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2013 report


<ul><li><p>iSamSon international PlC annual report 2013/14</p></li><li><p>Evolution of the Company</p><p>Samson International Plc is a subsidiary of the DSI Samson Group (Pvt) Ltd. The parent Company was founded in 1962. DSI Samson Group has an export turnover of more than 1% of the countrys total export </p><p>turnover and has a workforce of 8,500 employees. The majority of their factories are located in remote rural </p><p>areas. Samson International PLC is one of them. </p><p>Samson International Plc started its business on 14th October 1988 at a time the open economic policies </p><p>had got firmly established in the country with a great tendency among the business community to commence </p><p>export-oriented projects. Accordingly, this Company was intended to produce rubber-based products largely </p><p>for export markets.</p><p> Samson International Plc now manufactures and exports molded and extruded rubber products such as hot </p><p>water bottles, jar sealing rings, rubber mats, rubber floorings, beadings and mud flaps mainly to international </p><p>markets. Samson International Plc has 324 employees and the main factory is situated at Bogahagoda, Galle. </p><p>Milestones</p><p> 1988SamsonInternationalLtd.wasincorporatedasaPrivateCompanyon14th October, 1988</p><p> 1992-Ordinarysharesof theCompanywere listed in theColomboStockExchange and became a public quoted company as Samson International Plc </p><p>on 24th July, 1992</p><p> 1994-WasawardedthefirstISO9001:2008qualitymanagementcertificate among the rubber-related product manufacturing companies in </p><p>Sri Lanka</p><p> 2007-InvestedinthefirstmicrowavecontinuouslinemachineinSriLanka.(This is the only microwave machine in South Asia)</p><p> 2009-PurchasedallassetsofAkselRubberMatCompany,Kalutara</p><p> 2012-WasawardedtheGoldExportAwardfromtheNationalChamberofExporters of Sri Lanka </p><p> 2013WasawardedtheGoldExportAwardfromtheNationalChamberofExporters of Sri Lanka for the second consecutive year when the Company </p><p>celebrated its Silver Jubilee</p><p> 2014-PurchasedassetsofOktaPVCLanka(Private)Ltd.,Baddegama,andsteppedintomanufacturingPVCproducts</p></li><li><p>cOntents</p><p> Page</p><p>1) Financial highlights 01 </p><p>2) OurCorporateVision,Mission,ValuesandourAim 02</p><p>3) Chairmans review In English 03 - 06 </p><p>4) ChairmansreviewinSinhala 07-09</p><p>5) ManagingDirectorsoperationalreview 10-13</p><p>6) Corporate information 14 - 15</p><p>7) TheBoardofDirectors 16-17</p><p>8) Profi les of Directors 18 - 19 </p><p>9) Executive management 20 - 23 </p><p>10) Managementdiscussion&amp;analysis 24-52</p><p>11) Corporate governance 53 - 58</p><p>12) Riskmanagement 59-64</p><p>13) ReportoftheBoardofDirectors 65-70</p><p>14) StatementofDirectorsresponsibilities 71</p><p>15) AuditCommitteeReport 72-73</p><p>16) RemunerationCommitteeReport 74</p><p>17) FinancialReview 75-76</p><p>18) AuditorsReport 77</p><p>19) FinancialStatement 78-107</p><p>20) SustainabilityReport 108-121</p><p>21) GlobalReportingInitiative 122-126</p><p>22) InvestorInformation 127-130</p><p>23) Four-Quarter Financial Summary 131</p><p>24) Ten- year Economic Summary 132</p><p>25) Ten-year Financial Summary 133</p><p>26) Foreign Currency Financial Statement 134</p><p>27) GlossaryofFinancialTerms 135</p><p>28) NoticeoftheAGM 136</p><p>29) DirectiontothevenueoftheAGM 137</p><p>30) Notes 