MTD WALKERS PLC · 2018-09-03 · 6 MTD WALKERS PLC Annual Report 2017/18 @,(9 (; ( .3(5*, April...

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MTD WALKERS PLC

Annual Report 2017/18

About UsAbout this Report 03

Who we are 04

Group Structure, Subsidiaries and Associates 05

Year at a Glance 06

Significant Achievements, Awards and Accreditations 07

Financial and Non-Financial Highlights 08

Chairman’s Statement 11

Group Executive Deputy Chairman’s Statement 13

GovernanceBoard of Directors 16

Executive Committee 20

Corporate Governance 24

Enterprise Risk Management 43

Sustainability Integration 46

Management Disclosures and AnalysisIntegrated Group Performance Review 56

Civil Engineering Sector 66

Heavy Engineering Sector 79

Marine Engineering Sector 84

Power Generation 87

Real Estate Sector 90

Trading and Other Sector 94

Financial StatementsAnnual Report of the Board of Directors 98

Statement of Director’s Responsibility 102

Auditor’s Report 103

Statement of Financial Position 106

Statement of Profit or Loss 107

Statement of Comprehensive Income 108

Statement of Changes in Equity 109

Cash Flow Statement 110

Notes to the Financial Statements 111

Supplementary InformationShare Information 168

Decade at a Glance 171

Circular to Shareholders 172

Notice of Meeting 173

Form of Proxy 175

Corporate Information / IBC

Scan this QR Code with

your smart device to view

a version of this annual

report online at www.walkerscml.com

To be Sri Lanka’s No.1

Engineering and

Infrastructure Solutions

Provider

We seek to enable and implement infrastructure projects, ranging

from innovative design, to funding and development. Leveraging

on our core capabilities in engineering, we seek to build mutually

beneficial relationships with all our stakeholders, whilst acting in an

environmentally and socially responsible manner.

Integrity – above all, professional and personal

Innovation – combined with commercial acumen, as the means to competitiveness

Excellence – striving to be the best-in-class in all our pursuits

Team work – working together towards a common vision

Recognition – giving due credit for staff and other stakeholder contribution, as a means of

motivation and building a healthily working relationship in a transparent manner

Responsibility – for all actions that impact people, resources, society and the environment

3

The MTD Walkers PLC 2017/18

Integrated Annual Report is the

third of its kind and is aligned

to the Integrated Reporting

Framework of the International

Integrated Reporting Council

(IIRC). The report provides an

all-inclusive Group wise and

sector wise performance review

for the financial year ended

31st March 2018, containing

the Group’s financial and

non-financial performance, an

overview of the management

of its Capitals. The Group's

previous performance of its

progress was presented in the

Annual Report 2016/17.

This overview of the Group’s

Financial, Manufactured,

Intellectual, Natural, Human

and Social Relationship Capitals

and their inter-relatedness

along with the overall

Group strategy, Corporate

Governance framework and

risk management process has

a direct impact of the Group’s

integrated thinking and

decision making process.

The Sustainability Management

Framework that was introduced

in the financial year 2015/16

continues to drive the

non-financial aspects of this

report. The reporting scope

and boundary, the method

in determining materiality

and the Group’s stakeholder

engagement methodology are

detailed in the ‘Sustainability

Integration’ section of this

report. All information in this

report has been reviewed

internally by the Senior

Management of the Group in

accordance to the policies and

methodologies carried in the

‘Corporate Governance’ section

of this report.

There has been no change

in the material topics

and the sustainability

reporting boundary, and any

reinstatements with regards

to Financial and Non-Financial

Performance are clearly

highlighted in the relevant

sections.

The financial information

contained in this report is in

compliance with the laws and

regulations pertaining to the

financial reporting standards

of the Institute of Chartered

Accountants of Sri Lanka

(ICASL) and also complies with

the laws and regulations of

the Companies Act No. 7 of

2007, the Listing Rules of the

Colombo Stock Exchange (CSE)

and subsequent revisions up to

01st April 2012.

The financial statements in

this report are prepared in

accordance with the Sri Lanka

Accounting Standards (SLFRS/

LKAS) issued by the Institute of

Chartered Accountants

Sri Lanka (CA Sri Lanka), and

have been prepared on an

accruals basis and under the

historical cost convention

unless otherwise specifically

stated.

The Report has been externally verified and assured through an

independent assurance process undertaken by Messrs. Ernst &

Young for its financial information.

For inquiries regarding this annual report please contact:

Ms. P.S. Attygalle

Company Secretary

[email protected]

About Us Governance Management Discussion and Analysis

FinancialStatements

Supplementary Information

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MTD WALKERS PLC


MTD Walkers PLC is a pioneer in the engineering and

infrastructure industry with a well-established track record

in multidisciplinary engineering activities in Sri Lanka and

Maldives.

In operation since 1854, we are the seventh oldest company

in Sri Lanka, and over the years we have created a portfolio of

infrastructure-related businesses including Civil Engineering,

Heavy Engineering, Electrical Engineering, Pile Construction,

Power Generation, Real Estate Development, Marine

Engineering and Trading of Heavy Equipment.

Having its registered address at No. 18, St Michael’s Road,

Colombo 03, MTD Walkers PLC is a public quoted company

listed on the main board of the Colombo Stock Exchange,

with a market capitalisation value of LKR 3.4 billion as at 31st

March 2018.

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The list of entities that fall within the sphere of influence of the Group are as follows:

Walker Sons & Company Limited is an investment holding company and a subsidiary of MTD Walkers PLC, not shown above as no operations are undertaken.

Group Tax

Planning

Organisational

Performance and

Management

Accounting and

Sustainability

CML - MTD

Construction

Limited

Walkers CML

International

(Private) Limited

Group Finance

and Compliance

Group Human

Resources

Group Health

and Safety

CML - MTD

Joint Venture

Limited

Group TreasuryGroup IT

Corporate

Communications

Enterprise Risk

Management

and Insurance

Special Projects

Company

(Private) Limited

Group

Procurement

Group Securities

and Facilities Management

Legal

Walkers Piling

(Private) Limited

Walkers M3

(Private) Limited

Walker Sons &

Company Engineers

(Private) Limited

Walkers Colombo

Shipyard (Private)

Limited

Northern Power

Company (Private)

Limited

Western Air Ducts

(Private) Limited

MTD Walkers

Infracon Limited

Colombo Engineering

Services (Private)

Limited

Walkers CML

Properties (Private)

Limited

Walkers Equipment

Limited

MTD Walkers

Projects Limited


FinancialStatements


6

MTD WALKERS PLC


April 2017

Walkers CML International

secures their first project

in the Maldives, a 10 storey

Luxury residential apartment

complex consisting of 95

apartments, located in one of

the Hulhumale’s.

August 2017

Walkers CML partnered

with INSEE Cement and the

Vocational Training Authority

for the Alternate Livelihood

Project which aims at providing

youth vocational training and

employment.

September 2017

CML - MTD Construction was

awarded their first Airport

project at the Bandaranaike

International Airport.

The project consisted of

constructing a Remote Apron

and Taxiways for the airport.

Walkers CML Properties unveils

‘Grace’ in Nugegoda. A modern

apartment complex planned

and designed to supplement

and add convenience to the

lifestyle of modern families.

November 2017

Successfully handed over one

block of housing units at the

UDA Salamulla Housing project

constructed by CML-MTD

Construction.

December 2017

Walkers Piling was awarded the

largest construction project to

date, the Central Expressway

Stage II which is spanning from

Meerigama to Kurunegala.

Won the Silver Award in the

Construction Sector at the

53rd Annual Report Awards

organised by the Institute of

Charted Accountants of

Sri Lanka (CA Sri Lanka).

January 2018

Won the Gold award under the Corporate

Accountability category issued by the STING

Consultant in Sri Lanka.

CML-MTD Construction was awarded two large

projects; an extension of the Southern Expressway

Rehabilitation Road (HR06, HR10 and HR21) and

Polgahawela Pothuhera Water Supply Project.

February 2018

Won the Gold Award in the Construction Sector at the SLITAD

People’s Development Awards 2017 organised by the Sri Lanka

Institute of Training and Development.

Walkers Colombo Shipyard has successfully completed the

construction of its fourth vessel, a 10 tonne bollard pull tug ‘Sea

Gulf 3’.

March 2018

Successfully completed the first ever cross-border project in the

Republic of Maldives for the expansion of four Fuel Storage Tanks

for the State Trading Organisation by Walkers Engineers.

Launched Havelock Heights an iconic landmark residential

apartment complex by Walkers CML Properties

Walkers CML Properties launched Arcadia; a 42-unit residential

apartment complex in the heart of the island’s Administrative

Capital.

Signing ceremony of the Maldives luxury apartment complex project

SLITAD People Development Award ceremony

Groundbreaking ceremony of Arcadia

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Awards and Achievements

• Gold Award in the

construction sector at the

SLITAD People Development

Awards 2016/17.

• Gold Award under the

Effective Corporate

Accountability category

issued by STING Consultants.

• Silver Award in Construction

and Engineering Category

at the CA Sri Lanka 53rd

Annual Report Award.

Accreditations

• CML - MTD Construction

Limited – CIDA

Membership Number 9393

• Grade CS2 – Highways,

Building.

• Grade C1 – Bridges,

Irrigation, Water supply

and Drainage, Land

Reclamation and

Dredging and Maritime.

• Walkers Piling (Private)

Limited – CIDA Membership

Number P0005

• Grade GP – B1 – Piling

Contractor.

• Walker Sons & Company

Engineers (Private) Limited

– CIDA Membership

Number EM0040/ 1222

• EM1 – Heavy Steel

Fabrication, MVAC,

Electrical Installation,

Fire Detection and

Suppression.


Engineers (Private)

Limited - Since June

2012.

• ISO 14001 – 2015

(Environment Management

System)

• CML – MTD Construction

(Private) Limited – Since

July 2001.

• Walker Piling (Private)

Limited – Since May

2014.

• Walkers Sons & Company

Engineers (Private)

Limited – Since August

2017.

• Western Air Ducts Lanka

(Private) Limited – Since

August 2017.

• OSHAS 18001 – 2007

(Occupational Health

and Safety Management

System)


Limited – Since June

2013.


Limited – Since May

2014.


Engineers (Private)

Limited – Since August

2017.

• Western Air Ducts Lanka

(Private) Ltd – Since

August 2017.

• EM4 – Refrigeration,

Elevators and Escalators,

Electrical Installations

(HT), Extra Low Voltage

Installations.

• EM2 – Mechanical

Ventilation and Air

Conditioning.

• C2 – Heavy Construction

(Dam).

• C6 – Building.

• C7 – Highway, Bridge,

Water Supply and

Sewerage, Irrigation

and Drainage Canals,

Dredging and

Reclamation, Storm

Water Disposal and Land

Drainage and Maritime

Construction.

• Member of the National

Construction Association of

Sri Lanka (NCASL)

• CML - MTD Construction

Limited Registration

Number R 0131.


Limited Registration

Number R 2482.

• ISO 9001 -2015 (Quality

Management System)


Limited – Since February

2000.


Limited - Since June

2006.

Memberships

• Member of Chamber of

Construction Industry (CCL).

• Member of International

Federation of Asian and

Western Pacific Contractors

Association (IFAWPCA).

• Member of Institute of

Engineers Sri Lanka (IESL).

• Member of Construction

Industry Development

Authority (CIDA).

• Member of the Ceylon

Chamber of Commerce.

• Business Councils under

Ceylon Chamber of

Commerce (Malaysia,

Vietnam, Maldives, USA).

• Member of the American

Chamber of Commerce,

Sri Lanka.

• Member of the European

Chamber of Commerce,

Sri Lanka.

• Member of the Green

Building Council of Sri Lanka

– Corporate Platinum –CML-

MTD Construction Limited.


FinancialStatements


8

MTD WALKERS PLC


16.3BnGroup Revenue

3.4BnMarket Capitalisation

46.0BnTotal Assets

SLFRS/LKAS SLFRS/LKAS SLFRS/LKAS

Year Ended 31st March 2017/18 2016/17 2015/16

Earning Highlights and Ratios

Group Revenue LKR Mn 16,309 13,466 11,964

Group Profit Before Interest and Tax (EBIT) LKR Mn (960) 1,938 142

Group Profit Before Tax LKR Mn (3,434) 300 (758)

Group Profits Attribute to Shareholders LKR Mn (3,179) 85 (867)

Earning per Share LKR Mn (19.0) 0.5 (5.2)

Interest Cover No.of times (0.4) 1.2 0.2

Gross Profit Margin Percent 2.2 19.4 11.7

Operating Profit Margin Percent (5.9) 14.4 1.2

Net Profit Margin Percent (21.8) 1.6 (6.7)

Return on Assets Percent (7.7) 0.6 (2.8)

Return on Equity (ROE) Percent (70.2) 2.4 (10.2)

Return on Capital Employed (ROCE) Percent (2.8) 6.9 0.6

Financial Position Highlights and Ratios

Total Assets LKR Mn 46,007 36,844 28,753

Total Debt LKR Mn 29,421 19,443 14,277

No. of Shares in Issue No. Mn 168 168 168

Net Assets Value per Share LKR 27.0 46.8 42.8

Current Ratio No.of times 1.0 1.3 1.4

Quick Assets Ratio No.of times 0.8 1.1 1.2

Gearing Ratio Percent 85.3 68.8 64.2

Market/ Shareholder Information

Market Price of Share as at 31st March LKR 20.5 35.0 33.3

Market Capitalisation LKR Mn 3,437 5,868 5,583

Market Price per Share - Highest LKR 43.9 48.0 64.8

Market Price per Share - Lowest LKR 19.1 32.5 25.0

Market Price per Share - Closing LKR 20.5 35.0 33.3

Enterprise Value (EV) LKR Mn 28,722 18,778 13,901

Price to Book Value No.of times 0.8 0.7 0.8

Economic Value Information

Economic Value Generated LKR Mn 17,290 14,444 12,442

Economic Value Distributed LKR Mn 19,411 13,118 11,980

Economic Value Retained LKR Mn (2,121) 1,326 462

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FinancialStatements


GRI Standard

Indicator

Non-Financial Performance Indicator 2017/18 2016/17

Economic Indicators

GRI 201 - 1 Direct Economic Value Added (LKR ‘000) (3,559,727) 213,898

GRI 202 - 2 Percentage of Local Board Members and Senior Management Staff (Percent) 96 93

GRI 204 - 1 Proportion of Local Purchases (Percent) NA 91.3

Environmental Indicators

GRI 301 - 1 Materials used by Volume/Weight

- Cement (MT) 29,364 23,878

- Tor Steel (MT) 8,950 7,787

- Ready Mix (m3) 30,080 41,814

- Sand (Cubes) 29,412 14,488

- Aggregates (Cubes)* 65,173 33,019*

- Bitumen (MT) 2,069 2,316

- Lubricant (l) 104,655 109,144

- Timber and Plywood (LFT) 49,323 45,956

- Asphalt (MT) 42,686 57,040

- Paint (l) 80,266 70,890

GRI 302 - 1 Energy Consumption (GJ) 186,365 183,367

Energy in GJ per LKR of Revenue 11.43 13.66

GRI 303 - 1 Total Water Withdrawal (m3) 519,028 214,931

GRI 305 - 1 Direct GHG Emissions – Scope 1 (MT) 13,136 13,005

GRI 305 - 2 Direct GHG Emissions – Scope 2 (MT) 1,775 1,576

Total Carbon Footprint 14,911 14,582

Carbon Footprint per LKR of Revenue 0.91 1.09

GRI 306 - 1 Total Water Discharged by Quality and Destination (m3) 515,168 214,175

GRI 306 - 2 Total Weight of Waste Disposed (MT) 13,306 30,564

GRI 306 - 3 Number of Significant Spills None None

GRI 307 - 1 Monetary Value of Significant Environmental Fines** None None

Labour Indicators

GRI 401 - 1 Total Workforce 4,005 5,120

Total Attrition Rate 17.4 26.9

GRI 403 - 2 Injury Rate 1.22 1.05*

Lost Day Rate 0.01 0.02

GRI 404 - 1 Average Hours of Training per Year per Employee 6.3 7.3*

Human Rights Indicators

GRI 407 - 1 Areas of Risk of Violation of the Right to Associate Freely None None

GRI 408 - 1 Number of Incidences of Child Labour None None

GRI 409 - 1 Number of Incidences of Forced Labour None None

Social Indicators

GRI 413 - 1 Value of Community Engagement Activities (LKR ‘000) 5,648 24,279

GRI 205 - 1 Operations Assessed for Risks Related to Corruption (percent) 100 100

GRI 419 - 1 Value of Fines for Non-Compliance with Laws and Regulations None None

Product Responsibility Indicator

GRI 419 - 9 Fines Paid for Non Compliance with Product Laws and Regulations None None

* The data has been restated** Instances of significant fines over LKR 1 million

We are conscious of

the challenges faced by the

Group in implementing large

scale infrastructure projects,

and have embarked on multiple

exercises in an attempt to

increase efficiencies at project

sites and reduce wastage to

generate profit during the

forthcoming financial year.

