ANNUAL REPORT 2016 LEADING IN A SECTOR POSITIONED TO GROW 1 · ANNUAL REPORT 2016 1 LEADING IN A SECTOR POSITIONED TO GROW LEADING IN A SECTOR POSITIONED TO GROW #1 SINGER (SRI LANKA)

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SINGER (SRI LANKA) PLC

NO. 80, NAWAM MAWATHA, COLOMBO 2. SRI LANKA.

HOT LINE: (+94) (011) 5 400 400

E-MAIL: [email protected]


173 Financial Reports

Annual Report of the Board of Directors on the Affairs of the Company

174

Statement of Directors’ Responsibility 180

Independent Auditors’ Report 181

Statement of Profit or Loss and Other Comprehensive Income

182

Statement of Financial Position 183

Statement of Changes in Equity 184

Statement of Cash Flows 186

Notes to the Financial Statements 187

251 Subsidiaries/Associate and Related Companies

252 A Decade in Perspective

253 Share Information

257 Distribution Network

258 Service Network and Fashion Academy Network

259 Glossary of Financial Terms

260 Notice of Annual General Meeting

Enclosed Form of Proxy

04 Group at a Glance

05 Financial Highlights

06 Letter from the Chairman

10 Group Chief Executive Officer’s Review

19 Board of Directors

24 Management Team

28 Milestones

30 Year at a Glance

32 Operations Review

62 Financial Review

73 Awards and Accolades

74 Sustainability Report

119 Independent Assurance Report

120 Global Reporting Initiatives (GRI) Standard Disclosures Index

124 Corporate Governance

162 Risk Management

169 Audit Committee Report

170 Remuneration Committee Report

171 Nomination Committee Report

172 Related Party Transactions Review Committee Report

PAGE PAGE

CONTENTS

P:1Singer (Sri Lanka) PLC ANNUAL REPORT 2016

Singer is the undisputed leader in the consumer durables market of Sri Lanka,

a market which holds tremendous potential for further growth in the years to come.

Our position of leadership in this market, coupled with our own sustained growth trajectory will enable

us to exceed market growth and maintain our dominant positioning well into the future.

#1LEADING IN

A SECTORPOSITIONED

TO GROW

Singer (Sri Lanka) PLC ANNUAL REPORT 2016

VisionTo be the foremost appliance

retailer in Asia Pacific

Values

Objectives

Consumers Shareholders Employees Suppliers Competitors Community EnvironmentWe live up to the expectations of a responsible organisation by contributing to the improvement in the quality of life of our customers through outstanding products and services

We provide a reasonable return while safeguarding their investment

We respect each other as individuals and encourage cross functional teamwork while providing opportunities for career development

We develop our suppliers to be partners in progress and we share our growth with them

We respect our competitors and recognise their contribution to market value

We conduct our business by conforming to the ethics of our country and share the social responsibility of the less fortunate

We make every effort to ensure that the environment is protected and conserved for future generations

To be the market leader in our Product and Market Segment

Provide our consumers with the Best Service and Shopping Experience in the Island

Provide our Consumers with Products of Latest Technology

Develop our Employees to achieve their real Potential

Provide our Shareholders with steady Asset Growth and Return on Investment above our Industry Norm

Grow our Revenue and Profits at a rate above the Industry Norm

P:2

Singer (Sri Lanka) PLC ANNUAL REPORT 2016 P:3

MissionTo improve quality of life by providing

comforts and conveniences at fair prices

Consumers Shareholders Employees Suppliers Competitors Community EnvironmentWe live up to the expectations of a responsible organisation by contributing to the improvement in the quality of life of our customers through outstanding products and services

We provide a reasonable return while safeguarding their investment

We respect each other as individuals and encourage cross functional teamwork while providing opportunities for career development

We develop our suppliers to be partners in progress and we share our growth with them

We respect our competitors and recognise their contribution to market value

We conduct our business by conforming to the ethics of our country and share the social responsibility of the less fortunate

We make every effort to ensure that the environment is protected and conserved for future generations

To be the market leader in our Product and Market Segment

Provide our consumers with the Best Service and Shopping Experience in the Island

Provide our Consumers with Products of Latest Technology

Develop our Employees to achieve their real Potential

Provide our Shareholders with steady Asset Growth and Return on Investment above our Industry Norm

Grow our Revenue and Profits at a rate above the Industry Norm

Singer (Sri Lanka) PLC ANNUAL REPORT 2016P:4

Our Retail Presence

Province Singer Mega Singer Plus Singer Homes Satellite Shops Sisil World Total

Central 2 24 2 13 7 48

Eastern – 21 – 3 2 26

North Central – 21 1 8 3 33

North Western – 21 2 10 5 38

Nothern – 13 – 1 4 18

Sabaragamuwa – 17 2 9 11 39

Southern – 31 1 13 6 51

Uva – 13 1 10 4 28

Western 20 78 9 11 23 141

Total 22 239 18 78 65 422

GROUP AT A GLANCE

2010

16.0

22.0 25

.4 25.5

29.7

38.7

46.9

2011 2012 2013 2014 2015 2016

REVENUE

Rs. 46.9 billion7-Year CAGR of 21.64% in

Group Net Revenue

2,436Singer staff

Over 4.5 million

Household users

Over 1 million

Online and mobile users

Singer (Sri Lanka) PLC ANNUAL REPORT 2016 P:5

Group Company

2016

Rs. ’000

2015

Rs. ’000

Increased/(Decreased)

%

2016

Rs. ’000

2015

Rs. ’000

Increased/(Decreased)

%

Revenue – Net 46,924,144 38,710,834 21.2 39,267,203 33,311,395 17.9

Net Finance Cost 1,472,573 974,548 51.1 1,281,431 930,688 37.7

Share of Profit of Equity Accounted Investees (Net of Income Tax) – 2,042 100.0 – – –

Profit before Tax 3,126,233 1,895,275 64.9 1,450,530 1,195,682 21.3

Profit for the Year 2,357,756 1,236,039 90.8 1,104,445 859,705 28.5

Total Comprehensive Income for the Year 2,623,507 1,206,343 117.5 1,363,277 830,723 64.1

Stated Capital 626,048 626,048 – 626,048 626,048 –

Revenue Reserve 6,374,644 4,728,455 34.8 4,242,213 3,612,779 17.4

Capital Reserve 1,057,964 857,580 23.4 1,065,542 857,580 24.2

Statutory Reserves 95,361 73,318 30.1 – – –

Non-Controlling Interest 1,401,088 484,584 189.1 – – –

Total Equity 9,554,905 6,769,985 41.1 5,933,805 5,096,407 16.4

Property, Plant & Equipment – Net 5,426,841 2,715,401 99.9 3,022,805 2,600,437 16.2

Investments 17,061 71,893 (76.3) 3,384,290 1,656,545 104.3

Net-Current Assets 6,024,815 6,440,356 (6.4) 4,773,020 6,453,030 (26.0)

Gross Dividends* N/A N/A – 1,101,845 525,880 110

Dividend per Share – Rs. N/A N/A – 8.80 4.20 110

Dividend Payout Ratio – % N/A N/A – 99.77 61.14 63.2

Earnings per Share – Rs. 16.95 9.21 84.1 8.82 6.87 28.4

Price Earnings Ratio – Times N/A N/A – 14.31 20.07 (28.7)

Net Assets per Share – Rs. 65.12 50.20 29.7 47.39 40.70 16.4

Market Value per Share – 31st December – Rs. N/A N/A – 126.20 137.90 (8.5)

Net Income to Net Turnover – % 5.02 3.19 57.4 2.81 2.58 8.9

Return on Average Net Assets/Equity – % 28.89 19.48 48.3 20.03 17.77 12.7

Debt Ratio – % 77.38 79.02 (2.08) 79.42 78.26 1.5

Gearing Ratio 0.69 0.69 – 0.72 0.71 1.0

Interest Cover – Times 3.12 2.94 6.1 2.13 2.28 (6.6)

Dividend Cover – Times N/A N/A – 1.30 1.63 (20.2)

Current Ratio – Times 1.27 1.42 (10.6) 1.35 1.60 (18.1)

Acid Ratio – Times 0.84 0.97 (13.4) 0.80 0.98 (18.4)

Net Debt to Equity Ratio – Times 2.35 2.60 (9.6) 2.41 2.25 7.1

* Includes Authorised Final Dividends of the Company.

FINANCIAL HIGHLIGHTS

Total Assets:

Total Equity:31% 41%

P:6 Singer (Sri Lanka) PLC ANNUAL REPORT 2016LETTER FROM THE CHAIRMAN

Our record of impressive performance has been driven by consistently

high standards of customer service and

business performance.

P:7Singer (Sri Lanka) PLC ANNUAL REPORT 2016 LETTER FROM THE CHAIRMAN

Dear Shareholders,

Singer has become one of Sri Lanka’s premium brands, synonymous with trust and excellence. Our record of impressive performance has been driven by consistently high standards of customer service and business performance. We intend to remain clearly ahead of the field through innovation, best serving customer needs and delivering sustainable financial performance in a market which has a high growth potential.

A Glimpse of the EconomyYear 2016 was the second year under a new regime. As evidenced by the Government policy documents and the two budgets presented in 2015 and 2016, Sri Lanka is moving away from a highly debt financing economy to a globally competitive, export-led economy with an emphasis on foreign direct investments. In this policy turnaround, the Government

had to make three firm decisions. One was to curtail credit to the private sector by increasing interest rates. Secondly,

increasing taxes to mobilise revenue in order to balance the budget; in particular increasing the Value Added Tax (VAT) from 11% to 15%. Thirdly, agreeing to a stabilisation package with the International Monetary Fund (IMF) in June 2016 and gradually increasing the interest rates to curtail excessive borrowing by the private sector.

These three factors have an impact on the consumer durables market, which is the area of interest to our Company. Consumer spending in year 2016

was relatively lower compared to year 2015 since an increased consumer spending was observed in 2015 largely on account of the salary increase of public sector employees and the price reduction of gas, electricity and fuel. However, specially in year 2016 Company was in relatively better possition compared to year 2012 – 2014. The Rupee depreciated by approximately 4% by year end whilst interest rates increased sharply as much as 500 basis points compared to 2015.

Following the recent VAT increase by 4%, we are compelled to pass part of the cost increase to the consumers. The consequent increase in interest rates and depreciation of the Rupee from Rs. 146/USD in 2015 to Rs. 151/USD in 2016 will be reflected in the price of our goods in the upcoming year in 2017. However, I am optimistic that this will not significantly curtail demand for consumer durables due to five main reasons. Firstly, people’s purchasing power will increase as Sri Lanka’s per capita income grows. Secondly, the penetration of consumer durables in Sri Lanka is still low, making room for consumers to purchase these items. Thirdly, there is a rapid development in electronics and IT/ mobile phone sector, by way of improved features and lower costs resulting in new models and new technology introduced each year. This encourages consumers to replace such items faster. Fourthly, almost 95% of the households have electrification, enabling consumers, who did not have the opportunity of using electronic items to do so. Finally, the Government plans to make Sri Lanka a Retail Hub, facilitating consumers from neighbouring countries to shop in Sri Lanka for 'small, hand carried' consumer durables such

21%Revenue Increase

P:8 Singer (Sri Lanka) PLC ANNUAL REPORT 2016

Singer, is now the leader in Sri Lanka’s white goods consumer durables sector, with 2,031 employees, serving thousands customers in every district of our nation

as mobile phones, laptops, small TV's and small appliances. These factors would undoubtedly create an increased demand for consumer durables and Singer as the market leader would cater to the growing demand by building on its strengths.

Financial ResultsWe have made good progress and generated significant momentum as Sri Lanka’s leading consumer durables Company. We remain committed to delivering a superior experience for our customers and strong results for our shareholders. The results reflect our rapid growth on account of capitalisation on new business opportunities and steady growth of existing business.

As a result, Group revenue increased by 21.1% YoY to Rs. 46.9 billion in 2016 compared to Rs. 38.7 billion in 2015. Profit for the year increased by 91% to Rs. 2,358 million for the 12 months ended December 2016. All segments recorded a commendable performance making a significant contribution to the Group’s bottom line. The largest segment, Home Appliances, revenue grew by 24% in YoY, followed by IT Products (40%), Financial Services (15%), Consumer Electronics (6%), Sewing Machines ( 9%) and Furniture (20%).

Wining InitiativesWe embarked on several initiatives during 2016 to achieve our medium-term goals, in particular to grow market share, revenue and profits. The success of these initiatives are reflected in our financial results and growth across all segments. Continuous efforts were made to modernise our product offering, retail formats, brands, channels, credit products, after sales service and infrastructure to achieve the Group’s medium-term goals.

A key initiative was the acquisition of Associate Companies; Singer Industries (Ceylon) PLC and Regnis Lanka PLC which boosted Group’s net income on account of consolidation. These companies would showcase a strong performance in the years ahead and make a significant contribution to the Group.

Our smartphone business grew aggressively during the year by expanding the distribution network. The re-entry to the mobile phone business has been a key strategic decision to cater to young consumers in one of the largest segments in the consumer durables industry. I am extremely happy with the growth of this segment which has made a significant contribution to Group profits.

The capacity increase of the refrigerator factory of Regnis Lanka PLC resulted in a 20% increase in production to meet the increased demand for GEO and ECO refrigerators.

The Singer branded Credit Card was launched through Singer Finance (Lanka) PLC joining hands with VISA International during the year. This made Singer Finance PLC the first non-banking financial institution to launch a credit card in Sri Lanka.

LETTER FROM THE CHAIRMAN


I am extreme happy with the progress as the Singer Card has become the fastest growing credit card in Sri Lanka.

We also engaged in the expansion and modernisation of our retail network to offer an outstanding customer experience. Our e-commerce business was renewed by partnering e-commerce sites, aggressively promoting our products online with attractive offers and revamping our corporate website. Our wholesale markets were expanded by adding new segments and by commencing a second wholesale channel.

Investments were made to enhance information and communication technology; in particular enhancements were made to the ERP system.

We firmly believe that one of the best investments we can make is in our people. Hence, we provided employees with more training opportunities enabling them to reach their full potential during the year.

Building a Stronger CompanyOur Company has a strong culture of operating ethically, acting with integrity and effectively managing risks. To achieve our long-term goal of building an even better organisation, we are taking important steps to step up our focus on corporate governance and a strong risk management culture. The Board and the Management are committed to achieving the highest standards of professional conduct across all our operations. Compliance with all regulatory requirements and company specific policies and procedures remains core to our business.

Public ConfidenceConsidering our strong market leadership supported by a wide retail presence, strong market position, a portfolio of well-known brands and extensive local manufacturing capabilities, Fitch Ratings assigned Singer (Sri Lanka) PLC’s (Singer; A-(lka)/ Stable). The Rs. 2 billion debenture issue in 2016 was oversubscribed on the first day; a testament of public confidence in our Company.

Key RecognitionsIt is with pride I mention that Regnis (Lanka) PLC, our Subsidiary Company achieved the distinction of making it to the Forbes Asia's 200 Best Under USD one Billion 2016 list. This is in recognition of highest sales and earnings per share growth for both the most recent fiscal year and three preceding year periods and the strongest five-year average return on equity. The top 200 entities represent the top 1.0 % of the small and medium enterprise (SME) sector in Asia Pacific. Growth and development go hand in hand with a deep sense of responsibility for the environment and the community in which we operate in. The practical application of our concerns continues to be reported publicly in the Sustainability Report.

The effectiveness of our endeavours was recognised when the Ceylon Chamber of Commerce named Singer (Sri Lanka) as one of the top 10 Corporate Citizens in the country.

Business magazine LMD has ranked our performance as First in the Trading Companies category for 2015/16 (year ended December 2015 and March 2016).

Shared Vision for an Even Better CompanySinger, is now the leader in Sri Lanka’s white goods consumer durables sector with 2,436 employees serving thousands of customers in every district of our Nation. We have an excellent brand and reputation that we are proud of. Going forward we will continue to build on our momentum and implement our strategic agenda, in particular, bring all our production units to one industrial zone which are currently geographically scattered. We will continue to upgrade our brand offering to be more relevant to customers and develop our credit card business in partnership with Singer Finance converting most of our hire purchase customers to credit card purchasing customers.

Thank youI am very proud of what we have achieved and as always, is grateful to all those who contributed to the success of our Company. My deep appreciation is extended to the Group CEO, Mr. Asoka Pieris, the Senior Management Team and all staff members for their dedication and commitment. I thank my colleagues of the Board including external Directors of Singer Asia for their continued support extended to me in steering the Company to greater heights during the year 2016.

A special appreciation is extended to our customers and shareholders for their trust and support shown to us. I am very confident that our Company’s best days are ahead as we continue to build on our momentum making Singer the clear market-leader and the choice for individuals and families who want the best consumer durables.

Dr. Saman KelegamaChairman

23rd February 2017

LETTER FROM THE CHAIRMAN

P:10 Singer (Sri Lanka) PLC ANNUAL REPORT 2016GROUP CHIEF EXECUTIVE OFFICER’S REVIEW

The level of consumer spending in 2016

though reduced from that of 2015 was

better than in the preceding years

of 2012-2014.

P:11Singer (Sri Lanka) PLC ANNUAL REPORT 2016 GROUP CHIEF EXECUTIVE OFFICER’S REVIEW

Dear Shareholders,

The Environment and Business ConditionsThe level of consumer spending in 2016 though reduced from that of 2015 was better than in the preceding years of 2012-2014. The increase in consumer spending in 2015 was due to public sector salary increases and reduction of consumer costs on gas, electricity and fuel.

Exchange rates devalued by around 4% in 2016 (year end to year end) on top of a devaluation of over 9% in prior year.

Interest rates which had a marginal increase in 2015, increased very sharply by around 500 basis points and in percentage terms by 60% - 70% on the prior year rates.

The Government increased the value added tax (VAT) rate from 11% to 15% from 2nd May, but had to postpone it in mid-July due to legal actions. VAT increase was effected again from 1st November. In addition from 1st November, VAT was imposed on some products which previously were exempt.

The political environment was stable. The positives of the present Government continues with greater freedom for the citizens, better relationships with most foreign governments and better relationships between communities.

91%Profit

Increase


Singer Finance has the honour of being the first non-banking financial institution to launch a credit card.

On the negative side, the Government continued to be indecisive on policy, creating confusion in the business sector and the public. The general slowdown in the decision-making and implementation by the Government continued but we were happy to note the resumption of major projects. While the Government has made many plans, these need to be implemented.

On the social side, consumers are keen to upgrade their living standards and continue to move to better and latest products. (Example: from semi-auto washing machines to fully-auto washing machines) There is also a shift from living in homes in suburbs to apartments in cities.

On the technological front, especially in mobile phones and electronics, there were constant improvements and new technologies presented to customers (Example: ultra-high definition 4K televisions; smart televisions).

Medium-Term Prospects for the Industry and CompanyThe medium-term prospects for the industry are very favourable due to the following:

z Experience in countries where per capita income has increased, dictate that demand for consumer durables would grow at a higher rate than per capita income growth. This is because the additional income acquired would be spent on enhancing the living standards than on basic items.

z The Government has plans to make Sri Lanka a Retail Hub, so that consumers from our neighbouring countries will come to Sri Lanka to shop for clothing, perfume, jewellery, watches, smartphones, laptops, small televisions, audios and small appliances. In this connection a significant step was the announcement at the National Budget 2017 to create a Sri Lanka Shopping Festival in line with those held in other shopping capitals of the region.

z Electrification of households now is over 95% and is growing. Consumers, who did not have the opportunity of using a refrigerator or a television previously now have an opportunity of using these items.

z The current low penetration of consumer durables at homes indicate that there is room for consumers to purchase these items. For example the current penetration of these are estimated to be refrigerators 60%, washers 25%, computers 30% and air conditioners 10%.

z In the consumer durable industry, especially in electronics and IT/Mobile phone sector, there is rapid development by way of improved features and lower costs resulting in new models and new technology introduced each year. This results in shorter replacement cycles in the future.

z Traditionally, furniture was passed on from generation to generation with minimal new furniture purchases. Today, due to the interior designs unique to each home, consumers seek new furniture than using their parents’ furniture.

z The rising number of new apartments in the cities and new houses in the suburbs result in increasing demand for durables and furniture.

z Sri Lanka has witnessed rapid growth in tourist arrivals and this is expected to continue. This too results in an increasing demand for durables and furniture.

z Singer, as the leading consumer durable retailer would be at the forefront to cater to this growing market.

Strategic Direction of the BusinessOur medium-term goal is for the Group to continue to be the leader in retailing household consumer durables; to be the largest provider of consumer credit; to manufacture consumer durables where feasible and pursue new opportunities in related sectors.

In 2016, we initiated actions to grow market share, revenue and profits. These are elaborated below and are reflected in the financial results.

As in past years and with a view to attaining our medium-term goals and to capitalise on the growth opportunities in the medium-term (mentioned above), we continue to modernise our product offering, retail formats, brands, channels, credit products, after sales service and infrastructure.

Key Initiatives in 2016Our Key Initiatives in 2016 were as follows:

1. Acquisition of Associate CompaniesSinger (Sri Lanka) PLC acquired majority stakes in its associate companies, Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC from its common parent, Retail Holding (Sri Lanka) B.V. – formerly Singer (Sri Lanka) B.V. making these Companies subsidiaries.

GROUP CHIEF EXECUTIVE OFFICER’S REVIEW


It was a conclusion of a long process commenced early in 2015 and included an independent valuation of these companies and getting approval from various regulating institutions.

The acquisition of these companies resulted in a one-time gain on bargain purchase and an improvement to net income due to their consolidation as described in the financial results section of this review.

2. Continue Growth in Smart PhonesThe Company continued to grow its smart phone business through expansion of distribution; excellent quality of product; marketing and promotions. The Company also set up mobile phone corners in over 150 of its shops, many of them with dedicated promoters.

In 2016, tablets/media pads unit sales increased by 105% over prior year and other smart phones increased by 54%.Singer sells HUAWEI and SONY branded mobile phones in both retail and wholesale and is the exclusive national distributor for these brands. The Company also sells SAMSUNG and APPLE phones in selected retail outlets.

We re-entered the mobile phone business in 2010 considering that the mobile phone is the first purchase by a youth and it was important for Singer to cater to mobile phones in order to tie in the young consumers and since the mobile phone market is one of the largest segments in the consumer durable industry.

Since our re-entry, we had success with smart phones (including tablets/media pads) as shown in the growth of unit sales below.

2011 2012 2013 2014 2015 2016

380 4,660 47,880 131,200 312,900 488,500

3. Expansion of Capacity at the Refrigerator Factory of Regnis (Lanka) PLCConsequent to the refrigerator factory introducing refrigerators with R600a technology, the superior electricity saving offered by the R600a technology, modern designs for the GEO and ECO refrigerators and an excellent marketing campaign, resulted in a huge demand for these refrigerators. The factory has not been able to produce to meet the demand. At the end of 2015, the factory changed the process where pre-painted sheets are used, instead of the painting being done in the factory enabling production to increase by 20%. Further, at the end of 2016, higher capacity machines were installed further raising capacity by around 20%.

4. Introduction of Singer Credit Card by Singer FinanceDuring the year, Singer Finance (Lanka) PLC had the public launch of the Singer branded Credit Card. This is an internationally-accepted credit card through VISA.

Singer Finance has the honour of being the first non-banking financial institution to launch a credit card.

Singer’s entry into the credit card business is considering the following:

Singer has been in the consumer finance business in Sri Lanka since its inception by offering hire purchase to customers. We see that in the long term this business could be taken over by credit cards. Singer has many years of experience in consumer finance and would be in a position to offer the credit card to the consumers of the mass market. Currently, credit cards are used by less than 5% of the eligible population.

In October 2015, Singer commenced issuing credit cards on a limited and test basis and had the public launch in July 2016. With over 10,000 cards issued, Singer credit card is one of the fastest growing credit cards in the country.

5. Launch of Singer Vista Smart TVThe Company launched a Smart TV under the Singer brand named Singer Vista. The superior quality of the product, the offering to the customers, backed by an excellent marketing campaign resulted in Singer branded flat panel televisions increasing by 28%. Total of all brands of flat panel televisions increased by 15%. Moreover it helped to increase the sales of larger televisions and smart TV’s. Televisions 40” and above increased by 127%. Smart TV’s increased by 670% and now constitutes 12% of total panel TV sales.

6. Expansion and Modernisation of Retail ShopsThe Company opened 8 new showrooms. Singer Plus channel opened one new showroom, Sisil World channel opened three new showrooms and Mega channel opened two new showrooms and Singer Homes opened two new showrooms. With 422 showrooms around the country we are present in almost every town and bazar.

Hence, our focus is more on modernisation - renovation and expansion of retail space of existing showrooms. The company renovated 27 existing shops and upgraded eight satellite showrooms to Singer Plus showrooms.

With the upgrades, new shops and renovations a total of 43 new shops were provided with a complete uplift to reach the high merchandising standards practiced by the Company.

GROUP CHIEF EXECUTIVE OFFICER’S REVIEW


7. Grow E-Commerce BusinessWhile the e-commerce industry is small in Sri Lanka we have taken steps to grow this area to become a major player.

During the year we partnered the leading e-commerce sites by selling our products through these sites both for deals and for the mall.

Singer’s own website was re-vamped to be more customer friendly; cash on delivery was introduced in 2015; the deal section (named Singer Hot Deals) was marketed; options were given to customers on delivery or pick up; equal monthly instalment schemes on credit cards were offered to customers.

Total sales grew by 71% off a relatively small base. A third of the sales were from expatriates buying for family in Sri Lanka.

8. Expansion into Wholesale MarketsOver the last two years the company expanded its presence in the wholesale market in segments not present previously.

a. Sale of furniture to wholesale dealers including specialised furniture dealers.

b. Sale of computers to wholesale dealers including specialized computer dealers.

In addition, the Company commenced a second wholesale channel selling new brands. In July 2016, SONY branded products were offered to wholesale dealers – prior to this only retail outlets sold SONY.

In 2016, sales of these increased 350% and crossed the Rs. One billion mark.

Products, Brands and ChannelsWe continued to position ourselves to be the preferred consumer durable retailer/wholesaler to meet the requirements of the customers.

In the current year all segments recorded growth;The largest segment – Home Appliances saw revenue increasing by 24%. Within this segment, refrigerator unit sales increased by 17%, washing machines by 13%, deep freezers by 22%, air conditioners by 57%, bottle coolers by 73%, air coolers by 29%, gas ovens by 14% and fans by 11%.

The second largest segment IT products grew revenue increasing by 40%. Within this segment (as mentioned under Key Initiatives), tablets increased by 105% and smart phones increased by 54%. Computers too increased by 10%; digital cameras continued to decline as the product is becoming redundant. Feature phones declined as we have exited this product.

The third largest segment, Electronics had revenue increasing marginally by 6%. While total television unit sales grew (as mentioned under Key Initiatives) there was a decline in audios, DVDs and home theatres.

The Group Financial Services consisting of finance income from Singer (Sri Lanka) PLC and Singer Finance grew by 15%.

The sewing segment revenue increased by 9%; furniture segment revenue increased by 20% and “other” increased by 19%.

The Singer Lifestyle Exhibition, which showcased the vast array of our products and brands to the public, was held once again at the BMICH in Colombo. We also conducted a lower scale exhibition in five other towns, namely Galle, Bandarawela, Chilaw, Batticaloa and Jaffna.

By using our strength and breath in sourcing of products, Singer continued to supply high quality products at reasonable prices. We continued to bring the latest models and latest technology within each product line.

Singer continued to expand and modernise the retail shops as mentioned in Key Initiatives. The wholesale network too continued to strengthen with addition of new dealers. In case of other new channels, (not mentioned under Key Initiatives) the Digital Media channel continued its growth, with a 49% growth in 2016. It is now one of our major channels. The channel works through distributors and reaches close to 2000 small outlets selling mobile phones, accessories and connections.

The Central Air Condition channel continued to win new contracts. Singer is now recognised as a strong player in this

GROUP CHIEF EXECUTIVE OFFICER‘S REVIEW

By using our strength and breath in sourcing of products, Singer continued to supply high quality products at reasonable prices.


sector. The B2B operations continued to grow well, especially in computers, mobile phones and air conditioners. The Company continued opening ‘Mini Shops’ in rural towns operated under a branch. Some of these were seasonal, while others continued throughout the year.

Singer continued to actively engage followers on social media. Singer Facebook now counts over 396,000 fans.

The new loyalty programme linked to our ERP system increased its membership to 785,000. Members enjoyed special terms at our outlets and benefits from other organisations. Members were able to purchase items by redeeming their loyalty points.

Financial Services and Consumer CreditThe Group continued to offer a wide range of easy payment plans to customers on its own through other banks and finance companies and through credit and debit cards. The Group had several promotions to increase consumer credit. The number of hire purchase accounts increased by 15% during 2016. The Group had 423,000 consumer durable accounts – in terms of customers serviced, this is second only to top banks.

Under Financial Services, customers can enjoy the following services at all Singer shops:

z Pay utility bills, credit card bills and insurance premiums; z Obtain mobile phone reloads; z Collect funds remitted through Western Union and; z Upload funds and withdraw funds using mobile cash.

The number of financial services transactions increased by 6%, while value increased by 17%. It is noteworthy that an average of 222,000 transactions took place in our shops each month and we collected/paid out Rs. 8.0 billion on financial services.

Human ResourcesHuman Resources is the most important asset of the Company, since all other assets are managed and operated by this resource.

The Company continued to have very good industrial relations. The Company continued its engagement activities and events for employees as well as their families and increased the development and training for its staff as well as for our partners and their staff. Details of these are given in the sustainability report.

Singer continued to be placed among the Top 25 Great Places to Work in Sri Lanka.

After Sales Service and LogisticsSinger continued to have the best After Sales Offering to the consumers in Sri Lanka. A new Regional Service Centre was added in Nittambuwa. Our Logistics Centre in Colombo is taxed to the maximum. Therefore a regional Logistics Centre was planned in 2015. This will be commissioned in early 2017.

Information and Communication TechnologyWe continue to make enhancements to the on-line real-time ERP system.

Key enhancements included recording collections outside of shops, in the field using mobile phone interface with the ERP and serial number tracking of mobile phones at all retail outlets using scanners.

The Company continued to send out reminders to customers via SMS on their instalments due for payment. This state-of-the art technology used by us is not even used by many banks and financial institutions.

The Company also continued to send marketing and promotional SMS to our customer data base. Outside of telecommunication companies, Singer probably has the largest communication by SMS to its customers. SMS is also used to notify most customers on completed repairs. The Group Call Centre had close to 810,000 inbound/outbound calls compared to 597,000 in prior year. These related to welcome calls for new hire purchase customers, after sales service, marketing and promotions and follow up on arrears.

Call Centre software was upgraded giving better information to call centre agents.

Manufacturing Division of Singer (Sri Lanka)The manufacturing division of the Company consists of Agro and Furniture factories. The value of production increased by 24% over the prior year.

The production of water pumps had a huge increase of 40% this year. Furniture production increased by 12%.

The factory introduced 11 new models for furniture including products using paper laminated boards for lower end of the market and products using high gloss board pantries for the upper end. We continued to upgrade the machinery including a CNC machine, Edge Banding machine and Beam Saw.



Regnis (Lanka) PLC GroupRegnis (Lanka) PLC Group consists of Regnis (Lanka) PLC which manufactures refrigerators and Regnis Appliances which manufactures washing machines and plastic components for refrigerators.

Regnis (Lanka) PLC Group's revenue increased to Rs. 4.8 billion an increase of 15.5%. Net profit increased to Rs. 350.3 million, an increase of 2%.

The refrigerator production increased by 21% as capacity was increased (as explained in key initiatives) and washing machine production increased by 17%.

Regnis Group's increase in production, revenue and net income over the last three years lead it to be listed among Forbes Asia’s 200 Best under a billion companies – one of three Sri Lankan companies so named.

Singer Industries (Ceylon) PLCSinger Industries (Ceylon) PLC which manufactures sewing cabinets and stands and assembles sewing machine heads had a marginal growth in revenue. The Company made a Profit of Rs. 42.0 million, including Rs. 24 million gain on change in fair value of investment property against a loss in the prior year. The loss in prior year was due to the Voluntary Retirement Scheme.

The volumes of machine heads increased marginally, with a big increase in portable machines. Cabinets and stands declined due to shift to portable machines.

Singer Finance (Lanka) PLCSinger Finance (Lanka) PLC, revenue increased by 16%, but Net Profit decreased by 2% for the year as a result of higher financing cost, initial costs of credit card operations and impairment of the current software programme which is being replaced. One of its key achievements was the launch of the credit card as mentioned under key initiatives.

Singer Finance (Lanka) PLC opened two new branches in Nugegoda and Kiribathgoda.

Sustainability and Corporate Social ResponsibilitySinger believes that it is our duty to safeguard the environment and to carry out Social Responsibility Projects. The work done on these areas is very extensive and are described in pages 74 to 118 We encourage as many employees as possible, to participate in CSR activities.

Singer is very proud to continue to be in the top ten Best Corporate Citizens in the country.

The Financial Results for the yearSince the details, are given in the Financial Review, I will highlight only the significant areas in this section.The Singer Group Revenue reached Rs. 46.9 billion in 2016 – a growth of Rs. 8.2 billion over the prior year and in percentage terms a growth of 21%.

The Group Net Profit for the year inclusive of a one-time gain was Rs. 2,358 million, which is an increase of 91% when compared with prior year. In case of the Company, net profit for the year was Rs. 1,104 million, which is an increase of 28%.

Singer Industries (Ceylon) PLC was acquired for Rs. 664.1 million. There is a gain on bargain purchase of Rs. 469 million. While earnings of Singer Industries (Ceylon) PLC have been low for many years, the consideration is on the value of the assets of the Company, especially the land.

Regnis (Lanka) PLC was acquired for Rs. 722.5 million and at a gain on bargain purchase of Rs. 94.9 million.

Post-Acquisition, the Net Income of these two companies are consolidated in the Group results of Singer (Sri Lanka) PLC. After considering the financial costs of the acquisition and consolidation adjustments arising out of the acquisition it resulted in an improvement in net Income of approximately Rs. 224.6 million in 2016. There was no acquisition and consolidation in the last year. There was no increase in Group Revenue due to the acquisitions.


The Singer Group Revenue reached Rs. 46.9 billion in 2016 – a growth of Rs. 8.2 billion over the prior year and in percentage terms a growth of 21%.


The Group total comprehensive income for the year was Rs. 2,623 million and in case of the Company, total comprehensive income was Rs. 1,363 million. The comprehensive income growth includes revaluation of Property, plant & equipment which is done once in two years and included re-measurement of Defined Benefit obligations.

The earnings per share increased to Rs. 16.95 from Rs. 9.21 in prior year.

The growth in revenue and profits can be attributed to initiatives taken by the Group, mentioned in the preceding sections of this review.

Changes in the Board and the ManagementMr. Stephen Goodman was Appointed to the Board of Directors in March 2016. Mr. Stephen Goodman is the Chairman of Retail Holdings N.V., which is the Ultimate Parent Company of Singer (Sri Lanka) PLC. He was a member of the Board of Directors of Singer (Sri Lanka) PLC in the past.

We welcome Mr. Stephen Goodman back on the Board and wish him all the best.

Mr. Gelmart Gellecanao was appointed to the Board of Directors in May 2016. He does not offer himself for re-election. We wish to thank Mr. Gelmart Gellecanao for his valuable contribution to the Board.

Mr. Sujeewa Perera was appointed as an Alternate Director on the Board. Mr. Sujeewa Perera is the Factory Director of Singer (Sri Lanka)’s manufacturing plant and has been with the Company since September 1994. We wish Mr. Sujeewa Perera continued success with the Company in the coming years.

Conclusion I wish to place on record my appreciation of all our staff for their contribution and commitment in achieving these outstanding results. There was exceptional contribution across all ranks and all divisions and departments in the Group.

I also thank the Group Chairman, Dr. Saman Kelegama and the Chairman of Singer Asia, Mr. Stephen Goodman and Chief Executive Officer of Singer Asia, Mr. Gavin Walker for their continued guidance, support and encouragement.


I also thank the Board of Directors of the Company and of its subsidiaries and the Board of Directors of Singer Asia for their valuable support and guidance.

I also thank all our shareholders for their continued trust in the Board of Directors and the Management of the Company and the Group.

Sincerely,

Asoka PierisGroup Chief Executive Officer

23rd February 2017


THE BOARD PROVIDES LEADERSHIP TO THE COMPANY WITH A VIEW TO DELIVERING LONG-TERM VALUE TO SHAREHOLDERS AND ALL OTHER STAKEHOLDERS. THE BOARD ALSO SETS THE STRATEGY AND OVERSEES ITS EXECUTION WITHIN AN AGREED FRAMEWORK OF INTERNAL CONTROLS, ENSURING RISK IS APPROPRIATELY MANAGED.


Dr. Saman Kelegama Chairman

Joined the Board of Singer (Sri Lanka) PLC as Director on 1st June 2006.

Chairman of Singer Finance (Lanka) PLC., Regnis (Lanka) PLC, Regnis Appliances (Private) Limited, Reality Lanka Limited, and Singer Industries (Ceylon) PLC. Board member of the SC Securities (Pvt) Limited, Postgraduate Institute of Management (PIM), Standing Committee on Humanities and Social Sciences, University Grants Commission and the Gamani Corea Foundation.

Executive Director, Institute of Policy Studies of Sri Lanka, Fellow, National Academy of Sciences in Sri Lanka, former President and Honourary Fellow of the Sri Lanka Economic Association and author of several publications on the economy of Sri Lanka and the South Asian region.

D.Phil (Economics), Oxford University, UK.

Joined the Board of Singer (Sri Lanka) PLC on 1st August 2004. Appointed as Managing Director and Group Chief Executive Officer of Singer Group of Companies on 1st July 2010.

Director of Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC, Reality (Lanka) Limited, Regnis Appliances (Private) Limited, Singer Digital Media (Private) Limited, Singer Business School (Private) Limited and Director of Equity Investments Lanka Limited. Vice President of Singer Asia Limited and Retail Holdings NV.

Prior to the present appointment, Mr. Asoka Pieris was Chief Financial Officer of Singer Asia Limited.

Associate Member of The Institute of Chartered Accountants of Sri Lanka. Fellow Member of the Chartered Institute of Management Accountants UK and a certified Global Management Accountant.

Deepal SooriyaarachchiDirector

Mr. Deepal Sooriyaarachchi joined the Singer (Sri Lanka) PLC Board on the 1st October 2015.

Mr. Deepal Sooriyaarachchi is a Chartered Marketer, a Fellow of the Chartered Institute of Marketing UK and holds an MBA from the University of Sri Jayawardenepura.

Mr. Sooriyaarachchi, counts over 30 years of experience in the fields of sales, advertising, marketing, human resource development and strategy. He is a renowned Management Consultant, Speaker, Trainer and an Author. Before embarking on full time consultancy work he was the Managing Director of AVIVANDB Insurance PLC (now known as AIA Insurance). He had received extensive management training and exposure here and overseas including National University of Singapore, Asian Institute of Management and Stanford Business School USA.

Mr. Sooriyaarachchi serves as a Non-Executive Independent Director of AIA Insurance Lanka PLC, Sampath Bank PLC, Pan Asian Power PLC and Hemas Manufacturing (Pvt) Limited. He is a consulting partner of RBL USA.

He is a Past President of the Sri Lanka Institute of Marketing, and a Past Commissioner of Sri Lanka Inventors Commission. He had served on a number of national bodies such as National Administrative Reforms Commission, Presidential Task Force for English, Councils of Moratuwa and Kelaniya Universities. He had also served UNDP in Nepal.

BOARD OF DIRECTORS

Asoka Pieris Director


Gavin J. WalkerDirector

Joined the Board of Singer (Sri Lanka) PLC, as Director on 1st November 2005.

Mr. Walker is the President and Chief Executive Officer of Singer Asia Limited, and was appointed to this position in August 2005. Prior to joining the Company, Mr. Walker held offices as Managing Director and Chief Executive Officer of public quoted and private companies in the United Kingdom and South Africa. Mr. Walker, served as Chief Executive Officer of a multi-brand retailer of electrical appliances and furniture with operations in 16 African countries and Australia (including SINGER® brand electrical appliances under license). Mr. Walker serves on the Board of a number of Singer Asia Subsidiaries.

Joined the Board of Singer (Sri Lanka) PLC on 10th June 2011.

John Hyun is a Managing Director of UCL Asia, one of Hong Kong’s larger direct investment groups in terms of liquid capital. Mr. Hyun began his career in finance more than 20 years ago as part of Bankers Trust’s Asia Private Equity investment team based in Hong Kong before relocating to Seoul to help establish its Mergers, Acquisitions & Advisory group with BT Wolfensohn. He returned to Hong Kong in 1999 with Investor Asia, the Asian operations of Investor AB, the Swedish industrial holding group. Mr. Hyun joined UCL in 2003. Mr. Hyun serves on the boards of Sewko Holdings Limited, Singer Finance (Lanka) PLC, Whittington Group Pte Limited, and several non-profit organisations active in Asia. He is an alumnus of the University of Chicago.

John HyunDirector

Joined the Board of Singer (Sri Lanka) Limited, on 5th May 2016.

Mr. Gellecanao joined Singer Corporate office in May 1994 as an International Auditor and is the VP-Risk Management of Singer Asia Limited. He is also a member of the Board of Directors of Singer Bangladesh Limited, and International Appliance Limited.

Mr. Gellecanao has worked as Controller in a number of Singer locations and was the acting CFO of Singer Asia from July to August 2010. Prior to this, he spent 10 years at SGV & Company, a member firm of Ernst & Young in the Philippines. He holds a B.S. in Business Administration Degree from the University of the Philippines and is a Certified Public Accountant (Philippines) and a Certified Internal Auditor (USA).

Gelmart M. GellecanaoDirector

BOARD OF DIRECTORS


Ranil De SilvaDirector

Joined the Board of Singer (Sri Lanka) PLC on 1st April 2015.

Mr. De Silva is currently the Jt. Managing Director of Aitken Spence Hotel Management (Pvt) Limited. He was formerly the Managing Director of the Hemas Hotel Sector and has wide experience locally and overseas in diverse industries.

He is also a Director of Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC.

Mr. De Silva is a Fellow Member of the Chartered Institute of Management Accountants UK, Associate member of The Institute of Chartered Accountants of Sri Lanka and a Member of the Chartered Institute of Marketing UK.

Joined the Board of Singer (Sri Lanka) PLC on 1st October 2003.

Managing Director of UCL Asia Limited, (Hong Kong), Director, Singer Asia Limited, Observer, Singer Bangladesh Limited.

Mr. O’Donnell is an alumnus of both Harvard College and Harvard Business School.

Peter O’DonnellDirector

Rejoined the Board of Singer (Sri Lanka) PLC as Director on 31st March 2016; had previously served on the Board from 28th July 2000 to 16th May 2008.

Mr. Goodman is an Executive Director and Chairman of the Board of Sewko Holdings Limited, and is Chairman of the Board of Singer Asia Limited. He is also Director, Chairman, President and Chief Executive Officer of Retail Holdings N.V., the Ultimate Parent Company of Singer (Sri Lanka) PLC. Mr. Goodman has held that position and a similar position at a predecessor company, since January 1998. Prior to joining the predecessor company, Mr. Goodman was a Managing Director at Bankers Trust Company.

BS (Economics), Cornell University; MA, MPh (Economics), Yale University.

Stephen GoodmanDirector

BOARD OF DIRECTORS

P:22

Lalith Yatiwella Alternate Director

Ajith ParanavaitaneAlternate Director

Kumar Samarasinghe Alternate Director

Joined the Board of Singer (Sri Lanka) PLC as Director on 13th November 2014.

Director – Information and Technology of Singer (Sri Lanka) PLC and Vice-President Information Service of Singer Asia Limited.

Mr. Paranavaitane has worked in the IT industry for over 30 years, starting as a software engineer in 1983. He joined Singer Sri Lanka in 1987 and was responsible for setting up the IT division from inception. Mr. Paranavaitane also spent a year in the United States working as a senior consultant for a software and engineering firm before returning to Singer Sri Lanka as Deputy Director IT in 2000. He was subsequently promoted to Director IT in 2005. He graduated from the University of Colombo of Sri Lanka in 1982 with a Bachelor of Science and from the National Institute of Business Management Sri Lanka in 1984 with a Diploma in Computer Systems Design. He also has a postgraduate Diploma in Business and Financial Administration from The Institute of Chartered Accountants of Sri Lanka in association with University of Wageningen, Holland in 1997 and is a Chartered IT Professional and Fellow of the British Computer Society, United Kingdom.

Joined the Board of Singer (Sri Lanka) PLC as Director on August 8, 2014.

Finance Director of Singer (Sri Lanka) PLC. He is also a Director of Singer Digital Media (Private) Limited, Singer Business School (Private) Limited. Alternate Director of Singer Finance (Lanka) PLC.

Mr. Yatiwella is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and holds a BSc (Hons) Special Degree in Business Administration from University of Sri Jayawardenapura.

Joined the Board of Singer (Sri Lanka) PLC on 14th February 2011.

Director of Sales and Sewing Marketing of Singer (Sri Lanka) PLC.

Holds a Diploma in Business Administration and Diploma in Marketing and MBA from University of London.

Singer (Sri Lanka) PLC ANNUAL REPORT 2016BOARD OF DIRECTORS

P:23

Joined the Board of Directors of Singer (Sri Lanka) PLC on 5th May 2016.

Mr. Sujeewa Perera joined the Singer Group in September 1994 as an Internal Auditor after completing articles at KPMG and has risen through the corporate ladder. He joined SSL Factory as an Assistant Accountant in June 1997 and was promoted to Management Accountant in February 2001. In January 2005 he was promoted to Senior Management as Factory Controller and was responsible for finance as well as human resources.

In July 2011, Mr. Sujeewa Perera was appointed as Factory Manager at the Singer Sri Lanka Factory and in July 2013 was promoted as Factory Director.

Sujeewa PereraAlternate Director

A.C.M. IrzanSecretary to the Board (Since 15th May 2008)

Mahesh WijewardeneAlternate Director

Joined the Board of Singer (Sri Lanka) PLC on 1st June 2006.

Director Marketing and Commercial of Singer (Sri Lanka) PLC and Member of the Singer Asia Sourcing Committee.

Director of Singer Digital Media (Private) Limited and Singer Business School (Private) Limited. Serves in the Board of CSR Lanka (Guarantee) Limited.

Past Chairman of the Ceylon Chamber of Commerce-Import Section and Sri Lanka-China Business Council.

Holds a Masters in Business Administration from the University of Southern Queensland, Diploma in General Management.

Alternate Director, Singer Industries (Ceylon) PLC and Head of Treasury & Investor Relations Singer (Sri Lanka) PLC. A Fellow of the Chartered Institute of Management Accountants, UK, Associate of the Chartered Institute of Marketing, UK and holds an MBA in Marketing from the University of Colombo, Sri Lanka.

Singer (Sri Lanka) PLC ANNUAL REPORT 2016 BOARD OF DIRECTORS


A.P. ManoratneDeputy Director – Service and Logistics

L.A.D.K. PereraDeputy Director – Information Technology

G.A.K. Weerasuriya Senior Manager – Inventory

N.B. KarunaratneDirector – Human Resources

M. Mahesharatnam Business Development Manager – Sisil Channel

M.M.C. Priyanjith Head of Risk Management

R.S. WijeweeraChief Executive Officer/Director – Singer Finance (Lanka) PLC

S. RamanathanDirector – Logistics

D.B. Wijesundera Marketing Manager – White Goods

MANAGEMENT TEAM

H.V. Gomes Senior Manager – Financial Services


A.U. Karunaratne Senior Manager – Merchandise and Promotions

T.G.S. Perera Senior Manager – Recoveries

W.L.I.A. Gunathilake Business Development Manager Singer Mega & Singer Homes

I.A.S. Kolambage Commercial Manager – Piliyandala Factory

O.D. AmarathungaSenior Manager – Services

K.R.L. Perera Group Administration Manager

C.A. SamarasingheDirector – Operations

R.C. De La Motte Business Development Manager – Wholesale Channel

J. MendisDirector – Credit

B.T.L. MendisDeputy Director – Commercial

MANAGEMENT TEAM

P:26 Singer (Sri Lanka) PLC ANNUAL REPORT 2016MANAGEMENT TEAM

A.R.N.P.K. WijesunderaSales Manager – Agro and Transportation

H.S. Perera Senior Manager – Budget and Planning

A. Sathyamoorthy Senior Manager – Trade Credit

P. JayatilakaSenior Manager – Direct Marketing

K.P. PeramunugamageHead of Business School

K.S. Wijekulasuriya (Mrs.) Senior Manager – Retail Channel Accounts

N.I. Kuruppuarchchi Senior Manager – Legal

R.B. Gaspe Business Development Manager – New Projects

L.R.P. Perera Business Development Manager – Retail Channel

P:27Singer (Sri Lanka) PLC ANNUAL REPORT 2016 MANAGEMENT TEAM

T.S. MartynSenior Manager – Apparel Solutions

K.D.J.M. PereraBusiness Development Manager – Digital Media

N.L.D.W. AmarathungaOperations Manager – Furniture – Piliyandala Factory

T.L. Seneviratne Senior Manager – Information Technology

D.D.W. DassanayakeSenior Manager – Credit

S. Serasinghe Senior Manager – Distribution

N.B. RanasingheSenior Manager – Revenue and Margin

L.D.P.T.K. Liyanage (Mrs.) Finance Manager

K.I.S. Perera Business Development Manager – J Plus Channel

K.D.S. Kanishka Senior Manager – Promotions

R. Silva Business Development Manager – Institutional Sales

Singer (Sri Lanka) PLC ANNUAL REPORT 2016P:28 MILESTONES

1815 20011974 1988 1998

1877 1981 1992 2000

Singer commenced operations in Sri Lanka introducing sewing machines.

Listed in the Colombo Stock Exchange.

Singer commenced manufacturing of furniture and agricultural products at the Piliyandala factory.

Acquired the local brand, Sisil.

Isaac Merrit Singer incorporated I. M. Singer & Company (Singer) and commenced production of sewing machines in the United States.

Incorporated as a Limited Liability Company.

Singer commenced manufacturing refrigerators in Sri Lanka through Regnis (Lanka) PLC.

First Singer Mega store opened in Sri Lanka.

First Singer Homes store opened in Sri Lanka.

P:29Singer (Sri Lanka) PLC ANNUAL REPORT 2016 MILESTONES

2004 2011 2015

2003 2010 2014

Singer Corporation formed Singer Asia to hold interests in Sri Lanka

Singer Finance (Lanka) PLC listed via Rs. 400 million IPO

Singer opened its 400th retail store

Established Singer Finance (Lanka) PLC.

Singer entered large scale smartphone business in Sri Lanka.

Singer Finance (Lanka) PLC launched credit cards.

2016

Conducted a group restructuring and acquired majority stakes of Regnis (Lanka) PLC and Singer Industries (Ceylon) PLC from its common parent, Retail Holding Sri Lanka BV (Formerly known as Singer (Sri Lanka) BV)

P:30 Singer (Sri Lanka) PLC ANNUAL REPORT 2016YEAR AT A GLANCE

JAN MAR MAY

JUNAPRFEB

The Annual Marketing Convention was held at BMICH

The Annual SISIL World Convention was held at Waters Edge Hotel

Opened Singer Homes Showroom in Kandy

VISTA series of Smart Televisions was launched

Digital media Channel Achievers’ Night was held at Waters Edge Hotel In Battaramulla

The Inaugural Singer Agro Convention was held at Waters Edge Hotel in Battaramulla

Opened new SISIL Showroom in Veyangoda

Annual Religious Ceremony was held in January

The Annual Dealer Convention was held at Waters Edge Hotel

Opened Hospital Road - Jaffna Singer Plus Showroom and Niwala satallite shop

Upgraded satellite shops in Imaduwa and Pinnaduwa to Singer Plus Showroom

‘SISIL World New Year Bonanza’ exhibition and fair was held at Sanath Jayasuriya Ground in Matara

Opened new SISIL Showroom in Thambuttegama

Upgraded following satellite shops to Singer Plus Showroom

– Eppawala – Habarana – Pannala

Singer (Sri Lanka) PLC ANNUAL REPORT 2016 P:31YEAR AT A GLANCE

JUL SEPT NOV

DECOCTAUG

Opened two new Singer Computer Academies at Anuradhapura and Wennappuwa

Singer Management Conference was held at Blue Waters Hotel

Opened following New Showrooms

– Singer Mega Kaluthara – SISIL World Welimada

Singer (Sri Lanka) PLC was awarded as one of the ‘Top 25 Best Companies to work for in Sri Lanka’ for the 3rd consecutive year

Opened new Singer Homes Showroom in Wellawatta

Upgraded satellite shop in Wilgamuwa to Singer Plus Showroom

Beko Thailand range of refrigerators was launched

Singer Galle Fiesta Exhibition 2016 was held at Galle International Cricket Pavilion

Opened new service centre and Singer Vocational Academy at Pasyala

Opened new Singer Mega Store in Boralesgamuwa

Singer Lifestyle Fiesta, exhibition and funfair was held on for the 6th consecutive year

Upgraded satellite shop in Kebithigollawa to Singer Plus Showroom


OPERATIONS REVIEW


Positioned to Lead

Journey of trusted excellence

Singer; synonymous with trust and excellence, has earned the

reputation as a segment defining brand, delivering class, leading reliability and

durability with an outstanding customer service.

A multi-brand product portfolio

From simply selling domestic sewing machines to the Sri Lankan market in 1877 to today’s full range

of electronic home appliances of international repute, Singer has a legacy

of leadership unique in the industry.

Singer Network

We’ve consolidated our position as the leading consumer durables company

in Sri Lanka. Through our wide network of retail outlets, strategically located island-wide, we serve customers in

every part of Sri Lanka.


A Journey of Leadership

A Heritage to be Proud ofSinger has been in Sri Lanka since the introduction of sewing machines to the domestic market by the Singer Corporation in 1877. From the sale of home appliances to the Sri Lankan market by the Singer Corporation in 1957, Singer has become a familiar name in the local consumer durables space.

Singer Corporation incorporated Singer (Sri Lanka) PLC in 1974 and was listed in the Colombo Stock Exchange in January 1981.

Singer Finance, the finance subsidiary of Singer (Sri Lanka) PLC was incorporated in 2004. The subsidiary companies Reigns (Lanka) PLC and Singer Industries (Ceylon) PLC, manufactures washing machines, refrigerators and sewing machines. It was in 2015 that Singer (Sri Lanka) PLC, along with Singer Asia commenced a restructuring process to amalgamate all local operations under Singer (Sri Lanka) PLC. This was to enable Singer Asia to operate through one holding company in each country it had an interest in. Consequently, Singer (Sri Lanka) PLC acquired 83.55% and 58.29% stakes in Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC respectively, in the months of January and February 2016. Approximately, 33% of products sold by Singer (Sri Lanka) PLC are manufactured locally.

Our Leadership Achieving a leadership position and sustaining it over a long period of time is not an easy task, be in the field of sports, politics, quality maintenance or trust. You are certain to be straddled up, in the bandwagon of cyclical change which has its natural inclination of giving turns for success. However, Singer has ridden this bandwagon by claiming a leadership position over a very long period of time, navigating through many challenges, standing the test of time.

Singer has not only been the leader of the consumer durables retail business in Sri Lanka over a considerable time period, but has led in terms of quality, brand promise, operational efficiency, integrity and social responsibility. This leadership position has been endorsed by the many awards the Company has won over the years including, the People’s Durable Brand of the Year Award, People’s Youth Brand of the Year Award, People’s Brand of the Year Award for 10 consecutive years and by being recognised as one of the best places to work in Sri Lanka.

Unique Business ModelSinger has successfully developed an unique business model which has stood the test of time. No competitor has successfully emulated the culture and processes of this unique business model. Just like mighty Oaks grow from the little Acorns, Singer has branched out from a single product to a host of products, carefully chosen to satisfy modern consumer needs in the area of consumer durables.

Singer (Sri Lanka) PLC traces its origins back to 1877 to a small store in Pettah; just like the little Acorn. The growth over the years of Singer (Sri Lanka) PLC matched the great Oak of our parent company. From 1963 to 1995, we established Singer Industries (Ceylon) PLC., Regnis (Lanka) PLC and Singer (Sri Lanka) Piliyandala Factory which led to an impressive line of locally manufactured items - sewing machines, televisions, refrigerators, washing machines, solid and layered furniture and domestic/agro water pumps. Singer also ventured into a range of financial services, including own hire purchase financing to its customers and later setting up of a finance company and offering customers the convenience of settling utility bills from any Singer store island-wide. The latest addition to its financial businesses is to introduce Singer credit card from subsidiary company Singer Finance (Lanka) PLC. This vast offering of brands and products has achieved success, thanks to Company’s unique business model.

Strategy and ExecutionFor an organisation to succeed, all cogs in the wheel must move in harmony. Having a unique business model alone does not spell success, unless strategy is executed into action. The Company has a large workforce with a wealth of knowledge; many having been with the Singer family since

OPERATIONS REVIEW

Singer has not only been the leader of the consumer durables retail business in Sri Lanka over a considerable time period, but has led in terms of quality, brand promise, operational efficiency, integrity and social responsibility.


joining as school leavers or after graduation; skilled and experts in the fields of retail, manufacturing and finance. This talent base is adept at escalating ideas and first hand operational information to the top management, which is essential to formulate strategies and make decisions to meet customer needs most effectively. The business model is such that information flows through to the decision-makers in a timely manner, facilitating information to be analysed and utilised in time, to achieve success.

‘Trusted Excellence’We continually strive to deliver excellence in Product and Services quality. This is because; Singer has been built on a strong foundation of customer confidence. This is affirmed by the many accolades we have won over the years, including the People’s Brand of the Year Award for 10 consecutive years, Consumer Brand of the Year Award, Youth Brand of the Year, based on island-wide research carried out by AC Nielsen and the Sri Lanka Institute of Marketing.

The Singer brand offers a wide spectrum of product categories such as consumer electronics, household appliances, sewing machines, air conditioners, furniture, agricultural implements, motor cycles, smart-phones and digital media products and personal computers. The strong interactions we maintain with our customers, coupled with our aggressive brand development and CSR activities, have enabled us to achieve greater success over the years. We passionately promote sports in Sri Lanka as well. Our close association with Schools Cricket League, Schools Rugby and the Bradby Shield is a testament to this fact.

Our uncompromised commitment to providing excellence in pre-sales and after-sales service to our consumers across the entire social spectrum has enabled us to uphold our brand promise - ‘Trusted Excellence’ year after year. Our reputation has reached great heights as we speak and live our brand promise. While delivering on our brand promise on a daily basis, we constantly look at avenues to enhance that promise.

Our Multi Brand Strategy Singer Sri Lanka has consciously followed a multi brand strategy leveraging the brand equity of Singer. This strategy was adopted to target multiple segments of the Sri Lankan consumers, enabling Singer to introduce high quality, brand leading, innovative products at affordable prices leading to economies of scale from the wide network of distribution channels. This strategy has helped Singer to enhance customer associations and perceptions and strengthen the Singer brand. This has undoubtedly enabled us to reach the eminent position that we have attained in the consumer durables retailing market space in Sri Lanka.

OPERATIONS REVIEW

Singer now boasts of over 40 brands of international repute, giving the widest possible choice to the customer of any social strata whatever their lifestyles, taste, expectations and aspirations may be. Given below is a brief introduction to our brand offering, how we manage those brands, our relationship with the principals, our initiatives under each brand and their performance during the year. Through these brands, we believe that we were able to deliver unprecedented value to our customers and help them raise their living standards.

The Cooling SpecialistSISIL; the first refrigerator brand to be manufactured in Sri Lanka, 50 years ago, now holds a dominant market share in refrigerator, kitchen appliance and washing machine segments. We purchased the SISIL brand in year 2000 and leveraged on the strength of this brand. SISIL is also renowned for service excellence and durability and has outperformed many of the global brands in terms of trust and reliability.

Change for the BetterSinger is the sole distributor and authorised service partner for Beko in Sri Lanka since 2013. Beko brand has maintained its position as the number one free standing home appliances brand in Europe. Beko offers smart technologies with stylish functional design that are both eco-friendly and user-friendly with enhanced functionalities and efficiency. Singer, together with Beko offers a premium experience through a range of cutting edge Beko appliances for the modern home. The Beko products marketed in Sri Lanka includes refrigerators, free standing electric and gas as well as built in ovens, washing machines, built in hoods and hobs, dishwashers and dryers.

Beko conducted a promotion during 2016, where three lucky couples and the top most contributor for Beko sales, got the opportunity to travel to Spain to watch FC Barcelona Football match. Beko is the club’s worldwide sponsorship partner for a period of four years from 2014 to 2018.

Additionally, a Singer – Beko fun baking event was held, which attracted many enthusiastic mothers and children.


backed by our strong support and distribution. Singer – Huawei partnership celebrated its 4th year and underscored its position as the number one quality smartphone in Sri Lanka. As per the latest GfK Report, Huawei is ranked as the No. 2 smartphone brand in the country with over 30% market share. The brand’s popularity and sales continued to portray an upward trend as it consolidated its market leadership position, including the No. 2 slot in Sri Lanka, which it had consistently maintained in 2013, 2014 and 2015 in the smartphone segment.

Our Technologies Your TomorrowSinger Sri Lanka entered into a partnership with Mitsubishi Heavy Industries – Mahajak Air Conditioners in 2015. Mitsubishi air conditioners are manufactured in Thailand by Mitsubishi Heavy Industries – Mahajak Air Conditioners Co. Limited (MACO).

MACO manufactures highly efficient, superior quality air conditioners to cater to the residential and industrial air conditioning requirements including low/high capacity inverter/non-inverter split type air conditioners and highly efficient Variable Refrigerant Flow (VRF) air conditioning systems. The brand is renowned for its high quality, reasonable price and environment friendly technologies.

Singer introduces innovative and versatile kitchen appliances under the reputed French brand; Moulinex every year. These appliances are designed to enhance the efficiency and effectiveness in cooking and food preparation enabling modern housewives to reduce the time they spend in the kitchen, which is a need of the day.

Samsung – Turn on TomorrowSamsung Electronics, is the global leader in high-tech electronics manufacturing and digital media. Singer’s partnership with Samsung thrived in 2016. As one of the world’s leading appliance brands, Samsung continued to dominate the market with its cutting edge technology in TVs, refrigerators, mobile phones as well as a host of other product categories. Samsung brand has over the years attracted consumers of all categories regardless of the gender or socio-economic levels. Samsung is ranked on top when it comes to most advanced Smart TVs and energy saving Digital inverter Technology Refrigerators and smartphones.

OPERATIONS REVIEW

Power to Do MoreDell empowers countries, communities, customers and people everywhere to use technology to realise their dreams. Customers trust Dell to deliver technology solutions that help them do and achieve more, whether they’re at home, work, school or anywhere in their world.

Singer partnered with Dell in 2014 and demonstrated a rapid growth in Dell sales resulting in increasing its overall market share in Sri Lanka within the first phase of operations. Accordingly, Dell has grown exponentially in Sri Lanka over a short period to become the leading PC brand in the local market for three consecutive years as per data released by the IDC. In recognition, Singer was awarded the Top Consumer Distribution partner in the South Asia Developing Marketing Group at the Dell South Asia and Korea Channel Summit 2016; the only Sri Lankan company to receive this accolade.

Inspire the NextConsumer products segment of Hitachi offers electronics products and home appliances such as optical disk drives, flat panel television sets, LCD projectors, room air conditioners, refrigerators, vacuum cleaners and air conditioning equipment. Singer unveiled the Hitachi range of inverter refrigerators and inverter range of domestic air conditioners in Sri Lanka, The brand presents advanced Japanese technologies such as the inverter X dual fan cooling technology; anti-bacterial, anti-mold and deodorising nano technology; energy-saving and eco-friendly, eco thermo sensors and R600a refrigerant; and flexible, humidity controlled and minus zero freezer compartments.

Make it PossibleHuawei brand performed well as evidenced by the many global accolades during 2016. The brand was listed as one of the ‘Most Valuable Global Brands 2016’ by Brand Z, ranked No. 72 in the ‘Inter Brand Best Global Brands 2016’ list. Huawei enjoys a market share of above 15% in 33 countries and above 20% in 18 countries.

Huawei has rapidly become a popular smartphone brand among Sri Lankan consumers through the establishment of an emotional connection between the brand and its users,


Be OriginalSharp Corporation of Japan is a leading innovator, having created many “world’s first” products. Amongst the many environmentally friendly energy saving products of Sharp, includes its signature 4 colour ‘Quattron Pro’ LED TVs, ‘Plasmacluster’ air purifiers and ‘Healsio’ microwave ovens. We have partnered Sharp as their sole agent for electronics and home appliances in Sri Lanka and as the preferred retail partner for office equipment since 2013. This has enabled us to offer the Sri Lankan market a range of cutting edge Sharp brand products, including LED TVs, microwave ovens, air purifiers, vacuum cleaners, fans, multifunction printers/copiers and cash registers.

Skyworth is a large scale high tech company mainly engaged in manufacturing of consumer electronics. It is operating under the motto of ‘MY WONDERFUL LIFE’.

Skyworth is continuously growing over the last few years mainly due to the product quality.

Skyworth has introduced OLED to the global market in last year and will be introduced for Sri Lankan market very soon.

Be MovedSony is the world renowned electronics manufacturer and supplier of world class and innovatively tech-savvy Japanese electronics. Sony manufactures a range of products including TVs, cameras, audio, video equipment, semi conductors, electronic components, professional solutions and even medical equipment. We were appointed the exclusive distributor for Sony Mobile Communications (Sony Mobile) in Sri Lanka in July 2014. Since December 2014, we are the retail distributor of a wide range of Sony products, including LED TVs, Smart TVs, Blu-Ray players, cameras and other electronic products.

The Creative LifeFounded 32 years ago, TCL is one of the fastest growing brands in China and the largest business groups of consumer electronics operating in a global scale. It makes a wide range of consumer electronics products and appliances like refrigerators, washers/dryers, air conditioners, Blu-ray players and cell phones in different regions across the world. By offering great products at reasonable prices through Singer, TCL has gained the trust of Sri Lankan customers.

Zoje Sewing Machine Company Ltd. is one of the largest industrial sewing machine manufactures in China since its inception in 1994, and houses the famous Zoje Brand. Zoje is well-accepted in the Sri Lankan industrial sewing machine market due to its quality and reliability in performance. Zoje as an industrial sewing machine brand continues to grow in market share since its partnership with Singer in 2002 backed by the service excellence of Singer.

Singer Omni Channel PresenceSinger has built one of the most extensive networks of distribution channels across Sri Lanka - an invaluable asset that only few other corporates can boast of. This network encompass a variety of channels, ranging from conventional brick and mortar stores to electronic channels, enabling customers to purchase goods in the most convenient way. The omni channel strategy has enabled Singer to offer multiple brands and an eclectic range of products and services, in tandem, with the emerging customer tastes and preferences and the rapid pace of development in communication technology. Singer has prioritised the development of e-commerce channels to offer more convenience to customers. In addition to meeting changing customer preferences, these channels enable to realise operational efficiencies from a corporate perspective.

Given below is a brief introduction to the different channels we operate, how we manage those channels, our initiatives under each channel and their performance during the year. Through these channels, we believe we are able to deliver unparalleled customer convenience, enabling customers to raise their standard of living.

OPERATIONS REVIEW


SINGER Plus

Singer Plus is the main distribution channel of Singer (Sri Lanka) PLC.

Today Singer Plus channel has expanded its network in every part of the country and comprises 239 Singer Plus Showroom, 78 Satellite shops and 205 Sales Agents. During the year, the channel opened two new outlets, including satellite showrooms and seven satellite outlets were upgraded to Company showrooms. In addition, 70 new Sales Agents were appointed to the Sales Network.

In the year 2016 Singer Plus expanded its operations to sell more digital media products and furniture. 104 numbers of mobile corners were opened to focus more digital media products and shop renovations, upgrades and new opening added extra space to sell more furniture.

Singer Plus made a significant contribution to the overall performance of the Company in 2016, by achieving every KPI. The revenue increased by 16% YoY and a commendable

sales growth was achieved in refrigerators, televisions, sewing machines, computers, smartphones, washing machines, furniture, small and kitchen appliances.

The success of the Singer Plus Channel is attributed to well planned ATL and BTL campaigns, active involvement of field staff and focus given for those programmes. Novel sales promotions and continuous field activities are carried out periodically to boost sales and contribute towards the Company’s multi brand, multi product strategy. The digital media products in particular, helped to attract new customers to the channel.

Singer Plus conducted lower scale exhibitions in five towns namely, Galle, Bandarawela, Chilaw, Batticalloa and Jaffna.

SINGER Mega

Singer Mega – The Big ExperienceSinger Mega completed another successful year, achieving a 19% revenue growth YoY under highly volatile and challenging market conditions. The warm and friendly customer service and comfortable shopping experience, coupled with an array of high quality world-class products have facilitated strong growth year after year.

During the latter part of 2016, two branches were added to the network in Boralesgamuwa and Kalutara, increasing the total to 22 branches; strategically located in key towns.

Our flagship store, Singer Mega Nugegoda, was renovated during the year to provide an even bigger and better shopping experience to customers. As a result, the branch recorded the highest revenue ever, generated by a single branch for a calendar year, crossing Rs. 330 million.

In its commitment towards Sri Lanka at large, Singer Mega extended its partnership with Sri Lanka Diabetes Federation and Diabetes Research Unit of the Faculty of Medicine, Colombo for the second consecutive year to fight diabetes which has become a challenging health issue in the country.

Singer has prioritised the development of e-commerce channels to offer more convenience to customers.

OPERATIONS REVIEW


SINGER Homes

Singer Homes completed another successful year of operations in 2016, achieving a revenue growth of 29% YoY.

Our operations were carried out exceptionally, amid challenging economic conditions by improving our product range with novel and elegant designs and launching aggressive ATL and BTL campaigns. Our flexible easy payment schemes enabled our valued customers to uplift their lifestyles with our modern furniture without much burden to their wallets.

Singer Homes channel comprise 18 branches with two new additions during the year in Kandy and Wellawatta. Both new showrooms have performed exceptionally well, whilst Singer Homes Kandy surpassed Rs. 100 million, mark in first ten months of operations in 2016.

SISIL World

SISIL World continued to consolidate its position as a premier consumer durables retailer during the year. The Channel opened three new showrooms and renovated four shops in 2016, contributing to increased customer service and convenience. The sales volume rose by 23.6% YoY in 2016. Air conditioners recoded the largest sales growth, followed by smartphones during the year. Sisil World channel conducted sale exhibition in Matara town to give more focus to the branding.

Wholesale ChannelThe Wholesale Channel recorded sales revenue of Rs. 5.1 billion for the financial year 2016 which was a remarkable achievement considering the challenging market conditions and competition.

Refrigerators was the key product category which brought in a turnover of Rs. 1.8 billion selling over 45,600 units in 2016. Sisil brand dominated the refrigerator segment making an outstanding contribution to sales.

The distribution network of the Channel was augmented to reach a wider market and the dealer strength was over 425 as at end December 2016.

Several training programmes were conducted for the dealers including out-door programmes and dealer branding and CSR programmes at selected locations to motivate dealers and their staff members to increases sale of Singer products.

The Wholesale Channel has won the ‘Best Channel’ Award for three consecutive years at the annual Management Conference from 2014 to 2016.

OPERATIONS REVIEW


J Plus ChannelOver the last two years the Company expanded its presence in the wholesale market in segments not present previously.

a. Sale of furniture to wholesale dealers including specialised furniture dealers.

b. Sale of computers to wholesale dealers including specialised computer dealers.

In addition, the Company commenced a second wholesale channel selling new brands. In July 2016, SONY branded products were offered to wholesale dealers, prior to this SONY brands were sold only in retails outlets.

In 2016, sale of these increased 350% and crossed the Rs.1 billion mark.

