Annual Report 2013/14. Muller & Phipps (Ceylon) PLC

Transcription

1 Annual Report 2013/14 Muller & Phipps (Ceylon) PLC

2 CONTENTS Chairman s Review 1 Board of Directors 2-3 Annual Report of the Board of Directors 4-6 Corporate Governance 7-8 Audit Committee Report 9 Independent Auditors Report 10 Statement of Comprehensive Income 11 Statement of Financial Position 12 Statement of Changes in Equity 13 Statement of Cash Flows 14 Notes to the Financial Statements Share Information Ten Year Summary - 42 Notice of Meeting 43 Form of Proxy Enclosed

3 CHAIRMAN S REVIEW I am pleased to present on behalf of the Board of Directors the Annual Report and Audited Accounts of the and its subsidiaries for the year ended 31st March 2014 and to welcome you to the forty ninth Annual General Meeting of the. The turnover achieved this year by the was Rs million, an increase of 8% over the turnover of Rs million recorded in the previous year. However, the operational profit reduced from Rs million in the previous year to Rs million in the current year. This was on account of the reduced trade margins. This has also reduced the net profit of the to Rs. 12 million from Rs million in the previous year. We remain confident that the loss of trade margins will be regained by increased turnover. The continues to seek new opportunities in the health care sector to ensure its sustainable profitability. In conclusion, I wish to thank all our employees for their dedication and hard work during the year and to all our other stakeholders for their support and confidence in the and to my colleagues on the Board for their invaluable counsel at all times. S.D.R. Arudpragasam Chairman Colombo 27th May, 2014 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 1

4 BOARD OF DIRECTORS Mr. S.D.R. Arudpragasam Chairman FCMA (UK) Mr. S.D.R. Arudpragasam joined the Board and was appointed Chairman in the year He serves as Chairman of several subsidiaries of The Colombo Fort Land & Building PLC. He holds the positions of Deputy Chairman on the Boards of The Colombo Fort Land & Building PLC (CFLB) and Lankem Ceylon PLC. Mr. Arudpragasam also functions as Managing Director of E.B. Creasy & Co. PLC in addition to serving on the Boards of other companies within the CFLB. Mr. P. Pathmarajah Director Mr. P. Pathmarajah was appointed to the Board in He has extensive experience in promoting/marketing pharmaceutical products. Since 1993 he has been responsible for the operation of the subsidiary Pettah Pharmacy (Private) Limited. Mr. R.C.A. Welikala Director Mr. R.C.A. Welikala was appointed to the Board in He has extensive experience in marketing of fast moving consumer goods and has successfully developed key brands in the E.B. Creasy to market leadership positions. He also serves on several Boards of The Colombo Fort Land and Building. Mr. R.N. Bopearatchy Director B.Sc. (Cey), Dip. BM, MBA (Univ. of Col.) Mr. R.N. Bopearatchy was appointed to the Board in He has considerable expertise in product development, manufacturing and marketing of pesticides, pharmaceuticals and consumer products. Soon after graduation he was employed in Research in the Plant Pathology Division of the Tea Research Institute and subsequently joined Chemical Industries Colombo Limited, and was appointed to its Board. He also served on the Board of Crop Management Services (Pvt) Ltd, the Managing Agents for Mathurata Plantations Ltd., CIC Fertilizers Ltd. and Cisco Specialty Packaging (Pvt) Ltd. He has been a former President of the Pesticide Association of Sri Lanka and the Toxicological Society of Sri Lanka and is now a member of the Executive Committee of the International Mosquito Spiral Manufacturers Association (IMSMA). Mr. Bopearatchy currently holds several other Directorships within The Colombo Fort Land & Building. Mr. P.M.A. Sirimane Director FCA, MBA Mr. P.M.A. Sirimane joined the E.B. Creasy in October, 2009 and was appointed to the Board of Muller & Phipps (Cey) PLC in October Amongst other senior positions, he has functioned as Managing Director/CEO of Mercantile Leasing Ltd., Finance Director of United Tractor & Equipment Ltd., Chief Financial Officer of Sri Lanka Telecom Ltd. and Director SLT Hong Kong Ltd. He has served as a Member of several Committees of the Institute of Chartered Accountants of Sri Lanka and was an ex-officio member of the International Leasing Association. Mr. Sirimane serves on the Board of E.B. Creasy & PLC and some of its subsidiaries. He also holds several other Directorships. Mr. A.R. Rasiah Director B.Sc. (Cey.), FCA Mr. A.R. Rasiah was appointed to the Board as an Independent Non-Executive Director on 2nd May He possesses well over 40 years of experience in Finance at a very senior level both internationally and locally. He currently serves on some of the Boards of The Colombo Fort Land and Building, Ceylon Cold Stores PLC, Nations Trust Bank PLC and MTD Walkers PLC. He is a former (retired) Finance Director of Nestle (Lanka) PLC. He has been a visiting lecturer on Finance and Accounts for Nestle SA for Africa- Asian and Oceanic Regions. Mr. Rasiah is the Chairman of Ceylon Pencil Ltd, and is currently a visiting lecturer for MBA students on Finance at the Post Graduate Institute of Management (PIM). He is a former President of the Benevolent Society of the Institute of Chartered Accountants of Sri Lanka and a Committee Member of Sri Lanka Institute of Directors. Mr. S.N.P. Palihena Director FCIB (U.K.), FIB (SL), Post Grad. Dip. Bus. & FA Mr. S.N.P. Palihena was appointed to the Board as an Independent Non-Executive Director on 2nd May In addition to serving on the Board of E.B. Creasy & PLC and some of its subsidiaries he also serves on the Board of a subsidiary of The Colombo Fort Land & Building PLC. Mr. Palihena currently holds Directorships in several companies of the Hirdaramani. 2 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14