138</p><p>31) Form of Proxy Enclosed</p></li><li><p>SamSon international PlC annual report 2013/14</p><p>Profit Before Tax (Rs.000) Finance Cost (Rs.000)</p><p>NetAssetsPerShare(Rs.) FixedAssetTurnoverRatio(Times)</p><p> (7,608) </p><p> (55,980) </p><p> 19,123 </p><p> 51,077 </p><p> 64,841 </p><p> (80,000) (60,000) (40,000) (20,000) </p><p> - </p><p> 20,000 </p><p> 40,000 </p><p> 60,000 </p><p> 80,000 </p><p>2009/10 2010/11 2011/12 2012/13 2013/14 </p><p> 17,161 </p><p> 21,922 </p><p>10,106 9,900</p><p>3,780</p><p> - </p><p> 5,000 </p><p> 10,000 </p><p> 15,000 </p><p> 20,000 </p><p> 25,000 </p><p>2009/10 2010/11 2011/12 2012/13 2013/14 </p><p> 102.87 </p><p> 88.27 91.75 104.00</p><p> 117.00 </p><p> - </p><p> 20 </p><p> 40 </p><p> 60 </p><p> 80 </p><p> 100 </p><p> 120 </p><p> 140 </p><p>2009/10 2010/11 2011/12 2012/13 2013/14 </p><p> 3.44 7.71</p><p> 4.95 </p><p> 5.31 5.45 </p><p> - </p><p> 1 </p><p> 2 </p><p> 3 </p><p> 4 </p><p> 5 </p><p> 6 </p><p>2009/10 2010/11 2011/12 2012/13 2013/14 </p><p>Profit before tax increased by 27% or Rs. 13.7mnFinance cost decreased by 62% or Rs. 6.0mnFinancial investments increased by Rs. 50mn</p><p>Profit before tax increased by 27% or Rs. 13.7mnFinance cost decreased by 62% or Rs. 6.0mnFinancial investments increased by Rs. 50mn</p></li><li><p>1SamSon international PlC annual report 2013/14</p><p> 2013/14 2012/13 Variance %</p><p>Operating Results </p><p>Revenue Rs.000 952,561 973,858 (21,297) (2)</p><p>Profitbeforetax Rs.000 64,841 51,077 13,764 27</p><p>Taxonprofit Rs.000 8,491 (4,438) 12,929 291</p><p>Profitaftertax Rs.000 56,350 55,515 835 1.5</p><p>Exportsearnings inUS$000 4,753 5,235 (482) (9)</p><p>Valueadditions Rs.000 227,496 199,631 27,865 14</p><p>Interest cover times 18.15 6.15 </p><p>ROCE % 12.5 13.8 (1.3)</p><p>Gross profit to Sales % 15.2 15.3 (0.1) </p><p>Valueadditionsperemployee Rs/month 58,512 55,085 3,427 6.2</p><p>Manpower Nos. 324 302 22 7.3 </p><p>Financial Position </p><p>Dividendcover times 7.3 7.2 </p><p>Currentratio times 2.37 2.39 </p><p>Gearing % 6.8 13.2 (6.4) </p><p>Financecost Rs.000 3,780 9,900 (6,120) (62)</p><p>FinancialInvestments Rs.000 50,354 - 50,354</p><p>Totalassets Rs.000 654,125 593,108 61,017 10.2</p><p>Cashgeneratedfromoperations Rs.000 136,204 17,785 118,419 666 </p><p>Shareholder information </p><p>Dividendpershare Rs. 2.00 2.00 - -</p><p>Marketpricepershare-Closing Rs. 88.20 82.20 6.00 7</p><p>Earningspershare Rs. 14.64 14.43 0.21 1.5</p><p>Netassetspershare Rs. 116.82 104.18 12.64 12</p><p>Numberofsharesissued Nos. 3,847,974 3,847,974 - -</p><p>NumberofShareholders Nos. 1,125 1,127 (2) (0.2)</p><p>Marketcapitalization Rs.000 339,391 316,303 23,088 7</p><p>ShareholdersFunds Rs.000 449,558 400,904 48,654 12</p><p>Price earnings ratio times 6.02 5.69 0.33 5.8</p><p>Financial HighlightsFinancial Highlights</p></li><li><p>2SamSon international PlC annual report 2013/14</p><p>Our Vision</p><p>To be a leading Polymer Product manufacturer in the region.</p><p>Our Mission</p><p>To become a versatile manufacturer of diversified polymer products in the globalmarketbyutilizingmoderntechnologywhileprovidingoptimum</p><p>value to Stakeholders.</p><p>Our Values</p><p>Contributing to the Socio-economic development,Respecting national and religious heritage,Protecting and safeguarding our environment,Enhancing disciplined human resources based on the family concept.