MTD WALKERS PLC


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annual report online at www.walkerscml.com

11

Dear ShareholderOn behalf of the Board of Directors, I present to you the

integrated Annual Report and Operational Review for

the financial year ended 31st March 2018.

Economic Environment

During the year under review

the global economy witnessed

a slowdown in growth,

while advanced economies

continued to report growth

above previous forecasts,

implying a more rapid than

expected slowdown in some

emerging market economies.

As reported by the World Bank,

the withdrawal of stimulus

packages in USA and China has

led to a tightening of global

financing conditions and a

rise in global borrowing costs.

A 10.0 percent increase in oil

prices and an average increase

of 24.0 percent in the price of

metals – led by strong demand

for construction supplies acted

as a further damper on growth

in emerging markets.

The Sri Lankan economy

too continued its lack-lustre

economic performance,

reporting a growth of 3.3

percent Year on Year for 2017;

its lowest reported figure since

the end of the war in 2009.

Inflation was also higher than

expected at an average of 6.1

percent during the year, while

the rupee depreciated 3.0

percent against the US dollar.

Interest rates rose an average

of 70 bps in the year after

increasing more than 200 bps

in the previous year.

Sustainability

The Group consistently works

towards bringing meaningful

social change through the

improvement of communities

and livelihoods, and by

identifying ways in which

the company’s resources and

expertise could be used to

improve basic infrastructure

facilities of the communities.

The Group remains committed

in making a positive change

in the communities that it

operates in.

Appreciation

On behalf of the Board of

Directors of MTD Walkers

PLC, I would like to offer our

deep appreciation to our

stakeholders for their patience,

trust and confidence placed

in the Group and to the

management of MTD Walkers

PLC for navigating the business

through tough and turbulent

times. Finally I wish to thank my

fellow Board Members for their

support offered during the

financial year 2017/18.

Dato’ Nik Faizul Bin Tan Sri Nik

Hussain

Chairman

31st August 2018

Construction Sector

The construction sector which

showed signs of recovery

during the previous financial

year performed below

expectations with a moderate

growth of 4.4 percent Year on

Year in 2017. A slower growth

of 5.0 percent during the first

quarter of the year, further

established the challenging

business environment the

Group has operated in over the

past twelve months.

Financial Performance


the Group reported a revenue

of LKR 16.3 billion, a growth of

21.1 percent Year on Year. The

revenue growth was primarily

attributable to a couple of large

scale projects secured by the

Group during the previous

financial year. The Group

recorded a loss of LKR 3.6 billion

during the year as against

a profit of LKR 214 million

during the previous year.

An increasingly competitive

construction industry coupled

with a greater than expected

increase in raw material prices

during the year were the

primary causes of the loss

made by the Group. A rise in

interest rates further impacted

Group profitability.

As the Group recovers in

this challenging business

environment, the Board has

proposed not to distribute

46.0BnTotal Assets

dividend payments for the

current financial year.

Navigating Through

Turbulent Times

We are conscious of the

challenges faced by the Group

in implementing large scale

infrastructure projects, and

have embarked on multiple

exercises in an attempt to

increase efficiencies at project

sites and reduce wastage to

generate profit during the

forthcoming financial year.

The Group is focusing on

introducing newer and

more efficient materials

to the local industry, and

adopting international best

practices to enhance its

internal processes and project

management capabilities to

enhance efficiencies at all

levels. The Group has always

championed the use of IT

related technologies to increase

its business efficiencies and

will continue this strategy in

enhancing the productivity of

the Group.

A key focus of the Group going

forward will be engaging

with project consultants and

designers to conduct value

engineering exercises that will

benefit both the Group and all

other stakeholders by reducing

costs, delivery times and

optimising resources.


FinancialStatements


MTD WALKERS PLC


12

I wish to thank

the Chairman and the Board

for their leadership support

during another difficult and

challenging year.


your smart device to

view a version of this

annual report online at www.walkerscml.com

13

I would like to present to you our

Integrated Annual Report for the


Navigating the way ahead

The year under review has been

a mixed one for the Group with

the company achieving an all-

time high revenue of LKR 16.3

billion with the commencement

of a few key infrastructure

projects during the last financial

year, but also recording a loss

of LKR 3.6 billion during the

same period. The challenging

operating environment

witnessed in the construction

industry as a result of rising raw

material prices, labour shortages

and a rapidly depreciating

exchange rate.

The average cost of steel,

cement, sand and labour which

makes up 90% of construction

costs has increased by 25%

during the year, far surpassing

any reasonable cost escalation

estimates for construction

projects. While the Group has

been at the forefront of enacting

various cost control initiatives

and introducing new processes

to develop the local construction

industry, an unprecedented

increase in costs, as witnessed

during the last financial year,

had a negative impact on the

performance of the Group.

The Group’s diversification into

Marine Engineering and Real

Estate development in early

2015, has lessened the impact

of its poor performing Civil

Engineering business. Whilst

the Shipyard is yet to fully

commence operations, the Real

Estate sector has been able to

capitalise on the strong demand

for middle-income housing to

become a leading name in this

sector in a short period of time.

Operational Highlights


the Group is nearing completion

of its final three projects under

the UDA’s Urban Regeneration

Plan, resulting in the addition

of more than 3,000 houses

underserved communities in the

Colombo region. The Group is

one of the largest participants

in the Urban Regeneration Plan

and has been supporting the

Government in its endeavour to

providing housing to all families

in Sri Lanka. Together with

apartments build by the Group’s

Real Estate arm, this makes

the Group one of the largest

housing providers in the country.

The Central Expressway project

which aims to connect Colombo

to Kandy and Dambulla is

one of the most technically

challenging infrastructure

projects in the country and we

are pleased to announce that

the section awarded to us has

made good progress during the

year under review. The Group’s

Piling subsidiary has been able

to utilise its vast experience

of piling in difficult terrains

to secure piling contracts of

multiple other sections of the

Central Expressway.

Cementing the Group’s

position as one of the foremost

engineering companies in the

country, the Group recently

commenced work on the

runway expansion at the

Bandaranayake International

Airport. The project which

was undertaken together

with a leading civil works

contractor from Japan will

result in significant technology

transfer into Sri Lanka and

the development of the

local construction industry.

Showcasing the Group’s ability

to capitalise on such inward

transfers of technology, the

Upper Elahera Canal Project-

entailing the construction of the

longest canal project in South

and South East Asia, which was

awarded the Group during the

last financial year, has made

considerable progress.

Capitalising on the synergies

within the Group, the Civil

Engineering arm secured

the C1 Grading in Maritime

Construction due to in-house

resources, undertaking a

significant role in the building

of the Group’s Shipyard. The

Shipyard which is in its final

phase of commissioning is

expected to commence full

operations during the second

quarter of the upcoming

financial year.

The Group is also pleased to

announce during the past

financial year, its Marine

Engineering division built and

delivered two tugboats and

one self-propelled barge. The

designs for all three vessels were

developed in-house and has

allowed the Group to emerge as

one of the region’s only turn-key

ship builders.

The Real Estate sector of the

Group has launched its largest

project during the year under

review – Havelock Heights. This

project is catered towards the

upper middle-income housing

market in Colombo which has

shown strong growth, and is also

the primary focus of the sector.

During the short span of three

years since the Group’s foray

into real estate development,

the Group has achieved great

success and currently has more

than 1000 apartments under

active development.

Financial Highlights

The revenue of the Civil

Engineering Sector reported a

growth of 17.5 percent during

the year on the back of several

large scale infrastructure projects

during the last financial year. The

Non-civil Engineering Sector

continued its strong growth

streak with revenue growing by

32.3 percent Year on Year.

The Non-civil Engineering Sector

now accounts for almost 26.8

percent of Group revenue – in

line with the strategy of the

Group to reduce revenue from

the Civil Engineering Sector to

73.2 percent over the coming

years. The revenue of the Marine

16.3BnGroup Revenue


FinancialStatements


Dear StakeholdersThe Annual Report aims to highlight the Group’s plans

and initiatives in achieving corporate objectives amidst

a turbulent and challenging year.

14

MTD WALKERS PLC


Engineering Sector in particular

grew by 181.7 percent Year

on Year resulting mainly from

the increase in business as the

Shipyard nears completion

and commencement of full

operations.

The Group expects to maintain

revenue growth at current levels,

with the Government focusing

infrastructure investment in

the Group’s core areas of roads,

highways, water supply and

irrigation. A country undergoing

rapid urbanisation is further

expected to drive demand for

high-rise buildings which will

feed in to the order books of

the Group’s building, piling,

mechanical, electrical and

plumbing segments.

The Group reported a loss of

LKR 3.6 billion during the year

under review with rising raw

material costs and interest rates

significantly impacting the

Group’s bottom line. The Civil

Engineering Sector of the Group

was the most affected, and Real

Estate Sector reported a profit of

LKR 505 million.

The Road Ahead

As the local Construction

industry grows and becomes

more competitive, it becomes

necessary to constantly innovate

and embrace new technology

to stay ahead. With the

unprecedented increase in costs

witnessed in the last financial

year, the Group undertook a

thorough review of all processes

and operations to identify all

inefficiencies and resource gaps,

and has begun formulating

strategies to address each of

them.

Labour has been one of the key

challenges faced by the Group

and the industry at large, as

the country struggles to match

the demand for infrastructure.

The Group has invested in

many technologies to reduce

its dependency on labour and

transition in to a company with

semi-automated construction

processes. Investments in light-

weight concrete and precast

technology will allow the

Group to achieve faster rates of

construction, reduce the number

of labourers required at site and

improve the overall quality of

its work while reducing costs.

The Group has also commenced

dialog with various stakeholders

to introduce training programs

to help increase the number of

qualified professionals in the

industry and upgrade current

skill levels.

As the Construction industry

looks to maintain its economic

contribution, it has become

necessary to embark on more

stringent value engineering

exercises. Over-engineering and

over-design of buildings and

other infrastructure accounts

for almost 20 percent of total

cost, signifying a substantial

loss to all stakeholders. An

industry-wide change would be

required in order to inculcate

new design ideologies to ensure

sustainability of the industry over

the coming years. The Group

has expanded its capabilities

to include ‘design and build’

services in an effort to introduce

these new ideas to the industry

and further as a mechanism to

drive efficiency gains at its other

projects.

As a pioneer in the use of IT

systems for project management

and project monitoring, the

Group has introduced many new

technologies to the industry.

The Group has a firm focus on

building on knowledge gained

by the use of these IT systems

to drive increased efficiency at

project sites. Introduction of

these initiatives to the industry

at large is also expected to

drive positive change in the

industry and lead to a lower cost

structure in the coming years.

In the rapidly evolving

Construction industry, the

use of newer and smarter

materials have the potential to

optimise resource utilisation

for all stakeholders. The Group

together with other key industry

stakeholders has embarked on

various exercises with the view

on introducing such materials

to the local construction

industry. These materials will

have the ability to greatly

enhance the value for money

of the projects the Group

undertakes and further increase

its competitiveness. The Group is

also investing in waste recycling

technologies to reduce wastage

and the cost of raw materials. The

manufacturing sand plant which

was commissioned late last year

has begun to show results with

cost savings witnessed in both

the Group’s quarry operations

and raw material purchases.

Future Outlook

As the Group looks to recover

from what has been a year

with many highs and lows, the

Group’s vision to be the foremost

engineering entity in Sri Lanka

will continue to be the driving

force behind the strategies of the

Group. While the core business

of the Group will remain in Civil

Engineering, more resources

will be allocated to grow the

Non-civil engineering business

of the Group with a special focus

on the Group’s new investments

in to Marine Engineering and

Real Estate development. These

two sectors are expected to be

key contributors to the Group’s

growth in the next five years

as Sri Lanka transitions into an

upper-middle income country

and strives to be a regional

maritime hub.

The Group will continue to

focus on increasing skill levels

of its workforce by introducing

them to new processes and

technologies and further invest

in to research and developed to

drive its value engineering ethos

across all business segments.

Appreciations

I wish to thank the Chairman and

the Board for their leadership

support during another difficult

and challenging year. To our

customers, business partners

and all our stakeholders, I

thank you for your loyalty, and

especially our shareholders for

their confidence placed in the

Group. We seek your continued

support in the years to come.

I wish to also thank the staff

at MTD Walkers PLC and its

subsidiaries for their tireless

efforts in navigating through

such turbulent times.

Jehan Prasanna Amaratunga

Group Executive Deputy

Chairman

31st August 2018

15

Board of Directors 16

Executive Committee 20

Corporate Governance 24

Enterprise Risk Management 43

Sustainability Integration 46

16

MTD WALKERS PLC


Dato’ Nik Faizul Bin Tan Sri Nik Hussain

Chairman

Non-Independent Non-Executive Director

Dato’ Nik Faizul Bin Tan Sri Nik Hussain was appointed to the Board

of MTD Walkers PLC on 10th March 2017 and subsequently as the

Chairman on 14th September 2017.

Dato’ Nik Faizul is a graduate with a Diploma in Accountancy from

UiTM and a Bachelor of Science (Accounting) from Indiana State

University in 1981 and 1984 respectively. He started his career in

Kenneison Brothers Construction Sdn Bhd before joining Janas

Sdn Bhd, a company dealing in oil and gas, as an Accountant and

Administration Manager in 1990.

When Dato’ Nik Faizul joined MTD Capital Bhd in 1994, he was

also appointed as the Deputy General Manager in Alloy Toll

Management Sdn Bhd up to 1999. Between 2003 and 2009,

he assumed the position of General Manager respectively in

the Property and Development Department and Business

Development Department. Dato’ Nik Faizul became the Vice

President of Dimensi Timal Sdn Bhd, a subsidiary of Metacorp Bhd

from 2009 to 2013.

Dato’ Nik Faizul holds directorship in MTD Capital Bhd, a public

company since 28th January 1994 and he also sits on the board of

several private limited companies.


Group Executive Deputy Chairman

Non-Independent Executive Director

Mr. Jehan Prasanna Amaratunga is the Executive Deputy Chairman

of MTD Walkers PLC, Sri Lanka. He is a Fellow Member of the

Institute of Chartered Accountants of Sri Lanka and a Fellow

Member of the Chartered Institute of Management Accountants,

United Kingdom. Mr. Amaratunga was awarded First in Order of

Merit Prize at the Final examination of the Institute of Chartered

Accountants of Sri Lanka.

Mr. Amaratunga currently serves as a Director of People’s Bank,

People’s Leasing & Finance PLC, Sri Lanka Institute of Information

Technology (SLIIT) and JAT Holdings (Private) Limited. He is also

the Chairman of People’s Insurance Limited. He counts over 25

years of experience in the fields of Finance and Management.

Mr. Amaratunga has served as a Consultant and Director to a

number of corporations and private business entities. At the

National Conference of the Institute of Chartered Accountants

of Sri Lanka, he presented a paper titled “Value for Money

Accounting” which is one of the many notable achievements that

stand out in his career. He was also a member of the Governing

Council of the Institute of Chartered Accountants of Sri Lanka and

the University of Colombo.

17

Albert Rasakantha Rasiah

Independent Non-Executive Director

Mr. Albert Rasakantha Rasiah has over 40 years of experience in the

financial sector; both locally and abroad. He holds Board positions

of E B Creasy Group of Companies, Sunshine Tea (Co) Limited,

Fintek (Private) Limited, a Senior Deputy President of the Institute

of Directors and formerly a visiting lecturer in Finance at the Post

Graduate Institute of Marketing (PIM). He was the Director Finance

of Nestlè Lanka PLC for over a decade before retiring; and was

also a visiting lecturer in Finance and Accounting for Nestlè SA

(International) for Asia Oceanic region.

Mr. Albert Rasiah is a Science Graduate of the University of Ceylon

and a Fellow Member of the Institute of Chartered Accountants

of Sri Lanka, and a finalist of the Institute of Management

Accountants of the United Kingdom.

Niranjan Joseph de Silva Deva-Aditya


Mr. Niranjan Joseph de Silva Deva-Aditya, who was appointed to

the Board of MTD Walkers PLC in February 2012, is an aeronautical

engineer, scientist and economist, a Conservative Member of

the European Parliament elected from the SE England. He is the

Chairman of the European Parliament’s Delegation for Relations

with the Korean Peninsula and Vice President of the Development

Committee; ECR Coordinator and Conservative Spokesman for

Overseas Development and Cooperation. He was the Co-Leader of

the Parliamentary Delegation to the UN World Summit and General

Assembly 2006, Chairman Working Group C of Development

Committee overseeing Asia, Central Asia and Far East; Co Coordinator

Assembly of 79 Parliaments of the EU-ACP 2004 and the President

EU India Chamber of Commerce from 2005. In 2012 he stood for and

came runner up, beating the Liberal candidate into third place to be

the President (Speaker) to the European Parliament.

He was the first Asian to be elected as a Conservative Member of

British Parliament, first Asian MP to serve in the British Government

as PPS in the Scottish office and first Asian born MP to be elected

to the European Parliament. He was nominated as a candidate

to succeed Kofi Annan as Secretary General to the UN in 2006.