5 BOARD OF DIRECTORS CONTD. He was a former Chief Executive Officer/General Manager of Bank of Ceylon and has had a distinguished banking career spanning almost forty years at the Bank of Ceylon. He has also worked at the National Development Bank of Sri Lanka for a period of over three years. Mr. Palihena is a former Director of the DFCC Bank. Dr. A.M. Mubarak - Director Dr. Mubarak is a former Director and Chief Executive Officer of the Industrial Technology Institute. He is a Chemist by profession and has more than 25 years of experience in Research & Development including Research Management. Dr. Mubarak graduated from the University of Colombo with first class honours in Chemistry and holds a PhD from the University of Cambridge U.K. He did his Post-doctoral research at the University of Maryland, College Park Campus and Royal Institute of Technology, Stockholm. Dr. Mubarak, a Commonwealth Scholar, is the past President of the Institute of Chemistry, Ceylon and is the current General President of the Sri Lanka Association for the Advancement of Science. He has served on the Boards / Councils of the University of Colombo, Post Graduate Institute of Science, Sri Lanka, National Engineering Research & Development Centre and Sri Lanka Accreditation Board. With his knowledge and experience in a wide range of fields, Dr. Mubarak had served in many Presidential and Ministerial Task Forces dealing with Science & Technology. He had been an active member of Sri Lanka delegations in several bilateral discussions with India on Science & Technology co-operation. Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 3

6 ANNUAL REPORT OF THE BOARD OF DIRECTORS The Board of Directors of Muller & Phipps (Ceylon) PLC present their Report on the affairs of the together with the Audited Financial Statements for the year ended 31st March The details set out herein provide the pertinent information required by the Companies Act No. 07 of 2007, and the Colombo Stock Exchange Listing Rules and are guided by recommended best practices. PRINCIPAL ACTIVITIES / BUSINESS REVIEW The principal activity of the is to serve as an agent representative in Sri Lanka for foreign pharmaceutical companies and deals in importing, wholesale and distribution of pharmaceuticals. The Chairman s Review together with the Financial Statements reflects the state of affairs of the. The Directors, to the best of their knowledge and belief confirm that the has not engaged in any activities that contravene laws and regulations. FINANCIAL STATEMENTS The Financial Statements of the are given on pages 11 to 39. AUDITORS REPORT The Auditors Report on the Financial Statements is given on page 10. ACCOUNTING POLICIES The Accounting Policies adopted in the preparation of the Financial Statements are given on pages 15 to 23. There were no changes in the Accounting Policies adopted. INTEREST REGISTER Directors Interest in Transactions The Directors have made general disclosures as provided for in Section 192(2) of the Companies Act No. 07 of Arising from this, details of contracts in which they have an interest are disclosed in Note 30 to the Financial Statements on page 38. Directors Interest in Shares Directors of the who have an interest in the shares of the are required to disclose their shareholdings and any acquisitions/disposals to the Board in compliance with Section 200 of the Companies Act No. 07 of However, none of the Directors held any shares during the period under review nor in the previous year. Directors Remuneration Key Management Personnel Compensation in respect of the and the for the financial year 2013/2014 is detailed in Note 30.2 to the Financial Statements on page 38 (2012/2013 Rs. 5.3 million) DIRECTORATE The names of the Directors who held office during the financial year are given below and brief profiles appear on pages 2 and 3. Mr. S.D.R. Arudpragasam - Chairman Mr. P. Pathmarajah - Director Mr. R.C.A. Welikala - Director Mr. R.N. Bopearatchy - Director Mr. P.M.A. Sirimane - Director Mr. A.R. Rasiah - Director Mr. S.N.P. Palihena - Director Dr. A.M. Mubarak - Director (Appointed w. e. f. 02/09/2013) In terms of Article 83 & 84 of the Articles of Association Mr. R.C.A. Welikala retires by rotation and being eligible offers himself for re-election. In terms of Article 90 of the Articles of Association Dr. A.M. Mubarak retires and being eligible offers himself for re-election. Mr. R.N. Bopearatchy, who is over seventy years of age, offers himself for re-appointment under and by virtue of a Special Notice received from a shareholder of the which is referred to in the Notice of Meeting. CORPORATE GOVERNANCE Adoption of good governance practices has become an essential requirement in today s corporate culture. The practices carried out by the are given in the Corporate Governance Statement on pages 7 to 8. 4 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14