Institutional ChannelInstitutional Sales Channel caters to bulk orders of B2B clients such as hotels, hospitals, Government and private sector organisations.

The Agro Channel Year 2016 was a remarkable year for the Agro Channel; the smallest Channel of Singer. Recording a turnover of Rs. 901 million for the year ended December 2016, the Channel has proven to be an important Unit to the Singer Company. The highest ranker in Government Statistics in import of tractors, the Agro Channel has sold 1,046 tractors during the fiscal year.

The Channel excelled in the market, conducting 20 after sales campaigns and servicing over 300 tractors free of charge. The Agro Channel also widened its product portfolio by introducing 30 active SKUs in Water Pump category and new business entities like Yamaha generators, wood working machines, sprayers, scales and combine harvesters. With a small team of committed employees, the Agro Channel forged ahead in the market to reach even greater heights during the year.

e-Commerce Channel - www.singersl.comDuring the year we partnered the leading e-Commerce sites by selling our products through the site both for dealers and the mall.

Singer's own website was revamped to be more customer friendly; cash on delivery was introduced in 2015; the deal section (named Singer Hot Deals) was marketed; options were given to customers on delivery or pick up; equal monthly instalment schemes on credit cards were offered to customers.

In order to maximise our online brand presence and to generate sales through our e-commerce Singer Sri Lanka

Website, we commenced digital activities to drive sales. The main campaigns include advertising on Facebook and Google, Adwords campaigns such as search engine campaigns, display marketing and dynamic remarketing campaigns.

We also launched our online Wedding Registry facilitating couples to create and handle their own wedding registry from anywhere in the world via a safe and secure web portal. The registry includes a complete range of branded goods marketed by us covering over 30 product categories. The couples are given a wide choice from a multitude of products.

The website offers special discounts up to 50% on hot deals, with free delivery to their doorstep.

The Pick Up Store concept was recently introduced especially for online customers with a 15% discount on all online purchases. Customers can place the order online and pick up the items from the Singer Web Pick Up Store located at No. 06, Dudley Senanayake Mawatha, Colombo 06.

Singer Duty Free

Singer Sri Lanka expanded the dealer operation and built the brand image of the Singer Duty Free during the year 2016. Increased customer awareness was created about the store, especially among foreign customers. The Singer Duty Free Store has a wide range of products to cater to the demands of the discerning customers.

OPERATIONS REVIEW


Strategic Business Units

Apparel SolutionsSinger Industrial Sewing Machine Division was formerly known as the ‘Industrial Product Division’. In the year 2005 a strategic decision was taken to relaunch the Division as ‘Apparel Solutions’ to be in line with the market requirements. Following the foot steps of Singer’s multi brand strategy, the division also followed suit by adding several International brands to its product portfolio namely Sunstar, ZOJE, Megasew, SDY, Sansiko and TSM etc.

The sales mix is two segments leveraging on the existing retail and wholesale channels and the other is direct sales done to factories on Indent basis.

Industrial Air Conditioning DivisionSinger has a strong presence in Industrial air conditioner market, supported by a strong service backup. We are the authorised dealer for Mitsubishi and Fujiair in Sri Lanka and we deal with the local agent for Dunham-Bush products.

Mitsubishi Heavy Industries (MHI) offer a wide range of versatile and energy-efficient Mitsubishi single, multi split and VRF systems, to cover small, medium and large size commercial applications and all residential setups. All of MHI products offer best in class efficiency due to high performance inverters and smart designs. MHI split systems are available with a wide range of controllers, including their latest model with an advanced touch screen panel. Most of the commercial systems are available in both 1-phase and 3-phase electric power for maximum flexibility.

Singer Industrial Air conditioning Division successfully completed several large scale projects in different sectors including banking, apartments, hotels and universities.

The Division was further strengthened in 2016 by adding more HVAC engineers, HVAC maintenance executives and HVAC technicians. It is fully-equipped to take over any large project and to provide the service backup.

The Division aims to become the best HVAC contractor in Sri Lanka within the next 5 years.

Financial Services DivisionCustomers can pay utility bills, credit card bills, obtain mobile phone reloads, collect funds remitted through Western Union and upload funds and withdraw funds using mobile cash from all Singer Channels.

In the year 2016, Financial Services business volumes increased by 17%. It is noteworthy that an average of 222,000 transactions took place in our channels each month and we transacted Rs. 8 billion of financial services.

The Singer Express Pay was launched in 2016.

Singer Express Pay

Singer Express Pay enables customers to making a wide range of bill payments, including credit cards, mobile phones, insurance, utility bills and eZ Cash and mCash top-ups and withdrawals from any of its 422 retail outlets island-wide. Due to our extended working hours, we are able to facilitate this service to the customers beyond the working hours of banks or the service providers. Tying up with NDB Bank as the Principal Agent, Singer Express Pay encompass the foreign money remittance such as the Western Union Money Transfer facility.

SINGER Distribution Centre

The state of the art Distribution centre commissioned in 2004 at Piliyandalais now 13th year in operation and looking forward to de centralise its operation by opening up of 75,000 Sq.Ft. warehouse complex in Dambulla in the Matale District in early part of 2017 especially to cater to requirements for Noth, Eeast, and part of Central with a key objective of providing better and faster service in keeping with the expected volume increases of existing products and also new addition of brand and models.

OPERATIONS REVIEW


Keeping in line with the global technological advancements and to minimise the carbon footprint and the environmental impact, we have commenced repair of LED Television panels locally in year 2016 using the latest electronic equipment, is progressing well at present.

The continuity of maintaining the ISO 9001:2008 standards for 11 years at the Distribution Centre is a proof of adherence and conformance to quality. Further all arrangements have been made to further update the version of ISO 9001 : 2008 to the very latest 9001 : 2015 in August 2017.

Distribution centre is one of the key contributors being the main Collection Hub to Company’s Green initiative programme and all employees are actively contributing on collection of E-waste from the Company collection centres, storing and handing them over to relevant authorities for disposal same.

As in the past years Distribution Centreactively participated for CSR projects

Two water pumps were handed over to the Archdiocesan Apostolate for drug and alcohol demand reduction service under the guidance of the Colombo Archdiocese of the Catholic Church to give vocational training to recovered dependents of alcohol and drug abuse.

Three schools in the North Western Province which was affected by the 2016 flood was repaired and restored. The three schools were Mavila Mahinda Junior Buddhist School, Yakedessawa Junior School and Thummodara Muslim School.

Singer Service Centres

There are 13 Service Centres located island-wide, 219 CP service franchise agents (SFA) and 104 motorbike service franchise agents. Each Service Centre is well equipped to provide a customer care of the highest standard by skilled and competent service agents. During the year 2016, a new Service Centre was opened in Pasyala.

We continuously train our staff members to be well versed in technical knowledge, which is imperative to offer excellent customer care. Therefore, 24 training programmes were conducted during the 12 months of the year. Additionally, several motivational programmes were conducted to keep our employees and SFAs motivated.

The Mobile Vehicle Unit is a great asset to the Centre which provides services through its fleet of 60 mobile vehicles, six days of the week.

We always provide technical support to our customers, especially in the areas where our sales promotional events are conducted. Our employees actively participated in several CSR projects in particularly, by repairing the damaged products of our customers affected by floods and also cleaning their houses.

OPERATIONS REVIEW

SINGER Duo 2 in 1 Laptop Model: SIN-DUO-W10

Intel Cherry Trail Atom Z8300 Processor (1.4 GHz up to 1.84 GHz)10.1”, 800x1280, IPS Display; Touch Panel(TP): Capacitive, 10 Fingers Touch, G+G

Memory: 2GB & Internal Storage: 32GBBattery Capacity: 7500mAh, Sensor: G-sensor; Wifi: 802.11 b/g/n;

Bluetooth: BT4.0, OS Version: Genuine Windows 10 Home

DELL Inspiron 5378 2 in 1Model: DELL-7G-I7TOUCH

7th Generation Intel Core i7-7500U 2.70 GHz with Turbo Boost LED-backlit touchscreen (1920 x1080), 10-finger multi-touch support 8GB DDR4 2400 MHz, 256 GB SSD Drive Intel HD

Graphics 620 with shared graphics memory Integrated webcam Wifi 802.11ac,Bluetooth 4.0


Keyed InWork on the go...play on the go...communicate on the go. Singer’s

portfolio of premium branded laptops are keyed into a new generation...

together we are all clued in too!

SCAN TO VIEW MORE LAPTOPS


In order to improve our brand, we launched a SMS alert service to inform our customers once their goods are repaired, improving customer convenience. We have in place a system to obtain customer feedback on repairs done to improve our service further as well.

Information and Technology DepartmentAs mobile has become a key part of today’s enterprise, IT Department introduced mobile technology to enhance various business functions of Singer.

Mobile Field Collections z It is the first time in Sri Lanka that a consumer durable company has introduced hire purchase instalment collection operation using a mobile app. This app provides interface to ERP system. These transactions are processed electronically in the field and a receipt is produced using a mobile printer.

z Electronic collection process at field eliminates manual collections entry at the shop locations, resulting cash flow improvement for the Company.

We leverage mobile technology in order to enhance business functions, thereby offering enhanced and effective services to our customers.

z Currently we have implemented in 129 locations covering 299 collectors. We have planned to implement in all locations before end of 2017.

Sales Force Automation for Digital Media Channel z The entire operation of selling, invoicing and handling of Inventory is automated using a web/mobile application

z The application covers starting from Singer Head Office functions, distributor functions and dealer functions

After Sales Service Automation System for Digital Media z Total service functionality is automated using a web/mobile application

z This system includes the handling of service franchise agents

SSL Factory The manufacturing division of the Company consists of Agro and Furniture factories. The value of production increased by 24% over the prior year.

The production of water pumps had a huge increase of 40% this year. Furniture production increased by 12%.

The factory introduced 11 new models for furniture including products using paper laminated boards for lower end of the market and products using high gloss board pantries for the upper end. We continued to upgrade the machinery including a CNC machine, Edge Banding machine and Beam saw.

The Factory manufactured a Self Priming Diesel Engine Driven Pump 5 hp, 3 inch during the year, especially for large scale agrarian sites and industrial applications. Additionally, the machining capacity of the CNC turret lathe machine was increased, making it more efficient whilst the domestic water pump assembly lines were expanded to cater the increased volume.

DELL XPS 13 (9350) DELL-XPS-I7QHD

XPS 13 (9350) 6th Generation Intel Core i7-6560U 13.3 inch QHD+ (3200 x 1800) Infinity Edge touch display 8GB

LPDDR3 1866MHz 256GB PCIe Solid State Drive 45 Intel(R) Iris Graphics 540 802.11ac 2.4/5GHz + Bluetooth

OPERATIONS REVIEW

DELL Inspiron 7000 Series 7359Modes: Notebook/Tablet

Processor: Intel Core i7-6500U 6th Gen, Memory: 8GB Single Channel DDR3L 1600 MHz, Video Graphics: Intel HD 520 Integrated Graphics, Display: 13.3 inch LED Backlit Touch Display with Truelife, Wide-Angle

Viewing (IPS) and FHD resolution (1920×1080), Hard Drive: 256GB Solid State Drive


In order to promote sales and marketing, several outdoor programmes were conducted, such as free water pump service campaigns and plumbers/farmers day programmes in several towns in Sri Lanka.

To cater to the increased capacity of all factories, a 500 kVA generator was installed to facilitate a smooth production even during frequent power failures.

The Modular Furniture Factory continued to give more emphasis to the pantry cupboard business since 2013. The designs, materials and services were upgraded according to modern market trends, leading to increase in sales; in particular pantry cupboard sales soared by 40% YoY in 2016. Several initiatives were taken to drive sales such as introduction of Granite tops and 4 new colorus to the gloss board range, whilst several cost control initiatives were implemented to reduce the cost substantially, whilst providing the functionalities to the customers.

For the first time, aluminum mix furniture were introduced, which led to the manufacture of a Bed Room Suite with a ‘silver line’ design. The new design brought in additional revenue to the factory, which is expected to have a high demand in the upcoming year as well. The revenue increased by 20% YoY, whilst the compounded growth for the past three years was over 100%. Additional employment opportunities were created, whilst employees were enabled to earn extra income by working additional hours by introducing of a second shift and by an additional incentive scheme.

A three day training programme was carried out by the Singer Piliyandala factory in each quarter to enhance the product knowledge of the staff members of the Singer Homes, Singer Mega and Singer Plus channels. Apart from the study sessions, a hands-on experience was given to all the participants. Sustainable eco practices are implemented in the factory as detailed in the Sustainability Report. Several activities were carried during the year to improve knowledge of students

such as the Rajakeeya Shilpa Yatra 2016 educational seminar, the factory visits for the students of Welagedara Central, Kurunegala and the students of the Girandurukotte Vocational training Centre.

For the employees, an inter-departmental cricket tournament and an annual excursion to the sacred town of Katharagama were conducted. The employees also actively participated in CSR activities as well, detailed in the Sustainability Report.

Singer Call CentreThe Call Centre handle calls related to after-sales service, marketing and promotions, general customer inquiries and follow-up on hire purchase credit. In year 2016 the Call Centre handled 569,000 inbound and outbound calls. The Call Centre has also upgraded the system which will help the agents to provide better service to the customers.

Expansion of our Product Portfolio in 2016We continuously strive to add increased value to our stakeholders through our product and service offering. Our wide range of products and service are made available to our customers across the nation through our expansive network of distribution channels. The in-depth knowledge about the Sri Lankan customer, acquired by marketing, a few legacy products initially enabled us to expand our product portfolio by constantly adding new products and services over the years.

Singer is well known by the target market and has a positive brand image in the minds of consumers, leading to a high level of product and service acceptance. This has enabled us to leverage on various cross product opportunities, fill price and quality gaps in the market and secure greater self space. Taking into account the growing concern and demand for green energy-efficient products, we will continue to make our products and services increasingly green and energy-efficient going forward.

SINX-I7-6GModel: SINGER Notebook

Processor: 6th Gen Intel® Core™ i7-6700HQ processor Core Logic: Mobile Intel® HM170 Express Chipset

Memory: 8 GB Dual channel DDR4 2133 MHz, Upgradeable Up To 64GB (4 Memory Slots – Depends on 4GB/8GB/16GB

SODIMM module) Display: 15.6"(39.62cm) FHD (1920x1080) 16:9 panel, 3.5mm Integrated 2.0M FHD Web Camera

DELL-7566-I7FHD Model: Dell Inspiron 7566

NVIDIA® GeForce® GTX 960M 6th Gen Intel® Core™ i7 Quad Core processors.

Non-touch anti-glare options in FHD, 4K UHD.

OPERATIONS REVIEW


Following is a brief introduction on the development of the product and services portfolio during the year. Through these products and services, we believe that we were able to deliver an exceptional choice to customers, that enabled them to improve their living standards.

Huawei P9 Smartphone

Huawei, together with Singer Sri Lanka, launched the premium flagship smartphone, Huawei P9 and P9 Lite in Sri Lanka.

The Huawei P9 is the first smartphone co-engineered with the global iconic brand, Leica Camera AG. The P9’s dual-lens camera takes smartphone photography to the next level, enabling to capture both vivid colours and striking black and white images. It combines groundbreaking innovations and exceptional design, setting a new standard in smartphone photography. The P9 has a 5.2-inch 1080p display and is powered by the new Kirin 955 2.5GHz 64-bit ARM-based processor for leading-class mobile performance. The 3,000mAh high-density battery offers P9 users outstanding mobility and battery life as well.

Both these devices are available throughout the Singer retail network island-wide.

Huawei GR5 Smartphone

Huawei together with Singer Sri Lanka, launched the all new Huawei GR5 2017 at a ceremonious unveiling at the Singer Lifestyle Festival in Colombo. Sri Lanka became the first country in the region to witness and experience the launch of the GR5 2017.

The smartphone has an unmatched price tag along with cutting-edge feature options which include a dual camera, fingerprint sensors using the latest tech advancements, 3G RAM and 3340mAh battery and a 5.5-inch FHD with a metal design and curved body. The product is available across the Singer retail network island-wide.

Sony 4K HDR Televisions

Sony unveiled its ultimate new Bravia 4K HDR Ultra HD TV range, which is available through all main Singer outlets around the country. Through the new Slim Backlight Drive™ technology, the 4K High Dynamic Range (HDR) TVs delivers stunning and unmatched picture quality, reproducing images that are true to life; offering a truly remarkable experience in clarity, colour, contrast and much more, compatible with the latest HDR movies and shows. These televisions use the most advanced TV technologies with future forward stunning designs that elevate the TV experience to an entirely new level.

Among the line-up of premium 2016 BRAVIA™ 4K HDR Android TVs showcased during the launch, was Sony’s flagship Z9D

OPERATIONS REVIEW


series, the award winning X93D series and its fellow 4K HDR TV range, as well as other superior Full HD TVs.

The BRAVIA line-up supports the latest Android 6.0 Marshmallow software, enabling TVs to become more intuitive to use and smarter than before. With the latest software updates, customers are able to enjoy expandable storage space using their USB drive to download more TV applications.

Sony Xperia X Series

Sony together with Singer Sri Lanka launched the flagship Sony Xperia Z5, Xperia Z5 Compact and the Xperia Z5 Premium. These smartphones are equipped with Sony’s up to two-day battery stamina and innovative power saving technology and a sharp 5.5” 4K TRILUMINOS™ Display, a 23MP rear camera and a 5.1MP front facing camera. It also has a built in storage of 32GB with a Micro SD slot that supports up to 200GB of storage and fast battery charging aka Quick Charge 2.0, which can charge the phone up to 60% in 30 minutes.

Sony MDR Headphones

Sony, in collaboration with Singer Sri Lanka launched the new range of personal audio products, bringing stylish headphones and a Walkman that match the customers’ style. These high resolution audio brings tunes much closer to true sound. Sony’s new ‘h.ear on’ headband-type headphones, ‘h.ear in NC1’ Noise Cancelling (NC) in-ear headphones.

Samsung K Series TV Range

Samsung Electronics announced its new QLED TV series during the Company’s 2017 product unveiling in Las Vegas.Samsung QLED TVs represent yet another leap forward with improved colour performance, displaying DCI-P3 colour space accurately capable of reproducing 100% colour volume. This is a result of Samsung’s adoption of a new metal Quantum Dot material. Furthermore, these TVs can generate peak luminance with no impact on its ability to deliver accurate and impeccable colour. With its metal alloy Quantum Dot technology, brightness no longer has to be compromised to boost colour performance as well.

Beko EverFresh Refrigerator Range The latest Beko refrigerator range is equipped with EverFresh+® technology that combines the latest technology with unique features and modern designs, offering consumer with unmatchable cooling solutions offered in line with its product promise ‘Everyday Freshness’.

OPERATIONS REVIEW


Equipped with the ProSmart inverter technology with A+energy ratings, these refrigerators consumes up to 30% less energy.Beko’s active dual cooling technology and the NeoFrost TM technology, facilitates the fridge and freezer compartments to have independent cooling systems, providing optimum level of humidity for a prolonged storage life of fresh fruit and vegetables and prevent the food in the cooling compartment from freezing. The special crisper compartment (tested by SGS, the world's leading inspection, verification, testing and certification company) keeps the fruits and vegetables fresh up to 30 days. Beko Active Fresh Blue LightTM preserves fruits and vegetables 30% better and protects vitamin C intensity and other vital nutrients in the food as well. It also prevents the odour being transferred with the help of IronGuard TM technology.

Singer Smart Refrigerator

Newly introduced SINGER SMART series intends to add more value through feature rich smart technology that will help the customer to uplift their standards of refrigeration required day-to-day.

The New SMART series comprises two invertor type refrigerators and a non invertor model. Stabiliser free, Duo Cooling System, digital temperature controller, energy saving R600a refrigerant are some of the key factors to note. In addition 10 years of SINGER warranty backed by best after-sales services will be a great value addition to our customers.

Singer DUO – 2 in 1 Laptop

The Singer Duo 2 in 1 Laptop encompasses detachable features in two different modes; the laptop mode and the tab mode. This enables users to have a more user-friendly approach in using their laptop, based on their requirement. The laptop also features an Intel Z8300 Quad Core processor with a Genuine Windows 10 Operating System. Other attributes includes 2GB Memory, 32GB Internal Storage, 10.1” IPS Display, capacitive 10 fingers touch screen, a 2 Mega Pixel camera, Wi-Fi and Bluetooth.

Electric Coconut Scraper (Domestic Version)

The first domestic version of Electric Coconut Scrapers was introduced to the Sri Lankan market under REGNIS brand in 2016. This product was invented and manufactured by Sri Lankan inventor; a graduate from University of Sri Jayewardenepura. Singer came forward to support him, who has brought great honour to Sri Lanka internationally through his inventions. He has won several prestigious awards both at national and international level including the Presidential Award.

As a responsible corporate social citizen, Singer gave him financial support and the necessary guidance and support to market his product. Singer always believes in sharing its growth and making the suppliers ‘partners in progress.’

The product is user-friendly, safe to use and versatile. It is backed by a Singer warranty and island-wide after-sale-service. Over 10,000 products were sold within a short span.

Moulinex Kitchen Appliances Singer is the exclusive distributor for Moulinex, Tefal and Krups brands. Moulinex is the global kitchens specialist, introducing versatile appliances to fulfils the culinary requirements of households.

During the year, the Moulinex Multi-Moulinette mini-chopper was introduced to Sri Lanka. The appliances has a 500ml chopping bowl and two sets of blades for chopping to finer pieces.

OPERATIONS REVIEW


Moulinex glass jar blender is another remarkable appliance introduced during the year, which is considered to be a hygienic form of blending food compared to plastic jar blenders. This blender can be used for blending hot beverages, such as ‘kola kanda’ or soups.

LED Lighting – Cherry branded LED Bulbs Range

Cherry Brand LED Bulbs was introduce in July 2016. LED Bulbs manufacture & service by IE Technic in Sri Lanka. Cherry Brand LED Bulbs has obtained National Engineering Research & Development (NERD) Certification for the quality of the bulb. Cherry LED Bulbs has the wattage of 4W, 6W and 8W.

Huawei MediaPad T2

The Huawei MediaPad T2 7.0 is encapsulated within a slim unibody aluminum design and an opulent gold metal casing that adds a touch of class. It has a quad-core, 1.5GHz A7 processor enabling high speed browsing, gaming or switching between applications. The device has 12 hours of high-definition video, 7 hours of 4G web browsing and 23 hours of calling coupled with other features including Android 6.0, a long battery life with capacity of 4100 mAh and a 7-inch IPS full view screen as well.

Singer Vista TV

Singer launched Singer Vista; the new diamension in TV with technologically advanced features and enhanced viewing pleasure that combines the convenience and features of a computer. The attractive pricing and product positioning ‘beyond a TV Singer viewing experience’ made Singer Vista the fastest selling brand in Singer TV category in 2016.

The Vista lifestyle app was also launched, enabling customers to be connected whilst staying tuned.

Innovative Marketing Initiatives

SINGER Life Style Exhibition

OPERATIONS REVIEW


It’s truly moving – how Singer’s benchmark multi brand ‘stable’ of televisions fill space and need across a widely diverse landscape of homes across the length and breadth of Sri Lanka.

A Moving Picture

SCAN TO VIEW MORE TELEVISIONS


The 6th consecutive Singer Lifestyle Fiesta was held from 18th to 20th November at the BMICH. This exhibition, which draws large crowds annually, continued to be a much looked forward event by the many consumers. A range of appliances, furniture, electronic goods, smartphones and computers were showcased under one roof with attractive discounts, some as much as 50%. The event took the hue of a fun fair with numerous cookery demonstrations, live performances by popular artists, fashion shows and fun activities for kids.

The proceeds of ticket sales contributed towards the Company’s CSR fund, which is utilised to for the numerous CSR activities launched during the year. Additionally, many small scale non-competing entrepreneurs were given stalls at very reasonable prices to display their products as well.

Singer Finance Credit Cards

Singer Finance (Lanka) PLC, subsidiary of the Company was the first Non-Bank Financial Institute in Sri Lanka to receive a license from the Central Bank of Sri Lanka to issue a credit card. Banks have obtained a share of the retail consumer durable market through their credit card business. Singer Group made strategic plans to sustain their core market share by venturing into the cards business. This move also complements the payment industry moving into plastic cards and electronic payment modes.

With over 10,000 cards issued, Singer credit card is one of the fastest growing credit card in the country. Singer’s wide network will be used to expand its card base in the future and with over 1.5 million existing hire purchase and leasing customers, the Company is confident of growing the card business above the industry average.

Singer Sri Lanka Social Media Presence

Leading consumer durables and home appliance brand

in Sri Lanka with the most amount of

‘Likes’

Enhancing brand value through digital marketing strategies is taking over traditional marketing strategies in today’s world. Engaging with customers through multiple channels is the need of the day for Singer Sri Lanka which is a leading household name for home appliances and consumer durables. Therefore, we at Singer have harnessed our energies to develop unique and innovative approaches to take our message to our target market via digital marketing.

We surpassed a significant milestone in our Facebook (FB) page recently, by acquiring over 375,151 Facebook fans, making us the leading consumer durables and home appliance company in Sri Lanka with the most amount of ‘Likes.’ We have reached a high level of connectivity among our online audience with an ever growing fan base.

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OPERATIONS REVIEW


We aim to explore new opportunities for product promotions, make real time association with existing and potential customers and engage in activities through competitions, posts, product launches and events through our FB page. This has proved to be the main platform for our Company’s social media presence. In the past financial year, we successfully reached a considerable audience of over eight million through Facebook.

Within the period all the activations were geared to attract audience to our website. Through our Google advertising platforms we were able to create a campaign which continuously allowed audience to engage with our website even after a purchase or after exiting the website.

Remarketing and dynamic remarketing mainly focus on reminding audience who have visited or shown interest on our products but failed to make a purchase due to several factors. This has proven to be an effective method for the digital consumer.

Singer Sri Lanka Facebook page is a main platform to communicate directly with the brand. Facebook is an integral part of the CRM cycle which helps customers to build trust, engage with the brand, make queries regarding products and services, place complaints in which we can directly contact the customer and resolve the issues. We also collect leads and information about our fan base to determine the mode of communication with our target audience. Facebook helps to nurture and retain existing customers, entice former clients back into the fold and reduce marketing and advertising costs.

We were able to maintain a 80% response rate as by following a 24-hour problem solving policy where all queries are responded to within 24 hours. The 3A problem solving technique - Acknowledge, Apologise and Address, has been adopted for this purpose which has proved to be effective in generating customer trust and strengthening their relationship with the brand.

SINGER Fashion Show 2016

The Singer Fashion Academy held a grand ceremony for awarding certificates to students who successfully completed the diploma in Scientific Dressmaking and Machine Embroidery at the Bishops College Auditorium. The highlight of the ceremony was a grand fashion show, which gained the interest and attention of the whole audience. All outfits for the fashion show were created by past and the present students of Singer Fashion Academies. The event had a competitive aspect by selecting the winners from five different categories – Kandyan

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OPERATIONS REVIEW


saree, office wear, kids wear, evening wear and sports. The three best outfits from each category were awarded prizes; a Singer sewing machine for the first place and trophies for the first and second runners-up. The successful and colorful event encourages more students to follow a variety of courses offered by Singer Fashion Academies each year.

Customer Loyalty ProgrammeThe Singer Customer Loyalty Programme has been designed to give cardholders more flexibility and greater convenience. Loyalty Cardholders can earn loyalty points through hire purchase sales and when paying utility and credit card bills through Singer’s Express Pay Counters. Singer issues points based on 1% of the price of the purchased item. Each point is equivalent to Rs. 1.00 and customers can use their earned points when making purchases either by cash, credit or debit card or easy payment scheme. This is the only loyalty programme in Sri Lanka that allows customers to earn loyalty points (varying from 0.1% – 1% of the bill’s value) through utility bill payments and credit card bill payments. Singer Loyalty Cardholders are also eligible for seasonal discounts, bonus loyalty points on selected products and easy payment scheme options at Singer, as well as holiday packages and discounts from various partner merchants.

The Singer Customer Loyalty Programme, is an advanced, purely benefit-driven loyalty programme that is comprehensive and hassle-free. The electronically-administered Singer loyalty card containing loyalty points is electronically updated with the value of every transaction. Singer’s superior IT system, facilitates the recording of the loyalty points earned and/or redeemed, on customers’ receipts at any retail store associated with the Programme.

The Singer Customer Loyalty Programme is implemented through the Singer Information System, powered by global ERP solutions provider, IFS. This is uniquely designed to serve all customers who patronise Singer Plus, Singer Mega, Singer Homes and SISIL World stores. Customers who shop at any of the Singer retail outlets island-wide are eligible to register

with the Singer Customer Loyalty Programme and obtain a loyalty card as soon as they earn 500 points. A fast-tracked, free enrollment process that doesn’t require filling of forms takes place, while customers purchase their goods. Thereafter, a personalised electronic loyalty card is sent by mail to the customer’s doorstep.

During 2016, the total customer enrolments surpassed 700,000 whilst more customers are attracted to redeem their earned points. It is very significant that more than 5,000 customers have redeemed points to the value of Rs.12 million and Singer has awarded Rs. 143 million points in 2016. The total loyalty points accumulated as at 31st December 2016 was Rs. 261 million. Singer has tied up with prestigious establishments such as Bata, Nolimit, Vison Care and Sarasavi Book Shop to offer exclusive offers and discounts for Singer Loyalty Card Members.

Home Science in Schools

In an effort to educate Sri Lankans on the importance of better nutrition and to provide access to knowledge and tools needed to enhance their lives, Singer in partnership with the Ministry of Education, launched the ‘Singer Soopa Shasthra Vedamuluwa’ and continued in year 2016 too. Through these programmes, the message of healthy cooking and eating is spread through

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OPERATIONS REVIEW


Home Science classes in schools across the country. The participants are given hands-on experience in using modern kitchen appliances to create nutritious meals with less time, thereby empowering Sri Lankan families to cook right and eat right.

Singer Laptops to Top 12 Ordinary Level StudentsIn order to inspire high-achieving students and thereby boost education in Sri Lanka, Singer Sri Lanka provided the latest Singer X Series laptops to top 12 students who excelled in the G.C.E. Ordinary Level Examination in 2015.

The laptops were handed over by His Excellency President Maithripala Sirisena at a special event organised at the Presidential Secretariat on 23rd August. Singer Sri Lanka was represented by the Group CEO Asoka Pieris together with Mahesh Wijewardene – Director – Sales and Commercial

The Singer X Series laptops include latest Intel Core i5 with 6th Generation Processor, 4GB RAM, 1TB Hard Disk, 15.6” HD Display, DVD RW Drive, Integrated HD Web Camera, Multi Card Reader, enhanced Intel graphic support, Wi-Fi and Bluetooth. All laptops are powered by the all-new Genuine Windows 10 Operating System.

Campaigns, Competitions, Promotions and Other

FB CampaignsSinger Sri Lanka FB page is a diverse platform where multiple online competitions are conducted using the brands to engage fans and customers. Two main competitions are conducted each month to reach a larger audience which include the Singer Super Chef Competition, Singer Homes Furniture Competition, Singer All I want for Christmas Competition and the Beko Football Application Competition.

Additionally, special hot deals promotions and pick up store promotions are conducted on FB to reach a wider target audience. Important events such as product launches as well as main Singer events such as the Singer Life Style Exhibition was promoted through off line and on line FB activations, live video updates and coverage.

Singer Wins Top Dell Accolade

Singer Sri Lanka won the most coveted award for the Top Consumer Distribution partner in the South Asia Developing Marketing Group at the Dell South Asia and Korea Channel Summit 2016 held in Manila, Philippines. The award is given to top consumer and retail partners across the countries of the South Asian Developing Marketing Group (SADMG), selected based on their revenue, commitment and the overall contribution to the region. Singer was the only Sri Lankan Company to receive this award at this Summit.

Singer Achieved Named Account Status with Microsoft The new venture with Microsoft and Intel as a local OEM partner is a strategic advantage for Singer. This milestone for Singer Sri Lanka proves that the Company has set exemplary standards expected of Microsoft partners and will further enhance the brand’s greater global visibility. By taking this strategic step, Singer is amongst global best brands also operating with Microsoft under this agreement. Operating in the same league as other multinationals, Singer has stepped into the echelons of large multinationals that prefer this arrangement with Microsoft Sri Lanka for the numerous advantages it offers them.

Flat Bed Promotions

Flat bed promotions are done providing convenience buying the products of their choice at the customers doorstep.

OPERATIONS REVIEW


Seasonal Promotions

Seasonal Catalogues of Singer Mega and Singer Homes offering range of products with discounts.

OPERATIONS REVIEW


Credit Card OffersThe Company provided attractive discount offers with interest free instalment plans to all major credit cards such as Amex, Visa and Master. This was done in partnership with leading banks in the country.

Subsidiaries

Singer Finance (Lanka) PLCThe subsidiary company of Singer Sri Lanka; Singer Finance (Lanka) PLC recorded a stable performance in the year under review. Gross revenue increased by 16% YoY to Rs. 2.2 billion and net interest income increased by 6.8% YoY to Rs. 1.46 billion in 2016. Cost of funds increased in the latter part of 2016, due to the escalation of interest rates. Despite the increase in cost of funds, Singer Finance issued a listed debenture in April 2016, raising Rs. 1 billion at an overall AER of 11.75% for 3 year and 4 year maturity periods respectively. The cost was substantially below Government Bond rates that prevailed at the time of issue. These funds enabled the Company to mitigate the impact from rising interest rates to a reasonable level, in addition to reducing the mismatch of maturity periods between assets and liabilities.

The Company’s net profit amounted to Rs. 416 million; marginally below year 2015 by 1.8%. This was mainly attributed to the Company’s investments in a new ERP system, the launch of the new credit cards product and the escalating interest costs. Singer Finance had to impair the old software system amounting to Rs. 29.8 million as per LKAS 36 Impairment of Assets accounting standard. The credit card business has progressed successfully and has good future potential. The investments made into the card business will add value to the Company and increase its future earning potential. Interest costs grew by 37.5% YoY to Rs. 886 million, which was a significant turnaround, compared to the 9% favourable interest cost variance in 2015.

This is a predicament that is common to the Finance Industry, as the yields on the new lending portfolio can be adjusted but not the existing loan book given on fixed rates. Since adjustment to the interest rates on new lending, are carried out immediately, adjustments to the income statement takes time whilst the interest cost remains the same.

The Company’s loan book grew by 19.4% to Rs. 11.3 billion YoY, with leasing being the main contributor to income earning assets, growing by 27% YoY to Rs. 9.079 billion. Loans and advances portfolio grew by 50% YoY to Rs 1.8 billion, increasing by Rs. 607 million in 2016. The factoring loan book grew five times to Rs.116 million and is seen as a product with high growth potential.

Singer Finance converted the Nugegoda and Kiribathgoda window offices to branches during the year. The staff strength

Day Celebrations

Special promotions to capture special day celebrations such as Valentine’s Day, Childrens Day, Womens Day etc.

OPERATIONS REVIEW


stood at 303 as at the end of the fiscal year 2016. Singer Finance ended the year on a strong footing and continues to build on its sound platform.

Singer has under its wings, the following SBUs and subsidiary companies.

Regnis GroupRegnis (Lanka) PLC and Regnis Appliance (Pvt) Limited are the manufacturers of two main consumer durable products – refrigerators and washing machines under the brands of Singer and SISIL.

Products manufactured by Regnis Group are eco-friendly, locally manufactured and has over the years gained a reputation as durable and affordable products by consumers. Regnis has always believed in meeting consumer expectations for efficient and environmentally friendly products. Therefore, Regnis makes continuous investments in new technologies and manufacturing processes to improve product quality and introduce more environmentally friendly products to drive growth.

Year 2016 was challenging but successful with increased demand for the Company’s products which was successfully met by increasing production volumes. This increase in demand is attributed to rise in peoples’ disposable income on account of increased salaries of Government employees, the seasonal demand during March-April 2016 and the steady prices offered by Regnis.

Refrigerator Business The Company’s main business is the manufacture of refrigerators. During the year, the production and sales of our two refrigerator brands – Singer and Sisil increased mainly due to its affordability and accepted durability by Sri Lankan consumers. In addition, the recognised after sales service and hire purchase facilities provided by Singer Sri Lanka, our Parent Company, the sole distributor and marketer of our products also continued to play a significant role in the consistent demand for our manufactured brands. In the year under review, the total refrigerators manufactured increased by 21% YoY supported by increased production capacity, while sales volumes increased by 16% YoY mainly due to our competitive prices and high quality products which enables us to compete successfully with products of other brands in the market.

Manufacturing ProcessWe focus on continuous improvement and strive to upgrade and transform our production facilities incorporating state-of-the-art technologies and latest ‘green processes.’ This helps us to ensure our manufactured products are aligned with international production and environmentally-friendly standards.

During the year under review, we continued to upgrade our manufacturing processes with a focus on increasing operational efficiency and eco-friendliness in our refrigerator products. These improvements enabled us to reduce our production cost despite increased taxation and currency depreciation. The cost reductions through our investments are passed onto our consumers in terms of sustained sales prices for our refrigerator products.

We invested Rs. 189 million to automate the cabinet making process and to modernise the production processes and the refrigerator assembly lines in 2016. Now our Company is in a position to increase production volumes to meet the future demands.

An indirect impact of our strategy of utilising state-of-the-art production processes and machinery is the inflow of the latest technology to Sri Lanka. This facilitates our employees to work in an environment where they are able to enhance their knowledge on the latest technological developments and environmentally friendly manufacturing processes.

Market ShareWe are one of the leading manufacturers of refrigerators in Sri Lanka. With a significant market share for refrigerators in Sri Lanka, we continued with our strategy of maximising the installed capacity to cater to increasing consumer demand for our products and to optimise production costs. The key markets for our refrigerator products continue to be the Direct Cool segment. We have also increased our sales of No-Frost refrigerators in urban areas of our Nation in the recent years.

ProductsToday, our refrigerator models are divided between Singer and Sisil brands which offer eco-friendly and energy efficient No-Frost/Direct Cool, refrigerators to discerning consumers. The latest inverter model refrigerators produced under both brands was introduced to the market in 2016 and was well-received by consumers.

The superior electricity saving offered by the R600a technology, modern designs for the GEO and ECO refrigerator models coupled with an excellent marketing campaign, resulted in high consumer acceptability.

Washing Machine Business Regnis washing machines are manufactured under our fully-owned Subsidiary Regnis Appliances (Pvt) Limited under the Singer and Sisil brands. The business continued its growth momentum producing 17% more washing machine units compared to the previous year. Regnis Appliances also continued to focus on utilising its installed capacity to reduce production costs and improve the manufacturing processes with the ultimate aim of enhancing quality and meeting the

OPERATIONS REVIEW


demand for environmentally friendly and energy efficient washing machines by consumers.

The increase in production was also supported by increased sales of 15% YoY. The increase in electrification and availability of water supply to Sri Lankan households contributed to the sales growth in 2016.

Products Regnis Appliances manufactures seven models of washing machines which are environmentally friendly and adhere to international standards. Regnis Appliances introduced a new 6kg semi-automatic washing machine model under the Singer brand in 2016 which performed exceptionally well and was well received by the consumers throughout the country.

Market ShareThe market share for our washing machines was smaller compared to our refrigerators. However, the outlook for washing machines is positive in the coming years. This is supported by increased electrification of households in the country which is now above 90%, and the expansion in the water supply of households by the Water Board.

The overall low penetration of washing machines in the market together with the increase in total sales by 15% in the year under review encourages us to continue our efforts in this market segment to drive growth in the future and further increase our market share.

As the sole retailer of our products, Singer Sri Lanka is in a unique position to sell Regnis products island-wide using the extensive distribution network of Singer outlets. We also participate in technical exhibitions where we can directly interact with other manufacturers to share and learn from each other the latest technological developments. We also take this opportunity to display and promote our products and share technological features with the general public.

Future OutlookDespite the expected increases in inflation and the currency depreciation, we are positive about the business outcome in the coming year. This is mainly due to the enhanced manufacturing processes and utilisation of cutting-edge technology in the manufacture of our products. These factors enable us to take advantage of the ‘first mover’ position as well as lead the market in meeting the demands of the environmentally conscious consumers. We also expect gains in terms of reduced production costs and savings from reduction in wastage and rejects due to the modernisations of our manufacturing processes.

The optimistic economic and industry conditions coupled with the increased installed capacities and price competitiveness achieved through the modernised, automated and eco-friendly manufacturing processes installed in 2016, we are looking at new investments and strategies to enlarge the market for our products in the coming years.

Singer Industries (Ceylon) PLC Being in operation over five decades the Company is engaged in assembly of sewing machines and manufacture of cabinets and stands for sewing machines.

The Company’s sole customer is Singer (Sri Lanka) PLC.

The Company’s product range consists of the traditional product lines, which include straight stitch, zig- zag and portable sewing machines. Revenue from operations shows an increase of 0.4% from Rs. 740 million to Rs. 743 million. In rupee terms, it is an increase of Rs. 3.15 million compared to the previous year, 2015.

Singer Industries commenced manufacturing of four new models of portable sewing machines during the year of 2016 in addition to the existing.

A significant portion of the sales revenue of the current year is attributable to sale of portable machines which is a 140% increase vs traditional models.

During the final quarter of 2016, SIC started assembly of Washing machine components to its related company Regnis Appliances (pvt) Limited. However the operation is in its initial stages and a significant impact to the revenue is envisaged in coming years.

The Company’s restructuring scheme was continued during the year. Two employees of the Company accepted the VRS scheme and five employees were offered the opportunity of transferring to other locations within the Singer Group during the year.

Company’s Net Profit for the Year was Rs. 42 million compared to the Rs. 1.6 million net loss in the previous year. (In 2016 The Company revalued its Land, Buildings and Investment Property. Through this the Company realised a total gain on revaluations amounting to Rs. 376.3 Mn and an actuarial gain of deferred tax liability of Rs. 9 million are included in 2016 Net Profit).

Singer Digital Media (Pvt) LimitedSinger Digital Media continued its growth momentum and recorded 49% revenue growth verses year 2015 and it is one of the major distribution arms in the Singer Group.

OPERATIONS REVIEW


World renowned digital brands such as Huawei and Sony, have placed their trust and confidence, partnering Singer to meet the needs of tech-savvy Sri Lankan consumers. The Company succeeded in increasing the Huawei smartphone market share from 17% in 2015 to 33% in 2016.

The Singer Digital Media (Pvt) Limited was recognised as the Best Emerging distribution arm in Singer Group in 2016. The Company works through distributors and reach close to 2000 small sub dealers selling smartphones, accessories and mobile connections.

Singer Business School

Singer Business School is the education arm of Singer (Sri Lanka) PLC, which was established in 2015 with the aim of providing world class education to Sri Lankan youth at affordable prices across the island. Coupled with a rich heritage and widest reach, Singer Business School reaches youth through 65 Fashion Academies, six Computer Academies and three Vocational Academies.

The Vocational Academy, provides two qualifications in the field of engineering. These programmes are accredited by City & Guilds, UK, the largest vocational training body in the world, making our qualifications internationally recognised. The programmes are aligned with the actual market needs. The trainees get exposure to real state-of-the-art service facilities in the country with large amount of practical experience which no other training institute can provide. Those who successfully complete the programme has the potential of securing job opportunities within Singer and its franchise network.

The Singer Computer Academy provides the City & Guilds qualification on the Skills Proficiency Certificate in Basic IT for Office Application. Each student has a state-of-the-art laptop to do hands on training. The academies are equipped with multimedia projectors and Wi-Fi connections facilitating a better learning environment. Singer Business School is planning to expand its computer academy network to 15 by the end of 2017.

The Singer Fashion Academy offers over 30 different programmes which includes two diploma programmes, vocational programmes and crafting programmes to anyone who has a passion towards sewing. The Fashion Academy organise a Fashion Show and an awards ceremony annually to showcase the talents of the students. Needle painting exhibitions and regional exhibitions are also organised to create a platform for students to showcase their talents and to meet potential customers to sell their products making education sustainable.

Utilisation of cutting-edge technology in manufacturing enable us to take advantage of the ‘First Moverʼ position.

OPERATIONS REVIEW


WITH A VISION OF PROVIDING SRI LANKANS WITH ‘TRUSTED EXCELLENCE’ WE OFFER A WIDE RANGE OF TOP-QUALITY INTERNATIONAL BRANDS. THROUGH OUR EXTENSIVE RETAIL NETWORK, WE REACH OUT TO OUR DIVERSIFIED CONSUMER BASE SPREAD ACROSS THE NATION. THE OUTSTANDING BRAND LOYALTY ENJOYED BY US IS EVIDENT IN THE ACCOLADES WE’VE WON OVER THE YEARS. OUR CONSUMERS ARE OFFERED A LARGER CHOICE OF PRODUCTS AND SERVICES, AFFORDABLE PAYMENT PLANS AND GREATER EXTENT OF CONVENIENCE TO BETTER THEIR EXPERIENCE EVERY TIME.



FINANCIAL REVIEW


Bigger, Better, Stronger

Return on Equity

Return on Equity which is the amount of net income returned as a percentage of

shareholders’ equity increased to 28.9% in 2016.

Earnings per Share

Earnings per share is a measure of the Company’s profit. Group EPS

increased to Rs.16.95 in 2016.

Total Assets

Group’s total assets increased by 30.9% YoY to

Rs. 42,250 million in 2016.


The following discussion and analysis should be read in concurrence with the Audited Consolidated Financial Statements of the Group and the Company for the year ended 31st December 2016. In this Report, ‘Group’ refers to Singer (Sri Lanka) PLC and its seven subsidiary companies and ‘Company’ refers to Singer (Sri Lanka) PLC.

PreambleSinger Sri Lanka PLC reported a very strong growth for 2016 against a moderate economic backdrop in the year. At the end of the year, the Group reported a 21.2% increase in Revenue amounting to Rs. 46.9 billion. This reflected a commendable 26% growth over the last two years.

The Group’s Net Profit at the end of the year increased by 90.8% to Rs. 2,358 million over the previous year. This included a one-time gain and consolidation of new acquisitions.

During the current year, Singer (Sri Lanka) PLC acquired majority stakes in Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC from its parent company, Retail Holdings (Sri Lanka) B.V. formerly known as Singer (Sri Lanka) B.V. transforming these companies as subsidiaries of Singer (Sri Lanka) PLC. The acquisition of the aforesaid companies resulted in a one-time gain on bargain purchase, amounting to Rs. 563.9 million. Post Acquisition, the Net Income of new Subsidiary companies are consolidated in the Group results of Singer (Sri Lanka) PLC, whereas there were no acquisition and consolidation pertaining to the prior year figures. There was no increase in Group Revenue due to the acquisition.

The growth momentum in Revenue and Net Income, is a result of the Group’s strategic imperatives throughout the year and pioneering new business opportunities organically and from acquisitions. The remarkable growth of results is an evidence to the continued strength of the Singer brand and continuing customer demand, despite increase in interest rates, exchange rates and increase in VAT from 11% to 15% and imposition of VAT on some categories, which previously were exempt.

Sri Lankan Economic OutlookThe Sri Lankan economy recorded an annual Gross Domestic Product (GDP) growth of 4.1% for the year 2016, compared to 4.8% in the previous year. The Sri Lankan consumer experienced improved market conditions in most of the year 2016. Consumers are keen to upgrade their living standards and continue to move to better and latest products. In 2016 exchange rates devalued by 4% (year end to year end) on top of a devaluation of over 9% in the prior year. Interest rates which had a marginal increase in 2015, increased very sharply by around 500 basis points and in percentage terms by 60% - 70% on the prior year rates.

Basis of Preparation and Comparative FiguresThe Group Financial Statements for the year 2016, include the Financial Statements of Singer (Sri Lanka) PLC and its seven subsidiaries.

The Financial Statements have been prepared in accordance with Sri Lankan Accounting Standards (hereafter, referred to as SLFRSs and LKASs) issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the requirements of the Companies Act No. 07 of 2007 and Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995. Comparative figures were presented in line with the presentation made on the Financial Statements for the year ended 31st December 2015.

Net Turnover Analysis

��

��

14%

16%

11%

12%

5%

5%

22%

19%

34%

33%

7%

8%

7%

7%

Consumer Electronics

Home Appliances

Other

Financial Services

IT products

Furniture

Sewing

Revenue During the year under review, Singer Sri Lanka Group revenue grew by 21.2% to Rs. 46.9 billion over prior year, whilst revenue of the Company grew by 17.9% to reach Rs. 39.3 billion. The strong growth was supported by the significant growth in the, Home Appliances and IT Products segments. Home Appliance segment grew 23.6%, IT products 40.1%, consumer electronics 6%, furniture 19.5%. Singer Digital Media (Pvt) Limited specialising in mobile phone sales and computers to the trade channel, contributed Rs. 5,393 million through revenue

FINANCIAL REVIEW


from sales to external parties. Singer Finance (Lanka) PLC’s contribution to the revenue was 4.8%. There was no impact on Group Revenue due to the acquisitions as revenue of acquired companies are inter group and therefore, eliminated on consolidation. The Singer Group managed to sustain its volume growth in traditional product lines such as sewing machines, refrigerators, washing machines, panel televisions etc. and there were major gains due to significant volume growth in products such as mobile phones, furniture and air conditioning business categories.

Revenue

50,000

10,000

20,000

30,000

40,000

0

Rs. million

20162013 2014 20152012

46,9

24

25,4

41

25,4

85

29,6

99

38,7

11

Direct Interest CostDirect interest cost of the Group increased from Rs. 645 million in the previous year to Rs. 736 million, which is an increase of 14.1%. Included in direct interest cost is interest cost for customer deposits and interest on debentures at Singer Finance (Lanka) PLC. Customer deposits at Singer Finance (Lanka) PLC decreased from Rs. 3,368 million to Rs. 3,042 million. However, bank borrowings increased over prior year to strengthen the balance sheet position and to fund growth in lease receivables and loans.

Gross ProfitGross profit of the Group for the year under review reached Rs. 14,150 million, compared to Rs. 11,464 million in the previous year, an increase of 23.4%. The Group’s gross margin percentage marginally increased from 29.6% to 30.2% over the prior year. The gross profit of the Company is Rs. 11,418 million as against Rs. 9,780 million in the previous year, an increase of 16.7%. Gross margin percentage of the Company was 29.1% (2016) vs 29.4% (2015), a decrease of 0.3%. In absolute terms, gross margin of both Group and Company increased over prior year supported by revenue growth.

Gross margin percentage of both Group and Company is impacted by lower mix of high margin product lines, discounts to flush out slow moving inventory and provision for excess inventory. In addition, it was increasingly challenging to protect the product margins in the competitive market conditions that the Company generated in the year under review and the Company focused more on retaining and expanding market share with the aim of reaping long-term benefits.

Operating ProfitDuring the year under review, the Group Operating profit increased by 59.8% to Rs. 4,758 million (2015: Rs. 2,978 million), driven by revenue growth. Growth in other income was significant, due to the record of gain on bargain purchase, as a result of the acquisition of Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC. Selling and administrative expenses of the Group increased over prior year by 16.7% from Rs. 8,727 million in 2015 to Rs. 10,186 million in 2016, in line with the expansion of operational activities and aggressive marketing and promotional plans to sustain and expand market share. As a percentage of revenue, Group and Company administrative and selling expenses decreased from 22.5% to 21.7% and 23.8% to 23.1% respectively.

Managing costs in a dynamic business environment is a challenge since the management needs to maintain a balanced approach on maintaining operational efficiency as well as catering to the growth of business prospects. Both Group and Company carefully managed costs without sacrificing expansion of the business for future business prospects.

Operating Profit

5,000

1,000

2,000

3,000

4,000

0

Rs. million

20162013 2014 20152012

2,7

45

2,0

33

2,2

22

2,9

78

4,7

58

FINANCIAL REVIEW


Premium brands...premium range...premium specs...the Singer washing machine portfolio just offers a clean advantage to the busy housewife.

The Clean Advantage

SCAN TO VIEW MORE WASHING MACHINE


Net Finance CostGroup net finance costs increased by 51.1% to Rs. 1,473 million. Similarly, the Company’s net finance costs increased by 37.6% to Rs. 1,281 million, mainly due to the financial costs pertaining to the acquisition, in addition to the increase of borrowings for business expansion and working capital growth, specially relating to increase in trade receivables and inventory. Finance income of the Group increased from Rs. 117 million, to Rs.129 million. At the Company level, finance income increased from Rs. 164 million to Rs. 338 million due to increase in interest income from Subsidiary Companies, Singer Finance (Lanka) PLC and Singer Digital Media (Pvt) Limited on its borrowings from the Parent Company, Singer (Sri Lanka) PLC and interest income for debenture investment of Singer Sri Lanka PLC. and interest income for debenture investment of Singer (Sri Lanka) PLC. However, these income are offset in the Consolidated Financial Statements.

Income Tax ExpenseIncome tax expense of the Group was Rs. 768 million, as against Rs. 659 million in 2015. Income tax expense for the Company increased from Rs. 336 million to Rs. 346 million. The current year income tax expense on ordinary activities of both Group and Company has grown due to the increase in profit from ordinary business.

Net Tax Expenses include – Income Tax, Deferred Tax and WHT on Dividend Received.

The Group’s effective tax rate for the year is 24.6% vs. 34.8% in 2015, effective tax rate of the Company was 23.9% vs 28.1% in 2015. The effective tax rate decreased at Group level due to one time gain on bargain purchase of Rs. 564 million which is the consolidation adjustment excempt from income tax, whilst the decrease in effective tax rate at the Company level is mainly due to the dividend income from subsidiaries which is not liable for income tax.

Taxation

800

160

320

480

640

0

40

8

16

24

32

0

%Rs. million

20162013 2014 20152012

561

659

768

32

28

32

35

2224

25

Net Effective Tax Rate (%)Net Tax Expenses (Rs. million)

374

206

Profit for the YearThe Group recorded a profit after tax of Rs. 2,358 million for the financial year 2016. This represents a growth of Rs. 1,122 million or 90.7% over last year.

Singer (Sri Lanka) PLC’s net profit for the year was Rs. 1,104 million vs. Rs. 860 million reported in the previous year, which is an increase of Rs. 244 million, a growth of 28.4% over prior year. This is a commendable improvement of operational performance compared to the previous year together with consolidation impact from newly acquired subsidiaries at the Company Level.

Samsung Brand Top Loading Fully AutoModel No.: SMGWA60HCapacity: 6 kg, Panel Display: Dual Cluster Control, Spin Speed: 700rpm, Auto Restart, Air Turbo Drying – Dries Clothes Much FasterChild Lock, Diamond Drum (Fabric Care), Magic Filter (Clean and Hygiene), Pulsator: Wobble (Less Tangle, Better Care), Tempered Glass Window (Scratch-Free and Long-Lasting), Air Turbo Drying System

Singer Brand Top Loading Fully AutoModel No.: SWM-FA70R7kg Capacity,Rust Free Fibre Body, Stainless Steel Inner Tub, Wash Programmes

FINANCIAL REVIEW


In the Group, profit attributable to owners of the Company was Rs. 2,122 million vs. Rs. 1,153 million in 2015. Profit attributable to non-controlling interest was Rs. 236 million vs. Rs. 83 million in 2015. Non-controlling interest pertains to Singer Finance (Lanka) PLC effective from 22nd December 2010, after allotment of shares following the IPO and Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC and Reality Lanka Limited following the acquisition during the period under review.

Profit After Tax

2,500

500

1,000

1,500

2,000

0

Rs. million

20162013 2014 20152012

522

781

1,2

36

2,3

58

1,2

15

Other Comprehensive IncomeOther comprehensive income for the year is limited to actuarial gain/loss on retirement benefit obligation at both Group and Company level and revaluation gain of land and buildings of the Company. Land and buildings of the Company were revalued in the financial year 2016 by Mr. Chulananda Wellappili, an Independent Valuer. The next valuation falls due in financial year 2018.

Total Comprehensive Income for the YearThe Group recorded a total comprehensive income of Rs. 2,624 million after tax for the year against Rs. 1,206 million in previous year, which was above prior year by Rs. 1,417 million. Singer (Sri Lanka) PLC’s total comprehensive income for the year was Rs. 1,363 million

vs. Rs. 831 million reported in the previous year, an increase of Rs. 532 million. In the Group, total comprehensive income attributable to equity holders was Rs. 2,386 million vs. Rs. 1,123 million in 2015. Total comprehensive income attributable to non-controlling interest was Rs. 237 million vs. Rs. 83 million in 2015.

Total Comprehensive Income

3,000

600

1,200

1,800

2,400

0

Rs. million

20162013 2014 20152012

1,3

20

519

891 1

,206

2,6

24

Earnings Per ShareGroup Earnings per share (EPS) for the period under review was Rs. 16.95 vs. Rs. 9.21 in year 2015. Earnings per share of the Company was Rs. 8.82 vs. Rs. 6.87 in year 2015.

Earnings Per Share

20

4

8

12

16

0

Rs.

20162013 2014 20152012

3.69

5.70

9.21

16.95

9.26

Singer Washing MachineModel No.: SWMA4505SL3Front Loading Fully Auto, Capacity (kg): 6, Number of Programmes: 16, Maximum Spin Speed (rpm): 1200, Energy Efficiency Class (WM): A+, Voltage (v): 220-230

Beko Washer DryerModel No.: WDA 105614Washing Capacity (kg): 10.5, Drying Capacity (kg): 6.0,Number of Programs: 16ProSmart Inverter Motor, Maximum Spin Speed (rpm) (WD): 1400, Automatic Water Adjustment System: Yes,Durable Heater: Yes, Drying Technology: Air Condensation

FINANCIAL REVIEW


Price Earnings RatioThe price-to-earnings ratio of the Company as at 31st December 2016 was 14 times against 20 times as at 31st December 2015.

During the year under review, the Company’s share price ranged between Rs. 107.00 and Rs. 140.00, closing the year at Rs. 126.20. Respective figures for 2015 were Rs. 105.50, to Rs. 152.00 and closing price was Rs. 137.90.

Price Earnings Ratio

40

8

16

24

32

020162013 2014 20152012

Times

36.90

31.90

20.10

14.3112.50

DividendCompany paid a final dividend of Rs. 4.20 per share amounting to Rs. 526 million during the year, in respect of the year ended 31st December 2015. The Directors have proposed and approved, final dividend of Rs. 8.80 per share, amounting to Rs. 1,102 million for the year ended 31st December 2016. In accordance with LKAS 10 on ‘Events after the Reporting period’, the proposed final dividend, subsequent to the reporting date is not recognised as a liability in the Financial Statements as at 31st December 2016. The Company has access to necessary funds to finance the payment of the final dividend.

Dividend Payout Ratio

125

25

50

75

100

020162013 2014 20152012

%

74

104

6861

99

Dividend Per Share

10

2

4

6

8

020162013 2014 20152012

Rs.

6.00

2.50 2.50

4.20

8.80*

*Authorised final dividends of the Company.

Samsung WasherModel No.: WW80Front Loading Fully Auto, Eco Bubble Washer with, Digital Inverter Motor, 8kg, Crystal White Design Eco Bubble Stain Away, Diamond Drum

Beko Washer DryerModel No.: B-WDA9144OWFully Automatic Front Loading Washing Machine, 9kg Wash, 6kg Dry, 1400 rpm spin speed, LCD display, Direct Air Tech, BabyProtect+ Tech, Energy efficiency class: A+++, Spinning efficiency class: C, Automatic water control system, Child lock, Overflow safety

FINANCIAL REVIEW


Dividends Paid/Payable

1,250

250

500

750

1,000

0

Rs. million

20162013 2014 20152012

751

313

313

526

1,1

02

SolvencySection 56 of the Companies Act No. 07 of 2007, requires that a solvency test be carried out prior to the payment of dividends. The Board of Directors obtained a Certificate of Solvency from the Auditors, prior to the date of dispatch of the final dividend payment.

Return on EquityReturn on Group equity for the year under review is 28.9%, whilst in the previous year, it was 19.5%. Return on equity of the Company was 20.0%, compared to 17.8% in the previous year. Return on equity has been computed by dividing the profit for the year by the average total equity, as at the beginning and end of each financial year.

Return On Equity

30

6

12

18

24

020162013 2014 20152012

%

22.9

9.5

13.9

19.5

28.9

Total AssetsTotal assets of the Group increased by 30.9% to reach Rs. 42,250 million compared to 31st December 2015 while Company total assets increased by 23.0% to reach Rs. 28,830 million. The large increase is attributable to acquisition through business combinations, additions to property plant & equipment to improve leasehold premises, shop renovations, trade and other receivables and inventories. At the Company level, other major investments included a Rs. 1,415 million investment in subsidiary companies.

Financial Position Structure

100

20

40

60

80

0

%

20162016 20152015

LiabilitiesAssets

PPE

Inventories

Cash and Others

Investments

Assets

Receivables

Shareholders’ Funds

Short-term Borrowings

Other Liabilities

Long-term Borrowings

Liabilities

Trade Creditors

Growth in Property, Plant and Equipment

6,000

1,200

2,400

3,600

4,800

0

Rs. million

20162013 2014 20152012

2,1

51

2,5

05

2,6

67

2,7

15

5,4

26

FINANCIAL REVIEW


Net Assets Per Share

75

15

30

45

60

020162013 2014 20152012

Rs.

41.98 39.6543.73

50.20

65.12

Total EquityTotal Group equity including non-controlling interest, increased by Rs. 2,785 million over 2015 to stand at Rs. 9,555 million as at 31st December 2016. The increase was mainly due to increase in retained earnings over the prior year and increase in Non-controlling interest as a result of the acquisition of subsidiaries. Total Company equity increased by Rs. 838 million over the previous year to Rs. 5,934 million.

Capital Structure

100

20

40

60

80

0

%

20162013 2014 20152012

Total Borrowings Shareholders’ Equity

32

33

29

28

37

68

67 7

1 72

63

20162012 2013 2014 2015

Net Assets Per Share (RHS)

Market Price Per Share (LHS)

Net Assets Per Share vs.Market Price Per Share Rs.

75

15

30

48

60

0

150

30

60

90

120

0

126.2

0

117.9

0

89.0

0

102.3

041.9

8

39.6

5

43.7

3

13

7.9

0

65.1

2

50.2

0

Total LiabilitiesTotal liabilities of the Group increased by 28.3% to reach Rs. 32,695 million, compared to the 31st December 2015. The Company’s total liabilities increased by 24.8% to reach Rs. 22,897 million. This increase was mainly attributable to the increase in interest bearing loans and borrowings following the issue of new listed debentures by Singer Finance (Lanka) PLC, increase in borrowing to finance acquisition of Subsidiaries and increase in trade payables.

FINANCIAL REVIEW


Cash FlowGroup cash and cash equivalents increased by Rs. 112 million to Rs. 339 million by the end of the year under review. At Company level, cash and cash equivalents increased by Rs. 260 million to Rs. 337 million for the same period.

Group net operating cash outflow was Rs. 2,127 million, compared to Rs. 2,651 million outflows in 2015. This is attributable to the increase in level of inventories to meet a high seasonal demand and trade and other debtors. During the year under review, the Group net cash used in investing activities increased to Rs. 2,103 million, compared to Rs. 236 million in 2015, this was attributable to investment in subsidiary companies and additions made to property, plant & equipment. Net cash flow from financing activities at Group level was Rs. 4,458 million, as against Rs. 2,172 million of net cash inflows reported in prior year same period; this is attributable to increase in interest-bearing borrowings during the year under review.

Accounting PoliciesGroup and Company Financial Statements for the period ended 31st December 2016 presented in this Annual Report are prepared and illustrated in accordance with SLFRSs and LKASs and applicable accounting policies with effect from 1st January 2015 and the requirements of the Colombo Stock Exchange and the Companies Act No. 07 of 2007, respectively.

FINANCIAL REVIEW

P:73Singer (Sri Lanka) PLC ANNUAL REPORT 2016 AWARDS AND ACCOLADES

People’s Youth Choice Brand of the Year 2016.

People’s brand of the year 2016.

People’s Durable brand of the year 2016.

Recognition at the Best Corporate Citizen Awards Ceremony organised by the Ceylon Chamber of Commerce by being granted the title of one of Sri Lanka’s Top Ten Best Corporate Citizens and the Sector Award for the Corporate in the ‘Other Category’.

Great Place to Work – Recognised as one of the Top 25 companies to work for in Sri Lanka in the year 2016.

Gold Award under Trading Category in the 52nd Annual Report Awards organised by The Institute of Chartered Accountants of Sri Lanka.


SUSTAINABILITYREPORT


Creating Sustainable

Value

EnvironmentalOne of our priorities is to reduce

our environmental footprint by promoting energy efficient

products and embracing sustainable eco practices.

EconomicWe contribute to our Nation's

economic development through our business operations, infrastructure

development and by creating employment opportunities.

SocialWe forge and maintain

cooperative relationships with our key stakeholders and nurture sustainable communities through

our many CSR initiatives.

P:76 Singer (Sri Lanka) PLC ANNUAL REPORT 2016SUSTAINABILITY REPORT

Dear Shareholders,

Singer continues to be in the forefront of corporate entities that touch millions of Sri Lankan lives daily in improving their quality of life through various corporate responsibility projects, nurturing education, sports, health care and protecting the environment.

The Sustainability Report highlights the Company’s progress over the past financial year toward being a better steward of our people, products and planet.

Significant progress was made in our efforts to nurture lifelong relationships with customers extending beyond an ordinary sales contract. Our CSR framework enabled us to make the most positive and holistic impact on Sri Lankan society in particular through our efforts to combat kidney diseases through the ‘Thirst for Life’ project. Our strong support of educational initiatives saw us creating a solid, sustainable foundation to enrich our children with knowledge and essential skills for life. The Singer Fashion Academy continued to address women empowerment and encourage entrepreneurship and employment among Sri Lankan women. Through their involvement in many CSR activities, Singer employees constantly demonstrated their willingness to help others.

We have embedded sustainability requirements into our procurement and supplier lifecycle management processes to increase procurement efficiency and enhance the sustainability capabilities of our suppliers.

This year too, our CSR activities were recognised at the Best Corporate Citizen Awards Ceremony organised by the Ceylon Chamber of Commerce by being granted the title of one of Sri Lanka’s Top Ten Best Corporate Citizens and the Sector Award for the Corporate in the ‘Other Category’.

This Sustainability Report enables you to learn more about our performance in our own operations, and for our customers, our growing number of business partners, and how the people of Singer daily demonstrate our dedication to sustainability.


23rd February 2017Colombo

Chairman’s Statement


The Profile of this Report

ComplianceSinger Sri Lanka’s Annual Report for 2016 adopts the Global Reporting Initiative (GRI) Guidelines, version G4 and covers the economic, environmental and social performance for the financial year ended 31st December 2016.

Our first Report based on GRI G3 Guidelines was published in 2010. Thereafter, in 2013 we adopted GRI G3.1 Guidelines to report our sustainability performance. The 2015 Annual Report was based on GRI G4 Guidelines. This report is prepared in accordance with the requirements of the Global Reporting Initiative G4 ‘In accordance’ – Core Guidelines.

QueriesWe will be pleased to respond to any queries on this Report. You may contact:

Finance Division,Singer (Sri Lanka) PLC,No. 80, Nawam Mawatha,Colombo 2.

Products and Services The Company is engaged in Retail and Wholesale Marketing, Financing, Assembling and Manufacturing and in Financial Services. The Company markets Consumer Electronics, Home Appliances, Mobile Phones, Personal Computers, Laptops, Furniture, Domestic and Industrial Sewing Machines, Agricultural Equipment, and provides Financing through Hire Purchase. In addition, the Company manufactures and sells Furniture, Water Pumps and assembles and sells Motor Cycles and Two Wheel Tractors. The Company also acts as a Bill Collection Agent for banks, Mobile service providers, National Water Supply & Drainage Board, Ceylon Electricity Board and is also a sub-agent for Western Union.

SUSTAINABILITY REPORT

Reporting PeriodThe Annual Report 2016 of Singer Sri Lanka PLC covers the 12-month period from 1st January 2016 to 31st December 2016. This period is consistent with the Company’s usual annual reporting cycle for both financial and sustainability reporting.

Report Boundary and ContentUnless otherwise stated, the 2016 Annual Report is limited to the Company’s operations in Sri Lanka. Therefore, the operations of our Subsidiaries, Singer Finance (Lanka) PLC, Singer Digital Media (Private) Limited, Singer Business School (Private) Limited, Regnis (Lanka) PLC, Regnis Appliances (Private) Limited, Singer Industries (Ceylon) PLC and Reality Lanka Limited are included in the Annual Report.

Economic, social and environmental parameters that affect our business and stakeholders have been considered in deciding the content of this Report.

Data Measurement Techniques and Base of CalculationFinancial data presented in this Report have been extracted from Audited Financial Statements. The accounting policies adopted in preparation of the Financial Statements including the basis of preparation and significant assumptions are given on pages 182 to 250. The man hours in respect of training extended to employees is computed based on the scheduled time for each training session.

The scope, boundary and measurement methods used in the preparation of this Report are the same as those used in our previous Report in 2015. The information presented in this Report in respect of prior periods has not been restated.

Singer team at the Best Corporate Citizen Sustainability Awards.


Climate ConditioningPrime Brands from a Prime House – that’s Singer’s proposition, which has placed more air conditioners in more locations around the country helping more people stay cool.

SCAN TO VIEW MORE AIR CONDITIONERS


Outsourcing functions are limited to after sales services of our products, managed through a service franchise network, under the Company’s 15 Regional Service Centres, located strategically island-wide.

Singer Finance (Lanka) PLC is engaged in accepting deposits from the general public and financing sale or purchase of goods by letting on hire, hire purchase, leasing or through an alternative method of finance.

Singer Digital Media (Private) Limited, the fully-owned Subsidiary markets mobile phones through the island-wide distribution network.

Singer Business School (Private) Limited, the latest fully-owned Subsidiary extends educational services to the public.

Regnis (Lanka) PLC manufactures refrigerators and washing machines.

Singer Industries (Ceylon) PLC manufactures sewing machines.

An extensive range of products, of both local and international brands, offered by Singer Sri Lanka, is appearing on pages 35 to 37 of this Report.

Operational Structure Singer Group comprises eight companies and a separate manufacturing division. The eight companies are Singer (Sri Lanka) PLC, Singer Finance (Lanka) PLC (80.4% owned Subsidiary), Singer Digital Media (Private) Limited, Singer Business School (Private) Limited, (fully-owned Subsidiaries), Reality Lanka Limited, Regnis (Lanka) PLC, Regnis Appliances (Private) Limited and Singer Industries (Ceylon) PLC (Subsidiary Companies). Singer Manufacturing Factory in Piliyandala operates as a separate division.

Significant changes from previous reporting period in 2015 was the acquisition of majority stakes in its associate companies, Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC from its common parent, Retail Holding (Sri Lanka) B.V. – formerly Singer (Sri Lanka) B.V. making these Companies subsidiaries. Due to these acquisitions Reality (Lanka) Limited is now reported as a subsidiary, where as it was reported as an equity accounted investee in 2015.

Singer (Sri Lanka) PLC and Digital Media (Private) Limited serves as the Sri Lankan distributor for several major international brands in addition to purchasing materials and components from overseas suppliers. Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC and Regnis Appliances (Private) Limited are purchasing material and components from overseas suppliers too. The rest of the operations of Singer (Sri Lanka) PLC falls exclusively within Sri Lanka.


The Singer Group is spread across every geographical region in Sri Lanka. During the year, we augmented our reach by opening eight showrooms

SINGER – SASI12YMDNInverter technology, up to 50% energy saving,

R410a gas with a capacity of 12000BTU

SAMSUNG – SMGAR12Elegant design, inverter – up to 50% energy saving, eco

friendly R600a gas with a capacity of 12000BTU


The Singer Group is spread across every geographical region in Sri Lanka. During the year, we augmented our reach by opening eight showrooms, in Jaffna (Hospital Road), Boralasgamuwa, Kalutara, Thambuttegama, Veyangoda, Kandy, Welimada and Wellawatta.

Please refer page 257 of this Report for our distribution network.


