC refrigerants that contribute heavily to the depletion of the ozone layer, thereby contributing to global warming. The move to R600a was made two decades in advance of the mandatory deadline for its adoption in 2040 under the Montreal Protocol, further highlighting our commitment to the environment.

The Company promoted its R600a gas refrigerators heavily in Sri Lanka, emphasising its benefits and importance in marketing communications. The Company discontinued the sale of R134a gas refrigerators and completely switched to the manufacture of R600a refrigerators, contributing to advancing the nation’s steps towards energy efficiency.

Promoting Energy Efficient Inverter TechnologySinger has heavily promoted products based on inverter technology that can consume 30-50% less energy than non-inverter-based products. Although inverter technology is more expensive, we promote these products due to their high energy efficiency that can not only contribute to lower electricity bills but is crucial for a greener planet. The most popular inverter technology-based products include Singer Inverter air conditioners, Samsung refrigerators, Beko refrigerators, Hitachi refrigerators, and Hitachi air conditioners.

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When you’re not

standing Sitting, lounging, reclining – times

when you need real quality and comfort around you – times when

you need “good”... furniture.

VOlGa SOFa• Fabric upholstered

• Treated oak wood frame

• Cushion – PU foam and polyfiber

• 3(2R):1R:1R combination

DayStaR SOFa• Sofa with 3:1:1 combination

• Treated rubber wood frame

• Fabric and PU upholstered

• Leg : Polypropylene plastic

BEliZE SOFa• 2 seater sofa with storage

• 3 step conversion sofa, lounger & bed position

• Straps to keep it down when it is in the upright position

• Frame – wood base and plywood

• Legs – solid wood

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Materials Used by Weight/VolumeRenewable Materials

Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt) Ltd Singer Industries (Ceylon) PLC

Timber SQFT 649,938 HIPS (Plastic) KG 244,501 PP (Plastic) KG 515,376 Steel KG 2,173,921

Particle Boards

KG 1,223,924 – – – GPPS (Plastic) KG 156,385 Wood KG 470,191

Casting KG 98,392 – – – ABS (Plastic) KG 123,323 – – –

MDF KG 89,900 – – – – – – – – –

Corrugated Cartons

Nos 54,409 Corrugated Cartons KG 194,721 Corrugated Cartons KG – – – –

Non-renewable Materials

Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt) Ltd Singer Industries (Ceylon) PLC

Diesel Litres 22,512 Hermetic Compressor

Nos. 88,512 PCB for Fully Auto Washers

Nos. 244,291 Plastic KG 479,881

Motors KG 179,520 PCM/VCM Steel Sheet

KG 1,099,613 Steel Tub for Fully Auto Washers

Nos. 4,460 Polythene KG 2,700

Engines KG 32,000 Evaporator Plate

Nos. 88,512 – – – Alloy KG 67,289

Edge Bands

Mtr 589,688 Isocyanate KG 232,817 – – – – – –

PU Foam

NOS 119,220 Polyol KG 177,336 – – – – – –

Total Weight of Materials used to Produce and Package Refrigerators at Regnis (Lanka) PLC

(Weight) kg 2018/19 (Weight) kg 2017/18

Model Direct Materials Packing Materials Total Weight Direct Materials Packing Materials Total Weight

RGS 150 15,037 1,233 16,270 38,400 3,148 41,548

ECO 55 363,256 26,710 389,966 418,302 30,758 449,060

GEO 182S/SM 185 242,239 22,915 265,154 420,838 39,809 460,647

ECO 72/ECO 72 WR 776,295 69,668 845,963 1,041,261 93,447 1,134,708

GEO 200D/SM 205 664,390 58,870 723,260 1,181,011 104,647 1,285,658

ECO 192/WR 192 1,478,762 131,030 1,609,792 1,765,413 156,429 1,921,842

GEO 242D/SM 255 232,732 22,432 255,164 307,598 29,648 337,246

ECO 245 249,208 24,020 273,228 383,834 36,996 420,830

GEO 260NF/SM 265 429,088 37,312 466,400 368,322 32,028 400,350

ECO 251NF/251 WR 480,286 41,764 522,550 552,000 48,000 600,000

GEO 262 I/252 I 61,824 5,376 67,200 142,554 12,396 154,950

GEO 282 NF 612 48 660 37,638 2,952 40,950

GEO SM 267 NF 45,034 3,916 48,950 – – –

RBC 501 20,160 264 20,424 14,868 3,147 18,015

Total 5,058,922 445,556 5,504,478 6,672,039 593,405 7,265,444

Make a statement with a wide range of furniture from Singer Sri Lanka to match your taste and lifestyle.

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Total Electricity and Diesel Consumption from Non-renewable Sources by Regnis (Lanka) PLC

Energy Consumption 2018/19 2017/18

Diesel (Litres) 9,128 15,400

Electricity (kWh) 1,070,214 1,334,354

Diesel Energy Consumption in Kj (million) 340 574

Electricity Consumption in Kj (million) 3,852 4,803

Total Energy Consumption in Kj (million) 4,192 5,377

Diesel Energy Intensity Ratio Kj/unit 3,105 3,479

Percentage Reduction in Diesel Consumption per unit (%) 12.05 71.8

Electricity energy intensity ratio Kj per unit 35,156 29,117

Total energy intensity ratio 38,261 32,597

Consumption by Source

Non-Renewable Sources Singer (Sri Lanka) PLC

Regnis (Lanka) PLC

Regnis Appliances (Pvt ) Ltd.

Singer Industries (Ceylon) PLC

Singer Finance (Lanka) PLC

Group

Electricity (kWh) 15,938,000 1,070,214 1,278,470 408,696 806,984 19,502,364

Water (Litres) 67,095,010 18,616,573 5,034,999 1,704,000 12,734,815 105,185,397

Diesel (Litres) 22,512 9,128 5,020 – – 36,660

Water Withdrawal by Source

Water withdrawal by Source (Litres) Singer (Sri Lanka) PLC

Regnis (Lanka) PLC

Regnis Appliances (Pvt ) Ltd.



Group

Ground Water 6,804,000 12,959,000 – 1,278,000 – 21,041,000

Municipal Lines 60,291,010 4,748,000 5,034,999 426,000 12,734,815 83,234,824

Total 67,095,010 17,707,000 5,034,999 1,704,000 12,734,815 104,275,824

Water Discharge by Destination

Water Discharge by Destination (Litres) Singer (Sri Lanka) PLC

Regnis (Lanka) PLC

Regnis Appliances (Pvt ) Ltd



Group

Municipality Sewerage, Drainage Lines 54,202,200 1,537,000 4,774,599 1,704,000 12,734,815 74,952,614

To Ground through Soakage Pits 12,892,810 16,170,000 260,400 – – 29,323,210

Total 67,095,010 17,707,000 5,034,999 1,704,000 12,734,815 104,275,824

Reduction in Energy Consumption at Regnis

Diesel (Kj) million

Electricity (Kj)million

Reduction in energy consumption at Regnis (Lanka) PLC per month 233.77 79.23

Reduction in Diesel Consumption and CO2 Emissions at Regnis

2018/19 2017/18

Diesel Saving in the Factory (l) 6,272 2,413

CO2 Emission per Diesel Litre (kg) 2.68 2.82

Reduction in carbon footprint at Regnis (Lanka) PLC is 39 tCO2e in 2018/19.

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CO2 Emission details are as follows.

tCO2 Scope 1 Scope 2 Scope 3

Singer (Sri Lanka) PLC 0.45 60.81 38.74

Singer Finance (Lanka) PLC – 90.42 9.58

Singer Industries (Ceylon) PLC 2.68 87.75 9.58

Regnis (Lanka) PLC 4.86 84.52 10.62

Regnis Appliances (Pvt) Limited 1.65 88.92 9.43

Environmental Investment

Environmental Investment (Rs.) Singer (Sri Lanka) PLC

Regnis (Lanka) PLC


Group

Prevention and Environmental Management Cost 4,167,009 54,545 335,287 4,556,841

Investment in Special Initiatives – Waste management, Emission Treatment etc. 1,667,009 – 384,494 2,051,503

Total 5,834,018 54,545 719,781 6,608,344

Total units of production is as follows.


Regnis (Lanka) PLC

Regnis Appliances (Pvt) Ltd


Group

Total units of Production/Service 110,122 109,575 77,753 117,362 414,812

The Battle for Solar EnergyDuring a time where the world has come together in search of a solution for the global energy crisis, Sooryabala Sangramaya (The battle for solar energy), a power generation project which was implemented by the Sri Lanka Sustainable Energy Authority (SLSEA) under the purview of the Sri Lankan Ministry of Power and Renewable Energy, has been deemed a success.

Solar power has been recognised as the most suitable and environmentally friendly solution to the energy crisis prevalent in the island. The Government has taken an active role in this initiative by introducing low interest loan schemes with the support of the CEB and LECO.

For 12 years, Singer has joined hands with SLSEA to provide the ultimate solution for the nation’s solar power needs. Singer Solar System has taken an active involvement in the Sooryabala Sangramaya which is implemented under the purview of the Ministry of Power and Renewable Energy and SLSEA and can be introduced as the most suitable solution to satisfy every Sri Lankan’s solar power needs.

The initiative has been successful in designing and implementing Solar PV systems on any scale, from the smallest home to large scale factories, with the expertise of the most skilled engineers in the industry. The initiative strives maintain a strict adherence to the highest standards with

the use of only A-grade panels which come with a 25-year guarantee and the most efficient inverters which come with a 10-year guarantee. Singer uses the highest quality European brands that make the most suitable and efficient products in terms of DC cables, surge protection, and other tools to get the maximum efficiency from these solar power systems. Singer PV systems come with a long-term guarantee and more information can be obtained from our Singer Plus, Singer Mega, Homes, and SISIL branches across the island.

Grievances on Environmental ImpactsThe Singer Group believes in the importance and value of protecting and preserving biodiversity. To this extent, the Company does not own, lease, or manage any operational sites in or adjacent to protected areas and areas of high biodiversity value outside of protected areas. The Group takes every effort to prevent environmental harm.

No grievances were filed on environmental impacts through formal grievance mechanisms during the reporting period. Neither were any monetary or non-monetary sanctions imposed for non-compliance with environmental laws and regulations. All suppliers are required to adhere to the Singer Code of Conduct and environmental standards.

Dream Weaver

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101STEWARDSHIP




Dream Weaver

It’s probably the world’s first ever single appliance

that allows you to “weave a dream” – bring materiality to vision – the

sewing machine.

• 18 stitch patterns

• 6mm Stitch width

• Four Step button hole

• Stable and durable alloy body

• Dual operating Facility (Motor Driven & Manual)

• Carrying case provided

• 08 Built in stitches

• 04 Step Buttonhole

• Snap on Presser Feet

• Colour Code Treading System

• Free Arm Sewing

Auto Threader

• Tread Cutter

• 25 Built in stitches

• 04 step button hole

• Free Arm Sewing

• LED Light

• Drop Feed

Mc2868

Mc8280

Mc990

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Product ResponsibilityA combination of the highest customer benefit, the highest safety standards, and maximum environmental and climate compatibility are what constitute product responsibility for Singer.

We strive to continuously provide consumers with products and services of world class repute. Therefore, the safety of our products is of paramount importance through all stages of their life cycle, including production, product use, disposal, and recycling.

We adopt the same considerations where product sourcing is concerned, where we measure for environmental compatibility and energy efficiency through the entire product life cycle.

We inform our customers about the properties of our products and conditions of usage, and actively ensure product safety throughout their entire life cycle to minimise adverse impacts on people and the environment.

Approximately 23% of revenue of Singer is generated from products manufactured in our state-of-the-art local factories. The factories are certified by ISO Standards and are manned by the country’s most qualified and skilled production managers, engineers, and manual workforce, who are capable of producing advanced and innovative products.

We use customer feedback and market trends to develop new products with the support of our long-standing third-party local suppliers. Customers are assured about the quality of our products which are subject to stringent quality assurance by our Quality Assurance Division, manned by professional engineers. From sample evaluations to post-sale evaluations, our products are continuously enhanced with a lengthy life cycle.

Organisation Supply ChainOwn Manufacturing FacilitiesThe Singer Piliyandala Factory is equipped with the latest technology. These modern manufacturing facilities allow us to operate locally on a large scale and we constantly upgrade our facilities to offer the best manufacturing processes.

Highly Reputed SuppliersAs part of our agenda to deliver the best products to our customers, we ensure sourcing is done only from reputed suppliers. Taking into consideration the suppliers’ ranking in the industry, we visit their factories and evaluate their credibility before entering into business agreements with them. Some of our original equipment manufacturing sources include Polytron, Indonesia; Skyworth, Galanz, TCL and Huawei, China; Pensonic, Malaysia; Arçelik, Turkey; and Whirlpool, India.

Details of suppliers and payments are as follows.

Profile of Suppliers Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt ) Ltd Singer Industries (Ceylon) PLC Group

Number

of

suppliers

Payments

(Rs.)

Number

of

suppliers

Payments

(Rs.)

Number

of

suppliers

Payments

(Rs.)

Number

of

suppliers

Payments

(Rs.)

Number

of

suppliers

Payments

(Rs.)

Small and Medium Scale Suppliers 1,228 3,855,259,464 366 1,125,043,475 220 32,981,514 230 90,065,144 2,044 5,103,349,597

Large Scale Suppliers 659 26,966,608,222 524 2,705,357,493 65 1,842,843,945 32 412,562,498 1,280 31,927,372,158

Sub Contractors 33 89,625,132 36 112,217,827 10 54,611,243 4 4,853,991 83 261,308,193

B2B suppliers – – – – – – 8 7,982,707 8 7,982,707

Total 1,920 30,911,492,818 926 3,942,618,795 295 1,930,436,702 274 515,464,340 3,415 37,300,012,655

Profile of Suppliers Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt ) Ltd. Singer Industries (Ceylon) PLC Group

Payments to local suppliers 4,317,209,707 1,777,839,078 376,298,950 191,474,961 6,662,822,696

Payments to international suppliers 26,594,283,111 2,164,779,717 1,554,137,751 323,989,378 30,637,189,957

Total 30,911,492,818 3,942,618,795 1,930,436,701 515,464,339 37,300,012,655

Singer sewing machines have enabled individuals and businesses to transform their innovative ideas into creative masterpieces for over a century.

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101STEWARDSHIP




Product Sourcing for Our Own BrandsWe employ strong measures to source products from the world’s leading manufacturers by evaluating them on key areas. These include industry ranking, company reputation, management style, financial stability, quality consciousness, delivery capabilities, and more.

Freedom of Association and Collective BargainingThere have been no operations and suppliers identified in which right to exercise freedom of association and collective bargaining may be violated or at significant risk.

ComplianceCustomer PrivacyDuring the year, the Group did not encounter any substantiated complaints regarding breaches of customer privacy and losses of customer data.

Health and Safety of ProductsThere were no incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of our products and services during the year.

There were no incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling during the year.

There were no incidents of non-compliance with laws and regulations in the social and economic area.

Marketing CommunicationsThere were no incidents of non-compliance with regulations and voluntary codes pertaining to marketing communications, including advertising, promotions and sponsorships during the year. The Company does not engage in the sale of banned products.

Product and Service UsageThe Company was not subject to monetary fines for non-compliance with laws and regulations concerning the provision and use of products and services and labelling during the year.

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101




STEWARDSHIPTHE SINGER GROUP COMPLIES WITH ESTABLISHED

BEST PRACTICES IN CORPORATE GOVERNANCE AND ENSURES THE HIGHEST ETHICAL STANDARDS

IN THE CONDUCT OF ITS BUSINESS.

102CORPORATE

GOVERNANCE

148AUDIT COMMITTEE

REPORT

150REMUNERATION

COMMITTEE REPORT

151NOMINATION

COMMITTEE REPORT

152RELATED PARTY

TRANSACTIONS REVIEW COMMITTEE REPORT

154RISK MANAGEMENT

101STEWARDSHIP

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CORPORATE GOVERNANCE

Group/Company ensures to comply with established best practices in corporate governance and ensures the highest ethical standards in conduct of its business. The Board adopts core values and standards which set out the conduct of staff in their dealings with shareholders, customers, colleagues, suppliers and other stakeholders. Once the core values are set and communicated to all levels of the Organisation, the Group/Company is of the belief that the highest standards of integrity will be maintained in business.

Governance Policy and FrameworkGovernance framework covers both corporate governance and the business governance. Corporate governance and business governance are interrelated processes and one process is always linked to and dependent on the other process. Business governance enables us to focus on areas of value creation to the business. Corporate governance process is to safeguard and ensure that the Group/Company achieve business performance maintaining a balance between accountability and assurance of the business process. Thus, we believe our business governance and corporate governance are interlinked to each other as depicted below:

In line with the above governance framework, the Group/Company believes that successfully run business enterprises are founded on a set of fundamental qualities – those that embed transparency, accountability and responsibility within the core of its business operations. Translated into action, the Group’s/Company’s strong core qualities and guiding corporate governance functions ensure that we remain “law abiding”, strictly adhering to the laws and regulations of the country. Business integrity and accountability to stakeholders are top of the mind factors that we inculcate right across – from the Board of Directors to the shop floor.

Statement of ComplianceSinger Group is fully-compliant with the Code of Best Practices on Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka as well as the Rules on Corporate Governance published by the Colombo Stock Exchange, except which are specifically mentioned in the corporate governance report. In addition to the above, our Subsidiary Company Singer Finance (Lanka) PLC is fully-compliant with the requirement set out by the Finance Companies Act No. 78 of 1988 and subsequent amendments and Finance Companies Corporate Governance Direction No. 3 of 2008 issued by the Central Bank of Sri Lanka (CBSL).

The following developments took place during the period:

zz Mr. S.H. Goodman (in terms of Section 211 of the Companies Act No. 07 of 2007 was appointed as a Non-Executive Director with effect from 26th June 2018)

zz Mr. D.K. de S. Wijeyeratne (Appointed as Independent Non-Executive Director with effect from 1st April 2018)

zz Ms. O. Gunewardene (Appointed as Independent Non-Executive Director with effect from 1st August 2018)

zz Mr. H.A. Pieris – Group CEO/Director (Resigned with effect from 31st October 2018)

zz Mr. M.H. Wijewardene (Appointed as Group CEO/Director with effect from 1st November 2018)

zz Mr. G.J. Walker (Resigned with effect from 29th November 2018)

zz Mr. M.H. Wijewardene (Ceased to be Alternate Director to Mr. G.J. Walker with effect from 29th November 2018)

zz Mr. L.N.S. Kumar Samarasinghe – (Ceased to be Alternate Director to Mr. H.A. Pieris with effect from 31st October 2018. Appointed as Alternate Director to Mr. M.H. Jamaldeen with effect from 22nd January 2019)

zz Mr. H.P.S. Perera (Appointed as Alternate Director to Mr. M.H. Wijewardene with effect from 22nd January 2019)

Minimum Public HoldingThe public holding of the company as at 31st March 2019 was 7.72%, which is below the minimum requirement of 20% as specified by the Listing Rules of the Colombo Stock Exchange (CSE).

In terms of Rule No. 7.13.3 (iii) (ii) of the Listing Rules, the Company sought an extension from CSE on complying with the minimum public holding on the basis that the public holding was reduced consequent to the Mandatory Offer made under the Takeovers and Mergers Code 1995 (as amended) in September 2017.

In response, the CSE by their letter dated 5th February 2019 has communicated to the Company that an exemption has been granted up to 2nd August 2019.

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Purchase of sharesOn 15th October 2018, Hayleys PLC purchased the balance 35,562,883 (9.47%) ordinary shares held by Retail Holdings (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47.00 per share upon Retail Holdings (Sri Lanka) BV exercising their option to sell its shares to Hayleys PLC as previously agreed at the time of the Mandatory Offer made in 2017. After accepting this offer, Hayleys PLC together with its Group Companies, holds 90.43% of Singer (Sri Lanka) PLC.

Business GovernanceBusiness governance (performance governance) is linked from Company’s Vision Statement to Final Objective level of grass root level. Business governance process is started at the point of preparing the annual plan and annual plan is focused on future strategic direction, long-term objectives, medium-term objectives and short-term set targets. Annual plan is initially approved by the Parent Company and subsequently reviewed

and approved by the Board. The Group CEO and Executive Committee review the strategic plan and budgets against the actual performance on a monthly basis and at more frequent intervals, as needed and Chairman and Board of Directors review actual performance at each Board meeting.

IT GovernanceIT governance process of the Company ensures that IT objectives are aligned with the business objectives that will meet its strategic and operational objectives. IT governance is an integral part of the corporate governance process and which deals primarily with optimising the linkage between Strategic Directions and Information Management of the Company. Competent and dedicated staff are deployed to support this need. Company investment in IT resources covers resources operated and managed centrally and resources deployed in various places. IT resources include ERP system, other related business systems, Internet, emails and other Company-wide data communication system.

Impact of the IT governance to diverse functional areas of the Company is driven by certain core objectives which are set below:

Compliance Investing in licensed software deployed in compliance with Intellectual Property Law with a view to educate and mandate compliance to such laws throughout the Company.

Operational Efficiency Streamlining of inventory management, logistic management and credit management process so that integrity is maintained across the value chain through near real-time processing.

Prudent Capital Expenditure All major IT investments are carefully evaluated by the IT team and built into the business plan and carefully scrutinised at the planning level, and approval is granted by the Board.

Customer Convenience Ensuring process efficiencies to increase the contribution to customer convenience.

Green IT Protecting the environment by reducing print through migration to emails, SMS, social media and soft copies.

Governance Structure

External Regulations Internal Regulations

Companies Act No. 07 of 2007 Articles of Association of the Company

Continues Listing Requirements of the Colombo Stock Exchange Singer Finance Manual

Code of Best Practice of Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka

Code of Ethics, Human Resources Policies and Procedures

Directives/ Regulations of the Securities and Exchange Commission of Sri Lanka. Information Technology and Other Internal Manuals

In case of Subsidiary Company Singer Finance (Lanka) PLC, requirements set out by the Finance Companies Act No. 78 of 1988 and Subsequent Amendments and Finance Companies Corporate Governance – Direction No. 3 of 2008 issued by the Central Bank of Sri Lanka

Standing Instructions, Policy and Procedures (P&P)

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Shareholders

Executive Committee

Group Chief Executive Officer

Customers

Environment

Board of Directors

Aud

it C

omm

ittee

Board of D

irectors of Parent C

ompnay

Rel

ated

par

ty

Tran

sact

ions

Rev

iew

C

omm

ittee

Nom

inat

ion

Com

mitt

eeR

emun

erat

ion

Com

mitt

ee

Employees

Community

As diagrammatically presented above, Group governance structure is set up to create a distinction between the functions of the Board and Management team but ensuring effective cooperations and communication between two groups. Group Chief Executive Officer exercises triangular linking role between Board, Executive Management Committee and other Stakeholders, i.e., Shareholders, Employees, Customers, Community and Environment. Group’s Chief Executive Officer is the main communication link with the Board and Executive Management Committee. He also acts as a defacto officer to maintain a fair role on behalf of shareholders, employees, customers, community and environment.

Business EthicsThe Group enshrines the highest ethical standards in the conduct of its business affairs and its Board of Directors are tasked with ensuring that the resultant regime of exemplary governance across all aspects of business are in the best interests of stakeholders. Ethically correct conduct comprising integrity, honesty, fair play and loyalty pervade all Group actions.

Transparency is encouraged in all public disclosures, as well as in the way business and communication take place with all stakeholders. A “whistle-blowing policy” introduced internally in 2009 has increased the level of transparency towards a wider dimension.

All employees are bound by the Company’s written Code of Ethics that includes the following aspects:

zz Exercise honesty, objectivity and diligence when performing ones duties.

zz Avoid situations where personal interest might conflict with the interest of the Company; and if so, disclose such interest in advance.

zz Maintain confidentiality of commercial and price-sensitive information.

zz Work within applicable laws and regulations.

zz Safeguard the Company’s assets.

zz Avoid conduct that will reflect badly on the person concerned or the Company’s image.

zz Strictly avoid giving or accepting any kind of bribe, either directly or indirectly.

zz Strictly avoid making contributions for political funds, either directly or indirectly.

zz Strictly avoid any kind of sexual harassment.

105





The Company has implemented a formal whistle-blowing procedure and encourages any employee who suspect wrongdoing at work, whether by Management, peers or any other employee, to raise their concerns.

Other PoliciesIn addition, the Company implements policies covering –

zz Recruitment and selection

zz Financial integrity

zz Use of Company property including computers

zz Non-harassment in the workplace

zz Environment, safety and health

zz Security of IT system

Responsibility to Customers The Company maintains an island-wide network of outlets and provides a wide choice of products and brands to its customers, augmented by easy payment opportunities. Outstanding customer care and world class after-sales service are two of seven propositions substantiating our claim to be a world-class company. What is salient about the widespread nature of our distribution is that in most instances, a consumer living in any part of the country need not travel more than 10 km to obtain goods and services from the Company.

Products sold by the Company are of the highest quality and are rigorously tested prior to introduction. The Company extends warranties on its products. It maintains an island-wide network of service centres and franchise agents to facilitate product repairs. Customer grievances, if any, are handled promptly and solutions provided with exchange of merchandise in the unlikely event of a manufacturing defect.

Among developments relevant to customer relations in the year under review was the growing popularity of our Contact Centre established in 2006 to deal with customer complaints and product performance issues as well as to provide customer-related information. In addition to this, the Company conducts customer-loyalty programmes and Customer-Service Clinics across the country where any customer can relate their grievances or obtain service for their product on site.

In service to our differently-abled customers, wheelchair ramps and other such infrastructure modifications and facilities are being added to the Company’s retail outlets progressively as part of routine showroom renovations.

EnvironmentSocial responsibility is regarded as a fundamental aspect of the Company’s strategy and it is one of the core values of the business. As stated in our value statement ‘we make every effort to ensure that the environment is protected and conserved for future generations’ and in line with this core value, the Company is committed to minimising any adverse impact the conduct of the business may have on the environment. Further to that, this core value encourages and ensures our products, processes and business does not unnecessarily damage the environment.

The Company is proud to present in this Annual Report, based on the Global Reporting Initiatives (GRI) Guidelines. The Company’s Social and Environment Management Initiations are more-fully described on pages 50 to 99 and pages 283 to 288.

Code of Best Practice on Corporate GovernanceWe set out below the corporate governance practices adopted and practiced by the Company, the extent of adoption of the Code of Best Practice on Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka and the Rules set out in Section 7.10 of the Colombo Stock Exchange Listing Rules on Corporate Governance.

Section AThis section covers Company’s extent of adherence to the requirements of the Code of Best Practice on Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka. This reflects Company’s governance in following eight fundamental aspects:

zz Directors

zz Director Remuneration

zz Relationship with Shareholders

zz Accountability and Audit

zz Institutional Investors

zz Other Investors

zz Internet of things and cyber-security

zz Environment, society and governance These are discussed in the sections that follows.

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A. DirectorsA.1 – The BoardMain PrincipleEvery public company should be headed by an effective Board, which should direct, lead and control the company.

Corporate Governance Principle

CA Sri LankaCode Reference

Requirement of the Code Compliant with the Code Compliance

Board Meeting

A.1.1 The Board should meet regularly, at least once in every quarter.

The Board meets at least four times a year and additional meetings are held as necessary. The Board Subcommittees also met on a regular basis. Circular Resolutions are passed as per the requirements. The Board met four times during the period ended 31st March 2019. Details of the meetings and attendance of the members are set out on pages 146 and 147. The meetings convened by the Board Subcommittees during 2018/19 are also provided on pages 146 and 147.

The regularity of Board meetings and the structure and process of submitting information should be agreed to and documented by the Board.

A board pack containing all relevant information is submitted to board of directors.

Responsibility of the Board

A.1.2 Board should be responsible for matters including:

Ensuring the formulation and implementation of a sound business strategy.

The Board is responsible for the strategic planning process of the Company. This includes the responsibility for the formulation of the strategic vision and mission of the Company, setting the overall corporate policy and strategy, monitoring performance and reviewing risks and major investments. The Board also takes on the added responsibility of directing Company performance towards achieving the best results possible and increasing shareholder value. The Board sets the broad parameters of the Company’s business. The Company’s business units are then tasked with their application, in achieving specific targets and objectives.

Appointing the Chair and the Senior Independent Director if relevant.

Not applicable since Group CEO is the apex executive in charge of the day-to-day management of operations and business of the Company.

Ensuring that the CEO and Management Team possess the skill, experience and knowledge to implement strategy.

The profile of the CEO is provided in this Annual Report on page 18.

While the Board of Directors is ultimately responsible for the operations and financial soundness of the Company, the day-to-day management of the Company is entrusted to the Group CEO. There is extensive staff participation in decision-making at all levels, with strategic recommendations on material matters flowing to the Board for final decision.

The Group CEO chairs the Executive Committee. The Executive Management Committee, comprising all Key Managers who are divisional heads and two Deputy Directors and Group CEO meets every week for performance review and decision-making.

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The Company’s Annual Plan addresses the requirements of all business units and divisions. This ensures that the entire Company follows the set plans and objectives as articulated in the Annual Plan. These in turn become the primary objectives of the Management Committee which is represented by all Heads of Divisions, and are shared with Divisional Heads and Heads of all SBUs. The Management Committee together with the Heads of Divisions and SBUs have the autonomy and freedom to translate these objectives to specific goals that are achievable.

Key programmes are identified by the Group CEO for each year in line with the Annual Plan after they are discussed at Executive Committee meetings. A review of progress on plan implementation is a key item on the agenda of the monthly Management Review meetings.

Ensuring the adoption of an effective CEO and Senior Management succession strategy.

Succession planning is given due recognition in the corporate culture. Effective succession planning is a criterion in the performance appraisals of the Senior Management and Key Management.

Addition to that, as part of the development and succession programme, the “3x3x3” initiative seeks to ensure that all positions of Key Managers, Senior Managers, Middle Managers and Junior Managers have been identified and are groomed for succession.

Approving budgets and major capital expenditure.

Budgets and major capital expenditure are reviewed and approved by the Board.

Determining the matters expressively reserved to the Board and those delegated to the Management including limits of authority and financial delegation.

The Board has agreed and reserved power to determine matters including approving of major capital expenditure, appointing the secretary to the Board and seeking professional advice as and when needed.

Limits of authority and financial delegation are agreed by the Board in order to manage affairs efficiently.

Ensure effective systems to secure integrity of information, internal control and risk management.

The Board has delegated this responsibility to the Audit Committee.

The Audit Committee is empowered to review and monitor the financial reporting process of Singer Group so as to provide additional assurance on the reliability of Financial Statements through a process of independent and objective review.

As such, the Audit Committee acts as an effective forum in assisting the Board of Directors in discharging their responsibilities on ensuring the quality of financial reporting and related communication to the shareholders and the public.

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Audit Committee framework, composition, responsibilities and duties are given in the Audit Committee Report on pages 148 and 149.

Risk Management framework is given in the Risk Management Report appearing from pages 154 to 159.

Ensuring compliance with laws, regulation and ethical standards.

The Board follows a policy of strict compliance with laws and regulatory requirements and ensures that stakeholder interests are considered in key corporate direction.

A compliance checklist is provided to Audit Committee and Board members in every quarter by the Compliance Officer indicating compliance with applicable laws, regulations etc.

The Company has also issued a Code of Ethics and Human Resources Policies and Procedures applicable to all employees.

All stakeholders’ interests are considered in corporate decisions.

The Board adopted core values and standards which set out the conduct of staff in their dealings with shareholders, customers, community, environment, suppliers and other stakeholders. Once the core values are set and communicated to all levels of the Organisation, there is a belief that the highest standards of integrity are maintained in business.

The Board relies on the integrity and due diligence of Key Managers, Senior Managers, Auditors and Advisors to oversee the Group’s overall performance objectivities, financial plans and annual budgets, investments, financial performance reviews, risk management and corporate governance practices.

Recognising sustainable business development in corporate strategy, decisions and activities and consider the need for adopting “integrated reporting”.

Development of sustainable value is embedded in the corporate strategies.

The Company’s values and standards are set with emphasis on adopting appropriate accounting policies and fostering compliance with financial regulations.

The Group enshrines the highest ethical standards in the conduct of its business affairs and its Board of Directors are tasked with ensuring that the resultant regime of exemplary governance across all aspects of business are in the best interests of stakeholders. Ethically correct conduct comprising integrity, honesty, fair play and loyalty pervade all Group actions.

Accounting policies are reviewed annually in light of changing business requirements, evolving international and local accounting standards and industry best practice. As mentioned above, significant emphasis is placed on compliance with applicable regulations. Group continues to adopt same accounting policies adopted in year 2017/18 and which are given as part of the Financial Reports on pages 184 to 209.

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Establish a process of monitoring and evaluation of progress on strategy implementation, budgets, plans and related risks.

Performance and progress of strategy implementation, budgets, plans and risks are monitored through a formal reporting process.

Ensuring that a process is established for corporate reporting on annual and quarterly basis or more regularly as relevant to the Company.

The Board ensures compliance to annual and quarterly corporate reporting requirements.

Fulfilling such other Board functions as relevant to the Organisation.

The Board makes every endeavour to ensure a balanced and objective assessment of the Company’s position, performance and prospects.

Members from professional accounting bodies are on the Board ensuring financial and economic acumen, knowledge and other Board members from the professional marketing bodies ensure stimulation of marketing knowledge of the Board members.

Compliance with laws and seeking independent professional advices

A.1.3 The Board collectively, and Directors individually, must act in accordance with the laws of the country and there should be a procedure agreed by the Board of Directors to obtain independent professional advice where necessary, at the Company’s expense.

As mentioned above, there is a significant emphasis across the Organisation to ensure compliance with applicable laws and regulations.

The Board members are permitted to obtain independent professional advice from a third party including the Company’s External Auditors and other professional consultants whenever deemed necessary at the expense of the Company.

Independent professional advice were obtained during the year 2018/19 as below:

During the year under review, Board has obtained independent advice from KPMG on the implementation of SLFRS 9 and SLFRS 15.

Company Secretary

A.1.4 All Directors should have access to the advice and service of the Company’s Secretary, who is responsible to the Board in ensuring, that the Board procedures are followed and that the applicable rules and regulations are complied with. Any question of the removal of the Company Secretary should be a matter for the Board as a whole.

The Company Secretary ensures that all Board Terms of Reference are followed and applicable rules and regulations are adhered to. The Company Secretary advices the Board and ensures that the Company complies with its Articles of Association, Companies Act and such regulatory publication, Board procedures and other applicable rules and regulations are followed. All Directors have access to the Company Secretary. The Secretary possesses the required qualifications as set out in the Companies Act.

The Company should obtain appropriate insurance cover as recommended by the Nomination Committee for the Board, Directors and Key Management Personnel.

Insurance cover has been obtained.

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Independent judgement of Directors

A.1.5 All Directors should bring independent judgement to bear on issues of strategy, performance, resource allocation, risk management, compliance and standards of business conduct.

The Chairman conducts Board meetings in a manner which ensures that there is effective participation from all Directors, their individual contribution and concerns are objectively assessed prior to making key decisions and that the balance of power is maintained.

In advance of every Board meeting, each Director receives a comprehensive set of Board papers and any additional information requested by the Directors. It is the Group CEO’s duty to ensure that all members are properly briefed.

None of the Independent Directors have held executive responsibilities in the Company, and have submitted a declaration confirming their independence in accordance with Section 7 of the CSE Listing Rules on Corporate Governance as at 31st March 2019.

Dedication of adequate time and effort by the Directors

A.1.6 Every Director should dedicate adequate time and effort to matters of the Board and the Company, to ensure that the duties and responsibilities owned to the Company are satisfactorily discharged.

The Board met on four occasions during the year.

The Board is satisfied that the Chairman and the Non-Executive Directors committed sufficient time during 2018/19 to fulfil their duties.

A.1.7 One-third of Directors can call for a resolution to be presented to the Board where they feel it is in the best interest to the Company to do so.

As per Articles of Association, resolutions could be passed with majority voting.

Training for new and existing Directors

A.1.8 Every Director should receive appropriate training when first appointed to the Board of a company, and subsequently as necessary. The training curricular should encompass both general aspects of directorship and matters specific to the particular industry/company concerned. A Director must recognise that there is a need for continuous training and expansion of the knowledge and skill required to effectively perform his duties as a Director. The Board should regularly review and agree on the training and development needs of the Directors.

The Directors are given the opportunities to familiarise and obtain an in-depth understanding of the Company’s business, its strategies, risks and processes, at their discretion.

Training is provided to Executive Directors and Alternate Directors to equip themselves to discharge their responsibilities effectively. This includes training provided by principles, external and in-house training. Training and development needs are reviewed on a regular basis.

Directors are briefed on changes in laws and regulations, tax laws and accounting standards from time to time either during the Board meetings or at specially convened sessions.

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A.2 Chairman and Group Chief Executive Officer (Group CEO)Main Principle




Separation of the roles of Chairman and Group CEO

A.2.1 The positions of Chairman and Group CEO are separated to ensure a balance of power and authority and to prevent any one individual from possessing unfettered decision-making authority.

Although Chairman acts as Executive Chairman, the Chairman’s and Group CEO’s functions are separated to ensure a balance of power of authority and this dual panel structure has been continued throughout the year 2018/19.

The Chairman of the Board of Directors functions in an executive capacity. The Group Chief Executive Officer functions as an Ex-Officio Director of the Board and is the apex executive in charge of the day-to-day management of operations and business of the Company, while providing the link between the, Board of the Parent Company and Divisional Heads (Key Management).

A.3 Chairman’s RoleMain PrincipleThe Chairman’s role in preserving good corporate governance is crucial. As the person responsible for running the Board, the Chairman should preserve order and facilitate the effective discharge of Board functions.




Role of Chairman

A.3.1 The Chairman should conduct Board proceedings in a proper manner and ensure, inter alia, that –

zz The agenda for Board meetings is developed in consultation with the CEO, Directors and the Company Secretary taking into consideration matters relating to strategy, performance, resource allocation, risk management and compliance.

zz Agenda for Board meetings is developed in consultation with the Group CEO, Directors, CFO and the Company Secretary.

zz Sufficiently detailed information of matters included in the agenda should be provided to Directors in a timely manner.

zz Required information are provided to Directors in a timely manner.

zz All Directors are made aware of their duties and responsibilities and the Board and Committee structures through which it will operate in discharging its responsibilities.

zz All Directors are aware of their duties and responsibilities and Chairman and Group CEO provide a comprehensive overview of the Company and its operations once a new Director is appointed to the Board.

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zz The effective participation of both Executive and Non-Executive Directors is secured.

zz The Chairman is responsible for leading the Board and for its effectiveness. In practice, this means taking responsibility for the Board’s composition, ensuring that the Board focuses on its key tasks and supports the Group CEO in managing the day-to-day running of the Company. The Chairman is also the ultimate point of contact for shareholders, particularly on corporate governance issues.

zz All Directors are encouraged to make an effective contribution, within their respective capabilities, for the benefit of the Company.

zz The Chairman satisfies himself that the information available to the Board is sufficient to make an informed assessment of the Company’s affairs as well as to discharge their duties to all stakeholders.

zz All Directors are encouraged to seek information considered necessary to discuss matters on the agenda of meetings and to request inclusion of matters of corporate concern on the agenda.

zz Necessary information and presentations are done if necessary to the agenda items. All Directors are free to communicate with Divisional Heads and Head of Risk Management to call additional information necessary.

zz A balance of power between Executive and Non-Executive Directors is maintained.

zz The Chairman conducts Board meetings in a manner which ensures that there is effective participation from all Directors, their individual contribution and concerns are objectively assessed prior to making key decisions and that the balance of power is maintained.

zz The views of Directors on issues under consideration are ascertained; and

zz The Board is in complete control of the Company’s affairs and alert to its obligations to all shareholders and other stakeholders.

zz Chairman ensures that regular meetings are conducted at least once a quarter and the minutes of the meetings are accurately recorded.

zz Chairman approves the agenda prepared by the Company Secretary.

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A.4 Financial AcumenMain PrincipleThe Board should ensure the availability within it of those with sufficient financial acumen and knowledge to offer guidance on matters of finance.




Financial acumen and knowledge

A.4.1 Availability of sufficient financial acumen and knowledge.

The Board includes a member who is a Fellow Member of the Association of Certified Chartered Accountants, UK, a member who is a Fellow Member of The Institute of Chartered Accountants of Sri Lanka and a member of the Institute of Certified Management Accountants of Australia, a member who is an Associate Member of The Institute of Chartered Accountants of Sri Lanka (ACA) and Fellow Member of the Chartered Institute of Management Accountants, UK, (FCMA). Other members of the Board have the ability to offer guidance on matters of finance to the Board.

The profiles of the Board of Directors are provided in this Annual Report from pages 18 to 21.

A.5 Board BalanceMain Principle It is preferable for the Board to have a balance of Executive and Non-Executive Directors such that no individual or small group of individuals can dominate the Board’s decision-taking.




Presence of strong team of Non-Executive Directors

A.5.1 The Board should include Non-Executive Directors of sufficient calibre and number for their views to carry significant weight in the Board’s decisions.

The Board should include at least three Non-Executive Directors or such number of Non-Executive Directors equivalent to one-third of total number of Directors, whichever is higher. In the event, the Chairman and CEO is the same person, Non-Executive Directors should comprise a majority of the Board.

Eight out of ten Directors on the Board are Non-Executive Directors which is well above the minimum prescribed by the Code. This ensures views of Non-Executive Directors carry a significant weight in the decisions made by the Board.

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Independent Non-Executive Directors

A.5.2 Where the constitution of the Board of Directors includes only three Non-Executive Directors, all three Non-Executive Directors should be “independent”. In all other instances three or two-third of Non-Executive Directors appointed to the Board of Directors whichever is higher should be “independent”.

Five out of eight Non-Executive Directors on the Board are independent based on the criteria set by this Code and the Listing Rules of the Colombo Stock Exchange. However, the Board has determined Mr. M.H. Jamaldeen as an independent Non-Executive Director notwithstanding that he is a Director of Hayleys PLC, the Parent Company as the objectivity of his role is not compromised by being on both Boards.

The Names of the Independent Non-Executive Directors are disclosed in Code A.5.5 and on the back page of the Annual Report.

Independence of Non-Executive Directors

A.5.3 For a Director to be deemed “independent” such Director should be independent of management and free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgement.

The Company maintains the “Interest Register” required by the Companies Act No. 07 of 2007, which also shows details of Director Interest in Contracts/Company or Group.

A disclosure on related party transactions is available on pages 267 to 269.

Annual Declaration

A.5.4 Each Non-Executive Director should submit a signed and dated declaration annually of his/her independence or non-independence against the specified criteria set out in the Specimen in Schedule K.

Every Non-Executive Independent Director of the Company has made written submissions as to their independence against the specified criteria set out by the Company, which is in line with the requirements of Schedule K of this Code.

Determination of Independence of Director

A.5.5 The Board should make a determination annually as to the independence or non-independence of each Non-Executive Director based on such a declaration made of decided criteria and other information available to the Board, and should set out in the Annual Report the names of Directors determined to be “independent”.

The Board has determined the independence of Directors based on the declarations submitted by the Non-Executive Directors, as to their independence, as a fair representation and will continue to evaluate their independence on this basis annually. No circumstances have arisen for the determination of independence by the Board, beyond the criteria set out in the Code. Independent Non-Executive Directors are:

The Board should specify the criteria not met and the basis for its determination in the Annual Report, if it determines that a Director is independent notwithstanding the existence of relationships or circumstances which indicate the contrary.

Mr. D. Sooriyaarachchi

Mr. M.H. Jamaldeen*

Mr. D.H. Fernando

Mr. D.K. de S.Wijeyeratne

Ms. O. Gunewardene

*The Board has determined Mr. M.H. Jamaldeen as an Independent Non-Executive Director notwithstanding that he is a Director of Hayleys PLC, the Parent Company as the objectivity of his role is not compromised by being on both Boards.

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Appointment of Alternate Director

A.5.6 If an Alternate Director is appointed by a Non-Executive Director such Alternate Director should not be an executive of the Company. If an Alternate Director is appointed by an Independent Director, the person who is appointed also should meet the criteria of Independence and the provision on minimum number of independent Directors also should be satisfied.

Independent Non-Executive Director has appointed an Executive Director within the Singer Group as his Alternate Director. However any decision by the Alternate Director is arrived at in consultation with his appointor and hence there is no compromise of the independence of his appointor during Board proceedings.

Alternative Directors to the Non-Executive Directors are executives of the Company. However, Board balance is not affected since the Board complies with Code A.5.2

Requirement to appoint “Senior Non-Executive Director”

A.5.7 In the event the Chairman and CEO is the same person, or the Chairman is not an Independent Director or the Chairman is immediately preceding CEO, the Board should appoint one of the Independent Non-Executive Directors to be the “Senior Independent Director” (SID) and disclose this appointment in the Annual Report.

Not applicable since Group CEO is the apex Executive in charge of the day-to-day management of operations and business of the Company.

Confidential discussion with Senior Independent Director

A.5.8 The Senior Independent Director should make himself available for confidential discussions with other Directors who may have concerns which they believe have not been properly considered by the Board as a whole and which pertain to significant issues that are detrimental to the Company.

Not Applicable.

Chairman’s meetings with Non-Executive Directors

A.5.9 The Chairman should hold meetings with the Non-Executive Directors only, without the Executive Directors being present, as necessary and at least once each year.

Chairman meets with Non-Executive Directors without the presence of Executive Directors, whenever necessary.

Recording of concerns in Board Minutes

A.5.10 Where Directors have concerns about the matters of the Company which cannot be unanimously resolved, they should ensure their concerns are recorded in the Board minutes.

Concerns raised by the Directors during the period, if any, are recorded in the minutes of Board meetings with adequate details by the Company Secretary.

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A.6 Supply of InformationMain Principle The Board should be provided with timely information in a form and of a quality appropriate to enable it to discharge its duties.


SEC and CA Sri LankaCode Reference


Management obligation to provide appropriate and timely information to the Board

A.6.1 Management has an obligation to provide the Board with appropriate and timely information, but information volunteered by management may not be enough in all circumstances and Directors should make further inquiries where necessary. The Chairman should ensure all Directors are properly briefed on issues arising at Board meetings.

The Company ensures that the Directors receive adequate information in a timely manner. On urgent matters, every effort is made to provide the information, as early as possible.

The Board receives a standard set of documents, which are timely, accurate, relevant and comprehensive. These papers include a detailed analysis of financial and non-financial information. The Board may call for additional information or clarify issues with any member of the Executive Committee.

If necessary, all Directors are adequately briefed by the Group CEO on matters arising at Board meetings. The Secretary and the Compliance Officer ensure that Board papers are circulated in advance prior to Board meeting.

If necessary, members of the Executive Committee, External Auditors and Outside Consultancies makes presentations on issues of importance.

The Chairman ensures that all Directors are briefed adequately on issues arising at Board meetings.

Adequate time for effective conduct of Board meetings

The minutes, agenda and papers required for a Board meeting should ordinarily be provided to Directors at least seven (7) days before the meeting, and the minutes of the meeting should ordinarily be provided to Directors at least two weeks after the meeting date.

The minutes, agenda and papers required for Board meeting are provided in advance to facilitate its effective conduct.

A.7 Appointments to the BoardMain Principle There should be a formal and transparent procedure for the appointment of new Directors to the Board.




Nomination Committee

A.7.1 A Nomination Committee should be established to make recommendations to the Board on all new Board appointments. Terms of Reference for Nomination Committees are set out in Schedule A. The Chairman and members of the Nomination Committee should be identified in the Annual Report.

The Committee consists of one Independent Non-Executive Director, one Non-Executive Director, Chairman who is also an Executive Director and Group CEO.

Please refer page 151 for new appointments in year 2018/19.

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A separate section of the Annual Report should describe the work of the Nomination Committee including the process it has used in relation to Board appointments.

Details of work of the Nomination Committee are given in page 151.

Assessment of Board composition by the Nomination Committee

A.7.2 The Nomination Committee should annually assess Board-composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company. The findings of such assessment should be taken into account when new Board appointments are considered and when incumbent Directors come up for re-election.

Board as a whole annually assessed the composition of the Board to ensure that the combined knowledge and experience of the Board matches the strategic demand facing the Company. The findings of such assessments are taken into account when new Board appointments are considered.

Disclose of required details of new Directors to shareholders

A.7.3 Upon the appointment of a new Director to the Board, the Company should forthwith disclose to shareholders:

zz a brief résumé of the Director;zz the nature of his expertise in relevant

functional areas;zz the names of companies in which

the Director holds directorships or memberships in Board committees; and

zz whether such a Director can be considered “independent”.

All new appointments are communicated to the shareholders via the Colombo Stock Exchange.

The details of the current Board of Directors and new appointments are provided on pages 18 to 21 in this Annual Report.

A.8 Re-electionMain Principle All Directors should be required to submit themselves for re-election at regular intervals and at least once in every three years.




Re-election of Non-Executive Directors, Chairman and CEO

A.8.1 Non-Executive Directors should be appointed for specified terms subject to re-election and to the provisions in the Companies Act relating to the removal of a Director, and their reappointment should not be automatic.

In terms of the Articles of Association, one-third of the Directors, except for Chairman, Managing Director/CEO, retire by rotation and may offer themselves for re-election at the AGM. By virtue of being the Chairman, Managing Director/CEO are not required to make themselves available for re-election as per the Articles of Association. The Company’s Articles of Association provides that any Director appointed by the Board during the period to hold office until the next Annual General Meeting and seek reappointment by the shareholders at the said AGM.

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A.8.2 All Directors including the Chairman of the Board, should be subject to election by shareholders at the first opportunity after their appointment, and to re-election thereafter at intervals of no more than three years. The names of Directors submitted for election or re-election should be accompanied by a résumé minimally as set out in paragraph A.7.3 above, to enable shareholders to make an informed decision on their election.

Based on the article and the current composition of the Board, a Director has to come forward for re-election, every three years.

A résumé of the Directors coming up for re-election at the AGM, 2018/19 is available on pages 18 to 21.

The Chairman and Chief Executive Officer do not retire by rotation.

Resignation A.8.3 In the event of a resignation of a Director prior to completion of his appointed term, the Director should provide a written communication to the Board of his reasons for resignation.

Written communications are provided to the Board by Directors who resign prior to completion of his appointed term.

A.9 Appraisal of Board PerformanceMain Principle Boards should periodically appraise their own performance in order to ensure that Board responsibilities are satisfactorily discharged.




Annual performance evaluation of the Board and its Committee

A.9.1 The Board should have in place a formal and rigorous process for annually reviewing the performance of the Board and its committees and should address any matters that may arise from such review, in the discharge of its key responsibilities as set out in A.1.2.

The performance of the Board and the Subcommittee is reviewed and evaluated by the Board and Chairman based on a self-appraisal basis.

A.9.2 The Board should also undertake an annual self-evaluation of its own performance and that of its committees.

The evaluation should be carried out by each Director individually. The collective outcome should be compiled and made available to Nomination Committee, which should make recommendations to the Board on initiatives and actions required to improve the balance of skills, experience, independence, industry and company knowledge, training of Directors, governance processes, strategy review and other factors relevant to its effectiveness.

Not Complied.

A.9.3 The Board should have a process to review the participation, contribution and engagement of each Director at the time of re-election

Not Complied.

A.9.4 The Board should state how such performance evaluations have been conducted, in the Annual Report.

Not Complied.

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A.10 Disclosure of Information in Respect of DirectorsMain Principle Shareholders should be kept advised of relevant details in respect of Directors.




Details in respect of Directors

A.10.1 The Annual Report of the Company should set out the following information in relation to each Director:

i. Name, qualifications and brief profile; Available on pages 18 to 21 of Board of Directors.

ii. The nature of his/her expertise in relevant functional areas;

Available on pages 18 to 21 of Board of Directors.

iii. Immediate family and/or material business relationships with other Directors of the Company;

Not Applicable.

iv. Whether Executive, Non-Executive and/or Independent Director


v. Names of listed companies in Sri Lanka in which the Director concerned serves as a Director;


vi. Names of other companies in which the Director concerned serves as a Director, provided that where he/she holds directorships in companies within a Group of which the Company is a part, their names need not be disclosed; it is sufficient to state that he/she holds other directorships in such companies;


vii. Number/percentage of Board meetings of the Company attended during the year;

Available on page 147.

viii. The total number of Board seats held by each Director indicating listed and unlisted companies and whether in an executive or non-executive capacity;

Not disclosed in the Annual report. But can be obtained from Company Secretary.

ix. Committees in which the Director serves as Chairman or a member;

Available on pages 164 and 165.

x. Number/percentage of Committee meetings attended during the year.

Available on page 146.

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A.11 Appraisal of Group Chief Executive OfficerMain Principle The Board should be required, at least annually, to assess the performance of the Group CEO.




Setting annual targets and the appraisal of performance of the CEO

A.11.1 At the commencement of every fiscal year, the Board in consultation with the CEO, should set, in line with the short, medium and long-term objectives of the Company, reasonable financial and non-financial targets that should be met by the Group CEO during the year.

The Annual Business Plan is prepared setting up short-term, medium-term and long-term financial and non-financial goals. The Annual Business Plan is initially approved by the Board.

A.11.2 The performance of the Group CEO should be evaluated by the Board at the end of each fiscal year to ascertain whether the targets set by the Board have been achieved and if not, whether the failure to meet such targets was reasonable in the circumstances.

Assessment of performance of the Group CEO is carried out by the Board at the end of each year to ensure that pre-agreed targets have been achieved or if not whether there are acceptable reasons for not achieving them.

B. Directors’ RemunerationB.1 Remuneration ProcedureMain Principle Companies should establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. No Director should be involved in deciding his/her own remuneration.




Establishment of the Remuneration Committee

B.1.1 To avoid potential conflicts of interest, the Board of Directors should set up a Remuneration Committee to make recommendations to the Board, within agreed terms of reference, on the Company’s framework of remunerating Executive Directors. (These also include Post-Employment Benefits as well as Terminal Benefits.) Terms of Reference for Remuneration Committees are set out in Schedule C.

The scope of the Committee is to consider and recommend to the Board remuneration and perquisites of Independent Directors, Executive Directors of the Board of the Company including Key Managers and approve recommendations made by the Group Chief Executive Officer and the Parent Company.

Remuneration and perquisites of Group CEO is considered and recommended by the Parent Company – Hayleys PLC Remuneration Committee.

Composition of the Remuneration Committee

B.1.2 Remuneration Committees should consist exclusively of Non-Executive Directors with a minimum of three Non-Executive Directors of whom the majority should be Independent. The Chairman should be an independent Non-Executive Director and should be appointed by the Board.

The Committee consists of three Independent Non-Executive Directors. The Committee is chaired by an Independent Non-Executive Director. Finance Director serves as the Secretary to the Committee. Chairman to the Company participates as an observer to the Committee. Group CEO and the Finance Director assist the Committee by providing the relevant information and participating in its analysis and deliberations.

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Chairman and Members of the Remuneration Committee

B.1.3 The Chairman and members of the Remuneration Committee should be listed in the Annual Report each year.

Please refer page 150 of the Remuneration Committee Report for details of the Chairman and members of the Board Remuneration Committee.

Determination of remuneration of Non-Executive Directors

B.1.4 The Board as a whole, or where required by the Articles of Association the shareholders, should determine the remuneration of Non-Executive Directors, including members of the Remuneration Committee, within the limits set in the Articles of Association. Where permitted by the Articles, the Board may delegate this responsibility to a subcommittee of the Board, which might include the CEO.

After consideration of the recommendation made by the Group Chief Executive Officer and the Parent Company., the Committee as a whole decides the remuneration of the Non-Executive Directors. The Non-Executive Directors receive a fee for being a Director of the Board and separate fee for either chairing or being a member of a Board Subcommittee. They do not receive any performance/incentive payments.

Consultation of the Chairman and access to professional advice

B.1.5 The Remuneration Committee should consult the Chairman and/or CEO about its proposals relating to the remuneration of other Executive Directors and have access to professional advice from within and outside the Company, in discharging their responsibilities.

