Annual 2010 Report

Annual Report 2010

Ministry of Construction, Engineering Services, Housing & Common Amenities

ContentsCorporate Information 4

Board of Directors of the Corporation 4

Corporate Management 5

Senior Management Team 5 Vision and Mission Statement of the Corporation 6

Goals & Core Values 7 Chairman’s Message 8

Progress Review of the Corporation 10

Construction Group Activities 14

Mechanical & Electrical Group Activities 18

Construction Components Group Activities 22

Consultancy Group Activities 26 Human Resources & Administration Division 29 Internal Audit Division 31

Report of the Auditor General 33

Financial Results 43

ConstructionGroup

Mechanical &Electrical Group

Construction Components

Group

Consultancy Group

BuddhasrawakaBikku University

Face-lift ofPeople’s BankHead OfficeBuilding

Refurbishment of R. PremadasaInternational

CricketStadium

Proposed three Storied Building, Lanka German Technical College

Corporate InformationName of Corporation - State Engineering Corporation of Sri Lanka.

Legal Status - Fully owned Enterprise of the Government of the Democratic Socialist

Republic of Sri Lanka.

Name of Ministry - Construction, Engineering Services, Housing & Common Amenities.

Registered Office - 130, W.A.D. Ramanayaka Mawatha, Colombo 02

Tel: 011-2434691 Fax: 011-2421262

E-mail:[email protected]

www.secsl.lk

Board of Directors - 2010

Mr. B.V.S.K.De Silva - Chairman (Jan-May, 2009-2010)

Prof. Ashu Marasinghe - Chairman (May-Dec, 2010)

Mr. S.A.S.Wickramarathne - Acting Vice Chairman (Jan-May)

Mr. Akila Saliya Ellawala - Vice Chairman (May-Dec)

Mr. P.L.Dilantha Mahindapala - Working Director (Jan-May)

Mr. Eng.Wasantha Ehelapitiya - Working Director (May-Sep)

Mr. M.F.Mohamad Muzammil - Working Director (Sep-Dec)

Mrs. Damitha Rathnayake - Director (Treasury Representative)

Eng. Chandranandana Diunuge - Director

Mr. Dennis Fernando - Director

Mr K.P.Dias - Director

Eng. Wimal Jayawardana - Director

Mrs. Achala Samarasekara - Secretary to the Board (Jan-July)

Mrs. Indira Wikramanayake Alexander - Secretary to the Board (July-Dec)

Corporate ManagementMr. Tuder Wigenayake - Acting General Manager

Mrs. G.A.L.Nonis - Deputy General Manager - Construction Mr. Jayampathy Thennakoon - Deputy General Manager - Mech. & Electrical

Mr. A.A. Piyadasa - Deputy General Manager - Const. Component Mr. P.A.P.A.Panawala - Deputy General Manager - Finance

Mr. G.G.P.Abeysekara - Deputy General Manager - H.R & A Mr. M. W. J. De Silva - Deputy General Manager - Consultancy

Senior Management

Mrs. P. Karawita - Manager (Construction)

Mr. R.A.M.S.Weerasena - Chief Internal Auditor Mr. M. D. Pathmasiri - Chief Engineer (Designs)

Mr. C.M.S.R. Fernando - Actg. Chief Engineer (Contracts & Planning)

Mr. A.P.Thennakoon - Acting Manager (Const. components)

Mr. A.P.K. Manamperi - Acting Manager (Construction)

Mr. L.A.L.Liynarachchi - Acting Manager (Const. components) Mr. K.M.T.B.Jayasundara - Acting Manager (Construction)

Mr. K.A.Shantha Kumara - Acting Manager (Construction)

Mr. A.M.S.T.B.Alahakoon - Acting Manager (Construction)

Mr. W.G.A.Gajasinghe - Acting Manager (Construction)

Goals• Achieve highest levels of technical Standards and professionalism

• To be a commercially focused, financially viable and self-sustainable government enterprise

• To diversify business activities of the corporation

• To develop leading and promote the use of domestic technology and local materials

• To be the leading partner in National Development Programmes

• Improve the management and human resources of the Corporation

Core Values• Clients’ Satisfaction• Integrity• Social Obligation• Employee Satisfaction• Safety• Quality

ENGINEERS TO THE NATION

VisionTo be the leading Engineering Enterprise

MissionTo be a provider of innovative and integrated engineering solutions through excellent consultancy, construction,

manufacturing and project management services supported by research and development, delighting the client,

with the active participation of a competent and motivated workforce within a prosperous enterprise and there by

contribute to national development

2.2. Turnover & Profitability The year 2010 marked a turnover of Rs 5,921 Million; the highest ever recorded for the SEC. The net profit after tax was Rs 86.4 Million. Two mega projects, the Kettarama international cricket stadium and the Pallekale inter-national cricket stadium contributed immensely to the increase the turnover by 56% compared to 2009.

2.3 Progress & Achievementi. Construction Group The construction group recorded a gross profit of Rs 96 Million during the year compared to Rs 203 Million in 2009. The Aluminium factory at Rathmalana performed poorly and recorded a loss of Rs 2 Million compared to a profit of Rs 19 Million during the previous year.

Chairman’s ReviewIt is with great pleasure that I present the Annual Report of the State Engineering Corporation of Sri Lanka for the financial year ended on 31st December 2010.

During the year, the key Focus of the government was the development of roads, besides the other strategic areas such as Ports, power and Energy, Irrigation and Water Supply and Sanitation. Furthermore, the government, other than recon-structing the damaged irrigation facilities and roads due to floods, successfully continued its rural development initiatives such as “Gama Naguma” and “Maga Naguma” as well as the development initiatives under “Uthuru Wasanthaya” whereby the capital expenditure was increased.

The construction sector expanded significantly by 9.3 per cent in value added terms in 2010 compared to the lower growth rate of 5.6 percent in 2009. Increased activity in construction was depicted by the growth of domestic pro-duction of building materials by 12.0 per cent during the year. Also the, cement availability grew by 18.1 per cent in 2010 compared to the contraction of 11.1 per cent in the previous year. The increased involvement in the private sector was reflected by the growth of private sector credit for construction purposes by 19.3 per cent during the year. Meanwhile, the government construction projects related to roads, ports, power sector, irrigation and water resources and housing together with other small scale construction also contributed favourably to the growth in value added in the construction sector. The construction sector expanded with the acceleration of the ongoing road development projects such as the Colombo – Katunayake and Southern Expressways, interregional national highways and mega power projects initiated to meet the rising demand for electricity. On the other hand, the con-struction activities were boosted due to Port development projects and the construction and reconstruction work done in newly liberates areas.

1. Business BackdropHaving hit the record growth of 8.0% in 2010, Sri Lankan economy envisages to boost its growth in the years to come. With this situation at, the public invest-ment programme of the government progressed with accelerated implementa-tion of many major infrastructure development projects.

2.1. Status of Key Position PlatformA new Chairman was appointed during the year 2010 and changes were made to the Board of Directors. Many of the vacancies that came over from the previous year for key positions were filled during 2010. The number of employees for the year 2010 totalled 2343 among them 1659 permanent, 610 coming under contract basis and 74 as casual employees.

8 | State Engineering Corporation of Sri Lanka Annual Report 2010 | 9

iii. Construction Components Group The construction components group showed a gross profit of Rs 77 Million compared to Rs 32 Million during 2009. It is a significant increase of 140% in gross profit, compares to the previous year.

iv. Consultancy Group The consultancy group generated a significant gross profit of Rs 206 Million for the year 2010, mainly due to the Department of Inland Revenue project.

ii. Mechanical & Electrical Group The M & E group continued to perform poorly, recording a loss of Rs 59 Million for the year 2010. This situation is expected to improve in future, in line with the restructuring programme related to the group.

3. Acknowledgements

I extend my grateful thanks to the Board of Directors for their kind co-operation in finalizing a multitude of matters, General Manager, Deputy General Managers of all groups, staff members at all levels, the devoted workforce and Trade Unions, for their commitment in achieving many of the expected results which have sta-bilized the Corporation to some extent during the year under review.

I also wish to take this opportunity to pay my gratitude to Hon Minister of Construction, Engineering Services, Housing and Common Amenities for his valuable guidance and advice for SEC to steer clear of many difficulties; his influence to have concurrence of the Cabinet, in matters pertaining to SEC and resolving union issues in a manner beneficial to all concerned.

I am also thankful to the Secretary to the Ministry of Construction, Engineering Services and Common Amenities and the Ministry staff for their assistance in matters which SEC was concerned during the year 2010.

B.K. Jagath Kumara PereraChairmanState Engineering Corporation of Sri Lanka

Progress Review of the CorporationTurnover & ProfitDuring the financial year 2010, State Engineering Corporation hit a record turnover (net turnover) of Rs: 5,921 million and a net profit (before tax) of Rs: 133 million. The turnover increased by 56% over the previous year. Over the past 5 years, the corporation has achieved a turnover growth of 221% and a net profit growth of 568%.

2006 2007 2008 2009 2010Turnover(Net) 1,844 2,219 2,652 3,794 5,921Profit/(Loss)From Operation 3.12 103.17 42.7 281 123Profit/(Loss)Before Taxation 19.9 127.86 59.5 313 133

Comparative Turnover & Profit Figures 2006 - 2010 Turnover & Net Operating Profit / (Loss)

Table I- (Comparative Turnover & Profit Figures of the Corporation 2006-2010)

Table II - (Turnover & Net Operating Profit/(Loss) of Construction group)

Table III - (Turnover & Net Operating Profit / (Loss) of Construction Components group)

Corporation has gained profits in its operations. Following are the details of operations in each section.

Construction Group During the financial year 2010, the Construction group has gained a (Gross) Turnover of Rs.2,751 Million an increase of 14% compared to the last year. Its stake in the total Turnover of SEC is 46% and it has recorded a Net Operating Profit of Rs. 96.3Million during the year 2010.

Construction Components Group Construction Components group has recorded a total turnover (Gross) of Rs.1770 million during the financial year 2010 compared with that of Rs.664 million in 2009. In compassion with the last year, it’s an increase of 167%. This group has also recorded a net operating profit of Rs.77 million for the year 2010, against the net operating profit of Rs.33million. for the financial year 2009.

Turnover & Net Operating Profit / (Loss)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Rs.M

illio

n

105.8

1,2021,408

1,878

2,418 3,101

95 138 24996

2006 2007 2008 2009 2010

Turnover Net Operating Profit/(Loss)

0200400

600800

10001200

1400160018002000

Rs:M

illio

n

84

481 529633

665

1770

43 51 33 77

2006 2007 2008 2009 2010


7,000

6,000

5,000

4,000

3,000

2,000

1,000

2006 2007 2008 2009 20100

Turnover(Net)

Profit/(Loss)From Operation

Profit/(Loss)Before Taxation

Rs.M

illio

n

Consultancy group

The consultancy division has recorded a turnover (net) of Rs. 1260 mn. (as compared with Rs.631million in 2009), The division has also increased the net operating Profit to 206million (As compared with that of Rs.133 million in 2009)

Turnover & Net Operating Profit / (Loss)

Table IV- (Turnover & Net Operating Profit/ (Loss) of Consultancy group)

0

200

400

600

800

1,000

1,200

1,400

Rs:M

illio

n132

69.9 130

297128

133

206

631

1260

2006 2007 2008 2009 2010


49


Financial Flows

Financial flows during the year 2010 in terms of collection of money from the clients are given below compared with past four years period.

Assets

The total assets of the corporation grew by 43% during the year. The corporation increased its current assets to Rs: 5,447 million from Rs: 3,808 million in 2009.

Mechanical & Electrical group The turnover M & E division has decreased to Rs: 183 million in comparision with that of Rs: 274 million in 2009. The net operating profit of Rs: 3.9 million of the division in the previous year, reduced to a net operating loss of Rs:73.5million in 2010.

Collection of Finance Corporation

Growth of Assets

Table VI (Cash Collection of the Corporation)

Table V (Turnover & Net Operating Profit / (Loss) of Mechanical & Electrical group)

Table VII (Growth of Assets)

Turnover & Net Operating Profit/ (Loss)

-100

-50

0

50

100

150

200

250

300

Rs:M

illio

n 84

145

274

183

-73

3.910.2

-25-59

120

2006 2007 2008 2009 2010Turnover Net Operating Profit/(Loss)

2008 2009 2010Non-Current Assets 128 120 162Current Assets 2,689 3,808 5,448

Rs:M

illio

n

0

1,000

2008 2009 2010

2,000

3,000

4,000

5,000

6,000

Non-CurrentAssets

CurrentAssets

0

1,000

2,000

3,000

4,000

5,000

6,000

Rs:M

illio

n

2006 2007 2008 2009 2010

Cash Collection

18772422 2783

5000

4784

Other Revenues

In Comparision with the previous year, other income was decreased from Rs.26.8 million to Rs. 14.2 million where as the rent income was increased by 21% respectively

2006 (Rs'000) 2007 (Rs'000) 2008 (Rs'000) 2009 (Rs'000) 2010 (Rs'000)

Rent 6,024.00 12,770.00 7,122.00

5,938.00 7,208.00

Sales of Fixed Assets(Unserviceable Assets) 8,813.00

495.00 410.00 12,006.00

Advertisement 1,203.00 2,995.00 3,627.00

471.00

Over head Bridge 743.00 680.00 671.00

569.00

Other(Excluding Provision-2004) 1,007.00

8,260.00 644.00 7,835.00 6,816.00

17,790.00 25,200.00 12,474.00 26,819.00 14,025.00

Table VIII (Increase of Other Income)


Construction Group Key Members of the Management

Mrs.G.A.L.Nonis - Deputy General Manager

Mrs.P.D.Karawita - Manager

Mr.A.P.K.Manamperi - Actg. Manager

Mr.K.M.T.B.Jayasundara - Actg. Manager

Mr.Ranjan Fernando - Chief Engineer (Actg.)