Hitachi – H-RAU012Japanese technology,

Inverter – up to 50% energy saving, R410a gas with a capacity of 12000BTU

Mitsubishi – M-SRK13YL-SJapanese technology, inverter – up to 50%

energy saving, anti-corrosive green fin technology, eco friendly R600a gas with a capacity of 12000BTU

Singer recognised as the ‘People’s Brand of the Year’.

Singer receiving ‘Great Place to Work’ Award.

Winner of Multiple AwardsSinger (Sri Lanka) PLC was recognised as one of Sri Lanka’s top 10 Corporate Citizens by the Ceylon Chamber of Commerce. The Company was also awarded the Sector Award (Other) for Best Performance and the Certificate of Merit for the Best Sustainability Project for its ‘Soopa Shasthra’ programme at the Best Corporate Citizen Sustainability Awards 2016. These accolades are in recognition of the Company’s contribution to the community through the numerous CSR projects and the effective sustainability initiatives to generate increased value for all its stakeholders. Singer also won the ‘People's Brand of the Year award’, ‘Consumer Durables Brand of the year award’ and ‘Youth Brand of the year award’.

Singer (Sri Lanka) PLC was recognised as one of Sri Lanka’s Top 25 Best Companies to work for in Sri Lanka and was also recognised as one of the most respected entities in the year 2016. Further, Singer also entered the Business Today Top 30 ranking for the first time at number 30 in the year 2016.


Singer Sri Lanka’s 2015 Annual Report won the Gold Award under Trading Category in the 52nd Annual Report Awards organised by The Institute of Chartered Accountants of Sri Lanka. The award recognises the Company’s commitment to the triple-bottom line concept, sustainability of its operations and the high level of reporting.

Receiving the Gold Award in the Trading Category at the 52nd Annual Report Awards Competition.

Good Governance

Governance, Commitments and EngagementsSinger enshrines the highest ethical standards in the conduct of its business operations. The Board of Directors is responsible to ensure exemplary governance across all aspects of business in the best interests of stakeholders.

The Chairman of the Board functions in a non-executive capacity which strengthens the independence of the Board and Non-Executive Directors.

The Board comprises nine (9) Directors including the Chairman and the Chief Executive Officer.

Considering the size of our Company, we believe, the most effective way for shareholders to forward their recommendations or directions is through General Meetings.

They can also communicate directly with the Company’s Compliance Officer, Head of Treasury Cum Manager Investor Relations or Non-Executive Chairman in writing.

Employees communicate with the Board through their respective divisional heads. Management review meetings and operations meetings are held every month with the participation of key senior managers and relevant subject managers, to discuss and address current operational matters and issues of strategic nature. We foster a culture facilitating employees to express their views and recommendations to the management at all levels. The Group CEO and Directors have regular interactions with the management staff.

Current operational matters and issues of strategic nature are discussed and prompt action is taken at the weekly meetings held by the Executive Committee, comprising all key managers and three Deputy Directors.

Singer employs dynamic governance by adopting a non-authoritarian organisational operating structure. People are empowered to make policy within their established domains fostering better and clearer decisions. Company’s corporate culture facilitates leadership to spring forth when it is most needed, enabling the business to take effective action when needed. Therefore, the knowledge, expertise and experience of lower-level employees are fully utilised in decision-making. In dynamic governance, every voice is heard in creating policies and a management hierarchy exists for daily operations. It also encompasses both horizontal and vertical governance, which is a unique characteristic of dynamic governance. Both the manager and the hierarchy stay in place and everybody has a voice that can’t be ignored.

Dynamic governance often leads to higher staff morale, increased productivity and better decisions. This helps to generate better ideas for decision-making and motivate people to give of their best to carrying them out. Dynamic governance makes Singer more vibrant, as we have the information we need from the entire Organisation.


SINGER – SAS12L70Copper Condenser, anti-corrosive

‘Blu Fin Technology’, eco friendly R600a gas, Fibre Out door with a capacity of 12000BTU

SISIL – SL12LHighest energy saving, affordable price, anti-corrosive blue fin technology with a

capacity of 9000BTU


Performance-Based CompensationThe Board has established four Governance Committees.

Audit CommitteeThe Audit Committee is empowered to review and monitor the financial reporting process of the Group. This provides additional assurance on the reliability of Financial Statements through a process of independent and objective review.

Hence, the Committee operates as an effective forum in assisting the Board in discharging their responsibilities by ensuring the quality of financial reporting and related communication to the shareholders and the public.

The Audit Committee comprised three Non-Executive Independent Directors. The Head of Risk Management functions as the Secretary to the Committee.

The Financial Director/Compliance Officer, Audit Staff, Representatives of External Auditors and when necessary, the Group CEO and relevant operation Directors and Managers attend the meetings by invitation.

Remuneration CommitteeThe Remuneration Committee comprises of three Non-Executive Independent Directors and one Non-Executive Director. The Committee is chaired by President/Chief Executive Officer of Singer Asia Limited, who is also a Non-Executive Director. The Finance Director functions as the Secretary to the Committee. The Group CEO and the Finance Director provides the relevant information and participates in its analysis and deliberations. The scope of the Committee is to consider and recommend to the Board fees, remuneration and perquisites of Chairman, Group CEO, Independent Directors and the Executive Directors of the Board of the Company, including Alternate Directors and approve recommendations made by the Group CEO and the Corporate Office of Singer Asia Limited the Intermediate Parent of the Company. In addition, the Committee reviews the policies pertaining to the remuneration and perquisites of the key managers of the Company.

Nomination CommitteeThe Nomination Committee comprise two Non-Executive Independent Directors and the Chief Executive Officer of the Group. The Chairman of the Committee is a Non-Executive Independent Director appointed by the Board. Secretary to Board functions as the Secretary to the Committee as well.

The key responsibility of the Committee is to propose a suitable charter for the appointment and reappointment of Directors to the Board and to act in accordance with such a charter in proposing appointments and reappointments. The charter covers areas such as qualifications, competencies, independence and relationships which have potential to give rise to conflict vis-a-vis the business of the Company etc.

Further, the Committee reviews the structure, size, composition and competencies (including the skills, knowledge and experience) of the Board and makes recommendations to the Board on any changes if necessary.

Related Party Transactions Review Committee The Committee comprises three Non-Executive Independent Directors, one Non-Executive Director and the Executive Director/Group Chief Executive Officer. One Independent Director of singer Finance (Lanka) PLC attended the Committee to represent subsidiary company Singer Finance (Lanka) PLC. The Finance Director functions as the Secretary of the Committee. The Board-Related Party Transactions Review Committee was formed by the Board of Directors to assist the Board to review all related party transactions in accordance with the requirements of the Code of Best Practice on Related Party Transactions issued by the Securities and Exchange Commission of Sri Lanka.

Avoiding Conflicts of InterestAll key and senior managers are bound by the written Code of Business Conduct; an agreement signed as part of their written Contract of Employment. The signatory is responsible to comply with the Code and ensure employees reporting to him/her also comply with the Code. The Code of Business Conduct is signed annually to refresh their knowledge on the contents and update themselves on new clauses and amendments to the Code.

The Whistle-Blower Policy and the Collective Agreement signed with the labour unions have further strengthened our stance of avoiding conflicts. The Whistle-Blower Policy was introduced in 2009 to enhance transparency and promotes adherence to the Code of Ethics. It encourages employees to raise concerns on any misconduct at work. The Collective Agreements with our labour unions facilitates an equitable balance between the interests of Singer Group of company and its employees. The welfare facilities provided by the Group helps to keep the employees motivated and avert potential conflicts of interest.

Eligibility of Board MembersNew members are appointed to the Board based on qualifications and expertise as per the rules and regulations of the Colombo Stock Exchange, the Code of Best Practice on Corporate Governance issued jointly by The Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka and the Companies Act No. 07 of 2007.

Executives are identified and groomed for appointment to the Board based on a well-structured process that includes extensive training and development. This sometimes includes overseas assignments and training at foreign universities and other institutions.



Exposure is given to Board members through regular training programmes and enabling them to serve in related committees.

Fundamental Framework

Our Vision, Mission, Values and ObjectivesOur vision, mission, values and objectives are given on page 2 and 3 of this Report. As a company committed to creating shared value, we ensure our business practices are aligned with our social goals. Such values are built into our corporate culture and organisation structure and are routinely evaluated in the process.

We believe in working closely with our suppliers in order to create shared values, for both parties. As detailed in the Customer and Supplier Relations section, we strive to enable our suppliers to reach new standards and also improve and develop our product range by sharing our market intelligence with them.

Overseeing Economic, Social and Environmental PerformanceThe Board of Directors is responsible for the Group’s strategic planning function as they are the highest governance body. This entails the formulation of the Group’s strategic vision and mission, setting the overall corporate policy, monitoring performance and reviewing risks and all major investments.

The Board provides a mechanism for critical evaluation of Company’s operations. Board members exercise independent judgment in executing their responsibilities, which include strategy and risk management as well.

Both, the Chairman and the Group CEO ensure good governance across the Organisation, ensuring effective participation of both Executive and Non-Executive Directors in decision-making and making independent judgment on issues pertaining to strategy, performance and risk. The Board also seeks independent professional advice from third parties such as the External Auditors and other professional consultants, when deemed necessary.

Alternate Directors with expertise in diverse fields also provide additional information and expertise to the Board. Operational decisions are made by the Executive Committee at the Executive Committee meeting held every Monday. A Management Review meeting is held once a month as well.

Company’s annual plan sets out the objectives and plans for all business units and divisions. Management Committees translate these objectives into tasks to be implemented by Divisional Heads.

We abide by internationally-accepted standards, Codes of Conduct and principles. For example, the section on ‘Creating Sustainable Value’ in the Annual Report is based on Global Reporting Initiative Guidelines.

Evaluating Performance of Board MembersThe Board conducts a self-evaluation of its own performance. Interactions with stakeholders also enable us to assess our economic, social and environmental performance. In addition, critical self-analysis, stakeholder communication, independent judgments from external entities also facilitate evaluation of Board performance. Company’s performance is evaluated at corporate level by the Board of Singer Asia, against the annual business plan as well.

Implementation of the Global Reporting Initiative Guidelines and through our participation in forums, such as the Annual Report Competition, we are able to obtain feedback on Board’s performance. In addition, competitions, such as SLIM AC Nielsen People’s Brand of the Year Awards, Fitch Ratings and LMD’s ‘Most Respected Entities’, ‘Great Place to Work Survey’ and the ‘Best Corporate Citizen’ rankings, provide useful external evaluations of the Board’s performance.

The Executive Directors are closely involved in the daily operations of the business, constantly engaging with key stakeholders. These include meeting customers during field visits; suppliers at their manufacturing locations (overseas and local) and also during suppliers’ visit to the Company. Direct feedback is obtained through regular interactions with employees and other external bodies such as Chamber of Commerce, rating agencies, Governmental agencies and industrial associations.

Memberships in AssociationsSinger Group of companies are members of the following associations:

z The Ceylon Chamber of Commerce z Sri Lanka-China Business Council z Import Section of the Ceylon Chamber of Commerce z Sri Lanka-Canada Business Council z The Employers’ Federation of Ceylon z CSR Lanka Guarantee Limited z The Industrial Association of Sri Lanka

Our Response to Precautionary Approach We remain committed to safeguarding the public in conducting our business operation. Therefore, every effort is taken to keep our customers and the communities informed of any potential risk they may face as a result of our operations. In our efforts to be proactive, we anticipate possible health or environmental risks in advance and take apt measures to address them. This is why we adopted CFC free gas at a very early stage and used zero ozone impact R600a natural refrigerants. We were prompted to adapt these measures out of our concern towards the environment.



Our voluntary partnership with the Central Environmental Authority in the National Co-operate E-Waste Management Project was driven by this same conviction. As detailed in the Environmental Relations section, we are forerunners in e-waste collection. We also attempt to increase the recyclable content of all our products and packaging. This is the reason we substituted Styrofoam with natural recycled paper packaging, way before it was regulated.

StakeholdersStakeholder Identification Our stakeholders are considered to be individuals or groups who can affect the value creation process of our Company over time. They may significantly be affected by our business operations and their actions may affect our ability to achieve our objectives.

Accordingly, we identified our customers, employees, shareholders, suppliers, community and Government Authorities to be key primary stakeholders of our Company. Our other key stakeholders include Bankers, Financial Institutions, Depositors and Competitors.

Stakeholder EngagementSinger actively seeks to engage and ascertain valuable feedback through ongoing proactive dialogue with both internal and external stakeholders. Details of our stakeholder engagement are given throughout this Report. We plan to continue the GRI G4 journey, engaging with our stakeholders more deeply on our GRI G4 reporting and CSR programmes. This helps us to obtain more specific feedback on our approach which will be shared in our future reports.

Stakeholder Method of Engagement Frequency

Customers Retail Channels, Call Centre, Field programmes, after sales service

Ongoing

Advertising and Promotion Ongoing

Employees Management and Divisional Meetings, Initiatives by HR Division, various meetings and collective agreements with Unions

Ongoing/Daily

Shareholders Annual General Meetings Annually

Quarterly Reports and Correspondence

Quarterly, Ongoing

Suppliers Visits, Consultations, Workshops Ongoing

Community Various Projects Ongoing

Government Authorities

Timely Tax Payments, Complying with all Regulations Ongoing

Based on feedback received from stakeholder engagement stated in the table above, Singer has identified topics and concerns of key stakeholders.


This information is provided in the following table:

Topics and Concerns of Key StakeholdersAfter stakeholder identification, the expectations and concerns of our stakeholders are identified and assessed. Since these concerns and expectations vary according to the stakeholder group, it is important to have a clear understanding. Listed below are the primary concerns and expectations of the various stakeholders and our response to those concerns:

Stakeholder Concern Response

Customers Product availability, enhanced customer service, reliable quality of products, after sales service and financing options

Singer ensures products are widely available through its island-wide distribution network. Further, Singer provides an enhanced customer service to its customers. Singer provides dealership to many world renowned brands with high quality and assures quality of locally assembled Singer brand products. Singer provides call centre facilities to attend after sales services on urgent basis. Singer offers various financing options including hire purchase, credit terms and credit card options

Employees Increased salaries and wages, job satisfaction and motivation, training and continuous career development

Singer offers a wide range of financial and non-financial benefits to employees along with continuous training and career development opportunities and collective agreements with unions

Suppliers Long-term contracts for purchases, ability to obtain payments promptly

Singer maintains an effective relationship with suppliers

Shareholders Growth in profits, dividend growth, increase in share price

Singer commits to fulfil shareholder concerns and maintains robust dividend policy

Government Compliance with rules and regulations including tax payments, creation of job opportunities

Singer adheres to Government’s rules and regulations in conducting its operations and pays due taxes and duties timely

Society Minimising threats to the environment, creation of job opportunities

Singer engages in all activities in an environmental-friendly manner and safeguards the interests of the society and engages in a lot of CSR activities


MaterialityMateriality AssessmentWe consider an aspect to be material if it substantially affects our Company’s ability to create value over short, medium and long term. This assessment helps us to focus on issues that matter most to us and our stakeholders.

Aspect Indicator Significance

To Organisation(Very High/High/Medium)

To Stakeholder(Very High/High/Medium)

1. Economic Performance G4-EC1G4-EC3G4-EC4 Very High Very High

2 Materials G4-EN1, G4–EN2 Very High High

3 Energy G4-EN3, G4–EN5G4-EN7, G4–EN6 High Medium

4 Water G4-EN8 Medium Medium

5 Biodiversity G4-EN11 Medium Medium

6 Emissions G4-EN19 Medium Medium

7 Effluents and Waste G4-EN23 High High

8 Products and Services G4-EN27 Very High High

9 Compliance G4-EN29 Very High Medium

10 Supplier Environmental Assessment G4-EN32 Medium Medium

11 Environmental Grievance Mechanisms G4-EN34 High High

12 Employment G4-LA1G4-LA2G4-LA3 Very High Very High

13 Labour/ Management Relations G4-LA4 Very High High

14 Occupational Health and Safety G4-LA5G4-LA6 Very High High

15 Training and Education G4-LA9G4-LA10G4-LA11 High High

16 Diversity and Equal Opportunity G4-LA12 High Medium

17 Equal Remuneration for Women and Men G4-LA13 High High

18 Labour Practices Grievance Mechanisms G4-LA16 Very High High

19 Non-Discrimination G4-HR3 Very High High

20 Freedom of Association and Collective Bargaining G4-HR4 High High

21 Child Labour G4-HR5 High High

22 Forced or Compulsory Labour G4-HR6 High High

23 Human Rights Grievance Mechanisms G4-HR12 High High

24 Local Communities G4-SO1 High High

25 Anti-competitive Behaviour G4-SO7 High Medium

26 Customer Health and Safety G4-PR1G4-PR2 Very High Very High

27 Product and Service Labelling G4-PR4G4-PR5 Very High Very High

28 Marketing Communications G4-PR6G4-PR7

Very High High

29 Customer Privacy G4-PR8 Very High Very High

30 Compliance G4-PR9 Very High High



Materiality MatrixThe matrix below is a visual summary of the ratings with the numbers depicting the different aspects listed above:

Sign

ifica

nce

to

Stak

ehol

der

Very High 1, 12, 29High 7, 11, 14, 15, 17,

20, 21, 22, 23, 24, 26, 272 ,8, 13, 14, 18, 19, 28, 30

Medium 4, 5, 6, 10 3, 25 9, 16Medium High Very High

Significance to Singer

Economic Performance

Statement of Value Added – Group Category 2016

Rs. ’000% 2015

Rs. ’000%

Group Turnover – Gross 51,060,655 41,082,588

Other Income 793,743 240,935

Less – Cost of Material and Services 36,513,818 30,866,773

Value Added 15,340,579 100 10,456,750 100

Distribution of Value Added to Employees and Dealers

Salaries, Commissions and Other Benefits 4,958,598 33 4,266,832 41

To Government

Income Taxes, Turnover Taxes, Value Added Tax and Other Taxes 5,074,507 33 3,122,195 30

To Banks, Deposit Holders and Other Lenders

Interest and Bank Charges on Borrowings and Customer Deposits 2,208,264 15 1,619,007 15

To Suppliers of Capital

Dividends to Shareholders* 1,101,845 7 525,880 5

Retained for Reinvestment and Future Growth

Depreciation, Amortisation and impairment 463,042 3 325,500 3

Retained Profits 1,534,324 10 597,336 6

Value Distributed 15,340,579 100 10,456,750 100

* Includes proposed dividends.

100 10020 2040 4060 6080 800

Sources and Distribution of Income%

Sources of Income Distribution of Income

2016

Interest and Bank Charges on Borrowingsand Customer Deposits

Distribution of Value Added toEmployees and Dealers

Dividends to Shareholders

Retained Profits

Depreciation and Amortisation

To Government

Value Added

2015

Defined Benefit ObligationThe Group’s net obligation in respect of defined benefit plan of employees is disclosed in Note 27 on page 28 of the Report.


P:87Singer (Sri Lanka) PLC ANNUAL REPORT 2016 SUSTAINABILITY REPORT

Our manufacturing processes are constantly evaluated for their environmental impacts and we actively promote recycling and waste management.

Environmental Performance

Singer Factories Integrating Sustainable Eco PracticesPromoting the well-being of our planet, people and ecosystems is at the heart of everything we do at Singer. Whilst we aspire to be the foremost appliance retailer in the Asia Pacific, we care deeply about how we achieve that vision and our lasting impact on the planet and the communities where we operate. Therefore, we make every effort to create a more sustainable environment, ensuring even the smallest procedures we carry out reflect visionary, green contributions to our society. The products marketed and manufactured by us are increasingly eco-friendly. Our manufacturing processes are constantly evaluated for their environmental impacts and we actively promote recycling and waste management processes in our Organisation.

As a responsible corporate citizen, we have taken several initiatives to mitigate any damage to the environment. The Singer factory in Piliyandala has acquired the licenses and certifications needed to comply with the Central Environmental Authority (CEA) regulations. The manufacturing plant in Piliyandala is licensed under the Environment Protection Licenses (Section 23B of the National Environment Act No. 47 of 1980). Furthermore, Regnis (Lanka) PLC, our refrigerator plant that converts refrigerators to R600-highly-efficient, energy-saving GEO and ECO products, is well-ahead in the region for having zero impact on the ozone.

The staff members at the Piliyandala factory adhere to environmentally-friendly practices to preserve the lush environment surrounding the premises. Hence, they are focused on controlling noise pollution, air pollution and water pollution. Solid waste management and sound chemical

management practices are followed to the extent of energy and resource conservation as well.

Guidelines given by local and international authorities are strictly followed in storing and transporting certain hazardous materials which are used for production. All chemicals are stored in a sealed warehouse with restricted access. Two independent environmental audits are conducted annually for the furniture factory and the agro factory for the renewal of the CEA certification. The fact that all Singer Sri Lanka factories operate under these set standards signify our stance as an eco-friendly company.

Whilst ensuring the factory is compliant with all environmental certifications, all our internal operations are carried out in conformance to these guidelines as well. Therefore, our conventional paint booths were replaced with water curtain paint booths, reducing air emission caused by spray painting to a greater extent and reducing toxic emission as well.

The sanding activities are carried out in an enclosed area installed with a proper dust extraction system. This facilitates a safe environment for the employees engaged in this area whilst carrying out the main operation without polluting the air. The emission control system is well maintained.

Environmentally sustainable practices are instilled in our suppliers and manufacturers at regular on-site evaluations of their processes. In the event of non-compliance, we either discontinue their services or take prompt measures to upgrade their standards.

Solid waste including saw dust arising from our operations is removed in an environmentally safe manner, through responsible third party contractors, in consultation with the relevant authorities. The solid waste is used for wood briquetting, burners and filling up of marsh lands.

Saw Dust CollectionWe continuously focus on reducing, reusing and recycling saw dust, smoke, paint fumes, wood cut-offs, particle boards, plastic and iron scraps. These waste materials are channelled into water troughs, thereafter collected, treated and disposed in a responsible manner. A dust collection system is installed in our sofa factory to prevent air pollution through a fine filtration process.

Saw dust disposed in our Piliyandala factory is recycled as fuel for boilers and ovens through a third party supplier. The supplier collects the saw dust voluntarily, from our factory thrice a week from the specially-fitted chambers in the factory for saw dust collection. This enables us to support the supplier and also optimise the use of waste from our manufacturing processes. In recognition of our contribution and support to reduce Sri Lanka’s carbon footprint, we received a token of appreciation from the Central Environmental Authority.


The King of Cool!Singer’s industry leading, multi-brand portfolio of refrigerators complements lifestyles in homes across Sri Lanka.

SCAN TO VIEW MORE REFRIGERATORS


We strive to make recycling electronics as easy as purchasing electronics. To date we have led the removal of a significant quantity of e-waste which otherwise would have the potential to cause damage to the environment and the well-being of communities. We annually spend a substantial sum of money in ensuring proper disposal of e-waste through approved e-waste disposal companies. Each year, we have increased our capacity of e-waste collection.

Given below are details of e-waste disposed by Singer for the year 2016:

Category Volume

CRT TVs 38,269LCD TV 6,544Refrigerators 2,407Washing Machines 6,498

Singer (Sri Lanka) PLC has invested Rs. 14.7 Million on LED panel repair project to repair technically damaged LED panels which were scrapped earlier. Due to this investment following number of LED panels were repaired during the year 2016.

Total repaired LED panels 3,148

Total operations cost on panel repair project in 2016 (Rs.) 812,000

Given below are details of cost of recycled material of Regnis (Lanka) PLC for the year 2016:

Total (kg) Net Price Rs.

Total ValueRs.

HIPS Offcuts 152,551 68.17 10,399,402

Metal Offcuts 67,247 17.04 1,145,889

Plastic and Polythene 13,779 29.83 411,028

Cardboard 63,901 21.30 1,361,091

Aluminium 61 46.87 2,859

Used Powder 42 30.68 1,289

Copper 24 426.09 10,226

Total 297,605 13,331,783

Island-wide e-Waste Collection Points

Our reputation as a respected and responsible distributor of electrical appliances in Sri Lanka, propelled the general public and our customers joined the e-waste management campaign organised by us. Our wide network provided easy access for the participants as we placed e-waste collection bins in all Singer Plus, Sisil World, Singer Mega, Singer Home Showrooms and Singer Service Centres. Awareness was created through Below-The-Line (BTL) promotions, Public Relations (PR) articles, print advertisements, posters and billboards.

Biodegradable Packaging All Singer factories have replaced regifoam with corrugated cardboard as a packing material. Research and planning are underway to expand the use of biodegradable materials. Going forward, we strategise to use shopping bags made out of biodegradable materials.

Continuing e-Waste Management LeadershipAligned to the Government’s vision and our corporate business values, we constantly seek to minimise the effects of our operations and that of our customers through sustainable business models. Therefore, since year 2010, Singer has signed a Memorandum of Understanding with the Central Environmental Authority to assist local authorities in the management of e-waste on a national scale. Under its guidance, the Singer Group follows UN BASEL convention regulations in collecting, transporting and storing e-waste for recycling.


HITACHI – H-RW720Inverter dual fan cooling and water dispenser with a capacity of 582 litres

SAMSUNG – SMGRS21HUTPNSmart inverter technology with a capacity of 585 litres


5% of the total material used at Regnis factories to manufacture refrigerators is recycled material.

Trade-in Offers to Reduce Carbon FootprintBeing the largest consumer durables retailer in the country, we strive to instil environmentally-friendly habits in our customers, whilst nurturing strong customer relationships. Singer trade-in offers-provides consumers with convenient opportunities to recycle their old electronics as they avail themselves of discounted trade-in offers should they wish to dispose of old products. This motivates customers to trade in their old electrical appliances for more energy-efficient and environmentally friendly products which contribute to the reduction of carbon footprint.

Pioneering and Promoting R600a Gas RefrigerationSinger's subsidiary company Regnis (Lanka) PLC adopts our commitment to creating and sustaining a greener future in Sri Lanka. Regnis manufactures two of the most energy efficient and valued range of refrigerators; Singer GEO and SISIL ECO. The Singer GEO range became the first to adopt R600a gas technology, which is a 100% environmentally-friendly substitute for the HFC refrigerants that contribute heavily to the depletion of the Ozone Layer and increase global warming. Although the use of R600a gas becomes compulsory in year 2040 under the Montreal Protocol, our commitment to the environment propelled us to meet this goal more than two decades ahead.

The Company took aggressive steps to promote R600a gas refrigerators in Sri Lanka. All marketing communications were targeted to promote the benefits and importance of R600a refrigerators. The Company discontinued the sale of R134a gas refrigerators and switched fully to R600a refrigerators. The entire nation benefited through this marketing revolution.

Given below is the estimated power saving per annum to the nation through total sale of R600a refrigerators in the year 2016 which is manufactured by the subsidiary company Regnis (Lanka) PLC

Total Power Consumption Per Annum

R134a (kWh) R600a (kWh) Power Saving (kWh)

50,431,645 38,913,238 11,518,407

Singer Represents Global Leaders of Sustainable Home AppliancesSinger partnered with Arçelik Group, the leader in home technologies in Turkey and the third largest in Europe. This exclusive partnership built on a shared commitment to the most advanced, consumer friendly products, resulted in the launch of Beko product ranges in Sri Lanka.

Beko range includes the world’s most energy efficient washing machine, consuming 50% less power than A-energy class appliances, as well as the world’s most energy efficient multifunction oven, which consumes 30% less energy than any competitor product in its segment.

Promoting Energy Efficient Inverter TechnologyWe have been heavily involved in promoting products that utilise inverter technology consuming at least 30% to 50% less energy than standard products. Although inverter technology is more expensive, we promote these products as they are energy efficient and are crucial for a greener planet. The most popular products that use inverter technology include the Singer inverter air conditioners, Samsung refrigerators, BEKO refrigerators, Hitachi refrigerators, and Hitachi air conditioners.


BEKO – B-RCNA3652 door bottom freezer & A++ energy efficiency with a capacity of 365 litres

HITACHI – H-RWB550Inverter dual fan cooling technology & bottom freezer with a capacity of 455 litres


Materials Used by Weight/VolumeThe total volume and weight of non-renewable materials used to produce and pack products of the Piliyandala factory is given below for 2016.

Material Avg. QTY/per month (Litres)

Paints 2,600

Thinner 2,600

Base Coat 1,100

Acetone 300

Rexin 12,000

Total renewable materials used to produce and pack the products of the Piliyandala factory.

Material Avg. QTY/per month

Particle Board 3,400 boardsWood 78,500 Cubic feet

Total weight of materials that are used to produce and package refrigerators at Regnis factory is as follows.

Weight (Kg)

Model Direct Materials

Packing Materials

Total Weight

RGS 150 47,031 3,855 50,886

ECO 55 337,518 24,818 362,336

GEO 182S 372,479 35,235 407,714

ECO 72 946,881 84,977 1,031,858

GEO 200D 1,060,141 93,937 1,154,078

ECO 192/WR 192 1,328,662 117,730 1,446,392

GEO 242D 195,465 18,840 214,305

ECO 245 283,653 27,340 310,993

GEO 260NF 343,574 29,876 373,450

ECO 251NF 450,570 39,180 489,750

GEO 282S 168,096 13,184 181,280

Total 5,534,070 488,972 6,023,042

During 2016, approximately 10,000kg of packaging card board was reused by the Singer Distribution Centre in Piliyandala. This contributed to saving valuable resources and money spent on new cardboard.

Total Fuel Consumption from Non-Renewable SourcesThe table below shows the electricity and diesel consumption by our subsidiary company Regnis (Lanka) PLC in the year 2016 and 2015

Energy Consumption 2015 2016

Diesel (litres) 125,400.0 44,800.0

Electricity (Kwh) 1,240,321.0 1,118,190.0

Diesel Energy Consumption in Kj (million) 4,674.1 1,669.9

Electricity Consumption in Kj (million) 4,465.2 4,025.5

Total Energy Consumption in Kj (million) 9,139.3 5,695.3

Diesel energy intensity ratio Kj/unit 41,133.7 12,360.2

% Reduction in Diesel consumption p/unit 17% 70%

Electricity energy intensity ratio Kj/unit 39,294.9 29,796.3

% Reduction in Electricity consumption p/unit 17% 24%

Total energy intensity ratio 80,428.6 42,156.5

The amount of reductions in energy consumption achieved as a result of conservation and efficiency initiatives at Regnis is given below.

Diesel (Kj) million

Electricity (Kj) million

Reduction in energy consumption at Regnis (Lanka) PLC 3,004.3 439.7

On average, the Piliyandala factory consumed 2,000 litres of diesel per month and average electricity consumption for a month at Piliyandala Factory was 93,000 kW/h in its operations in 2016.


SAMSUNG – SMGRSA1Smart inverter technology with a capacity of 545 litres

SINGER – GR600 Smart inverter technology with a capacity of 640 litres


Singer uses ground water only for human consumption and not for any manufacturing processes. We keep the Municipal water supply line only as a standby source for our operations. The Piliyandala factory drew 30,000 litres of ground water per day on average in 2016.

It is estimated that a similar volume of planned and unplanned water was discharged through the common drain system. This water was not reused by another organisation.

Reduction in Co2 emission due to reduction in diesel consumption in Regnis (Lanka) PLC is as follows:

Diesel saving in the factory (l) 104,027

Co2 emission per diesel litre (kg) 2.68

Reduction in Co2 emission (l) 278,792

While Singer Group believes in the importance and value of protecting and preserving biodiversity, the Company does not have operational sites owned, leased or managed, in or adjacent to protected areas and areas of high biodiversity

value outside protected areas. The Group makes every effort to prevent environmental harm.

Grievances on Environmental ImpactsNo grievances were filed on environmental impacts through formal grievance mechanisms during the Reporting period. Neither there had been any monetary or non-monetary sanctions imposed for non-compliance with environmental laws and regulations. All suppliers are required to adhere to the Singer Code of Conduct and environmental standards.

Social Performance

Labour Practices and Decent Work Singer is committed to employee engagement that upholds individual dignity and respect human rights. Our employment practices are premised on attracting and retaining human talent based on merit. Employee skills are enhanced through the capability development agenda entailing customised training and development programmes. Our employees are provided a work environment benchmark for the quality of its safety and health standards.

The Group Chief Executive Officer, through the members of the Executive Committees and human resources function is responsible to ensure employment practices in all Singer subsidiaries as per the Company’s HR policy. Total compliance with all statutory provisions governing labour practices and decent work is also ensured throughout the organization and Group of companies. Specific responsibilities are assigned to individuals based on their particular role.

The Human Resource Division regularly monitors the progress to ensure proper implementation of the HR policies. The Unit Heads and Divisional Management Committees periodically follow-up to ensure full compliance.

The minimum number of weeks’ notice provided to employees and their elected representatives prior to the implementation of significant operational changes that could substantially affect them is determined based on the situation.

WorkforceDue to the acquisition of major stakes of Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC, total number of 416, employees were added to the Singer group in 2016. Employee details reported in this report is including all subsidiaries in 2016 where as it was limited to Singer (Sri Lanka) PLC, Singer Finance (Lanka) PLC and Digital media (Pvt) Ltd in year 2015.

The workforce as at 31st December 2016 at Singer Group was 2,436 of which 86% were male employees. A total of 316 employees were recruited during the year; 263 males and 53 females.


Our employees are provided a work environment benchmarked for the quality of its safety and health standards.


227 employees have resigned during the year; 183 male and 44 female.

Key Indicators

Description 2016 2015 2014 2013 2012

Total Number of employees 2,436 1,905 1,762 1,637 1,475

Staff Growth (%) 27.87 8.12 7.64 10.98 20.10

Turnover per Employee (Rs. ’000) 19,263 20,321 16,856 15,568 17,248

Profit after Tax per Employee (Rs. ’000) 968 649 444 319 830

Asset per Employee (Rs. ’000) 17,338 16,936 15,478 15,005 14,522

Personal cost per Employee (Rs. ’000) 2,033 2,251 2,013 1,852 1,891

The human resources statistics of our Company are given below:Staff Strength

Description Grand Total

Key & Senior Management 57

Middle Management 113

Junior Management 178

Executive 32

Non- Management 2,056

Grand Total 2,436

Gender Diversity

Description Female Male Grand Total

Key & Senior Management 2 55 57

Middle Management 9 104 113Junior Management 33 145 178Executive 7 25 32Non- Management 296 1,760 2,056

Grand Total 347 2,089 2,436

Age Analysis of Staff

Description 18-28 29-39 40-50 50 Above Grand Total

Key & Senior Management – 5 27 25 57

Middle Management 2 39 45 27 113

Junior Management 24 104 35 15 178

Executive 5 24 1 2 32

Non-Management 590 765 532 169 2,056

Grand Total 621 937 640 238 2,436

Identifying Skills Required for the FutureRecruiting and training employees, who have the potential to lead the Company in the future, will enable a business to grow. Apart from the academic credentials and skill levels, there are

many other factors that needs to be taken into consideration when making recruitment and training decisions.

It is not practical to list ideal skills set, both ‘hard’ and ‘soft’, needed in the future leaders. A company culture is almost impossible to replicate and every organisation will have an image of their ideal professionals. However, there are certain soft skills that are likely to suggest the suitability of an individual for a leadership position. The ability to take responsibility and get work done is one such attribute.

Training and Development Employee turnover has high costs ranging from 10% to 30% of the employee’s annual salary. This includes direct expenses such as recruiting and the expense of loss of productivity and institutional knowledge.

The reasons for leaving the Organisation can be many. Managers who focus on grooming their successors can avoid many of these reasons at every opportunity. When a manager sees the potential of an employee with the required personality traits, he builds skills and leadership training into their daily interactions. The impact of this method on corporate culture can be immense, as staff members understand they are highly valued by both their manager and the Company. It facilitates a culture of continuous learning, innovation and team building, which is vital for a sustainable workplace. By empowering staff through training and developing new skills, companies can retain high performing, loyal staff members and avoid the high costs of recruiting and training a new employee.

Training successors leads to increased productivity, skill and innovation of the workforce, allowing the Company to better retain top talent and give a faster, more effective response mechanism to change.

Finding new leaders is critical to the successful growth of any organisation and growth is greatly impacted by the number of leaders recruited to the Company. Following are the steps we adopt though the concept of multiplying our leadership base:

Our Training Philosophy Catch the Vision of Multiplication

One cannot sell something unless he/she believes in it.

Be Intentional

A conscious decision must be made to replace oneself. Multiplication should be a part of one’s strategy and there must be a system of leadership recruitment.

Start Early

Leaders must be replaced before they are needed. Leaders must invest in their own personal growth. One cannot lead unless he/she has been there.



Humble Yourself

Leaders must not fear of the new leaders being better leaders than them. People must be allowed to shine under one's leadership; this will advance one’s ability to lead. The team will follow the leader if there is a direct benefit to them and if they trust the integrity of the leader.

Share Responsibilities Early

Sharing responsibility at an early stage is the easiest way to foster learning. When more ownership is given to people, they will be motivated more to participate and learn.

Identify Potential

Look for potential in people. Early identification of potential is the key to be focused and to offer appropriate training to individuals.

Create an Environment Conducive to Produce Leaders

Commitment to creating an environment that is conducive for learning and development is vital. An environment that welcomes engagement could lead to the creation of good leadership, shared responsibility and collective growth.

Recruit

Identify and recruit the best quality of people, adhering to ‘recruitment of quality’ principle.

Lead for Life Change

Identifying and nurturing potential leaders who have the potential to be bold, mature and responsible decision-makers is part of our focus areas in creating a quality workforce.

Our Approach to Employees’ Progression and Career Development

Singer gives emphasis to career development of employees, encouraging them to reach their personal and as well as professional goals. This not only makes their work lives more satisfying, but ensures continued success of the Company.

As a responsible employer, we encourage our employees to pursue career development opportunities and continuously support their professional growth. Even in challenging times, we invest time and money for training and professional development initiatives of our employees.

Training helps to improve the current skills of employees. We conduct four categories of training-major training, external training, operational training and product training. All training programmes are conducted at the state-of-the-art training centre at the Group’s Head Office in Nawam Mawatha. This facility can accommodate up to 200 staff members at a given time. Field training is conducted according to the convenience and requirement of the trainees and trainers. In addition, we have invested in infrastructure development of our regional centres, which accommodates close to 25 employees at a time.

External training is conducted by the British Council, Sponge Learning, IPM Sri Lanka, Ceylon Chamber of Commerce, ‘Employers’ Federation of Ceylon, CIMA Sri Lanka, CA Sri Lanka, McQuireRens and Jones, CINEC and other resource persons. Customised training programmes are organised by the HR Division based on employee’s specific job requirements. Training programmes covers areas such as motivational techniques, creative thinking, customer care, marketing and networking.

External Training

The external programmes include seminars, conferences and technical or functional specific training. The need for external training often crops up due to the need of keeping abreast with industry best practices. The Line Managers have the flexibility to request specific training programmes based on requirement at any given time.

Product TrainingSewing Machine Workshop

The Sewing Machine Workshop was conducted for the showroom staff members of Singer Mega, Singer Plus and Sisil World outlets. The effectiveness of the programme was enhanced by incorporating a sewing demonstration by the sewing instructresses. These programmes helped to improve both the selling skills as well as demonstration skills of the staff members. Training on the latest portable machines was also given in these workshops. The programme was successfully conducted in all districts of the island.

Training on Singer Futura

The programme was especially launched for the showroom staff members of the Singer Mega Channel. However, the programme was expanded to other channels and locations on the request made by employees. Training was solely focused on demonstrating the capabilities and functionalities of the Singer Futura XL400 machine.

Industrial Sewing Machine Training

Selected number of training programmes were conducted on the industrial sewing machine in collaboration with the Industrial Product Division. These programmes were conducted on request, covering selling, assembling and basic troubleshooting of industrial sewing machines.



Sewing Machine Training – Technical

A series of training programmes were conducted for the staff members involved in technical troubleshooting of sewing machines. This was a hands-on training conducted for the entire island. Main objective of the programme was to mitigate customer dissatisfactions due to minor technical malfunctions of domestic sewing machines.

White Goods Training

The programme covered refrigerators and deep freezers, washing machines, water pumps, air conditioners and instant shower heaters. This programme focused on demonstration of the front loader washing machines. A special module on Company’s achievements and the importance of training and development was included as well. Staff members of Singer Plus, Sisil World and Singer Mega were trained and the programme was extended to new recruits as a part of the SRA Training.

Product Knowledge

Product Knowledge - Brown Goods Programme is a monthly programme providing new recruits/appointees with the necessary product knowledge. The new recruits/appointees include Trainee District Managers, Trainee Branch Managers, Satellite shop managers, Sales Agents and Customer Care Assistants. Apart from the product knowledge, they are educated on the latest technologies as well as the basics required for selling electronic appliances.

Field Staff Training

All Branch Managers and selected shop Assistants were trained on the basics required in selling electronic consumer durables such as televisions, audios, home theatres, DVDs, Blu Rays and computers. This programme was not conducted model-wise but provided an overall understanding of the particular product line and the latest technologies affecting them.

Smart Phone Training

Understanding the dynamism of the mobile phone industry, a training programme was developed to incorporate best practices for retail shop staff members. Apart from product training, the operational aspect was also covered including the importance of proper inventory handling and reporting mechanisms.

Product/Brand Specific Training

With the introduction of the Singer Vista Smart TV range, a special training was conducted to educate the members of the showroom staff. This programme was expanded to include latest water pumps and computers as well.

Product launch of Samsung was carried out in selected areas focusing on latest product introductions including demonstrations. Prodcut training of Beko and Hitachi was conducted with the participation of the brand principals, especially for Singer Mega showroom staff and staff members of selected Singer Plus and Sisil World outlets.

Kitchen Appliances Training

The trainees were educated on induction cookers, multi-cookers, microwave ovens, pressure cookers and food processors. The programme included a product demonstration of each of these categories which was conducted on request. Apart from the Singer retail channels, dealers in the Northern Province were trained as well.

Furniture Training Programme

The training included an update on furniture operations and a product familiarisation. The participants were given a hands-on experience and real site experience in furniture assembly, dismantling, designing pantry sets, basic drawing concepts, material selection and product costing. In addition, a basic understanding on factory communication to deliver goods to customers on time was also given. The programme was conducted with the support of the Singer Sri Lanka factory in Piliyandala.

Training Programme on Latest Products and Technologies – Wholesale Channel

Programme was focused on a selected set of products including, washing machines, Smart TV's, Blue Ray Players, smart phones and laptops. The participants were educated on energy conservation through the use of efficient products. The programme was conducted based on request.

Operational TrainingSinger Retail Academy Diplomas

The Singer Retail Academy; a subsection under the Singer Business School was established in 2009, to develop employees involved in field operations. The academy currently conducts five Diploma programmes for Customer Care Assistants, Auditors, Credit Officers, Sales Promotion Officers

As a responsible employer, we encourage our employees to pursue career development opportunities and continuously support their professional growth.


and Executive Retail Managers. The programmes take into consideration areas that need to be strengthened in each group for effective and efficient functioning of operations. These following areas constitute the modules of the programme.

Hire Purchase Financing

The training on Hire Purchase Financing was conducted for branch staff members across our retail channels. Selected Branch Managers from Singer Plus, Singer Homes and Sisil World were trained as well.

Selling Skills

This was conducted for the selected branches in the Singer Plus Channel for customer care assistants.

Extended Warranty

Training on extended warranty was conducted for branch staff of Singer Plus and Sisil World Channels across the island.

Western Union

This was conducted for selected branches during the year. The rest of the branch will be trained in the upcoming years.

Handing Over Procedure

The programme provided useful insights on inventory handing over procedures, cash handing over procedure and hire purchase handing over procedure. This programme was conducted for both District and Zonal Managers of the Operations Division.

Credit Card and Treasury Functions

Resource personnel from the Treasury Department conducted training on Treasury functions for selected branches across Singer Plus, Sisil World, Singer Homes and Singer Mega Channels.

After Sales and Customer Care Training

Training of after sales and customer care was conducted for Customer Service Assistants in Service Centres.

Mobile Field Collection

Training on newly implemented mobile field collection system was conducted for selected for Branch Managers, Collectors and Cashiers. The rest of the branches will be trained in 2017. This was a new initiative introduced with the assistance of the IT Division.

District Managers and Branch Managers

Five District Managers and twenty-four Branch Managers were trained and posted across Singer Plus, Sisil World, Singer Homes and Singer Mega Channels.

Major and General TrainingGraduate Training

Supporting the educational institutes in Sri Lanka, we provide internship opportunities to fully or partially-qualified students. They are placed in a suitable capacity within the Group and are given the necessary exposure with a comprehensive orientation and an in-depth practical training. Students following Marketing, Finance, Production, Supply Chain Management, Human Resources and other management avenues are given this opportunity.

Orienting to the Organisation

Each employee should have an overall understanding of the total operations of their organisation. The formal induction and visits to Company’s retail outlets and channels of distribution, gives a glimpse of the total business. Guided visits to Company’s factories and warehouse provide the much needed firsthand experience and exposure that helps them to relate better to organisational objectives. A programme to address this was conducted for staff members who had not visited these locations.

Lean Six Sigma Training

The training sessions are done at three different levels. z Lean Six Sigma White Belt (4 hrs) z Lean Yellow Belt three days (24 hrs) z Lean Six Sigma Green Belt 12 half day sessions (48 hrs)


Supporting the educational institutes in Sri Lanka, we provide internship opportunities to fully or partially qualified students.


Projects z 26 Yellow Belt projects were evaluated

19 projects were approved out of which – 9 projects have been completed – 10 projects to be completed

5 projects needs further review

2 projects needs re-submission

z 5 Green Belt projects has been approved and on going z Another 5 Green Belt projects are at proposal level

Process Improvement Unit

A dedicated manager for business process improvements were appointed during 2016 and the process improvement unit was formed which comprised several Key and Senior Managers. The process improvement unit is responsible for looking at all possible process improvement opportunities across the Singer Group.

Training on Information Security Awareness

IT research published in 2016 revealed 93% of security breaches in an organisation are due to human error. Security professionals generally recognise the importance of security awareness training as part of an overall information security plan. Users need to know their role in securing Company data. Accordingly, training was conducted for Company’s computer users as well as new recruits in an effort to educate and manage IT security risks that effect Company data and operation.

Financial Management for Business Managers Programme

Finance and accounting knowledge is useful for any type of business. Hence, it is important for non-financial managers to have such knowledge. Therefore, over 30 individuals from different departments participated and were given a better understanding of the different concepts of finance and accounting. The knowledge acquired helps to make better decisions for the Company.

Marketing for Business Managers

This programme was conducted for non-marketing managers to improve their understanding and appreciation for the role of marketing.

Advance Excel for Marketers

When it comes to competitive edge though marketing, the speed of response matter as much as creativity. To aid our marketer in faster analysis of data for speedier and better decision-making, a programme on Advance Excel was organised.

Digital Marketing

The world is getting digitised rapidly. Therefore digital market space plays a significant role in the success of a business. Identifying this necessity, the marketing staff were educated to be in par with the changing demographics of marketing.

Delighting Your Customers

Customers are at the heart of every business as they drive demand for a company’s products and services. Hence, it is important to keep customers delighted. However, this becomes challenging when the sales person is not physically present as in the case of the Call Centre. Therefore, a training programme was conducted to educate the Call Centre employees on delighting customers during the year.

Sales Territory and Distributor Management

Management of sales territories and distributors within those territories play a core role in sales. Therefore, Singer Digital Media updated the knowledge and best practices of those handling new territories.

Presentation Skills

The ability to deliver a sales pitch or convey an idea depends not just on the information but also on the mode of delivery and its effectiveness. Understanding the need for more effective delivery of presentations, employees were trained on the skills required.

Language Development Programmes

We believe effective business communication is key to successful businesses. Therefore, a 12-hour programme was conducted for staff members of the Audit Department to develop their linguistic skills.

Corporate Etiquette with Dining Etiquette

We believe that each employee should carry the Company brand with them. Therefore, it is essential for employees to be well versed in corporate and dining etiquette as they are among the main customer touch points that drive the Company brand. Hence a corporate etiquette programme was conducted for over 60 employees during the year.

Effective Environmental Footprinting

Employees were trained through a tactical sustainability workshop covering trends, tools, strategies and cutting-edge best practices in effective carbon footprint, GRI reporting and water footprint. A total of 15 employees attended the training.

Risk Management

Risk is the main cause of uncertainty in any organisation. Risk can arise from both internal and external sources. Companies need to focus more on identifying risks and managing them before they affect the business. The ability to manage risk will help companies to take future business decisions confidently. Therefore, 27 employees involved in handling risk were trained under this programme.

Decision-Making and Negotiations

Decision-making is a critical element in an organisation. This is because; decisions taken by management affect the operations of the Company. Negotiation skills need to be mastered by



each employee, especially by managers as it leads to securing good business opportunities for the Company. Therefore, a training programme on honing negotiation skills was conducted for 28 Managers of the Company.

Motivational Training

A motivational training programme was conducted for the staff members of Agro and IPD sections of the Organisation. The programme was aimed at improving the productivity of the employees and increasing their morale in all areas of their lives. The Singer Business School extended their support to conduct the following major training programmes:

Training the Trainers

Singer has a unique method of employing internal personnel as trainers to educate other members on important areas. This helps in monitoring as well. Hence, over 25 employees were trained on the art of conducting successful training programmes.

Outward Bound Training

To encourage cross-functional team work and build self confidence in employees, an outward bound training programme was conducted with Sri Lanka Business Development Centre (SLBDC) in Dambulla. The activities included rock climbing, abseiling, raft building, rafting and various other team building and confidence building activities. The programme stretched over three days and two nights enabling participants mingle and fellowship. The programme included many entertainment activities such as drama competitions and singing competitions.

Succession Plan (3 x 3 x 3)

For every management position, this initiative aims at select up to three employees, identifying three areas of development and grooming them over a three year period to take up critical management roles when they become available. As part of our Development and Succession Programme, the 3 x 3 x 3 initiative seeks to ensure that all key Managers, including Senior Managers, Middle Managers and selected Junior Managers have identified and developed their successors.

Investment in Training and Employees Trained 2016

Category Foreign Training

Major Training

Product Training

Operational Training

External Training

Total

Investment (Rs.) 5,548,252 3,843,479 2,341,509 4,186,033 1,390,523 17,309,796

No. of Programmes 4 20 59 196 44 323

No. of Participants 8 600 1,716 4,690 120 7,134

No. of Training Hours – 198 472 1,099 368 2,137

Investment per Participant (Rs.) 693,532 6,406 1,364 892 11,588 2,426

Performance AppraisalAll employees of the Group undergo performance appraisals except interns, trainees and temporary employees. The process facilitates career management, mapping development paths and enhancing the effectiveness and motivation of our employees. It helps to achieve better results, manage employees effectively and identify high performance and training needs of individuals.

Strategic information is provided to employees through Company’s internal magazine – ‘Sinera’ and staff meetings with the management.

Special emphasis is given for managerial development as we understand that a good leader is able to build a well-integrated and effective team.

Singer conducts individual performance appraisals quarterly with the final appraisal at the end of every year. A subordinates’ strengths, weakness and training and development needs are assessed by the respective Line Managers which is subsequently analysed and incorporated into the training plan for the upcoming year.

Singer’s Divisional Heads are required to give a detailed account of their division’s training requirement in the third quarter each year. The Training Department schedules and implements tailor-made programmes to address these training needs, either through external or internal training programmes. The external programmes include seminars, conferences and technical sessions. In addition, training needs are identified at the annual performance appraisal as well. The Line Managers have the flexibility to request specific training programmes based on requirements at any given time. Methods such as ‘Mystery Shopper’ and ‘Call Centre Complaint’ evaluations are used to assess employees’ skill levels and provide training as necessary.

Department Heads are also responsible to assess skill shortages of their respective departments based on the annual performance appraisals and the skill needed to successfully



navigate future challenges. The Department Heads, in consultation with the Training Department decides on the training needed in the upcoming year.

Employee BenefitsA wide range of benefits are given to the permanent staff members of our Company. Detailed below are such benefits:

Employee Facilities

We offer our employees a wide range of facilities including 42 days leave per annum, 3-day excursions, uniforms, staff discounts for Singer products, staff loans, training and development opportunities, sports and tea served thrice a day at work.

Ergonomics

Employees spend a significant amount of time at work. Therefore, we ensure a conducive work environment. We look into aspects such as work space to employee ratio, air conditioning, noise pollution, desk and chair alignment, sanitary needs and provide adequate space for meals and relaxation.

Professional Subscriptions

As a company benefit scheme, subscription fees are paid to professional bodies on behalf of our employees. This helps to enrich their careers and many managers in particular have benefited from this scheme.

Internship Programme

Attracting and retaining the right talent within the Organisation is a key challenge. Therefore, we have partnered with several state and private sector institutions to initiate brand building activities of our Company. Singer’s internships programme

helps to attract youth into the Organisation and give them an understanding of our Company, business practices, policies and vision for the future. This also translates into a CSR project, for students following local and foreign degree programmes in Sri Lanka and pursuing professional qualifications (Chartered Institute of Management Accountants, UK and The Institute of Chartered Accountants of Sri Lanka). Students following Finance, Marketing, Supply Chain and Human Resource Management Degrees are embraced into the programme. Interns are given a comprehensive orientation of the organisation’s operations and an in-depth practical training within their specialised areas. We are also focusing our attention on evaluating the remuneration package to be on par with the industry.

A new reward schemes to recognise achievements including foreign tours to high scoring shop assistants will be launched under the product knowledge evaluation programmes. This is in order to retain talent within the Company.

Medical Benefits

Medical expenses of our employees are reimbursed up to predetermined amounts calculated according to employee grade. If the expenses exceed this specific amount, the employee and the Company share the balance equally. However, in certain cases, Singer reimburses the medical expenses in full. We also provide hospitalisation and OPD treatment coverage to all staff members and their immediate family members.

Accident Cover

This facility is extended to staff members who are exposed to accidents either at the workplace or as a result of extensive travel.

Travel Expenses

Several facilities are extended to employees engaged in official travel, including vehicle maintenance, transport allowances and reimbursement of travel expenses. Employees in the field staff and base staff categories receive travel benefits based on their responsibilities and the respective employment grade.

Discounted Sales

All staff members enjoy convent easy access to all products marketed by Singer (Sri Lanka) PLC at special discounted prices and easy payment schemes.

Lodging

Expenses incurred by field staff members staying at Company approved hotels while on official business are reimbursed.

Housing Loans

Employees who have completed five years of service are eligible to receive financial assistance from the Company. This assistance is given to cover the initial expenses of building a house while they await a loan facility from a financial institution.


Singer’s internships programme helps to attract youth into the organisation and give them an understanding of our Company, business practices, policies and vision for the future.


Distress Loans

Distress loans are given to employees in the case of emergencies such as a sudden illness, death of a family member, damage to homes due to floods or other natural causes, urgent home repairs or a family wedding etc.

Vehicle/Motorcycle Loans

Permanent employees in specified categories are eligible to apply for interest-free or low-interest vehicle loans through the Singer management.

Educational Aid Scheme

Two mechanisms are in place to support employees with their studies:1. A lump sum of Rs. 225,000/- is granted on the condition the

employee serves the Company for eight years. The facility should be repaid only if the employee leaves the Company before the expiration of the eight years. This is mostly granted for postgraduate studies.

2. Two-thirds of the cost of a particular course fee is reimbursed by the Company on the successful completion of the final examination.

Death Donation

In the event of the death of an employee, the family members of the deceased will receive a donation of Rs. 50,000/- in addition to six month’s salary. In the event of the death of an employee’s spouse, child, parent or unmarried sibling, the employee will be granted a sum of Rs. 25,000/-. The Death Donation Fund is a contributory fund maintained by permanent employees.

Maternity

All female employees are entitled to maternity leave. No. of

Employees

The total number of employees who took maternity leave 11

The total number of employees who returned to work after maternity leave ended 10

The total number of employees who returned to work after maternity leave ended and were still employed twelve months after returning to work 10

Singer – A Great Place to WorkSinger (Sri Lanka) was recognised as one of the best places to work in Sri Lanka for the third consecutive year, in year 2016 at an exclusive ceremony by Great Place to Work Institute.

Each year, Great Place to Work (GPTW) conducts the largest annual set of workplace culture studies in the world to develop and recognise high-trust workplaces.

Singer continuously strives to create a great work ambience for its employees, through a range of team activities to build camaraderie among departments. Amongst these activities are staff training and development programmes, recreational and cultural activities and the engagement of families of staff members.


Singer team at the ‘Great Place to Work’ Awards.


Many of the Company’s initiatives have contributed to creating a vibrant team of happy and committed people driving the best customer experiences. These include, establishing the first Corporate Rotaract Club in the world, having an active Corporate Toastmasters Club, holding inter-departmental competitions including a novel talent show titled ‘Singer Got Talent’.

A prominent place is given for sports whilst Singer encourages employees to participate in a range of sports activities including cricket, badminton, volleyball and netball. The employees participate in both Mercantile and Inter-Departmental Competitions every year. Singer also provides continuous support for inter-school sports activities and is the proud sponsor of the Sri Lanka Schools Rugby Tournament for over 25 years.

Singer introduced flexi hours in certain locations to improve the work-life balance of employees. The annual family outings, Christmas parties and children’s art competitions are some of the highly popular events in the Company calendar.

Retaining its best talents through developing and retaining top performers and the dynamic management team has made Singer the employer of choice. There are three Executive Directors who joined the Company as junior clerks and have risen up the ranks over the years.

HR Policies and Procedures Employees can communicate with the Board through their respective Divisional Heads. Monthly management review meetings and operations meetings are held with the participation of all key senior and relevant subject managers. We maintain an open door policy to facilitate a culture where employees of all levels could freely express their views and recommendations to the management staff.

Singer is a successful Company because we have a motivated workforce. Therefore, ‘doing good’ cascades throughout the communities in which we conduct business. It is one Company that embeds sustainability whilst motivating employees in its business operations.

Encouraging Open Dialogue

Open dialogue is encouraged in our Organisation as it leads to building trust amongst all employees. This is essential to drive operational excellence and strengthen employee integrity and credibility. Sincere and comprehensive dialogue on any issue in the Company builds trust.

Promoting Employee Performance

A number of employee and team recognition schemes are in place, such as the annual conference. The list of winners are published in the Sinera magazine as well.

Grievance Handling

Singer follows a formal process in handling grievances. There were no grievances about labour practices reported through the formal grievance mechanism during the year under review.

Equal Remuneration

Remuneration is determined through a transparent performance evaluation mechanism. Hence, there is no disparity in salaries of men and women in our Organisation.

Occupational Health and Safety Safety and Health Committee

Considering the magnitude of our Group and the diversity of our activities, several proactive measures as well as carefully researched reactive measures have been implemented to ensure the highest standards of occupational safety and health. Our employees are considered the backbone of our Organisation and are treated with great respect and care. A wide spectrum of health and safety measures, including hygiene and accident-safety practices are implemented by our Safety and Health Committee. Its members are representatives of the entire Company and meet once a quarter or in case of emergencies. Their responsibilities include –

Monitoring Health and Safety Performance

Assisting the development, monitoring and review of health and safety policies or procedures of the Group. They also look into proposals, changes to the workplace, policies, work practices or procedures which may affect the health and safety of the employees. A successful health and safety programme requires strong management commitment and worker participation. Therefore, the Committee actively promotes the importance of health and safety amongst employees.

Benefits of Promoting a Healthy Workforce

The Organisation receives numerous benefits through a well-managed health and safety programme. These include, positive and caring image, improved staff morale, reduction in staff turnover and absenteeism, increased productivity, reduction in healthcare/insurance costs and risk of fines and litigation to the Company.

The benefits for the employee include a safe and healthy work environment, enhanced self-esteem, reduced stress, improved morale, increased job satisfaction, increased skills for health protection, improved health and a sense of well-being.

Workforce in Factories

Total workforce Male Female

Permanent 523 19

Trainees/Fixed Term 286 12

Total 809 31



Given below are the number of employees who were injured and the types of injuries during the year in the Piliyandala and Regnis factories:

Accidents Piliyandala Factory Regnis Factory Regnis Appliances Factory

Cut Injuries 40 5 –

Eye Injuries 21 5 –

Other 4 3 3

Total 65 13 3


We believe the recognition for our club and its continued success comes from the commitment and passion of our members. We have seen more people showing keen interest of becoming participative members of the Club. We are also proud that some of our talented Toastmasters have taken our Club’s name to the divisional level of Toastmasters through their participation in international, impromptu and humorous speech contests and speech evaluation contests.

Singer (Sri Lanka) PLC Toastmasters Club has gathered significant momentum since its charter in 2011. The installation ceremony of the 6th Executive Committee of the Singer Toastmasters Club was held in July 2016 at the Singer Sri Lanka Management Office. As in the previous years, several activities were conducted by the Club during 2016.

Communication and leadership skills essential for any individual is harnessed by the Toastmasters Club. We are proud of the fact that nine of our members completed communicator stage and another five completed the leadership stage. One Member has achieved the Distinguished Toastmaster (DTM) status.

The effectiveness of the Club is due to the informal and enjoyable learning environment that it creates. Some of our members participated in annual and mid-year conferences of Toastmasters District 82 which gave them the opportunity to meet Toastmasters from foreign countries. In addition to hosting guest speakers, the members were involved in numerous creative and team-building activities such as the Toastmasters drama festival, divisional Christmas party, themed meetings and joint educational meeting with other clubs.

Employee Engagement Singer Sri Lanka Toastmasters Club

Singer Toastmasters EXCO – 2016.


Singer (Sri Lanka) PLC Toastmasters also provided guidance and expertise in organising and hosting the Singer Speech Contest for employees in collaboration with our Human Resources. Many individuals come forward to compete which helps to enhance their skills through participation irrespective of winning. The event also served as a communication platform to express their thoughts on various topics.

We believe in continuous improvement. Therefore, we train our officers to enhance their capability to serve as members. Apart from training the officers, the members who had progressed further in their educational tracks were trained to judge competitions of Toastmasters Clubs of other institutes.

Rotaract Club

Installation ceremony of the Roteract Club.


Over 230 employees received free medical advice and health care at the Camp.

We made history by becoming the first ever corporate to initiate a Rotaract Club. The Club caters to a young audience between the ages of 18 and 30 years and provides opportunity for ‘Self-Development – Fellowship through Service.’ The Rotaract Club enables our young employees to advance in professional development, international relations, communication and network, by continuously making them thrive beyond the confinements of their jobs. This year was the 3rd installation ceremony of the Club, held in the Company’s Head Office with the participation of a large gathering.

Several events were organised by the Club during the year. A blood donation campaign, flood relief campaign, professional development conferences and an e-waste management awareness programme for school children were the main events for 2016. Singer Sri Lanka was the main sponsor of the Rotasia 2016; the Rotaract Asia Conference hosted by the Rotaract District 3220 (Sri Lanka and Maldives). Over 800 Rotaractors representing Asia participated in the conference with the objective of promoting international understanding and to celebrate Rotaract. We also hosted three Rotaractors from India for two days in 2016.

Singer Poson Udanaya 2016

Singer Poson Bhakthi Gee.

‘Poson Udanaya 2016’ was held in June 2016 to commemorate Poson Poya. Several activities were launched to mark the day including Poson Bhakthi Gee sung by Singer employees. Several dansals were organised as well by Singer Finance (Lanka) PLC and the Singer Rotaract Club.

P:104 Singer (Sri Lanka) PLC ANNUAL REPORT 2016SUSTAINABILITY REPORT

New Year at Singer

The New Year was embraced by our employees with the prayers and blessings of all religions at the Head Office as well as at the branches.

Religious beginning of the year.

Sinera Magazine

The Sinera Magazine is the newsletter of Singer Sri Lanka distributed to our employees free of charge to keep them informed of the activities of our Organisation. Published twice a year, the magazine is packed with corporate news, Company bulletins and photographs.

The Sinera Facebook page was also launched with the electronic version of the magazine. A total of 876 employees are active members of this page.

Free Health Camp and Awareness Programme

Free health camp at Singer.

For the third consecutive year, Human Resources Department organised a ‘Free Health Camp’ for our employees on 26th September 2016, at the Singer Head Office. Over 230 employees received free medical advice and healthcare at the Camp. A series of checks including, blood sugar tests, blood pressure, BMI checks and eye check-ups were conducted. In addition, a dietician gave advice on healthy diet patterns to suits the lifestyles of employees.

Flexi Hours

We believe enhanced work-life balance leads to healthy minds. Therefore, we introduced flexible work hours for the staff working in the management office.

Singer Inter-Departmental Quiz

Overall winners of quiz competition.

The quiz was organised by the HR Division, under the guidance of the Group CEO. A total of 14 teams participated at the inaugural quiz. Legal Department emerged overall winners.


Kids Art Competition 2016

Fostering creativity of the younger generation.


Two Christmas parties were held in December 2016. The Christmas party of Singer Finance (Lanka) PLC and Singer Piliyandala Factory was held at the Golden Rose – Boralesgamuwa. The colourful night was patronised by approximately 800 guests.

About 1,800 attended the Christmas Party of Singer (Sri Lanka) PLC, Distribution Centre, Singer Mega and Service Centre.

Sports and Recreational Facilities

Singer shuttlers won the MBA 33rd Inter Firm Championship.

Singer netball team clinched the championship at Mercantile Knockout Netball Tournament.

Giving wings to the imagination and creative skills of the younger generations the kids art competition was organised for the 6th consecutive year. Over 150 children participated in three differently themed categories. Prizes were awarded to all participants and special prizes to the winners.

Gents Excursion

The annual gents picnic was held at the Amaya Pasikudah Hotel from 10th to 13th June 2016. The event which was attended by 238 employees was a huge success, building strong friendships.

Ladies Excursion

The annual ladies picnic was held from 13th to 15th May 2016 at Chaaya Blue in Trincomalee. A total of 145 employees and 45 children participated in the excursion filled with fun events and activities.

Annual Christmas Party

Singer employees celebrating Christmas.


Singer Inter departmental cricket tournament was held on the 14th of August 2016, at the P. Saravanamuththu (Oval) grounds with the participation of over 1,000 singer employees.

Inter-departmental cricket tournament.

The Singer Netball team clinched the championship trophy at the Mercantile Knockout Netball Tournament held in April 2016. Singer emerged champions. The Company rewarded the team with a tour to Malaysia and was given the opportunity to play a netball match against University Technology Mara in Malaysia.

Singer was placed 9th out of 43 companies at the Mercantile Annual Athletics Meet held at the Mahinda Rajapaksa Stadium in Diyagama on 19th to 21st August 2016. Our athletes brought home, 5 Gold, 6 Silver and 13 Bronze medals.

Singer shuttlers won the MBA 33rd Inter-Firm Team Championship 2016 held at the MBA Court Complex, Colombo 7 in October 2016. Singer shuttlers of the Men’s A Team emerged Champions of the Men’s ‘E’ Division.


For the first time, Singer soccer team participated in the Mercantile Seven ‘A’ Open Soccer Carnival at the CR & FC Grounds in July 2016. Out of the 24 teams, Singer team made it to the top eight for the second round knockout matches.

The Singer Industries Table Tennis team were crowned champions at the Inter-Club League Table Tennis Tournament organised by the Veterans Table Tennis Association of Sri Lanka. The tournament was held in October 2016 at the S. Thomas’ College Sports Complex, Mt. Lavinia. Singer Industries played in the ‘B’ Division to win this title.

The Masters Athletic Championship was held on 26th and 27th November 2016 in Mangalore, India. Three employees from Singer represented the country and won six Gold, one Silver and one Bronze medal at the meet.

The All Island Masters Athletic championship of the Central Province Veterans Athletic Association was held at the Bogambara Stadium in Kandy in July 2016. Mr. W.M. Somadasa of Singer, won a Gold and a Silver medal for his events.

Collective Agreements

Three separate Memorandums of Settlement (MOS) signed in the year 2016 were effective for the year 2018 as well with the following branch/parent unions pertaining to a salary revision:

Commercial and Industrial Workers Union Clerical Branch – applicable to clerical allied and technical grade employees.


Commercial and Industrial Workers Union Non-Clerical Branch – applicable to manual workers.

Inter-Company Employees Union – applicable to manual workers attached to our factories.

Approximately, 34% of Singer employees are covered by these collective agreements. In addition to signing Collective Agreements, the management meets with branch unions to discuss any concerns and provide satisfactory solutions. The cordial relations maintained with our employees prevent disputes arising in the workplace.

Employee RecognitionSinger Asia’s Most Valuable Player – Runner-up

The Most Valuable Player Performance Award Runner-up was presented to Mr. Janaka Mendis, Credit Director of Singer (Sri Lanka) PLC.

Diamond Club and President Club Awards

Diamond Club Award 2016 was won by by Mr. Thasan Sathyamoorthy while Mr. Lahiru Weerasinghe and Mr. Niranjan Sethunga won the coveted President Club Award 2016.

Best Executive Award 2016

Mr. Manjula Silva was adjudged as the Best Executive at the 30th Annual Singer Management Conference held at the Blue Waters Hotel, Wadduwa.



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Singer Service Awards 2016

Singer recognising staff loyalty.

This is an annual event in the Company calendar to appreciate the loyalty and dedication of the Singer employees. The Singer Service Awards 2016 was organised by the HR Division to appreciate the outstanding service of employees and their loyalty to the Company. It was held on 23rd March 2016 at the BMICH Committee Room ‘B’.

The Singer Group CEO, Mr. Asoka Peiris, graced the occasion as Chief Guest and all other Directors of the Company attended as well. A highlight of the event was that Mr. Asoka Pieris receiving the Service Award for 25 years of service. A total of 226 employees received awards and gifts vouchers in appreciation of their long-standing and loyal service to the Company in six categories.

Years of Service No. of Employees

05 8610 6115 1920 3725 10

30 735 6

Total 226

Society

Corporate Social Responsibility (CSR)Corporate Social Responsibility has become an important aspect of a company’s long-term strategy. Consumers have become increasingly concerned where products come from and the employees need a sense of pride and fulfilment from their workplace than a mere paycheck from their employer. To fulfil these requirements there has to be congruence of values between the Company and the employees.

In our commitment towards social responsibility we encourage all employees to submit written proposals of a CSR project of their choice. Employees can propose a CSR activity that is either an one-off project or one that can be integrated into the business processes. We believe that our employees can give a better perspective on the progress of our CSR agenda and hence we seek their input as to what they can do to enhance their CSR efforts.

Employee engagement in the form of feedback helps to improve our CSR practices constantly. By increasing accessibility to corporate sustainability, we enhance employee involvement which elevates our performance. This also helps employees to develop new skills which would be beneficial to their performance. It also leads to fostering a responsible and socially-alert workforce in the Organisation.

Once the Company’s CSR Committee approves the CSR project proposed by an employee, department or branch in writing, the related Singer Group companies ensures that the project is financed and resourced until completion. The employee who initiated the CSR project is responsible to kick-start the activities and to ensure its success. We also solicit proposals from our communities.

In order to maintain best practices in our dealings with the communities, the Singer CSR Committee evaluates, oversees and monitors all CSR projects carried out by the Company. It is also the responsibility of the CSR Committee to ensure that CSR activities cover the entire spectrum of economic, social and environmental concerns.

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We have found that engagement is philanthropic activities not directly related to employees, has had a significant influence on their work attitudes and behaviours. Our Company has benefited immensely by facilitating employees to engage in CSR projects they are passionate about as reflected in the commitment and passion of the employees. Branches and departments that implement CSR projects have proved to perform better in the Organisation due to the strong team spirit nurtured through the involvement in CSR activities.

Singer’s Commitment Towards Education

Supporting educational development of Sri Lanka remains a key aspect of Singer’s CSR agenda. Even as most businesses are shifting their focus to responsible supply chain management, waste reduction and water stewardship, developing a sustainable pool of talent remains a dire need. Therefore, we have taken meaningful action to elevate the level of education in our nation especially of the rural communities.