The Committee has the authority to seek internal and external independent professional advice on matters falling within its purview, at the Company’s expense. Views of the Chairman and Group CEO are obtained as they too assist and participate in its analysis and deliberations to the said Board Subcommittee.

B.2 Level and Make – Up of RemunerationMain Principle Levels of remuneration of both Executive and Non-Executive Directors should be sufficient to attract and retain the Directors needed to run the Company successfully. A proportion of Executive Directors’ remuneration should be structured to link rewards to corporate and individual performance.




Executive Directors’ remuneration package

B.2.1 The Remuneration Committee should provide the packages needed to attract, retain and motivate Executive Directors of the quality required but should avoid paying more than is necessary for this purpose.

The Board Remuneration Committee and also the Board ensure that Executive Directors – (Alternate Directors to the Non-Executive Directors) who are on the Board and Key Management are provided with an attractive remuneration package.

Remuneration package of the Group CEO is considered at Parent Company Remuneration Committee.

B.2.2 Executive Directors’ remuneration should be designed to promote the long-term success of the Company.

Executive Directors’ and Key Management’s remuneration is designed to promote the long-term success of the Company/Group.

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Comparison of remuneration with other companies/Other companies in the Group

B.2.3 The Remuneration Committee should judge where to position levels of remuneration of the Company, relative to other companies. It should be aware what comparable companies are paying and should take account of relative performance, but should use such comparisons with caution, mindful of the risk that they can result in an increase of remuneration levels with no corresponding improvement in performance.

A primary objective of compensation packages is to attract and retain a highly qualified and experienced workforce and reward performances. These compensation packages should provide compensation appropriate for each business within the Group and commensurate with each employee’s level of experience and contribution, bearing in mind the business performance and long-term shareholder returns.

B.2.4 The Remuneration Committee should be sensitive to remuneration and employment conditions elsewhere in the Company or Group of which it is a part, especially when determining annual salary increases.

Remuneration and annual salary increases are decided considering industry practices, performance of the Company/Group, each employee’s level of experience and contribution bearing in mind the business performance and the long-term shareholder returns.

Performance-based remuneration of Executive Directors

B.2.5 The performance-related elements of remuneration of Executive Directors should be designed and tailored to align their interests with those of the Company and main stakeholders and to give these Directors appropriate incentives to perform at the highest levels. The performance-related elements should be transparent, stretching and rigorously applied.

Objectives for Group CEO, Executive Directors and Key Management are set at the beginning of the year and the remuneration including the performance bonus is decided based upon the degree of achievement of such pre-set targets subject to the remuneration policy.

Executive share options

B.2.6 Executive share options should not be offered at a discount (i.e., less than market price prevailing at the time the exercise price is determined), save as permitted by the Listing Rules of the Colombo Stock Exchange. Shares granted under share options schemes should not be exercisable in less than three years and the Remuneration Committee should consider requiring Directors to hold a minimum number of shares and to hold shares for a further period after vesting or exercise.

Presently the Company does not have an Executive Share Option Scheme.

Designing the remuneration of Executive Directors

B.2.7 In designing schemes of performance-related remuneration, Remuneration Committees should follow the provisions set out in Schedule E. The schemes should include provisions that would enable the Company to recover sums paid or withhold a portion of such performance-related remuneration and specify the circumstances in which a company may not be entitled to do so.

Please refer Remuneration Committee Report on page 150.

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Early termination of Executive Directors

B.2.8 Remuneration Committee should consider what compensation commitments (including pension contributions) their Directors’ contracts of service, if any, entail in the event of early termination. Remuneration Committee should in particular, consider the advantages of providing explicitly for such compensation commitments to apply other than in the case of removal for misconduct, in initial contracts.

Not applicable to the Board except for Group CEO and other Executive Directors (Alternate Directors to the Non-Executive Directors) who are employees of the Company, and their terms of employment are governed by the contract of service/employment.

B.2.9 Where the initial contract does not explicitly provide for compensation commitments, Remuneration Committees should, within legal constraints, tailor their approach in early termination cases to the relevant circumstances. The broad aim should be, to avoid rewarding poor performance while dealing fairly with cases where departure is not due to poor performance.

Not applicable.

Level of remuneration of Non-Executive Directors

B.2.10 Levels of remuneration for Non-Executive Directors should reflect the time commitment and responsibilities of their role, taking into consideration market practices. Remuneration for Non-Executive Directors should not normally include share options. If exceptionally options are granted, shareholder approval should be sought in advance and any shares acquired by exercise of the options should be held until at least one year after the Non-Executive Director leaves the Board. Holding share options could be relevant to the determination of a Non-Executive Director’s independence. (as set out in provision A.5.5).

Non-Executive Directors of the Company are paid nominal fees commensurate with their time and role in the Company and taking into consideration market practices.

Non-Executive Directors are not included in share options as there is no scheme in existence.

B.3 Disclosure of RemunerationMain Principle The Company’s Annual Report should contain a Statement of Remuneration Policy and details of remuneration of the Board as a whole.




Disclosure of Remuneration

B.3.1 The Annual Report should set out the names of Directors (or persons in the Parent Company’s Committee in the case of a Group Company) comprising the Remuneration Committee, contain a statement of remuneration policy and set out the aggregate remuneration paid to Executive and Non-Executive Directors.

Please refer Remuneration Committee Report on page 150 for disclosure on the names of Remuneration Committee members and Remuneration Policy of the Company.

Please refer Note 8 to the Financial Statements on page 214 for aggregate remuneration paid to Executive and Non-Executive Directors.

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C. Relations with ShareholdersC.1 Constructive use of Annual General Meeting (AGM) and Conduct of General Meetings Main Principle Boards should use the AGM to communicate with shareholders and should encourage their participation.




Adequate Notice of the AGM

C.1.1 Companies should arrange for the Notice of AGM and related papers to be sent to shareholders at least as determined by statute, before the meeting.

A copy of the Annual Report including Financial Statements, Notice of Meeting and the Form of the Proxy are sent to shareholders 15 working days prior to the date of the AGM, as requested by statute, in order to provide the opportunity to all the shareholders to attend the AGM.

Separate resolution for all separate issues at the AGM

C.1.2 Companies should propose a separate resolution at the AGM on each substantially separate issue and should in particular propose a resolution at the AGM relating to the adoption of the report and accounts. For each resolution, proxy appointment forms should provide shareholders with the option to direct their proxy to vote either for or against the resolution or to withhold their vote. The Proxy Form and any announcements of the results of a vote should make it clear that a “vote withheld” is not a vote in law and will not be counted in the calculation of the proportion of the votes for and against the resolution.

Company proposes a separate resolution at the AGM on each substantially separate issue.

Further, adoption of the Annual Report of the Board of Directors on the affairs of the Company and Audited Financial Statements together with the Report of the Auditors thereon are considered as a separate resolution.

C.1.3 The Company should ensure that all valid proxy appointments received for General Meetings are properly recorded and counted. For each resolution where a vote has been taken on a show of hands, the Company should ensure that the following information is given at the Meeting and made available as soon as reasonably practicable on a website which is maintained by or on behalf of the Company:

zz The number of shares in respect of which proxy appointments have been validly made;

zz The number of votes for the resolution;zz The number of votes against the resolution; andzz The number of shares in respect of which the vote was

directed to be withheld;

The Company ensures that all valid proxy appointments received for General Meetings are properly recorded and counted.

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zz When, in the opinion of the Board a significant proportion of votes have been cast against a resolution at any General Meeting, the Board should take steps to understand the reasons behind the vote results and determine if any actions are required.

Availability of all Subcommittee Chairmen

C.1.4 The Chairman of the Board should arrange for the Chairmen of the Audit, Remuneration, Nomination and Related Parties Transactions Review Committees and the Senior Independent Director where such appointment has been made, to be available to answer questions at the AGM if so requested by the Chairman.

The Chairman of the Company ensures that Chairmen of all Board Subcommittees namely, Audit, Remuneration, Nomination and Related Party Transactions Review Committees are present at the AGM to answer the questions under their purview.

Procedures of Voting at AGM

C.1.5 Companies should circulate with every Notice of General Meeting, a summary of the procedures governing voting at General Meetings.

A summary of the procedures governing voting at General Meeting is circulated to shareholders with every Notice of General Meeting.

C.2 Communication with ShareholdersMain PrincipleThe Board should implement effective communication with shareholders.




Channel to reach all shareholders of the Company

C.2.1 There should be a channel to reach all shareholders of the Company in order to disseminate timely information.

The primary modes of communication between Company and the shareholders are the CSE announcements. Interim Financial Statements, Shareholders Circulars/Notices , Annual Report and AGM. Information is provided to the shareholders prior to the AGM to give them an opportunity to exercise the prerogative to raise any issues relating to the business of Company, either verbally or in writing prior to the AGM.

The Company used the following channels to disseminate timely information;

zz Shareholders meetingszz Financial and other notices as and when required through

the Colombo Stock Exchangezz Corporate websitezz Press notices.

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Policy and methodology for communication with shareholders

C.2.2 The Company should disclose the policy and methodology for communication with shareholders.

The Company will focus on open communication and fair disclosure, with emphasis on the integrity, timeliness and relevance of the information provided. The Company will ensure information is communicated accurately and in such a way as to avoid the creation or continuation of a false market.

Implementation of the Policy and methodology for communication with shareholders

C.2.3 The Company should disclose how they implement the above policy and methodology.

Printed copies of Annual Report are provided to all shareholders without charge.

All other announcements are posted on the CSE website.

Contact person for the communication

C.2.4 The Company should disclose the contact person for such communication.

Details of Company Secretary are disclosed in Corporate Information Section. Shareholders may, at any time, direct questions, request for publicly available information and provide comments and suggestions to Directors or Management of the Company. In addition, Head of Investor Relations is assigned to handle communications related to investor relations. Such questions, requests and comments should be addressed to the Company Secretary and in the absence of him the Group Chief Executive Officer.

Process to make Directors aware of major issues and concerns of shareholders

C.2.5 The Company should have a process to make all Directors aware of major issues and concerns of shareholders and this process should be disclosed by the Company.

The Company Secretary shall maintain a record of all correspondence received and will deliver as soon as practicable such correspondence to the Board or individual Director/s as applicable. The Board or individual Director/s, as applicable, will generate an appropriate response to all validly received shareholder correspondence and will direct the Company Secretary to send the response to the particular shareholder.

C.2.6 The Company should decide the person to contact in relation to shareholders’ matters.

Company Secretary or head of Investor Relations can be contacted in relation to shareholders’ matters.

C.2.7 The process for responding to shareholders matters should be formulated by the Board and disclosed.

Company Secretary is assigned to respond to shareholders by the Board and update the Board on such matters.

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C.3 Major TransactionsMain PrincipleFurther to compliance with the requirements under the Companies Act, Directors should disclose to shareholders all proposed corporate transactions, which if entered into, would materially alter/vary the Company’s net assets base or in the case of a Company with subsidiaries, the consolidated Group net asset base.




Disclosure on “Major Transaction”

C.3.1 Prior to a company engaging in or committing to a “Major Related Party Transaction”, with a related party, involving the acquisition, sale or disposition of greater than one third value of the Company’s assets or that of a subsidiary which has a material bearing on the Company and for consolidated net assets of the Company, or a transaction which has or is likely to have the effect of the Company acquiring obligations and liabilities, of greater than one third of the value of the Company’s assets, the Directors should disclose to shareholders the purpose and all material facts of such transaction and obtain shareholders’ approval by ordinary resolution at an EGM. It also applies to transactions or series of related transactions which have the purpose or effect of substantially altering nature of the business carried on by the Company.

During the year, there were no major transactions as defined by Section 185 of the Company’s Act No. 07 of 2007 which materially affect the Net Assets Base of the Company or Consolidated Group Net Asset Base.

Transactions which materially affect the net assets base of the Company will be disclosed in the Quarterly/Annual Financial Statements, if any.

C.3.2 Public listed companies should in addition comply with the disclosure requirements and shareholder approval by special resolution as required by the Rules and Regulations of the Securities and Exchange Commission and by the Colombo Stock Exchange.

Not applicable since no such transactions were carried out during the period.

D. Accountability and AuditD.1 Financial ReportingMain PrincipleThe Board should present a balanced and understandable assessment of the Company’s financial position, performance and prospects.


CA Sri LankaCodeReference


Board’s responsibility for Statutory and Regulatory Reporting

D.1.1 The Board should present an annual report including Financial Statements that is true and fair, balanced and understandable and prepared in accordance with the relevant laws and regulations and any deviation being clearly explained.

An annual report is presented including Financial Statements that is true and fair, balanced and understandable and prepared in accordance with the relevant laws and regulations.

D.1.2 The Board’s responsibility to present a balanced and understandable assessment extends to interim and other price-sensitive public reports and reports to regulators, as well as to information required to be presented by statutory requirements.

The Board is well aware of its responsibility to present regulatory and statutory reporting in a balanced and understandable manner and a statement to this effect is given in the Statement of Directors’ Responsibility on page 170 confirming this position.

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The Company had strictly complied with the requirements of the Companies Act No. 07 of 2007 in the preparation of Quarterly and Annual Financial Statements which are prepared and presented in conformity with Sri Lanka Accounting Standards. Further, Company has complied with the reporting requirements prescribed by the regulatory authority such as the Colombo Stock Exchange.

In case of Subsidiary Company – Singer Finance (Lanka) PLC has also complied with the requirements of the Finance Companies Act No. 78 of 1988 and amendments thereto and reporting requirements prescribed by the regulatory authorities such as the Central Bank of Sri Lanka and the Colombo Stock Exchange. Given below is a table containing the dates on which the Annual and Interim Financial Statements were uploaded to the CSE website/dispatched to the shareholders in the year under review:

Report Date of Dispatch or Upload

Status

Annual Report for the 15 months ended 31st March 2018

4th June 2018 Compliant

1st Quarter 2018 8th August 2018 Compliant

2nd Quarter 2018 12th November 2018 Compliant

3rd Quarter 2018 8th February 2019 Compliant

4th Quarter 2019 16th May 2019 Compliant

D.1.3 The Board should, before it approves the Company’s Financial Statements for a financial period, obtain from its Chief Executive Officer and Chief Financial Officer a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the Financial Statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company and that the system of risk management and internal control was operating effectively.

It is assigned to Chief Financial Officer, Head of Risk Management and compliance officers of the respective subsidiary companies.

Chief Financial Officer, Head of Risk Management and compliance officers (financial accountants) review quarterly and year end Financial Statements before submitting to the Audit Committee and Board and ensure that, the financial records of the entity have been properly maintained and that the Financial Statements comply with the appropriate accounting standards and give a true and fair view.

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Directors’ Report in the Annual Report

D.1.4 The Directors’ Report, which forms part of the Annual Report, should contain declarations by the Directors to the effect that:

zz the Company has not engaged in any activity which contravenes laws and regulations;

zz the Directors have declared all material interests in contracts involving the Company and refrained from voting on matters in which they were materially interested;

zz the Company has made all endeavours to ensure the equitable treatment of shareholders;

zz the Directors have complied with best practices of corporate governance

zz Property. plant and equipment is reflected at fair value, where it is different from fair value adequate disclosures are made

zz the business is a going concern, with supporting assumptions or qualifications as necessary; and

zz they have conducted a review of the internal controls, covering financial, operational and compliance controls and risk management, and have obtained reasonable assurance of their effectiveness and successful adherence therewith, and, if it is unable to make any of these declarations, to explain why it is unable to do so.

The Annual Report of the Board of Directors on the Affairs of the Company given on pages 163 to 169 covers all of these sections.

In addition to that Company has established procedures to ensure compliance with all applicable statutory and regulatory requirements. The Accountants of respective companies within the Group act as Compliance Officers and are responsible for ensuring proper compliance with applicable laws and regulations.

A compliance statement is tabled at each Board meeting by the Compliance Officer.

The Company’s compliance with Section 7.10 of the Colombo Stock Exchange Listing Rules on Corporate Governance and details of such compliance are discussed on pages 144 and 146 of this Report.

Statements of Directors’ and Auditors’ Responsibility for the Financial Statements

D.1.5 The Annual Report should contain a statement setting out the responsibilities of the Board for the preparation and presentation of Financial Statements, together with a statement by the Auditors about their reporting responsibilities. Further the Annual Report should contain a report/statement on internal control.

The “Statement of Directors’ Responsibility” is given on page 170.

The “Independent Auditors’ Report” on pages 171 to 175 states the Auditor’s responsibility.

The Statement on Internal Control is given on page 170 in the Statement of Director’s Responsibilities.

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Management Discussion and Analysis

D.1.6 The Annual Report should contain a “Management Discussion and Analysis”, discussing, among other issues:

zz business model;

zz industry structure and developments;

zz opportunities and threats;

zz risk management ;

zz internal control systems and their adequacy;

zz governance;

zz stakeholder relationships;

zz social and environmental protection activities carried out by the Company;

zz financial performance;

zz investment in physical and intellectual capital;

zz human resource/industrial relations activities carried out by the company; and

zz prospects for the future.

The Management Discussion and Analysis may be structured based on the integrated reporting framework issued by International Integrated Reporting Council and “a preparer’s guide to integrated Corporate Reporting” issued by CA Sri Lanka.

Please refer Chairman’s Letter on pages 14 and 15, Group Chief Executive Officer’s Review on pages 16 and 17, Review of Operation (Management Discussion and Analysis) on pages 35 to 99 of this Annual Report.

Management Discussion and Analysis is structured based on the Integrated Reporting Framework in this Annual Report.

Summon on EGM to notify serious loss of capital

D.1.7 In the event the net assets of the Company falling below 50% of the value of the Company’s shareholders’ funds, the Directors shall forthwith summon an Extraordinary General Meeting of the Company to notify shareholders of the position and of remedial action being taken. The Directors should report periodically to the shareholders progress on these remedial actions.

Likelihood of such occurrence is remote. However, should the situation arises, an EGM will be called for and shareholders will be notified.

Disclosure of related party transaction

D.1.8 The Board should adequately and accurately disclose the Related Party Transactions in its Annual Report:

Each Company within the Group to submit signed and dated quarterly declarations mentioning whether they have related party transactions with the Company as defined in this Code;

The Company Secretary keeps a record on related party transactions and make necessary disclosures accordingly;

There should be a process to capture related parties and related party transactions. This process needs to be operationalised and related party transactions should be properly documented:

A record/register either in hard or soft form on related party and related party transaction should be maintained by the Company;

This record should ensure that the company captures information to comply with the respective related party disclosure requirements imposed by SEC/Accounting Standards/Auditing Standards and similar regulations.

Each Company within the Singer Group has submitted signed and dated declarations mentioning whether they had related party transactions with the Company during the period ended 31st March 2019.

Related Party Transactions Review Committee reviewed related party transactions of the Singer Group which is described in this Annual Report in pages 152 and 153.

Related parties and related party transactions are captured and documented by the Company.

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D.2 Risk Management and Internal ControlMain PrincipleThe Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. The Board should have a process of risk management and a sound system of internal control to safeguard shareholders’ investments and the Company’s assets. Broadly, risk management and internal control is a process, effected by a company’s Board of Directors and Management, designed to provide reasonable assurance regarding the achievement of Company’s objectives.




Annual Review of the effectiveness of Group’s system of internal control

D.2.1 The Board should monitor the Company’s risk management and internal control systems and, at least annually, carry out a review of their effectiveness, and report on that review in the Annual Report. The monitoring and review should cover all material controls, including financial, operational and compliance controls.

The Company’s Directors are responsible for instituting a system of internal controls to ensure the effective implementation of all policies and decisions of the Board. This framework is designed to provide reasonable but not absolute assurance that all aspects are safeguarded.

The Company has its own internal audit processes, implemented to ensure that effective controls are in place. These processes extend across all Company operations.

The internal audit function is headed by the Head of Risk Management, who reports to the Board Audit Committee and Group CEO.

In relation to the retail network, the internal audit function includes an individual risk assessment for every outlet directly operated by Singer (Sri Lanka) PLC, based on five criteria –

1. Receivables management

2. Inventory management

3. Cash management

4. Internal checks and balances

5. Effectiveness of internal controlsEach location is graded by the Internal Audit Department based on its adherence to controls and its administrative performance on the management of the five criteria mentioned above.

Review the need for internal audit function

D.2.2 The Directors should confirm in the Annual Report that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The Directors should describe those risks and explain how they are being managed or mitigated.

Please refer pages 154 to 159 in the Risk Management report.

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D.2.3 Companies should have an internal audit function.

Risk Management and Internal Audit are responsible for internal audit functions.

Review of the process and effectiveness of risk management and internal controls

D.2.4 The Board should require the Audit Committee to carry out reviews of the process and effectiveness of risk management and internal controls, and to document to the Board and Board takes the responsibility for the disclosures on risk management and internal controls.

The Internal Audit Division of the Company carries out regular reviews on the risk management function and internal control system including internal control over financial reporting. The Audit Committee monitors, reviews and evaluates the effectiveness of internal control system including the internal controls over financial reporting. In the reporting period ended 31st March 2019, the Board of Directors was satisfied with the effectiveness of the system of internal controls of the Company. Refer the Directors’ Statement on Internal Control on page 170 for details.

D.3 Audit CommitteeMain PrincipleThe Board should establish formal and transparent arrangements for considering how they should select and apply accounting policies, financial reporting, determine the structure and content of corporate reporting, implement internal control and risk management principles and for maintaining an appropriate relationship with the Company’s Auditors.




Composition of the Audit Committee

D.3.1 The Board should establish an Audit Committee exclusively of Non-Executive Directors with a minimum of three Non-Executive Directors of whom at least two should be independent. If there are more Non-Executive Directors. The majority should be independent. The Committee should be chaired by an Independent Non-Executive Director. The Board should satisfy itself that at least one member of the Audit Committee has recent and relevant experience in financial reporting and control.

All members of the Board Audit Committee are Independent Non-Executive Directors.

Details of the members, invitees and Secretary of the Committee are found on pages 148 and 149 of the “Audit Committee Report” under the heading “Composition of the Committee”.

Terms of Reference of the Audit Committee

D.3.2 The Audit Committee should have a written Terms of Reference, dealing clearly with its authority and duties. The Audit Committee’s written Terms of Reference must address:

The Committee’s purpose – which, at minimum, must be to –

zz Assist Board oversight of the:

zz Preparation, presentation and adequacy of disclosures in the Financial Statements, in accordance with the Sri Lanka’s Accounting Standards;

zz Compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements;

Company established written Audit Committee charter which addressed Terms of Reference of the Audit Committee and further details are disclosed in Audit Committee Report on pages 148 and 149 of this Annual Report.

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Terms of Reference of the Audit Committee

zz Process to ensure that the Company’s internal controls and risk management procedures are adequate to meet the requirements of the Sri Lanka Auditing Standards;

zz Assessing the Company’s ability to continue as a going concern in the foreseeable future:

zz Performance of the Company’s internal audit function;

zz Process to the identification, monitoring and management of significant business/financial risk; and

zz Independence and performance of the Company’s external audit.

zz The duties and responsibilities of the Audit Committee should at a minimum include those set out below:

zz Making recommendations to the Board, pertaining to appointment, reappointment and removal of External Auditors and to approve the External Auditors;

zz To develop and implement policy on the engagement of the External Auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm; and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken;

zz To review and monitor the External Auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant Sri Lankan professional and regulatory requirements;

zz Discussion of the audit plan, key audit issues, their resolution and management responses;

zz Review the Company’s annual Audited Financial Statements and Quarterly Financial Statements with management and the Auditor to ensure compliance with the Sri Lanka Accounting Standards and other relevant laws and regulations;

zz To review significant financial reporting judgements;

zz Review the Company’s earnings press releases and financial information and earnings guidance provided to analysts and rating agencies;

zz Discussion of policies and practices with respect to risk assessment and risk management;

zz Ensuring that a process of sound system of internal control is in place;

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zz Ensuring that at least once in every three years an review of the Board’s risk management, internal controls, business continuity, planning and information security systems are carried out and appropriate remedial action recommended to the Board;

zz Ensuring that an effective internal audit function is in place and monitor and review the internal audit activities;

zz Meeting separately, periodically, with Management, auditors and internal auditors;

zz Ensuring that there is a mechanism for the confidential receipt, retention and treatment of complaints alleging fraud, received from internal/external sources and pertaining to accounting, internal control or other such matters;

zz Assuring confidentiality to whistle-blowing employees;

zz Setting clear hiring policies for employees or former employees of the Auditors; and

zz Reporting regularly to the Board of Directors.

Disclosure of names of the members of the Audit Committee

D.3.3 zz A separate section of the Annual Report should describe the work of the Committee in discharging its responsibilities. The report should include –

zz The names of the Directors (persons in the Parent Company’s Committee in the case of a Group Company) comprising the Audit Committee should be disclosed in the Annual Report.

zz The number of meetings held and attendance of each Director;

zz The scope of work and how its roles and responsibilities were discharged;

zz An explanation of how it has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external audit, and information on the length;

Names of the members of the Audit Committee are given on page 148 under the section on the “Composition of the Committee” and disclosure on the independence of the Auditors is found on page 169 under the Auditors’ in the “Annual Report of the Board of Directors on the Affairs of the Company” on pages 163 to 169.

zz If the External Auditor provides non-audit services, an explanation of how audit objectivity and independence are safeguarded; and the Committee should also make a determination of the independence of the Auditors and should disclose the basis of such determination in the Annual Report.

Report by the Audit Committee is given on pages 148 and 149.

zz The Annual Report should contain a Report by the Audit Committee, setting out the manner of compliance by the Company, in relation to the above, during the period to which the Annual Report relates.

Report by the Audit Committee is given on pages 148 and 149.

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D.4 Related Party Transactions Review Committee Main PrincipleThe Board should establish a procedure to ensure that the Company does not engage in transactions with “related parties” in a manner that would grant such parties “more favourable treatment” than that accorded to third parties in the normal course of business.




Disclosure of Related Party Transactions Review Committee

D.4.1 A related party and related party transactions will be as defined in LKAS 24.

Related party and related party transactions are defined as per LKAS 24.

D.4.2 The Board should establish a Related Party Transactions (RPT) Review Committee consisting exclusively of Non-Executive Directors with a minimum of three Non-Executive Directors of whom the majority should be independent. Executive Directors may attend by invitation. The Chairman should be an Independent Non-Executive Director appointed by the Board.

In compliance with Section 9 of the Listing Rules of the CSE, The Committee comprises two Independent Non-Executive Directors, and one Executive Director

The Committee is chaired by an Independent Non-Executive Director.

D.4.3 RPT Review Committee should have written terms of reference dealing clearly with its authority and duties which should be approved by the Board of Directors. The RPT Review Committee’s written terms of reference must address –

zz A procedure for documenting related parties in accordance with the definitions in LKAS 24 and the CSE Listing Rules.

zz A procedure to obtain a statement of related party interest from each such related party at least once in each quarter, when there’s a change in the status and in any event prior to entering into any transaction between such related parties and the Company, its parent or any of subsidiaries, sub-subsidiaries, fellow subsidiaries, associates, joint ventures and any other entities which are considered related parties as defined in LKAS 24 unless they are exempted related party transactions as defined in CSE Listing Rules.

The Related Party Transactions Review Committee Report sets out the functions of the Committee which is given on pages 152 and 153.

zz Key Management Personnel of the Company responsible for contracting, procurement, payments, and any other channel through which an inflow or outflow of resources can result, should have a list of all related parties and have a process in place to capture and report any related party transaction within their area of responsibility.

zz A procedure to inform all related parties of what constitutes exempted related party transactions.

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zz A procedure and guideline to delegate to Key Management Personnel to deal with recurrent related party transactions as defined in the CSE Listing Rules.

zz A procedure for the RPT Review Committee to review and recommend to the Board matters relating to such transactions.

zz Any interested Directors should not participate at the meeting at which the transaction relating to him/her is discussed unless invited to seek clarification/information.

zz A procedure and definition of disclosure required to be made by the Company on an annual basis, those requiring immediate disclosure and those requiring shareholder approval.

zz A procedure to identify related party transactions which require immediate disclosure as per the CSE listing rules and to ensure that required disclosures are made by the Company to the Colombo Stock Exchange in accordance with the CSE Listing Rules.

zz A procedure to identify related party transactions which require shareholder approval by special resolution at an Extraordinary General Meeting.

zz The Company Secretary should maintain a permanent record in manual or electronic form of such statements, submissions, approvals, and minutes.

zz Review and recommend to the Board the related party disclosures to be made in the Annual Report of the Company.

D.5 Code of Business Conduct and Ethics Companies must adopt a Code of Business Conduct and Ethics for Directors, Key Management Personnel and all other employees including but not limited to; dealing with shares of the Company; compliance with listing rules; bribery and corruption; confidentiality; encouraging that any illegal, fraudulent and unethical behaviour be promptly reported to those charged with governance. The Company must disclose waivers of the code for Directors, if any –




Disclosure of Code of Business Conduct and Ethics

D.5.1 All companies must disclose whether they have a Code of Business Conduct and Ethics for Directors and Key Management personnel and if they have such a code, make an affirmative declaration in the Annual Report that all Directors and Key Management Personnel have declared compliance with such code, and if unable to make that declaration, state why they are unable to do so.

Each company may determine its own policies in the formulation of such a code, but all companies should address the following important topics in their respective codes:

zz Conflict of interest;zz Bribery and corruption;

Company has an internally-developed Code of Conduct. All employees including Directors, Key Managers and Senior Managers are bound by the Company’s written Code of Ethics that includes the following aspects:

zz Exercise honesty, objectivity and diligence when performing one’s duties.

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zz Entertainment and gift;zz Accurate accounting and

record-keeping;zz Fair and transparent procurement

practices;zz Corporate opportunities;zz Confidentiality;zz Protection and proper use of

company assets including information assets;

zz Compliance with laws, rules and regulations (including insider trading laws); and

zz Encouraging the reporting of any illegal, fraudulent or unethical behaviour.

zz Avoid situations where personal interest might conflict with the interest of the Company; and if so, disclose such interest in advance.

zz Maintain confidentiality of commercial and price sensitive information.

zz Work within applicable laws and regulations.zz Safeguard the Company’s assets.zz Avoid conduct that will reflect badly on the

person concerned or the Company’s image. zz Strictly avoid giving or accepting any kind of

bribe, either directly or indirectly.zz Strictly avoid making contributions for political

funds, either directly or indirectly.zz Strictly avoid any kind of sexual harassment.

The Company has implemented a formal whistle-blowing procedure and encourages any employee who suspects wrong doing at work, whether by Management, peers or any other employee, to raise their concerns.

Other PoliciesIn addition, the Company implements policies covering:

zz Recruitment and selectionzz Financial integrity/Financial Manualzz Use of Company property including computerszz Non-harassment in the work placezz Environment, safety and healthzz Security of IT system

D.5.2 The Company should have a process in place to ensure that material and price sensitive information is promptly identified and reported in accordance with the relevant regulations.

Company has established policy and process to ensure that material and price sensitive information is immediately disclosed to the Colombo Stock Exchange immediately after relevant decisions are made by the Board of Directors. This task is assigned to the Company Secretary and it is a prime responsibility of the Company Secretary.

D.5.3 The Company should establish a policy, process for monitoring and disclosure of shares purchased by any Director, Key Management Personnel or any other employee involved in financial reporting.

The policy in place and any share transaction done by Board Director need to be immediately disclosed to the Company Secretary and Company Secretary will inform such transactions to the Colombo Stock Exchange. Any share transaction done by Key Management Personnel other than Board Directors should inform such transactions to Compliance Officer of the Company.

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Affirmative Statement by the Chairman

D.5.4 The Chairman must affirm in the Company’s Annual Report that a code of conduct and ethics has been introduced company-wide and the procedure for disseminating, monitoring and compliance with that code. He must also disclose that he is not aware of any violation of any of the provisions of the code of business conduct and ethics.

Please refer Chairman’s Letter on pages 14 and 15 in this Report.

D.6 Corporate Governance DisclosuresDirectors should be required to disclose the extent to which the Company adheres to established principles and practices of good Corporate Governance.




Disclosure of Corporate Governance

D.6.1 The Directors should include in the Company's Annual Report, a Corporate Governance Report setting out the manner and extent to which the Company has complied with the principles and provisions of this Code.

This Report from page 102 to 147 sets out the manner and extent to which Singer (Sri Lanka) PLC has complied with the principles and provisions of the Code.

ShareholdersE. Institutional InvestorsE.1 Shareholder VotingMain PrincipleInstitutional shareholders have a responsibility to make considered use of their votes and should be encouraged to ensure their voting intentions are translated into practice.




Communication with Shareholders

E.1.1 A listed Company should conduct a regular and structured dialogue with shareholders based on a mutual understanding of objectives. Arising from such dialogue, the Chairman should ensure the views of shareholders are communicated to the Board as a whole.

In order to avoid conflict of interest by nurturing the mutual understanding, the Board carries out dialogues with its shareholders at General Meetings. In this regards, the Annual General Meeting (AGM) and Extraordinary General Meetings (EGM) of the Company plays a critical role. Voting of the shareholders is crucial in carrying a resolution at the AGM/EGM. The Chairman who plays the role of the agent and communicates the views and queries of the shareholders to the Board and the Key and Senior Management in order to ensure that the views are properly communicated to the Company.

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Head of Investor Relations is a dedicated position to communicate with shareholders if necessary. Investors and Shareholders can directly communicate and share their views and it will be communicated to the Board for necessary actions.

Shareholders are provided with Quarterly Financial Statements and the Annual Report, which the Company considers as its principle communication with them and other stakeholders. These reports are also available on the Company’s website – www.singersl.com and are provided to the Colombo Stock Exchange.

Any information that the Board considers as price sensitive is disseminated to the shareholders as necessary.

E.2 Evaluation of Governance Disclosures




Due weight by Institutional Investors

E.2.1 When evaluating Companies’ governance arrangements, particularly those relating to Board structure and composition, institutional investors should be encouraged to give due weight to all relevant factors drawn to their attention.

The Institutional Investors are at liberty to give due weight to matters relating to the Board structure and composition, when they consider resolutions relating to Board structure and composition.

F. Other InvestorsF.1 Investing/Divesting Decision




Individual Shareholders

F.1 Individual shareholders, investing directly in shares of companies should be encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions.

Individual investors are encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions.

Individual Shareholder Voting

F.2 Individual shareholders should be encouraged to participate in General Meetings of companies and exercise their voting rights.

Individual shareholders are encouraged to participate in General Meeting of the Company and exercise their voting rights.

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G. Internet of things and Cyber Security




G.1 The Board should have a process to identify how in the organisation’s business model, IT devices within and outside the organisation can connect to the organisation’s network to send and receive information and the consequent cyber security risks that may affect the business.

Internal and external parties could have computing devices embedded in everyday objects which may enable them to interconnect with the Company’s network to send and receive data. Such access could be authorised or unauthorised.

The Board assigned this responsibility to the Information Technology Division and Director – IT is mainly assigned to complete this task.

IT policy and Cyber security policies have been developed and needs to be presented to the Board for approvals.

G.2 The Board should appoint a Chief Information Security Officer (CISO) with sufficient expertise, authority and budgetary allocation to introduce and implement a cybersecurity risk management policy which should be approved by the Board.

The policy should include a robust cybersecurity risk management process, incident response system, vendor management system, disaster recovery plan and a governance structure to monitor effective implementation, reporting and the need for cybersecurity insurance.

Director IT is appointed as a Chief Information Security Officer.

IT policy and cybersecurity policy has been developed

G.3 The Board should allocate regular and adequate time on the Board meeting agenda for discussions about cyberrisk management:

zz The matters taken up for the discussion on the Board meeting agenda may include; Potential cybersecurity risks in the Company’s business model.

zz CISO’s security strategy and status of the current projects.

zz Compliance with the cybersecurity risk management process and incident report.

zz Findings and recommendations from independent reviewers.

Not Complied.

IT policies and Cybersecurity policies are to be presented to the Board.

G.4 The Board should ensure the effectiveness of the cybersecurity risk management through independent periodic review and assurance.

The scope and the frequency of the independent periodic reviews could be determined based on the industry vulnerability, Company’s business model and incident findings.

Not Complied.

Security assessment has been carried out and in the process of taking the corrective actions.

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G.5 The Board should disclose in the Annual Report, the process to identify and manage cybersecurity risks.

IT Risk assessments are carried out according to ISO 27001:2013 and ISO 31000:2018 standards, at least annually to identify the risks on the IT environment of SSLP. Identified risks will be evaluated and proper measures are taken by the SSLP IT team to mitigate or minimise the threats. The Board of Directors shall be updated regarding the controls in place to mitigate cyber risks, and on possible cyberrisks that the company is exposed to.

H. Environment Society and Governance (Esg)H.1 ESG ReportingMain PrincipleThe Company’s Annual Report should contain sufficient information to enable investors and other stakeholders to assess how ESG risks and opportunities are recognised, managed, measured and reported.

Environmental, social and governance considerations can affect a company’s ability to execute its business strategy and create value. While many ESG factors are “non-financial”, their management and likely impact have financial consequences. Hence, they are important factors to be built into a company’s business model, strategy, governance and risk management framework. ESG factors relevant to the Company could impact the followings:

zz Access to financial capitalzz Cost savings and productivityzz Brand value and reputationzz Employee recruitmentzz Employee retentionzz Access to marketszz License to operatezz Market capitalisation

Integrating ESG policies and practices into a company’s strategy, business model, governance and risk management, and reporting its likely impact and implications are increasingly seen by investors as material to their investment decisions. Further, investors want to understand the risks associated with ESG issues, as this is seen as a the risks associated with ESG issues, as this is seen as a how well companies are managing how well companies are managing key test of the long-term sustainability of the Company. They are also increasing interested in the opportunities presented by companies that are well equipped to benefit from this.




H.1.1 Companies should provide information in relation to –

zz The relevance of environmental, social and governance factors to their business models and strategy.

zz How ESG issues may affect their business. zz How risks and opportunities pertaining to

ESG are recognised managed, measured and reported.

Sustainability principles related to ESG factors are embedded in the operations of the Company and initiatives implemented to ensure adherence by the Company are discussed in the Management Discussion and Analysis and compliance section of this report.

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H.1.2 Environmental Factors




H.1.2 Environmental governance of an organisation should adopt an integrated approach that takes into consideration the direct and indirect economic. Social, health, and health and environmental implications of their decisions and activities, including:

zz pollution prevention.zz sustainable resource use

(e.g: water, energy).zz climate change.zz protection of environment.zz biodiversity.zz restoration of natural resources.

Sustainability principles related to environmental factors are embedded in the operations of the Company and initiatives implemented to ensure adherence to environmental governance by the Company are discussed in the Management Discussion and Analysis and Compliance section of this report.

H.1.3 Social Factors




H.1.3.1 Social governance of an organisation should include its relationship with the community, customers, employees, suppliers, outsourced providers and any other party that can influence or be influenced by the organisation’s business model.

zz The organisation should adopt an integrated approach to building a relationship with the community and striving for sustainable development including responsible community engagement, fair competition, thereby demonstrating corporate social responsibility.

zz The organisation should adopt an integrated approach to building a relationship with customers. This includes establishing a process for customer engagement, product responsibility and product recall and other matters relevant to the organisation’s business model.

Sustainability principles related to social factors are embedded in the operations of the Company and initiatives implemented to ensure adherence to social governance by the Company are discussed in the Management Discussion and Analysis and Compliance section of this report.

zz The labour practice related governance of an organisation should encompass all policies and practices in relation to work performed by or on behalf of the organisation in accordance with its business model, and should also include policies and practices such as equal opportunity, career development and training, reward and recognition, conditions of work, work-life balance and industrial relations.

zz The organisation should have policies and procedures to ensure that suppliers and outsourced providers comply with social governance norms of the Company.

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H.1.4 Governance




H.1.4.1 zz Companies should establish a governance structure to support its ability to create value and manage risks in the short, medium and longterm, recognising managing and reporting on all pertinent aspects of ESG.

zz The Company should recognise the key resources/capitals deployed in its business and establish financial and non-financial measures for resource/capital management and related outputs and outcomes.

zz The Company should have a process to ascertain, assess and mange risks which have an impact on the sustainability of the Company.

zz The Company should have a process to recognise material matters relating to significant stakeholders and a method of engagement relevant to their level of interest and influence.

zz The disclosures should deal with how the Company has complied with the mandatory and voluntary codes of corporate governance and how its leadership structure, organisational culture, code of conduct and business model supports sustainability of the Company in the short, medium and long-term.

Process of managing risks in line with ESG aspects is discussed in the Risk management report.

H.1.5 Board’s Role on ESG Factors


SEC and CA Sri LankaCode Reference


H.1.5.1 ESG reporting is a Board’s responsibility and it is designed to add value by providing a credible account of the Company’s economic, social and environmental impact. ESG reporting and disclosure should be formalised as part of the Company’s reporting process and take place on a regular basis. ESG reporting should link sustainable issues more closely with strategy.

ESG reporting may be built on a number of different guidelines, such as –

zz Integrated Reporting Frameworkzz The Global Reporting Initiative Guidelines

The Company follows ESG reporting and is disclosed in line with Global Reporting Initiatives (GRI) guidelines in this annual report and described from pages 283 to 288.

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Section BThis section covers the Company’s extent of adherence to the requirements of the Continuous Listing Requirements Section 7.10 on Corporate Governance Rules for Listed Companies issued by the Colombo Stock Exchange. This reflects the Company’s level of conformity to CSE’s Listing Rules which comprise the following fundamental principles:

zz Non-Executive Directors

zz Independent Directors

zz Disclosures Relating to Directors

zz Remuneration Committee

zz Audit Committee

The following table presents the details of the Company’s compliance with Section 7.10 and Section 9 of the CSE Listing Rules on Corporate Governance as at 31st March 2019:

Section Rule No. Corporate Governance Rule Details of Compliance Compliance

Board of Directors

Non-Executive Directors

7.10.1 Number of Non-Executive Directors – One-third of the total number of Directors, subject to a minimum of two.

The Board of Directors comprises ten Directors, eight of whom are Non-Executive Directors.

Independent Directors

7.10.2 (a) Number of Independent Directors – One-third of Non-Executive Directors, subject to a minimum of two.

Five of the Non-Executive Directors are independent.

7.10.2 (b) Each non-Executive Director should submit a declaration of independence/non-independence.

All Non-Executive Directors have submitted declarations.

Independent Non-Executive Directors have submitted declarations confirming their independence.

Disclosures relating to Directors

7.10.3 (a) Names of Independent Directors should be disclosed in the Annual Report.

Please refer page 114.

7.10.3 (b) The Board shall make a determination annually as to the Independence or Non-independence of each Non-Executive Director.

The Board has determined Mr. M.H. Jamaldeen as an Independent Non-Executive Director notwithstanding that he is a Director of Hayleys PLC, the Parent Company as his role is not compromised by being on both Boards.

7.10.3 (c) A brief résumé of each Director should be included in the Annual Report including the area of experience.

Please refer Board of Directors section of this report on pages 18 to 21.

7.10.3 (d) Provide brief résumé of any new Director appointed to the Board.

Please refer Board of Directors section of this report on pages 18 to 21.

Remuneration Committee

Composition 7.10.5 (a) Number of Independent Non-Executive Directors in the Committee to be –

zz a minimum of two (where a Company has only two Directors on the Board), or

zz in all other instances majority of whom to be independent.

The Committee comprises three Independent Non-Executive Directors.

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Separate Committee to be formed for the Company or the Listed Parent’s Remuneration Committee to be used.

A separate Remuneration Committee was formed for the Company.

Chairman of the Committee to be a Non-Executive Director.


Function 7.10.5 (b) Function of the Committee. The Remuneration Committee Report sets out the functions of the Committee.

Disclosure in the Annual Report

7.10.5 (c) The Annual Report should set out –Names of Directors comprising the Remuneration Committee


Statement of Remuneration policy Please refer Remuneration Committee report on page 150.

Aggregate remuneration paid to Executive and Non-Executive Directors


Audit Committee

Composition 7.10.6 (a) Number of Independent Non-Executive Directors in the Committee to be –

zz a minimum of two (where a Company has only two Directors on the Board), or

zz in all other instances of Non Executive Directors a majority of whom to be independent.

The Committee comprises three Independent Non-Executive Directors.

Separate Committee to be formed for the Company or the Listed Parent’s Committee to be used.

A separate Audit Committee was formed for the Company and the Singer Group.

Chairman of the Committee to be a Non-Executive Director.


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

The Chairman of the Committee is a member of a recognised professional accounting body.

CEO and CFO to attend Committee meetings, unless otherwise determined by the Audit Committee.

Group CEO attends by invitation.CFO attends by invitation.

Function 7.10.6 (b) Function of the Committee. The Audit Committee Report sets out the functions of the Committee.


7.10.6 (c) zz Names of Directors comprising the Audit Committee

Please refer pages 148 and 149.

zz The Audit Committee shall make a determination of the independence of the Auditors and disclose the basis for such determination

Please refer Audit Committee Report on pages 148 and 149.

zz The Annual report shall contain a Report of the Audit Committee in the prescribed manner.

Please refer Audit Committee Report on pages 148 and 149.

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Related Party Transactions Review Committee

Composition 9.2.2 Combination of Non-Executive Directors and Independent Non-Executive Directors and may include Executive Directors at the option of the Comapny.

The Committee comprises two Independent Non-Executive Directors, and one Executive Director.

9.2.3 Separate Committee to be formed for the Company or the Listed Parent’s Committee to be used.

A separate Related Party Transactions Review Committee was formed for the Company and the Singer Group .

Function of the Committee. The Related Party Transactions Review Committee Report sets out the functions of the Committee.


9.3.2 (c) The Annual Report shall contain a Report of the Related Party Transactions Review Committee in the prescribed manner.

Please refer Related Party Transactions Review Committee Report on pages 152 and 153.

Board, Audit Committee, Remuneration Committee, Nomination Committee and Related Party Transactions Review Committee AttendanceThe number of meetings of the Board, Audit Committee, Remuneration Committee and Related Party Transactions Review Committee and individual attendance by members are as follows:

Number of Meetings, Circular Resolutions and Dates

Board Meetings 4

Audit Committee Meetings 4

Remuneration Committee Meetings 1

Nomination Committee Meetings –

Related Party Transactions Review Committee Meetings 3

Board Meetings Audit Committee Meetings Remuneration Committee Meetings Nomination Committee Meetings Related Party Transactions Review Committee Meetings

14th May 2018 14th May 2018 25th July 2018 – 6th August 2018

8th August 2018 6th August 2018 7th November 2018

9th November 2018 7th November 2018 5th February 2019

7th February 2019 5th February 2019

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Individual Attendance

Name of Director Directorship status Board Members

Audit Committee

Related Party Transaction Review Committee

[Singer (Sri Lanka) PLC]

Nomination Committee

Remuneration Committee

Mr. A.M. Pandithage – ED Executive 4/4 – – –

Mr. K.D.D. Perera – NED Non-Executive 3/4 – – –

Mr. M.H. Wijewardene – CEO/ED – appointed w.e.f. 1st November 2018

Executive 2/2 – Appointed to the Committee on

5th February 20191/1

–

Mr. D.H. Fernando – INED Independent Non-Executive

3/4 – – –

Mr. S.C. Ganegoda – NED* Non-Executive 3/4 – – –

Mr. Deepal Sooriyaarachchi – INED Independent Non-Executive

4/4 4/4 3/3 – 1/1

Mr. M.H. Jamaldeen – INED Independent Non-Executive

3/4 3/4 – – 0/1

Mr. D.K. de S. Wijeyeratne – INED – appointed w.e.f. 1st April 2018

Independent Non-Executive

4/4 4/4 Appointed to theCommittee on

14th May 20183/3

– 1/1

Ms. O.D. Gunewardene – INED – Appointed w.e.f. 1st August 2018

Independent Non-Executive

2/3 – – – –

Mr. S.Goodman – NED – Appointed w.e.f. 26th June 2018

Non-Executive 0/3 – – – –

Mr. G.J. Walker – NED – Resigned w.e.f. 29th November 2018**

Non-Executive 0/2 – 0/1 – –

Mr. H.A. Pieris – ED – Resigned w.e.f. 31st October 2018

Executive 2/2 2/2 1/1 – –

*Mr. K.K.L.P. Yatiwella (Alternate Director to Mr. S.C. Ganegoda) attended one meeting.

**Mr. M.H. Wijewardene – (Ceased to be Alternate Director to Mr. G.J. Walker w.e.f. 29th November 2018) attended two meetings.

ED – Executive Director

NED – Non-Executive Director

INED – Independent Non-Executive Director

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PreambleThe Committee is empowered to review and monitor the financial reporting process of Singer Group so as to provide additional assurance on the reliability of the Financial Statements through a process of independent and objective review. As such, the Audit Committee acts as an effective forum in assisting the Board of Directors in discharging its responsibilities on ensuring the quality of financial reporting and related communications to the shareholders and the public.

Composition of the CommitteeThe Audit Committee consists of three Independent Non-Executive Directors and is chaired by an Independent Non-Executive Director.

Audit Committee MembersMr. D.K. de S. Wijeyeratne – Chairman – Independent Non-Executive Director (Appointed w.e.f. 1st April 2018).

Mr. D. Sooriyaarachchi – Independent Non-Executive Director

Mr. M.H. Jamaldeen – Independent Non-Executive Director

Brief profiles of the Directors are given on pages 18 to 21 of this Annual Report.

Hayleys Group Services (Private) Limited functions as the Secretary to the Committee. The Finance Director/Compliance Officer, Head of Risk Management, Audit Staff, Representatives of External Auditors and when necessary, the Chairman, the Group Chief Executive and relevant Operational Directors and Managers attend the meetings by invitation.

Responsibilities and Duties of the Committee The Audit Committee’s authority, responsibilities and specific duties have been formalised through an Audit Committee Charter. By this, the Audit Committee is empowered among other things, to examine any matters relating to the financial affairs of the Singer Group and to review the adequacy of the internal control procedures, coverage of internal and external audit programmes, disclosure of accounting policies and compliance with statutory and corporate governance requirements.

AUDIT COMMITTEE REPORT

Activities in 2018/19Financial ReportingThe Committee along with the Board, internal audit and external audit reviewed the Interim Financial Statements and the Annual Financial Statements to ensure compliance with mandatory, statutory and other regulatory requirements laid down by the authorities, prior to publication.

Internal Audit, Risk and ControlThe Committee also provides a forum for the impartial review of the reports of internal and external audits and to take into consideration findings and recommendations stated therein relating to significant business risks and control issues.

The Committee reviewed the Group audit plan for the year and agreed its budget and resource requirements. It reviewed interim and year-end summary reports and management’s responses. The Committee carried out an evaluation of the performance of the internal audit function and was satisfied with the effectiveness of the function.

The Committee reviewed the Compliance Officer’s Report on the Singer Group’s compliance with the applicable laws and regulations, including internal policy codes of conduct of its employees.

Meetings of the CommitteeDuring the reporting period, Four Audit Committee meetings were held to discuss the Reports of the Internal and External Auditors and Interim Financial Statements. The Financial Statements for the twelve months period ended 31st March 2019 were also discussed at the meeting held on the 14th May 2019. The minutes of the meetings were tabled at the meetings of the Board of Directors for information and necessary action.

The attendance of the Audit Committee meetings held during the reporting period ended 31st March 2019 under review is given on page 147 of this Annual Report:

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AUDIT COMMITTEE REPORT

External Audit The external audit approach and scope was reviewed and discussed by the Committee with the External Auditors and Management prior to the commencement of the audit. The External Auditors informed the Committee on an ongoing basis regarding matters of significance that were pending resolution. Before the conclusion of the audit, the Committee met with the External Auditors without Management being present. External Auditors discussed the audit issues with the Audit Committee and the Management to agree on audit issues.

The Audit Committee recommended to the Board of Directors that Messrs KPMG, Chartered Accountants be reappointed as the External Auditors for the financial year 2019/20, subject to the approval of the shareholders at the Annual General Meeting (AGM) and the required resolution will be put to the shareholders at the AGM.

Sri Lanka Accounting StandardsCommittee reviewed the revised policy decisions relating to adoption of new and revised Sri Lanka Accounting Standards (SLFRS/LKAS) applicable to the Group companies and made recommendations to the Board of Directors.

Progress of implementation of SLFRS 9 and SLFRS 15:The Committee continuously monitored the progress of implementation of SLFRS 9 and SLFRS 15 that have been issued with effective date being 1st January 2018.

The Committee would continue to monitor the compliance with relevant Accounting Standards and keep the Board of Directors informed at regular intervals.

The Committee has pursued the support of Messrs KPMG to assess and review the existing SLFRS policies and procedures adopted by the Group.

AppreciationI appreciate the contribution made by Mr. H.A. Peiris former Group CEO of the Company who assisted the Committee participating by invitation.

I wish to thank all members who served in the Committee during the period and for their contribution to the deliberations of the Committee.

Dilip Kumar de Silva WijeyeratneChairman – Audit Committee

16th May 2019Colombo

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REMUNERATION COMMITTEE REPORT

Composition of the CommitteeRemuneration Committee consists of three Independent Non-Executive Directors and is chaired by an Independent Non-Executive Director.

Remuneration Committee MembersMr. M.H. Jamaldeen – Chairman – Independent Non-Executive Director

Mr. D. Sooriyaarachchi – Independent Non-Executive Director

Mr. D.K. de S. Wijeyeratne – Independent Non-Executive Director (Appointed on 14th May 2018)


Finance Director functions as the Secretary to the Committee.

The Chairman of the Company participated as an observer to the Committee. Group CEO assist the Committee by providing the relevant information and participate in its analysis and deliberations except when their own compensation packages are reviewed.

Responsibilities and Duties of the CommitteeThe scope of the Committee is to “look into fees, remuneration and perquisites of Independent Directors, Executive Directors of the Board of the Company and Key Management and approve recommendations made by the Group CEO.

Remuneration and perquisites of Group CEO is reviewed and approved by the Parent Company Remuneration Committee (Hayleys PLC) and it is not under the scope of the board remuneration Committee of the Company.

The Committee also reviews the policies pertaining to the remuneration and perquisites of the executives of the Group.

Remuneration Policy A primary objective of compensation packages is to attract and retain a highly qualified and experienced work force, and reward performance. These compensation packages should provide compensation appropriate for each business within the Group and commensurate with each employee’s level of experience and contribution, bearing in mind the business performance and long-term shareholder returns.

Meetings of the CommitteeThe Committee meets from time to time and reviews the Group’s remuneration and fee structures to assure alignment with strategic priorities and with compensation offered by competitor companies.

The Committee met once during the period and the attendance of the members given on page 147 of this Annual Report.

AppreciationI appreciate the contribution made by Mr. H.A. Peiris former Group CEO of the Company who assisted the Committee participating by invitation.

I wish to take this opportunity to thank all members who served in the Committee during the period and for their contribution to the deliberations of the Committee.

Mohamed Hisham JamaldeenChairman – Remuneration Committee


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NOMINATION COMMITTEE REPORT

Composition of the CommitteeNomination Committee consists of one Independent Non-Executive Director, one Non-Executive Director and two Executive Directors as at the end of the reporting period, 31st March 2019.

Nomination Committee MembersMr. A.M. Pandithage – Chairman – Executive Director

Mr. K.D.D. Perera – Non-Executive Director

Mr. M.H. Jamaldeen – Independent Non-Executive Director

Mr. H.A. Pieris – Group CEO – Executive Director (Resigned w.e.f. 31st October 2018


Responsibilities and Duties of the Committee

zz Consideration of making any appointment of new Directors or re-electing current Directors.

zz Provide advice and recommendations to the Board on any such appointment.

zz Review criteria such as qualifications, experience and key attributes required for eligibility to be considered for appointment to the Board and Key Management Personnel in the Company.

zz Consider if a Director is able to and has been adequately carrying out his or her duties as a Director taking into consideration the Director’s number of listed Company Boards on which the Director is represented and other principal commitments.

zz Review the structure, size, compensation and competencies of the Board and make recommendations to the Board with regard to any changes.

zz Recommend the requirements of new expertise and succession arrangements for retiring Directors.

zz Recommend on any other matter referred to it by the Board of Directors.