Mr. K.A.Shantha Kumara - Actg. Manager

Mr.A.M.S.T.B.Alahakoon - Actg. Manager

Mr.W.G.A.Gajasinghe - Actg. Manager

Major Activities

Heavy and light Civil Construction work and Building Construction work.

Review of Progress

The total turnover and the Profit of the Construction Group during year 2010 were Rs.2751 Million and Rs.96.3 Million respectively. It is an increase of Rs. 333 Million in turnover compared to the previous year. As in the past, S.E.C. Construction Group was able to keep its position as the Main Contributor to the existence of S.E.C. contributing Rs. 213.0 Million in year 2010.

Construction Group has continued the post war rehabilitation works at Manner District during year 2010 even amidst the other major Construction works such as Construction of Cricket Stadium at Pallekele for cricket World Cup 2011,Construction of Para-Clinical Building at University of Rajarata, Construction of Multi Storied Building for Disaster Management Centre and etc.

Though the turnover of Engineers/Technical Staff of Construction Group was high during 2010 due to its poor remuneration compared to other similar organizations, it could attract Junior Engineers/Technical Staff who gained valuable experience under Senior Engineers.

No Site No Name of the ProjectContract

Sum(In Millions)

1 1527 Library Building at university of Peradeniya 67.40

2 1556 Proposed Boys Hostel Complex ,Hettiyawaththa. 87.35

3 1564-I Extra Hostel Complex , University of Moratuwa 69.68

4 1596 Prison Complex, Pallekale 373.66

5 1601-I Proposed Construction of Grange System--Sainthamarthu 36.87

6 1601-II Proposed Construction of Water Project-Sainthamarthu 9.19

7 1615 Para-Clinical Building for Faculty of medicine university of Rajarata 219.43

8 1630-III Construction of Service Building for National Zoological Garden ,Pinnawala 23.57

9 1631 Building of Buddhasrawaka Bikku University 83.34

10 1647 Construction of Disaster Management Centre, Colombo 07 195.14

11 1671 Proposed Construction of Chain Link Fence at president’s House, Kandy-Stage I 8.50

12 1671/1 Proposed Construction of Chain Link Fence at President’s House,Kandy-Stage II 17.50

13 1643/11 Construction of one unit of quarters for an employee (house type 01) 5.93

14 1643/111 Construction of one unit of quarters for an employee (house type 02) 8.15

15 1660 Reconstruction & Refurbishmentof Inland Revenue Department Building, Colombo 02. 240.00

16 1674 Proposed Repairs and Rectification works for Lady Lochore Lean Fund Building, Colombo 02. 1.25

17 1680 Rehabilitation & Reconstruction of Damaged Building in 18 GN Division in Vavuniya District 21.90

18 1683/1700 Repair & Reconstruction of Education Sector Buildings in Mannar 49.04

19 1684/1701 Repair & Reconstruction of Local Government Buildings in Mannar 33.23

20 1685/1702 Repair & Reconstruction of Health Sector Buildings in Mannar 54.60

21 1697/1704 Repairs & Reconstruction of Corporative Sector Buildings in Mannar 12.32

Projects Completed in 2010

AnuradhapuraBuddhasrawaka Bikku University

Annual Report 2010 | 15

No Site No Name of the Project Contract Sum (In Million)

1 1671/11 Construction of Chain Link Security Fence Stage III at President’s House Premises, Kandy 13.69

2 1713/1 Supply & laying of pipe, construction of wash out chambers, pump house & fixing of specials for Zoological garden at Pinnawala 12.46

3 1713/11 Construction of Storm Water Collection & Disposal System for Depart-ment of National Zoological Gardens at Pinnawala 7.40

4 1713/111 Construction super structure for Zoo service Buildingfor Zoological Garden at Pinnawala 119.57

5 1713/1V Electrical Distribution Network System for National Zoological Garden at Pinnawala 149.48

6 1718 Construction of International Cricket Stadium, Kengalla, Pallekele 857.387 1615 Para-Clinical Building, Faculty of medicine, university of Rajarata 219.43

8 1723 Proposed Building Complex (stage I) for Sri Lanka BureauEmployment, Yatawatta, Godigamuwa, Tangalle 79.50

9 1735 Supply & installation of Passenger Lift with facilities for Disabled Per-sons at Court Complex, Mount - Lavinia 8.58

10 1739 Construction of Library Building for Gampaha Wickramarachchi Ayurveda Institute 68.37

11 1741 Proposed 2 Nos of Hostels, 400 mtrs. Athletic running track &Pavilion for Tholangamuwa Central College, Tholangamuwa 213.80

12 1742 Construction of Cricket Ground, Pavilion, Three Storied class room block and improvements to Badminton Court at Kegalu Vidyalaya 249.04

13 1745Proposed Residential Training Center for Migrant workersat Mathugama for Sri Lanka Bureau of Foreign Employment, Mathugama.

25.00

14 1746 Construction of Building for the Faculty of Buddhist Studiesfor Buddhasrawaka Bikku University at Anuradhapura 239.37

15 1747 Construction of Disaster Management & Coordination Centre – Stage II 385.71

16 1750 Proposed four Storied Building (Block C) for District Secretariat at Matara Fort 139.02

Projects Awarded in 2010

17 1751 Construction of Bus Stand at Gunasinghepura 13.6018 1753 Construction of Animal Nursery at National Zoological Gardens 49.04

19 1753/1 Construction of Two units of Staff Grade Quarters at National Zoolog-cal Gardens, at Dehiwala 19.20

20 1753/11 Construction of Water Sump at National Zoological Gardens at Dehiwala 7.0021 1753/111 Construction of Reptilian at National Zoological Garden at Dehiwala 14.1822 1756 Construction of Administration Building & Section I, Remand Building 151.7023 1757 Construction of Pola at Nugegoda 72.6124 1761 Proposed Commercial Complex – Stage II at Radampola 21.52

25 1766 Construction of two storied building including Central Dispensary and Community Medical Centre, Akaragama, Minuwangoda 22.70

26 1796 Proposed Buddashrawaka Bikku University – Construction of Bound-ary Wall from main gate, Stage 1 1.85

27 1796 – 1 Proposed Buddhashrawaka University- Construction of Internal Roads – Stage 1 5.03

Total 2921.50

No Site No Name of the Project Contract Sum(In Millionn)

1 1648 Head Office Building for Provincial Road Passenger TransportAuthority, Battaramulla 13.60

2 1753 Construction of Animal Nursery at National Zoological Gardens 49.04

3 1652 Construction & Completion of the Proposed Development of Bus Stand at Delgoda 57.44

4 1677 Construction of Bus Stand & Commercial Complex, Highlevel Road, Homagama 56.71

5 1705 Clinical Building for Faculty of Medicine and Applied Science, RajarataUniversity, Phase 01 & 02 913

6 1713/1 Supply & laying of pipes ,construction of washout chambers, pump house & fixing of specials for Zoological Garden at Pinnawala 12.46

7 1713/11 Construction of Storm Water Collection & Disposal System forDepartment of National Zoological Gardens at Pinnawala 7.40

8 1713/111 Construction of Super Structure for zoo service Building for National Zoological Gardens at Pinnawala 119.57

9 1713/iv Electrical Distribution System for Department of NationalZoological Gardens at Pinnawala 149.48

10 1718 Construction of International Cricket Stadium at Kengalla,Pallekale 857.38

11 1723 Proposed Building Complex for Sri Lanka Bureau of foreignEmployment Yatawatta,Godigamuwa,Tangalle 79.50

12 1735 Supply & Installation of Passenger Lift with Facilitiesfor disabled People at Court Complex, Mount Lavinia 8.58

13 1739 Construction of Library Building for Gampaha WickramarachchiAyurwedha Institute 68.37

14 1741 Proposed two Hostels, 400m athletic Running Track & Pavilion for Tholangamuwa Central College, Tholangamuwa 213.80

15 1742 Construction of Cricket Ground, Pavilion, Three Storied class room Block and Improvements to Badminton Court at Kegalu Vidyalaya 249.04

16 1745 Proposed Residential Training centre for Migrant WorkersAt Mathugama for Sri Lanka Bureau of Foreign Employment 25.00

17 1745/1 Proposed Residential Training centre for Migrant Workers-Class Room Block at Mathugama for Sri Lanka Bureau of Foreign Employment. 13.40

18 1746 Construction of a Building for the Faculty of Buddhist Studiesfor Buddasrawaka Bikku University at Anuradhapura 239.37

19 1747 Construction of Disaster Management & Coordination Centre - Stage 11 385.7120 1750 Proposed Four Storied Building for District Secretariat at Matara Fort 139.0221 1751 Construction of a Bus stand at Gunasinghapura 13.1622 1753 Construction of Animal Nursery at National Zoological Gardens Dehiwala 23.75

23 1753/1 Construction of Two Units of Staff Grade Quarters at National Zoologi-cal Gardens, Dehiwala 19.20

24 1753/11 Construction of Water Sump at National Zoological Gardens, Dehiwala 7.0025 1753/111 Construction of Reptilian at National Zoological Gardens, Dehiwala 14.1826 1756 Construction of Administration Building and Section 1 Remand Building 151.7027 1757 Construction of Pola at Nugegoda 72.61

28 1761 Proposed Commercial Complex-Stage11 at Radampola 21.52

Project Started In 2010


Review of Progress

The Annual turnover (gross) of the M & E group for the year 2010 is Rs.183 Million. It is decreased by 33% in Comparision with the last year’s gross turnover of Rs. 274 Million.

The Project of the Reconstruction of People’s Bank Building conducted by M & E Group was commenced in the end of 2010.

Restructure Program is presently being implemented in this group with the view to Increase efficiency andproductivity.

Mechanical & Electrical Group Key Members of the Management

Mr. Jayampathy Thennakoon - D.G.M.

D.I.P. Perera - Chief Engineer

Mr. S.H.S.M.J.Hewasiliyen - Works Manager (Peliyagoda)

Mr. M.S.Eheliyagoda - Works Manager (Dolamite-Mathale)

Mr. M.W.A.H.Wijayasuriya - Works Manager (Rathmalana)

Major Activities

Steel Processing & Mechanical Operations

Maintenance of heavy Mechanical & equipment related to constructions Production of Dolamite fertilizer lime and watered salt

Face-lift ofPeople’s Bank Head Office Building

No Site no No Client Project DescriptionContract

Sum(Rs.Milion)

1 104 CPC Refinery SapugaskandaExecute service & necessary repairing jobs of the flare stack unit including 96v1,v2 vessels during MSD-2010 .

0.99

2 1710 Buddhist & PaliUniversity of Sri Lanka

Buddhist & Pali University of Sri LankaElectrical re-wiring at Hostel BuildingBuddhist & Pali University.

1.15

3 1711 CMC Reconstruction of Sewer manhole atDuplication Road/Lorenz Road Junction 1.9

4 1712 CMC Improvement of storm water drainage system at Saunder’s Place 8.99

5 1732 Internal-SEC CC Refurbishment of R Premadasa stadium 95

6 - Internal-SECConstruction

Construction of Cricket Stadium atPallekale

7 1734 Inland RevenueDepartment

Maintenance of the Inland RevenueDepartment Head Office Building 0.95

8 1736 Sri Lanka Army Repair work of Antenna Tower at Palaly 6.96

9 1743 Road DevelopmentAuthority

Reconstruction of bridge no.5/2 of Marandagahamula-Badalgama Road 4.04

Total 119.98

Projects Started in 2010Projects Completed in 2010

No Project No Client Project DescriptionContract

Sum(Rs.Milion)

1 104 CPC Refinery, Sapugaskanda Execute service & necessary repairing jobs of the flare stack unit including 96v1, v2 vessels during MSD-2010

0.99

2 1710 Buddhist & Pali University of Sri Lanka

Electrical re-wiring at Hostel Building,Buddhist & Pali University 1.15

3 1711 Colombo MunicipalCouncil.

