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Access Engineering PLC. Annual Report 2011/12

Annual Report 2011/12

www.accessengsl.com


CORPORATE INFORMATION

Name of Company Access Engineering PLC Registered Office Level 8, Access Towers 278, Union Place Colombo 02. Tel: +94 11 2302302 Fax: +94 11 2302333 Web - www.accessengsl.com E-mail - inquiries@accessengsl.com Legal Form A public limited liability company incorporated in Sri Lanka on July 31, 2001 under the Companies Act No. 17 of 1982 and Reregistered under the Companies Act No. 07 of 2007 on February 06, 2008. Ordinary Voting Shares are listed on the Dirisavi Board of the Colombo Stock Exchange. Company Registration Number PB 200 PQ Board of Directors S J S Perera J C Joshua D A R Fernando S H S Mendis T A G Fernando S D Munasinghe R J S Gomez A I Lovell Prof. K A M K Ranasinghe N D Gunaratne

Financial Highlights Chairman’s Message Management Discussion & Analysis Corporate Governance Annual Report of the Board of Directors Audit Committee Report Risk Management Board of Directors Corporate Management Team Engineering Projects Engineering Services People & Communities

2 4 8 18 21 23 24 26 28 34 42 48

The Planet 54 Accreditations,Awards & Accolades 58 Independent Auditor’s Report 63 Income Statement 64 Balance Sheet 65 Statement of Changes in Equity 66 Cash Flow Statement 67 Notes to the Financial Statements 68 Share Information 96 Notice of Meeting 99 Form of Proxy Enclosed Corporate Information IBC

Designed and produced by emagewise Digital plates and printing by Aitken Spence Printing & Packaging (Pvt) Ltd.

Bankers Bank of Ceylon Nations Trust Bank PLC Sampath Bank PLC Hatton National Bank PLC Commercial Bank of Ceylon PLC People’s Bank The Hongkong and Shanghai Banking Corporation Limited Secretaries P W Corporate Secretarial (Pvt) Ltd 3/17, Kynsey Road Colombo 08. Tel: +94 11 4640360 Fax: +94 11 4740588 Auditors Messrs KPMG Chartered Accountants 32A, Sir Mohamed Macan Markar Mawatha Colombo 03. Tel: +94 11 2426426 Fax: +94 11 2445872


Vision “To be the foremost Sri Lankan business enterprise in value engineering” Mission “To meet the challenges in the development of multi sector civil engineering projects, providing innovative solutions whilst developing long term progressive relationships with all our stakeholders”

Our vision to ‘be the foremost Sri Lankan business enterprise in value engineering’ means more to us than operational excellence and investor value alone. We deal with people’s lives - their hopes, their dreams, their visions of building better prospects for themselves and for their children. From bridges and flyovers to roads and highways, harbour projects, water supply schemes and optical fibre backbone projects; Access Engineering has been the invisible strength behind scores of massive infrastructure programmes that have directly affected the lives of thousands of Sri Lankans across the island, from urban cities to the remotest reaches of our island. Every day, our operations enable trade and transport, offer access to education and healthcare and simply bring people together, wherever they are. Our work is all about delivering hope.

1


GROUP REVENUE

Rs.7,315 Million 2010 / 2011 : 3,651 Million

STATED CAPITAL

Rs.9,000 Million 2010 / 2011: 3,000 Million

PROFIT BEFORE TAX

Rs.2,032 Million 2010 / 2011 : 1,381 Million

TOTAL ASSETS

Rs.14,243 Million 2010/ 2011 : 5,767 Million

STATED CAPITAL

CONSOLIDATED REVENUE Rs. millions

Rs. millions

1,000 2009/10

2

2010/11

Rs. millions

14,243

7,315

9,000

3,175

3,000

TOTAL ASSETS

3,651

5,767 4,386

2011/12

Access Engineering PLC. Annual Report 2011/12

2009/10

2010/11

2011/12

2009/10

2010/11

2011/12


FINANCIAL HIGHLIGHTS

2011/12

2010/11

Change

Group Company Group Company Group Company

Earnings Highlights & Ratios Revenue

Rs. Mn

7,315

6,956

3,651

3,518

100.4%

97.7%

Gross Profit

Rs. Mn

2,111

1,952

1,296

1,199

62.9%

62.9%

EBITDA

Rs. Mn

2,157

1,855

1,498

1,267

44.0%

46.4%

Earnings before tax

Rs. Mn

2,032

1,723

1,381

1,144

47.2%

50.6%

Earnings after tax

Rs. Mn

1,735

1,436

1,167

936

48.7%

53.4%

1,731

1,436

962

936

80.0%

Earnings attributable to Equity

Rs. Mn

Dividends

Rs. Mn

Earnings per share

Rs.

-

162

-

200

-

53.4% -19.0%

1.83

1.52

1.20

1.17

52.5%

29.9%

Balance Sheet Highlights & Ratios Total Assets

Rs. Mn

14,243

13,129

5,767

5,751

147.0%

128.3%

Stated Capital

Rs. Mn

9,000

9,000

3,000

3,000

200.0%

200.0%

Rs. Mn

1,627

1,503

1,116

1,139

45.9%

31.9%

Retained earnings/ Accumulated profit Equity attributable to Equity Holders of Parent Total Equity

Rs. Mn

10,656

10,531

4,344

4,367

145.3%

141.1%

Rs. Mn

10,792

10,531

4,344

4,367

148.4%

141.1%

Total Liabilities

Rs. Mn

3,451

2,598

1,423

1,384

142.5%

87.8%

Current Assets

Rs. Mn

8,059

6,698

1,738

1,830

363.6%

266.0%

Current Liabilities

Rs. Mn

3,277

2,454

898

863

264.8%

184.2%

Net asset per share

Rs.

10.66

10.53

7.24

7.28

47.2%

44.7%

Investor Highlights & Ratios Market Capitalisation

Rs. Mn

-

26,700

-

-

-

-

Market Price

Rs.

-

26.70

-

-

-

-

-

17.57

-

-

-

-

Price Earning Ratio

(x)

Debt/Total assets

%

0.09% 0.1% 10.8% 10.9% 99.2% 99.1%

Current asset ratio

(x)

2.5

2.7

1.9

2.1

27.1%

28.8%

Quick asset ratio

(x)

1.9

2.3

1.6

1.8

20.0%

29.7%

3


CHAIRMAN’S MESSAGE

When I look back on the year that was, I see one where opportunities came to fruition and strengths as a people, were honed; I also observe that we became a nation that truly believed in a country that could produce results, despite the world undergoing unprecedented challenges, while the country in itself ensured that the trajectory it had planned could be met with pragmatism and visionary foresight.We all became ingenues in an arena where hope became the catalyst and delivery of that hope resulted in the consummation of building a nation that would be conjoined with strong economic and social bonds.

embarked upon, the initiatives for expansion, the knowledge culture and the professionalism we displayed were a positive influence in the investor mindset. It also brought into play the facets of governance, ethics, principles, transparency and accountability, which form the nucleus of a sustainable business concern, aiming to showcase consistent results on a platform of excellence. To us at Access Engineering, this was more than a successful IPO; it was an exceedingly proud moment for us because this proved that we are held in high repute by our peers and stakeholders.

To us at Access Engineering, this year has been a watershed. While the nation charted its path for the future, building on that platform of ‘Hope Delivered’, we opened a brand new chapter in our corporate annals.The historic IPO transformed us from a home grown entrepreneurial venture to assuredly place us as a leader, spearhead and pioneer in the larger corporate sphere of the country.

We continued our good growth performance as can be seen in our exemplary figures for the year ending March 31st 2012. Revenue for the year recorded a mammoth 100% and 98% growth over the previous year at Group and Company level to mark Rs.7.3 billion and Rs.7 billion respectively. Profits attributable to the equity holders of the parent were Rs.1.7 billion and Rs.1.4 billion respectively at the Group and Company level.This turns out to a 80% and 53% growth over the previous year.The total asset base of the Group and the Company witnessed an exemplary growth to end the year at Rs.14.2 billion and Rs.13.1 billion respectively. A notable growth during the year came from the Company’s stated capital which saw a growth of 200% over the previous year which was the result of the successful private placement and the subsequent IPO.Your company is cash rich with cash and cash equivalents of Rs.1.6 billion and Rs.1.1 billion at the Group and Company level.This is also reflected in the healthy current asset ratio of 2.5 times and 2.7 times at the Group and Company level.

It is in this background, dear Shareholder, that I welcome you with great pleasure to the inaugural Annual General Meeting of Access Engineering PLC, following our listing on the Colombo Stock Exchange and present to you on behalf of the Board of Directors, the Annual Report and consolidated audited accounts for the year ended 31st March 2012. I’m most excited as I write this message as this has been a year that has truly been a landmark in our history of just a decade, both quantitatively and qualitatively. Our maiden IPO on the Colombo Stock Exchange for twenty million Ordinary Voting Shares was oversubscribed in record time, which signaled that our reputation within not only the industry sectors we operate in but in an overall corporate context, is undoubtedly held in high esteem. It also proved that the plans and projects we had 4

Access Engineering PLC. Annual Report 2011/12

Having always retained a reputation as a company that delivered on our promise all the time, every time, we continued this premise this year as well.We have carved a niche for ourselves as a dynamic and progressive entity that leads the civil engineering


sector in Sri Lanka, having imbued innovative value engineering solutions from the A to Z of construction, spanning design, procurement, construction and commissioning of multidisciplinary engineering projects. Our partnerships with world renowned construction companies have seen us secure many civil engineering projects islandwide since our inception in 2001. In synopsis, Access Engineering’s completed engineering feats encompass the Hambantota and Batticaloa Water Supply Projects, North East Bridge Rehabilitation, Greater Colombo Flood Control Project – Phase II, Southern Highway Project, Kukuleganga Hydro Power Project, Hikkaduwa Fishery Harbour, Kelaniya, Nugegoda and Dehiwala Flyovers, Unnachchai Tank Bund Project and Colombo Sewerage Rehabilitation among others, some of which have involved partnerships with international contractors and strategic joint ventures.

of Directors and announce the retirement of Mr. Dilhan Perera from the board in 2012. I wish to thank Dilhan for his immense support and dedication extended to Access Engineering and wish him all the best for the future. Our strong team of over 3000 employees that is helmed by a management that is one of the best in the industry, has surely given us the confidence to lead and fearlessly tread into newer areas and avenues.Your dynamism and tireless pursuit of excellence will always remain our greatest asset. To our shareholders, I would like to extend a sincere promise that your company will live up to or beyond your expectations and deliver on the promises we have made to you.Thank you for the confidence and trust you placed in us.

Our subsidiary, Access Realties (Pvt) Limited, the catalyst for the iconic Access Tower, will soon begin construction on Access Tower 2, yet another state of the art office complex.

Our valued business partners and customers have been the strong conduit that has ensured we remain in leadership, perpetually innovating, continuously improving and constantly reaching towards ambitious goals.Thank you for your unwavering partnership in the myriad spheres we work in.

During February 2012, we acquired Sathosa Motors PLC (SML) which we believe has significant potential to contribute to the growth of our company and we hope to benefit from the envisaged synergies in the coming years.The SML portfolio includes the importation and sale of Isuzu commercial vehicles which was ranked 76 among the 100 leading brands in Sri Lanka for the year 2012.

The communities in which we have our projects have been true supporters of our endeavours, taking on the mantle of community partnership whenever the need arose.You have always made our operations easier and we hope, these relationships we have nurtured will continue to remain strong.

We continue to etch indelible marks in the construction and engineering sectors, true to our vision of being ‘The Foremost Business Enterprise in Value Engineering’, constantly upping benchmarks in standards and quality excellence. The commitment to ‘Green Engineering’ concepts is also well founded not only through the fact that we are accredited by ISO for practicing environmentally friendly standards and quality initiatives, but also for being a signatory to the UN Global Compact, the first construction company in Sri Lanka to be so. Therefore, these ensures that Access Engineering continues to remain at the zenith of our disciplines and core competencies, as evidenced by the accolades we have accrued. We gained a listing among the Top 20 of Sri Lanka’s Most Respected Entities by premier business magazine LMD this year, while being conferred numerous awards at the ICTAD Awards and the National Business Excellence Awards as well. At the former, we were accorded three National Awards for Construction Performance for the Nugegoda and Sangupiddy Flyovers and the bridge across Maoya on the PannalaManingamuwa-Mellawagedara Road. At the NBE Awards, Access Engineering collected three awards and a record for being conferred the Gold award for the second consecutive year as the Best Knowledge Integrator. Our governance tenets were also recognised when Sting Consultants together with LMD awarded us Gold Status within the Corporate Accountability Index.

We have firmly established ourselves as a partner to the country’s progress, given the interventions we already have in both the economic and social spheres.We see amazing potential in the thrust areas which will see the construction sector posit even more growth this year, as we remain a crucial player in infrastructure, due to the vast expertise, capability, knowledge and competencies we possess, in addition to proven experience in handling myriad diverse projects.We will continue to aggressively seek growth opportunities in the short to medium term in our proven capabilities which include road and bridge construction, ports and related work, water management and civil engineering works. Another key driver we see potential in is the property development market, emerging due to rapid urbanisation and lifestyle change.

SUMAL PERERA Chairman

I’m most appreciative of the exemplary guidance, knowledge and support I gained through my able Board of Directors especially in this year of transition. I would like to welcome Mr. Alexis Lovell, Prof. Malik Ranasinghe and Mr. Niroshan Gunaratne to the Board

5


Sangupiddy Bridge across Kilali Lagoon

6

Access Engineering PLC. Annual Report 2011/12


Thinking Ahead The strategic thinking infused by us into every project we embark upon is truly the hallmark of Access Engineering’s success.We have broken the mould through our customised solutions, permeating sustained growth at myriad levels and our stakeholders, thus are rewarded with better results.

MANAGEMENT DISCUSSION & ANALYSIS Management Discussion & Analysis

08

7


MANAGEMENT DISCUSSION & ANALYSIS Providing innovative solutions through multi-sector civil engineering projects being our core business, we have been involved in over a hundred engineering projects since the inception of Access Engineering in 2001.

Overview of the economy Sri Lanka’s extraordinary foresight and pragmatic initiatives once again bore fruit when for the second year in succession and for the first time in post independence history, it rode rapid growth waves to post a GDP of 8%, which is quite unprecedented given that global GDP and in general, countries around the world were feeling the downward spiral of the economic downturn. Gross National Product also grew 8.4% in real terms in 2011, while GDP per capita increased by 18.17% to reach US$ 2,386.

both the government and private sectors taking advantage of the milieu of better investor confidence, a growing economy and an absence of war to grow the primary infrastructure sectors. The industry was also significantly responsible for the decline in unemployment, as employment generation gained massive ground, with the sector having employed 7.2% of the total workforce, which amounts to nearly 600,000 persons. Undeniably, the infrastructure related construction sector has much prospect and growth potential.

Improved investor confidence, accelerated development, favourable macroeconomic conditions and renewed economic activity from geographic areas that for long remained laggards due to the conflict, were among the factors influencing these positive results. Unemployment too continued decelerating, recording its lowest levels at 4.2% due to expanded economic activity and a concerted drive to promote the SME sector and entrepreneurial ventures.

For a period of two years until 2012, the Government’s investment in roads and transportation was earmarked at Rs.269 Bn, given that an efficient road network is an imperative to achieve the nation’s vision for the future. One of the initiatives within this sphere is the National Road Master Plan 2007 to 2017, a long term plan formulated by the RDA focusing on road modernisation and construction, including highways, expressways, bridges and flyovers, improvements and widening of roads.This is further augmented with the maritime and aviation hubs requiring fast-tracked development, which will include substantial increases in overall cargo handling capacity and the development of airports and ports around the country.

Operating Environment Augmenting the government’s Vision for accelerated development was further entrenched with the unveiling of Sri Lanka’s five year vision aimed at positioning it as South Asia’s Economic Hub.The five pronged economic drivers strategically mapped out a path that would ensure that Sri Lanka would surely and steadily achieve this status within the hubs of aviation, energy, maritime, knowledge and commercial.These five hub areas assuredly present our Company with immense and infinite opportunities for growth and development, given that we are already involved quite extensively in infrastructure development of the aviation, energy and maritime industries directly, while with our prowess in infrastructure construction, roads, highways, bridges, telecommunication and similar connection networks, the other hub areas too have the Access Engineering expertise and input. It is pertinent to note that the emphasis on infrastructure development embarked upon by the government in the last year to add fillip to this goal, saw public investment on infrastructure development programmes amount to Rs.407.5 billion or 6.2 per cent of the GDP in 2011. One of the highest growth sectors in 2011 was the construction sector, growing 1.3 times of the GDP and showcased at 9.3%, buoyed greatly by the accelerated infrastructure and thrust industry development the country embarked upon.The tourism industry, roads, highways, bridges, airports, ports and telecommunication sectors gained massive fillip post war, with 8

Access Engineering PLC. Annual Report 2011/12

Aligned to meeting the governments development plans, there’s a concerted national effort in improving access to safe water sources and a national goal has been formulated to achieve 100% coverage by 2025 with an immediate objective of 85% of the population by 2015. Similarly, while connectivity is truly a unifying factor in nation building, it also remains the axis upon which the five growth hubs would be built upon.The building and expansion of the fibre optic infrastructure in addition to continuously improving and modernising existing technology, remains atop the national agenda. Portfolio of Projects Providing innovative solutions through multi-sector civil engineering projects being our core business, we have been involved in over a hundred engineering projects since the inception of Access Engineering in 2001.These projects cover all the civil engineering sectors including Water Supply and Sanitation, Bridges and Flyovers, Roads and Highways, Harbour and Marine, Telecommunication Infrastructure and Piling and Building sectors. Our relentless pursuit of perfection and value addition for our clients have led to many success stories in projects undertaken by us for both us and our clients.


We continue to be engaged in many disciplines of construction and have further enhanced our position as a major and specialist contractor with the highest accreditation in the respective categories of construction.The volume of work handled by us almost doubled during the year 2011/12 compared to the previous year.

Taisei Corporation of Japan, a giant in the international construction industry has recently employed us as their trusted partner to undertake piling works for the Outer Circular Highway (OCH) Project – Northern Section at a value of Rs.3.1 Bn.The piling works are currently underway and expected to be completed by late 2013.

As the key contributor to our income we have undertaken and completed numerous road projects among which, the Rs.2.3 Bn Jaffna Roads rehabilitation project is currently underway.The project is due to be completed ahead of schedule in December 2012.The Kanthale Trincomalee Road Project, Dayata Kirula Road Rehabilitation Project in the Anuradhapura District, Anuradhapura Padeniya Road Project, rehabilitation of A15 under the Trincomalee Integrated Infrastructure Development Project and Navathkulai-Karaitivu-Mannar Road (A32) Project are among the other ongoing projects during the year 2011/12.We have also been awarded the contracts for Ibbagamuwa-Madagalla Road Rehabilitation Project at a value of Rs.2.8 Bn and GalagedaraRambukkana Road Rehabilitation Project at a value of Rs.1.25 Bn.

Access Engineering takes pride in having a stake in most of the major development projects in the country, and the construction of the International Airport in Mattala, Hambantota is no exception to this hypothesis.We have undertaken the design and construction of the Access Road to the Airport, the construction of Fire Rescue and Cargo Buildings, construction of water tower and water supply mains for the airport and the construction of Fuel Hydrants for a combined value of over Rs.1.5 Bn in partnership with China Harbour Engineering Company of China.

Among the Bridge Projects under the period of review is the Sangupiddy Bridge which connected the Jaffna Peninsula to the mainland through the Kilali lagoon, Aravi Aru Bridge and the Eastern and North Central Provincial Bridge Project – Phase I for the construction of 4 bridges and 6 multi cell culverts. As one of the very first companies to form a joint venture in water sector, Access Engineering joined hands with Salcon Berhard of Malaysia and China Geo Engineering Corporation of China in undertaking the two largest water supply projects in post war Sri Lanka, Batticaloa Water Supply Project at a value of Rs. 4.14 Bn and Hambantota Water Supply Project at a value of Rs.1.7 Bn.These projects provide potable water to thousands in the rural community who were previously denied access to clean drinking water.We have also undertaken the responsibility of constructing the gated Salinity Barrier across Walawe River at Ambalantota to prevent the intrusion of saline water at the intake of Hambantota water supply scheme at a value of over Rs.1 Bn. This project is expected to be completed by the end of 2012. The projects in the Marine Sector during the current period include the Mega Port Phase III project and the rehabilitation work at the Unity Container Terminal at the Colombo Port. Our relationship with our long term client Dialog Axiata PLC continued to thrive.We installed over 750 km of optical fibre cables helping Sri Lanka progress to the next stage of global communication by connecting every corner of the country in to one giant web of information network. During the period under review we completed Dialog Backbone Project from Wadduwa to Matara and Colombo Metro Optical Fibre Network Project – Phase II.Total value of the projects completed for Dialog within the last year amounts to Rs.1 Bn.We have also recently completed the first phase of Dialog Aerial Optical Fibre Network project employed by the main contractor Huawei Technologies of China, and second phase of the project is currently underway.

In order to relocate the underserved settlements in the Colombo metropolitan area, the government embarked on a project through Urban Development Authority, providing better housing to the underserved settlement dwellers in the city of Colombo.We were invited to participate in this project, and was awarded the design and build of five 12 storey apartment blocks comprising of 1137 housing units at a value of Rs.2.9Bn. This project is currently underway and will further enhance our capacity in high rise building construction. Financial Performance The prospect of ‘Hope Delivered’ was carried through with much emphasis this year too when Access Engineering together with its two subsidiaries notched yet another year of solid financial performance. Our shareholders and indeed our stakeholders will be pleased that our revenue doubled, bottom line growth was showcased at 80%, liquidity position continued to be healthy as did profitability and promising new investments were entered into during the year. The core business for Access Engineering is in construction, while its fully owned subsidiary, Access Realties (Pvt) Limited is engaged in high-rise real estate development and management, extending its purview to leasing, renting or selling these developed projects in whole or in part. Access Engineering acquired Sathosa Motors PLC adding the importation and sale of Isuzu commercial vehicles and spare parts, repair and maintenance into its business portfolio, on 29th February 2012 and therefore consolidating of the results of Sathosa Motors was effective from this date.

Composition of Company Revenue Rs. millions 7,000 6,000 5,000

Production income Marine construction Telecommunication infrastructure Building and other construction Bridge & Flyover construction Water and drainage construction Highways construction

4,000 3,000 2,000 1,000 0

2010/11

2011/12

9


MANAGEMENT DISCUSSION & ANALYSIS The value engineering ethos which the Company remains very focused upon, infused the required results as is seen in the satisfactory GP and NP margins, due to the improved efficiencies that continue in a milieu of continuously raising the bar.

Profitability continued to gain ground with Earnings Before Tax increasing by 51% to Rs.1,723 Mn, while Group EBT increased 47% to Rs.2,032 Mn. Due to the additional comfort on profitability with no burden of interest obligations. It should be noted that this year’s profitability gained unreservedly from the large scale projects embarked upon during the year. Earnings After Tax gained 53% to be notched at Rs.1,436 Mn, while earnings attributable to the equity of the Group, stood at Rs.1,731 Mn, increasing 80% over last year.

PLC pays 28% on income tax and the total taxation liability stands at Rs.68.9 Mn for this year.

Earnings before Tax Rs. millions 2,500 2,000 1,500 1,000

Group Revenue Rs. millions 8,000 7,000

500 0

6,000

07/08

08/09 EBT - Group

09/10

10/11

11/12

EBT - Company

5,000 4,000

Earnings after Tax

3,000

Rs. millions

2,000

2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

1,000 0

07/08 08/09 09/10 10/11 11/12

Access Realties (Pvt) Limited also took full advantage of the increased demand for office space, coupling it with fair value gains from investment property. Sathosa Motors PLC too benefited from the increased demand for commercial vehicles enjoying tax concessions and unbridled industry growth.

07/08

08/09

Earnings after tax-Group

09/10

10/11

11/12

Earnings after tax-Company

The value engineering ethos which the Company remains very focused upon, infused the required results as is seen in the satisfactory GP and NP margins, due to the improved efficiencies that continue in a milieu of continuously raising the bar.

Liquidity has remained above par with a current ratio of 1:2.5 for the Group and 1:2.7 for the Company depicting sound working capital management. Negligible levels of gearing, further strengthened this liquidity position for the Group.

Access Engineering’s income tax liability is at the concessionary rate of 12% on construction income and 28% on other income. Income tax this year stands at Rs.202 Mn.

Cash flow meanwhile notched a net cash generation of Rs.229 Mn from its operations for 2011/12, with Rs.214 Mn showcased at Company level.Total net increase in cash and cash equivalent was Rs.1,422 Mn at Group level, primarily due to the new capital infusion Rs.5 Bn which negated the impact of major investments in property, plant and equipment and strategic initiatives which amounted to Rs.1,530Mn

The BOI registered Access Realties (Pvt) Limited enjoyed a tax holiday of seven years which expired in 2010/2011, thereafter it is liable to income tax at the concessionary tax rate of 2% on turnover applicable for 15 years. Accordingly the company paid Rs.3.5 Mn as income tax for the current year. Sathosa Motors 10 Access Engineering PLC. Annual Report 2011/12


Liquidity

times 3.5 3.0 2.5

ROCE (Return On Capital Employed) and ROE (Return On Equity) have remained at very healthy levels, despite expansion as well as a very competitive operating environment. A considerable increase in the capital base saw a decrease in ROCE and ROE for the current year however, it is crucial to note, that these investments and new equity are yet to deliver full scale results.

2.0 1.5 1.0 0.5

while NAPS (Net Assets Per Share) is Rs.10.66. At Company level this is posted at Rs.1.52 and Rs.10.53 respectively.The positive earnings coupled with the strong asset base remain the fundamentals in prompting positive investor sentiment.

07/08 08/09 09/10 10/11 11/12 Current asset ratio Quick asset ratio

Working capital management Rs. millions 10,000

PE Ratio (Price Earnings Ratio) and PBV (Price to Book Value) stands at 17.5 times and 2.5 times respectively. Despite the fact that for most of the year the CSE showcased a somewhat bearish sentiment and considerable volatility, Access Engineering’s stability, consistency and governance facets augured well in maintaining positive investor sentiment.

8,000

Economic Value Distribution As depicted in the table below both at the group and company level more than 50% of the economic value generated are retained within to be utilized for future business expansion, while more than 30% has been distributed among the employees.

6,000 4,000 2,000 0

07/08 08/09 09/10 10/11 11/12 Current asset Current liabilities

The capital structure remains equity based. At the beginning of the year, the Company capitalised its reserves, increasing its share capital by Rs.1 Bn, followed by the issue of 200 million new shares, worked through a private placement of 180 million shares and the groundbreaking IPO collating 20 million shares.The two share issues raised Rs.5 Bn, collated from Rs.4.5 Bn from the private placement and Rs.0.5 Bn from the IPO.This increased the stated capital to Rs.9 Bn represented by 1 billion shares. This strong balance sheet detailing Rs.9 Bn in stated capital and Rs.10.65 Bn in equity, certainly adds pragmatic promise for future potential, while augmenting consistency and sustainability into its business persona. Possessing a negligible level of borrowing of only Rs.12.5 Mn as an outstanding on a loan, both the Company and Group have a Net debt/equity ratio at an extremely low 0.1%. Similarly, interest cover is a remarkable 104 times at Company level and 123 times at Group level. Financing of our expansion and diversification initiatives during the year was predominantly equity based. Operating in a milieu that is dealing with volatility in both the interest rates and financial risk, the fact that the Company and Group already have the rudiments of a low risk environment in its operations and strategic planning, augurs well for our stakeholders.This low risk profile reiterates our ability to work towards the plans and objectives already set out, with minimal or no financing challenges. The Company declared and paid a dividend of Rs.0.25 per share, encompassing Rs.250 Mn from profits posted in 2011/12. At Group level, EPS (Earnings Per Share) stands at Rs.1.83 basic,

Value Addition - Group Rs. millions

979

1,714 16 232 162

To employees To providers of finance To Government Diviend paid to share holders Retained in the business

Value Addition - Company Rs. millions

962 1,571

162

16 223

To employees To providers of finance To Government Diviend paid to share holders Retained in the business

Investments As mentioned above, Access Engineering acquired 77% stake in Sathosa Motors PLC for Rs.1.1Bn leveraging further on the synergies prevalent within the Group.This acquisition is expected to contribute towards revenue and profitability, while also signalling a pragmatic move in managing risk through diversification. 11


MANAGEMENT DISCUSSION & ANALYSIS Given the challenging delivery timelines and continuous need to improve efficiency, speed and economical advantage,Access Engineering’s investment in property, plant and machinery also diminished the dependency on external suppliers in some vital areas.

