Raigam Wayamba Salterns - Annual Report 2017 | 2018

ANNUAL

REPORT 2017 - 2018

ANNUAL

REPORT 2017 - 2018

Great Achievements Made by Spicing up Life…

Exploring new destinations and reaching new heights with numerous innovations that paved the path for savouring the life in most exclusive ways, we have revolutionized the traditional salt market by introducing new standards of quality and manufacturing processes.

Determined to open up new avenues of spicing up life with the most precise levels of perfection and right blend, we have committed ourselves towards offering the best to our customers who have in turn propelled us forward to make unbelievably amazing achievements as a pioneering organization in the country.

Continuing to contribute towards the national development with a commendable product and service aimed at spicing up life in right proportions, we are moving ahead along the success path overcoming numerous challenges that provide us with courage, strength and determination to go beyond bounds. We strongly believe in our capabilities and commitment that drive us. We are certain that we can fulfill our promises towards the wellbeing of our society, our stakeholders and the country at large.

CONTENTS

Overview About this Report

05

About Us

06

Our Milestones

08

Corporate Information

10

Key Performance Signs - Group

12

Financial Highlights - Group

13

Key Performance Signs - Company

14

Financial Highlights - Company

15

Our Presence

16

Achievements and Awards

17

Our Leadership Chairman’s Message

18

CEO’s Review

20

Board of Directors

26

Senior Management Team

30

Business Model & Operating Context Management Discussion and Financial Review

32

Salt not only for Taste

39

Our Production Process

40

Value Creation Model

42

Corporate Governance Corporate Governance

44

Annual Report of Board of Directors

60

Statement of Directors Responsibility

64

Report of the Audit Committee

65

Report of the Remuneration Committee

67

Report of the Related Party Transaction Review Committee

68

Disclosure of Related Party Transactions

69

Risk Management

70

Stakeholder Engagement

72

Financial Statements Independent Auditor’s Report

76

Statement of Profit & Loss

79

Statement of Other Comprehensive Income

80

Statement of Financial Position

81

Statement of Changes in Equity

82

Statement of Cash Flows

83

Notes to the Financial Statements

84

Annexes Investor Information

118

Value Added Statement- Group

122

Value Added Statement- Company

123

Group Five Years Summary

124

Real Estate Portfolio

125

Notice of Meeting

126

Form of Proxy

127

About This Report This Annual Report is providing our stakeholders a holistic view of our strategy and performance during the financial year 2017/2018. Through this reporting, we aim to provide our stakeholders information that we believe is of material interest in making an informed assessment of our ability to create value over the short, medium and long-term.

The Report includes material information relating to strategy, governance, performance, market risks and opportunities.

External Assurance A combined assurance model is used to ensure that the credibility and integrity of our reporting. External assurance on the financial statements has been provided by Messrs. Ernst and Young. The Company’s Audit Committee also monitors adequacy and effectiveness of the financial reporting and internal control systems.

Scope and Boundary This Report covers the operations of Raigam Wayamba Salterns PLC (RWS) and its operating subsidiary Southern Salt Company (Pvt) Limited (SS) from April 1, 2017 to March 31, 2018.

Standards and Principles The annual financial statements have been prepared based on the principles and/or requirements of the Sri Lanka Accounting Standards (SLFRS/LKAS).

The Report also complies with the requirements of the Companies Act No. 7 of 2007, the Listing Requirements of the Colombo Stock Exchange (CSE) and the Code of Best Practice on Corporate Governance issued by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission. The sustainability reporting also complies with the Environmental, Social and Governance (ESG) reporting guidelines published by the CSE.

Materiality In determining content to be included in this Report, we have considered matters that are of interest to current and prospective investors as well as other stakeholders who wish to assess our ability to deliver value. These material topics form the anchor of this Report and have been identified through numerous stakeholder engagement platforms, as discussed in this Report.

We have presented chapters of Annual Report as Follows ² About Us (6-17) ² Our leadership team (18-31) ² Our strategy in delivering sustainable shared value (32-43) ² Our approach to governance (44-59) ² Our key risk exposures and how we manage them (70-71) ² Our Perfomance and Position (76-117)

Feedback We welcome your feedback on our Annual Report and encourage you to put forward any suggestions you may have in terms of what you would like to see in our next Report. Please direct your feedback to, Deputy General Manager - Finance (Group) Raigam Wayamba Salterns PLC No: 23, Walukarama Road, Colombo 03.

Email: janaka@raigam.lk

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

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About Us Vision “To be the convenient partner in enhancing the taste and health needs of the nation”

Mission “To become the largest value added salt supplier in the island contributing to fulfillment of salt and iodine needs of the nation by way of extracting best resources from nature using modern technology and improved productivity while satisfying stakeholders of every facet”

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Values

• Customer is valued as the most important party and the entire processes Centre for fulfilling and exceeding customer needs and wants.

• We value the customer centric decision making system based on evidence rather than management by opinion.

• Equal treatment of employees is recognized as a prominent value of the company.

• Existence of favorable working environment and protection and respect for employees' rights, assurance equity in reward system.

• Employees are valued and recognized as the number one asset of the company rather than as a liability.

• Drivers towards continuous improvements in processes are recognized as a value in the system.

• Team effort is a valued feature of the organization rather than chasing individual goal achievement.

• Recognition and acceptance of social and environmental responsibilities is in all the operations of the company.

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Our Milestones Company converted to a Public company as Raigam Wayamba Salterns Ltd.

Wayamba Salterns (Pvt) Ltd launched its first commercial operation. Mother company, Raigam Marketing Services (Pvt) Ltd acquired 26 % of shares of Puttlam Salt Ltd to secure the source of raw material supply to the company.

Southern Salt Company (Pvt) Ltd issued further 5, 000, 000 shares.

2011

Southern Salt Company (Pvt) Ltd issued 682, 354 shares.

2009

2005

2007 Wayamba Salterns (Pvt) Ltd acquired 100% ownership of Southern Salt Company (Pvt) Ltd, Bata-atha, in Hambanthota district.

2010 Raigam Wayamba Salterns Ltd under the theme of ‘Hiru Samuduru Pavathinathuru’ implemented an IPO and listed in the CSE as a Raigam Wayamba Salterns PLC.

Raigam Wayamba Salterns PLC launched Pure Vacuumed Dried (PVD) Salt to the retail market with packages of 100g, 200g, 400g and 1Kg.

Raigam Wayamba Salterns PLC launched Pure Vacuumed Dried (PVD) Salt to the local market.

2012

2016

2017

2011 For the very first time in Sri Lanka, Raigam Wayamba Salterns PLC started fabrication of Pure Vacuumed Dried (PVD) Salt plant for delivering value added salt products to the local market.

2014 Southern Salt Company (Pvt) Ltd started making profit.

Company won the gold award at the National Business Excellence Awards - NBEA 2017.

Corporate Information

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NAME OF THE COMPANY REGISTERED OFFICE CONTACT DETAILS

COMPANY REGISTRATION NUMBER DETAILS OF INCORPORATION

BOARD OF DIRECTORS

AUDITORS TO THE COMPANY

Raigam Wayamba Salterns PLC No. 23, Walukarama Road, Colombo 3 Tel: 0112 753340-1, 0114 886777 Fax: 0112 753342, E-mail: info@raigam.lk Web: www.wayambasalterns.lk PV 10922 PB/PQ

Incorporated as a Private Limited Liability company under the Companies Act No. 17 of 1982 on 15 June 2005 in Colombo, and re-registered under the Companies Act No. 07 of 2007 on 15 January 2009, converted to a Public Company in December 2009. Later the company was listed on the Dirisavi Board of the Colombo Stock Exchange on 29 April 2010 converting into a Public Limited Company.

Dr. Ravi Liyanage Mr. G. V. P. Ganaka Amarasinghe Snr. Prof. S. P. P. Amaratunge Mr. T. Dharmarajah Mr. K. R. Theodore Mr. W. A. Upali Gunawardena Mr. S. A. Wickramapala Messrs. Ernst & Young Chartered Accountants 201, De Saram Place, Colombo 10.

REGISTRARS TO THE COMPANY

Business Intelligence (Pvt) Limited No: 08, Tickell Road, Colombo 08.

SECRETARIES TO THE COMPANY

Business Intelligence (Pvt) Limited No: 08, Tickell Road, Colombo 08.

BANKERS TO THE COMPANY

Sampath Bank PLC People's Bank Commercial Bank of Ceylon PLC

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

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Key Performance Signs - Group 2017/ 2018

2016/ 2017

Rs.000

Rs.000

%

Rs.000

%

Turnover

791,506

778,704

1.6%

435,166

79%

Gross Profit

292,793

272,713

7.4%

147,270

85%

Profit Before Tax

185,005

170,026

8.8%

58,050

193%

Profit After Tax

148,163

108,660

36.4%

45,804

137%

42,331

28,221

50.0%

-

-

Retained Profit

105,832

80,439

31.6%

45,804

76%

Revenue to Government

118,122

92,585

28.0%

54,282

71%

Value Addition

563,514

451,175

25.0%

292,159

54%

Shareholders’ Fund

1,108,870

1,011,117

9.7%

890,523

14%

Total Assets

1,259,477

1,141,872

10.3%

955,259

20%

Earnings Per Share - Rs.

0.53

0.39

36.35%

0.16

141%

Net Assets (Year End) - Rs.

3.93

3.58

9.7%

3.16

13%

Gross Profit Ratio (GP / Sales)

37.0%

35.0%

5.7%

33.8%

3.5%

Net Profit Ratio (NP / Sales)

18.7%

13.9%

34.1%

10.5%

32.6%

Return on Assets

11.8%

9.5%

23.6%

98.5%

98.5%

Return on Equity

13.4%

10.8%

24.3%

108.9%

108.9%

6.5

5.8

12.1%

5.8

0.0%

Equity / Asset Ratio

88.0%

88.5%

-0.6%

93.5%

-5.01%

Debt to Equity Ratio

13.6%

12.9%

5.0%

7.3%

77.9%

Operting Results

Dividend

Change 2015/ 2016

Change

Position At The Year End

Per Share Details

Ratios

Current Ratio (CA / CL)

Total Direct Employees

Rs. 792 Mn

Profit After tax Rs. 148 Mn

Total Assets

Shareholders Fund

Value Added Per Employee

Rs. 1,259 Mn

Rs. 1,109 Mn

Rs. 2.05 Mn

Turnover

12

TAX

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

274 Heads

Financial Highlights - Group Turnover Rs. Mn

Profit Before Tax Rs. Mn

900 800

200

700 600

150

500 400 300

100

200 100

50

-

13/14

14/15

15/16

16/17

17/18

13/14

Profit After Tax Rs. Mn

15/16

16/17

17/18

14/15

15/16

16/17

17/18

15/16

16/17

17/18

EPS (Cents)

160 140 120 100 80 60 40 20 -

0.60 0.50 0.40 0.30 0.20 0.10 13/14

14/15

15/16

16/17

-

17/18

NAPS (Rs.)

13/14

Value Addition Rs. Mn

5.00

600

4.00

500 400

3.00

300

2.00

200

1.00 -

14/15

100 13/14

14/15

15/16

16/17

-

17/18

37.0%

18.7%

13.4%

Gross Profit Margin

Net Profit Margin

ROE

13/14

14/15

6.5 Times

Rs.3.93

Liquidity Ratio

Net Assets Per Share

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

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Key Performance Signs - Company 2017/ 2018

2016/ 2017

Change

2015/ 2016

Change

Rs.000

Rs.000

%

Rs.000

%

Turnover

734,081

723,426

1.5%

414,678

74.5%

Gross Profit

226,673

188,327

20.4%

113,435

66.0%

Profit Before Tax

162,369

116,690

39.1%

51,790

125.3%

Profit After Tax

134,354

65,749

104.3%

43,746

50.3%

Dividend

42,331

28,221

50.0%

-

-

Retained Profit

92,023

37,528

145.2%

43,746

-14.2%

Revenue to Government

90,605

74,318

21.9%

45,283

64.1%

463,167

345,366

34.1%

164,522

109.9%

Shareholders’ Fund

1,055,378

971,377

8.65%

914,236

6.3%

Total Assets

1,187,875

1,076,227

10.37%

958,997

12.2%

677,298

564,415

20.00%

564,415

0.0%

Earnings Per Share - Rs.

0.48

0.23

107.0%

0.16

43.8%

Net Assets (Year End) - Rs.

3.74

3.24

8.6%

3.24

0.0%

Dividend Per share - Rs

0.15

0.10

50.0%

-

-

Dividend Recommended Per Share - Rs

0.10

0.15

-50.0%

0.10

50.0%

Market Value Per Share - Rs

2.40

2.00

20.0%

2.00

0.0%

Gross Profit Ratio (GP / Sales)

30.9%

26.0%

18.6%

27.4%

-4.8%

Net Profit Ratio (NP / Sales)

18.3%

9.1%

101.4%

10.5%

-13.8%

Return on Assets

11.3%

6.1%

85.1%

4.6%

33.9%

Return on Equity

12.7%

6.8%

88.1%

4.8%

41.5%

6.6

6.7

-1.1%

8.70

-23.0%

Equity / Asset Ratio

88.8%

90.3%

-1.6%

95.3%

-5.3%

Debt to Equity Ratio

12.6%

10.8%

16.3%

4.9%

120.5%

Operting Results

Value Addition Position At The Year End

Market Capitalization Per Share Details

Ratios

Current Ratio (CA / CL)

Profit After tax

Total Direct Employees

Rs. 734 Mn

Rs. 134 Mn

243 Heads

Total Assets

Shareholders Fund

Value Added Per Employee

Rs. 1,188 Mn

Rs. 1,055 Mn

Rs. 1.90 Mn

Turnover

14

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Financial Highlights - Company Turnover Rs. Mn

Profit Before Tax Rs. Mn

800 700

200

600 500 400

150 100

300 200 100

50

-

13/14

14/15

15/16

16/17

17/18

13/14

Profit After Tax Rs. Mn

140 120 100 80 60 40 20 -

14/15

15/16

16/17

17/18

14/15

15/16

16/17

17/18

15/16

16/17

17/18

EPS (Cents)

0.50 0.40 0.30 0.20 0.10 13/14

14/15

15/16

16/17

-

17/18

NAPS (Rs.)

13/14

Value Addition Rs. Mn

4.00 3.50 3.00 2.50

450

2.00

250 200 150

400 350 300

1.50 1.00 0.50

100 -

13/14

14/15

15/16

16/17

17/18

13/14

14/15

30.9%

18.3%

12.7%

5.0

6.6 Times

Gross Profit Margin

Net Profit Margin

ROE

P/E Ratio

Liquidity Ratio

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

15

Agalawatta Akuressa Alawwa Aluthgama Ambalangoda Ambalanthota Ampara Anuradhapura Aralaganwila Awissawella Badalgama Badulla Balangoda Bandarawela Battaramulla Bataatha Batticaloa Biyagama Borella Bulnewa Chilaw Dambulla Dankotuwa Delgoda Deniyaya Deraniyagala Digana Ehaliyagoda Elpitiya Embilipitiya Galagedara Galgamuwa Galle Gampaha Gampola Hanguranketha Hanwella Hatton Hingurakgoda Homagama Horana Ibbagamuwa Ja-Ela Jaffna Kadawatha Kaduwela Kahawatta Kalmunai Kalutara Kamburupitiya Kandana Kandy Kantale Katugasthota Katunayake Kebathigollewa Kegalle Kekirawa Kelaniya Kesbewa Kesellenawa Kilinochchi Kiribathgoda Kuliyapitiya Kurunegala Kuruwita Maharagama Mahawewa Mahiyanganaya Maho Maligawaththa Manikhinna

Mannar Matale Matara Mathugama Meerigama Minuwangoda Monaragala Naranmala

Our Presence

Jaffna

Factory Locations

1. Raigam Wayamba Salterns PLC 2. Southern Salt Company (Pvt) Ltd

Kilinochchi

Distribution Network

Mullaitivu

Mannar Vavuniya Trincomalee

Anuradhapura

1 Puttlam

Polonnaruwa Batticaloa

Matale

Kurunegala

Kandy Ampara Gampaha

Kegalle Nuwara-Eliya

Badulla

Colombo Monaragala

Kalutara

Ratnapura

Galle

Nawalapitiya Negombo Nikawaratiya Nugegoda Nuwara-Eliya Padukka Panadura

Pilimathalawa Piliyandala Polgahawela Polonnaruwa Polpithigama Pothuhera Puttalam

Hambantota Matara

2 Bata-atha

Rajagiriya Rambukkana Rathmalana Rathnapura Redeegama Ruwanvella Tangalle

Thissamaharama Trincomalee Valaichchenai Vavuniya Wattala Wathupitiwala Welimada

Wennappuwa Weyangoda Yakkala Yatiyanthota

Achievements and Awards

Raigam Wayamba Salterns PLC was the winner in the Manufacturing - Food and Beverage Sector, at the National Business Excellence Awards (NBEA) 2017 held

by The National Chamber of Commerce of Sri Lanka to recognize and honor business leaders and professionals and

National Business Excellence Awards - 2017

organizations responsible for developing the most effective methods that exemplify business success in their

Gold Award Winner - Manufacturing Food and Beverage Sector

respective organizations in the country.

Dear Shareholders, It is with great pleasure that I welcome you to the 13th Annual General Meeting of Raigam Wayamba Salterns PLC and present you the annual report together with audited financial statements for the financial year 2017/2018.

The main challenge before the company in the financial year under review was to sustain the remarkable financial results recorded in the preceding year, 2016/2017. Compared to the previous year, the environmental and market factors affecting the industry were not favourable. However your company reached the expectations with a moderate growth in terms of revenue and profit, as we remained focused on strategy to drive short term performances, while ensuring that the right decisions were made to sustain long term growth.

As a result of the increased harvest of industrial salt in Sri Lanka during the period under review, once again the consumer market turned in to a sharp price competition bringing down margins. However your

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Company was able to face the situation in a stable manner as the company had heavily emphasized on capitalizing its’ brands as a long-term strategy. The capacity utilization of the two production facilities of the group, at Palavi in Puttalam District and Bata-atha in Hambantota District were at satisfactory levels.

In keeping with your company’s vision “to be the convenient partner enhancing the taste and health needs of the nation” continues to guide us in reinforcing our efforts to contribute to fulfillment of salt and iodine needs of the nation, ensuring highest standards in nutrition and health factors.

Consequently, the company continued its focused efforts to empower the consumers and help them make informed good habits in their diets and to improve the awareness of essential good practices together with compliances relevant to the industry among our stakeholders in supply and distribution chains.

Being the trend setter in the value added salt market in Sri Lanka, our research and development efforts continued throughout the year in order to enhance

Message from the

Chairman

Being the trend setter in the value added salt market in Sri Lanka, our research and development efforts continued throughout the year in order to enhance the product portfolio providing consumers with new experience in their food and beverage options.

the product portfolio providing consumers with new experience in their food and beverage options.

I am proud to mention that the real value of your investment calculated on net asset basis stood above the market price throughout the period since listing in the Colombo Stock Exchange (CSE). Raigam Wayamba Salterns PLC is among the few such companies listed in the CSE. Your Company which is operated on a healthy financial platform with minimum financial commitments has generated an earning of Rs. 0.53 per share in 2017/18 compared to Rs. 0.39 in the previous year. In keeping with the dividend policy of the company your Board has recommended a first and final dividend of Rs. 0.10 per share.

I would like to bring to the notice of our shareholders that the Company was compelled to annul the rights issue announced in August 2016 to finance the proposed acquisition of Raigam Eastern Salt Company (Pvt) Limited, due to reasons beyond our control. The due procedure has been followed in cancellation of the proposed rights issue subject to the approval of majority of

public shareholders at the Extra Ordinary General Meeting that has been called for the subject purpose.

I take this opportunity to extend my appreciation to all our stakeholders including industrial and retail customers, distributors, suppliers and service providers whose continued support was a pillar of strength for the group during the year. I extend my utmost gratitude to my colleagues on the Board of Directors, and the entire staff for their invaluable contributions during the year. Finally, a special thanks to our shareholders for the confidence placed in us.

Dr. Ravi Liyanage Chairman

30 July 2018

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19

CEO’s Review As a result of prudent management and control practices exercised by the management, your company is currently operating on a healthy financial platform with less commitments.

Economic & Industry Environment The economic growth of Sri Lanka in the year 2017 stood at 3.1% compared to 4.5% in the preceding year which indicates an overall adverse momentum in the economic environment of the country. The main draw-back was recorded in the agricultural sector due to the severe drought in the northern & eastern parts of the country whilst in the south there were floods. As a significant section of our population is dependent on agriculture, a severe impact on the sector results in far reaching ramifications in the economy. When earnings across such a large community are adversely affected, sales volumes of FMCG businesses are bound to suffer.

In terms of salt harvest drought is a positive factor for the salt industry. The raw salt harvest in both seasons of the year recorded a tremendous increase due to the dry weather prevailed in all salt producing areas throughout the year. According to the statistics the production has exceeded forecasts by almost 30% and has resulted in escalating stocks in salterns in the country. The adverse side of excess supply is creation of a competitive market situation narrowing down

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

margins. Further the market observed a threat of entering inferior quality products through domestic level industries. However the market information sources have confirmed the changing demand pattern of the consumers from traditional crystal salt to value added products such as “free flow table salt” and “pure vacuum dried salt”, which is the focus of your company.

Business Operations The company operates the main salt refinery, crystal salt plant; pure vacuum dried (PVD) salt plant and two salterns in an area, 131 acres in extent in Puttlam.

The fully owned subsidiary company, Southern Salt Company (Pvt) limited operates a salt refinery and a saltern in an area, 204 acres in extent at Bataatha in the Hambantota district. The group mainly produces value added salt for direct consumption by households and also for industrial customers. As the raw salt produced in the salterns of the group is not sufficient to meet the raw material requirement, a significant quantity is purchased from outside suppliers at competitive prices. The drop in raw salt price due to increased harvest has created a positive

impact on the cost of production. During the year under review the all production facilities were operated efficiently.

The product manufactured by the group under the umbrella brand “Raigam” and other sub brands are distributed island wide through its own distribution network. Your group is privileged to market its products under the brand “Raigam” which is a highly respected brand in the FMCG market in Sri Lanka.

The brand and the effective distribution network are the main strengths of the group in reaching this remarkable position.

Other support services including finance, logistics, human resources, information technology and research and development extended their contribution utmost to carry out operational and strategic tasks of the group to a winning situation.

Further the company continued with its CSR projects including educational support, environmental conservation and also consumer awareness in health and food habits. We remain certified for ISO 22000, ISO 14001 & ISO 45001. These cover food

safety management, environment management and occupational health & safety respectively.

I am proud to place on record that the efforts of our team to achieve this outstanding performance have been justified by securing the gold award in National Business Excellence Awards 2017 in the Manufacturing – Food and Beverage Sector awarded by the National Chamber of Commerce of Sri Lanka.

Operating Results & Financial Position The group recorded a turnover Rs. 791.5 million compared to Rs. 778.7 million for the previous year with a marginal growth of 1.6%. Although the overall sales volume has increased from 12,135 Mt to 12,928 Mt, the value increment does not reflect the volume growth due to price adjustments with the market trends. We earned a pre-tax profit of Rs. 185.0 million on that turnover as compared to the pre-tax profit of Rs. 170.0 million earned in the preceding year. Profit after tax grew by Rs. 39.5 million from Rs. 108.7 million to Rs. 148.2 million. The increased gross profit due to favorable fluctuations of raw material prices, enhanced finance income and the impact on

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

21

deferred tax adjustments are the main reasons behind the increase in bottom line at a rate higher than the gross revenue. In the overall assessment the earning per share for the year under review was Rs. 0.53 compared to Rs. 0.39 in the preceding year.

I am pleased to report that as a result of prudent management and control practices exercised by the management, your company is currently operating on a healthy financial platform with less commitments.

However due to the volatile nature of the industry, especially high response to weather conditions which are unpredictable, the Board of Directors always emphasize on prudent ways of managing funds of the company. Net assets per share at the end of the financial year stood at Rs 3.93. In comparison, at the beginning of the financial year, net assets per share amounted to Rs 3.58. Meanwhile, market value per share rose to Rs 2.40 from Rs 2.00 during the same period. As at the end of the financial year, market value stood at Rs 677.3 million whilst the balance sheet reflected a net assets value of Rs 1,108.9 million.

Taxation Our income tax expense for the year under review amounted to Rs. 36.8 million. According to the agreement entered into by the company with the Board of Investment of Sri Lanka, the profits arising from operations are taxable at a concessionary rate of 20%.

As per the regulations gazetted by the Hon. Minister of Finance on 1st April 2018 to give effect to transitional provisions under the new Inland Revenue Act, the company is eligible to continue with the beneficial rate of tax despite removal of most of the tax concessions by the new Act. With the new Inland Revenue Act coming into force, we are compelled to account for a deferred tax liability that would arise if we were to dispose of the land & buildings housing the plant. The deferred tax liability was calculated on the difference in value between the most recent valuation and the cost of acquisition.

As mandated by Accounting Standards, the relevant provision amounting to Rs 7.1 million is reflected in the Statement of Other Comprehensive Income.

Returns to Shareholders Considering the heavy capital outlay ahead on the plant modernization project and the possible changes in level of operation with the changes in weather patterns, your Board deemed it is appropriate to maintain an adequate level of liquidity and reserves.

However as your company is committed to ensure

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

a fair return on your investment in the company the Board has proposed a first and final dividend of Rs. 0.10 per share for the year amounting to Rs 28.2 million which is 19.05% of after tax profit.

The Year Ahead The financial year 2016/2017 is the golden year of the group with remarkable financial results and the highest growth. The highly favourable market conditions prevailed in that year positively contributed to achieve those results. The operating environment of salt industry is highly volatile. Whatever the challenges the environment may throw we are determined to benchmark 2016/2017 to workout future growth. We were successful in the current year. We have already planned and working to achieve better results in the years ahead.

In the current market scenario the FMCG category, including the food & beverage sector, is likely to remain under pressure during the ongoing financial year. Apart from that salt market will be price competitive until the existing buffer stocks are diminished to a moderate level. Therefore the success of future definitely depends on the product diversity with changing consumer needs and the brand loyalty. Therefore our strategy is focused on innovation and brand capitalization.

Conclusion We completed two consecutive years with remarkable achievements. Thanks to the very committed team, led by a team of talented & loyal senior managers, who were the pillars of success. I also wish to place on record the unstinted support of our distributors, dealers including modern trade operators and consumers at large without their respective role we would not be successful.

I wish to extend my gratitude to the management teams of the parent company and other sister companies of Raigam Group for their excellent support and Chairman and my colleagues on the Board for their direction and valuable guidance to perform my role successfully.

Finally, I extend my sincere thanks to our shareholders whose continued trust was always a source of much encouragement.

Ganaka Amarasinghe Executive Director / CEO 30 July 2018

SNR. PROF. S.P.P. AMARATUNGE Non - Executive Director

MR. S.A. WICKRAMAPALA Non - Executive Director

MR. T. DHARMARAJAH Non - Executive Director

ENG. W. A. UPALI GUNAWARDENA Non - Executive Director

DR. RAVI LIYANAGE Chairman

MR. K. R. THEODORE Executive Director

MR. G. V. P. GANAKA AMARASINGHE Executive Director / Chief Executive Officer

DR. RAVI LIYANAGE Chairman

The Board of Directors

Dr. Ravi Liyanage is the founder and present Chairman / CEO of the Raigam Group and holds a B.Sc. Degree in Business Administration from the University of Sri Jayewardenepura. His MBA, specializing in Marketing was obtained from the University of Colombo and later the Lacrosse University (USA) conferred him the Ph.D. in Management.

