report - cse

ANNUALREPORT2019/20

Our Mission

“Our mission is to provide best value energy generating products”

To our shareholders - We will continuously improve our manufacturing capabilities and technology as part of our growth strategy and thereby improve profits and return on investment.

To our customers - We will provide high quality products that will consistently meet customer expectations.

To our employees - We will create a work environment where employees will be treated with dignity & respect and made active participants in the development of the organization.

To our suppliers - We will work towards building long term relationships and commitment for mutual growth.

To our society - We will commit ourselves to ensure that our present and future manufacturing systems and services will be so designed to create the least environmental impact. We will always promote good governance and ethical practices in business and honour the rights of all racial, religious and gender sections in our society.

1Annual Report 2019/20

Our Mission Inner Front Cover

Financial Highlights 2

Notice of Meeting 3 - 8

Chairman’s Review 9

Company Profile 10

Board of Directors 11 - 12

Risk Management 13 - 14

Corporate Governance 15 - 16

Annual Report of the Board of Directors 17 - 19

Audit Committee Report 20

Related Party Transactions Review Committee Report 21

Independent Auditor’s Report 22 - 25

Statement of Profit or Loss and Other Comprehensive Income 26

Statement of Financial Position 27

Statement of Changes in Equity 28

Statement of Cash Flows 29

Notes to the Financial Statements 30 - 65

Share Information 66 - 67

Financial Summary 68

Notes 69 - 70

Form of Proxy 71 - 72

Corporate Information Inner Back Cover

Contents

2 Laxapana Batteries PLC

Financial Highlights

2019/20 2018/19 Rs. Rs.

Revenue 652,843,434 480,203,730

Gross Profit 166,226,094 109,515,929

Profit Before Tax 49,517,170 9,739,125

Profit after Tax 41,302,835 11,301,654

Earnings per share 1.06 0.29

Net Assets per share 4.99 4.17

Market price per share 8.90 10.80

Dividend Payout Ratio 0.24 -

Current Ratio (Times) 1.15 1.09

Financial Performance

200

150

100

50

0

Gross Profit

2019/20 2018/19 2017/18 2016/17

Rs.

Mn.

60

50

40

30

20

10

0

Profit Before Tax

2019/20 2018/19 2017/18 2016/17

Rs.

Mn.

250

200

150

100

50

0

Shareholders’ Funds

2019/20 2018/19 2017/18 2016/17

Rs.

Mn.

700600500400300200100

0

Revenue

2019/20 2018/19 2017/18 2016/17

Rs.

Mn.


Notice of Meeting

Notice is hereby given that the Sixty Fourth Annual General Meeting of Laxapana Batteries PLC will be held at the Grand Oriental Hotel, No. 2, York Street, Colombo 01, on Wednesday, 11th November 2020 at 9.30 a.m. for the following purposes, namely:

1. To receive and consider the Annual Report of the Board of Directors and the Statement of Accounts for the year ended 31st March 2020, with the Report of the Auditors thereon.

2. To declare a First and Final Dividend of Rs. 1.00 per share for the year ended 31st March 2020 as recommended by the Directors.

3. To re-elect as a Director, Mr. P.M.A. Sirimane who retires in accordance with Articles 83 and 84 of the Articles of Association.

4. To reappoint Mr. R.N. Bopearatchy who is over seventy years of age as a Director.

A Special Notice has been received from a shareholder of the intention to pass a Resolution which is set out below in relation to his reappointment (see Note No. 5).

5. To reappoint Mr. A.R. Rasiah who is over seventy years of age as a Director.


6. To reappoint Mr. S.N.P. Palihena who is over seventy years of age as a Director.


7. To authorise the Directors to determine Contributions to Charities.

8. To reappoint as Auditors, KPMG Chartered Accountants, and to authorize the Directors to determine their remuneration.

9. Special Business: To consider and if thought fit to pass the following

Special Resolution to amend the Articles of Association of the Company in the following manner:

Special Resolution Resolved –• “That the name of the Company set opposite the

words “The Company” in the table under Article 2 of the Articles of Association be amended to read as follows:

The Company Laxapana Batteries PLC

• That the meaning set opposite the words “ the Statutes” in the table under Article 2 of the Articles of Association be amended to read as follows:

The Statutes The Companies Act No. 7 of 2007, all amendments thereto including all regulations made there under and every other Act or Ordinance for the time being in force concerning companies and affecting the Company.

• That the following words and meanings be included in the table under Article 2 of the Articles of Association immediately following the words “The Statutes” and the meaning set opposite:

The Act The Companies Act No. 7 of 2007 and all amendments thereto including all regulations made thereunder.

Electronic A system or method providing an Facility/ies electronic means of participating

at a meeting including audio, or audio and visual communication by which all shareholders and or participants participating can simultaneously hear each other throughout the meeting.


Notice of Meeting

• That the meaning set opposite the words “In Writing” in the table under Article 2 of the Articles of Association be amended to read as follows:

In writing Written or to the extent permitted by the Statute in any other form.

• That the existing Article 45 be renumbered as Article 45(1) and the following new Articles numbered 45(2) and 45(3) be included immediately after the renumbered Article 45(1):

45 (2) A General Meeting may be held-

(i) by means of audio, or audio and visual communication by which all Members participating and constituting a quorum, can simultaneously hear each other throughout the meeting; or

(ii) by the quorum being present and assembled together at the place, date and time appointed for the meeting; or

(iii) by simultaneous attendance and participation partly by means of an Electronic Facility/ies and by being assembled together at a place, where all Members participating and constituting a quorum, can simultaneously hear each other throughout the meeting.

(3) In the event all persons participating in the General Meeting cannot be accommodated in the meeting room where the Chairman will be, the Directors can arrange for any people who they consider cannot be seated in such main meeting room, to attend in an overflow room or rooms. Any overflow room must have a live video and two way sound link with the main room for the General Meeting, where the Chairman will be. The video and sound link must enable those in all the rooms to see and hear the proceedings of the other rooms. The notice of the General Meeting does not have to give details of any arrangements under this Article. However at the discretion of the Board the notice and or a circular accompanying the notice shall incorporate details on maximum number of Members to be accommodated in the

main room. The Directors can decide on how to divide people between the main room and any overflow room. If any overflow room is used, the General Meeting will be treated as being held in the main room.

• That the following new Article 49(d) be included immediately after the existing Article 49 (c):

49 (d) In the case of any General Meeting being

conducted partly or completely by an Electronic Facility/ies the notice and or a circular accompanying the notice shall provide details on the method of access and participation including how to speak and vote at the meeting.

• That the existing Article 52 be deleted and the following be substituted therefor:

52 (1) No business shall be transacted at any General Meeting unless a quorum is present when the meeting proceeds to business. The quorum for all purposes shall be three (03) each being a Member or a proxy for a Member or attorney or (in the case of a corporation) by an authorized representative.

(2) In determining attendance at a General Meeting, it is immaterial whether any two or more members attending it are in the same place as each other.

(3) Where a General meeting is held partly or completely by Electronic Facility/ies, the Board and the Chairman may stipulate any requirement that is reasonably necessary to ensure the identification of such participants and the security of the electronic communication.

• That the existing Article 56 (ii) be deleted and the following be substituted therefor:

56 (ii) Not less than five persons present in person or by attorney or representative or by proxy and entitled to vote; or


Notice of Meeting

• That the existing Article 56 inclusive of the aforesaid change be renumbered as 56(1) and the following new Article 56 (2) be included immediately after the renumbered Article 56 (1).

56 (2) Notwithstanding, the aforesaid provisions contained in Article 56(1) at any General Meeting held partly or completely by means of an Electronic Facility/ies, a resolution put to the vote shall be decided either by the Members signifying their assent or dissent via electronic means or in the event of a poll, such poll votes may be cast by such electronic means as the Board deems appropriate.

• That the existing Article 68 be renumbered as Article 68(1) and the following new Article numbered 68(2) be included immediately after the renumbered Article 68(1):

68 (2) A non-resident shareholder may appoint and revoke proxies by cable, facsimile or by any electronic media provided such appointment or revocation by cable or facsimile or electronic means under the shareholder’s signature is received not less than forty eight (48) hours before the commencement of the Meeting at which it is to be used.


91. (1) The Directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting of the Directors shall be determined by a majority of votes. In case of an equality of votes the Chairman shall have a second or casting vote. A Director may and the Secretary on the requisition of a Director shall, at anytime summon a meeting of the Directors. It shall not be necessary to give notice of a meeting of Directors to any Director for the time being absent from Sri Lanka

(2) The Board may concurrently participate either in person or by telephone, radio, conference television or similar equivalent communication or any

other form of audio or audiovisual instantaneous communication by which all persons participating in the conference are able to hear and be heard by all other participants for the dispatch of business and adjourn and otherwise regulate the conference as they think fit or by a combination of such methods. All provisions relating to the convening of a meeting of the Board, including the giving of Notice thereof and Agenda, the quorum for such conference meeting and the votes to be cast shall be the same as is applicable under these Presents in relation to such Meetings.

(3) A resolution passed by such conference meeting may be constituted by an instrument in hard copy or electronic form (duly executed) and shall notwithstanding that the Directors are not present together at one place at the time of the conference, be deemed to have been passed at a conference of the Directors held on the day and at the time at which the conference was held and shall be deemed to have been held at the registered office of the Company unless otherwise agreed, and all Directors and other persons including the Secretary participating at that conference shall be deemed for all purposes to be present at the conference.


99 A resolution in writing signed by all the Directors for the time being in Sri Lanka provided such number of Directors in Sri Lanka shall constitute a valid quorum of Directors as hereinbefore set out) shall be as effective as a resolution passed at a meeting of the Directors duly convened and held, and may consist of several documents in the like form, each signed by one or more of the Directors. Provided always that a resolution faxed or e-mailed or transmitted by any other electronic means under their respective signature/s shall be deemed to have been signed by them for all purposes hereof and shall be as effective as a


Notice of Meeting

resolution duly voted on at a meeting of the Board.


116. The Directors shall cause minutes to be maintained either in books or electronic means as permitted by law for the purpose:-

a) of all the appointments of officers made by the Directors;

b) of the names of the Directors present at each meeting of the Directors and of any committee of the Directors;

c) of all resolutions and proceedings at all Meetings of the Company, and of the Directors, and of committees of Directors:

and every Director present at any meeting of Directors or committee of Directors shall sign his name on the attendance register to be kept for that purpose.


141 A copy of every balance sheet and profit and loss account which is to be laid before a General Meeting of the Company (including every document required by law to be annexed thereto) together with a copy of every report of the Auditors relating thereto and of the Directors’ report, shall not less than fifteen working days before the date of the meeting be sent by post or any other instantaneous method of communication ,or made available on the Company’s website and/or on the website of the Colombo Stock Exchange to every Member of, and every holder of debentures of the Company and to every other person who is entitled to receive notices from the Company under the provisions of the Act or of these presents (provided that this Article shall not require a copy of these documents to be sent to any person of whose address in Sri Lanka the Company is not aware or to more than one of the joint-holders, but

any Member to whom a copy of these documents has not been sent, shall be entitled to receive a copy free of charge on application at the office).

Notwithstanding anything to the contrary and in accordance with section 167 of the Act, the Company may, in the first instance, send every Member by post or any other instantaneous method of communication, or made available on the Company’s website and/or on the website of the Colombo Stock Exchange the Annual Report together with the Financial Statements in the summarized form as may be prescribed, in consultation with the Institute of Chartered Accountants of Sri Lanka. The Company shall inform each Member that he is entitled to receive, if he so requires, the full Financial Statement or a printed copy of the Annual Report within a stipulated period of time.

• That the existing Article 146 be renumbered as Article 146(1) and the following new Article numbered 146(2) be included immediately after the renumbered Article 146(1) :

146 (2) In the event of a postal disruption, the Company may issue communication/notices through the Company’s website and/ or on the website of the Colombo Stock Exchange and/or by any other electronic means.


150 If a Member has no registered address in Sri Lanka, and has not supplied to the Company an address outside Sri Lanka for the giving of notices to him, a notice posted up in the registered office of the Company and/or on the Company’s website and/or on the website of the Colombo stock exchange shall be deemed to be duly given to him at the expiration of 24 hours from the time when it is so posted up.”


Notice of Meeting

By Order of the Board,

Corporate Managers & Secretaries (Private) LimitedSecretaries

Colombo30th September, 2020

Note:

The aforesaid Annual General Meeting is convened on the assumption that no curfew will be in force by such date and that no restrictions will be imposed by the Authorities on the conduct of meetings.

1. Any member of the Company who is entitled to attend and vote may appoint a proxy to attend and vote instead of him or her. A proxy need not be a member of the Company.

2. A Form of Proxy for the Meeting is enclosed with this Report.

3. The instrument appointing a proxy should reach the Registered Office of the Company’s Secretaries, Corporate Managers & Secretaries (Private) Limited, No. 8-5/2, Leyden Bastian Road, York Arcade Building, Colombo 01, not less than 48 hours before the time appointed for the holding of the meeting.

4. Given that the health and well-being of our Members is paramount to us, Members are encouraged to vote by Proxy through the appointment of a member of the Board of Directors to represent them and vote on their behalf. Members are advised to complete the Form of Proxy and their voting preferences on the specified resolutions to be taken up at the meeting and submit the same to the Company in accordance with the instructions given on the reverse of the Form of Proxy.

5. Special Notice has been received by the Company from a shareholder giving notice of the intention to move the following Resolution as an Ordinary Resolution at the Annual General Meeting:

Resolved –

“That Mr. R.N. Bopearatchy who is seventy nine years of age, be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Director, Mr. R.N. Bopearatchy.”


Resolved –

“That Mr. A. R. Rasiah who is seventy four years of age, be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to the said Director, Mr. A. R. Rasiah.”


Resolved –

“That Mr. S.N.P. Palihena who is seventy three years of age, be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No.7 of 2007 shall not apply to the said Director, Mr. S.N.P. Palihena.”

8. The Meeting will be held in compliance with the Health and Safety guidelines issued by the Ministry of Health and Indigenous Medical Services (Ministry of Health) and standards imposed by the venue to ensure the safety and well-being of all Meeting attendees. Please note that in compliance with such guidelines and standards:


Notice of Meeting

a) All attendees will have to undergo a temperature check and sign a declaration form.

b) Persons who record temperatures in excess of norms prescribed by the Ministry of Health will not be permitted into the Meeting.

c) Persons with respiratory infections of any type including cough, cold, sore throat or exhibiting other similar symptoms will not be permitted into the Meeting.

d) Physical contact such as shaking hands will not be permitted and attendees will not be permitted to linger or remain after the conclusion of the Meeting.

e) Any person not adhering to the health and safety guidelines and standards, including wearing a mask and maintaining the minimum social distance required, will be requested to leave the Meeting.

f) Food and beverage offerings are not guaranteed and may be limited in keeping with health and safety standards and regulations.

g) As social distancing measures will be implemented, once the hall capacity is reached as per the relevant Government guidelines, Members may not be permitted to enter.

h) A maximum total of sixty shareholders will be accommodated at the Meeting venue. The number of shareholders at the Meeting venue has been limited as aforesaid to maintain ‘social distancing’ requirements in order to mitigate the risk factor associated with the spread of the Covid-19 Virus.

i) The selection of the shareholders eligible to participate physically will be made on a ‘First come First served’ basis.

j) In the event the Company is required to take any further action in relation to the meeting in the best interests of the meeting attendees due to COVID-19 Pandemic, and/ or any communications, guidelines, directives or orders issued by the Government of Sri Lanka Notice of such action shall be given by way of an announcement to the Colombo Stock Exchange.