7 ANNUAL REPORT OF THE BOARD OF DIRECTORS CONTD. AUDITORS The Financial Statements of the for the year have been audited by Messrs, KPMG, the retiring Auditors, who have expressed their willingness to continue as Auditors of the and are recommended for re-appointment. A resolution to re-appoint them and to authorize the Directors to determine their remuneration will be proposed at the Annual General Meeting. The Auditors KPMG were paid Rs. 225,000/- ( Rs. 251,000/-) as audit fees and fees for audit related services by the during the year under review. In addition, the Companies are engaged with other audit firms. Audit fees in respect of these firms amounted to Rs. 409,000/- during the year under review ( Rs. 372,000/-). Further, those other Auditors were paid Rs. 120,040 as the Non Audit Services fee during the year ( Rs. 76,540/-). As far as the Directors are aware the Auditors do not have any relationship (other than that of an Auditor) with the. The Auditors do not have any interests in the. REVENUE The revenue of the for the year was Rs million. (2012/2013 Rs million) RESULTS The made a Profit before Income Tax Expense of Rs million, against a profit of Rs million in the previous year. The detailed results are given in the Statement of Comprehensive Income on page 11. Dividends The Board of Directors have recommended the payment of a first and final dividend of Rs per share on the ordinary shares of the for the year ended 31st March, 2014 for approval by the shareholders at the Annual General Meeting to be held on 27th June The Directors have confirmed that the satisfies the solvency test requirement under Section 56 of the Companies Act No. 07 of 2007 for the dividend proposed. A solvency certificate has been sought from the Auditors in respect of the aforementioned dividend. PROPERTY, PLANT & EQUIPMENT Information relating to movement in Property, Plant & Equipment is given in Note 11 to the Financial Statements. STATED CAPITAL In compliance with the Companies Act No. 07 of 2007, the Financial Statements reflect the Stated Capital of the. The Stated Capital is the total of all amounts received by the in respect of the issue of shares. The Stated Capital of the as at is Rs. 83,000,000/- and is represented by 283,000,000 Ordinary Shares. RESERVES The total reserves of the as at 31st March 2014 amounted to Rs million comprising General Reserves of Rs. 5 million and an Accumulated Profit of Rs million. The movements are shown in the Statement of Changes in Equity in the Financial Statements on page 13. TAXATION The provision for income tax is based on the elements of income and expenditure as reported in the Financial Statements and computed in accordance with the provision of the Inland Revenue Act No. 10 of 2006 and amendments thereto. Relevant details have been disclosed in Note 9 to these Financial Statements. SHARE INFORMATION Information relating to earnings, dividend, net assets, market value per share and share trading is given on pages 40 and 41. EVENTS OCCURRING AFTER THE REPORTING DATE No circumstances have arisen since the reporting date that would require adjustments to or disclosure in the Financial Statements other than those disclosed in Note 32 on page 39. Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 5

8 ANNUAL REPORT OF THE BOARD OF DIRECTORS CONTD. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES Capital expenditure commitments and contingent liabilities as at the reporting date have been disclosed in Note 28 and 31 in the Financial Statements. EMPLOYMENT POLICY The s recruitment and employment policy is non-discriminatory. The number of persons employed by the at the year end was 78 (2012/13 73). SHAREHOLDERS The has made all endeavors to ensure equitable treatment to all shareholders. STATUTORY PAYMENTS The Directors to the best of their knowledge and belief are satisfied that all statutory payments of the due in relation to employees and the Government have been made. ENVIRONMENTAL PROTECTION The s business activities can have direct and indirect effects on the environment. It is the s policy to minimize any adverse effects its activities have on the environment and promote co-operation and compliance with the relevant authorities and regulations. We confirm that the has not undertaken any activities which have caused or are likely to cause detriment to the environment. GOING CONCERN As noted in the Financial Statement on page 39 the Directors have adopted the going concern basis in preparing Financial Statements. For and on behalf of the Board, R.N.Bopearatchy Director By Order of the Board R.C.A. Welikala Director Corporate Managers & Secretaries (Private) Limited Secretaries 27th May Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14