Access Engineering also increased investment in property, plant and machinery by Rs.1,530 Mn with the objective of building capacity and adding to its value engineering ethos, in response to the increased demand emanating from the market. Given the challenging delivery timelines and continuous need to improve efficiency, speed and economical advantage, Access Engineering’s investment in property, plant and machinery also diminished the dependency on external suppliers in some vital areas, while adding knowledge, expertise and competencies into the team, which now stands over 3000 and forms the ideal trusses for future earning potential and exploitation of market opportunities.

ARL’s turnover summary for the last five years is depicted in the graph below:

Turnover Rs. millions 200 150 100 50

Subsidiary Performance Access Realties (Pvt) Limited (ARL) Commencing commercial operations in March 1998, it was on the 31st of March 2011 that ARL became a fully owned subsidiary of Access Engineering. Engaged in real estate development and the holding company of the 12 storey modern office complex Access Towers, ARL increased its turnover by 10% to Rs.163 Mn during this financial year.The increase in rental income is attributed to the 9% increase in rates charged from clientele, competitively placing the complex at the forefront in the demand for office space.

Rs. millions 180 160 140 120 100 80 60 40 20

2010/11

07/08 08/09 09/10 10/11 11/12

Increase in topline growth was partially due to the high rates of occupancy, which has been maintained at an almost 100%, for the past five years.This topline growth was also reflected in the bottom line, while substantial savings in direct and administration expenses compared to the previous year also augured well. Sathosa Motors PLC (SML) Incorporated on March 11, 1982, SML is a public limited liability company listed on the Colombo Stock Exchange. It holds the franchise for Isuzu motor vehicles and spare parts manufactured by Isuzu Motors Limited of Japan, in Sri Lanka and the Republic of the Maldives. Augmenting Access Engineering’s diversification strategy, the majority stake of SML was acquired from ITOCHU Corporation Japan in February 2012 and as at 31st March 2012, Access Engineering holds 77% of the company.

Revenue

0

0

2011/12

Service Charges Rental Income

12 Access Engineering PLC. Annual Report 2011/12

Over this year, turnover increased by 31.3% mainly due to the waiver of duty and VAT on trucks and buses as mandated by the Fiscal Budget 2011, resulting in an increase demand for new vehicles. As seen in the below graph, 81% of the turnover emanated from the sale of new vehicles, while 10% was contributed from the sale of spare parts, 8% from the workshop department and 1% from agency commissions. Commercial trucks was the highest contributor in new vehicle sales. Sale of spare parts is primarily operated through dealers, fleet owners, corporate and government institutions.


Revenue Composition 9%

0%

Workforce Composition Numbers 3500

12%

1% 8% 10%

3000 2500 2000 1500

2011/12

2010/11

Management & Professional Operational Technical Skilled and unskilled

1000 Operational New vehicles Work shop Agency commission

81% 79%

During 2011/2012, SML sold 427 brand new Isuzu motor vehicles, posting an increase of 27% over the previous year, driven primarily by the duty concessions effected by the Budget and the rapid infrastructure development permeating the country. Details of Land and Investment Property of Access Engineering Group Location

Access Engineering No.336/1, Low Level Road, Jalthara, Ranala No.267, Dehiwala Road, Maharagama No. 278, Alubogahalanda, Jalthara, Ranala No.117, Dehiwala Road, Boralesgamuwa

Carrying Value of Revalued/ Amortised Assets (Rs.)

Extent

A

R

P

-

3.0

38.4

35,500,000

-

3.0

1.0

120,000,000

3.0

3.0

4.6

40,000,000

-

2.0

37.0

Dickowita - Hendala

3.0

3.0

10.2

Diddeniya - Hanwella

2.0

-

16.5

Weliwita - Kaduwela*

2.0

-

-

100,000,000 15,800,000 2,000,000 28,185,640

Access Realties Investment property Colombo 2

Sathosa Motors Peliyagoda - Leasehold land

1.0

-

12.4

3,000,000,000

-

24.0

5,667,610

2.0

* Stated at cost since the land was purchased during the year under review. Capacity Building The energised and revitalised economic milieu posed a plethora of opportunities for Access Engineering and in order to exploit these opportunities, it became essential that Access Engineering builds capacity to meet the demand that began emerging. Access Engineering is one of the largest civil engineering construction companies in the country with the expertise, specialty and competency to undertake the massive infrastructure projects that are currently being earmarked as part of the national economic development agenda.

500 0

2010/11

2011/12

In order to consolidate our premier position in the industry and continue to aggressively seek growth opportunities in the short and medium term, heavy investment was made in modernising and adding to our plant and heavy machinery, while staff requirements, both present and future forecast, too were focused upon. The staff was increased by 1,500 during the year with new recruitment effected mostly in operational, technical and workmen categories, gaining the advantage of some of the country’s best human capital and reiterating Access Engineering’s status as a preferred employer in the industry. During 2011/12, Access Engineering provided external training, both local and foreign, in addition to the ongoing on-the-job training and job rotation. The focus on human resource development continued with the company developing a team of 22 competent trainers from within the Company to undertake in-house training programmes and commitment to an ambitious in-house training plan for the next two years with over 40,000 employee training hours. The most notable capacity building initiative is in plant and machinery, which amounts to an investment of Rs. 1.2 Bn, a significant increase over last year.This includes investments in Asphalt and concrete batching plants and crusher plants to augment raw material sourcing for the road improvement and development projects as well as other civil engineering projects engaged islandwide, eliminating dependency on external suppliers. Any excess production is made available for purchase by external customers.The 8% contribution from production income towards revenue is due to the investments made in these plants, further justifying return on investment. With the recent additions made to the fleet of machinery and plants, Access Engineering was able to strengthen its capacity in terms of services provided. Our Asphalt plants in Jaffna, Kanthale, Kotadeniyawa, and Thalawa together boasts of a production capacity of 456 Tonnes Per Hour (TPH). Access Engineering Crusher Plants holding a total capacity 280 TPH are located in Northern and North Central provinces of the country.With the addition of the latest plant in Mabima, the total capacity of concrete production increased to 175 m3/hr. The fleet of heavy machinery was also strengthened with the purchase of new piling machines, pile drivers, Horizontal Directional Drilling (HDD) machines, cranes, motor graders, 13


MANAGEMENT DISCUSSION & ANALYSIS Access Engineering has truly broken records, been honoured and recognised for this excellence and we are truly proud to have been selected as the best among the best.

pavers and concrete pumps during this financial year.This was added to with an investment of Rs.151 Mn and Rs.111 Mn in motor vehicles and relevant tools. Value Engineering Value engineering remains the backbone of Access Engineering’s operations as this is the foundation upon which we construct the trusses of providing total construction solutions in a timely, efficient and economical conflate, with innovation placed as the overarching rudiment.This innovative technology and mindset has in turn, imbued continuous improvement and development of systems and processes, presenting the end result of excellence in project execution and delivery. Access Engineering has pioneered new technology, introduced state of the art comprehensive systems and been an ideologue in launching the latest and most modern equipment into the country in civil construction, which has naturally permeated to augmenting and strengthening the Company’s value engineering capabilities.

Business Development An integral feature in the consistent growth paradigm of the Company, business development remains the foundation that seeks opportunities via new projects and identifies the apt international partners who would assuredly add value to these projects, based on their core competencies. Over the years, the judgment and foresight we have displayed in not only identifying potential projects, but also in choosing the apt partner has proved to be extremely successful given our results both in financial tangibility and in increasing positive perception in our delivery promise.We have successfully formulated and secured joint ventures with some reputed international companies and elevated our status as the preferred construction partner to most international companies mobilised in Sri Lanka. Given our prowess in resources, reputation and tangible results, aided even further by our public listing, we will now strive to attract the world’s best multi-national contractors to Sri Lanka, thus Business Development will continue to be a catalyst in our expansion and consolidation charter.

Horizontal Directional Drilling – a method employing trenchless technology to install underground ducts and cables, Cable Jetting by blowing cables replacing conventional manual methods, a new guard rail installation method, use of Controlled Low Strength Material, flowable and non-shrinking, to backfill road trenches which eliminated subsequent settlements, use of Ground Penetrating Radar to detect underground utilities, Hydrogen Leak Detection method for Testing of pipes and Ducts for leakages soon after installation are some of the value engineering techniques adopted by us.These techniques helped us achieve cost reduction, increasing the pace of construction and heightened efficiency of projects we were involved in.

We foresee a prosperous business environment in the short to medium term where national development will position the construction industry as a key driver in meeting its agenda.This will naturally see our business development purview expand, adding further value to the sustainable growth of the Company.

Access Engineering excels in being a ‘design-build contractor’, thriving on the unremitting innovative features within its business domain.The focus on value engineering efforts has given Access Engineering the advantages of presenting unique designs, improved quality and the ability to reuse resources for better efficiencies. This value engineering philosophy hence cascades in effect to the customer and in the larger sense to the communities and nation, making Access Engineering a responsible corporate steward focused on the fundamentals of sustainable development.

Excellence in construction performance is not easy to attain due to challenges, the competitiveness and the sustained performance companies must maintain. However, Access Engineering has truly broken records, been honoured and recognised for this excellence and we are truly proud to have been selected as the best among the best.

14 Access Engineering PLC. Annual Report 2011/12

Awards and Accolades When our peers and other recognised national and international organisations confer honours on us, we know that we have truly delivered on our promise and that ‘hope delivered’ is not merely an euphemism to be proclaimed, but rather a theme that we ‘walk the talk’.

National Business Excellence Awards (2011) • Winner - Best Knowledge Integrator • Runner up - Construction Sector • Merit - Extra Large category


National ICTAD Awards (2011) • ‘Construction Performance – Civil Engineering Sector’ for construction of the bridge across Maoya on Pannala-Maningamuwa-Mellawagedara road • ‘Construction Performance – Civil Engineering Sector’ for construction of the Nugegoda flyover • ‘Construction Performance – Civil Engineering Sector’ for construction of the Sangupiddy flyover

Access ranked Number 11 among LMD’s ‘Most Respected Entities in Sri Lanka for 2011’

Awarded gold status and ranked Number 09 in the Corporate Accountability Index conducted by Sting Consultants and published by LMD

Golden Award for ‘Quality and Business Prestige’ from Otherways International Research and Consultants at Berlin, Germany

A Promising Future Our team continues to be one of the most skilled and talented within the industry and we are indeed proud to have honed their professionalism and specialties to further enhance our capacity and develop our business. Our secured Order Book will provide the platform to sustain our enhanced capacities and further improve on same in the forthcoming years. For Access Engineering, the future is undoubtedly promising, but the future is also about maintaining consistency and improving on the platform of excellence that we work upon.We will aggressively pursue those opportunities we see, be aware of the trends, challenges and threats emerging from the macro environment, strengthen our leadership status and emphasize our pioneering stance. Our value engineering philosophy will work on a bar of continuous improvement that is aligned to the emerging opportunities, capacity building will continue.

opportunities, based on the platform of developing our resource base and reinforcing our competitive advantage in the market place. We have been looking at business opportunities beyond our shores, however the opportunities, in the local market has resulted in the maximum utilisation of all our resources.We will continue to pursue the opportunities available to us in overseas markets with the view of taking our business beyond our shores. Hope is an evolving word and one which tends to present bigger and broader horizons. For Sri Lanka, we know that Access Engineering continues its ethos of delivering hope, whether in ensuring that villages have the basic necessities of water, or in enhancing economic development by interconnecting transportation and telecommunication infrastructure through both rural and urban areas, to improve trade and economic development. In being ‘Green’, we ensure that our business practices and impact on the environment are as environmentally friendly as possible, while we create an empowering milieu for our stakeholders, whether it be our communities, our investors or our team, to thrive and grow.

Christopher Joshua Executive Director

Rohana Fernando Director/ COO

24th July 2012 Colombo

Our proven prowess in roads, highway and bridge construction, ports and related competencies, water management, building and telecom infrastructure will form the platform for growth, aligned to the country’s accelerated development agenda and the Economic Hub status envisaged for 2016.The pragmatic strategies, strong balance sheet, astute investments, conformance to best practices and emphasis on governance tenets, well position Access Engineering to gain further investor confidence, raise the required financing and proceed unhindered with the expansion and diversification drive it has planned. Opportunity is envisaged in township establishments, mixed development and residential projects in earmarked metropolises as are community development projects in collaboration with the Government based on Public-Private Partnerships in the areas of water management and electricity generation. PPP based projects generate stable and secure long term business, which will also present us a springboard to develop capacity, expertise and innovation, while creating additional business opportunities by leveraging on the synergies of these partnerships. Inorganic avenues will be pursued to explore lucrative strategic investment

15


Our team members at Asphalt plant in Kotadeniyawa

16 Access Engineering PLC. Annual Report 2011/12


Building Trust At Access Engineering, stakeholder relationships are driven by an unwavering commitment to honesty, trust, ethics, transparency, accountability and sincerity of action. Our governance strategy has always been founded on these principles, which assuredly remain the trusses upon which our reputation as a corporate steward remains firm.

GOVERNANCE Corporate Governance 18 Annual Report of the Board of Directors 21 Audit Committee Report 23 Risk Management 34 Board of Directors 26 Corporate Management Team 28

17


CORPORATE GOVERNANCE Our governance and operating model facilitates efficient and timely decision making coupled with pragmatic resource allocations.

Constructed on a philosophy of responsible governance, ethics, values, accountability and sincerity of action, Access Engineering’s corporate governance ethos works within a culture of performance that emphasizes a framework of conformance and compliance.To us, corporate governance goes beyond the tenets of conformance and compliance into a milieu where our business is grown and nurtured into a sustainable and equitable one, presenting all our stakeholders with a future to grow with us. Maximizing shareholder wealth on a sustainable basis while safeguarding the rights of multiple stakeholders are fundamentals which are permeated through all levels of our management and staff.They in turn work on the trusses of truth, trust, principles, good morals and honesty to ensure that the end justifies the means and remain strategically aligned to the core principles of our corporate governance practice. Our governance and operating model facilitates efficient and timely decision making coupled with pragmatic resource allocation.These are integrated into a transparent, accountable and ethical framework that is compliant not only with the laws of the country but also with self-imposed codes of ethics, standards and regulations that position us on a platform of critical governance features to ensure a culture that goes beyond compliance.This is thus manifested in the composition of the corporate management team, division of powers and duties and the promotion of sound corporate ethics across the company. The company’s vision and mission remain firmly embedded in our future journey with the Board of Directors and Corporate Management, providing the necessary stewardship to our team and other stakeholders to achieve our objectives. Evaluating and setting the direction of the Company’s strategic initiatives, performance objectives and targets also remain entrenched within the leadership. In addition, this leadership is tasked with strengthening the overarching company principle of protecting the interests of all stakeholders and consolidation of business activities to ensure continuity and sustainability.

18 Access Engineering PLC. Annual Report 2011/12

The Board of Directors of Access Engineering endeavors to provide entrepreneurial leadership through effective formulation and execution of policies and procedures, designed to attain the objectives of the company.The Board comprises of ten Directors, of whom six are Executive Directors, one a Non-Executive Director and three Independent Non-Executive Directors.The Independent Non-Executive Directors were appointed this year to further entrench independent non-partial judgment, which in turn is designed to embed the strong fundamentals of transparency into the decision making process. During the year, the Company established the Strategic Planning Committee, Audit Committee and Remuneration Committee as per the regulatory requirements and Compliance Committee designed to strengthen Access Engineering’s unwavering commitment to corporate governance. Audit Committee Appointed by the Board of Directors, the Committee comprises three (03) Independent Non-Executive Directors and One (01) Non-Executive Director of the Board. Members of the Audit Committee: Niroshan Dakshina Gunaratne (Chairman)

Independent Non-Executive Director

Alexis Indrajit Lovell

Independent Non-Executive Director

Prof. Kulatilleke Arthanayake Malik Kumar Ranasinghe

Independent Non-Executive Director

Ranjan John Suriyakumar Gomez Non-Executive Director The Audit Committee Charter formalises the authority, responsibilities and specific duties pertaining to the Committee as follows;

Overseeing preparation, presentation and adequacy of disclosures in the financial statements of the Company, in accordance with Sri Lanka Accounting Standards;


Ensuring compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial related regulations and requirements;

The Committee’s mandate includes:

Formulating criteria and guidelines for assessing existing and new investments

Ascertaining that the Company’s internal controls and risk management processes are adequate and meet the Sri Lanka Auditing Standards requirements;

Planning investments periodically, targeting at optimum utilization of resources

Reviewing existing investments

Assessing the independence and performance of the Company’s external auditors;

Assessing new investments for strategic fit, risk profile, profitability and future potential

Making recommendations to the Board pertaining to appointment, re-appointment and removal of external auditors and to approve remuneration and terms of engagement of the external auditors.

Making recommendations to the Board on investment portfolio, contingency planning and desired future corporate goals

Remuneration Committee Comprising two Independent Non-Executive Directors and one Non-Executive Director of the Board, this Committee is appointed by the Board. Members of the Remuneration Committee: Ranjan John Suriyakumar Gomez Non-Executive Director (Chairman)

Compliance Committee The Compliance Committee is appointed by the Chief Operating Officer and is set up to further strengthen good governance at Corporate Management level.This mechanism will bridge the gap between the senior management and the Board of Directors when important decisions are to be made on operational issues. Members of the Compliance Committee

Prof. Kulatilleke Arthanayake Malik Kumar Ranasinghe

Independent Non-Executive Director

Rohana Fernando (Chairman)

Chief Operating Officer / Executive Director

Niroshan Dakshina Gunaratne

Independent Non-Executive Director

V.K. Manatunge (Convener)

Senior General Manager

Palitha Wanigasundara

General Manager (Projects Office III)

Manoaj Jayahsuriya

General Manager (Projects Office I)

Kosala Wickramasinghe

Deputy General Manager (Projects Office II)

A.A. Fernando

Deputy General Manager (Project Coordinating)

Niroshan Thilakaratne

Deputy General Manager (Commercial)

Prabath Karunanayake

Head of HR

With the primary objective of the Company’s remuneration policy being effective enough to attract and retain the best human capital to sustain operations while rewarding performance, the Remuneration Committee is tasked with recommending the remuneration payable to the Executive Directors and Chief Executive Officer of the Company and/or equivalent position thereof.This recommendation is made to the Board, which is responsible for the final determination upon consideration of such recommendations. Strategic Planning Committee Essentially focusing on assessing existing and new investments, this Committee is responsible for identifying, appraising and monitoring the investment purview, in order to ensure optimum resource allocation by the Company. Members of the Strategic Planning Committee: Sumal Joseph Sanjiva Perera (Chairman)

Chairman

Joseph Christopher Joshua

Executive Director

Dalpadoruge Anton Rohana Fernando

Executive Director/Chief Operating Officer

Alexis Indrajit Lovell

Independent Non-Executive Director

Prof. Kulatilleke Arthanayake Malik Kumar Ranasinghe

Independent Non-Executive Director

The Committee’s mandate includes: Establish and monitor if the organisation’s objectives are met

• •

Evaluate company policies, formulate new policies, advise and take the initiative to revise existing policies

Ensure that policies are in compliance with laws and regulations

Ensure that project management, accounting, procurement, stores and human resource functions are carried out according to established processes and procedures

Ensure that control systems are laid down and operated to promote the most economic, efficient and effective use of resources as well as safeguard assets

19


CORPORATE GOVERNANCE

Ensure the proper implementation of management systems (ISO 9001, ISO 14001 and OHSAS 18001) through strict monitoring and guidance by the internal audit team

Review the performance of the internal audit team

Collect and review financial and operational information that is meant to be disclosed to external parties and verify the reliability of the means that are used to identify, measure and report such information

Access Engineering’s Corporate Management team is committed to achieving sustained value creation for the benefit of all stakeholders, through adherence to a set of well-defined corporate governance principles, coupled with maintaining effective structures and processes within the Company.The team helmed by the Chief Executive Officer, has the input of the Chief Operating Officer, Board Members and Senior Management who meet regularly to discuss the management of business activities. Project implementation is driven by Projects Offices, wherein the Project Director, General Managers and Deputy General Managers work on plans and targets, matching those to realistic time frames and ensuring any shortfalls or delays are speedily rectified. Authority is exercised within an ethical framework of business practices established by the Board, which demands compliance to existing laws and regulations as well as best practices in dealing with employees, customers, suppliers and the community at large.

20 Access Engineering PLC. Annual Report 2011/12

We have also infused a milieu of increased participation by middle management to permeate the need for a more responsible, transparent and accountable administration, which will strengthen the financial discipline of the Company.The permeating culture of empowerment and accountability emanates quick responses to customer requirements, which has kept Access Engineering far ahead of most competitors and has been the cornerstone of our competitive advantage.This permeation of authority and accountability has spawned empowerment even at shop-floor level and the front-line, enabling top management to dwell more importantly on the more strategic and conceptual inputs. Driving a team branded on excellence, people remain centric to our entire operational capabilities and engineering competencies. The experience and professionalism within our team have been the catalysts in integrating our core competencies into strategic partnerships. Maintaining a healthy work life balance with an environment of superior human resource development via a comprehensive Quality Management System inculcates the culture of meritocracy, while performance oriented individuals who make up an excellent team are driven to achieve ambitious goals.


ANNUAL REPORT OF THE BOARD OF DIRECTORS The Board of Directors of Access Engineering PLC has the pleasure in presenting their Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March 2012. General The Company was incorporated in terms of the Companies Act No.17 of 1982 on 31st July 2001 and was re-registered as per the Companies Act No.7 of 2007 on 6th February 2008 with PB 200 as the new number assigned to the Company. Thereafter, the Company obtained a listing on the Diri Savi Board of the Colombo Stock Exchange on 27th March 2012 and changed its name to Access Engineering PLC on 12th June 2012. The registration number of the Company changed to PB 200 PQ. Principal activities and review of performance during the year Refer note 1.2 of Notes to the Financial Statements for principle activities of the company and its subsidiaries. This Report together with the Financial Statements, reflect the state of affairs of the Company and its subsidiaries. Financial Statements The complete Financial Statements of the Group, duly signed by two Directors on behalf of the Board are included in this Annual Report and forms part and parcel hereof. Accounting Policies The principal accounting policies adopted by the Group in the preparation of Financial Statements are consistent with those of the previous year. Purchase of majority shareholding in Sathosa Motors PLC The Company acquired 3,600,000 shares which represented 59.67% of the shares in issue at a price of Rs.236.44/- per share in Sathosa Motors PLC on 29th February 2012 and acquired a further 1,332,303 shares up to 24th July 2012 increasing its total holding to 81.75%. Directors The names of the Directors of the Company who held office as at the end of the accounting period are: Executive Directors Mr. S J S Perera Mr. J C Joshua Mr. D A R Fernando Mr. S H S Mendis Mr.T A G Fernando Mr. S D Munasinghe

Chairman Chief Operating Officer

Non Executive Directors Mr. R J S Gomez Mr. S D Perera Resigned on 06/10/2011

Mr. S D Perera resigned as a Director on 6th October 2011. Prof. K A M K Ranasinghe, Mr. N D Gunaratne and Mr.A I Lovell who were appointed to the Board on 1st July 2011 are due to retire at the forthcoming Annual General Meeting in terms of Article 95 of the Articles of Association of the Company, and being eligible offer themselves for re-election. Interests Register The Company maintains an Interests Register in terms of the Companies Act, No. 7 of 2007, which is deemed to form part and parcel of this Annual Report and available for inspection upon request. All related party transactions which encompass the transactions of Directors who were directly or indirectly interested in a contract or a related party transaction with the Company during the accounting period are recorded in the Interests Register in due compliance with the applicable rules and regulations of the relevant Regulatory Authorities. Directors’ Remuneration The aggregate remuneration paid to the Directors’ of the company during the year under review has been disclosed in the Note 35.2 to the Financial Statements. Directors’ responsibility for Financial Reporting The Directors are responsible for the preparation of the Financial Statements of the Company to reflect a true and fair view of the state of its affairs. A further statement in this regard is included on page 63. Auditors Messrs KPMG, Chartered Accountants served as the Auditors of the Company.The Auditors do not have any interest in the Company other than that of Auditor and provider of tax related services. The Auditors remuneration payable by the Group has been disclosed in the Note 12 to the Financial Statements. The payments for the Non-Audit services have been disclosed in Note 12 to the Financial Statements. Stated Capital The Stated Capital of the Company is Rs.9,000,000,000 representing 1,000,000,000 Ordinary Shares. Issue of Shares by way of a Prospectus The Company had an Issue of Shares by way of a Prospectus on 9th June 2011 of 180,000,000 (180 Mn) Ordinary Voting Shares at Rs.25.00 each. A description on the utilization of the said funds is found on page 96.

Non Executive Independent Directors Prof. K A M K Ranasinghe Appointed w.e.f 01/07/2011 Mr. N D Gunaratne Appointed w.e.f 01/07/2011 Mr.A I Lovell Appointed w.e.f 01/07/2011

Initial Public Offer The Company had an Initial Public Offer (IPO) on 6th March 2012 of 20,000,000 (20 Mn) Ordinary Voting Shares at Rs.25.00 each which were listed on the Diri Savi Board of the Colombo Stock Exchange. Resulting from the said IPO, the Stated Capital increased by Rs.500,000,000.

In terms of Article 88(i) of the Articles of Association, Mr. R J S Gomez shall retire by rotation and being eligible, is recommended by the Board for re-election at the forthcoming Annual General Meeting.

Proceeds from the said IPO are being utilized to part finance the development and construction of five 12 storied buildings at Henamulla in Colombo 15. 21


ANNUAL REPORT OF THE BOARD OF DIRECTORS

and its subsidiaries as at the Balance Sheet date have been paid or, where relevant provided for, except as specified in note 37 to the financial statements covering commitments and contingencies.

Director’s shareholding The relevant interests of Directors in the shares of the Company as at 31st March 2012 as recorded in the Interests Register are as follows; Directors Mr. S J S Perera Mr. R J S Gomez Mr. J C Joshua Mr. D A R Fernando Mr. S H S Mendis Mr. S D Munasinghe Mr.T A G Fernando Prof. K A M K Ranasinghe Mr. N D Gunaratne Mr.A I Lovell

Share holding Share holding as at 31/03/2012 as at 31/03/2011 250,000,000 120,000,000 100,000,000 24,000,000 24,000,000 24,000,000 6,400,000 Nil Nil 16,000,000

269,999,988 149,999,994 149,999,994 Nil Nil Nil Nil Nil Nil Nil

Shareholders There were 1838 Shareholders registered as at 31st March 2012 Major Shareholders, Distribution Schedule and other information Information on the distribution of shareholding, analysis of shareholders, market values per share, earnings, dividends, net assets per share, twenty largest shareholders of the Company, Directors’ shareholding, percentage of shares held by the public as per the Listing Rules of the Colombo Stock Exchange are given under Share Information on pages 3 and 96 to 98 respectively. Auditor’s Report The Report of the Auditors on the Financial Statements of the Group is attached with the Financial Statements in page 63. Reserves The reserves of the Group, with the movements during the year, are given in the Statement of Changes in Equity on page 66. Property, Plant and Equipment Details of property, plant and equipment and changes during the year are given in Note 16 ‘Notes to the Financial Statements’ in page 77 and 78.