Meetings of the CommitteeDuring the reporting period, Nomination Committee meetings were not held, whereas appointments were approved by the Board via circular resolutions.

Re-election of Directors at the Annual General MeetingMr. M.H. Wijewardene and Ms. O.D. Gunawardena being Directors appointed to the Board during the financial year being eligible would present themselves for re-election at the forthcoming Annual General Meeting in terms of Article 24 (10) of the Articles of Association of the Company.

In terms of Article 24 (4) of the Articles of Association of the Company, Mr. D. Sooriyaarachchi retire by rotation and being eligible offer himself for re-election and the shareholders will be requested to re-elect him at the forthcoming Annual General Meeting.

Appointment of Over 70 Years DirectorMr. S.H. Goodman being over 70 years of age was appointed as a Director at the last Annual General Meeting held on 26th June 2018 for a period of one year in terms of Section 211 of the Companies Act No. 07 of 2007. Mr. Goodman has intimated that he does not wish to present himself for re-appointment in terms of Section 211 of the Companies Act No. 07 of 2007 at the forthcoming Annual General Meeting and would thus cease to be a Director on conclusion of the Annual General Meeting on 25th June 2019.

AppreciationI also appreciate the contribution made by Mr. H.A. Pieris who served as a member of the Committee and resigned w.e.f. 31st October 2018.

I wish to take this opportunity to thank all members who served in the Committee and for their contribution to the deliberations of the Committee during the period.

Mohan Pandithage Chairman – Nomination Committee


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RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

PreambleThe Board established the Related Party Transactions Review Committee (RPTRC) in terms of the Code of Best Practice on Related Party Transactions issued by the Securities and Exchange Commission of Sri Lanka (the “Code”) and Section 9 of the Listing Rules of the Colombo Stock Exchange (the “Rules”).

Composition of the CommitteeThe Related Party Transactions Review Committee consists of two Independent Non-Executive Directors, and one Executive Director and is chaired by an Independent Non-Executive Director.

The following Directors serve on the Committee:

Mr. D. Sooriyaarachchi – Chairman Independent Non-Executive Director

Mr. D.K. de S. Wijeyeratne – Independent Non-Executive Director (Appointed w.e.f. 14th May 2018)

Mr. M.H. Wijewardene – Executive Director – appointed w.e.f. 5th February 2019

Mr. G.J. Walker Non-Executive Director – Resigned 29th November 2018

Mr. H.A. Pieris – Group CEO Executive Director – Resigned 31st October 2018

Mr. J.A. Sethukavalar Independent Non-Executive Director of Singer Finance (Lanka) PLC – participating by invitation represents Singer Finance (Lanka) PLC.

Brief profiles of the members are given on pages 18 to 21 of this Annual Report.

The above composition is in compliance with the provisions of the Code regarding the composition of the Related Party Transactions Review Committee.

Hayleys Group Services (Pvt) Ltd. functions as the Secretary to the Related Party Transactions Review Committee.

Meetings of the CommitteeDuring the year ended 31st March 2019, the Committee met three times. Attendance by the Committee Members at these meetings is given in the table on page 147 of the Annual Report.

Role and ResponsibilitiesThe mandate of the Committee is derived from the Code and the Rules and is as follows:

zz To review in advance all proposed related party transactions of the Group either prior to the transaction being entered into or, if the transaction is expressed to be conditional on such review, prior to the completion of the transaction.

zz Seek any information the Committee requires from Management, employees or external parties with regard to any transaction entered into with a related party.

zz Obtain knowledge or expertise to assess all aspects of proposed related party transactions where necessary including obtaining appropriate professional and expert advice from suitably qualified persons.

zz To recommend, where necessary, to the Board and obtain their approval prior to the execution of any related party transaction.

zz To monitor that all related party transactions of the entity are transacted on normal commercial terms and are not prejudicial to the interests of the entity and its minority shareholders.

zz Meet with the Management, Internal Auditors/External Auditors as necessary to carry out the assigned duties.

zz To review the transfer of resources, services or obligations between related parties regardless of whether a price is charged.

zz To review the economic and commercial substance of both recurrent/non-recurrent related party transactions

zz To monitor and recommend the acquisition or disposal of substantial assets between related parties, including obtaining “competent independent advice” from independent professional experts with regard to the value of the substantial assets of the related party transaction.

Policies and Procedures Adopted by the RPTRC for Reviewing Related Party Transactions (RPTs)

1. Relevant information to capture RPTs are fed into the Company Data Collection System.

2. All officers concerned are informed of the applicable regulatory requirements relating to the reporting of RPTs.

3. Key Management Personnel (KMPs) and their Close Family Members (CFMs) are identified half yearly together with their NIC numbers and business registration numbers. This information is in the system.

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RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

4. Systems are updated with KMP and their CFM details on a half yearly basis or as and when the need arises in the event of a material change.

5. Data is extracted from the system, verified and validated.

6. All Managers are advised to report RPTs to the Finance Director who has been identified as the Focal Point, for this purpose.

7. Data is shared with the Finance Director and the Company Secretaries to meet the regulatory requirements if required.

Task of the Committee The Committee reviewed the related party transactions and their compliance and communicated to the Board.

The Committee in its review process recognised the adequacy of the content and quality of the information forwarded to its members by the Management and in compliance with Section 9 of the CSE Listing Rules.

Related Party Transactions are disclosed in the Note 39 to the Financial Statements.

Reporting to the BoardThe Minutes of the RPTRC meetings are tabled at Board meetings enabling all Board members to have access to same.

Appreciation I appreciate the contribution made by Mr. G. J. Walker and Mr. H. A. Pieris who served as members of the Committee and resigned during the year.

I Wish to take this opportunity to thank all members who served in the Committee and for their contribution to the deliberations of the Committee during the period.

Deepal SooriyaarachchiChairman – Related Party Transactions Review Committee


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RISK MANAGEMENT

Protecting OurselvesRisk is an integral part of any business. It is a matter of identifying the sources of risk, their likelihood of occurrence and impact, and then developing a comprehensive framework to address them. Such a systematic approach also raises a few questions, like determining one’s appetite for risk and establishing thresholds, bearing in mind that risk and return go hand in hand. So it’s a question of striking a balance and managing risk.

Over the years, Singer has developed a set of clear risk management objectives and a well-established strategy to deliver them, through core risk management processes.

At a strategic level, our risk management objectives are –

zz To identify the Company’s significant risks.

zz To formulate the Company’s risk appetite and ensure that business profile and the plans are consistent with it.

zz To optimise risk/return decisions by taking them as closely as possible to the business, while establishing strong and independent review and challenge structures.

zz To ensure that business growth plans are properly supported by effective risk infrastructure.

zz To manage risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions.

zz To help executives improve the control and co-ordination of risk taking across the business.

The Company’s approach is to provide direction on understanding the principal risks to achieving the Company strategy; establishing risk appetite; and establishing and communicating the risk management framework. The process is then broken down into five steps: identify, assess, control, report, and manage/challenge.

The Company’s risk management strategy is broadly unchanged from 2011.

The Risk Management ProcessDuring the year under review, the Company continued to review and improve its risk management function in line with its risk management objectives.

Steps Activities

Data Collection and Analysis zz The Management Information System (MIS) to pick-up relevant business-critical information.zz Review and validation before it is submitted to Senior Management.

Assess zz Agree and implement measurement and reporting standards and methodologies.

Control zz Establish key control processes and practices, including limit structures, impairment allowance criteria and reporting requirements.

zz Monitor the operation of the controls and adherence to risk direction and limits.zz Provide early warning of control or appetite breaches.zz Ensure that risk management practices and conditions are appropriate for the business

environment.

Report zz Interpret and report on risk exposures, concentrations and risk-taking outcomes.zz Interpret and report on sensitivities and Key Risk Indicators.zz Communicate with relevant parties.

Manage zz Review aspects of the Company’s risk profile.zz Assess new risk-return opportunities.zz Advise on optimising the Company’s risk profile.zz Review and challenge risk management practices.

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Internal, External and Corporate AuditInternal, external and corporate audits are crucial in the risk management process. Reports on the Group’s operational and financial systems by these audits are reviewed and action taken to manage any risks that have been identified. Significant audit findings by the Auditors are immediately reviewed by the Board-appointed Audit Committee.

The Group’s system of internal controls covers all policies and procedures, enabling significant strategic and operational risks to be managed.

The internal audit team meets with the Finance Department every month to share information and exchange perspectives. Issues identified at these discussions as being a potential risk are immediately subjected to a fuller investigation.

Risk Mitigation Activities

Macroeconomic FactorsEconomic Environment

The Group’s business operations are sensitive to economic conditions and in particular to levels of consumer spending. Any delay in economic recovery could affect consumer expenditure and therefore our revenue. There is an ongoing risk to our business in terms of increases in the cost of products due to rupee depreciation.

zz A diversified portfolio of products and brands with a wide range of offers targeted at different consumer groups.

zz A Broad geographic spread.zz The Board and the Senior Management Team regularly review the impact of

the economic conditions on the Group’s budget and strategic plans.zz Emphasise excellent quality, service, value for money and up-to-date

product offers, we aim to broaden our appeal to customers.zz Renewal and transformation plan to improve our business performance

irrespective of macroeconomic factors strategy and business planning which takes into account varying economic scenarios.

Market Specific Characteristics

Seasonality – A substantial proportion of revenue and operating profit is generated during the fourth financial quarter, which includes the Christmas and New Year season. Adverse trading in this relatively short period is likely to impact significantly the full year’s results.

zz Financial planning takes into account expected peaks and troughs during the year and the business is run accordingly.

zz Increasing the proportion of internal promotion and various offers, which gives a regular stream of income over the course of the year.

Adverse Weather-Frequent floods, droughts and other extreme weather conditions affected consumers income levels and paying ability specially in agricultural area affect achieving planed revenue and collections.

zz Rescheduling of HP in affected areas.zz Insurance scheme for HP customers.zz Discount offer for repairs and replacement.

Price Deflation – Price deflation has been a common feature across most electrical goods categories for a number of years, primarily driven by technological advances and improved production efficiencies.

zz Effective launches of new technologically evolved products as it becomes available to the market.

zz Growth of services-related business to increase the number and value of non-product sales.

zz Improve gross profit in renovated showrooms.zz Control of stock and strong management of clearance and exit routes.

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Competition

Competitors reduce the Group’s market share and/or drive down margins in specific markets.

zz Renovation and transformation plan is improving our showrooms, cost structure and service across all channels.

zz Continuing development of strong international brands.zz Ensuring our prices offer good value, including a customer price index.zz Building stronger relationships with suppliers.zz Expand and improve after-sales service network.

The e-commerce sites driven slowly by revenue valuations are selling products well below the costs, thereby forcing all parties to reduce the margins.

zz Revamp the Company web site and increased promotional awareness through the web site.

zz Make existing network to free delivery for web purchase.zz Set up pick-up store with additional discount for selected items.zz Combine with deal sites.zz Active engagement and promotion on social media.

Risk that we fail to capitalise on new technology or emerging trends to maximise revenues and fail to meet the expectations of customers.

zz Strong supplier relationships.zz Delivery of Customer Plan to respond to identified changes in technology.zz Showroom renovation to take into account emerging trends in showroom

layouts.zz Exciting product launches to make our showrooms the destination for the

latest technology.zz Continued focus on ensuring an excellent range across all price points.zz Customer service training for sales staff and product workshops to improve

product knowledge.zz A loyalty programme that encourages customers to stay with the Singer

Brand and its products.

Product Risk

Products could turn out to be defective or inappropriate for the market in terms of price, functionality or perceived value. They are also liable to be rendered obsolete. In such instances, the Company is exposed to market risks arising from consumer dissatisfaction and consequent rejection of its products.

zz The Company’s plant and machinery are rigorously maintained and upgraded whenever necessary.

zz Established quality control measures as well as product testing through sampling are performed on all product lines.

zz The in-house Quality Surveillance Unit tests samples of new products or components from external suppliers before order placement.

Operational RiskPeople

A failure to attract, retain, develop and motivate the best employees across all our showrooms and head office may impact our ability to deliver our operational and strategic objectives. Labour issues can affect product quality, output, market share as well as the Company goodwill and reputation.

zz Company endeavours to recruit the best people with the right skills at all times.

zz Offer training and development programmes to ensure that we retain them.zz Remuneration packages are benchmarked to ensure that they remain

competitive, including incentive arrangements where appropriate.zz Collective agreements are in place with the labour unions to maintain an

equitable balance between the interests of employer and employee and provide a basis for negotiations when issues arise.

zz Procedures have also been laid down in responding to grievances and staff complaints.

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As the business grows in size and geographical scope, the potential for fraud and dishonest activity by our suppliers, customers and employees increase.

zz Clear behavioural guidance given to employees through operational manuals.

zz Appropriate procedures and controls set out and audited across the business to reduce fraud risks; Internal Audit and Corporate Audit undertake detailed investigations into all business areas and report their findings to the Audit Committee.

zz Regular update and new introduction of relevant policies and procedures.zz Whistle-blower Policy.zz Periodical review of the internal controls by outsourced consultants.

IT Systems and Infrastructure

Any significant failure in the IT processes of our retail operations would impact our ability to trade.

zz The Company has installed comprehensive network security.zz Regular backups of all databases and mission-critical information.zz Off-site disaster-recovery system.zz Regular follow-up reviews are conducted on recommendations given by

external IT risk assessment team.zz Investment in IT system improvements and innovating to improve business

efficiency.zz Extensive controls and reviews to maintain integrity and efficiency of IT

infrastructure and data.

Supply Chain

Timely distribution of products to our retail outlets is crucial. We work with a number of key overseas and local suppliers our business, could be at risk of both interruption of supply and of failure of such key suppliers and service providers.

zz Regular review of distribution plan.zz Monthly operational meetings to review the forecast, level of inventory and

procurement requirement etc.zz Long-standing relationships with many suppliers help to minimise risks in

this area.zz Reduce dependability on a single service provider.

Asset Risk

Risks associated with the physical assets of the Company include the destruction, loss or theft as well as technical and other defects.

zz All such assets are insured against all identifiable risks.zz The relevant insurance policies are subject to a comprehensive annual

review, with modifications made as deemed necessary.zz Procedures in place to control technical and other defects include

purchasing from reputable suppliers who comply with acceptable standards on product and service quality; active, standards-based (ISO 9001) quality assurance at all manufacturing facilities, distribution centres and service centres; and the maintenance of adequate spare parts.

zz Provisioning is also made against obsolete inventory, warranty claims and doubtful debtors. Warranty costs are shared with the Company’s partners. The extended warranty cost is comprehensively covered by a well-reputed insurance company.

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Financial RiskLiquidity Risk

Inadequate liquidity can have an adverse impact on ongoing operations, marketing and investment in new products and brands.

zz The liquidity position of the Company is regularly reviewed and reported to the Board.

zz Projected net borrowings are covered by committed banking facilities and a healthy industry-related gearing ratio is maintained.

zz The Company’s good relationships and facilities with many banks and other sources of finance ensure reliable access to funds.

Interest Rate Risk

Increase in interest rates will have an adverse impact to the profitability.

zz Fluctuating interest rates are minimised by striking a balance between short and long-term borrowings.

zz Floating-rate debentures are sometimes issued to capitalise on existing interest rates.

zz The Company’s strong brand strength and financial dependability help ensure ready access to funds at attractive rates.

Credit Risk

The Company is exposed to credit risk in the form of financial loss when a customer reneges on a hire purchase agreement. Such exposure cannot be avoided entirely since consumer credit is an integral part of the Company’s retail operations and is used to encourage and enable consumers to purchase.

zz Branch Managers act as del credere agents.zz Management undertakes a thorough appraisal of the client before credit is

extended.zz Credit appraisals of dealers are undertaken to ascertain whether they have

the capacity to pay for goods ordered; in doubtful cases, a bank guarantee or security deposit is requested.

zz Details of customers and dealers who have defaulted on payments are recorded in a database, accessible to those staff whose duty is to undertake credit evaluations of customers and dealers.

zz Risk-adjusted pricing.zz A fully-equipped and trained Credit Supervision team is available.

Investment Risk

While investment in new products and geographical expansion is vital for the Company to remain competitive, it raises fresh risks.

zz Appraisals are carried out before an investment is made.zz A due diligence study ensures that projected budgets and forecasts can

be met and examines the impact of technological and other factors on the investment decision.

zz Post-investment analysis and performance tracking is in place including financial and customer measures through balance scorecard.

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Other RiskGovernance Risk

These are risks to the Company arising from non-compliance with relevant health, safety and environmental statutes and leading to loss of reputation and goodwill, possible litigation and financial loss.

zz Preventive action has been designed by the Company’s Legal Department.zz Frequent internal, external and corporate audits-monitor compliance.zz The Company’s Management culture stresses ethical performance in this

area. International best practices are followed wherever possible.zz Quality surveillance helps protect the Company against litigation and

warranty claims. Provisioning ensures that such claims do not have an adverse impact on operational and other aspects of the Company.

zz Detailed, established procedures to ensure product integrity.zz Group Compliance Officer reviews reports forwarded to the Audit Committee

to ensure compliance with laws and policies.

Socio-economic Risks

Sri Lanka’s socio-economic and political environment has an impact on the consumer durables business as well as the investment climate.

zz Management reviews prices in comparison to inflation and negotiates with suppliers for lower prices and credit terms.

Environment and Climate Change

Aside from the general risks to humankind posed by climate change, a specific business risk to which the Company is exposed concerns possible shortages of essential raw materials, such as wood for the manufacture of furniture and risks of environment pollution due to waste material.

zz The use of alternative materials mitigates this risk while simultaneously opening up new marketing opportunities.

zz Collaborate with Central Environmental Authority to assist in e-waste project.zz All factories, warehouse and service centres complied with the requirement

of environment regulations.zz Introduction of energy saving appliances.

Caveat

Although the key sources of risk and their mitigation have been discussed in this document, no assurance can be given that the Company is fully-protected against all possible risks. As noted in the opening paragraph, the best that can be achieved is reasonable management of risks through a sound operational framework that identifies, evaluates and mitigates the negative impacts in a timely manner at multiple levels.

zz The Company is confident that all material risk factors have been adequately assessed and managed to ensure the uninterrupted and profitable continuance of the business.

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161



101STEWARDSHIP

162FINANCIAL CALENDAR

163ANNUAL REPORT OF THE BOARD OF

DIRECTORS ON THE AFFAIRS OF THE COMPANY

170STATEMENT OF

DIRECTORS’ RESPONSIBILITY

171INDEPENDENT

AUDITORS’ REPORT

176STATEMENT OF PROFIT

OR LOSS AND OTHER COMPREHENSIVE INCOME

177STATEMENT OF FINANCIAL

POSITION

178STATEMENT OF

CHANGES IN EQUITY

181STATEMENT OF

CASH FLOWS

183NOTES TO THE

FINANCIAL STATEMENTS

FINANCIAL REPORTS


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FINANCIAL CALENDAR

Financial Calendar – 2018/19

Annual Report 2017/18 Approved 14th May 2018

Forty Third Annual General Meeting 26th June 2018

Interim Financial Statements in Terms of Rule 7.4 of the Colombo Stock Exchange Released to CSE

For the three months ended 30th June 2018 (Unaudited) 8th August 2018

For the six months ended 30th September 2018 (Unaudited) 12th November 2018

For the nine months ended 31st December 2018 (Unaudited) 8th February 2019

For the twelve months ended 31st March 2019 (Unaudited) 16th May 2019

Annual Report and Annual General MeetingAnnual Report 2018/19 Approved 16th May 2019

Forty Fourth Annual General Meeting 25th June 2019

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ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

The Board of Directors of Singer (Sri Lanka) PLC has pleasure in presenting their Report on the Affairs of the Company together with the Audited Financial Statements of Singer (Sri Lanka) PLC and the Audited Consolidated Financial Statements of the Group for the 12 months ended 31st March 2019.

Review of the YearChairman’s Message, (pages 14 to 15), the Group Chief Executive Officer’s Review, (pages16 to 17) and Management Discussion and Analysis (pages 35 to 99), describe the Company’s affairs and the Group’s business and mention important events that occurred during the year and up to the date of this Report. Financial results of the Company/Group are elaborated on pages 35 to 42 These reports together with the Audited Financial Statements reflect the state of affairs of the Company/Group.

Principal ActivitiesThe Company is engaged in Retail and Wholesale Marketing, Financing, Assembling and Manufacturing and in Financial Services. The Company markets Consumer Electronics, Home Appliances, Mobile and smart Phones, Personal Computers, Laptops, Furniture, Domestic and Industrial Sewing Machines, Agriculture Equipment, and provides Financing through Hire Purchase. In addition, the Company manufactures and sells Furniture, Water Pumps and assembles and sells Motor Cycles and Two Wheel Tractors. The Company also acts as a Bill Collection Agent for banks, Mobile service providers, National Water Supply and Drainage Board, Ceylon Electricity Board and is also a sub agent for Western Union.

Independent Auditors’ ReportThe Independent Auditors’ Report on the Financial Statements is given on pages 171 to 175 in this Annual Report.

Financial StatementsThe Financial Statements for the twelve months ended 31st March 2019 are in accordance with the Sri Lanka Accounting Standards, SLFRSs/LKASs, issued by The Institute of Chartered Accountants of Sri Lanka and the requirements of Section 151 (and Section 153 for consolidated entity) of the Companies Act No. 07 of 2007.

The Financial Statements duly signed by the Directors are provided on pages 176 to 270 in this Annual Report.

Accounting PoliciesThe accounting policies adopted in preparation of the Financial Statements are provided in detail in the Notes to the Financial Statements on pages 183 to 209 The Company/Group has consistently applied the accounting policies as set out in Note 2 to all periods presented in these Consolidated Financial Statements.

Property, Plant and EquipmentDuring the period under review, the Company and the Group invested a sum of Rs. 459,376,293/- (2017/18 – Rs. 600,451,154/-) and Rs. 733,580,136/- (2017/18 – Rs. 887,107,521/-) in property, plant and equipment.

Details of Property, Plant and Equipment and Intangible Assets and their movements are given in Notes 11 and 12 to the Financial Statements respectively. Details of freehold land and buildings are given in Note 11.7 to the Financial Statements.

Market Value of PropertiesThe freehold property of the Company/Group is revalued by an Independent Qualified Valuer when there is a substantial difference between the fair value and the carrying amount of the freehold property. Company/Group reviews its assets once in each reporting date.

The most recent valuation was carried out as at 31st March 2019. The details of the valuation are given in Note 11.6 to the Financial Statements on page 219. in this Annual Report.

Directors’ ResponsibilitiesThe Statement of the Directors’ Responsibilities is given on page 170.

Corporate GovernanceThe Company has complied with Corporate Governance rules laid down by The Institute of Chartered Accountants of Sri Lanka, and listing rules of the Colombo Stock Exchange The Corporate Governance Section on pages 102 to 147 describes the good Corporate Governance Principles adopted by the Company.

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Profit and Appropriations

For Twelve Months Ended 31st March 2019

Rs.

For Fifteen Months Ended31st March 2018

Rs.

Group Profit Before Tax for the Twelve Months Ended 31st March after Deducting all Expenses, Providing for Known Liabilities and Depreciation Amounts to 672,129,112 2,049,052,146

From this has to be deducted the Income Tax Expenses (286,148,528) (828,757,533)

Non-controlling Interest (207,123,452) (111,429,890)

Making a Profit for the Period 178,857,132 1,108,864,723

Total Other Comprehensive Income/(Loss) (15,510,222) (11,626,151)

Total Other Comprehensive Income/(Loss) – Non-controlling Interest 71,263,960 (65,182,518)

To this has to be added a Balance Brought Forward from the Previous Year 2,795,477,725 2,600,892,894

Interim Dividend for the Period – Gross – Rs.0.65 per Share (2017/18 – Rs. 2.20 per share) (244,158,740) (826,383,426)

Adjustment on WHT on dividend paid in terms of Bonus Issue (8,788,026) –

Adjustment due to Realisation on Revaluation Surplus 24,389,920 28,213,846

Adjustment due to changes in ownership interest in subsidiaries (9,940,099) 1,347,099

Adjustment on error correction in prior year 43,358,242 –

Adjustment of initial application of SLFRS 9 and SLFRS 15, Net of Tax (472,032,585) –

Leaving a Total Available for Appropriation 2,362,917,307 2,836,126,468

Transfer to Reserve Fund (27,086,695) (40,648,742)

Final Dividend Approved 2018/19 – Nil (2017/18 – Nil) – –

Making a total Appropriation of (27,086,695) (40,648,742)

Leaving a balance on Group Basis to be Carried Forward of 2,335,830,612 2,795,477,725

The Balance to be Carried Forward on Company Only Basis will be 151,601,145 626,088,413

Dividends In terms of Article 7 of the Articles of Association of the Company, an interim dividend of Rs.0.65 per share was paid on 18th April 2019 for the twelve months financial period ended 31st March 2019. The Board signed a Certificate of Solvency stating that the Company would satisfy the Solvency Test immediately after the said distribution is made in accordance with Section 57 of the Companies Act No. 07 of 2007. The Board of Directors obtained a Certificate of Solvency from the Auditors prior to the date of dispatch of the dividend payment.

Reserves (Excluding Non-controlling Interest)Group reserves and retained equity as at 31st March 2019 amounted to Rs. 6,317 million vs Rs. 6,209 million as at 31st March 2018. The break-up and movement are shown in the Statement of Changes in Equity in the Financial Statements.

Stated CapitalAs per the terms of the Companies Act No. 07 of 2007, the Stated Capital of the Company was Rs. 626,048,050/- as at 31st March 2019 and was unchanged during the twelve months period. Details are given in Note 21 to the Financial Statements on page 237.

Commitments and ContingenciesCommitments and Contingent Liabilities of the Group are disclosed in the Note 37 to the Financial Statements.

Events after the Reporting PeriodNo circumstances have arisen since the reporting date, which would require adjustment or disclosure except for the details given in Note 38 to the Financial Statements on page 267.

Statutory PaymentsThe declaration relating to statutory payments is made in the Statement of Directors’ Responsibility on page 170.

Board Committees Audit Committee Following are the names of the Directors comprising the Audit Committee of the Board:

Mr. D.K. de S. Wijeyeratne – Chairman (Appointed w.e.f. 1st April 2018)


Mr. M.H. Jamaldeen

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The Report of the Audit Committee on pages 148 to 149 sets out the manner of compliance by the Company in accordance with the requirements of the Rule 7.10 of the Listing Rules of the Colombo Stock Exchange on Corporate Governance.

Remuneration Committee Following are the names of the Directors comprising the Remuneration Committee of the Board:

Mr. M.H. Jamaldeen – Chairman


Mr. D.K. de S. Wijeyeratne(Appointed w.e.f. 14th May 2018)

Mr. A.M Pandithage – Observer

The Report of the Remuneration Committee on page 150 contains a statement of the remuneration policy. The details of the aggregate remuneration paid to the Executive and Non-Executive Directors during the period under review are given in Note 8 to the Financial Statements on page 214.

Board Nomination Committee Following are the names of the Directors comprising the Nomination Committee of the Board:

Mr. A.M. Pandithage – Chairman

Mr. K.D.D. Perera

Mr. H.A. Pieris (Resigned w.e.f. 31st October 2018)

Mr. M.H. Jamaldeen

The Report of the Board Nomination Committee on page 151 sets out the manner of compliance by the Company in accordance with the requirements of the Code of Best Practice on Corporate Governance issued by The Institute of Chartered Accountants of Sri Lanka.

Related Party Transactions Review Committee Following are the names of the Directors comprising the Board Related Party Transactions Review Committee:

Mr. D. Sooriyaarachchi – Chairman,

Mr. D.K. de S. Wijeyeratne – Appointed w.e.f. 14th May 2018,

Mr. M.H. Wijewardene – Appointed w.e.f. 6th February 2019

Mr. H.A. Pieris – Resigned 31st October 2018,

Mr. G.J. Walker – Resigned 29th November 2018,

By Invitation –

Mr. J.A. Sethukavalar – Director of Singer Finance (Lanka) PLC participating on invitation to represent Singer Finance (Lanka) PLC.

The Board of Directors formed the Related Party Transactions Review Committee to assist the Board in reviewing all related party transactions in accordance with the requirements of Section 9 of the Listing Rules of the Colombo Stock Exchange.

The Report of the Board-Related Party Transactions Review Committee on pages 152 to 153 sets out the manner of compliance by the Company.

Directors’ Indemnity and InsuranceThe Directors and Officers of the Company and subsidiaries are covered in respect of Directors’ and Officers’ liability by the Insurance Policy obtained by the Company, as per the provisions in Article 44.

Issue of Listed DebenturesThe Company has issued 12% three year debentures of Rs. 656.8 million at fixed rate during the year.

Share Information and Substantial ShareholdingsThe distribution of shareholdings, public holding percentage, market value of shares, twenty largest shareholders and record of scrip issues are given on pages 275 to 279.

Earnings per share, dividends per share, dividend pay out and net assets value per share are given in the Financial Highlights on page 10 of this Annual Report.

Directorate and ShareholdingThe names of the Directors of the Company as at 31st March 2019 and their brief profiles are shown on pages 18 to 21 and the Inner Back Cover.

Mr. M.H. Wijewardene was appointed as the Chief Executive Officer of Singer (Sri Lanka) PLC on 1st November 2018.

Mr. D.K. de S. Wijeyeratne was appointed as an Independent Non-Executive Director with effect from 1st April 2018.

Ms. O.D. Gunewardene was appointed as an Independent Non-Executive Director with effect from 1st August 2018.

Mr. L.N.S.K. Samarasinghe was appointed as the Alternate Director to Mr. M.H. Jamaldeen and Mr. H.P.S. Perera was appointed as the Alternate to M.H. Wijewardene with effect from 22nd January 2019.

Mr. H.A. Pieris resigned from the Board with effect from 31st October 2018 and Mr. L.N.S.K. Samarasinghe the Alternate Director to Mr. H.A. Pieris ceased to be on the Board with effect from 31st October 2018.

Mr. G.J. Walker resigned from the Board with effect from 29th November 2018.

Mr. S.H. Goodman being over 70 years of age was appointed as a Director at the last Annual General Meeting held on 26th June 2018 for a period of one year in terms of Section 211 of the Companies Act No. 07 of 2007. Mr. Goodman has intimated that he does not wish to present himself for reappointment in terms of Section 211 of the Companies Act No. 07 of 2007 at the forthcoming Annual General Meeting and would thus cease to be a Director on conclusion of the Annual General Meeting on 25th June 2019.

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Mr. M.H. Wijewardene and Ms. O.D. Gunawardena being Directors appointed to the Board during the Financial year being eligible would present themselves for re-election at the forthcoming Annual General Meeting in terms of Article 24 (10) of the Articles of Association of the Company.

In terms of Article 24 (4) of the Article of Association of the Company, Mr. D. Sooriyaarachchi retires by rotation and being eligible offer himself for re-election and the shareholders will be requested to re-elect him at the forthcoming Annual General Meeting.

Directors’ Interests and Interest Register Details of transactions with Director related entities are disclosed in Note 39. to the Financial Statements on pages 267 to 269 and have been declared at the Board meetings, pursuant to Section 192 (2) of the Companies Act No. 07 of 2007.

Directors’ Remuneration Executive Directors remuneration is structured within an established framework by the Board’s Remuneration Committee to whom this task has been entrusted. The Directors are of the opinion that the framework assures appropriateness of remuneration and fairness for the Company. The total remuneration of the Executive Directors for the reporting period ended 31st March 2019 is given on Note 8 and 39.3 includes the value of perquisites granted to them as part of their terms of service.

The total Directors fees of Non-Executive Directors for the reporting period ended 31st March 2019 is given in Note 8 is determined according to the scales of payment decided upon by the Board. The Board is satisfied that the payment of remuneration is fair to the Company.

Directors’ Interest in Shares The following transactions of shares of the Directors/Alternate Directors of the respective companies were reported during the reporting period.

Singer (Sri Lanka) PLCOn the 15th of October 2018, Hayleys PLC purchased the balance 35,562,883 (9.47%) ordinary shares held by Retail Holdings (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47.00 per share upon Retail Holdings (Sri Lanka) BV exercising their option to sell its shares to Hayleys PLC as previously agreed at the time of the Mandatory Offer made in 2017. After accepting this offer, Hayleys PLC together with its Group Companies holds 90.43% of Singer (Sri Lanka) PLC.

Messrs. S.H. Goodman and G.J. Walker were representatives of Retail Holdings (Sri Lanka) BV.

Messrs A.M. Pandithage, K.D.D. Perera, S.C. Ganegoda and M.H. Jamladeen were common Directors of Hayleys PLC and Singer (Sri Lanka) PLC.

Singer Industries PLC Mr. V.G.K. Vidyaratne acquired 16 shares and Mr. K.D. Kospelawatta acquired 320 shares as a result of capitalisation of reserves made on 11th September 2018 in the ratio of 8:5 Ordinary Shares held as at 11th September 2018.


Shareholding31st March 2019

Number of Shares

Mr. A.M. Pandithage –

Mr. K.D.D. Perera 6,935,913

Mr. D. Sooriyaarachchi –

Mr. D.H. Fernando –

Mr. M.H. Jamaldeen –

Mr. M.H. Wijewardene (CEO) – Appointed w.e.f. 1st November 2018 –

Mr. S.C. Ganegoda –

Mr. S.H. Goodman – Appointed w.e.f 26th June 2018 –

Ms. D.K. De S. Wijeyeratne – Appointed w.e.f 1st April 2018 –

Mr. O.D. Gunewardene – Appointed w.e.f 1st August 2018 –

Mr. K.K.L.P. Yatiwella (Alternate to Mr. S.C. Ganegoda) –

Mr. L.N.S.K. Samarasignhe (Alternate to Mr. M.H. Jamaldeen) – Appointed 22nd January 2019 17,372

Mr. H.P.S. Perera (Alternate to Mr. M.H. Wijewardene) – Appointed w.e.f 22nd January 2019 –

Mr. G.J. Walker – Resigned w.e.f 29th November 2018 –

Mr. M.H. Wijewardene (Alternate to Mr. G.J. Walker) – Ceased to be Alternate Director w.e.f. 29th November 2018 –

Mr. H.A. Pieris – Resigned w.e.f. 31st October 2018 6,000

Mr. L.N.S.K. Samarasignhe (Alternate to Mr. H.A. Pieris) – Ceased to be Alternate Director w.e.f 31st October 2018 17,372

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Subsidiaries

Shareholding of Singer Finance (Lanka) PLC

31st March 2019Number of Shares

Shareholding of Singer Industries (Ceylon) PLC


Shareholding of Regnis (Lanka) PLC


Common Directors of the Singer Group Companies

Mr. A.M. Pandithage – – –

Mr. K.D.D. Perera – – –

Mr. M.H. Wijewardene (CEO Singer Group) – – –

Mr. H.A. Pieris (Resigned) 102,335 – 1,000

Mr. D. Sooriyaarachchi – –

Mr. M.H. Jamaldeen – – –

Mr. D.H. Fernando – – –

Mr. D.K. de S. Wijeyeratne – – –

Ms. O.D. Gunewardene – – –

Mr. G.J. Walker (Resigned) – – –

Mr. S.C. Ganegoda – – –

Mr. S.H. Goodman – – –

Mr. L.N.S.K. Samarasinghe (Alternate) 325,000 10,670 14,000

Mr. H.P.S. Perera (Alternate) 79,008

Mr. K.K.L.P. Yatiwella (Alternate) – – –

Directors of Singer Finance (Lanka) PLC

Mr. M.Y.A. Perera – – –

Mr. J.A. Setukavalar – – –

Mr. M.P.A. Salgado 12,224 – –

Mr. T.A. Amarasuriya (CEO) 50,155 – –

Mr. R.S. Wijeweera (Retired) 37,892 – –

Mr. J.M.J. Perera – – 800

Ms. D.G. Talpahewa – – –

Mr. L.S.S. Perera – – –

Mr. C.A. Samararasinghe (Alternate) (Resigned) – – –

Mr. S. Ramanathan (Alternate) (Resigned) – 17329 35,102

Directors of Singer Industries (Ceylon) PLC/ Regnis (Lanka) PLC

Mr. V.G.K. Vidyaratne 250,555 260 60,155

Mr. K.D.G. Gunaratne – – –

Mr. N.L.S. Joseph – – –

Mr. K. Kospelawatte – 520

Mr. A.C.M. Irzan (Alternate) – – –

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DebenturesThere were no debentures held by Directors of the Company.

Independence of Directors Mr. D. Sooriyaarachchi

Mr. M.H. Jamaldeen

Mr. D.H. Fernando

Mr. D.K. de S. Wijeyeratne

Ms. O.D. Gunewardene

In accordance with Rule 7.10.2 (b) of the Colombo Stock Exchange (CSE) Listing Rules, Independent Directors have submitted a signed and dated declaration as per the specimen given in Appendix 7A of continuing Listing Rules of CSE.

Although, Mr. M.H. Jamaldeen serves on the Board of Hayleys PLC, the Parent Company, the Board of Directors of the Company has determined that Mr. M.H. Jamaldeen nevertheless be independent as the objectivity of his role is not compromised by being on both Boards:

Subsidiaries The names of the Directors holding office at the end of the reporting period ended 31st March 2019 in respect of the subsidiaries are given below:

Singer Finance (Lanka) PLCMr. M.Y.A. Perera – Chairman

Mr. J.A. Setukavalar

Mr. M.P.A. Salgado

Mr. T.A. Amarasuriya (CEO)

Mr. J.M.J. Perera

Ms. D.G. Talpahewa

Mr. L.S.S. Perera

Mr. M.H. Wijewardene

Mr. K.K.L.P. Yatiwella (Alternate to Ms. D.G. Talpahewa)

Singer Industries (Ceylon) PLC Mr. A.M. Pandithage – Chairman


Mr. M.H. Wijewardene – Group CEO

Mr. V.G.K. Vidyarathne

Mr. M.H. Jamaldeen

Mr. N.L.S. Joseph

Mr. K.D.G. Gunaratne

Mr. S.C. Ganegoda

Mr. K.D. Kospelawatta

Regnis (Lanka) PLC Mr. A.M. Pandithage – Chairman

Mr. M.H. Wijewardene – Group CEO


Mr. V.G.K. Vidyarathne

Mr. M.H. Jamaldeen

Mr. K.D.G. Gunaratne

Mr. N.L.S. Joseph

Mr. S.C. Ganegoda


Mr. A.C.M. Irzan (Alternate to Mr K.D. Kospelawatta)

Reality Lanka LimitedMr. A.M. Pandithage


Mr. S.C. Ganegoda

Singer Digital Media (Pvt) LimitedMr. A.M. Pandithage – Chairman

Mr. M.H. Wijewardena

Mr. K.K.L.P. Yatiwella

Mr. S.C. Ganegoda

Mr. K.D.J.M. Perera

Singer Business School (Pvt) LimitedMr. A.M. Pandithage – Chairman

Mr. M.H. Wijewardena

Mr. K.K.L.P. Yatiwella

Mr. S.C. Ganegoda

Regnis Appliances (Pvt) LimitedMr. A.M. Pandithage – Chairman



Mr. S.C. Ganegoda

Mr. N.M.P. Fernando

Domus Lanka (Pvt) Limited Mr. A.M. Pandithage – Chairman


EmploymentThe number of persons employed by the Group and the Company as at 31st March 2019 was 2,798 (2017/18– 2,617) and 1,827 (2017/18 – 1,781), respectively.

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101STEWARDSHIP

Details of human resource initiatives are given in the Employees section of the Sustainability Report.

Corporate Governance Directors’ DeclarationsThe Directors declare that having considered all information and explanations made available to them that –

(a) the Company complied with all applicable laws and regulations in conducting its business;

(b) they have declared all material interests in contracts involving the Company and refrained from voting on matters in which they were materially interested;

(c) the Company has made all endeavours to ensure the equitable treatment of shareholders;

(d) the business is a going concern with supporting assumptions or qualifications as necessary: and

(e) they have conducted a review of internal controls covering financial, operational and compliance controls and risk management and have obtained a reasonable assurance of their effectiveness and successful adherence herewith.

The Corporate Governance Report is given under the governance section of this Annual Report.

Donations (For Approved and Non-Approved Charities/Organisations)During the year, donations amounting to Rs. 466,250/- (2017/18 – Rs. 763,465/-) were made by the Group and donations made by the Company were Rs. 360,000/- (2017/18 – Rs. 335,220/-). Donations made by the Group and Company are given in Note 8.

AuditorsThe Financial Statements for the period under review were audited by Messrs KPMG, Chartered Accountants who offer themselves for reappointment for the ensuing year. The Directors propose the reappointment of Messrs KPMG, Chartered Accountants as Auditors of the Company for the year 2019/20 subject to the approval of the shareholders at the Annual General Meeting.

The Audit Committee reviews the appointment of the Auditor, its effectiveness and its relationship with the Company including the level of audit and non-audit fees paid to the Auditors. Details on the work of the Audit Committee are set out in the Audit Committee Report.

The audit and non-audit fees paid to the Auditors by the Company and Group are disclosed in Note 8 on page 214. in this Annual Report.

As far as the Directors are aware, the Auditors do not have any relationship or interest in the Company or its subsidiaries. The Auditors have confirmed that they do not have any relationship (other than that of Auditors) with or interest in the Company or any of its subsidiaries other than those disclosed above.

Notice of MeetingThe Forty-Fourth Annual General Meeting will be held at Hayleys PLC, No. 400, Deans Road, Colombo 10, Sri Lanka on Tuesday 25th of June 2019 at 3.00 p.m.

The Notice of the Annual General Meeting to the shareholders is given on page 294.

For and on behalf of the Board,

Mohan Pandithage Chairman

M.H. WijewardeneDirector/Chief Executive Officer

Hayleys Group Services (Pvt) LtdCompany SecretariesSinger (Sri Lanka) PLC

Colombo

16th May 2019

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FINANCIAL REPORTS

5SINGER AT A GLANCE

STATEMENT OF DIRECTORS’ RESPONSIBILITY

The Directors are responsible under sections 150 (1), 151, 152 (1), and 153 of the Companies Act No. 07 of 2007, to ensure compliance with the requirements set out therein and to prepare Financial Statements for the twelve months financial period ended 31st March 2019 giving a true and fair view of the state of affairs of the Company and the Group and of the profit of the Company and the Group for the said financial period.

The Directors are also responsible, under Section 148, for ensuring that proper accounting records are kept to enable, determination of financial position with reasonable accuracy, preparation of Financial Statements and audit of such statements to be carried out readily and properly.

The Board accepts responsibility for the integrity and objectivity of the Financial Statements presented. The Directors confirm that in preparing the Financial Statements, appropriate accounting policies have been selected and applied consistently while reasonable and prudent judgements have been made so that the form and substance of transactions are properly reflected.

The Directors confirm that the Financial Statements have been prepared and presented in accordance with the Sri Lanka Accounting Standards (SLFRSs/LKASs), Companies Act No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange. Further, the Financial Statements provide the information required by the Companies Act and the Listing Rules of the Colombo Stock Exchange.

The Directors are of the opinion, based on their knowledge of the Company, key operations and specific inquiries, that adequate resources exist to support the Company and the Group on a going concern basis over the next year. These Financial Statements have been prepared on that basis.

The Directors have taken reasonable measures to safeguard the assets of the Company and the Group and, in that context, have instituted appropriate systems of internal control with a view to preventing and detecting fraud and other irregularities.

The Board of Directors declared an interim Dividend for the twelve month period ended 31st March 2019 and paid on 18th April 2019 in terms of the Articles of Association of the Company and in line with Section 56 of the Companies Act No. 07 of 2007. The Solvency Test was satisfied immediately after such distribution in accordance with Section 57 of the Act.

The External Auditors, Messrs KPMG, Chartered Accountants who will be proposed to be reappointed as the Auditors of the Company at the Annual General Meeting were provided with every opportunity to undertake the inspections they considered appropriate to enable them to form their opinion on the Financial Statements. The report of the Auditors, shown on pages 171 to 175 sets out their responsibilities in relation to the Financial Statements. The Board has recommended that Messrs KPMG be reappointed as Auditors for the year 2019/2020.

Compliance ReportThe Directors confirm that to the best of their knowledge, all statutory payments relating to employees and the Government that were due in respect of the Company and its subsidiaries as at the balance sheet date have been paid or where relevant, provided for.

By Order of the Board,

Hayleys Group Services (Pvt) Ltd.Company SecretariesSinger (Sri Lanka) PLCColombo

16th May 2019

171


To the Shareholders of Singer (Sri Lanka) PLCReport on the Audit of the Financial StatementsOpinionWe have audited the financial statements of Singer (Sri Lanka) PLC (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”), which comprise the statement of financial position as at 31st March 2019, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and Notes to the financial statements, including a summary of significant accounting policies and other explanatory Notes set out on pages from 176 to 270.

In our opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as at 31st March 2019, and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Basis for OpinionWe conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics), and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Company financial statements and the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the Company financial statements and the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

KPMG Tel : +94 - 11 542 6426(Chartered Accountants) Fax : +94 - 11 244 587232A, Sir Mohamed Macan Markar Mawatha, : +94 - 11 244 6058P. O. Box 186, Internet : www.kpmg.com/lkColombo 00300, Sri Lanka.

M.R. Mihular FCA P.Y.S. Perera FCA C.P. Jayatilake FCAT.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph FCAMs. S.M.B. Jayasekara ACA W.K.D.C Abeyrathne FCA S.T.D.L. Perera FCAG.A.U. Karunaratne FCA R.M.D.B. Rajapakse FCA Ms. B.K.D.T.N. Rodrigo FCAR.H. Rajan FCA M.N.M. Shameel ACA Ms. C.T.K.N. Perera ACA

Principals - S.R.I. Perera FCMA(UK), LLB, Attorney-at-Law, H.S. Goonewardene ACA

INDEPENDENT AUDITOR’S REPORT

172


Risk Description Our response

01. Adoption of and Transition to SLFRS 15 (Revenue Recognition)Refer to Note 2.8.1 (accounting policy) and Note 3 to these Financial Statements. The Group has adopted SLFRS 15 using the cumulative effect method (without practical expedients) on 1st April 2018. Accordingly, the information presented for 2017/2018 has not been restated and continued to be reported under LKAS 18.

The Group has complex and multiple revenue streams which requires significant judgements when assessing the performance obligations and recognition of revenue under SLFRS 15. We focused on this area as recognition of revenue involved significant judgement and estimates made by the management including, whether contracts contains multiple performance obligations. This comprises allocation of consideration to the individual performance obligation of multi-element contract as noted above, assessing whether performance obligations are satisfied at a point in time or over time.

Given the level of subjectivity nature of assumptions/judgements involved and transition adjustments are likely to be subject to scrutiny from investors/ regulators resulted in revenue has being considered as a key audit matter.

Our audit procedures included;

zz Evaluating the appropriateness of the selection of accounting policies and management approach over adoption and transition applied for SLFRS 15, including the key accounting estimates and judgements made by the management based on the requirements of the new standards.

zz Challenging the reasonableness of management’s key judgements and estimates made in adopting SLFRS 15 and preparing the transition adjustments including selection of methods, models, assumptions and data sources.

zz Evaluating the completeness, accuracy and relevance of data used in adopting SLFRS 15 and preparing the transition adjustments.

zz Communicating our views about the significant qualitative aspects of the entity’s accounting practises, including accounting policies, estimates and financial statement disclosures.

zz Assessing the adequacy of the financial statements disclosure required by SLFRS 15.

02. Impairment allowance for Trade and other Receivables including transition to SLFRS 9

Refer to Note 2.4.5 (accounting policy) and Note 18.3 to these Financial Statements.

The Group has recognised impairment provisions relating to trade and other receivables which amounts to Rs. 2,348 million (Company – Rs. 1,654 million).

Impairment allowances represent management’s best estimate of the losses expected within receivables as at the financial position date. They are calculated for specific assets and on a collective basis for portfolios of receivables of a similar nature.

The calculation of impairment allowances is inherently judgemental for any institution and the Group use subjective assumptions/ judgements made to determine the classification category (e.g. business model and SPPI assessment), and ECL modelling (e.g. macro-economic inputs) with the adoption of SLFRS 9 on 1st April 2018.

Accordingly, the audit was focused on impairment due to the materiality of the balances, significant management judgement relating to classification decisions and determining expected credit loss outcomes and the subjective nature of the calculation.

Our audit procedures included:

zz Challenging the appropriateness of the selection of accounting policies based on the requirements of the new standards, our business understanding and industry practice.

zz Evaluating the appropriateness of the management approach over adoption, transition and practical expedients applied for SLFRS 9.

zz Assessing management’s new or revised processes, systems and controls implemented over classification, measurement and impairment assessment.

zz Challenging the reasonableness of management’s key assumptions/judgements over classification and measurement decisions, adopting of and preparing the transitional adjustments.

zz Identifying and testing the relevant key controls and evaluating the completeness, accuracy and relevance of data used.

zz Evaluating the appropriateness and tested the mathematical accuracy of models applied and post- model adjustments.

173



Given the level of subjectivity nature of significant management judgements involved and transition adjustments are likely to be subject to scrutiny from investors/regulators resulted in impairment of trade receivables being considered as a key audit matter.

zz Assessing the completeness, accuracy and relevance of the disclosures required by SLFRS 9 for adoption and transition.

03. Carrying Value of Inventory

Refer to Note 2.5 (accounting policy) and Note 16 to these Financial Statements.

The Group has recognised a total inventory provision of Rs. 904 million (Company – Rs. 869 million) in arriving at a total inventory value of Rs. 14,126 million (Company – Rs. 12,135 million)

The Group has significant levels of inventories and significant management judgements are taken with regard to categorisation of inventories into obsolete and/or slow moving and which should be therefore be considered for provision. Estimates are then involved in arriving at provisions against cost in respect of slow moving and obsolete inventories to arrive at valuation based on lower of cost and net realisable value.

Given the level of significant management judgements and estimates involved this is considered to be a key audit matter.


zz Challenging the management with regard to the calculation methodology, the basis for provision and the process with respect to inventory provision.

zz Testing the design, implementation and operating effectiveness of the key controls management has established for provision computations and to ensure the accuracy of the inventory provision.

zz Assessing the adequacy of, and movements in, inventory provisions held, by recalculating a sample of items included within the provision to ensure appropriate basis of valuation.

zz Evaluating, on a sample basis, whether inventories were stated at the lower of cost or net realisable value at the reporting date by comparing the sales prices of inventories subsequent to the reporting date.

zz Evaluating the appropriateness of the assumptions used based on our knowledge and information of the client and the industry.

04. Revaluation of the Land and BuildingsRefer to Note 2.3 (accounting policy) and Note 11.1 and 11.10 to these financial statements.

The Group has recorded a revaluation gain of Rs. 883 million (Company – Rs. 454 million) by revaluing the land and buildings.

Management’s assessment of fair value of these land and buildings are based on valuations performed by a qualified independent property valuer in accordance with recognised industry standards. Estimating the fair value is a complex process which involves a significant degree of judgement and estimates in respect of price per perch of the land, capitalisation rates, value per square feet, diversity of locations and nature of the properties.

We identified assessing the valuation of land and building and investment properties owned by the Group as a key audit matter because of the complexity of the valuation, significant judgement and estimation.


zz Assessing appropriateness of the key assumptions used against externally published market comparable or industry data where available.

zz Assessing the objectivity, independence, competence and qualifications of the external valuer.

zz Assessing the adequacy of the disclosures in the financial statements.

174



05. Contingent Liability on Deemed VAT AssessmentRefer to Note 37.4 in these Financial Statements.

The Group has tax assessments which requires disclosures in the financial statements. The Assessment Notice received by Singer (Sri Lanka) PLC, relating to deemed VAT is significant.

Commissioner General of Inland Revenue has issued assessment notices on Singer (Sri Lanka) PLC pertaining to an additional VAT Liability/Payment on account of Deemed VAT for seven quarters for the period 1st January 2014 to 30th September 2015. The assessment was for a Deemed VAT payment of Rs. 1,076 million and Penalty of Rs. 423 million totalling to Rs. 1,499 million. Commissioner General of Inland Revenue has given the determination on the appeal. Accordingly, Rs.791 million of Deemed VAT liability and penalty of Rs. 395 million totalling to Rs. 1,186 million is payable as a Deemed VAT liability for seven quarters for the period 1st January 2014 to 30th September 2015. The Company after carefully reviewing the advice of tax consultants, is of the opinion that there is no basis for the Company to be made liable for Deemed VAT and accordingly company has decided to appeal to the Tax Appeal Commission against the determination. Hence, no provision has been made in the Financial Statements.

The outcome of the deemed VAT assessment is uncertain and as it requires the management to make significant judgements and estimates in relation to the likely outcome of these tax issues and exposures.

Given the significant value relating to the Deemed VAT assessment and judgemental nature of this contingent liability, this is considered to be a key audit matter.


zz Discussions with management and those who charged with governance to understand the nature and status of tax assessment.

zz Inspecting correspondence with tax consultants and lawyer’s opinions obtained by the management in assessing the likelihood of outflow of resources have become probable.

zz Assessing the adequacy and appropriateness of the Group’s disclosure on deemed VAT assessment in accordance with accounting standards.

Other Information Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the Financial Statements and our Auditor’s Report thereon.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the annual report, if we conclude that there is a material misstatement there in, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Financial StatementsManagement is responsible for the preparation of Financial Statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.

175


Auditor’s Responsibilities for the Audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

As part of an audit in accordance with SLAuSs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

zz 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.

zz 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 and the Group’s internal control.

zz Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

zz Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor’s Report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditor’s Report. However, future events or conditions may cause the Group to cease to continue as a going concern.

zz 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.

zz Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our Auditor’s Report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory RequirementsAs required by section 163 (2) of the Companies Act No. 07 of 2007, we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.

CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 3272.

CHARTERED ACCOUNTANTSColombo, Sri Lanka

16th May 2019

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FINANCIAL REPORTS

5SINGER AT A GLANCE

Consolidated Company

Note

For twelve months ended

31st March 2019Rs.

For fifteen months ended

31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Revenue 3 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

Cost of Sales (41,139,965,111) (45,632,148,268) (31,320,692,490) (36,728,240,797)

Direct Interest Cost (1,265,014,487) (1,281,563,416) – –

Gross Profit 16,100,415,639 18,208,592,838 12,297,196,939 14,181,792,095

Other Income 5 338,061,691 360,258,175 590,066,636 1,088,431,100

Selling and Administrative Expenses (11,919,695,025) (13,361,827,374) (10,233,588,367) (11,824,669,954)

Impairment Loss on Trade Receivables 8.1 (521,421,384) (367,607,130) (212,806,334) (137,147,306)

Operating Profit 3,997,360,921 4,839,416,509 2,440,868,874 3,308,405,935

Finance Income 6 207,670,679 175,549,720 453,906,643 344,598,049

Finance Cost 7 (3,240,746,377) (2,706,924,672) (2,774,862,229) (2,494,325,151)

Net Finance Cost (3,033,075,698) (2,531,374,952) (2,320,955,586) (2,149,727,102)

Value Added Tax on Financial Services (292,156,111) (258,989,411) (31,200,000) (52,800,000)

Profit Before Tax 8 672,129,112 2,049,052,146 88,713,288 1,105,878,833

Income Tax Expense 9 (286,148,529) (828,757,533) 51,837,151 (106,855,559)

Profit for the Period 385,980,583 1,220,294,613 140,550,439 999,023,274

Other Comprehensive Income

Items that will not be Reclassified to Profit or Loss

Revaluation of Property, Plant and Equipment 882,824,365 – 453,751,963 –

Re-measurement of Employee Benefit Obligation 27 (21,158,221) (18,910,000) (26,947,676) (9,478,416)

Related Taxes

Tax on Other Comprehensive Income 9.4 5,871,651 6,319,485 7,545,349 2,653,957

Deferred Tax on Revaluation of Property, Plant and Equipment 9.4 (247,190,822) (516,049,055) (127,050,550) (198,082,001)

Other Comprehensive Income for the period, Net of Tax 620,346,973 (528,639,570) 307,299,086 (204,906,460)

Total Comprehensive Income for the Period, Net of Tax 1,006,327,556 691,655,043 447,849,525 794,116,814

Profit Attributable to:

Owners of the Company 250,121,091 1,043,682,205 140,550,439 999,023,274

Non-Controlling Interests 135,859,492 176,612,408 – –

Total Comprehensive Income Attributable to: 385,980,583 1,220,294,613 140,550,439 999,023,274

Owners of the Company 799,204,104 580,225,153 447,849,525 794,116,814

Non-Controlling Interests 207,123,452 111,429,890 – –

1,006,327,556 691,655,043 447,849,525 794,116,814

Earnings per Share – Basic (Rs.) 10.2 0.67 2.78 0.37 2.66

Dividend per Share (Rs.) – – 0.65 2.20

The Notes on pages 183 through 270 form an integral part of these Financial Statements.


STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

177



101STEWARDSHIP

STATEMENT OF FINANCIAL POSITION


As atNote

31st March 2019Rs.

31st March 2018Rs.

31st March 2019Rs.

31st March 2018Rs.

AssetsProperty, Plant and Equipment 11 6,704,648,597 5,649,423,644 3,498,021,139 3,082,597,562 Intangible Assets 12 268,296,168 281,316,991 201,000,888 207,145,304 Investment in Subsidiaries 13 – – 2,900,872,703 2,925,222,314 Other Non-Current Assets 14 63,219,073 64,520,322 – – Other Investments 15.1 17,061,300 17,061,300 616,202,652 929,110,000Trade and Other Receivables 18.1 11,478,309,145 9,162,979,851 1,432,236,418 1,341,906,019 Deferred Tax Assets 26 – – 264,757,033 69,642,532 Non-Current Assets 18,531,534,283 15,175,302,108 8,913,090,833 8,555,623,731 Inventories 16 14,125,716,969 12,573,709,862 12,135,241,818 10,741,281,063 Loans Due from Related Parties 17 – – 1,215,819,977 1,219,150,767 Income Tax Receivables 31 70,953,640 46,635,361 240,187,686 157,630,474 Trade and Other Receivables 18.2 22,672,158,380 20,685,222,631 12,860,387,063 12,142,047,361 Amounts due from Related Parties 19 – 788,000 3,310,666 185,396,027 Other Financial Assets 35.2 85,648,063 – 85,648,063 – Deposits with Banks 83,323,971 81,504,012 – – Other Investments 15.2 623,372,330 671,382,640 312,090,000 – Cash and Cash Equivalents 20.1 1,849,642,830 1,339,006,740 1,337,712,692 1,017,627,946 Current Assets 39,510,816,183 35,398,249,246 28,190,397,965 25,463,133,638 Total Assets 58,042,350,466 50,573,551,354 37,103,488,798 34,018,757,369

EquityStated Capital 21 626,048,050 626,048,050 626,048,050 626,048,050 Capital Reserves 22 1,118,122,637 577,919,322 1,158,333,041 847,555,412 Statutory Reserves 23 163,096,146 136,009,451 – – Revenue Reserves 24 5,035,830,612 5,495,477,725 2,851,601,145 3,326,088,413 Total Equity Attributable to Owners of the Company 6,943,097,445 6,835,454,548 4,635,982,236 4,799,691,875 Non-Controlling Interests 40 1,508,546,318 1,349,113,961 – – Total Equity 8,451,643,763 8,184,568,509 4,635,982,236 4,799,691,875

Liabilities

Interest-Bearing Loans and Borrowings 25 10,640,159,470 4,319,898,408 7,373,929,275 2,532,149,832 Employee Benefit Obligations 27 871,971,129 794,644,981 630,757,966 574,009,152 Security Deposits 28 1,388,433,021 1,199,127,333 1,332,128,051 1,199,127,333 Deferred Tax Liability 26 246,869,202 467,235,592 – – Other Financial Liabilities 35.1 804,555,534 411,393,904 – – Deferred Revenue 30 85,928,321 126,328,596 85,928,321 126,328,596Other Non-Current Liabilities 29.3 143,126,349 – 143,126,349 – Non-Current Liabilities 14,181,043,026 7,318,628,814 9,565,869,962 4,431,614,913Trade and Other Payables 29 7,321,038,209 8,112,971,678 5,114,175,724 6,003,703,096 Deferred Revenue 30 188,044,737 119,961,349 182,534,759 119,961,349Dividends Payables 32 88,496,948 220,838,973 49,212,196 166,754,628Amounts Due to Related Parties 34 256,020,865 389,037,813 2,762,311,875 3,012,216,978Other Financial Liabilities 35.1/35.2 5,148,467,467 4,826,583,524 – 8,337,510 Interest-Bearing Loans and Borrowings 25 19,491,167,297 19,268,269,452 13,376,313,438 14,239,388,295 Bank Overdrafts 20.2 2,916,428,154 2,132,691,242 1,417,088,608 1,237,088,725 Current Liabilities 35,409,663,677 35,070,354,031 22,901,636,600 24,787,450,581Total Liabilities 49,590,706,703 42,388,982,845 32,467,506,562 29,219,065,494 Total Equity and Liabilities 58,042,350,466 50,573,551,354 37,103,488,798 34,018,757,369

The Notes on pages 183 through 270 form an integral part of these Financial Statements.I certify that the Financial Statements of the Company comply with the requirements of the Companies Act No. 07 of 2007.

Lalith YatiwellaFinance DirectorThe Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by,

Mohan Pandithage Mahesh H Wijewardene Chairman Director/Group Chief Executive Officer16th May 2019Colombo

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5SINGER AT A GLANCE

Consolidated

Attributable to Equity Holders of the Company

Note

Stated Capital

Rs.

Reserve Fund

Rs.

RevaluationReserves

Rs.

GeneralReserves

Rs.

RetainedEarnings

Rs.

Total

Rs.

Non-ControllingInterest

Rs.

Total

Rs.

Balance at 1st January 2017 626,048,050 95,360,709 1,057,964,069 2,700,000,000 3,674,443,725 8,153,816,553 1,401,088,060 9,554,904,613 Realisation of Revaluation Surplus 22.1 – – (28,213,846) – 28,213,846 – – – Transferred to/(from) During the Period – 40,648,742 – – (40,648,742) – – – Total Comprehensive Income for the PeriodProfit for the Period – – – – 1,043,682,205 1,043,682,205 176,612,408 1,220,294,613 Other Comprehensive Income Re-measurement of Employee Benefit Obligation 27 – – – – (17,615,944) (17,615,944) (1,294,056) (18,910,000)Related TaxesTax on Other Comprehensive Income 9.4 – – – – 5,989,793 5,989,793 329,692 6,319,485 Deferred Tax on Revaluation of Lands 9.4 – – (451,830,901) – (451,830,901) (64,218,154) (516,049,055)Total Other Comprehensive Income for the Period – – (451,830,901) – (11,626,151) (463,457,052) (65,182,518) (528,639,570)Total Comprehensive Income for the Period – – (451,830,901) – 1,032,056,054 580,225,153 111,429,890 691,655,043 Transactions with Owners of the Company, Recognised Directly in EquityDistributions to Owners of the CompanyFinal Dividend – 2016 33 – – – – (1,101,844,568) (1,101,844,568) (120,545,099) (1,222,389,667)Interim Dividend – 2017/18 33 – – – – (826,383,426) (826,383,426) (92,297,193) (918,680,619)Total Distributions to Owners of the Company – – – – (1,928,227,994) (1,928,227,994) (212,842,292) (2,141,070,286)Changes in Ownership interest in SubsidiariesRight Issue Cost – – – – (1,989,651) (1,989,651) – (1,989,651)Right Issue to Non-Controlling Interest – – – – – – 77,732,040 77,732,040 Gain on Acquisition of additional shares in Right issue – – – – 3,336,750 3,336,750 – 3,336,750 Effect of Change in Holding in Subsidiaries – – – – 28,293,737 28,293,737 (28,293,737) –

Balance at 31st March 2018 626,048,050 136,009,451 577,919,322 2,700,000,000 2,795,477,725 6,835,454,548 1,349,113,961 8,184,568,509 Adjustment on Error Correction (Note 11.2) – – – – 43,358,242 43,358,242 6,069,758 49,428,000 Adjustment of Initial Application of SLFRS 9 net of tax – – – – (283,954,015) (283,954,015) (21,946,844) (305,900,859)Adjustment of Initial Application of SLFRS 15 net of tax – – – – (188,078,569) (188,078,569) – (188,078,569)Adjusted Balance as at 1st April 2018 626,048,050 136,009,451 577,919,322 2,700,000,000 2,366,803,383 6,406,780,206 1,333,236,875 7,740,017,081Realisation on Revaluation Surplus – – (24,389,920) – 24,389,920 – – – Transferred to/(from) during the year – 27,086,695 – – (27,086,695) – – – Total Comprehensive Income for the YearProfit for the Year – – – – 250,121,091 250,121,091 135,859,492 385,980,583 Other Comprehensive Income

Revaluation of Property, Plant and Equipment 22.1 – 784,157,271 – – 784,157,271 98,667,094 882,824,365 Re-measurement of Employee Benefit Obligation 27 – – – (21,499,348) (21,499,348) 341,127 (21,158,221)Related Taxes – – Tax on Other Comprehensive Income 9.4 – – 5,989,126 5,989,126 (117,475) 5,871,651 Deferred tax on Revaluation of Property, Plant and Equipment 9.4 – – (219,564,036) – (219,564,036) (27,626,786) (247,190,822)Total Other Comprehensive Income for the Year – – 564,593,235 – (15,510,222) 549,083,013 71,263,960 620,346,973 Total Comprehensive Income for the Year – – 564,593,235 – 234,610,869 799,204,104 207,123,452 1,006,327,556 Transactions with Owners of the Company, Recognised Directly in EquityDistributions to Owners of the CompanyDividend paid in terms of bonus issue – – – – (8,788,026) (8,788,026) (1,230,244) (10,018,270)Interim Dividend – 2018/19 33 – – – – (244,158,740) (244,158,740) (78,922,778) (323,081,518)Total Distributions to Owners of the Company – – – – (252,946,766) (252,946,766) (80,153,022) (333,099,788)Changes in Ownership interest in SubsidiariesEffect of Change in Holdings in Subsidiaries – – – – (9,940,099) (9,940,099) 48,339,013 38,398,914Total Transactions with owners of the Company – – – – (262,886,865) (262,886,865) (31,814,009) (343,039,887)Balance at 31st March 2019 626,048,050 163,096,146 1,118,122,637 2,700,000,000 2,335,830,612 6,943,097,445 1,508,546,318 8,451,643,763


STATEMENT OF CHANGES IN EQUITY

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101STEWARDSHIP

Consolidated

Attributable to Equity Holders of the Company

Note

Stated Capital

Rs.

Reserve Fund

Rs.

RevaluationReserves

Rs.

GeneralReserves

Rs.

RetainedEarnings

Rs.

Total

Rs.

Non-ControllingInterest

Rs.

Total

Rs.

Balance at 1st January 2017 626,048,050 95,360,709 1,057,964,069 2,700,000,000 3,674,443,725 8,153,816,553 1,401,088,060 9,554,904,613 Realisation of Revaluation Surplus 22.1 – – (28,213,846) – 28,213,846 – – – Transferred to/(from) During the Period – 40,648,742 – – (40,648,742) – – – Total Comprehensive Income for the PeriodProfit for the Period – – – – 1,043,682,205 1,043,682,205 176,612,408 1,220,294,613 Other Comprehensive Income Re-measurement of Employee Benefit Obligation 27 – – – – (17,615,944) (17,615,944) (1,294,056) (18,910,000)Related TaxesTax on Other Comprehensive Income 9.4 – – – – 5,989,793 5,989,793 329,692 6,319,485 Deferred Tax on Revaluation of Lands 9.4 – – (451,830,901) – (451,830,901) (64,218,154) (516,049,055)Total Other Comprehensive Income for the Period – – (451,830,901) – (11,626,151) (463,457,052) (65,182,518) (528,639,570)Total Comprehensive Income for the Period – – (451,830,901) – 1,032,056,054 580,225,153 111,429,890 691,655,043 Transactions with Owners of the Company, Recognised Directly in EquityDistributions to Owners of the CompanyFinal Dividend – 2016 33 – – – – (1,101,844,568) (1,101,844,568) (120,545,099) (1,222,389,667)Interim Dividend – 2017/18 33 – – – – (826,383,426) (826,383,426) (92,297,193) (918,680,619)Total Distributions to Owners of the Company – – – – (1,928,227,994) (1,928,227,994) (212,842,292) (2,141,070,286)Changes in Ownership interest in SubsidiariesRight Issue Cost – – – – (1,989,651) (1,989,651) – (1,989,651)Right Issue to Non-Controlling Interest – – – – – – 77,732,040 77,732,040 Gain on Acquisition of additional shares in Right issue – – – – 3,336,750 3,336,750 – 3,336,750 Effect of Change in Holding in Subsidiaries – – – – 28,293,737 28,293,737 (28,293,737) –

Balance at 31st March 2018 626,048,050 136,009,451 577,919,322 2,700,000,000 2,795,477,725 6,835,454,548 1,349,113,961 8,184,568,509 Adjustment on Error Correction (Note 11.2) – – – – 43,358,242 43,358,242 6,069,758 49,428,000 Adjustment of Initial Application of SLFRS 9 net of tax – – – – (283,954,015) (283,954,015) (21,946,844) (305,900,859)Adjustment of Initial Application of SLFRS 15 net of tax – – – – (188,078,569) (188,078,569) – (188,078,569)Adjusted Balance as at 1st April 2018 626,048,050 136,009,451 577,919,322 2,700,000,000 2,366,803,383 6,406,780,206 1,333,236,875 7,740,017,081Realisation on Revaluation Surplus – – (24,389,920) – 24,389,920 – – – Transferred to/(from) during the year – 27,086,695 – – (27,086,695) – – – Total Comprehensive Income for the YearProfit for the Year – – – – 250,121,091 250,121,091 135,859,492 385,980,583 Other Comprehensive Income

Revaluation of Property, Plant and Equipment 22.1 – 784,157,271 – – 784,157,271 98,667,094 882,824,365 Re-measurement of Employee Benefit Obligation 27 – – – (21,499,348) (21,499,348) 341,127 (21,158,221)Related Taxes – – Tax on Other Comprehensive Income 9.4 – – 5,989,126 5,989,126 (117,475) 5,871,651 Deferred tax on Revaluation of Property, Plant and Equipment 9.4 – – (219,564,036) – (219,564,036) (27,626,786) (247,190,822)Total Other Comprehensive Income for the Year – – 564,593,235 – (15,510,222) 549,083,013 71,263,960 620,346,973 Total Comprehensive Income for the Year – – 564,593,235 – 234,610,869 799,204,104 207,123,452 1,006,327,556 Transactions with Owners of the Company, Recognised Directly in EquityDistributions to Owners of the CompanyDividend paid in terms of bonus issue – – – – (8,788,026) (8,788,026) (1,230,244) (10,018,270)Interim Dividend – 2018/19 33 – – – – (244,158,740) (244,158,740) (78,922,778) (323,081,518)Total Distributions to Owners of the Company – – – – (252,946,766) (252,946,766) (80,153,022) (333,099,788)Changes in Ownership interest in SubsidiariesEffect of Change in Holdings in Subsidiaries – – – – (9,940,099) (9,940,099) 48,339,013 38,398,914Total Transactions with owners of the Company – – – – (262,886,865) (262,886,865) (31,814,009) (343,039,887)Balance at 31st March 2019 626,048,050 163,096,146 1,118,122,637 2,700,000,000 2,335,830,612 6,943,097,445 1,508,546,318 8,451,643,763


180




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FINANCIAL REPORTS

5SINGER AT A GLANCE

Company

Note

Stated Capital

Rs.

RevaluationReserves

Rs.

GeneralReserves

Rs.

RetainedEarnings

Rs.

Total

Rs.

Balance as at 1 January 2017 626,048,050 1,065,542,144 2,700,000,000 1,542,212,861 5,933,803,055

Realisation on Revaluation Surplus 22.1 – (19,904,731) – 19,904,731 –

Profit for the Period – – – 999,023,274 999,023,274


Remeasurement of Employee Benefit Obligations 27 – – – (9,478,416) (9,478,416)

Related Taxes

Tax on Other Comprehensive Income 9.4 – – – 2,653,957 2,653,957

Deferred Tax on Revaluation of Lands 9.4 – (198,082,001) – – (198,082,001)

Total Other Comprehensive Income – (198,082,001) – (6,824,459) (204,906,460)

Total Comprehensive Income for the period – (198,082,001) – 992,198,815 794,116,814

Transactions with owners of the Company, Recognised Directly in Equity

Distributions to Owners of the Company –

Final Dividend – 2016 33 – – – (1,101,844,568) (1,101,844,568)

Interim Dividend – 2017/18 33 – – – (826,383,426) (826,383,426)

Total Distributions to Owners of the Company – – – (1,928,227,994) (1,928,227,994)

Balance as at 31st March 2018 626,048,050 847,555,412 2,700,000,000 626,088,413 4,799,691,875

Adjustment of Initial Application of SLFRS 9 net of tax (179,321,855) (179,321,855)

Adjustment of Initial Application of SLFRS 15 net of tax (188,078,569) (188,078,569)

Restated Balance as at 1st April 2018 626,048,050 847,555,412 2,700,000,000 258,687,989 4,432,291,451

Realisation on Revaluation Surplus 22.1 – (15,923,784) – 15,923,784 –

Profit for the Year – – – 140,550,439 140,550,439


Revaluation of Property, Plant and Equipment – 453,751,963 – – 453,751,963

Re-measurement of Employee Benefit Obligation 27 – – – (26,947,676) (26,947,676)

Related Taxes

Tax on Other Comprehensive Income 9.4 – – – 7,545,349 7,545,349

Deferred Tax on Revaluation of Property, Plant and Equipment 9.4 – (127,050,550) – – (127,050,550)

Total Other Comprehensive Income – 326,701,413 – (19,402,327) 307,299,086

Total Comprehensive Income for the Period – 326,701,413 – 121,148,112 447,849,525

Transactions with Owners of the Company, Recognised Directly in Equity

Distributions to Owners of the Company

Interim Dividend – 2018/19 33 – – – (244,158,740) (244,158,740)

Total Distributions to owners of the Company – – – (244,158,740) (244,158,740)

Balance at 31st March 2019 626,048,050 1,158,333,041 2,700,000,000 151,601,145 4,635,982,236


181



101STEWARDSHIP


Note


31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2016Rs.

Cash Flows from/(used in) Operating Activities

Profit before Income Tax Expense 672,129,112 2,049,052,146 88,713,288 1,105,878,833

Adjustments for:

Depreciation on Property, Plant and Equipment 11.2 579,242,530 632,735,522 453,474,287 509,249,151

Amortisation of Intangible Assets12.2, 12.3 21,698,455 31,694,467 11,947,019 22,343,871

Impairment of Software 12.2 – 5,605,554 – –

Amortisation of Leasehold Rights 14 1,301,249 542,188 – –

(Gain)/Loss on Disposal of Property, Plant and Equipment 5 279,943 10,851,256 483,591 11,220,725

Changing Fair Value of Derivative (Assets)/Liabilities (93,985,573) 8,337,510 (93,985,573) 8,337,510

(Gain)/Loss on Disposal of Shares 5 – – (14,049,303) –

Interest Expense 7 3,240,746,377 2,706,924,672 2,774,862,239 2,494,325,151

Interest Income 6 (207,670,679) (175,549,720) (453,906,643) (344,598,049)

Impairment of Inventory 16.1 172,995,327 15,211,882 174,028,852 44,233,025

Impairment on Trade and Other Receivables 18.3 783,159,310 652,643,612 474,683,286 422,183,787

Dividend Income 5 (206,400) (180,000) (462,621,207) (923,613,843)

Provision for Employee Benefit Obligations 27 144,669,128 161,489,696 103,310,278 114,418,462

Operating Profit Before Working Capital Changes 5,314,358,779 6,099,358,785 3,056,940,114 3,463,978,623

(Increase)/Decrease in Inventories (1,725,002,433) (3,048,593,785) (1,567,989,606) (2,992,019,040)

(Increase)/Decrease in Debtors falling due after one Year (2,317,799,858) (956,898,739) (92,800,964) 546,560,764

(Increase)/Decrease in Debtors falling due within one Year (3,149,966,224) (4,749,047,702) (1,436,627,030) (2,648,991,630)

(Increase)/Decrease in dues from Related Parties 788,000 (788,000) 182,085,361 (110,613,182)

Increase/(Decrease) in dues to Related Parties 14,543,920 16,182,262 (102,344,235) 1,762,442,545

Increase/(Decrease) in Security Deposits 189,305,688 180,675,482 133,000,718 180,675,483

Increase/(Decrease) in Trade and Other Payables (786,452,908) 1,746,166,960 (884,046,810) 1,211,050,044

Increase/(Decrease) in Deferred Liabilities (61,290,490) (192,699,301) (66,800,467) (192,699,301)

Cash Generated from (used in) Operations (2,521,515,526) (905,644,038) (778,582,919) 1,220,384,306

Finance Costs Paid (3,156,107,807) (2,706,924,670) (2,737,523,238) (2,494,325,153)

Employee Benefits Paid 27 (88,501,201) (36,898,710) (73,509,140) (26,642,192)

Income Tax Paid 31 (686,410,946) (1,039,106,287) (237,898,052) (380,519,169)

Net Cash from/(used in) Operating Activities (6,452,535,480) (4,688,573,705) (3,827,513,349) (1,681,102,208)

STATEMENT OF CASH FLOWS

182


STATEMENT OF CASH FLOWS


25BUSINESS MODEL


FiNANCiAL REpORTS

5SINGER AT A GLANCE


Note


31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2016Rs.

Cash Flows from Investing Activities

Acquisition of Property, Plant and Equipment and Intangible Assets 11/12 (742,257,768) (944,186,483) (465,178,897) (616,783,182)

Proceeds from Disposal of Property, Plant and Equipment 50,307,074 20,938,048 43,746,800 20,188,759

Investment in shares in Subsidiary Company – – – (470,042,325)

Investment in leasehold rights – (65,062,510) – –

Proceeds from disposal of shares/Investment in Debentures in Subsidiary Company 38,398,914 – 38,398,914 –

(Acquisition)/Disposal of Marketable Securities 48,010,310 (156,127,059) – –

Investment/(Withdrawal) in Bank Deposits (1,819,959) (346,333) – –

Net Cash flows from Loans Given to Related Companies – – 2,000,000 158,923,929

Interest Received 207,670,678 175,549,720 453,906,643 344,598,049

Dividend Received 206,400 180,000 462,621,207 923,613,843

Net Cash Flows used in Investing Activities (399,484,349) (969,054,617) 535,494,667 360,499,073

Cash Flows from Financing Activities

Proceeds From Interest – Bearing Loans and Borrowings 59,084,657,219 41,272,217,086 38,845,046,556 28,182,883,821

Repayment of Interest – Bearing Loans and Borrowings (52,626,136,881) (37,442,108,649) (34,903,680,972) (26,001,752,260)

Decrease in Customer Deposit Liabilities 723,383,081 2,196,030,528 – –

Proceeds from Right Issue Purchased by Minority Shareholders – 81,068,790 – –

Right Issue Cost – (1,989,651) – –

Net Payment to Minority Shareholders (78,922,778) (212,842,292) – –

Dividends Paid (524,061,633) (1,358,992,630) (509,262,040) (1,409,141,672)

Net Cash Flows Generated from Financing Activities 6,578,919,008 4,525,045,672 3,432,103,545 763,652,379

Net Increase/(Decrease) in Cash and Cash Equivalents (273,100,822) (1,132,582,650) 140,084,863 (556,950,756)

Cash and Cash Equivalents at the Beginning of the Year (793,684,502) 338,898,148 (219,460,779) 337,489,977

Cash and Cash Equivalents at the End of the Year 20 (1,066,785,324) (793,684,502) (79,375,916) (219,460,779)


183



101STEWARDSHIP

NOTES TO THE FINANCIAL STATEMENTS

Note 1 Corporate Information 184

Note 2 Significant Accounting Policies 187

Note 3 Revenue 210

Note 4 Operating Segments Information 211

Note 5 Other Income 213

Note 6 Finance Income 213

Note 7 Finance Cost 214

Note 8 Profit Before Tax 214

Note 9 Income Tax Expense 215

Note 10 Earnings Per Share 217

Note 11 Property, Plant and Equipment 218

Note 12 Intangible Assets 226

Note 13 Investments in Subsidiaries – Company 229

Note 14 Other Non-Current Assets 230

Note 15 Other Investments 230

Note 16 Inventories 232

Note 17 Loans Due from Related Parties 232

Note 18 Trade and Other Receivables 233

Note 19 Amounts Due from Related Parties 237

Note 20 Cash and Cash Equivalents 237

Note 21 Stated Capital 237

Note 22 Capital Reserves 238

Note 23 Statutory Reserves 238

Note 24 Revenue Reserves 239

Note 25 Interest-Bearing Loans and Borrowings 240

Note 26 Deferred Tax Assets/(Liabilities) 244

Note 27 Employee Benefit Obligations 246

Note 28 Security Deposits 248

Note 29 Trade and Other Payables 248

Note 30 Deferred Revenue 249

Note 31 Income Tax Payables/(Receivables) 250

Note 32 Dividend Payables 250

Note 33 Dividends 250

Note 34 Amounts due to Related Parties 250

Note 35 Other Financial Liabilities 251

Note 36 Financial Instruments 252

Note 37 Commitments and Contingencies – Group/Company 265

Note 38 Events Occurring after the Reporting Period 267

Note 39 Related Party Transactions 267

Note 40 Non-Controlling Interest 270

184




25BUSINESS MODEL


FINANCIAL REPORTS

5SINGER AT A GLANCE

1. Corporate Information1.1 Reporting Entity1.1.1 GeneralSinger (Sri Lanka) PLC is a public limited liability company incorporated and domiciled in Sri Lanka. The Registered Office of the Company is located at No 112, Havelock Road, Colombo 05, and the principal place of business is situated at the above address.

In the Report of the Directors and in the Financial Statements, “the Company” refers to Singer (Sri Lanka) PLC as the Holding Company and “the Group” refers to the Consolidated Financial Statements of Singer (Sri Lanka) PLC and its Subsidiaries, Singer Finance (Lanka) PLC, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Reality Lanka Limited, Regnis Appliances (Pvt) Limited, Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Limited and Domus Lanka (Pvt) Limited.

The ordinary shares of the Company are listed on the Colombo Stock Exchange of Sri Lanka.

Hayleys PLC together with its subsidiaries, Volanka (Pvt) Ltd., and Carbotels (Pvt) Ltd., acquired on 15th September 2017 a total of 231,864,362 ordinary shares in Singer (Sri Lanka) PLC, constituting approximately 61.73% of the total shares in issue at a price of Rs. 47/- per share, making Hayleys PLC the ultimate controlling party of Singer (Sri Lanka) PLC with effect from 15th September 2017.

Consequent to the purchase of 210,587,766 shares, a mandatory offer was made by Hayleys PLC on 31st October 2017 as Hayleys PLC triggered the Company takeovers and Mergers Code 1995, published under the rules made by the Securities and Exchange Commission of Sri Lanka under Section 53 of the Securities and Exchange Commission of Sri Lanka, Act No. 36 of 1987 as amended, and in terms of Rule 31 (1) (a) of the Code. Accordingly subsequent to the mandatory offer, Hayleys PLC, with parties acting in concern holds 304,108,410 shares constituting approximately 80.96% of the total shares in issue .

On 15th October 2018, Hayleys PLC purchased the balance 35,562,883 (9.47%) ordinary shares held by Retail Holdings (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47.00 per share upon Retail Holdings (Sri Lanka) BV exercising their option to sell its shares to Hayleys PLC as previously agreed. After accepting this offer, Hayleys PLC together with its Group Companies holds 90.43% (80.96% previously) of Singer (Sri Lanka) PLC.

1.1.1.1 Changing the Reporting PeriodThe reporting period of Singer (Sri Lanka) PLC, has been changed from 31st December to 31st March with effect from Financial Year 2017/18 in order to align with the parents

reporting period. Therefore, the comparative year information comprises a period of fifteen months from 1st January 2017 to 31st March 2018. The current year amounts comprise as at and for the period of twelve months ended 31st March 2019. Therefore, amounts presented in the Financial Statements are not entirely comparable. The disclosures pertaining to change of the financial reporting period has been made in accordance with LKAS 1 on “Presentation of Financial Statements”. The Consolidated Financial Statements of Singer (Sri Lanka) PLC as at and for the period ended 31st March 2019 comprise the Company and its Subsidiaries namely, Singer Finance (Lanka) PLC, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Reality Lanka Limited, Regnis Appliances (Pvt) Limited, Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Limited and Domus Lanka (Pvt) Limited.

SubsidiariesSinger Finance (Lanka) PLCSinger Finance (Lanka) PLC, was incorporated on 19th April 2004 under the Companies Act No. 17 of 1982 and re-registered under the Company’s Act No. 07 of 2007 and its commercial operations commenced on 8th July 2004. Singer (Sri Lanka) PLC owns 79.93% of its equity shares.

Singer Industries (Ceylon) PLCSinger Industries (Ceylon) PLC was incorporated on 13th December 1963 and re-registered under the Companies Act No. 07 of 2007 and its commercial operations commenced on 13th December 1963. Singer (Sri Lanka) PLC owns 87.7% of its equity shares.

Regnis Lanka PLCRegnis (Lanka) PLC was incorporated on 8th October 1987 under the Companies Act No. 17 of 1982 and re-registered under the Companies Act No. 07 of 2007 and its commercial operations commenced on 8th October 1987. Singer (Sri Lanka) PLC owns 58.3% of its equity shares.

Reality Lanka LimitedReality Lanka Limited was incorporated on 29th September 2006 under the Companies Act No. 17 of 1982 and re-registered under the Companies Act No. 07 of 2007 and its commercial operations commenced on 29th September 2006. Singer (Sri Lanka) PLC directly, indirectly owns 88.2% of its equity shares.

Regnis Appliances (Pvt) LimitedRegnis Appliances (Pvt) Limited, was Incorporated on 18th January 2010 under the Companies Act No. 07 of 2007 and commenced its commercial operations on 1st October 2010. Singer (Sri Lanka) PLC indirectly owns 58.3% of its equity shares.

185




101STEWARDSHIP

Singer Digital Media (Pvt) LimitedSinger Digital Media (Pvt) Limited was incorporated on 16th May 2014 under the Companies Act No. 07 of 2007 and its commercial operations commenced on 8th July 2014. Singer Digital Media (Pvt) Limited is a fully-owned Subsidiary.

Singer Business School (Pvt) Limited A fully-owned Subsidiary, Singer Business School (Pvt) Limited was incorporated on 5th May 2015 under the Companies Act No. 07 of 2007 and its commercial operations commenced on 5th May 2015

Domus Lanka (Pvt) Limited Domus Lanka (Pvt) Limited was incorporated on 4th January 2018 under the Company Act No. 07 of 2007.

Associates (Equity Accounted Investees)Associate companies of the Group, whose results have been included in the Consolidated Financial Statements are:Telshan Network (Pvt) Limited. All above companies are incorporated in Sri Lanka.

1.1.3 Principal Activities and Nature of OperationsThe CompanyThe Company is engaged in Retail and Wholesale Marketing, Financing, Assembling, Manufacturing and Financial Services. The Company markets Consumer Electronics, Home Appliances, Mobile and smart Phones, Personal Computers, Laptops, Furniture, Domestic and Industrial Sewing Machines, Agricultural Equipment, and provides Financing through Hire Purchase. In addition, the Company manufactures and sells Furniture, Water Pumps and assembles and sells Motor Cycles and Two Wheel Tractors. The Company also acts as a Bill Collection Agent for banks, mobile service providers, National Water Supply and Drainage Board, Ceylon Electricity Board and is also a sub-agent for Western Union.

SubsidiarySinger Finance (Lanka) PLCThe principal activities of the Company consist of finance leasing, hire purchase financing, gold loan, financing of consumer durables under loan scheme and granting loans, factoring, credit card, authorised foreign currency dealer and mobilising fixed deposits and savings.

Singer Finance (Lanka) PLC (“Company”), regulated under the Finance Business Act No. 42 of 2011, was incorporated on 19th April 2004 as a Public Limited Liability Company domiciled in Sri Lanka under the provisions of the Companies Act No. 17 of 1982 and re-registered under the Companies Act No. 07 of 2007.

SubsidiarySinger Industries (Ceylon) PLCThe principal activities of the Company are assembling sewing machines and manufacturing of cabinets and stands for sewing machines.

SubsidiaryRegnis Lanka PLCThe principal activities of the Company are manufacturing of Refrigerators and Bottle Coolers.

SubsidiaryReality Lanka LimitedThe principal activities of the Company are renting of company property and property development.

SubsidiaryRegnis Appliances (Pvt) LimitedPrincipal activities of Regnis Appliances (Pvt) Limited are manufacturing and assembling of Washing Machines, producing plastic components for Refrigerators and Plastic Chairs.

SubsidiarySinger Digital Media (Pvt) LimitedThe principal activity of the Company is marketing mobile and smart phones. SubsidiarySinger Business School (Pvt) Limited The principal activity of the Company is provisioning of educational services.

SubsidiaryDomus Lanka (Pvt) LimitedDomus Lanka (Pvt) Limited was incorporated on 4th January 2018 (formerly known as D.V.D. Lanka (Pvt) Limited. The principal activity of the Company is carrying on the business of designing, manufacturing and trading furniture. However no commercial operations have been commenced as of the reporting period.

1.1.4 Parent EnterpriseThe Company’s Parent undertaking is Hayleys PLC.

1.1.5 Number of EmployeesThe number of employees of the Group at the end of the year was 2,798 (2017/18 – 2,617), Company – 1,827 (2017/18 – 1,781).

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1.2 Basis of Accounting1.2.1 Statement of ComplianceThe Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (hereinafter referred to as SLFRSs/LKASs ) issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the requirements of the Companies Act No. 07 of 2007.

1.2.2 Responsibility for Financial StatementsThe Board of Directors is responsible for preparation and presentation of the Financial Statements of the Company as per the provisions of the Companies Act No. 07 of 2007 and Sri Lanka Accounting Standards. The Directors’ Responsibility over Financial Statements is set out in detail in the Statement of Directors’ Responsibility.

1.2.3 Approval of Financial StatementsThe Financial Statements for the year ended 31st March 2019 were authorised for issue in accordance with a resolution of the Board of Directors on 16th May 2019 .

1.2.4 Basis of Measurement The Financial Statements have been prepared on accrual basis and under the historical cost convention, except for financial assets at FVOCI financial liabilities at PNL (FVTPL) and items of Property, Plant and Equipment, which are measured at fair value and Defined Benefit Plans which are measured at present value of the Retirement Benefit Obligations as explained in the respective Notes to the Financial Statements.

1.2.5 Functional and Presentation CurrencyThe Financial Statements are presented in Sri Lankan Rupees which is the functional currency of the Company and its Subsidiaries.

1.2.6 Use of Estimates and JudgementsThe preparation of the Financial Statements in conformity with SLFRSs/LKASs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the Financial Statements is included in the following Notes:

zz Note 11 – Valuation of Land and Building

zz Note 12 – Measurement of Intangible Assets

zz Note 16 – Provision for Inventories

zz Note 18 – Impairment of Trade and other receivables

zz Note 9/26 – Current Tax and Deferred Tax assets and Liabilities

zz Note 27 – Measurement of Employee Benefit Obligations

zz Note 29 – Provision for Warranty

zz Note 36 – Financial Instrument

zz Note 37 – Commitments and Contingencies

Measurement of Fair ValueA number of the Group’s accounting policies and disclosures require the measurement of fair value for both financial and non-financial assets and liabilities.

The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to Measure fair values, The Company assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of SLFRSs/LKASs, including the level in the fair value hierarchy in which such valuations should be classified .

Further, the external valuers are involved for valuation of significant assets, such as land and building. Selection criteria for external valuers include market knowledge, reputation, independence and whether professional standards are maintained. The Group decides, after discussions with the external valuers, which valuation techniques and inputs to use for individual assets

Significant valuation issues are reported to the Group’s Audit Committee. When measuring the fair value of an asset or liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly (i.e. prices) or indirectly (i.e. derived from prices)

• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest input level that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

1.2.7 Materiality and AggregationEach material class of similar items is presented separately in the Consolidated Financial Statements. Items of a dissimilar nature or function are presented separately unless they are immaterial as permitted by the Sri Lanka Accounting Standard – LKAS 1 on “Presentation of Financial Statements”.

1.2.8 Going ConcernThe Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future, and they do not intend either to liquidate or cease trading.

1.2.9 Comparative InformationThe amounts presented in the Financial Statements are not entirely comparable due to changes of the reporting period. Please refer Note 1 for further clarifications.

2. Significant Accounting PoliciesThe Company has applied SLFRS 15 and SLFRS 9 from 1st April 2018. Due to the transition methods chosen by the Company in applying these standards, comparative information throughout these Financials Statements has not been restated to reflect the requirements of the new standards.

Except for the above, the accounting policies set out below have been applied consistently to all periods presented in these Financial Statements.

Other significant accounting policies not covered with individual notes.Following accounting policies, which have been applied consistently by the Group, are considered to be significant but not covered in any other sections.

Current versus non-current classification The Group presents assets and liabilities in Statement of Financial Position based on current/non-current classification.

An asset is current when it is:

• Expected to be realised or intended to be sold or consumed in the normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when it is:

• It is expected to be settled in the normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.

All other liabilities are classified as non-current.

2.1 Basis of Consolidation2.1.1 SubsidiariesSubsidiaries are entities controlled by the Group. The Group “controls” an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Financial Statements of Subsidiaries are included in the Consolidated Financial Statements from the date on which control commences until the date when control ceases.

2.1.2 Non-Controlling Interests (NCI)NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Changes in the Group’s interest in a Subsidiary that do not result in a loss of control are accounted for as equity transactions.

2.1.3 Loss of ControlWhen the Group losses control over Subsidiary derecognises the assets and liabilities of the Subsidiary, any non-controlling interests and other components of equity. Any surplus or deficit arising on the loss of control is recognised in the profit or loss. Any interest retains in the previous Subsidiary, is measured at fair value as at the date that control is lost.

2.1.4 Interest in Equity Accounted InvesteesThe Group’s interest in equity accounted investees comprise interest in Associate. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. Interests in Associates are accounted for using the equity method. They are initially recognised at cost, which include transaction cost. Subsequent to initial recognition the Consolidated Financial

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Statements includes the Group’s share of profit or loss and Other Comprehensive Income of equity accounted investees, until the date on which significant influence ceases.

2.1.5 Transactions Eliminated on ConsolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

2.2 Foreign Currency TransactionsTransactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in profit and loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.

2.3 Property, Plant and Equipment2.3.1 Recognition and MeasurementItems of property, plant and equipment are measured at cost/fair value, less accumulated depreciation and any accumulated impairment losses.

If a significant part of an item of Property, Plant and Equipment has different useful lives, then they are accounted for as separate items (major components) of Property, Plant and Equipment. Any gain or loss on disposal of an item of Property, Plant and Equipment is recognised in profit or loss.

(a) Cost ModelThe Group applies the cost model to Property, Plant and Equipment except for freehold land and buildings.

(b) Revaluation ModelThe Group applies the revaluation model to the entire class of freehold land and buildings. A revaluation is carried out when there is a substantial difference between the fair value and the carrying amount of the property, and is undertaken by professionally qualified valuers. Group reviews its assets once in two years.

Increases in the carrying amount on revaluation is recognised in other comprehensive income and accumulated in equity in the revaluation reserve, unless it reverses a previous revaluation decrease relating to the same asset, which was previously recognised as an expense. In these circumstances the increase is recognised as income to the extent of the previous write down.

Decreases in the carrying amount on revaluation that offset previous increases of the same individual asset are charged against revaluation reserve directly in equity. All other decreases are recognised in profit and loss.

The relevant portion of the revaluation reserve is transferred to retained earnings as the asset is depreciated with the balance being transferred on ultimate disposals.

(c) Subsequent Costs The cost of replacing part of an item of Property, Plant and Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within that part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of Property, Plant and Equipment are recognised in profit and loss as incurred.

(d) DepreciationDepreciation is calculated to write-off the cost of items of Property, Plant and Equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Land is not depreciated.

The estimated useful lives are as follows:

Freehold Buildings Over 38 to 50 years

Motor Vehicles Over 5 to 7 years

Furniture and Equipment Over 10 years

Plant and Machinery Over 10 years

EDP Equipment Over 5 to 10 years

Improvement on Leasehold Premises Over 4 to 10 years

Shop Furniture and Equipment Over 7 years

EDP Equipment – Computer Servers

Over 7 years

Depreciation of an asset commences when the asset is available for use and ceases at the earlier of the date the asset is classified as held-for-sale and the date that the asset is derecognised.

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Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

2.3.2 Intangible Assets(a) Recognition and MeasurementAn intangible asset is recognised if it is probable that future economic benefits will flow to the entity and the cost of the asset can be measured reliably in accordance with LKAS 38 – on “Intangible Assets”. Intangible assets with finite useful lives are measured at cost, less accumulated amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed to be either finite or indefinite.

(b) Subsequent Expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands are recognised in profit or loss as incurred.

(c) AmortisationIntangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. Amortisation expense on intangible assets with finite lives is recognised in profit and loss on a straight-line basis over the estimated useful lives, from the date they are available for use.

The estimated useful lives of intangible assets with finite lives are as follows:

The Class of Intangible Assets Useful Life

Computer Software 10 years

Other Intangible Assets Externally Acquired 5 years

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangible assets are not amortised.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the

net disposal proceeds and the carrying amount of the asset and are recognised in profit and loss when the asset is derecognised.

Intangible assets with indefinite useful lives represent trade marks purchased and were recorded at cost. These intangible assets are assessed for impairment annually.

2.4 Financial Instruments(a) Financial Assets(i) Recognition and MeasurementA financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity.

Receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Policy Applicable from 1st April 2018

(ii) Classification and subsequent measurement of financial assetsOn initial recognition, a financial asset is classified as measured at: amortised cost; fair value through other comprehensive income (FVOCI) – debt investment; fair value through other comprehensive income (FVOCI) – equity investment; or fair value through profit or loss (FVTPL).

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

– it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

– its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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Group financial assets classified and measured at amortised cost are limited to its Non Current financial Assets – Investments in debt instruments ,other receivables, short-term investments and cash & cash equivalent. A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

– it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

– its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Group has not designated any debt instruments as FVOCI.

On initial recognition of an equity investment that is not held-for-trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis. These instruments comprise quoted and unquoted shares that had been previously classified as Available for sale under LKAS 39.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

The Group has not designated any equity investments as FVTPL.

zz Financial assets – Business model assessmentThe Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

zz the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

zz how the performance of the portfolio is evaluated and reported to the Group’s management;

zz the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

zz how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

zz the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

zz Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest.

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

– contingent events that would change the amount or timing of cash flows;

– terms that may adjust the contractual coupon rate, including variable-rate features;

– prepayment and extension features; and

– terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par

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amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

zz Financial assets – Subsequent measurement and gains and losses

Financial assets at FVTPL

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

Financial assets at amortised cost

These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Policy Applicable before 1st April 2018

(ii) Classification and subsequent measurement of financial assets (Continued)

At inception, a financial asset is classified in one of the following categories:

– Loans and Receivables

– Held-to-Maturity

– Available-for-Sale

– At Fair Value through Profit or Loss

As at the year end the Group did not have assets categorised as fair value through profit or loss.

2.4.1.1 Held-to-Maturity Financial AssetsA non-derivative financial asset with fixed or determinable payments with fixed maturity where Group intends to hold to maturity is classified under this category.

Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition held-to-maturity financial assets are measured at amortised cost using the effective interest method.

Held-to-maturity financial assets had comprised of treasury bills, treasury bonds and debenture investments.

2.4.1.2 Loans and ReceivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise of hire purchase and lease receivable, consumer loans, vehicle loans, distress loans and temporary refund loans, related party loans, staff loans, deposits with banks, cash and cash equivalents and trade and other receivables.

2.4.1.3 Available-for-Sale Financial AssetsAvailable-for-sale financial assets are non-derivative financial assets that are recognised as available-for-sale or not classified in any previous categories. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, are recognised in the Other Comprehensive Income and presented in the available-for-sale reserve in equity. When an investment is derecognised, the cumulative gain or loss in Other Comprehensive Income is transferred to profit or loss.

Available-for-sales financial assets comprise equity investments.

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(c) Financial liabilities

Classification, subsequent measurement and gain and lossesFinancial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held – for – trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

(iii) Derecognition

Financial assetsThe Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.

Financial liabilitiesThe Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

(iv) OffsettingFinancial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

2.4.2 Non-Derivative Financial LiabilitiesThe Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Group classifies non-derivative financial liabilities into other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise interest-bearing borrowings, bank overdrafts, amount due to related parties, security deposits, trade and other payables and other financial liabilities due to customers.

Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the Statement of Cash Flows.

2.4.3 Derivative financial instrumentsThe Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if certain criteria are met.

Derivatives are initially measured at fair value; any directly attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.

2.4.4 Stated CapitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

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2.4.5 Impairment2.4.5.1 Policy Applicable from 1st April 2018

(a) Financial Assets The Group except for Singer (Finance) PLC recognises loss allowances for ECLs on:

– financial assets measured at amortised cost;

– debt investments measured at amortised cost

– equity investments measured at FVOCI

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12-month ECLs:

– debt securities that are determined to have low credit risk at the reporting date; and

– other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables is always measured at an amount equal to lifetime ECLs.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the group’s historical experience and informed credit assessment and including forward-looking information.

The Group considers a financial asset to be in default when:

– the borrower is unlikely to pay its credit obligations to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

zz Measurement of ECLs ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

zz Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets carried at amortised cost and equity investments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:

– significant financial difficulty of the borrower or issuer;

– a breach of contract such as a default in payments

– the restructuring of a loan or advance by the Company on terms that the Company would not consider otherwise;

– it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

– the disappearance of an active market tor a security because of financial difficulties.

zz Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI. As at the year end the Group did not have assets categorised as FVOCI.

zz Write-off The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount based on historical experience of recoveries of similar assets. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures to recovery of amounts due.

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Singer Finance (Lanka) PLCThe Company recognises loss allowances for ECL on the following financial instruments that are not measured at FVTPL:

– financial assets that are debt instruments;

– lease and loan receivables;

– financial guarantee contracts issued; and

– loan commitments issued.

No impairment loss is recognised on equity investments.

The Company measures loss allowances at an amount equal to lifetime ECL, except for the following,

for which they are measured as 12-month ECL:

– debt investment securities that are determined to have low credit risk at the reporting date; and

– other financial instruments (other than lease receivables) on which credit risk has not increased significantly since their initial recognition.

Loss allowances for lease receivables are always measured at an amount equal to lifetime ECL. The Company considers a debt investment security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘investment grade’. The Company does not apply the low credit risk exemption to any other financial instruments.

Financial instruments for which a 12-month ECL is recognised are referred to as “Stage 1 financial instruments”.

Life-time ECL are the ECL that result from all possible default events over the expected life of the financial instrument. Financial instruments for which a lifetime ECL is recognised but which are not credit-impaired are referred to as “Stage 2 financial instruments”.

Measurement of ECLECL are a probability-weighted estimate of credit losses. They are measured as follows:

– financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive);

– financial assets that are credit-impaired at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows;

– undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the Company if the commitment is drawn down and the cash flows that the Company expects to receive; an

– financial guarantee contracts: the expected payments to reimburse the holder less any amounts that the Company expects to recover.

The key inputs used for measurement of ECL is likely to be the term structures of the following variables:

Probability of Default (PD)PD estimates are estimates at a certain date, which are calculated based on statistical models, and assessed using various categories based on homogeneous characteristics of exposures. These statistical models are based on internally compiled data comprising both quantitative and qualitative factors. The Company forecast PD by incorporating forward looking economic variables (unemployment, GDP growth, infation, interest rate and using lag effect of these variables).

Loss Given Default (LGD)LGD is the magnitude of the likely loss if there is a default. The Company estimates LGD parameters based on the history of recovery rates of claims against defaulted counterparties.

Exposure at Default (EAD)EAD represents the expected exposure in the event of a default. The Company derives the EAD from the current exposure to the counterparty and potential changes to the current amount allowed under the contract including amortisation. The EAD of a financial asset is its gross carrying amount.

The Company has used these parameters from internally-developed statistical models using historical data. All inputs were adjusted to reflect forward-looking information and future economic scenarios.

Impairment losses and releases are accounted for and disclosed separately from modification losses or gains that are accounted for as an adjustment of the financial asset’s gross carrying value.

The mechanics of the ECL method are summarised below:

• Stage 1: The 12month ECL is calculated as the portion of LTECLs that represent the ECLs that result from default events on a financial instrument that are possible within the 12 months after the reporting date. The Company calculates the12 month ECL allowance based on the expectation of a default occurring in the 12 months following the reporting date. These expected 12-month default probabilities are applied to a forecast EAD and multiplied by the expected LGD and discounted by an approximation to the original EIR.

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• Stage 2: When a loan has shown a significant increase in credit risk since origination, the Company records an allowance for the LTECLs. The mechanics are similar to those explained above, including the use of multiple scenarios, but PDs and LGDs are estimated over the lifetime of the instrument. The expected cash shortfalls are discounted by an approximation to the original EIR.

• Stage 3: For loans considered credit-impaired the Company recognises the lifetime expected credit losses. The method is similar to that of Stage 2 assets, with the PD set at 100%.

Restructured financial assetsIf the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a new one due to financial difficulties of the borrower, then an assessment is made of whether the financial asset should be derecognised and ECL are measured as follows.

– If the expected restructuring will not result in derecognition of the existing asset, then the expected cash flows arising from the modified financial asset are included in calculating the cash shortfalls from the existing asset.

– If the expected restructuring will result in derecognition of the existing asset, then the expected fair value of the new asset is treated as the final cash flow from the existing financial asset at the time of its derecognition. This amount is included in calculating the cash shortfalls from the existing financial asset that are discounted from the expected date of derecognition to the reporting date using the original effective interest rate of the existing financial asset.

Credit-impaired financial assetsAt each reporting date, the Company assesses whether financial assets carried at amortised cost and debt financial assets carried at FVOCI, and finance lease receivables are credit-impaired (referred to as ‘Stage 3 financial assets’). A financial asset is “credit-impaired” when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

– significant financial difficulty of the borrower or issuer;

– a breach of contract such as a default or past due event;

– the restructuring of a loan or advance by the Company on terms that the Company would not consider otherwise;

– it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or

– the disappearance of an active market for a security because of financial difficulties.

A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced significantly and there are no other indicators of impairment. In addition, a retail loan that is overdue for 180 days or more is considered credit-impaired even when the regulatory definition of default is different.

In making an assessment of whether an investment in sovereign debt is credit-impaired, the Company considers the following factors.

– The market’s assessment of creditworthiness as reflected in the bond yields.

– The rating agencies’ assessments of creditworthiness.

– The country’s ability to access the capital markets for new debt issuance.

– The probability of debt being restructured, resulting in holders suffering losses through voluntary or mandatory debt forgiveness.

– The international support mechanisms in place to provide the necessary support as “lender of last resort” to that country, as well as the intention, reflected in public statements, of governments and agencies to use those mechanisms. This includes an assessment of the depth of those mechanisms and, irrespective of the political intent, whether there is the capacity to fulfil the required criteria.

Presentation of allowance for ECL in the statement of financial position.Loss allowances for ECL are presented in the Statement of Financial Position as follows:

– financial assets measured at amortised cost as a deduction from the gross carrying amount of the assets;

– loan commitments and financial guarantee contracts: generally, as a provision;

– where a financial instrument includes both a drawn and an undrawn component, and the Company cannot identify the ECL on the loan commitment component separately from those on the drawn component: the Company presents a combined loss allowance for both components. The combined amount is presented as a deduction from the gross carrying amount of the drawn component. Any excess of the loss allowance over the gross amount of the drawn components presented as a provision; and

– debt instruments measured at FVOCI. - no loss allowance is recognised in the Statement of Financial Position because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed and is recognised in the fair value reserve.

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Write-offLoans and debt securities are written off (either partially or in full) when there is no reasonable expectation of recovering a financial asset in its entirety or a portion thereof. This is generally the case when the Company determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is carried out at the individual asset level. Recoveries of amounts previously written off are included in “impairment losses on financial instruments” in the statement of profit or loss and OCl.

Financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

Policy Applicable before 1st April 2018Impairment of Non-Derivative Financial AssetsFinancial assets other than those measured at fair value are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash from the asset have been affected.

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets are impaired. A financial asset or a group of financial assets are deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset and that loss event have an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

(a) Impairment Losses on Financial Assets Carried at Amortised CostThe Group except for Singer Finance (Lanka) PLC considers evidence for these assets at individual asset level. All individually significant assets are individually assessed for impairment.

Singer Finance (Lanka) PLC considers evidence of impairment for receivables at collective level. Loans and receivables are collectively assessed for impairment by grouping together receivables with similar risk characteristics. In assessing collective impairment, the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for Management’s judgements as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

Further, higher purchase debtors of Singer (Sri Lanka) PLC are also assessed for impairment at collective level.

Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. If a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. When the Company considers that there is no realistic process of recovery of the asset, the relevant amounts are written off.

Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset’s original effective interest rate.

When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written-off.

Impairment losses are recognised in profit or loss and reflected in an allowance account against loans and advances. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(b) Impairment Losses on Available-for-SaleImpairment losses on available-for-sale investment securities are recognised by the reclassifying losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation), and the current fair value, less any impairment loss previously recognised in profit or loss. If the fair value of an impaired available-for-sale debt security subsequently increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed through profit or loss, otherwise it is reversed through Other Comprehensive Income.

(c) Impairment – Equity-Accounted InvesteesAn impairment in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss, and is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

2.4.5.2 Impairment of Non-Financial AssetsThe carrying amount of the Group’s non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is an indication of impairment. If any such indication exists or when annual impairment testing for an asset is required, then the asset’s recoverable amount is estimated.

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For impairment testing, assets are grouped into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash flows of other assets or other cash-generating units (CGU). Goodwill arising from business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value, less costs to sell, an appropriate valuation model is used.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised n profit and loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.4.6 LeasesThe determination of whether an arrangement is lease or it contains a lease, is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

2.4.6.1 Operating Leases

(a) Operating Leases – Company as a LesseeLeases that do not transfer to the Company substantially all risks and benefits incidental to ownership of the leased assets are operating leases. Operating lease payments are recognised as an expense in the Income Statement on a straight-line basis over the lease term. Contingent rental payable is recognised as an expense in the period in which they are incurred.

(b) Operating Leases – Company as a LessorLeases where the Company does not transfer substantially all risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

Contingent rents are recognised as revenue in the period in which they are earned.

2.4.6.2 Finance Leases

(a) Finance Leases – Company as a LesseeFinance leases that transfer substantially all risks and benefits incidental to ownership of the leased item to the Company, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

(b) Finance Leases – Company as a LessorWhen the Company is the lessor under the finance leases the amounts due under the finance leases, after deduction of unearned charges, are included in “lease rentals receivables”, as appropriate. The finance income receivable is recognised in “interest income” over the periods of the leases so as to give a constant rate of return on the net investment in the leases.