9 corporate governance Corporate Governance is the mechanism by which Companies are managed and directed with the objective of balancing and attaining the corporate objectives, the alignment of corporate behavior within the expectations of the law and society and the accountability to shareholders and the responsibility to other recognized stakeholders. BOARD Composition The Board of Muller & Phipps (Ceylon) PLC comprises of eight Non-Executive Directors including the Chairman and three Independent Directors. These Directors are named below and profiled on pages 2 to 3. Mr. S.D.R. Arudpragasam - Non-Executive Director (Chairman) Mr. P. Pathmarajah - Non-Executive Director Mr. R.C.A. Welikala - Non-Executive Director Mr. R.N. Bopearatchy - Non-Executive Director Mr. P.M.A. Sirimane - Non-Executive Director Mr. A.R. Rasiah - Independent Non-Executive Director Mr. S.N.P. Palihena - Independent Non-Executive Director Dr. A.M Mubarak - Independent Non-Executive Director The Non-Executive Directors have submitted declarations of their independence/non-independence to the Board. Although Messrs. A.R. Rasiah, S.N.P. Palihena and Dr. A. M. Mubarak serve on the Boards of E.B. Creasy & Co. PLC (EBCPLC), Parent and some of its subsidiaries and a majority of the Directors of the are on the Boards of EBCPLC and its subsidiaries, the Board after taking into consideration all other circumstances listed in the Rules pertaining to the criteria for defining independence, is of the opinion that Messrs. A.R. Rasiah, S.N.P. Palihena and Dr. A. M. Mubarak are nevertheless independent. Decision Making of the Board In addition to Board Meetings, matters are referred to the Board and decided by Resolutions in Writing. Appointment and Re-election of Directors The Board as a whole decides on the appointment of Directors in accordance with the Articles of Association of the. Details of new appointments to the Board are made available to the Shareholders by making announcements to the Colombo Stock Exchange. In terms of the Articles of Association, a Director appointed by the Board holds office until the next Annual General Meeting, at which he seeks re-election by the Shareholders. The Articles require that one third of the Directors retire at each Annual General Meeting. The Directors to retire are those who have been longest in office since their last election. Retiring Directors are eligible for re-election. Remuneration Committee The s Remuneration Committee comprises of Mr. A.R. Rasiah, Chairman, Mr. S.N.P. Palihena, Independent Non-Executive Director and Mr. S.D.R. Arudpragasam, Non- Executive Director. The Committee is responsible for recommending remuneration packages for the key management and senior management personnel. In addition, they lay down guidelines and parameters for the compensation structure of the management staff. The primary objective of compensation package is to attract, motivate and retain qualified and experienced personnel and reward performance in a fair manner. Secretaries and Independent Professional Advice The and all the Directors may seek advice from Corporate Managers & Secretaries (Pvt) Ltd. who are qualified to act as Secretaries as per the provisions of the Companies Act No. 07 of Advice is also sought from independent external professionals whenever the Board deems it necessary. Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 7

10 corporate governance CONTD. Independent Judgment The Board is committed to exhibit high standards of integrity and independence of judgment. Each Director dedicates the time and effort necessary to carry out his responsibilities. Financial Acumen The Directors are from varied business and professional backgrounds. Their expertise enables them to exercise independent judgment and their views carry substantial weight in decision making. The Board includes three finance professionals who possess the necessary knowledge to offer guidance on matters of finance. Supply of Information The Directors are provided with an Agenda, Minutes and relevant Board Papers prior to Board Meetings. Minutes of all the Meetings are properly recorded and circulated amongst the Directors. Constructive use of the Annual General Meeting / General Meetings The Board considers the Annual General Meeting / General Meetings an opportunity to communicate with Shareholders and encourages their participation. Questions raised by the Shareholders over the content of the Annual Report as well as other matters pertaining to the, are answered and an appropriate dialogue is maintained with them. Major Transactions There have been no transactions during the year under review which falls within the definition of Major Transactions as set out in the Companies Act. Financial Reporting The Board of Directors considers the timely publication of its Annual and Quarterly Financial Statements as a high priority. These publications include financial and nonfinancial information in order to facilitate the requirements of the existing and potential shareholders. The Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards. Audit Committee The Audit Committee comprises of Mr. A.R. Rasiah, Chairman, Mr. S.N.P. Palihena, Independent Non-Executive Director and Mr. A.M. de S. Jayaratne Independent Non- Executive Director of the Parent, E.B. Creasy & PLC. The Audit Committee Report is set out on page 09. Internal Control The Board is satisfied with the effectiveness of the system of internal controls for the period up to the date of signing the Financial Statements. 8 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14