We believe that learning is a lifelong process. Hence, supporting educational development of Sri Lankan children and youth has proved to be an extremely gratifying endeavour for us. We have forged strong relationships with rural communities as well as teachers, parents and officials who work tirelessly to upkeep the education sector in the country. We believe education is one of the greatest gifts one can give to the society. We are especially proud to engage our wide network to take the gift of education to rural Sri Lanka in the hope of building a promising future with educated and accomplished individuals.


School Projects

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In 2016, we renewed our commitment to education by continuing our efforts to uplift the education of schools and systematically building their infrastructure, supplying furniture, appliances, stationery, musical instrument and much more.

School Description

Deniyaya Godakubura Primary School Fixed a mesh and painted the main hall

Kahantota Primary School Built and donated a brand new library equipped with 4 cupboards, 4 long benches, chairs and children's books

Kudaligama Maha Vidyalaya Donated equipment needed for home science education.

Athale Maha Vidyalaya in Baduraliya Conducted a large scale renovation of the school by painting classrooms, landscaping the playground, repairing and supplying computer equipment and donating playground equipment.

Halabagalla Vidyalaya Donated desks and chairs.

Diyalape Junior School, Akuressa Constructed a music room equipped a 28”LED TV, DVD player, music system and microphones. Constructed a toilet as well.

Hettigama Junior School Constructed an open classroom and stage as per the new directive of the Ministry of Education. Donated cupboards and book to the library as well.

Ambathale Tikiri Kumara Vidyalaya Donated desks and chairs.

Samudradevi Balika Vidyalaya, Mulleriyawa Donated band costumes for the school’s eastern band.

Gurukula Vidyalaya, Kelaniya Donated school equipment, including school bags and shoes for the children affected by floods.

St. Mary’s Maha Vidyalaya Renovated the assembly hall of the school.

Gothami Balika Vidyalaya Donated school bags, shoes, uniforms and instrument boxes to students.

Ashoka Primary School Built and toilet for the school.

Siri Rathna Dhamma School SSL Factory donated uniform material to 124 students.

Katiyape Maha Vidyalaya, Deiyandara Regnis donated 100 chairs.

Sri Sumangala College, PanaduraBuddhist Girls’School, Mt. Lavinia

A water tank was donated to each school by Regnis.

Kuruppumulla Sri Parakrama Vidyalaya, PanaduraSri Dhamarama Vidyalaya, Ratmalana

Steel cupboards were donated to each school by Regnis

Munidasa Kumaratunga Vidyalaya, BomiriyaKanagamuwa Maha VidyalayaKalugala Maha VidyalayaSevanagala Maha VidyalayaSumangala College, Kandy

Regnis donated a refrigerator to each of these schools.

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Singer Laptops to Top 12 Ordinary Level Students

In our efforts to support education in Sri Lanka and to inspire high achieving students, the top 12 students who excelled in the G.C.E. Ordinary Level examination in 2015, were awarded with the latest Singer X Series laptops.

The laptops were handed over to these students by His Excellency, President Maithripala Sirisena, at a special event organised at the Presidential Secretariat.

Health Sector

Singer has always helped to ease challenging health issues faced in Sri Lanka such as chronic kidney diseases and diabetes. In 2016, Singer has assisted the following hospitals by donating equipment to treat patients.

Hospital

Kurunegala General Hospital

Donated a refrigerator to the Cancer Ward

Middeniya Divisional Hospital

Donated furniture items, a refrigerator and a water dispenser

Philanthropic ProjectsFlood Relief Campaign

Singer has voluntarily taken a leading role of emergency relief, in assisting communities affected by floods. Our employees voluntarily contributed in emergency flood relief and post flood settlement efforts by conducting various supportive activities for the affected. At the preliminary stage, we provided emergency relief to the flood victims, providing them with necessary commodities that were required the most. As the secondary move, we revisited the affected areas and provided them with required support for cleaning their homes, water wells. 15 Teams consisting of 50 employees, including technicians were deployed to assist the affected areas, using Company service vehicles with required accessories to collect and speed up the repair process of appliances.

In addition to free service support, a special discount of 20% was given for any new item purchased by flood affected customers, to continue with their life styles as before.

Financial assistance was extended to our employees, including 24 staff members, 31 staff of branch managers and three outsourced employees. In addition, we helped nine schools affected by floods.

Donation of a Water Purification Plant and Distribution System

Water purification project.

In our efforts to support the eradication of Sri Lanka’s Chronic Kidney Disease (CKD), a water purification plant was donated to the rural village of Ulukkulama in the Anuradhapura District. Over 1,600 villagers were provided with quality potable water. The water purification project ‘Sathdiyawara’ cost Rs. 4 million and was jointly presented through technological expertise from Puritas of Hayleys Group and under the guidance of the Water Board. The purification plant produces 10,000 litres of water per day and one litre is sold at just Rs. 1 /= to a resident. All proceeds contribute towards the maintenance of the plant and for any other developments required for the future.

Singer also donated tractors to distribute water to the water tanks in the area which will provide water to nearby villages.

We also donated three CRRT (Continuous Renal Replacement Therapy) machines to the National Hospital worth over Rs. 7.5 million under Singer ‘Thirst for Life’ health and wellness sustainability project. This brings the total number of machines donated to six units.

Singer ‘Thirst for Life’ health and wellness project.



Card for War Heroes

Under the Virusara Privilege Card issued by the Government for war heroes, Singer offers a 10% discount on all Singer manufactured products and 7.5% on other brands, with an extended warranty of three years.

Boosting Home Science Education in Schools

In an effort to educate Sri Lankans on the importance of better nutrition and to equip them with the required knowledge and tools, we partnered with the Ministry of Education to launch the ‘Singer Soopa Shasthra Vedamuluwa’ in 2016. The programme supports Home Science classes in schools across the country to spread the message of healthy cooking and eating. We provide guidance on using modern kitchen appliances to prepare nutritious meals in less time. The programme empowers Sri Lankan families to cook right and eat right.

Singer Soopa Shasthra Vedamuluwa.

Under the second phase of the programme, deserving 150 schools were selected, representing all provinces to receive Singer appliances to boost their Home Science classes, increasing the total to 300 schools. A set of equipment worth Rs. 35,000/- inclusive of a rice cooker, tabletop gas cooker, pressure cooker, blender and an electric oven were donated for each Home Science class.

In addition, Home Science Teacher Training Workshops were conducted across the island for over 1,300 Home Science teachers. The Ministry of Education has stated that there has been a significant increase in the number of students taking up Home Science as a subject for their G.C.E. (Advanced Level) Examination, after the successful completion of this first phase of the project in 2015. There has been a noteworthy improvement in results of the A/L examination in the schools that participated in the programme. In particular, the student who got the highest marks was from a participatory school.

Helping a Children's Home

Singer donated dry rations to prepare lunch for the children and caregivers at the Preethi Pura Children's Home during Vesak.

Renovating a Children's Home

In collaboration with the Bandarawela United Trade Association and the Banadarawela Digital Media Team, the Children's hostel of the Siri Sangabo Children's Home was renovated.

Other Projects Ma Sevana Project

The Fashion Academy of Ratmalana, conducted a sewing programme for teenage mothers who are victims of sexual abuse. A total of 20 students participated. The needed equipment were provided by Standard Chartered Bank at a concessionary rate offered by the Academy, whilst Singer provided the other materials needed for the programme.

Assisting the German Tech Training School

Regins Lanka donated a refrigerator for the German Tech Training School in Katubedda.

Dansala for Asala Perahara

The Sisil World Kandy branch conducted a Dansala during the Asala Perahara season.

Deaf and Blind

Sewing project for children of Deaf and Blind School.

Singer Fashion Academy conducted a sewing project for the children of the Deaf and Blind Schools in Ratmalana. The project which spanned over six months was fully sponsored by Singer.

Singer Walks the Path towards Preventing Diabetes in Sri Lanka

Singer Mega partnered the Sri Lanka Diabetes Federation and the Non-Communicable Disease Unit of the Ministry of Health, by becoming the Principal Sponsor of the National diabetes walk. The walk themed ‘Act Today to Change Tomorrow’ commenced from Independence Square and concluded at the BMICH. A series of activities were organised as well.

Singer Sri Lanka No. 1 Sports Promoter

Singer is Sri Lanka’s largest sports promoter. For over 20 years, we have backed several sports at schools, mercantile and national level, providing all Sri Lankans the platform to excel in sports of their choice. Over the years, Singer has



Singer sponsored the Bradby Shield encounter between Royal College, Colombo and Trinity College, Kandy – for the 27th consecutive year. This is Sri Lanka’s oldest and most prestigious rugby fixture.

Club Rugby

For the 16th consecutive year, Singer supported the Kandy Sports Club by co-sponsoring the event in 2016.

Cricket

Singer continued to sponsor the Mercantile Division A Tournament for the 24th consecutive year. This is one of the premier limited overs cricket tournaments in Sri Lanka, featuring national players.

Singer sponsors school cricket since 2014. A three-year agreement has been signed with Sri Lanka School Cricket Association in the year 2014. A total of 1,800 players from 60 schools participated in the tournament from every province in Sri Lanka. The league tournament sponsorship amounted to Rs.15 million, whilst the cricket gear amounted to Rs. 10 million.

Additionally, Singer sponsors big matches of schools in selected provinces. Award ceremonies are organised by Singer to recognise and appreciate school cricketers. Singer also donated cricket equipment and other materials to selected under privileged schools in Sri Lanka.

Our retail network maintains close relationships with the communities where they operate and cricket is a sport that they have been closely connected to. A number of regional softball tournaments were held by Singer throughout the country, as we understand that these tournaments give young cricketers an opportunity to showcase their talents to Sri Lanka Cricket selectors.

been developing sports infrastructure and uplifting Sri Lankan sportsmen and women, especially of rural Sri Lanka. We do this by supporting long-term development of sports and providing employment to our national sportsmen/women. We also assist the upkeep of sporting facilities, supporting international tournaments and nurturing the passion for sports in children. Our continued active participation in sports has enabled to uplift community relations as well.

Rugby

Singer has a rich history of supporting Sri Lankan Rugby at all levels. In 2016, we sponsored the Singer Schools League Tournament organised by the Sri Lanka Schools Rugby Football Federation for the 13th consecutive year. This has been the largest school rugby event in Sri Lanka since 2004, where we facilitated 69 schools to participate in a tournament, which included 226 matches.

Sponsoring the Bradby Shield

Singer supporting school rugby.



All Island National Schools Cycling Championship

Singer sponsoring All Island National Cycling Championship.

Singer sponsored the All Island National Cycling Championship held in Anuradhapura. Close to 100 cyclists from all districts participated.

Motor RacingGunners Supercross 2016

Singer was the main sponsor of the Gunners Supercross 2016. This is one of the highlights of the Sri Lanka motor racing calendar and the sporting pride of the Regiment of Artillery. 140 racing drivers and riders displayed their motor sporting skills in the most challenging Gunners Track.

Calvary Supercross 2016

Singer co-sponsored the 2016 edition of the Calvary Supercross, organised by the Sri Lanka Armoured Corps in collaboration with the Sri Lanka Association of Drivers and Riders.

Public Policy

Singer does not fund or make contributions of any kind to political parties, politicians or related institutions. The Company is regularly invited by the Government of Sri Lanka to submit proposals for consideration when formulating the National Budget.

Government Assistance

The Group did not receive any financial assistance during the year.

Anti-Competitive Behaviour and Compliance

The Company did not encounter any legal action for anti-competitive behaviour, anti-trust and monopoly practices during 2016. We always obtain the necessary local authority approval and strictly adhere to rules and regulations pertaining to display of materials, audio/video materials and branding among other factors, when conducting our marketing/sales promotional activities.

We have not been subjected to any fines or sanctions during the year.


Human RightsSinger follows employment practices, which enshrine human rights. As such we facilitate freedom of association, strict elimination of all forms of compulsory labour, abolishing child labour and eliminating sexual harassment in the workplace. There were no incidents of human rights grievances reported during the fiscal year.

Grievance Handling and Sexual Harassment PoliciesThese two policies ensure the emotional well-being of our employees. The grievances policy provides employees the right to forward their grievances and dissatisfactions to the management and obtain a fair hearing. Our sexual harassment policy takes note of the distinct nature of a claim and provides disciplinary measures, depending on the degree of sensitivity of the matter at hand.

Code of Business Conduct All Key and Senior Managers are bound by the Company’s written Code of Business Conduct, which is an agreement signed as part of their written Contract of Employment. As per the agreement, the signatory is responsible to comply with the Code and ensure employees reporting to him/her also comply with the Code. The Code of Business Conduct is signed annually to refresh their knowledge on the contents and update themselves on new clauses and amendments to the Code.

Whistle-Blower PolicyThe Whistle-Blower Policy provides a guided procedure for any employee to make a written or verbal complaint on any experience or suspect of illegal or unethical employment or business practices exercised by a colleague in any capacity in the governance hierarchy. Upon induction to the Group, all employees are taken through the policy procedures and assured of confidentiality and anonymity.

The Group takes necessary actions to prevent corruption or illegal activities and the management takes necessary actions on the above, where it is implemented for Whistle-Blower Procedures.

Non-Discrimination

There were no incidents of discrimination reported in the Company in the financial year under review.

Fostering Human Rights and Equal Opportunity

People’s affinity to Singer, draws many requests from religious, educational and other institutions, as well from individuals. This is because, Singer is known as a compassionate and benevolent company and they often turn to us in their moment of need.


Our island-wide reach enables us to be present in some of the most remote areas of our country, which gives us a unique perspective of the issues that affect the lives of the less fortunate citizens. It is also important to note that our employees are often the biggest champions of community relation projects and initiatives and they are empowered to propose solutions of their own communities’ needs.

As a responsible corporate that works for the benefit of the community, we have very close links with the society in which we operate. We work on the principle that we give something back to the communities by means community support projects. This Report provides ample examples of the projects conducted by the Company for the year 2016.

Product Responsibility Product responsibility is a combination of three things for us at Singer; the highest customer benefit, the highest safety standards and maximum environmental and climate compatibility. Our measure for environmentally compatible and energy-efficient product sourcing takes into account the entire product life cycle, covering production, product use as well as disposal and recycling.

Our policy is to continuously provide consumers with products and services of world class repute. The safety of the products supplied to our customers is essential right throughout the product life cycle, end of product life and recycling.

Our customers are kept fully informed about the properties of our products and the conditions of use. We play an active role in ensuring product safety throughout its entire lifecycle in order to minimise potential adverse impacts on people and the environment.

We visited overseas factories and conducted extensive research and quality checks, prior to adding some of the most respected and widely consumed brands in the world to our repertoire. Our customers can always count on Singer for the latest technological developments.

Approximately 40% of products sold by Singer are manufactured in our three state-of-the-art local factories (including our three subsidiary companies). These are certified by ISO Standards and are manned by the country’s most qualified and skilled production managers, engineers and manual workforce, who are capable of producing advanced and innovative products.

Customer feedback and market trends are used to develop new products with the support of our long-standing third party local suppliers. The Singer GEO and SISIL ECO series is the latest range of locally developed products, to enter the Sri Lankan eco-friendly consumer durables market. Customers are assured about the quality of our products which are subject to stringent quality assurance by our Quality Assurance Division, manned by professional engineers. From sample, evaluations to post-sale evaluations, our products are continuously enhanced with a lengthy life cycle.

Organisation Supply ChainOwn Manufacturing Facilities

The Singer Piliyandala Factory is equipped with the latest technology. These modern manufacturing facilities allow us to operate locally, on a large scale and we constantly upgrade our facilities to offer the best manufacturing processes.

Highly Reputed Suppliers

In order to ensure the very best is delivered to our customers, we ensure sourcing is done only from reputed suppliers. Taking into consideration the suppliers' ranking in the industry, we visit their factories and evaluate their credibility, before entering into business agreement, with them. Some of the original equipment manufacturing sources are Polytron, Indonesia; Skyworth, Galanz and TCL, China; Pensonic, Malaysia; Arçelik, Turkey; and Whirlpool, India.

Product Sourcing for Our Own Brands We take strong measures to source products from the world’s leading manufacturers, by evaluating them on key areas. These include industry ranking, Company reputation, management style, financial stability, quality consciousness, delivery capabilities and more.


We are the first consumer durable retailer in Sri Lanka to set up a Call Centre.


Customer Feedback and ResearchCustomers’ quest for authenticity includes their desire to buy from genuine companies that meet their value standards. They also demand transparency in sourcing and our best research tool is our employee base.

As a large customer-centric organisation, our customer service representatives are spread across the country, providing a personalised service. They are trained to collect customer feedback, which is directly absorbed from customers and communicated to brand managers who make presentations to our product and services research and development teams. We believe this to be an immensely comprehensive research methodology, which is as effective as consulting third party organisations. For example, our hire purchase customers numbering close to 350,000, visits our showrooms and communicates with our staff on a monthly basis.

We also invest significant resources on feedback forms, informal surveys, product surveys, data mining, mystery shoppers, local and international research teams, as well as our call centre that records and reports all customer complaints and feedback. We periodically utilise the services of research agencies such as Nielsen and LMRB, to conduct overall consumer market research or product specific research, to identify changing consumer trends and widen our knowledge on consumer needs. For the purpose of improving our products and services, we also perform data mining on loyalty members to extract their preferences on a continuous basis. In addition, customs import statistics are obtained to measure market trends and market share movements.

Customer Complaints/Suggestions and Avoiding/Reducing Negative Impacts of Company’s Products/Services on Customers Singer being a renowned customer-centric company, treats all customer complaints with utmost importance. Irrespective of the cause, unhappy customers are still our guests and our hope for future business. Therefore, we strive to satisfy them again even though a customer may not always be right. Hence, we take control of customer complaints and turn them to our advantage.

We always attend on customer complaints promptly. Given below are the steps adopted in resolving customer complaints:

1. Listen Intently: Listen to the customer and never interrupt them as they need to tell their story and feel they have been heard.

2. Thank Them: We thank the customer for bringing the problem to our attention. We can’t resolve something we aren’t completely aware of, or may make faulty assumptions about.

3. Apologise: We sincerely convey our apologies to the customer for the inconvenience caused.

4. Seek the Best Solution: We determine the customer requirement by inquiring to provide a solution.

5. Reach Agreement: We seek to agree on the solution that will resolve the situation to their satisfaction. Our best intentions can miss the mark completely if we still fail to deliver what the customer wants.

6. Take Quick Action: We act on the solution with a sense of urgency. Customers will often respond more positively to our quick resolution of the matter.

7. Follow-up: We follow-up to ensure the customer is completely satisfied.

As a customer-centric company, we are always focused on enhancing customer satisfaction, convenience and service quality. By expanding our distribution channels, we improve access for customers to get the products and services they need. Our retail outlets are upgraded and refurbished at least once in every six/seven years. As a dynamic and evolving company, we effect the necessary changes to our product offering in tandem, with new market developments and changing customer lifestyles.

Our customers are rewarded with loyalty programs and we provide customer guidelines, merchandising manuals and recipe books along with our products. Our ‘Sanasuma’ extended warranty programme gives shoppers confidence to purchase products from us. We also operate a Call Centre to ensure issues are directed to the relevant division promptly to provide a solution.

Customer Care Centre We are the first consumer durable retailer in Sri Lanka to set up a Call Centre. These Call Centres are linked to service franchise agents to direct customer issues efficiently to the right channels. Customers can dial the hotline to make suggestions, as well as lodge complaints regarding Singer products and services. The customer representatives then liaise with the Service Centre or with relevant personnel from Singer to ensure customer complaints are addressed, whilst tracking the internal progress of complaints. We take proactive measures to ensure the highest industrial standards are adhered to and adopt stringent internal product quality standards to resolve the issues speedily.

Call Centre 2016 2015

Outbound 383,102 275,721

Inbound 186,159 170,537

Total 569,261 446,258

Customer service is an integral part of our operations. A company’s most vital asset is its customers. Our business would not and could not exist without them. When we satisfy our customers, they not only help us grow by continuing to do business with us, but recommend us to friends and associates.



Customer service should be practiced on the shop floor, as it is in any other sales environment.

Customer PrivacyDuring the year, the Group did not encounter any substantiated complaints regarding breaches of customer privacy and losses of customer data.

Promotional CampaignsMarketing Outreach Programme

In our endeavours to connect with our valued customers through innovative methods, we launched the ‘Show Me How’ online product demonstration guide. Launched as a dedicated YouTube channel and a Smartphone app, ‘Show Me How’ videos are available for a number of Singer household appliances. These include installation and safeguarding of home appliances and educating consumers on the effectiveness of the products to achieve cost and time savings.

The one of a kind product video demonstrations made available at customers’ finger tips, adds convenience to as people generally find that a video demonstration is far easier to absorb than reading off a user manual.

Accordingly, the products that have a corresponding online demo will display a ‘Singer - SHOW ME HOW’ sticker that directs the customer to the product demo. We have educated over 20,000 customers through ‘Singer – Show Me How.’

Singer Computer Exhibition

The Singer, computer exhibition and sales promotion was conducted in Nawalapitiya, Pussellawa, Talawakalle and Nuwara Eliya in March 2016. The objective was to enhance the technological know-how of the residents of these towns.

Singer Bridal Show 2016

The Singer Plus Matara A, organised a Bridal Show for the customers in Matara. Bridal designers of the Matara district received the opportunity to showcase their talent.

Deepawali Outreach Programme

An outreach programme was conducted in Hatton, Nuwara Eliya and Talawakalle. Activities included sewing workshops, cookery demonstrations and special programmes for farmers. Equipment were donated to rural schools in the area and the day ended with a musical concert.

Galle Fiesta Exhibition 2016

The Singer Galle Fiesta was held at the Galle International Cricket Stadium in September 2016. Record breaking crowds came for the exhibition, which was held over 3 days. The event showcased the first use of live streaming technology, enabling customers to get a real time glimpse of the Galle Exhibition from around the globe.

Free Motorcycle Service Programme

Singer conducted several free motorcycle service programmes island wide. The aim was to instil confidence in customers and boost sales.

ComplianceHealth and Safety of Products

There were no incidence of non-compliance with regulations and voluntary codes, concerning the health and safety impacts of products and services during the year.

There were no incidence of non-compliance with regulations and voluntary codes, concerning product and service information and labeling during the year.

Marketing Communications

There were no incidents of non-compliance with regulations and voluntary codes pertaining to marketing communications, including advertising, promotion and sponsorship during the year. The Company does not engage sale of banned products.

Product and Service Usage

The Company was not subject to monetary fines for non-compliance with laws and regulations concerning the provision and use of products and services during the year.


P:119Singer (Sri Lanka) PLC ANNUAL REPORT 2016 INDEPENDENT ASSURANCE REPORT

Introduction and Scope of the EngagementThe management of Singer (Sri Lanka) PLC (“the Company”) engaged us to provide an independent assurance on the following elements of the sustainability reporting criteria presented in the Annual Report – 2016 (‘the Report’).

z Reasonable assurance on the information on financial performance as specified on page 86 of the Report.

z Limited assurance on other information presented in the Report (General Standard Disclosures and Specific Standard Disclosures of the GRI Index page 120 to page123), prepared in accordance with the requirements of the Global Reporting Initiative G4 ‘In accordance’ – Core guidelines.

Basis of Our Work and Level of Assurance We performed our procedures to provide limited assurance in accordance with International Standard on Assurance Engagements (ISAE 3000): ‘Assurance Engagements Other than Audits or Reviews of Historical Financial Information’, issued by the Institute of Chartered Accountants of Sri Lanka (‘CASL’).

The evaluation criteria used for this limited assurance engagement are based on the Sustainability Reporting Guidelines (“GRI Guidelines”) and related information in particular, the requirements to achieve GRI G4 ‘In accordance’ – Core guideline publication, publicly available at GRI’s global website at ‘www.globalreporting.org’.

Our engagement provides limited assurance as well as reasonable assurance. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement conducted in accordance with ISAE-3000 and consequently does not enable to obtain assurance that we would become aware of all significant matters that might be identified in a

Independent Assurance Report to Singer (Sri Lanka) PLC on the Sustainability Reporting Criteria Presented in the Annual Report – 2016

reasonable assurance engagement. Accordingly, we do not express an opinion providing reasonable assurance.

Management of the Company’s Responsibility for the ReportThe management of the Company is responsible for the preparation of the self-declaration, the information and statements contained within the Report, and for maintaining adequate records and internal controls that are designed to support the sustaining reporting process in line with the GRI Sustainability Reporting Guidelines.

Ernst & Young’s ResponsibilityOur responsibility is to express a conclusion as to whether we have become aware of any matter that causes us to believe that the Report is not prepared in accordance with the requirements of the Global Reporting Initiative G4 ‘In accordance’ – Core guidelines. This report is made solely to the Company in accordance with our engagement letter dated 30 January 2017. We disclaim any assumption of responsibility for any reliance on this report to any person other than the Company or for any purpose other than that for which it was prepared. In conducting our engagement, we have complied with the independence requirements of the Code for Ethics for Professional Accountants issued by the CASL.

Key Assurance Procedures We planned and performed our procedures to obtain the information and explanations considered necessary to provide sufficient evidence to support our limited assurance conclusions. Key assurance procedures included:

z Interviewing relevant Company’s personnel to understand the process for collection, analysis, aggregation and presentation of data.

z Reviewing and validation of the information contained in the Report.

z Checking the calculations performed by the Company on a sample basis through recalculation.

z Reconciling and agreeing the data on financial performance are properly derived from the Company’s audited Financial Statements for the year ended 31st December 2016.

z Comparison of the content of the Report against the criteria for a Global Reporting Initiative G4 ‘In accordance’ – Core guidelines.

Our procedures did not include testing electronic systems used to collect and aggregate the information.

Limitations and ConsiderationsEnvironmental and social performance data are subject to inherent limitations given their nature and the methods used for determining, calculating and estimating such data.

ConclusionBased on the procedures performed, as described above, we conclude that;

z The information on financial performance as specified on page 86 of the Report are properly derived from the audited Financial Statements of the Company for the year ended 31st December 2016.

z Nothing has come to our attention that causes us to believe that other information presented in the Report are not fairly presented, in all material respects, in accordance with the Company’s sustainability practices and policies, some of which are derived from GRI-G4-‘In accordance’ Core Sustainability Reporting Guidelines.

Chartered Accountants23rd February 2017Colombo

Partners: W R H Fernando FCA FCMA M P D Cooray FCA FCMA R N de Saram ACA FCMA Ms. N A De Silva FCA Ms. Y A De Silva FCA W K B S Fernando FCA FCMA Ms. K R M Fernando FCA ACMA Ms. L K H L Fonseka FCA A P A Gunasekera FCA FCMA A Herath FCA D K Hulangamuwa FCA FCMA LLB (Lond) H M A Jayesinghe FCA FCMA Ms. A A Ludowyke FCA FCMA Ms. G G S Manatunga FCA N M Sulaiman ACA ACMA B E Wijesuriya FCA FCMA

Principal T P M Ruberu FCMA FCCA

A member firm of Ernst & Young Global Limited

P:120 Singer (Sri Lanka) PLC ANNUAL REPORT 2016GLOBAL REPORTING INITIATIVES (GRI) STANDARD DISCLOSURES INDEX

GRI Index Index No.

Description Reported Section Page No.

General Standard DisclsouresStrategy and AnalysisG4-1 Statement from the most senior decision-maker of the Organisation Sustainability Report 76

Organisational Profile

G4-3 Name of the Organisation Corporate Information Inner Back CoverG4-4 Primary Brands, products and services Sustainability Report 35 - 37 and 77G4-5 Location of the Organisation’s headquarters Corporate Information Inner Back CoverG4-6 Number of countries where the Organisation operates and names of

countries with either major operations or that are specifically relevant to the sustainability issues covered in the Report

Sustainability Report 79

G4-7 Nature of ownership and legal form Sustainability Report Inner Back CoverG4-8 Markets served (including geographic breakdown,

sectors served and types of customers/beneficiaries)Sustainability Report 79 - 80

G4-9 Scale of the reporting Organisation Sustainability Report 77 and 182G4-10 Total workforce by employment type, employment contract,

and region, broken down by genderSustainability Report 92 - 93

G4-11 Report the percentage of total employees covered by collective bargaining agreements


G4-12 Organisation’s supply chain Sustainability Report 116G4-13 Significant changes during the reporting period regarding size,

structure, or ownershipSustainability Report 79

G4-14 Report whether and how the precautionary approach or principle is addressed by the Organisation

Sustainability Report 83 - 84

G4-15 List externally developed economic, environmental and social charters, principles, or other initiatives to which the Organisation subscribes or which it endorses.


G4-16 List memberships of associations (such as industry associations) and national or international advocacy Organisations in which the Organisation


Identified Material Aspects and Boundaries

G4-17 Operational structure of the Organisation Sustainability Report 79G4-18 Process for defining report content Sustainability Report 77G4-19 Material aspects identified in the process for defining report content Sustainability Report 85 - 86G4-20 Aspect boundary for identified material aspects within the Organisation Sustainability Report 84 - 86G4-21 Aspect boundary for identified material outside the Organisation Sustainability Report 77 and 84 - 86G4-22 Report the effect of any restatements of information provided in

previous reports, and the reasons for such restatements.Sustainability Report 77

G4-23 Report significant changes from previous reporting periods in the Scope and Aspect Boundaries


Stakeholder EngagementG4-24 List of stakeholder groups engaged by the Organisation. Sustainability Report 84G4-25 Report the basis for identification and selection of stakeholders

with whom to engage.Sustainability Report 84

G4-26 Report the Organisation’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group


G4-27 Report key topics and concerns that have been raised through stakeholder engagement, and how the Organisation has responded to those key topics and concerns, including through its reporting.


Report Profile

G4-28 Reporting period Sustainability Report 77G4-29 Most recent previous report Sustainability Report 77G4-30 Reporting cycle Sustainability Report 77G4-31 Contact point regarding the report Sustainability Report 77


GRI Index Index No.


GRI Content IndexG4-32 Compliance with GRI G4 guidelines, GRI content index and

external assurance report Sustainability Report 77, 119 and 123

AssuranceG4-33 Policy and current practice with regard external assurance Sustainability Report 119

GovernanceG4-34 Report the governance structure of the Organisation, including

committees of the highest governance body and identify any committees responsible for decision-making on economic, environmental and social impacts

Sustainability Report and Corporate Governance

81, 82 and 128 - 130

Ethics and IntegrityG4-56 The Organisation’s values, principles, standards and norms

of behavior such as codes of conduct and codes of ethicsSustainability Report and Corporate Governance

83, 115 and 127 - 132

Specific Standard DisclosuresCategory: EconomicAspect: Economic PerformanceG4-EC1 Economic value generated and distributed Sustainability Report 86G4-EC3 Coverage of the Organisation’s defined benefit plan obligations Notes to the Financial

Statements86 and 194 - 195

and 228G4-EC4 Financial assistance received from Government Sustainability Report 115

Category: Environmental Aspect: MaterialsG4-EN1 Materials used by weight or volume Sustainability Report 91

Aspect: EnergyG4-EN3 Energy consumption within the Organisation Sustainability Report 91G4-EN7 Reduction in energy requirements of products and services Sustainability Report 90, 91

Aspect: WaterG4-EN8 Total water withdrawal by source Sustainability Report 92

Aspect: BiodiversityG4-EN12 Direct and indirect impacts on biodiversity Sustainability Report 92

Aspect: Effluents and WasteG4-EN23 Total weight of waste by type and disposal method Sustainability Report 87 - 89

Aspect: Products and ServicesG4-EN27 Mitigation of environmental impacts of products and services Sustainability Report 87 - 92

Aspect: ComplianceG4-EN29 Monetary value of significant fines and total number of

non-monetary sanctionsSustainability Report 115

Aspect: Supplier Environmental AssessmentG4-EN32 Percentage of new suppliers that were screened using

environmental criteriaSustainability Report 116

Aspect: Environmental Grievance MechanismsG4-EN34 Number of grievances about environmental impacts Sustainability Report 92

GLOBAL REPORTING INITIATIVES (GRI) STANDARD DISCLOSURES INDEX


GRI Index Index No.


Category: SocialSub Category: Labour Practices and Decent WorkAspect: EmploymentG4-LA1 Total number and rates of new employees hired and employee

turnover by age group, gender and regionSustainability Report 93

G4-LA2 Benefits for full/part time employees Sustainability Report 99 - 100G4-LA3 Return to work and retention rates after parental leave, by gender Sustainability Report 100

Aspect: Labour/Management RelationsG4-LA4 Minimum notice period regarding operational changes including

whether these are specified in collective agreementsSustainability Report 82

Aspect: Occupational Health and Safety 92G4-LA5 Joint management-worker health and safety committees Sustainability Report 101G4-LA6 Type of injuries Sustainability Report 102

Aspect: Training and EducationG4-LA9 Training details Sustainability Report 93 - 98G4-LA10 Programmes implemented and assistance provided to upgrade

employee skillsSustainability Report 93 - 98

G4-LA11 Regular performance and career development review Sustainability Report 98 - 99

Aspect: Diversity and Equal OpportunityG4-LA12 Diversity categories Sustainability Report 92 - 93 and 115

Aspect: Equal Remuneration for Women and MenG4-LA13 Basic salary and remuneration of women to men Sustainability Report 101

Aspect: Labour Practices Grievance MechanismsG4-LA16 Grievances about labour practices Sustainability Report 101 and 115

Sub Category: Human RightsAspect: Non-descriminationG4-HR3 Incidents of discrimination Sustainability Report 115

Aspect: Freedom of Association and Collective BargainingG4-HR4 Violation of exercise freedom of association or collective

bargaining from suppliers Sustainability Report 115

Aspect: Child LabourG4-HR5 Child labour related to operations and suppliers Sustainability Report 115

Aspect: Forced or Compulsory LabourG4-HR6 Incidents of forced or compulsory labour Sustainability Report 115

Aspect: Human Rights Grievance MechanismsG4-HR12 Grievance mechanisms of human rights Sustainability Report 115

GLOBAL REPORTING INITIATIVES (GRI) STANDARD DISCLOSURES INDEX

P:123Singer (Sri Lanka) PLC ANNUAL REPORT 2016 GLOBAL REPORTING INITIATIVES (GRI) STANDARD DISCLOSURES INDEX

GRI Index Index No.


Sub Category: SocietyAspect: Local CommunitiesG4-SO1 Engagement with local community Sustainability Report 109 - 115

Aspect: Anti-competitive BehaviourG4-SO7 Number of legal actions pending or completed Sustainability Report 115

Sub Category: Product ResponsibilityAspect: Customer Health and SafetyG4-PR1 Product and service categories for health and safety impacts Sustainability Report 116G4-PR2 Non-compliance with regulations and voluntary codes

concerning the health and safetySustainability Report 118

Aspect: Product and Service LabellingG4-PR3 Product and service information and labelling Sustainability Report 116G4-PR5 Customer satisfaction surveys Sustainability Report 117

Aspect: Marketing CommunicationsG4-PR7 Non-compliance with regulations and voluntary codes concerning

marketing communicationsSustainability Report 118

Aspect: Customer PrivacyG4-PR8 Complaints received concerning breaches of customer privacy Sustainability Report 118

Aspect: ComplianceG4-PR9 Monetary value of fines for non-compliance with laws and

regulations concerning products and servicesSustainability Report 118


CORPORATE GOVERNANCE


Promoting Fairness, Accountability and

Transparency

Governance Framework

The Board leads the governance framework, setting broad strategic targets, monitoring

progress, approving proposed actions and ensuring appropriate controls are in place.

Business Ethics

We enshrine the highest ethical standards and ensure

exemplary governance across all business operations.

Code of Best Practice

The Code of Best Practice on Corporate Governance

ensures compliance to highest ethical standards.

P:126 Singer (Sri Lanka) PLC ANNUAL REPORT 2016CORPORATE GOVERNANCE

Dear Shareholders,

In an era of rapid change in the economy and environment around us, a well defined and effective governance structure promotes the success of the Company and helps to safeguard shareholders’ investments and the Company’s assets. We strongly believe that good governance is at the heart of and is fundamental to the effective management of the business and Company’s long-term sustainability.

To recognise and respond to the expected changes, the process of monitoring internal controls are carried out periodically and are considered perpetual safeguard against weaknesses in gaps, if any. This action, exemplifies the commitment of the Board of Directors and Senior Management to practice the highest standards of Corporate Governance and business ethics in the organisation.

The Board’s Audit Committee has a huge responsibility in ensuring Corporate Governance standards are maintained in conformity with the Company’s Code of Conduct. As we enter an era of business prosperity and exponential growth, I have every confidence that we will continue to challenge ourselves and the business to strengthen our existing governance structure and contribute to the ongoing success of the business.

This Report on Corporate Governance lays down the process through which we implement our Corporate Governance Ethics to safeguard shareholder stake. We invite you to read the contents and learn more about our Company’s Corporate Governance practices.

Sincerely,

Dr. Saman KelegamaChairman23rd February 2017Colombo

Chairman's Statement


Group/Company ensures to comply with established best practices in corporate governance and ensures the highest ethical standards in conduct of its business. The Board adopts core values and standards which set out the conduct of staff in their dealings with shareholders, customers, colleagues, suppliers and other stakeholders. Once the core values are set and communicated to all levels of the Organisation, the Company is of the belief that the highest standards of integrity will be maintained in business.

Governance Policy and FrameworkGovernance framework covers both corporate governance and business governance. Corporate governance and business governance are interrelated processes and one process is always linked to and dependent on the other process. Business governance enables us to focus on areas of value creation to the business. Corporate governance process is to safeguard and ensure that the Group/Company achieve business performance maintaining a balance between accountability and assurance of the business process. Thus, we believe our business governance and corporate governance are interlinked to each other as depicted below:

In line with the above governance framework, the Group believes that successfully run business enterprises are founded on a set of fundamental qualities – those that embed transparency, accountability and responsibility within the core of its business operations. Translated into action, the Company’s strong core qualities and guiding corporate governance functions ensure that we remain ‘law abiding’, strictly adhering to the laws and regulations of the country. Business integrity and accountability to stakeholders are top of the mind factors that we inculcate right across – from the Board of Directors to the shop floor.

Statement of ComplianceSinger Group is fully-compliant with the Code of Best Practice on Corporate Governance issued in year 2013 jointly by The Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka as well as the Rules on Corporate Governance published by the Colombo Stock Exchange. In addition to the above, our Subsidiary Company Singer Finance (Lanka) PLC is fully-compliant with the requirement set out by the Finance Companies Act No. 78 of 1988 and subsequent amendments and Finance Companies Corporate Governance Direction No. 3 of 2008 issued by the Central Bank of Sri Lanka.

The following developments took place in 2016: z Mr. Stephen Goodman was appointed as a Non-Executive Director in April 2016.

z Mr. Gelmart Gellecanao was appointed to the Board as a Non-Executive Director in May 2016.

z Mr. Sujeewa Perera was appointed as an Alternate Director to the Board in May 2016.

z The Board established the Board Related Party Transactions Review Committee (BRPTRC) for Singer Group of Companies with effect from 25th February 2016 in terms of the Code of Best Practice on Related Party Transactions issued by the Securities & Exchange Commission of Sri Lanka (the ‘Code’) and Section 9 of the Listing Rules of the Colombo Stock Exchange (the ‘Rules’). The establishment of a BRPTRC with effect from 1st January 2016 is mandatory in terms of the Code. The Board Related Party Transactions Review Committee comprises of four Non-Executive Directors and one Executive Director. The following Directors serve on the Committee:

- Mr. Deepal Sooriyaarachchi – Chairman (IND)- Mr. Gavin Walker – Non-Executive Director (NED)- Mr. Ranil De Silva (IND)- Mr. H.A. Pieris (ED)- Mr. J.A. Setukavalar (IND)

(Represents Singer Finance (Lanka) PLC)

z The above composition is in compliance with the provisions of the Code regarding the composition of the Board Related Party Transactions Review Committee. Brief profiles of the members are given on pages 19 and 23 of the Annual Report. The Finance Director functions as the Secretary to the Board Related Party Transactions Review Committee.

Business GovernanceBusiness governance (Performance Governance) is linked from Company’s Vision Statement to Final Objective level of grass root level. Business governance process is started at the point of preparing the Annual Plan and Annual Plan is focused on future strategic direction, long-term objectives, medium-term objectives and short-term set targets. Annual Plan is initially approved by the Singer Asia Limited, which is the Intermediate Parent Company and subsequently reviewed and approved by the Board. The Group CEO and Executive Committee review the strategic plan and budgets against the actual performance on a monthly basis and at more frequent intervals, as needed and Chairman and Board of Directors review actual performance at each Board meeting.



IT GovernanceIT governance process of the Company ensures that IT objectives are aligned with the business objectives that will meet its strategic and operational objectives. IT governance is an integral part of the corporate governance process and which deals primarily with optimising the linkage between Strategic Directions and Information Management of the Company. Competent and dedicated staff are deployed to support this need. Company investment in IT resources covers resources operated and managed centrally and resources deployed in various places. IT resources include ERP system, other related business systems, internet, emails and other Company-wide data communication systems.

Impact of the IT governance to diverse functional areas of the Company is driven by certain core objectives which are set below:

Compliance Investing in licensed software deployed in compliance with Intellectual Property Law with a view to educate and mandate compliance to such laws throughout the Company.

Operational Efficiency Streamlining of inventory management, logistic management and credit management process so that integrity is maintained across the value chain through near real-time processing.

Prudent Capital Expenditure All major IT investments are carefully evaluated by the IT team and built into the business plan and carefully scrutinised at the planning level, and approval is granted by both, Board and Intermediate Parent Company.

Final approval of IT capital expenditure is sought from the Group CEO and Intermediate Parent Company.

Customer Convenience Ensuring process efficiencies to increase the contribution to customer convenience.

Green IT Protecting the environment by reducing print through migration to emails and soft copies.

Governance StructureExternal Regulations Internal Regulations

Companies Act No. 07 of 2007 Articles of Association of the Company

Continues Listing Requirements of the Colombo Stock Exchange. Singer Finance Manual

Code of Best Practice on Corporate Governance issued in year 2013 jointly by The Institute of Chartered Accountants of Sri Lanka and Securities and Exchange Commission of Sri Lanka.

Code of Ethics, Human Resources Policies and Procedures

In case of Subsidiary Company Singer Finance (Lanka) PLC, requirements set out by the Finance Companies Act No. 78 of 1988 and Subsequent Amendments and Finance Companies Corporate Governance Direction No. 03 of 2008 issued by the Central Bank of Sri Lanka.

Information Technology and Other Internal Manuals

Standing Instructions, Policy and Procedures (P&P).


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Shareholders

Employees

Group Chief Executive Officer

Community

Board of DirectorsAuditCommittee

Board of Directors of Intermediate Parent

Company

NominationCommittee

Related Party Transactions ReviewCommittee

RemunerationCommittee

Customers

Executive Committee

Environment

As diagrammatically presented above, Group governance structure is set-up to create a distinction between the functions of the Board and Management team but ensuring effective co-operations and communication between two groups. Group Chief Executive Officer exercises triangular linking role between the Board, Executive Management Committee and other Stakeholders i.e., Shareholders, Employees, Customers, Community and Environment. Group’s Chief Executive Officer is the main communication link with the Board and Executive Management Committee. He also acts as a defacto officer

to maintain a fair role on behalf of Shareholders, Employees, Customers, Community and Environment.

Business EthicsThe Group enshrines the highest ethical standards in the conduct of its business affairs and its Board of Directors are tasked with ensuring that the resultant regime of exemplary governance across all aspects of business are in the best


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interests of stakeholders. Ethically correct conduct comprising integrity, honesty, fair play and loyalty pervade all Group actions.

Transparency is encouraged in all public disclosures, as well as in the way business and communication take place with all stakeholders. A ‘whistle-blowing policy’ introduced internally in 2009 has increased the level of transparency towards a wider dimension.

All employees are bound by the Company’s written Code of Ethics that includes the following aspects:

z Exercise honesty, objectivity and diligence when performing one’s duties.

z Avoid situations where personal interest might conflict with the interest of the Company; and if so, disclose such interest in advance.

z Maintain confidentiality of commercial and price-sensitive information.

z Work within applicable laws and regulations. z Safeguard the Company’s assets. z Avoid conduct that will reflect badly on the person concerned or the Company’s image.

z Strictly avoid giving or accepting any kind of a bribe, either directly or indirectly.

z Strictly avoid making contributions for political funds, either directly or indirectly.

z Strictly avoid any kind of sexual harassment.

The Company has implemented a formal whistle-blowing procedure and encourages any employee who suspects misconduct at work, whether by management, peers or any other employee, to raise their concerns.

Other PoliciesIn addition, the Company implements policies covering –

z Recruitment and selection z Financial integrity

z Use of Company property including computers z Non-harassment in the workplace z Environment, safety and health z Security of IT system

Responsibility to Customers The Company maintains an island-wide network of outlets and provides a wide choice of products and brands to its customers, augmented by easy payment opportunities. Outstanding customer care and world class after-sales service are two of seven propositions substantiating our claim to be a world-class company. What is salient about the widespread nature of our distribution is that in most instances, a consumer living in any part of the country need not travel more than 10 km to obtain goods and services from the Company.

Products sold by the Company are of the highest quality and are rigorously tested prior to introduction. The Company extends warranties on its products. It maintains an island-wide network of service centres and franchise agents to facilitate product repairs. Customer grievances, if any, are handled promptly and solutions provided with exchange of merchandise in the unlikely event of a manufacturing defect.

Among developments relevant to customer relations in the year under review was the growing popularity of our Contact Centre established in 2006 to deal with customer complaints and product performance issues as well as to provide customer-related information. In addition to this, the Company conducts customer-loyalty programmes and Customer-Service Clinics across the country where any customer can relate their grievances or obtain service for their product on site.

In service to our differently-abled customers, wheelchair ramps and other such infrastructure modifications and facilities are being added to the Company’s retail outlets progressively as part of routine showroom renovations.


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EnvironmentSocial responsibility is regarded as a fundamental aspect of the Company’s strategy and it is one of the core values of the business. As stated in our value statement “we make every effort to ensure that the environment is protected and conserved for future generations” and in line with this core value, the Company is committed to minimising any adverse impact the conduct of the business may have on the environment. Further to that, this core value encourages and ensures our products, processes and business does not unnecessarily damage the environment.

The Company is proud to present in this Annual Report, the ‘Creating Sustainable Value’ based on the Global Reporting Initiatives (GRI) Guidelines version G4. The Company’s Social and Environment Management initiations are more fully described in the ‘Creating Sustainable Value’ on pages 75 to 123.

Code of Best Practice on Corporate GovernanceWe set out below the corporate governance practices adopted and practiced by the Company, the extent of adoption of the Code of Best Practice on Corporate Governance issued in year 2013 jointly by The Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka and the Rule set out in Section 7.10 of the Colombo Stock Exchange Listing Rules on Corporate Governance.

Section AThis section covers companies extent of adherence to the requirements of the Code of Best Practice on Corporate Governance issued in year 2013 by the Securities and Exchange Commission of Sri Lanka and The Institute of Chartered Accountants of Sri Lanka. This reflects Company’s governance in following six fundamental aspects:

z Directors z Director – Remuneration z Relationship with Shareholders z Accountability and Audit z Institutional Investors z Other Investors

These are discussed in the sections that follow:

A. DirectorsA.1 The BoardMain PrincipleEvery public company should be headed by an effective Board, which should direct, lead and control the Company.

Corporate Governance Principle

SEC and CA Sri Lanka Code Reference

Requirement of the Code Compliant with the Code

Board Meeting A.1.1 The Board should meet regularly, at least once in every quarter.

The Board meets at least four times a year and additional meetings are held if required. The Board subcommittees also met on a regular basis. Circular Resolutions are passed as per the requirements. The Board met four times during the financial year. Details of the meetings and attendance of the members are set out on pages 160 to 161. The meetings convened by the Board subcommittees during 2016 are also provided on page 160.






Responsibility of the Board

A.1.2 Board should be responsible for matters including:

Ensuring the formulation and implementation of a sound business strategy.

The Board is responsible for the strategic planning process of the Company. This includes the responsibility for the formulation of the strategic vision and mission of the Company, setting the overall corporate policy and strategy, monitoring performance and reviewing risks and major investments. The Board also takes on the added responsibility of directing Company performance towards achieving the best results possible and increasing shareholder value. The Board sets the broad parameters of the Company’s business. The Company’s business units are then tasked with their application, in achieving specific targets and objectives.

Ensuring that the CEO and Management team possess the skill, experience and knowledge to implement strategy.

The profile of the CEO is provided in this Annual Report on page 19.

While the Board of Directors is ultimately responsible for the operations and financial soundness of the Company, the day-to-day management of the Company is entrusted to the Group CEO. There is extensive staff participation in decision-making at all levels, with strategic recommendations on material matters flowing to the Board for final decision.

The Group CEO chairs the Executive Committee and five Key Management members are Alternate Directors to the main Board. The Executive Management Committee, comprising all Key Managers who are Divisional Heads and four Deputy Directors and Group CEO meets every week for performance review and decision-making.

The Company’s Annual Plan addresses the requirements of all business units and divisions. This ensures that the entire Company follows the set plans and objectives as articulated in the Annual Plan. These in turn become the primary objectives of the Management Committee which is represented by all Heads of Divisions, and are shared with Divisional Heads and Heads of all SBUs.

The Management Committee together with the Heads of Divisions and SBUs have the autonomy and freedom to translate these objectives to specific goals that are achievable.

Key programmes are identified by the Group CEO for each year in line with the Annual Plan after they are discussed at Executive Committee meetings. A review of progress on plan implementation is a key item on the agenda of the monthly Management Review meetings.

Ensuring the adoption of an effective CEO and Senior Management succession strategy.

Succession planning is given due recognition in the corporate culture. Effective succession planning is a criterion in the performance appraisals of the Senior Management and Key Management.

Addition to that, as part of the development and succession programme, the ‘3x3x3’ initiative seeks to ensure that all positions of Key Managers, Senior Managers, Middle Managers and Junior Managers have been identified and are groomed for succession.






Ensure effective systems to secure integrity of information, internal control and risk management.

The Board has delegated this responsibility to the Audit Committee.

The Audit Committee is empowered to review and monitor the financial reporting process of Singer Group so as to provide additional assurance on the reliability of Financial Statements through a process of independent and objective review.

As such, the Audit Committee acts as an effective forum in assisting the Board of Directors in discharging their responsibilities on ensuring the quality of financial reporting and related communication to the shareholders and the public.

Audit Committee framework, composition, responsibilities and duties are given in the Audit Committee Report on page 169.

Risk Management Framework is given in the Risk Management Report appearing from pages 162 to 168.

Ensuring compliance with laws, regulation and ethical standards.

The Board follows a policy of strict compliance with laws and regulatory requirements and ensures that stakeholder interests are considered in key corporate direction.

A compliance checklist is provided to Audit Committee and Board members in every quarter by the Compliance Officer indicating compliance with applicable laws, regulations etc.

The Company has also issued a Code of Ethics and Human Resources Policies and Procedures applicable to all employees.

All stakeholders’ interests are considered in corporate decisions.

The Board adopted core values and standards which set out the conduct of staff in their dealings with shareholders, customers, community, environment, suppliers and other stakeholders. Once the core values are set and communicated to all levels of the organisation, there is a belief that the highest standards of integrity are maintained in business.

The Board relies on the integrity and due diligence of Key Managers, Senior Managers, Auditors and Advisors to oversee the Group’s overall performance objectivities, financial plans and annual budgets, investments, financial performance reviews, risk management and corporate governance practices.

The Company’s values and standards are set with emphasis on adopting appropriate accounting policies and fostering compliance with financial regulations.

The Group enshrines the highest ethical standards in the conduct of its business affairs and its Board of Directors are tasked with ensuring that the resultant regime of exemplary governance across all aspects of business are in the best interests of stakeholders. Ethically correct conduct comprising integrity, honesty, fair play and loyalty pervade all Group actions.

Accounting policies are reviewed annually in light of changing business requirements, evolving international and local accounting standards and industry best practice. As mentioned above, significant emphasis is placed on compliance with applicable regulations. Group continues to adopt same accounting policies adopted in year 2015 and which are given as part of the Financial Reports in pages 187 to 198.






Fulfilling such other Board functions as relevant to the organisation.

The Board makes every endeavour to ensure a balanced and objective assessment of the Company’s position, performance and prospects.

Members from professional accounting bodies and high scholar representatives from the field of economics are on the Board ensuring financial and economic acumen, knowledge and other Board members from the professional marketing bodies ensure stimulation of marketing knowledge of the Board members.

Compliance with laws and seeking independent professional advices

A.1.3 The Board collectively, and Directors individually, must act in accordance with the laws of the country and there should be a procedure agreed by the Board of Directors to obtain independent professional advice where necessary, at the Company’s expense.

As mentioned above, there is a significant emphasis across the organisation to ensure compliance with applicable laws and regulations.

The Board members are permitted to obtain independent professional advice from a third party including the Company’s External Auditors and other professional consultants whenever deemed necessary at the expense of the Company.

During the year under review, Board has obtained independent legal opinion to the amendment to the Value Added Tax Act No. 7 of 2014.

Except to the above, independent professional advice were not obtained during the year 2016.

Company Secretary

A.1.4 All Directors should have access to the advice and service of the Company’s Secretary, who is responsible to the Board in ensuring, that the Board procedures are followed and that the applicable rules and regulations are complied with. Any question of the removal of the Company Secretary should be a matter for the Board as a whole.

The Company Secretary ensures that all Board Terms of Reference are followed and applicable rules and regulations are adhered to. The Company Secretary advices the Board and ensures that matters concerning the Companies Act, Board procedures and other applicable rules and regulations are followed. All Directors have access to the Company Secretary. The Secretary possesses the required qualifications as set out in the Companies Act.

Independent judgment of Directors

A.1.5 All Directors should bring independent judgment to bear on issues of strategy, performance, resources and standards of business conduct.

The Chairman conducts Board meetings in a manner which ensures that there is effective participation from all Directors, their individual contribution and concerns are objectively assessed prior to making key decisions and that the balance of power is maintained.

In advance of every Board meeting, each Director receives a comprehensive set of Board papers and any additional information requested by the Directors.

It is the Group CEO’s duty to ensure that all members are properly briefed.

None of the Independent Directors have held executive responsibilities in the Company, and have submitted a declaration confirming their independence in accordance with Section 7 of the CSE Listing Rules on Corporate Governance as at 31st December 2016.






Dedication of adequate time and effort by the Directors

A.1.6 Every Director should dedicate adequate time and effort to matters of the Board and the Company, to ensure that the duties and responsibilities owned to the Company are satisfactorily discharged.

The Board met on four occasions during the year.

The Chairman attended all meetings and the attendance of the other Directors is detailed on page 161.

The Board is satisfied that the Chairman and the Non-Executive Directors committed sufficient time during 2016 to fulfil their duties.

Training for new and existing Directors

A.1.7 Every Director should receive appropriate training when first appointed to the Board of a company, and subsequently as necessary. The training curricular should encompass both general aspects of directorship and matters specify to the particular industry/company concerned. A Director must recognise that there is a need for continuous training and expansion of the knowledge and skill required to effectively perform his duties as a Director.

The Directors are given the opportunities to familiarise and obtain an in-depth understanding of the Company’s business, its strategies, risks and processes, at their discretion.

Training is provided to Executive Directors and Alternate Directors to equip themselves to discharge their responsibilities effectively. This includes training provided by principles, external and in-house training.

Directors are briefed on changes in laws and regulations, tax laws and accounting standards from time to time either during the Board meetings or at specially convened sessions.

A.2 Chairman and Group Chief Executive Officer (CEO)Main PrincipleCorporate Governance Principle

SEC & CA Sri Lanka Code Reference


Separation of the roles of Chairman and Group CEO

A.2.1 The positions of Chairman and Group CEO are separated to ensure a balance of power and authority and to prevent any one individual from possessing unfettered decision-making authority.

The Chairman’s and Group CEO’s functions are separated to ensure a balance of power of authority and this dual panel structure has been continued throughout the year 2016.

The Chairman of the Board of Directors functions in a non-executive capacity with no activities involving the direct supervision of staff or Senior Management. The Group Chief Executive Officer functions as an Ex-Officio Director of the Board and is the apex executive in charge of the day-to-day management of operations and business of the Company, while providing the link between the Board, Board of the Intermediate Parent Company and Divisional Heads (Key Management).



A.3 Chairman’s RoleMain PrincipleThe Chairman’s role in preserving good corporate governance is crucial. As the person responsible for running the Board, the Chairman should preserve order and facilitate the effective discharge of Board functions.




Role of Chairman A.3.1 The Chairman should conduct Board proceedings in a proper manner and ensure, inter alia, that:

z the effective participation of both Executive and Non-Executive Directors is secured;

z all Directors are encouraged to make an effective contribution, within their respective capabilities, for the benefit of the Company;

z a balance of power between Executive and Non-Executive Directors is maintained;

z the views of Directors on issues under consideration are ascertained; and

z the Board is in complete control of the Company’s affairs and alert to its obligations to all shareholders and other stakeholders.

z The Chairman is responsible for leading the Board and for its effectiveness. In practice, this means taking responsibility for the Board’s composition, ensuring that the Board focuses on its key tasks and supports the Group CEO in managing the day-to-day running of the Company. The Chairman is also the ultimate point of contact for shareholders, particularly on corporate governance issues.

z The Chairman satisfies himself that the information available to the Board is sufficient to make an informed assessment of the Company’s affairs as well as to discharge their duties to all stakeholders.

z The Chairman conducts Board meetings in a manner which ensures that there is effective participation from all Directors, their individual contribution and concerns are objectively assessed prior to making key decisions and that the balance of power is maintained.

z Chairman ensures that regular meetings are conducted at least once a quarter and the minutes of the meetings are accurately recorded.

z Chairman approves the agenda prepared by the Company Secretary.

A.4 Financial AcumenMain PrincipleThe Board should ensure the availability within it of those with sufficient financial acumen and knowledge to offer guidance on matters of finance.




Financial acumen and knowledge

A.4.1 Availability of sufficient financial acumen and knowledge.

Chairman has obtained his doctorate – D.Phil (Econ) from Oxford University, UK.

Group CEO is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and Fellow of the Chartered Institute of Management Accountants – UK.

In addition, the Board includes a member who is an Associate Member of The Institute of Chartered Accountants of Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants – UK. Other members of the Board have the ability to offer guidance on matters of finance to the Board. The profiles of the Board of Directors are provided in this Annual Report from pages 19 to 23.



A.5 Board BalanceMain Principle It is preferable for the Board to have a balance of Executive and Non-Executive Directors such that no individual or small group of individuals can dominate the Board’s decision-taking.




Presence of strong team of Non-Executive Directors

A.5.1 The Board should include –

Non-Executive Directors of sufficient calibre and number for their views to carry significant weight in the Board’s decisions.

The Board should include at least two Non-Executive Directors or such number of Non-Executive Directors equivalent to one-third of total number of Directors, whichever is higher. In the event, the Chairman and CEO is the same person, Non-Executive Directors should comprise a majority of the Board.

Eight out of nine Directors on the Board are Non-Executive Directors which is well above the minimum prescribed by the Code. This ensures views of Non-Executive Directors carry a significant weight in the decisions made by the Board.

Independent Non-Executive Directors

A.5.2 Where the constitution of the Board of Directors includes only two Non-Executive Directors, both such Non-Executive Directors should be ‘independent’. In all other instances two or one-third of Non-Executive Directors appointed to the Board of Directors whichever is higher should be ‘independent’.

Three out of eight Non-Executive Directors on the Board are independent based on the criteria set by this Code and the Listing Rules of the Colombo Stock Exchange.

The names of the Independent Non-Executive Directors are disclosed on pages from 19 to 23 and back page of the Annual Report.

Independence of Non-Executive Directors

A.5.3 For a Director to be deemed ‘independent’ such Director should be independent of management and free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgment.

The Company maintains the ‘Interest Register’ required by the Companies Act No. 07 of 2007, which also shows details of Director Interest in Contracts/Company or Group.

A disclosure on related party transactions is available on pages 247 to 249.

Annual Declaration

A.5.4 Each Non-Executive Director should submit a signed and dated declaration annually of his/her independence or non-independence against the specified criteria set out in the Specimen in Schedule H.

Every Non-Executive Independent Director of the Company has made written submissions as to their independence against the specified criteria set out by the Company, which is in line with the requirements of Schedule H of this Code.

Determination of Independence of Director

A.5.5 The Board should make a determination annually as to the independence or non-independence of each Non-Executive Director based on such a declaration made of decided criteria and other information available to the Board, and should set out in the Annual Report the names of Directors determined to be ‘independent’. The Board should specify the criteria not met and the basis for its determination in the Annual Report, if it determines that a Director is independent notwithstanding the existence of relationships or circumstances which indicate the contrary.

The Board has determined the independence of Directors based on the declarations submitted by the Non-Executive Directors, as to their independence, as a fair representation and will continue to evaluate their independence on this basis annually. No circumstances have arisen for the determination of independence by the Board, beyond the criteria set out in the Code. Independent Non-Executive Directors are:

Dr. S. KelegamaMr. D. SooriyaarachchiMr. D. T. R. De Silva






Appointment of Alternate Director

A.5.6 If an alternate Director is appointed by a Non-Executive Director such Alternate Director should not be an executive of the Company. If an Alternate Director is appointed by an Independent Director, the person who is appointed also should meet the criteria of independence and the provision on minimum number of Independent Directors also should be satisfied.

Independent Non-Executive Directors have not appointed Alternate Directors.

Alternative Directors to the Non-Executive Directors are executives of the Company. However, Board balance is not affected since the Board complies with Code A 5.2.

Requirement to appoint ‘Senior Non-Executive Director’.

A.5.7 In the event the Chairman and CEO is the same person, the Board should appoint one of the Independent.

Non-Executive Directors to be the ‘Senior Independent Director’ (SID) and disclose this appointment in the Annual Report.

The requirement to appoint a Senior Independent Director does not arise as the roles of Chairman and Group CEO are separated.

Confidential discussion with Senior Independent Director

A.5.8 The Senior Independent Director should make himself available for confidential discussions with other Directors who may have concerns which they believe have not been properly considered by the Board as a whole and which pertain to significant issues that are detrimental to the Company.

Not Applicable.

Chairman’s meetings with Non-Executive Directors

A.5.9 The Chairman should hold meetings with the Non-Executive Directors only, without the Executive Directors being present, as necessary and at least once each year.

Chairman meets with NEDs without the presence of Executive Directors, whenever necessary.

Recording of concerns in Board minutes

A.5.10 Where Directors have concerns about the matters of the Company which cannot be unanimously resolved, they should ensure that their concerns are recorded in the Board minutes.

Concerns raised by the Directors during the year, if any, are recorded in the minutes of Board meetings with adequate details by the Company Secretary.



A.6 Supply of InformationMain Principle The Board should be provided with timely information in a form and of a quality appropriate to enable it to discharge its duties.




Management obligation to provide appropriate and timely information to the Board

A.6.1 Management has an obligation to provide the Board with appropriate and timely information, but information volunteered by management may not be enough in all circumstances and Directors should make further inquiries where necessary. The Chairman should ensure all Directors are properly briefed on issues arising at Board meetings.

The Company ensures that the Directors receive adequate information in a timely manner. On urgent matters, every effort is made to provide the information, as early as possible.

The Board receives a standard set of documents, which are timely, accurate, relevant and comprehensive. These papers include a detailed analysis of financial and non-financial information. The Board may call for additional information or clarify issues with any member of the Executive Committee.

If necessary, all Directors are adequately briefed by the Group CEO on matters arising at Board meetings. The Secretary and the Compliance Officer ensure that Board papers are circulated in advance prior to Board meeting.

If necessary, members of the Executive Committee, External Auditors and Outside Consultancies makes presentations on issues of importance.

The Chairman ensures that all Directors are briefed adequately on issues arising at Board meetings.

Adequate time for effective conduct of Board meetings

A.6.2 The minutes, agenda and papers required for a Board meeting should ordinarily be provided to Directors at least seven (7) days before the meeting, to facilitate its effective conduct.

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

A.7 Appointments to the BoardMain Principle There should be a formal and transparent procedure for the appointment of new Directors to the Board.




Nomination Committee

A.7.1 A Nomination Committee should be established to make recommendations to the Board on all new Board appointments. Terms of Reference for Nomination Committees are set out in Schedule A. The Chairman and members of the Nomination Committee should be identified in the Annual Report.

The Committee consists of an Independent Non-Executive Director, Chairman who is also an Independent Non-Executive Director and Group CEO. Company Secretary acts as the Secretary to the Committee.

Please refer page 171 for new appointments in year 2016.






Assessment of Board Composition by the Nomination Committee

A.7.2 The Nomination Committee or in the absence of a Nomination Committee, the Board as a whole should annually assess Board composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company. The findings of such assessment should be taken into account when new Board appointments are considered and when incumbent Directors come up for re-election.

Board as a whole annually assessed the composition of the Board to ensure that the combined knowledge and experience of the Board matches the strategic demand facing the Company. The findings of such assessments are taken into account when new Board appointments are considered.

Disclose of required details of new Directors to shareholders

A.7.3 Upon the appointment of a new Director to the Board, the Company should forthwith disclose to shareholders –

z a brief résumé of the Director; z the nature of his expertise in relevant functional areas;

z the names of companies in which the Director holds directorships or memberships in Board Committees; and

z whether such a Director can be considered ‘independent’.

All new appointments are communicated to the shareholders via the Colombo Stock Exchange.

The details of the current Board of Directors and new appointments are provided on pages 19 to 23 in this Annual Report.

A.8 Re-electionMain Principle All Directors should be required to submit themselves for re-election at regular intervals and at least once in every three years.




Re-election of Non-Executive Directors, Chairman and CEO

A.8.1 Non-Executive Directors should be appointed for specified terms subject to re-election and to the provisions in the Companies Act relating to the removal of a Director, and their reappointment should not be automatic.

In terms of the Articles of Association, one-third of the Directors, except for Chairman, Managing Director/CEO, retire in rotation and may offer themselves for re-election at the AGM. By virtue of being the Chairman, Managing Director/CEO are not required to make themselves available for re-election as the Articles of Association.

A.8.2 All Directors including the Chairman of the Board, should be subject to election by shareholders at the first opportunity after their appointment, and to re-election thereafter at intervals of no more than three years. The names of Directors submitted for election or re-election should be accompanied by a résumé minimally as set out in paragraph A.7.3 above, to enable shareholders to make an informed decision on their election.

The Company’s Articles of Association provides that any Director appointed by the Board to hold office until the next Annual General Meeting, may seek reappointment by the shareholders at the said AGM.

Based on the article and the current composition of the Board, a Director has to come forward for re-election, every three years.

A résumé of the Directors coming up for re-election at the AGM, 2017 is available on pages 19 and 23.

The Chief Executive Officer does not retire by rotation.



A.9 Appraisal of Board PerformanceMain Principle Boards should periodically appraise their own performance in order to ensure that Board responsibilities are satisfactorily discharged.




Annual performance evaluation of the Board and its Committee

A.9.1 The Board should annually appraise itself on its performance in the discharge of its key responsibilities as set out in A.1.2.

The performance of the Board and the subcommittee is reviewed and evaluated by the Board and Chairman based on a self-appraisal basis.

A.9.2 The Board should also undertake an annual self-evaluation of its own performance and that of its Committees.

A.9.3 The Board should state how such performance evaluations have been conducted, in the Annual Report.

A.10 Disclosure of Information in Respect of DirectorsMain Principle Shareholders should be kept advised of relevant details in respect of Directors.




Details in respect of Directors

A.10.1 The Annual Report of the Company should set out the following information in relation to each Director:

i. Name, qualifications and brief profile; Available on pages 19 and 23 of Board of Directors.

ii. The nature of his/her expertise in relevant functional areas;

Available on pages 19 and 23 of Board of Directors.

iii. Immediate family and/or material business relationships with other Directors of the Company;

Not Applicable.

iv. Names of listed companies in Sri Lanka in which the Director concerned serves as a Director;


v. Names of other companies in which the Director concerned serves as a Director, provided that where he/she holds directorships in companies within a group of which the company is a part, their names need not be disclosed; it is sufficient to state that he/she holds other directorships in such companies;


vi. Number/percentage of Board meetings of the Company attended during the year;

Available on page 161.

vii. Committees in which the Director serves as Chairman or a member;

Available on pages from 175 to 176.

viii. Number/percentage of Committee meetings attended during the year.

Available on page 161.



A.11 Appraisal of Group Chief Executive OfficerMain Principle The Board should be required, at least annually, to assess the performance of the Group CEO.




Setting annual targets and the appraisal of performance of the CEO

A.11.1 At the commencement of every fiscal year, the Board in consultation with the CEO, should set, in line with the short, medium and long-term objectives of the Company, reasonable financial and non-financial targets that should be met by the Group CEO during the year.

The Annual Business Plan is prepared setting up short-term, medium-term and long-term financial and non-financial goals. The Annual Business Plan is initially approved by the Intermediate Parent Company, Singer Asia Limited and subsequently approved by the Board.

A.11.2 The performance of the Group CEO should be evaluated by the Board at the end of each fiscal year to ascertain whether the targets set by the Board have been achieved and if not, whether the failure to meet such targets was reasonable in the circumstances.

Assessment of performance of the Group CEO is carried out by both Intermediate Parent Company’s Board and the local Board at the end of each year to ensure that pre-agreed targets have been achieved or if not whether there are acceptable reasons for not achieving them.

B. Directors’ RemunerationB.1 Remuneration ProcedureMain Principle Companies should establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. No Director should be involved in deciding his/her own remuneration.




Establishment of the Remuneration Committee

B.1.1 To avoid potential conflicts of interest, the Board of Directors should set up a Remuneration Committee to make recommendations to the Board, within agreed terms of reference, on the Company’s framework of remunerating Executive Directors. (These also include Post-Employment Benefits as well as Terminal Benefits.) Terms of Reference for Remuneration Committees are set out in Schedule C.

The scope of the Committee is to consider and recommend to the Board, remuneration and perquisites of the Chairman, Group CEO, Independent Directors and Executive Directors of the Board of the Company including Alternate Directors and approve recommendations made by the Group Chief Executive Officer and the Corporate Officer of Singer Asia Limited.

Singer Asia Limited, is the Intermediate Parent of the Company.



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Composition of the Remuneration Committee

B.1.2 Remuneration Committees should consist exclusively of Non-Executive Directors and should have a Chairman, who should be appointed by the Board.

The Committee consists of three Independent Non-Executive Directors and One Non-Executive Director. The Committee is chaired by the Non-Executive Director.

Finance Director acts as the Secretary to the Committee. The Group CEO and the Finance Director assist the Committee by providing the relevant information and participating in its analysis and deliberations.

Chairman and Members of the Remuneration Committee

B.1.3 The Chairman and Members of the Remuneration Committee should be listed in the Annual Report each year.

Please refer page 170 of the Remuneration Committee Report for details of the Chairman and Members of the Board Remuneration Committee.

Determination of remuneration of Non-Executive Directors

B.1.4 The Board as a whole, or where required by the Articles of Association the shareholders, should determine the remuneration of Non-Executive Directors, including members of the Remuneration Committee, within the limits set in the Articles of Association. Where permitted by the Articles, the Board may delegate this responsibility to a subcommittee of the Board, which might include the CEO.

After consideration of the recommendation made by the Group Chief Executive Officer and the Corporate Office of Singer Asia Limited, Committee as a whole decides the remuneration of the Non-Executive Directors. The Non-Executive Directors receive a comprehensive fee for being a Director of the Board and either chairing or being a member of a Board subcommittee. They do not receive any performance/incentive payments.

Consultation of the Chairman and access to professional advice

B.1.5 The Remuneration Committee should consult the Chairman and/or CEO about its proposals relating to the remuneration of other Executive Directors and have access to professional advice from within and outside the Company, in discharging their responsibilities.

The Committee has the authority to seek internal and external independent professional advice on matters falling within its purview, at the Company’s expense. Views of the Chairman and Group CEO are obtained as they too are members of the said Board subcommittee.


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B.2 Level and Make-Up of RemunerationMain Principle Levels of remuneration of both Executive and Non-Executive Directors should be sufficient to attract and retain the Directors needed to run the Company successfully. A proportion of Executive Directors’ remuneration should be structured to link rewards to corporate and individual performance.




