power of b r · contents 04 singer at a glance 06 vision/mission/values 08 highlights 09 financial...

SINGER (SRI LANKA) PLC

No. 80, Nawam Mawatha, Colombo 2. Sri Lanka.Hot Line: (+94) (011) 5 400 400E-Mail: [email protected]: [email protected] SINGER (SRI LANKA) PLC ANNUAL REPORT 2017/18

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Singer (Sri Lanka) PLC Annual Report 2017/18 1

Singer is the most prevalent, popular and renowned brand in the country. The Company successfully popularised a highly diversified portfolio that offers a choice of products from premium brands, and made it freely available to people from all walks of life, from every town and village in the country and across every social segment via one of the most comprehensive and multi-channel distribution networks in the country. With Singer’s involvement in e-commerce and a wider choice of payment methods, the luxury of choice to the consumer is even greater. Today, we continue to innovate, expand our product portfolio across even more categories and strengthen and expand our manufacturing processes.

To the customer we offer…the Power of Brand and the Luxury of Choice.

Singer (Sri Lanka) PLC Annual Report 2017/182

CONTENTS

04Singer At a Glance06 Vision/Mission/Values08 Highlights09 Financial Highlights10 Review Period at a Glance12 Milestones14 Awards and Accolades

114Singer’s Governance116 Corporate Governance155 Audit Committee Report156 Remuneration Committee Report157 Nomination Committee Report158 Related Party Transactions Review

Committee Report159 Risk Management

16Singer’s Leadership18 Chairman’s Statement20 Group Chief Executive

Officers Review26 Board of Directors30 Management Team

34Business Model36 Operating Environment37 Business Model/Strategy

and Execution42 Stakeholder Engagement46 Materiality47 Economic Performance

48Management Discussion\and Analysis50 Financial Capital67 Institutional Capital76 Customer Capital80 Employee Capital97 Social and Environmental Capital

164 Financial Reports166 Annual Report of the Board of

Directors on the Affairs of the Company

172 Statement of Directors’ Responsibility173 Independent Auditors’ Report176 Statement of Profit or Loss and Other

Comprehensive Income177 Statement of Financial Position178 Statement of Changes in Equity180 Statement of Cash Flows181 Notes to the Financial Statements

244 SupplementaryInformation246 About this Report247 Parent, Subsidiaries and

Related Companies248 A Decade in perspective249 Share Information253 Independent Assurance Report254 Certificate of the Director on

Transfer Pricing255 Global Reporting Initiatives (GRI)

Standard Disclosures Index259 Distribution Network260 Service Network and Fashion

Academy Network261 Glossary of Financial Terms262 Notice of Annual General MeetingEnclosed Form of Proxy


Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones 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Singerat a glance

06 08 09Vision/Mission/Values Highlights Financial Highlights


Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and Accolades Vision/Mission/Values Highlights Financial Highlights Review Period at a Glance Milestones Awards and 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Singerat a glance

10 1412Review Period at a Glance

Awards and AccoladesMilestones


Values

ObjectivesProvide our consumers with the Best Service and Shopping Experience in the Island

To be the market leader in our Product and Market Segment

ShareholdersWe provide a reasonable return while safeguarding their investment

ConsumersWe live up to the expectations of a responsible organisation by contributing to the improvement in the quality of life of our customers through outstanding products and services

EmployeesWe respect each other as individuals and encourage cross functional teamwork while providing opportunities for career development

VisionTo be the foremost consumer durable retailer and foremost consumer financier in Sri Lanka.


Provide our Consumers with Products of Latest Technology

Develop our Employees to achieve their real Potential

Provide our Shareholders with steady Asset Growth and Return on Investment above our Industry Norm

Grow our Revenue and Profits at a rate above the Industry Norm

SuppliersWe develop our suppliers to be partners in progress and we share our growth with them

CommunityWe conduct our business by conforming to the ethics of our country and share the social responsibility of the less fortunate

CompetitorsWe respect our competitors and recognise their contribution to market value

EnvironmentWe make every effort to ensure that the environment is protected and conserved for future generations

MissionTo improve the

quality of life by providing comforts and conveniences

at fair prices.

HIGHLIGHTS

Financial Capital

Rs. 65.1 billion group revenue for 15

months ended 31st March 2018

Rs. 2,049 million group profit before tax for 15 months ended

31st March 2018

Rs. 2.78 group earnings

per share

Rs. 2.20 dividend per share

Institutional Capital

“Singer” Peoples Brand

for the 12th consecutive year

Brands and Products Portfolio and multiple financing

options

432 retail shops across the country

Unmatched after sales service

Customer Capital

8 million customers

443,000 hire purchase customers

Over 483,000 Facebook fans

Over 1.1 million loyalty members

Employee Capital

2,617 employees

Core competencies4th consecutive year

Singer Recognised as a “Great Place to Work”

Company’s unique culture

Social and Environmental Capital

One of the Top 10 companies at the Best

Corporate Citizen Awards

1,093 MT of e-waste disposed

to protect the environment

CSR dedicated to improve education, health and

sports

CO2 emissions reduced by

139,531 litres


FINANCIAL HIGHLIGHTS

Group Company

For fifteen months ended

31st March 2018Rs. ’000

For twelve months ended

31st December 2016Rs. ’000

Increased/(Decreased)

%


31st March 2018Rs. ’000


31st December 2016Rs. ’000

Increased/(Decreased)

%

Group Revenue – Net 65,122,305 46,924,144 38.8 50,910,033 39,267,203 29.7

Net Finance Cost 2,531,375 1,472,573 71.9 2,149,727 1,281,431 67.8

Profit Before Tax 2,049,052 3,126,233 (34.5) 1,105,879 1,450,530 (23.8)

Profit For the Period 1,220,295 2,357,756 (48.2) 999,023 1,104,445 (9.5)

Total Comprehensive Income for the Period (Net of Tax) 691,655 2,623,507 (73.6) 794,117 1,363,277 (41.7)

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

Revenue Reserves 5,495,478 6,374,444 (13.8) 3,326,088 4,242,213 (21.6)

Capital Reserves 577,919 1,057,964 (45.4) 847,555 1,065,542 (20.5)

Statutory Reserves 136,009 95,361 42.6 – – –

Non-Controlling Interest 1,349,114 1,401,088 (3.7) – – –

Total Equity 8,184,569 9,554,905 (14.3) 4,799,692 5,933,803 (19.1)

Property, Plant & Equipment – Net 5,649,424 5,426,841 4.1 3,082,598 3,022,805 2.0

Other Investments 17,061 17,061 – 929,110 929,110 –

Net-Current Assets 214,028 6,024,815 (96.4) 549,354 4,773,020 (88.5)

Gross Dividends* N/A N/A – 826,383 1,101,845 (25.0)

Dividend per Share – Rs. N/A N/A – 2.20 2.93** (24.9)

Dividend Payout Ratio – % N/A N/A – 82.71 99.67** (17.0)

Earnings per Share – Rs. 2.78 5.65** (50.8) 2.66 2.94** (9.5)

Price Earnings Ratio – times N/A N/A – 15.11 14.31 (5.6)

Net Assets per Share – Rs. 18.20 21.70** (16.1) 12.78 15.80** (19.1)

Market Price per Share – Rs. 31st March 2018 – (2016 – 31st December) N/A N/A – 40.20 126.20*** N/A

Net Income to Net Turnover – % 1.87 5.02 (62.7) 1.96 2.81 (30.2)

Return on Average Net Assets/Equity – % 13.76 28.89 (52.4) 18.62 20.03 (7.0)

Debt Ratio – % 83.82 77.42 8.3 85.89 79.44 8.1

Debt to Equity 3.60 2.33 54.5 3.53 2.39 47.7

Gearing Ratio (Times) 0.79 0.71 11.3 0.85 0.72 18.1

Interest Cover (Times) 1.81 3.12 (42.0) 1.51 2.13 (29.1)

Dividend Cover (Times) N/A N/A – 1.21 1.00 21.0

Current Ratio (Times) 1.00 1.27 (21.3) 1.02 1.31 (22.1)

Acid Ratio (Times) 0.65 0.84 (22.6) 0.59 0.80 (26.3)*Current period informations include the Interim Dividend paid during the period and comparative inform includes authorised Final Dividend of the Company.**Information for the previous year has been restated, except market price per share to reflect the subdivision of shares in March 2017.***Market price per share – before the subdivision of shares.

-The information presented above are not entirely comparable due to the change of financial period from 31st December to 31st March..



January AprilFebruary MayMarch June

Annual Religious Ceremony

Relocated Kandy Service Centre

Upgraded Satellite showroom in Kahatagasdigiliya to Singer Plus showroom.

Opened SISIL World showroom in Pilimathalawa and upgraded two satellite showrooms in Bingiriya and Ibbagamuwa to Singer Plus showrooms

Launched of Huawei P20

Annual Religious ceremony

Annual Marketing Convention 2017

Opened new Singer Plus showroom in Mattakkuliya

Needle Painting Exhibition 2017

Opened new Singer Home showroom in Matale and new SISIL World showroom in Kirindiwela

Relocated Jaffna Service Centre

SISIL World Annual Convention 2017

Annual Dealer Convention 2017

Won People’s Brand for 11th consecutive year

Won Youth Brand and Consumer durable Brand of the year

Annual Marketing Convention 2018

Upgraded three satellite showrooms in Norocholai, Pasyala and Rambewa to Singer Plus showrooms

Singer Finance Annual Awards Ceremony

Singer 4K ultra HD TV Launched

Awarded as one of the ‘Top 25 Best Companies to Work for in Sri Lanka’ by the Great Place to Work Institute for the 4th consecutive year

Annual Dealer Convention 2018

Annual SISIL World Convention 2018

Introduced Gold Loan by Singer Finance (Lanka) PLC

Commemorating the 25th anniversary of Singer Furniture Factory

Won People’s Brand of the year for the 12th consecutive year

JanuaryFebruaryMarch

REVIEW PERIOD AT A GLANCE

Rs. billion 22.00

Rs. billion 25.40

20112012

Revenue Rs. 65.12 billion*


July OctoberAugust November

December

September

7th Installation Ceremony of Singer Sri Lanka Toastmasters Club

Opening Singer Logistics Hub at Dambulla

Launch of Sony BRAVIA OLED TV

Opened new SISIL World showroom in Monaragala

Launched Singer Geo smart refrigerator series

Introduced Mitsubishi Heavy Industries Air conditioning Solutions

Singer Digital Awards 2017

Opened three Singer Plus showrooms in Elpitiya, Mallavi and Murunkan

4th Instalation of Singer Roteract Club

Singer Life style Fiesta – 2017

Upgraded Satellite shop in Thirappane to Singer Plus showroom

Kids Art Competition

Singer Got Talent Season 3

Launched Huwaei Nova 2i and apple mobile phone

Opened new Singer Home showroom and Singer Mega showroom in Kottawa

Annual Fashion show & Awards Ceremony

New Singer Finance Branch opened at Kuliyapitiya

Launched Samsung Note 8

Rs. billion46.92

Rs. billion*65.12

Rs. billion25.49

Rs. billion 29.70

Rs. billion38.71

6 year CAGR 19.79% in group net revenue

20132014

2015

2016

2017/18*

*15 months ended 31 March 2018


1851

2011

1877

2013

2010

1974

2015

2004

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

Singer entered large scale smart phone business in Sri Lanka.

Singer commenced operations in Sri Lanka introducing sewing machines.

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

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

Incorporated as a Limited Liability Company.

Singer Finance (Lanka) PLC launched credit cards.

Established Singer Finance (Lanka) PLC.

MILESTONES


2001

2016

1981

2000

2017

1988

1998

1992

First Singer Homes store opened in Sri Lanka.

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

Listed in the Colombo Stock Exchange.

Acquired the local brand, SISIL.

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

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

First Singer Mega store opened in Sri Lanka.

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

2018

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

Singer (Sri Lanka) PLC Annual Report 2017/1814AWARDS AND ACCOLADES

Sri Lanka’s Top 25 Best Companies to Work For, Great Place to Work

Singer (Sri Lanka) PLC was recognised as one of Sri Lanka’s Top 25 Best Companies to work for in Sri Lanka and was also recognised as one of the most respected entities in the year 2017.

Business Today Top 30, 2016-17

Singer rose to number 28 on the Business Today TOP 30, 2016/17.

Best Corporate Citizen Sustainability Award, Ceylon Chamber of Commerce

Singer (Sri Lanka) PLC was recognised as one of Sri Lanka’s top 10 Corporate Citizens by the Ceylon Chamber of Commerce in recognition of the Company’s contribution to the community through the numerous CSR projects and the effective sustainability initiatives to generate increased value for all its stakeholders.

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


Durable Brand of the Year, SLIM Nielsen People’s Awards 2018Winner for the 12th consecutive year

People’s Youth Choice – Brand of the Year, SLIM Nielsen People’s Awards 2017

People’s Brand of the Year, SLIM Nielsen People’s Awards 2018Winner for the 12th consecutive year

Durable Brand of the Year, SLIM Nielsen People’s Awards 2017

People’s Brand of the Year, SLIM Nielsen People’s Awards 2017


Chairman’s Statement Group Chief Executive Officers Review Board of Directors Management Team Chairman’s Statement Group Chief Executive Officers Review Board of Directors Management Team Chairman’s Statement Group Chief Executive Officers Review Board of Directors Management Team Chairman’s Statement Group Chief Executive Officers Review Board of Directors Management Team Chairman’s Statement Group Chief Executive Officers Review Board of Directors Management Team Chairman’s Statement Group Chief Executive Officers Review Board of Directors Management Team Chairman’s Statement Group Chief Executive Officers Review Board

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20 26 30Group Chief Executive Officers Review

Board of Directors Management Team


CHAIRMAN’S STATEMENT

Dear Shareholder,

I am pleased to present the 2017/18 Annual Report and Audited Financial Statements for Singer (Sri Lanka) PLC.

2017 has been an eventful year, with Singer Sri Lanka joining the World of Hayleys in September 2017. Singer once again was named the number one brand in Sri Lanka for the 12th consecutive year by Ac Nielsen Peoples Award.

During the last six months of operations under the Hayleys Group, the two companies marked two major milestones. Firstly, Hayleys and Singer celebrated our 140th anniversary of operations in Sri Lanka. Secondly, the Hayleys Group became the first listed entity in the country to surpass an annual turnover of over USD 1 billion, with significant contribution to the Group’s revenue coming from Singer (Sri Lanka) PLC under the Retail segment.

Performance The Singer Sri Lanka Group recorded revenue of Rs. 65.1 billion for the fifteen months period ending 31st March 2018. The strong progress was supported by the significant growth in the IT Products and Furniture segments.

The Group profit before tax for the fifteen months was Rs. 2.05 billion and the Group profit after tax for the fifteen months period ending 31st March 2018 was Rs. 1.22 billion.

Outlook Singer Sri Lanka is the largest retailer of consumer durables in the country with an island wide distribution comprising over 430 outlets. Singer Sri Lanka is also renowned for its consistent resolve on maintaining the highest standards in Good Governance and Sustainability. Continuous investments would be made to generate new growth opportunities over the coming years. It’s the intention of the Hayleys Group to take Singer to even greater heights.

We will ensure that Singer brand name continues to be in the hearts and minds of the people; to expand the customer base and our reach through our branch network; to serve Singer’s customers even better and bring greater experiences and innovative and exciting product offerings.

Singer (Sri Lanka) PLC Annual Report 2017/18 19 CHAIRMAN’S STATEMENT

encouraged by open market access to imports of home branded or generic brand products. The Consumer durables and mobile phone pricing in the market place is very competitive, however we would differentiate with our quality offering and after sales service .We encourage competition, as it makes us be ahead of our strategies, ensuring that we are neither complacent nor satisfied with mediocrity. Leveraging the trust in the Singer brand and offering customers a wide range of consumer durables along with outstanding customer service and after sales service are Singer’s key differentiation factors which has enabled us to build trust and long-lasting relationships with our customers.

The financing arm Singer Finance (Lanka) PLC which commenced operations in 2004 has evolved as a medium to large scale Finance Company in the last decade. The company with a total asset base of Rs 16.1 Bn and a branch network of 24 branches aspires to be within the Top 5 Finance Companies in the country. The company plans for strategic growth in its core business of Leasing and will be venturing into Gold Loans in the FY 2018/19.

We look at the economic outlook for the year 2018 with a sense of optimism, despite the weakening currency and the increase in fuel prices which impacts the purchasing power of the consumer. We understand that long due corrective actions has been implemented by the Government. In addition, the Government would need to implement strategies that would propel the country’s economy to reach US $ 5000 GDP per capita. No doubt that Singer and Hayleys will play pivotal roles as private sector participants, in the quest for economic growth.

I place my appreciation to all those involved for their contributions to the Singer Group’s success. I thank the Senior Management Team, and all staff members for their tireless efforts to ensure the seamless transfer of ownership, and their continued dedication and commitment. I wish to express my heartfelt gratitude to the members of the Board for their support and commitment.

It is with a deep sense of sadness that I wish to express our sincere appreciation of late. Dr. Saman Kelegama whose untimely departure, whilst holding office as Chairman was a great loss for the Company as well as the country at large. We also wish to thank Mr. Ranil De Silva, Mr. John Hyun, Mr. Gelmart Gellecano and Mr. Peter O’Donnell who preceded the present Board members, for their yeomen service to the Board, over the years.

I welcome to the Board Mr. K.D.D. Perera, Mr. D.H. Fernando, Mr. M.H. Jamaldeen, Mr. D.K. de S. Wijeyeratne and Mr. S.C. Ganegoda. Last but not least, I thank our customers and shareholders for their continued trust in Singer (Sri Lanka) PLC.

It is my expectation that together, we will take Singer to the next level.

Sincerely,

Mohan PandithageChairman

14th May 2018

Key Strategies2017/18 has proven to be a challenging year, where we have been able to post profits in spite of overall tougher economic conditions along with increased taxes.

Singer Sri Lanka enjoys market leadership in many categories. Over the last 140 years, Singer has remained the market leader in sewing machines and today it has successfully branched out to be the market leader in consumer durables – namely in refrigerators, televisions, fans, and small appliances etc. Today Singer is the market leader in mobile phones in Sri Lanka, a product that is closely associated with the youth of this country. These are all significant achievements, yet we will not rest on its laurels.

Furniture will be a key focus for us going forward, and we have many initiatives in place to enhance our competitiveness. We will partner with other suppliers, to introduce world class brands along with a wider range to suit the needs of our customers. We will step up our efforts in e-commerce, where we have introduced web access to all stores. Singer has to contend with an intense competition from both large and established retailers as well as a growing wholesale trade with many new players joining the industry

2017 was an eventful year, with Singer Sri Lanka joining the World of Hayleys and once again, being named the number one brand in Sri Lanka for the 12th consecutive year.

Singer (Sri Lanka) PLC Annual Report 201720

GROUP CHIEF EXECUTIVE OFFICER’S REVIEW

Dear Shareholder,

The Environment and Business ConditionsThe business conditions in the fifteen month period were challenging. The continuous drought in the dry zone resulted in a drop in harvest and since almost 30% of households are dependent on agriculture, impacted the purchasing power of a large market segment. In addition the country experienced floods in the wet zone. The full effect of increase in the value added tax (VAT) was felt during this period. All these affected the retail sector.

Exchange rate devaluation was minor and around 4.1% during the fifteen months. Interest rates decreased by around 60 basis points but still remain at a level higher than desired.

It should be noted that the Consumer durables industry in which Singer is present is more susceptible to market conditions than other industries. When customer’s disposable income decreases, the demand for consumer durables is well below that of the general market demand. At the same time when customer income increases the demand for consumer durables is way above that of general market demand. We have seen this oscillation over many years.

On the social side, consumers continue to upgrade their living standards and continue to move to better and latest products. (example: from semi-auto washing machines to fully auto washing machines). A significant shift was noted in phones where customers shifted from non-smart phones to smart phones. There is also a shift from living in homes in suburbs to apartments in cities.

On the technological front, especially in mobile phones and electronics, there were constant improvements and new technologies presented to customers (example: ultra-high definition 4K smart televisions; continuous improvement of camera in smart phones)


Singer (Sri Lanka) PLC Annual Report 2017 21

Change of Ownership In September 2017, the controlling stake of Singer (Sri Lanka) PLC were acquired by the Hayleys PLC Group thus making Hayleys PLC the ultimate parent company of the Singer Group. The change of ownership has been smooth and Singer Group continues to pursue its programmes and strategies to retain the market leadership in consumer durables. We believe that with additional ideas and plans generated by the new owners as well as synergies with Hayleys PLC Group a bright future augurs for the Singer Group and its stakeholders.

Among synergies are sales done by Singer to staff at all of Hayleys Group companies and at associate companies; financial opportunities for staff and suppliers through Singer Finance; sale of Hayleys Group company products through Singer as explained under Key Initiatives (8), etc.

There have been many new ideas and plans which are mentioned in this report under Key Initiatives and other areas. Among the major items are; initiatives of e-commerce; furniture; expansion of Singer Finance business; launch of new products and introduction of retail analytics.

Medium Term Prospects for the Industry and GroupThe medium-term prospects for the industry and group are very favourable due to the following:

z Experience in countries where per capita income has increased, dictate that demand for consumer durables would grow at a higher rate than per capita income growth. This is because the additional income acquired would be spent on enhancing the living standards than on basic items.

z The government has plans to make Sri Lanka a Retail Hub, so that consumers from our neighbouring countries will come to Sri Lanka to shop for clothing, perfume, jewellery, watches, smart phones, laptops and small televisions.

z Electrification of households now is over 95% and is growing. Consumers, who did not have the opportunity of using a refrigerator or a television previously now have an opportunity of using these items.

z The current low penetration of consumer durables at homes indicate that there is room for consumers to purchase these items. For example the current penetration of these are estimated to be refrigerators 60%, washers 25%, computers 30% and air conditioners 10%.

z In the consumer durable industry, especially in electronics and IT/mobile phone sector, there is rapid development by way of improved features and lower costs resulting in new models and new technology introduced each year. This result in shorter replacement cycles in the future.

z Traditionally, furniture was passed on from generation to generation with minimal new furniture purchases. Today, due to the interior designs unique to each home, consumers seek new furniture than using their parents’ furniture.

z The rising number of new apartments in the cities and new houses in the suburbs result in increasing demand for durables and furniture.

z Sri Lanka has witnessed rapid growth in tourist arrivals and this is expected to continue. This will result in an increase in hotel rooms and development of rooms for tourists in normal homes resulting in an increase in demand for durables and furniture.

Singer, as the leading consumer durable retailer would be at the forefront to cater to this growing market.

Strategic Direction of the BusinessOur medium term goal is for the Group to continue to be the leader in retailing household consumer durables; to be the largest provider of consumer credit; to manufacture consumer durables where feasible and pursue new opportunities in related sectors.

View of All Stakeholders The Group looks at all of the stakeholders and endeavour to deliver the best to each of the stakeholders. In case of customers, we are bringing new products and brands required by customers and ensure good quality and excellent after sales service. In case of employees, we give benefits equal or above that of the market and have training and development programmes for all staff. We also have many engagements

and activities for staff as well as their families. To our shareholders, we endeavour to give above average returns in our industry. To our community, we help the community with sponsorships especially on youth and sports and other environment and social responsibility projects. For the government, we are one of the leading tax payers in the country.

Key Initiatives for the Fifteen Months Ended 31st March 2018Our Key Initiatives during this period were as follows:

1. Continue growth in Smart PhonesThe company continued to grow its smart phone business through expansion of distribution; excellent quality of product; marketing and promotions. The company also increased mobile phone corners in shops from 150 to 250, many of them with dedicated promoters.

Singer sells HUAWEI and SONY branded mobile phones in both retail and wholesale and is the exclusive national distributor for these brands. The company also sells SAMSUNG and APPLE phones in selected retail outlets.

Since our re-entry, we have continued our success with smart phones (including tablets/media pads) as shown in the growth of unit sales below:

Growth of Unit Sales – Smart Phones

2016 2017/18

488,500 825,000100,000

80,000

60,000

40,000

20,000

02013 2014 2015 2016 2017/18*

*15-months ended 31st March 2018

2017

2018

In the first three months of 2018, smart phone unit sales increased by further 35%.

Singer (Sri Lanka) PLC Annual Report 2017/18 21 GROUP CHIEF EXECUTIVE OFFICER’S REVIEW


2. E-commerce During the period, Singer website was revamped to be on a par with international standards and advertising and promotions of the website were increased.

In the 1st quarter of 2018, we saw a threefold increase in e-commerce sales and the Singer website is now among the fastest growing large e-commerce sites in the country.

A mobile app was also developed to access the e-commerce site with over 29,000 downloads.

During the period access to the e-commerce site was provided to all of the shops. Singer has a vast array of products and it is not possible to showcase each one of them in all showrooms. However with the access to web given to each shop it is now possible, to show the customers all of the products available.

The Company also continues to partner other e-commerce sites and make our products available to consumers of such sites.

3. Combining Advantages of Brick and Mortar with E-CommerceSinger has 432 outlets across every nook and corner of the country. By having web access in every shop, every shop is able to showcase all of the models at Singer. At the same time, a major challenge for many e-commerce companies is the high costs to do the last mile delivery. Singer resolves this through the existing retail network and their delivery to the home system.

4. Improvement of Margins through New Products and through New SourcingThe Company is pursuing strategies to improve the margins through the introduction of new products and change to new sources.

This is in addition to other ways and means in improving the margins through improvement of minimising of discounts and minimising of defective and obsolete inventory.

5. Thrust on FurnitureThe thrust on furniture is from many directions. Key is the expansion of choice to customers by way of new models and new brands/ranges. Also included is expansion of shop space to display furniture, use of catalogues and web access to show all of furniture models. The Company introduced the Domus Vita range of sofa beds which is currently available in the United States.

Other products introduced included ironing tables, upmarket pantry cupboards, new design dressing tables.

Singer is now also partnering other furniture suppliers to offer niche products to customers. Some of the partners on board are built in range from Haffle, garden furniture from World of Outdoor Furniture and several partners for accessories.

6. Expansion of Singer Finance BusinessPreviously Singer strategy was limited growth on non-consumer durable financing business, such as leasing of vehicles. With the change of ownership it has been decided that the finance company would expand to its full potential.

During the period, new branches were set up in Kuliyapitiya while the window operation in Panadura was shifted to a branch. In accordance with the expansion, four new branches are planned in the ensuing year.

Singer Finance ventured into providing Gold Loans for customers. Currently, it is available in five locations and is expected to be available in most branches in the ensuing financial year.

Singer Finance previously arranged vehicle insurance through a broker. Singer Finance is now directly engages insurance companies and apart from additional income is in a better position to help the customers to expedite their insurance claims. Singer Finance also commenced providing vehicle insurance to customers other than those obtaining leases.

7. Expansion of Capacity at the Refrigerator Factory of Regnis (Lanka) PLCAs part of the programme to increase production capacity, Regnis changed its process from powder painting to use of painted sheets and installed higher capacity machines. The Company continued to do this with addition to machinery and equipment of Rs. 168 million which is currently been installed and tested. The new machines also result in improvements to quality, lesser scrap and re-work.

We expect the higher production capacity to yield results when demand picks up in the market place.

8. Launch of New Products/BrandsDuring the period, the Company introduced many new products and brands.

On the digital media and IT segment, the Company expanded retailing of Apple phones. The Company also relaunched the Asus range of computers and introduced feature phones from Samsung and Zigo.

In the electronic segment, in June under Singer brand we launched a 4K smart television thus taking Singer televisions to a new level. In addition, the Singer Vista smart television range was upgraded to Android 5.0 version. Sony which we have the distributorship introduced OLED televisions.

In refrigerator range, a new range of refrigerators which would save energy depending on the environment load within the refrigerator, number of times opening of refrigerator door was introduced taking Singer brand of refrigerators again into a new level. This also has an inbuilt power guard. In case of direct cool refrigerator, dual senses were included. All these were manufactured in our manufacturing complex at Regnis. Channel specific refrigerators were introduced under Sisil brand.

In washing machines, new channel specific washing machines were introduced.



New products on furniture are mentioned in (4) above.

The Company also sold products of Group companies, such as four-wheel Kubota tractors, solar power systems, Fentons Security Systems and Phillips LED bulbs.

On home appliances, new products introduced included air curtaining, floor polishers, three-in-one waffle/sandwich makers, personal care products from Phillips and Singer brands, upmarket jug kettles.

With a view of not turning away a single customer, the Company also introduced a range of household requirements by customers such as multi-plugs, adopters, power banks, flasks, home bathroom/kitchen scales under the Salter brand.

9. Expansion and Modernisation of Retail shopsThe Company opened 13 new showrooms. Singer Plus channel opened four new showrooms in Mattakkuliya, Embilipitiya New Town, Murunkan, and Mallavi. Sisil World channel opened four new showrooms in Pilimathalawa, Kirindiwela, Godakawela and Monaragala. Mega channel opened one new showroom in Kottawa and Singer Homes opened two new showrooms in Matale and Kottawa and two satellite shops were opened in Haputale and Polwaththa. With 432 showrooms around the country we are present in almost every town and bazar.

Hence, our focus is more on modernisation – renovation and expansion of retail space of existing showrooms. The company renovated 297 existing shops and upgraded 16 satellite showrooms to Singer Plus showrooms. With the upgrades, new shops and renovations a total of 56 new shops were provided with a complete uplift to reach the high merchandising standards practiced by the Company.

In addition, a re-arrangement with minor renovations were done in 125 shops.

10. Expansion into Wholesale MarketsThe new channels continue to establish and do well. These are; (a) Sale of furniture to wholesale dealers

including specialised furniture dealers.

(b) Sale of computers to wholesale dealers including specialised computer dealers.

(c) Second wholesale channel offering specialised brands.

(d) Sale of products to other duty free shops.

Products, Brands and ChannelsWe continued to position ourselves to be the preferred consumer durable retailer/wholesaler to meet the requirements of the customers.

The largest segment – Home Appliances revenue was Rs. 19.8 billion for the fifteen month period. Within this segment, major increases in revenue were in washing machines, air conditioners, bottle coolers, vacuum cleaners, gas ovens, built in appliances and dish washers.

The second largest segment, Digital Media and IT products had revenue of Rs. 18.5 billion for this period. Within this segment (as mentioned under Key Initiatives), smart phones had a major increase. Computers too had a good increase.

The third largest segment, Electronics had revenue of Rs. 8.0 billion in this period. Television sales grew marginally.

The Financial Services consisting of finance income from Singer (Sri Lanka) PLC and Singer Finance recorded Rs. 8.0 billion in this period. The sewing segment revenue was Rs. 3.6 billion; furniture segment revenue was Rs. 3.4 billion, “other” segment revenue was Rs. 3.5 billion. The Singer Lifestyle Exhibition, which showcased the vast array of our products and brands to the public, was held once again at the BMICH in Colombo. We also conducted a lower scale exhibitions in five other towns, namely Kandy, Galle, Bandarawela, Chilaw, Matara and Jaffna.

By using our strength and breath in sourcing of products, Singer continued to supply high quality products at reasonable prices. We continued to bring the latest models and latest technology within each product line.

Singer continued to expand and modernise the retail shops and wholesale networks as mentioned in Key Initiatives. The Company continued opening “Mini Shops” in rural towns operated under a branch. Some of these were seasonal, while others continued throughout the year.

Singer continued to actively engage followers on social media. Singer Facebook now counts over 483,000 fans. Singer Instagram also commenced during this period. Singer continues to expand the number of “show me how” videos on YouTube to demonstrate the customer products. New videos on installation of products and of minor repairs have also been done to educate customers and staff.

Singer loyalty programme increased its membership to 1,150,000. Members enjoyed special terms at our outlets as well as benefits from other organisations. Members were able to purchase items by redeeming their loyalty points.

Financial Services and Consumer CreditThe Group continued to offer a wide range of easy payment plans to customers on its own; through other banks and finance companies and through credit and debit cards. The Group had several promotions to increase consumer credit. The number of hire purchase accounts increased during this period to 443,000 consumer durable hire purchase accounts – in terms of customers serviced, this is second only to top banks.

Under Financial Services, customers can enjoy the following services at all Singer shops.

z Settlement of utility bills, credit card bills and insurance premiums

z Obtain mobile phone reloads z Collect funds remitted through Western Union and

z Upload funds and withdraw funds using mobile cash

During this period the company tied up with m-cash for upload and withdrawals of funds and with Pan Asia bank for settlement of credit card bills.

The company also provides “Suraksha” – protection for hire purchase accounts and “Senasuma” – extended warranty for products sold by Singer. During the year the company introduced “Senasuma Plus” which in addition to the extended warranty on products, also gave cover for natural disasters through a tie up with an insurance company. We had an excellent response in the first year. In addition to extended warranty sold at shop level, we introduced a post sales extended warranty sold using our call centre.



Singer Business School and Fashion Academies Singer commenced its sewing schools seventy years ago. These are now upgraded to Fashion Academies. During the period under review, we have modernised fashion academy courses and some of the courses have been validated by the Chartered Society of Designers in UK. The computer education currently in eight locations has tied up with City & Guilds. The Company also has 3 Vocational Academies in our Regional Service Centres.

Human ResourcesOur team is the most important asset of the CompanyThe Group continued to have very good industrial relations and continued its engagement activities and events for employees as well as their families. The Group continued the development and training for its staff as well as for our partners and their staff. Details of these are given in the Management Discussion and Analysis.

Singer (Sri Lanka) continued to be placed among the Top 25 Great Places to Work in Sri Lanka.

After Sales Service and LogisticsSinger continued to have the best After Sales Offering to the consumers in Sri Lanka. A new Regional Service Centre was added in Vavuniya and Regional Logistics Hub serving four provinces was commissioned in Dambulla in July 2017.

Information and Communication TechnologyWe continue to make enhancements to the on-line real-time ERP system.

Key enhancements included recording collections outside of shops, in the field using mobile phone interphase with the ERP and serial number tracking of mobile phones at all retail outlets using scanners.

The company continued to send out reminders to customers via SMS on their instalments due for payment. This state of the art technology used by us is not even used by many banks and financial institutions.

The Company also continued to send marketing and promotional SMS to our customer data base. Singer has one of the largest communications by SMS to its customers. SMS is also used to notify most customers on completed repairs and status of repairs. The Group Call Centre had close to 841,000 inbound/outbound calls compared to 569,000 in prior year. These related to welcome calls for new hire purchase customers, after sales service, marketing and promotions and follow up on arrears.

The Company has tied up with an international firm specialising in retail analytics to help convert the vast data available to precise information. This is currently being developed and we will see the benefit of this in the ensuing year.

Manufacturing Division of Singer (Sri Lanka) PLCThe manufacturing division of the company consists of Agro and Furniture factories.

The factory introduced 38 new models for furniture during this period including leather sofas for upmarket and knocked down products for dealers. Four new water pump models too were introduced. We continued to upgrade the machinery.

Regnis (Lanka) PLC GroupRegnis (Lanka) PLC Group consists of Regnis (Lanka) PLC which manufactures refrigerators and Regnis Appliances (Pvt) Limited which manufacture washing machines and plastic components for refrigerators.

Regnis (Lanka) PLC Groups’ revenue for the fifteen months period was Rs. 6.3 billion which is inter company. The profit before tax was Rs. 248.6 million.

While Regnis had capacity to manufacture more refrigerators the market demand was low. Regnis held prices despite devaluation of the Rupee and increase in raw material costs and absorbed part of the increase in VAT due to sluggish demand and inability to increase prices.

Singer Industries (Ceylon) PLCSinger Industries (Ceylon) PLC which manufactures sewing cabinets and stands and assembles sewing machine heads

had revenue of Rs. 864 million and made a Profit before tax of Rs. 70.8 million, including Rs. 50 million gain on change in fair value of investment property.

Singer Finance (Lanka) PLCSinger Finance (Lanka) PLC, revenue during the fifteen month period was Rs. 3.6 billion and Net Profit was 522 million Key initiatives of Singer Finance were described earlier.

Sustainability and Corporate Social ResponsibilitySinger believes that it is our duty to safeguard the environment and to carry out Social Responsibility Projects. The work done on these areas is very extensive and are described in pages 67 to 112. We encourage as many employees as possible, to participate and devote time for CSR activities.

Singer is very proud to continue to be one of the top ten Best Corporate Citizens in the country.

The Financial Results for the YearSince the details are given in the Financial Review, we will highlight only the significant areas in this section.

The Group Revenue reached Rs. 65.1 billion in the fifteen month period. The Group Profit before Tax for fifteen months was Rs. 2,049 million excluding onetime gain compared to Rs. 2,562 million for twelve months of 2016. The Group Net Profit for the fifteen months period was Rs. 1,220 million while in twelve months of 2016 excluding the one-time gain it was Rs. 1,794 million.

The reasons for the decline in the profits are due to the following:

z Due to market conditions, the slow growth of revenue excluding mobile phones.

z Due to slack market conditions, many participants in the market sold by discounting and chose not to pass on the full impact of the increase in VAT and costs to customers. As a result the company too could not increase prices and gross margins reduced.



z Net Finance Cost increased largely due to increase in average interest rates. Average interest rates increased mainly due to tapering off of medium terms loans taken at low interest levels of 7% - 9%.

The Group total comprehensive income for the period was Rs. 691.6 million and was impacted by the deferred tax on revaluation of property based on the new Inland Revenue Act. The deferred tax amounted to Rs. 516 million.

Outlook for Ensuing YearWe are optimistic that the business conditions would improve. Indications are that the drought is over and this would benefit almost 30% of households. There is stability in Government revenue and we are encouraged by the Government’s indications that they would reduce the VAT in future.

Further the construction of houses in the North, the development of the Port City and other high-rises in Colombo, the completion of highways, the benefits to the apparel and fishing sectors following GSP Plus are all favourable indications.

Together with expected improvement in business conditions and with the results of all our initiatives mentioned in various sections of this report earlier, leads us to take an optimistic view of the ensuing year.

Changes in the Board and the ManagementWe were deeply saddened by the demise of the Company’s Chairman, Dr. Saman Kelegama in June 2017. Late Dr. Kelegama became Chairman in April 2015 and was associated with the Singer Group since June 2006. We are very thankful to Late Dr. Kelegama for the excellent insight provided to us on the economy and the guidance on strategies.

We thank Mr. Gavin Walker for his services as Chairman during an interim period.

Following the change of ownership, Mr. Mohan Pandithage was appointed as Chairman and Mr. Dhammika Perera was appointed as Co-chairman in October 2017. They are Chairman and Co-Chairman of the parent company, Hayleys PLC and have extensive experience across many sectors. We welcome Mr. Mohan Pandithage and Mr. Dhammika Perera and wish them the very best.

Mr. Stephen Goodman ceased to be a member of the Board at the expiry of his term. Consequently, Mr. Sujeewa Perera who was Alternate also ceased to be an Alternate Director. The Board recommends the re-appointment of Mr. Stephen Goodman.

Mr. Gelmart Gellecanao, who joined the Board in May 2016 did not offer himself for re-election at the last Annual General Meeting. With the change of ownership Mr. John Hyun, who joined the Board in June 2011 and Mr. Jamie O’Donnell, who joined the Board in October 2003 resigned. We wish to thank Messrs. Jamie O’Donnell, John Hyun and Gelmart Gellecanao for their valuable contribution to the Board.

Mr. Ranil De Silva, who joined the Board in April 2015, resigned with effect from 31st March 2018. We wish to thank Mr. Ranil De Silva for his valuable contribution as an Independent Director of the Board.

In October 2017, Mr. Sarath Ganegoda, Mr. Hisham Jamaldeen and Mr. Dumith Fernando and in April 2018, Mr. Dilip De S. Wijeyeratne joined the Board of Directors. All of them have extensive experience. We welcome all of them and wish them all the best.

Within the key management of the company, Mr. Ajith Paranavithane retired as Director – Information Technology in July 2017. Mr. Paranavithane served the company for a total of 29 years. Mr. Ajith Paranavithane was also an Alternate Director of the Board. Mr. Neminda Karunaratne, Director – Human Resources resigned in September 2017 to migrate overseas. Mr. Neminda Karunaratne served the group for 26 years. We thank both Mr. Ajith Paranavithane and Mr. Neminda Karunaratne for their excellent contribution to Singer over a long period.

We welcome Mr. Kapila Perera who succeeded as Director – Information Technology. He has been with Singer for 24 years and we wish him continued success with the Singer Group.

Conclusion I wish to place on record my appreciation of all our staff for their contribution and commitment in achieving these results in a tough business environment. There was exceptional contribution across all ranks and all divisions and departments in the group.

I also thank our Group Chairman, Mr. Mohan Pandithage and Co-Chairman, Mr. Dhammika Perera for the extensive involvement in developing strategies for Singer and for their guidance, support and encouragement.

I also appreciate our late Chairman, Dr. Saman Kelegama and thank interim Chairman, Mr. Gavin Walker for their guidance, support and encouragement.

I also thank the Board of Directors of the company and of its subsidiaries and of the parent company for their valuable support and guidance. I also thank all our Shareholders for their continued trust in the Board of Directors and the Management of the company and the Group.

Sincerely,

Asoka PierisGroup Chief Executive Officer

14th May 2018


Singer (Sri Lanka) PLC Annual Report 2017/1826BOARD OF DIRECTORS

Mr. Mohan PandithageExecutive ChairmanJoined the Board of Singer (Sri Lanka) PLC on 2nd October 2017.

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

Mr. Dhammika PereraNon-Executive Co-ChairmanJoined the Board of Singer (Sri Lanka) PLC on 2nd October 2017.

Mr. Dhammika Perera is the quintessential strategist and business specialist with interests in a variety of key industries including Manufacturing, Banking and Finance, Hospitality and Hydropower generation. He has nearly thirty years of experience in building formidable business through unmatched strategic foresight.

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

Mr. Asoka Pieris Managing Director/Group CEOAppointed to the Board on 1st August 2004. Appointed as Managing Director and Group Chief Executive Officer of Singer Group of Companies on 1st July 2010.

Mr. Pieris is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants, UK and a Certified Global Management Accountant.

Prior to the present appointment, Mr. Asoka Pieris served in Hong Kong as Chief Financial Officer of Singer Asia Ltd., and Controller of Retail Holdings N.V.

Mr. Pieris Serves as a Director of Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC, Reality (Lanka) Ltd., Regnis Appliances (Pvt) Ltd. Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Ltd., Domus Lanka (Pvt) Limited and Equity Investments Lanka Ltd.


Mr. Dumith FernandoAppointed to the Board on 2nd October 2017.

Mr. Fernando holds a BA (Honours) in Physics and Economics from Middlebury College, USA and an MBA from Harvard Business School.

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

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

Mr. Mohamed Hisham Jamaldeen Appointed to the Board on 2nd October 2017.

Mr. Jamaldeen is a Fellow of the Association of Certified Chartered Accountants, UK and holds a Degree in Engineering and Business from the University of Warwick, UK.

He is a finance professional with over 15 years of wide-ranging experience as a commercial property investor and advisor, and Founder/Managing Director of Steradian Capital Investments (Pvt) Ltd. responsible for Financing, Corporate Structurers, Acquisitions and Development.

Mr. Jamaldeen serves as a Director of Regnis (Lanka) PLC, Singer Industries (Ceylon)PLC, Hayleys PLC, Talawakelle Tea Estates PLC, Haycarb PLC and People’s Bank. He is also Executive Director of numerous real estate companies focusing on commercial property investment and development.

BOARD OF DIRECTORS

Mr. Deepal SooriyaarachchiJoined the Board of Singer (Sri Lanka) PLC on 1st October 2015.

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

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

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

He is a Past President of the Sri Lanka Institute of Marketing, and a Past Commissioner of Sri Lanka Inventors Commission. He had served on a number of national bodies such as National Administrative Reforms Commission, Presidential Task Force for English, Councils of Moratuwa and Kelaniya Universities. He had also served UNDP in Nepal.

Singer (Sri Lanka) PLC Annual Report 2017/1828BOARD OF DIRECTORS

Mr. Gavin J. WalkerAppointed to the Board on 1st November 2005.

Prior to joining the Company, Mr. Walker held offices as Managing Director and Chief Executive Officer of public quoted and private companies in the United Kingdom and South Africa. Mr. Walker, served as Chief Executive Officer of a multi-brand retailer of electrical appliances and furniture with operations in 16 African countries and Australia (including SINGER® brand electrical appliances under license).

Mr. Walker Serves as a President/Chief Executive Officer of Singer Asia Ltd. and was appointed to this position in August 2005.

Mr. Walker serves on the Board of a number of Singer Asia Subsidiaries.

Mr. Sarath Clement GanegodaAppointed to the Board on 2nd October 2017.

Mr. Ganegoda is a Fellow Member of The Institute of Chartered Accountants of Sri Lanka and Member of Institute of Certified Management Accountants of Australia. He holds an MBA from the Postgraduate Institute of Management, University of Sri Jayewardenepura.

He has wide-ranging experience in several senior management positions in large private sector entities in Sri Lanka and internationally. He also served the Hayleys Group between 1982 and 2002 and re-joined in 2007.

Mr. Ganegoda serves as a Director of Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC, Regnis Appliances (Pvt)Ltd., other subsidiaries of Singer (Sri Lanka) PLC, Hayleys PLC since 2009 and has responsibility for the Strategic Business Development Unit of Hayleys PLC and the Fentons Group.

Mr. Dilip Kumar de Silva WijeyeratneAppointed to the Board on 1st April 2018.

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

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

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

Singer (Sri Lanka) PLC Annual Report 2017/18 29 BOARD OF DIRECTORS

Mr. Mahesh WijewardeneAlternate DirectorJoined the Board of Singer (Sri Lanka) PLC on 1st June 2006.

Holds a Masters in Business Administration from the University of Southern Queensland, Diploma in General Management.

Director Sales and Commercial of Singer (Sri Lanka) PLC. Director of Singer Digital Media (Pvt) Ltd. and Singer Business School (Pvt) Ltd.

Past Chairman of the Ceylon Chamber of Commerce – Import Section and Sri Lanka – China Business Council.

Serves in the Board of CSR Lanka (Guarantee) Ltd.

Mr. Kumar SamarasingheAlternate DirectorJoined the Board of Singer (Sri Lanka) PLC on 14th February 2011.

Holds a Diploma in Business Administration, a Diploma in Marketing and an MBA from University of London.

Director Marketing of Singer (Sri Lanka) PLC.

Mr. Lalith YatiwellaAlternate DirectorJoined the Board of Singer (Sri Lanka) PLC on 8th August 2014.

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

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

Singer (Sri Lanka) PLC Annual Report 2017/1830MANAGEMENT TEAM

Mr. R.S. WijeweeraChief Executive Officer/Director – Singer Finance (Lanka) PLC

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

Mr. A.P. ManoratneDeputy Director – Service and Logistics

Mr. O.D. Amaratunga Senior Manager – Service

Mr. S. RamanathanDirector – Logistics

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

Mr. B.T.L. MendisDeputy Director – Commercial

Mr. W.L.I.A. Gunathilake Business Development Manager – Singer Mega and Singer Homes

Mr. J. Mendis Credit Director

Mr. I.A.S. KolambageCommercial Manager – Piliyandala Factory

Mr. D.B. WijesunderaDeputy Director – Marketing

Mr. K.R.L. PereraGroup Administration Manager

Singer (Sri Lanka) PLC Annual Report 2017/18 31 MANAGEMENT TEAM

Mr. H.A.P.S. PereraFactory Director – Piliyandala Factory

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

Mr. K.D.J.M. PereraDeputy Director – Operations

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

Mr. C.A. Samarasinghe Director – Operations

Mr. M. Mahesharatnam Business Development Manager – SISIL Channel

Mr. A.C.M. IrzanHead of Treasury and Investor Relations

Mr. S.H. Perera Senior ManagerBudget and Planning

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

Mr. H.V. GomesHead of Financial Services

Mr. G.A.K. Weerasuriya Senior Manager – Inventory

Mr. T.J. MartynSenior Manager – Apparel Solutions


Mr. N.L.D.W. Amarathunge Operations Manager – Furniture – Piliyandala Factory

Mr. K.I.S. Perera Business Development Manager – J Plus Channel

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

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

Dr. M. Balasuriya Head of Regulatory & Quality Assurance

Mr. A.A. SathyamoorthySenior Manager – Trade Credit

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

Mr. N.I. Kuruppuarchchi Senior Manager – Legal

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

Mr. P. Jayatilaka Marketing Manager

Mr. K.D.S. Kanishka Senior Manager – Promotions

Mr. S. Serasinghe Senior Manager – Distribution

MANAGEMENT TEAM


Mr. T.L. SeneviratneSenior Manager – Information Technology

Mr. T.U.S. Peiris Sales Manager – Singer Plus

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

Mr. D.D.W. Dassanayake Senior Manager – Credit

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

Mrs. P.T.K. LiyanageFinance Manager

Mr. U. Ganehiarachchi Business Development Manager – Wholesale

Mr. K.P. PeramunugamageHead of Singer Business School

Mr. M.S.M. HanasBusiness Development Manager – Digital Media Channel

Mr. R.B. Gaspe Business Development Manager – New Project

MANAGEMENT TEAM

Singer (Sri Lanka) PLC Annual Report 2017/1834MANAGEMENT TEAM

Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business

Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution

Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement

Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business























Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder

36 37Operating Environment

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Businessmodel


Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business


























Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder Engagement Materiality Operating Environment Business Model/Strategy and Execution Stakeholder

42 4746Stakeholder Engagement Economic PerformanceMateriality

Businessmodel

Singer (Sri Lanka) PLC Annual Report 2017/1836BUSINESS MODEL

Operating EnvironmentGlobal Economy OverviewPicking up from 2016, the global economy continued to gain momentum, recording 3.8% growth in 2017. Two thirds of the world’s economies, both emerging and developing economies and advanced economies, experienced higher year over year (YoY) growth in 2017.

Advanced economies experienced growth almost entirely through increased investment expenditure, which had remained weak since the global financial crisis in 2008-09. Emerging market and developing economies experienced increased private consumption, thus leading to growth in those economies. Although investment growth in China and India slowed down, exports and strong private consumption supported each country’s growth respectively.

Global trade had an estimated real growth rate of 4.9% in 2017, higher than in the preceding two years. Emerging market and developing economies in particular experienced 6.4% growth in 2017 compared to 2.2% in 2016, reflecting improved investment growth rates and a recovery in advanced economy investment and domestic demand. Large exporters in the advanced economies – Germany, Japan, the United Kingdom,

and the United States – contributed to the recovery in exports, as well as imports (excluding the United Kingdom). Among the emerging market and developing economies, export growth was particularly strong in China and emerging Asia. Imports also saw growth, particularly among commodity exporting economies such as Angola, Brazil, Ecuador, Nigeria, and Russia, that had previously experienced significantly reduced investments and imports during 2015-16.

Despite increasingly difficult financial market conditions and potential disruptions arising from the threat of trade wars between major global economies, the momentum in global growth that has continued into 2017 is expected to pick up further in 2018. Both advanced and emerging economies are expected to benefit from enhanced investment, production, and trade. Domestic and external demand in the US, Europe, and advanced Asian economies will drive global growth, having positive spillover impacts on emerging market economies, particularly via trade.

Local Economy OverviewThe Sri Lankan economy growth fell to 3.1% in 2017 from 4.5% in 2016, well below the average growth rates of emerging economies and the global growth estimate.

Hayleys PLC acquired 80.96% of shares in Singer Sri Lanka, the single largest acquisition for a listed company in Sri Lanka in recent history. The combined companies share over 280 years of experience.

As in recent years, severe drought conditions prevailed in major cultivation areas, handicapping growth in the agricultural sector. A tight monetary policy and rationalisation of Government expenditure further hobbled economic growth. Industry and service contributed to the country’s growth however, as a result of the reinstatement of GSP+ benefiting manufacturing and industry activities.

Investment expenditure slowed down in 2017, while consumption expenditure accelerated by 9.0%, compared to 3.1% in 2016. Private consumption expenditure (PCE) accounted for 88.0% of total consumption expenditure, reflected by the increase in consumer goods import volumes.

The significant growth in import activity had a detrimental impact on the country’s net external demand, despite increased export growth to trading partners like the US and Europe. Furthermore, domestic savings slowed down and workers’ remittances were also affected by geopolitical tensions uncertainties in the Middle East.

Gradual improvement over the medium term is expected, with conducive macroeconomic policies supporting private sector growth. World Bank projections place growth at 4.5% for

Singer (Sri Lanka) PLC Annual Report 2017/18 37 BUSINESS MODEL

the year, driven by private consumption and investment. Although inflationary pressures will ease as the country recovers from natural disasters, rising oil prices may have an impact. GSP+ preferential access to the European Union and tourism will boost the external sector as remittances continue to deteriorate. The country remains subject to political uncertainty, inadequate foreign exchange inflows, the strain of further natural disasters, and the cost of debt could increase if global financial conditions decline.

Consumer Durables Industry in Sri LankaThe Sri Lankan Consumer Durables Industry is inherently more susceptible to market conditions than other industries. Customer purchasing power in 2017 was impacted by the increased value added tax (VAT), higher interest rates, and floods in the country’s wet zones.

Furthermore, with 30% of households being dependent on agriculture, the continuous drought in the dry zones led to a drop in harvest, thus eroding the purchasing power of a major market segment. As a whole, the industry had not been prepared to pass on the increase in VAT and other costs to customers, resulting in reduced product mix gross margins for the year.

The industry is expected to recover as consumers adjust to higher costs. Recovering earnings in the agricultural sector and stable rates will further aid the recovery in sales volumes during the year. Sri Lanka is experiencing increasing smartphone penetration. Combined with short replacement cycles in contrast to most consumer durables, Singer is well-placed in the market as the largest smartphone retailer in the country and its exclusive distributorship of the Huawei brand, one of Sri Lanka’s largest smartphone brands.

Business Model/Strategy and ExecutionHistoryWith a history going back to the introduction of sewing machines 1851 by the Singer Corporation, to the sale of home appliances in Sri Lanka started in 1877 and from that day, Singer has established itself as a leader in the local consumer durables space was incorporated as a public liability company

Singer (Sri Lanka) PLC in 1974, and the Company was listed in the Colombo Stock Exchange in January 1981.

The finance subsidiary of Singer (Sri Lanka) PLC, Singer Finance, went on to be incorporated in 2004. Subsidiary companies, Regnis (Lanka) PLC and Singer Industries (Ceylon) PLC, manufacture washing machines, refrigerators, and sewing machines. In 2015, Singer (Sri Lanka) PLC and Singer Asia embarked on a restructuring process to amalgamate all local operations under Singer (Sri Lanka) PLC. The amalgamation enabled Singer Asia to operate through one holding company in each country it had an interest in.

In September 2017, Hayleys PLC and its subsidiaries acquired 61.73% of shares in Singer (Sri Lanka) PLC in what was the single largest acquisition for a listed company in Sri Lanka in recent history. Consequently a mandatory offer was made by Hayleys PLC on 31st October 2017. Hayleys PLC holds 80.96% of the total shares in issue subsequent to the mandatory offer. With similar cultures and opportunities for business synergies, the acquisition has been a smooth transition for the companies. The combined companies share over 280 years of experience in the Sri Lankan market.

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

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

The Singer Group is spread across every geographical region in Sri Lanka. During the year, we augmented our reach by opening 13 showrooms in Mattakkuliya, Embilipitiya New Town, Mallavi, Murunkan, Kottawa (Singer Mega and Singer Homes), Pilimathalawa, Kirindiwela, Godakawela, Monaragala, Matale, Haputale, and Polwatta.

Singer Group

z Singer (Sri Lanka) PLC

z Singer Finance (Lanka) PLC Subsidiary company

z Singer Industries (Ceylon) PLC Subsidiary company

z Regnis (Lanka) PLC Subsidiary company

z Reality Lanka Limited Subsidiary company

z Regnis Appliances (Pvt) Limited Subsidiary company

z Singer Digital Media (Pvt) Limited Fully-owned subsidiary

z Singer Business School (Pvt) Limited Fully-owned subsidiary

z Domus Lanka (Pvt) Limited Fully owned subsidiary

z Singer Manufacturing Factory, Piliyandala Separate division

FINANCIAL CAPITAL z Shareholders’ funds z Borrowed funds z Customer deposits

INSTITUTIONAL CAPITAL z Strong Peoples Brand of the country z 432 retail network z Product portfolio z Distribution rights for renowned brands z Property, plant and equipment z Maintains real time ERP system and z Data base z Suppliers and business partners z Awards and accolades z Credit ratings

EMPLOYEE CAPITAL z 2,617 employees z Core competencies z Company unique culture z Great place to work

CUSTOMER CAPITAL z Customer base of millions of Sri Lankans and hire purchase customers

z Over one million loyalty card members z Singer call centre and Facebook fans z Reputed after sales service

SOCIAL AND ENVIRONMENTAL CAPITAL

z Land z Water z Energy z Air

INPUTS (Resources put into the processes)

OPERATING ENVIRONMENT

REGULATORY ENVIRONMENT

GOVERNANCE FRAMEWORK

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Singer Sri Lanka

Code of Ethics

Corporate Governance

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Mission Values

Anti-competitve regulations (Fair Trading Commission Act)

Processes(Activities

undertaken for value creation)

ManufacturingAssembling

TradingFinancial services

Educational services

BUSINESS MODEL Singer (Sri Lanka) PLC Annual Report 2017/1838

z Stability z Dividends and interest z Capital gains through share price appreciation

z A loyal shareholder base z Growth in market share

FOR INVESTORS z Growth z Profits

z A satisfied workforce z Career development z Realised “dreams” z Work life balance

FOR EMPLOYEES z Remuneration and benefits z Training and development z A Great Place to Work

z A market place z Growth opportunities z An integrated supply chain

FOR SUPPLIERS AND BUSINESS PARTNERS

z Access to Singer’s branch network z A market place for their products z Standards and assurance certifications

z Tax revenue z Economic growth z Employment creation z Innovation

FOR GOVERNMENT z Taxes, duties and levies z Economic opportunities

z A loyal and satisfied customer base z Choice of products and services z Affordability z Enhanced living standards z Peace of mind

FOR CUSTOMERS z Quality products and services z Flexible financing options for purchases z Payment of utility bills through branch network

z Community development z Environmental consciousness z Financial inclusion z “Social license” to operate

FOR SOCIETY AND ENVIRONMENT

z Community investments z Shared value

OUTPUTS (Results generated through the processes)

OUTCOMES (Impact of the outputs on the stakeholders)

Central Bank of Sri Lanka

Central Environm

ental Authority

Internal Controls

Board Charters

Singer Digital M

ediaSinger Finance

Values

Processes

BUSINESS MODELSinger (Sri Lanka) PLC Annual Report 2017/18 39


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

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

Singer ventured into the field of financial services, initially offering hire purchase financing to its customers and later establishing a finance company. Singer Finance (Lanka) PLC offers customers the convenience of settling utility bills from any Singer store island wide. Most recently, Singer introduced the Singer Credit Card from Subsidiary Singer Finance (Lanka) PLC. The Company has seen a lot of success as a result of this unique business model encompassing a vast offering of brands, products, and services, affording unparalleled choice to the customer.

Strategy and ExecutionSinger’s unique business model is not all that defines its success – strategy and its execution are instrumental. The Company has a large and knowledgeable workforce, skilled, and experts in the fields of retail, manufacturing, and finance. This workforce is adept at escalating ideas and first-hand operational information to top management, essential for formulating strategies and making decisions to meet customer needs effectively. The business model enables the flow of information through to key decision-makers in a timely manner, thus facilitating information to be analysed and utilised in time to achieve successful results.

Our Multi-Brand StrategySinger Sri Lanka has consciously embraced a multi-brand strategy that leverages the brand equity of Singer. This opens up multiple segments of Sri Lankan consumers to Singer, enabling us to target different demographics through a variety of high quality, market leading, innovative products at affordable prices and achieving economies of scale through our wide network of distribution channels. This strategy has enabled us to strengthen our brand by enhancing customer associations and perceptions. These efforts have culminated in Singer’s eminent position in the Sri Lankan consumer durables retail market.

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

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

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

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

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

BUSINESS MODELBUSINESS MODELSinger (Sri Lanka) PLC Annual Report 2017/18 41


Stakeholder Method of engagement

Frequency

Customers Retail channels, call centre, field programmes, after sales service

Ongoing

Advertising and promotion

Ongoing

Employees Management and divisional meetings, initiatives by HR division, various meetings and collective agreements with unions

Ongoing/Daily

Shareholders Annual General Meetings

Annually

Quarterly reports and correspondence

Quarterly, Ongoing

Suppliers Visits, consultations, workshops

Ongoing

Community Various projects Ongoing

Government Authorities

Timely tax payments, complying with all regulations

Ongoing

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

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

StayingConnected

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

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

Stakeholder EngagementSinger actively seeks to ascertain valuable feedback through open dialogue with internal and external stakeholders. Details of how we engage with our stakeholders are provided throughout this Report. Continuing our GRI G4 journey, we are engaging with our stakeholders this year through our GRI G4 reporting and CSR programmes. This will help us to obtain more specific feedback on our approach, which will be shared in future reports.


In today’s fast-paced world, being instantly connected to those that matter to you is crucially important. It could mean the

difference between success and failure or safety and danger. At Singer Sri Lanka we truly understand our customers’ needs,

providing you with the best choices that the world has to offer.

Huawei Nova 2i Quad Camera, Rear Camera – 16M+2M, Front Camera – 13M + 2M, Full view Display 5.99’ LCD FHD +, Memory RAM – 4GB, RAM – 64GB

HUWAI Y9 2018Quad Camera,

Rear Camera – 13M + 2M, Front Camera – 16M+2M,

Full view Display, 5.93’ LCD FHD+

Memory, RAM – 3GB, RAM – 32GB

SAMSUNG NOTE 8 Rear Camera – 12MP, Front camera – 12MP,

Display – 6.3’ AMOLED, Internal of RAM 6GB, 64GB

SONY L1 DS_SM31Android 7.0 (Nougat) OS,

Quad-core 1.45 GHz Cortex-A53 CPU,

micro SD up to 256 GB, Internal RAM of 16 GB, 2 GB,

13 MP Primary camera with LED flash, 5 MP secondary camera

APPLE IPHONE X 64GB (SPACE GRAY) - AP-X-

64GB-BInternal Memory: 64 GB, 3 GB

RAM, Full view display, Dual: 12 MP primary camera,

7 MP secondary camera, iOS 11.1.1, Hexa-core

2.39 GHz CPU

for more details please visit www.singer.lk



Stakeholder Concern Response

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

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

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

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

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

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

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

Training and continuous career development

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

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

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

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

Dividend growth Singer maintains a stable dividend policy.

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

Government Compliance with rules and regulations including tax payments

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

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

Society Minimising threats to the environment

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

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


Materiality

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

Aspect Indicator Significance

To Organisation(Very High/High/Medium)

To Stakeholder(Very High/High/Medium)

1. Economic Performance G4-EC1G4-EC3G4-EC4

Very High Very High

2 Materials G4-EN1, G4–EN2 Very High High

3 Energy G4-EN3, G4–EN5G4-EN7, G4–EN6

High Medium

4 Water G4-EN8 Medium Medium

5 Biodiversity G4-EN11 Medium Medium

6 Emissions G4-EN19 Medium Medium

7 Effluents and Waste G4-EN23 High High

8 Products and Services G4-EN27 Very High High

9 Compliance G4-EN29 Very High Medium

10 Supplier Environmental Assessment G4-EN32 Medium Medium

11 Environmental Grievance Mechanisms G4-EN34 High High

12 Employment G4-LA1G4-LA2G4-LA3

Very High Very High

13 Labour/ Management Relations G4-LA4 Very High High

14 Occupational Health and Safety G4-LA5G4-LA6

Very High High

15 Training and Education G4-LA9G4-LA10G4-LA11

High High

16 Diversity and Equal Opportunity G4-LA12 High Medium

17 Equal Remuneration for Women and Men G4-LA13 High High

18 Labour Practices Grievance Mechanisms G4-LA16 Very High High

19 Non-Discrimination G4-HR3 Very High High

20 Freedom of Association and Collective Bargaining G4-HR4 High High

21 Child Labour G4-HR5 High High

22 Forced or Compulsory Labour G4-HR6 High High

23 Human Rights Grievance Mechanisms G4-HR12 High High

24 Local Communities G4-SO1 High High

25 Anti-competitive Behaviour G4-SO7 High Medium

26 Customer Health and Safety G4-PR1G4-PR2

Very High Very High

27 Product and Service Labelling G4-PR4G4-PR5

Very High Very High

28 Marketing Communications G4-PR6G4-PR7

Very High High

29 Customer Privacy G4-PR8 Very High Very High

30 Compliance G4-PR9 Very High High

BUSINESS MODEL


Very High

Very High

High

Medium High

Medium

Significance to Stakeholder

Significance to Singer

Materiality Matrix

The matrix is a visual summary of the ratings with the numbers depicting the different aspects listed above. 9, 16

2, 8, 13, 14, 18, 19, 28, 30

1, 12, 26, 27, 29

3, 16, 25

7, 11, 14, 15, 17, 20, 21, 22,

23, 24

4, 5, 6, 10

Economic Performance Statement of Value Added – Group

Category Fifteen Months ended 31st March

2018Rs. ’000

% Twelve Months ended 31st December

2016Rs. ’000

%

Group Turnover – Gross 70,302,397 51,060,655Other Income 360,258 229,798Gain on Bargain Purchase – 563,945Less – Cost of Material and Services 48,663,520 35,240,802

Value Added 21,999,135 100 16,613,596 100

Distribution of Value Added to Employees and Dealers

Salaries, Commissions and Other Benefits 7,100,184 32 4,952,100 30

To Government

Income Taxes, Turnover Taxes, Value Added Tax and Other Taxes 10,665,486 48 7,560,606 45

To Banks, Deposit Holders and Other Lenders

Interest and Bank Charges on Borrowings and Customer Deposits 2,531,374 12 1,472,573 9

To Suppliers of Capital

Dividends to Shareholders* 826,383 4 1,101,845 7

Retained for Reinvestment and Future Growth

Depreciation, Amortisation and Impairment 670,035 3 463,042 3Retained Profits 205,673 1 1,063,430 6

Value Distributed 21,999,135 100 16,613,596 100

* Includes proposed dividends

Value Added Salaries, Commissions and Other Benefits Income Taxes, Turnover Taxes, Value Added

Tax and Other Taxes Interest and Bank Charges on Borrowings and

Customer Deposits Dividends to Shareholders* Depreciation, Amortisation and Impairment Retained Profits

2017/182016

Source and Distribution (%)

100 80 60 40 20 0 20 40 60 80 100

Sources of Income Distribution of Income

BUSINESS MODEL


Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital

Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial

Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee

Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital

Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social

and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional

Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and

Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee

















Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer

Management discussion and analysis

50 67Financial Capital Institutional Capital


Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital

Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial

Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee






















Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer Capital Employee Capital Social and Environmental Capital Financial Capital Institutional Capital Customer

Management discussion and analysis

76 80 97Customer Capital Employee Capital Social and

Environmental Capital


Financial ReviewThe following discussion and analysis should be read in concurrence with the Audited Consolidated Financial Statements of the Group and the Company for the period ended 31st March 2018. In this Report, “Group” refers to Singer (Sri Lanka) PLC and its eight subsidiary companies and “Company” refers to Singer (Sri Lanka) PLC.

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

The reporting period of Singer (Sri Lanka) PLC, has been changed from 31st December to 31st March with effect from Financial Year 2017/18 in order to align with the parent company’s reporting period with the approval of the Registrar of Companies. Therefore, the comparative year information comprises a period of twelve months from 1st January 2016 to 31st December 2016. The current year figures comprise as at and for the period of fifteen months ended 31st March 2018. Therefore, amounts presented in the Financial Statements are not readily comparable.

Net Turnover Analysis (%)

2017/18%

2016%

Consumer Electronics 13 14

Financial Services 12 11

Furniture 5 5

Home Appliances 30 34

IT products 28 22

Sewing 6 7

Other 6 7

13

12

5

30

28

66

2017/18

14

11

5

34

22

77

2016

PreambleGroup revenue for fifteen months trended to a record of Rs. 65.1 billion compared to Rs. 46.9 billion for twelve months ended December 2016. The profit for the fifteen months was Rs. 1.2 billion, while the profit for twelve months ended December 2016 was Rs. 2.4 billion including the one-time gain on purchase of controlling interest of its subsidiaries.

During this period under review, the business conditions were challenging; the continuous drought resulted in a sharp drop in harvest which eroded the purchasing power of a large market segment. This is in addition to customer purchasing power been affected by increased Value Added Tax (VAT), higher interest rates, the devaluation of currency and floods in the wet zone.

The Singer Group continues to anticipate gradual improvements in the business conditions and at the same time pursue strategies to improve revenue, margins and control costs by eliminating any excesses. The Company focused on furthering the e-commerce business and furniture business by offering a wide range of furniture through the retail network and also strengthening the manufacturing arm with the aim of maintaining healthy margins from manufacturing products.

Sri Lankan Economic OutlookThe Sri Lankan economy posted a GDP growth of 3.2%, lower compared to the previous year of 4.4%. The effects

MANAGEMENT DISCUSSION AND ANALYSIS

Despite challenging business conditions, Group revenue for fifteen months trended to a record of Rs. 65.1 billion.

Financial Capital


of climate change on agriculture and agriculture based industries along with increased inflation, increased indirect taxes and higher oil prices were main reasons for a moderate economic growth.

Revenue The Singer Sri Lanka Group recorded revenue of Rs. 65.1 billion for the fifteen months period which was a 39% increase compared to Rs. 46.9 billion in twelve months period of 2016 whilst revenue of the Company grew by 30% to reach Rs. 50.9 billion. The strong growth was supported by the significant growth in the IT Products segment and Furniture segment. IT Products segment contributed in a commendable way to boost revenue with a 78% contribution, Furniture contribution was 45%, Home appliances 26% and consumer electronics 23%. Singer Digital Media (Pvt) Limited specialising in mobile phone sales to the trade channel, contributed Rs. 10.5 billion through revenue from sales to external parties. Singer Finance (Lanka) PLC’s contribution to the revenue was 6% and was Rs. 3.7 billion.

The contribution from consumer electronics segment is relatively low compared to the past years mainly due to the volume drop in traditional products lines such as refrigerators, washing machines and panel televisions; however, there were major gains due to significant volume growth in products such as mobile phones and furniture categories.

Total Net Turnover (Rs. million)

2016 2017/18

46,924 65,12275,000

60,000

45,000

30,000

15,000

02013 2014 2015 2016 2017/18

15-months ended 31st March 2018

2017

2018

Direct Interest CostDirect interest cost of the Group was Rs 1,282 million at the end of fifteen months, against Rs. 736 million in 2016 (12 M), recording

an increase of 74% against the previous year. Included in direct interest cost is interest cost for customer deposits and interest on debentures at Singer Finance (Lanka) PLC. Customer deposits at Singer Finance (Lanka) PLC increased from Rs. 3,042 million to Rs. 5,238 million and bank borrowings increased over prior year to strengthen the balance sheet position and to fund growth in lease receivables and loans.

Gross ProfitGross profit of the Group for the fifteen months period reached Rs. 18,209 million, compared to Rs. 14,150 million in the twelve months period of previous year, an increase of 29%. The Group’s gross margin percentage decreased from 30.2% to 28.0% over the prior year. The gross profit of the Company for the period under review was Rs. 14,182 million as against Rs. 11,418 million in the previous year, an increase of 24%. Gross margin percentage of the Company was 27.9% (15 months) vs 29.0% (12 months), a decrease of 1.1%. In absolute terms, gross margin of both the Group and the Company increased over prior year supported by revenue growth.