11 AUDIT COMMITTEE REPORT Composition The Audit Committee comprises of two Independent Non- Executive Directors of the and an Independent Non-Executive Director of E.B. Creasy & PLC (Parent ). The names of the members are set out below: Mr. A.R. Rasiah Mr. S.N.P. Palihena Mr. A.M. de S. Jayaratne Chairman - Independent Non-Executive Director Muller & Phipps (Ceylon) PLC Member - Independent Non-Executive Director Muller & Phipps (Ceylon) PLC Member - Independent Non-Executive Director E.B. Creasy & PLC The members have varied experience, financial knowledge and business acumen to carry out their role effectively and efficiently. Two of the members are finance professionals, including the Chairman. The s Secretaries Corporate Managers & Secretaries (Private) Ltd. function as the Secretaries to the Audit Committee. Role of the Audit Committee The Audit Committee assists the Directors to discharge their duties and responsibilities in respect of regulatory compliance and risk management. The Committee also reviews the financial reporting system adopted by the in the preparation of its quarterly and annual Financial Statements to ensure reliability of the processes and consistency of the accounting policies and methods adopted and compliance thereof. The Audit Committee also monitors the timely payment of all statutory payments. It also reviews the adequacy of internal controls and the business risks. The attendance of the Committee was as follows: Mr. A.R. Rasiah (4/4) Mr. A.M. de S. Jayaratne (4/4) Mr. S.N.P. Palihena (4/4) Senior financial officers of the are invited to the meetings. The proceedings of the Audit Committee are reported to the Board of Directors. External Audit The has appointed KPMG as its External Auditor and the service provided by them are segregated between audit/assurance services. The Audit Committee also reviews the professional fees of the External Auditors. The Audit Committee has recommended to the Board of Directors the re-appointment of KPMG as Auditors for the financial year ending 31st March 2015, subject to the approval of the shareholders at the Annual General Meeting. Conclusion The Audit Committee is of the view that adequate controls are in place to safeguard the s assets and that the financial position and the results disclosed in the audited accounts are free from any material misstatements. A. R. Rasiah Chairman Audit Committee 27th May 2014 Meetings and Attendance The Audit Committee has met on four occasions during the year ended 31st March Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 9

12 INDEPENDENT AUDITORS REPORT KPMG (Chartered Accountants) 32A, Sir Mohamed Macan Markar Mawatha, P. O. Box 186, Colombo , Sri Lanka. Tel : Fax : Internet : TO THE SHAREHOLDERS OF MULLER & PHIPPS (CEYLON) PLC Report on the Financial Statements We have audited the accompanying financial statements of Muller & Phipps (Ceylon) PLC ( the ) and the consolidated financial statements of the and its subsidiary ( the ), which comprise the statements of financial position as at 31st March 2014, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information set out on pages 11 to 39 of the annual report. 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 controls 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. 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 policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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, the maintained proper accounting records for the year ended 31st March 2014 and the financial statements give a true and fair view of the financial position of the as at 31st March 2014, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. Opinion - In our opinion, the consolidated financial statements give a true and fair view of the financial position of the and its subsidiary dealt with thereby as at 31st March 2014, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. Report on Other Legal and Regulatory Requirements These financial statements also comply with the requirements of Section 153(2) to 153(7) of the Companies Act No. 07 of Chartered Accountants 27th May 2014 Colombo KPMG, a Sri Lankan Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International cooperative ( KPMG International ), a Swiss entity. M.R. Mihular FCA P.Y.S. Perera FCA C.P. Jayatilake FCA T.J.S. Rajakarier FCA Ms. S.M.B. Jayasekara ACA G.A.U. Karunaratne ACA W.W.J.C. Perera FCA W.K.D.C Abeyrathne ACA R.M.D.B. Rajapakse ACA Ms. S. Joseph FCA S.T.D.L. Perera FCA Ms. B.K.D.T.N. Rodrigo ACA Principals - S.R.I. Perera ACMA, LLB, Attorney-at-Law, H.S. Goonewardene ACA 10 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14

13 STATEMENT OF COMPREHENSIVE INCOME For the year ended 31st March, Notes Rs. 000 Rs. 000 Rs. 000 Rs. 000 Revenue 5 573, , Cost of Sales (462,349) (404,154) - - Gross Profit 110, , Other Operating Income 6 15,804 6,195 11,023 29,000 Administrative Expenses (91,669) (83,171) (3,551) (2,774) Distribution Expenses (11,459) (10,491) - - Profit from Operations 23,579 38,202 7,472 26,226 Finance Income 7.1 1,099 1,114 18,839 15,679 Finance Expenses 7.2 (3,329) (3,977) - - Other Financial Items 7.3 (3,033) 8, Net Financing Income / (Expenses) 7.4 (5,263) 5,542 18,839 15,679 Profit before Income Tax Expense 8 18,316 43,744 26,311 41,905 Income Tax Expense 9 (6,338) (12,050) (5,126) (3,371) Profit for the Year 11,978 31,694 21,185 38,534 Other Comprehensive Income Defined benefit plan actuarial gain / (losses) 1,219 (5,149) - - Net change in fair value of available for sale Financial Asset (8,836) Total Other Comprehensive Income for the Year (7,617) (5,081) Total Comprehensive Income for the Year 4,361 26,613 21,287 38,587 Earnings per Share (Rs.) The Accounting Policies and Notes form an integral part of these Financial Statements. Figures in brackets indicate deductions. Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 11