Executive Directors’ remuneration package

B.2.1 The Remuneration Committee should provide the packages needed to attract, retain and motivate Executive Directors of the quality required but should avoid paying more than is necessary for this purpose.

The Board Remuneration Committee and also the Board ensure that Executive Director – Group CEO and another five Executive Directors – (Alternate Directors to the Non-Executive Directors) who are on the Board are provided with an attractive remuneration package.

Comparison of remuneration with other Companies/Other Companies in the Group

B.2.2 The Remuneration Committee should judge where to position levels of remuneration of the Company, relative to other companies. It should be aware what comparable companies are paying and should take account of relative performance, but should use such comparisons with caution, mindful of the risk that they can result in an increase of remuneration levels with no corresponding improvement in performance.

A primary objective of compensation packages is to attract and retain a highly qualified and experienced workforce and reward performances. These compensation packages should provide compensation appropriate for each business within the Group and commensurate with each employee’s level of experience and contribution, bearing in mind the business performance and long-term shareholder returns.

B.2.3 The Remuneration Committee should be sensitive to remuneration and employment conditions elsewhere in the Company or Group of which it is a part, especially when determining annual salary increases.

Performance-based remuneration of Executive Directors

B.2.4 The performance-related elements of remuneration of Executive Directors should be designed and tailored to align their interests with those of the Company and main stakeholders and to give these Directors appropriate incentives to perform at the highest levels.

Objectives for Executive Directors including Group CEO are set at the beginning of the year and the remuneration including the performance bonus is decided based upon the degree of achievement of such pre-set targets subject to the remuneration policy of Parent company Singer Asia Limited.

Executive share options

B.2.5 Executive share options should not be offered at a discount (i.e., less than market price prevailing at the time the exercise price is determined), save as permitted by the Listing Rules of the Colombo Stock Exchange.

Presently the Company does not have an Executive Share Option Scheme.


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Designing the remuneration of Executive Directors

B.2.6 In designing schemes of performance-related remuneration, Remuneration Committees should follow the provisions set out in Schedule D.

Please refer Remuneration Committee Report on page 170.

Early termination of Executive Directors

B.2.7 Remuneration Committees should consider what compensation commitments (including pension contributions) their Directors’ contracts of service, if any, entail in the event of early termination. Remuneration Committees should in particular, consider the advantages of providing explicitly for such compensation commitments to apply other than in the case of removal for misconduct, in initial contracts.

Not applicable to the Board except for Group Chief Executive Officer and other Executive Directors (Alternate Directors to the Non-Executive Directors) who are employees of the Company, and their terms of employment are governed by the contract of service/employment.

B.2.8 Where the initial contract does not explicitly provide for compensation commitments, Remuneration Committees should, within legal constraints, tailor their approach in early termination cases to the relevant circumstances. The broad aim should be, to avoid rewarding poor performance while dealing fairly with cases where departure is not due to poor performance.

Not applicable

Level of remuneration of Non-Executive Directors

B.2.9 Levels of remuneration for Non-Executive Directors should reflect the time commitment and responsibilities of their role, taking into consideration market practices Remuneration for Non-Executive Directors should not normally include share options. If exceptionally options are granted, shareholder approval should be sought in advance and any shares acquired by exercise of the options should be held until at least one year after the Non-Executive Director leaves the Board. Holding share options could be relevant to the determination of a Non-Executive Director's independence. (as set out in provision A.5.5)

Non-Executive Directors of the Company are paid nominal fees commensurate with their time and role in the Company and taking into consideration market practices and recommendations made by the Chief Executive Officer of Singer Asia Limited, as the Intermediate Parent of the Company.

Non-Executive Directors are not included in share options as there is no scheme in existence.


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B.3 Disclosure of RemunerationMain Principle The Company’s Annual Report should contain a Statement of Remuneration Policy and details of remuneration of the Board as a whole.




Disclosure of Remuneration

B.3.1 The Annual Report should set out the names of Directors (or persons in the Parent Company’s Committee in the case of a Group Company) comprising the Remuneration Committee, contain a statement of remuneration policy and set out the aggregate remuneration paid to Executive and Non-Executive Directors.

Please refer Remuneration Committee Report on page 170 for disclosure on the names of Remuneration Committee members and Remuneration Policy of the Company.

Please refer Note 40.3 to the Financial Statements on page 249 for aggregate remuneration paid to Executive and Non-Executive Directors.

C. Relations with ShareholdersC.1 Constructive use of Annual General Meeting (AGM) and Conduct of General Meetings Main Principle Boards should use the AGM to communicate with shareholders and should encourage their participation.




Use of Proxy Votes

C.1.1 Companies should count all proxy votes and should indicate the level of proxies lodged on each resolution, and the balance for and against the resolution, after it has been dealt with on a show of hands, except where a poll is called.

The Company has in place an effective mechanism to count all proxy votes to indicate to the Chairman the level of proxies lodged on each resolution and the number of votes for and against the resolution.

Separate resolution for all separate issues at the AGM

C.1.2 Companies should propose a separate resolution at the AGM on each substantially separate issues and should in particular propose a resolution at the AGM relating to the adoption of the report and accounts.

Company proposes a separate resolution at the AGM on each substantially separate issues.

Further, adoption of the Annual Report of the Board of Directors on the affairs of the Company and Audited Financial Statements together with the Report of the Auditors thereon are considered as a separate resolution.

Availability of all Subcommittee Chairmen

C.1.3 The Chairman of the Board should arrange for the Chairmen of the Audit, Remuneration and Nomination Committees to be available to answer questions at the AGM if so requested by the Chairman.

The Chairman of the Company ensures that Chairmen of all Board subcommittees namely, Audit, Remuneration, Nomination and Related Party Transactions Review Committee are present at the AGM to answer the questions under their purview.

Adequate Notice of the AGM

C.1.4 Companies should arrange for the Notice of the AGM and related papers to be sent to shareholders at least as determined by statute, before the meeting.

A copy of the Annual Report including Financial Statements, Notice of Meeting and the Form of Proxy are sent to shareholders 15 working days prior to the date of the AGM, as requested by statute, in order to provide the opportunity to all the shareholders to attend the AGM.

Procedures of Voting at AGM

C.1.5 Companies should circulate with every Notice of General Meetings, a summary of the procedures governing voting at General Meetings.

A summary of the procedures governing voting at General Meetings is circulated to shareholders with every Notice of General Meetings.



C.2 Communication with ShareholdersMain PrincipleThe Board should implement effective communication with shareholders.




Channel to reach all shareholders of the Company

C.2.1 There should be a channel to reach all shareholders of the Company in order to disseminate timely information

The primary modes of communication between Company and the shareholders are the Annual Report and AGM. Information is provided to the shareholders prior to the AGM to give them an opportunity to exercise the prerogative to raise any issues relating to the business of Company, either verbally or in writing prior to the AGM.

The Company used the following channels to disseminate timely information;

z Shareholders meetings z Financial and other notices as and when required through the Colombo Stock Exchange

z Corporate website z Press notices.

Policy and methodology for communicationwith shareholders

C.2.2 The Company should disclose the policy and methodology for communication with shareholders

The Company will focus on open communication and fair disclosure, with emphasis on the integrity, timeliness and relevance of the information provided. The Company will ensure information is communicated accurately and in such a way as to avoid the creation or continuation of a false market.

Implementation of the Policy and methodology for communication with shareholders

C.2.3 The Company should disclose how they implement the above policy and methodology

Printed copies of Annual Report are provided to all shareholders without charge.

Contact person for the communication

C.2.4 and C.2.6 The Company should decide the person to contact in relation to shareholders’ matters and should disclose the contact person for such communication

Shareholders may, at any time, direct questions, request for publicly available information and provide comments and suggestions to Directors or management of the Company. Such questions, requests and comments should be addressed to the Company Secretary and in the absence of him the Chief Executive Officer.

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

C.2.5 The Company should have a process to make all Directors aware of major issues and concerns of shareholders

The Company Secretary shall maintain a record of all correspondence received and will deliver as soon as practicable such correspondence to the Board or individual Director/s as applicable. The Board or individual Director/s, as applicable, will generate an appropriate response to all validly received shareholder correspondence and will direct the Company Secretary to send the response to the particular shareholder.



C.3 Major TransactionsMain PrincipleFurther to compliance with the requirements under the Companies Act, Directors should disclose to shareholders all proposed corporate transactions, which if entered into, would materially alter/vary the Company’s net assets base or in the case of a Company with subsidiaries, the Consolidated Group Net Asset Base.




Disclosure on ‘Major Transaction’

C.3.1 Prior to a company engaging in or committing to a ‘Major Transaction’, involving the acquisition, sale or disposition of greater than half of the net value of the Company’s assets or that of a subsidiary which has a material bearing on the consolidated Net Assets of the Company, Directors should disclose to shareholders all material facts of such transactions.

During the year, there were no major transactions as defined by Section 185 of the Companies Act No. 07 of 2007 which materially affect the Net Assets Base of the Company or Consolidated Group Net Asset Base.

Transactions which materially affect the net assets base of the Company will be disclosed in the Quarterly/Annual Financial Statements, if any.

D. Accountability and AuditD.1 Financial ReportingMain PrincipleThe Board should present a balanced and understandable assessment of the Company’s financial position, performance and prospects.




Board’s responsibility for Statutory and Regulatory Reporting

D.1.1 The Board’s responsibility to present a balanced and understandable assessment extends to interim and other price-sensitive public reports and reports to regulators, as well as to information required to be presented by statutory requirements.

The Board is well aware of its responsibility to present regulatory and statutory reporting in a balanced and understandable manner and a statement to this effect is given in the Statement of Directors’ Responsibility on page 180 confirming this position.

The Company had strictly complied with the requirements of the Companies Act No. 07 of 2007 in the preparation of Quarterly and Annual Financial Statements which are prepared and presented in conformity with Sri Lanka Accounting Standards. Further, Company has complied with the reporting requirements prescribed by the regulatory authority such as the Colombo Stock Exchange.






In case of Subsidiary Company – Singer Finance (Lanka) PLC has also complied with the requirements of the Finance Companies Act No. 78 of 1988 and amendments thereto and reporting requirements prescribed by the regulatory authorities such as the Central Bank of Sri Lanka and the Colombo Stock Exchange. Given below is a table containing the dates on which the Annual and Interim Financial Statements were uploaded to the CSE website/dispatched to the shareholders in the year under review:

Report Date of Dispatch or Upload

Status

Annual Report for the year ended 31st December 2015

8th March 2016 Compliant

1st Quarter 2016 5th May 2016 Compliant

2nd Quarter 2016 1st August 2016 Compliant

3rd Quarter 2016 15th November 2016 Compliant

4th Quarter 2016 23rd February 2017 Compliant

Directors’ Report in the Annual Report

D.1.2 The Directors’ Report, which forms part of the Annual Report, should contain declarations by the Directors to the effect that –

z the Company has not engaged in any activity which contravenes laws and regulations;

The Annual Report of the Board of Directors on the Affairs of the Company given on pages 174 to 179 covers all of these sections.

In addition to that Company has established procedures to ensure compliance with all applicable statutory and regulatory requirements. The Accountants of respective companies within the Group act as Compliance Officers and are responsible for ensuring proper compliance with applicable laws and regulations.

A compliance statement is tabled at each Board meeting by the Compliance Officer.

z the Directors have declared all material interests in contracts involving the Company and refrained from voting on matters in which they were materially interested;

z the Company has made all endeavours to ensure the equitable treatment of shareholders;

z the business is a going concern, with supporting assumptions or qualifications as necessary; and

z they have conducted a review of the internal controls, covering financial, operational and compliance controls and risk management, and have obtained reasonable assurance of their effectiveness and successful adherence therewith, and, if it is unable to make any of these declarations, to explain why it is unable to do so.

The Company’s compliance with Section 7.10 of the Colombo Stock Exchange Listing Rules on Corporate Governance and details of such compliance are discussed on pages 125 and 161 of this Report.






Statements of Directors’ and Auditors’ Responsibility for the Financial Statements

D.1.3 The Annual Report should contain a statement setting out the responsibilities of the Board for the preparation and presentation of Financial Statements, together with a statement by the Auditors about their reporting responsibilities.

The “Statement of Directors’ Responsibility" is given on page 174.

The ‘Independent Auditors Report’ on page 181 states the Auditors responsibility.

Management Discussion and Analysis

D.1.4 The Annual Report should contain a ‘Management Discussion and Analysis’, discussing, among other issues:

z industry structure and developments; z opportunities and threats; z risks and concerns; z internal control systems and their adequacy; z social and environmental protection activities carried out by the Company;

z financial performance; z material developments in human resource/industrial relations; and

z prospects for the future.

Please refer Chairman’s Letter on pages 6 to 9, Group Chief Executive Officer’s Review on pages 10 to 17.

Review of Operation (Positioned to Lead) on page 32, ‘Creating Sustainable Valueʼ on page 74 and Bigger, Better, Stronger on page 62 of this Annual Report.

Declaration by the Board on going concern of the business

D.1.5 The Directors should report that the business is a going concern, with supporting assumptions or qualifications as necessary. The matters to which the Board should give due consideration when adopting the going concern assumption are set out in Schedule E to this Code.

Please refer page 174 of this ‘Annual Report to the Board of Directors’ and the ‘Statement of Directorsʼ Responsibility’ on page 180 for the required declaration.

Summon on EGM to notify serious loss of capital

D.1.6 In the event the net assets of the Company falling below 50% of the value of the Company’s shareholders’ funds, the Directors shall forthwith summon an Extraordinary General Meeting of the Company to notify shareholders of the position and of remedial action being taken.

Likelihood of such occurrence is remote. However, should the situation arise, an EGM will be called for and shareholders will be notified.

Disclosure of related party transaction

D.1.7 Each related party to submit signed and dated quarterly declarations mentioning whether they have related party transactions with the Company as defined in this Code;

The Company Secretary keeps a record on related party transactions and make necessary disclosures accordingly;

A record/register in hard form on related party and related party transactions are kept by the Company;

The Company captures information to comply with the respective related party disclosure requirements imposed by SEC/Accounting Standards/Auditing Standards and similar regulations.

Each related party has submitted signed and dated declarations mentioning whether they had related party transactions with the Company during 2016.

Related Party Transactions Review Committee reviewed related party transaction which is described in this Annual Report from page 247 to 249.



D.2 Internal ControlMain PrincipleThe Board should maintain a sound system of internal control to safeguard shareholders’ investments and the Company’s assets.




Annual Review of the effectiveness of Group’s system of internal control

D.2.1 The Directors should, at least annually, conduct a review of the effectiveness of the Group’s system of internal controls, so as to be able to report to shareholders as required in D.1.2. This could be made the responsibility of the Audit Committee.

The Company’s Directors are responsible for instituting a system of internal controls to ensure the effective implementation of all policies and decisions of the Board. This framework is designed to provide reasonable but not absolute assurance that all aspects are safeguarded.

Board of Directors appointed Messrs Ernst & Young – Chartered Accountants to carry out internal system and control review and to document said internal system and control procedure to enhance integrity of financial reporting and information and controls over financial reports and areas of recommendation were implemented in the year 2015.

The Company employs personnel across different levels of operations to apply these internal controls, while the Internal Audit Department reviews the effectiveness of such controls.

The Company’s operations are also subject to review by the Corporate Internal Audit Division of Retail Holdings NV, the Ultimate Parent Company of Singer (Sri Lanka) PLC.

The Company has its own internal audit processes, implemented to ensure that effective controls are in place. These processes extend across all Company operations.

The internal audit function is headed by the Head of Risk Management, who reports to the Board Audit Committee and Group CEO and the Corporate Internal Auditor.

In relation to the retail network, the internal audit function includes an individual risk assessment for every outlet directly operated by Singer (Sri Lanka) PLC, based on five criteria –

1. Receivables management2. Inventory management3. Cash management4. Internal checks and balances5. Effectiveness of internal controls

Each location is graded by the Internal Audit Department based on its adherence to controls and its administrative performance on the management of the five criteria mentioned above.






Review the need for internal audit function

D.2.2 Companies which do not have an internal audit function should from time to time review the need for one.

This is not applicable as the Risk Management and Internal Audit is responsible for internal audit functions.

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

D.2.3 The Board should require the Audit Committee to carry out reviews of the process and effectiveness of risk management and internal controls, and to document to the Board

The Internal Audit Division of the Company carries out regular reviews on the risk management function and internal control system including internal control over financial reporting.

The Audit Committee monitors, reviews and evaluates the effectiveness of internal control system including the internal controls over financial reporting. In the year 2016, the Board of Directors was satisfied with the effectiveness of the system of internal controls of the Company. Refer the Directors’ Statement on Internal Control on page 180.

D.3 Audit CommitteeMain PrincipleThe Board should establish formal and transparent arrangements for considering how they should select and apply accounting policies, financial reporting and internal control principles and maintaining an appropriate relationship with the Company’s Auditors.




Composition of the Audit Committee

D.3.1 The Audit Committee should be comprised a minimum of two Independent Non-Executive Directors (in instances where a company has only two Directors on its Board) or exclusively by Non-Executive Directors, a majority of whom should be independent, whichever is higher. The Chairman of the Committee should be a Non-Executive Director, appointed by the Board.

All members of the Board Audit Committee are Independent Non-Executive Directors.

Details of the members, invitees and Secretary of the Committee are found on page 169 of the ‘Audit Committee Report’ under the heading ‘Composition of the Committee’.

Duties of the Audit Committee

D.3.2 The duties of the Audit Committee should include keeping under review the scope and results of the audit and its effectiveness, and the independence and objectivity of the Auditors. Where the Auditors also supply a substantial volume of non-audit services to the Company, the Committee should keep the nature and extent of such services under review, seeking to balance objectivity, independence and value for money.

As stated in the Report of the Audit Committee of the Company it regularly reviews scope, results and effectiveness of the Audit.

Details of ‘Duties of the Audit Committee’ are found on page 169 of the ‘Audit Committee Report’ under the heading ‘Responsibilities and Duties of the Committee’.






Terms of Reference of the Audit Committee

D.3.3 The Audit Committee should have a written Terms of Reference, dealing clearly with its authority and duties. (As referred to in the Code) Detailed guidance on the scope and functions of the Audit Committee can be found in the Code of Best Practice on Audit Committees issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) in May 2002.

Terms of Reference of the Board Audit Committee is clearly defined in the Charter of the Audit Committee approved by the Board of Directors. This clearly explains the purpose of the Committee, its duties and responsibilities together with the scope and functions of the Committee. The Committee mainly deals with the matters pertaining to statutory and regulatory compliance in financial reporting, matters with regard to the External Auditors, internal audit and risk management procedures of the Company.

Disclosure of names of the members of the Audit Committee

D.3.4 The names of the Directors (persons in the Parent Company’s Committee in the case of a Group Company) comprising the Audit Committee should be disclosed in the Annual Report.

The Committee should also make a determination of the independence of the Auditors and should disclose the basis of such determination in the Annual Report.

The Annual Report should contain a Report by the Audit Committee, setting out the manner of compliance by the Company, in relation to the above, during the period to which the Annual Report relates.

Names of the members of the Audit Committee are given on page 169 under the section on the ‘Composition of the Committee’ and disclosure on the independence of the Auditors is found on page 181 under the ‘Auditors’ in the ‘Annual Report of the Board of Directors on the Affairs of the Company’ on pages 174 to 179.

D.4 Code of Business Conduct and EthicsMain PrincipleCompanies must adopt a Code of Business Conduct and Ethics for Directors and members of the Senior Management Team and must promptly disclose any waivers of the Code for Directors or others.




Disclosure of Code of Business Conduct and Ethics

D.4.1 All companies must disclose whether they have a Code of Business Conduct and Ethics for Directors and members of the Senior Management Team and if they have such a Code, make an affirmative declaration in the Annual Report that all Directors and members of the Senior Management Team have complied with such Code, and if unable to make that declaration, state why they are unable to do so.

Company has an internally developed Code of Conduct.

All employees including Directors, Key Managers and Senior Managers are bound by the Company’s written Code of Ethics that includes the following aspects:

z Exercise honesty, objectivity and diligence when performing one’s duties.

z Avoid situations where personal interest might conflict with the interest of the Company; and if so, disclose such interest in advance.

z Maintain confidentiality of commercial and price sensitive information.

z Work within applicable laws and regulations. z Safeguard the Company’s assets.






Each Company may determine its own policies in the formulation of such a code, but all companies should address the following important topics in their respective codes:

z conflict of interest; z corporate opportunities; z confidentiality; z fair dealing; z protection and proper use of Company assets;

z compliance with laws, rules and regulations (including insider trading laws); and

z encouraging the reporting of any illegal or unethical behaviour.

z Avoid conduct that will reflect badly on the person concerned or the Company’s image.

z Strictly avoid giving or accepting any kind of bribe, either directly or indirectly.

z Strictly avoid making contributions for political funds, either directly or indirectly.

z Strictly avoid any kind of sexual harassment.

The Company has implemented a formal whistle-blowing procedure and encourages any employee who suspects wrong doing at work, whether by management, peers or any other employee, to raise their concerns.

Other Policies In addition, the Company implements policies covering –

z Recruitment and selection z Financial integrity z Use of company property including computers z Non-harassment in the work place z Environment, safety and health z Security of IT system

Affirmative Statement by the Chairman

D.4.2 The Chairman must affirm in the Company’s Annual Report that he is not aware of any violation of any of the provisions of the Code of Business Conduct and Ethics.

Please refer Chairman’s Letter on pages 6 to 9 in this Report.

D.5 Corporate Governance DisclosuresDirectors should be required to disclose the extent to which the Company adheres to established principles and practices of good Corporate Governance.




Disclosure of Corporate Governance

D.5.1 The Directors should include in the Company’s Annual Report a Corporate Governance Report, setting out the manner and extent to which the Company has complied with the principles and provisions of this Code.

This Report from page 124 to 161 sets out the manner and extent to which Singer (Sri Lanka) PLC has complied with the principles and provisions of the Code.



SHAREHOLDERSE. Institutional InvestorsE.1 Shareholder VotingMain PrincipleInstitutional shareholders have a responsibility to make considered use of their votes and should be encouraged to ensure their voting intentions are translated into practice.




Communication with Shareholders

E.1.1 A listed company should conduct a regular and structured dialogue with shareholders based on a mutual understanding of objectives. Arising from such dialogue, the Chairman should ensure the views of shareholders are communicated to the Board as a whole.

In order to avoid conflict of interest by nurturing the mutual understanding, the Board carries out dialogues with its shareholders at General Meetings. In this regard, the Annual General Meeting (AGM) of the Company plays a critical role. Voting of the shareholders is crucial in carrying a resolution at the AGM. The Chairman who plays the role of the agent and communicates the views and queries of the shareholders to the Board and the Key and Senior Management in order to ensure that the views are properly communicated to the Company.

Shareholders are provided with Quarterly Financial Statements and the Annual Report, which the Company considers as its principle communication with them and other stakeholders. These reports are also available on the Company’s website – www.singersl.com and are provided to the Colombo Stock Exchange.

Any information that the Board considers as price sensitive is disseminated to the shareholders as necessary.

E.2 Evaluation of Governance DisclosuresCorporate Governance Principle



Due weight by Institutional Investors

E.2.1 When evaluating Companies’ governance arrangements, particularly those relating to Board structure and composition, institutional investors should be encouraged to give due weight to all relevant factors drawn to their attention.

The Institutional Investors are at liberty to give due weight to matters relating to the Board structure and composition, when they consider resolutions relating to Board structure and composition.



F. Other InvestorsF.1 Investing/Divesting DecisionCorporate Governance Principle



Individual Shareholders

F.1 Individual shareholders, investing directly in shares of companies should be encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions.

Individual investors are encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions.

Individual Shareholder Voting

F.2 Individual shareholders should be encouraged to participate in General Meetings of companies and exercise their voting rights.

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

SECTION BThis section covers the Company’s extent of adherence to the requirements of the Continuous Listing Requirements Section 7.10 on Corporate Governance Rules for Listed Companies issued by the Colombo Stock Exchange. This reflects the Company’s level of conformity to CSE’s Listing Rules which comprise the following fundamental principles:

z Non-Executive Directors z Independent Directors z Disclosures Relating to Directors z Remuneration Committee z Audit Committee

The following table presents the details of the Company’s compliance with Section 7.10 and Section 9 of the CSE Listing Rules on Corporate Governance as at 31st December 2016:

Section Rule No. Corporate Governance Rule Details of Compliance

Board of Directors

Non-Executive Directors

7.10.1 Number of Non-Executive Directors – One-third of the total number of Directors, subject to a minimum of two.

The Board of Directors comprises nine Directors, eight of whom are Non-Executive Directors.

Independent Directors

7.10.2 (a) Number of Independent Directors – One-third of Non-Executive Directors, subject to a minimum of two.

Three of the Non-Executive Directors are independent.

7.10.2 (b) Each Non-Executive Director should submit a declaration of independence/ non-independence.

Independent Non-Executive Directors have submitted declarations confirming their independence.

Disclosures relating to Directors

7.10.3 (a) Names of Independent Directors should be disclosed in the Annual Report.

Please refer pages 178 to 179.

7.10.3 (b) The Board shall make a determination annually as to the Independence or Non-Independence of each Non-Executive Director.

Not Applicable.

7.10.3 (c) A brief résumé of each Director should be included in the Annual Report including the area of experience.

Please refer Board of Directors section of this report on pages 19 to 23.

7.10.3 (d) Provide brief resume of any new Director appointed to the Board.

Please refer Board of Directors section of this report on pages 19 to 23.




Remuneration Committee

Composition 7.10.5 (a) Number of Independent Non-Executive Directors in the Committee to be –

z a minimum of two (where a Company has only two Directors on the Board), or

z in all other instances majority of whom to be independent.

The Committee comprises four Non-Executive Directors, three of whom are Independent Non-Executive Directors.

Separate Committee to be formed for the Company or the Listed Parent’s Remuneration Committee to be used.

A separate Remuneration Committee was formed for the Company.

Chairman of the Committee to be a Non-Executive Director.

The Board of Directors has appointed a Non-Executive Director as the Chairman of the Committee.

Function 7.10.5 (b) Function of the Committee. The Remuneration Committee Report sets out the functions of the Committee.

Disclosure in the Annual Report

7.10.5 (c) The Annual Report should set out – z Names of Directors comprising the Remuneration Committee

z Statement of Remuneration policy z Aggregate remuneration paid to Executives and Non-Executive Directors

Please refer page 170.

Please refer Remuneration Committee report on page 170.

Please refer Note 40.3 page 249.

Audit Committee

Composition 7.10.6 (a) Number of Independent Non-Executive Directors in the Committee to be –

The Committee comprises three Directors who are Independent Non-Executive Directors.

z a minimum of two (where a Company has only two Directors on the Board), or

z in all other instances majority of whom to be independent.

Separate Committee to be formed for the Company or the Listed Parent’s Committee to be used.

A separate Audit Committee was formed for the Company.

Chairman of the Committee to be a Non-Executive Director.

The Board of Directors has appointed an Independent Non-Executive Director as the Chairman of the Committee.

Chairman or one member of the Committee to be a member of a recognised professional accounting body.

The Chairman of the Committee is a member of a recognised professional accounting body.

CEO and CFO to attend Committee meetings, unless otherwise determined by the Audit Committee.

Group CEO attends by invitation.CFO attends by invitation.

Function 7.10.6 (b) (b) Function of the Committee. The Audit Committee Report sets out the functions of the Committee.





7.10.6 (c) z Names of Directors comprising the Audit Committee

z The Audit Committee shall make a determination of the independence of the Auditors and disclose the basis for such determination

z The Annual Report shall contain a Report of the Audit Committee in the prescribed manner.

Please refer page 169.

Please refer Audit Committee Report on page 169.

Please refer Audit Committee report on page 169.

Related Party Transactions Review Committee

Composition 9.2.2 Combination of non-executive directors and independent non-executive directors

The Committee comprises of three Independent Non-Executive Directors, one Non-Executive Director and one Executive Director

9.2.3 Separate Committee to be formed for the Company or the Listed Parent’s Committee to be used.

A separate Related Party Transactions Review Committee was formed for the Company.

Function of the Committee. The Related Party Transactions Review Committee Report sets out the functions of the Committee.


9.3.2. (c) The Annual report shall contain a Report of the Audit Committee in the prescribed manner.

Please refer Related Party Transactions Review committee report on page 172.

Board, Audit Committee, Remuneration Committee and Related Party Transactions Review Committee AttendanceThe number of meetings of the Board, Audit Committee, Remuneration Committee and Related Party Transactions Review Committee and individual attendance by members are as follows:

Number of Meetings, Circular Resolutions and Dates

Board Meetings 04

Audit Committee Meetings 06

Remuneration Committee Meetings 02

Nomination Committee Meetings 02

Related Party Transactions Review Committee Meetings 01

Circular Resolutions Passed 32

Board Meetings Audit Committee Meetings Remuneration Committee Meetings Nomination Committee Meetings Related Party Transactions Review Committee Meetings

25th February 2016 18th February 2016 18th February 2016 18th February 2016 15th November 2016

05th May 2016 03rd May 2016 18th July 2016 3rd May 2016

31st August 2016 20th May 2016

15th November 2016 15th July 2016

26th July 2016

03rd November 2016



Individual AttendanceName Directorship Status Board Audit Committee Remuneration

CommitteeNomination Committee

Related Party Transactions Review Committee

Dr. S. Kelegama – Chairman Independent Non-Executive

4/4 5/6 2/2 2/2 N/A

Mr. D.T.R. De Silva Independent Non-Executive

4/4 6/6 2/2 2/2 1/1

Mr. D. Sooriyaarachchi Independent Non-Executive

4/4 5/6 2/2 N/A 1/1

Mr. H.A. Pieris – Group CEO (Alternate Director – Mr. L.N.S.K. Samarasinghe)

Executive 4/4 N/A 2/2 2/2 1/1

Mr. G.J. Walker (Alternate Director – Mr. M.H. Wijewardene)*

Non-Executive 2/4 N/A 2/2 N/A 1/1

Mr. P.J. O’Donnell (Alternate Director – Mr. K.K.L.P. Yatiwella)**

Non-Executive 4/4 N/A N/A N/A N/A

J. Hyun (Alternate Director Mr. A.S. Paranavitane )***


Mr. S.H. Goodman (Alternate Director Mr. H.A.P.S. Perera)**** – Appointed in March 2016


Mr. G.M. Gellecanao – Appointed in May 2016 Non-Executive 2/2 N/A N/A N/A N/A

Mr. J.A. Setukavalar – Represented Singer Finance (Lanka) PLC

Independent Non-Executive

N/A N/A N/A N/A 1/1

*Alternate Director – Mr. M.H. Wijewardene attended two meetings.**Alternate Director – Mr. K.K.L.P. Yatiwella attended four meetings.***Alternate Director – Mr. A.S. Paranavitane attended one meeting.**** Alternate Director – Mr. H.A.P.S. Perera attended one meeting.



RISK MANAGEMENT


Building a Stronger Organisation

Risk AssessmentThe Board carries out a robust assessment of the Company’s

principal risks, their impact and means of addressing them.

Risk CultureWe follow defined and established risk

management and internal control procedures to ensure our growth is supported by a developed

and embedded risk management culture.

Internal ControlsOur internal processes and

controls enable us to manage significant strategic and

operational risks effectively.


Protecting OurselvesRisk is an integral part of any business. It is a matter of identifying the sources of risk, their likelihood of occurrence and impact, and then developing a comprehensive framework to address them. Such a systematic approach also raises a few questions, like determining one’s appetite for risk and establishing thresholds, bearing in mind that risk and return go hand in hand. So it’s a question of striking a balance and managing risk.

Over the years, Singer has developed a set of clear risk management objectives and a well-established strategy to deliver them, through core risk management processes.

At a strategic level, our risk management objectives are – z To identify the Company’s significant risks. z To formulate the Company’s Risk Appetite and ensure that business profile and the plans are consistent with it.

z To optimise risk/return decisions by taking them as closely as possible to the business, while establishing strong and independent review and challenge structures.

z To ensure that business growth plans are properly supported by effective risk infrastructure.

z To manage risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions.

z To help executives improve the control and co-ordination of risk taking across the business.

The Company’s approach is to provide direction on understanding the principal risks to achieving the Company strategy; establishing risk appetite; and establishing and communicating the risk management framework. The process is then broken down into five steps: identify, assess, control, report and manage/challenge.

The Company’s risk management strategy is broadly unchanged from 2011.

The Risk Management ProcessDuring the year under review, the Company continued to review and improve its risk management function in line with its Risk Management Objectives.

Steps Activities

Data Collection and Analysis

z The management information system (MIS) to pick up relevant business-critical information.

z Review and validation before it is submitted to senior management.

Assess z Agree and implement measurement and reporting standards and methodologies.

Control z Establish key control processes and practices, including limit structures, impairment allowance criteria and reporting requirements.

z Monitor the operation of the controls and adherence to risk direction and limits.

z Provide early warning of control or appetite breaches.

z Ensure that risk management practices and conditions are appropriate for the business environment.

Report z Interpret and report on risk exposures, concentrations and risk-taking outcomes.

z Interpret and report on sensitivities and Key Risk Indicators.

z Communicate with relevant parties.

Manage z Review aspects of the Company’s risk profile.

z Assess new risk-return opportunities. z Advise on optimising the Company’s risk profile.

z Review and challenge risk management practices.

Internal, External and Corporate Audit Internal, external and corporate audits are crucial in the risk management process. Reports on the Group’s operational and financial systems by these audits are reviewed and action taken to manage any risks that have been identified. Significant audit findings by the Auditors are immediately reviewed by the Board appointed Audit Committee.

The Group’s system of internal controls covers all policies and procedures, enabling significant strategic and operational risks to be managed.

The internal audit team meets with the Finance Department every month to share information and exchange perspectives. Issues identified at these discussions as being a potential risk are immediately subjected to a fuller investigation.

RISK MANAGEMENT


Risk Mitigation Activities

1. Macroeconomic FactorsEconomic EnvironmentThe Group’s business operations are sensitive to economic conditions and in particular to levels of consumer spending. Any delay in economic recovery could affect consumer expenditure and therefore our revenue. There is an on going risk to our business in terms of increases in the cost of key products.

z A diversified portfolio of products and brands with a wide range of offers targeted at different consumer groups.

z A Broad geographic spread. z The Board and the Senior Management team regularly review the impact of the economic conditions on the Group’s budget and strategic plans.

z Emphasise excellent quality, service, value for money and up-to-date product offers, we aim to broaden our appeal to customers.

z Renewal and transformation plan to improve our business performance irrespective of macroeconomic factors strategy and business planning which takes into account varying economic scenarios.

Market Specific Characteristics

Seasonality – A substantial proportion of revenue and operating profit is generated during the fourth financial quarter, which includes the Christmas and New Year season. Adverse trading in this relatively short period is likely to impact significantly the full year’s results.

z Financial planning takes into account expected peaks and troughs during the year and the business is run accordingly.

z Increasing the proportion of internal promotion and various offers, which gives a regular stream of income over the course of the year.

Price Deflation – Price deflation has been a common feature across most electrical goods categories for a number of years, primarily driven by technological advances and improved production efficiencies.

z Effective launches of new technologically evolved products as it becomes available to the market.

z Growth of services-related business to increase the number and value of non-product sales.

z Improve gross profit in renovated showrooms. z Control of stock and strong management of clearance and exit routes.

2. Competitor and Marketplace RiskCompetitionCompetitors reduce the Group’s market share and/or drive down margins in specific markets.

z Renovation and transformation plan is improving our showrooms, cost structure and service across all channels.

z Continuing development of strong international brands. z Ensuring our prices offer good value, including a customer price index. z Building stronger relationships with suppliers. z Expand and improve after-sales service network.

Changing Technology/Consumer PreferencesRisk that we fail to capitalise on new technology or emerging trends to maximise revenues and fail to meet the expectations of customers.

z Strong supplier relationships. z Delivery of Customer Plan to respond to identified changes in technology. z Showroom renovation to take into account emerging trends in showroom layouts.

z Exciting product launches to make our showrooms the destination for the latest technology.

z Continued focus on ensuring an excellent range across all price points.

z Customer service training for sales staff and product workshops to improve product knowledge.

z A loyalty programme that encourages customers to stay with the Singer brand and its products.

RISK MANAGEMENT



Product RiskProducts could turn out to be defective or inappropriate for the market in terms of price, functionality or perceived value. They are also liable to be rendered obsolete. In such instances, the Company is exposed to market risks arising from consumer dissatisfaction and consequent rejection of its products.

z The Company’s plant and machinery are rigorously maintained and upgraded whenever necessary.

z Established quality control measures as well as product testing through sampling are performed on all product lines.

z The in-house Quality Surveillance Unit tests samples of new products or components from external suppliers before order placement.

3. Operational RiskPeopleA failure to attract, retain, develop and motivate the best employees across all our showrooms and head office may impact our ability to deliver our operational and strategic objectives. Labour issues can affect product quality, output, market share as well as the Company goodwill and reputation.

z Company endeavours to recruit the best people with the right skills at all times. z Offer training and development programmes to ensure that we retain them. z Remuneration packages are benchmarked to ensure that they remain competitive, including incentive arrangements where appropriate.

z Collective agreements are in place with the labour unions to maintain an equitable balance between the interests of employer and employee and provide a basis for negotiations when issues arise.

z Procedures have also been laid down in responding to grievances and staff complaints.

Fraud, Compliance and Internal ControlsAs the business grows in size and geographical scope, the potential for fraud and dishonest activity by our suppliers, customers and employees increase.

z Clear behavioural guidance given to employees through operational manuals.

z Appropriate procedures and controls set out and audited across the business to reduce fraud risks; Internal Audit and Corporate Audit undertake detailed investigations into all business areas and report their findings to the Audit Committee.

z Regular update and new introduction of relevant policies and procedures. z Whistle-blower policy. z Periodical review of the internal controls by outsourced consultants.

IT Systems and InfrastructureAny significant failure in the IT processes of our retail operations would impact our ability to trade.

z The Company has installed comprehensive network security. z Regular backups of all databases and mission-critical information. z Off-site disaster-recovery system. z Regular follow-up review are conducted on recommendations given by external IT risk assessment team.

z Investment in IT system improvements and innovating to improve business efficiency.

z Extensive controls and reviews to maintain integrity and efficiency of IT infrastructure and data.

RISK MANAGEMENT



Supply ChainTimely distribution of products to our retail outlets is crucial. We work with a number of key overseas and local suppliers our business, could be at risk of both interruption of supply and of failure of such key suppliers and service providers.

z Regular review of distribution plan. z Monthly operational meeting to review the forecast, level of inventory and procurement requirement etc.

z Long-standing relationships with many suppliers help to minimise risks in this area.

z Reduce dependability on a single service provider.

Asset RiskRisks associated with the physical assets of the Company include the destruction, loss or theft as well as technical and other defects.

z All such assets are insured against all identifiable risks. z The relevant insurance policies are subject to a comprehensive annual review, with modifications made as deemed necessary.

z Procedures in place to control technical and other defects include purchasing from reputable suppliers who comply with acceptable standards on product and service quality; active, standards-based (ISO 9001) quality assurance at all manufacturing facilities, distribution centres and service centres; and the maintenance of adequate spare parts.

z Provisioning is also made against obsolete inventory, warranty claims and doubtful debtors. Warranty costs are shared with the Company’s partners. The extended warranty cost is comprehensively covered by a well-reputed insurance company.

4. Financial RiskLiquidity RiskInadequate liquidity can have an adverse impact on ongoing operations, marketing and investment in new products and brands.

z The liquidity position of the Company is regularly reviewed and reported to the Board.

z Projected net borrowings are covered by committed banking facilities and a healthy industry-related gearing ratio is maintained.

z The Company’s good relationships and facilities with many banks and other sources of finance ensure reliable access to funds.

Interest Rate RiskIncrease in interest rates will have an adverse impact to the profitability.

z Fluctuating interest rates are minimised by striking a balance between short and long-term borrowings.

z Floating-rate debentures are sometimes issued to capitalise on existing interest rates.

z The Company’s strong brand strength and financial dependability help ensure ready access to funds at attractive rates.

Credit RiskThe Company is exposed to credit risk in the form of financial loss when a customer reneges on a hire purchase agreement. Such exposure cannot be avoided entirely since consumer credit is an integral part of the Company’s retail operations and is used to encourage and enable consumers to purchase.

z Branch Managers act as del credere agents. z Management undertakes a thorough appraisal of the client before credit is extended.

z Credit appraisals of dealers are undertaken to ascertain whether they have the capacity to pay for goods ordered; in doubtful cases, a bank guarantee or security deposit is requested.

z Details of customers and dealers who have defaulted on payments are recorded in a database, accessible to those staff whose duty is to undertake credit evaluations of customers and dealers.

z Risk-adjusted pricing. z A fully equipped and trained Credit Supervision team is available.

RISK MANAGEMENT



Investment RiskWhile investment in new products and geographical expansion is vital for the Company to remain competitive, it raises fresh risks.

z Appraisals are carried out before an investment is made. z A due diligence study ensures that projected budgets and forecasts can be met and examines the impact of technological and other factors on the investment decision.

z Post-investment analysis and performance tracking is in place including financial and customer measures through balance scorecard.

5. Other RiskGovernance RiskThese are risks to the Company arising from non-compliance with relevant health, safety and environmental statutes and leading to loss of reputation and goodwill, possible litigation and financial loss.

z Preventive action has been designed by the Company’s Legal Department. z Frequent internal, external and corporate audits-monitor compliance. z The Company’s management culture stresses ethical performance in this area. International best practices are followed wherever possible.

z Quality surveillance helps protect the Company against litigation and warranty claims. Provisioning ensures that such claims do not have an adverse impact on operational and other aspects of the Company.

z Detailed, established procedures to ensure product integrity. z Group Compliance Officer reviews reports forwarded to the Audit Committee to ensure compliance with laws and policies.

Socioeconomic RisksSri Lanka’s socioeconomic and political environment has an impact on the consumer durables business as well as the investment climate.

z Management reviews prices in comparison to inflation and negotiates with suppliers for lower prices and credit terms.

Environment and Climate ChangeAside from the general risks to humankind posed by climate change, a specific business risk to which the Company is exposed concerns possible shortages of essential raw materials, such as wood for the manufacture of furniture and risks of environment pollution due to waste material.

z The use of alternative materials mitigates this risk while simultaneously opening up new marketing opportunities.

z Collaborate with Central Environmental Authority to assist in E-waste project. z All factories, warehouse and service centres complied with the requirement of environment regulations.

z Introduction of energy saving appliances.

CaveatAlthough the key sources of risk and their mitigation have been discussed in this document, no assurance can be given that the Company is fully-protected against all possible risks. As noted in the opening paragraph, the best that can be achieved is reasonable management of risks through a sound operational framework that identifies, evaluates and mitigates the negative impacts in a timely manner at multiple levels.

z The Company is confident that all material risk factors have been adequately assessed and managed to ensure the uninterrupted and profitable continuance of the business.

RISK MANAGEMENT

P:169Singer (Sri Lanka) PLC ANNUAL REPORT 2016 AUDIT COMMITTEE REPORT

Preamble The Committee is empowered to review and monitor the financial reporting process of Singer Group so as to provide additional assurance on the reliability of the Financial Statements through a process of independent and objective review. As such, the Audit Committee acts as an effective forum in assisting the Board of Directors in discharging their responsibilities on ensuring the quality of financial reporting and related communications to the shareholders and the public.

Composition of the Committee As at year-end, the Audit Committee comprised of three Independent Non-Executive Directors and Chaired by an Independent Non-Executive Director. The profiles of the members are given on pages from 19 to 23.

Audit Committee Members Mr. Ranil De Silva – Chairman Dr. Saman Kelegama – Member Mr. Deepal Sooriyaarchchi – Member

The Head of Risk Management functions as the Secretary to the Committee. The Finance Director/Compliance Officer, Audit Staff, Representatives of External Auditors and when necessary, the Chairman/the Group Chief Executive Officer and relevant operational Directors and Managers attend the meetings by invitation.

Responsibilities and Duties of the Committee The Audit Committee’s authority, responsibilities and specific duties have been formalised through an Audit Committee Charter. By this, the Audit Committee is empowered among other things, to examine any matters relating to the financial affairs of the Singer Group and to review the adequacy of the internal control procedures, coverage of internal and external audit programmes, disclosure of accounting policies and compliance with statutory and corporate governance requirements.

Financial ReportingThe Committee along with the Board, Internal Audit and External Audit reviewed the Interim Financial Statements to ensure compliance with mandatory, statutory and other regulatory requirements laid down by the authorities prior to publication.

Internal Audit, Risk and ControlThe Committee also provides a forum for the impartial review of the reports of internal and external audits and to take into consideration findings and recommendations stated therein relating to significant business risks and control issues.

The Committee reviewed the Group audit plan for the year and agreed its budget and resource requirements. It reviewed interim and year-end summary reports and management’s

responses. The Committee carried out an evaluation of the performance of the internal audit function and was satisfied with the effectiveness of the function.

The Audit Committee also reviewed the Corporate Audit Reports of the Corporate Internal Auditors of Singer Asia Limited. The Corporate Auditors carry-out audits every year.

The Committee reviewed the Compliance Officer’s Report on the Singer Group’s compliance with the applicable laws and regulations, including any internal policy codes of conduct of its employees.

Meetings of the CommitteeDuring the year, six Audit Committee meetings were held to discuss the reports of the Internal and External Auditors and Interim Financial Statements. The Financial Statements for the year ended 31st December 2016 was also discussed at the meeting held on 21st February 2017. The minutes of the meetings were tabled at the meetings of the Board of Directors for information and necessary action. The attendance of the audit committee meetings held during the year under review was as follows:

16th February

2016

3rd June 2016

20th June 2016

15th July

2016

26th July

2016

03rd November

2016

Mr. Ranil De Silva √ √ √ √ √ √

Dr. Saman Kelegama √ √ – √ – √

Mr. Deepal Sooriyaarchchi √ – √ – √ √

External Audit The External Audit approach and scope was reviewed and discussed by the Committee with the External Auditors and management prior to the commencement of the audit. The External Auditors informed the Committee on an on-going basis regarding matters of significance that were pending resolution. Before the conclusion of the audit, the Committee met with the External Auditors without management being present. External Auditors discussed the audit issues with the Audit Committee and management and to agree on Audit issues.

The Audit Committee recommended to the Board of Directors that Messrs KPMG, Chartered Accountants be reappointed as the External Auditors for the year ending 31st December 2017, subject to the approval of the shareholders at the Annual General Meeting which will be held on 31st March 2017.

Ranil De SilvaChairman – Audit Committee


P:170 Singer (Sri Lanka) PLC ANNUAL REPORT 2016REMUNERATION COMMITTEE REPORT

The Remuneration Committee consists of the three Non-Executive Independent Directors and one Non-Executive Director. The Committee is chaired by Non-Executive Director and President/Chief Executive Officer of Singer Asia Limited. The Finance Director acts as the Secretary to the Committee. The Group Chief Executive Officer and the Finance Director assist the Committee by providing the relevant information and participate in its deliberations.

The scope of the Committee is to consider and recommend to the Board, remuneration and perquisites of the Chairman, Group Chief Executive Officer, Independent Directors and the Executive Directors of the Board of the Company including Alternate Directors and approve recommendations made by the Group Chief Executive Officer and the Corporate Office of Singer Asia Limited. Singer Asia Limited, is the Intermediate Parent of the Company.

The Committee also reviews the policies pertaining to the remuneration and perquisites of the Executives of the Company.

A primary objective of compensation packages is to attract and retain a highly qualified and experienced workforce, and reward performances. These compensation packages should provide compensation appropriate for each business within the Group and commensurate with each employee’s level of experience and contribution, bearing in mind the business performance and long-term shareholder returns.

The Committee meets from time to time and reviews the Group’s remuneration and fee structures to assure alignment with strategic priorities and with compensation offered by competitor companies.

The Committee met twice during the period.

I wish to thank the members of the Committee for their valuable contributions to the deliberations of the Committee.

I also wish to thank Mr. Asoka Pieris for helping the Committee in its deliberations by providing the necessary information.

Gavin J. WalkerChairman – Remuneration Committee.


P:171Singer (Sri Lanka) PLC ANNUAL REPORT 2016 NOMINATION COMMITTEE REPORT

Role of the Committee The main role and responsibilities of the Committee are to propose a suitable charter for the appointment and reappointment of Directors to the Board and to act in accordance with such Charter in proposing appointments and reappointments. Such Charter shall cover areas such as qualifications, competencies, independence, relationships which have potential to give rise to conflict vis-a-vis the business of the Company etc.

Further, the Committee reviews the structure, size, composition and competencies (including the skills, knowledge and experience) of the Board and makes recommendations to the Board with regard to any changes if necessary.

Composition and Quorum The Committee comprises two Non-Executive Independent Directors together with the Chief Executive Officer of the Group. The Chairman of the Committee is a Non-Executive Independent Director appointed by the Board.

Secretary to the Board functions as the Secretary to the Committee.

Meetings and ActivitiesThe Committee met twice during the year under review.

Re-election of Directors at the Annual General MeetingThe Committee has recommended Mr. Stephen Goodman be reappointed a Director for a period of one year from the date of the Annual General Meeting, notwithstanding him having attained the age of 72 years on 28th May 2016, subject to the due compliance of the provisions of the Companies Act No. 07 of 2007.

In terms of Article 24 (4) of Article of Association of the Company, Mr. John Hyun retires by rotation. The Committee recommended to the Board that Mr. John Hyun be proposed for re-election to the Board at the Annual General Meeting to be held on 31st March 2017.

In terms of Article 24 (10) of the Articles of Association of the Company, Mr. Gelmart Gellecanao, was appointed as a Director of the Company on 5th May 2016. Mr. Gelmart Gellecanao notified the Company that he will not stand for re-election at the forthcoming Annual General Meeting.

Mr. Sujeewa Perera was appointed as an Alternate Director to Mr. Stephen Goodman with effect from 5th May 2016.

ConclusionI wish to thank and record my appreciation to all members who served in the Committee during the year and for their contribution to the deliberations of the Committee.

Dr. Saman Kelegama Chairman – Nomination Committee


P:172 Singer (Sri Lanka) PLC ANNUAL REPORT 2016RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

Composition of the Related Party Transactions Review CommitteeThe Board established the Related Party Transactions Review Committee (RPTRC) for Singer Group of Companies with effect from 25th February 2016 in terms of the Code of Best Practice on Related Party Transactions issued by the Securities and Exchange Commission of Sri Lanka (the ‘Code’) and Section 9 of the Listing Rules of the Colombo Stock Exchange (the ‘Rules’). The establishment of a RPTRC with effect from 1st January 2016 is mandatory in terms of the Code. The Board Related Party Transactions Review Committee comprises four Non-Executive Directors and one Executive Director. The following Directors serve on the Committee.

Mr. Deepal Sooriyaarachchi – Chairman (IND)Mr. Ranil De Silva (IND)Mr. Gavin Walker – Non-Executive Director (NED)Mr. H.A. Pieris (ED)Mr. J.A. Sethukavalar (IND) [Represents Singer Finance (Lanka) PLC]

The above composition is in compliance with the provisions of the Code regarding the composition of the Related Party Transactions Review Committee. Brief profiles of the members are given on pages 19 and 23 of the Annual Report.

The Finance Director functions as the Secretary to the Board Related Party Transactions Review Committee.

MeetingsDuring the year 2016, the Committee met once. Attendance by the Committee Members at this meeting is given in the table on page 161 of the Annual Report.

Role and ResponsibilitiesThe mandate of the Committee is derived from the Code & the Rules and includes the following:

1. Developing a Related Party Transactions Policy consistent with the provisions of the Code and the Rules for adoption by the Board of Directors of the Company and its listed Subsidiaries.

2. Reviewing in advance all proposed Related Party Transactions (‘RPTs’) in compliance with the provisions of the Code.

3. Advising the Board on making Immediate Market Disclosures and Disclosures in the Annual Report where necessary, in respect of RPTs, in compliance with the provisions of the Code and the Rules.

Policies and Procedures Adopted by the RPTRC for Reviewing Related Party Transactions (RPTs)1. Relevant information to capture RPTs are fed into the

Company Data Collection System.

2. All Officers concerned are informed of the applicable regulatory requirements relating to the reporting of RPTs.

3. Key Management Personnel (KMPs) and their Close Family Members (CFMs) are identified half yearly together with their NIC numbers and business registration numbers. This information is in the system.

4. Systems are updated with KMP and their CFM details on a half yearly basis or as and when the need arises in the event of a material change.

5. Data is extracted from the system, verified and validated.

6. All Managers are advised to report RPTs to the Finance Director who has been identified as the Focal Point, for this purpose.

7. Data is shared with the Finance Director to meet the regulatory requirements if required.

Review Function of the CommitteeReview of the relevant Related Party Transactions was done commencing 15th November 2016. Further it has communicated its observations to the Board on the RPTs published in the Note 40 to the Financial Statements.

Reporting to the BoardThe minutes of the RPTRC meetings are tabled at the Board meetings enabling all Board members to have access to same.

On behalf of the Related Party Transactions Review Committee. I wish to thank members of the Committee for their valuable contribution to the deliberations of the Committee.

Deepal SooriyaarachchiChairman – Related Party Transactions Review Committee


NOTES TO THE FINANCIAL STATEMENTS

Financial Calendar – 2016Annual Report 2015 Approved 25th February 2016

Forty First Annual General Meeting 31st March 2016

Final dividend 2015 Paid 11th April 2016

Proposed Financial Calendar – 2017For the three months ending 31st March 2017 (Unaudited) May 2017

For the six months ending 30th June 2017 (Unaudited) August 2017

For the nine months ending 30th September 2017 (Unaudited) November 2017

For the twelve months ending 31st December 2017 (Unaudited)February 2018

Annual Report and Accounts for 2017 (audited) March 2018

Forty-Third Annual General Meeting March 2018

Interim Financial Statements in Terms of Rule 8.3 of the Colombo Stock ExchangeFor the three months ended 31st March 2016 (Unaudited) 5th May 2016

For the six months ended 30th June 2016 (Unaudited) 1st August 2016

For the nine months ended 30th September 2016 (Unaudited) 15th November 2016

For the twelve months ended31st December 2016 (Unaudited) 23rd February 2017

Annual Report and Annual General MeetingAnnual Report 2016 Approved 23rd February 2017

Forty-Second Annual General Meeting 31st March 2017

Final Dividend 2016 Payable16th March 2017

Singer (Sri Lanka) PLC Financial ReportsAnnual Report of the Board of Directors on the Affairs of the Company 174

Statement of Directors’ Responsibility 180

Independent Auditors’ Report 181

Statement of Profit or Loss and Other Comprehensive Income 182

Statement of Financial Position 183

Statement of Changes in Equity 184

Statement of Cash Flows 186

Notes to the Financial Statements 187

The Board of Directors of Singer (Sri Lanka) PLC has pleasure in presenting their Report on the affairs of the Company together with the Audited Financial Statements of Singer (Sri Lanka) PLC and the Audited Consolidated Financial Statements of the Group for the year ended 31st December 2016.

Review of the YearLetter from the Chairman (pages 6 to 9), the Group Chief Executive Officer’s Review (pages 10 to 17) and Review of Operations titled ‘Positioned to Lead’ (pages 32 to 59), describe the Company’s affairs and the Group’s business and mention important events that occurred during the year and up to the date of this Report. Bigger, Better, Stronger on pages 62 to 72 elaborates the financial results of the Company/Group. These reports together with the Audited Financial Statements reflect the state of the affairs of the Company/Group.

Principal ActivitiesThe Company is engaged in Retail and Wholesale Marketing, Financing, Assembling and Manufacturing and in Financial Services. The Company markets Consumer Electronics, Home Appliances, Mobile Phones, Personal Computers, Laptops, Furniture, Domestic and Industrial Sewing Machines, Agricultural Equipment, and provides Financing through Hire Purchase. In addition, the Company manufactures and sells Furniture, Water Pumps and assembles and sells Motor Cycles and Two Wheel Tractors. The Company also acts as a Bill Collection Agent for banks, Mobile service providers, National Water Supply and Drainage Board, Ceylon Electricity Board and is also a sub-agent for Western Union.

Independent Auditors’ ReportThe Independent Auditors’ Report on the Financial Statements is given on page 181 in this Annual Report.

Financial StatementsThe Financial Statements for the year ended 31st December 2016 are in accordance with the Sri Lanka Accounting Standards, SLFRSs/LKASs, issued by The Institute of Chartered Accountants of Sri Lanka and the requirements of Section 151 (and Section 153 for consolidated entity) of the Companies Act No. 07 of 2007.

The Financial Statements duly signed by the Directors are provided on pages 182 to 250 in this Annual Report.

Accounting PoliciesThe accounting policies adopted in preparation of the Financial Statements are provided in details in the Notes to the Financial Statements on pages 187 to 198. The Group has consistently applied the accounting policies as set out in Note 02 to all periods presented in these consolidated Financial Statements.

Property, Plant and EquipmentDuring the year under review, the Company and the Group invested a sum of Rs. 539,048,305/- (2015 - Rs. 293,140,509/-) and Rs. 778,292,600/- (2015 - Rs. 361,999,991/-).

Details of Property, Plant and Equipment and Intangible Assets and their movements are given in Notes 11 and 12 to the Financial Statements respectively. Details of freehold land and buildings are given in Note 11.17 to the Financial Statements.

Market Value of PropertiesThe freehold property of the Company is revalued by an Independent Qualified Valuer when there is a substantial difference between the fair value and the carrying amount of the freehold property. Group review its assets once in each Reporting date.

The most recent valuation was carried out as at 31st December 2016. The details of the valuation are given in Note 11.13 to the Financial Statements on page 207 in this Annual Report.

Investments During the year Company acquired the controlling stakes in Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC from its Parent Company Singer (Sri Lanka) BV [Now known as Retail Holdings (Sri Lanka) BV].

Movement in investments during the year is disclosed under Notes 13, 14 and 15 to the Financial Statements.

Directors’ ResponsibilitiesThe Statement of the Directors’ Responsibility is given on page 180.

Corporate GovernanceThe Company has complied with Corporate Governance rules laid down under the Listing Rules of Colombo Stock Exchange. The Corporate Governance Section on pages 124 to 161 describes the good Corporate Governance Principles adopted by the Company.

ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY


Profit and Appropriations 2016 2015

Rs. Rs.

Group Profit Before Tax for the Year Ended 31st December After Deducting All Expenses, Providing for Known Liabilities and Depreciation Amounts to 3,126,233,230 1,895,274,564

From this has to be Deducted the Income Tax Expense (768,476,891) (659,235,725)

Non-Controlling Interest (237,491,497) (83,126,428)

Making a Profit for the Year of 2,120,264,841 1,152,912,411

Total Other Comprehensive Income 43,080,535 (29,554,592)

Total Other Comprehensive Income – Non-Controlling Interest 1,929,832 (141,121)

To this has to be added a Balance Brought Forward from the Previous Year 1,502,574,620 929,650,601

And Adjustment Due to Realisation on Revaluation Surplus 20,356,143 12,778,068

Adjustment due to Acquisition of NCI 8,280,491 –

Leaving a Total Available for Appropriation of 3,696,486,462 2,065,645,367

The Following Appropriations have been Proposed/Approved:

Transfer to General Reserve – (100,000,000)

Transfer from Investment Fund – 82,242,927

Transfer to Reserve Fund (22,042,737) (19,433,312)

Final Dividend Approved: Gross Rs. 8.80 Per Share (2015 – Rs. 4.20 Per Share) (1,101,844,568) (525,880,362)

Making a Total Appropriation of (1,123,887,305) (563,070,747)

Leaving a Balance on Group basis to be Carried Forward of 2,572,599,158 1,502,574,620

The Balance to be Carried Forward on Company only basis will be 440,368,294 386,898,365

Dividends In terms of Article 7 of the Articles of Association of the Company, a final dividend of Rs. 8.80 per share has been authorised by the Directors for the financial year ended 31st December 2016, for payment on 16th March 2017. The Board has reasonable grounds for believing that the Company would satisfy the Solvency Test immediately after the distribution is made and accordingly, the Board of Directors has signed the Certificate of Solvency in accordance with Section 57 of the Companies Act No. 07 of 2007.

The Board of Directors will obtain a Certificate of Solvency from the Auditors prior to the date of dispatch of the dividend payment.

Reserves (Excluding Non-Controlling Interest)Group reserves and retained equity as at 31st December 2016 amounted to Rs. 8,153.8 million vs Rs. 6,285.4 million as at 31st December 2015. The break-up and movement are shown in the Statement of Changes in Equity in the Financial Statements.

Stated CapitalAs per the terms of the Companies Act No. 07 of 2007, the Stated Capital of the Company was Rs. 626,048,050/- as at 31st December 2016 and was unchanged during the year. Details are given in Note 21 to the Financial Statements on page 220.

Commitments and ContingenciesCommitments and Contingent Liabilities of the Group are disclosed in the Note 37 to the Financial Statements.

Events after the Reporting PeriodNo circumstances have arisen since the Reporting date, which would require adjustment or disclosure except for the details given in Note 38 to the Financial Statement on page 244.

Statutory PaymentsThe declaration relating to statutory payments is made in the Statement of Directors’ Responsibility on page 180.

Board CommitteesAudit Committee Following are the names of the Directors comprising the Audit Committee of the Board:

Mr. Ranil De Silva – Chairman

Dr. Saman Kelegama

Mr. Deepal Sooriyaarachchi

Mr. M.M.C. Priyanjith – Secretary



The Report of the Audit Committee on page 169 sets out the manner of compliance by the Company in accordance with the requirements of the Rule 7.10 of the Listing Rules of the Colombo Stock Exchange on Corporate Governance.

Remuneration Committee Following are the names of the Directors comprising the Remuneration Committee of the Board:

Mr. Gavin Walker – ChairmanDr. Saman KelegamaMr. Ranil De SilvaMr. Deepal SooriyaarachchiMr. K.K.L.P. Yatiwella – Secretary

The Report of the Remuneration Committee on page 170 contains a statement of the remuneration policy. The details of the aggregate remuneration paid to the Executive and Non-Executive Directors during the financial year are given in Note 40.3 to the Financial Statements on page 249.

Board Nomination Committee Following are the names of the Directors comprising the Nomination Committee of the Board:

Dr. Saman Kelegama – Chairman Mr. Ranil De Silva Mr. Asoka PierisMr. A.C.M. Irzan – Secretary

The Report of the Board Nomination Committee on page 171 sets out the manner of compliance by the Company in accordance with the requirements of the Code of Best Practice on Corporate Governance issued jointly by The Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka.

Related Party Transactions Review Committee Following are the names of the Directors comprising the Board Related Party Transactions Review Committee:Mr. Deepal Sooriyaarachchi – Chairman

Mr. Gavin J. WalkerMr. Ranil De SilvaMr. Asoka PierisMr. K.K.L.P. Yatiwella – Secretary

The Board of Directors formed the Board-Related Party Transactions Review Committee to assist the Board in reviewing all related party transactions in accordance with the requirements of the Section 9 of the Listing Rules of Colombo Stock Exchange.

The Report of the Board-Related Party Transaction Review Committee on page 172 sets out the manner of compliance by the Company.

Directors’ Indemnity and InsuranceThe Directors and Officers of the Company and subsidiaries are covered in respect of Directors’ and Officers’ liability by the Insurance Policy obtained by the Ultimate Parent Company, as per the provisions in Article 44.

Issue of Listed DebenturesThe Company issued Twenty million (Rated A- (lka) by Fitch Rating Lanka Limited) unsecured senior redeemable debentures at the face value of Rs. 100/- each on 15th March 2016 to raise Rupees Two billion to be matured on 15th March 2019.

The objectives of the debenture issue of the Company were fully achieved as declared in the prospectus dated 02nd March 2016 within the stipulated timeframe as given in the table below.


Objective as per Prospectus dated 02nd March 2016 Amount allocated as per Prospectusdated 02nd March 2016 in Rs.

Current Status

To finance the term loan of USD 10 million (approximately Rs. 1,407.50 million) maturing in July 2016

Approximately Rs. 1,407.50 million

Was settled on 15th July 2016

To part finance the settlement of senior, listed, unsecured, rated redeemable debentures of Rs. 900 million maturing in May 2016

Approximately Rs. 592.50 million

Was settled on 30th May 2016

Details of outstanding debentures are given in Note 25.2 to the Annual Report.


Proposed Increase of Shares by Way of a Sub-DivisionThe Board of Directors of the Company recommended an increase of the number of Ordinary Shares of the Company by way of a subdivision subject to approval by Controller of Exchange and shareholders at the General Meeting schedule for 31st March 2017. The Board is of the view that such subdivision will facilitate greater liquidity of the shares.

Accordingly, it was proposed that the Company’s issued and fully-paid Ordinary Shares be subdivided by subdividing each issued Ordinary Share of the Company in the proportion of three (03) shares for every one (01) share held, thus increasing the number of existing issued Ordinary Shares of the Company from 125,209,610 to 375,628,830, without effecting an increase in the Stated Capital of the Company of Rupees Six Hundred and Twenty Six million Forty Eight Thousand and Fifty Only (Rs. 626,048,050).

Share Information and Substantial ShareholdingsThe distribution of shareholding, public holding percentage, market value of shares, twenty largest shareholders and record of scrip issues are given on pages 253 to 256.

Earnings per share, dividends per share, dividend pay out and net assets value per share are given in the Financial Highlights on page 5 of the Annual Report.

Directorate and ShareholdingThe names of the Directors of the Company as at 31st December 2016 and their brief profiles are shown on pages 19 and 23 and the Inner Back Cover.

The Board has received notice from Mr. Stephen Goodman that he has attained the age of 72 years on 28th May 2016. The Board has requested Mr. Stephen Goodman to continue to serve as a Director of the Company and Mr. Stephen Goodman has consented to remain on the Board subject to due compliance of the provisions of the Companies Act No. 07 of 2007 and has offered himself for reappointment to the Board.

The Board of Directors recommends that a resolution be passed by the shareholders declaring that the age limit stipulated in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. Stephen Goodman and that, notwithstanding him having attained the age of 72 years on 28th May 2016, he be appointed to the Board of Directors for a period of one year in terms of Section 211 of the Companies Act No. 07 of 2007.

In terms of Article 24 (4) of the Articles of Association of the Company, Mr. John Hyun retires by rotation and being eligible, is recommended for re-election.


In terms of Article 24 (10) of the Articles of Association of the Company, Mr. Gelmart Gellecanao was appointed as a Director of the Company on 5th May 2016. Mr Gelmart Gellecanao notified the Board that he will not stand for re-election at the forthcoming Annual General Meeting.

Directors place on record their appreciation for the invaluable service rendered by Mr. Gelmart Gellecanao during his tenure as a Director of the Company.

Mr. Sujeewa Perera was appointed as an Alternate Director to Mr. Stephen Goodman with effect from 5th May 2016.

Directors’ Interests and Interest Register Details of transactions with Director-related entities are disclosed in Note 40 to the Financial Statements on pages 247 to 249 and have been declared at the Board meetings, pursuant to Section 192 (2) of the Companies Act No. 07 of 2007.

Interest in Shares There were no share transactions by the Directors during the year in respect of the Company and the subsidiaries except for the following:

Singer Finance (Lanka) PLC (Subsidiary) Mr. L.N.S.K. Samarasinghe purchased 10,000 shares. Mr. K.K.L.P. Yatiwella purchased 15,000 shares.


Shareholdings of Directors and Chief Executive Officer at the beginning of the year and as at the end of the year are as follows:

Shareholding01.01.2016

No. of Shares

Shareholding31.12.2016

No. of Shares

Dr. S. Kelegama – –

Mr. H.A. Pieris 2,000 2,000

Mr. Ranil De Silva – –

Mr. Deepal Sooriyaarachchi – –

Mr Stephen Goodman* – –

Mr G.J. Walker** – –

Mr. P.J. O’Donnell – –

Mr. J.J. Hyun – –

Mr. Gelmart Gellecanao – –

Mr. M.H. Wijewardene – –

Mr. L.N.S.K. Samarasinghe 4,124 4,124

Mr. K.K.L.P. Yatiwella – –

Mr. Ajith P. Paranavitane – –

Mr Sujeewa Perera – –

* Mr. Stephen Goodman and family – Trust hold 12.54% (2015 - 11.54%) indirectly of the total issued shares of Singer (Sri Lanka) PLC.** Mr. G.J. Walker holds 3.79% (2015 - 3.79%) indirectly of the total issued shares of Singer (Sri Lanka) PLC.

None of the Directors hold Debentures of Singer Sri Lanka PLC.

Subsidiaries Directors shareholdings of the subsidiary companies as at the end of the year are as follows:

Shareholding ofSinger Finance

(Lanka) PLC31.12.2016

No. of Shares

Shareholding ofSinger Industries

(Ceylon) PLC31.12.2016

No. of Shares

Shareholding of Regnis

(Lanka) PLC 31.12.2016

No. of Shares

Dr. S. Kelegama – – –

Mr. H.A. Pieris 51,002 – 1,000

Mr. Ranil De Silva – – –

Mr. Deepal Sooriyaarachchi – – –

Mr Stephen Goodman – – –

Mr G.J. Walker – – –

Mr. P.J. O’Donnell – – –

Mr. J.J. Hyun – – –

Mr. Gelmart Gellecanao – – –

Mr. M.H. Wijewardene – – –

Mr. L.N.S.K. Samarasinghe 275,000 4,104 14,000

Mr. K.K.L.P. Yatiwella 15,000 – –

Mr. Ajith P. Paranavitane – – –

Mr Sujeewa Perera – – –

The names of Directors holding office at the end of the financial year in respect of subsidiaries and associate company are given on page 251.

Independence of Directors In accordance with Rule 7.10.2 (b) of the Colombo Stock Exchange (CSE) Listing Rules, Dr. S. Kelegama, Mr Ranil de Silva and Mr. Deepal Sooriyaarachchi who are Non-Executive Directors of the Company, have submitted a signed and dated declaration as per the specimen given in Appendix 7A of continuing listing requirements of CSE.

Although, Dr. S. Kelegama has not met the criteria mentioned in items (e) and (g) of Rule 7.10.4 of the CSE Listing Rules, the Board of Directors of the Company is of the opinion that –

(i) Dr. S. Kelegama is nevertheless independent on the following basis:

(a) His high standing in the society and business sector.

(b) His experience and knowledge particularly in the field of economics will continue to be an asset to the Company.

(c) He does not participate in executive decision-making. (Dr. S. Kelegama did not participate in these deliberations and decisions taken pursuant thereto as referred to above to avoid conflict of interests.)

Although, Mr. Ranil De Silva has not met the criteria mentioned in item (g) of Rule 7.10.4 of the CSE Listing Rules, the Board of Directors of the Company is of the opinion that –

(ii) Mr. Ranil De Silva is nevertheless independent on the following basis:

(a) His high standing in business sector.

(b) His experience and knowledge particularly in the accounting field will be an asset to the Company.

(c) He does not participate in executive decision-making. (Mr. Ranil De Silva did not participate in these deliberations and decisions taken pursuant thereto as referred to above to avoid conflict of interests.)



Independent Non-Executive DirectorsDr. S. KelegamaMr. Ranil De SilvaMr. Deepal Sooriyaarachchi

EmploymentThe number of persons employed by the Group and the Company as at 31st December 2016 was 2,436 (2015 – 1,905) and 1,698 (2015 - 1,584), respectively.

Details of human resource initiatives are given in the Employees’ section of the Sustainability Report.

Corporate GovernanceDirectors’ DeclarationsThe Directors declare that having considered all information and explanations made available to them that –(a) the Company complied with all

applicable laws and regulations in conducting its business.

(b) the Directors have declared all material interests in contracts involving the Company and refrained from voting on matters in which they were materially interested.

(c) the Company has made all endeavours to ensure the equitable treatment of shareholders.