This was followed by numerous other post graduate and professional qualifications such as Diploma in Marketing. Dr. Liyanage is the first Fellow of The Institute of Marketing in Sri Lanka and he holds membership of various professional bodies including Institute of Gemology, Institute of HR Professionals, and The Association of Accounting Technicians of Sri Lanka.

Starting his career in the private sector, he changed course in mid-career to public sector and changed again to end up creating the well-known, truly Sri Lankan FMCG Company in the land, The Kingdom of Raigam. He was the Platinum Award winner of FCCISL Entrepreneur of the Year in 2005 and in the same year won the much coveted CIMA Business Leader of the Year, thus becoming the first ever entrepreneur to win both these prestigious awards in the same year. He presently serves as a Director of Puttalam Salt Limited. Dr. Liyanage is a Faculty Board Member of the Faculty of Management Studies and Commerce of the University of Sri Jayewardenepura and a well-known lecturer in Management subjects in many universities and institutions.

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

MR. G. V. P. GANAKA AMARASINGHE Executive Director / Chief Executive Officer Mr. Ganaka Amarasinghe commenced his career at Raigam as the Managing Director of the group in early 1999. He obtained his first Degree in Business Administration from the University of Sri Jayewardenepura and became a fellow member of the Institute of Chartered Accountants, Institute of Certified Management Accountants and The Association of Accounting Technicians of Sri Lanka. For decades he has held senior positions in private and public sectors, as Accountant, Financial Analyst, and Finance Manager. He has served as a member of the governing councils of The Institute of Chartered Accountants of Sri Lanka and the Association of Accounting Technicians of Sri Lanka (AAT Sri Lanka) for many years. He is also a Past President of AAT Sri Lanka.

Mr. Amarasinghe is a visiting lecturer of the University of Sri Jayewardenepura and many other professional and academic institutions. He has served as a member of the Panel of Judges of National Export Awards many years and chaired the same Panel for three consecutive years from 2013. He also served the Panel of Judges for the Presidential Awards for Travel and Tourism in 2007. He is also a Director of Puttalam Salt Limited.

SNR. PROF. S.P.P. AMARATUNGE Non - Executive Director Senior Professor Sampath Amaratunge is the present Vice-Chancellor of the University of Sri Jayewardenepura, where he served as an academic for over 28 years. He served as the Dean of the Faculty of Management Studies and Commerce of the same university from 2008 to 2014. He obtained his B.A. (Hons.) in Economics from the same university and his M.A. in Economics from the University of Colombo. Further he obtained a M.Sc. in Economics of Rural Development from the Saga National University and a Ph.D. from Kogoshima National University in Japan. Senior Prof.

Amaratunge has published more than 75 papers in international and national journals.

Senior Prof. Amaratunge was the recipient of the prestigious Research Excellence Award in 2002, awarded by the Kyushu Society of Rural Economics, Japan, in addition to several other local and international awards. He is considered as an expert in the field of Economics with special reference to Rural Development, whose attention is not focused solely on the university community, but additionally, he has a wide array of interests and is actively involved in the development of the country. He serves as a consultant to many reputed companies. He is also working as an Independent Director of several companies in Sri Lanka.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

27

ENG. W. A. UPALI GUNAWARDENA Non - Executive Director Eng. Warusapperuma Arachchige Upali Gunawardena is a Chartered Engineer by Profession. He is an Honorary Life Member of the Institution of Engineers, Sri Lanka (IESL) and a Fellow Member of the Institution of Incorporated Engineers, Sri Lanka. He holds the Post Graduate Diploma in Engineering (Construction Management) from the University of Moratuwa and many other qualifications. In addition, he followed a course in Engineering Maintenance Management in Sweden and Norway.

He is a Member of Board of Governors of University of Vocational Technology (UNIVOTEC), Project Manager of Relocation and Development of Institute of Technology, University of Moratuwa (ITUM) and he is an Exco member of Organization of Professional Associations (OPA).

After completing initial career in Civil Engineering, he gained over thirty five years of experience with significant exposure to the salt industry in Sri Lanka.

During this period, he held several positions in the management of the Sri Lanka National Salt Corporation, Lanka Salt Ltd, including the positions of Chief Engineer, General Manager and Consultant. He was a Director of Lanka Mineral Sands Ltd, and Mantai Salt Ltd. He was highly involved in the implementation of Universal Salt Iodization program at the inception in Sri Lanka, and installed the first Salt Iodization plant in Palavi Saltern donated by UNICEF. Eng. Upali Gunawardena handled a special assignment as a Consultant to UNICEF to assess the damages to the Salterns in the country as a consequence of the Tsunami.

He also participated in many programs in managing, monitoring and controlling of iodine deficiency disorders, organized by WHO in India, Nepal and Thailand.

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

MR. T. DHARMARAJAH Non - Executive Director Mr. Thiyagarajah Dharmarajah, is a fellow member of The Institute of Chartered Accountants of Sri Lanka, The Association of Accounting Technicians of Sri Lanka, and The Institute of Public Finance and Development Accountancy. He graduated from the University of Sri Jayewardenepura obtaining a B.Sc. Management (Sp) Degree and counts over 35 years’ experience in the disciplines of Finance and Accounting in the Public and Private Sectors. In addition, he holds the Higher National Diploma in Accountancy – Ceylon Technical College.

Mr. Dharmarajah is well-known and respected in the field of Finance and Accountancy.

He is a partner of Amerasekera and Company, a well-recognized firm of Chartered Accountants in Sri Lanka. Mr. Dharmarajah has been actively involved in many accounting bodies of Sri Lanka. He was a member of the Governing Council of The Institute of Chartered Accountants of Sri Lanka (ICASL) and was a member of the Council of the University of Sri Jayewardenepura. He is also a Past President of The Association of Accounting Technicians (AAT) of Sri Lanka. Presently, he is a Member of Council of University of the Visual & Performing Arts. He is also a Director of DFCC Bank PLC and Central Engineering Consultancy Bureau (CECB). He has been lecturing in Finance and Accountancy for decades and acknowledged as a respected lecturer who has contributed immensely to produce thousands of qualified Accountants in Sri Lanka.

MR. K. R. THEODORE Executive Director Mr. Kishan Rohana Theodore, the Deputy Chairman and co-founder of the Raigam Group was appointed as a director to the company with effect from 27th March 2013. He is a veteran in ICT Industry in Sri Lanka and is a pioneer in the introduction of novel ICT concepts including mobile ICT lab, Integrated Network Solutions etc to Sri Lanka. After completing his studies he started his own business in ICT industry, with an affiliation in Singapore, achieving tremendous success. Diversity of his portfolio is witnessed in his remarkable achievement in FMCG industry, which has made him to be designated the Deputy Chairman in well reputed Raigam Group in Sri Lanka. While in his busy schedules across different industries, he has contributed immensely to the country being the Head of Centre for NonGovernmental Sector attached to the Ministry of Finance, where he played a significant role during the Post-Tsunami period.

MR. S.A. WICKRAMAPALA Non - Executive Director Mr. Subasinghe Arachchige Wickramapala counts over 35 years extensive experience in the public sector with considerable exposure to rural banking and co-operatives in Sri Lanka. Mr. Wickramapala served as an Assistant Commissioner of Co-operatives, Government of Sri Lanka, until 2004. He functioned as a Director of Sri Lanka Co-operative Rural Bank Federation Ltd and as its Chairman, from 20042009, and also the Chairman of Wayamba Co-operative Rural Bank Union Ltd from 1996 - 2009.

He has also functioned as a Director and Chairman of Co-operative Leasing Company Ltd. He has also functioned as a Director and Vice Chairman of Co-operative Insurance Company Ltd for a considerable period. He is a director of Puttlam salt Ltd (PSL) since 1997 and has held the position of Managing Director in two occasions. During his first tenure as Managing Director of Puttalam Salt Ltd (PSL) from 1997 to 2003, he contributed greatly, overseeing the transition of Government held National Salt Corporation to Puttalam Salt Limited, to be one of the most profitable private sector salt manufacturing Companies in Sri Lanka. Considering his vast experience in the industry, he has been reappointed as the Managing Director of the PSL since October 2017.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

29

GANAKA AMARASINGHE Executive Director / Chief Executive Officer NEVINDA JAYASURIYA Director Finance (Group) NIHAL VIJENDRA General Manager - Operations NALIN GANGOGAVILA Deputy General Manager - R & D (Group) ROHANA KUMARA

Senior Management Team

Deputy General Manager - Promotion (Group) JANAKA MAYADUNNA Deputy General Manager - Finance (Group) INDIKA PALIHAWADANA Senior Manager - Engineering (Puttalam) LASANTHA EDIRISINGHE Senior Manager - Finance JANIKA KUMARA Senior Manager - Operations (Bata-atha) BUDDIKA JAYASEKARA Accountant JAYANTHA WEERASINGHE Internal Auditor

Management Discussion & Financial Review Sri Lankan Economic Outlook The Gross Domestic Product for Sri Lanka for the year 2017 at constant (2010) price has reached Rs. 9,315 Bn. The GDP value reported for the year of 2016 was Rs. 9,034 Bn. Accordingly, Sri lankan economy has grown at a slower rate of 3.1 % in real terms in comparison to the GDP growth rate of 4.5% in the previous year. The four major components of the economy, Agriculture, industry, services and Taxes, less subsidies on products, have contributed their share to the GDP at current price by 7.7%, 27.2 %, 55.8% and 9.3% respectively for the year 2017.

During the year 2017, highest growth rate of 3.9% was reported for overall industrial activities. Meanwhile, services activities have grown by 3.2%, compared to the previous year. However, the Agricultural activities reported a 0.8% negative growth rate. Adverse weather conditions in several parts of the country resulted in the Agricultural sector to report a negative growth during the year.

A relatively tight monetary policy stance was maintained during most part of the year with a view to addressing inflationary pressures. There is a marginal increase in AWPLR (2017 - 11.55% and 2016 - 11.52%) compared to previous year. Though, interest rate was not favorable basically for the industrial sector.

Inflation, measured by the CCPI (Base year 2013), reflected an upward trend of 7.1% in December 2017 compared to 4.5 % in December 2016. The increase in inflation in the latter part of the year was mainly attributed to the impact of tax adjustments and supply disruptions caused by adverse weather conditions.

However, the Central Bank is targeting inflation between 4-6% this year.

When taking about exchange rate, the CBSL sought to allow more flexibility in exchange rate determination while emphasis was also placed on absorbing foreign exchange from the domestic interbank market to build up FOREX reserves. The Rupee remained

32

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

relatively stable in 2017, depreciating by around 2% during the year. The first quarter of 2018, has however seen continued downward pressure resulting from increased foreign outflows following the unexpected outcome of the local council elections and resultant instability in the political climate.

The method of salt production has undergone changes over the years.

Due to increased demand, the salt industry is now transforming from conventional method to high-tech practices.

Salt Industry SALT is a universal commodity; it plays an important role today in human survival and well-being. Medical science utilizes salt as the universal carrier for iodine in the eradication of preventable brain damage and iodine deficiency disorders. Salt is involved in regulating the water content (fluid balance) of the body. The manufacture of salt has been a naturalistic operation from the days of the ancient kings.

Similar to Agriculture Industry, performance of the Salt Industry is also subject to the behavior of weather conditions. As in paddy cultivation, harvesting of salt is also done in two seasons. The Maha season stretches from July to October and the Yala season from February to mid-April. The method of salt production has undergone changes over the years.

Due to increased demand, the salt industry is now transforming from conventional method to hightech practices. Sea water had to be pumped through channels to the lagoon in order to obtain additional water. The saturated sea water is pumped into specially prepared areas known as salt pans where

it is kept until crystallization, after which the water is diverted to the specially prepared salterns. Due to further evaporation, salt is formed after which it is collected and transported for storage. Common or edible salt is washed, dried and sprayed with an iodine solution before packing. Table salt is prepared according to a special formula.

Since Sri Lanka is surrounded by sea and it also has numerous other favorable conditions for the manufacture of Solar Salt in the coastal areas, it can be said that the Salt Industry has a more favorable position compared to other industries.

Salt is a biological necessity for human life and had been used by humans since pre-historical times. The fact that consumption of salt is necessary for the human life and the demand for Salt is increasing year to year with the development of industrial, food and beverage sectors. Due to the demographic changes, the type and choice of salt usage by the Sri Lankan consumers have been significantly converted from the traditional crystal Salt to value added Salt (Powdered Salt) in the recent past.

The continuous development of product portfolio and meeting the consumers’ requirement are focal aspects in our organizational context.

Our Strategy and Performance Raigam Wayamba Salterns PLC recorded ever highest performance in a year despite the turbulent conditions due to economic and political instability, inclement weather conditions, lowering margin due to price competition in the market and the depreciating Rupee against the US Dollar, which created a volatile and competitive environment. The Group was successful in leveraging its competitive advantages, capitalizing on growth drivers and pursuing operational efficiencies across-the-board, which had positive outcomes in terms of the profitability and performance of group.

At the time that we entered into Salt market, many Salt products were of the conventional category, basically crystal Salt with inferior packaging and few standard-sized packaging, because Salt was categorized as a “common” commodity. We, however, are proud to say that as an innovative company, we transformed the entire Salt market into new direction by adding value to our product range while maintaining reasonable market price. The main strategy that the company focused from the inception was “product differentiation” in that value is provided to customers through high quality, rapid product innovation, advanced technological features and attractive, high quality packaging of the products.

The continuous development of product portfolio and meeting the consumers’ requirement are focal aspects in our organizational context. Continuous production was encouraged to enhance the yield and the standardization of quality control process also paved the platform for maximizing the results of the financial year. Accordingly, it has succeeded to achieve remarkable growth of net profit to Rs. 148.2 Mn which is the highest ever achievement in our journey.

In addition, a sum of Rs. 18.2 Mn was invested during the year in property, plant & equipment including saltern development in line with expected future growth of the Company as well as the Group. Investing for growth has also been one of the strategies used by the Group to survive and growth in the industry.

Consequently, the operating asset base exceeds Rs. 1.25 Bn by the year end.

Marketing Drive The marketing drive of the Company ensures from designing correct quality products to satisfy varying needs of consumers and to ensure availability of whatever Salt product they demand. The basic strategy that we execute is meeting the consumer’s needs in term of Salt products. Our team of research and development continues to develop and upgrade our range of products to be more customer-oriented in retail consumer market as well as in industrial market.

The Company operates with an island-wide distribution network which reaches over 90% of the retail, wholesale and modern trade outlets as well as industrial users in the country. As innovative Salt manufacturer in Sri Lanka, variety of products is marketed in order to fulfill the need of each segment in the market.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

33

The Group adopts responsible marketing practices which comply with all regulatory requirements and industry best practices. During the year under review, there were no incidences of non-compliance pertaining to the Group’s advertising or marketing communications.

Development of Salterns The Group is continuing its saltern development activities at Puttalam and Bata-atha. During the year, reservation tanks have been completed with a view to mitigate the adverse impact from weather conditions as these tanks are not so sensitive to rainfall.

Internal integration is very much a cost effective concept as far as raw salt supply is concerned and it is what has been practiced by the management from the inception. During the year concerned, the southern salt Company (Pvt) Ltd also expanded its evaporation area to enhance the harvesting capacity. The Group is looking at every possible step to develop and strengthen the salt resource since it is the point where our attention needs to be focused.

A majority of our employee-base at all levels have an extensive knowledge and experience in Salt industry.

Human Capital The most valuable asset in every organization is Human Capital. Thus, Human Capital becomes one of the critical success factors of the Company. Loosing skilled labor is an unbearable cost to any Company.

Therefore, we have implemented comprehensive and formalized policy frameworks covering all human resource aspects and clearly defined governance structures as Group’s human resource strategy which is effectively implemented and that all employees are treated justly and equally. Majority of the employees are engaged in either field activities or production under extremely difficult conditions. Moreover, our HR policies also ensure that we do not engage

34

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

child, forced or compulsory labor. Our HR policy encompasses compliance with all labor laws of the country and employee rights and is aimed at facilitating a merit based, non-discriminatory work environment. However, our manufacturing activities tend to be male dominated due to physical demand of the job/industry.

The Group has on board a competent team of professional and skilled employees who has driven the Group to new heights of excellence. A majority of our employee-base at all levels have an extensive knowledge and experience in salt industry. This has been a key factor in maintaining a competitive advantage in the market and in maintaining market leadership and product quality consistently. A range of benefits and incentives have been introduced to ensure their job satisfaction, personal and professional development as well as recognize their achievements.

This, in turn, has benefited the Group in terms of enhanced employee productivity and their long-term commitment to the Group.

The number of employees in the Group at the end of the year under review was 274 compared to 233 in the previous year and it can be depicted in following analysis.

Gender Distribution Category

31.03.2018

31.03.2017

Male

Female

Total

Male

Female

Total

Top Management

02

0

2

2

0

2

Managerial Level

12

0

12

13

0

13

Executives

17

3

20

17

5

22

Clerical and Supervisory

34

4

38

41

2

43

Workers/Skilled Workers

170

32

202

141

12

153

Total

235

39

274

214

19

233

Value Added per Employee Value added per employee is an outstanding measure that reflects employees’ strengths for the company. It is worked out as operating profit plus salaries, wages and payroll expenses, divided by the average number

of employees. During the year, the employees of the group recorded progressive value addition over the past as portrayed in following chart.

Performance Turnover Turnover Rs. Mn

Description Value added per employee per month

2017/2018 (Rs.)

2016/2017 (Rs.)

171,385

161,387

Profit Bef

900 800 700

200

600

150

500

Average Remuneration per Employee

400

100

300 200

50

100 -

We have offered competitive remuneration packages having complied with all the statutory requirements and introduced many welfare schemes in order to enhance the value created for them. Year by year, we have been able to continuously improve their wealth and living standards both in financial and nonfinancial terms.

Description Average remuneration per employee per month

2017/2018 (Rs.)

2016/2017 (Rs.)

43,219

40,742

Outsourced Services A relatively small number of outsourced employees are working in the manufacturing areas and salt harvesting areas as helpers in non-routine and non-value adding jobs. The Group has taken adequate steps to ensure the legitimate rights of such outsourced employees and monitors on a monthly basis the regulatory compliance with respect to payments by the service providers. Like other employees, they are also entitled for the Annual increment and staff welfare benefits in order to create non-discriminatory work environment. In addition, actions have been taken to ensure that the service provider provides those benefits as agreed. In every year, this assessment is being conducted in order to carefully evaluate whether they are registered with the Labor Department and they should, on a monthly basis, furnish documentary evidence for statutory compliance in terms of EPF and ETF payments.

13/14

14/15

15/16

16/17

17/18

13

Profit After Tax Rs. Mn Despite the challenges from external environment, the Group recorded a marginal top line growth by 160 1.6% for the ensuring year compared to Rs. 778.7 Mn 140 in120 the previous year. This is the highest ever turnover recorded in the Company’s history and a massive 100 80 achievement that enhances stakeholder confidence.

60 Revenue growth was driven by expansion of market 40 network and strengthening our market position as Sri 20 Lanka’s Number 01 Salt brand which is an “Isy salt”.

13/14

14/15

15/16

16/17

EPS (Cen 0.60 0.50 0.40 0.30 0.20 0.10 -

17/18

As a Group, we have been able to increase the turnover each year tremendously that projects future NAPS (Rs.) potential of this business. Pure Vacuum Dried (PVD) Salt which is high end product of salt category that 5.00 certainly supports to acquire new industrial market during the year. Apart from that proper management 4.00 of raw salt in hand and maintaining right quality 3.00 continuously are also main contributors for such a 2.00 favorable outcome. The Company’s turnover stood at1.00 Rs. 734.1 Mn and Rs. 723.4 Mn in 2017/2018 and 2016/2017 respectively, which is an increase of 1.5% compared to the previous year.

13/14 14/15 15/16 16/17 17/18

The subsidiary Company, Southern Salt Company (Pvt.) Ltd recorded a turn-over of Rs. 135.3 Mn compared to Rs. 136.3 Mn in the previous financial year. This is a marginal decrease of 0.8% compared to the previous year. Sale of products manufactured by the subsidiary Company was channeled through the island wide distribution network of the parent Company and its direct customers especially targeting industrial market.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

13

Value Ad 600 500 400 300 200 100 -

35

13

300 200

50

100 -

13/14

Profitability

14/15

15/16

16/17

13/14

17/18

140 120 100 80 60 40 20 -

Turnover Rs. Mn 900 800 700 600 500 400 300 200 13/14 100

14/15

15/16

16/17

17/18

14/15

15/16

16/17

NAPS (Rs.) The Group’s bottom line was healthy at 36.4%, driven by the operational profit and the Finance 5.00 After Taxinvesting Rs. Mn in Fixed Deposits. incomeProfit coming from 4.00net profit of the Group after taxation for the The year 160 review was Rs. 148.2 Mn compared to 3.00under 140 corresponding value of Rs. 108.7 Mn recorded for 2.00 120 the previous year. It is notable facts that growth of 100 1.00 profit margin by 2.0% compared to previous gross 80 year, growth in finance income and reduction of 60 40 income tax expense due to 15/16 reversal of differed17/18 13/14 14/15 16/17 20 tax liability are the key contributors for such performance. 13/14 14/15 15/16 16/17

17/18

13/14 has 14/15 15/16 single 16/17 Moreover, the Group taken every step

13/14

14/15

Value Additionper Rs. Share Mn Earnings 600

17/18

15/16

16/17

17/18

EPS (Cents)

500 400

0.60

300

0.50

200

0.40

100

0.30

-

17/18

The positioning of the products according to the marketNAPS requirements and expediting the internal (Rs.) control processes in order to create the competitive advantage 5.00even in the mass scale environment have been executed as short term strategies during the 4.00 year. Proper management of deposit portfolio by 3.00 higher rates than the industry-norm in negotiating each and every occasion made us gain more for the 2.00 bottom line. Strategies were carried out to reduce finance 1.00 cost relatively.

17/18

to avoid unnecessary cost escalation by setting up mechanisms to monitor at regular intervals at all levels. This could be proved by looking at Administrative costs. There is a relatively increase in Selling & Distribution costs compared to previous year is purely due to expansion of distributor network and the marketing campaigns during the year. In essence, it is proud to mention that the Group has been able to achieve highest ever profit after tax in the history of the Group.

36

16/17

-

13/14

-

15/16

Our target is to sustain EPS (Cents) the results in the year,Taxas Profit Before Rs. many Mn 0.60 next 0.50 of the restraining 0.40 200 0.30 factors attached to the 150 0.20 company's supply chain 0.10 100 - are now under the 50 13/14 14/15 15/16 16/17 17/18 control of the Company.

Profit After Tax Rs. Mn 160

14/15

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

0.20 13/14 0.10 -

14/15

13/14

15/16

14/15

16/17

15/16

17/18

16/17

17/18

The Group's Earnings per Share (EPS) stood at Rs. Value Addition Rs. Mn 0.53 for the financial year under review, as against Rs. 0.39 recorded last year. This is a 36.4% increase over the600 previous year's EPS. The continuous improvement in 500 EPS is another reflection of Group’s prosperity.

Our 400target is to sustain the results in the next year, as 300 many of the restraining factors attached to the company's supply chain are now under the control of 200 the100 Company.

-

13/14 and 14/15 15/16 Market Price Dividend

16/17

17/18

Share price of the Company was in strong position during the year recording Rs. 3.10 and Rs. 2.00 - the highest and lowest respectively despite the general downward trend reflected in the All Share Price Index. As at 31st March 2018, it stood at Rs.2.40.

The group dividend policy is formulated taking into consideration the group's overall performance and growth plans as well as economic and market

160

0.60

140

0.50

120 100

0.40

80

0.30

dynamics.

Having healthy bottom line results, both 60 EPS and DPS improved in the year under review.

40 20 Considering the company’s earnings per share of Rs. 0.48- for the year, the directors have recommended a 13/14 14/15 15/16 16/17 17/18 final dividend of Rs. 0.10 per share.

NAPS (Rs.)

0.20 0.10 -

14/15

15/16

16/17

17/18

15/16

16/17

17/18

Value Addition Rs. Mn

5.00

600

4.00

500 400

3.00

300

2.00

200

1.00 -

13/14

100 13/14

14/15

15/16

16/17

17/18

-

13/14

14/15

Financial Position The Group’s financial position is healthy, reflecting consistent asset growth, a strong equity base and low gearing levels. Total assets grew by 10.3% to Rs. 1.26 billion during the year, due to increased working capital requirements. During the year, the Group invested Rs. 18.2 Mn in capital assets for the prosperity of the group. Net asset value of the Group has grown by Rs. 98 Mn. The Group’s liquidity position is strong, with cash and short-term deposits amounting to Rs. 308.5 million as at end-March 2018, in which Rs. 117.4 was made during the year. The net current asset has grown up to Rs. 544 Mn which is a 5.5 times more than the current liability. The debts to equity ratio stood at 13.6% and 12.9% for 2017/2018 and 2016/2017 respectively. This reflects the strength and the healthy financial structure of the Group.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

37

Salt Not Only For Taste Salt has made a glittering, often surprising contribution to the history of humankind.

Whoever controlled salt was in power. That was the world history.

Sri Lanka is an island nation surrounded by Indian Ocean that holds unlimited resources and salt is one of its prime commodities, which can be easily exploited as an almost inexhaustible resource. Though Sri Lanka is blessed with a temperate climate throughout the year salt harvesting is limited to two seasons namely Yala & Maha base on monsoonal rain. As such, sea salt can be produced using natural sunlight allowing for the seasonal (monsoonal) changes.

Two areas of the country mainly Hambantota and Puttalam are famous for salt for ages. There are couple of salterns namely Maha lewaya, Bundala, Palatupana and Kunukalliya lewaya existing in southern province to produce nearly 40% of the total salt demand of 160,000 MT of edible salt in addition to the demand from other industries.

Rest is supplied from north-western province.

Most of other salterns scattered in Puttalam district and are accountable for a substantial percentage of the country’s salt production.

There are some salterns found in the Northern region too. Newly developed saltern called Periyakarachchi in Eastern province is now accountable for the countries demand in addition to the salterns established long back. All those salterns exploit sea water or lagoon brine and the natural sunlight to produce salt. As such, the only hindrance is climatic inconsistency as an island.

Theoretically, during salt process both the source material (sea water) and the energy source (sunlight) are absolutely free, a favorable condition hardly found in other industries. Yet, it is surprising to note that most of the people in Sri Lanka still fail to identify the economic importance of this valuable resource Sea Salt.

Fortunately, in the recent past some private entrepreneurs too have come to the forefront to invest in to upgrade the salt industry. Couple of years back Raigam Wayamba Salterns PLC declared its commercial production of salt adapting Pure Vacuum Dried (PVD) technology affirming that salt could be produced 100% free from any other impurities using artificial evaporation technology.

The other noteworthy feature is that even during the conventional salt production locals are unaware of many important highly valuable elements that result during salt production. These are not exploiting for any profitable use. One such product called bittern, very bitter-tasting solution that remains after evaporation and crystallization of salt, fetches a very high price compared to common salt. It is also a commercial source of many elements including magnesium compounds especially magnesium sulphate (Epsom salts). In addition, very common and important chemical called gypsum is solidified in intermediate ponds, but Lankans so far do not extract those products, nevertheless, spent lot of money to import those required by industries.

In past there was an establishment called Paranthan Chemical Factory but unfortunately it was destroyed during the civil war. That factory was capable of producing several valuable chemicals mainly Sodium Hydroxide by using salt solution as a primary source material. During that process hydrogen and chlorine are also produced as by-products directing to many industries.

Nowadays, scientists have identified that 14,000 salt based industries fall within high-tech category.