14 STATEMENT OF FINANCIAL POSITION As at 31st March, Notes Rs.'000 Rs.'000 Rs.'000 Rs.'000 ASSETS Non-Current Assets Property, Plant & Equipment 11 7,255 9, Intangible Assets Investments in Subsidiaries ,897 38,897 Financial Assets Available for Sale 14 20,077 27,039 3,770 1,794 Deferred Tax Assets Total Non-Current Assets 27,776 36,952 42,715 40,744 Current Assets Inventories 16 65, , Trade and Other Receivables , , Amounts due from Related Companies 18 25,864 1, , ,813 Financial Assets Held to Maturity - Investments 19 1,090 10, Income Tax Recoverable 3,453 2, Cash and Cash Equivalents 20 4,738 24, ,116 Total Current Assets 266, , , ,949 Total Assets 294, , , ,693 EQUITY AND LIABILITIES Equity Stated Capital 21 83,000 83,000 83,000 83,000 Reserves 22 91,273 86,913 85,054 63,767 Equity Attributable to Equity Holders of the 174, , , ,767 Non-Current Liabilities Retirement Benefit Obligations 23 3,366 3, Total Non-Current Liabilities 3,366 3, Current Liabilities Trade and Other Payables 24 5,242 5, ,393 Income Tax Payable 1,112 1,535 1,112 1,533 Amounts due to Related Companies Interest Bearing Borrowings 26 98,197 95, Derivative Financial Instruments Bank Overdraft 20 11,955 30, Total Current Liabilities 117, ,074 2,083 2,926 Total Equity & Liabilities 294, , , ,693 The Accounting Policies and Notes form an integral part of these Financial Statements. I certify that the Financial Statements of the have been prepared in compliance with the requirements of the Companies Act No. 07 of P.M.A. Sirimane Chief Financial Officer The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Approved and signed for and on behalf of the Board of Muller & Phipps (Ceylon) PLC. R.N. Bopearatchy Director 27th May 2014, Colombo 12 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 R.C.A. Welikala Director

15 STATEMENT OF CHANGES IN EQUITY For the year ended 31st March, Stated Capital General Reserve Capital Reserve Retained Earnings Total Rs. 000 Rs. 000 Rs. 000 Rs. 000 Rs. 000 Balance as at 1st April ,000 5, , ,300 Profit for the Year ,694 31,694 Other Comprehensive Income for the Year (5,081) (5,081) Balance as at 31st March ,000 5, , ,913 Profit for the Year ,978 11,978 Other Comprehensive Income for the Year (7,617) (7,617) Balance as at 31st March ,000 5, , ,273 Balance as at 1st April ,000 5, , ,180 Profit for the Year ,534 38,534 Other Comprehensive Income for the Year Balance as at 31st March ,000 5, , ,767 Profit for the Year ,185 21,185 Other Comprehensive Income for the Year Balance as at 31st March ,000 5, , ,054 The Accounting Policies and Notes form an integral part of these Financial Statements. Figures in brackets indicate deductions. Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 13

16 STATEMENT OF CASH FLOWS For the year ended 31st March, Rs.'000 Rs.'000 Rs.'000 Rs.'000 Cash Flows from Operating Activities Profit Before Taxation 18,316 43,744 26,311 41,905 Adjustments for : Depreciation on Property, Plant & Equipment 1,876 1, Property Plant & Equipment Written Off 612 1, Provision for Retiring Gratuity 1,274 1, Interest Expense 3,329 3, Profit from Sale of Investments (923) - (923) - Interest Income (1,099) (1,114) (18,839) (15,679) Profit on Sale of Property, Plant & Equipment 46 (146) - - Dividend Received - - (8,100) (27,000) Operating Profit / (Loss) Before Working Capital Changes 23,431 50,473 (1,546) (768) (Increase) / Decrease in Inventories 46,300 1, (Increase) / Decrease in Trade & Other Receivables (46,493) (23,666) - - (Increase) / Decrease in Amount Due from Related Companies (24,551) 1,316 (21,801) (41,434) Increase / (Decrease) in Trade & Other Payables 202 1,757 (422) 165 Increase / (Decrease) in Amount Due to Related Companies 516 (1,134) - - Cash Generated from / (Used in) Operations (595) 30,121 (23,769) (42,037) Retiring Gratuity Paid - (9,881) - - Interest Expense Paid (3,329) (3,977) - - Income Tax Expense Paid (8,253) (11,665) (5,547) (3,606) Net Cash Flows from Operating Activities (12,177) 4,598 (29,316) (45,643) Cash Flow from Investing Activities Purchase of Property, Plant & Equipment (687) (5,298) - - Dividend Received - - 8,100 27,000 Interest Received 1,099 1,114 18,839 15,679 Proceeds from Disposal of Property, Plant & Equipment Investment in Other Short Term Financial Assets 9,357 (2,706) - - Net Cash Flows from Investing Activities 10,208 (6,700) 26,939 42,679 Cash Flows from Financing Activities Investments during the Year (3,668) (1,741) (3,668) (1,741) Proceed from Sale of Investment 2,717-2,717 - Proceed from Borrowings 2,892 11, Forward Contract (578) Net Cash Flows from Financing Activities 1,363 10,644 (951) (1,741) Increase / (Decrease) in Cash & Cash Equivalents (606) 8,542 (3,328) (4,705) Cash & Cash Equivalents at the beginning of the Year (6,611) (15,152) 4,116 8,821 Cash & Cash Equivalents at the end of the Year (Note 20) (7,217) (6,611) 788 4,116 The Accounting Policies and Notes form an integral part of these Financial Statements. Figures in brackets indicate deductions. 14 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14