He is a Hon. Ambassador without portfolio for Sri Lanka; the first

Asian to be appointed as Her Majesty’s Deputy Lord Lieutenant

for Greater London, representing the Queen on official occasions

since 1985; awarded the honour “Viswakirthi Sri Lanka Abhimani”

by the Buddhist Clergy for his Services to Sri Lanka and given the

Knighthood with Merit of the Sacred Constantinian Military Order

of St. George for his global work on poverty eradication. In 2017, Mr.

Niranjan Joseph de Silva Deva-Aditya was awarded the GG2 Editor’s

Award for his outstanding contribution to British and ethnic minority

communities in his 25 years of public service. He is a Fellow of the

Royal Society for Arts, Manufacture and Commerce (Est: 1765).


FinancialStatements


18

MTD WALKERS PLC


Hewawasamge Ravindranath Srilal Wijeratne


Mr. Hewawasamge Ravindranath Srilal Wijeratne is the Chairman of

the Rank Group of Companies, which has diverse interests in real

estate development, finance, logistics, solid waste management,

hydropower and wind energy and entertainment. Mr. Wijeratne

owns the largest dry port in Sri Lanka, namely Rank Container

Terminals Limited. His Group holds licenses for two gaming

operations in Colombo and has successfully operated Sri Lanka’s

largest casino for the past 18 years. Mr. Wijeratne gained his

higher education from the London School of Accountancy and

Management, United Kingdom.

Returning to Sri Lanka in the late 1980’s, he co-founded the

Grayline Group in 1987. He entered the business of property

development, which led to interests in a range of business sectors.

Kim Siew Tee


Mr. Kim Siew Tee was appointed as Director of MTD Walkers PLC

on 14th February 2018. He is currently, the Acting Chief Executive

Officer of AlloyMtd Group of Companies, a portfolio he held

effective 5th September 2017. He concurrently holds the same

position in the listed business unit of MTD Capital Bhd namely,

MTD ACPI Engineering Berhad. He is also the Head of Real Estate &

Property Development Division of the Group since January 2009. He

is instrumental in shaping the development of the Group’s overseas’

real estate & property business in Australia and United Kingdom.

Mr. Tee began his professional accounting career at BSG Valentine,

Simlers and Casson Beckman Chartered Accountants, London.

He is a Fellow Member of The Association of Chartered Certified

Accountants, United Kingdom.

He returned to Malaysia and joined Metacorp Berhad in May 1996

as Head of Finance. Subsequently, he was appointed as Financial

Controller of Metacorp Berhad in 2001. Due to his extensive

experience in finance, he was then promoted to Chief Financial

Officer of MTD Capital Bhd in 2005, and was also responsible for

two other public listed companies namely, MTD Infraperdana

Berhad and Metacorp Berhad. Mr. Tee also sits on the board of

several other private limited companies.

19

Keith George Cowling*


Mr. Keith George Cowling was appointed as Director of MTD

Walkers PLC on 23rd May 2007. He is a Chartered Engineer and

holds a Bachelor in Civil Engineering from Dundee University,

Scotland and is a member of the Institution of Civil Engineers,

United Kingdom and a Fellow of the Institution of Engineers,

Malaysia, where he served on committees including being the

Chairman of the Tunneling and Underground Space Technical

Division.

His experiences include service with the City of Dundee District

Council (1972-1976) in Dundee, Scotland, Mason Pittendrigh &

Partners (1976-1977) in Edinburgh, Scotland, Auscon Consultants

(1979) and Petroleum Development Oman (1980-1981) in the

Sultanate of Oman, and Maunsell Consultants Asia (1980-1984) in

Hong Kong.

Mr. Cowling joined AlloyMtd Group in 1984 serving in various

capacities; from Engineer to Chief Engineer; General Manager,

Head of Business Development; Executive Vice President, Head,

Business Development & Manufacturing Division; Executive Vice

President, Head, Manufacturing Division and his current position

as Advisor, Business Development. He is the Non-Independent

Executive Director of MTD ACPI Engineering Berhad since 15th

August 2006 and also sits on the Board of several private limited

companies.

* Mr. Keith George Cowling resigned from the Board of Directors of the

Company with effect from 23rd April 2018. He also resigned from the

Board Sub Committee, Audit Committee.

Mr. Keith George Cowling was re-appointed with effect from 24th

July 2018 as a Non-Independent Executive Director.

Prashanie Saroja Attygalle

Company Secretary

Ms. Prashanie Saroja Attygalle is a Chartered Secretary and has

been the Group Company Secretary of MTD Walkers PLC and

its business units since 2008. She is an Associate Member of the

Institute of Chartered Secretaries and Administration; of the United

Kingdom and a member of Chartered Corporate Secretaries of

Sri Lanka.

Ms. Attygalle has more than 33 years of experience working as

a Company Secretary in various multinational diversified groups

including Sri Lanka Insurance Corporation Limited and KPMG

Sri Lanka. During her service tenure, she has worked in the areas

of Corporate Governance, Stakeholder/Shareholder Relations and

Human Resource Management.


FinancialStatements


1 Mr. Tan Sri D. Azmil Khalili Bin Dat Khalid resigned with effect from

24th August 2017.

2 Mr. Zukri Bin Samath was appointed with effect from 23rd April

2018 and resigned with effect from 17th July 2018.

3 Mr. Hizamuddin Bin Jamalluddin was appointed with effect from

15th May 2018 and resigned with effect from 8th August 2018.

4. Mr. Md Rijaluddin Bin Mohd Salleh was appointed with effect from

8th August 2018.

20

MTD WALKERS PLC




Chairman

Mr. Jehan Prasanna

Amaratunga is the Executive

Deputy Chairman of MTD

Walkers PLC, Sri Lanka. He is a

Fellow Member of The Institute

of Chartered Accountants

of Sri Lanka and a Fellow

Member of the Chartered

Institute of Management

Accountants, United Kingdom.

Mr. Amaratunga was awarded

First in Order of Merit Prize

at the Final examination of

the Institute of Chartered

Accountants of Sri Lanka.

Mr. Amaratunga currently

serves as a Director of People’s

Bank, People’s Leasing &

Finance PLC, Sri Lanka, Institute

of Information Technology

(SLIIT) and JAT Holdings

(Private) Limited. He is also the

Chairman of People’s Insurance

Limited. He counts over 25

years of experience in the fields

of Finance and Management.

Mr. Amaratunga has served

as a Consultant and Director

to a number of corporations

and private business entities.

At the National Conference

of the Institute of Chartered

Accountants of Sri Lanka, he

presented a paper titled “Value

for Money Accounting” which

is one of the many notable

achievements that stand out

in his career. He was also a

member of the Governing

Council of the Institute of

Chartered Accountants of

Sri Lanka and the University of

Colombo.

Viraj de Silva

President – Engineering Services

& Infrastructure Cluster

Mr. Viraj de Silva started his

career at Asia Capital Limited

and rose to the position of Asst.

Vice President in the Corporate

Finance Division of the

Company. He then joined MTD

Walkers PLC in the year 2009

as the Group Chief Financial

Officer. He was also appointed

as a Director for several

companies including Walkers

Piling (Private) Limited, Walkers

CML properties (Private)

Limited and Walkers Colombo

Shipyard (Private) Limited.

In the year 2017, Mr. de Silva

was appointed as the President

of the Engineering Services

and Infrastructure cluster. The

cluster comprises of Walkers

Piling (Private) Limited, Walkers

Colombo Shipyard (Private)

Limited, Walker Sons and

Company Engineers (Private)

Limited, Walkers CML Properties

(Private) Limited, Walkers

Equipment (Private) Limited,

Walkers M3 (Private) Limited,

MTD Walkers Infracon Limited

and Northern Power Company

(Private) Limited.

He graduated from the

University of Durham with a

BA (Hons) Degree in Business

Finance and is also an Associate

member of the Chartered

Institute of Management

Accountants.

Erandi Wickramaarachchi*

Executive Vice President

Chief Financial Officer

Ms. Erandi Wickramaarachchi

has worked at the Softlogic

Group from 2004 onwards,

and held the position of

Group Chief Financial Officer

of Softlogic Holdings PLC and

as a Director at subsidiary

companies of the Group.

She holds a Degree

in Accountancy and

Financial Management

from the University of Sri

Jayewardenepura and an MBA

from the University of Cardiff

Metropolitan. She is a Fellow

Member of the Institute of


Sri Lanka, an Associate Member

of Certified Management

Accountants of Sri Lanka, an

Associate Member of Certified

Public Accountants (CPA) of

Australia and an Associate

Member of the Chartered

Management Accountants of

UK.

* Ms. Erandi Wickramaarachchi resigned from the MTD Walkers PLC

with effect from 10th July 2018

Dian Nearcus Jayasuriya

President – Civil Engineering &

Building Services Cluster

Mr. Dian Jayasuriya is the

President – Civil Engineering

and Building Services Cluster

of MTD Walkers PLC. Mr. Dian

Jayasuriya has over 35 years

of extensive experience in

management and has served

in the capacity of Company

Director in several esteemed

blue-chip private and public

quoted companies.

He also functions as a Director

of the major constructors of

the National Construction

Association of Sri Lanka the

principal body responsible for

the development and growth

of Sri Lanka’s Construction

Industry and Individual

Contractors. He is also a

member of the Chartered

Institute of Marketing (UK).

As at 31st March 2018

21

Tulsi Wallooppillai*


Head of Business Development

Mr. Tulsi Walloopillai has served

as a Managing Director of

Hypower Engineering (Private)

Limited from year 1998 – 2009.

He then joined MTD Walkers

PLC as a Director Infrastructure

of MTD Walkers Projects

Limited.

He graduated from MBA

City University in 1984 and

University College of London.

His specialist areas are

structural infrastructure projects

and arranging financing

internationally using ECA’s and

financial instruments.

* Tulsi Wallooppillai resigned from MTD Walkers PLC with effect from

31st March 2018

Chulendra De Silva*


Head of Corporate Centre

Mr. Chulendra De Silva was

appointed as the head of the

Corporate Center functions

of the Walkers CML Group in

2015. Mr. De Silva has over

14 years of experience in

Financial Analysis, Sourcing,

Business Process Management,

Enterprise Risk Management

and Sustainability.

Mr. De Silva holds a first class

honours degree in Science

from the University of Colombo,

is an Associate Member of

the Chartered Institute of

Management Accountants

(CIMA), holds an MBA from

the University of Southern

Queensland Australia, and is a

Chartered Financial Analysts

(CFA) Charter holder.

He is also a certified

Sustainability Practitioner of

the Centre for Sustainability &

Excellence of Athens, Greece,

a Certified Sustainability

Assurance Practitioner of

the Confederation of Indian

Industries and is also a certified

lead auditor for ISO14001

Environmental Management

Systems.

* Mr. Chulendra De Silva resigned

from the MTD Walkers PLC with

effect from 31st December 2017.

Zainal Abidin Bin Powzie*


Chief Technical Officer (Engineering)

Mr. Zainal Abidin Bin Powzie

has over 34 years of experience

as Geotechnical Engineer,

Material Engineer, and

Road Design Engineer and

Project Manager. Having vast

experience in Multi-National

Companies in Malaysia, he

joined the group in 2007

as Executive Director and

is responsible in the re-

engineering and restructuring

of the Company.

Mr. Powzie holds Bsc. Hons

in Civil Engineering and also

he is a Chartered Professional

Engineer from Board of

Engineers, Malaysia.

* Zainal Abidin Bin Powzie was appointed to the Executive Committee with effect on 21st

December 2017.

O D N L Perera



Mr. O.D.N.L. Perera joined the

Sri Lanka Air Force (SLAF)

as a cadet in the Technical

Engineering Branch in January

1972. On completion of his

branch training in Sri Lanka

he was sent to Royal Air

Force College, Cranwell UK

to complete his technical

engineering officer training.

Mr. Perera is a graduate of

the Air Command and staff

College Maxwell Air Force

Base Montgomery Alabama.

His career with the SLAF spans

a period of 34 years and he

retired on 15th March, 2006,

having held the position

of Director Aeronautical

Engineering of the SLAF for

over 10 years.

He is presently employed as


at MTD Walkers PLC.


FinancialStatements


22

MTD WALKERS PLC


D.D. Wijemanne*

Non – Executive Chairman – Walkers Piling

(Private) Limited

* Retired with effect from 31st August 2017

Shiran Cabraal


Chief Operating Officer - Civil Engineering

and Building Services Cluster - CML MTD

Construction Limited

Dr. Sarath Obeysekera


Chief Executive Officer – Walkers Colombo

Shipyard (Private) Limited

Lalith De Silva

Senior Vice President

Chief Executive Officer – Northern Power

Company (Private) Limited

Indrajith Jayarathne

Senior Vice President/Head of Group IT

Chief Executive Officer - Walkers M3

(Private) Limited

Nimal Perera

Senior Vice President / Head of Technical

Engineering Services, Tendering and

International Operations - CML MTD


Prashanie Attygalle

Vice President

Company Secretary and Head of

Company Secretarial Division

Lakmal Gunarathna

Vice President

Head of Internal Audit

Mahesh Yogarajan

Vice President

Head of Corporate Finance and Strategy

Executive Director – Walkers Colombo


Subi Ranasinghe*

Vice President

Head of Group Human Resources and

Administration

* Resigned with effect from 30th April 2018

(Replaced by Wijesuriya Arachchige

Derrick Vernon Perera)

Pulathisi Punchihewa *

Vice President

Head of Tax Planning and Compliance

* Retired with effect from 30th April 2018

Kodithuwakku Muditha

Udayanta Wijeratna

Vice President

Head of Logistic and Administration

Krishna Mohan

Vice President

Head of Building- CML- MTD Construction

Limited

Ananda Gunathilake

Vice President

Head of Security and Facilities

Management

Nimal Gunawardena

Vice President

Head of Central Workshop

Palitha Wickramasuriya

Vice President

Head of Operations – Walkers Colombo


Mohammed Najab

Vice President

Head of Health and Safety

Malaka Weerakoon

Assistant Vice President

Head of Road Projects – CML- MTD


Shanaka Cabraal

Vice President

Head of Plant and Equipment

Director – Walkers Equipment Limited

Upula Dharmawardana*

Vice President

Chief Executive Officer – Walker Sons &

Company Engineers (Private) Limited

* Resigned with effect from 26th June 2018

Douglas Wegiriya

Vice President

Chief Executive Officer – Walkers Piling

(Private) Limited

Hari Mahadeva

Vice President

Chief Executive Officer - MTD Walkers

Infracon Limited

Lalinda Kalubowila

Vice President

Chief Executive Officer – Walkers CML

Properties (Private) Limited

Yung Sheng Tsung

Vice President

Chief Executive Officer – Walkers

Equipment Limited

Rozan Jameel

Vice President

Group Financial Controller

Siraj Jakariya

Vice President

Head of Group Finance

Alex Duckworth

Vice President

Head of Group Project Development

23

Lalith Liyanarachchi


Head of Building Projects - CML- MTD


M.W.S.B Wijesinghe


Head of Road Projects – CML- MTD


Pravin Pieris


Head of Operations - Walkers CML

Properties (Private) Limited

Dharshana Abeyratne


Head of Construction Projects - CML- MTD


Bandula Amaratunga


Head of Renewable Energy, Recycling and

Business Incubator Projects

Camillus de Hoedt


Head of Group Procurement

Jayantha Pushpakumara


Head of Operations – Walkers Equipment

Limited

Nishantha Seneviratne


Head of Water Projects - CML- MTD


Ishani Ranasinghe*


Head of Sustainability and Corporate

Communications

*Resigned with effect from 28th February

2018

(Replaced by Dulmi Gunathilake)

Shalitha Heenwella


Senior Manager – Corporate Finance and

Strategy

Gihan Fonseka


Senior Manager Infrastructure Projects -

CML - MTD Construction Limited

W.R.S.C. Ranaweera


Chief Quantity Surveyor- CML- MTD


Theasha Nawanthi Amaratunga


Design and Project Development- CML-

MTD Construction Limited

Saman Priyantha Hettiarachchi*


Senior Coordinator Building Projects- CML-

MTD Construction Limited

*Appointed on 02nd October 2017

Shanika Cabraal


Project Strategy and Implementation-

CML- MTD Construction Limited

Esther Joy Shayamala Joseph


Insurance and Risk

Prasanna Gamage*


Head of Building Projects - CML- MTD


* Resigned with effect from 31st March

2018


FinancialStatements


24

MTD WALKERS PLC


Corporate Governance

Philosophy

The Board of Directors of

MTD Walkers PLC perceives

Corporate Governance as

an uncompromising pursuit

that provides the platform

for improving efficiency and

growth as well as enhancing

sustainable shareholder value

through transparent reporting

and accountability. MTD

Walkers PLC has designed

its' Corporate Governance

framework to ensure that

the Group focused on

its responsibilities to its

stakeholders and on creating

long term shareholder value.

following mandatory provisions

stated below;

• Companies Act No. 7 of

2007

• Listing Rules of the Colombo

Stock Exchange (CSE)

• Rules of the Securities and

Exchange Commission of

Sri Lanka (SEC)

• Other legislation and rules

relevant to the businesses of

the Group

• Code of Best Practice on

Related Party Transactions

issued by the SEC and the

CSE

• The Code of Best Practice

on Corporate Governance

issued jointly by the Institute

of Chartered Accountants

of Sri Lanka (ICASL) and the

SEC.


