Annual Report 2010-2011 - Colombo Stock Exchange

Richard Pieris & 

Company PLC 

Annual Report 2010 / 2011

Vision and Mission 

Vision 

To be a market driven, technologically oriented diverse 

group. 

We will organise and operate to continually focus on 

exceeding the expectations of our customers, whilst 

excelling in profitability and we will attract, develop and 

retain talented people to ensure the continued growth 

and viability of all our business ventures. 

Mission 

To continually exceed the expectations of our customers. 

To optimise the contribution from our employees 

by providing career and personal development 

opportunities, thereby creating an atmosphere that 

would motivate and internalise employee aspirations with 

corporate objectives. 

To provide a satisfactory return to shareholders whilst 

retaining sufficient funds for reinvestment, thereby 

enhancing corporate wealth. 

To ensure continuous growth by the planned expansion 

and diversification of business activities. 

To continually strive for the upliftment of our community 

whilst adhering to high ethical standards in business.

4 Financial Highlights 

5 Corporate Information 

7 Chairman’s Review 

12 The Board of Directors 

14 Sector Reviews 

33 Corporate Social Responsibility 

35 Financial Review 

41 Risk Management 

45 Our People 

47 Group Structure 

51 Financial Information 

52 Annual Report of the Board of Directors 

56 Corporate Governance 

58 Report of the Remuneration Committee 

59 Report of the Audit Committee 

60 Statement of Directors’ Responsibility 

61 Auditor’s Report 

62 Balance Sheet 

63 Income Statement 

64 Cash Flow Statement 

66 Statement of Changes in Equity 

67 Notes to the Financial Statements 

104 Ten Year Summary 

106 Shareholder Information 

108 Group Real Estate Portfolio 

109 Glossary of Financial Terms 

111 Notes 

114 Notice of Meeting 

115 Form of Proxy 

Contents 

Richard Pieris and Company PLC | Annual Report 2010/2011 2

Think Big 

No dream is ordinary, no target is unachievable and nothing is 

impossible. We have proved this by having the most successful 

year, brought about by exceptional strategy and performance. 

We believe that thinking positive opens new horizons and inspires 

our team to reach further. By setting our goals high, we have 

achieved big and having strengthened our core businesses, 

expansion is our next goal, adding to our diverse list of ventures 

and continuing to be a leading player in the industry. Our scope 

for growth is endless and possibility is everything. We believe in 

pushing the envelope and our position as one of the largest and 

most diversified conglomerates in Sri Lanka is a testament to our 

dedication. At Richard Pieris and Company PLC, our foundations 

are firm; the future is now and we’re thinking big. 

3 

Annual Report 2010/2011 | Richard Pieris and Company PLC

Financial Highlights 

2010/2011 2009/2010 

Rs.’000 

Rs.’000 

Net turnover 27,241,577 22,339,288 

Profit from operations 3,450,366 1,969,697 

Profit before tax from continuing operations 2,768,757 1,060,159 

Income tax expense (616,566) (330,592) 

Profit for the year from continuing operations 2,152,191 729,567 

Loss after tax from discontinued operations (11,609) (17,873) 

Profit for the year 2,140,582 711,694 

Profit attributable to equity holders of the parent 1,680,684 580,204 

Total assets 20,639,457 17,364,817 

Shareholder funds 5,002,929 3,792,892 

Market capitalisation 26,346,485 7,053,806 

Total value addition 9,889,518 7,557,169 

Per Ordinary Share 

Earnings (Rs.)* 0.87 0.30 

Net assets (Rs.)* 2.58 1.97 

Market value (Rs.)* 13.60 3.67 

Ratios 

Return on equity (%) 38.22 16.56 

Interest cover (No of times) 4.34 2.03 

Gearing ratio (%) 38.62 49.69 

Turnover vs. Turnover Growth 

Rs. Mn. % 

30,000 

25,000 

20,000 

35 

30 

25 

20 

15,000 

15 

10,000 

10 

5,000 

0 

5 

0 

06/07 07/08 08/09 09/10 10/11 

Turnover Turnover Growth Rate 

Operating Profit vs. Growth Rate 

Rs. Mn. % 

4,000 

3,500 

3,000 

80 

60 

40 

2,500 

20 

2,000 

1,500 

500 

0 

(20) 

0 

(40) 

06/07 07/08 08/09 09/10 10/11 

Operating Profit Growth Rate 

Operating Profit vs. EBT vs. EAT 

Market Cap & Total Return 

Rs. Mn. 

4,000 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

(500) 

06/07 07/08 08/09 09/10 10/11 

Operating Profit EBT 

EAT 

Rs. Mn. % 

30,000 

400 

25,000 

20,000 

250 

15,000 

10,000 

100 

5,000 

0 

(50) 

06/07 07/08 08/09 09/10 10/11 

Market Cap Total Return 

Financial Highlights 


Corporate Information 

Name of the Company 

Richard Pieris and Company PLC 

Legal Form 

A quoted public Company with limited liability, incorporated 

in Sri Lanka under the Companies Ordinance No. 51 of 1938 

on 11th May 1940. The Company registration number is 

PQ 138. 

Stock Exchange Listing 

The Ordinary shares of the Company are listed in the 

Colombo Stock Exchange of Sri Lanka. 

Board of Directors 

Dr. Sena Yaddehige 

- Chairman/ Managing 

Director/CEO 

Mr. Pravir D. Samarasinghe - Director/Chief Operating 

Officer 

(Resigned w.e.f. 15/02/2011) 

Mr. J. H. Paul Ratnayeke - Director 

Prof. Lakshman R. Watawala - Director 

Prof. Susantha D. Pathirana - Director 

Mr. M. M. Udeshi 

- Director 

Mr. W. J. Viville. P. Perera - Director 

Head/Registered Office 

No. 310, High Level Road, 

Nawinna, Maharagama, 

Sri Lanka. 

Telephone : + (94) 114310500 

Fax : + (94) 114310777 

Website : www.arpico.com 

E-mail : cpu@arpico.com 

Secretaries 

Richard Pieris Group Services (Private) Limited 


Nawinna, Maharagama, 

Sri Lanka. 

Auditors 

Ernst & Young 

Chartered Accountants 

No. 201, De Saram Place, 

Colombo 10, 

Sri Lanka. 

Bankers 

Bank of Ceylon 

Commercial Bank of Ceylon PLC 

Deutsche Bank A G 

DFCC Bank PLC 

Hatton National Bank PLC 

Hongkong & Shanghai Banking Corporation PLC 

Indian Bank 

Nations Trust Bank PLC 

NDB Bank PLC 

National Servings Bank 

PABC Bank PLC 

People’s Bank 

Sampath Bank PLC 

Seylan Bank PLC 

Standard Chartered Bank 

State Bank of India 

Legal Advisors 

Paul Ratnayeke Associates 

International Legal Consultants, 

Solicitors and Attorneys-at-Law, 

No. 59, Gregory’s Road, 

Colombo 7, 

Sri Lanka. 

Executive Management Committee 

Dr. Sena Yaddehige (Chairman) 

Priyantha Abeygunawardana 

Wasantha Abeysirigunawardena 

Andrew Dalby 

Raj De Silva 

Jagath Dissanayake 

Thushara Hettithantrige 

Sunil Jayakoddy 

Januka Jayanga 

Sunil Liyanage 

Jayantha Perera 

Viville Perera 

Fabio Piccolo 

Sunil Poholiyadde 

Pradeep Samaratunge 

Niranjan Vithanage 

Muditha Welihinda 

Corporate Information 

5 


Chairman’s Review 

Need Image 




Chairman/CEO/MD 

“The Group reported 

a Profit before Tax of 

Rs. 2,769 mn and a net 

attributed profit of Rs. 

1,681 mn, indicating 

growth of 161% and 190% 

respectively over the 

figures recorded in the 

preceding year.” 


Total assets of the Group stood at Rs. 20,639 mn 

while total equity was recorded at Rs. 6,864 mn. 

Simultaneously, Earnings per Share stood at Rs. 

0.87 for the year and Return on Equity at 38%. 

7 



It gives me great pleasure to present the 72nd Annual Report 

and Audited Accounts of the Company and its subsidiaries for 

the year ended 31st March 2011. 

It is with great pride that I announce to you that your group of 

companies posted record sales and earnings for the financial 

year 2010/2011. Total net sales recorded by the Group were Rs. 

27,242 mn, 22 % increase over the previous year, while the 

Gross Profit increased by 41% to Rs. 6,610 mn. The Group also 

reported a Profit before Tax of Rs. 2,769 mn and a net attributed 

profit of Rs. 1,681 mn, indicating growth of 161% and 190% 

respectively over the figures recorded in the preceding year. 

Finance costs witnessed a significant decrease during the year 

from Rs. 969 mn to Rs. 795 mn, mainly due to reduced interest 

rates and efficient working capital and treasury management. 

Other operating income of the Group increased by 39% while 

profit from associates increased by Rs. 53 mn. The year also 

recorded an operating cash flow of Rs. 2,819 mn compared to 

Rs. 2,156 mn in the financial year 2009/2010. Total assets of the 

Group stood at Rs. 20,639 mn while total equity was recorded 

at Rs. 6,864 mn. Simultaneously, Earnings per Share stood at 

Rs. 0.87 for the year and Return on Equity at 38%. 

The Group operations for the year 2010/11 created a total value 

of Rs. 3,450 mn, an increase of 75% from the value created in 

the preceding year. The significant contribution of all operating 

segments resulted in reaching such a healthy performance 

outcome. 

The retail sector 

continued to be 

the value driver 

of the group, 

representing 40% 

of consolidated 

revenue and 21% 

of earnings before 

interest and tax. 

Economy 

In 2010, the Sri Lankan economy recorded an impressive 

growth of 8.0%, the highest annual rate of growth reported in 

the last three decades. Favorable performance in all key sectors 

of the economy contributed towards achieving this desirable 

milestone. Growth of the agricultural sector was recorded at 

7%, which is a significant improvement when compared with 

Group Performance 

Return on Equity vs. Return on Capital Employed 

Rs. Mn. 

29,500 

24,500 

19,500 

9,500 

4,500 

(500) 

06/07 07/08 08/09 09/10 10/11 

Rs. Mn. 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

(500) 

% 

50 

40 

30 

20 

10 

0 

(10) 

(20) 

8 15 

(6) 

17 

(10) 

13 

21 

17 

39 38 

06/07 07/08 08/09 09/10 10/11 

Turnover Operational Profit 

Profit attributable to Equity holders of Parent Company 

ROE 

ROCE 




the growth of 3.2% achieved in 2009. Reflecting a similar trend, 

industries recorded a growth of 8.4% while services posted a 

growth of 8%, both of which were significantly higher than the 

values recorded in the previous year. 

The annual average rate of inflation as measured by the 

Colombo Consumers’ Price Index stood at 5.9% in 2010. The 

annual average rate of unemployment reached its lowest ever 

level of 4.9%, while the per capita income rose further to US $ 

2,399 in 2010. 

In response to the significant reductions in policy interest 

rates, there was a substantial downward adjustment of market 

interest rates across the term structure. 

With favorable macroeconomic conditions and the consequent 

recovery in economic activity, performance and stability of the 

financial sector strengthened in 2010. Accordingly, the financial 

sector expanded further during the year and thereby stimulated 

more economic activity. Improved performance of financial 

sector institutions was observed in terms of profitability, capital 

levels, asset quality and the range of products and services 

offered. 

The overall fiscal deficit was reduced to 7.9% of GDP in 2010 

from the 9.9% recorded in 2009. Several vital revisions were 

also introduced to the tax structure, with special focus on the 

simplification of the tax system, rationalization of exemptions, 

improvement of tax compliance and strengthening of tax 

administration. 

The external sector continued to sustain its strong 

performance in 2010, supported by the favorable global 

economic environment that persisted during the year. The 

Balance of Payments recorded a surplus of $ 921 mn, an 

outcome attributable to the higher inflows to the capital and 

financial account which exceeded the current account deficit. 

Consequently, the appreciating trend in the exchange rate 

continued during year, as reflected by the nominal effective 

exchange rate of the Sri Lanka rupee, (based on the 5-currency 

basket) appreciating by 4.1%. Gross official reserves also 

increased substantially from US $5,097 mn in 2009, to record 

US $6,610 mn by end 2010. 

The All Share Price Index and the Milanka Price Index 

increased by 96% and 83% respectively in 2010. The number 

of shares traded increased four-fold and the average daily 

turnover rose more than three-fold, while market capitalization 

of the CSE reached Rs.2.2 trillion by end 2010. 

Sector Review 

The Group achieved a respectable growth and surpassed the 

revenue milestone of Rs. 27,242 mn in 2010/2011. The plantation 

and retail sectors accounted for a larger portion of the total 

revenue generated. 

The plantations sector was the most significant contributor, 

representing more than half of the earnings before interest 

and tax. The retail sector, in continuing its long term trend, also 

contributed towards both the top line and bottom line. Except for 

the rubber and tyre sectors, all operating segments significantly 

contributed to the outstanding consolidated performance. 

Cash generated from operating activities of the group 

amounted to Rs. 2,819 mn of which Rs. 2,077 mn was 

attributable to the plantations sector. Plastic & Services sectors 

contributed Rs. 168 mn and Rs. 1,097 mn respectively to the 

operating cash flow. During the year under review, all sectors 

excepting Rubber and Services expanded their asset base and 

the group Return on Assets stood at 17% in 2010/11 compared 

to 12% in 2009/10 

Real GDP vs. Real Growth Rate vs. Unemployment Rate 

Balance of Payments vs. Exchange Rates LKR/USD $ 

Rs. Bn. % 

3,000 

2,500 

10 

8 

2,000 

6 

1,500 

4 

1,000 

500 

2 

0 

0 

06/07 07/08 08/09 09/10 10/11 

Real GDP Real Economic Growth Rate 

Unemployment Rate 

USD$ Mn. 

3,500 

2,000 

500 

(1,000) 

(2,500) 

(4,000) 

(5,500) 

(7,000) 

LKR/USD$ 

116 

114 

112 

110 

108 

106 

104 

06/07 07/08 08/09 09/10 10/11 

Trade Deficit USD $ Mn (Jan - Dec) 

Overall Balance of Payment USD $ Mn (Jan - Dec) 

Annual Exchange Rate LKR / USD (March) 

9 



Retail 

The retail sector continued to be the value driver of the 

group, representing 40% of consolidated revenue and 21% of 

earnings before interest and tax. The sector posted revenue of 

Rs. 10,926 mn in 2010/2011, compared to Rs. 9,043 mn in the 

preceding year, while segment profit was recorded at Rs. 828 

mn. As mentioned in the last Annual Report, an aggressive 

and accelerated expansion of the chain of outlets continued 

to operate in targeted areas of the country, with the aim of 

capitalizing on the post war economic boom. Consequently, 

the sector performed well by increasing its turnover by 21% 

and profitability by 61%. The results generated demonstrate 

the potential of the retail industry, specifically for the Company 

and in general for Sri Lanka, for future growth. The steady 

improvement of the post-war Sri Lankan economy has created 

a positive sentiment on consumer confidence, which in turn has 

driven retailing in the country. This positive trend is expected to 

continue in the coming year as well. 

Plantations 

The Financial Year 2010/2011 was an impressive year for the 

plantations sector where earning before interest and tax (EBIT) 

grew 147% to 2,032 mn. Plantations were the highest earner 

for the group, accounting for over 51% of the group profits and 

28 % of the group revenue. 

Plantations were 

the highest earner 

for the group, 

accounting for over 

51% of the group 

profits and 28 % of 

the group revenue. 

Being the largest rubber producing Plantation Company in the 

country, Kegalle Plantations produced 4,082 metric tons of 

rubber during the year, which constituted 2.7% of the national 

production. 

At national scale too plantation sector recorded a successful 

year, with an outstanding contribution to the National GDP, 

despite hampered production due to adverse weather. Tea and 

Rubber crops contributed 4.34% and 3.78% respectively at the 

national level in the year of review. 

Interest Rates - AWPLR 

Rs. Bn. 

21.00 

19.00 

17.00 

15.00 

13.00 

11.00 

9.00 

7.00 

5.00 

April 

May 

June 

July 

August 

September 

October 

November 

December 

January 

February 

March 

2009 

2010 



Rubber 

Although the sector has played a key role in enhancing the 

Group’s reputation for high quality and dependable products, 

the dramatic and unprecedented increase in rubber prices 

had a severe impact on its profitability, specifically in the low 

end products. Although sector turnover increased by 25% to 

Rs. 2,215 mn, rubber sector recorded a negative operational 

contribution of Rs. 25 mn, when compared to the profit of Rs. 

65 mn in the financial year 2009/2010. Nevertheless, despite 

current and potential challenges such as high rubber prices, 

high cost of furnace oil and of electricity, the sector has focused 

on improving operations and business processes, with the aim 

of achieving reductions in cost and enhancements in quality. 

Tyre 

In the tyre sector too, although turnover increased by 20% 

to Rs. 2,530 mn, profit from operations dipped to Rs.264 

mn, despite having recorded a profit of Rs. 300 mn in the 

financial year 2009/2010. Even though the entire tyre industry 

was affected by the high rubber prices, Richard Pieris Tyre 

Company was able to maintain a substantial performance. 

The sector also benefitted from the process consolidation, 

which reduced production cost. During the next year, the 

sector expects further growth in volumes, market share and 

profitability, as market conditions improve. 

Plastics & Distribution 

This year was both challenging and rewarding for the plastics 

and distribution sector, with an exceptional increase in turnover 

and profits. Revenue for the year increased by 33% from the 

prior year, while sector profitability was also up from Rs. 321 

mn in 2009/10 to Rs. 460 mn in 2010/11. Extensive volume 

growth was visible in the Polyurethane, Rigifoam and Water 

Tanks divisions. Continued focus on quality control at all stages 

of the production process and the introduction of innovative 

processes, have further strengthened the companies’ position 

in this sector. 

The Outlook for next year 

In the coming year, The Group intends to continue exploring 

opportunities for expansion and growth, while being vigilant of 

global and local market conditions. 

Dividend 

During the year, the company declared and paid interim 

dividend of Rs.0. 20 per share. The directors also recommend a 

final dividend of Rs. 0.10 per share. 

Conclusion 

I take this opportunity to thank all our stakeholders including 

the management team and employees, our suppliers, our 

customers, our business partners and my co- directors of 

Richard Pieris and Company PLC for their support given in 

this challenging year. I also wish to thank all the shareholders 

for the confidence vested in the Company, and ask for their 

continued understanding and support. 


Chairman/CEO/MD 

27th May 2011 

Services 

The services sector includes various businesses outside 

the Group’s main sectors of Plantations, Rubber, Tyre, Retail 

and Plastics. During the year, the group re-entered the 

financial services industry via the formation of its fully owned 

subsidiaries RP Securities (Pvt) Ltd & RP Financial Services 

(Pvt) Ltd. From the outset, the performance appears to be good 

with a wide client base and positive results. The Group targets 

at becoming a dominant player in the financial services market 

domain by taking full advantage of its brand equity and countrywide 

infrastructure. 

11 


The Board of Directors 

[1] Dr. Sena Yaddehige 

Chairman/Managing Director/Chief 

Executive Officer 

Dr. Sena Yaddehige is a Sri Lankan born 

British Scientist/Engineer and a UK 

based industrialist. He is the Managing 

Director of an European Company, 

which is part of a group involved in 

the development of high technology, 

automated manufacturing, and export 

of automotive components and systems 

to Europe, China and the United States. 

He holds a large number of worldwide 

patents on radiation processing, 

contactless sensors and drive by wire 

systems along with a Srilankan patent for 

slow release fertilizer. 

He is Founder, Chairman and Director of 

numerous companies in Sri Lanka and 

abroad. 

Dr. Yaddehige is the Chairman of the 

Richard Pieris Group of Companies 

comprising 5 Listed Companies and 

almost over 45 companies wholly or 

majority owned by Richard Pieris and 

Company PLC. He was appointed 

to the Board of Directors of National 

Development Bank PLC in December 

2007 and was in the directorate until his 

resignation from the Bank in November 

2010. 

Dr. Yaddehige was conferred with Doctor 

of Science (D.Sc.) in consideration of 

his original research work in the fields 

of Radiation, Radiation processing, 

Electromechanical Sensor technology, 

non contact sensor technology and 

automotive pedal systems along with 

numerous patents in the above fields. 

[2] Mr. J. H. P. Ratnayeke 

Mr. Paul Ratnayeke is a Senior 

Corporate Lawyer who is also the 

precedent partner of Paul Ratnayeke 

Associates, a leading law firm in 

Sri Lanka which he founded in 

1987 handling all areas of law and 

international legal consultancy work. 

Mr. Ratnayeke is a Solicitor of England 

and Wales and an Attorney - at - Law 

of the Supreme Court of Sri Lanka. 

He holds a bachelors degree in law 

with honours and has been awarded a 

Masters Degree in Law by the University 

of London. 

Currently Mr. Ratnayeke holds 

directorships in several companies of 

which 8 are public quoted companies. 

He has also been elected/appointed as 

Chairman/ Deputy Chairman to several 

of these companies. 

At Paul Ratnayeke Associates, he 

specializes in corporate and commercial 

areas of law including mergers and 

acquisitions, aviation, insurance and 

maritime law. 

[3] Prof. Lakshman R. Watawala 

Prof. Lakshman R. Watawala is a 

Fellow of the Institute of Chartered 

Accountants of Sri Lanka, Fellow of 

the Institute of Certified Management 

Accountants of Sri Lanka and Fellow of 

the Chartered Institute of Management 

Accountants in UK. He is the Former 

Chairman and Director General of 

the Board of Investment of Sri Lanka, 

former Chairman of People’s Bank, 

People’s Merchant Bank, State Mining 

and Mineral Development Corporation 

and the Ceylon Leather Products 

Corporation and a Committee Member 

of the Ceylon Chamber of Commerce. 

He is also President of the Institute of 

1 2 3 




Certified Management Accountants-Sri 

Lanka. Past President of the Institute of 

Chartered Accountants of Sri Lanka and 

South Asian Federation of Accountants, 

Founder President of AAT Sri Lanka 

and Past President- Organisation of 

Professional Associations of Sri Lanka. 

He also serves on the Board of Directors 

of several public listed companies. 

[4] Prof. Susantha Pathirana 

Prof. Susantha Pathirana is a graduate 

in Production Engineering from the 

University of Peradeniya with a MSc 

in Automatic Control and a PhD in 

Mechanical Engineering. He is a 

Member of the Institute of Engineering 

& Technology - U.K, Fellow of the 

Institution of Engineers - Sri Lanka and 

a Member of the Institution of Electrical 

& Electronic Engineers – U.S.A. He is 

the former Head of the Department 

of Production Engineering and former 

Dean of the Faculty of Engineering 

at the University of Peradeniya, Sri 

Lanka. He is currently a Professor in the 

Department of Production Engineering at 

the University of Peradeniya, Sri Lanka. 

[5] Mr. M. M. Udeshi 

Mr. Morarji Udeshi Joined C V Bhatt 

Group of Companies in 1947. He was 

appointed Chairman and Managing 

Director of the C V Bhatt Group in 1991, 

and Asha Phillip Securities Ltd. 

[6] Mr. Viville Perera 

Mr. Viville Perera is a Science graduate 

from Kelaniya University with Second 

Class Honours and a Fellow Member of 

the Chartered Institute of Management 

Accountants and Associate Member 

of the Chartered Institute of Marketing 

in United Kingdom. Mr. Perera has 

over 30 years experience in senior 

managerial capacity in leading business 

organisations such as Associated 

Newspapers of Ceylon Limited, 

Middeleway Ltd (Ceylinco Group) and 

Amico Group of Companies. He has 

served as a Treasurer and Vice President 

of Sri Lanka Institute of Packaging 

and a member of the lecture panel for 

SLIM and ABE Sri Lanka Branch for 

examinations leading to CIM and ABE 

(UK). He is a Director of Richard Pieris 

Exports PLC. 

4 5 6 

13 


Sector Review - Retail 

Retail 

The selective expansion of its chain of Supercentres/stores in 

targeted areas of the country will continue, capitalising on the 

post war economic boom that is expected in the ensuing years. 

The Product Portfolio: Fast Moving Consumer Goods including Food, Household 

Goods, Apparel, Furniture & Electronics 




The Retail Sector operates the Arpico Supercentres, 

Superstores and a network of showrooms and also provides 

interior decorating solutions for institutions. During the past few 

years this sector has been a key growth oriented arm of the 

Group. The Sector performed very well in the year under review 

increasing its turnover by 21% and profitability by 61% when 

compared to the previous year. This demonstrates the potential 

of the retail industry, in Sri Lanka, for future growth. 

The steady improvement of the economy in post war Sri Lanka 

is also having a positive sentiment on consumer confidence, 

which has helped drive retailing in the Country. This positive 

trend is expected to continue in the coming year as well and 

should have a positive impact on the performance of this 

Sector. 

Retail Sector Performances 

Rs. Mn. 

12,000 

10,000 

8,000 

6,000 

4,000 

2,000 

0 

06/07 07/08 08/09 09/10 10/11 

Net Turnover Operating Profit 

Rs. Mn. 

900 

750 

600 

450 

300 

150 

0 

The Sector is represented by Richard Pieris Distributors 

Limited, Arpimalls Development Company (Pvt.) Limited, 

RPC Retail Developments (Pvt.) Limited, RPC Real Estate 

Development (Pvt.) Limited and Arpico Interiors (Pvt.) Limited. 

Richard Pieris Distributors Ltd. 

Richard Pieris Distributors operates the well-known Arpico 

chain of Supercentres, Super Stores and Showrooms islandwide. 

The network retails a wide array of fast moving consumer 

goods (FMCG), household goods, including furniture & 

electronics, and offers a host of value added services through 

its eleven super centres/stores, twenty six showrooms, five mini 

stores and one furniture outlet. 

The turnover and profitability of the Company improved steadily 

compared to the previous year. All key product categories 

including FMCG, household goods, furniture & electronics 

recorded a steady growth in business during the year under 

review. These positive trends are expected to continue into the 

coming year as well. 

The Company opened its eleventh large format retail outlet 

in the town of Wattala with a grand opening amidst a large 

gathering of invitees in December 2010. This outlet, which is in 

excess of 50,000 square feet can comfortably park 150 cars, 

and is arguably the most environmentally friendly retail store 

as of date. The outlet has become the focal point in the town of 

Wattala and has fast become a destination where thousands of 

people congregate on a daily basis. 

The Company also commenced business operations in five 

mini stores in the Central Province, a furniture outlet in Nawala 

and a showroom in Dambulla in the year under review. This has 

further helped enhance the volume growth of the Company. 

Customer convenience has enabled the Arpico Supercentres 

and stores to gain a competitive edge over its rivals. All super 

centres and stores have ample parking space, wide aisle space 

for easy shopping and state-of-the-art cool rooms to provide 

fresh products. We continue to focus on improving levels of 

convenience and service. 

15 



Special events were organised throughout the year, including 

activities for children in order to create an added level 

of excitement and provide customers with a comfortable 

environment to shop in. The Arpico Family range of branded 

products was expanded and new products adapted to suit 

today’s market. 

Carefully targeted marketing and sales strategies over the 

years have led to better awareness of the Arpico Brand. The 

Company carried out a re-branding exercise in the year under 

review with its “fresh ideas everyday” tag line been very well 

received by a large majority of customers. The Company also 

carried out an aggressive seasonal campaign in the festive 

month of December giving away a brand new Santafe SUV to 

the winner of the grand draw. This had a positive impact on the 

turnover growth of the Company. The Company continued with 

the provision of value added products and services with the 

inclusion of the HSBC credit card bill settlement facility to its 

portfolio. 

The Arpico Privilege Card customer base continued to grow 

with its membership increasing to approximately 180,000 by 

the end of the year. Tempting rewards to members contributed 

to the increasing popularity of the Privilege Card. Sri Lanka’s 

first ever environmentally friendly biodegradable Privilege card 

was also launched coinciding with the launch of the outlet in 

Wattala. 

The careful implementation of cost reduction programmes and 

focus on inventory control has enabled the retail operation 

to run efficiently keeping expenses well within budgeted and 

acceptable proportions while continuing to improve the quality 

of its products and services. The supply chain operation was 

constantly monitored and evaluated and this enhanced the 

capability of selling a wide range of high quality products at 

competitive prices. 

The Company was also the recipient of a sum of money 

exceeding Rs. 1 billion from four financial institutions as a result 

of Sri Lanka’s first ever credit card securitization transaction in 

January 2011. This should help significantly speed up the retail 

expansion of the Company. 

The Company believes in the continuous training and 

development of its employees. The training academy at 

Nawinna which was opened two years ago continued to provide 

training to all employees. The results are visible in improved 

efficiency and better customer service. 

Arpimalls Development Company (Pvt.) Ltd. 

Arpimalls Development Company owns the two large Arpico 

Supercentres in Battaramulla and Dehiwela operated by 

Richard Pieris Distributors Ltd. The company continued its 

profitable record during the year under review. 

RPC Retail Developments (Pvt.) Ltd. 

RPC Retail Developments owns the 45,000 square foot Arpico 

Supercentre in Negombo which is now in its fourth year of 

operation and has continued recording profitable results in the 

year under review. 

RPC Real Estate Development (Pvt.) Ltd. 

RPC Real Estate Development owns the Arpico Supercentre in 

Kandy. The Company also continued its profit making record in 

the year under review. 

Arpico Interiors (Pvt.) Ltd. 

Arpico Interiors provides institutional and corporate customers 

in both the public and private sectors with comprehensive 

services in interior decorating and solutions including the 

provision of furniture. Over the years, it has built a strong 

reputation as a provider of turnkey solutions and supplier 

of furniture. It focuses on projects for hotels, apartments, 

hospitals, factories and offices from concept planning to 

complete turnkey solutions. The products are of high quality 

sourced from reputed local manufacturers as well as those 

of personally handpicked suppliers, from the U.S.A., Europe, 

Dubai, China and Malaysia. Its wide range of products, are on 

display at the Interior Decor Showroom at Hyde Park Corner. 

The Company remained profitable despite the slow recovery 

from the economic slowdown which had a significant impact 

on the construction industry and the institutional sector in 

particular. The impact on profitability was further compounded 

by the increasing cost of imports due mainly to high import 

duties and taxes. Consequently, plans to introduce high 

end items to its product portfolio, were deferred until market 

conditions become more favourable. 

Arpico Interiors, while continuing to adopt a cautious approach 

during the coming year, is confident of improving its profitability, 

with the recovery of economic activities. The company has 

drawn up plans to meet the opportunities of the coming year 

with increased offerings. 

The selective expansion of its chain of Supercentres/stores in 

targeted areas of the country will continue, capitalising on the 

post war economic boom that is expected in the ensuing years. 


Sector Review - Plantations 

Plantations 

The year 2010/2011 witnessed the plantation sector emerging 

as the highest contributor to group profitability for the third 

consecutive year. 

The Product Portfolio: Leasehold Ownership & Management of Tea, Rubber, Oil 

Palm, Coconut Plantations and Branded Tea 


17 



The year 2010/2011 witnessed the plantation sector emerging 

as the highest contributor to group profitability for the third 

consecutive year. The sector, comprising of three public 

quoted companies, namely Kegalle Plantations, Namunukula 

Plantations and Maskeliya Plantations, performed exceptionally 

well during the year despite bearing the burden of a 42% wage 

hike in the previous year and adverse weather conditions. 

The outcome was also recorded as the historical best for both 

Kegalle Plantations and Namunukula Plantations. 

Output of the plantation sector is highly diversified and includes 

high grown, mid grown and low grown tea, rubber, oil palm, 

coconut, cinnamon, cardamom, rambutan and other crops. 

Of these, the highest contribution to revenue was from tea at 

61.9%, followed by rubber at 32.8% and oil palm at 3.3%. Out 

of the total 27,800 hectares of extent, 7290.4 hectares were 

employed for tea, while 5,864.30 hectares were used for rubber. 

Oil palm and other crops utilized 1,105.7 and 751.15 hectares 

respectively. 

At national level, despite the negative growth in the agricultural 

sector initially, the year end witnessed the sector encouragingly 

maintaining its prominence with a 11.9% contribution to 

the GDP. It was also during this year that the national tea 

production reached its all-time high of 330 mn kg, a sharp rise 

from the 320 mn kg produced in the preceding year. 

Tea prices were at attractive levels, with high grown tea being 

traded at Rs. 341.03 and low grown tea being traded at Rs. 

362.00 per kg on average. An attractive trend in terms of 

price was also witnessed in the market for rubber, with Latex 

Crepe claiming its’ highest ever price of Rs. 700.00 per kg, 

and speculation is ripe that the trend will continue for the next 

year as well. The average price of oil palm was recorded at Rs. 

23.24 per kg during the year. 

Plantation Sector Performances 

Rs. Mn. 

9,000 

7,500 

6,000 

4,500 

3,000 

1,500 

0 

06/07 07/08 08/09 09/10 10/11 

Net Turnover 

Operating Profit 

Rs. Mn. 

3,000 

2,000 

1,000 

The plantation sector runs a risk of being imposed another 

pay hike in the coming year as a consequence of the 

Collective agreement entered in to between regional plantation 

companies and trade unions. There is a pressing need to 

consider the sustainability of the industry during the negotiation 

process, as failure to do so will reflect adversely on the viability 

of the industry. 

KEGALLE PLANTATIONS PLC 

For Kegalle Plantations, the year ended on a high note, with it 

generating the highest ever profit recorded in its history. 

Despite a 11% decrease in production, it was able to maintain 

its stature as the largest rubber producer, with production 

amounting to 4,082 metric tons. The decrease is largely 

attributable to the adverse weather that persisted during the 

third quarter of the year, whose effects hampered production 

during the months where usually the highest crop is reaped. 