</p><p>Our Aim</p><p>Aiming at versatility in all polymer products</p><p>During the last 25 years, we have maintained a benchmark for having arguably the widest product range among the rubber products manufacturing companies in Sri Lanka. </p><p>WearemovingonbeyondourSilverJubilee,determinedtoexpandourpolymerproducts</p><p>range and invest in modern technology aimed at versatility.</p><p>Wealsocontinuetobecommittedtocontributetothenationaleconomy,servingtherural</p><p>areas in the Southern Province by using local raw materials, opening direct employment </p><p>avenues for neighbouring villages, generating foreign exchange and nurturing our </p><p>indigenousheritageasasociallyresponsiblecorporatecitizenwhileaimingatversatilityandmovingforwardinthedirectionofourVision.</p><p>Our cOrpOrateVision, Mission, Values and aim</p></li><li><p>3SamSon international PlC annual report 2013/14</p><p>cHairMans review</p><p>It is observed that currently, more than half of </p><p>Sri Lankan exports are still centered on the US </p><p>and EU markets. We would be severely affected </p><p>if the economies in both the US and EU decline. </p><p>To minimize the risk, the right mixture of exports </p><p>has to be identifi ed. In view of this, we all have to </p><p>develop the Chinese, Japanese and South Asian </p><p>markets </p><p>ItismypleasuretopresenttheAnnualReportofSamsonInternationalPlcfortheyearended31stMarch2014.As</p><p>you are aware, Samson International Plc was incorporated on </p><p>14th October 1988 and we celebrated our silver jubilee this </p><p>fi nancial year.</p><p>Global Economic outlookIn 2013, the global economic growth was estimated at 3 </p><p>percent which is a marginal drop from 3.2 percent recorded </p><p>in2012.AsprojectedintheIMFforecast,globalgrowthwill</p><p>strengthen from 3 percent in 2013 to 3.6 percent in 2014 and </p><p>3.9 percent in 2015.</p><p> 6</p><p>5.2</p><p>3.93.2 3</p><p>3.63.9</p><p>5</p><p>4</p><p>2</p><p>3</p><p>1</p><p>02010 2011 2012 2013 2014 2015</p><p>5.2</p><p>2010</p><p>3.9</p><p>2011</p><p>3.2</p><p>2012</p><p>3</p><p>2013</p><p>3.6</p><p>2014</p><p>3.9</p><p>2015</p><p>World Economic Output Growth (%)%</p><p>Source : IMF World Economic Outlook Report of April 2014</p></li><li><p>4SamSon international PlC annual report 2013/14</p><p>Whenwelookattheforeigncurrencytrends,forsome</p><p>currencies the foreign exchange market was highly volatile. The </p><p>Japanese Yen recorded 18.1 percent depreciation against the </p><p>dollar where currencies such as the Euro, Sterling Pound and </p><p>theSouthAfricanRandsignificantlyappreciatedagainstthe</p><p>dollar. Infl ation remained stable in many economies in 2013 </p><p>while a few developed economies faced defl ationary pressures.</p><p>Sri Lankan Economic OutlookTheSriLankaneconomyrecordeda7.3percentgrowthin</p><p>2013 while infl ation remained at single digit levels for the fi fth </p><p>consecutiveyear,steadilydecliningtomidsingledigitlevels</p><p>by the end of 2013. Though remaining at a low level of 4.4 </p><p>percent in 2013, the unemployment level recorded a slight </p><p>increase of 0.4 percent compared to the previous year due to </p><p>new job seekers entering the labour market. Infl ation trended </p><p>downward in 2013, averaging 6.9% in the year. Economic </p><p>growth was broad based with contributions from all sectors, </p><p>supported by favorable weather conditions.