Gross margin percentage of both the Group and the Company was impacted by lower mix of high margin product lines, especially the significant growth of lower margin product-mobile phones compared to the growth rate of other traditional high margin product lines such as refrigerators, washing machines and televisions. Discounts to flush out slow moving inventory and provision for excess inventory also contributed to the drop in percentage margins. In addition, it was increasingly challenging to protect the product margins in the competitive market conditions that the Company faced in the period under review. The Company was intent in retaining and expanding market share with the aim of reaping long-term benefits.

Operating ProfitThe Group Operating profit increased by 2% from Rs. 4,758 million in 2016 (including the one-time gain on purchase of controlling interest of its subsidiaries) to Rs. 4,839 million in fifteen months period ended 31st March 2018, driven by revenue growth. Growth in other income was mainly due to increase in other income pertaining to finance company’s other services. Selling and administrative expenses of the Group for fifteen months period increased over prior year by 35% from Rs. 10,186 million in 2016 to Rs. 13,729 million, mainly due to the different period of comparisons and in line with the expansion of operational activities of the Company, subsidiary

company of Singer Finance (Lanka) PLC and aggressive marketing and promotional plans to sustain and expand market share. As a percentage of revenue, Group administrative and selling expenses decreased from 22% to 21%; this is an indication that costs have been managed well during a challenging period.

Managing costs in a dynamic business environment is a challenge since the Management needs to maintain a balanced approach on maintaining operational efficiency as well as catering to the growth of business prospects. Both the Group and the Company carefully managed costs without sacrificing business expansion and opportunities.

Operating Profit(Rs. million)

2016 2017/18

4,758 4,8395,000

4,000

3,000

2,000

1,000

02013 2014 2015 2016 2017/18

*15-months ended 31st March 20182016 Including the one time gain on purchase of controlling interest of its subsidiaries

2017

2018

Profit before Tax(Rs. million)

2016 2017/18

3,126 2,0494,000

3,200

2,400

1,600

800

02013 2014 2015 2016 2017/18


2017

2018

2016 Including the one time gain on purchase of controlling interest of its subsidiaries


Singer (Sri Lanka) PLC Annual Report 2017/1852MANAGEMENT DISCUSSION AND ANALYSIS

At the end of a busy day, coming home means kicking off your shoes and opening the ‘fridge’ for some refreshing nourishment. At Singer Sri Lanka we make it a point to offer our customers a range of reliable refrigerator options to suit every lifestyle and budget – options that keep food fresh and nutritious.

Keeping it Fresh


Net Finance CostThe 29% increase in the Group’s total borrowings together with the relatively high cost of funds in the economy and different period of comparisons resulted in the increase of net finance cost by 72% to Rs. 2,531 million for the fifteen months period ended 31st March 2018 from Rs. 1,473 million in twelve months period of 2016.

Similarly, the Company’s net finance costs increased by 68% to Rs. 2,150 million, mainly due to the financial costs pertaining to the business expansion and working capital growth, specially relating to increase in trade receivables and inventory and partly due to financing subsidiary companies. Apart from the above, maturity of low rate long-term loans and debentures during the period under review also contributed to high interest cost. Finance income of the Group increased from Rs. 129 million to Rs.153 million. At the Company level, finance income increased from Rs. 338 million to Rs. 345 million due to increase in interest income from Subsidiary Companies, Singer Finance (Lanka) PLC and Singer Digital Media (Pvt) Limited on its borrowings from the Parent Company, Singer (Sri Lanka) PLC and interest income for debenture investment in Singer Finance (Lanka) PLC. However, these incomes are offset in the Consolidated Financial Statements. Despite the said challenges, the strong business position and the credit rating enable the Company to borrow at relatively competitive interest rates from the banks.

Income Tax ExpenseThe Group’s total tax charge for the period under review was Rs. 829 million, recording an increase of 8% compared to the twelve months period of previous year. Company’s Income tax expenses decreased from Rs. 413 million, to Rs. 225 million, in 2016, as a result of the decrease in taxable profits of the Company. The Group deferred tax expense increased to Rs. 82 million from the reversal of Rs. 99 million in prior year, mainly due to the increase of origination of timing differences of Singer Finance (Lanka) PLC. Tax on dividend income for the fifteen months ended 31st March 2018 was Rs. 112 million compared to the Rs. 41 million in the prior year, this amount was incurred for the final and interim dividends received from subsidiary companies during 2017 and 2018.

The Group’s effective tax rate for the fifteen months period was 40% vs 25% in 2016 (including the one-time gain on purchase


of controlling interest of its subsidiaries); effective tax rate of the Company was 10% vs 24% in 2016. The effective tax rate increased at Group level due to the significant increase of Withholding Tax on Dividend, whilst the decrease in effective tax rate at the Company level is mainly due to the dividend income from subsidiaries which is not liable for income tax.

Taxation(Rs. million) (%)

2016 2017/18

Net Tax Expenses

768Net Effective Tax Rate

25

Net Tax Expenses

828Net Effective Tax Rate

40

2013 2014 2015 2016 2017/18*

1,000

800

600

400

200

0

100

80

60

40

20

0

Net Tax Expenses Net Effective Tax Rate


2017

2018

Profit for the PeriodThe Group recorded a profit for the fifteen months of Rs. 1.2 billion while the profit for the twelve months period of 2016 was Rs. 2.4 billion including the one-time gain on purchase of controlling interest of its subsidiaries.

Singer (Sri Lanka) PLC’s profit for the fifteen months period was Rs. 999 million vs. Rs. 1,104 million reported for the twelve months period of previous year. Both Group and Company profitability were impacted by the lower margins mainly due to the sluggish market conditions and higher interest.

In the Group, profit attributable to owners of the Company was Rs. 1,044 million vs Rs. 2,122 million in 2016 including the one-time gain on purchase of controlling interest of its subsidiaries. Profit attributable to non-controlling interest was Rs. 177 million vs. Rs. 236 million in 2016.

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SINGER GEO – SM340 I

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Stabilizer Free, Duo Cooling System, Digital Temperature

Controller, Energy Saving R600a Refrigerant, 10 Years Of Singer Warranty For The

Compressor



Singer (Sri Lanka) PLC Annual Report 2017/18 55 MANAGEMENT DISCUSSION AND ANALYSIS

The provisioning for deferred tax on revaluation of lands in line with the new capital gain taxes had an impact on the Group’s and Company’s total Comprehensive Income for the fifteen months period.

Profit after Tax(Rs. million)

2016 2017/18

2,358 1,2202,500

2,000

1,500

1,000

500

02013 2014 2015 2016 2017/18


2017

2018

Other Comprehensive IncomeOther comprehensive income for the year is limited to actuarial gain or loss on retirement benefit obligation and deferred tax on revaluation gain from land which was provided in during 2018 in line with the new capital gain taxes imposed in Inland Revenue Act No. 24 of 2017, at both the Group and the Company level. As a result of that the amount of Rs. 516.0 million and Rs.198.1 million were provided for differed tax on Land Revaluation at Group level and Company level respectively for the period of fifteen months ended 31st March 2018.

Total Comprehensive Income for the PeriodThe Group recorded a total comprehensive income of Rs. 692 million after tax for the fifteen months period against Rs. 2,623 million for twelve month period, (including the one time gain on purchase of controlling interest of its subsidiaries) which was below prior year by Rs. 1,931 million. Singer (Sri Lanka) PLC’s total comprehensive

income for the period under review was Rs. 794 million vs Rs. 1,363 million reported in the 2016, a decrease of Rs. 569 million. Both the Group’s and the Company’s total Comprehensive Income for the fifteen months period were impacted by the provisioning for deferred tax on revaluation of lands in line with the new capital gain taxes as explained above and land and buildings revaluation which was accounted for in 2016 in line with the Singer Group revaluation policy.

Earnings per ShareGroup Earnings per Share (EPS) for the fifteen months period under review was Rs. 2.78 vs. Rs. 5.65 (including the one-time gain on purchase of controlling interest of its subsidiaries) during twelve months period in 2016. Earnings per share of the Company was Rs. 2.66 vs. Rs. 2.94 in year 2016.

Earnings per Share(Rs.)

2016 2017/18

5.65** 2.78 6.25

5.00

3.75

2.50

1.25

02013 2014 2015 2016 2017/18*


**Information for the previous years have been restated to reflect the subdivision of shares in March 2017.

DividendCompany paid a final dividend of Rs. 8.80 per share (prior to subdivision of shares) amounting to Rs. 1,102 million during the financial period, in respect of the year ended 31st December 2016 and an interim dividend of Rs. 2.20 per share for existing number of shares after the subsidiaries amounting Rs. 826 million for the fifteen months period ended 31st March 2018.

Dividend per Share(Rs.)

2016 2017/18

2.93** 2.203.00

2.40

1.80

1.20

0.60

02013 2014 2015 2016 2017/18*


**Information for the previous years have been restated to reflect the subdivision of shares in March 2017.


Dividends Pay Out Ratio(%)

2016 2017/18

99.67 82.71150

120

90

60

30

02013 2014 2015 2016 2017/18*


Dividends Paid(Rs. million)

2016 2017/18

1,102 8261,250

1,000

750

500

250

02013 2014 2015 2016 2017/18*


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

Return on EquityReturn on Group equity for the fifteen months period under review was 13.8%, whilst in the twelve months period it was 28.9% including the one-time gain on purchase of controlling interest of its subsidiaries. Return on equity of the Company was 18.6%, compared to 20.0% in 2016. Return on equity has been computed by dividing the profit for the period by the average total equity, as at the beginning and end of each financial year.

Return on Equity(%)

2016 2017/18

28.89 13.7630.00

24.00

18.00

12.00

6.00

02013 2014 2015 2016 2017/18*


Total AssetsAsset growth was mainly due to the capacity expansion in the manufacturing sector and investments made on retail shops upgrades to increase the retail space to cater to additional products and brands. The Group total assets increased by 20% to Rs. 50,582 million compared to 31st December 2016 with non-current and current assets grew by 8% and 25% respectively. Group total assets base comprised 30% of non-current assets (2016 – 33%) and 70% of current assets (2016 – 67%). The growth of non-current assets was due to additions made into Property, Plant and Equipment, mainly in the manufacturing segment. Increase in operational activities evidenced for the growth of working capital mainly in the Company, Singer Finance (Lanka) PLC and Singer Digital Media (Pvt) Limited.

Financial Position Structure(%)

100

80

60

40

20

02016 2017/18 2016 2017/18

Assets

Property, Plant and Equipment Investments Inventories Receivables Cash and Others

Liabilities

Shareholders Funds Long-term Borrowings Short-term Borrowings Trade Creditors Other Liabilities

Assets Liabilities

6,000

4,800

3,600

2,400

1,200

02013 2014 2015 2016 2017/18*

Growth in Property, Plant and Equipment(Rs.)

2016 2017/18

5,427 5,649


Net Assets per Share(Rs.)

2016 2017/18

21.70** 18.2030.00

24.00

18.00

12.00

6.00

02013 2014 2015 2016 2017/18*

*15-months ended 31st March 2018**Information for the previous years have been restated to reflect the subdivision of shares in March 2017.

Total EquityTotal assets base was funded by 16% of Group equity including non-controlling interest, decreased by Rs. 14% over 2016 to stand at Rs. 8,185 million as at 31st March 2018. The decrease was mainly due to payment of the final and the interim dividends of Rs. 1,928 million during the fifteen months period as well as the decline of revaluation reserves by Rs. 452 million as a result of provisions made on Deferred Tax on revaluation of land subsequent to the new capital gain tax imposed by the Revenue Authorities.



Capital Structure(%)

2016 2017/18

Shareholder Equity

29%Total Borrowings

71%

Shareholder Equity

21%Total Borrowings

79%100

80

60

40

20

02013 2014 2015 2016 2017/18*

Total Borrowings Shareholder Equity


Net Assets per Share Vs. Market Price per Share(Rs.) (Rs.)

2016 2017/18

Net Assets/Share

21.70**Market Price/Share

42.07**

Net Assets/Share

18.20Market Price/Share

40.20

2013 2014 2015 2016 2017/18*

25

20

15

10

5

0

50

40

30

20

10

0

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

*15-months ended 31st March 2018**Information for the previous years have been restated to reflect the subdivision of shares in March 2017.

Total LiabilitiesTotal liabilities of the Group represented 14% of long-term liabilities and 70% of current liabilities from total Equity and Liabilities. Total borrowings accounting

for 73% of total liabilities compared to the 72% in prior year. Total borrowings together with customer deposits of Finance company increased by 29% to reach Rs. 30,792 million. This increase was mainly attributable to the increase in customer deposits of Singer Finance (Lanka) PLC by 72% over the prior year. The debt profile was mainly towards the short-term borrowing as at 31st March 2018 which was 84% vs 63% in previous year due the maturing of long-term loans and debentures during the period under review.

Cash FlowGroup net operating cash outflow was Rs. 4,697 million, compared to Rs. 2,127 million outflows in 2016. This is attributable to the high working capital requirements and relatively high interest payments. Net cash flow from investing activities of the Group increased over prior year by Rs. 1,134 million. Proceeds from new borrowings and customer deposits resulted in a net inflow from financial activities amounting to Rs. 4,533 million.

Overview of Performance of SubsidiariesSinger Finance (Lanka) PLC

Singer Finance (Lanka) PLC is a 81.29% owned subsidiary of Singer (Sri Lanka) PLC. Incorporated in April 2004, the Company is a licensed Finance Company

registered with the Central Bank of Sri Lanka. Singer Finance has grown its portfolio steadily over the years but with caution, thus ensuring that its income earning receivable portfolio is among the top finance companies, reporting Non-Performing Loans (NPLs) well below industry levels. Arrearage management is a Key Performance Indicator (KPI) of significant importance to lending organisations, and the Company has been mindful of its arrearage values and effectively managed it on a consistent basis. The stand alone rating of BBB with a positive outlook by Fitch Ratings signifies the credit quality of the Company.

Over the years, Singer Finance has grown albeit with a sense of cautiousness and a low risk appetite. As such, only one new branch was opened in Kuliyapititya during the year under review. However, the winds of change began to take place with the acquisition of the Company’s Group and Parent by Hayleys PLC in the latter part of 2017. An aggressive growth strategy has been drawn and is being implemented with four new branches planned to be opened mid-year, and



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Relaxing atHome


two window locations being shifted to larger, more spacious and visible locations with the intent of expanding the core leasing business.

Singer Finance has not traditionally been overly dependent on funds from the fixed deposit market. Due to this, as of 31st March 2018, the Depositors Funds-to-Equity ratio remained at 67% – one of the highest figures in the industry. Singer Finance had focused more on raising funds from banks and the debenture market in the past. Renewed plans are to grow the Fixed Deposit base with new customer relationships formed. Being a subsidiary of two of the largest business entities in the country, one being a large conglomerate, and the other, the immediate parent company, being the largest and most reputed consumer durables company, is a source of immense strength to SFLP and its stakeholders. The acquisition of Singer by Hayleys has strengthened the Company’s profile, rating, and standing which will, no doubt, also be a significant force behind the Company’s growth plans.

Due to the change in the financial reporting year of Singer (Sri Lanka) PLC, immediate parent of Singer Finance, the Financials consolidated in the year under review are for 15 months whereas the prior year comparative is for 12 months. Therefore, except for the Statement of Financial Position, the financial report on the Statement of Comprehensive Income compared to the prior year will not provide an apple-to-apple comparison. Irrespective of this mismatch in periods, the Company performed reasonably well despite the economic outlook not being the most favourable. Total assets of Singer Finance grew by 26.7% to Rs. 16.1 billion, YoY 31st March 2016 over 2017. With income earning assets growing by 26.4% YoY, 90% of Singer Finance’s total assets are income earning, illustrating how the Company has maintained its status quo of sticking to the bread and butter of its core business. Total equity of the Company grew by 26% to Rs. 3.3 billion. Rs. 551 million was raised by way of a Rights Issue in December 2017 and the Company declared a dividend of 0.97 cents in March 2018. Total revenue grew 61.7% to Rs. 3.6 billion in the 15 months ended 31st March 2017, compared to Rs. 2.2 billion for the 12 months ended 31st December 2016. The profit after tax of Rs. 522 million for the 15 months ended 31st March 2017 grew by 25.8% in comparison to the 12 months ended 31st December 2016. The increase in provisioning for bad debts and the

increase in interest costs were two major inhibiting expense categories that prevented a more stellar bottom line growth during the aforementioned period under review.

Singer Finance introduced Gold Loans into its portfolio and will be focused in rolling out this product to the existing branch network in 2018/19. The Company also plans to grow its traditional leasing business by expanding the marketing staff and the branch network. A debit card will also be launched mid-year with plans to grow the savings products of the Company.

Regnis (Lanka) PLC – Group

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

Regnis success is underpinned by the skills, expertise, and work ethic of 427-strong team at factories who drive our strategic ambitions and deliver growth agenda. As a responsible corporate citizen, Regnis is cognisant of the role in reducing the environmental footprint of the product range and have continued to leverage our research capabilities to enhance the energy efficiency of our products and processes.

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

Singer 75” Epic 4K UHD Smart TV – SLE75G6Resolution: 3840 x 2160, HDR - High Dynamic Range, Android 5.0, Dolby Digital

Audio System, Energy Saving

SAMSUNG – UA50MU6100

SAMSUNG LED, 4K – 50”, 50” UHD 4K Smart LED TV, Display Resolution: 3840 x 2160, Smart TV Apps, HDR (High Dynamic Range): HDR Premium, 50w

SKYWORTH 40” FULL HD SMART TV –

SKY-40E3SResolution: 1920x1080, Number

of Speakers: 2, Web OS: Yes (Skyworth Style), Opera TV Store/

Opera Browser/Youtube

TCL 40” FULL HD LED TV –

TCLED40D2900Full HD Resolution: 1920x1080,

Natural Light Technology, Backlight Adjustable, Dynamic

Contrast, Dolby Digital Plus

SONY 4K-SMART TV

55X7000E4K HRD Internet LED TV, Screen

Size: 55” (54.6”), Display resolution (H x V, pixels):

3840x2160, HDR compatible, Live Colour Technology, Dynamic Contrast Enhancer, Audio Power

Output: 10W+10W,




Products

z 19 refrigerator models

z Launched four models of GEO Smart series refrigerators under the Singer brand

z Eight washing machine models

z Introduced two front loading washing machines under the Singer and SISIL brands

Regnis Group has consistently brought innovative solutions to the market. In 2017, Regnis launched the new GEO Smart Refrigerator series showcasing four models under the Singer brand.

Since its inception, the Regnis Group has consistently brought innovative solutions to the market, both in the refrigerator and washing machine lines. In 2017, Regnis launched the new GEO Smart Refrigerator series showcasing four models under the Singer brand. The new refrigerator series features an improved door design and electronically controlled temperature control system. Regnis also launched a coloured refrigerator series in December 2017 as a pilot project, the response for which has been extremely encouraging.

Financial highlights of Regnis for the 15 months ended 31st March 2018

z Revenue: Rs. 6.3 billion

z Profit before tax: Rs. 248.6 million

z Finial Dividend: Rs. 10.50 per share

Manufacturing Process

The Regnis Group’s manufacturing facilities are located in Ratmalana and Panadura, where three production lines are in place to smoothly and efficiently manufacture refrigerators, washing

machines and plastic chairs. The agility of the Group’s manufacturing process has enabled it to continuously innovate its product range, thereby enhancing product features and processes without substantial changes to the manufacturing lines.

Capital expenditure increased by Rs. 309.7 million in the period under review primarily due to investment in a new vacuum forming machine which eliminates a bottle-neck in the production line and enables productivity improvements.

As part of our environmental commitment, the Regnis Group consistently strives to introduce technology which reduces the environmental footprint of its manufacturing activities. In recent years, these have included the installation of a new U-shell machine to automate the cabinet-making process for refrigerators, and the vacuum forming machine, both of which have generated substantial improvements in energy efficiency.

Future Outlook

Economic growth and the resultant expansion of the country’s middle class is likely to result in higher demand for consumer durables. Accordingly, we see strong potential for growth in our market segment, particularly washing machines, for which penetration levels are still relatively low. The Company will continue to invest in product development and capacity expansions to drive further market penetration across the country.



Singer Industries (Ceylon) PLC

Operating for over five decades, Singer Industries (Ceylon) PLC is engaged in the assembly of sewing machines and the manufacture of cabinets and stands for sewing machines.

The Company’s sole customer is Singer (Sri Lanka) PLC.

The revenue of the Company was Rs. 864 during the period.

Nevertheless, it is encouraging to see that the Company has recorded approximately 10% of its revenue from washing machine component sales in its first full year after commencing operations in the final Quarter of 2016.

Furthermore, the Company ventured into manufacturing refrigerator components for Regnis (Lanka) PLC during the final quarter of 2017 as a temporary subcontract operation.

Future Outlook

In the coming year, two new portable domestic sewing machines are expected to be introduced in order to capture existing market voids and thereby rejuvenate the Company’s traditional product portfolio.

Furthermore, the Company expects to enter into a sub-contracting arrangement for the production of accessories for televisions and air conditioners marketed by Singer (Sri Lanka) PLC.

These revenue streams are expected to deliver promising results for the Company and reduce dependence on traditional product portfolios.

Singer Digital Media (Pvt) Ltd.

Singer introduced Digital Media products into the product portfolio with the objective of serving our customers in line with dynamic market trends. In 2012, the Digital Media Channel embarked on its journey in mobile phone distribution when world renowned mobile phone brands Huawei and Sony partnered with Singer for their Sri Lankan operations. Among the key pillars of success is the distributor network associated with the Channel since the commencement of the business.

The Management together with a dedicated sales force took on the challenge of this novel business opportunity, and have since achieved many milestones. The Digital Media Channel was proud to announce the achievement of record sales worth Rs. 14 billion for the period, with Rs. 1 billion sales in the month of December 2017 alone.

The Company is an out-of-the box thinker, ready to take on challenges while adhering to market best practices. The increased number of promotion officers, demarcation of regions, appointment of direct dealers, managing field credit exposure, and usage of MIS (Management Information Systems) to exploit the market contributed to a remarkable performance in 2017/18 and built a sound business relationship among distributors and retail partners.

As a result, the Company had the largest mobile phone distribution in the market with high distributor retention compared to any other competitor.

Future Outlook

The Company will move forward with restructuring and embracing more information-driven practices through sales force automation and MIS. Together with support from Singer Management and the collective efforts of the team, this will ensure the best outcomes for the Company.

Singer Business School (Pvt) Ltd.

Established in 2015, Singer Business School is the education arm of Singer (Sri Lanka) PLC and aims to provide world-class education to Sri Lankan youth at affordable prices across the island. Coupled with a rich heritage and a wide reach, Singer Business School reaches its students through 67 Fashion Academies and eight Computer Academies.

The Singer Fashion Academy offers over 25 different sewing courses, which include two diploma programmes, seven certificate courses, and several other sewing courses to anyone who has a passion towards sewing. In the period ended, approximately 50 students completed two diploma programmes and the current student base increased to 6,670 students.

The Singer Computer Academy provides the City & Guilds qualification on the Skills Proficiency Certificate in Basic IT

Singer Digital Media was proud to announcethe achievement of record sales worthRs. 14 billion for the period, with Rs. 1 billionsales in the month of December 2017 alone.


for Office Applications. Each student has a state-of-the-art laptop to do hands-on training. During the year, three new computer academies were opened in Kiribathgoda, Pilimathalawa, and Pelmadulla to cater world-class computer education for those regional communities. There are currently 53 students across all eight computer academies, which are equipped with multimedia projectors and Wi-Fi connections, facilitating a better learning environment.

Overview of Performance of Distribution Channels

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

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

Singer Plus

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

With 259 showrooms and 64 satellite shops, the Singer Plus presence is felt in every nook and corner of the country. The Singer Plus retail channel continued its

Revenue was impacted by the long prevailing drought and sluggish macro economic conditions that primarily affected the mid to low income consumer segment. However, the Channel contributed nearly 50% of the overall revenue of the Company, and a high percentage of hire purchase sales. Mobile phones exhibited significant growth with the expansion of Digital Corners in Singer Plus outlets, supported by the increase in market demand for smartphones. Other product categories such as Furniture, Washing Machines, Laptops, Freezers & Coolers, and Kitchen appliances exhibited good growth.

The Singer Plus Channel reaches customers through sales promotional activities such as ATL (Above the Line) and BTL (Below The Line) advertising, and field programmes. The Channel also focuses on group sales to institutions. The Channel successfully carried out many Lifestyle Exhibitions in Colombo, Galle, Bandarawela, Chilaw, Kandy, Batticaloa, and Jaffna. The exhibitions offered consumers the opportunity to view the various brands and products sold by Singer.

retail space expansion with the addition of new showrooms, upgrades, and shop space enhancements. During the period under review, the retail channel added four new showrooms and upgraded 13 satellite shops to full fledged Singer Plus retail stores. Development of the retail channel continues with a focus on enhanced merchandising and displays, overall shop administration, and staff training and development with the goal of serving our customers better.

of revenue of Singer is generated from products manufactured in our ISO certified local factories.

23%


Singer Mega

Singer Mega continued to demonstrate strong growth, given the tough market conditions in the country, this is quite an achievement. Various customer engagement programmes and events were held over the course of the year to showcase the latest range of products from world class brands that Singer had to offer.

With over 483,000 fans, Singer Sri Lanka has the most popular Facebook page for a Consumer Durables & Home Appliance brand in Sri Lanka.

Developments during the period included the renovation of Mega Kiribathgoda and the opening of a new showroom in the rapidly developing town of Kottawa providing customers with a superior retail experience.

In line with the Company’s CSR initiatives, Singer Mega extended its helping hand to the Sri Lanka Diabetes Federation and Diabetes Research Unit of the Faculty of Medicine, Colombo for the third consecutive year to fight against diabetes, a non-communicable disease becoming a major issue in the country.



Singer Homes

Singer Homes introduced a variety of modern and elegant furniture into its portfolio during the year, offering customers options to make their living spaces more vibrant. More colours and options were made available to customers for customised kitchens, with world class fittings from the Häfele and Beko brands.

Singer Homes opened two new showrooms in Matale and Kottawa, and renovated the Kegalle showroom in 2017. The Channel serves its customers through 19 branches across the island.

SISIL World

SISIL World continued to consolidate its position as a premier consumer durables retailer during the year. The Channel opened four new showrooms and renovated four shops in 2017, contributing to enhanced customer service and convenience.

Wholesale Channel

Celebrating its 30th anniversary in August 2017, the well-established Channel caters to dealers who serve the lower end of the market that focuses on more price conscious consumers.

J Plus Channel

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

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

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

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

Institutional Channel

The Institutional Sales Channel caters to bulk orders from B2B clients, including hotels, hospitals, and Government and private sector organisations. During the year under review, the Channel tied up with four corporate giants in Sri Lanka to supply Mitsubishi and Singer air conditioners.

Agro Channel

Initially startling life as a special project channel, the project was relaunched as the Agro Channel with a focus on machinery items. Starting out with water pumps, the Channel has since expanded to cover a vast range of products including 2-wheel and 4-wheel tractors, combine harvesters, wood working machines, motorbikes, paddy threshers, scales, bicycles, fans, irons, and kitchen appliances. As a result of the amalgamation with Hayleys, Singer was able to sell the most powerful brand in the agricultural machinery business, the Kubota four wheeler.



At the time of publication, the Channel consists of 550 active hardware dealers, 100 tractor consignment dealers, and 25 motorbike dealers. The Channel is exploring and testing several new products that it expects to expand its product portfolio with.

The Channel has expanded its popularity among remote villages through the help of various field activities. Plumber training programmes, free tractor service campaigns, wood working training programmes, and dealer assistant trainings are just some of the services the Channel has extended to the public.

The majority of the Channel’s customer community struggled against the severe weather conditions experienced during the period. It was therefore inevitable that there would be a fall in sales against the projections. However, under the guidance of the management and the agility of the youth of the working group, the Channel moved forward. Through the sincere affection extended by the public and the introduction of new products to high demand, the future prospects for the Channel appear positive.

e-Commerce Channel – www.singer.lk

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

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

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

The Singer Sri Lanka Facebook page aims to explore new opportunities for product promotions and real time

association with existing and potential customers by engaging with them via activities such as competitions, posts, product launches, and events.

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

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

With the aim of building an audience and directing them to our website, these digital activities allowed us to target our audience based on their interests and personal preferences. Through the Google advertising platforms, we

were able to create a campaign which continuously allowed the audience to engage with our website even after making a purchase or leaving the website. Dynamic re-marketing efforts focused on customers who have visited or shown interest in our products but not made a purchase – a method that has proven to be effective with the digital consumer.

Singer Corporate Furniture

As a relatively new venture, we are creating a niche market for our furniture products by providing furniture solutions to corporates. This range of furniture is specially designed and tailored to suit apartment complexes, hotels, and offices.

With a dedicated team of designers and engineers who design solutions to suit the moods and requirements of every customer, every aspect including space usage, colour, textures, and materials are meticulously sourced and matched, providing customers with the ultimate satisfaction. This commitment to detail means that every piece of furniture is a work of art.


www. s i nge r. l k


The institutional capital Singer has amassed since its inception is leveraged to great effect, benefiting all stakeholders. From the local manufacture of products to the distribution of products both home grown and from world-renowned brands through one of the nation’s densest branch networks, Singer has positioned itself to be Sri Lanka’s leading consumer durables manufacturer and retailer.

Overview of BrandsIn addition to the Singer brand, Singer (Sri Lanka) PLC also distributes several world-renowned brands through its Channels.

SISIL: The Cooling SpecialistSISIL, established 55 years ago as the first refrigerator brand to be manufactured in Sri Lanka, holds a dominant market share in the refrigerator, kitchen appliance and washing machine segments. Singer purchased the SISIL brand in 2000 and leveraged the strength of this brand. SISIL is also renowned for service excellence and durability and has outperformed many global brands in terms of trust and reliability.

Beko: Official partner of everydaySinger is the sole distributor and authorised service partner for Beko in Sri Lanka since 2013. Beko has maintained its position as the number one free standing home appliances brand in Europe. Beko offers

Hitachi: Inspire the NextWith the latest advanced Japanese technology and the trust that comes with a 100-year reputation for reliability, Hitachi home appliances & electronics are the ultimate choice for every room, in every home. Featuring smart human-friendly designs, advanced eco-conscious technologies and quality materials, Hitachi home appliances and electronics accentuate your everyday life. Upgrade for Life. Singer unveiled the Hitachi range of inverter refrigerators, inverter range of domestic air conditioners, vacuum cleaners & 4k Smart Televisions in the Sri Lankan market.

Huawei: Make it PossibleIn 2017, Huawei ranked 83 in the Top 100 of the Fortune 500 List, and ranked 88 in Forbes’ World’s Most Valuable Brands list. Recently, Huawei rose to number 25 on the Brand Finance Global 500 Most Valuable Brands 2018. As a result of Huawei’s innovation and commitment to unmatched quality, it is the fastest growing smartphone brand in the country with a market share of over 38% in the smartphone category.

Huawei Sri Lanka won the bronze award in the International Brand of the Year category at the SLIM Brand Excellence in November 2017.

smart technologies with stylish functional design that are both eco-friendly and user-friendly with enhanced functionalities and efficiency. Singer, together with Beko offers a premium experience through a range of cutting edge Beko appliances for the modern home. Beko products marketed in Sri Lanka include refrigerators, free standing and built-in electric and gas ovens, washing machines, built-in hoods and hobs, dishwashers, and dryers.

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

Singer partnered with Dell in 2014 and demonstrated a rapid growth in Dell sales resulting in increasing its overall market share in Sri Lanka within the first phase of operations. Accordingly, Dell has grown exponentially in Sri Lanka over a short period to become the leading PC brand in the local market for three consecutive years as per data released by the International Data Corporation (IDC). Singer clinched the “Best Consumer Distributor” award as a result of the Company’s significant contribution towards Dell’s business in the consumer segment during the period.

With over 432 retail stores across the country offering a wide range of brands and products with multiple financing options, and unmatched after-sales service, it’s little wonder that Singer was crowned the People’s Brand of the Year for the 12th consecutive year.

Institutional Capital



Huawei market share in the burgeoning smartphone category.

38%

The Singer – Huawei partnership celebrated its 5th year and underscored its position as the number one quality smartphone in Sri Lanka.

Mitsubishi Heavy Industries – Air conditionersMitsubishi Heavy Industries – Mahajak Air conditioners Co. Ltd. (MACO) is one of the leaders in Thailand’s air conditioning industry, which manufactures superior quality air conditioners with a capacity of more than 28 million units since its establishment under the brand of “Mitsubishi Heavy Industries”.

The brand has gained the trust and reliance of its customers for its high quality products, on-time delivery, reasonable price and environment – friendly technologies.

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

Samsung: Turn on TomorrowSamsung electronics is a global leader in high-tech electronics manufacturing and digital media. As one of the world’s leading appliance brands, Samsung continued to dominate the market with

its cutting edge technology in TVs, refrigerators, mobile phones, and a host of other product categories. The Samsung brand has over the years attracted consumers of all categories regardless of their gender or socio-economic levels. Samsung is ranked on top when it comes to most advanced Smart TVs and energy saving digital inverter technology refrigerators and smartphones.

Sharp: Be OriginalSharp Corporation of Japan is a leading innovator, having created many “world’s first” products. Products from the Japanese manufacturer include its signature 4-colour “Quattron Pro” LED TVs, “Plasmacluster” air purifiers, and “Healsio” microwave ovens.

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

Skyworth: My Wonderful LifeSkyworth is a large scale high-tech company mainly engaged in manufacturing of consumer electronics. The brand has grown continuously over the last few years in Sri Lankan consumer segments.



When the temperature outside is too hot for comfort, fatigue sets in and tempers fray. Stay cool with Singer Sri Lanka’s air conditioning solutions and enjoy greater comfort and productivity. We bring you the best that technology has to offer, keeping interiors hygienically fresh.

SONYSony is a world renowned electronics manufacturer and supplier of world class and innovatively tech-savvy Japanese electronics. Sony manufactures a range of products including TVs, cameras, audio, video equipment, semi-conductors, electronic components, professional solutions, and even medical equipment.

Singer was appointed the exclusive distributor for Sony Mobile Communications (Sony Mobile) in Sri Lanka in July 2014. Since December 2014, we are the retail distributor of a wide range of Sony products, including LED TVs, Smart TVs, 4K TV’s, High tech audio systems, cameras, and other electronic products.

TCL: The Creative LifeFounded 37 years ago, TCL is one of the fastest growing brands in China and USA. It makes a wide range of consumer

Living in Comfort


Anti-Corrosive Blue Fin Technology with a capacity of 9000 BTU

SINGER – SASI12AUR

Energy saving, inverter technology with a capacity of

12000 BTU

SISIL – SL-12LN

Energy saving, affordable price, R-410 gas with a capacity of

12000BTU

HITACHI – H-RAU312

Auto Climate Technology with a capacity of 12000BTU

M-SRK13YL-S7 – MITSUBISHI

Inverter technology with a capacity of 13000BTU




electronics products and appliances like TV’s, refrigerators, washers/dryers, air conditioners, Blu-ray players, and cell phones in different regions across the world. By offering great products at reasonable prices through Singer, TCL has gained the trust of Sri Lankan customers.

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

UnicUnic manufactures a wide range of products includings TV’s, Rice cookers and air conditioners. It would continue to grow itself as an international brand in Sri Lanka.

Overview of Performance of Strategic Business Units

Apparel SolutionsThe Singer Industrial Sewing Machine Division, formerly known as the “Industrial Product Division”, was relaunched as “Apparel Solutions” after a strategic decision in 2005. The Division imports and distributes industrial sewing

machines, laser machines, bonding machines, spreading machines, cutting and embroidery machines. In line with Singer’s multi-brand strategy, the Division followed suit by adding several international brands to its product portfolio, including Sunstar, ZOJE, Megasew, SDY, Sansiko, and TSM.

The Division’s sales mix consists of two segments: one segment leverages the existing retail and wholesale channels, and the other segment focuses on direct sales to factories on indent basis. In 2017, the Division launched a four-in-one embroidery machine.

Industrial Air Conditioning DivisionWith the formation of the Singer Industrial Air Conditioning Division in 2012, Singer successfully entered the central/industrial air conditioning market and became a key player in the market within a short span of time. Supported by a group of professional engineers, the Division has already acquired major commercial projects, including the Platinum 1 Apartment project, Commercial Bank Main Street and Wellawatta branch buildings, Wayamba University Auditorium project, Aira Lagoon Hotel project, Analytical Properties (Pvt) Ltd. project, Mandarina Hotel project, and the R&D Centre for Link Natural Products (Pvt) Ltd. The prestigious portfolio of projects has resulted in positive word of mouth about Singer Industrial Air Conditioning Division, which the Division will capitalise upon with rapidly increasing demand in the country.

In line with the Company’s strategy, world-renowned commercial air conditioning brands have tied up with Singer as suppliers to the Industrial Air Conditioning Division. Japanese brand Mitsubishi supplies inverter-based and standard unitary products and VRF systems, and Fujiair supplies its full range of heating, ventilation and air conditioning (HVAC) products, all of which can be utilised for domestic and commercial/industrial purposes.

Financial Services DivisionCustomers can pay utility bills, credit card bills, reload their mobile phone credit balances, collect funds remitted through Western Union, and upload and withdraw funds using mobile cash from all Singer Channels.

Financial Services business grew by 11% in volume of transactions, 22% in value of transactions, and 18% in commission earnings.

Singer Express Pay

Singer Express Pay enables customers to make a wide range of bill payments, including credit cards, mobile phones, insurance, utility bills, and eZ Cash and mCash top-ups and withdrawals from over 430 retail outlets island wide.

From the local manufacture of products to the distribution of home grown and world-renowned brands, Singer has positioned itself to be Sri Lanka’s leading consumer durables manufacturer and retailer.



Due to our extended working hours, we are able to facilitate this service to customers beyond the standard working hours of banks and other service providers. Tying up with NDB Bank as the Principal Agent, Singer Express Pay offers foreign money remittances through the Western Union Money Transfer facility.

Singer Distribution CentreThe state of the art Distribution Centre commissioned in 2004 at Piliyandala is now in its 13th year of operations. In July 2017, distribution operations were decentralised by the opening of a 75,000 sq. ft. Logistics Hub in the Matale District of Dambulla to cater to requirements for the North and the East Provinces and part of the Central Province, with a key objective of providing better and faster service in keeping with the expected increase of volume of new and existing products.

The Distribution Centre maintained the ISO 9001:2008 standard for the last 12 years. In September 2017, SGS UK awarded the Centre the new version of the standard, ISO 9001:2015, highlighting the facility’s adherence and conformance to quality standards since 2005.

The Distribution Centre is one of the key contributors to Singer’s Green Initiative programme, serving as the main Collection Hub for the Company. All employees actively contribute to the collection of e-waste by the Company’s collection centres. In 2017, we handed over 1,093 MT of e-waste to the relevant authorities for disposal. Furthermore, keeping in line with global technological advancements and in an effort to minimise our carbon footprint and environmental impact, we commenced repairs of LED

We continuously train our staff members to be well versed in technical knowledge, which is imperative to offer excellent customer care.

z Singer Air Conditioners – A technical team from China visited Sri Lanka to provide our technical staff with training on air conditioners.

z Hitachi Air Conditioners – A country visit by Hitachi management and technical teams from India and Singapore consisting of the Senior Vice President, General Manager, Assistant Manager – Regional Service and Parts, and Assistant Manager – Design and Development for the purpose of studying and understanding the Sri Lankan market, and to train our technical staff.

z Security Systems – We introduced a new security system from Israel-based Visonic. Our technical staff received training for installation and repair of the system.

television panels locally in 2016 using the latest electronic equipment. The initiative is progressing well at present.

Singer Service Centres

Singer operates 13 service centres island-wide, 385 Consumer Products Service Franchise Agents (SFA) and 92 motorbike service franchise agents and 36 furniture service franchise agents. Each service centre is well-equipped to provide the highest standard in customer care with skilled and competent service agents. In line with maintaining the highest standards, the Kandy and Jaffna service centres were relocated and reopened during 2017.



z City & Guilds certificate programme – We organise a City & Guilds certificate programme under the guidelines of the Singer Business School to enhance the knowledge of our SFA technical staff.

Furthermore, to keep our employees and SFAs motivated, we conducted several motivational programmes.

Adding to our present after sales service product line, we commenced the undertaking of furniture and sofa repairs and the assembly of modular furniture to facilitate speedy service for the J-Plus and other channels. To facilitate the easy finding of parts and check availability, we introduced an Android app for SFAs. We have developed a website to share knowledge about new product innovations and improvements to product quality. In order to expedite AC services, we enhanced our current IT system and added an SMS alert facility to inform customers prior to AC service visits.

We provide technical support to our customers, particularly in areas where we conduct promotional sales events. Our employees participated in several CSR projects to repair the damaged products of our customers who were affected by floods and also helping to clean their homes.

Information and Technology DepartmentAs mobile phones increasingly become a key part of today’s enterprises, Singer has embraced mobile technology to enhance our business functions and better serve our customers.

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

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

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

Website

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

Digital Product Catalogue

Singer (Sri Lanka) PLC is in the process of implementing a Digital Product Catalogue in retail stores around the country. This project has been launched to provide product details and product features to visiting customers and can be used as a tool to showcase models not in stock at the branch. The catalogue is hosted on a large screen TV at the branch and updated centrally via head office. Customers have the ability to browse through the catalogue using a remote control and viewing more information about products via a user-friendly interface that organises products in easily searchable categorisations. This project is currently launched as a pilot project in 20 branches.

Singer Factory Complex PiliyandalaThe Solid Furniture Factory introduced six new models of solid furniture and three new sofa models to expand its existing range of furniture, offering customers a wider choice. Increased production capacity led to sofa production increasing by 70%, creating additional employment opportunities. We continued to upgrade our working environment, installing two dust collection systems with sanding machines. To accommodate the increased capacity of all factories and facilitate smoother production, 40 HP air compressor units, air dryers, and 3,500 litre air receiving tanks were installed.

The Agro Factory introduced two pumps in 2017: a self-priming diesel engine-driven pump (5 HP, 3”) aimed at large scale agrarian sites and industrial applications, and a domestic-oriented 0.5 HP automatically controlled pressure pump for increasing water pressure in domestic usage. To promote the pumps, several outdoor programmes were conducted, including free water pump service campaigns and plumbers/farmers day programmes in several towns across the country.

ImageCredit card pix from last year

The Modular Furniture Factory continued to focus on the pantry cupboard business, a segment it has focused on since 2013. Designs, materials, and services were upgraded to meet modern market trends. This led to an increase in sales, including pantry cupboards. In an effort to drive sales, granite tops and three new colours were added to the gloss board range. Several cost control initiatives were implemented to reduce costs substantially, while maintaining functionality and providing increased choices to customers.

A sliding door wardrobe was introduced for the first time, which led to the manufacture of a bedroom suite with a new lighter colour board. The new design and mechanism was well-received and brought in additional revenue to the factory. The high demand is expected to continue in the coming year with the addition of more sliding wardrobes to the range. More employment opportunities were created, and employees were enabled to earn extra income by working additional hours through the introduction of a second shift and an additional incentive scheme.

Innovative Marketing Initiatives

Singer Lifestyle ExhibitionThe 7th consecutive Singer Lifestyle Fiesta was held from the 24th to 26th of November at the BMICH. The exhibition, which draws large crowds annually, continued to be an eagerly awaited event by consumers. A range of appliances, furniture, electronic goods, smartphones, and computers were showcased under one roof with attractive discounts, some as much as 50%. The event took the hue of a fun fair with numerous cookery demonstrations, live performances by popular artists, fashion shows, and fun activities for kids.



Ticket sales proceeds were contributed towards the Company’s CSR fund, which funds the numerous CSR activities launched during the year. Additionally, many small scale non-competing entrepreneurs were given stalls at very reasonable rates to display their products as well.

Singer Finance Credit CardsSinger Finance (Lanka) PLC became the first Non-Bank Financial Institute (NBFI) in Sri Lanka to receive a license to issue credit cards from the Central Bank of Sri Lanka (CBSL). With banks obtaining a share of the retail consumer durables business through their credit cards and venturing into the leasing space, the Singer Group made strategic plans to sustain their core market share by venturing into the credit card business. This move also complements the fact that the payment industry is transitioning to plastic cards and electronic modes of payment.

Nearing the completion of two years in business, we have issued over 24,495 approved cards to the Sri Lankan credit card industry. The Company will utilise its network of over 800 touch-points island-wide, the largest reach in the country, to expand its card base. As per VISA international, Singer Finance is one of the fastest growing credit card companies in Sri Lanka. With an existing hire purchase and leasing customer base of 1.5 million, the Company is confident in growing its card business above the industry average in measured steps.

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

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



Singer Fashion Show

The Fashion Show and Awards Ceremony, Needle Painting Exhibition, and two regional sewing craft exhibitions, were successfully held during the year as the main annual events of the Fashion Academy. The events serve as the main platforms for students to showcase their talents and meet potential customers to

sell their products, making their education sustainable. As one of the main functions, the Fashion Academy has conducted 835 sewing demonstrations and 3,470 free sewing lessons to those who purchased sewing machines during the period to promote the sewing machine product line.

Customer Loyalty Programme

The Singer Customer Loyalty Programme was designed to offer cardholders greater flexibility and convenience. Loyalty Cardholders can earn loyalty points through hire purchase sales; points issued are based on 1% of the price of the purchased item, with each point equivalent to Rs. 1.00. The Loyalty programme is unique in Sri Lanka because it offers customers the ability to earn points on utility and credit card bill payments (between 0.1% - 1% of the bill’s value) made through Singer’s Express Pay counters. Singer Loyalty cardholders are also eligible for seasonal discounts, bonus loyalty points on selected products, easy payment schemes at Singer, and holiday packages and discounts from various partner merchants.

The electronically-administered system relies on Singer’s superior IT systems powered by global ERP solutions provider IFS, which facilitates the recording of loyalty points earned and/or redeemed on customers’ receipts at affiliated retail stores. The Programme is designed for patrons of Singer Plus, Singer Mega, Singer Homes, and SISIL World stores. To enhance the convenience of the loyalty programme for customers, we introduced a One-Time Password (OTP) system that enables loyalty members to redeem their points without needing their loyalty cards.

Customer enrolments surpassed the one million mark during the period, while more customers redeemed their points to the tune of Rs. 49 million. By the end of the period, Singer had awarded over Rs. 464 million in loyalty points to customers and tied up with prestigious establishments including Bata, Nolimit, Vision Care, DSI, and Sarasavi Bookshop to offer exclusive offers and discounts for Singer Loyalty Card members.



Singer strives to add increased value to its stakeholders, its customers in particular, through a comprehensive product and service offering. Our customers across the nation can avail of these products and services through our expansive network of distribution channels. Through in-depth knowledge about the Sri Lankan customer acquired through marketing, we have expanded our product portfolio from a few legacy products, and over the years we have constantly added new products and services.

Singer’s high level of product and service acceptance is the result of broad recognition by the target market and positive brand image in the minds of consumers. We have used this to leverage various cross product opportunities, fill price and quality gaps in the market, and secure greater shelf space. With growing concern for the environment and increasing demand for green energy-efficient products, we will focus on making our products and services increasingly green and energy-efficient going forward.

Product Portfolio in 2018

Singer Epic 4K Ultra HD Smart Television SeriesSinger Sri Lanka added another innovative product to its portfolio with the launch of the Singer Epic 4K Ultra HD Smart TV product series in Sri Lanka. With advanced smart features, Singer has introduced a new dimension in television

technology. The all new-range of Singer Epic 4K Ultra HD Smart TV product series guarantees to provide users with a brand new experience of entertainment at an unmatchable price and warranty with Singer service backing.

Singer Epic 4K Ultra HD Smart Android TVs are available in 49”, 55”, 60”, 65”, 75” sizes. A unique feature of this new TV series is High Dynamic Range (HDR) that enhances colour through HDR metadata, impacting saturation and boosting contrast. With high quality Dolby Digital audio, the TVs offer a compact home cinema experience, adding a new dimension to the whole television experience.

Singer GEO Smart Refrigerator Range


Customer Capital

Singer delivers exceptional choice in products and services to over 8 million customers, with over 443,000 customers taking advantage of our hire purchase facilities and over 1.1 million loyalty programme members.


Singer has been carrying out its noble mission of introducing innovative technologies such as R600a gas technology with the GEO refrigerator range that has benefited over half a million customers.

With the GEO Smart refrigerator range, Singer upgrades the highly successful GEO refrigerator range with intelligent features that keep food fresh longer and maintains high levels of energy efficiency. Smart features include an ambient temperature sensor, power fluctuation and load sensor, door sentry and dual temperature control.

Introduction of Two Front Loading Washing Machines from SingerSinger Sri Lanka, the market leader in washing machines, produced two fine quality front loading washing machines for our customers. The machines are assembled at our own factory.

One machine, produced under the Singer brand, comes fully loaded with features to satisfy customers seeking the latest technology. The other model is produced under the SISIL brand, reputed for its heritage and trust over the years.

By bringing the latest technology on a par with global trends along with affordability, convenience, high quality products, and attractive offers, Singer has established itself as the premier destination for washing machines.

Launch of Huawei nova 2iThe highly anticipated Huawei nova 2i upper mid-range smartphone was launched in November 2017. The

smartphone was an instant hit in the market and registered sales of Rs. one billion within three months of launch.

Launch of Huawei P20 proHuawei P20 pro is the first triple camera smart phone with AI technology launched by Huawei.

Sony BRAVIA OLED TVsSinger introduced the latest Sony BRAVIA OLED TV range to high-end customers. The new Sony BRAVIA OLED TVs make the best use of 4K HDR (High Dynamic Range) content with the combination of a unique image processor and display device technologies. They create exquisite, unprecedented contrast that reveals more detail in shadows and more depth in every scene. The 4K HDR Processor X1™ Extreme is made to enhance the latest generation of 4K


Singer GEO Smart Refrigerator Range

HDR pictures and brings every scene to life. It delivers unprecedented picture quality for everything the viewer sees, upscaling content from any source nearer to 4K HDR quality. Over eight million self-illuminating pixels are precisely and individually controlled by this processor.


Sony SHAKE Models and EXTRABASS Speakers

The impressive range of new products under the SHAKE Models and EXTRABASS series have been designed to liven up any party with powerful audio and flashy lighting all intermingled into compact and portable sizes while providing the right amount of fun to suit all home entertainment needs. Music lovers and those who especially enjoy the EDM culture of dance music will be ecstatic to find that the range also extends into bigger size power towers that would generate sounds above the crowd on a dance floor. The EXTRABASS portable wireless speaker series includes four new additions to their current line-up: SRS-XB10, SRS-XB20, SRS-XB30, and SRS-XB40. These special speakers have been designed to enable users to enjoy the intensity of deep bass notes in a variety of locations and scenarios. The EXTRABASS technology delivers powerful and clear bass sound, resulting in a full, deep, resonating sound with synchronised flashing lights, perfect for a night of enjoyment with the users favourite music genre. The speakers feature user-friendly, one-touch connectivity, and music streaming with NFC and Bluetooth compatibility.

Launch of Samsung’s Latest Flagship Smartphones S8/S8+ and Note 8The Samsung Galaxy S8 and S8+ were introduced to the Sri Lankan public at Singer outlets in April. As two of Samsung’s most advanced devices, the Galaxy S8 and S8+ ushered in a new level of functionality and convenience,


opening up a world of unlimited possibilities to consumers.

Samsung Smart Convertible RefrigeratorsSinger has been renowned over the years for their vast product portfolio of Samsung household appliances such as televisions, refrigerators, mobile phones, washing machines, microwave ovens and air conditioners. As the latest introduction, local customers now have the opportunity of experiencing the all-new technology of smart convertible inverter refrigerators.

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

The new range of Samsung convertible inverter refrigerators come in 320L and 345L capacities and are priced competitively, delivering the promise of affordability to many who wish to experience the luxury of convertibles.

Moulinex Kitchen AppliancesSinger launched the “MasterChef Gourmet Plus”, the latest kitchen appliance from renowned French brand Moulinex. The launch took place amidst

a special gathering of home bakers and Singer Management. An exceptional feature of this kitchen appliance in particular is its die cast aluminium exterior, which is a cutting-edge shift from plastic casing, giving the appliance durability, robustness, and increased steadiness. The MasterChef Gourmet Plus is most suitable for home based baking and pastry enthusiasts.

Addition of Apple to Brand PortfolioSinger introduced top global brand Apple to its growing portfolio with the launch of the iPhone 8 and 8 Plus in November, 2017. The launch took place at the Lifestyle Exhibition and Fun Fair 2017. The launch enabled customers seeking premium Apple products to easily purchase the latest versions of their favourite iPhone models.

Customer Feedback and ResearchCustomers’ quest for authenticity includes their desire to buy from genuine companies that meet their value standards. They also demand transparency in sourcing and our best research tool is our employee base.

As a large customer-centric organisation, our customer service representatives are spread across the country providing a personalised service. They are trained to collect customer feedback, which is directly absorbed from customers and communicated to brand managers who


make presentations to our product and services R&D teams. We believe this to be an immensely comprehensive research methodology, which is as effective as consulting third party organisations. For example, our hire purchase customers numbering close to 420,000, visit our showrooms and communicate with our staff on a monthly basis.

We also invest significant resources on feedback forms, informal surveys, product surveys, data mining, mystery shoppers, local and international research teams, as well as our call centre that records and reports all customer complaints and feedback. We periodically utilise the services of research agencies like Nielsen and LMRB to conduct overall consumer market research or product specific research to identify changing consumer trends and broaden our knowledge on consumer needs. For the purpose of improving our products and services, we also perform data mining on loyalty members to extract their preferences on a continuous basis. In addition, customs import statistics are obtained to measure market trends and market share movements.

Customer retention

Customers at the beginning of the period 6,015,715

Customers acquired during the period 1,979,284

Customers at end of period 7,994,999

Singer Call CentreSinger was the first consumer durables retailer in Sri Lanka to establish a Call Centre, offering our customers with unparalleled after sales service and peace of mind.

Customer Complaints/Suggestions and Avoiding/Reducing Negative Impacts of Company’s Products/Services on CustomersSinger being a renowned customer-centric company treats all customer complaints with utmost importance. Irrespective of the cause, unhappy customers are still our guests and our hope for future business. Therefore, we strive to satisfy them again even though a customer may not always be right. Hence, we take control of customer complaints and turn them to our advantage.

We always attend to customer complaints promptly.

As a customer-centric company, we are always focused on enhancing customer satisfaction, convenience, and service quality. By expanding our distribution channels, we improve access for customers to get the products and services they need. Our retail outlets are upgraded and refurbished at least once in every six/seven years. As a dynamic and evolving company, we effect the necessary changes to our product offerings in tandem with new market developments and changing consumer lifestyles.

Our customers are rewarded with loyalty programmes and we provide customer guidelines, merchandising manuals, and recipe books along with our products. With our “Sanasuma” extended warranty programme, shoppers have confidence in purchasing products from us. We also operate a Call Centre to ensure issues are directed to the relevant division promptly to provide a solution.

Results of Customer Satisfaction Surveys (If Available)No.

Customer Satisfaction is

at Satisfaction Level

Customer Surveys Conducted

Three (Done once a month)

Customer Complaints Received 30,049

Customer Complaints Resolved 30,049

Customer Care CentreWe are the first Consumer Durables retailer in Sri Lanka to establish a Call Centre. These Call Centres are linked to Service Franchise Agents to direct customer issues efficiently towards the right channels. Customers can dial the hotline to make suggestions, as well as lodge complaints regarding Singer products and services. The customer representatives then liaise with the Service Centre or with relevant personnel from Singer to ensure customer complaints are addressed while tracking the internal progress of complaints. We take proactive measures to ensure the highest industrial standards are adhered to and adopt stringent internal product quality standards to resolve issues speedily

Call Centre 2017/18 2016

Outbound 535,000 383,102

Inbound 306,070 186,159

Total 841,070 569,261

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

Listen Intently

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

Apologise

We follow-up to ensure the customer is completely satisfied.

Follow-up

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

Reach Agreement

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

Thank Them

We determine the customer requirement by inquiring to provide a solution.

Seek the Best Solution

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

Take Quick Action


Singer maintains a commitment to employee engagement that is respectful of individual dignity and human rights. Our employment practices are premised on attracting and retaining human talent based on merit. Our capability development agenda enhances the skills of our employees through customised training and development programmes. Our employees work in an environment that has been benchmarked for health and safety standards.

Labour Practices and Decent WorkThe Group CEO, through the members of the Executive Committees and Human Resources division, is responsible for ensuring employment practices in all Singer subsidiaries adhere to the Company’s HR policy. Total compliance with all statutory provisions governing labour practices and decent work is ensured across the Organisation and Group of companies. Individuals are assigned specific responsibilities in line with their particular role.

The Human Resource Division regularly monitors progress to ensure proper implementation of HR policies. Unit Heads and Divisional Management Committees periodically follow-up to ensure full compliance.

The minimum number of weeks’ notice provided to employees and their elected representatives prior to the implementation of significant operational changes that could substantially affect them is determined based on the situation.


Employee Capital

Our employees are provided a work environment benchmarked for the quality of itssafety and health standards.

Workforce

31st March 2018

No.

Male 2,216

Female 401

Total workforce 2,617

15 months ended 31st March 2018

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

Male Female Male Female Male Female Male Female Male Female Total

No. No. No. No. No. No. No. No. No. No. No.

Recruitments 231 79 96 15 16 – 2 – 345 94 439 Resignations 120 44 68 14 33 3 26 5 247 66 313

Key Indicators

Description 2017/18 2016 2015 2014 2013

Total Number of employees 2,617 2,436 1,905 1,762 1,637

Staff Growth (%) 7.43 27.87 8.12 7.64 10.98

Turnover per Employee (Rs. ’000) *24,884 19,263 20,321 16,856 15,568

Profit after Tax per Employee (Rs. ’000) *466 968 649 444 319

Asset per Employee (Rs. ’000) 19,328 17,338 16,936 15,478 15,005

Personal cost per Employee (Rs. ’000) *2,713 2,033 2,251 2,013 1,852

* 15 months ended 31st March 2018

Staff Strength

Description Grand Total

Key & Senior Management 64

Middle Management 120

Junior Management 194

Executive 32

Non-Management 2,207

Total 2,617


Workforce Based on Contract

Total workforce Male Female Total

Permanent 2,040 355 2,395

Trainees/Fixed Term 176 46 222

Total 2,216 401 2,617

All employees work on full time basis.

Workforce Based on Region

Province Male Female Total

Western 1,312 263 1,575

Southern 252 48 300

Central 195 28 223

North Western 117 17 134

Sabaragamuwa 96 15 111

Uva 88 9 97

North Central 73 11 84

Eastern 46 5 51

Northern 37 5 42

Total 2,216 401 2,617

Gender Diversity

Description Female Male Total

No. % No. % No. %

Key and Senior Management 2 0.1 62 2.4 64 2.4

Middle Management 11 0.4 109 4.2 120 4.6

Junior Management 35 1.3 159 6.1 194 7.4

Executive 7 0.3 25 0.1 32 1.2

Non-Management 346 13.2 1,861 71.1 2,207 84.3

Total 401 15.3 2,216 84.7 2,617 100.0

Age Analysis of Staff

Description 18-28 29-39 40-50 50 above Total

No. % No. % No. % No. % No. %

Key and Senior Management – 0.0 6 0.2 28 1.1 30 1.1 64 2.4

Middle Management 3 0.1 42 1.6 49 1.9 26 1.0 120 4.6

Junior Management 21 0.8 122 4.7 35 1.3 16 0.6 194 7.4

Executive 5 0.2 25 1.0 2 0.1 – 0.0 32 1.2

Non-Management 714 27.3 788 30.1 495 18.9 210 8.0 2,207 84.3

Total 743 28.4 983 37.6 609 23.3 282 10.8 2,617 100.0


Employee Benefit Obligation

The Group’s net obligation in respect of defined benefit plan of employees is disclosed in Note 27 on page 222 of the Report.

Identifying Skills Required for the Future

The recruitment and training of employees who have the potential to be the Company leadership in the future ensures the growth of the business. Beyond academic credentials and skill levels, various factors also need to be taken into consideration when making recruitment and training decisions.

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

Training and Development

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

There can be several reasons for leaving an organisation. Managers who focus on grooming their successors can avoid many of these reasons. When a manager sees the potential in an employee with the required personality traits, they build skills and leadership training into their daily interactions with staff. This can have an immense effect on the corporate culture, as staff understand they are valued by their manager and the Company. It facilitates a culture of continuous learning, innovation and team building, which is vital for a sustainable workplace. Empowering staff via training and the development of new skills can lead to the Company retaining high performing, loyal staff and avoid the high costs associated with the recruitment and training of new employees.


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

Succession Plan: The 3 x 3 x 3 Initiative

This initiative selects up to three employees for every management position. Three areas of development are identified, and the employees are groomed over a three year period to take on critical management roles whenever they become available. Our Development and Succession Programme, the 3 x 3 x 3 initiative, seeks to ensure all key managers, including senior managers, middle managers, and selected junior managers have identified and developed their successors.

Washing dirty linen isn’t the chore it used to be, but unless you’re using a washing machine that cleans clothes gently but completely you aren’t getting the most out of this modern day convenience. At Singer we provide solutions that truly make a difference.

Enjoying Greater Convenience

SISIL – SL-FLE047R• Fully Auto 7kg Front Loader • Pre-Wash • Extra Rinse • Child Lock • Extra 15 Minute Quick Wash

SINGER – SWM-FA70R• Fully Auto • 7kg Capacity • Rust Free Fibre Body • Stainless Steel Inner Tub • Wash Programs

BEKO – B-DCY7202XW3• 7kg Front Loading Dryer

(Not A Washing Machine)• Reverse drum action• Large porthole for easy

loading• Filter cleaning indicator• Water tank full indicator• 8 Programs• Auto Anti-Creasing

SAMSUNG – SMGWA70H4000• 7 kg Capacity• Double Storm Pulsator • Magic Filter • Air Turbo Drying System • Diamond Drum • Tempered Glass Window • 5 Water Levels • Auto Restart • Child Lock


Singer – SWM-FLG057R• Fully Auto 7kg Front Loader • LED Display • Delay Start • Pre-Wash • Extra Rinse • Child Lock • Extra 15 Minute Quick Wash • 1600 RPM For Quick Dry



The Singer Training Philosophy

One cannot sell something unless they believe in it

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

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

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

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

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

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

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

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

Catch the Vision of Multiplication

Humble Yourself

Create an Environment Conducive to Producing Leaders

Be Intentional

Share Responsibilities Early

Recruit

Start Early

Identify Potential

Lead for Life Change



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

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

Singer conducts four categories of training: major training, external training, operational training, and product training. Most training programmes are conducted at the state-of-the-art training centre at the Group’s Head Office in Nawam Mawatha. This facility can accommodate up to 150 staff members at a given time. Field training is conducted according to the convenience and requirement of the trainees and trainers. Furthermore, we have invested in infrastructure development of our regional service centres, which can accommodate approximately 25 employees at a time.

External Training

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

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

Showroom Level Training and Mentoring Sessions

To increase customer satisfaction at the showroom level, it is vital to keep the showroom staff updated on products and correct practices. In order to achieve this objective, Human Resource Developments Department initiated a Territory Training Officer model to diffuse knowledge effectively among showroom staff. 523 showroom employees underwent training and mentoring at the showroom level through this initiative in 2017.

Product Demonstration Training and Competition

This training programme, which was conducted district-wise, created a competition within showrooms based on product knowledge. The top three performers at each showroom were selected and recognised, and the overall performance of employees was evaluated and trainings were conducted as per the requirement. 358 showroom employees participated in this programme.

Training on Sales, Customer Care, and Self-Motivation

Aimed at retail showroom staff in the field, the programme covered sales techniques, the importance of customer care, and self-motivation techniques. The programme was conducted covering all branches.

Industrial Sewing Machine Training

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

Training on White Goods

Covering white goods such as refrigerators and deep freezers, washing machines, water pumps, air conditioners, and instant shower heaters, this programme focused on demonstrating the latest products such as front loader washing machines. The programme also included a special module on Company achievements and the importance of training and development. Singer Plus, SISIL World, and Singer Mega staff received this training, as did all new recruits as a part of their Singer Retail Academy (SRA) training.

Product Knowledge – Brown Goods

This is a monthly programme which provides new recruits/appointees such as Trainee District Manager, Trainee Branch Managers, Approved Dealers, Sales Agents, and Customer Care Assistants with the necessary product knowledge. Apart from the product knowledge, trainees are also educated on the latest technologies and the essentials of selling electronic appliances.

Latest Product Introductions

All Branch Managers and selected Assistants received training on televisions, audio systems, home theatres, refrigerators, washing machines, and computers. The programme was conducted to educate field staff about the latest products in the afore mentioned categories, as well as the essentials of selling consumer durables.

Product/Brand Specific Training

With the introduction of the Singer Epic Smart TV range, a special training was conducted to educate showroom staff. The programme was expanded to cover the introduction of new water pumps and computers.

Samsung product launches were carried out in selected areas, with staff receiving training and demonstrations of the latest products.

Beko and Hitachi trainings were conducted with the participation of the brand principals for Singer Mega showroom staff and staff members of select Singer Plus and SISIL World outlets.

Training Programme on Furniture

The training updated employees on furniture operations and familiarised them with the product range. The participants were given a hands-on experience and real site experience in furniture assembly, dismantling, designing of pantry sets, basic drawing concepts, material selection, and product costing. They are given a basic understanding of the communication process of the factory to deliver the goods to customers on time. The programme was conducted with the support of the SSL factory, and 255 showroom employees received the training during the year.



Operational Training

Singer Retail Academy Diplomas

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

Hire Purchase

Trainings on hire purchase were conducted for Branch staff across our Retail Channels to educate them and refresh their knowledge on procedures and best practices of the hire purchase payment option for customers. Over 250 employees were trained under these programmes in 2017.

Western Union Training

Singer offers the facility to transfer money through Western Union. Trainings were organised for our Retail Channels staff to familiarise them with the protocols involved in performing this service for customers. Over 300 employees underwent this training.

Selling Skills

This training was conducted for selected Branches in the Singer Plus Channel for Customer Care Assistants.

Treasury, Audit, and System Training

Knowledge about the internal functions associated with the sales process is important for our field staff. Trainings on cash management, auditing, best practices, and the Sales ERP (Enterprise Resource Planning) module were conducted with the aim of enabling staff to provide superior service to our customers. Over 260 personnel were trained under these programmes.

Mobile Field Collection

A total of 800 personnel were trained on the Mobile Field Collection system across the Retail Channels.

Shop Staff Motivational Training

Selected locations in the Retail Channel were provided motivational programmes to explore the benefits of positive attitudes and reaffirm their ability to succeed in life and in their jobs. Over 100 individuals received the training.

Training for After Sales Service Staff

Six specialised training programmes were organised for service centre staff to better enable them to provide industry-best service. Topics such as supervisory and leadership development, industrial machines, network technology, and process improvement tools were covered under the programmes and benefited close to 150 employees during the year.

Major and General Training

Graduate Training

In support of educational institutes in Sri Lanka, we provide internship opportunities to fully or partially qualified students. They are placed within the Company and are given relevant exposure with a comprehensive orientation and in-depth practical training. Students following marketing, finance, production, supply chain management, human resources, and other management avenues are given this opportunity.

Orienting to the Organisation

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

Lean Management Training

The Digital Media staff underwent Lean Management Training in October 2017. The training covered the basic concepts of lean management and Six-Sigma.

A Green Belt Training Programme was also conducted for selected employees and shared further insight into lean management concepts and Six-Sigma concepts. The training included a practical project to improve a current process or implement a new concept.

Training on Information Security Awareness

Research published in 2016 found that 93% of security breaches in an organisation are the result of human error. Security professionals generally recognise the importance of security awareness training as an essential part of an overall information security plan, for users to understand their role in securing the Organisation’s data. Training was conducted for computer users in the Organisation and new recruits in an effort to educate and manage IT security risks that can affect Company data and operations.

Language Development Programme

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

Motivation and Change Management

Aimed at the sewing instructors of the Fashion Academies, the training sought to improve their productivity and outlook on change practices to improve all aspects of their lives and raise morale.

Corporate Etiquette and Grooming

We at Singer believe that each employee carries the Company brand with them. It is therefore essential that employees are well versed in corporate etiquette and are well groomed, as they are among the main customer touch-points that drive the Company brand. As such, we conducted training on this aspect for over 40 employees.

Customer Service Interaction

A programme on effective interaction with customers was conducted for all call centre staff in two batches last year. The objective of the programme was to learn best practices and improve call centre service quality for customers.

Establishing Positive Customer Synergies

This programme was specifically designed for staff of the Digital Media Direct Channel who are involved in mobile phones sales in our retail locations. The objective behind this programme was to encourage a positive outlook on their functionality while providing customers with more effective service. The programme was conducted for two batches in Colombo and Kandy, with 80 personnel undergoing the training.



When you’re on the go, you need never be at a loss. At Singer Sri Lanka we make every effort to provide our customers with choices that are a perfect match to their needs. Whether it’s your child’s first electronic tablet, a laptop for your business or anything in between – we’ve got you covered.

Experiencing the World



Towards a High Performing Entrepreneur

A specialised programme was designed for the top performing branch managers across channels, covering topics such as how to further improve as an entrepreneur, balancing work and family life, and managing finances and time. A total of 151 branch managers were trained under this programme in four batches.

Leadership Training

We believe that leadership is something that is needed across levels in a professional setting. A training programme that encompassed the components that constitute leadership and methods of effectively leading teams was conducted for staff of the Organisation who are involved in leadership on different levels, be it leading teams or leading projects. A total of 59 employees were trained under this programme.

Setting Effective Objectives

A training programme was conducted through internal trainers to educate Line Managers. This covered the purpose and techniques of objective setting that contributes to increased organisational productivity and the achievement of organisational goals. A total of 30 managers underwent the training.

Managing Time Effectively

Good time management enables you to accomplish more in less time and help you have time for new learning opportunities, lower your stress, and to focus, which leads to more career success. Understanding this effect on work, the Company was able to organise a workshop on effective time and task management for staff.

Sustainable Fashion and Natural Dyeing

The world is moving towards sustainability and it is entering the spheres of the fashion world. Sri Lanka is a country with a rich heritage in natural dyeing. Understanding this, the Company organised a training programme on sustainable fashion and natural dyeing for the sewing instructors of the Company’s Fashion Academies to raise awareness and initiate modes of sharing that knowledge with students. The programme was delivered through a foreign researcher studying about Sri Lankan natural dyeing processes with the intention of introducing it to the world.

Skill Enhancement for Managers and Executives

Almost 100 employees across divisions were trained during the year on skills unique to their jobs and upcoming trends in their fields. The aim was to keep our human capital up-to-date on changes in their fields and enable them to better contribute through their jobs.