In absolute terms, the Company’s total rubber production 

dropped from 4,578 metric tons in the previous year to 4,082 

metric tons in the year under review by 496 metric tons. The 

0 



average yield per hectare (YPH) for rubber was recorded 

at 936 kg while national increase in tea production was 

recorded at 27%, Kegalle Plantations recorded growth stood 

at 12%. Nevertheless, this is a commendable achievement 

when considered in the light of the unfavourable weather 

conditions that persisted in the Udapussellawa region. It was 

also desirable to note that the tea prices in the Udapussellawa 

region remained encouraging during the year. 

All factories of the Company were able to maintain an 

acceptable NSA. This is reflected in the Gampaha factory 

obtaining 63 top prices, Luckyland 57 top prices and Doteloya 

32 top prices during the year. Kirklees and Yataderiya recorded 

6 and 3 top prices respectively. 

The Company continued its replanting programme and 

accordingly 23.15 hectares of tea and 147 hectares of rubber 

were replanted with expenditure of Rs. 145 mn. The year also 

saw the commencement of the upgrading of the Doteloya 

factory at an investment of Rs. 18 mn. The Company’s practice 

of embracing new inventions in order to improve productivity, 

such as using rain guards in rubber extents, was also 

continued. 

Overall, the Company’s revenue for the period was recorded at 

Rs. 2.99 billion, a 35% rise from the previous year. The largest 

contributor to revenue was rubber, with a 65% share, while 

tea contributed to 30.3%. A 4% contribution was received from 

other crops and the sale of rubber trees. Revenue from rubber 

recorded a handsome 54% increase, while revenue from tea 

improved by 5%. 

NAMUNUKULA PLANTATIONS PLC 

Namunukula Plantations PLC is the most diversified plantation 

company in the group, with interests in more than 5 main 

crops. The year 2010/2011 is recorded as the best performing 

year in its history, where growth in both revenue and profits 

was witnessed despite the adverse impact of weather on all 

its crops. Such an outcome is largely attributable to the high 

prices obtained in the market for its three main crops, namely 

tea, rubber and oil palm. Company profits were recorded at 

its highest ever of Rs. 409.3 mn, more than 179% higher than 

profits recorded in the preceding year. Revenue was recorded 

at Rs. 2.1 billion. 

Bought tea leaf operations, on which depends approximately 

82% of the Company’s tea production, continued to be 

challenging due to the operation of private estates in 

surrounding areas. Nevertheless, in comparison to the previous 

year, a nominal increase was observed in bought tea leaf 

operations. 

While low grown tea continued to stabilize at existing NSA’s, 

rubber and oil palm NSA’s were recorded at an all time high. 

Rubber prices were recorded at Rs. 491.26, which is an 85% 

increase from the previous year. Yatadola Estate fetched a price 

of Rs. 630.00 per kg of Latex Crepe Grade 1X, the highest 

recorded in the history of the plantation sector. Oil palm prices 

too remained vibrant, recording an all-time high of Rs. 28.82 

per fresh fruit bunch in February. This trend is expected to 

continue in the coming year as well, due to low production 

levels both locally and internationally. 

During the year the Company replanted 2.5 hectares of tea 

and 104 hectares of oil palm at a total investment of Rs. 47.5 

mn. Maintenance expenditure on immature fields was recorded 

at Rs. 48.3 mn. The Company is currently involved with the 

development of a tea factory at the Baddegama Estate at a 

total investment of Rs. 56 mn. Upon completion, the factory will 

increase the processing capacity of the Company to 1.20 mn kg 

per annum. 

MASKELIYA PLANTATIONS PLC 

The year ended with Maskeliya Plantations recording both crop 

and price gains in its high grown tea production. Out of the total 

tea production of 9.13 mn kg, 8.45 mn kg was from estate leaf, 

which is approximately 7% higher than the production of the 

same in the previous year. Bought leaf quantities increased by 

150% in comparison to the previous year. Cultivation has also 

improved, with the yield per hectare increasing by 8% to 1525 

kg. 

By recording 130 top prices for six of its estates, the Company 

was able to secure its supremacy in the high grown tea 

segment. Some garden marks topped by recording prices as 

high as Rs. 510 per kg during the year. The Western High NSA 

was recorded at Rs. 368.52 per kg, with Elevation average at 

Rs. 353.64. In the Uva High Category, the Company’s average 

was recorded at Rs. 316.85, while the Elevation average was 

Rs. 312.28 per kg. 

The Company invested Rs. 162 mn on replanting 55 hectares, 

while a further Rs. 7 mn was spent on maintenance of 

immature plants. It successfully established a 7 hectare 

rubber plantation in the lower sections of the Poonagalla 

Estate, and plans are underway to expand this venture further. 

Furthermore, a rambutan and duriyan cultivation of 2 hectares 

was also undertaken in the Ampittiakande Estate. In order to 

accommodate market preferences via enhanced manufacturing 

flexibility, the Company has commenced factory developments 

in Poonagalla, Ampittiakande, Craig, St. Clair and Talawakelle 

with an investment worth Rs. 66 mn. 

All fourteen factories of the Company were certified under 

‘Ethical Tea Partnership UK’ whose members include some of 

UK’s leading buyers. Moreover, twelve factories have obtained 

the ISO 22000 (Food and Safety System Certification), 

while four have continued to maintain the Fair trade Labeling 

19 



Organization certificate. These achievements form ample 

indication of the Company’s commitment to maintain the 

highest standards of quality. 

Overall, the Company recorded a profit of Rs. 42.4 mn, which 

is a considerable improvement from the loss of Rs. 34.6 mn 

recorded in the preceding year. Total revenue also improved 

from Rs. 3.1 billion to Rs. 3.2 billion in the current year. 

Profitability was achieved despite high labour costs, mainly 

due to the low finance costs achieved via efficient working 

capital management and low interest rates that prevailed in the 

economy. Impressively, the borrowings of the Company were 

also reduced from Rs. 537 mn in the previous year to Rs. 502 

mn in the current year. 

MASKELIYA TEA GARDENS CEYLON LTD 

Maskeliya Tea Gardens markets top quality pure Ceylon tea 

both locally and globally under the brand ‘St. Clair’s’. Equipped 

with a wide range, from orthodox black leafy tea to flavoured 

tea in tea bags and gift items, St. Clair’s tea is renowned for 

their outstanding quality, offering a supreme cuppa to the 

discerning tea drinker. The supreme quality of the produce 

of Maskeliya Tea Gardens was recognized for the second 

consecutive year at the ProdExpo 2011 Moscow Fair, where 

it bagged the ‘Grand Prix Award’ for excellence in product 

innovation and design. 

The brand continued its vibrant progress in the local market 

with the introduction of attractive St. Clair’s loose-leaf tea pack. 

The resultant immediate increase in sales at the Company’s 

Super Centers has prompted the Company to consider 

expanding the product range to other shopping centers as well. 

During the year, Maskeliya Tea Gardens continued to ship 

produce to Australia, Nigeria and Chile. Attention was also 

placed on expanding the Russian market, which has continued 

to pay dividends via increased orders. Further, the Company 

is entertaining plans to enter the Middle-Eastern market in the 

coming year. 

The St. Clair’s Tea Center at Thalawakelle continues to attract 

a wide range of local and foreign tourists, offering a refreshing 

stop-over and a tantalizing product range of tea items, bundled 

with service par-excellence and old-world charm. 

Maskeliya Tea Gardens will focus on expanding its client base 

and increasing its turnover in the coming year. 


Sector Review - Tyre 

Tyre 

Richard Pieris Tyre Company is the established market leader 

having the largest tyre distribution network in the Country. 

The Product Portfolio: Retreaded Tyres for Light and Heavy Commercial Vehicles, 

Re-Manufactured Radial Tyres, Tubes and Flaps, trading in tubes, flaps and new 

tyres 


21 



The Tyre Sector of Richard Pieris Group which facilitates the 

entire tyre retreading value chain is the pioneer and market 

leader of tyre retreading in Sri Lanka. The tyres being re 

used has indirectly contributed to the Country’s economy by 

decreased transport costs and outflow of foreign exchange 

on imported tyres. This also immensely helps the reduction in 

damage to the environment. The tyre sector comprises three 

companies, Richard Peiris Tyre Co, Ltd, Arpidag International 

(Pvt) Ltd and Richard Peiris Rubber Compounds Ltd. 

Richard Pieris Tyre Company is the established market leader 

having the largest tyre distribution network in the Country. 

Arpidag International (Pvt.) Ltd and Richard Pieris Rubber 

Compounds Ltd are the supportive companies supplying 

pre-cured tread, bonding gum, cement other related materials 

and customized mixing facilities to the Tyre Company. Arpidag 

International also has extended its services by supplying treads 

and consumables to mini plants in the industry. 

The whole rubber based industry in the Country including 

our Company went through a challenging year due to 

the fluctuations of rubber prices. The first half of the year 

experienced comparatively low commodity prices compared 

to the rubber prices in the second half which had a sharp 

increase adversely affecting the entire rubber based industry. 

However even though the entire tyre industry was affected by 

a negative performance, Richard Pieris Tyre Company was 

able to maintain a substantial profit for the year due to the 

production and energy efficiencies minimizing overhead costs 

and eliminating unproductive practices. The Sector also was 

benefitted by the process consolidation which reduced the 

production cost. The Company being more vigilant about the 

future has helped to gain competitive advantage on the buying 

process which contributed in sustaining the performance even 

during a challenging period faced by the entire industry. 

Tyre Sector Performances 

Rs. Mn. 

3,000 

2,500 

2,000 

1,500 

1,000 

5,00 

0 

06/07 07/08 08/09 09/10 10/11 

Net Turnover 


Rs. Mn. 

350 

Richard Pieris Tyre Company 

Richard Peiris Tyre Company, the largest tyre retreader 

in Asia, having a large dealer network with 1300 Dealers 

Island wide, rebuilds more than 600,000 tyres per annum. 

Its operations entail the retreading of tyres, in which it holds 

a larger share of the local market, and trading, a business it 

entered into a few years ago. Retreading still forms over 80% 

of the company’s turnover. During the year under review it 

increased its manufacturing capacity and enhanced its product 

range, both in the retreading and trading product in order to 

meet increased customer demand. The company’s retreading 

turnover increased by 23% and trading turnover increased by 

21%, increasing its share of the market. 

The production capacity in the Kandy factory was increased 

to cater the increased demand in the Central province. 

Kurunagale factory capacity was also increased to meet the 

demands from the Northern and Eastern markets. The overall 

production capacity was enhanced in order to further increase 

the market share. 

300 

250 

200 

150 

100 

50 

0 



The conventional capacity in the Agricultural segment, which 

is the fastest growing segment, was enhanced in order to meet 

the increased seasonal demands. 

The sale of “Arpiradial”, which was introduced few years ago, 

has performed well. The process facilitates the retreading of 

radial tyre casings, giving strength and retread ability to the 

casings and uses specially designed radial tread designs. The 

Company intends in introducing a larger product range in the 

radial tyres since the customer base is moving to radial tyres 

from the bias tyres, increasing the demand for more radial tyres 

in the future. 

The Company has consolidated its position in the trading 

business and has successfully completed the year under review 

with a substantial turnover growth. At present the Company is 

the sole agent for Birla tyres India, and also represents Corsa 

tyres in Indonesia. Birla Tyres are the manufacturers of truck, 

light truck and agricultural vehicles. Corsa tyres specialize 

in supplying tyres for passenger cars and vans. In addition 

to this, sales of tubes, flaps and three-wheeler tyres have 

also increased. The wide dealer network has proved to be a 

significant competitive advantage which has enabled the timely 

delivery of imported tyres island wide within a day. 

The Company introduced radial truck tyres with the Birla 

Company, further the Company also intends in increasing the 

product portfolio by introducing automotive batteries to the 

market. 

The Company’s profitability was affected by the high price of 

raw material during the year. Efficient management of costs 

however enabled the company to maintain profitability. 

The capacity is fully utilized by providing services to outside 

customers with higher energy and labour efficiencies. The 

production efficiency will be increased further in the coming 

year to enhance the quality of the products. 

Arpidag International entered the international market by 

exporting tread in small quantities to Europe and also the 

Company plans to further increase exports in the coming year. 

Richard Pieris Rubber Compounds Ltd. 

Richard Pieris Rubber Compounds provides mixing services to 

Richard Pieris Tyre Company, several other companies within 

the Group, and various external customers. The company has 

state-of-the-art machinery in its factory which provides a high 

level of quality. The company now also sells chemicals to local 

manufacturers. 

The Company is continuing its efforts to find potential 

customers for milling services and help the other two 

companies in the sector to achieve a higher market share by 

providing an excellent mixing service. 

The right product portfolio and dynamic service levels has 

been the key to the sector’s success. The location of plants and 

island wide distribution network enables quick delivery. A “One 

day service” was introduced in designated areas with tyres in 

these areas are being delivered within a day enabling dealers 

to control their working capital requirements. 

The sharp increase in the raw material prices proved to be a 

considerable challenge during the year under review. Rubber 

prices have doubled during the last twelve months and there 

is no indication that these prices will come down in the near 

future. Steps have been taken to increase efficiency and 

maintain production at the optimum level for each plant. The 

Company continuously invests in the work force and believes 

that efficient human resources is vital to its growth. 

Arpidag International (Pvt.) Ltd 

Arpidag International is a pioneer in supplying the pre- cured 

treads to the tyre industry. It supplies pre-cured tread mainly 

to the Richard Pieris Tyre Company while it also supplies to 

external customers through the ATM brand. The Company has 

been awarded with the process quality certification of “ISO : 

9001” 

23 


Sector Review - Plastics 

Plastics 

The year under review was both challenging and rewarding with 

an exceptional increase in turnover and profits. 

The Product Portfolio: Water Tanks, Polyurethane Foam Mattresses, Water 

Pumps, CFL Bulbs, Moulded Plastic & Expandable Rigid Polystyrene Products 




The Plastics Sector manufactures and markets a wide range 

of products made of polyurethane foam, rotational moulded 

plastics, expanded rigid polystyrene, PVC, domestic and 

industrial based rubber products, and other categories such as 

water pumps, PVC doors and CFL bulbs. It also manufactures 

& distributes furniture. 

The year under review was both challenging and rewarding 

with an exceptional increase in turnover and profits. 

Plastic Sector Performances 

Rs. Mn. 

4,000 

3,000 

2,000 

1,000 

Rs. Mn. 

600 

450 

300 

150 

Sales revenue increased by 33% compared to the prior year. 

Volumes in the Polyurethane, Rigifoam and water tanks 

divisions grew extensively. 

0 

06/07 07/08 08/09 09/10 10/11 


0 

Manufacturing was well planned resulting in increased 

productivity, and catered to market demand in terms of both 

quantity and quality, while keeping in view the need for effective 

controls on inventory levels. Continued focus on quality control 

at all stages of the production process and the introduction 

of innovative processes further strengthened the quality of 

products. 

Expanded rigid Polystyrene 

RPC Polymers manufactures expanded rigid polystyrene 

products, commonly known as “Rigifoam”. The products include 

containers, sheets and other products primarily for the fishing 

industry. 

The company maintains its position as the market leader with a 

market share of 50%. 

The company also exports containers to the Maldives for 

packaging purposes. 

The Polyurethane Operation 

The Polyurethane operation manufactures a range of products 

which include mattresses, cushions, sheets and other 

specialized products such as sports goods, bedding for hotel 

industry etc. 

Market share of mattresses improved to approximately 45% 

despite intense competition. The company continued to 

maintain its profitable record and market leadership position. 

Value addition to mattresses continued in response to identified 

customer demand. The company has also ventured into the 

manufacture of sofas for the local market. 

Inventory has been carefully monitored and overhead costs 

were managed effectively. Arpico Flexifoam - which is an ISO 

9001:2000 standard company, also possesses the SLS 893 

standard. 

Rotational Mouldings 

The company has achieved a dominant position in the local 

moulded water tank market, with the Arpico branded water 

tanks commanding 46% of the market share. 

Products are manufactured at the factories in Horana, 

Pallakalle, Koggala and Dambulla which give easy access to 

island wide distribution. The wide range of products include 

water tanks of different capacities, sump tanks, septic tanks 

and utility products including garbage bins, compost bins and 

25 



traffic control cones, a recent addition being the introduction of 

a eco friendly “Green gas tank”. 

The increased demand in the Northern and Eastern Provinces 

was aggressively pursued and significant increase in volumes 

were reported. The factory in Dambulla is fully geared to cater 

to these markets. 

PVC Operation 

Arpitech (Pvt) Ltd manufactures a range of pipes and fittings 

under the brand name “Arpico PVC”, and has received the Sri 

Lanka Standards (SLS) certification for its range of pipes. 

The company’s sales volumes grew strongly during the year 

under review, with increased brand acceptance and market 

penetration. The company at present is in the process of 

increasing its production capacity at its plant in Mattegoda. 

Re-Distribution Division 

The Re-Distribution Division distributes products island-wide 

through a network of distributors and dealers. The group is 

proud of this distribution channel, which is one of the largest 

in the country, catering to over five thousand Hardware & 

Furniture outlets islandwide. 

The Re-Distribution division achieved a credible level of growth 

during the year under review. Turnover grew by over 25% 

compared to prior year with growth in profits being over 17%. 

Turnover in most categories of products grew; the Company 

reported a significant growth level in the sales volumes of 

mattresses and water tanks during the year under review 

compared to the previous year. 

Sales of the “Arpilight” CFL bulb, made steady progress during 

the year and it is expected that the product will soon become a 

household name. 

“Arpitech” water pump is another product which has captured 

the market, and is a dominant player with a market share of 

35%. Product innovation and enhanced customer service 

enabled this achievement of becoming a market leader in 

short period of time. The management is also planning to 

aggressively diversify into the Agricultural product categories 

during the next financial year. 

The division is projecting a growth on the strength of continued 

diversification into new areas of business, with the goal of being 

a dominant player in the hardware and furniture sectors. 


Sector Review - Rubber 

Rubber 

The Operation and business processes were improved with the 

aim of achieving cost reductions and quality enhancements. 

The Product Portfolio: Natural Latex Foam Mattresses, Pillows, Rubber Mats for 

Industrial and Domestic Use, Jar Sealing Rings, Small mould Products and other 

Specialized Rubber Products 


27 



The Group’s Rubber Sector provides a wide range of value 

added rubber products for the local and export markets. 

This sector has traditionally played a large role in the 

Group’s reputation for providing products of high quality and 

dependability. 

This sector is comprised of Richard Pieris Exports, Richard 

Pieris Natural Foams Ltd, Arpico Natural Latex Foams, 

Arpitalian Compact Soles, Micro Minerals, and Richard Pieris 

Rubber Products. 

Rubber Sector Performance 

Rs. Mn. 

2,500 

2,000 

1,500 

1,000 

5,00 

Rs. Mn. 

100 

50 

0 

(50) 

(100) 

Research and development continues to be a key area for 

the entire sector, and Richard Pieris Exports, Richard Pieris 

Natural Foams, and Arpitalian have experienced research 

personnel who are of international standard. 

0 

06/07 07/08 08/09 09/10 10/11 


(150) 

The Operation and business processes were improved with the 

aim of achieving cost reductions and quality enhancements 

which enables the companies in this sector to become stronger 

and more competitive in the near future. 

The sector has been operating under several challenges which 

will also be experienced in the future. Rubber prices were 

increased due to the higher global demand. The cost of furnace 

oil is also of some concern; due to international oil prices being 

high. Cost of electricity is also an impediment to the Sector. 

Richard Pieris Exports PLC. 

Richard Pieris Exports produces and exports rubber mats to 

the Europe, USA and Asia Pacific regions from its factory in 

Ekala since 1984. In addition to the mats it also produces jar 

sealing rings and crutch tips for European markets. 

The company’s range of mats include specialized products for 

industrial use, entrance, agriculture, playgrounds, gymnasiums 

and specialty items such as fire retardant mats, electricity 

resistant mats and anti static mats. Every year the company 

does innovations with new products with the help of the 

Research & Development division. Many new products such 

as rubber based fabric mats were introduced to the agricultural 

and industrial markets during the year under review. 

During the year, the sales volume of jar sealing rings increased 

by 30%. Along with the demand the production capacity 

increased in the extruder section and washing section in order 

to have a smooth production. 

In January 2011, the Company participated in the Dometex 

exhibition in Germany where there was a good response for 

our products with many sales inquiries. Our presence in Europe 

is growing well whereas in USA and Asia Pacific regions the 

presence is as expected. 

The dramatic and unprecedented increase in rubber prices had 

a severe impact on the profitability especially in the low end 

products. Even though the prices were increased the margins 

were not met. With the intense competition being experienced 

in the low-end product market, the company is now focusing 

more on investing in the latest technology measures to improve 

its product quality and yield, in order to maintain its competitive 



advantage. Further new moulds will be made in order to suit the 

current demands for new products by the customers. 

Richard Pieris Natural Foams Ltd. 

Richard Pieris Natural Foams Limited (RPNF) manufactures 

and market all natural latex foam blocks, sheets and pillows for 

international market from the factory located in free trade zone, 

Biyagama. 

The company’s focus on sales growth, operational excellence 

and quality improvements showed commendable results in the 

financial year under review. 

Sales picked up from the second quarter due to aggressive 

sales campaign carried out in multiple markets. RPNF achieved 

the highest export volume since year 2006 in the 3rd quarter of 

the year. 

The value added products launched to the local market have 

shown positive results showing the program’s potential to 

become a significant contributor to the profitability of the 

company in the medium and long run. 

Strategic investments on continuous waste reduction 

and quality improvements have made the business more 

competitive whilst enhancing customer satisfaction during the 

year. Focus on maintaining and reducing the cost of energy 

despite the challenges faced by the company has made us 

achieve commendable results during the year. 

Natural latex prices were considerably high throughout the 

year and were at the peak in the fourth quarter of the year. 

This unexpected increase in critical raw material together with 

the increases of other raw material prices had a significant 

negative impact on the profitability of the business. 

US dollar devaluation and raw material price increase have 

compelled the business to raise the market prices of products 

significantly, destabilizing the narrow market segment “all 

natural latex mattresses” 

Arpitalian Compact Soles ( Pvt) Limited 

Arpitalian Compact Soles manufactures shoes soling sheets for 

the International shoe manufacturers. The Company is a joint 

venture with Davos SPA, a globally reputed manufacturer for 

shoe soles. 

During the year a Director of Davos Spa-Italy took over the 

responsibility to manage the operations of the Company as 

the CEO in June 2010 which enables the sharing of Italian 

technology and market knowledge to improve the productivity 

and profitability of the Company. 

During the year the Company took over the control of the 

rubber mixing plant which is a critical component of the 

manufacturing process which enables the Company to directly 

control the compound manufacturing process. 

The Company implemented several cost reduction measures 

during the year under review, which assisted in mitigating the 

challenges posed with the rising prices of synthetic rubber 

which is a major component in its production process. 

The Company’s emphasis on research and development 

enabled the Company to experience continuous cost reductions 

throughout the year, with the introduction of new formulas. 

The Company is now targeting to enter new markets in 

Bangladesh and Vietnam. Even though the demand from the 

European markets is decreasing to some extent, the Company 

managed to increase the total sales volumes by 8% during 

the year under review mainly due to higher sales to the Asian 

market. 

With the imminent turnaround of the Italian market and the 

emergence of new markets within the South East Asia and 

South Asian regions a significant improvement in Company 

performance is expected in the upcoming financial year. 

Micro Minerals (Pvt.) Ltd 

Micro Minerals (Pvt.) Ltd produces mineral products which 

are essential as fillers for rubber compounds. This company 

mainly supplies Arpitalian compact soles and Richard Pieris 

Exports. The production plant of the Company is located in 

Bandaragama. 

Due to the scarcity of raw materials for calcite and ball clay, the 

Company was unable to have a significant sales growth in the 

current financial year. The Company had to increase the selling 

prices in order to recover the increase in purchase price of the 

raw material. 

Richard Pieris Rubber Products Ltd. 

The main activity of Richard Pieris Rubber Products is the 

manufacturing of rubber garden hoses, vehicle floor mats, 

specialized Industrial Products and re-rubberized printing 

rollers. 

With the intense competition being experienced in the product 

market, the Company focused to improve its product quality 

and yield, in order to maintain its competitive advantage. 

Competitive prices along with timely and appropriate 

promotions helped maintain market share for garden hoses and 

vehicle floor mats, where the Company has being established 

as the market leader. 

29 


Sector Review - Service and Other 

Services and Other 

The Group re-entered the financial services industry with the 

formation of its fully owned subsidiary RP Securities (Pvt) Ltd. 

The Product Portfolio: Real Estate, Insurance, Freight Forwarding and Financial 

Services 




This sector includes the Group’s holding company, Richard 

Pieris and Company PLC, and subsidiary companies in various 

businesses outside of the Group’s main sectors of Plantations, 

Rubber, Tyre, Retailing and Plastics. It includes companies 

involved in Logistics, Insurance, Real Estate and Financial 

Services. 

Richard Pieris and Company PLC 

Richard Pieris and Company PLC is the holding company of 

the Group and is responsible for the overall corporate policy 

and direction of the Group. Richard Pieris and Company PLC 

generates a proportion of its income by way of dividends from 

its subsidiaries. It also owns and rents real estate, including 

the Hyde Park corner retailing complex and the Nawinna 

complex which houses the tyre factory, the head office and a 

Super Centre. The company’s various divisions provide support 

services to all companies in the Group. This includes services 

relating to information and communication technology, human 

resources and procurement. 

The IT Division provides systems integration, managed 

services and “end-to-end” services and solutions. This 

has enabled the Group to generate more value through an 

innovative approach to business processes, well-integrated 

supporting technologies and strategic investments. The 

technical staff have an in-depth understanding of company’s 

technological needs and businesses and a proven track record 

of delivering results in many industrial sectors. The division 

manages the data center, disaster recovery center and central 

PABX. During the year under review, the internally developed 

ERP solution, Marksys was rolled out to business sectors of the 

Group. Within the Marksys system several manual processes in 

the traditional plantation businesses were automated during the 

year. The retailing sector was deployed with new Point of Sales 

software on a Linux platform. 

The Group Human Resource Division is responsible for the 

overall HR policy of the Group. It deals with the administrative 

Services Sector Performance 

Rs. Mn. 

250 

200 

150 

100 

50 

0 

06/07 07/08 08/09 09/10 10/11 

Net Turnover 


Rs. Mn. 

600 

work relating to employees and coordinates training and staff 

development. More details on its activities are to be found in the 

report “Our People” on page 45. 

The Central Commercial Division handles the procurement of 

raw materials and consumables, both domestic and imports. 

It has been successful in passing on the low costs to our 

SBUs by maintaining sound supplier relations and maximizing 

economies of scale. 

The Group Treasury supports funding requirements of all the 

businesses. It is also involved in negotiating bank facilities 

to the Group and manages the Group’s foreign exchange 

exposure and interest rate risks. 

The Group Corporate Planning Unit coordinates the Group’s 

overall strategic planning process. It provides expertise to all 

SBUs to develop and monitor Key Performance Indicators. 

This unit also analyses all new business ventures, develops 

business plans and continuously monitors existing businesses 

in order to ensure optimal allocation of resources. This unit was 

restructured towards the end of the year. 

450 

300 

150 

0 

31 



The internal audit function which is centralized ensures that 

internal control systems are adequate; procedures are up- todate 

and are adhered to by all group companies. Its activities 

are based on the risks faced by the group in the different 

industries. 

R P C Logistics Ltd. 

R P C Logistics is primarily engaged in international freight 

forwarding and customs broking. At present, two thirds of the 

Company’s revenue is generated from its freight forwarding 

activities. The Company’s portfolio of services includes 

airfreight, sea freight, sea freight consolidation, customs 

brokerage and transshipment. The Company’s services 

include door-to-door cargo services with the assistance of the 

Company’s overseas agents and a variety of other connected 

services. 

The main focus of the Company was to service the needs of 

other entities with the Richard Pieris Group. However with the 

turnaround of the economy it would pursue other opportunities 

into the future. 

Asian Alliance Insurance PLC 

Asian Alliance Insurance is a comprehensive insurer that 

is rapidly gaining a reputation for its superior products and 

excellent service. The Company offers both life and general 

insurance services to corporate clients as well as individuals. 

Its client portfolio includes many of the largest trade and 

industrial conglomerates in Sri Lanka. 

The Asian Alliance Insurance Company completed yet another 

successful year with a growth in turnover of 28% over the 

previous year. Profitability improved remarkably during the year 

where the company recorded a Profit after tax of Rs. 368 mn, 

reporting a growth of 154% when compared with the profit after 

tax of Rs.145 mn reported last year. Shareholder equity has 

increased by Rs.1,043mn from last year to Rs. 1,560 mn as at 

31st December 2010. 

RP Securities (Pvt.) Ltd. 

The Group re-entered the financial services industry with the 

formation of its fully owned subsidiary RP Securities (Pvt) 

Ltd. With a modern office with all facilities the company which 

commenced operations in January 2011 has attracted the 

best of professionals in the industry to form the nucleus of 

this operation. From the outset the performance has been 

good with a decent client base and positive results. The Group 

intends to be a dominant player in the financial services 

market domain by taking full advantage of its brand equity and 

infrastructure throughout the country. 


Corporate Social Responsibility 

The Richard Pieris Group is one of the largest diversified 

companies in Sri Lanka with a large number of stakeholders 

which actively engages in a number of economic, social and 

environmental support initiatives thus contributing towards its 

responsibilities to all stakeholders. 

We aim to engage positively with all stakeholders, responding 

to them swiftly and efficiently while continuing to welcome their 

views. 

The Group has structured its Corporate Social Responsibility 

objectives to protect the interests of its stakeholders. It has 

instituted a policy that requires each of its Sectors to plan and 

execute sustainable and wide-ranging programmes in all areas 

in which it carries out its business. 

Customers 

Richard Pieris which is a highly customer oriented group of 

companies, mobilises its competence, energy and resources to 

build a high performing service to its customers, treating their 

needs and wants as high priority. 

All companies in the Group guarantee the highest quality 

of their products and services. Many companies have 

international and national certifications and strive to provide the 

maximum level of convenience, service and value for money to 

its customers. 

Food Safety 

Being a leading retail chain in Sri Lanka one of our key 

priorities is food safety. We are excelling in providing the 

best products to the customers with the theme “fresh ideas 

everyday”. The Arpico Supercentres maintain stringent policies 

on food safety and quality. Arpico employees define and verify 

quality standards for every product the Group sells. Enabling 

our customers to eat healthily and ensuring a wide choice 

of high quality, fresh and affordable food is our main focus. 

The company offers essential items at low prices but with no 

compromise on quality, with the “Super Saver” range. 

The loyal and positive relationships with the shoppers and the 

suppliers entirely support the community to ensure the long 

term sustainability of the business while we continue in local 

and sustainable sourcing. 

Food safety is ensured in the Plantation Sector by most our tea 

factories having obtained certification from Fair-trade Labeling 

Organisation and the Ethical Tea Partnership, whose members 

are leading retailers in the U.K. 

Fair and Competitive Trading Practices 

Our policy is to be fair and honest, being accessible and 

straightforward in our dealings and to always deliver what we 

promise. 

Employees 

Employee Health and Safety 

The Richard Pieris Group is one of the largest private sector 

employers in the country considering the employees as key 

stakeholders whose contribution is vital for the continued 

success of the Company. 

The health and safety of our employees is a key priority which 

is ensured in all factories and other workplaces by providing the 

equipment required to maintain high safety standards. Training 

programmes are conducted to educate employees on health 

and safety matters in the workplace. Medical facilities are 

provided to all employees. 

Further details of the Group’s commitment to its employees are 

to be found in other sections of this Annual Report. 

Community & Country 

The Richard Pieris Group being one of the largest diversified 

companies in the Country carries out a wide range of diverse 

activities across all provinces in Sri Lanka contributing to the 

goodwill of the entire Country which has enabled us to have 

a long held reputation of being a responsible corporate body. 

Its initiatives reach out across the Island from small villages to 

urban centres. 

CSR Initiatives 

Social welfare 

The Plastic Sector of the Group carried out many projects 

which contributed to the social welfare in many ways, such 

as donating mattresses to flood victims in the North and East 

area in collaboration with Sri Lanka Rupavahini. Also more 

donations of mattresses were made to Dalada Maligawa and 

Sithulpahuwa Temple. 

The Company provided water tanks for drinking water for 

the pilgrims at the Kandy perahera / Kataragama season / 

Sinigama festival and all key seasons of selected places of 

religious activities and also to the disabled soldier homes at the 

Police Sevavanitha Unit. 

Maskeliya Tea Gardens donated a container of tea bags to 

Japan when the devastating Tsunami was hit in March 2011. 

The Estates carried out skill development programs for their 

harvesters in order to improve worker productivity and their 

personal development. 

Supporting healthcare 

A CSR project was carried out by Richard Pieris Distributors 

under the Privilege cards CSR gifting - “Sound of Silence” in 

collaboration with the Deaf School in Ratmalana to provide 

hearing aids for deaf which started in January 2011. For every 

point the customer earns we contribute one point to add up to 

value. 


33 



A Contribution was made to the Cancer Walk which was 

organized by the Sri Lanka Cancer Society by means of a 

sponsorship. 

Donations in terms of stationery, toys and gifts were made to 

the children’s ward at the Cancer Hospital, Maharagama. 

The Plantation sector continued to work towards the 

improvement of medical facilities on its estates. Many health 

camps, including eye camps with replacement of spectacles, 

health camps for diabetes and mobile health camps were 

conducted. 

Assisting education 

The Group supported children’s education by donating books, 

sport equipment and other educational aids to underprivileged 

youngsters. School Bags with a set of books/stationery were 

gifted to children who started their school carrier. 

Financial Assistance was given to all estate employees’ children 

who were qualified for University education as done in the 

previous years. 