(d) the business is a going concern with supporting assumptions or qualifications as necessary: and

(e) have conducted a review of internal controls covering financial, operational and compliance controls and risk management and have obtained a reasonable assurance of their effectiveness and successful adherence herewith.

The Corporate Governance Report is given under the governance section of this Annual Report.

DonationsDuring the year, donations amounting to Rs. 1,452,115 /- (2015 - Rs. 285,000/-) were made by the Group/Company. Donations made by the Group is given in Note 8.

AuditorsThe Financial Statements for the period under review were audited by Messrs KPMG, Chartered Accountants who offer themselves for reappointment for the ensuing year. The Directors propose the reappointment of Messrs KPMG, Chartered Accountants as Auditors of the Company for the year 2017 subject to the approval of the shareholders at the Annual General Meeting.

The audit and non-audit fees paid to the Auditors by the Company and Group are disclosed in Note 8 on page 201 in this Annual Report.

As far as the Directors are aware, the Auditors do not have any relationship or interest in the Company or its subsidiaries.

The Audit Committee reviews the appointment of the Auditor, its effectiveness and its relationship with the Company including the level of audit and non-audit fees paid to the Auditors. Details on the work of the Audit Committee are set out in the Audit Committee Report.

Notice of MeetingThe Forty-Second Annual General Meeting will be held at the Registered Office of the Company, No. 80, Navam Mawatha, Colombo 2, on Friday, 31st March 2017 at 10.00 am.

The Notice of the Annual General Meeting to the shareholders is given on page 260.

For and on behalf of the Board,


Asoka PierisDirector/ Chief Executive Officer

A.C.M. Irzan, FCMA (UK)Company SecretarySinger (Sri Lanka) PLC

Colombo23rd February 2017



STATEMENT OF DIRECTORS’ RESPONSIBILITYP:180 Singer (Sri Lanka) PLC ANNUAL REPORT 2016

The Companies Act No. 07 of 2007 requires Directors to ensure that the Company keeps accounting records, which correctly record and explain the Company’s transactions and prepare Financial Statements that give a true and fair view of the Company’s state of affairs as at the Reporting date and of the profit for the year. It further requires the Financial Statements of a Group to give a true and fair view of the state of affairs of the Group and the profit of the Group for the year.

The Directors are also required to ensure that the Financial Statements have been prepared and presented in accordance with the Sri Lanka Accounting Standards (SLFRS/LKAS) and the Rules of the Colombo Stock Exchange. They are also responsible for taking reasonable measures to safeguard the assets of the Company and in that context, to have proper regard to the establishment of appropriate systems of internal control with a view to the prevention and detection of fraud and other irregularities.

The Directors are of the view that these Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards (SLFRS/LKAS) as laid down by The Institute of Chartered Accountants of Sri Lanka.

The Directors endeavour to ensure that the Company maintains sufficient records to be able to disclose, with reasonable accuracy, the financial position of the Company and to be able to ensure that the Financial Statements of the Company meet with the requirements of the Companies Act, Sri Lanka Accounting Standards (SLFRS/LKAS) and the Rules of the Colombo Stock Exchange.

The Directors have a reasonable expectation, that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and therefore have continued to adopt the going concern basis in preparing the accounts.

As required by Section 56 (2) of the Companies Act and in terms of Article 7 (2) of the Articles of Association of the Company, the Board of Directors has authorised the payment of dividends, being satisfied based on information available to it that the Company would satisfy the Solvency Test after such distributions in accordance with Section 57 of the Companies Act No. 07 of 2007. Accordingly, the Board of Directors has signed the Certificate of Solvency. In respect of the authorised final dividend, the Company shall forward to CSE, prior to the date of dispatch of the dividend payment, a Certificate by the Auditors to the effect that the Company is able to satisfy the Solvency Test immediately after the distribution.

Messrs KPMG, Chartered Accountants, the Auditors of the Company, have examined the Financial Statements made available by the Board of Directors together with all relevant financial records, related data, minutes of shareholders' and Directors' meetings and express their opinion in their Report on page 181 of this Annual Report.

Compliance ReportBased on the Report of the Compliance Officer, the Directors confirm that to the best of their knowledge and belief, all taxes, duties and levies payable by the Company and its Subsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and its Subsidiaries and all other known statutory dues as were due and payable by the Company and its Subsidiaries as at the Reporting date have been paid or were provided.

By Order of the Board,

A.C.M. Irzan, FCMA (UK)Company SecretarySinger (Sri Lanka) PLC


INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF SINGER (SRI LANKA) PLCReport on the Financial StatementsWe have audited the accompanying financial statements of Singer (Sri Lanka) PLC, (the “Company”) and the consolidated financial statements of the Company and its subsidiaries (“Group”), which comprise the statement of financial position as at December 31, 2016, and the statement of profit or loss and other comprehensive income, statement of changes in equity and, statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes set out on pages 182 to 250 of the annual report.

Board’s Responsibility for the Financial Statements The Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at December 31, 2016, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory RequirementsAs required by section 163 (2) of the Companies Act No. 07 of 2007, we state the following:

a) The basis of opinion and scope and limitations of the audit are as stated above

b) In our opinion:

– We have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company,

– The financial statements of the Company give a true and fair view of its financial position as at December 31, 2016, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

– The financial statements of the Company, and the Group comply with the requirements of sections 151 and 153 of the Companies Act No. 07 of 2007.

Chartered AccountantsColombo

23rd February 2017


Consolidated Company

Year ended 31st December 2016 2015 2016 2015

Note Rs. Rs. Rs. Rs.

Revenue 3 46,924,143,940 38,710,833,576 39,267,202,832 33,311,395,189

Cost of Sales (32,038,078,065) (26,602,061,231) (27,849,435,276) (23,531,268,883)

Direct Interest Cost (735,691,136) (644,458,910) – –

Gross Profit 14,150,374,739 11,464,313,435 11,417,767,556 9,780,126,306

Other Income 5 793,742,928 240,934,743 431,704,582 296,622,470

Selling and Administrative Expenses (10,185,751,356) (8,727,065,659) (9,069,711,231) (7,918,679,029)

Operating Profit 4,758,366,311 2,978,182,519 2,779,760,907 2,158,069,747

Finance Cost 6.1 (1,601,925,418) (1,091,234,852) (1,619,789,209) (1,094,741,462)

Finance Income 6.2 129,352,848 116,686,914 338,358,270 164,053,234

Net Finance Cost 6 (1,472,572,570) (974,547,938) (1,281,430,939) (930,688,228)

Share of Profits of Equity Accounted Investees (Net of Income Tax) 7 – 2,042,497 – –

Value Added Tax on Financial Services (159,560,511) (110,402,514) (47,800,000) (31,700,000)

Profit Before Tax 8 3,126,233,230 1,895,274,564 1,450,529,968 1,195,681,519

Income Tax Expense 9 (768,476,891) (659,235,725) (346,085,301) (335,976,573)

Profit for the Year 2,357,756,339 1,236,038,839 1,104,444,667 859,704,946

Other Comprehensive IncomeItems that will not be Reclassified to Profit of Loss

Revaluation of Property, Plant and Equipment 11 250,153,762 – 250,153,762 –

Remeasurement of Defined Benefit Obligation 27 62,276,719 (41,244,046) 52,905,239 (40,252,056)

Tax on Other Comprehensive Income 9.4 (46,679,921) 11,548,333 (44,227,036) 11,270,576

Other Comprehensive Income for the Year, Net of Tax 265,750,560 (29,695,713) 258,831,965 (28,981,480)

Total Comprehensive Income for the Year 2,623,506,899 1,206,343,126 1,363,276,632 830,723,466

Profit Attributable to:

Owners of the Company 2,122,194,674 1,152,771,289 1,104,444,667 859,704,946

Non-Controlling Interests 235,561,665 83,267,550 – –

2,357,756,339 1,236,038,839 1,104,444,667 859,704,946

Total Comprehensive Income Attributable to:

Owners of the Company 2,386,015,402 1,123,216,698 1,363,276,632 830,723,466

Non-Controlling Interests 237,491,497 83,126,428 – –

2,623,506,899 1,206,343,126 1,363,276,632 830,723,466

Earnings per Share – Basic (Rs.) 10.2 16.95 9.21 8.82 6.87

The Notes on pages 187 through 250 form an integral part of these Financial Statements.


STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME



As at 31st December 2016 2015 2016 2015

Note Rs. Rs. Rs. Rs.

ASSETSProperty, Plant and Equipment 11 5,426,840,950 2,715,400,922 3,022,805,042 2,600,437,050 Intangible Assets 12 261,538,051 249,891,580 213,157,147 200,296,513 Investment in Subsidiaries 13 – – 2,455,179,989 992,241,596 Equity-Accounted Investees 14 – 54,831,464 – 48,000,000 Other Investments 15.1 17,061,300 17,061,300 929,110,000 616,303,000 Trade and Other Receivables 18.1 8,206,081,112 7,222,704,746 1,888,466,783 1,620,582,297 Deferred Tax Assets 26 124,061,153 144,913,478 147,270,286 124,492,574 Non-Current Assets 14,035,582,566 10,404,803,490 8,655,989,247 6,202,353,030

Inventories 16 9,540,327,961 6,919,158,792 7,793,495,049 6,677,026,859 Loans Due from Related Parties 17 – 65,890,881 1,378,074,696 1,122,638,197 Income Tax Receivables 31 – – 1,767,152 – Trade and Other Receivables 18.2 16,536,066,267 13,270,919,039 9,886,667,043 8,325,781,111 Amounts Due from Related Parties 19 – – 74,782,845 234,256,922 Deposits with Banks 81,157,679 85,344,286 – –Other Investments 15.2 515,255,581 606,011,463 – –Cash and Cash Equivalents 20.1 1,541,474,815 910,169,077 1,039,586,108 876,593,992 Current Assets 28,214,282,303 21,857,493,538 20,174,372,893 17,236,297,081

Total Assets 42,249,864,869 32,262,297,028 28,830,362,140 23,438,650,111 EquityStated Capital 21 626,048,050 626,048,050 626,048,050 626,048,050 Capital Reserves 22 1,057,964,069 857,580,019 1,065,542,144 857,580,019 Statutory Reserve 23 95,360,709 73,317,972 – –Revenue Reserves 24 6,374,443,725 4,728,454,981 4,242,212,861 3,612,778,716 Total Equity Attributable to Owners of the Company 8,153,816,553 6,285,401,022 5,933,803,055 5,096,406,785 Non-Controlling Interests 41 1,401,088,060 484,584,032 – –Total Equity 9,554,904,613 6,769,985,054 5,933,803,055 5,096,406,785 LiabilitiesInterest-Bearing Loans and Borrowings 25 8,381,884,933 8,091,906,878 6,000,000,000 6,250,000,000 Defined Benefit Obligations 27 651,143,995 486,465,251 476,754,466 457,181,699 Security Deposits 28 1,018,451,850 851,794,462 1,018,451,850 851,794,462 Other Financial Liabilities 35 454,012,592 645,007,596 – – Non-Current Liabilities 10,505,493,370 10,075,174,187 7,495,206,316 7,558,976,161

Trade and Other Payables 29 6,224,738,008 4,388,034,568 4,590,536,979 3,345,457,979 Deferred Revenue 30 438,989,246 318,459,902 438,989,246 318,459,902 Income Tax Payables 31 245,280,570 350,294,932 – 133,791,489 Dividends Payables 32 24,459,161 17,515,071 20,523,857 17,515,071 Amounts Due to Related Parties – Trade 34.1 – 454,202,566 876,918,882 771,744,188 Amounts Due to Related Parties – Non-Trade 34.2 119,738,131 122,214,032 119,738,131 125,239,131 Other Financial Liabilities 35 2,587,934,308 2,722,824,531 – – Interest-Bearing Loans and Borrowings 25 11,345,750,795 6,245,272,120 8,652,549,543 5,454,102,091 Bank Overdrafts 20.2 1,202,576,667 798,320,065 702,096,131 616,957,314 Current Liabilities 22,189,466,886 15,417,137,787 15,401,352,769 10,783,267,165 Total Liabilities 32,694,960,256 25,492,311,974 22,896,559,085 18,342,243,326 Total Equity and Liabilities 42,249,864,869 32,262,297,028 28,830,362,140 23,438,650,111

The Notes on pages 187 through 250 form an integral part of these Financial Statements.I certify that the Financial Statements of the Company comply with the requirements of the Companies Act No. 07 of 2007.

Lalith YatiwellaFinance Director

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

Dr. Saman Kelegama Asoka Pieris Director Director/Group Chief Executive Officer23rd February 2017Colombo

STATEMENT OF FINANCIAL POSITION P:183Singer (Sri Lanka) PLC ANNUAL REPORT 2016

Consolidated

Year ended 31st December Attributable to Equity Holders of the CompanyRevenue Reserves

Note Stated Reserve Investment Revaluation General Retained Total Non- TotalCapital Fund Fund Reserves Reserves Earnings Controlling

InterestRs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Balance at 1st January 2015 626,048,050 53,884,660 82,242,927 870,358,087 2,600,000,000 1,242,674,626 5,475,208,350 441,960,453 5,917,168,803 Realisation on Revaluation Surplus 22.1 – – – (12,778,068) – 12,778,068 – – – Transferred to/(from) during the Year – 19,433,312 (82,242,927) – 100,000,000 (37,190,386) – – –

Total Comprehensive Income for the Year

Profit for the Year – – – – – 1,152,771,290 1,152,771,290 83,267,550 1,236,038,839

Other Comprehensive IncomeRe-measurement of Defined Benefit Obligation

27 – – – – – (41,048,044) (41,048,044) (196,002) (41,244,046)

Related Taxes 9.4 – – – – – 11,493,452 11,493,452 54,881 11,548,333

Total Other Comprehensive Income for the Year – – – – – (29,554,592) (29,554,592) (141,121) (29,695,713)

Total Comprehensive Income for the Year – – – – – 1,123,216,698 1,123,216,698 83,126,428 1,206,343,126

Transactions with Owners of the Company, Recognised Directly in Equity

Distributions to Owners of the CompanyFinal Dividend – 2014 – – – – – (313,024,025) (313,024,025) – (313,024,025)Dividend Paid by Subsidiary Companies to Non-controlling interest – 2014 – – – – – – – (40,502,849) (40,502,849)

Total Distributions to Owners of the Company – – – – – (313,024,025) (313,024,025) (40,502,849) (353,526,874)

Balance at 31st December 2015 626,048,050 73,317,972 – 857,580,019 2,700,000,000 2,028,454,981 6,285,401,022 484,584,032 6,769,985,054

Realisation on Revaluation Surplus 22.1 – – – (20,356,143) – 20,356,143 – – – Transferred to/(from) during the Year – 22,042,737 – (22,042,737) – – –


Profit for the Year – – – – – 2,122,194,674 2,122,194,674 235,561,665 2,357,756,339

Other Comprehensive IncomeRevaluation of Property, Plant and Equipment 22.1 – – – 250,153,762 – – 250,153,762 – 250,153,762Re-Measurement of Defined Benefit Obligation

27 – – – – – 59,695,524 59,695,524 2,581,195 62,276,719

Related Taxes 9.4 (29,413,569) (16,614,989) (46,028,598) (651,363) (46,679,921)

Total other Comprehensive Income for the Year – – – 220,740,193 – 43,080,535 263,820,728 1,929,832 265,750,560

Total Comprehensive Income for the Year – – – 220,740,193 – 2,165,275,209 2,386,015,402 237,491,497 2,623,506,899


Distributions to Owners of the CompanyFinal Dividend – 2015 33 – – – – – (525,880,362) (525,880,362) – (525,880,362)Dividend paid by Subsidiary Companies to Non-controlling Interest – 2015 – – – – – – (89,095,889) (89,095,889)

Total Distributions to Owners of the Company – – – – – (525,880,362) (525,880,362) (89,095,889) (614,976,251)

Changes in Ownership Interests in SubsidiaryAcquisition of subsidiaries with NCI – – – – – – – 836,855,788 836,855,788 Acquisition of NCI without change in control 8,280,491 8,280,491 (68,747,368) (60,466,877)

Balance at 31st December 2016 626,048,050 95,360,709 – 1,057,964,069 2,700,000,000 3,674,443,725 8,153,816,553 1,401,088,060 9,554,904,613


STATEMENT OF CHANGES IN EQUITYP:184 Singer (Sri Lanka) PLC ANNUAL REPORT 2016

Company

Year ended 31st December Note Revenue Reserves

Stated Revaluation General Retained TotalCapital Reserves Reserves Earnings

Rs. Rs. Rs. Rs. Rs.

Balance at 1st January 2015 626,048,050 870,358,087 2,600,000,000 482,301,207 4,578,707,344

Realisation on Revaluation Surplus 22.1 – (12,778,068) – 12,778,068 –

Transferred to/(from) During the Year – – 100,000,000 (100,000,000) –


Profit for the Year – – – 859,704,946 859,704,946

Other Comprehensive Income

Re-measurement of Defined Benefit Obligations 27 – – – (40,252,056) (40,252,056)

Related taxes 9.4 – – – 11,270,576 11,270,576

Total Other Comprehensive Income – – – (28,981,480) (28,981,480)

Total Comprehensive Income for the Year – – – 830,723,466 830,723,466


Distributions to Owners of the Company

Final Dividend – 2014 – – – (313,024,025) (313,024,025)

Total Distributions to Owners of the Company – – – (313,024,025) (313,024,025)

Balances at 31st December 2015 626,048,050 857,580,019 2,700,000,000 912,778,716 5,096,406,785

Realisation on Revaluation Surplus 22.1 – (12,778,068) – 12,778,068 –

Total Comprehensive Income for the Year – – – 1,104,444,667 1,104,444,667

Other Comprehensive Income

Revaluation of Property, Plant and Equipment 250,153,762 250,153,762

Re-Measurement of Defined Benefit Obligation 27 52,905,239 52,905,239

Related Taxes 9.4 (29,413,569) (14,813,467) (44,227,036)

Total Other Comprehensive Income – 220,740,193 – 37,729,031 258,831,965

Total Comprehensive Income for the year – 220,740,193 – 1,142,536,439 1,363,276,632


Distributions to Owners of the Company

Final Dividend – 2015 33 – – – (525,880,362) (525,880,362)

Total Distributions to Owners of the Company – – – (525,880,362) (525,880,362)

Balance at 31st December 2016 626,048,050 1,065,542,144 2,700,000,000 1,542,212,861 5,933,803,055


STATEMENT OF CHANGES IN EQUITY P:185Singer (Sri Lanka) PLC ANNUAL REPORT 2016

STATEMENT OF CASH FLOWS


Year ended 31st December Note 2016 2015 2016 2015Rs. Rs. Rs. Rs.

Cash Flows from/(used in) Operating ActivitiesNet Profit before Income Tax Expense 3,126,233,230 1,895,274,564 1,450,529,968 1,195,681,519 Adjustments for:

Depreciation on Property, Plant and Equipment 11.2 414,049,360 306,775,866 341,432,961 288,662,663 Share of Profit from Equity Accounted Investees 7 – (2,042,497) – –Amortisation of Intangible Assets 12.8 19,174,532 18,724,066 14,598,693 12,645,915 Impairment of Software 12.2 29,817,819 – – –Gain on Disposal of Property, Plant and Equipment 5 (3,862,509) (2,257,931) (3,186,072) (2,257,931)Interest Expense 6.1 1,601,925,418 1,091,234,852 1,619,789,209 1,094,741,462 Interest Income 6.2 (129,352,848) (116,686,914) (338,358,270) (164,053,234)Prepaid Debenture Cost 37,420,087 29,688,600 26,023,265 24,473,128Impairment of Inventory 8 167,127,287 233,405,310 150,581,485 185,037,653 Impairment on Trade and Other Receivables 8 282,592,051 260,713,094 226,782,152 193,630,858Dividend Income 5 (1,685,006) (2,158,613) (312,607,896) (178,802,049)Provision for Retiring Gratuity 8.2 116,488,092 74,737,355 86,547,997 68,076,781 Gain on Bargain Purchase 5 (563,945,506) – – –

Operating Profit Before Working Capital Changes 5,095,982,007 3,787,407,752 3,262,133,492 2,717,836,765(Increase)/Decrease in Inventories (1,846,073,589) (1,676,773,285) (1,267,049,675) (1,683,849,166)(Increase)/Decrease in Debtors Falling due after one Year (977,883,751) (1,444,505,418) (267,884,486) (55,907,217)(Increase)/Decrease in Debtors Falling due within one Year (3,448,028,546) (2,519,092,569) (1,746,792,059) (1,438,329,348)(Increase)/Decrease in dues from Related Parties – 45,072,914 159,474,077 64,131,813 (Increase)/Decrease in dues to Related Parties (121,647,284) 139,402,893 99,580,361 39,167,831 Increase in Security Deposits 166,657,389 119,670,092 166,657,388 119,670,091Increase/(Decrease) in Trade and Other Payable 1,474,237,020 553,824,064 1,253,734,906 327,165,849 Increase/(Decrease) in Deferred Liabilities 120,529,345 83,126,216 120,529,344 83,126,216

Cash Generated from (used in) Operations 463,772,591 (911,867,312) 1,780,383,348 173,012,834

Finance Costs Paid (1,543,775,242) (1,155,337,916) (1,601,300,100) (1,156,140,836)Retiring Gratuity Paid 27 (17,843,656) (13,428,212) (13,976,658) (13,339,583)Income Tax Paid 31 (1,029,515,398) (570,548,397) (548,648,690) (365,020,801)

Net Cash Used in Operating Activities (2,127,361,705) (2,651,181,866) (383,542,100) (1,361,488,386)

Cash Flows from/(used in) Investing ActivitiesAcquisition of Property, Plant and Equipment and Intangible Assets 11/12 (836,493,346) (386,969,519) (566,506,933) (300,669,907)Proceeds from Disposal of Property, Plant and Equipment 30,924,157 9,989,640 28,586,486 9,989,640 Investment in Shares in Subsidiary Companies (1,472,393,737) – (1,414,938,393) (5,000,000)Investment in Debentures in Subsidiary Companies – – (312,807,000) (450,000,000)Disposal of Marketable Securities 90,755,882 47,368,812 – –Withdrawal of Bank Deposits 4,186,606 25,043,992 – –Net Cash Flows from Loans Given to Related Companies – (756,250) (255,436,499) (405,569,648)Interest Received 77,873,710 64,298,959 288,826,339 123,706,960Dividend Received 1,685,006 4,558,613 312,607,896 178,802,049

Net Cash Flows used in Investing Activities (2,103,461,722) (236,465,753) (1,919,668,104) (848,740,906)

Cash Flows from Financing Activities Net Proceeds From Interest-Bearing Loans and Borrowings 21,145,390,085 19,034,867,739 17,363,137,748 16,174,867,739Repayment of Interest-Bearing Loans and Borrowings (15,850,503,618) (15,385,046,306) (14,459,202,669) (14,001,658,328)Decrease in Customer Deposit Liabilities (225,046,439) (1,126,809,843) – –Net Payment to Minority Shareholders (89,095,889) (40,502,877) – –Dividends Paid (522,871,576) (311,000,294) (522,871,576) (311,000,294)

Net Cash Flows Generated from Financing Activities 4,457,872,563 2,171,508,419 2,381,063,503 1,862,209,117

Net Increase/(Decrease) in Cash and Cash Equivalents 227,049,136 (716,139,142) 77,853,299 (348,020,175)Cash and Cash Equivalents at the Beginning of the Year 20 111,849,012 827,988,154 259,636,678 607,656,851

Cash and Cash Equivalents at the End of the Year 20 338,898,148 111,849,012 337,489,977 259,636,678



1. Corporate Information

1.1 Reporting Entity

1.1.1 GeneralSinger (Sri Lanka) PLC is a limited liability company incorporated and domiciled in Sri Lanka. The Registered Office of the Company is located at No. 80, Nawam Mawatha, Colombo 2, and the principal place of business is situated at the above address.

In the Report of the Directors and in the Financial Statements, ‘the Company’ refers to Singer (Sri Lanka) PLC as the Holding Company and ‘the Group’ refers to the Consolidated Financial Statements of Singer (Sri Lanka) PLC and its Subsidiaries, Singer Finance (Lanka) PLC, Regnis (Lanka) PLC, Singer Industries (Ceylon) PLC, Regnis Appliance (Private) Limited, Singer Digital Media (Private) Limited, Singer Business School (Private) Limited, and Reality Lanka Limited.

1.1.2 Companies in the GroupThe Singer (Sri Lanka) PLC has acquired the controlling interest of Singer Industries (Ceylon) PLC and Regnis (Lanka) PLC on 4th January 2016 and 24th February 2016 respectively. Accordingly, the Group consist of following companies:

SubsidiariesSinger Finance (Lanka) PLC

Singer Finance (Lanka) PLC, was incorporated on 19th April 2004 under the Companies Act No. 17 of 1982 and its commercial operations commenced on 8th July 2004. Singer (Sri Lanka) PLC owns 80.4% of its equity shares.

Singer Industries (Ceylon) PLC

Singer Industries (Ceylon) PLC was incorporated on 13th December 1963 under the Companies Act No. 17 of 1982 and its commercial operations commenced on 13th December 1963. Singer (Sri Lanka) PLC owns 87.7% of its equity shares.

Note 1 Corporate Information 187

Note 2 Significant Accounting Policies 189

Note 3 Revenue 199

Note 4 Operating Segments Information 199

Note 5 Other Income 200

Note 6 Net Finance Cost 200

Note 7 Share of Profit of Equity Accounted Investees – (Net of Income Tax) 201

Note 8 Profit Before Tax 201

Note 9 Income Tax Expense 202

Note 10 Earnings Per Share 203

Note 11 Property, Plant and Equipment 204

Note 12 Intangible Assets 209

Note 13 Investments in Subsidiaries – Company 212

Note 14 Equity Accounted Investees 212

Note 15 Other Investment 214

Note 16 Inventories 215

Note 17 Loans Due from Related Parties 215

Note 18 Trade and Other Receivables 216

Note 19 Amounts Due from Related Parties 220

Note 20 Cash and Cash Equivalents 220

Note 21 Stated Capital 220

Note 22 Capital Reserves 221

Note 23 Statutory Reserves 221

Note 24 Revenue Reserves 222

Note 25 Interest-Bearing Loans and Borrowings 223

Note 26 Deferred Tax Assets/(Liabilities) 226

Note 27 Defined Benefit Obligation 228

Note 28 Security Deposits 229

Note 29 Trade and Other Payables 229

Note 30 Deferred Revenue 230

Note 31 Income Tax Payables/Receivables 230

Note 32 Dividend Payables 230

Note 33 Dividends 230

Note 34 Amounts due to Related Parties 231

Note 35 Other Financial Liabilities 231

Note 36 Financial Instruments 232

Note 37 Commitments and Contingencies – Group/Company 243

Note 38 Events after the Reporting Period 244

Note 39 Acquisition of Subsidiary 244

Note 40 Related Party Transactions 247

Note 41 Non-Controlling Interest 249

NOTES TO THE FINANCIAL STATEMENTS P:187Singer (Sri Lanka) PLC ANNUAL REPORT 2016


Regnis (Lanka) PLC

Regnis (Lanka) PLC. was incorporated on 8th October 1987. under the Companies Act No. 17 of 1982 and its commercial operations commenced on 8th October 1987. Singer (Sri Lanka) PLC owns 58.29% of its equity shares.

Reality Lanka Limited

Reality Lanka Limited was incorporated on 29th September 2006 under the Companies Act No. 17 of 1982 and its commercial operations commenced on 29th September 2016 Singer (Sri Lanka) PLC owns 40% of its equity shares.

Regnis Appliances (Private) Limited

Regnis Appliances (Private) Limited, was Incorporated on 18 January 2010 under the Companies Act No. 07 of 2007 and commenced its commercial operations On 1 October 2010.

Singer Digital Media (Private) Limited

Singer Digital Media (Private) Limited was incorporated on 16th May 2014 under the Companies Act No. 07 of 2007 and its commercial operations commenced on 8th July 2014. Singer Digital Media (Private) Limited is a fully-own Subsidiary.

Singer Business School (Private) Limited

A fully-owned Subsidiary, Singer Business School (Private) Limited was incorporated on 5th May 2015 under the Companies Act No. 07 of 2007 and its commercial operations commenced on 5th May 2015.

Associates (Equity Accounted Investees)

Associate companies of the Group, whose results have been included in the Consolidated Financial Statements are:

Telshan Network (Private) Limited

All above companies are incorporated in Sri Lanka.

The Reality Lanka Limited become a subsidiary of the Group with effect from 4th January 2016, through the acquisition of Singer Industries (Ceylon) PLC.

1.1.3 Principal Activities and Nature of OperationsThe Company

The Company is engaged in Retail and Wholesale Marketing, Financing, Assembling and Manufacturing and Financial Services. The Company markets Consumer Electronics, Home Appliances, Mobile Phones, Personal Computers, Laptops, Furniture, Domestic and Industrial Sewing Machines, Agricultural Equipment, and provides Financing through Hire Purchase. In addition, the Company manufactures and sells Furniture, Water Pumps and assembles and sells Motor Cycles and Two Wheel Tractors. The Company also acts as a Bill Collection Agent for Banks, Mobile service providers, National Water Supply & Drainage Board, Ceylon Electricity Board and is also a sub-agent for Western Union.

Subsidiary Singer Finance (Lanka) PLC

Principle activities of Singer Finance (Lanka) PLC are financing of the sale or purchase of any goods, articles, vehicles or other items either by letting on hire, hire purchase, leasing and other methods of financing. In addition, Singer Finance (Lanka) PLC accepts deposits. Singer Finance (Lanka) PLC is a licensed finance company under the Finance Companies Act No. 78 of 1988.

Subsidiary Singer Industries (Ceylon) PLC

The Principle activities of the Company are assembling sewing machines and manufacturing of cabinets and stands for sewing machines.

Subsidiary Regnis (Lanka) PLC

The principle activities of Company are manufacturing of Refrigerators and Bottle Coolers.

Subsidiary Reality Lanka Limited

The principle activities of Company are renting of company property and property development.

Subsidiary Regnis Appliances (Private) Limited

Principal activities of Regnis Appliances (Private) Limited are manufacturing and assembling of Washing Machines, producing plastic components for Refrigerators and Plastic Chairs.

Subsidiary Singer Digital Media (Private) Limited

The principal activity of the Company is marketing mobile phones, computers and digital cameras.

Subsidiary Singer Business School (Private) Limited

The principal activity of the Company is provisioning of educational services.

1.1.4 Parent Enterprise and Ultimate Parent EnterpriseThe Company's Parent undertaking is Retail Holdings (Sri Lanka) BV, formerly known as [Singer (Sri Lanka) BV].

The Company's Ultimate Parent undertaking and controlling party is Retail Holdings NV, which is incorporated in the Curacao.

1.1.5 Number of EmployeesThe number of employees of the Group at the end of the year was 2,436 (2015 – 1,905), Company – 1,698 (2015 – 1,584).

1.2 Basis of Accounting

1.2.1 Statement of ComplianceThe Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (hereinafter referred to as SLFRS) issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the requirements of the Companies Act No. 07 of 2007.

1.2.2 Approval of Financial StatementsThe Board of Directors is responsible for preparation and presentation of the Financial Statements of the Company as per the provisions of the Companies Act No. 07 of 2007 and Sri Lanka



Accounting Standards. The Directors’ responsibility over Financial Statements is set out in detail in the Statement of Directors’ Responsibility.

The Financial Statements for the year ended 31st December 2016 were authorised for issue in accordance with a resolution of the Board of Directors on 23rd February 2017.

1.2.3 Basis of Measurement The Financial Statements have been prepared on the historical cost basis, except for available-for-sale financial assets and items of Property, Plant and Equipment, which are measured at fair value and Defined Benefit Plans which are measured at present value of the Retirement Benefit Obligations as explained in the respective Notes to the Financial Statements.

1.2.4 Functional and Presentation CurrencyThe Financial Statements are presented in Sri Lankan Rupees which is the functional currency of the Company and its Subsidiaries.

1.2.5 Use of Estimates and JudgmentsThe preparation of the Financial Statements in conformity with SLFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the

Financial Statements is included in the following Notes:

z Note 12 – Measurement of Intangible Assets

z Note 16 – Provision for Inventories z Note 27 – Measurement of Retirement Benefit Obligations

z Note 37 – Commitments and Contingencies

z Note 36 – Financial Instrument

Measurement of Fair ValueA number of the Group’s accounting policies and disclosures require the measurement of fair value for both financial and non-financial assets and liabilities.

Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to measure fair values, Company assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of SLFRS, including the level in the fair value hierarchy in which such valuations should be classified.

Significant valuation issues are reported to the Group’s Audit Committee. When measuring the fair value of an asset or liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

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

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

If the inputs used to measure the fair value of an asset or liability fall into

different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest input level that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the Reporting period during which the change has occurred.

1.2.6 Going ConcernThe Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future, and they do not intend either to liquidate or cease trading.

2. Significant Accounting PoliciesThe accounting policies set out below have been consistently applied to all periods presented in these Financial Statements.

2.1 Basis of Consolidation

2.1.1 SubsidiariesSubsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Financial Statements of Subsidiaries are included in the Consolidated Financial Statements from the date on which control commences until the date when control ceases.

2.1.2 Non-Controlling Interests (NCI)NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date.Changes in the Group’s interest in a Subsidiary that do not result in a loss of control are accounted for as equity transactions.



2.1.3 Loss of ControlWhen the Group losses control over subsidiary derecognises the assets and liabilities of the Subsidiary, any non-controlling interests and other components of equity. Any surplus or deficit arising on the loss of control is recognised in the Profit or Loss. Any interest retains in the previous Subsidiary, is measured at fair value as at the date that control is lost.

2.1.4 Interest in Equity Accounted InvesteesThe Group’s interest in equity accounted investees comprise interest in Associate. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. Interests in Associates are accounted for using the equity method. They are initially recognised at cost, which include transaction cost. Subsequent to initial recognition the Consolidated Financial Statements includes the Group’s share of profit or loss and Other Comprehensive Income of equity accounted investees, until the date on which significant influence ceases.

2.1.5 Transactions Eliminated on ConsolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

2.2 Foreign Currency TransactionsTransactions in foreign currencies are translated into the respective functional currencies of Group Companies at

the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the Reporting date are translated into the functional currency at the exchange rate at the Reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in profit and loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.

2.3 Property, Plant and Equipment

2.3.1 Recognition and MeasurementItems of Property, Plant and Equipment are measured at cost/fair value, less accumulated depreciation and any accumulated impairment losses.

If a significant part of an item of Property, Plant and Equipment has different useful lives, then they are accounted for as separate items (major components) of Property, Plant and Equipment. Any gain or loss on disposal of an item of Property, Plant and Equipment is recognised in profit or loss.

(a) Cost Model

The Group applies the cost model to Property, Plant and Equipment except for freehold land and buildings.

(b) Revaluation Model

The Group applies the revaluation model to the entire class of freehold land and buildings. A revaluation is carried out when there is a substantial difference between the fair value and the carrying amount of the property, and is undertaken by professionally qualified valuers. Group reviews its assets once in each Reporting dates.

Increases in the carrying amount on revaluation is recognised in other comprehensive income and accumulated in equity in the revaluation reserve, unless it reverses a previous revaluation decrease relating to the same asset, which was previously recognised as an expense. In these circumstances the increase is recognised as income to the extent of the previous write down.

Decreases in the carrying amount on revaluation that offset previous increases of the same individual asset are charged against revaluation reserve directly in equity. All other decreases are recognised in profit and loss.

The relevant portion of the revaluation reserve is transferred to retained earnings as the asset is depreciated with the balance being transferred on ultimate disposals.

(c) Subsequent Costs

The cost of replacing part of an item of Property, Plant and Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within that part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of Property, Plant and Equipment are recognised in profit and loss as incurred.

(d) Depreciation

Depreciation is calculated to write-off the cost of items of Property, Plant and Equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Land is not depreciated.



Depreciation of an asset commences when the asset is available for use and ceases at the earlier of the date the asset is classified as held-for-sale and the date that the asset is derecognised.

Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

2.3.2 Intangible Assets(a) Recognition and Measurement

An intangible asset is recognised if it is probable that future economic benefits will flow to the entity and the cost of the asset can be measured reliably in accordance with LKAS 38 – 'Intangible Assets'. Intangible assets with finite useful lives are measured at cost, less accumulated amortisation and accumulated impairment losses.

The useful lives of intangible assets are assessed to be either finite or indefinite.

(b) Subsequent Expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands are recognised in profit or loss as incurred.

(c) Amortisation

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for

an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. Amortisation expense on intangible assets with finite lives is recognised in profit and loss on a straight-line basis over the estimated useful lives, from the date they are available for use.

The estimated useful lives of intangible assets with finite lives are as follows:

The Class of Intangible Assets Useful Life

Computer Software 10 yearsOther Intangible Assets Externally Acquired

5 years

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangible assets are not amortised.

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

Intangible assets with indefinite useful lives represent trade marks purchased and were recorded at cost. These intangible assets are assessed for impairment annually.

2.4 Financial Instruments

2.4.1 Non-Derivative Financial Assets(a) Recognition and Measurement

The Group recognises financial assets in its Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of a financial asset or a liability (other than financial assets at fair value through profit or loss) are added or deducted from the fair value of the financial asset, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in the Income Statement.

The Group derecognises financial assets when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial assets in a transaction in which substantially all the risks and rewards of ownership of the financial assets are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount is presented when, and only when the Group has a legal right to offset the amount and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

(b) Classification

At inception, a financial asset is classified in one of the following categories:

– Loans and Receivables

– Held-to-Maturity

– Available-for-Sale

– At Fair Value through Profit or Loss

The estimated useful lives are as follows:

Freehold Buildings Over 38 to 50 years Motor Vehicles Over 05 to 07 years Furniture and Equipment Over 10 years Plant and Machinery Over 10 years EDP Equipment Over 05 to 10 yearsImprovement on Leasehold Premises Over 04 to 10 yearsShop Furniture and Equipment Over 07 years EDP Equipment – Computer Servers 07 years



As at the year end the Group did not have assets categorised as fair value through profit or loss.

2.4.1.1 Held-to-Maturity Financial Assets

A non-derivative financial asset with fixed or determinable payments with fixed maturity where Group intends to hold to maturity is classified under this category.

Held-to-maturity financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition held-to-maturity financial assets are measured at amortised cost using the effective interest method.

Held-to-maturity financial assets comprise of Treasury Bills and Treasury Bonds.

2.4.1.2 Loans and Receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise of HP and lease receivable, consumer loans, vehicle loans, distress loans and temporary refund loans, related party loans, staff loans, deposits with banks, cash and cash equivalents and trade and other receivables.

2.4.1.3 Available-for-Sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are recognised as available-for-sale or not classified in any previous categories. Available-for-sale financial assets are recognised initially at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, are recognised in the Other Comprehensive Income and presented in the available-for-sale reserve in equity. When an investment is derecognised, the cumulative gain or loss in Other Comprehensive Income is transferred to profit or loss.

Available-for-sales financial assets comprise of equity investments.

2.4.2 Non-Derivative Financial LiabilitiesThe Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Group classifies non-derivative financial liabilities into other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise interest-bearing borrowings, bank overdrafts, amount due to related parties, security deposits, trade and other payables and other financial liabilities due to customers.

Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the Statement of Cash Flows.

2.4.2.1 Derecognition of Financial Liability

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. Financial assets and liabilities are offset

and the net amount presented in the Statement of Financial Position when and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset or settle the liability simultaneously.

2.4.3 Stated CapitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

2.4.4 Impairment2.4.4.1 Impairment of Non-Derivative Financial Assets

Financial assets other than those measured at fair value are assessed for indicators of impairment at the end of each Reporting period. Financial assets are considered to be impaired when there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash from the asset have been affected.

The Group assesses at each Reporting date whether there is any objective evidence that a financial asset or a group of financial assets are impaired. A financial asset or a group of financial assets are deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset and that loss event have an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

(a) Impairment Losses on Financial Assets Carried at Amortised Cost

The Group except for Singer Finance PLC considers evidence for these assets at individual asset level. All individually significant assets are individually assessed for impairment.

Singer Finance PLC considers evidence of impairment for receivables at collective level. Loans and receivables



are collectively assessed for impairment by grouping together receivables with similar risk characteristics. In assessing collective impairment, the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgments as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. Further, higher purchase debtors of Singer (Sri Lanka) PLC are also assessed for impairment at collective level.

Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. If a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. When the Company considers that there is no realistic process of recovery of the asset, the relevant amounts are written off.

Impairment losses on assets carried at amortised cost are measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the asset’s original effective interest rate.

When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off.

Impairment losses are recognised in profit or loss and reflected in an allowance account against loans and advances. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(b) Impairment Losses on Available-for-Sale

Impairment losses on available-for-sale investment securities are recognised by the reclassifying losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference

between the acquisition cost (net of any principal repayment and amortisation), and the current fair value, less any impairment loss previously recognised in profit or loss. If the fair value of an impaired available-for-sale debt security subsequently increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed through profit or loss, otherwise it is reversed through Other Comprehensive Income.

(c) Impairment – Equity Accounted Investees

An impairment in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss, and is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

2.4.4.2 Impairment of Non-Financial Assets

The carrying amount of the Group’s non-financial assets other than inventories and deferred tax assets are reviewed at each Reporting date to determine whether there is an indication of impairment. If any such indication exists or when annual impairment testing for an asset is required, then the asset's recoverable amount is estimated.

For impairment testing, assets are grouped into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash flows of other assets or other cash-generating units (CGU). Goodwill arising from business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of combination

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects

current market assessments of the time value of money and the risks specific to the asset. In determining fair value, less costs to sell, an appropriate valuation model is used.

An impairment loss is recognised if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit and loss. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.4.5 Leases The determination of whether an arrangement is lease or it contains a lease, is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

2.4.5.1 Operating Leases2.4.5.1 (a) Operating Leases – Company as a Lessee

Leases that do not transfer to the Company substantially all risks and benefits incidental to ownership of the leased assets are operating leases. Operating lease payments are recognised as an expense in the Income Statement on a straight line basis over the lease term. Contingent rental payable is recognised as an expense in the period in which they are incurred.

2.4.5.1 (b) Operating Leases – Company as a Lessor

Leases where the Company does not transfer substantially all risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the



2.6.2 Capital Commitments and ContingenciesCapital commitments and contingent liabilities of the Group are disclosed in the respective Notes to the Financial Statements.

2.7 Employee Benefits

2.7.1 Defined Benefit PlanThe Group net obligation in respect of defined benefit plan is calculated by estimating the amount of future benefits that employees have earned in current and prior periods discounting that amount.

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses are recognised immediately in OCI. The Group determines the net interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then – net defined liability, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other

carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

Contingent rents are recognised as revenue in the period in which they are earned.

2.4.5.2 Finance Leases2.4.5.2 (a) Finance Leases – Company as a Lessee

Finance leases that transfer substantially all risks and benefits incidental to ownership of the leased item to the Company, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

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

2.4.5.2 (b) Finance Leases – Company as a Lessor

When the Company is the lessor under the finance leases the amounts due under the finance leases, after deduction of unearned charges, are included in ‘lease rentals receivables’, as appropriate. The finance income receivable is recognised in ‘interest income’ over the periods of the leases so as to give a constant rate of return on the net investment in the leases.

2.5 InventoriesInventories are measured at the lower of cost and net realisable value, after making due allowances for obsolete and slow moving items. Net realisable value (NRV) is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling

expenses. Group assess the NRV by giving consideration to future demand and condition of inventory and make adjustments to the value by making required provisions.

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

Raw Materials – At actual cost on first-in first-out basisFinished Goods (Excluding Factory) – Weighted average costFinished Goods and Work-in-Progress at Piliyandala Factory

– At the cost of direct materials, direct labour and an appropriate proportion of fixed production overheads, based on normal operating capacity

Goods-in-Transit – At actual costSupplies and Parts – Weighted average costRepossessed Goods – 75% of its weighted average cost

2.6 ProvisionsA provision is recognised in the Statement of Financial Position when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the provision can be measured reliably in accordance with LKAS 37 – ‘Provisions, Contingent Liabilities and Contingent Assets’. The amount recognised is the best estimate of the consideration required to settle the present obligation at the Reporting date, taking into account the risks and uncertainties surrounding the obligation at the date. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is determined based on the present value of those cash flows.

2.6.1 Provisions for WarrantiesA provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighing of all possible outcomes against their associated probabilities. Provision is utilised to settle the actual claims made by the customers.



expenses related to defined benefit plans are recognised in profit or loss.

The liability is not externally funded.

2.7.2 Defined Contribution Plans – Employees’ Provident Fund/Mercantile Services Provident Society and Employees’ Trust FundA defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Employees are eligible for contributions to Employees' Provident Fund/Mercantile Services Provident Society and Employees' Trust Fund in line with the respective statutes and regulations. The Company contributes 12%, 12% and 3% of gross emoluments of employees to the Employees' Provident Fund, Mercantile Services Provident Society and the Employees' Trust Fund, respectively and is recognised as an expense in profit and loss in the periods during which services are rendered by employees.

2.7.3 Short-Term BenefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be measured reliably.

2.8 Statement of Profit or Loss and Other Comprehensive Income

2.8.1 Revenue RecognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured

at the fair value of the consideration received or receivable, net of returns, trade discounts and turnover taxes. The following specific criteria are used for the purpose of recognition of revenue:

(a) Sale of Goods (Normal Trading Transactions)

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to buyers, the recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. Revenue is measured net of returns and trade discounts.

(b) Sale of Goods (Hire Purchase Transactions)

At the time of effecting hire sales, the cash sales value is recognised as sales.

Subsequent to the initial recognition, hire purchase receivables are measured at amortised cost using the effective interest method, less any impairment losses.

(c) Interest – Other

Interest income is recognised in profit and loss as it accrues and is calculated by using the effective interest rate method.

(d) Dividends

Dividend income is recognised in profit and loss when the right to receive dividends is established.

(e) Service Fee Income on Hire Purchase

Service fee income is recognised over the length of hire purchase agreement using the effective interest rate method. In the event of early termination of the hire purchase contract or cash conversion remaining deferred, service income is recognised when such contract is recognised or converted.

(f) Income on Suraksha and Extended Warranty Scheme

Income is recognised over the period of contract. Unrecognised income is accounted for as deferred revenue.

(g) Others

Other income is recognised on an accrual basis.

Net gains and losses of a revenue nature on the disposal of Property, Plant and Equipment and other non-current assets including investments have been accounted for in profit and loss, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses.

2.8.2 Revenue Recognition Policy of Singer Finance (Lanka) PLC(a) Hire Purchase, Lease and Loans and Advances

The excess of aggregated contract receivables over the cost of the hired assets constitutes the total unearned income at the commencement of a contract. The unearned income is recognised as revenue as it is earned, using the effective interest rate method. (b) Interest

Interest income and expense are recognised in profit or loss using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial assets or liability (or, where appropriate a shorter period) to the carrying amount of the financial asset or liability. When calculating the effective interest rate, the Company estimates future cash flows considering all contractual terms of the financial instruments, but not future credit losses.

The calculation of effective interest rate includes all transaction costs and fees and points paid or received that are an integral part of the effective interest rate.



Transaction costs include incremental cost that are directly attributable to the acquisition or issue of a financial asset or liability. Interest income and expense presented in the Statement of Comprehensive Income include:

z Interest on financial assets and financial liabilities measured at amortised cost calculated on an effective interest basis.

z Interest on available-for-sale financial instruments calculated on an effective interest basis.

(c) Fees and Commission

Fees and commission income and expense that are integral to the effective interest rate on a financial asset or liability are included in the measurement of the effective interest rate. Other fees and commission income, including account servicing fees, are recognised as the related services are performed. Other fees and commission expense relate mainly to transactions and service fees, which are expensed as the services are received.

(d) Net Gain/(Loss) from Trading

Net gain/(loss) from trading comprise gains less losses related to trading assets and liabilities and include all realised and unrealised fair value changes.

2.8.3 Regulatory Provisions(a) Deposit Insurance Scheme

In terms of the Finance Companies Direction No. 02 of 2010 – ‘Insurance of Deposit Liabilities’ issued on 27th September 2010 all Registered Finance Companies are required to insure their deposit liabilities in the Deposit Insurance Scheme operated by the Monetary Board in terms of Sri Lanka Deposit Insurance Scheme Regulations No. 01 of 2010 issued under Sections 32A to 32E of the Monetary Law Act with effect from 1st October 2010.

Deposits to be insured include demand, time and savings deposit liabilities and exclude the following:

z Deposit liabilities to member institutions

z Deposit liabilities to Government of Sri Lanka

z Deposit liabilities to Directors, Key Management Personnel and other related parties as defined in Finance Companies Act Direction No. 03 of 2008 on Corporate Governance of Registered Finance Companies

z Deposit liabilities held as collateral against any accommodation granted

z Deposit liabilities falling within the meaning of dormant deposits in terms of the Finance Companies Act, funds of which have been transferred to the Central Bank of Sri Lanka

z Registered Finance Companies are required to pay a premium of 0.15% on eligible deposit liabilities as at end of the month to be payable within a period of 15 days from the end of the respective month

2.8.4 Investment Fund AccountAs proposed in the Budget 2011, an investment fund has been established and operated in the manner described below. As and when taxes are paid after 1st January 2011, following fund are transfer to the investment fund account and build a permanent fund in the Company.

z 8% of the profits calculated for the payment of Value Added Tax (VAT) on financial services on the dates as specified in the VAT Act for the payment of VAT.

z 5% of the profit before tax calculated for payment of income tax purposes on date specified in Section 113 of the Inland Revenue Act for the Self-Assessment Payment of tax.

The Company shall utilise the funds in the investment fund account as specified by the direction. The operation of this fund was ceased with the effect from 1st October 2014.

2.8.5 Reserve FundThe Company is maintaining a reserve fund in compliance with Direction No. 01 of 2003 – Central Bank (Capital Funds) issued to Finance Companies and it will be used for only the purpose specified in the said Direction above. The details of the reserve fund are disclosed in Note 23.1.

2.8.6 Expenditure Recognition(a) Expenses are recognised in Profit and Loss on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the Property, Plant and Equipment in a state of efficiency has been charged to income in arriving at the profit for the year.

(b) For the purpose of presentation of the Income Statement, the Directors are of the opinion that ‘function of expenses method’ presents fairly the elements of the Company's performance and hence such presentation method is adopted.

2.8.7 Net Finance CostFinance income comprises interest income on funds invested interest income from related parties and which is recognised as it accrues in Profit or Loss, using the effective interest method.

Finance cost comprises interest payable on borrowings, interest on security deposits. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.



Foreign currency gains and losses are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in net gain or net loss position.

2.8.8 Income TaxIncome tax expense comprises both current and deferred tax. Income tax expense is recognised in profit and loss, except to the extent that it relates to items recognised directly in equity, or in Other Comprehensive Income.

(a) Current Tax

The current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the Reporting date, and any adjustment to tax payable in respect of previous years.

(b) Deferred Taxation

Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

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

A deferred tax asset is recognised for unused tax losses and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. The carrying amount of deferred tax assets is reviewed at each Reporting date and is reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset deferred tax assets and liabilities and when the deferred tax relates to income tax levied on the same tax authority on the same taxable entity or on different tax entity but then intends to settle relevant tax liabilities and assets on a net basis or their tax assets and liabilities will be simultaneously realised.

Tax withheld on dividend income from Subsidiaries and Associates is recognised as an expense in the Consolidated Income Statement at the same time as the liability to pay the related dividend is recognised.

(c) Value added Tax on Financial Services

VAT on Financial Services is calculated in accordance with the amended VAT Act No. 07 of 2013. The base for the computation of Value Added Tax ion Financial Services is the accounting profit before income tax adjusted for the economic depreciation and emolument of employees computed on prescribed rate.

(d) Crop Insurance Levy

As per the provisions of the Section 14 of the Finance Act No. 12 of 2013, the CIL was introduced with effect from 1st April 2013 and is payable to the National Insurance Trust Fund. Currently, the CIL is Payable at 1% of the profit after tax.

2.9 Events After the Reporting PeriodAll material events after the Reporting date have been considered and where necessary adjustments made in these Financial Statements.

2.10 Earnings Per ShareThe Group presents basic Earnings Per Share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the Profit or Loss attributable to ordinary shareholders of the Company by the weighted number of ordinary shares outstanding during the period.

2.11 Segment ReportingAn operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components. All operating results are reviewed regularly by the Group Chief Executive Officer (CEO) to make decisions regarding resources to be allocated to the segments and to assess its performance and for which discrete finance information is available.

Segment results that are reported to the Group CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to acquire Property, Plant and Equipment and intangible assets other than goodwill.

Segment information is presented in the respective Notes to the Financial Statements.

2.12 Statement of Cash FlowsThe Cash Flow Statement has been prepared using the indirect method.



2.13 New Accounting Standards Issued but Not Yet Effective A number of new standards and amendments to the standards were issued but they were not effective as at the year end.

Accordingly, the Group has not applied the following new or amended standards in preparing these Consolidated Financial Statements:

New or Amended Standards Summary of the Requirement Possible Impact on Consolidated Financial Statements

SLFRS 9 – ‘Financial Instruments’

SLFRS 9, published in July 2014, replaces the existing guidance in LKAS 39 – Financial Instruments: Recognition and Measurement. SLFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from LKAS 39.

SLFRS 9 is effective for annual reporting periods beginning on or after 1st January 2018, with early adoption permitted.

The Group is assessing the potential impact on its Consolidated Financial Statements resulting from the application of SLFRS 9.

SLFRS 15 – ‘Revenue from Contracts with Customers’

SLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including LKAS 18 – ‘Revenue’, LKAS 11 – ‘Construction Contracts’ and IFRIC 13 – ‘Customer Loyalty Programmes’

SLFRS 15 is effective for annual reporting periods beginning on or after 1st January 2018, with early adoption permitted.

The Group is assessing the potential impact on its Consolidated Financial Statements resulting from the application of SLFRS 15.



3. RevenueConsolidated Company

Year ended 31st December 2016 2015 2016 2015Rs. Rs. Rs. Rs.

3.1 SummaryTurnover 46,924,143,940 38,710,833,576 39,267,202,832 33,311,395,189

46,924,143,940 38,710,833,576 39,267,202,832 33,311,395,189

3.2 RevenueSale of Goods 41,556,001,470 34,040,639,824 36,154,084,072 30,545,808,095

Rendering of Services (Note 3.3) 5,368,142,470 4,670,193,752 3,113,118,760 2,765,587,094

46,924,143,940 38,710,833,576 39,267,202,832 33,311,395,189

3.3 Rendering of Service

Interest Income on Hire Purchase 3,016,134,020 2,847,249,621 2,860,194,295 2,476,212,210

Interest Income on Leasing 1,498,192,409 1,041,785,007 – –

Interest Income on Loans 412,245,904 287,099,538 – –

Service Income 441,570,137 494,059,586 252,924,465 289,374,885

5,368,142,470 4,670,193,752 3,113,118,760 2,765,587,094

4. Operating Segment Information

4.1 Segment Products and Services

Consumer Electronics Televisions, Audios, DVD and Other Electronic ProductsFinancial Services Leasing, Hire Purchase and LoansFurniture Wood and Layered Furniture, Sofa Sets, Steel Furniture and MattresesHome Appliances Refrigerators, Washing Machines, Deep Freezers, Bottle Coolers, Air Conditioners, Fans,

Small Appliances and Kitchen RangesIT Products Laptops and Smart PhonesSewing Domestic and Industrial Sewing Machines and General MerchandiseOther Motor Bikes, Bicycles, Water Pumps, Paddy Threshers and Tractors

4.2 Segmental Analysis of Revenue is as Follows:Consolidated Company

2016 2015 2016 2015Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Consumer Electronics 6,666,967 6,292,432 6,666,967 6,292,432

Financial Services 5,368,142 4,670,194 3,113,119 2,765,587

Furniture 2,363,812 1,977,938 2,363,812 1,977,938

Home Appliances 15,755,758 12,742,389 15,747,284 12,742,389

IT Products 10,385,985 7,413,095 4,993,832 3,918,450

Sewing 3,219,173 2,953,998 3,219,173 2,953,998

Other 3,163,307 2,660,788 3,163,016 2,660,601

46,924,144 38,710,834 39,267,203 33,311,395



4.3 Segmental Analysis of Profit before Tax is as Follows:Consolidated Company

2016 2015 2016 2015Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

Consumer Electronics 231,410 201,765 231,410 201.765

Financial Services 986,596 1,004,932 395,629 337,981

Furniture 73,980 61,915 73,980 61,915

Home Appliances 979,904 401,262 522,181 401,262

IT Products 429,776 240,681 38,347 35,708

Sewing 142,822 89,455 108,842 89,455

Other 85,723 69,920 80,141 67,596

Dividend (367,924) (176,697) – –

Gain on Bargain Purchase 563,946 – – –

Share of Profit on Equity Accounted Investees – 2,042 – –

3,126,233 1,895,275 1,450,530 1,195,682

4.4 There are no separately distinguishable assets and liabilities for the above segments.

5. Other IncomeConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Dividend Income – Quoted – 54,000 234,283,390 149,547,436

– Unquoted 1,685,006 2,104,613 78,324,506 29,254,613

Gain on Disposal of Property, Plant and Equipment 3,862,509 2,257,931 3,186,072 2,257,931

Miscellaneous Income 148,476,387 83,701,149 40,151,183 28,983,747

Income from Financial Services 75,773,520 152,817,050 75,759,432 86,578,743

Gain on Bargain Purchase (Note 39) 563,945,506 – – –

793,742,928 240,934,743 431,704,583 296,622,470


2016 2015 2016 2015Rs. Rs. Rs. Rs.

6. Net Finance Cost6.1 Finance CostInterest on Overdrafts and Loans 1,489,737,646 997,430,547 1,477,483,908 1,000,937,157

Interest on Security Deposits 112,187,772 93,804,305 112,187,772 93,804,305

Interest Expense on Related Party Payables – – 30,117,529 –

1,601,925,418 1,091,234,852 1,619,789,209 1,094,741,462




2016 2015 2016 2015Rs. Rs. Rs. Rs.

6.2 Finance IncomeInterest Income – Related Parties – – 273,481,295 107,839,548

– Others 77,873,710 64,298,959 15,345,044 15,867,412

Unwinding Interest Income on Interest Free Employee Loans 41,798,501 49,210,055 40,876,024 37,168,374

Gain on Translation of Foreign Currency 9,680,637 3,177,900 8,655,907 3,177,900

129,352,848 116,686,914 338,358,270 164,053,234

Net Finance Cost 1,472,572,570 974,547,938 1,281,430,939 930,688,228

7. Share of Profits of Equity-Accounted Investees (Net of Income Tax) Consolidated

2016 2015Share of Profit Share of Profit

Rs. Rs.

Reality Lanka Limited (Note 14.2) – 2,042,497

8. Profit Before TaxConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Stated After Charging all Expenses Including the Following:

Executive Directors’ Emoluments 152,943,941 78,893,535 103,610,273 64,940,930

Non-Executive Directors’ Fees 14,328,000 11,189,835 6,268,800 6,523,335

Auditors' Remuneration – Statutory Audit 6,335,000 5,895,000 2,900,000 2,600,000

– Audit-Related Services 275,000 345,000 115,000 115,000

– Non-Audit Services 1,740,000 575,000 175,000 –

Impairment on Trade and Other Receivables (Note 8.1) 282,592,051 260,713,094 226,782,152 193,630,858

Impairment of Inventories (Note 16.1) 167,127,287 233,405,310 150,581,485 185,037,653

Software Impairment 29,817,819 – – –

Amortisation of Intangible Assets 19,174,532 18,724,065 14,598,693 12,645,916

Depreciation on Property, Plant and Equipment 414,049,360 306,775,866 341,432,961 288,662,663

Personnel Costs (Note 8.2) 4,952,100,427 4,287,912,713 4,446,967,908 3,953,182,637

Operating Lease Rentals 828,033,716 744,937,262 782,827,157 709,126,405

Donations 1,452,115 285,000 188,000 285,000

Royalty 460,715,461 429,658,487 436,841,849 370,126,613

8.1 Impairment on Trade and Other ReceivablesImpairment for Hire Purchase Receivable (Note 18.3) 23,620,450 23,297,303 28,597,942 33,229,556

Impairment for Lease Rental Receivable (Note 18.3) 12,708,063 27,038,321 – –

Impairment for Loan Receivable (Note 18.3) 30,056,917 25,273,058 – –

Impairment for Trade Debtor (Note 18.3) 80,184,956 53,544,994 62,162,545 28,841,884

Impairment for Other Receivable (Note 18.3) 136,021,665 131,559,418 136,021,665 131,559,418

282,592,051 260,713,094 226,782,152 193,630,858



8.2 Personnel CostsConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Staff Costs 4,416,358,271 3,856,156,011 3,972,019,851 3,548,562,365

Defined Benefit Plan Costs – Retiring Gratuity 116,488,092 74,737,355 86,547,997 68,076,781

Defined Contribution Plan Costs – EPF, ETF and MSPS 419,254,064 357,019,347 388,400,060 336,543,491

4,952,100,427 4,287,912,713 4,446,967,908 3,953,182,637

9. Income Tax ExpenseConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Current Income Tax ExpenseCurrent Tax Expense on Ordinary Activities for the Year – Singer (Sri Lanka) PLC (Note 9.1) 907,000,775 708,138,865 426,554,644 390,728,327

Under/(Over) Provision in Respect of Previous Year (80,388,571) 11,408,728 (13,464,595) 10,144,703

Tax on Dividend IncomeWHT on Dividend Received from Subsidiary Companies 40,880,488 19,366,382 – –

867,492,692 738,913,975 413,090,049 400,873,030

Deferred TaxExpense/(Income) (Note 9.2) (99,015,801) (79,678,250) (67,004,748) (64,896,457)

768,476,891 659,235,725 346,085,301 335,976,573

9.1 Reconciliation Between Accounting Profit and Taxable ProfitConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Profit Before Tax 3,126,233,229 1,895,274,564 1,450,529,968 1,195,681,519

Share of Profit of Associate – (2,042,497) – –

Aggregate Accounting Profit 3,126,233,229 1,893,232,067 1,450,529,968 1,195,681,519

Aggregate Disallowable Expenses 3,740,255,334 3,019,018,467 512,747,173 450,826,544

Aggregate Tax Deductible Expenses (3,057,827,537) (2,399,815,824) (127,259,804) (72,247,703)

Income Not Liable for Tax (565,930,512) (2,158,613) (312,607,896) (178,802,049)

Unrealised Profit 2,079,449 18,791,278 – –

3,244,809,963 2,529,067,375 1,523,409,441 1,395,458,311

Taxable Profit 28% 3,225,484,783 2,529,067,375 1,523,409,441 1,395,458,311

Taxable Profit 20% 19,325,180 – – –

Current Income Tax 28% 903,135,739 708,138,865 426,554,644 390,728,327

Current Income Tax 20% 3,865,036 – – –

Current Income Tax 907,000,775 708,138,865 426,554,644 390,728,327

The Group tax expense is based on the taxable profit of each Company in the Group. Singer (Sri Lanka) PLC and six subsidiary companies – Singer Finance (Lanka) PLC, Regnis Lanka PLC, Singer Industries (Ceylon) PLC, Reality Lanka Limited and Singer Digital Media (Private) Limited and Signer Business School (Private) Limited are liable to Income Tax at 28% on taxable profit and Regnis Appliances (Private) Limited is liable to income tax at 20% on Taxable profit.

The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretation of tax law and prior experience.



9.2 Deferred Tax Expense/(Income)Consolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Deferred Tax Charge/(Credit) Arising due to – Origination and Reversal of Temporary Differences (Note 26.1) (94,628,799) (69,447,444) (62,035,500) (59,927,209)

Deferred Tax Effect on Unrealised Profit in Inventory (Note 26.1) 582,246 (5,261,558) – –

– Deferred Tax Effect in Realisation of Revaluation Surplus (Note 26.1) (4,969,248) (4,969,248) (4,969,248) (4,969,248)

(99,015,801) (79,678,250) (67,004,748) (64,896,457)

9.3 Deferred Tax has been computed using the enacted tax rate of 28% except for the rate of 20% used for Regnis Appliance (Private) Limited.

9.4 Tax Recognised in Other Comprehensive Income2016 2015

Before Tax Tax Expense Net of Tax Before Tax Tax Expense Net of TaxRs. Rs. Rs. Rs. Rs. Rs.

GroupRevaluation Gain on Property, Plant and Equipment (Note 22.1) 250,153,762 (29,413,569) 220,740,193 – – –

Actuarial Loss on Obligation (Note 27) 62,276,719 (17,266,352) 45,010,367 (41,244,046) 11,548,333 (29,695,713)

312,430,481 (46,679,921) 265,750,560 (41,244,046) 11,548,333 (29,695,713)

CompanyRevaluation Gain on Property, Plant and Equipment (Note 22.1) 250,153,762 (29,413,569) 220,740,193 – – –

Actuarial Loss on Obligation (Note 27) 52,905,239 (14,813,467) 38,091,772 (40,252,056) 11,270,576 (28,981,480)

303,059,001 (44,227,036) 258,831,965 (40,252,056) 11,270,576 (28,981,480)

10. Earnings Per Share

10.1 Basic earnings per share is calculated by dividing the profit for the year attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

10.2 The following reflects the income and share data used in the basic earnings per share computations:


2016 2015 2016 2015Rs. Rs. Rs. Rs.

Profit Attributable to Ordinary Shareholders

Profit for the Year (Rs.) 2,357,756,339 1,236,038,839 1,104,444,667 859,704,946

Profit Attributable to Ordinary Shareholders for Basic Earnings Per Share (Rs.) 2,122,194,674 1,152,771,289 1,104,444,667 859,704,946

Weighted Average Number of Ordinary Shareholders

Weighted Average Number of Ordinary Shares in Issue Applicable to Basic Earnings per Share 125,209,610 125,209,610 125,209,610 125,209,610

Basic Earnings per Share (Rs.) 16.95 9.21 8.82 6.87



11. Property, Plant and Equipment 11.1 Gross Carrying Amounts – Consolidated

Balance as at

01.01.2016

Acquisition through Business

Combination

Additions/Transfers

Increase/(Decrease)

in Revaluation

Disposals/Transfers

Balance as at

31.12.2016Rs. Rs. Rs. Rs. Rs. Rs.

At CostMotor Vehicles 299,384,203 17,178,490 45,886,400 – (44,937,954) 317,511,139

Furniture and Equipment 258,886,664 15,028,951 26,528,467 – – 300,444,082

Plant and Machinery 257,048,516 496,493,665 126,460,846 – (23,661,251) 856,341,776

Culinary School Equipment 75,814 – – – – 75,814

E.D.P. Equipment 276,347,426 28,649,709 79,360,869 – (1,783,496) 382,574,508

Shop Furniture 496,220,492 – 88,989,995 – (6,460,011) 578,750,476

Shop Equipment 617,883,739 – 178,822,769 – (21,101,206) 775,605,302

Improvements on Leasehold Premises 708,712,169 7,324,160 133,858,685 – (13,759,762) 836,135,252

2,914,559,023 564,674,975 679,908,031 – (111,703,680) 4,047,438,349

At ValuationFreehold Land 665,668,900 1,470,337,501 – 145,105,300 – 2,281,111,701

Freehold Buildings 597,038,220 356,758,192 1,337,419 105,048,462 (47,446,056) 1,012,736,237

1,262,707,120 1,827,095,693 1,337,419 250,153,762 (47,446,056) 3,293,847,938

Gross Carrying Amount Excluding Capital WIP 4,177,266,143 2,391,770,668 681,245,450 250,153,762 (159,149,736) 7,341,286,287

Machinery and Equipment – 89,535,980 181,815,799 – (77,203,347) 194,148,432

Improvements on Leasehold Premises – – 4,640,399 – – 4,640,399

Total Capital Work-in-Progress – 89,535,980 186,456,198 – (77,203,347) 198,788,831

Total Gross Carrying Amount 4,177,266,143 2,481,306,648 867,701,648 250,153,762 (236,353,083) 7,540,075,118

11.2 Depreciation and Impairment Losses – ConsolidatedBalance as at

01.01.2016Acquisition

throughBusiness

Combination

Charge for theYear/Transfers

Increase/(Decrease)

in Revaluation

Disposals/Transfers

Balance as at31.12.2016

Rs. Rs. Rs. Rs. Rs. Rs.

Freehold Buildings 24,681,436 1,631,498 34,948,491 – (47,446,056) 13,815,369

Motor Vehicles 132,882,102 9,180,206 20,539,886 – (19,826,473) 142,775,721

Furniture and Equipment 153,232,949 10,451,007 20,084,980 – 12,205,700 195,974,636

Plant and Machinery 161,594,335 307,622,691 49,552,675 – (22,065,064) 496,704,637

Culinary School Equipment 75,814 – – – – 75,814

E.D.P. Equipment 169,811,050 22,150,201 38,143,579 – (1,639,072) 228,465,758

Shop Furniture 205,632,319 – 70,478,276 – (6,460,011) 269,650,584

Shop Equipment 248,201,461 – 91,167,027 – (20,984,635) 318,383,853

Improvements on Leasehold Premises 365,753,755 6,166,370 89,134,447 – (13,666,776) 447,387,796

Total Depreciation and Impairment Loss 1,461,865,221 357,201,973 414,049,360 – (119,882,388) 2,113,234,168



11.3 Carrying AmountsGroup

31st December 2016

31st December 2015

Rs. Rs.

At Cost 2,132,993,012 1,452,693,802

At Valuation 3,293,847,938 1,262,707,120

Total Carrying Amount of Property, Plant and Equipment 5,426,840,950 2,715,400,922

11.4 During the financial year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs. 778,292,600/- (2015 – Rs 361,999,991/-) on cash basis.

11.5 Lands and Buildings were revalued during the financial year 2016 by Messrs Chulananda Wellappili, an Independent Valuer who is holding a degrees of B.Sc the state Management and Valuation. M.Sc Town and Country Planning and PG.Dip in Regional planning. Further he is a gratuate member of Institute of valuers of Sri Lanka, A member of Institute of Town and Country Planning Sri Lanka, Senior Certified Valuer of international Real Estate Institute of USA. A corporate member of the Institute of Revenues, Rating and Valuations of UK. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2016. The surplus arising from the revaluation was transferred to a revaluation reserve.

11.6 The carrying amount of the revalued assets that would have been included in the Financial Statements had the assets been carried at cost would be as follows:

Carrying Amount Rs.

Land 677,752,579

Building 628,445,638

Total Carrying Amount 1,306,198,217

11.7 The amount of the Property, Plant and Equipment includes fully-depreciated assets value would be as follows:2016

Rs.2015

Rs.

Fully Depreciated Assets 1,116,508,583 788,373,433

11.8 Depreciation charge for the year is included in the following line items in the Statements of Profit or Loss and Other Comprehensive Income.

2016Rs.

2015Rs.

Cost of Sales 79,291,546 31,787,001

Administration Expenses 334,757,814 274,988,866

414,049,360 306,775,867



11.9 Gross Carrying Amounts – CompanyBalance as at

01.01.2016Additions/Transfers

Increase/(Decrease)in Revaluation

Disposals/Transfersto Revaluation

Balance as at31.12.2016

Rs. Rs. Rs. Rs. Rs.