DELL-5570-I5-8G15.6 “ laptop with Intel Core i7 8550U (1.80 up to 4.0 GHz, 8MB Cache Memory), 8GB RAM DDR4/2TB HDD/ DVD RW/HD Webcam, Dell FHD (1920x1080) 15.6” AMD Radeon 530 Graphics 4GB GDDR5, WI-FI AC/Bluetooth 4.1/Ubuntu Linux with 2 Years Warranty

DELL-I3-7GENDell Inspiron 3567, Intel Core i3 7100U (2.4GHz 3MB Cache Memory) 7 Generation, RAM: 4GB DDR4 2400MHz, Hard Disk: 1 TB 5400RPM, DVD RW: Tray load DVD Drive (reads and writes to DVD/CD), Web Cam: Integrated HD Webcam 720p (1280X720)@30fps and Ubuntu Linux 16.04 Operating System

SIN-DELTA-DCIntel Celeron N3350 Processor (14nm, 1.1GHz, Apollo Lake, DDR3L-1866MHz, 2MB Smart Cache, TDP: 6W, Memory: 4 GB DDR3L-1600MHz, Upgradeable Up To 8GB (Two Memory Slots), 15.6”(39.62cm) HD (1366x768) 16:9 panel, 3.8mm, Intel HD Graphics, Integrated 1.0M HD Web Camera, Storage: 500 GB SATA Hard Disk Drive, Free DOS Operation System with One Year Warranty.


DELL – 5379-i7W10

SIN-DUO-W10Laptop mode and tab mode with Intel Cherry Trail Atom Z8300 Processor (1.4 GHz up to 1.84 GHz), 2GB RAM, Touch Panel (TP): Capacitive, 10 Fingers Touch, G+G, Wi-Fi, Bluetooth, Internal Storage 32GB, Display: 10.1”, 800x1280, IPS, Genuine Windows 10 Home

• Intel Core i7 8550U (1.80 up to 4.0GHz 8MB Cache Memory)

• 8GB RAM DDR4/1TB HDD/IR Webcam

• Dell FHD (1920X1080) 13.3” IPS Touch Screen

• Dual Digital Mic

• Intel UHD Graphics 620 (Shared VGA up to 4GB)

• WI-FI AC/Bluetooth 4.1/Waves MaxxAudio Sounds

• Backlit Keyboard/USB 3.1 with Power Share

• Windows 10 Home

• Warranty 2 Years (1 Year Battery and Adapter)



Investment in Training and Employees Trained 2017/18

Category General Training

Product Training

Operational Training

External Training

ServiceCentre

Training

Total

Investment (Rs.) 2,679,840 4,242,096 4,884,194 1,130,877 461,630 13,398,637

Number of Programmes 19 86 243 40 6 394

Number of Participants 689 2,604 4,972 94 148 8,507

Number of Training Hours 179 704 1,268 356 64 2,571

Investment per Participant 3,889 1,629 982 12,031 3,119 1,575


training and development opportunities and sports. Some of these benefits vary by employee grade and nature of job functions, while some facilities are common to all employee categories.

Ergonomics

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

Professional Subscriptions

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

Internship Programme

Attracting and retaining the right talent within the Organisation is a key challenge. We have partnered with several state and private sector institutions to initiate brand building activities of our Company. Singer’s internship programme helps to attract youth into the Organisation and give them an understanding of our Company, business practices, policies, and vision for the future. This also acts as a CSR project for students following local and foreign degree programmes in Sri Lanka and pursuing professional qualifications (Chartered Institute of Management Accountants, UK and The Institute of Chartered Accountants of Sri Lanka). Students following Finance, Marketing, Supply Chain, and Human Resource Management degrees are embraced into the programme. Interns are given a comprehensive orientation of the Organisation’s operations and in-depth practical training within their specialised areas. We are also focusing our attention

on evaluating our remuneration packages to be on a par with the industry.

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

Employee Benefits

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

Medical Benefits

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

Accident Cover

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

Travel Expenses

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

Discounted Sales

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

Lodging

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

Housing Loans

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

Performance Appraisal

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

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

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

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

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

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

Employee Facilities

We offer our employees a wide range of facilities, including 42 days leave per annum, 3-day excursions, uniforms, staff discounts for Singer products, staff loans,


Distress Loans

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

Vehicle/Motorcycle Loans

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

Educational Aid Scheme

Two mechanisms are in place to support employees with their studies:

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

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

Death Donation

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

Maternity

All female employees are entitled to maternity leave.

Number of Employees

Total number of employees who took maternity leave in 2017/18 12

Total number of employees who returned to work after maternity leave ended in 2017/18 12

Total number of employees who returned to work after maternity leave ended and were still employed 12 months after returning to work in 2017/18 10

Singer – A Great Place to Work

For the fourth consecutive year, Singer (Sri Lanka) PLC was recognised as one of the best places to work in Sri Lanka in 2017 at an exclusive ceremony by Great Place to Work Institute.

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


Singer was recognised as one of the best places to work in Sri Lanka for the fourth consecutive year.

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

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

Prominence is given to sports

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


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

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

HR Policies and Procedures

Employees can communicate with the Board through their respective Divisional Heads. Monthly management review meetings, sales review meetings and operations meetings are held with the participation of all key senior and relevant subject managers. We maintain an open door policy to facilitate a culture where employees of all levels can freely express their views and recommendations to the Management staff.

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

Encouraging Open Dialogue

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

Promoting Employee Performance

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

Grievance Handling

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

Equal Remuneration

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

Occupational Health and Safety

Safety and Health Committee

Given the magnitude of our Group and the diversity of our activities, we have implemented several proactive measures and carefully researched reactive measures to ensure the highest standards of occupational safety and health. We consider our employees to be the backbone of our Organisation and ensure they are treated with great respect and care. A wide spectrum of health and safety measures, including hygiene and accident-safety practices, are implemented by our Safety and Health Committee. Its members are representatives of the entire Company and meet once a quarter or in case of emergencies.

Monitoring Health and Safety Performance

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

Benefits of Promoting a Healthy Workforce

The Organisation receives numerous benefits through a well-managed health and safety programme. These include a positive and caring image, improved staff morale,

reduction in staff turnover and absenteeism, increased productivity, reduction in healthcare/insurance costs and risk of fines and litigation to the Company.

Benefits for the employee include a safe and healthy work environment, enhanced self-esteem, reduced stress, improved morale, increased job satisfaction, increased skills for health protection, improved health, and a sense of well-being.

Factory Workforce Injuries in 2017/18

Accidents Singer Factory

Piliyandala

Regnis (Lanka)

PLC

Regnis Appliances

(Pvt) Ltd

Singer Industries

(Ceylon) PLC

Cut Injuries 13 11 1 22

Eye Injuries 15 5 1 6

Other 2 2 4 5

Total 30 18 6 33

Employee Engagement

Singer Sri Lanka Toastmasters Club

Since its charter in 2011, the Singer (Sri Lanka) PLC Toastmasters Club has gathered significant momentum. In line with the Toastmasters mission, the Singer Sri Lanka Toastmasters Club continues to nurture, support, and empower our membership in developing their communication and leadership skills by introducing and initiating thought provoking themed meetings and providing ample opportunities for interaction and networking through joint meetings. This expands their ability to think out of the box and creativity, thus leading to greater self-confidence and personal growth.



Some of the creative themes for meetings held during the year included New Year, New Beginnings; All That is Irish, commemorating St. Patrick’s Day; Chinese New Year; and a Teddy Bear/Cuddles theme. Furthermore, club engagement was boosted through joint meetings with other clubs in Area C2, where our Toastmasters met up with the “Cupids” of Area C2 when the HSBC Toastmasters Club (TMC) organised their Valentine themed joint meeting, AMW celebrated Father’s Day, and Sampath Bank had their Christmas themed meeting.

A highlight of the year was the Speech Crafter programme conducted by District 82 Chief Judge DTM Padmini Samarasinghe and coordinated by TM Rolinka Perera of the Singer HR Training Department. Members were given the opportunity to listen to passionate, skilled speakers and presenters such as TM Kaishika Rodrigo and Michelle de Zilva amongst others. The programme attracted interest among employees and brought new members to the Club.

Our members scored some significant wins in local contests in 2017. We are proud that TM Gayathridevi Pathmarajah was placed second in the Area C2 Prepared Speech contest and TM Rolinka Perera represented Area C2 at the Division C Table Topics contest. TM Gayathridevi Pathmarajah was selected to be Area Director of C3 and DTM Keerthi Wijekulasuriya. The Test Speaker for the District 82 Evaluation Speech Contest was TM Ragunath Karunamoorthy, who delivered his speech “Conquer Them All” to an audience of over 500 members at the Reverberations Conference in Chennai, India.

In 2017, the club received the highest recognition given by Toastmaster International, the “President’s Distinguished Club”, a Smedley Award, and the Golden Gavel awarded by District 82 for 2016/17.

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

Rotaract Club

Being the first corporate Rotaract Club in the world, we have had the passion to serve society. This has developed our personal and professional skills and enabled us to make new friends around the world. Professional networks have expanded and ideas have been exchanged between

leaders. Leadership training programmes have enabled our young employees to develop their skills and excel in their day-to-day work life, overcoming the barriers they face in their workplace.

2017/18 marked the 4th installation ceremony of the Club, held at the Company’s Head Office. The Club has organised several successful events covering areas such as community service, professional development, international service, public relations, club service, and fund raising activities.

Singer Got Talent Season 3

Held on the 7th of November 2017 at Bishops College Auditorium, Singer’s employee talent contest saw the successful completion of its third season. Months of preparation culminated in the Grand Finale of Season 3, where the Solo Singing Category was won by Umanga Jayaweera, Solo Dancing category by Sathya Garusinghe, and the Instrument Category by Chanaka Prabath. The Winners of the Singing Duet Category were Upul Fernando and Dilanka Nishadi from Singer Factory, while the Singing Group Category was won by the team from Institutional Sales that included Sumudu Maduranga, Chanaka Prabath, Nimesh Perera, and Kaveen Fernando.

New Year at Singer

The New Year was embraced by our employees with the prayers and

blessings of all religions at the Head Office and branches.e and branches.



Gent’s Picnic 2017/18

We held the gent’s picnic in two separate events in June 2017, owing to the large number of participants. Both picnics were held at the Trinco Blu by Cinnamon hotel in Trincomalee, and were attended by over 450 employees.

Ladies’ Picnic 2017/18

The annual ladies’ picnic was held at the Amaya Lake hotel in Dambulla in May 2017. The event was attended by over 145 adults and 52 children under the age of 12.

Annual Christmas Party

We held two Christmas parties in December 2017, due to the large number of participants. Over 2,500 employees and their families participated in the parties.

Sports and Recreational Facilities

Singer inter-company badminton championship was conducted in 2017. Singer Sri Lanka ladies badminton team

secured the 4th place in the 34th MBA team badminton championship 2017.

The Singer inter-departmental cricket tournament was held on the 20th August 2017, at the P. Saravanamuttu (Oval) stadium with the participation of over 1,000 Singer employees.


Sinera Magazine

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

The Sinera Facebook page was also launched with the electronic version of the magazine. A total of 992 employees are active members of this page.

Free Health Camp and Awa reness Programme

For the fourth consecutive year, the Human Resources Department organised a “Free Health Camp” for our employees on 18th September 2017 at the Singer Head Office. A series of tests were conducted to check for blood sugar, blood pressure, BMI, and vision, and a dietician was available to give advice on healthy diet patterns to suit the lifestyles of Singer employees. Over 250 employees received free medical advice and healthcare at the Camp.

Flexi Hours

We believe enhanced work-life balance leads to healthy minds. To encourage better work-life balance, we introduced flexible work hours for staff working in the Management office.

Kids Art Competition 2017/18

The Kids Art Competition was organised for the 7th consecutive year. Over 150 children participated in three differently themed categories, with prizes awarded to all participants and special prizes for the winners.


Further, the Singer netball team was placed 2nd runners-up in ‘B’ division at the league netball tournament which was held in March 2018.

Singer Factory Complex Piliyandala

An inter-departmental cricket tournament and volleyball tournament was held for the employees of the SSL Factory. The Singer Group also held their volleyball tournament at the Piliyandala Factory complex.

The SSL Factory annual excursion took place in Mahiyanganaya at Sorabora Village Hotel with the participation of over 90 employees.

Collective Agreements

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

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

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

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

Approximately, 34% of Singer employees are covered by these collective agreements. In addition to signing Collective Agreements, the management meets with branch unions to discuss any concerns and provide satisfactory solutions. The cordial relations maintained with our employees prevent disputes arising in the workplace.

Employee Recognition

Diamond Club Award winner

Mr. Damitha Serasinghe

President Club Award winners

Mr. Priyanjith Meegoda

Mr. Wimal Amaratunge

Singer Service Awards 2017/18

The Singer Service Awards are an annual event in the Company calendar to appreciate the loyalty and dedication of Singer employees. The service awards ceremonies was organised by the HR Division during the period and held on 15th March 2017 at the BMICH Committee Room “B”.

A total of 281 employees received awards and gift vouchers in appreciation of their long-standing and loyal service to the Company in seven categories.

Years of Service Number of Employees

5th March 2017

5 109

10 76

15 13

20 54

25 20

30 5

35 4

Total 281



Singer, as a responsible corporate, works for the benefit of society. Through our extensive branch network, we have established close ties to the communities in which we operate. Through our community support projects, we aim to give a portion of value addition back to these communities.

Our responsibilities don’t end there. We take the initiative to mitigate any damage to the environment and make every effort to create and contribute to a more sustainable environment. Moreover, we constantly evaluate our manufacturing processes for their environmental impacts, and conduct regular evaluations of the processes of our suppliers and manufacturers.

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

z The Ceylon Chamber of Commerce z Sri Lanka-China Business Council z Import Section of the Ceylon Chamber of Commerce

z Sri Lanka-Canada Business Council

z The Employers’ Federation of Ceylon z CSR Lanka Guarantee Limited z The Industrial Association of Sri Lanka

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

As part of our commitment and responsibility towards society, we encourage all employees to submit written proposals for a CSR project of their choosing, be it a one-off project or an activity that can be integrated into the business process. We believe that our employees can give a better perspective on the progress of our CSR agenda and hence we seek their input as to what they can do to enhance their CSR efforts.

Feedback from our employees not only helps to keep them engaged but also improves our CSR practices on an ongoing basis. Increasing accessibility

to corporate sustainability leads to enhanced employee involvement which ultimately elevates the Company’s performance. Employees also benefit from developing new skills which can boost their performance, and they can thrive in an environment which fosters a responsible and socially-alert workforce.

Once the Company’s CSR Committee approves the CSR project proposed by an employee, department or branch in writing, the related Singer Group companies ensures that the project is financed and resourced until completion. The employee who initiated the project takes on the responsibility of kick-starting activity around the project and ensuring its success. The Company also solicits proposals from our communities.

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

Engagement in philanthropic activities not directly associated to our employees can have a significant influence on their work attitudes and behaviours. Our



Singer works for the benefit of society. Through our community support projects, we aim to give back to the communities in which we operate.


Home Science teachers received training under the Singer Soopa Shasthra programme in partnership with the Ministry of Education

1,000 Company has benefited immensely by facilitating employees to engage in CSR projects they are passionate about, and this is evidenced in the commitment and passion they exude. Furthermore, branches and departments that implement CSR projects have proven to perform better in the Organisation due to the strong team spirit nurtured through the involvement in CSR activities.

In 2017/18, Singer (Sri Lanka) PLC was awarded by the Ceylon Chamber of Commerce as one of the Top 10 companies, at the Best Corporate Citizen Awards in recognition of our continuous commitment to the community through our CSR projects and the sustainability of our contributions to the community.

Singer’s Commitment Towards EducationSupporting the educational development of Sri Lanka is a key aspect of Singer’s CSR agenda. While most businesses are focusing their energies on responsible supply chain management, waste reduction, and water stewardship, Singer believes that the nation is in dire need of development of a sustainable pool of talent that will ultimately benefit the nation as a whole. We actively try to elevate the level of education in our nation through meaningful action, particularly in rural communities.

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

Philanthropic ProjectsSinger Flood Relief Programme

Sri Lanka saw one of the most devastating flood and land slides during the period. Many were reported dead or left no homes to live with. Singer joined hands with all the employees in the Group and launched a flood relief programme which covered all the area which was affected by floods. Most of the donation was given by employees.

Our foreign suppliers also joined hands with us to help in this relief programme. The areas which could be reached was reached by our staff and the dry rations, cloths, sanitary items were distributed equally. Area which could not be reached by land was reached by air with the help of Sri Lanka Air Force.

Not only the outsiders, Singer also looked after their staff who were effected through flood. We provided interest free loans and various other financial assistance, free product replacement and free product services for all the staff who were affected by flood.

The Ceylon School for the Deaf and BlindSinger sponsors four students from The Ceylon School for the Deaf and Blind every year. This has been an ongoing project for more than 6 years.


Samata Sarana Home – MutuwalSinger sponsors four students from The Ceylon School for the Deaf and Blind every years. This has been an ongoing project for more than 6 years.

Deepa Wijesuriya Memorial FoundationSinger donated stationary items for the children in the low income families who are attached to the Deepa Wijesuriya Memorial Foundation.

School ProjectsIn 2017/18, we renewed our commitment to education by continuing our efforts to uplift the education of schools and systematically building their infrastructure, supplying furniture, appliances, stationery, musical instrument, and much more.

Your furniture is often the first impression visitors have of your home. At Singer Sri Lanka we understand that while furniture must be sturdy and serviceable, it must also reflect the varied tastes and lifestyles of our diverse customers.

Making a Statement

AWANAFabric upholstery, Detachable sofa, Ottoman included, PU cushion, Leg : Polypropylene plastic

FLORACFabric upholstery sofa, Detachable into 3 pieces, PU & Poly-fiber Cushions, Treated wooden frame, Leg : Polypropylene plastic

VEGAS Genuine leather and PVC upholstery, Treated Oak wood Frame, PU and Poly fiber cushion, Single chair recliner mechanism, 3.2.1 Combination, Leg : Polypropylene plastic

BENEVENStylish and contemporary design, Pull Flip Conversion Sofa Convertible, Solid wood frame construction with backrest metal frame and legs, High density poly-foam cushioning with Perforated Breather, High grade spring for added stability and uniformity


VOLGA SOFAFabric upholstery and PU cushion, treated Oak wood,

3.1.1. Combination, Leg : Polypropylene plastic




School Description

Raddolugama Junior School Modification of Teachers’ Rest Room

Mara/Kanahalagama Kanitu Vidyalaya Providing water supply facility to Kanahalagama Junior School, Akuressa

G/Batuwangala Maha Vidyalaya Providing drinking water system to Batuwangala; Navodya Vidyalaya, Neluwa

Mahamedagama Maha Vidyalaya Renovation of Main Hall

Galigamuwa Maha Vidyalaya New class room for English medium students

A/Sri Rohini Vidyalaya New class room for 2017 children

B/Ellegama Maha Vidyalaya Providing certificates for Ellagama Maha Vidyalaya

Kuli/Subharathi Primary College/Kuli/Wekanda Lokananda College/Kuli/Katuwattewela Primary College Providing desks and chairs

Thalahagama Primary School Providing Ceiling Fans

BT/Sinnawattha GTM School Providing Water Supply System

Vidyadeepa Maha Vidyalaya Renovation of the Hall

Edandawala Sri Medhankara Vidyalaya Providing Stationery

Buluwala Maha Vidyalaya Providing Furniture

Udapola Junior School Providing Singer Hi-Fi System

Udapola Junior School Providing Electricity Connection

Thiththawella Junior School Renovation of the School Building at Monaragala

St. Josephs College – Trincomalee Providing 10 Dell Computers

Gonadhika Sinhala Tamil Vidyalaya Providing Water Supply System

Ilanthidiya Government, Sinhala Vidyalaya Renovation of Building

Koruwawa Junior School Building of Toilets and Renovations

Gamkanda Vidyalaya Construction of a Budu Medura

Nawalakanda Maha Vidyalaya Construction of a Building

Mangalagama Junior School, Molagoda Providing a TV

Murugananda College Paranthan Refurbishment of Laboratory

St. Clair College, Wellawatte Fixing of water supply system

Health Sector

Singer has always helped to ease challenging health issues faced in Sri Lanka such as chronic kidney diseases and diabetes. In 2017/18, Singer assisted the following hospitals by donating equipment to treat patients.

Cancer Hospital – Maharagama

Supply of two LF-OX-BR-L Book Racks to be Donated to Cancer Hospital

Mirigama Hospital

Refrigerator Donated to the Hospital

Other Projects

Home Science in SchoolsSinger successfully completed the 3rd phase of the “Singer Soopa Shasthra” programme jointly with the Ministry of Education. The programme aims to boost the standard of Home Science education in schools across the country while also paving the way for school leavers to step into a career in the fast-growing hospitality industry.

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



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

Initiatives by Singer Factory Complex PiliyandalaThe SSL Factory demonstrated their continuous commitment to improve the regional educational sector by contributing to Rajakeeya Shilpa Yatra 2017, an educational seminar organised by the Piliyandala branch of Old Boys Association of Royal College.

The SSL Factory also renovated the laboratory of Base Hospital in Piliyandala by fixing a new ceiling, repairing and painting walls, setting up a quality pantry with a sink, and repairing the tangled and hazardous electricity system in the building, creating safer conditions for the hospital.

Highlights z Funding for Drug

Addicts – The Turning Point, Ja-Ela

z Reach for Water z Three dialysis machines

donated to needy hospitals


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

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

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

Singer Schools Cricket


Singer has been associated with Sri Lankan cricket since 1996 with our support for the World Cup winning national team. We support cricket at school and club levels, helping to develop the next generation of cricketers. Our Singer League is a long-standing cricket league held in partnership with the Sri Lanka Schools Cricket Association. Singer not only provides financial assistance but also equipment, with a focus on rural schools. We also support the development of school players into professional status with our association with the Mercantile Cricket Association, supporting the MCA Premier League and MCA Knockout Tournament.

Singer Schools RugbySinger is a proud supporter of rugby at all competitive levels and has been involved in the development of the sport for over a decade. We provide infrastructure assistance to schools: everything from scoreboards to building rugby stadiums. The Singer Schools Rugby League is one of our biggest investments in sports, amounting to over Rs. 50 million each year. We also sponsored the Bradby Shield, the oldest competitive rugby encounter in Sri Lanka, for the 27th consecutive year, and supported the Kandy Sports Club.

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

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

Anti-Competitive Behaviour and ComplianceThe Company did not encounter any legal action for anti-competitive behaviour, anti-trust, and monopoly practices during 2017/18. We always obtain the necessary local authority approval and strictly adhere to rules and regulations pertaining to display of materials, audio/video materials, and branding among other factors, when conducting our marketing/sales promotional activities.

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

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

Code of Business ConductAll Key and Senior Managers are bound by the Company’s written Code of Business Conduct, which is an agreement signed as part of their written Contract of Employment. As per the agreement, the signatory is responsible to comply with the Code and ensure employees reporting


to them also comply with the Code. The Code of Business Conduct is signed annually to refresh their knowledge on the contents and update themselves on new clauses and amendments to the Code.

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

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

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

Fostering Human Rights and Equal OpportunitySinger is recognised as a compassionate and benevolent company. People’s affinity towards Singer draws many requests

from religious, educational, and other institutions, as well as individuals.

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

Environmental Performance

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


We understand our customers, desire to stand out from the rest. For the longest time, Singer sewing machines have allowed individuals and businesses to turn their most innovative ideas into creative masterpieces.

EnablingCreativity

MC565 – PORTABLE DOMESTIC SEWING MACHINE13 built-in stitches, Automatic clutch bobbin winder, Reverse stitch button, Easy thread cutter and Oscillating hook

MC588 – PORTABLE DOMESTIC SEWING MACHINE12 built-in stitches, 04 step buttonhole, Free-arm sewing, Power saving LED Bulb (1W), Thread cutter, Bed extension table, Available in two colours (peach red & green)

MC8280 –PORTABLE DOMESTIC SEWING MACHINE8 built-in stitches, 04 step buttonhole, Snap on presser feet, Colour code treading system, Free-arm sewing

SM-MC9116 –PORTABLE DOMESTIC SEWING MACHINE16 built-in stitches, 04 step buttonhole, Metal bobbin winder stud, Free-arm sewing, Carrying handle with LED Bulb.


MC15N1-1W – Domestic Straight Stich Sewing MachineFeed drop mechanism, Forward and reverse stitching, Dial type tread adjustment, Cabinet and stand included with an Optional motor



The well-being of our planet, people, and ecosystems is at the heart of everything we do at Singer.

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

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

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

In addition to ensuring the factory is compliant with all environmental certifications, we also carry out all our internal operations in conformance with these guidelines. For instance, our conventional paint booths were replaced with water curtain paint booths, thus reducing air and toxic emissions caused by spray painting. Sanding activities are carried out in an enclosed area equipped with a dust extraction system, facilitating a safe environment for employees working in this area while carrying out main operations without polluting the air. Solid waste, such as saw dust, that is a by-product of our operations is removed in an environmentally safe manner through responsible third party contractors in consultation with the relevant authorities. We take steps to ensure that the accumulated solid waste isn’t dumped in naked lands or bodies of water, and that they enter the chain of accepted solid waste management systems handled by reputed parties. The solid waste that is collected is used for wood briquetting, burners, and filling up of marsh lands.

Total Waste – Non-hazardous (Kg) Singer (Sri Lanka) PLC

Regnis (Lanka) PLC


Group

Reuse 5,661 – – 5,661

Recycling – 187,609 – 187,609

Recovery 747,900 182,040 94,234 1,024,174

Other 1,501,877 – 14,300 1,516,177

Total 2,255,438 369,649 108,534 2,733,621

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

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


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

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

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

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

Category Volume of e-waste Disposed

by Singer

CRT TVs 75,607

LCD TV 11,490

Refrigerators 7,472

Washing Machines 6,664

Others 4,008

Singer (Sri Lanka) PLC has invested in an LED panel repair project that aims to repair previously scrapped LED panels that have been damaged.

Total repaired LED panels 5,161

Operations cost on panel repair project in 2017/18 (Average p.m.) Rs. 898,653

Given below are details of the cost of recycled material for Regnis (Lanka) PLC in 2017/18:

Total (kg)

HIPS Offcuts 187,609

Metal Offcuts 73,691

Plastic and Polythene 16,814

Cardboard 90,447

Aluminium 230

Gasket 129

Copper 729

Total 369,649

5% of the total material used at Regnis factories to manufacture refrigerators are recycled materials.

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

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

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

Singer Represents Global Leaders of Sustainable Home AppliancesSinger partnered with Arçelik Group, the leader in home technologies in Turkey and the third largest in Europe. This exclusive partnership built on a shared commitment to the most advanced, consumer friendly products, resulted in the launch of Beko product ranges in Sri Lanka.

The Beko range includes the world’s most energy efficient washing machine, consuming 50% less power than A-energy class appliances, as well as the world’s most energy efficient multifunction oven, which consumes 30% less energy than any competitor product in its segment.

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


Materials Used by Weight/VolumeRenewable Materials

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

UOM Units UOM Units UOM Units UOM Units

Timber Sq.ft. 1,341,231 HIPS (Plastic) kg 814,636 PP (Plastic) kg 1,182,908 Steel kg 1,205,924

Particle Boards kg 2,854,800 – – – GPPS (Plastic)

kg 780,421 Wood kg 280,464

Casting kg 320,299 – – – ABS (Plastic) kg 360,750 – – –

MDF kg 120,150 – – – – – – – – –

CorrugatedCartons

kg 160,046 Corrugated Cartons

kg 552,855 Corrugated Cartons

kg 185,525 – – –

Non-Renewable Materials

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

UOM Units UOM Units UOM Units UOM Units

Diesel Litres 29,030 Hermetic Compressor

Nos. 166,351 Washing machine motor

Nos. 74,902 Plastic kg 231,773

Motors kg 792,080 PCM/VCM Steel Sheet

kg 2,123,065 PCB for Fully Auto Washers

Nos. 37,339 Polyethyene kg 1,350

Engines kg 89,000 Evaporator Plate

Nos. 166,351 Steel Tub for Fully Auto Washers

Nos. 37,339 Alloy kg 42,451

Edge Bands

Mtr 1,068,510 Isocyanate kg 431,016 – – – – – –

PU Foam Nos. 281,559 Polyol kg 290,656 – – – – – –

Total Weight of Materials used to Produce and Package Refrigerators at Regnis (Lanka) PLC

(Weight) kg2017/18

(Weight) kg2016

Model Direct Materials Packing Materials Total Weight Direct Materials Packing Materials Total Weight

RGS 150 38,400 3,148 41,548 47,031 3,855 50,886

ECO 55 418,302 30,758 449,060 337,518 24,818 362,336

GEO 182S 420,838 39,809 460,647 372,479 35,235 407,714

ECO 72 1,041,261 93,447 1,134,708 946,881 84,977 1,031,858

GEO 200D 1,181,011 104,647 1,285,658 1,060,141 93,937 1,154,078

ECO 192/WR 192 1,765,413 156,429 1,921,842 1,328,662 117,730 1,446,392

GEO 242D 307,598 29,648 337,246 195,465 18,840 214,305

ECO 245 383,834 36,996 420,830 283,653 27,340 310,993

GEO 260NF 368,322 32,028 400,350 343,574 29,876 373,450

ECO 251NF 552,000 48,000 600,000 450,570 39,180 489,750

GEO 262I/252I 142,554 12,396 154,950 – – –

Total 6,619,533 587,306 7,206,839 5,365,974 475,788 5,841,762



Total Electricity and Diesel Consumption from Non-Renewable Sources by Regnis (Lanka) PLC

Energy Consumption 2017/18 2016

Diesel (Litres) 15,400 44,800

Electricity (Kwh) 1,334,354 1,118,190

Diesel Energy Consumption in Kj (million) 574 1,669

Electricity Consumption in Kj (million) 4,803 4,025

Total Energy Consumption in Kj (million) 5,377 5,695

Diesel energy intensity ratio Kj/unit 3,479 12,360

Percentage Reduction in Diesel consumption per unit (%) 71.8 69.9

Electricity energy intensity ratio Kj per unit 29,117 29,796

Percentage Reduction in Electricity (%) 2.3 24.2

Total energy intensity ratio 32,597 42,156

Consumption by Source

Non-Renewable Sources Singer (Sri Lanka)

PLC

Regnis (Lanka)

PLC

Regnis Appliances

(Pvt) Ltd.

Singer Industries

(Ceylon) PLC

Singer Finance (Lanka)

PLC

Group

Electricity (Kwh) 9,196,749 1,334,354 1,579,842 682,040 840,244 13,633,229

Water (Litres) 16,108,615 20,303,000 11,752,000 5,016,000 27,058 53,206,673

Diesel (Litres) 29,030 15,400 2,310 – – 46,740

Water Withdrawal by Source

Singer uses ground water only for human consumption and not for any manufacturing processes. We keep the Municipal water supply line only as a standby source for our operations.

Water withdrawal by Source (Litres) Singer (Sri Lanka)

PLC

Regnis (Lanka)

PLC

Regnis Appliances (Pvt)

Ltd.

Singer Industries

(Ceylon) PLC


PLC

Group

Ground Water 10,800,000 14,900,000 – 3,762,000 – 29,462,000

Municipal Lines 5,308,615 5,403,000 11,752,000 1,254,000 27,058 23,744,673

Total 16,108,615 20,303,000 11,752,000 5,016,000 27,058 53,206,673

Water Discharge by Destination

It is estimated that a similar volume of planned and unplanned water was discharged through the common drain system. This water was not reused by another organisation.

Water discharge by (Litres) Singer (Sri Lanka)

PLC

Regnis (Lanka)

PLC

Regnis Appliances (Pvt)

Ltd.

Singer Industries

(Ceylon) PLC


PLC

Group

Municipality sewerage, drainage lines 11,618,188 18,881,790 – 3,762,000 27,058 34,289,036

To rivers, lakes, wetlands – – 10,576,800 – – 10,576,800

To ground through soakage pits 4,439,600 1,421,210 1,175,200 – – 7,036,010

Total 16,057,788 20,303,000 11,752,000 3,762,000 27,058 51,901,846



Reduction in Energy Consumption at Regnis

Diesel (Kj) million

Electricity (Kj) million

Reduction in energy consumption at Regnis (Lanka) PLC per month 1,341.80 491.4

Reduction in Diesel Consumption and CO2 emissions at Regnis

Diesel saving in the factory (l) 2,413

CO2 emission per diesel litre (kg) 2.82

Reduction in CO2 emission (l) 139,531

We inform our customers about the properties of our products and conditions of usage, and actively ensure product safety throughout their entire life cycle to minimise adverse impacts on people and the environment.

Approximately 23% of revenue of Singer is generated from products manufactured in our state-of-the-art local factories. The factories are certified by ISO Standards and are manned by the country’s most qualified and skilled production managers, engineers, and manual workforce, who are capable of producing advanced and innovative products.

We use customer feedback and market trends to develop new products with the support of our long-standing third party local suppliers. Customers are assured about the quality of our products which are subject to stringent quality assurance by our Quality Assurance Division, manned by professional engineers. From sample evaluations to post-sale evaluations, our products are continuously enhanced with a lengthy life cycle.

Organisation Supply Chain

Own Manufacturing FacilitiesThe Singer Piliyandala Factory is equipped with the latest technology. These modern manufacturing facilities allow us to operate locally on a large scale and we constantly upgrade our facilities to offer the best manufacturing processes.

Highly Reputed SuppliersAs part of our agenda to deliver the best products to our customers, we ensure sourcing is done only from reputed suppliers. Taking into consideration the suppliers’ ranking in the industry, we visit their factories and evaluate their credibility before entering into business agreements with them. Some of our original equipment manufacturing sources are Polytron, Indonesia; Skyworth, Galanz and TCL and Huawei China; Pensonic, Malaysia; Arçelik, Turkey; and Whirlpool, India.

Product Sourcing for Our Own BrandsWe employ strong measures to source products from the world’s leading manufacturers by evaluating them on key areas. These include industry ranking, company reputation, management style, financial stability, quality consciousness, delivery capabilities, and more.

Freedom of association and collective bargaining There have been no operations and suppliers identified in which right to exercise freedom of association and collective bargainings may be violated or at significant risk.


Grievances on Environmental ImpactsThe Singer Group believes in the importance and value of protecting and preserving biodiversity. To this extent, the Company does not own, lease, or manage any operational sites in or adjacent to protected areas and areas of high biodiversity value outside of protected areas. The Group takes every effort to prevent environmental harm.

No grievances were filed on environmental impacts through formal grievance mechanisms during the reporting period. Neither were any monetary or non-monetary sanctions imposed for non-compliance with environmental laws and regulations. All suppliers are required to adhere to the Singer Code of Conduct and environmental standards.

Product ResponsibilityA combination of the highest customer benefit, the highest safety standards, and maximum environmental and climate compatibility are what constitute product responsibility for Singer.

We strive to continuously provide consumers with products and services of world class repute. Therefore, the safety of our products is of paramount importance through all stages of their life cycle, including production, product use, disposal, and recycling.

We adopt the same considerations where product sourcing is concerned, where we measure for environmental compatibility and energy efficiency through the entire product life cycle.


Details of our suppliers and payments can be found in the following tables.

Profile of Suppliers Singer (Sri Lanka) PLC Regnis (Lanka) PLC Regnis Appliances (Pvt) Ltd.


Group

Number of

Suppliers

Payments(Rs.)

Number of

Suppliers

Payments (Rs.)

Number of

Suppliers

Payments (Rs.)

Number of

Suppliers

Payments

(Rs.)

Number of

Suppliers

Payments

(Rs.)

Small and Medium Scale Suppliers 281 790,562,107 199 1,298,423,344 6 56,890,259 38 33,228,845 524 2,179,104,555

Large Scale Suppliers 317 46,866,234,418 196 3,506,714,532 13 1,217,074,285 38 449,888,817 564 52,039,912,053

Sub Contractors 7 92,073,358 9 135,466,743 2 46,378,007 1 4,825,671 19 278,743,779

B2B suppliers – – 1 2,230,103 1 2 2,230,103

Others – – 117 46,203,209 117 46,203,209

Total 605 47,748,869,883 404 4,940,604,619 139 1,368,775,863 78 487,943,333 1,226 54,546,193,699

Geographical Breakdown of Suppliers Singer (Sri Lanka) PLC

Regnis (Lanka) PLC

Regnis Appliances (Pvt) Ltd.

Singer Industries

(Ceylon) PLC

Group

Payments to local suppliers 18,628,973,026 2,228,319,465 318,649,991 163,409,699 21,339,352,181

Payments to international suppliers 29,119,896,858 2,712,285,154 1,050,125,872 324,533,634 33,206,841,518

Total 47,748,869,884 4,940,604,619 1,368,775,863 487,943,333 54,546,193,699


Compliance

Customer PrivacyDuring the year, the Group did not encounter any substantiated complaints regarding breaches of customer privacy and losses of customer data.

Health and Safety of ProductsThere were no incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of our products and services during the year.

There were no incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling during the year.

Marketing CommunicationsThere were no incidents of non-compliance with regulations and voluntary codes pertaining to marketing communications, including advertising, promotions and sponsorships during the year. The Company does not engage in the sale of banned products.

Product and Service UsageThe Company was not subject to monetary fines for non-compliance with laws and regulations concerning the provision and use of products and services during the year.

Our Retail Presence

Southern

Northern

North Central

North Western

Central

Eastern

Western

Sabaragamuwa

Uva

20

27

50

30

38

143

39

52

33

Our Retail Presence

Province Singer Mega Singer Plus Singer Homes Satellite Shops SISIL World Total

Central 2 26 3 11 8 50

Eastern – 21 – 4 2 27

North Central – 24 1 5 3 33

North Western – 25 2 6 5 38

Nothern – 15 – 1 4 20

Sabaragamuwa – 19 2 7 11 39

Southern – 33 1 12 6 52

Uva – 13 1 11 5 30

Western 20 83 9 7 24 143

Total 22 259 19 64 68 432


Southern



Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report

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116 155 156Corporate Governance Audit Committee Report Remuneration

Committee Report

Singer’sgovernance


Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report










Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related Party Transactions Review Committee Report Risk Management Corporate Governance Audit Committee Report Remuneration Committee Report Nomination Committee Report Related

Singer’sgovernance

157 158 159Nomination Committee Report

Related Party Transactions Review Committee Report

Risk Management


Group/Company ensures to comply with established best practices in corporate governance and ensures the highest ethical standards in conduct of its business. The Board adopts core values and standards which set out the conduct of staff in their dealings with shareholders, customers, colleagues, suppliers and other stakeholders. Once the core values are set and communicated to all levels of the Organisation, the Group/Company is of the belief that the highest standards of integrity will be maintained in business.

Governance Policy and FrameworkGovernance framework covers both corporate governance and the business governance. Corporate governance and business governance are interrelated processes and one process is always linked to and dependent on the other process. Business governance enables us to focus on areas of value creation to the business. Corporate governance process is to safeguard and ensure that the Group/Company achieve business performance maintaining a balance between accountability and assurance of the business process. Thus, we believe our business governance and corporate governance are interlinked to each other as depicted below:

In line with the above governance framework, the Group/Company believes that successfully run business enterprises are founded on a set of fundamental qualities – those that embed transparency, accountability and responsibility within the core of its business operations. Translated into action, the Group’s/Company’s strong core qualities and guiding corporate governance functions ensure that we remain “law abiding”, strictly adhering to the laws and regulations of the country. Business integrity and accountability to stakeholders are top of the mind factors that we inculcate right across – from the Board of Directors to the shop floor.

Statement of ComplianceSinger Group is fully – compliant with the Code of Best Practices on Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka as well as the Rules on Corporate Governance published by the Colombo Stock Exchange, except which are specifically mentioned in the corporate governance report. In addition to the above, our Subsidiary Company Singer Finance (Lanka) PLC is fully

compliant with the requirement set out by the Finance Companies Act No. 78 of 1988 and subsequent amendments and Finance Companies Corporate Governance Direction No. 3 of 2008 issued by the Central Bank of Sri Lanka.

The following developments took place during the period:

z Change of ownership

Hayleys PLC together with its Subsidiaries, Volanka (Pvt) Ltd., and Carbotels (Pvt) Ltd., acquired on 15th September 2017 a total of 231,864,362 ordinary shares in Singer (Sri Lanka) PLC, constituting approximately 61.73% of the total shares in issue at a price of Rs. 47/- per share, making Hayleys PLC the controlling party of Singer (Sri Lanka) PLC with effect from 15th September 2017. Previous Parent Company of Singer (Sri Lanka) PLC was Retail Holdings (Sri Lanka) BV. Consequent to the above transaction a mandatory offer was made by Hayleys PLC as Hayleys PLC triggered the Company Takeovers and Mergers Code 1995, published under the rules made by the Securities and Exchange Commission of Sri Lanka under section 53 of the Securities and Exchange Commission of Sri Lanka, Act No. 36 of 1987 as amended, and in terms of Rule 31 (1) (a) of the Code. Accordingly subsequent to the mandatory offer, Hayleys PLC with parties acting in concert holds 304,108,410 shares constituting approximately 80.96% of the total shares in issue.

z Change in financial year

The reporting period of Singer (Sri Lanka) PLC has been changed from 31st December to 31st March in order to align with the Parent Company’s reporting period with the approval of the Registrar of Companies. Therefore, the current financial period is 15 months ended 31st March 2018 and the next financial year end will be 12 months ending 31st March 2019. The disclosures pertaining to change of the financial reporting period has been made in accordance to LKAS 1: Presentation of Financial Statements.

z Mr. A.M. Pandithage (Appointed as Executive Chairman with effect from 2nd October 2017)

z Mr. K.D.D. Perera (Appointed as Co-Chairman with effect from 2nd October 2017)

z Mr. M.H. Jamaldeen (Appointed with effect from 2nd October 2017)

CORPORATE GOVERNANCE

z Mr. D.H. Fernando (Appointed with effect from 2nd October 2017)

z Mr. S.C. Ganegoda (Appointed with effect from 2nd October 2017)

z Mr. D.K. de S. Wijeyeratne (Appointed with effect from 1st April 2018)

z Mr. G.M. Gellecanao (Resigned w.e.f. 31st March 2017)

z Late Dr. S. Kelegama (Deceased on 23rd June 2017)

z Mr. P.J. O’Donnell (Resigned with effect from 2nd October 2017)

z Mr. J.J. Hyun (Resigned with effect from 2nd October 2017)

z Mr. D.T.R. De Silva (Resigned with effect from 31st March 2018)

z Mr. S. H. Goodman (Ceased to be a Director with effect from 31st March 2018 in terms of Section 211 of the Companies Act No. 07 of 2007)

z Mr. A. S. Paranavitane – Alternate to Mr. J.J. Hyun (Resigned w.e.f. 31st July 2017)

z Mr. K.K.L.P. Yatiwella – Alternate to Mr. P.J.O’ Donnell. (ceased w.e.f. 2nd October 2017 upon resignation as Alternate Director of his appointer Mr. P.J.O. Donnell)

z Mr. K.K.L.P. Yatiwella appointed as Alternate Director to Mr. S.C. Ganegoda w.e.f. 2nd October 2017

z Mr. H.A.P.S. Perera (Ceased to be Alternate Director to S. H. Goodman with effect from 31st March 2018))

Changes to Company Secretary and Secretary to following Subcommittees:

Hayleys Group Service (Private) Limited was appointed as Secretary to the company and following Subcommittees.

z Audit Committee z Related Party Transaction Review Committee

Business GovernanceBusiness governance (Performance Governance) is linked from Company’s Vision Statement to Final Objective level of grass root level. Business governance process is started at the point of preparing the annual plan and annual plan is focused on future strategic direction, long-term objectives, medium-term objectives and short-term set targets. Annual plan is initially approved by, the Parent Company and subsequently reviewed and approved by the Board. The Group CEO and Executive Committee review the strategic plan and budgets against the actual performance on a monthly basis and at more frequent intervals, as needed and Chairman and Board of Directors review actual performance at each Board meeting.

Singer (Sri Lanka) PLC Annual Report 2017/18 117 CORPORATE GOVERNANCE

IT GovernanceIT governance process of the Company ensures that IT objectives are aligned with the business objectives that will meet its strategic and operational objectives. IT governance is an integral part of the corporate governance process and which deals primarily with optimising the linkage between Strategic Directions and Information Management of the Company. Competent and dedicated staff are deployed to support this need. Company investment in IT resources covers resources operated and managed centrally and resources deployed in various places. IT resources include ERP system, other related business systems, internet, emails and other Company-wide data communication system.

Impact of the IT governance to diverse functional areas of the Company is driven by certain core objectives which are set below:

Compliance Investing in licensed software deployed in compliance with Intellectual Property Law with a view to educate and mandate compliance to such laws throughout the Company.

Operational Efficiency

Streamlining of inventory management, logistic management and credit management process so that integrity is maintained across the value chain through near real-time processing.

Prudent Capital Expenditure

All major IT investments are carefully evaluated by the IT team and built into the business plan and carefully scrutinised at the planning level, and approval is granted by the Board.

Customer Convenience

Ensuring process efficiencies to increase the contribution to customer convenience.

Green IT Protecting the environment by reducing print through migration to emails and soft copies.

Governance Structure

External Regulations Internal Regulations

Companies Act No. 07 of 2007 Articles of Association of the CompanyContinues Listing Requirements of the Colombo Stock Exchange

Singer Finance Manual

Code of Best Practice of Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka

Code of Ethics, Human Resources Policies and Procedures

Directives/ Regulations of the Securities and Exchange commission of Sri Lanka.

Information Technology and Other Internal Manuals

In case of Subsidiary Company Singer Finance (Lanka) PLC, requirements set out by the Finance Companies Act No. 78 of 1988 and Subsequent Amendments and Finance Companies Corporate Governance – Direction No. 3 of 2008 issued by the Central Bank of Sri Lanka

Standing Instructions, Policy and Procedures (P&P)

Shareholders

Employees

Group Chief Executive Officer

Community

Board of Directors

Customers

Executive Committee

Environment

AuditCommittee

NominationCommittee

Related Party Transactions ReviewCommittee

RemunerationCommittee

Board of Directors of Parent Company

Singer (Sri Lanka) PLC Annual Report 2017/18118CORPORATE GOVERNANCE

As diagrammatically presented above, Group governance structure is set up to create a distinction between the functions of the Board and Management team but ensuring effective co-operations and communication between two groups. Group Chief Executive Officer exercises triangular linking role between Board, Executive Management Committee and other Stakeholders, i.e., Shareholders, Employees, Customers, Community and Environment. Group’s Chief Executive Officer is the main communication link with the Board and Executive Management Committee. He also acts as a defacto officer to maintain a fair role on behalf of shareholders, employees, customers, community and environment.

Business EthicsThe Group enshrines the highest ethical standards in the conduct of its business affairs and its Board of Directors are tasked with ensuring that the resultant regime of exemplary governance across all aspects of business are in the best interests of stakeholders. Ethically correct conduct comprising integrity, honesty, fair play and loyalty pervade all Group actions.

Transparency is encouraged in all public disclosures, as well as in the way business and communication take place with all stakeholders. A “whistle-blowing policy” introduced internally in 2009 has increased the level of transparency towards a wider dimension.

All employees are bound by the Company’s written Code of Ethics that includes the following aspects:

z Exercise honesty, objectivity and diligence when performing ones duties.

z Avoid situations where personal interest might conflict with the interest of the Company; and if so, disclose such interest in advance.

z Maintain confidentiality of commercial and price-sensitive information.

z Work within applicable laws and regulations.

z Safeguard the Company’s assets. z Avoid conduct that will reflect badly on the person concerned or the Company’s image.

z Strictly avoid giving or accepting any kind of bribe, either directly or indirectly.

z Strictly avoid making contributions for political funds, either directly or indirectly.

z Strictly avoid any kind of sexual harassment.

The Company has implemented a formal whistle-blowing procedure and encourages any employee who suspect wrongdoing at work, whether by management, peers or any other employee, to raise their concerns.

Other PoliciesIn addition, the Company implements policies covering –

z Recruitment and selection z Financial integrity z Use of Company property including computers

z Non-harassment in the workplace z Environment, safety and health z Security of IT system

Responsibility to Customers The Company maintains an island-wide network of outlets and provides a wide choice of products and brands to its customers, augmented by easy payment opportunities. Outstanding customer care and world class after-sales service are two of seven propositions substantiating our claim to be a world-class Company. What is salient about the widespread nature of our distribution is that in most instances, a consumer living in any part of the country need not travel more than 10 km to obtain goods and services from the Company.

Products sold by the Company are of the highest quality and are rigorously tested prior to introduction. The Company extends warranties on its products. It maintains an island-wide network of service centres and franchise agents to facilitate product repairs. Customer grievances, if any, are handled promptly and solutions provided with exchange of merchandise in the unlikely event of a manufacturing defect.

Among developments relevant to customer relations in the year under review was the growing popularity of our Contact Centre established in 2006 to deal with customer complaints and product performance issues as well as to provide customer-related information. In addition to this, the Company conducts customer-loyalty programmes and Customer-Service Clinics across the country where any customer can relate their grievances or obtain service for their product on site.

In service to our differently-abled customers, wheelchair ramps and other such infrastructure modifications and facilities are being added to the

Company’s retail outlets progressively as part of routine showroom renovations.

EnvironmentSocial responsibility is regarded as a fundamental aspect of the Company’s strategy and it is one of the core values of the business. As stated in our value statement ‘we make every effort to ensure that the environment is protected and conserved for future generations’ and in line with this core value, the Company is committed to minimising any adverse impact the conduct of the business may have on the environment. Further to that, this core value encourages and ensures our products, processes and business does not unnecessarily damage the environment.

The Company is proud to present in this Annual Report, based on the Global Reporting Initiatives (GRI) Guidelines version G4. The Company’s Social and Environment Management Initiations are more-fully described in the on pages 67 to 112 and pages 255 to 258.

Code of Best Practice on Corporate GovernanceWe set out below the corporate governance practices adopted and practiced by the Company, the extent of adoption of the Code of Best Practice on Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka and the Rules set out in Section 7.10 of the Colombo Stock Exchange Listing Rules on Corporate Governance.

Section AThis section covers Company’s extent of adherence to the requirements of the Code of Best Practice on Corporate Governance issued in year 2017 by The Institute of Chartered Accountants of Sri Lanka. This reflects Company’s governance in following six fundamental aspects:

z Directors z Director Remuneration z Relationship with Shareholders z Accountability and Audit z Institutional Investors z Other Investors z Internet of things and cyber security z Environment, society and governance

These are discussed in the sections that follows.

Singer (Sri Lanka) PLC Annual Report 2017/18 119 CORPORATE GOVERNANCE

A. DirectorsA.1 – The Board

Main PrincipleEvery public company should be headed by an effective Board, which should direct, lead and control the company.

Corporate Governance Principle

CA Sri LankaCode Reference

Requirement of the Code Compliant with the Code Compliance

Board Meeting A.1.1 The Board should meet regularly, at least once in every quarter.

The Board meets at least four times a year and additional meetings are held as necessary. The Board Subcommittees also met on a regular basis. Circular Resolutions are passed as per the requirements. The Board met eight times during the period ended 31st March 2018. Details of the meetings and attendance of the members are set out on page 154. The meetings convened by the Board Subcommittees during 2017/18 are also provided on page 154.

The regularity of Board meetings and the structure and process of submitting information should be agreed to and documented by the Board

A board pack containing all relevant information is submitted to board of directors

Responsibility of the Board

A.1.2 Board should be responsible for matters including:

Ensuring the formulation and implementation of a sound business strategy.

The Board is responsible for the strategic planning process of the Company. This includes the responsibility for the formulation of the strategic vision and mission of the Company, setting the overall corporate policy and strategy, monitoring performance and reviewing risks and major investments. The Board also takes on the added responsibility of directing Company performance towards achieving the best results possible and increasing shareholder value. The Board sets the broad parameters of the Company’s business. The Company’s business units are then tasked with their application, in achieving specific targets and objectives.

Appointing the Chair and the Senior Independent Director if relevant.

Not applicable since Group CEO is the apex Executive in charge of the day-to-day management of operations and business of the Company.

Ensuring that the CEO and Management Team possess the skill, experience and knowledge to implement strategy.

The profile of the CEO is provided in this Annual Report on page 26.

While the Board of Directors is ultimately responsible for the operations and financial soundness of the Company, the day-to-day management of the Company is entrusted to the Group CEO. There is extensive staff participation in decision-making at all levels, with strategic recommendations on material matters flowing to the Board for final decision.

The Group CEO chairs the Executive Committee. The Executive Management Committee, comprising all Key Managers who are divisional heads and Four Deputy Directors and Group CEO meets every week for performance review and decision-making.

The Company’s Annual Plan addresses the requirements of all business units and divisions. This ensures that the entire Company follows the set plans and objectives as articulated in the Annual Plan. These in turn become the primary objectives of the Management Committee which is represented by all Heads of Divisions, and are shared with Divisional Heads and Heads of all SBUs. The Management Committee together with the Heads of Divisions and SBUs have the autonomy and freedom to translate these objectives to specific goals that are achievable.

Key programmes are identified by the Group CEO for each year in line with the Annual Plan after they are discussed at Executive Committee meetings. A review of progress on plan implementation is a key item on the agenda of the monthly Management Review meetings.





Ensuring the adoption of an effective CEO and Senior Management succession strategy.

Succession planning is given due recognition in the corporate culture. Effective succession planning is a criterion in the performance appraisals of the Senior Management and Key Management.

Addition to that, as part of the development and succession programme, the “3x3x3” initiative seeks to ensure that all positions of Key Managers, Senior Managers, Middle Managers and Junior Managers have been identified and are groomed for succession.

Approving budgets and major capital expenditure.

Budgets and major capital expenditure are reviewed and approved by the Board.

Determining the matters expressively reserved to the Board and those delegated to the Management including limits of authority and financial delegation.

The Board has agreed and reserved power to determine matters including approving of major capital expenditure, appointing the secretary to the Board and seeking professional advice as and when needed.

Limits of authority and financial delegation are agreed by the Board in order to manage affairs efficiently.

Ensure effective systems to secure integrity of information, internal control and risk management.

The Board has delegated this responsibility to the Audit Committee.

The Audit Committee is empowered to review and monitor the financial reporting process of Singer Group so as to provide additional assurance on the reliability of Financial Statements through a process of independent and objective review.

As such, the Audit Committee acts as an effective forum in assisting the Board of Directors in discharging their responsibilities on ensuring the quality of financial reporting and related communication to the shareholders and the public.

Audit Committee framework, composition, responsibilities and duties are given in the Audit Committee Report on page 155.

Risk Management framework is given in the Risk Management Report appearing from pages 159 to 163.

Ensuring compliance with laws, regulation and ethical standards.

The Board follows a policy of strict compliance with laws and regulatory requirements and ensures that stakeholder interests are considered in key corporate direction.

A compliance checklist is provided to Audit Committee and Board members in every quarter by the Compliance Officer indicating compliance with applicable laws, regulations etc.

The Company has also issued a Code of Ethics and Human Resources Policies and Procedures applicable to all employees.

All stakeholders’ interests are considered in corporate decisions.

The Board adopted core values and standards which set out the conduct of staff in their dealings with shareholders, customers, community, environment, suppliers and other stakeholders. Once the core values are set and communicated to all levels of the Organisation, there is a belief that the highest standards of integrity are maintained in business.

The Board relies on the integrity and due diligence of Key Managers, Senior Managers, Auditors and Advisors to oversee the Group’s overall performance objectivities, financial plans and annual budgets, investments, financial performance reviews, risk management and corporate governance practices.

Recognising sustainable business development in corporate strategy, decisions and activities and consider the need for adopting “integrated reporting”.

Development of sustainable value is embedded in the corporate strategies






The Company’s values and standards are set with emphasis on adopting appropriate accounting policies and fostering compliance with financial regulations.

The Group enshrines the highest ethical standards in the conduct of its business affairs and its Board of Directors are tasked with ensuring that the resultant regime of exemplary governance across all aspects of business are in the best interests of stakeholders. Ethically correct conduct comprising integrity, honesty, fair play and loyalty pervade all Group actions.

Accounting policies are reviewed annually in light of changing business requirements, evolving international and local accounting standards and industry best practice. As mentioned above, significant emphasis is placed on compliance with applicable regulations. Group continues to adopt same accounting policies adopted in year 2016 and which are given as part of the Financial Reports in pages 176 to 192.

Establish a process of monitoring and evaluation of progress on strategy implementation, budgets, plans and related risks.

Performance and progress of strategy implementation, budgets, plans and risks are monitored through a formal reporting process.

Ensuring that a process is established for corporate reporting on annual and quarterly basis or more regularly as relevant to the Company

The Board ensures compliance to annual and quarterly corporate reporting requirements.

Fulfilling such other Board functions as relevant to the Organisation.

The Board makes every endeavour to ensure a balanced and objective assessment of the Company’s position, performance and prospects.

Members from professional accounting bodies and high scholar representatives from the field of economics are on the Board ensuring financial and economic acumen, knowledge and other Board members from the professional marketing bodies ensure stimulation of marketing knowledge of the Board members.

Compliance with laws and seeking independent professional advices

A.1.3 The Board collectively, and Directors individually, must act in accordance with the laws of the country and there should be a procedure agreed by the Board of Directors to obtain independent professional advice where necessary, at the Company’s expense.

As mentioned above, there is a significant emphasis across the Organisation to ensure compliance with applicable laws and regulations.

The Board members are permitted to obtain independent professional advice from a third party including the Company’s External Auditors and other professional consultants whenever deemed necessary at the expense of the Company.

Independent professional advice were obtained during the year 2017/18 as below:

During the year under review, Board has obtained independent legal opinion to the amendment to the Value Added Tax Act No. 07 of 2014. Also the Board has obtained independent professional advice from Acuity Partners (Pvt) Ltd. on the mandatory offer made by Hayleys PLC and partners acting in concert to the shareholders of the Company to acquire all the remaining issued and fully paid up ordinary voting shares of the Company not already owned by Singer.






Company Secretary

A.1.4 All Directors should have access to the advice and service of the Company’s Secretary, who is responsible to the Board in ensuring, that the Board procedures are followed and that the applicable rules and regulations are complied with. Any question of the removal of the Company Secretary should be a matter for the Board as a whole.

The Company Secretary ensures that all Board Terms of Reference are followed and applicable rules and regulations are adhered to. The Company Secretary advices the Board and ensures that the Company complies with its Articles of Association, Companies Act and such regulatory publication, Board procedures and other applicable rules and regulations are followed. All Directors have access to the Company Secretary. The Secretary possesses the required qualifications as set out in the Companies Act.

The Company should obtain appropriate insurance cover as recommended by the Nomination Committee for the Board, Directors and Key Management Personnel.

Insurance cover has been obtained.

Independent judgement of Directors

A.1.5 All Directors should bring independent judgement to bear on issues of strategy, performance, resource allocation, risk management, compliance and standards of business conduct.

The Chairman conducts Board meetings in a manner which ensures that there is effective participation from all Directors, their individual contribution and concerns are objectively assessed prior to making key decisions and that the balance of power is maintained.

In advance of every Board meeting, each Director receives a comprehensive set of Board papers and any additional information requested by the Directors. It is the Group CEO’s duty to ensure that all members are properly briefed.

None of the Independent Directors have held executive responsibilities in the Company, and have submitted a declaration confirming their independence in accordance with Section 7 of the CSE Listing Rules on Corporate Governance as at 31st March 2018.

Dedication of adequate time and effort by the Directors

A.1.6 Every Director should dedicate adequate time and effort to matters of the Board and the Company, to ensure that the duties and responsibilities owned to the Company are satisfactorily discharged.

The Board met on eight occasions during the year.

The Board is satisfied that the Chairman and the Non-Executive Directors committed sufficient time during 2017/18 to fulfil their duties.

A.1.7 One third of Directors can call for a resolution to be presented to the Board where they feel it is in the best interest to the company to do so.

As per Articles of Association, resolutions could be passed with majority voting.






Training for new and existing Directors

A.1.8 Every Director should receive appropriate training when first appointed to the Board of a company, and subsequently as necessary. The training curricular should encompass both general aspects of directorship and matters specific to the particular industry/company concerned. A Director must recognise that there is a need for continuous training and expansion of the knowledge and skill required to effectively perform his duties as a Director. The Board should regularly review and agree on the training and development needs of the Directors.

The Directors are given the opportunities to familiarise and obtain an in-depth understanding of the Company’s business, its strategies, risks and processes, at their discretion.

Training is provided to Executive Directors and Alternate Directors to equip themselves to discharge their responsibilities effectively. This includes training provided by principles, external and in-house training. Training and development needs are reviewed on a regular basis.

Directors are briefed on changes in laws and regulations, tax laws and accounting standards from time-to-time either during the Board meetings or at specially convened sessions.

A.2 Chairman and Group Chief Executive Officer (Group CEO)

Main Principle




Separation of the roles of Chairman and Group CEO

A.2.1 The positions of Chairman and Group CEO are separated to ensure a balance of power and authority and to prevent any one individual from possessing unfettered decision-making authority.

Although Chairman acts as Executive Chairman, the Chairman’s and Group CEO’s functions are separated to ensure a balance of power of authority and this dual panel structure has been continued throughout the year 2017/18.

The Chairman of the Board of Directors functions in a executive capacity. The Group Chief Executive Officer functions as an Ex-Officio Director of the Board and is the apex executive in charge of the day-to-day management of operations and business of the Company, while providing the link between the, Board of the Parent Company and Divisional Heads (Key Management).



A.3 Chairman’s RoleMain PrincipleThe Chairman’s role in preserving good corporate governance is crucial. As the person responsible for running the Board, the Chairman should preserve order and facilitate the effective discharge of Board functions.




Role of Chairman

A.3.1 The Chairman should conduct Board proceedings in a proper manner and ensure, inter alia, that –

z The agenda for Board meetings is developed in consultation with the CEO, Directors and the company secretary taking into consideration matters relating to strategy, performance, resource allocation, risk management and compliance.

z Agenda for Board meetings is developed in consultation with the Group CEO, Directors, CFO and the Company Secretary.

z Sufficiently detailed information of matters included in the agenda should be provided to Directors in a timely manner.

z Required information are provided to Directors in a timely manner.

z All Directors are made aware of their duties and responsibilities and the Board and Committee structures through which it will operate in discharging its responsibilities.

z All Directors are aware of their duties and responsibilities and Chairman and Group CEO provide a comprehensive overview of the Company and its operations once a new Director is appointed to the Board.

z The effective participation of both Executive and Non-Executive Directors is secured.

z The Chairman is responsible for leading the Board and for its effectiveness. In practice, this means taking responsibility for the Board’s composition, ensuring that the Board focuses on its key tasks and supports the Group CEO in managing the day-to-day running of the Company. The Chairman is also the ultimate point of contact for shareholders, particularly on corporate governance issues.

z All Directors are encouraged to make an effective contribution, within their respective capabilities, for the benefit of the Company.

z The Chairman satisfies himself that the information available to the Board is sufficient to make an informed assessment of the Company’s affairs as well as to discharge their duties to all stakeholders.

z All Directors are encouraged to seek information considered necessary to discuss matters on the agenda of meetings and to request inclusion of matters of corporate concern on the agenda.

z Necessary information and presentations are done if necessary to the agenda items. All Directors are free to communicate with divisional heads and head of risk management to call additional information necessary.

z A balance of power between Executive and Non-Executive Directors is maintained.

z The Chairman conducts Board meetings in a manner which ensures that there is effective participation from all Directors, their individual contribution and concerns are objectively assessed prior to making key decisions and that the balance of power is maintained.

z The views of Directors on issues under consideration are ascertained; and

z The Board is in complete control of the Company’s affairs and alert to its obligations to all shareholders and other stakeholders.

z Chairman ensures that regular meetings are conducted at least once a quarter and the minutes of the meetings are accurately recorded.

z Chairman approves the agenda prepared by the Company Secretary.



A.4 Financial Acumen

Main PrincipleThe Board should ensure the availability within it of those with sufficient financial acumen and knowledge to offer guidance on matters of finance.




Financial acumen and knowledge

A.4.1 Availability of sufficient financial acumen and knowledge.

Group CEO is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and Fellow of the Chartered Institute of Management Accountants – UK and a Certified Global Management Accountant.

In addition, the Board includes a member who is a Fellow Member of the Association of Certified Chartered Accountants, UK, a member who is a Fellow Member of The Institute of Chartered Accountants of Sri Lanka and a member of the Institute of Certified Management Accountants of Australia, a member who is an Associate Member of The Institute of Chartered Accountants of Sri Lanka (ACA) and Fellow Member of The Chartered Institute of Management Accountants, UK, (FCMA). Other members of the Board have the ability to offer guidance on matters of finance to the Board.

The profiles of the Board of Directors are provided in this Annual Report from page 26 to 29.

A.5 Board Balance

Main Principle It is preferable for the Board to have a balance of Executive and Non-Executive Directors such that no individual or small group of individuals can dominate the Board’s decision-taking.




Presence of strong team of Non-Executive Directors

A.5.1 The Board should include Non-Executive Directors of sufficient calibre and number for their views to carry significant weight in the Board’s decisions.

The Board should include at least three Non-Executive Directors or such number of Non-Executive Directors equivalent to one-third of total number of Directors, whichever is higher. In the event, the Chairman and CEO is the same person, Non-Executive Directors should comprise a majority of the Board.

Seven out of nine Directors on the Board are Non-Executive Directors which is well above the minimum prescribed by the Code. This ensures views of Non-Executive Directors carry a significant weight in the decisions made by the Board.

Independent Non-Executive Directors

A.5.2 Where the constitution of the Board of Directors includes only three Non-Executive Directors, all three Non-Executive Directors should be “independent”. In all other instances three or two third of Non-Executive Directors appointed to the Board of Directors whichever is higher should be “independent”.

Three out of seven Non-Executive Directors on the Board are independent based on the criteria set by this Code and the Listing Rules of the Colombo Stock Exchange. However, the Board has determined Mr. M.H. Jamaldeen as an independent Non-Executive Director notwithstanding that he is a Director of Hayleys PLC, the Parent Company as the objectivity of his role is not comprised by being on both Boards.

The Names of the Independent Non-Executive Directors are disclosed on page 126 and back page of the Annual Report.






Independence of Non-Executive Directors

A.5.3 For a Director to be deemed “independent” such Director should be independent of management and free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgement.

The Company maintains the “Interest Register” required by the Companies Act No. 07 of 2007, which also shows details of Director Interest in Contracts/Company or Group.

A disclosure on related party transactions is available on pages 239 to 242.

Annual Declaration

A.5.4 Each Non-Executive Director should submit a signed and dated declaration annually of his/her independence or non-independence against the specified criteria set out in the Specimen in Schedule K.

Every Non-Executive Independent Director of the Company has made written submissions as to their independence against the specified criteria set out by the Company, which is in line with the requirements of Schedule K of this Code.

Determination of Independence of Director

A.5.5 The Board should make a determination annually as to the independence or non-independence of each Non-Executive Director based on such a declaration made of decided criteria and other information available to the Board, and should set out in the Annual Report the names of Directors determined to be “independent”.

The Board should specify the criteria not met and the basis for its determination in the Annual Report, if it determines that a Director is independent notwithstanding the existence of relationships or circumstances which indicate the contrary.

The Board has determined the independence of Directors based on the declarations submitted by the Non-Executive Directors, as to their independence, as a fair representation and will continue to evaluate their independence on this basis annually. No circumstances have arisen for the determination of independence by the Board, beyond the criteria set out in the Code. Independent Non-Executive Directors are:

Mr. D. SooriyaarachchiMr. M.H. Jamaldeen* Mr. D.H. FernandoMr. D.K. de S.Wijeyeratne

*The Board has determined Mr. M.H. Jamaldeen as an Independent Non-Executive Director notwithstanding that he is a Director of Hayleys PLC, the Parent Company as the objectivity of his role is not compromised by being on both Boards.

Appointment of Alternate Director

A.5.6 If an alternate Director is appointed by a Non-Executive Director such alternate Director should not be an executive of the Company. If an alternate Director is appointed by an independent Director, the person who is appointed also should meet the criteria of independence and the provision on minimum number of independent Directors also should be satisfied.

Independent Non-Executive Directors have not appointed alternate directors.

Alternative Directors to the Non-Executive Directors are Executives of the Company. However, board balance is not affected since the Board complies with Code A.5.2

Requirement to appoint “Senior Non-Executive Director”

A.5.7 In the event the Chairman and CEO is the same person, or the chairman is not an Independent Director or the Chairman is immediately preceding CEO, the Board should appoint one of the Independent Non-Executive Directors to be the ‘Senior Independent Director’ (SID) and disclose this appointment in the Annual Report.

Not applicable since Group CEO is the apex Executive in charge of the day-to-day management of operations and business of the Company.

Confidential discussion with Senior Independent Director

A.5.8 The Senior Independent Director should make himself available for confidential discussions with other Directors who may have concerns which they believe have not been properly considered by the Board as a whole and which pertain to significant issues that are detrimental to the Company.

Not Applicable.

Chairman’s meetings with Non-Executive Directors

A.5.9 The Chairman should hold meetings with the Non-Executive Directors only, without the Executive Directors being present, as necessary and at least once each year.

Chairman meets with Non-Executive Directors without the presence of Executive Directors, whenever necessary.






Recording of concerns in Board Minutes

A.5.10 Where Directors have concerns about the matters of the Company which cannot be unanimously resolved, they should ensure their concerns are recorded in the Board minutes.

Concerns raised by the Directors during the period, if any, are recorded in the minutes of Board meetings with adequate details by the Company Secretary.

A.6 Supply of Information

Main Principle The Board should be provided with timely information in a form and of a quality appropriate to enable it to discharge its duties.


SEC and CASri LankaCode Reference


Management obligation to provide appropriate and timely information to the Board

A.6.1 Management has an obligation to provide the Board with appropriate and timely information, but information volunteered by management may not be enough in all circumstances and Directors should make further inquiries where necessary. The Chairman should ensure all Directors are properly briefed on issues arising at Board meetings.

The Company ensures that the Directors receive adequate information in a timely manner. On urgent matters, every effort is made to provide the information, as early as possible.

The Board receives a standard set of documents, which are timely, accurate, relevant and comprehensive. These papers include a detailed analysis of financial and non-financial information. The Board may call for additional information or clarify issues with any member of the Executive Committee.

If necessary, all Directors are adequately briefed by the Group CEO on matters arising at Board meetings. The Secretary and the Compliance Officer ensure that Board Papers are circulated in advance prior to Board meeting.

If necessary, members of the Executive Committee, External Auditors and Outside Consultancies makes presentations on issues of importance.

The Chairman ensures that all Directors are briefed adequately on issues arising at Board meetings.

Adequate time for effective conduct of Board meetings

A.6.2 The minutes, agenda and papers required for a Board meeting should ordinarily be provided to Directors at least seven (7) days before the meeting, and the minutes of the meeting should ordinarily be provided to directors at least two weeks after the meeting date.

The minutes, agenda and papers required for Board meeting are provided in advance to facilitate its effective conduct.

A.7 Appointments to the Board

Main Principle There should be a formal and transparent procedure for the appointment of new Directors to the Board.




Nomination Committee

A.7.1 A Nomination Committee should be established to make recommendations to the Board on all new Board appointments. Terms of Reference for Nomination Committees are set out in Schedule A. The Chairman and members of the Nomination Committee should be identified in the Annual Report.