Chairman’s Review

On behalf of the Board of Directors, it gives me great pleasure to welcome you to the Company’s 64th Annual General Meeting and to present to you the Annual Report and Audited Financial Statements of the Company for the year ended 31st March 2020.

This was a year of unprecedented challenges, defined by two events that were devastating to the economy. The financial year began with the tragic Easter Sunday attacks and concluded with the COVID-19 global pandemic in the fourth quarter.

Both these events resulted in severe and prolonged stress across several industrial sectors and value chains. Subdued consumer and investor sentiment combined with political uncertainty resulted in a particularly challenging business landscape. Consequently, the GDP growth moderated to 2.3% in 2019 compared to 3.3% in the previous year.

On the positive side, interest rates declined during the year as monetary policy focused on stimulating economic growth. The rupee appreciated marginally by 0.6% in 2019 and depreciated by 4.5% by March 2020. Further, headline and core inflation moved broadly in the desired range of 4% to 6% in 2019, mainly due to subdued demand.

Although the country started recovering from the Easter Sunday attacks towards the end of 2019, the COVID-19 pandemic and the measures implemented to contain the virus impeded anticipated recovery. The full economic impact of the pandemic is yet to be determined but the next financial year, commencing with nearly 6 weeks of lockdown, is likely to be even more challenging than the reporting year.

Against this backdrop, I am pleased to report that the Company performed commendably, by recording a turnover of Rs. 652.8 million during the year under review. This reflects an increase of Rs.172.6 Mn which is a growth of 38% compared to the previous year.

This is mainly attributable to the Company’s strategic initiative of launching an in-house distribution network to cater to a segment of the market previously not met. The initiative directly improved sales volumes and margins during the year. Further, we adopted

a stringent cost reduction model to streamline our operational expense-base against the previous year. These strategies allowed us to sustain our business in this challenging environment. Thus, the profit after tax stood at Rs. 41.3 million in comparison with the previous year’s profit of Rs. 11.3 million reflecting our focused efforts to manage costs and improve margins.

Given the stringent lockdown adopted by the country and the economic fallout as a result of the Covid-19, the company actioned a plan to ensure the continuity of activity, to the extent possible. Strategies focused mainly on driving down costs (specifically procurement and administrative costs) without sacrificing product quality across the product portfolio. Given the volatile and evolving business landscape, the Company will continue to monitor the impacts to its operations and proactively take measures to ensure business continues as seamlessly as possible.

Despite the negative externalities precipitated in the domestic economy during the year, your Board of Directors capitalized on investment initiatives on branding Laxapana LED bulb segment. This directly improved the performance of the Company.

Going forward, we hope to further capitalize on strategic initiatives that we are confident will contribute to our growth momentum, and simultaneously continue to rationalize costs.

In conclusion, I wish to extend my sincere appreciation to my colleagues on the Board for their wise counsel and for their guidance in determining the strategic direction of the company.

I am humbled by the loyalty of our treasured customers, many business partners, employees and valued shareholders for their trust and confidence in the Company as we forge ahead in our endeavors.

S.D.R. ArudpragasamChairman

30th September, 2020


Elephant Lite Corporation Ltd was incorporated as a Public Limited liability Company in 1956. The Company was the pioneer manufacturer of D size dry cell batteries, namely Torch and Transistor batteries, in Sri Lanka and continued manufacturing the same until the closure of operation in 2012, due to the rapid drop in demand for D size batteries locally as well as globally. The Company continues to market LAXAPANA brand Zinc Chloride AA, AAA and 9V batteries, Alkaline AA and AAA batteries, LED bulbs including emergency lamps, LED Panel lights and industrial lights.

In 1982, the Company was quoted on the Colombo Stock Exchange. In August 2005, the name of the Company was changed to Laxapana Batteries Limited and subsequently re-registered as Laxapana Batteries PLC.

The Company continues to operate the fully equipped laboratory to ensure the quality of dry cell batteries marketed by the Company and also a laboratory testing facility to ensure quality of LED bulbs.

In April 2019, the Company Commenced its own distribution netwok as Laxapana Hardware distribution.

The Company’s main office is located at 98, Sri Sangaraja Mawatha, Colombo 10 and its 3 ½ acre freehold land at Homagama is rented out to E.B. Creasy & Co. PLC.

Company Profile


Board of Directors

S.D.R. Arudpragasam – FCMA (UK)Chairman

Mr. S.D.R. Arudpragasam joined the Board in 1997 and was appointed Chairman in the year 2011. He serves as Chairman of several subsidiaries of The Colombo Fort Land & Building PLC (CFLB) including Chairman, Lankem Ceylon PLC and Chairman/Managing Director of E.B. Creasy & Company PLC. He holds the position of Deputy Chairman on the Board of The Colombo Fort Land and Building PLC, in addition to holding other Directorships within the CFLB Group.

Mr. Arudpragasam is a Fellow of the Chartered Institute of Management Accountants (U.K.).

R.N. BopearatchyB.Sc. (Cey), Dip. BM, MBA (Univ. of Col.)Director

Mr. R.N. Bopearatchy was appointed to the Board in the year 2000. He has considerable expertise in product development, manufacturing and marketing of pesticides, pharmaceuticals and consumer products. Soon after graduation he was employed in Research in the Plant Pathology Division of the Tea Research Institute and subsequently joined Chemical Industries Colombo Limited and was appointed to its Board. He also served on the Boards of Crop Management Services (Pvt) Ltd. the managing agents for Mathurata Plantations Ltd., CIC Fertilizers Ltd. and Cisco Speciality Packaging (Pvt) Limited. He has held office as the Chairman of the Pesticide Association of Sri Lanka, the Toxicological Society of Sri Lanka and the International Mosquito Spiral Manufacturers Association (IMSMA). Mr. R.N. Bopearatchy currently holds several other Directorships within The Colombo Fort Land & Building Group.

He holds a Bachelor of Science degree from the University of Ceylon and a Masters in Business Administration from the University of Colombo and a Diploma in Business Management from NIBM.

S. Rajaratnam – B.Sc., CADirector

Mr. S. Rajaratnam was appointed to the Board in the year 2006. He holds the position of Joint Managing Director of E.B. Creasy & Company PLC. He serves on the Boards of certain subsidiaries of the E.B. Creasy Group and holds several other Directorships including

The Colombo Fort Land & Building PLC.

Mr. S. Rajaratnam holds a Bachelor of Science Degree in Business Administration from Boston College, U.S.A. and is a member of the Institute of Chartered Accountants in Australia. He has been associated with overseas companies in the field of Finance.

R. C. A. WelikalaDirector

Mr. R. C. A. Welikala was appointed to the Board in the year 2000. He has extensive experience in marketing of fast moving consumer goods and has successfully developed key brands in the E.B. Creasy Group to market leadership positions. He also holds other Directorships within The Colombo Fort Land & Building Group.

P.M.A. Sirimane – FCA, MBADirector

Mr. P.M.A. Sirimane joined the E.B. Creasy Group in October, 2009 and was appointed to the Board in November, 2009. Amongst other senior positions he has functioned as Managing Director/CEO of Mercantile Leasing Ltd., Group Finance Director of United Tractor & Equipment Ltd., Chief Financial Officer, Sri Lanka Telecom Ltd. and Director SLT Hong Kong Ltd. He has served as a Member of several Committees of the Institute of Chartered Accountants of Sri Lanka and was an ex-officio member of the International Leasing Association.

Mr. Sirimane serves on the Board of E.B. Creasy & Company PLC and some of its subsidiaries and holds several other Directorships including The Colombo Fort Land & Building PLC on which Board he serves as Group Finance Director.

Mr. Sirimane is a Fellow of the Institute of Chartered Accountants of Sri Lanka and also holds a Masters in Business Administration from the University of Swinburne, Victoria Australia.

A.R. Rasiah – B.Sc.(Cey.), FCADirector

Mr. A.R. Rasiah was appointed to the Board as an Independent Non-Executive Director on 2nd May, 2013. He possesses well over 40 years of experience in Finance at a very senior level both internationally


Board of Directors Contd....

and locally. He currently serves on certain Boards of the E B Creasy Group and on some of the Boards of the Hotels Sector in The Colombo Fort Land & Building Group, Sunshine Tea (Pvt) Ltd. Gestetner of Ceylon PLC , Fintek Managed Solutions (Pvt) Ltd. Clindata Lanka (Pvt) Ltd, Synteract Lanka (Pvt) Ltd.and as Chairman of Hela Group of Companies. He is a former (retired) Finance Director of Nestle (Lanka) PLC. He has been a visiting lecturer on Finance and Accounts for Nestle SA for Africa-Asian and Oceanic Regions and has travelled overseas extensively. Mr. Rasiah is a past lecturer for MBA students on Finance at the Postgraduate Institute of Management (PIM). He is a former President of the Benevolent Society of the Institute of Chartered Accountants of Sri Lanka and currently the Chairman of the Sri Lanka Institute of Directors.

He is also a keen sportsman who has represented Sri Lanka in Table Tennis and is a former president of Tamil Union C & AC.

He is a Science Graduate of the University of Ceylon and a Fellow of the Institute of Chartered Accountants of Sri Lanka and a Finalist of the Institute of Management Accountant Examination (UK).

S.N.P. Palihena FCIB (U.K.), FIB (SL), Post Grad. Dip. Bus. &FADirector

Mr. S.N.P. Palihena was appointed to the Board as an Independent Non-Executive Director on 2nd May, 2013. In addition to serving on the Board of E. B. Creasy & Company PLC and some of its subsidiaries, he also serves on certain Boards of The Colombo Fort Land & Building Group.

He was a former Chief Executive Officer/General Manager of Bank of Ceylon and has had a distinguished banking career spanning almost forty years at the Bank of Ceylon. He has also worked at the National Development Bank of Sri Lanka for a period of over three years. Mr. Palihena is a former Director of the DFCC Bank and Softlogic Finance PLC.

He is a Fellow of the Chartered Institute of Bankers - London, and a Fellow of the Institute of Bankers – Sri Lanka. He also has a Post Graduate Diploma in Business and Financial Administration.

A.M. Mubarak B.Sc. (SL) Ph. D. (Cantab), FICHEMC, FNASSLDirector

Dr. A.M. Mubarak was appointed to the Board as an Independent Non – Executive Director on 2nd September 2013. Dr. Mubarak, a former Director and Chief Executive Officer of the Industrial Technology Institute, has several years experience in managing industry oriented R&D.

He has served as a visiting lecturer at several universities in Sri Lanka. Presently he holds the post of Chief of Research and Innovation at the Sri Lanka Institute of Nanotechnology.

Dr. Mubarak, a Commonwealth Scholar, has a B.Sc. degree from the University of Colombo and a Ph. D. from the University of Cambridge U.K. Dr. Mubarak has held the posts of President, Institute of Chemistry, Ceylon, General President, Sri Lanka Association for the Advancement of Science and President, National Academy of Sciences of Sri Lanka. He has also served as Chairman of National Science Foundation and on the Boards/Councils of the University of Colombo, Postgraduate Institute of Science, Sri Lanka Accreditation Board, National Engineering Research & Development Centre and National Science and Technology Commission. Presently he is a Member of the University of Sri Jayewardenapura Council and the Sri Lanka Standards Institute Council. Dr. Mubarak serves on the Boards of E.B. Creasy & Company PLC and some of its subsidiaries and as Chairman of Union Chemicals Lanka PLC.

S.W. Gunawardena – B.Sc., MBADirector

Mr. S. W. Gunawardena was appointed to the Board as a Non – Executive Director on 1st April 2014. Prior to joining the Parent Company, E.B. Creasy & Company PLC he had served in leading mercantile establishments in Sri Lanka and overseas.

Mr. Gunawardena serves on the Board of E.B. Creasy & Company PLC and some of its subsidiaries .

He holds a Bachelor of Science degree from the University of Colombo and a Masters in Business Administration from the Postgraduate Institute of Management, University of Sri Jayawardenapura.


Risk Management

The Board of Directors considers risk identification, assessment and mitigating activities to be vital in maintaining sustainable growth and making steady progress towards achievement of the corporate objectives. In the pursuit of opportunities it is unavoidable that we are subject to various risks. The management ensures that such risks are systematically identified and the procedures are in place to manage and control the same. Hence a well structured Risk Management Framework is in place under which the risks are being assessed. The identified risks are being reviewed by the Audit Committee at the Company level.

Under the Framework, the risks are then prioritised and business units use both preventive and mitigation controls to manage risk exposures within the prescribed tolerance limits.

The principal foreseeable risks have been identified and are set out below with mitigation strategies. The nature and the scope of risks are subject to change and not all of the factors listed are within the control of the Company.

Description of Risk Mitigation Strategies

Health and Safety Risk • Likelihood that an individual may be harmed or

suffers adverse health effects if exposed to a workplace hazard or viral infection.

• Possibility of a customer facing health and safety risks while consuming a product or service provided by any of the businesses.

• The business takes employee safety as the

highest priority.

• Health and Safety related policies and procedures have been implemented across the company and periodically reviewed.

• Quality policies and frameworks are in place at all our businesses and operations are carried out under strict quality controls.

• Staff are continuously trained on conducting operations by adhering to quality protocols.

Risk of Political Instability • Adverse impacts arising due to an unstable

political environment in the country.

• Analysing SWOT and PEST factors and developing appropriate strategies.

• Business diversification and enter alternate markets.

Financial RiskAdverse impact on profitability as a result of adverse movements in the Interest rate risk, Inflation risk, exchange rates risk.

• Use of appropriate financial and hedging strategies.

• Negotiate for concessionary interest rates using Company strength.

• Effective treasury management.

• Dynamic pricing strategies.

Human Resource RiskImpact to business competitiveness due to the difficulties to recruit/retain required talent and issues pertaining to industrial relations.

• Build strong employer brand and better industrial relations.


Operational RiskPotential losses due to inadequate internal controls, failures of internal processes, cyber risk, non-compliance with regulatory, people and systems as a result of natural and human activities.

• Business continuity plans to ensure the smooth operation of the businesses even at the time of disaster.

• Internal audits on internal controls and compliance.

• Monitor compliance with regulatory requirements.

Funding/Liquidity Risk

Difficulty in obtaining required low cost funding for working capital and business expansion.

• Maintain an acceptable retention policy.

• Leverage on brand equity.