Framework

At MTD Walkers PLC, a

comprehensive Corporate

Governance framework has

been adapted across all its

business units with an aim

to balance both growth and

efficiency with governance

and ethics. It guides the Group

and drives towards progress

by way of developing and

implementing appropriate

corporate strategies. The

Board of Directors, senior

management and all

employees are required to

embrace this framework in

the performance of their

official duties and in other

situations that could affect the

Group’s image since it’s their

MTD Walkers PLC and its

business units, since its

establishment, has operated its

business under its Corporate

Governance philosophy “As

a good corporate citizen, the

Group is committed to sound

corporate practices based

on conscience, openness,

fairness, professionalism and

accountability in building

confidence of its various

stakeholders, thereby paving

the way for its long term

success.”

This report illustrates, in detail,

how MTD Walkers PLC and its

business units have embraced,

and complied with, all the

duty and the responsibility

to uphold and act in the best

interest of the company and

its stakeholders in fulfilling its

stewardship obligations.

The Group’s Corporate

Governance mechanism is

based on the following three

key elements;

1. Internal Governance

Structure comprising of

committees, systems and

processes that inculcate a

culture of good governance

and ensure the sustainability

of the organisation

2. External Governance

Structure comprising of

applicable laws, regulations

and best business practices

complied by the Group

3. Assurance, the supervisory

module of the Group’s


framework that ensures

integrity of operations

Assurance

The Group's Board of Directors

obtains external assurance

on this report through the

following:

MTD Walkers PLC and its business

units, since its establishment,

has operated its business under

its Corporate Governance

philosophy, “As a good corporate

citizen, the Group is committed

to sound corporate practices

based on conscience, openness,

fairness, professionalism and

accountability in building

confidence of its various

stakeholders, thereby paving the

way for its long term success.”

25


FinancialStatements


1. INTERNAL GOVERNANCE

STRUCTURE

These are the internal control

mechanisms embedded within

the Group that oversights the

execution and monitoring of all

governance related practices,

systems and processes. The

Internal Governance Structure

of the Group encompasses:

1.1 The Board of Directors (BOD)

1.2 Board Sub-Committees

1.3 Executive Committee

1.4 Internal Policies

The Group’s Internal

Governance arrangements

comprises of the following

three key components:

• Code of Business Conduct

and Ethics

• Human Capital

Management Policy

• Stakeholder Management

and Policies pertaining to

Sustainability

1.5 Integrated Risk Management

1.6 Internal Structure

1.1 The Board of Directors

MTD Walkers PLC is governed

by its Board of Directors, who

determines the strategic

Executive Officers (CEOs) of

business units in the Group

• Monitoring systems of

governance and compliance

• Overseeing systems of

internal control and risk

management

• Determining any changes to

the discretions/authorities

delegated from the Board to

the executive levels

objectives and reviews

the detailed planning and

implementation of those

objectives and policies, put

forward by the Executive

Committee. The Board also

monitors compliance with

the policies and actual

performance against set

objectives through regular

dialogue with management

personnel.

1.1.1 Principle Responsibilities

and Duties

The Board’s key responsibilities

and duties include;

• Providing direction and

guidance to the Group in

the establishment of its

strategies, with an emphasis

on medium and long term,

in the pursuance of its

operational and financial

goals

• Evaluating and approving

annual budget plans

• Reviewing Human

Resources processes;

with emphasis on top

management succession

planning

• Appointing and evaluating

the performance of Chief

• Evaluation and approving

acquisitions, takeovers,

disposals and capital

expenditure which

can amount to a major

transaction in terms of the

Companies Act No. 07 of

2007

• Approval of any material

changes, which requires

shareholder approval

Companies Act No. 07 of 2007

Code of Best Practice of Corporate

Governance issued jointly by the

Institute of Chartered Accountants of

Sri Lanka and the Securities and

Exchange Commission of Sri Lanka

Listing Rules of the Colombo Stock

Exchange

Inland Revenue Act No. 10 of 2006 as

amended Exchange applicable to MTD

Walkers PLC

Independent assurance to the Audit

Committee (Internal Audit)

External Audit of Consolidated Financial

Statements of MTD Walkers PLC and

the Financial Statements of the Group

subsidiaries

External Audit by the International

Organisation for Standardisation on

Quality, Environment, Occupational

Health and Safety

Chairman

Board of Directors

Executive Committee

Executive Deputy Chairman

Board Sub-Committee

Employee Empowerment

1.1.2 Composition of the Board

The composition of the Board of MTD Walkers PLC as at 31st March

2018 is as follows:

No

. of

Me

mb

ers

Exe

cuti

ve

No

n-

Exe

cuti

ve

Ind

ep

en

de

nt

No

n-I

nd

ep

en

de

nt

Ge

nd

er

Re

pre

sen

tati

on

Age Distribution

Male FemaleBelow

50

50-

60

61

-70

Above

70

07 01 06 03 04 07 NIL NIL 04 02 01

The Board of Directors of MTD Walkers PLC as at 31st March

2018 comprises of seven directors, of whom one is an Executive

Directors whilst three are Non-Executive Independent Directors.

Brief profiles of the Directors are set out on pages 16 to 19. The

Board has assessed the independence of the Non-Executive

Directors.

26

MTD WALKERS PLC


1.1.3 Board Meetings and Participation

Board meetings follow the internal guidelines that are specifically

designed for those which facilitate informed and efficient decision

making by the Board.

The respective Managing Directors / Chief Executive Officers of

each business unit of the Group are responsible to present the

Board with progress updates regarding the implementation of

approved business strategies, operational performance and the

respective funding strategies at each of these meetings. The Board

also receives reports from the Board Sub-Committees and may

also receive reports from the Company Secretary, who is also the

Secretary of the Group Board Sub Committees and the Executive

Committee, on any relevant Corporate Governance matters.

Attendance of Director’s at Board Meetings up to 31st March 2018:

NamesAttendance

of Meeting

Number of Meetings Held 6

Dato’ Nik Faizul Bin Tan Sri Nik Hussain 6/6

Mr. Jehan Prasanna Amaratunga 6/6

Mr. Keith George Cowling 6/6

Mr. Albert Rasakantha Rasiah 5/6

Mr. Niranjan Joseph de Silva Deva-Aditya 4/6

Mr. Hewawasamge Ravindranath Srilal Wijeratne 5/6

Dato’ Dr. Azmil Khalili Bin Dato’ Khalid - resigned

with Effect from 24th August 2017 0/6

Mr. Kim Siew Tee- appointed on 14th February 2018 0/6

1.1.4 The Chairman

The Chairman’s primary role is to lead the Board in order to ensure

governance and effective operations of the Board. The Chairman

plays an active role in setting the agenda, style and the tone of

the Board deliberations. Furthermore, he is also responsible for

ensuring that opinions of all Directors are appropriately considered

in decision making.

Key Responsibilities

• Leading the Board for its effectiveness and setting the quality

for the governance and ethical framework.

• Guaranteeing that constructive working relations are

maintained between the Executive and Non-Executive

Members of the Board.

• Ensuring, with the aid of the Board Secretary that Board

procedures are followed and information is distributed in a

timely manner to the Board Members.

1.1.5 The Executive Deputy

Chairman

The Executive Deputy

Chairman is responsible for

the execution of strategies and

policies of the Board.

The Executive Deputy

Chairman is also the Head of

the Executive Committee and

guides and supervises the

Committee towards ensuring

that the operating model of the

Group is aligned to the short

term and long term strategies

of the Group.

1.1.6 Board Induction and

Training

New Directors are required

to undergo a comprehensive

induction on joining the Board

where they are appraised on

the Group values and culture,

its operations and strategies,

governance framework and

processes. In addition, their

responsibilities as a Director in

terms of the applicable rules

and regulations are reiterated.

The Directors have access

to relevant information that

is required to execute their

duties as a Director. The Group

has established procedures

that enable Directors to seek

information and advice of the

Company Secretary, who is also

the Company Secretary of the

Group subsidiaries, and opinion

of other Group independent

professional bodies as required.

1.1.7 Board Responsibility of

Financial Reporting

The Board holds the overall

responsibility in ensuring

that MTD Walkers PLC and

its business units maintain

sound financial reporting

standards. Regulatory reports,

which should be submitted

to the Department of

Inland Revenue, Registrar of

Companies and the Colombo

Stock Exchange have been

submitted on due dates. In the

preparation of Quarterly and

Annual Financial Statements,

the Group complied with

the requirements of the

Companies Act No. 07 of 2007

and prepared and presented

in conformity with Sri Lanka

Financial Reporting Standards

(SLFRS) and Lanka Accounting

Standards (LKAS).

‘The Statement of the Directors-

Responsibility for Financial

Reporting’ on page 102 of this

Annual Report highlights the

Board’s responsibility in respect

of financial reporting.

1.1.8 Role of the Company

Secretary

The Company Secretary plays

an important role in ensuring

that the Board procedures

are followed and are regularly

reviewed. Additionally, the

Company Secretary ensures

that all relevant information,

details and documents are

made available to the Directors

and Senior Management for

effective decision-making at

meetings. To ensure healthy

deliberation and optimum

decision making, the Directors

have access to the services

of the Company Secretary

ensuring that all regulations

and statutory requirements are

27


FinancialStatements


met. The Board is responsible

for the appointment or removal

of the Company Secretary.

Minutes of all physically

held meetings are recorded

by the Company Secretary,

who also facilitates Circular

of Resolutions sought for

impromptu approvals from the

Board. All these are promptly

distributed among the Board

by the Company Secretary.

REPORT OF THE AUDIT

COMMITTEE

The Audit Committee is a

formally constituted sub-

committee that reports to and

is accountable to the Board of

Directors of MTD Walkers PLC.

The Audit Committee assists

the Board of Directors in its

general oversight of financial

reporting, internal controls and

functions relating to internal

and external audits.

The Composition of the Audit

Committee

The members of the Audit

Committee of MTD Walkers PLC

as at 31st March 2018 were;

Mr. Albert Rasakantha

Rasiah

(Chairman)

Independent Non-Executive

Director

Mr. Keith George Cowling

Non-Independent Non-Executive

Director

Mr. Niranjan Joseph de

Silva Deva–Aditya


Director

Mr. Hewawasamge

Ravindranath Srilal Wijeratne


Director

The Board Sub-Committees

comprises predominantly of


Directors. The reports of the

three Board Sub-Committees

are as below.

1.2.1 Report of the Audit

Committee

Please refer to page 27 of this

Annual Report.

The Duties and

Responsibilities of the Audit

Committee

The Committee has been

mandated to carry out the

duties mentioned here;

Financial Reporting

The Audit Committee monitors

and reviews the integrity of

the Financial Information/

Financial Statements of the

company, including its Annual

and Quarterly Reports and any

other formal announcement

relating to the financial

performance of the Company

and its business units (“the

Group”).

The Committee reviews

significant financial reporting

issues and decisions, any

changes in accounting policies

and practices, significant

adjustments arising from the

audits and the Going Concern

Assumptions.

Further, it verifies the Group’s

compliance with financial

reporting requirements,

information requirements of

the Companies Act No. 07

of 2007 and other relevant

financial reporting related

regulations and requirements.

1.2 Board Sub-Committees

The Board has delegated

certain responsibilities to

Board Sub-Committees which

operate within clearly defined

terms of reference:

• Audit Committee

• Remuneration Committee

• Related Party Transaction

Review Committee

*Dato’ Nik Faizul Bin Tan Sri

Nik Hussain

Non-Independent Non-Executive

Director

* Appointed with effect from 01st

June 2017

Charter of the Committee

Terms of Reference of the Audit

Committee are defined by

the Charter. It demonstrates

that the activities of the Audit

Committee are in line with

the Code of Best Practice

on Corporate Governance,


of Chartered Accountants of

Sri Lanka, and Securities and

Exchange Commission.

Membership

The Board is responsible for

appointing the members of the

Audit Committee. In adhering

to the Listing Rules of the

Colombo Stock Exchange, the

Audit Committee comprises

of three Independent/

Non-Executive Director and

two Non-Independent/

Non-Executive Directors. The

Chairman of the Committee

is an Independent/ Non-

Executive Director who has

proven financial acumen in the

fields of accountancy and audit.

1.2.2 Report of the

Remuneration Committee


Annual Report.

1.2.3 Report of the Related

Party Transaction Review

Committee


Annual Report.

Having assessed the prevailing

internal controls and

procedures, the Committee

is of the view that adequate

controls and procedures are

in place to provide reasonable

assurance that the financial

position of the Group is well

monitored and accurately

reported.

Meetings

The Committee held four

meetings during the year under

review and attendance of

Directors are shown below:

Names Attended

Number of

Meetings Held 4

Mr. Albert

Rasakantha Rasiah

(Chairman) 4/4

Mr. Keith George

Cowling 4/4

Mr. Niranjan

Joseph de Silva

Deva-Aditya 2/4

Mr. Hewawasamge

Ravindranath Srilal

Wijeratne 1/4

Dato’ Nik Faizul Bin

Tan Sri Nik Hussain 3/4

Ms. Erandi Wickramaarachchi

(Chief Financial Officer) 4/4

28

MTD WALKERS PLC


Internal Audit

The Group’s Internal Audit

Department which has been

established by the Audit

Committee of MTD Walkers PLC

is responsible for conducting

the internal audit process for

the Group. The Internal Audit

function is independent of

the activities it audits and is

performed with impartiality,

proficiency, and due

professional care. Necessary

Internal Audit Reports are

tabled at the Audit Committee

Meetings.

The Committee will review,

assess and approve the

internal audit plans and

programs. Also it reviews and

REPORT OF THE

REMUNERATION

COMMITTEE

The Remuneration Committee

of MTD Walkers PLC, appointed

by and responsible to the

Board with a primary role

of approving appropriate

remuneration to attract,

retain and motivate suitably

qualified Executive Directors

and Senior Management. The


is composed of three

Independent/ Non-Executive

Directors and one Non-


Director. It is chaired by Mr.

Albert Rasakantha Rasiah, Chief

Financial Officer, Executive Vice

President/Head of Corporate

Centre and the Head of Human

Resources assist the Committee

by providing the relevant

Audit Department to conduct

compliance reviews on a

regular basis in order to ensure

compliance awareness.

External Audit

The External Audit Committee

of the Group reviews the

external audit process to ensure

independence, objectivity, and

effectiveness in accordance

with the applicable standards

of best practice.

The committee remains

satisfied with the level of

independence of the External

Auditors and is of the view that

they have not been impaired

by any event or services that

give rise to conflict of interest.

Independent/Non-

Executive Director 2/2

Mr. Niranjan Joseph

de Silva Deva-Aditya

Independent/Non-


Mr. Hewawasamge

Ravindranath Srilal

Wijeratne

Independent/Non-



Tan Sri Nik Hussain

Non Independent/

Non-Executive

Director

*Appointed with

effect from 01st June

2017 2/2

During the year under

review, the members of the


monitors the responsiveness

of the management to

significant audit findings and

recommendations of the

Internal Auditor.

Regulatory Compliance

The Audit Committee monitors

the Group’s compliance

with mandatory finance and

other statutory requirements,

systems, and procedures

to ensure the compliance

with such requirements. The

compliance reporting has

been set up in such a way

that the Company Secretary

will apprise the Committee

of compliance and regulatory

material. The Committee has

advised the Group Internal

information and participating

in its analysis and deliberations,

as and when required.

The policy of the Group is to

be consistently aligned with

the market reality in order

to retain a highly qualified,

competent and motivated

workforce. The remuneration

packages are aligned with the

Group’s Remuneration Policy

and are linked to individual

and divisional performances;

reflecting the time and effort

required from the members in

fulfilling their responsibilities.

Names Attended

Number of Meetings

Held 2


Rasiah (Chairman)

Due consideration has been

given to the nature of the

services provided by the

auditors and the level of audit

fees received by the auditors

from MTD Walkers PLC.


Chairman - Audit Committee


Secretary - Audit Committee

31st August 2018, Colombo

convened twice in order to

decide on matters pertaining

under their respective scope.


Chairman Remuneration

Committee

MTD Walkers PLC

31st August 2018


Secretary Remuneration

Committee

31st August 2018

REPORT OF THE AUDIT COMMITTEE (Contd.)

29


FinancialStatements


REPORT OF THE RELATED

PARTY TRANSACTION

REVIEW COMMITTEE

The Composition of the Related


Committee

The Related Party Transaction

Review Committee of MTD

Walkers PLC was constituted in

March 2016 and the following

Directors served as the members

of the committee during the

financial year under review.

Mr. Albert Rasakantha Rasiah

(Chairman)


Mr. Jehan Prasanna

Amaratunga

Non-Independent Executive Director

Mr. Niranjan Joseph de

Silva Deva-Aditya


During the year under review,

the members of the Related


Committee convened four

meetings in order to decide

matters pertaining under their

respective scope.