Reconstruction of Sewer manhole atDuplication Road/Lorenz Road Junction 1.90

Total 4.04

No Site no No Client Project DescriptionProject Value

(Rs. Milion)

1 104 CPC Refinery, SapugaskandaExecute service & necessary repairing jobs of the flare stack unit including 96v1,v2 vessels during MSD-2010 . 0.99

2 1710 Buddhist & Pali University of Sri Lanka

Electrical re-wiring at Hostel BuildingBuddhist & Pali University. 1.41

3 1711 Colombo Municipal Council. Reconstruction of Sewer manhole atDuplication Road/Lorenz Road Junction 1.90

4 1712 Colombo Municipal Council Improvement of storm water drain system at Saunder’s Place 8.99

5 1725 Road Development Authority Raising up of the bridge at Nattupana, Agalawatta. 3.98

6 1732 Internal-SEC Refurbishment of R Premadasa stadium 957 - Internal-SEC Construction of Cricket Stadium at Pallekale -

8 1734 Inland Revenue Department Maintenance of the Inland RevenueDepartment Head Office Building

0.95 per month

9 1736 Sri Lanka Army Repair work of Antenna Tower at, Palaly 6.96

10 1737 Road Development Authority Construction of Bridge on Meepe-Ingiriya Road in Kalutara District 4.14

11 1743 Road Development Authority Reconstruction of bridge no.5/2 of Marandagahamula-Badalgama Road 4.04


Reconstruction of Bridge no 7/5 onNayapamulla-Unanwita- Batuwangala Road 4.34

13 1754 People’s Bank Head Office Face Lifting of Peoples Bank Head Office Building 356.54

14 1755 Road Development Authority Construction of Bridge across DehiwalaCanal at Dehiwala for Dehiwala Marine Drive 15.623

15 1760 Urban SettlementDevelopment Authority

Refurbishments of the Damaged canopies in Sahaspura 2

16 1762 CMC Repair of Collapsed Sewer Line, Galle Road Wellawatta 21.95

Total 528.813

Projects Awarding in 2010


Review of Progress

In year 2010, the Construction Components Group hit the record turnover of Rs. 1770 million the highest ever turnover that the group has produced so far. In comparision with the previous year, it is an increase of Rs. 1,105 million. The turnover’s steadiness arose mainly from Kettharama project, other sub projects and Pre-cast yard.

The group generated a net operating profit of Rs. 77.1 million in the year, which was mainly contributed by the Pre-cast yard at Ekala and Sleeper yard at Dematagoda with 37.5 million and 29 million respectively, besides the profit of 10.6 million from the other yards including Rathmalana, Peliyagoda and Dankotuwa.

Also, the value of successfully completed projects in 2010 amounts to Rs. 72.08 million, which include the projects such as Sri Lanka North Cooperation Project – N.H.D.A, Power Plant Project of the C.E.B and the Construction of Two Storied Building for Sri Lanka Rupavahini Corporation.

On the other hand, the value of the awarded projects in 2010 which include Kettharama Project for Sri Lanka Cricket, Seruwavila Project for NHDA and Ranaviru Apparels Project for Sri Lanka Army, amount to Rs. 1439.24 million.

Construction Components Group Key Members of the Management

Mr. A.A. Piyadasa - Deputy General Manager

Mr. A.P. Tennakoon - Actg. Manager (Yards)

Mr. L.A.L. Liyanarachchi - Actg. Manager (Projects)

Major Activities

Pre – Cast Concrete Work

Making of Bricks and Blocks

Manufacturing of Building Materials

Construction of Pre – Cast Building

Refurbishmentof R.PremadasaInternational CricketStadium

No Site No Client Project Description Project cost(Rs.Milion)

1 1650 Sri Lanka Railways Construction of Twin flats for way and works staff for Sri Lanka Railways at Galle. 7.80


Removal of stores buildingbelonging to Ceylon Fertilizer Company at Hunupitiya.

21.45

3 1673 Ceylon Electricity BoardFencing of the site at Mutur East for the Trincomalee coal power project of Ceylon Electricity Board

19.40

4 1682 Milco (Pvt.) Ltd. Construction of Pre-fabricated building for Regional Manager's office at Meepe 3.45

5 1686 Sri Lanka RupavahiniCorporation

Construction of Two storied building for Sri Lanka Rupavahini Corporation. 15.35

6 1695 Sri Lanka Cricket Construction of Resting Shed at RPICS 2.30

7 1708 Sri Lanka Bureau of Foreign Employment

Repair and Improvement of existing build-ing for SLBFE Sabaragamuwaprovincial office Ratnapura

2.33

Total 72.08

No Site No Client Project Description Project cost(Rs.Milion)

1 1714 Sri Lanka Cricket Refurbishment of R.PremadasaStadium under Sri Lanka Cricket. 1,235.04

2 - Aviation Services (Sri Lanka)Limited

Pre Cast yard casting and supplyconcrete tense posts to the Air Port and Aviation Service ( Sri Lanka)Limited at Mattala 14.03

3 1724 State Engineering corporation of Sri Lanka

Construction of bridges in Kaluthara District 5.00

4 1728 RDAConstruction of Culverts onSomawathiya –Seruwavila Road –From (6+900)Km to (13+500)Km

38.13

5 1729 RDAConstruction of Culverts onSomawathiya –Seruwavila Road –From (13+500)Km to (22+000)Km 40.48

6 1730 RDAConstruction of Culverts onSomawathiya –Seruwavila Road –From (22+000)Km to (32+100)Km 35.43

7 1733 Sri Lanka Army

Construction of 2 nos of single stores building (OR’s mess, Corpral’s club) and three storied building (OR’S billet) for Ranaviru Apparels at Alawwa.

53.11

** All values are without VAT


Projects Awarding in 2010

8 1749 NHDANawagampura community centerrenovation project underNagamupurawara Program 4.52

9 1748 NHDA Kirulapura community center renovation project under Nagamupurawara Program 4.27

10 1758 Buddhasrawaka BikkuUniversity Anuradhapura

Supply & erection of 2.4m high precast boundary wall for Buddhasrawaka Bikku University, Anuradhapura 2.20

11 1759 NHDAConstruction of proposed communitycenter for Sri Wickramapura Housing Scheme 7.03

Total 1,439.24

** All values are without VAT


Review of Progress

The turnover during the year was remarkable. Consultancy group undertook the Management Contract of the Refurbishment of the Department of Inland Revenue Building of which the original contract price was Rs. 1041.27 million. Except for the civil construction component of the project, all specialized items of work were carried out by the consultancy group by sub contracting to specialists. This project was successful and the client has expressed satisfaction on the project. The building was handed over on time. With this experience, Consultancy Group envisages undertaking similar specialized projects in future.

Another major project, for which consultancy services were completed up to tender stage and construction was commenced towards end of the year is the Clinical Building at Anuradhapura for the University of Rajarata. The esti-mated construction cost of this project is Rs. 736 . 98 million (Excluding VAT).

However subsequently due to the client’s added requirements, the total cost was increased to Rs.1.28 bil-lion (Excluding VAT & Consultancy fee) for which approval is yet to be obtained. Other projects commenced during the year are as follows Mention the projects.

Most of these Consultancy Projects were undertaken was for the provision of consortium Consultancy Services including Architectural, Structural Services, Electrical and Specialist Services such as Air conditioning & Fire fighting and Quantity Surveying.

Consultancy Group Key Members of the Management

Mr. M.W.J.L. de Silva - Deputy General Manager

Mr. M.D. Pathmasiri - Chief Engineer (Designs)

Ms. Dharshini Gamage - Chief Architect

Mr. L. Ramanayake - Chief Quantity Surveyor

Mr. S. Hapuarachchi - Chief Engineer (Electrical)

Mr. Hysinth Ranasinghe - Senior Architect

Ms. Rangika Alwis - Senior Architect

Mr. W.P.Sudharshana - Senior Architect

Mr. D.T. Rajasekaran - Senior Engineer

Mr. Vernon Fernando - Senior Engineer

Ms. Nirmali Jayakody - Senior Engineer

Mr. J.C. Kannangara - Senior Engineer

Ms. Udeni thalagalaarachchi - Senior Quantity Surveyor

Ms. Menaka Jayasinghe - Senior Quantity Surveyor

Major Activities

Building and Civil Engineering Consultancy Works

No Site No Project DescriptionEstimated Cost of

Construction (Rs.Milion)

TotalConsultancy Fee

(Rs.Milion)

1 2007-13 Proposed boys' hostel for 400 students at Mihintale 142 8.5

2 2007-13 Proposed boys' hostel for 400 students at Mihintale 142.7 8.56

3 2007-14 Proposed Student / Staff Canteen & Student Centre at Puliyankulama 37 2.22

4 2007-32 Para Clinical Building Complex at Saliyapura wing I & wing II 219.4 13.16

5 2007-35 Proposed Building Complex, Faculty ofArchitecture, University of Moratuwa 46 2.76

6 2008-99 Proposed building Complex ‘Ola script’,University of Kelaniya 7.9 .4

7 2008-100 Proposed three storied New Canteen Building University of Kelaniya 15.1 .9

8 DM-1288 Proposed three storied Building, National Transport Commission 86.3 5.1

9 2008-82 Proposed three storied Building Lanka German Technical College 51 3

10 2008-05 Proposed Administration Building, Buddhasrawaka Bikku University 74.8 4.49

11 2007-05 Computer Laboratory & Computer UnitStage 1 60.1 3.6

12 2007-57 Proposed boundary wall Stage 11, Faculty of Engineering, Hapugala 14.2 .8

13 2009-16 Inland Revenue Building 1,608 80.4


Staff on Permanent and Contract Basis in Relation to the Last Two Years

Human Resources & Administration DivisionKey Members of the Management

Mr. E.A.R. Edirisinghe - Deputy General Manager (HR & A)

Mr. E.A.R. Edirisinghe - Manager -Development & Training

Mrs. O.D.G.S.Jayaweera - Legal Officer

Mr. K.L.M. Samarathunga - Assistant Personnel Manager

Mr. Gamini Makolage - Administrative Officer

Ms. Tharukshi Liyanage - Administrative Officer

Mr. Major.D.N.R.Peiris - Chief Security Officer

Mr. Nimal Mendis - Public Relations Officer

Mr. I.D. Dayananda - Transport Officer

Mr. K.S. Pushpakumara - Welfare Officer

In the year 2010 total number of employees of the corporation was 2346.Among them ,there were1659 permanent employees while 610 were on contract basis. The other 74 employees were on casual basis Comparison of staff on permanent and contract basis in relation tothe last two years are as follows

Description 2010 2009 2008

Permanent Contract Permanent Contract Permanent Contract

1 Chairman & Working Director 03 02 - 02

2 Senior Management Team 08 03 06 06 06 06

3 Engineer(Information Technology) 01 01 - 01

4 Engineer(Mechanical) 01 01 - 01

5 Engineers (Civil / Mechanical & Elect.) 48 97 53 67 59 40

6 Architects 13 15 14 10 16 08

7 Quantity Surveyors 04 25 04 15 05 04

8 Accountants 03 05 03 05 03 05

9 Administer 03 02 05 03 05 04

10 Other Executive Grades 37 15 34 10 35 04

11 Superintendent (C/M/E) 27 123 29 67 34 38

12 Draughtsman & AQSS 42 34 42 16 36 16

13 Leader of Work 25 31 25 27 20 27

14 Clerical & General 175 142 184 59 182 27

15 Security Services 116 12 126 02 89 02

16 Minor Staff 52 07 52 02 47 -

17 Skilled Staff 419 42 506 00 266 15

18 Unskilled Staff 687 53 689 03 417 03

19 Sub Total 1659 610 1772 293 1,214 193

20 Grand Total 2269 2065 1,407


Actions have been taken in 2010 to discontinue the services of casual employees who were recruited under H&T Nos, with the closing down of the worksite. The following actions were also done by the HR Division in the year 2010.

Rs. 2000/- was paid to employees as a special payment for New Year. As in the year 2009, Rs.10,000/-was paid as bonus in the month of December. It was also decided to make a payment of Rs. 5000/- in the next year as a special New Year payment.

• Technical & Non – Technical categories were recruited to the Corporation as new employees.

• Actions were taken to implement the public Enterprises Circular No, 44/52, which states that the retirement age is 57 years.

• Distress loans were duty paid to the employees.

• Skilled employees served in different categories were grated leave to obtain NVQ qulifications.

• The categories of employees in the HR & Administration Division are as follows

1. Deputy General Manager2. Manager (Training & Development)3. Asst. Personnel Manager4. Legal Officer5. Admin. Officer6. Welfare Officer

There are 37 HR& Admin. Division

Legal Unit

The following cases, which have been filed against SEC by 17 workmen who worked in the sites of “Sainthmarthu” and “Periyaneelawani” on worksites basis, claiming their wages and reinstatement back, were dismissed in favour of SEC by labour Tribunal, Ampara on 25.05.2010. The cases are LT 522/2009, 523/2009, 524/2009, 525/2009, 526/2009, 527/2009, 528/2009, 529/2009, 530/2009, 531/2009, 532/2009, 533/2009, 534/2009, 535/2009, 536/2009, 537/2009, 539/2009.

Civil Appellate case NO CA 1027/96, an appeal by former employee’s wife against SEC at Civil Appellate court claiming compensation for her husband’s death, have been dismissed on 15.09.2010, in favour of SEC

Colombo District Court Case has been settled on 12.11.2010. No. DMR 05865/2010 which has filed by Sri Lanka Telecom against SEC at Colombo District Court, claiming damages for their Telecom cables. By paying Rs. 175,000/- instead of Rs. 216,715.29 SEC have claimed Rs. 175,000/- pertaining to the case, from relevant insurance Company.

Training has been provided for 210 students from Universities and Technical Colleges who have been registered with NAITA and Technical Training Authority in the following categories.

Engineer (Civil) Quantity SurveyorSuperintendent (Civil) ForemanWelder Electrician

In addition, as per in the previous year we have sent technical or non- technical officers to local universities in order to obtain Post Graduate Degrees. Furthermore Technical Officers were sent to foreign and local short training courses.