The Committee consists of one Independent Non-Executive Director, one Non-Executive Director, Chairman who is also an Executive Director and Group CEO.

Please refer page 157 for new appointment in year 2017.

A separate section of the Annual Report should describe the work of the Nomination Committee including the process it has used in relation to Board appointments.

Details of work of the Nomination Committee are given in page 157.






Assessment of Board composition by the Nomination Committee

A.7.2 The Nomination Committee should annually assess Board-composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company. The findings of such assessment should be taken into account when new Board appointments are considered and when incumbent Directors come up for re-election.

Board as a whole annually assessed the composition of the Board to ensure that the combined knowledge and experience of the Board matches the strategic demand facing the Company. The findings of such assessments are taken into account when new Board appointments are considered.

Disclose of required details of new Directors to shareholders

A.7.3 Upon the appointment of a new Director to the Board, the Company should forthwith disclose to shareholders:

z a brief résumé of the Director; z the nature of his expertise in relevant functional areas;

z the names of companies in which the Director holds directorships or memberships in Board committees; and

z whether such a Director can be considered “independent”.

All new appointments are communicated to the shareholders via the Colombo Stock Exchange.

The details of the current Board of Directors and new appointments are provided on pages 26 to 29 in this Annual Report.

A.8 Re-election

Main Principle All Directors should be required to submit themselves for re-election at regular intervals and at least once in every three years




Re-election of Non-Executive Directors, Chairman and CEO

A.8.1 Non-Executive Directors should be appointed for specified terms subject to re-election and to the provisions in the Companies Act relating to the removal of a Director, and their reappointment should not be automatic.

In terms of the Articles of Association, one-third of the Directors, except for Chairman, Managing Director/CEO, retire by rotation and may offer themselves for re-election at the AGM. By virtue of being the Chairman, Managing Director/CEO are not required to make themselves available for re-election as per the Articles of Association. The Company’s Articles of Association provides that any Director appointed by the Board during the period to hold office until the next Annual General Meeting and seek reappointment by the shareholders at the said AGM.

A.8.2 All Directors including the Chairman of the Board, should be subject to election by shareholders at the first opportunity after their appointment, and to re-election thereafter at intervals of no more than three years. The names of Directors submitted for election or re-election should be accompanied by a résumé minimally as set out in paragraph A.7.3 above, to enable shareholders to make an informed decision on their election.

Based on the article and the current composition of the Board, a Director has to come forward for re-election, every three years.

A résumé of the Directors coming up for re-election at the AGM, 2017/18 is available on pages 26 to 29.

The Chairman and Chief Executive Officer does not retire by rotation.

Resignation A.8.3 In the event of a resignation of a Director prior to completion of his appointed term, the Director should provide a written communication to the Board of his reasons for resignation.

Written communications are provided to the Board by directors who resign prior to completion of his appointed term.



A.9 Appraisal of Board Performance

Main Principle Boards should periodically appraise their own performance in order to ensure that Board responsibilities are satisfactorily discharged.




Annual performance evaluation of the Board and its Committee

A.9.1 The Board should have in place a formal and rigorous process for annually reviewing the performance of the board and its committees and should address any matters that may arise from such review, in the discharge of its key responsibilities as set out in A.1.2.

The performance of the Board and the subcommittee is reviewed and evaluated by the Board and Chairman based on a self-appraisal basis.

A.9.2 The Board should also undertake an annual self-evaluation of its own performance and that of its committees.

The evaluation should be carried out by each Director individually. The collective outcome should be compiled and made available to Nomination Committee, which should make recommendations to the Board on initiatives and actions required to improve the balance of skills, experience, independence, industry and Company knowledge, training of Directors, governance processes, strategy review and other factors relevant to its effectiveness.

Not Complied.

A.9.3 The board should have a process to review the participation, contribution and engagement of each Director at the time of re-election

Not Complied.

A.9.4 The Board should state how such performance evaluations have been conducted, in the Annual Report.

Not Complied.

A.10 Disclosure of Information in Respect of Directors

Main Principle Shareholders should be kept advised of relevant details in respect of Directors.




Details in respect of Directors

A.10.1 The Annual Report of the Company should set out the following information in relation to each Director:

i. Name, qualifications and brief profile; Available on pages 26 to 29 of Board of Directors.

ii. The nature of his/her expertise in relevant functional areas;

Available on pages 26 to 29 of Board of Directors.

iii. Immediate family and/or material business relationships with other Directors of the Company;

Not Applicable.

iv. Whether Executive, Non-Executive and/or Independent Director


v. Names of listed companies in Sri Lanka in which the Director concerned serves as a Director;







vi. Names of other companies in which the Director concerned serves as a Director, provided that where he/she holds directorships in companies within a Group of which the Company is a part, their names need not be disclosed; it is sufficient to state that he/she holds other directorships in such companies;


vii. Number/percentage of Board meetings of the Company attended during the year;

Available on page 154.

viii. The total number of Board seats held by each Director indicating listed and unlisted companies and whether in an executive or non-executive capacity;

Not disclosed in the Annual report. But can be obtained from Company Secretary.

ix. Committees in which the Director serves as Chairman or a member;

Available on pages 167 to168.

x. Number/percentage of Committee meetings attended during the year.

Available on page 154.

A.11 Appraisal of Group Chief Executive Officer

Main Principle The Board should be required, at least annually, to assess the performance of the Group CEO.




Setting annual targets and the appraisal of performance of the CEO

A.11.1 At the commencement of every fiscal year, the Board in consultation with the CEO, should set, in line with the short, medium and long-term objectives of the Company, reasonable financial and non-financial targets that should be met by the Group CEO during the year.

The Annual Business Plan is prepared setting up short-term, medium-term and long-term financial and non-financial goals. The Annual Business Plan is initially approved by the Board.

A.11.2 The performance of the Group CEO should be evaluated by the Board at the end of each fiscal year to ascertain whether the targets set by the Board have been achieved and if not, whether the failure to meet such targets was reasonable in the circumstances.

Assessment of performance of the Group CEO is carried out by the Board at the end of each year to ensure that pre-agreed targets have been achieved or if not whether there are acceptable reasons for not achieving them.



B. Directors’ RemunerationB.1 Remuneration ProcedureMain Principle Companies should establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. No Director should be involved in deciding his/her own remuneration.




Establishment of the Remuneration Committee

B.1.1 To avoid potential conflicts of interest, the Board of Directors should set up a Remuneration Committee to make recommendations to the Board, within agreed terms of reference, on the Company’s framework of remunerating Executive Directors. (These also include Post-Employment Benefits as well as Terminal Benefits.) Terms of Reference for Remuneration Committees are set out in Schedule C.

The scope of the Committee is to consider and recommend to the Board remuneration and perquisites of the Chairman, Group CEO, Independent Directors, Executive Directors of the Board of the Company including Key Managers and approve recommendations made by the Group Chief Executive Officer and the Parent Company.

Hayleys PLC., is the Parent of the Company.

Composition of the Remuneration Committee

B.1.2 Remuneration Committees should consist exclusively of Non-Executive Directors with a minimum of three Non-Executive Directors of whom the majority should be Independent. The Chairman should be an independent Non-Executive Director and should be appointed by the Board.

The Committee consists of three Independent Non-Executive Directors. The Committee is chaired by an Independent Non-Executive Director. Finance Director serves as the Secretary to the Committee. Group CEO and the Finance Director assist the Committee by providing the relevant information and participating in its analysis and deliberations.

Chairman and Members of the Remuneration Committee

B.1.3 The Chairman and Members of the Remuneration Committee should be listed in the Annual Report each year.

Please refer page 156 of the Remuneration Committee Report for details of the Chairman and members of the Board Remuneration Committee.

Determination of remuneration of Non-Executive Directors

B.1.4 The Board as a whole, or where required by the Articles of Association the shareholders, should determine the remuneration of Non-Executive Directors, including members of the Remuneration Committee, within the limits set in the Articles of Association. Where permitted by the Articles, the Board may delegate this responsibility to a Subcommittee of the Board, which might include the CEO.

After consideration of the recommendation made by the Group Chief Executive Officer and the Parent Company., the Committee as a whole decides the remuneration of the Non-Executive Directors. The Non-Executive Directors receive a consolidated fee for being a Director of the Board and either chairing or being a member of a Board Subcommittee. They do not receive any performance/incentive payments.

Consultation of the Chairman and access to professional advice

B.1.5 The Remuneration Committee should consult the Chairman and/or CEO about its proposals relating to the remuneration of other Executive Directors and have access to professional advice from within and outside the Company, in discharging their responsibilities.

The Committee has the authority to seek internal and external independent professional advice on matters falling within its purview, at the Company’s expense. Views of the Chairman and Group CEO are obtained as they too assist and participate in its analysis and deliberations to the said Board Subcommittee.



B.2 Level and Make – Up of Remuneration

Main Principle Levels of remuneration of both Executive and Non-Executive Directors should be sufficient to attract and retain the Directors needed to run the Company successfully. A proportion of Executive Directors’ remuneration should be structured to link rewards to corporate and individual performance.




Executive Directors’ remuneration package

B.2.1 The Remuneration Committee should provide the packages needed to attract, retain and motivate Executive Directors of the quality required but should avoid paying more than is necessary for this purpose.

The Board Remuneration Committee and also the Board ensure that Executive Director – Group CEO, Executive Directors – (Alternate Directors to the Non-Executive Directors) who are on the Board and Key Management are provided with an attractive remuneration package.

B.2.2 Executive Directors’ remuneration should be designed to promote the long-term success of the Company.

Executive Directors’ and Key Management’s remuneration is designed to promote the long-term success of the Company

Comparison of remuneration with other companies/Other companies in the Group

B.2.3 The Remuneration Committee should judge where to position levels of remuneration of the Company, relative to other companies. It should be aware what comparable companies are paying and should take account of relative performance, but should use such comparisons with caution, mindful of the risk that they can result in an increase of remuneration levels with no corresponding improvement in performance.

A primary objective of compensation packages is to attract and retain a highly qualified and experienced workforce and reward performances. These compensation packages should provide compensation appropriate for each business within the Group and commensurate with each employee’s level of experience and contribution, bearing in mind the business performance and long-term shareholder returns.

B.2.4 The Remuneration Committee should be sensitive to remuneration and employment conditions elsewhere in the Company or Group of which it is a part, especially when determining annual salary increases.

Remuneration and annual salary increases are decided considering industry practices, performance of the Company, each employee’s level of experience and contribution bearing in mind the business performance and the long term shareholder returns.

Performance-based remuneration of Executive Directors

B.2.5 The performance-related elements of remuneration of Executive Directors should be designed and tailored to align their interests with those of the Company and main stakeholders and to give these Directors appropriate incentives to perform at the highest levels. The performance-related elements should be transparent, stretching and rigorously applied.

Objectives for Group CEO, Executive Directors and Key Management are set at the beginning of the year and the remuneration including the performance bonus is decided based upon the degree of achievement of such pre-set targets subject to the remuneration policy.

Executive share options

B.2.6 Executive share options should not be offered at a discount (i.e., less than market price prevailing at the time the exercise price is determined), save as permitted by the Listing Rules of the Colombo Stock Exchange. Shares granted under share options schemes should not be exercisable in less than three years and the Remuneration Committee should consider requiring Directors to hold a minimum number of shares and to hold shares for a further period after vesting or exercise.

Presently the Company does not have an Executive Share Option Scheme.






Designing the remuneration of Executive Directors

B.2.7 In designing schemes of performance-related remuneration, Remuneration committees should follow the provisions set out in Schedule E. The schemes should include provisions that would enable the company to recover sums paid or withhold a portion of such performance-related remuneration and specify the circumstances in which a company may not be entitled to do so.

Please refer Remuneration Committee Report on page 156.

Early termination of Executive Directors

B.2.8 Remuneration committees should consider what compensation commitments (including pension contributions) their Directors’ contracts of service, if any, entail in the event of early termination. Remuneration Committees should in particular, consider the advantages of providing explicitly for such compensation commitments to apply other than in the case of removal for misconduct, in initial contracts.

Not applicable to the Board except for Group CEO and other Executive Directors (Alternate Directors to the Non-Executive Directors) who are employees of the Company, and their terms of employment are governed by the contract of service/employment.

B.2.9 Where the initial contract does not explicitly provide for compensation commitments, Remuneration Committees should, within legal constraints, tailor their approach in early termination cases to the relevant circumstances. The broad aim should be, to avoid rewarding poor performance while dealing fairly with cases where departure is not due to poor performance.

Not applicable.

Level of remuneration of Non-Executive Directors

B.2.10 Levels of remuneration for Non-Executive Directors should reflect the time commitment and responsibilities of their role, taking into consideration market practices. Remuneration for Non-Executive Directors should not normally include share options. If exceptionally options are granted, shareholder approval should be sought in advance and any shares acquired by exercise of the options should be held until at least one year after the Non-Executive Director leaves the Board. Holding share options could be relevant to the determination of a Non-Executive Director independence. (as set out in provision A.5.5).

Non-Executive Directors of the Company are paid nominal fees commensurate with their time and role in the Company and taking into consideration market practices.

Non-Executive Directors are not included in share options as there is no scheme in existence.

B.3 Disclosure of RemunerationMain Principle The Company’s Annual Report should contain a Statement of Remuneration Policy and details of remuneration of the Board as a whole.




Disclosure of Remuneration

B.3.1 The Annual Report should set out the names of Directors (or persons in the Parent Company’s Committee in the case of a Group Company) comprising the Remuneration Committee, contain a statement of remuneration policy and set out the aggregate remuneration paid to Executive and Non-Executive Directors.

Please refer Remuneration Committee Report on page 156 for disclosure on the names of Remuneration Committee members and Remuneration Policy of the Company.

Please refer Note 8 to the Financial Statements on page 195 for aggregate remuneration paid to Executive and Non-Executive Directors.



C. Relations with ShareholdersC.1 Constructive use of Annual General Meeting (AGM) and Conduct of General Meetings

Main Principle Boards should use the AGM to communicate with shareholders and should encourage their participation.




Adequate Notice of the AGM

C.1.1 Companies should arrange for the Notice of AGM and related papers to be sent to shareholders at least as determined by statute, before the meeting.

A copy of the Annual Report including Financial Statements, Notice of Meeting and the Form of the Proxy are sent to shareholders 15 working days prior to the date of the AGM, as requested by statute, in order to provide the opportunity to all the shareholders to attend the AGM.

Separate resolution for all separate issues at the AGM

C.1.2 Companies should propose a separate resolution at the AGM on each substantially separate issue and should in particular propose a resolution at the AGM relating to the adoption of the report and accounts. For each resolution, proxy appointment forms should provide shareholders with the option to direct their proxy to vote either for or against the resolution or to withhold their vote. The proxy form and any announcements of the results of a vote should make it clear that a “vote withheld” is not a vote in law and will not be counted in the calculation of the proportion of the votes for and against the resolution.

Company proposes a separate resolution at the AGM on each substantially separate issue.

Further, adoption of the Annual Report of the Board of Directors on the affairs of the Company and Audited Financial Statements together with the Report of the Auditors thereon are considered as a separate resolution.

C.1.3 The Company should ensure that all valid proxy appointments received for general meetings are properly recorded and counted. For each resolution where a vote has been taken on a show of hands, the Company should ensure that the following information is given at the meeting and made available as soon as reasonably practicable on a website which is maintained by or on behalf of the Company:

z The number of shares in respect of which proxy appointments have been validly made;

z The number of votes for the resolution; z The number of votes against the resolution; and z The number of shares in respect of which the vote was directed to be withheld;

z When, in the opinion of the Board a significant proportion of votes have been cast against a resolution at any general meeting, the Board should take steps to understand the reasons behind the vote results and determine if any actions rae required.

The Company ensures that all valid proxy appointments received for general meetings are properly recorded and counted.

Availability of all Subcommittee Chairmen

C.1.4 The Chairman of the Board should arrange for the Chairmen of the Audit, Remuneration, Nomination and Related Parties Transactions Review Committees and the Senior Independent Director where such appointment has been made, to be available to answer questions at the AGM if so requested by the Chairman.

The Chairman of the Company ensures that Chairmen of all Board Subcommittees namely, Audit, Remuneration, Nomination and Related Party Transactions Review Committee are present at the AGM to answer the questions under their purview.

Procedures of Voting at AGM

C.1.5 Companies should circulate with every Notice of General Meeting, a summary of the procedures governing voting at General Meetings.

A summary of the procedures governing voting at General Meeting is circulated to shareholders with every Notice of General Meeting.



C.2 Communication with Shareholders

Main PrincipleThe Board should implement effective communication with shareholders.




Channel to reach all shareholders of the Company

C.2.1 There should be a channel to reach all shareholders of the Company in order to disseminate timely information.

The primary modes of communication between Company and the shareholders are the Annual Report and AGM. Information is provided to the shareholders prior to the AGM to give them an opportunity to exercise the prerogative to raise any issues relating to the business of Company, either verbally or in writing prior to the AGM.

The Company used the following channels to disseminate timely information;

z Shareholders meetings z Financial and other notices as and when required through the Colombo Stock Exchange

z Corporate website z Press notices.

Policy and methodology for communication with shareholders

C.2.2 The Company should disclose the policy and methodology for communication with shareholders.

The Company will focus on open communication and fair disclosure, with emphasis on the integrity, timeliness and relevance of the information provided. The Company will ensure information is communicated accurately and in such a way as to avoid the creation or continuation of a false market.

Implementation of the Policy and methodology for communication with shareholders

C.2.3 The Company should disclose how they implement the above policy and methodology is implemented.

Printed copies of Annual Report are provided to all shareholders without charge.

Contact person for the communication

C.2.4 The Company should disclose the contact person for such communication.

Details of Company Secretary is disclosed on page … Shareholders may, at any time, direct questions, request for publicly available information and provide comments and suggestions to Directors or Management of the Company. In addition, Head of Investor Relations is assigned to handle communications related to investor relations. Such questions, requests and comments should be addressed to the Company Secretary and in the absence of him the Chief Executive Officer.

Process to make Directors aware of major issues and concerns of shareholders

C.2.5 The Company should have a process to make all Directors aware of major issues and concerns of shareholders and this process should be disclosed by the Company.

The Company Secretary shall maintain a record of all correspondence received and will deliver as soon as practicable such correspondence to the Board or individual director/s as applicable. The Board or individual director/s, as applicable, will generate an appropriate response to all validly received shareholder correspondence and will direct the Company Secretary to send the response to the particular shareholder.

C.2.6 The Company should decide the person to contact in relation to shareholders’ matters.

Company secretary or head of Investor Relations can be contacted in relation to shareholders’ matters.

C.2.7 The process for responding to shareholder matters should be formulated by the board and disclosed.

Company secretary is assigned to respond to shareholders by the Board and update the board an such matters.



C.3 Major Transactions

Main PrincipleFurther to compliance with the requirements under the Companies Act, Directors should disclose to shareholders all proposed corporate transactions, which if entered into, would materially alter/vary the Company’s net assets base or in the case of a Company with subsidiaries, the consolidated Group net asset base.




Disclosure on “Major Transaction”

C.3.1 Prior to a company engaging in or committing to a “Major Related Party Transaction”, with a related party, involving the acquisition, sale or disposition of greater than one third value of the Company’s assets or that of a subsidiary which has a material bearing on the Company and for consolidated net assets of the Company, or a transaction which has or is likely to have the effect of the Company acquiring obligations and liabilities, of greater than one third of the value of the company’s assets, the Directors should disclose to shareholders the purpose and all material facts of such transaction and obtain shareholders’ approval by ordinary resolution at an EGM. It also applies to transactions or series of related transactions which have the purpose or effect of substantially altering nature of the business carried on by the Company.

During the year, there were no major transactions as defined by Section 185 of the Company’s Act No. 07 of 2007 which materially affect the Net Assets Base of the Company or Consolidated Group Net Asset Base.

Transactions which materially affect the net assets base of the Company will be disclosed in the Quarterly/Annual Financial Statements, if any.

C.3.2 Public listed companies should in addition comply with the disclosure requirements and shareholder approval by special resolution as required by the Rules and Regulations of the Securities and Exchange Commission and by the Colombo Stock Exchange.

Not applicable since no such transactions were carried out during the period.

D. Accountability and AuditD.1 Financial Reporting

Main PrincipleThe Board should present a balanced and understandable assessment of the Company’s financial position, performance and prospects.




Board’s responsibility for Statutory and Regulatory Reporting

D.1.1 The Board should present an annual report including Financial Statements that is true and fair, balanced and understandable and prepared in accordance with the relevant laws and regulations and any deviation being clearly explained.

An annual report is presented including Financial Statements that is true and fair, balanced and understandable and prepared in accordance with the relevant laws and regulations.

D.1.2 The Board’s responsibility to present a balanced and understandable assessment extends to interim and other price-sensitive public reports and reports to regulators, as well as to information required to be presented by statutory requirements.

The Board is well aware of its responsibility to present regulatory and statutory reporting in a balanced and understandable manner and a statement to this effect is given in the Statement of Directors’ Responsibility on page 172 confirming this position.

The Company had strictly complied with the requirements of the Companies Act No. 07 of 2007 in the preparation of Quarterly and Annual Financial Statements which are prepared and presented in conformity with Sri Lanka Accounting Standards. Further, Company has complied with the reporting requirements prescribed by the regulatory authority such as the Colombo Stock Exchange.






In case of Subsidiary Company – Singer Finance (Lanka) PLC has also complied with the requirements of the Finance Companies Act No. 78 of 1988 and amendments thereto and reporting requirements prescribed by the regulatory authorities such as the Central Bank of Sri Lanka and the Colombo Stock Exchange. Given below is a table containing the dates on which the Annual and Interim Financial Statements were uploaded to the CSE website/dispatched to the shareholders in the year under review:

Report Date of Dispatch or Upload Status

Annual Report for the year ended 31st December 2016

13th March 2017 Compliant

1st Quarter 2017 9th May 2017 Compliant

2nd Quarter 2017 10th August 2017 Compliant

3rd Quarter 2017 2nd November 2017 Compliant

4th Quarter 2017 1st February 2018 Compliant

5th Quarter 2018 15th May 2018 Compliant

D.1.3 The Board should, before it approves the Company’s Financial Statements for a financial period, obtain from its Chief Executive Officer and Chief Financial Officer a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the Financial Statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company and that the system of risk management and internal control was operating effectively.

It is assigned to Chief Financial Officer, Head of Risk Management and compliance officers of the respective subsidiary companies.

The said Committee comprising of Chief Financial Officer, Head of Risk Management and compliance officers (financial accountants) review quarterly and year end Financial Statements before submitting to the Audit Committee and Board and the Committee confirms that in their opinion, the financial records of the entity have been properly maintained and that the Financial Statements comply with the appropriate accounting standards and give a true and fair view.

Directors’ Report in the Annual Report

D.1.4 The Directors’ Report, which forms part of the Annual Report, should contain declarations by the Directors to the effect that:

z the Company has not engaged in any activity which contravenes laws and regulations;

The Annual Report of the Board of Directors on the Affairs of the Company given on pages 167 to 171 covers all of these sections.

In addition to that Company has established procedures to ensure compliance with all applicable statutory and regulatory requirements. The Accountants of respective companies within the Group act as Compliance Officers and are responsible for ensuring proper compliance with applicable laws and regulations.

A compliance statement is tabled at each Board meeting by the Compliance Officer.






z the Directors have declared all material interests in contracts involving the Company and refrained from voting on matters in which they were materially interested;

z the Company has made all endeavours to ensure the equitable treatment of shareholders;

z the Directors have complied with best practices of corporate governance

z Property. Plant and equipment is reflected at fair value, where it is different from fair value adequate disclosures are made

z the business is a going concern, with supporting assumptions or qualifications as necessary; and

The Company’s compliance with Section 7.10 of the Colombo Stock Exchange Listing Rules on Corporate Governance and details of such compliance are discussed on pages 152 and 153 of this Report.

z they have conducted a review of the internal controls, covering financial, operational and compliance controls and risk management, and have obtained reasonable assurance of their effectiveness and successful adherence therewith, and, if it is unable to make any of these declarations, to explain why it is unable to do so.

Statements of Directors’ and Auditors’ Responsibility for the Financial Statements

D.1.5 The Annual Report should contain a statement setting out the responsibilities of the Board for the preparation and presentation of Financial Statements, together with a statement by the Auditors about their reporting responsibilities. Further the Annual Report should contain a report/statement on internal control.

The “Statement of Directors’ Responsibility” is given on page 172.

The “Independent Auditors’ Report” on page 173 states the Auditor’s responsibility.

The Statement on Internal Control is given on page 172 in the Statement of Director’s Responsibilities.

Management Discussion and Analysis

D.1.6 The Annual Report should contain a “Management Discussion and Analysis”, discussing, among other issues:

z business model; z industry structure and developments;

z opportunities and threats; z risk management ; z internal control systems and their adequacy;

z governance; z stakeholder relationships; z social and environmental protection activities carried out by the Company;

Please refer Chairman’s Letter on pages 18 to 19, Group Chief Executive Officer’s Review on pages 20 to 25, Review of Operation (Management Discussion and Analysis) on page 50 of this Annual Report.






z financial performance; z investment in physical and intellectual capital;

z human resource/industrial relations activities carried out by the company; and

z prospects for the future.

The Management Discussion and Analysis may be structured based on the integrated reporting framework issued by International Integrated Reporting Council and “a preparer’s guide to integrated Corporate Reporting” issued by CA Sri Lanka.

Summon on EGM to notify serious loss of capital

D.1.7 In the event the net assets of the Company falling below 50% of the value of the Company’s shareholders’ funds, the Directors shall forthwith summon an Extraordinary General Meeting of the Company to notify shareholders of the position and of remedial action being taken. The Directors should report periodically to the shareholders progress on these remedial actions.

Likelihood of such occurrence is remote. However, should the situation arises, an EGM will be called for and shareholders will be notified.

Disclosure of related party transaction

D.1.8 The Board should adequately and accurately disclose the Related Party Transactions in its Annual Report:

Each related party to submit signed and dated quarterly declarations mentioning whether they have related party transactions with the Company as defined in this Code;

The Company Secretary keeps a record on related party transactions and make necessary disclosures accordingly;

There should be a process to capture related parties and related party transactions. This process needs to be operationalised and related party transactions should be properly documented:

A record/register either in hard or soft form on related party and related party transaction should be maintained by the Company;

This record should ensure that the company captures information to comply with the respective related party disclosure requirements imposed by SEC/Accounting Standards/Auditing Standards and similar regulations.

Each related party has submitted signed and dated declarations mentioning whether they had related party transactions with the company during the period ended 31st March 2018.

Related Party Transactions Review Committee reviewed related party transaction which is described in this Annual Report in page 158.

Related parties and related party transactions are captured and documented by the Company



D.2 Risk Management and Internal Control

Main PrincipleThe Board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. The Board should have a process of risk management and a sound system of internal control to safeguard shareholders’ investments and the Company’s assets. Broadly, risk management and internal control is a process, effected by a company’s Board of Directors and Management, designed to provide reasonable assurance regarding the achievement of Company’s objectives.




Annual Review of the effectiveness of Group’s system of internal control

D.2.1 The Board should monitor the company’s risk management and internal control systems and, at least annually, carry out a review of their effectiveness, and report on that review in the Annual Report. The monitoring and review should cover all material controls, including financial, operational and compliance controls.

The Company’s Directors are responsible for instituting a system of internal controls to ensure the effective implementation of all policies and decisions of the Board. This framework is designed to provide reasonable but not absolute assurance that all aspects are safeguarded.

Board of Directors appointed Messrs Ernst & Young – Chartered Accountants to carry out internal system and control review and to document said internal system and control procedure to enhance integrity of financial reporting and information and controls over financial reports and areas of recommendation were implemented.

The Company employs personnel across different levels of operations to apply these internal controls, while the Internal Audit Department periodically reviews the effectiveness of such controls.

The Company has its own internal audit processes, implemented to ensure that effective controls are in place. These processes extend across all Company operations.

The internal audit function is headed by the Head of Risk Management, who reports to the Board Audit Committee and Group CEO.

In relation to the retail network, the internal audit function includes an individual risk assessment for every outlet directly operated by Singer (Sri Lanka) PLC, based on five criteria –1. Receivables management2. Inventory management3. Cash management4. Internal checks and balances5. Effectiveness of internal controls

Each location is graded by the Internal Audit Department based on its adherence to controls and its administrative performance on the management of the five criteria mentioned above.

Review the need for internal audit function

D.2.2 The Directors should confirm in the Annual Report that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The Directors should describe those risks and explain how they are being managed or mitigated.

Please refer page 159 in the Risk Management report.

D.2.3 Companies should have an internal audit function.

Risk Management and Internal Audit is responsible for internal audit functions.






Review of the process and effectiveness of risk management and internal controls

D.2.4 The Board should require the Audit Committee to carry out reviews of the process and effectiveness of risk management and internal controls, and to document to the Board and Board takes the responsibility for the disclosures on risk management and internal controls.

The Internal Audit Division of the Company carries out regular reviews on the risk management function and internal control system including internal control over financial reporting. The Audit Committee monitors, reviews and evaluates the effectiveness of internal control system including the internal controls over financial reporting. In the reporting period ended 31st March 2018, the Board of Directors was satisfied with the effectiveness of the system of internal controls of the Company. Refer the Directors’ Statement on Internal Control on pages 172 for details.

D.3 Audit Committee

Main PrincipleThe Board should establish formal and transparent arrangements for considering how they should select and apply accounting policies, financial reporting, determine the structure and content of corporate reporting, implement internal control and risk management principles and for maintaining an appropriate relationship with the Company’s Auditors.




Composition of the Audit Committee

D.3.1 The Board should establish an Audit Committee exclusively of Non-Executive Directors with a minimum of three Non-Executive Directors of whom at least two should be independent. If there are more Non-Executive Directors. The majority should be independent. The committee should be chaired by an Independent Non-Executive Director. The Board should satisfy itself that at least one member of the Audit Committee has recent and relevant experience in financial reporting and control.

All members of the Board Audit Committee are Independent Non-Executive Directors.

Details of the members, invitees and Secretary of the Committee are found on page 155 of the “Audit Committee Report” under the heading “Composition of the Committee”.

Terms of Reference of the Audit Committee

D.3.2 The Audit Committee should have a written Terms of Reference, dealing clearly with its authority and duties. The Audit Committee’s written Terms of Reference must address:

The Committee’s purpose – which, at minimum, must be to:

z Assist Board oversight of the:Preparation, presentation and adequacy of disclosures in the Financial Statements, in accordance with the Sri Lanka’s Accounting Standards;Compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements;Process to ensure that the Company’s internal controls and risk management procedures are adequate to meet the requirements of the Sri Lanka Auditing Standards;

z Assessing the Company’s ability to continue as a going concern in the foreseeable future:

Performance of the Company’s internal audit function;

Terms of Reference of the Board Audit Committee is clearly defined in the Charter of the Audit Committee approved by the Board of Directors. This clearly explains the purpose of the Committee, its duties and responsibilities together with the scope and functions of the Committee. The Committee mainly deals with the matters pertaining to statutory and regulatory compliance in financial reporting, matters with regard to the External Auditors, internal audit and risk management procedures of the Company.

As stated in the Report of the Audit Committee of the Company it regularly reviews scope, results and effectiveness of the Audit.

Details of “Duties of the Audit Committee” are found on page 155 of the “Audit Committee Report” under the heading “Responsibilities and Duties of the Committee”.


Singer (Sri Lanka) PLC Annual Report 2017/18142CORPORATE GOVERNANCE




Process to the identification, monitoring and management of significant business/financial risk; andIndependence and performance of the Company’s external audit.

z The duties and responsibilities of the Audit Committee should at a minimum include those set out below:

Making recommendations to the Board, pertaining to appointment, reappointment and removal of External Auditors and to approve the External Auditors;

To develop and implement policy on the engagement of the External Auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm; and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken;To review and monitor the External Auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant Sri Lankan professional and regulatory requirements;Discussion of the audit plan, key audit issues, their resolution and management responses;

Review the Company’s annual Audited Financial Statements and Quarterly Financial Statements with management and the Auditor to ensure compliance with the Sri Lanka Accounting Standards and other relevant laws and regulations;To review significant financial reporting judgements;Review the Company’s earnings press releases and financial information and earnings guidance provided to analysts and rating agencies;Discussion of policies and practices with respect to risk assessment and risk management;Ensuring that a process of sound system of internal control is in place;Ensuring that at least once in every three years an review of the Board’s risk management, internal controls, business continuity, planning and information security systems are carried out and appropriate remedial action recommended to the board;Ensuring that an effective internal audit function is in place and monitor and review the internal audit activities;





Meeting separately, periodically, with Management, auditors and internal auditors;Ensuring that there is a mechanism for the confidential receipt, retention and treatment of complaints alleging fraud, received from internal/external sources and pertaining to accounting, internal control or other such matters;Assuring confidentiality to whistle-blowing employees;Setting clear hiring policies for employees or former employees of the Auditors; andReporting regularly to the Board of Directors.

Disclosure of names of the members of the Audit Committee

D.3.3 A separate section of the Annual Report should describe the work of the Committee in discharging its responsibilities. The report should include –

z The names of the Directors (persons in the Parent Company’s Committee in the case of a Group Company) comprising the Audit Committee should be disclosed in the Annual Report.

z The number of meetings held and attendance of each Director;

z The scope of work and how its roles and responsibilities were discharged;

z An explanation of how it has assessed the effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external audit, and information on the length;

Names of the members of the Audit Committee are given on page 155 under the section on the “Composition of the Committee” and disclosure on the independence of the Auditors is found on page 173 under the Auditors’ in the “Annual Report of the Board of Directors on the Affairs of the Company” on pages 166 to 171.

z If the External Auditor provides non-audit services, an explanation of how audit objectivity and independence are safeguarded ;and The Committee should also make a determination of the independence of the Auditors and should disclose the basis of such determination in the Annual Report.

Report by the Audit Committee is given in page 155.

z The Annual Report should contain a Report by the Audit Committee, setting out the manner of compliance by the Company, in relation to the above, during the period to which the Annual Report relates.

Report by the Audit Committee is given in page 155.

D.4 Related Party Transactions Review Committee

Main PrincipleThe Board should establish a procedure to ensure that the Company does not engage in transactions with “related parties” in a manner that would grant such parties “more favourable treatment” than that accorded to third parties in the normal course of business.




Disclosure of Related Party Transactions Review Committee

D.4.1 A related party and related party transactions will be as defined in LKAS 24.

Related party and related party transactions are defined as per LKAS 24.






D.4.2 The Board should establish a Related Party Transactions (RPT) review Committee consisting exclusively of Non-Executive Directors with a minimum of three Non-Executive Directors of whom the majority should be independent. Executive Directors may attend by invitation. The chairman should be an Independent Non-Executive Director appointed by the board.

The Committee comprises two Independent Non-Executive Directors, one Non-Executive Director and one Executive Director

The Committee is chaired by an Independent Non-Executive Director.

D.4.3 RPT Review committee should have written terms of reference dealing clearly with its authority and duties which should be approved by the Board of Directors. The RPT Review Committee’s written terms of reference must address –

z A procedure for documenting related parties in accordance with the definitions in LKAS 24 and the CSE Listing Rules.

z A procedure to obtain a statement of related party interest from each such related party at least once in each quarter, when these’s a change in the status and in any event prior to entering into any transaction between such related parties and the Company, its parent or any of subsidiaries, sub-subsidiaries, fellow subsidiaries, associates, joint ventures and any other entities which are considered related parties as defined in LKAS 24 unless they are exempted related party transactions as defined in CSE Listing Rules.

The Related Party Transactions Review Committee Report sets out the functions of the Committee which is given in page 158.

z Key Management Personal of the Company responsible for contracting, procurement, payments, and any other channel through which an inflow or outflow of resources can result, should have a list of all related parties and have a process in place to capture and report any related party transaction within their area of responsibility.

z A procedure to inform all related parties of what constitutes exempted related party transactions.

z A procedure to identify and for Directors to report recurrent and non-recurrent related party transactions and to obtain Board or shareholder approval by special or ordinary resolution as required by the CSE Listing Rules.

z A procedure and guideline to delegate to Key Management Personnel to deal with recurrent related party transactions as defined in the CSE Listing Rules.

z A procedure for the RPT Review Committee to review and recommend to the Board matters relating to such transactions.

z Any interested Directors should not participate at the meeting at which the transaction relating to him/her is discussed unless invited to seek clarification/information.

z A procedure and definition of disclosure required to be made by the Company on an annual basis, those requiring immediate disclosure and those requiring shareholder approval.






z A procedure to identify related party transactions which require immediate disclosure as per the CSE listing rules and to ensure that required disclosures are made by the Company to the Colombo Stock Exchange in accordance with the CSE Listing Rules.

z A procedure to identify related party transactions which require shareholder approval by special resolution at an extra-ordinary general meeting.

z The company secretary should maintain a permanent record in manual or electronic form of such statements, submissions, approvals and minutes.

z Review and recommend to the Board the related party disclosures to be made in the Annual Report of the Company.

D.5 Code of Business Conduct and Ethics Companies must adopt a Code of Business Conduct and Ethics for Directors, Key Management Personnel and all other employees’ including but not limited to; dealing with shares of the Company; compliance with listing rules; bribery and corruption; confidentiality; encouraging that any illegal, fraudulent and unethical behaviour be promptly reported to those charged with governance. The Company must disclose waivers of the code for Directors, if any –




Disclosure of Code of Business Conduct and Ethics

D.5.1 All companies must disclose whether they have a Code of Business Conduct and Ethics for directors and key management personnel and if they have such a code, make an affirmative declaration in the Annual Report that all Directors and Key Management Personnel have declared compliance with such code, and if unable to make that declaration, state why they are unable to do so.

Each company may determine its own policies in the formulation of such a code, but all companies should address the following important topics in their respective codes:

z Conflict of interest; z Bribery and corruption; z Entertainment and gift; z Accurate accounting and record-keeping;

z Fair and transparent procurement practices;

z Corporate opportunities; z Confidentiality; z Protection and proper use of company assets including information assets;

z Compliance with laws, rules and regulations (including insider trading laws); and

Company has an internally-developed Code of Conduct. All employees including Directors, Key Managers and Senior Managers are bound by the Company’s written Code of Ethics that includes the following aspects:

z Exercise honesty, objectivity and diligence when performing one’s duties.

z Avoid situations where personal interest might conflict with the interest of the Company; and if so, disclose such interest in advance.

z Maintain confidentiality of commercial and price sensitive information.

z Work within applicable laws and regulations. z Safeguard the Company’s assets. z Avoid conduct that will reflect badly on the person concerned or the Company’s image.

z Strictly avoid giving or accepting any kind of bribe, either directly or indirectly.

z Strictly avoid making contributions for political funds, either directly or indirectly.

z Strictly avoid any kind of sexual harassment.

The Company has implemented a formal whistle-blowing procedure and encourages any employee who suspects wrong doing at work, whether by Management, peers or any other employee, to raise their concerns.

Other PoliciesIn addition, the Company implements policies covering:

z Recruitment and selection z Financial integrity/Financial Manual






z Encouraging the reporting of any illegal, fraudulent or unethical behaviour.

z Use of Company property including computers z Non-harassment in the work place z Environment, safety and health z Security of IT system

D.5.2 The company should have a process in place to ensure that material and price sensitive information is promptly identified and reported in accordance with the relevant regulations.

Company has established policy and process to ensure that material and price sensitive information is immediately disclosed to the Colombo Stock Exchange immediately after relevant decisions are made by the Board of Directors. This task is assigned to the Company Secretary and it is a prime responsibility of the Company Secretary.

D.5.3 The Company should establish a policy, process for monitoring and disclosure of shares purchased by any Director, Key Management Personnel or any other employee involved in financial reporting.

The policy in place and any share transaction done by Board Director need to be immediately disclosed to the Company Secretary and Company Secretary will inform such transactions to the Colombo stock Exchange. Any share transaction done by Key Management Personnel other than Board Directors should inform such transactions to Compliance Officer of the company.

Affirmative Statement by the Chairman

D.5.4 The Chairman must affirm in the Company’s Annual Report that a code of conduct and ethics has been introduced company wide and the procedure for disseminating, monitoring and compliance with that code. He must also disclose that he is not aware of any violation of any of the provisions of the code of business conduct and ethics.

Please refer Chairman’s Letter on pages 18 to 19 in this Report.

D.6 Corporate Governance DisclosuresDirectors should be required to disclose the extent to which the Company adheres to established principles and practices of good Corporate Governance.




Disclosure of Corporate Governance

D.6.1 The Directors should include in the Company's Annual Report, a Corporate Governance Report setting out the manner and extent to which the Company has complied with the principles and provisions of this Code.

This Report from page 116 to 154 sets out the manner and extent to which Singer (Sri Lanka) PLC has complied with the principles and provisions of the Code.



SHAREHOLDERSE. Institutional InvestorsE.1 Shareholder Voting

Main PrincipleInstitutional shareholders have a responsibility to make considered use of their votes and should be encouraged to ensure their voting intentions are translated into practice.




Communication with Shareholders

E.1.1 A listed Company should conduct a regular and structured dialogue with shareholders based on a mutual understanding of objectives. Arising from such dialogue, the Chairman should ensure the views of shareholders are communicated to the Board as a whole.

In order to avoid conflict of interest by nurturing the mutual understanding, the Board carries out dialogues with its shareholders at General Meetings. In this regards, the Annual General Meeting (AGM) and Extraordinary General Meetings (EGM) of the Company plays a critical role. Voting of the shareholders is crucial in carrying a resolution at the AGM/EGM. The Chairman who plays the role of the agent and communicates the views and queries of the shareholders to the Board and the Key and Senior Management in order to ensure that the views are properly communicated to the Company.

Head of Investor Relations is a dedicated position to communicate with shareholders if necessary. Investors and Shareholders can directly communicate and share their views and it will be communicated to the Board for necessary actions.

Shareholders are provided with Quarterly Financial Statements and the Annual Report, which the Company considers as its principle communication with them and other stakeholders. These reports are also available on the Company’s website – www.singersl.com and are provided to the Colombo Stock Exchange.

Any information that the Board considers as price sensitive is disseminated to the shareholders as necessary.

E.2 Evaluation of Governance Disclosures




Due weight by Institutional Investors

E.2.1 When evaluating Companies’ governance arrangements, particularly those relating to Board structure and composition, institutional investors should be encouraged to give due weight to all relevant factors drawn to their attention.

The Institutional Investors are at liberty to give due weight to matters relating to the Board structure and composition, when they consider resolutions relating to Board structure and composition.



F. Other InvestorsF.1 Investing/Divesting Decision




Individual Shareholders

F.1 Individual shareholders, investing directly in shares of companies should be encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions.

Individual investors are encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions.

Individual Shareholder Voting

F.2 Individual shareholders should be encouraged to participate in General Meetings of companies and exercise their voting rights.

Individual shareholders are encouraged to participate in General Meeting of the Company and exercise their voting rights.

G. Internet of things and Cyber Security




G.1 The Board should have a process to identify how in the organisation’s business model, IT devices within and outside the organisation can connect to the organisation’s network to send and receive information and the consequent cyber security risks that may affect the business.

Internal and external parties could have computing devices embedded in everyday objects which may enable them to interconnect with the Company’s network to send and receive data. Such access could be authorised or unauthorised.

The board assigned this responsibility to the Information Technology Division and Director – IT is mainly assigned to complete this task. IT policy and cyber security policy is being developed as at the reporting date. And the board expects to implement this in the year 2018/2019.

G.2 The Board should appoint a Chief Information Security Officer (CISO) with sufficient expertise, authority and budgetary allocation to introduce and implement a cyber security risk management policy which should be approved by the Board.

The policy should include a robust cyber security risk management process, incident response system, vendor management system, disaster recovery plan and a governance structure to monitor effective implementation, reporting and the need for cyber security insurance.

Director IT is appointed as a Chief Information Security Officer. However IT policy and cyber security policy is being developed as at the reporting date.

G.3 The Board should allocate regular and adequate time on the Board meeting agenda for discussions about cyber-risk management:

z The matters taken up for the discussion on the board meeting agenda may include; Potential cyber security risks in the Company’s business model.

z CISO’s security strategy and status of the current projects.

z Compliance with the cyber security risk management process and incident report.

z Findings and recommendations from independent reviewers.

Not Complied.It is being developed and the Board expects to implement it in the year 2018/2019.






G.4 The Board should ensure the effectiveness of the cyber security risk management through independent periodic review and assurance.

The scope and the frequency of the independent periodic reviews could be determined based on the industry vulnerability, company’s business model and incident findings.

Not Complied.Will be implemented after implementation of cyber security policy.

G.5 The Board should disclose in the annual report, the process to identify and manage cyber security risks.

Not Complied.

H. Environment Society and Governance (ESG)

H.1 ESG REPORTING

Main PrincipleThe Company’s Annual Report should contain sufficient information to enable investors and other stakeholders to assess how ESG risks and opportunities are recognised, managed, measured and reported.

Environmental, social and governance considerations can affect a company’s ability to execute its business strategy and create value. While many ESG factors are ‘non-financial’, their management and likely impact have financial consequences. Hence, they are important factors to be built into a company’s business model, strategy, governance and risk management framework. ESG factors relevant to the Company could impact the followings:

z Access to financial capital z Cost savings and productivity z Brand value and reputation z Employee recruitment z Employee retention z Access to markets z License to operate z Market capitalisation

Integrating ESG policies and practices into a company’s strategy, business model, governance and risk management, and reporting its likely impact and implications are increasingly seen by investors as material to their investment decisions. Further, investors want to understand the risks associated with ESG issues, as this is seen as a the risks associated with ESG issues, as this is seen as a how well companies are managing how well companies are managing key test of the long-term sustainability of the Company. They are also increasing interested in the opportunities presented by companies that are well equipped to benefit from this.




H.1.1 Companies should provide information in relation to:

z The relevance of environmental, social and governance factors to their business models and strategy.

z How ESG issues may affect their business. z How risks and opportunities pertaining to ESG are recognised managed, measured and reported.

Sustainability principles related to ESG factors are embedded in the operations of the Company and initiatives implemented to ensure adherence by the Company are discussed in the Management Discussion and Analysis and compliance section of this report.



H.1.2 Environmental Factors




H.1.2 Environmental governance of an organisation should adopt an integrated approach that takes into consideration the direct and indirect economic. Social, health, and health and environmental implications of their decisions and activities, including:

z pollution prevention. z sustainable resource use (e.g: water, energy).

z climate change. z protection of environment. z bio-diversity. z restoration of natural resources.

Sustainability principles related to environmental factors are embedded in the operations of the Company and initiatives implemented to ensure adherence to environmental governance by the Company are discussed in the Management Discussion and Analysis and compliance section of this report.

H.1.3 Social Factors




H.1.3.1 Social governance of an organisation should include its relationship with the community, customers, employees, suppliers, outsourced providers and any other party that can influence or be influenced by the organisation’s business model.

z The organisation should adopt an integrated approach to building a relationship with the community and striving for sustainable development including responsible community engagement, fair competition, thereby demonstrating corporate social responsibility.

z The organisation should adopt an integrated approach to building a relationship with customers. This includes establishing a process for customer engagement, product responsibility and product recall and other matters relevant to the organisation’s business model.

Sustainability principles related to social factors are embedded in the operations of the Company and initiatives implemented to ensure adherence to social governance by the Company are discussed in the Management Discussion and Analysis and compliance section of this report.

z The labour practice related governance of an organisation should encompass all policies and practices in relation to work performed by or on behalf of the organisation in accordance with its business model, and should also include policies and practices such as equal opportunity, career development and training, reward and recognition, conditions of work, work-life balance and industrial relations.

z The organisation should have policies and procedures to ensure that suppliers and outsourced providers comply with social governance norms of the Company.



H.1.4 Governance




H.1.4.1 z Companies should establish a governance structure to support its ability to create value and manage risks in the short, medium and long-term, recognising managing and reporting on all pertinent aspects of ESG.

z The Company should recognise the key resources/capitals deployed in its business and establish financial and non-financial measures for resource/capital management and related outputs and outcomes.

z The Company should have a process to ascertain, assess and mange risks which have an impact on the sustainability of the Company.

z The company should have a process to recognise material matters relating to significant stakeholders and a method of engagement relevant to their level of interest and influence.

z The disclosures should deal with how the Company has complied with the mandatory and voluntary codes of corporate governance and how its leadership structure, organisational culture, code of conduct and business model supports sustainability of the company in the short, medium and long-term.

Process of managing risks in line with ESG aspects is discussed in the Risk management report.

H.1.5 Board’s Role on ESG Factors


SEC and CASri LankaCode Reference


H.1.5.1 ESG reporting is a Board’s responsibility and it is designed to add value by providing a credible account of the Company’s economic, social and environmental impact. ESG reporting and disclosure should be formalised as part of the Company’s reporting process and take place on a regular basis. ESG reporting should link sustainable issues more closely with strategy.

ESG reporting may be built on a number of different guidelines, such as –

z Integrated Reporting Framework z The Global Reporting Initiative Guidelines

The company follows ESG reporting and is disclosed in line with Global Reporting Initiatives (GRI) guidelines version G4 in this annual report and described from pages 255 to 258.

Section BThis section covers the Company’s extent of adherence to the requirements of the Continuous Listing Requirements Section 7.10 on Corporate Governance Rules for Listed Companies issued by the Colombo Stock Exchange. This reflects the Company’s level of conformity to CSE’s Listing Rules which comprise the following fundamental principles:

z Non-Executive Directors z Independent Directors z Disclosures Relating to Directors z Remuneration Committee z Audit Committee



The following table presents the details of the Company’s compliance with Section 7.10 and Section 9 of the CSE Listing Rules on Corporate Governance as at 31st March 2018:

Section Rule No. Corporate Governance Rule Details of Compliance Compliance

Board of Directors

Non-Executive Directors

7.10.1 Number of Non-Executive Directors – One-third of the total number of Directors, subject to a minimum of two.

The Board of Directors comprises Nine Directors, seven of whom are Non-Executive Directors.

Independent Directors

7.10.2 (a) Number of Independent Directors – One-third of Non-Executive Directors, subject to a minimum of two.

Four of the Non-Executive Directors are independent.

7.10.2 (b) Each non-Executive Director should submit a declaration of independence/non-independence.

All Non-Executive Directors have submitted declarations.

Independent Non-Executive Directors have submitted declarations confirming their independence.

Disclosures relating to Directors

7.10.3 (a) Names of Independent Directors should be disclosed in the Annual Report.

Please refer page 126.

7.10.3 (b) The Board shall make a determination annually as to the Independence or Non-independence of each Non-Executive Director.

The Board has determined Mr. M.H. Jamaldeen as an Independent Non-Executive Director notwithstanding that he is a Director of Hayleys PLC, the Parent Company as his role is not compromised by being on both Boards.

7.10.3 (c) A brief résumé of each Director should be included in the Annual Report including the area of experience

Please refer Board of Directors section of this report on pages 26 to 29.

7.10.3 (d) Provide brief résumé of any new Director appointed to the Board.

Please refer Board of Directors section of this report on pages 26 to 29.

Remuneration Committee

Composition 7.10.5 (a) Number of Independent Non-Executive Directors in the Committee to be –

z a minimum of two (where a Company has only two Directors on the Board), or

z in all other instances majority of whom to be independent.

The Committee comprises three Independent Non-Executive Directors.

Separate Committee to be formed for the Company or the Listed Parent’s Remuneration Committee to be used.

A separate Remuneration Committee was formed for the Company.

Chairman of the Committee to be a Non-Executive Director.

The Committee is chaired by an independent Non-Executive Director.

Function 7.10.5 (b) Function of the Committee. The Remuneration Committee Report sets out the functions of the Committee.

Disclosure in the Annual Report

7.10.5 (c) The Annual Report should set out –

z Names of Directors comprising the Remuneration Committee

Please refer page 156.

z Statement of Remuneration policy Please refer Remuneration Committee report on page 156.

z Aggregate remuneration paid to Executive & non-executive Directors

Please refer page 195

Audit Committee

Composition 7.10.6 (a) Number of Independent Non-Executive Directors in the Committee to be –

z a minimum of two (where a Company has only two Directors on the Board), or

z in all other instances majority of whom to be independent.

The Committee comprises of three Independent Non-Executive Directors.



Section Rule No. Corporate Governance Rule Details of Compliance Compliance

Separate Committee to be formed for the Company or the Listed Parent’s Committee to be used.

A separate Audit Committee was formed for the Company.

Chairman of the Committee to be a Non-Executive Director.

The Committee is chaired by an Independent Non-Executive Director.

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

The Chairman of the Committee is a member of a recognised professional accounting body.

CEO and CFO to attend Committee meetings, unless otherwise determined by the Audit Committee.

Group CEO attends by invitation.CFO attends by invitation.

Function 7.10.6 (b) (b) Function of the Committee. The Audit Committee Report sets out the functions of the Committee.


7.10.6 (c) z Names of Directors comprising the Audit Committee Please refer page 155.

z The Audit Committee shall make a determination of the independence of the Auditors and disclose the basis for such determination

Please refer Audit Committee Report on page 155.

z The Annual report shall contain a Report of the Audit Committee in the prescribed manner.

Please refer Audit Committee Report on page 155.

Related Party Transactions Review Committee

Composition 9.2.2 Combination of Non-Executive Directors andIndependent Non-Executive directors.

The Committee comprises of two Independent Non-Executive Directors, one Non-Executive Director and one Executive Director.

9.2.3 Separate Committee to be formed for the Company or the Listed Parent’s Committee to be used.

A separate Related Party Transactions Review Committee was formed for the Company.

Function of the Committee. The Related Party Transactions Review Committee Report sets out the functions of the Committee.


9.3.2 (c) The Annual Report shall contain a Report of the Related Party Transactions Review Committee in the prescribed manner.

Please refer Related Party Transactions Review Committee Report on page 158.

Board, Audit Committee, Remuneration Committee, Nomination Committee and Related Party Transactions Review Committee AttendanceThe number of meetings of the Board, Audit Committee, Remuneration Committee and Related Party Transactions Review Committee and individual attendance by members are as follows:

Number of Meetings, Circular Resolutions and Dates

Board Meetings 08Audit Committee Meetings 06Remuneration Committee Meetings 02Nomination Committee Meetings 03Related Party Transactions Review Committee Meetings 03



Board Meetings Audit Committee Meetings Remuneration Committee Meetings

Nomination Committee Meetings Related Party Transactions Review Committee Meetings

23rd February 2017 21st February 2017 21st February 2017 23rd February 2017 21st February 20179th May 2017 3rd May 2017 27th July 2017 15th September 2017 9th May 201710th August 2017 3rd August 2017 2nd October 2017 10th August 201715th September 2017 26th October 2017 2nd October 2017 18th December 201720th October 2017 1st February 201826th October 20171st February 2018

Individual Attendance

Name Directorship Status Board Audit Committee

Remuneration Committee

NominationCommittee

Related PartyTransactions

Review Committee

Mr. A.M. Pandithage – Chairman (Appointed w.e.f. 2nd October 2017)

Executive 4/4 N/A N/A N/A N/A

Mr. K.D.D. Perera – Co-Chairman (Appointed w.e.f. 2nd October 2017)

Non-Executive 4/4 N/A N/A N/A N/A

Mr. H.A. Pieris Executive 8/8 N/A 2/2 3/3 3/3

Mr. D. Sooriyaarachchi Independent Non-Executive

5/8 5/6 2/2 N/A 3/3

Mr. M.H. Jamaldeen (Appointed w.e.f. 2nd October 2017)

Independent Non-Executive

4/4 3/3 N/A N/A N/A

Mr. D.H. Fernando (Appointed w.e.f. 2nd October 2017)


2/4 N/A N/A N/A N/A

Mr. D.K. de S. Wijeyeratne (Appointed w.e.f. 1st April 2018)


N/A N/A N/A N/A N/A

Mr. G.J. Walker* Non-Executive 4/8 N/A 2/2 2/2 1/3

Mr. S.C. Ganegoda (Appointed w.e.f. 2nd October 2017)


Mr. G.M. Gellecanao – (Resigned w.e.f. 31st March 2017) Non-Executive 1/1 N/A N/A N/A N/A

Late Dr. S. Kelegama (Deceased on 23rd June 2017)


2/2 2/2 1/1 N/A N/A

Mr. P.J. O'Donnell*** (Resigned w.e.f. 2nd October 2017)


Mr. J.J. Hyun (Resigned w.e.f. 2nd October 2017)


Mr. D.T.R. de Silva ( Resigned w.e.f. 31st March 2018)


7/8 6/6 2/2 3/3 3/3

Mr. S.H. Goodman** (Ceased to be a Director w.e.f. 31st March 2018 in terms of Section 211 of the Companies Act No. 07 of 2007)


Mr. J.A. Setukavalar – By Invitation (Represented Singer Finance (Lanka) PLC

Independent Non-Executive of Singer Finance (Lanka) PLC

N/A N/A N/A N/A 3/3

*Mr. M.H.Wijeyewardene (Alternate to Mr.G.J.Walker) attended 3 meetings.**Mr. H.A.P.S.Perera (Ceased to be Alternate Director to Mr. S.H. Goodman w.e.f. 31st March 2018) attended 5 meetings.***Mr. K.K.L.P.Yatiwella (Alternate to Mr. P.J.O.Donnell) ceased w.e.f. 2nd October 2017 attended 3 meetings.



PreambleThe Committee is empowered to review and monitor the financial reporting process of Singer Group so as to provide additional assurance on the reliability of the Financial Statements through a process of independent and objective review. As such, the Audit Committee acts as an effective forum in assisting the Board of Directors in discharging its responsibilities on ensuring the quality of financial reporting and related communications to the shareholders and the public.

Composition of the CommitteeThe Audit Committee consists of three Independent Non-Executive Directors and is chaired by an Independent Non-Executive Director.

Audit Committee MembersMr. D.K. de Silva Wijeyeratne – Chairman – Independent Non-Executive Director (Appointed w.e.f. 1st April 2018).Mr. D. Sooriyaarachchi – Independent Non-Executive DirectorMr. M.H. Jamaldeen – Independent Non-Executive Director (Appointed w.e.f. 2nd October 2017)Mr. D.T.R. de Silva – Chairman – Independent Non-Executive Director (Resigned w.e.f. 31st March 2018)Late Dr. S. Kelegama – Independent Non-Executive Director (Deceased on 23rd June 2017)Brief profiles of the Directors are given on Pages 26 to 29 of this Annual Report.

Hayleys Group Services (Private) Limited functions as the Secretary to the Committee. The Finance Director/Compliance Officer, Head of Risk Management, Audit Staff, Representatives of External Auditors and when necessary, the Chairman, the Group Chief Executive and relevant Operational Directors and Managers attend the meetings by invitation.

Responsibilities and Duties of the Committee The Audit Committee’s authority, responsibilities and specific duties have been formalised through an Audit Committee Charter. By this, the Audit Committee is empowered among other things, to examine any matters relating to the financial affairs of the Singer Group and to review the adequacy of the internal control procedures, coverage of internal and external audit programmes, disclosure of accounting policies and compliance with statutory and corporate governance requirements.

AUDIT COMMITTEE REPORT

Activities in 2017/18

Financial ReportingThe Committee along with the Board, Internal Audit and External Audit reviewed the Interim Financial Statements and the Annual Financial Statements to ensure compliance with mandatory, statutory and other regulatory requirements laid down by the authorities, prior to publication.

Internal Audit, Risk and ControlThe Committee also provides a forum for the impartial review of the Reports of Internal and External Audits and to take into consideration findings and recommendations stated therein relating to significant business risks and control issues.

The Committee reviewed the Group audit plan for the year and agreed its budget and resource requirements. It reviewed interim and year-end summary reports and management’s responses. The Committee carried out an evaluation of the performance of the internal audit function and was satisfied with the effectiveness of the function.

The Committee reviewed the Compliance Officer’s Report on the Singer Group’s compliance with the applicable laws and regulations, including internal policy codes of conduct of its employees.

Meetings of the CommitteeDuring the reporting period, six Audit Committee Meetings were held to discuss the Reports of the Internal and External Auditors and Interim Financial Statements. The Financial Statements for the 15 months period ended 31st March 2018 were also discussed at the meeting held on the 14th May 2018. The minutes of the meetings were tabled at the meetings of the Board of Directors for information and necessary action.

The attendance of the Audit Committee meetings held during the reporting period ended 31st March 2018 under review is given on page 154 of this Annual Report:

External Audit The External Audit approach and scope was reviewed and discussed by the Committee with the External Auditors and Management prior to the commencement of the audit. The External Auditors informed the Committee on an ongoing basis regarding matters of significance that were pending resolution. Before the conclusion of the audit, the Committee met with the External Auditors without Management being present. External Auditors discussed the audit issues with the Audit Committee and the Management to agree on audit issues.

The Audit Committee recommended to the Board of Directors that Messrs KPMG, Chartered Accountants be reappointed as the External Auditors for the financial year 2018/19, subject to the approval of the shareholders at the Annual General Meeting (AGM) and the required resolution will be put to the shareholders at the AGM.

Sri Lanka Accounting StandardsCommittee reviewed the revised policy decisions relating to adoption of new and revised Sri Lanka Accounting Standards (SLFRS/LKAS) applicable to the Group companies and made recommendations to the Board of Directors.

Progress of implementation of SLFRS 9 & SLFRS 15:The Committee continuously monitored the progress of implementation of SLFRS 9 and SLFRS 15 that have been issued with effective date being January 1, 2018.

The Committee would continue to monitor the compliance with relevant Accounting Standards and keep the Board of Directors informed at regular intervals.

The committee has pursued the support of Messrs KPMG to assess and review the existing SLFRS policies and procedures adopted by the Group.

AppreciationI appreciate the contribution made by Mr. D.T.R. de Silva who served as the Chairman of the Audit Committee and resigned on 31st March 2018. His profound knowledge in the sphere of controls was of immense value to the Company.

It is with sadness that I record the passing of the late Dr. S. Kelegama who served as a member of the Audit Committee. His vast experience in the business sector benefited the Company enormously.

I wish to thank all members who served in the Committee during the period and for their contribution to the deliberations of the Committee.

Dilip Kumar de Silva WijeyeratneChairman – Audit Committee

14th May 2018Colombo

Singer (Sri Lanka) PLC Annual Report 2017/18156REMUNERATION COMMITTEE REPORT

Composition of the CommitteeRemuneration Committee consists of three Independent Non-Executive Directors and is chaired by an Independent Non-Executive Director.

Remuneration Committee MembersMr. M.H. Jamaldeen - Chairman - Independent Non-Executive Director (Appointed w.e.f. 2nd October 2017)Mr. D. Sooriyaarachchi - Independent Non-Executive DirectorMr. D.K. de Silva Wijeyeratne - Independent Non-Executive Director (Appointed on 14th May 2018)Late Dr. S. Kelegama - Independent Non-Executive Director (Deceased on 23rd June 2017)Mr. G.J. Walker - Chairman - Non-Executive Director (Resigned from 2nd October 2017)Mr. D.T.R. de Silva - Independent Non-Executive Director (Resigned w.e.f. 31st March 2018.)

Brief profiles of the Directors are given on Pages 26 to 29 of this Annual Report.

Finance Director functions as the Secretary to the Committee.

The Chairman of the Company and the Group CEO assist the Committee by providing the relevant information and participate in its analysis and deliberations except when their own compensation packages are reviewed.

Responsibilities and Duties of the CommitteeThe scope of the Committee is to “look into fees, remuneration and perquisites of Chairman, Group CEO, Independent Directors, Executive Directors of the Board of the Company and Key Management and approve recommendations made by the Committee.

The Committee also reviews the policies pertaining to the remuneration and perquisites of the executives of the Group.

Remuneration Policy A primary objective of compensation packages is to attract and retain a highly qualified and experienced work-force, and reward performance. These compensation packages should provide compensation appropriate for each business within the Group and commensurate with each employee’s level of experience and contribution, bearing in mind the business performance and long-term shareholder returns.

Meetings of the CommitteeThe Committee meets from time to time and reviews the Group’s remuneration and fee structures to assure alignment with strategic priorities and with compensation offered by competitor companies.

The Committee met twice during the period and the attendance of the members given on page 154 of this Annual Report.

AppreciationI appreciate the contribution made by Mr. G.J. Walker who served as the Chairman of the Committee.

It is with sadness that I record the passing of the late Dr. S. Kelegama who served as a member of the Remuneration Committee. His knowledge and experience benefited the Company immensely.

I also appreciate the contribution made by Mr. D.T.R. de Silva who served as a member of the committee and resigned w.e.f. 31st March 2018.

I wish to take this opportunity to thank all members who served in the committee during the period and for their contribution to the deliberations of the Committee.

Mohamed Hisham JamaldeenChairman – Remuneration Committee


Singer (Sri Lanka) PLC Annual Report 2017/18 157 NOMINATION COMMITTEE REPORT

Composition of the CommitteeNomination Committee consists of one Independent Non-Executive Director, one Non-Executive Director and two Executive Directors as at the end of the reporting period, 31st March 2018.

Nomination Committee MembersMr. A.M. Pandithage – Chairman – Executive Director (Appointed w.e.f. 2nd October 2017)Mr. K.D.D. Perera – Non-Executive Director (Appointed w.e.f. 2nd October 2017)Mr. M.H. Jamaldeen – Independent Non-Executive Director (Appointed w.e.f. 2nd October 2017)Mr. H.A. Pieris – Group CEO – Executive Director Late Dr. S. Kelegama – Independent Non-Executive Director (Deceased on 23rd June 2017)Mr. D.T.R. de Silva – Independent Non-Executive Director (Resigned w.e.f. 31st March 2018)

Brief profiles of the Directors are given on pages 26 to 29 of this Annual Report.

Responsibilities and Duties of the Committee

z Consideration of making any appointment of new Directors or re-electing current Directors.

z Provide advice and recommendations to the Board on any such appointment.

z Review criteria such as qualifications, experience and key attributes required for eligibility to be considered for appointment to the Board and Key Management Personnel in the Company.

z Consider if a Director is able to and has been adequately carrying out his or her duties as a Director taking into consideration the Director’s number of listed Company Boards on which the Director is represented and other principal commitments.

z Review the structure, size, compensation and competencies of the Board and make recommendations to the Board with regard to any changes.

z Recommend the requirements of new expertise and succession arrangements for retiring Directors.

z Recommend on any other matter referred to it by the Board of Directors.

Meetings of the CommitteeDuring the reporting period, three Nomination Committee meetings were held and attendance is given on page 154 of this Annual Report.

Re-election of Directors at the Annual General MeetingIn terms of Article 24 (4) of the Articles of Association of the Company, Messrs. G.J. Walker and D. Sooriyaarachchi retire by rotation and being eligible offer themselves for re-election and the shareholders will be requested to re-elect them at the Annual General Meeting.

In terms of Article 24 (10) of the Articles of Association of the Company, all the Directors who were appointed to the Board since the last Annual General Meeting are subject to election by the shareholders as given in the Notice of Meeting.

Appointment of Over 70 Years DirectorMr. S.H. Goodman who attained 72 years and reappointed at the last Annual General Meeting held on 31st March 2017 by the shareholders for a period of one year in terms of Section 211 of the Companies Act No. 07 of 2007 ceased to be a Director on 30th March 2018 due to the completion of one year.

The Nomination Committee has recommended that Mr. S.H. Goodman be appointed to the Board subject to the shareholders’ approval at the forthcoming Annual General Meeting in pursuant to Section 211 of the Companies Act No. 07 of 2007.

The above recommendations were approved by the Board.

AppreciationIt is with sadness that I record the passing of the late Dr. S. Kelegama who served as the Chairman of the Nomination Committee. His knowledge and experience benefited the Group immensely.

I also appreciate the contribution made by Mr. D.T.R. de Silva who served as a member of the Committee and resigned on 31st March 2018.

I wish to take this opportunity to thank all members who served in the Committee and for their contribution to the deliberations of the Committee during the period.

Mohan Pandithage Chairman – Nomination Committee


Singer (Sri Lanka) PLC Annual Report 2017/18158RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

PreambleThe Board established the Related Party Transactions Review Committee (RPTRC) in terms of the Code of Best Practice on Related Party Transactions issued by the Securities and Exchange Commission of Sri Lanka (the “Code”) and Section 9 of the Listing Rules of the Colombo Stock Exchange (the “Rules”).

Composition of the CommitteeThe Related Party Transactions Review Committee consists of two Independent Non-Executive Directors, one Non-Executive Director and one Executive Director and is chaired by an Independent Non-Executive Director. The following Directors serve on the Committee:

Mr. D. Sooriyaarachchi – Chairman Independent Non-Executive DirectorMr. D.K. de Silva Wijeyeratne Independent Non-Executive Director (Appointed w.e.f. 14th May 2018)Mr. G.J. Walker Non-Executive DirectorMr. H.A. Pieris – Group CEO Executive DirectorMr. J.A. Sethukavalar Independent Non-Executive Director of Singer Finance (Lanka) PLC – participating on invitation represents Singer Finance (Lanka) PLCMr. D.T.R. de Silva – Independent Non-Executive Director (Resigned w.e.f. 31st March 2018.)

Brief profiles of the members are given on pages 26 to 29 of this Annual Report.

The above composition is in compliance with the provisions of the Code regarding the composition of the Related Party Transactions Review Committee.

Hayleys Group Services (Pvt) Ltd. functions as the Secretary to the Related Party Transactions Review Committee.

Meetings of the CommitteeDuring the 15 months period ended 31st March 2018, the Committee met three times. Attendance by the Committee Members at these meetings is given in the table on page 154 of the Annual Report.

Role and ResponsibilitiesThe mandate of the Committee is derived from the Code and the Rules and is as follows.

z To review in advance all proposed related party transactions of the Group either prior to the transaction being entered into or, if the transaction is expressed to be conditional on such review, prior to the completion of the transaction.

z Seek any information the Committee requires from Management, employees or external parties with regard to any transaction entered into with a related party.

z Obtain knowledge or expertise to assess all aspects of proposed related party transactions where necessary including obtaining appropriate professional and expert advice from suitably qualified persons.

z To recommend, where necessary, to the Board and obtain their approval prior to the execution of any related party transaction.

z To monitor that all related party transactions of the entity are transacted on normal commercial terms and are not prejudicial to the interests of the entity and its minority shareholders.

z Meet with the Management, Internal Auditors/External Auditors as necessary to carry out the assigned duties.

z To review the transfer of resources, services or obligations between related parties regardless of whether a price is charged.

z To review the economic and commercial substance of both recurrent/non-recurrent related party transactions

z To monitor and recommend the acquisition or disposal of substantial assets between related parties, including obtaining “competent independent advice” from independent professional experts with regard to the value of the substantial assets of the related party transaction.

Policies and Procedures Adopted by the RPTRC for Reviewing Related Party Transactions (RPTs)1. Relevant information to capture

RPTs are fed into the Company Data Collection System.

2. All Officers concerned are informed of the applicable regulatory requirements relating to the reporting of RPTs.

3. Key Management Personnel (KMPs) and their Close Family Members (CFMs) are identified half yearly together with their NIC numbers and business registration numbers. This information is in the system.

4. Systems are updated with KMP and their CFM details on a half yearly basis or as and when the need arises in the event of a material change.

5. Data is extracted from the system, verified and validated.

6. All Managers are advised to report RPTs to the Finance Director who has been identified as the Focal Point, for this purpose.