The Company did not encounter any material issues pertaining to employees and industrial relations of the entity during the financial year under review.

Risk Management Contd....


Corporate Governance

Corporate Governance is the process by which Company objectives are established, achieved and monitored. Corporate Governance is concerned with the responsibilities of the Board and its relationships with all relevant stakeholders within a legal and regulatory framework.

Board

Composition

The Board consists of nine Non -Executive Directors three of whom are Independent. They are equipped with a balance of skills and experience and together they provide strategic direction to the Company.

Mr. S.D.R. Arudpragasam - Non - ExecutiveMr. S. Rajaratnam - Non- ExecutiveMr. R.N. Bopearatchy - Non- ExecutiveMr. R.C.A. Welikala - Non - ExecutiveMr. P.M.A. Sirimane - Non- ExecutiveMr. A.R. Rasiah - Independent Non-ExecutiveMr. S.N.P. Palihena - Independent Non- Executive Dr. A.M. Mubarak - Independent Non-ExecutiveMr. S.W. Gunawardena - Non- Executive

The Non-Executive Directors have submitted declarations of their independence or non-independence to the Board of Directors.

Mr. A.R. Rasiah, Mr. S.N.P. Palihena and Dr. A. M. Mubarak serve on the Boards of E. B. Creasy & Co. PLC (EBCPLC) Parent Company and some of its subsidiaries and a majority of the Directors of the Company are on the Boards of EBCPLC and its subsidiaries. Mr. A.R.Rasiah and Mr. S.N.P.Palihena have also served on the Board of the Parent Entity and some of its subsidiaries for over a period of nine years. However the Board after taking into consideration all other circumstances listed in the Rules pertaining to the Criteria for defining Independence is of the opinion that the aforementioned Directors are nevertheless Independent.

Decision Making

In addition to Board Meetings matters are referred to the Board and decided by Resolutions in writing.

The Interim and Annual Financial Statements are approved by the Board. Management Accounts and the progress reports are also reviewed and approvals relating to the Annual Budgets, Capital Expenditure and New Investments are granted after consideration.

Nomination Committee and Appointments to the Board

The Nomination Committee of the Parent Company, E.B. Creasy & Company PLC functions as the Company’s Nomination Committee. The Committee comprises of Mr. A.R. Rasiah- Chairman, Mr. S.N.P. Palihena and Mr. A.M. de S. Jayaratne- Independent Non- Executive Directors of E.B. Creasy & Co. PLC.

New Directors are proposed for Appointment by the Nomination Committee in consultation with the Chairman of the Company in keeping with the provisions of the Articles of Association of the Company in relation to same and in compliance with the Rules on Corporate Governance.

The details of new appointments to the Board are made available to the shareholders by making announcements to the Colombo Stock Exchange.

Re-election of Directors

The Company’s Articles of Association require any Director appointed by the Board to hold office until the next Annual General Meeting at which he seeks re-election by the Shareholders.

The Articles require one- fourth of the Directors in office to retire at each Annual General Meeting (not being an Appointed Director or Nominee Director). The Directors to retire in each year are those who have been longest in office since their last election. Retiring Directors are generally eligible for re-election.


Corporate Governance Contd.... Company Secretaries and Independent Professional AdviceThe Company and all Directors may seek advice from Corporate Managers & Secretaries (Private) Ltd. who are qualified to act as Secretaries as per the provisions of the Companies Act No. 07 of 2007. Advice is also sought from independent external professionals whenever the Board deems it necessary.

Independent Judgment The Board of Directors as a whole and individually are committed to exhibit high standards of integrity and independence of judgment on various issues.

Management MeetingsThe Management team meets on a monthly basis to review progress, discuss operational issues and other important developments that require consideration and follow up action.

Financial AcumenThe Board includes four finance professionals who possess the necessary knowledge and experience to offer the Board guidance on financial matters.

Annual General Meeting/ General MeetingsThe Board considers the Annual General Meeting/General Meetings an opportunity to communicate with Shareholders and encourages their participation. Questions raised by the Shareholders are answered and an appropriate dialogue is maintained with them.

Major TransactionsThere have been no transactions during the year under review which falls within the definition of ‘Major Transactions’ as set out in the Companies Act.

Financial ReportingThe Board of Directors considers the timely publication of its Quarterly and Annual Financial Statements as a high priority. The Financial Statements are prepared in

accordance with the Sri Lanka Accounting Standards.

DisclosuresThe Annual Report of the Board of Directors is given on pages 17 to 19 in this Report. The Auditor’s Report on the Financial Statements is given on pages 22 to 25 in this Annual Report.

Internal ControlThe Board is satisfied with the effectiveness of the system of internal controls for the period up to the date of signing the Financial Statements.

Audit CommitteeThe Audit Committee Report is set out on page 20

Remuneration CommitteeThe Remuneration Committee of the Parent Company, E.B. Creasy & Company PLC functions as the Company’s Remuneration Committee. The Committee comprises of Mr. A.R. Rasiah - Chairman, Mr. S.N.P. Palihena and Mr. A.M. de S. Jayaratne – Independent Non-Executive Directors of E.B. Creasy & Company PLC.

The remuneration policy is to attract, motivate and retain qualified and experienced personnel whilst determining remuneration packages for Key Management and Senior Management personnel with the objective of rewarding performance in a fair manner based on merit, competence, individual performance and having regard to the Company’s operating results and comparable market statistics.

Related Party Transactions Review Committee The Related Party Transactions are disclosed in Note 28 (d) to the Financial Statements. The Report of the Related Party Transactions Review Committee appear on page 21


The Board of Directors of Laxapana Batteries PLC present their Report on the Affairs of the Company together with the Audited Financial Statements for the year ended 31st March, 2020.

The details set out herein provide the pertinent information required by the Companies Act No. 7 of 2007, and the Colombo Stock Exchange Listing Rules and are guided by recommended best practices.

Principal Activities, Business Review/Future DevelopmentsThe principal business activities of the Company are importing and trading LED and CFL bulbs, dry cell batteries, rechargeable torches and industrial lighting products in the local market. During the current financial year, the company commenced a new business line of distributing hardware items.

A review of the Company’s business and its performance during the year with comments on financial results and future developments is contained in the Chairman’s Review, which together with the financial statements reflect the state of affairs of the Company.

The Directors to the best of their knowledge and belief confirm that the Company has not engaged in any activities that contravene laws and regulations.

Financial StatementsThe Financial Statements of the Company are given on pages 26 to 65

Auditors’ ReportThe Auditors’ Report on the Financial Statements is given on Pages 22 to 25

Accounting Policies and changes during the yearThe financial statements have been prepared in accordance with Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, which requires compliance with Sri Lanka Accounting Standards. The detailed accounting policies adopted in the preparation of the financial statements are given on pages 30 to 43

There were no changes to the accounting policies used by the Company during the year except for changes in accounting policies disclosed in Note 3 to the financial statements.

Interest RegisterDirectors’ Interest in transactionsThe Directors have made general disclosures as provided for in Section 192(2) of the Companies’ Act No. 7 of 2007. Arising from this, details of contracts in which they have an interest are disclosed in Note 28(b)to the financial statements on pages 63 to 65

Directors’ Interest in SharesThe Directors of the Company who have an interest in the shares of the Company have disclosed their shareholdings and any acquisitions / disposals to the Board in compliance with section 200 of the Companies Act No. 07 of 2007. Details pertaining to Directors direct shareholdings are set out below:

Name of Director No. of No. of Shares Shares as at 31.03.2020 as at 31.03.2019

Mr. S.D.R. Arudpragasam 4, 600,000 4, 600,000Mr. S.W. Gunawardena 113,500 113,500

Directors’ RemunerationDirectors fees in respect of the Company for the financial year 2019/20 are given in Note 28 (b)(i) to the Financial Statements on page 63.

Corporate DonationsNo Corporate donations were made during the year.(2018/19 – Rs. 27,000/-)

DirectorateThe names of the Directors who held office during the financial year are given below. Brief profiles of the Directors currently in office appear on pages 11 and 12.Mr. S.D.R. Arudpragasam - ChairmanMr. S. Rajaratnam - DirectorMr. K.D. Sumanasekera - Director (Resigned w.e.f. 15.10.2019)Mr. R.N. Bopearatchy - DirectorMr. R.C.A. Welikala - DirectorMr. P.M.A. Sirimane - DirectorMr. A.R. Rasiah - Director Mr. S.N.P. Palihena - Director Dr. A.M. Mubarak - Director Mr. S.W. Gunawardena - Director

Annual Report of the Board of Directors


In terms of Articles 83 and 84 of the Articles of Association Mr. P.M.A. Sirimane retires by rotation and being eligible offers himself for re-election.

Mr. K.D. Sumanasekera resigned from the Board of Directors with effect from 15th October 2019

Mr. R.N. Bopearatchy who is over seventy years of age, retires and offers himself for reappointment under and by virtue of a Special Notice received from a shareholder of the Company which is referred to in the Notice of Meeting.

Mr. A.R. Rasiah who is over seventy years of age, retires and offers himself for reappointment under and by virtue of a Special Notice received from a shareholder of the Company which is referred to in the Notice of Meeting.

Mr. S.N.P. Palihena who is over seventy years of age, retires and offers himself for reappointment under and by virtue of a Special Notice received from a shareholder of the Company which is referred to in the Notice of Meeting.

Auditors

The Financial Statements of the Company for the year have been audited by KPMG, Chartered Accountants, the retiring Auditors who have expressed their willingness to continue as Auditors of the Company and are recommended for reappointment.

A resolution to reappoint them and to authorize the Directors to determine their remuneration will be proposed at the Annual General Meeting.

The Auditors, Messrs. KPMG were paid Rs. 750,000/- (2018/19 - Rs.680,000/-) as audit fees and fees for audit related services by the Company. In addition they were paid Rs. 420,000/- (2018/19 - Rs.188,673/-) by the Company for non-audit related work, which consisted mainly of taxation work.

As far as the Directors are aware the Auditors do not have any relationship (other than that of an Auditor) with the Company. The Auditors do not have any interests in the Company.

RevenueThe Revenue of the Company for the year was Rs. 652.8Mn. (2018/19- Rs. 480.2 Mn)

Results The Company made a net profit of Rs. 41.3 Mn in the current financial year. The net profit for the previous year was Rs. 11.3 Mn.

DividendsThe Directors are pleased to recommend the payment of a First and Final Dividend of Rs. 1.00 per share on the ordinary shares of the Company for the year ended 31st March 2020 for approval by the shareholders at the forthcoming Annual General Meeting to be held on 11th November 2020. The Board of Directors have confirmed that the Company satisfies the solvency test requirement under section 56 of the Companies Act No. 07 of 2007 for the dividend proposed. A solvency certificate has been sought from the Auditors in respect of the above Dividend.

Property, Plant & EquipmentThe carrying amount of property, plant and equipment as at the date of the Statement of Financial Position was Rs.8.3 Mn. (2018/19– Rs.10.9 Mn). The details are given in Note 13 on page 47 and 48.

Investment PropertyThe carrying amount of investment property, which was leased to the Parent Company, as at the date of Statement of Financial Position was Rs. 133.5 Mn. (2018/19 – Rs. 134.3 Mn). The details are given in Note 14 on page 49 and 50.

Stated CapitalThe Stated Capital of the Company as at 31st March 2020 was Rs. 138,010,000/- and is represented by 39,000,000 Ordinary Shares and 1,000, 5% Cumulative Preference Shares.

Reserves The Company had Retained Earnings of Rs. 55.3 Mn as at 31st March 2020. Retained Earnings as at 31st March, 2019 was Rs. 23.6 Mn. Revaluation Reserve as at 31st March 2020 amounted to Rs. 1.1 Mn (2018/2019 - Rs. 1.1 Mn)

The movements are shown in the Statement of Changes in Equity in the Financial Statements.

Annual Report of the Board of Directors Contd......


TaxationIncome Tax liability for the current year is Rs. 10.6 Mn. (2018/19 – Nil ).

Related Party TransactionsDuring the financial year there were no non-recurrent related party transactions which exceeded the respective disclosure thresholds mentioned in Section 9 of the Colombo Stock Exchange Listing Rules.

Recurrent related party transactions although exempt which exceeded the respective disclosure threshold are disclosed in Note 28 (e) to the Financial Statements.

The Company has complied with the requirements of the Listing Rules on Related Party Transactions except for the number of Related Party Transaction Review Committee Meetings held during the year.

The Related Party Transactions presented in the financial statements are disclosed in Note 28 from page 63 to 65.

Share Information

Information relating to earnings (deficit), net assets, market value per share and share trading is given on pages 66 and 67.

Events Occurring after the Reporting Date

Events occurring after the Reporting date that would require adjustments to or disclosures are disclosed in Note 31 on page 65.

Capital Commitment and Contingent Liabilities

There were no capital commitments and material contingent liabilities outstanding as at the date of the Statement of Financial Position.

Employment Policy

The Company’s recruitment and employment policy is non-discriminatory. The number of persons employed by the Company at the year end was 12. (2018/19 – 13)

Statutory Payments

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

Environmental Protection

The Environmental Protection License was not renewed as the Company has ceased its assembly operation.

Internal Control

The Directors are satisfied with the Internal Control systems in operation at present.

Going Concern

The Board of Directors are satisfied that the Company has adequate resources to continue its operations in the foreseeable future. Therefore the Going Concern basis has been adopted in the preparation of these financial statements.

For and on behalf of the Board

………………….………R.N. BopearatchyDirector

………………….………R.C.A. WelikalaDirector

By Order of the Board

Corporate Managers & Secretaries (Private) Limited Secretaries30th September, 2020

Annual Report of the Board of Directors Contd......


Audit Committee Report

The Audit Committee report focuses on the activities of the Company for the year under review, which the Committee has reviewed and monitored as to provide additional assurance on the reliability of the Financial Statements through a process of independent and objective views.

CompositionThe Audit Committee comprises of two Independent Non- Executive Directors of the Company and an Independent Non- Executive Director of the Parent Company, E.B. Creasy & Company PLC (EBCPLC)

The names of the members are set out below:

Mr. A.R. Rasiah - Chairman (Independent Non-Executive Director - LBPLC)

Mr. S.N.P. Palihena - Member (Independent Non-Executive Director - LBPLC)

Mr. A.M. de S. Jayaratne - Member (Independent Non- Executive Director - EBCPLC)The members have varied experience, financial knowledge and business acumen to carry out their role effectively and efficiently. Two of the members are finance professionals including the Chairman.

The Company’s Secretaries, Corporate Managers and Secretaries (Pvt) Ltd. functions as the Secretaries to the Audit Committee.

Role of the Audit CommitteeThe Committee provides assistance to the Board of Directors in fulfilling its responsibility to the Shareholders and other Stakeholders relating to the Company’s financial statements and the financial reporting process to ensure that the financial reporting system is in adherence with the Sri Lanka Accounting Standards and other regulatory and statutory requirements. It also reviews the adequacy of internal controls and the business risks.