Building infrastructure 

During the year under review, renovations were made in the 

Line Rooms and Drains, Re-roofing was under-taken in several 

estates and Road Development work were undertaken with the 

assistance of PHDT. 

An 18 passenger bus was purchased for the use of estate 

workers to enhance their logistical requirement. 

Suppliers 

Building lasting partnerships with our suppliers 

Our commitment for working in partnership with our suppliers 

ensures the best possible service to our customers. We are a 

loyal customer to our suppliers, as a good relationship with our 

suppliers is vital for our success. Arpico has a large number of 

suppliers from different parts of the world. Year after year, the 

Group strives to develop partnerships with Small and Mediumsized 

Enterprises (SMEs) in Sri Lanka and supports small 

producers in Sri Lanka by providing them with guidance in the 

use of appropriate technology for manufacture and channels to 

market which ultimately contributes to the economic welfare of 

the People and Country. 

The new supercenters are opened with the concept of “Go 

Green” by using energy conserving initiatives such as sky 

lighting and water treatment plants which have immensely 

contributed to a high energy saving by recycling the energy. 

For the first time in the Sri Lankan retail market Arpico 

introduced a degradable loyalty card, “Eco Privilege” as an 

initiative to protect the environment. Arpico supercenters also 

encourage environmentally friendly shopping by promoting the 

use of recyclable bags. 

The Group plays a key role in the Agricultural Sector and 

recognizes that this carries with it many responsibilities in 

respect of the environment. The Group obtains environmental 

certifications from global and local environmental authorities, 

wherever applicable. This includes certifications from the Forest 

Stewardship Council, the Central Environmental Authority 

and ISO 2000 certificate. The Group focuses on forestry 

conservation systems in all its estates and has formulated 

and implemented a long term forest management plan for the 

sustainable management of forest blocks and harvestable 

timber extents. 

The Group also encourages individual employees to inculcate 

environment-friendly practices in their work habits and their 

personal lives. This includes energy conservation and recycling 

of waste and by-products. Also colored outdoor bins were 

introduced to segregate garbage for recycling purposes. 

As a “Go Green” project in order to make a greener future a 

green gas unit was developed. This addresses the perennial 

problem of disposing garbage (organic waste) and also 

provides a clean pure organic fertilizer for every home 

Environment 

The Group has been committed for environment protection 

throughout the operations, particularly by reducing carbon 

footprint, saving energy, increasing transport efficiency, 

preventing waste and increasing recycling. 


Financial Review 

Overall Group Performances 

It was a historical year for the Richard Pieris Group which 

recorded the highest ever turnover and profits since its 

inception. The escalated rubber prices, aggressive expansion 

in the retail supermarket chain together with the enhanced 

demand for local manufacturing sector products contributed 

immensely for the Group to make this remarkable achievement. 

During the year under review, the Group Turnover grew 

significantly by 22% to Rs. 27,242 mn compared to Rs. 22,339 

mn in the last financial year. However, Cost of Sales increased 

only by 17% from Rs. 17,654 mn to Rs. 20,631 mn which 

enabled the Group to make an impressive growth of 41% in 

Gross Profit and 75% in Profit from Operations during the same 

period. Gross Profits and Profits from Operations stood at Rs. 

6,610 mn and 3,450 mn respectively. Group Finance Cost 

declined by 18% to Rs. 795 mn from Rs. 969 mn of the previous 

financial year. Due to the significant growth in Gross Profit and 

the declined Finance Cost, the Group’s Profit before Tax rose 

by 161% to Rs. 2,769 mn. A healthy level of Profits before Tax 

lead to an escalation of Group Tax Expenses by 87% which 

recorded at Rs. 617 mn. Discontinued Operations made a loss 

of Rs. 12 mn during the year as compared to a loss of Rs. 18 

mn in the previous year. The Group has completed the financial 

year with a Profit after Tax of Rs. 2,141 mn which is three times 

more than the profit achieved in the last financial year. Rs. 460 

mn of current year profits is attributable to Minority Interest 

while the remaining Rs. 1,681 mn is attributable to the Equity 

holders of the Parent Company. During the year, Minority 

Interest grew by 250% while Profits attributable to Equity 

holders of the Parent Company grew by 190%. 

Turnover Analysis 

Despite numerous challenges experienced as a result of 

macroeconomic forces and the high level of competitiveness 

from other conglomerates, the Group achieved a satisfactory 

growth of 22% in Turnover. During the period under review, 

Group Turnover increased from Rs. 22,339 mn to Rs. 27,242 

mn. 

Retail sector’s contribution of Rs. 10,926 mn which accounts 

for 40% of the Group Turnover managed to ensure its dominant 

position in the Group Turnover as in previous financial years. 

Retail Turnover grew by 21%, mainly due to aggressive 

expansion in super market outlets, including the Wattala Super 

Center which raised the overall standard for the supermarket 

outlets in the country. Growth in the Sri Lanka economy by 

8% which boosted the consumer confidence and disposable 

income also contributed to the Retail Sector performing strongly 

during the period. 

Rubber industry experienced the highest ever prices in this 

era which caused the Rubber Plantations companies to record 

strong Turnover. Further, prices of low grown tea and high 

grown tea remained at steady levels as in the previous year. 

Palm Oil prices also improved due to increased demand with 

escalating petroleum prices. However, Plantation sector crops, 

hampered by adverse weather conditions, prevailed throughout 

the country during the financial year. Consequently, Plantations 

Sector turnover grew only by 18% to Rs. 7,700 mn as compared 

to Rs. 6,519 mn in the previous period. Plantation sector 

turnover is 28% of the Group Turnover. 

Plastic Sector has recorded the highest growth rate in turnover 

by recording 33% growth. The sector turnover grew from Rs. 

2,858 mn to Rs. 3,809 mn which accounts for 14% in the Group 

turnover. Sales volumes of Polyurethene, Rigifoam and Water 

Tanks increased due to enhanced demand from the Northern 

and Eastern parts of the country which helped the Plastic 

sector to register a remarkable turnaround. Further, the sector 

made their entrance into the Maldivian market during the year 

under review, which also helped to enhance its volume. 

Volume growth of 6% in re-trading and 16% growth in trading 

resulted in an overall growth of 20% in Tyre Sector Turnover 

during the period. Tyre sector turnover grew from Rs. 2,101 

mn to Rs. 2,530 mn and contributed to Group Turnover by 9% 

which is the same as the last financial year. 

Despite the local currency being stronger against major foreign 

currencies and economic recovery in the western countries 

being slower, the Rubber sector recorded a growth of 25% 

in the period under review with a turnover of Rs. 2,215 mn. 

Upward price revisions due to escalated raw material prices 

coupled with marginal growth in volumes have helped the 

sector to maintain an 8% contribution to the Group turnover as 

in the previous period. 

Service sector turnover also grew by 23% mainly with 

commencement of operation in the Stock Broking arm being 

the latest addition to the Group business portfolio. 

Segmental Turnover Composition 

% 

45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

8 

8 

9 

9 

13 

14 

40 

40 

Rubber Tyre Plastic Retail Services Plantations 

2009/2010 2010/2011 

1 

1 

29 

28 


35 



Geographical Turnover Composition of Exports 

% 

100 

80 

60 

40 

20 

0 

45 

48 

42 

39 

13 

13 

09/10 10/11 

USA Europe Other 

Expenses Analysis 2010/2011 

Cost of Sales 76% 

Operational Expenses 12% 

Finance Cost 3% 

Tax 2% 

Expenses Analysis 2009/2010 

Cost of Sales 79% 

Operational Expenses 12% 

Finance Cost 4% 

Tax 1% 

Group’s Export turnover grew by 47% to US$ 22 mn compared 

to US$ 15 mn in the previous year. With the reposition of the 

Group’s export marketing strategy, Asia Pacific region has 

become the largest export market of the group which accounts 

for 48% of the total export turnover. European market accounts 

for 39% of the export turnover while USA market accounts for 

only 13%. 

Cost of Sales and Operating Expenses Analysis 

World commodity prices escalated during the year which 

resulted in a higher cost of raw material for all companies 

except for Plantation companies. Hence, the Group Cost of 

Sales increased by 17% from Rs. 17,654 mn to Rs. 20,631 

mn. Rubber, Tyre and Plastic sectors experienced very high 

raw material cost during the period. Cost of Sales accounted 

for 76% of turnover compared to 79% in the previous period. 

Group Administration expenses and Distribution cost increased 

by 12% and 29% respectively during the period under review. 

However, the total operating expenses, inclusive of Cost of 

Sales, decreased from 91% to 87% as a percentage of turnover 

due to continuation of strict overheads-controlling strategies 

implemented by the management in the previous years. 

Profit from Operations 

The Group has made an outstanding improvement in 

operational profits by recording 75% growth in a single period. 

Group Operational profit stood at Rs. 3,450 mn as compared to 

Rs. 1,970 mn in the previous year. Plantations, Retail, Service 

and Plastic sectors achieved an impressive positive growth rate 

while Tyre and Rubber sectors recorded negative growth rates. 

Plantation sector continued to be the biggest contributor to the 

Group’s operating profits, accounting for 51% of Group total 

operational profits. Sector profits increased from Rs. 823 mn to 

Rs. 2,032 mn with an impressive growth of 147% due to a steep 

increase in rubber prices, steady tea and palm oil prices. 

Enhanced volume due to expansion in supermarket outlets 

together with increased income from other sources enabled the 

Retail sector to record 61% growth in operational profits. Retail 

sector operational profits increased from Rs. 515 mn to Rs. 828 

mn., which accounts for 21% of the Group’s operating profits. 



Plastic sector recorded a growth of 43% in operational 

profits during the year, which accounts for 12% of the group 

operational profit. Plastic sector profits increased by Rs. 140 mn 

to Rs. 460 mn., mainly due to an improvement in productivity, 

and efficient controls in inventory levels. 

Segmental Profit Composition 

% 

60 

50 

51 

Despite the growth in volumes, Tyre sector’s contribution to 

the Group operational profits declined from 14% to 7%, giving 

rise to a negative growth of 12% during the year. Operational 

profits reduced from Rs. 300 mn to Rs. 264 mn., mainly due to 

escalating rubber prices. 

Rubber sector has suffered in many ways during the year. High 

rubber prices, lower demand from Western countries due to 

slower economic growth together with an appreciation of local 

currency has resulted in complete erosion of the profitability of 

the Rubber sector. The sector has made a negative of Rs. 25 

mn contribution to Group’s operational profit, compared to a 

profit of Rs. 65 mn in the previous period. 

40 

30 

20 

10 

0 

3 

(1) 

14 

7 

15 

11 

23 

21 

Rubber Tyre Plastic Retail Services Plantations 

2009/2010 2010/2011 

8 

11 

37 

Finance Cost 

Market interest rates continued their downward trend during 

the current financial year. Average Weighted Prime Lending 

Rate which is the most appropriate indicator for corporate 

borrowing rate has declined by 3.79% to 9.83% under the 

same period which resulted in a significant decline in Group 

average borrowing cost. Group debt further reduced by Rs. 913 

mn during the year. As a result, finance cost reduced by Rs. 

175 mn to Rs. 795 mn., and consequently the interest cover 

ratios, too, improved to 4 times compared to 2 times in the last 

financial year. 

Share of results from Associates 

RPC group owns 25% stake in Asian Alliance Insurance PLC 

and 19% of AEN Oil Palm Limited which make up the associate 

investments of the Group. Enhanced profitability of these two 

institutions resulted in a growth of 90% in share of associates 

profits which recorded at Rs. 113 mn during the current financial 

year. 

Profit/Loss on Discontinued Operations 

Discontinued operations of Arpico Homes Ltd, RPC Global 

Travels (Pvt) Ltd and Hameefa Kegalle (Pvt) Ltd showed a 

marginal decline in losses from Rs. 18 mn to Rs. 12 mn as 

compared to last year. 

Finance Cost vs. Interest Cover Ratio 

Rs. Mn. 

1,600 

1,200 

800 

400 

0 

2 880 

1,473 

1,436 

2 969 

795 4 

1 

1 

06/07 07/08 08/09 09/10 10/11 

Finance Cost (Rs. Mn.) Interest Cover Ratio 

Losses on Discontinued Operations 

Rs. Mn. 

250 

200 

150 

100 

166 

203 

108 

5 

4 

3 

2 

1 

0 

50 

18 

12 

0 

06/07 07/08 08/09 09/10 10/11 

37 



Minority Interest vs. Plantations Profitability 

Rs. Mn. 

2,400 

2,000 

1,600 

1,200 

800 

400 

0 

(400) 

06/07 07/08 08/09 09/10 10/11 

Plantations Operating Profit Minority Interest 

Working Capital Investment vs. Liquid Ratio 

Rs. Mn. % 

10,000 

1.25 

1.00 

7,500 

0.75 

5,000 

0.50 

2,500 

0.25 

0 

0 

06/07 07/08 08/09 09/10 10/11 

Current Assets 

Current Ratio 

Current Liabilities 

Quick Assets Ratio 

Net Operational Cash Flow Classifications 

Rs. Mn. 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

(500) 

(1,000) 

(1,500) 

06/07 07/08 08/09 09/10 10/11 

Cash Profit before Working Capital Change 

Working Capital Change 

Net Operating Cash Flow 

Minority Interest 

Minority Interest of the RPC Group mainly comprises of 

minority shareholdings of the Group’s Plantation Sector. As 

Plantation Sector operational profit increased from Rs. 823 mn 

to Rs. 2,032 mn during the year , Minority interest of the Group 

increased from Rs. 131 mn to Rs. 460 mn which was a growth 

of a 251%. 

Investments / Acquisitions and Disposals 

Strong profitability coupled with a healthy level of cash 

surpluses generated during the previous financial years 

encouraged the Group to expand its core businesses to exploit 

the new opportunities which have emerged as a result of the 

boosted macro economy. The Group has made an investment 

of Rs. 1,192 mn in property, plant, machinery and replanting 

during the year. During the year, Retail sector aggressively 

expanded its supermarket chain by investing approximately 

Rs. 500 mn on the newly established Wattala and Kadawatha 

Super Centers. Further, the Group has subscribed for the rights 

issue of Asian Alliance Insurance PLC by making an additional 

investment of Rs. 203 mn. This enabled the Group to maintain 

its associate status of its insurance arm. In addition, Plantation 

sector has also incurred Rs. 644mn on new replanting during 

the year. The Group made an investment of Rs. 100 mn in 

Richard Pieris Securities (Pvt) Limited and Richard Pieris 

Financial Services (Pvt) Limited to carry out the stock broking 

and margin trading operations. 

Group Financial Position and Liquidity 

Non-Current Assets 

Due to the capital expenditure incurred by the Group, the total 

noncurrent assets increased by 7%, from Rs. 10,804 mn to 

Rs.11,585 mn during the year under review. Property Plant 

& Equipment amounted to Rs. 10,001 mn as at 31st March 

2011. Investments in Associates increased by Rs. 275 mn., 

mainly due to the investment of Rs. 203 mn. in Asian Alliance 

Insurance PLC. During the year, real estate investments of the 

Group were valued and total market value stood at Rs. 9,718 

mn compared to Rs. 8,930 mn in the previous year, details of 

which are given in the Group Real Estate Portfolio Statement 

on page 108. 

Working Capital 

The Group’s Total Current Assets increased by Rs. 2,494 mn to 

Rs. 9,055 mn while Total Current Liabilities increased only by 

Rs. 1,514 mn to Rs. 8,869 mn. During the year, the Plastic and 

Tyre sectors continued to build extra stocks to benefit from price 

discounts, and, also, to avoid sudden hikes in world commodity 

prices that were pressurized by the supply side, mainly due to 

the uncertainties that prevailed in the Gulf countries. Hence, 

Group inventory grew from Rs. 2,464 mn to Rs. 3,342 mn. 

Enhanced turnover in all sectors resulted in the Trade and 

Other Receivables increasing from Rs. 2,550 mn to Rs. 2,909 

mn during the year. Cash at Bank and Cash in Hand also 



strengthened by Rs. 1,241 mn during the year due to healthy 

cash profits generated by the Group. Trade Creditors and Other 

Payables balances in total increased from Rs. 2,633 mn to Rs. 

3,653 mn. 

The Working Capital investment of the Group has significantly 

improved during the year, mainly due to an improvement in the 

Cash and the Trade Receivable balances of the Group. The 

Group recorded a positive net Working Capital investment of 

Rs. 186 mn compared to a negative Working Capital investment 

of Rs. 794 mn recorded in the previous year. Hence, the 

Current Ratio improved from 0.89 to 1.02 while the Quick 

Assets Ratio improved from 0.56 to 0.64. 

Cash Flows 

The Group has made a cash profit of Rs. 4,555 mn with an 

impressive growth of 37% compared to the previous financial 

year. However, an increase in Inventory and Trade Debtor 

balances resulted in a negative Working Capital change of Rs. 

371 mn during the year compared to a positive change of Rs. 

124 mn in the previous period. Group Finance Cost declined by 

Rs. 174 mn to Rs. 795 mn while both Group tax payments and 

the gratuity payment increased by Rs. 233 mn and Rs. 19 mn, 

respectively. Plantations, Services and Plastic sectors remained 

the best cash generating units, and helped the Group to record a 

net operating cash flow of Rs. 2,819 mn with the growth of 31%. 

Investment in new super centers, continuous investment in 

replanting agricultural crops, and subscription for the rights 

shares of Asian Alliance Insurance PLC resulted in a negative 

cash flow of Rs. 1,389 mn from investing activities compared to 

Rs. 542 mn in the previous financial year. 

The repayment of loans amounted to Rs. 1,248 mn, exceeding 

the proceeds of new loans amounting to Rs. 1,134 mn which 

resulted in a net loan repayment of Rs. 114 mn. In addition, 

the Group has distributed Rs. 572 mn as Dividends to its 

shareholders during the year, and recorded net cash outflow of 

Rs. 645 mn from financing activities which has increased by Rs. 

396 mn compared to previous financial year. 

Despite the negative cash flow from investing and financing 

activities, a strong cash flow from operating activities has 

created a positive net cash flow of Rs. 784 mn to the Group, 

compared to Rs. 1,365 mn in the previous period. 

Capital Structure 

Total Assets of the Group grew by 19% during the year to 

Rs. 20,639 mn while Total Liabilities increased by 14% to Rs. 

13,776 mn. Total Shareholders Fund was enhanced by Rs. 

1,210 mn to Rs. 5,003 mn by Retained Profits after distributing 

Rs. 516 mn as Dividends to its shareholders of parent company. 

Total Assets were funded by Shareholders’ Funds (24%), 

Minority Interest (9%), Long Term Liabilities (24%) and Short 

Term Liabilities (43%). During the year the significance of 

the Shareholders’ fund increased from 22% to 24% while the 

relative prominence of long term liabilities dropped from 27% 

to 24%. Minority Interest and short term liabilities were at the 

same level of importance as in the previous year. 

Equity 

During the year, Richard Pieris and Company PLC made 

a share split of 1 to 15 and this has increased the number 

of Ordinary Shares from 128,251,023 to 1,937,241,535. 

Subsequent to exercising of the Employee Shares Option 

Scheme by the employees of the Parent company, the Stated 

Capital of the Group increased by Rs. 49 mn to Rs. 1,628 mn. 

Following a distribution of Dividends amounting to Rs. 516 mn, 

Total Shareholders Fund increased by Rs. 1,210 mn to Rs. 

5,003 mn. In view of the significant increase in profitability of 

Plantation Sector, Minority Interest also increased by 24% from 

Rs. 1,503 mn to Rs. 1,861 mn during the period under review. 

Debt 

Group Debt continued to further decrease by Rs. 912 mn 

during the year and stood at Rs. 4,318 mn at the end of the 

year. 

As a result of strong profitability, Plantation sector debt reduced 

significantly by Rs. 1,221 mn, and Plastic Sector also showed 

an improvement of Rs. 274 mn. Aggressive expansion in super 

markets resulted in the retail sector debt increasing by Rs. 

155 mn during the period under review. In order to facilitate 

its future capital expenditure, Retail sector raised over Rs. 

1,014 mn through the first ever credit card securitization loan 

transaction in the country. Due to the escalated raw material 

prices coupled with the increase in working capital investments, 

both Rubber and Tyre Sector debt increased by Rs. 239 mn 

and Rs. 90 mn, respectively, during the period under review. 

Investment in Asian Alliance Insurance PLC, Stock Broking and 

Margin Trading business resulted in an increase of Rs. 99 mn in 

the Service sector debt. 

With the addition of Credit Card Securitization loan, the Group’s 

long term debt increased from 37% to 47% while short term 

debt decreased from 63% to 53% as percentage of total 

Group debt. 53% of the total debt is secured and 47% is on 

clean basis. 7% of Total Group Debts is in foreign currency 

compared to 10% in the previous financial year. Export turnover 

represents only 9% of the total Group turnover for the period 

under review. 

39 



Capital Structure 

% 

100 

80 

60 

40 

20 

0 

21 7 44 28 

20 8 45 27 

06/07 07/08 08/09 09/10 10/11 

Total Shareholders Fund 


Total Debt Vs Gearing Ratio 

Short Term Funds 

Long Term Funds 

Rs. Mn. % 

10,000 

100 

8,000 

6,000 

4,000 

2,000 

0 

8,532 

63% 

7,860 

61% 

19 8 46 27 

6,834 

60% 

22 9 42 27 

24 9 43 24 

06/07 07/08 08/09 09/10 10/11 

Total Borrowings (Rs. Mn.) 

5,231 

50% 

4,318 

39% 

Gearing Ratio 

80 

60 

40 

20 

0 

The Gearing Ratio has improved from 50% to 39% as at the 

year end. This could be attributed to the generation of healthy 

cash profits by the business units. The repayment profile and 

security offered on the long term debt is listed out in Note 13 in 

financial accounts on page 88. Information relating to the short 

term borrowings is given in Note 19 to the financial statements 

on page 92. 

Shareholders’ Return / Return on Equity (ROE) / Earnings 

per Share (EPS) 

Profit attributable to shareholders of the parent company 

improved significantly by 190% during the year, increasing from 

Rs. 580 mn to Rs. 1,681 mn. Earnings per Share improved from 

30 cents per share to 87 cents per share with an impressive 

growth of 190% during the year. Earnings yield recorded at 

9%, and Dividend Yield at 3% on average share price which 

prevailed during the period under review. 

Market Capitalization 

Colombo Stock Exchange had some mixed results during 

the period. However, All Share Price Index grew by 94% and 

Milanka Price Index grew by 61% during the year and both 

indexes closed at 7226.10 and 6874.70, respectively. 

Strong performance and enhanced market depth in the share 

resulted from the 1:15 share split. Richard Pieris & Company 

PLC has performed well during the period. The Company 

share price closed at Rs. 13.60 compared to Rs. 3.67 as at 

the end of the previous financial year. Market capitalization of 

the Company has been boosted by 273% to Rs. 26,346 mn 

as compared to Rs. 7,054 mn in the previous financial year. 

The total return which accounts for the price appreciation 

and dividend received stood at 304% for the current period, 

compared to 120% return on the Company share in the last 

year. 

The highest traded price was Rs. 16 while the lowest was Rs. 

3.65 and 498 mn shares were traded at the Colombo Bourse 

during the year. The share turnover of the Company was Rs. 

12,317 mn, compared to Rs. 1,904 mn in previous period. 

Distribution 

During the year Company declared an interim dividend of 

Rs. 0.20 per share. The directors also recommended a final 

dividend of Rs. 0.10 per share. 

Financial Risks 

Financial risks associated with the operations of the Group and 

its risk management processes are discussed in detail in the 

risk management report on page 41. 


Risk Management 

Managing business and financial risks is of fundamental importance in maintaining sustainable growth and making steady 

progress towards the achievement of corporate goals and objectives. “Risk” being a factor which is not possible to “eliminate” 

completely, the Group ensures the “minimization” of risks by adopting various strategies for continuous reviewing of the Group 

operations. Various strategies are developed and implemented to achieve this goal. 

Risk Exposure Group Objectives Risk Minimization Strategies 

Financial Risk Management 

1. Liquidity and Cash 

Management 

• To ensure faster response to market 

opportunities by ensuring instant 

funding ability. 

• To maintain a ‘sufficient’ liquidity 

position at all times 

2. Interest Rate Risk • To minimize adverse effects of 

interest rate volatility. 

• To ensure cost of borrowing is at 

minimum level. 

3. Currency Risk • To minimize risk associated with the 

fluctuation in foreign currency rates 

in relation to export proceeds, import 

payments and foreign currency debt 

transactions. 

Business Risk Management 

1. Credit Risk • To minimize risks associated with 

debtor defaults. 

• Funding of long term assets through Equity and Long 

Term Loans. 

• Availability of short term borrowing facilities to the 

Group at all times. 

• Funding of inventory by short term creditors. 

• The Group owns land and buildings with market 

values significantly in excess of its book values 

that can be offered as collateral for future funding 

requirements. 

• Sourcing of funding requirements through many 

financial institutions. 

• Structuring the loan portfolio to combine foreign 

currency and local currency denominated borrowings. 

Continuous monitoring is being done to match the mix 

of foreign and local denominated borrowings to the 

mix of export and local turnover of the group. 

• Using fixed and variable rate borrowings to strike a 

balance. 

• Centralized Treasury that coordinates Group funding 

requirements thus ensuring more effective borrowing 

terms. 

• Practicing effective hedging techniques such as 

interest rate swaps. 

• Export proceeds exceeding the import payments 

and foreign currency debt payments act as a natural 

hedge. 

• Ensuring effective Treasury operations through 

various hedging techniques such as forward 

bookings, forward sales, swap and options contracts 

etc. 

• Obtaining insurance cover for export debtors. 

• Developing and implementing Credit Policies 

• Measuring the credit risk and maintaining risk rating 

system. 

• Obtaining bank guarantees, deposits and collateral for 

all major local customers. 

• Following stringent assessment procedures to 

ensure credit worthiness of the customers prior to the 

granting of credit. 

• Demarcating the local areas and appointing new 

distributors thus increasing the number of customers 

with the objective of reducing credit exposure due to 

the reliance of a few customers. 


41 




2. Asset Risk • To minimize risk from fire, theft 

and machinery and equipment 

breakdown. 

3. Internal Controls • To maintain a sound system 

of internal control to safeguard 

shareholders’ wealth and Group 

assets. 

4. Reputation Risk • To prevent the causes that damage 

our reputation. 

• To minimize the impact if, despite 

our best endeavors, a reputation 

crisis should occur. 

5. Human Capital and 

Labour Risk 

• To ensure a smooth flow of 

operations without any undue 

disruptions. 

• To project our self as a human 

employer, successful in motivating, 

developing, retaining and attracting 

the best of human capital. 

6. Technological Risk • To keep pace with the current 

technological developments and 

safeguard against obsolescence 

• Obtaining comprehensive insurance covers for all 

tangible assets. 

• Adoption of stringent procedures with regards to the 

moving of assets from one location to another. 

• Carrying out mandatory preventive maintenance 

programs. 

• Carrying out frequent employee training programs in 

areas such as fire prevention. 

• Carrying out of system audits and other control 

mechanisms such as inventory and cash counts 

throughout the Group by our central Internal Audit 

Department. 

• Having in place a budgetary process and a budgetary 

control mechanism on a monthly basis to ensure that 

the Group’s performance is in line with its targets. 

• Adopting stringent quality assurance policies with 

regard to goods bought out from third parties as well 

as the inputs, processes and outputs of own brand 

and in-house manufactured products. 

• Ensuring effective communication with various 

stakeholders including employees, bankers, media, 

regulators, customers, suppliers, shareholders and 

the community at large. 

• Providing the front line managers and the sales 

staff with adequate training in order to improve 

service standards as well as to educate staff on the 

importance of customer service. 

• Maintaining healthy relationships with trade unions 

through regular dialogue. 

• Entering into collective agreements with trade unions. 

• Improving employee benefits by way of financial 

incentives and welfare activities. 

• Improving the Human Resource function of the Group 

with regards to employee recruitment, performance 

appraisals and in-house as well as external training 

programs. 

• Continuous investment in new machines. 

• Investing in Research and Development activities 

throughout the year. 

• Investing in hardware and developing software inhouse. 

• Continuous improvement on safeguarding IT and 

related assets. 




7. Procurement Risk • To minimize risk associated with 

price and availability. 

8. Inventory • To reduce stock obsolescence and 

manage stock holding costs. 

• Reducing the risk associated with 

theft and shrinkage 

9. Risk of Competition • To maximize our market share and 

maintain market leadership in the 

respective industries. 

10. Intellectual Capital 

Risk 

11. Capital Investments 

Risk 

• To protect ourselves against possible 

violations, fraudulent usage and 

infringements on the Group’s 

copyrights. 

• To minimize risk of not meeting profit 

expectations. 

• Developing new products to improve quality and 

manage costs. 

• Establishing relationships with many global and local 

suppliers for raw materials and commodities in order 

to reduce over-dependency on a single supplier/ 

brand. 

• Ensuring effective category management to reduce 

the risk of non-availability of goods at our retail 

outlets. 

• Adoption of backward integration strategies. 

• Centralized purchasing division which has enabled us 

to create a reliable network of global suppliers. 

• Entering into forward contracts for raw material 

purchases. 

• Adopting a monthly declaration policy. 

• Identifying slow-moving stocks and effectively laying 

out a channel for these to be sold off. 

• Adopting security systems at the Retail outlets such 

as security tags with alarm systems, surveillance 

cameras and deployment of security to manage theft. 

• Ensuring high standards of quality in the eyes of the 

customer. 

• Increasing productivity and efficiency in order 

to ensure our prices remain competitive despite 

increasing wage, energy and transportation costs. 

• Carrying out Research and Development activities to 

identify needs. 

• Further strengthening our Arpico brand through 

aggressive advertising campaigns and target 

marketing. 

• Introducing pioneering products. 

• The introduction of a CRM program in our retail chain. 

• The provision of various value added services at our 

key retailing outlets. 

• Registering our brands and trade marks. 

• Successfully obtaining patents for manufactured radial 

tyres. 

• Furthering our Arpico brand image through 

promotions and advertising. 

• Adopting a stringent approval procedure for Capital 

expenditure based on the level of investment and the 

expected pay back. 

• Carrying out extensive feasibility studies for large 

scale investments. External expertise is obtained 

wherever required. 

43 




12. Information Systems 

Risk 

13. Environmental, 

Political and 

Regulatory Risk 

• To minimize risk associated with 

Data Security, Hardware and 

Communication and Software 

• To minimize the negative impact 

from the changes in the external 

environment which are beyond our 

control. 

• Maintaining of spare servers. 

• Mirroring of hard disks with critical data. 

• Data back-ups stored in off-site locations. 

• Vendor agreements for support service and 

maintenance. 

• Regular upgrading of Virus Scanners, Firewalls etc. 

• Compliance with statutory requirements for 

environmental preservations. 

• Carrying out Application Control Audits. 

• Compliance with statutory requirements for all tax and 

other payments. 


Our People 

Richard Pieris Group embraces the goodwill by carrying the 

pride in its own strength of 28,403 employees together with 

their attributes, expertise, innovative thoughts, challenging 

perspectives and collective experience. The Group Human 

Resources Division takes the responsibility in appreciating 

and valuing its employees by providing a robust structure in 

attracting, retaining, training and developing its talents at the 

most in further delighting and motivating the staff. 

On Boarding 

The structured On-Boarding Process within the Group which 

is centralised is carried out in a manner that each executive 

joining the organisation gathers an induction with the exposure 

to all sectors within the Group. The Corporate HR Department 

plans and designs the induction programme for each executive 

as per the importance of the role of the individual towards 

the respective sector and the Group. This process enables 

and ensures that a new arrival to the big family will be made 

comfortable by way of eliminating the thoughts of unfamiliarity 

within the Group to perform his/her tasks at his/her highest 

potential. The employee would feel welcomed, valued and 

connected to the members of the Group through this structured 

induction programme. 

Training & Development 

The Group believes in training and developing their staff is the 

key attribute in retaining of their talent. It possesses a planned, 

methodical structure in training & developing its staff across 

the sectors. Predominantly it focuses on delivering the training 

sector wise, based on the essential needs of its employees 

at different levels. The training would focus on developing 

technical skills, soft skills, personal development and leadership 

qualities of staff. We do carry out common programmes 

focusing fundamental attributes across sectors with a mixed 

representation of companies to enlighten and encourage the 

interaction among staff. 

Training provides a base to facilitate the internal promotions 

with a structured succession plan and it is considered as 

the cornerstone of our human resources policy. The Group 

advocates a number of widely recognized development 

programs both locally and in overseas for its dedicated long 

standing employees who have demonstrated leadership 

commitment and executive participation. Group Human 

Resources Division strives to build an exclusive work 

environment in which all employees regardless of their 

nationality, race, religion, gender, age can achieve their 

professional and personal commitments towards the betterment 

of the Group. 

Statement of Value Added 

2010/2011 % 2009/2010 % 

Rs .000 Rs .000 

Turnover (Gross) 27,541,404 22,564,356 

Cost of material & services purchased (18,149,161) (15,367,346) 

9,392,243 7,197,010 

Other Income 497,275 360,159 

9,889,518 7,557,169 

Distribution of value added 

To employees 

- Remuneration 4,576,864 46% 4,420,596 58% 

To government 

- Duties & taxes 1,769,112 18% 847,506 11% 

To providers of capital 

- Interest on loan capital 794,617 8% 969,147 13% 

- Minority interest 459,898 131,490 

- Dividend to shareholders 

Retained in the business 

- Depreciation 608,343 6% 608,226 8% 

- Profit/(loss) retained 1,680,684 17% 580,204 8% 

9,889,518 7,557,169 

Our People 

45 


Our People 

Another key factor in the training aspect is the RPC Training 

School which primarily focuses on the training of the retail 

sector staff. It continuously carries out skills and leadership 

training to front liners and the operational staff of the business. 