</p><p>The Sri Lankan economy was projected to accelerate further </p><p>in the medium term to an annual growth rate of 8 percent. </p><p>This economic growth target is expected to be supported by </p><p>infrastructure expansion in transport, telecommunication, ports </p><p>and growth of tourism. The services sector made the largest </p><p>contributiontogrowthin2013.Rapidgrowthinwholesale</p><p>and retail trade, hotels and restaurants, transport, banking, </p><p>insurance and real estate enhanced performance in the large </p><p>service sector to 6.4% from 4.6% a year earlier. Industry grew </p><p>by 9.9%, slightly less than a year earlier, as slower growth </p><p>in mining and quarrying and in construction offset a pickup </p><p>in manufacturing and utilities. Favourable weather helped </p><p>maintainagriculturegrowthatarelativelyfavourable4.7%.</p><p>Whenwelookfurther,foodinflationwasatabout12%during</p><p>the fi rst quarter as the drought late in 2012 had disrupted </p><p>domestic food supplies, but then dropped markedly to 0.9% </p><p>inFebruary2014.Non-foodinflationwasalsoloweroverthe</p><p>yearbutincreasedto7.1%inJanuary2014.</p><p>cHairMans statement (contd...)</p><p>-6 </p><p>-4 </p><p>-2 </p><p>0 </p><p>2 </p><p>4 </p><p>6 </p><p>8 </p><p>10 </p><p>12 </p><p>14 </p><p>16 </p><p>2005 2005 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015 </p><p>Emergind and Devoloping Emergind and Devoloping Emergind and Devoloping Emergind and Devoloping Asia Asia Asia India India India India China China China China </p><p>Economic Growth (%) Economic Growth (%) Economic Growth (%) Source : World Economic Source : World Economic Outlook Apr 2014 Outlook Apr 2014 </p><p>-6 </p><p>-4 </p><p>-2 </p><p>0 </p><p>2 </p><p>4 </p><p>6 </p><p>2005 2005 2005 2005 2006 2007 2008 2008 2008 2008 2008 2008 2008 2009 2010 2020111111 2012 2013 2014 2015 2015 </p><p>United States United States United States United States Japan Japan Advanced Economies Advanced Economies Advanced Economies Advanced Economies </p><p>Economic Growth (%) Source : World Economic Source : World Economic Outlook Apr 2014 </p><p>AccordingtoIMFWorldEconomicOutlookReportofApril</p><p>2014, the USA, Euro area ( Germany, France, Italy and Spain), </p><p>Japan,UKandCanadahaveadvancedeconomies.The</p><p>economic activities in these countries struggled in the fi rst half </p><p>but grew fi rmly in the second half of the year and recorded </p><p>1.4 percent growth in 2013 compared to 1.3 percent in 2012. </p><p>In these countries, growth is expected to increase to about </p><p>2.2percentin2014.Keydriversofsuchgrowthwillbea</p><p>reduction in fi scal tightening (except in Japan) while pursuing </p><p>accommodative monetary measures . Growth will be strongest </p><p>in the United States at about 2.8 percent while in the Euro area </p><p>growth is projected to be positive but varied area depending on </p><p>the extent of debt and fi nancial fragmentation. </p><p>-6 </p><p>-4 </p><p>-2 </p><p>0 </p><p>2 </p><p>4 </p><p>6 </p><p>2005 2005 2005 2006 2007 2008 2008 2008 2008 2009 2010 2011 2012 2012 2012 2013 2013 2013 2014 2015 2015 </p><p>Euro Euro Area France France Germony Germony Germony Germony </p><p>Economic Growth (%) Source : World Economic Outlook Apr 2014 Outlook Apr 2014 </p><p>Economic activity in many emerging market economies ( i.e., </p><p>China,India,Indonesia,Malaysia,Philippines,Thailandand</p><p>Vietnam)hasbeendisappointinginalessfavorableexternal</p><p>fi nancial environment, although they continue to contribute </p><p>more than two-thirds of global growth. Some emerging </p><p>economies slowed in growth due to weaker domestic demand </p><p>than anticipated and the growth recorded by emerging </p><p>economieswas4.7percent,whichisa0.2percentdrop</p><p>fromthepreviousyear.AccordingtoIMF,inChinagrowthis</p><p>projectedtoremainatabout7.5percentin2014.