Finance DivisionKey Members of the ManagementMr. P.A.P.A. Panawala - Deputy General Manager (Finance)

Mr. P.M.A. Karunasinghe - Accountant (Construction)

Ms. K.W.M.L.D. Keerthiratne - Accountant (Construction)

Mrs. A. Nilupa De Silva - Accountant (Financial Accounting)

Mrs. K.M.G.R.W. Kariyawasam - Accountant (Salaries & Wages)

Mrs. B.L. Kusum Dayani - Accountant (Payments)

Mr. K.B.G.H.N. Kariyawasam - Accountant (Construction Components)

Mr. M.M. Anorathna - Accountant (Consultancy)

Mrs. T.S. Apsara Rohan - Accountant (M&E)

Review Of Progress

Finance Division is serving all Operational and Service Groups of the State Engineering Corporation of Sri Lanka (SEC)

The Finance Division continued to support the operational groups of the SEC by providing essential services such as payment of Salaries and Overtime, payment of suppliers and subcontractors and providing monthly manage-ment information.

Because of the efficient Treasury Management of the Corporation by the Finance Division, interest income on Fixed Deposits and Repo interest income reached to Rs 15 Million for the year 2010 in spite of cash flow con-straints faced by the SEC

SEC undertook the massive Kettarama and Pallekale International Cricket Stadium projects during the year 2010 which were completed during a very short period of time for the Cricket World Cup. The SEC had to employ many sub-Contractors and Labour Contractors to achieve this uphill task. The payments for all those Sub-Contractors attached to these two massive projects were managed by the Finance Division with great difficulty since a major part of the income was not received from Sri Lanka Cricket.

The successful performance of the Finance Division was made possible due to the support extended by the Chairman and the Board of Directors and especially, the hard work and commitment of the Finance Staff at all levels.

7. Secretarial Asst.8. Management Asst.9. Book Binder10. Lift Operator11. Messenger 12. Skilled & Unskilled Employees

Internal Audit DivisionKey Members of the Management

Mr.R.M.A.S.Weerasena - Chief Internal Auditor

Internal Audit ReportsThe annual Audit programe for the year under review, was approved by the Board of Directors, and submitted to the Auditor General for his concurrence which was received.

During the year 2010, the Chief Internal Auditor Submitted 59 Audit reports to the management. Summarized versions of those reports were submitted every quarter, to the Audit and Management – Committee and also to the Board of Directors.Four sesions of the Audit & Management Committee were held during the year 2010.

Summarized Statements of the Internal Audit Reports were also submitted to the Auditor General’s Department.

Pre- Audit Checks Final Payment dues to 149 employees, Gravity payment dues to 42 employees, No claim certificate relevant to 153 Employees and Release of Final Payments on Sub Contracts 205 were checked.Internal Audit Officers also attended at 196 Tender Openings during the year under revies.


1:3 Scope of Audit and Basis of Opinion

1:2 Responsibility of the Management for the Financial Statements

My responsibility is to express an opinion on these financial statements based on my audit. Audit opinion, com-ments and findings in this report are based on review of the financial statements presented to audit and sub-stantive tests of samples of transactions. The scope and extent of such review and tests were such as to enable as wide an audit coverage as possible within the limitations of staff, other resources and time available to me. The audit was carried out in accordance with Sri Lanka Auditing Standards to obtain reasonable assurance as to whether the financial statements are free from material misstatements.

The audit includes the examination on a test basis of evidence supporting the amounts and disclosures in finan-cial statements and assessment of accounting policies used and significant estimates made by the management in the preparation of financial statements as well as evaluating their overall presentation. I have obtained suffi-cient information and explanations which to the best of my knowledge and belief were necessary for the purpose of my audit. I therefore believe that my audit provides a reasonable basis for my opinion. Sub - sections (3) and (4) of the Section 13 of the Finance Act No. 38 of 1971 give discretionary powers to the Auditor General to deter-mine the scope and extent of the audit.

Management is responsible for the preparaation and fair presentation of these financial statements in accord-ance with Sri Lanka Accounting Standards. This responsibility includes : designing, implementing and maintaning internal control relevant to the preparation and fair presentation of financial statements that are free from mate-rial misstatements, whether due to fraud or error : selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

The ChairmanState Engineering Corporation of Sri Lanka

Report of the Auditor General on the Financial Statements of the State Engineering Corporation for the year ended 31 December 2010 in terms of section 14(2)(c) of the Finance Act No.38 of 1971.

The audit of Financial Statements of the state Engineering Corporation of Sri Lanka for the year 31 December 2010 was carried out under my direction in pursuance of provisions in Article 154(1) of the constitution of the Democratic Socialist Republic of Sri Lanka read in conjunction with section 13(1) of the Finance Act, No. 38 of 1971 and Section 29(2) of the State Industrial Corporation Act, No. 49 of 1957. My omments and observations which I consider should be published with the Annual Report of the Corporation in terms of Section 14(2)(c) of the Finance Act appear in this report. A detailed report in terms of Section 13(7)(a) of the Finance Act was sent to the Chairman of the Corporation on 27 October 2011.


ConstructionGroup

Mechanical &Electrical Group

Construction Components Group

Consultancy Group

BuddhasrawakaBikku University

Face-lift ofPeople’s Bank

Head OfficeBuilding

Refurbishment of R. PremadasaInternationalCricketStadium

Proposed three Storied Building,

Lanka German Technical College

2. Financial Statements

2:1 Opinion

2:2 Comments on Financial Statements

2:2:1 Non-compliance with Sri Lanka Accounting Standards

2:2:2 Accounting Policies disclosed in the Financial Statements

2:2:3 Accounting Deficiencies

The following instances of non-compliance with Sri Lanka Accounting Standards were observed.

(a) According to the Standard No. 14 and temporary changes in taxes should be shown under the Deferred Tax Account. Nevertheless, the Deferred Tax Account had not been adjusted for the changes in the taxes in the year under review.

(b) Even though a provision of Rs.247,918,919 had been made for payment of gratuity in terms of Standard No. 16, a specific investment or a special fund had not been created for financing the responsibility of that provision.

(c) According to Standard No. 18, when the book value of fixed assets reaches zero value such assets should be revalued. Nevertheless, fixed assets costing Rs. 255,710,022 had been shown in the financial statements at a nominal value of Rs. 1 instead of being revalued.

(d) According to Standard No. 28, the assets and liabilities of each Division should be disclosed separately in the financial statement relating to each such Division. Nevertheless the Corporation had not taken action accord-ingly.

The Corporation had taken action in terms of the Accounting Policy No. 1.4(b) in the computation of profits on contracts in the preceding years to account for the expenditure on contracts with less than 20 per cent work completed as theexpenditure for the year. Nevertheless, profits had been computed on such contracts in the year under review on the basis of the percentage of work completed.

The following observations were made.

Even though the provision for slow moving assets as at the end of the year 2010 should have been made in the financial statements by carrying out a proper computation, the provision of Rs.21,217,216 made for the year 2009 had been carried forward. Nevertheless, the value of the slow moving assets for the year 2010 as computed by the Stock Verification Committee amounted to Rs.3,092,177

Even though the balances of Inter – Departmental Current Accounts of each Division of the Corporation should be reconciled against each other at the end of the year, a difference of Rs.9, 939,086 was observed due to the faulty reconciliation. Even though the debit/ credit balances of the Inter – Departmental Current Accounts should be set off against each other and eliminated from the financial statements, the total of the balances of Current Accounts of the respective Departments totaling Rs.103,082,193 had been shown as debtors and a credit balance of Rs.93,143,107 had been shown as creditors in the financial statements.

So far as appears from my examination and to the best of information and according to the explanations given to me, I am of opinion that the State Engineering Corporation had maintained proper accounting records for the year ended 31 December 2010 and except for the effects on the financial statements of the matters referred to in paragraph 2:2 of this report, the financial statements have been prepared in accordance with Sri Lanka Accounting Standards and give a true and fair view of the state of affairs of the State Engineering Corporation as at 31 December 2010 and the financial results of its operation and cash flows for the year then ended.

(a)

(b)

A balance of Rs.69, 878,678 to be debited as receivable from the sub-contractors had been shown as receivable under the Foreign Purchases Control Account and the Consumer Letters of Credit Account.

Instead of accounting for foreign travel expenses, advertisement charges and stamp fees amounting to Rs.838, 355 as revenue expenditure those had been brought to account as sundry debtors

An unusual credit balance of Rs.6, 565,121 in the Payment of Cheque with Order Advances Account and an unusual debit balance in the Mobilization Advances from Clients Account amounting to Rs.48,725,004 had not been identified and adjusted appropriately.

Bank Charges and commission amounting to Rs.30,520,246 had been shown under the sundry expenses instead of being shown under the financial expenses

In view of that erroneous adjustment of the Inter - Departmental profit margins in the computation of the overall profit of the Corporation, the correct accumulated profit of Rs.131,175,066 on the modernization of the Inland Revenue Building had been recognized as Rs.197,706,666. Thus the profit for the year had been overstated by a sum of Rs.66,531,602.

Even though the receivables on the Modernization of Inland Revenue Building Project amounted to Rs.142.32 million it had been shown in the accounts as Rs.450.61 million, thus overstating the balance receivable by a sum of Rs.308.29 million.

(c)

The balance of the Provision Account created for covering the expenditure that may be arisen during the Maintenance Period of construction contracts completed as at 31 December 2010 was amounted to Rs.1, 916,238 and it was not disclosed for which worksites those provisions were related.

The difference between the balances of 05 accounts and the balances shown according to the schedules of those accounts was amounted to Rs.57, 502,020.

Out of the current and non-current assets of the Corporation, the debtors represented the highest value and a trade debtors balance amounting to Rs.3,397,632,670 remained as at the end of the year under review. The confirmation of balances relating to the amount had not been furnished to the audit. Out of this amount a sum of Rs.214,039,272 had been debtors balances older than 05 years and over 95 per cent of that amount being due from Government Institutions is a special feature. The progress of recovery of debts had been at a very low level while the trade debtors had increased by 59 percent as compared with the preceding year.

Out of the total trade creditors balance of Rs.120,956,415 balance amounting to Rs.2,769,899 had remained outstanding for over 05 years. Effective courses of action had not been taken for the settlement of these creditors balances.

Even though a sum of Rs. 22,512,074 payable to and as sum of Rs.5,356,353 receivable from the Urban Development Authority, had been brought forward by the Corporation continuously since the year 2000, no effective course of action whatsoever had been taken for the payment or recovery of those amounts. This institution was regularly seen under the trade debtors and trade creditors.

The cash fraud of Rs.805,938 committed by the cashier of the Seruwila work site had been shown from the year 2008 as a sum recoverable from him. No recoveries had been made in this connection even up to the end of the year under review. A case in this connection is pending in the High Court, Trincomalee.

According to the Audit Fee bills, the audit fees payable for the years 1987 to 2008 amounted to Rs.7,826,334 and action for payment had not been taken even up to the end of the year under review.

(d)

(f)

(h)

(a)

(b)

(c)

(e)

(g)

2:2:4 Inappropriate Disclosures

2:2:5 Unreconciled Accounts

2:2:6 Accounts Receivable and Payable

(d)

(e)


Even though a sum of Rs.1,741,893 had been shown as payable since the year 1991 for the assets of the Building Materials Corporation acquired by the Corporation, action had not been taken even up to the end of the year under review either for the payment of the amount or to settle the matter.

The amounts payable by the Corporation to the sub-contractors lapsed for over 05 years had been Rs.41,297,719 and the total payables as at the end of the year amounted to Rs. 125,448,700.

Action had not been taken even in the year under review for the settlement of the amounts totalling Rs.7,466,362 relating to the Temple of the Tooth Control Account and the Ministry of Buddha Sasana Control Account brought forward in the accounts over a long period as payable.

The balance of the Advances to Suppliers Account as at the end of the year under review amounted to Rs.40,286,942 and out of that a sum of Rs.1,246,816 had been older than 05 years. A sum of Rs.1,552,701 represented advances granted between 04 to 05 years

The issue of cheques with the Orders placed before the receipt of goods is done on a regular basis and the balance of the Cheque Advances granted with Orders Account as at 31 December 2010 amounted to Rs.167,120,857. An age analysis of the amount had not been presented.

Even though cash advances should be paid only to the cashiers of the work sites, cash advances amounting to Rs.4,560,327 had been paid to various other officers in addition to the cashiers.

The Sub-contracts mobilization advances older than 05 years amounted to Rs.17,234,856 and the advances less than 05 years old amounted to Rs.195,105,118. Out of the advances paid to the labour sub-contractors, the unsettled balances of advances as at 31 December 2010 amounted to Rs.142,756,705.

An Advance Account had been maintained for the purchase of spare parts and the balance of that account as at 31 December 2010 amounted to Rs.1,445,859.

Another Advance Account called Cash Advances for Services had been maintained and the year end balance which had not been supported by an age analysis amounted to Rs. 5,966,611.

The Corporation had granted advances in large extent regularly for various purposes and adequate action had not been taken to get settled such advances. Details appear below.