Even with all those technological advances, it is surprising to note that Sri Lanka had not yet considered the economic importance of this valuable resource in trending towards Nano-Age.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

39

Our Production Process Manufacturing of Crystal Salt

Sea Water / Lagoon Brine

Irrigation to Saltern

Evaporation in Condensers

Crystallization

Manufacturing of Table Salt

Crystal Salt

Dispatching

40

Grading

Pre-washing

Packing

Drying

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Hydro Milling & Elutriation

Iodization

The Solar Salt Process

Harvesting

Crystal Salt

Salt is produced through the natural evaporation of sea water or lagoon brine. Salt water is captured in shallow ponds through the process of irrigation and allowed to evaporate by the sun and wind. After a few days, brine is crystallized. Salt crystals will form in a range of shapes and sizes. This salt is harvested and washed with saturated, clean brine to remove impurities, after which it is stacked for storage before being further purified or processed into a consumer packs.

The Process of Table Salt

Washing

Centrifuging

Once the crystal salt is produced from the salterns, next step is to grade the crystal salt by looking at the physical & chemical parameters. Then, the process of powdering is made through hydro milling & transferred to elutriation system in order to remove soluble and insoluble impurities. Further refining of salt takes place and sent to the centrifuge for reduction of moisture ensuring the product is fluidized at fluidized bed dryer as expected.

This is the process of drying done to ensure that the product is dry with free flowing nature.

To make the fortification, Iodine is added as per the prevailing regulations of the country. Finally, packing of salt is made based on the market requirement.

Value is created through an organization’s business

Value Creation Model (Group)

model, which takes inputs from the capitals and transforms them through business activities, interactions and relationships to produce outputs and outcomes that, over the short, medium and long term, create or destroy value for the organization, its stakeholders, society and the environment.

Although there is no universally agreed definition of the term “Value Creation” or the manner in which it should be communicated, following themes inform the meaning of the term generally even though it is not a comprehensive list of all matters.

² Value creation takes place within a context ² Financial value is relevant, but not sufficient, for assessing value creation

² Value creation manifests itself in outcomes

² Value is created from tangible and intangible assets

² Innovation is central to value creation

² Value is created from private and public/ common resources

² Values play a role in how and what type of value is created

² Value is created for an organization and for others

² Measures of value creation are evolving

We also create value from our intangible assets, such as our brand reputation, our tacit knowledge, relationships, strategies and practices. Our actions are positioned in and around resources shared by other stakeholders such as land, lagoons, water sources and public areas and we recognize the need for transparency and accountability in our sharing of these common resources. Through our integrated reporting, we aim to share how we connect to and use these tangible and intangible assets to create and preserve the value that we create for Raigam Wayamba Salterns PLC and for others. An extent of the maturity of our integrated thinking as decision makers and employees is our ability to define both the positives and negatives of our selections.

42

² Value is created from the connectivity between wide ranges of factors

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Input Financial Capital

Manufactured Capital

Human Capital

Social & Relationship Capital

Cash and cash equivalents Rs. 58.3 Mn

PPE Rs. 635.0 Mn

Transaction relationship with customers

New investments during the Year Rs. 18.2 Mn

Motivated Employees 233 Heads Responsible Leadership

Production Capacity 33,600 Mt

Organization structure

Constructive Engagement with government and Authorities

Share holders’ fund Rs. 1,011.1 Mn Bank facilities Rs. 107 Mn

Entering to the PVD salt retail Market

Intellectual Capital

Land and lagoon

Slandered Operating procedures

Water Air

Brands (Isy, Premium, Ruchi, and PVD)

Positive Employees Relationship

Responsible Leadership

Collaboration with share holders

Vision Governance

Natural Capital

Mission Values

Risk Management

Output

Outcome

Financial Capital Positive net operating cash flow Growth in EPS and Net Assets per Share Increased GP Ratio

Financial Capital Net operating cash flow - Rs. 80.2 Mn EPS - Rs. 0.53 Net Assets per Share - Rs. 3.93

Manufactured Capital 400g Production Capacity Increased PVD salt to retail market

Human Capital Skilled and Motivated employees Employees experience enhanced Employees’ welfare

Social & Relationship Capital Increased customer base Expansion of distribution network Employees turnover reduced

Manufactured Capital Yield Free flow salt plant - 62.88% Packing plant - 99.55% Crystal plant - 81.85% Human Capital Number of Employees - 274 Heads Rewarding work environment with opportunities Employees turnover - 14.97%

Social & Relationship Capital Donations - Rs. 0.9 Mn New Agencies

Natural Capital Waste recovery through PVD plant Continuous monitoring for energy saving

Natural Capital Recycled waste

Intellectual Capital Sustainable growth in shareholders’ wealth

Intellectual Capital Increased 400g packet sale

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

43

Corporate Governance

The Company’s Corporate Governance framework is structured clearly, specifying key elements of external and internal structures, while adopting the said Corporate Governance framework into the management systems to ensure investor protection and deliver the maximum productive outcome to the shareholders’ value while ensuring the sustainable development of the Company and its stakeholders.

The Board The Board usually meets once a month. Its principal focus is the overall strategic direction, development and control of the company. The Board as at the date of this statement consists of seven members of which four members are Non-Executive Directors and three are Executive Directors. All Non-Executive Directors are independent as defined under the Listing Rules of the Colombo Stock Exchange.

There is a Board balance and complies with the independent Directors criteria set out under Listing Rules of the Colombo Stock Exchange. Together,

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NAME OF THE DIRECTOR

NO OF MEETING

During the year Thirteen Board Meetings have been held and the Directors' attendance is shown below.

INDEPENDENT

The Board of Directors ensures and is responsible to its shareholders, regulatory and statutory bodies and all other stakeholders of the Company to ensure that the Company is growing sustainability while establishing a strong Corporate Governance framework in order to ensure investor protection, transparency and confidence.

Board Attendance

NON-EXECUTIVE

Raigam Wayamba Salterns PLC has adopted and practiced highest standards of Corporate Governance requirements recommended by the Code of Best Practices on Corporate Governance, Listing Rules of the Colombo Stock Exchange, and Code of Best Practices on Related Party Transactions compiled by the Securities and Exchange Commission of Sri Lanka in collaboration with the Institute of Chartered Accountants of Sri Lanka.

the Directors with their wide experience in both the public and private sectors and diverse academic backgrounds provide a collective range of skills, expertise and experience which is vital for the successful direction of the Group. A brief profile of each Director is presented on pages 26 to 29.

EXECUTIVE

Overview

Dr. Ravi Liyanage

13

Mr. G. V. P. Ganaka Amarasinghe

13

Mr. K. R. Theodore

12

Snr. Prof. S. P. P. Amaratunge

10

Mr. T. Dharmarajah

13

Eng. W. A. Upali Gunawardena

12

Mr. S. A. Wickramapala

13

Disclosure of Information and Compliance Each Non-executive director annually submits a declaration of independence / non-independence.

The board makes the determination annually as to the independence or non-independence of each nonexecutive directors based on the declaration and other information available to the board. The board states that following non-executive directors are determined to be independent.

Snr. Prof. S. P. P. Amaratunge Mr. T. Dharmarajah Eng. W. A. U. Gunawardena Mr. S. A. Wickramapala

A summary of interests of Independent Non-executive Directors are given below.

Significant Shareholdings

Director or Employee of another entity or a Trustee

Material Business relationship

Close family member is a Director or CEO

Business Connection

Employment in the company

Continuously served for more than nine years

(A)

(B)

(C)

(D)

(E)

(F)

(G)

Mr. T. Dharmarajah

NO

NO

NO

NO

NO

NO

NO

Snr. Prof. S. P. P. Amaratunge

NO

NO

NO

NO

NO

NO

NO

Mr. W. A. U. Gunawardena

NO

NO

NO

NO

NO

NO

NO

Mr. S. A. Wickramapala

NO

NO

NO

NO

NO

NO

NO

Name of the Director

A) Carrying not less than 10% of voting rights of a company.

B) Self or close family member is a Director or employee of another company or a Trustee.

C) Any relationship resulting in income / non cash benefits equivalent to 10% of the directors annual income.

D) Close family member who is a Director or CEO. E) Relationship resulting in transaction value equivalent to 10% of the turnover of the company.

F) Has been employed by the company during the period of two years immediately preceding appointment as a Director.

G) Has served on the Board continuously for a period exceeding nine years.

Statement of Compliance As a responsible company, Raigam wayamba salterns PLC complies with Acts, Regulations, Codes and Best Practices announced by different governing bodies and authorities. Accordingly, the company makes all endeavors to comply with following guidelines. ² Companies Act No. 7 of 2007 ² Code of Best Practices on Corporate Governance jointly issued by The Institute chartered Accountants of Sri Lanka and Securities and Exchange Commission of Sri Lanka ² Listing Rules of Colombo Stock Exchange ² Inland Revenue Act No. 10 of 2006 ² LKAS and SLFRS For easy reference of this Annual Report, our commitment to adopt Code of Best Practices on Corporate Governance and Listing Rules of Colombo Stock Exchange are sectioned into three units.

Section 01: Extent of compliance to the requirements of the Code of Best Practices on Corporate Governance jointly issued by The Institute of Chartered Accountants of Sri Lanka and The Securities and Exchange Commission of Sri Lanka.

Section 02: Extent of compliance to the requirements of The Continuing Listing Requirements Section 7.10 on Corporate Rules for Listed Companies issued by Colombo Stock Exchange.

Section 03: Extent of compliance to the requirements of The Continuing Listing Requirements Section 9 on Related Party Transactions for Listed Companies issued by Colombo Stock Exchange

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

45

Section 01 Extent of compliance to the requirements of the Code of Best Practices on Corporate Governance jointly issued by The Institute of Chartered Accountants of Sri Lanka and The Securities and Exchange Commission of Sri Lanka.

Corporate Reference Compliance Governance principles of code

Extent of Compliance

A. Directors A.1 The Board The company is headed by an effective Board of Directors with years of experience in both public and private sector. The Board of Directors of the Company consists of professionals in the fields of Accounting, Management, Economics, Engineering, Marketing and business leaders. All Directors possess the skills and experience and knowledge complemented with a high sense of integrity and independent judgment. The Board gives leadership in setting the strategic direction and establishing a sound control framework for the successful functioning of the Company. The Board’s composition reflects a sound balance of independence and anchors shareholder commitment. Profiles of Directors are given on pages 26 to 29.

Board meetings

A.1.1

Complied

The Board usually meets at monthly intervals, but also meets more frequently whenever required. The board met 13 times during the year under review.

Scheduled Board meetings were arranged well in advance, and all Directors were expected to attend each meeting. Any instances of non- attendance of Board meetings was generally related to prior business, personal commitments or illness.

The attendance at Board meetings held is set out on page 44.

The Board is responsible to the shareholders for creating and delivering longterm sustainable shareholder value through the business. The Board ensures the formulation and implementation of a sound business strategy.

Board responsibilities

A.1.2

Complied

The Board has put in place a corporate management team led by the Managing Director with the required skills, experience and knowledge necessary to implement the business strategy of the company.

The Board also ensures effective systems are in place to secure integrity of information, internal controls and risk management.

The Board ensures that the company’s values and standards are set with an emphasis on adopting appropriate accounting policies and fostering compliance with financial regulation.

Compliance with laws and access to independent professional advice

A.1.3

Complied

The Board collectively, and Directors individually must act in accordance with the laws as applicable to the company. The company had complied with all applicable laws and regulations during the year. A procedure has been put in place for Directors to seek independent professional advice in furtherance of their duties, at the company’s expense. This will be coordinated through the company or the Board secretary when requested.

Company Secretary

A.1.4

Complied

All Directors have access to the advice and services of the company secretary as required. The company secretary keeps the Board informed of new laws and revisions, and regulations and requirements coming into effect which are relevant to them as individual Directors and collectively to the Board.

Independent judgment

A.1.5

Complied

All Directors exercise independent judgment in decisions made by the Board on issues of strategy, performance, resource allocation and the conduct of business.

Dedication of adequate time and effort by the Board and Board committees

A.1.6

Complied

All Directors of the Company dedicate adequate time and effort to fulfill their duties as Directors of the company both before and after the Board meetings, in order to ensure that the duties and responsibilities owed to the company are satisfactorily discharged.

Call for a resolution to be presented to the Board

A.1.7

Complied

One third of the Directors can call for a resolution to be presented to the Board where they feel it is in best interest of the company.

Complied

Both new and existing Directors of the company are provided guidelines on general aspects of directorships and industry specific matters. In this regard, the Directors have recognized the need for continuous training, expansion of knowledge and to take part in such professional development as and when they consider it necessary and which would assist them to carry out their duties as Directors.

Training for new and existing Directors

46

A.1.8

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

A.2 Chairman and Chief Executive Officer (CEO) There should be a clear division of responsibilities between the Chairman and Chief Executive Officer in order to ensure a balance of power and authority, in such a way that any individual has no unfettered powers of decision making.

The roles of the Chairman and Chief Executive Officer function separately in the Company. The Chairman’s main responsibility is to lead, direct and manage the work of the Board in order to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. The Managing Director, who performs the role of the Chief Executive Officer, is responsible for the day-to-day operations of the company.

Division of responsibilities of the Chairman and Managing Director (CEO)

The positions and functions of the chairman and the managing Director have been separated; the role of the Managing Director is to manage the day-to-day running of the company.

A.2

Complied

The Board has delegated this responsibility to the managing Director and he then leads the corporate management team in making and executing operational decisions. The managing Director is also responsible for recommending strategy to the Board.

A.3 Chairman’s role The Chairman leads and manages the Board, ensuring that it discharges its legal and regulatory responsibilities effectively and fully preserves order and facilitates the effective discharge of the Board functions. The profile of the Chairman is given on pags 26.

The Chairman is as an outstanding business leader, provides leadership to the Board, controls and preserves order at Board meeting and provides the Board with strategic direction and guidance in managing the affairs of the company.

The chairman is also responsible for;

Role of the Chairman

A.3.1

Complied

Ensuring the new Board members are given an appropriate induction, covering terms of appointment, The effective participation of both executive and non-executive Directors, All Directors are encouraged to make an effective contribution, within their respective capabilities, for the benefit of the Company, A balance of power between executive and non-executive Directors is maintained, The views of Directors on issues under consideration are ascertained.

A.4 Financial Acumen The Code requires that the Board comprises of members with sufficient financial acumen and knowledge in order to offer guidance on matters on finance. The Board of the Company has met the above requirement as some of the Board members are qualified Accountants having professional qualifications and are equipped with sufficient financial acumen and knowledge to offer guidance on matters of finance.

Financial acumen and knowledge

A.4

Complied

The Board comprises two Chartered Accountants (CA Sri Lanka). One of them serves as chairman of the Audit Committee. These Directors add substantial value and independent judgment on the decision-making of the Board on matters concerning finance and investment.

A.5 Board Balance The Code requires that a balance is maintained between the executive and non-executive Directors (NEDs) so that no individual or a small group of individual Directors are able to dominate the Board’s decision-making.

The Board consists of three executive Directors and four non-executive Directors. Each of them brings to the Board, wide experience and the ability to exercise independence and judgment when taking informed decisions.

Presence of nonexecutive Directors

A.5.1

Complied

Four of the seven Directors are non-executive Directors, which is well above the minimum number prescribed by this code.

Criteria to evaluate independence of nonexecutive Directors

A.5.3

Complied

Please refer page 45. The Board considers non-executive

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

47

Signed declaration of independence by the non-executive Directors

A.5.4

Complied

Every non-executive Director of the company has made a written submission as to their independence against the specified criteria set out by the company, which is in line with the requirements of schedule K of the code of best Practices on corporate governance.

Determination of independence of the Board

A.5.5

Complied

The Board has determined the independence of Directors based on the declarations submitted by the non-executive Directors, as to their independence as a fair representation and will continue to evaluate their independence on this basis annually. No circumstances have arisen for the determination of independence by the Board, beyond the criteria set out in the Code. Independent non-executive Directors are: Snr. Prof. S.P.P. Amaratunge Mr. T. Dharmarajah Eng. W.A. Upali Gunawardena Mr. S.A. Wickramapala

Alternate Directors

A.5.6

N/A

No alternate Directors were appointed during the year.

Senior Independent Director

A.5.7

Complied

Mr. T. Dharmarajah, who is an independent non-executive Director, functioned as the senior independent Director. The senior independent Director has met with nonexecutive Directors twice and with the executive Directors once during the year to discuss and communicate governance related matters.

Confidential Discussions with senior independent Director

A.5.8

Complied

A Senior Independent Director is available for confidential discussions with other Directors who may have concerns which pertain to significant issues that are detrimental to the company.

Chairman’s meeting of non-executive Directors

A.5.9

Complied

The Chairman meets with the non-executive Directors without the presence of executive Directors, whenever necessary.

Recording of concerns in Board minutes

A.5.10

Complied

Concerns raised by the Directors which cannot be unanimously resolved during the year, if any, are recorded in the Board minutes with adequate details.

A.6 Supply of information Management should provide time-bound information in a format that is appropriate and enables the Board to discharge its duties. Financial and non-financial information is analyzed and presented to the Board to make informed and accurate decisions.

Obligation of the management to provide appropriate and timely information to the Board

A.6.1

Complied

The Board was provided with timely and appropriate information by the management by way of Board papers and proposals. The Board sought additional information as and when necessary. The Chairman also ensured all Directors were properly briefed on issues arising at Board meetings.

Adequate time for effective Board meetings

A.6.2

Complied

The minutes, agenda and papers required for board meeting are provided in advance to facilitate its effective conduct.

A.7 Appointments to the Board The code requires having a formal and transparent procedure in place for the appointment of new Directors to the Board.

Nomination committee

A.7.1

Complied

The nomination committee of the company consists of following members: Dr. Ravi Liyanage – Chairman Mr. Ganaka Amarasinghe Mr. T. Dharmarajah

Assessment of Board composition by the nomination committee

A.7.2

Complied

The nomination committee annually assesses Board composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company. The findings of such assessment are taken into account when new Board appointments are considered.

Disclosure of required details to shareholders on new appointments to the Board

A.7.3

Complied

When new Directors are appointed, a brief resume of each such Director, including the nature of his expertise, the names of companies in which the Director holds directorships, memberships in Board sub-committees etc., are reported to the Colombo Stock Exchange (CSE) in addition to disclosing this information in the Annual Report. Further, any changes in the details provided by the Directors are disseminated to the CSE without delay.

During the year, no new director was appointed to the Board.

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

A.8 Re-election The Code requires all Directors to submit themselves for re-election at regular intervals and at least once in every three years.

Appointment of nonexecutive Directors, Chief Executive and Directors

A.8.1

Complied

The provisions of the company’s Articles require a Director appointed by the Board to hold office until the next Annual General Meeting and seek re-appointment by the shareholders at that meeting.

Election of Directors by shareholders

A.8.2

Complied

The names of the Directors submitted for election or re-election, if any is accompanied by a resume to enable shareholders to make an informed decision on their election at the Annual General Meeting.

A.8.3

Complied

In the event of a Director resigning prior to his appointed term, written communication should be provided to the Board of his reasons for resignation. No Directors have resigned as such during the year.

Prior communication of resignation of a Director

A.9 Appraisal of Board Performance The Board should periodically appraise its own performance against the present targets in order to ensure that the Board responsibilities are satisfactorily discharged.

The Chairman and remuneration committee evaluate the performance of the executive Directors periodically

Annual performance evaluation of the Board and its committees

A.9.1 & 9.2

Complied

Evaluation at re-election

A. 9.3

Complied

Disclosure on performance evaluation criteria

A.9.4

Complied

The Board undertakes an annual self-evaluation of its own performance and of its committees. The Board evaluated its performance and effectiveness in the current year.

Board reviews the participation, contribution and engagement of each director at the re-election, if any.

Evaluation criteria with regard to Executive Directors are financial and non-financial targets set at the beginning of the year through the annual corporate plan.

Criteria relating to evaluation of Board committees are the performance against their duties referred in respective committee reports. Refer page 65 to 69.

A.10 Disclosure of information in respect of Directors The following details pertaining to each Director are disclosed as follows: Details in respect of Directors

A.10.1

Complied

(a) Brief profile with expertise and experience – Pages 26 to 29. (b) Directors’ interest in transactions and shareholding - Page 61. (c) Attendance to the Board meetings held during the year - page 44.

A.11 Appraisal of Chief Executive Officer The Board of Directors should annually assess the performance of the managing Director who performs the role of the Chief Executive Officer Targets for Managing Director

Evaluation of the performance of the Managing Director

A.11.1

A.11.2

Complied

Prior to the commencement of each financial year, the Board sets reasonable financial and non-financial targets which are in line with short, medium and longterm objectives of the company, achievement of which should be ensured by the Managing Director.

Complied

The performance is evaluated by the Board at each Board meeting and the overall evaluation at the end of each fiscal year in order to ascertain whether the targets set by the Board have been achieved and if not, whether the failure to meet such targets was reasonable in the circumstances.

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49

B. Directors’ Remuneration B.1 Remuneration procedure This principle ensures that the company has a well-established, formal and transparent procedure in place for developing an effective remuneration policy for both executive and non-executive Directors where no Director is involved in deciding his/her own remuneration in order to avoid potential conflict of interest.

Establishment of a remuneration committee

B.1.1

Complied

The committee is required to decide on the remuneration of the executive Directors and sets guidelines for the remuneration of the management staff within the company.

The Chairman and Managing Director are not members of this committee. Please refer page 67 for the remuneration committee report.

Composition of remuneration committee

B.1.2

Complied

The remuneration committee consists of three independent non-executive Directors and the chairman of this committee is appointed by the Board.

Chairman and the members of the remuneration committee

B.1.3

Complied

The remuneration committee consists of following independent non- executive Directors: Eng. W.A.U. Gunawardeana - Chairman Snr. Prof. S.P.P. Amaratunge Mr. S.A. Wickramapala

Determination of remuneration of the nonexecutive Directors

B.1.4

Complied

The Board as a whole determines the remuneration of the non-executive Directors including the members of the remuneration committee which the Board believes is in line with current market conditions.

Complied

Each committee member has the authority to seek internal and external independent professional advice on remuneration of other executive Directors and also on matters falling within its purview at the company’s expense. Views of the Chairman of each committee are obtained, in addition to the views of the Managing Director.

Consultation of the Chairman and access to professional advice

B.1.5

B.2 The Level and Make up of Remuneration The level of remuneration of both Executive and Non-Executive Directors should be sufficient to attract and retain the Directors needed to run the company successfully. A proportion of executive Directors’ remuneration should be structured to link rewards to the corporate and individual performance.

50

Level and makeup of the remuneration packages of executive Directors.

B.2.1

Complied

The Board is mindful of the fact that the remuneration of executive Directors should reflect the market expectations and is sufficient enough to attract, retain and motivate the executive Directors of the required competence in order to run the company.

Executive Directors’ remuneration

B.2.2

Complied

Executive Directors’ remuneration has been designed to promote the long term success of the company.

Competitiveness of levels of remuneration

B.2.3

Complied

The remuneration committee ensures that the remuneration of executives of each level of management including executive Directors is competitive and in line with their performance. Surveys are conducted as and when necessary to ensure that the remuneration is competitive and in line with those of comparative companies.

Comparisons of remuneration with other companies in the group

B.2.4

Complied

The remuneration committee reviews data concerning executive pay among other companies in the group.

Designing the performance-based remuneration for executive Directors

B.2.5

Complied

Performance-based incentives have been determined by the remuneration committee to ensure that the total earnings of the executive Directors are aligned with the achievement of objectives and budgets of the company.

Executive share options

B.2.6

N/A

Presently the company does not have an executive share option schemes.

Designing the Performance related remuneration of executive Director

B.2.7

Complied

The remuneration committee follows the provisions set out in schedule E of the code as required.

Early termination of executive Directors

B.2.8 B.2.9

N/A

Termination of executive Directors is governed by their contracts of service. No termination of executive Directors was happened during the year.

Levels of remuneration of non-executive Directors

B.2.10

Complied

Remuneration for Non-Executive Directors reflects the time commitment and responsibilities of their role, taking into consideration market practices

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

B.3 Disclosure of Remuneration The code requires the company to disclose in its Annual Report the details of the remuneration paid and the remuneration policy.

Disclosure of remuneration

B.3.1

Complied

Please refer page 115 for the total Directors’ remuneration.

C. Relations with Shareholders C.1 Constructive use of the Annual General Meeting (AGM) and conduct of General Meetings The Code requires the Board to use the AGM which is a major event in the company’s calendar to communicate with shareholders and encourage their active participation. In this regard, all shareholders of the company receive the notice of meeting within the statutory due dates.

Adequate notice of the AGM to shareholders

C.1.1

Complied

A copy of the Annual Report including financial statements, notice of the meeting and the form of Proxy is sent to shareholders 20 working days prior to the date of the AGM, as required by the statute, in order to provide the opportunity to all the shareholders to attend the AGM.

Separate resolution for substantially separate issues and adoption of Annual report and Accounts

C.1.2

Complied

The Board remains mindful of being accountable to shareholders and the need for transparency at all levels, striving to maintain its value framework in all shareholder dealings and communications.

Use of proxy votes

C.1.3

Complied

The company has in place an effective mechanism to count all proxies lodged on each resolution, and the balance for and against the resolution, after it has been dealt with on a show of hands, except where a poll is called.

Availability of all Board subcommittee chairmen at the AGM

C.1.4

Complied

The chairman of the company ensures the chairmen of Audit and remuneration committees are available to answer questions at the AGM if so requested by the chairman.

Procedures of voting at General Meetings

C.1.5

Complied

A summary of the procedures governing voting at general meeting is circulated to shareholders with every notice of the General Meeting.

C.2 Communication with Shareholders The code requires the Board to implement effective communication with shareholders.

Channel to reach all shareholders

The main mode of communication between the company and the A shareholder is the Annual General Meeting. Shareholders are provided with the information prior to the AGM. C.2.1

Complied

Further, financial and other announcements are promptly submitted to CSE to publish in the CSE website.

Comments and suggestions can be sent through Janaka@raigam.lk

Policy methodology for communication with shareholders.

C.2.2

Complied

An open door policy is in place, which enables shareholders to keep in constant touch, visit and obtain information from the company secretary.

Contact details are published in all annual and quarterly financial reporting.

Implementation of the policy and methodology for communication with shareholders.

C.2.3

Complied

Please refer C.2.4 and C.2.5 for the implementation of the policy and methodology.

Contact person for communication

C.2.4 & C.2.6

Complied

Details of contact persons are disclosed in the Annual Report. Page 5.

Process to make Directors aware of major issues and concerns of shareholders

The company secretary maintains a record of all correspondence received.

C.2.5

Complied

All major issues and concerns of the shareholders are referred to the Board of Directors with the views of the management.

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51

Response to the shareholders matters

C.2.7

Complied

The process for responding to shareholder matters have been formulated by the Board and disclosed. Such matters are responded at the shareholder meetings, publications at the CSE or communication by the company secretary to the shareholders.

C.3 Major Transactions Directors should disclose to shareholders all proposed corporate transactions which if entered into, would materially alter/vary the company’s Net Asset base or the consolidated group’s Net Asset base.

Disclosure on proposed major Transaction

C.3.1

Complied

During the year there were no major transactions as defined by Section 185 of the companies Act no. 07 of 2007 which materially affect the net asset base of company or the group’s consolidated net asset base.

Shareholders’ approval by Special Resolution

C.3.2

Complied

During the year there were no transactions/events which require approval by way of a Special Resolution. Complied with the disclosure requirements and approval by special resolution as required by the rules and regulations by SEC and CSE.

D. Accountability and Audit D.1 Financial and Business Reporting The Board should present a balanced and understandable assessment of the Company’s financial position, performance and prospects.

Board’s responsibility for statutory and regulatory reporting that is true and fair, balanced and understandable

D.1.1 and D.1.2

Complied

The Board has recognized the responsibility to present regulatory and statutory reporting in a balanced and understandable manner. When preparing Quarterly and annual financial statements, the company complied with the requirements of the companies Act no. 07 of 2007 and prepared and presented them in accordance with Sri Lanka Accounting Standards and Sri Lanka Financial Reporting Standard. The company has complied with the reporting requirements prescribed by the CSE.