</p><p>%</p><p>%</p><p>%</p><p>Source : IMF World Economic Outlook Report of April 2014</p><p>Source : IMF World Economic Outlook Report of April 2014</p><p>Source : IMF World Economic Outlook Report of April 2014</p></li><li><p>5SamSon international PlC annual report 2013/14</p><p>The 2013 fi scal defi cit is estimated at 5.8% of GDP in keeping </p><p>with the target. The target was achieved notwithstanding </p><p>unexpectedly weak revenues by reducing current expenditure. </p><p>Capital expenditure was largely sustained but was again </p><p>slightly below the target of 6% of GDP. The ratio of </p><p>governmentdebttoGDPfellto78.4%inSeptember2013</p><p>from79.1%in2012.</p><p>There was a turnaround in external demand during the </p><p>secondhalfofthefinancialyear2013/14withthegradual</p><p>improvement in the advanced economies including the United </p><p>States and the European Union, which are Sri Lankas major </p><p>export destinations. Currently, more than half of Sri Lankan </p><p>exportsarestillcentredontheUSandEUmarkets.Wewould</p><p>be severely affected if the economies of both the US and the </p><p>EUdecline.Tominimizetherisk,therightmixtureofexports</p><p>has to be identifi ed. In view of this, we have all to develop the </p><p>Chinese, Japanese and South Asian markets. </p><p>Withtheflexibleexchangeratepoliciesofthegovernment</p><p>the rupee remained less volatile against the dollar and the </p><p>currencies of some of the major emerging economies. By the </p><p>endof2013,therupeehadexchangedatarateof130.75</p><p>againsttheUSdollarrecordingadepreciationof2.75percent</p><p>compared to the previous year.</p><p>In 2013, many key infrastructure projects were completed, </p><p>namely, the countrys second international airport, harbour </p><p>and port development projects, the Expressway and highway </p><p>developmentprojects,theNorthernrailwayprojectandpower</p><p>projects, with some more due to be completed in the future. </p><p>cHairMans statement (contd...)</p><p>12.0</p><p>10.0</p><p>8.0</p><p>6.0</p><p>4.0</p><p>2.0</p><p>0.0200920092009</p><p>AgricultureAgriculture IndustryIndustry</p><p>%</p><p>ServicesServices GDPGDP</p><p>20102010 20112011 201220122012 201320132013</p><p>Industry PerformanceThe rubber industry of the country faced two major challenges </p><p>during the year. Firstly, the signifi cant decline in production was </p><p>due to a drop in tapping days during the adverse weather in the </p><p>firstninemonths.Rubberproductiondeclinedby14.2percent</p><p>compared to 2012. Secondly, declining world market prices of </p><p>natural rubber due to high stocks levels maintained in China </p><p>and Japan, which affected rubber prices in Sri Lanka too. </p><p>Despite these challenges the output of rubber products </p><p>increased at a moderate rate of 4.6 percent with the increase </p><p>in international demand for rubber-based products in the </p><p>latter part of 2013. Earnings from exports of rubber products </p><p>recorded a 3.3 percent...</p></li></ul>


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