Chairman Related Party

Transaction

Review Committee

31st August 2018


Secretary Related Party

Transaction

Review Committee

31st August 2018

Dato’ Nik Faizul Bin Tan Sri

Nik Hussain

Non Independent Non-Executive

Director

* Appointed with effect from 01st

June 2017

The objective of the Committee

is to ensure on behalf of the

Board, that all Related Party

Transactions of MTD Walkers PLC

are consistent with the Code of

Best Practices on Related Party

Transaction issued by the SEC.

Names Attended

Number of Meetings

Held 4


Rasiah (Chairman) 4/4

Mr. Jehan Prasanna

Amaratunga 4/4

Mr. Niranjan Joseph

de Silva Deva–Aditya 2/4


Tan Sri Nik Hussain 3/4

Related Party Interest - As at 31st March 2018

MTD

Wal

kers

PLC

Wal

ker S

on

s an

d C

om

pan

y Lt

d

Wal

ker S

on

s an

d C

om

pan

y En

gin

eers

(Pvt

) Ltd

MTD

Wal

kers

Infr

aco

n L

td

MTD

Wal

kers

Pro

ject

s Lt

d

Wal

kers

Pili

ng

(Pvt

) Ltd

No

rth

ern

Po

wer

Co

mp

any

(Pvt

) Ltd

CM

L-M

TD C

on

stru

ctio

n L

td

Co

lom

bo

En

gin

eerin

g S

ervi

ces

(Pvt

) Ltd

Wes

tern

Aird

uct

s La

nka

(Pvt

) Ltd

CM

L-M

TD J

oin

t Ven

ture

Ltd

Wal

kers

CM

L Pr

op

ertie

s (P

vt) L

td

Wal

kers

Co

lom

bo

Sh

ipya

rd (P

vt) L

td

Wal

kers

Eq

uip

men

t Ltd

Spec

ial P

roje

cts

Co

mp

any

(Pvt

) Ltd

Wal

kers

M3

(Pvt

) Ltd

Wal

kers

Su

bse

a Se

rvic

es (P

vt) L

td

Wal

kers

Trin

co S

hip

yard

(Pvt

) Ltd

Wal

kers

CM

L In

tern

atio

nal

Pvt

. Ltd

Wal

kers

CM

L Pr

op

ertie

s La

nka

(Pvt

) Ltd

CM

L M

TD H

ou

sin

g P

roje

cts

(Pvt

) Ltd

Co

lom

bo

Fo

rt H

erita

ge

Co

mp

any

(Pvt

) Ltd

Wal

kers

CM

L Re

al E

stat

e (P

vt) L

td

Wal

kers

Sh

ipya

rds

Ltd

Wal

kers

CM

L Pr

op

erty

Dev

elo

pm

ent (

Pvt)

Ltd

Nik Faizul Bin Tan Sri Nik Hussain X - - - - - - - - - - - - - - - - - - X X X - - -

Jehan Prasanna Amaratunga X - - X X - X X X X X X X - X X X X X X X X X X X

Keith George Cowling X - - - - X X X X X - - X X - X - X X - - - - X -

Albert Rasakantha Rasiah X X X X X - - - - - - - - - - - - - - - - - - - -

Niranjan Joseph de Silva Deva-Aditya X - - - - - - - - - - - - - - - - - - - - - - - -

Hewawasamge Ravindranath Srilal

WijeratneX - - X - - - - X - - - - - - - - - - - - - - - -

Kim Siew Tee X X X X X X X - - - - X - - - - - - - - - X - - -

x - Board Director but no related party interests– - Neither Board Director nor related party interestsBoard restructuring not effected during the respective financial year

30

MTD WALKERS PLC


1.3 Executive Committee

The Executive Committee

comprises of the Group

Executive Deputy Chairman,

President/Head of each Cluster/

Function and has seven

members in total as at 31st

March 2018.

Under the leadership and

direction of the Group

Executive Deputy Chairman,

the Group Executive

Committee implements

the policies and strategies

determined by the Board

and manages the business

and the respective activities

of the Group, which includes

the review of the Group’s

sustainability performance,

providing timely and accurate

information and the overall

integration of sustainability

within business operations.

1.3.1 Fixed Asset Committee

Following the process

concerning the Technical

Evaluation Committee, the

final ranking and commercial

evaluation will be presented

to the Fixed Asset Committee

for approval. The approvals

will then be forwarded to the

Group Executive Committee

and the Board for final approval.

1.3.2 Technical Evaluation

Committee

During the procurement

process of a fixed asset

for the business units will

communicate its requirements

to the Head of Procurement,

and the Head of Group

Plant and Machinery. The

minimum specifications will

The business ethics embedded

at MTD Walkers PLC corporate

culture:

• Committed to carry out

business with integrity,

allowing us to remain true

to our ethics.

• Actively comply with

all legal and regulatory

obligations, in order to

conform to legal norms and

to protect our interests and

those of our stakeholders.

• Provide a safe and healthy

working environment for all

employees, at all levels, and

are committed to continued

training and development

to complement their current

and future work plans

and is governed by the

Occupational, Health and

Safety Policy adopted at

Group level.

• An equal opportunity

employer without prejudice

towards race, gender,

nationality, religion, ethnic

affiliation, political views

or other distinguishing

characteristic as mandated

by the Diversity and Equal

Opportunity Policy.

• Governed by the Child

Labour and Forced Labour

Policy, are committed to

employing those who

choose to work with us

out of free will; and remain

committed to not working

with those who use: child

labour, forced labour, slave

labour or other forms of

involuntary labour in the

services or goods they

supply. Does not allow

any practice that would

be established together by the

user company, Head of Group

Plant and Machinery, and will

be signed off by the Technical

Evaluation Committee.

Thereafter the Procurement

Department will call for

quotations and the Technical

Evaluation Committee shall

undertake a comprehensive

and complete evaluation of all

the bids received.

1.4 Internal Policies, Processes

and Procedures

Internal policies, processes

and procedures of MTD

Walkers PLC and its business

units are designed to

support and maintain a

transparent and effective

internal control system, the

institutionalisation of best

processes for governance,

and the management of risk

and compliances across the

organisation.

1.4.1 Code of Business

Conduct and Ethics

MTD Walkers PLC and all

Group business units strive to

ensure that all operations are

carried out to maximise value

creation for all stakeholders;

shareholders, internal

stakeholders (employees) and

external stakeholders (clients),

suppliers, and community.

The Group strives to achieve

this goal while maintaining

their corporate integrity and

ensuring that they act with

the utmost responsibility

towards the community

and environment the Group

operates in.

restrict free movement of

employees.

• Provide means for

employees and other

shareholders, involved with

MTD Walkers PLC and its

business units, to report

legitimate concerns and

grievances in a manner that

ensures proper review and

action without repercussion.

• It is important for all staff to

be able to share the benefits

of the Group’s success in

achieving its goals.

• Shall not act contrary to

applicable competition laws

• Seek competitive proposals

from suitable goods and

services providers to meet

the Group’s needs; this is

mandated by the Group

Procurement Policy and the

Group Sourcing Drive.

• Remain open-minded in

dialogue with those who

are affected by operations,

or wish to raise concerns

regarding operations.

The Group will respond

to inquiries from external

parties and communicate

with affected parties in

a timely and an effective

manner and always

work towards amicable

resolutions.

• Will not risk the Group’s

reputation by knowingly

associating with people,

organisations, products

or transactions that could

potentially damage the

corporate heritage MTD

Walkers PLC has built over

160 years of operations. This

is governed by the Anti-

31


FinancialStatements


Corruption Policy that is in

place.

• Will adhere to

environmental regulations

and strive to develop

methods to reduce impact

on nature and our carbon

footprint. This will be

implemented across all

business units in all activities

and in all finished products.

All environmental related

policies mandate that

the Group abides by all

regulations and laws of

Sri Lanka.

• Actively support local

communities through

charitable donations and

gifts in kind; and encourage

the involvement of staff

in volunteer initiatives for

community development.

This is further enhanced by

our Social Responsibility

Policy.

1.4.2 Human Capital

Management

1.4.2.1 People and Talent

Management

The Human Capital of the

Group is considered as the

primary component of its

earning potential, productivity

and long term sustainability.

MTD Walkers PLC believes

that shareholders’ long term

interests are well served by

involving employees actively

in safeguarding the Group


framework. The employees

contribute positively towards

upholding the principles of

Corporate Governance as they

are been encouraged and

empowered to do so.

The Group is committed

to hiring and developing

individuals who possess the

required competencies. As a

result, policies, processes and

systems have been put in place

please refer the section Share

Information of this Annual

Report.

1.4.3 Stakeholder

Management

The Board of MTD Walkers PLC

views effective stakeholder

management as a crucial

feature in safeguarding the

MTD Walkers PLC Corporate

Governance Philosophy.

1.4.3.1 Employee Relations

Human resource aspects are

considered in a manner that

empowers approachability by

any employee to every level of

management. The Group culture

encourages constant dialogue

and facilitation not only relating

to work but also matters relating

to general interest that could

distress employees and their

families. The Group pursues

open-door policies for its key

stakeholder which includes their

employees and this is endorsed

at all levels of the Group.

1.4.3.2 Dialogue with

Shareholders

The Group is in possession of

an established investor relation

programme which addresses

any information regarding the

Group's strategy, performance

and competitive position that

the investment institutions and

analysts require.

1.4.3.3 Effective and

Transparent Communication

(i) Employee Communication

MTD Walkers PLC is

unremittingly looking at ways

to introduce unique and

effective ways of employee

communication and employee

cognisance.

The prominence of

communication – bottom-

up, top-down and lateral

communication are

encouraged in order to

to ensure effective recruitment,

development and retention of

employees.

A safe, secure, and conducive

environment for the employees

is provided by the Group.

The employees are allowed

freedom of association,

prohibits child labour, forced

or compulsory labour and

any discrimination based on

gender, race or religion or

other. The Group promotes

workplaces that are free from

physical, verbal and sexual

harassment. To further ensure

this, a formal policy was

documented during the last

financial year and can be found

online at www.walkerscml.

com/sustainability.

1.4.2.2 Pay for Performance

At MTD Walkers PLC, the

employees are rewarded with

a performance based scheme

that is determined as follows:

• Manager and above Levels:

The performance is

measured annually on well-

defined individual as well

as organisational objectives

and metrics which reflect,

the objective of the Group,

thereby aligning employee,

management, and

stakeholder interests.

• Assistant Manager Level

and Executive level:

The performance is

measured by the individual

performance rating.

1.4.2.3 Equity Sharing

Share options have been offered

to employees at distinct career

levels built on pre-determined

criteria which are consistently

applied across the eligible levels.

Share options are offered at the

volume weighted market prices

prevailing on the date of the

offer. For further information

improve the commitment of

the employees to the Groups

goals and values which have

been borne intensively and

comprehensively through

numerous communiques

dispensed by the Group

Executive Deputy Chairman /

CEO and the management.

Whilst employees have several

opportunities to communicate

with the Senior Management,

the Group has also developed

formal channels for such

communication through

feedback such as:

• Performance Evaluation:

The employee is appraised

by their managers and

if required the peers will

provide their feedback.

Further to this, the Group

has commenced the

implementation of Key

Performance Indicators (KPI).

• Exit Interviews: This

process is compulsory for

all executives and above

levels. The Human Resource

Department carries out this

process and the respective

outcome is forwarded

to the Group Executive

Deputy Chairman and the

Presidents.

• Direct E Mail Address to the


Chairman: The employees

of MTD Walkers PLC are

given the opportunity to

bring up any issues of the

Group values when other

established avenues have

not yet yielded results

via e-mail to the Group

Executive Deputy Chairman

at any time.

• Corporate Communications:

The main goal of the

Corporate Communications

team is to improve and

safeguard the brand

values of MTD Walkers PLC.

32

MTD WALKERS PLC


Consequently, the team

absorbs in activities to build

the brand amongst the

current and prospective

employees. Further, the

team also creates awareness

amongst the public as well.

1.4.3.4 Stakeholder

Engagement Review


review, the Group proactively

engaged with a wide

range of stakeholders to

assess the Group's focus on

responsiveness to material

issues and it will continue to

be carried out periodically. The

Group will carry out a detailed

independent stakeholder

engagement study in the future

to maintain its commitment to

increasing stakeholder value.

Investor Communications

The Corporate Finance

and Strategy Division of

the Group is responsible

for maintaining an active

dialogue with shareholders,

potential investors, investment

banks, stock brokers and

other interested parties in

ensuring an effective investor

communication channel.

The Corporate Finance and

Strategy Division of MTD

Walkers PLC is responsible for

• Staying visible and building

relations

• Focusing on the long term

view and strength of the

Group’s financial position

• Responding to queries

and clarifying concerns of

investors

PLC and its business units

comprises of the laws,

regulations and best practices

listed below that enable the

Group to operate within a

sound Corporate Governance

Framework.

Major External Regulations

Applicable to MTD Walkers PLC

and its business units

• Companies Act No. 07 of

2007

• Code of Best Practice of




Sri Lanka and the Securities

and Exchange Commission

of Sri Lanka

• Listing Rules of the Colombo

Stock Exchange applicable

to MTD Walkers PLC

• Inland Revenue Act No. 10

of 2006 (as amended)

A detailed compliance report

disclosing MTD Walkers PLC’s

level of compliance with Codes

of Best Practice of Corporate

Governance issued jointly

by the Institute of Chartered

Accountants of Sri Lanka and

the Securities and Exchange

Commission of Sri Lanka and

Listing Rules of the Colombo

Stock Exchange is set out on

pages 33 to 42 of this Annual

Report.

3. ASSURANCE


assurance at MTD Walkers PLC

and its business units is upheld

by the Internal Audit Division

and the External Auditors of the

Group.

1.5 Integrated Risk

Management

Risk Management is

considered as an integral part

of the Corporate Governance

Framework of MTD Walkers PLC

and the Group has in place,

a risk management process,

based on the guidelines of ISO

31000 was instilled throughout

the Group including its

business units.

The steps taken towards

promoting the Group’s

integrated risk management

processes include;

• Reviewing the risk registers

• Reviewing the risk rating

parameters to ensure

consistency of risk ratings at

all business units

• Documentation of Group

Risk Policy

1.6 Ownership Structure

The right of shareholders to

make decisions is exercised at

the Annual General Meeting

of the Company in addition to

Extraordinary General Meetings

which are called as and when

required.

MTD Walkers PLC had a

total number of 167,647,568

ordinary shares as at 31st March

2018, of which MTD Capital

Berhad, the largest shareholder

of the Company accounted for

90.78 percent amounting to

152,183,583 ordinary shares as

at 31st March 2018.

2. EXTERNAL

GOVERNANCE STRUCTURE

The External Governance

Structure of MTD Walkers

3.1 Internal Audit

MTD Walkers PLC’ s Internal

Audit Division plays a vital role

in the governance structure

of the Group that focuses

on providing independent

supervision to the Audit

Committee on the processes

and controls within the Group

and the level of compliance

with laws and regulation.

3.2 External Audit

External Audit Report enables

the Board to determine the

adequacy and effectiveness of

the Company’s Internal controls

which form an essential

part of the sound Corporate

Governance mechanism.

Messrs. Ernst & Young;

Chartered Accountants were

the External Auditors of MTD

Walkers PLC and its business

units. They were responsible

for auditing the consolidated

financial statements of MTD

Walkers PLC and the financial

statements of the Group's

business units.

Statement of Compliance

under Section 7.10 of the

Rules of the Colombo Stock

Exchange (CSE) on Corporate

Governance (Mandatory

provisions – fully complied)

Code of Best Practice of

Corporate Governance issued

jointly by The Institute of


Sri Lanka and the Securities and

Exchange Commission of

Sri Lanka.

(Voluntary provisions – fully

complied)

33


FinancialStatements


Adherence with the Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka

(CA Sri Lanka) and the Securities and Exchange Commission (SEC) and the Listing Rules of the Colombo Stock Exchange (CSE) is tabulated

below.

Section 1- Board and CEO Functions

Principle Reference to

the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE

Details of Compliance

Board of Directors

The Board should direct, lead and

control the Company

A.1 Refer to the MTD Walkers PLC Corporate Governance

Section 1.1.

Board Meetings

Frequency of Board Meetings and

Directors’ attendance at Board

Meetings

A.1.1 Refer to the MTD Walkers PLC Corporate Governance

Section 1.1.3.

Board Responsibilities

Formulation and Implementation of

a sound strategy

A.1.2 Refer to the MTD Walkers PLC Corporate Governance

Section 1.1.1.

Competency of the CEO and the

Senior Managers to implement the

Company strategy

A.1.2 The Company does not carry the designation of CEO. The

function of a CEO is carried out by the Group Executive

Deputy Chairman. The Group Executive Deputy Chairman

and the Senior Management Team of the Company possess

extensive knowledge and skills with widespread experience

in the industry in which the Company operates.

For further information please refer to the Board of Directors

section of this Annual Report.