17 NOTES TO THE FINANCIAL STATEMENTS 1. REPORTING ENTITY Muller and Phipps (Ceylon) PLC is incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. The registered office and principal place of business is situated at No: 98, Sri Sangaraja Mawatha, Colombo Principal Activities and Nature of Operations The serves as a holding and currently the is the holding of Pettah Pharmacy (Pvt) Ltd, which is serving as an agent representative in Sri Lanka for foreign pharmaceutical companies and deals in importing, whole selling and distribution of pharmaceuticals. However, during the year under review the had no agencies for any foreign pharmaceutical companies. 1.2 Parent Enterprise In the Director s opinion, the s ultimate Parent undertaking and controlling party is The Colombo Fort Land and Building PLC, which is incorporated in Sri Lanka. 2. BASIS OF PREPARATION 2.1 Statement of Compliance The Financial Statements of the and those consolidated with such comprise of the Statement of Financial Position, Statement of Comprehensive Income, Statement of Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows together with the Accounting Policies and Notes to the Financial Statements. The Consolidated Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (SLFRSs/LKASs) as issued by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the requirements of the Companies Act No. 07 of The Board of Directors is responsible for the preparation and presentation of the Financial Statements of the and its subsidiaries as per provisions of Companies Act No. 07 of 2007 and the Sri Lanka Accounting Standards (SLFRSs/ LKASs). The Consolidated Financial Statements were authorized for issue by the Board of Directors on 27th May Basis of Measurement The Consolidated Financial Statements have been prepared on the basis of historical cost. 2.3 Financial Year All companies in the have a common Financial Year which ends on 31st of March. 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements and certain comparative amounts have been reclassified to conform to the current year s presentation. 3.1 Basis of Consolidation The Consolidated Financial Statements (referred to as the ) comprise the Financial Statements of the and its subsidiaries. The Consolidated Financial Statements have been prepared using uniform accounting policies for like transactions/events in similar circumstances and where necessary, appropriate adjustments have been made in the Consolidated Financial Statements Business Combinations Business combinations are accounted for using the acquisition method as at the acquisition date - i.e. when control is transferred to the. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the also takes into consideration potential voting rights that are currently exercisable. The measures goodwill at the acquisition date as: the fair value of the consideration transferred; plus the recognized amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss. Transactions costs, other than those associated with the issue of debt or equity securities, that the incurs in connection with a business combination, are expensed as incurred. Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 15

18 NOTES TO THE FINANCIAL STATEMENTS Non-Controlling Interests The total profit and loss for the year of the and its subsidiaries included in consolidation are shown in the Consolidated Statement of Comprehensive Income with the proportion of profit and loss after taxation pertaining to minority shareholders subsidiaries being deducted as Non-controlling interest. All assets and liabilities of the and of its subsidiaries included in consolidation are shown in the Consolidated Statement of Finacial Position. The interest of minority shareholders of subsidiaries in the fair value of net assets of the are indicated separately in the Consolidated Statement of Financial Position under the heading Non-controlling interest. Changes in the s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners, in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is recognized in profit or loss Subsidiaries Subsidiaries are entities controlled by the. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date, that control commences until the date that control ceases Loss of Control On the loss of control, the derecognizes the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognized in profit or loss Transactions Eliminated on Consolidation Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. 3.2 Foreign Currency Foreign Currency Transactions Transactions in foreign currencies are translated to the respective functional currencies of entities at exchange rates as at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate on that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortized cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are retranslated to the functional currency at the exchange rate on the date the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. 3.3 Assets and Bases of their Valuation Assets classified as current assets in the Statement of Financial Position are cash and bank balances and those which are expected to be realized in cash during the normal operating cycle of the s business, or within one year from the reporting date, whichever is shorter. Assets other than current assets are those which the intends to hold beyond a period of one year from the reporting date Financial Instruments - Initial Recognition, Classification and Subsequent Measurement Date of Recognition All financial assets and liabilities except Regular way trades are initially recognized on the trade date, i.e., the date that the becomes a party to the contractual provisions of the instrument. Regular way trades means purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place. Those trades are initially recognized on the settlement date. 16 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14