Declaration by Chief Executive Officer and Chief Financial Officer

D.1.3

Complied

The Board before approving the financial statements for the period has obtained from Chief Executive Officer and Chief Financial Officer a declaration that, in their opinion, the financial records have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the company and that the system of risk management and internal control was operating effectively.

Declaration by Board

D.1.4

Complied

Directors have made all necessary declarations.

Refer the Directors' report in Annual report pages 60 to 63.

Statement of Boards and Auditor's responsibility and statement of internal control

D.1.5

Complied

This is given in the ‘Annual report of the Board of Directors’ on pages 60 to 63 and the ‘Statement of Directors’ Responsibility’ on page 64 and pertains to required declarations.

Management Discussion and Analysis

D.1.6

Complied

See Management Discussion and Analysis on pages 32 to 38.

Summon an EGM to notify serious loss of capital

D.1.7

Complied

Reason for such an EGM has not risen as yet but would be complied with if such a situation arises.

Disclosure of related party transactions

D.1.8

Complied

The Directors have instituted an effective and comprehensive system of internal control for identifying, recording and disclosing related party transactions.

All related party transactions, as defined in Sri Lanka Accounting Standard - ( LKAS 24 ) on Related Party Transactions are disclosed in note 26 to financial statements.

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

D.2 Risk Management and Internal Control The Board should have a sound system of internal controls to safeguard shareholders’ investments and the company’s assets.

Annual evaluation of the internal controls system

D.2.1

Complied

The Board is responsible for the company’s internal control and its effectiveness.

Internal control is established with emphasis placed on safeguarding assets, making available accurate and timely information and imposing greater discipline on decision-making. it covers all controls, including financial, operational and compliance controls and risk management. It is important to state, however, that any system can ensure only reasonable, and not absolute, assurance that errors and irregularities are prevented or detected within a reasonable time. The company’s internal audit department plays a significant role in assessing the effectiveness and successful implementation of existing controls and strengthening these and establishing new controls where necessary. Internal Audit reports are made available to the chairman and managing Director and the chairman of the Audit committee.

The Board has reviewed the effectiveness of the system of financial controls for the period up to the date of signing the accounts.

There is a direct channel of communication between the head of internal audit department and the chairman of the Audit committee without the interference of any Directors or executives.

Assessment of principle risks facing the company.

D.2.2

Complied

A strong assessment on risks involved in company has been carried out review the status on every meeting. Mitigating actions have been identified and continuously review the progress.

Refer page 70 for Risk Management.

Need for internal audit function

D.2.3

Complied

The company has its own internal audit department.

Review of the process and effectiveness of risk management and internal controls

D.2.4

Complied

The Audit committee reviews internal control issues and risk management measures and evaluates the adequacy and effectiveness of the risk management and internal control systems including financial reporting.

Directors’ responsibility of maintaining of a sound internal control system

D.2.5

Complied

Please refer Statement of Directors’ Responsibilities on page 64.

D.3 Audit committee The Board should have formal and transparent arrangements in selecting and applying the accounting policies, financial reporting and internal control principles and maintaining an appropriate relationship with the company’s external Auditor.

Audit committee consists of three independent non-executive Directors.

Composition of The Audit Committee

D.3.1

Complied

Mr. T. Dharmarajah - Chairman Snr. Prof. S. P. P. Amaratunge Mr. W. A. U. Gunawardena The Audit committee is required to help the company to achieve a balance between conformance and performance.

Duties of The Audit Committee

Terms of reference of The Audit Committee

D.3.2

D.3.3

Complied

The Audit Committee keeps under review the scope and results of the audit and its effectiveness, and the independence and objectivity of the auditors. Review of nature and extent of non-audit services provided by the auditors to seek balance objectivity and independence. Refer Audit committee report on page 65 for the duties.

Complied

Terms of Reference of the Audit Committee is clearly defined in the charter of the Audit committee approved by the Board of Directors. This clearly explains the purpose of the committee, its duties and responsibilities together with the scope and functions of the committee. The Committee is required mainly to deal with the matters pertaining to statutory and regulatory compliance in financial reporting, matters with regard to the external Auditors, Internal Audit and Risk Management procedures of the company. Please refer Audit Committee report on page 65.

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53

Disclosures of the Audit Committee

D.3.4

Complied

The names of the members of the Audit Committee are given under section D.3.1 of this code. The committee ensures that the rotation of external Audit Engagement Partner once every five years is met. The External Auditor, has provided an Independence confirmation in compliance with the “Guidelines for Appointment of Auditors of Listed Companies” issued by SEC. In order to safeguard the objectivity and independence of the external Auditor, the Audit committee reviewed the nature and scope taking account of the regulations guidelines stated in section D.3.2.

D.4 Related Party Transactions Review Committee The company should establish a procedure that it is not engaged in “Related Party Transactions” which is more favorable treatment than with third parties in the normal course of business.

Adherence to LKAS 24

D.4.1

Complied

Related Party transactions are defined as in LKAS 24

Related party Transactions Review committee

D.4.2

Complied

Related Party Transactions Review Committee was established on January 1, 2016 as a requirement under Section 9 of the Colombo Stock Exchange Listing Rules, in order to monitor and regulate related party transactions in the best interest of shareholders.

Terms of references of RPTR committee

D.4.3

Complied

Written terms of reference of the committee are available. Please refer Related Party Transactions Review Committee Report on page 68.

D.5 Code of Business Conducted and Ethics The company should develop a code of business conduct and ethics for Directors and members of the senior management team and must promptly disclose any waivers of the code for Directors or others.

Code of business conduct and ethics

D.5.1

Complied

The company has developed a code of conduct for its employees. This Code addresses conflict of interest, corporate opportunities, confidentiality of information, fair dealing, protection and proper use of the company’s assets, compliance with laws and regulations and encouraging the reporting of any illegal or unethical behavior, etc.

Material and Price sensitive information

D.5.2

Complied

Material and price sensitive information, if any is promptly identified and reported to the shareholders via CSE notices.

Policy and disclosures on share purchases by Directors

D.5.3

Complied

Company has a policy and process for monitoring and disclosure of shares purchased by any Director, key management personnel or any other employee involved in financial reporting. All disclosures are duly made in the CSE.

Affirmative statement by the chairman

D.5.4

Complied

See the 'The chairman’s statement' on page 18 for required details.

D.6 Corporate Governance Disclosure Directors of the company disclose annually the company’s adherence to the code of best Practice on corporate governance issued jointly by The Institute of Chartered Accountants of Sri Lanka and The Securities and Exchange Commission of Sri Lanka.

Disclosure of Corporate Governance

D.6.1

Complied

This requirement is met with the presentation of this report.

E. Institutional Investors E.1 Shareholders’ Voting Institutional shareholders are required to make considered use of their votes and are encouraged to ensure their voting intentions are translated into practice.

Communication with shareholders

54

E.1.1

Complied

In order to avoid conflicts of interest by nurturing mutual understanding, the Board carries out dialogue with its shareholders at general meetings in this regard, the AGM of the company plays a critical role. Voting by the shareholders is crucial in carrying a resolution at the AGM. The chairman, who plays the role of the agent, communicates the views and queries of the shareholders to the Board and the senior management, in order to ensure that the views are properly communicated to the company.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

E.2 Evaluation of Governance Disclosures The code requires the company to encourage institutional investors to give due weight to all relevant factors drawn to their attention.

Due weight by institutional investors

E.2.1

Complied

The institutional investors are encouraged to give due weight to all relevant matters relating to the Board structure and composition.

F. Other Investors F.1 Investing/ Divesting Decisions

Seek independent advice

F.1

Complied

Individual investors are encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions. The company’s website serves to provide a wide range of information on the company.

Complied

Individual shareholders are encouraged to participate in General Meetings of the company and exercise their voting rights.

F.2 Shareholder Voting Encourage Voting by individual investors

F.2

G. Internet of Things and Cyber-security Internal and external IT devices connected to the business model.

G.1

Complied

Connection of internal and external IT devices to the organization network has been allowed with necessary access controls and firewalls to safeguard the integrity of information.

Cyber information Security officer and cyber security risk management policy

G.2

Complied

Group’s Senior Manager – MIS monitors and reviews the security requirements of the company’s information system and has introduced and implemented a cyber-security risk management policy.

Discussions on cyber risk management

G.3

Complied

This is a regular agenda item of the risk management discussion of the Board and have given due attention.

Independent periodic reviews and assurance

G.4

Complied

Periodic reviews are carried out by the external auditors and consultants and observations are submitted to the Board for review and actions.

Disclosure on cyber security risk management

G.5

Not Complied

A detailed disclosure has not been made on the cyber security process in this Annual Report.

H. Environment, Society and Governance (ESG) H.1 ESG reporting The code requires the company to include the ESG factors in building its business model, strategy, governance and risk management framework.

Company ESG activities are not governed by specific ESG Committee appointed, rather the ESG activities are overlooked by the executive Directors and ensure that effective environmental, social and governance, best practices are implemented properly.

Provision of information on ESG

H.1.1

Complied

Company has included the environmental, social and governance factors in its business models and provided sufficient information on all aspects in the Annual Report.

The environment

H.1.2

Complied

The company adopts an integrated approach which mitigates the environmental threats and improves best practices in company’s engagements to fulfill the obligation towards the environment. Such best practices are pollution prevention, sustainable resource use, and protection of environment and restoration of natural resources.

Social factors

H.1.3

Complied

The company adopts an integrated approach to building relationship with the community in order to build a strong relationship and strives towards sustainable development.

Governance

H.1.4

Complied

The company establishes a governance structure to support its ability to create value and manage risks on all pertinent aspects of ESG.

Board’s role on ESG factors

H.1.5

Complied

The Board takes necessary measures to add value by providing a credible account of the company’s economic , social and environmental impacts.

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55

Section 02 Extent of compliance to the requirements of The Continuing Listing Requirements Section 7.10 on Corporate Rules for Listed Companies issues by Colombo Stock Exchange.

Section 7.10 on Corporate Governance for Continuing Listing Requirements issued by Colombo Stock Exchange requires the Company to be complied with criteria set.

Following table discloses the extent of adherence, whether complied or not and reference to the annual report pertaining to each sub rule.

56

Listing Rule No.

Subject Area

Extent of Compliance

Compliance

Reference in this Report

7.10.1(a) & (b)

Non-Executive Directors

Four (4) of the seven (7) Directors were Non-Executive Directors as at 31st March 2018

Complied

Corporate Governance

7.10.2(a)

Independent Directors

All four (4) Non-Executive Directors were independent as at 31st March, 2018.

Complied

Corporate Governance

7.10.2(b)

Independent Directors

All Non-Executive Directors have submitted signed and dated annual declaration of his independence/non-independence against the specified criteria.

Complied

Corporate Governance

7.10.3(a)

Disclosure relating to Directors

The Board has determined the independence/nonindependence of each Non-Executive Director based on annual declaration and other information available and has disclosed the names of Directors determined to be independent.

Complied

Corporate Governance

7.10.3(c)

Disclosure relating to Directors

A brief resume of each Director has been included in the Annual Report including the Director’s areas of expertise.

Complied

Board of Directors’ (profile) section in the Annual Report Page 26 to 29

7.10.5(a)

Composition of Remuneration Committee

The Remuneration Committee comprised of Three (3) Independent Non-Executive Directors as at 31st March 2018 and Mr. W.A.Upali Gunawardana headed the Committee.

Complied

Remuneration Committee Report Page 67

7.10.5(b)

Functions of Remuneration Committee

The Remuneration Committee recommended the remuneration of the Managing Director and the Executive Directors to the Board.

Complied

Remuneration Committee Report Page 67

7.10.5(c)

Disclosure in the Annual Report relating to Remuneration Committee

Names of Remuneration Committee members are given in the Remuneration Committee Report and it contains the statement of remuneration policy.

Complied

Aggregate remunerations paid to Executive and NonExecutive Directors are set out in this report

Remuneration Committee Report Page 67 Annual Report of Board of Directors Page 60

7.10.6(a)

Composition of Audit Committee

The Remuneration Committee comprised of Three (3) Independent Non-Executive Directors as at 31st March 2018 and Mr. T. Dharmarajah headed the Committee.

Complied

Audit Committee Report Page 65

7.10.6(b)

Functions of the Audit Committee

Audit Committee functions are stated in the Audit Committee Report

Complied

Audit Committee Report Page 65

7.10.6(c)

Disclosure in the Annual Report relating to Audit Committee

Complied

Audit Committee Report Page 65

The names of the Audit Committee members given in this Report.

The basis of determination of the independence of the Auditor is also given.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Section 03 Extent of compliance to the requirements of The Continuing Listing Requirements Section 9 on Related Party Transactions for Listed Companies issues by Colombo Stock Exchange.

Section 9 of the Listing Rules – Related Party Transactions requires the company to put in place the necessary processes to identify, review, disclose and monitor Related Party Transactions.

Following table portrays the extent of compliance by Raigam Wayamba Salterns PLC with Section 9 on Related Party Transactions for Listed Companies issues by Colombo Stock Exchange.

Listing Rule No.

Subject Area

Extent of Compliance

Compliance

Reference in this Report

9.2.1

Review of Related Party Transactions

Except for transactions set out in Rule 9.5, all other Related Party Transactions were reviewed by the Related Party Transactions Review Committee.

Complied

Related Party Transactions Review Committee Report Page 68

The RPTRC consists of following directors:

9.2.2

Composition of the Related Party Transactions Review Committee

Mr. S.A. Wickramapala - Independent Non-Executive Director - Chairman Mr. T. Dharmarajah - Independent Non-Executive Director - Member

Complied

Related Party Transactions Review Committee Report Page 68

Mr. G.V.P.G. Amarasinghe - Executive Director Member

9.2.3

Related Party Transactions Review Committee

The committee for Raigam Wayamba Salterns PLC was formed on 1st January 2016. The functions of the committee are stated in Related Party Transactions re-view Committee report.

Complied

Related Party Transactions Review Committee Report Page 68

9.2.4

Committee Meetings

The committee gathered 04 times during the financial year of 2017/2018

Complied

Related Party Transactions Review Committee Report Page 68

9.3.1

Immediate disclosures

Raigam Wayamba Salterns PLC has not involved in any non-recurrent related party transactions which requires immediate disclosure to the Colombo Stock Exchange.

Complied

Disclosure of Related Party Transactions Page 69

9.3.2 (a)

Disclosures in the Annual Report - Non-recurrent Related Party Transaction

Company has not involved with an Non recurrent related party transactions with aggregate value exceeds 10% of the equity or 5% Total assets whichever is lower.

Complied

Disclosure of Related Party Transactions Page 69

9.3.2 (b)

Disclosures in the Annual Report Recurrent Related Party Transaction

Company has involved in purchase/provision of goods/ services and settlement for such purchase/provision which are carried out on a continuing basis in ordinary course of business of the company. Accordingly, those transactions of which aggregate value exceeds 10% of Gross Revenue of latest audited accounts have been duly disclosed.

Complied

Disclosure of Related Party Transactions Page 69

9.3.2 (c)

Report by the Related Party Transactions review Committee

Refer page 68 for the Related Party Transactions review Committee report

Complied

Related Party Transactions Review Committee Report Page 68

9.3.2 (d)

An affirmative statement of compliance by Board of Directors

The Annual Report of Board of Directors contains an affirmative statement of compliance.

Complied

Annual report of Board of Directors Page 60

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57

Annual Report of Board of Directors The Directors of Raigam Wayamba Salterns PLC present their report together with the Audited Financial Statements of the Company and of the Group for the year ended March 31, 2018.The details set out herein provide the pertinent information required by the Companies Act No. 7 of 2007, Listing Rules of the Colombo Stock Exchange, and Securities and Exchange Commission of Sri Lanka and are guided by recommended best Accounting Practices.

Operational Review

Principal Activities

For the year ended 31 March,

The principal activity of the Company is manufacturing and distribution of edible and industrial salt. There were no significant changes in the activities of the Company in the year under review. A review of Company performance during the year with brief comments on the financial results and prospects are contained in the CEO’s Review and the Management Review of this Annual Report. These reports 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 Statements The Financial Statements of the Company and Group are given on pages 79 to 117.

Independent Auditor’s Report Independent Auditors’ Report on the Financial Statements is given on pages 76 to 78.

Accounting Policies The accounting policies adopted by the Company and its subsidiary in the preparation of the Financial Statements are given on pages 84 to 94.

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Turnover The turnover of the Group was Rs. 791,505,921 (2017 – Rs. 778,703,892) and a composition of revenue is given in Note 03 to the Financial Statements.

Financial Performance and Position - Group

2018 Rs.

2017 Rs.

Turnover

791,505,921

778,703,892

Gross Profit

292,792,509

272,713,362

Profit Before Tax

185,005,393

170,025,686

Profit After Tax

148,162,906

108,659,822

Total Assets

1,259,477,438

1,141,871,925

Net Assets

1,108,870,136

1,011,116,665

Property, Plant and Equipment The total capital expenditure incurred on the acquisition of property, plant and equipment during the financial year amounted to Rs. 18,247,215 (2017 – Rs. 29,617,827), out of which expenditure on salterns and field development amounted to Rs. 3,318,229 (2017 - Rs. 7,858,437). Further information relating to the movement of property, plant and equipment is given in Note 04 to the financial statements.

Capital expenditure has been financed by short term borrowings and or internally generated funds.

Stated Capital The stated capital of the company as at 31 March 2018 was Rs. 604,414,640. Details of the Stated Capital are given in Note 11 to the Financial Statements.

Donations The donations made during the year by the Group amounted to Rs. 894,614 (2017- Rs. 585,585).

Taxation Pursuant to agreement dated 20 March 2006 entered into with Board of Investment of Sri Lanka under Section 17 of the Board of Investment Law, the Company was exempt from the business of manufacturing for a period of 8 years from year 2007.

This exemption was expired on the 31st of March 2014 and for the immediately succeeding two years the Company was liable to pay income tax at the rate of 10% and from 2016/2017 onwards the Company is liable to pay at the rate of 20%.

Directors' Interests in Contracts with the Company Directors’ interests in contracts are disclosed in the Related Party Transactions under Note 26 to the Financial Statements.

Directors' Interests in Shares Directors' shareholding of the Company as at 31st March 2018 is as follows.

Name o the Director

Number

%

Major Shareholders

Dr. Ravi Liyanage

505,516

0.18%

The details of 20 major shareholders of the Company as at 31 March 2018 have been set out under "Investor information" in page 120.

Mr. Ganaka Amarasinghe

250,000

0.09%

Directors The names of the Directors who held office during the year are given below. Their brief profile has been set out under the content of "Board of Directors." in page 26-29.

Names of Directors Dr. Ravi Liyanage Mr. G. V. P. G. Amarasinghe Mr. K. R. Theodore Snr. Prof. S. P. P. Amaratunge Mr. T. Dharmarajah Mr. W. A. U. Gunawardane Mr. S. A. Wickramapala The balance of the composition of the Board between executive and non-executive is well structured by having four numbers of non-executive independent directors and three numbers of executive directors.

Further, resolutions will be tabled at the forthcoming Annual General Meeting to re-elect Mr. S. A. Wickramapala and Mr. W.A. Upali Gunawardena who are above the age of 70 years and who are to be retired at the end of the Annual General Meeting in terms of section 210 of the Companies Act No 07 of 2007.

Directors' Remuneration and Other Benefits Executive Directors’ remuneration is established within an approved framework by the Board’s Remuneration Committee, to whom this task has been entrusted. The total remuneration of Executive Directors for the year ended 31st March 2018 was Rs. 4,110,000 (2017 – Rs. 4,050,000), which includes the value of perquisites granted to them as part of their terms of service. The total remuneration of non-executive Directors for the year ended 31st March 2018 was Rs. 1,920,000 (2017 – Rs. 1,840,000) determined according to scales of payment decided upon by the Board. The Board is satisfied that the payment of this remuneration is fair to the Company.

Environmental Protection The Company activities may have indirect effect on the environment. It is the policy of the Company to minimize any adverse effects as much as possible and creating awareness among staff on current global environment threats.

Employment Policy The Company's recruitment and employment policy is non-discriminatory. Employees’ appraisals are carried out by the respective Departmental Heads annually in order to evaluate their performances and realize their potential to benefit the Company and employees.

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61

Issues Pertaining to Employees and Industrial Relationship

Directors' Responsibility for Financial Reporting

The Board of Raigam Wayamba Salterns PLC assesses all the issues with regard to employees and industrial relation which influence the performance of the Group. The Group take considerable amount of steps to ensure employees are satisfied at all the levels and their issues are addressed in order to retain talented employees. A well-structured grievance handling system is in place to manage the grievance of employees at all levels. We make sure to maintain pertinent industrial relationship with all the governmental agencies. There are no issues which affect the Company’s performance to be disclosed.

The Directors are responsible for the preparation of the Financial Statements of the Company to present a true and fair view of the state of its affairs.

The Directors are of the view that these Financial Statements have been prepared in conformity with the requirements of the Sri Lanka Accounting Standards, Companies Act No 7 of 2007, Sri Lanka Accounting and the Listing Rules of the Colombo Stock Exchange.

Statutory Payments The Directors, to the best of their knowledge and belief, are satisfied that all statutory payments have been made up to date.

Events after the Reporting Period Further to the Note No 28, Events after the reporting period, no circumstances have arisen since the date of Statement of Financial Position, which would require adjustment or disclosure in the Financial Statements.

Corporate Governance / Internal Controls Adoption of good governance practices has become and essential requirement in today’s corporate culture.

The Company has complied with the Corporate Governance rules laid down by the Colombo Stock Exchange. The practices carried out by the Company are explained in the Corporate Governance statement on pages 44 - 58.

The Directors acknowledge their responsibility for the Group’s system of internal control. The system is designed to give assurance regarding the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information generated. However, any system can only ensure reasonable and not absolute assurance that errors and irregularities are either prevented or detected within a reasonable time period. The Board, having reviewed the system of internal controls, is satisfied with its effectiveness for the period up to the date of signing the Financial Statements.

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

The Statement of Directors’ Responsibility for Financial Reporting is given on page 64 which forms an integral part of the Annual Report of the Board of Directors.

Auditors The Financial Statements for the year ended 31 March 2018 have been audited by Messrs. Ernst & Young, Chartered Accountants. In accordance with the Companies Act No. 7 of 2007, a resolution proposing re-appointment of Messrs.

Ernst & Young as Auditors to the Company and authorizing the Directors of the Company to fix their remuneration will be forwarded at the Annual General Meeting.

The audit fees of Messrs. Ernst & Young for the current year Rs. 499,944 (2017 - Rs. 416, 491) is paid by the Company. As far as the Directors were aware the Auditors do not have any relationship other than that of an Auditor with the Company.

Dividend The Board of Directors has authorized the payment of first and final dividend of Rs. 0.10 per share payable on September 10, 2018 to the shareholders of the issued ordinary shares of the Company as at close of business on August 30, 2018.

The Directors have confirmed that the company satisfied the solvency test requirement under Section 56 of the Companies Act No. 7 of 2007 for the said First & Final dividend proposed.

A solvency certificate by the auditors has been received in respect of the First & Final dividend proposed.

Going Concern The Directors’ after making necessary inquiries and reviews including review of the Group’s budget for the ensuing year, capital expenditure requirements, future prospects and risks, cash flows and borrowing facilities have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Therefore, the going concern basis has been adopted in the preparation of the Financial Statements.

Related Party Transactions Further to the request under Section 9.3.2(d) of the Colombo Stock Exchange Listing Rules, the Board of Directors would like to hereby declare and confirm that there had been related party transactions during the financial year 2017/2018, and all such transactions were proceeded as per provisions stipulated under Section 9 of the Colombo Stock Exchange Listing Rules with respect to Related Party Transactions.

The Committee met four (04) times during the financial year 2017/18. Meetings held on May 30, 2017, August 17, 2017, November 30, 2017 and February 27, 2018.

Annual General Meeting The Annual General Meeting will be held at 9.00 a.m. on 30th August 2018 at the Auditorium of the Centre for Banking Studies – Central Bank of Sri Lanka, No. 58, Sri Jayewardenapura Mawatha, Rajagiriya. The Notice of Annual General Meeting is attached hereto the report.

By Order of the Board

Dr Ravi Liyanage Chairman 30 July 2018

Ganaka Amarasinghe Director / CEO 30 July 2018

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Statement of Directors' Responsibility As stipulated by the Companies Act No. 07 of 2007, the Directors are responsible for the preparation and presentation of financial statements comprising an Income Statement for the year and a Statement of Financial Position which presents a true and fair view of the state of affairs of the company as at the end of the financial year, which have to be placed before the AGM. In keeping with the provisions under the above Act, the Directors of Raigam Wayamba Salterns PLC, acknowledge their responsibility in relation to financial reporting of the company. The responsibilities differ from those of its Auditors, Messrs Ernst & Young, which are set out in their report.

The Financial Statements of the company for the year ended 31 March 2018 included in this report, have been prepared and presented in accordance with the Sri Lanka Accounting Standards (comprising SLFRS & LKAS), and they provide the information as required by the Companies Act No. 7 of 2007, Sri Lanka Accounting Standards (comprising SLFRS & LKAS) and the Listing Rules of the Colombo Stock Exchange. The Directors confirm that suitable accounting policies have been used and applied consistently, and that all applicable accounting standards have been followed in the preparation of the Financial Statements. All material deviations from these standards if any have been disclosed and explained. The judgments and estimates made in the preparation of these Financial Statements are reasonable and prudent.

The Directors confirm their responsibility for ensuring that the Company maintains accounting records, which are sufficient to prepare Financial Statements that disclose with reasonable accuracy, the financial position of the Company. They also confirm their responsibility towards ensuring that the Financial Statements presented in the Annual Report give a true and fair view of the state of affairs of the Company as at 31 March 2018 and that of the profit for the year then ended.

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Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

The overall responsibility for the Company's internal control systems lies with the Directors. Whilst recognizing the fact that there is no single system of internal control that could provide absolute assurance against material misstatements and frauds, the Directors confirm that the prevalent internal control systems instituted by them and which comprise internal checks, internal audit and financial and other controls are so designed that, there is a reasonable assurance that all assets are safeguarded and transactions properly authorized and recorded, so that material misstatements and irregularities are either prevented or detected within a reasonable period of time.

The Directors are of the view that the Company has adequate resources to continue operations in the foreseeable future, and have continued to use the going concern basis in the preparation of these Financial Statements.

The Directors have provided the External Auditors Messrs. Ernst & Young, Chartered Accountants with every opportunity to carry out reviews and tests that they considered appropriate and necessary for the performance of their responsibilities. The Auditors have examined the Financial Statements together with all financial records and related data they may have considered to be appropriate to enable them to express their opinion.

Compliance Report The Directors confirm that to the best of their knowledge, all statutory payments relating to employees and the government that were due in respect of the Company & its subsidiary as at end of the reporting period have been paid or where relevant, provided for.

By Order of the Board

Dr. Ravi Liyanage Chairman 30 July 2018

Report of the Audit Committee In keeping with the Code of Best Practice on Corporate Governance and the requirements of the Securities and Exchange Commission for Public Limited Companies, Raigam Wayamba Salterns PLC has established an Audit Committee whose functions, authority and duties have been clearly identified in the Audit Committee Charter. This Charter integrates all the requirements of the Securities and Exchange Commission and Code of Best Practice on Corporate Governance.

The Role of the Audit Committee is to oversee the financial reporting systems of the Company with a view of safeguarding the interests of all the stakeholders and ensuring that it has been extended to its subsidiaries. This includes selecting and applying appropriate accounting policies for the purpose of financial reporting, ensuring sound internal control principles and its effective implementation, ensuring the integrity of Financial Statements and maintaining an appropriate independent relationship with the Company’s Auditors.

