redesigning the future · annual report 2017/18 10 we invested heavily on our synthetic filament...

BPPL HoLdings PLC | AnnuAL RePoRt 2017/18

Redesigningthe future

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B P P L Holdings PLC,Level 17, Access Towers, No. 278/4, Union Place, Colombo 02.

Tel : +94 11 2307168 | Fax: +94 11 2307169

Corporate InformationComPAny nAmeB P P L Holdings PLC

dAte of inCoRPoRAtion26th August 1991

LegAL foRmIncorporated in Sri Lanka on 26th August 1991 as a public company under the Companies Act No. 17 of 1982 [N (PBS) 291)], re-registered under the Companies Act No. 07 of 2007 on 21st January 2009 (PB 859), converted to a private limited liability on 20th July 2012 (PB 859 PV),converted to a public company on 29th July 2016 (PB 859 PV) and subsequently converted to Public Quoted Company (PB 859 PQ) on 29th June 2017 . Authority of Incorporation: Registrar of Companies (ROC), Colombo.

ComPAny RegistRAtion numBeRPB 859 PQRegistered Office and Current Place of BusinessB P P L Holdings PLC,Level 17, Access Towers,No. 278/4, Union Place,Colombo 02.Tel : +94 11 2307168Fax: +94 11 2307169

BoARd of diReCtoRsMr. Sarath Dayantha Amarasinghe – ChairmanDr. Anush Amarasinghe – Managing Director / Chief Executive OfficerMr. Vaithilingam Selvaraj - Executive Director / Chief Financial OfficerMr. B. D. Prasad Devapriya Perera - Executive DirectorMr. Ranil Pathirana – Non-Executive DirectorMr. Manjula De Silva - Independent Non- Executive DirectorMrs. Sharmini Ratwatte - Independent Non- Executive DirectorMr. Savantha De Saram – Independent Non-Executive DirectorCompany SecretarySecretarius (Pvt) Ltd.3rd Floor, 40, Galle Face Court,Colombo 03.Tel : +94 11 2333431Fax: +94 11 2381907

ComPAny RegistRARS S P Corporate Services (Private) Limited,101, Inner Flower Road, Colombo 03. Tel : +94 11 2573894 Fax : +94 11 2573609 Email : [email protected]

AuditoRs to tHe ComPAnyMessrs. Ernst & Young (Chartered Accountants)201, De Saram Place,Colombo 10.Tel : +94 11 2204444Fax: +94 11 2697369

LAwyeRs to tHe ComPAnyAIM LAWAttorneys-at-Law and Notaries PublicNo. 514C, R A De Mel MawathaColombo 03.Tel: +94 11 2503426/ +94 712 228 044Email: [email protected]

ComPAny weBsitewww.beiragroup.com

ComPAny [email protected]

BAnkeRs to tHe ComPAnyBank of Ceylon04, Bank of Ceylon Mawatha,Colombo 01.

national development Bank42, DHPL Building,Nawam Mawatha,Colombo 02.

sampath Bank110,Sir James Pieris Mawatha,Colombo 00200

Hongkong and shanghai Banking Corporation Limited24, Sir Baron Jayathilake Mawatha,Colombo 01.

Hatton national BankHNB Towers,479, T.B. Jayah Mawatha,Colombo 10.

Redesigning the future

We believe in creating a world where nothing goes to waste. Where our natural resources are protected while creating a sustainable environment that is made better for future generations. As staunch supporters of this cause, we turn everyday PET bottles into synthetic yarn that is used in creating clothes and shoes. Others might call that recycling, we say it’s redesigning the future.

BPPL Holdings PLCAnnual Report 2017/18

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OvErviEWYear in review 4Summary of Operations 5Our New State of the Art Factory 8CEO’s review 11Corporate Social responsibility 17Board of Directors 24Corporate Governance review 28report of the Audit Committee 32report of the remuneration Committee 33report of the related Party Transaction review Committee 34Annual report of the Board of Directors 35

FiNANCiAl STATEmENTSindependent Auditor’s report 39Statement of Financial Position 42Statement of Profit and Loss 43Statement of Comprehensive income 44Statement of Changes in Equity 45Statement of Cash Flows 47Notes to the Financial Statements 48investor information 83Statement of value Added 85Five Year Summary 86Office Addresses 87Notice of meeting 88Notes 89Form of Proxy 91Corporate information Inner Back Cover

Contents

About UsFollowing the recent commissioning of a synthetic yarn spinning facility and expansion of the synthetic filament production facility, BPPl Holdings PlC has diversified its product range into two principal areas – brush production and filament extrusion. Furthermore, with the coming on stream of these new production lines, the Group has expanded the markets it serves to include the apparel sectors in Sri lanka and Taiwan in addition to the North American region, where most of its brushware is sold.

The filament extrusion business offers tremendous opportunities for growth for the Group, especially due to the recycled products that these facilities will produce and complements its recycling efforts as the leading plastics recycler in Sri lanka.


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Quality CertificationsTo ensure continuous improvement and corporate responsibility, our factories are iSO 9001:2015 quality management systems, iSO 14001:2015 environmental management systems and OHSAS 18001:2007 occupational health and safety management systems certified. B P P l Holdings PlC is a responsible sourcing partner collaborating with forest owners and FSC® certified suppliers committed to proper harvesting methods. We are certified through SGS lanka (Pvt) ltd. to offer Forest Stewardship Council® (FSC®) Certified products (SGS-COC-00986) and have obtained accreditation under the international Standards for Phytosanitary measures No. 15 (iSPm 15), a measure developed by international Plant Protection Convention (iPPC) on the need to treat wood materials. The certification is awarded by the National Plant Quarantine Services (NPQS) Unit of the ministry of Agriculture. We practice international social standards such as the ETi Code of Conduct and BSCi. We are also a member of SEDEX. in addition we follow lean manufacturing Techniques and Japanese 5S Housekeeping Practices.


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Year in Review2017/18 HigHligHtsFollowing the pivotal change to the shape of BPPl’s business lines with the recent commissioning of its yarn spinning plant, the year 2017/18 was characterised by further noteworthy activities

investments in 2017/18

800

600

rs. mn

700

500

400

300

200

100

To Brush

To Fillaments

0To BrushTo Fillaments

revenue

Brush relatedFillaments related

17%

83%

Gross Profit

Brush relatedFillaments related

21%

79%

•• 8% increase in reported revenue in a year that was impacted by unprecedented floods.

•• Near three-fold increase in monthly PET waste collections required to supply plastic flakes to its yarn spinning and filament extrusion plants.

•• Dividend remained at 42 cents per share as in the past year.

•• Higher plastic waste collections will also negate cost increases caused by rising petroleum prices as recycled plastics will be used as a cost effective alternative to virgin plastics.

•• Commissioning of the first fully-fledged polyester yarn spinning plant in the country.

•• 16% dip in NPAT following the floods which impacted timber supply and increased timber prices in the second and third quarters.

8%

16%


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Summary of OperationsBrUsHwAreProductsBrushware and cleaning tools for janitorial activities

Brushware for the food services sector Brushware for building activities

Brushware for industrial applications Brushware and cleaning products for households

A range of raw material components for other brushware manufacturers

main markets and customer typesWholesalers and distributors of janitorial, food services, construction and industrial suppliesDistributors and retailers of household cleaning products.

Significant eventsDeeper penetration of the sourcing office market space of commercial and industrial tool suppliersSeveral new customer wins in North America.


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Summary of Operations

syntHetic FilAmentsProducts•• recycled PET, polypropylene and

nylon single filaments used in cleaning, industrial and painting brushes and brooms

•• Polyester-based multiple spun filaments or yarn used as raw materials for fabric production

main markets and customer types•• manufacturers of brushware•• manufacturers of polyester fabrics

Significant events•• Successfully substituted recycled

plastics when making polypropylene brush filaments

•• Successfully commissioned the second of just two yarn spinning facilities in the world that’s capable of producing yarn directly from recycled PET bottle flakes

•• This is also the first yarn spinning plant of its kind in Sri lanka

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Our New State of the Art Factory


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We invested heavily on our syntheticfilament business in order to diversifyand thereby reduce dependency on asingle brushware-based product rangeduring the past year. The syntheticfilament sector offers tremendousgrowth opportunities for the Companyas a market leading plastic recycler in Sri lanka.

To cater to this higher demand,we increased production capacity byinvesting in a third filament extrusionplant, which is expected to becommissioned by July/August of 2018.

Product sampling is currently being donefor several customers in the apparelindustry both in Sri lanka and overseas.

Our New State of the Art Factory


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CEO’s Review

3,660Mn | 39%Total Assets FY 2018 | Growth

Dear Shareholder,Your Company completed its first year as a listed entity following the quoting of its shares on the Colombo Stock Exchange in April 2017.

First and foremost, i would like to thank the shareholders of BPPl Holdings for their continued confidence shown towards the Company, despite the challenging environment faced during most of the past 12 months.

The financial year 2017/18 was a year in which results were mixed, with both revenue and profitability affected by unprecedented floods in Sri lanka in may/June 2017. These floods initially disrupted timber supply and subsequently impacted timber prices. Overtime and labour costs were significantly higher due to temporary worker hiring in order to process orders as and when timber was received. Financial results were also affected by escalating petroleum prices, which impacted plastic raw material costs later in the year.

revenUeConsolidated revenue for the period April ’17 to march ’18 was rs. 2.6 billion, up 8% over the corresponding period in the previous year.

revenue growth was from a combination of new customer accounts, deeper penetration of existing accounts and certain customers re-ordering after slowing the previous year. Higher revenue was also generated through increased synthetic filament sales to other brush manufacturers in the indian sub-continent region.

revenue

3,000

2,500

1,500

rs. mn

2,000

1,000

500

FY 14 FY 15 FY 16 FY 17 FY 180

“Consolidated revenue for the period April ’17 to March ’18 was Rs. 2.6 billion, up 8% over the corresponding period in the previous year.”


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CEO’s Review

The North American region remained the dominant performer for the year accounting for 81% of full year revenue.

The Group continued with its strategy of direct sales through sourcing offices to the industrial and commercial market segments of the cleaning tool industry for more immediate-term gains. Direct sales grew 17% during the April ’17 to march ’18 period over the corresponding period in the previous year and accounted for 27% of Group revenue. meanwhile, revenue to the Company’s heartland wholesale market segment only grew by 5% and now accounts for a 71% of Group revenue.

The Group also pursued its strategy of supplying own-brand goods to the household markets for longer-term benefits. Tip Top branded goods are sold in Sri lanka by two national retailers and are available in 251 stores. Similarly JAB branded goods are listed by nine retail chains in indonesia with products currently available in 294 outlets. However, contributions from this channel to Group revenue are still around 2% given the longer gestation periods normally associated with branded goods.

ProFitABilityProfit After Tax attributable to the Company’s shareholders for the April ’17-March ’18 period was Rs. 366 million, down 16% over April ’16-March ’17. EPS for the 12 months was rs. 1.19 compared to rs. 1.42 for the corresponding period in the previous year. These figures are after accounting for a one-time differed tax charge in the financial year 2017/18

The externally-driven raw material cost factors also made us closely examine our brush-making operations during the year. We moved North American sales management to Sri lanka in order to reduce costs. We also slowed our brand expansion plans and rationalised our strategies by mainly focusing on the Sri lankan and indonesian markets whilst parking our expansion into malaysia for the time-being.

Branded cleaning tools are a relatively new product range for your Company. They were developed to cater to growing disposable income levels amongst the Asian households. Fairly extensive market research showed us that this market segment requires high quality, attractively designed and packaged and reasonably-priced cleaning products that are easily accessible. The products could be differentiated with cheaper Chinese imports through branding with easy accessibility being provided by selling at modern trade outlets.

Household markets are also significantly larger than our traditional commercial and industrial market segments and offer greater potential for growth.

However, it takes a longer time to establish brand names amongst consumers and requires heavy investments for promoting products. This was a key reason for slowing our market expansion plans in this category, a

FY18

USA & CanadaAustralia & New ZealandEurope & the UKSri lankaOther

5%5%

7%

81%

3%

decision taken to balance the near-term vs. longer-term returns provided to our shareholders.

in order to reduce the impact of escalating petroleum prices on our plastic brushware, we also started producing more of the plastic brush backs with recycled plastics. recycled plastics are generally less expensive than virgin plastics. The results so far have been promising although the full benefits of these efforts will only be seen in the financial year 2018/19.

in addition, price increases are planned during the financial year 2018/19 to offset some of these higher costs.

We also invested heavily on our synthetic filament business in order to diversify and thereby reduce dependency on a single brushware-based product range during the past year. The synthetic filament sector offers tremendous growth opportunities for your Company as a market leading plastic recycler in Sri lanka.

Operationally, we separated the two business areas under separate management teams and promoted key

“we Also invested HeAvily on oUr syntHetic FilAment BUsiness in order to diversiFy And tHereBy redUce dePendency on A single BrUsHwAre-BAsed ProdUct rAnge dUring tHe pAst yeAR. ”


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members of management in each of the two business areas to manage the day-to-day functions with greater focus.

We won significant sales orders for synthetic filaments (used in brushware) from new customers in North America where shipments are likely to commence in the second quarter of the Financial Year 2018/19.

in order to cater to this higher demand, we increased production capacity by investing in a third filament extrusion plant, which is expected to be commissioned by July/August of 2018.

Our multifilament (used as yarn for making fabric) production facilities were commissioned in march/April 2018. Product sampling is currently being done for several customers in the apparel industry both in Sri lanka and overseas. Again, we expect orders for these items to flow in from the second and third quarters of financial year 2018/19.

I’m proud to say that this is the first fully-fledged polyester yarn spinning plant in Sri lanka. The apparel industry the world over is increasingly moving

Gross Profit

1,200

1,000

600

rs. mn %

800

400

200

FY 14 FY 15 FY 16 FY 17 FY 180 0

10

20

30

40

50

Gross Profit (Rs Million)GP margin (%)

Operating Profit

600

500

300

rs. mn %

400

200

100

FY 14 FY 15 FY 16 FY 17 FY 180 0

5

10

15

20

25

Operating Profit (Rs Million)OP margin (%)

Profit After Tax (PAT)

500450

350

250

150

50

400

200

rs. mn %

300

100

FY 14 FY 15 FY 16 FY 17 FY 180 0

4

8

12

16

2018

14

10

6

2

PAT (rs million)PAT margin (%)

from supplying cotton-based apparels to polyester as it’s more versatile and less expensive. We will initially focus on producing recycled polyester yarn, which is a niche segment within this sector, but one with good growth potential.

in order to supply raw materials to both these filament and yarn segments, we increased our post-consumer (waste) PET bottle collections during the year with monthly collections rising to 150-200 tonnes from an average of around 75 tonnes in financial year 2017/18; 200 tonnes is fairly significant in that it accounts for approximately 17% of virgin PET imports into Sri lanka.

Your Company currently has 125 PET bottle collection points across the country and is in the midst of converting some of these into collection centres. A collection centre will have machinery installed to compress/bail bottles for more efficient storage. It also will lower transport costs when bringing the bailed bottles to our recycling plant as it is more cost-efficient to transport bailed bottles compared to loose bottles.

We also upgraded our bottle-washing plant during the year for better bottle flake quality. A much higher quality of flakes is generally necessary for yarn extrusion when compared to filament extrusion.

The Company’s kiln drying and wood block processing capacities were also expanded during the year due to increased customer demand for these products.

dividendsThe total dividend for the financial year 2017/18 was 42 cents per share consisting of a first interim dividend of 18 cents per share and a second interim dividend of 24 cents per share.

Total dividends for the year were the same as in the previous financial year.

cAsH And cAPitAlThe Group generated rs. 327 million from operational activities during the financial year after working capital changes and interest and tax payments. in addition, the Group borrowed rs. 736 million in short- and long-term debt. Of this total of rs. 1,063 million,


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CEO’s Review

Finance Cost & Gearing

35

30

20

10

5

25

rs. mn %

15

FY 14 FY 15 FY 16 FY 17 FY 180 0

20

40

60

50

30

10

Net Finance Cost (rs. mn)Debt/ Equity

PAT & rOE

500450

350

250200

10050

150

400

rs. mn %

300

FY 14 FY 15 FY 16 FY 17 FY 180 0

5

15

25

20

10

PAT (rs. million)rOE (%)

rs. 129 million was used by the Company towards dividends with the balance rs. 924 million being used for the acquisition of plant and equipment.

The Group debtor settlement period had worsened slightly to 92 days at the end of the financial year 2017/18, from 82 days at the end of the previous year. We, however, had anticipated this increase earlier due to the increase in retail sales to the household sector where credit terms are longer. We expect this period to stabilise around these levels going forward.

The Group creditor settlement period on the other hand, improved considerably to 60 days from 36 days at the end of the previous financial year. The impact from the higher debtor receivable days was, therefore, minimised due to this increase.

deBt to eQUityThe Group debt to equity ratio was 49% at the end of the financial year 2017/18, up from 17% as at end 2016/17, primarily due to payment for the yarn spinning and filament extrusion plants. The net debt level at the end of the financial year 2017/18 was rs. 1.1 billion. Although

payments for these projects are still not fully completed, we do not expect this ratio to exceed 55% in the financial year 2018/19.

inventoryInventory build-up of post-consumer PET waste bottles for both the yarn and filament projects reduced Group inventory turnover to 3.5x at the end of the financial year 2017/18 from 3.6x at the end of the previous year. We are conscious of this excess and will focus our efforts to improve this in the next financial year towards a target of 4x. We believe that 4x is realistic for our industry, despite having to import raw materials from as far afield as Mexico and Canada where, due to the longer lead times, inventory levels have to be maintained at adequate levels in order to meet customer delivery commitments.

risk reviewYour Company had faced limited external risks these past few years primarily due to falling commodity prices led by lower petroleum prices. most common plastic resins such as polypropylene and polyethylene terephthalate are derived from petrochemicals and, therefore,

plastic costs benefited from falling petroleum prices.

moreover, prices of our other vital raw material, timber, were also stable these past few years.