Performance Based Rewards 

Richard Pieris believes in recognising, appreciating and valuing 

employees for their sincere contribution and this is made 

possible with the transparent, comprehensive Performance 

Management System which is in existence in the Group for 

all executive staff together with detailed customized score 

cards carried out for non executive staff. The objective of the 

evaluations will be carried out biannually and the outcome 

is used as a base for employee bonus payouts and the 

increments. 

Further to the above our team enjoys facilities such as 

subsidized lunch, discounts on Super Centre purchases, 

holiday bungalow facilities, enrolment in a 24 hour medical 

service, in-house medical centre, reimbursement of medical 

expenses, surgical and hospitalization schemes, vehicle loans 

at concessionary rates etc. for being members of the big family. 

The PMS is carried out with a top down approach across 

the group and we truly believe that it increases performance, 

productivity, quality, innovations, decision making process 

which in return enables Richard Pieris Group to succeed in its 

endeavors on a day to day basis. We as a Group continuously 

thrive towards building and maintaining a high-performance 

culture in all aspects whilst encouraging a work life balance 

to employees through its integrated rewards and recognition 

scheme applied for different sectors to appreciate the 

contribution of the employees at different levels. The Process 

begins with a predetermined set of Goals and objectives 

between the leader and the team member (Appraiser and the 

Appraisee) beginning of each financial year with subsequent 

evaluations agreed at the beginning of the year. 

Employees Recreational Activities 

We believe that all in the ARPICO family should posses and 

advocate a work life balance within the Group. This induces 

us at Group HR to plan, organize and carry out recreational 

activities in every possible way not disturbing the on going 

operations but facilitating an increase in the employees 

satisfaction and delighting them with opportunities and benefits 

whilst extending the same to their immediate families too. 

The corporate Human Resources Division of the Group takes 

initiatives in organizing monthly movie nights, employee’s trade 

exhibitions, employees eye clinics, sports festivals, providing 

club memberships, organising staff health camps etc as 

ongoing projects to sustain the staff momentum of belonging to 

a balanced culture. 


Group Structure 

1. RUBBER SECTOR 

RICHARD PIERIS EXPORTS PLC 

Business Activity 

Manufacture and Export of rubber mats and sealing 

rings 

Dr. Sena Yaddehige Chairman/CEO 

Shaminda Yaddehige Director 

P D Samarasinghe Resigned w.e.f. 15.02.2011 

J H P Ratnayeke Director 

S S G Liyanage Director 

Renton De Alwis Director 

Viville P Perera Director 

W R Abeysirigunawardena Director appointed w.e.f. 01.03.2011 

Stated Capital 

Rs. 220,262,000/00 Represented by 11,163,745 shares 

Group Holding 80.26% 

ARPITALIAN COMPACT SOLES (PRIVATE) LIMITED 


Manufacture and export of resin rubber shoe soling 

sheets 

Dr Sena Yaddehige Chairman 


Fabio Piccolo 

Director 

Lino Piccolo 

Director 



Rs. 415,983,350/00 Represented by 35,193,835 

ordinary shares 6,404,500 preferential shares 


RICHARD PIERIS NATURAL FOAMS LIMITED 

Business Activity Manufacture and export of foam rubber products 

Dr. Sena Yaddehige Chairman 




S S Poholiyadde Director 




ARPICO NATURAL LATEXFOAMS (PRIVATE) LIMITED 

Business Activity Manufacture and export of foam rubber products 







RICHARD PIERIS RUBBER PRODUCTS LIMITED 

Business Activity Manufacture of rubber products 



W Abeysirigunawardene Director 





Group Holding 100% 

MICRO MINERALS (PRIVATE) LIMITED 

Business Activity Manufacture of rubber fillers 


W Abeysirigunawardene 

Chairman 

Director 


B L P Jayawardana 


Director 


Rs. 9,126,000/00 Represented by 912,600 shares 

PLAYCRAFT LANKA (PRIVATE) LIMITED 


Cessation of business w. e. f. 31/08/2000 – Under 

liquidation 






2. TYRE SECTOR 

RICHARD PIERIS TYRE COMPANY LIMITED 

Business Activity Tyre retreading, Re-manufacturing & trading 



P J Janadheera Resigned w.e.f. 15.03.2011 


Wasantha 

Abeysirigunawardena 

Director appointed w.e.f. 17.03.2011 




ARPIDAG INTERNATIONAL (PRIVATE) LIMITED 

Business Activity Manufacture of precured tyre retreading material 


M A Tirona 

Director 






RICHARD PIERIS RUBBER COMPOUNDS LIMITED 

Business Activity Mixing rubber compounds 








3. PLASTICS SECTOR 

ARPICO FLEXIFOAM (PRIVATE) LIMITED 

Business Activity Manufacture of polyurethane foam products 



S S G Liyanage Managing Director 

E A Senanayake Director 


L Wijeyesinghe Director 

Dr. K Weerapperuma Director 

Prof. U Liyanage Director 





47 



PLASTISHELLS LIMITED 

Business Activity Manufacture of rotational moulded products 


J H P Ratnayeke 

S S G Liyanage 

E A Senanayake 

Director 

Director 

Managing Director 

Director 


Dr. K Weerapperuma 

Prof. U Liyanage 


Director 

Director 



ARPICO PLASTICS LIMITED 

Business Activity Manufacture of plastic products 



E A Senanayake 

Chairman 

Managing Director 

Director 



P A S Kularatne 




Director 

Director 

Director 

Director 



ARPITECH (PRIVATE) LIMITED 

Business Activity Manufacture of PVC pipes & fittings 



Chairman 

Director 





Director 

Director 

Director 

E S Senanayake Director appointed w.e.f. 10.01.2011 

L C Wijeyesinghe Director appointed w.e.f. 10.01.2011 




4.RETAIL SECTOR 

RICHARD PIERIS DISTRIBUTORS LIMITED 

Business Activity Managing & operating a chain of retail network 


Chairman 




Dr. Harsha Cabral 

Director 

Director 

Director 

AndrewJ. Dalby Director appointed w.e.f. 01.03.2011 

P D A S Kularatne Director appointed w.e.f. 01.03.2011 


Rs. 1,096,760,960/00 Represented by 106,676,096 

shares 


ARPICO INTERIORS (PRIVATE) LIMITED 

Business Activity Interior decorating 


F N Vithanage 

Director 






ARPICO FURNITURE LIMITED 

Business Activity Cessation of business w.e.f 31.03.2004 


Chairman 





ARPIMALLS DEVELOPMENT COMPANY (PRIVATE) 

LIMITED 

Business Activity Operates retailing centres 




Company RPD RPC 

No. of shares Ord. 16,000,001 5,000,001 

Pref. 22,000,000 



shares 


5. PLANTATION SECTOR 

RICHARD PIERIS PLANTATIONS (PVT.) LTD 

Business Activity Managing agents of plantations 



Viville P. Perera Director appointed w.e.f. 15.03.2011 



Rs. 70/00 represented by 07 shares 


RPC MANAGEMENT SERVICES (PRIVATE) LIMITED 


Investment & management of the plantation 

companies 

Dr. Sena Yaddehige Director 

J H P Ratnayeke Deputy Chairman 


J M A Ratnayeke Director 

R L Kumararatne Vacated the office w.e.f. 25.02.2011 

Prof. K Goonesekera Director 


Rs. 75,000,000 Represented by 7,500,000 shares 

Group Holding 100 % 

MASKELIYA PLANTATIONS PLC 

Business Activity Tea Plantations 





S P Jayakoddy Director 

Dr. S A B Ekanayake Director 

Dr. H S D Soysa Director 






KEGALLE PLANTATIONS PLC 

Business Activity Rubber, Tea and Coconut Plantations 



Chairman 

Deputy Chairman 


S. S Poholiyadde Director 


Dr. Nugawela 

Director 

L N de S Wijeyeratne Resigned w.e.f. 01.07.2010 

Dr. S S G Jayawardena Director appointed w.e.f. 16.08.2010 



EXOTIC HORTICULTURE (PVT.) LTD 

Business Activity Cultivation of fruits 



S S Poholiyadde 


Chairman 

Director 

Director 





HAMEFA KEGALLE (PRIVATE) LTD 

Business Activity Manufacture & Export of furniture 


Chairman 


J H P Ratnayke 


Director 



NAMUNUKULA PLANTATIONS PLC 

Business Activity Rubber, Tea, Cinnamon & Coconut Plantations 



Chairman 

Director 



V K J Thalpawila Vacated the office w.e.f. 10.02.2011 

A Dias Vacated the office w.e.f. 28.09.2010 

N C Pieris 

Director 

S S Poholiyadde Director appointed w.e.f. 03.01.2011 

Mrs. L D Senanayake Director appointed w.e.f. 10.02.2011 




RPC PLANTATION MANAGEMENT SERVICES (PVT) LTD 

Business Activity Investment & management of plantations 



Chairman 

Director 



J M A Ratnayeke 


Director 


Rs.241,062,500/00 Represented by 24,106,250 shares 

MASKELIYA TEA GARDENS (CEYLON) LIMITED 

Business Activity Trading &, marketing of value added tea 


Chairman 




Director 

Lilanthi C. Herath Director appointed w.e.f. 24.02 .2011 



Rs. 15,000,070 Represented by 1,500,007 shares 

6. SERVICES 

RICHARD PIERIS GROUP SERVICES (PRIVATE) LIMITED 

Business Activity Provides Company Secretarial Services 



Mrs. R J Siriweera 


Chairman 

Director 

Director 


Rs. 20/00 Represented by 02 shares 

ARPICO INDUSTRIAL DEVELOPMENT COMPANY 

(PRIVATE) LIMITED 

Business Activity Operates industrial estates 



Andrew J. Dalby Director appointed w.e.f. 15.03.2011 



shares 


RPC REAL ESTATE DEVELOPMENT COMPANY (PRIVATE) 

LIMITED 


Property & Real Estate Development Projects 




Stated Capital – Rs.667,000,020/00 Rpresented by 66,700,002 shares 


RPC RETAIL DEVELOPMENTS (PRIVATE) LIMITED 

Business Activity Construction, Property and Real Estate Development 



Viville Perera Director appointed w.e.f. 15.03.2011 




shares 


RPC LOGISTICS LIMITED 

Business Activity Freight forwarding and allied services 





Rs 20, 000,070/00 Represented by 2,000,007 shares 


49 



ASIAN ALLIANCE INSURANCE COMPANY PLC 

Business Activity Insurance 


H L L M Nanayakkara 

R G Jasinghe 

R J Wickremasinghe 

Chairman 

Deputy Chairman 

Director 

Director 

Prof. Lakshman R. 

Watawala 

Director 

C D Silva 

Director 

S.A. Abeyesinghe Director 

V. Silva JR Director 

D. Muthukumarana Director 

Ms. D.P. Pieris 

Alternate Director to H.L.L.M. Nanayakkara 


Rs. 1,062,500,000/00 Represented by 37, 500,000 

shares 


RPGS are not company secretaries to this company 

ARPICO EXOTICA ASIANA (PRIVATE) LIMITED 

Business Activity Leisure 







RPE GLOBAL TRADING (PRIVATE) LIMITED 

Business Activity Export Trading 






RPC CONSTRUCTION (PRIVATE) LIMITED 

Business Activity Business of construction nationally and internationally 





Rs.20, 000,070/00 represented by 2,000,007 shares 

Group Holding - 100% 

ARPICO HOMES LIMITED 

Business Activity Property & Real Estate Development 







R P C GLOBAL TRAVELS (PRIVATE) LIMITED 

Business of national and international airline travel 

Business Activity and trade 

Cessation of Business w e f 31.03.2009 




M M Udeshi 

Director 


Rs.6,000,020/00 Represented by 600,002 shares 


R P C POLYMERS (PRIVATE) LIMITED 


Manufacturers, exporters and importers of all plastic 

products 





Dr. K Weerapperuma Director 

Prof. U Liyanage Director 


Rs. 187,000,020/00 represented by 18,700,002 shares 


MARKRAY SYSTEMS (PRIVATE) LIMITED 




S Kalugala 

Director 




FERHAM ORGANICS (PRIVATE) LIMITED 

Business Activity Engage in agri-business 


Wasantha 

Abeysirigunawardena 

Director appointed w.e.f. 28.03.2011 

S S Poholiyadde Director appointed w.e.f. 28.03.2011 




RPC SOUTHERN INDUSTRIAL PARK (PRIVATE) LIMITED 

Business Activity Development of township and industrial estates 






RICHARD PIERIS SECURITIES (PRIVATE) LIMITED 

Business Activity Carrying on the business of a stock-broker 


Prof. Lakshman R. 

Watawala 

Director 

Andrew J. Dalby Director 


H J C Perera Director appointed w.e.f. 23.02.2011 




RICHARD PIERIS FINANCIAL SERVICES (PRIVATE) 

LIMITED 

Business Activity Acting as margin providers 


Andrew J. Dlaby Director appointed w.e.f. 01.03.2011 


Viville P. Perera Director appointed w.e.f. 01.03.2011 

Stated Capital Rs. 35,000,000/00 

Represented by 3,500,000 shares 


Richard Pieris and Company PLC | Annual Report 2010/2011 

50

52 Annual Report of the Board of Directors 

56 Corporate Governance 

58 Report of the Remuneration Committee 

59 Report of the Audit Committee 

60 Statement of Directors’ Responsibility 

61 Auditor’s Report 

62 Balance Sheet 

63 Income Statement 

64 Cash Flow Statement 

66 Statement of Changes in Equity 

67 Notes to the Financial Statements 

Financial Information 

51 


Annual Report of the Board of Directors 

The Directors of Richard Pieris and Company PLC are pleased 

to present to their members the Annual Report together with 

the audited financial statements of its Group and the Company, 

for the year ended 31 March 2011. 

The Directors approved the financial statements on 27th May 


Principal Activities & Operational Review 

Richard Pieris and Company PLC is the holding company 

that owns, directly and indirectly, investments in a number of 

companies constituting the Richard Pieris Group. The principal 

activities of the Group are described under the Group Structure 

on pages 47 - 50 of the report. 

A review of the Group’s business and its performance 

during the year, with comments on financial results and 

future developments, is contained in the Chairman and 

CEO’s Review, Sector Reviews and the Financial Review of 

this Annual Report. The measures taken by the Company 

to manage its risks are detailed in the report titled Risk 

Management on pages 41 - 44 of this report. 

Future Developments 

The Group intends to continue to pursue a strategy of focusing 

on its core business activities. In order to achieve this, the 

Group will concentrate on enhancing the performance of it’s 

retail, plantation, tyre, rubber and plastics business sectors. 

Further information on future developments is provided in the 

Chairman and CEO’s Review and Sector Review of this report. 

Group Revenue 

The turnover of the Group was Rs. 27.2 bn. A detailed analysis 

of the Group’s turnover identifying the contributions from 

different sectors is given in Note 21 to the Financial Statements. 

The Group’s exports from Sri Lanka were Rs. 2.4 bn. Trade 

between Group companies is conducted at fair market prices. 

Results & Dividends 

Details relating to the Group profits are given in the table on 

Page 53. The Group reported a Profit after tax amounting to Rs. 

2.1 bn. 

The Directors recommend a cash dividend amounting to Rs. 

194 mn to all shareholders at the rate of Rs. 0.10 per ordinary 

share and subject to approval of the shareholders payable on 

or before 8th July 2011. The dividends represent a redistribution 

of dividends received by the company and therefore will not be 

subject to the 10% withholding tax otherwise applicable. 

Group Investments 

The Group did not incur any expenditure on investments other 

than investments in subsidiary companies during the year. 

Details of this are given in Note 5 to Financial Statements. 

Property, Plant & Equipment 

Capital expenditure on property, plant, equipment and workin-progress 

incurred during the year under review amounted 

to Rs. 1.2 bn. Information relating to this is given in Note 3 

to the Financial Statements. Land is included as described 

in Accounting Policies in the Financial Statements. Capital 

expenditure approved and contracted for after the year-end 

is given in Note 32 to the Financial Statements. The value of 

property stated in the Financial Statements is not in excess of 

its current market values. 

Freehold Property 

A description of the property owned by the Group is shown 

under the Group Real Estate portfolio on page 108. 


The stated capital of the Company as at 31 March 2011 was 

Rs. 1.62 bn. The details of the stated capital is given in Note 9 

to the Financial Statements. 

Reserves 

Total Group Reserves as at 31st March, 2011 amount to Rs. 3.4 

bn. (Rs. 2.2 bn as at 31 March 2010). The details of which are 

given in Notes 10, 11 and 12 to the Financial Statements. 

Corporate Donations 

Donations made by the Company and Group to charitable 

organisations amounted to Rs. 0.22 mn and Rs. 4.1 mn 

respectively. 


Taxation 

The general corporate income tax rate in effect during the year 

was 35%. The rate of tax on qualified export profits was 15%. 

Agricultural profits were exempted from Income Tax. Companies 

that enjoy tax holiday status and other concessionary rates are 

listed in Note 27 to the Financial Statements. 

In computing the Group’s tax liability, the maximum relief 

available to investors under the provisions of the Inland 

Revenue Act has been claimed. 

It is the Group’s policy to provide for deferred taxation on all 

known temporary differences, on the liability method. 

Directors 

The names of Directors who served during the year are given 

on pages 5, 12 and 13 of this report, under the caption of 

‘Board of Directors’. Mr. Pravir Samarasinghe resigned from the 

Board with effect from 15th February 2011. 

Mr. Moraji M. Udeshi shall vacate at the conclusion of the 

Annual General Meeting in terms of Section 210 of the 

Companies Act and will not be re-appointed. 

Prof Susantha Pathirana retires by rotation in terms of Article 85 

of the Articles of Association of the Company and being eligible 

offers himself for re-election at the Annual General Meeting. 

Details on the Group’s exposure to taxation are disclosed in 

Note 27 to the Financial Statements. 

Share Information 

Information relating to earnings, dividend, net assets and 

market value per share is given in the Ten Year Summary on 

pages 104 - 105 of this report. 

Substantial Shareholdings 

The twenty major shareholders and the percentage held by 

each one of them as at 31st March, 2011 are given in pages 

106 and 107 under Shareholder Information. 

2010/11 2009/10 

Group Profits Rs.’000 Rs.’000 

The net profit earned by the Group after providing for all expenses, known liabilities 

and depreciation on property, plant and equipment was 2,768,757 1,060,159 

From which the deduction of income tax and transfer to the deferred taxation account was (616,566) (330,592) 

Leaving the Group with a profit after tax from continuing operations of 2,152,191 729,567 

From which the loss after tax from discontinued operations deducted was (11,609) (17,873) 

Leaving the Group with a profit for the year of 2,140,582 711,694 

From which Minority Interest deducted was (459,898) (131,490) 

Leaving a profit attributable to the equity holders of the parent was 1,680,684 580,204 

To which the retained profit brought forward form the previous year added was 1,876,921 1,296,717 

Leaving a profit available for appropriation of 3,557,605 1,876,921 

Appropriations 

The amount available has been appropriated as follows 

Final Dividend 2009-10 (128,850) - 

Interim Dividend 2010-11 (387,096) - 

Leaving a retained profit to be carried forward amounting to 3,041,659 1,876,921 

53 


Annual Report of the Board of Directors Contd. 

Directors’ Interest in Contracts with the Company and the Interest Register 

Directors’ interests in contracts or proposed contracts with the Company both direct and indirect are disclosed on page 54, 102 and 

103. These interests have been declared at the meetings of directors. The directors have no direct or indirect interest in any other 

contract or proposed contract of the Company. The Company maintains an interest register as required by the Companies’ Act No. 

07 of 2007. Information pertaining to directors’ interest in contracts, their remuneration and their share ownership are disclosed in 

the interest register. 

Transactions with related undertakings 

Name of Position Transaction 2010/2011 2009/2010 

Director Details Rs.Mn Rs.Mn 

Group 

Asia Siyaka Commodities (Pvt) Ltd Mr. J.H.P. Ratnayeke Director Packing Materials 11.76 30.20 

Brokerage 0.03 26.54 

Store rent 4.04 7.12 

Others - 5.31 

National Development Bank PLC Dr. Sena Yaddehige Director Loans 1,117.88 1,019.69 

Prof. Lakshman R. Watawala Interest paid 67.53 130.28 

(Alternate Director to Dr. Sena Yaddehige) Letter of credit facility 555.00 352.00 

(Note 1) 

Swadeshi Marketing Limited Mr. P.D. Samarasinghe Director Purchase of goods for resale 12.72 14.73 

(Note 2) Rent received 1.12 0.92 

Mouldex Ltd Mr. M.M. Udeshi Director Purchase of goods for resale 2.07 1.89 

1. Dr Sena Yaddehige resigned from the Board of Directors of NDB PLC w.e.f. 11.11.2010 and 2010/2011 amounts disclosed above 

related to the period up to the date of his resignation. 

2. Mr. P.D. Samarasinghe resigned from the Board of Directors of the Company w.e.f.15.02.2011 and 2010/2011 amounts 

disclosed above related to the period up to the date of his resignation. 

The list of Directors at each of the subsidiary and associate Companies have been disclosed in the group structure on page 47 to 50. 

Directors’ Shareholding 

Directors’ Shareholding in Richard Pieris and Company PLC is stated in page 107. 

Directors’ Interest in Contracts 

Directors’ Interest in Contracts in relation to transactions with 

related entities, transactions with Key Management Personnel 

and other related disclosures are stated in Note 35 (Related 

party disclosures) to the financial statements. In addition, 

the Company carried out transactions in the ordinary course 

of business with the following entities having one or more 

directors in common which is summarised above. 

Directors’ Remuneration 

Directors’ fees and emoluments, in respect of the Group and 

the Company for the financial year ended 31st March 2011 are 

disclosed in note 35.2 to the Financial Statements. 

Vision & Long Term Goals 

The Group’s Vision and Long Term Goals are given in page 1 

of this report. 


Environmental Protection 

The Company has not engaged in any activities detrimental 

to the environment. The Group’s efforts in relation to 

environmental protection are set out in the Corporate Social 

Responsibility Report in pages 33 - 34. 

Employment Policies 

Group employment policies are based on recruiting the 

best people, providing them training to enhance their skills, 

recognition of innate skills and competencies of each individual 

while offering equal career opportunities regardless of gender, 

race or religion and to retain them with the Group as long 

as possible. Health and safety of the employees has always 

received priority in the HR agenda. The number of persons 

employed by the company and its subsidiaries at the year end 

was 28,403. 

Compliance with Other Laws & Regulations 

The Directors, to the best of their knowledge and belief, 

confirm that the Group has not engaged in any activities that 

contravene the laws and regulations applicable in Sri Lanka. 

Financial Statements are published quarterly in line with the 

listing rules of the Colombo Stock Exchange. 

Annual General Meeting 

The Annual General Meeting will be held at the Registered 

Office of the Company, No. 310, High Level Road, Nawinna, 

Maharagama, on 30th June 2011. The Notice of the Annual 

General Meeting is on page 114 of this report. 

Auditors 

The Financial Statements for the year have been audited by 

Messrs. Ernst & Young, Chartered Accountants. 

Statutory Payments 

The Directors, to the best of their knowledge and belief are 

satisfied that all statutory payments due to the Government and 

in relation to employees have been made up to date. 

Events Subsequent To the Balance Sheet Date 

There have not been any material events that occurred 

subsequent to the Balance Sheet Date that require disclosure 

or adjustments to the Financial Statements, other than those 

disclosed if any, in Note 34 to the Financial Statements. 

In accordance with the Companies Act No. 7 of 2007, a 

resolution proposing the re-appointment of Messrs. Ernst & 

Young, Chartered Accountants, as Auditors to the Company 

and authorizing the Directors to fix their remuneration will be 

proposed at the Annual General Meeting. 

By Order of the Board 

Board Committees 

The Board has appointed two sub-committees namely, the 

Audit Committee and the Remuneration Committee. Their 

compositions and functions are given in pages 58 - 59 of the 

report. 

W J Viville Perera 

Director 


Director 

Corporate Governance / Internal Control 

The Directors acknowledge their responsibility for the Group’s 

corporate governance and the system of internal control. The 

practices carried out by the Company in relation to corporate 

governance and internal controls are explained in pages 56 - 

57 of this report. The Board is satisfied with the effectiveness 

of the system of internal control for the period up to the date of 

signing the Financial Statements. 

Richard Pieris Group Services (Pvt) Limited 

Secretaries 


Nawinna, Maharagama. 

Directors’ Responsibility for Financial Reporting 

The Statement of Directors’ Responsibility for financial reporting 

of the Company and the Group is set out in page 60 of this 

report. 


55 


Corporate Governance 

The Board of Directors of Richard Pieris and Company PLC 

is committed and takes responsibility to maintain the highest 

standards of Corporate Governance. 

Richard Pieris’ has designed its Corporate Governance policies 

and practices to ensure that the Company is focused on its 

responsibilities to its stakeholders and on creating long term 

shareholder value. The Company recognizes the interests of all 

its stakeholders including shareholders, employees, customers, 

suppliers, consumers and the other communities in which it 

operates. The Group complies with the rules on Corporate 

Governance, included in the Listing Rules of the Colombo 

Stock Exchange, and is guided by the principles included in 

the Code of Best Practice on Corporate Governance issued 

jointly by the Securities and Exchange Commission of Sri 

Lanka and the Institute of Chartered Accountants of Sri Lanka. 

This statement sets out the Corporate Governance policies, 

practices and processes adopted by the Board. 

The Board and its Operations 

The Company is governed by its Board of Directors, who 

directs and supervises the business and affairs of the Company 

on behalf of the shareholders. 

The Board comprises six Directors, of which two are Executive 

Directors whilst four are Non-Executive Directors of which three 

are Independent, ensuring an independent outlook to temper 

the expediency of the experts. Brief profiles of the Directors 

are set out on pages 12 and 13. The Board has assessed the 

independence of the Non-Executive Directors. 

During the year the Board met on 7 occasions. Prior to 

each meeting, the Directors are provided with all relevant 

management information and background material relevant to 

the agenda to enable informed decisions. Board Papers are 

submitted in advance on group performance, new investments, 

capital projects and other issues which require specific Board 

approval. A separate information memorandum is provided on 

statutory payments at each Board Meeting. 

The Chairman, who is also the Chief Executive Officer, is 

responsible for matters relating to policy, maintaining regular 

contact with the other Directors, shareholders and external 

stakeholders of the Company. He is responsible for all aspects 

of the Group’s overall commercial, operational and strategic 

development and assisted by the Chief Operating Officer and 

an Executive Management Committee comprising Executive 

Directors and Heads of Companies of the Strategic Business 

Units (SBU). The Finance function devolves on the Group Chief 

Financial Officer, who is present by invitation at board meetings 

when financial matters are discussed. The Board of Directors 

has access to independent professional advice as and when 

deemed necessary for decision making. 

The main functions of the board are to: 

• Direct the business and affairs of the company. 

• Formulate short and long term strategies, as a basis 

for the operational plans of the company and monitor 

implementation. 

• Report on their stewardship to shareholders. 

• Identify the principal risks of the business and ensure 

adequate risk management systems in place. 

• Ensure internal controls are adequate and effective. 

• Approve the annual capital and operating budgets and 

review performance against budgets. 

• Approve the interim and final financial statements of the 

group. 

• Determine and recommend interim and final dividends for 

the approval of shareholders. 

• Ensure compliance with laws and regulations. 

• Sanction all material contracts, acquisitions or disposal of 

assets and approve capital projects. 

All Non-Executive Directors are independent with no direct 

or indirect material relationship with the Company. Their wide 

range of expertise and significant experience in commercial, 

corporate and financial activities bring an independent view 

and judgment to the Board. 

Sub Committees of the Board 

The Board is responsible for the establishment and functioning 

of all Board Committees, the appointment of members to these 

committees and their compensation. The Board has delegated 

responsibilities to two Board Sub Committees which operate 

within clearly defined terms of reference. 

Audit Committee 

The Audit Committee is composed of two Independent Non- 

Executive Directors namely Prof. Lakshman R. Watawala, 

Chairman and Prof. Susantha Pathirana. The Chief Executive 

Officer, Chief Operating Officer, Group Chief Financial Officer, 

Internal Audit Manager and functional heads of subsidiaries 

attend meetings by invitation. 

The Audit Committee Report on page 59 describes the 

activities carried out by the Committee during the financial year. 

Remuneration Committee 

The Remuneration Committee is composed of two Independent 

Non-Executive Directors - its Chairman, Prof. Lakshman R. 

Watawala and Prof. Susantha Pathirana. 

The Report of the Remuneration Committee on page 58 

highlights its main activities. 

Appointment of Directors 

The Company does not have a Nomination Committee 

to recommend additions to the Board. The Board as a 

whole decides on the appointments of new members. Mr. 


P.D.Samarasinghe resigned from the Board with effect from 

15th February 2011. 

Relationship with Shareholders 

The Board maintains healthy relationships with its key 

shareholders (individual and institutional) while maintaining 

a dialogue with potential shareholders as well. The Annual 

General Meetings are held to communicate with the 

shareholders and their participation is encouraged. Apart 

from this, its principal methods of communication include 

the corporate website, the annual report, quarterly financial 

statements and press releases. 

Internal Controls 

The Board is responsible for instituting on effective internal 

control system to safeguard the assets of the Company and 

ensure that accurate and complete records are maintained from 

which reliable information is generated. The system includes all 

controls including financial, operational and risk management. 

Strategies adopted by the Company to manage its risk are set 

out in its report on Risk Management on pages 41 - 44. 

Apart from the strategic plans covering a three year time 

horizon, a comprehensive budgetary process is in place, where 

annual budgets, identifying the critical success factors and 

functional objectives, prepared by all subsidiaries are, approved 

by the Board, at the commencement of a financial year, and 

its achievement monitored monthly, through a comprehensive 

monthly management reporting system. Clear criteria and 

benchmarks have also been set out for the evaluation of capital 

projects and new investments. 

The Internal Audit Division reporting to the Chairman, regularly 

evaluates the internal control system across the organization 

and its findings are reviewed first by the Audit Committee and 

significant issues are thereafter reported to the Board. The 

Board reviewed the internal control procedures in existence and 

are satisfied with its effectiveness. 

Relationship with Other Stakeholders 

The Board identifies the importance of maintaining a healthy 

relationship with its key stakeholders and ensures the Group 

as a whole inculcates this practice. Internal communication is 

mainly conducted through the quarterly newsletter, e-mails, 

memos and circulars. 

The Board also ensures that the Group policies and 

practices are in line with the Company’s values and its 

social responsibilities. The group promotes protection of the 

environment, health and safety standards of its employees and 

others within the organization. The relevant measures taken are 

given in detail in the Corporate Social Responsibility report on 

pages 33 - 34. 

Compliance 

The Board places significant emphasis on strong internal 

compliance procedures. The Financial Statements of the Group 

are prepared in strict compliance with the guidelines of the Sri 

Lanka Accounting Standards and other statutory regulations. 

Financial statements are published quarterly in line with the 

Listing Rules of the Colombo Stock Exchange through which all 

significant developments are reported to shareholders quarterly. 

The Board of Directors, to the best of their knowledge and 

belief, are satisfied that all statutory payments have been made 

to date. 

Going Concern 

The Directors have continued to use the ‘Going Concern’ 

basis in the preparation of the Financial Statements, after 

careful review of the financial position and cash flow status 

of the Group. The Board of Directors believes that the Group 

has adequate resources to continue its operation for the 

foreseeable future. 

Name of Director Executive Non- Executive Independent 

Dr S Yaddehige 

 

Mr. J H P Ratnayeke 

 

Mr. W J V P Perera 

 

Prof. Lakshman R Watawala 

Prof. Susantha Pathirana 

Mr. M M Udeshi 

Corporate Governance Requirements under Section 7 of the Listing Rules issued by the Colombo Stock Exchange. 

Colombo Stock Exchange 

Status of Richard Pieris and Company PLC 

Non Executive Directors 

In Compliance 

Independent Directors 

In Compliance 

Disclosures relating to Directors 

In Compliance 

Remuneration Committee 

In Compliance 

Audit Committee 

In Compliance 

57 


Report of the Remuneration Committee 

The Remuneration Committee, appointed by and responsible 

to the Board of Directors, consists of two independent Non 

Executive Directors Prof. Lakshman R Watawala and Prof. 

Susantha Pathirana. The Committee is chaired by Prof. 

Lakshman R Watawala.The Committee met on several 

occasions during the financial year. 

The Remuneration Committee has reviewed and recommended 

the following to the Board of Directors: 

1. Policy on remuneration of the Executive Staff 

2. Specific remuneration package for the Executive Directors 

In a highly competitive environment attracting and retaining 

high caliber executives is a key challenge faced by the Group. 

In this context, the Committee took into account, competition, 

market information and business performance in declaring the 

overall remuneration policy of the Group. 

Prof. Lakshman R Watawala 

Chairman 



Report of the Audit Committee 

The Audit Committee Charter, approved by the Board of 

Directors defines the purpose, authority, composition, meeting, 

and responsibilities of the Committee. 

The purpose of the Audit Committee is to: 

1. Assist the Board of Directors in fulfilling its overall 

responsibilities for the financial reporting process 

2. Review the system of internal control and risk management 

3. Monitor the effectiveness of the internal audit function 

4. Review the Company’s process for monitoring compliance 

with laws and regulations. 

5. Review the independence and performance of the external 

auditors 

6. To make recommendations to the board on the 

appointment of external auditors and recommend their 

remuneration and terms of engagement 

The Audit Committee consisted of two independent and Non 

Executive Directors, namely Prof. Lakshman R. Watawala and 

Prof. Susantha Pathirana. The Chairman of the Committee 

is a Senior Chartered Accountant. The Company Secretary 

functions as Secretary to the Audit Committee. 