At CostMotor Vehicles 292,404,200 42,686,400 – (44,937,954) 290,152,646

Furniture and Equipment 211,550,869 16,959,170 – – 228,510,039

Plant and Machinery 257,048,516 31,419,977 – – 288,468,493

Culinary School Equipment 75,814 – – – 75,814

E.D.P. Equipment 236,703,907 60,082,656 – (281,628) 296,504,935

Shop Furniture 496,220,493 88,989,995 – (6,460,011) 578,750,477

Shop Equipment 617,883,740 178,822,769 – (21,101,206) 775,605,303

Improvements on Leasehold Premises 606,253,678 132,292,339 – (13,759,763) 724,786,254

2,718,141,217 551,253,306 – (86,540,562) 3,182,853,961

At ValuationFreehold Land 665,668,900 – 145,105,300 – 810,774,200

Freehold Buildings 597,038,220 – 105,048,462 (47,446,056) 654,640,626

1,262,707,120 – 250,153,762 (47,446,056) 1,465,414,826

Total Gross Carrying Amount 3,980,848,337 551,253,306 250,153,762 (133,986,618) 4,648,268,787

11.10 Depreciation and Impairment Losses – CompanyBalance as at

01.01.2016Charge for the Year/Transfers

Increase/(Decrease) in Revaluation

Disposals/Transfers Balance as at31.12.2016

Rs. Rs. Rs. Rs. Rs.

Freehold Buildings 24,681,436 22,764,620 – (47,446,056) –

Motor Vehicles 130,797,340 18,099,635 – (19,826,474) 129,070,501

Furniture and Equipment 136,883,172 14,594,086 – 12,205,700 163,682,958

Plant and Machinery 161,594,335 18,466,154 – – 180,060,489

Culinary School Equipment 75,814 – – – 75,814

E.D.P. Equipment 149,784,270 28,906,469 – (202,251) 178,488,487

Shop Furniture 205,632,318 70,478,276 – (6,460,011) 269,650,583

Shop Equipment 248,201,463 91,167,027 – (20,984,635) 318,383,855

Improvements on Leasehold Premises 322,761,138 76,956,695 – (13,666,776) 386,051,058

Total Depreciation and Impairment Losses 1,380,411,286 341,432,962 – (96,380,504) 1,625,463,745

11.11 Carrying Amounts31st December

201631st December

2015Rs. Rs.

At Cost 1,557,390,216 1,362,475,694

At Valuation 1,465,414,826 1,237,961,356

Total Carrying Amount of Property, Plant and Equipment 3,022,805,042 2,600,437,050

11.12 During the financial year, the Company acquired Property, Plant and Equipment to the aggregate value of Rs. 539,047,605/- (2015 – Rs. 293,140,509/-) on cash basis.



11.13 Lands and Buildings were revalued during the financial year 2016 by Messrs Chulananda Wellappili, an Independent Valuer. who is holdings a degrees of B.Sc state management and valuation. M.Sc Town and Country planning and PG.Dip in Regional planning. Further he is a gratuate member of Institute of valuers of Sri Lanka, A member of Institute of Town and Country Planning Sri Lanka, Senior certified valuer of international Real Estate Institute of USA. A corporate member of Institute of Revenues, Rating and Valuations of UK. The results of such revaluation were incorporated in these Financial Statements from its effective date which is 31st December 2016. Such assets were valued on contractors method for existing use basis. The surplus arising from the revaluation was transferred to a revaluation reserve.

11.14 The carrying amount of the revalued assets that would have been included in the Financial Statements had the assets been carried at cost would be as follows:

Carrying Amount Rs.

Land 583,697,750

Building 549,592,164

Total carrying amount 1,133,289,914

11.15 The amount of the property, plant and equipment includes fully depreciated assets value would be as follows:

2016Rs.

2015Rs.

Fully Depreciated Assets 841,703,025 606,588,734

11.16 Depreciation charge for the year is included in the following line items in the Statements of Profit or Loss and other Comprehensive Income.

2016Rs.

2015Rs.

Cost of Sales 31,600,931 31,787,001


341,432,961 288,662,663

11.17 Information on the Freehold Land and Buildings of the CompanyLocation Extent

(Perches)Buildings

(Square Feet)

Cost or Revaluation of

Land Rs.


BuildingsRs.

Total Value

Rs.

Ambalantota Main Street, Ambalantota 6.6 1885 11,550,000 4,618,250 16,168,250

Balangoda Ratnapura Road, Balangoda 6.2 2080 15,500,000 6,435,000 21,935,000

Bandarawela Main Street, Bandarawela 3.69 1535 6,642,000 4,617,625 11,259,625

Borella D.S. Senanayaka Mawatha, Borella 4.84 1700 37,120,000 6,791,500 43,911,500

Chilaw Bazaar Street, Chilaw 13.05 4120 28,871,000 13,086,125 41,957,125

ColpettyNo. 143, Galle Road, Colombo 03 3.35 1560 25,125,000 5,625,000 30,750,000

Eheliyagoda Ratnapura Road, Eheliyagoda 5.73 1660 8,595,000 4,357,500 12,952,500

Galle Main Street, Galle 2.84 2250 11,360,000 9,365,625 20,725,625

Gampaha Colombo Road, Gampaha 19.45 7870 44,675,000 26,758,000 71,433,000



Location Extent (Perches)

Buildings (Square

Feet)


Land Rs.


BuildingsRs.

Total Value

Rs.

Hikkaduwa Galle Road, Hikkaduwa 8.74 2400 15,295,000 7,104,000 22,399,000

Embilipitiya Colombo Road, Pallegama, Embilipitiya 4.6 2070 13,580,000 7,038,000 20,618,000

Kadawatha Kandy Road, Kadawatha 3.8 1150 7,700,000 11,980,000 19,680,000

Kandy – Mega Sirimavo Bandaranaike Mawatha, Kandy 9.55 12840 29,372,000 57,780,000 87,152,000

Katugastota Madawala Road, Katugastota 4.875 535 7,350,000 4,206,438 11,556,438

Kirindiwela Gampaha Road, Kirindiwela 8.1 2940 14,580,000 8,379,000 22,959,000

Kurunegala Bodhiraja Mawatha, Kurunegala 7.66 2230 21,065,000 5,652,500 26,717,500

Maharagama High Level Road, Maharagama 6.2 2700 31,000,000 9,720,000 40,720,000

Matara Anagarika Dharmapala Mawatha, Matara 10 3520 29,400,000 13,068,000 42,468,000

Middeniya Katuwana Road, Middeniya 8.25 2670 10,312,500 7,375,875 17,688,375

Mount Lavinia Galle Road, Mount Lavinia 7.5 1900 26,250,000 6,661,875 32,911,875

Mount Lavinia – Mega Galle Road, Mount Lavinia 20 15840 69,262,200 72,773,713 142,035,913

Nawalapitiya Kotmale Road, Nawalapitiya 5.25 2760 9,400,000 6,279,000 15,679,000

Negombo Greens Road, Negombo 6 2040 18,000,000 5,737,500 23,737,500

Nuwara-Eliya Kandy Street, Nuwara-Eliya 4.65 1700 13,950,000 5,610,000 19,560,000

Panadura Galle Road, Panadura 6.15 2940 15,375,000 8,820,000 24,195,000

Piliyandala Gonamaditta Road, Piliyandala 1,151.95 116410 194,539,500 299,004,162 493,543,662

Pussellawa Nuwara-Eliya Road, Pussellawa 12.43 3295 18,645,000 9,514,313 28,159,313

Rathnapura Colombo Road, Rathnapura 5.8 2735 14,500,000 8,752,000 23,252,000

Tangalle Matara Road, Tangalle 4.6 1285 11,500,000 2,923,375 14,423,375

Trincomalee North Coast Road, Trincomalee 12.12 2.184 11,160,000 7,586,250 18,746,250

Wellawatta Galle Road, Wellawatta 4.6 2700 39,100,000 7,020,000 46,120,000

810,774,200 654,640,626 1,465,414,826



11.18 Measurement of Fair Values

(i) Fair Value HierarchyThe fair value of property was determined by external independent property valuer having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.

The fair value measurement for all of properties has been categorised as Level 3 fair value based on the input to the valuation technique used.

(ii) Valuation Technique and Significant Unobservable InputsThe following table shows the valuation technique used in measuring the fair value of property, as well as the significant unobservable inputs used:Valuation Technique Significant Unobservable Inputs Interrelationship between Key Unobservable

Inputs and Fair Value Measurements

Contractor's Method: The contractor’s method works on the basis that a property’s value can be equated to its cost. Valuer assess the cost of the building if it would have constructed in current year, and deduct margin for usage of the property-based on their year of construction.

Land value is based on the market prices of each land respectively. Value of property is considered as summation of land and building value.

z Market value of land (Price per Perch). Valuer has used a range of prices for respective lands based on their recently transacted cost.

z Construction cost per square feet of a building.

z Depreciation rate for the usage of assets.

The estimated fair value would increase/(decrease) if –

z Market value per perch was higher (lower)

z Cost per square feet was higher (lower)

z Depreciation rate for usage lower (higher)

12. Intangible Assets


2016 2015 2016 2015Rs. Rs. Rs. Rs.

Trade Mark (Note 12.1) 93,512,500 93,512,500 93,512,500 93,512,500

Software (Note 12.2) 121,593,631 109,947,160 73,212,727 60,352,093

Other Intangible Assets Externally Acquired (Note 12.3) 46,431,920 46,431,920 46,431,920 46,431,920

261,538,051 249,891,580 213,157,147 200,296,513

12.1 Trade Mark with Infinite Useful Life Consolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

CostAs at the Beginning of the Year 93,512,500 93,512,500 93,512,500 93,512,500

As at the End of the Year 93,512,500 93,512,500 93,512,500 93,512,500

Less: Accumulated Impairment Loss – – – –

Net Carrying Amount 93,512,500 93,512,500 93,512,500 93,512,500

Trade mark consists of SISIL brand name Rs. 55,000,000/- (Note 12.4) and UNIC brand name Rs. 38,512,500/- (Note 12.5) Refer Notes 12.4 and 12.5 for SISIL and UNIC impairment respectively.



12.2 SoftwareConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.


Acquisition through Business Combination 3,060,949 – – –

Acquired/Incurred During the Year 58,200,745 24,969,529 27,459,327 7,529,398


AmortisationAs at the Beginning of the Year 154,205,729 135,481,664 123,637,114 110,991,199

Acquisition through Business Combination 622,873 – – –

Software Impaired 29,817,819 –

Amortisation Charge for the Year (Note 12.8) 19,174,532 18,724,066 14,598,693 12,645,915

Transferred from Property, Plant and Equipment – – – –


Carrying AmountAs at the Beginning of the Year 109,947,160 103,701,697 60,352,093 65,468,611


12.3 Other Intangible Assets Externally AcquiredConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.


Acquired/Incurred During the Year – – – –

Capitalised During the Year – – – –


AmortisationAs at the Beginning of the Year 32,000,000 32,000,000 32,000,000 32,000,000

Amortisation Charge for the Year – – – –


Carrying AmountAs at the Beginning of the Year 46,431,920 46,431,920 46,431,920 46,431,920


Other Intangible Assets externally acquired includes Sony distribution rights amounting to Rs. 46,431,920/- and Hayleys Brand Amounting to Rs. 32,000,000/-. Hayleys Brand is fully amortised as at 31st December 2016. Refer Note 12.6 and 12.7 for amortisation of Hayleys and impairment of Sony.



12.4 SISIL TrademarkThe Company had acquired the ‘SISIL’ trade mark in December 2000, amounting to Rs. 55 million. The management is of the opinion that the aforementioned trademark has an indefinite useful life as their associated brand awareness and recognition has existed over 30 years and the Company intends to utilise the said trademark for the foreseeable future. There are no legal, regulatory, contractual, competitive, economic or other factors that may limit its useful life and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for any impairment as at 31st December 2016:

Annual Sales Growth for Next Five Years 18%Gross Margin 28%Discount Rate 11.5%Indefinite Growth Rate after Year 2020 2%

12.5 UNIC TrademarkThe Company had acquired the ‘UNIC’ Trade mark in 2006 amounting Rs. 38,512,500/-. This trade mark is also considered to have an indefinite useful life due to the factors mentioned in the preceding paragraph and accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st December 2016:

Annual Sales Growth for Next Five Years 20%Gross Margin 33%Discount Rate 11.5%Indefinite Growth Rate after Year 2020 2%

12.6 The Company took over the showrooms, retail operation of the Hayleys Electronic Retail Limited, from 2nd January 2008 and agencies of Philips and Kenwood from Hayleys Electronic Ltd for Rs. 32 million. The entire purchase consideration is treated as Goodwill and is amortised over the determined useful life of 5 years commencing from the period beginning 1st January 2009.

12.7 SONY Distribution Rights The Company had acquired the distribution rights of brand ‘SONY’ in 2014 amounting Rs. 46,431,920/-. These assets are now carried at cost subject to annual impairment test and carrying amount as at 31st December 2016 is Rs. 46,431,920/-. This distribution right also considered to have an indefinite useful life as the Company is intending to use the distribution right for the foreseeable future. Accordingly, the carrying amount of this trademark is determined after testing for impairment annually. Following assumptions are made to test for impairment as at 31st December 2016:

Annual Sales Growth for Next Five Years 38%

Gross Margin 22%

Discount Rate 11.5%

Indefinite Growth Rate after Year 2020 2%


31st December 2016 2015 2016 2015Rs. Rs. Rs. Rs.

12.8 Amortisation Charge for the YearAmortisation of Software 19,174,532 18,724,066 14,598,693 12,645,915

19,174,532 18,724,066 14,598,693 12,645,915



13. Investment in Subsidiaries – CompanyCountry ofIncorporation

No. of Shares

31st December

No. of Shares

31st December

CarryingValue

31st December

CarryingValue

31st December2016 2015 2016 2015

Rs. Rs.

QuotedSinger Finance (Lanka) PLC Sri LankaInvestment on 1st January 132,931,054 132,931,054 982,241,596 982,241,596

Investment Made During the Year – – – –

Investment as at 31st December 132,931,054 132,931,054 982,241,596 982,241,596

Singer Industries (Ceylon) PLC Sri LankaInvestment on 1st January – – – –

Investments Made During the Year (Note 39.1 and Note 41.2) 3,373,967 – 692,407,683 –

Investment as at 31st December 3,373,967 – 692,407,683 –

Regnis Lanka PLC Sri LankaInvestment on 1st January – – – –

Investments Made During the Year (Note 39.2) 6,568,461 – 722,530,710 –

Investment as at 31st December 6,568,461 – 722,530,710 –

Non-QuotedSinger Digital Media (Pvt) Limited Sri LankaInvestment on 1st January 500,000 500,000 5,000,000 5,000,000


Investment as at 31st December 500,000 500,000 5,000,000 5,000,000

Singer Business School (Pvt) Limited Sri LankaInvestment on 1st January 500,000 500,000 5,000,000 5,000,000


Investment as at 31st December 500,000 500,000 5,000,000 5,000,000

Reality Lanka Limited Sri Lanka

Investment on 1st January – –

Transfer from Equity Investee 40.0% 4,800,000 4,800,000 48,000,000 –

Investment as at 31st December 4,800,000 4,800,000 48,000,000 –

Total Investment in Subsidiaries 2,455,179,989 992,241,596

14. Equity Accounted Investees

14.1 Equity Accounted Investees – ConsolidatedHolding Consolidated

Carrying Amount31st December

2016

Share ofProfit/(Loss)

Net of Dividends Received for

the Year

ConsolidatedCarrying Amount

31st December2015

31st December

2016

31st December

2015

% % Rs. Rs. Rs.

Non-QuotedReality Lanka Limited (Note 14.2 and Note 14.7) 40.0 – – 54,831,464

Telshan Network (Pvt) Limited (Note 14.6) 23.56 23.56 – – –

Total Non-Quoted Investments in Equity Accounted Investees – – 54,831,464



14.2 Share of Equity Accounted Investee Retained ProfitConsolidated

31st December 2016 2015Rs. Rs.

Reality Lanka LimitedBalance Brought Forward – 7,188,967

Current Year Share of Profit (Note 7) – 2,042,497

Less: Dividends Received – Gross – (2,400,000)

– 6,831,464

Total Share of Equity Accounted Investees Retained Profits – 6,831,464

Cost of Equity Accounted Investees (Note 14.3) – 48,000,000

Total Carrying Amount of Investment in Equity Accounted Investees – 54,831,464

14.3 Movement of Investment – CostConsolidatedBalance as at

31st December 2015

Increase/ (Decrease)

in Investments

ConsolidatedBalance as at

31st December 2016

Rs. Rs. Rs.

Reality Lanka Limited 48,000,000 (48,000,000) –

Telshan Network (Pvt) Limited (Note 14.6) – – –

48,000,000 (48,000,000) –

14.4 Summarised Financial Information of Equity Accounted Investees2016 2015

Rs. Rs.

Percentage of Ownership Interest – 40%

Non-Current Assets – 207,101,500

Current Assets – 4,666,922

Non-Current Liabilities – –

Current Liabilities – (74,689,763)

Net Assets (100%) – 137,078,659

Group Share of Net Assets (40%) – 54,831,463

Revenue – 7,434,350

Change in Fair Value of Investment Property – –

Administrative Expense – (342,250)

Income Tax Expense – (1,985,858)

Profit for the year – 5,106,242

Group Share of Revenue (40%) – 2,042,497



14.5 Equity Accounted Investees – CompanyNo. of Shares Carrying

AmountDirectors’ Valuation

Carrying Amount

Directors’ Valuation

2016 2015 2016 2016 2015 2015Rs. Rs. Rs. Rs.

Non-QuotedTelshan Network (Pvt) Limited (Note 14.6) 2,000,000 2,000,000 – – – –

Reality Lanka Limited – 4,800,000 – – 48,000,000 54,831,464

Total Investments in Non-Quoted Equity Accounted Investees – – 48,000,000 54,831,464

Net Carrying Amount of Investment in Equity Accounted Investees – – 48,000,000 54,831,464

14.6 Company’s Investment in Telshan Network (Pvt) Limited amounting to Rs. 20,000,000/- had been written off since it carries negative net assets position.

14.7 Investment in Reality Lanka Limited is now classified under Investment in Subsidiaries as Reality Lanka Limited became a subsidiary of the Company through the acquisition of Singer Industries (Ceylon) PLC.

15. Other Investments

15.1 Non-Current Financial AssetsConsolidated Company

No. of Shares Amount Amount2016 2015 2016 2015 Rs. Rs. Rs. Rs.

a. Available-for-Sale Financial AssetsNon-Quoted Equity Investment Lanka Limited 1,665,000 17,020,000 17,020,000 17,020,000 17,020,000

Credit Information Bureau of Sri Lanka 100 41,300 41,300 – –

17,061,300 17,061,300 17,020,000 17,020,000


Amount Amount2016 2015 2016 2015 Rs. Rs. Rs. Rs.

b. Held-to-Maturity Financial AssetsInvestments in Debentures

Fixed Rate 9.95% Senior Unlisted, Unsecured Redeemable, Rated Debentures Redeemable on 18.06.2020 – – 450,000,000 599,283,000

36 Months 11.5% Secured Debentures Redeemable on 06.04.2019 – – 312,090,000 –

48 Months 12% Secured Debentures Redeemable on 06.04.2020 – – 150,000,000 –

Total Other Investments 17,061,300 17,061,300 929,110,000 616,303,000

15.2 Short-Term Investments

a. Held-to-Maturity Financial AssetsInvestment in Treasury Bills 515,255,581 606,011,463 – –

515,255,581 606,011,463 – –

Further details relating to fair valuation in carrying value is providing in Note 36 to these Financial Statements.



16. InventoriesConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Raw Materials 1,075,229,171 245,590,000 252,289,000 245,590,000

Work-in-Progress 190,474,933 86,666,000 107,285,000 86,666,000

Finished Goods 7,767,288,251 6,506,542,194 6,977,909,352 6,154,551,950

Supplies and Parts 584,157,732 486,956,001 564,552,905 486,627,359

Goods-in-Transit 745,090,585 206,962,890 545,311,719 206,962,890

10,362,240,672 7,532,717,085 8,447,347,976 7,180,398,199

Less: Impairment of Inventory (Note 16.1) (715,812,992) (548,685,705) (650,899,533) (500,318,048)

Unrealised Profit on Inventory (103,146,326) (61,819,296) – –

Consignment Inventory (2,953,394) (3,053,292) (2,953,394) (3,053,292)

Total Inventories 9,540,327,961 6,919,158,792 7,793,495,049 6,677,026,859

Raw materials, consumable and change in work-in-progress and finished goods recognised at cost of sales by the Group and the Company to the amount of Rs. 5,945,493,902/- (2015 – Rs. 4,976,160,583 /-) and Rs. 1,715,501,330/- (2015 – Rs. 1,357,583,825/-) respectively.

16.1 Impairment of InventoryConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Balance as at the Beginning of the Year 548,685,705 315,280,395 500,318,048 315,280,395

Amount Recognised during the Year (Note 8) 167,127,287 233,405,310 150,581,485 185,037,653Balance as at the end of the Year 715,812,992 548,685,705 650,899,533 500,318,048

17. Loans Due from Related PartiesConsolidated Company

2016 2015 2016 2015Relationship Rs. Rs. Rs. Rs.

Reality Lanka Limited Subsidiary – 65,890,881 58,134,631 65,890,881 Digital Media (Private) Limited Subsidiary – – 1,119,940,065 756,747,316 Singer Finance (Lanka) PLC Subsidiary – – 200,000,000 300,000,000

– 65,890,881 1,378,074,696 1,122,638,197



Reality Lanka LimitedCompany granted this facility based on the fund requirement of Reality Lanka Limited, and it will be recovered on demand.

Digital Media (Private) LimitedCompany granted this facility based on the fund requirement of Singer Digital Media (Private) Limited, and will be recovered on demand. Interest is charged based on the highest AWPLR prevailing in the respective month + 0.5%.

Singer Finance (Lanka) PLCCompany granted this facility based on the fund requirement of Singer Finance (Lanka) PLC and will be recovered on demand. Interest is charged based on the highest AWPLR prevailing in the respective month + 0.5%.

18. Trade and Other Receivables18.1 Non-Current


2016 2015 2016 2015Rs. Rs. Rs. Rs.

Hire Debtors 1,408,786,868 1,775,778,961 1,204,847,107 1,034,472,113

Less: Deferred Profit on Hire Sales (214,086,677) (276,653,626) (192,173,114) (166,963,799)

1,194,700,191 1,499,125,335 1,012,673,993 867,508,314

Lease Rental ReceivablesGross Instalment in Lease 7,280,063,563 5,843,498,844 – –

Rental Received in Advance (262,899) (514,248) – –

7,279,800,664 5,842,984,596 – –

Less: Unearned Income (1,364,239,586) (1,109,001,049) – –

5,915,561,078 4,733,983,547 – –

Loan DebtorsConsumer and Personal Loans 231,048,419 237,358,038 – –

Rental Received in Advance – (319,089) – –

Less: Unearned Loan Interest Income (44,654,131) (31,772,631) – –

186,394,288 205,266,318 – –

Rent Paid in Advance 659,255,881 535,938,702 658,129,688 535,938,702

Other Receivables 3,165,000 1,564,000 3,165,000 1,564,000

Loans to Employees (Note 18.4) 247,004,674 246,826,844 214,498,101 215,571,281

909,425,555 784,329,546 875,792,789 753,073,983

8,206,081,112 7,222,704,746 1,888,466,782 1,620,582,297



18.2 CurrentConsolidated Company

Note 2016 2015 2016 2015Rs. Rs. Rs. Rs.

Hire Debtors 7,103,449,566 6,355,157,524 6,764,140,047 5,683,520,321

Rental Received in Advance (86,150) (108,972) – –

Less: Deferred Profit on Hire Sales (1,200,862,574) (1,128,866,598) (1,145,506,331) (968,407,730)

Provision for Impairment 18.3 (50,985,870) (67,975,323) (25,491,954) (32,861,711)

5,851,514,972 5,158,206,631 5,593,141,762 4,682,250,880

Lease Rental ReceivableGross Instalment in Lease 4,691,624,489 3,635,029,927 – –

Less: Unearned Income (1,432,703,032) (1,081,230,773) – –

Provision for Impairment 18.3 (93,696,290) (111,417,122) – –

3,165,225,167 2,442,382,033 – –

Loan DebtorsConsumer and Personal Loans 1,870,325,713 1,186,586,141 – –

Less: Unearned Loan Interest Income (208,207,480) (160,365,805) – –

FD Loans 25,565,725 36,108,569 – –

Net Receivable 1,687,683,958 1,062,328,905 – –

Less: Provision for Impairment 18.3 (43,421,919) (42,905,357) – –

1,644,262,039 1,019,423,548 – –

Trade DebtorsTrade Receivables 4,791,733,076 3,644,233,847 3,514,400,198 2,835,167,462

Less: Provision for Impairment 18.3 (182,167,047) (110,750,517) (139,441,526) (86,047,407)

4,609,566,029 3,533,483,330 3,374,958,672 2,749,120,055

Other DebtorsAdvance and Other Receivables 1,471,735,032 1,272,618,033 1,227,500,332 1,144,176,973

Less: Provision for Impairment 18.3 (477,353,780) (451,829,649) (476,152,244) (451,829,649)

994,381,252 820,788,384 751,348,088 692,347,324

Shipping Guarantees – 19,483,107 – 19,483,108

Prepayments 167,974,258 165,066,080 85,563,766 90,259,195

Loans to Company Employees 18.4 103,142,550 112,085,927 81,654,755 92,320,549

271,116,808 296,635,114 167,218,521 202,062,852

16,536,066,267 13,270,919,039 9,886,667,043 8,325,781,111




2016 2015 2016 2015Rs. Rs. Rs. Rs.

18.3 Provision for Impairment – Hire DebtorsMovementBalance as at the Beginning of the Year 67,975,323 92,659,009 32,861,711 37,576,524

Provided During the Period 23,620,450 23,297,303 28,597,942 33,229,556

Write-off/Transfer During the Period (40,609,903) (47,980,989) (35,967,699) (37,944,369)

Balance as at the End of the Period 50,985,870 67,975,323 25,491,954 32,861,711

Provision for Impairment – Lease Rental ReceivableMovementBalance as at the Beginning of the Year 111,417,122 129,875,011 – –

Provided During the Period 12,708,063 27,038,321 – –

Write-off During the Period (30,428,895) (45,496,210) – –

Balance as at the End of the Period 93,696,290 111,417,122 – –

Provision for Impairment – Loan DebtorsMovementBalance as at the Beginning of the Year 42,905,357 35,524,073 – –

Provided During the Period 30,056,917 25,273,058 – –

Write-off During the Period (29,540,355) (17,891,774) – –

Balance as at the End of the Period 43,421,919 42,905,357 – –

Provision for Impairment – Trade DebtorsMovementBalance as at the Beginning of the Year 110,750,517 59,371,589 86,047,407 59,371,589


Write-off During the Period (8,768,426) (2,166,066) (8,768,426) (2,166,066)


Provision for Impairment – Other DebtorsMovementBalance as at the Beginning of the Year 451,829,649 435,855,329 451,829,649 435,855,329


Write-off During the Period (110,497,535) (115,585,099) (111,699,070) (115,585,099)




18.4 Loans to Company Employees Consolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

MovementBalance as at the Beginning of the Year 365,735,599 353,228,147 307,891,830 308,037,826

Loans Granted During the Year 138,546,224 130,511,377 106,136,080 109,870,460

Less: Repayments (154,134,599) (124,826,753) (117,875,054) (110,016,456)

Balance as at the End of the Year 350,147,224 358,912,771 296,152,856 307,891,830

Due Within One Year 103,142,550 112,085,927 81,654,755 92,320,549

Due After One Year 247,004,674 246,826,844 214,498,101 215,571,281

18.5 Maturity Analysis of Lease and Loans

Consolidated – 2016Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years 2016


Hire Debtors 1,976,602,004 3,874,912,968 1,194,700,191 – – 7,046,215,163

Lease Rental Receivables 858,334,301 2,306,890,866 3,397,054,714 2,518,506,364 – 9,080,786,245

Loans Receivables 771,072,607 873,189,432 148,958,594 36,935,694 500,000 1,830,656,327

3,606,008,912 7,054,993,266 4,740,713,499 2,555,442,058 500,000 17,957,657,735

Consolidated – 2015Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years 2015


Hire Debtors 1,670,296,174 3,487,910,457 1,431,403,645 67,721,690 – 6,657,331,966

Lease Rental Receivables 591,225,632 1,851,156,401 3,395,121,421 1,328,996,435 9,865,692 7,176,365,580

Loans Receivables 453,509,633 565,913,914 185,670,710 18,893,584 702,024 1,224,689,865

2,751,031,439 5,904,980,772 5,012,195,776 1,415,611,709 10,567,716 15,058,387,411

Company – 2016Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years 2016


Hire Debtors 1,840,794,077 3,752,347,685 1,012,673,993 – – 6,605,815,755

1,840,794,077 3,752,347,685 1,012,673,993 – – 6,605,815,755

Company – 2015Less than 3-12 1-3 3-5 Over Total 3 Months Months Years Years 5 Years 2015


Hire Debtors 1,534,886,912 3,147,363,969 867,508,313 – – 5,549,759,194

1,534,886,912 3,147,363,969 867,508,313 – – 5,549,759,194



19. Amounts Due from Related PartiesConsolidated Company


Singer Finance (Lanka) PLC Subsidiary – – – 98,474,822

Singer Digital Media (Private) Limited Subsidiary – – 73,813,827 135,782,100

Singer Business School (Private) Limited Subsidiary – – 969,018 –

– – 74,782,845 234,256,922

20. Cash and Cash Equivalents Components of Cash and Cash Equivalents

20.1 Favourable Cash and Cash Equivalents BalancesConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Cash at Banks 1,415,845,661 904,126,217 1,036,707,808 874,007,756

Cash in Hand 125,629,154 6,042,860 2,878,300 2,586,236

1,541,474,815 910,169,077 1,039,586,108 876,593,992

20.2 Unfavourable Cash and Cash Equivalent BalancesBank Overdrafts (1,202,576,667) (798,320,065) (702,096,131) (616,957,314)

Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement 338,898,148 111,849,012 337,489,977 259,636,678

21. Stated CapitalAt the Beginning

of the Year 01.01.2016

Number

Issued for Cash During

the Year Number

Issued for Non-Cash

Consideration Number

At the End of the Year 31.12.2016

Number

Number of Shares – Ordinary Shares 125,209,610 – – 125,209,610

125,209,610 – – 125,209,610

Rupees – Ordinary Shares 626,048,050 – – 626,048,050

626,048,050 – – 626,048,050

The holders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share at a meeting of the Company.

21.1 Shares Held by Group CompaniesThe shares of the Company held by the Group Companies are as follows:

2016 2015Number Number

Retail Holdings (Sri Lanka) BV [Formerly known as Singer (Sri Lanka) BV] 99,762,850 107,812,850



21.1.1 Share Holding of Retail Holdings (Sri Lanka) BV2016 2015

Number Number

Shares as at the Beginning of the year 107,812,850 107,812,850

Shares Divestment during the Year (8,050,000) –

Shares as at the End of the Year 99,762,850 107,812,850

22. Capital ReservesConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Revaluation ReserveRevaluation Reserve (Note 22.1) 1,057,964,069 857,580,019 1,065,542,144 857,580,019

1,057,964,069 857,580,019 1,065,542,144 857,580,019

22.1 Revaluation ReserveBalance as at the Beginning of the Year 857,580,019 870,358,087 857,580,019 870,358,087

Revaluation During the Year (Note 9.4) 250,153,762 – 250,153,762 –

Deferred Tax on Revaluation Surplus (Note 9.4) (29,413,569) – (29,413,569) –

Realisation on Revaluation Surplus (20,356,143) (12,778,068) (12,778,068) (12,778,068)

Balance as at the End of the Year 1,057,964,069 857,580,019 1,065,542,144 857,580,019

The revaluation reserve relates to revaluation of freehold land and buildings and represents the fair value of the land and buildings as at the date of revaluation.

23. Statutory Reserves

Consolidated

2016 2015Rs. Rs.

(a) Reserve FundReserve Fund (Note 23.1) 95,360,709 73,317,972

95,360,709 73,317,972

Consolidated

2016 2015Rs. Rs.

(b) Investment FundInvestment Fund (Note 23.2) – –

– –

Total Statutory Reserves 95,360,709 73,317,972



Consolidated

2016 2015Rs. Rs.

23.1 Reserve FundBalance as at the Beginning of the Year 73,317,972 53,884,660

Transfer of Surplus During the Year 22,042,737 19,433,312

Balance as at the End of the Year 95,360,709 73,317,972

The balance in the reserve fund will be used only for the purpose specified in the Central Bank Direction No. 1 of 2003.

The Reserve Fund is maintained in compliance with Direction No. 1 of 2003 Central Bank of Sri Lanka (Capital Funds) issued to Finance Companies.

As per the said Direction, every Licensed Finance Company shall maintain a Reserve Fund and transfer to such reserve fund out of the net profits of the each year after due provisions has been made for taxation and bad and doubtful debts on following basis:

Capital Funds to Deposit Liabilities % of Transfer to Reserve Fund

Not less than 25% 5%

Less than 25% and not less than 10% 20%

Less than 10% 50%

Accordingly, Group has transferred 5% of its net profit after taxation to the Reserve Fund as Company’s Capital Funds to Deposit Liabilities, belongs to not less than 25%.

Consolidated

2016 2015Rs. Rs.

23.2 Investment FundBalance as at the Beginning of the Year – 82,242,927

Transfers During the Year – (82,242,927)

Balance as at the End of the Year – –

From 1st January 2012 onwards, Bank transferred 8% of the profit calculated for the payment of value added tax and 5% of profit before tax calculated for payment of income tax purposes to the investment fund account. The operations of this fund was ceased with effect from 1st October 2014.


2016 2015 2016 2015Rs. Rs. Rs. Rs.

24. Revenue Reserves Summary(a) General Reserve (Note 24.1) 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

(b) Retained Earnings (Note 24.2) 3,674,443,726 2,028,454,981 1,542,212,862 912,778,716

3,674,443,726 2,028,454,981 1,542,212,862 912,778,716

Revenue Reserves 6,374,443,726 4,728,454,981 4,242,212,862 3,612,778,716



24.1 General ReserveThe general reserve which is a revenue reserve represents the amounts set aside by the Directors for general application.

The movement of general reserve is as follows:


2016 2015 2016 2015Rs. Rs. Rs. Rs.

At the Beginning of the Year 2,700,000,000 2,600,000,000 2,700,000,000 2,600,000,000

Transferred from Retained Earnings – 100,000,000 – 100,000,000

At the End of the Year 2,700,000,000 2,700,000,000 2,700,000,000 2,700,000,000

24.2 Retained EarningsSinger (Sri Lanka) PLC 1,542,212,862 912,778,716 1,542,212,862 912,778,716

Equity-Accounted Investees (Note 14.2) – 6,831,464 – –

Subsidiary Companies 3,141,764,370 1,174,846,962 – –

Consolidation Adjustment on Profit in Inventory (71,537,212) (44,509,895) – –

Gain on Dilution of Equity Holding of Singer Finance (Lanka) PLC 176,573,748 176,573,748 – –

Acquisition of Subsidiary with Non-Controlling Interest (4,810,872) (4,810,872) – –

Retained Earnings Attributable to Non-Controlling Interest (Note 24.3) (1,109,759,170) (193,255,142) – –

3,674,443,726 2,028,454,981 1,542,212,862 912,778,716

24.3 Retained Earnings Attributable to Non-Controlling InterestConsolidated

2016 2015Rs. Rs.

At the Beginning of the Year 193,255,142 150,631,563

Total Comprehensive Income Attributable to Non-Controlling Interest – for the Year 237,491,497 83,126,428

Dividend for Non-Controlling Interest – for the Year (89,095,889) (40,502,849)

Acquisition of Non-Controlling Interest 768,108,420 –

At the End of the Year 1,109,759,170 193,255,142

25. Interest-Bearing Loans and Borrowings

25.1 Loans and Borrowings – Consolidated2016

Amount Repayable

Within 1 Year

2016 Amount

Repayable After 1 Year

2016

Total

2015 Amount

Repayable Within 1 Year

2015 Amount


2015

TotalRs. Rs. Rs. Rs. Rs. Rs.

Debentures (Note 25.2) 1,877,842,557 6,982,084,933 8,859,927,490 1,270,227,880 6,209,106,878 7,479,334,758

Bank Loans (Note 25.3 a,b) 8,882,290,535 1,399,800,000 10,282,090,535 4,837,576,713 1,882,800,000 6,720,376,713

Commercial Papers (Note 25.4) 390,000,000 – 390,000,000 – – –

11,150,133,092 8,381,884,933 19,532,018,025 6,107,804,593 8,091,906,878 14,199,711,471

Interest Payable 195,617,703 195,617,703 137,467,527 – 137,467,527

11,345,750,795 8,381,884,933 19,727,635,728 6,245,272,120 8,091,906,878 14,337,178,998



25.2 Debentures – ConsolidatedAs at 01.01.2016 New Issues Redemption As at 31.12.2016

Rs. Rs. Rs. Rs.

Fixed Rate 14.50%. Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 30.05.2016 900,000,000 – (900,000,000) –

Fixed Rate 14.00% Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 10.09.2016 416,666,000 – (416,666,000) –

Fixed Rate 14.25% Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 10.09.2017 416,666,000 – – 416,666,000

Fixed Rate 8.25%. Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 22.12.2017 1,500,000,000 – – 1,500,000,000

Fixed Rate 8.60%. Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 07.06.2018 2,929,980,000 – – 2,929,980,000

Variable 9.5% Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 07.06.2018 70,020,000 – – 70,020,000

Fixed Rate 14.50% Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 10.09.2018 416,668,000 – – 416,668,000

Fixed Rate 10.5% Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 15.03.2019 – 460,560,000 – 460,560,000

Variable Rate – 6 Months Gross TB + 1.50% (Floor 9.50% Cap 12.50%) Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 15.03.2019 – 1,539,440,000 – 1,539,440,000

36 Months 11.50% Secured Debentures Redeemable on 06.04.2019 – 409,300,000 – 409,300,000

48 Months 12% Secured Debentures Redeemable on 06.04.2020 – 590,700,000 – 590,700,000

Fixed Rate 9.95% Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 18.06.2020 1,500,000,000 – – 1,500,000,000

Transaction Cost (71,382,242) 10,065,731 – (61,316,511)

Less: Investment in debentures in Subsidiary (599,283,000) (462,090,000) (149,283,000) (912,090,000)

7,479,334,758 2,537,910,000 (1,465,949,000) 8,859,927,489

25.3 Bank Loans – Consolidated(Within one year) Balance as at

01.01.2016Loans Obtained Repayment As at

31.12.2016

Rs. Rs. Rs. Rs.

(a) Bank Loans Repayable within one YearBank Loans 4,837,576,713 17,900,080,085 (13,855,366,262) 8,882,290,535

4,837,576,713 17,900,080,085 (13,855,366,262) 8,882,290,535

The bank loans repayable within one year consist of short-term loans obtained from Hatton National Bank, People’s Bank, Nations Trust Bank, Commercial Bank, Sampath Bank, Seylan Bank, Standard Chartered Bank and Bank of Ceylon.

These loans bears interest rate between 10.8% to 14.0% and due for settlement at maturity.

(b) Bank Loan Repayable After One Year – ConsolidatedCompany Lender/Rate of Interest (p.a.) Repayment Security 2016 2015

Rs. Rs.

Singer (Sri Lanka) PLC Commercial Bank @ AWPLR (Rate Reviewed Quarterly cap 8.5%)

At Maturity No Assets Pledged 1,000,000,000 1,000,000,000

Singer (Sri Lanka) PLC DFCC Bank @ AWPLR(Rate Reviewed bi-annually)

At Maturity No Assets Pledged – 750,000,000

Singer Finance (Lanka) PLC Sampath Bank Fixed Rate 9.75% Monthly Repayment Lease Debtors 317,400,000 –

Singer Finance (Lanka) PLC Seylan Bank Fixed Rate 14.00% Monthly Repayment Hire Purchase Receivable/Lease 82,400,000 132,800,000

1,399,800,000 1,882,800,000



25.4 Commercial Papers – ConsolidatedAs at 01.01.2016 New Issues Redemption As at 31.12.2016

Rs. Rs. Rs. Rs.

Commercial Papers – Company Singer Finance (Lanka) PLC – 390,000,000 – 390,000,000

– 390,000,000 – 390,000,000

25.5 Bank Facilities – Consolidated2016 2015

Utilised Total Facility Utilised Total FacilityRs. Rs. Rs. Rs.

Overdraft 1,202,576,667 3,160,000,000 798,320,065 2,510,000,000

Term Loans 1,399,800,000 2,450,000,000 1,882,800,000 1,950,000,000

Short-Term Loans 8,882,290,535 11,090,000,000 4,837,576,713 8,989,500,000

Total Debt Facility 11,484,667,202 16,700,000,000 7,518,696,778 13,449,500,000

Guarantees 1,543,652,019 1,750,000,000 406,291,029 430,000,000

Letter of Credit 2,788,966,216 6,568,000,000 3,331,291,451 7,250,000,000

Total Debt and Other Facilities 15,817,285,437 25,018,000,000 11,256,279,258 21,129,500,000

25.6 Interest-Bearing Loans and Borrowings – Company2016

Amount Repayable

Within 1 Year

2016 Amount


2016

Total

2015 Amount

Repayable Within 1 Year

2015 Amount


2015

TotalRs. Rs. Rs. Rs. Rs. Rs.

Debentures (Note 25.7) 1,462,863,288 5,000,000,000 6,462,863,288 855,676,430 4,500,000,000 5,355,676,430

Bank Loans (Note 25.8 a,b) 7,034,948,198 1,000,000,000 8,034,948,198 4,462,176,713 1,750,000,000 6,212,176,713

8,497,811,486 6,000,000,000 14,497,811,486 5,317,853,143 6,250,000,000 11,567,853,143

Interest Payable 154,738,057 – 154,738,057 136,248,948 – 136,248,948

8,652,549,543 6,000,000,000 14,652,549,543 5,454,102,091 6,250,000,000 11,704,102,091

25.7 Debentures – CompanyAs at 01.01.2016 New Issues Redemption As at 31.12.2016

Rs. Rs. Rs. Rs.

Fixed Rate 14.50% Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 30.05.2016 900,000,000 – (900,000,000) –

Fixed Rate 8.25% Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 22.12.2017 1,500,000,000 – – 1,500,000,000

Fixed Rate 8.60% Senior, Unlisted, Unsecured, Redeemable, Rated Debentures Redeemable on 07.06.2018 2,929,980,000 – – 2,929,980,000

Variable Rate – 1 Year Net TB +1.25% (Floor 7% Cap 9.50%) Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 07.06.2018 70,020,000 – – 70,020,000

Fixed Rate 10.50% Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 15.03.2019 – 460,560,000 – 460,560,000

Variable Rate – 6 Months Gross TB + 1.50% (Floor 9.50% Cap 12.50%) Senior, Rated, Unsecured, Redeemable, Listed Debentures Redeemable on 15.03.2019 – 1,539,440,000 – 1,539,440,000

Transaction Cost (44,323,570) 7,186,858 – (37,136,712)

5,355,676,430 2,007,186,858 (900,000,000) 6,462,863,288



25.8 Bank Loans – CompanyAs at 01.01.2016 Obtained Repayment As at 31.12.2016

Rs. Rs. Rs. Rs.

(a) Bank Loans Repayable within One Year Bank Loans – Short-Term 4,462,176,713 15,363,137,748 (12,790,366,263) 7,034,948,198

4,462,176,713 15,363,137,748 (12,790,366,263) 7,034,948,198

The bank loans repayable within one year consist of the short term loans obtained from Hatton National Bank, People’s Bank, Nations Trust Bank, Commercial Bank, Seylan Bank, Standard Chartered Bank and Bank of Ceylon. These loans bears interest rate between 10.8% to 12.5% and due for settlement of maturity.

(b) Bank Loan Repayable After One YearLender Repayment Security 2016 2015

Rs. Rs.

Commercial Bank AWPLR Rate Reviewed Quarterly (Cap 8.5%) At maturity No assets pledged 1,000,000,000 1,000,000,000DFCC Bank AWPLR Rate reviewed bi-annually At maturity No assets pledged – 750,000,000

1,000,000,000 1,750,000,000

25.9 Bank Facilities – Company2016 2015

Utilised Total Facility Utilised Total FacilityRs. Rs. Rs. Rs.

Overdraft 702,096,130 2,500,000,000 616,957,314 2,060,000,000

Term Loans 1,000,000,000 1,750,000,000 1,750,000,000 1,750,000,000

Short-Term Loans 7,034,948,198 10,100,000,000 4,462,176,713 8,489,500,000

Total Debt Facility 8,737,044,328 14,350,000,000 6,829,134,027 12,299,500,000

Guarantees 1,542,602,019 1,750,000,000 406,291,029 430,000,000

Letter of Credit 2,105,684,020 6,568,000,000 2,750,043,317 6,250,000,000

Total Debt and Other Facilities 12,385,330,369 22,668,000,000 9,985,468,373 18,979,500,000

26. Deferred Tax AssetsConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

26.1 Deferred Tax AssetsBalance as at Beginning of the Year 144,913,478 65,235,228 124,492,574 59,596,117

Acquisition from Business Combination (71,444,374) – – –

Origination and Reversal of Timing Differences – Recognised in Statement of Comprehensive Income (Note 9.4) (46,679,921) – (44,227,036) –

Origination and Reversal of Timing Differences – Recognised in Statement of Profit and Loss (Note 9.2) 94,628,799 69,447,444 62,035,500 59,927,209

Deferred Tax Impact on Revaluation (Note 9.2) 4,969,248 4,969,248 4,969,248 4,969,248

Transfer from Deferred Tax Liability (1,743,833) – – –

Deferred Tax Impact on Unrealised Profit (Note 9.2) (582,246) 5,261,558 – –




26.2 Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against tax liabilities and when the deferred tax relate to the same fiscal authority.

The movement in deferred tax assets during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Deferred tax is computed using the tax rate which was enacted by the end of the Reporting period which is 28% and Regnis Appliance (Private) Limited at 20%.

26.3.1 Consolidated2016 2015

Assets Liabilities Assets LiabilitiesRs. Rs. Rs. Rs.

(a) Composition of Deferred Tax Assets

Property, Plant and Equipment – 524,100,382 – 332,397,237

Intangible Assets – 19,787,493 – 18,900,292

Lease Rentals 26,943,347 – – 27,586,428

Tax Losses 18,683,161 – – –

Inventories 218,558,498 – 170,941,391 –

Provision on Assets 191,467,149 – 176,958,835 –

Deferred Benefit Obligations 182,392,138 – 136,210,270 –

Provision for Warranty 29,904,735 – 39,686,939 –

667,949,028 543,887,875 523,797,435 378,883,957

Net Deferred Tax 124,061,153 144,913,478

26.3.2 Company2016 2015

Assets Liabilities Assets LiabilitiesRs. Rs. Rs. Rs.

(a) Composition of Deferred Tax Assets

Property, Plant and Equipment – 360,530,054 – 318,811,502

Intangible Assets – 13,787,781 – 10,513,338

Inventories 182,251,869 – 140,089,053 –

Provision on Assets 179,504,003 – 159,806,855 –

Defined Benefit Obligations 133,491,251 – 128,010,876 –

Provision for Warranty 26,340,998 – 25,910,631 –

521,588,121 374,317,835 453,817,414 329,324,840

Net Deferred Tax 147,270,286 124,492,574



27. Defined Benefit ObligationsConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Present Value of Unfunded Gratuity 651,143,995 486,465,251 476,754,466 457,181,699

Total Present Value of the Obligation

Provision for Retiring Gratuity

At the Beginning of the Year 486,465,251 383,912,062 457,181,699 362,593,735


Transfers to Subsidiary – – (93,333) (401,082)

Actuarial (Gain)/Loss on Obligation (Note 9.4) (62,276,719) 41,244,046 (52,905,239) 40,252,056

Current Service Cost 44,117,501 34,464,452 32,846,658 30,046,553

Interest on Obligation 72,370,591 40,272,903 53,701,339 38,030,020

668,987,651 499,893,463 490,731,124 470,521,282

Benefit Paid (17,843,656) (13,428,212) (13,976,658) (13,339,583)

At the End of the Year 651,143,995 486,465,251 476,754,466 457,181,699

The Company maintains a non-contributory defined benefit plan providing for gratuity benefits payable to employees who will get eligible upon their retirement.

As at 31st December 2016, the gratuity liability was actuarial valued under the Projected Unit Credit (PUC) method by a professionally qualified Actuary Mr. Pushpakumar Gunasekara of Smiles Global (Pvt) Limited who is a qualified Actuary, Associate of the Institute of Actuaries of Australia (AIAA).

The required accounting provision of the Company as at 31st December 2016 has been determined based on the recommendation on this Report.

Following key assumptions were made in arriving at the above figures:

2016 2015

(a) Rate of Discount 11.5% p.a. (Net of Tax) 10.5% p.a. (Net of Tax)

(b) Salary Increment Rate Year 1 10% 10% Year 2+ 10% 9%(c) Retirement Age

Other than Factory General Staff

Other than Factory General Staff

All members 60 Years 60 YearsBranch Managers 55 Years 60 Years



(d) Assumptions regarding future mortality are based on A1967/70 Mortality Table, issued by the Institute of Actuaries, London. The demographic assumptions underline the valuation are with respect to retirement age, early withdrawal from service and retirement on medical grounds.

The expense so recognised is included in selling and administrative expenses in the Income Statement.

Expense is recognised in the following line items in the Income Statement:


2016 2016

Rs. Rs.

Cost of Sales 32,682,565 9,726,825


116,488,092 86,547,997

27.1 Sensitivity AnalysisReasonably possible changes at the Reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below:


31st December 2016 31st December 2016

Increase Decrease Increase Decrease

Rs. Rs. Rs. Rs.

Discount Rate (1% Movement) (52,736,388) 60,967,575 (37,997,347) 43,920,818

Future Salary (1% Movement) 62,523,753 (54,912,419) 44,939,025 (39,448,613)

28. Security DepositsConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Balance as at beginning of the Year 851,794,462 732,124,370 851,794,462 732,124,370

Contribution during the Year 96,111,732 94,163,086 96,111,732 94,163,086

Interest Charges 112,187,771 93,804,305 112,187,771 93,804,305

Shortages Recovered (23,210,872) (35,900,930) (23,210,872) (35,900,930)

ESD Releases (18,431,243) (32,396,369) (18,431,243) (32,396,369)

Balance as at the end of the Year 1,018,451,850 851,794,462 1,018,451,850 851,794,462

29. Trade and Other PayablesConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Trade Payables 3,167,951,307 2,051,508,915 2,464,480,092 1,631,823,262

Value Added Tax Payable 235,344,011 22,760,311 222,156,524 –

MSPS Payable 65,528,097 54,896,578 65,528,097 54,896,578

ETF Payable 18,035,289 13,141,105 18,035,289 13,141,105

Advances Received from Customers 266,435,957 254,706,761 266,435,957 254,706,761

Accrued Expenses 1,496,531,295 1,221,276,925 1,225,865,216 1,028,892,425

Other Payables 849,398,745 652,851,241 233,960,812 245,105,116

Warranty Provisions* (Note 29.1) 125,513,307 116,892,732 94,074,992 116,892,732

6,224,738,008 4,388,034,568 4,590,536,979 3,345,457,979

* Warranty provisions have been recognised for expected warranty claims on products sold by the Company.



29.1 Warranty ProvisionsConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Balance as at Beginning of the Year 116,892,732 99,792,732 116,892,732 99,792,732


Provision made During the Year 38,513,095 17,100,000 4,000,000 17,100,000

Utilised during the Year (52,663,803) – (26,817,740) –

Balance as at End of the Year 125,513,307 116,892,732 94,074,992 116,892,732

30. Deferred RevenueConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.


Amounts Recognised During the Year (191,729,729) (110,789,206) 191,729,729 (110,789,206)

Amounts Transferred During the Year 312,259,073 193,915,422 312,259,073 193,915,422


30.1 Deferred Revenue includes deferred service fee on air conditioners, Sanasuma Insurance Scheme and amount deferred on motor bike services income as at 31st December 2016.

31. Income Tax Payables/(Receivables)Consolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.


Acquisition from Business Combination 97,888,831 – – –

Charge for the Year (Note 9) 907,000,775 696,592,803 426,554,644 379,457,751

(Over)/under Provision (Note 9) (80,388,571) 11,408,727 (13,464,595) 10,144,703

Payment Made (1,029,515,398) (570,548,397) (548,648,690) (365,020,801)

Balance as at end of the Year 245,280,570 350,294,932 (1,767,156) 133,791,489

32. Dividend PayableConsolidated Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Unclaimed Dividends 24,459,161 17,515,071 20,523,857 17,515,071

24,459,161 17,515,071 20,523,857 17,515,071

33. DividendsCompany

2016 2015Rs. Rs.

Ordinary Shares

Final Dividend 2015 Rs. 4.20 (2014 – Rs. 2.58) 525,880,362 313,024,025



34. Amounts Due to Related PartiesConsolidated Company


34.1 TradeSinger Industries (Ceylon) PLC Subsidiary – 97,299,467 104,244,714 97,299,467

Regnis (Lanka) PLC Subsidiary – 216,631,070 305,042,784 216,631,070 Regnis Appliances (Private) Limited Subsidiary – 140,272,029 127,621,705 140,272,029

Singer Finance (Lanka) PLC Subsidiary – – 107,574,325 –

Singer Digital Media (Private) Limited Subsidiary – – 232,435,354 317,541,622

– 454,202,566 876,918,882 771,744,188

34.2 Non-TradeSinger Asia Limited Affiliate Company 119,738,131 122,214,032 119,738,131 122,214,032

Singer Business School (Private) Limited Subsidiary – – – 3,025,099

119,738,131 122,214,032 119,738,131 125,239,131

35. Other Financial LiabilitiesOther Financial Liabilities are the customer deposits at Singer Finance (Lanka) PLC which is carried at amortised cost.

Consolidated

2016 2015Rs. Rs.

Balance as at the Beginning of the Year 3,367,832,127 4,494,641,970

New Deposits 784,574,282 421,394,714

Capitalisation of Interest 105,599,238 82,994,409

4,258,005,647 4,999,031,093

Repaid Deposits (1,105,733,917) (1,631,198,966)

Less: Investment in Fixed Deposits in Subsidiary (110,324,830) –

Balance as at the End of the Year 3,041,946,900 3,367,832,127

Payable within One Year 2,587,934,308 2,722,824,531

Payable After One Year 454,012,592 645,007,596

35.1 Deposit ClassificationFixed Deposits at Amortised Cost 2,996,269,879 2,572,772,541

Savings 45,677,021 795,059,586

3,041,946,900 3,367,832,127



36. Financial Instruments

Financial Risk Management

OverviewThe Group has exposure to the following risks from its use of financial instruments:

Credit risk

Liquidity risk

Market risk

Operational risk

The note presents information about Group’s exposure to each of above risks, the Group’s objectives, policies and processes measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these Consolidated Financial Statements.

Risk Management Framework The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the risk faced by the Group, to set appropriate risks limits and controls and to monitor risks and adherence to limits.

Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Board of Directors oversees how management monitor compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Company’s Directors are assisted in their oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of the risk management controls and producers, the result of which are reported to the Company’s Directors.

Credit RiskCredit risk is the risk of financial loss to the Group if a customer of counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s trade and other receivables.

Treasury BillsSinger Finance (Lanka) PLC invests not less than 7.5% of the public deposits in Treasury Bills to comply with the Central Bank of Sri Lanka Direction No. 1 of 2009.

Trade and Other ReceivablesThe Group’s exposure to credit risk relates to sale of products on installment credit/hire purchase which is an integral part of the business of the Group.

The Group’s exposure to credit risk on installment credit/hire purchase contracts is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risks of the country in which customers reside, has a lesser influence on credit risk.

Geographically, there is no concentration of credit risk. Goods are sold, subject to collateral undertakings so that in the event of non-payment, the Group can have a secured claim. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposure and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined, based on historical data of payment statistics for similar financial assets.



Liquidity RiskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

Market RiskMarket risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income. The objective of market risk management is to manage and control market risk exposure within the acceptable parameters, while optimising the return.

Currency Risk The Group is exposed to currency risk on purchases that are denominated in a currency other than the respective financial currencies of Group entities. The currency in which these transactions primarily are denominated in US Dollars. The currency risk is limited by the short-term nature of the period between the dates of the purchase and settlements of the related liability.

Interest Rate Risk The Group manages interest rate risk on borrowings by using a combination of fixed and floating interest rate.

Operational RiskOperational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all Group’s operations.

The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.

The primary responsibility for the development and implementation of controls to address operational risks is assigned to Senior Management within each business unit. This responsibility is supported by the development of overall Group standards for the managements of operational risk in the following areas:

z Requirements for the appropriate segregation of duties, including the independent authorisation of transactions. z Requirements for the reconciliation and monitoring of transactions. z Compliance with regulatory and other legal requirements. z Documentation of controls and procedures. z Requirements for the periodic assessment of operational risks faced and the adequacy of controls and procedures to address the risks identified.

z Requirements for the reporting of operational losses and proposed remedial action. z Development of contingency plans. z Training and professional development. z Ethical and business standards. z Risk mitigation, including insurance where this is effective.

Compliance with Group standards is supported by a programme of periodic reviews undertaken by internal audit. The results of internal audit reviews are discussed with the management of the business unit to which they relate, Senior Management of the Group and the Board of Directors.



Credit RiskExposure to Credit RiskThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the Reporting date was:

Carrying Amount – Consolidated Carrying Amount – Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Trade and other Receivables 24,742,147,380 20,493,623,786 11,775,133,826 9,946,363,408

Cash at Bank 1,415,845,661 904,126,217 1,036,707,808 874,007,756

Amounts due from Related Parties – 65,890,881 1,452,857,541 1,356,895,119

Other Financial Assets 532,316,881 623,072,763 3,384,289,989 1,656,544,596

Deposits at Bank 81,157,679 85,344,286 – –

26,771,467,601 22,172,057,934 17,648,989,164 13,833,810,879

The Maximum exposure to credit risk for receivables at the Reporting date by type of counterparty was:

Carrying Amount – Consolidated Carrying Amount – Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Retail Customers 17,957,657,737 15,058,387,411 6,605,815,755 5,549,759,194

Wholesale Customers 4,609,566,028 3,533,483,330 3,374,958,672 2,749,120,055

Others 2,174,923,616 1,901,753,045 1,794,359,398 1,647,484,159

Total 24,742,147,381 20,493,623,786 11,775,133,825 9,946,363,408

Impairment AnalysisThe aging of receivables at the Reporting date was:

Group

Gross2016

Impairment2016

Net Receivable2016

Gross2015

Impairment2015

Net Receivable2015


Not Past due 18,675,385,043 (2,972,732) 18,672,413,311 16,174,319,027 (4,158,450) 16,170,160,577

Past due 0-30 Days 2,276,089,039 (31,377,425) 2,244,711,614 2,024,021,098 (3,229,153) 2,020,791,945

Past due 31-120 Days 2,136,354,541 (45,655,623) 2,090,698,917 1,375,439,178 (15,887,654) 1,359,551,524

Past due more than 120 Days 2,501,943,662 (767,619,124) 1,734,324,538 1,704,722,451 (761,602,711) 943,119,740

25,589,772,285 (847,624,904) 24,742,147,380 21,278,501,754 (784,877,968) 20,493,623,786

Company

Gross2016

Impairment2016

Net Receivable2016

Gross2015

Impairment2015

Net Receivable2015


Not Past due 11,679,442,245 – 11,679,442,245 9,077,414,489 – 9,077,414,489

Past due 0-30 Days 37,727,192 (28,748,050) 8,979,142 266,773,864 – 266,773,864

Past due 31-120 Days 82,748,817 (36,247,546) 46,501,271 47,197,710 (7,880,710) 39,317,000

Past due more than 120 Days 616,301,296 (576,090,130) 40,211,168 1,125,716,112 (562,858,056) 562,856,055

12,416,219,550 (641,085,725) 11,775,133,826 10,517,102,175 (570,738,766) 9,946,363,409



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


2016 2015 2016 2015Rs. Rs. Rs. Rs.

Balance at the Beginning of the Year 784,877,968 753,285,011 570,738,766 532,823,442

Impairment Loss Recognised 282,592,051 260,713,094 226,782,153 193,610,858

Amounts Written off (219,845,114) (229,120,137) (156,435,194) (155,695,534)

Balance at the End of the Year 847,624,905 784,877,962 641,085,725 570,738,766

Total impairment for the period resulted from following counterparties.

Group Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Impairment for Hire Debtors 50,985,870 67,975,323 25,491,954 32,861,711

Impairment for Lease Rental Receivables 93,696,290 111,417,122 – –

Impairment for Loan Debtors 43,421,919 42,905,357 – –

Impairment for Trade Debtors 182,167,047 110,750,517 139,441,526 86,047,407

Impairment for Other Debtors 477,353,779 451,829,649 476,152,244 451,829,649

847,624,905 784,877,968 641,085,725 570,738,766

A committee respective functional managers groups established a credit policy under which each new customer is analysed individually for credit worthiness before the Group’s standard payment and delivery terms and conditions offered for wholesale customers, sale limits are established for each customer and reviewed periodically. Any sales exceeding these limits require approvals from Directors based on amount enhanced.

The Group establishes an allowance for impairment that represent its estimate of incurred losses in respect of trade and other receivables.

All bank deposits and current accounts maintained at licenced commercial banks, which are subject to close supervision of Central Bank.

All related party receivables are from Subsidiary and Associate companies which are controlled by the same Board of Directors of Singer (Sri Lanka) PLC.

Liquidity RiskThe following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

GroupCarrying Amount

Contractual Cash Flows

6 Months or Less

6-12 Months

1-2 Years

2-5Years

More than 5 Years

31st December 2016 Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Non-Derivative Financial LiabilitiesSecured Bank Loans 1,539,800,000 1,544,431,565 1,069,631,565 75,000,000 281,600,000 118,200,000 –

Unsecured Bank Loans 8,742,290,535 10,509,333,341 7,197,905,517 1,531,044,391 1,780,383,433 – –

Unsecured Debenture Issues 8,921,244,000 8,819,599,760 767,566,201 2,168,054,203 3,766,177,625 2,117,801,731 –

Trade and Other Payables 6,224,738,018 6,224,738,018 6,224,738,018 – – – –

Public Deposits 3,041,946,900 3,155,819,254 1,483,310,873 1,200,211,824 424,810,994 36,017,461 11,468,102

Bank Overdraft 1,202,576,667 1,202,576,667 1,202,576,667 – – – –

29,672,596,120 31,456,498,605 17,945,728,841 4,974,310,418 6,252,972,052 2,272,019,192 11,468,102



Carrying Amount


6 Months or Less

6-12 Months

1-2 Years

2-5Years

More than 5 Years


Non-Derivative Financial Liabilities

Secured Bank Loans 508,200,000 549,388,000 349,700,000 54,936,000 106,776,000 37,976,000 –

Unsecured Bank Loans 6,212,176,712 6,477,998,426 4,462,176,710 – 859,499,798 1,156,321,918 –

Unsecured Debenture Issues 7,550,717,000 7,893,146,864 953,987,671 582,666,514 2,728,895,662 3,627,597,017 –

Trade and Other Payables 4,388,034,568 4,388,034,568 4,167,921,999 220,112,569 – – –

Public Deposits 3,367,832,127 3,577,851,861 330,451,919 2,543,740,247 670,494,150 22,716,583 10,448,962

Bank Overdraft 798,320,065 798,320,065 798,320,065 – – – –

Amounts due to Related Parties – Trade 454,202,566 454,202,566 454,202,566 – – – –

Amounts due to Related Parties – Non-Trade 122,214,032 122,214,032 122,214,032 – – – –

23,401,697,070 24,261,156,382 11,638,974,962 3,401,455,330 4,365,665,610 4,844,611,518 10,448,962

CompanyCarrying Amount


6 Months or Less

6-12 Months

1-2 Years

2-5Years

More than 5 Years



Unsecured Bank Loans 8,034,948,198 8,327,306,331 6,490,563,180 823,702,055 1,013,041,096 – –

Unsecured Debenture Issues 6,462,863,288 7,584,197,475 365,808,202 1,751,076,584 3,349,510,958 2,117,801,731 –

Trade ad other payables 4,590,536,984 4,590,536,984 4,590,536,984 – – – –

Bank Overdraft 702,096,131 702,096,131 702,096,131 – – – –


19,910,182,732 21,323,875,052 12,268,742,628 2,574,778,639 4,362,552,054 2,117,801,731 –

Carrying Amount


6 Months or Less

6-12 Months

1-2 Years

2-5Years

More than 5 Years



Unsecured Bank Loans 6,212,176,712 6,477,998,426 4,462,176,710 – 859,499,798 1,156,321,918 –

Unsecured Bond Issues 5,355,676,430 6,329,084,688 953,987,671 – 1,747,500,000 3,627,597,017 –

Trade and other Payables 3,345,457,979 3,345,457,979 3,345,457,979 – – – –

Bank Overdraft 616,957,314 616,957,314 616,957,314 – – – –

Amounts due to Related Parties – Trade 771,744,188 771,744,188 771,744,188 – – – –


16,427,251,754 17,666,481,726 10,275,562,993 – 2,606,999,798 4,783,918,935 –

The outflows disclosed in the above table represent the contractual undiscounted cashflows relating to non-derivative financial liabilities held for risk management purposes and which are not closed out before contractual maturity.



Market Risk

Currency RiskThe summary quantitative data about the Group’s exposure to currency risk as reported to the management of the Group is as follows.

31st December 2016 31st December 2015USD CNY EURO USD CNY EURO

Trade Payables 9,231,563 12,847,778 24,174 11,508,376 48,280,380 14,197 Net Exposure 9,231,563 12,847,778 24,174 11,508,376 48,280,380 14,197

* USD – United States Dollars* CNY – Chinese Yuan

The following significant exchange rates have been applied:

Average Rate Year End Sopt Rate

Rs. 2016 2015 2016 2015

USD 149.01 137.93 151.66 146.18CNY 22.44 22.38 21.57 22.38Euro 164.96 153.88 160.92 160.47

Sensitivity AnalysisA reasonably possible strengthening (weakening) of the USD, CNY or EURO against all other currencies at 31st December would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Profit or Loss Equity net of Tax

StrengtheningRs ' 000

WeakeningRs ' 000

StrengtheningRs ' 000

WeakeningRs ' 000

2016USD (5% Movement) (70,003) 70,003 (50,402) 50,402 CYN (5% Movement) (13,856) 13,856 (9,977) 9,977 EURO (5% Movement) (195) 195 (140) 140

2015USD (5% Movement) (84,115) 84,115 (60,563) 60,563 CYN (5% Movement) (54,026) 54,026 (38,899) 38,899 EURO (5% Movement) (114) 114 (82) 82



Interest Rate Risk

ProfileAt the Reporting date, the interest rate profile of the Group's interest-bearing financial instruments was:

Group Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Fixed Rate Instruments

Financial Assets 17,957,657,737 15,749,784,461 7,517,905,755 5,549,759,194

Financial Liabilities (17,922,558,025) (14,017,235,202) (12,888,351,486) (7,479,134,027)

35,099,712 1,732,549,259 (5,370,445,731) (1,929,374,833)

Variable Rate Instruments

Financial Assets – – – –

Financial Liabilities (1,609,460,000) (4,807,423,258) (1,609,460,000) (4,750,000,000)

(1,609,460,000) (4,807,423,258) (1,609,460,000) (4,750,000,000)

Cash Flow Sensitivity for Variable Rate InstrumentsA reasonably possible change of 100 basis points in interest rate at the Reporting date would have increased (Decreased) equity and profit or loss by the amounts show below. This analysis assume that all other variables, remain constant:

Profit or Loss Equity Net of Tax

1% Increase 1% Decrease 1% Increase 1% Decrease

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000

31st December 2016

Variable Rate Instruments (16,094) 16,094 (11,587) 11,587

Cash Flow Sensitivity (Net) (16,094) 16,094 (11,587) 11,587

31st December 2015

Variable Rate Instruments (48,074) 48,074 (34,613) 34,613

Cash Flow Sensitivity (Net) (48,074) 48,074 (34,613) 34,613

Fair ValuesFair Values Versus Carrying Amounts

The fair values of financial assets and liabilities, together with the carrying amounts in the Balance Sheet, are as follows:

GroupNote Available-for-

SaleHeld-to-Maturity

Loans andReceivables

Other Financial

Liabilities

Total Carrying Value

Fair Value Fair Value Measurement

Level31st December 2016 Rs. Rs. Rs. Rs. Rs. Rs.

Investment in Equity Securities 15.1 (a) 17,061,300 17,061,300 Level 2

Investment in Debentures 15.1 (b) – 912,090,000 912,090,000

Hire Purchase Receivables 18 7,046,215,164 7,046,215,164

Lease Debtors 18 9,080,786,245 9,080,786,245

Loan Debtors 18 1,830,656,327 1,830,656,327

Trade Debtors 18 4,609,566,028 4,609,566,028

Other Receivables 18 2,174,923,616 2,174,923,616

Cash and Cash Equivalents 20 1,541,474,815 1,541,474,815

Investment in Treasury Bills 15.2 (a) 515,255,581 515,255,581 515,255,581 Level 2

Income Tax Receivable 33 231,570,056 231,570,056

Deposits with Banks 81,157,679 81,157,679

17,061,300 912,090,000 27,111,605,511 28,040,756,811



GroupNote Available-for-

SaleHeld-to-Maturity


Other Financial

Liabilities


Fair Value Fair Value Measurement


Debentures 25.2 8,859,927,490 8,859,927,490

Bank Loans 25.3 (a,b) 10,282,090,535 10,282,090,535

Bank Overdraft 20.2 1,202,576,667 1,202,576,667

Commercial Papers 25.4 390,000,000 390,000,000

Trade and Other Payables 29 6,224,738,006 6,224,738,006

Dividend Payable 32 24,459,161 24,459,161

Amounts due to Related Parties 34 119,738,131 119,738,131

Fixed Deposits 35 3,041,946,900 3,041,946,900

Security Deposits 28 1,018,451,850 1,018,451,850

Income Tax Payable 31 231,570,056 231,570,056

31,044,498,796 31,044,498,796

Note Available for Sale

Held-to-Maturity


Other Financial Liabilities

TotalCarrying Value

FairValue

Fair Value Measurement


Investment in Equity Securities 15.1 (a) 17,061,300 – 17,061,300

Investment in Debentures 15.1 (b) 599,283,000 599,283,000

Loans due from Related Parties 17 65,890,881 65,890,881

Hire Purchase Receivables 18 6,657,331,966 6,657,331,966

Lease Debtors 18 7,176,365,580 7,176,365,580

Loan Debtors 18 1,224,689,865 1,224,689,865

Trade Debtors 18 3,533,483,330 3,533,483,330

Other Receivables 18 1,901,753,044 1,901,753,044

Cash and Cash Equivalents 20 910,169,077 910,169,077

Investment in Treasury Bills 15.2 (a) 606,011,463 606,011,463 606,011,463 Level 2

Deposits with Banks 85,344,286 85,344,286

17,061,300 599,283,000 22,084,229,492 22,700,573,792

Debentures 25.2 7,479,334,758 7,479,334,758

Bank Loans 25.3 (a,b) 6,720,376,713 6,720,376,713

Bank Overdraft 20.2 798,320,065 798,320,065



Amounts Due to Related Parties 34 576,416,598 576,416,598

Fixed Deposits 35 3,367,832,113 3,367,832,113

Security Deposits 28 851,794,462 851,794,462


24,621,301,522 24,621,301,522



CompanyNote Available-

for-SaleHeld-to-Maturity




FairValue


Level31st December 2016 Rs. Rs. Rs. Rs. Rs. Rs. .

Investment in Equity Securities 15.1 (a) 17,020,000 17,020,000


Loans due from Related Parties 17 1,378,074,696 1,378,074,696

Trade and Other Receivables 18 11,775,133,826 11,775,133,826

Amounts due from Related Parties 18 74,782,845 74,782,845

Cash and Cash Equivalents 20 1,039,586,108 1,039,586,108

Income Tax Receivable 31 16,580,623 16,580,623

17,020,000 912,090,000 14,284,158,098 14,284,158,098

Debentures 25.7 6,462,863,288 6,462,863,288

Bank Loans 25.8 (a,b) 8,034,948,198 8,034,948,198

Bank Overdraft 20.2 702,096,130 702,096,130




Security Deposits 28 1,018,451,850 1,018,451,850

21,826,077,320 21,826,077,320

Note Available-for-Sale

Held-to-Maturity




FairValue


Level31st December 2015 Rs. Rs. Rs. Rs. Rs. Rs. .