Hence, this was the first financial year in which your Company had to encounter significant risks brought about by the floods in May/June 2017 and then rising petroleum prices at the end of 2017.

Our significant exposure to the North American market remains a concern. North America remains the only market that offers substantial and un-fragmented sales opportunities for our specialised brushware products, which means that we must continue to retain a dominant presence in this market.

However, in order to lower the impact of these risk factors, we have now implemented the following:

1. Commenced evaluating alternatives to natural timber, such as wood/plastic composite materials, which are as strong.

“the CoMpAny’s kiln drying And wood Block Processing cAPAcities were Also exPAnded dUring tHe yeAr dUe to increAsed cUstomer demAnd For tHese pRoduCts. ”


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2. Expanded our recycling efforts to include other plastic items, such as polypropylene-based products that can be used for making brush backs. Our recycling efforts up until recently was only focused on the collection of PET bottle waste.

3. Product and geographical diversification through the commissioning of our yarn spinning venture, which not only reduces our dependency on a single product range but also exposes the Company to other markets, primarily the apparel export sectors in Sri lanka and Taiwan.

oUtlookWe expect an improved financial performance in the subsequent quarters now that the timber supplies have stabilised and other cost rationalisation initiatives have been implemented. Although petroleum prices continue to escalate, we will lower its impact on gross profit margins with an increasing use of recycled plastics. A general price increase is also planned in the financial year 2018/19 to offset some of these higher costs.

The year ahead also offers better prospects for earnings growth for your Company, with the commissioning of the yarn spinning plant and the expected commissioning of the third synthetic filament extrusion line in the second quarter of the financial year 2018/19. Both these plants are expected to contribute to revenue from the second and third quarters of 2018/19.

We expect both these businesses to become substantial contributors to BPPL’s financial position and performance over the coming years. Filament sales to other brush manufacturers in the region are already a

lucrative business line for your Company; 40% of filaments produced are currently sold outside the Group and this figure should only rise with some of the new orders that the Company has won.

Yarn sales to Sri lanka’s apparel sector is also likely to contribute significantly to both revenue and earnings growth, as the Asian region and Sri lanka in particular, have a progressive apparel industry that is now shifting towards polyester-based fabric from cotton. Currently ,yarn for such fabric is imported to the country. By sourcing polyester yarn from Sri lanka, fabric manufacturers can significantly reduce lead times and also lower inventory costs.

i would like to conclude my message by thanking the Board, management, and staff, for their collective efforts at driving the Company towards its objectives. i also thank our customers and our business partners for their support and patronage and look forward to serving their needs better in the new financial year.

Sincerely,

dr. Anush AmarasingheManaging Director/Chief Executive Officer

“tHe yeAr AHeAd Also oFFers Better ProsPects For eArnings growtH For yoUr CoMpAny, with the commissioning oF tHe yArn sPinning PlAnt And tHe exPected commissioning oF tHe tHird syntHetic FilAment extrUsion line in tHe second QUArter oF FinAnciAl yeAr 2018/19. ”

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QuAlity, enviRonMent, heAlth And sAfety systeMs

Corporate Social Responsibility

Our multi-layered quality system ensures consistent quality of production outputs of international standard, while also being environmentally and socially responsible. Our quality system is enforced through our in-house quality auditors in addition to regular external compliance audits for renewal of certifications.

Our People and Workplace SafetyThe year under review has been one of expansion and growth for the BPPl Holdings team with a new factory premises for manufacture of yarn being set up. The new facility, located in the BOi zone in Boralugoda, Horana has employment capacity for over 100 personnel. During the current financial year nearly 75% of this personnel requirement was achieved through new recruitments, mainly from the local communities. The new factory is scheduled for commercial operations in 2018. However, we commenced training new recruits in 2017-18 to enable fast and smooth running of the facility no sooner it is commissioned.

in addition, our brush factory in ingiriya was expanded, by introducing modern machinery for quality and efficiency, supported by the addition of new employees.

Compliance with labour lawsBPPl Holdings is fully compliant with all applicable labour regulations. As at end march 2018, all statutory employee payments were made on time. The Group did not face any fines or penalties for non compliance, or delays in compliance with any applicable labour laws or directives.

BPPl employees are not unionised. However, employee engagements were enhanced during the year to facilitate better, direct communications with employees.

The Group remuneration policy ensures above minimum wage pay for all factory employees together with incentive payments for increased productivity.

iso 9001: 2015 iso 14001:2015oHsAs

18001:2007

isPm 15Fsc

certiFicAtions in Process For tHe oeko-tex® |

stAndArd 100

certiFicAtions in Process For tHe gloBAl recycle

stAndArd


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APPlicABle regUlAtion

stAtUs oF comPliAnce

Shop and Office Employees Act of 1954

Fully compliant

Factories Ordinance of 1942

Fully compliant•• The BPPl ingiriya factory was subjected to 02

inspections by the District Engineer for compliance under the Factories Ordinance during 2017-18.

•• The factory was also subjected to 02 labour Department inspections during the year for compliance on working conditions, and employee relations including health and safety standards.

•• labour Department approval has been obtained to allow night work for females at the BPPl ingiriya factory.

Employees Provident Fund Act of 1958 (and subsequent amend-ments)

Fully compliant•• The Company credited 8% of employees salaries to

their EPF accounts on the due date of every month•• The Company contributed 12% of employees salaries

to their EPF accounts on the due date of every month•• New EPF accounts for new recruits have been opened

Employees Trust Fund Act of 1980

Fully compliant•• The Company contributed 3% of employee salaries to

their ETF accounts on the due date of every month•• New ETF accounts for new recruits have been opened

Over time, allowances Fully compliant•• All payments have been made on time

Employee Profile As At End-March 2018The total workforce of BPPl Holdings increased to 808 permanent employees by end March 2018 from 715 with rapid new recruitments during the year to fill vacancies at our brush factory in ingiriya and the new facility in Boralugoda and also for the BPPl head office in Colombo.

stAFF grAde 2016-17 2017-18Senior management 08 08

Executives 50 65

Staff 73 77

Factory floor employees(skilled, unskilled and helpers) 582 656

management trainees 2 2

total 715 808


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New Recruitment 2017-18

stAFF grAde nos Senior management -

Executives 15

Staff 4

Factory floor employees 74

management trainees -

total 93

New recruitment by skill category

skill cAtegory new recrUitments

totAl

Engineers 01 01

management graduates 02 02

Skilled personnel 21 21

Unskilled personnel (machine operations, packing, quality control)

53 53

During the year we recruited 93 permanent personnel of all categories. in line with our growth plans, we expanded our academically and technically qualified cadre, including highly qualified engineers, to facilitate professional operations and management of the business in the future. A majority 90% of new recruits are below the age of 40 years, which has brought down the average age of our employees to 36 years. This injection of new blood can be expected to add value to our existing highly experienced senior factory management team by providing innovative and modern solutions.

Workplace SafetyOur operational brush manufacturing factory in ingiriya is Occupational Safety and Health Administration (OHSAS) compliant and complies fully with the safety standards of the Factories Ordinance. The factory is equipped with required protective equipment and clothing. The OHSAS certification was renewed in the current financial year. We also provided training to factory floor employees on health and safety during the year. Our factory employees are also insured under the Workmen’s Compensation Act against industrial accidents.

Industrial Accidents 2017-18

Accidents 2016-17 2017-18Fatalities 0 0

major accidents 0 1

minor accidents 50 45

lost man days 28 14

During the current financial year we experienced 1 major accident for which the workman has been compensated and is back at work, in a different occupation. in addition, we continued to experience many minor accidents in the form of minor scrapes and cuts. The relatively high prevalence of such minor accidents is due to factory employees not observing correct safety protocols. many workers do not like to wear the provided protective gear such as safety gloves, footwear, masks, ear plugs etc..

Training and Development

2017-18Number of training programmes con-ducted

130

Number of employee hours trained

3283 hours

Total cost of training rs. 1 mn (approx)


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Forklift Training Padukka & Ingiriya Fire Training Workers cricket day

Motivation Staff Training

Grievance managementDuring the current financial year, a more proactive grievance management system was introduced to accommodate welfare of our employees as the workforce continued to expand. The Group has a common Grievance Committee to address any formal grievances. The Committee comprises employee and management representation.

Under the new system, the Head of Human resources and Administration personally visits the factory floor on a monthly basis and speaks directly with employees. This has increased employee communication with management and also the number of grievances brought to the notice of the Hr Department. However, 99% of reported grievances during the current year were of personal nature, related to family, difficulties in child care and difficulties with transport conditions, and were unrelated to work and working conditions. The Head of Hr and Admin takes all necessary steps to address all grievances for the best of the Company and its employees.

The grievance management system also incorporates employee welfare and includes a Welfare Society, a Sports Club, and a Death Donation Fund.

Employee Welfaremany employee events are organised annually to facilitate socialisation and networking for a friendlier and cooperative work environment. Some of these events are listed below.

Beira News, our quarterly magazine is a key communication tool between the Company and our growing team. The magazine is used to notify employees of any important developments of the company, including the introduction of new recruits. The magazine is also used by employees to showcase their achievements such as poetry, sport events, weddings and other social occasions.


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Annual Day OutingsEmployees went on their annual trip to Kanneliya Forest, a rainforest which is a tourist attraction in Sri lanka. The employees enjoyed bathing in the river and music and games at the hotel for a fun filled vacation.

Employee Get together 2017 - Kanneliya

School Book Distribution - 2017

Flood Donation

The vesak season was commemorated with a lantern competition and alms giving with a vesak dan sala.

Flood assistanceAs a community activity, all employees of BPPl joined hands with the management to donate food items and clothing among the flood affected persons, some of whom were fellow workers. The Company also attended to the repairs of damaged houses and replacement of furniture etc.. for all the affected employees.

Helping Children of Employees

The Company continued to support the education of children of its employees by distributing school books to all children of BPPl Holdings which, included school bags as well.

environmentAl resPonsiBilityWe ensure total compliance with all environmental protection regulations at our factory premises in ingiriya and also in our new factory premises in Boralugoda. All relevant environmental clearances have been obtained to construct our factory in Boralugoda and all environmental licences were renewed from the Central Environmental Authority for ingirya operations during the year. We did not face any fines or penalties for non compliance with any applicable environmental regulations.•• renewed the Environmental

Protection license (EPl) for both the factories.

•• Obtained iSO 14001:2015 certification from SGS lanka(Pvt) ltd in August 2016 for the ingiriya facility.

managing Environmental impactsemissions: Our brush manufacturing operation does not generate hazardous waste. Emissions are limited to sound

and dust. All sound emission are contained within statutorily stipulated levels and the company has in place dust extractors to prevent air pollution.

water : manufacturing water usage is limited to washing and this water is treated at our treatment plant and reused 100%. Water is tested for contamination by the PHi every year. Canteen waste water is diverted to a pit which is cleared regularly.

Manufacturing waste : The main manufacturing waste product is sludge which is sold for concrete manufacture.

Wood shavings are sold as firewood to companies and are also used to fire our boilers.

manufacturing rejects are recycled or used as burner fuel

food waste: Food waste is donated to animal farms

paper: Our head office premises is almost paperless. All paper is also collected and recycled or burned.

electronic waste : Electronic waste is disposed by calling for quotations annually


22

We helped clean up the country by collecting plastic bottles from the Kataragama area and beaches in 2017. These bottles were recycled to brush filaments to fill the brushes for export.

Community engagementsWe engage with communities in the locality of our ingiriya factory on a regular basis through many corporate social responsibility projects. During the current financial year we contributed rs. 500,000 for CSr projects. Every year the Company donates school books, food, and other items to the ingiriya temple for redistribution among needy families in the village. in addition, we also support various public institutions such as the ingiriya Police and Pradeshiya Sabha in their events.

environmentAl conservAtion Activities


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in m

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ays t

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Bppl holdings plCAnnual report 2017/18

24

04. Mr. Manjula hiranya de silvaIndependent Non-Executive Director

Board of Directors

03. Mr. sarath dayantha AmarasingheChairman

01. Mr. vaithilingam selvarajExecutive Director/Chief Financial Officer

02. Mr. B d prasad devapriya pereraExecutive Director

25 Bppl holdings plCAnnual report 2017/18

08. Mr. Ranil prasad pathiranaNon-Executive Director

05. Ms. sharmini RatwatteIndependent Non-Executive Director

06. Mr. savantha Rishad sproule de saram

Independent Non-Executive Director

07. dr. Anush Amarasinghemanaging Director/Chief Executive Officer


26

Board of Directors

01. Mr. vaithilingam selvarajExecutive Director/Chief Financial Officer

Business experiencemr. Selvaraj holds an mBA from the Australian institute of Business, is an Associate member of the Chartered institute of management Accountants, UK (ACmA) and a CGmA and Associate member of the institute of Data Processing management (AiDPm). He is also a Graduate member of the Sri lanka institute of Directors.

in terms of business management experience, mr. Selvaraj counts over 34 years in the manufacturing sector, out of which 33 years were in senior managerial positions in the areas of finance, supply chain management, export sales, iT and general management. He served as the Chief Accountant of the Phoenix Group of Companies for nine years, and has been a Director of moosajees (Private) limited for 23 years.

mr. Selvaraj is also on the boards of Beira Brush (Private) limited, Beira Enviro Solutions (Private) limited, Beira Enterprises (Private) limited and moosajees (Private) limited. He is also a Non-Executive Director Moot investments (Private) limited and Gold Coins Feed mills (lanka) limited.

other directorshipsBeira Brush (Private) limitedBeira Enviro Solutions (Private) limitedBeira Enterprises (Private) limitedmoosajees (Private) limitedmoot investment s (Private) limitedGold Coins Feed mills (lanka) limited

02. Mr. B d prasad devapriya pereraExecutive Director

Business experiencemr. Perera, who is a science graduate with a second class from the University of Colombo and a certified Director of the Sri lanka institute of Directors, is the chief operating officer at Beira Brush (Pvt) ltd. Starting his career at BPPl as a management Trainee in 1991, mr. Perera has served the Company for 26 years in various capacities. His previous employment was at Brandix lanka limited, as a sectional head.

mr. Perera also holds Director positions at Beira Brush (Private) limited, Beira Enviro Solutions (Private) limited and Beira Enterprises (Private) limited.

other directorshipsBeira Brush (Private) limitedBeira Enviro Solutions (Private) limitedBeira Enterprises (Private) limited

03. Mr. sarath dayantha AmarasingheChairman

Business experiencemr. Sarath Dayantha Amarasinghe is a Chartered Engineer by profession. A member of the institute of mechanical Engineers, UK – m i mech E and a member of the institute of marine Engineers, UK - M I Mar E, he is also a member of the institute of Chartered Engineers, UK and a member of the institute of Engineers, Sri lanka – miE (S.l) He counts over 35 years of service at Colombo Commercial Company

(Engineers) ltd., of which he served as its General manager/managing Director for a period of 10 years. He also served as Chairman/managing Director at Alumex Group of Companies for a period of Seven years.

other directorshipsBeira Brush (Private) limitedBeira Enviro Solutions (Private) limitedBeira Enterprises (Private) limitedInfinity Capital (Pvt) Ltd

04. Mr. Manjula hiranya de silvaIndependent Non-Executive Director

Business experiencemr. manjula De Silva holds a BA Hons (1st Class) degree in Economics from the University of Colombo and a mBA from london Business School, UK. He is also a FCmA (UK) and a CGmA. mr. De Silva held the positions of CEO and managing Director at HNB Assurance PlC. He is currently the Chairman at the National insurance Trust Fund (NiTF). He has formerly held positions at NDB Wealth management and the Public Enterprises reform Commission (PErC). He has also served as the Chairman of CimA (Chartered institute of management Accountants) Sri lanka Board. He was recently appointed as a commission member of the Securities and Exchange Commission of Sri lanka (SEC)

other directorshipsNational insurance Trust FundTea Smallholder Factories PlC


05. Ms. sharmini RatwatteIndependent Non-Executive Director

Business experiencems. Sharmini ratwatte is a Fellow member of the Chartered institute of management Accountants, UK and holds a master of Business Administration from the University of Colombo.

Sharmini is a Non-Executive Director at mAS investments (Pvt) ltd until 31st march 2018 and Ceylon Cold Stores PlC. She is also a Founder Trustee of the Federation of Environmental Organisations, and the Sunera Foundation.

ms. Sharmini ratwatte was recognised as the Zonta “Woman of Achievement - management” in 2004.

other directorshipsCeylon Cold StoresTrustee at Sunera Foundation

06. Mr. savantha Rishad sproule de saram

Independent Non-Executive Director

Savantha De Saram, is the Senior Partner of M/s D. L. & F. De Saram, Attorneys-at-Law, specialising in infrastructure, corporate restructuring, m&A, cross border financing (including project financing) and corporate and commercial law. He holds a llB (Hons) from Holborn Law College London, and is a Barrister-of-Law (of Lincoln’s Inn) and an Attorney-at-Law. He has been in practice for over 18 years. He currently serves as a non-executive director of Hunters & Co. PlC

other directorshipsHunters and Co. PlC

07. dr. Anush AmarasingheManaging Director/Chief Executive Officer

Business experienceDr. Amarasinghe holds a Bachelor of Science and Ph.D. degrees in Electronics Engineering from the loughborough University of Technology, UK, and is a veteran investor with many years of hands-on business management experience.

Dr. Amarasinghe began his career as a research Engineer at Thorn Emi Central research laboratories, UK where he patented two inventions on low cost, low energy consuming electronic ballasts for lighting equipment. Between 1993 and 1998 Dr. Amarasinghe worked at SG Securities as an investment research analyst and an investment banker. He was an early investor in millennium information Technologies (millenniumiT) and in 1999 joined millenniumiT as its Chief Financial Officer. He was elected to the Board in 2001 and was appointed Chief Operating Officer in 2004. In 2009 millenniumiT was sold to the london Stock Exchange Group, UK, and Dr. Amarasinghe left the company in 2012, after serving a mandatory three-year post-sale agreement.