2.5 InventoriesInventories are measured at the lower of cost and net realisable value, after making due allowances for obsolete and slow-moving items. Net realisable value (NRV) is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. Group assess the NRV by giving consideration to future demand and condition of inventory and make adjustments to the value by making required provisions.

The cost of each category of inventory is determined on the following basis:

Raw Materials At actual cost on first-in first-out basis

Finished Goods (Excluding Factory)

Weighted average cost

Finished Goods and Work-in-Progress at Piliyandala Factory

At the cost of direct materials, direct labour and an appropriate proportion of fixed production overheads, based on normal operating capacity

Goods-in-Transit At actual cost

Supplies and Parts Weighted average cost

Repossessed Goods 75% of its weighted average cost

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2.6 ProvisionsA provision is recognised in the Statement of Financial Position when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the provision can be measured reliably in accordance with LKAS 37 – “Provisions, Contingent Liabilities and Contingent Assets”. The amount recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation at the date. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is determined based on the present value of those cash flows.

2.6.1 Provisions for WarrantiesA provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighing of all possible outcomes against their associated probabilities. Provision is utilised to settle the actual claims made by the customers.

2.6.2 Dividend PayablesDividends on ordinary shares are recognised as a liability and deducted from equity when they are recommended and declared by the Board of Directors.

2.6.3 Deposits due to Customers These include term deposits and certificates of deposits of Singer Finance (Lanka ) PLC.

Subsequent to initial recognition, deposits are measured at their amortised cost using the effective interest method, except where the Company designates liabilities at fair value through profit or loss. Interest paid/payable on these deposits recognised in profit or loss

2.6.3 Capital Commitments and ContingenciesCapital commitments and contingent liabilities of the Group are disclosed in the respective Notes, to the Financial Statements.

2.7 Employee Benefits

2.7.1 Defined Benefit PlanThe Group net obligation in respect of defined benefit plan is calculated by estimating the amount of future benefits that employees have earned in current and prior periods discounting that amount.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses are recognised

immediately in OCI. The Group determines the net interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then – net defined liability, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

The liability is not externally funded.

2.7.2 Defined Contribution

Plans – Employees’ Provident Fund/Mercantile Services Provident Society and Employees’ Trust Fund A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Employees are eligible for contributions to Employees’ Provident Fund/Mercantile Services Provident Society and Employees’ Trust Fund in line with the respective statutes and regulations. The Company contributes 12%, 12% and 3% of gross emoluments of employees to the Employees’ Provident Fund, Mercantile Services Provident Society and the Employees’ Trust Fund, respectively and is recognised as an expense in profit and loss in the periods during which services are rendered by employees.

2.7.3 Short-Term BenefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be measured reliably.

2.8 Statement of Profit or Loss and Other Comprehensive Income

2.8.1 Revenue RecognitionThe Group has initially applied SLFRS 15- “Revenue from Contracts with Customers” from 1st April 2018.

Performance obligations and revenue recognition policies

SLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.

As per the standard, revenue is measured based on the consolidation specified in a contact with a customer. The Group recognises revenue when it transfers control over a good or service to a customer. Determining the timing of the transfer of control at a point in time or over time require judgment.

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2.8.1.1 Disaggregation of Revenue SLFRS 15 requires an entity to disaggregate revenue recognised from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The company’s contracts with customers are in similar nature and revenue from these contracts are not significantly affected by economic factors apart from the product and service categories. The Company believes objective of this requirement will be met by using two type of category – timing of revenue and type of goods and services (Note 3.b. ii).

Type of product/service Nature and timing of satisfaction of performance obligations, including significant payment terms

Revenue recognition under SLFRS 15 (applicable from 1st April 2018)

Revenue recognition under LKAS 18 (applicable prior to 1st April 2018)

Sale of Goods (Normal Trading Transactions)

Company sells goods to the customers on cash or credit basis. At the time of delivery of the goods to the customers, Company meets its performance obligation.

Revenue is recognised when the goods are delivered to the customers.

Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the customers.

Sale of Goods (Hire Purchase Transactions)

Company sells its products to its customers by entering into Hire Purchase Agreements. At the time of delivery of the goods to the customers, Company meets its performance obligations.

Revenue is recognised when the goods are delivered to the customers. Transaction price is estimated by adjusting the consideration for the time value of money. As the HP agreements are based on market interest rates the cash price and the adjusted consideration has no significant difference.

At the time of effecting hire sales the cash sales value is recognised as sales.

Sale of Goods (Consignment Arrangements)

The Company sells goods to the customers though consignment arrangements with third parties. At the time of delivering the goods to the end-customers, the Company meets its performance obligations.

At the time of delivering the goods to the end-customers, the revenue is recognised.

At the time of delivering the goods to the end-customers, the revenue is recognised.

Extended Warranty Income

Company provides extended warranty for certain products by charging additional consideration from the client. The Company meets its performance obligations over the period of extended warranty.

The extended warranty fee income (net of taxes) is recognised over the period of contact. Unrecognised income is accounted for as deferred revenue.

A portion of extended warranty fee income is recognised upfront to the revenue based on the pre-determined rate. Unrecognised income is accounted for as deferred revenue.

Income on Suraksha & Service Fees

When the Company sells goods under hire purchases, an additional fee is charged as Suraksha and service fee. This fee is calculated based on the value of the product. The Company meets its performance obligations over period of hire purchase contact.

Revenue is recognised over the period of hire purchase contact using effective interest rate. Unrecognised income is accounted for as unearned income.

Revenue is recognised over the period of hire purchase contact using effective interest rate. Unrecognised income is accounted for as unearned income.

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Type of product/service Nature and timing of satisfaction of performance obligations, including significant payment terms

Revenue recognition under SLFRS 15 (applicable from 1st April 2018)

Revenue recognition under LKAS 18 (applicable prior to 1st April 2018)

Revenue on Customer Loyalty Programme

The Company provides loyalty points where they could redeem such points for future purchases.

Revenue is deferred at the time of earning the loyalty points based in the expected redemption rate. Based on the actual redemptions the revenue is recognised.

Revenue recognised at the point of redeeming the points.

Installation fee charged on AC products

The Company provides AC installation services to the customers at the time of selling the AC products. The Company meets its performance obligations over period of AC Installation contacts.

Based on the stage of completion, installation fee is charged as revenue.

Based on the stage of completion, installation fee is charged as revenue.

2.8.2 Revenue Recognition Policy of Singer Finance PLC

(a) Hire Purchase, Lease , Loans and AdvancesThe excess of aggregated contract receivables over the cost of the hired assets constitutes the total unearned income at the commencement of a contract. The unearned income is recognised as revenue as it is earned , using the effective interest rate method.

(b) Interest Interest income and expense are recognised in profit or loss using the Effective Interest Rate (EIR) method. The EIR is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability. When calculating the EIR, the Company estimates future cash flows considering all contractual terms of the financial instrument, but not future credit losses.

The calculation of the EIR includes transaction costs and fees and points paid or received that are an integral part of the EIR. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or financial liability.

Interest income and expense presented in the Income Statement include:Interest on financial assets and financial liabilities measured at amortised cost calculated using EIR method; Over Due Interest have been accounted for on a cash received basis.

(c) Fees and Commission Income and ExpenseFees and commission income and expense that are integral to the EIR on a financial asset or liability are included in the measurement of the EIR. Other fees and commission income are recognised as the related services are performed.

(d) Net Gain/(Loss) from TradingNet gain/(loss) from trading’ comprise gains less losses related to trading assets and liabilities, and include all realised and unrealised fair value changes and dividends.

2.8.3 Regulatory Provisions

(a) Deposit Insurance SchemeIn terms of the Finance Companies Direction No. 2 of 2010 “Insurance of Deposit Liabilities” issued on 27th September 2010 all Registered Finance Companies are required to insure their deposit liabilities in the Deposit Insurance Scheme operated by the Monetary Board in terms of Sri Lanka Deposit Insurance Scheme Regulations No. 1 of 2010 issued under Sections 32A to 32E of the Monetary Law Act with effect from 1st October 2010.

Deposits to be insured include demand, time and savings deposit liabilities and exclude the following.

zz Deposit liabilities to member institutions

zz Deposit liabilities to Government of Sri Lanka

zz Deposit liabilities to shareholders, directors, key management personnel and other related parties as defined in Finance Companies Act Direction No. 03 of 2008 on Corporate Governance of Registered Finance Companies

zz Deposit liabilities held as collateral against any accommodation granted

zz Deposit liabilities falling within the meaning of dormant deposits in terms of the Finance Companies Act, funds of which have been transferred to Central Bank of Sri Lanka Registered Finance Companies are required to pay a premium of 0.15% on eligible deposit liabilities as at end of the month to be payable within a period of 15 days from the end of the respective month.

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(b) Debt Securities Issued and Subordinated Term DebtsThese represent the funds borrowed by the Company for long-term funding requirements. Subsequent to initial recognition debt securities issued are measured at their amortised cost using the effective interest method, except where the Company designates debt securities issued at fair value through profit or loss. Interest paid/payable is recognised in profit or loss.

2.8.4 Reserve FundSinger Finance (Lanka) PLC is maintaining a reserve fund in compliance with Direction No. 01 of 2003 – Central Bank (Capital Funds) issued to Finance Companies and it will be used for only the purpose specified in the said Direction above. The details of the reserve fund are disclosed in Note 23.1.

2.8.5 Expenditure Recognition(a) Expenses are recognised in Profit and Loss on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the Property, Plant and Equipment in a state of efficiency has been charged to income in arriving at the profit for the year.

(b) For the purpose of presentation of the Income Statement, the Directors are of the opinion that “function of expenses method” presents fairly the elements of the Company’s performance and hence such presentation method is adopted.

2.8.6 Net Finance CostFinance income comprises interest income on funds invested interest income from related parties and which is recognised as it accrues in profit or loss, using the effective interest rate method.

Finance cost comprises interest payable on borrowings, interest on security deposits. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

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

2.8.7 Income TaxIncome tax expense comprises both current and deferred tax. Income tax expense is recognised in profit and loss, except to the extent that it relates to items recognised directly in equity, or in Other Comprehensive Income.

(a) Current TaxThe 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 TaxationDeferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on tax laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised for unused tax losses and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and is reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset deferred tax assets and liabilities and when the deferred tax relates to income tax levied on the same tax authority on the same taxable entity or on different tax entity but then intends to settle relevant tax liabilities and assets on a net basis or their tax assets and liabilities will be simultaneously realised.

Tax withheld on dividend income from Subsidiaries and Associates is recognised as an expense in the Consolidated Income Statement at the same time as the liability to pay the related dividend is recognised.

(c) Value Added Tax (VAT) on Financial Services VAT on Financial Services is calculated in accordance with the amended Value Added Tax (Amendment) Act, No. 20 of 2016. The base for the computation of Value Added Tax ion Financial Services is the accounting profit before income tax adjusted for the economic depreciation and emolument of employees computed on prescribed rate.

(d) Nation Building Tax on Financial Services (NBT)With effect from 1st January 2014, NBT of 2% was introduced on supply of financial services via an amendment to the NBT Act No. 09 of 2009. NBT is chargeable on the same base used for calculation of VAT on Financial services as explained in notes to the Financial Statements.

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(e) Crop Insurance LevyAs per the provisions of the Section 14 of the Finance Act No. 12 of 2013, the CIL was introduced with effect from April 01, 2013 and is payable to the National Insurance Trust Fund. Currently, the CIL is payable at 1% of the profit after tax.

(f) Debt Repayment Levy (DRL)As per the Finance Act No. 35 of 2018, with effect from 1st October 2018, DRL of 7% was introduced on the value addition attributable to the supply of financial services by each financial institution. DRL is chargeable on the same base used for calculation of VAT on financial services as explained in Note 3.16 above.

(g) Withholding Tax on Dividends Distributed by the CompanyWithholding tax that arises from the distribution of dividends by the Company is recognised at the time the liability to pay the related dividend is recognised.

2.9 Events After the Reporting PeriodAll material events after the reporting date have been considered and where necessary adjustments made in these Financial Statements.

2.10 Earnings Per ShareThe Group presents basic Earnings Per Share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the Profit or Loss attributable to ordinary shareholders of the Company by the weighted number of ordinary shares outstanding during the period.

2.11 Segment ReportingAn operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. All operating results are reviewed regularly by the Group Chief Executive Officer to make decisions regarding resources to be allocated to the segments and to assess its performance and for which discrete finance information is available.

Segment results that are reported to the Group CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to acquire Property, Plant and Equipment and intangible assets other than goodwill.

Segment information is presented in the respective Notes to the Financial Statements.

2.12 Statement of Cash FlowsThe Cash Flow Statement has been prepared using the indirect method.

2.13 Changes in Accounting PolicyThe Company has applied SLFRS 15 (refer sub note A) and SLFRS 9 (refer sub note B) from 1st April 2018.A number of other new standards are also effective from 1st April 2018 but they do not have material impact on companies financial statements due to the transition methods chosen by the Group in applying these standards, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standards.

A. SLFRS 15 Revenue from Contracts with CustomersSLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced LKAS 18 Revenue, LKAS 11 Construction contracts and related interpretations. Under SLFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer control-at a point in time or over time- requires judgment.

The Company has adopted SLFRS 15 using the cumulative effect method (without practical expedients), with the effect of initially applying this standard recognised at the date of initial application (i.e. 1st April 2018). Accordingly, the information presented for 2017 has not been restated – i.e. it is presented, as previously reported, under LKAS 18, and related interpretations, additionally, the disclosures requirements in SLFRS 15 have not generally been applied to comparative information.

The effect of initially applying these standards is mainly attributes to the following,

zz Earlier recognition of revenue from extended warranties

zz Earlier recognition of revenue from option to purchase additional goods

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The following table summarises the impact net of tax of transition to SLFRS 15 on retained earnings Group/Company as at 1st April 2018.

Group Company

Retained Earnings Impact of adopting SLFRS 15 as at

1st April 2018Rs.

Impact of adopting SLFRS 15 as at

1st April 2018 Rs.

On over the time recognition of Extended Warranty 169,198,605 169,198,605

Impact on over the time recognition of Loyalty 57,420,784 57,420,784

(Less) Related Tax (38,540,820) (38,540,820)

Total Impact on Retained Earnings as at 1st April 2018 188,078,569 188,078,569

The following tables summarise the impact of adopting SLFRS 15 on the Group/Company’s Statement of Financial Position as at 31st March 2019 and its Profit or Loss for the year then ended for each line item affected.

Impact on Consolidated statement of financial position

Amounts withoutadoption of

SLFRS 15 Rs.

Adjustment As Reported

Rs.

31st March 2019

Assets

Deferred Tax Assets – 57,905,549 57,905,549

Other Assets – – 57,984,444,907

Total assets 57,926,539,359 – 58,042,350,466

Revenue reserves 5,210,729,482 (174,898,866) 5,035,830,616

Non-controlling interest 1,508,546,318 – 1,508,546,318

Others 1,907,267,831 – 1,907,267,831

Equity 8,626,543,631 – 8,451,643,766

Other Non-Current Liabilities – 143,126,349 143,126,349

Others 4,037,916,677 – 4,037,916,677

Non-Current Liabilities 4,181,043,026 – 4,181,043,026

Trade Payables 7,257,359,014 63,679,183 7,321,038,197

Deferred Revenue 186,536,023 1,508,714 188,044,737

Tax Liability – 24,490,169 24,490,169

Others 27,853,709,603 – 27,853,709,603

Current Liabilities 28,188,644,067 – 35,409,663,665

Total Equity, Minority Interest and Liabilities 57,926,539,359 – 58,042,350,466

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Impact on Company statement of financial position

Amounts without\adoption of

SLFRS 15 Rs.

Adjustment As Reported

Rs.

31st March 2019

Assets

Deferred Tax Assets – 57,905,549 57,905,549

Other Assets – – 37,045,583,249

Total Assets 37,045,583,249 – 37,103,488,798

Revenue reserves 3,026,500,012 (174,898,866) 2,851,601,146

Others 1,784,381,091 – 1,784,381,091

Equity 4,810,881,103 – 4,635,982,237

Other Non-Current Liabilities – 143,126,349 143,126,349

Others 9,422,743,613 – 9,422,743,613

Non-Current Liabilities 9,422,743,613 – 9,565,869,962

Trade Payables 5,050,496,541 63,679,183 5,114,175,724

Deferred Revenue 181,026,045 1,508,714 182,534,759

Tax Liability – 24,490,169 24,490,169

Others 17,580,435,947 – 17,580,435,947

Current Liabilities 22,896,677,791 – 22,901,636,599

Total equity, minority interest and Liabilities 37,045,583,249 – 37,103,488,798

Impact on consolidated statement of Profit or Loss


SLFRS 15 Rs.

Adjustment As ReportedSLFRS 15

Rs.

For the year ended 31st March 2019

Revenue 58,310,926,027 194,469,213 58,505,395,240

Cost of sales (41,070,805,367) 69,159,745 (41,139,965,112)

Direct Interest Cost (1,265,014,488) – (1,265,014,488)

Gross Profit 16,100,415,639 – 16,100,415,639

Other Income 445,066,015 (107,004,324) 338,061,691

Total Administration and Selling Expense (12,441,116,410) – (12,441,116,410)

Others (3,325,231,809) – (3,325,231,809)

Income tax expenses (281,023,088) 5,125,440 (286,148,528)

Profit for the period 498,110,347 – 385,980,583

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Impact on Company Statement of Profit or Loss


SLFRS 15 Rs.

Adjustment As ReportedSLFRS 15

Rs.

For the year ended 31st March 2019

Revenue 43,423,420,216 194,469,213 43,617,889,429

Cost of sales (31,251,532,745) 69,159,745 (31,320,692,490)

Gross Profit 12,171,887,471 – 12,297,196,939

Other Income 697,070,960 (107,004,324) 590,066,636

Total Administration and Selling Expense (10,446,394,702) – (10,446,394,702)

Others (2,352,155,586) – (2,352,155,586)

Income tax expenses 56,962,592 5,125,440 51,837,152

Profit for the period 127,370,735 – 140,550,439

Key Changes to the Accounting Policies on the Adoption of IFRS 15Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determination of the timing of the transfer of control at a point or over time requires judgements.

The details of the new significant accounting policies and the nature of the changes to previous accounting policies in relation to the Company’s various goods and services are set out below:

Type of product/service New revenue/cost criteria Change from previous accounting policy

Extended Warranty Income

The extended warranty fee income (net of taxes) is recognised over the period of extended warranty. Unrecognised income is accounted for as deferred revenue.

The Company has recognised the full warranty income as revenue over the period of extended warranty without recognising a portion of revenue upfront.

Revenue on Customer Loyalty Programme

Revenue is deferred at the time of earning the loyalty points based in the expected redemption rate. Based on the actual redemptions the revenue is recognised.

Revenue is deferred at the time of earning the loyalty points based in the expected redemption rate.

B. SLFRS 9 Financial InstrumentsSLFRS 9 set out requirements for recognised and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces LKAS 39 Financial Instruments: Recognition and Measurement. As a result of the adoption of SLFRS 9, the Group has adopted consequential amendments to LKAS 1 Presentation of Financial Instruments, which require impairment of financial assets to be presented in separate line item in the statement of profit or loss and OCI. The Company has adopted consequential amendments to SLFRS 7 Financial Instruments: Disclosures that are applied to disclosures about 2019 but have not been generally applied to comparative information.

SLFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, FVOCI and FVTPL. The classification of financial assets under SLFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. SLFRS 9 eliminates the previous LKAS 39 categories of held to maturity, loans and receivables and available for sale. SLFRS 9 largely retains the existing requirements in LKAS 39 for the classification and measurement of financial liabilities.

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The Company has used an exemption not to restate comparative information for prior periods with respect to classification and measurement (including impairment) requirements. Differences in the carrying amounts of financial assets resulting from the adoption of SLFRS 9 are recognised in retained earnings as at 1st April 2018. Accordingly, the information presented for 2017/18 does not generally reflect the requirements of SLFRS 9, but rather those of LKAS 39.

The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application.

zz The determination of the business model within which a financial asset is held.

zz The designation and revocation of previous designations of certain financial assets and financial liabilities as measured at FVTPL.

zz The designation of certain investments in equity instruments not held for trading as at FVOCI.

zz If an investment in a debt security had low credit risk at the date of initial application of SLFRS 9, then the Group has assumed that the credit risk on the asset had not increased significantly since its initial recognition.

Accordingly, the following table summarises the impact, net of tax, of transition to SLFRS 9 on the opening balance of reserves, retained earnings and NCI as at 1st April 2018.

Group Company

Impact on adoption of SLFRS 9 on

opening balances Rs.

Impact on adoption of SLFRS 9 on

opening balances Rs.

(Reversal)/Charge of Impairment allowance on expected credit losses recognised under SLFRS 9 5,495,477,725 3,326,088,413

– Trade and other receivables (360,394,885) (248,222,744)

Related Tax (76,440,870) (68,900,890)

As at 1st April 2018 retained earnings after SLFRS 9 adjustment only 5,058,641,970 3,008,964,779

Non-Controlling interest as at 1st April 2018 1,349,113,963 –

(Reversal)/Charge of Impairment allowance on expected credit losses recognised under SLFRS 9 –

– Trade and other receivables (21,946,844) –

Related Tax – –

As at 1st April 2018 Non-Controlling interest after SLFRS 9 adjustment only 1,327,167 –

Group

Original classification Under LKAS 39

New classification under SLFRS 9

Original carrying amount under

LKAS 39 Rs. ’000

New carrying amount under

SLFRS 9 Rs. ’000

Financial Assets

Investments in Non Quoted equity Available For Sale Fair Value through OCI 17,061,300 17,061,300

HP receivables Loans and Receivables Amortised Cost 7,534,792,738 7,507,269,105

Lease Receivables Loans and Receivables Amortised Cost 11,383,225,323 11,344,294,699

Loan Receivables Loans and Receivables Amortised Cost 2,900,362,916 2,830,777,250

Loan Receivables Loans and Receivables Amortised Cost 788,000 788,000

Trade debtors Loans and Receivables Amortised Cost 5,361,912,649 5,134,999,363

Other Debtors Loans and Receivables Amortised Cost 1,673,053,244 1,673,053,244

Cash and Cash equivalents Loans and Receivables Amortised Cost 1,339,006,740 1,339,006,740

Total financial assets 30,210,202,910 29,847,249,701

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LKAS 39 Rs. ’000


SLFRS 9 Rs. ’000

Financial Liabilities

Trade and Other Payables Amortised Cost Amortised Cost 8,112,971,679 8,112,971,679

Derivatives Financial Liability FVTPL FVTPL 8,337,510 8,337,510

Debentures Amortised Cost Amortised Cost 6,983,551,005 6,983,551,005

Bank Loans Amortised Cost Amortised Cost 16,418,864,972 16,418,864,972

Bank Overdraft Amortised Cost Amortised Cost 2,132,691,242 2,132,691,242

Amount Due to Related Party Amortised Cost Amortised Cost 389,037,813 389,037,813

Dividend Payable Amortised Cost Amortised Cost 220,838,973 220,838,973

Total financial liabilities 34,266,293,194 34,266,293,194

Company




LKAS 39 Rs. ’000


SLFRS 9 Rs. ’000

Financial assets

Investments in Non Quoted equity Available For Sale Fair Value through OCI 17,020,000 17,020,000

Investments in Debentures Held to Maturity Amortised Cost 912,090,000 911,272,652

Related Party Loans Loans and Receivables Amortised Cost 1,219,150,767 1,217,819,977

HP receivables Loans and Receivables Amortised Cost 7,451,947,830 7,425,246,259

Amount due from Related Party Loans and Receivables Amortised Cost 185,396,027 185,396,027

Trade debtors Loans and Receivables Amortised Cost 3,979,170,189 3,795,796,884

Other Debtors Loans and Receivables Amortised Cost 1,208,065,613 1,208,065,613

Cash and Cash equivalents Loans and Receivables Amortised Cost 1,017,627,946 1,017,627,946

Total financial assets 15,990,468,372 15,742,245,628

Financial liabilities

Trade and Other Payables Amortised Cost Amortised Cost 6,003,703,094 6,003,703,094

Derivatives Financial Liability FVTPL FVTPL 8,337,510 8,337,510

Debentures Amortised Cost Amortised Cost 4,991,435,763 4,991,435,763

Bank Loans Amortised Cost Amortised Cost 11,707,742,249 11,707,742,249

Bank Overdraft Amortised Cost Amortised Cost 1,237,088,725 1,237,088,725

Amount Due to Related Party Amortised Cost Amortised Cost 3,012,216,978 3,012,216,978

Dividend Payable Amortised Cost Amortised Cost 166,754,628 166,754,628

Total financial liabilities 27,127,278,947 27,127,278,947

SLFRS 9 replaces the “incurred loss” model in LKAS 39 with an “expected credit loss” (ELC) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investment at Amortised cost,

For assets in scope of the SLFRS 9 impairment model, impairment losses are generally expected to increase and become more volatile. The Company has determined that the application of SLFRS 9’s impairment requirements at 1st April 2018 results in an additional allowances for impairment as follows.

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The following table reconcile the carrying amounts of financial assets under LKAS 39 to the carrying amounts under SLFRS 9 on transition on 1st April 2018 Group.

LKAS 39 Carrying amounts

at 31st march 2018 Rs.

Reclassification Remeasurement SLFRS 9 Carrying amounts

at 31st march 2019Rs.

Financial assets

Amortised cost

Trade and other receivable

Brought forward: trade receivables 5,361,912,649

Remeasurement (246,301,807)

Carried forward: amortised cost 5,115,610,842


Brought forward: Hire purchases 7,534,792,738




Brought forward: Loan debtors 2,900,362,916




Brought forward: lease receivable 11,383,225,323



Total Amortised cost 27,180,293,626 (382,341,279) 26,797,952,347

The following table reconcile the carrying amounts of financial assets under LKAS 39 to the carrying amounts under SLFRS 9 on transition on 1st April 2018 Company.


at 31st March 2018 Rs.

Reclassification

Rs.

Remeasurement

Rs.

SLFRS 9 Carrying amounts


Financial assets

Amortised cost


Brought forward: trade receivables 3,979,170,189




Brought forward: Hire purchases 7,451,947,830



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at 31st March 2018 Rs.

Reclassification

Rs.

Remeasurement

Rs.

SLFRS 9 Carrying amounts



Brought forward: related party 1,219,150,767

Remeasurement (1,330,790 )


Debenture

Brought forward: Debenture 912,090,000

Remeasurement (817,348)

Carried forward: amortised cost 911,272,652

Total Amortised cost 13,562,358,786 (248,222,744) 13,314,136,042

2.14 Standards issued but not yet effective

(A) SLFRS 16 Leases SLFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under LKAS – 17. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. The information gives a basis for the users of Financial Statements to assess the effect that leases have on the financial position.

SLFRS 16 is effective for annual reporting periods beginning on or after 1st January 2019, with early adoption permitted.

The Group is assessing the potential impact on its consolidated Financial Statements resulting from the application of SLFRS 16.

(B) Other standardsThe following amended standards and the interpretations are not expected to have a significant impact on the Group’s consolidated financial statements.

Effective Date – 1st January 2019

IFRIC 23 Uncertainty over Tax Treatments.

– Prepayment features with negative compensation (Amendments to SLFRS 9).

– Long-term interests in Associates and Joint Ventures (Amendments to LKAS 28).

– Plan Amendment, Curtailment or settlement (Amendment to LKAS 19).

– Annual Improvements to SLFRS Standards 2015-2017 Cycle- various standards.

– Annual Improvements to SLFRS 3-Business combinations, SLFRS 11 – Joint Arrangements, LKAS12 Income Taxes.

Effective Date – 1st January 2020

– Amendments to References to Conceptual Framework in SLFRS standards

– Amendments to LKAS 1 and LKAS 8

– Amendments to SLFRS 3

– Effective Date – 1st January 2022

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3. RevenueThe effect of initially applying SLFRS 15 on the Group’s revenue from the contracts with customers is described in Note 2.13 Due to the cumulative effect method chosen in applying SLFRS 15, comparative information has not been restated to reflect the new requirements.

(a) Revenue StreamsGroup generates revenue primarily from the sale of consumer electronic, home appliance, mobile phones, personal computer, laptops, furnitures, domestic and industrial sewing machines, agricultural equipment and provide services of financing through hire purchases, leasing, gold loans etc. (See Note 1.13 in Policies) to its customers.



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.

For fifteenmonths ended

31st March 2018Rs.

Revenue from Contracts with customers 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

Total Revenue 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

3.1 Revenue from Contracts with Customers

Sale of Goods 51,191,440,621 57,084,528,259 40,103,798,429 46,530,148,517

Rendering of Services (Note 3.2) 7,313,954,619 8,037,776,263 3,514,091,000 4,379,884,375

58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

3.2 Rendering of Services

Interest Income on Hire Purchase 2,787,475,281 3,589,628,519 2,780,170,190 3,533,706,112

Interest Income on Leasing 2,630,826,396 2,500,541,881 – –

Interest Income on Loans 837,927,774 785,572,115 – –

Service Income 1,057,725,168 1,162,033,748 733,920,810 846,178,263

7,313,954,619 8,037,776,263 3,514,091,000 4,379,884,375

(b) Disaggregation of revenue from contract with customersIn the following table, revenue from contracts with customers is disaggregated by major products, service lines and timing of revenue recognition.


(i) Major Products/Service Lines For twelve months ended

31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Consumer Electronics 6,482,904,635 8,210,121,000 6,480,471,000 8,210,121,000

Financial Services 7,313,954,619 8,037,776,263 3,514,091,000 4,379,884,375

Furniture 2,681,806,000 3,416,843,000 2,681,806,000 3,416,843,000

Home Appliances 17,202,756,000 19,785,509,468 17,196,056,000 19,774,100,000

IT products 19,461,519,686 18,524,320,790 8,383,589,429 7,971,414,000

Sewing 2,585,372,000 3,615,763,000 2,585,372,000 3,615,762,517

Other 2,777,082,300 3,531,971,000 2,776,504,000 3,541,908,000

Revenue from contract with customers 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

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(ii) Timing of Revenue Recognition For twelve months ended

31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Products transferred at a point in time 51,477,248,203 57,400,383,744 40,065,801,653 46,530,148,517

Products and Services transferred Over Time 7,028,147,037 7,721,920,778 3,552,087,776 4,379,884,375

Revenue from Contracts with Customers 58,505,395,240 65,122,304,522 43,617,889,429 50,910,032,892

(c) Contract BalancesFollowing table provides information about receivables, contract liabilities from contracts with customers.



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Receivables which are included in “trade and other receivables” 528,961,365 226,607,130 212,806,334 137,147,305

Contract Liabilities (Note 29.1)* 36,921,881 19,638,343 36,921,881 19,638,343

*Contract Liabilities primarily relate to the advance consideration received from customers for Air Conditioning installation projects, for which revenue is recognised over time.

4. Operating Segment Information

4.1 Segment Products and Services

Consumer Electronics Televisions, Audios, DVD and Other Electronic Products

Financial Services Leasing, Hire Purchase and Loans

Furniture Wood and Layered Furniture, Sofa Sets, Steel Furniture and Mattresses

Home Appliances Refrigerators, Washing Machines, Deep Freezers, Bottle Coolers, Air Conditioners, Fans, Small Appliances and Kitchen Ranges

IT Products Laptops, mobile and Smart Phones

Sewing Domestic and Industrial Sewing Machines and General Merchandise

Other Motor Bikes, Bicycles, Water Pumps, Paddy Threshers and Tractors

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4.2 Segmental Analysis of Revenue is as follows:



31st March 2019Rs. ’000


31st March 2018Rs. ’000


31st March 2019Rs. ’000


31st March 2018Rs. ’000

Consumer Electronics 6,482,905 8,210,121 6,480,471 8,210,121

Financial Services 7,313,954 8,037,776 3,514,091 4,379,884

Furniture 2,681,806 3,416,843 2,681,806 3,416,843

Home Appliances 17,202,756 19,785,509 17,196,056 19,774,100

IT Products 19,461,520 18,524,322 8,383,589 7,971,414

Sewing 2,585,372 3,615,763 2,585,372 3,615,763

Other 2,777,082 3,531,971 2,776,504 3,541,908

58,505,395 65,122,305 43,617,889 50,910,033

4.3 Segmental Analysis of Profit Before Tax is as follows:



31st March 2019Rs. ’000


31st March 2018Rs. ’000


31st March 2019Rs. ’000


31st March 2018Rs. ’000

Consumer Electronics 477,627 376,366 345,016 370,412

Financial Services 1,847,124 2,093,507 602,802 767,812

Furniture 133,296 127,445 115,396 125,432

Home Appliances 997,565 1,240,300 751,790 858,837

IT Products 839,225 1,078,101 154,857 114,025

Sewing 135,028 158,142 119,240 160,020

Other 103,998 132,982 87,904 125,402

Dividend – 180 462,621 923,614

Gain on Sale of Shares in Subsidiary (Note 5) – – 14,050 –

Impairment Loss on Trade Receivables (Note 5) (521,421) (367,607) (212,806) (137,147)

Operating Profit 3,997,361 4,839,416 2,440,869 3,308,406

Net Finance Cost (3,033,076) (2,531,375) (2,320,956) (2,149,727)

VAT on Financial Services (292,156) (258,989) (31,200) (52,800)

Profit Before Tax 672,129 2,049,052 88,713 1,105,879

4.4 There are no separately distinguishable assets and liabilities for the above segments.

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5. Other Income



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Dividend Income – Quoted – – 198,601,207 509,613,843

– Unquoted 206,400 180,000 264,020,000 414,000,000

Gain/(Loss) on Disposal of Property Plant & Equipment (279,943) (10,851,256) (483,591) (11,220,725)

Gain on Sale of Shares in Subsidiary Company (Note 5.1) – – 14,049,303 –

Miscellaneous Income 259,479,830 281,899,877 35,250,696 87,008,428

Income from Financial Services 78,655,404 89,029,554 78,629,021 89,029,554

338,061,691 360,258,175 590,066,636 1,088,431,100

5.1 Gain on Sale of Shares in Subsidiary CompanyOn 31st August 2018, the Company disposed 2,754,174 shares of its subsidiary Singer Finance (Lanka) PLC (1.36%) to general public for a consideration of Rs. 38.3 million, which has resulted in diluting its ownership of Company from 81.29% to 79.93%.

6. Finance Income



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Interest Income – Related Parties – – 387,330,579 273,523,543

– Others 83,820,431 123,584,230 22,711,282 25,926,776

Unwinding Interest Income on Interest Free Employee Loans 51,530,147 46,067,134 43,864,782 45,147,730

Foreign Exchange Gain 72,320,101 5,898,356 – –

207,670,679 175,549,720 453,906,643 344,598,049

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7. Finance Cost



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Interest on Overdrafts and Loans (2,834,533,161) (2,515,226,927) (2,345,567,628) (2,261,875,743)

Interest on Security Deposits (148,317,161) (168,619,531) (146,162,296) (168,619,532)

Foreign Exchange Loss (257,896,055) (23,078,214) (11,964,773) (21,561,543)

Interest Expense on Related Party Payables – – (271,167,532) (42,268,333)

(3,240,746,377) (2,706,924,672) (2,774,862,229) (2,494,325,151)

Net Finance Cost* (3,033,075,698) (2,531,374,952) (2,320,955,586) (2,149,727,102)

* Finance Cost (Note 7) Less Finance Income (Note 6).

8. Profit Before Tax



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Stated After Charging all Expenses Including the Following:

Executive Directors’ Emoluments 108,140,247 197,578,515 72,346,480 136,714,404

Non-Executive Directors’ Fees 16,918,890 16,676,920 8,522,000 8,306,800

Auditors’ Remuneration – Statutory Audit 5,725,000 4,510,000 2,100,000 2,100,000

– Audit-Related Services 525,000 4,250,000 – 990,000

– Non-Audit Services 375,000 640,000 – –

Impairment on Trade and Other Receivables (Note 8.1) 783,159,310 652,643,612 474,683,286 422,183,788

Impairment of Inventories (Note 16.1) 172,995,327 15,211,882 174,028,852 44,233,025

Software Impairment (Note 12.2) – 5,605,554 – –

Amortisation of Intangible Assets (Note 12.8) 21,698,455 31,694,467 11,947,021 22,343,871

Depreciation on Property, Plant and Equipment (Note 11.2/11.11) 579,242,530 632,735,522 453,474,284 509,249,151

Personnel Costs (Note 8.2) 6,114,251,526 7,100,184,259 4,924,654,157 5,832,223,437

Operating Lease Rentals 1,155,691,416 1,253,040,814 683,045,000 1,191,322,880

Donations 466,250 763,465 360,000 335,220

Royalty 649,952,432 611,084,317 484,717,794 513,552,753

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31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

8.1 Impairment on Trade and Other Receivables

Impairment for Hire Purchase Receivables (Note 18.3) 14,854,732 22,044,710 17,380,351 33,294,359

Impairment for Lease Receivables (Note 18.3) 143,871,915 68,944,048 – –

Impairment for Loan Debtors (Note 18.3) 140,642,025 156,665,425 – –

Impairment for Trade Debtor (Note 18.3) 222,052,712 119,952,947 195,425,983 103,852,947

Impairment Loss on Trade Receivables 521,421,384 367,607,130 212,806,334 137,147,306

Impairment for Other Debtors (Note 18.3) 261,737,926 285,036,482 261,876,952 285,036,482

783,159,310 652,643,612 474,683,286 422,183,788

8.2 Personnel Costs



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Staff Costs 5,506,018,143 6,320,971,861 4,435,268,258 5,175,603,185

Provision for Employee Benefit Obligations 144,669,128 161,489,696 103,310,278 114,418,462

Defined Contribution Plan Costs – EPF, ETF and MSPS 463,564,254 617,722,702 386,075,621 542,201,790

6,114,251,526 7,100,184,259 4,924,654,157 5,832,223,437

9. Income Tax Expense



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Current Income Tax Expense

Current Tax Expense (Note 9.1) 477,606,668 614,776,454 143,238,137 224,296,133

Under/(Over) Provision in Respect of Previous Year (Note 31) 104,474,835 20,055,084 12,102,703 359,716

Tax on Dividend Income

WHT on Dividend Received from Subsidiary Companies 69,992,896 112,358,820 – –

652,074,399 747,190,358 155,340,840 224,655,849

Deferred Tax

Expense/(Income) (Note 9.2) (365,925,870) 81,567,175 (207,177,991) (117,800,290)

286,148,529 828,757,533 (51,837,151) 106,855,559

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9.1 Reconciliation Between Accounting Profit and Taxable Profit



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Profit Before Tax 672,129,112 2,049,052,146 88,713,288 1,105,878,833

Aggregate Accounting Profit 672,129,112 2,049,052,146 88,713,288 1,105,878,833

Aggregate Disallowable Expenses 7,587,638,573 8,373,267,670 1,318,882,157 1,347,270,689

Aggregate Tax Deductible Expenses (6,570,053,369) (8,191,887,563) (896,030,671) (728,478,061)

Income Not Liable for Tax – – – (923,613,843)

Tax Losses B/f 12,637,687 24,825,242 – –

Adj: Tax Loss Claimed During the Period (12,637,687) (14,694,244) – –

Tax Loss Carried Forward 13,860,390 12,637,687 – –

Qualifying Payments Relief for Investments – (1,997,909) – –

Unrealised Profit 2,163,404 (23,849,698) – –

1,705,738,100 2,227,353,331 511,564,774 801,057,618

Taxable Profit 20% – 111,030,990 – –

Taxable Profit 28% 1,705,738,100 2,116,322,341 511,564,774 801,057,618

1,705,738,100 22,227,353,331 511,564,774 801,057,618

Current Income Tax 20% – 22,206,198 – –

Current Income Tax 28% 477,606,668 592,570,256 143,238,137 224,296,133

Current Income Tax 477,606,668 614,776,454 143,238,137 224,296,133

The Group tax expense is based on the taxable profit of each company in the Group. Singer (Sri Lanka) PLC and six subsidiary companies – Singer Finance (Lanka) PLC, Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC, Reality (Lanka) Limited, Singer Digital Media (Pvt) Limited and Singer Business School (Pvt) Limited are liable to pay Income Tax at 28% on taxable profit and Regnis Appliances (Pvt) Limited is liable at a rate of 20%.

The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience.

9.2 Deferred Tax Expense/(Income)



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Deferred Tax Charge/(Credit) Arising due to – Origination and Reversal of Temporary Differences (Note 26.1) (356,631,694) 82,215,026 (200,985,408) (110,059,561)

Deferred Tax Impact on Unrealised Profit in Inventory (Note 26.1) 190,793 7,092,878 – –

Deferred Tax Impact on Realisation of Revaluation Surplus (Note 26.1) (9,484,969) (7,740,729) (6,192,583) (7,740,729)

(365,925,870) 81,567,175 (207,177,991) (117,800,290)

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9.3 Deferred Tax has been computed using the enacted tax rates of 28% and 20% applicable for the entities in the Group.

9.4 Tax Recognised in Other Comprehensive Income

For twelve months ended 31st March 2019 For fifteen months ended 31st March 2018

Before TaxRs.

Tax ExpenseRs.

Net of TaxRs.

Before TaxRs.

Tax ExpenseRs.

Net of TaxRs.

Group

Revaluation Gain on Property, Plant and Equipment 882,824,365 (247,190,822) 635,633,543 – (516,049,055) (516,049,055)

Actuarial Gain/(Loss) on Employee Benefit Obligations (Note 27) (21,158,221) 5,871,651 (15,286,570) (18,910,000) 6,319,485 (12,590,515)

861,666,144 (241,319,171) 620,346,973 (18,910,000) (509,729,570) (528,639,570)

Company

Revaluation Gain on Property, Plant and Equipment (Note 22.1) 453,751,963 (127,050,550) 326,701,413 – (198,082,001) (198,082,001)

Actuarial Gain/(Loss) on Employee Benefit Obligations (Note 27) (26,947,676) 7,545,349 (19,402,327) (9,478,416) 2,653,957 (6,824,459)

426,804,287 (119,505,201) 307,299,086 (9,478,416) (195,428,044) (204,906,460)

10. Earnings Per Share10.1 Basic Earnings Per Share is calculated by dividing the profit for the period attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

10.2 The following reflects the income and share data used in the Basic Earnings per Share computations:



31st March 2019Rs.


31st March 2018Rs.


31st March 2019Rs.


31st March 2018Rs.

Profit Attributable to Ordinary Equity Holders of the Parent

Profit for the Period (Rs.) 385,980,583 1,220,294,613 140,550,439 999,023,274

Profit Attributable to Ordinary Equity Holders of the Parent (Rs.) 250,121,091 1,043,682,205 140,550,439 999,023,274

Weighted Average Number of Ordinary Shares

Weighted Average Number of Ordinary Shares 375,628,830 375,628,830 375,628,830 375,628,830

Basic Earnings per Share (Rs.) 0.67 2.78 0.37 2.66

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11. Property, Plant and Equipment 11.1 Gross Carrying Amounts – Consolidated

Balance as at1st April 2018

Rs.

Additions/Transfers

Rs.

Increase/(Decrease)in Revaluation

Rs.

Disposals/Transfers

Rs.

Balance as at31st March 2019

Rs.

At Cost

Motor Vehicles 312,700,081 30,958,330 – 77,989,546 265,668,865

Furniture and Equipment 342,260,204 59,887,400 – 1,201,483 400,946,121

Plant and Machinery 1,132,946,964 339,947,672 – 4,801,670 1,468,092,965

Culinary School Equipment 75,814 – – – 75,814

E.D.P. Equipment 460,745,984 90,907,738 – 7,927,321 543,726,401

Shop Furniture 658,284,574 50,879,138 – – 709,163,712

Shop Equipment 996,799,353 151,342,786 – – 1,148,142,139

Improvements on Leasehold Premises 930,078,677 116,557,941 – – 1,046,636,618

4,833,891,651 840,480,394 – 91,920,020 5,582,452,636

At Valuation

Freehold Land 2,297,611,701 – 606,566,750 – 2,904,178,451

Freehold Buildings 1,030,693,329 75,006,193 276,257,615 100,224,444 1,281,732,693

3,328,305,030 75,006,193 882,824,365 100,224,444 4,185,911,144

Gross Carrying Amount Excluding Capital WIP 8,162,196,681 915,486,587 882,824,365 192,144,464 9,768,363,780

Capital Work-In-Progress

Machinery and Equipment 136,611,420 82,674,298 – 213,485,434 5,800,284

Improvements on Leasehold Premises 2,267,202 25,206,043 – 7,931,912 19,541,333

Total Capital Work-in-Progress 138,878,622 107,880,341 – 221,417,346 25,341,617

Total Gross Carrying Amount 8,301,075,303 1,023,366,928 882,824,365 413,561,810 9,793,705,397

11.2 Depreciation and Impairment Losses – Consolidated


Rs.

Charge for theYearRs.

Disposals

Rs.


Rs.

Freehold Buildings 65,572,166 42,300,544 100,224,446 7,648,264

Motor Vehicles 152,163,236 25,466,155 28,509,594 149,119,797

Furniture and Equipment 234,663,907 24,985,266 1,149,148 258,500,025

Plant and Machinery 578,126,684 89,443,423 4,271,103 663,299,004

Culinary School Equipment 75,814 – – 75,814

E.D.P. Equipment 276,522,024 51,531,814 7,683,098 320,370,741

Shop Furniture 354,573,820 89,662,572 – 444,236,392

Shop Equipment 449,390,749 142,768,808 – 592,159,557

Improvements on Leasehold Premises 540,563,259 113,083,947 – 653,647,206

Total Depreciation and Impairment Loss 2,651,651,659 579,242,530 141,837,390 3,089,056,800

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11.3 Carrying Amounts

Group

As at 31st March 2019

Rs.


Rs.

At Cost 2,518,736,842 2,386,690,780

At Valuation 4,185,911,755 3,262,732,864

Total Carrying Amount of Property, Plant and Equipment 6,704,648,597 5,649,423,644

11.4 Prior year Error Correction on Singer Industries (Ceylon) PLC Property ValuationDue to an oversight Company has not revalued its building to reflect its value in its financial statements over the years. The building is brought in to financial statements by obtaining a value through an independent professionally qualified valuer. Accordingly building was valued at Rs. 68 million and was incorporated as part of Buildings under Property Plant and Equipment through retained earnings. Due to the impracticability of determining the specific effects of the error on comparative information for one or more prior periods presented no restatement of prior year financial statements has been made.

Rs.

Fair Value as at 31st March 2019 68,650,000

Deferred Tax relating to Revaluation (19,222,000)

Net Impact on retained Earnings as at 31st March 2019 49,428,000

11.5 During the financial year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs. 733,580,136/- (2017/2018 – Rs. 887,107,521/-) on cash basis.

11.6 Lands and Buildings were revalued during the financial year 2018/19 by Messrs Chulananda Wellappili, an Independent Valuer who holds degrees of B.Sc State Management and Valuation, M.Sc Town and Country planning and PG. Dip. in Regional Planning. Further he is a Graduate Member of Institute of Valuers of Sri Lanka, A member of Institute of Town and Country Planning Sri Lanka, Senior certified valuer of international Real Estate Institute of USA. A Corporate Member of the Institute of Revenues, Rating and Valuations of UK. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st March 2019. The surplus arising from the revaluation was transferred to a revaluation reserve.

11.7 The carrying amount of the revalued assets that would have been included in the Financial Statements had the assets been carried at cost would be as follows:

Carrying Amount Rs.

Land 112,593,796

Building 337,602,186

Total Carrying Amount 450,195,982

11.8 The amount of the Property, Plant and Equipment includes fully-depreciated assets value would be as follows:


Rs.


Rs.

Fully Depreciated Assets 1,319,162,323 1,031,206,991

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11.9 Depreciation charge for the year is included in the following line items in the Statement of Profit or Loss and Other Comprehensive Income:


31st March 2019Rs.


31st March 2018Rs.

Cost of Sales 125,378,081 124,148,542

Administration Expenses 453,864,449 508,586,980

579,242,530 632,735,522

11.10 Gross Carrying Amounts – Company


Rs.

Additions/Transfers

Rs.

Increase/ (Decrease) in Revaluation Rs.

Disposals/Transfers

Rs.


Rs.

At Cost

Motor Vehicles 285,341,588 30,958,330 – 67,809,546 248,490,372

Furniture and Equipment 260,667,140 10,369,307 – – 271,036,447

Plant and Machinery 306,098,212 84,765,872 – – 390,864,084

Culinary School Equipment 75,814 – – – 75,814

E.D.P. Equipment 352,913,798 73,441,896 – 150,549 426,205,145

Shop Furniture 658,284,574 50,879,138 – – 709,163,712

Shop Equipment 996,799,354 151,342,786 – – 1,148,142,140

Improvements on Leasehold Premises 799,006,950 54,745,326 – – 853,752,276

3,659,187,430 456,502,655 – 67,960,095 4,047,729,990

At Valuation

Freehold Land 810,774,200 – 284,984,250 – 1,095,758,450

Freehold Buildings 654,640,626 2,873,637 168,767,713 61,928,953 764,353,023

1,465,414,826 2,873,637 453,751,963 61,928,953 1,860,111,473

Total Gross Carrying Amount 5,124,602,256 459,376,292 453,751,963 129,889,048 5,907,841,463

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11.11 Depreciation and Impairment Losses – Company


Rs.

Charge for the YearRs.

Disposals

Rs.


Rs.

Freehold Buildings 34,483,985 27,444,968 61,928,953 –

Motor Vehicles 135,073,701 16,801,858 23,718,046 128,157,513

Furniture and Equipment 194,476,799 22,095,529 – 216,572,328

Plant and Machinery 200,686,289 21,784,279 – 222,470,568

Culinary School Equipment 75,814 – – 75,814

E.D.P. Equipment 211,161,448 37,519,680 11,655 248,669,473

Shop Furniture 354,573,819 89,662,572 – 444,236,391

Shop Equipment 449,390,751 142,768,808 – 592,159,559

Improvements on Leasehold Premises 462,082,088 95,396,590 – 557,478,678

Total Depreciation and Impairment Losses 2,042,004,694 453,474,284 85,658,654 2,409,820,324

11.12 Carrying Amounts


Rs.


Rs.

At Cost 1,637,909,664 1,651,666,721

At Valuation 1,860,111,475 1,430,930,841

Total Carrying Amount of Property, Plant and Equipment 3,498,021,139 3,082,597,562

11.13 During the financial year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs. 459,376,292/- (2017/2018 – Rs. 600,451,154/-) on cash basis.

11.14 Lands and Buildings were revalued during the financial year 2018/19 by Messrs Chulananda Wellappili, an Independent Valuer. who holds degrees of B.Sc State Management and Valuation, M.Sc Town and Country Planning and PG. Dip. in Regional Planning. Further he is a Graduate Member of Institute of Valuers of Sri Lanka, A member of Institute of Town and Country Planning Sri Lanka, Senior certified Valuer of international Real Estate Institute of USA. A corporate member of Institute of Revenues, Rating and Valuations of UK. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st March 2019. Such assets were valued on contractors method for existing use basis. The surplus arising from the revaluation was transferred to a revaluation reserve.

11.15 The carrying amount of the revalued assets that would have been included in the Financial Statements had the assets been carried at cost would be as follows:

Carrying Amount Rs.

Land 100,851,000

Building 268,429,761

Total carrying amount 369,280,761

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11.16 The amount of the property, plant and equipment includes fully depreciated assets value would be as follows:


Rs.


Rs.

Fully Depreciated Assets 1,008,975,247 771,566,098

11.17 Depreciation charge for the year is included in the following line items in the Statement of Profit or Loss.

For twelve months ended 31st March

2019Rs.

For fifteen months ended 31st March

2018Rs.

Cost of Sales 38,361,507 39,135,949

Administration Expenses 415,112,777 470,113,202

453,474,284 509,249,151

11.18 Information on the Freehold Land and Buildings of the Group

Location Extent (Perches)

Buildings (Square

Feet)

Cost or Revaluation of

Land Rs.


BuildingsRs.

Total Value

Rs.

AttidiyaNo. 190, Main Road, Attidiya, Dehiwala 6.2 2260 18,600,000 9,153,000 27,753,000

AhangamaNo. 24A, Matara Road, Ahangama 14 1630 25,200,000 6,825,875 32,025,875

Ambalantota Main Street, Ambalantota 6.6 1885 16,500,000 5,278,000 21,778,000

AmbanpolaNo. 108, Yaluwewa, Ambanpola. 10 – 2,000,000 – 2,000,000

Balangoda Ratnapura Road, Balangoda 6.2 2080 20,150,000 7,722,000 27,872,000

Bandarawela Main Street, Bandarawela 4.1 2660 10,250,000 11,510,000 21,760,000

Borella D.S. Senanayaka Mawatha, Borella 4.64 2310 69,600,000 9,240,000 78,840,000

Chilaw Bazaar Street, Chilaw 13.05 4120 42,412,500 15,656,000 58,068,500

ColpettyNo. 143, Galle Road, Colombo 03 3.35 1440 56,950,000 6,156,000 63,106,000

Eheliyagoda Ratnapura Road, Eheliyagoda 5.73 1660 11,460,000 4,316,000 15,776,000

Embilipitiya Colombo Road, Pallegama, Embilipitiya 4.6 2070 16,100,000 7,917,750 24,017,750

Galle Main Street, Galle 2.84 2250 11,360,000 9,112,500 20,472,500

Galle No. 13 and 15, Wackwella Road, Galle 12 – 54,000,000 – 54,000,000

Gampaha Colombo Road, Gampaha 17.87 7870 62,545,000 30,220,800 92,765,800

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Buildings (Square

Feet)


Land Rs.


BuildingsRs.

Total Value

Rs.

Hikkaduwa Galle Road, Hikkaduwa 8.74 2400 24,035,000 8,160,000 32,195,000

Kadawatha Kandy Road, Kadawatha 3.8 1150 8,250,000 11,980,000 20,230,000

Kadawatha No. 430/1, Ganemulla Road, Ihala-Karagahamuna, Kadawatha 4.38 – 10,425,000 – 10,425,000

KalawanaNo. J63A, Watapotha Road, Nivithigala, Ratnapura 258.66 – 7,000,000 – 7,000,000

KandyNo. 129, Kotugodella Veediya, Kandy 9.55 2900 42,975,000 6,960,000 49,935,000

Kandy – Mega Sirimavo Bandaranaike Mawatha, Kandy 15.7 12840 36,715,000 69,336,000 106,051,000

Katugastota Madawala Road, Katugastota 4.875 1620 10,106,250 6,743,250 16,849,500

Kirindiwela Gampaha Road, Kirindiwela 8.1 2940 20,250,000 9,922,500 30,172,500

Kurunegala Bodhiraja Mawatha, Kurunegala 7.66 2810 26,810,000 10,010,625 36,820,625

Maharagama High Level Road, Maharagama 6.2 2700 37,200,000 10,800,000 48,000,000

MaradanaNo. 51/57, Brandiyawatta, Wellampitiya 10 – 3,500,000 – 3,500,000

Matara Anagarika Dharmapala Mawatha, Matara 10 3520 37,800,000 14,520,000 52,320,000

Middeniya Katuwana Road, Middeniya 8.25 2670 14,850,000 8,624,100 23,474,100

MoratuwaNo. 17, New Galle Road, Moratuwa 13.09 2990 39,270,000 5,793,000 45,063,000

Mount Lavinia Galle Road, Mount Lavinia 7.5 1900 33,750,000 7,445,625 41,195,625

Mount Lavinia – Mega Galle Road, Mount Lavinia 18.47 15500 92,350,000 83,006,466 175,356,466

Nawalapitiya Kotmale Road, Nawalapitiya 4.7 2760 12,704,700 7,176,000 19,880,700

Negombo Greens Road, Negombo 6 2040 24,000,000 6,885,000 30,885,000

Nuwara Eliya Kandy Street, Nuwara Eliya 4.65 1700 18,600,000 6,375,000 24,975,000

Panadura Galle Road, Panadura 6.15 2940 18,450,000 10,584,000 29,034,000

Piliyandala Gonamaditta Road, Piliyandala 1,144.35 118450 228,870,000 342,566,563 571,436,563

Pussellawa Nuwara Eliya Road, Pussellawa 12.43 3295 24,860,000 11,553,094 36,413,094

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Buildings (Square

Feet)


Land Rs.