The principal activities of the Committee are detailed below. 

Meetings 

The Audit Committee held eight meetings during the year under 

review. 

The Group Chief Financial Officer, Group Internal Audit 

Manager and functional heads of the Strategic Business Units 

(SBUs) were invited if deemed necessary for audit committee 

meetings. 

Meetings were held with the external auditors regarding the 

scope and the conduct of the annual audits. 

Internal Audit and Risk Management 

The Internal Audit Programme was reviewed by the Committee 

to ensure that it covered the major business units of the Group. 

The Chief Internal Auditor was invited to be present at all Audit 

Committee deliberations. He presented a summary of the 

salient findings of all internal audits and investigations carried 

out by his department for the period. The responses from the 

Managing Directors of the SBUs to the internal audit findings 

were reviewed and where necessary corrective action was 

recommended and implementation monitored. 

The Committee also had the responsibility to review the loss 

making SBU’s of the Group and strategies for turning round 

these Companies and recommending suitable corrective action. 

Internal Controls 

During its meetings, the Committee reviewed the adequacy 

and effectiveness of the internal control systems and the 

Group’s approach to its exposure to the business and financial 

risks. Processes are in place to safeguard the assets of the 

organisation and to ensure that the financial reporting system 

can be relied upon in the preparation and presentation of 

financial statements. A comprehensive Management Report 

and Accounts are produced at month end highlighting all key 

performance criteria pertaining to the Company’s SBUs which 

is reviewed by the Senior Management on a monthly basis. 

SBU Boards review performance on a quarterly basis. 

Financial Statements 

The Committee reviewed the Group’s Quarterly Financial 

Statements, the Annual Report and Accounts for reliability, 

consistency and compliance with the Sri Lanka Accounting 

Standards and other statutory requirements, including the 

Companies Act, No 7 of 2007, prior to issuance. It also reviewed 

the adequacy of disclosure in published financial statements. 

External Auditors 

The Audit Committee has reviewed the other services 

provided by the External Auditors to the group to ensure their 

independence as Auditors has not been compromised. 

The Committee reviewed the Management Letters issued by 

the External Auditors, the Management response thereto and 

also attended to matters specifically addressed to them. The 

external auditors kept the audit committee informed on an 

ongoing basis of all matters of significance. The committee met 

with the auditors and discussed issues arising from the audit 

and corrective action taken where necessary. 

The Audit Committee has recommended to the Board of 

Directors that Messrs Ernst & Young be re-appointed as 

Auditors for the financial year ending 31st March, 2012 subject 

to the approval of the shareholders at the next Annual General 

Meeting. 

Conclusion 

The Audit Committee is satisfied that the control environment 

prevailing in the organisation provides reasonable assurance 

regarding the reliability of the financial reporting of the Group, 

the assets are safeguarded and that the Listing Rules of the 

Colombo Stock Exchange have been met. 

Prof. Lakshman R Watawala 

Chairman 


59 


Statement of Directors’ Responsibility 

In keeping with the provisions under the Companies Act 

No. 7 of 2007, the Directors of Richard Pieris and Company 

PLC, acknowledge their responsibility in relation to financial 

reporting of both, the Company and that of its Group. These 

responsibilities differ from those of its Auditors, M/s. Ernst & 

Young, which are set out in their report, appearing on page 61 

of this report. 

The financial statements of the Company and its subsidiaries 

for the year ended 31st March 2011 included in this report, 

have been prepared and presented in accordance with the Sri 

Lanka Accounting Standards, and they provide the information 

as required by the Companies Act No. 7 of 2007, Sri Lanka 

Accounting Standards and the Listing Rules of the Colombo 

Stock Exchange. The Directors confirm that suitable accounting 

policies have been used and applied consistently, and that all 

applicable accounting standards have been followed in the 

preparation of the financial statements exhibited on pages from 

62 to 103 inclusive. All material deviations from these standards 

if any have been disclosed and explained. The judgments and 

estimates made in the preparation of these financial statements 

are reasonable and prudent. 

The Directors’ have provided the Auditors M/s. Ernst & Young 

Chartered Accountants with every opportunity to carry out 

reviews and tests that they consider appropriate and necessary 

for the performance of their responsibilities. The Auditors have 

examined the financial statements together with all financial 

records and related data and express their opinion which 

appears as reported by them on page 61 of this report. 

By Order of the Board, 

Richard Pieris Group Services (Pvt) Limited 

Secretaries 

310, High Level Road, Nawinna, Maharagama 


The Directors confirm their responsibility for ensuring that all 

companies within the Group maintain accounting records, 

which are sufficient to prepare financial statements that 

disclose with reasonable accuracy, the financial position of the 

Company and its Group. They also confirm their responsibility 

towards ensuring that the financial statements presented in the 

Annual Report give a true and fair view of the state of affairs of 

the Company and its Group as at 31st March 2011, and that of 

the profit for the year then ended. 

The overall responsibility for the Company’s internal control 

systems lies with the Directors. Whilst recognizing the fact that 

there is no single system of internal control that could provide 

absolute assurance against material misstatements and fraud, 

the Directors confirm that the prevalent internal control systems 

instituted by them and which comprise internal checks, internal 

audit and financial and other controls are so designed that, 

there is reasonable assurance that all assets are safeguarded 

and transactions properly authorized and recorded, so that 

material misstatements and irregularities are either prevented 

or detected within a reasonable period of time. 

The Directors’ are of the view that the Company and its 

Group have adequate resources to continue operations in 

the foreseeable future and have continued to use the goingconcern 

basis in the preparation of these financial statements. 


Auditor’s Report 

INDEPENDENT AUDITOR’S REPORT 

TO THE SHAREHOLDERS OF RICHARD PIERIS AND 

COMPANY PLC 

Report on the Financial Statements 

We have audited the accompanying financial statements 

of Richard Pieris and Company PLC (“Company”), the 

consolidated financial statements of the Company and its 

subsidiaries (together “Group”) as at 31March 2011 which 

comprise the balance sheets as at 31 March 2011, and the 

Income Statements, statements of changes in equity and cash 

flow statements for the year then ended, and a summary of 

significant accounting policies and other explanatory notes. 

Management’s Responsibility for the Financial Statements 

Management is responsible for the preparation and fair 

presentation of these financial statements in accordance with 

Sri Lanka Accounting Standards. This responsibility includes: 

designing, implementing and maintaining internal control 

relevant to the preparation and fair presentation of financial 

statements that are free from material misstatement, whether 

due to fraud or error; selecting and applying appropriate 

accounting policies; and making accounting estimates that are 

reasonable in the circumstances. 

Scope of Audit and Basis of Opinion 

Our responsibility is to express an opinion on these financial 

statements based on our audit. We conducted our audit 

in accordance with Sri Lanka Auditing Standards. Those 

standards require that we plan and perform the audit to obtain 

reasonable assurance whether the financial statements are free 

from material misstatement. 

We have obtained all the information and explanations which 

to the best of our knowledge and belief were necessary for 

the purposes of our audit. We therefore believe that our audit 

provides a reasonable basis for our opinion. 

Opinion 

In our opinion, so far as appears from our examination, 

Company maintained proper accounting records for the year 

ended 31 March 2011 and the financial statements give a true 

and fair view of the Company’s state of affairs as at 31 March 

2011 and its profit and cash flows for the year then ended in 

accordance with Sri Lanka Accounting Standards. 

In our opinion, the consolidated financial statements give a true 

and fair view of the state of affairs as at 31 March 2011 and the 

profit and cash flows for the year then ended, in accordance 

with Sri Lanka Accounting Standards, of the Company and 

its subsidiaries dealt with thereby, so far as concerns the 

shareholders of the Company. 

Report on Other Legal and Regulatory Requirements 

In our opinion, these financial statements also comply with the 

requirements of Sections 151(2) and 153(2) to 153(7) of the 

Companies Act No. 07 of 2007. 

30 May 2011 

Colombo. 

An audit includes examining, on a test basis, evidence 

supporting the amounts and disclosures in the Financial 

Statements. An audit also includes assessing the accounting 

principles used and significant estimates made by 

management, as well as evaluating the overall financial 

statement presentation. 

61 


Balance Sheet 

Group 

Company 

As at March 31 2011 2010 2011 2010 

Note Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Assets 

Non-current assets 

Property, plant and equipment 3 10,001,325 9,512,842 46,404 61,480 

Leasehold property 3 605,934 629,919 - - 

Investment property 3 - - 691,393 699,207 

Intangible assets 4 497,279 480,177 - - 

Investments in subsidiaries 5 - - 2,560,917 2,447,584 

Investments in associates 5 456,186 180,919 159,756 37,500 

Other investments 5 24,000 - 89,750 95,750 

Deferred tax assets 16 - - 36,953 36,953 

11,584,724 10,803,857 3,585,173 3,378,474 

Current assets 

Inventories 6 3,341,884 2,464,038 - - 

Trade and other receivables 7 2,908,800 2,550,148 52,706 67,039 

Taxation receivable 180,650 181,874 - 6,957 

Amounts due from subsidiaries - - 984,541 1,629,758 

Short term investments 8 59,540 42,057 59,540 42,057 

Cash at bank and in hand 2,563,859 1,322,843 63,349 266,271 

9,054,733 6,560,960 1,160,136 2,012,082 

Total assets 20,639,457 17,364,817 4,745,309 5,390,556 

Equity and liabilities 

Equity attributable to equity holders of the parent 

Stated capital 9 1,627,612 1,578,475 1,627,612 1,578,475 

Capital reserves 10 126,901 126,901 10,574 10,574 

Revenue reserves 11 3,221,102 2,056,364 617,905 654,962 

Foreign currency translation 12 27,314 31,152 - - 

5,002,929 3,792,892 2,256,091 2,244,011 

Minority interest 1,860,693 1,503,071 - - 

Total equity 6,863,622 5,295,963 2,256,091 2,244,011 

Non-current liabilities 

Interest bearing borrowings 13 1,998,291 1,957,680 149,084 428,469 

Net liability to the lessor payable 14 650,980 672,158 - - 

Deferred income 15 584,763 528,898 - - 

Deferred tax liabilities 16 10,589 24,981 - - 

Employee benefit liabilities 17 1,662,131 1,529,685 48,578 50,141 

4,906,754 4,713,402 197,662 478,610 

Current liabilities 

Trade and other payables 18 3,653,146 2,632,913 258,991 232,239 

Current portion of interest bearing borrowings 13 1,075,241 1,239,549 275,000 605,000 

Current portion of net liability to the lessor 14 21,978 25,394 - - 

Deposits 2,838 7,746 2,838 7,745 

Amounts due to subsidiaries - - 177,515 148,167 

Current tax liabilities 309,944 100,559 5,880 - 

Short term borrowings 19 3,805,934 3,349,291 1,571,332 1,674,784 

8,869,081 7,355,452 2,291,556 2,667,935 

Total liabilities 13,775,835 12,068,854 2,489,218 3,146,545 

Total equity and liabilities 20,639,457 17,364,817 4,745,309 5,390,556 

I certify that the financial statements comply with the requirements of the Companies Act No. 7 of 2007 

Jagath Dissanayake 

Group Chief Financial Officer 

The Board of Directors is responsible for the preparation and presentation of these financial statements. 

W J Viville Perera 


Director 

Director 

The accounting policies and notes from pages 67 to 103 form an integral part of these financial statements. 



Income Statement 

Group 

Company 

2011 2010 2011 2010 

For the year ended March 31 Note Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Continuing operations 

Revenue 21 27,241,577 22,339,288 968,388 533,684 

Cost of sales (20,631,178) (17,654,136) - - 

Gross profit 6,610,399 4,685,152 968,388 533,684 

Other operating income 22 492,906 355,879 17,483 38,597 

Distribution costs (849,644) (658,359) - - 

Administrative expenses (2,638,251) (2,354,806) (303,251) (237,916) 

Other operating expenses 23 (165,044) (58,169) - - 

Profit from operations 24 3,450,366 1,969,697 682,620 334,365 

Finance cost 25 (794,617) (969,147) (178,317) (199,776) 

Profit from operations after finance cost 2,655,749 1,000,550 504,303 134,589 

Share of results of associates 26 113,008 59,609 - - 

Profit before tax 2,768,757 1,060,159 504,303 134,589 

Income tax expense 27 (616,566) (330,592) (25,414) - 

Profit for the year from continuing operations 2,152,191 729,567 478,889 134,589 

Discontinued Operations 

Loss after tax for the year from 

Discontinued operations 28 (11,609) (17,873) - - 

Profit for the year 2,140,582 711,694 478,889 134,589 

Attributable to: 

Equity holders of the parent 1,680,684 580,204 

Minority interest 459,898 131,490 

2,140,582 711,694 

Rs. 

Rs. 

Earnings/(loss) per share 

Basic 29 0.87 0.30 

Diluted 29 0.84 0.30 

Earning per share from continuing operations 

Basic 29 0.88 0.31 

Diluted 29 0.84 0.31 

Dividend per share 30 0.30 1.00 

Figures in brackets indicate deductions. 


63 


Cash Flow Statement 

Group 

Company 


For the year ended March 31 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Cash flows from / (used in) operating activities 

Profit before tax from continuing operations 2,768,757 1,060,159 504,303 134,589 

Loss before tax from discontinued operation (11,609) (17,873) - - 

Adjustments for 

Depreciation 584,916 584,008 25,393 25,878 

Impairment of property, plant and equipment 62,019 29,093 - - 

Amortisation of leasehold property 23,427 24,217 - - 

Interest charges 794,617 969,147 178,317 199,776 

Provision for defined benefit plans 282,843 557,486 3,103 9,799 

Profit/(loss) on sales of property, plant and equipment 477 (1,038) - - 

Change in the value of short term Investment (17,483) (34,082) (17,483) (34,082) 

Share of net profit of associates (113,008) (44,161) - - 

Exchange differences on translation of foreign currency (4,019) (881) - - 

Amortisation of grants and subsidies (22,303) (23,508) - - 

Allowances for bad debt and bad debts written off 114,909 147,073 79,249 53,749 

Allowances for obsolete and slow moving inventories 56,680 48,048 - - 

Amortisation and impairment of intangible assets 45,208 10,725 - - 

Allowances for unrealised profit (4,939) 10,673 - - 

Negative goodwill in investment in subsidiary (16,200) - - - 

Loss on disposal of subsidiary 10,319 - - - 

Operating profit before working capital changes 4,554,611 3,319,086 772,882 389,709 

Increase in inventories (938,263) (219,721) - - 

(Increase) / decrease in trade and other receivables (470,952) (145,812) 586,426 458,563 

Increase / (decrease) in trade and other payables 1,038,229 489,352 51,190 (219,534) 

Cash generated from operations 4,183,625 3,442,905 1,410,498 628,738 

Interest paid (794,617) (969,147) (178,317) (199,776) 

Income tax paid (419,729) (186,900) (12,577) - 

Defined benefit plan costs paid (150,397) (131,022) (4,788) (4,772) 

Net cash from operating activities 2,818,882 2,155,836 1,214,816 424,190 

Cash Flows from / (used in) investing activities 

Increase in holding in a subsidiary (56,908) - - - 

Purchase of investment in associate and other investment (203,527) - (235,589) (240,000) 

Disposal of subsidiary 5,337 - - - 

Purchase and construction of property plant and equipment (1,191,977) (618,858) (2,503) (7,410) 

Proceeds from sale of property, plant and equipment 2,533 2,851 - - 

Intangible assets acquired (63,349) - - - 

Grants received 78,167 74,259 - - 

Dividend received from associate 40,647 - - - 

Net cash flows used in investing activities (1,389,077) (541,748) (238,092) (247,410) 

Net cash inflow before financing 1,429,805 1,614,088 976,724 176,780 


Group 

Company 


For the year ended March 31 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Cash Flows from (Used in) Financing Activities 

Increase in minority shareholding 16,264 - - - 

Proceeds from issue of ordinary shares 49,137 - 49,137 - 

Proceeds from interest bearing loans and borrowings 1,133,979 1,445,223 - - 

Repayment of interest bearing loans and borrowings (1,248,156) (1,661,459) (609,385) (477,795) 

Principal payment under finance lease liabilities (24,593) (24,828) - - 

Dividend paid to equity holders of parent (515,946) - (515,946) - 

Dividend paid by subsidiary companies to outside shareholders (56,117) (8,128) - - 

Net cash flows used in financing activities (645,432) (249,192) (1,076,194) (477,795) 

Net increase / (decrease) in cash and cash equivalents 784,373 1,364,896 (99,470) (301,015) 

Cash and cash equivalents at the beginning of the year (2,026,448) (3,391,344) (1,408,513) (1,107,498) 

Cash and cash equivalents at the end of the year (1,242,075) (2,026,448) (1,507,983) (1,408,513) 

Analysis of cash and cash equivalents at the end of the year 

Bank and cash balances 20 2,563,859 1,322,843 63,349 266,271 

Short term borrowings 20 (3,805,934) (3,349,291) (1,571,332) (1,674,784) 

(1,242,075) (2,026,448) (1,507,983) (1,408,513) 


65 


Statement of Changes in Equity 

Attributable to equity holders of the parent 

Stated Capital Revenue Retained Foreign Total Minority Total 

capital reserves reserves profit currency interest equity 

translation 

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Group 

Balance as at 31st March 2009 1,578,475 126,901 179,443 1,296,717 32,371 3,213,907 1,380,908 4,594,815 

Net profit / (loss) for the period - - - 580,204 - 580,204 131,490 711,694 

Subsidiary dividend to minority shareholders - - - - - - (8,128) (8,128) 

Effect of foreign currency translation - - - - (1,219) (1,219) (1,199) (2,418) 

Balance as at 31st March 2010 1,578,475 126,901 179,443 1,876,921 31,152 3,792,892 1,503,071 5,295,963 


Net profit / (loss) for the period - - - 1,680,684 - 1,680,684 459,898 2,140,582 

Dividends - - - (515,946) - (515,946) - (515,946) 

Issue of share capital 49,137 - - - - 49,137 - 49,137 

Adjustment due to changes in holding - - - - - - 12,217 12,217 

Acquisition of minority interest - - - - - - (56,908) (56,908) 

Subsidiary Dividend to Minority Shareholders - - - - - - (56,117) (56,117) 

Effect of foreign currency translation - - - - (3,838) (3,838) (1,468) (5,306) 


Company 

Balance as at 1st April 2009 1,578,475 10,574 - 520,373 - 2,109,422 - 2,109,422 

Net profit for the period - - - 134,589 - 134,589 - 134,589 

Balance as at 31st March 2010 1,578,475 10,574 - 654,962 - 2,244,011 - 2,244,011 


Net profit for the period - - - 478,889 - 478,889 - 478,889 

Issue of share capital 49,137 - - - - 49,137 - 49,137 

Dividends - - - (515,946) - (515,946) - (515,946) 




Notes to the Financial Statements 

1. CORPORATE INFORMATION 

Richard Pieris and Company PLC is a public limited liability 

company incorporated and domiciled in Sri Lanka and listed 

on the Colombo Stock Exchange. The registered office and 

principal place of business of the company is located at 310, 

High Level Road, Nawinna, Maharagama. 

In the Annual Report of the Board of Directors and in the 

financial statements, “the company” refers to Richard Pieris and 

Company PLC. as the holding company and “the group” refers 

to the companies whose accounts have been consolidated 

therein. The financial statements for the year ended 31st March 

2011 were authorized for issue by the Directors on 27th May 


The principal activities of the group are stated in the Annual 

Report of the Board of Directors. 

All values presented in the financial statements are in Sri Lanka 

rupees thousands (Rs.’000s) unless otherwise indicated. The 

significant accounting policies are discussed below. 

1.1 GENERAL POLICIES 

1.1.1 Statement of compliance 

The Balance Sheet, Income Statement, Statement of Changes 

in Equity and the Cash Flow Statement, together with the 

accounting policies and notes (the “financial statements”) have 

been prepared in compliance with the Sri Lanka Accounting 

Standards (SLAS) issued by the Institute of Chartered 

Accountants of Sri Lanka. 

1.1.2 Basis of preparation 

The financial statements, presented in Sri Lanka rupees, have 

been prepared on an accrual basis and under the historical 

cost convention unless stated otherwise. The preparation and 

presentation of these financial statements is in compliance with 

the Companies Act No. 07 of 2007. 

1.1.3 Changes in accounting policies 

The accounting policies adopted are consistent with those of 

the previous financial year. 

1.1.4 Comparative information 

The accounting policies applied by the group are consistent 

with those used in the previous year. Previous year’s figures 

and phrases have been re-arranged, wherever necessary, to 

conform to the current year’s presentation. 

1.1.5 Events after the balance sheet date 

All material post balance sheet events have been considered 

and appropriate adjustments or disclosures have been made in 

the respective notes to the financial statements. 

1.2 CONSOLIDATION POLICY 

1.2.1 Basis of consolidation 

The consolidated financial statements include the financial 

statements of the company, its subsidiaries and other 

companies over which it has control. 

The Group’s Financial Statements comprise the consolidated 

financial statements of the company and the group which have 

been prepared in compliance with the group’s accounting 

policies. 

All intra group balances, income and expenses and profits and 

losses resulting from intra group transactions are eliminated in 

full. 

1.2.2 Acquisitions and divestments 

Acquisitions of subsidiaries are accounted for using the 

purchase method of accounting. The results of subsidiaries, 

joint ventures and associates acquired or incorporated during 

the year have been included from the date of acquisition, or 

incorporation while results of subsidiaries, joint ventures and 

associates disposed have been included up to the date of 

disposal. 

1.2.3 Subsidiaries 

Subsidiaries are those enterprises controlled by the parent. 

Control exists when the parent holds more than 50% of the 

voting rights or otherwise has a controlling interest. 

Subsidiaries are consolidated from the date the parent obtains 

control until the date that control ceases. 

Subsidiaries consolidated have been listed in the Group 

Structure. 

The total profits and losses for the period, of the Company and 

of its subsidiaries included in consolidation and all assets and 

liabilities of the Company and of its subsidiaries included in 

consolidation are shown in the Consolidated Income Statement 

and Balance Sheet respectively. 

Minority interests, which represents the portion of profit or 

loss and net assets not held by the group, are shown as a 

component of profit for the period in the Income Statement and 

as a component of equity in the Consolidated Balance Sheet, 

separately from parent shareholders’ equity. 

The Consolidated Cash Flow Statement includes the cash 

flows of the Company and its subsidiaries. 

1.2.4 Associates 

Associates are those investments over which the group has 

significant influence and holds 20% to 50% of the equity and 

which are neither subsidiaries nor joint ventures of the group. 

67 


Notes to the Financial Statements Contd. 

All associates are incorporated in Sri Lanka. 

The investments in associates are carried in the Balance Sheet 

at cost plus post acquisition changes in the group’s share of 

net assets of the associates. Goodwill relating to an associate 

is included in the carrying amount of the investment. After 

application of the equity method, the group determines whether 

it is necessary to recognize any additional impairment loss 

with respect to the group’s net investment in the associate. The 

Income Statement reflects the share of the results of operations 

of the associate. Where there has been a change recognized 

directly in the equity of the associate, the group recognizes its 

share of any changes in the Statement of Changes in Equity. 

When the group’s share of losses in an associate equals or 

exceeds the interest in the undertaking, the group does not 

recognize further losses unless it has incurred obligations or 

made payments on behalf of the entity. 

The group ceases to use the equity method of accounting on 

the date from which it no longer has significant influence in the 

associate. 

The accounting policies of associate companies conform to 

those used for similar transactions of the group. Accounting 

policies that are specific to the business of associate 

companies are discussed in note 2.7. 

1.2.5 Goodwill 

Goodwill acquired in a business combination is initially 

measured at cost being the excess of the cost of the business 

combination over the group’s interest in the net fair value of 

the identifiable assets, liabilities and contingent liabilities. 

Following initial recognition, goodwill is measured at cost less 

any accumulated impairment losses. Goodwill is reviewed for 

impairment, annually or more frequently if events or changes in 

circumstances indicate that the carrying value may be impaired. 

For the purpose of impairment testing, goodwill acquired in a 

business combination is, from the acquisition date, allocated 

to groups of cash-generating units that are expected to benefit 

from the synergies of the combination. 

Impairment is determined by assessing the recoverable amount 

of the cash-generating unit to which goodwill relates. Where 

the recoverable amount of the cash generating unit is less than 

the carrying amount, an impairment loss is recognized. The 

impairment loss is allocated first to reduce the carrying amount 

of any goodwill allocated to the unit and then to the other 

assets pro-rata to the carrying amount of each asset in the unit. 

Goodwill and fair value adjustments arising on the acquisition 

of a foreign operation are treated as assets and liabilities of the 

foreign operation and translated at the closing rate. 

Where goodwill forms part of a cash-generating unit and part 

of the operation within that unit is disposed of, the goodwill 

associated with the operation disposed of is included in the 

carrying amount of the operation when determining the gain or 

loss on disposal of the operation. 

1.2.6 Financial year 

Results of all subsidiaries and associates (except for Asian 

Alliance Insurance PLC) are drawn for the twelve months 

period up to 31st March, which is their year end. 

The results of Asian Alliance Insurance PLC is drawn for the 

twelve month period up to 31st December, which is their year 

end. 

2.1 SIGNIFICANT ACCOUNTING JUDGMENTS, 

ESTIMATES AND ASSUMPTIONS 

2.1.1 Judgments 

In the process of applying the Group’s accounting policies, 

management has made the following judgments, apart from 

those involving estimations, which has the most significant 

effect on the amounts recognized in the Financial Statements. 

Going Concern 

When preparing financial statements, management has made 

assessment of the ability of the constituents of the Group to 

continue as a going concern, taking into account all available 

information about the future, including intentions of curtailment 

of businesses, as decided by the Board, as disclosed in Note 

28 to the Financial Statements. 

Deferred tax assets 

Deferred tax assets are recognized for all unused tax losses 

to the extent that it is probable that taxable profit will be 

available against which the losses can be utilized. Significant 

management judgment is required to determine the amount 

of deferred tax assets that can be recognized, based upon 

the likely timing and level of future taxable profits together with 

future tax planning strategies. Further details are given in Note 

16. 

Allowance for doubtful debts 

The Group reviews at each balance sheet date all receivables 

to assess whether an allowance should be recorded in 

the Income Statement. The management uses judgment 

in estimating such amounts in the light of the duration of, 

outstanding and any other factors management is aware of that 

indicates uncertainty in recovery. 

2.1.2 Estimates and assumptions 

The key assumptions concerning the future and other key 

sources of estimation uncertainty at the Balance Sheet date, 

that have a significant risk of causing material adjustments to 

the carrying amounts of assets and liabilities within the next 


financial year are discussed below. The respective carrying 

amounts of assets and liabilities are given in related notes to 

the financial statements. 

Defined benefit plans 

The cost of defined benefit plans- gratuity is determined using 

actuarial valuations. The actuarial valuation involves making 

assumptions about discount rates, expected rates of return 

on assets, future salary increases, mortality rates and future 

pension increases. Due to the long term nature of these plans, 

such estimates are subject to significant uncertainty. Further 

details are given in Note 17. 

Intangible assets 

For the purposes of impairment testing, goodwill is allocated 

to cash generating units when cash generating units to which 

goodwill has been allocated are tested for impairment annually, 

using Value in Use method. The calculation of value in use for 

the cash generating unit is most sensitive to the assumptions of 

sales growth, discount rates and cost increases due to inflation. 

Further details are given in Note 4. 

Inventory valuation - Produce inventory 

The Group has valued part of unsold produce inventory at 

since realized prices. The balance unsold inventory remained 

as at the balance sheet date valued at an estimated selling 

price based on most recent selling prices available subsequent 

to the year end. 

2.2 FOREIGN CURRENCY TRANSLATION 

2.2.1 Foreign currency transactions 

The consolidated financial statements are presented in 

Sri Lanka rupees, which is the company’s functional and 

presentation currency. 

The functional currency is the currency of the primary 

economic environment in which the entities of the group 

operate. 

All foreign exchange transactions are converted to Sri Lanka 

rupees, at the rates of exchange prevailing at the time the 

transactions are effected. 

Monetary assets and liabilities denominated in foreign currency 

are retranslated to Sri Lanka rupee equivalents at the exchange 

rate prevailing at the Balance Sheet date. Non-monetary assets 

and liabilities are translated using exchange rates that existed 

when the values were determined. The resulting gains and 

losses are accounted for in the Income Statement. 

2.2.2 Foreign operations 

The Balance Sheet and Income Statement of subsidiaries 

which are deemed to be foreign operations are translated 

to Sri Lanka rupees at the rate of exchange prevailing as at 

the Balance Sheet date and at the average annual rate of 

exchange for the period respectively. 

Arpitalian Compact Soles (Private) Limited use US dollars 

as its functional currency as it conducts the majority of its 

business in US dollars and is entitled to the benefits provided to 

companies approved by the Board of Investment of Sri Lanka. 

Arpitalian Compact Soles (Private) Limited adopted US dollars 

as its measurement and functional currency in line with SLAS 

21 which deals with “Effects of Changes in Foreign Exchange 

Rates” and has been translated to the presentation currency of 

the group, Sri Lankan Rupees, for consolidation purpose. 

The exchange differences arising on the translation are taken 

directly to a separate component of equity. On disposal of a 

foreign entity, the deferred cumulative amount recognized in 

equity relating to that particular foreign operation is recognized 

in the Income Statement. 

2.3 TAX 

2.3.1 Current tax 

Provision for income tax is based on the elements of income 

and expenditure as reported in the financial statements and is 

computed in accordance with the provisions of the relevant tax 

statutes. 

2.3.2 Deferred tax 

Deferred taxation is the tax attributable to the temporary 

differences that arise when taxation authorities recognize and 

measure assets and liabilities with rules, that differ from those 

of the consolidated financial statements. 

Deferred tax is provided using the liability method on temporary 

differences at the balance sheet date between the tax bases 

of assets and liabilities and their carrying amounts for financial 

reporting purposes. 

Deferred tax assets are recognized for all deductible temporary 

differences, carry-forward of unused tax credits and unused tax 

losses, to the extent that it is probable that taxable profit will be 

available against which the deductible temporary differences, 

and the carry-forward of unused tax credits and unused tax 

losses can be utilized. 

The carrying amount of deferred tax assets is reviewed at 

each Balance Sheet date and reduced to the extent that it is 

no longer probable that sufficient taxable profit will be available 

to allow all or part of the deferred tax asset to be utilized. 

Unrecognized deferred tax assets are reassessed at each 

balance sheet date and are recognized to the extent that it 

has become probable that future taxable profit will allow the 

deferred tax asset to be recovered. 

69 



Deferred tax assets and liabilities are measured at tax rates 

that are expected to apply to the year when the asset is 

realized or liability is settled, based on the tax rates and tax 

laws that have been enacted or substantively enacted as at the 

balance sheet date. 

Deferred tax assets and deferred tax liabilities are offset, if 

a legally enforceable right exists to set off current tax assets 

against current tax liabilities and when the deferred taxes relate 

to the same taxable entity and the same taxation authority. 

Deferred tax relating to items recognized directly in equity is 

recognized in equity. 

2.4 VALUATION OF ASSETS AND THEIR BASES OF 

MEASUREMENT 

2.4.1 Property, plant and equipment 

a) Cost and valuation 

Property, plant and equipment is stated at cost or fair value less 

accumulated depreciation and any accumulated impairment in 

value. 

The carrying values of property plant and equipment 

are reviewed for impairment when events or changes in 

circumstances indicate that the carrying value may not be 

recoverable. All items of property, plant and equipment are 

initially recorded at cost. Where items of property, plant and 

equipment are subsequently revalued, the entire class of such 

assets are revalued at fair value. 

When an asset is revalued, any increase in the carrying 

amount is credited directly to a revaluation reserve, except to 

the extent that it reverses a revaluation decrease of the same 

asset previously recognized in the Income Statement, in which 

case the increase is recognized in the Income Statement. Any 

revaluation deficit that offsets a previous surplus in the same 

asset is directly offset against the surplus in the revaluation 

reserve and any excess recognized as an expense. Upon 

disposal, any revaluation reserve relating to the asset sold is 

transferred to retained earnings. 

Items of property, plant and equipment are derecognised upon 

replacement, disposal or when no future economic benefits are 

expected from its use. Any gain or loss arising on derecognition 

of the asset is included in the Income Statement in the year the 

asset is derecognised. 

Immature and mature plantations 

The cost of replanting and new planting are classified as 

immature plantations up to the time of harvesting the crop. 

Further the general charges incurred on the plantation are 

apportioned based on the labour days spent on respective 

replanting and new planting, and capitalized on the immature 

areas. The remaining portion of the general charges is 

expensed in the accounting period in which it is incurred. The 

cost of areas coming in to bearing are transferred to mature 

plantations and depreciated over their useful life period. 

Infilling cost 

Where infilling results in an increase in the economic life of 

the relevant field beyond its previously assessed standard of 

performance, the costs are capitalized in accordance with Sri 

Lanka Accounting Standard 32 “Plantations” and depreciated 

over the useful life as rates applicable to mature plantations. 

Infilling costs that are not capitalized have been charged to the 

Income Statement in the year in which they are incurred. 

b) Depreciation 

Provision for depreciation is calculated by using a straight 

line method on the cost or valuation of all property, plant and 

equipment, other than freehold land, in order to write off such 

amounts over the estimated useful economic life of such 

assets. 

The estimated useful life of assets are as follows: 

Buildings 

20-60 years 

Plant, machinery tools and electrical installations 5-10 years 

Furniture, fixtures and fittings 

4-10 years 

Office and other equipment 

5-10 years 

Computers 

3-10 years 

Motor vehicles 

4-10 years 

Land improvements 

20 years 

Replanting and new planting 

- Tea 33 years 

- Rubber 20 years 

- Coconut 50 years 

The useful life and residual value of assets are reviewed, and 

adjusted if required, at the end of each financial year. 

c) Finance leases 

Property, plant and equipment on finance leases, which 

effectively transfer to the group substantially all the risk and 

benefits incidental to ownership of the leased items, are 

capitalized and disclosed as finance leases at their cash price 

and depreciated over the period the group is expected to 

benefit from the use of the leased assets. 