Whilst at millenniumiT, Dr. Amarasinghe was also a founding partner and investor in E-Channelling, and was instrumental in listing E-Channelling on the Colombo Stock Exchange. Dr. Amarasinghe was also a director and an early investor in Alumex Anodising and machine Tools (Pvt) ltd.

Beira Parawood Products ltd. (BPPl) is Dr. Amarasinghe’s most recent investment. He acquired the company in 2012.

other directorshipsBeira Brush (Private) limitedBeira Enviro Solutions (Private) limitedBeira Enterprises (Private) limitedInfinity Capital (Pvt) Ltd

08. Mr. Ranil prasad pathiranaNon-Executive Director

Business experiencemr. ranil Pathirana has extensive experience in finance and management in financial, apparel/manufacturing and energy sectors. He is a Fellow member of the Chartered institute of management Accountants, UK (FCmA) and holds a Bachelor of Commerce degree from the University of Sri Jayewardenepura.

mr. Pathirana is a Director of the Hirdaramani Group Holding Companies, and the managing Director of Hirdaramani international Exports (Pvt) ltd.

non-executive directorshipsBeira Brush (Private) limitedBeira Enviro Solutions (Private) limitedBeira Enterprises (Private) limitedSampath Bank PlCAlumex PlCCeylon Hotels Corporation PlCAmbeon Capital PlCOdel PlC

27


28

BPPl Holdings PlC is a Public limited Company listed on the Colombo Stock Exchange (CSE) and registered under the Companies Act No. 07 of 2007.

stewArdsHiPCorporate governance and risk management combine to define how we conduct business at BPPl Holdings PLC. Together they form our play-book, articulating our vision, values and philosophy, providing structure for decision making at appropriate levels. Finely balanced to drive efficiency and innovation while providing sufficient safeguards to preserve value, they facilitate careful stewardship of the Company.

Corporate Governance ReviewThe Board is committed and takes responsibility to conduct the Company’s business ethically and maintains the highest standards of Corporate Governance. The Board also ensures enhancement of stakeholders’ value whilst ensuring that proper internal control systems are in place by complying with the generally accepted Corporate Governance practices such as,

•• listing rules of the Colombo Stock Exchange (CSE)•• Companies Act No. 07 of 2007 and,•• Corporate Governance best practices stipulated jointly by the Securities &

Exchange Commission (SEC) and the institute of Chartered Accountants of Sri lanka (iCSAl).

The Company’s Corporate Governance framework is expected to ensure transparency and a good governance system leading towards enhancing profitability and long-term economic and environmental sustainability.

corPorAte governAnce strUctUreThe Company’s Governance Framework is depicted in the following diagram.

Shareholders delegate power to the Board of Directors

Board delegates the powers to management

sHAreHolders

Conduct of the Business and

other operational matters

financial Reporting

internal Control

Risk Management

externAl AUditor

cHAirmAn

internAl AUditor

mAnAgement

non execUtive directors

ceo And execUtive directors

BoArd oF directors

m

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i

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Audit Committee

Related party transaction Review

Committee

Remuneration Committee


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comPosition oF tHe BoArdThe Board has the overall responsibility and accountability for the management of the affairs of the Company, maintenance of prudent risk management practices and safeguarding stakeholder rights. The Board is comprises eight Directors consisting of three Executive Directors and five Non-Executive Directors. Out of the five Non-Executive Directors, three are independent and their independent outlook is to bring an independent view and judgment to the Board with their wide range of expertise and significant experience. There is significant balance of power, minimising the tendency for one or few members of the board to dominate the board processes or decision making. Brief profiles of the Directors are set out on Pages 26 to 27.

nAme oF tHe director

execUtive non- execUtive

indePendent

Dr. Anush Amarasinghe √

mr. Sarath Amarasinghe √

mr. ranil Pathirana √

mr. manjula De Silva √ √

ms. Sharmini ratwatte √ √

mr. Savantha De Saram √ √

mr. vaithilingam Selvaraj √

mr. Prasad Perera √

oPerAtion oF tHe BoArdBoard meetings are held on a quarterly basis with the flexibility to arrange ad-hoc meetings to supplement these when required. meetings are arranged well in advance with the agenda and information relating to matters set before the Board circulated at least one week in advance facilitating sufficient time for due consideration of the same. The Board met 4 (four) times during the year as set out below,

nAme oF tHe director role BoArd meetings

Dr. Anush Amarasinghe ED/managing Director/CEO 4/4

mr. Sarath Amarasinghe NED/Chairman 4/4

mr. ranil Pathirana NED 4/4

mr. manjula De Silva iNED 4/4

ms. Sharmini ratwatte iNED 4/4

mr. Savantha De Saram iNED 4/4

mr. vaithilingam Selvaraj ED/Director Finance/CFO 4/4

mr. Prasad Perera ED/Director-Factory operations 4/4

BoArd HigHligHts 2017/18The Board approved,•• New mono-filament extrusion plant

of rs. 180mn•• Yarn extrusion plant (POY & DTY)

and washing plant upgrade of rs.760mn

•• installation of bale machines at 24 bottle collection sites at the cost of rs. 36 mn (rs. 1.5mn per site).

•• Annual capital expenditure of rs. 115mn

sUB committees to tHe BoArdThe Board has delegated some of the functions to three Board sub committees, Audit Committee, remuneration Committee and related Party Transactions Committee which operate within clearly defined terms of reference. Each Sub Committee consists of three Non-Executive Directors and is chaired by a Non-Executive Independent Director

1. Audit CommitteeThe Audit Committee is required to help the Company achieve a balance between conformance and performance. it is responsible for reviewing the function and process of internal controls in the Company and ensuring the effectiveness of the controls. The committee also reviews the Financial Statements of the Company to monitor the integrity of same. Furthermore, all audit activities are monitored by the committee to ensure compliance and adherence to statutory and regulatory requirements and industry best practices.

The Audit Committee updates the Board at regular intervals of the outcome of its meetings and circulates the minutes of its meetings. The Audit Committee consists of the following three Non-Executive Directors, two of whom are independent:


30

Mr. Manjula de silva Chairman - Non-Executive independent DirectorMs. sharmini Ratwatte Member- Non-Executive Independent DirectorMr. Ranil pathirana Member - Non-Executive Director

The Company Secretary serves as its Secretary. The Board has appointed an external professional firm to carry out the internal audit functions as directed by the Audit Committee and submit their findings. The Internal Auditors and the Chief Financial Officer (CFO) are invited to attend the meetings. Other Senior Executives are invited to attend where necessary.

The Audit Committee held five meetings for the financial year ended 31st March 2018. The Audit Committee report on describes the activities carried out during the financial year ended 31st march 2018.

2. Remuneration CommitteeThe remuneration Committee ensures that the Company has well–established, formal and transparent procedures in place for developing an effective remuneration policy for both Executive and Non-Executive Directors. No Director is involved in deciding his/her own remuneration to avoid potential conflicts of interest. The committee is also responsible for setting up the remuneration policy and providing guidelines to the Board on the overall remuneration framework (including setting performance incentives and targets) to ensure that remuneration levels are sufficient to attract and retain the calibre of professionals required for the successful management and operations of the Company. The

remuneration Committee consists of the following three Non-Executive Directors two of whom are independent:

Mr. savantha de saram Chairman - Non-Executive Independent DirectorMrs. sharmini Ratwatte Member- Non-Executive Independent DirectorMr. Ranil pathirana Member - Non-Executive Director

The remuneration Committee held two meetings for the financial year ended 31st march 2018. The report on the remuneration Committee is on page 33 and highlights its main activities.

3. Related party transactions Review Committee

The related Party Transactions review Committee ensures that the interest of shareholders as a whole is taken into account when engaging in transactions with related parties. The related Party Transactions review Committee consists of the following three Non-Executive Directors two of whom are independent:

Mr. Manjula de silvaChairman - Non-Executive Independent DirectorMrs. sharmini Ratwatte Member- Non-Executive Independent DirectorMr. Ranil pathirana Member - Non-Executive Director

The related Party Transactions Committee held five meetings for the financial year ended 31st March 2018. The report of the related Party Transactions review Committee is on Page 34 and highlights its main activities.

comPliAnceStatement of ComplianceThe Board places significant emphasis on strong internal compliance procedures. The Financial Statements of the Company are prepared in strict compliance with the guidelines of the Sri lanka Accounting Standards and other statutory regulations. The Board of Directors, to the best of their knowledge and belief, are satisfied that all statutory payments have been made to date.

As a responsible organisation, BPPl Holdings PlC adheres to the following regulations, codes and best practices published by different Government bodies.

•• Companies Act No. 7 of 2007.•• Sri lanka Accounting and Auditing

Standards Act No. 15 of 1995•• Code of Best Practice on Corporate

Governance jointly issued by the institute of Chartered Accountants of Sri lanka and the Securities and Exchange Commission of Sri lanka.

•• Corporate Governance requirements listed under Section 7 & 9 of the listing rules issued by the Colombo Stock Exchange

•• listing requirements of the Colombo Stock Exchange

•• inland revenue Act No.24 of 2017•• Foreign Exchange Act No 12 of 2017•• Customs Ordinance•• Employees Provident Fund Act No 15

of 1958•• Employees Trust Fund Act No 46 of

1980•• Payment of Gratuity Act No 12 of

1983•• Factory Ordinance No 45 of 1942•• Shop and Office employees Act No

15 of 1954•• Workman Compensation Ordinance

No 19 of 1934•• maternity Benefits Ordinance No 32

of 1939

Corporate Governance Review


31

Corporate Governance requirements listed Under Section 7 & 9 of the listing rules issued by the Colombo Stock Exchange (CSE)

cse- section reFerence

reQUirement comPliAnce stAtUs

7.10.1 Non-Executive Directors in Compliance

7.10.2 independent Directors in Compliance

7.10.3 Disclosure relating to Directors in Compliance

7.10.4 Criteria for ‘independence’ in Compliance

7.10.5 remuneration Committee in Compliance

7.10.6 Audit Committee in Compliance

9 related Party Transaction in Compliance


32

The Audit Committee Charter, approved by the Board of Directors defines the purpose, authority, composition, meeting and responsibilities of the Committee. The Audit committee is responsible for oversight of the integrity of the financial statements of the Company, of the Company’s compliance with legal and regulatory requirements, of the independence and qualifications of the internal auditor and of the performance of the Company’s internal audit function and internal auditors.

The audit committee consisted of three Non-Executive directors out of which two are independent. mr. manjula De Silva, Chairman, ms. Sharmini Tamara ratwatte and mr. ranil Prasad Pathirana are members of the Committee. The Company Secretary functions as Secretary to the audit committee.

Board approved to assign a professional firm to perform specific internal audits in accordance with the internal audit Plan suggested by the Audit Committee which ensured that it covered the major operational aspects of the company. KPmG, Chartered Accountants was selected as internal auditors and their final reports were reviewed by the Audit Committee after management response. The Audit Committee considers that the internal audit function is free from conditions that threaten the ability to carry out the internal audit activities in an unbiased manner.

The Audit Committee held five meetings during the year under review. The attendance of the Directors and audit

Report of the Audit Committeecommittee meetings for the financial year ended 31st march 2018,

mr. manjula De Silva 5/5ms. Sharmini Tamara ratwatte 5/5mr. ranil Prasad Pathirana 2/5

KPmG internal auditors, Chief Financial Officer (CFO) are invited and attend the meetings. Other Senior Executives of the management personnel are invited to attend the meeting where necessary attended the meetings.

The Audit Committee is satisfied that the control environment prevailing in the organisation provides reasonable assurance regarding the reliability of the financial reporting of the Company, the assets are safeguarded and the listing rules of the CSE have been met.

Manjula de silvaChairmanAudit committee

21st June 2018


33

The remuneration Committee, appointed by and responsible to the Board of Directors, consists of the following two Non-Executive Independent Directors namely mr. Savantha rishad Sproule De Saram , ms Sharmini Tamara ratwatte and Non executive Director namely mr. ranil Prasad Pathirana. The committee is chaired by mr Savantha rishad Sproule De Saram. The Committee met twice during the financial year. The attendance of the Directors and remuneration committee meetings for the financial year ended 31st march 2018,

mr. Savantha rishad sproule De saram 2/2 ms. Shamini Tamara ratwatte 2/2mr. ranil Prasad Pathirana 2/2

role oF tHe committeeThe remuneration Committee has reviewed and recommended to the Board of Directors the policy of the remuneration for the executive staff. The aggregate remuneration received by the Directors was rs. 23.9mn.

remUnerAtion Policyin a highly competitive environment, attracting and retaining executives high caliber executives is a key challenge faced by the Company. in this context, the Committee took into account competition, market information and performance evaluation methodology in declaring the overall remuneration policy.

savantha Rishad sproule de saramChairmanremuneration CommitteeColombo

21st June 2018

Report of the Remuneration Committee


34

The Company complies with the relevant legislation by forming the related Party Transaction Committee to ensure that the interests of shareholders as a whole are taken into account when engaging in transactions with related parties.

The related Party Transactions review committee consists of two independent Non- Executive Directors namely Mr. manjula De Silva, ms. Sharmini Tamara ratwatte and one Non –Executive Director namely mr. ranil Prasad Pathirana.

The Committee is chaired by mr. manjula De Silva. The committee held five meetings during the year under review. All the committee members were present. The Company Secretary functions as Secretary to the Committee. The attendance of the Directors and related party transaction review committee for the financial year ended 31st march 2018,

mr. manjula De Silva 5/5ms. Sharmini Tamara ratwatte 5/5mr. ranil Prasad Pathirana 2/5

The Company’s ErP system provides complete, timely, adequate and relevant information to the Board and senior management and thereby to the related Party Transaction review Committee.

There were no related parties transactions falling within the scope of

Report of the Related Party Transactions Review Committee

the listing rules was entered into by the Company during the Financial Year ended 31st march 2018.

Manjula de silvaChairmanrelated Party Transaction review Committee

21st June 2018


35

Annual Report of the Board of DirectorsThe Directors have pleasure in presenting the Second Annual report of the Company for the year ended 31st march 2018, after listing on the Colombo Stock Exchange.

PrinciPAl ActivitiesThe principal activities of the Company and the Group are detailed in Note 1.2 of the financial statements.

FinAnciAl stAtementsThe financial statements of the Group and Company for the year ended 31st march 2018 which have been prepared in accordance with Sri lanka Accounting Standards (SlrFS/lKAS) with the inclusion of signatures of the managing Director/CEO, Director/Chief Financial Officer and Senior Manager Finance are set out on pages 42 to 82 which form an integral part of the Annual report.

AuditoR’s RepoRtThe Auditor’s report is set out on pages 39 to 41 of the Annual report.

FinAnciAl resUlts And APProPriAtionsRevenuerevenue generated by the Company amounted to rs. 668 mn (2017 – rs. 626 mn) whilst Group revenue amounted to rs. 2,616 mn (2017 – rs. 2,422 mn).

profit and AppropriationsThe profit after tax of the Company was rs. 132 mn (2017 – rs. 190 mn) whilst the Group profit attributable to the equity holders of the Company was rs. 366 mn (2017 – rs. 436 million).

The Company’s total comprehensive income net of tax was rs. 66 mn (2017 – rs. 192 mn) and the Group total comprehensive income attributable was rs. 294 mn (2017 – rs. 444 mn).

dividend And reservesAs required by Section 56(2) of the Companies Act No. 7 of 2007, the Board of Directors have confirmed that the Company satisfies the solvency test in accordance with Section 57 of the Companies Act No. 7 of 2007, and has obtained a certificate from the auditors, prior to declaring all dividends. The Company paid interim dividends of 18 cents per share and 24 cents per share on 17th August 2017 and 27th February 2018 respectively for the year ended 31st march 2018.

AccoUnting PoliciesAll the significant accounting policies adopted by the Company and the Group are mentioned in Note 2 to the financial statements. There have been no changes in the accounting policies adopted by the Group during the year under review.

donAtionsTotal donations made by the Company and the Group during the year amounted to rs. 613,085 (2017 – rs. 271,613) and rs. 1,731,606 (2017 – rs. 766,301) respectively.

relAted PArty trAnsActionsThe Company’s transactions with related parties given in Note 27 to the financial statements, have complied with Colombo Stock Exchange listing rule 9.3.2 and Code of Best Practices on related Party Transactions under the Securities and Exchange Commission Directive issued under Section 13(c) of the Securities and Exchange Commission Act.

cAPitAl exPenditUreThe Company’s and Group’s capital expenditure on property, plant and equipment amounted to rs. 130 mn (2017 – rs. 31 mn) and rs. 976 mn (2017 – rs. 219 mn) respectively and all

other information and movements have been disclosed in Note 4 to the financial statements.

The Company’s and Group’s additions to intangible assets amounted to rs. 1.2 mn (2017 – Nil) and rs. 7.1 mn (2017 – rs. 5.1 mn) respectively and all other information and movements have been disclosed in Note 5 to the financial statements.

vAluAtion of pRopeRty, plAnt & eQUiPmentAll information relating to property, plant and equipment is given in Note 2.4.8 to the financial statements.

stAted cAPitAlThe stated capital of the Company as at 31st March 2018 was Rs. 100,371,584/- represented by 306,843,357 Shares.

sHAre inFormAtionThe distribution and composition of shareholders and the information relating to dividends, market value per share, and share trading are given in the investor information section of the Annual report.

mAjor sHAreHoldersDetails of the twenty largest shareholders of the Company and the percentages held by each of them are disclosed in the investor information section of the Annual report.

investmentsDetailed description of the long term investments held as at the reporting date is given in Note 6 to the financial statements.

revenUe reservesrevenue reserves as at 31st march 2018 for the Company and the Group


36

amounted to rs. 313 mn (2017 – rs. 376 mn) and rs. 1,820 mn (2017 – rs. 1,655 mn) respectively. The movement and composition of the reserves are disclosed in the Statement of Changes in Equity.

tHe BoArd oF directorsThe Directors of the Company as at 31st march 2018 were as follows and their brief profiles are given in the Board of Directors section of the Annual report:

mr. S D AmarasingheDr. Anush Amarasinghemr. r P Pathiranamr. v Selvarajmr. B D P D Pereramr. m H De Silvams. S T ratwattemr. S r Sproule De Saram

retirement And re-election oF directorsAs per Article 81 of the Articles of Association of the Company, mr. v Selvaraj and mr. r P Pathirana retire by rotation, and being eligible, offer themselves for re-election.