BuildingsRs.

Total Value

Rs.

Ratnapura Colombo Road, Ratnapura 5.8 3075 20,300,000 11,685,000 31,985,000

RatmalanaNo. 52, Ferry Road, Off Borupana Road, Ratmalana 705 120615 423,000,000 257,097,795 680,097,795

RatmalanaNo. 02, 5th Lane, Ratmalana 362.5 75365 952,100,000 162,900,000 1,115,000,000

RatmalanaNo. 435, Galle Raod, Ratmalana 50 – 226,350,000 68,650,000 295,000,000

Tangalle Matara Road, Tangalle 4.6 1285 13,800,000 3,822,875 17,622,875

Trincomalee North Coast Road, Trincomalee 5.58 2335 19,530,000 9,007,874 28,537,874

Trincomalee Nayanmarthidal, Thampalakamam, Trincomalee 60 – 4,000,000 – 4,000,000

Wellawatta Galle Road, Wellawatta 4.6 2700 55,200,000 7,020,000 62,220,000

2,904,178,451 1,281,732,693 4,185,911,114

11.19 Information on the Freehold Land and Buildings of the Company


Buildings (Square

Feet)


Land Rs.


BuildingsRs.

Total Value

Rs.

Ambalantota Main Street, Ambalantota 6.6 1885 16,500,000 5,278,000 21,778,000

Balangoda Ratnapura Road, Balangoda 6.2 2080 20,150,000 7,722,000 27,872,000

Bandarawela Main Street, Bandarawela 4.1 2660 10,250,000 11,510,000 21,760,000

Borella D.S. Senanayaka Mawatha, Borella 4.64 2310 69,600,000 9,240,000 78,840,000

Chilaw Bazaar Street, Chilaw 13.05 4120 42,412,500 15,656,000 58,068,500

ColpettyNo. 143, Galle Road, Colombo 03 3.35 1440 56,950,000 6,156,000 63,106,000

Eheliyagoda Ratnapura Road, Eheliyagoda 5.73 1660 11,460,000 4,316,000 15,776,000

Galle Main Street, Galle 2.84 2250 11,360,000 9,112,500 20,472,500

Gampaha Colombo Road, Gampaha 17.87 7870 62,545,000 30,220,800 92,765,800

Hikkaduwa Galle Road, Hikkaduwa 8.74 2400 24,035,000 8,160,000 32,195,000

Embilipitiya Colombo Road, Pallegama, Embilipitiya 4.6 2070 16,100,000 7,917,750 24,017,750

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Buildings (Square

Feet)


Land Rs.


BuildingsRs.

Total Value

Rs.

Kadawatha Kandy Road, Kadawatha 3.8 1150 8,250,000 11,980,000 20,230,000

Kandy – Mega Sirimavo Bandaranaike Mawatha, Kandy 15.7 12840 36,715,000 69,336,000 106,051,000

Katugastota Madawala Road, Katugastota 4.875 1620 10,106,250 6,743,250 16,849,500

Kirindiwela Gampaha Road, Kirindiwela 8.1 2940 20,250,000 9,922,500 30,172,500

Kurunegala Bodhiraja Mawatha, Kurunegala 7.66 2810 26,810,000 10,010,625 36,820,625

Maharagama High Level Road, Maharagama 6.2 2700 37,200,000 10,800,000 48,000,000

Matara Anagarika Dharmapala Mawatha, Matara 10 3520 37,800,000 14,520,000 52,320,000

Middeniya Katuwana Road, Middeniya 8.25 2670 14,850,000 8,624,100 23,474,100

Mount Lavinia Galle Road, Mount Lavinia 7.5 1900 33,750,000 7,445,625 41,195,625

Mount Lavinia – Mega Galle Road, Mount Lavinia 18.47 15500 92,350,000 83,006,466 175,356,466

Nawalapitiya Kotmale Road, Nawalapitiya 4.7 2760 12,704,700 7,176,000 19,880,700

Negombo Greens Road, Negombo 6 2040 24,000,000 6,885,000 30,885,000

Nuwara Eliya Kandy Street, Nuwara Eliya 4.65 1700 18,600,000 6,375,000 24,975,000

Panadura Galle Road, Panadura 6.15 2940 18,450,000 10,584,000 29,034,000

Piliyandala Gonamaditta Road, Piliyandala 1144.35 118450 228,870,000 342,566,563 571,436,563

Pussellawa Nuwara Eliya Road, Pussellawa 12.43 3295 24,860,000 11,553,094 36,413,094

Ratnapura Colombo Road, Ratnapura 5.8 3075 20,300,000 11,685,000 31,985,000

Tangalle Matara Road, Tangalle 4.6 1285 13,800,000 3,822,875 17,622,875

Trincomalee North Coast Road, Trincomalee 5.58 2335 19,530,000 9,007,875 28,537,875

Wellawatta Galle Road, Wellawatta 4.6 2700 55,200,000 7,020,000 62,220,000

1,095,758,450 764,353,023 1,860,111,473

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11.20 Measurement of Fair Value(i) Fair Value HierarchyThe fair value of property was determined by external independent property valuer having appropriate recognized professional qualifications and recent experience in the location and category of the property being valued.

The fair value measurement for all of properties has been categorized as level 3 fair value based on the input to the valuation technique used.

(ii) Valuation Technique and Significant Unobservable InputsThe following table shows the valuation technique used in measuring the fair value of property, as well as the significant unobservable inputs used.

Valuation Technique Significant Unobservable Inputs Interrelationship between Key Unobservable Inputs and Fair Value Measurements

Land value is based on the market prices of each land respectively. Value of property is considered as summation of land & Building value.

Contractors Method: The contractor’s method works on the basis that a property’s value can be equated to its cost. Valuer assess the cost of the building if it would have constructed in current year, and deduct margin for usage of the property based on their year of construction.

zz Market value of land (Price per Perch). Valuer has used range of prices for respective lands based on their recently transacted cost.

zz Construction cost per Square feet of a building.

zz Depreciation rate for the usage of assets.

The Estimated fair value would increase (decrease) if –zz Market Value per perch was higher

(lower)zz Cost per square feet was higher

(lower)zz Depreciation rate for usage lower

(higher)

12. Intangible Assets



Rs.


Rs.


Rs.


Rs.

Trade Mark (Note 12.1) 93,512,500 93,512,500 93,512,500 93,512,500

Software (Note 12.2) 128,351,748 141,372,571 61,056,468 67,200,884

Other Intangible Assets Externally Acquired (Note 12.3) 46,431,920 46,431,920 46,431,920 46,431,920

268,296,168 281,316,991 201,000,888 207,145,304

12.1 Trade Mark with Infinite Useful Life



Rs.


Rs.


Rs.


Rs.

Cost

As at the Beginning of the Period 93,512,500 93,512,500 93,512,500 93,512,500

As at the End of the Period 93,512,500 93,512,500 93,512,500 93,512,500

Less: Accumulated Impairment Losses – – – –

Net Carrying Amount 93,512,500 93,512,500 93,512,500 93,512,500

Trade mark consists of SISIL brand name Rs. 55,000,000/- (Note 12.4) and UNIC brand name Rs. 38,512,500/- (Note 12.5) Please refer Notes 12.4 and 12.5 for SISIL and UNIC impairment respectively.

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12.2 Software



Rs.


Rs.


Rs.


Rs.

Cost


Acquired/Incurred During the Period 8,677,632 57,078,961 5,802,605 16,332,028


Amortisation


Software Impairment – 5,605,554 – –

Amortisation Charge for the Period 21,698,455 31,694,467 11,947,021 22,343,871


Carrying Amount



12.3 Other Intangible Assets Externally Acquired



Rs.


Rs.


Rs.


Rs.

Cost


Acquired/Incurred During the Period – – – –


Amortisation


Amortisation Charge for the Period – – – –


Carrying Amount



Other Intangible Assets externally includes Sony distribution rights amounting to Rs. 46,431,920/- and Hayleys Brand Amounting to Rs. 32,000,000/-. Hayleys Brand is fully amortised as at 31st March 2019. Refer Note 12.6 and 12.7 for amortisation of Hayleys and impairment of Sony.

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12.4 SISIL TrademarkThe Company had acquired the “SISIL” trade mark in December 2000, amounting to Rs. 55 million. The management is of the opinion that the aforementioned trademark has an indefinite useful life as their associated brand awareness and recognition has existed over 50 years and the Company intends to utilise the said trademark for the foreseeable future. There are no legal, regulatory, contractual, competitive, economic or other factors that may limit its useful life and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for any impairment as at 31st March 2019:

Annual Sales Growth for Next Five Years 14%

Gross Margin 27%

Discount Rate 11%

Indefinite Growth Rate after Year 2024 2%

12.5 UNIC TrademarkThe Company had acquired the “UNIC” Trade mark in 2006 amounting Rs. 38,512,500/-. This trade mark is also considered to have an indefinite useful life due to the factors mentioned in the preceding paragraph and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st March 2019:


Gross Margin 25%

Discount Rate 11%


12.6 Hayleys Brand NameThe Company took over the showrooms, retail operation of the Hayleys Electronic Retail Limited, from 2nd January 2008 and agencies of Philips and Kenwood from Hayleys Electronic Limited for Rs. 32 million. The entire purchase consideration is treated as Goodwill and is amortised over the determined useful life of 5 years commencing from the period beginning 1st January 2009.

12.7 SONY Distribution Rights The company had acquired the distribution rights of brand “SONY” in 2014 amounting Rs. 46,431,920/- This assets are now carried at cost subject to annual impairment test and carrying amount as at 31st March 2019 is Rs.46,431,920/-.This distribution right also considered to have an indefinite useful life due to the factors mentioned in the preceding paragraph accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st March 2019:


Gross Margin 22%

Discount Rate 11%


12.8 Amortisation Charge for the Period



2019Rs.


2018Rs.


2019Rs.


2018Rs.

Amortisation of Software 21,698,455 31,694,467 11,947,021 22,343,871

21,698,455 31,694,467 11,947,021 22,343,871

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13. Investment in Subsidiaries – Company

Number of Shares Carrying Value

Country ofIncorporation

As at31st March

2019

As at31st March

2018

As at31st March

2019 Rs.

As at31st March

2018Rs.

Quoted

Singer Finance (Lanka) PLC Sri Lanka

Investment at the Beginning of the Period 164,267,209 132,931,054 1,452,283,921 982,241,596

Investment Made During the Period – 31,336,155 – 470,042,325

Investment Disposed During the Period (2,754,174) – (24,349,611) –

Investment at the End of the Period 161,513,035 164,267,209 1,427,934,310 1,452,283,921

Singer Industries (Ceylon) PLC Sri Lanka

Investment at the Beginning of the Period 3,373,967 3,373,967 692,407,683 692,407,683

Investments Made During the Period – – – –

Investment at the End of the Period 3,373,967 3,373,967 692,407,683 692,407,683

Regnis Lanka PLC Sri Lanka


Investments Made During the Period – – – –


Non-Quoted

Singer Digital Media (Pvt) Limited Sri Lanka

Investment at the Beginning of the period 500,000 500,000 5,000,000 5,000,000

Investment Made During the Period – – – –

Investment at the End of the period 500,000 500,000 5,000,000 5,000,000

Singer Business School (Pvt) Limited Sri Lanka

Investment at the Beginning of the Period 500,000 500,000 5,000,000 5,000,000

Investment Made During the Period – – – –

Investment at the End of the Period 500,000 500,000 5,000,000 5,000,000

Reality Lanka Limited Sri Lanka


Investment Made During the Period – – – – –


Total Investment in Subsidiaries 2,900,872,703 2,925,222,314

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14. Other Non–current AssetsPrepaid Operating Leases – Leasehold rightPrepaid operating lease relates to operating lease paid in advance for the land acquired by Regnis Appliances (Pvt) Limited from Board of Investment (BOI) in Sri Lanka. The Group amortise the leasehold land over the lease period of 50 years, on straight line basis. The reconciliation of prepaid operating lease is as follows:



Rs.


Rs.


Rs.


Rs.

At the Beginning of the Period 64,520,322 – – –

Acquisitions During the Period – 65,062,510 – –

Amortisation for the Period (1,301,249) (542,188) – –

At the end of the Period 63,219,073 64,520,322 – –

15. Other Investments15.1 Non–current Financial Assets


Number of Shares Amount Amount

Non-Quoted As at 31st March

2019

As at 31st March

2018

As at 31st March

2019Rs.

As at 31st March

2018Rs.

As at 31st March

2019Rs.

As at 31st March

2018Rs.

Available-for-Sale Financial Assets (AFS)

Equity Investment Lanka Limited 1,665,000 17,020,000 17,020,000

Credit Information Bureau of Sri Lanka 100 41,300 –

1,665,100 17,061,300 17,020,000

Financial Assets at Fair Value through Other Comprehensive Income (FVOCI)

Equity Investment Lanka Limited 1,665,000 17,020,000 17,020,000

Credit Information Bureau of Sri Lanka 100 41,300 –

1,665,100 17,061,300 17,020,000


Amount Amount


Rs.


Rs.


Rs.


Rs.

Investments in Debentures

Held to Maturity Financial Assets

Fixed Rate 9.95% Senior Unlisted, Unsecured Redeemable, Rated Debentures Redeemable on 18th June 2020 – – – 450,000,000

48 Months 12% Secured Debentures Redeemable on 6th April 2020 – – – 150,000,000

36 Months 11.5% Secured Debentures Redeemable on 6th April 2019 – – – 312,090,000

– – – 912,090,000

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Amount Amount


Rs.


Rs.


Rs.


Rs.

Financial Assets at Amortised Cost

Fixed Rate 9.95% Senior Unlisted, Unsecured Redeemable, Rated Debentures Redeemable on 18th June 2020 – – 450,000,000 –

48 Months 12% Secured Debentures Redeemable on 6th April 2020 – – 150,000,000 –

(Less) Impairment provision on Investment in Debentures – – (817,348) –

– – 599,182,652 –

Total Non Current Financial Assets 17,061,300 17,061,300 616,202,652 929,110,000

15.2 Short-Term Investments



Rs.


Rs.


Rs.


Rs.

Held to Maturity Financial Assets

Investment in Treasury Bills – 580,351,485 – –

Investment in Treasury Bonds – 91,031,155 – –

– 671,382,640 – –

Financial Assets at Amortised Cost

36 Months 11.5% Secured Debentures Redeemable on 6th April 2019 – – 312,090,000 –

Investment in Treasury Bills 529,920,590 – – –

Investment in Treasury Bonds 93,451,740 – – –

623,372,330 – 312,090,000 –

Total Short-term Investments 623,372,330 671,382,640 312,090,000 –

Further details relating to fair valuation and carrying value is provided in Note 35 to these Financial Statements.

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16. Inventories



Rs.


Rs.


Rs.


Rs.

Raw Materials 1,103,130,403 1,179,159,152 270,592,000 380,487,000

Work-in-Progress 176,221,424 177,062,951 74,591,000 71,995,000

Finished Goods 11,941,110,167 10,600,546,593 10,970,091,634 9,800,343,616

Supplies and Parts 647,659,048 572,820,285 633,329,719 561,886,869

Goods-in-Transit 1,238,774,794 854,455,933 1,055,824,318 621,714,686

15,106,895,836 13,384,044,914 13,004,428,671 11,436,427,171

Less: Impairment of Inventory (Note 16.1) (904,020,201) (731,024,874) (869,161,410) (695,132,558)

Unrealised Profit in Inventory (77,133,223) (79,296,628) – –

Consignment Inventory (25,443) (13,550) (25,443) (13,550)

Total Inventories 14,125,716,969 12,573,709,862 12,135,241,818 10,741,281,063

16.1 Impairment of Inventory



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 731,024,874 715,812,992 695,132,558 650,899,533

Amount Recognised During the Period (Note 8) 172,995,327 15,211,882 174,028,852 44,233,025

Balance at the End of the Period 904,020,201 731,024,874 869,161,410 695,132,558

17. Loans Due from Related Parties


Relationship As at 31st March 2019

Rs.


Rs.


Rs.


Rs.

Regnis Lanka PLC Subsidiary – – 150,000,000 150,000,000

Reality Lanka Limited Subsidiary – – 62,150,767 69,150,767

Singer Business School (Pvt) Limited Subsidiary – – 5,000,000 –

Singer Finance (Lanka) PLC Subsidiary – – 1,000,000,000 1,000,000,000

Provision for Impairment – – (1,330,790) –

– – 1,215,819,977 1,219,150,767

Regnis Lanka PLCCompany granted this facility based on the fund requirement of Regnis Lanka PLC and will be recovered on demand. Interest is charged based on the highest AWPLR prevail in the respective month + 0.5% to 2.0%.

Reality Lanka LimitedCompany granted this facility based on the fund requirement of reality Lanka Limited and it will be recovered on demand.

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Singer Finance (Lanka) PLCCompany granted this facility based on the fund requirement of Singer Finance (Lanka) PLC and will be recovered on demand. Interest is charged based on the highest AWPLR prevail in the respective month + 0.5% to 2.0%.

18. Trade and Other ReceivablesThe effect of initially applying SLFRS 9 on the Group's Financial Assets is described in Note 2.13 (B) due to the transition method chosen in applying SLFRS 9. Comparative information has not been restated to reflect the new requirement.

18.1 Non-current


Note


Rs.


Rs.


Rs.


Rs.

Hire Debtors – Instalment Receivables 489,531,443 393,938,607 485,038,473 372,752,597

Less: Unearned hire debtors interest income (44,715,142) (43,108,652) (43,736,178) (40,629,947)

Provision for Impairment (2,470,564) – (2,470,564) –

442,345,737 350,829,955 438,831,731 332,122,650

Lease Rental Receivables

Gross Instalments in Lease 11,685,901,512 9,416,110,605 – –

Rental Received in Advance (89,159) (89,159) – –

11,685,812,353 9,416,021,446 – –

Less: Unearned Income (2,674,594,017) (2,070,449,248) – –

9,011,218,336 7,345,572,198 – –

Loan Debtors

Consumer and Personal Loans 1,068,634,832 480,410,919 – –

Rental Received in Advance – – – –

Less: Unearned Loan Interest Income (96,935,776) (77,006,387) – –

971,699,056 403,404,532 – –

Other Debtors

Rent Paid in Advance 747,600,000 767,235,953 747,600,000 763,656,794

Other Receivables – 15,450,423 – 2,989,000

Loans to Employees 18.4 305,446,016 280,486,790 245,804,687 243,137,575

1,053,046,016 1,063,173,166 993,404,687 1,009,783,369

11,478,309,145 9,162,979,851 1,432,236,418 1,341,906,019

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18.2 Current


Note


Rs.


Rs.


Rs.


Rs.

Hire Debtors

Hire Debtors – Instalments Receivables 8,704,710,568 8,582,637,814 8,683,389,508 8,498,528,903

Rental Received in Advance (84,188) (84,188) – –

Less: Unearned hire debtors interest income (1,400,039,779) (1,333,704,665) (1,398,448,966) (1,325,607,580)

Provision for Impairment (90,961,816) (64,886,178) (82,385,651) (53,096,143)

7,213,624,785 7,183,962,783 7,202,554,891 7,119,825,180

Lease Rental Receivables

Gross Instalments in Lease 7,333,492,114 5,885,499,839 – –

Less: Unearned Income (2,146,116,729) (1,721,535,607) – –

Provision for Impairment 18.3 (248,345,208) (126,311,107) – –

4,939,030,177 4,037,653,125 – –

Loan Debtors

Consumer and Personal Loans 3,432,153,576 2,909,032,853 – –

Less: Unearned Loan Interest Income (264,926,628) (285,970,584) – –

FD Loans 68,229,423 42,000,185 – –

Net Receivable 3,235,456,371 2,665,062,454 – –

Less: Provision for Impairment 18.3 (323,203,252) (168,104,070) – –

2,912,253,119 2,496,958,384 – –

Trade Debtors

Trade Receivables 18.3 5,811,614,548 5,655,684,133 4,370,734,959 4,214,116,152

Less: Provision for Impairment (758,362,703) (293,771,484) (645,981,951) (234,945,963)

5,053,251,845 5,361,912,649 3,724,753,008 3,979,170,189

Other Debtors

Advance and Other Receivables 2,734,863,828 1,661,417,605 2,600,357,987 1,509,870,839

Less: Provision for Impairment (924,243,104) (666,561,992) (922,921,231) (665,101,091)

1,810,620,724 994,855,613 1,677,436,756 844,769,748

Shipping Guarantees – 27,092,217 – –

Prepayments 619,011,838 467,275,531 163,192,642 105,832,478

Loans to Employees 124,365,893 115,512,329 92,449,765 92,449,765

743,377,731 609,880,077 255,642,407 198,282,244

22,672,158,380 20,685,222,631 12,860,387,063 12,142,047,361

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18.3 Provision for Impairment



Rs.


Rs.


Rs.


Rs.

Trade Receivables Impairment Provision for Impairment – Hire Debtors

Movement

Balance as at the Beginning of the Period 64,886,178 50,985,870 53,096,143 25,491,954

Impact of Adopting SLFRS 9 – Financial Instruments 27,523,634 – 26,701,301 –

Provided During the Period (Note 8.1) 14,854,732 22,044,710 17,380,351 33,294,359

Write-off/Transfer During the Period (13,832,164) (8,144,402) (12,321,580) (5,690,170)

Balance as at End of the Period 93,432,380 64,886,178 84,856,215 53,096,143

Provision for Impairment – Lease Rental Receivable

Movement

Balance at the Beginning of the Period 126,311,107 93,696,290 – –

Impact of Adopting SLFRS 9 – Financial Instruments 46,251,037 – – –

Provided During the Period (Note 8.1) 143,871,915 68,944,048 – –

Write-off/Transfer During the Period (68,088,853) (36,329,231) – –

Balance at the End of the Period 248,345,206 126,311,107 – –

Provision for Impairment – Loan Debtors

Movement


Impact of Adopting SLFRS 9 – Financial Instruments 62,265,251 – – –

Provided During the Period (Note 8.1) 140,642,025 156,665,425 – –

Write-off/Transfer During the Period (47,808,094) (31,983,274) – –


Provision for Impairment – Trade Debtors

Movement


Impact of Adopting SLFRS 9 – Financial Instruments 246,301,807 – 219,373,305 –




Total Provision for Trade Receivables 1,423,343,541 653,072,839 730,838,166 288,042,106

Provision for Impairment – Other Debtors

Movement





Total Provision for Impairment 2,347,586,645 1,319,634,832 1,653,759,397 953,143,197

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18.4 Loans to Employees



Rs.


Rs.


Rs.


Rs.

Balance as at the Beginning of the Period 395,999,119 350,147,224 335,587,340 296,152,856

Loans granted During the Period 193,240,400 231,456,517 126,460,000 178,835,350

Less: Repayments (159,427,610) (185,604,622) (123,792,889) (139,400,865)

Balance as at the End of the Year 429,811,908 395,999,119 338,254,452 335,587,340

Due Within One Year 124,365,893 115,512,329 92,449,765 92,449,765

Due After One Year 305,446,015 280,486,790 245,804,687 243,137,575

18.5 Maturity Analysis of Hire Purchase, Lease and LoansConsolidated – As at 31st March 2019

Less than3 Months

Rs.

3-12Months

Rs.

1-3Years

Rs.

3-5Years

Rs.

Over5 Years

Rs.

2019Total

Rs.

Hire Debtors 2,866,548,769 4,436,453,886 352,118,564 849,301 – 7,655,970,520

Lease Rental Receivables 1,612,711,611 3,326,229,408 6,873,472,451 2,110,972,176 26,862,868 13,950,248,514

Loan Debtors 425,057,532 2,487,195,587 329,994,550 640,921,909 782,598 3,883,952,175

4,904,317,911 10,249,878,881 7,555,585,565 2,752,743,386 27,645,466 25,490,171,209

Consolidated – As at 31st March 2018

Less than3 Months

Rs.

3-12Months

Rs.

1-3Years

Rs.

3-5Years

Rs.

Over5 Years

Rs.

Total

Rs.

Hire Debtors 3,821,993,586 3,361,969,197 348,744,379 2,085,575 – 7,534,792,738

Lease Rental Receivables 1,098,056,091 2,939,597,034 5,727,692,782 1,606,990,995 10,888,421 11,383,225,322

Loan Debtors 743,438,665 1,753,519,719 336,626,139 65,647,645 1,130,748 2,900,362,916

6,413,063,300 8,055,085,950 5,663,488,342 1,674,724,215 12,019,169 21,818,380,976

Company – As at 31st March 2019

Less than3 Months

Rs.

3-12Months

Rs.

1-3Years

Rs.

3-5Years

Rs.

Over5 Years

Rs.

Total

Rs.

Hire Debtors 2,857,154,007 4,433,932,341 350,300,274 – – 7,641,386,622

2,857,154,007 4,433,932,341 350,300,274 – – 7,641,386,622

Company – As at 31st March 2018

Less than3 Months

Rs.

3-12Months

Rs.

1-3Years

Rs.

3-5Years

Rs.

Over5 Years

Rs.

Total

Rs.

Hire Debtors 3,797,473,732 3,322,351,448 332,122,650 – – 7,451,947,830

3,797,473,732 3,322,351,448 332,122,650 – – 7,451,947,830

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19. Amounts Due from Related Parties



Rs.


Rs.


Rs.


Rs.

Hayleys PLC Parent – 788,000 – –

Singer Finance (Lanka) PLC Subsidiary – – – 173,772,072

Singer Business School (Pvt) Limited Subsidiary – – 3,310,666 11,623,955

– 788,000 3,310,666 185,396,027

20. Cash and Cash Equivalents Components of Cash and Cash Equivalents

20.1 Favourable Cash and Cash Equivalents Balances



Rs.


Rs.


Rs.


Rs.

Cash at Banks 749,758,092 514,254,469 527,301,613 366,536,513

Cash in Hand 1,099,884,738 824,752,271 810,411,079 651,091,433

1,849,642,830 1,339,006,740 1,337,712,692 1,017,627,946

20.2 Unfavourable Cash and Cash Equivalent Balances

Bank Overdrafts (2,916,428,154) (2,132,691,242) (1,417,088,608) (1,237,088,725)

Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement (1,066,785,324) (793,684,502) (79,375,916) (219,460,779)

21. Stated Capital

As at 1st January 2017

Subdivision of Shares

As at31st March 2018

Number of Shares – Ordinary Shares (Nos.) 125,209,610 250,419,220 375,628,830

Rupees – Ordinary Shares (Rs.) 626,048,050 – 626,048,050

1st April 2018 31st March 2019

Number of Shares – Ordinary Shares (Nos.) 375,628,830 – 375,628,830

Rupees – Ordinary Shares (Rs.) 626,048,050 – 626,048,050

The holders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share at meetings of the Company.

As per the resolution passed at the Extra Ordinary General Meeting held on 31st March 2017, the issued and fully paid Ordinary shares of the Company was subdivided, by subdividing each issued Ordinary share of the Company in the proportion of three (03) shares for every One (01) shares held, thus increasing the number of existing issued Ordinary shares of the Company from 125,209,610 to 375,628,830 without effecting an increase in the Stated Capital of the Company of Rupees six hundred and twenty six million forty eight thousand and fifty only (Rs. 626,048,050/-).

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22. Capital Reserves



Rs.


Rs.


Rs.


Rs.

Revaluation Reserve 1,118,122,637 577,919,322 1,158,333,041 847,555,412

Revaluation Reserve (Note 22.1) 1,118,122,637 577,919,322 1,158,333,041 847,555,412

22.1 Revaluation Reserves



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 577,919,322 1,057,964,069 847,555,412 1,065,542,144

Revaluation Gain on Property, Plant and Equipment 784,157,271 – 453,751,963 –

Deferred Tax on Revaluation Gain on Property, Plant and Equipment (Note 9.4) (219,564,036) (451,830,901) (127,050,550) (198,082,001)

Realisation of Revaluation Surplus (24,389,920) (28,213,846) (15,923,784) (19,904,731)

Balance at the End of the Period 1,118,122,637 577,919,322 1,158,333,041 847,555,412

The revaluation reserve relates to revaluation of freehold land and buildings and represents the fair value of the land and buildings as at the date of revaluation.

23. Statutory Reserves



Rs.


Rs.


Rs.


Rs.

(a) Reserve Fund

Reserve Fund (Note 23.1) 163,096,146 136,009,451 – –

163,096,146 136,009,451

23.1 Reserve Fund



Rs.


Rs.


Rs.


Rs.


Transfer of Surplus During the Period 27,086,695 40,648,742 – –


The balance in the reserve fund will be used only for the purpose specified in the Central Bank Direction No. 1 of 2003.The Reserve Fund is maintained in compliance with Direction No. 1 of 2003 Central Bank of Sri Lanka (Capital Funds) issued to Finance Companies.

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As per the said Direction, every Licensed Finance Company shall maintain a Reserve Fund and transfer to such reserve fund out of the net profits of the each year after due provisions has been made for taxation and bad and doubtful debts on following basis:

Capital Funds to Deposit Liabilities % of Transfer to Reserve Fund

Not less than 25% 5

Less than 25% and not less than 10% 20

Less than 10% 50

Accordingly, Singer Finance (Lanka) PLC has transferred 5% of its net profit after taxation to the Reserve Fund as Company’s Capital Funds to Deposit Liabilities, belongs to not less than 25%.

24. Revenue Reserves



Rs.


Rs.


Rs.


Rs.

Summary

(a) General Reserve (Note 24.1) 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

(b) Retained Earnings 2,335,830,612 2,795,477,725 151,601,145 626,088,413

2,335,830,612 2,795,477,725 151,601,145 626,088,413

Revenue Reserves 5,035,830,612 5,495,477,725 2,851,601,145 3,326,088,413

24.1 General ReservesThe general reserve which is a revenue reserve represents set aside by the Directors for general application.

The movement of general reserve is as follows:



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

Transferred from Retained Earnings – – – –

At the End of the Period 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

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25. Interest-Bearing Loans and Borrowings25.1 Loans and Borrowings – Consolidated


Amount Repayable Within 1 Year

Rs.


Amount Repayable After 1 Year

Rs.

TotalAs at 31st

March 2019

Rs.



Rs.



Rs.

TotalAs at 31st

March 2018

Rs.

Debentures (Note 25.2) 97,210,000 2,137,906,386 2,235,116,386 5,408,103,763 1,575,448,576 6,983,552,339

Bank Loans (Note 25.3 a,b) 18,554,647,218 7,197,055,004 25,751,702,222 13,674,415,140 2,744,449,832 16,418,864,972

Securitisation Loans (Note 25.4) 568,920,960 1,305,198,080 1,874,119,040 – – –

19,220,778,178 10,640,159,470 29,860,937,648 19,082,518,903 4,319,898,408 23,402,417,311

Accrued Interest for interest Bearing Loans and Borrowings 270,389,119 – 270,389,119 185,750,549 – 185,750,549

19,491,167,297 10,640,159,470 30,131,326,767 19,268,269,452 4,319,898,408 23,588,167,860

25.2 Debentures – Consolidated

As at1st April 2018

Rs.

New Issues

Rs.

Redemption

Rs.


Rs.

Fixed Rate 8.60% Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 7th June 2018 2,929,980,000 – (2,929,980,000) –

Variable Rate – 1 year Net TB+1.25% (Floor 7% Capital 9.5%) Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 7th June 2018 70,020,000 – (70,020,000) –

Fixed Rate 14.50% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 10th September 2018 416,668,000 – (416,668,000) –

Fixed Rate 10.5% Senior, Listed, Unsecured, Redeemable, Rated Debentures Redeemable on 15th March 2019 460,560,000 – (460,560,000) –

Variable Rate – 6 Months Gross TB + 1.50% (Floor 9.50% Cap 12.50%) Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 15th March 2019 1,539,440,000 – (1,539,440,000) –

Fixed Rate 12.00%. Senior, listed, Unsecured, Redeemable, Rated Debentures Redeemable on 28th September 2021 – 656,800,000 – 656,800,000

Fixed Rate 11.50% Senior, Listed, Secured, Redeemable, Rated Debentures Redeemable on 6th April 2019 409,300,000 – – 409,300,000

Fixed Rate 12% Senior, Listed, Secured, Redeemable, Rated Debentures Redeemable on 6th April 2020 590,700,000 – – 590,700,000

Fixed Rate 9.95% Senior, Listed, Secured, Redeemable, Rated Debentures Redeemable on 16th June 2020 1,500,000,000 – – 1,500,000,000

Transaction Cost (21,025,661) 11,432,048 – (9,593,614)

Less: Investment in debenture in subsidiary (912,090,000) – – (912,090,000)

6,983,552,339 668,232,048 (5,416,668,000) 2,235,116,386

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25.3 Bank Loans – Consolidated


Loans Obtained Repayment Balance as at31st March 2019

Rs. Rs. Rs. Rs.

(a) Bank Loans Repayable within one Year – Consolidated

Bank Loans 13,674,415,140 50,662,126,131 (45,781,894,053) 18,554,647,218

13,674,415,140 50,662,126,131 (45,781,894,053) 18,554,647,218

The bank loans repayable within one year consist of short-term loans obtained from Hatton National Bank PLC, People’s Bank, Nations Trust Bank PLC, Commercial Bank of Ceylon PLC, Sampath Bank PLC, Seylan Bank PLC, Standard Chartered Bank Sri Lanka Limited, National Development Bank PLC, Deutsche Bank Sri Lanka and Muslim Commercial Bank Sri Lanka.

These loans bear interest rate between 10.35% to 13.55% and due for settlement at maturity.

(b) Bank Loan Repayable After One Year – Consolidated

Company Lender/Rate of Interest (p.a.) Repayment Security As at 31st March 2019

Rs.


Rs.

Singer (Sri Lanka) PLC Standard Chartered Bank Sri Lanka Limited (Fixed rate 12.95%)

Quarterly Negative pledged 220,375,004 657,149,832

Singer (Sri Lanka) PLC Commercial Bank of Ceylon PLC (AWPLR +1%, Rate Reviewed monthly)

Annually Negative pledged 1,250,000,000 1,875,000,000

Singer (Sri Lanka) PLC Commercial Bank of Ceylon PLC (Variable rate) (PLR + 1% – Floor 13.25%)

Quarterly Negative Pledged 2,000,000,000 –

Singer (Sri Lanka) PLC Sampath Bank PLC (Variable rate) (PLR + 1%)

Quarterly Negative Pledged Over Fixed Assets of the company 1,750,000,000 –

Singer (Sri Lanka) PLC Hatton National Bank PLC (Variable rate) (PLR + 1%)


Singer Finance (Lanka) PLC Seylan Bank PLC (AWPLR + 2.5%) Monthly Negative pledged 383,380,000 –

Singer Finance (Lanka) PLC Sampath Bank PLC AWPLR + 1.75 Rate review Monthly

Monthly Negative pledged 93,300,000 –

Singer Finance (Lanka) PLC Sampath Bank PLC (AWPLR +1.5%) Monthly Repayment

Negative pledged– 192,900,000

Singer Finance (Lanka) PLC Seylan Bank PLC (AWPLR +2%) Monthly Repayment

Negative pledged– 19,400,000

7,197,055,004 2,744,449,832

25.4 Securitisation Loans – Consolidated(a) Securitisation Loans Repayable within One Year

As At 1st April 2018

New Issues

Redemption As At 31st March 2019

Securitisation Loans – 2,050,000,000 (153,500,000) 1,896,500,000

Transaction Cost – (22,380,960) – (22,380,960)

Total – 2,027,619,040 (153,500,000) 18,741,119,040

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(b) Securitisation Loans Repayable after One Year – Consolidated

Company Lender/Rate of Interest Repayment Security As at 31st March 2019



Hatton National Bank PLC (Fixed 13.32% AWPLR + 1.75%) Structured

Lease and Hire Purchase receivable 461,880,737 –


Hatton National Bank PLC (Rate review monthly AWPLR + 2.5%) Quarterly

Lease and Hire Purchase receivable 1,112,238,303 –


Hatton National Bank PLC (Rate review monthly) Monthly

Lease and Hire Purchase receivable 300,000,000 –

1,874,119,040 –

25.5 Bank Facilities – Consolidated

As at 31st March 2019 As at 31st March 2018

UtilisedRs.

Total FacilityRs.

Utilised Rs.

Total FacilityRs.

Overdrafts 2,916,428,154 3,220,000,000 2,132,691,242 3,495,000,000

Term loans 7,197,055,004 7,828,333,336 2,744,449,832 4,355,000,000

Short-term loans and current portion of long-term loans 18,554,647,218 18,744,772,224 13,674,415,140 19,914,000,000

Total Debt Facility 28,668,130,376 29,793,105,560 18,551,556,214 27,764,000,000

Guarantees 561,769,119 1,800,000,000 524,894,785 2,200,000,000

Letter of credits 4,319,720,459 7,275,605,110 4,511,447,444 10,645,000,000

Total Debt and Other Facilities 33,549,619,954 38,868,710,670 23,587,898,443 40,609,000,000

25.6 Interest-Bearing Loans and Borrowings – Company



Rs.



Rs.

TotalAs at 31st

March 2019

Rs.



Rs.



Rs.

TotalAs at 31st

March 2018

Rs.

Debentures (Note 25.7) – 653,554,271 653,554,271 4,991,435,763 – 4,991,435,763

Bank Loans (Note 25.8 a,b) 13,266,614,322 6,720,375,004 19,986,989,326 9,175,592,417 2,532,149,832 11,707,742,249

13,266,614,322 7,373,929,275 20,640,543,597 14,167,028,180 2,532,149,832 16,699,178,012

Accrued Interest for interest Bearing Loans and Borrowings 109,699,116 – 109,699,116 72,360,115 – 72,360,115

13,376,313,438 7,373,929,275 20,750,242,713 14,239,388,295 2,532,149,832 16,771,538,128

25.7 Debentures – Company


Rs.

New Issues

Rs.

Redemption

Rs.

As At 31st March 2019

Rs.

Fixed Rate 8.60% Senior, Listed, Unsecured, Redeemable,Rated Debentures redeemable on 7th June 2018 2,929,980,000 – (2,929,980,000) –

Variable Rate 1 year Net TB+1.25% (Floor 7% Cap 9.5%) Senior,Listed, Unsecured, Redeemable, Rated Debentures redeemable on 7th June 2018 70,020,000 – (70,020,000) –

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101STEWARDSHIP


Rs.

New Issues

Rs.

Redemption

Rs.

As At 31st March 2019

Rs.

Fixed Rate 10.50% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 15th March 2019 460,560,000 – (460,560,000) –

Variable Rate – 6 Months Gross TB + 1.50% (Floor 9.50% Cap 12.50%) Senior, Listed, Unsecured, Redeemable, Rated Debentures Redeemable on 15th March 2019 1,539,440,000 – (1,539,440,000) –

Fixed rate 12.00%. Senior,listed, Unsecured, Redeemable, Rated Debentures Redeemable on 28th September 2021 – 656,800,000 – 656,800,000

Transaction Cost (8,564,237) 5,318,508 – (3,245,729)

4,991,435,763 662,118,508 (5,000,000,000) 653,554,271

25.8 Bank Loans – Company

As at1st April 2018

Rs.

LoanObtained

Rs.

Repayment

Rs.


Rs.

(a) Bank Loans Repayable within One Year – Company

Bank Loans, Short-Term Loans and CurrentPortion of Long-Term Loans 9,175,592,417 32,932,928,049 (28,841,906,144) 13,266,614,322

9,175,592,417 32,932,928,049 (28,841,906,144) 13,266,614,322

The bank loans repayable within one year consist of short term loans obtained from Hatton National Bank PLC, Nations Trust Bank PLC, Commercial Bank of Ceylon PLC, Sampath Bank PLC, Deutsche Bank Sri Lanka, Seylan Bank PLC, Standard Chartered Bank Sri Lanka Limited, People’s Bank and Muslim Commercial Bank Sri Lanka. These loans bears interest rate between 10.3% to 11.45% and due for settlement of maturity.

(b) Bank Loan Repayable After One Year – Company

Lender Repayment Security As at 31st March 2019

Rs.


Rs.

Standard Chartered Bank Sri Lanka Limited (Fixed Rate 12.95%)

Quarterly Negative Pledged 220,375,004 657,149,832

Commercial Bank of Ceylon PLC (AWPLR + 1 Rate review Monthly)

Annually Negative Pledged 1,250,000,000 1,875,000,000

Commercial Bank of Ceylon PLC (Variable rate) (PLR + 1% – Floor 13.25%)


Sampath Bank PLC (Variable rate) (PLR + 1%) Quarterly Negative Pledged Over Fixed Assets of the company 1,750,000,000 –

Hatton National Bank PLC (Variable rate) (PLR + 1%) Quarterly Negative Pledged 1,500,000,000 –

6,720,375,004 2,532,149,832

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25.9 Bank Facilities – Company


UtilisedRs.

Total FacilityRs.

Utilised Rs.

Total FacilityRs.

Overdraft 1,417,088,608 2,195,000,000 1,237,088,725 2,295,000,000

Term Loans 6,720,375,004 6,628,333,336 2,532,149,832 3,655,000,000

Short-Term Loans and Current Portion of Long-Term Loans 13,266,614,322 17,105,377,334 9,175,592,417 12,615,000,000

Total Debt Facility 21,404,077,934 25,928,710,670 12,944,830,974 18,565,000,000

Guarantees 561,769,119 1,800,000,000 524,894,785 1,750,000,000

Letter of Credit 3,621,720,459 7,130,000,000 2,504,862,843 6,630,000,000

Total Debt and Other Facilities 25,587,567,512 34,858,710,670 15,974,588,602 26,945,000,000

26. Deferred Tax Assets/(Liabilities)


Note


Rs.


Rs.


Rs.


Rs.

26.1 Deferred Tax

Balance at the Beginning of the Period (467,235,592) 124,061,153 69,642,532 147,270,286

Adjustment on Error Correction (19,222,000) – – –

Amount (Originating)/Reversal During the Period – Recognised in Profit or Loss 9.2 356,631,694 (82,215,026) 200,985,408 110,059,561

Amount (Originating)/Reversal During the Period – Recognised in Statement of Other Comprehensive Income Profit and Loss 9.4 5,871,651 6,319,485 7,545,349 2,653,957

Deferred Tax on Revaluation of PPE 9.4/26.3 (247,190,822) (516,049,055) (127,050,550) (198,082,001)

Deferred Tax Impact on Realisation of Revaluation Surplus 9.2 9,484,969 7,740,729 6,192,583 7,740,729

Deferred tax adjustment on SLFRS 9 and SLFRS 15 114,981,691 – 107,441,711 –

Deferred Tax Impact on Unrealised Profit in inventory 9.2 (190,793) (7,092,878) – –

Balance as at the End of the Period (246,869,202) (467,235,592) 264,757,033 69,642,532

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101STEWARDSHIP

26.2 Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against tax liabilities and when the deferred tax relate to the same fiscal authority.

Deferred tax is computed using the tax rate which was enacted by the end of the reporting period which is 28% and Regnis Appliances (Pvt) Limited at 20%.

26.3 As per the newly enacted Inland Revenue Act No. 24 of 2017, business income includes gains from realisation of capital assets and liabilities of a business. Accordingly, the gain from the realisation of an asset or liability shall be the amount by which the sum of the consideration received for the asset or liability exceeds the acquiring cost of the asset or liability at the time of realisation. The Group has recognised a revaluation reserve on free hold land (Capital asset of the Group) amounting to Rs. 606,566,750/- (2018 – Rs. 1,843,032,339/-), Company 284,984,250/- as at 31st March 2018 which is the amount by which the sum of the carrying value of the freehold land exceeds the acquiring cost of the land based on the revaluation carried out and accounted for as at the balance sheet date. Hence, the Group has recognised a deferred tax liability of Rs. 685,887,745/- (2018 – Rs. 516,049,055/-), Company Rs. 277,877,591/- (2018 – Rs. 198,082,001/- on revaluation reserve of freehold lands which is computed at the corporate tax rate of 28%.

26.3.1 Consolidated


AssetsRs.

Liabilities Rs.

AssetsRs.

LiabilitiesRs.

(a) Composition of Deferred Tax

Property, Plant and Equipment – 1,361,085,819 – 1,071,132,890

Intangible Assets – 34,029,561 – 26,353,008

Lease Rentals 1,007,875 133,123,515 139,257,459

Tax Losses 954,073 – 6,078,222 –

Provision for Inventories 275,554,201 – 222,864,788 –

Provision on Receivables 656,954,137 – 286,217,145 –

Employee Benefit Obligations 257,787,290 – 222,225,372 –

Provision for Warranty 89,112,116 – 32,122,238 –

1,281,369,693 1,528,238,895 769,507,764 1,236,743,357

Net deferred tax 246,869,202 467,235,592

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26.3.2 Company


AssetsRs.

Liabilities Rs.

AssetsRs.

LiabilitiesRs.

(a) Composition of Deferred Tax

Property, Plant and Equipment – 683,818,578 – 564,113,342

Intangible Assets – 17,608,992 – 16,308,898

Provision for Inventories 243,365,195 – 194,637,116 –

Provision on Receivables 463,052,631 – 266,880,095 –

Employee Benefit Obligations 176,612,230 – 160,722,563 –

Provision for Warranty 83,154,547 – 27,824,998 –

966,184,603 701,427,571 650,064,772 580,422,240

Net Deferred Tax 264,757,033 – 69,642,532

27. Employee Benefit Obligations


Note


Rs.


Rs.


Rs.


Rs.

Present Value of Unfunded Gratuity 871,971,129 794,644,981 630,757,966 574,009,152

Total Present Value of the Obligation 871,971,129 794,644,981 630,757,966 574,009,152

Provision for Retiring Gratuity

At the Beginning of the Period 794,644,981 651,143,995 574,009,152 476,754,466

Adjustment due to transfer of employees out of Company (13,970,000) – (13,970,000) –

Actuarial (Gain)/Loss on Obligation 9.4 21,158,221 18,910,000 26,947,676 9,478,416

Current Service Costs 57,258,140 67,788,899 40,169,233 46,279,839

Interest Costs 87,410,988 93,700,797 63,141,045 68,138,623

946,502,330 831,543,691 690,297,106 600,651,344

Benefits Paid During the Period (74,531,201) (36,898,710) (59,539,140) (26,642,193)

At the End of the Period 871,971,129 794,644,981 630,757,966 574,009,152

The Group and Company maintains a non-contributory defined benefit plan providing for gratuity benefits payable to employees who will get eligible upon their retirement.

As at 31st March 2019, the gratuity liability was valued under the Projected Unit Credit (PUC) method by a professionally qualified actuary Mr. Pushpakumar Gunasekara of Smiles Global (Pvt) Limited who is qualified Actuary, Associate of the Institute of Actuaries of Australia (AIAA).

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Following key assumptions were made in arriving at the above figures:

2019 2018

(a) Rate of Discount 11.0% p.a. (net of tax) 11.0% p.a. (net of tax)

(b) Salary Increment Rate

Year 1 10% 10%

Year 2+ 10% 9%

(c) Retirement Age

All Staff Members (Other than Factory Non-Management Staff) 60 years 60 years

Branch Managers 55 years 55 years

Factory Non-Management Staff – Singer Industries (Ceylon) PLC 60 years 60 years

Other Factory Non-Management Staff 55 years 55 years

(d) Assumptions regarding future mortality are based on A1967/70 Mortality Table, issued by the Institute of Actuaries, London. The demographic assumptions underline the valuation are with respect to retirement age, early withdrawal from service and retirement on medical grounds.

The expense is recognised in the following line items in the Income statement.

Expense is recognised in the following line items in the Income statement.



2019Rs.


2018Rs.


2019Rs.


2018Rs.

Cost of Sales 19,587,673 61,695,402 10,961,702 12,420,280

Selling and Administration Expenses 125,081,455 99,794,294 92,348,576 101,998,182

144,669,128 161,489,696 103,310,278 114,418,462

27.1 Sensitivity AnalysisReasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the benefit obligation by the amounts shown below:



IncreaseRs.

DecreaseRs.

IncreaseRs.

DecreaseRs.

Discount Rate (1% Movement) (43,945,630) 48,889,476 (32,619,543) 36,416,058

Future Salary (1% Movement) 49,458,488 (45,209,771) 37,188,452 (33,874,786)

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28. Security Deposits



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 1,199,127,333 1,018,451,850 1,199,127,333 1,018,451,850

Contribution During the Period 138,960,799 108,243,347 84,810,694 108,243,347

Interest Charges 148,317,161 168,619,531 146,162,296 168,619,531

Shortages Recovered (43,263,080) (58,152,701) (43,263,080) (58,152,701)

ESD Releases (54,709,192) (38,034,694) (54,709,192) (38,034,694)

Balance at the End of the Period 1,388,433,021 1,199,127,333 1,332,128,051 1,199,127,333

29. Trade and other Payables



Rs.


Rs.


Rs.


Rs.

Trade Payables 4,606,937,477 5,234,301,866 3,218,426,890 3,835,415,978

Value Added Tax Payable 52,964,929 78,224,110 (11,478,512) 14,216,669

MSPS Payable 38,937,714 94,291,306 38,417,044 94,031,975

ETF Payable 8,919,478 20,503,576 8,919,478 20,460,848

Advances Received from Customers (Note 29.1) 287,775,219 284,604,628 257,382,652 284,604,628

Accrued Expenses 1,314,537,407 1,378,838,308 1,048,277,442 1,113,729,765

Other Payables 810,047,047 880,560,560 400,376,205 541,868,243

Warranty Provisions (Note 29.3) 200,918,938 141,647,324 153,854,524 99,374,992

7,321,038,209 8,112,971,678 5,114,175,724 6,003,703,096

29.1 Advance Received From Customers



Rs.


Rs.


Rs.


Rs.

Contract Liabilities 36,921,881 19,638,343 36,921,881 19,638,343

Other Advances 250,853,339 264,966,285 220,460,772 264,966,285

287,775,219 284,604,628 257,382,652 284,604,628

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101STEWARDSHIP

29.2 Warranty Provision



Rs.


Rs.


Rs.


Rs.


Reclassification from Deferred Revenue on initial application of SLFRS 15 137,645,787 – 137,645,787 –

Provision Made During the Period 148,950,254 63,075,541 113,004,086 5,300,000

Utilised During the Period (84,198,078) (46,941,524) (53,043,992) –


29.3 Warranty Provision



Rs.


Rs.


Rs.


Rs.

Due after One Year 143,126,349 – 143,126,349 –

Due within One Year 200,918,938 141,647,324 153,854,524 99,374,992

344,045,287 141,647,324 296,980,873 99,374,992

*Warranty Provisions have been recognised for expected warranty claims on products. See the accounting policies in Note 2.6.1.

30. Deferred Revenue



Rs.


Rs.


Rs.


Rs.

Balance as at Beginning of the Period 246,289,945 438,989,246 246,289,945 438,989,246

Adjustment on initial application of SLFRS 15 226,619,389 – 226,619,389 –

Reclassification to warranty on initial application of SLFRS 15 (137,645,787) – (137,645,787) –

Amounts recognised During the Period 105,722,629 (220,658,167) 106,942,451 (220,658,167)

Amounts Transferred During the Period (167,013,118) 27,958,866 (173,742,918) 27,958,866

Balance as at the End of the Period 273,973,058 246,289,945 268,463,080 246,289,945

Due within One Year 188,044,737 119,961,349 182,534,759 119,961,349

Due after One Year 85,928,321 126,328,596 85,928,321 126,328,596

273,973,058 246,289,945 268,463,080 246,289,945

30.1 Deferred Revenue includes deferred service fee on air conditioners, Sanasuma Extended Warranty Scheme and amount deferred on motor bike services income as at 31st March 2019.

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31. Income Tax Payables/(Receivables)


Notes


Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period (46,635,361) 245,280,570 (157,630,474) (1,767,152)

Charge for the Period 9 477,606,670 614,776,454 143,238,137 224,296,133

(Over)/Under Provision in respect of Previous Year 9 104,474,835 20,055,084 12,102,703 359,716

Payments Made During the Period (606,399,784) (926,747,469) (237,898,052) (380,519,171)

Balance at the End of the Period (70,953,640) (46,635,361) (240,187,686) (157,630,474)

32. Dividend Payables



Rs.


Rs.


Rs.


Rs.

Unclaimed Dividends 88,496,948 220,838,973 49,212,196 166,754,628

88,496,948 220,838,973 49,212,196 166,754,628

33. Dividends

Company

As at 31st March 2019 Rs.

As at 31st March 2018Rs.

Ordinary Shares

Final Dividend 2018/19 – Nil (2016 – Rs. 8.80 ) – 1,101,844,568

Interim Dividend 2018/19 – Rs. 0.65 (2017/18 – Rs. 2.20) 244,158,740 826,383,426

244,158,740 1,928,227,994

Dividend Per Share (Rs.) 0.65 2.20

34. Amounts Due to Related Parties 34.1 Amounts Due to Related Parties – Trade



Rs.


Rs.


Rs.


Rs.

Singer Industries (Ceylon) PLC Subsidiary Company – – 65,450,436 105,987,239

Regnis (Lanka) PLC Subsidiary Company – – 667,743,445 363,661,515

Regnis Appliances (Pvt) Limited Subsidiary Company – – 213,374,482 185,500,241

Singer Finance (Lanka) PLC Subsidiary Company – – 78,738,426 –

Singer Digital Media (Pvt) Limited Subsidiary Company – – 1,482,650,928 1,969,146,333

Hayleys Travels and Tours (Pvt) Limited

Affiliate Company– 7,087,599 – 7,087,599

– 7,087,599 2,507,957,717 2,631,382,927

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101STEWARDSHIP

34.2 Amounts Due to Related Parties – Non Trade



Rs.


Rs.


Rs.


Rs.

Hayleys PLC Parent Company 200,549,783 195,311,266 198,883,053 194,195,103

Hayleys Advantis Limited Affiliate Company 24,132,979 81,198,192 24,132,979 81,198,192

Volanka (Pvt) Limited Affiliate Company 7,537,234 25,359,894 7,537,234 25,359,894

Hayleys Aventura (Pvt) Limited Affiliate Company 6,845,718 23,033,298 6,845,737 23,033,298

Carbotels (Pvt) Limited Affiliate Company 6,292,553 21,172,021 6,292,557 21,172,021

Hayleys Agriculture Holdings Limited Affiliate Company 6,154,255 20,706,702 6,154,255 20,706,702

Mr. K.D.D. Perera Key Management Personnel (KMP) 4,508,343 15,168,842 4,508,343 15,168,842

256,020,865 381,950,214 254,354,158 380,834,051

Total 256,020,865 389,037,813 2,762,311,875 3,012,216,978

35. Other Financial Liabilities





As at 31st March 2018Rs.

Deposits from Customers (Note 35.1) 5,953,023,001 5,229,639,918 – –

Due within One Year 5,148,467,467 4,826,583,524 – –

Due after One Year 804,555,534 411,393,904 – –

Derivative Financial Liabilities (Note 35.2) (85,648,063) 8,337,510 (85,648,063) 8,337,510

35.1 Deposits from Customers

Balance at the Beginning of the Period 5,229,639,918 3,041,946,900

New Deposits 5,673,100,303 5,433,583,327

Capitalisation of Interest 309,184,127 668,667,381

11,211,924,348 9,144,197,608

Repaid Deposits (5,242,547,096) (3,788,119,165)

Less: Investment in Fixed Deposits in Subsidiary (16,354,251) (126,438,525)

Balance at the End of the Period 5,953,023,001 5,229,639,918

Payable within One Year 5,148,467,467 4,813,246,014

Payable after One Year 804,555,534 411,393,904

Deposit Classification

Fixed Deposits at Amortised Cost 5,899,267,301 5,161,466,477

Saving Deposits 53,755,700 68,173,441

5,953,023,001 5,229,639,918

35.2 Derivative Financial Liabilities/(Assets)

Fair Value of Cross Currency interest SWAP (85,648,063) 8,337,510 (85,648,063) 8,337,510

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During 2017/18 Period Company has entered into a borrowing contract with Standard Chartered Bank (Mauritius) Limited to borrow a USD 10 million at an interest rate of 3 Months LIBOR+3.5%. In order to mitigate the currency and interest rate risks, company has entered to a separate cross currency interest rate SWAP with Standard Chartered Bank (Sri Lanka) Limited. Accordingly the instalments are fixed to be settled Sri Lankan Rupees. Derivative financial liabilities include the fair value of cross currency SWAP as at 31st March 2019. The resultant fair value of the cross currency interest SWAP is accounted as a derivative assets in these financial statements.

