Annual Report 2009/2010 - Colombo Stock Exchange

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CHAIRMAN'S STATEMENT Your Company will emerge stronger in the year ahead thanks to the positive environment that is now prevalent in Sri Lanka. However, we continue to seek an appropriate policy environment to forge a culture of responsibility in alcohol consumption, since the lack of one is the only drawback that the Company faces as of now. I acknowledge with gratitude the continued patronage of our valued customers & consumers, Agents, suppliers & all other trading partners, both local & foreign and bankers for the support extended during the year. My grateful thanks also to our loyal shareholders for the continued confidence in the Company & our brands so aptly demonstrated at the time of the Rights Issue. In September 2009, Mr. Mano Selvanathan, resigned as Director of the Company. He has been a member of the Board since its inception in 1996. Since that time, through various phases of the Company, equally in times of difficulty and success, Mano has been a tremendous source of strength and inspiration to the Management and the Board. Whilst thanking him for his invaluable contribution to the Company, we remain confident, that he will continue to give of his time & wisdom generously when needed, as he continues to be a Director of the parent company. During the year under review, Mr Roy Bagattini, Executive Vice President of Carlsberg Breweries responsible for its Asian operations joined your Board. Roy will bring with him a wealth of knowledge & experience acquired during a successful career in the beer industry in many parts of the world including in India. Roy is also the Chairman of Carlsberg India (Pvt) Ltd, the joint venture in which the Company has a stake. We look forward to his contribution & advice in the years ahead. Mr. Krishna Selvanathan joined the Board of the Company during the year under review. On behalf of the Board I welcome Krishna and look forward to working with him closely. In conclusion, I extend my thanks & appreciation to the Audit Committee for their valued contribution & to my colleagues on the Board for their guidance & support. (Sgd.) L.C.R. de C. Wijetunge Chairman Colombo th 7 May 2010 3C h a i r m a n ' s S t a t e m e n t 2
R e v i e w o f O p e r a t i o n s 4 OPERATIONS REVIEW From most perspectives it was a momentous year. May 2009 brought closure to a near 30 year conflict that had deprived Sri Lanka the stable environment it needed to pursue growth & prosperity. Some may suggest that the means used to bring terrorism to an end were controversial. Yet the President and his administration must be given the credit for being bold & standing firm in the face of much pressure from both local & overseas sources. The President's determination to be led by his conscience even in the face of severe pressure augurs well for the Nation; it is an indication that he can take the hard but necessary decisions to drive Sri Lanka forward. The Defense establishment too must take pride in completing the task handed over to them with focus, commitment & dedication. In January 2010 the incumbent President was re-elected by a resounding majority extending his term of office by a further 6 years. A General Election followed in April 2010, bringing the coalition led by his party to power with a handsome majority in Parliament. Thus on the political front, an environment of stability has returned to Sri Lanka after many a year. The Government's development program maintained momentum amidst murmurs of discontent on issues such as law & order, human rights & good governance. Roads across the country are being modernized & expanded at a pace whilst other large scale infrastructure projects such as ports, airports and power are being brought on stream steadily. The process of reconstruction in the North & the East is also underway. The conclusion of the conflict has meant that Sri Lanka is once again a destination of choice for many holiday makers across the globe. Within a few months of May 2009, hotels across the country enjoyed good levels of occupancy. Internal tourism too has grown significantly particularly to the North & East Many Sri Lankans were deprived of visiting these areas during the conflict but this is no longer the case. The numbers that travelled to the North in the immediate aftermath of the opening of the A9 road were considerable. The Sri Lankan economy faltered in the first two quarters of 2009 under the weight of the conflict & the global financial crisis. However, since then, the conflict was brought to a conclusion, global commodity prices reduced significantly and the Government concluded an assistance package with the IMF stabilizing the currency & reducing inflation sharply. The economy has responded and in the final quarter of 2009, GDP growth was an impressive 6%+. The stock market responded favorably to these changes in the environment. The growth in the ASPI during the year under review was a remarkable 127% whilst the Colombo Bourse was the second best performing market in the world in calendar year 2009. Similarly after many years business confidence moved upwards steadily. In short, the “feel good” factor is slowly but steadily re-emerging in the Sri Lankan environment. Your company – anchored as it is to a portfolio of superb brands, world class distribution & manufacturing processes, innovative use of information technology & sound management – took full advantage of the positive changes in the environment. On revenue of Rs 7.92 billion the Company generated a profit before tax of Rs 632.69 million up from Rs 6.09 billion & Rs 81.89 million respectively in the previous year whilst earnings per share rose to Rs 7.46 from Rs 0.90. The Company's gearing which stood at 53% at the commencement of the financial year ended at a healthy 16%, a result of both the Rights Issue concluded in September 2009 & the improved operating performance. Thus the Company concluded the financial year with a return to a reasonable level of profitability and a strong balance sheet.
Page 2 and 3: Operations Review
Page 6 and 7: OPERATIONS REVIEW The single most i
Page 8 and 9: OPERATIONS REVIEW The stronger bala
Page 10 and 11: OPERATIONS REVIEW Conclusion From m
Page 12 and 13: PROFILE OF DIRECTORS Profiles of Di
Page 14 and 15: ANNUAL REPORT OF THE BOARD OF DIREC
Page 20 and 21: AUDIT COMMITTEE REPORT The Audit Co
Page 22 and 23: STATEMENT OF DIRECTOR'S RESPONSIBIL
Page 24 and 25: FINANCIAL STATEMENTS Financial High
Page 26 and 27: INCOME STATEMENT For the year ended
Page 28 and 29: STATEMENT OF CHANGES IN EQUITY In R
Page 30 and 31: NOTES TO THE FINANCIAL STATEMENTS 1
Page 32 and 33: NOTES TO THE FINANCIAL STATEMENTS (
Page 36 and 37: NOTES TO THE FINANCIAL STATEMENTS F
Page 42 and 43: NOTES TO THE FINANCIAL STATEMENTS A
Page 44 and 45: NOTES TO THE FINANCIAL STATEMENTS N
Page 48 and 49: VALUE ADDED STATEMENT For the year
Page 50 and 51: FIVE YEAR SUMMARY Year ended 31st M
Page 52 and 53: INCOME STATEMENT For the year ended
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FINANCIAL HIGHLIGHTS Year ended 31s
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INFORMATION TO SHAREHOLDERS & INVES
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GLOSSARY OF FINANCIAL TERMS Appropr
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LION BREWERY (CEYLON) PLC FORM OF P
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Annual Report 2009/2010 - Colombo Stock Exchange

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