A resolution for the re-appointment of mr. S D Amarasinghe who is over the age of 70 years will be proposed at the annual general meeting of the Company.

interests register And interests in contrActsThe Company has maintained an interests register as required by the Companies Act No. 7 of 2007.

All the Directors have made a general disclosure relating to share dealings and other Directorships to the Board of Directors as required by Section 192(2) of the Companies Act No. 7 of 2007 and no additional interests have been disclosed

by any Director. The interests register is available at the registered office of the Company, in keeping with the requirements of Section 119(1)(d) of the Companies Act No. 7 of 2007.

directors remUnerAtionDetails of the remuneration and other benefits received by the Directors are set out in Note 27.1 to the financial statements.

corPorAte governAnceThe Board of Directors is committed towards maintaining an effective Corporate Governance Framework and implementing systems and structures required to ensure best practices in Corporate Governance and their effective implementation.

emPloymentThe Group has an equal opportunity policy and these principles are practiced in specific selection, training, development and promotion policies, ensuring that all decisions are based on merit. The Group practices equality of opportunity for all employees irrespective of ethnicity, religion political opinion, gender, marital status or different physical attributes.

The number of persons employed by the Company and Group as at 31st march 2018 was 264 (2017 - 214) and 803 (2017 - 685) respectively.

environmentAl ProtectionThe Group complies with the relevant environmental laws, regulations and endeavours to comply with best practices applicable. Details of activities in the above area are contained in the report on corporate social responsibility included in this Annual report.

stAtUtory PAymentsThe Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company and its subsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and its subsidiaries, and all other known statutory dues as were due and payable by the Company and its subsidiaries as at the statement of financial position date have been paid or where relevant provided for.

risk mAnAgementThe Board confirms that there is an ongoing process of identifying evaluating and managing any significant risks faced by the Group.

events AFter tHe rePorting PeriodThere have been no events subsequent to the reporting date which require disclosure or adjustments to the financial statements.

going concernThe Directors are satisfied that the Company and its subsidiaries have adequate resources to continue in operational existence for the foreseeable future, to justify adopting the going concern basis in preparing these financial statements.

AmoUnts PAyABle to tHe Firm Holding oFFice As An AUditorDetails of audit fees paid to the Auditors for the period under review are set out in Note 19 to the financial statements.

Annual Report of the Board of Directors


37

AuditoR’s RelAtionship oR Any interest witH tHe comPAnyThe Directors are satisfied that the auditors did not have any relationship or any interest with the Company that would impair their independence.

APPointment oF AUditorsA resolution to re-appoint the auditors, m/s. Ernst & Young, Chartered Accountants, who have expressed their willingness to continue, will be proposed at the Annual General meeting of the Company.

comPliAnce witH lAws And regUlAtionsTo the best of knowledge and belief of the Directors, the Company or Group has not engaged in any activity which contravenes laws and regulations of the country.

AnnUAl rePortThe Board of Directors approved the financial statements on 21st June 2018. The appropriate number of copies of this report will be submitted to the Colombo Stock Exchange and to the Sri lanka Accounting and Auditing Standards monitoring Board on 3rd July 2018.

AnnUAl generAl meetingThe annual general meeting will be held at Elevate, Frangipani Hall, Access Towers, level 28, No. 278/4, Union Place, Colombo 2 on Wednesday 25th July 2018 at 03.00 pm. The Notice of meeting appears on page 88 of this Annual report.

This Annual report of the Directors has been signed on behalf of the Board by:

dr. Anush AmarasingheDirector

Mr. vaithilingam selvarajDirector

secretarius (private) limitedSecretaries

Colombo

2nd July 2018

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39 Bppl holdings plCAnnual report 2017/18

Independent Auditor’s Report

independent AuditoR’s RepoRtto tHe sHAreHolders oF BPPl Holdings Plc

Report on the audit of the financial statementsOpinionWe have audited the financial statements of BPPl Holdings PlC (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”), which comprise the statement of financial position as at 31 march 2018 and the statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

in our opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as at 31 March 2018, 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 judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

Key audit matter how our audit addressed the key audit matter

Capital work in progress expenditure

The Group has capital work in pro-gress amounting to rs. 715,976,337 pertaining to a construction of a factory. This amount comprise capital expenditure incurred by the Group including directly attributable costs and interest capitalised.

Among other audit procedures over capital work in progress we performed following specific procedures:

assessed the nature of costs incurred through discussion with management and inspection of relevant documents and determined if the costs incurred met the capitalisation criteria in accordance with lKAS 16: Property, Plant and Equipment and lKAS 23: Borrowing Costs.

40Bppl holdings plCAnnual report 2017/18

Key audit matter how our audit addressed the key audit matter

There is judgement involved in de-termining whether the costs incurred, and interest cost related to borrow-ings denominated in foreign currency comply with relevant accounting standards.

•• tested the operating effectiveness of the controls over authorisation of capital expenditure and determining if such are directly attributable to the project.

•• assessed the adequacy of the Group’s disclosures given in note 2.2, 2.4.8 and 4 to the financial statements.

Other information included in The 2018 Annual report Other information consists of the information included in the Annual report, other than the financial statements and our auditor’s report thereon. Management is responsible for the other information.

Our opinion on the financial statements does not cover 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 other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. if, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

responsibilities of the management and those charged with governanceManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SlAuSs will always detect a material misstatement when it exists. misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SlAuSs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Independent Auditor’s Report


41

•• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls of the Company and the Group.

•• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

•• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. if we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

•• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the

financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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 requirements

As required by section 163 (2) of the Companies Act No. 07 of 2007, we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.

CA Sri lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 2440.

21 June 2018Colombo


42

Statement of Financial Position

Group CompanyAs at 31 march 2018 Note 2018 2017 2018 2017 rs. rs. rs. rs.

Assets non-Current Assets Property, Plant and Equipment 4 2,262,121,611 1,420,762,541 802,921,208 698,446,298lease Hold right/ Prepaid lease rental 4.10 8,537,731 8,723,559 - -intangible Asset 5 15,822,656 11,330,268 1,214,038 197,609investment in Subsidiaries 6 - - 367,626,688 367,626,688Deferred Tax Assets 12 1,970,438 322,226 - - 2,288,452,436 1,441,138,594 1,171,761,934 1,066,270,595

Current Assets inventories 7 619,417,182 544,168,100 129,435,982 109,239,129Trade and Other receivables 8 725,647,667 629,386,876 121,797,257 114,762,685income Tax receivables 2,356,752 185,840 1,997,728 -Cash and Bank Balances 15 24,262,260 22,209,867 3,810,953 4,045,847 1,371,683,861 1,195,950,683 257,041,920 228,047,661total Assets 3,660,136,297 2,637,089,277 1,428,803,854 1,294,318,256

eQUity And liABilities Capital and Reserves Stated Capital 9 100,371,584 100,371,584 100,371,584 100,371,584revaluation reserve 259,933,800 259,933,800 257,827,800 257,827,800retained Earnings 1,819,860,551 1,654,940,657 313,335,990 375,860,037total equity 2,180,165,935 2,015,246,041 671,535,374 734,059,421

non-Current liabilities interest Bearing loans and Borrowings 10 585,834,000 83,072,414 - -Deferred Tax liabilities 12 118,970,610 43,802,703 83,172,861 15,863,334Retirement Benefit Obligations 13 61,550,915 46,172,815 16,901,615 13,597,626 766,355,525 173,047,933 100,074,476 29,460,960

Current liabilities Trade and Other Payables 14 196,438,185 139,771,484 595,087,025 455,171,090income Tax Payable 3,544,859 26,198,193 - 4,807,846interest Bearing loans and Borrowings 10 513,631,793 282,825,627 62,106,979 70,818,939 713,614,837 448,795,304 657,194,004 530,797,875total equity and liabilities 3,660,136,297 2,637,089,277 1,428,803,854 1,294,318,256

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

Senior manager Finance

The board of directors is responsible for these Financial Statements. Signed for and on behalf of the board by:

Director Director

The accounting policies and notes on pages 48 through 82 form an integral part of the financial statements.

21 June 2018 Colombo


43

Statement of Profit and Loss

Group CompanyYear ended 31 march 2018 Note 2018 2017 2018 2017 rs. rs. rs. rs.

Revenue 3 2,616,348,715 2,422,402,089 667,778,658 625,571,538Cost of Sales (1,694,688,859) (1,459,696,642) (558,074,130) (456,703,700)Gross Profit 921,659,856 962,705,447 109,704,528 168,867,838Other Operating income 16 9,011,932 1,767,260 96,926,748 115,896,462Distribution Costs (251,579,255) (230,214,412) (28,982,919) (27,873,501)Administrative Expenses (243,620,723) (223,143,043) (30,874,383) (43,242,678)operating profit 435,471,810 511,115,252 146,773,974 213,648,121Finance Cost 18 (21,589,221) (20,237,534) (6,467,800) (10,441,010)Finance income 17 242,076 218,082 3,246 5,113profit Before tax 19 414,124,665 491,095,800 140,309,420 203,212,224income Tax Expense 11 (48,510,393) (55,090,849) (8,266,682) (13,671,745)profit for the year 365,614,272 436,004,951 132,042,738 189,540,479 Earnings per share - Basic 20 1.19 1.42 0.43 0.62Earnings per Share - Diluted 20 1.19 1.42 0.43 0.62Dividend Per Share 21 0.42 0.42 0.42 0.42

Attributable to: Equity holders of the parent 365,614,272 436,004,951 365,614,272 436,004,951



44

Statement of Comprehensive Income


Profit for the Year 365,614,272 436,004,951 132,042,738 189,540,479

other Comprehensive income Other Comprehensive Income not to be reclassified to profit or loss in subsequent periods (Net of tax)

Retirement Benefit Obligation Actuarial Gain/(Loss) 13 (9,609,538) 8,592,037 (2,829,629) 2,787,764Deferred Tax Attributable to Actuarial (Gain)/loss 1,364,365 (1,019,901) 396,148 (334,532)Deferred Tax Attributable to land revaluation 12 (63,576,254) - (63,260,354) -Net Other Comprehensive Income not to be reclassified to profit or loss in subsequent periods (Net Of tax) (71,821,427) 7,572,136 (65,693,835) 2,453,232

Other Comprehensive income for the year (Net of tax) (71,821,427) 7,572,136 (65,693,835) 2,453,232Total Comprehensive income for the Year, Net of Tax 293,792,845 443,577,087 66,348,904 191,993,711

Attributable to: Equity holders of the parent 293,792,845 443,577,087 293,792,845 443,577,087



45

Statement of Changes in Equity

Stated revaluation retained Total Note Capital reserve Earnings Total EquityGroup rs. rs. rs. rs. rs.

Balance as at 01 April 2016 81,193,880 259,933,800 1,359,127,818 1,700,255,497 1,700,255,498Issue of Bonus Share 19,177,704 - (19,177,704) - -Profit for the Year - - 436,004,951 436,004,951 436,004,951

other Comprehensive income Retirement Benefit Obligation Actuarial Gain/(Loss) 13 - - 8,592,037 8,592,037 8,592,037Deferred Tax on Actuarial (Gain)/Loss 12 - - (1,019,901) (1,019,901) (1,019,901)Total Comprehensive Income - - 424,399,383 443,577,087 443,577,087Dividend Paid - - (128,586,544) (128,586,544) (128,586,544)Balance as at 31 march 2017 100,371,584 259,933,800 1,654,940,657 2,015,246,040 2,015,246,041Profit for the Year - - 365,614,272 365,614,272 365,614,272

other Comprehensive income Retirement Benefit Obligation Actuarial Gain/(Loss) 13 - - (9,609,538) (9,609,538) (9,609,538)Deferred Tax on Actuarial (Gain)/Loss - - 1,364,365 1,364,365 1,364,365Deferred Tax Attributable to land Revaluation - - (63,576,254) (63,576,254) (63,576,254)Total Comprehensive Income - - 293,792,845 293,792,845 293,792,845Dividend Paid - - (128,872,951) (128,872,951) (128,872,951)Balance as at 31 march 2018 100,371,584 259,933,800 1,819,860,551 2,180,165,935 2,180,165,935



46

Stated revaluation retained Total Note Capital reserve Earnings EquityCompany rs. rs. rs. rs.

Balance as at 01 April 2016 81,193,880 257,827,800 331,630,575 670,652,255Profit for the Year - - 189,540,479 189,540,479Issue of Bonus Share 19,177,704 - (19,177,704) -

other Comprehensive incomeActuarial Gain/(Loss) on Retirement Benefit Obligation 13 - - 2,787,764 2,787,764Deferred Tax on Actuarial (Gain)/Loss 12 - - (334,532) (334,532)total Comprehensive income - - 172,816,007 191,993,711

Dividend Paid - - (128,586,544) (128,586,544)Balance as at 31 march 2017 100,371,584 257,827,800 375,860,037 734,059,421

Profit for the Year - - 132,042,738 132,042,738

other Comprehensive incomeActuarial Gain/(Loss) on Retirement Benefit Obligation 13 - - (2,829,629) (2,829,629)Deferred Tax on Actuarial (Gain)/Loss 12 - - 396,148 396,148Deferred Tax Attributable to Land Revaluation - - (63,260,354) (63,260,354)

total Comprehensive income - - 66,348,904 66,348,904Dividend Paid - - (128,872,951) (128,872,951)Balance as at 31 March 2018 100,371,584 257,827,800 313,335,990 671,535,374


Statement of Changes in Equity


47

Statement of Cash Flows


operating ActivitiesProfit Before Tax 414,124,665 491,095,800 140,309,420 203,212,224 Adjustments for Depreciation 4 75,368,500 64,286,400 16,168,930 13,532,234Amortisation 5 2,806,356 2,580,474 213,571 116,547Provision for Retirement Benefit Obligations 13 11,398,691 9,953,542 3,154,900 3,378,487Transfer of Retirement Benefit Obligations 13 - - - (3,228,938)interest income 17 (242,076) (218,082) (3,246) (5,113)Dividend income 16 - - (93,607,909) (111,484,722)Finance Cost 18 21,589,221 20,237,534 6,467,800 10,441,010(Profit)/Loss From Disposal Of Property Plant & Equipment 611,527 1,250,963 837,209 (548,800)Unrealised Exchange loss 10 5,745,835 7,997,001 1,712,344 6,224,101Provision for Slow moving Stocks (319,683) 3,135,164 (1,784,659) 1,558,905operating profit/(loss) Before working Capital Changes 531,083,036 600,318,797 73,468,361 123,195,935

working Capital Adjustments(increase)/Decrease in inventories (74,929,399) (95,573,203) (18,412,194) (14,359,206)(increase)/Decrease in Trade and Other receivables (96,260,791) (80,049,002) (7,034,572) 49,899,212increase/(Decrease) in Trade and Other Payables 56,666,701 35,433,043 139,915,935 73,749,760Net Cash Generated from Operations 416,559,547 460,129,636 187,937,531 232,485,701

income Tax Paid (62,026,552) (29,849,421) (10,626,935) (8,144,804)Retirement Benefit Obligations Costs paid 13 (5,630,129) (2,685,465) (2,680,540) (1,326,485)interest Paid (21,589,221) (20,237,534) (6,467,800) (10,441,010)Net Cash flows from/(used in) Operating Activities 327,313,645 407,357,216 168,162,255 212,573,402

investing ActivitiesAcquisition of Property, Plant and Equipment 4 (151,476,821) (70,495,556) (36,903,880) (26,221,248)Cost incurred on WiP 4 (772,307,471) (148,464,943) (87,888,223) (4,344,776)Acquisition of intangible Assets 5 (7,112,916) (5,092,318) (1,230,000) -Proceeds From Disposal Of Property Plant & Equipment 6,445,196 5,498,410 3,311,053 725,006interest received 17 242,076 218,082 3,246 5,113Dividend received 16 - - 93,607,909 111,484,722Net Cash flows from/(used in) Investing Activities (924,209,936) (218,336,325) (29,099,895) 81,648,817

financing Activitiesrepayment of interest Bearing loans and Borrowings 10 (1,881,922,155) (1,800,365,131) (566,005,311) (1,109,785,745)Proceeds from interest Bearing loans and Borrowings 10 2,617,466,688 1,759,900,699 564,503,687 952,457,356Dividends Paid (128,872,951) (128,586,544) (128,872,951) (128,586,544)Net Cash flows from/(used in) Financing Activities 606,671,582 (169,050,976) (130,374,575) (285,914,933)

Net increase/ (Decrease) in Cash and Cash Equivalents 9,775,291 19,969,914 8,687,785 8,307,286

Cash and Cash Equivalent at the beginning of the year 15 (10,549,447) (30,519,359) (17,191,811) (25,499,097)Cash and Cash Equivalent at the end of the year 15 (774,156) (10,549,447) (8,504,026) (17,191,811)



48

Notes to the Financial Statement

1. CoRpoRAte infoRMAtion1.1 GeneralBPPl Holdings PlC (“Company”) is a limited liability Company incorporated and domiciled in Sri lanka. The registered office of the Company and principle place of business is located at level 17, Access Towers, No. 278/4, Union Place, Colombo 02.

1.2 Principal Activities and Nature of OperationsCompanyDuring the year, the principal activities of the Company were manufacturing and exporting of wooden handles for brooms and brushes.

