Financial Information

Annual Report of the Board of Directors

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 58 – 64 of the report.

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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 its retail,

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Group Revenue

The revenue of the Group was Rs. 54 bn. A detailed analysis of the Group’s turnover identifying the contributions from different sectors is given in Note 3 to the Financial Statements.

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Results & Dividends

Details relating to the Group profits are given in the table on Page 68. The Group reported a Profit after tax amounting to Rs. 1.3 bn.

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Group Investments

The Group has not invested in any subsidiary companies during the year.

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Property, Plant & Equipment

Capital expenditure on property, plant, equipment and workin-progress incurred during the year under review amounted to Rs. 1.5 bn.

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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

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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 three Board Sub Committees which operate within clearly defined terms of reference.

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Audit Committee

The Audit Committee is comprised of two Independent NonExecutive Directors namely Dr. Jayatissa De Costa P.C., Mr. Prasanna Fernando and a Non-Executive Director, the Chairman of the Committee, Mr. J F Fernandopulle. Audit Committee

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Remuneration Committee

The Remuneration Committee is comprised of two Independent Non- Executive Directors –its Chairman, Dr. Jayatissa De Costa P.C., Mr. Prasanna Fernando and a Non-Executive Director Mr. J F Fernandopulle.

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The Related Party Transactions Review Committee consists of two Independent Non-Executive Directors namely its’ Chairman Dr. Jayatissa De Costa P.C., Mr. Prasanna Fernando and a Non-Executive Director

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Relationship with Shareholders

The Board maintains healthy relationships with its shareholders. The Annual General Meetings are held to communicate with the shareholders and their participation is encouraged.

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Internal Controls

The Board is responsible for instituting an 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. READ MORE➜

Corporate Governance

REPORT OF THE REMUNERATION COMMITTEE

The Remuneration Committee, appointed by and responsible to the Board of Directors, consist of two Independent NonExecutive Directors of Richard Pieris and Company PLC, Dr Jayatissa De Costa P.C. and Mr Prasanna Perera and a Non-Executive Director Mr Joseph Felix Fernandopulle. The Committee is chaired by Dr Jayatissa De Costa P.C. The committee met on several occasions during the financial year.

The Remuneration policy of the company is formulated to attract and retain high caliber personnel and motivate them to develop and implement the business strategy in order to optimize long term shareholder value. The Committee took into account, competition, market information and business performance in deciding the overall remuneration policy.

Dr. Jayatissa De Costa P.C.

Chairman

25th November 2020

Meetings

The Audit Committee held 07 meetings during the year under review.

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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.

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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 business and financial risks.

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Financial Statements

The Committee reviewed the Group’s Quarterly Financial Statements, the Annual Report and Accounts for reliability,

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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.

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Conclusion

The Audit Committee is satisfied that the control environment prevailing in the organization provides reasonable assurance regarding the reliability of the financial reporting of the Group,

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Report of the Audit Committee

RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

The Related Party Transactions Review Committee consisted of two Independent Non-Executive Directors namely its’ Chairman Dr. Jayatissa De Costa P.C., Mr. Prasanna Fernando and a NonExecutive Director, Mr. J F Fernandopulle.

The Group Chief Financial Officer attended meetings by invitation. The Company Secretary functions as Secretary to the Related Party Transactions Review Committee.

The Objectives of the Committee,

To exercise oversight on behalf of the Board, that all Related Party Transactions (“RPTs”, other than those exempted by the CSE listing rules on the Related Party Transactions) of Richard Pieris & Company PLC and all its listed subsidiaries are carried out and disclosed in a manner consistent with the CSE listing rules.
To advise and update the Board of Directors on the related party transactions of each of the listed companies on a quarterly basis.
To ensure compliance with the CSE listing rules on the Related Party Transactions.

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 pages 76 and 77 of this report.

The financial statements of the Company and its subsidiaries for the year ended 31st March 2020 included in this report, have been prepared and presented in accordance with the new Sri Lanka Accounting Standards (LKAS and SLFRS), 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 78 to 147 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.