7. Data is shared with the Finance Director and the Company Secretaries to meet the regulatory requirements if required.

Task of the Committee The Committee reviewed the related party transactions and their compliance and communicated to the Board.

The Committee in its review process recognised the adequacy of the content and quality of the information forwarded to its members by the management and in compliance with Section 9 of the CSE Listing Rules.

Related Party Transactions are disclosed in the Note 39 to the Financial Statements.

Reporting to the BoardThe Minutes of the RPTRC meetings are tabled at Board meetings enabling all Board members to have access to same.

Appreciation I appreciate the contribution made by Mr. D.T.R. de Silva who served as a member of the Committee and resigned w.e.f. 31st March 2018.

I Wish to take this opportunity to thank all members who served in the Committee and for their contribution to the deliberations of the Committee during the period.

Deepal SooriyaarachchiChairman – Related Party Transactions Review Committee


Singer (Sri Lanka) PLC Annual Report 2017/18 159 RISK MANAGEMENT

Protecting OurselvesRisk is an integral part of any business. It is a matter of identifying the sources of risk, their likelihood of occurrence and impact, and then developing a comprehensive framework to address them. Such a systematic approach also raises a few questions, like determining one’s appetite for risk and establishing thresholds, bearing in mind that risk and return go hand in hand. So it’s a question of striking a balance and managing risk.

Over the years, Singer has developed a set of clear risk management objectives and a well-established strategy to deliver them, through core risk management processes.

At a strategic level, our risk management objectives are –

z To identify the Company’s significant risks.

z To formulate the Company’s Risk Appetite and ensure that business profile and the plans are consistent with it.

z To optimise risk/return decisions by taking them as closely as possible to the business, while establishing strong and independent review and challenge structures.

z To ensure that business growth plans are properly supported by effective risk infrastructure.

z To manage risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions.

z To help executives improve the control and co-ordination of risk taking across the business.

The Company’s approach is to provide direction on understanding the principal risks to achieving the Company strategy; establishing risk appetite; and establishing and communicating the risk management framework. The process is then broken down into five steps: identify, assess, control, report and manage/challenge.

The Company’s risk management strategy is broadly unchanged from 2011.

The Risk Management ProcessDuring the year under review, the Company continued to review and improve its risk management function in line with its Risk Management Objectives.

Steps Activities

Data Collection and Analysis z The Management Information System (MIS) to pick-up relevant business-critical information.

z Review and validation before it is submitted to senior management.Assess z Agree and implement measurement and reporting standards and methodologies.

Control z Establish key control processes and practices, including limit structures, impairment allowance criteria and reporting requirements.

z Monitor the operation of the controls and adherence to risk direction and limits. z Provide early warning of control or appetite breaches. z Ensure that risk management practices and conditions are appropriate for the business environment.

Report z Interpret and report on risk exposures, concentrations and risk-taking outcomes. z Interpret and report on sensitivities and Key Risk Indicators. z Communicate with relevant parties.

Manage z Review aspects of the Company’s risk profile. z Assess new risk-return opportunities. z Advise on optimising the Company’s risk profile. z Review and challenge risk management practices.

Internal, External and Corporate AuditInternal, external and corporate audits are crucial in the risk management process. Reports on the Group’s operational and financial systems by these audits are reviewed and action taken to manage any risks that have been identified. Significant audit findings by the Auditors are immediately reviewed by the Board appointed Audit Committee.

The Group’s system of internal controls covers all policies and procedures, enabling significant strategic and operational risks to be managed.

The Internal Audit team meets with the Finance Department every month to share information and exchange perspectives. Issues identified at these discussions as being a potential risk are immediately subjected to a fuller investigation.


Risk Mitigation Activities

1. Macroeconomic FactorsEconomic Environment

The Group’s business operations are sensitive to economic conditions and in particular to levels of consumer spending. Any delay in economic recovery could affect consumer expenditure and therefore our revenue. There is an ongoing risk to our business in terms of increases in the cost of products due to rupee depreciation.

z A diversified portfolio of products and brands with a wide range of offers targeted at different consumer groups.

z A Broad geographic spread. z The Board and the Senior Management team regularly review the impact of the economic conditions on the Group’s budget and strategic plans.

z Emphasise excellent quality, service, value for money and up-to-date product offers, we aim to broaden our appeal to customers.

z Renewal and transformation plan to improve our business performance irrespective of macroeconomic factors strategy and business planning which takes into account varying economic scenarios.

Market Specific Characteristics

Seasonality – A substantial proportion of revenue and operating profit is generated during the fourth financial quarter, which includes the Christmas and New Year season. Adverse trading in this relatively short period is likely to impact significantly the full year’s results.

z Financial planning takes into account expected peaks and troughs during the year and the business is run accordingly.

z Increasing the proportion of internal promotion and various offers, which gives a regular stream of income over the course of the year.

Adverse weather- frequent floods, droughts and other extreme weather conditions affected consumers income levels and paying ability specially in agricultural area affect achieving planed revenue and collections.

z Rescheduling of HP in affected areas. z Insurance scheme for HP customers. z Discount offer for repairs and replacement.

Price Deflation – Price deflation has been a common feature across most electrical goods categories for a number of years, primarily driven by technological advances and improved production efficiencies.

z Effective launches of new technologically evolved products as it becomes available to the market.

z Growth of services-related business to increase the number and value of non-product sales.

z Improve gross profit in renovated showrooms. z Control of stock and strong management of clearance and exit routes.

Competition

Competitors reduce the Group’s market share and/or drive down margins in specific markets.

z Renovation and transformation plan is improving our showrooms, cost structure and service across all channels.

z Continuing development of strong international brands. z Ensuring our prices offer good value, including a customer price index. z Building stronger relationships with suppliers. z Expand and improve after-sales service network.

The e-commerce sites driven slowly by revenue valuations are selling products well below the costs, thereby forcing all parties to reduce the margins.

z Revamp the Company web site and increased promotional awareness through the web site.

z Make existing network to free delivery for web purchase. z Set up pick-up store with additional discount for selected items. z Combine with deal sites. z Active engagement and promotion on social media.

RISK MANAGEMENT



Risk that we fail to capitalise on new technology or emerging trends to maximise revenues and fail to meet the expectations of customers.

z Strong supplier relationships. z Delivery of Customer Plan to respond to identified changes in technology. z Showroom renovation to take into account emerging trends in showroom layouts. z Exciting product launches to make our showrooms the destination for the latest technology.

z Continued focus on ensuring an excellent range across all price points. z Customer service training for sales staff and product workshops to improve product knowledge.

z A loyalty programme that encourages customers to stay with the Singer brand and its products.

Product Risk

Products could turn out to be defective or inappropriate for the market in terms of price, functionality or perceived value. They are also liable to be rendered obsolete. In such instances, the Company is exposed to market risks arising from consumer dissatisfaction and consequent rejection of its products.

z The Company’s plant and machinery are rigorously maintained and upgraded whenever necessary.

z Established quality control measures as well as product testing through sampling are performed on all product lines.

z The in-house Quality Surveillance Unit tests samples of new products or components from external suppliers before order placement.

2. Operational RiskPeople

A failure to attract, retain, develop and motivate the best employees across all our showrooms and head office may impact our ability to deliver our operational and strategic objectives. Labour issues can affect product quality, output, market share as well as the Company goodwill and reputation.

z Company endeavours to recruit the best people with the right skills at all times. z Offer training and development programmes to ensure that we retain them. z Remuneration packages are benchmarked to ensure that they remain competitive, including incentive arrangements where appropriate.

z Collective agreements are in place with the labour unions to maintain an equitable balance between the interests of employer and employee and provide a basis for negotiations when issues arise.

z Procedures have also been laid down in responding to grievances and staff complaints.

As the business grows in size and geographical scope, the potential for fraud and dishonest activity by our suppliers, customers and employees increase.

z Clear behavioural guidance given to employees through operational manuals. z Appropriate procedures and controls set out and audited across the business to reduce fraud risks; Internal Audit and Corporate Audit undertake detailed investigations into all business areas and report their findings to the Audit Committee.

z Regular update and new introduction of relevant policies and procedures. z Whistle-blower policy. z Periodical review of the internal controls by outsourced consultants.

IT Systems and Infrastructure

Any significant failure in the IT processes of our retail operations would impact our ability to trade.

z The Company has installed comprehensive network security. z Regular backups of all databases and mission-critical information. z Off-site disaster-recovery system. z Regular follow-up review are conducted on recommendations given by external IT risk assessment team.

z Investment in IT system improvements and innovating to improve business efficiency.

z Extensive controls and reviews to maintain integrity and efficiency of IT infrastructure and data.

RISK MANAGEMENT



Supply Chain

Timely distribution of products to our retail outlets is crucial. We work with a number of key overseas and local suppliers our business, could be at risk of both interruption of supply and of failure of such key suppliers and service providers.

z Regular review of distribution plan. z Monthly operational meeting to review the forecast, level of inventory and procurement requirement etc.

z Long-standing relationships with many suppliers help to minimise risks in this area. z Reduce dependability on a single service provider.

Asset Risk

Risks associated with the physical assets of the Company include the destruction, loss or theft as well as technical and other defects.

z All such assets are insured against all identifiable risks. z The relevant insurance policies are subject to a comprehensive annual review, with modifications made as deemed necessary.

z Procedures in place to control technical and other defects include purchasing from reputable suppliers who comply with acceptable standards on product and service quality; active, standards-based (ISO 9001) quality assurance at all manufacturing facilities, distribution centres and service centres; and the maintenance of adequate spare parts.

z Provisioning is also made against obsolete inventory, warranty claims and doubtful debtors. Warranty costs are shared with the Company’s partners. The extended warranty cost is comprehensively covered by a well-reputed insurance company.

3. Financial Risk

Liquidity Risk

Inadequate liquidity can have an adverse impact on ongoing operations, marketing and investment in new products and brands.

z The liquidity position of the Company is regularly reviewed and reported to the Board.

z Projected net borrowings are covered by committed banking facilities and a healthy industry-related gearing ratio is maintained.

z The Company’s good relationships and facilities with many banks and other sources of finance ensure reliable access to funds.

Interest Rate Risk

Increase in interest rates will have an adverse impact to the profitability.

z Fluctuating interest rates are minimised by striking a balance between short and long-term borrowings.

z Floating-rate debentures are sometimes issued to capitalise on existing interest rates.

z The Company’s strong brand strength and financial dependability help ensure ready access to funds at attractive rates.

Credit Risk

The Company is exposed to credit risk in the form of financial loss when a customer reneges on a hire purchase agreement. Such exposure cannot be avoided entirely since consumer credit is an integral part of the Company’s retail operations and is used to encourage and enable consumers to purchase.

z Branch Managers act as del credere agents. z Management undertakes a thorough appraisal of the client before credit is extended.

z Credit appraisals of dealers are undertaken to ascertain whether they have the capacity to pay for goods ordered; in doubtful cases, a bank guarantee or security deposit is requested.

z Details of customers and dealers who have defaulted on payments are recorded in a database, accessible to those staff whose duty is to undertake credit evaluations of customers and dealers.

z Risk-adjusted pricing. z A fully equipped and trained Credit Supervision team is available.

RISK MANAGEMENT



Investment Risk

While investment in new products and geographical expansion is vital for the Company to remain competitive, it raises fresh risks.

z Appraisals are carried out before an investment is made. z A due diligence study ensures that projected budgets and forecasts can be met and examines the impact of technological and other factors on the investment decision.

z Post-investment analysis and performance tracking is in place including financial and customer measures through balance scorecard.

4. Other Risk

Governance Risk

These are risks to the Company arising from non-compliance with relevant health, safety and environmental statutes and leading to loss of reputation and goodwill, possible litigation and financial loss.

z Preventive action has been designed by the Company’s Legal Department. z Frequent internal, external and corporate audits-monitor compliance. z The Company’s management culture stresses ethical performance in this area. International best practices are followed wherever possible.

z Quality surveillance helps protect the Company against litigation and warranty claims. Provisioning ensures that such claims do not have an adverse impact on operational and other aspects of the Company.

z Detailed, established procedures to ensure product integrity. z Group Compliance Officer reviews reports forwarded to the Audit Committee to ensure compliance with laws and policies.

Socioeconomic Risks

Sri Lanka’s socioeconomic and political environment has an impact on the consumer durables business as well as the investment climate.

z Management reviews prices in comparison to inflation and negotiates with suppliers for lower prices and credit terms.

Environment and Climate Change

Aside from the general risks to humankind posed by climate change, a specific business risk to which the Company is exposed concerns possible shortages of essential raw materials, such as wood for the manufacture of furniture and risks of environment pollution due to waste material.

z The use of alternative materials mitigates this risk while simultaneously opening up new marketing opportunities.

z Collaborate with Central Environmental Authority to assist in e-Waste project. z All factories, warehouse and service centres complied with the requirement of environment regulations.

z Introduction of energy saving appliances.

Caveat

Although the key sources of risk and their mitigation have been discussed in this document, no assurance can be given that the Company is fully-protected against all possible risks. As noted in the opening paragraph, the best that can be achieved is reasonable management of risks through a sound operational framework that identifies, evaluates and mitigates the negative impacts in a timely manner at multiple levels.

z The Company is confident that all material risk factors have been adequately assessed and managed to ensure the uninterrupted and profitable continuance of the business.

RISK MANAGEMENT


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Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of

Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial

Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the

Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income

Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position

Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of

Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement

of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other

Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income



















of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial

Financialreports

Statement of Financial Position

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


178 180 181

173 176172

Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of

Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial

Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the

Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income
























of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial Statements Statement of Financial Position Statement of Changes in Equity Annual Report of the Board of Directors on the Affairs of the Company Statement of Directors’ Responsibility Statement of Profit or Loss and Other Comprehensive Income Audit Committee Report Statement of Cash Flows Notes to the Financial

Financialreports

Independent Auditors’ Report

Statement of Profit or Loss and Other Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Statement of Directors’ Responsibility

Financial Calendar – 2016Annual Report 2016 Approved 23rd February 2017Forty Second Annual General Meeting 31st March 2017Final dividend 2016 Payable 16th March 2017

Interim Financial Statements in Terms of Rule 8.3 of the Colombo Stock ExchangeFor the three months ended 31st March 2017 (Unaudited) 9th May 2017For the six months ended 30th June 2017 (Unaudited) 10th August 2017For the nine months ended 30th September 2017 (Unaudited) 2nd November 2017For the twelve months ended 31st December 2017 (Unaudited) 1st February 2018For the fifteen months ended 31st March 2018 (Unaudited) 15th May 2018

Annual Report and Annual General MeetingAnnual Report 2017/18 Approved 14th May 2018Forty-Third Annual General Meeting 26th June 2018

Proposed Financial Calendar – 2018/19For the three months ending 30th June 2018 (Unaudited) August 2018For the six months ending 30th September 2018 (Unaudited) November 2018For the nine months ending 31st December 2018 (Unaudited) February 2018For the twelve months ending 31st March 2019 (Unaudited) May 2019Annual Report and Accounts for 2018/19 (Audited) May 2019Forty-Forth Annual General Meeting June 2019

Singer (Sri Lanka) PLC Annual Report 2017/18166ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

The Board of Directors of Singer (Sri Lanka) PLC has pleasure in presenting their Report on the Affairs of the Company together with the Audited Financial Statements of Singer (Sri Lanka) PLC and the Audited Consolidated Financial Statements of the Group for the 15 months ended 31st March 2018.

Review of the YearChairman’s Message, (pages 18 to 19), the Group Chief Executive Officer’s Review, (pages 20 to 25) and Management Discussion and Analysis (pages 50 to 112), describe the Company’s affairs and the Group’s business and mention important events that occurred during the year and up to the date of this Report. Financial results of the Company/Group are elaborated on pages 50 to 57. These reports together with the Audited Financial Statements reflect the state of affairs of the Company/Group.

Change of OwnershipHayleys PLC together with its subsidiaries, Volanka (Pvt) Ltd. and Carbotels (Pvt) Ltd., acquired on 15th September 2017 a total of 231,864,362 ordinary shares in Singer (Sri Lanka) PLC, constituting approximately 61.73% of the total shares in issue at a price of Rs. 47/- per share, making Hayleys PLC the controlling party of Singer (Sri Lanka) PLC with effect from 15th September 2017. Previous Parent Company of Singer (Sri Lanka) PLC was Retail Holdings (Sri Lanka) BV. Consequent to the above purchase, a mandatory offer was made by Hayleys PLC as Hayleys PLC triggered the Company Take-overs and Mergers Code 1995, published under the rules made by the Securities and Exchange Commission of Sri Lanka under Section 53 of the Securities and Exchange Commission of Sri Lanka, Act No. 36 of 1987 as amended, and in terms of Rule 31 (1) (a) of the Code. Accordingly, subsequent to the mandatory offer, Hayleys PLC with parties acting in concert holds 304,108,410 shares constituting approximately 80.96% of the total shares in issue.

Change in Financial YearThe reporting period of Singer (Sri Lanka) PLC has been changed from 31st December to 31st March in order to align with the Parent Company’s reporting period with the approval of the Registrar

of Companies. Therefore, the current financial period is fifteen months ended 31st March 2018 and the next financial year end will be 31st March 2019. The disclosures pertaining to change of the financial reporting period has been made in accordance with LKAS 1: ‘Presentation of Financial Statements’.

Principal ActivitiesThe Company is engaged in Retail and Wholesale Marketing, Financing, Assembling and Manufacturing and in Financial Services. The Company markets Consumer Electronics, Home Appliances, Mobile Phones, Personal Computers, Laptops, Furniture, Domestic and Industrial Sewing Machines, Agriculture Equipment, and provides Financing through Hire Purchase. In addition, the Company manufactures and sells Furniture, Water Pumps and assembles and sells Motor Cycles and Two Wheel Tractors. The Company also acts as a Bill Collection Agent for banks, Mobile service providers, National Water Supply and Drainage Board, Ceylon Electricity Board and is also a subagent for Western Union.

Independent Auditors’ ReportThe Independent Auditors’ Report on the Financial Statements is given on page 173 in this Annual Report.

Financial StatementsThe Financial Statements for the fifteen months ended 31st March 2018 are in accordance with the Sri Lanka Accounting Standards, SLFRSs/LKASs, issued by The Institute of Chartered Accountants of Sri Lanka and the requirements of Section 151 (and Section 153 for consolidated entity) of the Companies Act No. 07 of 2007.

The Financial Statements duly signed by the Directors are provided on pages 176 to 243 in this Annual Report.

Accounting PoliciesThe accounting policies adopted in preparation of the Financial Statements are provided in detail in the Notes to the Financial Statements on pages 182 to 192 The Company/Group has consistently applied the accounting policies as set out in Note 2 to all periods presented in these Consolidated Financial Statements.

Property, Plant and EquipmentDuring the period under review, the Company and the Group invested a sum of Rs. 600,451,154/- (2016 – Rs. 539,048,305/-) and Rs. 887,107,521/- (2016 – Rs. 778,292,600/-) in Property, Plant and Equipment.

Details of Property, Plant and Equipment and Intangible Assets and their movements are given in Notes 11 and 12 to the Financial Statements respectively. Details of freehold land and buildings are given in Note 11.17 to the Financial Statements.

Market Value of PropertiesThe freehold property of the Company/Group is revalued by an Independent Qualified Valuer when there is a substantial difference between the fair value and the carrying amount of the freehold property. Company/Group reviews its assets once in each reporting date.

The most recent valuation was carried out as at 31st December 2016. The details of the valuation are given in Note 11.13 to the Financial Statements on page 202 in this Annual Report.

Directors’ ResponsibilitiesThe Statement of the Directors’ Responsibilities is given on page 172.

Corporate GovernanceThe Company has complied with Corporate Governance rules laid down by The Institute of Chartered Accountants of Sri Lanka. The Corporate Governance Section on pages 116 to 154 describes the good Corporate Governance Principles adopted by the Company.

Singer (Sri Lanka) PLC Annual Report 2017/18 167 ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

Profit and Appropriations

For Fifteen Months Ended

31st March 2018Rs.

For Twelve Months Ended

31st December 2016Rs.

Group Profit Before Tax for the fifteen months ended 31st March after deducting all expenses, providing for known Liabilities and Depreciation amounts to 2,049,052,146 3,126,233,230

From this has to be deducted the Income Tax Expenses (828,757,533) (768,476,891)

Non-Controlling Interest (111,429,890) (237,491,497)

Making a Profit for the Period 1,108,864,723 2,120,264,841

Total Other Comprehensive Income/(Loss) (11,626,151) 43,080,535

Total Other Comprehensive Income/(Loss) – Non-Controlling Interest (65,182,518) 1,929,832

To this has to be added a Balance Brought Forward from the Previous Year 2,600,892,894 1,530,868,357

Interim Dividend for the Period – Gross – Rs. 2.20 Per Share (2016 – Nil) (826,383,426) –

And adjustment due to Realisation on Revaluation Surplus 28,213,846 20,356,143

Adjustment due to Acquisition of Non-Controlling Interest 1,347,099 8,280,491

Leaving a Total Available for Appropriation 2,836,126,468 3,724,780,200

Transfer to Reserve Fund (40,648,742) (22,042,737)

Final Dividend Approved 2017/18 : Nil (2016 – Rs. 2.93* Per Share) – (1,101,844,568)

Making a total Appropriation of (40,648,742) (1,123,887,305)

Leaving a balance on Group Basis to be Carried Forward of 2,795,477,725 2,600,892,894

The Balance to be Carried Forward on Company only basis will be 626,088,413 440,368,293

*Dividend Per Share (DPS) has been restated to reflect the subdivision of shares in March 2017.

Dividends In terms of Article 7 of the Articles of Association of the Company, an interim dividend of Rs. 2.20 per share was paid on 29th March 2018 for the fifteen months financial period ended 31st March 2018. The Board signed a Certificate of Solvency stating that the Company would satisfy the Solvency Test immediately after the said distribution is made in accordance with Section 57 of the Companies Act No. 07 of 2007. The Board of Directors obtained a Certificate of Solvency from the Auditors prior to the date of dispatch of the dividend payment.

Reserves (Excluding Non-Controlling Interest)Group reserves and retained equity as at 31st March 2018 amounted to Rs. 6,209 million vs Rs. 7,528 million as at 31st December 2016. The break-up and movement are shown in the Statement of Changes in Equity in the Financial Statements.

Stated CapitalAs per the terms of the Companies Act No. 07 of 2007, the Stated Capital of the Company was Rs. 626,048,050/- as at 31st March 2018 and was unchanged during the fifteen months period. Details are given in Note 21 to the Financial Statements on page 216.

Commitments and ContingenciesCommitments and Contingent Liabilities of the Group are disclosed in the Note 37 to the Financial Statements.

Events after the Reporting PeriodNo circumstances have arisen since the Reporting date, which would require adjustment or disclosure except for the details given in Note 38 to the Financial Statements on page 239.

Statutory PaymentsThe declaration relating to statutory payments is made in the Statement of Directors’ Responsibility on page 172.

Board Committees Audit Committee Following are the names of the Directors comprising the Audit Committee of the Board.

Mr. D.K. de Silva Wijeyeratne – Chairman (Appointed w.e.f. 1st April 2018)Mr. D. Sooriyaarachchi Mr. M.H. Jamaldeen – (Appointed w.e.f. 2nd October 2017)Late Dr. S. Kelegama – (Deceased on 23rd June 2017)Mr. D.T.R. de Silva – Chairman (Resigned w.e.f. 31st March 2018.)

The Report of the Audit Committee on page 155 sets out the manner of compliance by the Company in accordance with the requirements of the Rule 7.10 of the Listing Rules of the Colombo Stock Exchange on Corporate Governance.


Remuneration Committee Following are the names of the Directors comprising the Remuneration Committee of the Board:

Mr. M.H. Jamaldeen – Chairman (Appointed w.e.f. 2nd October 2017)Mr. D. SooriyaarachchiMr. D.K. de Silva Wijeyeratne (Appointed w.e.f. 14th May 2018)Late Dr. S. Kelegama – (Deceased on 23rd June 2017)Mr. G.J. Walker – Chairman – (Resigned w.e.f. 2nd October 2017)Mr. D.T.R. de Silva – (Resigned w.e.f. 31st March 2018)

The Report of the Remuneration Committee on page 156 contains a statement of the remuneration policy. The details of the aggregate remuneration paid to the Executive and Non-Executive Directors during the period under review are given in Note 8 to the Financial Statements on page 195.

Board Nomination Committee Following are the names of the Directors comprising the Nomination Committee of the Board:

Mr. A.M. Pandithage – Chairman – (Appointed w.e.f. 2nd October 2017)Mr. K.D.D. Perera – (Appointed w.e.f. 2nd October 2017)Mr. H.A. PierisMr. M.H. Jamaldeen – (Appointed w.e.f. 2nd October 2017)Late Dr. S. Kelegama – Chairman – (Deceased on 23rd June 2017)Mr. D.T.R. de Silva – (Resigned w.e.f. 31st March 2018)

The Report of the Board Nomination Committee on page 157 sets out the manner of compliance by the Company in accordance with the requirements of the Code of Best Practice on Corporate Governance issued by The Institute of Chartered Accountants of Sri Lanka.

Related Party Transactions Review Committee Following are the names of the Directors comprising the Board Related Party Transactions Review Committee:

Mr. D. Sooriyaarachchi – ChairmanMr. D.K. de Silva Wijeyeratne (Appointed w.e.f. 14th May 2018)

Mr. H.A. Pieris Mr. G.J. WalkerMr. J.A. Sethukavalar – Director of Singer Finance (Lanka) PLC participating on invitation represents Singer Finance (Lanka) PLCMr. D.T.R. de Silva – (Resigned w.e.f. 31st March 2018.)

The Board of Directors formed the Board Related Party Transactions Review Committee to assist the Board in reviewing all related party transactions in accordance with the requirements of Section 9 of the Listing Rules of the Colombo Stock Exchange.

The Report of the Board Related Party Transactions Review Committee on page 158 sets out the manner of compliance by the Company.

Directors’ Indemnity and InsuranceThe Directors and Officers of the Company and subsidiaries are covered in respect of Directors’ and Officers’ liability by the Insurance Policy obtained by the Company, as per the provisions in Article 44.

Issue of Listed DebenturesNo debentures were issued during the period.

Share Information and Substantial ShareholdingsThe distribution of shareholdings, public holding percentage, market value of shares, twenty largest shareholders and record of scrip issues are given on pages 249 to 252.

Share SplitAt the Extraordinary General Meeting held on 31st March 2017, the shareholders approved a subdivision of shares on the basis of three shares for every one existing share held. Subsequent to the share split the issued number of shares increased to 375,628,830 from previous position of 125,209,610. This has not altered the stated capital of the Company.

Earnings per share, dividends per share, dividend pay out and net assets value per share are given in the Financial Highlights on page 9 of this Annual Report and prior year figures are adjusted in line with share split.

Directorate and ShareholdingThe names of the Directors of the Company as at 31st March 2018 and their brief profiles are shown on pages 26 and 29 and the Inner Back Cover.

Late Dr. S. Kelegama demised on 23rd June 2017.

Messrs G.M. Gellecanao, J.J. Hyun, P.J. O’Donnel and D.T.R. de Silva resigned from the Board during the financial reporting period.

Mr. S.H. Goodman who attained 72 years and reappointed at the last Annual General Meeting held on 31st March 2017 by the shareholders for a period of one year in terms of Section 211 of the Companies Act No. 07 of 2007 ceased to be a Director on 30th March 2018 due to the completion of one year.

Mr. A. Paranavithane resigned as alternate Director during the Financial Period.

Mr. K.K.L.P. Yatiwella ceased to be an alternate Director upon the resignation of his appointer Mr. P.J. O’Donnell.

Mr. S.H. Perera ceased to be an alternate Director to his appointer Mr. S.H. Goodman as described above.

Messrs A.M. Pandithage, K.D.D. Perera, M.H. Jamaldeen, D.H. Fernando, S.C. Ganegoda and D.K. de Silva Wijeyeratne were appointed to the Board since the last Annual General Meeting. The Shareholders will be requested to elect them at the Annual General Meeting in terms of Article 24 (10) of the Articles of Association of the Company.

Mr. K.K.L.P. Yatiwella was appointed as an alternate Director to Mr. S.C. Ganegoda w.e.f. 2nd October 2017.

In terms of Article 24 (4) of the Article of Association of the Company, Messrs G.J. Walker and D. Sooriyaarachchi retire by rotation and being eligible offer themselves for re-election and the shareholders will be requested to re-elect them at the Annual General Meeting.

The Board has recommended Mr. S.H. Goodman to be appointed to the Board subject to the shareholders’ approval at the Annual General Meeting in pursuant to Section 211 of the Companies Act No. 07 of 2007. A resolution will

ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY


be put before the shareholders for the appointment of Mr. S.H. Goodman who is 74 Years of age notwithstanding the age limit of 70 years stipulated by Section 210 of the Companies Act No. 07 of 2007.

Directors’ Interests and Interest Register Details of transactions with Director related entities are disclosed in Note 39 to the Financial Statements on pages 239 to 242 and have been declared at the Board meetings, pursuant to Section 192 (2) of the Companies Act No. 07 of 2007.

Directors’ Remuneration Executive Directors remuneration is structured within an established framework by the Board’s Remuneration Committee to whom this task has been entrusted. The Directors are of the opinion that the framework assures appropriateness of remuneration and fairness for the Company. The total remuneration of the Executive Directors for the reporting period ended 31st March 2018 is given on Note 8 and 39.3 includes the value of perquisites granted to them as part of their terms of service.

The total Directors fees of Non-Executive Directors for the reporting period ended 31st March 2018 is given in Note 8 is determined according to the scales of payment decided upon by the Board. The Board is satisfied that the payment of remuneration is fair to the Company.

Directors’ Interest in Shares The following transactions of shares of the Directors/Alternate Directors of the respective companies were reported during the reporting period.

Singer (Sri Lanka) PLCMr. K.D.D. Perera purchased 6,935,913 shares during the reporting period.

Singer Finance (Lanka) PLC (Subsidiary)Purchased from the Rights Issue: Mr. M.P.A. Salgado – 2,222 shares Mr. R.S. Wijeweera – 6,889 shares Mr. K.K.L.P. Yatiwella (Alternate) – 20,333 shares Mr. T.A. Amarasuriya (Alternate) – 6,600 shares Mr. K.K.L.P. Yatiwella disposed 35,333 shares during the reporting period.

Directors of the Company and its subsidiaries who have relevant interest in shares of the respective Companies as at the reporting period ended 31st March 2018 are stated below:

Singer (Sri Lanka) PLC

Shareholding 31st March 2018

Number of Shares

Shareholding 1st January 2017 Number of Shares

Mr. A.M. Pandithage – –

Mr. K.D.D. Perera 6,935,913 –

Mr. H.A. Pieris 6,000 2,000

Mr. D. Sooriyaarachchi – –

Mr. M.H. Jamaldeen – –

Mr. D.H. Fernando – –

Mr. D.K de Silva WijeyeratneMr. G. J. Walker – –

Mr. S.C. Ganegoda – –

Mr. G.M. Gellecanao (Resigned) – –

Late Dr. S. Kelegama (Deceased on 23rd June 2017) – –

Mr. P.J. O’Donnell (Resigned) – –

Mr. J.J. Hyun (Resigned) – –

Mr S.H. Goodman (Ceased to be a Director w.e.f. 31st March 2018)

– –

Mr. D.T.R. de Silva (Resigned) – –

Mr. M.H. Wijewardene (Alt) – –

Mr. L.N.S.K. Samarasinghe (Alt) 17,372 4,124

Mr. K.K.L.P. Yatiwella (Alt) – –

Mr. A.P. Paranavitane (Alt) – (Resigned) – –

Mr. H.A.P.S. Perera (Alt) (Ceased to be an Alternate Director w.e.f. 31st March 2018)

– –

Subsidiaries

Shareholding of Singer Finance

(Lanka) PLC 31st March 2018

Number of Shares

Shareholding of Singer Industries

(Ceylon) PLC 31st March 2018

Number of Shares

Shareholding ofRegnis


Number of Shares

Common Directors of the Singer Group Companies

Mr. A.M. Pandithage – – –

Mr. K.D.D. Perera – – –

Mr. H.A. Pieris 102,335 – 1,000

Mr. D. Sooriyaarachchi – –

Mr. M.H. Jamaldeen – – –

Mr. D.H. Fernando – – –

Mr. D.K. de Silva Wijeyeratne – – –

Mr. G.J. Walker – – –

Mr. S.C. Ganegoda – – –

Late Dr. S. Kelegama (Deceased) – – –

Mr. S.H. Goodman (Ceased to be a Director on 31st March 2018) – – –

Mr. D.T.R. de Silva (Resigned) – – –



Shareholding of Singer Finance


Number of Shares

Shareholding of Singer Industries

(Ceylon) PLC 31st March 2018

Number of Shares

Shareholding ofRegnis


Number of Shares

Mr. M.H. Wijewardene (Alt) – – –

Mr. L.N.S.K. Samarasinghe (Alt) 325,000 4,104 14,000

Mr. K.K.L.P. Yatiwella (Alt) – – –

Mr. H.A.P.S. Perera (Alt) (Ceased to be a Director on 31st March 2018) – – –

Directors of Singer Finance (Lanka) PLC

Mr. M.Y.A. Perera – – –

Mr. J.A. Setukavalar – – –

Mr. M.P.A. Salgado 12,224 – –

Mr. R.S. Wijeweera 37,892 – –

Mr. J.M.J. Perera – – 800

Ms. D.G. Talpahewa – – –

Mr. L.S.S. Perera – – –

Mr. T.A. Amarasuriya (Alt) 50,155 – –

Mr. C.A. Samararasinghe (Alt) – – –

Mr. S. Ramanathan (Alt) (Resigned) – 4,742 35,102

Directors of Singer Industries (Ceylon) PLC/Regnis (Lanka) PLC

Mr. V.G.K. Vidyaratne 250,555 100 60,155

Mr. K.D.G. Gunaratne – – –

Mr. N.L.S. Joseph – – –

Mr. K. Kospelawatte – 200 –

Mr. A.C.M. Irzan (Alt) – (Singer Industries (Ceylon) PLC) – – –

In accordance with Rule 7.10.2 (b) of the Colombo Stock Exchange (CSE) Listing Rules, independent Directors have submitted a signed and dated declaration as per the specimen given in Appendix 7A of continuing Listing Rules of CSE.

Although, Mr. M.H. Jamaldeen serves on the Board of Hayleys PLC, the Parent Company, the Board of Directors of the Company has determined that Mr. M.H. Jamaldeen is nevertheless independent as the objectivity of his role is not compromised by being on both Boards:

Subsidiaries The names of the Directors holding office at the end of the reporting period ended 31st March 2018 in respect of the subsidiaries are given below:

Singer Finance (Lanka) PLCMr. M.Y.A. Perera – ChairmanMr. J.A. SetukavalarMr. M. P.A. SalgadoMr. R.S. WijeweeraMr. G.J. WalkerMr. J.M.J. PereraMs. D.G. TalpahewaMr. L.S.S.PereraMr. K.K.L.P. Yatiwella (Alt)Mr. T.A. Amarasuriya (Alt)Mr. C.A. Samarasinghe (Alt)

Singer Industries (Ceylon) PLC Mr. A.M. Pandithage – ChairmanMr. V.G.K. VidyarathneMr. H.A. PierisMr. M.H. JamaldeenMr. N.L.S. JosephMr. K.D.G. GunaratneMr. G.J. WalkerMr. S.C. GanegodaMr. K.D. KospelawatteMr. A.C.M. Irzan (Alt)Mr. D.K. de Silva Wijeyeratne

Regnis (Lanka) PLC Mr. A.M. Pandithage – ChairmanMr. H.A. PierisMr. V.G.K. VidyarathneMr. M.H. JamaldeenMr. K.D.G. Gunaratne Mr. N.L.S. JosephMr. G.J. WalkerMr. S.C. GanegodaMr. K.D. KospelawatteMr. D.K. de Silva Wijeyeratne

Reality Lanka LimitedMr. A.M. PandithageMr. H.A. PierisMr. G.J. WalkerMr. S.C. Ganegoda

Singer Digital Media (Pvt) LimitedMr. A.M. Pandithage – ChairmanMr. H.A. PierisMr. M.H. WijewardenaMr. K.K.L.P. YatiwellaMr. S.C. Ganegoda


DebenturesThere were no debentures held by Directors of the Company.

Independence of Directors Mr. D. Sooriyaarachchi Mr. M.H. Jamaldeen Mr. D.H. Fernando Mr. D.K. de Silva Wijeyeratne

Late Dr. S. Kelegama – (Deceased on 23rd June 2017)Mr. D.T.R. de Silva – (Resigned w.e.f. 31st March 2018)


Singer Business School (Pvt) LimitedMr. A.M. Pandithage – ChairmanMr. H.A. PierisMr. M.H. WijewardenaMr. K.K.L.P. YatiwellaMr. S.C. Ganegoda

Regnis Appliances (Pvt) LimitedMr. A.M. Pandithage – ChairmanMr. H.A. PierisMr. K.D. KospelawatteMr. S.C. Ganegoda Mr. N.M.P. Fernando

Domus Lanka (Pvt) Limited Mr. A.M. Pandithage – ChairmanMr. H.A. Pieris

EmploymentThe number of persons employed by the Group and the Company as at 31st March 2018 was 2,617 (2016 – 2,336) and 1,781 (2016 – 1,698), respectively.

Details of human resource initiatives are given in the Employees’ section of the Sustainability Report.

Corporate Governance Directors’ DeclarationsThe Directors declare that having considered all information and explanations made available to them that –

(a) the Company complied with all applicable laws and regulations in conducting its business;

(b) they have declared all material interests in contracts involving the Company and refrained from voting on matters in which they were materially interested;

(c) the Company has made all endeavours to ensure the equitable treatment of shareholders;

(d) the business is a going concern with supporting assumptions or qualifications as necessary: and

(e) they have conducted a review of internal controls covering financial, operational and compliance controls and risk management and have obtained a reasonable assurance of their effectiveness and successful adherence herewith.

The Corporate Governance Report is given under the governance section of this Annual Report.

DonationsDuring the year, donations amounting to Rs. 763,465 /- (2016 – Rs. 1,452,115/-) were made by the Group and donations made by the Company were Rs. 335,220/- (2016 – Rs. 188,000/-). Donations made by the Group and Company are given in Note 8.

AuditorsThe Financial Statements for the period under review were audited by Messrs KPMG, Chartered Accountants who offer themselves for reappointment for the ensuing year. The Directors propose the reappointment of Messrs KPMG, Chartered Accountants as Auditors of the Company for the year 2018/19 subject to the approval of the shareholders at the Annual General Meeting.

The Audit Committee reviews the appointment of the Auditor, its effectiveness and its relationship with the Company including the level of audit and non-audit fees paid to the Auditors. Details on the work of the Audit Committee are set out in the Audit Committee Report.

The audit and non-audit fees paid to the Auditors by the Company and Group are disclosed in Note 8 on page 195 in this Annual Report.

As far as the Directors are aware, the Auditors do not have any relationship or interest in the Company or its subsidiaries. The Auditors have confirmed that they do not have any relationship (other than that of Auditors) with or interest in the Company or any of its subsidiaries other than those disclosed above.


Notice of MeetingThe Forty-Third Annual General Meeting will be held at the Conference Room of Hayleys PLC, No 400, Deans Road, Colombo 10, Sri Lanka on 26th June 2018 at 12 noon.

The Notice of the Annual General Meeting to the shareholders is given on page 262.

For and on behalf of the Board,

Mohan Pandithage Chairman

Asoka PierisDirector/Chief Executive Officer

Hayleys Group Services (Pvt) LtdCompany SecretariesSinger (Sri Lanka) PLC

Colombo14th May 2018

Singer (Sri Lanka) PLC Annual Report 2017/18172STATEMENT OF DIRECTORS’ RESPONSIBILITY

The Directors are responsible under sections 150 (1), 151, 152 (1),) and 153 of the Companies Act No. 07 of 2007, to ensure compliance with the requirements set out therein and to prepare Financial Statements for the fifteen months financial period ended 31st March 2018 giving a true and fair view of the state of affairs of the Company and the Group and of the profit of the Company and the Group for the said financial period.

The Directors are also responsible, under Section 148, for ensuring that proper accounting records are kept to enable, determination of financial position with reasonable accuracy, preparation of Financial Statements and audit of such statements to be carried out readily and properly.

The Board accepts responsibility for the integrity and objectivity of the Financial Statements presented. The Directors confirm that in preparing the Financial Statements, appropriate accounting policies have been selected and applied consistently while reasonable and prudent judgements have been made so that the form and substance of transactions are properly reflected.

The Directors confirm that the Financial Statements have been prepared and presented in accordance with the Sri Lanka Accounting Standards (SLFRS/LKAS), Companies Act No. 07 of 2007 and the Listing Rules of the Colombo Stock Exchange. Further, the Financial Statements provide the information required by the Companies Act and the Listing Rules of the Colombo Stock Exchange.

The Directors are of the opinion, based on their knowledge of the Company, key operations and specific inquiries, that adequate resources exist to support the Company and the Group on a going concern basis over the next year. These Financial Statements have been prepared on that basis.

The Directors have taken reasonable measures to safeguard the assets of the Company and the Group and, in that context, have instituted appropriate systems of internal control with a view to preventing and detecting fraud and other irregularities.

The Board of Directors declared an interim Dividend for the fifteen months period ended 31st March 2018 and paid on 29th March 2017 in terms of the Articles of Association of the Company and in line with Section 56 of the Companies Act No. 07 of 2007. The Solvency Test was satisfied immediately after such distribution in accordance with Section 57 of the Act.

The External Auditors, Messrs KPMG, Chartered Accountants who will be proposed to be reappointed as the Auditors of the Company at the Annual General Meeting were provided with every opportunity to undertake the inspections they considered appropriate to enable them to form their opinion on the Financial Statements. The report of the Auditors, shown on page 173 sets out their responsibilities in relation to the Financial Statements. The Board has recommended that Messrs KPMG be reappointed as Auditors for the year 2018/19.

Compliance ReportThe Directors confirm that to the best of their knowledge, all statutory payments relating to employees and the Government that were due in respect of the Company and its Subsidiaries as at the balance sheet date have been paid or where relevant, provided for.

By order of the Board

Hayleys Group Services (Pvt) Ltd.Company SecretariesSinger (Sri Lanka) PLC

Colombo

14th May 2018

Singer (Sri Lanka) PLC Annual Report 2017/18 173 INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Singer (Sri Lanka) PLC

Report on the Audit of the Financial StatementsOpinion

We have audited the financial statements of Singer (Sri Lanka) PLC (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”), which comprise the statement of financial position as at 31st March 2018, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the 15 months period then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory notes set out on pages from 176 to 243.

In our opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as at 31st March 2018, and of their financial performance and cash flows for the 15 months period then ended in accordance with Sri Lanka Accounting Standards.

Basis for OpinionWe conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics), and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Company financial statements and the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the Company financial statements and the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Nature and area of focus Our response

Carrying Value of Inventory

Refer to Note 16 in the Financial Statements.

Group has recognised a total inventory provision of Rs. 731 million (2016: Rs. 716 million) in arriving at a total inventory value of Rs. 12,574 million (2016: Rs. 9,540 million).

The Group has significant levels of inventories and judgements are taken with regard to categorisation of inventories in to obsolete and/or slow moving and which should be therefore be considered for provision. Estimates are then involved in arriving at provisions against cost in respect of slow moving and obsolete inventories to arrive at valuation based on lower of cost and net realisable value.

Given the level of judgements and estimates involved this is considered to be a key audit matter.

Our audit procedures included:

z Inquiring of the management with regard to the calculation methodology, the basis for provision and the processes with respect to inventory provision.

z Testing the design, implementation and operating effectiveness of the key controls management has established for provision computations and to ensure the accuracy of the inventory provision.

z Assessing the adequacy of, and movements in, inventory provisions held, by recalculating a sample of items included within the provision to ensure appropriate basis of valuation.

z Comparing on a sample basis, the carrying value of inventories with sales prices subsequent to the end of the reporting period.

z Evaluating the appropriateness of the assumptions used based on our knowledge and information of the client and the industry.

Recoverability of Loans, Advances and Trade Receivables

Refer to Note 18 in the Financial Statements.

Group has recognised impairment provisions relating to trade receivables which amounts to Rs. 653 million (2016: Rs. 370 million).


z Obtaining an understanding of and assessing the design, implementation and operating effectiveness of management’s key internal controls in respect of the trade receivables, which included credit control procedures.

KPMG Tel : +94 - 11 542 6426(Chartered Accountants) Fax : +94 - 11 244 587232A, Sir Mohamed Macan Markar Mawatha, : +94 - 11 244 6058P. O. Box 186, Internet : www.kpmg.com/lkColombo 00300, Sri Lanka.

M.R. Mihular FCA P.Y.S. Perera FCA C.P. Jayatilake FCAT.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph FCAMs. S.M.B. Jayasekara ACA W.K.D.C Abeyrathne FCA S.T.D.L. Perera FCAG.A.U. Karunaratne FCA R.M.D.B. Rajapakse FCA Ms. B.K.D.T.N. Rodrigo FCAR.H. Rajan ACA

Principals - S.R.I. Perera FCMA(UK), LLB, Attorney-at-Law, H.S. Goonewardene ACA Ms. C.T.K.N. Perera ACA

Singer (Sri Lanka) PLC Annual Report 2017/18174INDEPENDENT AUDITORS’ REPORT

Nature and area of focus Our response

Impairment allowances represent management’s best estimate of the losses incurred within receivables as at the financial position date. They are calculated for specific assets and on a collective basis for portfolios of receivables of a similar nature.

z Evaluating the methodology, valuation model and key assumptions used to compute the impairment allowance for portfolios such as lease, loans and hire purchases. We substantively tested the completeness and accuracy of key inputs into models and assessed the appropriateness of assumptions.

The calculation of impairment allowances is inherently judgemental for any institution. Collective impairment allowances are calculated using statistical models concurrent with the past settlement pattern which approximate the impact of current economic and credit conditions on large portfolios. The inputs to these models are subject to management judgement and model overlays are required.

The audit was focused on impairment due to the materiality of the balances and the subjective nature of the calculation.

z On a sample basis, reviewing credit files for controls and substantive purposes and challenge the valuation of underlying collateral.

z Assessing the adequacy of the Group’s disclosures regarding impairment.

Contingent Liability on Deemed VAT Assessment

Refer to Note 37.4 (a) in the Financial Statements.

The Group has made several judgements and estimates in relation to tax issues and exposures resulting to tax assessments which requires disclosures in the Financial Statements. The Assessment Notice received by Singer (Sri Lanka) PLC, relating to deemed VAT is significant.

Commissioner General of Inland Revenue has Issued Assessment Notice on Singer (Sri Lanka) PLC pertaining to an additional VAT liability/Payment amounting to Rs. 1,499 million on account of Deemed VAT. After careful review of lawyers and tax consultant’s advice, management is of the opinion that there is no basis for the Company to be made liable for Deemed VAT. Hence no provision has been made in the Financial Statements.

The outcome of the deemed VAT assessment is uncertain and as it requires the management to make significant judgements and estimates in relation to the likely outcome of these tax issues and exposures.

Given the significant value relating to the Deemed VAT assessment and judgemental nature of this contingent liability, this is considered to be a key audit matter.


z Discussions with management and those who charged with governance to understand the nature and status of tax assessment.

z We inspected correspondence with tax consultants and lawyer’s opinions obtained by the management in assessing the likelihood of outflow of resources have become probable.

z Assessing the adequacy of the Group’s disclosure in this regard are appropriate and in accordance with relevant accounting standards.

Other Information Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the Financial Statements and our Auditor’s Report thereon.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the annual report, if we could conclude that there is a material misstatement there in, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and those Charged with Governance for the Financial StatementsManagement is responsible for the preparation of Financial Statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.

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

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

Singer (Sri Lanka) PLC Annual Report 2017/18 175 INDEPENDENT AUDITORS’ REPORT

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

As part of an audit in accordance with SLAuSs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

z 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.

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

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

z 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.

z 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.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our Auditor’s Report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

CA Sri Lanka membership number of the engagement partner responsible for signing this Independent Auditor’s Report is 3272.

Chartered AccountantsColombo, Sri Lanka

14th May 2018


Consolidated Company

For fifteen months ended 31st March 2018

For twelve months ended 31st December 2016



Note Rs. Rs. Rs. Rs.

Revenue 3 65,122,304,522 46,924,143,940 50,910,032,892 39,267,202,832

Cost of Sales (45,632,148,268) (32,038,078,065) (36,728,240,797) (27,849,435,276)

Direct Interest Cost (1,281,563,416) (735,691,136) – –

Gross Profit 18,208,592,838 14,150,374,739 14,181,792,095 11,417,767,556

Other Income 5 360,258,175 229,797,422 1,088,431,100 431,704,582

Gain on Bargain Purchase – 563,945,506 – –

Selling and Administrative Expenses (13,729,434,504) (10,185,751,356) (11,961,817,260) (9,069,711,231)

Operating Profit 4,839,416,509 4,758,366,311 3,308,405,935 2,779,760,907

Finance Income 6 175,549,720 129,352,848 344,598,049 338,358,270

Finance Cost 7 (2,706,924,672) (1,601,925,418) (2,494,325,151) (1,619,789,209)

Net Finance Cost (2,531,374,952) (1,472,572,570) (2,149,727,102) (1,281,430,939)

Value Added Tax on Financial Services (258,989,411) (159,560,511) (52,800,000) (47,800,000)

Profit Before Tax 8 2,049,052,146 3,126,233,230 1,105,878,833 1,450,529,968

Income Tax Expense 9 (828,757,533) (768,476,891) (106,855,559) (346,085,301)

Profit for the Period 1,220,294,613 2,357,756,339 999,023,274 1,104,444,667

Other Comprehensive Income

Items that will not be Reclassified to Profit of Loss

Revaluation of Property, Plant and Equipment – 250,153,762 – 250,153,762

Remeasurement of Employee Benefit Obligation 27 (18,910,000) 62,276,719 (9,478,416) 52,905,239

Related TaxesTax on Other Comprehensive Income 9.4 6,319,485 (46,679,921) 2,653,957 (44,227,036)

Deferred Tax on Revaluation of Land 9.4 (516,049,055) – (198,082,001) –

Other Comprehensive Income for the Period, Net of Tax (528,639,570) 265,750,560 (204,906,460) 258,831,965

Total Comprehensive Income for the Period, Net of Tax 691,655,043 2,623,506,899 794,116,814 1,363,276,632

Profit Attributable to:

Owners of the Company 1,043,682,205 2,122,194,674 999,023,274 1,104,444,667

Non-Controlling Interests 176,612,408 235,561,665 – –

1,220,294,613 2,357,756,339 999,023,274 1,104,444,667

Total Comprehensive Income Attributable to:

Owners of the Company 580,225,153 2,386,015,402 794,116,814 1,363,276,632

Non-Controlling Interests 111,429,890 237,491,497 – –

691,655,043 2,623,506,899 794,116,814 1,363,276,632

Earnings per Share – Basic (Rs.) 10.2 2.78 5.65* 2.66 2.94*

*Earnings Per Share (EPS) has been restated based on post subdivision weighted average number of shares.

The Notes on pages 181 through 243 form an integral part of these Financial Statements.

14th May 2018

Colombo

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME



As at 31st March 2018 31st December 2016 31st March 2018 31st December 2016

Note Rs. Rs. Rs. Rs.

AssetsProperty, Plant and Equipment 11 5,649,423,644 5,426,840,950 3,082,597,562 3,022,805,042Intangible Assets 12 281,316,991 261,538,051 207,145,304 213,157,147 Investment in Subsidiaries 13 – – 2,925,222,314 2,455,179,989 Other Non-Current Assets 14 64,520,322 – – – Other Investments 15.1 17,061,300 17,061,300 929,110,000 929,110,000 Trade and Other Receivables 18.1 9,162,979,851 8,206,081,112 1,341,906,019 1,888,466,783 Deferred Tax Assets 26 – 124,061,153 69,642,532 147,270,286Non-Current Assets 15,175,302,108 14,035,582,566 8,555,623,731 8,655,989,247Inventories 16 12,573,709,862 9,540,327,961 10,741,281,063 7,793,495,049 Loans Due from Related Parties 17 – – 1,219,150,767 1,378,074,696Income Tax Receivables 31 46,635,361 – 157,630,474 1,767,152Trade and Other Receivables 18.2 20,693,786,869 16,597,382,778 12,150,611,598 9,923,803,755 Amounts Due from Related Parties 19 788,000 – 185,396,027 74,782,845Deposits with Banks 81,504,012 81,157,679 – – Other Investments 15.2 671,382,640 515,255,581 – – Cash and Cash Equivalents 20.1 1,339,006,740 1,541,474,815 1,017,627,946 1,039,586,108 Current Assets 35,406,813,484 28,275,598,814 25,471,697,875 20,211,509,605 Total Assets 50,582,115,592 42,311,181,380 34,027,321,606 28,867,498,852

EquityStated Capital 21 626,048,050 626,048,050 626,048,050 626,048,050 Capital Reserves 22 577,919,322 1,057,964,069 847,555,412 1,065,542,144 Statutory Reserve 23 136,009,451 95,360,709 – – Revenue Reserves 24 5,495,477,725 6,374,443,725 3,326,088,413 4,242,212,861 Total Equity Attributable to Owners of the Company 6,835,454,548 8,153,816,553 4,799,691,875 5,933,803,055 Non-Controlling Interests 41 1,349,113,961 1,401,088,060 – – Total Equity 8,184,568,509 9,554,904,613 4,799,691,875 5,933,803,055

LiabilitiesInterest-Bearing Loans and Borrowings 25 4,332,359,832 8,381,884,933 2,532,149,832 6,000,000,000 Employee Benefit Obligations 27 794,644,981 651,143,995 574,009,152 476,754,466 Security Deposits 28 1,199,127,333 1,018,451,850 1,199,127,333 1,018,451,850 Deferred Tax Liability 26 467,235,592 – – –Other Financial Liabilities 35 411,393,904 454,012,592 – – Non-Current Liabilities 7,204,761,642 10,505,493,370 4,305,286,317 7,495,206,316 Trade and Other Payables 29 8,286,260,804 6,540,093,842 6,076,063,211 4,865,013,167 Deferred Revenue 30 246,289,945 438,989,246 246,289,945 438,989,246 Income Tax Payables 31 – 245,280,570 – – Dividends Payables 32 593,694,524 24,459,161 539,610,179 20,523,857 Amounts Due to Related Parties 34 16,182,262 – 2,639,361,427 876,918,882 Other Financial Liabilities 35 4,826,583,524 2,587,934,308 8,337,510 – Interest-Bearing Loans and Borrowings 25 19,091,083,140 11,211,449,603 14,175,592,417 8,534,948,198 Bank Overdrafts 20.2 2,132,691,242 1,202,576,667 1,237,088,725 702,096,131 Current Liabilities 35,192,785,441 22,250,783,397 24,922,343,414 15,438,489,481Total Liabilities 42,397,547,083 32,756,276,767 29,227,629,731 22,933,695,797 Total Equity and Liabilities 50,582,115,592 42,311,181,380 34,027,321,606 28,867,498,852

The Notes on pages 181 through 243 form an integral part of these Financial Statements.I certify that the Financial Statements of the Company comply with the requirements of the Companies Act No. 07 of 2007.

Lalith YatiwellaFinance Director

The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by,

Mohan Pandithage Asoka Pieris Chairman Director/Group Chief Executive Officer14th May 2018Colombo

STATEMENT OF FINANCIAL POSITION

Singer (Sri Lanka) PLC Annual Report 2017/18178STATEMENT OF CHANGES IN EQUITY

Consolidated

Attributable to Equity Holders of the Company

Note Stated Capital

Rs.

Reserve Fund

Rs.

RevaluationReserves

Rs.

GeneralReserves

Rs.

RetainedEarnings

Rs.

Total

Rs.

Non-Controlling

InterestRs.

Total

Rs.

Balance as at 1st January 2016 626,048,050 73,317,972 857,580,019 2,700,000,000 2,028,454,981 6,285,401,022 484,584,032 6,769,985,054 Realisation of Revaluation Surplus 22.1 – – (20,356,143) – 20,356,143 – – – Transferred to/(from) during the Year – 22,042,737 – – (22,042,737) – – – Total Comprehensive Income for the Year

Profit for the Year – – – – 2,122,194,674 2,122,194,674 235,561,665 2,357,756,339 Other Comprehensive Income

Revaluation Gain on Property, Plant and Equipment – – 250,153,762 – – 250,153,762 – 250,153,762 Re-measurement of Employee Benefit Obligations 27 – – – – 59,695,524 59,695,524 2,581,195 62,276,718 Related Taxes 9.4 – – (29,413,569) – (16,614,989) (46,028,558) (651,363) (46,679,921)Total Other Comprehensive Income for the Year – – 220,740,193 – 43,080,535 263,820,728 1,929,832 265,750,560 Total Comprehensive Income for the Year – – 220,740,193 – 2,165,275,209 2,386,015,402 237,491,497 2,623,506,899

Transactions with Owners of the Company, Recognised Directly in Equity

Distributions to owners of the Company

Final Dividend - 2015 – – – – (525,880,362) (525,880,362) – (525,880,362)Dividend paid by Subsidiary Companies to Non-controlling Interest - 2015 – – – – – – (89,095,889) (89,095,889)Total Distributions to Owners of the Company – – – – (525,880,362) (525,880,362) (89,095,889) (614,976,251)Changes in Ownership Interests in Subsidiaries

Acquisition of subsidiaries with NCI – – – – – – 836,855,788 836,855,788 Acquisition of NCI without change in control – – – – 8,280,491 8,280,491 (68,747,368) (60,466,877)Balance as at 31st December 2016 626,048,050 95,360,709 1,057,964,069 2,700,000,000 3,674,443,725 8,153,816,553 1,401,088,060 9,554,904,613 Realisation of Revaluation Surplus 22.1 – – (28,213,846) – 28,213,846 – – – Transferred to/(from) during the Period – 40,648,742 – – (40,648,742) – – – Total Comprehensive Income for the Period

Profit for the Period – – – – 1,043,682,205 1,043,682,205 176,612,408 1,220,294,613 Other Comprehensive Income Re-measurement of Employee Benefit Obligations 27 – – – – (17,615,944) (17,615,944) (1,294,056) (18,910,000)Related Taxes 9.4 – – – – 5,989,793 5,989,793 329,692 6,319,485 Deferred Tax Relating to Revaluation of Land 9.4 – – (451,830,901) – – (451,830,901) (64,218,154) (516,049,055)Total Other Comprehensive Income for the Period – – (451,830,901) – (11,626,151) (463,457,052) (65,182,518) (528,639,570)Total Comprehensive Income for the Period – – (451,830,901) – 1,032,056,054 580,225,153 111,429,890 691,655,043


Distributions to Owners of the Company

Final Dividend – 2016 33 – – – – (1,101,844,568) (1,101,844,568) (120,545,099) (1,222,389,667)Interim Dividend – 2017/18 33 – – – (826,383,426) (826,383,426) (92,297,193) (918,680,619)Total Distributions to Owners of the Company – – – – (1,928,227,994) (1,928,227,994) (212,842,292)

(2,141,070,286)

Changes in Ownership interest in Subsidiaries

Right Issue Cost – – – – (1,989,651) (1,989,651) – (1,989,651)Right Issue to Non-Controlling Interest – – – – – – 77,732,040 77,732,040 Gain on Acquisition of additional shares in Right issue – – – – 3,336,750 3,336,750 – 3,336,750 Effect of Change in Holdings in Subsidiaries – – – 28,293,737 28,293,737 (28,293,737) – Balance as at 31st March 2018 626,048,050 136,009,451 577,919,322 2,700,000,000 2,795,477,725 6,835,454,548 1,349,113,961 8,184,568,509



Company

Note Stated Capital

Rs.

RevaluationReserves

Rs.

GeneralReserves

Rs.

RetainedEarnings

Rs.

Total

Rs.

Balance as at 1st January 2016 626,048,050 857,580,019 2,700,000,000 912,778,716 5,096,406,785

Realisation of Revaluation Surplus 22.1 – (12,778,068) – 12,778,068 –

Total Comprehensive Income for the Year – – – 1,104,444,667 1,104,444,667


Revaluation Gain on Property, Plant and Equipment 250,153,762 250,153,762

Remeasurement of Employee Benefit Obligations 27 – – – 52,905,239 52,905,239

Related Taxes 9.4 – (29,413,569) – (14,813,467) (44,227,036)

Total Other Comprehensive Income – 220,740,193 – 38,091,772 258,831,965

Total Comprehensive Income – 220,740,193 – 1,142,536,439 1,363,276,632

Transactions with owners of the Company, Recognised directly in Equity

Distributions to Owners of the Company – – –

Final Dividend – 2015 (525,880,362) (525,880,362)

Total Distributions to Owners of the Company – – – (525,880,362) (525,880,362)

Balance as at 31st December 2016 626,048,050 1,065,542,144 2,700,000,000 1,542,212,861 5,933,803,055

Realisation of Revaluation Surplus 22.1 – (19,904,731) – 19,904,731 –

Profit for the Period – – – 999,023,274 999,023,274


Remeasurement of Employee Benefit Obligations 27 – – – (9,478,416) (9,478,416)

Related Taxes 9.4 – – – 2,653,957 2,653,957

Deferred Tax Relating to Revaluation of Land 9.4 – (198,082,001) – – (198,082,001)

Total Other Comprehensive Income – (198,082,001) – (6,824,459) (204,906,460)

Total Comprehensive Income for the Period – – – 992,198,815 794,116,814


Distributions to Owners of the Company

Final Dividend – 2016 33 – – – (1,101,844,568) (1,101,844,568)

Interim Dividend – 2017/18 33 – – – (826,383,426) (826,383,426)

Total Distributions to Owners of the Company – – – (1,928,227,994) (1,928,227,994)

Balance at 31st March 2018 626,048,050 847,555,412 2,700,000,000 626,088,413 4,799,691,875


STATEMENT OF CHANGES IN EQUITY

Singer (Sri Lanka) PLC Annual Report 2017/18180STATEMENT OF CASH FLOWS


Note For Fifteen months ended

31st March 2018

For Twelve months ended

31st December 2016

For Fifteen months ended

31st March 2018

For Twelve months ended

31st December 2016

Rs. Rs. Rs. Rs.

Cash Flows from/(used in) Operating Activities

Profit before Income Tax Expense 2,049,052,146 3,126,233,230 1,105,878,833 1,450,529,968 Adjustments for:

Depreciation on Property, Plant and Equipment 11.2 632,735,522 414,049,360 509,249,151 341,432,961 Amortisation of Intangible Assets 12.8 31,694,467 19,174,532 22,343,871 14,598,693 Impairment of Software 12.2 5,605,554 29,817,819 – – Amortisation of Leasehold Rights 14 542,188 – – –(Gain)/Loss on Disposal of Property, Plant and Equipment 5 10,851,256 (3,862,509) 11,220,725 (3,186,072)Interest Expense 7 2,706,924,672 1,601,925,418 2,494,325,151 1,619,789,209 Interest Income 6 (175,549,720) (129,352,848) (344,598,049) (338,358,270)Impairment of Inventory 16.1 15,211,882 167,127,287 44,233,025 150,581,485 Impairment on Trade and Other Receivables 18.3 652,643,612 282,592,051 422,183,787 226,782,152 Dividend Income 5 (180,000) (1,685,006) (923,613,843) (312,607,896)Provision for Employee Benefit Obligations 27 161,489,696 116,488,092 114,418,462 86,547,997 Gain on Bargain Purchase 5 – (563,945,506) – –

Operating Profit Before Working Capital Changes 6,091,021,275 5,058,561,920 3,455,641,113 3,236,110,227 (Increase)/Decrease in Inventories (3,048,593,785) (1,846,073,589) (2,992,019,040) (1,267,049,675)(Increase)/ Decrease in Debtors falling due after one Year (956,898,739) (977,883,751) 546,560,764 (267,884,486)(Increase)/ Decrease in Debtors falling due within one Year (4,749,047,702) (3,410,608,459) (2,648,991,630) (1,720,768,794)(Increase) / Decrease in dues from Related Parties (788,000) – (110,613,182) 159,474,077 Increase/(Decrease) in dues to Related Parties 16,182,262 (121,647,284) 1,762,442,545 99,580,361 Increase/(Decrease) in Security Deposits 180,675,482 166,657,389 180,675,483 166,657,388 Increase/(Decrease) in Trade and Other Payables 1,746,166,960 1,474,237,020 1,211,050,044 1,253,734,906 Increase/(Decrease) in Deferred Liabilities (192,699,301) 120,529,345 (192,699,301) 120,529,344

Cash Generated from (used in) Operations (913,981,548) 463,772,591 1,212,046,796 1,780,383,348 Finance Costs Paid (2,706,924,670) (1,543,775,242) (2,494,325,153) (1,601,300,100)Employee Benefits Paid 27 (36,898,710) (17,843,656) (26,642,192) (13,976,658)Income Tax Paid 31 (1,039,106,287) (1,029,515,398) (380,519,169) (548,648,690)

Net Cash from/(used in) Operating Activities (4,696,911,215) (2,127,361,705) (1,689,439,718) (383,542,100)

Cash Flows from Investing ActivitiesAcquisition of Property, Plant and Equipment and Intangible Assets 11/12 (944,186,483) (836,493,346) (616,783,182) (566,506,933)Proceeds from Disposal of Property, Plant and Equipment 20,938,048 30,924,157 20,188,759 28,586,486 Investment in shares in Subsidiary Company – (1,472,393,737) (470,042,325) (1,414,938,393)Investment in Leasehold Rights (65,062,510) – – –Investment in Debentures in Subsidiary Company – – – (312,807,000)(Acquisition)/Disposal of Marketable Securities (156,127,059) 90,755,882 – – Withdrawal Bank Deposits (346,333) 4,186,606 – – Net Cash flows from Loans Given to Related Companies – – 158,923,929 (255,436,499)Interest Received 175,549,720 77,873,710 344,598,049 288,826,339 Dividend Received 180,000 1,685,006 923,613,843 312,607,896

Net Cash Flows used in Investing Activities (969,054,617) (2,103,461,722) 360,499,073 (1,919,668,104)

Cash Flows from Financing ActivitiesProceeds From Interest – Bearing Loans and Borrowings 41,272,217,086 21,145,390,085 28,182,883,821 17,363,137,748 Repayment of Interest – Bearing Loans and Borrowings (37,442,108,649) (15,850,503,618) (26,001,752,260) (14,459,202,669)Decrease in Customer Deposit Liabilities 2,196,030,528 (225,046,439) – –Proceeds from Right Issue Purchased by Minority Shareholders 81,068,790 – – –Right Issue Cost (1,989,651) – – –Net Payment to Minority Shareholders (212,842,292) (89,095,889) – – Dividends Paid (1,358,992,630) (522,871,576) (1,409,141,672) (522,871,576)

Net Cash Flows Generated from Financing Activities 4,533,383,182 4,457,872,563 771,989,889 2,381,063,503 Net Increase/(Decrease) in Cash and Cash Equivalents (1,132,582,650) 227,049,136 (556,950,756) 77,853,299 Cash and Cash Equivalents at the Beginning of the Year 338,898,148 111,849,012 337,489,977 259,636,678 Cash and Cash Equivalents at the End of the Year 20 (793,684,502) 338,898,148 (219,460,779) 337,489,977


Singer (Sri Lanka) PLC Annual Report 2017/18 181 NOTES TO THE FINANCIAL STATEMENTS

Note 1 Corporate Information 182Note 2 Significant Accounting Policies 184Note 3 Revenue 193Note 4 Operating Segments Information 193Note 5 Other Income 194Note 6 Finance Income 195Note 7 Finance Cost 195Note 8 Profit Before Tax 195Note 9 Income Tax Expense 196Note 10 Earnings Per Share 198Note 11 Property, Plant and Equipment 199Note 12 Intangible Assets 206Note 13 Investments in Subsidiaries – Company 209Note 14 Other Non-Current Assets 210Note 15 Other Investment 210Note 16 Inventories 211Note 17 Loans Due from Related Parties 211Note 18 Trade and Other Receivables 212Note 19 Amounts Due from Related Parties 215Note 20 Cash and Cash Equivalents 215Note 21 Stated Capital 216Note 22 Capital Reserves 216Note 23 Statutory Reserves 216Note 24 Revenue Reserves 217Note 25 Interest-Bearing Loans and Borrowings 218Note 26 Deferred Tax Assets/(Liabilities) 221Note 27 Employee Benefit Obligations 222Note 28 Security Deposits 224Note 29 Trade and Other Payables 224Note 30 Deferred Revenue 224Note 31 Income Tax Payables/(Receivables) 225Note 32 Dividend Payables 225Note 33 Dividends 225Note 34 Amounts due to Related Parties 225Note 35 Other Financial Liabilities 226Note 36 Financial Instruments 226Note 37 Commitments and Contingencies – Group/Company 238Note 38 Events Occurring after the Reporting Period 239Note 39 Related Party Transactions 239Note 40 Non-Controlling Interest 242


1. Corporate Information1.1 Reporting Entity

1.1.1 GeneralSinger (Sri Lanka) PLC is a limited liability company incorporated and domiciled in Sri Lanka. The Registered Office of the Company is located at No. 80, Nawam Mawatha, Colombo 2, and the principal place of business is situated at the above address.

In the Report of the Directors and in the Financial Statements, “the Company” refers to Singer (Sri Lanka) PLC as the Holding Company and “the Group” refers to the Consolidated Financial Statements of Singer (Sri Lanka) PLC and its Subsidiaries, Singer Finance (Lanka) PLC, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Reality Lanka Limited, Regnis Appliances (Pvt) Limited, Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Limited and Domus Lanka (Pvt) Limited.

The ordinary shares of the Company are listed on the Colombo Stock Exchange of Sri Lanka.

Hayleys PLC together with its subsidiaries, Volanka (Pvt) Ltd., and Carbotels (Pvt) Ltd., acquired on 15th September 2017 a total of 231,864,362 ordinary shares in Singer (Sri Lanka) PLC, constituting approximately 61.73% of the total shares in issue at a price of Rs. 47/- per share, making Hayleys PLC the ultimate controlling party of Singer (Sri Lanka) PLC with effect from 15th September 2017.

Consequent to the purchase of 210,587,766 shares, a mandatory offer was made by Hayleys PLC on 31st October 2017 as Hayleys PLC triggered the Company takeovers and mergers code 1995, published under the rules made by the Securities and Exchange Commission of Sri Lanka under Section 53 of the Securities and Exchange Commission of Sri Lanka, Act No. 36 of 1987 as amended, and in terms of Rule 31 (1) (a) of the code. Accordingly subsequent to the mandatory offer, Hayleys PLC, with parties acting in concern holds 304,108,410 shares constituting approximately 80.96% of the total shares in issue.

