Kuruwita Textile Mills PLCAnnual Report 09/10 Company History Kuruwita Tex le Mills was incorporated on 11th December 1981 under the Companies Ordinance. In January 1982 the company bought over the weaving projects of the Department of Tex le Industries in Ratnapura consis ng four units which were engaged in warping, sizing and weaving of tex le fabric. KTM has steadily developed the project so acquired, into a highly profitable unit by ploughing back profits made into the venture itself. The Company was granted permission for the quota on of its shares by the Colombo Stock Exchange on September 1992, thereby opening up new doors and opportuni es to expand its ac vi es in a manner that would posi vely contribute towards its growth. The funds raised from the public issue of shares were invested en rely in a new project namely Kuruwita Manchester Tex le Mills Ltd., (KMTM), a BOI venture by procuring 65% of the equity of the said company. The project was a modern tex le processing plant which catered exclusively to the garment industry. 1998 was a year that created new horizons for KMTM with its major modernisa on cum expansion through an investment of Rs. 550 million. In order to concentrate more on the processing plant which was set up in line with the Government’s strategy of backward integra on of the apparel industry, KTM decided to cease its weaving opera ons in 1999. KMTM embarked on a new expansion drive in 2004 with an approximate investment of Rs 500 million which resulted in a capacity increase of 65%, the benefits of which are being reaped today. Subsequently Brandix Tex le Holdings Ltd acquired the shares of the company, which were held by Mast Industries Inc, resul ng in renaming of the subsidiary as Brandix Tex les (Pvt) Ltd (BTL). BTL, which is the manufacturing arm of KTM, is the largest woven fabric manufacturer with a capacity of 3mn yards per month. With a focus on East Asian, South American and Mediterranean clients BTL concentrates on the manufacture of co on and co on-lycra fabric. In 2008 BTL was recognised interna onally, becoming the first local factory to be awarded Fair Trade and Organic cer fica ons by the Ins tute of Market Ecology of Switzerland. Contents Financial Highlights...................................................................................... 2 Chairman’s Review ...................................................................................... 3 Operational and Financial Review ............................................................... 4 Corporate Social Responsibility ................................................................... 5 Board of Directors ....................................................................................... 6 Report of the Directors ............................................................................. 7-8 Risk Management........................................................................................ 9 Corporate Governance Report ............................................................. 10-11 Audit Committee Report & Remuneration Committee Report ................. 12 Independent Auditor’s Report................................................................... 13 Income Statement ..................................................................................... 14 Balance Sheet ............................................................................................ 15 Statement of Changes in Equity - Group ................................................... 16 Statement of Changes in Equity - Company ............................................. 17 Cash Flow Statement ................................................................................. 18 Notes to the Financial Statements ....................................................... 19-33 Shareholder Information ........................................................................... 34 Financial Summary .................................................................................... 35 Notice of Meeting ..................................................................................... 36 Form of Proxy ....................................................................................... 37-38 Kuruwita Textile Mills PLC Annual Report 2010 1 Financial Highlights 2010 Rs. ‘000 2009 Rs. ‘000 Change % Operations Turnover Profit from operations Finance costs Profit after taxation Balance Sheet Non current assets Current assets Current liabilities Non current liabilities Capital and reserves Per share data (Rs.) Earnings per share Average Market Price per share PE Ratio Net assets per share Closing market value per share Ratios Gross Profit Margin Net Profit Margin Return on Equity Return on Assets Return on Capital Employed Total Debt : Equity Interest cover (times) Current Ratio 6,325,462 48,607 21,274 23,284 6,368,065 (217,986) 28,418 (224,412) -0.67% -25.14% - 1,594,840 2,005,132 1,548,932 37,956 2,013,084 1,788,730 1,807,625 1,509,472 45,798 2,041,085 -10.84% 10.93% 2.61% -17.12% -1.37% 0.63 33.4 53.21 80.52 40.00 (6.67) 31.8 81.64 24.75 5.03% -1.37% 61.62% 6.1% 0.4% 1.06% 0.65% 2.21% 1.99 1.29 3.4% -3.5% -11.13% -6.23% -12.36% 0.22 1.20 2 Kuruwita Textile Mills PLC Annual Report 2010 Another encouraging point was the acceleration of consumer spending at a rate of 3. exchange rates continued to be unfavourable to the export sector. The financial crisis that plagued the US and European economies appeared to be turning around with impressive economic data being reported from both economies. GAP and NEXT have recorded impressive performances during their latest financial years. The global economy which appears to be on the mend. we remain hopeful of a profitable performance in the new financial year as well. definitely gives us confidence of capturing more customers whilst strengthening the relationships with our existing customers.16% which was prevalent during the beginning of the financial year. This would undoubtedly ease up a significant number of economic constraints for the country and would have a positive impact on the Manufacturing base. which was at 16. The management of your company is looking at means of mitigating the adverse impact. the growth in the European economies was much slower in pace. I would like to assure you that the management of your company will continue to strive towards providing favourable returns to the shareholders of the company. whilst we were also successful in winning over new customers such as Uniqlo of Japan. recording the highest ever seen price per lb of cotton. General and Administration overheads by over 22%. during the final quarter of 2009/10. Traditionally approximately 40% of our revenue was entitled to these concessions. 5. However in the context of exchange rates. steady appreciation of the rupee does not bode well for the export market. The fact that this was achieved with a slight dip in top line of almost 1% is definitely commendable. A major reason for this slow growth was the insecurity created by the Greek debt crisis and the growing budget deficit of the United Kingdom.2% in March 2010. This is more so with the now confirmed removal of the GSP+ concessions. which is our main raw material. A number of factors give us confidence of satisfactory performance whilst a number of other factors remain to be overcome in achieving healthy returns in to the future.9% growth in earnings for FY 2009/10. We were also successful in reducing gearing which combined with the lower interest rate regime that existed in the country enabled a reduction in finance overheads as well. Encouraging Domestic Climate The most encouraging outcome of the 2009/10 financial year on a domestic aspect was the conclusion of the 3 decade long conflict in the Northern and Eastern areas of the country. with growth rates of 1. Whilst this enhanced our position internationally and locally the high interest rate regime appeared to have come to an end. Stable Outlook We believe the new financial year will bring in a stable outlook.9% and 21% growth in earnings being recorded by GAP and NEXT respectively for FY 2009. with 13. the next three quarters witnessed a turnaround in GDP figures. Your company was able to significantly reduce its Selling. The conclusion of the 30 year old conflict in the North and East during the financial year under review injected new found vigour to all sectors of the economy which rubbed off on the company as well. whilst M&S recorded 17. This change for the better would definitely be a positive for the economic climate of the country. On a customer perspective all three of our major customers. Turn to the better During the year your company was successful in turning around from a negative bottom-line of Rs. However in comparison to the US economy. and a sizeable impact on revenue growth can definitely be forecasted. M&S. as it reduces the competitiveness of Sri Lankan exports on a global scale.0% and 3. 224 million to a Net Profit of Rs. Whilst we were confident of a turnaround in profitability for this financial year at the end of FY 2008/09. During the year we were successful in strengthening our relationships with our customers which resulted in greater contributions to revenue from customers such as GAP and Tommy Hilfiger.36% in March 2010 against a high of 19. with the last quarter of FY 2009/10 recording only a 0. This stable climate which the country is witnessing after 3 decades should undoubtedly bring in better prospects in the future. This combined with the now almost confirmed loss of the GSP+ trade concessions from the European Union. The borrowing rates of the economy saw a turn for the better with the AWPLR recording a low of 10. The inflation rate.Chairman’s Review 2009 declined to 3.7% being reported respectively.6%. This is in comparison to a record high of 23.7% in April Kuruwita Textile Mills PLC Annual Report 2010 3 .2% recorded during the 2008/09 financial year.6%. which was more than double that of the quarter between September 2009 and December 2009. In addition on an external context we have been witnessing an alarming rise in the prices of cotton. are aspects of concern going forward. The cost savings measures that were implemented during the previous financial year and diligently followed during the year under review greatly contributed towards this improved performance. Aslam Omar Chairman Financial Year 2009/10 was one in which we witnessed a number of positive factors that contributed towards a turnaround in your company’s performance.2% growth in GDP. which resulted in a positive contribution to the profitability of the company. The impact of this increase in cotton prices will be reflected in the profitability of the company. On a domestic perspective the lower interest rate regime and the lower levels of inflation will bring in positive contributions to your company. 23 million. Cotton prices have grown by almost 50% during the last financial year and are continuing its upward trend. A Global Economy on the Mend Whilst the 1st quarter of the 2009/10 financial year saw the US GDP figures contracting by 7%. However the trend of the rupee appreciating in value remains a cause of concern. 37 billion. as well as a gradual easing of operations in our joint venture operations in Pakistan which ended with the closure of the facility. The year under review enabled your company to record a welcome turn around in profitability. During the year. 23 million in comparison to a net loss of Rs. Vibrant Text in Pakistan has generated a one off. This has assisted us in reducing finance costs by over 25% which was advantageous to the company and assisted in improving profitability. The recent natural disasters experienced in Pakistan and China could further prolong this high price regime. However this was a commendable achievement in the backdrop of a global economy which was not operating at its full potential and which was emerging from one of the worst global economic downturns witnessed in recent history. Resilience has been an often displayed trait of your company which we believe still remains strong and would enable us to overcome the challenges in raw material pricing. your company recorded a turnover of Rs. 6. against which your company is exploring methods of insulation. 