The corresponding principal amount payable to the lessor is 

shown as a liability. Lease payments are apportioned between 

the finance charges and reduction of the lease liability so as to 

achieve a constant rate of interest on the outstanding balance 

of the liability. The interest payable over the period of the lease 

is transferred to an interest in suspense account. The interest 

element of the rental obligations pertaining to each financial 

year is charged to the Income Statement over the period of 

lease. 


The cost of improvements to leasehold property is capitalized, 

disclosed as leasehold improvements, and depreciated over 

the unexpired period of the lease or the estimated useful life of 

the improvements, whichever is shorter. 

d) Operating leases 

Leases, where the lessor effectively retains substantially all of 

the risks and benefits of ownership over the term of the lease, 

are classified as operating leases. 

Lease payments are recognized as an expense in the Income 

Statement over the term of the lease. 

2.4.2 Leasehold property 

Leasehold property is stated at recorded carrying values as at 

the effective date - Sri Lanka Accounting Standard 19 - Leases 

in accordance with Sri Lanka Accounting Standard Application 

Guidance 1:Accounting for Leasehold Land. Such carrying 

amounts are amortized over the remaining lease term or useful 

life of the leased property whichever in shorter. No further 

revaluations of these leasehold property will be carried out. 

The leasehold rights are amortized in equal amounts over the 

following periods: 

Bare land 

Mature plantations 

Leasehold buildings 

Machinery 

Land improvements 

71 

53 years 

30 years 

25 years 

15 years 

30 years 

2.4.3 Investment property 

Properties held to earn rental income, and properties held 

for capital appreciation have been classified as investment 

property, together with other assets that are integral to such 

investment properties. 

Investment properties are measured initially at cost, including 

transaction costs. The carrying amount includes the cost of 

replacing part of an existing investment property at the time 

that cost is incurred if the recognition criteria are met; and 

excludes the costs of day to day servicing of an investment 

property. 

After initial recognition the company measure all of its 

investment property using the cost model in accordance with 

the requirements in SLAS 18 (Revised 2005) Property, Plant 

and Equipment other than those that meet the criteria to be 

classified as held for sale. 

Investment properties are derecognised when disposed, or 

permanently withdrawn from use because no future economic 

benefits are expected. Any gains or losses on retirement or 

disposal are recognized in the Income Statement in the year of 

retirement or disposal. 

Transfers are made to investment property, when there is a 

change in use, evidenced by ending of owner occupation, 

commencement of an operating lease to another party 

or ending of construction or development. Transfers are 

made from investment property, when there is a change in 

use, evidenced by commencement of owner-occupation or 

commencement of development with a view to sale. 

Where group companies occupy a significant portion of 

the investment property of a subsidiary, such investment 

properties are treated as property, plant and equipment in the 

consolidated financial statements, and accounted for as per 

SLAS 18 (revised 2005) Property, Plant and Equipment. 

2.4.4 Intangible assets 

An intangible asset is initially recognized at cost, if it is probable 

that future economic benefit will flow to the enterprise, and the 

cost of the asset can be measured reliably. 

Following initial recognition, intangible assets are carried at 

cost less any accumulated amortization and any accumulated 

impairment losses. 

Intangible assets with finite lives are amortized over the useful 

economic life and assessed for impairment whenever there 

is an indication that the intangible asset may be impaired. 

The amortization period and the amortization method for an 

intangible asset with a finite useful life is reviewed at least at 

each financial year-end. 

Intangible assets with indefinite useful lives are tested 

for impairment annually either individually or at the cash 

generating unit level. 

2.4.5 Investments 

All quoted and unquoted securities, which are held as noncurrent 

investments, are valued at cost. The cost of the 

investment is the cost of acquisition inclusive of brokerage 

and costs of transaction. The carrying amounts of long term 

investments are reduced to recognize a decline which is 

considered other than temporary, in the value of investments, 

determined on an individual investment basis. 

In the company’s financial statements, investments in 

subsidiaries and associate companies have been accounted 

for at cost, net of any impairment losses which are charged 

to the Income Statement. Income from these investments are 

recognized only to the extent of dividends received. 

Short term investments are carried at market value. 

2.4.6 Impairment of assets 

The group assesses at each reporting date whether there 

is an indication that an asset may be impaired. If any such 

indication exists, or when annual impairment testing for an 



asset is required, the Group makes an estimate of the asset’s 

recoverable amount. An asset’s recoverable amount is the 

higher of an asset’s or cash generating unit’s fair value less 

costs to sell and its value in use and is determined for an 

individual asset, unless the asset does not generate cash 

inflows that are largely independent of those from other assets 

or groups of assets. Where the carrying amount of an asset 

exceeds its recoverable amount, the asset is considered 

impaired and is written down to its recoverable amount. 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. 

Impairment losses are recognized in the income statement 

except for impairment losses in respect of property, plant 

and equipment which are recognized against the revaluation 

reserve to the extent that it reverses a previous revaluation 

surplus. 

An assessment is made at each reporting date as to whether 

there is any indication that previously recognized impairment 

losses may no longer exist or may have decreased. Previously 

recognized impairment losses other than in respect of 

goodwill, are reversed only if there has been an increase in the 

recoverable amount of the asset. Such increase is recognized 

to the extent of the carrying amount had no impairment losses 

been recognized previously. 

2.4.7 Inventories 

Inventories other than produce inventories are valued at 

the lower of cost and net realizable value after making due 

allowances for obsolete and slow moving items. Net realizable 

value is the estimated selling price less estimated costs of 

completion and the estimated costs necessary to make the sale. 

The costs incurred in bringing inventories to its present location 

and condition, are accounted for as follows: 

a) Raw materials 

At actual cost on first-in first-out basis and weighted average 

cost 

b) Work-in- progress 

At the cost of direct materials, direct labour and an appropriate 

proportion of production overheads based on normal operating 

capacity. 

c) Finished goods 

At purchase cost and /or cost of direct materials, direct labour 

and an appropriate proportion of production overheads based 

on normal operating capacity. 

d) Goods in transit 

At actual cost 

e) Produce inventories 

At since realized price 

2.4.8 Trade and other receivables 

Trade and other receivables are stated at the amounts they are 

estimated to realize, net of allowances for bad and doubtful 

receivables. 

Allowances have been made for bad and doubtful debts. Bad 

debts are written off when identified. 

2.4.9 Cash and cash equivalents 

Cash and cash equivalents in the cash flow statement 

comprise cash at bank and in hand and short term deposits 

with a maturity of 3 months or less, net of outstanding bank 

overdrafts and short term borrowings. 

2.5 LIABILITIES AND PROVISIONS 

2.5.1 Employee Benefit Liabilities 

a) Defined benefit plan – Gratuity 

The Group measures the present value of the promised 

retirement benefits of gratuity, which is a defined benefit plan 

using Projected Unit Credit method (PUC). 

The services of a qualified actuary is obtained to determine the 

valuation once in every 2 years for plantation companies and 

every 3 years for other companies in the group. 

Actuarial gains and losses are recognized as income or 

expenses immediately. 

This item is stated under Employee Benefit Liabilities in the 

Balance Sheet. 

The basis of payment of retiring gratuity as follows: 

Length of 

service 

(years) 

No. of months 

salary for each 

completed year 

of service 

00-04 0 

05-10 ½ 

11-20 ¾ 

21-30 1 

Over 30 

1 ¼ 

b) Defined contribution plans - Employees’ Provident 

Fund and Employees’ Trust Fund 

Employees are eligible for Arpico Employees’ Provident Fund 

Contributions / Employees’ Provident Fund Contributions and 

Employees’ Trust Fund Contributions in line with the respective 

Statutes and Regulations. The Companies contribute 12% 

and 3% of gross emoluments of employees to the Arpico 


Employees’ Provident Fund / Employees’ Provident Fund and 

Employees’ Trust Fund respectively. 

2.5.2 Grants and subsidies 

Grants are recognized where there is reasonable assurance 

that the grant will be received and all attaching conditions 

will be complied with. When the grant relates to an expense 

item, it is recognized as income over the period necessary to 

match the grant on a systematic basis to the costs that it is 

intended to compensate. Where the grant relates to an asset, 

it is set up as deferred income. Where the group receives 

non-monetary grants, the asset and that grant are recorded at 

nominal amounts and is released to the Income Statement over 

the expected useful life of the relevant asset by equal annual 

installments. 

2.5.3 Provisions, contingent assets and contingent 

liabilities 

Provisions are made for all obligations existing as at the 

Balance Sheet date when it is probable that such an obligation 

will result in an outflow of resources and a reliable estimate can 

be made of the quantum of the outflow. 

All contingent liabilities are disclosed as a note to the financial 

statements unless the outflow of resources is remote. 

Contingent assets are disclosed, where inflow of economic 

benefit is probable. 

2.6 INCOME STATEMENT 

2.6.1 Revenue recognition 

Revenue is recognized to the extent that it is probable that 

the economic benefits will flow to the group, 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 trade discounts and 

value added taxes, after eliminating sales within the group. 

The following specific criteria are used for recognition of 

revenue: 

a) Sale of goods 

Revenue from the sale of goods is recognized when the 

significant risk and rewards of ownership of the goods 

have passed to the buyer with the group retaining neither 

a continuing managerial involvement to the degree usually 

associated with ownership, nor an effective control over the 

goods sold. 

b) Rendering of services 

Revenue from rendering of services is recognized in the 

accounting period in which the services are rendered or 

performed. 

c) Construction revenue 

Construction revenue is recognized by reference to the stage 

of completion, determined by taking into accounts the labour 

hours incurred to date as a percentage of total estimated labour 

hours for each contract. Where the contract outcome cannot be 

measured reliably, revenue is recognized only to the extent of 

expenses incurred that are recoverable. 

d) Plantation companies 

In keeping with the practice in the Plantation Industry revenue 

or profit or loss on Perennial Crops are recognized in the 

financial period of harvesting. Revenue is recorded at invoice 

value net of brokerage, public sale expenses and other levies 

related to turnover. 

e) Turnover based taxes 

Turnover based taxes include Value Added Tax, Economic 

Service Charge, Turnover Tax and Nation Building Tax. 

Companies in the group pay such taxes in accordance with the 

respective statutes. 

2.6.2 Dividend 

Dividend income is recognized when the shareholders’ right to 

receive the payment is established. 

2.6.3 Rental income 

Rental income is recognized on an accrual basis over the term 

of the lease. 

2.6.4 Royalties 

Royalties are recognized on an accrual basis in accordance 

with the substance of the relevant agreement. 

2.6.5 Interest income 

Interest income is recognized as and when the interest accrues. 

2.6.6 Gains and losses 

Net gains and losses of a revenue nature arising from the 

disposal of property, plant and equipment and other noncurrent 

assets, including investments, are accounted for in 

the Income Statement, after deducting from the proceeds on 

disposal, the carrying amount of such assets and the related 

selling expenses. 

Gains and losses arising from activities incidental to the main 

revenue generating activities and those arising from a group 

of similar transactions which are not material, are aggregated, 

reported and presented on a net basis. 

2.6.7 Other income 

Other income is recognized on an accrual basis. 

73 



2.6.8 Borrowing costs 

Borrowing costs are recognized as an expense in the 

period in which they are incurred except to the extent where 

borrowing costs that are directly attributable to the acquisition, 

construction or production of assets that takes a substantial 

period of time to get ready for its intended use or sale, is 

capitalized. 

2.7 SIGNIFICANT ACCOUNTING POLICIES THAT ARE 

SPECIFIC TO THE BUSINESS OF ASSOCIATE COMPANIES 

2.7.1 Asian Alliance Insurance PLC 

a) Non - Life (General) Insurance Business - Gross 

Written Premiums 

Gross Written Premium is generally recognized as written upon 

inception of the policy. Upon inception of the contract, premia 

are recorded as written and are earned primarily on a pro-rata 

basis over the term of the related policy coverage. However, for 

those contracts for which the period of risk differs significantly 

from the contract period, premia are earned over the period 

of risk in proportion to the amount of insurance protection 

provided. Earned premia are calculated on the 24th basis 

except for marine business, which is computed on a 60-40 

basis. 

b) Life Insurance Business – Gross Written Premium 

Premia from traditional long term insurance contacts, 

including participating contacts and annuity policies with 

life contingencies, are recognized as revenue when cash is 

received from the policyholder. 

2.9 Effect of Sri Lanka Accounting Standards issued but 

not yet effective 

a) The following standards have been issued by the Institute 

of Chartered Accountants of Sri Lanka. 

- Sri Lanka Accounting Standard 44 Financial Instruments; 

Presentation (SLAS 44) 

- Sri Lanka Accounting Standard 45 Financial Instruments; 

Recognition and Measurement (SLAS 45) 

- Sri Lanka Accounting Standard 39 Share Based Payments 

(SLAS 39) 

The effective date of SLAS 44, 45 and 39 was changed 

during the year to be effective for financial periods 

beginning on or after 01 January 2012. These three 

standards have been amended and forms a part of the 

new set of financial reporting standards mentioned under 

note (b) below. 

b) Following the convergence of Sri Lanka Accounting 

Standards with the International Financial Reporting 

Standards, the Council of the Institute of Chartered 

Accountants of Sri Lanka has adopted a new set of 

financial reporting standards that would apply for 

financial periods beginning on or after 01 January 2012. 

The application of these financial reporting standards is 

substantially different to the prevailing standards. 

2.8 SEGMENT INFORMATION 

2.8.1 Reporting segments 

The activities of the segments are described in the Segmental 

Review of Operations. Segmentation has been determined 

based on primary format and secondary format. Primary format 

represents the business segments, identified based on the 

differences in the products and services produced which has a 

similar nature of process, risk and return while the secondary 

format is on the basis of geographical areas in which the 

products or services are sold. The operating results of the 

segments are described in Note 21 to the financial statements. 

The geographical analysis is by the location of the customer. 

Since the manufacturing and marketing service as well as the 

assets and liabilities are located in Sri Lanka, only the turnover 

has been analyzed into the geographical location. 

2.8.2 Segment information 

Segment information has been prepared in conformity with the 

accounting policies adopted for preparing and presenting the 

consolidated financial statements of the group. 


3. Property plant & equipment 

A. Group 

As at Additions Impairment Disposals/ Effect of As at 

01.04.2010 transfers foreign 31.03.2011 

currency 

translation 

Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Cost / valuation 

Land / Land Improvements 1,754,805 120,789 - - - 1,875,594 

Buildings/Buildings improvements 2,320,801 146,331 - (23,065) (2,440) 2,441,627 

Immature / mature plantations 3,920,727 441,204 - - - 4,361,931 

Plant, machinery, tools & 

electrical installations 3,475,953 219,570 - (45,079) (14,888) 3,635,556 

Office & other equipment 430,882 101,251 - (3,087) - 529,046 

Furniture, fixtures & fittings 389,390 32,784 - (847) (324) 421,003 

Motor vehicles 500,412 22,919 - (1,240) (970) 521,121 

Computers 312,306 26,305 - (1,676) - 336,935 

Capital work in progress 183,906 140,804 - (50,739) - 273,971 

13,289,182 1,251,957 - (125,733) (18,622) 14,396,784 

As at Charge Impairment Disposals Effect of As at 

01.04.2010 for the foreign 31.03.2011 

year 

currency 

translation 

Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Depreciation / amortisation 

Land Improvements 38,927 7,779 - - - 46,706 

Buildings 422,400 70,970 1,609 (1,538) (643) 492,798 

Immature / mature plantations 501,279 98,129 - - - 599,408 

Plant, machinery, tools & 

electrical installations 1,955,805 239,126 60,410 (12,494) (8,027) 2,234,820 

Office & other equipment 310,630 39,317 - (1,120) - 348,827 

Furniture, fixtures & fittings 233,323 32,749 - (251) (300) 265,521 

Motor vehicles 432,532 32,362 - (1,240) (970) 462,684 

Computers 273,457 22,494 - (1,233) - 294,718 

4,168,353 542,926 62,019 (17,876) (9,940) 4,745,482 

75 



3. Property plant & equipment contd. 

2011 2010 

Rs.’000 Rs.’000 

Net Book Values 

Land / Land Improvements 1,828,888 1,715,878 

Buildings/Buildings improvements 1,948,829 1,898,401 

Immature / mature plantations 3,762,523 3,419,448 

Plant, machinery, tools & electrical installations 1,400,736 1,520,148 

Office & other equipment 180,219 120,252 

Furniture, fixtures & fittings 155,482 156,067 

Motor vehicles 58,437 67,880 

Computers 42,217 38,849 

Capital work in progress 273,971 183,906 

9,651,302 9,120,829 

As at Additions Impairment Disposals/ Effect of As at 

01.04.2010 transfers foreign 31.03.2011 

currency 

translation 

Assets acquired on finance leases Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 


Immature / mature plantations 758,385 - - - - 758,385 

Plant & machinery 134,286 - - - - 134,286 

Office & other equipment 836 - - - - 836 

Motor vehicles 4,630 - - (633) - 3,997 

898,137 - - (633) - 897,504 

As at Charge Impairment On Effect of As at 

01.04.2010 for the disposals foreign 31.03.2011 

year 

currency 

translation 

Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Depreciation / amortisation 

Immature / mature plantations 389,930 26,027 - - - 415,957 

Plant & machinery 111,251 15,907 - - - 127,158 

Office & other equipment 313 56 - - - 369 

Motor vehicles 4,630 - - (633) - 3,997 

506,124 41,990 - (633) - 547,481 




Rs.’000 Rs.’000 


Immature / mature plantations 342,428 368,455 

Plant & machinery 7,128 23,035 

Office & other equipment 467 523 

350,023 392,013 

Total carrying amount of property, plant and equipment 10,001,325 9,512,842 

B. Leasehold Property 

As at Additions Disposals/ As at 

01.04.2010 transfers 31.03.2011 

Rs.’000 Rs.’000 Rs.’000 Rs.’000 


Land 828,468 - (605) 827,863 

Buildings 201,281 - - 201,281 

1,029,749 - (605) 1,029,144 

As at Charge On As at 

01.04.2010 for the disposals 31.03.2011 

year 

Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Amortisation 

Land 256,273 16,305 (47) 272,531 

Buildings 143,556 7,122 - 150,680 

399,830 23,427 (47) 423,210 


Rs.’000 Rs.’000 

Land 555,332 572,195 

Buildings 50,602 57,724 

Total carrying amount of leasehold property 605,934 629,919 

77 




Of the 42 JEDB / SLSPC estates handed over to the Kegalle Plantations PLC and Maskeliya Plantations PLC, all estate leases 

except for that of Ambanpitiya Estate has been executed as at the balance sheet date. With regard to Namunukula Plantations, 

lease agreements for 10 estates have been executed and memorandum of record has been signed for the balance 10 estates. 

All of these leases will be retroactive to June 22, 1992 the date of formation of the companies. In terms of the ruling obtained 

from Urgent Issue Task Force (UITF) of the Institute of Chartered Accountants of Sri Lanka the leasehold right to bare land and 

all immovable assets under finance lease in these estates have been taken into the books of the companies retroactive to June 

22, 1992. While the bare land has been accounted for based on a value established just prior to the formation of the companies 

upon a revaluation carried out by a valuation specialist, Mr. D.R. Wickremasinghe, all other immovable assets under finance leases 

have been taken into the books of the companies at their book values as they appeared in the books of JEDB /SLSPC, on the 

day immediately preceding the date of formation of the companies. Subsequent to the withdrawal of UITF Abstract 11 and 23, the 

Sri Lanka Accounting Standard Application Guidance 1; Accounting for Leasehold Lands was issued. Accordingly, lease rentals 

prepaid to acquire land use rights, which was previously shown under property plant and equipment have now been re-classified 

under leasehold property. Prepaid lease rentals paid to acquire land rights are amortised over the lease term in accordance with 

the pattern of benefits provided. 

The assets are amortised on a straight-line basis over their estimated useful lives. 

Land and buildings and certain movable assets and liabilities of the Sri Lanka State Plantations Corporation at Glencroft Office 

situated at Norwood Estate have not been incorporated in the financial statements of Maskeliya Plantations PLC. 

The other assets of the two companies included under Property, plant and equipment represents all other movable assets vested 

in the company by gazette notification at the date of formation of the company. 

The unexpired period of the lease as at the balance sheet date was 34 years. 

Property (excluding leasehold property) with a carrying amount of Rs. 3,057 mn(2010 - Rs. 2,579 mn) are pledged as security for 

loans obtained. 

Borrowing costs amounting to Rs. 26.6mn ( 2010 Rs. 28.76mn) have been capitalised which was incurred on long term loans 

related to immature plantations in the plantation sector using a capitalisation rate of 11% - 12% (2010 11.77%). 

Impairment of property, plant and equipment 

The recoverable amount for certain items of plant and machinery was estimated and impairment losses were recognized to reduce 

the carrying amounts as follows: 

Richard Pieris Natural Foams Ltd - Rs. 55 mn (2010 Rs.16 mn) 

Hamefa Kegalle (Pvt) Ltd - Rs. 7 mn (2010 Rs. 13 mn) 

C. Company 



Rs.’000 Rs.’000 Rs.’000 Rs.’000 


Plant, machinery, tools & electrical installations 59,069 199 - 59,268 

Office & other equipment 25,917 129 - 26,046 

Furniture, fixtures & fittings 16,489 221 - 16,710 

Motor vehicles 66,776 - - 66,776 

Computers 25,859 1,761 - 27,620 

194,110 2,310 - 196,420 




01.04.2010 for the disposals 31.03.2011 

year 

Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Depreciation / amortization 

Plant, machinery, tools & electrical installations 43,948 2,863 - 46,811 

Office & other equipment 19,815 1,172 - 20,987 

Furniture, fixtures & fittings 8,958 1,295 - 10,253 

Motor vehicles 41,724 8,842 - 50,566 

Computers 18,185 3,214 - 21,399 

132,630 17,386 - 150,016 


Rs.’000 Rs.’000 

Net book value 

Plant, machinery, tools & electrical installations 12,457 15,121 

Office & other equipment 5,059 6,102 

Furniture, fixtures & fittings 6,457 7,531 

Motor vehicles 16,210 25,052 

Computers 6,221 7,674 

46,404 61,480 

Investment property 

D. Company 



Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Gross carrying amounts 

Freehold land 474,423 - - 474,423 

Buildings and Building integrals 285,607 192 - 285,799 

760,030 192 - 760,222 


01.04.2010 for the Disposals 31.03.2011 

Year 

Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Depreciation 

Buildings and Building integrals 60,823 8,007 - 68,830 

60,823 8,007 - 68,830 

79 





Rs 000 Rs 000 


Freehold land 474,423 474,423 

Buildings and Building integrals 216,970 224,784 

Total carrying amount of investment property 691,393 699,207 

Rental income earned from investment property by the company amounted to Rs128.mn (Rs.128mn in 2009/2010). Direct 

operating expenses incurred in respect of investment property by the company amounted to Rs. 1.37 mn (Rs. 3.3 mn in 

2009/2010). 

Fair value of Investment property as at 31 March 2011 amounted to Rs. 5,407 mn (2010 Rs. 4,945 mn). 

4 Intangible Assets 

Other 

Goodwill Licences intangibles Total 

Rs.000 Rs.000 Rs.000 Rs.000 

Cost/Carrying value 

As at 1 April 2010 445,807 16,708 70,082 532,597 

Acquired / Incurred during the period 34,400 28,949 - 63,349 

As at 31 March 2011 480,207 45,657 70,082 595,946 

Accumulated amortisation/impairment 


Amortisation for the year - 3,703 7,105 10,808 

Impairment Loss Recognised 34,400 - - 34,400 

Exchange translation difference - - 1,038 1,038 


Net book value 




(a) Goodwill 

Goodwill represents the excess of an acquisition over the Group interest in the net fair value of the identifiable assets, liabilities and 

contingent liabilities at the date of acquisition, and is carried at cost less accumulated impairment losses. The group Goodwill has 

been allocated to four cash-generating units for impairment testing, as follows: 

1. Kegalle Plantations PLC 

2. Namunukula Plantations PLC 

3. Maskeliya Plantations PLC 

4. Arpico Super Centre in Kandy (which is under the purview of Richard Pieris Distributors Ltd) 

Goodwill is not amortised, but is reviewed for impairment annually and for the purpose of testing goodwill for impairment, goodwill 

is allocated to the operating entity level, which is the lowest level at which the goodwill is monitored for internal management 

purpose. 

During the year Richard Pieris Distributors Ltd ,a fully owned subsidiary of the group took over the identified assets and liabilities of 

five mini stores located in the central province. The goodwill resulting on such acquisition amounted to Rs. 34.4mn and was written 

off during the year. 

The recoverable amount of the goodwill is determined based on a value in use calculation using cash flow projections based on 

financial budgets approved by senior management for one year, and forecast for the four years thereafter, covering a five year 

period. 

(b) Licenses 

Licenses include separately acquired four operating licenses stated at cost less accumulated amortizations and impairment losses. 

Licences acquired have been amortized evenly over a period of five years. 

During the year Richard Pieris Securities (Pvt) Ltd, a fully owned subsidiary of the group acquired a licence to operate stock 

broking activities at Colombo Stock Exchange at a cost of Rs. 28.9 mn. 

(c) Other intangible assets 

Other intangible assets represents the value of services provided by the foreign collaborator on engineering assembly know-how 

training, technological assistance and works management to Arpitalian Compact Soles (Private) Limited. This is amortized over a 

period of fifteen years and commencing from the financial year 2000/2001. 

The recoverable amount of the know how is determined based on a value in use calculation using cash flow projections based 

on financial budgets approved by senior management for one year, and forecast for the four years thereafter, covering a five year 

period. 

Key assumptions used in Value in Use calculations 

Volume growth - Volume growth is based on past performance, the approved budget and expected performance of such Cash 

Generation Unit (CGU) based on the actual performance and to evaluate future investment proposals. 

Discount rates - Discount rates reflect management’s estimate of the risk specific to the unit. This is the benchmark used by 

management to assess operating performance and to evaluate future investment proposals. 

Cost increase due to inflation - Expected inflationary levels over the next five years based on management judgment were used to 

estimate the increase in costs over similar periods. 

81 



5 Investments 

A Company investment in subsidiaries 

% Holding No of shares Value Rs.000 

31.03.2011 31.03.2010 31.03.2011 Movement 31.03.2010 31.03.2011 Movement 31.03.2010 

Quoted investments 

Richard Pieris Exports PLC (Rs 251mn) * 81 81 8,959,997 - 8,959,997 200,555 - 200,555 

Unquoted investments 

Richard Pieris Distributors Ltd. 100 100 106,673,960 - 106,673,960 812,130 - 812,130 

Arpidag International (Pvt) Ltd. 51 51 234,598 - 234,598 27,110 - 27,110 

Richard Pieris Tyre Co. Ltd. 100 100 4,000,000 - 4,000,000 50,000 - 50,000 

Richard Pieris Rubber Products Ltd. 100 100 2,700,000 - 2,700,000 27,000 - 27,000 

Richard Pieris Rubber Compounds Ltd. 100 100 1,700,000 - 1,700,000 17,000 - 17,000 

Arpico Furniture Ltd. 100 100 4,000,000 - 4,000,000 40,000 - 40,000 

Arpico Plastics Ltd. 100 100 2,900,000 - 2,900,000 29,000 - 29,000 

Arpico Industrial Development Co. Ltd. 

Ordinary Shares 100 100 1,500,000 - 1,500,000 15,000 - 15,000 

12% Redeemable Cumulative preference shares 9,140,000 - 9,140,000 91,400 - 91,400 

Plastishells Ltd. 98 98 3,361,000 - 3,361,000 35,615 - 35,615 

Richard Pieris Natural Foams Ltd. 22 22 14,022,253 - 14,022,253 143,479 - 143,479 

Arpico Flexifoam (Pvt) Ltd. 100 100 25,000,018 - 25,000,018 250,000 - 250,000 

Arpitalian Compact Soles (Pvt) Ltd. 

Ordinary Shares 15 16 5,333,333 1,333,333 4,000,000 53,333 13,333 40,000 

10% Redeemable Cumulative Preference Shares 6,404,500 - 6,404,500 64,045 - 64,045 

RPC Management Services (Pvt) Ltd. 100 100 7,500,000 - 7,500,000 550,250 - 550,250 

Richard Pieris Group Services (Pvt) Ltd. 100 100 2 - 2 - - - 

Arp-Eco (Pvt) Ltd. 100 100 2 - 2 - - - 

RPC Logistics (Pvt) Ltd. 100 100 2,000,002 - 2,000,002 20,000 - 20,000 

Richard Pieris Plantations (Pvt) Ltd. 100 100 7 - 7 - - - 

R P C Real Estate Development Co. (Pvt) Ltd. 100 100 2 - 2 - - - 

Arpico Homes (Pvt) Ltd. 100 100 2 - 2 - - - 

Arpico Exotica Asiana (Pvt) Ltd. 100 100 2 - 2 - - - 

RPC Globe Travel (Pvt) Ltd. 100 100 600,000 - 600,000 6,000 - 6,000 

RPC Construction (Pvt) Ltd. 100 100 2,000,000 - 2,000,000 20,000 - 20,000 

Arpitech Ltd. 100 100 3,500,000 - 3,500,000 35,000 - 35,000 

Arpimall Development Co (Pvt) Ltd. 24 24 5,000,000 - 5,000,000 50,000 - 50,000 

Arpico Interiors (Pvt) Ltd. 83 83 2,500,000 - 2,500,000 25,000 - 25,000 

Richard Pieris Securities (Pvt) Ltd 100 - 6,499,999 6,499,999 - 65,000 65,000 - 

Richard Pieris Financial Services (Pvt)Ltd 100 - 3,499,999 3,499,999 - 35,000 35,000 - 

2,661,917 113,333 2,548,584 

Provision for fall in value of the investments in 

Arpico Furniture Ltd. (40,000) - (40,000) 

RPC Globe Travels (Pvt) Ltd. (6,000) - (6,000) 

RPC Construction (Pvt) Ltd. (20,000) - (20,000) 

Arpitech Ltd. (35,000) - (35,000) 

Company investments in subsidiaries 2,560,917 113,333 2,447,584 


B 

Group investments in subsidiaries 


31.03.2011 31.03.2010 31.03.2011 movement 31.03.2010 31.03.2011 movement 31.03.2010 

Investor 


Investee 

Playcraft Lanka (Pvt) Ltd. 36 36 213,756 - 213,756 2,138 - 2,138 

Arpimalls Development Co (Pvt) Ltd. 

Ordinary shares 76 76 16,000,000 - 16,000,000 160,000 - 160,000 

6% redeemable cumulative preference shares 2,200,000 - 2,200,000 220,000 - 220,000 

Arpico Interiors (Pvt) Ltd. 17 17 500,000 - 500,000 5,000 - 5,000 

RPC Real Estate Development (Pvt) Ltd. 

6% redeemable cumulative preference shares - - 66,700,000 - 66,700,000 667,000 - 667,000 

RPC Retail Development (Pvt) Ltd. 

6% redeemable cumulative preference shares - - 38,700,000 20,000,000 18,700,000 387,000 200,000 187,000 

Investor 

Arpico Industrial Development Company (Pvt) Ltd 

Investee 

R P C Polymers (Pvt) Ltd 31 31 5,700,000 - 5,700,000 57,000 - 57,000 

Investor 

Richard Pieris Exports PLC 

Investee 

Richard Pieris Natural Foams Ltd 43 43 27,560,000 - 27,560,000 284,820 - 284,820 

Playcraft Lanka (Pvt) Ltd. 36 36 217,750 - 217,750 2,138 - 2,138 

Micro Minerals (Pvt) Ltd. 69 69 627,400 - 627,400 6,274 - 6,274 

Arpitalian Compact Soles (Pvt) Ltd. 45 44 15,993,334 3,998,333 11,995,001 159,933 39,983 119,950 

Arpico Natural Latex Foams (Pvt) Ltd. 44 44 4,000,000 - 4,000,000 40,000 - 40,000 

Investor 

Richard Pieris Natural Foams Ltd. 

Investee 

Arpico Natural Latex Foams (Pvt) Ltd. 56 56 5,000,000 - 5,000,000 50,000 - 50,000 

Investor 

Plastishells Ltd. 

Investee 

R P C Polymers (Pvt) Ltd 69 69 13,000,000 - 13,000,000 130,000 - 130,000 

Investor 

Richard Pieris Plantations (Pvt) Ltd. 

Investee 

Exotic Horticulture (Pvt) Ltd. 100 100 1,000,000 - 1,000,000 10,000 - 10,000 

Maskeliya Tea Garden Ltd. 100 100 499 - 499 14,999 - 14,999 

RPC Timberline (Pvt) Ltd. - 75 - (2,000,000) 2,000,000 - (20,000) 20,000 

RPC Plantation Management Services (Pvt) Ltd. 100 100 24,106,249 - 24,106,249 330,000 - 330,000 

Investor 

RPC Management Services (Pvt) Ltd. 

Investee 

Maskeliya Plantations PLC (Rs 539mn) * 71 64 19,172,144 1,995,400 17,176,744 457,457 56,908 400,549 

83 



B 

Group investments in subsidiaries contd. 



Investor 

RPC Plantation Management Services (Pvt) Ltd. 