1.1.1.1 Changing the Reporting Period

The reporting period of Singer (Sri Lanka) PLC, has been changed from 31st December to 31st March with effect from Financial Year 2017/18 in order to align

with the parents reporting period. Therefore, the comparative year information comprises a period of twelve months from 1st January 2016 to 31st December 2016. The current year amounts comprise as at and for the period of fifteen months ended 31st March 2018. Therefore, amounts presented in the Financial Statements are not entirely comparable. The disclosures pertaining to change of the financial reporting period has been made in accordance with LKAS 1 on “Presentation of Financial Statements”. The Consolidated Financial Statements of Singer (Sri Lanka) PLC as at and for the period ended 31st March 2018 comprise the Company and its Subsidiaries namely, Singer Finance (Lanka) PLC, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Reality Lanka Limited, Regnis Appliances (Pvt) Limited, Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Limited and Domus Lanka (Pvt) Limited.

Subsidiaries

Singer Finance (Lanka) PLC

Singer Finance (Lanka) PLC, was incorporated on 19th April 2004 under the Companies Act No. 17 of 1982 and its commercial operations commenced on 8th July 2004. Singer (Sri Lanka) PLC owns 81.3% of its equity shares.


Singer Industries (Ceylon) PLC was incorporated on 13th December 1963 and re-registered under the Companies Act No. 07 of 2007 and its commercial operations commenced on 13th December 1963. Singer (Sri Lanka) PLC owns 87.7% of its equity shares.

Regnis (Lanka) PLC

Regnis (Lanka) PLC was incorporated on 8th October 1987 under the Companies Act No. 17 of 1982 and its commercial operations commenced on 8th October 1987. Singer (Sri Lanka) PLC owns 58.3% of its equity shares.

Reality Lanka Limited

Reality Lanka Limited was incorporated on 29th September 2006 under the Companies Act No. 17 of 1982 and its commercial operations commenced on 29th September 2006. Singer (Sri Lanka) PLC directly, indirectly owns 88.2% of its equity shares.

Regnis Appliances (Pvt) Limited

Regnis Appliances (Pvt) Limited, was Incorporated on 18th January 2010 under the Companies Act No. 07 of 2007 and commenced its commercial operations on 1st October 2010. Singer (Sri Lanka) PLC owns 58.3% of its equity shares

Singer Digital Media (Pvt) Limited

Singer Digital Media (Pvt) Limited was incorporated on 16th May 2014 under the Companies Act No. 07 of 2007 and its commercial operations commenced on 8th July 2014. Singer Digital Media (Pvt) Limited is a fully-own Subsidiary.

Singer Business School (Pvt) Limited

A fully-owned Subsidiary, Singer Business School (Pvt) Limited was incorporated on 5th May 2015 under the Companies Act No. 07 of 2007 and its commercial operations commenced on 5th May 2015.

Domus Lanka (Pvt) Limited

Domus Lanka (Pvt) Limited was incorporated on 4th January 2018 under the Company Act No.7 of 2007.

Associates (Equity Accounted Investees)

Associate companies of the Group, whose results have been included in the Consolidated Financial Statements are:

Telshan Network (Pvt) Limited

All above companies are incorporated in Sri Lanka.

1.1.3 Principal Activities and Nature of OperationsThe Company

The Company is engaged in Retail and Wholesale Marketing, Financing, Assembling and Manufacturing and Financial Services. The Company markets Consumer Electronics, Home Appliances, Mobile Phones, Personal Computers, Laptops, Furniture, Domestic and Industrial Sewing Machines, Agricultural Equipment, and provides Financing through Hire Purchase. In addition, the Company manufactures and sells Furniture, Water Pumps and assembles and sells Motor Cycles and Two Wheel Tractors. The Company also acts as a Bill Collection Agent for Banks, Mobile service providers, National Water Supply and Drainage Board, Ceylon Electricity Board and is also a sub-agent for Western Union.

Subsidiary

Singer Finance (Lanka) PLC

Principal activities of Singer Finance (Lanka) PLC are financing of the sale or purchase of any goods, articles, vehicles or other items either by letting on, hire purchase, leasing and other methods of financing. In addition, Singer Finance (Lanka) PLC accepts deposits. Singer Finance (Lanka) PLC is a licensed finance company under the Finance Companies Act No. 78 of 1988.

NOTES TO THE FINANCIAL STATEMENTS


Subsidiary


The principal activities of the Company are assembling sewing machines and manufacturing of cabinets and stands for sewing machines.

Subsidiary

Regnis (Lanka) PLC

The principal activities of the Company are manufacturing of Refrigerators and Bottle Coolers.

Subsidiary

Reality Lanka Limited

The principal activities of the Company are renting of company property and property development.

Subsidiary

Regnis Appliances (Pvt) Limited

Principal activities of Regnis Appliances (Pvt) Limited are manufacturing and assembling of Washing Machines, producing plastic components for Refrigerators and Plastic Chairs.

Subsidiary


The principal activity of the Company is marketing mobile phones.

Subsidiary

Singer Business School (Pvt) Limited

The principal activity of the Company is provisioning of educational services.

Subsidiary

Domus Lanka (Pvt) Limited.

Domus Lanka (Pvt) Limited was incorporated on 4th January 2018 (formally known as D.V.D. Lanka (Pvt) Limited. The principal activity of the Company is carrying on the business of designing, manufacturing and trading furniture. However no commercial operations have been commenced as of the reporting period.

1.1.4 Parent EnterpriseThe Company’s Parent undertaking is Hayleys PLC.

1.1.5 Number of EmployeesThe number of employees of the Group at the end of the year was 2,617 (2016 - 2,336), Company - 1,781 (2016 - 1,698).

1.2 Basis of Accounting

1.2.1 Statement of ComplianceThe Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (hereinafter referred to as SLFRS) issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the requirements of the Companies Act No. 07 of 2007.

1.2.2 Responsibility for Financial StatementsThe Board of Directors is responsible for preparation and presentation of the Financial Statements of the Company as per the provisions of the Companies Act No. 07 of 2007 and Sri Lanka Accounting Standards. The Directors’ responsibility over Financial Statements is set out in detail in the Statement of Directors’ Responsibility.

1.2.3 Approval of Financial StatementsThe Financial Statements for the period ended 31st March 2018 were authorised for issue in accordance with a resolution of the Board of Directors on 14th May 2018.

1.2.4 Basis of Measurement The Financial Statements have been prepared on the historical cost basis, except for available-for-sale financial assets and items of Property, Plant and Equipment, which are measured at fair value and Defined Benefit Plans which are measured at present value of the Retirement Benefit Obligations as explained in the respective Notes to the Financial Statements.

1.2.5 Functional and Presentation CurrencyThe Financial Statements are presented in Sri Lankan Rupees which is the functional currency of the Company and its Subsidiaries.

1.2.6 Use of Estimates and JudgementsThe preparation of the Financial Statements in conformity with SLFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the Financial Statements is included in the following Notes:

z Note 12 – Measurement of Intangible Assets

z Note 16 – Provision for Inventories z Note 18 – Impairment of Trade and other receivables

z Note 27 – Measurement of Employee Benefit Obligations

z Note 36 – Financial Instrument z Note 37 – Commitments and Contingencies

Measurement of Fair ValueA number of the Group’s accounting policies and disclosures require the measurement of fair value for both financial and non-financial assets and liabilities.

The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to measure fair values, The Company assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of SLFRS, including the level in the fair value hierarchy in which such valuations should be classified.

Significant valuation issues are reported to the Group’s Audit Committee. When measuring the fair value of an asset or liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

z Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

z Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly (i.e. prices) or indirectly (i.e. derived from prices)

z Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).



If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest input level that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

1.2.7 Materiality and AggregationEach material class of similar items is presented separately in the Consolidated Financial Statements. Items of a dissimilar nature or function are presented separately unless they are immaterial as permitted by the Sri Lanka Accounting Standard – LKAS 1 on “Presentation of Financial Statements”.

1.2.8 Going ConcernThe Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future, and they do not intend either to liquidate or cease trading.

1.2.9 Comparative InformationThe amounts presented in the Financial Statements are not entirely comparable due to changes of the reporting period. Please refer Note 1 for further clarifications.

2. Significant Accounting PoliciesThe accounting policies set out below have been consistently applied to all periods presented in these Financial Statements.

2.1 Basis of Consolidation

2.1.1 SubsidiariesSubsidiaries are entities controlled by the Group. The Group “controls” an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Financial Statements of Subsidiaries are included in the Consolidated Financial Statements from the date on which control commences until the date when control ceases.

2.1.2 Non-Controlling Interests (NCI)NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Changes in the Group’s interest in a Subsidiary that do not result in a loss of control are accounted for as equity transactions.

2.1.3 Loss of ControlWhen the Group losses control over subsidiary derecognises the assets and liabilities of the Subsidiary, any non-controlling interests and other components of equity. Any surplus or deficit arising on the loss of control is recognised in the profit or loss. Any interest retains in the previous Subsidiary, is measured at fair value as at the date that control is lost.

2.1.4 Interest in Equity Accounted InvesteesThe Group’s interest in equity accounted investees comprise interest in Associate. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. Interests in Associates are accounted for using the equity method. They are initially recognised at cost, which include transaction cost. Subsequent to initial recognition the Consolidated Financial Statements includes the Group’s share of profit or loss and Other Comprehensive Income of equity accounted investees, until the date on which significant influence ceases.

2.1.5 Transactions Eliminated on ConsolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

2.2 Foreign Currency TransactionsTransactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in profit and loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.

2.3 Property, Plant and Equipment

2.3.1 Recognition and MeasurementItems of property, plant and equipment are measured at cost/fair value, less accumulated depreciation and any accumulated impairment losses.

If a significant part of an item of Property, Plant and Equipment has different useful lives, then they are accounted for as separate items (major components) of Property, Plant and Equipment. Any gain or loss on disposal of an item of Property, Plant and Equipment is recognised in profit or loss.

(a) Cost Model

The Group applies the cost model to Property, Plant and Equipment except for freehold land and buildings.

(b) Revaluation Model

The Group applies the revaluation model to the entire class of freehold land and buildings. A revaluation is carried out when there is a substantial difference between the fair value and the carrying amount of the property, and is undertaken by professionally qualified valuers. Group reviews its assets once in two years.

Increases in the carrying amount on revaluation is recognised in other comprehensive income and accumulated in equity in the revaluation reserve, unless it reverses a previous revaluation decrease relating to the same asset, which was previously recognised as an expense. In these circumstances the increase is recognised as income to the extent of the previous write down.

Decreases in the carrying amount on revaluation that offset previous increases of the same individual asset are charged against revaluation reserve directly in equity. All other decreases are recognised in profit and loss.



The relevant portion of the revaluation reserve is transferred to retained earnings as the asset is depreciated with the balance being transferred on ultimate disposals.

(c) Subsequent Costs

The cost of replacing part of an item of Property, Plant and Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within that part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of Property, Plant and Equipment are recognised in profit and loss as incurred.

(d) Depreciation

Depreciation is calculated to write-off the cost of items of Property, Plant and Equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Land is not depreciated.

The estimated useful lives are as follows:

Freehold Buildings Over 38 to 50 years Motor Vehicles Over 5 to 7 years Furniture and Equipment

Over 10 years

Plant and Machinery Over 10 years EDP Equipment Over 5 to 10 yearsImprovement on Leasehold Premises

Over 4 to 10 years

Shop Furniture and Equipment

Over 7 years

EDP Equipment – Computer Servers

Over 7 years

Depreciation of an asset commences when the asset is available for use and ceases at the earlier of the date the asset is classified as held-for-sale and the date that the asset is derecognised.

Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

2.3.2 Intangible Assets(a) Recognition and Measurement

An intangible asset is recognised if it is probable that future economic benefits will flow to the entity and the cost of the asset can be measured reliably in accordance with LKAS 38 – on “Intangible Assets”. Intangible assets

with finite useful lives are measured at cost, less accumulated amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed to be either finite or indefinite.

(b) Subsequent Expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands are recognised in profit or loss as incurred.

(c) Amortisation

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 may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. Amortisation expense on intangible assets with finite lives is recognised in profit and loss on a straight-line basis over the estimated useful lives, from the date they are available for use.

The estimated useful lives of intangible assets with finite lives are as follows:

The Class of Intangible Assets

Useful Life

Computer Software 10 yearsOther Intangible Assets Externally Acquired

5 years

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangible assets are not amortised.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit and loss when the asset is derecognised.

Intangible assets with indefinite useful lives represent trade marks purchased and were recorded at cost. These

intangible assets are assessed for impairment annually.

2.4 Financial Instruments

2.4.1 Non-Derivative Financial Assets(a) Recognition and Measurement

The Group recognises financial assets in its Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of a financial asset or a liability (other than financial assets at fair value through profit or loss) are added or deducted from the fair value of the financial asset, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in the Income Statement.

The Group derecognises financial assets when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial assets in a transaction in which substantially all the risks and rewards of ownership of the financial assets are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount is presented when, and only when the Group has a legal right to offset the amount and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

(b) Classification

At inception, a financial asset is classified in one of the following categories:

– Loans and Receivables– Held-to-Maturity– Available-for-Sale– At Fair Value through Profit or Loss

As at the year end the Group did not have assets categorised as fair value through profit or loss.

2.4.1.1 Held-to-Maturity Financial Assets

A non-derivative financial asset with fixed or determinable payments with fixed maturity where Group intends to hold to maturity is classified under this category.



Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition held-to-maturity financial assets are measured at amortised cost using the effective interest method.

Held-to-maturity financial assets comprise of Treasury Bills and Treasury Bonds.

2.4.1.2 Loans and Receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise of hire purchase and lease receivable, consumer loans, vehicle loans, distress loans and temporary refund loans, related party loans, staff loans, deposits with banks, cash and cash equivalents and trade and other receivables.

2.4.1.3 Available-for-Sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are recognised as available-for-sale or not classified in any previous categories. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, are recognised in the Other Comprehensive Income and presented in the available-for-sale reserve in equity. When an investment is derecognised, the cumulative gain or loss in Other Comprehensive Income is transferred to profit or loss.

Available-for-sales financial assets comprise equity investments.

2.4.2 Non-Derivative Financial LiabilitiesThe Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other liabilities are recognised initially on the trade date

at which the Company becomes a party to the contractual provisions of the instrument.

The Group classifies non-derivative financial liabilities into other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise interest-bearing borrowings, bank overdrafts, amount due to related parties, security deposits, trade and other payables and other financial liabilities due to customers.

Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the Statement of Cash Flows.

2.4.2.1 Derecognition of Financial Liability

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset or settle the liability simultaneously.

2.4.3 Derivative financial instrumentsThe Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if certain criteria are met.

Derivatives are initially measured at fair value; any directly attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.

2.4.4 Stated CapitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

2.4.5 Impairment2.4.5.1 Impairment of Non-Derivative Financial Assets

Financial assets other than those measured at fair value are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash from the asset have been affected.

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

(a) Impairment Losses on Financial Assets Carried at Amortised Cost

The Group except for Singer Finance (Lanka) PLC considers evidence for these assets at individual asset level. All individually significant assets are individually assessed for impairment.

Singer Finance (Lanka) PLC considers evidence of impairment for receivables at collective level. Loans and receivables are collectively assessed for impairment by grouping together receivables with similar risk characteristics. In assessing collective impairment, the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgements as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. Further, higher purchase debtors of Singer (Sri Lanka) PLC are also assessed for impairment at collective level.

Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. If a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. When the Company considers that there is no realistic process of recovery of the asset, the relevant amounts are written off.



Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset’s original effective interest rate.

When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written-off.

Impairment losses are recognised in profit or loss and reflected in an allowance account against loans and advances. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(b) Impairment Losses on Available-for-Sale

Impairment losses on available-for-sale investment securities are recognised by the reclassifying losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation), and the current fair value, less any impairment loss previously recognised in profit or loss. If the fair value of an impaired available-for-sale debt security subsequently increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed through profit or loss, otherwise it is reversed through Other Comprehensive Income.

(c) Impairment – Equity Accounted Investees

An impairment in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss, and is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

2.4.5.2 Impairment of Non-Financial Assets

The carrying amount of the Group’s non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is an indication of impairment. If any such indication exists or when annual impairment testing for an asset is required, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash flows of other assets or other cash-generating units (CGU). Goodwill arising from business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value, less costs to sell, an appropriate valuation model is used.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit and loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.4.6 LeasesThe determination of whether an arrangement is lease or it contains a lease, is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

2.4.6.1 Operating Leases

2.4.6.1 (a) Operating Leases – Company as a Lessee

Leases that do not transfer to the Company substantially all risks and benefits incidental to ownership of the leased assets are operating leases. Operating lease payments are recognised as an expense in the Income Statement on a straight-line basis over the lease term. Contingent rental payable is recognised as an expense in the period in which they are incurred.

2.4.6.1 (b) Operating Leases – Company as a Lessor

Leases where the Company does not transfer substantially all risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

Contingent rents are recognised as revenue in the period in which they are earned.

2.4.6.2 Finance Leases

2.4.6.2 (a) Finance Leases – Company as a Lessee

Finance leases that transfer substantially all risks and benefits incidental to ownership of the leased item to the Company, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

2.4.6.2 (b) Finance Leases – Company as a Lessor

When the Company is the lessor under the finance leases the amounts due under the finance leases, after deduction of unearned charges, are included in “lease rentals receivables”, as appropriate. The finance income receivable is recognised in “interest income” over the periods of the leases so as to give a constant rate of return on the net investment in the leases.

2.5 InventoriesInventories are measured at the lower of cost and net realisable value, after making due allowances for obsolete and slow-moving items. Net realisable value (NRV) is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. Group assess the NRV by giving consideration to future demand and condition of inventory and make adjustments to the value by making required provisions.



The cost of each category of inventory is determined on the following basis:

Raw Materials – At actual cost on first-in first-out basisFinished Goods (Excluding Factory) – Weighted average costFinished Goods and Work-in-Progress at Piliyandala Factory

– At the cost of direct materials, direct labour and an appropriate proportion of fixed production overheads, based on normal operating capacity

Goods-in-Transit – At actual costSupplies and Parts – Weighted average costRepossessed Goods – 75% of its weighted average cost


2.7.3 Short-Term BenefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be measured reliably.

2.8 Statement of Profit or Loss and Other Comprehensive Income

2.8.1 Revenue RecognitionRevenue is 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 returns, trade discounts and turnover taxes. The following specific criteria are used for the purpose of recognition of revenue:

(a) Sale of Goods

(Normal Trading Transactions)

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to buyers, the recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. Revenue is measured net of returns and trade discounts.

(b) Sale of Goods

(Hire Purchase Transactions)

At the time of effecting hire sales, the cash sales value is recognised as sales.

Subsequent to the initial recognition, hire purchase receivables are measured at amortised cost using the effective interest method, less any impairment losses.

(c) Interest – Other

Interest income is recognised in profit and loss as it accrues and is calculated by using the effective interest rate method.

(d) Dividends

Dividend income is recognised in profit and loss when the right to receive dividends is established.

2.6 ProvisionsA provision is recognised in the Statement of Financial Position when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the provision can be measured reliably in accordance with LKAS 37 – “Provisions, Contingent Liabilities and Contingent Assets”. The amount recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation at the date. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is determined based on the present value of those cash flows.

2.6.1 Provisions for WarrantiesA provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighing of all possible outcomes against their associated probabilities. Provision is utilised to settle the actual claims made by the customers.

2.6.2 Capital Commitments and ContingenciesCapital commitments and contingent liabilities of the Group are disclosed in the respective Notes, to the Financial Statements.

2.7 Employee Benefits

2.7.1 Defined Benefit PlanThe Group net obligation in respect of defined benefit plan is calculated by estimating the amount of future benefits that employees have earned in current and prior periods discounting that amount.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses are recognised immediately in OCI. The Group determines the net interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then – net defined liability, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

The liability is not externally funded.

2.7.2 Defined Contribution Plans – Employees’ Provident Fund/Mercantile Services Provident Society and Employees’ Trust Fund

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Employees are eligible for contributions to Employees’ Provident Fund/Mercantile Services Provident Society and Employees’ Trust Fund in line with the respective statutes and regulations. The Company contributes 12%, 12% and 3% of gross emoluments of employees to the Employees’ Provident Fund, Mercantile Services Provident Society and the Employees’ Trust Fund, respectively and is recognised as an expense in profit and loss in the periods during which services are rendered by employees.

Singer (Sri Lanka) PLC Annual Report 2017/18 189 NOTES TO THE FINANCIAL STATEMENTS

(e) Service Fee Income on Hire Purchase

Service fee income is recognised over the length of hire purchase agreement using the effective interest rate method. In the event of early termination of the hire purchase contract or cash conversion remaining deferred, service income is recognised when such contract is recognised or converted.

(f) Income on Suraksha and Extended Warranty Scheme

Income is recognised over the period of contract. Unrecognised income is accounted for as deferred revenue.

(g) Others

Other income is recognised on an accrual basis.

Net gains and losses of a revenue nature on the disposal of Property, Plant and Equipment and other non-current assets including investments have been accounted for in profit and loss, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses.

2.8.2 Revenue Recognition Policy of Singer Finance (Lanka) PLC(a) Hire Purchase, Lease and Loans and Advances

The excess of aggregated contract receivables over the cost of the hired assets constitutes the total unearned income at the commencement of a contract. The unearned income is recognised as revenue as it is earned, using the effective interest rate method.

(b) Interest

Interest income and expense are recognised in profit or loss using the effective interest rate method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial assets or liability (or, where appropriate a shorter period) to the carrying amount of the financial asset or liability. When calculating the effective interest rate, the Group estimates future cash flows considering all contractual terms of the financial instruments, but not future credit losses.

The calculation of effective interest rate includes all transaction costs and fees and points paid or received that are an integral part of the effective interest rate. Transaction costs include incremental cost that are directly attributable to

the acquisition or issue of a financial asset or liability. Interest income and expense presented in the Statement of Comprehensive Income include:

z Interest on financial assets and financial liabilities measured at amortised cost calculated on an effective interest basis.

z Interest on available-for-sale financial instruments calculated on an effective interest basis.

(c) Fees and Commission

Fees and commission income and expense that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate. Other fees and commission income, including account servicing fees, are recognised as the related services are performed. Other fees and commission expense relate mainly to transactions and service fees, which are expensed as the services are received.

(d) Net Gain/(Loss) from Trading

Net gain/(loss) from trading comprise gains less losses related to trading assets and liabilities and include all realised and unrealised fair value changes.

2.8.3 Regulatory Provisions(a) Deposit Insurance Scheme

In terms of the Finance Companies Direction No. 02 of 2010 – “Insurance of Deposit Liabilities” issued on 27th September 2010 all Registered Finance Companies are required to insure their deposit liabilities in the Deposit Insurance Scheme operated by the Monetary Board in terms of Sri Lanka Deposit Insurance Scheme Regulations No. 01 of 2010 issued under Sections 32A to 32E of the Monetary Law Act with effect from 1st October 2010.

Deposits to be insured include demand, time and savings deposit liabilities and exclude the following:

z Deposit liabilities to member institutions z Deposit liabilities to Government of Sri Lanka.

z Deposit liabilities to Directors, Key Management Personnel and other related parties as defined in Finance Companies Act Direction No. 03 of 2008 on Corporate Governance of Registered Finance Companies.

z Deposit liabilities held as collateral against any accommodation granted

z Deposit liabilities falling within the meaning of dormant deposits in terms of the Finance Companies Act, funds of which have been transferred to the Central Bank of Sri Lanka.

z Registered Finance Companies are required to pay a premium of 0.15% on eligible deposit liabilities as at end of the month to be payable within a period of 15 days from the end of the respective month.

2.8.4 Reserve FundSinger Finance (Lanka) PLC is maintaining a reserve fund in compliance with Direction No. 01 of 2003 – Central Bank (Capital Funds) issued to Finance Companies and it will be used for only the purpose specified in the said Direction above. The details of the reserve fund are disclosed in Note 23.1.

2.8.5 Expenditure Recognition(a) Expenses are recognised in Profit and Loss on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the Property, Plant and Equipment in a state of efficiency has been charged to income in arriving at the profit for the year.

(b) For the purpose of presentation of the Income Statement, the Directors are of the opinion that “function of expenses method” presents fairly the elements of the Company’s performance and hence such presentation method is adopted.

2.8.6 Net Finance CostFinance income comprises interest income on funds invested interest income from related parties and which is recognised as it accrues in profit or loss, using the effective interest rate method.

Finance cost comprises interest payable on borrowings, interest on security deposits. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

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


2.8.7 Income TaxIncome tax expense comprises both current and deferred tax. Income tax expense is recognised in profit and loss, except to the extent that it relates to items recognised directly in equity, or in Other Comprehensive Income.

(a) Current Tax

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

(b) Deferred Taxation

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on tax laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised for unused tax losses and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and is reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset deferred tax assets and liabilities and when the deferred tax relates to income tax levied on the same tax authority on the same taxable entity or on different tax entity but then intends to settle relevant tax liabilities and assets on a net basis or their tax assets and liabilities will be simultaneously realised.

Tax withheld on dividend income from Subsidiaries and Associates is recognised as an expense in the Consolidated Income Statement at the same time as the liability to pay the related dividend is recognised.


(c) Value Added Tax (VAT) on Financial Services

VAT on Financial Services is calculated in accordance with the amended Value Added Tax (Amendment) Act, No. 20 of 2016. The base for the computation of Value Added Tax ion Financial Services is the accounting profit before income tax adjusted for the economic depreciation and emolument of employees computed on prescribed rate.

(d) Crop Insurance Levy

As per the provisions of the Section 14 of the Finance Act No. 12 of 2013, the CIL was introduced with effect from 1st April 2013 and is payable to the National Insurance Trust Fund. Currently, the CIL is Payable at 1% of the profit after tax.

2.9 Events After the Reporting PeriodAll material events after the reporting date have been considered and where necessary adjustments made in these Financial Statements.

2.10 Earnings Per ShareThe Group presents basic Earnings Per Share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the Profit or Loss attributable to ordinary shareholders of the Company by the weighted number of ordinary shares outstanding during the period.

2.11 Segment ReportingAn operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. All operating results are reviewed regularly by the Group Chief Executive Officer to make decisions regarding resources to be allocated to the segments and to assess its performance and for which discrete finance information is available.

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

Segment capital expenditure is the total cost incurred during the period to acquire Property, Plant and Equipment and intangible assets other than goodwill.

Segment information is presented in the respective Notes to the Financial Statements.

2.12 Statement of Cash FlowsThe Cash Flow Statement has been prepared using the indirect method.

2.13 New Accounting Standards Issued but Not Yet Effective A number of new standards and amendments to the standards were issued but they were not effective as at the year end.

Accordingly, the Group has not applied the following new or amended standards in preparing these Consolidated Financial Statements:


New or Amended Standards Summary of the Requirement Possible Impact on Consolidated Financial Statements

SLFRS 9 – “Financial Instruments” SLFRS 9, issued in 2014 which replaces LKAS 39 Financial Instruments: Recognition and Measurement and all previous versions of SLFRS 9. SLFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. SLFRS 9 is effective for annual periods beginning on or after 1st January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

SLFRS 9 is effective for annual reporting periods beginning on or after 1st January 2018, with early adoption permitted.

During the period, the Group has performed a high level impact assessment of all three aspects of SLFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018 when the Group will adopt SLFRS 9. Overall, the Group expects no significant impact on its statement of financial position and equity except for the effect of applying the impairment requirements of SLFRS 9.

Classification and measurementThe Group does not expect a significant impact on its balance sheet or equity on applying the classification and measurement requirements of SLFRS 9. It expects to continue measuring at fair value all financial assets currently held at fair value.

Loans, Investments in debt instruments as well as trade receivables are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest. The Group has reviewed the arrangements and the objectives of assets portfolios to evaluate whether any of the condition triggers change in the classifications. However, the Group has not identified any significant changes to the measurement rules based on impact analysis performed. Therefore, reclassification for these instruments is not required.For the equity investment securities that are classified as available for sale under LKAS 39, the Group will apply the option to present fair value changes in OCI, and, therefore, the application of SLFRS 9 will not have a significant impact.

Since the Group does not have liabilities designated at fair value, SLFRS 9 does not change the measurement rules of financial liabilities.

ImpairmentSLFRS 9 brings out the concept of expected loss against the incurred loss principle used in LKAS 39. Accordingly, SLFRS 9 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables, either on a 12-month or lifetime basis. However, if loans credit risk has increased significantly from the grant date, life time expected loss should be recognised.



New or Amended Standards Summary of the Requirement Possible Impact on Consolidated Financial Statements

The Group will apply the simplified approach and record lifetime expected losses on all trade receivables. As per SLFRS 9, the Group will incorporate forward looking information to adjust loss provision calculated. These forward looking information include macroeconomic factors such as gross domestic production, inflation, interest rate etc.

Hedge accounting Hedge accounting guidelines prescribed by SLFRS 9 do not have any impact to the Group as hedge accounting is not applied currently.

SLFRS 15 – “Revenue from Contracts with Customers”

SLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including LKAS 18 – ‘Revenue’, LKAS 11 – ‘Construction Contracts’ and IFRIC 13 – ‘Customer Loyalty Programmes’


The Group has completed its initial assessment, but not yet completed the detailed assessment. Based on the initial assessment, the management does not believe that there will be a significant implications relating to recognition of revenue.

SLFRS 16 – “Leases” SLFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under LKAS – 17. The objective is to ensure that lessees and lessors provide relevant information in a manner that faithfully represents those transactions. The information gives a basis for the users of Financial Statements to assess the effect that leases have on the financial position.


The Group is assessing the potential impact on its consolidated Financial Statements resulting from the application of SLFRS 16.



3. Revenue



Rs.


Rs.


Rs.


Rs.

3.1 SummaryTurnover 65,122,304,522 46,924,143,940 50,910,032,892 39,267,202,832

65,122,304,522 46,924,143,940 50,910,032,892 39,267,202,832

3.2 RevenueSale of Goods 57,084,528,259 41,556,001,470 46,530,148,517 36,154,084,072

Rendering of Services (Note 3.3) 8,037,776,263 5,368,142,470 4,379,884,375 3,113,118,760

65,122,304,522 46,924,143,940 50,910,032,892 39,267,202,832

3.3 Rendering of ServiceInterest Income on Hire Purchase 3,589,628,519 3,016,134,020 3,533,706,112 2,860,194,295

Interest Income on Leasing 2,500,541,881 1,498,192,409 – –

Interest Income on Loans 785,572,115 412,245,904 – –

Service Income 1,162,033,748 441,570,137 846,178,263 252,924,465

8,037,776,263 5,368,142,470 4,379,884,375 3,113,118,760

4. Operating Segment Information

4.1 Segment Products and Services

Consumer Electronics Televisions, Audios, DVD and Other Electronic ProductsFinancial Services Leasing, Hire Purchase and LoansFurniture Wood and Layered Furniture, Sofa Sets, Steel Furniture and MattressesHome Appliances Refrigerators, Washing Machines, Deep Freezers, Bottle Coolers, Air Conditioners, Fans,

Small Appliances and Kitchen RangesIT Products Laptops and Smart PhonesSewing Domestic and Industrial Sewing Machines and General MerchandiseOther Motor Bikes, Bicycles, Water Pumps, Paddy Threshers and Tractors

4.2 Segmental Analysis of Revenue is as follows:



Rs. ’000


Rs. ’000


Rs. ’000


Rs. ’000

Consumer Electronics 8,210,121 6,666,967 8,210,121 6,666,967

Financial Services 8,037,776 5,368,142 4,379,884 3,113,119

Furniture 3,416,843 2,363,812 3,416,843 2,363,812

Home Appliances 19,785,509 15,755,758 19,774,100 15,747,284

IT Products 18,524,322 10,386,985 7,971,414 4,993,832

Sewing 3,615,763 3,219,173 3,615,763 3,219,173

Other 3,531,971 3,163,307 3,541,908 3,163,016

65,122,305 46,924,144 50,910,033 39,267,203



4.3 Segmental Analysis of Profit Before Tax is as follows:



Rs. ’000


Rs. ’000


Rs. ’000


Rs. ’000

Consumer Electronics 351,078 370,743 350,268 370,743

Financial Services 1,878,749 1,537,552 726,057 777,089

Furniture 118,882 118,524 118,611 118,524

Home Appliances 1,156,963 1,242,549 812,132 836,590

IT Products 1,062,001 602,188 107,824 61,436

Sewing 147,516 187,453 151,318 174,377

Other 124,047 133,727 118,582 128,394

Dividend 180 1,685 923,614 312,608

Gain on Bargain Purchase – 563,946 – –

4,839,416 4,758,367 3,308,406 2,779,761

Net Finance Cost (2,531,375) (1,472,573) (2,149,727) (1,281,431)

VAT on Financial Services (258,989) (159,561) (52,800) (47,800)

Profit Before Tax 2,049,052 3,126,233 1,105,879 1,450,530

4.4 There are no separately distinguishable assets and liabilities for the above segments.

5. Other Income



Rs.


Rs.


Rs.


Rs.

Dividend Income – Quoted – – 509,613,843 234,283,390

– Unquoted 180,000 1,685,006 414,000,000 78,324,506

Gain/(Loss) on Disposal of Property Plant & Equipment (10,851,256) 3,862,509 (11,220,725) 3,186,072

Miscellaneous Income 281,899,877 148,476,387 87,008,428 40,151,182

Income from Financial Services 89,029,554 75,773,520 89,029,554 75,759,432

360,258,175 229,797,422 1,088,431,100 431,704,582



6. Finance Income



Rs.


Rs.


Rs.


Rs.

Interest Income - Related Parties – – 273,523,544 273,481,295

- Others 123,584,230 77,873,710 25,926,775 15,345,044

Unwinding Interest Income on Interest Free Employee Loans 46,067,134 41,798,501 45,147,730 40,876,024

Foreign Exchange Gain 5,898,356 9,680,637 – 8,655,907

175,549,720 129,352,848 344,598,049 338,358,270

7. Finance Cost



Rs.


Rs.


Rs.


Rs.

Interest on Overdrafts and Loans (2,515,226,927) (1,489,737,646) (2,261,875,743) (1,477,483,908)

Interest on Security Deposits (168,619,531) (112,187,772) (168,619,532) (112,187,772)

Foreign Exchange Loss (23,078,214) – (21,561,543) –

Interest Expense on Related Party Payables – – (42,268,333) (30,117,529)

(2,706,924,672) (1,601,925,418) (2,494,325,151) (1,619,789,209)

Net Finance Cost * (2,531,374,952) (1,472,572,570) (2,149,727,102) (1,281,430,939)

* Finance Cost (Note 7) Less Finance Income (Note 6).

8. Profit Before Tax



Rs.


Rs.


Rs.


Rs.

Stated After Charging all Expenses Including the Following:

Executive Directors’ Emoluments 197,578,515 152,943,941 136,714,404 103,610,273

Non-Executive Directors’ Fees 16,676,920 14,328,000 8,306,800 6,268,800

Auditors’ Remuneration – Statutory Audit 4,510,000 4,465,000 2,100,000 2,100,000

– Audit-Related Services 4,250,000 2,145,000 990,000 915,000

– Non-Audit Services 640,000 1,740,000 – 175,000

Impairment on Trade and Other Receivables (Note 8.1) 652,643,612 282,592,051 422,183,787 226,782,152

Impairment of Inventories (Note 16.1) 15,211,882 167,127,287 44,233,025 150,581,485

Software Impairment (Note 12.2) 5,605,554 29,817,819 – –

Amortisation of Intangible Assets (Note 12.8) 31,694,467 19,174,532 22,343,871 14,598,693

Depreciation on Property, Plant and Equipment (Note 11.2/11.10) 632,735,522 414,049,360 509,249,151 341,432,961

Personnel Costs (Note 8.2) 7,100,184,259 4,952,100,427 5,832,223,437 4,446,967,908

Operating Lease Rentals 1,253,040,814 828,033,716 1,191,322,880 782,827,157

Donations 763,465 1,452,115 335,220 188,000

Royalty 611,084,317 460,715,461 513,552,753 436,841,849





Rs.


Rs.


Rs.


Rs.

8.1 Impairment on Trade and Other ReceivablesImpairment for Hire Debtors (Note 18.3) 22,044,710 23,620,450 33,294,358 28,597,942

Impairment for Lease Receivables (Note 18.3) 68,944,048 12,708,063 – –

Impairment for Loan Debtors (Note 18.3) 156,665,425 30,056,917 – –

Impairment for Trade Debtors (Note 18.3) 119,952,947 80,184,956 103,852,947 62,162,545

Impairment for Other Debtors (Note 18.3) 285,036,482 136,021,665 285,036,482 136,021,665

652,643,612 282,592,051 422,183,787 226,782,152

8.2 Personnel Costs



Rs.


Rs.


Rs.


Rs.

Staff Costs 6,320,971,861 4,416,358,271 5,175,603,185 3,972,019,851

Provision for Employee Benefit Obligations 161,489,696 116,488,092 114,418,462 86,547,997

Defined Contribution Plan Costs – EPF, ETF and MSPS 617,722,702 419,254,064 542,201,790 388,400,060

7,100,184,259 4,952,100,427 5,832,223,437 4,446,967,908

9. Income Tax Expense



Rs.


Rs.


Rs.


Rs.

Current Income Tax Expense

Current Tax Expense (Note 9.1) 614,776,454 907,000,775 224,296,133 426,554,644

Under/(Over) Provision in Respect of Previous Year (Note 31) 20,055,084 (80,388,571) 359,716 (13,464,595)

Tax on Dividend Income

WHT on Dividend Received from Subsidiary Companies 112,358,820 40,880,488 – –

747,190,358 867,492,692 224,655,849 413,090,049

Deferred Tax

Expense/(Income) (Note 9.2) 81,567,175 (99,015,801) (117,800,290) (67,004,748)

828,757,533 768,476,891 106,855,559 346,085,301



9.1 Reconciliation Between Accounting Profit and Taxable Profit



Rs.


Rs.


Rs.


Rs.

Profit Before Tax 2,049,052,146 3,126,233,230 1,105,878,833 1,450,529,968

Aggregate Accounting Profit 2,049,052,146 3,126,233,230 1,105,878,833 1,450,529,968

Aggregate Disallowable Expenses 8,373,267,670 3,740,255,334 1,347,270,689 512,747,173

Aggregate Tax Deductible Expenses (8,191,887,563) (3,057,827,537) (728,478,061) (127,259,804)

Income Not Liable for Tax – (565,930,513) (923,613,843) (312,607,896)

Tax Losses B/f 24,825,242 – – –

Adj: Tax Loss Claimed During the Period (14,694,244) – – –

Tax Loss Carried Forward 12,637,687 – – –

Qualifying Payments Relief for Investments (1,997,909) – – –

Unrealised Profit (23,849,698) 2,079,449 – –

2,227,353,331 3,244,809,963 801,057,618 1,523,409,441

Taxable Profit 20% 111,030,990 19,325,180 –

Taxable Profit 28% 2,116,322,341 3,225,484,783 801,057,618 1,523,409,441

2,227,353,331 3,244,809,963 801,057,618 1,523,409,441

Current Income Tax 20% 22,206,198 3,865,036 – –

Current Income Tax 28% 592,570,256 903,135,739 224,296,133 426,554,644

Current Income Tax 614,776,454 907,000,775 224,296,133 426,554,644

The Group tax expense is based on the taxable profit of each company in the Group. Singer (Sri Lanka) PLC and six subsidiary companies – Singer Finance (Lanka) PLC, Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC, Reality (Lanka) Limited, Singer Digital Media (Pvt) Limited and Singer Business School (Pvt) Limited are liable to pay Income Tax at 28% on taxable profit and Regnis Appliances (Pvt) Limited is liable at a rate of 20%.

The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience.

9.2 Deferred Tax Expense/(Income)



Rs.


Rs.


Rs.


Rs.

Deferred Tax Charge/(Credit) Arising due to – Origination and Reversal of Temporary Differences (Note 26.1) 82,215,026 (94,628,799) (110,059,561) (62,035,500)Deferred Tax Impact on Unrealised Profit in Inventory (Note 26.1) 7,092,878 582,246 – – Deferred Tax Impact on Realisation of Revaluation Surplus (Note 26.1) (7,740,729) (4,969,248) (7,740,729) (4,969,248)

81,567,175 (99,015,801) (117,800,290) (67,004,748)

9.3 Deferred Tax has been computed using the enacted tax rates of 28% and 20% applicable for the entities in the Group.



9.4 Tax Recognised in Other Comprehensive Income



Before TaxRs.

Tax ExpenseRs.

Net of TaxRs.

Before TaxRs.

Tax ExpenseRs.

Net of TaxRs.

Group

Revaluation Gain on Property, Plant and Equipment (Note 22.1) – – – 250,153,762 (29,413,569) 220,740,193 Actuarial Gain/(Loss) on Employee Benefit Obligations (Note 27) (18,910,000) 6,319,485 (12,590,515) 62,276,719 (17,266,352) 45,010,367Deferred Tax Relating to Revaluation of Land (Note 26.1) – (516,049,055) (516,049,055) – – –

(18,910,000) (509,729,570) (528,639,570) 312,430,481 (46,679,921) 265,750,560

Company

Revaluation Gain on Property, Plant and Equipment (Note 22.1) – – – 250,153,762 (29,413,569) 220,740,193Actuarial Gain/(Loss) on Employee Benefit Obligations (Note 27) (9,478,416) 2,653,957 (6,824,459) 52,905,239 (14,813,467) 38,091,772Deferred Tax Relating to Revaluation of Land (Note 26.1) – (198,082,001) (198,082,001) – – –

(9,478,416) (195,428,044) (204,906,460) 303,059,001 (44,227,036) 258,831,965

10. Earnings Per Share

10.1 Basic Earnings Per Share is calculated by dividing the profit for the period attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

10.2 The following reflects the income and share data used in the Basic Earnings per Share computations:



31st March 2018Rs.



Re-stated


31st March 2018Rs.



Re-stated

Profit Attributable to Ordinary Shareholders

Profit for the Period (Rs.) 1,220,294,613 2,357,756,339 999,023,274 1,104,444,667 Profit Attributable to Equity Holders of the Parent (Rs.) 1,043,682,205 2,122,194,674 999,023,274 1,104,444,667

Weighted Average Number of Ordinary Shares

Weighted Average Number of Ordinary Shares 375,628,830 375,628,830 375,628,830 375,628,830 Basic Earnings per Share (Rs.) 2.78 5.65* 2.66 2.94*

*Earnings Per Share (EPS) has been re-stated based on post subdivision weighted average number of shares.



11. Property, Plant and Equipment

11.1 Gross Carrying Amounts – Consolidated

Balance as at

1st January 2017Rs.

Additions/Transfers

Rs.

Disposals/Transfers

Rs.

Balance as at

31st March 2018Rs.

At Cost

Motor Vehicles 317,511,139 30,274,310 35,085,368 312,700,081

Furniture & Equipment 300,444,082 42,199,967 383,845 342,260,204

Plant & Machinery 856,341,776 277,182,965 577,777 1,132,946,964

Culinary School Equipment 75,814 – – 75,814

E.D.P. Equipment 382,574,508 79,696,849 1,525,373 460,745,984

Shop Furniture 578,750,476 101,430,346 21,896,248 658,284,574

Shop Equipment 775,605,302 245,047,458 23,853,407 996,799,353

Improvements on Leasehold Premises 836,135,252 136,728,743 42,785,318 930,078,677

4,047,438,349 912,560,638 126,107,336 4,833,891,651

At Valuation

Freehold Land 2,281,111,701 16,500,000 – 2,297,611,701

Freehold Buildings 1,012,736,237 17,957,092 – 1,030,693,329

3,293,847,938 34,457,092 – 3,328,305,030

Gross Carrying Amount Excluding Capital WIP 7,341,286,287 947,017,730 126,107,336 8,162,196,681

Capital Work-In-Progress

Machinery and Equipment 194,148,432 191,244,114 248,781,126 136,611,420

Improvements on Leasehold Premises 4,640,399 – 2,373,197 2,267,202

Total Capital Work-in-Progress 198,788,831 191,244,114 251,154,323 138,878,622

Total Gross Carrying Amount 7,540,075,118 1,138,261,844 377,261,659 8,301,075,303

11.2 Depreciation and Impairment Losses – Consolidated

Balance as at1st January 2017

Rs.

Charge for theYearRs.

Disposals

Rs.

Balance as at31st March 2018

Rs.

Freehold Buildings 13,815,369 51,756,797 – 65,572,166

Motor Vehicles 142,775,721 29,589,080 20,201,565 152,163,236

Furniture and Equipment 195,974,636 39,042,288 353,017 234,663,907

Plant and Machinery 496,704,637 81,971,019 548,972 578,126,684


E.D.P. Equipment 228,465,758 49,008,752 952,486 276,522,024

Shop Furniture 269,650,584 103,775,060 18,851,824 354,573,820

Shop Equipment 318,383,853 149,105,468 18,098,572 449,390,749


Total Depreciation and Impairment Loss 2,113,234,168 632,735,522 94,318,031 2,651,651,659



11.3 Carrying Amounts

Group

As at 31st March 2018

Rs.

As at 31st December 2016

Rs.

At Cost 2,386,690,780 2,132,993,012

At Valuation 3,262,732,864 3,293,847,938

Total Carrying Amount of Property, Plant and Equipment 5,649,423,644 5,426,840,950

11.4 During the period, the Group acquired Property, Plant and Equipment to the aggregate value of Rs. 887,107,521/- (2016 – Rs. 778,292,600/-).

11.5 Lands and Buildings were revalued during the financial year 2016 by Messrs Chulananda Wellappili, an Independent Valuer who is holdings a degrees of B.Sc state management and valuation. M.Sc Town and Country planning and PG.Dip in Regional planning. Further he is a graduate member of Institute of valuers of Sri Lanka, A member of Institute of Town and Country Planning Sri Lanka, Senior certified valuer of international Real Estate Institute of USA. A corporate member of Institute of Revenues, Rating and Valuations of UK. The results of such revaluation were incorporated from its effective date which was 31st December 2016. The surplus arising from the revaluation was transferred to a revaluation reserve.

11.6 The carrying amount of the revalued assets that would have been included in the Financial Statements had the assets been carried at cost would be as follows:

Carrying Amount Rs.

Land 112,593,796

Building 337,602,186

Total Carrying Amount 450,195,982

11.7 The amount of the Property, Plant and Equipment includes fully-depreciated assets value would be as follows:


Rs.


Rs.

Fully Depreciated Assets 1,031,206,991 1,116,508,583

11.8 Depreciation charge for the period is included in the following line items in the Statements of Profit or Loss and Other Comprehensive Income.


31st March 2018Rs.


31st March 2016Rs.

Cost of Sales 124,148,542 79,291,546

Administration Expenses 508,586,980 334,757,814

632,735,522 414,049,360



11.9 Gross Carrying Amounts – Company


Rs.

Additions/Transfers

Rs.

Disposals/Transfersto Revaluation

Rs.


Rs.

At Cost

Motor Vehicles 290,152,646 30,274,310 35,085,368 285,341,588

Furniture and Equipment 228,510,039 32,157,101 – 260,667,140

Plant and Machinery 288,468,493 17,629,719 – 306,098,212


E.D.P. Equipment 296,504,935 56,906,206 497,343 352,913,798

Shop Furniture 578,750,477 101,430,345 21,896,248 658,284,574

Shop Equipment 775,605,303 245,047,458 23,853,407 996,799,354


3,182,853,961 600,451,154 124,117,685 3,659,187,430

At Valuation

Freehold Land 810,774,200 – – 810,774,200

Freehold Buildings 654,640,626 – – 654,640,626

1,465,414,826 – – 1,465,414,826

Total Gross Carrying Amount 4,648,268,787 600,451,154 124,117,685 5,124,602,256 11.10 Depreciation and Impairment Losses – Company


Rs.

Charge for the YearRs.

Disposals

Rs.


Rs.

Freehold Buildings – 34,483,985 – 34,483,985

Motor Vehicles 129,070,501 26,204,765 20,201,565 135,073,701

Furniture and Equipment 163,682,958 30,793,841 – 194,476,799

Plant and Machinery 180,060,489 20,625,800 – 200,686,289


E.D.P. Equipment 178,488,487 32,917,607 244,646 211,161,448

Shop Furniture 269,650,583 103,775,060 18,851,824 354,573,819

Shop Equipment 318,383,855 149,105,468 18,098,572 449,390,751


Total Depreciation and Impairment Losses 1,625,463,745 509,249,151 92,708,202 2,042,004,694



11.11 Carrying Amounts


Rs.


Rs.

At Cost 1,651,666,721 1,557,390,216

At Valuation 1,430,930,841 1,465,414,826

Total Carrying Amount of Property, Plant and Equipment 3,082,597,562 3,022,805,042

11.12 During the financial period, the Company acquired Property, Plant and Equipment to the aggregate value of Rs. 600,451,154/- (2016 – Rs. 539,047,605/-).

11.13 Lands and Buildings were revalued during the financial year 2016 by Messrs Chulananda Wellappili, an Independent Valuer. who is holdings a degrees of B.Sc state management and valuation. M.Sc Town and Country planning and PG.Dip in Regional planning. Further he is a graduate member of Institute of valuers of Sri Lanka, A member of Institute of Town and Country Planning Sri Lanka, Senior certified valuer of international Real Estate Institute of USA. A corporate member of Institute of Revenues, Rating and Valuations of UK. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2016. Such assets were valued on contractors method for existing use basis. The surplus arising from the revaluation was transferred to a revaluation reserve.

11.14 The carrying amount of the revalued assets that would have been included in the Financial Statements had the assets been carried at cost would be as follows:

Carrying Amount Rs.

Land 100,851,000

Building 268,429,761

Total carrying amount 369,280,761

11.15 The amount of the property, plant and equipment includes fully depreciated assets value would be as follows:


Rs.


Rs.

Fully Depreciated Assets 771,566,098 841,703,025

11.16 Depreciation charge for the period is included in the following line items in the Statements of Profit or Loss and other Comprehensive Income.

For fifteen months ended 31st March

2018Rs.

For twelve months ended 31st March

2016Rs.

Cost of Sales 39,135,949 31,600,931

Administration Expenses 470,113,202 309,832,030

509,249,151 341,432,961



11.17 Information on the Freehold Land and Buildings of the Group

Location Extent (Perches)

Buildings (Square

Feet)

Cost or Revaluation of

Land Rs.


BuildingsRs.

Total Value

Rs.

AttidiyaNo.190, Main Rd, Attidiya, Dehiwala 6.2 2260 15,500,000 8,780,000 24,280,000

AhangamaNo. 24A, Matara Rd, Ahangama 14 1630 21,000,000 5,955,459 26,955,459

Ambalantota Main Street, Ambalantota 6.6 1885 11,550,000 4,618,250 16,168,250

AmbanpolaNo.108 Yaluwewa, Ambanpola. 10 – 2,000,000 – 2,000,000

Balangoda Ratnapura Road, Balangoda 6.2 2080 15,500,000 6,435,000 21,935,000

Bandarawela Main Street, Bandarawela 3.69 1535 6,642,000 4,617,625 11,259,625

Borella D.S. Senanayaka Mawatha, Borella 4.64 1700 37,120,000 6,791,500 43,911,500

Chilaw Bazaar Street, Chilaw 13.05 4120 28,871,000 13,086,125 41,957,125

ColpettyNo. 143, Galle Road, Colombo 03 3.35 1560 25,125,000 5,625,000 30,750,000

Eheliyagoda Ratnapura Road, Eheliyagoda 5.73 1660 8,595,000 4,357,500 12,952,500

Embilipitiya Colombo Road, Pallegama, Embilipitiya 5.87 2070 13,580,000 7,038,000 20,618,000

Galle Main Street, Galle 2.84 2250 11,360,000 9,365,625 20,725,625

Galle No. 13 &15, Wackwella Rd, Galle 12 – 54,000,000 – 54,000,000

Gampaha Colombo Road, Gampaha 17.87 7870 44,675,000 26,758,000 71,433,000

Hikkaduwa Galle Road, Hikkaduwa 8.74 2400 15,295,000 7,104,000 22,399,000

Kadawatha Kandy Road, Kadawatha 2.2 1150 7,700,000 11,980,000 19,680,000

Kadawatha No 430/1, Ganemulla Road, Ihala-Karagahamuna, Kadawatha 4.38 – 9,730,000 – 9,730,000

KalawanaNo. J63A, Watapotha Road, Nivithigala, Rathnapura 258.66 – 7,000,000 – 7,000,000

KandyNo 129, Kotugodella Vediya, Kandy 9.55 2900 42,975,000 5,655,000 48,630,000

Kandy – Mega Sirimavo Bandaranaike Mawatha, Kandy 10.49 12840 29,372,000 57,780,000 87,152,000

Katugastota Madawala Road, Katugastota 3.68 535 7,350,000 4,206,438 11,556,438

Kirindiwela Gampaha Road, Kirindiwela 8.1 2940 14,580,000 8,379,000 22,959,000

Kurunegala Bodhiraja Mawatha, Kurunegala 7.66 2230 21,065,000 5,652,500 26,717,500

Maharagama High Level Road, Maharagama 6.2 2700 31,000,000 9,720,000 40,720,000




Buildings (Square

Feet)


Land Rs.


BuildingsRs.

Total Value

Rs.

MaradanaNo. 51/57, Brandiyawatta, Wellampitiya. 10 – 3,500,000 – 3,500,000

Matara Anagarika Dharmapala Mawatha, Matara 8.4 3520 29,400,000 13,068,000 42,468,000

Middeniya Katuwana Road, Middeniya 8.25 2670 10,312,500 7,375,875 17,688,375

MoratuwaNo. 17, New Galle Rd, Moratuwa 13.09 2990 29,452,500 5,980,000 35,432,500

Mount Lavinia Galle Road, Mount Lavinia 7.5 1900 26,250,000 6,661,875 32,911,875

Mount Lavinia – Mega Galle Road, Mount Lavinia 18.47 15840 69,262,200 72,773,713 142,035,913

Nawalapitiya Kotmale Road, Nawalapitiya 4.7 2760 9,400,000 6,279,000 15,679,000

Negombo Greens Road, Negombo 6 2040 18,000,000 5,737,500 23,737,500

Nuwara-Eliya Kandy Street, Nuwara-Eliya 4.65 1700 13,950,000 5,610,000 19,560,000

Panadura Galle Road, Panadura 6.15 2940 15,375,000 8,820,000 24,195,000

Piliyandala Gonamaditta Road, Piliyandala 1144.35 116410 194,539,500 299,004,162 493,543,662

Pussellawa Nuwara-Eliya Road, Pussellawa 12.43 3295 18,645,000 9,514,313 28,159,313

Rathnapura Colombo Road, Rathnapura 5.8 2735 14,500,000 8,752,000 23,252,000

RatmalanaNo.52, Ferry Road,Off Borupana Road, Ratmalana 705 120615 317,250,000 227,839,931 545,089,931

RatmalanaNo.02, 5th lane, Ratmalana 362.5 75365 830,430,000 121,842,313 952,272,313

RatmalanaNo.435, Galle Raod, Ratmalana 50 – 150,000,000 – 150,000,000

Tangalle Matara Road, Tangalle 4.6 1285 11,500,000 2,923,375 14,423,375

Trincomalee North Coast Road, Trincomalee 5.58 2.184 11,160,000 7,586,250 18,746,250

Trincomalee Nayanmarthidal, Thampalakamam, Trincomalee. 60 – 4,000,000 – 4,000,000

Wellawatta Galle Road, Wellawatta 4.6 2700 39,100,000 7,020,000 46,120,000

2,297,611,700 1,030,693,329 3,328,305,029



11.18 Information on the Freehold Land and Buildings of the Company


Buildings (Square

Feet)


Land Rs.


BuildingsRs.

Total Value

Rs.

Ambalantota Main Street, Ambalantota 6.6 1885 11,550,000 4,618,250 16,168,250

Balangoda Ratnapura Road, Balangoda 6.2 2080 15,500,000 6,435,000 21,935,000

Bandarawela Main Street, Bandarawela 3.69 1535 6,642,000 4,617,625 11,259,625

Borella D.S. Senanayaka Mawatha, Borella 4.64 1700 37,120,000 6,791,500 43,911,500

Chilaw Bazaar Street, Chilaw 13.05 4120 28,871,000 13,086,125 41,957,125

ColpettyNo. 143, Galle Road, Colombo 03 3.35 1560 25,125,000 5,625,000 30,750,000

Eheliyagoda Ratnapura Road, Eheliyagoda 5.73 1660 8,595,000 4,357,500 12,952,500

Galle Main Street, Galle 2.84 2250 11,360,000 9,365,625 20,725,625

Gampaha Colombo Road, Gampaha 17.87 7870 44,675,000 26,758,000 71,433,000

Hikkaduwa Galle Road, Hikkaduwa 8.74 2400 15,295,000 7,104,000 22,399,000

Embilipitiya Colombo Road, Pallegama, Embilipitiya 5.87 2070 13,580,000 7,038,000 20,618,000

Kadawatha Kandy Road, Kadawatha 2.2 1150 7,700,000 11,980,000 19,680,000

Kandy – Mega Sirimavo Bandaranaike Mawatha, Kandy 10.49 12840 29,372,000 57,780,000 87,152,000

Katugastota Madawala Road, Katugastota 3.68 535 7,350,000 4,206,438 11,556,438

Kirindiwela Gampaha Road, Kirindiwela 8.1 2940 14,580,000 8,379,000 22,959,000

Kurunegala Bodhiraja Mawatha, Kurunegala 7.66 2230 21,065,000 5,652,500 26,717,500

Maharagama High Level Road, Maharagama 6.2 2700 31,000,000 9,720,000 40,720,000

Matara Anagarika Dharmapala Mawatha, Matara 8.4 3520 29,400,000 13,068,000 42,468,000

Middeniya Katuwana Road, Middeniya 8.25 2670 10,312,500 7,375,875 17,688,375

Mount Lavinia Galle Road, Mount Lavinia 7.5 1900 26,250,000 6,661,875 32,911,875

Mount Lavinia – Mega Galle Road, Mount Lavinia 18.47 15840 69,262,200 72,773,713 142,035,913

Nawalapitiya Kotmale Road, Nawalapitiya 4.7 2760 9,400,000 6,279,000 15,679,000

Negombo Greens Road, Negombo 6 2040 18,000,000 5,737,500 23,737,500

Nuwara-Eliya Kandy Street, Nuwara-Eliya 4.65 1700 13,950,000 5,610,000 19,560,000




Buildings (Square

Feet)


Land Rs.


BuildingsRs.

Total Value

Rs.

Panadura Galle Road, Panadura 6.15 2940 15,375,000 8,820,000 24,195,000

Piliyandala Gonamaditta Road, Piliyandala 1144.35 116410 194,539,500 299,004,162 493,543,662

Pussellawa Nuwara-Eliya Road, Pussellawa 12.43 3295 18,645,000 9,514,313 28,159,313

Rathnapura Colombo Road, Rathnapura 5.8 2735 14,500,000 8,752,000 23,252,000

Tangalle Matara Road, Tangalle 4.6 1285 11,500,000 2,923,375 14,423,375

Trincomalee North Coast Road, Trincomalee 5..58 2.184 11,160,000 7,586,250 18,746,250

Wellawatta Galle Road, Wellawatta 4.6 2700 39,100,000 7,020,000 46,120,000

810,774,200 654,640,626 1,465,414,826

11.19 Measurement of Fair Value

(i) Fair Value HierarchyThe fair value of property was determined by external independent property valuer having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.

The fair value measurement for all of properties has been categorised as Level 3 fair value based on the input to the valuation technique used.

(ii) Valuation Technique and Significant Unobservable InputsThe following table shows the valuation technique used in measuring the fair value of property, as well as the significant unobservable inputs used:

Valuation Technique Significant Unobservable Inputs Interrelationship between Key Unobservable Inputs and Fair Value Measurements

Contractor’s Method: The contractor’s method works on the basis that a property’s value can be equated to its cost. Valuer assess the cost of the building if it would have constructed in current year, and deduct margin for usage of the property-based on their year of construction.

Land value is based on the market prices of each land respectively. Value of property is considered as summation of land and building value.

z Market value of land (Price per Perch). Valuer has used a range of prices for respective lands based on their recently transacted cost.

z Construction cost per square feet of a building.

z Depreciation rate for the usage of assets.

z The estimated fair value would increase/(decrease) if –

z Market value per perch was higher (lower)

z Cost per square feet was higher (lower)

z Depreciation rate for usage lower (higher)

12. Intangible Assets



Rs.


Rs.


Rs.


Rs.

Trade Mark (Note 12.1) 93,512,500 93,512,500 93,512,500 93,512,500

Software (Note 12.2) 141,372,571 121,593,631 67,200,884 73,212,727

Other Intangible Assets Externally Acquired (Note 12.3) 46,431,920 46,431,920 46,431,920 46,431,920

281,316,991 261,538,051 207,145,304 213,157,147



12.1 Trade Mark with Infinite Useful Life



Rs.


Rs.


Rs.


Rs.

Cost

As at the Beginning of the Period 93,512,500 93,512,500 93,512,500 93,512,500

As at the End of the Period 93,512,500 93,512,500 93,512,500 93,512,500

Less: Accumulated Impairment Losses – – – –

Net Carrying Amount 93,512,500 93,512,500 93,512,500 93,512,500

Trade mark consists of SISIL brand name Rs. 55,000,000/- (Note 12.4) and UNIC brand name Rs. 38,512,500/- (Note 12.5) Refer Notes 12.4 and 12.5 for SISIL and UNIC impairment respectively.

12.2 Software



Rs.


Rs.


Rs.


Rs.

Cost


Acquisition through Business Combination – 3,060,949 – –

Acquired/Incurred During the Period 57,078,961 58,200,745 16,332,028 27,459,327


Amortisation


Acquisition through Business Combination – 622,873 – –

Software Impaired 5,605,554 29,817,819 – –

Amortisation Charge for the Period (Note 12.8) 31,694,467 19,174,532 22,343,871 14,598,693


Carrying Amount





12.3 Other Intangible Assets Externally Acquired



Rs.


Rs.


Rs.


Rs.

Cost


Acquired/Incurred During the Period – – – –


Amortisation


Amortisation Charge for the Period – – – –


Carrying Amount



Other Intangible Assets externally acquired includes Sony distribution rights amounting to Rs. 46,431,920/- and Hayleys Brand Amounting to Rs. 32,000,000/-. Hayleys Brand is fully amortised as at 31st March 2018. Refer Note 12.6 and 12.7 for amortisation of Hayleys and impairment of Sony.

12.4 SISIL TrademarkThe Company had acquired the “SISIL” trade mark in December 2000, amounting to Rs. 55 million. The management is of the opinion that the aforementioned trademark has an indefinite useful life as their associated brand awareness and recognition has existed over 50 years and the Company intends to utilise the said trademark for the foreseeable future. There are no legal, regulatory, contractual, competitive, economic or other factors that may limit its useful life and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for any impairment as at 31st March 2018:

Annual Sales Growth for Next Five Years 21%

Gross Margin 27%

Discount Rate 11.5%

Indefinite Growth Rate after Year 2023 2%

12.5 UNIC TrademarkThe Company had acquired the “UNIC” Trade mark in 2006 amounting Rs. 38,512,500/-. This trade mark is also considered to have an indefinite useful life due to the factors mentioned in the preceding paragraph and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st March 2018:


Gross Margin 22%

Discount Rate 11.5%


12.6 Hayleys Brand NameThe Company took over the showrooms, retail operation of the Hayleys Electronic Retail Limited, from 2nd January 2008 and agencies of Philips and Kenwood from Hayleys Electronic Ltd for Rs. 32 million. The entire purchase consideration is treated as Goodwill and is amortised over the determined useful life of 5 years commencing from the period beginning 1st January 2009.

12.7 SONY Distribution Rights The company had acquired the distribution rights of brand “SONY” in 2014 amounting Rs. 46,431,920/- This assets are now carried at cost subject to annual impairment test and carrying amount as at 31st March 2018 is Rs.46,431,920/-.This distribution right also considered to have an indefinite useful life due to the factors mentioned in the preceding paragraph accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st March 2018:




Gross Margin 17%

Discount Rate 11.5%


12.8 Amortisation Charge for the Period



2018Rs.

For twelve months ended 31st December

2016Rs.


2018Rs.


2016Rs.

Amortisation of Software 31,694,467 19,174,532 22,343,871 14,598,693

31,694,467 19,174,532 22,343,871 14,598,693

13. Investment in Subsidiaries – Company

Number of Shares Carrying Value

Country ofIncorporation

As at31st March

2018

As at31st December

2016

As at31st March

2018 Rs.

As at31st December

2016Rs.

Quoted

Singer Finance (Lanka) PLC Sri Lanka

Investment at the Beginning 132,931,054 132,931,054 982,241,596 982,241,596

Investment Made During the Period 31,336,155 – 470,042,325 –

Investment at the End 164,267,209 132,931,054 1,452,283,921 982,241,596

Singer Industries (Ceylon) PLC Sri Lanka

Investment at the Beginning 3,373,967 – 692,407,683 –

Investments Made During the Period – 3,373,967 – 692,407,683

Investment at the End 3,373,967 3,373,967 692,407,683 692,407,683

Regnis (Lanka) PLC Sri Lanka


Investments Made During the Period – 6,568,461 – 722,530,710


Non-Quoted

Singer Digital Media (Pvt) Limited Sri Lanka

Investment at the Beginning 500,000 500,000 5,000,000 5,000,000

Investment Made During the Period – – – –

Investment at the End 500,000 500,000 5,000,000 5,000,000

Singer Business School (Pvt) Limited Sri Lanka

Investment at the Beginning 500,000 500,000 5,000,000 5,000,000

Investment Made During the Period – – – –

Investment at the End 500,000 500,000 5,000,000 5,000,000

Reality Lanka Limited Sri Lanka


Transfer from Equity Investee – 4,800,000 – 48,000,000


Total Investment in Subsidiaries 2,925,222,314 2,455,179,989



14. Other Non-Current Assets

Prepaid Operating Leases – Leasehold RightsPre-paid operating lease relates to operating lease paid in advance for the land acquired by Regnis Appliances (Pvt) Limited from Board of Investment (BOI) in Sri Lanka during the period. The group amortise the lease hold land over the lease period of 50 years, on straight line basis. The reconciliation of pre-paid operating lease is as follows:



Rs.


Rs.


Rs.


Rs.

At the Beginning of the Period – – – –

Acquisitions During the Period 65,062,510 – – –

Amortisation for the Period (542,188) – – –

At the end of the Period 64,520,322 – – –

15. Other Investments

15.1 Non-Current Financial Assets


No. of Shares Amount Amount

2018 2016 As at 31st March 2018

Rs.


Rs.


Rs.


Rs.

a. Available-for-Sale Financial Assets

Non-Quoted

Equity Investment Lanka Limited 1,665,000 1,665,000 17,020,000 17,020,000 17,020,000 17,020,000

Credit Information Bureau of Sri Lanka 100 100 41,300 41,300 – –

17,061,300 17,061,300 17,020,000 17,020,000



Rs.


Rs.


Rs.


Rs.

b. Held-to-Maturity Financial Assets

Investments in Debentures

Fixed Rate 9.95% Senior Unlisted, Unsecured Redeemable, Rated Debentures Redeemable on 18.06.2020 – – 450,000,000 450,000,000

36 Months 11.5% Secured Debentures Redeemable on 06.04.2019 – – 312,090,000 312,090,000

48 Months 12% Secured Debentures Redeemable on 06.04.2020 – – 150,000,000 150,000,000

912,090,000 912,090,000

Total Other Investments 17,061,300 17,061,300 929,110,000 929,110,000

15.2 Short-Term Investments



Rs.


Rs.


Rs.


Rs.

a. Held-to-Maturity Financial AssetsInvestment in Treasury Bills 671,382,640 515,255,581 – –

671,382,640 515,255,581 – –

Further details relating to fair valuation in carrying value is providing in Note 36 to these Financial Statements.



16. Inventories



Rs.


Rs.


Rs.


Rs.

Raw Materials 1,179,159,152 1,075,229,171 380,487,000 252,289,000

Work-in-Progress 177,062,951 190,474,933 71,995,000 107,285,000

Finished Goods 10,600,546,593 7,767,288,251 9,800,343,616 6,977,909,352

Supplies and Parts 572,820,285 584,157,733 561,886,869 564,552,905

Goods-in-Transit 854,455,933 745,090,585 621,714,686 545,311,719

13,384,044,914 10,362,240,673 11,436,427,171 8,447,347,976

Less: Impairment of Inventory (Note 16.1) (731,024,874) (715,812,992) (695,132,558) (650,899,533)

Unrealised Profit in Inventory (79,296,628) (103,146,326) – –

Consignment Inventory (13,550) (2,953,394) (13,550) (2,953,394)

Total Inventories 12,573,709,862 9,540,327,961 10,741,281,063 7,793,495,049

16.1 Impairment of Inventory



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 715,812,992 548,685,705 650,899,533 500,318,048

Amount Recognised During the Period (Note 8) 15,211,882 167,127,287 44,233,025 150,581,485

Balance at the End of the Period 731,024,874 715,812,992 695,132,558 650,899,533

17. Loans Due from Related Parties


Relationship As at 31st March 2018

Rs.


Rs.


Rs.


Rs.

Regnis (Lanka) PLC Subsidiary – – 150,000,000 –

Reality Lanka Limited Subsidiary – – 69,150,767 58,134,631

Singer Digital Media (Pvt) Limited Subsidiary – – – 1,119,940,065

Singer Finance (Lanka) PLC Subsidiary – – 1,000,000,000 200,000,000

– – 1,219,150,767 1,378,074,696

Regnis (Lanka) PLCCompany granted this facility based on the fund requirement of Regnis (Lanka) PLC and will be recovered on demand. Interest is charged based on the highest AWPLR prevailing in the respective month + 0.5% to 2%.

Reality Lanka LimitedCompany granted this facility based on the fund requirement of Reality Lanka Limited, and it will be recovered on demand.

Singer Digital Media (Pvt) LimitedCompany granted this facility based on the fund requirement of Singer Digital Media (Pvt) Limited, and will be recovered on demand. Interest is charged based on the highest AWPLR prevailing in the respective month + 0.5% to 2%.

Singer Finance (Lanka) PLCCompany granted this facility based on the fund requirement of Singer Finance (Lanka) PLC and will be recovered on demand. Interest is charged based on the highest AWPLR prevailing in the respective month + 0.5% to 2%.



18. Trade and Other Receivables

18.1 Non-Current


Note As at 31st March 2018

Rs.


Rs.


Rs.


Rs.

Hire Debtors

Hire Debtors - Instalment Receivables 393,938,607 1,408,786,868 372,752,597 1,204,847,107

Less: Deferred Profit on Hire Sales (43,108,652) (214,086,677) (40,629,947) (192,173,114)

350,829,955 1,194,700,191 332,122,650 1,012,673,993

Lease Receivables

Gross Instalments in Lease 9,416,110,605 7,280,063,563 – –

Rental Received in Advance (89,159) (262,899) – –

9,416,021,446 7,279,800,664 – –

Less: Unearned Income (2,070,449,248) (1,364,239,586) – –

7,345,572,198 5,915,561,078 – –

Loan Debtors

Consumer and Personal Loans 480,410,919 231,048,419 – –

Less: Unearned Loan Interest Income (77,006,387) (44,654,131) – –

403,404,532 186,394,288 – –

Other Debtors

Rent Paid in Advance 767,235,953 659,255,881 763,656,794 658,129,689

Other Receivables 15,450,423 3,165,000 2,989,000 3,165,000

Loans to Employees 18.4 280,486,790 247,004,674 243,137,575 214,498,101

1,063,173,166 909,425,555 1,009,783,369 875,792,790

9,162,979,851 8,206,081,112 1,341,906,019 1,888,466,783

18.2 Current



Rs.