Derivative liabilities include the fair value of cross currency SWAP as at 31st March 2019.

36. Financial InstrumentsFinancial Risk Management OverviewThe Group has exposure to the following risks from its use of financial instruments:

Credit Risk

Liquidity Risk

Market Risk

Operational Risk

The note presents information about Group’s exposure to each of above risks, the Group’s objectives, policies and processes measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these Consolidated Financial Statements.

Risk Management FrameworkThe Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risk faced by the Group, to set appropriate risks limits and controls and to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Board of Directors oversees how management monitor compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Company’s Directors are assisted in their oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of the risk management controls and producers, the result of which are reported to the Company’s Directors.

Credit RiskCredit risk is the risk of financial loss to the Group if a customer of counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s trade and other receivables.

Treasury BillsSinger Finance (Lanka) PLC invests not less than 7.5% of the public deposits in Treasury Bills to comply with the Central Bank of Sri Lanka Direction No. 1 of 2009.

Trade and Other ReceivablesThe Group’s exposure to credit risk relates to sale of products on instalment credit/hire purchase which is an integral part of the business of the Group.

The Group’s exposure to credit risk on instalment credit/hire purchase contracts is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risks of the country in which customers reside, has a lesser influence on credit risk.

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101STEWARDSHIP

Geographically, there is no concentration of credit risk. Goods are sold, subject to collateral undertakings so that in the event of non-payment, the Group can have a secured claim. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposure and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified.

Liquidity RiskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

Market RiskMarket risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income. The objective of market risk management is to manage and control market risk exposure within the acceptable parameters, while optimising the return.

Currency RiskThe Group is exposed to currency risk on purchases that are denominated in a currency other than the respective financial currencies of Group entities. The currency in which these transactions primarily are denominated in US Dollars. The currency risk is limited by the short-term nature of the period between the dates of the purchase and settlements of the related liability.

Interest Rate RiskThe Group manages interest rate risk on borrowings by using a combination of fixed and floating interest rate.

Operational RiskOperational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all Group’s operations.

The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity

The primary responsibility for the development and implementation of controls to address operational risks is assigned to Senior Management within each business unit. This responsibility is supported by the development of overall Group standards for the managements of operational risk in the following areas:zz Requirements for the appropriate segregation of duties, including the independent authorisation of transactions.zz Requirements for the reconciliation and monitoring of transactions.zz Compliance with regulatory and other legal requirements.zz Documentation of controls and procedures.zz Requirements for the periodic assessment of operational risks faced and the adequacy of controls and procedures to address

the risks identified.zz Requirements for the reporting of operational losses and proposed remedial action.zz Development of contingency plans.zz Training and professional development.zz Ethical and business standards.zz Risk mitigation, including insurance where this is effective.

Compliance with Group standards is supported by a programme of periodic reviews undertaken by internal audit. The results of internal audit reviews are discussed with the management of the business unit to which they relate, Senior Management of the Group and the Board of Directors.

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Credit Risk

Exposure to Credit RiskThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the Reporting date was:

Carrying Amount – Consolidated Carrying Amount – Company


Rs.


Rs.


Rs.


Rs.

Trade and other Receivables 34,150,467,520 29,848,202,484 14,292,623,480 13,483,953,379

Cash at Bank 1,849,642,830 1,339,006,740 1,337,712,692 1,017,627,946

Amounts due from Related Parties – 788,000 3,310,666 185,396,027

Loans due from Related Parties – – 1,215,819,977 1,219,150,767

Other Financial Assets 726,081,693 688,443,940 928,292,652 3,854,332,314

Deposits at Bank 83,323,971 81,504,012 – –

36,809,516,014 31,957,945,176 17,777,759,467 19,760,460,433

The Maximum exposure to credit risk for receivables at the reporting date by type of counterparty was:

Carrying Amount – Consolidated Carrying Amount – Company


Rs.


Rs.


Rs.


Rs.

Retail Customers 25,490,171,209 21,818,380,977 7,641,386,622 7,451,947,830

Wholesale Customers 5,053,251,844 5,361,912,649 3,724,753,008 3,979,170,189

Others 3,607,044,467 2,667,908,857 2,926,483,851 2,052,835,360

Total 34,150,467,520 29,848,202,483 14,292,623,480 13,483,953,379

Impairment AnalysisThe aging of receivables at the Reporting date:

Group As at 31st March 2019 As at 31st March 2016

GrossRs.

ImpairmentRs.

Net ReceivableRs.

GrossRs.

ImpairmentRs.

Net ReceivableRs.

Not Past due 23,168,391,826 (197,247,975) 22,971,143,851 14,765,214,878 – 14,765,214,878

Past due 0-30 Days 4,999,720,394 (142,998,749) 4,856,721,645 4,609,373,702 (11,994,276) 4,597,379,426

Past due 31-120 Days 4,178,363,059 (221,406,838) 3,956,956,221 9,831,177,826 (112,743,713) 9,718,434,113

Past due more than 120 Days 4,151,578,886 (1,785,933,083) 2,365,645,803 1,962,070,908 (1,194,896,842) 767,174,066

Total 36,498,054,165 (2,347,586,647) 34,150,467,520 31,167,837,314 (1,319,634,831) 29,848,202,484

255




101STEWARDSHIP

Company As at 31st March 2019 As at 31st March 2018

GrossRs.

ImpairmentRs.

Net ReceivableRs.

GrossRs.

ImpairmentRs.

Net ReceivableRs.

Not Past due 12,115,787,669 (184,996,111) 11,930,791,558 4,324,534,873 – 4,324,534,873

Past due 0-30 Days 938,809,693 (45,780,584) 893,029,109 2,230,705,807 (11,903,850) 2,218,801,957

Past due 31-120 Days 1,176,147,691 (118,910,367) 1,057,237,324 3,426,993,657 (107,493,355) 3,319,500,302

Past due more than 120 Days 1,715,643,821 (1,304,072,331) 411,571,490 4,454,862,239 (833,745,992) 3,621,116,247

Total 15,680,955,734 (1,653,759,397) 14,292,629,480 14,437,096,576 (953,143,197) 13,483,953,379

The movement in the allowance for impairment in respect of receivables during the year was as follows:



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 1,319,634,831 847,624,904 953,143,197 641,085,725

Impact of Adopting SLFRS 9 “Financial instruments” 374,801,748 – 246,074,606 –

Impairment Loss Recognised 790,699,290 652,643,612 474,683,286 422,183,787

Amounts Written-off (137,549,222) (180,633,685) (20,141,692) (110,126,315)

Balance at the End of the Period 2,347,586,647 1,319,634,831 1,653,759,398 953,143,197

Total impairment for the period resulted from following counterparties.

Group Company


Rs.


Rs.


Rs.


Rs.

Impairment for Hire Debtors 93,432,380 64,886,178 84,856,215 53,096,143

Impairment for Lease Rental Receivables 248,345,208 126,311,107 – –

Impairment for Loan Debtors 323,203,252 168,104,070 – –

Impairment for Trade Debtors 758,362,703 293,771,484 645,981,951 234,945,963

Impairment for Other Debtors 924,243,104 666,561,993 922,921,232 665,101,091

Total 2,347,586,648 1,319,634,831 1,653,759,398 953,143,197

A committee respective functional managers groups established a credit policy under which each new customer is analysed individually for credit worthiness before the Group’s standard payment and delivery terms and conditions offered for wholesale customers, sale limits are established for each customer and reviewed periodically. Any sales exceeding these limits require approvals from Directors based on amount enhanced.

The Group establishes an allowance for impairment that represent its estimate of incurred losses in respect of trade and other receivables.

All bank deposits and current accounts maintained at licensed commercial banks, which are subject to close supervision of Central Bank.

All related party receivables are from Subsidiary companies which are controlled by the same Board of Directors of Singer (Sri Lanka) PLC.

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Liquidity RiskThe following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Group

31st March 2019 Carrying Amount

Rs.

Contractual Cash Flows

Rs.

6 Months or Less

Rs.

6-12 Months

Rs.

1-2 Years

Rs.

2-5Years

Rs.

More than 5 Years

Rs.

Non-Derivative Financial Liabilities

Secured bank loans 2,135,101,795 2,445,118,576 1,784,956,584 114,268,056 335,795,544 210,098,392 –

Unsecured bank loans 23,616,600,427 23,263,862,358 10,772,384,092 5,023,751,604 5,083,515,428 2,384,211,233 –

Unsecured Debenture issues 653,554,271 853,516,099 39,515,967 39,300,033 774,700,099 – –

Secured Debenture issues 1,581,562,115 1,959,194,435 167,092,972 692,069,255 1,100,032,208 – –

Bank overdraft 2,916,428,154 2,916,428,154 2,916,428,154 – – – –

Securitisation 1,874,119,040 2,176,654,310 433,024,310 372,141,600 1,371,488,400 – –

Trade and Other Payables 7,321,038,197 7,321,038,197 7,321,038,197 – – – –

Public Deposits 5,953,023,001 6,827,313,671 4,140,592,184 1,785,099,672 537,648,464 349,373,747 14,599,604

Total 46,051,427,000 47,763,125,800 27,575,032,460 8,026,630,220 9,203,180,143 2,943,683,372 14,599,604

Derivative Financial Liabilities

Interest Rate SWAP (85,648,063) (85,648,063) – (85,648,063) – – –

Total (85,648,063) (85,648,063) – (85,648,063) – – –


Rs.


Rs.

6 Months or Less

Rs.

6-12 Months

Rs.

1-2 Years

Rs.

2-5Years

Rs.

More than 5 Years

Rs.


Secured Bank Loans 1,312,300,000 1,317,724,996 955,424,996 75,000,000 75,000,000 212,300,000 –


Unsecured Debenture issues 4,483,352,339 4,772,302,590 2,673,505,135 2,098,797,455 – – –

Secured Debenture issues 2,500,000,000 2,567,378,286 67,378,286 – 409,300,000 2,090,700,000 –

Bank overdraft 2,132,691,242 2,132,691,242 2,132,691,242 – – – –


Public Deposits 5,229,639,918 5,356,078,444 3,573,003,590 1,379,223,153 279,720,244 111,990,210 12,141,247

Total 38,877,520,150 40,645,408,978 23,785,940,247 10,763,731,699 2,007,551,714 4,076,044,071 12,141,247


Interest Rate SWAP 8,337,510 8,337,510 – 8,337,510 – – –

Total 8,337,510 8,337,510 – 8,337,510 – – –

257




101STEWARDSHIP

Company


Rs.


Rs.

6 Months or Less

Rs.

6-12 Months

Rs.

1-2 Years

Rs.

2-5Years

Rs.

More than 5 Years

Rs.



Unsecured Debenture issues 653,554,271 853,516,099 39,515,967 39,300,033 774,700,099 – –


Bank overdraft 1,417,088,608 1,417,088,608 1,417,088,608 – – – –

Total 27,171,807,929 29,621,117,264 16,315,638,867 5,063,051,637 5,858,215,527 2,384,211,233 –


Interest Rate SWAP (85,648,063) (85,648,063) – (85,648,063) – –

Total (85,648,063) (85,648,063) – (85,648,063) – – –


Rs.


Rs.

6 Months or Less

Rs.

6-12 Months

Rs.

1-2 Years

Rs.

2-5Years

Rs.

More than 5 Years

Rs.


Unsecured Bank Loans 11,707,742,249 12,829,049,278 5,723,593,430 4,200,870,517 1,243,531,470 1,661,053,861

Unsecured Debenture issues 4,991,435,763 5,255,895,879 3,157,098,424 2,098,797,455 – – –


Bank Overdraft 1,237,088,725 1,237,088,725 1,237,088,725 – – – –

Total 23,939,969,831 25,325,736,976 16,121,483,673 6,299,667,972 1,243,531,470 1,661,053,861


Interest Rate SWAP 8,337,510 8,337,510 – 8,337,510 – – –

Total 8,337,510 8,337,510 – 8,337,510 – – –

The outflows disclosed in the above table represent the contractual undiscounted cash flows relating to non-derivative financial liabilities held for risk management purposes and which are not closed out before contractual maturity.

Market RiskCurrency RiskThe summary quantitative data about the Group’s exposure to currency risk as reported to the management of the Group is as follows.


USD CNY EURO USD CNY EURO

Trade Payables 11,381,413 2,027,261 1,028 17,178,724 1,535,074 17,914

Net Exposure 11,381,413 2,027,261 1,028 17,178,724 1,535,074 17,914

* USD – United States Dollars

* CNY – Chinese Yuan

* Euro – EU Euro

258




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5SINGER AT A GLANCE

The following significant exchange rates have been applied:

Average Rate Period End Sopt Rate

2019 2018As at

31st March 2019As at

31st March 2018

USD 178.42 152.92 176.13 155.97

CNY 26.14 23.26 26.27 21.92

Euro 201.67 163.8 197.80 192.22

Sensitivity AnalysisA reasonably possible strengthening (weakening) of the USD, CNY or EURO against all other currencies at reporting date would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Profit or Loss Equity net of Tax

StrengtheningRs. ’000

WeakeningRs. ’000

StrengtheningRs. ’000

WeakeningRs. ’000

2019

USD (5% Movement) (100,230) 100,230 (72,166) 72,166

CYN (5% Movement) (2,663) 2,663 (1,917) 1,917

EURO (5% Movement) (10) 10 (7) 7

2018

USD (5% Movement) (133,968) 133,968 (96,457) 96,457

CYN (5% Movement) (1,683) 1,683 (1,212) 1,212

EURO (5% Movement) (172) 172 (124) 124

Interest Rate Risk

ProfileAt the Reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was:

Group Company


Rs.

As at 31st March2018

Rs.


Rs.


Rs.

Fixed Rate Instruments

Financial Assets 25,490,171,209 21,818,381,007 8,553,476,622 8,364,037,830

Financial Liabilities (29,989,255,113) (21,813,982,972) (20,643,789,326) (15,098,282,249)

(4,499,083,904) 4,398,035 (12,090,312,704) (6,734,244,419)

Variable Rate Instruments

Financial Assets – – – –

Financial Liabilities – (1,609,460,000) – (1,609,460,000)

– (1,609,460,000) – (1,609,460,000)

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101STEWARDSHIP

Cash Flow Sensitivity for Variable Rate InstrumentsA reasonably possible change of 100 basis points in interest rate at the reporting date would have increased (Decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant:

Profit or Loss Equity Net of Tax

1% Increase Rs. ’000

1% DecreaseRs. ’000

1% Increase Rs. ’000

1% Decrease Rs. ’000

31st March 2019

Variable Rate Instruments – – – –

Cash Flow Sensitivity (Net) – – – –

31st March 2018

Variable Rate Instruments (16,094) 16,094 (11,587) 11,587

Cash Flow Sensitivity (Net) (16,094) 16,094 (11,587) 11,587

Fair Values

Fair Values Versus Carrying AmountsThe fair values of financial assets and liabilities, together with the carrying amounts in the Balance Sheet, are as follows:

Group

31st March 2019`

Note

FinancialAssets/

Liabilities atFVOCI

Rs.

FinancialAssets/

Liabilities atamortised

costRs.

Financial Liabilities at

FVTPL

Rs.

Other Financial

Liabilities

Rs.

Total Carrying Value

Rs.

Fair Value

Rs.

Fair Value Measurement

Level

Rs.

Investment in Equity Securities 15.1 17,061,300 17,061,300 Level 2

Derivatives 85,648,063 85,648,063 Level 2

Hire Debtors 18 7,655,970,520 7,655,970,522 –

Lease Debtors 18 13,950,248,514 13,950,248,513 –

Loan Debtors 18 3,883,952,175 3,883,952,174 –

Trade Debtors 18 5,053,251,844 5,053,251,844 –

Other Debtors 18 3,607,044,467 3,607,044,467 –

Cash and Cash Equivalents 20.1 1,849,642,830 1,849,642,830 –

Investment in Treasury Bills 15.2 623,372,330 623,372,330 – Level 2

Deposits with Banks 83,323,971 83,323,971 –

Total 17,061,300 36,706,806,651 85,648,063 – 36,809,516,014 –

Debentures 25.2 – – – 2,235,116,386 2,235,116,386 –

Bank Loans 25.3 – – – 25,751,702,222 25,751,702,222 –

Bank Overdraft 20.2 – – – 2,916,428,154 2,916,428,154 –

Trade and Other Payables 29 – – – 7,321,038,197 7,321,038,197 –

Dividend Payable 32 – – – 88,496,948 88,496,948 –

Amounts due to Related Parties 34 – – – 256,020,866 256,020,866 –

Deposits from Customers 35 – – – 5,148,467,467 5,148,467,467

Total 43,717,270,240 43,717,270,240

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Group

31st March 2018 Note Available-for-Sale

Rs.

Loans andReceivables

Rs.

Financial Assets/

Liabilities at FVTPL

Rs.

Other Financial Liabilities

Rs.

TotalCarrying Value

Rs.

FairValue

Rs.


Level

Investment in Equity Securities 15.1 17,061,300 – – – 17,061,300 17,061,300 Level 2

Hire Debtors 18 – 7,534,792,738 – – 7,534,792,738 –

Lease Debtors 18 – 11,383,225,322 – – 11,383,225,323 –

Loan Debtors 18 – 2,900,362,916 – – 2,900,362,916 –

Trade Debtors 18 – 5,361,912,649 – – 5,361,912,649 –

Other Debtors 18 – 2,667,908,857 – – 2,667,908,857 –

Amounts due from Related Parties 19 – 788,000 – – 788,000 –

Cash and Cash Equivalents 20.1 – 1,339,006,740 – – 1,339,006,740 –

Investment in Treasury Bills 15.2 – 671,382,640 – – 671,382,640 671,382,640 Level 2

Deposits with Banks – 81,504,012 – – 81,504,012 –

Total 17,061,300 31,940,883,875 – – 31,957,945,175 –

Derivatives 8,337,510 8,337,510 8,337,510 Level 2

Debentures 25.2 – – – 6,983,551,005 6,983,551,005 –

Bank Loans 25.3 – – – 16,418,864,972 16,418,864,972 –

Bank Overdraft 20.2 – – – 2,132,691,242 2,132,691,242 –

Trade and Other Payables 29 – – – 8,112,971,679 8,112,971,679 –

Dividend Payable 32 – – – 220,838,973 220,838,973 –

Amounts due to Related Parties 34 – – – 389,037,813 389,037,813

Deposits from Customers 35 – – – 5,229,639,918 5,229,639,918

Total – – 8,337,510 39,487,595,602 39,495,933,112 –

Company

31st March 2019

Note FinancialAssets/

Liabilities atFVOCI

Rs.

FinancialAssets/


costRs.

Financial Assets/


Rs.

Other Financial

Liabilities

Rs.


Rs.

Fair Value

Rs.


Level

Rs.

Investment in Equity Securities15.1 17,020,000 17,020,000 17,020,000 Level 2

Investment in Debentures 15.1 912,090,000 912,090,000

Derivatives 85,648,063 85,648,063

Loans due from Related Parties 17 1,215,819,977 1,215,819,977

Hire Debtors 18 7,641,386,622 7,641,386,622

Trade Debtors 18 3,724,753,008 3,724,753,008

Other Debtors 18 2,926,483,851 2,926,483,851

Amounts due from Related Parties 19 3,310,666 3,310,666

Cash and Cash Equivalents 20.1 1,337,712,692 1,337,712,692

Total 17,020,000 16,849,466,816 85,648,063 17,864,224,879 –

261




101STEWARDSHIP

Company

31st March 2019

Note FinancialAssets/

Liabilities atFVOCI

Rs.

FinancialAssets/


costRs.

Financial Assets/


Rs.

Other Financial

Liabilities

Rs.


Rs.

Fair Value

Rs.


Level

Rs.

Debentures 25 653,554,271 653,554,271

Bank Loans 25 19,986,989,326 19,986,989,326

Bank Overdraft 20.2 1,417,088,608 1,417,088,608

Trade and Other Payables 29 5,114,175,724 5,114,175,724

Dividend Payable 32 49,212,196 49,212,196

Amounts due to Related Parties 34 2,762,311,876 2,762,311,876

Total – – 29,983,332,001 29,983,332,001 –

Company

31st March 2018

Note Available-for-Sale

Rs.

Held-to-Maturity

Rs.

Loans andReceivables

Rs.

Financial Liabilities at

FVTPLRs.

Other Financial Liabilities

Rs.


Rs.

FairValue

Rs.


LevelRs.

Investment in Equity Securities 15.1 17,020,000 – – – – 17,020,000 17,020,000 Level 2

Investment in Debentures 15.1 – 912,090,000 – – – 912,090,000 –

Loans due from Related Parties 17 – – 1,219,150,767 – – 1,219,150,767 –

Hire Debtors 18 – – 7,451,947,830 – – 7,451,947,830 –

Trade Debtors 18 – – 3,979,170,189 – – 3,979,170,189 –

Other Debtors 18 – – 2,052,835,360 – – 2,052,835,360 –

Amounts due from Related Parties 19 – – 185,396,027 – – 185,396,027

Cash and Cash Equivalents 20.1 – – 1,017,627,946 – – 1,017,627,946

Total 17,020,000 912,090,000 15,906,128,119 – – 16,835,238,119 –

Derivatives 8,337,510 – 8,337,510 8,337,510 Level 2

Debentures 25 – – – – 4,991,435,763 4,991,435,763 –

Bank Loans 25 – – – – 11,707,742,249 11,707,742,249 –

Bank Overdraft 20.2 – – – – 1,237,088,725 1,237,088,725

Trade and Other Payables 29 – – – – 6,003,703,094 6,003,703,094 –

Dividend Payable 32 – – – – 166,754,628 166,754,628 –

Amounts due to Related Parties 34 – – – – 3,012,216,978 3,012,216,978 –

Total – – – 8,337,510 27,118,941,437 27,127,278,947 –

Where ever the assets and liabilities are not fair valued, it was assume that the caring value of such assets and liabilities are a reasonable approximation to this fair value as majority of such assets and liabilities are with shorter maturity periods.

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(I) Fair Value Versus Carrying AmountsThe following table show the valuation techniques used in measuring Level 2 fair values, as well as significant unobservable inputs used:

Type Valuation Technique Significant Unobservable Inputs

Treasury Bills Discount Cash Flows Forecasted Annual Cash Inflows and Outflows

Derivative The fair value is calculated as the present value of the estimated future cash flows. Estimates of future floating-rate cash flows are based on forward interest ratio and forward currency rates. Estimated cash flows are discounted using a yield curve constructed from similar sources.

Not Applicable

Capital ManagementThe Board’s policy is to maintain a strong capital base to maintain confidence of the investors, creditors and the market while sustaining future development of the business capital consists to total equity. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Board of Directors seeks to maintain a balance between higher returns facilitated through a higher level of borrowings and the benefits and security afforded by a sound capital position.

The Capital Structure of the Group consists of debt and equity of the Group. The capital structure of the Group is reviewed by the Board of Directors.

The Group monitors capital using the ratio of net debt to equity. For this purpose adjusted net debt is defined as total liabilities comprising interest bearing loans and borrowings and obligation under finance leases, less cash and cash equivalents.

Group Company


Rs.


Rs.


Rs.


Rs.

Total Borrowings 39,000,777,922 30,958,836,530 22,167,331,321 17,953,168,484

Less: Cash and Cash Equivalents (1,849,642,830) (1,339,006,740) (1,337,712,692) (1,017,627,946)

Adjusted Net Borrowings 37,151,135,092 29,619,829,790 20,829,618,629 16,935,540,538

Total Equity 8,451,643,776 8,184,568,509 4,635,982,237 4,799,691,875

Net Debt to Equity Ratio 4 4 4 4

The Regulatory Capital requirements for the Finance Companies are set by the Central Bank of Sri Lanka. The details of the computation of risk weighted assets, capital and the ratios of the Singer Finance PLC are given below:

Capital AdequacyCapital adequacy is a measure of financial institutions financial strength and stability. This widely accepted concept tries to specify the limit up to which a business can expand in terms of its risk – weighted assets. Finance companies in pursuit of business expansion, could engage themselves in activities that regularly change their risk profile. In light of this, regulatory capital requirements have been established to avoid undue expansion beyond specified limits keeping a hold on companies’ exposure to risk. Capital serves as a comfort to absorb unexpected losses, providing a degree of security to depositors and other key stakeholders.

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101STEWARDSHIP

This measure has been introduced by the Central Bank of Sri Lanka to protect the interest of the various stakeholders of the Company while ensuring the maintenance of confidence and stability of the financial system.

The capital adequacy ratio is calculated as a percentage on company’s capital to its risk weighted assets as specified by the direction No 03 of 2018 with the effect from 1st July 2018 . Previously, Capital Adequacy ratio was computed based on the Direction No.02 of 2006 and by the circular issued by the Central Bank of Sri Lanka dated 15/03/2017.

Based on the Direction No. 03 of 2018 the Listed Finance Companies which are having asset base less than 100 Billion need to be have minimum Core Capital Ratio (Tier-I) of 6% and 10% based on the Total Capital Ratio (Tier-II). This minimum requirement will increase to 6.5% and 10.5% respectively with the effect from 1st July 2019.

The core capital represents the permanent shareholders’, equity and reserves created or increase by appropriations of retained earnings or other surpluses and the total capital includes in addition to the core capital, the revaluation reserves, general provisions and other hybrid capital instruments and unsecured subordinated debts.

The Risk Weighted Assets have been calculated by multiplying the value of each category of asset using the risk weight specified by the Central Bank of Sri Lanka.

Details of the computation and the resulting rations are given below:

Balance Risk-Weighted Balance


Rs.


Rs.

Risk-WeightedFactor

%

2019

Rs.

2018

Rs.

Assets

Risk Weighted Amount for Credit Risk

Notes and Coins 99,120,778 – 0 – –

Cash Items in the Process of Collection 186,977,852 – 20 37,395,570 –

Fixed Assets 221,000,510 – 100 221,000,510 –

Other Assets/Exposures 518,006,872 – 100 518,006,872 –

Investment in Government Securities 623,372,330 – 0 – –

Bank deposits 83,323,970 – 20 16,664,794 –

Retail claims in respect of motor vehicles and machinery 7,935,770,584 – 100 7,935,770,584 –

Claims Secured by Gold

Outstanding claim portion up to 70% of the market value 145,163,225 – 0 – –

Remaining outstanding claim portion over 70% of the market value 5,714,871 – 100 5,714,871 –

Other retail claims 9,964,474,589 – 125 12,455,593,236 –

Other Non-Performing Assets

Specific provisions are equal or more than 20% 358,797,879 – 100 358,797,879 –

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Balance Risk-Weighted Balance


Rs.


Rs.

Risk-WeightedFactor

%

2019

Rs.

2018

Rs.

Total Risk-Weighted Assets Computation

Cash and Bank Balance – 295,702,611 0 – –

Investment in Government Securities – 671,382,400 0 – –

Bank deposits – 81,504,012 20 – 16,300,802

Loans against fixed deposits – 42,550,184 0 – –

Staff Loans Secured by Provident Fund Balances – 74,962,608 0 – –

Loans against Real Estate – 86,415,980 50 – 43,207,990

Loans and advances – 3,943,771,917 100 – 3,943,771,917

Finance lease receivable – 11,294,077,299 100 – 11,294,077,299

Hire purchase receivable – 74,762,408 100 – 74,762,408

Other assets – 323,859,164 100 – 323,859,164

Fixed assets – 170,007,501 100 – 170,007,501

Total Risk – Weighted Assets 20,141,723,461 17,058,996,084 21,548,944,316 15,865,987,082

Risk Weighted Amount for Operational Risk

Interest Income 2,918,214,497 – 15 437,732,175 –

Interest Expenses (1,296,290,577) – 15 (194,443,587) –

Non-interest income 445,271,279 – 15 66,790,692 –

2,067,195,199 – 310,079,280 –

Risk-Weighted Amount for operational Risk under the Basic Indicator Approach 3,100,792,798 –

Total Risk – Weighted Assets 22,208,918,660 17,058,996,084 24,649,737,114 15,865,987,082

Total Capital Base Computation

Stated Capital 1,996,444,457 1,996,444,457

Reserved Fund 136,009,451 113,852,174

Published Retained Earnings 1,202,658,012 986,177,932

Less:-

Other Intangible Assets (net) 46,293,490

Total Core Capital 3,288,818,430 3,096,474,563

Supplementary Capital – –

Total Supplementary Capital – –

Capital Base 3,288,818,430 3,096,474,563

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101STEWARDSHIP

Capital Adequacy Ratio

As at 31st March 2019%

2018%

Core Capital Ratio Core Capital

13.34 19.52Risk-Weighted Assets

Total Capital Ratio Capital Base

13.34 19.52Risk-Weighted Assets

The previous capital adequacy directions was adopted in 2006 for LFCs in line with the Capital Adequacy Accord recommended by the Basel Committee on Banking Supervision (BCBS)issued for banks in 1988.Under this direction risks were confined to credit risk and no capital requirements for other risks such as Market and operational risks. The new capital adequacy framework covers both credit risk and operational risk. Since the change in the basis and coverage of risks for capital adequacy impacted the tire one capital and total capital computation drastically, and for the purpose of disclosing the comparable correspondence figures, the below presentation is also noted.

As at 31st March 2019Based on Direction

No. 03 of 2018

2018Based on Direction

No. 03 of 2018

2019Based on Direction

No. 02 of 2006

Core Capital Ratio 13.34% 16.04% 19.52%

Total Capital Ratio 13.34% 16.04% 19.52%

37. Commitments and Contingencies – Group/Company37.1 Financial ContingenciesDocumentary Credits effected for foreign purchases amounting to Group and Company respectively Rs. 1,723,258,909/- (2018 – Rs.4,511,447,444/-) and Rs.1,392,145,399/- (2018 – Rs.2,504,862,843/-)

37.2 CommitmentsThere were no significant capital commitments which have been approved or contracted for by the Company/Subsidiary as at Reporting date except for following:

Singer (Sri Lanka) PLCOperating lease commitment as at 31st March 2019 is as follows:

Within One Year – Rs. 149.06 millionBetween One to Five Years – Rs. 446.85 millionOver Five Years – Rs. 358.24 million

As at 31st March 2019, unutilised credit card credit limit is Rs. 268,073,446/- (2018 – Rs. 722,821,725/-) of Singer Finance (Lanka) PLC.

As at 31st March 2019, unutilised Revolving loan facility amount is Rs. 296,662,710 (2018 – Rs. 71,561,460/-) of Singer Finance (Lanka) PLC.

37.3 Assets PledgedSinger (Sri Lanka) PLC has given a negative pledge over the bank loans obtained from commercial bank of Ceylon PLC, Standard Chartered Bank Sri Lanka Limited, Sampath Bank PLC and Hatton National Bank PLC which has carrying value of Rs,4,875,000,000 /-, Rs.641,666,670/-, Rs. 2,750,000,000/- and Rs.2,500,000,000/- respectively as at 31 March 2019.

Singer Finance (Sri Lanka) PLC has given the Securitization and negative pledge over the Company’s Lease receivable and Hire Purchase receivable, for the following banks over the Loans, Overdrafts & Debentures having a carrying value of Rs. 11,131,477,000/- against Loans, Overdraft & Trust Deed obtained to the value of Rs. 8,620,640,000/- respectively, as at the year end:

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As at 31st March Outstanding Credit Facility

Rs.

Carrying Value

Rs.

Sampath Bank 130% of the Banks’s exposure Loan Overdraft Facility

392,900,000300,000,000 935,415,000

Commercial Bank 150% of the Banks’s exposure Overdraft Facility 200,000,000 300,000,000

Seylan Bank 130% of the Banks’s exposure Loan Overdraft Facility

502,740,000250,000,000 978,562,000

Nations Trust Bank 130% of the Banks’s exposure Loan Overdraft Facility

930,000,00070,000,000 1,300,000,000

National Development Bank

130% of the Banks’s exposure Loan Overdraft Facility

200,000,000100,000,000 390,000,000

Deutsche Bank 110% of the Debenture explosure

Debenture2,500,000,000 3,100,000,000

Hatton National Bank 130% of the Banks’s exposure Securitisation 2,175,000,000 2,827,500,000

8,620,640,000 9,831,477,000

37.4 Contingencies

(a) Commissioner General of Inland Revenue has issued assessment notices on Singer (Sri Lanka) PLC pertaining to an additional VAT Liability/Payment on account of Deemed VAT for seven quarters for the period 1st January 2014 to 30th September 2015. The assessment was for a Deemed VAT payment of Rs. 1,076 million and Penalty of Rs. 423 million totalling to Rs. 1,499 million. Commissioner General of Inland Revenue has given the determination on the appeal. Accordingly, Rs. 791 million of Deemed VAT liability and penalty of Rs. 395 million totalling to Rs. 1,186 million is payable as a Deemed VAT liability for seven quarters for the period 1st January 2014 to 30th September 2015. The Company after carefully reviewing the advice of tax consultants, is of the opinion that there is no basis for the Company to be made liable for Deemed VAT and accordingly company has decided to appeal to the Tax Appeal Commission against the determination. Hence, no provision has been made in the Financial Statements. The Company previously sought a clarification from the Inland Revenue Department on the interpretation of the Act and did not receive the required clarification. Deemed VAT is removed with effect from 1st January 2016 under VAT Amendment Act No. 20 of 2016.

(b) Singer (Sri Lanka) PLC has provided bank guarantees amounting to Rs.287 million to Director General of Customs to clear imports during the years 2008 to March 2019. The bank guarantee related to alleged additional duty payable on imports, claimed by the customs and is being contested by the company in courts. The Court of Appeal ordered that the Director General of Customs continue with the investigations. The Company being aggrieved by the decision has filed an appeal, which is pending before the Supreme Court. The company lawyers are of the opinion that there is no basis that the Company is liable for the additional duty and hence, no provision is made in the Financial Statements. .

(c) Under the finance companies (single borrowers limit) direction no 4 of 2006/1, the value of unsecured accommodations granted to and outstanding at any point of time from all borrowers should not exceed 5% of the capital funds as shown in the last audited balance sheet. However as of 31st March 2019, the balance has been exceed in the credit card product by Rs. 363 million.

(d) Singer Finance (Lanka) PLC has provided letters of guarantees to banks totalling to Rs. 1 million against Fixed Deposits of Rs.1 million.

(e) Regnis Lanka PLC has provided Corporate guarantees to banks on behalf of Regnis Appliances (Pvt) Ltd amounting to Rs. 410 million for the purpose of obtaining banking facilities.

(f) Regnis Lanka (Pvt) Limited cleared a shipment of imported goods during the year 2008 on provision of a bank guarantee amounting to Rs. 6 million/- to the Director of Customs. The bank guarantee relates to alleged additional duty payable on imports which is contested by the Company. The customs inquiry initiated in 2008 is still pending. The management is of the opinion that there is no basis that the Company is liable for the additional duty and hence, no provision is made in the financial statements.

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101STEWARDSHIP

38. Events Occurring after the Reporting PeriodThere have been no material events occurring after the reporting date, which require adjustments to or disclosure in the Financial Statements to or Disclosure in the Financial Statements.

39. Related Party Transactions39.1 Parent and Ultimate Controlling PartyThe Company’s Parent undertaking and Controlling Party is Hayleys PLC.

39.2 (a) Transaction with Parent Company

Hayleys PLC

Name of the Company Nature of Transaction For twelve months ended 31 March 2019

Rs. million

For fifteen months ended 31 March 2018

Rs. million

Hayleys PLC Expenses Reimbursed 30.7 9.1

Dividends Paid 169.8 186.2

Balance Payable 200.5 195.3

On 15th October 2018, Hayleys PLC purchased the balance 35,562,883 (9.47%) ordinary shares held by Retail Holdings (Sri Lanka) BV in Singer (Sri Lanka) PLC at a price of Rs. 47/- per share upon Retail Holdings (Sri Lanka) BV exercising their option to sell its shares to Hayleys PLC as previously agreed. After accepting this offer, Hayleys PLC together with its Group Companies holds 90.43% (80.9% previously) of Singer (Sri Lanka) PLC.

39.2 (b) Transactions with Subsidiary Companies


Rs. million


Rs. million

Singer Finance (Lanka) PLC Sales financed through Singer Finance (Lanka) PLC 733.5 937.1

Cash remittance from Singer ( Sri Lanka ) PLC 3,364.0 4,059.8

Interest Income/(Expense) 170.0 61.9

Dividend Received – Gross 177.7 300.2

Cash Collection through Singer (Sri Lanka) PLC 5,124.0 5,303.4

Debenture Interest Expense 99.4 98.7

Expenses paid 468.5 475.6

Royalty Expenses Charged during the period 42.1 36.6

Collecting Commission paid through Singer (Sri Lanka) PLC 43.0 43.5

Rent Reimbursed 26.5 21.4

Royalty paid through Singer (Sri Lanka) PLC – 29.8

Loans settled during the period 625.0 600.0

Loans Obtained during the period 625.0 1,400.0

Service Charge Income 24.8 22.1

Loan Receivables – 1,000.0

Other Receivables/(Payables) 13.7 172.9

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5SINGER AT A GLANCE


Rs. million


Rs. million

Regnis (Lanka) PLC Purchases 3,766.3 4,859.8

Sales Taxes 653.4 855.6

Corporate Guarantees given 455.5 455.5

Interest Expense 31.3 18.9

Non Trade Settlement 209.5 10.0

Trade Credit Settled 4,162.6 5,550.1

Expenses Reimbursed 84.7 96.6

Fixed Assets Purchases 0.6 1.2

Loans Obtained during the period – 150.0

Transfer of Staff Loan – 0.1


Loan Receivables 150.0 150

Singer Industries (Ceylon) PLC Purchases 526.0 892.3

Lease rental paid 22.5 14.9

Trade Creditor Settled 569.3 889.3



Singer Digital Media (Pvt) Limited Purchases 3,212.8 3,476.2


Interest Charged 203.3 37.0

Royalty paid through Singer (Sri Lanka) PLC 123.0 60.7

Loan Granted 11,635.7 7,625.5

Loan Settlements 11,742.0 4,458.0

Balance Payable – Trade 1,050.9 1,463.4

Regnis Appliances (Pvt) Limited Purchases 1,629.1 1,420.1

Trade Settlements 1,887.5 1,666.4

Expenses paid 16.8 33.6

Finance charged 0.8 1.1

Non-Trade Settlement 21.0 22.7


Reality (Lanka) Limited Rent Expenses 7.7 9.6

Loan Receivable 62.2 69.2

Singer Business School (Pvt) Limited

Services Provided 6.35 0.32


Balance Receivable 8.3 11.6

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101STEWARDSHIP

39.2 (c) Transactions with Companies under Common Control of Hayleys PLC


Rs. million


Rs. million

Hayleys Travels (Pvt) Limited Balance payable – 7.1

Expenses Reimbursed 14.5

Hayleys Electronic Lightning (Pvt) Limited

Expenses Reimbursed 1.1 –

Volanka (Pvt) Limited Dividend Payable 7.5 –

Carbotels (Pvt) Limited Dividend Payable 6.3 21.1

Toyo Cushion (Pvt) Limited Expenses Reimbursed 22.1 –

Hayleys Advantis Limited Dividend Payable 24.1 81.2

Hayleys Aventura (Pvt) Limited Dividend Payable 6.8 23.1

Hayleys Agriculture Holdings Limited Dividend Payable 6.1 20.7

39.2 (d) Transactions with Associate CompaniesTelshan Network (Pvt) Limited is an Associated company of Singer (Sri Lanka) PLC, with whom Singer (Sri Lanka) PLC or its Subsidiary Companies had no transactions. Further, the investment of Rs. 20,000,000/- has been fully impaired due to negative net assets position.

39.3 Transactions with Key Management Personnel According to Sri Lanka Accounting Standard (LKAS) 24 – “Related Party Disclosure”, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Directors (Including Executive and Non-Executive Directors) of the Company and their immediate family members have been classified as Key Management Personnel of the Company.

For twelve months ended 31 March 2019

Rs. million


Rs. million

(i) Transactions with Key Management Personnel or Close Family Members

Deposits kept by Key Management Personnel or their Close Family Members at Singer Finance (Lanka) PLC 57.0 57.0

Group Company


Rs. million


Rs. million


Rs. million


Rs. million

(ii) Compensation of Key Management Personnel

Short-Term Employee Benefits 108.1 197.6 72.3 136.7

Post-Employment Benefits Paid 40.0 12.4 40.0 12.4

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40. Non-Controlling InterestThe following table summarises the information relating to each of the Group’s subsidiaries that has material NCI.

31st March 2019 Singer Finance(Lanka) PLC

Rs.


Rs.

Regnis(Lanka) PLC

Rs.

Other individuallyimmaterial

subsidiariesRs.

Total

Rs.

NCI Percentage 20.01 12.30 41.7

Non-Current Assets 10,320,797,812 1,475,340,276 1,404,802,424

Current Assets 9,218,270,692 384,366,249 1,551,490,880

Non-Current Liabilities 4,756,285,102 382,469,854 340,320,755

Current Liabilities 11,238,847,877 174,313,129 1,312,606,063

Net Assets 3,543,935,525 1,302,923,542 1,303,366,485 6,150,225,552

Net Assets attributable to NCI 710,913,466 160,259,596 543,503,824

Revenue 3,799,862,979 569,563,309 3,775,421,375

Profit 541,733,895 (5,029,314) 63,904,711

OCI (1,290,192) 183,207,936 113,965,216

Total Comprehensive Income 540,443,703 178,178,621 177,869,928

Profit Allocated to NCI 105,855,772 (617,600) 26,652,252 3,969,067 135,859,492

OCI Allocated to NCI (258,972) 22,497,934 47,530,607 1,494,391 71,263,960

Cash flows from Operating Activities (2,542,934,361) (44,690,625) (102,346,124)

Cash flows from Investment Activities (26,000,520) (6,203,201) (110,326,261)

Cash flows from Financing Activities 2,132,622,715 8,572,226 247,374,447

Net Increase/(Decrease) in Cash and Cash Equivalents (436,312,166) (42,321,600) 34,702,063

31st March 2018 Singer Finance(Lanka) PLC

Rs.


Rs.

Regnis (Lanka) PLC

Rs.

Other individuallyimmaterial

subsidiariesRs.

Total

Rs.

NCI Percentage 18.7 12.3 41.7

Non-Current Assets 8,061,266,409 1,094,910,644 1,027,137,949

Current Assets 8,070,338,941 389,584,253 1,322,480,391

Non-Current Liabilities 3,312,984,331 51,386,123 270,535,916

Current Liabilities 9,483,509,089 408,316,088 1,040,681,233

Net Assets 3,335,111,930 1,024,792,686 1,038,401,191

Net Assets attributable to NCI 623,979,745 125,846,503 433,078,094 166,209,619 1,349,113,961

Revenue 3,646,695,138 863,950,676 4,871,270,012

Profit 522,789,849 8,706,871 224,641,402

OCI (6,506,346) (233,028,907) (83,836,121)

Total Comprehensive Income 516,283,503 (224,322,036) 140,805,281

Profit Allocated to NCI 97,810,893 1,069,220 93,689,483 (15,957,188) 176,612,408

OCI Allocated to NCI (1,217,299) (28,616,396) (34,964,894) (383,929) (65,182,518)

Cash flows from Operating Activities (2,209,531,117) (3,098,279) 231,421,154

Cash flows from Investment Activities (219,729,676) 4,321,657 (54,116,647)

Cash flows from Financing Activities 2,204,591,667 (72,866,841) (164,070,351)

Net Increase/(Decrease) in Cash and Cash Equivalents (224,669,126) (71,643,463) 13,234,156

40.1 Share Disposal Note In the month of August 2018 the company sold 2,754,174 shares of its subsidiary singer finance (Lanka) PLC to general public for a consideration of Rs. 38.3 million, which has resulted in diluting ownership of company from 81.29% to 79.93%.

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101STEWARDSHIP


SUPPLEMENTARY INFORMATION

THE INFORMATION CONTAINED IN THIS SECTION CONTAINS EXTRANEOUS DETAILS ABOUT OUR

OPERATIONS. INFORMATION PERTAINING TO SHAREHOLDERS AND CORPORATE INFORMATION IS

ALSO CONTAINED IN THIS SECTION.

272PARENT, SUBSIDIARIES AND

RELATED COMPANIES

273A DECADE IN PERSPECTIVE

275SHARE

INFORMATION

280INDEPENDENT ASSURANCE

REPORT

282CERTIFICATE OF THE DIRECTOR/PRINCIPAL OFFICER/PRECEDENT PARTNER ON TRANSFER PRICING

283GLOBAL REPORTING

INITIATIVES (GRI) STANDARD

DISCLOSURES INDEX

289DISTRIBUTION

NETWORK

291SERVICE NETWORK AND

FASHION ACADEMY NETWORK

293GLOSSARY

294NOTICE OF ANNUAL GENERAL MEETING


272



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5SINGER AT A GLANCE

PARENT, SUBSIDIARIES ANDRELATED COMPANIES

Company Name Principal Activity Directors

Hayleys PLCParent Company

zz Global market and manufacturing, agriculture, power and energy, domestic and industrial lighting, transportation and logistics, leisure and aviation, consumer, investments and services

Mr. A.M. Pandithage – Chairman and Chief ExecutiveMr. K.D.D. Perera – Co-ChairmanMr. S.C. GanegodaMr. H.S.R. KariyawasanDr. H. CabralMr. L.R.V. WaidyaratneMr. M.H. JamaldeenMr. M.Y.A. PereraMr. N.L.S. JosephMs. J. Dharmasena

Singer Finance (Lanka) PLCSinger – Interest 79.9%

zz Leasing

zz Hire Purchasing

zz Lending and Accepting Deposits

Mr. M.Y.A. Perera – ChairmanMr. J.A. SetukavalarMr. M.P.A. SalgadoMr. J.M.J. PereraMr. T.A.AmarasuriyaMs. D.G. TalpahewaMr. L.S.S. PereraMr. M.H. WijewardeneMr. K.K.L.P. Yatiwella – (Alternate to Ms. D.G. Talpahewa)

Singer Industries (Ceylon) PLCSinger – Interest 87.7%

zz Manufacturing and Assembling Sewing

Machines

Mr. A.M. Pandithage – ChairmanMr. M.H.WijewardeneMr. V.G.K. VidyaratneMr. M.H. JamaldeenMr. N.L.S. JosephMr. K.D.G. GunarathneMr. S.C. GanegodaMr. K.D. KospelawatteMr. D.K. de Silva Wijeyeratne

Regnis (Lanka) PLCSinger – Interest 58.3%

zz Manufacturing Refrigerators Mr. A.M. PandithageMr. M.H. WijewardeneMr. S.C. GanegodaMr. V.G.K. VidyaratneMr. M.H. JamaldeenMr. N.L.S. JosephMr. K.D.G. Gunaratne Mr. K.D. Kospelawatta Mr. D.K. de S. Wijeyeratne Mr. A.C. M Irzan (Alternate to K.D. Kospelawatta)

Reality Lanka LimitedSinger – Interest 88.2% (Indirect)

zz Investment on Properties Mr. A.M. Pandithage – ChairmanMr. S.C. GanegodaMr. M.H. Wijewardene

Regnis Appliances (Private) LimitedSinger – Interest 58.3% (indirect)

zz Manufacturing Washing Machines Mr. A.M. Pandithage – ChairmanMr. K.D. KospelawatteMr. S.C. GanegodaMr. N.M.P. FernandoMr. M.H. Wijewardene

Singer Digital Media (Private) LimitedSinger – Interest 100%

zz Marketing Mobile Phones, Computers and Cameras

Mr. A.M. Pandithage – ChairmanMr. S.C. GanegodaMr. M.H. WijewardeneMr. K.K.L.P. YatiwellaMr. K.D.J.M. Perera

Singer Business School (Private) LimitedSinger – Interest 100%

zz Educational Services Mr. A.M. Pandithage – ChairmanMr. M.H. WijewardeneMr. K.K.L.P. YatiwellaMr. S.C. Ganegoda

Domus Lanka (Pvt) LimitedSubsidiary – Interest 100%

zz Designing, Manufacturing and Trading Furniture

Mr. A.M. Pandithage – ChairmanMr. M.H. Wijewardene

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Period Ended/As at 31st March

2019(12 Months)

31st March

2018(15 Months)

31st December

2016(12 Months)

31st December

2015(12 Months)

31st December

2014(12 Months)

31st December

2013(12 Months)

31st December

2012(12 Months)

31st December

2011(12 Months)

31st December

2010(12 Months)

(Restated)

31st December

2009(12 Months)

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

GDP Growth – % 3.2 3.4 4.1 6.00 7.40 7.30 6.00 8.30 7.00 3.50

Market Capitalisation Growth – % (37.81) (4.44) (8.48) 17.00 32.50 (13.00) (22.90) 36.10 102.00 123.00

Trading Results

Group Turnover – Net 58,505,395 65,122,305 46,924,144 38,710,834 29,699,602 25,485,561 25,441,494 22,031,653 16,028,534 11,913,503

Profit before Tax 672,129 2,049,052 3,126,233 1,895,275 1,155,608 728,440 1,777,160 1,990,012 1,167,862 247,729

Taxation 286,149 828,758 768,477 659,236 373,974 206,375 561,451 681,181 499,042 114,830

Profit for the Year 385,981 1,220,295 2,357,756 1,236,039 781,634 522,066 1,215,710 1,308,831 668,819 132,899

Total Comprehensive Income for the Year 1,006,328 691,655 2,623,507 1,206,343 891,279 519,059 1,320,383 1,308,831 – –

Property, Plant & Equipment 6,704,649 5,649,424 5,426,841 2,715,401 2,667,909 2,505,355 2,151,208 1,691,107 1,564,240 1,285,728

Investment in Equity Accounted Investees – – – 54,831 55,189 53,226 52,663 46,886 23,525 24,541

Other Investments 17,061 17,061 17,061 17,061 17,061 17,061 17,061 17,061 17,061 18,490

Deferred Tax Assets – – 124,061 259,733 185,024 119,022 150,284 143,450 110,226 143,053

Other Non-Current Assets 11,809,824 9,508,817 8,467,619 7,472,596 6,021,845 5,867,311 5,234,046 4,385,767 2,687,281 2,205,263

Total Non-Current Assets 18,531,534 15,175,302 14,035,582 10,404,803 8,947,028 8,561,974 7,605,262 6,284,271 4,402,333 3,677,075

Current Assets 39,510,816 35,398,249 28,214,282 21,857,494 18,444,957 16,000,553 13,795,274 11,164,888 8,477,132 7,176,378

Current Liabilities 35,409,664 35,070,354 22,189,446 15,417,138 15,213,903 13,030,817 12,849,830 10,043,948 6,602,195 6,392,896

Net Current Assets 4,101,153 327,895 6,024,836 6,440,356 3,231,054 2,969,736 945,444 1,120,940 1,874,937 783,482

Total Assets Less Current Liabilities 22,632,687 15,503,197 20,060,398 16,959,979 12,178,083 11,531,711 8,550,706 7,405,211 6,277,270 4,460,557

Security Deposits 1,388,433 1,199,127 1,018,452 851,794 732,124 651,765 576,648 487,449 403,894 359,516

Interest bearing Loans and Borrowings re-payable after one Year 10,640,159 4,319,898 8,381,885 8,091,907 4,226,596 4,334,165 1,633,823 1,110,385 1,287,291 763,936

Employee Benefit Obligations 871,971 794,645 651,144 486,465 383,912 320,033 270,539 204,787 181,876 158,546

Other Financial Liabilities re-payable after one Year 804,556 411,394 454,013 645,008 798,492 756,232 342,535 503,142 195,995 150,001

Deferred Tax Liability 246,869 467,236 – 114,820 119,789 109,540 113,926 95,805 99,339 –

Net Assets 8,451,644 8,184,568 9,554,905 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799

A DECADE IN PERSPECTIVE

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25BUSINESS MODEL



5SINGER AT A GLANCE

Period Ended/As at 31st March

2019(12 Months)

31st March

2018(15 Months)

31st December

2016(12 Months)

31st December

2015(12 Months)

31st December

2014(12 Months)

31st December

2013(12 Months)

31st December

2012(12 Months)

31st December

2011(12 Months)

31st December

2010(12 Months)

(Restated)

31st December

2009(12 Months)

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Share Capital and Reserves

Stated Capital 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048

Capital Reserves 1,118,123 577,919 1,057,964 857,580 870,358 762,034 773,312 655,454 664,542 412,127

Statutory Reserves 163,096 136,009 95,361 37,318 136,128 128,447 78,425 44,408 10,748 –

Revenue Reserves 5,035,831 5,495,478 6,374,444 4,728,455 3,842,675 3,447,544 3,778,395 3,421,739 2,583,363 1,975,624

Shareholders’ Funds 6,943,097 6,835,455 8,153,817 6,285,401 5,475,208 4,964,073 5,256,181 4,747,648 3,884,701 3,013,799

Non-Controlling Interest 1,508,546 1,349,114 1,401,088 484,584 441,960 395,902 357,054 255,995 224,174 –

Total Equity 8,451,644 8,184,569 9,554,905 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799

Ratio and Statistics

Profitability

Earning per Share – Rs.* 0.67 2.78 5.65 3.07 1.90 1.23 3.09 3.37 1.78 0.35

Net Assets per Share – Rs.* 18.48 18.20 21.70 16.73 14.58 13.22 14.00 12.64 10.34 8.02

Return on Average Net Assets – % 4.64 13.76 28.89 19.50 13.90 9.50 22.90 29.30 18.80 4.40

Dividends

Amount – Rs. ’000 244,159 826,383 1,101,845 525,880 313,024 313,024 751,258 939,072 281,722 –

Per Share – Rs. * 0.65 2.20 2.93 1.40 0.83 0.83 2.00 2.50 1.50 –

Cover 0.58 1.21 1.00 1.63 1.48 0.96 1.37 1.20 1.50 –

Others

Market Price per Share – Rs. 25.00 40.20** 126.20 137.90 117.90 89.00 102.30 132.70 195.00 76.50

Price Earnings Ratio 66.81 15.11 14.31 20.10 31.90 36.90 12.50 14.30 18.30 36.10

Annual Sales Growth – % N/A*** 38.78 21.22 30.30 16.50 0.20 15.50 37.30 34.50 (13.30)

Current Ratio 1.12 1.01 1.27 1.40 1.20 1.20 1.10 1.10 1.30 1.10

Average Annual Inflation – % 4.30 4.20 3.75 0.90 3.30 7.30 7.60 6.70 6.90 4.80

Net Income to Net Turnover – % 0.66 1.87 5.02 3.20 2.60 2.00 4.80 5.90 4.20 1.10

* Information for the previous years have been restated to reflect the subdivision of shares in March 2017.

** Market price per share for 31st March 2018 was after subdivision of shares.

*** Not comparable due to change in financial year in 2017/2018.

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101STEWARDSHIP


SHARE INFORMATION

Stated Capital

31st March 2019 31st March 2018

Stated Capital (Rs.) : 626,048,050 626,048,050

Number of Ordinary Shares : 375,628,830 375,628,830

Class of Shares : Ordinary Shares

Voting Rights : One Vote per Ordinary Share

Stock Exchange ListingThe issued ordinary shares of Singer (Sri Lanka) PLC are listed with the Colombo Stock Exchange of Sri Lanka.