Formation and Composition of the Committee The Audit Committee was established by the Board with a formal and transparent arrangement and the Committee comprises of three Independent NonExecutive Directors.

Mr. T. Dharmarajah (Chairman) Snr. Prof. S. P. P. Amaratunge Mr. W. A. Upali Gunawardena The Chairman of the Audit Committee is Mr. T. Dharmarajah, who is an Independent Non-Executive Director, a fellow member of The Institute of Chartered Accountants of Sri Lanka and a Senior Partner of Messrs Amerasekera and Company, a well-recognized firm of Chartered Accountants in Sri Lanka, with expert knowledge in Accounting and Finance.

Duties and Responsibilities In brief, the duties and responsibilities performed by the Audit Committee are as follows ² Recommending the appointment of external auditors of Raigam Wayamba Salterns PLC for each financial year. ² Examine any non-audit work performed by the Auditors and the fees thereon to ensure that their objectivity and independence is not impaired. ² Reviewing the scope and result of the audit and its effectiveness. ² Discussing with the External Auditors before commencement of the audit and at the conclusion of the audit, in relation to audit plan, key audit issues and their resolution, management responses and recommending to the Board and the remuneration of the auditors. ² Reviewing the extent of compliance with the laws of the country, Governmental regulations, listing rules and established policies of the Company. ² Ensuring that the company’s internal controls and risk management practices are adequate to meet the requirements of the Sri Lanka Auditing Standard, and are being duly performed. ² Reviewing and discussing the business risk management processes and procedures adopted by the Group to manage and mitigate the effects of such risks and measures taken to minimize the impact of such risks.

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65

² Monitoring the policies and practices related to risk management. ² Ensuring proper standardized updated systems for financial reporting. ² Holding of meetings with the Head of Finance to ensure proper controls and segregation of duties to minimize risks. ² Reviewing Company’s quarterly unaudited and annual Audited Financial Statements and making recommendations to the Board for their approval and release.

Meetings The Audit Committee held four meetings during the year under review. The proceedings of the Audit Committee are regularly reported to the Board of Directors. The Chairman of the Audit Committee has been empowered to convene regular meetings

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with the Director Finance, sectional heads and Company’s external auditors, separately and periodically as deemed necessary. The Board reviews and updates the Committee Charter annually according to the changes in business operations of the organization. The minutes of the meetings and reports from the Audit Committee are submitted to the Board of Directors.

Conclusion The Audit Committee is satisfied that the control environment adopted in the organization provides reasonable, but not absolute assurance that the financial position of the company is satisfactory and that systems are in place to minimize the impact of identifiable risks and that the Listing Rules of the Colombo Stock Exchange have been met.

T. Dharmarajah

Chairman - Audit Committee 30 July 2018

Report of the Remuneration Committee In Accordance with the Corporate Governance Guidelines, the Board has appointed the Remuneration Committee which consists of three independent non-executive directors. The members are: Mr. W. A. Upali Gunawardena (Chairman) Snr. Prof. S. P. P. Amaratunge Mr. S. A. Wickramapala A brief profile of the members are given in pages 26 to 29.

The Committee studies and recommends the remuneration and perquisites applicable to executive directors and other Key Management personnel of the Company and makes appropriate recommendations to the Board of Directors of the Company for approval.

The Group policy on remuneration packages is to attract and retain the best professional

managerial talent to the Group and also to motivate and encourage them to perform at the highest possible level. The Group has a structure and professional methodology in evaluating the performance of employees. The policy ensures equity and fairness between the various employees is maintained, no discrimination is practiced on account of gender, age, ethnicity or religion, recognizes the basic needs of staff and ensures that compensation addresses cost of living and inflation, particularly in the lower income groups.

The Committee also carries out periodic reviews to ensure that the remunerations are in line with market conditions.

W. A. U. Gunawardana

Chairman - Remuneration Committee 30 July 2018

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Report of the Related Party Transaction Review Committee The Related Party Transaction Review Committee (RPTRC) was constituted by the board of directors on 01st January 2016 further to the provisions contained in Section 9 of the Listing Rules of the Colombo Stock Exchange (CSE).

Composition of the Committee The Committee comprised of the following members & they met 04 times during the year under review, Mr. S. A. Wickramapala (Chairman) – Non Executive / Independent Director Mr. T. Dharmarajah - Non Executive / Independent Director Mr. G. V. P. G. Amarasinghe – Executive Director / Chief Executive Officer

Purpose of the Committee The purpose of the Committee is to assist the Board in meeting its oversight responsibilities to ensure that the interest of shareholders as a whole, are taken into account when entering into related party transactions.

The RPTRC reviews all the Related Party Transactions of the Group and where the Committee decides that the approval of the Board of Directors of the respective companies is necessary to approve a Related Party Transaction, such Board approval is obtained prior to entering into the relevant Related Party Transaction.

When reviewing a transaction, the RPTRC would decide whether the proposed transaction is carried out on an arm’s length basis irrespective of whether recurrent or non-recurrent in nature.

Reviewing and approval would be either by meeting of members (subject to quorum being present) or by circulation.

In determining whether to obtain the approval of the Board of Directors for a Related Party Transaction, the RPTRC will take into account, among other factors it deems appropriate, whether the proposed RPTs pose a conflict of interest to the Directors.

The self-declarations from the Directors and Key Management Personnel are obtained for the purpose

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of identifying parties related to them. Further, the guidelines which senior management must follow in routing Related Party Transactions to the relevant forum, including transaction threshold values and pricing where applicable, have been documented even in the case of once approved recurrent transactions which are of operational nature, which as per the RPT code need not be repeatedly approved if within the broad thresholds.

The RPTRC in discharging its function has introduced processes and periodic reporting by the relevant entities with a view to ensuring that: ² There is compliance with the Code; ² Shareholder interests are protected; and ² Fairness and transparency are maintained.

The Committee has criteria for designating Group Key Management Personnel (KMP). Further, processes have been introduced to obtain annual disclosures from all KMPs so designated.

The Related Party Transactions of the Company for the period 1st April 2017 to 31st March 2018 have been reviewed by the Members of the RPTRC and the comments and observations of the Committee have been communicated to the Board of Directors of the Company.

Meetings The committee meetings were held four times during the year under review on 30th May 2017, 17th August 2017, 30th November 2017 and 27th February 2018.

Disclosures A detailed disclosure of all the related party transactions including Recurrent and Non Recurrent related party transactions which are required to be disclosed under section 9.3.2 of the listing rules of the Colombo Stock Exchange has been made in Page 69.

S. A. Wickramapala

Chairman – Related Party Transactions Review Committee 30 July 2018

Disclosure of Related Party Transactions Non-recurrent Related Party Transactions and Recurrent Related Party Transactions which meet the threshold criteria set out in Sections of 9.3.2 (a) and 9.3.2 (b) of Listing Rules pertaining to Related Party Transactions issued by Colombo Stock Exchange are required to be disclosed in the Annual Report.

01. Non-recurrent Related Party Transactions (Section 9.3.2 (a)) Raigam Wayamba Salterns PLC has not involved in any non-recurrent related party transactions which aggregate value exceeds 10% of Equity or 5% of total Assets

Name of the Related Party

Southern Salt Company (Pvt) Ltd

Raigam Eastern Salt Company (Pvt) Ltd

Relationship

Nature of the Transaction

Purchase of Goods/Services Subsidiary Settlements for purchase of Goods/Services Purchase of Goods/Services

Subsidiary of the ultimate Settlements for parent company purchase of Goods/Services Purchase of Goods/Services

Puttalam Salt Ltd.

Associate of the ultimate parent company Settlements for purchase of Goods/Services

whichever is lower, as per audited financial statements for 2017/2018.

02. Recurrent Related Party Transactions (Section 9.3.2 (b)) During the year under review, the Company has involved in Recurrent Related Party Transactions which are carried out on a continuing basis in ordinary course of business.

Such Recurrent Related Party Transactions of which the aggregate value exceeds 10% of the gross revenue/ income are shown in the stipulated format below.

Aggregate value Aggregate value of Related Party of Related Party Transactions Year Transactions entered as a % of Net into during the financial year Revenue/ Income 2017/2018

89,520,900

2016/2017

92,035,151

2017/2018

88,310,159

2016/2017

89,634,754

2017/2018

63,487,756

2016/2017

84,414,406

2017/2018

59,726,842

2016/2017

84,414,406

2017/2018

116,895,533

2016/2017

31,657,720

2017/2018

97,935,715

2016/2017

31,657,720

Terms and Conditions of the Related Party Transactions

11% Arm’s length Transaction on normal 13% commercial terms.

Arm’s length Transaction on normal 12% commercial terms.

10%

Arm’s length Transaction on normal 12% commercial terms.

8%

7% Arm’s length Transaction on normal 12% commercial terms.

Arm’s length Transaction on normal 4% commercial terms.

14%

12% Arm’s length Transaction on normal 4% commercial terms.

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Risk Management Risk management is an integral part of our business, since balancing risks against returns is a critical trade off decision we have to make every day when it comes to investment decision making. We have in place several measures to strengthen our risk management processes which are linked to our daily investment decisions. These include policies to mitigate business risks along with the upgrading of the support systems that enable easy monitoring and management risks.

We reviewed and refined our investment processes balancing rigor and consistency with responsiveness and flexibility. The aim was to lay a sound foundation to integrate our risk management activities as part and paeial of our operations. The board of directors places special consideration on mitigating of those risks to possible extent.

The strategies the Group adopts to manage risk depend on the type of risk and the severity of the risk, which are outlined as follows, ² Accepting the consequences of the risk and budgeting for it.

Board of Directors

Audit Committee

Chief Executive Officer Senior Management (Functional)

Internal Audit

Risk Management Process The Group’s key risk exposures are identified through a review process which evaluates risks stemming from the economic and industry environments as well as social and environmental factors. The Process of risk management in the RWS group can be depicted as follows.

5

Risk Monitoring

² Avoiding the possibility of the risk occurring.

4

² Transferring the risk to another party.

Risk Treatment

Risk Management Structure The Board has the preliminary responsibility for ensuring whether the risks are identified and appropriately managed via the Group. The Audit Committee has been delegated to review the effectiveness of the risk management process, including the systems set for identifying, assessing, managing and monitoring risks by, the Board of Directors. The internal audit department of the company also plays a major role in risk identification. The corporate management team plays the prime role in the total risk management process of identification of risks and eventually the enactment of mitigating plans and monitoring of identified risks.

The corporate management team also evaluates possible alternatives available to mitigate identified risks. Functional managers deliver valuable information and responses to the corporate management team for risk management with the aid of the employees.

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3

Risk Reporting

2 1

Risk Assessment

The Organization’s Strategic Goals and Objectives

Risk Assessment Raigam Wayamba Salterns PLC follows the COSO framework for risk assessment. This framework requires any risk to be assessed based on the likelihood and the impact. COSO risk assessment framework can be presented in following matrix.

According to the matrix, top right corner risks are assessed as highest risks and such risks require prompt attention.

Risk Categorization Business & Operations

High (3)

Likelihood

² Business Risk

Finance ² Foreign Exchange Risk

Moderate (2)

² Project

Environment ² Regularity and

Reputation ² Quality

Complains Risk

² Interest Rate Risk

² Legal Risk

² Customer Service

Development Risk ² Technological Risk

² Credit Risk

² Human Risk

Low (1)

² Commodity Price

Low (1)

Moderate (2)

High (3)

Impact

Risk ² Cost Overrun Risk ² Operational Risk

Risk Mitigation Actions The table below sets out the broader categories of risks, their effects, assessment of their likelihood of occurrence and impact and mitigating actions for such identified risks.

Risk Category

Effect

Commodity Price Risk

Impact to profitability due to fluctuation of raw material sourcing prices from time to time, especially raw crystal salt purchasing prices depending on harvest quantities and qualities from harvesting season to season.

Business Risk

Likelihood

Impact

Mitigating Actions

High

High

Entering into purchasing agreement with suppliers, deploying special purchasing plans on right time by purchasing division and passing the cost increases to customers.

Obsolescent of existing technology due to innovation in the industry.

High

High

Backward integration, obtaining expert knowledge on forecasting and assumptions.

Technological Risk

Introduction of new regulations affecting the business adversely.

High

High

Foreign consultancy, training.

Regulatory And Compliance Risk

Introduction of new regulations affecting the business adversely.

Moderate

Moderate

Monitoring of compliance with regulatory requirements. Participate in lobbying efforts against regulations that could have a negative impact on business / industry.

Human Risk

Adverse impact on business competitiveness due to the inability to recruit / retain required talented staff.

Low

High

Build strong employer brand.

Project Development Risk

Delays in project development due to deadlocks leading to loss of revenue E.g. Delay in granting approval by related authorities for project related matters.

Low

High

Building and maintaining a good rapport with the stakeholders to minimize project development delays.

Credit Risk

Liquidity position being negatively affected due to delays / non-payments from debtors.

Low

High

Protection through legally enforceable agreements.

Legal Risk

Non adherence to the rules and regulations set out in numerous government Acts.

Low

High

Awareness of those regulations and policy level arrangement to address those risks.

Quality Risk

Potential adverse impact on company's image due to low quality.

Low

High

Conducting internal and external audits. Holding the prestigious ISO 9001 and assessing quality management system frequently.

Customer Service Risk

Risk arising from poor customer service pose a major threat to the reputation.

Low

High

Having customer inquiry system with a sound technical sport system.

Cost Overrun Risk

Returns from new projects being lower due to actual project cost overruns.

Low

Low

Making accurate project cost estimates using expert knowledge and adopting budgetary controls on development cost.

Operational Risk

Losses due to fraud, human errors, inefficient processes, natural perils and loss of sensitive information.

Low

Low

Conduct periodic internal audit reviews which report to the Audit Committee of the company.

Working out a business continuity plan to ensure disaster preparedness. Appropriate insurance covers.

Interest Rate Risk

Adverse impact on profitability due to interest rate fluctuations.

Low

Low

Use of flexible financial sources and arrangements.

Foreign Exchange Rate Risk

Adverse impact on profitability due to exchange rate fluctuations.

Low

Low

Managing foreign exchange rate exposures by applying financial risk management techniques

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Stakeholder Engagement A person, group or organization that has interest or concern in our company is defined as a stakeholder of Raigam Wayamba Salterns PLC. In the setting of sustainable growth, it is vital that we engage with both types of stakeholders of internal and external.

Considering their materiality to the business and level of interest, we have identified seven groups of stakeholders who have interest in us. Our stakeholder engagement process ensures that we identify stakeholder requirements and effectively address any queries and topics of interest with discussion and involvement.

Shareholders

Employees

Prove Commitment Disclosure

Community

Balance Interest

Distributors Raigam Wayamba Salterns PLC

Equitable Treatments

Reputation Indentify & Engage Government and Regulatory Bodies Salterns

Customers

Suppliers

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Our Relationship with Stakeholders Stakeholder

Interest area

Employees

² ² ² ² ²

Company performance Job security Benefits program Compensation Education & training program

Shareholders

² ² ² ² ²

Annual General Meeting Annual Report Dividend Share price Press conferences and releases

Distributors

² ² ² ² ²

On time distribution Transport cost Free issue Distributor discounts Merchandizing

² ² ² ²

Field visits Telephonic inquiries Personal meetings Workshops

Customers

² ² ² ²

Price Quality Health Regulatory compliance

² ² ² ²

Regular advertisements Communication through brand managers Direct contacts Market surveys

Suppliers

Government and Regulatory Bodies

Community

² Cost and Quality ² Credit period ² Relationship

Mode of engagement ² ² ² ²

Training sessions Face to face communication Telephonic conversations Annual events

² Conducting AGM as per requirements ² Annual dividend recommendations by the Board to AGM ² Conducting press conferences to inform future steps

Frequency ² Annual employee evaluation ² Training programs when required ² Monthly operational review ² Annual AGM ² Annual dividend ² Regular monitoring of share price ² Press conferences once required

² Annual sales conference ² Ongoing road shows

² Ongoing

² One-to-one meetings ² Supplier Contracts

² Annual contract renewal ² Ongoing

² Ongoing

² ² ² ²

Compliances Jobs Minimum investment Eco friendliness

² Liaising ² Direct communication ² Compliance monitoring

² ² ² ²

Jobs Safety Environmental protection Donations

² ² ² ²

Sponsorships Disaster management plan Public events CSR activities

² Ongoing

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Financial Statements

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF RAIGAM WAYAMBA SALTERNS PLC

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

In our opinion, the accompanying financial statements of the Company and the Group give a true and fair view of the financial position of the Company and the Group as at 31 March 2018 and of their financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards (“SLASs”).

Basis for opinion We 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

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of the Group in accordance with the Code of Ethics issue by The Institute of Chartered Accountant of 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 matters Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements of the current period. These matters were addressed in the context of the audit of the financial statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

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

Description of the Key Audit Matter

How our audit addressed the key audit matter

Valuation of land, buildings and salterns development As of 31 March 2018 the Group carried free hold land, buildings and salterns developments at fair value amounting to Rs. 485,883,052 which represents 39% of the total assets of the Group. The fair value of such property was determined by external valuer engaged by the Group. The valuation of land, buildings and salterns developments was significant to our audit due to the use of significant estimates such as per perch price and value per square foot as further disclosed in note 4 to the financial statements.

Other information included in the Company’s 2017/18 Annual Report Other information consists of the information included in the Annual Report, other than the financial statements and our auditor’s report thereon.

Management is responsible for the other information.

Other information is expected to be made available to us after the date of this auditor’s report.

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 identified above when it becomes available 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.

Responsibilities of management and those charged with governance for the financial statements Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with SLASs, and for such internal control

Our audit procedures focused on the valuation performed by external valuer engaged by the Group and assessment made by the valuer on the valuation, and included the following; • Assessed the competency, capability and objectivity of the external valuer engaged by the Group • Read the professional valuer’s report and understood the key estimates made and the approach taken by the valuer in determining the valuation of each property • Engaged our internal experts to assess the reasonableness of the valuation technique, per perch price and value per square foot • We have also assessed the adequacy of the disclosures made in note 4 to the financial statements relating to the valuation technique and estimates used by the professional valuer.

as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor’s responsibilities for the audit of the financial statements Our 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.

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As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• 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 of the Company and the Group.

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

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

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision • Evaluate the overall presentation, structure and

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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 relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

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

The Institute of Chartered Accountant of Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 1864.

30 July 2018 Colombo

STATEMENT OF PROFIT OR LOSS Year ended 31st March 2018

Group Note

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

791,505,921

778,703,892

734,080,595

723,425,555

Cost of Sales

(498,713,412)

(505,990,530)

(507,407,457)

(535,098,153)

Gross Profit

292,792,509

272,713,362

226,673,138

188,327,402

1,642,235

3,266,308

1,642,235

3,266,308

Administrative Expenses

(68,954,408)

(64,547,105)

(46,907,269)

(46,308,182)

Selling and Distribution Expenses

(69,361,505)

(58,645,805)

(60,182,900)

(48,842,574)

Results From Operating Activities

156,118,832

152,786,760

121,225,205

96,442,954

Revenue

Other Income

3

17

Finance Income

18

31,457,386

17,793,994

43,577,756

20,538,563

Finance Cost

19

(2,570,826)

(555,068)

(2,434,009)

(291,973)

28,886,561

17,238,926

41,143,748

20,246,590

Net Finance Income Profit Before Tax

22

185,005,393

170,025,686

162,368,952

116,689,544

Income Tax Expense

15

(36,842,487)

(61,365,864)

(28,014,488)

(50,940,636)

148,162,906

108,659,822

134,354,464

65,748,908

Profit for the Year

Earnings Per Share - Basic (Rs.)

20

0.53

0.39

0.48

0.24

- Diluted (Rs.)

20

0.53

0.39

0.48

0.24

21

0.15

0.10

0.15

0.10

Dividend Per Share (Rs.)

The accounting policies and notes on pages 84 through 117 form an integral part of the financial statements.

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STATEMENT OF COMPREHENSIVE INCOME Year ended 31st March 2018

Group Note

Profit for the Year

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

148,162,906

108,659,822

134,354,464

65,748,908

(1,245,981)

(2,200,211)

(1,167,941)

(2,177,296)

-

51,567,232

-

22,963,238

Other Comprehensive Income Other comprehensive income not to be reclassified to income statement in subsequent periods: Actuarial Gain /(Loss) on Defined Benefit Plans

14

Revaluation Gain Income Tax on Other Comprehensive Income

15

255,439

(9,213,268)

233,588

(1,173,338)

Tax Effect on Revaluation Surplus of Land

15

(7,087,796)

-

(7,087,796)

-

Net other comprehensive income/(Loss) not to be reclassified to profit or loss in subsequent periods

(8,078,337)

40,153,753

(8,022,148)

19,612,604

Other Comprehensive Income/(Loss) for the Year, Net of Tax

(8,078,337)

40,153,753

(8,022,148)

19,612,604

Total Comprehensive Income for the Year, Net of Tax

140,084,569

148,813,575

126,332,316

85,361,512

The accounting policies and notes on pages 84 through 117 form an integral part of the financial statements.

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STATEMENT OF FINANCIAL POSITION

As at 31st March 2018

Note

ASSETS

Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Non-Current Assets Property, Plant and Equipment

4

613,294,207

635,009,716

496,129,701

509,750,939

Intangible Assets

5

3,019,955

3,142,899

136,800

205,200

Investments in Subsidiary

7

-

-

75,140,226

75,140,226

616,314,162

638,152,615

571,406,727

585,096,365

55,374,749

42,912,164

42,063,059

28,389,792

Current Assets Inventories Trade and other Receivables Held to Maturity Financial Assets Cash and Cash Equivalents

9 10

279,328,481

220,506,495

266,516,875

229,156,988

8

299,387,411

181,989,055

299,387,411

181,989,055

23

9,072,635

58,311,596

8,500,797

51,594,958

Total Assets

643,163,276

503,719,310

616,468,142

491,130,793

1,259,477,438

1,141,871,925

1,187,874,869

1,076,227,158

EQUITY AND LIABILITIES Stated Capital

11

604,414,640

604,414,640

604,414,640

604,414,640

Revaluation Reserve

12

107,990,561

116,379,070

88,726,445

95,821,422

Retained Earnings

396,464,935

290,322,955

362,237,271

271,141,075

1,108,870,136

1,011,116,665

1,055,378,356

971,377,137

14

16,418,470

11,259,198

15,199,327

10,376,189

Deferred Tax Liability

15

33,162,443

28,257,056

22,644,918

16,770,540

Interest Bearing Loans and Borrowings

13

1,580,237

4,069,533

1,580,237

4,069,533

51,161,150

43,585,787

39,424,481

31,216,262

90,021,761

46,641,631

84,436,9621

41,715,478

6,917,082

38,304,946

6,127,762

29,695,385

Total Equity Non-Current Liabilities Defined Benefit Obligation

Current Liabilities Trade and Other Payables

16

Income Tax Payable Interest Bearing Loans and Borrowings Total Equity and Liabilities

13

2,507,310

2,222,896

2,507,310

2,222,896

99,446,153

87,169,473

93,072,0332

73,633,759

1,259,477,438

1,141,871,925

1,187,874,869

1,076,227,158

I Certify that these financial statements are in compliance with the requirements of the Companies Act No.07 of 2007.

…………………………...……...

Nevinda Jayasuriya Director Finance

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

…………………………...……... …………………………...……...

Ganaka Amarasinghe Ravi Liyanage Director / CEO Chairman

The accounting policies and notes on pages 84 through 117 form an integral part of the financial statements.

30 July 2018 Colombo

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

81

STATEMENT OF CHANGES IN EQUITY Year ended 31st March 2018

Stated Capital

Revaluation Reserve

Retained Earnings

Total

Rs.

Rs.

Rs.

Rs.

604,414,640

75,799,740

210,309,442

890,523,822

Profit for the Year

-

-

108,659,822

108,659,822

Other Comprehensive Income

-

41,912,089

(1,758,336)

40,153,753

Revaluation Realisation

-

(1,332,759)

1,332,759

-

604,414,640

116,379,070

318,543,687

1,039,337,397

-

-

(28,220,732)

(28,220,732)

604,414,640

116,379,070

290,322,955

1,011,116,665

Profit for the Year

-

-

148,162,906

148,162,906

Other Comprehensive Income

-

-

(990,542)

(990,542)

GROUP

Note

Balance as at 01 April 2016

Total Comprehensive Income Dividend paid (Rs. 0.10/- per share) Balance as at 31 March 2017

Realisation of Revaluation Reserves

12

-

(1,300,714)

1,300,714

-

Deferred Tax Effect

12

-

(7,087,796)

-

(7,087,796)

604,414,640

107,990,561

438,796,033

1,151,201,234

-

-

(42,331,098)

(42,331,098)

604,414,640

107,990,561

396,464,935

1,108,870,136

Stated Capital

Revaluation Reserve

Retained Earnings

Total

Rs.

Rs.

Rs.

Rs.

604,414,640

75,799,740

234,021,977

914,236,357

Profit for the Year

-

-

65,748,908

65,748,908

Other Comprehensive Income

-

21,354,441

(1,741,837)

19,612,604

Realisation of Revaluation Reserves

-

(1,332,759)

1,332,759

-

604,414,640

95,821,422

299,361,807

999,597,870

-

-

(28,220,732)

(28,220,732)

604,414,640

95,821,422

271,141,075

971,377,137

Profit for the Year

-

-

134,354,464

134,354,464

Other Comprehensive Income

-

-

(934,353)

(934,353)

Total Comprehensive Income Dividend Paid (Rs. 0.15/- Per Share) Balance as at 31 March 2018

COMPANY

Note

Balance as at 01 April 2016

Total Comprehensive Income Dividend paid (Rs. 0.10/- per share) Balance as at 31 March 2017

Realisation of Revaluation Reserves

12

-

(7,181)

7,181

-

Deferred Tax Effect

12

-

(7,087,796)

-

(7,087,796)

604,414,640

88,726,445

404,568,369

1,097,709,454

-

-

(42,331,098)

(42,331,098)

604,414,640

88,726,445

362,237,271

1,055,378,356

Total Comprehensive Income Dividend Paid (Rs. 0.15/- Per Share) Balance as at 31 March 2018

The accounting policies and notes on pages 84 through 117 form an integral part of the financial statements.