(g)

(b)

(d)

(f)

(f)

(a)

(c)

(e)

(h)

2:2:7 Irregular Payment of Advances

A sum of Rs.70,890,121 had been remitted to the Commissioner General of Inland Revenue as at the end of the year under review as the Withholding Tax on the services procured from the Corporation by the client institutions. This situation had arisen due to the failure to obtain a Tax Directive in terms of Section 153 of the Inland Revenue act, No. 10 of 2006. The Tax Directive had been obtained with effect from 01 June 2008.

he application made by the Corporation on 16 December 2010 to obtain a Tax Directive on the recovery of Withholding Tax from the interest income from fixed deposits had been rejected due to the failure of the Corporation to settle its tax liabilities properly. As such, the Bank had deducted a sum of Rs.601,263 as the Withholding Tax on interest income in the year 2010 alone and remitted to the Department of Inland Revenue. The accumulated balance of the Withholding Tax on Interest Income Account as at 31 December 2010 amounted to Rs. 5,907,715.

Even though a provision of Rs.9.5 million for tax had been made from the year 2003 without correct identification, action had not been taken up to the end of the year under review to settle the account.

The sum of Rs.87,742,509 as at the end of the year under review in the unidentified debit balance of Value Added Tax and the Goods and Services Tax included the Value Added Tax and Goods and Services Tax amounting to Rs.84,762,685 existing over a number of years and a sum of Rs.172,505,194 being the Value Added Tax receivable on inputs. The Corporation had not taken affective course of action for the settlement of these taxes.

A tax liability of Rs.136,049,594 inclusive of the penalty of Rs.41,730,813 had arisen on 20 Assessment Notices issued by the Department of Inland Revenue on the Value Added Tax, Nation Building Tax and Economic Service Tax due to the failure to settle the pasts tax liabilities properly. Action had not been taken either for the settlement of the amount or for making provision therefore in the accounts.

Despite the instructions issued against the creation of posts or filling of vacancies without the approval of the Department of Management Services, 22 unapproved posts had been created and 156 em-ployees had been recruited to those posts. Salaries amounting to Rs.29,229,345 had been paid to them in the year 2010. The Chief Architect, Chief Estima-tor and the Chief Engineer (Contract Designs) which are essential for the achievement of the objectives of the Corporation remain vacant since the year 2005 without recruitment.

Management Services Circular No. 28(ii) of 01 August 2006 and letter No. PMS/E.3/43/4/265/1 dated 25 November 2009 of the Director General of Management Services.

(a)

(c)

(e)

(b)

(a)

(d)

2:2:8 Weaknesses in the Tax Management

2:2:9 Non-compliance with Laws, Rules, Regulations and Management Decisions

Non-compliances with the following laws, rules etc. were observed.

Reference to Laws, Rules etc. Non-compliance

The Approved Cadre of the Corporation as at 01 September 1998 and the Scheme ofRecruitment

Financial Regulation 395 of the Democratic Socialist Republic of Sri Lanka

Letter No. BD/356/303/23 dated 28 April 2004 of the Department of National Budget.

Public Enterprises Circulars

Circular No. PED/28 of 31 January 2005

Circular No. 108 of 12 May 1996.

According to the approved Cadre and the Re-cruitment Procedure, the permanent unskilled cadre is 500. Nevertheless, 187 unskilled em-ployees in excess of the approved cadre had been given permanent appointments. Those had been paid a sum of Rs. 44,803,498 as sala-ries in the year 2010.

Sixteen skilled employees had been recruited in the year in accordance with the restructure pro-posals submitted in the year 2009 but not ap-proved. A sum of Rs.4,805,760 had been paid as their salaries.

Even though the Bank Reconciliation Statements should be furnished to the Auditor General on the specified dates, the particulars of reconciliations and the Bank Statements relating to Bank balanc-es of the Corporation amounting to Rs.6,939,946 had not been furnished to audit.

Even though the balance from the money re-ceived under the Voluntary Retirement Scheme in the year 2003 to 2007 remaining after the pay-ment of compensation paid should be refunded to the Treasury, the balance as at 31 December 2010 amounting to Rs.20,278,812 had not been refunded to the Treasury.

Even though the approval of the Treasury should be obtained for the purchase of motor vehi-cles by the Government Institutions, such ap-proval had not been obtained for the purchas-es of 07 double cab motor vehicles valued at Rs.10,671,360.

The Corporation had made donations amounting to Rs.2,782,139 during the year without the ap-proval of the Cabinet of Ministers.

(b)

(c)

(d)

(e)

(i)

(ii)

(i)

(ii)


National Procurement Agency Circular No. 8 of 25 January 2006

A sum of Rs.2,574,335 had been paid to two institu-tions supplying hiring car services and for 05 motor vehicles procured on hire basis without calling for bids.

The Corporation had not prepared a Procurement Plan for the year 2010 in terms of Section 4.2 of the Procurement Guidelines.

(f) (i)

(ii)

2:2:10 Lack of Evidence for Audit

3. Financial and Operating Review

3:1 Financial Review

3:1:1 Financial Results

The operation of the Corporation for the year under review had resulted in a pre-tax net profit of Rs.133,063,356 as compared with the pre – tax net profit of Rs.313,065,616 for the preceding year, thus indicating a decrease of Rs.180,002,260 in the financial results for the year under review. The decrease of in the profits earned from the construction projects in the year under review as compared with the preceding year had been the main reason for the decrease.

The evidence indicated against the following items of account had not been furnished to audit.

Items in the Financial Statements

Cheque with Order Advances Ac-count

Advances for Services

Special Cash Advance

Capital Receipts on the relocation of the Premix Yard from Narahenpita.

Balance of the Account No. 9934included in the Cash and CashEquivalents.

Cash balance of Sri Lanka StateEngineering Corporation (Qatar) Company Limited.

Sundry Expenses

Money receivable fromCustomers to the Corporation

Money Payable by theCorporation to customers

Other Creditors and AccountsPayable.

Value Rs.

167,120,857

5,966,611

4,560,327

22,656,456

1,880,176

5,958,715

737,377,194

418,909,383

1,293,651,840

12,897,756

Evidence not made available

Age Analysis

- do -

Age Analysis

Source of Receipts and Filescontaining transfer docments.

Bank Account, Bank Statements, Bank Reconciliations, Confirmation of Balance.

Bank Confirmations, BankStatements, Credit Advices. Bank Reconciliations,

Detailed Schedules.

- do -

- do -

Journal Vouchers

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

3:2 Corporate Plan and Action Plan

(a) Corporate Plan

(b) Action Plan

3:3 Operating Inefficiencies

Even though a copies of the detailed Corporate Plan prepared and updated should be furnished 15 days before the commencement of the financial year to the Auditor General, the Secretary to the Committee on Public Enterprises and to the Department of Public Enterprises in terms of the Circular No. PED 47 of 18 December 2007 of the Department of Public Enterprises and Chapter 5 of the Public Enterprises Guidelines on Good Government, the Corporation had not taken action accordingly. The Corporate Plan for the years 2010 to 2015 had been prepared in the year 2011.

The Corporation had not prepared and updated Corporate Plan and the Action Plan annually after the year 2006. As such it was observed that the Corporation did not have a clear vision of the targets for achievement in the years 2007, 2008, 2009 and 2010 and how such targets were to be achieved in the respective years. The complete withdrawal in the year 2010 of the Corporate Plan for the years 2009 to 2013 prepared in the last quarter of the year 2009 can be sited as an example

The following observations are made in this connection.

The Corporation had paid a sum of Rs.6,944,000 to a private company for the purchase of roofing sheets for the Project for the Construction of Houses for the Displaced Persons in the Menik Farm, Settikulama before the receipt of goods and a stock of roofing sheets valued at Rs. 3,318,000 only had been supplied. A case had been filed for the recovery of the sum of Rs.3,626,000 overpaid by the corporation. The amount was being settled in installments and the outstanding balance as at the end of the year under review amounted to Rs.2,466,000 was to be recovered from the company.

Even though the Corporation had cash and cash equivalents and fixed deposits amounting to Rs.171,038,073 as at the end of the year under review the Bank Overdrafts payable as at that date amounted to Rs.110,000,614. The Corporation had not paid proper attention for reducing the Bank overdrafts by utilizing such financial assets. As such a sum of Rs.2,418,917 had to be paid as over-draft interest.

The value of losses and damage that had taken place due to the lack of proper management of the work sites of the Corporation during the year under review totalled Rs.3,054,088.

The Corporation had spent a sum of Rs.34,391,557 on the motor vehicles procured on hire basis in the year under review due to the lack of an adequate fleet of motor vehicles and thatrepresented 40 per cent of the profit after tax for the year.

(a)

(b)

(c)

(d)

3:4 Deficiencies in Contract Administration

The following observations are made in this connections.

Construction of the Science and Technology Laboratory Building of the Faculty of Agriculture, University of Peradeniya had been commenced before the approval of the Bills of Quantities by the Technical Evaluation Committee. The Bills produced by the Corporation had been amended considerably by the Technical Evalu-ation Committee. As such the Corporation had to forgo a sum of Rs.2,269,446 for the work done in the year under review.

The Corporation had incurred a loss of Rs.188,493,804 as at 31 December 2010 due to incurring costs ex-ceeding in bid values even after taking into consideration of the approved price variances in respect of 16 construction contracts.

(a)

(b)


3:5 Performance

The following observations are made.

The Mechanical and Electrical Division had been running at losses continuously from the year 2001 to 2008 and earned a profit of Rs.3.8 million in the year 2009. It had incurred a loss of Rs.73.5 million again in the year under review. Accordingly the cumulative loss from the year 2001 amounted to Rs.277.2 million.

Ratmalana Yard of the Mechanical and Electrical Division had not earned any profit whatsoever during the past 10 years and its cumulative loss amounted to Rs.73.3 million.

A review of the operations of the Matale Dolomite Pre-mix Yard of the Corporation revealed that except for the year 2006, it had been running at losses in the rest of the past 13 years. A loss of Rs.4.8 million had been incurred in the year under review. The cumulative loss for the period amounted to Rs.32.6 million.

The Brick and Carpentry Products Yard of the Corporation at Dankotuwa is situated on land 07 acres in extent. A large portion of the land is underutilized. Out of the past 14 years, the operations of the yard in 12 years, including the year under review, had resulted in losses. The cumulative loss amounted to Rs.23million.

Even though the Brick and Carpentry Products Yard at Dankotuwa had been established for obtaining the brick and wooden products required for the construction works of the Corporation, the use of bricks pro-duced by that yard for construction works had been at a very low level while the bricks required had been purchased from outside. This was one reason for the losses incurred by the Yard. Similarly the consumer demand had decreased due to the prices being fixed at rates higher than those of the competitors. As such the sale of bricks in the year under review had resulted in a loss of Rs.472,221

Even though the Aluminum Workshop of the Construction Division at Ratmalana had earned a profit of Rs.19.4 million in the preceding year, it had incurred a loss of Rs.2.8 million in the year under review.

The labour costs of the Mechanical and Electrical Division and the Construction Accessories Production Units of the Construction Division of the Corporation had not been managed in a manner to suit the income. The labour costs of the Maligawatta Workshop, the Matale Dolamite Pre-mix Yard and the Peliyagoda Pre-mix Yard of that Division ranged between 54 per cent to 65 per cent as compared with the income. The labour cost of the Ratmalana Workshop of the Mechanical and Electrical Division amounted to 388 per cent as com-pared with the income.

A sum of Rs.3,159,250 had been paid in the year to 41 Marketing Promotion Officers recruited without ap-proval with a view to launching Island – wide Marketing Promotion and Publicity Programmes. Nevertheless, the turnover of the Production Workshop at Matale Dankotuwa, Ratmalana, etc. had not increased by an appreciable level and continued to remain in the loss incurring status. In addition, expenditure amounting to Rs.4,162,833 had been incurred on business promotion in the year under review.

Even though a sum of Rs.6,038,110 continued to be shown by the Corporation in the financial statements over several years as capital work in-progress, such works had not been completed even by the end of the year under review.

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

3:6 Identified Losses


A loss of Rs.158.24 million had been incurred on 31 Construction contracts executed by the Corporation in the year 2010.

The Value Added Tax amounting to Rs. 168.99 million receivable on the work done amounting to Rs. 1,408 million out of the bill value of Rs. 1,444 million on the Modernization of the Khettarama International Cricket Stadium had not been received by the Corporation from the Sri Lanka Cricket Board.The reason adduced in this connection was that the Sri Lanka Cricket Board is entitled to the Value Added Tax exemption. Neverthe-less, the Corporation had paid Value Added Tax amounting to Rs.26.38 million in making payments to the Sub-contractors.

According to the letter No. FP/06/20/03/03/19(SP-Vol ii) dated 01 February 2011 of the Director General of Public Finance of the Ministry of Finance and Planning exemption from tax had been granted to Sri Lanka Cricket Board only for the work done during the 03 months from 01 February 2011 to 01 May 2011. As such it was clear that tax exemption had not been received for the work done prior to that period. As such the Corporation had been deprived of a sum of Rs.195.37 million comprising the Value Added Tax of Rs.26.38 million paid in the bills of sub-contracts and Value Added Tax of Rs.168.99 million not received on the work done.