Land Holdings The details of the Company’s land holdings are given on page 13. Material Foreseeable Risk Factors The details of the Material Foreseeable Risk Factors are given under the ‘Risk Management’ report on page 24 of this report. Events occurring after the Balance Sheet date Except for the matters disclosed in Note 38 to the Financial Statements on page 92 there are no material events as at 31st March 2012 which require adjustment to, or disclosure in the Financial Statements. Corporate Governance Corporate Governance Practices with respect to the management and operations of the Company is set out on pages 18 to 20 of this report. The Directors confirm that the Company is in compliance with the rules on corporate governance contained in the listing rules of the Colombo Stock Exchange. An Audit Committee, Remuneration Committee and Strategic Planning Committee function as the Board’s sub-committees with Directors who possess the requisite qualifications and experience. The composition of the said Committees is as follows: Audit Committee Mr. N D Gunaratne - Chairman Mr.A I Lovell Prof. K A M K Ranasinghe Mr. R J S Gomez Remuneration Committee Mr. R J S Gomez - Chairman Prof. K A M K Ranasinghe Mr. N D Gunaratne Strategic Planning Committee Mr. S J S Perera - Chairman Mr. J C Joshua Mr. D A R Fernando Mr. A I Lovell Prof. K A M K Ranasinghe Annual General Meeting The Annual General Meeting will be held on 13th September 2012 at the Ballroom,Taj Samudra Hotel, 25, Galle Face Centre Road, Colombo 3 from 3.00 p.m. to 5.00 p.m.

Donations The Company made donations amounting to Rs.14,315,336 during the period under review.

The Notice of the Annual General Meeting appears on page 99. This Annual Report is signed for and on behalf of the Board of Directors by

Dividends An Interim Dividend of twenty five cents (cents 0.25) per share was declared on 18th May 2012 and paid to the shareholders on 8th June 2012.

S J S Perera D A R Fernando Chairman Director / COO

Statutory Payments The Directors confirm that, to the best of their knowledge, all taxes, duties and levies payable by the Company and its subsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and its subsidiaries and all other known statutory dues as were due and payable by the Company 22 Access Engineering PLC. Annual Report 2011/12

P W Corporate Secretarial (Pvt) Ltd Secretaries 24th July 2012 Colombo


AUDIT COMMITTEE REPORT

Formation The audit committee was formed in October 2011 following the corporate governance best practices and also as a part of the process in making the company a public entity.

Support to the committee The committee received information and support from the management as required in enabling them to fulfill their responsibilities.

Role of the audit committee The Audit Committee’s authority, responsibilities and specific duties have been formalized through an audit committee charter.The role of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities for the integrity of the financial statements of the company and the Group, the internal control and risk management systems of the Group and its compliance with legal and regulatory requirements, the external auditors’ performance, qualifications and independence.

External Auditors The Committee after evaluating the independence and performance of the external Auditor has decided to recommend to the Board the reappointment of Messrs KPMG as the external Auditors for the financial year ending 31st March 2013, subject to the approval of the shareholders at the Annual General Meeting.

Composition of the committee The Audit Committee of AEL is appointed by the Board of Directors and the present committee comprises of three Independent Non-Executive Directors and one Non-Executive Director of the Board.

Conclusion The audit committee with their initial reviews is satisfied that the company’s accounting policies and operational controls are sufficient and provide reasonable assurance that the affairs of the company are managed in accordance with the group policies and that group assets are properly accounted for and adequately safeguarded.

Members of the Audit Committee and attendance are as follows. Name

Designation

Mr. Niroshan Dakshina Gunaratne (Chairman)

Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director

Mr. Alexis Indrajit Lovell

Prof. Kulatilleke Arthanayake Malik Kumar Ranasinghe Mr. Ranjan John Suriyakumar Gomez

Attended / Eligible to attend 1/1

0/1

N.D.Gunaratne Chairman Audit Committee 24th July 2012 Colombo

1/1

0/1

Meetings and Activities The committee met once and in addition to the members the meeting was attended by the DGM (Finance) and the COO of the company and the secretaries.The committee performed the following tasks in relation to the financial year under review. • Finalizing the audit charter • Reviewing the financial statements and the management letter and recommended obtaining an independent opinion about the depreciation policy of the company • Recommended to carry out a gap analysis on the company’s financial statements and their presentation with the adaptation of IFRS • Reviewing the internal controls

23


RISK MANAGEMENT The success and sustained growth seen at Access Engineering affirms the efficacy of our risk management initiatives, despite operating in volatile and competitive milieus.

Risk management has always been a key priority within the Group’s strategic decision making process as it forms the bedrock to the entity’s sustainability and business continuity. Risk management is embedded in the organisation’s management practices, culture and values. Access Engineering’s culture and value system emphasise the dichotomy of risk management and the need to take risks in astute fashion, while transforming them into opportunities and therefore advantages for business, whenever possible. The effectiveness of risk management is measured by the achievement of organisational goals and objectives.The success and sustained growth seen at Access Engineering affirms the efficacy of our risk management initiatives, despite operating in volatile and competitive milieus. Risk management strategies are employed based on constant analyses, reviews and previews

Risk Category Business & Operational risks

conducted in various areas of the business which gain an unrelenting focus on risk potential and solutions.The strategies implemented are most often triggered through experience and infuse strategic planning processes and best practices to minimise, prevent or assuage risk. Given the constantly transforming macro environment and the constant changes experienced internally due to new business opportunities arising, newer thought processes and innovation, Access Engineering has begun augmenting its risk management strategy, having formulated and documented a formal risk management enterprise framework for the Group. The broad categorisation of some of the key risks identified as applicable to the organisation and which are deemed relevant to the current reporting period, are given in the table below:

Risk

Impact

Response

Project delays and cost over-runs

Could lead to penalties and negative image.This also could affect securing of future projects negatively

• Detailed project planning • Project review meetings • Customer relationship management

Quality

Faulty construction or sub-standard output could lead to negative image, penalties and hazards to third parties

• Detailed project planning • Regular internal audits • Adherence to quality and safety standards

Product portfolio (Less diversity in income streams)

Could lead to high income volatility

• Venturing into areas identified as related and unrelated diversification

Dependence on clients

Dependence on a few clients could lead to authoritarian terms and high income volatility

• Customer Relationship Managers regularly communicate with the client • Approaching both public and private sector projects

24 Access Engineering PLC. Annual Report 2011/12


Risk Category

Financial risks

Legal and Regulatory Risks

Risk

Impact

Response

Loss of key employees

Loss of key staff especially to competitors may lead to future loss of business and decline in quality of service

• Providing a challenging work environment • Training and development • Providing employees with highly competitive compensation and incentive packages

Dependence on partners/suppliers

Quality issues could arise and dependence could lead to unfavorable terms in contracting

• Backward integration • Working with a range of suppliers

Health and safety of employees

Could lead to workplace accidents, penalties, negative image and hiring challenges for future projects

• Providing necessary safety equipment to all sites • Focused training on Health and safety to all employees • Insurance coverage to mitigate risks form unforeseeable risks

Competition

Increased competition has the possibility of reducing market share and margins

• Efforts to maintain industry positioning (certification/ accreditations etc) • Practice of value engineering philosophy ensuring value addition to clientele

Impact on environment

Construction inherently results in changes to the natural environment, which damage will be viewed negatively by stakeholders

• Green engineering philosophy • R&D into new techniques in construction for less impact to environment

Interest rate risk

Potential high interest cost lowering net earnings and difficulty of financing new projects

• Maintaining low gearing • Capital structure guideline designed for each project at the planning stage

Investment risk

New investments could materialize to lower yields than expected. Also certain synergies planned will be difficult to obtain due to issues of value alignment

• Board input for investment decisions through the Strategic Planning Committee • Investment screening and adherence to predetermined criteria

Credit risk

Potential defaults and delay of payments triggering negative impact on earnings

• Credit policy/approvals • Creditworthy client base • Payments being backed by Guarantees

Fraud and Error

Permeating a negative impact on earnings, bad precedence to other employees and negative impact on image

• Authority limits and internal controls • Focused recruitment process

Instability of Government Policy

This industry is highly prone to these risks; adverse changes can lead to difficulties in project planning and execution

• Close relationship with relevant government officials in order to gain a better understanding of policy trends

Tax rates

Changes in tax rates might lead to possible reduction in earnings/margins

• Forecasting and tax planning

Compliance

Non compliance to applicable laws and contracts could lead to fines and negative impact on corporate image

• Adherence to corporate governance practices • Careful review of agreements

25


BOARD OF DIRECTORS

Sumal Perera

Christopher Joshua

Rohana Fernando

Sumal Joseph Sanjiva Perera Chairman The Founder Chairman of the Access group of companies founded in 1989, he is also the Founder Chairman and a shareholder of Access Engineering. He continues to be the Chairman of all companies under the umbrella of the Access group and Managing Director of Sathosa Motors PLC, a company that gained a public listing in 1993. He is a Fellow Member of the Chartered Institute of Management Accountants - UK. It is under his vision and leadership that the Access Group of Companies has grown to be a diversified and successful business enterprise, in a short span of over 2 decades. Joseph Christopher Joshua Executive Director One of the founder Directors of the Access Group of Companies, he was instrumental in heading some of the most successful business units within the group. A founder shareholder, he was the Joint Managing Director/CEO of the Company for a considerable period of time. It was under his leadership that Access Engineering achieved these significant milestones in growth over the last decade. Since 1997, he has also functioned as the Joint Managing Director of the Access Group. Companies under his purview include Access Realties (Pvt) Ltd., Access Energy (Pvt) Ltd., Access Natural Water (Pvt) Ltd., Eco Friendly Power Developers (Pvt) Ltd., and business units of Access International (Pvt) Ltd. He is also a Director of Sathosa Motors PLC. Dalpadoruge Anton Rohana Fernando Executive Director/ COO Joining the Access Group in 1998 as an Engineer based in the Engineering Division of Access International (Pvt) Ltd., he played a vital role in enabling the division to become a separate business entity, encompassing the name and persons of Access Engineering. Having held senior management positions in Access Engineering, he was appointed to the Board in 2002. In 2007, he was appointed as the Director / COO of Access Engineering. He is also a 26 Access Engineering PLC. Annual Report 2011/12

Shevantha Mendis

Gration Fernando

Director of Access International (Pvt) Ltd. He is a Corporate Member of Institution of Engineers, Sri Lanka (IESL) and has a BSc Degree in Civil Engineering from the University of Peradeniya. Shevantha Harindra Sudharaka Mendis Executive Director/Director – Business Development Having held many executive and management positions within the Access group, he has functioned within the Engineering Division since its inception.With the genesis of Access Engineering, he became a part of that unit and was appointed as DirectorBusiness Development in 2002. He is also a Director of Access International (Pvt) Ltd., and an alternate Director of Sathosa Motors PLC. Thiththalapitige Anton Gration Fernando Executive Director/Director – Projects Joining Access International (Pvt) Ltd as the Manager-Marine Works in September 1997 and doubling as Project Manager as well, he was subsequently promoted to Assistant General Manager at Access Holdings (Pvt) Ltd in March 2003. He joined Access Engineering in January 2004 and was appointed to the Board of Access Engineering as the Director - Projects. He possesses over ten years of service as a commissioned officer in the Sri Lanka Navy and holds a Bachelor of Arts Degree in Defence Studies from Sir John Kothalawala Defence University. Saumaya Dharshana Munasinghe Executive Director/Director – Business Development He joined Access International (Pvt) Ltd as a Sales Executive of the Packaging Division in 1996 and was promoted to the position of Assistant Manager in 1999. In 2001, he assumed duties as Manager - Special Projects in Access International (Pvt) Ltd and was promoted as General Manager - Special Projects in 2004. He joined Access Engineering in 2006, and was appointed to the Board of Access Engineering as Director - Business Development. He is also a Director of Access International (Pvt) Ltd., and an alternate Director of Sathosa Motors PLC.


Dharshana Munasinghe

Ranjan Gomez

Ranjan John Suriyakumar Gomez Non-Executive Director One of the founder Directors of the Access group of companies and has functioned as the Joint Managing Director of the Group since 1997. Companies under his purview include ATSL International (Pvt) Ltd., ATSL Telesoft (Pvt) Ltd., Access Energy Solutions (Pvt) Ltd.,Think Cube Systems (Pvt) Ltd., Science Land Information Technology (Pvt) Ltd., e-buy (Pvt) Ltd., and business units of Access International (Pvt) Ltd. He is also a Director of Sathosa Motors PLC. Prof. Kulatilleke Arthanayake Malik Kumar Ranasinghe Independent Non-Executive Director A member of the Access Engineering Board since 2011, he is a Senior Professor in Civil Engineering at the University of Moratuwa, a Chartered Engineer and International Professional Engineer, a Fellow of the Institution of Engineers, Sri Lanka and the National Academy of Sciences, Sri Lanka. An immediate past Vice-Chancellor of the University of Moratuwa, he functions as an independent non-executive Director of Sampath Bank PLC, Hemas Power PLC and Textured Jersey Lanka PLC. He is a former Fellow of The National University of Singapore and has been a Non-Executive Director of the Colombo Stock Exchange and Lanka IOC PLC.

Malik Ranasinghe

Alexis Lovell

Niroshan Gunaratne

Alexis Indrajit Lovell Independent Non-Executive Director Appointed to the Access Engineering Board in 2011, he counts over 30 years experience in Finance and Investment Banking. Currently he also functions as the Chairman of Union Bank of Colombo PLC, a position he has held since May 2012, into which he was appointed as Non Executive Director in 2007. A Chartered Management Accountant, UK with a Postgraduate Degree in Business Administration, he was awarded the MBE (Most Distinguished Order of the British Empire) by Her Majesty the Queen of England for his services to Investment Banking. He is also a Director of Sathosa Motors PLC. Niroshan Dakshina Gunaratne Independent Non-Executive Director Appointed to the Access Engineering Board in 2011, he is also the Finance Director of ASCOT Holdings PLC., an Associate Member of the Chartered Institute of Management Accountants (UK). He possesses over eighteen years of experience in the field of finance and accounting and has been at MB Financial Services (Private) Ltd, a primary dealer appointed by the CBSL and Jewelknit, a subsidiary of Mast Industries USA.

He was conferred his PhD in Civil Engineering Economics in 1990 from the University of British Columbia,Vancouver, Canada. His research focus is to combine applications in Engineering Economics and Environmental Economics with Project Management. He has published over 110 research publications, of which over 60 are international refereed publications. He has been honoured with the Sri Lanka Association for the Advancement of Science (SLAAS) General Research Committee Award for Outstanding Contribution to Sri Lankan Science and Trinity Prize for Engineering in recognition of the outstanding contributions made to his chosen profession.

27


CORPORATE MANAGEMENT TEAM

Vasantha Manatunge

Dharmasiri Chandrapala

Manoaj Jayahsuriya

Sumal Joseph Sanjiva Perera Chairman Joseph Christopher Joshua Executive Director Dalpadoruge Anton Rohana Fernando Executive Director/ COO Shevantha Harindra Sudharaka Mendis Executive Director/Director – Business Development Thiththalapitige Anton Gration Fernando Executive Director/Director – Projects Saumaya Dharshana Munasinghe Executive Director/Director – Business Development For the profiles of the above Directors, please refer to the previous page. Vasantha Manatunge Senior General Manager V. K. Manatunge joined the Company in early 2003 and is currently functioning as the Senior General Manager of Access Engineering. He obtained his Degree in Civil Engineering from the University of Moratuwa in 1978 and has been a Corporate Member of the Institution of Engineers, Sri Lanka since 1982. He counts about 33 years of experience in the civil engineering field and has worked in various capacities in the state sector as well as private sector. Dharmasiri Chandrapala General Manager (Technical) T.D.D. Chandrapala Joined the Company in 2002 and counts over 9 years of experience at the senior management level of the Company. He holds a BSc Degree in Civil Engineering and he is also a Chartered Civil Engineer. He has 35 years of experience in the fields of Irrigation and Drainage, Building Construction,Water Supply and Roads and Bridges. 28 Access Engineering PLC. Annual Report 2011/12

Srimal Fernando

Palitha Wanigasundara

Manoaj Jayahsuriya General Manager (Projects Office - I) Manoaj joined the Company in March 2006 as General Manager (Projects Office I). He has 29 years of experience in diversified fields such as the Sri Lanka Navy, operations, apparel manufacturing, corporate planning and human resources management. He holds a MBA from the Postgraduate Institute of Management (PIM) of University of Sri Jayewardenepura, BSc (Hons) from University of Colombo and a Postgraduate Diploma in Psychology as well as several naval professional qualifications. Srimal Fernando General Manager (Projects Office - II) Srimal joined the Company in August 1999 as a civil engineer and was promoted to Manager Engineering in January 2004 and as General Manager in January 2008. Currently, he delivers his duties as the Head of Projects Office II. He holds a Bachelor’s Degree in Civil Engineering from the University of Peradeniya and is a Corporate Member of the Institute of Engineers, Sri Lanka. During the period of his service, he was involved with major projects in many diversified fields such as Roads and Highways, Bridges,Telecommunication,Water and Waste Water, Piling and Buildings in a senior level management capacity. Palitha Wanigasundara General Manager (Projects Office - III) Palitha joined the Company in 2007 as Deputy General Manager (Construction) and currently functions as the General Manager (Projects Office III). He holds a Master of Science Degree in Civil Engineering (USSR), a Master of Engineering Degree in Construction Management (University of Moratuwa) and a Master of Business Administration Degree (Postgraduate Institute of Management (PIM) of University of Sri Jayewardenepura). He is a Fellow Member of Institute of Engineers, Sri Lanka and a Corporate Member of the Institute of Engineers (Australia). Prior to joining the Company, He served in the National Water


Aariadasa Fernando

Kosala Wickramasinghe

Supply and Drainage Board for 20 years in the capacities of Chief Engineer, Project Manager, Assistant General Manager and a Project Director. Aariadasa Fernando Deputy General Manager (Project Coordination) A. A. Fernando joined the Company in August 2003 and presently serves as Deputy General Manager (Project Coordination). He is also functioning as the Company’s Lead Auditor of the ISO systems. He has 38 years of experience in civil engineering to his credit and has worked in a number of government institutions such as Public Works Department, Highways Department, Road Development Authority and Road Construction and Development Company (Ministry of Highways) before joining the private sector. He holds a Graduateship in Civil Engineering from City and Guilds, London and possesses several other qualifications in civil engineering and is a Member of the Institute of Incorporated Engineers, Sri Lanka. Kosala Wickramasinghe Deputy General Manager (Projects Office – II) Kosala joined the Company as a Project Manager in 2007 and currently functions as the Deputy General Manager (Projects Office - II). He holds a Bachelor of Science Degree in Civil Engineering from University of Moratuwa and a Postgraduate Diploma in Structural Engineering from University of Moratuwa. He is also a Corporate Member of the Institution of Engineers, Sri Lanka and a Corporate Member of the Society of Structural Engineers Sri Lanka. He has 12 years experience in the field of civil engineering including Structural Engineering and Project Management.

Niroshan Thilakarathne

Neranjala Priyadarshani

Prabath Karunanayake

years of experience before joining Access having worked in a professional firm which provides Audit,Tax, Finance and Advisory services. He is also a Finalist of the Institute of Chartered Accountants of Sri Lanka. Neranjala Priyadarshani Deputy General Manager (Finance) Neranjala joined the Company in 2005 and presently serves in the capacity of the Deputy General Manager (Finance) of the Company. She is an Associate of the Institute of Chartered Accountants of Sri Lanka and an Associate of the Society of Certified Management Accountants of Sri Lanka. She holds a Special Degree in Accountancy and Financial Management from the University of Sri Jayewardenepura. Prabath Karunanayake Head of Human Resources Prabath is the latest addition to the Corporate Management Team of Access Engineering and functions in the capacity of Head of Human Resources. He holds a MBBS from the University of Colombo and a MBA in HR from the same University. Currently, he is reading for his Doctorate in Organizational Psychology. He is an Associate Member of the Institute of Certified Professional Managers. He accounts for over 12 years of experience in training and human resource management in both private and public sector institutions. He has served as a consultant for local and multinational companies in HR and occupational health & safety. Prabath also serves as a Student Mentor and a Member of the Industry-Academic Consultative Committee at the University of Moratuwa.

Niroshan Thilakarathne Deputy General Manager (Commercial) Niroshan presently serves in the capacity of the Deputy General Manager (Commercial) after serving in various capacities in the Company over a period of almost 9 years. Also, he has over 5 29


Being the Best Empowerment and inclusivity are the strong kinetics that have proudly labeled us the best in what we do. The philosophy of accessibility is deep rooted in our mindset and it is this that drives us to connect people across the nation, which in turn, affirms us as a caring responsible corporate entity.

PROCESS INTEGRATION Engineering Projects Engineering Services People and Communities The Planet Accreditations,Awards & Accolades

34 42 48 54 58

Work in progress at Salinity Barrier across Walawe River,Ambalantota.

30 Access Engineering PLC. Annual Report 2011/12


31


BEING THE BEST

We are a Group that focuses on delivering hope and promise to a nation that has for too long dealt with despair and destruction. This quest has seen Access Engineering climb to the zenith of its industry as a spearhead, leader and champion.We have taken on the mantle of innovator, a pioneer, a harbinger of change and a benchmark initiator, believing strongly in the ethos that we are tasked with shaping the future for the nation, rather than joining an already chartered course.To be thus bold and courageous, we have to be confident that we can run the course ahead of everyone and therefore, over our short but eventful history, have ensured that our Group determines paradigms and maps the macro journey.We therefore have rightfully emerged as a maven for both industry and country, proudly carrying the laurel of ‘Being the Best’ in the myriad dimensions in which we influence the way we work and conduct our business.

32 Access Engineering PLC. Annual Report 2011/12


Infrastructure is the mainstay to physical and economical aspects of nation building and while it quantitatively presents means of economic upliftment to communities who for long suffered through the debilitating impacts of a thirty year war, the qualitative impacts are wide ranging, diverse and numerous. In the context of nation building, infrastructure brings together communities, adds economic and social value through access to amenities and facilities, opens new avenues of employment generation and most of all, introduced social equity into communities. We at Access Engineering, are proud to be at the helm of this nation building process, spearheading infrastructure development aligned to the Government’s accelerated development agenda, truly espousing our euphemism of, ‘Hope Delivered’.

Engineering Projects

33


ENGINEERING PROJECTS

Roads and Highways Sector The name of Access Engineering goes hand in hand with Roads and Bridges in the mind of the public due to the numerous Road, Highway, Bridge and Flyover Projects we have handled over the years, flagging them as the icons of Access Engineering’s achievements. Roads and highways as a sector is the main contributor to Access Engineering turnover with Roads and Highway projects accounting for 56% of the turnover during the year 2011/12. The government of Sri Lanka has placed a special emphasis in rehabilitation, restoration and developing the road infrastructure in war-torn areas and Access Engineering is actively participating in the road development programme of the Jaffna peninsula. Access Engineering has undertaken Rehabilitation and

Improvement of Jaffna – Kankasanthurai Road, Puttur – Meesalai Road & Jaffna – Palali Road as a subcontractor to China Railway No 5, while rehabilitation work is being implemented under the supervision of the Road Development Authority.Work on the Jaffna-Kankesanthurai Road was begun in February 2011, followed by the Puttur-Meesalai Road and the Jaffna-Palali Road. Considering the importance and magnitude of the project, Access Engineering invested in critical support services which included adding an Asphalt plant, a crusher plant, a concrete batching plant and dedicated laboratory services to expedite the projects.The thirty month timeline for completion will be well ahead of schedule, with the project earmarked for completion in November 2012. At completion the road network will provide a boost to the economy and living standards of the people in Jaffna. Government undertook the upgrading and improvement of the existing roadway between Padeniya and Anuradhapura at a value of Rs.8 Bn with the aim of facilitating tourists visiting world heritage sites in Anuradhapura, Kandy and Polonnaruwa. At completion, this project will provide high mobility transport between Padeniya and Anuradhapura.We undertook works of widening and improvement of Padeniya-Anuradhapura road with two lanes with an addition of four lanes in town areas from 50+000 km to 80+000 km from the main contractor Keangnam Enterprises Ltd.

Construction of a box culvert at Navatkuli - Karaitivu Mannar Road

34 Access Engineering PLC. Annual Report 2011/12

Laying asphalt at Kanthale – Trincomalee Road


Rehabilitation and improvement of road sections on AmbepussaKurunegala-Trincomalee Road (A 06) is underway under the World Bank funded Resettlement and Action Plan and Access Engineering secured the Project for Rehabilitation and Improvement of Road Section from 157+000 to 167+280 & Kanthale to Parathuweli (B 196) Road at a project value of Rs. 850 Mn. Construction works began in July 2011 and scheduled for completion in 18 months and currently the processes of widening the existing road and providing adequate shoulder, side and cross drainage systems as well as a utility service corridor are in progress, under the guidance of the Road Development Authority of Sri Lanka. On commissioning, this road will increase connectivity across Central, Sabaragamuwa, North Western and Eastern provinces. Apart from the regular traffic flow which includes passenger buses, heavy vehicles and private vehicles, tourists and devotees visiting Trincomalee, Anuradhapura, Polonnaruwa, Dambulla and Sigiriya will also gain considerable advantage from the outcome of this project. Almost habitually Access Engineering has a stake in any major development project that takes place, as is the case with Dayata Kirula 2012. Under Deyata Kirula 2012 programme activities, the development of Highways, provincial roads and improvements in rural areas of Anuradhapura District have been initiated and Access Engineering was involved in this programme by way of implementing Rehabilitation and Improvements to several roads in North Central Province and Construction of Internal Roads at

Deyata Kirula Exhibition Area.- Zone F carrying out works worth over a Rs. 850 Mn within a strict timeline in time for the initiation of Dayata Kirula 2012 on 04th February 2012. Our skills in innovative road design were utilised in the designing of the over 2.5 km long Access Road to the Hambantota International Airport. Access Engineering is proud to be involved in this mega development project. Design and construction work of higher traffic intensity 4 lane road was subcontracted to Access Engineering by the main contractor China Harbour Engineering Company. Road consists of 4 lanes 3.2m wide carriageways on either side, a 2m wide central median and 1.1m wide walkways on either side.Total width of the road is 18.4m. Access Engineering also undertook the rehabilitation and improvement works of internal roads in Katunayaka and Biyagama Export Processing Zones. Over Rs. 350 Mn worth road improvement works were completed in May 2012 with significant contributions from our support services. Bridge and Flyover Sector Access Engineering has pioneered in employing speedy erection technologies and methods in the construction of bridges and flyovers in Sri Lanka. Kelaniya, Nugegoda and Dehiwala flyovers and Sangupiddy Bridge, where prefabricated steel superstructures were used can be given as the best examples. All

Completed Anuradhapura – Padeniya Road

Road compaction in progress at Navatkuli - Karaitivu Mannar Road

Temporary bridge being installed on the Batticaloa Ayittiyamalai Road at Valayaravu

35


The unfamiliar subsoil conditions in the area and the difficult terrain were some unique challenges encountered and overcome. At completion, the bridge created a unique landmark in the Northern Province, adding another facet to the nation building process.

ENGINEERING PROJECTS

of the above flyovers were constructed in busy road junctions with minimum disruption to traffic by utilizing the fast assembly technologies.These flyovers and Sangupiddy Bridge were constructed in partnership with Mabey Bridge UK, one of the leading steel bridge experts in the world. Access Engineering was entrusted with the challenge of connecting the Jaffna Peninsula to the mainland through the Kilali lagoon with the construction of a bridge, Sangupiddy Bridge, designed to replace the ferry operated during the prewar era linking Sangupiddy and Karaitivu on A32. In partnership with Mabey Bridge Limited UK, construction works began in December 2009 under the “Regional Bridge Programme” with funding from the British Government.The bridge is a prefabricated steel girder structure with an anti-skid steel deck system erected on a RCC structure founded on piled foundations, 288m in length and accommodating a 7.35m wide carriageway.

In keeping with the government’s plans of providing all necessary infrastructure for the people before commencing resettlement in Musali Divisional Secretariat Division, Mannar, it was decided to build Aravi Aru Bridge across Malwatuoya.The project commenced under financial aid from the British Government. Employed by the Road Development Authority and partnered by Mabey Bridge UK, Aravi Aru Bridge was constructed by Access Engineering across Malwathuoya at Arrippu on Thallady-ArippuMarichchukaddi road.When completed 259 meter long steel deck bridge consisting of six bays helped reduce the difficulties experienced by the communities living in Tallady areas to reach Mannar when the Malwathu-oya overflows owing to the rains experienced in the upstream areas. As a part of government initiated development initiative in the Northern region and funded by Asian Development Bank, Eastern and North Central Provincial Bridge Project – Phase 1 is currently underway. Access Engineering’s scope of work includes the design and construction of four bridges and six multi cell culverts. At completion in the beginning of the year 2013 this project will help further strengthen the road network in the region.