The Committee has scrutinized the Quarterly accounts and the Accounts for the year ended 31st March, 2020.

Meetings and AttendanceThe Audit Committee has met on four occasions during the year ended 31st March, 2020.

The Attendance of the Committee was as follows

Mr. A.R. Rasiah - (4/4)Mr. S.N.P. Palihena - (4/4)Mr. A.M. de S. Jayaratne - (4/4)Other members of the Board and Senior Management personnel of the Company are invited to the meetings regularly. The proceedings of the Audit Committee are reported to the Board of Directors.

External Auditors were present when appropriate.

External AuditThe Company has appointed KPMG as its External Auditor and the service provided by them are segregated between audit/assurance services and other advisory services such as tax consultancy.

The Audit Committee has determined that KPMG Auditors are independent on the basis that they do not carry out any management related functions of the Company. The Audit Committee also reviews the professional fees of the External Auditors.

The Audit Committee has concurred to recommend to the Board of Directors the re-appointment of KPMG as Auditors for the financial year ending 31st March 2021, subject to the approval of the shareholders at the Annual General Meeting. The Fee to be agreed upon by the Directors.

ConclusionThe Audit Committee is of the view that adequate controls are in place to safeguard the Company’s assets and that the financial position and the results disclosed in the audited accounts are free from any material misstatements.

A.R. RasiahChairmanAudit Committee30th September, 2020


The Related Party Transactions Review Committee is entrusted with the responsibility of ensuring that Shareholders’ interests are protected in all related party transactions.

CompositionThe Related Party Transactions Review Committee of the Parent Company, E.B. Creasy & Company PLC (EBCPLC) functions as the Company’s Related Party Transactions Review Committee which comprises of the following members: Mr. R. Seevaratnam - Chairman - Independent / Non-Executive Director, EBC PLC Mr. A.M.de S. Jayaratne - Member - Independent / Non-Executive Director, EBC PLC Mr. A.R. Rasiah - Member - Independent / Non-Executive Director, EBC PLC Mr. P.M.A. Sirimane - Member - Executive Director, EBC PLC

The Company’s Secretaries, Corporate Managers & Secretaries (Private) Ltd. functions as the Secretaries to the Related Party Transactions Review Committee.

Meetings of the Committee The Related Party Transactions Review Committee has met on two occasions in respect of Laxapana Batteries PLC during the financial year ended 31st March 2020.

The attendance of the Committee members was as follows. Mr. R. Seevaratnam - Chairman 2/2 Mr. A.M. de S. Jayaratne 2/2 Mr. A.R. Rasiah 2/2 Mr. P.M.A. Sirimane 2/2

Functions of the Committee:* Review all proposed Related Party Transactions ( Except for exempted transactions) * Direct the transactions for Board approval / Shareholder approval as deemed appropriate* Obtain updates on previously reviewed Related Party Transactions from Senior Management and approve any

material changes* Establish guidelines for Senior Management to follow in ongoing dealings with related parties. * Review and assess on an Annual basis the transactions for Compliance against the Committee guidelines.

ConclusionThe Related Party Transactions Review Committee has reviewed the Related Party Transactions entered into during the financial year under review and has communicated its comments and observations to the Board of Directors. Related Party Transactions have been reviewed and disclosed in a manner consistent with the Listing Rules. The Committee is free to seek external professional advice on matters within their purview when necessary. The Board of Directors of Laxapana Batteries PLC have also declared in the Annual Report that there were no non-recurrent related party transactions which exceeded the respective thresholds mentioned in Section 9 of the Colombo Stock Exchange Listing Rules . The Board further declares that recurrent related party transactions although exempt which exceeded the respective disclosure threshold are disclosed in Note 28 (e) to the Financial Statements and that the Company has complied with the requirements of Section 9 of the Colombo Stock Exchange Listing Rules on Related Party Transactions except for the number of meetings held during the year.

R. Seevaratnam

ChairmanRelated Party Transactions Review Committee


Related Party Transactions Review Committee Report


TO THE SHAREHOLDERS OF LAXAPANA BATTERIES PLC

Report on the Audit of the Financial Statements

OpinionWe have audited the financial statements of Laxapana Batteries PLC (“the Company”), which comprise the statement of financial position as at March 31, 2020, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information set out on pages 26 to 65 of the Annual Report.

In our opinion, the accompanying financial statements of the Company give a true and fair view of the financial position of the Company as at March 31, 2020, and of their financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Basis for OpinionWe conducted our audit in accordance with Sri Lanka Auditing Standards (SLAuSs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by CA Sri Lanka (Code of Ethics), and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit MattersKey audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Independent Auditor’s Report



Risk Description Our Response

Revenue recognition

Refer Note 4.2 and Note 6 (notes to the financial statements “Revenue”).Revenue from sale of goods is recognised when control has been transferred to the buyer; and is measured net of trade discounts.

In addition, the Company considers revenue as an important element in the preparation of budgets and measuring management performance. These factors could create an incentive for revenue to be recognised prior to control being transferred.

Considering above factors, we identified revenue as a key audit matter because revenue is a significant audit risk and one of the key performance indicators of the Company and therefore there is an inherent risk of manipulation of the timing of revenue recognition by management to meet specific targets or expectations.

Our audit procedures included;

• Evaluating the appropriateness of the Company’s revenue recognition policies including the recognition, measurement and classification as required by the accounting standard.

• Testing the operating effectiveness of key controls over the revenue recognition and measurement.

• Evaluating the integrity of the general IT control environment and testing the operating effectiveness of key IT application controls over revenue.

• Performing monthly trend analysis of revenue considering internal benchmarks, and detailed testing by vouching a sample of invoices and credit notes.

Valuation of inventories

Refer Note 4.6 and Note 16 (notes to the financial statements “Inventories”)

Risk Description Our Response

The Company has recorded inventories amounting to Rs. 138.3 Mn as at 31 March 2020.

The Company has significant amount of inventory and judgment is exercised with regard to categorisation of stocks as obsolete and/or slow moving to be considered for provision; estimates are then involved in arriving at provisions against cost in respect of slow moving and obsolete inventories to arrive valuation based on lower of cost and net realizable value. Given the level of judgments and estimates involved this is considered to be a key audit matter.

Our audit responses included

• Testing key controls over inventory valuation and key controls designed to identify slow moving and obsolete inventories.

• Verification of inventories on a sample basis as at financial year end.

• Comparison of inventory levels, by product group, to sales data to corroborate whether slow moving and obsolete inventories had been appropriately identified and challenge the categorization as obsolete or slow moving.

• Assessing the realizations of inventories during the period and after the period end, in particular of clearance categories, and compare these to the expected recoveries for inventory categorized as obsolete and/or slow moving at the period end date.

• Assessing whether the accounting policies had been consistently applied and the adequacy of the disclosures in respect of the judgment and estimation made in respect of inventory provisioning.

Other Information Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial StatementsManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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

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

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

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

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



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

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 1224.

CHARTERED ACCOUNTANTS

Colombo, Sri Lanka





Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31st March, 2020 2019 Note Rs. Rs.

Revenue 6 652,843,434 480,203,730 Cost of sales (486,617,340) (370,687,801) Gross profit 166,226,094 109,515,929 Other operating income 7 24,041,979 25,949,409 Distribution expenses (88,989,930) (49,528,762)Administrative expenses (39,119,177) (50,921,332)Impairment loss on property, plant & equipment - (3,879,295)Profit from operations 62,158,966 31,135,949 Finance costs 8 (12,641,796) (21,396,824)Profit before taxation 9 49,517,170 9,739,125 Income tax (expense)/ reversal 10 (8,214,335) 1,562,529 Profit for the year 41,302,835 11,301,654 Other comprehensive income Items that will not be reclassified to profit or loss Revaluation gain on property, plant and equipment - 1,581,293 Actuarial gain/ (loss) on retirement benefit obligation 247,989 103,593 Deferred tax on revaluation gain on property, plant and equipment - (442,762)Deferred tax on actuarial gain/ (loss) on retirement benefit obligations 10.2 (69,437) (29,006)Other comprehensive income/ (expense) for the year, net of tax 178,552 1,213,118 Total comprehensive income for the year 41,481,387 12,514,772

Earnings per share 11 1.06 0.29 The notes form an integral part of these financial statements. Figures in brackets indicate deductions.


Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position

As at 31st March 2020 2019 Note Rs. Rs.

ASSETS Non-current assets Property, plant and equipment 13 8,396,155 10,922,439 Investment property 14 133,589,035 134,330,940 Deferred tax assets 15 4,885,715 2,487,357 Total non-current assets 146,870,905 147,740,736 Current assets Inventories 16 138,391,123 109,302,892 Trade and other receivables 17 220,109,618 103,426,791 Amounts due from related companies 18 14,463,985 19,027,346 Cash and cash equivalents 19 34,215,290 7,003,473 Total current assets 407,180,016 238,760,502 Total assets 554,050,921 386,501,238 EQUITY AND LIABILITIES Equity Stated capital 20 138,010,000 138,010,000 Revaluation reserve 21 1,138,531 1,138,531 Retained earnings 55,343,568 23,612,181 Total equity 194,492,099 162,760,712 Non-current liabilities Retirement benefit obligations 22 4,482,100 5,692,566 Total non-current liabilities 4,482,100 5,692,566Current liabilities Trade and other payables 23 229,870,536 87,900,378 Amounts due to related companies 24 34,800,346 17,534,217 Interest bearing loans and borrowings 25 63,657,379 92,378,775 Income tax payable 9,016,002 - Bank overdrafts 19 17,732,459 20,234,590 Total current liabilities 355,076,722 218,047,960 Total liabilities 359,558,822 223,740,526 Total equity and liabilities 554,050,921 386,501,238

The notes form an integral part of these financial statements. I certify that these financial statements are in compliance with the requirements of the Companies Act No.07 of 2007.

………………………….. N. Musheen Senior Manager - Finance The Board of Directors is responsible for the preparation and fair presentation of these Financial Statements. Approved and signed for and on behalf of the Board; ………………………….. ………………………….. R.N. Bopearatchy R.C.A. Welikala Director Director

30th September, 2020 Colombo


Statement of Changes in Equity

Stated Capital Ordinary Preference Revaluation Retained Total Share Capital Share Capital reserve Earnings equity Rs. Rs. Rs. Rs. Rs.

Balance as at 01st April 2018 138,000,000 10,000 - 12,235,940 150,245,940 Total comprehensive income for the period Profit for the year - - - 11,301,654 11,301,654 Other comprehensive income for the year - - 1,138,531 74,587 1,213,117 Total comprehensive income for the period - - 1,138,531 11,376,241 12,514,772 Balance as at 31st March 2019 138,000,000 10,000 1,138,531 23,612,181 162,760,712

Balance as at 1st April 2019 138,000,000 10,000 1,138,531 23,612,181 162,760,712Total comprehensive income for the periodProfit for the year - - - 41,302,835 41,302,835 Other comprehensive income - - - 178,552 178,552 Total comprehensive income for the period - - - 41,481,387 41,481,387

Transactions with owners of the CompanyDividends - - - (9,750,000) (9,750,000)Total transactions with owners of the Company (9,750,000) (9,750,000)Balance as at 31st March 2020 138,000,000 10,000 1,138,531 55,343,568 194,492,099

For the year ended 31st March Note 2020 2019

Dividend per share (Rs.) 12 0.25 -

The notes form an integral part of these financial statements. Figures in bracket indicate deductions.


Statement of Cash Flows

For the year ended 31st March 2020 2019 Note Rs. Rs.

CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 49,517,170 9,739,125

Adjustments for; Depreciation on property, plant and equipment 2,526,284 3,381,613 Depreciation on investment property 741,905 741,905Impairment loss on property, plant and equipment - 3,879,295 Impairment loss on trade receivables and amounts due from related parties 1,992,300 111,474 Interest expense 12,077,264 16,917,469 Provision for retirement benefit obligations 686,803 991,674 Provision for slow moving inventories (486,450) 9,110,938 Gain on disposal of property,plant and equipment - (1,437,231)Operating cash flows before working capital changes 67,055,276 43,436,262

Changes in: Inventories (28,601,781) (6,480,723)Trade and other receivables (117,669,222) (17,694,648)Amounts due from related companies 4,587,571 (14,696,720)Amounts due to related companies 17,266,128 14,749,020 Trade and other payables 143,374,202 19,624,507Cash generated from/ (used in) operations 86,012,174 38,937,698

Taxes paid (3,358,282) (6,780,206) Interest paid (12,819,268) (16,208,839) Retiring gratuity paid (1,649,280) (178,650) Net cash flows generated from (used in) operating activities 68,185,344 15,770,003 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment - 1,850,868 Purchase of property, plant and equipment - (1,909,864) Net cash flows (used in) investing activities - (58,996) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loans and borrowings 294,486,926 293,733,945 Repayment of borrowings (323,208,322) (317,878,156) Dividends paid (9,750,000) - Net cash flows generated from/ (used in) financing activities (38,471,396) (24,144,211) Net increase/ decrease in cash and cash equivalents 29,713,948 (8,433,204) Cash and cash equivalents at the beginning of the year (13,231,117) (4,797,913) Cash and cash equivalent at the end of the year 19 16,482,831 (13,231,117) The Accounting Policies and Notes form an integral part of these Financial Statements. Figures in the brackets indicate deductions


Notes to the Financial Statements

1. Reporting entity

1.1 Domicile and legal form Laxapana Batteries PLC is a Quoted Public

Company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. The Company’s registered office is situated at No. 98, Sri Sanagaraja Mawatha, Colombo 10.

The principal business activity of the Company is importing and trading LED and CFL bulbs, dry cell batteries, rechargeable torches and industrial lighting products in the local market. During the current financial year, the Company commenced a new business line of distributing hardware items.

1.2 Parent enterprise The immediate and ultimate holding companies

of Laxapana Batteries PLC are E.B. Creasy & Company PLC and The Colombo Fort Land & Building PLC respectively.

2. Basis of accounting

2.1 Statement of compliance The Financial Statements of the Company

which comprise of the Statement of Financial Position, Statements of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows together with the Accounting Policies and Notes to the Financial Statements. The Financial statements have been prepared in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) as issued by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the requirements of the Companies Act No.7 of 2007.

2.2 Responsibility of those charged with governance

The Board of Directors is responsible for the preparation and presentation of these financial statements of the Company as per the provisions of the Companies Act No.07 of

2007 and the Sri Lanka Accounting Standards (SLFRSs and LKASs).

The Company financial statements were authorized for issue by the Board of Directors on 30th September 2020.

2.3 Basis of measurement The financial statements have been prepared

on the historical cost basis except for the following items in the Statement of Financial Position.

• Retirement Benefit Obligations which are measured at the present value of the defined benefit plans.

2.4 Fair value Fair value is the price that would be received to

sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When measuring fair value of an asset or liability, the Company uses observable market data as far as possible.

Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows,

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

If inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.


Notes to the Financial Statements Contd......