224 million that was recorded in FY2008/09. 80. 12. Well controlled overhead costs and an effective and penetrative marketing strategy would enable us to record better returns to the shareholders during the new financial year.7% over the previous financial year. enabled the reduction of Selling General and Administrative overheads by 22% to Rs. The company has made a financial commitment for a capital investment of USD3. which had a positive contribution towards its profitability. Your company recorded a decline of 3. World Cotton Prices . Whilst we witnessed reductions in contribution towards turnover by two of our main customers NEXT and M&S we were successful in strengthening our relationships with customers such as GAP and Tommy whilst winning over new customers such as Uniqlo which is a large player in the Japanese market. including our greige hedging agreements with Pakistani fabric mills. shifting our head office from Colombo to Pannala.67% from the previous year’s figure of Rs. non recurring negative impact of Rs. Cotton prices ended at an all time high of over US$ 0. The net assets of the company stood at a value of Rs.Operational and Financial Review However the head start achieved during the early part of the year in terms of reduction in cost of sales suffered to some extent with record high cotton prices that were witnessed during the financial year. We are focussed towards winning over more non traditional customers into the future which would give us greater reach as well as insulation against recessionary shocks in various parts of the world.Cotlook FE index 90 85 80 US Cents/lb 75 70 65 60 55 50 45 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY06 FY07 FY08 FY09 FY10 Feroz Omar Managing Director 4 Kuruwita Textile Mills PLC Annual Report 2010 . realigning product development.46% in cost of sales during the year. 6. However this figure could have been higher if not for the record hike in cotton prices which was witnessed mainly during the last quarter and 2009/10 and has alarmingly flowed through to the 1st quarter of 2010/11 as well. This was possible due to a number of novel methods that were used during the year. The disposal of our joint venture. that were in place during the 1st half of the year and the focus towards JIT stocking systems.1 million in order to enhance the dyeing and finishing capacities of the company.85 per lb on 31st March 2010. This was achieved through a combination of a better economic climate as well as effective decisions taken regarding the strategy of the company. The payback period of the investment is expected to be in 4 years Better working capital management initiatives have improved the cash flow position of the company and enabled us to repay interest bearing borrowings over course of the year.33 billion which was a marginal drop of 0. The company ended the year with a net profit of Rs. However this has not resulted in a significant drawback on profitability of the company as evidenced by the turnaround recorded during the financial year.5 million which is an increase of 78. 218 million recorded in 2008/09 to an operating profit of Rs. However in spite of these adverse effects your company was able to record a gross profit of Rs. 340 million. 386.5mn. These cost savings enabled your company to convert an operating loss of Rs. The investment will be financed by a secured term loan from a commercial bank. The stringent cost reduction plans introduced by the company during the latter part of the last financial year such as the closure of our marketing offices in New York and Delhi.5 at the end of financial year 2009/10. 49 million. the benefit reaches out and impacts on a much larger number than the immediate beneficiary household. medical facilities and also a sound frame of mind. Kuruwita Textile Mills PLC Annual Report 2010 5 . with the implementation of 12 individual wells. the women of a household face the double burden of sourcing clean water to care for the good health of the family. In addition. many Sri Lankans face serious long term chronic health problems due to consuming contaminated water over a prolonged period of time. However. In the 2009/2010 35 Associates from our subsidiary BTL Pannala benefitted from this project. Healthy living is made of a number of aspects. in many instances. In this situation. We believe that by assisting our employees to improve their living conditions we can create a positive impact to the localities that they call home. Our programme of corporate social responsibility will continue to be focussed towards the betterment of the living standards of those within us and towards the communities in which we work. In this context in 2006. including a healthy diet. 5 Water supply systems and 2 community wells. 5 tube wells. Ensuring healthy living amongst our employees has been a top most priority in our CSR agenda. In many areas of the country this basic quantity is just not available to households. sanitation.Corporate Social Responsibility We as a group have continuously strived to work towards the betterment of those within us beyond our boundaries as an employer. we developed the “Care for our Own” initiative to respond to the desperate need for clean water supply systems among our Associates and their communities. We will work towards improving those standards with emphasis on ensuring the supply of clean water and sanitation. Good clean water is also essential for healthy living. The focus on “water” was also partly prompted by the importance of water in the manufacturing process in the apparel industry. The standard recommended daily intake of water for normal functioning and to avoid dehydration is 1 litre. the beauty of such a strategy is that fact that. In addition. He is a Consultant and a developer of managers. Uditha Liyanage – Independent Non Executive Director He is a leading Chartered Marketer and is the Director of the Postgraduate Institute of Management (PIM). 2. which was the Group’s maiden foray into the manufacture of knitted lingerie. As a senior banker his experience runs well over 28 years. Investment Banking. and is on the boards of directors of a number of leading companies. Its investments include a number of private equity investments including being the sole shareholder of Brandix Lanka Ltd and Phoenix Industries Ltd.a leader in fabric manufacturing today. Feroz Omar He began his career as Managing Executive of MKC Industries. he has over 18 years experience as an academic.Board of Directors 1. His exposure in the banking industry is diverse with a wealth of experience in Development Banking. 4. and a listed equity portfolio. Mohamed Aslam Omar A Fellow member of the Sri Lankan Institute of Chartered Accountants. logical integration required a fabric processing mill. he is currently responsible for Ocean 5. He is the Winner of prestigious “CIMA STAR OF THE YEAR” award. a BSc. having published and lectured extensively on branding and strategic marketing. along with Brandix Casualwear Denim. a substantial real estate portfolio. 2. He holds a MBA in International Finance. He has also subsequently pursued studies in accountancy and business administration. As Brandix grew. the Society of Certified Management Accountants and a Fellow Member of ACCA (UK). He also holds the position of CEO at Phoenix Ventures Limited which is the ultimate parent company of the group. Phoenix Ventures Limited has a diverse portfolio of investments. 5. at the CIMA Pinnacle Awards in 2006. Asset Management and Venture Capital. which he fulfilled by converting a Greenfield site into Brandix Textiles . Hasitha Premaratne He leads the Group’s overall Finance Team at Brandix Lanka Ltd and is also the CEO of Leading Investment Holdings Ltd. 3. The Brandix India Apparel City project also falls under his purview. Dr. in Computer Science and is an Associate member of CIMA (UK). with a customer base that spans the region. An experienced senior corporate manager.Lending at DFCC Bank 4. 3. His involvement with Phoenix Ventures Ltd allows him to bring in a wealth of knowledge in various sectors to the company. 1. Hewa Annakkage Ariyaratne – Independent Non Executive Director He is a science graduate with first class honours. Lanka and Quenby Lanka Prints. both of which he helped form. 6 Kuruwita Textile Mills PLC Annual Report 2010 . He is also the Executive Vice President . an Investment Company within the Brandix Group. plant and equipment of the Company and of the group is set out in Note 14 to the financial statements on page 25 and 26 of this report. The financial statements are prepared on a going concern basis. Changes in Group Equity Consolidated statement of changes in equity is given on page 16 Total shareholders equity as at the Balance Sheet date has declined to Rs 1.21% as at 31st March 2009) 7. The directors have taken reasonable steps to safeguard the assets of the Company and of the group and established appropriate internal control systems with a view to preventing and for the detection of fraud and other irregularities. 2000. profits and income of Brandix Textiles Ltd is exempt from income tax. 4. the directors have selected appropriate accounting policies and applied them in a consistent manner.498 million of the previous year.000 consisting of 25. 7 of 2007 to prepare financial statements for each year giving a true and fair view of the state of affairs of the company and its subsidiary as at the end of the financial year and of the profit and loss. provision for income tax for the year ended 31. distribution of which together with the listing of major shareholders is given on page 34 The public holding of the issued shares as at 31st March 2010 was 19.000 ordinary shares. Review of operations A review by the Chairman of the group’s operations during the year ended 31st March 2010 is set out on page 3 of this Annual Report. 10 of 2006.03. which are set out in pages 13 to 33 The directors are required by the provisions of the Companies Act No. changes in equity and cash flows of the company and its subsidiary for the financial year. It is spread among 983 shareholders. it continues to operate as the holding company of Brandix Textiles Ltd which is a state-of the-art textile processing factory providing finished fabric to exporters. the directors have a responsibility to ensure that the Company maintains sufficient accounting records to disclose.69% (19. Kuruwita Textile Mills PLC Annual Report 2010 7 .Rs 90.000. Responsibility in respect of Financial Statements The Board of Directors are responsible for preparing and presenting the financial statements.000. provided for. 5. 8. The directors are confident that they have discharged their responsibility as set out in this statement. The planned capital expenditure of the group for the year 2010/11 amounts to approximately Rs 350 million. 6. In view of the discontinuation of its weaving operations. Capital expenditure An analysis of the changes during the year ended 31st March 2010. Taxation Company In terms of the provisions of the Inland Revenue Act No. They also confirm that to the best of their knowledge all statutory payments payable by the Company and its subsidiary as at the Balance Sheet date have been paid or where relevant. 