Fixing of gates at Salinity Barrier across Walawe River, Ambalantota

36 Access Engineering PLC. Annual Report 2011/12

Hambantota Water Supply Scheme in operation


Water Sector As another key area of infrastructure development, Access Engineering continued to be involved in major water supply projects in the country supplying and increasing the supply of potable water to rural population of the country. Among the recent water supply projects aimed at raising the living standard of rural Sri Lanka are Batticaloa Water Supply Project and Hambantota Water Supply Project. Access Engineering performed a pivotal role in the success of both projects. As a major design and build water supply contract in Sri Lanka with, Hambantota Water Supply Project was aimed at providing potable water to the rural communities in Southern Sri Lanka. Access Engineering joined hands with China Geo Corporation of China and Salcon Engineering Berhard of Malaysia to form Access-China Geo-Salcon Joint Venture and the JV designed and constructed head works, raw water transmission main, treatment plant and water pumping main as well as the rehabilitation of the existing water treatment plant. Implemented under the supervision of the National Water Supply and Drainage Board of Sri Lanka, apart from being a successful collaboration with two major international companies, the use of stainless steel Lamella Plate Process Technology for the clarification of raw water was another significant feature which speaks highly of our value engineering ethos.

In parallel with the implementation of Hambantota Water Supply Project, the Government of Sri Lanka took initiatives to increase the water intake capacity to the treatment plant to align the capacity of the plant to meet the long term development targets of the region.The Asian Development Bank funded Gated Salinity Barrier Across Walawe River – Ambalantota involves the construction of a gated salinity barrier across the Walawe River downstream of the existing water intake for the Ambalantota water treatment plant. Scheduled for completion by the end 2012, it is billed to increase the intake of the existing treatment plant by 28,000 m3/day and meet drinking water requirement of the Hambantota district up to the year 2025. The project, which is Rs. 1 Bn in value, is yet another landmark water project which incorporates numerous value engineering techniques including the use of gabion structures to build the coffer dam, instead of the much costlier and harder to implement original option of sheet piles. Initiated by the government as one of the key development projects in the Eastern Province in 2007 with the aid of Asian Development Bank, Batticaloa Water Supply Project is now providing potable water to nearly 85% of the population (450,000) of Batticaloa town and suburbs.The rural population of the area now have access to clean drinking water without having to walk for miles.We carried out the construction of raw water intake, laying 800 mm diameter Ductile Iron transmission mains of about 26 km and 800 & 600 mm diameter High Density

Excavation work at Unity Container Terminal Renovation at Colombo Harbour

Mattala Airport Water Tower close to completion

Sangupiddy Bridge across Kilali Lagoon

37


Along with the unprecedented damage caused to human lives and livelihoods, 2004 Tsunami also managed to cripple infrastructure in the coastal region of the country. Among these was the damage to the Unity Container Terminal at Colombo harbour, which coupled with pre-existing design failures, made it essential for the terminal to undergo renovations.

ENGINEERING PROJECTS

Polyethylene (HDPE) pipes across the lagoon of about 1.2 km each in partnership with China Geo-Engineering Corporation of China and Salcon Engineering Berhad of Malaysia.Water is pumped from the Unachchiya Tank through raw water pipeline to the Treatment Plant to be purified and distributed among the people of the Batticaloa District. Harbour and Marine Sector With the completion of Mega Port Phase I and Phase II, and adding to Access Engineering’s technical knowhow of latest technology on most up-to-date development in harbour security was Mega Port III, which was completed during 2011. Past year also marked the use of innovative and value engineering solutions being implemented in harbour and marine projects undertaken by Access Engineering.

Unity Container Terminal Project began with the intention of providing urgent renovations to restore failures incurred in the west and north revetments of the Unity Container Terminal, rehabilitate the yard and have a fully functional terminal. Access Engineering’s scope of work includes dredging and constructing a rubble mounted embankment to protect the quay settlement, rectification of the settlement with anchor rods and tie rods, removal of existing graded rock mound along the existing North revetment and restoration of the yard area, while adding the amenities of water, electricity and gantry crane rail foundation. Funded by Japanese Non-Project Grant Aid Counterparts Funds and valued at Rs. 416 Mn, Access Engineering is employed by the Sri Lanka Ports Authority for the implementation of the project. The project is progressing ahead of schedule due to a surfeit of value engineering solutions being added to the features, processes and systems. Building Sector Believing that change and the new are essential to the sustainability of any business, Access Engineering ventured

Cable connection work at Dialog Aerial Optical Fibre Network Project in Trincomalee

38 Access Engineering PLC. Annual Report 2011/12

Work continues till dusk at Low Cost Housing Project, Henamulla


into building construction in 2011.With this step forward we were able to acquire and develop the expertise and specialised knowledge required to excel in this most competitive sector of the construction industry in-house, gearing up to meet the future challenges and the changes in economic climate would bring to our doorstep. Access Engineering was one of the few construction companies selected to partner one of Sri Lanka’s most exhilarating infrastructure projects, the new International Airport at Mattala in Hambantota. Currently Access Engineering is in the process of constructing the Cargo and Fire Rescue Buildings, scheduled for completion in September 2012, which gains extreme priority in terms of quality assurance. Similar to the design and construction of Airport Access Road, Airport Water Tower and the Pipe Laying Project undertaken by Access Engineering at Mattala Airport Project, this project too is in partnership with China Harbour Engineering Company Ltd under the supervision of Airport and Aviation Services (Sri Lanka) Ltd.The project also marks our entry into the highly competitive building construction sector of the industry, a significant step in achieving our future vision. Funded by the Urban Development Authority at a project value of Rs.2.9 Bn, Access Engineering is working on the structural design and construction of all the civil engineering works of five 12-storey apartment blocks comprising 1,137 housing

units under the Henamulla Low Cost Housing Project. Design and installation of mechanical, electrical and plumbing works, landscaping and rehabilitation of the access road to the housing settlement also fall within the scope of Access Engineering. On completion, the project extends housing to families who are currently living in Under-served Settlements in and around Colombo.This is the first large scale housing project undertaken by Access Engineering and also marks the successful implementation of a new formwork system, which has enhanced speed and efficiencies of the construction and improved quality, while entrenching a firm commitment to sustainable building technology. Telecom Infrastructure Sector Our relationship with our long term client Dialog Axiata PLC continued to thrive.We installed over 750 km of optical fibre cables helping Sri Lanka progress to the next stage of global communication by connecting every corner of the country in to one giant web of information network. During the period under review we completed Dialog Backbone Project from Wadduwa to Matara and Colombo Metro Optical Fibre Network Project – Phase II.Total value of the projects completed for Dialog within the last year amounts to Rs. 1 Bn. We have also recently completed the first phase of Dialog Aerial Optical Fibre Network Project employed by the main contractor Huawei Technologies of China, and Second phase of the project is currently underway.

Tower crane in operation at Low Cost Housing Project, Henamulla

Finishing work underway in Fire Rescue Building at Mattala Airport

Work on the prefabricated roof underway in Cargo Building at Mattala Airport

39


ENGINEERING PROJECTS

On the premise that Access Engineering has been fundamentally focused on ‘Hope Delivered’, the fact that the Company is metastasizing its presence in all areas of the country encompassing all competencies and sectors of the construction industry, further proves that Access Engineering’s intervention in the country’s progress is strong and focused. A detailed purview of the Company’s geographic presence whether in water and sanitation, roads, highways, bridges, flyovers or buildings is given below for the financial year 2011/12.

Projects Roads & Highways Water & Waste Water Bridges & Flyovers Harbours & Marine Works Dredging & Reclamation Telecommunication Infrastructure Buildings

40 Access Engineering PLC. Annual Report 2011/12


Access Engineering’s underlying premise in ensuring that quality remains paramount in each project we embark on, is in demanding the best, not only in hardware encompassing infrastructure and raw material, but also in ensuring that skills, competencies and knowledge in optimising the best resources available is high on the agenda. Backward integration therefore forms the backbone to our concept of A to Z Engineering Solutions, propelling Access Engineering to enter into spheres which would not only support the work we are engaged in, but also raise benchmarks and add value to the entire industry. Given overleaf are the new initiatives we embarked upon and those already implemented which we continue to improve, ensuring that our brand of supreme quality deliverables form the kinetics to ‘Hope Delivered’.

Engineering Services

41


integration feature of Asphalt Mixing Plants, which would not only supply our own projects but will also have enough production available for external customers.The new Asphalt plants are established in Kotadeniyawa, Jaffna, Kanthale and Thalawa. The Kotadeniyawa plant has a capacity of 96 TPH (tonnes per hour) and is now operating at full capacity, supplying to external customers as well.The other three encompass a much higher capacity of 120 TPH and cater to our requirements.

ENGINEERING SERVICES

The A to Z of design and construction is augmented due to a highly experienced reputed and skilled design division whose execution of complex projects has included the design of bridges, flyovers, buildings, roads and highways. Equipped with the latest state of the art technology in both analysis and design, the Engineering Design Division undertook the design of Ramp 9 and Bridge 19 for the Outer Circular Highway project (Southern Section), which involved the design of a complex box girder structure, curved in both vertical and horizontal plains.The design was carried out and implemented successfully at the Kottawa Interchange of the Outer Circular Highway Road Project. With the Access Engineering business portfolio expanding, the Company saw a considerable increase in the road development project sector which prompted us to invest in the backward

With a view to adding value and enhancing the highest contributor to our revenue portfolio, Access Engineering made substantial investments in machinery, equipment and plants to aid the construction of new roads and highways and the rehabilitation and improvement of existing roads.The Quarry Operations, situated in locations convenient and adjacent to ongoing projects include some which are owned by Access Engineering.These are the Thalawa Quarry in Anuradhapura, Sarvodaya Quarry in Vavuniya and Kabithigollawa Quarry in Vavuniya.Within the last year, 3 new Crusher Plants holding a capacity of 50 TPH, 80 TPH and 150 TPH were added to enhance the existing quarry operations in Anuradhapura, Kanthale and Vavuniya, not only providing raw material for Road Pavements and Asphalt, but also the aggregate required for manufacturing ready-mix concrete.

Asphalt production plant at Kotadeniyawa

42 Access Engineering PLC. Annual Report 2011/12

New concrete batching plant in Mabima, Kaduwela


Yet another new addition to the Access Engineering portfolio, the plant which was initially established to supply concrete for ongoing projects including piling projects and low cost housing project in Henamulla, saw a further investment to the existing fleet of Concrete Batching Plants with an infusion of a 60 m3/ hr capacity plant.The plant’s assets now include a truck mounted boom concrete pump, a front end loader, 10 transit truck mixtures and accessories.These are complemented with the latest technology, upgraded expertise and vigorous quality control, adding the dimension of supplying to external customers in large scale as well. A Bauer BG 25 rotary drilling rig was added to the Piling Division of Access Engineering in 2011. In addition, a De-sander was acquired for the Division through which the quality of drilling fluid is maintained to enhance the quality of piling works. Among many piling projects undertaken were two major projects undertaken by the Division - Piling Work for the Proposed Medical Faculty Building Complex at Sir John Kotelawala Defence University at Rathmalana and Piling Work for the Construction of 500 Housing Units at Dematagoda. Piling works at KDU included installation of 277 numbers cast in-situ bored piles of diameters ranging from 500 to 750 mm and scope of work of UDA piling project is to install 386 numbers cast in-situ bored piles of diameters varying from 500 mm to

1000 mm. Our piling division also undertook the Piling Work of Low Cost Housing Project at Henamulla.This project with over 400 piles to be cast is currently nearing completion. Bauer BG 24 and 25 rigs are employed in above projects and the work scopes of both projects include pile testing as well.The piling division is currently being reinforced with further investments in machinery and equipment to gear up the division, to handle the upcoming large scale piling projects. Within a few years of its establishment, the Geotechnical Laboratory Services Division has become a valuable asset to the company portfolio by providing support services in a timely and cost effective manner. Currently, this division supports our numerous projects with various services. Some of the main services provided by this division include soil testing and geo technical investigations for the Hambantota Airport Access Road Project, Low Cost Housing Project at Henemulla and the Hambantota Water Tower Project, field investigation (DCP testing etc) for A32 Road Project and quality control and quality assurance for Kothalawala Defence University Piling, UDA Housing Project Piling at Dematagoda and Mega Port Project. Investigations for deep/shallow foundations, traffic surveys, topographical and contour surveys, concrete testing, field testing for earth and road works, testing of aggregates and sand, laboratory tests for soil and testing of Bituminous and Asphalt

Sourcing material from Vavuniya Quarry

Testing in progress at Geotechnical Laboratory

Piling work in progress at Kothalawala Defence University Building

43


ENGINEERING SERVICES

among other services being provided by the division. As a valuable support service of Access Engineering, the capacity of this division enables us to do testing more frequently, economically and reliably but also helps us establish the innovative techniques and processes we have developed within the industry by providing the required proof of quality and standards. Over the last few years Mechanical Workshop has turned into one of the most crucial operations within our organisation by handling the operation and maintenance of all the heavy machinery, equipment and the fleet of vehicles owned by us. However, management of this division was committed to expanding the operations of the workshop beyond the supply of support services to the existing machinery and vehicles.With ambitious forward planning and innovative out of the box thinking,

this division has expanded its operations into various other ventures. Fabrication of various components with the acquisition of new machinery, customisation of machines and equipment to better suit the needs of individual projects, installation of mechanical equipment, designing and fabrication works, fulfilling different types of pile casting requirements of piling division, design and manufacturing, washing plants for DBST material, manufacturing semi-automatic pipe benders for large sized Iron pipes, fabricating and installation of fuel tanks and design and fabrication of water bowsers are among some of the other works undertaken by the Mechanical Workshop. Progress of this division was achieved by our hard working team comprising of skilled and competent personnel including mechanical engineers and other technical and management staff. Horizontal Directional Drilling (HDD) is a technique, which employs a trenchless method to install pipes, ducts or cables underground.This trenchless method becomes very versatile during the installation of underground utilities along the roads in built-up areas since the disturbance to traffic is very minimal.With the recent acquisition of 2 HDD machines, our strength was increased to 3 machines.We have so far installed underground ducts of around 37 km within the city of Colombo and in built-up areas along the Galle Road under the Optical Fibre Network Projects of Dialog Axiata PLC.

Finished products leave the Crusher Plant in Vavuniya

44 Access Engineering PLC. Annual Report 2011/12

Horizontal Directional Drilling (HDD) machine at work


Fibre Optic Cable installation by Cable Jetting, is the process of installing a cable in a duct by pushing the cable into the duct whilst blowing air through the duct.This is made possible with the use of a cable jet machine and compressors with moist separators ensuring minimum tension to the cables and enhancing productivity.This is a much better alternative than the installation of cables by conventional manual cable pulling methods, which helps save time and enhances quality by way of eliminating cable damages that may occur due to manual cable pulling forces. We have been successful in installing and reaching a distance of approximately 4 km of optical fibre cables on average per day. As the only construction company to own a Cutter Suction Dredger, we have been able to complete a variety of Dredging and Dredging Related Activities in an economical and efficient manner.We have successfully completed dredging projects in Hikkaduwa, Mirissa and Puranwella Fishery Harbours and the Lunawa lagoon. One of the recently completed dredging project is the dredging of the Dutch canal, which was initiated as part of the Katunayake Expressway project to mitigate the risk of flooding of lower level land due to Expressway construction. We carried out the re-channelling works of the Old Dutch Canal at Muthurajawela along the Colombo – Katunayake Expressway from Ch 10+900 to Ch 13+546 (Total re-channeling length of the canal is 2,646 m and the width of the canal is 40 m).

Production underway in Asphalt plant in Kanthale

Dredger at work in Dutch Canal, Negombo

Sheet metal fabrication in Mechanical work shop at Ranala

45


ENGINEERING SERVICES

A fundamental feature in the total solutions kinetics that Access Engineering espouses, our services which were initially begun as a support feature for the expansive projects undertaken, have now evolved into efficient service centers that extend their competencies and capacities to external customers as well. Detailed below are the geographic locations of the Company’s Asphalt, Crusher and Concrete Plants and as well as the quarries which now play a significant role in extending the capacities available in the entirety of the construction industry.

Services Piling Asphalt plants Crusher plants Batching plants Quarries

46 Access Engineering PLC. Annual Report 2011/12


They are hardworking and dedicated, loyal and enthusiastic.They are, and will always be, our greatest asset and they hoped that one day, they would become a bigger part of the company that they are so devoted to. We believed we could make a difference in their lives and we did. A stake worth Rs.3 Billion was gifted to the employees by the three Founder Shareholders, in recognition of their valued and devoted contributions. We showed them that they are more than just employees and provided them with a sustainable gift for the future. We delivered hope.

People and Communities

47


PEOPLE & COMMUNITIES

The teamwork, dynamism, motivation and most of all the drive to win have propelled our people to push boundaries, create paradigms, innovate solutions and become a force in not only our industry but in Sri Lanka’s corporate annals.This also means that Access Engineering must attract and retain the best in the industry and over the years, we have done just that.We have infused HR best practices into the way we do business and way we manage our people.We continue to create and develop an empowering milieu for them, where achievements are rewarded and performance is recognised. We imbue a knowledge culture which becomes central to our working environment, as we strongly believe that the honing of skills and talent, while improving levels of knowledge remain the bedrock to an empowered workforce. Into this is added the additional tenets of responsibility and accountability, which permeates naturally from the levels of empowerment granted to our team, presenting our team with options of maximising their capabilities, honing their competencies and being accountable for their actions.This also showcases leadership, highlights team players and fires an entrepreneurial spark which activates a sense of ownership for the success of the organisation.

On the job training in progress

48 Access Engineering PLC. Annual Report 2011/12

We are most proud that this year we took our employees to new heights, espousing our corporate responsibility and stewardship into truly imbuing the sense of ownership among our team. In a bid to appreciate the loyalty and commitment displayed by the members of the team, we presented Company shares to some of our loyal and long standing team members.This undoubtedly heralds a new chapter in Sri Lanka’s corporate history, while also paving the way for others in the team to aspire towards claiming ownership eventually. Access Engineering awarded share ownership to over 1,000 team members comprising managers, assistant managers, executives, clerical and support staff. Given the standing and value of the Access Engineering share, this outright gift of ownership makes more than 250 of these team members rise to the monetary ranks of millionaires, while impacting positively on their families as well. HR Management The HR function at Access Engineering is decentralised, with a dedicated Head of HR working from Head Office overseeing the Group’s HR operations, while HR at each Project Office also comes under individual HR Managers. Our HR Policy works on the ethos of ‘Best people, producing their best work, under the best conditions’, which means that from identifying the role to recruitment, selection, training and development, each individual is earmarked to achieve their full potential, equipped with the apt knowledge, skills and tools to optimise performance.

The spirit of teamwork


Personnel policies, processes and procedures are aligned to the diktats of the International Labour Organisation, the UN Declaration on Human Rights and the applicable regulatory environment prevalent in Sri Lanka. However, it must be noted that Access Engineering constantly strives to work in a culture that goes beyond compliance, which is fully endorsed by the existing monitoring system implemented through the Code of Ethics and Working Standards to trigger higher productivity and a better work life balance in the team, which in turn ensures the meeting of individual aspirations and company goals. Rights and Policies Our Recruitment and Selection Policy adheres to Access Engineering being the preferred employer in the industry, where those joining our team have the potential to make a positive and valued contribution. Meritocracy is the underlying fundamental in both recruitment and career mobility, while non-discriminatory practices are in high focus.There is no bias in gender, marital status, race, ethnic, political or religious belief, disability or age. If an individual shows potential and is ‘the right person for the right job’, recruitment is guaranteed. Similarly, we do not condone child labour or illegal labour practices in any form and remain firmly committed to an ethical process in HR management. Given the nature of our industry, there are instances where child labour has been used in the past by suppliers in quarries, crusher plants and road construction work. However, we have eschewed this practice fully and

categorically prohibit our suppliers and valued business partners in engaging in these practices.We will not engage in any business with any organisation or individual that does not conform to accepted labour practices. When delivery timelines loom, there is a necessity sometimes, especially during the last three months, when teams may have to work longer hours. If this need arises, Project Officers are mandated to ensure that those engaged in additional hours are not exploited, gain adequate rest between shifts and are monetarily rewarded adequately. Recruitment and retention As at March 31st 2012, the total team increased to 3,174 at Access Engineering with almost 35% based in the technical and operational categories, which has seen very positive sentiments emanating from our team, who are now empowered with responsibilities in the day to day operations, decision making and planning. Net employment fluctuation, evidenced by data over the course of several years is an important indicator of the organization’s contribution to the overall economic development and sustainability of the workforce. Over the last three years, there has been an exponential increase in net employment as seen at 16.6% in the year 2010/11 and 94.7% in the year 2011/12. Another indicator monitored closely is employee attrition, which is an apt benchmark to judge levels of uncertainty and dissatisfaction, requiring fundamental changes in the structure of

Attention to detail

Safety first

Employing youth from local communities

49


PEOPLE & COMMUNITIES

closest competitor and 7 index points above the industry average. The research also showed that Access Engineering is strongly perceived on parameters such as financial stability, competitive salaries, performance-based benefits and challenging work environment.

core operations. An uneven pattern highlighting age or gender can indicate incompatibility or potential inequity in the workplace. It must be noted that attrition in the construction industry is very high, primarily due to the structure of the industry which has a transient workforce, migratory nature of workstations, employment opportunities abroad and the influx of international contractors whose remuneration is above market rates for short term contracts.These remain elements beyond our control. However, despite these disadvantages, we have maintained staff turnover at single digit levels of 6.8%, way below industry average which counts at a high 20% to 30% and a significant improvement over the Company’s levels of 10.9% in 2010/11.These improved retention rates attest to the Access Engineering work ethic of responsibility, authority and accountability, coupled with apt rewards and remuneration aligned to performance. The superior status enjoyed by Access Engineering in terms of being a preferred employer in the construction industry was further highlighted by an independent survey carried out by TNS Lanka, the global leader in customized market research.The research which was conducted on a sample of over 250 current and prospective employees of the industry, revealed that Access Engineering is the Employer of Choice, 2 index points above the

Training & Development From selection onwards, all team members undergo a comprehensive orientation in which they are given an extensive awareness and induction programme on the Code of Ethics and Working Standards within the company. A high level of integrity, conformance to ethics, morals and principles are expected and is strongly embedded into the working culture. Training & Development (T&D) is paramount to the sustainability of our business.The HR division creates and implements the training calendar annually, charted against individual aspirations and divisional goals and objectives, current and future projects, trends, challenges and opportunities where knowledge and skills are matched. T&D works on the triad of external, internal and on-the-job practical training, all of which saw an investment of Rs.8.3 Mn expended on T&D this year. Epitomising on the philosophy of not being content with what we achieve and always striving to reach further heights, a comprehensive training needs analysis was undertaken at the

Work hard and play harder, unwinding at leisure world

50 Access Engineering PLC. Annual Report 2011/12

Participants at Training of Trainers


beginning of 2012. Accordingly, an in-house training plan was drawn up which identified 82 training areas with a total of 150 programmes covering 225 training days and 5,000 participants. This plan will supplement the current programme of local and foreign training through external bodies. In order to deliver this ambitious training plan, a team of 22 executives were developed as trainers through a Training of Trainers (TOT) programme conducted over a period of three months.The TOT programme covered the basics of adult learning and corporate training, and concluded with practical sessions which provided them the opportunity to sharpen their skills as trainers. The knowledge based culture we promote is further encouraged by Access Engineering supporting team member’s pursuance of higher studies and professional qualifications. In addition, promotions form a springboard for career development based on performance and meeting goals and objectives.This year, the number of staff promotions increased to 47. We also inculcate a strong spirit of cross-skilling, as this also helps in expanding knowledge horizons while also identifying individual skills and competencies.Therefore, job rotation is key to continuous professional development at Access Engineering and in the last three years, there have been a total of 52 instances of rotation.

Health, Safety and Welfare Work life balance remains paramount in our working culture and into this equation, we emphasize immense importance to occupational health and safety. While we conform and in most cases exceed the applicable health and safety regulations applicable to the construction industry, it is vital that we are very attentive to ensuring that our workplaces are safe and healthy. Access Engineering has an established Health & Safety Management System (HSMS) that stringently adheres to all safety measures and has a zero tolerance attitude to carelessness and negligence.The HSMS which was launched in November 2011, was subjected to an Initial Review by the certifying body Det Norske Veritas (DNV) and found to meet the requirements of OHSAS 18001:2007 international standard.The System is implemented in all operational locations of the Company and it will be subject to a Certifying Audit in September 2012. Welfare initiatives increased this year with insurance covers for team members and their families continuing, in addition to the food and accommodation for project staff, annual entertainment and sporting activities.The Head Office Team made their annual three day trip to Bentota, while the Projects Staff ventured to Nuwara Eliya, Bandarawela, Galle and Kandalama.The annual Access Christmas Carnival was held at Havelock Grounds on 11th December 2011 bringing together team members and their families for a fun filled event brimming with festive joy.

Helping hand to those in need

Industrial trainees learning the finer points of surveying

Inspiring the next, mock interviews at Kelaniya University

51


PEOPLE & COMMUNITIES

Communities Our communities remain integral to the success of each of our projects and sustainability of our business.The formula is one in which we inculcate a win-win situation for the communities and ourselves, where we ensure a permeating economic value for both, while the ensuing social equity is designed to imbue a change in lifestyle and uplift entire communities.We remain inextricably entwined with our communities and make an emphatic effort to engage them through various initiatives.These engagement initiatives are mooted by project management teams and supported by the relevant project offices and the head office. Social responsibility projects are worked on four primary platforms: local community relations, capacity building, health and wellness and industry advancement.To maintain transparency and equity in the chosen social responsibility projects, a series of evaluations and reviews are conducted by the Corporate Sustainability Team to ensure that these initiatives are aligned to the social responsibility platforms, that goals and objectives can be met and that resources and investment is available and applicable. We continuously work to support the wellbeing of the community, contribute to the enrichment of the society and make a tangible contribution to their economic and social development of the localities where our projects and plants are located.We have also taken initiatives to mitigate health & safety impacts of infrastructure, hazardous materials, emissions and discharges; counteract social impacts of involuntary resettlement, physical and economic displacement and livelihood disturbances; and honour the local culture, cultural heritage and indigenous peoples. During the heavy rains experienced during the early part of 2011, we took leadership in providing relief for the affected areas in close proximity to our projects. Especially, the project staff of A15 road rehabilitation project took the initiative to distribute dry food and water among flood victims and our employees were the first relief team to reach the area due to the inundation of access roads. The Mechanical Workshop conducted a community relations project at the Sanasa Welfare & Funeral Support Society in Jalthara, Ranala where they donated Tor steel bars to construct a new two-storey building at the premises of the Society.The objective of this project was to facilitate and strengthen the local mechanism of providing financial assistance to people of the area and organizing social activities. Another area where we have actively engaged in is building human capacity and developing human resources in the society, including our own employees and their families, focusing our attention on pre-school, school, technical and tertiary education by means of transferring knowledge, mentoring and coaching, apprenticeships, scholarships and other financial contributions. Some of the capacity building activities carried out during the last year included industrial training and career guidance.We provided industrial training for 25 students from Universities and Technical Colleges.We also took part at the Inspiring the Next – Career Fair 2011 which was organized by the University of Kelaniya at 52 Access Engineering PLC. Annual Report 2011/12

the university premises. During the event we interviewed more than 15 students and indentified talented individuals among them who have the potential of becoming a member of Access family in future.While providing an employment opportunity for some students, our inputs certainly would improve their interview skills which would in turn prepare them better for the job market. Health and wellness is yet another focus area for our social responsibility initiatives where we engage in projects to promote physical, psychological, social and spiritual wellness of the society, including our own employees and their families, through health and wellness education, infrastructure development, dissemination of healthcare services and contributions to other medical services. During the period of concern, a key focus area was on wellbeing of differently-abled children in special care institutions.We designed and constructed a playground with a pavilion for the benefit of the differently-abled children at the Daya Mina Center for Differently Abled Children at Embuldemiya, Nugegoda. Daya Mina is a day center for young boys and girls and currently has attendance of over 40 students from the Colombo District.The playground has brought about an enormous benefit in terms of their psychosocial development.We also contributed in many ways to the Ceylon School of Deaf and Blind and Ratmalana.The School looks after about 600 impaired children and we have made donations for the provision of hearing aids and meals for impaired children. We commenced work on another capacity building project in Methodist Madya Maha Vidyalaya, Hakmana where we have undertaken to design and build an Auditorium Building with a floor area of 8,600 sq. ft. and a seating capacity of 700.The proposed Auditorium will provide the students in around the school with the very best facilities to showcase their talents in performing arts and speech.The project is to be handed over by the end of 2012. Finally, we consider industry advancement also to be one of our key responsibilities. In this respect, we have taken leadership in the advancement of the construction industry to take up the future challenges through the introduction of modern technology, development of human resources and dissemination of best practices in construction management. During the tear, we commenced a project to address one of the critical human resource issues in the construction industry – dearth of competent laboratory technicians. Lack of a formal education programme has resulted in the construction laboratories being handled by technicians who have learned the craft by experience but with inadequate technical knowledge. As a solution, we selected a group of 10 school-leavers with good educational background and enrolled them in an apprenticeship programme to be trained as laboratory technicians.The company will bear a cost of over Rs. 300,000 per apprentice without any financial bond, but only with the objective of providing competent human resource to the industry.