Investee 

Namunukula Plantations PLC (Rs 1,599 mn) * 59 59 13,950,000 - 13,950,000 397,163 - 397,163 

Kegalle Plantations PLC (Rs 3,531 mn) * 68 68 17,015,000 - 17,015,000 190,974 - 190,974 

Investor 

Kegalle Plantations PLC 

Investee 

Richard Pieris Natural Foams Ltd. 35 35 22,500,000 - 22,500,000 225,000 - 225,000 

Hamefa Kegalle (Pvt) Ltd. 100 100 2,800,000 - 2,800,000 14,000 - 14,000 

3,810,896 276,891 3,534,005 

Allowances for fall in value of investments in; 

Playcarft Lanka (Pvt) Ltd. (4,276) - (4,276) 

Namunukula Plantations PLC (29,167) - (29,167) 

RPC Timberline (Pvt) Ltd. - 20,000 (20,000) 

Arpico Natural Latex Foams (Pvt) Ltd. (50,000) - (50,000) 

3,727,453 296,891 3,430,562 

C 

Company / Group investment in associates 



Company 

Quoted investments 

Asian Alliance Insurance PLC (Rs 884 mn) * 15 15 5,629,900 1,879,900 3,750,000 159,756 122,256 37,500 

Company investments in associates (at cost) 159,756 122,256 37,500 

Group investments in associates 

Quoted Investments 

Investor 


Investee 

Asian Alliance Insurance PLC (Rs 589mn)* 10 10 3,750,912 1,250,312 2,500,600 106,277 81,271 25,006 

Unquoted Investments 

Investor 

Namunukula Plantations PLC 

Investee 

AEN Palm Oil Processing (Pvt) Ltd. 33 33 2,696,012 - 2,696,012 29,960 - 29,960 

Group investment in associates (at cost) 295,993 203,527 92,466 

Group share of associate companies - 

Asian Alliance Insurance PLC 132,687 66,398 66,289 

AEN Palm Oil Processing (Pvt) Ltd. 27,506 5,342 22,164 

Group investment in associates (equity basis) 456,186 275,267 180,919 

* Amounts stated within brackets correspond to market values as at 31st March 2011. In the opinion of the Directors any reduction in market value below cost is considered to be of 

temporary nature. 


D Other investements 

Value Rs.’000 

Investor Investment 31.03.2011 movement 31.03.2010 

Richard Pieris and Company PLC Unquoted investments 

Richard Pieris Plantations (Pvt) Ltd. - Debentures 65,750 - 65,750 

RPC Timberline (Pvt) Ltd - Debentures 55,000 - 55,000 

RPC Timberline (Pvt) Ltd - Equity Shares 12,985 12,985 - 

133,735 12,985 120,750 

Allowances for fall in value of investment in RPC Timberline (Pvt) Ltd (43,985) (18,985) (25,000) 

89,750 (6,000) 95,750 

Reversal of intra group debentures / adjustments (65,750) - (95,750) 

24,000 - - 

The value of unquoted investments based on net assets amounted to Rs. 5,000 mn (Rs. 4,221 mn in 2009/2010). 

6 Inventories 

Group 

Company 

2010/2011 2009/2010 2010/2011 2009/2010 

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Raw materials 722,599 560,514 - - 

Growing crop-nurseries 27,283 42,392 - - 

Work-in-progress 144,349 123,558 - - 

Finished goods 1,610,543 1,225,858 - - 

Produce inventories 798,321 478,019 - - 

Other inventories 46,074 48,068 - - 

Goods in transit 7,028 4,881 - - 

3,356,197 2,483,290 - - 

Elimination of unrealised profit (14,313) (19,252) - - 

3,341,884 2,464,038 - - 

Inventories are net of allowances for slow moving and obsolete inventories. 

The amount of write-down of inventories recognised as an expense is Rs.60mn (2010 Rs. 42 mn) which is recognised under 

administration expenses. 

Inventories carried at net realisable value as at 31st March 2011 amounted Rs.886mn(2010 Rs. 467 mn) which is recognised in 

cost of sales and administrative expenses. 

Inventories with a carrying amount of Rs. 1,250 mn (2010 Rs. 896 mn ) are pledged as security for loans obtained, details of which 

are disclosed in Note 13 to the financial statements. 

85 



7 Trade and other receivables 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Trade Debtors 2,330,762 2,222,259 - - 

Less: Allowances for bad doubtful debts (421,008) (408,170) - - 

1,909,754 1,814,089 - - 

Advances, deposits and prepayments 370,638 270,904 - 18,627 

Loans to employees 10,189 6,765 1,472 909 

Other debtors 618,219 458,390 51,234 47,503 

2,908,800 2,550,148 52,706 67,039 

8 Short term investments 

Group / Company 


No. of No. of Market value Cost Market value Cost 

Quoted investments shares shares Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

John Keells Holdings PLC 54 54 26 6 11 6 

Asian Hotel Properties PLC 319,700 319,700 59,399 17,721 41,968 17,721 

Dialog Telekom PLC 10,100 10,100 115 192 78 192 

59,540 17,919 42,057 17,919 

Appreciation / (provision) 

for fall in value of investment - 41,621 - 24,138 

59,540 59,540 42,057 42,057 

9 Stated capital 


Number of Value of Number of Value of 

shares shares shares shares 

in ‘000 Rs. ‘000 in ‘000 Rs. ‘000 

Fully paid ordinary shares at the beginning of the year 128,251 1,578,475 128,251 1,578,475 

Share options exercised prior to subdivision of shares (Note 33) 781 40,305 - - 

Sub division of shares during the year (Note 9.1) 1,806,448 - - - 

Share options exercised after subdivision of shares (Note 33) 1,761 8,832 - - 

Balance at the end of the year 1,937,241 1,627,612 128,251 1,578,475 

9.1 The Company exercised a sub division of shares in the proportion of 15 shares for every 1 share held on 4th October 2010. 

10 Capital reserves 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Capital reserve 124,526 124,526 8,199 8,199 

Revaluation reserve 2,375 2,375 2,375 2,375 

126,901 126,901 10,574 10,574 

10.1 Capital Reserves Compromise surplus arising from revaluations and other statutory reserves. 


11 Revenue reserves 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

A. General reserve 179,443 179,443 - - 

179,443 179,443 - - 

B. Retained profit 3,041,659 1,876,921 617,905 654,962 

3,221,102 2,056,364 617,905 654,962 

11.1 General reserves represent amounts set aside from time to time by the directors for general application. These have been 

appropriated by the board complying with the articles of association which provides for such amounts being set aside for future 

use and utilized based on board approval. 

12 Foreign currency translation 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

At the beginning of the year 31,152 32,371 - - 

Exchange translation difference for the year (3,838) (1,219) - - 

At the end of the year 27,314 31,152 - - 

Foreign currency translation relates to the resulting exchange difference on translation of Arpitalian Compact Soles (Pvt.) Ltd.’s 

accounts maintained in US dollars, into Sri Lankan rupees. 

13 Interest bearing loans and borrowing 

Group 

Company 


Rs’000 Rs’000 Rs’000 Rs’000 

At beginning of the year 3,197,229 3,416,833 1,033,469 1,511,263 

Effect of foreign currency translation (8,433) (3,368) - - 

Disposal of subsidiary (1,087) - - - 

New Loans obtained 1,133,979 1,445,223 - - 

4,321,688 4,858,688 1,033,469 1,511,263 

Repayments (1,248,156) (1,661,459) (609,385) (477,794) 

3,073,532 3,197,229 424,084 1,033,469 

Transferred to current Liabilities (1,075,241) (1,239,549) (275,000) (605,000) 

At the end of the year 1,998,291 1,957,680 149,084 428,469 

Total Interest Bearing Loans & Borrowings 

Repayable within one year 1,075,241 1,239,549 275,000 605,000 

Repayable after one year 1,998,291 1,957,680 149,084 428,469 

3,073,532 3,197,229 424,084 1,033,469 

87 



B. Interest bearing loans and borrowings repayable after one year 

Company Lender 2010/2011 

31.03.2011 

Rs.’000 

2009/2010 


Rs.’000 

Repayment 

Security 

Richard Pieris and Company PLC Commercial Bank PLC 234,800 412,000 Rs.42 mn per quarter Mortgage over Land and Building at Kandy & Battaramulla. 

Commercial Bank PLC 9,200 34,385 Rs.7.5 mn per quarter Mortgage over shares of Namunukula Plantations PLC 

DFCC Bank PLC 61,334 93,334 Rs. 2.67 mn per month Mortgage over Machinery 

National Savings Bank - 300,000 Bullet Repayment in September 2010 Mortgage over Land & Building at Dehiwala 

Indian Bank 118,750 193,750 Rs 6.25 mn per month Mortgage over Land & Building at Mattegoda 

Richard Pieris Distributors Limited Commercial Bank PLC - 42,830 Rs 2.86 mn per month Corporate Guarantee given by Richard Pieris and Company PLC and 

shares of Namunukula Plantations PLC 

Commercial Bank PLC 570,400 W.e.f. August 2011 Monthly Repayment 

State Bank of India 170,000 W.e.f. August 2011 Monthly Repayment 

NDB AVIVA Fund Management 14,979 W.e.f. August 2011 Monthly Repayment 

National Development Bank PLC 259,600 W.e.f February 2013 

National Development Bank PLC 195,000 255,000 Rs 15 mn per quarter Clean Basis 

Credit Card receivables at Hyde Park Corner & Battaramulla Super Center 

Arpitech (Pvt) Limited Pan Asia Bank PLC 28,498 45,577 Rs. 1.95 mn per month Mortgage over Land, Plant & Machinery at Mattegoda 

RPC Timberline (Pvt) Ltd Sampath Bank 1,087 Rs. 41,500 per month Land & Building at Homagama 

RPC Retail Development 

LOLC PLC 163,565 208,562 Rs 3.75 mn per month Mortgage over Land and Building at Negambo 

Company Limited 

Richard Pieris Exports PLC Hatton National Bank PLC 76,760 137,709 US $ 125,000 per quarter Mortgage over Land and Buildings at Union Place, Colombo 02 

State Bank of India 68,994 156,791 US $ 62,500 per month Mortgage over Stocks, Debtors, Plant & Machinery and Land & Building 

at Ekala. 

RPC Management Services (Pvt) DFCC Bank PLC 128,245 173,513 Rs 3.772 mn per month Mortgage over Shares of Maskeliya Plantations PLC 

Limited 

RPC Plantations Management Hatton National Bank PLC 27,076 39,580 Rs 1mn per month Promissory Note 

Services (Pvt) Limited 

Maskeliya Plantations PLC ADB/ National Development Bank PLC 1,942 5,270 Rs. 0.28mn per month 

ADB/ National Development Bank PLC 3,000 5,117 Rs. 0.18mn per month 

Primary mortgage over leasehold rights of Brunswick,Strathspey,Laxapana 


and Moray Estates. 







Secondary mortgage over leasehold rights of 

Brunswick,Strathspey,Laxapana and Moray Estates. 

Primary mortgage over leasehold rights of Talawakelle Estate. 

Tertiary mortgage over leasehold rights of Brunswick, Strathspey, 

Laxapana and Moray Estates. 

Secondary mortgage over leasehold rights of Talawakelle Estate. 

ADB/Seylan Bank PLC 19,128 23,459 Rs. 0.36mn per month 

Primary mortgage over leasehold rights of Ampitittiakande, Craig & 


Mousakelle Estates. 


DFCC Bank PLC 9,190 13,274 Rs. 0.34mn per month 

Hatton National Bank PLC 4,313 8,063 Rs. 0.31mn per month 

Corporate Guarantee given by RPC Management Services (Pvt) Ltd 

National Development Bank PLC- 

E-Friend Loan 

23,128 32,383 Rs. 0.77mn per month 

National Development Bank PLC- 

Government Relief Package 

27,000 117,500 As per monthly Trust Papers Securitization of future tea receivables 

NDB Investment Bank 112,600 125,000 As per monthly Trust Papers Securitization of future tea receivables 

National Development Bank PLC 119,000 W.e.f. April 2012 Rs.1.4mn per month Primary mortgage over leasehold rights of Brunswick, Strathspy, 

Laxapana, Moray estates and Thalawakelle estate 

Kegalle Plantations PLC ADB/ National Development Bank PLC 4,133 9,644 Rs. 0.46mn per month 


Corporate guarantee by Richard Pieris and Company PLC for Rs 33mn 

and primary and secondary mortgage over leasehold rights of Atale, 

Pallegama, Parambe, Weniwella and Yatederiya Estates 


ADB/ Seylan Bank PLC 24,681 30,251 Rs 0.46mn per month Primary mortgage over leasehold rights of Eadella Estates 

Hatton National Bank PLC-USD Dollar 

Loan 

- 13,470 $19,930 per month 


Company Lender 2010/2011 


Rs.’000 

2009/2010 


Rs.’000 

Repayment 

Security 

Hatton National Bank PLC - E friend 

Loan 

10,540 13,696 Rs 0.26mn per month Primary floating mortgage over leased hold property at Luckyland Estate, 

Udupussellawa, Badulla Estates 

ADB/ National Development Bank PLC 56,313 56,312 Rs 0.63mn per month Primary Mortgage over leasehold rights of Atale, Etana, Doteloya, Kirkless 

ADB/ National Development Bank PLC 29,352 29,352 

and Secondary mortgage over Pallegama, Parambe, Weniwella and 

Yataderiya Estates. 

ADB/ National Development Bank PLC 173,000 173,000 Secondary Mortgage over leasehold rights of Atale, Etana, Doteloya, 

Kirkless, Pallegama, Parambe, Weniwella and Yataderiya Estates. 

ADB/ National Development Bank PLC 6,000 25,500 Rs.1.83mn per month Securitized Sales Proceeds 

LOLC PLC 7,193 8,707 Rs 0.13mn per month Mortgage over Plant & Machineries at Luskeyland Estate 

Namunukula Plantations PLC DFCC Bank PLC 56,064 80,402 Rs 2mn per month Primary mortgage over leasehold rights of Hulandawa,Pallegoda, Yatadola 

& Hallala estates and undertaking from RPC Plantations Management 

Services (Pvt) Ltd 

ADB/LOLC PLC 14,932 17,732 Rs.0.23mn per month 

ADB/LOLC PLC 7,830 9,100 Rs. 0.10mn per month 

Corporate Guarantee given by RPC Plantation Management Services 

(Pvt) Ltd 



NDB Investment Bank 93,000 116,500 As per monthly Trust Papers Promissory Note/ Securitization of future tea receivables 

Total Term Loans 3,073,532 3,197,230 

Transferred to Current Liabilities (1,075,241) (1,239,549) 

1,998,291 1,957,681 

14 Net liability to the lessor of SLSPC / JEDB estates and others 

Repayable Repayable Repayable Total Repayable Repayable Repayable Total 

within after 1 year after 5 years Repayable within after 1 year after 5 years Repayable 

1 year less than after 1 year 1 year less than after 1 year 

5 years as at 5 years as at 

31.03.2011 31.03.2010 

Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Group 

Gross liability (14.1) 35,674 142,699 1,043,277 1,221,650 35,674 142,699 1,078,948 1,257,321 

Less: finance charges (26,358) (101,548) (436,498) (564,404) (26,716) (103,132) (461,272) (591,120) 

Net liability 9,316 41,151 606,779 657,246 8,958 39,567 617,676 666,201 

Transferred to current liabilities (9,316) (8,958) 

Net liability to the lessor of SLSPC/JEDB 647,930 657,243 

Gross liability - other lease 14,025 3,137 - 17,162 20,075 16,390 - 36,465 

Less: finance charges (1,363) (87) - (1,450) (3,639) (1,475) - (5,114) 

Net liability to the other lessors 12,662 3,050 - 15,712 16,436 14,915 - 31,351 

Transferred to current liabilities (12,662) (16,436) 

3,050 14,915 

Total net liability to the lessor 21,978 650,980 25,394 672,158 

14.1 The leases of the estates have been amended with effect from 22nd June 1996 to an amount substantially higher than the 

previous lease rental of Rs. 500/- per estate per annum. The first rental payable under the revised basis was Rs. 6,744 mn and Rs. 

15,744 mn for Maskeliya Plantations PLC and Kegalle Plantations PLC respectively from 22nd June 1996 to 21st June 1997. 

89 



Rentals payable according to the original Lease agreement stipulated that the frozen Average GDP Deflator for the Calendar Years 

2002 to 2006 be used to calculate the lease rentals payable and to be reviewed at the time of the expiry of this agreement, in 

June 2008. The Regional Plantation Companies were at the negotiation table during the previous financial year as well as the year 

under review to continue the same basis for the ensuing periods. Subsequently in their communication with Regional Plantation 

Companies in May 2010, Ministry of Plantation Industries stated that the Lease Rentals should be calculated on the GDP Deflator 

from 2008/9 as stipulated in the original lease agreement. 

This resulted in an arrears in Lease rental payments amounting to Rs. 37.3 mn and Rs. 32.2 mn for Kegalle and Namunukula 

Plantations respectively, payable in 12 equal installments 

15 Deferred income 

Group 


Rs. ‘000 Rs. ‘000 

Deferred grants and subsidies 

At beginning of the year 528,898 478,147 

Grants received during the year 78,167 74,259 

Amortised during the year (22,302) (23,508) 

At end of the year 584,763 528,898 

16 Deferred tax liability / (assets) 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

At beginning of the year 24,981 21,804 (36,953) (36,953) 

Transfer from / (to) income statement (14,392) 3,177 - - 

At end of the year 10,589 24,981 (36,953) (36,953) 

Deferred tax assets, liabilities related to the following: Group Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Deferred tax liabilities 

Accelerated depreciation for tax purposes 273,802 303,759 32,402 35,230 

273,802 303,759 (32,402) 35,230 

Deferred tax assets 

Retirement benefit obligations (119,337) (118,693) (13,602) (17,549) 

Benefits arising from tax losses (99,434) (114,961) (55,753) (54,634) 

Other provisions (44,442) (45,124) - - 

(263,213) (278,778) (69,355) (72,183) 

Net deferred tax liability / assets 10,589 24,981 (36,953) (36,953) 

Deferred tax assets amounting to Rs. 330 mn (2010 Rs. 435 mn) for the group and Rs. 74 mn ( 2010 Rs. 124 mn) for the company 

has not recognized since the companies do not expect these assets to reverse in the foreseeable future. 


17 Employee benefit liabilities 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Provision for retiring gratuity 

At beginning of the year 1,529,685 1,103,222 50,141 45,114 

Provision for the year 282,843 557,485 3,103 9,799 

Payments (150,397) (131,022) (4,788) (4,772) 

Transfers - - 122 - 

At end of the year 1,662,131 1,529,685 48,578 50,141 

Actuarial valuation of the defined benefit plan / gratuity was carried out on 31st March 2011 by Messrs. Actuarial & Management 

Consultants (Pvt) Ltd, Actuaries for Companies in all segments other than for the plantation segment. In respect of plantation 

companies such valuation was carried by the same party as at 31st March 2010. Appropriate and compatible assumptions were 

used in determining the cost of retirement benefits. The principal assumptions used are as follows: 

Assumptions 2010/2011 2009/2010 

a) Demographic assumptions 

Retiring age: 

Executives 55-60 years 55-60 years 

Non Executives 55 years 55 years 

In respect of plantation companies, 

Retiring age: 

Workers (male and female) 60 years 60 years 

Other categories of staff (male and female) 55-58 years 55-58 years 

b) Financial assumptions 

Rate of interest net of tax per annum 10.5% 12% 

Rate of salary increment 9% 8.5% 

Rate of discount 10.5% 12% 

In respect of plantation companies, 

Rate of interest net of tax per annum 11% 11% 

Rate of salary increment: 

Workers 16% every two years 16% every two years 

Staff employees 10% per year 10% per year 

Rate of discount 11% 11% 

18 Trade and other payables 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Trade payables 1,925,213 1,406,537 - - 

Accrued expenses 945,938 627,081 - 232,239 

Others 781,995 599,295 258,991 - 

3,653,146 2,632,913 258,991 232,239 

91 



19 Short term borrowings 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Commercial papers (a) 125,853 100,191 125,853 100,191 

Import loans (b) 78,611 94,447 - - 

Other short term borrowings ( c) 1,799,678 1,996,424 1,400,000 1,570,000 

Bank overdrafts (d) 1,801,792 1,158,229 45,479 4,593 

3,805,934 3,349,291 1,571,332 1,674,784 

(a) Repayment of commercial papers will be less than three months. 

(b) Import loans have been obtained for the purpose of operations and is repayable within thirty to ninety days. 

(c) Short term borrowings mainly consist of money market borrowings and will be repayable at maturity within seven to ninety 

days. 

(d) Bank overdrafts are repayable on demand. 

20 Cash and cash equivalents 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Cash at bank and in hand 1,274,365 602,850 63,349 266,271 

Treasury bills 1,289,494 719,993 - - 

2,563,859 1,322,843 63,349 266,271 

Short term borrowings (Note 19) (3,805,934) (3,349,291) (1,571,332) (1,674,784) 

(1,242,075) (2,026,448) (1,507,983) (1,408,513) 


21 Group segmental reporting 

21.1 Group 

Business segment Rubber Tyre Plastics Retail Services Plantations Inter/Intra Group 

segment 

eliminations 

Year ended March 31 2011 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Turnover 

External sales 2,215,025 2,529,921 3,809,412 10,925,548 62,013 7,699,659 - 27,241,577 

Inter segment sales 202,149 58,742 373,271 119,855 1,128,256 810,090 (2,692,362) - 

Intra segment sales 36,849 1,268,640 1,774,328 76,135 - 413,498 (3,569,449) - 

Net turnover 2,454,023 3,857,303 5,957,011 11,121,538 1,190,269 8,923,247 (6,261,812) 27,241,577 

Results 

Segment results (24,643) 263,943 460,200 827,759 429,316 2,031,672 (537,880) 3,450,366 

3,450,366 

Finance costs (794,617) 

Share of associate company profits 113,008 

Profit before taxation 2,768,757 

Income tax expense (616,566) 

Profit for the year from continuing operations 2,152,191 

Profit / (loss) after tax from discontinued operations (11,609) 

2,140,582 

Minority interest (459,898) 

Profit / (loss) attributable to equity holders of parent 1,680,684 

Segmental assets 

Assets 2,284,492 1,757,046 2,924,522 5,960,404 5,375,493 11,674,794 (9,793,480) 20,183,271 

Investments in associates 159,933 - - 106,277 223,801 29,960 (63,785) 456,186 

Consolidated total assets 20,639,457 

Segmental liabilities 

Trade and other payables 153,058 154,937 582,143 1,462,247 370,898 1,602,821 - 4,326,104 

Non interest bearing liabilities 76,301 115,977 132,271 295,799 57,352 1,952,385 (62,658) 2,567,427 

Interest bearing liabilities 804,154 585,518 476,614 1,555,457 2,163,185 1,297,376 - 6,882,304 

13,775,835 

Other information 

Capital expenditure 30,395 18,870 11,601 483,569 12,910 643,872 - 1,201,218 

Depreciation 80,452 42,055 56,335 112,740 46,966 269,792 - 608,343 

Impairment of Property Plant & Equipment 55,000 - - - - 7,019 - 62,019 

Segmental cash flow 

Operating 16,227 (108,557) 168,161 (93,278) 1,096,808 2,076,871 (337,352) 2,818,882 

Investing (69,875) (18,341) 11,596 (622,892) (378,381) (634,853) 323,670 (1,389,077) 

Financing (142,898) (31,000) (82,080) 962,546 (1,092,809) (593,063) 333,873 (645,432) 

Geographical segment Sri Lanka USA Europe Other Inter/Intra Group 

segment 

eliminations 

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Net turnover 28,380,258 315,829 959,356 1,155,583 (3,569,449) 27,241,577 

93 



21 Group segmental reporting contd. 

Business segment Rubber Tyre Plastics Retail Services Plantations Inter/Intra Group 

segment 

eliminations 

Year ended March 31 2010 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Turnover 

External sales 1,767,918 2,100,782 2,858,233 9,042,785 50,272 6,519,298 - 22,339,288 

Inter segment sales 132,102 84,836 221,519 19,498 654,040 638,677 (1,750,672) - 

Intra segment sales 43,789 926,289 1,400,293 160,576 - 130,432 (2,661,379) - 

Net turnover 1,943,809 3,111,907 4,480,045 9,222,859 704,312 7,288,407 (4,412,051) 22,339,288 

Results 

Segment results 64,758 299,640 320,743 515,318 177,840 822,697 (231,298) 1,969,697 

1,969,697 

Finance costs (969,147) 

Share of associate company profits 59,609 

Profit before taxation 1,060,159 

Income tax expense (330,592) 

Profit for the year from continuing operations 729,567 

Profit / (loss) after tax from discontinued operations (17,873) 

711,694 

Minority interest (131,490) 

Profit / (loss) attributable to equity holders of parent 580,204 

Segmental assets 

Assets 2,318,959 1,480,950 2,265,447 4,832,359 5,733,862 9,944,975 (9,392,654) 17,183,898 

Investments in associates 119,950 - - 25,006 101,545 29,960 (95,542) 180,919 

Consolidated total assets 17,364,817 

Segmental liabilities 

Trade and other payables 138,832 136,622 426,045 970,675 302,308 1,355,983 - 3,330,465 

Non interest bearing liabilities 90,330 139,203 39,560 119,087 50,104 1,804,005 (58,165) 2,184,124 

Interest bearing liabilities 691,374 403,699 559,561 723,066 2,653,977 1,522,588 - 6,554,265 

12,068,854 

Other information 

Capital expenditure 16,414 20,568 313 25,257 7,407 548,899 - 618,858 

Depreciation 80,206 40,059 57,586 113,071 50,661 266,643 - 608,225 

Impairment of Property Plant & Equipment 16,000 - - - - 13,093 - 29,094 

Segmental cash flow 

Operating (21,192) 375,619 130,677 553,642 676,561 1,028,229 (587,700) 2,155,836 

Investing (66,132) (20,512) (120,744) (20,829) (482,588) (709,975) 879,032 (541,748) 

Financing 228,981 (247,630) 398,969 81,892 (476,446) (16,102) (218,856) (249,192) 

Geographical segment Sri Lanka USA Europe Other Inter/Intra Group 

segment 

eliminations 

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Turnover 23,411,238 227,712 767,914 593,802 (2,661,378) 22,339,288 


22 Other operating income 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Profit from sale of property, plant and equipment 1,627 1,038 - - 

Amortisation of capital grants and subsidies (Note 15) 22,303 23,508 - - 

Exchange gain 6,382 6,986 - - 

Interest income 134,078 61,710 - - 

Scrap sales 12,107 11,004 - - 

Rental income 132,851 98,520 - - 

Change in the value of short term Investments 17,483 34,082 17,483 34,082 

Negative goodwill 16,200 - - - 

Sundry income 149,875 119,031 - 4,515 

492,906 355,879 17,483 38,597 

23 Other operating expenses 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

VAT on management fees of plantation companies 47,609 36,865 - - 

Loss on disposal of subsidiary 10,319 - - - 

Amortisation and impairment of intangible assets 45,208 10,725 - - 

Others 61,908 10,579 - - 

165,044 58,169 - - 

23.1 During the year the Group disposed 706,500 shares of RPC Timberline (Pvt) Limited (a subsidiary of the group with a 

controlling interest of 75%) to Papoose International (Pvt) Ltd and thereby the termination of the joint venture between the 

Richard Pieris Group and Papoose. The Group’s interest after the disposal was reduced to 49% where the Group ceases to 

exercise any influence over the financial and operating policies of the entity. 

24 Profits from operations is stated after charging 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Directors’ remuneration & fees 39,472 44,488 17,683 15,496 

Auditors’ remuneration & fees 11,358 15,871 617 600 

Depreciation 584,916 584,008 25,393 25,878 

Amortisation of property, plant and equipment 23,427 24,217 - - 

Impairment losses (Included in administrative expenses) 62,019 29,093 - - 

Provision for retiring gratuity 282,843 557,486 3,103 9,799 

Staff costs including EPF/ETF contributions 4,254,549 3,817,863 41,975 30,696 

Legal fees 6,292 6,896 611 146 

Donations 4,123 1,969 219 201 

Allowance for bad and doubtful debts & bad debts written off 108,909 147,073 73,249 53,749 

Allowance for value of Investment 6,000 - 6,000 - 

Amortisation of Intangible Assets 10,808 10,725 - - 

95 



25 Finance cost 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Interest on long term loans 363,835 591,758 80,243 89,899 

Interest on short term loans 430,782 377,389 98,074 109,877 

794,617 969,147 178,317 199,776 

26 Share of results of associates 

Group 


Rs. ‘000 Rs. ‘000 

Turnover 2,965,608 2,548,762 

Profit before tax 474,589 263,728 

Group’s share of profit before tax 113,008 59,609 

Total assets and total liabilities of the associates amounts to Rs. 4,707 mn (2009/2010 Rs. 3,103 mn) and Rs.69mn (2009/2010 Rs. 

2.354 mn) respectively. 

The Group can influence up to 33.33% of the voting rights of the AEN Palm Oil with an effective holding of 19.58%. 

27 Income tax expense 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

27.1 Taxation on current year profit 

Richard Pieris and Company PLC 25,415 - 25,414 - 

Subsidiaries 548,855 298,000 - - 

574,270 298,000 25,414 - 

Associates 620 613 - - 

Dividend tax 56,068 28,802 - - 

Deferred taxation (Note 27.3) (14,392) 3,177 - - 

616,566 330,592 25,414 - 


27.2 Reconciliation of accounting profit to income tax expense of the company and its subsidiaries 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Profit before tax from continuing operations 2,768,757 1,060,159 504,303 134,589 

Profit before tax from discontinued operations (11,609) (17,873) - - 

Profit from associate companies (113,008) (59,609) - - 

2,644,140 982,677 504,303 134,589 

Disallowed items 1,691,542 1,773,235 205,837 121,216 

Allowable expenses (2,061,580) (1,392,471) (600,080) (300,464) 

Tax exempt income (1,247,464) (520,723) - - 

Losses of tax exempt companies - 31,025 - - 

1,026,638 873,743 110,060 (44,659) 

Tax loss brought forward (3,141,561) (3,392,906) (501,408) (458,943) 

Tax losses carried forward 2,989,665 3,184,767 462,887 503,602 

Taxable income 874,742 665,604 71,539 - 

Income tax @ 35% 516,092 258,593 25,039 - 

Income tax @ 20% - 13,725 - - 

Income tax @ 15% 44,981 20,282 - - 

Income tax at other rates 3,656 6,367 - - 

Social Responsibility Levy (1.5%) 8,820 4,394 375 - 

573,549 303,361 25,414 - 

(Over) / under provision in the previous year 721 (5,361) 

574,270 298,000 25,414 - 

Associates 620 613 - - 

Dividend tax 56,068 28,802 - - 

Deferred tax (14,392) 3,177 - - 

Total income tax expense/reversal 616,566 330,592 25,414 - 

27.3 Deferred tax expenses / (reversal) 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Accelerated depreciation for tax purpose (29,957) (7,532) 2,829 2,870 

Retirement benefit obligations (644) (12,679) (3,947) (1,759) 

Benefit arising from tax losses 15,527 38,018 1,118 (1,111) 

Others 682 (14,630) - - 

Total deferred tax (reversal) / charge (14,392) 3,177 - - 

The deferred tax effect on undistributed reserves of subsidiaries has not been recognised since the parent can control the timing of 

the reversal of these temporary differences. 

97 



27.4 Income tax rates and details of tax holidays enjoyed by the group 

Tax liabilities of resident companies (quoted and unquoted) are computed at the standard rate of 35% (28 % 2011/12 onwards) 

The export profits of Richard Pieris Exports PLC is liable to income tax at a concessionary rate of 15% for a period of twenty years 

commencing from the year of assessment 1995/1996, in terms of Section 52 of the Inland Revenue Act No. 10 of 2006. (12 % 

2011/12 onwards). The export profits of Richard Pieris Natural Foams Limited is also liable to income tax at 15% from the year of 

assessment 2005/2006. Other profit & income is liable to tax at 35%. 

Under the Board of Investment Law No. 04 of 1978, the profits of Arpitalian Compact Soles (Private) Limited is liable to income tax 

at 15% for ten years from the year of assessment 2008/09.Other profits and income is liable to tax at 35%. 

RPC Polymers has entered into an agreement with the Board of Investment of Sri Lanka under section 17 of the BOI law and 

accordingly its profit and income is exempt from income tax for a period of three years commencing from the year of assessment 

2008/09.The Company will be liable to tax at 10% for a period of 2 years immediately succeeding the last day of said exemption 

period and thereafter it will be liable at the reduced income tax rate of 20%. 

In terms of an agreement entered in to with the Board of Investments of Sri Lanka under the BOI Law NO.04 OF 1978, RPC 

Retail Development (Private) Limited will be exempt from tax for a period of three years commencing from the year of assessment 

2009/2010 .After the expiry of the tax holiday the company will be liable to income tax at 10% for two years and at 20% thereafter. 

The profits of Arpico Industrial Development Company (Private) Limited is subject to a concessionary income tax rate of 2% on 

turnover for a period of fifteen years from the financial year 2002/2003 in terms of the agreement entered into with the Board of 

Investment of Sri Lanka. 

Micro Mineral (Private) Limited is taxed at a concessionary rate of 15%, in terms of an agreement entered into with the Board of 

Investment of Sri Lanka under the Board of Investment of Law No. 04 of 1978. It is entitled to this concessionary rate for a period of 

twenty years commencing 1st September 1996. 

Kegalle Plantations PLC, Maskeliya Plantations PLC and Namunukula Plantations PLC are liable for income tax at the rates of 

35% on manufacturing activities and profits from agriculture are exempt from income tax for five years which ended up 31st March 

2011 & tax at 10 % commencing from 1st April 2011. 

E. Social Responsibility Levy 

As per the provision of the Finance Act No. 08 of 2008, Social Responsibility Levy (SRL) is payable at the rate 1.5% on the income 

tax payable & this has removed with effect from 1st April 2011. 