3.2010 was not made in view of the adjusted tax losses. for a total period of Seventeen Years. with reasonable accuracy the financial position of the Company and of the group. the profits and income of the Brandix Textiles Limited in respect of the year of assessment 2009 / 2010 is exempt from income tax. In view of the above. The group has recorded a 0. and to ensure that the financial statements presented comply with the requirements of the Companies Act No.Report of the Directors For the year ended 31st March 2010 The Directors of Kuruwita Textile Mills PLC have pleasure in presenting their report for the year ended 31st March 2010 together with the audited financial statements for the year then ended. Share Capital The Stated Capital of the Company as at 31st March 2010 is Rs. Whilst the Company has discontinued its operating activities.478 million from Rs 1. Principal activity of the group The principal activity of the group continues to be the manufacture and sale of textiles. as amended. of which the prevailing tax exemption period of twelve years of the Company was commenced on 01 April. the profit and income of the Company is liable for income tax. 1.250. in the property. Turnover The turnover of the Group during the financial years ended 31st March is shown in the Income Statement. In preparing the financial statements. the Company has not recorded a turnover. 7 of 2007. Further. However. Adjusted tax losses available for carry forward as at 31 March 2010 is approximately Rs 92 million (2009 . 2.1 million) Subsidiary In terms of the Agreements with the Board of Investment of Sri Lanka. Such policies are supported by reasonable and prudent judgment and all applicable Accounting Standards have been followed.67% decrease in turnover when compared with the previous year. of Shares Mr. Risk Management Specific steps taken by the Company in managing the various risks are detailed on page 9 of this Report. Aslam Omar The report of the Audit Committee is set out on page 12 Remuneration Committee (1) (2) (3) (4) Mr. the financial statements. Nimal Perera 12. The directors have disclosed the nature of their interests in contracts at meetings of the directors 11. the Audit Committee and Remuneration Committee. 166 166 14. Nimal Perera (resigned w. Hasitha Premaratne (appointed w.f 18th May2009) In accordance with Article 84 of the Articles of Association of the Company. 18th May2009) Mr. Nimal Susiri Perera (resigned w.f. Chartered Accountants who have expressed their willingness to continue will be proposed at the forthcoming Annual General Meeting. of Shares No. 18th May 2009) Mr. H A Ariyaratne Mr.f.e. 12th May 2009) Dr.Report of the Directors (Cont. As at 31st March 2010 the following members served on the Audit Committee and Remuneration Committee of the Company. Directors’ interests in the shares of the Company 2010 2009 No. or disclose in. Deferred Tax In view of tax losses available for carry forward no provision has been made for deferred tax liabilities in the financial statements of the Company and its subsidiary. 16. Hewa Annakkage Ariyaratne retires by rotation and being eligible. in any contract or proposed contract with the Company other than those set out in Note 27 to the financial statements.e. 13. Board Committees The Board is supported by two sub committees namely. 18.e. offers himself for reelection. direct or indirect. By Order of the Board. Uditha Liyanage (appointed w. Feroz Omar Mr. PricewaterhouseCoopers. Directors’ interest in contracts and proposed contracts with the Company. Varners International (Private) Limited Secretaries Colombo 12th August 2010 8 Kuruwita Textile Mills PLC Annual Report 2010 .f 12th May 2009) Dr. 18th May 2009) Mr.f.e.) For the year ended 31st March 2010 ESC paid could be deducted against the income tax payable for the year of assessment in which the ESC is paid and any un-recouped ESC is available for carry forward for setoff against income tax payable for subsequent four years of assessment. Post balance sheet events No other events have occured since the balance sheet date which would require adjustments to. Mohamed Aslam Omar (Chairman) Mr. The Board is satisfied with the effectiveness of the system of Internal Control for the period upto the date of signing the Financial Statements. Mr. 9.e.. Hewa Annakkage Ariyaratne Mr. The directors of the Company have no interest.e. Appointment of Auditors A resolution to re-appoint our present auditors. Donations During the year the Company has not contributed any funds for charitable purposes. 10. H A Ariyaratne Mr. Feroz Omar The report of the Remuneration Committee is set out on page 12 17. Corporate Governance and Internal Controls The Corporate Governance practices of the Company are set out on pages 10 & 11 of this Report. Directors The following Directors of the Company held office during the year under review: Mr. Uditha Liyanage (appointed w. The Economic Service Charge (ESC) paid for the year ended 31 March 2010 is carried forward to set off against income tax payable in future years. Nimal Perera (resigned w. Uditha Liyanage (appointed w.f 12th May 2009) Dr. other than those disclosed in Note 29 on page 33 to the financial statements. Audit Committee (1) (2) (3) (4) Mr.e. These committees have been delegated with specific responsibilities in line with the Corporate Governance Rules of the Colombo Stock Exchange.f. natural causes. Operational Risk: Interruptions on production due to machinery and production issues.Risk Management Risk Management Any event that has the potential to hinder the achievement of an organization’s financial. Business Risk: The subsidiary of the company. Financial Risk: Foreign exchange risk: The subsidiary of the company has mitigated a greater portion of foreign currency risks by using the US Dollar as its functional currency since a majority of its sales and purchases are recorded US Dollars. fraud by staff. The industry is highly susceptible to a number of local and global factors that can both hinder as well as promote its growth. Factors such as exchange rate stability. The finance division of the company constantly looks at various methods that could be used to mitigate this risk. to ensure minimal interruptions to the production process. The production division ensures adherence to a number of strict policies and procedures in production. Credit Risk: The operating model of the industry necessitates provision of credit to its customers. The subsidiary constantly works with its customers. burglary. The subsidiary has a number of divisions that are responsible for its operations as well as its controls. However all operational costs are incurred in Sri Lankan Rupees and therefore the prevalent exchange rate will always have either a positive or negative impact on the overall performance and the ability to externally compete. Following is a review of the risks that are faced by the subsidiary of the company which is its operating arm. Comprehensive insurance cover has been obtained to mitigate losses arising from a multitude of risks such as fire. Brandix Textiles Ltd.. The subsidiary also has an IT division which works towards ensuring that all IT related risks are mitigated and that employees adhere to all IT policies. trade concessions. Interest Rate Risk: The subsidiary constantly reviews the interest rates that are charged on its borrowings and always attempts to ensure that finance costs are maintained at low levels whiles mitigating adverse impacts that may arise through volatile interest rates. Through risk management organizations attempt to control this uncertainty in order ensure that the objectives of the company can be achieved unhindered whilst also ensuring that opportunities are exploited fully for organizational benefit. raw material pricing and resilience of external economies can significantly influence the business activities of the subsidiary. information technology failures and human error are all factors that contribute towards operational risk in the subsidiary of the company. is involved in the manufacturing of textile which is supplied to the apparel industry. breakdown of internal controls. Kuruwita Textile Mills PLC Annual Report 2010 9 . claims by clients and third party on negligence and business interruptions. employees and policy makers in taking steps to mitigate these risks. operational and strategic objectives can be termed as a risk. However the subsidiary follows stringent policies in providing credit to its customers and constantly follows up on collections. the Board of Directors has placed greater emphasis on compliance with such principles. legal. 18th May 2009) Mr. Each of the Non-Executive Directors has declared his independence to the Board and in turn the Board has assessed and determined the independence of each of such NonExecutive Directors.e. H A Ariyaratne. The Board members communicate with the Senior Management staff of the Company frequently to consider among other matters. The Board of Directors is of the view that these principles will ensure good governance.Corporate Governance Report The Board of Directors of the Company recognizes the importance of adhering to principles of corporate governance and ethical conduct and endeavors to uphold the highest standard of these principles in conducting the operations of the Company. transactions are authorized and recorded properly and that material errors and irregularities are either prevented or detected within a timely period. the Audit Committee and Remuneration Committee. investment and employment of key managerial staff require the approval of the Board of Directors. 18th May 2009) are the Independent Non.f.f 12th May 2009) and Dr. The composition of Board of Directors meets with the rules stipulated by the regulatory authorities on the Non Executive and Independent Directors.f. Company Secretaries Varners International (Private) Limited. Going Concern The Directors confirm that they are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future.e. Effectiveness of the Board The Board of Directors consists of persons with an appropriate balance of expertise and ability in the fields of senior corporate management. (1) (2) (3) (4) Mr. With the introduction of the new rules on Corporate Governance by regulatory authorities. Audit Committee As at 31st March 2010 the following members served on the Audit Committee of the Company. Uditha Liyanage (appointed w. finance and marketing and in the apparel industry. Accordingly.e. Board Committees The Board is supported by two sub committees namely. they continue to adopt the 10 Kuruwita Textile Mills PLC Annual Report 2010 . Nimal Perera (resigned w.e. Board of Directors Profiles of the Board of Directors of the Company are set out on page 06 of this Annual Report. In pursuit of the above the Board of Directors has also given due consideration to the Code of Best Practice for Corporate Governance issued by the Institute of Chartered Accountants of Sri Lanka. H A Ariyaratne Mr.Executive Directors of the Company. Aslam Omar The report of the Audit Committee is set out on page 12 Remuneration Committee As at 31st March 2010 the following members served on the Remuneration Committee of the Company. Nimal Perera (resigned w. (1) (2) (3) (4) Mr.f 12th May 2009) Dr. The Company’s system have been designed to provide the Directors with reasonable assurance that assets are safeguarded. During the year the Board comprised of 02 Non-Executive Directors who are also Independent. These committees have been delegated with specific responsibilities in line with the new rules on Corporate Governance issued by regulatory authorities. Nimal Perera (resigned w. 07 of 2007. Mr. accountability and integrity in all its activities.e. 18th May 2009) Mr. transparency. H A Ariyaratne Mr. Uditha Liyanage(appointed w. Mr. the performance and Financial Statements for the period and