We categorically make decisions throughout our value chain to ensure that while standard building practices are guided by short term economic considerations, our ethos of sustainable construction will always be founded on best practices, emphasising long term affordability, quality and efficiency. We have adopted a philosophy of Going Green, which requires every level of the company to adopt and implement an eco-friendly concept in all standards, systems, processes and practices. In tandem, this decreases the negative impacts on the environment and increases the sustainability of the project and thereby our business.

The Planet

53


THE PLANET

The construction industry has for long been viewed as a controversial one in the context of being harmful to the environment. In fact, the negativities are believed to have increased and in some cases become incendiary due to these impacts not being actively managed. As per ‘The Impacts of Construction and the Built Environment’ (www.willmottdixongroup.co.uk) due to the industry’s massive usage of natural resources, which is believed to be about 50% of global resources and approximately 70% of the world’s timber, there certainly is some verity to justifying these viewpoints. Add the fact that the industry is responsible for most CO2 emissions and pollution, creating the largest volumes of waste and is the most colossal user of huge amounts of non-energy related resources, the industry really deserves its squalid reputation. However, over the years, there has been a concerted effort by the industry towards sustainable construction, infusing a wide ranging plethora of green initiatives and much more responsibility towards the use of resources, waste management, initiatives to reduce pollution and waste and in turn, being conscious of impacts on communities and planet. It must be noted that Access

Access employees participate in a tree planting programme at a church in Athurugiriya

54 Access Engineering PLC. Annual Report 2011/12

Engineering has been much more conscious and aware of the negative impacts permeating from this industry from inception. Given that Sri Lanka’s island status leaves limited scope for use of resources and in turn, calls for a more responsible management of these resources and the impact that ensues from the work we do, Green Management was consciously introduced and implemented into our strategic business plan. We categorically make decisions throughout our value chain to ensure that while standard building practices are guided by short term economic considerations, our ethos of sustainable construction will always be founded on best practices, emphasising long term affordability, quality and efficiency. In tandem, this decreases the negative impacts on the environment and increases economic sustainability of the project and thereby our business. Environmental Management System We are extremely proud to be the pioneer in adopting a formal Environmental Management System and gaining ISO 14001:2004 certification back in September 2009 within the entire construction industry.This certification included implementing a stringent but comprehensive analysis of all our systems and procedures.The EMS too continues being strictly adhered to with similar vigour and enthusiasm and ascertained its certification by successfully completing the surveillance audit carried out by certifying body Det Norske Veritas (DNV) in November 2011.


This absolute commitment to ensuring that we practice a true brand of sustainable construction is imbued stringently in all projects. For example, the Company prepares Environmental Compliance Plans for all major projects to ensure that environmental facets are pragmatically managed and executed according to these plans during construction. In addition, Environmental Rehabilitation Plans have also been introduced into our management planning processes, where we are compelled to restore the environment surrounding the localities of our quarries, crusher plants and asphalt plants to the original state it was in, prior to our intervention, to the best of our ability. Energy Management The EMS imposes stringent operational controls on the use and management of electricity, which is implemented at the Head Office and all Project Offices. Initially, the operational controls included generic actions including creating awareness among the team on energy saving initiatives and encouraging participation as well as suggestions. However, given that these programmes have inculcated an energy saving mindset among our team, Access Engineering set itself a target of reducing electricity consumption by a further 2% by the end of 2011.The initiatives that were implemented to meet our goal was in isolating the board room Air Conditioner from the central system, dividing the lighting system into several zones with spate switches, installing a power factor correction capacitor, using thermal insulation

for roofs, introducing an energy saving/surge protection system, introducing LCD monitors for desktop computers and switching to laptop computers.The success of the programme was surely showcased, when we exceeded our target and reduced electricity consumption by 4%. In 2011, we introduced a LED bulb systems with structural changes and the usage of AC was further reduced by adjusting the operational hours.This thus brought in a reduction of a further 2% in consumption. Going Green Access Engineering has adopted a philosophy of Going Green, which requires every level of the company to adopt and implement an eco-friendly concept in all standards, systems, processes and practices used in its construction work.The green initiatives ranged from eco-friendly designs and construction procedures to paper re-use and tree planting. From a design perspective, we have had the opportunity to contribute our expertise in several bridge and building designs, aligned to our green ethos. In the Trincomalee Integrated Infrastructure Project, five major bridges were designed using high strength Grade 50 concrete for the superstructure and high strength strands. In addition, the most economical beam sections were selected for use, while couplers instead of reinforcement

E- Waste Management Programme at Access Engineering

Water sprinklers used to control dust emission at a crusher plant

Use of safety nets to control falling dust and debris

Drain takes a detour to save the tree

55


in the construction process and natural light and ventilation was optimised to minimise energy usage.

THE PLANET

lappings were used in order to reduce the use of material, re-usable material and locally available resources were also introduced. In controlling slope erosion, Reno mattresses and rubble pitching, river training works and Gabion retaining walls were the solutions we infused. In building design, we adopt a range of techniques including the concept of multifunctional spaces at intermediate floor levels, maximum utilization of natural ventilation and lighting, ‘Passive Soar Building Design’, increasing efficiency of lighting systems and AC systems, water conservation and rainwater harvesting. Several construction projects we have undertaken in the dry zone of Sri Lanka including, the Aravi Aru bridge in the Mannar District, the raising of Unnachchai tank in Batticaloa District and Kantale Trincomalee Road Project in Trincomalee District which brought in some unique ‘green’ practices.The temporary project offices and other facilities which were located in areas where day temperatures soared above 35oC, were designed to take full advantage of the natural vegetation in the areas, not only cooling the surrounds but also preserving the flora and trees.There was a considerable increase in the use of recycled and waste material

Concrete is a conventional mainstay in the construction process, even though it is not a sustainable means, due to high energy consumption and by-products causing immense pollution. Access Engineering’s solution to this enduring challenge was to promote the use of steel construction, which comparatively has low energy consumption levels, causes minimum harm through its byproducts and has the unique persona of being 100% reusable. Partnering Mabey Bridge UK, a pioneer in introducing prefabricated steel flyovers to Sri Lanka which were constructed in record time with minimum disruption to traffic flow, this environmentally friendly concept of steel construction can be seen in the Kelaniya Flyover, Dehiwala Flyover and Nugegoda Flyover.This technology was extended to the recently completed Sangupiddy Bridge. Given the huge burden placed on the natural resources in producing construction material, we explored the contribution we could make in making our construction material more ecofriendly. One such initiative was replacing river sand with quarry dust, which is a by-product in metal crushing process, in concrete production. During the year we used a total of 315.2 cubes of river sand and 300 cubes of quarry dust.Which means that we have used 48.8% recycled material in our concrete production.

Energy efficient site office at Kanthale Asphalt plant where containers are being reused

56 Access Engineering PLC. Annual Report 2011/12

Green site office at Unnachchi Tank Rehabilitation Project


Our environmental consciousness translates from the genesis of design to ultimate completion of the project.This includes ground preparation, which may involve the felling of trees, which becomes almost an imperative in the industry. At Access Engineering, we remain kinetically focused to conceptualise our architecture and design to bring in maximum preservation of the trees.This is done in conjunction with our client, where our engineering team not only presents alternative designs to ensure minimum impact, but also permeates an environmental consciousness to the client and valued business partners as well. For example, in widening and improving the Padeniya-Anuradhapura road and KantaleTrincomalee road, there were over 200 instances where trees were saved due to our astute design changes, which included the shift of the center line and diverting drains.When trees are felled, we ensure that new trees are planted in as close proximity as possible to the original location of the tree, as effected in this project, where trees were planted on either side of the road. Our paper saving and recycling efforts saw us re-use 953 kg of paper either reused or recycled in 2011/12, which is a definite increase over 2010 where we reused 472 kg of paper

used paper. By re-using paper for copying and printing, we saved 645 kg of new paper in 2011/12, compared to 472 kg last year. Another green initiative involved Electronic Waste (E-Waste). Having realized the enormity of the harmful effects of disposing E-Waste in an irresponsible manner in landfills or burning them without proper safety precautions, we joined hands with Ceylon Waste Management (Pvt) Ltd, the only BOI approved organization for waste recycling in the country to collect and recycle E-Waste from our offices and the general public. Over 2.4 Tonnes of electrical and electronic waste was collected during this project and was handed over for recycling. Our committed efforts to increase the country’s forest cover continued with 550 mango, kumbuk, mahogany, naa, teak and halmilla trees being planted at various locations, collating a total of over 6,000 saplings planted since 01/09/2008.This year, the planting initiatives were implemented at Rattanapitiya Maha Vidyalaya, Ratmalana Technical College, Pannipitiya Doowa Temple, Bokundara Dhamma Samadhi Temple, Attiduya Police Academy and Modara-Mattakkuliya road.

These are resultant to proactive features we have introduced including the installation of software that monitors the number of copies and printouts, having two copier/printers using exclusively

Slope protection at A15 Road Project

Used paper being recycled at Head office at Access Towers

Steel replaces less environmentally friendly reinforced concrete in bridges and flyovers

57


ACCREDITATIONS, AWARDS & ACCOLADES

Our emergence as a pioneer, an initiator and an innovator for the construction industry in Sri Lanka, while carrying the laurel of ‘Being the Best’ in the way we work and conduct our business, has been recognized in numerous ways during the short history of the Company’s existence.When we are honoured with accreditations, awards and accolades, it authenticates that our tireless efforts to deliver hope has made an impression in the hearts and minds of our diverse stakeholders.We do take serious note of the recognitions we have received, because for us, it is not only a garland for what we have achieved in the past, but also a challenge of raised expectations for the future. Accreditations As a company in the forefront of the construction industry of Sri Lanka, Access Engineering has received the following accreditations: •

Institute of Construction Training and Development (ICTAD) – C1 grades for Highway, Bridge,Water Supply and Drainage, Irrigation and Land Drainage, Dredging and Reclamation and Groynes Revetments and Reclamation

ICTAD – GP- B1 grade for piling, EM I for telecommunication

58 Access Engineering PLC. Annual Report 2011/12

National Construction Association of Sri Lanka (NCASL) – Major and Specialist Contractor

Our management systems which have been developed and aligned with international standards have been certified by DNV as meeting the requirements of these standards.The Quality Management System (QMS) is certified with ISO 9001: 2008 and the Environmental Management System (EMS) is certified with ISO 14001:2004.The documentation of the Health & Safety Management System (HSMS) has been subject to the Initial Review and the system is scheduled to be certified with OHSAS 18001:2007 in September this year. The technical expertise and the competence possessed by the Company is well recognised by professional bodies.The Institution of Engineers of Sri Lanka (IESL) has recognised Access Engineering for training graduate engineers for IESL Engineering Charter and the Institute of Chartered Accountants of Sri Lanka (ICASL) has approved us as a training institution at Certificate Level. In addition, Access Engineering has been granted membership of United Nations Global Compact (the first Sri Lankan construction company to be selected as a member), National Chamber of Commerce of Sri Lanka and Sri Lanka Business Coalition for HIV and AIDS.


Awards Our contribution to the construction industry has been continuously recognised by the ICTAD and 2011 was no exception. At the National ICTAD Awards 2011, Access Engineering won three awards: •

‘Construction Performance – Civil Engineering Sector’ for construction of the bridge across Maoya on PannalaManingamuwa road

‘Construction Performance – Civil Engineering Sector’ for construction of Nugegoda Flyover

‘Construction Performance – Civil Engineering Sector’ for construction of Sangupiddy Bridge

Not only are we recognised as a construction company but also as a business entity, by the business community of Sri Lanka. Our continuous performance in the National Business Awards conducted by National Chamber of Commerce Sri Lanka is clear evidence of this recognition. In 2011, we received the awards for: •

Winner – Best Knowledge Integrator

Runner-up – Construction Sector

Merit – Extra Large Category

Epitomizing our efforts to deliver excellence in everything we undertake, we received the Gold award for the ‘Stall with Best Display of Engineering Services’ at the National Engineering and Technology Awards 2011 conducted by the Institution of Engineers of Sri Lanka for our stall at Techno 2011. Recognition of our unwavering efforts has come from beyond the shores of the country as well. In 2011 Access Engineering received the Golden Award for ‘Quality and Business Prestige’ from Otherways International Research and Consultants in Berlin, Germany. Accolades Lanka Monthly Digest (LMD), with its unique corporate honour roll that benchmarks the country’s most respected business entities rated Access with its premier multi sector engineering expertise within the top 20 of its most respected business entities. Access Engineering also won gold status in Corporate Accountability Index Survey conducted by Sting Consultants for the LMD magazine. Access Engineering was ranked 9 among all the corporate entities surveyed, which was due recognition for the Company’s good governance, transparency and accountability.

59


Delivering Expectations We have always been ideologues of creating wealth for all stakeholders, delivering on our promise of quality products, pioneering services and long lasting solutions through multiple dimensions.The strong customer relationships we have thus nurtured remain the axis upon which our business is constructed.

FINANCIAL INFORMATION Independent Auditor’s Report Income Statement Balance Sheet Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements

63 64 65 66 67 68

Access road to the Hambantota International Airport, Mattala

60 Access Engineering PLC. Annual Report 2011/12


61


62 Access Engineering PLC. Annual Report 2011/12


INDEPENDENT AUDITORS’ REPORT

TO THE SHAREHOLDERS OF ACCESS ENGINEERING PLC Report on the Financial Statements We have audited the accompanying Financial Statements of Access Engineering PLC, (the “Company”), the Consolidated Financial Statements of the Company and its subsidiaries as at 31st March 2012 which comprise the Balance Sheet as at 31st March 2012, and the Income Statement, Statement of Changes in Equity and Cash Flow Statement for the year then ended, and a Summary of Significant Accounting Policies and Other Explanatory Notes as set out on pages 64 to 93 of this Annual Report. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these Financial Statements in accordance with Sri Lanka Accounting Standards.This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Scope of Audit and Basis of Opinion Our responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards.Those standards require that we plan and perform the audit to obtain reasonable assurance whether the Financial Statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall Financial Statement presentation. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion. Opinion Company In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31st March 2012 and the Financial Statements give a true and fair view of the Company’s state of affairs as at 31st March 2012 and its Profit and Cash Flows for the year then ended in accordance with Sri Lanka Accounting Standards. Group In our opinion, the Consolidated Financial Statements give a true and fair view of the state of affairs as at 31st March 2012 and its Profit and Cash Flows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiaries dealt with thereby, so far as concerns the shareholders of the Company. Report on Other Legal and Regulatory Requirements These Financial Statements also comply with the requirements of Sections 153(2) to 153(7) of the Companies Act No. 07 of 2007.

CHARTERED ACCOUNTANTS 24th July 2012 Colombo

63


INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH 2012

Group

Revenue

2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

Note 8

7,315,093,022

3,650,698,835

6,955,749,584

3,518,039,270

Cost of Sales

(5,204,470,563)

(2,354,891,731)

(5,003,587,507)

(2,319,484,338)

Gross Profit

2,110,622,459

1,295,807,104

1,952,162,077

1,198,554,932

18.2

171,068,469

290,977,447

9

81,632,207

24,548,140

81,331,957

Administrative Expenses

(382,109,125)

(249,804,846)

(354,639,317)

(243,837,462)

Other Expenses

(51,623,477)

(17,269,791)

(51,623,477)

(17,269,791)

Net Finance Income

10

102,169,864

21,895,788

96,081,024

16,538,205

Profit from Jointly Controlled Operations

11

Profit before Tax

12

2,031,760,397

1,380,553,359

1,723,312,264

Income Tax Expense

13

(296,662,186)

(213,246,819)

(287,406,381)

(208,299,898)

1,735,098,211

1,167,306,540

1,435,905,883

935,851,522

Net Gain from Fair Value adjustment of Investment Property Other Income

Profit for the Year

-

14,399,517

-

-

175,766,019

14,399,517 1,144,151,420

Profit attributable to: Equity Holders of the Parent

1,731,292,122

961,805,268

1,435,905,883

Minority Interest

3,806,089

205,501,272

Profit for the Year

1,735,098,211

1,167,306,540

1,435,905,883

935,851,522

-

935,851,522 -

Earnings Per Share

14

1.83

1.20

1.52

1.17

Dividend Per Share

15

0.27

2.00

0.27

2.00

The Accounting Policies and Notes from pages 68 to 93 form an integral part of these Financial Statements. Figures in brackets indicate deductions.

64 Access Engineering PLC. Annual Report 2011/12


BALANCE SHEET AS AT 31ST MARCH 2012

Group 2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

Note Assets Non-Current Assets Property, Plant and Equipment 16 2,672,490,773 1,228,903,278 2,634,564,270 1,224,126,696 Leasehold Land 17 5,667,610 - - Investment Properties 18 3,000,000,000 2,800,000,000 - Investment in Subsidiary 19 - - 3,796,894,818 2,696,901,280 Long Term Investments 20 - - - Goodwill 21 505,987,018 - - Total Non-Current Assets 6,184,145,401 4,028,903,278 6,431,459,088 3,921,027,976 Current Assets Short Term Investments 22 49,215,032 3,120,076 49,215,032 3,120,076 Inventories 23 1,817,406,555 312,423,317 1,102,734,941 312,423,317 Trade and Other Receivables 24 3,607,512,435 1,013,369,402 3,464,802,479 997,986,742 Amount due from Related Parties 25 60,222,648 88,082,744 104,906,144 221,173,278 Short Term Deposits 883,314,855 96,290,109 883,314,855 96,290,109 Cash and Cash Equivalents 26 1,641,207,130 224,978,007 1,092,737,038 199,106,020 Total Current Assets 8,058,878,655 1,738,263,655 6,697,710,489 1,830,099,542 Total Assets 14,243,024,056 5,767,166,933 13,129,169,577 5,751,127,518 Equity and Liabilities Stated Capital 27 9,000,000,000 3,000,000,000 9,000,000,000 3,000,000,000 Revaluation Reserve 28,063,987 228,063,987 28,063,987 228,063,987 Retained Earnings 1,627,399,651 1,115,935,763 1,503,435,182 1,139,426,974 Equity attributable to Equity Holders of the Parent 10,655,463,638 4,343,999,750 10,531,499,169 4,367,490,961 Minority Interest 136,278,114 - - Total Equity 10,791,741,752 4,343,999,750 10,531,499,169 4,367,490,961 Non-Current Liabilities Deferred Grant 28 7,239,819 - - Interest Bearing Borrowings 29 5,978,150 452,828,967 5,978,150 452,828,967 Employee Benefits 30 61,692,703 27,796,471 39,089,433 23,123,143 Deferred Taxation 31 98,910,750 44,185,273 98,144,541 44,185,273 Total Non-Current Liabilities 173,821,422 524,810,711 143,212,124 520,137,383 Current Liabilities Interest Bearing Borrowings 29 6,608,397 171,755,936 6,608,397 171,755,936 Trade and Other Payables 32 3,038,877,835 594,939,350 2,243,767,949 570,718,747 Current Taxation Payable 33 189,315,327 107,318,533 163,231,175 102,371,611 Amounts due to Related Parties 34 23,889,020 1,520,249 23,776,264 1,313,108 Dividend Payable 1,695,804 - - Bank Overdraft 26 17,074,499 22,822,404 17,074,499 17,339,772 Total Current Liabilities 3,277,460,882 898,356,472 2,454,458,284 863,499,174 Total Liabilities 3,451,282,304 1,423,167,183 2,597,670,408 1,383,636,557 Total Equity and Liabilities 14,243,024,056 5,767,166,933 13,129,169,577 5,751,127,518 The Accounting Policies and Notes from pages 68 to 93 form an integral part of these Financial Statements. I certify that these Financial Statements have been prepared in compliance with the requirements of the Companies Act No. 7 of 2007.

P T N Priyadarshani Deputy General Manager - Finance The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Approved and signed for and on behalf of the Board of Directors of Access Engineering PLC.

J C Joshua D A R Fernando Executive Director Executive Director/ COO 24th July 2012 Colombo.

65


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST MARCH 2012

Group Attributable to Equity Holders of the Parent Stated Revaluation Retained Capital Reserve Earnings Total Rs. Rs. Rs. Rs. Balance at 01st April 2010 Revaluation Surplus Bonus Shares Issued During the Year Profit for the Year Dividend Paid to Minority Adjustment Due to Change in Holding Dividend Paid

1,000,000,000 - 1,954,130,495 - 628,063,987 - 2,000,000,000 (400,000,000) (1,600,000,000) - - 961,805,268 - - - - - - - - (200,000,000)

Minority Interest Rs.

Total Equity Rs.

2,954,130,495 628,063,987 - 961,805,268 - - (200,000,000)

812,490,357 - - 205,501,272 (38,829,798) (979,161,831) -

3,766,620,852 628,063,987 1,167,306,540 (38,829,798) (979,161,831) (200,000,000)

Balance at 31st March 2011 3,000,000,000 228,063,987 1,115,935,763 4,343,999,750 Bonus Issue 1,000,000,000 (200,000,000) (800,000,000) - Issue of Ordinary Shares 5,000,000,000 - - 5,000,000,000 Profit for the Year - - 1,731,292,122 1,731,292,122 Acquisition of Subsidiary - - - Adjustment Due to Change in Holding - - (147,930,558) (147,930,558) Dividend Paid - - (162,000,000) (162,000,000) Share Issue Expenses - - (109,897,676) (109,897,676)

- - - 3,806,089 132,472,025 - - -

4,343,999,750 5,000,000,000 1,735,098,211 132,472,025 (147,930,558) (162,000,000) (109,897,676)

Balance at 31st March 2012

136,278,114 10,791,741,752

9,000,000,000

28,063,987 1,627,399,651 10,655,463,638

Company

Stated Capital Rs.

Revaluation Reserve Rs.

Retained Earnings Rs.

Total Rs.

Balance at 01st April 2010 Revaluation Surplus Bonus Shares Issued during the Year Profit for the Year Dividend Paid

1,000,000,000 - 2,003,575,452 - 628,063,987 - 2,000,000,000 (400,000,000) (1,600,000,000) - - 935,851,522 - - (200,000,000)

3,003,575,452 628,063,987 935,851,522 (200,000,000)

Balance at 31st March 2011 Bonus Issue Issue of Ordinary Shares Profit for the Year Dividend Paid Share Issue Expenses

3,000,000,000 228,063,987 1,139,426,974 4,367,490,961 1,000,000,000 (200,000,000) (800,000,000) 5,000,000,000 - - 5,000,000,000 - - 1,435,905,883 1,435,905,883 - - (162,000,000) (162,000,000) - - (109,897,676) (109,897,676)

Balance as at 31st March 2012

9,000,000,000

28,063,987 1,503,435,182 10,531,499,169

The Accounting Policies and Notes from pages 68 to 93 form an integral part of these Financial Statements. Figures in brackets indicate deductions.

66 Access Engineering PLC. Annual Report 2011/12


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2012

Group 2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

Note Cash Flows from Operating Activities Profit Before Tax 2,031,760,397 1,380,553,359 1,723,312,264 1,144,151,420 Adjustments for: Depreciation 228,090,254 139,391,001 227,354,677 139,128,200 Provision for Employee Benefits 16,823,209 10,377,908 16,205,290 6,908,448 Provision for Fall in Value of Investment 26,855,311 415,224 26,855,311 415,224 (Reversal) of Bad and Doubtful Debts (931,510) (5,200,541) (994,010) (5,200,541) Provision for Related Party Receivable - 13,843,107 - 13,843,107 Impairment Loss on Property, Plant and Equipment - 9,143,909 - 9,143,909 (Gain)/Loss on Sale of Property, Plant and Equipment 23,758 (10,827,223) 105,008 (10,827,223) Loss on Sale of Investment in Unit Trust 56,310,680 - 56,310,680 Profit on Disposal of Investment (1,382,709) (939,890) (1,382,709) (939,890) Goodwill Written Off - 195,298,612 - Gain on Revaluation of Investment Property (171,068,469) (486,276,059) - Dividend Income (105,068,466) - (105,068,466) (151,301,740) Net Finance Income (102,169,864) (21,895,788) (96,081,024) (16,538,205) 1,979,242,591 1,223,883,619 1,846,617,021 1,128,782,708 Changes in Working Capital (Increase)/Decrease Inventories (790,311,624) (200,289,770) (790,311,624) (200,289,770) (Increase)/Decrease Trade and Other Receivables (2,467,153,546) (443,484,457) (2,465,821,727) (376,324,665) Increase/(Decrease)Trade and Other Payables 1,651,052,621 124,308,474 1,673,049,204 137,304,136 (Increase)/Decrease Due from Related Parties 27,860,096 135,529,099 116,267,134 99,464,715 Increase/(Decrease) Due to Related Parties 22,368,771 (13,561,972) 22,463,156 (13,735,737) Cash Generated from Operating Activities 423,058,909 826,384,993 402,263,164 775,201,388 Interest Paid (15,710,763) (6,523,815) (15,710,763) (6,523,815) Tax Paid (178,078,913) (74,061,369) (172,587,549) (74,061,369) Gratuity Paid (239,000) (1,054,878) (239,000) (1,054,878) Net Cash from Operating Activities 229,030,233 744,744,931 213,725,852 693,561,326 Cash Flows from Investing Activities Acquisition of Property, Plant and Equipment (1,530,147,081) (401,949,289) (1,530,147,081) (401,562,485) Investment in Capital Work in Progress (115,294,765) - (115,294,765) Investment in Investment Properties (28,931,531) - - Proceeds from Sale of Property, Plant and Equipment 7,625,836 18,287,738 7,544,586 18,287,738 (Investment in) Shares (87,950,266) - (87,950,266) Proceeds from Sale of Shares 16,382,709 7,115,750 16,382,709 7,115,750 Investment in Unit Trust Fund (2,058,252,427) - (2,058,252,427) Proceeds from Sale of Investment in Unit Trust 2,001,941,748 - 2,001,941,748 Payment for Shares Acquired from Minority - (979,161,831) - Acquisition of Subsidiary 39 (564,455,743) - (1,099,993,540) (958,760,480) Investments in Short Term Deposit (787,024,746) (2,364,085) (787,024,746) (2,364,085) Dividend Income 105,068,466 - 105,068,466 142,093,008 Interest Income 117,880,627 29,284,619 111,791,787 23,927,036 Net Cash Used in Investing Activities (2,923,157,173) (1,328,787,099) (3,435,933,529) (1,171,263,518) Cash Flows from Financing Activities Loan Obtained During the Year - 610,000,000 - 610,000,000 Dividends Paid (162,000,000) (200,000,000) (162,000,000) (200,000,000) Dividend Paid to Minority - (78,378,668) - Share Issue Expenses Paid (109,897,676) - (109,897,676) Repayment of Loan (611,374,987) (10,189,636) (611,374,987) (10,189,636) Payment of Finance Lease Liabilities (623,369) (12,071,742) (623,369) (12,071,742) Proceeds from Share Issue 5,000,000,000 - 5,000,000,000 Net Cash from Financing Activities 4,116,103,968 309,359,954 4,116,103,968 387,738,622 Net Increase/(Decrease) in Cash and Cash Equivalents 1,421,977,028 (274,682,212) 893,896,291 (89,963,570) Cash and Cash Equivalent at 01st April 202,155,603 476,837,815 181,766,248 271,729,818 Cash and Cash Equivalent at 31st March 26 1,624,132,631 202,155,603 1,075,662,539 181,766,248 The Accounting Policies and Notes from pages 68 to 93 form an integral part of these Financial Statements. Figures in brackets indicate deductions. 67


NOTES TO THE FINANCIAL STATEMENTS

1.