GroupDuring the year, the principal activities of the Group were manufacturing and exporting of wooden handles, brooms, brushes, mops and synthetic Fibre.

1.3 Parent Enterprise and Ultimate Parent EnterpriseThe Company’s parent undertaking is Infinity Capital (Private) Limited, which is incorporated in Sri lanka.

1.4 Date of Authorisation for issueThe consolidated financial statements of BPPl Holdings PlC for the year ended 31 march 2018 were authorised for issue in accordance with a resolution of the board of directors on 21 June 2018.

2. GeneRAl poliCies2.1 Basis of PreparationThe consolidated financial statements of the Group have been on an accrual basis under the historical cost convention unless otherwise stated. The consolidated financial statements are presented in Sri lankan rupees which is the Groups functional and presentation currency.

2.1.1 Statement of ComplianceThe financial statements which comprise the statement of profit and loss and other comprehensive income, statement of financial position, statement of changes in equity and statement of cash flows for the year then ended and notes (to the “financial statements”) have been prepared in accordance with Sri lanka Accounting Standards (SlFrS/lKAS) as issued by the institute of Charted Accountants of Sri lanka (CA Sri lanka) and the requirements of the Companies Act No. 7 of 2007.

2.1.2 Comparative informationThe presentations and classification of the Consolidated Financial Statements of the previous year have been amended for better presentation and to be comparable with those of the current year.

2.1.3 Going ConcernThe Directors have made an assessment of the Company’s ability to continue as a going concern and they do not intend either to liquidate or to cease trading.

2.2 Significant Accounting Judgements, Estimates and AssumptionsJudgmentsin the process of applying the Company’s accounting policies, management has made the following judgments, apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements.

deferred tax Assets:Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based on

the likely timing and level of future taxable profits together with future tax planning strategies.

Capitalisation of borrowing cost on the foreign currency loan obtained to finance the capital work in progress:maximum amount of borrowing costs capitalised on the foreign loan obtained to finance the capital work in progress is the amount of borrowing costs on the functional currency equivalent borrowing. The maximum amount of currency exchange differences attributed to interest rates that are capitalised is limited to the difference between the interest costs on the foreign currency loan and the local currency loan.

estimates and AssumptionsThe key assumptions concerning the future and other key sources of estimation uncertainty at the date of statement of financial position, that have a significant risk of causing a material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below. The respective carrying amounts of assets and liabilities are given in related notes to the financial statements.

2.3 Consolidation Policy2.3.1 Basis of consolidationThe consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 march 2018. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:


49

i. Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

ii. Exposure, or rights, to variable returns from its involvement with the investee

iii. The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

i. The contractual arrangement(s) with the other vote holders of the investee

ii. rights arising from other contractual arrangements

iii. The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of OCi are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling

interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

if the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

2.4 Summary of Significant Accounting Policies2.4.1 Foreign Currency TranslationThe financial statements are presented in Sri lankan rupees, which is the Company's functional and presentation currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

2.4.2 Taxationa) Current taxesCurrent income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of inland revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted on the reporting date in the country where the Company operates and generates taxable income. Current income tax relating to items recognised directly in equity is recognised in equity and not in the Statement of Profit or Loss.

The provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the inland revenue Act No 10 of 2006 and the amendments thereto.

management has used its judgment on the application of tax laws including transfer pricing regulations involving identification of associated undertakings, estimation of the respective arm’s length prices and selection of appropriate pricing mechanism.

As per the inland Act No. 10 of 2006 and amendments thereto, BPPl Holdings PlC, Beira Brush (Pvt) ltd and BPPl Enterprises (Pvt) ltd Companies are liable to income Tax at 12% on Qualified Export Profits and liable to income Tax at 28% on other Taxable Profits during the year 2017/2018.

Pursuant to the agreement dated 17 September 2009 entered into with the Board of investment of Sri lanka under section 17 of the Board of investment law No. 4 of 1978, Beira


50

Enviro Solutions (Private) limited is exempt from income taxes on profit the business of manufacturing of plastic resins and monofilament yarn, for a period of 07 years, reckoned from the year in which the enterprise commences to make profits or any year of assessment not later than two years reckoned from the date of commencement of commercial operation which ever year is earlier as may be specified in a certificate issued by the Board. Thereafter it will be 10% for a period of 02 years immediately succeeding the last date of the tax exemption period and thereafter profit and income of the enterprise shall be charged for any year of assessment at the rate of 15%. The Company is liable to pay tax on other income.

b) deferred taxationDeferred income tax is provided, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised except where the deferred

income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss and other comprehensive income.

c) tax on dividend incomeTax on dividend income from subsidiaries is recognised as an expense in the consolidated statement of profit and loss and other comprehensive income.

2.4.3 Borrowing CostsBorrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

2.4.4 intangible Assetsintangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the statement of profit and loss and other comprehensive income in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. The rates of amortisations estimated as follows.

Assets cAtegorygroUP comPAny

2018 2017 2018 2017

Enterprise resource Planning System

8 Years 8 Years 8 Years 8 Years

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset



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may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is 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. The amortisation expense on intangible assets with finite lives is recognised in statement of profit and loss and other comprehensive income in the expense category consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

2.4.5 inventoriesinventories are valued at the lower of cost and net realisable value, after making due allowances for obsolete and slow moving items. Net realisable value is the price at which inventories can be sold in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to make the sale.

The cost incurred in bringing inventories to its present location and condition are accounted using the following cost formulae:-

Raw Materials - At actual cost on weighted average cost basisFinished Goods & Work-in-progress - At the cost of direct materials, direct labour and an appropriate proportion of manufacturing overheads based on normal operating capacity, but excluding borrowing Costs.Consumables & Spares - At purchase cost on weighted average basis. Good in Transit - At Purchase cost

2.4.6 Trade and Other receivablesmost sales are made on the basis of normal credit terms, and the receivables do not bear interest. Where credit is extended beyond normal credit terms, receivables are measured at amortised cost using the effective interest method. At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed to determine whether there is any objective evidence that the amounts are not recoverable. If so, an impairment loss is recognised immediately in profit or loss.

2.4.7 Cash and Cash EquivalentsCash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts. investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents.

2.4.8 Property, Plant and EquipmentProperty, Plant and Equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing component parts of the Property, Plant and Equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of Property, Plant and Equipment are required to be replaced at intervals, the Company derecognises the replaced part, and recognises the new part with its own associated useful life and depreciation. likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the Plant and Equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the Statement of Profit or loss as incurred.

When items of Property, Plant and Equipment are subsequently revalued, the entire class of such assets is revalued. Any revaluation surplus is recognised in other comprehensive income and accumulated in equity in the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the Statement of Profit or Loss, in which case the increase is recognised in the Statement of Profit or Loss. A revaluation deficit is recognised in the Statement of Profit or Loss, except to the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve.


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lands are measured at fair value at the date of revaluation. valuations are performed with sufficient frequency to ensure that the carrying amount of a revalued asset does not differ materially from its fair value.

Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.

Depreciation is calculated on straight line basis over the estimated useful lives of all Property, Plant and Equipment.

Depreciation is calculated on straight line basis over the estimated useful lives of the assets as follows;

Assets cAtegory groUP comPAny

2018 2017 2018 2017

Buildings on Freehold land 40 Years 40 Years 40 Years 40 Years

Plant and machinery 10 - 20 Years

10 - 20 Years

10 - 20 Years

10 - 20 Years

motor vehicles 6 Years 6 Years 6 Years 6 Years

Furniture and Fittings 08 Years 08 Years 08 Years 08 Years

Factory Equipment 08 Years 08 Years 08 Years 08 Years

Air Conditioner and Gen-erator

08 Years 08 Years 08 Years 08 Years

Office Equipment 08 Years 08 Years 08 Years 08 Years

An item of Property, Plant and Equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit or Loss when the asset is derecognised.

2.4.9 ProvisionsProvisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. if the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.

2.4.10 Retirement Benefit Obligations(a) defined Contribution plans –

employee’s provident fund and employees’ trust fund

Employees are eligible for Employee’s Provident Fund Contributions and Employees’ Trust Fund Contributions in line with the respective statutes and regulations. The Company contributes 12% and 3% of gross emoluments of employees to Employee’s Provident Fund and Employees’ Trust Fund respectively.

(b) defined Benefit plan – GratuityThe Group measures the present value of the promised retirement benefits of gratuity which is a defined benefit plan with the advice of an actuary using the projected benefit valuation method.

remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCi in the period in which they occur. remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

•• The date of the plan amendment or curtailment, and

•• The date that the Group recognises related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in



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the net defined benefit obligation under ‘cost of sales’, ‘administration expenses’ and ‘selling and distribution expenses’ in the consolidated statement of profit or loss (by function):

•• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements Net interest expense or income

•• However, as per the payment of Gratuity Act No. 12 of 1983 this liability only arises upon completion of 5 years of continued service.

The gratuity liability is not externally funded.

2.4.11 Operating leaserentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

2.4.12 impairment of Non Financial AssetsThe company assesses at each reporting date whether there is an indication that an asset may be impaired. if any such indication exists, or when annual impairment testing for an asset is required, the company makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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.

impairment losses of continuing operations are recognised in the statement of profit or loss in those expense categories consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to equity. in this case the impairment is also recognised in equity up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. if such indication exists, the company makes an estimate of recoverable amount.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. if that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot ''exceed' the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods. Such reversal is recognised in the Statement of Profit and loss and other Comprehensive income unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. impairment losses recognised in relation to goodwill are not reversed for subsequent increases in its recoverable amount.

2.4.13 Financial Instruments - initial recognition and Subsequent measurementi. financial Assetsinitial Recognition and MeasurementFinancial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets, as appropriate and determine the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus transaction cost of assets, in the case of investments not at fair value through profit or loss.

The financial assets include cash and short-term deposits, trade and other receivables, other financial assets.

subsequent MeasurementThe subsequent measurement of financial assets depends on their classification as follows:

loans and ReceivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (Eir), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the Eir. The Eir amortisation is included in finance income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss in finance cost.


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derecognitionA financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when,

i. The rights to receive cash flows from the asset have expired

ii. The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either•• The company has transferred

substantially all the risks and rewards of the asset, or

•• The company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognised to the extent of the company’s continuing involvement in it.

in that case, the company also recognises an associated liability. The transferred assets and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.

ii. impairment of financial AssetsThe company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

financial Assets Carried at Amortised costFor financial assets carried at amortised cost, the company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not

included in a collective assessment of impairment.

if there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. if a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the statement of profit or loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the company. if, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. if a future write-off is later recovered, the recovery is credited to finance costs in statement of profit or loss.



55

iii. financial liabilitiesinitial Recognition and MeasurementFinancial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, other financial liabilities or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The company determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, and other financial liabilities carried at amortised cost. This includes directly attributable transaction costs.

The company financial liabilities include trade and other payables, bank overdrafts, loans and borrowings, other financial liabilities.

subsequent MeasurementThe measurement of financial liabilities depends on their classification as follows;

loans and Borrowings/other financial liabilitiesAfter initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate method (Eir) amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the Eir. The Eir amortisation is included in finance costs in the statement of profit or loss.

derecognitionA financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of profit or loss.

iv. offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

2.4.14 Fair value of Financial instrumentsThe Company measures financial instruments such as Financial Assets Held for Trading, Financial Derivatives, and Non-Financial Assets such as certain classes of Property, Plant and Equipment, at fair value at each reporting date. Fair value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed are summarised under the respective notes.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the Financial

Statements are categorised within the fair value hierarchy, described in note 22.

For assets and liabilities that are recognised in the Financial Statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period.

2.4.15 Statement of profit and loss and other comprehensive incomeRevenue Recognition

revenue s recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue and associated costs incurred or to be incurred can be reliably measured. revenue is measured at the fair value of the consideration received or receivable net of trade discounts and sales taxes. The following specific criteria are used for the purpose of recognition of revenue.

a) sale of Goodsrevenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods.

b) Rent incomerental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms.

c) interestFor all financial instruments measured at amortised cost and interest bearing financial assets classified as available for sale, interest income or expense is recorded using the Effective interest rate (Eir), which is the rate that


56

exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the Statement of Profit or Loss of Profit or Loss.

d) dividendsrevenue is recognised when the Company’s right to receive the payment is established.

e) othersOther income is recognised on an accrual basis.

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

2.4.16 Operating SegmentAn operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. All operating segments operating results are reviewed regularly by the Group’s Chief Executive Officer (CEO) to make decisions about resources to assess its performance, and for which discrete financial information is available.

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

2.5 Effects of Sri lanka Accounting Standards issued but Not Yet Effective:The following SlFrS issued by the institute of Chartered Accountants of Sri lanka that have an effective date in future and have not been applied in preparing these Financial Statements. Those SlFrS will have an effect on the Accounting Policies currently adopted by the Company and may have an impact on the future Financial Statements.

a) slfRs 9 financial instrumentsSlFrS 9 replaces the existing guidance in lKAS 39 – Financial instruments: recognition and measurement. SlFrS 9 contains three principal classification categories for financial assets – i.e. measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FvTPl).

The existing LKAS 39 categories of Held-to-maturity, Loans and receivables and Available-for-sale are removed. SLFRS 9 replaces the ‘incurred loss’ model in lKAS 39 with an ‘expected credit loss’ model. The new model applies to financial assets that are not measured at FvTPl. SlFrS 9 is effective for annual reporting periods beginning on or after 01 January 2018, with early adoption permitted.

The model uses a dual measurement approach, under which the loss allowance is measured as either: 12 month expected credit loss; or Lifetime expected credit losses.

The measurement basis will generally depend on whether there has been a significant increase in credit risk since initial recognition. A simplified approach is available for trade receivables, contract assets and lease receivables, allowing or

requiring the recognition of lifetime expected credit losses at all times. Special rules apply to assets that are credit impaired at initial recognition. The new standard carried guidance on new general hedge accounting requirements.

The Group has commenced the initial high level assessment of the potential impact on its Consolidated Financial Statements resulting from the application of the SlFrS 9. The Group is not expected to have a material impact from the new classification, measurement, impairment principles introduced by SlFrS 9.

Group will commence the implementation phase upon completion of the assessment by 2nd quarter.

b) slfRs 15 Revenue from Contracts with Customers

SlFrS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. New qualitative and quantitative disclosure requirements aim to enable Financial Statements users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

it replaces existing revenue recognition guidance, including lKAS 18 revenue, lKAS 11 Construction Contracts and iFriC 13 Customer loyalty Programmes. SlFrS 15 is effective for annual reporting periods beginning on or after 01 January 2018, with early adoption permitted.



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However, the Group is currently in the process of evaluating the accounting impact and the current systems and processes will be modified when necessary.

c) slfRs 16 leasesSlFrS 16 provides a single lessee accounting model, requiring leases to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value even though lessor accounting remains similar to current practice. This supersedes: lKAS 17 leases, iFriC 4 determining whether an arrangement contains a lease, SIC 15 Operating Leases- Incentives; and SiC 27. Evaluating the substance of Transactions involving the legal form of a lease. Earlier application is permitted. SlFrS 16 is effective for annual reporting periods beginning on or after 1 January 2019. Based on the preliminary evaluation of impact analysis of SlFrS 16. However, the Group is currently in the process of evaluating the accounting impact and the current systems and processes will be modified when necessary.

d) ifRiC interpretation 23 uncertainty over income tax treatment

The interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of lKAS 12 and does not apply to taxes or levies outside the scope of iAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses the following:

i. Whether an entity considers uncertain tax treatments separately

ii. The assumptions an entity makes about the examination of tax treatments by taxation authorities

iii. How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates

iv. How an entity considers changes in facts and circumstances

An entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. The interpretation is effective for annual reporting periods beginning on or after 1 January 2019, but certain transition reliefs are available. The Group will apply interpretation from its effective date. Since the Group operates in a complex multinational tax environment, applying the interpretation may affect its consolidated financial statements and the required disclosures. in addition, the Group may need to establish processes and procedures to obtain information that is necessary to apply the interpretation on a timely basis.


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3. Revenue

Group Company 2018 2017 2018 2017 rs. rs. rs. rs.

Export Sales 2,487,723,027 2,291,927,042 308,665,471 284,331,090inter company sales - - 347,383,968 325,919,673local Sales 121,858,497 122,316,744 4,996,252 7,230,626Scrap sales 34,224 68,154 - -rejected log Sales 6,732,967 8,090,149 6,732,967 8,090,149 2,616,348,715 2,422,402,089 667,778,658 625,571,538

4. pRopeRty, plAnt And eQuipMent4.1 At Cost

Group Balance Balance as at as at 01.04.2017 Additions Transfers Disposals 31.03.2018 rs. rs. rs. rs. rs.

Buildings on Freehold Land 302,658,883 9,114,620 - (1,917,870) 309,855,633Plant and Machinery 811,107,186 137,001,144 - (4,133,394) 943,974,936Motor Vehicles 66,491,970 14,955,000 - (9,062,435) 72,384,535Furniture and Fittings 16,370,032 5,954,125 - (2,012,853) 20,311,304Factory Equipment 99,933,241 30,591,641 - (372,715) 130,152,167Tools 5,083,750 376,708 - - 5,460,458Office Equipment 37,693,948 5,926,949 - (448,530) 43,172,366 1,339,339,010 203,920,187 - (17,947,798) 1,525,311,399

At valuation Freehold Lands 503,760,001 - - - 503,760,001 503,760,001 - - - 503,760,001

in the Course of Construction Yarn Project 95,496,906 620,479,431 - - 715,976,337Other Projects 54,125,137 151,828,040 (52,443,366) - 153,509,811 149,622,043 772,307,471 (52,443,366) - 869,486,148total value of Assets 1,992,721,053 976,227,658 (52,443,366) (17,947,798) 2,898,557,548


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4.2 Depreciation

Depreciation Balance Balance as at Charge for as at 01.04.2017 the Year Transfers Disposals 31.03.2018 rs. rs. rs. rs. rs.