Adoption of an effective CEO and

Senior Management succession plan

A.1.2 The Human Resources Division guided by the Board of

Directors is in the process of carrying out the necessary

requirements.

Effective systems to secure integrity

of information, internal controls and

risk management

A.1.2 The Company has set up a fully-fledged Internal Audit

Division which carried out four Internal Audits during the

financial year under review.

For further information please refer to the Audit Committee

Report and the Enterprise Risk Management section of this

Annual Report.

Compliance with laws, regulations

and ethical standards

A.1.2 The Company practices and enforces the highest ethical

standards and adheres to all stipulated laws and relevant

regulations.

Moreover, the Company seeks independent professional

advice when deemed necessary.

Consideration of stakeholder

interests in corporate decision

making

A.1.2 All charters and policies of the Company have been

developed to ensure that responsibilities to shareholders and

other stakeholders are timely and appropriately discharged.

Moreover, in terms of Companies Act No. 07 of 2007, the

approvals of the shareholders are sought where necessary.

Please refer to the Sustainability Integration section of this

Annual Report for further information.

34

MTD WALKERS PLC



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Recognising sustainable business

development in corporate strategy,

decisions and activities

A.1.2 Please refer to the Sustainability Integration section of this

Annual Report on pages 46 to 54 for further information.

Adoption of appropriate accounting

policies and fostering compliance

with financial regulations

A.1.2 The Company comprises of qualified accountants who report

to the Group Chief Financial Officer who in turn reports

to the Board of Directors regarding accounting policies

and compliance with financial regulations that have to be

adopted.

With this information, the Board of Directors advices the

Senior Management in the appropriate adoption of polices

and compliance of financial regulations.

Fulfilling the other Board functions

relevant to the organisation

A.1.2 During the year under review, every endeavour was made by

the Board of Directors in order to fulfil its obligations.

Act in accordance with the laws

and regulations relevant to the

organisation and procedures to

obtain independent advice

A.1.3 The majority of the Board Sub-Committees comprise of

Independent Directors which facilitate the Company to act in

accordance with the relevant laws and regulations. Further,

the Board seeks independent professional advice when

deemed necessary.

Access to the Company Secretary

and functions of the Company

Secretary

A.1.4 Refer to the MTD Walkers PLC Corporate Governance Section

1.1.8.

Independent judgment of Directors A.1.5 All Directors at the point of appointment disclosed their

conflicts of interests or stated that they have no interest in

business that the Group is involved in. During their tenure

on the Board they will disclose to the Board any new

appointments, which may have a conflict of interest.

In the event a matter is discussed to which a Director

has a conflict of interest, he will excuse himself from that

discussion. If there is a vote where a Director has a conflict of

interest they will abstain from voting.

Dedication of adequate time and

effort for the matters of the Board

and the Company


1.1.3.

In addition, the Directors function as members of the Board

Sub-Committees.

For attendance of Directors at Sub-Committee meetings refer

to the MTD Walkers PLC Corporate Governance Section 1.2.1,

1.2.2 and 1.2.3.

Further circular resolutions of the Board are passed in order

to meet urgent business decisions.

35


FinancialStatements



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Board induction and training A.1.7 Refer to the MTD Walkers PLC Corporate Governance Section

1.1.6.

Chairman and CEO

Chairman and CEO A.2 The profile of the Chairman is set out on page 16 of this

Annual Report.

The Company does not carry the designation of CEO.

Chairman’s and CEO’s Role A.3 The Company does not carry the designation of CEO. However,

the Group Executive Deputy Chairman of the Company

functions as the Chief Executive Officer of the Group.

Refer to the MTD Walkers PLC Corporate Governance Section

1.1.4.

Key responsibilities of the Chairman A.3.1 Refer to the MTD Walkers PLC Corporate Governance Section

1.1.4 and Section 1.1.5.

Financial Acumen

Availability of sufficient financial

acumen and knowledge

A.4 The Chairman is an Accountant by profession and holds a

Bachelor of Science in Accounting.

The Group Executive Deputy Chairman is a Fellow Member

of the Institute of Chartered Accountants of Sri Lanka and

Chartered Institute of Management Accountants, United

Kingdom and possesses sound financial acumen and

knowledge.

The Directors’ financial acumen and knowledge is more-fully

described under the Board of Directors section of this Annual

Report.

Board Balance

Board Composition A.5 7.10.1, 7.10.3 (c) Refer to the MTD Walkers PLC Corporate Governance

Section 1.1.2.

Balance of Executive and Non-

Executive Directors

A.5.1 7.10.1 (a),(b),(c) Refer to the MTD Walkers PLC Corporate Governance

Section 1.1.2.

Independent Directors A.5.2, A.5.3,

A.5.5

7.10.2, 7.10.3

(a), 7.10.3 (b)

Refer to the MTD Walkers PLC Corporate Governance

Section 1.1.2.

Submission of annual declaration of

independence

A.5.4 All Non-Executive Directors submit a signed and dated

declaration of their independence on an annual basis.

Requirement to appoint a Senior

Independent Director

A.5.6,

A.5.7,A.5.8

The Company’s Board composition currently does not

necessitate the requirement for a Senior Independent

Director. The terms of reference will be disclosed in the

Annual Report when the need for such a designation arises.

Meetings to be held with Non-

Executive Directors only

A.5.9 The Audit Committee and the Remuneration Committee

only comprises of Non-Executive Directors. Refer to the MTD

Walkers PLC Corporate Governance Section 1.2.1.

Unresolved matters A.5.10 The Directors concerns pertaining to uncertain matters

are discussed and documented accordingly in the Board

Meeting minutes. Further discussions on these matters are

pursued at the next Board Meeting with a view to resolve

them.

36

MTD WALKERS PLC



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Supply of Information

Management obligation for

providing information in a timely

manner


1.3 and refer to the MTD Walkers PLC Corporate Governance

Section 1.1.7.

Adequate time for effective Board

Meetings

A.6.2 The date of the next Board Meeting is collectively decided by

all Board Members present during the previous meeting, and

the notice in terms of the Articles of Association is given to all

Board Members when convening a Board Meeting.

Appointment to the Board

Appointment of new Directors to the

Board

A.7 7.10.3 (d) All applications to the Board are approved by the Nomination

Committee of MTD Capital Berhad. Malaysia. Re-election at

MTD Walkers PLC takes place strictly in accordance with the

Articles of Association; where one third of Directors retire

annually.

During the financial year 2017/18 one new Director was

appointed to the Board on the 14th of February 2018. For

further details refer section Board of Directors on page 18 of

this report.

Requirement of a Nomination

Committee

A.7.1, A.7.2 The Company has not appointed a Nomination Committee

as at the reporting date. However, as stated above, the

performance of the Board is assessed to ensure that the

Board is comprised of persons with adequate resources to

represent the needs of the Company.

Re-election

Re-election at regular intervals and

should be subject to election and

re-election by shareholders

A.8, A.8.1,A.8.2 The Board Members are appointed and recommended for

re-election in terms of the Articles of Association of the

Company until they reach the retirement age in terms of

Companies Act No. 07 of 2007.

One third of the Directors retire by rotation on the basis

prescribed in the Articles of Association of the Company.

A Director retiring by rotation is eligible for re-election by the

shareholders at the Annual General Meeting by passing a

resolution.

Appraisal of Board Performance and Functions

Board Appraisal A.9, A.9.1, A.9.2,

A.9.3

The Board appraisal mechanism is currently being

implemented.

37


FinancialStatements



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Disclosure of Directors’ Information

Information in relation to each

Director

A.10, A.10.1 7.10.3(C.)

7.10.4(a.4)

The profiles of all Board Members are presented on pages 16

to 19 of this Annual Report.

Related party transactions are presented in Note 37 to the

Financial Statements on page 164 of this Annual Report.


1.1.3.

For attendance of Directors at Sub-Committee Meetings refer

to the MTD Walkers PLC Corporate Governance Section 1.2.1,

1.2.2 and 1.2.3.

Appraisal of CEO

Assessing the performance of the

CEO

A.11 The Company does not possess the designation of CEO as

the Group Executive Deputy Chairman carries out executive

functions and steers the Company towards its goals.

The Board collectively appraises the performance of the

Group Executive Deputy Chairman on the basis of pre agreed

goals for the Group.

Section 2 – Director's Remuneration


the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Director's Remuneration and Remuneration Committee

Director's Remuneration B.1. No Director is involved in deciding his own remuneration.

Remuneration Committee and

determining remuneration of the

Directors

B.1.1, B.1.2,

B.1.3, B.1.4,

B.1.5

7.10.5 (a.1),

(a.2)

The Remuneration Policy for all levels of employees of the

Group is reviewed and approved by the Remuneration

Committee of the Company.

The remuneration of the Executive Directors are decided by

the Remuneration Committee and approved by the Board.

The remuneration of the Senior Management is decided by

the Remuneration Committee subjected to the approval of

the Board.

The Level and Make up of Remuneration

Level of Remuneration and Executive

Share Options

B.2, B.2.1, B.2.2,

B.2.3, B.2.4,

B.2.5, B.2.6,

B.2.7, B.2.8,

B.2.9


1.2.2.

The Company has offered an Executive Share Option Plan

during the financial year 2015/16.

Please refer to the Share Information section of this Annual

Report for more information.

38

MTD WALKERS PLC



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Composition of Remuneration Committee Members.

Independent / Non Executive Director

2015/16

Non Independent / Non Executive Director

2016/17 2017/18

100% 100% 75%

25%

Disclosure of Remuneration

Disclosure of remuneration B.3, B.3.1 7.10.5 (b), (c.1) Please refer to Note 30 to the Financial Statements on page

153 of this Annual Report.

Section 3 – Relations with Shareholders


the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Relations with Shareholders

Constructive use of Annual General

Meeting and conduct of General

Meetings

C.1 The Board uses an Annual General Meeting (AGM) to

communicate the Group’s performance with shareholders

and encourages their active participation.

In this regard, all shareholders of the Company receive the

Notice of Meeting within the statutory period.

Consideration of proxy votes C.1.1 As a matter of practice, proxy votes together with the votes

of the shareholders present at the Annual General Meeting

are considered for each resolution.

Separate resolutions on each

substantially separate issue

C.1.2 The Company proposes separate resolutions on each

substantially separate issue, giving shareholders the

opportunity to vote on each such issue separately.

Availability of Board Sub- Committee

Chairman to answer queries

C.1.3 If requested, the Chairman of the Audit Committee is available

to respond to any queries at the Annual General Meeting.

Circulation of notice of Annual

General Meeting

C.1.4 The Notice of Meeting and related documents including

a softcopy of the Annual Report, a Form of Proxy and

other resolutions, if any, are circulated to the shareholders

15 working days prior to the Annual General Meeting in

compliance with the Companies Act No. 07 of 2007 and the

Articles of Association of the Company.

Procedures governing voting at the

Annual General Meeting

C.1.5 A summary of the procedure relating to voting at the AGM is

set out in the ‘Notice of Meeting’ sent to each shareholder.

39


FinancialStatements



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Communication with Shareholders

Official channel to reach all

shareholders

C.2.1 The Company Secretary attends to all shareholder queries.

Disclose the policy and methodology

for communication with shareholders

C.2.2 The Company Secretarial Department, headed by the

Company Secretary, attends to all shareholder queries.

Disclose how they implement the

above policy and methodology

C.2.3 The Company telephone number and address is published

on the Colombo Stock Exchange (CSE) website. Any decision

to convene an Annual General Meeting or Extraordinary

General Meeting will be communicated to shareholders via

circular or notice by the Company Secretary with proper

approval by the Colombo Stock Exchange and the Board.

Disclose the contact person for such

communication

C.2.4 Company Secretarial Division of the Company.

There should be a process to make all

Directors aware of major issues and

concerns of shareholders, and this

process has to be disclosed by the

Company

C.2.5 All major concerns raised by the shareholders are

communicated to the Board at the Board Meeting, by the

Company Secretary.

The Company should decide the

person to contact in relation to

shareholders’ matters (Company

Secretary or a Director from the BOD)

C.2.6 Company Secretarial Department of the Company.

The process for responding to

shareholder matters should be

formulated by the Board and

disclosed

C.2.7 Shareholder queries are responded via face to face meetings,

telephone conversations or letters by the Company

Secretarial Division.

Major Transactions

Disclosure of major transactions C.3 There were no major transactions during the financial year.

Disclosure of major transactions

which change the Group

composition

C.3.1 There were no major transactions during the financial year

that changed the Group’s composition.

Accountability and Audit

Financial Reporting D.1 The Financial Statements presents a balanced and

understandable evaluation of the Company. The Company’s

position, performance and prospects have been discussed in

detail in the following reports;

• Chairman’s Statement of this Annual Report.

• Group Executive Deputy Chairman’s Statement of this

Annual report.

• Management Discussion and Analysis of this Annual

Report.

• Financial Review of this Annual Report.

All Interim and Annual Financial Reports are submitted in

terms of the listing rules of the Colombo Stock Exchange.


1.1.7.

40

MTD WALKERS PLC



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Board responsibility in respect of

Financial Reporting

D.1.1 Refer to the MTD Walkers PLC Corporate Governance Section

1.1.7.

Directors’ Report D.1.2 Directors’ declaration on the Company’s Governance is

discussed in the Annual Report of the Board of Directors of

this Annual Report.

Declaration of Going Concern by the

Directors

D.1.5 This information is provided in the Annual Report of the

Board of Directors section of this Annual Report.

Extraordinary General Meetings

in the event the net assets of the

Company fall below 50 percent

of the value of the Company’s

shareholders’ funds

D.1.6 Not applicable as the Company has not faced such a

situation during the financial year under review.

The Board should adequately and

accurately disclose the related party

transactions in its Annual Report

D.1.7 The Company has adhered to the disclosure requirements

as 31st March 2018 in terms of the Securities Exchange

Commission and Colombo Stock Exchange.

Internal Control

Implementation of sound system of

Internal Control

D.2 Internal Controls are closely scrutinised by the Internal Audit

Division of the Group.

Review of effectiveness of the

Group’s system of Internal Controls

D.2.1 The Audit Committee reviews the Internal Audit Reports/

findings and updates them periodically.

Need to have an Internal Audit

function

D.2.2 The Group Internal Audit Division has been set up as of April

2014. Prior to setting up the Group Internal Audit Division,

the Internal Audit function was carried out by the Internal

Audit Division of the Group’s Parent Company.

The Board should require the Audit

Committee to carry out reviews

of the processes and effectiveness

of Risk Management and Internal

Controls, and to document this

to the Board. The Board takes the

responsibility for the Disclosures on

Internal Controls.

D.2.3 The Audit Committee carries out the necessary requirements

to comply with this rule.

Responsibilities of Directors in

maintaining a sound system of

Internal Control

D.2.4 These are being monitored and implemented by the Internal

Audit Division of the Group and the Audit Committee.

The independent opinion of External Auditors is also sought

when required.

41


FinancialStatements



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Audit Committee

The Audit Committee should

be comprised of a minimum of

two Independent Non-Executive

Directors or exclusively by Non-

Executive Directors, a majority of

whom should be Independent,

whichever is higher. The Chairman of

the Committee should be a Non-

Executive Director, appointed by the

Board.

D.3.1 7.10.6 (a.1),(a.2),

7.10.6 (c.1)

The Audit Committee of the Company comprises 03

Independent/Non-Executive Directors, and 02 Non

Independent/Non-Executive Director.


1.2.1.

Composition of the Audit Committee Members.

2015/16

Non Independent / Non Executive Director

2016/17 2017/18

Independent / Non Executive Director

80% 80% 60%

20% 20% 40%

Terms of Reference, Duties and

Responsibilities

D.3.2, D.3.3 7.10.6

(b.1),(b.2), (b.3),

(b.4), (b.5)


1.2.1.

Disclosures

Annual Report should contain a report

by the Audit Committee setting out,

- The names of Directors comprising

the Audit Committee should be

disclosed in the Annual Report

- Determination of the independence

of the Auditors Disclose use of the

basis of such determination

- Compliance by the Company

D.3.4 7.10.6 (c.1),

(c.2), (c.3)


1.2.1.

Code of Business Ethics

Availability of Code of Business

Conduct and Ethics

D.4 Refer to the MTD Walkers PLC Corporate Governance Section

1.4.1.

Corporate Governance Disclosure D.5 The Company has complied with the Code of Best Practice

on Corporate Governance issued jointly by the Institute of

Chartered Accountants of Sri Lanka and the Securities and

Exchange Commission of Sri Lanka.

Corporate Governance Report D.5.1 Corporate Governance Report serves this requirement.

Institutional Investors and Shareholder Voting

Encourage Institutional Shareholders

to translate their voting intentions

into practice

E.1 All shareholders are encouraged to participate and vote at

the Annual General Meeting.

Regular and structured dialogue with

shareholders

E.1.1 The Annual General Meeting is used to enable an effective

dialogue with shareholders. Further the Board of Directors

ensures the prompt release of material information to the

public and the Colombo Stock Exchange. The Chairman

ensures that views and queries of shareholders, as

appropriate, are communicated to the Board as a whole, and

addressed in a timely manner.