Reporting Entity

Access Engineering PLC (“Company”) is a Company domiciled and operating in Sri Lanka and listed on the Colombo stock Exchange.The Company’s registered office and the principal place of business are located at “Access Towers”, 278, Union Place, Colombo – 02.

The Consolidated Financial Statements of Access Engineering PLC as at and for the year ended 31st March 2012 comprise the Company and its subsidiaries, (together referred to as the “Group”).The Financial Statements of all Companies in the Group have a common financial year which ends on March 31st.

1.2 Principal Activities and Nature of Operations

Access Engineering PLC (AEL) is primarily involved in the business of construction activities.

Access Realties (Private) Limited, a fully owned subsidiary of AEL engage in the development of high rise buildings and manage the same or otherwise (lease/rent/sale) in whole or in part.

Sathosa Motors PLC which is also a subsidiary of AEL is in the business of importing and sale of motor vehicles and spare parts together with the repair and maintenance of such motor vehicles.

1.3 Date of Authorisation for Issue

The Consolidated Financial Statements were authorized for issue by the Board of Directors in accordance with the resolution passed by the Board of Directors on 24th July 2012.

2.

Basis of Preparation

2.1 Statement of Compliance

The Consolidated Financial Statements of the Company and the Group comprise the Balance Sheet and the Statements of Income, Changes in Equity and Cash Flows together with the Accounting Policies and Notes to the Financial Statements.These Consolidated Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards (SLAS) laid down by the Institute of Chartered Accountants of Sri Lanka, and the requirements of Companies Act No.07 of 2007.

2.3 Functional and Presentation Currency

2.4 Use of Estimates and Judgments

The preparation of Financial Statements in conformity with Sri Lanka Accounting Standards (SLAS) laid down by the Institute of Chartered Accountants of Sri Lanka requires the management to make judgments, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses.The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from the other sources. Actual results may differ from these estimates,

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision affects only that financial year or in the period of the revision and future periods if the revision affects both current and future financial years.

2.5 Going Concern

The Directors have made an assessment of the group’s ability to continue as a going concern in the foreseeable future and they do not foresee a need for liquidation or cessation of business.

3.

Significant Accounting Policies

The Accounting Policies set out below have been applied consistently to all periods presented in these Financial Statements and have been applied consistently by the group.

3.1 Basis of Consolidation

The Consolidated Financial Statements have been prepared on the historical cost basis except for Short Term Investments, Investment Properties and certain item of Property, Plant and Equipment of Company (Note 16.2) which are measured at fair value and Employee Benefit Obligations which are measured at the present value of the defined benefit plan.

68 Access Engineering PLC. Annual Report 2011/12

The Consolidated Financial Statements comprise the Company and its subsidiaries.

3.1.1 Subsidiaries

Subsidiaries are entities controlled by the group. Control exists when the group has the power to govern the financial and operating policies of an entity. So as to obtain benefits from its activities. In assessing control, potential voting rights that are currently excisable are also taken in to accounts.

The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date when control effectively commences and until control effectively ceases.

2.2 Basis of Measurement

The Consolidated Financial Statements are presented in Sri Lankan Rupees (Rs.), which is the Group’s functional currency.

3.1.2 Minority Interest

The proportion of the profit or loss after taxation applicable to outside shareholders of subsidiary companies is reflected under ‘Minority Interest’ in the Consolidated Income Statements.


The interest of the outside shareholders in the net assets employed of those companies are reflected under the heading ‘Minority Interest’ in the Balance Sheet.

(b) Subsequent Expenditure

3.1.3 Goodwill

Goodwill represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liability and contingent liabilities acquired. Goodwill is initially recognized at cost. Such goodwill is identified into cash-generating units is annually tested for impairments. After initial recognition goodwill is stated at cost less accumulated impairment losses .

(c) Revaluation

3.1.4 Intra-Group Transactions

Intra-Group balances and Intra-Group transactions and resulting unrealized profits are eliminated in full in the Consolidated Financial Statements. Unrealized losses resulting from Intra-Group transactions are eliminated unless the cost cannot be recovered.

3.1.5 Translation of Foreign Currency

All transactions involving foreign currencies are retranslated into Rupees at the foreign exchange rate prevailing at the time of such transactions were affected. For transactions covered by forward exchange contracts, translation into Rupees is at the contracted rate of exchange. Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet date are translated into Rupees at the foreign exchange rates prevailing on that date. Non-monetary assets and liabilities which are stated at historical cost denominated in foreign currencies are translated to Sri Lanka Rupees at the exchange rate prevailing at the dates of the transactions. The foreign exchange differences arising on translation are recognized in the Income Statement.

Assets classified as current assets in the Balance Sheet are cash and bank balances and those, which are expected to be realized in cash during the normal operating cycle, or within one year from the Balance Sheet date, whichever is shorter. Assets other than current assets are those, which the Company intends to hold beyond the one year period calculated from the Balance Sheet date.

3.2.1 Property, Plant & Equipment

The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or cash generating unit (CGU) exceeds its recoverable amount. A cash generating unit (CGU) is the smallest identifiable asset group that generates cash flows that are largely independent from other asset groups. Impairment losses are recognized in the Income Statement.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(e) Depreciation

Depreciation is not charged on Freehold Land and Capital Work in Progress. Depreciation is charged to the Income Statement on all Property, Plant and Equipment on the straight-line basis over the estimated useful lives.The estimated useful lives are as follows:

Asset Category

Useful Lives (Years)

Freehold Building Computer Plant & Machinery Motor Vehicles Office Equipment Furniture & Fittings Tools

10 – 50 years 3-5 years 3-10 years 4 - 8 years 3 -5 years 3 -5 years 3 -5 years

(a) Recognition and Measurement

Property, Plant & Equipment are measured at cost (or at fair value in the case of certain items of the Company) less accumulated depreciation and impairment losses.The cost of an item of Property, Plant & Equipment comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use.The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the asset to the working condition for its intended use.This also includes cost of dismantling and removing the items and restoring in the site on which they are located.

The Group revalues Property, Plant and Equipment at least once in every three years which is stated at its fair value at the date of revaluation less depreciation and impairment losses, if any. On revaluation of Property, Plant and Equipment any increase in the revaluation amount is credited to the revaluation reserve unless it offsets a previous decrease in value of the same assets that was recognized in the Income Statement. A decrease in value is recognized in the Income Statement where it exceeds the increase in the previous year recognized in the revaluation reserves. Upon disposal, any related revaluation reserve is transferred from the revaluation reserve to accumulated profits and is not taken into accounts in arriving at the gain or loss on disposal.

(d) Impairment

3.2 Assets and Bases of their Valuation

Subsequent expenditure incurred is capitalized only when it is probable that the future economic benefits embodied with the expenditure will flow to the group. All other expenditure is recognized in the Income Statement as an expense as and when incurred.

69


NOTES TO THE FINANCIAL STATEMENTS

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Depreciation of an asset begins when it is available for use whereas depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) and the date that the asset is derecognised.

(b) Valuation

Investment properties are stated at ‘Fair Value’ accounting which describes value or amount for which land and buildings could be exchanged between knowledgeable, willing parties at an arm length transaction.

(c) Initial Recognition

Investment Property will be recognized based on a valuation done by an Independent Professional Valuer and the differences between the Cost and revalue amount will be transferred to Revaluation Reserve.

(f)

Leased Assets

(d) Subsequent Recognition

Assets obtained under the finance lease, which effectively transfers substantial risks and benefits incidental to ownership of the leased assets, are treated as if they have been purchased outright and are capitalised at their cash price.

Assets held under finance lease are amortised over the shorter of the lease period or the useful lives of equivalent owned assets, unless ownership is not transferred at the end of the lease period.

(e) Derecognition

The principal / capital elements payable to the Lessor is shown as liability / obligation.The lease rentals are consisting of capital and interest elements.The capital element in the rental that is applied to reduce the outstanding obligation and interest element is charged against profit, in proportion to the reducing capital element outstanding.

The cost of improvements to or on leased property is capitalised, disclosed as improvements to leasehold property and depreciated over the unexpired period of the lease, or the estimated useful lives of the improvements, whichever is shorter.

Capital expenses incurred during the year which are not completed as at the Balance Sheet date are shown as Capital Work-in-Progress, whilst the capital assets which have been completed during the year and available to use have been transferred to Property, Plant and Equipment.

(a) Classification

Leasehold property comprising of land use rights and is amortised on a straight line basis over the 99 years lease period. Leasehold property is tested for impairment annually and is written down where applicable.The impairment loss if any is recognised in the Income Statement.

Quoted and unquoted investments in shares held on long term basis are stated at cost. In the Parent Company’s Financial Statements, investment in subsidiaries is carried out at cost less impairment losses. Provision for diminution in value is made when in the opinion of the Directors there has been a decline other than temporary in the value of the investment.

Quoted and unquoted investments in shares held on short term basis are measured at cost and provision has been made for the fall in value of investments based on the fair value of the investments.

3.2.3 Investment Properties (a) Classification

The land and buildings held either to earn rental income or for capital appreciation or for both but not for the sale in the ordinary course of business, use in production or supply of goods or services or for the administrative purpose, are classified as investment properties.

70 Access Engineering PLC. Annual Report 2011/12

Investment in subsidiary of the company are treated as Long Term Investments and stated at cost. Other Investments which are held for yield or capital appreciation are also classified as Long Term Investment; the investments that intended to be held for trading purpose are classified as Short Term Investments.

(b) Valuation

3.2.2 Leasehold Property – Land

Investment Properties are derecognised when either they have been disposed of or when the Investment Property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an Investment Property are recognized in the Income Statement in the year of retirement or disposal.

3.2.4 Investments

(g) Capital Work in Progress

Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions as at the Balance Sheet date. Formal valuations are carried out at least every 3 years by a qualified valuer. Gains or losses arising from changes in the fair values of Investment Properties are included in the Income Statement in the year in which they arise.

3.2.5 Inventories

Inventories are stated at the lower of cost and net realizable value, after making due allowance for obsolete and slow moving items. Net realisable value is the estimated selling price in the normal course of business less estimated cost of


realization and/or cost of conversion from their existing state to saleable condition.

The cost of each category of inventory of the company is determined on the following basis:

Spare parts Brand New Vehicles Goods in Transit

- at actual cost on a weighted average basis - at actual cost - at actual cost

3.3.1 Employee Benefits (a) Defined Benefit Plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.The liability recognized in the Balance Sheet in respect of defined benefit plan is the present value of defined benefit obligation at the Balance Sheet date.

The defined benefit obligation of Access Engineering PLC and its subsidiary Sathosa Motors PLC are calculated by independent actuaries using Project Unit Credit (PUC) method as recommended by SLAS 16 (Revised 2006) ‘Employee Benefits’.The present value of the defined benefit obligation is determined by discounting the estimated future cash flows.The gratuity liability was based on the actuarial valuation carried out.

The Companies expects to carry out actuarial valuation once in every three years. However, according to the Payment of Gratuity Act No. 12 of 1983, the liability for the gratuity payments to an employee arise only on the completion of 5 years of continued service with the Company.

Defined Benefit Plan - Access Realties (Private) Limited

The gratuity liability of Access Realties (Private) Limited is arrived as per SLAS -16 Employee Benefit using Formula Method described in appendix (E).

However, according to the Payment of Gratuity Act No. 12 of 1983, the liability for gratuity payment to an employee arises only after the completion of 5 years of continued service.

The liability is not externally funded nor actuarially valued.

Inventory movement is reviewed at the end of each year by an expert to assess the recoverability of inventory and the items that are identified as irrecoverable are written off during the year.

(a) Work in Progress

Work in Progress is recognized on actual cost incurred in relation to the uncertified work done as at the Balance Sheet date. It includes cost of work performed and direct overhead expenses.

3.2.6 Receivables

Receivables are stated at their estimated realizable amounts after providing for bad and doubtful debts.

3.2.7 Short Term Deposits

Short Term Deposits represents fixed deposits which the Company has invested and which will be matured within one year from the Balance Sheet date.

3.2.8 Cash and Cash Equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value. For the purpose of Cash Flow Statement, cash and cash equivalents consist of cash in hand, investment in repurchase agreements and deposits in banks net of outstanding bank overdrafts.

3.3 Liabilities and Provision

Liabilities recognized in the Balance Sheet when there is a present obligation arising from a past event, the settlement of which is expected to result in an outflow of resources embodying accounting benefits. Obligations payable at the demand of the creditor or within the one year of the Balance Sheet date are treated as Current Liabilities in the Balance Sheet. Liabilities payable after one year from the Balance Sheet date are treated as Non-Current Liabilities in the Balance Sheet. A provision is recognized in the Balance Sheet when the group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits for which a reliable estimate could be made is required to settle the obligation.

(b) Defined Contribution Plans - Employees Provident Fund & Employees Trust Fund

A defined contribution plan is a post-employment benefit plan under which an entity pays a fixed contribution into a separate entity and will have no legal or constructive obligation to pay further amounts.

All the employees who are eligible for Employees’ Provident Fund and Employees’Trust Fund are covered by relevant contribution funds in line with the respective statutes. Employers’ contribution to defined contribution plans are recognized as an expense in the Income Statement when incurred.

4.

Income Statement

4.1 Revenue

Revenue represents the amounts derived from the provision of services, which fall within the companies’ ordinary activities net of trade discounts and turnover related taxes.

4.2 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the 71


NOTES TO THE FINANCIAL STATEMENTS

revenue and the associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and sales taxes, and after eliminating sales within the Group.The following specific criteria are used for the purpose of recognition of revenue. (a) Construction Contracts

When the outcome of the contract can be measured reliably, contract revenue is recognized by reference to stage of completion of the contract activity at the Balance Sheet date. Further, the company recognizes construction revenue only after receiving the work done certification from the customer. Any expected losses on specific contracts are recognized immediately by a corresponding reduction in their revenue.

(b) Rental Income

Revenue represents the rental income derived from letting out the Company’s premises. Rental income is accrued on a time proportion basis and is matched with related expenditure in accordance with Sri Lanka Accounting Standard No 29, “Revenue”

(i)

Assets Related Grants

Assets Related Grants for the purchase of Property, Plant and Equipment are amortised and credited to the Income Statement over the useful lives of the related assets.

4.3 Expenditure Recognition (a) Construction Contracts

Total cost incurred in respect of each contract during the year, which can be attributed to the work certified, has been included in the cost of sales.

When the outcome of the contract can be measured reliably, contract expense is recognized by reference to stage of completion of the contract activity at the Balance Sheet date.

(b) Other Expenses

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 revenue in arriving at the profit for the year.

For the purpose of presentation of Income Statement the Directors are of the opinion that function of expenses method presents fairly the elements of the enterprises performance; hence such presentation method is adopted.

(c) Recognition of Expected Losses

(c) Goods Sold

Revenue from the sale of goods is recognized in the Income Statement when significant risks and rewards of ownership have been transferred to the buyer.

(d) Borrowing Costs

Borrowing costs are recognized as an expense in the period in which they are incurred except those that are directly attributable to the construction or development of Property, Plant and Equipments which are capitalized as part of the cost of those assets during the period of construction or development.

4.4

Income Tax Expense Income tax expense for the year comprises current and deferred tax and is recognised in the Income Statement.

(d) Services Rendered

Expected Losses are recognized as an expense when it is probable that the total cost pertaining to construction contracts will exceed its revenue.

Revenue for services rendered is recognized in the Income Statement after completion of the service.

(e) Agency Commissions

Agency Commissions is recognized on accrual basis.

(f)

Interest Income

Interest income is recognized on accrual basis unless collectability is in doubt. Interest from bank deposits are recognized on a time proportion basis from the date of deposit to the Balance Sheet date.

4.4.1 Current Taxation

(g) Dividend Income

Dividend income is accounted when the shareholders’ right to receive payment is established.

(h) Other Income

Other income is recognised on accrual basis. Gains or losses on the disposal of Property, Plant and Equipment is recognised in the Income Statement.

72 Access Engineering PLC. Annual Report 2011/12

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the Balance Sheet date and any adjustment to tax payable in respect of previous years.

4.4.2 Deferred Taxation

Deferred tax is provided using the Balance Sheet liability method, providing for tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.


Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the Balance Sheet date.

5.

Segmental Reporting

The Segment is a distinguishable component of the Group that is engaged either in providing related Products or Services (business segment), or in providing Products or Services within a particular Economic Environment (Geographical Segment), which is subject to risks and returns that are different from those of the Segments. Segment Information is presented in respect of the Group’s Business and Geographical Segments.The Group’s Primary Format for segment reporting is based on business Segments.The Business segments are determined based on the Group’s management and internal reporting structure.

6.

Other General Accounting Policies

6.1

Related Party Transactions

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

These Sri Lanka Accounting Standards comprise of accounting standards prefixed both SLFRS and LKAS which correspond to relevant IFRS and IAS. Application of Sri Lanka Accounting Standards prefixed SLFRS and LKAS for the first time shall be deemed to be an adoption of SLFRS’s.

The Group is currently in the process of evaluating the potential effects of these standards on its financial statements, with the assistance of an independent consultant.

6.2 Comparative Figures

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

6.3 Capital Commitment and Contingent Liabilities

Capital commitments and contingent liabilities of the Group are disclosed in the respective notes to the Financial Statements.

6.4 Events Occurring after the Balance Sheet Date

All material post balance sheet events have been considered and where appropriate adjustment to or disclosures have been made in the Financial Statements.

6.5 Earnings Per Share

The Group presents and diluted Earnings Per Share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary share holders of the company by the weighted average number of ordinary shares outstanding during the period.

7.

New Accounting Standards Issued But Not Effective as at the Balance Sheet Date

The Institute of Chartered Accountants of Sri Lanka has issued a new volume of Sri Lanka Accounting Standards which have become applicable for financial periods beginning on or after 1st January 2012. Accordingly, these Standards have not been applied in preparing these Financial Statements as they were not effective for the year ended 31st March 2012.

73


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012

Group

2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

8. Revenue Highways Construction Water and Drainage Construction Bridge Construction Building and Other Construction Rental Income Service Charges Sale of Construction Related Material Vehicle Sales and After Sales Services

4,477,446,155 479,835,984 17,934,360 1,429,555,606 129,899,856 16,897,634 550,977,479 212,545,948

2,471,327,814 319,278,139 667,011,860 60,421,457 118,613,610 14,045,955 - -

4,477,446,155 2,471,327,814 479,835,984 319,278,139 17,934,360 667,011,860 1,429,555,606 60,421,457 - - 550,977,479 - -

7,315,093,022

3,650,698,835

6,955,749,584

3,518,039,270

9.

Other Income Dividend Income Loss on Disposal of Investments Rent Income Profit/(Loss) on Disposal of Property, Plant and Equipment Foreign Exchange Gain Hiring Income Profit on Sale of Shares Sundry Income

105,068,466 (56,310,680) 2,811,984 (23,758) 15,032,240 3,755,932 1,382,709 9,915,314

- - 2,748,714 10,889,723 5,772,956 2,780,333 939,890 1,416,524

105,068,466 (56,310,680) 2,811,984 (105,008) 18,894,319 3,755,932 1,382,709 5,834,235

151,301,740 2,748,714 10,827,223 5,778,086 2,780,333 939,890 1,390,033

81,632,207

24,548,140

81,331,957

175,766,019

10. 10.1

Net Finance Income Interest Income on Fixed Deposits Interest Income on Repurchase Agreements Other Interest Income

62,771,940 54,387,661 721,026

8,530,487 9,711,566 11,094,011

62,771,940 48,298,821 721,026

8,530,487 9,711,566 5,736,428

Finance Income

117,880,627

29,336,064

111,791,787

23,978,481

10.2 Interest on Finance Leases Interest on Bank Overdraft Bank Loan Interest

(15,900) (1,038,618) (14,656,245)

(916,461) (220,209) (6,303,606)

(15,900) (1,038,618) (14,656,245)

(916,461) (220,209) (6,303,606)

Finance Cost

(15,710,763)

(7,440,276)

(15,710,763)

(7,440,276)

Net Finance Income

102,169,864

21,895,788

96,081,024

16,538,205

11.

Profit from Jointly Controlled Activities The Company has signed an agreement with China Geo - Engineering Corporation and Salcon Engineering Berhad to provide construction services to National Water Supply & Drainage Board for the Construction and completion of Head Works, Raw Water Transmission and Main Treatment Plants.The Company’s Share of Profit of this Jointly Controlled Operation is based on the scope of work allocated and performed in accordance with the agreement and agreement has been lapsed in year 2011. Group

Profit from Jointly Controlled Operations

74 Access Engineering PLC. Annual Report 2011/12

2012 Rs. -

2011 Rs. 14,399,517

Company 2012 Rs. -

2011 Rs. 14,399,517


FOR THE YEAR ENDED 31ST MARCH 2012

Group

2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

12.

Profit before Tax Is stated after charging all expenses including following: Auditor’s Remuneration - Statutory Audit - Non-Audit Services Provision for Fall in Value of Investments (Reversal) of Bad and Doubtful Debts Provision for Related Party Receivable Impairment loss on Property, Plant and Equipment Donations Depreciation Write off Inventories Personal Cost Including, Defined Benefit Plan Costs - Gratuity Defined Contribution Costs - EPF - ETF Staff Cost Number of Employees

1,912,500 594,199 26,855,311 (931,510) - - 14,315,336 228,090,254 193,536

1,600,000 27,063 415,224 (5,200,541) 13,843,107 9,143,909 4,412,809 139,391,001 -

1,400,000 589,407 26,855,311 (994,010) - - 14,315,336 227,354,677 -

1,200,000 27,063 415,224 (5,200,541) 13,843,107 9,143,909 4,412,809 139,128,200 -

16,823,209 46,087,416 11,445,897 921,130,424 3,330

10,377,908 21,383,256 5,457,585 451,877,636 1,660

16,205,290 45,039,981 11,184,037 905,963,934 3,174

6,908,448 20,767,082 5,303,541 442,903,060 1,630

13. 13.1

Income Tax Expense Current Tax Expense (Note 13.2) Adjustment for Prior Years Deferred Tax Expense (Note 31)

211,555,679 31,049,868 54,056,639

169,932,721 - 43,314,098

202,219,032 31,228,082 53,959,268

164,985,800 43,314,098

296,662,186

213,246,819

287,406,381

208,299,898

13.2 Reconciliation between Accounting Profit and Taxable Profit Accounting Profit before Income Tax Expense Aggregate Disallowed Items Aggregate Allowable Items

2,031,760,397 251,195,221 (604,872,898)

1,380,553,359 284,219,548 (815,417,210)

1,723,312,264 371,195,832 (601,125,357)

1,144,151,420 284,219,548 (386,116,403)

Total Statutory Income Exempted Income

1,678,082,720 (106,763,970)

1,195,956,049 -

1,493,382,739 (106,763,970)

1,042,254,565

Taxable Income

1,571,318,750

1,195,956,049

1,386,618,769

1,042,254,565

Tax on Revenue at 2% Tax on Construction Income at 12% Tax on Other Income at 28%

162,997,490 1,162,713,898 245,607,362

148,247,593 1,011,207,559 1,162,713,898 36,500,897 223,904,871

1,011,207,559 31,047,006

1,571,318,750

1,195,956,049

1,042,254,565

1,386,618,769

Tax @ 2% Tax @ 12% Tax @ 28%

3,259,950 139,525,668 68,770,061

2,964,952 151,681,134 12,775,314

- 139,525,668 62,693,364

151,681,134 10,866,452

Total Income Tax Social Responsibility Levy @ 1.5%

211,555,679 -

167,421,400 2,511,321

202,219,032 -

162,547,586 2,438,214

Current Income Tax Expenses

211,555,679

169,932,721

202,219,032

164,985,800

75


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012

13.3 Income Tax Company Under the provisions of the Inland Revenue Act No.10 of 2006 and amendments thereto, the Company is liable for income tax at the concessionary rate of 12% on construction income, and 28% on other income. Subsidiaries Access Realties (Private) Limited In accordance with the section 17 of the Board of Investments Act No 4 of 1978, the Company is exempted from Income Tax for a period of seven (07) years from the year of assessment in which the Enterprise commences to make profits in relation to the transaction in that year or any year of assessment not later than five (05) years reckoned from the date of its operation whichever year is earlier. Accordingly, the seven (07) years Income Tax exemption period was enforce from 01st April 2003 to 31st March 2010.Thereafter the Company is liable for a concessionary rate of Income Tax of 2% on its turnover for the period of fifteen years from the year of assessment 2010/2011. However, the Company is liable to pay Income Tax at 28% on other income. Sathosa Motors PLC In accordance with the provision of the Inland Revenue Act No 10 of 2006 and amendments there to the company is liable for Income Tax at 28% on its taxable profit. 14.

Basic Earnings Per Share The calculation of Basic Earnings Per Share at 31st March 2012 was based on the profit attributable to Ordinary Shareholders and Weighted Average Number of Ordinary Shares in issue during the year.The comparative number of Shares have been restated by incorporating the 200,000,000 Shares capitalised as at 11th May 2011. Group

2012 Rs.

2011 Rs.

2012 Rs.

Profit Attributable to Equity Holders of the Company (Rs.) 1,731,292,122 Weighted Average Number of Shares as at the Year end 946,958,904 Earnings Per Share (Rs.) 1.83

15.

Dividend Per Share The calculation of the Dividend Per Share is based on the Dividend Paid for the year divided by the number of ordinary shares in issue as at the time of Dividend Paid out. Group

Dividend Paid (Rs.) Number of Ordinary Shares Dividend Per Share (Rs.)

1,435,905,883 946,958,904 1.52

2011 Rs.

961,805,268 800,000,000 1.20

Company

2012 Rs. 162,000,000 600,000,000 0.27

2011 Rs. 200,000,000 100,000,000 2.00

935,851,522 800,000,000 1.17

Company 2012 Rs. 162,000,000 600,000,000 0.27

2011 Rs. 200,000,000 100,000,000 2.00

15.1 Proposed Dividend The Directors have recommended the payment of a Interim Dividend of Rs.0.25 per share declared on 18th May 2012. In accordance with the Sri Lanka Accounting Standard 12 - “Events after balance sheet date “this proposed Interim Dividend has not been recognized as a liability in the Financial Statements for the year ended 31st March 2012.