Buildings on Freehold Land 72,170,856 6,962,994 - (159,744) 78,974,107Plant and Machinery 375,272,672 37,930,597 - (3,237,763) 409,965,506Motor Vehicles 39,060,537 8,187,455 - (6,021,033) 41,226,959Furniture and Fittings 6,367,280 2,178,206 - (882,297) 7,663,190Factory Equipment 58,135,456 13,975,461 - (190,666) 71,920,251Tools 803,118 1,678,114 - - 2,481,232Office Equipment 20,148,593 4,455,674 - (399,574) 24,204,692total depreciation 571,958,513 75,368,500 - (10,891,076) 636,435,937

4.3 Net Book values

2018 2017At Cost rs. rs.

Buildings on Freehold land 230,881,526 230,488,027Plant and machinery 534,009,430 435,834,514motor vehicles 31,157,576 27,431,434Furniture and Fittings 12,648,114 10,002,751Factory Equipment 58,231,916 41,797,785Tools 2,979,226 4,280,631Office Equipment 18,967,674 17,545,355 888,875,462 767,380,497

At valuationFreehold lands 503,760,001 503,760,001 503,760,001 503,760,001

in the course of ConstructionYarn Project 715,976,337 95,496,906Other Projects 153,509,811 54,125,137 869,486,148 149,622,043 2,262,121,611 1,420,762,541


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4. pRopeRty, plAnt And eQuipMent (Contd.)4.4 During the financial year 2015/16 following companies have stated their properties at revalued amounts by expert independent valuer De Silva DPlC . The surplus arising from the revaluation was transferred to revaluation reserve.

method of Property Carrying value Extent valuation valuation Date of at Cost and valuation Significant Unobservable

Bppl holding plC Per Perch value Land - Ingiriya 19,619,330 9A-1R-30.8P 300,000 453,240,000 30/03/2016

Per Perch value Land - Padukka 2,911,000 0A-3R-21P 150,000 21,150,000 30/03/2016

Beira enviro solutions (pvt) ltd Per perch value Land - Mawgama 27,264,000 01A-2R-27P Rs. 110,000/- 29,370,000 31/03/2016

4.5 Significant Unobservable Inputs Description of the above valuation techniques together with narrative descriptions on sensitivity of the fair value measurement to changes in significant unobservable inputs are tabulated below;

valuation Technique Significant unobserva-ble valuation inputs

Sensitivity of the fair value measurement to inputs

market Comparable method

This method considers the selling price of a similar property within a rea-sonably recent period of time in determining the fair value of the property being revalued. This involves evaluation of recent market prices of similar assets, making appropriate adjustments for differences in size, nature, location, condition of specific property. In this process outlier transactions, indicative of particular motivated buyers or sellers are too compensated for since the price may not adequatley reflect the fair market value.

Price per perch of land Estimated fair value would increase/(de-crease) if :

Price per perch increas-es/(decreases)



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4.5 Company

Balance Balance as at as at 01.04.2017 Additions Disposals 31.03.2018At Cost rs. rs. rs. rs.

Buildings on Freehold land 191,734,067 6,796,455 (1,917,870) 196,612,652Plant and machinery 125,733,208 12,412,810 (800,000) 137,346,018motor vehicles 7,450,089 4,035,000 (3,336,000) 8,149,089Furniture and Fittings 6,937,441 4,984,429 (1,243,239) 10,678,631Factory Equipment 38,165,951 12,447,942 (352,715) 50,261,178Office Equipment 6,560,624 977,694 (64,999) 7,473,320 376,581,381 41,654,331 (7,714,823) 410,520,888

At valuationFreehold Lands 474,390,001 - - 474,390,001 474,390,001 - - 474,390,001

in the course of constructionCapital Work in Progress 4,344,776 87,888,223 (4,750,451) 87,482,548 4,344,776 87,888,223 (4,750,451) 87,482,548 total Gross Carrying Amount 855,316,158 129,542,553 (12,465,274) 972,393,437

4.6 Depreciation

Balance Balance as at Charge for as at 01.04.2017 the Year Disposals 31.03.2018At Cost rs. rs. rs. rs.

Buildings on Freehold land 56,741,298 4,288,541 (159,744) 60,870,095Plant and machinery 63,441,924 5,193,216 (684,734) 67,950,407motor vehicles 4,006,763 1,015,944 (1,936,670) 3,086,036Furniture and Fittings 3,148,991 1,057,956 (565,773) 3,641,174Factory Equipment 25,315,078 4,000,729 (171,339) 29,144,467Office Equipment 4,215,805 612,544 (48,300) 4,780,050Total Depreciation 156,869,860 16,168,930 (3,566,560) 169,472,229


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4. pRopeRty, plAnt And eQuipMent (Contd.)4.7 Net Book values

2018 2017At Cost rs. rs.

Buildings on Freehold land 135,742,557 134,992,769Plant and machinery 69,395,611 62,291,284motor vehicles 5,063,053 3,443,326Furniture and Fittings 7,037,457 3,788,450Factory Equipment 21,116,711 12,850,873Office Equipment 2,693,270 2,344,819 241,048,659 219,711,521

At valuationFreehold lands 474,390,001 474,390,001 474,390,001 474,390,001

in the Course of ConstructionCapital Work in Progress 87,482,548 4,344,776 87,482,548 4,344,776 total Carrying Amount of property, plant and equipment 802,921,208 698,446,298

4.8 During the financial year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs. 129,542,553/- (2017 - Rs.26,221,249/- ). Cash payments amounting to Rs. 124,792,103/- (2017 - Rs.26,221,249/-) were made during the year for purchase of Property, Plant and Equipment.

During the financial year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs.976,227,658/- (2017 - Rs.70,495,558 /-). Cash payments amounting to Rs. 923,784,292/- (2017 - Rs.70,495,558/-) were made during the year for purchase of Property, Plant and Equipment.

4.9 Property, Plant and Equipment of Company includes fully depreciated assets having a gross carrying amounts of Rs.36,450,592/- (2017 - Rs.23,953,726 /-) Property, Plant and Equipment of Group includes fully depreciated assets having a gross carrying amounts of Rs. 111,260,608/- (2017 - Rs.85,055,197/- )

4.10 The Group started the construction of a Yarn Project in previous year. This project is expected to be completed in July 2018. The carrying amount of the Yarn Project at 31 March 2018 was Rs.715,976,337/- (2017: Rs.95,496,906/-). The Yarn Project is financed by a loans obtained from Hongkong and Shanghai Banking Corporation and Hattion National Bank PlC.

The amount of borrowing costs capitalised to Capital Work in Progress during the year ended 31 march 2018 was Rs.18,774,214/- (2017 -Nil/- ).



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Project wise cost capitalised during the year as follows,

Yarn Project Other Projects Total rs. rs. rs.

Other Costs 697,202,123 153,509,811 850,711,934Qualifying Borrowing Costs 18,774,214 - 18,774,214 715,976,337 153,509,811 869,486,148

4.11 lease Hold right/ Prepaid lease rental

2018 2017Group rs. rs.

At 01 April 8,723,559 8,909,511Amortisation for the Year (185,828) (185,952)At 31 march 8,537,731 8,723,559

lease hold land represents the lease rental paid to acquire lease hold land rights of land situated in Horana, Obtained from the Board of investment in Sri lanka by the agreement dated 09 may 2013. The amount paid upfront has been amortised over the lease period of 50 years.

5. intAnGiBle Assets

Group 2018 2017 rs. rs.

summary At Cost As at 1 April 32,665,365 27,573,047Transfers - -Acquired / incurred during the year 7,112,916 5,092,318As at 31 march 39,778,282 32,665,365

AmortisationAs at 1 April 21,335,097 18,940,575Transfers - -Amortisation for the year 2,620,528 2,394,522As at 31 march 23,955,626 21,335,097

net book value As at 1 April 11,330,268 8,632,472As at 31 march 15,822,656 11,330,268

intangible assets consists of ErP System.


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5. intAnGiBle Assets (Contd.)

Company 2018 2017 rs. rs.

summary At Cost As at 1 April 2,152,710 2,152,710Acquired / incurred during the year 1,230,000 -As at 31 march 3,382,710 2,152,710

Amortisation As at 1 April 1,955,101 1,838,554Amortisation for the year 213,571 116,547As at 31 march 2,168,672 1,955,101

net book value As at 1 April 197,609 314,156As at 31 march 1,214,038 197,609

6. investMent 6.1 Company

Direct Holding Direct investment 2018 2017 2018 2017 rs. rs. Beira Brush (Pvt) ltd 99.9% 99.9% 9,102,220 9,102,220Beira Enviro Solutions (Pvt) ltd 100% 100% 358,524,458 358,524,458BPPl Enterprises (Pvt) ltd 100% 100% 10 10total 367,626,688 367,626,688

6.2 Group Companies

Company Principle Place of Business relationship Principal Activities

Beira Brush (Pvt) ltd

level 17,Access Tower, No 278/4, Union Place , Colombo 02.

Subsidiary manufacturing and exporting of brooms and brushes.

Beira Enviro Solutions (Pvt) ltd Subsidiary Manufacturing of monofilament for direct and indirect export.

BPPl Enterprises (Pvt) ltd Subsidiary Buying and exporting brush, mop and cleaning material.



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7. inventoRies

Group Company 2018 2017 2018 2017 rs. rs. rs. rs. raw materials 414,737,196 339,677,766 76,450,605 52,014,942Work in Progress 6,440,490 10,398,695 5,979,266 9,759,323Finished Goods 55,647,217 66,324,185 14,972,382 29,979,517Consumables and Spares 114,002,015 110,832,132 20,919,114 19,624,011Goods in Transit 34,245,927 22,910,668 11,468,619 -less: Allowance for slow moving inventory (Note 7.1) (5,655,663) (5,975,346) (354,004) (2,138,663) 619,417,182 544,168,100 129,435,982 109,239,129

7.1 Allowance for Slow moving inventory

Group Company 2018 2017 2018 2017 rs. rs. rs. rs. Balance as at the Beginning of the Year 5,975,346 2,840,182 2,138,663 579,758Provision/ (reversals) made during the Year (319,683) 3,135,164 (1,784,659) 1,558,905Balance as at the End of the Year 5,655,663 5,975,346 354,004 2,138,663

8. tRAde And otheR ReCeivABles 8.1 Summary


Trade Receivables - Other 661,796,211 545,272,685 91,215,364 54,723,983 - Related Parties (Note 8.2) - - 133,411 27,117Provision for bad debts (Note 8.3) (913,905) (1,988,905) - - 660,882,305 543,283,780 91,348,775 54,751,100

Other Debtors - Other 25,027,224 14,722,506 1,037,144 -Loans to Company Officers (Note 8.4) 14,000 8,000 14,000 8,000Advances and Prepayments 32,709,053 65,605,979 22,382,253 54,236,974Other receivables 7,015,085 5,766,611 7,015,085 5,766,611 725,647,667 629,386,876 121,797,257 114,762,685


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8. tRAde And otheR ReCeivABles (Contd.)8.2 Trade Receivables - Related Party

Company 2018 2017 relationship rs. rs.

Beira Brush (Pvt) ltd Subsidiary - -Beira Enviro Solutions (Pvt) ltd Subsidiary 133,411 27,117 133,411 27,117

8.3 Provision for Bad Debts


Balance as at the Beginning of the Year 1,988,905 2,610,406 - -Provision/ (reversals) made during the Year (1,075,000) (621,501) - -Balance as at the End of the Year 913,905 1,988,905 - -

8.4 Loans to Company Officers

loans Balance Granted repayments Balance as at During During as at 01.04.2017 the year the year 31.03.2018 rs. rs. rs. rs.

Loans to Company Officers 8,000 1,769,000 (1,763,000) 14,000 8,000 1,769,000 (1,763,000) 14,000

8.5 Trade Debtors Age Analysis

Past due but not impairedGroup Neither past due nor Total impaired 30-90 Days 91-120 Days >120 Days

2018 660,882,305 294,048,808 327,593,936 10,239,344 29,000,2172017 543,283,780 208,175,769 283,557,227 51,550,784 2,526,944



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Past due but not impairedCompany Neither past due nor Total impaired 30-90 Days 91-120 Days >120 Days

2018 91,348,775 34,440,535 51,891,696 2,489,600 2,526,9442017 54,751,100 27,274,041 25,325,022 2,152,037 -

9. stAted CApitAl

Group Company 2018 2017 2018 2017 rs. rs. Number Number

Ordinary Shares 100,371,584 100,371,584 306,843,357 306,843,357

2018 2017 2018 2017 rs. rs. Number Number

Ordinary Shares 100,371,584 100,371,584 306,843,357 306,843,357

10. inteRest BeARinG liABilities10.1 Group

2018 2017 Amount Amount Amount Amount Payable Payable Total Payable Payable Total within one year after one year within one year after one year rs. rs. rs. rs. rs. rs.

Bank loan (Note 10.1.1) 488,595,377 585,834,000 1,074,429,377 250,066,293 83,072,414 333,138,706Bank Overdraft (Note 15.2) 25,036,416 - 25,036,416 32,759,334 - 32,759,334 513,631,793 585,834,000 1,099,465,793 282,825,627 83,072,414 365,898,040

10.1.1 Bank loan

Balance Balance as at New loans loan Exchange as at 01.04.2017 Obtained repayment Gain / (loss) 31.03.2018 rs. rs. rs. rs. rs.

NDB - Money Market Loan 165,084,619 1,999,700,051 (1,739,307,447) 2,517,700 427,994,924HNB -Money market Loan - 11,971,837 - 8,255,861 20,227,698HNB - Term Loan 83,072,415 40,658,950 (37,060,084) (5,064,526) 81,606,755HSBC - Term Loan - 544,563,200 - 36,800 544,600,000Money Market Loan HSBC 84,981,974 20,572,650 (105,554,624) - - 333,139,008 2,617,466,688 (1,881,922,155) 5,745,835 1,074,429,377


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10. inteRest BeARinG liABilities (Contd.)10.2 Company

2018 2017 Amount Amount Amount Amount Payable Payable Total Payable Payable Total within after within after one year one year one year one year rs. rs. rs. rs. rs. rs.

Bank loan (Note 10.2.1) 49,792,000 - 49,792,000 49,581,280 - 49,581,280Bank Overdraft (Note 15.2) 12,314,979 - 12,314,979 21,237,659 - 21,237,659 62,106,979 - 62,106,979 70,818,939 - 70,818,939

10.2.1 Bank loan

Balance Balance as at New loans loan Exchange as at 01.04.2017 Obtained repayment Gain / (loss) 31.03.2018 rs. rs. rs. rs. rs.

NDB - Money Market Loan 49,581,280 564,503,687 (566,005,311) 1,712,344 49,792,000 49,581,280 564,503,687 (566,005,311) 1,712,344 49,792,000

10.3 Terms and Conditions

(1) Beira Brush (Pvt) limited (2) Beira Brush (Pvt) limited Term Loan - Hatton National Bank Money Market Loan - National Development Bank Security - Secured Security - Secured Repayment - 48 installments Repayment - To be paid within 90 days Interest - 5% Interest - 5% fixed

(3) BPPl Holdings limited (4) Beira Enviro Solutions(Pvt) ltd Money Market Loan - National Development Bank Term Loan - Hatton National Bank Security - Secured Security - Secured Repayment - To be paid within 90 days Repayment - To be repaid within 60 months Interest - 5% fixed Interest - 3M LIBOR+5%

(5) Beira Enviro Solutions(Pvt) ltd (6) Beira Enviro Solutions(Pvt) ltd Term Loan - HSBC Money Market Loan - Hatton National Bank Security - Secured Security - Secured Repayment - To be paid within 48 months Repayment - To be paid within 90 days Interest - 1 Month LIBOR + 3.15% Interest - 3M LIBOR + 3.5%



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11. inCoMe tAX The major components of income tax expense for the years ended 31 march are as follows :

Group CompanyStatement of Profit or Loss 2018 2017 2018 2017Current income Tax rs. rs. rs. rs.

Current income Tax charge 26,833,467 40,571,967 4,224,500 11,163,960Under/(Over) Provision of current taxes in respect of prior years (31,759) (201,082) (403,140) -Dividend Tax 10,400,879 12,387,191 - -

deferred income tax Deferred Taxation Charge/(reversal) (Note 12) 11,307,806 2,332,773 4,445,322 2,507,785income tax expense reported in the Statement of Profit or Loss 48,510,393 55,090,849 8,266,682 13,671,745

11.1 A reconciliation between tax expense and the product of accounting profit multiplied by the statutory tax rate is as follows:


Accounting Profit before Tax 414,124,665 491,095,800 140,309,420 203,212,224Solar income (6,337,283) - - -Deductible Expenses (242,314,130) (311,982,497) (127,849,267) (137,377,587)Non deductible expenses 98,518,448 87,164,897 21,735,512 20,086,969Taxable Profit/ (Loss) 263,991,700 266,278,200 34,195,665 85,921,606

Less - Deduction Under Section 32 (3,116,937) (14,089,243) - -Profit attributable to BOI exempt sales (146,297,712) (137,617,638) - -Taxable income 114,577,051 114,571,319 34,195,665 85,921,606

income tax expense reported in the statement of profit or loss income tax at 12% 24,152,473 37,912,470 4,012,940 9,670,568 income tax at 28% 2,680,994 2,659,497 211,560 1,493,392 26,833,467 40,571,967 4,224,500 11,163,960

11.2 Deferred Tax Expenses / (income) Deferred tax expense / (income) arising due to origination and reversal of timing differences 11,307,807 2,332,773 4,445,322 2,507,785


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12. defeRRed tAX Deferred income taxes are calculated on all temporary differences under the liability method using the principal tax rate of 15% for Beira Enviro Solutions (Pvt) ltd and 14% for all other Companies.