28 Discontinued operation 

The Group continued to focus on its core business operations and restructure or exit from marginal businesses with limited 

potential. Accordingly operations of three businesses with losses have been discontinued, namely, Arpico Homes Limited, R P C 

Global Travels (Private) Limited, Hamefa Kegalle (Private) Limited, Arpico Natural Latex Forms (Private) Limited. 


The results of discontinued operations are given below. 


Rs. ‘000 Rs. ‘000 

Revenue - - 

Cost of sales - (461) 

Gross Profit - (461) 

Other Income 4,369 4,280 

Expenses (15,978) (21,692) 

Loss from discontinued operations (11,609) (17,873) 

Earnings per share - Basic (0.01) (0.01) 

As a result of the above, the comparatives presented in the previous financial statements have been changed. 

Operating and Investing cash flows for the year are presented below: 


Rs. ‘000 Rs. ‘000 

Net cash outflows from operating activities (2,989) (81,142) 

Net cash inflows from investing activities - 550 

Assets and liabilities of entities that are not going concern 

The financial statements of the Companies stated above have been prepared on a basis other than on a going concern reflecting 

the closure of discontinued operations. The aggregated amount of assets and liabilities of such Companies as at 31March 2011 are 

as follows. 

Total assets Rs. 132mn 

Total liabilities Rs. 454mn 

(2010 Rs. 149 mn) 

(2010 Rs. 460 mn) 

Accordingly ,adjustments have been made for the diminution in value of all property, plant and equipment so as to reduce their 

carrying value to their estimated realisable amount, and for any further liabilities which could arise. 

99 



29 Earnings per share 

Basic Earnings per share is calculated by dividing the net profit for the year attributable to equity holders of parent by the weighted 

average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding 

during the year and the previous year are adjusted for events, that have changed the number of ordinary shares outstanding, 

without a corresponding change in the resources such as a bonus issue. 

Diluted Earnings Per Share is calculated by dividing the net profit attributable to ordinary shareholders by the weighted average 

number of ordinary shares outstanding during the year adjusted for the effects of diluted potential ordinary shares. 

Group 


Profit attributable to equity holders of the parent from continuing operations 1,692,293 598,077 

Loss attributable to equity holders of the parent from a discontinued operation (11,609) (17,873) 

Net profit attributable to equity holders of the parent 1,680,684 580,204 

Weighted average number of ordinary shares applicable to basic earnings per share 1,933,017,932 1,923,765,345 

Adjusted Weighted average number of ordinary shares applicable to diluted earnings per share 2,009,454,318 1,923,765,345 

Basic earnings per share 0.87 0.30 

Diluted earnings per share 0.84 0.30 

Earning Per Share from continuing operations - Basic 0.88 0.31 

Earning Per Share from continuing operations - Diluted 0.84 0.31 

30 Dividend per share 


Rs. ‘000 Rs. ‘000 

Interim paid Rs. 0.20 per share 387,096 - 

Final proposed Rs. 0.10 per share (2009/10 Rs.1 per share) 193,724 128,850 

580,820 128,850 

(i) The final dividend of Rs.1.00 per share for the financial year ended 31 March 2010 was paid on 8 July 2010. 

(ii) The interim dividend of Rs. 0.20 per share for the financial year ended 31 March 2011 was declared on 29 November 2010 and 

was paid on 16 December 2010. 

(iii) The Directors have recommended a Rs.0.10 per share as the final dividend payment for the year ended 31st March 2011 . 

31 Contingent liabilities 

The contingent liabilities as at 31st March 2011 on corporate guarantee issued by the Company on loans obtained by subsidiary 

companies has been decreased by Rs.121mn to Rs.113mn. Guarantees given by subsidiaries on loans obtained amounted to Rs. 

225 mn. 

Following a strike at Richard Pieris Exports PLC a subsidiary of the Group, which was considered as unjustifiable,160 workers 

were terminated on 28th December 2007. Since negotiations failed, the matter has been referred to arbitration by Minister of 

Labour and contested at the court of appeal at present. The maximum amount demanded by the union on behalf of the workers is 

Rs.136 mn, which demand the company has resisted/opposed. 


Namunukula Plantations PLC, a subsidiary of the Group sub leased six (6) estates to Tusker Bottling Ltd .Tusker Bottling Ltd is 

currently being wound up pursuant to a Court Order. 

In the event the sub lease agreement is cancelled and the company takes possession of the six sub leased estates, Namunukula 

Plantations PLC may be called upon to pay the arrears of statutory payments to the employees which the lessee; Tusker Bottling 

Ltd failed to pay which is estimated at Rs. 72 mn. 

There are more than 29 cases outstanding filed by the Commissioner of Labour (Badulla) against Tusker Bottling Ltd, Namunukula 

Plantations PLC and the superintendent of the Estate regarding the payment of employees statutory dues , which the Sub Lessee 

has failed to pay in respect of the said 6 estates. Namunukula Plantations PLC has filed objections that the company is not liable 

to pay such dues. The Court has directed the Commissioner of Labour to find out the correct respondent who is liable to pay such 

dues and institute fresh legal action against the party. 

32 Capital and lease commitments 

A. The capital commitments for property, plant and equipment incidental to the ordinary course of business as at 31st March 

2011, approved by the Board were as follows: 

Group 

Company 


Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Contracted but not provided for 105,061 - - - 

Approved but not contracted for 408,848 374,929 - - 

513,909 374,929 - - 

B. Lease Commitments 

Future minimum rentals payable under non cancellable operating leases as at 31 March are as follows: 

Group 

Company 


Rs’000 Rs’000 Rs. ‘000 Rs. ‘000 

Within one year 73,920 73,920 - - 

After one year but not more than five years 322,689 312,765 - - 

More than five years 535,646 619,489 - - 

932,255 1,006,174 - - 

33 Employee share option plan 

The Employee Share Option Plan (ESOP 1) was set up by a Special Resolution adopted by the shareholders at an Extraordinary 

General Meeting (EGM) of the Company held on 10th June 1998 by allocating 5% of the issued share capital of the company to 

this scheme. 

A second ESOP scheme was set up following a Special Resolution adopted by the shareholders at an EGM of the company held 

on 29th July 2005 by allocating and granting 5% of the issued share capital of the company. 

101 



Details of these schemes are presented in the table below. 

Number of Shares 

ESOP-1 ESOP-2 

Available as at 1.4.2010 3,462,333 6,310,876 

Options exercise before subdivision (ESOP1 at Rs. 78.46 and ESOP2 at Rs. 46.14) (131,866) (649,168) 

Share options issued under subdivision 46,626,538 79,263,912 

Options exercised after subdivision (ESOP1 at Rs. 5.23 and ESOP2 at Rs. 3.08) (1,585,675) (175,005) 

48,371,330 84,750,615 

The company does not provide any financial assistance to the employees to purchase shares under this scheme. 

34 Post balance sheet events 

There have been no material events occurring after the Balance Sheet date that require adjustments to or disclosure in the 

Financial Statements other than; 

(a) The Board of Directors of the company has declared a final dividend of Rs.0.10 per share for the financial year ended 31st 

March 2011. As required by section 56 (2) of the Companies Act No 07 of 2007, the Board of Directors has confirmed that the 

company satisfies the solvency test in accordance with section 57 of the Companies Act No 07 of 2007, and has obtained 

a certificate from the auditors, prior to declaring the dividend which is to be paid on 8th July 2011. In accordance with the 

Sri Lanka Accounting Standard 12 (revised 2005), Events after the Balance Sheet date, the final dividend has not been 

recognized as a liability in the financial statements as at 31st March 2011. 

35 Related party disclosures 

35.1 Transaction with related entities 

Group 

Company 


Nature of transactions Rs.’000 Rs.’000 Rs.’000 Rs.’000 

35.1.1 Subsidiaries 

35.1.2 Associates 

Amounts receivable as at 31 March 984,541 1,629,758 

Amounts payable as at 31 March 177,515 148,167 

Allocation of common personnel and 

administration expenses 145,636 148,490 

Rendering of Services 63,877 67,946 

Net investments made 113,333 240,000 

Dividends received 537,881 231,300 

Rent income 128,432 128,184 

Royalty income 215,757 91,637 

Allowances for doubtful debt 48,739 49,182 

Amounts receivable as at 31 March 4,101 4,994 - - 

Amounts payable as at 31 March 1,783 1,300 - - 

Insurance premia paid/payable 52,596 72,462 19,653 14,545 

Sale of goods/services 282,041 313,164 - - 

Purchase of goods/services 9,185 11,067 - - 

35.1.3 Significant Investor 

Dividend paid 137,704 - 137,704 - 


35.1.4 Terms and conditions 

Transactions with related parties are carried out in the ordinary course of business. Outstanding balances at the year end are 

unsecured. 

35.1.5 Off balance sheet items 

Guarantees given by the Company to Banks on behalf of related parties are disclosed in Note 13 to the financial statements. 

35.2 Transactions with key management personnel of the company or its parent 

The Key Management Personnel include members of the Board of Directors of Richard Pieris and Company PLC and its 

subsidiary companies. 

a) Key management personnel compensation 

Group 

Company 


Rs.’000 Rs.’000 Rs.’000 Rs.’000 

Short-term employee benefits 39,472 44,488 17,683 15,496 

b) Other transactions with key management personnel 

Richard Pieris and Company carries out transactions with Key Management Personnel and their close family members on an arm’s 

length basis except any concessions which have been availed under concessionary schemes uniformly applicable to all staff. This 

is mainly evident in the Arpico sales outlets island wide. 

Post Employment Benefits to Key Management Personnel amounted to Rs.12 mn. 

c) Options granted to key management personnel 

The options granted and held by Key Management Personnel under the Employee Share Option Plan were as follows: 


No. of Shares No. of Shares 

Options granted and obtained under ESOP-1 48,371,330 3,462,333 

Cumulative options granted and obtained under ESOP-2 84,750,615 6,310,876 

Value of options exercised by Key Management Personnel that resulted in increase in stated capital amounted to Rs. 48.4 mn. 

35.3 Other related party disclosures 

(a) Legal fees amounting to Rs. 5.7 mn (2010 Rs. 3.6 mn) was paid by the Group to an entity in which a Key Management 

personnel was a Partner. 

(b) During the year the Group purchased goods amounting to Rs. 2 mn (2010 Rs. 1.89 mn) from an entity controlled by a key 

management personnel. 

103 


Ten Year Summary 

Net Turnover 

Rs. mn. 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

0 

07/08 

08/09 

09/10 

10/11 

2010/2011 2009/2010 2008/2009 

Rs. ‘000 Rs. ‘000 Rs. ‘000 

TRADING RESULTS 

Net turnover 27,241,577 22,339,288 21,103,176 

Profit from operations 3,450,366 1,969,697 1,378,556 

Loss on disposal of investment 

Finance cost (794,617) (969,147) (1,436,225) 

Profit from operations after finance cost 2,655,749 1,000,550 (57,669) 

Income from associates before tax 113,008 59,609 41,015 

Profit/(loss) before tax from continuing operations 2,793,757 1,060,159 (16,654) 

Income tax expense (616,566) (330,592) (180,411) 

Profit/(loss) for the year from continuing operations 2,152,191 729,567 (197,065) 

Loss after tax from discontinued operations (11,609) (17,873) (107,963) 

Profit/(loss) for the year 2,140,582 711,694 (305,028) 

Minority interest 459,898 131,490 24,055 

Profit/(loss) attributable to equity holders of parent 1,680,684 580,204 (329,083) 

Gross dividend 515,946 - - 

Profit from operations 

Rs. mn. 

4,000 

3,500 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

Total Assets 

07/08 

08/09 

09/10 

10/11 

BALANCE SHEET 

Assets 

Property, plant and equipment 10,607,259 10,142,761 10,167,170 

Intangible assets 497,279 480,177 491,491 

Investments in associates and other investments 480,186 180,919 136,757 

Current assets 9,054,733 6,560,960 6,128,679 

20,639,457 17,364,817 16,924,097 

Equity and liabilities 

Stated Capital 1,627,612 1,578,475 1,578,475 

Capital and revenue reserves 3,348,003 2,183,265 1,603,061 

Foreign currency translation 27,314 31,152 32,371 

Preliminary and pre-operating expenses - - - 

Minority interest 1,860,693 1,503,071 1,380,908 

Term loans payable after one year 1,998,291 1,957,680 2,354,617 

Deferred income and Deferred tax 595,352 553,879 499,951 

Provisions and other liabilities 1,662,131 1,529,685 1,103,222 

Net liability to the lessor payable after one year 650,980 672,158 697,432 

Current liabilities 8,869,081 7,355,452 7,674,060 

20,639,457 17,364,817 16,924,097 

Rs. mn. 

25,000 

20,000 

15,000 

10,000 

5,000 

0 

07/08 

08/09 

09/10 

10/11 

RATIOS & OTHER INFORMATION 

Earnings per share (Rs) 0.87 0.30 (2.57) 

Market value per share (Rs) 13.60 3.67 25.00 

Price earnings ratio (No. of Times) 15.63 12.23 - 

Net assets per share (Rs) 2.58 1.97 25.06 

Return on equity (%) 38.22 16.56 (9.76) 

Dividend per share (Rs) 0.30 1 - 

Dividend cover (No. of Times) 2.90 4.52 - 

Interest cover (No. of Times) 4.34 2.03 0.96 

Current ratio (No. of Times) 1.02 0.89 0.80 

Gearing ratio (%) 38.62 49.69 59.80 


2007/2008 2006/2007 2005/2006 2004/2005 2003/2004 2002/2003 2001/2002 

Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 

Profit/(loss) for the year 

Rs. mn. 

2,500 

20,142,591 15,627,638 13,093,791 10,118,693 5,237,157 4,351,197 3,561,302 

2,045,930 1,640,288 1,256,820 1,316,639 498,085 260,807 309,386 

(277,000) 

(1,472,629) (879,601) (548,240) (313,895) (120,136) (171,343) (162,642) 

296,301 760,687 708,580 1,002,744 377,949 89,464 146,744 

27,969 11,646 4,593 101,455 193,647 97,149 101,239 

324,270 772,333 713,173 1,104,199 571,597 186,613 247,983 

(77,278) (92,231) (120,150) (151,567) (71,738) (29,728) (56,264) 

246,992 680,102 - - - - - 

(203,216) (165,527) - - - - - 

43,776 514,575 593,023 952,632 499,859 156,885 191,719 

(258,853) (208,180) (63,994) (82,229) (19,194) (31,095) (11,330) 

(215,077) 306,395 529,029 870,403 480,665 125,790 180,389 

- 59,193 177,578 207,174 177,403 47,111 58,338 

2,000 

1,500 

1,000 

500 

0 

(500) 

07/08 

08/09 

09/10 

10/11 

Shareholder’s Fund 

10,125,468 9,433,192 9,464,246 6,203,485 5,481,116 2,105,783 1,915,094 

500,857 500,816 520,058 272,053 286,989 74,655 80,279 

101,007 1,765,956 96,408 73,694 628,540 1,018,016 1,045,531 

7,079,997 5,983,116 5,801,373 4,143,522 2,543,878 1,408,965 1,338,614 

17,807,329 17,683,080 15,882,085 10,692,754 8,940,523 4,607,419 4,379,519 

Rs. mn. 

6,000 

5,000 

4,000 

3,000 

2,000 

1,578,475 1,183,856 1,183,856 591,928 590,540 235,556 233,352 

1,932,144 2,601,033 2,395,652 2,576,931 1,902,699 1,880,271 1,825,889 

21,599 23,363 17,162 13,878 12,315 11,765 10,416 

- - - - - - (38,793) 

1,390,232 1,197,663 1,022,198 805,191 760,230 220,763 196,476 

2,683,162 2,968,288 2,197,653 1,224,344 1,515,237 553,159 564,626 

386,143 353,751 521,598 435,731 434,425 106,790 116,284 

1,037,650 871,716 832,373 595,252 563,882 151,082 123,719 

722,234 713,740 691,219 441,632 446,411 - - 

8,055,690 7,769,670 7,020,374 4,007,867 2,714,783 1,448,033 1,308,757 

17,807,329 17,683,080 15,882,085 10,692,754 8,940,523 4,607,419 4,379,519 

1,000 

0 

07/08 

08/09 


09/10 

10/11 

(1.68) 2.39 4.47 7.36 4.07 1.07 1.53 

39.00 65.00 75.00 165.00 92.75 92.50 90.00 

- 27.20 16.78 11.28 11.39 17.29 11.63 

27.54 32.17 30.38 53.77 42.43 36.03 35.18 

(6.09) 8.05 15.61 30.60 20.75 5.99 8.93 

- 0.50 1.50 3.50 3.00 2.00 2.50 

- 4.78 2.98 4.20 2.71 2.67 3.09 

1.20 1.86 2.30 4.52 5.76 2.09 2.52 

0.88 0.77 0.83 1.03 0.94 0.97 1.02 

61.49 63.03 58.61 41.93 45.22 41.13 39.93 

Rs. mn. 

2,000 

1,800 

1,600 

1,400 

1,200 

1,000 

800 

600 

400 

200 

0 

07/08 

08/09 

09/10 

10/11 

105 


Shareholder Information 

The Ordinary Shares of the Company are listed in the Colombo Stock Exchange. 

The audited Income statement for the year ended March 31, 2011 and the audited Balance Sheet of the Company as at date will 

be submitted to the Colombo Stock Exchange within two months of the Balance Sheet Date. 

As at the financial year ended 31st March 

Distribution of Shareholders 

Range of shareholding No of share No of % of No of share No of % of 

holders as at shares Shareholding holders as at shares Shareholding 

31/03/2011 31/03/2010 

1 500 2,116 514,654 0.03% 1,667 255,651 0.20% 

501 5,000 4,943 10,981,915 0.57% 1,475 2,691,638 2.10% 

5,001 10,000 1,275 10,489,700 0.54% 204 1,553,074 1.21% 

10,001 20,000 894 13,555,558 0.70% 121 1,768,977 1.38% 

20,001 30,000 387 9,985,942 0.52% 54 1,370,864 1.07% 

30,001 40,000 190 6,785,040 0.94% 35 1,213,331 0.94% 

40,001 50,000 175 8,259,876 0.43% 26 1,177,817 0.92% 

50,001 100,000 336 25,043,620 1.29% 55 3,759,960 2.93% 

100,001 1,000,000 430 129,452,380 6.68% 36 12,078,639 9.42% 

1,000,001 & above 77 1,722,172,850 88.90% 11 102,381,072 79.83% 

10,823 1,937,241,535 100.00% 3,684 128,251,023 100.00% 

As at the financial year ended 31st March 

Composition of Shareholders 

Category No of share No of % of No of share No of % of 

holders as at shares Shareholding holders as at shares Shareholding 

31/03/2011 31/03/2010 

Institutional Investors 483 1,602,110,606 82.70% 247 103,214,977 80.48% 

Individual Investors 10,340 335,130,929 17.30% 3,437 25,036,046 19.52% 

Total 10,823 1,937,241,535 100.00% 3,684 128,251,023 100.00% 

Resident shareholders 10,624 551,702,825 28.48% 3,586 34,942,259 27.25% 

Non-resident shareholders 199 1,385,538,710 71.52% 98 93,308,764 72.75% 

Total 10,823 1,937,241,535 100.00% 3,684 128,251,023 100.00% 

Public share holding as at March 31, 2011 is 44.86% (31.03.2010 Restated - 44.87%). 


Market Activity 

2010/11 Date 2009/10 Date 

Highest Price (Rs.) 16.00 10-Feb-11 4.58 22-Feb-10 

Lowest Price (Rs.) 3.65 5-Apr-10 1.58 3-Apr-09 

Year End Price (Rs.) 13.60 31-Mar-11 3.67 31-Mar-10 

No of Transactions 83,296 18,738 

No of shares traded 498,981,700 40,975,300 

Share Turnover (Rs.) 12,317,878,175 1,904,569,725 

Comparative shareholding information have been adjusted for sub division of shares (Note 9). 

Major Shareholders as at 31st March 

Name of the Shareholder 3/31/2011 % 3/31/2010 % 

1 Skyworld Overseas Holdings Limited 516,274,590 26.65% 34,425,906 26.84% 

2 Camille Consulting Corp. 316,935,120 16.36% 21,129,008 16.47% 

3 HSBC International Nominee Ltd-SSBT- Deutsche Bank 225,375,570 11.63% 15,025,038 11.72% 

4 Sezeka Limited 174,447,000 9.00% 11,629,800 9.07% 

5 Rockport Limited 99,506,865 5.14% 6,633,791 5.17% 

6 Employees Provident Fund 99,186,140 5.12% N/A N/A 

7 Mr. D.W.R.Rutnam & Mr. J.L.G. Wilson 

(The Executors of the estate of Late Mr. M.D. Rutnam) 25,759,500 1.33% 1,717,300 1.34% 

8 Commercial Bank of Ceylon PLC / Mr. A.L. Devasurendra 22,879,000 1.18% 2,239,300 1.75% 

9 The Executor of the Estate of Late Mrs L.B. S. Pieris 22,782,045 1.18% 1,518,803 1.18% 

10 Mr. H.A. Pieris 20,458,015 1.06% 1,841,701 1.44% 

11 Mercantile Investments Limited 16,035,995 0.83% N/A N/A 

12 Kalday (Pvt) Ltd. 12,126,030 0.63% 841,867 0.66% 

13 Mrs. S. Wambeek 9,248,200 0.48% 726,275 0.57% 

14 Mr. K.R. Dharmendra 7,576,900 0.39% N/A N/A 

15 Mr. R.C. Peries 7,253,780 0.37% 494,752 0.39% 

16 Mr.C.M. Fernando 6,660,165 0.34% N/A N/A 

17 Lexinton Holdings (PVT) Limited 6,193,500 0.32% N/A N/A 

18 Mr. M.M. Udeshi 6,156,000 0.32% N/A N/A 

19 Seylan Bank PLC - Account No: 03 5,000,000 0.26% N/A N/A 

20 The Incorporated Trustees of the Church of England 4,868,795 0.25% N/A N/A 

1,604,723,210 82.84% 98,223,541 76.60% 

Directors Shareholding as at 31st March 

No. of shares 

No. of shares 

as at 31st March 

as at 31st March 

No. Name of Director 2011 2010 

1 Dr. Sena Yaddehige - - 

2 Mr. J H Paul Ratnayeke 3,250,005 - 

3 Prof. Lakshman R Watawala 105,000 105,000 

4 Dr. Susantha Pathirana - - 

5 Mr. M M Udeshi 6,156,000 369,000 

6 Mr. Viville Perera 2,500 1,500 

Comparative shareholding information have been adjusted for sub division of shares (Note 9). 

107 


Group Real Estate Portfolio 

Freehold Land & Buildings 

Owning Company Location Land Building Market Value Market Value 

in Perches in (Sq.Ft) 2011 2010 

Rs.’mn Rs.’mn 

Richard Pieris & Co.Ltd. Hyde Park Corner 709 59,182 3,900 3,606 

Maharagama 1,739 347,217 1,557 1,370 

RPC Real Estate Co. Ltd Kandy 162 36,890 943 943 

Arpico Industrial Dev Co (Pvt) Ltd. Mattegoda 1,402 223,405 553 393 

Richard Pieris Distributors Ltd. Maharagama. 195 38,306 220 207 

Moratuwa. 85 - 100 100 

Mulleriyawa. 192 - 10 10 

RPC Retail Development (Pvt) Ltd. Negambo 226 43,000 380 396 

Kelaniya 102 - 93 88 

Wattala 100 - 126 122 

Arpimall Development (Pvt) Ltd. Dehiwala. 169 83,600 643 603 

Battaramulla. 116 40,757 459 369 

Plastishells Ltd. Mathegoda. 340 45,825 192 192 

Dambulla. 284 4,600 19 19 

Arpico Flexifoam (Pvt) Ltd Mattegoda 1,136 - 284 284 

Richard Pieris Exports Ltd Ja-Ela 640 36,300 120 120 

Micro Minerals (Pvt) Limited Bandaragama 320 16,500 15 15 

Richard Pieris Tyre Company Ltd Kurunagala 450 26,015 40 40 

Arpidag International (Pvt) Ltd Maharagama 80 17,946 64 53 

Total 9,718 8,930 

Leasehold Land & Buildings 

Owning Company Location Land Building 

in Hec in (Sq.Ft) 

(A) Leasehold Land of Plantations 

Maskeliya Plantations Ltd 10,561 7,112,890 

Kegalle Plantations Ltd 9,773 3,507,810 

Namunukula Plantations Limited 11,775 3,026,546 

Location Land Building 

in Per in (Sq.Ft) 

(B) Leasehold Land of other subsidiaries 

Plastishells Ltd Koggala 160 2,980 

Pallekale 160 2,980 

RPC Polymers (Pvt) Ltd Horana 1,392 60,000 

Arpitalian Compact Soles (Pvt) Ltd Biyagama 751 30,062 

Richard Pieris Natural Foams (Pvt) Ltd Biyagama 851 80,920 

Arpico Natural Latex Foams (Pvt) Ltd Seethawaka 758 4,917 

Richard Pieris Tyre Company Ltd Pallekale 252 27,530 

Weligama 432 28,347 

Polonnaruwa 540 30,690 


Glossary of Financial Terms 

Associate Company 

A Company other than a subsidiary in which a holding 

company has a participating interest and exercises significant 

influence over its operating and financial policies. 

Current Ratio 

Current Assets divided by Current Liabilities. A measure of 

short term liquidity. 

Debt to Equity Ratio 

Long term Interest Bearing Borrowings divided by Net Assets. 

Deferred Taxation 

Sum set aside for tax in the Financial Statements that will 

become payable in a financial year other than the current 

financial year. 

Dividend Cover 

Profit attributable to Ordinary shareholders divided by Gross 

Dividend. Measures the number of times dividend is covered by 

distributable profit. 

Dividend per Share 

Gross Dividend divided by the number of Ordinary Shares in 

issue at the year end. 

Dividend Yield 

Gross Dividend per share as a percentage of the year end 

market price per share. A measure of return on shareholders’ 

investment. 

Earnings Per Share (EPS) 

Profits attributable to Ordinary Shareholders divided by the 

weighted average number of Ordinary Shares in issue. 

Earnings Yield 

Earnings per Share as a percentage of the year end market 

price per share. 

Effective Tax Rate 

Income Tax expenses divided by profit before tax. 

Gearing Ratio 

Proportion of total interest bearing liabilities to total capital 

employed. 

Gross Dividend 

Portion of profits inclusive of tax withheld, distributed to 

shareholders during the year. 

Interest Cover 

Profit Before Tax (PBT) plus net finance cost divided by net 

finance cost. Measure of entity’s debt service ability. 

Investment Property 

A property that is not occupied by the owner, usually purchased 

specifically to generate profit through rental income and/or 

capital gains. 

Market Capitalization 

Number of shares in issue multiplied by the market value of a 

share at the reported date. 


An outside ownership interest in a subsidiary that is 

consolidated with the parent for financial reporting purposes. 

Net Assets per Share 

Shareholders’ fund divided by weighted average number of 

Ordinary Shares in issue. A basis of relative share valuation. 

Price Earnings Ratio 

Market Price of a share divided by Earnings per share as 

reported at that date. 

Price to Book Value 

Market price of a share divided by Net Assets per share. 

Public Shareholding 

Shares of a Listed Entity held by any person other than those 

directly or indirectly held by; 

a) its parent, subsidiary or associate companies or any 

subsidiaries or associates of its parent company; and, 

b) its directors who are holding office as directors of the Entity, 

their spouses and children under 18 years of age; and, 

c) Chief Executive Officer, his/her spouse and children under 

18 years of age; and, 

d) any single shareholder who holds 10% or more of the 

shares. 

Related Parties 

Parties who could control or significantly influence the financial 

and operating policies of the business. 

Return on Total Capital Employed 

Profit before Tax plus net finance cost divided by average total 

capital employed. 

Return on Equity 

Profit after Tax less Preference Share dividend if any, expressed 

as a percentage of Average Ordinary Shareholders’ Fund. 

Revenue Reserves 

Reserves considered as being available for distributions. 

109 


Glossary of Financial Terms Contd. 

Recession 

Reduction of a country’s GDP or negative real economic growth 

for at least two consecutive quarters 

Segmental Analysis 

Analysis of financial information to segments of an enterprise 

specifically, the different industries and the different 

geographical areas in which it operates. 

Shareholders’ Fund 

Stated Capital plus Revenue Reserves. 


The total of all amounts received by the entity or due and 

payable to the entity by shareholders in respect of the issue of 

shares and calls on shares. 

Subsidiary Company 

A company is a subsidiary of another company if the parent 

company holds more than 50% of the voting rights or controls 

the composition of its Board of Directors. 

Total Capital Employed 

Total Shareholders’ Fund plus Minority Interest plus total 

interest bearing borrowings. 

Value Addition 

The quantum of wealth generated by the activities of the Group 

measured as the differences between net revenue (including 

other income) and the cost of materials and services bought in. 

Working Capital Investment 

Capital required financing the day-to-day operations computed 

as the excess of current assets over current liabilities. 


Notes 

111 


Notes Contd. 


113 


Notice of Meeting 

NOTICE IS HEREBY GIVEN that the Seventy Second Annual 

General Meeting of Richard Pieris & Company PLC will be held 

at the Registered Office of the Company, No. 310, High Level 

Road, Nawinna, Maharagama on Thursday, 30th June 2011 at 

4.00.p.m. and the business to be brought before the meeting 

will be as follows; 

1. To consider the Report of the Directors and the Statement 

of Accounts for the year ended 31st March 2011 with the 

Report of the Auditors thereon. 

2. To declare a dividend as recommended by the Directors. 

Note: 

a) A member entitled to attend and vote at the meeting is 

entitled to appoint a proxy to attend and vote instead of 

him/her. 

b) A proxy need not be a member of the Company. The form 

of proxy will be found inserted in the Annual Report. 

c) The completed form of proxy should be deposited at the 

registered office of the Company No. 310, High Level Road, 

Nawinna, Maharagama., not less than 48 hours before the 

time appointed for the holding of the meeting. 

3. To re-elect Prof. Susantha Pathirana who retires by rotation 

in terms of Article 85 at the Annual General Meeting, a 

Director. 

4. To re -appoint M/s. Ernst & Young, Chartered Accountants 

as Auditors of the Company and to authorize the Directors 

to determine their remuneration. 

5. To authorize the Directors to determine contributions to 

charities. 

6. To consider any other business of which due notice has 

been given. 

To consider and if thought fit pass the following Special 

Resolution in order to amend the Articles of Association of the 

Company in the manner following; 

I 

That the following Article 80 (iii) be included immediately 

after the existing Article 80 (ii) to read as follows, 

(iii) The Directors who are holding any executive office in the 

Company will cease to be a director, consequent on the 

termination of his appointment in the Company. 

By Order of the Board 

Richard Pieris Group Services (Private) Limited 

Secretaries 

No. 310, High Level Road, Nawinna, Maharagama 



Form of Proxy 

I/We* (in block letters) ..................................................................................................................................................................... of 

................................................................................................................................................................................................. being a 

member / members of the RICHARD PIERIS & COMPANY PLC, hereby appoint ............................................................................... 

.......................................................................................................................................................................................................... of 

................................................................................................................................................................................................. whom 

failing DR. SENA YADDEHIGE whom failing JAMES HENRY PAUL RATNAYEKE whom failing PROF. LAKSHMAN RAVENDRA 

WATAWALA whom failing PROF. SUSANTHA DEDDUWA PATHIRANA whom failing MORARJI MEGHJI UDESHI whom failing 

VIVILLE PRAXIDUS PERERA * as my/our proxy to represent me/us and to vote on my/our behalf at the Seventy Second ANNUAL 

GENERAL MEETING of the Company to be held on 30th June 2011 and any adjournment thereof, and at every poll which may be 

taken in consequence thereof to vote:- 

In favour 

Against 

1. To consider the Report of the Directors and the Statement of Accounts for the year ended 31st 

March 2011 with the Report of the Auditors thereon. 

2 To declare a dividend as recommended by the Directors. 

3. To re-elect Prof. Susantha Pathirana , who retires by rotation in terms of Article 85 at the Annual 

General Meeting, a Director 

4. To re-appoint M/s Ernst & Young, Chartered Accountants as Auditors of the Company and to 

authorise the Directors to determine their remuneration. 

5. To authorize the Directors to determine contributions to charities 

6. To consider any other business of which due notice has been given 

Special Resolution as set out in the Notice of Meeting 

Dated this ................................. day of ............................... 2011 

........................................... 

Signature of shareholder 

Notes: 

(i) Please delete the inappropriate words 

(ii) A proxy need not be a member of the Company. 

(iii) Instructions as to completion appear on the reverse of this form. 

115 


Form of Proxy Contd. 

INSTRUCTIONS AS TO COMPLETION OF PROXY FORM 

To be valid, this Form of Proxy must be deposited at the registered 

office of the Company No. 310, High Level Road, Nawinna, 

Maharagama., not later than 4.00 p. m. on Tuesday, 

28th June 2011. 

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

legible. 

In the case of a Company/Corporation, the proxy must be under its 

Common Seal, which should be affixed and attested in the manner 

prescribed by its Articles of Association. 

Please indicate with an ‘X’ in the space provided how your proxy is to 

vote on each resolution. If no indication is given the proxy at his/her 

discretion will vote as he/she thinks fit. 

This Form of Proxy shall in the case of an individual be signed by 

the appointor or his/her Attorney. Where the Form of Proxy is signed 

under a Power of Attorney, which has not been registered with the 

Company, the original Power of Attorney together with a photocopy of 

same or a copy certified by a Notary Public must be lodged with the 

Company, along with the Form of Proxy. 


Produced by Copyline (Pvt) Ltd Printed by Printel (Pvt) Ltd

Richard Pieris & Company PLC 

310, High Level Road, Nawinna, Maharagama, 

Sri Lanka. 

www.arpico.com

Annual Report 2010-2011 - Colombo Stock Exchange

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