Rs.


Rs.


Rs.

Hire Debtors

Hire Debtors – Instalments Receivables 8,582,637,814 7,103,449,566 8,498,528,903 6,764,140,047

Rental Received in Advance (84,188) (86,150) – –

Less: Deferred Profit on Hire Sales (1,333,704,665) (1,200,862,574) (1,325,607,580) (1,145,506,331)

Provision for Impairment 18.3 (64,886,178) (50,985,870) (53,096,143) (25,491,954)

7,183,962,783 5,851,514,972 7,119,825,180 5,593,141,762

Lease Receivables

Gross Instalments in Lease 5,885,499,839 4,691,624,489 – –

Less: Unearned Income (1,721,535,607) (1,432,703,032) – –

Provision for Impairment 18.3 (126,311,107) (93,696,290) – –

4,037,653,125 3,165,225,167 – –





Rs.


Rs.


Rs.


Rs.

Loan Debtors

Consumer and Personal Loans 2,909,032,853 1,870,325,713 – –

Less: Unearned Loan Interest Income (285,970,584) (208,207,480) – –

FD Loans 42,000,185 25,565,725 – –

Net Receivable 2,665,062,454 1,687,683,958 – –

Less: Provision for Impairment 18.3 (168,104,070) (43,421,919) – –

2,496,958,384 1,644,262,039 – –

Trade Debtors

Trade Receivables 5,655,684,133 4,791,733,076 4,214,116,152 3,514,400,198

Less: Provision for Impairment 18.3 (293,771,484) (182,167,047) (234,945,963) (139,441,526)

5,361,912,649 4,609,566,029 3,979,170,189 3,374,958,672

Other Debtors

Advance and Other Receivables 1,661,417,605 1,471,735,032 1,509,870,839 1,227,500,332

Less: Provision for Impairment (666,561,992) (477,353,779) (665,101,091) (476,152,244)

994,855,613 994,381,253 844,769,747 751,348,088

Shipping Guarantees 27,092,218 – – –

Prepayments 475,839,768 229,290,769 114,396,717 122,700,478

Loans to Employees 18.4 115,512,329 103,142,550 92,449,765 81,654,755

618,444,315 332,433,319 206,846,482 204,355,233

20,693,786,869 16,597,382,778 12,150,611,598 9,923,803,755

18.3 Provision for Impairment



Rs.


Rs.


Rs.


Rs.

Trade Receivables Impairment

Provision for Impairment – Hire Debtors

Movement


Provided During the Period (Note 8.1) 22,044,710 23,620,450 33,294,358 28,597,942

Write-off During the Period (8,144,402) (40,609,903) (5,690,169) (35,967,699)


Provision for Impairment – Lease Receivables

Movement

Balance at the Beginning of the Period 93,696,290 111,417,122 – –

Provided During the Period (Note 8.1) 68,944,048 12,708,063 – –

Write-off During the Period (36,329,231) (30,428,895) – –

Balance at the End of the Period 126,311,107 93,696,290 – –





Rs.


Rs.


Rs.


Rs.

Provision for Impairment – Loan Debtors

Movement

Balance at the Beginning of the Period 43,421,919 42,905,357 – –

Provided During the Period (Note 8.1) 156,665,425 30,056,917 – –

Write-off During the Period (31,983,274) (29,540,355) – –

Balance at the End of the Period 168,104,070 43,421,919 – –

Provision for Impairment – Trade Debtors

Movement





Total Provision for Trade Receivables 653,072,839 370,271,126 288,042,106 164,933,480

Provision for Impairment – Other Debtors

Movement





Total Provision for Impairment 1,319,634,832 847,624,905 953,143,197 641,085,724

18.4 Loans to Employees



Rs.


Rs.


Rs.


Rs.

Movement


Loans granted During the Period 231,456,517 138,546,224 178,835,350 106,136,080

Less: Repayments (185,604,622) (154,134,599) (139,400,866) (117,875,054)


Due Within One Period 115,512,329 103,142,550 92,449,765 81,654,755

Due After One Period 280,486,790 247,004,674 243,137,575 214,498,101

18.5 Maturity Analysis of Hire Purchase, Lease and Loans

Consolidated – As at 31st March 2018

Less than3 Months

Rs.

3-12Months

Rs.

1-3Years

Rs.

3-5Years

Rs.

Over5 Years

Rs.

2017Total

Rs.

Hire Debtors 3,821,993,586 3,361,969,197 348,744,379 2,085,575 – 7,534,792,738

Lease Receivables 1,098,056,091 2,939,597,034 5,727,692,782 1,606,990,995 10,888,421 11,383,225,322

Loan Debtors 743,438,665 1,753,519,719 336,626,139 65,647,645 1,130,748 2,900,362,916

6,413,063,300 8,055,085,950 5,663,488,342 1,674,724,215 12,019,169 21,818,380,976



Consolidated – As at 31st December 2016

Less than3 Months

Rs.

3-12Months

Rs.

1-3Years

Rs.

3-5Years

Rs.

Over5 Years

Rs.

Total

Rs.

Hire Debtors 1,976,602,004 3,874,912,968 1,194,700,191 – – 7,046,215,163

Lease Receivables 858,334,301 2,306,890,866 3,397,054,714 2,518,506,364 – 9,080,786,245

Loan Debtors 771,072,607 873,189,432 148,958,594 36,935,694 500,000 1,830,656,327

3,606,008,912 7,054,993,266 4,740,713,499 2,555,442,058 500,000 17,957,657,735

Company – As at 31st March 2018

Less than3 Months

Rs.

3-12Months

Rs.

1-3Years

Rs.

3-5Years

Rs.

Over5 Years

Rs.

Total

Rs.

Hire Debtors 3,797,473,732 3,322,351,448 332,122,650 – – 7,451,947,829

3,797,473,732 3,322,351,448 332,122,650 – – 7,451,947,829

Company – As at 31st December 2016

Less than3 Months

Rs.

3-12Months

Rs.

1-3Years

Rs.

3-5Years

Rs.

Over5 Years

Rs.

Total

Rs.

Hire Debtors 1,840,794,077 3,752,347,685 1,012,673,993 – – 6,605,815,755

1,840,794,077 3,752,347,685 1,012,673,993 – – 6,605,815,755

19. Amounts Due from Related Parties



Rs.


Rs.


Rs.


Rs.

Hayleys PLC Parent 788,000 – – –

Singer Finance (Lanka) PLC Subsidiary – – 173,772,072 –

Singer Digital Media (Pvt) Limited Subsidiary – – – 73,813,827

Singer Business School (Pvt) Limited Subsidiary – – 11,623,955 969,018

788,000 – 185,396,027 74,782,845

20. Cash and Cash Equivalents Components of Cash and Cash Equivalents

20.1 Favourable Cash and Cash Equivalents Balances



Rs.


Rs.


Rs.


Rs.

Cash at Banks 514,254,469 722,443,014 366,536,513 343,305,161

Cash in Hand 824,752,271 819,031,801 651,091,433 696,280,947

1,339,006,740 1,541,474,815 1,017,627,946 1,039,586,108

20.2 Unfavourable Cash and Cash Equivalent BalancesBank Overdrafts (2,132,691,242) (1,202,576,667) (1,237,088,725) (702,096,131)

Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement (793,684,502) 338,898,148 (219,460,779) 337,489,977



21. Stated Capital

As at 1st January 2017

Number

Subdivision of

Number

As at31st March 2018

Number

Number of Shares - Ordinary Shares 125,209,610 250,419,220 375,628,830

125,209,610 250,419,220 375,628,830

Rupees - Ordinary Shares 626,048,050 – 626,048,050

626,048,050 – 626,048,050

The holders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share at meetings of the Company.

As per the resolution passed at the Extra Ordinary General Meeting held on 31st March 2017, the issued and fully paid Ordinary Shares of the Company was subdivided, by subdividing each issued Ordinary Share of the Company in the proportion of Three (03) shares for every One (01) shares held, thus increasing the number of existing issued Ordinary Shares of the Company from 125,209,610 to 375,628,830 without effecting an increase in the Stated Capital of the Company of Rupees Six Hundred and twenty six million forty eight thousand and fifty only (Rs. 626,048,050/-).

22. Capital Reserves



Rs.


Rs.


Rs.


Rs.

Revaluation Reserve

Revaluation Reserve (Note 22.1) 577,919,322 1,057,964,069 847,555,412 1,065,542,144

577,919,322 1,057,964,069 847,555,412 1,065,542,144

22.1 Revaluation ReserveBalance at the Beginning of the Period 1,057,964,069 857,580,019 1,065,542,144 857,580,019

Revaluation Gain on Property, Plant and Equipment (Note 9.4) – 250,153,762 – 250,153,762

Deferred Tax on Revaluation Gain on Property, Plant and Equipment (Note 9.4) – (29,413,569) – (29,413,569)

Realisation of Revaluation Surplus (28,213,846) (20,356,143) (19,904,731) (12,778,068)

Deferred Tax Relating to Revaluation of Land (451,830,901) – (198,082,001) –

Balance at the End of the Period 577,919,322 1,057,964,069 847,555,412 1,065,542,144

The revaluation reserve relates to revaluation of freehold land and buildings and represents the fair value of the land and buildings as at the date of revaluation.

23. Statutory Reserves

Consolidated


Rs.


Rs.

(a) Reserve FundReserve Fund (Note 23.1) 136,009,451 95,360,709

136,009,451 95,360,709



23.1 Reserve Fund

Consolidated


Rs.


Rs.

Balance at the Beginning of the Period 95,360,709 73,317,972

Transfer of Surplus During the Period 40,648,742 22,042,737

Balance at the End of the Period 136,009,451 95,360,709

The balance in the reserve fund will be used only for the purpose specified in the Central Bank Direction No. 1 of 2003.

The Reserve Fund is maintained in compliance with Direction No. 1 of 2003 Central Bank of Sri Lanka (Capital Funds) issued to Finance Companies.

As per the said Direction, every Licensed Finance Company shall maintain a Reserve Fund and transfer to such reserve fund out of the net profits of the each year after due provisions has been made for taxation and bad and doubtful debts on following basis:

Capital Funds to Deposit Liabilities % of Transfer to Reserve Fund

Not less than 25% 5%

Less than 25% and not less than 10% 20%

Less than 10% 50%

Accordingly, Singer Finance (Lanka) PLC has transferred 5% of its net profit after taxation to the Reserve Fund as Company’s Capital Funds to Deposit Liabilities, belongs to not less than 25%.

24. Revenue Reserves



Rs.


Rs.


Rs.


Rs.

Summary

(a) General Reserve (Note 24.1) 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

(b) Retained Earnings 2,795,477,725 3,674,443,725 626,088,413 1,542,212,861

2,795,477,725 3,674,443,725 626,088,413 1,542,212,861

Revenue Reserves 5,495,477,725 6,374,443,725 3,326,088,413 4,242,212,861

24.1 General ReserveThe general reserve which is a revenue reserve represents the amounts set aside by the Directors for general application.

The movement of general reserve is as follows:



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

Balance at the End of the Period 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000



25. Interest-Bearing Loans and Borrowings25.1 Loans and Borrowings – Consolidated


Amount Repayable Within 1 Year


Amount Repayable After 1 Year


Total






Total

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

Debentures (Note 25.2) 5,416,668,000 1,587,910,000 7,004,578,000 1,939,159,068 6,982,084,933 8,921,244,000

Bank Loans (Note 25.3 a,b) 13,674,415,140 2,744,449,832 16,418,864,972 8,882,290,535 1,399,800,000 10,282,090,535

Commercial Papers (Note 25.4) – – – 390,000,000 – 390,000,000

19,091,083,140 4,332,359,832 23,423,442,972 11,211,449,603 8,381,884,933 19,593,334,535

25.2 Debentures – Consolidated


Rs.

New Issues

Rs.

Redemption

Rs.


Rs.

Fixed Rate 14.25% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemed on 10.09.2017 416,666,000 – (416,666,000) –

Fixed Rate 8.25% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemed on 22.12.2017 1,500,000,000 – (1,500,000,000) –

Fixed Rate 8.60% Senior,Unlisted, Unsecured, Redeemable, Rated Debentures redeemable on 07.06.2018 2,929,980,000 – – 2,929,980,000

Variable Rate – 1 year Net TB+1.25% (Floor 7% Capital 9.5%) Senior,Unlisted, Unsecured, Redeemable, Rated Debentures redeemable on 07.06.2018 70,020,000 – – 70,020,000

Fixed Rate 14.50% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 10.09.2018 416,668,000 – – 416,668,000

Fixed Rate 10.5% Senior, Listed, Unsecured, Redeemable, Rated Debentures Redeemable on 15.03.2019 460,560,000 – – 460,560,000

Variable Rate – 6 Months Gross TB + 1.50% (Floor 9.50% Cap 12.50%) Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 15.03.2019 1,539,440,000 – – 1,539,440,000

Fixed Rate 11.50% Senior, Listed, Secured, Redeemable, Rated Debentures redeemable on 06.04.2019 409,300,000 – – 409,300,000

Fixed Rate 12% Senior, Listed, Secured, Redeemable, Rated Debentures redeemable on 06.04.2020 590,700,000 – – 590,700,000

Fixed Rate 9.95% Senior, Listed, Secured, Redeemable, Rated Debentures redeemable on 16.06.2020 1,500,000,000 – – 1,500,000,000

Less : Investment in Debentures in Subsidiary (912,090,000) – – (912,090,000)

8,921,244,000 – (1,916,666,000) 7,004,578,000

25.3 Bank Loans – Consolidated

(Within one year) As at 1st January 2017

Loans Obtained Repayment As at 31st March 2018

Rs. Rs. Rs. Rs.

(a) Bank Loans Repayable within one YearBank Loans, Short-Term Loans and Current Portion of Long-Term Loans 8,882,290,535 38,740,067,254 (33,947,942,649) 13,674,415,140

8,882,290,535 38,740,067,254 (33,947,942,649) 13,674,415,140



The bank loans repayable within one year consist of short-term loans obtained from Hatton National Bank PLC, People’s Bank, Nations Trust Bank PLC, Commercial Bank of Ceylon PLC, Sampath Bank PLC, Seylan Bank PLC, Standard Chartered Bank Sri Lanka Limited, National Development Bank PLC, Deutsche Bank Sri Lanka and Muslim Commercial Bank Sri Lanka.

These loans bear interest rate between 10.35% to 13.55% and due for settlement at maturity.

(b) Bank Loan Repayable After One Year – Consolidated

Company Lender/Rate of Interest (p.a.) Repayment Security As at 31st March

2018 Rs.

As at 31st December

2016Rs.

Singer (Sri Lanka) PLC Standard Chartered Bank Sri Lanka Limited (Fixed Rate 12.95%)

Quarterly Negative Pledged 657,149,832 –

Singer (Sri Lanka) PLC Commercial Bank of Ceylon PLC (AWLPR+1%, Rate Reviewed Monthly)

Annually Negative Pledged 1,875,000,000 –

Singer (Sri Lanka) PLC Commercial Bank of Ceylon PLC (AWPLR, Rate Reviewed Quarterly) (Cap 8.5%)

At Maturity Negative Pledged – 1,000,000,000

Singer Finance ( Lanka) PLC Sampath Bank PLC (AWPLR+1.5%) Monthly Repayment Negative Pledged 192,900,000 317,400,000 Singer Finance ( Lanka) PLC Seylan Bank PLC (AWPLR+2%) Monthly Repayment Negative Pledged 19,400,000 82,400,000

2,744,449,832 1,399,800,000

25.4 Commercial Papers – Consolidated


New Issues Redemption As at 31st March 2018

Rs. Rs. Rs. Rs.

Singer Finance (Lanka) PLC 390,000,000 – (390,000,000) –

390,000,000 – (390,000,000) –

25.5 Bank Facilities – Consolidated

As at 31st March 2018 As at 31st December 2016

UtilisedRs.

Total FacilityRs.

Utilised Rs.

Total FacilityRs.

Overdrafts 2,132,691,242 3,495,000,000 1,202,576,667 3,160,000,000

Term Loans 2,744,449,832 4,355,000,000 1,399,800,000 2,450,000,000

Short-Term Loans and Current Portion of Long-Term Loans 13,674,415,140 19,914,000,000 8,882,290,535 11,090,000,000

Total Debt Facility 18,551,556,214 27,764,000,000 11,484,667,202 16,700,000,000

Guarantees 524,894,785 2,200,000,000 1,543,652,019 1,750,000,000

Letter of Credits 4,511,447,444 10,645,000,000 2,788,966,216 6,568,000,000

Total Debt & Other Facilities 23,587,898,443 40,609,000,000 15,817,285,437 25,018,000,000

25.6 Interest-Bearing Loans and Borrowings – Company



Rs.



Rs.


TotalRs.

As at31st December 2016 Amount Repayable

Within 1 YearRs.

As at31st December 2016 Amount Repayable

After 1 YearRs.

As at31st December 2016

TotalRs.

Debentures (Note 25.7) 5,000,000,000 – 5,000,000,000 1,500,000,000 5,000,000,000 6,500,000,000

Bank Loans (Note 25.8 a,b) 9,175,592,417 2,532,149,832 11,707,742,249 7,034,948,198 1,000,000,000 8,034,948,198

14,175,592,417 2,532,149,832 16,707,742,249 8,534,948,198 6,000,000,000 14,534,948,198



25.7 Debentures – Company


Rs.

New Issues

Rs.

Redemption

Rs.


Rs.

Fixed Rate 8.25% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemed on 22.12.2017 1,500,000,000 – (1,500,000,000) –

Fixed Rate 8.60% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 07.06.2018 2,929,980,000 – – 2,929,980,000

Variable Rate 1 year Net TB+1.25% (Floor 7% Cap 9.5%) Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 07.06.2018 70,020,000 – – 70,020,000

Fixed Rate 10.50% Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 15.03.2019 460,560,000 – – 460,560,000

Variable Rate - 6 Months Gross TB + 1.50% (Floor 9.50% Cap 12.50%) Senior, Listed, Unsecured, Redeemable, Rated Debentures redeemable on 15.03.2019 1,539,440,000 – – 1,539,440,000

6,500,000,000 – (1,500,000,000) 5,000,000,000

25.8 Bank Loans – Company

Balance as at 1st January 2017

Rs.

Obtained

Rs.

Repayment

Rs.


Rs.

(a) Bank Loans Repayable within One Year Bank Loans, Short-Term Loans and Current Portion of Long-Term Loans 7,034,948,198 25,642,396,479 (23,501,752,260) 9,175,592,417

7,034,948,198 25,642,396,479 (23,501,752,260) 9,175,592,417

The bank loans repayable within one year consist of short term loans obtained from Hatton National Bank PLC, Nations Trust Bank PLC, Commercial Bank of Ceylon PLC, Sampath Bank PLC, Deutsche Bank Sri Lanka, Seylan Bank PLC, Standard Chartered Bank Sri Lanka Limited, People’s Bank and Muslim Commercial Bank Sri Lanka. These loans bears interest rate between 10.3% to 11.45% and due for settlement of maturity.

(b) Bank Loan Repayable After One Year

Lender Repayment Security 2018Rs.

2016Rs.

Commercial Bank of Ceylon PLC (AWPLR Rate Reviewed Quarterly) (Cap 8.5%)

At Maturity Negative Pledged – 1,000,000,000

Standard Chartered Bank Sri Lanka Limited (Fixed Rate 12.95%) (Note 35.2)

Quarterly Negative Pledged 657,149,832 –

Commercial Bank of Ceylon PLC (AWPLR + 1% Rate Review Monthly)

Annually Negative Pledged 1,875,000,000 –

2,532,149,832 1,000,000,000



25.9 Bank Facilities – Company


UtilisedRs.

Total FacilityRs.

Utilised Rs.

Total FacilityRs.

Overdraft 1,237,088,725 2,295,000,000 702,096,130 2,500,000,000

Term Loans 2,532,149,832 3,655,000,000 1,000,000,000 1,750,000,000

Short-Term Loans and Current Portion of Long-Term Loans 9,175,592,417 12,615,000,000 7,034,948,198 10,100,000,000

Total Debt Facility 12,944,830,974 18,565,000,000 8,737,044,328 14,350,000,000

Guarantees 524,894,785 1,750,000,000 1,542,602,019 1,750,000,000

Letter of Credit 2,504,862,843 6,630,000,000 2,105,684,020 6,568,000,000

Total Debt and Other Facilities 15,974,588,602 26,945,000,000 12,385,330,367 22,668,000,000

26. Deferred Tax Assets/(Liabilities)



Rs.


Rs.


Rs.


Rs.

26.1 Deferred TaxBalance at the Beginning of the Period 124,061,153 144,913,478 147,270,286 124,492,574

Acquisition from Business Combination – (71,444,374) – –

Amount (Originating)/Reversal During the Period – Recognised in Profit or Loss (Note 9.2) (82,215,026) 94,628,799 110,059,561 62,035,500

Amount (Originating)/Reversal During the Period – Recognised in Statement of Other Comprehensive Income (Note 9.4) 6,319,485 (46,679,921) 2,653,957 (44,227,036)

Deferred Tax Relating to Revaluation of Land (Note 9.4 and 26.3) (516,049,055) – (198,082,001) –

Deferred Tax Impact on Realisation of Revaluation Surplus (Note 9.2) 7,740,729 4,969,248 7,740,729 4,969,248

Transfer from Deferred Tax Liability – (1,743,831) –

Deferred Tax Impact on Unrealised Profit in Inventory (Note 9.2) (7,092,878) (582,246) – –

Balance at the End of the Period (467,235,592) 124,061,153 69,642,532 147,270,286

26.2 Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against tax liabilities and when the deferred tax relate to the same fiscal authority.

Deferred tax is computed using the tax rate which was enacted by the end of the reporting period which is 28% and Regnis Appliance (Pvt) Limited at 20%.

26.3 As per the newly enacted Inland Revenue Act No 24 of 2017, business income includes gains from realisation of capital assets and liabilities of a business. Accordingly, the gain from the realisation of an asset or liability shall be the amount by which the sum of the consideration received for the asset or liability exceeds the acquiring cost of the asset or liability at the time of realisation. The Group has recognised a revaluation reserve on free hold land (Capital asset of the Group) amounting to Rs.1,843,032,339/- as at 31st March 2018 which is the amount by which the sum of the carrying value of the freehold land exceeds the acquiring cost of the land based on the revaluation carried out and accounted for as at the balance sheet date. Hence, the Group has recognised a deferred tax liability of Rs. 516,049,055/- (Company Rs. 198,082,001) on revaluation reserve of freehold lands which is computed at the corporate tax rate of 28%.



26.3.1 Consolidated


AssetsRs.

Liabilities Rs.

AssetsRs.

LiabilitiesRs.

(a) Composition of Deferred Tax

Property, Plant and Equipment – 1,071,132,890 – 524,100,382

Intangible Assets – 26,353,008 – 19,787,493

Lease Rentals – 139,257,459 26,943,347 –

Tax Losses 6,078,222 – 18,683,161 –

Provision for Inventories 222,864,788 – 218,558,498 –

Provision on Receivables 286,217,145 – 191,467,149 –

Employee Benefit Obligations 222,225,372 – 182,392,138 –

Provision for Warranty 32,122,238 – 29,904,735 –

769,507,765 1,236,743,357 667,949,028 543,887,875

Net deferred tax 467,235,592 124,061,153

26.3.2 Company


AssetsRs.

Liabilities Rs.

AssetsRs.

LiabilitiesRs.

(a) Composition of Deferred Tax

Property, Plant and Equipment – 564,113,342 – 360,530,054

Intangible Assets – 16,308,898 – 13,787,781

Provision for Inventories 194,637,116 – 182,251,869 –

Provision on Receivables 266,880,095 – 179,504,003 –

Employee Benefit Obligations 160,722,563 – 133,491,251 –

Provision for Warranty 27,824,998 – 26,340,998 –

650,064,772 580,422,240 521,588,121 374,317,835

Net Deferred Tax 69,642,532 147,270,286

27. Employee Benefit Obligations



Rs.


Rs.


Rs.


Rs.

Present Value of Unfunded Gratuity 794,644,981 651,143,995 574,009,152 476,754,466

Total Present Value of the Obligation 794,644,981 651,143,995 574,009,152 476,754,466

Provision for Retiring Gratuity

At the Beginning of the Period 651,143,995 486,465,251 476,754,466 457,181,699


Transfers to Subsidiary – – – (93,333)

Actuarial (Gain)/Loss on Obligation (Note 9.4) 18,910,000 (62,276,719) 9,478,416 (52,905,239)

Current Service Costs 67,788,899 44,117,501 46,279,839 32,846,658

Interest Costs 93,700,797 72,370,591 68,138,623 53,701,339

831,543,691 668,987,651 600,651,342 490,731,124

Benefits Paid During the Period (36,898,710) (17,843,656) (26,642,192) (13,976,658)

At the End of the Period 794,644,981 651,143,995 574,009,152 476,754,466

The Group and Company maintains a non-contributory defined benefit plan providing for gratuity benefits payable to employees who will get eligible upon their retirement.



As at 31st March 2018, the gratuity liability was valued under the Projected Unit Credit (PUC) method by a professionally qualified actuary Mr. Pushpakumar Gunasekara of Smiles Global (Pvt) Limited who is qualified Actuary, Associate of the Institute of Actuaries of Australia (AIAA).

Following key assumptions were made in arriving at the above figures:


Rs.


Rs.

(a) Rate of Discount 11.0% p.a. (Net of Tax) 11.5% p.a. (Net of Tax)

(b) Salary Increment Rate Year 1 10% 10%

Year 2+ 9% 10%

(c) Retirement AgeAll Staff Members (Other than Factory Non-Management Staff) 60 years 60 Years

Branch Managers 55 years 55 Years

Factory Non-Management Staff – Singer Industries (Ceylon) PLC 60 years 60 Years

Other Factory Non-Management Staff 55 years 55 Years

(d) Assumptions regarding future mortality are based on A1967/70 Mortality Table , issued by the Institute of Actuaries, London. The demographic assumptions underlying the valuation are with respect to retirement age, early withdrawal from service and retirement on medical grounds.

The expense is recognised in the following line items in the Income statement:



2018Rs.


2016Rs.

Cost of Sales 61,695,402 12,420,280

Selling and Administration Expenses 99,794,294 101,998,182

161,489,696 114,418,462

27.1 Sensitivity AnalysisReasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the employee benefit obligation by the amounts shown below:


As at 31st March 2018 As at 31st March 2018

IncreaseRs.

DecreaseRs.

IncreaseRs.

DecreaseRs.

Discount Rate (1% Movement) (41,726,541) 47,064,719 (29,953,080) 34,001,825

Future Salary (1% Movement) 45,544,078 (41,105,095) 35,469,464 (31,721,751)



28. Security Deposits



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 1,018,451,850 851,794,462 1,018,451,850 851,794,462

Contribution During the Period 108,243,347 96,111,732 108,243,347 96,111,732

Interest Charges 168,619,531 112,187,771 168,619,531 112,187,771

Shortages Recovered (58,152,701) (23,210,872) (58,152,701) (23,210,872)

ESD Releases (38,034,694) (18,431,243) (38,034,694) (18,431,243)

Balance at the End of the Period 1,199,127,333 1,018,451,850 1,199,127,333 1,018,451,850

29. Trade and Other Payables



Rs.


Rs.


Rs.


Rs.

Trade Payables 5,234,301,866 3,167,951,307 3,835,415,978 2,464,480,092

Value Added Tax Payable 78,224,110 235,344,011 14,216,669 222,156,524

MSPS Payable 94,291,306 65,528,097 94,031,975 65,528,097

ETF Payable 20,503,576 18,035,289 20,460,848 18,035,289

Advances Received from Customers 284,604,628 266,435,957 284,604,628 266,435,957

Accrued Expenses 1,552,127,433 1,692,148,998 1,186,089,878 1,380,603,274

Other Payables 880,560,561 969,136,876 541,868,243 353,698,942

Warranty Provisions* (Note 29.1) 141,647,324 125,513,307 99,374,992 94,074,992

8,286,260,804 6,540,093,842 6,076,063,211 4,865,013,167

* Warranty provisions have been recognised for expected warranty claims on products.

29.1 Warranty Provision



Rs.


Rs.


Rs.


Rs.



Provision Made During the Period 63,075,541 38,513,095 5,300,000 4,000,000

Utilised During the Period (46,941,524) (52,663,803) – (26,817,740)


30. Deferred Revenue



Rs.


Rs.


Rs.


Rs.


Amounts Recognised During the Period (220,658,167) (191,729,729) (220,658,167) 191,729,729

Amounts Transferred During the Period 27,958,866 312,259,073 27,958,866 312,259,073


30.1 Deferred Revenue includes deferred service fee on air conditioners, Sanasuma Extended Warranty Scheme and amount deferred on motor bike services income as at 31st March 2018.



31. Income Tax Payables/(Receivables)



Rs.


Rs.


Rs.


Rs.

Balance at the Beginning of the Period 245,280,570 350,294,932 (1,767,152) 133,791,489

Acquisition from Business Combination – 97,888,831 – –

Charge for the Period (Note 9) 614,776,454 907,000,775 224,296,133 426,554,644

(Over)/Under Provision in respect of Previous Year (Note 9) 20,055,084 (80,388,571) 359,716 (13,464,595)

Payments Made During the Period (926,747,469) (1,029,515,397) (380,519,171) (548,648,690)

Balance at the End of the Period (46,635,361) 245,280,570 (157,630,474) (1,767,152)

32. Dividend Payables



Rs.


Rs.


Rs.


Rs.

Unclaimed Dividends 593,694,524 24,459,161 539,610,179 20,523,857

593,694,524 24,459,161 539,610,179 20,523,857

33. Dividends

Company


Rs.


Rs.

Ordinary Shares

Final Dividend 2016 – Rs. 8.80 (2015 – Rs. 4.20) 1,101,844,568 525,880,362

Interim Dividend 2017/18 – Rs. 2.20 (2016 – Nil) 826,383,426 –

1,928,227,994 525,880,362

34. Amounts Due to Related Parties



Rs.


Rs.


Rs.


Rs.

Singer Industries (Ceylon) PLC Subsidiary Company – – 105,987,239 104,244,714

Regnis (Lanka) PLC Subsidiary Company – – 363,661,515 305,042,784

Regnis Appliances (Pvt) Limited Subsidiary Company – – 185,500,241 127,621,705

Singer Finance (Lanka) PLC Subsidiary Company – – – 107,574,325

Singer Digital Media (Pvt) Limited Subsidiary Company – – 1,969,146,333 232,435,354

Hayleys PLC Parent Company 9,094,663 – 7,978,500 –

Hayleys Travels and Tours (Pvt) Limited Affiliate Company 7,087,599 – 7,087,599 –

16,182,262 – 2,639,361,427 876,918,882



35. Other Financial Liabilities



Rs.


Rs.


Rs.


Rs.

Deposits from Customers (Note 35.1) 5,229,639,918 3,041,946,900 – –

Derivative Financial Liabilities (Note 35.2) 8,337,510 – 8,337,510 –

5,237,977,428 3,041,946,900 8,337,510 –

Due within One Year 4,826,583,524 2,587,934,308 8,337,510 –

Due after One Year 411,393,904 454,012,592 – –

35.1 Deposits from CustomersBalance at the Beginning of the Period 3,041,946,900 3,367,832,113 – –

New Deposits 5,433,583,327 784,574,282 – –

Capitalisation of Interest 668,667,381 105,599,238 – –

9,144,197,608 4,258,005,633 – –

Repaid Deposits (3,788,119,165) (1,105,733,903) – –

Less: Investment in Fixed Deposits in Subsidiary (126,438,525) (110,324,830) – –

Balance at the End of the Period 5,229,639,918 3,041,946,900 – –

Payable within One Year 4,813,246,014 2,587,934,308 – –

Payable after One Year 411,393,904 454,012,592 – –

Deposit Classification – –

Fixed Deposits at Amortised Cost 5,161,466,477 2,996,269,879 – –

Saving Deposits 68,173,441 45,677,021 – –

5,229,639,918 3,041,946,900 – –

35.2 Derivative Financial LiabilitiesFair Value of Cross Currency interest SWAP 8,337,510 – 8,337,510 –

During the period company has entered into a borrowing contract with Standard Chartered Bank (Mauritius) Limited to borrow a USD 10 million at an interest rate of 3 Months LIBOR+3.5%. In order to mitigate the currency and interest rate risks, company has entered to a separate cross currency interest rate SWAP with Standard Chartered Bank (Sri Lanka) Limited. Accordingly the instalments are fixed to be settled Sri Lankan Rupees. Derivative financial liabilities include the fair value of cross currency SWAP as at 31st March 2018. The resultant fair value of the cross currency interest SWAP is accounted as a derivative liability in these Financial Statements.

36. Financial InstrumentsFinancial Risk Management

OverviewThe Group has exposure to the following risks from its use of financial instruments:

Credit riskLiquidity riskMarket riskOperational risk

The note presents information about Group’s exposure to each of above risks, the Group’s objectives, policies and processes measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these Consolidated Financial Statements.

Risk Management FrameworkThe Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risk faced by the Group, to set appropriate risks limits and controls and to monitor risks and adherence to limits.



Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Board of Directors oversees how management monitor compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Company’s Directors are assisted in their oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of the risk management controls and producers, the result of which are reported to the Company’s Directors.

Credit RiskCredit risk is the risk of financial loss to the Group if a customer of counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s trade and other receivables.

Treasury BillsSinger Finance (Lanka) PLC invests not less than 7.5% of the public deposits in Treasury Bills to comply with the Central Bank of Sri Lanka Direction No. 1 of 2009.

Trade and Other ReceivablesThe Group’s exposure to credit risk relates to sale of products on instalment credit/hire purchase which is an integral part of the business of the Group.

The Group’s exposure to credit risk on instalment credit/hire purchase contracts is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risks of the country in which customers reside, has a lesser influence on credit risk.

Geographically, there is no concentration of credit risk. Goods are sold, subject to collateral undertakings so that in the event of non-payment, the Group can have a secured claim. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposure and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified.

Liquidity RiskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

Market RiskMarket risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income. The objective of market risk management is to manage and control market risk exposure within the acceptable parameters, while optimising the return.

Currency RiskThe Group is exposed to currency risk on purchases that are denominated in a currency other than the respective financialcurrencies of Group entities. The currency in which these transactions primarily are denominated in US Dollars. The currencyrisk is limited by the short-term nature of the period between the dates of the purchase and settlements of the related liability.

Interest Rate RiskThe Group manages interest rate risk on borrowings by using a combination of fixed and floating interest rate.

Operational RiskOperational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all Group’s operations.

The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity

The primary responsibility for the development and implementation of controls to address operational risks is assigned to Senior Management within each business unit. This responsibility is supported by the development of overall Group standards for the managements of operational risk in the following areas:

z Requirements for the appropriate segregation of duties, including the independent authorisation of transactions. z Requirements for the reconciliation and monitoring of transactions.



z Compliance with regulatory and other legal requirements. z Documentation of controls and procedures. z Requirements for the periodic assessment of operational risks faced and the adequacy of controls and procedures to address the risks identified.

z Requirements for the reporting of operational losses and proposed remedial action. z Development of contingency plans. z Training and professional development. z Ethical and business standards. z Risk mitigation, including insurance where this is effective.

Compliance with Group standards is supported by a programme of periodic reviews undertaken by internal audit. The results of internal audit reviews are discussed with the management of the business unit to which they relate, Senior Management of the Group and the Board of Directors.

Credit Risk

Exposure to Credit RiskThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the Reporting date was:

Carrying Amount – Consolidated Carrying Amount – Company


Rs.


Rs.


Rs.


Rs.

Trade and other Receivables 29,856,766,720 24,803,463,890 13,492,517,617 11,812,270,538

Cash at Bank 514,254,469 722,443,014 366,536,513 343,305,161

Amounts due from Related Parties 788,000 – 185,396,027 74,782,845

Loans due from Related Parties – – 1,219,150,767 1,378,074,696

Other Financial Assets 688,443,940 532,316,881 3,854,332,314 3,384,289,989

Deposits at Bank 81,504,012 81,157,679 – –

31,141,757,141 26,139,381,464 19,117,933,238 16,992,723,229

The Maximum exposure to credit risk for receivables at the reporting date by type of counterparty was:

Carrying Amount – Consolidated Carrying Amount – Company


Rs.


Rs.


Rs.


Rs.

Retail Customers 21,818,380,977 17,957,657,735 7,451,947,830 6,605,815,755

Wholesale Customers 5,361,912,649 4,609,566,029 3,979,170,189 3,374,958,672

Others 2,676,473,094 2,236,240,126 2,061,399,598 1,831,496,111

Total 29,856,766,720 24,803,463,890 13,492,517,617 11,812,270,538

Impairment AnalysisThe aging of receivables at the Reporting date:

Group As at 31st March 2018 As at 31st December 2016

GrossRs.

ImpairmentRs.

Net ReceivableRs.

GrossRs.

ImpairmentRs.

Net ReceivableRs.

Not Past due 14,773,779,115 – 14,773,779,115 18,736,701,552 (2,972,732) 18,733,728,820

Past due 0-30 Days 4,609,373,702 (11,994,276) 4,597,379,426 2,276,089,039 (31,377,425) 2,244,711,614

Past due 31-120 Days 9,831,177,826 (112,743,713) 9,718,434,113 2,136,354,541 (45,655,623) 2,090,698,918

Past due more than 120 Days 1,962,070,908 (1,194,896,842) 767,174,066 2,501,943,663 (767,619,125) 1,734,324,538

31,176,401,551 (1,319,634,831) 29,856,766,720 25,651,088,795 (847,624,905) 24,803,463,890



Company As at 31st March 2018 As at 31st December 2016

GrossRs.

ImpairmentRs.

Net ReceivableRs.

GrossRs.

ImpairmentRs.

Net ReceivableRs.

Not Past due 4,333,099,111 – 4,333,099,111 11,716,578,958 – 11,716,578,958

Past due 0-30 Days 2,230,705,807 (11,903,850) 2,218,801,957 37,727,192 (28,748,050) 8,979,142

Past due 31-120 Days 3,426,993,657 (107,493,355) 3,319,500,302 82,748,817 (36,247,546) 46,501,271

Past due more than 120 Days 4,454,862,239 (833,745,992) 3,621,116,247 616,301,296 (576,090,129) 40,211,167

Total 14,445,660,814 (953,143,197) 13,492,517,617 12,453,356,263 (641,085,725) 11,812,270,538

The movement in the allowance for impairment in respect of receivables during the year was as follows:



Rs.


Rs.


Rs.


Rs.


Impairment Loss Recognised 652,643,612 282,592,051 422,183,787 226,782,152

Amounts Written-off (180,633,685) (219,845,114) (110,126,315) (156,435,195)

Balance at the End of the Period 1,319,634,832 847,624,905 953,143,197 641,085,725

Total impairment for the period resulted from following counterparties.

Group Company


Rs.


Rs.


Rs.


Rs.

Impairment for Hire Debtors 64,886,178 50,985,870 53,096,143 25,491,954

Impairment for Lease Rental Receivables 126,311,107 93,696,290 – –

Impairment for Loan Debtors 168,104,070 43,421,919 – –

Impairment for Trade Debtors 293,771,484 182,167,047 234,945,963 139,441,526

Impairment for Other Debtors 666,561,993 477,353,779 665,101,091 476,152,245

Total 1,319,634,832 847,624,905 953,143,197 641,085,725

A committee respective functional managers groups established a credit policy under which each new customer is analysed individually for credit worthiness before the Group’s standard payment and delivery terms and conditions offered for wholesale customers, sale limits are established for each customer and reviewed periodically. Any sales exceeding these limits require approvals from Directors based on amount enhanced.

The Group establishes an allowance for impairment that represent its estimate of incurred losses in respect of trade and other receivables.

All bank deposits and current accounts maintained at licensed commercial banks, which are subject to close supervision of Central Bank.

All related party receivables are from Subsidiary companies which are controlled by the same Board of Directors of Singer (Sri Lanka) PLC.



Liquidity RiskThe following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Group

31st March 2018 Carrying Amount

Rs.

Contractual Cash Flows

Rs.

6 Months or Less

Rs.

6-12 Months

Rs.

1-2 Years

Rs.

2-5Years

Rs.

More than 5 Years

Rs.

Non-Derivative Financial Liabilities

Secured bank loans 1,312,300,000 1,317,724,996 955,424,996 75,000,000 75,000,000 212,300,000 –

Unsecured bank loans 15,106,564,972 16,386,261,741 6,270,965,319 7,210,711,091 1,243,531,470 1,661,053,861 –

Unsecured Debenture issues 4,504,578,000 4,772,302,590 2,673,505,135 2,098,797,455 – – –

Secured Debenture issues 2,500,000,000 2,567,378,286 67,378,286 – 409,300,000 2,090,700,000 –

Bank overdraft 2,132,691,242 2,132,691,242 2,132,691,242 – – – –

Trade and Other Payables 8,286,260,806 8,286,260,806 8,286,260,806 – – – –

Public Deposits 5,229,639,918 5,356,078,443 3,573,003,590 1,379,223,153 279,720,244 111,990,210 12,141,247

Total 39,072,034,938 40,818,698,104 23,959,229,374 10,763,731,699 2,007,551,714 4,076,044,071 12,141,247

Derivative Financial Liabilities

Interest Rate SWAP 8,337,510 8,337,510 – 8,337,510 – – –

Total 8,337,510 8,337,510 – 8,337,510 – – –

31st December 2016 Carrying Amount

Rs.


Rs.

6 Months or Less

Rs.

6-12 Months

Rs.

1-2 Years

Rs.

2-5Years

Rs.

More than 5 Years

Rs.


Secured Bank Loans 1,539,800,000 1,544,431,565 1,069,631,565 75,000,000 281,600,000 118,200,000 –

Unsecured bank loans 8,742,290,535 10,509,333,341 7,197,905,517 1,531,044,391 1,780,383,433 – –

Commercial Papers 390,000,000 390,000,000 390,000,000 – – – –

Unsecured Debenture issues 8,921,244,000 8,819,599,760 767,566,201 2,168,054,203 3,766,177,625 2,117,801,731 –


Public Deposits 3,041,946,900 3,155,819,254 1,483,310,873 1,200,211,824 424,810,994 36,017,461 11,468,102

Bank overdraft 1,202,576,667 1,202,576,667 1,202,576,667 – – – –

Total 30,377,951,944 32,161,854,429 18,651,084,665 4,974,310,418 6,252,972,052 2,272,019,192 11,468,102



Company

31st March 2018 Carrying Amount

Rs.


Rs.

6 Months or Less

Rs.

6-12 Months

Rs.

1-2 Years

Rs.

2-5Years

Rs.

More than 5 Years

Rs.


Unsecured bank loans 11,707,742,249 12,829,049,278 5,723,593,430 4,200,870,517 1,243,531,470 1,661,053,861 –

Unsecured Debenture issues 5,000,000,000 5,255,895,879 3,157,098,424 2,098,797,455 – – –


Bank overdraft 1,237,088,725 1,237,088,725 1,237,088,725 – – – –

Total 24,020,894,186 25,398,097,094 16,193,843,790 6,299,667,972 1,243,531,470 1,661,053,861

Derivative Financial Liabilities

Interest Rate SWAP 8,337,510 8,337,510 – 8,337,510 – – –

Total 8,337,510 8,337,510 – 8,337,510 – – –

31st December 2016 Carrying Amount

Rs.


Rs.

6 Months or Less

Rs.

6-12 Months

Rs.

1-2 Years

Rs.

2-5Years

Rs.

More than 5 Years

Rs.


Unsecured Bank Loans 8,034,948,198 8,327,306,331 6,490,563,180 823,702,055 1,013,041,096 – –

Unsecured Debenture issues 6,500,000,000 7,584,197,475 365,808,202 1,751,076,584 3,349,510,958 2,117,801,731 –


Bank Overdraft 702,096,131 702,096,131 702,096,131 – – – –

Total 20,102,057,497 21,478,613,105 12,423,480,681 2,574,778,639 4,362,552,054 2,117,801,731 –

The outflows disclosed in the above table represent the contractual undiscounted cash flows relating to non-derivative financial liabilities held for risk management purposes and which are not closed out before contractual maturity.

Market Risk

Currency RiskThe summary quantitative data about the Group’s exposure to currency risk as reported to the management of the Group is as follows.


USD CNY EURO USD CNY EURO

Trade Payables 17,178,724 1,535,074 17,914 9,231,563 12,847,778 24,174

Net Exposure 17,178,724 1,535,074 17,914 9,231,563 12,847,778 24,174

* USD – United States Dollars* CNY – Chinese Yuan* Euro – EU Euro

The following significant exchange rates have been applied:

Average Rate Period End Sopt Rate

2018 2016 As at 31st March 2018


USD 152.92 149.01 155.97 151.66

CNY 23.26 22.44 21.92 21.57

Euro 163.80 164.96 192.22 160.92



Sensitivity AnalysisA reasonably possible strengthening (weakening) of the USD, CNY or EURO against all other currencies at reporting date would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Profit or Loss Equity net of Tax

StrengtheningRs. ’000

WeakeningRs. ’000

StrengtheningRs. ’000

WeakeningRs. ’000

2018

USD (5% Movement) (133,968) 133,968 (96,457) 96,457

CYN (5% Movement) (1,683) 1,683 (1,212) 1,212

EURO (5% Movement) (172) 172 (124) 124

2016USD (5% Movement) (70,003) 70,003 (50,402) 50,402

CYN (5% Movement) (13,856) 13,856 (9,977) 9,977

EURO (5% Movement) (195) 195 (140) 140

Interest Rate Risk

ProfileAt the Reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was:

Group Company


Rs.

As at 31st December2016

Rs.


Rs.


Rs.

Fixed Rate Instruments

Financial Assets 21,818,381,007 17,957,657,735 8,364,037,830 7,517,905,755

Financial Liabilities (21,813,982,972) (17,983,874,536) (15,098,282,249) (12,925,488,198)

4,398,035 (26,216,799) (6,734,244,419) (5,407,582,443)

Variable Rate Instruments

Financial Assets – – – –

Financial Liabilities (1,609,460,000) (1,609,460,000) (1,609,460,000) (1,609,460,000)

(1,609,460,000) (1,609,460,000) (1,609,460,000) (1,609,460,000)

Cash Flow Sensitivity for Variable Rate InstrumentsA reasonably possible change of 100 basis points in interest rate at the reporting date would have increased (Decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant:

Profit or Loss Equity Net of Tax

1% Increase Rs. ’000

1% DecreaseRs. ’000

1% Increase Rs. ’000

1% Decrease Rs. ’000

31st March 2018

Variable Rate Instruments (16,094) 16,094 (11,587) 11,587

Cash Flow Sensitivity (Net) (16,094) 16,094 (11,587) 11,587

31st December 2016

Variable Rate Instruments (16,094) 16,094 (11,587) 11,587

Cash Flow Sensitivity (Net) (16,094) 16,094 (11,587) 11,587



Fair ValuesFair Values Versus Carrying Amounts

The fair values of financial assets and liabilities, together with the carrying amounts in the Balance Sheet, are as follows:

Group

31st March 2018 Note Available-for-Sale

Rs.

Loans andReceivables

Rs.

Financial Liabilities at

FVTPLRs.

Other Financial

LiabilitiesRs.

Total Carrying Value

Rs.

Fair Value

Rs.

Fair Value Measurement

LevelRs.

Investment in Equity Securities 15.1 17,061,300 – – – 17,061,300 17,061,300 Level 2

Hire Debtors 18 – 7,534,792,738 – – 7,534,792,738 –

Lease Debtors 18 – 11,383,225,323 – – 11,383,225,323 –

Loan Debtors 18 – 2,900,362,916 – – 2,900,362,916 –

Trade Debtors 18 – 5,361,912,649 – – 5,361,912,649 –

Other Debtors 18 – 2,676,473,097 – – 2,676,473,097 –

Amounts due from Related Parties 19 – 788,000 – – 788,000 –

Cash and Cash Equivalents 20.1 – 1,339,006,740 – – 1,339,006,740 –

Investment in Treasury Bills 15.2 – 671,382,640 – – 671,382,640 671,382,640 Level 2

Deposits with Banks – 81,504,012 – – 81,504,012 –

Total 17,061,300 31,949,448,115 – – 31,966,509,415 –

Derivatives 8,337,510 8,337,510 8,337,510 Level 2

Debentures 25.2 – – – 7,004,578,000 7,004,578,000 –

Bank Loans 25.3 – – – 16,418,864,972 16,418,864,972 –

Bank Overdraft 20.2 – – – 2,132,691,242 2,132,691,242 –

Trade and Other Payables 29 – – – 8,286,260,804 8,286,260,804 –

Dividend Payable 32 – – – 593,694,524 593,694,524 –

Amounts due to Related Parties 34 – – – 16,182,262 16,182,262

Deposits from Customers 35 – – – 5,229,639,918 5,229,639,918

Total – – 8,337,510 39,681,911,722 39,690,249,232 –



Group

31st December 2016

Note Available-for-Sale

Rs.


Rs.

Other Financial Liabilities

Rs.

TotalCarrying Value

Rs.

FairValue

Rs.


Level

Investment in Equity Securities 15.1 17,061,300 – 17,061,300 17,061,300 Level 2

Hire Debtors 18 – 7,046,215,163 – 7,046,215,164 –

Lease Debtors 18 – 9,080,786,245 – 9,080,786,245 –

Loan Debtors 18 – 1,830,656,327 – 1,830,656,327 –

Trade Debtors 18 – 4,609,566,029 – 4,609,566,029 –

Other Debtors 18 – 2,236,240,126 – 2,236,240,126 –

Cash and Cash Equivalents 20.1 – 1,541,474,815 – 1,541,474,815 –

Investment in Treasury Bills 15.2 – 515,255,581 – 515,255,581 515,255,581 Level 2

Deposits with Banks 81,157,679 – 81,157,679 –

Total 17,061,300 26,941,351,965 – 26,958,413,265 –

Debentures 25.2 – – 8,921,244,000 8,921,244,000 –

Bank Loans 25.3 – – 10,282,090,535 10,282,090,535 –

Bank Overdraft 20.2 – – 1,202,576,667 1,202,576,667 –

Commercial Papers 25.4 – – 390,000,000 390,000,000 –

Trade and Other Payables 29 – – 6,540,093,842 6,540,093,842 –

Dividend Payable 32 – – 24,459,161 24,459,161 –

Deposits from Customers 35 – – 3,041,946,900 3,041,946,900 –

Total – – 30,402,411,105 30,402,411,105 –



Company

31st March 2018


Rs.

Held-to- Maturity

Rs.


Rs.

Financial Liabilities at

FVTPLRs.

Other Financial

LiabilitiesRs.


Rs.

Fair Value

Rs.


LevelRs.

Investment in Equity Securities 15.1 17,020,000 – – – – 17,020,000 17,020,000 Level 2

Investment in Debentures 15.1 – 912,090,000 – – – 912,090,000 –

Loans due from Related Parties 17 – – 1,219,150,767 – – 1,219,150,767 –

Hire Debtors 18 – – 7,451,947,830 – – 7,451,947,830 –

Trade Debtors 18 – – 3,979,170,189 – – 3,979,170,189 –

Other Debtors 18 – – 2,061,399,598 – – 2,061,399,598 –

Amounts due from Related Parties 19 – – 185,396,027 – – 185,396,027

Cash and Cash Equivalents 20.1 – – 1,017,627,946 – – 1,017,627,946

Total 17,020,000 912,090,000 15,914,692,357 – – 16,843,802,357 –

Derivatives 8,337,510 – 8,337,510 8,337,510 Level 2

Debentures 25 – – – – 5,000,000,000 5,000,000,000 –

Bank Loans 25 – – – – 11,707,742,249 11,707,742,249 –

Bank Overdraft 20.2 – – – – 1,237,088,725 1,237,088,725

Trade and Other Payables 29 – – – – 6,076,063,211 6,076,063,211 –

Dividend Payable 32 – – – – 539,610,179 539,610,179 –

Amounts due to Related Parties 34 – – – – 2,639,361,427 2,639,361,427 –

Total – – – 8,337,510 27,199,865,791 27,208,203,301 –



Company

31st December 2016


Rs.

Held-to-Maturity

Rs.


Rs.

Other Financial Liabilities

Rs.


Rs.

FairValue

Rs.


LevelRs.

Investment in Equity Securities 15.1 17,020,000 – – – 17,020,000 17,020,000 Level 2Investment in Debentures 15.1 – 912,090,000 – – 912,090,000 –Loans due from Related Parties 17 – – 1,378,074,696 – 1,378,074,696 –

Hire Debtors 18 – – 6,605,815,755 – 6,605,815,755 –

Trade Debtors 18 – – 3,374,958,672 – 3,374,958,672 –

Other Debtors 18 – – 1,831,496,111 – 1,831,496,111 –Amounts due from Related Parties 19 – – 74,782,845 – 74,782,845 –Cash and Cash Equivalents 20.1 – – 1,039,586,108 – 1,039,586,108 –Total 17,020,000 912,090,000 14,304,714,187 – 15,233,824,187 –

Debentures 25 – – – 6,500,000,000 6,500,000,000 –Bank Loans 25 – – – 8,034,948,198 8,034,948,198 –Bank Overdraft 20.2 – – – 702,096,131 702,096,131 –Trade and Other Payables 29 – – – 4,865,013,168 4,865,013,168 –Dividend Payable 32 – – – 20,523,857 20,523,857 –Amounts due to Related Parties 34 – – – 876,918,882 876,918,882 –Total – – – 20,999,500,235 20,999,500,235 –

Where ever the assets and liabilities are not fair valued, it was assume that the caring value of such assets and liabilities are a reasonable approximation to this fair value as majority of such assets and liabilities are with shorter maturity periods.

(I) Fair Value Versus Carrying Amounts The following table show the valuation techniques used in measuring Level 2 fair values, as well as significant unobservable inputs used:

Type Valuation Technique Significant Unobservable Inputs

Treasury Bills Discount Cash Flows Forecasted Annual Cash Inflows and OutflowsDerivative The fair value is calculated as the

present value of the estimated future cash flows. Estimates of future floating-rate cash flows are based on forward interest ratio and forward currency rates. Estimated cash flows are discounted using a yield curve constructed from similar sources.

Not Applicable



Capital ManagementThe Board’s policy is to maintain a strong capital base to maintain confidence of the investors, creditors and the market while sustaining future development of the business capital consists to total equity. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Board of Directors seeks to maintain a balance between higher returns facilitated through a higher level of borrowings and the benefits and security afforded by a sound capital position.

The Capital Structure of the Group consists of debt and equity of the Group. The capital structure of the Group is reviewed by the Board of Directors.

The Group monitors capital using the ratio of net debt to equity. For this purpose adjusted net debt is defined as total liabilities comprising interest bearing loans and borrowings and obligation under finance leases, less cash and cash equivalents.

Group Company


Rs.


Rs.


Rs.


Rs.

Total Borrowings 30,794,111,642 23,837,858,103 17,953,168,484 15,237,044,329

Less: Cash and Cash Equivalents (1,339,006,740) (1,541,474,815) (1,017,627,946) (1,039,586,108)

Adjusted Net Borrowings 29,455,104,902 22,296,383,287 16,935,540,538 14,197,458,221

Total Equity 8,184,568,509 9,554,904,613 4,799,691,875 5,933,803,055

Net Debt to Equity Ratio 3.60 2.33 3.53 2.39

The Regulatory Capital requirements for the Finance Companies are set by the Central Bank of Sri Lanka. The details of the computation of risk weighted assets, capital and the ratios of the Singer Finance PLC are given below:

Capital Adequacy of Singer Finance (Lanka) PLCCapital adequacy is a measure of financial institutions financial strength and stability. This widely accepted concept tries to specify the limit up to which a business can expand in terms of its risk-weighted assets. Finance companies in pursuit of business expansion, could engage themselves in activities that regularly change their risk profile. In light of this, regulatory capital requirements have been established to avid undue expansion beyond specified limits, keeping a hold on companies’ exposure to risk. Capital serves as a comfort to absorb unexpected losses,providing a degree of security to depositors and other key stakeholders.

This Measure has been introduced by the Central Bank of Sri Lanka to protect the interest of the various stakeholders of the Company while ensuring the maintenance of confidence and stability of the financial system.

The Capital Adequacy Ratio is calculated as a percentage on Company’s capital to its risk-weighted assets as specified by the Direction No. 02 of 2006, Finance Companies (Risk-Weighted Capital Adequacy Ratio) and there are two measures to defined the capital adequacy of the Company namely core capital to risk-weighted asset ratio and total capital to risk-weighted assets ratio.

The minimum requirement for core capital adequacy ratio and total capital adequacy ratio are 5% and 10% respectively.

The core capital represents the permanent shareholders’ equity and reserves created or increase by appropriations of retained earnings or other surpluses and the total capital include, in addition to the core capital, the revaluation reserves, general provisions and other hybrid capital instruments and unsecured subordinated debts.

The risk-weighted assets have been calculated by multiplying the value of each category of asset using the risk-weight specified by the Central Bank of Sri Lanka.



Details of the computation and the resulting rations are given below:

Balance Risk-Weighted Balance


Rs.


Rs.

Risk-Weighted Factor%

2018Rs.

2016Rs.

Total Risk-Weighted Assets Computation

Assets

Cash and Bank Balance 295,702,611 249,168,020 0% – –

Investment in Government Securities 671,382,640 515,255,581 0% – –

Bank Deposits 81,504,012 81,157,679 20% 16,300,802 16,231,536

Loans against Fixed Deposits 42,000,185 26,615,725 0% – –

Loans against Real Estate 86,415,980 1,684,439 50% 43,207,990 842,219

Staff Loans Secured by Provident Fund Balances 74,962,608 62,846,363 0%

Other Loans and Advances 3,820,833,257 1,804,164,691 100% 3,820,833,257 1,804,164,691

Finance Lease Receivable 11,407,007,116 9,046,314,853 100% 11,407,007,116 9,046,314,853

Hire Purchase Receivable 84,771,252 425,827,630 100% 84,771,252 425,827,630

Other Assets 323,859,164 199,843,181 100% 323,859,164 199,843,181

Fixed Assets 170,007,501 153,486,612 100% 170,007,501 153,486,612

Total Risk-Weighted Assets 17,058,446,325 12,566,364,773 15,865,987,082 11,646,710,722

Total Capital Base Computation

Stated Capital 1,996,444,457 1,445,333,342

Reserved Fund 113,852,174 95,360,709

Published Retained Earnings 986,177,598 808,935,366

Total Core Capital 3,096,474,229 2,349,629,417

Supplementary Capital –

Total Supplementary Capital –

Capital Base 3,096,474,229 2,349,629,417


%


%

Core Capital Ratio Core Capital 19.52 20.17

Risk - Weighted AssetsTotal Capital Ratio Capital Base 19.52 20.17

Risk - Weighted Assets

37. Commitments and Contingencies – Group/Company37.1 Financial ContingenciesDocumentary Credits effected for foreign purchases amounting to Group and Company respectively Rs. 4,511,447,444/- (2016 - Rs.2,788,966,216/-) and Rs. 2,504,862,843/- (2016 - Rs.2,105,684,020/-).

37.2 CommitmentsThere were no significant capital commitments which have been approved or contracted for by the Company/Subsidiary as at Reporting date except for following:

Operating lease commitment as at 31st March 2018 is as follows:

Within One Year – Rs. 220 millionBetween One to Five Years – Rs. 761.2 millionOver Five Years – Rs. 749 million



As at 31st March 2018, unutilised credit card credit limit is Rs.722,821,725/- of Singer Finance (Lanka) PLC.

As at 31st March 2018, unutilised Revolving loan facility amount is Rs.71,561,460/- of Singer Finance (Lanka) PLC.

37.3 Assets Pledged

37.3.1 Singer (Sri Lanka) PLC has given a negative pledge over the bank loans obtained from Commercial Bank of Ceylon PLC and Standard Chartered Bank Sri Lanka Limited which has carrying values of Rs. 2,500,000,000/- and Rs. 1,155,000,001/- respectively as at 31st March 2018.

37.3.2 Singer Finance (Lanka) PLC has given a negative pledge over the Loans, Overdrafts and Debentures having a carrying value of Rs. 7,494,740,000/- against Loans, Overdrafts obtained to the value of Rs. 2,546,800,000/-, Rs. 800,000,000/- and Rs. 2,500,000,000/- respectively, as at the end of the period.

37.4 Contingencies(a) Commissioner General of Inland Revenue has issued assessment notices on Singer (Sri Lanka) PLC pertaining to an additional

VAT Liability/Payment on account of Deemed VAT for seven quarters for the period 1st January 2014 to 30th September 2015. The assessment was for a Deemed VAT payment of Rs. 1,076 million and Penalty of Rs. 423 million totalling to Rs. 1,499 million. During the year company received a determination notice pertaining to assessment of 1st Quarter of 2014 for a value of Rs. 100.8 million and a penalty of Rs. 50.4 million totalling to Rs. 151.2 million. The Company after carefully reviewing the advice of tax consultants, is of the opinion that there is no basis for the Company to be made liable for Deemed VAT, hence, no provision has been made in the Financial Statements. The Company previously sought a clarification from the Inland Revenue Department on the interpretation of the Act and did not receive the required clarification. The Company has appealed against the VAT assessment, requesting to cancel the notice of assessment. Deemed VAT is removed with effect from 1st January 2016 under VAT Amendment Act No. 20 of 2016.

(b) Singer (Sri Lanka) PLC has provided bank guarantees amounting to Rs. 262.2 million to Director General of Customs to clear imports during the years 2008 to March 2018. The bank guarantee related to alleged additional duty payable on imports, claimed by the customs and is being contested by the company in courts.

The Court of Appeal ordered that the Director General of Customs continue with the investigations. The Company being aggrieved by the decision has filed an appeal, which is pending before the Supreme Court.

The company lawyers are of the opinion that there is no basis that the Company is liable for the additional duty and hence, no provision is made in the Financial Statements.

(c) The Commissioner General of Inland Revenue has issued assessment notices for the year of assessment 2013/14 and 2014/15 on Singer Finance (Lanka) PLC pertaining to an additional tax liability on account of disallowing impairment charge on Leasing business.

The assessment for 2013/14 is for a value of Rs. 31.8 million and a penalty of Rs. 15.9 million totalling to Rs. 47.7 million. The assessment for 2014/15 is for a value of Rs. 56.4 million and a penalty of Rs. 28.2 million totalling to Rs. 84.6 million. Singer Finance (Lanka) PLC after carefully reviewing the advice of tax consultant’s, is of the opinion that there is no basis for the

Company to be made liable, hence, no provision has been made in the financial statements. The Company has appealed against the assessment, requesting the entire tax and penalty be held over pending settlement of the appeal under section 173 (6) of the Inland Revenue Act No. 10 of 2006.

(d) Under the Finance Companies (single borrowers limit) Direction No. 4 of 2006/1, the value of unsecured accommodations granted to and outstanding at any point of time from all borrowers should not exceed 5% of the capital funds as shown in the last audited Balance Sheet. However the value of unsecured accommodation granted has been exceeded due to credit card product by Rs. 386.8 million as of 31st March 2018. Singer Finance (Lanka) PLC is in the process of seeking methods to be compliant with the said regulation.

(e) Guarantees given to Banks and Other Lending Institutions by Singer (Sri Lanka) PLC on behalf of Regnis (Lanka) PLC, amounting Rs. 455.5 million, Singer Finance (Lanka) PLC provided letters of guarantees to banks totalling to Rs. 550,000/- against Fixed Deposits of Rs. 744,378/-. In addition to that, Regnis (Lanka) PLC provided guarantees to Banks and other Lending Institutions on behalf of Regnis Appliances (Pvt) Limited amounting Rs. 345 million.

38. Events Occurring after the Reporting PeriodThere have been no material events occurring after the reporting date, which require adjustments to or disclosure in the Financial Statements.

39. Related Party Transactions

39.1 Parent and Ultimate Controlling PartyThe Company’s Parent undertaking and Controlling Party is Hayleys PLC.



39.2 (a) Transaction with Parent Company Hayleys PLC

Hayleys PLC together with its subsidiaries, Volanka (Pvt) Ltd., and Carbotels (Pvt) Ltd., acquired a total of 231,864,362 ordinary shares in Singer (Sri Lanka) PLC, on 15th September 2017 constituting approximately 61.73% of the total shares in issue at a price of Rs. 47/- per share, making Hayleys PLC the ultimate controlling party of Singer (Sri Lanka) PLC with effect from 15th September 2017.

Consequent to the purchase of 210,587,766 shares, a mandatory offer was made by Hayleys PLC on 31st October 2017 as Hayleys PLC triggered the Company takeovers and mergers code 1995, published under the rules made by the Securities and Exchange Commission of Sri Lanka under Section 53 of the Securities and Exchange Commission of Sri Lanka, Act No. 36 of 1987 as amended, and in terms of Rule 31 (1) (a) of the code. Accordingly subsequent to the mandatory offer, Hayleys PLC, with parties acting in concern holds 304,108,410 shares consisting approximately 80.96% of the total shares in issue.

Name of the Company Nature of Transaction For fifteen months ended 31st March

2018


2016

Rs. million Rs. million

Hayleys PLC Expenses Reimbursed 7.9 – Balance Payable 7.9 –

39.2 (b) Transactions with Subsidiary Companies


2018


2016


Singer Finance (Lanka) PLC Sales financed through Singer Finance (Lanka) PLC 937.1 583.9 Cash remittance from Singer ( Sri Lanka ) PLC 4,059.8 2,176.3 Interest Income 61.9 1.1 Dividend Received – Gross 300.2 199.4 Cash Collection through Singer (Sri Lanka) PLC 5,303.4 3,116.6 Debenture Interest Expense 98.7 108.1Expenses paid 475.6 314.8 Royalty Expenses Charged during the period 36.6 23.9 Collecting Commission paid through Singer (Sri Lanka) PLC

43.5 26.2

Rent Reimbursed 21.4 15.9 Royalty paid through Singer (Sri Lanka) PLC 29.8 21.4 Loans settled during the period 600.0 500.0 Non-trade settlement – 200.0 Loans Obtained during the period 1,400.0 400.0 Service Charge Income 22.1 13.7 Purchase of Assets – 3.5 Loan Receivables 1,000.0 200.0Other Receivables/(Payables) 172.9 (107.5)

Regnis (Lanka) PLC Purchases 4,859.8 3,682.1 Sales Taxes 855.6 560.1 Corporate Guarantees given 455.5 455.5 Interest Expense 18.9 2.3 Interest Income – 0.5 Non Trade Settlement 10.0 73.0 Trade Credit Settled 5,550.1 4,150.6 Expenses Reimbursed 96.6 72.4




2018


2016


Purchases of Assets 1.2 1.0 Loans Obtained during the period 150.0 –Transfer of Staff Loan 0.1 0.9 Balance Payable 363.6 305.0 Loan Receivables 150 –

Singer Industries (Ceylon) PLC Purchases 892.3 838.5 Lease rental paid 14.9 8.7 Interest Expense – 0.3 Trade Creditor Settled 889.3 833.0 Expenses Reimbursed 16.3 6.8 Balance Payable 105.8 104.3

Singer Digital Media (Pvt) Limited Purchases 3,476.2 2,294.2 Expenses Reimbursed 385.0 324.0 Interest Expense 37.0 137.0 Royalty paid through Singer (Sri Lanka) PLC 60.7 – Loans Obtained during the period 7,625.5 3,802.4 Loans Settled during the period 4,458.0 3,439.2 Corporate Guarantee Given – 50.0 Balance Receivable - Loans – 1,119.9Balance Payable - Trade 1,969.1 158.6

Regnis Appliances (Pvt) Limited Purchases 1,666.4 1,199.9Trade Settlements 1,598.3 1,262.9 Expenses paid 33.6 19.3 Interest Expense 1.1 5.7 Non-Trade Settlement 22.7 15.9 Balance Payable 185.5 127.7

Reality (Lanka) Limited Rent Expenses 9.6 7.7 Loan Receivable 69.2 58.1

Singer Business School (Pvt) Limited Services Provided 0.3 5.4 Expenses Reimbursed 3.1 1.5 Balance Receivable 11.6 0.9

39.2 (c) Transactions with Companies under Common Control of Hayleys PLC


2018


2016


Hayleys Travels & Tours (Pvt) Limited Expenses Reimbursed 7.1 – Balance Payable 7.1 –

39.2 (d) Transactions with Associate Companies Telshan Network (Pvt) Limited is an associate company of Singer (Sri Lanka) PLC, with whom Singer (Sri Lanka) PLC or its subsidiary companies had no transactions. Further, the investment of Rs. 20,000,000 has been fully impaired due to negative net assets position.


Singer (Sri Lanka) PLC Annual Report 2017/18242NOTES TO THE FINANCIAL STATEMENTS

39.3 Transactions with Key Management Personnel According to Sri Lanka Accounting Standard (LKAS) 24 – “Related Party Disclosure”, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Directors (Including Executive and Non-Executive Directors) of the Company and their immediate family members have been classified as Key Management Personnel of the Company.


2018Rs. million


2016Rs. million

(i) Transactions with Key Management Personnel or Close Family Members

Deposits kept by Key Management Personnel or their Close Family Members at Singer Finance (Lanka) PLC 57.0 31.5

Group Company


2018Rs. million


2016Rs. million


2018Rs. million


2016Rs. million

(ii) Compensation of Key Management Personnel

Short-Term Employee Benefits 197.6 152.9 136.7 103.6

Post-Employment Benefits Paid 12.4 4.9 12.4 4.9

40. Non Controlling InterestThe following table summarises the information relating to each of the Group’s subsidiaries that has material NCI.

31st March 2018 Singer Finance(Lanka) PLC

Rs.


Rs.

Regnis (Lanka) PLC

Rs.

Other individuallyimmaterial

subsidiariesRs.

Total

Rs.

NCI Percentage 18.7% 12.3% 41.7%

Non-Current Assets 8,061,266,409 1,094,910,644 1,027,137,949

Current Assets 8,070,338,941 389,584,253 1,322,480,391

Non-Current Liabilities 3,312,984,331 51,386,123 270,535,916

Current Liabilities 9,483,509,089 408,316,088 1,040,681,233

Net Assets 3,335,111,930 1,024,792,686 1,038,401,191

Net Assets attributable to NCI 623,979,745 125,846,503 433,078,094 166,209,619 1,349,113,961

Revenue 3,646,695,138 863,950,676 4,871,270,012

Profit 522,789,849 8,706,871 224,641,402

OCI (6,506,346) (233,028,907) (83,836,121)

Total Comprehensive Income 516,283,503 (224,322,036) 140,805,281

Profit Allocated to NCI 97,810,893 1,069,220 93,689,483 (15,957,188) 176,612,408

OCI Allocated to NCI (1,217,299) (28,616,396) (34,964,894) (383,929) (65,182,518)

Cashflows from Operating Activities (2,209,531,117) (3,098,279) 231,421,154

Cashflows from Investment Activities (219,729,676) 4,321,657 (54,116,647)

Cashflows from Financing Activities 2,204,591,667 (72,866,841) (164,070,351)

Net Increase/(Decrease) in Cash and Cash Equivalents (224,669,126) (71,643,463) 13,234,156


31st December 2016 Singer Finance(Lanka) PLC

Rs.