(a)

(b)

3:7 Transactions not supported by Adequate Authority

3:8 Uneconomic Transactions


The approval of the Board of Directors had not been obtained for the write off from books the finished stocks valued at Rs.32,051,305 and the purchase of 02 double cab motor vehicles valued at Rs.3,048,960 on lease purchase basis

Efforts had been made by the Corporation since the year 2008 to launch construction projects in foreign countries and earn income and the Chairman had, by his reply No. TH/C/SEC/FA/2009 dated 23 March 2010, informed that the Corporation was successful in securing construction projects valued at U.S.$ 3.9 million (Rs.460 million approximately) from the Maldives in the year 2009. Accordingly the Corporation had spent a sum of Rs.12,338,063 by the end of the year 2009 and sum of Rs.751,520 and Rs.41,120 had been paid in the year under review for the publication of a newspaper advertisement for the recruitment of employees for the construction of a housing complex of the Government of Libya and for obtaining private visas for an officer for 02 years in the United Kingdom respectively.

(a)

Nevertheless, the Corporation had failed to launch construction works in any foreign country, obtain any procurement or earn any income even up to the end of the year under review. All expenditure incurred had become fruitless expenditure.

The Corporation had failed to recover the sum of Rs.5,958,715 deposited in a Bank Account in Doha in the year 2009 for the Bank transactions of Sri Lanka State Engineering Corporation (Qatar) Company Limited for launching construction projects in foreign countries.

A sum of Rs.2,212,711 had been deposited in an ordinary savings account over a number of years and the annual interest received thereon amounted to Rs.50,036. Had that amount been invested in a fixed deposit at the interest rate of 7 per cent that prevailed in the year under review, an income of Rs.154,890 could have been earned.

The Corporation had to pay a sum of Rs.1,779,433 as liquidated damages in the year under review as a result of the failure to complete the construction contracts within the contract periods.

(b)

(c)

(d)

(a)

(b)

(c)

3:9 Transactions of Contentious Nature

The following observations are made.

Seventeen computers used by other institutions and fully depreciated had been purchased for Rs.232,050 contrary to the provisions in the Procurement Guidelines.

According to the agreement entered into by the Corporation with a private company on 10 November 2006 for the computerization of the Accounts Division, Administration Division and the Stock Control Division the work should have been completed within 03 months from that date. Nevertheless, only the salary system had been computerized by the end of the year 2010. Even though a sum of Rs.1,325,537 had been paid to that Company, the work had been stopped halfway.

A full-time permanent officer of the Corporation released to a temporary post in the Ministry and receiving the salary from the Ministry, had been paid an allowance by the Corporation, thus causing a financial loss of Rs.270,000 to the Corporation. Even though the Secretary to the Ministry of Constructions, Engineering Serv-ices, Housing and Common Amenities had informed the Corporation in October 2010 to recover that amount from the Board of Directors which approved the payment, the Corporation had failed to take any course of action whatsoever in that connection.


(a)

(b)

3:10 Human Resources Management


As the Corporation had failed to prepare the Scheme of Recruitment including the ‘Cadre List” and submit for approval under the cadre Restructure Proposals of the year 2009, the Corporation had not been able to recruit employees and promote employees. The Corporation had not been able to make 52 promotions relating to 07 categories of essential services.

According to the Scheme of Recruitment approved in the year 1998 the permanent cadre of the Corporation had stood at 1,991 and the total cadre as at 31 December 2010 stood at 2,283 and comprised 1,671 perma-nent cadre, 517 on contract basis, 44 casual employees and 51 others.

3:11 Internal Audit

3:12 Supply of Resources of the Corporation to other State Institution

3:13 Underutilised, Repairable, Broken Down and Slow Moving Assets

3:14 Budgetary Control

4. Systems and Controls


An internal audit of 41 work sites out of the 100 work sites in operation in the year under review had not been carried out.An Internal Audit Programme adequate to evaluate the overall performance of the Corporation had not been implemented.

The Corporation had spent a sum of Rs.3,423,724 contrary to the provisions in Section 9.4 of the Public Enterpris-es Circular No. PED/12 of 02 June 2003 on behalf of the Ministry in connection with motor vehicle hire charges, expenditure on the construction of stages and air travel costs.

Even though large quantities of underutilized, repairable, broken down and slow moving assets, the value of which cannot be determined exist in each and every work site of the Corporation over a number of years, action had not been taken even up to the end of the year under review to dispose of those on financially favorable terms or to use them effectively. The existence of those assets in the respective stores results in incurring heavy overhead costs and congestion of storage space. As such any opportunity of utilizing them effectively had also been lost.

The actual income and the actual operating profit of Rs.5,921.76 million and Rs.122.97 million respectively according to the financial statements presented by the Corporation as compared with the budgeted amounts of Rs.5,398.09 million and Rs.1,112.33 million revealed variance of Rs.523.67 million in the income Rs.989.36 million in the operat-ing profit. Thus it was observed that the budget had not been made use of as an effective instrument of financial management control.

Deficiencies observed during the course of audit were brought to the notice of the Chairman of the Corporation from time to time. Special attention is needed in the following areas of systems and controls.

H.A.S. SamaraweeraAuditor General

(a) Accounting for Contracts

(b) Accounts Receivable and Payable

(c) Cash Management

(d) Tax Management

(e) Budgetary Control and Corporate Plan

(f) Procurement Procedures

(g) Advances

(h) Contract Administration

(a)

(b)

Financial Reports• Balance Sheet

• Financial Summary

• Income Statement

• Statement of Changes in Equity

• Cash Flow Statement

• Notes to the Financial Statements & Accounting Policies

Balance Sheet as at 31st December 2010

2010 Actual Rs. 2009 Actual Rs.NOTES

AssetsNon-current AssetsProperty, Plant and Equipment 2 155,549,743 112,815,299 Investments in Shares 3 1,200,000 1,200,000 Capital Work in Progress 4 6,038,110 6,038,110

162,787,853 120,053,409Current AssetsInventories 5 401,616,002 280,905,172 Trade Debtors 6 2,615,772,542 1,577,933,537 Retention 7 741,493,365 541,221,905 Other Debtors & Receivables 8 907,930,863 547,012,010 Deposits Recoverable 9 10,994,916 8,553,754 Due from Customers 10 418,909,383 292,602,550 Fixed Deposits 11 17,636,174 16,883,505

Cash & Cash Equivalents 12 333,440,330 542,820,741

5,447,793,575 3,807,933,174

Total Assets 5,610,581,428 3,927,986,583Equity and LiabilitiesCapital and ReservesVoted Capital 13 70,000,000 70,000,000 Reserves 14 31,373,968 31,373,968

Accumulated Profit/(Loss) 15 385,976,724 319,889,739

Total Equity 487,350,692 421,263,707

Non-Current LiabilitiesLong Term borrowings 16 30,800,000 30,000,000

Deferred Liabilities 17 247,918,919 245,325,085

278,718,919 275,325,085


Balance Sheet

2010 Actual Rs. 2009 Actual Rs.NOTES

Current LiabilitiesBank Overdraft 18 110,000,614 66,516,385

Treasury Loan& Interest 19 4,006,293 4,006,293

Bill Discount Facilities 20 - 49,228,698

Trade Creditors 21 683,431,614 456,353,316

Other Creditors & Payables 22 1,291,435,451 530,520,302

Due to Customers 23 1,293,651,840 973,343,424 Mobilization Advances 24 1,461,986,005 1,151,429,373

4,844,511,818 3,231,397,791 Total Equity and Liabilities 5,610,581,428 3,927,986,583

Directors certificate in terms of Public Enterprises Circular No PED 45 The Accounting statements on pages 02-03 and Notes on pages 04 to 7A from an integral part of these Financial Statements. The Board of Directors is responsible for the preparation and presentation of these Financial Statements.These Financials Statements were approved by the Board of Directors and signed on their behalf

Chairman Director Page 1

Assets 2010 Audited

2009 Audited

2008 Audited

2007 Audited

2006 Audited

2005 Audited

Non-Current Assets Property,Plant &Equipment 155,549 112,815 120,454 128,256 95,447 61,274

Investment in Shares 1,200 1,200 1,200 1,200 1,200 1,200

Capital work in Progress 6,038 6,038 6,024 3,921

162,787 120,053 127,678 133,377 96,647 62,474

Current Assets

Inventories 401,616 280,905 357,240 274,594 200,838 132,908

Trade Debtors 2,615,772 1,577,933 1,039,671 1,197,573 722,064 599,431

Retention 741,493 541,221 422,284 320,649 295,604 227,633

Other Debtors &Receivables 907,930 547,012 380,514 311,634 216,797 106,465

Deposits 10,994 8,553 5,806 6,000 4,085 -

Cash & Cash Equivalents 333,440 542,821 542,820 161,135 171,777 157,836

Assets 2010 Audited

2009 Audited

2008 Audited

2007 Audited

2006 Audited

2005Audited

Due from customers 418,909 292,602 363,611 - - -

Fixed Deposit 17,636 16,883 - - - -

5,447,790 3,807,930 2,689,915 2,271,585 1,607,081 1,224,273

Total Assets 5,610,577 3,927,983 2,817,594 2,404,962 1,703,728 1,286,747

Equity & Liabilities

Capital & Reserves

Voted Capital 70,000 70,000 70,000 70,000 70,000 70,000

Reserves 31,374 31,374 31,374 31,374 31,374 31,374

Accumulated Profit / (Loss) 385,976 319,889 (45,280) (5,360) (134,044) (216,161)

Total Equity 487,350 421,263 247,153 96,013 (32,670) (216,161)

Non-current LiabilitiesDue to customers

Long term borrowings 30,800 30,000 30,800 40,044 59,966 68,921

Deferred Liabilities 247,918 245,325 216,353 170,864 133,120 118,525

278,718 275,325 247,153 210,908 190,086 187,446

Current Liabilities

Bank Overdraft 110,000 66,516 32,022 70,550 80,289 68,796

Interest on Treasury Loans 4,006 4,006 3,878 3,750 3,622 -

Bill Discount Facilities - 49,228 83,065 80,867 100,000 -

Trade Creditors 683,431 456,353 328,170 315,929 287,714 223,102

Other Creditors & Payables 1,291,435 530,520 527,879 682,069 523,909 403,752

Mobilization Advances 1,461,986 1,151,429 801,247 741,804 398,718 398,250

Due to customers 1,293,651 973,343 647,523 203,072 155,681 120,186

Total Equity & Liabilities 5,610,577 3,927,983 2,817,594 2,404,962 1,703,728 1,286,747


Revenue 2010 Audited

2009 Audited

2008 Audited

2007 Audited

2006 Audited

2005Audited

Revenue 5,921,760 3,794,483 2,652,217 2,219,047 1,843,109 1,118,663

Net Operating Profit/ (Loss)

Construction 96,347 203,916 138,174 94,865 105,899 68,831

M & E (59,764) 17,563 1,974 (25,230) (59,010) (58,360)

CC 77,101 32,985 51,282 43,103 84,041 2,161

Consultancy 206,495 177,423 48,572 130,442 69,862 31,507

320,179 431,887 240,002 243,180 200,793 44,140

Less: Admin Expenses 197,205 150,330 138,910 85,143 145,593 67,044

Less: Provision for Bad & Doubtful debts 19,357 29,513 58,330 54,863 52,077 19,119

Profit / (Loss) fromoperatios 103,617 252,044 42,762 103,174 3,123 (42,024)

Add: 14,025 26,819 12,114 25,200 17,790 5,638

15,678 34,263 5,471 3,102 4,479 1,481

Less: 256 62,337 769 3,610 5,489 7,191

Profit / (Loss) Before Taxa-tion 133,064 313,064 59,578 127,866 19,903 (42,095)

Less: 46,572 38,456 8,936 19,180

Profit / (Loss) After Taxation 86,492 274,608 50,642 108,686 19,903 (42,095)

Add: - - - 30,179 83,000 57,077

Less: - - - - 5,976 100

Net Profit / (Loss) For the Year 86,492 212,333 50,642 138,865 96,927 14,882

Income Statement Statement of Changes in Equity as at 31.12.2010

ShareCapital

Rs.

CapitalReserves Rs.

GeneralReserves

Rs.

Accumu-latedProfit

Rs.

Total Equity

Rs.

Balance as at 31 December 2007 70,000,000 27,738,806 3,635,162 (5,360,951) 96,013,017

Net Profit/(Loss) For The Year - - - 50,641,565 50,641,565

Transferred During the Year - - -

Balance as at 31 December 2008 70,000,000 27,738,806 3,635,162 45,280,614 146,654,582

Net Profit/(Loss) For The Year - - - 274,609,125 274,609,125

Transferred During the Year - - -

Balance as at 31 December 2009 70,000,000 27,738,806 3,635,162 319,889,739 421,263,707

Net Profit/(Loss) For The Year - - - 86,491,181 86,491,181 Transferred During the Year - - - (20,404,197) (20,404,197) Prior year AdjustmentsBalance as at 31 December 2010 70,000,000 27,738,806 3,635,162 385,976,723 487,350,691


Cash Flow Statement 20102010 Rs. 2009 Rs.