Fair values have been determined for measurement and disclosure purposes based on the following methods. Where applicable further information about the assumptions made in determining fair value is disclosed in the notes specific to that asset or liability.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability

or • In the absence of a principal market, in the

most advantageous market for the asset or liability

orthe principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

2.5 Going concern The directors have made an assessment of the

company’s ability to continue as a going concern and being satisfied that it has the recourse to continue in business for the foreseeable future confirm that they do not intend either to liquidate or to cease operations of any business unit of

the company other than those disclosed in the notes to the financial statements.

2.6 Materiality and aggregation

As per LKAS 01 on “Presentation of Financial Statement” “Disclosure Initiative” which was effective from January 01,2016 and amendments to LKAS 01 on each material class of similar items is presented separately in the financial statements. Items of dissimilar nature or function are presented separately unless they are immaterial.

2.7 Off setting Assets and Liabilities, and income and

expenses, are not offset unless required or permitted by Sri Lanka Accounting Standard.

2.8 Functional and Presentation Currency The financial statements are presented in

Sri Lankan Rupees. All financial information presented in Sri Lankan Rupees has been rounded to the nearest rupee.

2.9 Use of Estimates and Judgments In preparing these financial statements,

management has made judgments and estimates that affect the application of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

No significant judgments were made in applying accounting policies in these financial statements.

2.10 Assumptions and estimation uncertainties Information about assumptions and

uncertainties as at 31 March 2020 that have a significant risk of resulting in a material adjustments to the carrying amounts of assets and liabilities in the next financial year are included in the following notes.



- Note 4.2.1 - revenue recognition: estimate of expected returns;

- Note 4.3 - measurement of defined benefit obligations: key actuarial assumptions;

- Note 4.5.2 - recognition of deferred tax assets: availability of future taxable profit against which deductible temporary differences and tax losses carried forward can be utilised;

- Note 4.10 – measurement of ECL allowance for trade receivables and amounts due from related parties classified as amortised cost: key assumptions in determining the weighted average loss rate.

The ongoing COVID – 19 pandemic has increased the estimation uncertainty in the preparation of these Financial Statements. The estimation uncertainty is associate with:

- The extent and the duration of the expected economic downtown (and forecasts for key economic factors including GDP). This includes the disruption to capital markets, deteriorating credit, liquidity concerns, impact on unemployment and decline in consumer discretionary spending.

3 Changes in significant accounting policies The company initially applied SLFRS 16 Lease

from 1st April 2019. A number of other new standards are also effective from 1st April 2019 but they do not have a material effect on the company’s financial statements. Adoption of SLFRS 16 - Lease did not have a major impact on the company as the company is the lessor of the lease transaction.

4. Summary of significant accounting policies The accounting policies set out below have

been consistently applied to all periods presented in these financial statements.

4.1 Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss and presented within finance costs.

4.2 Revenue from contracts with customers

4.2.1 Sales of goods

The Company is engaged in the business of importing and trading LED and CFL bulbs, dry cell batteries, rechargeable torches and industrial lighting products in the local market. The Company shall recognise revenue when (or as) the entity satisfies a performance obligation by transferring a promised goods to a customer. An asset is transferred when (or as) the customer obtains controls of that asset.

4.2.2 Interest income

Interest income is recognised on time-proportion basis using the effective interest method.

4.2.3 Dividend income

Dividend income is recognised in the income statement on the date that the Company’s right to receive payment is established, which is generally when the dividend is declared.



4.2.4 Rental income

Rental income is recognised on the straight-line basis over the period of the rental contracts. When the customer initially enters into a rental contract, the Company usually receives an advance or a deposit or both which is recognised as liability. The advance is recognised as revenue with the passage of time while deposit is refunded to the customer in accordance with the rental contract on termination.

4.2.5 Others

Other income is recognised on an accrual basis. Gains and losses arising from incidental activities to main revenue generating activities and those arising from a Group of similar transactions which are not material, are aggregated, reported and presented on a net basis.

4.3 Employee benefits

4.3.1 Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. All the employees who are eligible for Employees’ Provident Fund and Employees’ Trust Fund are covered by relevant contribution funds in line with the respective statutes. Employers’ contribution to defined contribution plans are recognized as an expense in the Statement of Profit or Loss when incurred.

4.3.2 Defined benefit plan-retiring gratuity

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The liability recognised in the Statement of Financial Position in respect of defined benefit plans is the present value of the defined benefit obligation at the reporting date.

The defined benefit obligation is calculated annually using the Projected Unit Credit method. (PUC) as required by the Sri Lanka Accounting Standard LKAS 19 – Employee Benefits. The Company continues to use an internally developed method to measure retirement benefit obligation. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates that apply to the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related liability.

Provision has been made for retiring gratuities from the first year of service for all employees in conformity with LKAS 19 - Employee Benefits. However, according to the Payment of Gratuity Act No. 12 of 1983, the liability for gratuity to an employee arises only on completion of 5 years of continued service with the Company.

4.4 Finance costs

The Company finance costs include:

- Interest expenses

- The net gain or loss on foreign currency transactions

Interest expense is recognised using the effective interest method.

The ‘effective interest rate’ is the rate exactly discounts estimated future cash payments or receipts through the expected life of the financial instruments to:

- The gross carrying amount of the financial assets ; or

- The amortised cost of the financial liability.

In calculating interest expenses, the effective interest rate is applied to the amortised cost of the liability.



4.5 Income tax Income tax expense comprises current and

deferred tax. It is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in OCI.

4.5.1 Current tax Current tax comprises the expected tax payable

or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years.

The amount of tax payable and receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantially enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

4.5.2 Deferred tax Deferred tax is recognised in respect of

temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for;

- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss

Deferred tax assets are recognised for unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which can be used. Future taxable profits are determined based on the relevant taxable temporary differences. If the amount of taxable temporary difference is insufficient to recognise the deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans. Deferred tax assets are reviewed at each

reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will realised; such deductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantially enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria are met.

4.6 Inventories Inventories are measured at the lower of cost

and net realizable value, after making due allowances for obsolete and slow moving items. The cost of inventories is determined on weighted average basis and includes all the expenditure incurred in bringing the inventories to a saleable condition. In the case of finished products, cost includes all direct expenditures and production overheads based on a normal level of activity. Net realizable value is the price at which inventories can be sold in the normal course of business after allowing for cost of realization and/or cost of conversion from their existing state to saleable condition.

4.7 Property, plant & equipment

4.7.1 Freehold assets A. Recognition and measurement Items of Property, Plant and Equipment

are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The



cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset for its intended use and restoring the site on which they are located and capitalized borrowing cost. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The Company applies the revaluation model for the land. Such land is carried at a revalued amount, being their fair value at the date of revaluation, less subsequent accumulated impairment losses. Land of the Company are revalued at once in every three years on a roll over basis to ensure that the carrying amounts do not differ materially from the fair values at the reporting date.

On revaluation of an asset, any increase in the carrying amount is recognised in Other Comprehensive Income and accumulated in equity, under capital reserve or used to reverse a previous revaluation decrease relating to the same asset, which was charged to the Statement of Income. In this circumstance, the increase is recognised as income to the extent of the previous write down. Any decrease in the carrying amount is recognised as an expense in the Statement of Income or debited in the Other Comprehensive Income to the extent of any credit balance existing in the capital reserve in respect of that asset. The decrease recognised in other Comprehensive Income reduces the amount accumulated in equity under capital reserves. Any balance remaining in the revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within “other income/other expenses” in profit or loss.

B. Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

C. Depreciation

Items of property, plant and equipment are depreciated from the date they are available for use or, in respect of self-constructed assets, from the date that the asset is completed and ready for use.

Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line basis over their estimated useful lives. Depreciation is generally recognized in profit or loss, unless the amount is included in the carrying amount of another asset.

Depreciation of an asset begins when it is available for use and ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized.

The estimated useful lives for the current and comparative years are as follows:

Freehold Buildings 50 years

Plant & Machinery 15 years

Office Equipment 07 years

Factory Equipment 07 years

Computers 07 years

Motor Vehicles 04 years

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


date and adjusted if appropriate. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

4.8 Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is initially and subsequently measured at cost.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. When the use of a property changes such that it is reclassified as property, plant and equipment, its carrying value at the date of reclassification becomes its cost for subsequent accounting.

Depreciation is calculated to write off the cost of items of investment property less their estimated residual values using the straight-line basis over their estimated useful lives.

The estimated useful lives for the current and comparative years are as follows:

Freehold Buildings 50 years

Rental income from investment property is recognised as other income on a straight-

line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

4.9 Financial instruments

4.9.1 Recognition and initial measurement

Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provision of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

4.9.2 Classification and subsequent measurement Financial assets On initial recognition, a financial asset is

classified as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity instrument; or FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and




- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

- it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets - business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

- how the performance of the portfolio is evaluated and reported to the Company’s management;

- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

- how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for de-recognition are not considered sales for this purpose, consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets – assessment whether contractual cash flows are solely payments of principal and interest:

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as



consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

- contingent events that would change the amount or timing of cash flows;

- terms that may adjust the contractual coupon rate, including variable-rate features;

- prepayment and extension features; and

- terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse features)

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permit or requires prepayment at an annual amount that substantially represent the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.



Financial assets - subsequent measurement and gains and losses:

Financial assets at FVTPLThese assets are subsequently measured at fair value. Net gains and losses including any interest or dividend income, are recognized in profit or loss.

Financial assets at amortized cost

These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on de-recognition is recognized in profit or loss.

Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On de-recognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss



Financial liabilities – classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held- for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on de-recognition is also recognised in profit or loss.

4.9.3 De-recognition

Financial assets The Company de-recognises a financial asset

when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the, contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not de-recognised.

Financial liabilities The Company de-recognises a financial liability

when its contractual obligations are discharged or cancelled, or expire. The Company also de-recognises a financial liability when its terms are modified and the cash flows of the modified are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On ed-recognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit it or loss.

4.9.4 Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

4.10 Impairment

A. Non-derivative financial assets

The Company recognises loss allowances for Expected Credit Losses (ECLs) on:

- financial assets measured at amortised cost;

Loss allowance for trade receivables and contract assets are always measured at an amount equals to life time ECLs.

When determining whether the credit risk of a financial has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Company considers a financial asset to be in default when:



- the borrower is unlikely to pay its credit obligation to the Company in full, without recourse by the Company to actions such as realising security (if any is held); or

- The financial asset is more than 90 days past due.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data

- significant financial difficulty of the borrower or issuer;

- It is probable that the borrower will enter bankruptcy;

Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

Non-financial assets At each reporting date, the Company reviews

the carrying amounts of its non-financial assets (other than inventory and deferred tax assets) to determine whether there is any indication of impairment. If any such indicator exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.



An impairment loss is recognised if the carrying amount of an asset or CGU exceeds it recoverable amount.

Impairment losses are recognised in profit or loss. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have determined, net of depreciation or amortisation, if no impairment loss had been recognised.

4.11 Stated capital

i. Ordinary shares Incremental costs directly attributable to the

issue of ordinary shares are shown as a deduction (net of tax) from equity.

ii. Preference shares Non-redeemable preference shares are

classified as equity, because they bear discretionary dividends, do not contain any obligations to deliver cash or other financial assets and do not require settlement in a variable number of the Company’s equity instruments.

4.12 Provisions Provisions are recognized when the Company

has a present obligation (legal and constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

Provisions are reviewed at each statement of financial position date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying

economic benefits will be required to settle the obligation, the provision is reversed.

4.13 Statement of cash flows

The Statement of Cash Flows has been prepared using the ‘Indirect method’. Interest paid are classified as operating cash flows, interest and dividends received are classified as investing cash flows for the purpose of presentation of the Statement of Cash Flow.

4.14 Related party transactions

Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating decisions of the other, irrespective of whether a price is being charged.

4.15 Comparative figures

Where necessary, the comparative figures have been reclassified to conform to the current year’s presentation.

4.16 Events occurring after reporting period

All material post Balance Sheet events have been considered and where appropriate adjustments to or disclosures have been made in the respective notes to the financial statements.

4.17 Earnings per share

The Company presents basic earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

4.18 Capital commitments and contingencies

Contingencies are possible assets or obligations that arise from a past event and would be confirmed only on the occurrence



or non-occurrence of uncertain future events, which are beyond the Company’s control. All material capital commitments and contingencies of the Company are disclosed in the Notes to the financial statements.

5. New Accounting Standards issued but not yet effective

A number of new standards are effective for annual periods beginning after 1 April 2020 and earlier application is permitted; however, the Company has not early adopted the new or amended standards in preparing these Financial Statements.

The following amended standards are not expected to have a significant impact on the Group’s Financial Statements:

Amendments to references to conceptual framework in Sri Lanka Financial Reporting Standards

Definition of a business (Amendments to SLFRS 3)

Definition of Material (Amendments to LKAS 1 and LKAS 8)

Insurance contracts (IFRS 17)



For the year ended 31st March 2020 2019 Rs. Rs.

6. REVENUE Gross revenue 711,205,377 520,533,859 Less: Revenue based taxes: Value Added Tax (VAT) (52,973,798) (35,372,849)

Nation Building Tax (NBT) (5,388,145) (4,957,280) Net revenue 652,843,434 480,203,730

The Company commenced a new business line of distributing hardware items during the year under review.

7. OTHER OPERATING INCOME/(EXPENSE) Sundry income 41,979 512,178 Investment property rentals 24,000,000 24,000,000 Gain/ (loss) on disposal of property, plant and equipment - 1,437,231 24,041,979 25,949,409 8. FINANCE COSTS Interest expense - finance liabilities measured at amortised cost Interest on trust receipt loans 9,560,782 14,459,856 Interest on bank overdraft 2,516,481 2,420,230 Interest on term loan - 37,382 Finance costs-other Net foreign exchange loss 564,533 4,479,356 12,641,796 21,396,824 9. PROFIT BEFORE TAXATION Profit before income tax is stated after charging

all expenses including the following : Auditor’s remuneration

- Statutory audit 750,000 680,000 - Non audit services 429,028 188,673 Depreciation of property, plant and equipment 2,526,284 3,381,613 Depreciation of investment property 741,905 741,905 Provision for slow moving inventories (486,450) 9,110,938 Provision for trade receivable 1,907,978 35,107

Provision for related parties receivable 84,322 144,581 Donations - 27,000 Personnel costs (Note 9.1) 28,290,611 23,059,201

9.1 Personnel Costs Salaries 23,361,192 18,905,698

Defined benefit plan cost - Retiring gratuity 686,803 991,674 Defined contribution plan cost - EPF, ETF 1,717,604 1,857,944 Other staff related expenses 541,564 275,353 Bonus 1,983,448 1,028,532 28,290,611 23,059,201

No of employees 12 13



For the year ended 31st March 2020 2019 Rs. Rs.