82

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

STATEMENT OF CASH FLOWS Year ended 31st March 2018

Group Note

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

185,005,393

170,025,686

162,368,952

116,689,544

33,178,114

52,810,025

24,943,112

45,911,069

Cash Flows (used in)/from Operating Activities Profit Before Tax Adjustments for; Depreciation Amortization of Intangible Assets

4 5

122,945

122,945

68,400

68,400

Finance Expenses

19

2,570,826

555,068

2,434,009

291,973

Finance Income

18

(31,457,386)

(17,793,994)

(43,577,756)

(20,538,563)

Provision for Retirement Benefit Liability

14

4,327,615

2,383,024

4,069,519

2,177,295

(Profit)/ Loss on Disposal of Property, Plant and Equipment

17

1,942,610

(3,266,308)

(323,553)

(3,266,308)

(1,318,682)

-

(1,318,682)

-

(Reversal) / charge of provision for doubtful debts Revaluation Loss

-

4,745,443

-

4,394,708

Operating Profit before Working Capital Changes

194,371,436

209,581,891

148,664,000

145,728,119

(Increase)/Decrease in Inventories

(12,462,585)

73,682

(13,673,267)

5,013,451

(Increase)/Decrease in Trade and Other Receivables

(75,380,893)

(94,721,586)

(68,504,506)

(75,786,784)

43,380,130

4,883,959

42,721,484

5,952,281

Cash Generated from Operations

149,908,087

119,817,947

109,207,711

80,907,066

Income Tax Paid

(66,761,885)

(8,388,055)

(50,319,315)

(6,286,275)

Increase/ (Decrease) in Trade and Other Payables

Gratuity Paid

14

(414,322)

-

(414,322)

-

Finance Expenses Paid

19

(2,570,826)

(270,990)

(2,434,009)

(7,896)

80,161,054

111,158,900

56,040,065

74,612,894

4

(18,247,215)

(22,407,827)

(14,665,321)

(19,003,604)

8

(117,398,356)

(62,395,331)

(117,398,356)

(62,395,331)

18

30,303,007

14,966,142

41,067,171

14,966,142

4,842,000

7,544,998

3,667,000

7,544,998

15,636,530

19,534,067

32,731,259

35,350,600

(84,864,035)

(42,757,952)

(54,598,246)

(23,537,196)

(42,331,098)

(28,220,732)

(42,331,098)

(28,220,732)

(2,204,882)

(1,201,651)

(2,204,882)

(1,201,651)

Net Cash used in Financing Activities

(44,535,981)

(29,422,383)

(44,535,980)

(29,422,383)

Net Increase / (Decrease) in Cash and Cash Equivalents

(49,238,961)

38,978,565

(43,094,162)

21,653,315

58,311,596

19,333,031

51,594,958

29,941,643

9,072,635

58,311,596

8,500,797

51,594,958

Net Cash from Operating Activities Cash Flows (used in) / from Investing Activities Acquisition of Property, Plant and Equipment Investment in Fixed Deposits Finance Income Received Disposal Proceeds from Property, Plant and Equipment Net Movement of Loans Given to Related Parties

10

Net Cash used in Investing Activities Cash Flows (used in) / from Financing Activities Dividend Paid Lease instalments Paid

Cash and Cash Equivalents at the Beginning of the Year Cash and Cash Equivalents at the End of the Year

23

The accounting policies and notes on pages 84 through 117 form an integral part of the financial statements.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

83

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018 1.

CORPORATE INFORMATION

1.1

Reporting Entity

Raigam Wayamba Salterns PLC is a Public Limited Liability Company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. The registered office of the Company is located at No. 23, Walukarama Road, Colombo 03 and the principal place of business are located at No.277, Koswatte, Kiriwattuduwa; Kalpitiya Road, Palavi, Puttalam and Bata-atha Industrial Zone, Kahandamodara, Gurupokuna, Tangalle.

1.2

Consolidated Financial Statements

The Financial Statements for the year ended 31 March 2018, comprise “the Company” referring to Raigam Wayamba Salterns PLC as the Holding Company and “the Group” referring to the companies whose accounts have been consolidated therein.

1.3

Parent Entity and Ultimate Parent Entity

The Company’s parent and ultimate parent entity is Raigam Marketing Services (Private) Limited which is incorporated in Sri Lanka.

1.4

Approvals of Financial Statements The consolidated financial statements of Raigam Wayamba Salterns PLC and its Subsidiary (Collectively, the Group) for the year ended 31 March 2018 were authorized for issue in accordance with a resolution by the board of directors on 30 July 2018.

1.5

Principal Activities and Nature of Operations

During the year, the principal activities of the Company and Subsidiary were manufacturing and distribution of Salt Island wide and development of salterns.

Subsidiary is the enterprise controlled by the parent. Control exists when the parent has the power, directly or indirectly to govern the financial and operating policies of an enterprise. Subsidiary is controlled from the date the parent obtains control until the date that control ceases. The following companies have been consolidated.

Raigam Wayamba Saltern PLC Southern Salt Company (Private) Limited

2.

BASIS OF PREPARATION

2.1

Basis of Measurement

- -

Parent Subsidiary

The Consolidated Financial Statements have been prepared on an accrual basis and under the historical cost convention except for Property, Plant and Equipment that have been measured at fair value and the liability for Defined Benefit Obligations are actuarially valued and recognized at the present value.

2.2

Statement of Compliance

The Financial Statements which comprise the Statement of Profit or Loss, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and the Statement of Cash Flows together with the Accounting Polices and Notes (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.

2.3

Comparative Information

The accounting policies have been consistently applied by the Company and, are consistent with those used in the previous year. Previous year’s figures and phrases have been rearranged whenever necessary to conform to the current presentation.

84

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

2.4

Going Concern

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

2.5

Presentation and Functional Currency

The Consolidated Financial Statements are presented in Sri Lankan Rupees, the Group’s functional and presentation currency, which is the primary economic environment in which the Holding Company operates.

Each entity in the Group uses the currency of the primary economic environment in which they operate as their functional currency.

2.6

Basis of Consolidation

The Consolidated Financial Statements comprise the Financial Statements of the Company and its subsidiary as at 31 March 2018. The financial statements of the subsidiary is prepared for the same reporting period as the parent Company, which is 12 months ending 31 March, using consistent accounting policies.

All intra-Group balances, income and expenses, unrealized gains and losses resulting from intra-Group transactions and dividends are eliminated in full.

2.7 Subsidiary

Control over an investee is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Group controls an investee if, and only if, the Group has: •

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

•

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

•

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

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group.

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

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

The Consolidated Statement of Cash Flow includes the cash flows of the Company and its subsidiary.

2.8 Goodwill

Goodwill represents the excess of the cost of the acquisition over the fair value of identifiable net assets of a subsidiary as at the date of acquisition. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognized in Statement of Profit or Loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the group’s cash generating units that are expected to benefit from the combination transferred; irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

85

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Significant Accounting Judgments, Estimates and Assumptions

The preparation of the financial statements of the Group require the management to make judgments, estimates and assumptions, which may affect the amounts of income, expenditure, assets , liabilities and the disclosure of contingent liabilities, at the end of the reporting period. In the process of applying the Group’s accounting policies, the key assumptions made relating to the future and the sources of estimation at the reporting date together with the related judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year are discussed below.

Judgments

The preparation of the financial statements of the Group require the management to make judgments, estimates and assumptions, which may affect the amounts of income, expenditure, assets , liabilities and the disclosure of contingent liabilities, at the end of the reporting period. In the process of applying the Group’s accounting policies, the key assumptions made relating to the future and the sources of estimation at the reporting date together with the related judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year are discussed below.

Taxes

The Group is subject to income tax and other taxes including VAT. Significant judgment was required to determine the total provision for current, deferred and other taxes.

Given the wide range of business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. Where the final tax outcome of such matters are different from the amounts that were initially recorded, such differences will impact the income and deferred tax amounts in the period in which the determination is made.

Impairment of Trade Debtors

The Group reviews its individually significant Receivables at each reporting date to assess whether an impairment loss should be recorded in the Statement of Profit or Loss. In particular, management’s judgment is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the impairment allowance.

Critical Accounting Estimates and Assumptions

The financial statements are sensitive to assumptions and estimates made in measuring certain carrying amounts represented in the statement of financial position and amounts charged to the profit or loss. These could result in a significant risk of causing material adjustments to the carrying amounts of assets and liabilities which are disclosed in the relevant notes to the financial statements.

Fair Value of Property, Plant and Equipment

The Property, Plant and Equipment of the Group are reflected at fair value when current market prices of similar assets are available; such evidences are considered in estimating fair values of these assets. In the absence of such information the Group determines within a reasonable fair value estimates, amounts that can be attributed as fair values, with the assistance of an independent valuer.

The significant unobservable inputs to valuation are provided in note 4.

Employee benefit liability

The employee benefit liability of the Group determines using actuarial valuation carried out by an independent actuarial specialist. The actuarial valuations involve making assumptions about discount rates and future salary increases. The complexity of the valuation, the underlying assumptions and its long term nature, the defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Details of the key assumptions used in the estimates are contained in Note 14.

86

2.9

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

2.10

Summary of Significant Accounting Policies

The following are the significant accounting policies applied by the Group in preparing its financial statements:

2.10.1 Foreign currencies

Foreign currency transactions and balances

The Group’s consolidated financial statements are presented in Sri Lankan Rupees, which is also the parent Company’s functional currency.

For each entity the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. The Group uses the direct method of consolidation and has elected to recycle the gain or loss arises from this method.

Transactions and balances

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency spot rate at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary measured at fair value is treated in line with the recognition of gain or loss on change in fair value in the item (i.e., the translation differences on items whose fair value gain or loss is recognised in other comprehensive income (OCI) or profit or loss are also recognised in OCI or profit or loss, respectively).

2.10.2 Taxation a)

Current income tax

Raigam Wayamba Salterns PLC

Pursuant to agreement dated 20th March 2006 entered into with Board of Investment under Section 17 of the Board of Investment Law, the Raigam Wayamba Salterns PLC is exempt from the business of manufacturing for a period of 8 years from the year of assessment year 2006/07. This exemption expires on the 2nd March 2014 and for the immediately succeeding two years the Company is liable to pay income tax at the rate of 10% and thereafter at the rate of 20%. Applicable tax rate for current year is 20%.

Southern Salt Company (Private) Limited

The company’s liability to taxation has been computed in accordance with the provisions of the Inland Revenue Act No. 10 of 2006 and amendments thereto. Currently Applicable tax rate is 28%.

b)

Deferred Taxation

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

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

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

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

87

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

the carry-forward of unused tax assets and unused tax losses can be utilised except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

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

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

Deferred income tax relating to items recognized directly in equity is recognized in Statement of Changes in Equity and not in the Statement of profit or loss.

2.10.3 Borrowing Costs

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

Borrowing costs that are not directly attributable to the acquisition, construction or production of a Qualifying asset is recognized in the Statement of profit or loss.

2.10.4 Financial Instruments – Initial Recognition and Subsequent Measurement

Financial Assets

Initial recognition and measurement

Financial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments or as available-for-sale financial assets the Group determines the classification of its financial assets at initial recognition.

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

The Group’s financial assets include cash and short-term deposits, trade and other receivables, loans and other receivables which are classified as loans and receivables and held to maturity investments.

Subsequent measurement

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

Loans and receivables

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

Related party loans with zero interest rate

The initial difference between loan amount and fair value related to the loans provided to Parent, subsidiary and other related parties are recognized in the equity, investments and Statement of Profit or Loss respectively.

88

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Held-to-maturity investments

Non derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold them to maturity. After initial measurement, held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in other income in the Statement of Profit or Loss. The losses arising from impairment are recognised in the Statement of Profit or Loss in finance costs.

De-recognition

A financial asset (or, where applicable a part of a financial asset or part of a Group of similar financial assets) is derecognized when: -

The rights to receive cash flows from the asset have expired,

-

The Group has transferred its rights to receive cash flows from the assets or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement: and either

(a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the assets, but has transferred control of the assets.

Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or Group of financial assets is impaired. A financial asset or a Group of financial assets is deemed to be impaired if and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the Group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a Group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortized cost

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

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

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

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

89

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018 2.10.5 Financial Liabilities

Initial recognition and measurement

Financial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss or as loans and borrowings, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

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

The Group’s financial liabilities include trade and other payables, loans and borrowings,

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the Statement of Profit or Loss when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the Statement of Profit or Loss.

De-recognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit or Loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset with the net amount reported in the consolidated statement of financial position only if there is a current enforceable legal right to offset the recognised amounts and an intent to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

2.10.6 Cash and short-term deposits

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less.

For the purpose of the consolidated statement cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above.

2.10.7 Inventories

90

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

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

The cost incurred in bringing inventories to its present location and conditions are accounted using the following cost formulae: Raw Material

-

At purchase cost on first-in first-out basis

Finished Goods & Work-InProgress

-

At the cost of direct materials, direct labor at FIFO basis and an appropriate proportion of manufacturing overheads based on normal operating capacity, but excluding borrowing costs.

Engineering Stock, Firewood,

-

At purchase cost on first in first out basis

Packing Material, Fuel Stocks and Other Chemicals Stock 2.10.8

Property, Plant and Equipment

Basis of recognition

Property, plant and equipment are recognized if it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be reliably measured.

Basis of measurement

Property, Plant and Equipment are initially measured at cost less accumulated depreciation and any accumulated impairment loss. When significant parts of plant and equipment are required to be replaced at intervals, the Group derecognises the replaced part, and recognizes the new part with its own associated useful life and depreciation. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the income statement as incurred. Subsequent to initial recognition, the property, plant and equipment are stated at fair values, which reflect market conditions at the reporting date.

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

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

De-recognition

An item of property, plant and equipment are derecognised upon replacement, disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset is included in the Statement of Profit or Loss in the year the asset is derecognised.

Depreciation

Depreciation is calculated by using a straight-line method on the cost or valuation of all property, plant and equipment, other than freehold land, in order to write off such amounts over the estimated useful economic life of such assets.

2.10.9 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

91

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Operating lease payments are recognised as an operating expense in the Statement of Profit or Loss on a straight-line basis over the lease term.

2.10.10 Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is recognised in the Statement of Profit or Loss when it is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognised in the Statement of Profit or Loss in the expense category consistent with the function of the intangible assets.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit or Loss when the asset is derecognised.

2.10.11 Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, 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. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Profit or Loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

All contingent liabilities are disclosed as a note to the financial statements unless the outflow of resources is remote.

Contingent assets are disclosed, where inflow of economic benefit is probable.

2.10.12 Defined Benefit Obligation a)

Defined Benefit Plan – Gratuity

Gratuity is a defined benefit plan. The Group is liable to pay gratuity in terms of the relevant statute.

The Group measures the present value of the promised retirement benefit for gratuity, which is a defined benefit plan with the advice of an independent professional actuary using the projected unit credit method (PUC) as required by LKAS No. 19, Employee Benefits.

The item is stated under Defined Benefit Liability in the Statement of Financial Position.

Recognition of Actuarial Gains and Losses

Any actuarial gains and losses arising are recognized immediately in Other Comprehensive Income. This was previously recognized in Statement of Profit or Loss. Interest expense and current service cost are recognized in the statement of profit or loss.

b)

92

Defined Contribution Plans – Employees’ Provident Fund & Employees’ Trust Fund

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

All employees who are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions are covered by relevant contribution funds in line with respective statutes and regulations. The Company contributes 12% and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively, which are externally funded.

2.10.13 Impairment of Non-Financial Assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is higher of asset’s or cash generating unit’s (CGU) fair value less costs to sell and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Impairment losses of continuing operations, including impairment on inventories, are recognized in the Statement of Profit or Loss in those expense categories consistent with the function of the impaired asset, except for a property previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Statement of Profit or Loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

2.10.14 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.

The following specific criteria are used for the purpose of recognition of revenue. a)

Sale of Goods Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to buyer, usually on dispatch of the goods; with the Group not retaining neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold.

b)

Finance income Finance income comprises interest income on funds invested, gains on the remeasurement to fair value of any pre-existing interest in an acquiree that are recognised in Statement of Profit or Loss.

Interest income or expense is recorded as it accrues using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the Statement of Profit or Loss.

c) Dividends

Dividend income is recognised when the Group’s right to receive the payment is established. d) Gains and losses

Net gains and losses of a revenue nature arising from the disposal of property, plant and equipment and other noncurrent assets,

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

93

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

e)

including investments, are accounted for in the Statement of Profit or Loss, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.

Others Other income is recognized on an accrual basis.

2.10.15 Expenditure recognition

Expenses are recognised in the Statement of Profit or Loss on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the Statement of Profit or Loss.

For the purpose of presentation of the Statement of Profit or Loss, the “function of expenses” method has been adopted, on the basis that it presents fairly the elements of the Group and Group’s performance

2.10.16 Finance costs

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, impairment losses recognised on financial assets (other than trade receivables) that are recognised in the Statement of Profit or Loss.

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

2.11

Effects of Sri Lanka Accounting Standards issued but not yet effective

The following SLFRS have been issued by the Institute of Chartered Accountants of Sri Lanka that have an effective date in the future and have not been applied in preparing these Financial Statements. Those SLFRS will have an effect on the accounting policies currently adopted by the Company and may have an impact on the future Financial Statements.

SLFRS 9 Financial Instruments

In December 2014, the Institute of Chartered Accountant of Sri Lanka issued the final version of SLFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces LKRS 39 Financial Instruments, Recognition and Measurement. The standard introduces new requirements for classification and measurement of impairment, and hedge accounting. SLFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required. But comparative information is not compulsory. Management is yet to quantify the possible impact from SLFRS 9.

SLFRS 15 Revenue from Contracts with Customers

The objective of this Standard is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. SLFRS 15 will become effective on 01 January 2018.Management is yet to quantify the possible impact from SLFRS 15.

SLFRS 16- Leases

94

The Institute of Chartered Accountant of Sri Lanka issued the new standard for accounting for leases - SLFRS 16 Leases in January 2016.

The new standard does not significantly change the accounting for leases for lessors. However, it does require lessees to recognise most leases on their balance sheets as lease liabilities, with the corresponding right-off - use assets. Lessees must apply a single model for all recognised leases, but will have the option not to recognise ‘short-term’ leases and leases of ‘low-value’ assets. Generally, the profit or loss recognition pattern for recognised leases will be similar to today’s finance lease accounting, with interest and depreciation expense recognised separately in the statement of profit or loss.

SLFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs. Management is yet to quantify the possible impact from SLFRS 16.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

3.

REVENUE Group

Revenue from Sale of Goods

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

791,505,921

778,703,892

734,080,595

723,425,555

791,505,921

778,703,892

734,080,595

723,425,555

The business activities of the Group are only organised as a single reportable segment, where the management of the group monitors the Revenue from whole selling as a key performance indicator.

4.

4.1

PROPERTY, PLANT & EQUIPMENT - GROUP Balance as at

Additions

Disposals

Balance as at

01.04.2017

during the year

during the year

31.03.2018

Rs.

Rs.

Rs.

Rs.

227,180,725

-

-

227,180,725

Buildings on Freehold Land

45,815,001

-

-

45,815,001

Buildings on Leasehold Land

24,543,667

100,000

-

24,643,667

PVD Plant

22,750,000

271,608

-

23,021,608

Plant and Machinery

53,107,023

2,284,873

(6,311,860)

49,080,036

Motor Vehicles

20,250,001

12,284,441

(1,100,000)

31,434,442

875,000

-

-

875,000

1,550,000

-

-

1,550,000

850,000

8,000

-

858,000

25,000

251,671

-

276,671

700,000

-

-

700,000

Salterns Development

226,581,716

3,318,229

-

229,899,945

Total Value of Depreciable Assets

624,228,132

18,518,823

(7,411,860)

635,335,094

7,210,000

-

-

7,210,000

7,210,000

-

-

7,210,000

Balance as at

Additions

Transfers

Balance as at

01.04.2017

during the year

during the year

31.03.2018

Rs.

Rs.

Rs.

Rs.

3,829,696

-

(271,608)

3,558,088

3,829,696

-

(271,608)

3,558,088

635,267,828

18,518,823

(7,683,468)

646,103,183

Gross Carrying Amounts Freehold Lands

Furniture and Fittings Factory Equipment Office Equipment Computers & Accessories Deep Well

Asset on Finance Lease Motor Coach

4.2

In the Course of Construction

Capital Work in Progress

Total Gross Carrying Amount

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

95

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

4.3

Balance as at

Charge

Disposals

Balance As at

01.04.2017

for the year

during the year

31.03.2018

Rs.

Rs.

Rs.

Rs.

-

5,629,675

-

5,629,675

2,464,328

-

2,464,328

-

2,302,161

-

2,302,161

Depreciation Buildings on Freehold Land Buildings on Leasehold Land PVD Plant Plant and Machinery

-

7,651,521

(551,908)

7,099,613

Motor Vehicles

-

2,594,790

(75,342)

2,519,448

Furniture and Fittings

-

115,000

-

115,000

Factory Equipment

-

155,000

-

155,000

Office Equipment

-

85,717

-

85,717

Computers & Accessories

-

40,980

-

40,980

Deep Well

-

35,000

-

35,000

Salterns Development

-

11,382,942

-

11,382,942

Total Depreciation

-

32,457,114

(627,250)

31,829,864

Asset on Finance Lease Motor Coach

Total Depreciation

4.4

Net Book Values Freehold Lands

258,111

721,000

-

979,111

258,111

721,000

-

979,111

258,111

33,178,114

(627,250)

32,808,975

2018

2017

Rs.

Rs.

227,180,725

227,180,725

Buildings on Freehold Land

40,185,326

45,815,001

Buildings on Leasehold Land

22,179,339

24,543,667

PVD Plant

20,719,447

22,750,000

Plant and Machinery

41,980,423

53,107,023

Motor Vehicles

28,914,994

20,250,000

760,000

875,000

Furniture and Fittings

1,395,000

1,550,000

Office Equipment

Factory Equipment

772,283

850,000

Computers & Accessories

235,691

25,000

Deep Well Salterns Development

665,000

700,000

218,517,002

226,581,715

603,505,229

624,228,131

Asset on Finance Lease Motor Coach

In the Course of Construction Capital Work in Progress

Total Carrying Amounts of Property, Plant and Equipment

96

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

6,230,889

6,951,889

6,230,889

6,951,889

2018

2017

Rs.

Rs.

3,558,088

3,829,696

3,558,088

3,829,696

613,294,207

635,009,716

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

PROPERTY, PLANT & EQUIPMENT - COMPANY 4.5

Gross Carrying Amounts Freehold Land

Balance as at

uring the year

31.03.2018

Rs.

Rs.

Rs.

Rs.

-

-

227,180,725

45,815,001

-

-

45,815,001

PVD Plant

22,750,000

271,608

-

23,021,608

Plant and Machinery

36,000,001

2,192,959

(2,617,670)

35,575,290

Motor Vehicles

19,000,000

12,284,441

(1,100,000)

30,184,441

275,000

-

-

275,000

Factory Equipment Computers & Accessories

1,550,000

-

-

1,550,000

150,000

-

-

150,000

24,999

187,921

-

212,920

700,000

-

-

700,000

Salterns Development

149,081,716

-

-

149,081,716

Total Value of Depreciable Assets

502,527,442

14,936,929

(3,717,670)

513,746,701

Deep Well

Asset on Finance Lease Motor Coach

In the Course of Construction Capital Work in Progress

Total Gross Carrying Amount

4.8

Disposals d

during the year

227,180,725

Office Equipment

4.7

Additions

01.04.2017

Buildings on Freehold Land

Furniture and Fittings

4.6

Balance as at

Depreciation

-

7,210,000

7,210,000

7,210,000 -

-

7,210,000

509,737,442

14,936,929

(3,717,670)

520,956,701

Balance as at

Additions

Transfers

Balance as at

01.04.2017

during the year

during the year

31.03.2018

Rs.

Rs.

Rs.

Rs.

271,608

-

(271,608)

-

271,608

-

(271,608)

-

510,009,050

14,936,929

(3,989,278)

520,956,701

Balance as at

Charge

Disposals

Balance as at

01.04.2017

for the year

during the year

31.03.2018

Rs.

Rs.

Rs.

Rs.

Buildings on Freehold Land

-

5,629,675

-

5,629,675

PVD Plant

-

2,302,161

-

2,302,161

Plant and Machinery

-

6,066,349

(298,881)

5,767,468

Motor Vehicles

-

2,469,790

(75,342)

2,394,448

Furniture and Fittings

-

55,000

-

55,000

Factory Equipment

-

155,000

-

155,000

Office Equipment

-

15,000

-

15,000

Computers & Accessories

-

40,050

-

40,050

Deep Well

-

35,000

-

35,000

Salterns Development

-

7,454,087

-

7,454,087

Total Depreciation

-

24,222,112

(374,223)

23,847,889

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

97

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Asset on Finance Lease Motor Coach

258,111

721,000

-

979,111

258,111

721,000

-

979,111

258,111

24,943,112

(374,223)

24,827,000

2018

2017

Rs.

Rs.

227,180,725

227,180,725

Buildings on Freehold Land

40,185,326

45,815,001

PVD Plant

20,719,447

22,750,000

Plant and Machinery

29,807,822

36,000,001

Motor Vehicles

27,789,993

19,000,000

220,000

275,000

1,395,000

1,550,000

Office Equipment

135,000

150,000

Computers & Accessories

172,870

24,999

Deep Well

665,000

700,000

141,627,629

149,081,716

489,898,812

502,527,442

6,230,889

6,951,889

6,230,889

6,951,889

-

271,608

-

271,608

496,129,701

509,750,939

2018

2017

Buildings

8-10 Years

8-10 Years

Plant and Machinery

6-10 Years

6-10 Years

10 Years

10 Years

5-10 Years

5-10 Years

Factory Equipment

10 Years

10 Years

Office Equipment

10 Years

10 Years

Salterns Development

20 Years

20 Years

4-10 Years

4-10 Years

Deep Well

20 Years

20 Years

PVD Plant

10 Years

10 Years

Total

4.9

Net Book Values Freehold Lands

Furniture and Fittings Factory Equipment

Salterns Development

Asset on Finance Lease Motor Coach

In the Course of Construction Capital Work in Progress

Total Carrying Amounts of Property, Plant and Equipment

4.10

The useful lives of the assets are estimated as follows Group and Company

Motor Vehicles Furniture and Fittings

Computer & Accessories

98

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

4.11

During the financial year, the Group and Company acquired Property, Plant and Equipment to the aggregate value of Rs. 18,247,215/- and Rs. 14,936,929/- respectively (2017 - Group and Company Rs.29,617,827/- and Rs 26,213,604/- respectively). Cash payments amounting to Rs. 18,247,215/- and Rs. 14,665,321/- (2017 - Group and Company Rs. 22,407,827/- and Rs. 19,003,604/- respectively), were made during the year for purchase of Property, Plant and Equipment and acquired Rs, 7,200,000 by way of leases during year 2017 (2018 - Nil).

4.12

If the Properties, Plant and Equipment were measured using the cost model, the carrying amounts would be, as follows: Group

Freehold Lands

Cost

Accumulated depreciation

2018

2018

2018

Rs.

Rs.

Rs.

Company Cost

Accumulated depreciation

2017

2018

2018

2018

2017

Rs.

Rs.

Rs.

Rs.

Rs.

Net carrying amount

Net carrying amount

191,741,750

-

191,741,750

191,741,750

191,741,750

-

191,741,750

191,741,750

Buildings

86,151,768

59,135,819

27,015,949

30,572,317

75,310,471

55,027,919

20,282,552

22,854,829

PVD Plant

28,520,628

9,402,529

19,118,100

21,148,652

28,520,628

9,402,529

19,118,100

21,148,652

138,400,574

100,536,031

37,864,543

43,320,604

125,332,002

94,978,474

30,353,528

32,940,886

35,190,770

10,509,898

24,680,871

14,179,354

33,823,770

9,615,653

24,208,116

13,569,899

Plant and Machinery Motor Vehicles Furniture and Fittings

1,272,137

769,422

502,715

589,397

1,209,727

723,252

486,475

566,916

Factory Equipment

3,672,484

1,137,719

2,534,765

2,759,076

3,008,433

726,356

2,282,077

2,439,982

569,958

197,536

372,422

394,090

465,321

159,321

306,000

325,287

70,926

30,970

39,956

39,956

70,926

30,970

39,956

39,956

2,150,055

1,790,625

359,430

195,771

2,016,715

1,744,787

271,928

164,130

914,217

230,804

683,413

724,517

914,217

230,804

683,413

724,517

155,889,127

31,841,809

124,047,318

132,547,728

70,296,141

19,701,545

50,594,596

58,248,977

Office Equipment Name Board Computers & Accessories Deep Well Salterns Development 4.13

Revaluation of property, plant and equipment

The Group uses the revaluation model of measurement for Property, Plant and Equipment. The Group engaged independent expert valuer to determine the fair value of its Property, Plant and Equipment.

Details of Group’s Property, Plant and Equipment stated at valuation are indicated below; Company

Property, Plant and Equipment

Method of Valuation

Value Rs.