Rs.

Regnis (Lanka) PLC

Rs.

Other individuallyimmaterial

subsidiariesRs.

Total

Rs.

NCI Percentage 19.6% 12.3% 41.7%

Non-Current Assets 6,480,082,977 1,165,353,945 1,066,401,381

Current Assets 6,169,919,295 374,180,109 1,224,209,068

Non-Current Liabilities 3,782,712,926 53,604,747 152,507,098

Current Liabilities 6,226,317,198 100,115,345 744,388,645

Net Assets 2,640,972,148 1,385,813,962 1,393,714,706

Net Assets attributable to NCI 517,630,541 170,177,955 581,318,404 131,961,161 1,401,088,060

Revenue 2,255,023,708 743,206,094 3,112,110,318

Profit 415,370,784 21,651,705 240,948,909

OCI 1,002,689 6,514,102 526,672

Total Comprehensive Income 416,373,473 28,165,807 241,475,581

Profit Allocated to NCI 81,412,674 3,150,339 100,490,730 50,507,922 235,561,665

OCI Allocated to NCI 196,527 799,932 219,655 713,719 1,929,832

Cashflows from Operating Activities (1,625,380,639) 25,676,098 (263,138,182)

Cashflows from Investment Activities 38,025,211 4,829,460 36,495,688

Cashflows from Financing Activities 1,464,892,761 – 194,988,418

Net Increase/(Decrease) in Cash and Cash Equivalents (122,462,667) 30,505,558 (31,654,076)

40.1 Further Acquisition of NCIAs a result of Right Issue carried out by Singer Finance (Lanka) PLC during the period, Singer (Sri Lanka) PLC acquired an additional 0.9% interest in Singer Finance (Lanka) PLC for Rs. 26,938,815/- in cash, increasing in ownership from 80.4% to 81.3%. The carrying amount of Singer Finance (Lanka) PLC’s Net Assets in the Group’s Consolidated Financial Statements on the date of the acquisition was Rs.3,406,556,180/-.

The Group recognised an increase in Retained Earnings of Rs. 3,336,750/- in changes in the company’s ownership interest pertinent to Singer Finance (Lanka) PLC by 0.9%.


About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent

Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index

Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual

General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share

Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI)

Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of

Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related

Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent

Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director

on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report

Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution

Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index










Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting

Form of Proxy

247Parent, Subsidiaries and Related Companies

246About this Report

259Distribution Network

248A Decade in perspective

260Service Network and Fashion Academy Network

255Global Reporting Initiatives (GRI) Standard Disclosures Index

Supplementaryinformation


About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent

Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index










Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index










Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting Form of Proxy About this Report Subsidiaries and Parent Related Companies A Decade in perspective Share Information Independent Assurance Report Certificate of the Director on Transfer Pricing Global Reporting Initiatives (GRI) Standard Disclosures Index Distribution Network Service Network and Fashion Academy Network Glossary of Financial Terms Notice of Annual General Meeting

Form of Proxy

249Share Information

261Glossary of Financial Terms

253Independent Assurance Report

262Notice of Annual General Meeting

254Certificate of the Director on Transfer Pricing

Supplementaryinformation


Report PeriodThe Annual Report 2017/18 of Singer (Sri Lanka) PLC covers the 15-months period from 1st January 2017 to 31st March 2018. The reporting period of Singer (Sri Lanka) PLC has been changed from 31st December to 31st March in order to align with the Parent Company’s reporting period with the approval of the Registrar of Companies. Therefore, the current financial period is 15 months ended 31st March 2018 and the next financial year end will be 12 months ending 31st March 2019.

Report Boundary and ContentUnless otherwise stated, the 2017/18 Annual Report is limited to the Company’s operations in Sri Lanka. Therefore, the operations of our Subsidiaries, Singer Finance (Lanka) PLC, Singer Digital Media (Pvt) Limited, Singer Business School (Pvt) Limited, Regnis (Lanka) PLC, Regnis Appliances (Pvt) Limited, Singer Industries (Ceylon) PLC, and Reality Lanka Limited, and Domus Lanka (Pvt) Limited are included in the Annual Report.

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

Data Measurement Techniques and Base of CalculationFinancial data presented in this Report have been extracted from Audited Financial Statements. The accounting policies adopted in preparation of the Financial Statements including the basis of preparation and significant assumptions are given on pages 182 to 192. The man hours in respect of training extended to employees is computed based on the scheduled time for each training session.

The scope, boundary and measurement methods used in the preparation of this Report are the same as those used in our previous Report in 2016. The information presented in this Report in respect of prior periods has not been restated.

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

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

ComplianceSinger Sri Lanka’s Annual Report for 2017/18 adopts the Global Reporting Initiative (GRI) Guidelines, version G4 and covers the economic, environmental and social performance for the financial year ended 31st March 2018.

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

ABOUT THIS REPORT

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

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

Finance Division,Singer (Sri Lanka) PLC,No. 80, Nawam Mawatha,Colombo 2

Singer (Sri Lanka) PLC Annual Report 2017/18 247 PARENT, SUBSIDIARIES AND RELATED COMPANIES

Company Name Principal Activity Directors

Hayleys PLC Parent Company

z Global market and manufacturing, agriculture, power and energy, domestic and industrial lighting, transportation and logistics, leisure and aviation, consumer, investments and services

Mr. A.M. Pandithage - Chairman and Chief ExecutiveMr. K.D.D. Perera - Co-ChairmanMr. S.C. GanegodaMr. H.S.R. KariyawasanDr. H. CabralMr. L.T. SamarawickramaDr. K.I.M. RanasomaMr. L.R.V. WaidyaratneMr. M.H. JamaldeenMr. M.Y.A. PereraMr. N.L.S. JosephMs. J. Dharmasena

Singer Finance (Lanka) PLCSubsidiary – Interest 81.3%

z Leasing z Hire Purchasing z Lending and Accepting Deposits

Mr. M.Y.A. Perera – ChairmanMr. J.A. SetukavalarMr. M.P.A. Salgado Mr. R.S. Wijeweera Mr. G.J. WalkerMr. J.M.J. PereraMs. D. G. Talpahewa Mr. L.S.S. PereraMr. K.K.L.P. Yatiwella – Alternate Director Mr. T.A. Amarasuriya – Alternate DirectorMr. C.A. Samarasinghe – Alternate Director

Singer Industries (Ceylon) PLCSubsidiary – Interest 87.7%

z Manufacturing and assembling Sewing Machines

Mr. A.M. Pandithage – ChairmanMr. H.A. PeirisMr. V.G.K. Vidyaratne Mr. M.H. Jamaldeen Mr. N.L.S. Joseph Mr. K.D.G. Gunarathne Mr. S.C. Ganegoda Mr. G.J. Walker Mr. K.D. KospelawatteMr. D.K. de Silva WijeyeratneMr. A.C.M. Irzan – Alternate Director

Regnis (Lanka) PLCSubsidiary – Interest 58.3%

z Manufacturing Refrigerators

Mr. A.M. Pandithage – ChairmanMr. H.A. PierisMr. V.G.K. VidyaratneMr. M.H. JamaldeenMr. K.D.G. GunaratneMr. N.L.S. JosephMr. D.K. de Silva WijeyeratneMr. G.J. WalkerMr. S.C. Ganegoda Mr. K.D. Kospelawatte

Reality Lanka Limited Subsidiary – Interest 88.2% (Indirect)

z Investment on Properties

Mr. A.M. Pandithage – ChairmanMr. H.A. Pieris Mr. G.J. Walker Mr. S.C. Ganegoda

Regnis Appliances (Pvt) LimitedSubsidiary – Interest 58.3% (indirect)

z Manufacturing Washing Machines

Mr. A.M. Pandithage – ChairmanMr. H.A. PierisMr. K.D. KospelawatteMr. S.C. Ganegoda Mr. N.M.P. Fernando


Subsidiary – Interest 100% z Marketing Mobile Phones, Computers and Cameras

Mr. A.M. Pandithage – ChairmanMr. H.A. PierisMr. S.C. GanegodaMr. M.H. WijewardeneMr. K.K.L.P. Yatiwella

Singer Business School (Pvt) Limited Subsidiary – Interest 100%

z Educational Services Mr. A.M. Pandithage – ChairmanMr. H.A. Pieris Mr. M.H. WijewardeneMr. K.K.L.P. Yatiwala Mr. S.C. Ganegoda

Domus Lanka (Pvt) LimitedSubsidiary – Interest 100%

z Designing, Manufacturing and Trading Furniture

Mr. A.M. Pandithage – ChairmanMr. H.A. Pieris

Singer (Sri Lanka) PLC Annual Report 2017/18248A DECADE IN PERSPECTIVE

Period Ended 31st March 2018

(15 Months)

Rs. ’000

31st December

2016(12 Months)

Rs. ’000

31st December

2015(12 Months)

Rs. ’000

31st December

2014(12 Months)

Rs. ’000

31st December

2013(12 Months)

Rs. ’000

31st December

2012(12 Months)

Rs. ’000

31st December

2011(12 Months)

Rs. ’000

31st December

2010(12 Months)

(Restated)Rs. ’000

31st December

2009(12 Months)

Rs. ’000

31st December

2008(12 Months)

Rs. ’000

GDP Growth – % 3.20 4.10 6.00 7.40 7.30 6.00 8.30 7.00 3.50 6.00 Market Capitalisation Growth – % (4.44) (8.48) 17.00 32.50 (13.00) (22.90) 36.10 102.00 123.00 (40.40)

Trading Results

Group Turnover – Net 65,122,304 46,924,144 38,710,834 29,699,602 25,485,561 25,441,494 22,031,653 16,028,534 11,913,503 13,734,093 Profit before Tax 2,049,052 3,126,233 1,895,275 1,155,608 728,440 1,777,160 1,990,012 1,167,862 247,729 255,074 Taxation 828,758 768,477 659,236 373,974 206,375 561,451 681,181 499,042 114,830 89,616 Profit for the Year 1,220,295 2,357,756 1,236,039 781,634 522,066 1,215,710 1,308,831 668,819 132,899 165,458 Total Comprehensive Income for the Year

691,655 2,623,507 1,206,343 891,279 519,059 1,320,383 1,308,831 – – –

Property, Plant & Equipment 5,649,424 5,426,841 2,715,401 2,667,909 2,505,355 2,151,208 1,691,107 1,564,240 1,285,728 1,445,078 Investment in Equity Accounted Investees

– – 54,831 55,189 53,226 52,663 46,886 23,525 24,541 25,433

Other Investments 17,061 17,061 17,061 17,061 17,061 17,061 17,061 17,061 18,490 18,490 Deferred Tax Assets – 124,061 259,733 185,024 119,022 150,284 143,450 110,226 143,053 96,481 Other Non-Current Assets 9,508,817 8,467,619 7,472,596 6,021,845 5,867,311 5,234,046 4,385,767 2,687,281 2,205,263 2,455,481 Total Non-Current Assets 15,175,302 14,035,583 10,404,803 8,947,028 8,561,974 7,605,262 6,284,271 4,402,333 3,677,075 4,040,963 Current Assets 35,406,813 28,275,599 21,857,494 18,444,957 16,000,553 13,795,274 11,164,888 8,477,132 7,176,378 8,612,254 Current Liabilities 35,192,785 22,250,783 15,417,138 15,213,903 13,030,817 12,849,830 10,043,948 6,602,195 6,392,896 7,668,414 Net Current Assets 214,028 6,024,816 6,440,356 3,231,054 2,969,736 945,444 1,120,940 1,874,937 783,482 943,840 Total Assets Less Current Liabilities

15,389,331 20,060,398 16,959,979 12,178,083 11,531,711 8,550,706 7,405,211 6,277,270 4,460,557 4,984,803

Security Deposit 1,199,127 1,018,452 851,794 732,124 651,765 576,648 487,449 403,894 359,516 334,837 Loans Repayable After One Year 4,332,360 8,381,885 8,091,907 4,226,596 4,334,165 1,633,823 1,110,385 1,287,291 763,936 1,444,165 Employee Benefit Obligations 794,645 651,144 486,465 383,912 320,033 270,539 204,787 181,876 158,546 148,418 Other Financial Liabilities Payable After One Year

411,394 454,013 645,008 798,492 756,232 342,535 503,142 195,995 150,001 81,077

Deferred Tax Liability 467,236 – 114,820 119,789 109,540 113,926 95,805 99,339 – 22,707 Net Assets 8,184,568 9,554,905 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799 2,953,599

Equity

Stated Capital 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 Capital Reserves 577,919 1,057,964 857,580 870,358 762,034 773,312 655,454 664,542 412,127 407,098 Statutory Reserves 136,009 95,361 37,318 136,128 128,447 78,425 44,408 10,748 – –Revenue Reserves 5,495,478 6,374,444 4,728,455 3,842,675 3,447,544 3,778,395 3,421,739 2,583,363 1,975,624 1,920,453 Total Equity Attributable to Owners of the Company

6,835,455 8,153,817 6,285,401 5,475,208 4,964,073 5,256,181 4,747,648 3,884,701 3,013,799 2,953,599

Non-Controlling Interest 1,349,114 1,401,088 484,584 441,960 395,902 357,054 255,995 224,174 – –Total Equity 8,184,569 9,554,905 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799 2,953,599

Ratio and Statistics

Profitability

Earning per Share – Rs.* 2.78 5.65 3.07 1.90 1.23 3.09 3.37 1.78 0.35 0.44Net Assets per Share – Rs.* 18.20 21.70 16.73 14.58 13.22 14.00 12.64 10.34 8.02 7.86Return on Average Net Assets – %

13.76 28.89 19.50 13.90 9.50 22.90 29.30 18.80 4.40 5.60

Dividends

Amount – Rs. ’000 826,383 1,101,845 525,880 313,024 313,024 751,258 939,072 281,722 – 250,419 Per Share – Rs.* 2.20 2.93 1.40 0.83 0.83 2.00 2.50 1.50 – 1.33Cover* 1.21 1.00 1.63 1.48 0.96 1.37 1.20 1.50 – 1.80

Others

Market Price per Share – Rs. 40.20** 126.20 137.90 117.90 89.00 102.30 132.70 195.00 76.50 32.00 Price Earnings Ratio 15.11 14.31 20.10 31.90 36.90 12.50 14.30 18.30 36.10 12.10 Annual Sales Growth – % 38.78 21.22 30.30 16.50 0.20 15.50 37.30 34.50 (13.30) (0.30)Current Ratio 1.00 1.27 1.40 1.20 1.20 1.10 1.10 1.30 1.10 1.30 Average Annual Inflation – % 4.20 3.75 0.90 3.30 7.30 7.60 6.70 6.90 4.80 14.40

Net Income to Net Turnover – % 1.87 5.02 3.20 2.60 2.00 4.80 5.90 4.20 1.10 1.20

*Information for the previous years have been restated to reflect the subdivision of shares in March 2017.**Market price per share for 31st March 2018 was after the subdivision of shares.

Singer (Sri Lanka) PLC Annual Report 2017/18 249 SHARE INFORMATION

1. Stated Capital

31st March 2018 31st December 2016

Stated Capital (Rs.) : 626,048,050 626,048,050

Number of Ordinary Shares : 375,628,830 125,209,610

Class of Shares : Ordinary SharesVoting Rights : One Vote per Ordinary ShareSubdivision : Three (3) Shares for every one (1) existing share held on 31st March 2017

2. Stock Exchange ListingThe issued ordinary shares of Singer (Sri Lanka) PLC are listed with the Colombo Stock Exchange of Sri Lanka.

3. Distribution of Shareholding – 31st March 2018No. of Shareholders: 31st March 2018 – 2,597 (31st December 2016 – 2,385).

Resident Non-Resident Total

No. of Shares Held Number ofShareholders

Number ofShares

% Number ofShareholders

Number ofShares

% Number ofShareholders

Number ofShares

%

1 – 1,000 1,337 363,545 0.10 11 4,937 0.00 1,348 368,482 0.10

1,001 – 10,000 783 3,119,410 0.83 8 22,757 0.01 791 3,142,167 0.84

10,001 – 100,000 393 11,527,910 3.07 9 229,045 0.06 402 11,756,955 3.13

100,001 – 1,000,000 42 9,175,690 2.44 1 196,200 0.05 43 9,371,890 2.49

Over – 1,000,001 12 315,426,453 83.97 1 35,562,883 9.47 13 350,989,336 93.44

Total 2,567 339,613,008 90.41 30 36,015,822 9.59 2,597 375,628,830 100

31st March 2018 31st December 2016

Categories of Shares Number ofShares

Number ofShareholders

Number ofShares

Number ofShareholders

Individuals 30,233,417 2,432 8,973,584 2,218

Institutions 345,395,413 165 116,236,026 167

Total 375,628,830 2,597 125,209,610 2,385

4. DividendsInterim Dividend 2017/18 Rs. 2.20 (2016 – Nil)Final Dividend 2017/18 – Nil (2016 – Rs. 2.93)**Dividend per Share (DPS) has been restated to reflect the subdivision of shares in March 2017

5. Market Value Per Share

Fifteen months ended 31st March 2018

Rs.

Twelve months ended31st December 2016

Rs.

Highest during the Year* 149.90 – 6th March 2017 140.00 – 4th January

Lowest during the Year** 38.50 – 21st February 107.00 – 12th July

Last traded price as of period ending 29th March 2018** 40.20 N/A

Last traded price as of period ending 31st December 2016 N/A 126.2

* Prior to the subdivision of shares** Subsequent to the subdivision of shares


6. Twenty Largest Shareholders


Name Number of Shares %

National Savings Bank/Hayleys PLC 85,147,054 22.67

People’s Bank/Hayleys PLC 85,147,053 22.67

Hatton National Bank PLC/Hayleys PLC 40,293,659 10.73

Hayleys PLC 15,116,388 4.02

Hayleys Advantis Limited 37,127,660 9.88

Retail Holdings (Sri Lanka) BV 35,562,883 9.47

Volanka (Pvt) Limited 11,595,745 3.09

Hayleys Aventura (Private) Limited 10,531,915 2.80

Carbotels (Pvt) Limited 9,680,851 2.58

Hayleys Agriculture Holdings Limited 9,468,085 2.52

Mr. Kulappuarachchige Don Dhammika Perera 6,935,913 1.85

Deutsche Bank AG as Trustee for JB Vantage Value Equity Fund Deut 2,492,130 0.66

Mrs. Mihiri Virani Fernando 1,890,000 0.50

Andaradeniya Estate Private Limited 669,849 0.18

Mrs. Anoma Kamalika Amarasuriya 536,910 0.14

Mr. Nai Kaluge Anura Deepal De Silva 441,582 0.12

Ms. Nai Kaluge Ruvani Hemamala De Silva 397,638 0.11

Mr. Nalin Amita De Silva 378,978 0.10

Jafferjee Brothers (Exports) Limited 375,600 0.10

Mr. Abeysiri Hemapala Munasinghe 328,644 0.08

354,118,537 94.27

Others 21,510,293 5.73

Total 375,628,830 100



Retail Holdings (Sri Lanka) BV [formerly known as Singer (Sri Lanka) BV] 99,762,850 79.68

Bnymsanv Re-Cf Ruffer Investment Funds: Cf Ruffer Pacific) 5,000,000 3.99

Bank of Ceylon A/c Ceybank Century Growth Fund 4,977,370 3.98

Pemberton Asian Opportunities Fund 3,600,000 2.88

Deutsche Bank AG as Trustee for JB Vantage Value Equity 830,710 0.66

Mrs. Mihiri Virani Fernando 620,000 0.50

Bank of Ceylon A/c Ceybank Century Growth Fund 605,624 0.48

Mrs. Zohra Taher Jafferjee 330,890 0.26

Dr. Nimal Ebenezer Herat Sanderatne 180,403 0.14

Mrs. Anoma Kamalika Amarasuriya 178,970 0.14

Mrs. Kalutaravedage Jinangali Manel De Silva 131,248 0.10

Mr. Nalin Amita De Silva 126,326 0.10

Jafferjee Brothers (Exports) Ltd. 125,200 0.10

Union Investments Private Ltd. 120,144 0.10

SHARE INFORMATION




Mr. Abeysiri Hemapala Munasinghe 109,548 0.09

Mrs. Enoka Kamali Wickramasinghe 106,619 0.09

Mrs. Jasbinderjit Kaur Piara Singh 89,606 0.07

Mr. Hemaka Devapriya Senarath Amarasuriya 89,482 0.07

Mr. Nai Kaluge Anura Deepal De Silva 81,570 0.07

Deutsche Bank AG as Trustee to Capital Alliance Quantitative Equity 74,404 0.06

117,140,964 93.56

Others 8,068,646 6.44

Total 125,209,610 100

7. Share Trading

For the Period Ended As at 31st March 2018

(15 Months)


(12 Months)

Number of Transactions 3,107 1,966

Number of Shares Traded 247,193,250 12,226,301

Value of Shares Traded (Rs.) 11,602,291,501 1,433,094,157

8. Public Holding As at 31st March 2018The percentage of shares held by the public is 7.72% (2016 – 20.32%).Number of Shareholders representing public holding – 2,583.Float adjusted market capitalisation – Rs. 1,165,741,536.17 The Company is not compliant with option 5 of the listing Rules 7.13.1 (a) – less than Rs. 2.5 billion Float Adjusted Market Capitalisatiion which requires 20% minimum public holding.

9. Record of Scrip Issues

Year ended 31st December Issue Basis Number of Shares

CumulativeShare Capital

Rs. ’000

1981 Prior to Public Issue – 1,855,200 18,5521982 Public Issue – 463,800 23,1901984 Bonus 2:1 1,159,500 34,7851985 Bonus 3:1 1,159,500 46,3801989 Bonus 1:1 4,638,000 92,7601992 Bonus 4:1 2,319,000 115,9501992 Rights (at Rs. 40/-) 8:1 1,449,375 130,4441994 Bonus 5:1 2,608,875 156,5331996 Bonus 9:2 3,478,500 191,3181996 Rights (at Rs. 50/-) 9:2 1,855,766 209,8751998 Bonus 11:3 5,723,868 267,1142000 Bonus 5:1 5,342,276 320,5372004 Bonus 4:1 8,013,415 400,6712005 Bonus 4:1 10,016,769 500,8382006 Bonus 4:1 12,520,961 626,0482011 Subdivision 1 for 1 62,604,805 –2017 Subdivision 3 for 1 250,419,220 –

Total Number of Shares – 375,628,830 626,048

SHARE INFORMATION


All Share Price Index vs Market Price Per Share(Index) (Rs.)

6,750

6,600

6,450

6,300

6,150

6,000

50

40

30

20

10

0

15-months ended 31 March 2018

Jan. 2017

Feb. 2017

Mar. 2017

Jun. 2017

Apr. 2017

Jul. 2017

May 2017

Aug. 2017

Sep. 2017

Oct. 2017

Nov. 2017

Dec. 2017

Jan. 2018

Feb. 2018

Mar. 2018

All Share Price Index (LHS) Market Price Per Share (RHS)

10. Listed DebenturesDetails regarding the listed debentures are as follows:

Interest Rate of ComparableGovernment Securities as at Issue Date

(%)

8.60% Senior Rated Listed Unsecured Redeemable on 7th June 2018 6.29

9.50% Senior Rated Listed Unsecured Redeemable on 7th June 2018 6.29

10.50% Senior Rated Listed Unsecured Redeemable on 19th March 2019 9.43

12.29%* Senior Rated Listed Unsecured Redeemable on 19th March 2019 9.43

Interest Rate of Comparable Government Securities as at 31st March 2018 was 8.52%.

Highest traded price, lowest traded price, last traded price as at 31st March 2018, interest yield and yield to maturity of trade are as follows:

Highest Traded Price (Rs.)

Lowest Traded Price (Rs.)

Last Traded Price (Rs.)

Interest Yield (%)

Yield to Maturity (%)

9.50% Senior Rated Listed Unsecured Redeemable Debentures

95.00 95.00 95.00 14.73 14.73

Debt/equity ratio, interest cover and quick asset ratio are given in Financial Highlights on page 9 of this Report.

SHARE INFORMATION

Singer (Sri Lanka) PLC Annual Report 2017/18 253 INDEPENDENT ASSURANCE REPORT

Independent Assurance Report to Singer (Sri Lanka) PLC on the Sustainability Reporting Criteria Presented in the Integrated Annual Report – 2017/18

Introduction and Scope of the Engagement

The management of Singer (Sri Lanka) PLC (“the Company”) engaged us to provide an independent assurance on the following elements of the sustainability reporting criteria presented in the annual report – 2017/18 (“the Report”).

z Reasonable assurance on the information on financial performance as specified on page 47 of the Report.

z Limited assurance on other information presented in the Report, prepared in accordance with the requirements of the Global Reporting Initiative GRI Standards: “In accordance” – Core guidelines.

Basis of Our Work and Level of Assurance

We performed our procedures to provide limited assurance in accordance with Sri Lanka Standard on Assurance Engagements (SLSAE 3000): “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”, issued by the Institute of Chartered Accountants of Sri Lanka (“CASL”).

The evaluation criteria used for this limited assurance engagement are based on the Sustainability Reporting Guidelines (“GRI Guidelines”) and related information in particular, the requirements to achieve GRI Standards “In accordance” – Core guideline publication, publicly available at GRI’s global website at “www.globalreporting.org”.

Our engagement provides limited assurance as well as reasonable assurance. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement conducted in accordance with SLSAE-3000 and consequently does not enable to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we do not express an opinion providing reasonable assurance.

Management of the Company’s Responsibility for the Report

The management of the Company is responsible for the preparation of the self-declaration, the information and statements contained within the Report, and for maintaining adequate records and internal controls that are designed to support the sustainability reporting process in line with the GRI Sustainability Reporting Guidelines.

Ernst & Young’s Responsibility

Our responsibility is to express a conclusion as to whether we have become aware of any matter that causes us to believe that the Report is not prepared in accordance with the requirements of the Global Reporting Initiative, GRI Standards: “In accordance” – Core guidelines. This report is made solely to the Company in accordance with our engagement letter dated 6th April 2018. We disclaim any assumption of responsibility for any reliance on this report to any person other than the Company or for any purpose other than that for which it was prepared. In conducting our engagement, we have complied with the independence requirements of the Code for Ethics for Professional Accountants issued by the CASL.

Key Assurance Procedures

We planned and performed our procedures to obtain the information and explanations considered necessary to provide sufficient evidence to support our limited assurance conclusions. Key assurance procedures included:

z Interviewing relevant the Company’s personnel to understand the process for collection, analysis, aggregation and presentation of data.

z Reviewing and validation of the information contained in the Report.

z Checking the calculations performed by the Company on a sample basis through recalculation.

z Reconciling and agreeing the data on financial performance are properly derived from the Company’s audited financial statements for the year ended 31st March 2018.

z Comparison of the content of the Report against the criteria for a Global Reporting Initiative, GRI Standards: “In accordance” – Core guidelines.

Our procedures did not include testing electronic systems used to collect and aggregate the information.

Limitations and considerations

Environmental and social performance data are subject to inherent limitations given their nature and the methods used for determining, calculating and estimating such data.

Conclusion

Based on the procedures performed, as described above, we conclude that;

The information on financial performance as specified on page 47 of the Report are properly derived from the audited financial statements of the Company for the year ended 31st March 2018.

Nothing has come to our attention that causes us to believe that other information presented in the Report are not fairly presented, in all material respects, in accordance with the Company’s sustainability practices and policies some of which are derived from Sustainability Reporting Guideline, GRI Standards – “In accordance” Core.

Ernst & YoungChartered Accountants


Ernst & YoungChartered Accountants201 De Saram PlaceP.O. Box 101Colombo 10Sri Lanka

Tel : +94 11 2463500Fax Gen : +94 11 2697369 Tax : +94 11 [email protected]

Singer (Sri Lanka) PLC Annual Report 2017/18254CERTIFICATE OF THE DIRECTOR ON TRANSFER PRICING

TIN: 124008026(As per Regulation 10 of the Extraordinary Gazette No. 1960/39, dated 31st March 2016 issued under Section 104 of the Inland Revenue Act. No. 10 of 2006)

It is certified that the Company has complied with the Transfer Pricing Regulations issued under Section 104 of the Inland Revenue Act. No. 10 of 2006. The information pursuant to these Regulations is given in Approved Accountant’s Certificate produced under Section 107 (2) (a) of the said Inland Revenue Act. We believe that the record of transactions entered into with associated undertakings during the period from 1st January 2016 to 31st December 2016 are at arm’s length, not prejudicial to the interests of the Company and not carried out for profit shifting purposes.

Records and information of all transactions have been submitted to the Approved Accountant who reviewed the transfer pricing records and no adverse remarks have been in the certificate done by the Approved Accountant.

Note: The submission of record and information of transactions to the approved accountant is not required, in relation to a company which makes transactions with any associated undertaking where the aggregate value of such transactions is Sri Lankan rupees ten million or less.

Lalith YatiwellaFinance Director,Colombo

20th November 2017

Singer (Sri Lanka) PLC Annual Report 2017/18 255 GLOBAL REPORTING INITIATIVES (GRI) STANDARD DISCLOSURES INDEX

GRI Index No.

Description Reported Section Page No.

General Standard Disclosures

Strategy and Analysis

G4-1 Statement from the most senior decision-maker of the Organisation

Organisational Profile

G4-3 Name of the Organisation Corporate Information Inner Back CoverG4-4 Primary Brands, products and services Institutional Capital 67 - 72G4-5 Location of the Organisation’s headquarters Corporate Information Inner Back CoverG4-6 Number of countries where the Organisation operates and names of

countries with either major operations or that are specifically relevant to the sustainability issues covered in the Report

Business Model 37

G4-7 Nature of ownership and legal form Business Model Corporate Information

37Inner Back Cover

G4-8 Markets served (including geographic breakdown, sectors served and types of customers/beneficiaries)

Business Model 35, Distribution Network

G4-9 Scale of the reporting Organisation Financial Highlights 9G4-10 Total workforce by employment type, employment contract,

and region, broken down by genderEmployee Capital 80 - 81

G4-11 Report the percentage of total employees covered by collective bargaining agreements

Employee Capital 96

G4-12 Organisation’s supply chain Social and Environmental Capital

111 - 112

G4-13 Significant changes during the reporting period regarding size, structure, or ownership

Annual Report of the Board of Directors of the affairs of the Company

166

G4-14 Report whether and how the precautionary approach or principle is addressed by the Organisation

About this Report 246

G4-15 List externally developed economic, environmental and social charters, principles, or other initiatives to which the Organisation subscribes or which it endorses

About this Report 246116, 118

G4-16 List memberships of associations (such as industry associations) and national or international advocacy Organisations in which the Organisation Identified Material Aspects and Boundaries


97

Identified Material Aspects and Boundaries

G4-17 Operational structure of the Organisation Business Model 37G4-18 Process for defining report content About this Report 246G4-19 Material aspects identified in the process for defining report content Business Model 46G4-20 Aspect boundary for identified material aspects within the Organisation Business Model 46G4-21 Aspect boundary for identified material aspects outside the Organisation Business Model 45-47G4-22 Report the effect of any restatements of information provided in previous

reports, and the reasons for such restatementsAbout this Report 246

116, 118G4-23 Report significant changes from previous reporting periods in the Scope

and Aspect Boundaries Stakeholder EngagementAbout this Report 246

Stakeholder Engagement

G4-24 List of stakeholder groups engaged by the Organisation Business Model 42G4-25 Report the basis for identification and selection of stakeholders

with whom to engageBusiness Model 42

G4-26 Report the Organisation’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group

Business Model 42

G4-27 Report key topics and concerns that have been raised through stakeholder engagement, and how the Organisation has responded to those key topics and concerns, including through its reporting

Business Model 42 - 45


GRI Index No.


Report Profile

G4-28 Reporting period About this Report 246G4-29 Most recent previous report About this Report 246G4-30 Reporting cycle About this Report 246G4-31 Contact point regarding the report About this Report 246G4-32 Compliance with GRI G4 guidelines, GRI content index and

external assurance report About this Report,Supplementary Information

246, 253, 255 - 258

Assurance

G4-33 Policy and current practice with regard external assurance Supplementary Information 253 - 258Governance

G4-34 Report the governance structure of the Organisation, including committees of the highest governance body and identify any committees responsible for decision-making on economic, environmental and social impacts

Corporate Governance 117

Ethics and Integrity

G4-56 The Organisation’s values, principles, standards and norms of behaviour such as codes of conduct and codes of ethics

Singer at a Glance Corporate Governance

6 - 7145

Specific Standard Disclosures

Category: Economic

Aspect: Economic Performance

G4-EC1 Economic value generated and distributed Business Model 47G4-EC3 Coverage of the Organisation’s defined benefit plan obligations Notes to the Financial

Statements188,

222 - 223G4-EC4 Financial assistance received from Government Social and

Environmental Capital103

Category: Environmental Aspect: Materials

G4-EN1 Materials used by weight or volume Social and Environmental Capital

109

G4-EN2 Percentage of materials used that are recycled input materials Social and Environmental Capital

108

Aspect: Energy

G4-EN3 Energy consumption within the Organisation Social and Environmental Capital

110

G4-EN5 Energy intensity Social and Environmental Capital

110

G4-EN6 Reduction of energy consumption Social and Environmental Capital

111

G4-EN7 Reduction in energy requirements of products and services Social and Environmental Capital

108 - 111

Aspect: Water

G4-EN8 Total water withdrawal by source Social and Environmental Capital

110

Aspect: Emissions

G4-EN19 Reduction of greenhouse gas (GHG) emissions Social and Environmental Capital

111

Aspect: Effluents and Waste

G4-EN23 Total weight of waste by type and disposal method Social and Environmental Capital

107 - 108

GLOBAL REPORTING INITIATIVES (GRI) STANDARD DISCLOSURES INDEX


GRI Index No.


Aspect: Products and Services

G4-EN27 Mitigation of environmental impacts of products and services Social and Environmental Capital

107 - 109

Aspect: Compliance

G4-EN29 Monetary value of significant fines and total number of non-monetary sanctions


112

Aspect: Environmental Grievance Mechanisms

G4-EN34 Number of grievances about environmental impacts Social and Environmental Capital

111

Category: Social

Aspect: Employment

G4-LA1 Total number and rates of new employees hired and employee turnover by age group, gender and region

Employee Capital 80

G4-LA2 Benefits for full/part time employees Employee Capital 91 - 92G4-LA3 Return to work and retention rates after parental leave, by gender Employee Capital 92

Aspect: Labour/Management Relations

G4-LA4 Minimum notice period regarding operational changes including whether these are specified in collective agreements

Employee Capital 80

Aspect: Occupational Health and Safety

G4-LA5 Joint management-worker health and safety committees Employee Capital 93G4-LA6 Type of injuries Employee Capital 93

Aspect: Training and Education

G4-LA9 Training details Employee Capital 91G4-LA10 Programmes implemented and assistance provided to upgrade

employee skillsEmployee Capital 85 - 91

G4-LA11 Regular performance and career development review Employee Capital 91

Aspect: Diversity and Equal Opportunity

G4-LA12 Diversity categories Employee CapitalSinger Leadership

80 - 8126 - 29

Aspect: Equal Remuneration for Women and Men

G4-LA13 Basic salary and remuneration of women to men Employee Capital 93

Aspect: Labour Practices Grievance Mechanisms

G4-LA16 Grievances about labour practices Employee Capital 93

Sub Category: Human Rights

Aspect: Non-descrimination

G4-HR3 Incidents of discrimination Social and Environmental Capital

104

Aspect: Freedom of Association and Collective Bargaining

G4-HR4 Violation of exercise freedom of association and collective bargaining Social and Environmental Capital

112

Aspect: Child Labour

G4-HR5 Child labour related to operations and suppliers Social and Environmental Capital

103

Aspect: Forced or Compulsory Labour

G4-HR6 Incidents of forced or compulsory labour Social and Environmental Capital

103



GRI Index No.


Aspect: Human Rights Grievance Mechanisms

G4-HR12 Grievance mechanisms of human rights Social and Environmental Capital

103

Sub Category: Society

Aspect: Local Communities

G4-SO1 Engagement with local community Social and Environmental Capital

97 - 102

Aspect: Anti-competitive Behaviour

G4-SO7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes


103

Sub Category: Product Responsibility

Aspect: Customer Health and Safety

G4-PR1 Product and service categories for health and safety impacts are assessed for improvement


111

G4-PR2 Non-compliance with regulations and voluntary codes concerning the health and safety


112

Aspect: Product and Service Labelling

G4-PR3 Product and service information and labelling Social and Environmental Capital

111

G4-PR4 Non-compliance with regulations and valuntory codes concerning product and services information and labelling


112

G4-PR5 Customer satisfaction surveys Customer Capital 179

Aspect: Marketing Communications

G4-PR6 Sale of banned or disputed products Social and Environmental Capital

112

G4-PR7 Non-compliance with regulations and voluntary codes concerning marketing communications


112

Aspect: Customer Privacy

G4-PR8 Complaints received concerning breaches of customer privacy Social and Environmental Capital

112

Aspect: Compliance

G4-PR9 Monetary value of fines for non-compliance with laws and regulations concerning products and services


112



Singer Plus Shops

Ampara

AkkaraipattuAmpara “A”Ampara “B” Dehiattakandiya Kalmunai “A” Kalmunai “B” Padiyatalawa PottuvilSamanthuraiUhana

Anuradhapura

Anuradhapura “A” Anuradhapura “B”Anuradhapura “C”EppawelaGalenbindunuwewa HabaranaHorowpathana KahatagasdigiliyaKebithigollawaKekirawa Medawachchiya NochchiyagamaRambewaTambuththegamaThirappane

Badulla

Badulla “A”Badulla “B”Bandarawela “A”Bandarawela “B”Girandurukotte Hali-Ela Mahiyanganaya PassaraWelimada

Batticaloa

Batticaloa “A” Batticaloa “B”ChenkaladiKalawanchikudi Kattankudy Valaichchenai

Colombo

Angoda AthurugiriyaAttidiyaAvissawella Battaramulla Boralesgamuwa Borella ColpettyDehiwelaDelkandaGalle Face Court Gothatuwa Homagama Kaduwela Katubedda Kirulapona Kohuwala Kotahena Kottawa Maharagama “A” Maharagama “B” Malabe Maradana MattakkuliyaMilagiriya Moratuwa Nugegoda PadukkaPelawatte Peliyagoda

Pettah Piliyandala “A” Pliyandala “B” PitakotteRajagiriya Ratmalana Thimbirigasyaya Udahamulla – Merit Union PlaceWard Place Wellampitiya Wellawatta

Galle

Ahangama AmbalangodaBaddegamaElpitiya Elpitiya New TownGalle “A” Galle “B” Hikkaduwa ImaduwaNeluwa PinnaduwaUdugamaWanduraba

Gampaha

Delgoda DivulapitiyaDompeGampahaGanemulla Ja-ElaKadawatha “A” Kadawatha “B” Kandana Kiribathgoda “B” Kirindiwela Kochchikade Mawaramandiya Minuwangoda Mirigama Negombo Nittambuwa PasyalaPugoda Ragama Seeduwa Veyangoda Wattala Weliweriya Yakkala

Hambantota

Agunakolapelessa AmbalantotaBeliattaHambantota Middeniya Suriyawewa Tangalle Tissamaharamaya

Jaffna

ChavakachcheriChenkanai ChunnakamHospital Road, JaffnaJaffnaManipay Nelliady Point Pedro

Kalutara

Agalawatta AluthgamaBandaragamaBeruwala

Bulathsinghala Darga Town Horana IngiriyaKalutara “A” Kalutara “B” Matugama Panadura Wadduwa Kandy

Akurana DiganaGalahaGampolaGelioya Kandy Katugastota Kundasale Nawalapitiya Peradeniya Pilimathalawa Poojapitiya Rikillagaskada Wattegama

Kegalle

DeraniyagalaKegalle “A” Kegalle “B”MawanellaRambukkana Ruwanwella WarakapolaYatiyanthota

Kurunegala

Alawwa BingiriyaGalgamuwaGiriullaHiripitiyaIbbagamuwaKuliyapitiya Kurunegala “A” Kurunegala “B” Maho Mawathagama Melsiripura Narammala Nikaweratiya PannalaPolgahawela Pothuhera Rideegama Wariyapola

Matara

Akuressa DeniyayaDikwellaHakmana Issadeen Town Kamburupitiya Matara “A” Matara “B” Morawaka Urubokka Weligama

Mannar

Mannar

Matale

Dambulla GalewelaMataleNaulaRattotaWilgamuwa

Monaragala

Bibile ButtalaKataragamaMonaragala Siyabalanduwa Wellawaya

Nuwara Eliya

HattonMaskeliyaNuwara Eliya “A” Nuwara Eliya “B” Pussellawa Talawakelle Polonnaruwa

AralaganwilaBakamuna HingurakgodaKaduruwela “A”Kaduruwela “B” Medirigiriya Minneriya Polonnaruwa Welikanda

Puttalam

Anamaduwa ChilawDankotuwaNorochcholaiPuttalam Wennappuwa

Ratnapura

Balangoda DehiowitaEheliyagodaEmbilipitiyaGodakawela Kahawatta Kuruwita Nivitigala Pelmadulla Ratnapura “A” Ratnapura “B”

Trincomalee

Kanthalai Trincomalee “A”Trincomalee “B”Vakarai

Vavuniya

MallaviMurunkanParakramapuraVavuniya

Kilinochchi

Kilinochchi

Mullaitivu

Mullaitivu

Samsung Showroom

NugegodaRatmalana

Singer Homes

Anuradhapura BadullaChilaw Godagama Kadawatha Kalutara Kandy

Kegalle KottawaKotte Kurunegala Maharagama MataleMatara Negombo Nuwara Eliya Ratmalana RatnapuraWellawatta

SISIL World

Akuressa Ambalantota Ampara Anuradhapura Avissawella Badulla Balangoda Bandarawela Battaramulla Borella Chilaw Chunnakam Dambulla Dickwella Digana Eheliyagoda Embilipitiya Galle Gampaha Gampola GodakawelaHomagama HoranaJa-Ela Jaffna Kadawatha Kaduwela Kahawatta Kalutara KandyKatugastota Kegalle Kekirawa Kilinochchi KiribathgodaKirindiwelaKuliyapitiya KurunegalaMaharagama Mahiyanganaya MataleMatara Matugama MawanellaMinuwangoda MirigamaMonaragalaMount Lavinia Narammala Negombo Nikaweratiya Nittambuwa Nuwara Eliya Panadura Pelmadulla PilimathalawaPiliyandala Ratnapura Ruwanwella ThalawathugodaThambuttegamaTissamaharamaya Trincomalee Union Place Vavuniya VeyangodaWarakapola Welimada

Singer Mega

Beko & SonyBoralesgamuwaDuplication RoadGampahaKalutaraKandy Kandy Mall KiribathgodaKottawaK-Zone – Ja-ElaK-Zone – Moratuwa Liberty Plaza Digital Maharagama MalabeMount Lavinia Negombo Nugegoda Panadura Rajagiriya Thalawathugoda Thurstan Road Wattala Satellite Shops

Ampara

Hingurana

Anuradhapura

GalnewaThalawa Wilachchiya

Badulla

Diyatalawa EttampitiyaHaldummullaHaputaleHasalaka Meegahakivula Udapussellawa Ududumbara

Colombo

Hanwella KosgamaMoragahahena

Galle

Batapola KarandeniyaPitigala TalgaswalaUragasmanhandiya Yakkalamulla

Gampaha

KatanaMarandagahamullaNiwala

Hambantota

Ranna WalasmullaWeeraketiya

Jaffna

Kodikamam

Kalutara

Baduraliya Beruwala

Kandy

Alawathugoda AnkumburaGalagedaraHatharaliyadda Kadugannawa MenikhinnaPolwatta

Kegalle

Bulathkohupitiya Hemmatagama Kotiyakumbura

Kurunegala

AmbanpolaDummalasuriyaPolpithigama

Matale

Pallepola

Matara

Pitabeddara TelijjawilaThihagoda

Monaragala

Badalkumbura Thanamalwila

Nuwara Eliya

Ginigathhena PundaluoyaRagala Walapane

Polonnaruwa

Diyabeduma JayanthipuraDiyasenpura

Puttalam

HettipolaKobeiganeNattandiya

Ratnapura

KalawanaKiriellaPallebedda Rakwana

Trincomalee

Muttur

Other

Apparel Solutions and Katunayake Duty Free Store

DISTRIBUTION NETWORK


Singer Service

Regional Service Centres

AluthgamaAmpara Anuradhapura Badulla Colombo JaffnaKandy Kuliyapitiya Matara PasyalaPeliyagoda Polonnaruwa RatnapuraUnion PlaceNawam Mawatha

Aluthgama

A.K.MotorsAir Tech EngineeringAmal Ref & ElectricalsDilshan MotorsDinan Machine CentreEranda Multi ElectricityGulf MotorsMulti Tech EngineeringNanayakkara ElectronicsPerera & ServicePremalal MotorsSiri Electrical & Ref Eng.Sola Edge Colling & Power SolutionSuranjith MotorsThushara Motors U.D.Ref Engineering

Ampara

Aira MotorsAruna Ref & Electrical Chil AirE Sampath AselaEastern Tech Institute Isuru Sameera Cushion WorksJanudha Ref & Electricals Life Line EnterprisesMagic Cool AirconMusthafa Motors MEC Ruckshan Mechanical ShopS S H Motors Sahana Motors V T Cushion Works

Anuradhapura

Amila FurnitureAyesha Electricals Buddhika Electricals Chandana Enterprises D J FurnitureDaikin Electro Mechanical Derrick MotorsDream Home FurnitureEmil ElectronicsHashen Electrical & Ref EngineerIndika Auto Service Centre Indrani CushionIndunil Ref & Electricals Janith MotorsKurunegala Motors Lahiru MotorsLahiru Motors Lakmal MotorsLal EnterpriseLuck Cool Ref Engineers Luxman Ref & Electrical Majee AC & ElectricalMr. W.W.M.S. Gihan ChandrarathnaNeel MotorsNihal MotorsPower Wash Pujana Electrical & Cellular

SERVICE NETWORK AND FASHION ACADEMY NETWORK

Ran Sri ElectronicsRavi Motors Royal MotorsS L K Cushion DesignerSampath Auto Care Sandanayake Wood WorksShalini Auto Cool Shantha Motors Tharanga MotorsThushara Service CentreUdani Electronics Wijesinghe Motors

Badulla

Aruna ElectricalsChamari RefCool air engineeringGunathilake MotorsHemantha MotorsHiruna ElectronicsKesala ElectricalsLal MotorsMarriott Electricals Mohan MotorsNew Gamini Agro CentrePiyal MotorsRavi Service TechnologyRefco ElectricalSaman MotorsSameera Cooling ServiceTelstar ElectronicTharindu ElectricalsTV Centre Yasas Motors

Colombo

Anjana ElectricalsBen RefrigeratorsChamath EnterprisesChatu Spray PaintChirathma Electricals Cool Tech EngineersDineth ElectronicsDinu ElectricalsDushadi Sofa CentreE.M.P ElectricalsEcon AirElectro FrostFlemingo Cushion HouseG M ElectricalsGap Machine CentreGB Electrical Issuru Kaveen EngineersJ & U Electricals and ElectronicsKapila Machine RepairKeerthi De Jayasinghe Engi.Life Cool AC EngineersMr. C.L.S. AnandaMr. D.U. JayasingheMr. H.G. Lalith Mr. MuthugalageMr. W. Kulasiri FernandoNuwan EngineeringRathnayake EnterprisesRuwan Electricals S.K.ElectricalsS.N.A.Ref AirSamagi Ref CentreSandaruwan Cool EngineersSharp ElectronicsSmart Ref EngineersSuper Cool RefSuper Tech Ref EngineersTechnicold Electronics Ushan ElectricalsWelagedara Engineering Yoshitha Machine Centre

Jaffna

Ambiha ElectricalsAnton Service StationCity Link CoolersCool Air KingsInstitute of Ace

Jetcool Engineering Service Mr. SanthalingamMr. Srijeevan ThayarupanNew Asia CentreNPM ElectricalsPanchu GarageRagu Mechanic CentreRaj Motor WindingSnow Eagles [Ref & Air Con Engineers]SSV Cool Air ServiceSuvil Cushion CentreThe Best Chill Air ConditioningTNR Electricals & ElectronicsVageetha MotorsViji Air ConditionersWelcome Motors (Hero Garage)

Kandy

Chilled Air Cool MartDeepthi Sewing Machine ServiceEdirisinghe ElectricalsFresh Cool EnterpriseGanesh Luxury FurnitureI Tec ElectronicsJanaka ElectronicsKithshan MotorsLakmal ElectricalsLeshani ElectricalsLionel WijesingheManjula MotorsMicro ElectricalsMr. U.G. Jayantha UdagamaNew Sameera ElectricalsNew Vision ElectronicsOminda Electricals On-eye SolutionsPrabath ElectricalsPubudu ElectricalsS D S ElectronicsSampath Electrical EngineersSandamini Multi Electrical EngineersSathsara Sound Senadeera Ref Centre Shane MotorsShehan Multi ServiceSisilto Electricals & Technical ServicesSiva Motors Sugath Cushion WorksSuper Air Electrical WorksTech Mart Ref Thaprobaane InternationalThushara ElectronicsVimod Electricals

Kuliyapitiya

Anuradha ElectricalsBandara Auto MobileChandana Motor GarageChandu ElectricalsDasuna MotorsFreezairMahesh ElectricalsMihidum Juki Machine TechniciansModerni Air ConditionNalinda Mechine CentreNew Leeds ElectronicsNipuna Auto MobilePeo MotorsRavindra MotorsSahana MotorsSaman ServiceSamodha ElectronicsSanjeewa Auto WorksSathsara Auto WorksTechno FrostWijesinghe MotorsWorld Air Conditioner

Matara

Amila Pathum Architectures & FurnitureC J ElectricalsChaminda Air Ref Eng.Ser.Chathuranga MotorsG.A. Auto ElectriclesH L Nuwan SameeraHemantha MotorsIndika MotorsJanahitha MotorsJanapriya ElectronicsK.S.MotorsK.U.K Super Cool ServiceLal ElectronicsLal Honda ServiceLeyard FurnitureLion ElectronicMax Cool ElectricalsNew Freeze Air New Lion Radio New Shiney ElectronicsNilanka Pathirana Ref CenterNimal EngineersNuwan MotorsPenguine InternationalPrince ElectricalsPriyantha Ref EngineersRahula MotorsRohan Ref CentreRuhunu Ref & Air ServicesS D Machine Service CentreSachee Cushion WorksSamarawickrama Cushion WorksSampath Engineering WorksSampath Motor ServiceSarani MotorsSilver Dale ElecronicsSunil MotorsSuper Cool AirSusantha Motors Uduwella RefVictor Cycle WorksVijitha Motors

Pasyala

Aloka Engineers Ariyathilaka Electrical & Engineering Kavia EngineeringKavindu Ref N AirMr. P.P. WickramasingheNew PC House Nishani MotorsNushan Ref and Air CentreRaja MotorsS T S Technical Service S.N.A.Ref AirSaleena ElectronicsSESENI EngineersSilicone ElectronicsSumith Motor WorksSuper Electronics & Air TechnicsSusantha Ref ElectricalsTech Way ServicesTechnico ElectronicTechno Ref & Air EnterpricesThilak Electricals Zuhail Brothers

Polonnaruwa

Ananda Electricals Ashoka Ref B.N.R. EnterprisesChaminda Sewing Mechanics Dissanayake Lathe ShopDJ EngineersGautham Cushion WorksIndika MotoraJ & P ElectronicsJanith Motors

Jayathilaka MotorsKarunarathne MotoresKinnya AC Mechanics Mahaweli ElectronicsMayura Ref & ElectricalsMudalige ElectronicsNiluka Ref & ElectricalsNissanka MotorsPriyankara Motors Ravindra MotorsS.M. Motors Saman MotorsSampath Motors Sanath AC EngineeringSassitha MotorsSubasinghe Ref Engineers Sujeewa EngineersTechno EngineeringThilak ElectronicsThilanka Motors Udarata MotorsUdaya Motors

Ratnapura

Amangi ElectronicsD G ServicesDamruwan Cushion WorksDinuka Re Fashion CentreHigh FrostHighcool Air & Ref CentreIndika Ref EngineersLakshan TechniciansPathirana Ref EngineeringPSD MotorsQuick CoolRanjith ElectronicsRoshan ElectronicsRuhunu Cushion WorkSamagi Diesel EngineeringSaman WoodSampath ElectronicsSanjaya ElectronicsSenadeera Multy RefShashei Service SM ElectricalsSmart Wood CreationSolanta ElectronicsStar Ref Electricals

Air Conditioning Division

Air Cool TempAir Mech Airconditioning CompanyAlwis Engineering CentreCool Rite ServiceCool WayE R EngineersLahiru RefMelona Aircon ServicesNew Ashen ElectricalNew Dynamic Ref Engineers QualitcoolR&T Ref EngineeringRe Cool Ref Air ElectricalsRoyal Cool EnterprisesSewwandi Ref EngineersSri Lanken EngineeringSun Cool EnterprisesSun Ref EngineersSure RefTempcool EngineeringUnited Air Cool Yellowma Airconditioning

Motor Bike Service – Peliyagoda

Athula Motor Works Brito MotorsDiaz MotorsManahara ElectricalsRansak Service Centre Sinethma MotorsWimal Motor Works

Stock Franchise at Distribution Center

C K ElectronicsDanushka RefHiru ServiceHi-Tech ElectronicsK V ElectronicsK.TronicKumara Electronics Mr. Kariyawasam Mr. ChamindaMr. Ranjan AmarasingheR J EnterprisesSampath ElectricalsSunimal Perera T S ElectronicsTele TechnicsUltra Cool Ref Centre

Fashion Academies

AmbalangodaAmparaAngodaAnuradhapura “B”Avissawella Baddegama Badulla Bandarawela Battaramulla Borella Chilaw DambullaDehiattakandiya Dickwella Eheliyagoda ElpitiyaEmbilipitiya GalewelaGalle “B” Gampaha Gampola Hatton HingurakgodaHoranaJa-Ela Jaffna Kaduwela Kalutara Kandana Kandy KatubeddaKatugastota Kegalle Singer HomesKiribathgoda “B”KirindiwelaKottawaKuliyapitiyaKurunegala Mahiyanganaya MalabeMaradana MataleMatara “A”Mawanella Mega-KandyMiddeniyaMinuwangoda Mount Lavinia MegaNawalapitiya Negombo Nittambuwa Nugegoda Nuwara Eliya PelmadullaPanadura PeliyagodaPilimathalawaPiliyandala “B” PolonnaruwaRatnapura “A”Ruwanwella Thalawathugoda Mega Thambuttegama Tissamaharama WarakapolaWellawatta Wennappuwa


Accounting Policies

Specific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting Financial Statements.

Acid Ratio

Current asset less inventory divided by current liabilities.

Amortisation

The expense of writing off over a fixed period, the initial value of an intangible asset such as goodwill, patents etc.

Available-for-Sale

All assets not in any of the three categories namely held-to-maturity, fair value through profit or loss and loan and receivables. It is a residual category does not mean that the entity stands ready to sell these all the time.

Borrowings

All interest bearing loans, fixed deposits and savings deposits.

Capital Employed

Total of interest bearing loans and borrowings, bank over draft and total equity.

Capital Reserves

Reserves identified for specific purposes and considered not available for distribution.

Cash Equivalents

Liquid investments with original maturity periods of three months or less.

Contingent Liabilities

Conditions or situations at Reporting date the financial effect of which are to be determined by future events which may or may not occur.

Credit Rating

An evaluation of a corporate’s ability to repay its obligations or the likelihood of not defaulting, carried out by an independent rating agency.

Current Ratio

Current assets divided by current liabilities. A measure of liquidity.

Debt

Total liabilities, excluding deferred income.

Debt to Equity

Total borrowings less cash and cash equivalents divided by total equity.

Debt Ratio

Total liabilities divided by total assets.

Deferred Taxation

The net tax effect on items which have been included in the Income Statement, which would only qualify for inclusion on a tax return at a future date.

Dividend Cover

Profit attributable to ordinary shareholders divided by gross dividend. Measures the number of times dividend is covered by distributable profit.

Dividend Payout

Dividend per share of the company divided by earnings per share of the Company.

Dividend Per Share

Total gross dividend of the company divided by number of ordinary shares as at the reported date.

Earnings Per Share

Profits attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue.

Equity

Shareholders’ funds.

Fair Value

Fair value is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transactions.

Financial Instruments

Financial instrument is any contract that gives rise to both a financial assets in one entity and a financial liability or equity instrument in another entity.

Gearing Ratio

Proportion of borrowings to capital employed.

Gross Dividend

Portion of profits inclusive of tax withheld, distributed to shareholders.

Held-to-Maturity

Debt assets acquired by the entity with positive intention to be held-to-maturity.

Interest Cover

Profit before tax plus net finance cost divided by net finance cost. Measure of an entity’s debt service ability.

Impairment

This occurs when recoverable amount of an asset is less than its carrying value.

GLOSSARY OF FINANCIAL TERMS

Market Capitalisation

Number of shares in issue multiplied by the market value of a share at the Reported date.

Net Assets Per Share

The equity attributable to owners of the company divided by the weighted average number of ordinary shares in issue.

Non-Controlling Interest

Equities in a subsidiary not attributable, directly or indirectly, to a parent.

Price Earnings Ratio

Closing market price of a share divided by earnings per share as at reported date.

Related Parties

Parties who could control or significantly influence the financial and operating policies of the business.

Return on Average Net Assets Equity

Profits for the year divided by average total equity.

Revenue Reserves

Reserves considered as being available for distributions and investments.

Segment

Constituent business units grouped in terms of similarity of operations and location.

Value Addition

The quantum of wealth generated by the activities of the Group measured as the difference between turnover and the cost of materials and services bought in.

Working Capital

Capital required to finance the day-to-day operations computed as the excess of current assets over current liabilities.

Singer (Sri Lanka) PLC Annual Report 2017/18262NOTICE OF ANNUAL GENERAL MEETING

SINGER (SRI LANKA) PLC(Company Registration No. PQ 160)

NOTICE IS HEREBY GIVEN THAT THE FORTY-THIRD ANNUAL GENERAL MEETING OF SINGER (SRI LANKA) PLC will be held on Tuesday, 26th June 2018 at 12.00 noon at the Conference Room of Hayleys PLC at No. 400, Deans Road, Colombo 10, Sri Lanka.1. To receive, consider and adopt the Annual Report of the Board of Directors and the Statement of Accounts for the 15 months

ended 31st March 2018 with the Report of the Auditors thereon.

2. To re-elect, Mr. G.J. Walker, who retires by rotation at the Annual General Meeting, a Director in terms of Article 24 (4) of the Articles of Association of the Company.

3. To re-elect Mr. D. Sooriyaarachchi who retires by rotation at the Annual General Meeting, a Director in terms of Article 24 (4) of the Articles of Association of the Company.

4. To elect Mr. A.M. Pandithage who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

5. To elect Mr. K.D.D. Perera who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

6. To elect Mr. S.C. Ganegoda who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

7. To elect Mr. M.H. Jamaldeen who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

8. To elect Mr. D.H. Fernando who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

9. To elect Mr. D.K. de S. Wijeyeratne who has been appointed to the Board since the last Annual General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.

10. To appoint Mr. S.H. Goodman who is Seventy-Four years of age, a Director, by passing the under-noted ordinary resolution in compliance with section 211 of the Companies Act No. 07 of 2007 in relation to his appointment.

Ordinary Resolution

That Mr. S.H. Goodman who has attained seventy-four years of age be and is hereby appointed as a Director in terms of Section 211 of the Companies Act No. 07 of 2007 and it is hereby declared that the age limit of 70 years referred to in Section 210 of the Companies Act No. 07 of 2007 shall not apply to the appointment of the said Director.

11 To authorise Directors to determine contributions to Charities.12. To reappoint Messrs. KPMG, Chartered Accountants as the Auditors of the Company for the year 2018/19 and to authorise the

Directors to determine their remuneration.

By Order of the Board,

Singer (SRI LANKA) PLC

HAYLEYS GROUP SERVICES (PVT) LTD. Secretaries

Colombo14th May 2018

Note

A Shareholder is entitled to appoint a proxy to attend and vote instead of himself and a proxy need not be a Shareholder of the Company. A Form of Proxy is enclosed for this purpose. The instrument appointing a proxy must be deposited with the Company Secretaries, Hayleys Group Services (Pvt) Ltd., No. 400, Deans Road, Colombo 10, Sri Lanka not less than 48 hours before the time fixed for the Meeting.


Singer (Sri Lanka) PLC (Company Registration No. PQ160)

I/We* ……......................………………………………………………………………………………………………….(full name of Shareholder**)

NIC No./Reg. No. of Shareholder (**) ……………………………………………………………… of ………………………………………………

…………………………………………………..............… being Shareholder/Shareholders* of SINGER (SRI LANKA) PLC hereby appoint:

……………………………………………………………..……………………………………………………………… (full name of Proxyholder**)

NIC No. of Proxyholder (**) ……………….……………………………………………………… of …………………………………………………

………………………………………….………………………………………………….……………….or, failing him/them

ABEYAKUMAR MOHAN PANDITHAGE of Colombo, Chairman of the Company or failing him, one of the Directors of the Company as my/our* proxy to attend and vote as indicated hereunder for me/us* and on my/our* behalf at the Forty-Third Annual General Meeting of the Company to be held on Tuesday, 26th June 2018 at 12.00 noon and at every poll which may be taken in consequence of the aforesaid meeting and at any adjournment thereof:

For Against1. To adopt the Annual Report of the Board of Directors and the Statements of Accounts for the

15 months ended 31st March 2018 with the Report of the Auditors thereon.2. To re-elect Mr. G.J. Walker, who retires by rotation at the Annual General Meeting, a Director in terms

of Article 24 (4) of the Articles of Association of the Company.3. To re-elect Mr. D. Sooriyaarachchi, who retires by rotation at the Annual General Meeting, a Director

in terms of Article 24 (4) of the Articles of Association of the Company.4. To elect Mr. A.M. Pandithage who has been appointed to the Board since the last Annual General

Meeting, a Director in terms of Article 24(10) of the Articles of Association of the Company.5. To elect Mr. K.D.D. Perera who has been appointed to the Board since the last Annual General

Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company6. To elect Mr. S.C. Ganegoda who has been appointed to the Board since the last Annual General

Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.7. To elect Mr. M.H. Jamaldeen who has been appointed to the Board since the last Annual General

Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.8. To elect Mr. D.H. Fernando who has been appointed to the Board since the last Annual General

Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.9. To elect Mr. D.K. De S. Wijeyeratne who has been appointed to the Board since the last Annual

General Meeting, a Director in terms of Article 24 (10) of the Articles of Association of the Company.10. To appoint Mr. S. Goodman who is Seventy-Four years of age, a Director by passing the ordinary

resolution set out in the Notice of Meeting. 11. To authorise Directors to determine contributions to Charities.

12. To reappoint Messrs KPMG, Chartered Accountants as the Auditors of the Company for the year 2018/19 and to authorise the Directors to determine their remuneration.

(**) The proxy may vote as he thinks fit on any other resolution brought before the Meeting of which due notice has been given.

As witness my/our* hands this ……………………. day of …………………………….2018.

Witnesses: ………………………………Signature: ……………………………….......................................... Signature of Shareholder

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

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

NIC No: ………………………………..........................................

FORM OF PROXY


Notes:

(a) * Please delete the inappropriate words.(b) A shareholder entitled to attend and vote at the Annual General Meeting of the Company, is entitled to appoint a proxy to attend

and vote instead of him/her and the proxy need not be a shareholder of the Company. ** Full name of shareholder/proxyholder and their NIC Nos. and Witness are mandatory. Your Proxy Form will be rejected if these

details are not completed. (c) A shareholder is not entitled to appoint more than one proxy to attend on the same occasion. (d) Instructions are noted below.(e) This Form of Proxy is in terms of the Articles of Association of the Company.

INSTRUCTIONS AS TO COMPLETION

1. To be valid, the completed Form of Proxy must be deposited with the Company Secretaries, Hayleys Group Services (Pvt) Ltd. at No. 400, Deans Road, Colombo 10, Sri Lanka not less than 48 hours before the start of the Meeting.

2. In perfecting the Form of Proxy, please ensure that all requested details are filled in legibly including mandatory details. Kindly Sign and fill in the date of signing.

3. If you wish to appoint a person other than the Chairman of the Company (or failing him, one of the Directors) as your proxy, please insert the relevant details at (1) overleaf. The proxy need not be a member of the Company.

4. Please indicate with an X in the space provided how your proxy is to vote on the resolutions. If no indication is given, the proxy in his discretion will vote as he thinks fit.

5. In the Case of a Company/Corporation the proxy must be under its common seal which should be affixed and attested in the manner prescribed by its Articles of Association.

In the case of the individual shareholders, the signature of the shareholder should be witnessed by any person over 18 years of age.6. Where the Form of Proxy is signed under a Power of Attorney (POA) which has not been registered with the Company, the original

POA together with a photocopy of same or a copy certified by a Notary Public must be lodged with the Company along with the Form of Proxy.

7. In case of Marginal Trading Accounts (slash accounts), the Form of Proxy should be signed by the respective authorised Fund Manager/Banker with whom the account is maintained.

FORM OF PROXY

Name of the CompanySinger (Sri Lanka) PLC

Legal FormPublic Company with Limited Liability. Incorporated as a Public Company in Sri Lanka on 30th December 1974 under the Companies Ordinance and Re-registered under the Companies Act No. 07 of 2007 on 13th June 2008.Founded in 1877 as a Branch of Singer Sewing Machine Company, USA the shares of the Company are listed on the Colombo Stock Exchange. Accounting Year: 31st March.

Registered OfficeNo. 80, Nawam Mawatha,Colombo 2, Sri LankaTelephone: +94-11-2316316 (13 lines)Facsimile: +94-11-2423544E-mail: [email protected]: www.singer.lk

Company Registration NumberNew – PQ 160Old – PBS 802 (S.P.)

Tax Payer Identification Number124008026

BankersBank of CeylonCommercial Bank of Ceylon PLCDeutsche Bank Sri LankaHatton National Bank PLCMCB Bank Sri LankaNations Trust Bank PLCNDB Bank PLCPan Asia Bank PLCPeople’s BankSeylan Bank PLCSampath Bank PLCStandard Chartered Bank (Sri Lanka) LimitedThe Hongkong & Shanghai Banking CorporationUnion Bank PLC

AuditorsKPMG Chartered AccountantsNo. 32A, Sir Mohamed Macan Markar Mawatha,P.O. Box 186,Colombo 3Sri Lanka

RegistrarsBusiness Intelligence (Pvt) LimitedNo. 8, Tickell Road,Colombo 8Sri Lanka

Company SecretariesHayleys Group Services (Pvt) Limited.No. 400, Deans Road,Colombo 10Sri Lanka

LawyersNeelakandan & NeelakandanAttorneys-at-Law & Notaries PublicM&N Building (Level 5), No. 2, Deal Place,Colombo 3

DirectorateMr. A.M. Pandithage – Chairman (Executive)Mr. K.D.D. Perera – Non-Executive Director/Co-ChairmanMr. H.A. Pieris – Chief Executive Officer – Alternate Mr. L.N.S.K. SamarasingheMr. D. Sooriyaarachchi Mr. M.H. JamaldeenMr. Dumith FernandoMr. D.K. de. S. WIjeyeratneMr. G.J. Walker – Alternate Mr. M.H. WijewardeneMr S.C. Ganegoda – Alternate Mr. K.K.L.P. Yatiwella

Senior ManagementMr. H.A. Pieris – Chief Executive OfficerMr. M.H. Wijewardene – Director – Sales and CommercialMr. R.S. Wijeweera – Chief Executive Officer/ Director – Singer Finance (Lanka) PLCMr. L.N.S.K. Samarasinghe – Director MarketingMr. S. Ramanathan – Director – LogisticsMr. J. Mendis – Credit DirectorMr. H.A.P.S. Perera – Factory Director – Piliyandala FactoryMr. K.K.L.P. Yatiwella – Finance DirectorMr. C.A. Samarasinghe – Director – OperationsMr. L.A.D.K. Perera – Director – Information TechnologyMr. A.P. Manoratne – Deputy Director – Service and Logistics Mr. B.T.L. Mendis – Deputy Director – CommercialMr. D.B. Wijesundera – Deputy Director – MarketingMr. K.D.J.M. Perera – Deputy Director – OperationsMr. A.C.M. Irzan – Head of Treasury and Investor RelationsMr. G.A.K. Weerasuriya – Senior Manager – InventoryMr. A.U. Karunaratne – Senior Manager – Merchandising and PromotionsMr. T.G.S. Perera – Senior Manager – Field Inventory OperationsMr. I.A.S. Kolambage – Commercial Manager – Piliyandala FactoryMr. M.M.C. Priyanjith – Head of Risk ManagementMr. M. Mahesharatnam – Business Development Manager – SISIL ChannelMr. H.V. Gomes – Head of Financial ServicesMr. O.D. Amaratunga – Senior Manager – ServiceMr. W.L.I.A. Gunathilake – Business Development Manager – Singer Mega and Singer HomesMr. K.R.L. Perera – Group Administration ManagerMr. A.R.N.P.K. Wijesundera – Sales Manager – Agro and Transportation Mr. S.H. Perera – Senior Manager – Budget and Planning

Mr. T.J. Martyn – Senior Manager – Apparel SolutionsMr. N.L.D.W. Amarathunge – Operations Manager – Furniture – Piliyandala FactoryMr. A.A. Sathyamoorthy – Senior Manager – Trade CreditMr. P. Jayatilaka – Marketing Manager Mr. T.L. Seneviratne – Senior Manager – Information TechnologyMr. D.D.W. Dassanayake – Senior Manager – CreditMr. K.P. Peramunugamage – Head of Singer Business SchoolMr. L.R.P. Perera – Business Development Manager – Retail ChannelMr. N.I. Kuruppuarchchi – Senior Manager – LegalMr. S. Serasinghe – Senior Manager – DistributionMr. N.B. Ranasinghe – Senior Manager – Revenue and MarginMrs. P.T.K. Liyanage – Finance ManagerMr. R.B. Gaspe – Business Development Manager – New ProjectMr. K.I.S. Perera – Business Development Manager – J Plus ChannelMr. E.R.A. Silva – Business Development Manager – Institutional SalesMr. K.D.S. Kanishka – Senior Manager – Promotions Mr. T.U.S. Peiris – Sales Manager – Singer PlusMr. S.M.D.S.K. Jayatilake – Senior Manager – Human ResourcesMr. M.S.M. Hanas – Business Development Manager – Digital Media ChannelMr. G.T. Galagederage – Senior Manager – Research and DevelopmentMr. T.W.S.M. Perera – Senior Manager – Digital MediaDr. M. Balasuriya – Head of Regulatory and Quality AssuranceMr. U. Ganehiarachchi – Business Development Manager – Wholesale

CORPORATE INFORMATION

SINGER (SRI LANKA) PLC

No. 80, Nawam Mawatha, Colombo 2. Sri Lanka.Hot Line: (+94) (011) 5 400 400E-Mail: [email protected]: [email protected] SINGER (SRI LANKA) PLC ANNUAL REPORT 2017/18

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power of b r · contents 04 singer at a glance 06 vision/mission/values 08 highlights 09 financial...

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