10. INCOME TAX EXPENSE Current tax expense Income tax on current year profits 10,682,130 -

Under/ (over) provision in respect of previous year - (683,545) 10,682,130 (683,545) Deferred tax expense Origination and reversal of temporary differences (2,467,795) (878,984) 8,214,335 (1,562,529)

10.1 Reconciliation of accounting profit and taxable profit Accounting profit before income tax expense 49,517,170 9,739,125 Non business income (24,000,000) (25,437,231) Disallowed expenses 29,844,750 56,155,216 Tax deductible expenses (16,339,970) (32,360,042) Trade profit 39,021,950 8,097,068 Rent income 24,000,000 24,000,000 Assessable income 63,021,950 32,097,068

Tax loss claimed during the year (23,458,504) (32,097,068) Taxable profit 39,563,446 -

Income tax @ 28% 8,308,324 - Income tax @ 24% 2,373,807 Tax on profit for the year 10,682,130 -

Tax loss brought forward 15,057,597 45,840,155 Adjustment to tax loss brought forward 8,400,907 1,314,510 Loss utilised during the year (23,458,504) (32,097,068) Tax loss carried forward - 15,057,597

10.2 Tax recognised on other comprehensive income Actuarial gain/(losses) on retirement benefit obligations

2020 2019 Before tax Tax effect Net of tax Before tax Tax effect Net of tax Rs. Rs. Rs. Rs. Rs. Rs.

Actuarial gain/(losses) on 247,989 (69,437) 178,552 103,593 (29,006) 74,587 retirement benefit obligations Revaluation gain on property, - - - 1,581,293 (442,762) 1,138,531

plant and equipment



10.3 Details of the current tax computation The income tax provision of Laxapana Batteries PLC has been calculated on the adjusted profits from business

at a rate of 28% for the first three quarters in terms of the Inland Revenue Act No.24 of 2017 and amendments thereto. The adjusted profits from the business for the last quarter has been taxed at 24% with effect from 01 January, 2020 as per the notices issued by Inland Revenue Department.

The provision is currently under discussion, however, the Company believes that it is probable that the proposal would be enacted and the taxable income for the last quarter would be liable for tax at a rate of 24% of the assessable income from business. If the proposal would not be enacted, an additional tax expense of Rs. 395,635/- will be incurred and this will not have a material impact on the results.

11. EARNINGS PER SHARE The calculation of earnings per share is based on the profit attributable to ordinary shareholders and weighted

average number of ordinary shares in issue during the year.

For the year ended 31st March 2020 2019

Profit attributable to equity holders of the Company (Rs.) 41,302,835 11,301,654 Total weighted average number of ordinary shares in issue during the year 39,000,000 39,000,000 Earnings per share (Rs.) 1.06 0.29

12. DIVIDEND PER SHARE The calculation of dividend per share is based on dividend for the year and weighted average number of

ordinary shares in issue during the year.

For the year ended 31st March 2020 2019

Dividend paid during the year (Rs.) 9,750,000 - Weighted Average no. of Ordinary Shares 39,000,000 39,000,000 Dividend per share (Rs.) 0.25 - Dividend Payout Ratio 0.24 -

Final dividend for the year ended 31st March 2019 of Rs. 0.25 per share was paid on 09th October 2019.

A final dividend of Rs. 1.00 per share has been proposed for the year ended 31st March 2020 and has not been recognised as at the reporting date in compliance with LKAS 10-Events After the Reporting Period.



13. PROPERTY, PLANT AND EQUIPMENT

13.1 Reconciliation of carrying amount

Plant and Motor Office FactoryIn Rs. Land machinery vehicles equipment Computers equipment Total

Cost Balance at 1 April 2018 1,218,707 17,452,000 4,975,000 3,088,530 2,775,384 5,792,838 35,302,459 Additions - - 1,309,904 593,000 - 6,960 1,909,864 Revaluation of land reclassified to investment property 1,581,293 - - - - - 1,581,293 Reclassification to investment property (2,800,000) - - - - - (2,800,000)Disposals - (1,287,548) (1,400,000) - - - (2,687,548)Balance at 31 March 2019 - 16,164,452 4,884,904 3,681,530 2,775,384 5,799,798 33,306,068 Balance at 1 April 2019 - 16,164,452 4,884,904 3,681,530 2,775,384 5,799,798 33,306,068 Balance at 31 March 2020 - 16,164,452 4,884,904 3,681,530 2,775,384 5,799,798 33,306,068

Accumulated depreciation and impairment losses Balance at 1 April 2018 - 7,497,680 3,846,177 1,113,280 1,517,517 3,421,978 17,396,632 Depreciation - 903,961 974,498 477,584 327,310 698,261 3,381,613 Impairment loss - 3,523,716 - - - 355,579 3,879,295 Disposals - (873,912) (1,399,999) - - - (2,273,911)Balance at 31 March 2019 - 11,051,445 3,420,676 1,590,864 1,844,827 4,475,817 22,383,629 Balance at 1 April 2019 - 11,051,445 3,420,676 1,590,864 1,844,827 4,475,817 22,383,629 Depreciation - 561,350 562,548 494,562 327,310 580,514 2,526,284 Balance at 31 March 2020 - 11,612,795 3,983,224 2,085,426 2,172,137 5,056,331 24,909,913 Carrying amounts At 1 April 2018 1,218,707 9,954,320 1,128,823 1,975,250 1,257,867 2,370,860 17,905,827 At 31 March 2019 - 5,113,007 1,464,228 2,090,666 930,557 1,323,981 10,922,439 At 31 March 2020 - 4,551,657 901,680 1,596,104 603,247 743,467 8,396,155


13.2 Fully depreciated assets

Property, plant and equipment as at 31 March 2020 includes fully depreciated assets which are still in use having a gross carrying amount (cost) of Rs. 5,718,976/- (2019 - Rs. 2,120,976/-)

13.3 Impairment

During the year ended 31st March 2019, the management decided to discontinue assembling of CFL bulbs due to a change in the business model. Assets used in the assembling process were tested for impairment and recognized an impairment loss of Rs. 3,523,716/- and Rs. 355,579/- with respect to plant and machinery and office equipment respectively.

13.4 Transfer to Investment Property

During the year ended 31 March 2018, as a result of the change in the Company’s business plan, freehold land in extent of 3A-2R-17P and buildings thereon was reclassified as Investment Property.

During the year ended 31 March 2019, land in extent of 0A-0R-7P was reclassified as Investment Property, because the land is regarded as held for capital appreciation. Consequent to the Company remeasuring land at fair value, with effect from 2018/2019, the land was revalued at fair value prior to reclassification as Investment Property. The revaluation gain of Rs. 1,138,531/- (net of tax) is included under Revaluation Reserve.




14. INVESTMENT PROPERTY

14.1 Reconciliation of carrying amount

Land Building Total In Rs.

Cost Balance at 1 April 2018 100,456,293 37,093,497 137,549,790

Reclassification from property, plant and equipment 2,800,000 - 2,800,000 Balance at 31 March 2019 103,256,293 37,093,497 140,349,790 Balance as at 1 April 2019 103,256,293 37,093,497 140,349,790 Balance as at 31 March 2020 103,256,293 37,093,497 140,349,790 Accumulated depreciation

Balance as at 1st April 2018 - 5,276,945 5,276,945 Depreciation - 741,905 741,905 Balance at 31 March 2019 - 6,018,850 6,018,850 Balance as at 1 April 2019 - 6,018,850 6,018,850 Depreciation - 741,905 741,905 Balance as at 31st March 2020 - 6,760,755 6,760,755 Carrying amounts

At 1 April 2018 100,456,293 31,816,552 132,272,845 At 31 March 2019 103,256,293 31,074,647 134,330,940 At 31st March 2020 103,256,293 30,332,742 133,589,035

14.2 Land and Buildings

Location : Property is situated along High Level Road,within a distance of approximately 2 kilometers from Homagama Town Centre, in Panagoda, Godagama.

Extent: Land of 0A-0R-07P Land of 3A-2R-17P and the factory and office building

14.3 Amounts recognised in profit or loss

The investment property was leased to its parent company – E. B. Creasy & Co. PLC for a period of 08 years with effect from 01 January 2015. Rental shall be mutually agreed in every two years. Rental income of Rs. 24.0 Mn (2018/2019 – Rs. 24.0 Mn was recorded in ‘Other operating Income.’

14.4 Fair value of the investment property

The investment property is measured initially at its cost. After the initial recognition, the investment property is measured using cost model in accordance with LKAS 16’s requirements for the aforesaid model. LKAS 40.79(e) requires the Company to disclose the fair value of investment property since the Company’s policy for subsequent measurement is ‘cost model’ . Fair values of the investment property are as follows.



Fair values Valuation date Land Building 2019 31-Mar-19 Rs. 442,288,000 Rs. 46,297,925

Location Type of Assets

Method of valuation

Land Extent

No of Buildings

Building area (sq.ft)

Value

Panagoda, Godagama Land Market comparable

methods 0A-0R-07P 2,800,000

Panagoda, Godagama

Land Market comparable methods

3A-2R-17P 439,488,000

Building 04 49,861 46,297,925

Total 488,585,925

As at 31 March 2019, the lands were revalued by Mr. P.P.T. Mohideen, Chartered Valuation Surveyor and fair values were disclosed above.

All above revaluations are based on market values and the valuation carried out on 31st March 2019. The Directors are of the view that market values as at 31st March 2020 have not changed from the valuation determined as at 31st March 2019.

The fair value measurement for the land has been categorized as level 3 fair value based on the inputs to the valuation technique used.

14.5 Acquisition by the Government Land area of 27.63 perches belonging to the Company has been gazetted to be acquired by the Government.

The Company made a claim on 28.04.2016 for Rs. 218.6 million, which includes 27.63 perches of land, 3,885 cubic feet of retaining wall and other miscellaneous items. No adjustment has been made in the financial statements pending finalisation of the claim.

14.6 On 31 March 2020, property (land) with a carrying amount of Rs. 95.6 Mn were mortgaged as securities for revolving bank loans (Trust Receipt Loans) obtained amounting to Rs. 80 Mn.

As at 31st March 2020 2019 Rs. Rs.

15. DEFERRED TAX ASSETS

Balance at the beginning of the year 2,487,357 2,080,140 Origination and reversal of temporary difference - Recognised in profit or loss 2,467,795 878,985 - Recognised in other comprehensive income (69,437) (471,768) 4,885,715 2,487,357



15.1 Deferred tax assets/(liabilities) originated due to the temporary difference on following asset and liability bases; 2020 2019 Temporary Tax Temporary Tax Difference Effect Difference Effect Rs. Rs. Rs. Rs.

On property plant and equipment (36,702,768) (10,276,775) (38,033,904) (10,649,493) On retirement benefit obligation 4,482,100 1,254,988 5,692,566 1,593,919 On tax loss carried forward - - 15,057,597 4,216,127 On revaluation of land (1,581,293) (442,762) (1,581,293) (442,762) On provision for inventories 9,472,630 2,652,336 9,959,080 2,788,542 On provision for warranty 25,470,500 7,131,740 17,168,882 4,807,288 On impairment of trade and related party receivables 2,612,786 731,580 620,485 173,736 On refund liabilities 28,204,156 7,897,164 - - On right to recover returned goods (14,509,129) (4,062,556) - - 17,448,982 4,885,715 8,883,413 2,487,357


16. INVENTORIES

SKD - CFL components 645,842 741,450 Packing material 87,786 66,286 Work-in-progress - 478,166 Semi finished goods 1,396,886 1,396,886 Finished goods 90,257,102 80,881,716 Consumables and spare parts 1,643,303 1,608,663 Goods-in-transit 39,323,705 26,681,310 Right to recover returned goods 14,509,129 7,407,495 147,863,753 119,261,972 Less: Provision for slow moving inventories (9,472,630) (9,959,080) 138,391,123 109,302,892

In 2019/20, inventories of Rs. 485,640,242/- (2018-19 Rs. 358,151,005/-) were recognized as an expenses during the year and included in cost of sales.

On 31 March 2020, inventories with a carrying amount of Rs. 80Mn were mortgaged as securities for revolving banks loans (Trust Receipt Loans) obtained amounting to Rs. 80Mn.



2020 2019 Rs. Rs.

16.1 Provision for slow moving inventories At 1st April 9,959,080 4,737,239 During the year charge/(reversal) (486,450) 9,110,938 Obsolete stocks written-off - (3,889,097) At 31st March 9,472,630 9,959,080


17. TRADE AND OTHER RECEIVABLES Trade receivables - Others 96,933,649 1,729,526 Trade receivables - related parties (Note 17.1) 113,357,782 94,793,011 Less: Impairment of trade receivables (2,470,065) (453,554) Other Receivables (Note 17.2) 12,288,252 7,357,808 220,109,618 103,426,791

17.1 Trade receivables - related parties Darley Butler & Co. Ltd 110,894,824 93,244,764 E.B. Creasy & Co. PLC 1,594,200 1,332,247 Candy Delights Limited 76,000 76,000 Lanken Ceylon PLC 31,008 - Lanka Special Steels Limited 761,750 140,000 113,357,782 94,793,011

17.2 Other Receivables Income Tax recoverable - 2,394,947 Economic Service charge recoverable 5,268,525 1,843,463 Other receivables, deposits and prepayments 7,019,727 3,119,398 12,288,252 7,357,808




18. AMOUNTS DUE FROM RELATED COMPANIES E.B. Creasy & Co. PLC 14,606,706 19,194,277 Impairment of amounts due from related parties (142,721) (166,931) 14,463,985 19,027,346 As at 31st March 2020 2019 Rs. Rs.

19. CASH AND CASH EQUIVALENTS Balance

Cash at bank 34,099,514 6,969,367 Cash in hand 115,776 34,106 Cash and cash equivalents in the statement of financial position 34,215,290 7,003,473 Unfavourable balance

Bank overdraft repayable on demand and used for cash management purposes (17,732,459) (20,234,590) Cash and cash equivalents in the statement of cash flows 16,482,831 (13,231,117)

20. STATED CAPITAL 2020 2019 No. of shares Rs. No. of shares Rs.

Issued and fully paid ordinary shares Balance at the beginning of the year 39,000,000 138,000,000 39,000,000 138,000,000 Balance at the end of the year 39,000,000 138,000,000 39,000,000 138,000,000 5% Cumulative preference shares 1,000 10,000 1,000 10,000 10,000 10,000 138,010,000 138,010,000

All ordinary shares rank equally with regard to the Company’s residual assets. Preference shareholders participate only to the extent of the face value of the shares.

Ordinary shares Holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to one vote

per share at general meetings of the Company.

Non-redeemable preference shares Holders of these shares receive a cumulative dividend of 5% at the Company’s discretion, or whenever dividends

to ordinary shareholders are declared. They do not have right to participate in any additional dividends declared for ordinary shareholders. These shares do not have voting rights.




21. REVALUATION RESERVE At the beginning of the year 1,138,531 - Revaluation surplus - 1,581,293

Deferred tax on revaluation surplus of lands - (442,762) At the end of the year 1,138,531 1,138,531

The revaluation reserve relates to the revaluation of land immediately before its reclassification as investment property as explained in note 13.4 to the financial statements. As at 31st March 2020 2019 Rs. Rs.