Cash Flows from Operating Activities

Net Profit/(Loss) before Taxation 133,063,356 313,065,617 Interest - Expenses 2,594,831 190,337 Interest - Income (15,678,270) (34,263,052)Profit from Sales of Fixed Assets (20,404,197)Adjustment for :

Extraordinary ItemsPrior Year AdjustmentDepreciation 35,208,931 38,278,584 Provision for Bad & Doubtful debts 19,357,945 29,512,727 Provision for Accrued expenses - 203,457,081 Provision for Obsolete stocks - 17,870,867 Provision for income tax - - Provision for payment of Gratuity 5,204,240 53,503,419 Operating Profit Before Working Capital Changes 159,346,836 621,615,580

Increase in inventories (120,710,830) 58,464,258 Increase in Trade Debtors & Other Receivables (1,721,946,057) (697,496,887)Increase in Trade Creditors & Other Payables 1,243,068,578 155,918,639 Increase in Mobilization Advances 310,556,632 350,182,355 Operating Profit before payment of gratuity (129,684,841) 488,683,945

Less: Gratuity Paid (2,610,406) (24,531,337) Tax Paid (38,456,493)Net Cash Flows from Operating Activities (132,295,247) 425,696,115

Cash Flows from Investing Activities

Capital Work in Progress - (13,238)Acquisition of Property, Plant & Equipment (55,551,090) (30,652,260)Proceeds from sale of Property, Plant & Equipment - Interest Received 14,053,349 34,497,329

Net Cash Flows from Investing Activities (41,497,741) 3,831,831

Cash Flows from Financing Activities

Interest Paid (2,594,831) (62,337)Loan Obtained 800,000Lease Payment (10,411,949) (8,109,107)Repayment of Bill Discount Facilities (49,228,698) (33,816,916)Repayment of Loans - - Net Cash Flows from Financing Activities (61,435,478) (41,988,360)Net increase in Cash and Cash Equivalents (235,228,466) 387,539,586 Net Cash and Cash Equivalents at the beginning of the year 476,304,357 88,764,771

Net Cash and Cash Equivalents at end of the Period 241,075,891 476,304,357

Net Cash and Cash Equivalents Cash at Bank and in Hand 75,189,546 20,688,616 Fixed Deposits and Call Deposits 188,674,248 258,914,830 Savings at Bank 2,212,711 2,117,295 REPO 85,000,000 261,100,000 Bank Overdraft (110,000,614) (66,516,384)

241,075,891 476,304,357

The State Engineering Corporation was established under the State Industrial Corporation Act No.49 of 1957 on the 1st of January 1962. The State Engineering Corporation was to function under the Ministry of Construction & Engineering Service and provides services in civil engineering construc-tion, mechanical and electrical engineering, architectural and engineering consultancy services, manufacture of pre-cast components and building materials for civil engineering projects

The registered office of the State Engineering Corporation is located at No. 130, W.A.D. Ramanayake Mawatha, Colombo 02.

1.2 Significant Accounting Policies

1.2. (A) Accounting Convention

1.2. (B) Taxation

1.3 Assets and Basis of their valuation

1.3. (A) Property Plant & Equipment

The Financial Statements are prepared on the historical cost convention and in accordance with generally accepted Accounting principals and Accounting standards laid down by the institute of Chartered Accountants of Sri Lanka.

The Accounting Policies have been consistently applied by the Corporation with those used in the previous year.

Property, Plant and Equipment are recorded at cost of purchase or cost together with any incidental expenses thereon.

Property, Plant and Equipment are stated at cost less accumulated depreciation. It is planned to carry out a valuation of all fixed assets during 2011.

The charge for depreciation on assets commences in the year of purchase In accordance with the accounting standards, Depreciation is provided proportionally during the year of purchase and the year of disposal. Depreciation is calculated on a straight – line basis over the estimated useful life of the assets.

Notes to the Financial Statements & Accounting PoliciesGeneral(i)

(i)

(ii)

(iii)

(iv)

(ii)


1.4 Income Statement

1.4. (A) Revenue Recognition

1.5 Liabilities & Provisions

1.5. (A) Retirement Benefits

1.3. (B) Inventories

1.3. (c) Debtors and Receivable

1.4. (B) Construction Contracts

1.4. (C) Dividend Income

Capital Work in Progress - Represents the cost incurred during the year on proposed extension of eighth floor (south wing) of Head Office Building.

Stock of raw materials and spare parts are valued at costless provision for slow moving, idle and obsolete stocks on a first in first out basis.Finished goods are valued at lower of cost or net realizable value.

Debtors and receivables are stated at amounts, estimated to be realized. Provision has been made for bad and doubtful debts.

The revenue of the corporations is recognized on an accrual basis and matched with the associ-ated cost and expenses for the period.

The depreciation percentages for the year are given below.Assets Depreciation %Buildings 2.5%Plant & Machinery 20%Furniture & Fixtures 10%Motor Vehicles 20%Office Equipment 20%Computer-Hardware & Software 20%

Free Hold Land is not depreciated.

Revenue &profit from the ongoing construction Contacts is recognized according to SLAS 13 on the percentage of completion method. The stage of completion is determined on the basis of actual expenses incurred. For this purpose the budgeted contract profit is assumed to be 11% in general.

Provision for Retirement Gratuities has been made from the first year of the service of employees. However, according to the payment of gratuity Act No. 12 of 1983 the liability for gratuity to an employee arises only on completion of 5 years of continuous service.

No Dividend income from shares was received during the year 2010.

(V)

(i)

(Vi)

1.6 Post Balance Sheet Events

1.7 Contingent Liabilities

1.8 Comparative Figures

1.9 Cash Flow Statement

2.0 Due from & Due to Customers

2.1 Disclosure of the Adjustments of the pervious year

Sine a sum of Rs 20 million related to the previous year has been deducted from the brought forward profit, the impact on the profit as at 31.12.2009 could be stated as follows.

Profit for the year ended on 31st December 2009 Rs.274,609,123

Less. the adjustment of the previous year (Rs.20,404,197)

Adjusted Profit as at 31.12.2009 Rs.254,204,926

All material post Balance sheet events have been considered and where necessary adjustment has been made in the financial statements.

As per the cabinet paper Cp/11/0089/517/004 dated 26/01/2011, all the assets and liabilities of the National Equipment and Machinery Organisation (NEMO) have been taken over by the State Engineering Corporation of Sri Lanka.

16 court cases have been filed against the SEC as at 31.12.2010 (a list of the cases are given in note 2e-2g). If the court cases will have been defeated, the loss for the corporation will be Rs.17,027,361.00

Comparative figures applicable for the previous year have been stated to facilitate comparison.

The Cash Flow Statement has been prepared by using the Indirect Method. Cash and Cash equiva-lent comprises of net cash balance with banks and other Short Term Funds held by the Banks.

Due from Customers and Due to customers are shown separately in accounts under Current Assets and Current Liabilities.


2. Property Plant & Equipment (a) Free Hold Assets:

Land & Build-ings

Plant &Ma-chinery

Computer Hard/Soft

wareFurniture&

FittingsOffice Equip-

ment Motor

Vehicles Total (RS.)

Cost as at 01.01.2010 79,367,626 212,284,113 30,895,910 6,835,985 23,725,893 56,729,030 409,838,557

Additions during the period 508,597 33,623,712 5,800,643 10,826,916 4,791,222 - 55,551,090

Adjustment - - - - -

Cost as at 31.12.2010 79,876,223.40 245,907,825 36,696,553 17,662,901 28,517,115 56,729,030 465,389,647

Less - Depre-ciation

Balance as at 01.01.2010 32,985,203 183,216,312 21,455,361 3,045,237 17,695,949 55,109,804 313,507,866

Transferred from L.H. Assets.

- - - - - -

Deprecia-tion for the period 1,817,174 14,787,564 4,317,413 699,160 2,682,293 458,323 24,761,927

Depreciation on disposal - - - - - - -

34,802,377 198,003,876 25,772,774 3,744,397 20,378,242 55,568,127 338,269,793

Net Value as at 31.12.2010 45,073,847 47,903,948.97 10,923,779 13,918,504 8,138,873 1,160,902 127,119,855

Net Value as at 31.12.2009 46,382,424 29,067,801 9,440,549 3,790,748 6,029,944 1,619,225 96,330,691

b) Leased Hold Assets:Cost as at 01.01.2010

- 25,885,500

-

-

- 17,704,348 43,589,848

Additions during the period - 8,400,000 - - - 13,992,286 22,392,286

Cost as at 31.12.2010 - 34,285,500 - - - 31,696,634 65,982,134

Less - DepreciationBalance as at 01.01.2010

- 14,477,657

-

-

- 12,627,584 27,105,241

Transferred to F.H.Assets. - - - - - - -

Deprecia-tion for the period

- 5,751,380

-

-

- 4,695,625 10,447,005

Depreciation on disposal

-

-

-

-

-

-

-

20,229,037 - - - 17,323,209 37,552,246

Net Value as at 31.12.2010

- 14,056,463

-

-

- 14,373,425 28,429,888

Net Value as at 31.12.2009

- 11,407,843

-

-

- 5,076,764 16,484,607

Net Value as at 31.12.2010 45,073,847 61,960,412 10,923,779 13,918,504 8,138,873 15,534,327 155,549,743

Net Value as at 31.12.2009 46,382,424 40,475,644 9,440,549 3,790,748 6,029,944 6,695,990 112,815,299

Disclosure of Leased AssetsDetails of leased assets are not given with the Accounts and they are given below

Details of leased assetsOpening Balance as at 01/01/2010

Cost Rs.43,589,848.00

CTCDLE1000793500 Single Cab 1,361,143.00CTCDLE1000793600 Single Cab 1,361,143.00CTCDLE1000794100 Single Cab 1,361,143.00CTCDLE1000793900 Single Cab 1,361,143.00CTCDLE1000793800 Single Cab 1,361,143.00CTCDLE1000793700 Single Cab 1,361,143.00CTCDLE1000794000 Single Cab 1,361,143.00CTCDLE1000795800 Single Cab 6,464,286.00CTCDLE0900806100 Bachoe Loader 8,400,000.00

22,392,287.0022,392,287.0065,982,135.00

2010 -Actual Rs. 2009 -Actual Rs. 3 Investment in Shares

12,000 Shares at Rs.100.00 inHousing Development-

1,200,000 1,200,000

Finance Corporation of Sri Lanka Ltd. 1,200,000 1,200,000 4 Capital Work in Progress (Part of the SEC H/O

Building) 6,038,110 6,038,110

5 InventoriesMaterials 300,537,300 204,385,316 Finished Goods 122,295,918 97,737,072 Spare parts - -

422,833,218 302,122,388

Less: Provisions for Slow Moving & Obsolete items

21,217,216 21,217,216

401,616,002 280,905,172 6 Trade Debtors

Construction Group 1,800,921,838 1,259,536,741 Mechanical & Electrical Group 84,811,803 89,272,421 Construction Components Group 594,650,614 212,165,510 Consultancy Group 870,141,807 507,064,654 Services 18,229,869 14,819,397 Central Workshop 28,876,739 48,539,749

3,397,632,670 2,131,398,472


2010 -Actual Rs. 2009 -Actual Rs.

Less:

G.S.T / V A.T 484,689,536 275,652,288 N.S.L 3,541,485 3,541,485 Provision for Bad & Doubtful Debts 293,629,107 274,271,162

2,615,772,542 1,577,933,537

7 Retention / T.C. 741,493,365 541,221,905

8 Other Debtors & ReceivablesOther Debtors Foreign Purchase Control A/C 18,523,918 16,582 L/C 's Opended on Behalf of customer 51,354,760 Receivable Income from Overhead Bridge 664,836 611,100 Interest in Suspense - ( Leasing) 7,845,884 1,165,110 Salaries & Wages Rounding Off Recoveries 5,251 1,707 Withholding Tax 70,890,121 93,649,459 Prepayments 1,939,391 2,011,012 W.H.T on Interest Income 5,907,715 5,306,452 Nation Building Tax 13,265,476 3,303,376 Cash Lost ( Recoverable) at Seruwavila Site 805,938 805,938 Funds Transfer 14,754,231 2,104,385 Receivable from Employees 20,410 20,410 Interest on Bank Deposits 2,392,876 767,955 Economic Service Tax Recoverable 19,167,364 14,446,327 National Buddhist Centre - Pallekale - - Receivable from Site No 1576 - (UDA) 5,356,353 5,356,353 Investment in SEC (Quarter) LLC 5,958,715 5,966,738 Receivable from SEC (Qatar ) LLC 838,355 838,355 L/C Margin Account 1,810,963 1,810,963 Inter Group Current Debtors 103,082,193 103,082,193 REPO Interest Receivable 89,423 Welfare Advance 500,000 -

325,084,749 241,353,838

Advances

Wages Advances 61,730 55,740 Advance Payments to Suppliers 40,286,942 3,864,577 Advances for Services 5,966,611 2,427,266 Salary Advances 5,500 5,500 Advances to Staff 121,500 251,990 Festival Advances to Employees 1,834,694 1,715,994 Distress Loans 6,182,533 3,200,954 Cheque with Order Advances

2010 -Actual Rs. 2009 -Actual Rs.