42

MTD WALKERS PLC



the Code of

Best Practice

issued by CA Sri

Lanka and SEC

Reference to

the Section

7.10 of the

Listing Rules of

the CSE


Evaluation of Governance Structure E.2 The Governance Structure presented in this Annual Report is

regularly reviewed by the Board of Directors.

Investing divesting decisions

Independent advice with regard to

investing and divesting decisions

F.1 The Annual Report is circulated to all shareholders in a timely

manner and includes sufficient information to enable the

shareholders to make decisions relevant to their investment in

the Company. The following reports aim at providing an overall

evaluation of the Company’s activities and future prospects.

Individual shareholders are encouraged to carry out sufficient

analysis or seek independent advice on investing, holding or

divesting shares of the Company.

Shareholder Voting

Encourage individual shareholders to

participate in General Meetings

F.2 The Company circulates the Notice of Meeting within

the statutory timeline, thereby giving adequate time for

shareholders to consider the matters to be taken up at all

meetings. Shareholders are encouraged to participate at

such meetings.

Sustainability Reporting

Disclosure on adherence to

sustainability principles

G.1 Please refer Sustainability Integration section of this Annual

Report.

Statement of Compliance under section 7.10 of the Listing Rules of the Colombo Stock Exchange on Corporate Governance

(Implemented on 1st April 2009 and subsequent amendments to date).

CSE Rule Compliance Status Details of Compliance

7.10 Compliance

7.10.4 Criteria for defining independence

a. to h. Requirements for meeting the criteria to

be an Independent Director

Please refer Annual Report of the Board of Directors on in

this Annual Report.

7.10.5 Remuneration Committee

c.2 Statement of Remuneration Policy Remuneration Policy is decided by the Remuneration

Committee.

c.3 Aggregate remuneration paid to Executive

Directors and Non-Executive Directors

Decided by the Remuneration Committee and approved

by the Board.

43


FinancialStatements


Risk management is a firmly

entrenched component of the

corporate governance process

of the MTD Group and is an

integral part of the Group’s

overall Corporate Governance

Framework. The Group’s

sustainability and Internal Audit

functions also play a key role

in risk identification, to ensure

risks stemming from all aspects

can be identified and managed.

The Group firmly believes that

by the adoption of sound risk

management processes, future

risks and opportunities can be

accurately identified and dealt

with. This in turn will aid the

Group in achieving its goal of

sustainable long term growth

and reaching strategic and

operational objectives.

Each Group company

carries out its respective risk

identification and review

process bi-annually, based

on the Group’s risk policy and

risk management process. As

such, company specific risks as

well as common sectoral risks

are analysed and reviewed by

the respective CEO of each

business unit, subsequently the

Presidents of the Clusters and

the members of the Group’s

Executive Committee evaluates

the process at an overall

Group level. The Group and its

subsidiaries track enterprise

risks covering operational risks,

cyber risks, natural disasters and

occupational hazards, fraud

and corruption, labour related

risks, risks of negative impacts

on environment and society

as well as environmental and

of the Group. The Executive

Committee is responsible for

determining the risk appetite

and overall risk policy for the

Group, and is also responsible

for assessing risks on a Group-

wide basis by considering the

risks emanating from each

business unit.

The Risk Management Division

is responsible for driving the

culture of risk management

across the Group business units

and acts as a facilitator to the

risk process and as a resource

point for Risk Management

best practices and process

improvements.

The risk management

process adopted by the

Group commences with the

identification of enterprise

risk by each Group company,

assessing the implications

of such risks, quantifying the

impact severity, likelihood of

occurrence and velocity of risk.

Risks identified in this manner

are then discussed by the

management team of each

business unit and strategies,

processes and management

controls are put in place to

mitigate, minimise or transfer

the risk. These controls are

reviewed bi-annually by

the respective CEO of the

business unit and verified by

the members of the Executive

Committee.

The risk management cycle

is concluded with an annual

Group Risk Report containing a

Group wide risk status, analysis

and profile which is presented

social risks in its key supply

chain partners.

The Group is committed to

embedding effective and

efficient risk management

practices into its businesses

to ensure that risks, which

may delay or prevent

achievement of both strategic

and operational objectives are

assessed and controlled in time.

The Group has designed its

Integrated Risk Management

Framework based on

the ISO 31000 principles,

and strives to ensure that

the Risk Management

Framework is embedded

into its organisational culture,

governance and accountability

arrangements, planning,

reporting, performance review,

business transformation and

improvement processes.

The Group’s risk management

process is a bottom-up

approach, starting at the level

of individual business units

where risks are identified.

Business units are the

ultimate risk owners of their

business specific risks and are

responsible for complying with

risk procedures and identifying,

assessing and managing risks

by ensuring that appropriate

mitigation plans are put in

place. All business unit risks

are validated by the CEO

of each subsidiary, and its

specific Cluster Head who in

turn identify the level of risk

that can be taken within the

risk appetite parameters set

by the Executive Committee

to the Executive Committee

and any policy level decisions

stemming from this review are

incorporated in the next risk

review cycle.

The highlights of the identified

Group level risks along with key

impacts and opportunities are

detailed below.

Macro-Economic and Political

Environment

Risk Rating

FY 2017/18 Moderate

FY 2016/17 Moderate

FY 2015/16 Low

The Sri Lankan economy

recorded a slow growth

during the year under review.

Uncertainty on policies both

locally and globally is likely

to be offset by several trade

agreements in the coming

years.

As the Government finalises its

investment policy and embarks

on a series of long overdue

fiscal reforms over the coming

months, many bottlenecks for

investment should disappear

enabling a more robust

economic growth.

The Group has a planned

strategy to adopt and develop

new technologies that

allow the Group to remain

competitive in the wake of

increasing raw material and

labour costs.

44

MTD WALKERS PLC


Government Policy,

Regulatory Environment and

Portfolio Management

Risk Rating

FY 2017/18 Moderate

FY 2016/17 Moderate

FY 2015/16 Moderate

A lack of clarity and uncertainty

on Government Policies

regarding tax, regulatory

frameworks and infrastructure

development have continued

to impact the Group’s ability to

execute its strategies. As one

of the largest infrastructure

developers in the country

the Group relies heavily on

Government-led infrastructure

projects to achieve growth.

The members of the Executive

Committee and the senior

management team regularly

liaise with key Government

Institutions and engage with

policy making forums to stress

the need for consistency in

Government policies and

regulations. Participation of

the Group’s senior managers in

various industry associations

and industry chambers helps

to bring clarity and consistency

to Government policies and

regulations.

The Group is actively looking

at ways to diversify its revenue

composition to ease the

reliance on Government

infrastructure projects and

reduce the impact from any

adverse change in Government

Policies or Regulations.

However, the shortage of

skilled labour remains one

of the key concerns of the

Group, and as a result the

Group has taken proactive

steps to address this shortage

by augmenting its local labour

force by hiring skilled labour

within the region.

The Group employs a people-

centric approach in the

work place and believes that

effective talent management is

a key to sustaining the growth

trajectory of the Group.

The senior management of the

Group regularly engage with all

employees to ensure that both

the expectations of the Group

and the employee can be met

while being mutually beneficial.

The Group recognises the

importance of the role

played by its employees in

the overall operations of the

Group, and in addition to

having an effective grievance

mechanism in place provides

training to all employees to

ensure development of skills.

This in turn allows the Group

to maintain and improve the

quality of services offered,

and continue to attract skilled

individuals.

Health and Safety

Risk Rating

FY 2017/18 Moderate

FY 2016/17 Moderate

FY 2015/16 Low

Financial Exposure

Risk Rating

FY 2017/18 High

FY 2016/17 High

FY 2015/16 High

The Group Treasury Division

together with the Group Chief

Financial Officer is responsible

for managing the financial and

liquidity risks of the Group. The

nature of the Group’s business

requires large amounts of

working capital to finance

projects which exposes the

Group to liquidity risks if

payments are delayed. The

Treasury Division has regular

meetings to monitor the liquidity

and financial requirements of

the Group where interest rate

and exchange rate movements

are discussed and appropriate

strategies adopted to minimise

any adverse impacts.

Human Resources and Talent

Management

Risk Rating

FY 2017/18 High

FY 2016/17 High

FY 2015/16 High

As the construction sector and

the Group continue to grow,

the ability to attract skilled

employees to its workforce

determine the future growth

potential of the Group.

Recognition as a preferred

employer within the industry

and marketplace at large, has

allowed the Group to attract

capable employees to its

workforce.

Maintaining a safe work

place for all employees,

clients, customers and other

stakeholders is a key aspect of

the Groups’ Standard Operating

Procedures. All business units

with significant operations

maintain OSHAS 18001 at a

minimum, while all business

units follow the Group’s internal

Health and Safety Policy.

The Group’s Organisational

Performance Management

Accounting (OPMA) and

Sustainability Divisions

together with the Group Health

and Safety Department track

selected indicators throughout

the year and conduct semi-

annual reviews to ensure

compliance of all relevant

Health and Safety standards.

Environmental Stewardship

Risk Rating

FY 2017/18 Low

FY 2016/17 Low

FY 2015/16 Moderate

While carrying out operations

the Group strives to leave the

least possible impact on the

environment and has a robust

Environmental Policy in place.

Significant operating entities

within the Group follow the

ISO 14001 Environmental

Management System and

maintains the certification. All

business units are required

to obtain Environmental

Protection Licences and

scheduled waste disposal plans,

management licenses, where

applicable, at a minimum to

45


FinancialStatements


ensure compliance with local

laws.

The Group's Health and Safety

and Sustainability Division

tracks selected indicators

throughout the year and

conducts annual internal

assurance audits to ensure

compliance of all relevant

environmental policies of

the Group. The Audit Report

is reviewed by the senior

management team of the

Group where new polices

and recommendations are

discussed and adopted.

Sustainability Champions

attached to each business

unit are responsible for driving

sustainable practices within

their respective units. Each

business unit is encouraged to

maximise resource utilisation

by minimising wastage.

Service Quality

Risk Rating

FY 2017/18 Moderate

FY 2016/17 Moderate

FY 2015/16 Moderate

As a Group focused on

engineering and the

development of infrastructure,

the quality and safety

standards of its work are of vital

importance. The future growth

and sustained profitability of

the Group rely on its reputation

and brand as one of the leading

entities in Sri Lanka. The Group

has strict controls in place to

ensure all work is carried out

in a timely manner and to the

highest standards of quality

and safety, while all business

units maintain the ISO 9001

certification. The Group has

a Sourcing Policy in place to

ensure all material is procured

on time and meets the

minimum quality specifications.

Monthly meetings between

the Project Managers, members

of the Executive Committee

and subsidiary CEO’s take

place to ensure the Group

meets its performance targets

with regards to quality and

timeliness. The Group further

has an Employee Code of

Conduct and Communication

Policy in place to guarantee

representatives of the Group

and external communications

by the Group conform

to standards befitting its

reputation.

46

MTD WALKERS PLC


For Walkers CML, acting in

line with the principles of

sustainability means striving

to achieve long-term business

success on a viable basis. To

make this possible, business

activities must always be in

harmony with society and the

environment. The Group is

moving towards its targets by

making sustainability a firmly

integrated aspect of overall

Group operations. Operating

predominantly in service

based industries, the Group

recognises its success is largely

dependent on the employees

which is why it is paramount

to continually improve the

working conditions and remain

an attractive and interesting

employer. The sustainability

strategy is regularly reviewed

and developed to ensure the

Group can work systematically

with the fields of action that

are also considered important

by the stakeholders to further

enhance the contribution

towards the economy as a

socially responsible corporate

citizen.

In the continuing commitment

towards ensuring sustainability,

the Group has taken numerous

initiatives in setting monitoring

mechanisms to report on

material aspects in terms

of stakeholder concern and

business impact. The following

section illustrates the approach

and methodology adopted in

integrating sustainability within

all its operation.

Sustainability Policy

The Sustainability Policy of the Group has been developed in

accordance with AA1000SES standard by including the results from

the internal materiality assessment and the external independent

stakeholder engagement exercise.

The Sustainability Policy of the Group has been constructed in

line with the United Nations Sustainable Development Goals

and approved by the Executive Committee of the Group which

contains policies on environment, society and economy.

The Policy Implementations and the managing of the Group’s

six capitals are supported through the prevailing Management

Approaches. To ensure consistency, accuracy and completeness

of data, Standard Operating Procedures for each Management

Approach were developed and implemented by the Group during

the current financial year through the support of the Sustainability

Champions and the users who are engaged in the procedures.

Group Sustainability Policy

The Group will strive to constantly improve the manner in

which it conducts business operations to keep in line with the

highest international standards for corporate best practice and

compliance.

The Group is mindful of any environmental impact caused as a

result of its activities and continuously monitors all operations,

while seeking new methods to minimise any adverse effects.

The Group is dedicated to being transparent and open with respect

to all business activities and is working towards establishing global

best practices in partnership with all stakeholders.

The Group places significant emphasis on maintaining a safe

and secure work place for its employees and providing a non-

discriminatory environment that offers equal opportunity for all.

The Group aims to work with communities in areas of operations

and establish lasting relationships to help improve their standard

of living, while maintaining its social license to operate.

As part of the Group’s commitment towards incorporating

sustainability within all its activities, a robust Sustainability

Management Framework has been established to ensure the effective

integration of sustainability in the formulation of business strategy.

In the identification and managing of risks emanating from the

stakeholder groups, the Sustainability Management Framework

has become a pivotal instrument in the Group’s overall Risk

Management Framework together with the Enterprise Risk

Management process.

The framework provides clear

and systematic instructions

on how general principles of

sustainability can be converted

into everyday corporate

practices to aid the business in

becoming more sustainable.

The Framework which is

supported by the Senior

Management consists of

an organisational structure

comprising of a team of

Sustainability Champions

representing each business

unit, an internally developed

spreadsheet platform for

gathering data, a process

for reporting the Group’s

sustainability performance every

quarter, creating employee

awareness on sustainability,

and internal and external

sustainability assurance.

The Sustainability Management

Framework consists of

benchmarks and targets that

have been established for

the sustainability indicators

identified. The Group reviews

its performance against these

targets regularly to gauge

its performance in achieving

the sustainability goals with

revisions to the targets being

carried out periodically.

The information obtained

through the sustainability

management process assists

the Group and its business

units in the identification and

management of potential

risks and in measuring the

sustainability performance.

47

To ensure relevance in terms

of meeting the changing

operational requirements of the

business units within the Group,

the Sustainability Management

Framework is subject to

regular periodical reviews. The

existing management systems

for quality, environment,

health and safety along with

the social responsibility, risk

management, internal audit and

compliance processes helps

to fortify the effectiveness of

the framework. The Group’s

business units having extensive

operations have been awarded

the certifications of ISO 14001

(Environmental Management

System), OHSAS 18001

(Occupational Health & Safety

Management System), and ISO

9001 (Quality Management

System), the remaining

business units have adopted

and implemented the Group’s

policies on quality, environment

and health and safety with

the objective of gaining the

certifications in the coming

years.

Sustainability Organisational

Structure

The Sustainability and

Organisational Performance

Management Accounting

(OPMA) Division, with the

direction from the Executive

Deputy Chairman formulates

the overall Group sustainability

strategy. The Sustainability

Management Framework

guides the Group companies

in setting their sustainability

strategies and initiatives. The

sustainability division is also

responsible for recognising

significant stakeholders and

material issues, reviewing and

monitoring of sustainability

practices as well as carrying

out sustainability assurance.

Through systematic Group-

wide awareness campaigns,

risks of the Group. The Group

identified opportunities such

as global rapid urbanisation,

emerging economies exerting

more influence on the global

economy, construction

boom in Asia, increasing local

purchases through sustainable

sourcing, and enhancing

local infrastructure through

community and Government

based initiatives.

The ‘Precautionary Principle’

governs the Group’s operational

decisions in order to take

preventative action in the

face of uncertainty to prevent

potential risk/impacts to our

stakeholders and environment.

The Group gives precedence to

the prevention of environment

degradation and pollution,

climate change as well as any

impacts on local communities

around the areas we operate in.

These topics are identified as

key macro risks and impacts are

tracked through sustainability

indicators. The Group’s

operations depend on energy

and water resources and as a

result conservation is seen as

an opportunity for sustainable

growth. Similarly, the Group

identifies health and safety of

their employees as a vital aspect

and a key risk that needs to be

controlled and mitigated in

order to provide a safe, secure

workplace for our employees

to realise their potential, while

protecting their rights.

A comprehensive description

on the Group’s risk and

mitigation actions are stated in

the Enterprise Risk Management

section of this report.

Defining the Sustainability

Content of the Report

The section ‘Significant

Stakeholders and Topic

Boundary’ establishes the

the Division also endeavours

to infuse a sustainability culture.

The organisational structure

include dedicated Sustainability

Champions assigned to each

subsidiary to ensure execution

of the sustainability initiatives

and to regularly monitor the

subsidiary’s sustainability

performance through ongoing

collection and reporting

of sustainability data. The

materiality assessment in the

sustainability reporting for each

subsidiary is carried out based

on a process of non-financial

performance management

which integrates the

sustainability strategies with

business strategies to achieve

triple bottom line results.