Investment in Equity Securities 15.1 (a) 17,020,000 17,020,000


Loans due from Related Parties 17 65,890,881 65,890,881

Trade and Other Receivables 18 8,235,521,916 8,235,521,916

Amounts due from Related Parties 19 234,256,922 234,256,922

Cash and Cash Equivalents 20 876,593,992 876,593,992

17,020,000 599,283,000 9,412,263,711 10,028,566,711

Debentures 25.7 5,355,676,430 5,355,676,430

Bank Loans 25.8 (a,b) 6,212,176,713 6,212,176,713

Bank Overdraft 20.2 616,957,314 616,957,314




Security Deposits 28 851,794,462 851,794,462


17,430,352,776 17,430,352,776

Wherever the assets and liabilities are not fair valued, it was assumed that the carrying value of such assets and liabilities are a reasonable approximation to this fair value as majority of such assets and liabilities are with shorter maturity periods.



(I) Fair Value Versus Carrying Amounts The following table show the valuation techniques used in measuring Level 2 fair values, as well as significant unobservable inputs used:

Type Valuation Technique Significant Unobservable Inputs

Treasury Bills Discount Cash Flows Forecasted Annual Cash Inflows and Outflows

Capital ManagementThe Board's policy is to maintain a strong capital base to maintain confidence of the investors, creditors and the market while sustaining future development of the business capital consists to total equity. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Board of Directors seeks to maintain a balance between higher returns facilitated through a higher level of borrowings and the benefits and security afforded by a sound capital position.

The capital structure of the Group consists of debt and equity of the Group. The capital structure of the Group is reviewed by the Board of Directors.

The Group monitors capital using the ratio of net debt to equity. For this purpose adjusted net debt is defined as total liabilities comprising interest-bearing loans and borrowings and obligation under finance leases, less cash and cash equivalents.

Group Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

Total Liabilities 32,694,960,254 25,492,311,974 22,896,559,085 18,342,243,326

Less: Cash and Cash Equivalents (1,541,474,815) (910,169,077) (1,039,586,108) (876,593,992)

Adjusted Net Debt 31,153,485,440 24,582,142,897 21,856,972,980 17,465,649,334

Total Equity 9,554,904,616 6,769,985,054 5,933,805,055 5,096,406,784

Net Debt to Equity Ratio 3.26 3.63 3.68 3.43

The regulatory capital requirements for the finance companies are set by the Central Bank of Sri Lanka. The details of the computation of risk-weighted assets, capital and the ratios of the Singer Finance PLC are given below:

Capital Adequacy of Singer Finance (Lanka) PLCCapital adequacy is a measure of financial institutions financial strength and stability. This widely accepted concept tries to specify the limit up to which a business can expand in terms of its risk-weighted assets. Finance companies in pursuit of business expansion, could engage themselves in activities that regularly change their risk profile. In light of this, regulatory capital requirements have been established to avoid undue expansion beyond specified limits, keeping a hold on companies’ exposure to risk. Capital serves as a comfort to absorb unexpected losses, providing a degree of security to depositors and other key stakeholders.

This measure has been introduced by the Central Bank of Sri Lanka to protect the interest of the various stakeholders of the Company, while ensuring the maintenance of confidence and stability of the financial system.

The Capital Adequacy Ratio is calculated as a percentage on Company’s capital to its risk-weighted assets as specified by the Direction. No. 02 of 2006, Finance Companies (Risk-Weighted Capital Adequacy Ratio) and there are two measures to define the capital adequacy of the Company namely Core capital to risk-weighted asset ratio and Total Capital to risk-weighted assets ratio.

The minimum requirement for core capital adequacy ratio and total capital adequacy ratio are 5% and 10% respectively.



The core capital represents the permanent shareholders’, equity and reserves created or increase by appropriations of retained earnings or other surpluses and the total capital include, in addition to the core capital, the revaluation reserves, general provisions and other hybrid capital instruments and unsecured subordinated debts.

The risk-weighted Assets have been calculated by multiplying the value of each category of asset using the risk-weight specified by the Central Bank of Sri Lanka.

Details of the computation and the resulting rations are given below:

Balance Risk-Weighted BalanceAs at 31st December 2016 2015 Risk-Weighted Factor 2016 2015

Rs. Rs. % Rs. Rs.

Total Risk-Weighted Assets Computation

Assets Cash and Bank Balance 249,168,020 23,340,510 – – –

Investment in Government Securities 515,255,581 606,011,463 – – –

Bank Deposits 81,157,679 85,344,286 20% 16,231,536 17,068,857

Loans against Fixed Deposits 26,615,725 37,358,569 – – –

Loans against Real Estate 1,684,439 2,538,505 50% 842,219 1,269,252

Loans and Advances 1,804,164,691 1,176,707,411 100% 1,804,164,691 1,176,707,411

Finance Lease Receivable 9,046,314,853 7,107,593,667 100% 9,046,314,853 7,107,593,667

Hire Purchase Receivable 425,827,630 1,082,716,744 100% 425,827,630 1,082,716,744

Other Assets 199,843,181 249,689,809 100% 199,843,181 249,689,809

Fixed Assets 153,486,612 153,701,211 100% 153,486,612 153,701,211

Total Risk-Weighted Assets 12,503,518,411 10,525,002,175 11,646,712,722 9,788,746,951

Total Capital Base Computation

Stated Capital 1,445,333,342 1,445,333,342

Reserved Fund 95,360,709 73,317,972

Publised Retained Earnings 808,935,366 845,509,112

Total Core Capital 2,349,629,417 2,364,160,426

Supplementary Capital – –

Total Supplementary Capital – –

Capital Base 2,349,629,417 2,364,160,426

2016%

2015%

Core Capital Ratio Core Capital 20.17 24.15Risk – Weighted Assets

Total Capital Ratio Capital Base 20.17 24.15Risk – Weighted Assets



37. Commitments and Contingencies – Group/Company

37.1 Financial ContingenciesDocumentary Credits effected for foreign purchases amounting to Group and Company respectively Rs. 2,788,966,216/- (2015 – Rs. 3,331,291,451/-) and Rs. 2,105,684,020/- (2015 – Rs. 2,750, 043,317/-).

37.2 Capital CommitmentsThere were no significant capital commitments which have been approved or contracted for by the Company/Subsidiary as at Reporting date except for following:

Operating lease commitment as at 31st December 2016 is as follows:Within One Year – Rs. 93.7 millionBetween One to Five Years – Rs. 340.6 millionOver Five Years – Rs. 241.8 million

37.3 Assets PledgedThe Singer Finance (Lanka) PLC has given negative pledge over the Company’s total assets, except immovable assets for the following banks over the loans and borrowings having a carrying value of Rs. 4,835,375,411 as at the year end:

z Commercial Bank of Ceylon PLC z Seylan Bank PLC z Sampath Bank PLC z Nations Trust Bank PLC

37.4 Contingencies(a) Guarantees given to banks and other lending institutions by Singer (Sri Lanka) PLC on behalf of Regnis (Lanka) PLC,

Singer Industries (Ceylon) PLC and Singer Digital Media (Private) Limited, amounts to Rs. 455.5 million, 75.0 million and Rs. 50.0 million respectively.

Regnis (Lanka) PLC provided guarantees to banks and other lending institutions amounting to Rs. 345 million.(b) The Company has provided bank guarantees amounting to Rs. 242.2 million to Director General of Customs to clear imports

during the years 2008 to December 2016. The Bank guarantee related to alleged additional duty payable on imports, claimed by the customs and is being contested by the Company in Courts.

The Court of Appeal ordered that the Director General of Customs continue with the investigations. The Company being aggrieved by the decision has filed an appeal, which is pending before the Supreme Court.

The Company lawyers are of the opinion that there is no basis that the Company is liable for the additional duty and hence, no provision is made in the Financial Statements.

(c) Singer Finance (Lanka) PLC has provided guarantees to its Fixed Deposit Holders amounting to Rs. 1,050,000/- holding deposit holders fixed deposits amounting to Rs. 1,195,835/- as security.

(d) Commissioner General of Inland Revenue has issued assessment notices on Singer (Sri Lanka) PLC pertaining to an additional VAT Liability/Payment on account of Deemed VAT for seven quarters for the period 1st January 2014 to 30th September 2015. The assessment was for a Deemed VAT payment of Rs. 1,076 million and Penalty of Rs. 423 million totalling to Rs. 1,499 million.

The Company after carefully reviewing the advice of tax consultants, is of the opinion that there is no basis for the Company to be made liable for Deemed VAT, hence, no provision has been made in the Financial Statements. The Company previously sought a clarification from the Inland Revenue Department on the interpretation of the Act and did not receive the required clarification. The Company has appealed against the VAT assessment, requesting to cancel the notice of assessment.

Deemed VAT is removed with effect from 1st January 2016 under VAT Amendment Act No. 20 of 2016. (e) During the year, the Commissioner General of Inland Revenue has issued an assessment notice for the Year of Assessment

2012/13 on Singer Finance (Lanka) PLC pertaining to an additional tax liability on account of disallowing administration fees, advertising and promotional expenses, royalty fees, and Provision for Bad and Doubtful Debts for Leasing. The assessment is for a value Rs. 48.6 million and a penalty of Rs. 24.2 million totalling to Rs. 72.8 million. The Company after carefully reviewing the advice of tax consultants, is of the opinion that there is no basis for the Company to be made liable, hence, no provision has been made in the Financial Statements. The Company has appealed against the assessment, requesting the entire tax and penalty be held over pending settlement of the appeal under Section 173 (6) of the Inland Revenue Act No. 10 of 2006.



38. Events Occurring after the Reporting DateThere have been no material events occurring after the Reporting date, which require adjustments to or disclosure in the Financial Statements to or Disclosure in the Financial Statements, except for the following.

(a) Final Dividend – 2016 On 23rd February 2017, Board of Directors approved final dividend of Rs. 8.80 per share amounting to Rs. 1,101,844,568/- for the year ended 31st December 2016. The Company had the required solvency in accordance with Section 57 of the Companies Act No. 07 of 2007.

In accordance with Sri Lanka Accounting Standard – 10 on ‘Events after the Reporting Period’, the approved final dividend has not been recognised as a liability at the Reporting date.

The dividend will be paid on 16th March 2017.

(b) Share SubsidivisionThe Board of Directors has proposed that the ordinary shares of the Company would be subdivided in the proportion of three shares for every one existing shares held. Thus, the number of existing issued ordinary shares would be increased from 125,209,610 to 375,628,830 without affecting an increase in the stated capital of the Company of Rs. 626,048,050/-.

39. Acquisition of Subsidiary 39.1 Acquisition of Singer Industries (Ceylon) PLC(a) Subsequent to obtaining all regulatory clearance, on 4th January 2016, Singer (Sri Lanka) PLC purchased 3,213,600 shares in Singer Industries (Ceylon) PLC from its Parent Retail Holdings (Sri Lanka) BV [formerly known as Singer (Sri Lanka) BV] and thereby obtained 83.55% of controlling interest in Singer Industries (Ceylon) PLC.

During the period ended 31st December 2016, SIC contributed to profit of Rs. 21,651,705/- to the Group’s results and revenue was eliminated at the Group level.

Consideration Transferred

Singer (Sri Lanka) PLC has paid Rs. 206/- per share for the acquisition and paid the consideration in cash. Total consideration amounted to Rs. 664,070,355/-. (b) Identifiable Assets Acquired and Liabilities Assumed

As of the acquisition date, the following net assets has been acquired by Singer (Sri Lanka) PLC

Property, Plant and Equipment 985,429,033

Investment Property 126,000,000

Investment in Equity Accounted Investee 58,587,354

Other Receivables 609,246

Inventories 149,683,010

Trade and Other Receivables 101,293,661

Prepayments 13,500,633

Income Tax Recoverable 4,204,902

Investments in Fixed Deposits 100,838,788

Cash and Cash Equivalents 520,521

Deferred Tax Liabilities (3,285,083)

Retirement Benefit Obligations (48,869,228)

Trade and Other Payables (99,697,737)

Provisions (9,188,328)

Dividend Payable (844,956)

Interest-Bearing Loans and Borrowings (22,656,993)

Total Net Assets Acquired 1,356,124,824



Measurement of Fair Values

The valuation techniques used for measuring the fair value of material assets acquired were as follows:

Assets Acquired Valuation Technique

Property, Plant and Equipment Contractors Method: The contractor's method works on the basis that a property's value can be equated to its cost. Valuer assess the cost of the building if it would have constructed in current year and deduct margin for usage of the property based on their year of construction. The Land value is based on the market prices of each land respectively. Value of property is considered as summation of Land & Building value.

(c) Goodwill/Gain on Bargain Purchase

Gain on Bargain Purchase arising from the acquisition has been recognised as follows:

Based on the acquired net Assets, Gain on Bargain Purchase arises in Singer Industries (Ceylon) PLC acquisition.

Total Net Assets 1,356,124,824

– Non-Controlling Interest (223,076,769)

Net Assets Attributable to Singer (Sri Lanka) PLC 1,133,048,055

Consideration Paid (664,070,355)

Gain on Bargain Purchase 468,977,700

39.1.1 Gain on Bargain Purchase – Singer Industries (Ceylon) PLCThe acquisition of Singer Industries (Ceylon) PLC resulted in a gain of Rs. 468,977,700/- which has been included in Other Income (Note 5). Gain on Bargain Purchase was arrived through the net of net assets value of Rs. 1,356,124,824/- attributable to Singer (Sri Lanka) PLC and purchase consideration of Rs. 664,070,355/-. Purchase price was decided based on the independent valuation which was carried out by the Messers PricewaterhouseCoopers and after obtaining approval from various regulating institutions. The consideration is on the value of the assets of the Company, specially the land of the Company.

39.2 Acquisition of Regnis (Lanka) PLC(a) On 24th February 2016, Singer (Sri Lanka) PLC purchased 6,568,461 shares in Regnis (Lanka) PLC from its Parent Retail Holdings (Sri Lanka) BV [formerly known as Singer (Sri Lanka) BV] and thereby obtained 58.29% of controlling interest in Regnis (Lanka) PLC.

During the period ended 31st December 2016, Regnis contributed profit of Rs. 240,948,909/- to the Group's results and revenue was eliminated at Group level. Consideration Transferred

Singer (Sri Lanka) PLC has paid Rs. 110/- per share for the acquisition and paid the consideration in cash. Total consideration amounted to Rs. 722,530,710/-.



(b) Identifiable Assets Acquired and Liabilities Assumed

As of the acquisition date following net assets has been acquired by Singer (Sri Lanka) PLC.

Property, Plant and Equipment 807,774,680

Intangible Assets 2,438,076

Other Investment 19,350,768

Inventories 835,411,285

Trade and Other Receivables 44,659,524

Amount due from Related Parties 305,600,365

Cash at Bank and in Hand 7,536,117

Deferred Tax Liabilities (60,234,740)

Defined Benefit Obligation (79,535,132)

Trade and Other Payables (261,731,571)

Amount due to Related Parties (67,868,649)

Income Tax Payable (101,898,423)

Dividends Payable (2,244,237)

Bank Overdraft (46,880,661)

Total Net Assets Acquired 1,402,377,402

Measurement of Fair Values

The valuation techniques used for measuring the fair value of material assets acquired were as follows:

Assets acquired Valuation technique

Property, Plant and Equipment Contractors Method: The contractor's method works on the basis that a property's value can be equated to its cost. Valuer assess the cost of the building if it would have constructed in current year and deduct margin for usage of the property based on their year of construction.

The Land value is based on the market prices of each land respectively. Value of property is considered as summation of Land & Building value.

(c) Gain on Bargain Purchase

Gain on Bargain Purchase arising from the acquisition has been recognised as follows.

Based on the acquired net Assets, Gain on Bargain Purchase arises in Regnis (Lanka) PLC acquisition.

Total Net Assets 1,402,377,402

– Non-Controlling Interest (584,878,887)

Net Assets Attributable to Singer (Sri Lanka) PLC 967,602,482

Consideration Paid (772,530,710)

Gain on Bargain Purchase 94,967,805

39.2.1 Gain on Bargain Purchase – Regnis (Lanka) PLCThe acquisition of Regnis (Lanka) PLC resulted in a gain of Rs. 94,967,805/- which has been included in Other Income (Note 5). Gain on Bargain Purchase was arrived through the net of net assets attributable to Singer (Sri Lanka) PLC value of Rs. 1,402,377,402/- and the purchase consideration of Rs. 722,530,710/-. Purchase price was decided based on the independent valuation which was carried out by the Messrs PricewaterhouseCoopers, and after obtaining approval from various regulating institutions.



40. Related Party Transactions

40.1 Parent and Ultimate Controlling PartyThe Company’s Parent undertaking Retail Holdings (Sri Lanka) BV [formerly known as Singer (Sri Lanka) BV].

The Company’s ultimate Parent undertaking and controlling party is Retail Holdings N.V.

40.2 (a) Transaction with Parent Companies (a) Retail Holdings (Sri Lanka) BV [formerly known as Singer (Sri Lanka) BV] – (Immediate Parent).

2016 2015Rs. Rs.

Consideration paid on Acquisition of following Companies:Singer Industries (Ceylon) PLC – Initial Acquisition 664,070,355 –

– Subsequent Acquisition 28,337,328 –

Regnis (Lanka) PLC 722,530,710 –

(b) Retail Holdings Asia BV (formerly known as Singer Asia Holdings BV) – (Intermediate Parent)2016 2015

Rs. Rs.

Royalty Expenses 436,841,849 370,126,613 Royalty Payable Balance as at Period End 119,769,937 130,609,383

40.2 (b) Transactions with Subsidiary CompaniesName of the Company and Relationship Nature of Transaction 2016 2015

Rs. Rs.

Singer Finance (Lanka) PLC Sales Financed through Singer Finance (Lanka) PLC 583,937,548 412,841,008 (Subsidiary Company) Cash Remittance from Singer (Sri Lanka) PLC 2,176,293,925 1,661,568,394

Interest Income/(Expense) 1,080,221 2,338,165 Dividend Received – Gross 197,402,615 166,163,818 Cash Collection through Singer (Sri Lanka) PLC 3,116,609,664 2,311,674,263 Expenses Paid 314,839,790 249,611,311 Royalty Exp Charged during the Period 23,873,612 – Collecting Commission Paid through Singer (Sri Lanka) PLC 26,180,467 21,273,514 Rent Reimbursed 15,911,133 13,863,914 Royalty Paid through Singer (Sri Lanka) PLC 21,414,572 12,688,916 Loans Settled during the Period 500,000,000 – Non-Trade Settlement 200,000,000 – Loans Obtained during the Period 400,000,000 300,000,000 Service Charge Income 13,679,605 – Purchase of Assets 3,490,709 2,497,409 Balance Payable 92,425,676 98,593,400

Regnis (Lanka) PLC(Subsidiary Company)

Purchases 3,682,114,780 3,186,023,315 Corporate Guarantees Given 455,500,000 455,500,000 Interest Expense 2,284,344 2,284,344 Interest Income 463,024 4,258,363 Non-Trade Settlement 72,950,640 25,000,000 Trade Credit Settled 4,150,562,715 3,522,443,331 Expenses Reimbursed 72,395,521 49,668,681 Fixed Assets Purchases 1,022,667 3,515,995 Transfer of Staff Loan 921,410 919,085 Balance Payable 305,042,784 216,631,071



Name of the Company and Relationship Nature of Transaction 2016 2015Rs. Rs.

Singer Industries (Ceylon) PLC(Subsidiary Company)

Purchases 838,513,333 837,522,315 Corporate Guarantee Given – 75,000,000 Lease Rental Paid 8,658,767 4,250,400 Net Finance Charges 342,330 367,944 Trade Creditor Settled 833,071,807 848,415,000 Expenses Reimbursed 6,812,716 4,971,643 Balance Payable 104,244,714 97,299,466

Singer Digital Media (Private) Limited Purchases 2,294,156,905 1,897,377,317 (Subsidiary Company) Expenses Reimbursed 324,055,899 95,251,428

Interest Charged 137,005,498 62,651,026 Royalty Paid through Singer (Sri Lanka) PLC – 39,154,364 Loan Granted 3,802,405,498 739,813,398

Loan Settlements 3,439,212,750 635,000,000 Balance Receivable – Loans 1,119,940,064 756,747,316 Balance Payable – Trade 238,683,416 370,664,022 Balance Receivable – Non-Trade 73,813,827 135,782,100 Corporate Guarantee Given 50,000,000 50,000,000

Regnis Appliances (Private) Limited(Subsidiary Company)

Purchases 1,087,090,978 933,727,467 Trade Settlements 1,262,899,218 961,722,921 Expenses Paid 19,332,098 11,761,231 Finance Charged 5,741,639 2,805,847 Non-Trade Settlement 15,927,796 8,310,694 Balance Payable 127,621,705 140,272,029

Reality (Lanka) Limited(Subsidiary Company)

Rent Expense 7,695,000 7,434,350 Loan Receivable 58,134,631 65,890,881

Singer Business School (Private) Limited(Subsidiary Company)

Services Provided 5,373,514 5,060,270 Expenses Reimbursed 1,522,005 2,600,000 Capital Invested – 5,000,000 Balance Payable – Trade 969,018 3,082,578

40.2 (c) Transactions with Associate Companies

Telshan Network (Pvt) Limited is an Associate company of Singer (Sri Lanka) PLC, with whom Singer (Sri Lanka) PLC or its Subsidiary Companies had no transactions. The amount receivable from or payable by above related parties as at 31st December 2016, are disclosed in Notes 17, 19 and 34 respectively.

40.2 (d) The Company is authorised to use the name ‘SINGER’ as part of its corporate name so long as Since Asia Limited continues to hold, directly or indirectly, at lest a majority of voting stock of the Company.



40.3 Transactions with Key Management Personnel According to Sri Lanka Accounting Standard (LKAS) 24 – ‘Related Party Disclosure’, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Directors (Including Executive and Non-Executive Directors) of the Company and their immediate family members have been classified as Key Management Personnel of the Company.

2016 2015Rs. Rs.

(i) Transactions with Key Management Personnel or Close Family Members

Deposit kept by Key Management Personnel of their Close Family Members at Singer Finance (Lanka) PLC 31,459,877 22,444,481

Group Company

2016 2015 2016 2015Rs. Rs. Rs. Rs.

(ii) Compensation of Key Management Personnel

Short-Term Employee Benefits 152,943,941 78,893,535 103,610,273 64,940,930

Post-Employment Benefits Paid 4,900,500 9,261,000 4,900,500 9,261,000

In Addition to their Salaries, the Company provides non-cash benefits to the Key Management Personnel and contributes to a post employment defined benefit plan on their behalf. Directors’ emoluments are disclosed in Note 9 to the Financial Statements.

(iii) No transactions were carried out during the year with the parties/entities in which Key Management Personnel or their close family members have control, joint control or significant influence.

41. NCI

41.1 Acquisition of NCIThe following table summarises the information relating to each of the Group’s subsidiaries that has material NCI, before any intra group eliminations.

31st December 2016 Singer Finance(Lanka) PLC

Rs.

Singer Industries (Ceylon) PLC

Rs.

Regnis (Lanka) PLC

Rs.

Other individually immaterial

subsidiariesRs.

Total

Rs.

NCI Percentage (%) 19.60 12.28 41.71

Non-Current Assets 6,480,082,977 1,165,353,945 1,066,401,381

Current Assets 6,169,919,295 374,180,109 1,224,209,068

Non-Current Liabilities 3,782,712,926 53,604,747 152,507,098

Current Liabilities 6,226,317,198 100,115,345 744,388,645

Net Assets 2,640,972,148 1,385,813,962 1,393,714,706

Net Assets Attributable to NCI 517,630,541 170,177,955 581,318,404 131,961,161 1,401,088,061

Revenue 2,255,023,708 743,206,094 3,112,110,318

Profit 415,370,784 21,651,705 240,948,909

OCI 1,002,689 6,514,102 526,672

Total Comprehensive Income 416,373,473 28,165,807 241,475,581

Profit Allocated to NCI 81,412,674 3,150,339 100,490,730 50,507,922 235,561,665

OCI Allocated to NCI 196,527 799,932 219,655 713,719 1,929,833

Cash Flows from Operating Activities (1,625,380,639) 25,676,098 (263,138,182)

Cash Flows from Investment Activities 38,025,211 4,829,460 36,495,688

Cash Flows from Financing Activities 1,464,892,761 – 194,988,418

Net Increase (Decrease) in Cash and Cash Equivalents (122,462,667) 30,505,558 (31,654,076)



31st December 2015 Singer Finance(Lanka) PLC

Rs.

NCI Percentage (%) 19.60Non-Current Assets 5,774,110,926 Current Assets 4,789,958,579 Non-Current Liabilities 5,886,175,964 Current Liabilities 2,205,293,007 Net Assets 2,472,600,534 Net Assets Attributable to NCI 484,584,032 Revenue 1,875,359,355 Profit 424,874,478 OCI (720,075)Total Comprehensive Income 424,154,403 Profit Allocated to NCI 83,267,550 OCI Allocated to NCI (141,122)Cash Flows from Operating Activities (467,512,797)Cash Flows from Investment Activities (113,944,588)Cash Flows from Financing Activities 852,449,342 Net Increase in Cash and Cash Equivalents 270,991,957

41.2 Further Acquisition of NCIGroup acquired an additional 4.17% interest in Singer Industries (Ceylon) PLC for Rs. 28,337,328/- in cash, increasing its ownership from 83.55% to 87.72%. The carrying amount of Singer Industries (Ceylon) PLC’s net assets in the Group’s Consolidated Financial Statements on the date of the acquisition was Rs. 1,367,912,824/-.

The further acquisition of Singer Industries (Ceylon) PLC and the initial acqusition of Regnis Lanka PLC resulted to increase in indirect holding of Reality Lanka Limited from 77.6% to 88.2%. The carrying amount of Reality Lanka Limited net assets in the Group's Consolidate Financial Statments on the date of change in acquisitions was Rs. 129,434,060/-.

The Group recognised a decrease in NCI of Rs. 68,747,368/-, a increase in retained earnings of Rs. 8,280,491/- changes in the Company’s ownership interest in Singer Industries (Ceylon) PLC by 4.17% and Reality Lanka Limited by 10.6%.



Company Name Principal Activity Directors

Singer Finance (Lanka) PLC z Leasing Dr. Saman KelegamaSinger – Interest 80.4% z Hire Purchasing Mr. J.A. Setukavalar

z Lending and Accepting Deposits Mr. Russel De MelMr. Gavin J. WalkerMr. John HyunMr. N.J.K. DissanayakeMr. R.S. WijeweeraMr. Janaka MendisMr. S. RamanathanMr. K.K.L.P. YatiwellaMr. C.A. SamarasingheMr. T.A. Amarasuriya Mr. A.G.I.H. Perera

Regnis (Lanka) PLCSinger – Interest 58.3%

z Manufacturing Refrigerators Dr. Saman Kelegama Mr. Ranil De Silva Mr. G.J. WalkerMr. H.A. PierisMr. V.G.K. VidyarathneMr. K.D. KospelawattaMr. N.B. Karunaratne

Singer Industries (Ceylon) PLCSinger – Interest 87.7%

z Assembling Sewing Machines z Manufacturing of cabinets and stands for sewing machines and assembling

Dr. Saman Kelegama Mr. Ranil De Silva Mr. G.J. WalkerMr. H.A. PierisMr. V.G.K. VidyarathneMr. K.D. KospelawattaMr. A.C.M. Irzan

Regnis Appliances (Private) LimitedSinger – Interest 58.3% (indirect)

z Manufacturing and assembling washing machines Dr. Saman Kelegama Mr. H.A. PierisMr. V.G.K. VidyarathneMr. K.D. Kospelawatta

Singer Digital Media (Private) Limited

Singer – Interest 100%

z Marketing Mobile Phones, Computers and Cameras Mr. H.A. PierisMr. M.H. WijewardenaMr. K.K.L.P. Yatiwella

Reality Lanka Limited Singer – Interest 86.3% (Indirect)

z Investment on Properties Dr. Saman KelegamaMr. Gavin J. WalkerMr. H.A. Pieris

Singer Business School (Private) Limited Singer – Interest 100%

z Educational Services Mr. H.A. PierisMr. M.H. WijewardenaMr. K.K.L.P. Yatiwella

SUBSIDIARIES/ASSOCIATE AND RELATED COMPANIES

P:252 Singer (Sri Lanka) PLC ANNUAL REPORT 2016A DECADE IN PERSPECTIVE

Year ended 31st December 2016

Rs. ’000

2015

Rs. ’000

2014

Rs. ’000

2013

Rs. ’000

2012

Rs. ’000

2011

Rs. ’000

2010(Restated)

Rs. ’000

2009

Rs. ’000

2008

Rs. ’000

2007

Rs. ’000

GDP Growth – % 4.10 4.80 7.40 7.30 6.00 8.30 7.00 3.50 6.00 6.80 Market Capitalisation Growth – % (8.48) 17.00 32.50 (13.00) (22.90) 36.10 102.00 123.00 (40.40) 42.60

Trading Results

Group Turnover – Net 46,924,144 38,710,834 29,699,602 25,485,561 25,441,494 22,031,653 16,028,534 11,913,503 13,734,093 13,776,425 Profit before Tax 3,126,233 1,895,275 1,155,608 728,440 1,777,160 1,990,012 1,167,862 247,729 255,074 602,913 Taxation 768,477 659,236 373,974 206,375 561,451 681,181 499,042 114,830 89,616 232,698 Profit for the Year 2,357,756 1,236,039 781,634 522,066 1,215,710 1,308,831 668,819 132,899 165,458 370,215 Total Comprehensive Income for the Year 2,623,507 1,206,343 891,279 519,059 1,320,383 1,308,831 – – – –Property, Plant and Equipment 5,426,841 2,715,401 2,667,909 2,505,355 2,151,208 1,691,107 1,564,240 1,285,728 1,445,078 1,198,303 Investment in Equity Accounted Investees – 54,831 55,189 53,226 52,663 46,886 23,525 24,541 25,433 412,214 Other Investments 17,061 17,061 17,061 17,061 17,061 17,061 17,061 18,490 18,490 18,490 Deferred Tax Assets 124,061 259,733 185,024 119,022 150,284 143,450 110,226 143,053 96,481 68,642 Other Non-Current Assets 8,467,619 7,472,596 6,021,845 5,867,311 5,234,046 4,385,767 2,687,281 2,205,263 2,455,481 2,145,427 Total Non-Current Assets 14,035,582 10,404,803 8,947,028 8,561,974 7,605,262 6,284,271 4,402,333 3,677,075 4,040,963 3,843,076 Current Assets 28,214,282 21,857,494 18,444,957 16,000,553 13,795,274 11,164,888 8,477,132 7,176,378 8,612,254 8,219,439 Current Liabilities 22,189,446 15,417,138 15,213,903 13,030,817 12,849,830 10,043,948 6,602,195 6,392,896 7,668,414 5,853,413 Net Current Assets 6,024,816 6,440,356 3,231,054 2,969,736 945,444 1,120,940 1,874,937 783,482 943,840 2,366,026 Total Assets Less Current Liabilities 20,060,398 16,959,979 12,178,083 11,531,711 8,550,706 7,405,211 6,277,270 4,460,557 4,984,803 6,209,102 Security Deposit 1,018,452 851,794 732,124 651,765 576,648 487,449 403,894 359,516 334,837 301,558 Loans Repayable after One Year 8,381,885 8,091,907 4,226,596 4,334,165 1,633,823 1,110,385 1,287,291 763,936 1,444,165 2,350,644

Provision for Gratuity 651,144 486,465 383,912 320,033 270,539 204,787 181,876 158,546 148,418 126,889

Public Deposits 454,013 645,008 798,492 756,232 342,535 503,142 195,995 150,001 81,077 443,444 Deferred Tax Liability – 114,820 119,789 109,540 113,926 95,805 99,339 – 22,707 17,987 Net Assets 9,554,905 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799 2,953,599 2,968,580

Share Capital and ReservesStated Capital 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 626,048 Capital Reserves 1,057,964 857,580 870,358 762,034 773,312 655,454 664,542 412,127 407,098 233,598 Statutory Reserves 95,361 37,318 136,128 128,447 78,425 44,408 10,748 – – –Revenue Reserves 6,374,444 4,728,455 3,842,675 3,447,544 3,778,395 3,421,739 2,583,363 1,975,624 1,920,453 2,108,933 Shareholders’ Funds 8,153,817 6,285,401 5,475,208 4,964,073 5,256,181 4,747,648 3,884,701 3,013,799 2,953,599 2,968,579 Non-Controlling Interest 1,401,088 484,584 441,960 395,902 357,054 255,995 224,174 – – –Total Equity 9,554,905 6,769,985 5,917,169 5,359,975 5,613,235 5,003,643 4,108,876 3,013,799 2,953,599 2,968,580

Ratio and Statistics

Profitability

Earning per Share – Rs. 16.95 9.21 5.70 3.69 9.26 10.11 5.34 1.06 1.32 2.96 Net Assets per Share – Rs. 65.12 50.20 43.73 39.65 41.98 37.91 31.03 24.07 23.59 23.71 Return on Average Net Assets – % 28.89 19.50 13.90 9.50 22.90 29.30 18.80 4.40 5.60 12.90

Dividends

Amount – Rs. ’000 1,101,845 525,880 313,024 313,024 751,258 939,072 281,722 – 250,419 125,210 Per Share – Rs. 8.80 4.20 2.50 2.50 6.00 7.50 4.50 – 4.00 2.00 Cover 1.31 1.63 1.48 0.96 1.37 1.20 1.50 – 1.80 1.70

Others

Market Price per Share – Rs. 126.20 137.90 117.90 89.00 102.30 132.70 195.00 76.50 32.00 68.00 Price Earnings Ratio 14.31 20.10 31.90 36.90 12.50 14.30 18.30 36.10 12.10 11.50 Annual Sales Growth – % 21.22 30.30 16.50 0.20 15.50 37.30 34.50 (13.30) (0.30) 12.80 Current Ratio 1.27 1.40 1.20 1.20 1.10 1.10 1.30 1.10 1.30 1.40 Average Annual Inflation – % 3.75 0.90 3.30 7.30 7.60 6.70 6.90 4.80 14.40 17.50 Net Income to Net Turnover – % 5.02 3.20 2.60 2.00 4.80 5.90 4.20 1.10 1.20 2.70

P:253Singer (Sri Lanka) PLC ANNUAL REPORT 2016 SHARE INFORMATION

Share Information 31st December 2016 31st December 2015

Stated Capital (Rs.) : 626,048,050 626,048,050

No. of Ordinary Shares : 125,209,610 125,209,610

Class of Shares : Ordinary SharesVoting Rights : One Vote per Ordinary ShareSubdivision : New Share for every 1 Existing Share

held on 31st March 2011

2. Stock Exchange ListingThe issued ordinary shares of Singer (Sri Lanka) PLC are listed with the Colombo Stock Exchange of Sri Lanka.

3. Distribution of Shareholding – 31st December 2016No. of Shareholders: 31st December 2016 – 2,385 (31st December 2015 – 2,447).

Resident Non-Resident TotalNo. of

ShareholdersNo. of

Shares %No. of

ShareholdersNo. of

Shares %No. of

ShareholdersNo. of

Shares %

1 - 1,000 1,454 344,136 0.27 18 5,469 0.00 1,472 349,605 0.27

1,001 - 10,000 687 2,407,092 1.92 7 32,328 0.03 694 2,439,420 1.95

10,001 - 100,000 197 5,329,640 4.26 6 285,043 0.22 203 5,614,683 4.48

100,001 - 1,000,000 12 3,465,682 2.77 – – – 12 3,465,682 2.77

Over - 1,000,001 1 4,977,370 3.98 3 108,362,850 86.55 4 113,340,220 90.53

Total 2,351 16,523,920 13.20 34 108,685,690 86.80 2,385 125,209,610 100

31st December 2016 31st December 2015

Categories of SharesNo. of

SharesNo. of

ShareholdersNo. of

SharesNo. of

Shareholders

Individuals 8,973,584 2,218 9,289,959 2,277

Institutions 116,236,026 167 115,926,651 170

Total 125,209,610 2,385 125,209,610 2,447

4. DividendsFinal Dividend 2016 – Rs. 8.80 (2015 – Rs. 4.20)

5. Market Value Per Share2016 2015

Rs. Rs.

Highest during the Year 4th January – 140.00 19th August – 152.00

Lowest during the Year 12th July – 107.00 10th April – 105.50

31st December 126.20 137.90


6. Twenty Largest Shareholders as at 31st December2016

Name No. of Shares %.

Retail Holdings (Sri Lanka) BV [Formerly known as Singer (Sri Lanka) BV] 99,762,850 79.68

Bnymsanv Re-Cf Ruffer Investment Funds: Cf Ruffer Pacific 5,000,000 3.99

Bank of Ceylon A/c Ceybank Century Growth Fund 4,977,370 3.98

Pemberton Asian Opportunities Fund 3,600,000 2.88

Deutsche Bank AG as Trustee for JB Vantage Value Equity 830,710 0.66

Mrs. Mihiri Virani Fernando 620,000 0.50

Bank of Ceylon A/c Ceybank Century Growth Fund 605,624 0.48

Mrs. Zohra Taher Jafferjee 330,890 0.26

Dr. Nimal Ebenezer Herat Sanderatne 180,403 0.14

Mrs. Anoma Kamalika Amarasuriya 178,970 0.14

Mrs. Kalutaravedage Jinangali Manel De Silva 131,248 0.10

Mr. Nalin Amita De Silva 126,326 0.10

Jafferjee Brothers (Exports) Limited 125,200 0.10

Union Investments Private Limited 120,144 0.10

Mr. Abeysiri Hemapala Munasinghe 109,548 0.09

Mrs. Enoka Kamali Wickramasinghe 106,619 0.09

Mrs. Jasbinderjit Kaur Piara Singh 89,606 0.07

Mr. Hemaka Devapriya Senarath Amarasuriya 89,482 0.07

Mr. Nai Kaluge Anura Deepal De Silva 81,570 0.07

Deutsche Bank AG as Trustee to Capital Alliance Quantitative Equity 74,404 0.06

117,140,964 93.56

Others 8,068,646 6.44

Total 125,209,610 100.00

2015

Name No. of Shares %.

Singer (Sri Lanka) BV 107,812,850 86.11Bank of Ceylon A/c Ceybank Unit Trust 4,531,279 3.62Deutsche Bank AG as Trustee for JB Vantage Value Equity Fund Deut 830,710 0.66Bank of Ceylon A/c Ceybank Century Growth Fund 661,792 0.53Mrs. Mihiri Virani Fernando 618,000 0.49Mrs. Zohra Taher Jafferjee 330,890 0.26Piere Lanka Exports Private Limited 232,496 0.19People’s Bank 200,000 0.16Dr. Nimal Ebenezer Herat Sanderatne 179,403 0.14Mrs. Anoma Kamalika Amarasuriya 178,970 0.14Mrs. Maria Tasneem Moosajee 154,257 0.12Mrs. Kalutaravedage Jinangali Manel De Silva 131,248 0.10Mr. Nalin Amita De Silva 126,326 0.10Jafferjee Brothers (Exports) Limited 125,200 0.10Mr. Abeysiri Hemapala Munasinghe 109,548 0.09Mrs. Enoka Kamali Wickramasinghe 106,619 0.09Mrs. Jasbinderjit Kaur Piara Singh 89,606 0.07Mr. Hemaka Devapriya Senarath Amarasuriya 89,482 0.07Merchant Bank of Sri Lanka Limited/Union Investments Limited 88,894 0.07Sri Lanka Insurance Corporation Limited – General Fund 87,500 0.07

116,685,070 93.18Others 8,524,540 6.82Total 125,209,610 100

SHARE INFORMATION


7. Share TradingFor the year ended 31st December 2016 2015

Number of Transactions 1,966 2,332

Number of Shares Traded 12,226,301 2,248,222

Value of Shares Traded (Rs.) 1,433,094,157 300,569,544

8. Public HoldingThe percentage of shares held by the public is 20.32% (2015 – 13.89%).

9. Record of Scrip IssuesYear ended 31st December Issue Basis No. of Shares Cumulative

Share Capital(Rs'000)

1981 Prior to Public Issue – 1,855,200 18,552

1982 Public Issue – 463,800 23,190

1984 Bonus 1:02 1,159,500 34,785

1985 Bonus 1:03 1,159,500 46,380

1989 Bonus 1:01 4,638,000 92,760

1992 Bonus 1:04 2,319,000 115,950

1992 Rights (at Rs. 40/-) 1:08 1,449,375 130,444

1994 Bonus 1:05 2,608,875 156,533

1996 Bonus 2:09 3,478,500 191,318

1996 Rights (at Rs. 50/-) 1:09 1,855,766 209,875

1998 Bonus 3:11 5,723,868 267,114

2000 Bonus 1:05 5,342,276 320,537

2004 Bonus 1:04 8,013,415 400,671

2005 Bonus 1:04 10,016,769 500,838

2006 Bonus 1:04 12,520,961 626,048

2011 Subdivision 1 for 1 62,604,805 –

Total No. of Shares 125,209,610 626,048

SHARE INFORMATION

All Share Price Index vs Market Price Per Share

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10. Listed DebenturesDetails regarding the listed debentures are as follows:

Interest Rate of Comparable

Government Securitiesas at Issue Date

(%)

8.25% Senior Rated Listed Unsecured Redeemable on 22nd December 2017 6.66

8.60% Senior Rated Listed Unsecured Redeemable on 7th June 2018 6.29

9.50% Senior Rated Listed Unsecured Redeemable on 7th June 2018 6.29

10.50% Senior Rated Listed Unsecured Redeemable on 19th March 2019 9.43

12.29%* Senior Rated Listed Unsecured Redeemable on 19th March 2019 9.43

*Variable – Six months Gross TB+1.5% (Floor 9.5% Cap 12.5%)

Interest Rate of Comparable Government Securities as at 31st December 2016 was 9.63%.

Highest traded price, lowest traded price, last traded price as at 31st December 2016, interest yield and yield to maturity of trade are as follows:

Highest Traded Price (Rs.)

Lowest Traded Price (Rs.)

Last Traded Price (Rs.)

Interest Yield (%)

Yield to Maturity (%)

8.25% Senior Rated Listed Unsecured Redeemable Debenture

95 94 94 8.25 8.25

Debt/equity ratio, interest cover and quick asset ratio are given in Financial Highlights on page 05 of this Report.

SHARE INFORMATION


Singer Plus Shops

Ampara

AkkaraipattuAmpara ‘A’Ampara ‘B’ Aralanganwila Dehiattakandiya Kalmunai ‘A’ Kalmunai ‘B’ Padiyatalawa PottuvilUhana Samanthurai

Anuradhapura

Anuradhapura ‘A’ Anuradhapura ‘B’Anuradhapura ‘C’EppawelaGalenbindunuwewa HabaranaHorowpathana KebithigollawaKekirawa Medawachchiya Tambuththegama Nochchiyagama

Badulla

Badulla Badulla ‘B’Bandarawela ‘A’Bandarawela ‘B’Girandurukotte Hali-Ela Mahiyanganaya Welimada Passara

Batticaloa

Batticaloa ‘A’ Batticaloa ‘B’ChenkaladiKalawanchikudi Kattankudy Valaichchenai

Colombo

Angoda AthurugiriyaAttidiyaAvissawella Battaramulla Boralesgamuwa Borella Dehiwela DelkandaGalle Face Court Gothatuwa Homagama Kaduwela Katubedda Kirulapona Kohuwala Kollupitiya Kotahena Kottawa Maharagama ‘A’ Maharagama ‘B’ Malabe Maradana Milagiriya Moratuwa Nugegoda Pelawatte Peliyagoda Pettah Piliyandala ‘A’ Pliyandala ‘B’

PitakotteRajagiriya Ratmalana Thimbirigasyaya Udahamulla – Merit Union PlaceWard Place Wellampitiya Wellawatta

Galle

Ahangama AmbalangodaBaddegamaElpitiya Galle ‘A’ Galle ‘B’ Hikkaduwa ImaduwaNeluwa PinnaduwaUdugama

Gampaha

Delgoda DivulapitiyaGampahaGanemulla Ja-ElaKadawatha ‘A’ Kadawatha ‘B’ Kandana Kiribathgoda ‘B’ Kirindiwela Kochchikade Mawaramandiya Minuwangoda Mirigama Negombo Nittambuwa Pugoda Ragama Seeduwa Veyangoda Wattala Weliweriya Yakkala

Hambantota

Agunakolapelessa AmbalantotaBeliattaHambantota Middeniya Suriyawewa Tangalle Tissamaharamaya

Jaffna

Chenkanai ChavakachcheriChunnakamHospital Road JaffnaManipay Nelliady Point PedroJaffna

Kalutara

Agalawatta AluthgamaBandaragamaBeruwala Bulathsinghala Darga Town Horana Kalutara ‘A’ Kalutara ‘B’ Matugama Panadura Wadduwa

Kandy

Akurana DiganaGampolaGelioya Kandy Katugastota Kundasale Nawalapitiya Peradeniya Pilimatalawa Poojapitiya Rikillagaskada Wattegama

Kegalle

Kegalle ‘A’ Kegalle ‘B’MawanellaRambukkana Ruwanwella Warakapola

Kurunegala

Alawwa GalgamuwaGiriullaKuliyapitiya Kurunegala ‘A’ Kurunegala ‘B’ Maho Mawathagama Melsiripura Narammala Nikaweratiya PannalaPolgahawela Pothuhera Rideegama Wariyapola

Matara

Akuressa DeniyayaDikwellaHakmana Issadeen Town Kamburupitiya Matara ‘A’ Matara ‘B’ Morawaka Urubokka Weligama

Mannar

Mannar

Matale

Dambulla GalewelaMataleRattotaWilgamuwa

Moneragala

Bibile ButtalaKataragamaMoneragala Siyabalanduwa Wellawaya

Nuwara Eliya

HattonNuwara Eliya ‘A’ Nuwara Eliya ‘B’ Pussellawa Talawakelle

Polonnaruwa

Bakamuna HingurakgodaKaduruwela ‘A’Kaduruwela ‘B’ Medirigiriya Minneriya Polonnaruwa Welikanda

Puttalam

Anamaduwa ChilawDankotuwaPuttalam Wennappuwa

Ratnapura

Balangoda EheliyagodaEmbilipitiyaGodakawela Kahawatta Kuruwita Nivitigala Pelmadulla Ratnapura ‘A’ Ratnapura ‘B’ Yatiyantota

Trincomalee

Kanthalai Trincomalee ‘A’Trincomalee ‘B’Vakarai

Vavuniya

Vavuniya Parakramapura

Kilinochchi

Kilinochchi

Mullaitivu

Mullaitivu

Samsung Showroom Nugegoda Ratmalana

Singer Homes

Anuradhapura BadullaChilaw ColpettyGodagama Kadawatha Kalutara KandyKegalle Kotte Kurunegala Maharagama Matara Negombo Nuwara Eliya Ratmalana RatnapuraWellawatta

SISIL World

Akuressa Ambalantota Ampara Anuradhapura Avissawella Badulla

Balangoda Bandarawela Battaramulla Borella Chilaw Chunnakam Dambulla Dickwella Digana Eheliyagoda Embilipitiya Galle Gampaha Gampola Homagama HoranaJa-Ela Jaffna Kadawatha Kaduwela Kahawatta Kalawana Kalutara Katugastota Kegalle Kekirawa Kilinochchi Kuliyapitiya KurunegalaMaharagama Mahiyanganaya MataleMatara Matugama Mawanella MirigamaMount Lavinia Narammala Negombo Nikaweratiya Nittambuwa Nuwara Eliya Panadura Pelmadulla Piliyandala Ratnapura Ruwanwella TalawathugodaThambuttegamaTissamaharamaya Trincomalee Union Place Vavuniya VeyangodaWarakapola WelimadaKandy Kiribathgoda Minuwangoda

Singer Mega

Beko & SonyBoralesgamuwaDuplication Road GampahaKandy Kandy Mall KalutaraKiribathgodaK-Zone – Ja-ElaK-Zone – Moratuwa Liberty Plaza Digital Maharagama MalabeMt. Lavinia Negombo Nugegoda Panadura Rajagiriya Thalawathugoda Thurstan Road Wattala

Satellite Shops

Ampara

Hingurana

Anuradhapura

GalnewaKahatagasdigiliyaRambewa Thalawa Thirappane Wilachchiya

Badulla

Diyatalawa EttampitiyaHaldemmullaHasalaka Hettipola Meegahakivula Udapussellawa Ududumbara

Colombo

Hanwella KosgamaMoragahahenaPadukka

Galle

Batapola KarandeniyaPitigala TalgaswalaUragasmanhandiya Wanduramba Yakkalamulla

Gampaha

Dompe KatanaMarandagahamullaPasyala

Hambantota

Ranna WalasmullaWeeraketiya

Jaffna

Kodikamam

Kalutara

Baduraliya BeruwalaIngiriya

Kandy

Alawathugoda AnkumburaGalagedaraGalaha Hatharaliyadda Kadugannawa Menikhinna

Kegalle

Bulathkohupitiya DeraniyagalaNaiwala Hemmatagama Kotiyakumbura

Kurunegala

Bingiriya DummalasuriyaIbbagamuwaPolpithigama Hiripitiya

Matale

Pallepola

Matara

Pitabeddara TelijjawilaThihagoda

Moneragala

Badalkumbura Thanamalwila

Nuwara Eliya

Ginigathhena MaskeliyaPundaluoyaRagala Walapane

Polonnaruwa

Diyabeduma JayanthipuraDiyasenpura

Puttalam

Abanpola KobeiganeNattandiyaNorochcholai

Ratnapura

Dehiowita KalawanaKiriellaPallebadda Rakwana

Trincomalee

Muttur

Other

Apparel Solutions Katunayake Duty Free Store

DISTRIBUTION NETWORK


Singer Service

Regional Service Centres

AluthgamaAmpara Anuradhapura Badulla Colombo JaffnaKandy Kuliyapitiya Matara PasyalaPeliyagoda Polonnaruwa Ratnapura

Aluthgama

A.K.MotorsAir Tech EngineeringAmal Ref & ElectricalsDilshan MotorsDinan Machine CentreEranda Multi ElectricityGulf MotorsMulti Tech EngineeringNanayakkara ElectronicsPerera & ServicePremalal MotorsSiri Electrical & Ref Eng.Sola Edge Colling & Power SolutionSuranjith MotorsThushara Motors

Ampara

Aira MotorsAruna Ref & Electrical Chil AirEastern Tech Institute Isuru Sameera Cushion WorksJanudha Ref & Electricals Mustafa Motors MEC Ruckshan Mechanical ShopS S H Motors Sahana Motors V T Cushion Works

Anuradhapura

Amila FurnitureAyesha Electricals Buddhika Electricals Chandana Entreprises Deikin Electricals Derrick MotorsEmil ElectronicsHashen Electrical & Ref EngineerIndika Auto Service Centre Indunil Ref & Electricals Janith MotorsKurunegala Motors Lahiru Motors Lakmal MotorsLal EnterpriseLuck Cool Ref Engineers Luxman Ref & Electrical Majee AC & ElectricalNeel MotorsNihal MotorsPower Wash Pujana Electrical & CellularRavi Motors Royal MotorsSampath Auto Care

Sandanayake Wood WorksShalini Auto Cool Shantha Motors SLK Cushion DesignersTharanga MotorsThushara Service CentreUdani Electronics Wijesinghe Motors

Badulla Tharindu Electricals Marriott Electricals Cool Air Engineering Aruna ElectricalsTV CentreHiruna ElectronicsTelstar ElectronicSameera Cooling ServiceChamari RefRefco Electrical Saman Motors Mohan Motors Piyal Motors Lal MotorsKesala Electricals Yasas Motors Gunathilake Motors

Colombo

Ben RefrigeratorsChamath Enterprises Chatu Spray Paint Chirathma Electricals Dineth ElectronicsDinu ElectricalsDushadi Sofa CentreEcon AirE.M.P. Electricals Electro FrostFlemingo Cushion HouseG.M. Electricals Issuru Kaveen Engineers J & U Electricals and Electronics Life Cool AC Engineers Nuwan Engineers Ratnayake EnterprisesRuwan ElectricalsSandaruwan Cool Eng.S.K. ElectricalsS.N.A. Ref Air Samagi Ref Centre Sharp Electronics Super Tech Ref Engineers Technicold Electronics Cool Tech Engineers GB ElectricalSmart Ref Engineers Anjana Electricals Ushan ElectricalsMr.H.G.LalithMr.C.L.S.AnandaKeerthi De Jayasinghe EngineersMr.D.U.JayasingheMr.Muthugalage

Jaffna

Ambiga ElectricalsAnton Service StationCity Link Coolers Cool Air Kings Institute of Ace Jetcool Engineering ServicesNew Asia CentreNPM Electricals

Panchu Garage Ragu Mechanic Centre Raj Motor WindingSSV Cool Air Service Snow Eagles (Ref & Air Con Engineers)Suvil Cushion Centre TNR Electricals & ElectronicsThe Best Chill air conditionVageetha Motors Viji Air ConditionersWelcome Motors (Hero Garage)

Kandy

Fresh Cool Enterprise I Tec Electronics Leshani Electrical Lional WijesinheNew Sameera Electrical New Vision Electronics Ominda Electricals Prabath Electrical Sandamini Multi Electrical Sathsara Sound Senadeera Ref Centre Shehan Multi Service Siva MotorsSuper Air Electrical Works Tech Mart Ref Engineers Thushara Electronics Vimod ElectricalsManjula MotorsShane MotorsKithshan MotorsEdirisinghe ElectricalCool MartDeepathi Sewing Machine ServiceSisilto Electricals & Technical ServicesThaprobane International

Kuliyapitiya

Anuradha Electricals Chandana Motor Garage Chandu ElectricalsDasun MotorsFreezairMahesh Electricals Modern Air Condition Nalinda Machine Centre New Leeds Electronics Nipuna Auto Mobile Peo MotorsRavindra Motors Samodha Electicals Sahana Motors Sathsara Auto WorksSaman Service Sanjeewa Auto Works Mihidum Juki Machine TechnicianBandara Auto MobileTechno FrostWorld Air Conditioner Wijesinghe Motors

Matara

Chaminda Air Ref Eng. Ser.C J ElectricalsChathuranga Motors G.A. Auto Electricals Hemantha Motors Indika Motors Janahitha Motors

Janapriya Electronics K.U.K. Super Cool ServiceK.S. MotorsLal ElectronicsLal Honda Service Leyard FurnitureMax Cool ElectricalsNew Shiny ElectronicsNew Freeze AirNew Lion Radio Nilanka Pathirana Ref CentreNimal EngineersNuwan Motors Penguine International Prince Electricals Priyantha Ref EngineersRahula MotorsRohan Ref CentreRuhunu Ref & Air Services Sampath Motor Service Sampath Engineering WorksSarani MotorsSamarawickrama Cushion WorksSilver Dale ElectronicsS.D Machine Service CentreSunil Motors Super Cool AirSusantha MotorsUduwella RefU.D.Ref EngineeringVictor Cycle Works Vijitha Motors

Pasyala

Aloka EngineersKavia EngineersKavindu Ref & AirNew PC HouseNishani MotorsNushan Ref & Air CenterRaja MotorsS.N.A.Ref AirSaleena ElectronicsSeseni EngineersSilicone ElectronicsSumith Motor WorksSusantha Ref ElectricalsTech Way ServiceTechnico ElectronicsTechno Ref & Air EnterpricesThilak Electricals

Polonnaruwa

Ananda Electricals Ashoka RefB.N.R. Enterprises Chaminda Sewing Indika Motors MechanicsDissnayake Lathe Shop DJ EngineersJanith MotorsJ & P Electronics Jayathilaka Motors Karunarathne Motors Kinnya AC Mechanics Mahaweli Electronics Mayura Ref & Electricals Mudalige Electronics Nissanka Motors Priyankara Motors Sanath AC Engineering Sampath Motors S.M. Motors

Udarata Motors Udaya MotorsGautham Cushion works

Ratnapura

Amangi ElectronicsHigh FrostHighcool Air & Ref Center Indika Ref EngineersPathirana Ref Engineering PSD MotorsQuick Cool Ref Ranjith Electronics Roshan ElectronicsSaman WoodSamagi Diesel Engineering Smart Wood CreationSanjaya Electronics Senadheera Multi Ref Solenta Electronics Star Ref Electricals S MS Electrical

Air Conditioning Division

Air Cool TempAlwis Engineering Centre Cool WayE R EngineersNew Dynamic Ref EngineersLahiru Ref Engineers Melona Aircon ServicesNew Ashen ElectricalQualitcoolR&T Ref EngineeringRe CoolRef Air Electricals Royal Cool Enterprises Air Mech Sewwandi Ref EngineersSrilanken EngineeringSun Cool EnterprisesSun Ref EngineersSure RefTemp Cool Engineers Yellowma AirconditioningSubasinghe Ref Engineers Techno EngineeringThilak Electronics Thilanka Motors

Motor Bike Service – Peliyagoda

Athula Motor Works Brito MotorsDiaz MotorsManahara Electricals Ransak Service CentreSinethma MotorsWimal Motor Works

Stock Franchise at Distribution Center

C.K. ElectronicsDanushka RefHiru ServiceHi-Tech ElectronicsK V ElectronicsK TronicKumara ElectronicsR J EnterprisesSampath ElectricalsT S ElectronicsTele TechnicsUltra-Cool Ref Centre

Mr. Sunima PereraMr. KariyawasamMr. ChamindaMr. Ranjan Amarasinghe

Fashion AcademiesAmbalantota AmparaAngodaAmbalangodaAnuradhapura BAvissawella Baddegama Badulla Bandarawela Battaramulla Batticaloa Borella Chilaw DambullaDehiattakandiya Dickwella Eheliyagoda Elpitiya GalewelaGalle B Gampaha Gampola Hatton HoranaJa-Ela Jaffna Kaduruwela Kaduwela Kalutara Kandana Kandy KatubeddaKattankudy Katugastota KegalleKiribathgoda BKiribathogda-FranchiseKirindiwelaKottawaKuliyapitiyaKurunegala Mahiyanganaya MalabeMaradana Matara AMataleMawanella Mega-KandyMinuwangoda Nawalapitiya Negombo Neluwa Nittambuwa Nugegoda Nuwara Eliya Panadura PeliyagodaPiliyandala B RajagiriyaRatnapura A Ratmalana Thambuttegama Tissamaharama Wellawatta Wennappuwa

SERVICE NETWORK AND FASHION ACADEMY NETWORK


Accounting PoliciesSpecific principles, bases, conventions, rules and practices adopted by an enterprise in preparing and presenting Financial Statements.

Acid RatioCurrent asset less inventory divided by current liabilities.

AmortisationThe expense of writing off over a fixed period, the initial value of an intangible asset such as goodwill, patents etc.

Available-for-SaleAll assets not in any of the three categories namely held-to-maturity, fair value through profit or loss and loan and receivables. It is a residual category does not mean that the entity stands ready to sell these all the time.

BorrowingsAll interest bearing liabilities.

Capital EmployedTotal of interest bearing loans and borrowings, bank over draft and total equity.

Capital ReservesReserves identified for specific purposes and considered not available for distribution.

Cash EquivalentsLiquid investments with original maturity periods of three months or less.

Contingent LiabilitiesConditions or situations at Reporting date the financial effect of which are to be determined by future events which may or may not occur.

Credit RatingAn evaluation of a corporate’s ability to repay its obligations or the likelihood of not defaulting, carried out by an independent rating agency.

Current RatioCurrent assets divided by current liabilities. A measure of liquidity.

DebtTotal liabilities, excluding deferred income.

Debt RatioTotal liabilities divided by total assets.

Deferred TaxationThe net tax effect on items which have been included in the Income Statement, which would only qualify for inclusion on a tax return at a future date.

Dividend CoverProfit attributable to ordinary shareholders divided by gross dividend. Measures the number of times dividend is covered by distributable profit.

Dividend PayoutDividend per share of the company divided by earnings per share of the Company.

Dividend Per ShareTotal gross dividend of the company divided by number of ordinary shares as at the reported date.

Earnings Per ShareProfits attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue.

EquityShareholders’ funds.

Fair ValueFair value is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transactions.

Financial InstrumentsFinancial instrument is any contract that gives rise to both a financial assets in one entity and a financial liability or equity instrument in another entity.

Gearing RatioProportion of borrowings to capital employed.

Gross Dividend Portion of profits inclusive of tax withheld, distributed to shareholders.

Held-to-MaturityDebt assets acquired by the entity with positive intention to be held-to-maturity.

Interest CoverProfit before tax plus net finance cost divided by net finance cost. Measure of an entity’s debt service ability.

ImpairmentThis occurs when recoverable amount of an asset is less than its carrying value.

Market CapitalisationNumber of shares in issue multiplied by the market value of a share at the Reported date.

Net Assets Per ShareThe equity attributable to owners of the company divided by the weighted average number of ordinary shares in issue.

Non-Controlling InterestEquities in a subsidiary not attributable, directly or indirectly, to a parent.

Price Earnings RatioClosing market price of a share divided by earnings per share as at reported date.

Related PartiesParties who could control or significantly influence the financial and operating policies of the business.

Return on Average Net Assets EquityProfits for the year divided by average total equity.

Revenue ReservesReserves considered as being available for distributions and investments.

SegmentConstituent business units grouped in terms of similarity of operations and location.

Value AdditionThe quantum of wealth generated by the activities of the Group measured as the difference between turnover and the cost of materials and services bought in.

Working CapitalCapital required to finance the day-to-day operations computed as the excess of current assets over current liabilities.

GLOSSARY OF FINANCIAL TERMS

P:260 Singer (Sri Lanka) PLC ANNUAL REPORT 2016NOTICE OF ANNUAL GENERAL MEETING


(Company Registration No. PQ 160)

NOTICE IS HEREBY GIVEN THAT THE FORTY-SECOND ANNUAL GENERAL MEETING OF SINGER (SRI LANKA) PLC, will be held at the Registered Office of the Company, No. 80, Navam Mawatha, Colombo 02 on Friday, 31st March 2017 at 10.00 a.m. for the following purposes:

1. To receive, consider and adopt the Report of the Directors and the Audited Financial Statements for the year ended 31st December 2016 with the Report of the Auditors thereon.

2. To resolve declaring that the age limit stipulated in Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. Stephen Goodman who has attained the retirement age stipulated in Section 210 of the said Act and who has attained the age of 72 years on 28th May 2016 and that his appointment for a period of one year in terms of Section 211 of the said Act is approved and to elect him as a Director of the Company in terms of the said Section 211.

3. To re-elect as a Director, Mr. John Hyun, who retires by rotation in terms of Article 24 (4) of the Articles of Association of the Company and who being eligible is being recommended for re-election. A brief profile of Mr. John Hyun is contained in the Board of Directors Section of the Annual Report.

4. To authorise Directors to determine contributions to Charities.

5. To reappoint Messrs KPMG, Chartered Accountants as the Auditors of the Company for the ensuing year and to authorise the Directors to determine their remunerations.

By Order of the Board,

(Sgd.)A.C.M. Irzan, FCMA (UK)Secretary


Note

1. The Transfer Books of the Company will be kept open.2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him/her and such proxy need not be a member of the Company. A Form of Proxy is enclosed for this purpose. The completed Form of Proxy should be deposited at the Registered Office of the Company not less than 48 hours before the time fixed for the Meeting.


Singer (Sri Lanka) PLC (Company Registration No. PQ160)

I / We ........................................................................................................................................................................................ of

..........................................................................................................................................................................................being a

member/members of Singer (Sri Lanka) PLC hereby appoint -

Dr. Saman Kelegama (or failing him)Mr. Hiran Asoka Pieris (or failing him)Mr. Deepal Sooriyaarachchi (or failing him)Mr. Gavin John Walker (or failing him)Mr. John J. Hyun (or failing him)Mr. Peter O'Donnell (or failing him)Mr. Ranil De Silva (or failing him)

......................................................................................................................................................................................................

..................................................................................................................................................................................................of

............................................................................................................ as my/our proxy to represent me/us on my/our behalf at the Annual General Meeting of the Company to be held on Friday, 31st March 2017 at 10.00 a.m. at the Singer (Sri Lanka) PLC, Registered Office at No. 80, Navam Mawatha, Colombo 02, and at any adjournment thereof and at every poll, which may be taken in consequence thereof. I/We the undersigned hereby authorise my/our proxy to vote on my/our behalf in accordance with the preferences indicated below:

For Against

1. To receive, consider and adopt the report of the Directors and the Audited Financial Statements for the year ended 31st December 2016 with the Report of the Auditors thereon.

2. To resolve that Section 210 of the Companies Act No. 07 of 2007 shall not apply to Mr. Stephen Goodman and to elect him as a Director.

3. To re-elect as a Director, Mr. John Hyun, who retires by rotation in terms of Article 24 (4) of the Articles of Association of the Company.

4. To authorise Directors to determine contributions to Charities.

5. To reappoint Messrs KPMG, Chartered Accountants as the Auditors of the Company for the ensuing Year and to authorise the Directors to determine their remunerations.

As witness my/our hand this ............................................. day of ........................................... Two Thousand and Seventeen.

............................................ Signature

FORM OF PROXY


Instructions for Completion of Form of Proxy y If a proxy other than the names mentioned above is preferred, delete the names printed and add the name of the proxy preferred and initial the alteration.

y Please indicate how your proxy should vote by marking an ‘X’ in the cage provided for each resolution. If no indication is given, or if there is, in the view of the proxyholder, any doubt (be reason of the manner in which the instructions contained in the proxy have been completed) as to the way in which the proxyholder should vote, the proxyholder in his/her discretion may vote as he/she thinks fit.

y A Company/Corporation should execute the proxy under its seal in the manner authorised by its Articles of Association or Statute creating it or under the hand of an Officer or Attorney duly authorised.

y If the Form of Proxy is signed by an Attorney, a certified copy (certified by a Notary Public) of the relative Power of Attorney should also accompany the completed Form of Proxy, if it has not already been registered with the Company and the original of the Power of Attorney should be produced for inspection at the meeting if required.

y Unless the completed Form of Proxy is deposited at the Registered Office of the Company at No. 80, Navam Mawatha, Colombo 02, Sri Lanka, not less than 48 hours before the time of the meeting the same will not be valid.

FORM OF PROXY

Name of the CompanySinger (Sri Lanka) PLC

Legal FormPublic company with limited liability incorporated as a public company in Sri Lanka on 30th December 1974 under the Companies Ordinance and Re-registered under the Companies Act No. 07 of 2007 on 13th June 2008.Founded in 1877 as a Branch of Singer Sewing Machine Company, USA. The shares of the Company are listed on the Colombo Stock Exchange. Accounting Year: 31st December.

Registered OfficeNo. 80, Nawam Mawatha,Colombo 2, Sri LankaTelephone: 94-11-2316316 (13 lines)Facsimile: 94-11- 2423544E-mail: [email protected]: www.singersl.com

Company Registration NumberOld – PBS 802 (S.P.)New – PQ 160

Tax Payer Identification Number124008026

BankersBank of CeylonCommercial Bank of Ceylon PLCDeutsche BankDFCC Bank PLCHatton National Bank PLCMCB BankNations Trust Bank PLCNDB Bank PLCPan Asia Bank PLCPeople’s BankSampath Bank PLCSeylan Bank PLCStandard Chartered Bank LimitedThe Hongkong & Shanghai Banking CorporationUnion Bank

AuditorsKPMG Chartered AccountantsNo. 32A, Sir Mohamed Macan Markar Mawatha,P.O. Box 186,Colombo 3

RegistrarsBusiness Intelligence (Pvt) LimitedNo. 8, Tickell RoadColombo 8

SecretaryA.C.M. Irzan FCMA (UK)

LawyersNeelakandan & NeelakandanAttorneys-at-Law & Notaries PublicM&N Building (Level 5),No. 2, Deal Place,Colombo 3

DirectorateDr. S. Kelegama – Chairman Asoka Pieris – Group Chief Executive Officer – Alternate L.N.S.K. Samarasinghe D. SooriyaarachchiG.J. Walker – Alternate M.H. WijewardeneG.M. Gellecanao – Appointed on 05.05.2016J. Hyun – Alternate A.S. ParanavaitaneP.J. O’Donnell – Alternate Lalith YatiwellaR. De Silva S.H. Goodman – Appointed on 31.03.2016 – Alternate Sujeewa Perera

Key and Senior ManagementAsoka Pieris – Group Chief Executive OfficerM.H. Wijewardene – Director – Sales and Sewing MarketingR.S. Wijeweera – Chief Executive Officer/Director – Singer Finance (Lanka) PLCL.N.S.K. Samarasinghe – Director – Marketing and CommercialA.S. Paranavaitane – Director – Information TechnologyS. Ramanathan – Director – LogisticsJ. Mendis – Credit DirectorH.A.P.S. Perera – Factory Director – Piliyandala FactoryK.K.L.P. Yatiwella – Finance DirectorC.A. Samarasinghe – Director – OperationsN.B. Karunaratne – Director – Human ResourcesL.A.D.K. Perera – Deputy Director – Information TechnologyA.P. Manoratne – Deputy Director – Service and Logistics B.T.L. Mendis – Deputy Director – CommercialR.C. De La Motte – Business Development Manager – Wholesale Channel A.C.M. Irzan – Head of Treasury and Investor RelationsD.B. Wijesundera – Marketing Manager – White GoodsG.A.K. Weerasuriya – Senior Manager – InventoryA.U. Karunaratne – Senior Manager – Merchandise and PromotionsT.G.S. Perera – Senior Manager – RecoveriesI.A.S. Kolambage – Commercial Manager – Piliyandala FactoryM.M.C. Priyanjith – Head of Risk ManagementM. Mahesharatnam – Business Development Manager – Sisil ChannelH.V. Gomes – Senior Manager – Financial ServicesO.D. Amarathunga – Senior Manager – ServiceW.L.I.A. Gunathilake – Business Development Manager – Singer Mega & Singer Homes K.R.L. Perera – Group Administration ManagerA.R.N.P.K. Wijesundera – Sales Manager – Agro and Transportation H.S. Perera – Senior Manager – Budget and PlanningT.S. Martyn – Senior Manager – Apparel SolutionsK.D.J.M. Perera – Business Development Manager – Digital MediaN.L.D.W. Amarathunga – Operations Manager – Furniture – Piliyandala FactoryA. Sathyamoorthy – Senior Manager – Trade CreditP. Jayatilaka – Senior Manager – Direct MarketingT.L. Seneviratne – Senior Manager – Information TechnologyD.D.W. Dassanayake – Senior Manager – CreditK.P. Peramunugamage – Head of Business SchoolL.R.P. Perera – Business Development Manager – Retail ChannelN.I. Kuruppuarchchi – Senior Manager – LegalS. Serasinghe – Senior Manager – DistributionN.B. Ranasinghe – Senior Manager – Revenue and MarginL.D.P.T.K. Liyanage (Mrs.) – Finance ManagerR.B. Gaspe – Business Development Manager – New ProjectsK.S. Wijekulasuriya (Mrs.) – Senior Manager – Retail Channel AccountsK.I.S. Perera – Business Development Manager – J Plus ChannelR. Silva – Business Development Manager – Institutional SalesK.D.S. Kanishka – Senior Manager – Promotions

CORPORATE INFORMATION


NO. 80, NAWAM MAWATHA, COLOMBO 2. SRI LANKA.

HOT LINE: (+94) (011) 5 400 400



Documents

ANNUAL REPORT 2016 LEADING IN A SECTOR POSITIONED TO GROW 1 · ANNUAL REPORT 2016 1 LEADING IN A SECTOR POSITIONED TO GROW LEADING IN A SECTOR POSITIONED TO GROW #1 SINGER (SRI LANKA)