Less: Provision for C.W.O. Advances 167,120,857 88,014,032 Special Cash Advances 4,560,327 528,153 Travelling Advances (3,136) (50,536)Advance Account pallekale 64,395 - Mobilization Advances to Sub Contractors 212,339,974 101,855,397 Special Cash Advances (Sal.& Wages) 69,045 240,200 Traveling Imprest 16,429 10,000 Labour Sub Contract Advances 142,756,705 102,958,795 Purchase Cash / Spare Parts Imprests 1,445,859 63,960 Wages Piece Rate Imprest 16,150 16,150 Co-op Society Loan - 500,000

582,846,114 305,658,172

TOTAL 907,930,863 547,012,010

9 DepositsRefundable Deposits 10,994,916 8,553,754

10 Due from Customers 418,909,383 292,602,550

11 Fixed Deposits at Bank 17,636,174 16,883,505

12 Cash & Cash Equivalents

Cash at Bank and in Hand 75,189,546 20,688,616 Fixed Deposits at Bank - Short time 171,038,073 258,914,830 Savings at Bank 2,212,711 2,117,295 R.E.P.O 85,000,000 261,100,000

333,440,330 542,820,741 13 Share Capital

Authorized

Contribution by the Government 70,000,000 70,000,000 Voted CapitalContribution by the Government 70,000,000 70,000,000

14 Reserves(a) Capital Reserves

Machinary Gifted From U.S.S.R 5,082,350 5,082,350 Capital Gain on N'pita Shifting 22,656,456 22,656,456

27,738,806 27,738,806 (b) General Reserves Machinary Repair Funds 2,635,162 2,635,162 Bonus Shares Issued - H.D.F.C. 1,000,000 1,000,000

3,635,162 3,635,162

TOTAL 31,373,968 31,373,968


2010 - Actual Rs. 2009 - Actual Rs. 15 Accumulated Profit / (Loss)

Balance Brought Forward 319,889,739 45,280,616 Previous Year Adjustments (20,404,197) - Net Profit/(Loss) for the Year 86,491,181 274,609,123 Balance Carried Forward 385,976,724 319,889,739

16 Long Term BorrowingsTreasury Loans 30,800,000 30,000,000

17 Deferred LiabilitiesRetirement Benefit Obligations 247,918,919 245,325,085

18 Bank OverdraftPeople's Bank 106,494,507 42,732,102 Bank of Ceylon 3,506,107 23,784,282

110,000,614 66,516,384 19 Interest on Treasury Loans 4,006,293 4,006,293 20 Bill Discount Facilities - 49,228,698 21 Trade Creditors 120,956,415 58,887,828

Sub ContractorsSub Contracts 125,448,700 51,180,243 Sub Contract Retention 186,425,561 121,779,021 Sub Contract Accruals 190,254,254 159,978,794

502,128,515 332,938,058 U.D.AU.D.A. Control A/C 22,512,074 22,512,074

Ministry Pool Vehicles 37,834,609 42,015,356 TOTAL 683,431,614 456,353,316

22 Other Creditors & PayablesOther CreditorsTreasury Loans - 800,000 Payee Tax 1,068,753 1,016,193 Specified Fees Payable - WHT 2,026,594 98,771 Acquisition of Assets - B.M.M.C. 1,741,893 1,741,893 Remittances on Salaries 260,811 3,805,857 Final Payments to Staff 2,612,167 1,095,787 Unclaimed Wages & Casual O.T. 633,585 385,544 Unclaimed Salaries & O.T. 2,630,977 1,715,494 Unclaimed Car Mileage & Subsistence 3,437 3,437 Tender Deposits 1,467,661 1,580,574 Securities Deposits 634,500 584,500 Other Deposits 55,000 55,000 Payable to I.R.D 1,289,114 1,190,864 Building Department 549,640 549,640 Final Payments to Casual Employees - 184,436

2010 - Actual Rs. 2009 - Actual Rs. Dalada Maligawa Control A/C 993,816 993,816 Buddha Sasana My/ Control A/C. 6,472,546 6,472,546 G.S.T / VAT (87,742,509) 122,067,065 N.S.L 500,542 500,542 Debtors of on Account Payment 315,439,088 95,605,081 Volunteer Retirement Scheme -(Treasury)

20,278,812 20,302,292

Leasing - People's Leasing Co. Ltd 24,503,909 5,842,798 Inter Group Creditors 93,143,107 101,692,388 Cancel Cheque A/C 42,860 57,482 Pre Income 3,250 565,264 N.B.T. 4,538,878 1,153,334

393,148,432 370,060,598 Provisions & Accrued ExpensesConstruction Group 245,383,189 8,858,692 Mechanical & Electrical Group 5,084,988 8,352,655 Construction Components Group 292,051,758 1,014,619 Consultancy Group 197,789,260 - Services 2,717,612 3,254,095 Accrual - Sundry - - Stamp Fees 126,640 228,215 Death Donations - - E.P.F. 8,212,944 7,412,892 Surcharges on Delayed EPFE.T.F 1,116,355 1,027,507 Audit Fees 8,903,585 8,553,585 Provision for Budgetary Allowance 10,210,582 17,511,262 Tax In Default 3,739,236 3,739,236 Tax 9,500,000 9,500,000 Payment of EPF Arrears - Before 1984 7,515,874 8,151,034 Salaries 98,843 911,815 Overtime 17,761,160 12,446,220 Wages 3,218,636 1,882,878 Provision for Medical Leave Bonus 3,619,136 3,619,136 Provision for Completed Construction Projects

1,916,238 6,030,421

Provision for Labour Subcontract Advances 9,614,881 9,614,881 Kettharama Refreshment A/C (150,000) - Provision for E.S.T 23,283,928 9,894,068 Provision for Income Tax 46,572,175 38,456,493 Contingent Liabilities - -

898,287,019 160,459,704 -

TOTAL 1,291,435,451 530,520,302


2010 -Actual Rs. 2009 -Actual Rs. 23 Due To Customers 1,293,651,840 973,343,424 24 Mobilization Advances 1,461,986,005 1,151,429,373 25 Revenue

Construction Group 3,101,829,140 2,417,648,672 Mechanical & Electrical Group 182,877,069 274,032,270 Construction Components Group 1,769,779,520 664,649,635 Consultancy Group 1,260,918,503 631,440,379

6,315,404,231 3,987,770,956 Inter Group TransactionsConstruction Group 43,786,647 Mechanical & Electrical Group 150,763,262 132,786,073 Construction Components Group 109,809,328 54,257,098 Consultancy Group 89,284,850 6,244,147

393,644,087 193,287,318 Net RevenueConstruction Group 3,058,042,493 2,417,648,672 Mechanical & Electrical Group 32,113,807 141,246,197 Construction Components Group 1,659,970,192 610,392,537 Consultancy Group 1,171,633,653 625,196,232

5,921,760,145 3,794,483,63826 Construction Group

Income Statement for the period ended on 31.12.2010Group Revenue 26.1 3,101,829,140 2,417,648,672 Operating Profit/ (Loss)Ongoing Projects 26.2 198,610,248 260,576,881 Plant Hiring - Maligawatta 26.3 1,687,576 2,307,376 Aluminum Factory - Ratmalana 26.4 (2,864,650) 19,446,920 Special Project - IRD 26.5 - -

197,433,174 282,331,177 Add - Other IncomeGroup Income 15,551,840 19,928,800 Ministry Pool Management Fees 64,300

Less: Group Overheads 116,640,429 98,343,497 Ministry Pool Management Fees 61,313 Net Operating Profit / ( Loss ) 96,347,571 203,916,480 Less: Administrative Expenses 92,807,269 70,684,610

Group Profit / (Loss ) 3,540,303 133,231,870 Less: Provision for Bad & Doubtful Debts 15,825,656 Net Group Profit / ( Loss) 3,540,303 117,406,214

2010 -Actual Rs. 2009 -Actual Rs. 27 Mechanical & Electrical Group Operating

Statement for the period ended on 31.12.2010

Group Revenue 27.1 182,877,069 274,032,271 Operating Profit / ( Loss )Operation - Peliyagoda 27.2 574,154 4,483,689 Central Workshop - Peliyagoda 27.3 (16,250,137) 4,778,477 Other Projects 27.4 3,135,980 22,028,729 Workshop - Ratmalana 27.5 (26,048,071) (3,473,015)Dolamite Processing Yard-Matale 27.6 (4,877,964) (4,676,566)Ongoing Projects 27.7 (4,961,792) 11,965,506

(48,427,830) 35,106,820 Add: Other Income 1,322,710

(48,427,830) 36,429,530 Less: Group Overheads 11,336,712 18,865,697 Net Operating Profit / (Loss) (59,764,542) 17,563,833 Less: Administrative Expenses 13,822,359 10,527,495 Group Profit /(Loss) (73,586,901) 7,036,338 Less: Provision for bad & doubtful debts 3,182,199 Net Group Profit / ( Loss ) (73,586,901) 3,854,139

28 Construction Components Group Income Statement - for the period ended on 31.12.2010 Group Revenue 28.1 1,769,779,520 664,649,635 Operating Profit /(Loss)Precast Yard - Ekala 28.2 37,569,854 1,164,181 Precast Yard - Ratmalana 28.3 (2,947,216) (9,978,909)Precast Yard - Peliyagoda 28.4 (9,235,998) (5,750,285)Carpentry & Bricks Yard-Dankotuwa 28.5 (3,772,500) (1,625,325)Other Projects 28.6 (2,940,151) 45,131,849 Concrete Sleepers Factory 28.7 29,054,588 22,847,546 Ongoing Projects 28.8 39,922,682 0

87,651,260 51,789,057 Add: Other Income 11,674,534 2,427,920 Less: Group Overheads 22,223,997 21,231,976 Net Operating Profit /(Loss) 77,101,797 32,985,001 Less: Administrative Expenses 33,568,586 25,566,774 Group Profit / (Loss) 43,533,211 7,418,227 Less:Provision for doubtful Debts 6,187,968 Net Group Profit / ( Loss) 43,533,211 1,230,259

29 Consultancy Group Income Statement for period ended on - 31.12.2010 Revenue Fees - Internal 89,284,850 Fees - External 138,620,771 182,754,074 IRD Project* 805,789,182 448,686,305


2010 -Actual Rs. 2009 -Actual Rs. IIFA Project 225,786,806 Other Income 1,436,894

1,260,918,503 631,440,379 Less: ExpensesSalaries, Wages & Personnel Emolument 87,226,967 79,819,689 Sub Contract - Other Projects 2,698,341 Consultancy Fees - Printing & Stationery 4,062,424 3,006,253 Electricity, Water & Telephone 365,397 746,929 Transport 4,087,633 3,655,937 Depreciation 2,430,848 2,519,291 IRD Expenses* 712,851,561 IIFA Expenses 214,385,268 Other Expenses 26,314,733 4,833,670

1,054,423,173 94,581,769 Operating Profit 206,495,330 132,858,150 Add- other incomeSpecial Projects 43,008,106 Others 1,557,145 Net Operating Profit 177,423,401 Less: Administrative Expenses 57,264,059 43,613,908 Group profit 149,231,271 133,809,493 Less: Provision for Bad & Doubtful Debts 4,316,903 Net Group Profit / (Loss) 149,231,271 129,492,590 *IRD profit for the year =92,937,621/=

30 Administrative Expenses

Emoluments 101,671,680 83,326,755 Welfare 1,485,689 1,572,707 Insurance 993,787 1,072,026

Fuel & Lubricant /Materials 9,830,003 10,027,390

Repairs & Maintenance 5,328,712 4,783,164

Travelling & Subsistance 1,211,675 2,526,893

Foreign Travels 1,892,429

Tranport & Hire Charges 1,318,585 195,880

Sub Contact Labour 203,713 58,179

Professional Charges 4,574,577

Bank Charges & Commission 1,746,773 177,020

Services 5,118,326 5,723,874

Printing & Stationery 1,956,107 2,583,228

Rates & Taxes 6,913,282 15,332,962

Electricity , Water & Telephone 10,858,816 9,692,868

Depreciation 6,752,043 7,072,091

Rs. 2010 -Actual Rs. 2009 -Actual Advertising 5,077,486 3,975,392 Local Consultancy Fees 437,925 Audit Fees 734,000 Debit Tax 1,745,838 Training Fees & Subscription 654,964 488,464 Newspaper 174,550 154,200 Postages & Stamp Fees 295,524 1,952,195 Business Promotion 1,843,100 Other Expenses 5,469,232 Social Service Tax 274,885 Sports & Recreation 32,969

167,720,243 Less: Over Pro.of EPF Write Back - (17,081,938)

197,205,631 150,638,305 31 Provision for Bad & Doubtful Debts

Construction - 15,825,656 Mechanical & Electrical - 3,182,200 Construction Components - 6,187,968 Consultancy - 4,316,903

19,357,945 29,512,727 32 Other Income

Rent 7,208,525 5,938,265 Circuit Bungalow Room Charges 136,620 Sales of Fixed Assets - Tender Fees 569,545 Sales of Scrap Items 12,005,489 Interest & Other Income from Employees 101,402 Dividend Income -

Fine & Surcharges 15,024 Income from Scholarship Bonds - Rent Overhead Bridge 569,104 Advertising Income 471,429 Sundry Income 6,816,623 7,012,486

14,025,148 26,819,364 33 Interest Income

F.D Interest 8,223,026 31,397,840 Savings Interest 120,698 REPO Interest 7,455,245 2,744,514

15,678,270 34,263,052 34 Interest Expenses

O.D. Interest 256,643 62,337 Loan Interest - - Treasury Loan Interest - 128,000

256,643 190,337


Notes Notes


Documents

Annual 2010 Report