Raigam Wayamba Salterns PLC

Land and development at Kalpitiya Road, Palavi, Puttalam

Open Market Value Method

153,187,500

Land and Development at Periyatheevu Munaikany Puladivayal, Palavi Puttalam

Open Market Value Method

31,771,875

Land and Development at Periyatheevu Vayalkany Puladivayal, Palavi Puttalam

Open Market Value Method

152,246,817

Land and Development at Periyatheevu Kany Puladivayal, Palavi Puttalam

Open Market Value Method

39,031,250

Building at Kalpitiya Road, Palavi Puttalam

Open Market Value Method

42,200,000

Building at Periyatheevu Munaikany Puladivayal, Palavi Puttalam

Open Market Value Method

2,525,000

Valuer Details Mr. D. Jayawardana Independent Incorporated Valuer

Effective Date of Valuation 31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

99

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Company

Southern Salt Company (Pvt)Ltd

Property, Plant and Equipment

Method of Valuation

Building at Periyatheevu Vayalkany Puladivayal, Palavi Puttalam

Open Market Value Method

1,090,000

Plant Machineries and Equipment

Open Market Value Method

61,000,000

Furniture & Fittings

Open Market Value Method

275,000

Office Equipment

Open Market Value Method

150,000

Computer & Accessories

Open Market Value Method

25,000

Motor Vehicle

Open Market Value Method

19,000,000

Salterns Developments

Open Market Value Method

77,500,000

Open Market Value Method

24,543,667

Plant and Machinery

Open Market Value Method

17,107,022

Furniture and Fittings

Open Market Value Method

600,000

Office Equipment and Accessories

Open Market Value Method

700,000

Motor Vehicles

Open Market Value Method

1,250,000

Building

Value Rs.

Valuer Details

Effective Date of Valuation

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

Mr. D. Jayawardana Independent Incorporated Valuer

31st March 2018

The Surplus arising from the revaluation was transferred to a revaluation reserve.

4.14

Description of Significant Unobservable Inputs to Valuation The significant assumptions used by the valuer for valuations are as follows; Property Raigam Wayamba Salterns PLC

100

Method of Valuation and Effective date

Inputs used for measurement

Area

"Range/ Value" Rs.

Sensitivity of Fair Value to unobservable input

Per perch rate

Front Zone - 300 Perches

150,000

Positively correlated

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Company

Property, Plant and Equipment

Method of Valuation

Land at Kalpitiya Road, Palavi Puttalam

Open Market Value Method 31st March 2018

Per perch rate

Balance - 600 Perches

Per perch rate

Salterns - 2,570 Perches

Per perch rate

Salterns Developed 1,920 Perches

Land at Periyatheevu Munaikany

Open Market Value Method 31st March 2018

Salterns being Developed - 829 Perches

Puladivayal, Palavi Puttlam Land at Periyatheevu Vayalkany

Open Market Value Method 31st March 2018

Puladivayal, Palavi Puttlam Land at Periyatheevu Kany

Open Market Value Method

31st March 2018

Puladivayal, Palavi Puttlam Building at Kalpitiya Road, Palavi

Open Market Value Method

31st March 2018

Puttalam

Building at Periyatheevu Munaikany Puladivayal, Palavi Puttalam Building at Periyatheevu Vayalkany Puladivayal, Palavi Puttalam

Plant Machineries and Equipment.

Value Rs.

Open Market Value Method

31st March 2018

Open Market Value Method

31st March 2018

Cost method

31st March 2018

Computer & Accessories.

Motor Vehicle.

Open Market 31st March

2018

Open Market 31st March

2018

12,500

Positively correlated

9,375

Positively correlated

12,500

Positively correlated

Salterns being Developed - 1,309 Perches

9,375

Positively correlated

Per perch rate

Salterns Developed 2,080 Perches

12,500

Positively correlated

Per perch rate

Salterns being Developed -1,628 Perches

9,375

Positively correlated

Per sqft. rate

Main Factory Building 18,300 sq feet

3,000

Positively correlated

Per sqft. rate

Upstairs Section - 1,200 sq feet

3,200

Positively correlated

Per sqft. rate

Guard Room - 250 sq feet

3,000

Positively correlated

Per sqft. rate

Generator Room - 200 sq feet

2,000

Positively correlated

Per sqft. rate

Staff Quarter - 1620 sq feet

3,200

Positively correlated

Per sqft. rate

Garage & Workshop 2,940 sq feet

1,000

Positively correlated

Per sqft. rate

Store House - 1,200 sq feet

Per sqft. rate

Store House - 900 sq feet

Cost Less an allowance for Depreciation

2018

Open Market 31st March

Positively correlated

Per perch rate

Open Market 31st March

2018

18,750

Positively correlated

Salterns Developed 11,200 Perches

Cost Less an allowance for Depreciation

1,500

2,000

Positively correlated

Positively correlated

Salt refinery plant

36,000,000

Positively correlated

Salt crystal plant

22,400,000

Positively correlated

Generator

1,775,000

Positively correlated

Weigh Bridge

175,000

Positively correlated

Lath Machine

500,000

Positively correlated

700,000

Positively correlated

2,000,000

Positively correlated

Furniture

275,000

Positively correlated

Office Equipment

150,000

Positively correlated

25,000

Positively correlated

19,000,000

Positively correlated

Ancilliary Contruction

Office Equipment.

100,000

Per perch rate

Submersible Pump

Furniture & Fittings.

Valuer Effective Date of Details Valuation

Computer Accessories Motor Vehicle

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

101

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Company

Property, Plant and Equipment

Method of Valuation

Value Rs.

Valuer Effective Date of Details Valuation

Southern Saltern Company Pvt ltd Buiding at Gurupokunudeniya Road, Tangalle, Hambanthota

Plant and Machineries

Furniture and Fittings Office Equipment.

Motor vehicles.

5.

Open Market Value Method 31st March 2018

Open Market Value Method 31st March 2018 Open Market Value Method

Per sqft. rate

Main Factory Building 9320 sq feet

2,300

Positively correlated

Per sqft. rate

Upstairs section -1240 sq.ft

2,500

Positively correlated

Per sqft. rate

Generator Room - 200 sq feet

2,000

Positively correlated

Per sqft. rate

Site Store and Labourer Room -700 sq feet

1,300

Positively correlated

16,200,000

Positively correlated

Generator.

440,000

Positively correlated

Submersible pum,watre pump and deep well

600,000

Positively correlated

Furniture and Fittings

600,000

Positively correlated

Office Equipment

700,000

Positively correlated

1,250,000

Positively correlated

Salt plant and installation market value

Cost Less an allowance for Depreciation

31st March 2018

Open Market Value Method

31st March 2018

Open Market Value Method

31st March 2018

Motor Vehicles

INTANGIBLE ASSETS Group

Goodwill (5.1) Computer Software (5.2) Premium Paid on lease (5.3) 5.1

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

1,846,790

1,846,790

-

-

136,800

205,200

136,800

205,200

1,036,365

1,090,910

-

-

3,019,955

3,142,899

136,800

205,200

Balance at the beginning of the year

1,846,790

1,846,790

-

-

Balance at the end of the year

1,846,790

1,846,790

-

-

Goodwill

5.1.1

Goodwill represents the excess of an acquisition over the company’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities at the date of acquisition, and is carried at cost less accumulated impairment losses.

Goodwill is not amortized, but is reviewed for impairment annually and whether there is an indication that goodwill may be impaired.

For the purpose of testing goodwill for impairment, goodwill is allocated to the operating entity level, which is the lowest level at which the goodwill is monitored for internal management purpose.

Group

5.2

Computer Software

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Balance at the beginning of the year

205,200

273,600

205,200

273,600

Amortization

(68,400)

(68,400)

(68,400)

(68,400)

Balance at the end of the year

136,800

205,200

136,800

205,200

Software of the group represents the locally developed payroll software of Raigam Wayamba Salterns PLC which is amortized over 05 years.

102

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

5.3

Premium Paid on Lease

2018

2017

Rs.

Rs.

1,090,910

1,145,455

(54,545)

(54,545)

1,036,365

1,090,910

Group Transfer from Advances Amortization Balance as at 31st March

The group/company has obtained leasehold rights to a land situated in Ba-taatha, Hambanthota of Sri Lanka by the lease agreement for a period of 30 years 6.

FAIR VALUE MEASUREMENT GROUP & COMPANY The Group uses the following hierarchy for determining and disclosing the fair value of assets and liabilities by valuation technique:

Level 1:

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

Level 2:

other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3:

techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data

The Group held the following financial instruments carried at fair value in the statement of financial position: Level 1 Group

Level 2

Level 3

2018

2017

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

-

-

-

-

613,294,207

635,009,716

-

-

-

-

496,129,701

509,750,939

Assets Measured at Fair Value Revalued Property, Plant and Equipment Company Assets Measured at Fair Value Revalued Property, Plant and Equipment

Financial Assets and Liabilities measured or disclosed at Fair Value The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values: - The fair values of the quoted equities are based on price quotations at the reporting date.

Those assumptions for assets categorized as Level 3 has been described under respective note numbers.

During the reporting period ended 31 March 2018 and 2017, there were no transfers between Level 1 and Level 2 fair value measurements.

7.

INVESTMENT IN SUBSIDIARY Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

-

-

75,140,226

75,140,226

-

-

75,140,226

75,140,226

Non Current Investment in Subsidiary (7.1)

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

103

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Holding % 7.1

Investments in Subsidiary Southern Salt Company (Pvt) Ltd

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

100%

100%

Total Investments in Non-Quoted Equity Securities

8.

75,140,226

75,140,226

75,140,226

75,140,226

Total Gross Carrying Value of Investments in Equity Securities

75,140,226

75,140,226

Total Net Carrying Value of Investments

75,140,226

75,140,226

HELD TO MATURITY FINANCIAL ASSETS Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

As at 01 April

181,989,055

119,593,724

181,989,055

119,593,724

Additions

100,000,000

51,300,000

100,000,000

51,300,000

17,398,356

11,095,331

17,398,356

11,095,331

299,387,411

181,989,055

299,387,411

181,989,055

Current Investment in Fixed Deposits

Reinvestment of Interest As at 31 March

* The Fair Value of Loans & Receivable do not significantly vary from the value based on the amortised cost methodology.

9.

INVENTORIES Group

Raw Materials Finished Goods Packing Materials Other Chemical Stocks Engineering Stocks Fire wood Fuel Stock

10.

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

11,403,314

8,033,969

10,420,693

2,795,735

8,915,898

7,795,916

8,785,598

7,579,712

19,727,062

16,559,566

12,767,990

9,738,100

3,201,304

2,507,379

2,623,163

2,290,493

10,221,878

6,995,452

5,947,355

5,424,085

1,336,525

574,675

1,251,275

415,800

568,768

445,207

266,985

145,867

55,374,749

42,912,164

42,063,059

28,389,792

TRADE AND OTHER RECEIVABLES Group

Trade Receivables - Related Parties (10.1) Trade Receivables - Others Less : Provision for Doubtful Debts Other Receivables - Related Parties (10.2)

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

10,066,568

4,785,775

10,066,568

4,813,580

244,095,682

192,280,448

214,843,568

169,567,720

(2,789,619)

(4,108,301)

(2,789,619)

(4,108,301)

251,372,631

192,957,922

222,120,517

170,272,999

-

15,636,530

17,429,408

47,650,083

251,372,631

208,594,452

239,549,926

217,923,081

27,955,850

11,912,043

26,966,949

11,233,905

279,328,481

220,506,495

266,516,875

229,156,987

Non Cash Receivables Advances, Prepayments and Deposits

104

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Group 10.1

Trade Receivables From Related Parties

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

9,267,735

4,658,165

9,267,735

4,658,165

Relationship Raigam Marketing Services (Pvt) Ltd

Parent Company

Southern Salt Company (Pvt) Ltd

Subsidiary Company

Dream Life Science (Pvt) Ltd

Other Related Party

Company

-

-

-

27,805

798,833

127,610

798,833

127,610

10,066,568

4,785,775

10,066,568

4,813,580

Group 10.2

Other Receivables From Related Parties

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Relationship

11.

Company

2018

Raigam Marketing Services (Pvt) Ltd

Parent Company

-

9,352,037

-

9,352,037

Southern Salt Company (Pvt) Ltd

Subsidiary Company

-

-

17,429,408

34,524,138

Dream Life Science (Pvt) Ltd

Other Related Party

-

6,247,693

-

6,247,693

-

15,599,730

17,429,408

50,123,868

Initial Recognition Difference in Loan Receivable from Related Parties

-

-

-

(2,510,585)

Raigam Eastern Salt Company (Pvt) Ltd Other Related Party

-

36,800

-

36,800

-

15,636,530

17,429,408

47,650,083

STATED CAPITAL - GROUP & COMPANY 2018 Number

2017 Rs.

Number

Rs.

Fully Paid Ordinary Shares

12.

As at 01 April

282,207,320

604,414,640

282,207,320

604,414,640

As at 31 March

282,207,320

604,414,640

282,207,320

604,414,640

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

116,379,070

75,799,740

95,821,422

75,799,740

-

41,912,089

-

21,354,441

Revaluation Realised During the year

(1,300,714)

(1,332,759)

(7,181)

(1,332,759)

Tax Effect on Revaluation Surplus of Land

(7,087,796)

-

(7,087,796)

-

107,990,561

116,379,070

88,726,445

95,821,422

REVALUATION RESERVE Group

As at 01 April Revaluation of Property, Plant and Equipment- Net of Tax

As at 31 March 13.

Company

INTEREST BEARING LOANS AND BORROWINGS - GROUP & COMPANY

Finance Lease

Amount Repayable Within 1 Year

Amount Repayable After 1 Year

2018 Total

Amount Repayable Within 1 Year

Amount Repayable After 1 Year

2017 Total

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

2,507,310

1,580,237

4,087,546

2,222,896

4,069,533

6,292,429

2,507,310

1,580,237

4,087,546

2,222,896

4,069,533

6,292,429

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

105

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

13.2

Finance lease movement during year.

Motor Coach

13.3

As at 01.04.2017

New Leases Obtained

Repayment

As at 31.03.2018

Rs.

Rs.

Rs.

Rs.

7,450,224

-

(2,883,958)

4,566,266

7,450,224

-

(2,883,958)

4,566,266

Amount Repayable Within 1 Year

Amount Repayable After 1 Year

Total as at 31.03.2018

Rs.

Rs.

Rs.

2,883,598

1,922,638

4,806,236

(2,490,262)

(1,837,254)

(4,327,516)

393,336

85,384

478,720

Finance cost allocated to future periods.

Minimum Lease Payments Present Value of Minimum Lease Payments Future Lease Interest Cost

14.

DEFINED BENEFIT OBLIGATION Group

14.1

Expense on Defined Benefit Plans

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Current Service Expense

3,165,664

1,766,889

2,998,695

1,635,351

Interest Expense on Retirement Benefit Liability

1,161,950

616,136

1,070,823

541,944

Net Actuarial (Gain)/Loss on Liability

1,245,981

2,200,210

1,167,941

2,177,296

5,573,595

4,583,235

5,237,460

4,354,591

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

11,259,197

6,675,962

10,376,189

6,021,598

Current Service Expenses

3,165,664

1,766,889

2,998,695

1,635,351

Interest Expense on Retirement Benefit Liability

1,161,950

616,136

1,070,823

541,944

Net Actuarial (Gain)/Loss on Liability

1,245,981

2,200,211

1,167,941

2,177,296

Benefit Paid

(414,322)

-

(414,322)

-

16,418,470

11,259,197

15,199,327

10,376,189

Group 14.2

Retirement Benefit Liability

As at 01 April

As at 31 March

Company

14.3

As at 31 March 2018 the gratuity liability was actuarially valued by Messers. Spark Acturial (Pvt) Ltd.

14.4

Principal assumptions used in determining the retirement benefit liability for the Group and company are shown below.

Group 2018

2017

2018

2017

Staff Turnover Ratio

14.97%

14%

14.97%

14%

Salary Increase Rate

13.05%

14%

13.05%

14%

Discount Rate

10.68%

12.89%

10.68%

12.89%

55 Years

55 Years

55 Years

55 Years

Retirement Age

106

Company

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

14.5

In order to illustrate the significance of the salary increase rate and discount rate assumed in the actuarial valuation as at 31 March 2018, actuary had conducted a sensitivity analysis and results are given below.

Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Projected Benefit Liability on Current Assumptions

16,418,472

11,259,197

15,199,327

10,376,189

Value of +1% Change in Rate of Discounting Rate

15,657,478

10,751,044

14,532,290

9,901,966

Value of -1% Change in Rate of Discounting Rate

17,231,857

11,820,586

15,909,218

10,901,962

Value of +1% Change in Rate of Salary Increase Rate

17,207,916

10,709,581

15,887,597

9,860,472

Value of -1% Change in Rate of Salary Increase Rate

15,665,719

11,855,587

14,540,199

10,937,633

Group 14.6

The following payments are expected contributions to the retirement benefit liability in future years

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Less than or equal 1 year

2,979,645

1,883,057

2,979,645

1,883,057

Over 1 year and less than or equal 2 years

1,219,143

2,572,616

-

1,689,607

573,333

-

573,333

-

Over 5 years and less than or equal 10 years

11,646,349

6,803,525

11,646,349

6,803,525

Total

16,418,470

11,259,198

15,199,327

10,376,189

Over 2 years and less than or equal 5 years

15.

Company

INCOME TAX The major components of income tax expense for the years ended 31 March are as follows : Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

37,793,806

41,644,801

29,578,075

31,803,618

Previous Year Over/Under Provision

(224,349)

1,202,411

(583,757)

1,202,411

10% Withholding tax on inter company dividends

1,200,000

-

-

-

Deferred Taxation Charge/(Reversal) (15.2)

(1,926,970)

18,518,652

(979,830)

17,934,607

Income Tax (Income) / Expense Reported in the Income Statement

36,842,487

61,365,864

28,014,488

50,940,636

Income Statement Current Income Tax Current Income Tax Charge (15.1)

Deferred Income Tax

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

107

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

15.1

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

Group 2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Accounting Profit Before Tax

185,005,393

170,025,686

162,368,952

116,689,544

Aggregate Allowed Items

(35,349,027)

(34,747,276)

(26,792,483)

(25,168,404)

48,405,386

65,725,679

38,684,557

58,021,801

(30,267,171)

(14,966,142)

(30,267,171)

(14,966,142)

-

-

(10,800,000)

-

(1,318,682)

-

(1,318,682)

-

Tax Profit on Disposable profit

4,204,500

6,755,000

3,479,500

6,755,000

Accounting Disposal Profit

(323,553)

(3,266,308)

(323,553)

(3,266,308)

170,356,846

189,526,639

135,031,120

138,065,491

(8,637,180)

(18,972,001)

-

-

161,719,666

170,554,637

135,031,120

138,065,491

Other Income

9,185,183

14,966,142

9,185,183

14,966,142

Taxable Profit

170,904,850

185,520,779

144,216,303

153,031,633

Current Income Tax @ 20%

27,006,224

27,613,098

27,006,224

27,613,098

Expense

10,787,582

14,031,703

2,571,851

4,190,520

37,793,806

41,644,801

29,578,075

31,803,618

Aggregate Disallowed Items Interest Income Dividend Income Reversal of provision for doubtfull debts

Taxable Profit from Trade Income Section 32 deduction - Tax Losses Assessable Income

15.2

Company

@ 28%

Deferred Tax Assets, Liabilities and Income Tax relates to the followings; GROUP

Statement of Financial Position Deferred Tax Assets

Deferred Tax Liabilities

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Accumulated depreciation and revaluation for tax purposes

-

-

29,455,874

30,579,537

Tax Effect on Revaluation Surplus of Land

-

-

7,087,796

-

-

-

36,543,669

30,579,537

-

-

3,381,226

2,322,480

-

-

3,381,226

2,322,480

-

-

33,162,443

28,257,056

Deferred Tax Liabilities

Deferred Tax Assets Defined Benefit Plans

Net Deferred Tax (Asset)/Liability

108

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Income Statement

Other Comprehensive Income

2018

2017

2018

2017

(1,123,663)

19,613,875

(7,087,796)

9,655,143

(1,123,663)

19,613,875

(7,087,796)

9,655,143

(803,307)

1,095,223

(255,439)

441,875

(803,307)

1,095,223

(255,439)

441,875

(1,926,970)

18,518,652

(6,832,356)

9,213,268

Deferred Tax Liabilities Accumulated depreciation and revaluation for tax purposes

Deferred Tax Assets Defined Benefit Plans

Deferred Income Tax (Reversal)/Expense

COMPANY

Statement of Financial Position

Tax Effect on Revaluation Surplus of Land *

Other Comprehensive Income

2018

2017

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

18,596,988

18,845,778

(248,790)

18,972,226

-

1,608,797

7,087,796

-

-

-

(7,087,796)

-

25,684,783

18,845,778

(248,790)

18,972,226

(7,087,796)

1,608,797

3,039,865

2,075,238

(731,039)

(1,037,619)

(233,588)

(435,459)

3,039,865

2,075,238

(731,039)

(1,037,619)

(233,588)

(435,459)

(979,830)

17,934,607

(6,854,207)

1,173,338

Deferred Tax Liabilities Accumulated depreciation and revaluation for tax purposes

Income Statement

Deferred Tax Assets Defined Benefit Plans Deferred Income Tax (Reversal) / Expense Net Deferred Tax (Asset)/Liability

22,644,918

16,770,540

The New Inland Revenue Act No.24 of 2017 was certified on 24th October 2017 and is effective from 01 April 2018. Accordingly, Income tax provisions for the year ended 31 March 2018 were made based on rates applicable for the Year of Assessment 2017/18 with Deferred tax for the same period computed based on rates applicable post 1 April 2018. * Deferred Tax on Land Revaluation has been recognised based on new Inland Revenue Act No. 24 of 2017.

16.

TRADE AND OTHER PAYABLES Group 2018

Company 2017

2018

2017

Rs.

Rs.

Rs.

Rs.

21,454,021

10,134,412

12,999,268

10,134,412

- Related Parties (16.1)

23,061,582

-

29,518,663

1,507,896

Other Payables - Related Parties (16.2)

3,466

-

3,466

-

31,687,175

22,960,195

28,414,117

19,743,908

Trade Payables - Others

Sundry Creditors Including Accrued Expenses Statutory Payable Wages and Salary Payable Excess Funds Refundable against IPO Proceeds

314,071

2,174,503

-

-

13,183,447

11,054,521

13,183,447

10,011,262

318,000

318,000

318,000

318,000

90,021,761

46,641,631

84,436,962

41,715,478

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

109

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

16.1

Group

Trade Payables to the Related Parties Relationship

16.2

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

340,850

-

340,850

-

-

-

6,457,081

1,507,896

Raigam Marketing Services (Pvt) Ltd

Parent Company

Southern Salt Company (Pvt) Ltd

Subsidiary Company

Raigam Eastern Salt Company (Pvt) Ltd

Other Related Party

3,760,914

-

3,760,914

-

Puttalam Salt Ltd

Other Related Party

18,959,818

-

18,959,818

-

23,061,582

-

29,518,663

1,507,896

Group

Other Payables to Related Parties

Raigam Eastern Salt Company (Pvt) Ltd

17.

Company

Company

2018

2017

2018

2017

Relationship

Rs.

Rs.

Rs.

Rs.

Other Related Party

3,466

-

3,466

-

3,466

-

3,466

-

OTHER INCOME Group

Profit on Disposal of Property, Plant and Equipment Reversal of provision for doubtful Debts

18.

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

323,553

3,266,308

323,553

3,266,308

1,318,682

-

1,318,682

-

1,642,235

3,266,308

1,642,235

3,266,308

FINANCE INCOME Group

Interest Income - Fixed & Saving Deposits Dividend Income Notional Interest Income on Fair Valuation of Related Party Loans (Note 18.1)

18.1

Notional Interest Income on Fair Valuation of Related Party Loans Relationship

110

Company

Raigam Marketing Services (Pvt) Ltd

Parent Company

Southern Salt Company (Pvt) Ltd

Subsidiary Company

Dream Life Science (Pvt) Ltd

Other Related Party

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

30,303,007

14,966,142

30,267,171

14,966,142

-

-

10,800,000

-

1,154,378

2,827,852

2,510,585

5,572,422

31,457,386

17,793,994

43,577,756

20,538,563

2017

2018

Group 2018

Company 2017

Rs.

Rs.

Rs.

Rs.

692,049

2,026,760

692,049

2,026,760

-

-

1,356,207

2,744,571

462,329

801,091

462,329

801,091

1,154,378

2,827,852

2,510,585

5,572,422

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

19.

FINANCE COST Group 2018 Interest Charges on Bank Overdraft Lease Interest

Company 2017

2018

2017

Rs.

Rs.

Rs.

Rs.

1,891,750

270,990

1,754,933

7,895

679,076

284,078

679,076

284,078

2,570,826

555,068

2,434,009

291,973

20.

EARNINGS PER SHARE

20.1

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

20.2

The following reflects the income and share data used in the Basic Earnings Per Share computation.

Amount Used as the Numerator: Net profit from operations attributable to equity holders for basic earnings per share

Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

148,162,906

108,659,820

134,354,464

65,748,908

282,207,320

282,207,320

282,207,320

282,207,320

282,207,320

282,207,320

282,207,320

282,207,320

2017

2018

Number of Ordinary Shares Used as Denominator: Number of ordinary shares for basic earnings per share Effect of dilution: Weighted average number of ordinary shares adjusted for the effect of dilution 21.

DIVIDEND PER SHARE Group 2018 Dividend Paid Dividend Per Share

22.

Company 2017

Rs.

Rs.

Rs.

Rs.

42,331,098

28,220,732

42,331,098

28,220,732

0.15

0.10

0.15

0.10

PROFIT FROM CONTINUING OPERATIONS Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

29,620,627

49,335,871

21,642,272

42,153,517

Included in Cost of Sales Depreciation Staff Costs includes ;

150,514,342

110,458,584

120,801,820

88,628,423

- Defined Benefit Plan Expenses -Gratuity (included in staff cost)

2,988,552

1,635,434

2,988,552

1,635,434

- Defined Contribution Plan Expenses - EPF & ETF (included in staff cost)

5,736,265

4,945,451

4,938,831

4,380,973

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

111

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Depreciation

3,557,486

3,476,699

3,300,840

3,318,597

Amortisation

122,945

122,945

68,400

68,400

Research & Development Expenditure Written Off

225,596

60,836

225,596

60,836

38,561,414

36,006,168

25,338,391

23,486,103

798,578

747,590

540,483

541,861

- Defined Contribution Plan Expenses - EPF & ETF (included in staff cost)

3,306,245

3,209,527

2,140,102

2,081,953

Director Fees

6,030,000

5,890,000

5,190,000

5,120,000

499,944

416,491

374,944

329,041

11,146,872

8,282,422

9,432,994

8,699,290

540,483

-

540,483

-

1,117,747

1,080,316

894,198

864,655

18,740,828

10,153,728

18,740,828

10,153,728

Included in Administrative Expenses

Staff Costs includes - Defined Benefit Plan Expenses -Gratuity (included in staff cost)

Audit Fee & Expenses Included in Selling and Distribution Costs Staff Costs includes - Defined Benefit Plan Expenses -Gratuity (included in staff cost) - Defined Contribution Plan Expenses - EPF & ETF (included in staff cost) Advertising and Promotional Expenses 23.

CASH AND CASH EQUIVALENTS IN CASH FLOW STATEMENT Group

23.1

24.

Favourable Cash & Cash Equivalent Balances

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Cash & Bank Balances

9,072,635

58,311,596

8,500,797

51,594,958

Cash and Cash Equivalents for the Purpose of Cash Flow Statement

9,072,635

58,311,596

8,500,797

51,594,958

COMMITMENTS AND CONTINGENCIES Group

24.1

Capital Expenditure Commitments Expected capital Expenditure during the next financial year

24.2

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

25,000,000

25,000,000

20,000,000

20,000,000

25,000,000

25,000,000

20,000,000

20,000,000

Contingencies The Group does not have significant contingencies as at the reporting date.