discuss the strategies and forecast The decisions relating to capital expenditure.e.f.f 12th May 2009) Dr. who act as Secretaries to the Company are qualified to act as Secretaries as per the provisions of the Companies Act No. Uditha Liyanage(appointed w. Feroz Omar The report of the Remuneration Committee is set out on page 12 Internal Control The board has overall responsibility for the Company’s system of internal financial control and for reviewing its effectiveness. The Articles of Association of the Company are in compliance with these provisions except for the following. Kuruwita Textile Mills PLC Annual Report 2010 11 . The relevant Articles need to be amended by way of a Special Resolution approved by the shareholders to incorporate the following provisions as indicated: To replace Article 148 To replace Article 151 Insert as new Article 155 immediately after Article 154.going concern basis in preparing the Company’s Financial Statements. the Financial Statements of the Company are prepared in accordance with Sri Lanka Accounting Standards and in accordance with the requirements of the Colombo Stock Exchange. Compliance with Legal requirements The Board makes every endeavor to ensure that the Company complies with the Laws and Regulations. such advertisement. ii) Where notice is given by an advertisement. Securities Notice:ii) Any member whose registered address is not within Sri Lanka may name an address within Sri Lanka which for the purpose of notice. The Colombo Stock Exchange by their Circular No. the Directors recommended that a Resolution. Tamil and English national daily newspapers. if thought fit. Compliance with RulesNotwithstanding anything to the contrary contained in the Articles of Association of the Company. As these amendments are mandatory to comply with the Listing Rules of the Colombo Stock Exchange. 12/2009 dated 7th December 2009. to approve the amendments to the Articles as set out above. shall be published in Sinhala. has made it mandatory for all listed Companies to incorporate certain provisions in their Articles of Association in respect of (a) Transfer and Registration of Shares. and Exchange Commission Act No. 07 of 2007. 36 of 1987 and the Rules of the Colombo Stock Exchange. The Board of Directors requires that in all possible aspects. (c) Joint Shareholding and (d) Compliance with Rules. which shall be in force from time to time. be considered by the members and. shall be considered as his registered address. the Company shall comply with the Rules of the Colombo Stock Exchange and the Central Depository System. (b) Notices. so long as the Company is listed on the Colombo Stock Exchange. due notice of which is hereby given. The Board of Directors recognizes and takes responsibility to ensure compliance with applicable laws and regulations including the Companies Act No. Audit Committee 7th June 2010 Remuneration Committee Report The Remuneration Committee of the Company comprises of 2 Independent Non-Executive Directors. The remuneration committee is tasked with reviewing. Feroz Omar (Executive Director) who are members of the Remuneration Committee. H A Ariyaratne Chairman . Mr. In conclusion the Audit Committee would like to place on record that it is satisfied with the company’s accounting policies and risk management. comprises of 02 Independent Non-Executive Directors. Based on the recommendations of the remuneration committee the Board will determine the remuneration for the executive directors and senior management. The Audit Committee is of the view that the external auditors’ continue to perform their functions independently and objectively. Based on such findings the Audit Committee has recommended to the Board for seek the re-appointment of PWC as the external auditors of the Company at the forthcoming Annual General Meeting. Uditha Liyanage (Independent Non Executive Director) and Mr. H A Ariyaratne (Independent Non-Executive Director) functions as the Chairman of the Remuneration Committee along with Dr. H A Ariyaratne (Non-Executive Director) functions as the Chairman of the Audit Committee along with Dr. The Committee also reviewed the external auditor’s report and management letter for the financial year 2009/10. The Audit Committee is entrusted with the pivotal role of ensuring accuracy and reliability of financial statements of the Company. formulating and recommending the remuneration of the executive directors and senior management to the Board. Mr.Audit Committee Report The Audit Committee of the Company which has been appointed and is responsible to the Board of Directors.Remuneration Committee 7th June 2010 12 Kuruwita Textile Mills PLC Annual Report 2010 . Uditha Liyanage (NonExecutive Director) and Mr. All internal controls and other issues relating to the management control and risk minimization function of the company were also reviewed by the committee during the year. the Audit Committee members have conducted several meetings to deliberate and discuss on matters relating to the preparation of financial statements and determine the performance and independence of the external auditors. Aslam Omar (Chairman) who are members of the Audit Committee. H A Ariyaratne Chairman . The profiles of the members are included in page 6 of this report. The Audit Committee in discharging its functions has evaluated the audit procedures and independence of the external auditors (PWC) . The Committee reviewed the provisional financial statements for the four quarters for the year ending 31st March 2010 that was published. In discharging its responsibilities. the Company maintained proper accounting records for the year ended 31 March 2010 and the financial statements give a true and fair view of the Company’s state of affairs as at 31 March 2010 and of its results for the year and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. the income statement. as well as evaluating the overall financial statement presentation. Ms. 100. S Manoharan ACA. Braybrooke Place Colombo 2 Sri Lanka. 07 of 2007.Independent Auditor’s Report PricewaterhouseCoopers P. of the Company and its subsidiary dealt with thereby.O. and making accounting estimates that are reasonable in the circumstances. so far as concern the members of the Company. on a test basis. S Hadgie FCA. Opinion 6 In our opinion. evidence supporting the amounts and disclosures in the financial statements. Ms. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. Telephone : 94-11-4719838 (Hunting) Facsimile : 94-11-2303197 / 7 To the members of Kuruwita Textile Mills PLC Report on the Financial Statements 1 We have audited the accompanying financial statements of Kuruwita Textile Mills PLC and its subsidiary. selecting and applying appropriate accounting policies. Partners : Y Kanagasabai FCA. S Gajendran FCA. which comprise the balance sheet as at 31 March 2010. 5 We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. 7 Scope of Audit and Basis of Opinion 3 Our responsibility is to express an opinion on these financial statements based on our audit. the statement of changes in equity and the cash flow statement for the year then ended. the consolidated financial statements give a true and fair view of the state of affairs as at 31 March 2010 and consolidated results for the year and cash flows for the year then ended. In our opinion. Management’s Responsibility for the Financial Statements 2 Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. and a summary of significant accounting policies and other explanatory notes as set out on pages 19 to 33. An audit also includes assessing the accounting principles used and significant estimates made by management. S Perera ACA. We conducted our audit in accordance with Sri Lanka Auditing Standards. These financial statements also comply with the requirements of Sections 153(2) to 153(7) as appropriate of the Companies Act No. whether due to fraud or error. in accordance with Sri Lanka Accounting Standards. D T S H Mudalige FCA. This responsibility includes: designing. so far as appears from our examination. 8 4 PricewaterhouseCoopers Chartered Accountants Colombo 16th August 2010. Kuruwita Textile Mills PLC Annual Report 2010 13 . An audit includes examining. Box 918. N R Gunasekera ACA. implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. We therefore believe that our audit provides a reasonable basis for our opinion. 418 Nil 26.67) 1.673 Nil Nil (3.345 2.190 Earnings/(loss) per share for profit / (loss) attributable to the equityholders of the Group / Company during the year -basic (Rs) 12 0.938.418 26.630 Nil Nil (5.06 0.462 (5.801 (38.412) (166.986) 9.592 23.002) 48.285) (217.571 2.284 15.720) 216.net Share of result of joint venture company Profit / (loss)before tax Tax Net profit / (loss) Attributable to equity holders of the Company Minority interest 11 5 7 9 10 6 4 2010 6.418 Nil Nil Nil 26.062) (263.274) Nil 23.065 (6.174) (238) (224.284 2009 6.418) 12.380 (224.190 21.418 Nil 26.467 (71.607 (4.195) (386.367) (6.212) 26.85 The notes on pages19 to 33 form an integral part of these consolidated financial statements 14 Kuruwita Textile Mills PLC Annual Report 2010 .891) 386.412) 2010 Nil Nil Nil 31.428 (238) 21.428 Nil Nil Nil 21.049) (21.850 (28.245) 21.325.Income Statement (all amounts in Sri Lanka Rupees thousands) Year ended 31 March Group Notes Sales Cost of sales Gross profit Other operating income Distribution costs Economic service charge Administrative expenses Operating (loss) / profit Non operating income Finance (costs) / income .284 Nil 23.659) (224.418 Company 2009 Nil Nil Nil 24.753) (57.63 (6.692 7.190 Nil 21.151.368.652) (12. 167.407 Nil 26.695 1.298 564.248 121.Balance Sheet (all amounts in Sri Lanka Rupees thousands) Year ended 31 March Group Notes ASSETS Non-current assets Property.593 Nil Nil Nil 687 Nil Nil 687 687 562.486 45.596. Sgd. plant and equipment Investment in subsidiary company Investment in joint venture company Current assets Inventories Receivables and prepayments Current tax receivable Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity Stated capital Exchange equalisation reserve Revaluation and other reserves Retained earnings Minority interest Non-current liabilities Borrowings Defined benefit obligations Current liabilities Trade and other payables Current tax liabilities Borrowings Total liabilities Total equity and liabilities The board of Directors is responsible for the preparation and presentation of these financial statements. Sgd.599.462 2.594.932 1.294 Nil 89. The financial statements were authorised for issue by Board of Directors on 16th August 2010.827 434.327 Nil 1. Hasitha Premaratne Director Sgd.085 3.762.798 1.013.132 3.788.221 2.615 534.840 Nil Nil 1.548.281 17 Nil 4.339 1 375.500 Nil 556.814 1.118.355 121.472 1.298 4.586. Mohamed Aslam Omar Director 14 15(a) 16 1.730 1.658 542.084 Nil 37.953 562.956 37.764 Nil 286 Nil 6.649 564.641 17 496.367 2.026 412.413 2010 2009 2010 Company 2009 17 18 19 24 25 349.886 454.270 3.972 1.363 6.012. Chief Finance Officer The notes on pages 19 to 33 form an integral part of these consolidated financial statements Kuruwita Textile Mills PLC Annual Report 2010 15 .312 42.294 271.840 1.915 408.555.599.280 Nil 561.987 443.355 349.413 21 22 20 21 I certify that these financial statements have been prepared in compliance with the requirements of the Companies Act 07 of 2007.956 959.005.596.041.625 3.323 1.015 Nil 280.280 349.294 282.291 5.115 Nil Nil Nil 4.573 Nil 560.280 123.888 3.821 413.594.509.972 349.500 Nil 557.807.294 Nil 88.661 1 4.160 1.330 462.772 Nil 589.019 124.264 434. 