12.1 Deferred Tax liability


Balance as at Beginning of the Year 43,802,703 40,923,239 15,863,334 13,021,017Provision / (reversal) made During the Year 12,986,478 1,915,282 4,445,322 2,507,785impact on Other Comprehensive income 62,181,430 964,182 62,864,206 334,532Balance as at the end of the Year 118,970,611 43,802,703 83,172,862 15,863,334

deferred tax liabilities Property, Plant and Equipments 64,163,936 49,650,640 22,328,294 17,751,688Retirement Benefit Obligation (6,849,333) (6,211,381) (1,970,078) (1,966,247)Actuarial (Gain)/ Loss on Defined Benefit Obligation (1,078,924) 964,182 (396,148) 334,532Deferred Tax Attributable to land revaluation 63,260,354 - 63,260,354 -Allowances for slow moving stock (525,423) (600,739) (49,561) (256,639) 118,970,610 43,802,703 83,172,861 15,863,334

12.2 Deferred Tax Asset

Group 2018 2017 rs. rs.

Balance as at Beginning of the Year 322,226 795,436Provision / (reversal) made During the Year 1,678,671 (417,491)impact on Other Comprehensive income (30,460) (55,719)Balance as at the end of the Year 1,970,438 322,226

deferred tax Asset Property, Plant and Equipments 1,262,865 (19,308)Retirement Benefit Obligation 452,636 300,335Actuarial (Gain)/ Loss on Defined Benefit Obligation 285,440 (55,719)Allowances for slow moving stock 285,397 96,919Deferred Tax Attributable to land revaluation (315,900) - 1,970,438 322,226



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13. eXpense on RetiReMent Benefit oBliGAtion13.1 Expense on Retirement Benefit Obligation


Current Service Cost 5,511,659 5,064,738 1,421,203 1,544,004Interest Cost on Benefit Obligation 5,887,032 4,888,804 1,733,697 1,834,483 11,398,691 9,953,542 3,154,900 3,378,487

Actuarial (Gain)/loss on Obligation 9,609,538 (8,592,037) 2,829,629 (2,787,764) 9,609,538 (8,592,037) 2,829,629 (2,787,764) 21,008,229 1,361,505 5,984,529 590,723

13.2 Retirement Benefit Obligation Group Company 2018 2017 2018 2017Changes in the Present Value of the Defined Benefit Obligation are as follows: rs. rs. rs. rs.

Defined Benefit Obligation as at the Beginning of the Year 46,172,815 47,496,775 13,597,626 17,562,326interest Cost 5,887,032 4,888,804 1,733,697 1,834,483Current Service Cost 5,511,659 5,064,738 1,421,203 1,544,004Benefits Paid (5,630,129) (2,685,465) (2,680,540) (1,326,485)Transfers - - - (3,228,938) 51,941,377 54,764,852 14,071,986 16,385,390Actuarial (Gain)/loss on Obligation 9,609,538 (8,592,037) 2,829,629 (2,787,764)Defined Benefit Obligation as at the End of the Year 61,550,915 46,172,815 16,901,615 13,597,626

13.3 An actuarial valuation of the employee retirement benefit liability scheme was carried out by Piyal S Goonetileke and Associates as at 31 march 2017and 2018. The principle assumptions used are follows.

Group Company 2018 2017 2018 2017

rate of interest 10.5% p.a. 12.75% p.a. 10.5% p.a. 12.75% p.a.rate of Salary increase 10.00% p.a. 10.00% p.a. 10.00% p.a. 10.00% p.a.retirement Age : male 55 years 55 years 55 years 55 years : Female 50 years 50 years 50 years 50 years

13.4 Sensitivity of Assumptions Used in the Actuarial valuationThe following table demonstrates the sensitivity to a reasonably possible change in the key assumptions used with all other variables held constant in the employment benefit liability measurement.


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13. eXpense on RetiReMent Benefit oBliGAtion (Contd.)The sensitivity of the income Statement and Statement of Financial Position is the effect of the assumed changes in discount rate and salary increment rate on the profit or loss and employment benefit obligation for the year.

Group Company Effect on Performa Post Effect on Performa Post Profit or Loss Employment Profit or Loss Employment Benefit Liability Benefit Liability 2018 2018 2018 2018Assumed change in Financial Assumptions rs. rs. rs. rs.

if Discount rate increased By 1% 4,258,577 (4,258,577) 1,278,311 (1,278,311)if Discount rate Decreased By 1% (4,970,249) 4,970,249 (1,473,744) 1,473,744

if Salary increment rate increased By 1% (4,742,999) 4,742,999 (1,384,929) 1,384,929if Salary increment rate Decreased By 1% 4,145,556 (4,145,556) 1,225,525 (1,225,525)

13.5 Following payments are expected weighted average life span obligation on the future years:

Group Company 2018 2017 2018 2017Years from the Current Period rs. rs. rs. rs.

1st Following Year 3,753,495 1,357,952 1,168,509 340,7742nd Following Year 12,218,870 3,891,268 984,882 1,347,7503rd Following Year 4,931,379 12,474,415 1,459,309 1,150,8184th Following Year 8,956,571 4,840,035 4,779,155 1,505,4755th Following Year 7,893,288 8,553,100 3,528,893 4,657,828Beyond 5 Years 59,986,300 46,243,110 20,459,831 15,580,396

14. tRAde And otheR pAyABles Group Company 2018 2017 2018 2017 rs. rs. rs. rs.

Trade Payable - Related Parties (Note 14.1) - - 196,618,758 84,206,182 - Others 128,415,394 74,659,485 28,631,349 6,128,819Other Payable - Related Parties (Note 14.2) - - 358,524,448 358,524,448 - Others 52,816,390 57,860,126 10,877,470 5,921,641Sundry Creditors including Accrued Expenses 15,206,401 7,251,873 435,000 390,000 196,438,185 139,771,484 595,087,025 455,171,090



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14.1 Trade Payables - Related Parties relationship Company 2018 2017 rs. rs.

BPPl Enterprises (Pvt) ltd Subsidiary 1,868,059 1,868,059Beira Brush (Pvt) ltd Subsidiary 194,750,699 82,338,123 196,618,758 84,206,182

14.2 Other Payables - Related Parties relationship Company 2018 2017 rs. rs.

Beira Brush (Pvt) ltd Subsidiary 358,524,448 358,524,448 358,524,448 358,524,448

15. CAsh And CAsh eQuivAlents


15.1 Favourable Cash and Cash Equivalents BalanceCash and Bank Balances 24,262,260 22,209,867 3,810,953 4,045,847 24,262,260 22,209,867 3,810,953 4,045,847

15.2 Unfavourable Cash and Cash Equivalents Balance Bank Overdraft (25,036,416) 32,759,334 (12,314,979) 21,237,659Cash and cash equivalents for the purpose of Statement of Cash Flows (774,156) (10,549,467) (8,504,026) (17,191,812)

16. otheR opeRAtinG inCoMe


Bad Debt recovery 1,075,000 621,501 - -Dividend income - - 93,607,909 111,484,722Profit on Disposal of PPE (611,527) 1,086,819 (837,209) 548,800rent income - - 2,640,000 3,804,000Drying income - - 1,404,000 -Sundry income 8,548,459 58,940 112,049 58,940 9,011,932 1,767,260 96,926,748 115,896,462


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17. finAnCe inCoMe


interest income 242,076 218,082 3,246 5,113 242,076 218,082 3,246 5,113

18. finAnCe Cost


interest Expense on Overdrafts 685,128 501,579 296,224 343,277interest Expense on Bank loans 20,904,093 19,735,955 6,171,576 10,097,733 21,589,221 20,237,534 6,467,800 10,441,010

19. pRofit/(loss) BeFore tAx

Group CompanyStated after Charging/(Crediting) 2018 2017 2018 2017 rs. rs. rs. rs.

including in Cost of salesDepreciation 63,033,401 52,319,058 14,234,246 11,384,881

Personnel Costs including the following; - Defined Benefit Plan Costs -Gratuity 6,618,382 4,772,322 3,104,145 2,510,161 - Defined Contribution Plan Costs - EPF & ETF 4,939,787 4,049,407 654,039 561,153

including in Administration expenses

Personnel Costs including the following; - Defined Benefit Plan Costs -Gratuity 4,780,309 5,181,220 50,755 868,326 - Defined Contribution Plan Costs - EPF & ETF 14,558,940 12,817,928 1,143,277 1,195,750

directors' fees and emolumentsAuditors' Remuneration - Fees and Expenses 1,120,687 1,193,758 487,863 390,001Depreciation 12,521,108 14,339,673 1,934,661 2,150,474Amortisation 213,571 2,320,158 213,571 116,547Exchange (Gain) / Loss - Interest Bearing Loans & Borrowings 5,745,835 7,997,001 1,712,344 6,224,101 Other (6,413,028) (5,700,720) (1,723,965) (2,128,450)

including in selling and distribution CostsAdvertising Costs 2,608,932 1,017,797 1,316,973 41,059



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20. eARninGs peR shARe20.1 Basic Earnings Per Share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The weighted average number of ordinary shares outstanding during the period and the previous year are adjusted for events that have changed the number of ordinary shares outstanding, without a corresponding change in the resources such as a bonus issue.

20.2 The following reflects the income and share data used in the basic Earnings Per Share computations.

Group CompanyAmount Used as the Numerator: Year ended Year ended Year ended Year ended 2018 2017 2018 2017 rs. rs. rs. rs.

Net Profit/(Loss) Attributable to Ordinary Shareholders for basic Earnings/(loss) Per Share 365,614,272 436,004,951 132,042,738 189,540,479

20.3 Number of Ordinary Shares Used as Denominator:

As at As at As at As at 2018 2017 2018 2017 Number Number Number Number

Weighted Average number of Ordinary Shares in issue 306,843,357 306,843,357 306,843,357 306,843,357

Earnings Per Share - Basic (Original) 1.19 1.42 0.43 0.62Earnings Per Share - Diluted (Original) 1.19 1.42 0.43 0.62

21. dividends peR shARe Group Company 2018 2017 2018 2017 rs. rs. rs. rs.

declared and paid during the yearDividends on Ordinary Shares 128,872,951 128,586,544 128,872,951 128,586,544Dividends Per Share 0.42 0.42 0.42 0.42

22. fAiR vAlue

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

Cash and short-term deposits, trade receivables and trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments.


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22. fAiR vAlue (Contd.)Long-term floating-rate receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken to account for the expected losses of these receivables. As at 31 march 2018, the carrying amounts of such receivables, net of allowances, are not materially different from their calculated fair values.

fair value hierarchy - Company and GroupThe company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques.

level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data

Company Non-Financial Assets Measured at Fair Value 31-Mar-2018 Level 1 Level 2 Level 3

land 474,390,001 - - 474,390,001

Group Non-Financial Assets Measured at Fair Value 31-Mar-2018 Level 1 Level 2 Level 3

land 503,760,000 - - 503,760,000

23. finAnCiAl RisK MAnAGeMent oBJeCtives And poliCiesThe Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company has loan and other receivables, trade and other receivables, and cash and short-term deposits that arrive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk.

The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by the Board of Directors (BOD) that advises on financial risks and the appropriate financial risk governance framework for the Company. BOD provides assurance to the Company’s senior management that the Company’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with Company policies and risk appetite. it is the Company's policy that all derivative activities for risk management purposes are required to be approved by Board of Directors of Beira Group.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.

market riskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings and deposits.



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The overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the entity’s financial performance.

interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

interest Rate sensitivityThe following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Company’s profit before tax (through the impact on floating rate borrowings).

Effect on increase/ (Decrease) Group Company in basis points rs.’000’ rs.’000’

2018 + 100 basis points (10,995) (621) - 100 basis points 10,995 621

2017 + 100 basis points (3,659) (482) - 100 basis points 3,659 482

The assumed spread of basis points for the interest rate sensitivity analysis is based on the currently observable market environment changes to base rates such as liBOr.

foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a different currency from the Company’s functional currency).

foreign currency sensitivity The following table demonstrates the sensitivity of net operating cash flows before taxation and derivative financial instruments existing as at 31 march in GBP,CAD and USD to a reasonably possible change of such underlining foreign currencies (GBP,CAD and USD) exchange rate against lKr, with all other variables held constant. The company’s exposure to foreign currency changes for all other currencies is not material.

Change in Effect on Profit Before Tax Foreign Currency exchange rate Group Company rs ‘000’ rs ‘000’

2018 GBP 1% 4 - CAD 1% 180 107 USD 1% 6,175 817

2017 GBP 1% 5 5 CAD 1% 70 60 USD 1% 5053 495


78

23. finAnCiAl RisK MAnAGeMent oBJeCtives And poliCies (Contd.)equity price Risk The Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company’s Board of Directors reviews and approves all equity investment decisions.

Credit RiskCredit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The company is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities which includes deposits with banks.

Trade receivables Customer credit risk is managed by each company subject to the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed based on the credit risk evaluation model and individual credit limits are defined in accordance with this assessment.

Outstanding customer receivables are regularly monitored and contracts are signed and agreed with all credit customers. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 8. The Company does not hold collateral as security.

financial instruments and Cash depositsCredit risk from balances with banks is managed by the Company’s treasury department in accordance with the Company’s policy. investments of surplus funds are made only with approved counterparties as per the Treasury Policy and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company's Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Company’s Treasury Committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure. The Company’s maximum exposure to credit risk for the components of the statement of financial position is the carrying amounts as illustrated in Note 8 except for financial guarantees and derivative financial instruments.

liquidity Risk

The Company monitors its risk to a shortage of funds by setting up a minimum liquidity level. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual payments.

GroupAs at 31 march 2018 On less Than 3 to 12 1 to 5 Demand 3 Months Months Years > 5 Years Total rs. rs. rs. rs. rs. rs.

Interest-Bearing Loans and Borrowings 488,595,377 6,259,104 18,777,312 585,834,000 - 1,099,465,793Trade and Other Payable - 128,415,394 68,022,791 - - 196,438,185 488,595,377 134,674,498 86,800,103 585,834,000 - 1,295,903,978



79

GroupAs at 31 march 2017 On less Than 3 to 12 1 to 5 Demand 3 Months Months Years > 5 Years Total rs. rs. rs. rs. rs. rs.

Interest-Bearing Loans and Borrowings 250,066,293 8,189,833 24,569,500 83,072,414 - 365,898,041Trade and Other Payable - 74,659,485 65,111,999 - - 139,771,484 250,066,293 82,849,319 89,681,499 83,072,414 - 505,669,526

CompanyAs at 31 march 2018 On less Than 3 to 12 1 to 5 Demand 3 Months Months Years > 5 Years Total rs. rs. rs. rs. rs. rs.

Interest - Bearing Loans and Borrowings 49,792,000 3,078,745 9,236,234 - - 62,106,979Trade and Other Payable - 387,155,797 207,931,228 - - 595,087,025 49,792,000 390,234,541 217,167,463 - - 657,194,004

CompanyAs at 31 march 2017 On less Than 3 to 12 1 to 5 Demand 3 Months Months Years > 5 Years Total rs. rs. rs. rs. rs. rs.

Interest - Bearing Loans and Borrowings 49,581,280 5,309,415 15,928,244 - - 70,818,939Trade and Other Payable - 364,653,267 90,517,823 - - 455,171,090 49,581,280 369,962,682 106,446,067 - - 525,990,029

24. CoMMitMents And ContinGenCies24.1 Capital Expenditure Commitments

Beira enviro solutions (private) limitedThe Company has purchase commitments for acquisition of Property, Plant and Equipment incidental to the ordinary course of business as at 31 March, as follows;

2018 2017 rs. rs.

Contracted but not Provided for 67,123,663 356,708,856 67,123,663 356,708,856

Other than that the Company does not have significant capital commitments and contingencies as at the reporting date.


80

24. CoMMitMents And ContinGenCies (Contd.)24.2 Contingencies

Beira Brush (pvt) ltdThe Company has filed a case against Chiesel Consumer Products (Pvt) Ltd at Magistrate Court Colombo Fort on the basis of this Company is not settled the receivable balance of rs.913,905

25. Assets pledGed

Company Nature of Assets Nature of liability Facility Granted

2018 2017

BPPl Holdings PlC inventory, Trade receiva-bles, land & Buildings

Money market Loan - NDB USD 2,500,000 USD 2,500,000

Beira Enviro Solutions (Pvt) ltd

Yarn Plant & machinery HSBC Term loan lKr 536,344,139 -

HNB Term loan lKr 40,658,950 -

Beira Brush (Pvt) ltd machinery (imported) Term Loan - HNB USD 1,000,000 USD 1,000,000

inventory and Trade re-ceivables

Money Market Loan - NDB lKr 1,435,196,364 -

26. events oCCuRRinG AfteR the BAlAnCe sheet dAteThere have been no material events occurring after the reporting date that require adjustments to or disclosure in the financial statements.

27. RelAted pARty disClosuResCompany terms and Conditions The sales to and purchases from related parties are made at terms equivalent to those that in arm's length transactions. Outstanding balances at the year-end are unsecured and interest free.

Nature of Transactions Subsidiaries* Total Total 2018 2017 rs. rs. rs.

Beginning of the Year (442,703,512) (442,703,512) 65,089,917Sale of goods 355,079,074 355,079,074 326,256,008Purchase of goods (47,286,949) (47,286,949) (30,851,469)Fund Transfers (471,814,794) (471,814,794) (473,030,540)Investment in Beira Enviro Solutions (Pvt) Ltd - - (358,524,448)Settlement of liabilities on Behalf of the Company 51,716,386 51,716,386 28,357,020 (555,009,795) (555,009,795) (442,703,512)

included in: Trade and Other receivables and Trade and Other Payables Subsidiaries included* Beira Brush (Pvt) ltd Beira Enviro Solutions (Pvt) ltd BPPl Enterprises (Pvt) ltd



81

27.1 Transactions with Directors/ Key management Personnel

2018 2017 rs. rs.