19 NOTES TO THE FINANCIAL STATEMENTS Initial Measurement of Financial Instruments The classification of financial instruments at initial recognition depends on their purpose and characteristics and the management s intention in acquiring them. All financial instruments are measured initially at their fair value plus transaction costs that are directly attributable to acquisition or issue of such financial instrument, except in the case of financial assets and financial liabilities at fair value through profit or loss as per the Sri Lanka Accounting Standard - LKAS 39 on Financial Instruments: Recognition and Measurement. Transaction cost in relation to financial assets and financial liabilities at fair value through profit or loss are dealt with through the Statement of Comprehensive Income. The classifies its non-derivative financial assets into following categories: Financial assets at fair value through profit or loss, Held to maturity, Loans and receivables, and Available for sale financial assets Income and expenses are presented on a net basis only when permitted under SLFRS, or for gains and losses arising from a of similar transactions such as in the s trading activity. The classifies nonderivative financial assets into the following categories: (A) Fair Value Through Profit or Loss A financial asset is classified as fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the manages such investments and makes purchase and sale decisions based on their fair value in accordance with the s investment strategy. Attributable transaction costs are recognized in the Statement of Comprehensive Income as incurred financial assets at fair value through profit and loss are carried in the Statement of Financial Position at fair value with changes in fair value recognized in the Statement of Comprehensive Income. Financial assets designated at fair value through profit or loss comprises quoted equity instruments. (B) Held to Maturity Financial Assets (HTM) Financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the has the positive intention and ability to hold it to maturity. Held to maturity financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition held to maturity financial assets are measured at amortized cost using the effective interest method, less any impairment losses. (C) Loans and Receivables (L&R) Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. (D) Available-for-Sale Financial Assets (AFS) Available for sale financial assets are financial assets that are designated as available for sale and that are not classified in any of the previous categories. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses on available for sale equity instruments are recognized in Other Comprehensive Income and presented within equity in the available for sale reserve. Non-Derivative Financial Liabilities The initially recognizes debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognized initially on the trade date, which is the date that the becomes a party to the contractual provisions of the instrument. The derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired. The classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. Other financial liabilities comprise loans and borrowings, debt securities issued, bank overdrafts, and trade and other payables. Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14 17

20 NOTES TO THE FINANCIAL STATEMENTS Bank overdrafts that are repayable on demand and form integral part of the s cash management are included as a component of cash and cash equivalents for the Statement of Cash Flows Property, Plant and Equipment Property, Plant and Equipment are tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used during more than one period Recognition and Measurement Property, Plant and Equipment are recognized if it is probable that future economic benefits associated with the assets will flow to the and the asset can be reliably measured. Items of Property, Plant and Equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. When parts of a item of Property, Plant and Equipment have different useful lives, they are accounted for as separate items (major components) of Property, Plant and Equipment Owned Assets The cost of an item of Property, Plant and Equipment comprise of its purchase price plus any directly attributable costs of bringing the asset to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labor, and any other cost attributable to bringing the asset to the working condition for its intended use Subsequent Costs The cost of replacing a part of an item of Property, Plant and Equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of Property, Plant and Equipment are recognised in profit or loss as incurred Lease Assets Finance Leases The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset. Where the is a lessee in this type of arrangement, the related asset is recognized at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognized as a finance lease liability. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognized initially. Operating Leases All other leases are treated as operating leases. Where the is a lessee, payments on operating lease agreements are recognized as an expense on a straightline basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred Derecognition The carrying amount of an item of Property, Plant and Equipment are derecognised on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition of an item of Property, Plant and Equipment is included in profit or loss when the item is derecognised. When replacement costs are recognised in the carrying amount of an item of Property, Plant and Equipment, the remaining carrying amount of the replaced part is derecognized Gains and Losses on Disposal Gains and losses on disposal of an item of Property, Plant and Equipment are determined by comparing the proceeds from disposal with the carrying amount of Property, Plant and Equipment, and are recognised net within other income / other expenses in profit or loss Depreciation Depreciation is based on the cost or other amount substituted for cost, less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. 18 Muller & Phipps (Ceylon) PLC Annual Report 2013 / 14