Distribution of Shareholding – 31st March 2019Number of Shareholders: 31st March 2019 – 2,713 (31st March 2018 – 2,597).

Resident Non-resident Total

Number ofShareholders

Number ofShares

% Number ofShareholders

Number ofShares

% Number ofShareholders

Number ofShares

%

1 – 1,000 1,449 390,647 0.10 12 5,457 0.00 1,461 396,104 0.11

1,001 – 10,000 790 3,101,774 0.83 10 37,035 0.01 800 3,138,809 0.84

10,001 – 100,000 387 11,427,788 3.04 10 241,465 0.06 397 11,669,253 3.11

100,001 – 1,000,000 42 9,199,128 2.45 1 196,200 0.05 43 9,395,328 2.50

Over – 1,000,001 12 351,029,336 93.45 – – 0.00 12 351,029,336 93.45

Total 2,680 375,148,673 99.87 33 480,157 0.13 2,713 375,628,830 100.00

31st March 2019 31st March 2018

Categories of Shares Number of Shares


Number of Shares


Individuals 30,420,624 2,548 30,233,417 2,432

Institutions 345,208,206 165 345,395,413 165

Total 375,628,830 2,713 375,628,830 2,597

DividendsInterim Dividend 2018/19 Rs. 0.65 (2017/18 – Rs.2.20)

Final Dividend 2018/19 – Nil (2017/18 – Nil)

276


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25BUSINESS MODEL



5SINGER AT A GLANCE

Market Value Per Share

Twelve Months Ended 31st March 2019

Rs.

Fifteen Months Ended31st March 2018

Rs.

Highest during the Year 41.00 – 10th April 2018 149.90 – 6th March 2017

Lowest during the Year 24.50 – 12th March 2019 38.50 – 21st February

Last Traded Price as of Period Ending 29th March 2019 25.00 40.20

Twenty Largest Shareholders


Name Number of Shares %

1. National Savings Bank/Hayleys PLC 85,147,054 22.67

People’s Bank/Hayleys PLC 85,147,053 22.67

Hayleys PLC 50,679,271 13.49

Hatton National Bank PLC/Hayleys PLC 40,293,659 10.73

2. Hayleys Advantis Limited 37,127,660 9.88

3. Volanka (Pvt) Limited 11,595,745 3.09

4. Hayleys Aventura (Private) Limited 10,531,915 2.80

5. Carbotels (Pvt) Limited 9,680,851 2.58

6. Hayleys Agriculture Holdings Limited 9,468,085 2.52

7. Mr. Kulappuarachchige Don Dhammika Perera 6,935,913 1.85

8. Deutsche Bank AG as Trustee for JB Vantage Value Equity Fund 2,492,130 0.66

9. Mrs. Mihiri Virani Fernando 1,930,000 0.51

10. Commercial Bank of Ceylon PLC/Andaradeniya Estate Private Limited 669,849 0.18

11. Mrs. Anoma Kamalika Amarasuriya 536,910 0.14

12. Mr. Nai Kaluge Anura Deepal De Silva 441,582 0.12

13. Ms. Nai Kaluge Ruvani Hemamala De Silva 397,638 0.11

14. Mr. Nalin Amita De Silva 378,978 0.10

15. Jafferjee Brothers (Exports) Limited 375,600 0.10

16. Mr. Abeysiri Hemapala Munasinghe 328,644 0.09

17. Mrs. Enoka Kamali Wickramasinghe 319,857 0.09

18. Mr. Leslie Premal Mendis and Mrs. M.S. Mendis 274,934 0.07

19. Mr. Hemaka Devapriya Senarath Amarasuriya 268,446 0.07

20. Mr. Murtaza Ali Jafferjee 230,600 0.06

355,252,374 94.58

Others 20,376,456 5.42

Total 375,628,830 100

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101STEWARDSHIP



Name Number of Shares %

1. National Savings Bank/Hayleys PLC 85,147,054 22.67

People’s Bank/Hayleys PLC 85,147,053 22.67

Hatton National Bank PLC/Hayleys PLC 40,293,659 10.73

Hayleys PLC 15,116,388 4.02

2. Hayleys Advantis Limited 37,127,660 9.88

3. Retail Holdings (Sri Lanka) 35,562,883 9.47

4. Volanka (Pvt) Limited 11,595,745 3.09

5. Hayleys Aventura (Private) Limited 10,531,915 2.80

6. Carbotels (Pvt) Limited 9,680,851 2.58

7. Hayleys Agriculture Holdings Limited 9,468,085 2.52

8. Mr. Kulappuarachchige Don Dhammika Perera 6,935,913 1.85

9. Deutsche Bank AG as Trustee for JB Vantage Value Equity Fund 2,492,130 0.66

10. Mrs. Mihiri Virani Fernando 1,890,000 0.50

11. Andaradeniya Estate Private Limited 669,849 0.18

12. Mrs. Anoma Kamalika Amarasuriya 536,910 0.14

13. Mr. Nai Kaluge Anura Deepal De Silva 441,582 0.12

14. Ms. Nai Kaluge Ruvani Hemamala De Silva 397,638 0.11

15. Mr. Nalin Amita De Silva 378,978 0.10

16. Jafferjee Brothers (Exports) Limited 375,600 0.10

17. Mr. Abeysiri Hemapala Munasinghe 328,644 0.09

18. Mrs. Enoka Kamali Wickramasinghe 319,857 0.09

19. Mr. Leslie Premal Mendis 274,934 0.07

20. Mr. Hemaka Devapriya Senarath Amarasuriya 268,446 0.07

Others 20,647,056 5.50

Total 375,628,830 100

Share Trading

For the Period Ended As at 31st March2019

(12 Months)


(15 Months)

Number of Transactions 1,735 3,107

Number of Shares Traded 36,380,607 247,193,250

Value of Shares Traded (Rs.) 1,699,125,679 11,602,291,501

278


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25BUSINESS MODEL



5SINGER AT A GLANCE

Public Holding as at 31st March 2019The percentage of shares held by the public is 7.72% (2018 – 7.72%).

Number of Shareholders representing public holding – 2,702

Float adjusted market capitalisation – Rs. 724,963,641.9

The Company is not in compliance with option 5 of the Listing Rule 7.13.1 (a) which requires a Company with a Float Adjusted Market Capitalisation of less than Rs. 2.5 billion to maintain a minimum public Holding of 20%.

Record of Scrip Issues

Year ended 31st March Issue Basis Number of Shares

Cumulative Share Capital

Rs. ’000

1981 Prior to Public Issue – 1,855,200 18,552

1982 Public Issue – 463,800 23,190

1984 Bonus 2:01 1,159,500 34,785

1985 Bonus 3:01 1,159,500 46,380

1989 Bonus 1:01 4,638,000 92,760

1992 Bonus 4:01 2,319,000 115,950

1992 Rights (at Rs. 40.00) 8:01 1,449,375 130,444

1994 Bonus 5:01 2,608,875 156,533

1996 Bonus 9:02 3,478,500 191,318

1996 Rights (at Rs. 50.00) 9:02 1,855,766 209,875

1998 Bonus 11:03 5,723,868 267,114

2000 Bonus 5:01 5,342,276 320,537

2004 Bonus 4:01 8,013,415 400,671

2005 Bonus 4:01 10,016,769 500,838

2006 Bonus 4:01 12,520,961 626,048

2011 Subdivision 1 for 1 62,604,805 –

2017 Subdivision 3 for 1 250,419,220 –

Total Number of Shares – 375,628,830 626,048

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101STEWARDSHIP


All Share Price Index vs Market Price Per Share

Index Rs.

7,000

6,600

6,200

5,800

5,400

5,000

50

40

30

20

10

0

Apr.2018

May2018

Jun.2018

Jul.2018

Feb.2019

Jan.2019

Dec.2018

Nov.2018

Oct.2018

Sep.2018

Aug.2018

Mar.2019

Market Price Per Share (RHS) All Share Price Index (LHS)

12 months ended 31st March 2018

Listed DebenturesDetails regarding the listed debentures issued during the year.

Interest Rate of ComparableGovernment Securities as at Issue Date

(%)

12% senior rated listed unsecured redeemable on 28th September 2021 9.51

Interest Rate of Comparable Government Securities as at 31st March 2019 was 10.67%.

Utilisation of Funds Raised Via Debentures

Objective Number

Objective as per Prospectus

Amount allocated as per Prospectus in Rupees

Proposed Date of Utilisation as per Prospectus

Amount allocated from proceed in Rupees (A)

% of Total Proceed

Amounts utilised

Rupees (B)

% of utilisation

against allocation

(B/A)

Clarification if not fully utilised including where the funds are invested

(eg: whether lent to related party/s etc.)

1. Refinancing of short term bank facilities

Initial issue of Rs. 1.0 billion and a maximum issue of Rs. 1.5 billion

Immediately upon allotment of the Debentures

656.8 million

100 656.8 million

100% N/A

Highest traded price, lowest traded price, last traded price as at 31st March 2019, interest yield and yield to maturity of trade are as follows:

Highest Traded Price

(Rs.)

Lowest Traded Price

(Rs.)

Last Traded Price

(Rs.)

InterestYield

(%)

Yield toMaturity

(%)

17% senior rated unsecured redeemable debentures 99.98 99.98 99.98 17.00 17.01

4.5% senior rated unsecured redeemable debentures 100.00 100.00 100.00 14.50 14.50

8.25% senior rated unsecured redeemable debentures 100.00 100.00 100.00 8.25 8.25

Debt/equity ratio, interest cover and quick asset ratio are given in Financial Highlights on page 10 of this Report.

280



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5SINGER AT A GLANCE

INDEPENDENT ASSURANCE REPORT

Independent Assurance Report to Singer (Sri Lanka) PLC on the Sustainability Reporting Criteria Presented in the Integrated Annual Report – 2018/19

Introduction and scope of the engagementThe management of Singer (Sri Lanka) PLC (“the Company”) engaged us to provide an independent assurance on the following elements of the sustainability reporting criteria presented in the annual report – 2018/19 (“the Report”).

zz Reasonable assurance on the information on financial performance as specified on page 34 of the Report.

zz Limited assurance on other information presented in the Report, prepared in accordance with the requirements of the Global Reporting Initiative GRI Standards: “In accordance” – Core guidelines.

Basis of our work and level of assurance We performed our procedures to provide limited assurance in accordance with Sri Lanka Standard on Assurance Engagements (SLSAE 3000): “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”, issued by the Institute of Chartered Accountants of Sri Lanka (“ICASL”).

The evaluation criteria used for this limited assurance engagement are based on the Sustainability Reporting Guidelines (“GRI Guidelines”) and related information in particular, the requirements to achieve GRI Standards “In accordance” - Core guideline publication, publicly available at GRI’s global website at “www.globalreporting.org”.

Our engagement provides limited assurance as well as reasonable assurance. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement conducted in accordance with SLSAE-3000 and consequently does not enable to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we do not express an opinion providing reasonable assurance.

Management of the Company’s responsibility for the ReportThe management of the Company is responsible for the preparation of the self-declaration, the information and statements contained within the Report, and for maintaining adequate records and internal controls that are designed to support the sustainability reporting process in line with the GRI Sustainability Reporting Guidelines.

Ernst & Young’s responsibilityOur responsibility is to express a conclusion as to whether we have become aware of any matter that causes us to believe that the Report is not prepared in accordance with the requirements of the Global Reporting Initiative, GRI Standards: “In accordance” – Core guidelines. This report is made solely to the Company in accordance with our engagement letter dated 19 March 2019. We disclaim any assumption of responsibility for any reliance on this report to any person other than the Company or for any purpose other than that for which it was prepared. In conducting our engagement, we have complied with the independence requirements of the Code for Ethics for Professional Accountants issued by the ICASL.

Ernst & YoungChartered Accountants201 De Saram PlaceP.O. Box 101Colombo 10Sri Lanka

Tel : +94 11 2463500Fax Gen : +94 11 2697369 Tax : +94 11 [email protected]

Partners: W R H Fernando FCA FCMA M P D Cooray FCA FCMA R N de Saram ACA FCMA Ms. N A De Silva FCA Ms. Y A De Silva FCA W K B S P Fernando FCA FCMA Ms. K R M Fernando FCA ACMA Ms. L K H L Fonseka FCA A P A Gunasekera FCA FCMA A Herath FCA D K Hulangamuwa FCA FCMA LLB (Lond) H M A Jayesinghe FCA FCMA Ms. A A Ludowyke FCA FCMA Ms. G G S Manatunga FCA Ms. P V K N Sajeewani FCA N M Sulaiman ACA ACMA B E Wijesuriya FCA FCMAPrincipal T P M Ruberu FCMA FCCA

A member firm of Ernst & Young Global Limited

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INDEPENDENT ASSURANCE REPORT

101STEWARDSHIP


Key assurance procedures We planned and performed our procedures to obtain the information and explanations considered necessary to provide sufficient evidence to support our limited assurance conclusions. Key assurance procedures included:

zz Interviewing relevant the company’s personnel to understand the process for collection, analysis, aggregation and presentation of data.

zz Reviewing and validation of the information contained in the Report.

zz Checking the calculations performed by the Company on a sample basis through recalculation.

zz Reconciling and agreeing the data on financial performance are properly derived from the Company’s audited financial statements for the year ended 31 March 2019.

zz Comparison of the content of the Report against the criteria for a Global Reporting Initiative, GRI Standards: “In accordance” – Core guidelines.

Our procedures did not include testing electronic systems used to collect and aggregate the information.

Limitations and considerationsEnvironmental and social performance data are subject to inherent limitations given their nature and the methods used for determining, calculating and estimating such data.

ConclusionBased on the procedures performed, as described above, we conclude that:

zz The information on financial performance as specified on page 34 of the Report are properly derived from the audited financial statements of the Company for the year ended 31 March 2019.

zz Nothing has come to our attention that causes us to believe that other information presented in the Report are not fairly presented, in all material respects, in accordance with the Company’s sustainability practices and policies some of which are derived from Sustainability Reporting Guideline, GRI Standards – “In accordance” Core.

Ernst & YoungChartered Accountants


282



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Singer (Sri Lanka) PLCTIN 124008026

(As per Regulation 10 of the Extraordinary Gazette No. 1960/39, dated 31st March 2016 issued under Section 104 of the Inland Revenue Act No. 10 of 2006)

It is certified that the Company has complied with the Transfer Pricing Regulations issued under Section 104 of the Inland Revenue Act No. 10 of 2006. The information pursuant to these Regulations is given in Approved Accountant's Certificate produced under Section 107(2) (a) of the said Inland Revenue Act.

We believe that the record of transaction entered into with associated undertaking during the period from 1st April 2017 to 31st March 2018 is at arm’s length, not prejudicial to the interests of the Company and not carried out for profit shifting purposes.

Records and information of alI transactions have been submitted to the Approved Accountant who reviewed the transfer pricing records and no adverse remarks have been in the certificate done by the Approved Accountant.

Note: The submission of record and information of transactions to the Approved Accountant is not required, in relation to a company which makes transactions with any associated undertaking where the aggregate value of such transactions is Sri Lankan rupees ten million or less.

For and on behalf of the Board of Directors/Principal Officer,Singer (Sri Lanka) PLC,80, Nawam Mawatha, Colombo 2

23rd November 2018

CERTIFICATE OF THE DIRECTOR/PRINCIPAL OFFICER/PRECEDENT PARTNER ON TRANSFER PRICING

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101STEWARDSHIP


GRI Index No. Description Reported Section Page No.

GRI 102: General Disclosures

Organisational Profile

102-1 Name of the Organisation Corporate Information Inner Back Cover

102-2 Activities brands, products and services Institutional Capital 50 to 55

102-3 Location of headquarters Corporate Information Inner Back Cover

102-4 Location of operations Business Model 27

102-5 Ownership and legal form Business ModelCorporate Information

27Inner Back Cover

102-6 Markets served Business Model 27, 289 to 292

102-7 Scale of the reporting Organisation Financial Highlights 10

102-8 Information on other employees and other workers Employee Capital 69 to 70

102-9 Organisation’s supply chain Social and Environmental Capital 98

102-10 Significant changes to the organisation and its supply chain Annual Report of the Board of Directors of the affairs of the Company

163 to 169

102-11 Precautionary principle or approach About this Report 4

102-12 External initiatives About this Report 4, 103 and 104

102-13 Membership of associations Social and Environmental Capital 86

Strategy and Analysis

102-14 Statement from senior decision-maker Chairman/CEO Statement 16 and 17

Ethics and Integrity

102-16 Values, principles, standards and norms of behaviour Singer at a Glance Corporate Governance

7103 to 105

Governance

102-18 Governance structure Corporate Governance 104

Stakeholder Engagement

102-40 List of stakeholder groups Business Model 31 and 32

102-41 Report the percentage of total employees covered by collective bargaining agreements

Employee Capital 83

102-42 Identifying and selecting stakeholders Business Model 31

102-43 Approach to stakeholder engagement Business Model 31

102-44 Key topics and concerns raised Business Model 31 and 32

GLOBAL REPORTING INITIATIVES (GRI) STANDARD DISCLOSURES INDEX

284




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5SINGER AT A GLANCE


Reporting Practice

102-45 Entities included in the consolidated financial statements Business Model 27

102-46 Defining report content and topic boundaries About this Report 4 and 33

102-47 List of material topics Business Model 33

102-48 Restatements of information About this Report 4

102-49 Changes in reporting About this Report 4

102-50 Reporting period About this Report 4

102-51 Date of most recent report About this Report 4

102-52 Reporting cycle About this Report 4

102-53 Contact point for questions regarding the report Supplementary Information 4

102-54 Claims of reporting in accordance with the GRI Standards About this Report,Supplementary Information

4282

102-55 GRI content index Supplementary Information 282 to 288

102-56 External assurance Supplementary Information 4 and 282

GRI Specific Disclosures

Economic Topics

GRI 201: Economic Performance

103-1 Explain the material topics and its boundary Business Model 34

103-2 The Management Approach and its components Business Model 34

103-3 Evaluation of the Management approach Business Model 34

201-1 Direct Economic Value generated and distributed Business Model 34

201-3 Defined benefit plan obligations and other retirement plans Notes to the Financial Statements 246

201-4 Financial assistance received from government Social and Environmental Capital 90

GRI 206: Anti-competitive Behaviour

103-1 Explain the material topics and its boundary Social and Environmental Capital 90

103-2 The Management Approach and its components Social and Environmental Capital 90

103-3 Evaluation of the Management approach Social and Environmental Capital 90

206-1 Legal actions for anti-competitive behaviour, anti-trust and monopoly practices

Social and Environmental Capital 90

Environmental Topics

GRI 301: Materials


103-2 The Management Approach and its components Social and Environmental Capital 91, 92 and 94

103-3 Evaluation of the Management approach Social and Environmental Capital 91, 92 and 94

301-1 Materials used by weight or volume Social and Environmental Capital 94

301-2 Recycled input materials used Social and Environmental Capital 91 and 92

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GRI 302: Energy




302-1 Energy consumption within the Organisation Social and Environmental Capital 95

302-3 Energy intensity Social and Environmental Capital 95

302-4 Reduction of energy consumption Social and Environmental Capital 95

302-5 Reduction in energy requirements of products and services Social and Environmental Capital 92

GRI 303: Water




303-1 Water withdrawal by source Social and Environmental Capital 95

GRI 304: Biodiversity




304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas


GRI 305: Emissions




305-1 Direct (Scope 1) GHG emissions Social and Environmental Capital 96



305-5 Reduction of greenhouse gas (GHG) emissions Social and Environmental Capital 95

GRI 306: Effluents and Waste


103-2 The Management Approach and its components Social and Environmental Capital 91, 92 and 95

103-3 Evaluation of the Management approach Social and Environmental Capital 91, 92 and 95

306-1 Water discharge by quality and destination Social and Environmental Capital 95

306-2 Waste by type and disposal method Social and Environmental Capital 91 and 92

GRI 307: Environmental Compliance




307-1 Non-compliance with environmental laws and regulations Social and Environmental Capital 96

286




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5SINGER AT A GLANCE


GRI Specific Disclosures

Social Topics

GRI 401: Employment

103-1 Explain the material topics & its boundary Employee Capital 69 and 70

103-2 The Management Approach and its components Employee Capital 70 to 77

103-3 Evaluation of the Management approach Employee Capital 70 to 77

401-1 New employee hires and employee turnover Employee Capital 69 and 71

401-2 Benefits provided to full-time employees that are not provided to temporary or part time employees

Employee Capital 77

401-3 Parental leave Employee Capital 77

GRI 402: Labour/Management Relations

103-1 Explain the material topics & its boundary Employee Capital 69

103-2 The Management Approach and its components Employee Capital 69

103-3 Evaluation of the Management approach Employee Capital 69

402-1 Minimum notice periods regarding operational changes Employee Capital 69

GRI 403: Occupational Health and Safety

103-1 Explain the material topics and its boundary Employee Capital 78 and 80

103-2 The management approach and its components Employee Capital 78 and 80

103-3 Evaluation of the Management approach Employee Capital 78 and 80

403-2 Type of injury and rate of injury, occupational diseases, lost days and absenteeism and number of work related fatalities

Employee Capital 80

GRI 404: Training and Education

103-1 Explain the material topics and its boundary Employee Capital 74 to 76

103-2 The management approach and its components Employee Capital 74 to 76

103-3 Evaluation of the Management approach Employee Capital 74 to 76

404-1 Average hours of training per year per employee Employee Capital 76

404-2 Programmes for upgrading employee skills and transition assistance programmes

Employee Capital 70, 74 and 75

404-3 Percentage of employees receiving regular performance and career development reviews

Employee Capital 76

GRI 405: Diversity and Equal Opportunity

103-1 Explain the material topics and its boundary Employee Capital 70 and 78

103-2 The management approach and its components Employee Capital 70 and 78

103-3 Evaluation of the Management approach Employee Capital 70 and 78

405-1 Diversity of governance bodies and employees Employee Capital 70 and 71

405-2 Ratio of basic salary and remuneration of women to men Employee Capital 78

287



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GRI 406: Non-discrimination


103-2 The management approach and its components Social and Environmental Capital 90


406-1 Incidents of discrimination and corrective actions taken Social and Environmental Capital 90

GRI 407: Freedom of Association and Collective Bargaining

103-1 Explain the material topics and its boundary Social and Environmental Capital 83 and 99

103-2 The management approach and its components Social and Environmental Capital 83 and 99

103-3 Evaluation of the Management approach Social and Environmental Capital 83 and 99

407-1 Operations and suppliers in which the right of freedom of association and collective bargaining may be at risk


GRI 408: Child Labour




408-1 Operations and suppliers at significant risk for incidents of child labour Social and Environmental Capital 90

GRI 409 : Forced or Compulsory Labour




409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labour


GRI 412: Human Rights Assessment




412-1 Operations that have been subjected to human rights reviews or impact assessment


GRI 413: Local Communities

103-1 Explain the material topics and its boundary Social and Environmental Capital 86 to 89

103-2 The management approach and its components Social and Environmental Capital 86 to 89

103-3 Evaluation of the Management approach Social and Environmental Capital 86 to 89

413-1 Operations with local community engagement, impact assessment and development programmes

Social and Environmental Capital 86 to 89

288




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GRI 415: Public Policy




415-1 Political contributions Social and Environmental Capital 90

GRI 416: Customer Health and Safety




416-1 Assessment of health and safety impacts of product and service categories Social and Environmental Capital 98

416-2 Incidents of non-compliance concerning the health and safety impacts of products and services


GRI 417: Product and Service Labelling




417-2 Incidents of non-compliance concerning product and services information and labelling


417-3 Incidents of non-compliance concerning marketing communications Social and Environmental Capital 99

GRI 418: Customer Privacy




418-1 Complaints received concerning breaches of customer privacy and losses of customer data


GRI 419: Socioeconomic Compliance




419-1 Non-compliance with laws and regulations in the social and economic area Social and Environmental Capital 99

289


101STEWARDSHIP


DISTRIBUTION NETWORK

Singer Plus ShopsAmparaAkkaraipattuAmpara “A”Ampara “B”DehiattakandiyaKalmunai “A”Kalmunai “B”PadiyatalawaPottuvilSamanthuraiUhana

AnuradhapuraAnuradhapura “A”Anuradhapura “B”Anuradhapura “C”EppawelaGalenbindunuwewaHabaranaHorowpathanaKahatagasdigiliyaKebithigollawaKekirawaMedawachchiyaNochchiyagamaRambewaTambuththegama ThirappaneThalawa

Badulla BadullaBadulla “B”Bandarawela “A”Bandarawela “B”DiyathalawaGirandurukotteHali-ElaMahiyanganayaPassaraWelimada

BatticaloaBatticaloa “A”Batticaloa “B”ChenkaladiKalawanchikudiKattankudyValaichchenai

ColomboAngodaAthurugiriyaAttidiyaAvissawellaBattaramullaBoralesgamuwaBorellaColpettyDehiwelaDelkandaGalle Face Court

GothatuwaHomagamaKaduwelaKatubeddaKirulaponaKohuwalaKotahenaKottawaKosgamaMaharagama “A”Maharagama “B”MalabeMaradanaMattakkuliyaMerit – MoratuwaMilagiriyaMoratuwaNugegodaPadukkaPelawattePeliyagodaPettahPiliyandala “A”PitakottePliyandala “B”RajagiriyaRatmalanaThimbirigasyayaUdahamulla – MeritUnion PlaceWard PlaceWellampitiyaWellawatta

GalleAhangamaAmbalangodaBaddegamaElpitiyaElPitiya New TownGalle “A”Galle “B”HikkaduwaImaduwaNeluwaPinnaduwaUdugamaWanduramba

GampahaDelgodaDivulapitiyaDompeGampahaGanemullaJa-ElaKadawatha “A”Kadawatha “B”KandanaKiribathgoda “B”KirindiwelaKochchikadeMawaramandiya

MinuwangodaMirigamaNegomboNittambuwaPasyalaPugodaRagamaSeeduwaVeyangodaWattalaWeliweriyaYakkala

HambantotaAgunakolapelessaAmbalantotaBeliattaHambantotaMiddeniyaSuriyawewaTangalleTissamaharamaya

JaffnaChavakachcheriChenkanaiChunnakamHospital Road, JaffnaJaffnaManipayNelliadyPoint PedroPuthukkudiyirippuKodikamam

KalutaraAgalawattaAluthgamaBandaragamaBeruwalaBulathsinghalaDarga TownHoranaIngiriyaKalutara “A”Kalutara “B”MatugamaPanaduraWadduwa

KandyAkuranaDiganaGalahaGampolaGampola “B”GelioyaKandyKatugastotaKundasaleNawalapitiyaPeradeniyaPilimatalawa

PoojapitiyaRikillagaskadaWattegama

KegalleDeraniyagalaKegalle ‘A’Kegalle ‘B’MawanellaRambukkanaRuwanwellaWarakapolaYatiyanthota

KurunegalaAlawwaBingiriyaGalgamuwaGiriullaHiripitiyaIbbagamuwaKuliyapitiyaKurunegala “A”Kurunegala “B”Kurunegala “C”MahoMawathagamaMelsiripuraNarammalaNikaweratiyaPannalaPolgahawelaPothuheraPolpithigamaRideegamaWariyapola

MataraAkuressaDeniyayaDikwellaHakmanaIssadeen TownKamburupitiyaMatara “A”Matara “B”MorawakaUrubokkaWeligama

MannarMannar

MataleDambullaGalewelaMataleNaulaRattotaWilgamuwa

MonaragalaBibileButtalaKataragamaMonaragalaSiyabalanduwaWellawaya

Nuwara EliyaGinigathhenaHattonMaskeliyaNuwara Eliya “A”Nuwara Eliya “B”PussellawaTalawakelle

PolonnaruwaAralanganwilaBakamunaHingurakgodaKaduruwela “A”Kaduruwela “B”MedirigiriyaMinneriyaPolonnaruwaWelikanda

PuttalamAnamaduwaChilawDankotuwaNorochcholaiPuttalamWennappuwaNattandiya

RatnapuraBalangodaDehiowitaEheliyagodaEmbilipitiyaGodakawelaKahawattaKuruwitaNivitigalaPelmadullaRatnapura “A”Ratnapura “B”Kalawana

TrincomaleeKanthalaiTrincomalee “A”Trincomalee “B”Vakarai

VavuniyaMallaviMurunkanParakramapuraVavuniya

290


DISTRIBUTION NETWORK


25BUSINESS MODEL



5SINGER AT A GLANCE

KilinochchiKilinochchi

MullaitivuMullaitivu

Samsung ShowroomNugegodaRatmalana

Singer HomesAnuradhapuraBadullaChilawGodagamaKadawathaKalutaraKandyKegalleKottawaKotteKurunegalaMaharagamaMataleMataraNegomboNuwara EliyaRatmalanaRatnapuraWellawatta

SISIL WorldAkuressaAmbalantotaAmparaAnuradhapuraAvissawellaBadullaBalangodaBandarawelaBattaramullaBorellaChilawChunnakamDambullaDickwellaDiganaEheliyagodaEmbilipitiyaGalewelaGalleGampahaGampolaGodakawelaHingurakgodaHomagamaHoranaJa-ElaJaffnaKadawathaKaduwelaKahawattaKalutaraKandy

KatugastotaKegalleKekirawaKilinochchiKiribathgodaKirindiwelaKuliyapitiyaKurunegalaMaharagamaMahiyanganayaMataleMataraMatugamaMawanellaMinuwangodaMirigamaMonaragalaMoratuwaMount LaviniaNarammalaNegomboNikaweratiyaNittambuwaNuwara EliyaPanaduraPelmadullaPilimathalawaPiliyandalaRatnapuraRuwanwellaTalawathugodaThambuttegamaTissamaharamayaTrincomaleeUnion PlaceVavuniyaVeyangodaWarakapolaWelimada

Singer MegaBeko & SonyBoralesgamuwaDuplication RoadGampahaKalutaraKandyKandy MallKiribathgodaKottawaK-Zone – Ja-ElaK-Zone – MoratuwaMaharagamaMalabeMt. LaviniaNegomboNugegodaPanaduraRajagiriyaThalawathugodaThurstan RoadWattalaKaduwelaSinger warehouse

Satellite ShopsAmparaHingurana

AnuradhapuraGalnewaWilachchiya

BadullaEttampitiyaHaldemmullaHaputhaleHasalakaMeegahakivulaUdapussellawaUdudumbaraTissapura

ColomboHanwellaMoragahahena

GalleBatapolaKarandeniyaPitigalaTalgaswalaUragasmanhandiyaYakkalamullaLabuduwa

GampahaKatanaMarandagahamullaNiwala

HambantotaRannaWalasmullaWeeraketiya

KalutaraBaduraliya

KandyAlawathugodaAnkumburaGalagedaraHatharaliyaddaKadugannawaMenikhinnaPolwatta

KegalleBulathkohupitiyaHemmatagamaKotiyakumbura

KurunegalaAbanpolaDummalasuriyaKatupotha

MatalePallepola

MataraPitabeddaraTelijjawilaThihagoda

MonaragalaBadalkumburaThanamalwila

Nuwara EliyaPundaluoyaRagalaWalapane

PolonnaruwaDiyabedumaJayanthipuraDiyasenpura

PuttalamHettipolaKobeigane

RatnapuraKiriellaPallebaddaRakwana

TrincomaleeMuttur

OtherApparel Solutions and Katunayake Duty Free Store

291


101STEWARDSHIP


SERVICE NETWORK AND FASHION ACADEMY NETWORK

Singer ServiceRegional Service Centres

AluthgamaAmpara AnuradhapuraBadulla Colombo JaffnaKandy Kuliyapitiya Matara PasyalaPeliyagoda PolonnaruwaRatnapuraUnion PlaceNawam MawathaVavuniya

AluthgamaSiri Electrical & Ref Eng.Air Tech EngineeringMulti Tech EngineeringAmal Ref & ElectricalsEranda Multi ElectricityGulf MotorsPerera & ServiceDilshan Motors Nanayakkara ElectronicsPremalal MotorsSuranjith MotorsA.K. MotorsSola Edge Colling & Power Solution Dinan Machine CentreThushara Motors U.D. Ref Engineering

Ampara Aira MotorsRuckshan Mechanicle ShopMusthafa Motors MecS S H MotorsAruna Ref and Electrical Eastern Tech Institute Janudha Ref & ElectricalChil AirSahana MotorsIsuru Sameera Cushion WorksV T Cushion WorksE Sampath AselaLife Line EnterprisesMagic Cool Aircon

AnuradhapuraBuddhika ElectricalsIndunil Ref & ElectricalsLuck cool Ref EngineersShalini Auto CoolUdani ElectronicsChandana Entreprises

Derrick MotorsIndika Auto Service CentreJanith MotorsKurunegala MotorsLahiru MotorsNeel MotorsNihal Motors Power WashRavi MotorsRoyal MotorsSampath Auto CareShantha MotorsTharanga MotorsWijesinghe MotorsLakmal MotoresLAL EnterprisesLahiru MotorsAmila FurnitureS L K Cushion DesignerSandanayake Wood WorksPujana Electrical & CellularHashen Electrical & Ref EngineerD J FurnitureRan Sri ElectronicsIndrani CushionDream Home FurnitureMr. W.W.M.S. Gihan Chandrarathna

Badulla Marriott Electricals Tharindu ElectricalsCool air engineeringAruna ElectricalsTV Centre Hiruna ElectronicsTelstar ElectronicSameera Cooling ServiceChamari RefRefco ElectricalSaman MotorsMohan MotorsYasas MotorsGunathilake MotorsPiyal MotorsLal MotorsKesala ElectricalsHemantha MotorsNew Gamini Agro CentreRavi Service Technology

ColomboBen RefrigeratorsChamath EnterprisesChatu Spray PaintChirathma Electricals Cool Tech EngineersDineth ElectronicsE.M.P ElectricalsElectro Frost G.M.Electricals

Issuru Kaveen EngineersJ & U Electricals and ElectronicsLife Cool AC EngineersNuwan EngineeringRuwan Electricals S.K.ElectricalsS.N.A. Ref AirSamagi Ref CentreSharp ElectronicsSuper Tech Ref EngineersTechnicold Electronics GB Electrical Smart Ref EngineersAnjana ElectricalsMr. H G Lalith Mr. C L S AnandaUshan ElectricalsKeerthi De Jayasinghe Engi.Mr. D U JayasingheEcon AirDinu ElectricalsDushadi Sofa CentreRathnayake EnterprisesSandaruwan Cool EngineersMr. MuthugalageFlemingo Cushion HouseMr. W Kulasiri FernandoWelagedara Engineering Super Cool RefYoshitha Machine CentreKapila Machine RepairGap Machine Centre

JaffnaAmbiha ElectricalsCity Link CoolersSSV Cool Air ServiceInstitute of AceNPM ElectricalsCool Air KingsAnton Service StationWelcome Motors (Hero Garage)Panchu GarageRagu Mechanic Centre Vageetha MotorsNew Asia CentreViji Air ConditionersJetcool Engineering Service Snow Eagles [Ref & Air Con Engineers]Suvil Cushion CentreTNR Electricals & ElectronicsRaj Motor WindingThe Best Chill Air ConditioningMr. SanthalingamMr. Srijeevan Thayarupan

KandySathsara Sound I Tec ElectronicsSenadeera Ref Centre Thushara ElectronicsSuper Air Electrical WorksSandamini Multi Electrical EngrsVimod Electricals New Vision Electronics

KuliyapitiyaAnuradha ElectricalsChandu ElectricalsFreezairMahesh ElectricalsSamodha ElectronicsTechno FrostModerni Air ConditionNew Leeds ElectronicsWorld Air ConditionerChandana Motor GarageDasuna MotorsNipuna Auto MobileSahana MotorsSaman ServiceWijesinghe MotorsPeo MotorsRavindra MotorsSanjeewa Auto WorksSathsara Auto WorksNalinda Mechine CentreMihidum Juki Machine TechniciansBandara Auto Mobile

MataraJanapriya ElectronicsLal ElectronicsNew Shiney ElectronicsNew Lion Radio Silver Dale ElecronicsChaminda Air Ref Eng.Ser.New Freeze Air Penguine InternationalPrince ElectricalsUduwella RefK.U.K Sper Cool ServiceNilanKa Pathirana Ref CenterRuhunu Ref & Air ServicesSampath Engineering WorksRohan Ref CentreMax Cool ElectricalsG.A. Auto ElectriclesHemantha MotorsIndika MotorsJanahitha MotorsRahula MotorsSarani MotorsSampath Motor ServiceSusantha Motors Sunil Motors

Vijitha MotorsVictor Cycle Works,Nuwan MotorsLal Honda ServiceChathuranga MotorsNimal IngineersK.S.MotorsS D Machine Service CentrePriyantha Ref EngineersSuper Cool AirSamarawickrama Cushion WorksLeyard Furniture C J ElectricalsH L Nuwan SameeraAmila Pathum Architectures & FurnitureSachee Cushion WorksLion Electronic

PasyalaNew PC House Thilak Electricals Techno Ref & Air EnterpricesKavia EngineeringTechnico ElectronicAloka Engineers S.N.A.Ref AirSaleena ElectronicsSilicone ElectronicsKavindu Ref N AirTech Way ServicesSumith Motor WorksRaja MotorsNushan Ref and Air CentreSusantha Ref ElectricalsSESENI EngineersNishani MotorsSuper Electronics & Air TechnicsS T S Technical Service Ariyathilaka Electrical & Engineering Mr. P P WickramasingheZuhail Brothers

PolonnaruwaAshoka Ref DJ EngineersJ & P ElectronicsMahaweli ElectronicsMayura Ref & ElectricalsMudalige ElectronicsSanath AC EngineeringThilak ElectronicsSubasinghe Ref Engineers Kinnya AC Mechanics B.N.R. EnterprisesKarunarathne MotorsNissanka MotorsTechno EngineeringThilanka Motors

292


SERVICE NETWORK AND FASHION ACADEMY NETWORK


25BUSINESS MODEL



5SINGER AT A GLANCE

Udarata MotorsJanith Motors Priyankara Motors Sampath Motors Udaya Motors S. M. Motors Ananda Electricals Jayathilaka MotorsDissanayake Lathe ShopChaminda Sewing Mechanics Indika MotoraGautham Cushion WorksRavindra MotorsNiluka Ref & ElectricalsSassitha MotorsSaman MotorsSujeewa Engineers

RatnapuraHighcool Air & Ref CentreRoshan ElectronicsHigh FrostPathirana Ref EngineeringStar Ref ElectricalsSanjaya ElectronicsQuick CoolSenadeera Multy RefSolanta ElectronicsSamagi Diesel EngineeringSM ElectricalsPSD MotorsIndika Ref EngineersRanjith ElectronicsAmangi ElectronicsRuhunu Cushion WorkSaman WoodSmart Wood CreationShashei Service D G ServicesDinuka Re Fashion CentreDamruwan Cushion WorksSampath Electronics

Air Conditioning DivisionAlwis Engineering CentreAir Mech Airconditioning CompanyNew Dynamic Ref Engineers Lahiru RefRe Cool R&T Ref EngineeringRef Air ElectricalsRoyal Cool EnterprisesSewwandi Ref EngineersTempcool EngineeringYellowma Airconditioning QualitcoolSri Lankan EngineeringSun Ref EngineersCool Way

E R EngineersNew Ashen ElectricalSure RefSun Cool EnterprisesAir Cool TempMelona Aircon ServicesCool Rite ServiceUnited Air Cool

Motor Bike service – PeliyagodaAthula Motor Works Brito MotorsDiaz MotorsRansak Service Centre Sinethma MotorsWimal Motor WorksManahara Electricals

Stock Franchise at Distribution CentreMr.Ranjan AmarasingheHi-Tech ElectronicsMr.Pradeep ChamindaSampath ElectricalsMr. Kariyawasam Tele TechnicsK V ElectronicsHiru ServiceKumara Electronics T S ElectronicsR J EnterprisesUltra Cool Ref CentreSunimal Perera K.TronicDanushka RefC K Electronics

Mobile Phone Service Franchise AgentsColombo Trading Apogee InternationalOntasNalin CelularYurani TechnologyI Tech ElectronicsColombo Trading (Kandy)

Computers Service Franchise AgentsInet Computer SystemsOmex Computers TechnologyST ComputersPC SystemA Soft ComputerSabaragamuwa IT SolutionEasy TechnologyNano TechnologiesHP Computer SystemsSakun Technologies

NW Net Computer SystemsWeb Com ComputersE-Team TechnologiesMillennium WebRapid Computer SystemsR & D EngeneringsEZ Tec ComputersComtal Manpower SystemsThilina Electro TecLeem TechnologiesATN ComputersAruna ComputersSerendib Computer SystemStamina ITMC LinkK2 ComputersN.R.OutchoonSP ComputersWestern Digital ComputersGold Lion ElectronicsG.P.W.Electronic

Fashion Academies

AmbalangodaAmparaAngodaAnuradhapura BAvissawellaBaddegamaBadulla BBandarawelaBattaramullaBorellaChilawDambullaDickwellaEheliyagoEmbilipiti New TownGalewelaGalle BGampahaGampolaHattonHingurakgodaHomagamaHoranaJa-ElaJaffna-Hospital RoadKaduwelaKalutara AKandanaKandyKatubeddaKatugastotaKiribathgoda BKirindiwelaKurunegala AMahiyanganaMalabeMaradana

Matara-AMawanellaMega-ThalawathugodaMega-KandyMega-Mount LaviniaMinuwangodaNawalapitiyaNegomboNittambuwaNugegodaNuwaraeliya APanaduraPeliyagodaPelmadullaPilimathalawaPiliyandala BPolonnaruwaRathnapura ARuwanwellaShomes-KegalleTissamaharamaWarakapolaWellawattaWellawayaWennappuwa

293


101STEWARDSHIP


GLOSSARYAccounting PoliciesSpecific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting Financial Statements.

Acid RatioCurrent asset less inventory divided by current liabilities.

AmortisationThe expense of writing off over a fixed period, the initial value of an intangible asset such as goodwill, patents etc.

Available-for-SaleAll assets not in any of the three categories namely held to maturity fair value through profit or loss and loan and receivables. It is a residual category does not mean that the entity stands ready to sell these all the time.

BorrowingsAll interest bearing loans, fixed deposits and saving deposits.

Capital EmployedTotal of interest bearing loans and borrowings, bank overdraft and total equity.

Capital ReservesReserves identified for specific purposes and considered not available for distribution.

Cash EquivalentsLiquid investments with original maturity periods of three months or less.

Contingent LiabilitiesConditions or situations at reporting date the financial effect of which are to be determined by future events which may or may not occur.

Credit RatingAn evaluation of a corporate’s ability to repay its obligations or the likelihood of not defaulting, carried out by an independent rating agency.

Current RatioCurrent assets divided by current liabilities. A measure of liquidity.

DebtTotal liabilities, excluding deferred income.

Debt to EquityTotal borrowings less cash and cash equivalents divided by total equity.

Debt RatioTotal liabilities divided by total assets.

Deferred TaxationThe net tax effect on items which have been included in the Income Statement, which would only qualify for inclusion on a tax return at a future date.

Dividend CoverProfit attributable to ordinary shareholders divided by gross dividend. Measures the number of times dividend is covered by distributable profit.

Dividend PayoutDividend per share divided by earnings per share of the Company.

Earnings Per ShareProfits attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue.

EquityShareholders’ funds.

Fair ValueFair value is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction.

Financial InstrumentsFinancial instrument is any contract that gives rise to both financial assets in one entity and a financial liability or equity instrument in another entity.

Gearing RatioProportion of borrowings to capital employed.

Gross Dividend Portion of profits inclusive of tax withheld, distributed to shareholders.

Held-to-MaturityDebt assets acquired by the entity with positive intention to be held-to-maturity.

Interest CoverProfit before tax plus net finance cost divided by net finance cost. Measure of an entity’s debt service ability.

ImpairmentThis occurs when recoverable amount of an asset is less its carrying value.

Market CapitalisationNumber of shares in issue multiplied by the market value of a share at the reporting date.

Net Assets Per ShareThe equity attributable to owners of the Company divided by the weighted average number of ordinary shares in issue.

Non-Controlling InterestEquities in subsidiary not attributable, directly or indirectly to a parent.

Price Earnings RatioClosing market price of a share divided by earnings per share as at reporting date.

Related PartiesParties who could control or significantly influence the financial and operating policies of the business.

Return on Average Net Assets EquityProfits for the year divided by average total equity.

Revenue ReservesReserves considered as being available for distributions and investments.

SegmentConstituent business units grouped in terms of similarity of operations and location.

Value AdditionThe quantum of wealth generated by the activities of the Group measured as the difference between turnover and the cost of materials and services bought in.

Working capitalCapital required to finance the day-to-day operations computed as the excess of current assets over current liabilities.

294



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5SINGER AT A GLANCE

NOTICE OF ANNUAL GENERAL MEETING

SINGER (SRI LANKA) PLC(Company Registration No. PQ 160)

NOTICE IS HEREBY GIVEN THAT THE FORTY- FOURTH ANNUAL GENERAL MEETING OF SINGER (SRI LANKA) PLC will be held on Tuesday, 25th June 2019 at 3.00 pm at Hayleys PLC at No. 400, Deans Road, Colombo 10, Sri Lanka.

1. To receive, consider and adopt the Annual Report of the Board of Directors and the Statement of Accounts for the 12 months ended 31st March 2019 with the Report of the Auditors thereon.

2. To re-elect, Mr. D. Sooriyaarachchi, who retires by rotation at the Annual General Meeting, a Director in terms of Article 24 (4) of the Articles of Association of the Company.

3. To re-elect Ms. O.D. Gunewardene who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

4. To re-elect Mr. M.H. Wijewardene who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

5. To authorise Directors to determine contributions to Charities.

6. To reappoint Messrs. KPMG, Chartered Accountants as the Auditors of the Company for the year 2019/20 and to authorise the Directors to determine their remuneration.

By Order of the Board,

Singer (SRI LANKA) PLC

HAYLEYS GROUP SERVICES (PVT) LTD. SecretariesColombo

16th May 2019

Note:

A Shareholder is entitled to appoint a proxy to attend and vote instead of himself and a proxy need not be a shareholder of the Company. A Form of Proxy is enclosed for this purpose. The instrument appointing a proxy must be deposited with the Company Secretaries, Hayleys Group Services (Pvt) Ltd., No. 400, Deans Road, Colombo 10, Sri Lanka not less than 48 hours before the time fixed for the meeting.


FORM OF PROXY

Singer (Sri Lanka) PLC (Company Registration No. PQ160)

I/We* ……......................……………………………………………………………………………………… (full name of Shareholder**)

NIC No./Reg. No. of Shareholder (**) ………………………………………… of ………………………………………………………….

…………………………………………..…………… being Shareholder/Shareholders* of SINGER (SRI LANKA) PLC hereby appoint:

……………………………………………………………..……………………………………….…………… (full name of proxyholder**)

NIC No. of Proxyholder (**) ……………….…………………………… of …………………………………………………………………

………………………….………………………………………………….……………….……………………………… or, failing him/them,

ABEYAKUMAR MOHAN PANDITHAGE of Colombo (Chairman of the Company) or failing him, one of the Directors of the Company as my/our* proxy to attend and vote as indicated hereunder for me/us* and on my/our* behalf at the Forty Fourth Annual General Meeting of the Company to be held on Tuesday, 25th June 2019 at 3.00 p.m. and at every poll which may be taken in consequence of the aforesaid meeting and at any adjournment thereof.

For Against1. To adopt the Annual Report of the Board of Directors and the Statements of Accounts for the 12 months

ended 31st March 2019 with the Report of the Auditors thereon.2. To re-elect Mr. D. Sooriyaarachchi, who retires by rotation at the Annual General Meeting, a Director in

terms of Article 24 (4) of the Article of Association of the Company.3. To re-elect Ms. O.D. Gunewardene who has been appointed to the Board since the last Annual General

Meeting, a Director in terms of Articles 24 (10) of the Articles of Association of the Company.4. To re-elect Mr. M.H. Wijewardene who has been appointed to the Board since the last Annual General

Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.5. To authorise Directors to determine contributions to Charities.

6. To reappoint Messrs. KPMG, Chartered Accountants as the Auditors of the Company for the year 2019/20 and to authorise the Directors to determine their remuneration.

(**) The proxy may vote as he thinks fit on any other resolution brought before the Meeting of which due notice has been given.

As witness my/our* hands this ……………………. day of …………………………….2019.

Witnesses: ………………………………

Signature: ……………………………….......................................... Signature of Shareholder

Name: ………………………………..........................................

Address: ………………………………........................................

………………………………........................................

NIC No: ………………………………..........................................


Notes:

(a) *Please delete the inappropriate words.

(b) A shareholder entitled to attend and vote at the Annual General Meeting of the Company, is entitled to appoint a proxy to attend and vote instead of him/her and the proxy need not be a shareholder of the Company.

**Full name of shareholder/proxy holder and their NIC Nos. and Witness are mandatory. Your Proxy Form will be rejected if these details are not completed.

(c) A shareholder is not entitled to appoint more than one proxy to attend on the same occasion.

(d) Instructions are noted below.

(e) This Form of Proxy is in terms of the Articles of Association of the Company.

INSTRUCTIONS AS TO COMPLETION :

1. To be valid, the completed Form of Proxy must be deposited with the Company Secretaries, Hayleys Group Services (Pvt) Ltd. at No.400, Deans Road, Colombo 10, Sri Lanka not less than 48 hours before the start of the Meeting.

2. In perfecting the Form of Proxy, please ensure that all requested details are filled in legibly including mandatory details. Kindly Sign and fill in the date of signing.

3. If you wish to appoint a person other than the Chairman of the Company (or failing him, one of the Directors) as your proxy, please insert the relevant details at (1) overleaf. The proxy need not be a member of the Company.

4. Please indicate with an X in the space provided how your proxy is to vote on the resolutions. If no indication is given, the proxy in his discretion will vote as he thinks fit.

5. In the Case of a Company/Corporation the proxy must be under its common seal which should be affixed and attested in the manner prescribed by its Articles of Association.

In the case of the individual shareholders, the signature of the shareholder should be witnessed by any person over 18 years of age.

6. Where the Form of Proxy is signed under a Power of Attorney (POA) which has not been registered with the Company, the original POA together with a photocopy of same or a copy certified by a Notary Public must be lodged with the Company along with the Form of Proxy.

7. In case of Marginal Trading Accounts (slash accounts), the Form of Proxy should be signed by the respective authorised Fund Manager/Banker with whom the account is maintained.

CORPORATE INFORMATION

Name of the Company


Legal Form

Public company with limited liability. Incorporated as a public company in Sri Lanka on 30th December 1974 under the Companies Ordinance and Re-registered under the Companies Act No. 07 of 2007 on 13th June 2008.

Founded in 1877 as a Branch of Singer Sewing Machine Company, USA the shares of the Company are listed on the Colombo Stock Exchange. Accounting Year: 31st March.

Registered Office

Telephone: +94-11-2316316 (13 lines)Facsimile: +94-11-2423544E-mail: [email protected]: www.singer.lkCompany Registration NumberNew – PQ 160Old – PBS 802 (S.P.)

Tax Payer Identification Number

124008026

Bankers

Bank of CeylonCommercial Bank of Ceylon PLCDeutsche Bank Sri LankaHatton National Bank PLCMCB Bank Sri LankaNations Trust Bank PLCNDB Bank PLCPan Asia Bank PLCPeople’s BankSeylan Bank PLCSampath Bank PLCStandard Chartered Bank (Sri Lanka) LimitedThe Hongkong & Shanghai Banking CorporationUnion Bank PLC

Auditors

KPMG Chartered AccountantsNo. 32A, Sir Mohamed Macan Markar Mawatha,P.O. Box 186,Colombo 3Sri Lanka

Registrars

Hayleys Group Services (Pvt) LimitedNo. 400, Deans Road,Colombo 10,Sri Lanka.

Company Secretaries

Hayleys Group Services (Pvt) LimitedNo. 400, Deans Road,Colombo 10,Sri Lanka

Lawyers

Neelakandan & NeelakandanAttorneys-at-Law & Notaries PublicM&N Building (Level 5), No. 2, Deal Place,Colombo 3

Directorate

Mr. A.M. Pandithage – Chairman (Executive)Mr. K.D.D. Perera – Co-Chairman (Non-Executive)Mr. M.H. Wijewardene – Chief Executive OfficerMr. D. SooriyaarachchiMr. D.H. Fernando Mr. M.H. JamaldeenMr. D.K. de. S. WijeyeratneMs. O.D. GunewardeneMr S.C. GanegodaMr. S.H. GoodmanMr. L.N.S.K. Samarasinghe (Alternate to Mr. M.H. Jamaldeen)

Mr. K.K.L.P. Yatiwella (Alternate to Mr. S.C. Ganegoda)

Mr. H.P.S. Perera (Alternate to Mr. M.H. Wijewardene)

Senior Management

Mr. M.H. Wijewardene – Chief Executive OfficerMr. L.N.S.K. Samarasinghe – Director MarketingMr. S. Ramanathan-Director – LogisticsMr. J. Mendis – Credit DirectorMr. H.A.P.S. Perera-Factory Director – Piliyandala FactoryMr. K.K.L. Yatiwella – Finance DirectorMr. L.A.D.K. Perera-Director – Information TechnologyMr. B.T.L. Mendis-Director – CommercialMr. K.D.J.M. Perera – Director – OperationsMr. T. Amarasuriya – Chief Executive Officer – Singer Finance (Lanka) PLCMr. V. Tennakoon – Director – SalesMr. R. Kulasuriya – Director – Human Resources and Business IntegrationMr. A.P. Manorathna – Deputy Director – ServicesMr. D.B. Wijesundara – Deputy Director – MarketingMr. M.I. Carder – Head of Treasury & Investor RelationsMr. G.A.K. Weerasuriya-Senior Manager InventoryMr. A.U. Karunarathne-Senior Manager – Merchandising & PromotionsMr. T.G.S. Perera-Senior Manager – Field Inventory OperationsMr. I.A.S. Kolombage – Commercial ManagerMr. Priyanjith Meegoda – Head of Risk ManagementMr. V. Gomes – Head of Financial ServicesMr. W.L.I.A. Gunathilake – Business Development Manager – Mega & Singer Homes ChannelMr. K.R.L. Perera – Group Administration ManagerMr. A.R.N.P.K. Wijesundara-Sales Manager – Agro & TransportationMr. S.H. Perera – Senior Manager – Budget & PlanningMr. T.J. Martyn-Senior Manager – Apparel Solutions

Mr. A.A. Sathiyamoorthy – Senior Manager – Trade CreditMr. P. Jayatilake – Marketing Manager – ElectronicsMr. T.L. Senaviratne – Senior Manager – Information TechnologyMr. D.D.W. Dassanayake – Senior Manager – CreditMr. K.P. Peramunugamage – Head of Business SchoolMr. L.R.P. Perera – Business Development Manager – RetailMr. N.I. Kuruppuarachchi – Senior Manager – LegalMr. S. Serasinghe-Senior Manager – DistributionMr. N.B. Ranasinghe – Senior Manager – Revenue and MarginMrs. P.T.K. Liyanage – Finance ManagerMr. R.B. Gaspe – Head – Strategic Business Development UnitMr. K.I.S. Perera – Business Development Mananger – Whole Sale (South)Mr. E.R.A. Silva – Business Development Manager – Institutional SalesMr. K.D.S. Kanishka –Senior Manager – PromotionsMr. T.U.S. Peiris – Business Development Manager – SISILMr. S.M.D.S.K. Jayatilake – Senior Manager – Human ResourcesMr. M. Hanas – Business Development Manager – Digital MediaMr. G.T. Galagederage – Senior Manager – Research & DevelopmentMr. T.W.S.M. Perera – Senior Manager – Digital MediaDr. M Balasuriya – Head of Regulatory & Quality AssuaranceMr. U. Ganehiarachchi – Business Development Manager – Whole Sale (North)

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