22. RETIREMENT BENEFIT OBLIGATIONS Balance at the beginning of the year 5,692,566 5,478,135 Provision made in profit or loss during the year (Note 22.1) 686,803 991,674 Re-measurement of retirement benefit obligation recognised in OCI (Note 22.2) (247,989) (103,593) 6,131,380 6,366,216 Payments made during the year (1,649,280) (178,650) Transferred to related party during the year - (495,000) Balance at the end of the year 4,482,100 5,692,566

The retirement benefit obligation of the Company is based on Project Unit Credit (PUC) method. The liability is not externally funded.

22.1 Expense recognised in the statement of profit or loss Current service cost 308,625 447,546 Interest cost 378,178 544,128 686,803 991,674

22.2 Actuarial losses/ (gains) recognized in other comprehensive income Re-measurement of retirement benefit obligation (247,989) (103,593) (247,989) (103,593)

Principal assumptions used were as follows; Expected annual average salary increment 10% 10% Discount rate / interest rate 10% 11.5% Staff turnover factor 11% 11% Retirements age 55 Years 55 Years



22.3 Sensitivity analysis

Sensitivity variation on salary increment rate Impact of change in salary increment rate when the base assumption is increased/decreased by 1% is measured

as follows; Salary Increment Rate Defined Benefit Obligation as at 31.03.2020 (Rs.)

11% 4,761,152 9% 4,218,131

Sensitivity variation on discount rate Impact of change in discount rate when the base assumption is increased/decreased by 1% is measured as

follows; Discount Rate Defined Benefit Obligation as at 31.03.2020 (Rs.) 11% 4,220,445 9% 4,763,785

The Company continues to use an internally developed method to measure retirement benefit obligation.


23. TRADE AND OTHER PAYABLES Trade payables - related parties (Note 23.1) 105,252,538 94,976 Other - 392,115 Bills payable 48,542,500 45,826,394 153,795,038 46,313,485

Other payables (Note 23.2) 76,075,498 41,586,893 229,870,536 87,900,378


23.1 Trade payables - related parties E.B Creasy & Co PLC 105,252,538 94,976



23.2 Other payables Loan interest payable 340,770 1,082,774 Value Added Tax (VAT) payable 1,378,190 - Nation Building Tax (NBT) payable - 315,027 Economic Service Charge (ESC) payable - 552,630 Withholding tax (WHT) payable - 170,631 Sundry creditors and accrued expenses 19,911,388 7,240,090 Warranty provision (Note 23.2.1) 25,470,500 17,168,882 Unclaimed dividends 770,494 770,494 Refund liabilities 28,204,156 14,286,365 76,075,498 41,586,893


23.2.1 Warranty provision Balance at the beginning of the year 17,168,882 10,207,867 Provisions made during the year 12,270,117 15,078,809 Utilised during the year (3,968,499) (8,117,794) Balance at the end of the year 25,470,500 17,168,882

A provision for warranties relates mainly to products; LED and CFL Bulbs, sold during 2018/19 and 2019/20. The provision has been estimated based on historical warranty data associated with similar products and a weighing of possible outcomes against their associated probabilities.

As at 31st March 2020 2019 Rs. Rs.24. AMOUNTS DUE TO RELATED COMPANIES Darley Butler & Co. Ltd 18,294,804 16,085,952 E.B. Creasy Logistics Ltd. 431,274 1,448,265 E.B. Creasy & Co. PLC 16,074,268 - 34,800,346 17,534,217





25. INTEREST BEARING BORROWINGS At the beginning of the year 92,378,775 116,522,987 Loans obtained during the year 294,486,926 293,733,944 Repayments made during the year (323,208,322) (317,878,156) At the end of the year 63,657,379 92,378,775

25.1 Amount payable within one year Trust receipt loan (Note 25.2) 63,657,379 92,378,775 63,657,379 92,378,775 25.2 Terms and repayment schedule Terms and conditions of outstanding loans are as follows. Trust receipt loan

Lender Facility No.Interest

RateOutstanding

as at 31.03.2020

Rs.

Outstanding as at

31.03.2019 Rs.

RepaymentTerms Security

Sampath Bank Revolving Trust Receipt loan of Rs. 80 million

AWPLR + 1.25%

23,938,153 44,600,781 Each loan to be settled within

120days from the date of grant.

Existing mortgage bond of Rs.95.9 million over the

property situated in Panagoda, Homagama

Union Bank Revolving Trust receipt loan of Rs. 20 million

AWPLR + 2%

-

16,059,987 Each loan to be settled within

120days from the date of grant.

Primary floating mortgage bond of Rs.20 million over stocks at

Company premises in Panagoda,

Homagama and ware house at

Sapugaskanda and assignment over

book debts.


Lender Facility No. Interest Rate

Outstanding as at

31.03.2020 Rs.

Outstanding as at

31.03.2019 Rs.

RepaymentTerms Security

DFCC Bank Revolving Trust receipt loan of Rs. 60 million

AWPLR + 1%

39,719,226 31,718,007 Each loan to be settled within 120 days from the date

of grant.

Mortgage for Rs.60 million over

stocks kept at Company premises

at Panagoda, Homagama and warehouse at

Sapugaskanda.

26. FINANCIAL INSTRUMENTS - FAIR VALUES AND RISK MANAGEMENT

26.1 Accounting classifications and fair value

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable expectation of fair value.

At 31st March 2020

Financial assets

measured at amortised

cost

FVOCI - equity

instruments

Other financial liabilities

Total

Financial assets not measured at fair valueTrade and other receivables * 210,358,369 - - 210,358,369Amounts due from related companies 14,463,985 - - 14,463,985 Cash and cash equivalents 34,215,290 - - 34,215,290

259,037,644 259,037,644Financial liabilities not measured at fair valueTrade and other payables ** - - 174,817,690 174,817,690 Interest bearing borrowings - - 63,657,379 63,657,379 Amounts due to related parties - - 34,800,346 34,800,346 Bank overdrafts - - 17,732,459 17,732,459

- - 291,007,874 291,007,874

* Trade and other receivables that are not financial assets (Prepayments; Rs. 285,513/-, WHT recoverable; Rs. 4,197,211/-, ESC recoverable; Rs. 5,268,525/-) are not included.

** Trade and other payables that are not financial liabilities (VAT Payable; Rs,1,378,190/- Warranty provision; Rs. 25,470,500/- and Refund Liabilities; Rs. 28,204,156/-) are not included.



At 31st March 2019 Loans and receivables

Available for sale financial assets

Other financial liabilities

Total

Financial assets not measured at fair valueTrade and other receivables * 96,982,265 - - 96,982,265 Amounts due from related companies 19,027,346 - - 19,027,346 Cash and cash equivalents 7,003,474 - - 7,003,474

123,013,085 123,013,085 Financial liabilities not measured at fair valueTrade and other payables ** - - 55,406,843 55,406,843 Amounts due to related companies - - 92,378,775 92,378,775 Interest bearing borrowings - - 17,534,217 17,534,217 Bank overdrafts 20,234,590 20,234,590

- - 185,554,425 185,554,425

* Trade and other receivables that are not financial assets (Prepayments; Rs. 284,756/-, Income tax recoverable; Rs.2,394,947/-, WHT recoverable; Rs. 1,340,064/-,ESC recoverable; Rs.1,843,463/- and VAT recoverable;Rs.581,296/-) are not included.

** Trade and other payables that are not financial liabilities (NBT payable; Rs.315,027-, ESC payable; Rs. 552,630/, WHT payable; Rs.170,631/-,Warranty provision; Rs.17,168,882/- and Refund Liabilities; Rs.14,286,365/-) are not included.

26.2 Risk Management

Overview

The Company has exposure to the following risks arising from financial instruments:

i. Credit risk ii. Liquidity risk iii. Market risk

Risk management framework The Company’s risk management policies are established to identify and analyze the risks faced by the

Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures,and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit Department. Internal Audit Department undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.



i. Credit risk

Credit risk is the risk of financial loss to the Company, if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and related parties.

As at 31st March 2020 2019 Note Rs. Rs.

Exposure to credit risk Trade receivables 17 207,821,366 96,068,983 Other Receivables 17 12,288,252 7,357,808

Amount due from related company 18 14,463,985 19,027,346 Cash and cash equivalents 19 34,215,290 7,003,473

Total 268,788,893 129,457,610

Impairment losses on financial assets recognized in profit or loss were as follows, The maximum exposure to credit risk for trade and other receivables at the end of the reporting period by type

of counterparty.

2020 2019 Rs. Rs.

Expected credit loss allowance - trade receivables (1,907,978) 35,107 Expected credit loss allowance - related parties (84,322) (144,581) (1,992,300) (111,474)

The following table provides information about the exposure to credit risk and ECLs for trade and other receivables as at 31 March 2020.

As at 31st March 2020 2020 Rs. Rs. Gross carrying Loss amount allowance

Past due 1-75 days 69,451,708 612,751 Past due 76-150 days 27,102,167 1,251,612 Past due 151-225 days 379,773 43,615 Past due 226-365 days - - 96,933,649 1,907,978

Trade and other receivablesThe Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographic of the Company’s customer base, including the default risk of the industry and area in which customer operate, as these factors may have an influence on credit risk.



The Company is closely monitoring the economic environment in the country and is taking necessary measures to limit its exposure to customers experiencing particular economic volatility.

The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables. The main components of this allowance are specific loss component that relates to individually significant exposures, and a collective loss component established for group of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics of those receivables and the future macro economic conditions.

The Company applies the SLFRS 9 Simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for trade receivables. The movement in the allowance for impairment in respect of trade and other receivables during the year

2020 2019 Rs. Rs.

At 1st April 453,554 - Adjustment due to initial application of SLRS 9 - 486,661 Adjusted balance 453,554 486,661

Provision/(reversal) for the year 2,016,511 (33,107) At 31st March 2,470,065 453,554

Amounts due from related parties

Impairment on amounts due from related parties has been measured on a 12 month expected credit loss basis and reflect the short maturities of the exposures.

The movement in the allowance for impairment in respect of amounts due from related parties during the year

2020 2019 Rs. Rs.

At 1st April 166,931 - Adjustment due to initial application of SLRS 9 - 22,350 Adjusted balance 166,931 22,350 Provision for the year (24,210) 144,581 At 31st March 142,721 166,931



ii Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the financial obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The following are the contractual maturities of financial liabilities at the reporting date.

Contractual cash flowsAs at 31 March 2020 Carrying 6 months 6 - 12 1 - 2 2 - 5 More than TotalIn Rs. amount or less months years Years 5 years

Non-derivative financial liabilities Trade and other payables 174,817,690 (174,817,690) - - - - (174,817,690)Amounts due to related companies 34,800,346 (34,800,346) - - - - (34,800,346) Interest bearing loans and borrowings 63,657,379 (65,222,711) - - - - (65,222,711) Bank overdrafts 17,732,459 (17,732,459) - - - - (17,732,459) 291,007,874 (291,007,874) - - - (291,007,874)

As at 31 March 2020 Carrying 6 months 6 - 12 1 - 2 2 - 5 More than TotalIn Rs. amount or less months years Years 5 years

Non-derivative financial liabilitiesTrade and other payables 55,406,843 (55,406,843) - - - - (55,406,843) Amounts due to related companies 17,534,217 (17,534,217) - - - - (17,534,217) Interest bearing loans and borrowings 92,378,775 (94,334,762) - - - - (94,334,762)Bank overdrafts 20,234,590 (20,234,590) - - - - (20,234,590) 185,554,425 (185,554,425) - - - - (185,554,425)

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amount.

iii. Market risk

Market risk is the risk that changes in the market prices such as foreign exchange rates and interest rates affecting the Company’s income or the value of holdings of financial instruments. The objective of the market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

Currency risk The Company is exposed to foreign currency risk on purchases that are denominated in a currency other than

the functional currency of the Company.

Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instruments fluctuate because of

changes in market interest rates. The exposure to the risk of changes in market interest rates relates primarily to the Company’s long term debt obligation and investments with floating Interest rates.



The following table demonstrates the Company’s sensitivity to a reasonably possible change in interest rates, with all other variables held constant of the profit before tax.

Carrying amountAs at 31 March 2020 2019 Rs. Rs.

Variable rate instrument (1 % decrease) 636,574 1,195,865 Variable rate instrument (1 % increase) (636,574) (1,195,865)

27. CAPITAL MANAGEMENT

The Company’s policy is to maintain a strong capital base so as to maintain investor,creditor and market confidence and to sustain future development of the business Management monitors the return on capital,as well as the level of dividends to ordinary shareholders.

The board of directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowing and the advantages and security afforded by a sound capital position.

28. RELATED PARTY DISCLOSURES

(a) Identification of related parties

The Company has related party relationship with its parent company, ultimate parent company, affiliate companies and with its key management personnel.

(b) Transactions with key management personnel

Key management personnel include all members of the Board of Directors of the Company who have authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly.

(i) Key management personnel compensation

The details of compensation to key management personnel are as follows,

As at 31st March, 2020 2019 Rs. Rs.

Benefits paid to key management personnel 1,335,000 1,380,000

(ii) Other transactions with key management personnel

There were no other transactions with its key management personnels during the year under review.

(c) Transactions with related Parties are carried out in the ordinary course of the business and were made on terms equivalent to those the prevail in arm’s length transactions.




(d) The Company entered into transactions with following related parties during the year.

OutstandingName of the Company Names of Directors Nature of Transaction Amount at 31st Marchand Relationship Rs. 2020 2019 Rs. Rs.