76 Access Engineering PLC. Annual Report 2011/12


77

Balance at 31st March

Carrying Value at 31st March 2012

Carrying Value at 31st March 2011

313,300,000 118,571,097 457,703,637

341,485,640 133,937,825 1,530,843,701

- 42,451,555 142,950,982

Accumulated Depreciation Balance at 01st April - 928,903 9,472,897 267,123 3,048,499 67,572,696 31,793,676 25,113,783 113,629 - 138,311,206 492,803,246 Revaluation Reserve - - - - - - - - - - - (446,119,998) Charge - 7,468,466 120,361,099 7,500,000 51,654,361 12,250,496 10,328,902 16,349,555 2,177,275 - 228,090,254 139,391,001 Transfers - - 4,973,176 - 2,290,904 - - (4,973,176) (2,290,904) - - On Acquisition - 34,054,186 8,200,791 - 25,878,714 24,988,168 6,570,030 3,289,967 - - 102,981,856 Disposals/ Impairment - - (56,981) - (643,425) (260,000) - - - - (960,406) (47,763,043)

74,732,877 211,612,852

39,780,229

15,425,454

6,308,116

16,031,721

29,490,956 27,350,663 101,526,620

82,229,053 104,551,360 48,692,608

67,232,877 320,996,573

7,767,123

10,886,371

4,331,153

- 1,228,903,278

-

- 468,422,910 138,311,206 - 119,625,918 2,672,490,773

-

- 119,625,918 3,140,913,683 1,367,214,484

341,485,640 176,389,380 1,673,794,683

Balance at 31st March

75,000,000 403,225,626 134,042,316 76,043,271 141,306,849

313,300,000 119,500,000 467,176,534 75,000,000 214,661,348 82,998,150 38,101,795 41,145,504 11,000,000 4,331,153 1,367,214,484 847,688,673 - - - - - - - - - - - 181,943,989 28,185,640 2,270,817 1,183,710,558 - 151,113,722 22,932,169 30,942,257 110,991,918 - 115,294,765 1,645,441,846 401,949,289 - - 14,560,501 - 11,000,000 - - (14,560,501) (11,000,000) - - - 54,618,563 8,997,090 - 34,150,556 28,371,997 6,999,219 3,729,928 - - 136,867,353 - - (650,000) - (7,700,000) (260,000) - - - - (8,610,000) (64,367,467)

Cost or Valuation Balance at 01st April Revaluation Reserve Addition Transfers On Acquisition Disposals/ Impairment

16. Property, Plant and Equipment 16.1 Group Freehold Leasehold Land Building Plant & Plant & Motor Office Furniture & Tools Motor Capital Machinery Machinery Vehicles Equipment Fittings Vehicles Work in 2012 2011 Dredger Progress Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

AS AT 31ST MARCH 2012


78 Access Engineering PLC. Annual Report 2011/12

Carrying Value at 31st March 2012

Carrying Value at 31st March 2011

The Land , Building, Plant & Machinery and Motor vehicle of the company had been revalued at Rs. 1,180,207,048/- by K.T.D.Tissera, F.I.V. (Sri Lanka), an independent professional valuer as at 18th March 2011.The surplus arising from the revaluation amounting to Rs.628,063,987/- was transferred to Revaluation Reserve.

74,732,877 211,612,849

67,232,877 313,084,540

55,857,182

36,485,490

14,987,066

6,301,078

16,031,721

25,950,787 26,929,142 101,091,431

76,740,383 38,331,887

10,886,371

82,941,133 474,551,219

102,224,546 30,521,752 226,018,838

Carrying Value

32,844,950

102,224,546 51,875,177 540,798,281 81,387,684 221,977,367 998,263,055 - (21,353,425) (314,779,443) (48,542,734) (139,036,234) (523,711,836)

Cost Accumulated Depreciation

-

- 1,224,126,696

-

- 351,679,401 125,285,129 - 115,294,765 2,634,564,270

-

Following are the carrying amount of Land, Buildings, Plant & Machinery and Motor Vehicles that would have been recognized had Property, Plant & Equipment being carried under cost model.

313,300,000 118,571,097 457,703,637

341,485,640 113,420,171 1,530,074,917

7,767,123

Assets Freehold land Building Plant & Plant & Motor Total Machinery Machinery- vehicle Dredger -Freehold Rs. Rs. Rs. Rs. Rs. Rs.

Balance at 31st March

- 8,350,646 128,146,690

Accumulated Depreciation Balance at 01st April - 928,903 2,896,911 267,123 2,915,151 65,031,935 28,017,694 25,113,783 113,629 - 125,285,129 476,278,146 Revaluation Reserve - - - - - - - - - - - (446,119,998) Charge - 7,421,743 120,333,584 7,500,000 51,294,551 11,968,448 10,314,193 16,344,883 2,177,275 - 227,354,677 139,128,200 Transfers - - 4,973,176 - 2,290,904 - - (4,973,176) (2,290,904) - - Disposals/ Impairment - - (56,981) - (643,424) (260,000) - - - - (960,405) (44,001,219)

- 115,294,765 2,986,243,671 1,349,411,825

341,485,640 121,770,817 1,658,221,607

Balance at 31st March

75,000,000 368,941,722 102,691,170 65,261,029 137,576,921

313,300,000 119,500,000 460,600,548 75,000,000 214,528,000 80,019,001 34,318,772 41,145,504 11,000,000 - 1,349,411,825 826,510,994 - - - - - - - - - - 181,943,989 28,185,640 2,270,817 1,183,710,558 - 151,113,722 22,932,169 30,942,257 110,991,918 - 115,294,765 1,645,441,846 401,562,485 - - 14,560,501 - 11,000,000 - - (14,560,501) (11,000,000) - - - - (650,000) - (7,700,000) (260,000) - - - (8,610,000) (60,605,643)

Cost or Valuation Balance at 01st April Revaluation Reserve Addition Transfers Disposals/ Impairment

16. Property, Plant and Equipment (Contd.) 16.2 Company Freehold Leasehold Land Building Plant & Plant & Motor Office Furniture & Tools Motor Capital Machinery Machinery Vehicles Equipment Fittings Vehicles Work in 2012 2011 Dredger Progress Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

AS AT 31ST MARCH 2012

NOTES TO THE FINANCIAL STATEMENTS


AS AT 31ST MARCH 2012

Group

2012 Rs.

2011 Rs.

17. Leasehold Land Cost On Acquisition

7,550,366

-

Accumulated Amortization On Acquisition

1,882,756

-

Carrying Value

5,667,610

-

17.1 Leasehold Land disclosed above relate to the land at Peliyagoda acquired by Sathosa Motors PLC on a 99 years lease commencing from 1989 and building on acquisition represents work shop put up on the said land. Group

2012 Rs.

2011 Rs.

18.

Investment Property Balance at 01st April Change in Fair Value (Note 18.1 & 18.2) Acquisition of Investment Property

2,800,000,000 171,068,469 28,931,531

2,313,723,941 486,276,059 -

Balance at 31st March

3,000,000,000

2,800,000,000

18.1 The fair value of the Investment Property as at 27th February 2012 is ascertained by an independent valuation carried out by Mr. K. J. D. Tissera, an independent valuer on an open market value for existing use basis.

Location : The lands - Access Towers and Land of M/S Access Realties (Private) Limited, are located at Nos. 266, 268 and 278, Dr. Colvin R. De Silva Mawatha (Union Place), and Nos. 116 and 118, Dawson Street, Colombo 02.

Extent : (i) Lot 1 in Plan No. 5754 : (ii) Lot 1 in Plan No. 2824 : Total Extent :

Floor area The total gross floor area of the Access Towers is 216,718 sq.ft.

1A - or - 07.87P (0.4246 Hectares). 0A - or - 04.50P (0.01138 Hectares). 1A - or - 12.37P (0.43598 Hectares).

Group

2012 Rs.

2011 Rs.

18.2 Change in Fair Value Change in Fair Value Impairment of Goodwill (Note 21)

171,068,469 -

486,276,059 (195,298,612)

171,068,469

290,977,447

Net Change in Fair Value

79


NOTES TO THE FINANCIAL STATEMENTS AS AT 31ST MARCH 2012

19 Investment in Subsidiary Company Access Realties (Private) Limited Sathosa Motors PLC

2012 2011 % No. of Cost % No. of Holding Shares Rs. Holding Shares

100% 77%

67,422,532 2,696,901,280 4,652,085 1,099,993,538

100% -

Cost Rs.

67,422,532 2,696,901,280 - -

3,796,894,818

2,696,901,280

19.1 Acquisition of Sathosa Motors PLC The Company has purchased 3,600,000 shares representing 60% of the issued number of shares of Sathosa Motors PLC on 29th February 2012, from its major shareholder ITOCHU Corporation of Japan at a price of Rs.236.44/- per share.The Company further acquired 1,052,085 shares up to 31st March 2012, being 17% of the issued number of shares. 20.

Long Term Investment

Group / Company

2012 No. of Shares

Cost Rs.

Unquoted Investments Asia Pacific Golf Course Limited - Preference Shares 6 Less: Provision for Investment

1,500,000 6 (1,500,000)

1,500,000 (1,500,000)

-

No. of Shares

Group

21. Goodwill Balance at 01st April On Acquisitions

Cost Rs.

2011

2012 Rs.

2011 Rs.

Company

2012 Rs.

2011 Rs.

- 505,987,018

215,699,963 (20,401,351)

- -

-

At the End of the Year Impairment of Goodwill (Note 21.1)

505,987,018 -

195,298,612 (195,298,612)

- -

-

Balance at 31st March

505,987,018

-

-

-

21.1 The subsidiary ,Sathosa Motors PLC has revalued its property at Peliyagoda work shop on 19th April 2012 by a professional valuer Mr. R. T. K. Sirisena. However, following values have not been considered for accounting purpose during the current year and shall be obtained a ruling from UITF on this.

Land Building Plant and machinery

Rs.120 Mn Rs.20 Mn Rs.3.5 Mn

Therefore, Goodwill on acquisition of Sathosa Motors PLC has been calculated on provisional basis in accordance with Sri Lanka Accounting Standard - 25 ‘Business Combination’ and the necessary amendments on revaluation and impairment if any, will be adjusted during twelve months from the acquisition date. An impairment loss has not been recognized for Sathosa Motors PLC for which the Goodwill is allocated since there is no indication of impairment as per the Sri Lanka Accounting Standard - 41 ‘Impairment’ . 80 Access Engineering PLC. Annual Report 2011/12


AS AT 31ST MARCH 2012

2012 2011 No. of Cost Market No. of Cost Shares Rs. Value Shares Rs. Rs. 22.

Short Term Investment Group / Company Quoted Investments Nation Lanka Finance PLC Lanka Indian Oil Corporation PLC Tess Agro Company PLC Touchwood Investments PLC Horana Plantation PLC The Colombo Fort Land & Building Company PLC Namunukula Plantation PLC Richard Peiris & Co PLC Free Lanka Capital Holdings PLC Expo Lanka Holdings PLC Commercial Bank of Ceylon PLC Peoples Merchant PLC CIC Holdings PLC Softlogic Holdings PLC Vallibel One PLC Textured Jersey Lanka PLC Central Investments & Finance Company PLC Peoples Leasing Company PLC

12,300 36,600 60 14,400 7,500

453,009 1,035,414 - 414,108 538,464

124,230 710,040 162 223,200 188,250

12,300 36,600 60 14,400 7,500

Market Value Rs.

453,009 1,035,414 - 414,108 538,464

136,530 644,160 156 338,400 542,250

5,000 3,300 50,000 15,600 89,100 2,200 100 204,000 208,500 123,300 889,600

499,533 527,231 798,848 78,000 1,247,400 207,334 1,976 23,517,007 6,110,307 3,210,051 13,469,001

169,500 198,000 375,000 31,200 552,420 220,000 1,290 19,502,400 2,335,200 2,342,700 6,404,400

1,000 3,300 50,000 - - - - - - - -

499,533 527,240 798,848 - - - - - - - -

400,400 378,180 680,000 -

1,000,000 839,400

10,000,000 15,109,200

6,100,000 9,737,040

- -

- -

-

Total 5,446,460 77,216,883 49,215,032 125,160 4,266,616 3,120,076 Less Provision for Fall in Value (28,001,851) - (1,146,540) Carrying Value as at the End of the Year

49,215,032

49,215,032

3,120,076

Group 2012 Rs.

23. Inventories New Vehicles 266,119,180 Spare Parts 86,549,749 Goods in Transit 358,698,267 General Stores 1,935,063 Work in Progress 1,104,104,296

2011 Rs.

3,120,076 Company

2012 Rs.

2011 Rs.

- - - - - - - - 312,423,317 1,102,734,941 312,423,317

1,817,406,555

312,423,317

24.

866,960,053 2,974,125,225 855,049,028 3,997,760 18,533,022 3,997,760 5,900,980 35,934,797 5,900,980 1,991,035 1,399,346 1,991,035 19,969,561 50,630,728 19,969,561 101,566,346 332,878,880 101,566,346 9,498,833 12,387,527 9,498,833 1,337,755 - 1,768,846 10,560,180 - 14,325,744 378,233 14,027,030 13,199

Trade and Other Receivables Trade Receivable (Note 24.1) 3,049,451,494 Interest Receivable 18,533,022 Deposits and Prepayments 36,691,471 Margin on Bid Bond 1,399,346 Advances 50,630,728 Retention Receivable 332,878,880 Staff Loan (Note 24.2) 14,245,096 Short Term Lending (Note 24.3) 1,237,755 Refundable Deposits 12,349,026 VAT Receivable 61,482,608 Other Receivables 28,613,009

3,607,512,435 1,013,369,402

1,102,734,941

3,464,802,479

312,423,317

997,986,742 81


NOTES TO THE FINANCIAL STATEMENTS AS AT 31ST MARCH 2012

Group

2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

24. Trade and Other Receivables (Continued) 24.1 Trade Receivable Trade Receivable Less: Provision for Bad and Doubtful Debts

3,050,682,514 (1,231,020)

867,954,063 (994,010)

2,974,125,225 -

856,043,038 (994,010)

3,049,451,494

866,960,053

2,974,125,225

855,049,028

24.2

Staff Loan Balance at 01st April Loan Granted during the Year On Acquisition

Repayment during the Year Balance at 31st March

9,498,833 9,297,349 1,857,569

13,129,109 7,947,165 -

9,498,833 9,297,349 -

13,129,109 7,947,165 -

20,653,751 (6,408,655)

21,076,274 (11,577,441)

18,796,182 (6,408,655)

21,076,274 (11,577,441)

14,245,096

9,498,833

12,387,527

9,498,833

24.3 An Interest free loan has been given to Trans Continental Security Services (Private) Limited by Access Realties (Private) Limited. 25.

Amount Due from Related Parties China Geo - Salcon - Access JV Access Energy Solutions (Private) Limited Access Realties Tower II (Private) Limited Forestree Investments Limited Access Realties (Private) Limited (Note 25.1) Asia Pacific Golf Course (Private) Limited

Less: Provision for Bad & Doubtful Debts

53,609,436 3,796,708 2,816,504 - - 13,843,107

78,766,240 5,500,000 2,816,504 1,000,000 - 13,843,107

53,609,436 3,796,708 - - 47,500,000 13,843,107

78,766,240 5,500,000 1,000,000 135,907,038 13,843,107

74,065,755 (13,843,107)

101,925,851 (13,843,107)

118,749,251 (13,843,107)

235,016,385 (13,843,107)

60,222,648

88,082,744

104,906,144

221,173,278

25.1 Loans Granted to Related Parties This is an interest free short term loan given to Access Realties (Private) Limited which is a subsidiary of the Company. 26.

Cash and Cash Equivalents Favourable Balances Cash at Bank Cash in Hand Cash in Transit Investment in Repos Fixed Deposits

163,978,498 57,177,082 - 1,420,051,550 -

144,399,512 67,948,003 5,000,000 - 7,630,492

125,579,956 57,157,082 - 910,000,000 -

123,547,527 67,928,002 7,630,491

1,641,207,130 224,978,007 1,092,737,038 199,106,020 Unfavourable Balances Bank Overdrafts (17,074,499) (22,822,404) (17,074,499) (17,339,772)

Cash and Cash Equivalents for the purpose of Cash Flow Statement

82 Access Engineering PLC. Annual Report 2011/12

1,624,132,631

202,155,603

1,075,662,539

181,766,248


AS AT 31ST MARCH 2012

Group

27.

Stated Capital Issued and Fully Paid Balance at 01st April

600,000,000 Ordinary Shares (2011-100,000,000 Ordinary Shares)

Bonus Shares Issued during the Year

200,000,000 Ordinary Shares (2011-200,000,000 Ordinary Shares)

180,000,000 Ordinary Shares

Shares Issued on Private Placement Shares Issued on Initial Public Offering

2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

3,000,000,000

1,000,000,000

3,000,000,000

1,000,000,000

1,000,000,000

2,000,000,000

1,000,000,000

2,000,000,000

4,500,000,000

-

4,500,000,000

-

500,000,000

-

500,000,000

-

9,000,000,000

3,000,000,000

20,000,000 Ordinary Shares

Balance at 31st March

9,000,000,000

3,000,000,000

1,000,000,000 Ordinary Shares (2011- 600,000,000 Ordinary shares)

27.1 Pursuant to a special resolution adopted at a Extra Ordinary General Meeting held on 31st March 2011,Shareholders of the Company resolved that 300,000,000 ordinary shares held by share holders as at 31st March 2011 were subdivided in to two ordinary shares The subdivision has increased the total number of ordinary shares to 600,000,000 without a change to the Stated Capital. 27.2 Pursuant to a Ordinary resolution adopted on 11th May 2011 at a Extra Ordinary General Meeting, Shareholders of the Company resolved that an amount of Rs.1,000,000,000/- be transferred from Reserve accounts (Retained Earnings Rs.800,000,000/- and Revaluation Reserve Rs.200,000,000) to the Stated Capital and the said amount be utilized to make a bonus issue of 200,000,000 shares allotted and issued to the existing shareholders of the Company on 1:3 basis (One new share issued for each existing three shares). 27.3 Pursuant to a ordinary resolution adopted at an Extra Ordinary General Meeting held on 25th May 2011, Company has issued 180,000,000 shares through Private Placement for a consideration of Rs.4,500,000,000/27.4 Pursuant to a Ordinary resolution adopted at an Extra Ordinary General Meeting held on 10th January 2012, Company has issued 20,000,000 shares through Initial Public Offering for a consideration of Rs.500,000,000/Group

2012 Rs.

2011 Rs.

28.

Deferred Grant On Acquisition

7,239,819

-

Balance at 31st March

7,239,819

-

The above represents a Government grant received to Sathosa Motors PLC, for the construction of work shop at Peliyagoda and are amortised over a period of fifty (50) years.

83


NOTES TO THE FINANCIAL STATEMENTS AS AT 31ST MARCH 2012

29.

Interest Bearing Borrowings Payable Within One Year Term loan (Note 29.1) Finance Lease Obligation (Note 29.2)

Group / Company 2012 Rs.

2011 Rs.

6,608,397 -

171,132,567 623,369

6,608,397

171,755,936

5,978,150 -

452,828,967 -

5,978,150

452,828,967

Payable After One Year Term loan (Note 29.1) Finance Lease Obligation (Note 29.2)

29.1

Term Loan Balance at 01st April Obtained during the Year Repayment during the Year

623,961,534 - (611,374,987)

24,151,710 610,000,000 (10,190,176)

Balance at 31st March

12,586,547

623,961,534

Loan Payable Within One Year Loan Payable After One Year

6,608,397 5,978,150

171,132,567 452,828,967

12,586,547

623,961,534

29.2 Finance Lease Obligation Balance at 01st April Repayments during the Year

639,269 (639,269)

Less: Interest In Suspense Balance at 31st March

Payable Within One Year

12,711,011 (12,071,742)

- -

639,269 (15,900)

-

623,369

-

623,369

29.3 Term Loan Lender

Balance as at 01.04.2011

DFCC Bank PLC Loan 01 Loan 02

205,333,333 400,000,000

(205,333,333) (400,000,000)

-

People’s Leasing Corporation PLC Loan 01

18,628,201

(6,041,654)

12,586,547

623,961,534

(611,374,987)

12,586,547

84 Access Engineering PLC. Annual Report 2011/12

Repayment During the year

Balance as at 31.03.2012


AS AT 31ST MARCH 2012

29. Interest Bearing Borrowings (Contd.) 29.4 Details of securities (i)Lender : Peoples Leasing Corporation PLC (ii)Approved Facility : Rs.30,000,000/ (iii)Amount Obtained : Rs.30,000,000/ (iv)Securities Pledged : Corporate Guarantee and Promissory Note Guarantor - Access Realties (Private) Limited Letter of Assignment Demand Promissory Note - Between Peoples Leasing Corporation PLC and Access Realties (Private) Limited (v) Interest Rate : 25% until the reimbursement of Central Bank 9% after reimbursement 36% annual interest rate for failing of payments (vi)Repayment : Sixty (60) months Six (06) months grace period Group

30.

Employee Benefits Balance at 01st April Current Service Cost Interest Cost Actuarial Loss On Acquisition

Less: Payments made during the Year Balance at 31st March 30.1

Expense Recognised in the Income Statement Current Service Cost Interest Cost Actuarial (Gain)/Losses

2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

27,796,471 5,453,029 2,934,396 8,435,784 17,312,023

18,473,441 5,668,923 2,011,068 2,697,917 -

23,123,143 5,227,272 2,312,314 8,665,704 -

17,269,573 3,462,018 1,726,745 1,719,685 -

61,931,703 (239,000)

28,851,349 (1,054,878)

39,328,433 (239,000)

24,178,021 (1,054,878)

61,692,703

27,796,471

39,089,433

23,123,143

5,453,029 2,934,396 8,435,784

5,668,923 2,011,068 2,697,917

5,227,272 2,312,314 8,665,704

3,462,018 1,726,745 1,719,685

16,823,209

10,377,908

16,205,290

6,908,448

30.2 Company An independent actuarial valuation of the retirement benefit obligation was carried out as at 31st March 2012 by professional actuaries M/S K.A.Pandit, Professional consultants and actuaries.

The valuation method used by the Actuaries to value the Retirement Benefit Obligation is the “Projected Unit Credit Method”.The method recommended by the Sri Lanka Accounting Standard No.16 (Revised 2006)- ‘Employee Benefits’.

The Key Assumptions used by Actuary include the following:

(i) Discount Rate (ii) Expected Annual Average Salary Increment Rate (iii) Staff Turnover Factor (iv) Retirement Age (v) The Company will Continue as a Going Concern.

2012 10% 8.50% 1% 55 Years

2011 10% 8.50% 1% 55 Years

85


NOTES TO THE FINANCIAL STATEMENTS AS AT 31ST MARCH 2012

30. Employee Benefits (Contd.) 30.3 Group a. Sathosa Motors PLC The actuarial valuation have been carried out by Actuarial & Management Consultants (Private) Limited, professional actuaries.The valuation method used by the actuaries to value the retirement benefit obligation is the “Projected Unit Credit Method”.The method recommended by the Sri Lanka Accounting Standard No.16 (Revised 2006)- ‘Employee Benefits’. The Key Assumptions used by Actuary include the following: Discount Rate Expected Annual Average Salary Increment Rate Retirement Age The Company will Continue as a Going Concern

2012

`

(i) (ii) (iii) (iv)

b.

Access Realties (Private) Limited The gratuity liabilities of Access Realties (Private) Limited calculated applying the formula method.The following Key Assumptions were used in arriving at the retirement benefit liability under Projected Unit Credit (PUC) method.

(i) (ii) (iii) (iv) (v)

Discount Rate Expected Annual Average Salary Increment Rate Staff Turnover Factor Retirement Age The Company will Continue as a Going Concern

2012 10% 16.70% 1% 55 Years

Group

11% 10.00% 55 Years

2012 Rs.

2011 Rs.

2011 10% 16.90% 1% 55 Years

Company 2012 Rs.

2011 Rs.

31.

Deferred Taxation

Balance at 01st April Provision During the Year On Acquisition

44,185,273 54,056,639 668,838

871,175 43,314,098 -

44,185,273 53,959,268 -

871,175 43,314,098 -

Balance at 31st March

98,910,750

44,185,273

98,144,541

44,185,273

Deferred Tax Provision as at the year end is made up as follows, Property, Plant and Equipment Defined Benefit Obligation

108,460,467 (9,549,717)

46,960,050 (2,774,777)

102,835,273 (4,690,732)

46,960,050 (2,774,777)

98,910,750

44,185,273

98,144,541

44,185,273

31.1 Company Provision has been made for Deferred Taxation under the liability method in respect of temporary differences arising from difference between accounting and tax base. Deferred Tax has been computed at the rate of 12%. 31.2 Group Access Realties (Pvt) Limited No provisions has been made for Deferred Taxation, since the Company is liable for Income Tax at 2% on its Revenue for next fifteen (15) years after completing the seven (07) years of income tax exemptions.The tax exemption ends at the end of 2010/11 year of assessment.. Sathosa Motors PLC Provision has been made for Deferred Taxation under the liability method in respect of temporary differences arising from difference between accounting and tax base. Deferred Tax has been computed at the rate of 28%. 86 Access Engineering PLC. Annual Report 2011/12


AS AT 31ST MARCH 2012

Group

2012 Rs.

2011 Rs.

Company 2012 Rs.

2011 Rs.

32. Trade and Other Payables

Trade Creditors Mobilization Advances VAT Payable Accrued Expenses Advances Received ESC Payable Security Deposit

1,151,699,673 1,592,906,907 - 189,457,478 82,459,880 10,183,427 12,170,470

83,731,028 257,570,776 50,091,366 41,971,187 142,120,426 6,151,713 13,302,854

441,440,821 1,592,906,907 - 157,658,492 41,578,302 10,183,427 -

83,756,083 257,570,776 50,091,366 39,423,116 133,725,693 6,151,713 -

3,038,877,835

594,939,350

2,243,767,949

570,718,747

33.

Current Taxation Payable

Balance at 01st April Notional Tax WHT Recoverable ESC Recoverable Provision made During the Year Adjustment for the Prior Year Payments made During the Year On Acquisition

107,318,533 (4,829,882) (13,221,470) (21,341,208) 211,555,679 31,120,045 (138,686,353) 17,399,983

24,346,410 (971,156) (9,033,532) (22,234,567) 169,932,721 - (54,721,343) -

102,371,611 (4,829,882) (13,122,606) (20,790,163) 202,219,032 31,228,082 (133,844,899) -

24,346,410 (971,156) (9,033,532) (22,234,568) 164,985,800

Balance at 31st March

189,315,327

107,318,533

163,231,175

102,371,611

34.

Amount Due to Related Party Access Natural Water (Private) Limited Access International (Private) Limited Access Projects (Private) Limited Access Industrial Systems (Private) Limited

146,485 23,573,102 69,529 99,904

- 1,313,108 - 207,141

133,633 23,573,102 69,529 -

1,313,108 -

23,889,020

1,520,249

23,776,264

1,313,108

(54,721,343) -

87


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012

35.

Related Party Transactions

35.1 Company

The following transactions were carried out with related party companies during the year ended 31st March 2012. Name of the Company Access International (Private) Limited

Name of the Directors Nature of Interest Nature of the Transaction Mr. S. J. S. Perera Mr. J. C. Joshua Mr. R. J. S. Gomez

Chairman Director Director

Purchase of Construction Plant and Equipment Clearing Charges Paid

Mr. D. A. R Fernando

Director

Mr. S. H. S Mendis Mr. S. D Munasinghe

Director Director

Purchase of Road Marking Material Sub Contractor Chargers Loan Settlement Machinery Hiring Income Purchase of Gabion, Fibertex , Geo MX & Tie Wire

(109,839,500)

-

( 567,060)

(18,660)

(817,883) (609,213) 147,873

(618,940) 119,109,446 -

(8,580,700)

(13,963,419)

1,000,000

(1,000,000)

7,500,000 (19,364,571)

(45,000,000) 151,301,740 (14,807,490)

(984,715)

(780,538)

(874,286)

-

Purchase of Water Bottles

(2,073,803)

(1,606,250)

(4,620,096)

-

(406,313)

-

48,324

-

Advance payment for the Supply and Installation of Electrical Work

(3,796,708)

-

Purchase of Toner Photocopy Machine Spare Parts and Service

(250,880)

(167,867)

(251,130)

(110,688)

Forestree Investments Limited

Mr. S. J. S. Perera Mr. J. C. Joshua Mr. R. J. S. Gomez

Chairman Director Director

Loan (Given)/Settlement

Access Realties (Private) Limited

Mr. S. J. S. Perera Mr. J. C. Joshua Mr. R. J. S. Gomez

Chairman Director Director

Loan (Given)/Settlement Dividend Received Office Rentals Reimbursements Telephone and air conditioner charges Supply & Installation of Power Socket

Access Natural Water (Private) Limited

Mr. S. J. S. Perera

Chairman

Mr. J. C. Joshua

Director

Mr. R. J. S. Gomez

Director

Access Agencies (Private) Limited

Mr. S. J. S. Perera

Chairman

Subcontractor charges

Access Projects (Private) Limited

Mr. S. J. S. Perera

Chairman

Reimbursement of electricity bill Machinery hiring income

Access Energy Solutions (Private) Limited

Reprographics (Private) Limited

Mr. S. J. S. Perera

Chairman

Mr. J. C. Joshua

Director

Mr. R. J. S. Gomez

Director

Mr. S. J.S. Perera Mr. J. C. Joshua

Chairman Director

Mr. R. J. S. Gomez

Director

88 Access Engineering PLC. Annual Report 2011/12

Amount (Paid)/Received 2012 2011 Rs. Rs.