220 Nil Nil Nil Nil Nil 349.Group (all amounts in Sri Lanka Rupees thousands) Notes Stated Exchange Revaluation capital equalisation reserve reserve 349.821 Nil 10.238) Nil (11.085 2.506) (57.148) 23.221 99.294 349.497) (224.209 13.377 Nil (33.858 Nil (8.991) (166.692 413.412) 2.221 542.026 (15.275 Retained earnings Minority interest Total Balance at 1 April 2008 Effect of movement in foreign exchange rates Revaluation surplus Depreciation transfer Dividends Net profit Balance at 31 March 2009 Balance at 1 April 2009 Effect of movement in foreign exchange rates Depreciation transfer Dividends Net profit Balance at 31 March 2010 25 13 25 25 13 618.367 (15.084 The notes on pages 19 to 33 form an integral part of these consolidated financial statements 16 Kuruwita Textile Mills PLC Annual Report 2010 .294 89.753) 412.658 412.886 Nil 441.961 441.041.658 25.677 Nil Nil Nil Nil 282.294 193.592 534.397 583.616.284 2.659) 542.481 1.205) Nil Nil 443.013.940) 15.041.026 454.987 Nil (10.899) Nil Nil Nil 271.294 (10.047 141.327) Nil 768 (24.208) 7.137) Nil (36.615 (4.Statement of Changes in Equity .085 Nil Nil Nil Nil 349.519 (768) Nil Nil 454.205 (24.886 282. 229 (24.190 560.606 Nil 768 (24.Company (all amounts in Sri Lanka Rupees thousands) Notes Stated Revaluation capital reserve 349.573 1.019 Retained earnings 124.190 121.991) 21.294 The notes on pages 19 to 33 form an integral part of these consolidated financial statements Kuruwita Textile Mills PLC Annual Report 2010 17 .741 Nil (24.280 Total Balance at 1 April 2008 Revaluation surplus on lands and buildings Depreciation transfer Dividends Net profit Balance at 31 March 2009 Balance at 1 April 2009 Depreciation transfer Dividends Net profit Balance at 31 March 2010 13 14 (d) 25 13 487.294 Nil Nil Nil 349.275 76.418 561.573 121.175 76.248 (1.418 124.294 13.248 89.115 560.940) 26.593 Nil Nil Nil Nil 349.294 349.741 (768) Nil Nil 89.229) Nil Nil 88.940) 26.115 Nil (24.991) 21.Statement of Changes in Equity . 177 109.404 6.390) 12.922) (282) (6.806 (48.664 92.047) (155.940) (11.072) 4.072) 701 19 202.506) 89.662 701 6.236) Nil Nil (30.868 22.553) (30.377) (52.430) Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 13 28 (iii) (24.499 (29.208) 81.218 22.291 5.119 (13.268 16 14 1.288) (182.647) 17.Cash Flow Statement (all amounts in Sri Lanka Rupees thousands) Year ended 31 March Group Notes Operating activities Cash generated from operations Gratuity paid Interest paid Tax paid Economic Service Charge paid Net cash generated from operating activities Investing activities Dividend received from Joint Venture Company Purchase of property.940) Nil Nil Nil Nil (24.549 Nil Nil (281) Nil 22.363 (2.567) Nil Nil Nil Nil (21.622) (29.455 (2.567) (13.062) 43.940) (21.363 The notes on pages 19 to 33 form an integral part of these consolidated financial statements 18 Kuruwita Textile Mills PLC Annual Report 2010 .119 6.117) (19.332 321.909 (4.430 (25.333) (24.942) 92.627) (24. plant and equipment Proceed from disposal of Joint Venture Company Proceeds from sale of property.942) 188.072 (5.097) 278.629 (4.520 (68.100) (18) (6.455 202.886 Nil Nil (18) Nil 22. plant and equipment Net cash used in investing activities Financing activities Dividend paid to Company shareholders Dividend paid to minority shareholders Proceeds from long term borrowings Payment of term loan Payment of long term borrowings Net cash used in financing activities (Decrease) / increase in cash and cash equivalents Movement in cash and cash equivalents At start of year (Decrease) / increase At end of year 2010 2009 2010 Company 2009 26 22 9 72.991) (8. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. 2. irrespective of the extent of any minority interest. The subsidiary company’s financial statements are prepared and presented in United States Dollars (USD) and the directors of the Company are of the opinion that the use of USD as the functional currency provides information about the subsidiary that is useful and reflects the economic substance of the underlying events and circumstances relevant to the Company due to: (i) the significance of USD based transactions in relation to its inventories. Colombo 03. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired. being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary. Identifiable tangible and intangible assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. These financial statements have been approved for issue by the Board of Directors on 16th August 2010. The registered office is situated at No. Galle Road. 409. plant and equipment being purchased in USD. Subsidiary is fully consolidated from the date on which control is transferred to the Group and de-consolidated from the date that control ceases.1 Basis of preparation The consolidated financial statements are prepared in accordance with and comply with Sri Lanka Accounting Standards. The Group’s interest in the joint Kuruwita Textile Mills PLC Annual Report 2010 19 . Equity accounting involves recognising in the income statement the group’s share of the joint venture’s profit or loss for the year. These policies have been consistently applied to all the years presented. The inter-company transactions.Notes to the Financial Statements (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 1 General information Kuruwita Textile Mills PLC was incorporated under the Companies Act No 17 of 1982 on 11 December 1981 and re-registered on 14 July 2008 under the Companies Act No 07 of 2007. The unrealised losses are also eliminated. balances and unrealised gains on transactions between group companies are eliminated. The Group has adopted all new and revised SLAS that are effective in the current financial year and the accounting policies of the Group have been revised where relevant to be in compliance with the new and revised SLAS (b) Transactions and minority interests The group applies a policy of treating transactions with minority interests as transactions with parties external to the Group.2 (a) Consolidation Subsidiaries Subsidiary is the entity over which the Group has the power to govern the financial and operating policies generally accompanying by a shareholding of more than one half of the voting rights. Purchases from minority interests result in goodwill. the difference is recognised directly in the income statement. cash flows generated from the subsidiary’s assets and liabilities being primarily in USD. that came into effect on 3 May 2007. plant and equipment. receivables. equity instruments issued and liabilities incurred or assumed at the date of exchange. payables. equity and loan capital. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. (ii) (iii) (c) Joint ventures The Group’s interest in jointly controlled entities are accounted for by the equity method of accounting. The purchase method of accounting is used to account for the acquisition of subsidiary by the Group. Disposals to minority interests result in gains and losses for the Group and are re corded in the income statement. and a significant portion of property. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. plus costs directly attributable to the acquisition. The cost of an acquisition is measured as the fair value of the assets given. unless otherwise stated. The consolidated financial statements are prepared under the historical cost convention as modified by the revaluation of certain property. 2. The financial statements of the subsidiary company are prepared in United States Dollars (USD) and comply with Sri Lanka Accounting Standards. all other decreases are charged to the income statement.) (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) ventures are carried in the balance sheet initially at cost and adjusted thereafter for the post acquisition change in the Group’s share of net assets of the investee.Notes to the Financial Statements (Cont. When revalued assets are sold. plant and equipment is stated at historical cost or construction cost. All other property.3 Foreign currency translation (a) Presentation currency Items included in the financial statements are measured using Sri Lanka Rupees (LKR). The corresponding 20 Kuruwita Textile Mills PLC Annual Report 2010 .. The Group previously adopted proportionate consolidated method which is the bench mark treatment of accounting for investment in joint ventures as recommended by Sri Lanka Accounting Standard 31 (interest in joint ventures). c) Disposal Gains and losses on disposals are determined by comparing the proceeds with carrying amount and are recognised in determining operating profit or loss in the income statement. 2.5 Accounting for leases by the lessee Leases of property. d) Impairment The carrying value of property.4 Property. (d) Financial period All companies in the Group have a common financial year which ends on 31 March. plant and equipment a) Measurement All property. 2. to their residual values over their estimated useful lives as follows. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. Decreases that offset previous increases of the same asset are charged against the revaluation reserve. based on valuations by external independent valuers. Historical cost includes expenditure that is directly attributable to the acquisition of the items. less subsequent depreciation for buildings. (b) Transactions and balances Foreign currency transactions are translated into the reporting currency using the exchange rates prevailing at the dates of the transactions. If such indication exists and where the carrying value exceeds the estimated recoverable amount the assets are written down to their recoverable amount. Freehold buildings Plant and machinery Factory equipment Furniture and fittings Office equipment Motor vehicles Computer hardware Computer software 50 years 5 years 5 years 5 years 5 years 5 years 2 years 3 years The asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. the amounts included in the revaluation reserve is transferred to retained earnings. plant and equipment is initially stated at historical cost less depreciation. Impairment losses are recognised in the income statement unless it reverses a previous revaluation surplus for the same asset. commencing from 1 April 2006 the group changed the accounting policy for joint ventures whereby the equity method of accounting is adopted in accounting for investment in joint ventures. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset. including incidental expenses less depreciation. Increases in the carrying amount arising on revaluation are credited to revaluation reserves in shareholders’ equity. Land and buildings are subsequently shown at fair value. However. 2. and the net amount is restated to the revalued amount of the asset. plant and equipment is reviewed for impairment either annually or when events or changes in circumstances indicate the carrying value may not be recoverable. Each year the difference between depreciation based on the asset’s original cost is transferred from ‘revaluation reserve’ to ‘retained earnings’. b) Depreciation Freehold land is not depreciated as it is deemed to have an indefinite life. plant and equipment where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Depreciation on other assets is calculated using the straight line method to allocate their cost or revalued amounts. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. 6 Inventories Inventories are stated at the lower of cost and net realisable value.10 Defined benefit obligations Typically. other direct costs and related production overheads applicable to products subcontracted to the Company. and the amount has been reliably estimated. The cost of inventories consist of direct labour. it is written off against the allowance account for trade receivables. when they are due.Notes to the Financial Statements (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) rental obligations.11 Defined contribution plans All local and expatriate employees of the Company are members of the Employees’ Provident and Trust Funds. The carrying amount of the asset is reduced through the use of an allowance account. Where there are a number of similar obligations. The interest element of the finance cost is charged to the income statement over the lease period. The company has not further payment obligations once the contribution have been paid. deposits held at call with banks. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. The contributions are recognised as employee benefit expenses. When a trade receivable is uncollectible. 2.12 Trade payables Trade payables are recognised at cost. net of finance charges. 2. Subsequent recoveries of amounts previously written off are credited in the income statement. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. less provision for impairment. Net realisable value is the estimate of the selling price in the ordinary course of business less costs of completion and selling expenses. and the amount of the loss is recognised in the income statement. 2. Management periodically evaluated positions taken in tax returns with respect to situations in which applicable tax regulations it subject Kuruwita Textile Mills PLC Annual Report 2010 21 . Provisions are not recognised for future operating losses. 2. which is usually dependent on one or more factors such as period of service and compensation. plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term. completed as at the balance sheet date but not invoiced and products partially completed. A provision is recognised even if the like hood of an outflow with respect to any one item included in the same class of obligations may be small. are included in other long-term payables. net of transaction costs incurred. 2. and bank overdrafts. 2. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. 2. so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. 2. The property. The actuarial gains and losses are charged or credited to income statement in the period in which they arise. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows.7 Trade receivables Trade receivables are recognised initially at fair value and subsequently carried at cost. it is probable that an outflow of resources will be required to settle the obligation. 2. to which the Company contributes 12% and 3% respectively of such employees’ basic or consolidated wage or salary. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation.13 Borrowings Borrowings are recognised initially at fair value.14 Current and deferred income tax The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date where the Company operate and generate taxable income. Borrowings are subsequently stated at amortised cost. a defined benefit plan defines an amount of benefit that an employee will receive on retirement. other short-term highly liquid investments with original maturities of three months or less. the like hood that an outflow will be required in settlement is determined by considering the class of obligations as a whole.8 Cash and cash equivalents Cash and cash equivalents includes cash in hand.9 Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events. the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Dividend income Dividend income is recognised when the right to receive the payment is established. 5 Operating profit / (loss) The following items have been charged / (credited) in arriving at operating profit / (loss): Group 2010 Directors’ emoluments Auditors’ remuneration .248 Nil Nil Nil 480 22 Kuruwita Textile Mills PLC Annual Report 2010 . incorporated in Pakistan which trades in printed textiles. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax is provided in full.224 239.owned assets (Reversal of provision) / provision for bad debts (Reversal of provision) / provision for slow moving inventories Repairs and maintenance expenditure Staff costs (Note 8) 2.437 Nil Nil Nil Nil Company 2009 Nil 75 180 255 1. However. Interest income Interest income is derived from short-term investment of excess funds and is recognised on an accrual basis. 4 Sales Sales.281 103.654 335. are now shown under current borrowings. on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.) (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. which represents the invoiced value of goods sold mainly consist of sales of dyed fabric to exporters.883 20. The Company recognises revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.16 Comparatives The bank facility which was previously disclosed under trade and other payables.147 2009 Nil 335 180 515 170.000 428 Nil 428 170.776 82. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.15 Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods in the 3 Review of operations ordinary course of business activities. Though the Company has discontinued its operating activities.Audit . using the liability method.Notes to the Financial Statements (Cont. rebates and discounts.Non audit Depreciation (Note 14) .000 85 Nil 85 1. 2. Revenue is shown net of value-added tax. which has been disposed as at 30th June 2009 . The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved.. returns.414) 148.705 (4.575) (135. it continues to operate as the holding company of Brandix Textiles Limited which is a textile processing factory providing fabric to exporters. Management believes that the above re classifications give a fairer presentation. The subsidiary company held an interest of 50% of Vibrant Tex (Private) Limited. 2.286 2010 2. 7 Non operating income Non operating income of Group mainly consists of scrap sales of Rs 12.Rs 2.524) (13.Rs Nil) and loss on sale of joint venture company Rs 12.000) and rent income of Rs 2.824.862) (6.bank overdrafts .320.478 239.016.726.600.Rs 2.Rs Nil).Notes to the Financial Statements (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 6 Other operating income Other operating income of Group mainly consists of rent income of Rs 2.759 12.373).Rs 21. plant and equipment of Rs 3.373) and other operating income of Company mainly consists of dividend income from subsidiary of Rs 29.320.200 (15. Staff costs Group 2010 Salaries and wages Defined benefit obligations (Note 22) Defined contributions plans Average monthly no.274) 2.351) and loss on disposal of property.163 (2009 .626.147 2009 305.119 (2009 .Full time 211.305.Rs 9.032 Nil 309 Kuruwita Textile Mills PLC Annual Report 2010 23 .719) (15.200 24.589 (2009 .162.148 (2009 .net Group 2010 Net foreign exchange transaction (losses) / gains Interest expense .521} 15.077 Nil 747 2009 44.872 (2009 .bank borrowings .other borrowings 2009 2010 Company 2009 (2.679) (28.286 2010 Nil Nil Nil Nil Company 2009 480 Nil Nil 480 8 799 843 Nil 1 9 Finance (costs) / income .174) (5.997 (326) 29. of persons employed during the year: .633) (21.605) (6.504 (1.241 (572) 28.418) Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 10 Share of results of joint venture company Group 2010 Turnover Net profit Group share of net profit Nil Nil Nil 2009 44.380 The joint venture company has been disposed as at 30 th June 2009 and the aggregate amounts of each of the following categories as at 30 th June 2009 to the Group interest in joint venture are as follows.615 335. 2010 Revenue Expenses Current assets Non-current assets Current liabilities Nil Nil 30.872 (2009 .016. 418 25.940 24.) (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 11 Tax Company Provisions for income tax for the year has been made in terms of the provisions of the Inland Revenue Act No.63 2009 (166. Deferred tax In view of tax losses available for carry forward of the Company and the tax exemption period of subsidiary. 12 Earnings (loss) / per share Basic earnings / (loss) per share is calculated by dividing the net profit / (loss) attributable to shareholders by the weighted average number of shares in issues during the year.991 2009 2010 Company 2009 24 Kuruwita Textile Mills PLC Annual Report 2010 . 2000.85 13 Dividends Group 2010 Proposed and paid final dividend Rs 1 per share for 2010 (2009 . as amended.67) 2010 26. of which the prevailing tax exemption period of twelve years of the Company was commenced on 01 April. 10 of 2006. Group 2010 Net profit / (loss) attributable to shareholders Weighted average number of ordinary shares in issue (thousands) Basic earnings / (loss) per share (Rs) 15. the profits and income of the Brandix Textiles Limited in respect of the year of assessment .000 (6. at the rate of 35%.000 0. The Economic Service Charge (ESC) paid for the year ended 31 March 2010 is carried forward to set off against income tax payable in future years.06 Company 2009 21. no provision has been made for deferred tax liabilities in the financial statements of the Company and its subsidiary..000 0. for a total period of Seventeen Years. In view of the above. to be carried forward for future.991 24.2009 / 2010 is exempt from income tax.Rs 1 per share) 24.753) 25.692 25. ESC paid could be deducted against the income tax payable for the year of assessment in which the ESC is paid and any unrecouped ESC is available for carry forward for set-off against income tax payable for subsequent four years of assessment.190 25.139. The Company has recorded adjusted tax loss of Rs. No provision for deferred taxation has been made in view of the above tax exemption. profits and income of Brandix Textiles Ltd is exempt from income tax.340 as at 31 March 2010. 92. Subsidiary In terms of the Agreements with the Board of Investment of Sri Lanka.940 24.000 1.Notes to the Financial Statements (Cont. 942 (1.516 (149.013 (106) 907 123.120 972.827 73.852 3.762.033) 846.762.000 Nil 73.264 Plant and machinery Total Buildings Kuruwita Textile Mills PLC Annual Report 2010 25 .705) 1.679 2.780 Nil 10.156.138 (14.331) 47.000 Nil 73.287) (293) (20.794 Nil 8.349) (4.437) 121.840 (b) Company Freehold lands At 31 March 2009 Cost or valuation Accumulated depreciation Net book value Year ended 31 March 2010 Opening net book amount Depreciation charge (Note 5) Closing net book value At 31 March 2010 Cost or valuation Accumulated depreciation Net book value 73.575 59.000 64.852 Nil 3.907.616) (170.840 150.920 1.794 25.102) 1. plant and equipment 14 (a) Group Freehold lands Buildings Plant and machinery Furniture.120 Nil Nil Nil (622) Nil 150.152) 39.034) 1.033.407 151.218) 47.167.253 (17.232) (1.584 (8.390 Nil 16.780 682.251 2.856 8.115 (1.681) 564.208) 907 139.161 40.000 64.523 2.234) (24.768 23.162 Nil Nil Nil (74) (4.497 Nil 150.251 (1. and other equipment Motor vehicles Capital work in progress Total At 31 March 2009 Cost or valuation Accumulated depreciation Net book value Year ended 31 March 2010 Opening net book amount Additions Transferred from capital work-in-progress Disposal Effect of movement in foreign exchange rates Depreciation charge (Note 5) Closing net book value At 31 March 2010 Cost or valuation Accumulated depreciation Net book value 151.669.887) 49.899) (1.794 3.485.154) 14.390 Nil (10.000 Nil 73.291 564.162 8.768 14.390 (30.920 2.120 Nil 151.566 (13.013 139.636) (11.138 (16.535) 1.852 1.575 317.709) 9.426) 121.941) 826.291 682.264 (1.000 49.920 (278. fittings.610 (270.232) 9.358) 39.545 (2.874 (2.989) 123.390 329.449) 59.253 (15.857 3.498 846.827 73.591.115 (1.434) 826.179 Nil (6.497 975.161 Nil 3.594.594.627.Notes to the Financial Statements (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) Property.369) (121.423 (125.407 25.308) Nil (24) Nil 3.316 (26. Rs Freehold lands Buildings 72.789 (2009 ..741 (d) If the land and buildings were stated on the historical cost basis.954 (e) The freehold lands and buildings of the subsidiary have also been revalued by an Independent Chartered Appraiser on 06 April 2009. The valuations were made on the basis of recent market transactions on arm’s length basis.636 15 (a) Investment in subsidiary Company 2010 Opening net book amount Closing net book amount 434. Brandix Textiles Limited is incorporated in Sri Lanka.Notes to the Financial Statements (Cont.741.509) 3.155 (2.646 2009 6.155 (2.304. plant and equipment (Contd) (c) Property.500 (b) The Company held an interest of 72% in Brandix Textiles Limited which manufactures textiles for the garment export industry.227 506.500 434.440 76.355) 3.541). 