INDEPENDENT AUDITOR’S REPORT

Key audit matter	How our audit addressed the key audit matter
Annual impairment assessment of Goodwill The Group recorded a goodwill amounting to Rs. 1.12 bn as at 31 March 2020 which is required to be assessed for impairment, annually. This annual impairment assessment was significant to our audit because such process is complex as disclosed in Note 14. In addition, the impairment assessment involved subjective judgements about future business performance, with key assumptions including cash flows, revenue growth and discount rates. Accordingly, we selected annual goodwill impairment assessment as a key audit matter.	We performed the following procedures, amongst others We tested the reasonableness of key assumptions by comparing: the cash flow forecast to the respective budgets, business plans and other evidence of future intentions as approved by the board of directors; the current estimates of revenue growth with those achieved historically. We involved our specialized internal resources to assist us in assessing the appropriateness of the impairment assessment and reasonableness of estimates used by the management. We also assessed the adequacy of the related disclosures in Note 14 to the financial statements.

For the year ended 31st March	2020 Rs.’000	2019 Rs.’000
Continuing operations
Revenue from contracts with customers	49,718,797	50,851,486
Revenue from insurance contracts	1,641,416	1,374,171
Interest Income from Finance company	2,879,497	2,819,701
Dividend Income	-	-
Other revenue	-	-
Total Revenue	54,239,710	55,045,358

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st March	2020 Rs.’000	2019 Rs.’000
Profit for the year	1,290,586	2,342,267
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss;
Net loss on financial assets at FVOCI	(7,009)	(1,604)
Fair value movement of AFS reserve transferred to life fund	7,009	1,604
Exchange differences on translation of foreign operations	44,723	60,259
Net other comprehensive income to be reclassified to profit or loss	44,723	60,259

As at 31st March	2020 Rs.’000	2019 Rs.’000
Assets
Non-current assets
Property, plant and equipment	20,207,370	20,209,899
Investment properties	295,246	236,253
Right-of-use assets	5,559,343	1,293,525
Intangible assets	1,142,431	1,155,155
Bearer biological assets	1,138,269	1,026,885
Investments in subsidiaries	-	-
Investment in associates	189,407	149,087
Other non-current financial assets	1,983,494	2,316,579
Deferred tax assets	500,010	433,396
	31,015,570	26,820,779

STATEMENT OF CHANGES IN EQUITY

Group	Stated capital Rs.’000	Revenue reserves
As at 1st April 2018	1,972,829	11,136,984
Adjustments due to changes in SLFRS	-	(153,076)
Restated as at 1st April 2019	1,972,829	10,983,908

Profit for the year	-	2,009,568
Other comprehensive income / (loss)	-	(62,614)
Total comprehensive income	-	1,946,954

For the year ended 31st March	2020 Rs.’000	2019 Rs.’000
Operating activities
Profit before tax from continuing operations	2,568,087	3,353,592
Loss from discontinued operations	(7,366)	(4,561)
Profit before tax	2,560,721	3,349,031

Notes to the Financial Statements

1. CORPORATE INFORMATION

1.1 Reporting Entity

Richard Pieris & Company PLC (“Company”) is a public limited company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange.

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1.2 Principle Activities and Nature of Operations

The principal activities of the Group are stated in the Annual Report of the Board of Directors.

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1.3 Parent Entity and Ultimate Parent Entity

The Company does not have an identifiable parent on its own. Richard Pieris & Company PLC

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1.4 Directors Responsibility

The Board of Directors is responsible for these Consolidated Financial Statements as per the provisions of the Companies Act

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1.5 Approval of Financial Statements

The Consolidated Financial Statements of the Group for the year ended 31st March 2020

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Assets & Liabilities

Ten Year Summary

SHARE AND DEBENTURE INFORMATION

Owning Company	Location
Richard Pieris & Company PLC	Hyde Park Corner
	Maharagama
RPC Real Estate Development Company (Pvt) Limited	Kandy
Arpico Industrial Development Company (Pvt) Limited	Mattegoda
	Siyambalagoda
Richard Pieris Distributors Limited	Maharagama
	Moratuwa
	Mulleriyawa
	Matara
	Panadura

GLOSSARY OF FINANCIAL TERMS

Associate Company:

An entity over which the investor has significant influence.

AWPLR

Average Prime Lending Rate published periodically by the Central Bank of Sri Lanka.

Current Ratio:

Current assets divided by current liabilities. A measure of short term liquidity.

Debt to Equity Ratio:

Total interest bearing borrowings as a percentage of shareholder’s funds and non-controlling interest.

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.

Earnings Per Share (EPS)

Profits attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the period.

Earnings Yield:

Earnings per share as a percentage of the year end market price per share. A measure of return on shareholders’ investment.