FOR THE YEAR ENDED 31ST MARCH 2012

35. Related Party Transactions (Contd.)

Name of the Company Access Energy (Private) Limited

China Geo-Salcon-Access Joint Venture

Name of the Directors Nature of Interest Nature of the Transaction

Amount (Paid)/Received 2012 2011 Rs. Rs.

Mr. S. J. S. Perera

Chairman

Purchase of Motor Vehicles

(5,040,000)

-

Mr. J. C. Joshua

Director

Motor Vehicles Hiring Charges

(1,120,000)

-

Mr. R. J. S. Gomez

Director

Mr. J. C. Joshua Mr. S. H. S. Mendis Mr. D. A. R. Fernando

Partner Partner Partner

-

34,440,417 14,399,517

Sub Contractor Income Profit from Joint Venture

89


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012

35. Related Party Transactions (Contd.) 35.2 Group The following transactions were carried out between related party companies, within the Group. Amount (Paid)/Received Name of the Company

Name of the Directors Nature of Interest Nature of the Transaction

2012 Rs.

2011 Rs.

Access Realties (Private) Limited Access Industrial System (Private) Limited

Mr. S. J. S. Perera Mr. J. C. Joshua Mr. R. J. S. Gomez Mr. S. D. Perera Mr. C. K.Thambydorai Access International (Private) Mr. S. J. S. Perera Mr. J. C. Joshua Limited Mr. D. D. S. Ferdinando Mr.T.T. B. C. Fernando Mr. R. J. S. Gomez Mr. B. P. Obeysekara Mr. S. D. Perera Access Telecommunication (Private) Mr. S. J. S. Perera Mr. J. C. Joshua Limited Mr. R. J. S. Gomez K.M. B. M. Kumarasinghe Access Real Estate (Private) Limited Mr. S. J. S. Perera Mr.T.T. B. C. Fernando Mr. S. D. Perera Mr. S. J. S. Perera Access Natural Water (Private) Mr. S. J. S. Perera Limited Mr. J. C. Joshua Access Agencies (Private) Limited

Access Realties Tower 2 (Private) Limited

Chairman Director Director Director Director Chairman Director Director Director Director Director Director Chairman Director Director Director Chairman Director Director Director Chairman

Mr. R. J. S. Gomez Mr. S. J. S. Perera

Director Director Chairman

Mr. J. C. Joshua

Director

Mr. S. D. Perera

Director

Mr. S. J. S. Perera Mr. J. C. Joshua Mr. R. J. S. Gomez

Chairman Director Director

Lift Repair and Maintenance Charges

(3,041,630)

(920,000)

Rental and Services Income made in the Ordinary Course of the Business.

17,044,018

840,000

Rental and Services Income made in the Ordinary Course of the Business. Rental and Services Income made in the Ordinary Course of the Business. Purchase of Mineral Water

13,608,000

3,360,000

1,928,000

-

(28,276)

-

Rental and Services Income made in the Ordinary Course of the Business. Loan (Given)/Settlement

-

1,800,000

-

4,600,000

This note should be read in conjunction with Note No. 25 and 34 to these Financial Statements. Transactions with Key Management Personnel According to Sri Lanka Accounting Standard 30 (Revised 2005) ‘Related Party Disclosures’, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Board of Directors (including Executive and Non- Executive Directors) as key management personnel of the Company/Group have been classified Key Management Personnel. Compensation paid to Key Management Personnel Group

Salaries and other Employment Benefits

90 Access Engineering PLC. Annual Report 2011/12

2012 Rs. 22,034,546

2011 Rs. 13,420,000

Company 2012 Rs. 16,200,000

2011 Rs. 7,740,000


FOR THE YEAR ENDED 31ST MARCH 2012

36. Comparative Information Comparative figures have been reclassified wherever necessary to conform to the current year’s presentation. 37. Commitments and Contingencies 37.1 Company

There were no material Commitments and Contingent liabilities as at the Balance Sheet date except for the following,

Legal case filed against the company

The case of money recovery by GTB Colombo Corporation (Private ) Limited Vs.Three defendants, namely, 1st defendant : Asia Pacific Golf Course PLC, 2nd defendant: Access Engineering PLC and 3rd defendant: Urban Development Authority. (Case No- CHC706/10/ MR).The claim is made against the three defendants jointly and/or severally in the High Court of Western Province for non payment of material supplied and invoiced by the Plaintiff to the 1st defendant.

Access Engineering PLC is contesting the case, since the material purportedly supplied by the plaintiff was not received by the 2nd defendant and not invoiced to the 2nd defendant. Further trial is on 17th September 2012

Bank guarantee issued by the bank on behalf of the Company is as follows;

Bank

Nations Trust PLC Sampath Bank PLC Bank of Ceylon Hongkong & Shanghai Bank Corporation

Amount Rs. 801,685,049 1,973,826,718 1,231,487,723 213,345,102

37.2 Group

Sathosa Motors PLC

Labour Tribunal Cases against the Company

Ms. Sujatha Silva Vs. Sathosa Motors PLC (Ref - Ct. 78(02))

An Ex-Employee Ms. Sujatha Silva, who stood retired upon her attaining the age of 55 years lodged a complaint to the termination of Employment Unit of the Commissioner of labour alleging that she has been unlawfully terminated.The Commissioner of Labour dismissed the application of Ms. Sujatha Silva. Subsequently she filed a special case in the District court bearing No. D.S.P./00137/09.The court delivered order on 11th January 2011 in favour of Sathosa Motors PLC by dismissing the action with costs.The plaintiff has now filed an appeal and the lawyers has received the notice appeal on 27th January 2011.The lawyers have not received any notices form the court thereafter.

W.A. Siriwardane Vs. Sathosa Motors

The above application was filed in the labour tribunal by an ex-employee Mr. W.A. Siriwardane who was a driver in the company for terminating his services and seeks reinstatement in service.The Company is vehemently resisting the claim.The further trial is fixed for 09th August 2012

Other Cases against the Company

Customs Case No. POM/2280/2006

The Custom Department has initiated an inquiry regarding the payment of Duty on dividend paid to Itochu Corporation of Japan, who is the exporter of vehicles to the company as well as the major shareholder of the Company.The matter is still pending.

Based on the above information and the current status of the above case, the Company is not in a position to quantity the potential Financial impact if any, as at the Balance Sheet date.

91


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012

38. Events Occurring After the Balance Sheet Date

There have been no material events occurring after the Balance Sheet date except for the following that would require adjustments to or disclosure in the Financial Statements.

38.1 Company

Pursuant to resolution adopted on 18th May 2012, the Board of Directors of the Company approved the payment of an Interim Dividend of twenty five cents (0.25 cents) per share for the year ended 31st March 2012.

Company has increased its stake in Sathosa Motors PLC from 77.10% to 81.56% at a consideration of Rs.63,107,370, subsequent to the Balance sheet date.

38.2 Group

Sathosa Motors PLC

The Board of Directors has recommended a first and final dividend of Rs.5/- per share amounting to Rs.30,168,110/- for the year ended 31st March 2012(2011 Rs.5/- per share), and this has been declared at the Annual General Meeting held on 20th July 2012.

39. Acquisition of Sathosa Motors PLC

Access Engineering Ltd acquired 3,600,000 shares representing 60% of the issued number of shares of Sathosa Motors PLC on 29th February 2012, from its major shareholder ITOCHU Corporation of Japan at a price of Rs.236.44/- per share.The Company further acquired 1,052,085 shares up to 31st March 2012, being 17% of the issued number of shares.

The acquisition had the following effect on the Group Assets and Liabilities.

Amount Rs.

Property, Plant and Equipment Leasehold Land Inventories Trade and Other Receivables Cash and Cash Equivalents Assets Related Grant Employee Benefits Deferred Taxation Trade and Other Payables Income Tax Payables Dividend Payable

33,344,144 5,667,610 714,671,614 127,226,509 535,537,797 (7,239,819) (17,353,518) (766,209) (771,075,321) (23,146,582) (1,695,804)

Net Identifiable Assets and Liabilities

595,170,421

Investment Allocated to Minority Interest Goodwill on Acquisition Loss on Acquisition Current Year Profit

(136,278,114) 505,987,018 147,930,558 (12,816,343)

Cash consideration Paid on Acquisition of Subsidiary 1,099,993,540 Cash & Cash Equivalents Acquired (535,537,797)

Net Cash Outflow on Acquisition of Subsidiary

92 Access Engineering PLC. Annual Report 2011/12

564,455,743


93

Other information Segment Assets Intersegment - Elimination Investment in Subsidiary Goodwill Amount due from Related Parties

Segment Liabilities Intersegment - Elimination Dividend Payable Intercompany Loan

Capital Expenditure Depreciation

1,435,905,883

Profit for the Year

1,645,441,846 227,354,677

401,562,485 139,128,200

1,383,636,557

- -

- -

2,597,670,408

1,383,636,557

2,597,670,408

5,751,127,518

- - -

- - -

13,129,169,577

5,751,127,518

13,129,169,577

935,851,522

1,144,151,420 (208,299,898)

- - - 16,538,205

- - - 96,081,024

1,723,312,264 (287,406,381)

1,127,613,215

1,627,231,240

Profit Before Tax Income Tax Expense

3,518,039,270

6,955,749,584

3,518,039,270 -

6,955,749,584 -

Segment Results Gain from fair value adjustment of Investment Property Impairment of Goodwill Inter Company Dividend Net Finance Income

Access Realties (Private)Limited

Sathosa Motors PLC

Group Total

28,931,531 194,220

79,834,643

- -

79,834,643

3,035,814,614

- - -

3,035,814,614

282,569,896

286,051,908 (3,482,012)

171,068,469 - - 501,632

114,481,807

146,797,490

162,997,490 (16,200,000)

386,804 262,801

220,437,664

- -

220,437,664

2,893,847,733

- - -

2,893,847,733

578,055,370

583,002,291 (4,946,921)

486,276,059 - - 5,357,583

91,368,649

132,659,565

148,247,593 (15,588,028)

4,235,429 541,357

821,277,253

- -

821,277,253

1,416,447,665

- - -

1,416,447,665

16,622,432

22,396,225 (5,773,793)

- - - 5,587,208

16,809,017

212,545,948

212,545,948 -

1,735,098,211

2,031,760,397 (296,662,186)

171,068,469 - - 102,169,864

1,758,522,064

7,315,093,022

7,331,293,022 (16,200,000)

(3,796,894,818) 505,987,018 (47,500,000)

- -

-

- -

-

1,678,608,806 228,090,254

3,451,282,304

- (47,500,000)

3,498,782,304

- 14,243,024,056

- - -

- 17,581,431,856

-

- -

-

-

-

- -

401,949,289 139,391,001

1,423,167,183

(80,907,038) (100,000,000)

1,604,074,221

5,767,166,933

(2,696,901,280) (180,907,038)

8,644,975,251

1,167,306,540

1,380,553,359 (213,246,819)

486,276,059 (195,298,612) (151,301,740) 21,895,788

1,218,981,864

3,650,698,835

3,666,286,863 (15,588,028)

2012 2011 2012 2011 2012 2011 2012 2011 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Access Engineering PLC

Segment Revenue Inter Segment Revenue Revenue

40. Segment Information Primary Segments (Business Segments)

FOR THE YEAR ENDED 31ST MARCH 2012


27th March 2012 - Debut at the Colombo Stock Exchange

94 Access Engineering PLC. Annual Report 2011/12


Sharing the Wealth Stakeholders create an inviolable thread that binds success with sustainability. The Access Engineering Group empowers both our shareholders by sharing wealth, on the premise that this principle is crucial to sustaining all our shareholders.

SHARE INFORMATION Share Information

96

95


SHARE INFORMATION

The Colombo Stock Exchange During the year under review, the Colombo Stock Exchange (CSE) yielded a negative return resulting from volatility, unwarranted speculation, negative sentiment and changes imposed by regulatory authorities.The benchmark All Share Price Index (ASPI) recorded a negative growth of 8.5% in 2011 compared to 2010, while the more liquid Milanka Price Index recorded a negative growth of 25.9% in 2011.The market also witnessed a net foreign outflow of Rs.19 Bn, compared to Rs.26 Bn in the previous year.

shareholders, while 64.7% of the total shareholders hold shares in the range of 1-10,000.This broad-basing of ownership was a direct result of the Initial Public Offering concluded in March 2012. Share holding range

% holding

Number of holders

Number of shares

1-1,000

0.03%

582

329,427

1,001-10,000

0.25%

607

2,494,442

10,001-100,000

1.35%

399

13,567,690

100,001-1,000,000

7.94%

203

79,397,841

Over 1,000,000

90.43%

47

904,210,600

100.00%

1,838

1,000,000,000

Distribution of shares 0.03% 1.35%

The CSE facilitated the raising of Rs.19.2 Bn via Initial Public Offerings, warranting a mammoth 350% growth over the corresponding period.The country saw 29 new companies obtaining listings on the CSE and as at the end of the year the total market capitalisation stood at Rs.2,214 Bn

7.94%

Access Engineering Share

• CSE Ticker symbol- AEL.N0000 • Bloomberg symbol- AEL: SL The Ordinary Voting Shares of the Company commenced trading on the Dirisavi Board of the CSE under the ticker symbol AEL. N0000 on 27th March 2012.The shares are classified under the ‘Construction and Engineering’ sector.

AEL Share Price Price (Rs.) 26.8

Category of Access Engineering shareholders As depicted in the graphs below, Access Engineering has a mix of local and foreign shareholders covering both institutions as well as individuals. More than 95% of the total number of shareholders are local individuals who hold 86.5% of the total number of shares in issue among themselves.This category is followed by local institutions who hold 12.3% of the shares.

26.6

% holding

Number of holders

Number of shares

Local individuals

86.53%

1747

865,277,888

Local institutions

12.27%

81

122,674,812

Foreign individuals

0.31%

8

3,142,000

26.4

Category

26.2 26.0 25.8 27-Mar-12 28-Mar-12 29-Mar-12 30-Mar-12

The Access Engineering share recorded its highest and lowest price for the year under review on 27th March 2012 which were Rs.29.30 and Rs.25 respectively. As at 31st March 2012, the price of the AEL share stood at Rs.26.70. Market Capitalisation The market capitalisation of Access Engineering was Rs. 26.7 Bn as at 31st March 2012, representing 1.33% of the total market capitalisation of the CSE. Access Engineering was ranked 18th based on the market capitalisation of quoted companies on this end date. Distribution of Access Engineering share As indicated in the graphs below, over 90% of the total number of shares in issue are held by 2.5% of the total number of 96 Access Engineering PLC. Annual Report 2011/12

1-1,000 1,001-10,000 10,001-100,000 100,001-1,000,000 Over 1,000,000

90.43%

Foreign institutions

0.89%

2

8,905,300

100.00%

1,838

1,000,000,000

Category of shareholders 0% 1%

12%

87%

Foreign institutions Local individuals Local institutions Foreign individuals


Major shareholders The major shareholders of Access Engineering as at 31st March 2012 together with their percentage holding are as follows:

NAME OF SHAREHOLDER

NO. OF SHARES

31-03-2012

31-03-2011

Name

Number of shares

% Holding

Number of shares

% Holding

%

Mr. S J S Perera

250,000,000

25.00%

269,999,988

45.00%

Mr. R J S Gomez

120,000,000

12.00%

149,999,994

25.00%

Mr. J C Joshua

100,000,000

10.00%

149,999,994

25.00%

Mr. S H S Mendis

24,000,000

2.40%

-

0.00%

Mr. D A R Fernando

24,000,000

2.40%

-

0.00%

Mr. S D Munasinghe

24,000,000

2.40%

-

0.00%

Mr. A I Lovell

16,000,000

1.60%

-

0.00%

1

Sumal Joseph Sanjiva Perera

250,000,000

25.00

2

Mr. R J S Gomez

120,000,000

12.00

3

Mr. J C Joshua

100,000,000

10.00

4

Mrs. R M N Joshua

70,000,000

7.00

5

Shamal Joseph Shavindra Perera

45,000,000

4.50

6

Mrs. D R S Malalasekera

45,000,000

4.50

7

John Keells Holdings PLC

40,000,000

4.00

8

Mr. S A A Gomez

25,000,000

2.50

9

Mr. R J Gomez

25,000,000

2.50

10

Mr. S D Munasinghe

24,000,000

2.40

11

Mr. S H S Mendis

24,000,000

2.40

12

Mr. D A R Fernando

24,000,000

2.40

13

Mr. A I Lovell

16,000,000

14

Associated Electrical Corporation Ltd

Mr.T A G Fernando

6,400,000

0.64%

-

0.00%

1.60

Mr. K A M K Ranasinghe

-

0.00%

-

0.00%

13,000,000

1.30

Mr. N D Gunaratne

-

0.00%

-

0.00%

Barclays Bank PLC Singapore Branch Wealth Management

8,000,000

0.80

16

Watapota Investments PLC

8,000,000

0.80

17

Mr.T A G Fernando

6,400,000

0.64

18

MAS Capital (Private) Limited

6,000,000

0.60

19

Access Telecommunication Services (Pvt) Ltd

4,000,000

0.40

20

Mr. S N F Irippuge

4,000,000

0.40

21

Indra Traders (Pvt) Ltd

4,000,000

0.40

861,400,000

86.14

Others

Total

15

138,600,000

13.86

1,000,000,000

100.00

Public Holding As at 31st March 2012, the percentage of shares held by the public as per the Listing Rules of CSE stands at 36.52%. Dividend On 18th May 2012, the Company declared a dividend of Rs.0.25 per share for the financial year 2011/2012, amounting to Rs.250 Mn to all holders of Ordinary Voting Shares as at end of trading of 29th May 2012. Payment of the dividend was completed by 8th June 2012.

Access Engineering shares held by Directors As at 31st March 2012, the total number of shares held by the Board of Directors of the Company amounted to 564,400,000. This was 56.44% of the total number of shares in issue as at that date.The following table illustrates the number of shares held by Directors, together with their percentage holding:

97


• Access Engineering on 29th Feb 2012 acquired 59.67% of

SHARE INFORMATION

Stated Capital As at the end of the financial year, the stated capital of the Company stood at Rs.9 Bn represented by 1,000,000,000 Ordinary Voting Shares.The movement of stated capital during the year is illustrated below: Number of Shares

Rs.

Balance as at March 31, 2011

600,000,000

3,000,000,000

Issue of Shares on May 11, 2011 @ Rs.5/- per Share

200,000,000

1,000,000,000

Issue of Shares on June 9, 2011 @ Rs.25/- per Share through the Prospectus dated May 30, 2011

180,000,000

4,500,000,000

Issue of Shares on March 6, 2012 @ Rs.25/- per Share through the Prospectus dated February 10, 2012

20,000,000

500,000,000

1,000,000,000

9,000,000,000

• An investment of Rs.693 Mn was infused as additional working capital from June 2011 till the year end date.

• The remaining portion of the funds raised through the two

(Issue of one (01) new Share for every three (03) existing Shares by way of a capitalization of reserves)

Balance as at March 31, 2012

Sathosa Motors PLC, a company listed on the Colombo Stock Exchange from its major shareholder Itochu Corporation of Japan, at a price of Rs.236.44 per share for a total consideration of Rs. 851.3 Mn.The Company increased its holding to 77.1% by 31st March 2012.The total investment for this acquisition stands at Rs.1,099 Mn as at 31st March 2012.

Utilisation of funds raised through Private Placement and IPO Access Engineering raised funds amounting to Rs. 4,500 Mn through the issue of 180 million shares at a price of Rs. 25/- per share on June 9, 2011, in terms of the Prospectus dated May 30, 2011. Access Engineering also raised funds amounting to Rs.500 Mn with the issue of 20 million shares at a price of Rs.25/- per share on March 6, 2012 in terms of the Prospectus dated February 10, 2012. The funds raised through the above issues conducted have been utilized for the following purposes;

• A loan with an outstanding amount of approximately Rs. 596 Mn obtained on a long term basis from a LCB in Sri Lanka, was settled by Access Engineering on June 22, 2011.

• Investment in various equipment and machinery ranging from crusher plants, concrete batching plants, asphalt plants, hydraulic rock breakers, piling machines and other equipment in the form of capital expenditure to the amount of approximately Rs.1,086 million was made by Access Engineering during the period from June 2011 to March 2012, to build adequate capacity in view of the multitude of projects undertaken by the Company in various growth sectors of the economy.

98 Access Engineering PLC. Annual Report 2011/12

share issues amounts to approximately Rs.1,526 Mn and is expected to be utilized to part-finance the Henamulla 12 storeyed building project awarded to the Company by the Urban Development Authority and to finance the future working capital requirements of the Company in its ordinary course of business.This excess amount is currently held in short term investments until its actual utilization.


NOTICE OF MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Access Engineering PLC will be held at the Ballroom,Taj Samudra Hotel, 25, Galle Face Centre Road, Colombo 3 from 3.00 p.m. to 5.00 p.m. on the 13th of September 2012. Business to be brought before the meeting will be:

Notes: 1. A member entitled to attend and vote at the meeting is entitled to appoint a Proxy to attend and vote instead of him/her. 2.

A Proxy need not be a member of the Company.

1.

3.

A Form of Proxy is enclosed for this purpose.

4.

The completed form of Proxy should be deposited at the Registered Office of the Company, No. 278, Union Place, Colombo 2, not less than thirty six (36) hours before the time fixed for the commencement of the Meeting.

To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and the Financial Statements for the year ended 31st March 2012 and the Report of the Auditors thereon.

2.

To re-elect as a Director Mr. R J S Gomez who retires by rotation in terms of Article 88 (i) of the Articles of Association of the Company.

3.

To elect as a Director Prof. K A M K Ranasinghe who retires by rotation in terms of Article 95 of the Articles of Association of the Company.

4.

To elect as a Director Mr. N D Gunaratne who retires by rotation in terms of Article 95 of the Articles of Association of the Company.

5.

To elect as a Director Mr. A I Lovell who retires by rotation in terms of Article 95 of the Articles of Association of the Company.

6.

To authorise the Directors to determine donations for the ensuing year.

7.

To re-appoint Messrs. KPMG, Chartered Accountants as Auditors of the Company and to authorise the Directors to determine their remuneration.

By Order of the Board Access Engineering PLC

P W CORPORATE SECRETARIAL (PVT) LTD Director/Secretaries 24th July 2012 Colombo

99


100 Access Engineering PLC. Annual Report 2011/12


FORM OF PROXY

I/We the undersigned ................................................................................................................................................... NIC No‌......................................................... of ....................................................................................................................................................................................................................................................................... being a member/s* of Access Engineering PLC hereby appoint: ............................................................................................................................................................................................................................................................................ of ....................................................................................................................................................................................................................................................................... Mr. Sumal Joseph Sanjiva Perera Mr. Joseph Christopher Joshua Mr. Shevantha Harindra Sudhakara Mendis Mr. Dalpadoruge Anton Rohana Fernando Mr.Tiththalapitige Anton Gration Fernando Mr. Saumaya Darshana Munasinghe Mr. Ranjan John Suriyakumar Gomez Prof. Kulatilleke Arthanayake Malik Kumar Ranasinghe Mr. Niroshan Dakshina Gunaratne Mr. Alexis Indrajit Lovell

of Colombo or failing him* of Colombo or failing him* of Colombo or failing him* of Colombo or failing him* of Colombo or failing him* of Colombo or failing him* of Colombo or failing him* of Colombo or failing him* of Colombo or failing him* of Colombo

my/our* Proxy to vote as indicated hereunder for me/us* and on my/our* behalf at the Annual General Meeting of the Company to be held on 13th September 2012 and at every poll which may be taken in consequence of the aforesaid Meeting and at any adjournment thereof: Resolution 1 To receive and consider the Report of the Directors and the Statement of Accounts for the year ended 31st March 2012 with the Report of the Auditors thereon.

For

Against

Resolution 2 To re-elect Mr. R J S Gomez who retires in terms of Article No. 88 (i) of the Articles of Association of the Company, as a Director Resolution 3 To elect Prof. K A M K Ranasinghe who retires in terms of Article No.95 of the Articles of Association of the Company, as a Director. Resolution 4 To elect Mr. N D Gunaratne who retires in terms of Article No. 95 of the Articles of Association of the Company, as a Director. Resolution 5 To elect Mr. A I Lovell who retires in terms of Article No. 95 of the Articles of Association of the Company, as a Director. Resolution 6 To authorise the Directors to determine donations for the ensuing year. Resolution 7 To re-appoint Messrs. KPMG, Chartered Accountants as Auditors of the Company and authorise the Directors to determine their remuneration. In witness my/our* hands this .................................................. day of .......................................................Two Thousand and Twelve. .................................................... Signature of Shareholder/s * Please delete the inappropriate words. Instructions as to completion appear on the reverse. 101


FORM OF PROXY

INSTRUCTIONS AS TO COMPLETION 1.

This Form of Proxy must be deposited at No. 278, Union Place, Colombo 2 not less than thirty six (36) hours before the time fixed for the Meeting.

2.

In perfecting the Form of Proxy please ensure that all details are legible.

3.

If you wish to appoint a person other than a Director of the Company as your proxy, please insert the relevant details in the space provided.

4.

Please indicate with an ‘X’ in the space provided, how your proxy is to vote on the resolution. If no indication is given, the proxy in his discretion will vote as he thinks fit.

5.

In the case of a Company/Corporation, the proxy must be under its Common Seal, which should be affixed and attested in the manner prescribed by its Articles of Association.

6.

In the case of a Proxy signed by an Attorney, the Power of Attorney must be deposited at The Secretaries’ Office (i.e. P W Corporate Secretarial (Pvt) Ltd., 3/17, Kynsey Road, Colombo 8) for registration.

7.

In the case of joint holders the Form of Proxy must be signed by the first holder.

102 Access Engineering PLC. Annual Report 2011/12


CORPORATE INFORMATION

Name of Company Access Engineering PLC Registered Office Level 8, Access Towers 278, Union Place Colombo 02. Tel: +94 11 2302302 Fax: +94 11 2302333 Web - www.accessengsl.com E-mail - inquiries@accessengsl.com Legal Form A public limited liability company incorporated in Sri Lanka on July 31, 2001 under the Companies Act No. 17 of 1982 and Reregistered under the Companies Act No. 07 of 2007 on February 06, 2008. Ordinary Voting Shares are listed on the Dirisavi Board of the Colombo Stock Exchange. Company Registration Number PB 200 PQ Board of Directors S J S Perera J C Joshua D A R Fernando S H S Mendis T A G Fernando S D Munasinghe R J S Gomez A I Lovell Prof. K A M K Ranasinghe N D Gunaratne

Financial Highlights Chairman’s Message Management Discussion & Analysis Corporate Governance Annual Report of the Board of Directors Audit Committee Report Risk Management Board of Directors Corporate Management Team Engineering Projects Engineering Services People & Communities

2 4 8 18 21 23 24 26 28 34 42 48

The Planet 54 Accreditations,Awards & Accolades 58 Independent Auditor’s Report 63 Income Statement 64 Balance Sheet 65 Statement of Changes in Equity 66 Cash Flow Statement 67 Notes to the Financial Statements 68 Share Information 96 Notice of Meeting 99 Form of Proxy Enclosed Corporate Information IBC

Designed and produced by emagewise Digital plates and printing by Aitken Spence Printing & Packaging (Pvt) Ltd.

Bankers Bank of Ceylon Nations Trust Bank PLC Sampath Bank PLC Hatton National Bank PLC Commercial Bank of Ceylon PLC People’s Bank The Hongkong and Shanghai Banking Corporation Limited Secretaries P W Corporate Secretarial (Pvt) Ltd 3/17, Kynsey Road Colombo 08. Tel: +94 11 4640360 Fax: +94 11 4740588 Auditors Messrs KPMG Chartered Accountants 32A, Sir Mohamed Macan Markar Mawatha Colombo 03. Tel: +94 11 2426426 Fax: +94 11 2445872


Access Engineering PLC. Annual Report 2011/12

Annual Report 2011/12

www.accessengsl.com

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