26 Kuruwita Textile Mills PLC Annual Report 2010 .560 has been transferred to the revaluation reserve in the shareholders equity and made up as follows: (Note 25).635. The valuations were made on the basis of recent market transactions on arm’s length basis. The revalued amounts have been incorporated in the financial statements and a surplus of Rs 76.500 2009 434. and is audited by PricewaterhouseCoopers and its financial year ends on 31 March 2010.500 434.301 18.204. the cost of which at 31 March 2010. plant and equipment of Group include fully depreciated assets still in use. the amounts would be as follows: 2010 Cost Accumulated depreciation 6.Rs 969.194 has been transferred to the revaluation reserve in the shareholders equity and made up as follows: (Note 25).409 434.569.) (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) Property. Rs Freehold lands Buildings 58. The freehold lands and buildings of the Company have been revalued by an Independent Chartered Appraiser as of 31 March 2009. Rs 1. The revalued amounts have been incorporated in the financial statements and a surplus of Rs 506. 015 2010 Nil Nil Nil 1. The movements on the provision for bad debts are as follows: Kuruwita Textile Mills PLC Annual Report 2010 27 .875 91.915 2010 Nil Nil Nil Nil Company 2009 Nil Nil Nil Nil 17 (a) Bank facilities are secured on a floating charge over corresponding inventories.223 2009 119.380 26.665 81. Vibrant Tex (Private) Limited is incorporated in Pakistan and is not audited by PricewaterhouseCoopers.049 (17.596 61.430) Nil Nil 30.324 1.496.414) (431) 77. Receivables and prepayments are stated after a provision for bad and doubtful debts.339 2009 239. (b) Inventories are stated after a provision for slow moving inventories and movements on the provision is as follows.238 259.300 258.806) 12.046 408.582.661 Company 2009 Nil Nil Nil 286 286 213.028 1. Inventories Group 2010 Raw materials and consumables Work in progress Finished goods 680. which has been disposed as at 30th June 2009.068 (135.281 11.171 5.803 72.Rs 18.661 1.323 (25.323 (a) The Group held an effective interest of 36% in Vibrant Tex (Private) Limited which trades in printed textiles.167.330 2009 658.700 462.700 Nil 1. 2010 As at 1 April 2009 (Reversal of provision) / provision for slow moving inventories (Note 5) Effect of movements in exchange rates As at 31 March 2010 18 Receivables and prepayments Group 2010 Trade receivables Prepayments Due from related companies [Notes 28 (iv)] Other receivables 302.438 (2009 .031) 138 (1.118.498 15.649 201.068 (a) (b) Other receivables in Group mainly consists of VAT receivables of Rs 23.001 82.706 228.995).Notes to the Financial Statements (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 16 Investment in joint venture company Group 2010 Unlisted shares Opening net book amount Disposal Effect of movements in Exchange rates Dividend received during the year Share of results before tax (Note 10) Closing net book amount 2009 26.786 213. 363 20 Trade and other payables Group 2010 Trade payables Payable to related companies [Notes 27 (i) and 28 (v)] Advance from director [Note 28 (vi)] Accrued expenses Other payables 836.424 Nil 198 659 4.291 Company 2009 6.281 28 Kuruwita Textile Mills PLC Annual Report 2010 .576) 202.012.257 4.012 959.285) 188.695 2010 163 4.772 2009 884..553 3.119 2010 4.363 For the purposes of the cash flow statement.128 4.641 2010 Nil Nil Nil 75 612 687 Company 2009 Nil 3. the year-end cash and cash equivalents comprise the following: Group 2010 Cash and bank balances Bank overdrafts (Note 21) 375.177 2009 280.442 13.535 19 Cash and cash equivalents Group 2010 Cash at bank and in hand Short term deposits 371.132 Nil 111.) (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 18 Receivables and prepayments (Contd) Group 2010 As at 1 April 2009 (Reversal of provision) / provision for bad debts (Note 5) Effect of movements in exchange rates As at 31 March 2010 22.535 (4.363 Nil 6.575) (172) 17.462 2009 274.462 (187.291 Company 2009 133 6.465 6.776 1.063 22.230 6.236 Nil 107.291 Nil 4.267 12.695 (78.788 2009 696 20.514 1.334 4.230 280.128 375.Notes to the Financial Statements (Cont. Borrowings from related company 2009 5.312 3.3% LIBOR + 2% (b) Bank overdrafts are secured over corporate guarantees.126 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 2009 2010 Company 2009 (a) The interest rate exposure of the borrowings of the Group are as follows: Group 2010 Weighted average effective interest rates .160 Nil Nil 589.814 3.023 Nil 589.526 496.Notes to the Financial Statements (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 21 Borrowings Group 2010 Current Bank overdraft Bank facilities Bank borrowings Term loan [Note 28 (vii)] Non-current Bank borrowings Total borrowings 187. (e) Term loan is unsecured.312 3.285 3. (f) Maturity of non-current borrowings: Group 2010 Between 1 and 2 years Nil Nil 2009 3.21% 7.160 78.852 398.5% LIBOR + 2% . (d) Bank borrowings obtained to finance the factory expansion project are secured on the corresponding assets and the Group’s land and buildings.312 2010 Nil Nil Company 2009 Nil Nil Kuruwita Textile Mills PLC Annual Report 2010 29 .576 1.714 347.998 68.US Dollar borrowings .312 500. (c) Bank facilities of the Group were obtained to import raw materials and are secured by a charge on the corresponding inventories (see Note 17). and has no fixed repayment terms. Executive . The principal actuarial assumptions used were as follows: Discount rate Future salary increase .229) 88.741 (768) 89. an actuarial valuation was carried out by the Company using the projected unit credit method as per recommendations made in the SLAS 16 (revised 2006).947 (10.026 Nil (10.026 2010 89. Employee Benefits.275 76.486 (a) As stated in Accounting policy 2.900 7.) (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 22 Defined benefit obligations Movement in the liability recognised in the balance sheet is as follows: 2010 At beginning of year Current service cost Interest cost Actuarial gains Amount (credited) / charged to income statement (Note 8) Intercompany transfers Benefits paid Exchange rate fluctuation losses / (gains) At end of year 42.248 Nil (1.Non executive This provision is not externally funded.Non executive Staff turnover factor . commencing from December 2006 for a period of 30 Years.8% 10% 5% 4% 17% 23 Commitments Financial commitments There were no material financial commitments existing as at the balance sheet date.10 as at 31 March 2010.294 25 Revaluation reserve Group 2010 At beginning of year Additions [Note 14 (d) and (e)] Transfer of depreciation to retained earnings At end of year 454.889 5.463 4.412) (326) Nil (5.Executive .8% 10% 5% 6% 17% 2009 14.205) 443.000 Number of Stated capital 349.956 Group 2009 2010 Nil Nil Nil Nil Nil Nil Nil Nil Nil Company 2009 Nil Nil Nil Nil Nil Nil Nil Nil Nil 48.019 Company 2009 13. subsidiary company.821 2009 13. Operating commitments Operating lease commitments include annual operating rental of Rs 250.275 441.000 payable to Coconut Cultivation Board by Brandix Textile Limited.. 2010 14. 25.Notes to the Financial Statements (Cont. 24 Stated capital Company ordinary shares in 000’s At 31 March 2009 At 31 March 2010 All issued shares are fully paid.553) (98) 42.186 (12.248 30 Kuruwita Textile Mills PLC Annual Report 2010 . Capital commitments There were no material capital commitments existing as at the balance sheet date.519 (768) 454.408) (572) 458 (4.575) 159 37.294 349.000 25.486 3. 072 2010 26.375) (3.726 (6.869) (572) 72.payables Defined benefit obligations (Note 22) Cash generated from operations 23.415) (54.Notes to the Financial Statements (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 26 Cash generated from operations Reconciliation of profit / (loss) before tax to cash generated from operations: Group 2010 Profit / (loss) before tax Adjustments for: Depreciation (Note 14) ESC written-off Loss from sale of joint venture company (Note 7) Loss on disposal of property.428 1.549 27 Directors’ interests in contracts with the Company The Company is controlled by Brandix Textile Holdings Limited which owns 77. Uditha Liyanage.424 Kuruwita Textile Mills PLC Annual Report 2010 31 .705 6.174) 170.284 170. Aslam Omar Brandix Apparel Limited Brandix Casualwear Limited Brandix Finishing Limited Brandix Intimate Apparel Limited Brandix Lanka Limited Brandix Lightsew Limited Brandix Textiles Limited M K C Industries (Private) Limited Quenby Lanka Prints (Private) Limited x x x x x x x x Feroz Omar x x x x x x x x x Uditha Liyanage Hasitha Premaratne H A Ariyaratne - (i) Outstanding balances arising from sale / purchase of goods / services: Company 2010 2009 Payable to related companies Brandix Textile Holdings Limited Nil Nil 3.70% of the Company’s shares.324) (52.trade and other receivables .922 (12. The directors of the Company are Mohamed Aslam Omar.886 Company 2009 21.inventories .418 1.695) 19.248 Nil Nil Nil Nil Nil Nil Nil (87) (40) Nil 22.627 3.437 Nil Nil Nil Nil Nil Nil Nil (1.883 11.994 Nil Nil 54. plant and equipments (Note 7) Exchange gain / (losses) Interest expense (Note 9) Share of results of joint venture company (Note 10) Changes in working capital .629 2009 (224.095 (160.919) (326) 321.100 Nil (48. Hasitha Premaratne and Hewa Annakkage Ariyaratne who are also directors of the following companies with which the Company had transactions in the ordinary course of business during the year.594) Nil 22. The remaining 22.746 30. Feroz Omar.380) 325. The ultimate parent of the Group is Phoenix Ventures Limited.062 12.30% of the shares are widely held.424 3.231 125. 276 71. Brandix Casualwear Limited.405 2009 3.809 690 143.593 2009 178. Summary of transactions and details of each related party transactions of the group are as follows: Group Transactions Sale of goods Purchase of goods Purchase of services Payment of term loans 2010 2.802 Group 2009 14.251 114 9.809. Brandix Lanka Limited.142.077 68.802. Firoze Limited and Phoenix Ventures Limited.236 Nil 12.545 114 2.278 2009 29.077 2010 68.145.236 32 Kuruwita Textile Mills PLC Annual Report 2010 .150 3.289 2009 2.952 114 5.278 29. MKC Industries (Private) Limited.) (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 28 Related party transactions The subsidiary has entered into business transactions in the ordinary course of business with companies related through common directorship and / or ownership. Quenby Lanka Prints (Private) Limited.048 109 2.248 7.622 2009 2.145. Brandix Intimate Apparel Limited.809 2010 690 2010 Purchase of services: Quenby Lanka Prints (Private) Limited 143.809.254 91.Notes to the Financial Statements (Cont.622 2010 2.708 M K C Industries (Private) Limited Quenby Lanka Prints (Private) Limited Brandix Finishing Limited Nil 12.266 79.289 (i) Sale of goods and services: Sale of goods: Brandix Apparel Limited Quenby Lanka Prints (Private) Limited Brandix Finishing Limited (ii) Purchase of goods and services: Purchase of goods: M K C Industries (Private) Limited (iii) Payment of Term loans Brandix Lanka Limited Amounts receivable and payable from / to related parties and loans from related parties are as follows: (iv) Receivable from related companies: Firoze Limited Brandix Apparel Limited Brandix Finishing Limited Quenby Lanka Prints (Private) Limited (v) Payables to related companies: 2010 2.593 178. Brandix Apparel Limited.405 3.596 Group 2010 2009 343 9.083 453 Nil 81. Such related companies are Brandix Finishing Limited.. which would require adjustments to. (vii) Term Loan: Brandix Lanka Limited 2010 Nil 2009 68. The interest is charged at the rate of LIBOR plus 2% per annum.633) 25 Nil Advances from director wholly consisted of the amount owed by the Company to Mr Feroz Omar. unsecured and had no specified repayment terms. or disclosure in. Advance received from director was interest free.526 Borrowings from Brandix Lanka Limited is unsecured and have no fixed repayment terms. the financial statements.Notes to the Financial Statements (In the notes all amounts are shown in Sri Lanka Rupees thousands unless otherwise stated) 28 (vi) Related party transactions (Contd) Advances from director: 2010 Balance at the beginning of the year Repayment of advances Effect of movements in exchange rates Balance at the end of the year Nil Nil Nil Nil Group 2009 1. Kuruwita Textile Mills PLC Annual Report 2010 33 .608 (1. 