Key Management personnel Compensation - GroupShort Term Employee Benefits (Cash & Non-Cash) 23,933,109 23,112,241Post Employment Benefits 4,437,937 5,075,549 28,371,046 28,187,790

Key Management Personnel Compensation - Company 2018 2017 rs. rs.

Short Term Employee Benefits (Cash & Non-Cash) - -Post Employment Benefits - - - -

28. ReConCiliAtion of CoMpARAtive infoRMAtion

The Group has changed its presentation of Inventory, Receivable and Income Tax Payable for the better presentation of financial information. The management has reasonable evidence that such presentation would be more relavant for the understanding of the entity's financial performance for the user.

The comparative information is reclassified to be in-line with the current presentation.

For the Year ended 31 march 2017 As previously Reclassification Reclassified reportedGroup rs. rs. rs.

statement of financial positionCurrent Assetsinventories 521,257,432 22,910,668 544,168,100Trade and Other receivables 651,196,103 (22,910,668) 1,101,441 629,386,876

Current liabilitiesincome Tax Payable 25,096,752 1,101,441 26,198,193


82

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83

ordinAry sHAreHolders As At 31st mArcH 2018

resident Non resident Total Share Number of No of Number of No of Number of No of Holdings Shareholders Shares (%) Shareholders Shares (%) Shareholders Shares (%)

1 to 1000 Shares 263 83,215 0.03% 0 - 0% 263 83,215 0.03% 1,001 to 10,000 Shares 139 684,243 0.22% 2 6,400 0% 141 690,643 0.22% 10,001 - 100,000 Shares 106 4,119,718 1.34% 1 19,000 0.01% 107 4,138,718 1.35% 100,001 - 1000,000 Shares 43 16,332,944 5.32% 2 717,891 0.23% 45 17,050,835 5.55% Over 1,000,000 Shares 5 282,279,946 92.00% 1 2,600,000 0.85% 6 284,879,946 92.85% total 556 303,500,066 98.91% 6 3,343,291 1.09% 562 306,843,357 100.00%

Category No of No of Shareholders Shares

individual 506 15,012,653institutional 56 291,830,704 562 306,843,357

sHAre trAding inFormAtion Year Ended 31-Mar-18 31-Mar-17

share informationHighest Price (rs.) 16.00 N/Alowest Price (rs.) 12.00 N/AClosing Price (rs.) 13.20 N/A

public holding as at 31st March 2018Ordinary shares of the Company held by the public as at 31st March 2018;•• Percentage of ordinary shares held by the public 10%•• Number of Public Shareholders 559.

There were no non-voting shares as at 31st March 2018.The Company was listed with the Colombo Stock Exchange of Sri lanka on 4th April 2017. Therefore, there were no share trading prior to 4th April 2017.The Stock Exchange code for BPPl Holding PlC shares is “BPPl”.

DividendsThe company declared its first interim dividend of Rs 0.18 per ordinary share on 27th July 2017 for the Financial year 2017/18 and the dividend was paid on 17th August 2017.The company declared its second interim dividend of rs 0.24 per ordinary share on 6th February 2018 for the Financial year 2017/18 and the dividend will be paid on 27th February 2018.The Board of Directors confirmed that the company satisfied the solvency test in accordance with section 57 of the companies Act no 7 of 2007 and obtained a certificate from the auditors, prior to declaring the interim dividend.

Investor Information


84

twenty mAjor sHAreHolders

No Name of the Shareholder No. of Shares as at 31st march 2018 %

1 Infinity Capital (Pvt) Ltd 154,382,777 50.31%2 lOlC investments ltd. 80,546,372 26.25%3 Hirdaramani investment Holdings Private limited 41,229,208 13.44%4 Seylan Bank Plc/Arrc Capital (Pvt) ltd 3,176,301 1.04%5 J.B. Cocoshell (Pvt) ltd 2,945,288 0.96%6 Deutsche Bank Ag Singapore Branch 2,600,000 0.85%7 mr. Samaranayake Nihal Parakrama De Alwis 1,000,000 0.33%7 miss. Page marianne mahilmalar 1,000,000 0.33%9 mr. Udayananda Karagoda loku Gamage 802,690 0.26%10 Jafferjee Brothers (Exports) limited 772,800 0.25%11 mr. Fernando merrill Joseph 750,000 0.24%12 mr. Esufally murtazaali Abidhussen Hassanaly 733,400 0.24%13 mr. Hirdaramani mahesh lalchand 732,100 0.24%13 mr. Hirdaramani Akshay Anil 732,100 0.24%15 Deutsche Bank Ag-Comtrust Equity Fund 729,000 0.24%16 lanka Century investments Plc 645,100 0.21%17 Alpex marine (Pvt) ltd 635,000 0.21%18 GF Capital Global limited 476,600 0.16%19 Katunayake Garments limited. 419,200 0.14%20 mr. Hirdaramani Aroon Janak 412,700 0.13%20 mr. Hirdaramani Siddharth Janak 412,700 0.13% 295,133,336 96.18%

Investor Information


85

Statement of Value Added


Turnover 2,616,348,715 2,422,402,089 667,778,658 625,571,538Other income 9,011,931 1,767,260 96,926,748 115,896,462Finance income 242,077 218,082 3,246 5,113Cost of material & Services (1,550,727,147) (1,349,774,502) (356,050,159) (286,546,034)value added 1,074,875,576 1,074,612,929 408,658,493 454,927,079

Group Company 2018 % 2017 % 2018 % 2017 %

Distributed as follows:to employees as remuneration and other employee costs 432,113,704 40% 367,823,483 34% 116,625,844 29% 99,035,399 22%

to Government as income tax 48,510,393 5% 55,090,849 5% 8,266,684 2% 13,671,745 3%

to providers of Capital as dividends to shareholders 128,872,951 12% 128,586,544 12% 128,872,951 31% 128,586,544 28% as interest to finance providers 21,589,221 2% 20,237,534 2% 6,467,801 2% 10,441,010 2%

Retained in Business as depreciation and amortisation 78,174,833 7% 66,869,568 6% 16,382,478 4% 13,651,902 3% as profit/(loss) for the year 365,614,473 34% 436,004,951 41% 132,042,735 32% 189,540,479 42%

As remuneration and other employee costs As income tax As dividends to shareholders As interest to finance providers As depreciation and amortisation As profit/(loss) for the year

Group

34%

7%

2%

12%

5%

40%

41%

6%2%

5%

12%

34%

Company

32%

4%2%

31%

2%

29%

42%

3%2%

3%

28%

22%

2018

2017 2017

2018


86

Five Year Summary

2018 2017 2016 2015 2014 rs. rs. rs. rs. rs.

Revenue 2,616,348,715 2,422,402,089 2,087,533,093 1,931,010,849 1,765,969,967Profit Before Tax 414,124,665 491,095,800 330,573,657 174,774,095 227,895,220Taxation (48,510,393) (55,090,849) (23,695,879) (25,671,567) (26,996,439)Profit After Tax 365,614,272 436,004,951 306,877,778 149,102,528 200,898,781Profit / (Loss) from Discontinued Operation Net of Tax - - - (952,343) 2,171,505Profit for the Period 365,614,272 436,004,951 306,877,778 148,150,185 203,070,286

funds employedStated Capital 100,371,584 100,371,584 81,193,880 81,193,880 81,193,880reserves 259,933,800 259,933,800 259,933,800 - -retained Earnings 1,819,860,551 1,654,940,657 1,359,127,817 1,166,876,562 1,064,638,441

Assets employedNon-Current Assets 2,288,452,436 1,441,138,594 1,290,380,064 1,045,553,255 844,034,165Current Assets 1,371,683,861 1,195,950,683 1,015,197,900 1,082,675,774 926,222,961Current liability 713,614,837 448,795,304 428,315,153 653,259,635 502,185,059Capital Employed (Net Debt Basis) 3,255,369,669 2,358,934,222 2,096,381,295 1,912,030,894 1,554,701,973

Cash flowNet Cash Inflow/(Outflow)from Operating Activities 327,313,645 407,357,216 459,070,532 35,796,019 208,081,565Net Cash Inflow/(Outflow) from investing Activities (924,209,936) (218,336,325) (52,047,418) (214,500,990) (205,183,250)Net Cash Inflow/(Outflow) from Financing Activities 606,671,582 (169,050,976) (426,027,554) 164,641,775 59,916,474Net increase/(Decrease) in Cash and Cash Equivalents 9,775,291 19,969,914 (19,004,440) (14,063,196) 62,814,789

Key indicatorsCurrent ratio 1.92 2.66 2.37 1.66 1.84Gearing ratio 49% 17% 23% 53% 36%Asset Turnover ratio 0.71 0.92 0.91 0.91 1.00Earnings per Share (rs) 1.19 1.42 1.00 26.69 36.59Dividends per Share (rs) 0.42 0.42 0.36 11.62 3.00Net assets per Share (rs) 7.11 6.57 5.57 224.88 206.46return on Equity 17% 22% 18% 12% 18%return on Capital Employed 13% 22% 17% 11% 16%interest Cover (Times) 20.40 25.53 11.77 7.15 10.87Dividend Payout ratio 35% 30% 36% 44% 8%


87

Office Addresses

HeAd oFFice level 17,Access Towers,No. 278/4, Union Place,Colombo 02

wood, BRush And Mop fACtoRyNo 88,ratnapura road,ingiriya

syntHetic FilAment FActoryBatuvita,mawgama,Horana.

recycling And yArn PlAntlot 7,Horana Export Processing Zone,Boralugoda,Poruwadonda,Horana.

oFFsHore oFFices:

CanadaBeira marketing Services (N.A) inc,1465,Caulder Drive,Oakville,Ontario, l6J 5T1,Canada

indonesiaJi. Agung Timur,VIII Block 03/20-21,Sunter Jaya,Jakarta Utara,indonesia


88

Notice of Meeting

NOTiCE iS HErEBY GivEN THAT the Annual General meeting of B P P l Holdings PlC will be held on 25th July 2018 at 3.00 p.m. at Elevate, Frongipani Hall, Access Towers, level 28, No. 278/4, Union Place, Colombo 2 for the following purposes:

1. To read the Notice convening the meeting.

2. To receive and consider the Annual report and the Financial Statements for the Financial Year ended 31st march 2018 with the report of the Auditors thereon.

3. To re-elect as Director, Mr. V Selvaraj who retires by rotation in terms of Article 81 of the Articles of Association of the Company.

4. To re-elect as Director, Mr. R P Pathirana who retires by rotation in terms of Article 81 of the Articles of Association of the Company.

5. To re-elect as Director, Mr. S D Amarasinghe who retires in terms of Section 211 of the Companies Act No. 7 of 2007 and for which notice of the following resolution is given:

“THAT the age limit stipulated in terms of Section 210 of the Companies Act No. 7 of 2007 shall not apply to mr. S D Amarasinghe who is 81 years and that he be re-elected a Director of the Company in terms of Section 211 of the Companies Act No. 7 of 2007.”

6. To re-appoint Messrs. Ernst & Young, Chartered Accountants, as Auditors and to authorise the Directors to determine their remuneration.

7. Any Other Business of which due notice has been given in terms of the relevant laws and regulations.

By Order of the BoardB P P l Holdings Plc

secretarius (private) limitedSecretaries

Colombo

2nd July 2018

notes:•• A member unable to attend is entitled to appoint a Proxy to attend and vote in his/her place.•• A form of proxy is enclosed for this purpose.•• A proxy need not be a member of the Company.•• in order to be valid, the completed Proxy Form must be lodged at the registered Office of the Company not less than forty

eight hours before the time fixed for the meeting.


89

Notes

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90

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91

Form of Proxy

i/We …………………………………………………………………………………....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .………………………

of ………………………………………………………....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .………………………………………………being a member/members of B P P l HOlDiNGS PlC hereby appoint:

mr./mrs/miss ………....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .…………………………………………………………………………………

of …………………………………….………………....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .……………………… or failing him/her,

mr. S D AmArASiNGHE of Colombo, or failing himDr. K A AmArASiNGHE of Colombo, or failing himmr. v SElvArAJ of Colombo, or failing himmr. B D P D PErErA of malabe, or failing himmr. r P PATHirANA of rajagiriya, or failing himmr. m H DE SilvA of Nugegoda, or failing himmrS. S T rATWATTE of Dehiwela, or failing hermr. S r SPrOUlE DE SArAm of Colombo

as my/our proxy to represent me/us and vote on my/our behalf at the Annual General meeting of the Company to be held on 25th July 2018 at 3.00 p.m. and at any adjournment thereof and at every poll which may be taken in consequence thereof.

I/We, the undersigned, hereby direct my/our proxy to vote for me/us and on my/our behalf on the specified Resolution as indicated by the letter “X” in the appropriate cage:

For AgAinstTo re-elect as Director, Mr. V Selvaraj who retires by rotation in terms of Article 81 of the Articles of Association of the Company.

To re-elect as Director, Mr. R P Pathirana who retires by rotation in terms of Article 81 of the Articles of Association of the Company.

To re-elect as Director, Mr. S D Amarasinghe who retires in terms of Section 211 of the Companies Act No. 7 of 2007 and for which notice of the following resolution is given:

“THAT the age limit stipulated in terms of Section 210 of the Companies Act No. 7 of 2007 shall not apply to Mr. S D Amarasinghe who is 81 years and that he be re-elected a Director of the Company in terms of Section 211 of the Companies Act No. 7 of 2007.”

To re-appoint Messrs. Ernst & Young, Chartered Accountants, as Auditors and to authorise the Directors to determine their remuneration.

As witness my/our hands on this …………….. day of ………………………… Two Thousand & Eighteen.

..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Signature/s

INSTRUCTIONS AS TO COMPLETION OF THE FORM OF PROXY ARE SET OUT ON THE REVERSE.


92

Form of Proxy

instrUctions As to comPletion oF tHe Form oF Proxy

1. Kindly perfect the Form of Proxy by filling in legibly your full name and address and signing in the space provided. Please fill in the date of signature.

2. if the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should also accompany the completed Form of Proxy for registration, if such Power of Attorney has not already been registered with the Company.

3. if the appointer is a Company/Corporation, the Form of Proxy should be executed under its Common Seal or by a duly authorised officer of the company or Corporation in accordance with its Articles of Association.

4. The completed Form of Proxy should be deposited at the Registered office of the Company at Level 17, Access Towers, No. 278/4, Union Place, Colombo 2 not later than forty eight hours before the time appointed for the holding of the meeting.

Please fill in the following details:

Name : …………………………………………………………………………………………...……………………………………………….....…

………………………………....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Address : ………………………………………………………………………………………………………….………….……………………………

.... . . .…………………………………………………………………………....... . . . . .………………………………………………………

Jointly with : ……………………………………………………………....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .………………………………

Share Folio No. : ……………………………………………………....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .………………………………………

Corporate InformationComPAny nAmeB P P L Holdings PLC

dAte of inCoRPoRAtion26th August 1991

LegAL foRmIncorporated in Sri Lanka on 26th August 1991 as a public company under the Companies Act No. 17 of 1982 [N (PBS) 291)], re-registered under the Companies Act No. 07 of 2007 on 21st January 2009 (PB 859), converted to a private limited liability on 20th July 2012 (PB 859 PV),converted to a public company on 29th July 2016 (PB 859 PV) and subsequently converted to Public Quoted Company (PB 859 PQ) on 29th June 2017 . Authority of Incorporation: Registrar of Companies (ROC), Colombo.

ComPAny RegistRAtion numBeRPB 859 PQRegistered Office and Current Place of BusinessB P P L Holdings PLC,Level 17, Access Towers,No. 278/4, Union Place,Colombo 02.Tel : +94 11 2307168Fax: +94 11 2307169

BoARd of diReCtoRsMr. Sarath Dayantha Amarasinghe – ChairmanDr. Anush Amarasinghe – Managing Director / Chief Executive OfficerMr. Vaithilingam Selvaraj - Executive Director / Chief Financial OfficerMr. B. D. Prasad Devapriya Perera - Executive DirectorMr. Ranil Pathirana – Non-Executive DirectorMr. Manjula De Silva - Independent Non- Executive DirectorMrs. Sharmini Ratwatte - Independent Non- Executive DirectorMr. Savantha De Saram – Independent Non-Executive DirectorCompany SecretarySecretarius (Pvt) Ltd.3rd Floor, 40, Galle Face Court,Colombo 03.Tel : +94 11 2333431Fax: +94 11 2381907

ComPAny RegistRARS S P Corporate Services (Private) Limited,101, Inner Flower Road, Colombo 03. Tel : +94 11 2573894 Fax : +94 11 2573609 Email : [email protected]

AuditoRs to tHe ComPAnyMessrs. Ernst & Young (Chartered Accountants)201, De Saram Place,Colombo 10.Tel : +94 11 2204444Fax: +94 11 2697369

LAwyeRs to tHe ComPAnyAIM LAWAttorneys-at-Law and Notaries PublicNo. 514C, R A De Mel MawathaColombo 03.Tel: +94 11 2503426/ +94 712 228 044Email: [email protected]

ComPAny weBsitewww.beiragroup.com

ComPAny [email protected]

BAnkeRs to tHe ComPAnyBank of Ceylon04, Bank of Ceylon Mawatha,Colombo 01.

national development Bank42, DHPL Building,Nawam Mawatha,Colombo 02.

sampath Bank110,Sir James Pieris Mawatha,Colombo 00200

Hongkong and shanghai Banking Corporation Limited24, Sir Baron Jayathilake Mawatha,Colombo 01.

Hatton national BankHNB Towers,479, T.B. Jayah Mawatha,Colombo 10.

BPPL HoLdings PLC | AnnuAL RePoRt 2017/18

Redesigningthe future

BP

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Rt 2017/18

B P P L Holdings PLC,Level 17, Access Towers, No. 278/4, Union Place, Colombo 02.

Tel : +94 11 2307168 | Fax: +94 11 2307169

redesigning the future · annual report 2017/18 10 we invested heavily on our synthetic filament...

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