E.B. Creasy & Co. PLC Mr. S.D.R. Arudpragasam Rent income 27,962,680 16,200,905 20,526,523Parent Company Mr. S. Rajaratnam Service costs recoverable 6,205,602 - - Mr. R.N. Bopearatchy Sale of goods 1,668,626 - - Mr. R.C.A. Welikala Settlements during the year (40,162,527) - - Mr. P.M.A.Sirimane Employee related expenses (16,045,084) (121,326,805) (94,975) Mr. A.R. Rasiah Purchases (157,377,998) - - Mr. S.N.P. Palihena Settlements during the year 52,191,253 - - Dr. A.M. Mubarak Mr. S.W. Gunawardena Darley Butler & Co. Ltd Mr. S.D.R. Arudpragasam Sale of goods 395,370,100 110,894,824 93,244,763 Related Company Mr. R.N. Bopearatchy Settlements during the year (377,720,041) - - Mr. P.M.A.Sirimane Mr. S. Rajaratnam Employee related expenses (29,106,043) (18,294,804) (16,085,952) Mr. R.C.A. Welikala Service Charge on Storage (5,435,680) - - Mr. A.R. Rasiah Settlements during the year 32,332,871 Mr. S.N.P. Palihena Dr. A.M. Mubarak Mr. S.W. Gunawardena

EB Creasy Logistics Ltd Mr. S.D.R. Arudpragasam Logistics services (2,622,262) (431,274) (1,448,266)Related Company Mr. S. Rajaratnam Settlements 3,639,254 - - Mr. R.N. Bopearatchy Mr. R.C.A. Welikala Mr. P.M.A.Sirimane Mr. S.W. Gunawardena

Candy Delights Ltd. Mr. S.D.R. Arudpragasam Sale of goods - 76,000 76,000 Related Company Mr. S. Rajaratnam Settlements - - - Mr. R.N. Bopearatchy Mr. R.C.A. Welikala Mr. P.M.A.Sirimane Mr. A.R. Rasiah Mr. S.N.P. Palihena Dr. A.M. Mubarak Mr. S.W. Gunawardena

Lanka Special Steels Ltd. Mr. S.D.R. Arudpragasam Sale of goods 23,301 761,750 140,000Related Company Mr. S. Rajaratnam Service Income 2,617,796 - - Mr. R.N. Bopearatchy Settlements (2,019,347) - - Mr. R.C.A. Welikala Mr. P.M.A.Sirimane Mr. S.W. Gunawardena

Lankem Ceylon PLC Mr. S.D.R. Arudpragasam Sale of goods 31,008 31,008 - Related Company Mr. R.N. Bopearatchy Settlements - - - (Retired w.e.f. 31/7/2020) Mr. P.M.A.Sirimane


(e) Recurrent and non-recurrent related party transactions During the year, there were no non-recurrent related party transactions, the value of which exceeded the

disclosure thresholds mentioned in Section 9 of the Colombo Stock Exchange Listing Rules. Recurrent transactions although exempt in terms of section 9.5 of the CSE listing rules, which exceeded the disclosure threshold are disclosed below.

Name of the Related Party

Relationship Nature of the Transactions

Aggregate Value of RPT* entered into during the financial year (Rs.)

Aggregate value of RPT* as a % of Net Revenue / Income

Terms and Conditions of the Related Party Transactions

Darley Butler & Co. Ltd.

Affiliate Sale of Goods 395,370,100 82% On credit

E.B.Creasy & Co. PLC

Parent Purchases 157,377,998 24% On credit

29. CAPITAL COMMITMENTS There were no material capital commitments, which require adjustment to or disclosure in the financial

statements as at the reporting period.

30. CONTINGENT LIABILITIES There were no material contingent liabilities, which require adjustment to or disclosure in the financial

statements as at the reporting period.

31. EVENTS OCCURRING AFTER REPORTING DATE The Directors have proposed the payment of First and Final Dividend of Rs. 1.00 per share on ordinary shares

amounting to Rs. 39,000,000/- for the year ended 31st March 2020 (2019 - Rs. 9,750,000/-)

There were no other material events that occurred after the reporting date that require adjustments to or disclosure in the financial statements other than those disclosed above.

32. IMPACT OF COVID-19 ON THE BUSINESS OPERATION The COVID-19 outbreak since early 2020 has brought about additional uncertainties in the Company’s

operating environment. As far as the Company’s business is concerned, the outbreak has caused delays in recovery of debts as at the year end.

The Company has been closely monitoring the impact of the developments on the Company’s business and has taken measures to communicate with the debtors on the collection of receivables due during the lockdown period. No significant increase in credit risk was identified and the receivables are to be collected in due course.

The Company has a current asset ratio of 1.15 as at the year end and has sufficient funds to meet the current liabilities falling due. With the gradual resumption of work after the lockdown, the management is confident that the delays in receivable collections as at the year end would be rectified and normally would continue.

However, as the situation is evolving, the effect of the outbreak is subject to uncertainty, with the full range of possible effects currently unknown.



Distribution of Shareholding 31st March 2020 31st March 2019 No. of Shares Held No of % of No of % of Shareholders Total Holding Total Shares Shareholders Total Holding Total Shares

1 - 1,000 1,218 290,480 0.75 1,238 304,895 0.781,001 - 10,000 308 1,151,956 2.95 297 1,110,269 2.8510,001 - 100,000 67 2,032,123 5.21 59 1,892,105 4.85100,001 - 1,000,000 12 2,842,275 7.29 13 3,099,075 7.95Over 1,000,000 5 32,683,166 83.80 4 32,593,656 83.57 1,610 39,000,000 100.00 1,611 39,000,000 100.00 31st March 2020 31st March 2019 Categories of No of % of No of % of Shareholders Shareholders Total Holding Total Shares Shareholders Total Holding Total Shares Individuals 1,547 9,862,460 25.29 1,547 9,869,021 25.31 Institutions 63 29,137,540 74.71 64 29,130,979 74.69 1,610 39,000,000 100.00 1,611 39,000,000 100.00

PUBLIC HOLDING The percentage of shares held by the public as at 31st March 2020 was 34.75% ( 31st March 2019 - 34.75% ) The applicable option under CSE Rule 7.13.1 on minimum public holding is option 5 and the Float Adjusted Market Capitalization as of 31.03.2020 was Rs. 120,617,250/-

PUBLIC SHAREHOLDERS The number of Public Shareholders as at 31st March 2020 were 1,600 (31st March 2019 - 1,602 ) MARKET VALUE OF SHARES The market value of the Company’s Ordinary Shares was 2019/2020 2018/2019

Highest 11.50 13.00 Lowest 8.00 9.40 Close 8.90 10.80

Share Information


Share Information Contd......

TWENTY MAJOR SHAREHOLDERS

31st March 2020 31st March 2019 Full Name of Shareholder No of Share No of Share Shares Percentage Shares Percentage

1 MERCHANT BANK OF SRI LANKA & FINANCE PLC/ E.B. CREASY & COMPANY PLC 10,108,402 25.92% ─ ─

2 E.B. CREASY & COMPANY PLC 10,006,436 25.66% 20,114,838 51.58%

3 MR. SRI DHAMAN RAJENDRAM ARUDPRAGASAM 4,600,000 11.79% 4,600,000 11.79%

4 SEYLAN BANK PLC/ SENTHILVERL HOLDINGS (PVT) LTD 4,246,502 10.89% ─ ─

5 SAMPATH BANK PLC/ DR.T.SENTHILVERL 3,721,826 9.54% 3,721,826 9.54%

6 DR. NIRANJAN DEEPAL GUNAWARDENA 500,000 1.28% 500,000 1.28%

7 MR. DEGIRI MADHAWA PUSHPAKUMARA DE ZOYSA 400,000 1.03% 400,000 1.03%

8 COLOMBO FORT INVESTMENTS PLC 311,200 0.80% 311,200 0.80%

9 COLOMBO INVESTMENT TRUST PLC 304,600 0.78% 304,600 0.78%

10 PEOPLE’S LEASING & FINANCE PLC/ DR.H.S.D.SOYSA & MRS.G.SOYSA 300,092 0.77% 300,092 0.77%

11 MR. DISANAYAKA MUDIYANSELAGE GUNARATHNA 192,401 0.49% 192,401 0.49%

12 MR. PALLEWATTHA GAMARALALAGE WIJAYANANDA SIRISENA 165,100 0.42% 165,100 0.42%

13 MR. HARSHAKA CHAMUPATHIE SUBASINGHE 160,000 0.41% 160,000 0.41%

14 MR. ZOEBALY GULAMABASS CARIMJEE 143,482 0.37% 143,482 0.37%

15 DR. THIRUGNANASAMBANDAR SENTHILVERL 141,900 0.36% 141,900 0.36%

16 MR. SANJEEWA WIJESIRI GUNAWARDENA 113,500 0.29% 113,500 0.29%

17 MR. TALPAWILA KANKANAMAGE DON ARUNA PRASAD SAMARASINGHE AND MRS. DEANARAYANAGE PRADEEPA SAMARASINGHE 110,000 0.28% 130,000 0.33%

18 MISS. ASHANTHI SAMARASINGHE 100,000 0.26% 100,000 0.26%

19 MR. SUBRAMANIAM VASUDEVAN 96,935 0.25% ─ ─

20 MR. MUTHUTHANTHRIGE STEPHEN ANGELO FERNANDO 96,743 0.25% 96,743 0.25%

TOTAL 35,819,119 91.84% 31,495,682 80.75%


Financial Summary

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000

TRADING RESULTS Revenue (Net) 316,640 115,908 145,037 104,967 190,091 416,839 426,164 492,845 480,204 652,843

Profit / (Loss) before Tax 12,812 (88,503) (42,197) 13,525 19,509 40,517 41,837 28,430 9,739 49,517

Income Tax Expense 6,413 8,926 - 3,025 5,076 (4,033) 11,334 16,616 (1,563) (8,214)

Profit / (Loss) after Tax 6,399 (79,577) (42,197) 10,500 14,433 44,549 30,504 11,815 11,302 41,303

Other Comprehensive Income

Other Comprehensive Income/ (Expense) - 47 283 (868) (357) (29) 455 (825) 1,213 179

Total Comprehensive Income for the year - (79,531) (41,914) 9,632 14,076 44,520 30,959 10,990 12,515 41,482

ASSETS EMPLOYED

Non-Current Assets 176,063 147,242 147,849 155,182 164,379 180,384 162,898 152,259 147,740 146,871

Net Current Assets 111,529 56,928 5,921 10,627 28,110 38,681 18,606 9,124 20,713 52,103

287,592 204,170 153,770 165,809 192,489 219,066 181,504 161,383 168,453 198,974

SHAREHOLDERS’ FUND

Stated Capital 138,010 138,010 138,010 138,010 138,010 138,010 138,010 138,010 138,010 138,010

Reserves 126,273 46,742 4,828 14,460 22,686 57,456 36,935 17,895 24,750 56,482

264,283 184,752 142,838 152,470 160,696 195,466 174,945 155,905 162,760 194,492

NON-CURRENT LIABILITIES 23,309 19,417 10,933 13,339 31,793 23,600 6,560 5,478 5,693 4,482

287,592 204,170 153,770 165,809 192,489 219,066 181,504 161,383 168,453 198,974

Market Price per Share 8.30 7.40 4.40 3.50 4.60 7.00 11.50 10.30 10.80 8.90

Earnings /(Loss) per Share 0.21 (2.04) (1.08) 0.27 0.37 1.14 0.78 0.30 0.29 1.06

Net Assets per Share 6.78 4.74 3.66 3.91 4.12 5.01 4.49 4.00 4.17 4.99


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I/We................................................................................................................................................................................................of ..................................................................................................................……………. being a member/members of Laxapana Batteries PLC hereby appoint ……………………………………..................................of .......................................................................................... or failing him

1. Sri Dhaman Rajendram Arudpragasam of Colombo or failing him2. Ranjit Noel Bopearatchy of Colombo or failing him3. Rohan Chrisantha Anil Welikala of Colombo or failing him4. Sanjeev Rajaratnam of Colombo or failing him5. Parakrama Maithri Asoka Sirimane of Colombo or failing him6. Albert Rasakantha Rasiah of Colombo or failing him7. Shanthikumar Nimal Placidus Palihena of Colombo or failing him 8. Azeez Mohamed Mubarak of Colombo or failing him9. Sanjeewa Wijesiri Gunawardena of Colombo

as my/our* Proxy to speak and vote as indicated hereunder for me/us* and on my/our* behalf at the Sixty Fourth Annual General Meeting of the Company to be held on 11th November, 2020, at 9.30a.m. and at any adjournment thereof and at every poll which may be taken in consequence thereof.

FOR AGAINST1. To receive and consider the Annual Report of the

Board of Directors and the Statement of Accounts for the year ended 31st March 2020, with the Report of the Auditors thereon.

2. To declare a First and Final Dividend of Rs. 1.00 per share for the year ended 31st March 2020 as recommended by the Directors

3. To re-elect Mr. P.M.A. Sirimane as a Director

4. To reappoint Mr. R.N. Bopearatchy as a Director.

5. To reappoint Mr. A.R. Rasiah as a Director.

6. To reappoint Mr. S.N.P. Palihena as a Director.

7. To authorize the Directors to determine contributions to Charities

8. To reappoint as Auditors, KPMG Chartered Accountants, and to authorize the Directors to determine their remuneration.

9. Special Business To amend the Articles of Association as set out in the Notice of Meeting

*The proxy may vote as he/she thinks fit on any other resolution brought before the Meeting.

Signed this ………………….. day of ………………………….. 2020.

……………………………………………….. Signature *Please delete the inappropriate words.

NOTE:If no words are struck out or there is in view of the Proxy-holder doubt (by reason of the way in which the instructions contained in the Proxy have been completed) as to the way in which the Proxy-holder should vote, the Proxy-holder will vote, as he thinks fit.

Instructions for completion appear overleaf.

Form of Proxy


Instructions as to completion

1. Please write legibly, your name, address and date, and sign in the space provided.

2. The completed Form of Proxy should be received at the Registered Office of the Company’s Secretaries, Corporate Managers & Secretaries (Pvt) Ltd at 8-5/2, Leyden Bastian Road, York Arcade Building, Colombo 01, not less than 48 hours before the time appointed for the holding of the meeting.

3. In the case of a Company/Corporation, this Form of Proxy shall be executed either under its Common Seal or by its Attorney or by an Officer on behalf of such Company/Corporation duly authorised in writing.

4. In the case of a Proxy signed by an Attorney, the relevant Power of Attorney should also accompany the completed proxy for registration if such Power of Attorney has not been registered with the Company.

Corporate InformationNAME OF COMPANYLaxapana Batteries PLC

LEGAL FORMA Public Quoted Company with limited liabilityIncorporated in Sri Lanka under the Companies OrdinanceNo 51 of 1938 on 13th August 1956

COMPANY REGISTRATION NUMBERPQ 170

BOARD OF DIRECTORSS. D. R. Arudpragasam FCMA (Chairman)S. Rajaratnam B.Sc., CA.R. N. Bopearatchy B.Sc. (Cey.), Dip. BM, MBA.R. C. A. WelikalaP. M. A. Sirimane FCA, MBAA.R. Rasiah B.Sc. (Cey.) FCAS.N.P. Palihena FCIB (U.K.) FIB (SL) Postgrad. Dip. Bus.& FAA.M.Mubarak B.Sc. (Hons.) (Cey), Ph.D.(Cantab), FICHEMC, FNASSLS.W. Gunawardena B.Sc., MBA

STOCK EXCHANGE LISTINGThe Ordinary Shares of the Company are listed with theColombo Stock Exchange of Sri Lanka.

SECRETARIESCorporate Managers & Secretaries (Private) Ltd.8-5/2, Leyden Bastian Road,York Arcade Building,Colombo 1.

REGISTERED OFFICE98, Sri Sangaraja Mawatha,Colombo 10.

AUDITORSKPMG , Chartered Accountants,32A, Sir Mohamed Macan Markar Mawatha,Colombo 3.

BANKERSHatton National Bank PLCCommercial Bank of Ceylon PLCSampath Bank PLCUnion Bank of Colombo PLCDFCC Bank PLCPeople’s Bank

LEGAL ADVISERSMessrs Julius & CreasyAttorneys-at-LawP.O.Box 154,Colombo.

Printed by Aitken Spence Printing & Packaging (Pvt) Ltd

report - cse

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