29 Post balance sheet events No events occurred since the balance sheet date. 2010 1.B. AL-NAKIB PHOENIX VENTURES LIMITED J.000 240.N.500 70.500 69.40 77. Public Holding Percentage 7.F.23 0.K.001 . ZAHARA F. SHAHIDA I.000 50.00 Total Holding 158.000 shares Grand Total No.000 30.Shareholder Information 1. of Shares 5.03.700 19424213 25.112.48 2.84 3. 12th May 2009) 4.28 0.2010 as at 31.75 24.053.10 100. Share Valuation and Earnings Highest Market Price per Share during the year Lowest Market Price per Share during the year Last traded Price (31st March) Group Earnings per Share Net Assets per Share No.70 3.2010 as at 31.385 1.000.D.G DALPETHADO S.26 0.12 95. of Shares 19.1. Shareholding Structure Invdividual Institutional 6.001 64. ABO QAMAZ SANDWAVE LIMITED ALLIANCE FINANCE COMPANY PLC FIRST CAPITAL MARKETS LTD/ MR.2009 19.52 40.LALITH PRABASH HAPANGAMA T. CHANDRASIRI D.71 0.20 0.23 2.20 0.70 100.20 0.00 24.001 .200 951.06 0. List of 20 Largest Shareholders as at 31/03/2010 No.81 4. Foreign Holding No.96 0.100 50.45 15. Director’s Interest in Shares of the Company Nimal Perera (resigned w.000 shares 1.f. THARAB WALDOCK MACKENZIE LIMITED/DELMEGE FORSYTH AND COMPANY (EXPORTS) LIMITED 2.21% 2010 2009 45.69% 19. of Holders 805 136 34 7 1 983 % 81.03.2009 166 as at 31.H.O.800 50.10.200 556.A.63 80.75 (6.64 34 Kuruwita Textile Mills PLC Annual Report 2010 .000. Distribution of Shareholding Holdings 1 .61 3.600 516.345 % of Total 2009 7 93 as at 31.46 0.000 shares 10. FARATH H.20 0.00 40.28 0. DON CAROLIS & SONS LTD WALDOCK MACKENZIE LIMITED / LEWIS BROWN AND COMPANANY LIMITED BANK OF CEYLON A/C CEYBANK CENTURY GROWTH FUND M.850.000 shares 100.000 50.213 902.1.900 870.943.100.000 50.000 653.89 13.001 .000 50.000 76.45 0.566 Total Holding 2010 2009 2.424.78 Name of Shareholder BRANDIX TEXTILES HOLDINGS LTD WALDOCK MACKENZIE LIMITED/MR.31 0.61 2.03.00 3. W.600 57.03.945.500 23.e.914 % 77.20 0.870 453. COCOSHELL (PVT) LTD SRI LANKA INSURANCE CORPORATION LTD-LIFE FUND H.20 0.054.03.071 1798488 23201512 2010 8 92 166 as at 31.000 shares Over 1.929 22.000 % 0.03.67) 81. PERERA M.832 3.000.00 0.000 112. of Shareholders 2010 2009 921 62 925 67 as at 31.75 22.A.64 1. 220 -13.332 917.000 500.64 2007/08 Rs.496 215.284 349.500.153 (45.000.67) 1.69 Net Profit Margin 8.37% 0. ‘000 6.495.961 206.39% 7.540) 917.00 64.000 500.730 298.292 Nil 38.261.047 1.041.000 100.232.831.000 3.425) 176.639 404. ‘000 6.412) 349.63 1.000 -200.000 6.000 2.00% -4.013.000 4.913.594.181 1.000 400.82 2005/06 Rs.222 177.44% 2.473) (304.859 (1.984 (171.294 618.658 736.181 23.000 - Profit After Tax 600.Financial Summary Group Five Year Financial Summary Trading Results Turnover Profit/(Loss) before Taxation Current Taxation Profit/(Loss) after Taxation Balance Sheet Stated Capital Revenue Reserves Other Reserves Minority Interest Non Current Assets Net Current Assets/ (Liabilities) Long Term/ Deferred Liabilities Key Indicators Annual Growth in Turnover Net Profit/ (Loss) to Turnover Gearing % Earning/ (Loss) per Share (Rs.220 1.00 59.495.000 2.912 542.085 1.808 534.000.269 177.000 Kuruwita Textile Mills PLC Annual Report 2010 35 .247) 1.292 349.137 Nil 497.215 559.000 1.000 1.000 5.476 1.481 1.279.98% 44% 4.52 2008/09 Rs.739 267.476 29.200 (37.000 200.) Dividends per Share (Rs.65 2006/07 Rs.000. ‘000 6.00% 4.616.28% 51% 15.00% 2.) Net Assets per Share at year end (Rs.325.085 7.294 412.59% 0.00% 6.69% -3.711 38. ‘000 5.67% 0. ‘000 5.294 413.065 (224.158 497.00 81.398.284 Nil 23.041.366 (204.798) 2.286 286.484 441.462 23.000.084 1.000.616.294 526.32 Nil 36.) 2009/10 Rs.00% 2006 2006 2007 2008 2009 2010 8.368.361) 1.000 1.000.000.000.221 2.73% 66% 1.434 349.137 349.00% -2.000 7.000 300.174) (238) (224.00 80.013.840 456.615 715.000.000 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 -300.084 -0.63 1.956) 2.294 104.000 Turnover 2007 2008 2009 2010 Share Holders Funds 2.00% -6.788.52% 22% (6.000 -100.00% 0.194 (10.93 2.367 2.500.000. shall be published in Sinhala. for the following purposes. ANNEXURE 1 SPECIAL RESOLUTION OF THE MEMBERS TO AMEND THE ARTICLES OF ASSOCIATION “RESOLVED that the Articles of Association of the Company be and are hereby amended to incorporate the following changes1. at 3. A member entitled to attend and vote at the meeting.” 2. Delete existing Article 148 and insert the following: “148. is entitled to appoint a proxy to attend and vote instead of him/her. 1. which shall be in force from time to time. 4. Ariyaratne as a Director of the Company who retires by rotation in terms of Articles 84 of the Articles of Association of the Company. H.” Insert the following Article as Article 155 immediately after Article 154: COMPLIANCE WITH RULES “Notwithstanding anything to the contrary contained in the Articles of Association of the Company. the Company shall comply with the Rules of the Colombo Stock Exchange and the Central Depository System. 2. Colombo on Monday. H. Where notice is given by an advertisement. such advertisement. Ariyaratne as a Director of the Company. By Order of the Board. To re-appoint PricewaterhouseCoopers.Notice of Meeting NOTICE IS HEREBY GIVEN that the Twenty Ninth ANNUAL GENERAL MEETING of KURUWITA TEXTILE MILLS PLC will be held at The Ceylon Continental Hotel.A. A proxy need not be a member of the Company. A Form of proxy accompanies this Report. auditors and to authorise the directors to determine their remuneration. 2. shall be considered as his registered address. To re-elect Mr. Tamil and English national daily newspapers.30 p. so long as the Company is listed on the Colombo Stock Exchange. Sgd Varners International (Private) Limited Secretaries Colombo 20th August 2010 Note: 1. 36 Kuruwita Textile Mills PLC Annual Report 2010 . 3. Any member whose registered address is not within Sri Lanka may name an address within Sri Lanka which for the purpose of notice.m. 3. To consider and approve as a Special Resolution the proposed resolution as set out in Annexure 1 to the Notice to ensure that the Articles of Association of the Company are in compliance with the Listing Rules of the Colombo Stock exchange.” Delete existing Article 151 and insert the following: “151. To receive and adopt the Report of the Directors and the Financial Statements for the year ended 31st March 2010 and the Report of the Auditors thereon. 27th September 2010.A. The Directors recommend the re-election of Mr. ... who retires by rotation in terms of Articles 84 of the Articles of Association of the Company To re-appoint Messrs. day of ……..... 2010 Signature Note: Please see overleaf for instructions Kuruwita Textile Mills PLC Annual Report 2010 37 .…of ……………………………………………………………… ……………………………………………………. Uditha Liyanage Mr.... Hewa Annakkage Ariyaratne.. Hasitha Premaratne of Sri Lanka or failing him of Sri Lanka or failing him of Sri Lanka or failing him of Sri Lanka or failing him of Sri Lanka As my/our* proxy to vote as indicated hereunder on my/ our* behalf at the Annual General Meeting of the Company to be held on 27th September 2010 and at every poll which may be taken in consequence of the aforesaid meeting and at any adjournment thereof.. To consider and approve as a Special Resolution the proposed resolution as set out in Annexure 1 to the Notice to ensure that the Articles of Association of the Company are in compliance with the Listing Rules of the Colombo Stock exchange. of ………………………………………………………………………………………. To re-elect Mr..…being a member(s)* of Kuruwita Textile Mills PLC..Form of Proxy I/We …………………………………………………………............ hereby appoint …………………………… …………………………….……….……………………………………………...….or failing him Mohamed Aslam Omar Mohamed Feroz Omar Hewa Annakkage Ariyaratne Dr.. 2010 with the Report of the Auditors thereon.. FOR To receive and adopt the Report of the Directors and the Statements of Account for the Year ended 31 March..... a Director. PricewaterhouseCoopers..... auditors for the ensuring year.. AGAINST Signed this .. . If there is any doubt as to the manner in which the proxy should vote by reason of the manner in which instructions in 2 above have been carried out..) INSTRUCTIONS ON COMPLETING THE FORM OF PROXY 1...... Proxy holder’s NIC No ………………………………………………………………………………………………... 2...Form of Proxy (Cont. the manner in which you wish your vote to be cast... ………………... Share Certificate No....... If the shareholder is a company or body corporate.. the relative Power of Attorney should accompany the completed Form of Proxy for registration......................... Galle Road.. 7..... 409.. Colombo 03... No of shares held ………………………………………………………………………………………………….... (if not a Director of the Company) 38 Kuruwita Textile Mills PLC Annual Report 2010 . the Form of Proxy should be under its Common Seal in accordance with its Articles of Association or Constitution. 3rd Floor......... if a Power of Attorney has not already been registered with the Company.... The completed Form of Proxy should be deposited 48 hours before the time appointed for the holding of the meeting at the registered office of the Company at No. Please return the completed Form of Proxy to the Company after crossing out one or the other of the alternative words indicated by the asterisks on the body of the form and by indicating with an ‘X’ in the space provided against each resolution. Please provide the following information Shareholder’s NIC No. 4...................... 3............... 6.... A shareholder appointing a proxy (other than a director of the Company) to attend the meeting should indicate the proxy holder’s National Identity Card (NIC) number on the Form of Proxy and should instruct the proxy holder to bring his/ her National Identity Card to the meeting....... If the Form of Proxy is signed by an Attorney....... the proxy holder will vote as she/ he thinks fit... …………………………………………………………………………………………………. 5...... Please perfect the Form of Proxy after filling in legibly your name and address and by signing in the space provided and inserting the date of signature... incorporated in 1981 PQ 176 Company registra on No : Stock Exchange Lis ng Registered Office Directors : The issued Ordinary Shares of the Company are listed on the Colombo Stock Exchange of Sri Lanka.A. Ha on Na onal Bank Bank of Ceylon 409. : : 409. 3rd Floor. Varners Interna onal (Pvt) Ltd PricewaterhouseCoopers Chartered Accountants Varners A orneys-at-Law Ci bank. Uditha Liyanage Mr. 3rd Floor. Galle Road. Galle Road. N. Colombo 03 Tel: 94 114 727 000 Fax : 94 114 727 060 Secretaries Auditors A orneys Bankers : : : : Investor Rela ons : Designed & Printed by Ceylon Printers PLC . Hasitha Premaratne Messrs. Mohamed Aslam Omar Chairman Mr.Corporate Informa on Name Legal Form : : Kuruwita Tex le Mills PLC A public quoted Company with limited liability. Colombo 03 Mr. Hewa Annakkage Ariyaratne Dr. Feroz Omar Mr. Sri Lanka. Colombo 03.Kuruwita Textile Mills PLC 409. 3rd Floor. Galle Road. .