24.3

Finance lease commitments – Group/Company as lessee The Group/Company has entered into finance leases contracts for certain vehicles. The obligation under finance lease is secured by the lessor's title to leased assets. Future minimum lease payments as follows.

112

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Group

24.4

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Within one year

2,507,310

2,883,958

2,507,310

2,883,958

After one year but not more than five years

1,580,236

4,566,267

1,580,236

4,566,267

4,087,546

7,450,225

4,087,546

7,450,225

Operating lease commitments – Group/Company as lessee The Group/Company has entered into operating leases for a land which situated in Bataatha, Hambanthota for a period of 30 Years.

Future minimum rentals payable under non-cancellable operating leases as at 31 March are, as follows.

Group

Within one year

25.

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

900,000

900,000

-

-

3,600,000

3,600,000

-

-

18,900,000

19,800,000

-

-

23,400,000

24,300,000

-

-

After one year but not more than five years More than five years

Company

ASSETS PLEDGED - GROUP AND COMPANY The following assets have been pledged as security for liabilities.

Carrying Value of the Nature of the Assets Pledged

Assets Pledged

Facility Obtained

2018

26.

Assets Pledged "Included Under" 2017

Land at Palavi

Loan and Overdraft Facility

277 Mn

277 Mn

Property, Plant and Equipment

Fixed Deposits

Overdraft Facility

95.2 Mn

95.2 Mn

Investments

Motor Coach

Finance Lease Facility

7.21Mn

7.21Mn

Property, Plant and Equipment

}

RELATED PARTY DISCLOSURES Details of significant related party disclosures are as follows: Transaction with related entities Nature of transaction

26.1

Parent

Group

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Balance as at 1 April

14,010,202

25,173,165

14,010,202

25,173,165

Loan Settlements

(9,352,037)

(15,000,000)

(9,352,037)

(15,000,000)

Settlements for purchase goods and services Purchase of goods and services

-

(818,923)

-

(818,923)

618,795

4,655,960

618,795

4,655,960

Receivable on cash receipt for sales

3,990,775

-

3,990,775

-

Payable on cash receipt for sales

(340,850)

-

(340,850)

-

Balance as at 31 March

8,926,885

14,010,202

8,926,885

14,010,202

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

113

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

Group 26.2

Transaction with/between subsidiary

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Balance as at 1 April

-

-

33,044,047

55,058,213

Fund transfers

-

-

(11,123,781)

(10,000,000)

Loan Settlements

-

-

(16,876,219)

(20,000,000)

Purchase of Goods/Services

-

-

(89,520,900)

(92,035,151)

Settlements for purchase of Goods/Services

-

-

88,310,159

89,400,060

Supply of HR services

-

-

10,905,270

10,620,925

Receipts on behalf of other company

-

-

(3,766,250)

-

Balance as at 31 March

-

-

10,972,326

33,044,047

2017

2018

Group 26.3

Other related parties

2018

Balance as at 1 April Loan Settlements

Company 2017

Rs.

Rs.

Rs.

Rs.

6,338,503

11,230,137

6,338,503

11,230,137

(6,210,894)

(5,000,000)

(6,210,894)

(5,000,000)

(180,383,289)

(116,072,126)

(180,383,289)

(116,072,126)

157,662,557

116,072,126

157,662,557

116,072,126

-

(19,243)

-

(19,243)

Receipts on behalf of the company

619,920

-

619,920

-

Other Receipts on behalf of the company

(3,466)

-

(3,466)

-

Sale of Goods and Services

51,304

127,609

51,304

127,609

(21,925,365)

6,338,503

(21,925,365)

6,338,503

Purchase of Goods/Services Settlements for purchase of Goods/Services Expenses on behalf of the company

Balance as at 31 March

The above transactions are included in current liabilities as balance due to related parties and in current assets as balance due from related parties.

The above other related companies include following companies.

- Raigam Creations (Pvt) Ltd - Dream Cosmetics (Pvt) Ltd - Raigam Herbal Remedies (Pvt) Ltd - Raigam Eastern Salt Company (Pvt) Ltd - Puttalam Salt Ltd - Sun Salt Ltd - Dream Life Science (Pvt) Ltd - Raigam Distributors (Pvt) Ltd Other related parties are companies controlled / jointly controlled / Significantly influenced by parent company.

Terms and conditions of transactions with related parties The sales to and purchases from related parties are made on terms equivalent to those that are applicable to the External Customers.

Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2018, the Group/Company has not recorded any impairment of receivables relating to amounts owed by related parties (2017: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

114

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

26.3

Transaction with Key Management Personnel Group

Key Management Personnel include directors of the company.

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

6,030,000

5,890,000

5,190,000

5,120,000

Key Management Personnel Compensation Short - Term Employee Benefits

Company

2018

26.4

Other than the above short term benefits there have been no transactions with entities that are controlled or significantly influenced by key management personnel or their close members of family.

27.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

27.1

Introduction Risk is inherent in Group's business activities, but is managed through a process of ongoing identification, measurement, and monitoring, subject to risk limits and other controls. The Board of Directors places special consideration on the management of such risks. The Group is mainly exposed to; - Commodity Price Risk - Liquidity Risk - Equity Price Risk - Credit Risk Commodity Price Risk The entity is affected by the availability and price of certain commodities, specially raw crystal salt. Depending on the raw salt harvesting quantities and qualities the prices are decided. This risk is mitigated through passing on cost increases to the customer through the regular price adjustments and planning purchasing on right period by procurement division.

Liquidity risk Liquidity risk arises from the financial liabilities of the entity and entity's subsequent ability to meet their obligation to repay their financial liabilities as and when they fall due.

Liquidity risk management involves maintaining available funding and ensuring the entity has access to an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, Group aims to maintain flexibility within the funding structure through the use of bank overdrafts and short term loans.

The Group also regularly performs a comprehensive analysis of all cash inflows and outflows that relate to financial assets and liabilities.

Below table illustrates the maturity periods of liabilities in due.

2018

Type of Loan Finance Lease Trade & Other Payables

Group

Company

Repayable Within 1 Year

Repayable After 1 Year

Total Repayable

Repayable Within 1 Year

Repayable After 1 Year

Total Repayable

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

2,900,646

1,665,621

4,566,266

2,900,646

1,665,621

4,566,266

90,021,761

-

90,021,761

84,436,962

-

84,436,962

92,922,407

1,665,621

94,588,028

87,337,608

1,665,621

89,003,228

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

115

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

2018

Group

Company

Repayable Within 1 Year

Repayable After 1 Year

Total Repayable

Repayable Within 1 Year

Repayable After 1 Year

Total Repayable

Type of Loan

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Finance Lease

2,883,958

4,566,267

7,450,225

2,883,958

4,566,267

7,450,225

Trade & Other Payables

46,641,631

-

46,641,631

41,715,478

-

41,715,478

49,525,589

4,566,267

54,091,856

44,599,436

4,566,267

49,165,703

Equity Price Risk The key objective of entity when managing capital is to safeguard its ability to continue as a going concern and maintain optimal returns to shareholders and benefits for other stakeholders.

Credit Risk Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The company is exposed to credit risk from its operating activities (primarily for trade receivables). The company minimizes credit risk towards its customers by having high level scrutiny before converting a cash customer to a credit customer. Also the company adheres to the policy of obtaining bank guarantees from distributors and adequate cash deposits from dealers. The maximum exposure will be equal to the carrying amount of these instruments.

Group

The maximum exposure to credit risk at the reporting date was:

Company

2018

2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Trade Receivables

244,095,682

192,280,448

214,843,568

169,567,720

Other Receivables

27,955,850

27,548,573

44,396,358

58,883,987

The ageing of trade receivables, at the end of the reporting period is: 2018

Group

Company

Gross Carrying Amount

Impairment Allowance

Net Carrying Amount

Gross Carrying Amount

Impairment Allowance

Net Carrying Amount

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

152,006,714

-

152,006,714

141,124,210

-

141,124,210

Past due 31-180

45,150,868

-

45,150,868

31,556,910

-

31,556,910

Past due 181-365

15,633,360

-

15,633,360

13,705,910

-

13,705,910

Past Due More Than 365 days

31,304,739

(2,789,619)

28,515,120

28,456,537

(2,789,619)

25,666,918

244,095,681

(2,789,619)

241,306,062

214,843,568

(2,789,619)

212,053,949

Neither Past Due, Nor Impaired Past Due but Nor Impaired

116

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

NOTES TO THE FINANCIAL STATEMENT Year ended 31st March 2018

2017

Neither Past Due, Nor Impaired

Group

Company

Gross Carrying Amount

Impairment Allowance

Net Carrying Amount

Gross Carrying Amount

Impairment Allowance

Net Carrying Amount

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

145,433,412

-

145,433,412

131,829,584

-

131,829,584

Past Due but Nor Impaired Past due 31-180

21,171,530

-

21,171,530

12,512,281

-

12,512,281

Past due 181-365

10,922,397

-

10,922,397

10,475,547

-

10,475,547

Past Due More Than 365 days

14,753,109

(4,108,301)

10,644,808

14,750,308

(4,108,301)

10,642,007

192,280,448

(4,108,301)

188,172,147

169,567,720

(4,108,301)

165,459,419

The movement in the allowance for impairment in respect of trade receivables during the year was as follows: Group 2017

2018

2017

Rs.

Rs.

Rs.

Rs.

Gross Debtor Balance

244,095,682

192,280,448

214,843,568

169,567,720

Impairment Written Off

(2,789,619)

(4,108,301)

(2,789,619)

(4,108,301)

241,306,063

188,172,147

212,053,949

165,459,419

Net Debtor Balance 27.2

Company

2018

Capital Management The Board of Directors reviews the capital structure of the group on regular basis. The intention of Board of Directors is to maintain an optimum capital structure while minimizing cost of financing and safeguarding key stakeholders' interest.

28.

EVENTS AFTER THE REPORTING PERIOD There have been no material events occurring after the reporting date that require adjustments to or disclosure in the Financial Statements other than the following : Dividend

On 17 July 2018, the Board proposed a first and final dividend of Rs. 0.10 per share for the year ended 31st March 2018, subject to obtaining the shareholders’ approval at the Annual General Meeting.

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

117

Investor Information Stock Exchange The issued Ordinary shares of Raigam Wayamba Salterns PLC are listed with the Colombo Stock Exchange of Sri Lanka, since 29 April 2010. The Audited Financial Statements of the Group for the year ended 31 March 2018 have been submitted to the Colombo Stock Exchange.

118

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Composition Of Shareholdings The details of shareholders as at 31 March 2018 are as follows; 31.03.2018

31.03.2017

No of Shares

%

No of Shares

%

Raigam Marketing Services (Pvt) Ltd

101,103,660

35.83%

101,103,660

35.83%

Raigam Distributors (Pvt) Ltd

101,103,660

35.83%

101,103,660

35.83%

Ravi Liyanage

505,516

0.18%

505,516

0.18%

G. V. P. G. Amarasinghe

250,000

0.09%

250,000

0.09%

79,244,484

28.07%

79,244,484

28.07%

Major shareholding

Directors’ shareholding

Public shareholding 3,545 Number of shareholders

Stated Capital Stated Capital as at 31 March 2018 is represented by shares in issue as given below;

Ordinary Shares (Nos.)

31.03.2018

31.03.2017

282,207,320

282,207,320

Market Value Per Share 31.03.2018

31.03.2017

Highest

3.10

2.60

Lowest

2.00

1.80

As at the year end

2.40

2.00

31.03.2018

31.03.2017

3,218

2,113

Trading Activities No. of transactions / No. of times No. of shares traded Nos.

28,604,504

18,329,357

Value of shares traded Rs.

72,845,967

39,652,761

Investor Ratios 31.03.2018

31.03.2017

Earnings per Share Rs.

0.48

0.23

Dividend per Share Rs.

0.15

0.10

31.25

43.48

5.0

8.70

Earnings Yield %

20.0

11.50

Net Assets per Share Rs.

3.74

3.44

Debt Equity Ratio %

12.55

10.80

Interest Cover No. of times

67.71

400.66

Dividend pay out % Price Earning No. of time

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

119

COMPOSITION OF SHAREHOLDERS Year ended 31st March 2018

Twenty Largest Shareholders As at 31 March 2018 Name of Shareholders

%

No. of Shares

%

1

Raigam Marketing Services (Pvt) Ltd

101,103,660

35.83

101,103,660

35.83

2

Raigam Distributors (Pvt) Ltd

101,103,660

35.83

101,103,660

35.83

3

Employees Provident Fund

38,056,654

13.49

38,056,654

13.49

4

Tranz Dominion,L.L.C.

3,159,010

1.12

3,049,500

1.08

5

Dr. Abdul Rahuman Mohamed

1,564,577

0.55

-

-

6

Seylan Bank Plc/Jayantha Dewage

1,477,100

0.52

1,477,100

0.52

7

People'S Leasing & Finance Plc/Dr. W.V.P.C. Ranaweera

1,350,457

0.48

400,000

0.14

8

Mr. Brian Lester Sebastian Peiris

1,000,000

0.35

1,000,000

0.35

9

Mr. Joseph Ponniah Jayaramu

883,111

0.31

-

-

10

Mr. Wisnakadawalage Don Suranga Nishantha Gunasekara

800,000

0.28

-

-

11

Miss. Hewa Juwan Kankanange Udyogi Wijerame

700,000

0.25

-

-

12

Mr. Amrik Harnam & Mrs. J.K.P. Singh

650,000

0.23

-

13

Mr. Kanthasamy Ketheesan

581,423

0.21

-

14

Mr. Hiran Arjuna Surendra Madanayake

569,800

0.20

569,800

0.20

15

Dr. Ravi Liyanage

505,516

0.18

505,516

0.18

16

Venture Partners Private Limited

500,000

0.18

750,000

0.27

17

Harnam Holdings Sdn Bhd

499,900

0.18

499,900

0.18

18

Mr. Thissaveerasingam Jeyarajasingam

494,462

0.18

-

-

19

Mr. Abdul Sameem Mohamed Rifki

486,941

0.17

-

-

20

Mr. Suresh Hashantha Gregory Perera

477,679

0.17

477,679

0.17

21

Mr. Sri Mahadeva Mylventhen

-

-

1,968,178

0.70

22

Mrs. Namagal Srimahadeva

-

-

1,500,000

0.53

23

Mr. Dong Kim

-

-

1,477,100

0.52

24

Waldock Mackenzie Ltd/Mr. S. A. Gulamhusein

-

-

612,985

0.22

25

Mr. Abeysiri Hemapala Munasinghe

-

-

441,475

0.16

26

Mr. Ravindra Raj Weerawardena

-

-

440,000

0.16

27

Mr. Weerathunga Arachchige Sampath Palitha De Saram

-

-

411,222

0.15

28

Dr. Abdul Rahuman Mohamed

-

-

355,453

0.13

255,963,950

91

256,198,782

91

26,243,370

9

26,008,538

9

282,207,320

100

282,207,320

100

Sub Total Balance held by 3,529 shareholders (2017 - 3,606) Total No of Shares

120

As at 31 March 2017

No. of Shares

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

COMPOSITION OF SHAREHOLDERS

Year ended 31st March 2018

As at 31 March 2018 No. of Share holders

%

Less than or equal to 1000

1,650

1,001 - 10,000

As at 31 March 2017

No. of Share

No. of Share holders

%

No. of Share

0.23%

658,979

1,616

0.24%

673,472

1,538

2.39%

6,745,089

1,611

2.53%

7,141,949

299

3.44%

9,695,392

336

3.78%

10,674,629

55

6.13%

17,292,742

53

4.95%

13,982,518

7

87.81%

247,815,118

3

85.14%

240.263.974

3,549

100.00%

282,207,320

3,626

100.00 %

282,207,320

3,532

98.11%

276,880,110

3,607

97.89%

276,264,221

17

1.89%

5,327,210

19

2.11%

5,943,099

3,549

100.00%

282,207,320

3,626

100.00 %

282,207,320

Individuals

3,468

11.54%

32,577,590

3,542

11.54%

32,567,787

Institutions

81

88.46%

249,629,730

84

88.46%

249,639,533

3.549

100.00%

282,207,320

3,626

100.00%

282,207,320

Distribution Of Shareholding

10,001 - 100,000 100,001 - 1,000,000 Over 1,000,001 Grand Total Resident & Non - Resident Resident Non - Resident Total Shareholding Individuals & Institutions

Total Shareholding

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

121

VALUE ADDED STATEMENT - GROUP Year ended 31st March 2018

As at 31 March 2018 Value Addition

As at 31 March 2017

Rs.

%

Gross Turnover (Including Value Added Tax) Cost of Materials & Services Purchased Other Income Total Value Addition

%

Rs.

915,514,624

847,693,823

(385,100,439)

(418,485,683)

33,099,621

22,393,059

563,513,806

451,601,199

Distribution Of Value Addition To Employees (as Remuneration)

39%

217,825,620

37%

68,647,423

To Government

21%

118,122,296

21%

92,585,236

8%

46,101,925

6%

28,775,748

32%

181,463,965

36%

161,592,792

To Providers of Capital

Retained in the Business - Depreciation - Profit Retained

100%

33,301,059

52,932,970

148,162,906

108,659,822

563,513,806

Value Added per Employee Value Added as a % of Turnover

Distribution Of Value Addition

32%

39% 2017/ 2018

8% 21% 21%

To Employees

122

To Government

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

100%

2,056,620

1,828,345

62%

53%

Distribution Of Value Addition

37%

36% 2017/ 2016

6%

To Capital Providers

451,601,199

21%

Retained in the Business

VALUE ADDED STATEMENT - COMPANY

Year ended 31st March 2018

As at 31 March 2018 Value Addition

As at 31 March 2017

Rs.

%

Gross Turnover (Including Value Added Tax) Cost of Materials & Services Purchased Other Income Total Value Addition

Rs.

%

837,798,858

777,961,948

(419,851,392)

(457,426,258)

45,219,991

25,137,630

463,167,457

345,673,320

Distribution Of Value Addition To Employees (as Remuneration)

36%

168,430,902

38%

131,113,957

To Government

20%

90,605,472

22%

74,318,280

To Providers of Capital

10%

44,765,108

8%

28,512,705

Retained in the Business

34%

159,365,975

32%

111,728,378

- Depreciation - Profit Retained 100%

25,011,511

45,979,469

134,354,464

65,748,909

463,167,457

Value Added per Employee Value Added as a % of Turnover

100%

1,906,039

1,578,417

55%

44%

Distribution Of Value Addition

Distribution Of Value Addition

34%

32%

36% 2017/ 2018

38% 2017/ 2016

8%

10% 20%

To Employees

345,673,320

To Government

22%

To Capital Providers

Retained in the Business

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

123

GROUP FIVE YEAR SUMMARY Year ended 31st March 2018

Operating Results

2018

2017

2016

2015

2014

Turnover

Rs.

791,505,921

778,703,892

435,166,212

380,531,619

464,075,751

Gross Profit

Rs.

292,792,509

272,713,362

147,270,343

129,286,909

162,522,338

Earnings Before Interest & Taxation (EBIT)

Rs.

187,576,219

170,580,754

59,895,070

48,398,993

64,023,411

Profit / (Loss) Before Taxation (PBT)

Rs.

185,005,393

170,025,686

58,050,284

44,067,214

48,775,866

Profit / (Loss) After Taxation (PAT)

Rs.

148,162,906

108,689,820

45,804,438

43,134,267

45,550,393

Retained Profit / (Loss)

Rs.

396,464,935

290,322,953

210,309,442

164,628,907

149,287,784

Rs.

604,414,640

604,414,640

604,414,640

604,414,640

604,414,640

Financial Position Capital Employed Stated Capital Reserves

Rs.

504,455,496

406,702,023

286,109,182

240,428,647

225,087,524

Total Equity

Rs.

1,108,870,135

1,011,116,663

890,523,822

844,843,287

829,502,164

Total Debt

Rs.

150,607,302

130,755,261

62,398,083

77,910,771

124,237,255

Total Capital Employed

Rs.

1,259,477,437

1,141,871,924

952,921,904

922,754,058

953,739,419

Rs.

6,230,889

7,210,000

-

-

-

Assets Employed Property, Plant & Equipment - Leasehold Property, Plant & Equipment - Freehold

Rs.

607,063,318

628,057,827

615,658,816

638,365,567

617,072,957

Other Non Current Assets

Rs.

3,019,955

3,142,899

17,586,058

35,404,217

45,439,466

Total Current Assets

Rs.

643,163,276

503,719,309

319,677,030

248,984,273

291,226,996

Key Financial Indicators

124

Equity / Asset Ratio

No. of Times

0.88

0.89

0.93

0.92

0.87

Current Ratio

No. of Times

6.47

5.78

5.79

3.40

2.42

Gearing Ratio

%

13.6

12.9

6.5

8.7

15.0

Turnover to Capital Employed

No. of Times

0.63

0.68

0.46

0.41

0.49

Earnings Per Share (EPS)

Rs.

0.53

0.39

0.16

0.15

0.16

Dividend Per Share (DPS)

Rs.

0.15

0.10

-

0.10

-

Market Price

Rs.

2.40

2.00

2.00

2.70

2.20

Price Earning

No. of Times

4.57

5.19

12.32

17.66

13.75

Earning Yeild

%

21.88

19.25

8.12

5.66

7.27

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

GROUP REAL ESTATE PORTFOLIO Year ended 31st March 2018

Land Extent Acers

Value Rs.

No. of Building

Extent Sq.feet

Net Book Value Rs.

-

22

153,187,500

7

27,620

42,200,000



-

17

31,771,875

1

1,840

2,525,000

Lot B Periyatheevu Vayalkany Puladivayal Palavi Puttalam



-

78

152,246,817

1

-

1,090,000

Lot C Periyatheevu Kany Puladivayal Palavi Puttalam



-

23

-

-

Kunukalliya Levaya Kahandamodara Gurupokuna Tangalle

-



204

-



8

Owning Company

Location

Raigam Wayamba Salterns PLC

Kalpitiya Road, Palavi Puttalam



Lot A Periyatheevu Manaikany Puladivayal Palavi Puttalam

Southern Salt Company (Pvt) Ltd

Building

Bata-atha Industrial Park Bata-atha Hungama

Freehold Land

Leasehold Land

39,031,250 376,237,442

72,500,000

5,000,000 77,500,00

45,815,000

3

360

2

8532

935,837

21,203,502 22,179,339

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

125

Notice of Meeting NOTICE IS HERE BY GIVEN that the 13th Annual General Meeting of Raigam Wayamba Salterns PLC will be held at the Auditorium of The Centre for Banking Studies - Central Bank of Sri Lanka, No 58, Sri Jayawardenapura Mawatha, Rajagiriya on Thursday the 30th August 2018 at 9.00 a.m. for the following purposes

Agenda 1. To receive and consider the Report of the Directors and Audited Financial Statements of the Company and the Group for the financial year ended 31 March 2018, with the Auditors' Report thereon.

2. To approve a dividend of Rs. 0.10 per share recommended by the directors.

3. To re-appoint Messrs Ernst & Young, Chartered Accountants as Auditors for the ensuing year and to authorize the Directors to determine their remuneration.

4. To re-appoint Mr. S.A. Wickrampala, Director who retires from office in terms of section 210 of the Companies Act No. 7 of 2007 and for this purpose to pass the following resolution as an ordinary resolution

"RESOLVED that the age limit stipulated in section 210 of the Companies Act No. 7 of 2007

shall not apply to Mr. S.A. Wickramapala, who is 74 years of age and that he is re-appointed as a Director of the Company in terms of section 211 of the Companies Act No. 7 of 2007".

5. To re-appoint Mr. W.A. Upali Gunawardena, Director who retires from office in terms of section 210 of the Companies Act No. 7 of 2007 and for this purpose to pass the following resolution as an ordinary resolution

"RESOLVED that the age limit stipulated in section 210 of the Companies Act No. 7 of 2007 shall not apply to Mr. W.A. Upali Gunawardena, who is 72 years of age and that he is re-appointed as a Director of the Company in terms of section 211 of the Companies Act No. 7 of 2007".

6. To authorize the Directors to determine donations for the financial year 2018/2019.

By order of the Board Raigam Wayamba Salterns PLC

For Business Intelligence (Pvt) Ltd. Secretaries 30 July 2018 Note: A member entitled to attend and vote is entitled to appoint a Proxy to attend and vote in his / her place.

A Proxy need not to be a member of the Company.

A Form of Proxy accompanies this Notice.

126

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

Form of Proxy I/We*, the undersigned …………………………………………………………………………………………………………………… ……..............… of ......…………………………………………………………………………………………………………………… ……………………………………… being a shareholder / shareholders of Raigam Wayamba Salterns PLC hereby appoint ………… ……………………………………………………………………………………………… NIC No. …………………………………

Of ………………………………………………………………………………………………………………………………………… …………………....…………………………………………………………………… or failing him* Dr. Ravi Liyanage or failing him* Mr. G.V.P. Ganaka Amarasinghe

or failing him*

Snr. Prof. S.P.P. Amaratunge

or failing him*

Mr. T. Dharmarajah or failing him* Mr. W.A. Upali Gunawardena

or failing him*

Mr. K. R. Theodore

or failing him*

Mr. S. A. Wickramapala

or failing him*

as my/our* Proxy to represent me/us* and vote as indicated hereunder for me/us* and on my/our* behalf at the Annual General Meeting of the Company to be held on Thursday, August 30, 2018 at 9.00 a. m. at the Auditorium of the Centre for Banking Studies, Central Bank of Sri lanka No. 58, Sri Jayewardenepura Mawatha, Rajagiriya and at any adjournment thereof and at every poll, which may be taken in consequence thereof.

For

Against

01. To approve a dividend of Rs. 0.10 per share recommended by the directors.

02. To re-appoint Messrs Ernst & Young, Chartered Accountants as Auditors for the ensuing year and to authorize the Directors to determine their remuneration.

03. To re-appoint Mr. S.A. Wickrampala, Director who retires from office in terms of section 210 of the Companies Act No. 7 of 2007 and for this purpose to pass the following resolution as an ordinary resolution:

"RESOLVED that the age limit stipulated in section 210 of the Companies Act No. 7 of 2007 shall not apply to Mr. S.A. Wickramapala, who is 74 years of age and that he is re-appointed as a Director of the Company in terms of section 211 of the Companies Act No. 7 of 2007".

04. To re-appoint Mr. W.A. Upali Gunawardena, Director who retires from office in terms of section 210 of the Companies Act No. 7 of 2007 and for this purpose to pass the following resolution as an ordinary resolution:

"RESOLVED that the age limit stipulated in section 210 of the Companies Act No. 7 of 2007 shall not apply to Mr. W.A. Upali Gunawardena, who is 72 years of age and that he is reappointed as a Director of the Company in terms of section 211 of the Companies Act No. 7 of 2007".

05. To authorize the Directors to determine donations for the financial year 2018/2019.

Signed this……………………………………… day of.…………………………………….. Two Thousand and Eighteen. ……………………………

Signature of Shareholder/s *Please delete what is inapplicable

Raigam Wayamba Salterns PLC | ANNUAL REPORT 2017 - 2018

127

FORM OF PROXY (Cond..)

Instructions for completion of Proxy 01. All the relevant details should be legibly entered in the Form of Proxy and duly signed and dated by the shareholder.

02. Please indicate with a “X” clearly how the Proxy should vote on the Resolution. If no indication is given, the Proxy in his/her discretion will vote as he/ she thinks fit.

03. In the case of a company/corporation, the proxy must be under its common seal, which should be affixed and attested in the manner prescribed by its Articles of Association.

04. The completed Form of Proxy should be deposited at the Office of the Company Secretaries, Business Intelligence (Pvt) Ltd, No. 08, Tickell Road, Colombo 08 by 9.00 a. m. on August 28, 2018.

05. A Proxy need not to be a Shareholder of the Company.

ANNUAL

REPORT 2017 - 2018