Risk and Opportunity

Identification

The Group’s risk management

process is an integral part of

its strategic and operational

activities, which seeks to

effectively identify, control and

mitigate a range of structural,

operational, financial, and

strategic risks that may prevent

the organisation from meeting

its objectives. The process

simultaneously identifies

opportunities for business

success and assesses the value

chain for any potential risks

originating from it. A triple

bottom line perspective is used

to identify the above risks and

opportunities.

The Group identified global

economic trends such as the

weakened global economy

and the increase of public

debt acting as a constraint

on fiscal and policy options.

Local economic trends such as

political instability, and possible

volatility in interest and

foreign exchange rates were

identified as key economic

significant internal and external

stakeholders based on their

influence on the Group’s

operations and how all parties

are impacted by the actions

of the other. Details of the

frequency of engagement

of these stakeholders, and of

the independent third party

stakeholder engagement that

was carried out to establish

stakeholder concerns are

contained in the ‘Stakeholder

Engagement’ section. The

context in which the Group has

established its sustainability

drive are covered in the

Sustainability Integration

section and the Sustainability

Management Framework

sections of this report.

The outcome of the regular

stakeholder engagements,

the independent external

stakeholder engagement

and daily media monitoring

reports have been considered

in identifying the material

sustainability topics pertaining

to the Group, which are

highlighted in the ‘Key

Sustainability Concerns’

section. These concerns,

which are prioritised based

on importance to external

and internal stakeholders

are illustrated in the section

‘Mapping of Material Topics’.

The sustainability indicators

identified for reporting

are based on the material

topics that were identified

to be of ‘High Importance’

to both external and internal

stakeholders. This was done

by considering the results

of the independent external

stakeholder engagement as

well as the internal stakeholder

engagement, the results of

which were mapped using

the five part materiality test

as specified in AccountAbility


FinancialStatements


48

MTD WALKERS PLC


UK AA1000AS standard. The

Management Approach

adopted in ensuring the Group

performance in relation to the

identified material sustainability

topics are summarised in

the section ’Management of

Material Topics’ and also hosted

online on the Group’s website

at www.walkerscml.com/

sustainability.

Significant Stakeholders and

Topic Boundary

The Group’s operations in

multiple industries of the

economy have resulted in a

large and diverse range of

stakeholders interacting with

the Group on a day-to-day basis.

Functioning with a large number

of stakeholder groups translates

to numerous and varying

expectations from them, and

The sustainability content in this

Annual Report was gathered on

a quarterly basis through the

introduction of company specific

data gathering templates duly

completed by site level personal

and the individual company

sustainability champions. Each

business unit report on all

material topics that have been

identified by the Group, ensuring

the completeness of information.

Significant Stakeholders of the Group

Material Topics Internal Stakeholders External Stakeholders

Economic Performance All Group Companies, Employees Investors, Community, Peers, Customers,

Suppliers

Market Presence Civil Engineering Sector, Heavy Engineering Sector,

Employees

Investors, Regulatory Bodies

Procurement Practices All Sectors Investors, Suppliers, Community

Materials All Sectors Investors, Suppliers

Energy and Emissions All Sectors Investors, Customers, Regulatory Bodies,

Water, Effluents and Waste Civil Engineering Sector Regulatory Bodies, Media, Community

Environmental Compliance All Sectors Regulatory Bodies, Media, Community,

Pressure Groups

Employment, Training,

Occupational Health and Safety

All Sectors, Employees Society, Regulatory Bodies, Media

Prevention of Child Labour,

Prevention of Forced and

Compulsory Labour

All Sectors, Employees Regulatory Authorities, Media,

Customers

Local Communities All Sectors Investors, Community

Anti-Corruption and Regulatory

Compliance

All Sectors, Employees Investors, Regulatory Authorities, Media,

Customers

Disaster Preparedness,

Emergency Planning &

Response

Civil Engineering Sector (Special Projects Company),

Power Generation Sector (Northern Power Company),

All Other Sectors, Employees,

Investors, Community

Customer Health and Safety,

Product and Service Labelling

Civil Engineering Sector (CML – MTD Construction),

Real Estate Sector (Walkers CML Properties)

Customers

Access Power Generation Sector (Northern Power Company)

Pressure Groups

Investors, Customers

Materials Stewardship Civil Engineering Sector (Special Projects Company) Investors

while the Group is conscious of

its diverse range of stakeholders

it considers only the stakeholders

that have a significant influence

over the Group, or who would

be significantly impacted by

the Group’s operations. These

significant stakeholder groups

are illustrated on the table titled

‘Significant Stakeholders of the

Group’.

49

Stakeholder Engagement

Stakeholder engagement

remains a key aspect in the

Group’s sustainability strategy.

The Group’s approach to

managing identified significant

stakeholders revolves around

periodically engaging with

these stakeholder groups to

understand their perceptions

on significant operational

impacts and as a result identify

and responsiveness to, material

issues.

The AA1000SES standard

is used to verify materiality,

which defines the parameters

for reporting on inclusivity,

materiality and responsiveness.

The Group will carry out

a detailed independent

stakeholder engagement study

in the future to maintain its

material sustainability topics

that impact the Group. These

engagements include formal

and informal consultations,

negotiations, communications,

mandatory and voluntary

disclosures, certifications and

accreditations. During the

year under review the Group

proactively engaged with a

diverse range of stakeholders

to assess the Group’s focus on,


FinancialStatements


Significant Stakeholders of the Group

Customers – B2C, B2B, B2G

Expectations: On-time delivery of tailor-made and premium quality products and services, in an environmentally and socially

responsible manner.

Frequency of Engagement Method of Engagement

Annual/Bi-annual Road shows, conferences, site visits, discussion forums

Regular Regular progress review meetings, site visits

Ongoing Corporate communication (printed reports), direct dialogue

(telephone, SMS, e-mail), corporate website, and other business

development activities

Employees – Senior Management, Executives, Workers, Casual Workers

Expectations – Providing remuneration, benefits and equal opportunity in a safe and enabling workplace with a culture that promotes

meritocracy and encourages work-life balance.


Annual Group-wide annual cricket encounter, performance reviews

Bi-annual Performance reviews, skip level meetings

Regular Internal memos, employee newsletter, corporate events

Ongoing Training and development, open door policy, social responsibility

projects

Suppliers and Business Partners

Expectations: Long-term relationships through adherence to and renewal of agreements and contracts, settlement and knowledge

sharing within the industry sector


Annual Supplier evaluations, contract renewal mechanism, conferences

Regular One-on-one meetings, market reports

Ongoing Corporate website, calls, emails and circulars

Community, Community Leaders, Society

Expectations – Livelihood development and social inclusion through direct and indirect employment and local sourcing, with minimal

impact to shared resources


One-off One-off meetings, forums or workshops prior to project

commencement

Monthly Once project is commenced, monthly meetings, workshops and

forums

Ongoing Social responsibility programmes/projects

Investors and Lenders

Expectations - Economic value generation


Annual Annual reports, disclosures and reviews, investor road shows

Ongoing Phone calls, e-mail, written communication, websites, one-on-one

meetings

commitment to increasing

stakeholder value.

The Annual Report is the

Group’s primary method of

communicating its responses

to the material issues identified

through the stakeholder

engagement process in relation

to core business operations, of

the Group.

50

MTD WALKERS PLC


Key Sustainability Concerns

The stakeholder engagement

carried out by the Group

during the last financial year

highlighted a number of

sustainability strengths and

weaknesses.

During the last financial year

the Group identified their

weaknesses; lack of staff

engagement, employee

grievance handling, health

and safety concerns, energy

consumption, skilled labour

shortage, and shortage of

certain key construction

materials as key concerns for

the Group.

the Executive Committee for

advice and action. The Group’s

performance in relation to

these sustainability concerns

is reported through the

tracking of key sustainability

performance indicators, which

is featured in this Report and

would also be featured in

subsequent years.

Identification of

Sustainability Topics

The key sustainability concerns

of significant stakeholders that

were identified have been

prioritised and selected by the

Group based on the materiality

in terms of their impact to

The strengths of the Group

highlighted during the

stakeholder engagement

exercise included the Group’s

emphasis on employee welfare,

social responsibility initiatives,

efforts to create a positive

organisational culture and

professionalism displayed

when dealing with regulatory

bodies. The Group was

further perceived as a stable

employer with a high degree

of allegiance to the Group

by senior and experienced

employees.

The identified sustainability

strengths and concerns were

presented to the members of

significant internal and external

stakeholder groups.

Significant stakeholder groups

include internal stakeholders such

as business units and employees,

and external stakeholders such

as shareholders, investors,

lenders, customers, suppliers,

business partners, Government

and regulatory authorities, peers,

pressure groups, media and the

community.

This identification and

prioritisation of material topics

for reporting purposes is

illustrated in the diagram in

the ‘Mapping of Sustainability

Topics’ section of this report.

Legal and Regulatory Bodies

Expectations – Statutory compliance when carrying out operations


Annual Senior management are members of chambers and industry

associations and meet at least on a quarterly or bi-annual basis.

Ongoing Periodic discussions through meetings and other correspondence

Government Institutions and Departments

Expectations – Stimulating the local economy through investments, employment generations and settlements of taxes.


Annual Senior management are members of chambers and industry

associations and meet at least on a quarterly or bi-annual basis

Ongoing Meetings, business forums, newsletters, circulars, presentations

and briefings, advisory meetings of industry associates

Society, Media and Pressure Groups

Expectations – Being a responsible corporate citizen with sound governance practices which adhere to applicable laws and regulations

and with minimal impact to society and environment in which it operates.


Ongoing Website, press releases, media briefings, correspondence

and meetings, disclosures, media coverage, certification and

accreditation

Industry Peers and Competition

Expectations – Ensuring that anti-competitive behaviour is discouraged and actively participating in industry organisations


Quarterly Quarterly meetings at chambers and industry associations

Ongoing Participation at trade associations, conferences and discussion

forums

51


FinancialStatements


Mapping of Sustainability Topic Based on Importance to Internal and External Stakeholders

Economic Performance

Market Presence

Indirect Economic Impacts

Procurement Practices

Availability & Reliability

Demand Side Management

Research and Development

Plant Decommissioning

System Efficiency

Materials

Energy

Water

Biodiversity

Emissions

Effluents and Waste

Products and Services

Compliance - Environment

TransportSupplier Environmental Assessment

Land Degradation, Contamination & Remediation Employment

Labour/Management Relations


Training and Education

Diversity and Equal Opportunity

Equal Remuneration for Women and Men

Supplier Assessment for Labour Practices

Investment

Non- discrimination

Freedom of Association and Collective Bargaining

Child Labour

Forced or Compulsory Labour

Security Practices

Indigenous Rights

Assessment

Supplier Human Rights Assessment

Human Rights Grievance Mechanisms

Anti Corruption

Anti Competitive Behaviour

Regulatory Compliance

Local Communities

Public Policy

Supplier Assessment for Impacts on Society

Disaster/Emergency Preparedness & Response

Artisanal and Small Scale Mining

Resettlement

Low

High

External Stakeholder

Hig

h

Intern

al Stakeho

lder

Low

Closure Planning

Customer Health and Safety

Product and Service Labelling

Marketing Communications & Provision of Information

Customer Privacy

Product Compliance

Access Material Stewardship

Economy Environment Workforce Human Rights Society Products Responsibility

Prioritised material topics are colour-coded and categorised according to Group Management Approaches accordingly:

Category Material Topics Disclosure of Management Approach

Management of Capitals

Economy

Economic Performance

Economic PerformanceManagement of Financial and Manufactured Capitals

Market Presence

Procurement Practices

Environment

Materials

Environmental Responsibility

Management of Natural Capital

Energy and Emissions

Water, Effluents and Waste

Environmental Compliance

Workforce Employment, Training, Occupational Health and Safety Labour Practices Management of Human and Intellectual CapitalHuman Rights

Prevention of Child Labour, Prevention of Forced and Compulsory Labour

Human Rights

Society

Local Communities

Social Responsibility Management of Social and Relationship Capital

Anti-Corruption and Regulatory Compliance

Disaster Preparedness, Emergency Planning and Response

Product Responsibility

Customer Health & Safety, Product and Service Labelling and Product Compliance


52

MTD WALKERS PLC


Management of Material

Topics

The management of material

topics of the Group is carried

out through a number of

strategies and approaches. The

Management Approaches that

have been put in place for each

material topic is summarised

and stated below.

A full Disclosure of our

Management Approaches and

the management of the Groups

six capitals can be accessed via

the Group website on www.

walkerscml.com/sustainability.

Review of Capital

Management: Group’s

Disclosures of Management

Approach

Management of Financial and

Manufactured Capital

Economy

Within the Group’s Triple

Bottom Line sustainability

strategy, paramount

importance is placed on

the economic pillar which is

supported by the continuing

commitment of the Group to

deliver economic value to all its

stakeholders.

All business units have adopted

the Group Economic Policy

which provides direction

and guidance on sound

financial management, robust

internal controls and the risk

management process.

To foster a performance and

results driven culture across

the Group, a triple bottom line


which helps to ensure minimal

impact to the environment and

adherence to the applicable

local environmental laws and

regulations

Environmental Policy of the

Group is supplemented by the

policies and management on

other environmental topics

such as water consumption,

energy use, carbon emissions,

waste generation and effluent

discharge which is subject

to periodic reviews by the

Executive Committee of the

Group to ensure minimal

environmental impact from

operations.

The administration and

implementation of these

policies are carried out by the

Group Sustainability division

through Sector Heads, CEOs/

Managers and Sustainability

Champions at each of the

Group’s business units.

The Group continues to steer

all business units to its goal of

improving energy efficiency

and lowering water usage

through regular tracking of

units of energy, water, emission,

wastage generated and

compliance to environmental

laws.

Management of Human

Capital

Labour Practices and Decent

Work

As an organisation that

predominantly engages in the

service industry, the Group

understands the value of

being people-centric, which

system is in development to

implement a performance-

centric compensation scheme.

The Procurement and Sourcing

Policy of the Group has been

intricately designed to support

local organisations and to

create more sustainable local

economies.

In partnership with the

Government of Sri Lanka, the

Group actively engages in the

development of the country

by often taking up projects on

infrastructure development.

This enables the Group to

contribute in the development

of the local communities by

way of creating employment

both directly and indirectly

and gain acceptance by local

communities to operate.

Management of Natural

Capital

Environment

The Walkers CML Group

places paramount importance

on the legacy it leaves for

future generations to come

through the protection

and conservation of the

environment, and regularly

takes action to prevent or

minimise the harm caused to

the environment by business

operations with the aid of the

environmental management

systems developed in

compliance with ISO 14001.

Most business units within

the Group have established

their own Environmental

Management Systems in

line with ISO 14001 standard

is imperative to maintain a

competitive advantage. Under

this principle, the Group creates

synergies by recruiting and

efficiently managing local

talent.

• The Group deeply values

the component of Human

Capital and considers

it to drive earnings and

long term sustainability

as an organisation that

primarily operates in

the service industry.

The Group therefore

invests significantly in the

sourcing of new talent and

developing the skills and

capabilities of the existing

staff and right deployment

of resources across business

units and functions.

• The applicable local labour

laws and regulations

which are based on ILO

conventions are all being

conformed to across the

Group and all its business

units.

• The Group has in place

comprehensive human

resources related policies

encompassing the areas

of recruitment, work hours

and leave, performance

evaluation, labour relations,

training and development,

equal opportunity and

health and safety of

the workforce along

with Human Resources

processes that are regularly

benchmarked and updated.

• The Group makes every

effort to ensure that

employee rights are

53


FinancialStatements


safeguarded and a non-

discriminatory work

environment is maintained

by avoiding and eradicating

any form of discrimination

on the grounds of gender,

race, nationality, age, social

origin, disability, religion,

political opinion or any

other basis. Freedom of

association is given to all

employees to voluntarily

join unions and collectively

bargain to promote a

peaceful, inclusive and

democratic worker

participation and dispute

resolution.

• Health and Safety of the

workforce is at the front of

all business decisions and

activities of the Group, being

an organisation operating

primarily in occupationally

high risk industries. Rigorous

Health and Safety policies

have been established

across the Group while most

business units have received

the OHSAS 18001 Health


System certification.

Human Rights

Businesses flourish in societies

where human rights are

respected and protected.

The Walkers CML Group

recognises that this is a topic of

importance to our stakeholders,

making it not only a moral case,

but also a business case for us

to uphold human rights across

our operations.

• The success of the Group

is driven by its people,

therefore it is committed

to protecting the human

rights of its employees

and ensures that they are

safeguarded at all times. The

Group further extends this

to include the stakeholders

involved in all business

system and human capital

developments are carried

out together with other

qualitative and non-

qualitative data to further

enhance the brand value.

• Following the organisation-

wide restructure, the Group

and its business units were

able to reap the many

synergistic benefits which

were augmented through

the vast experience already

available within that aided

to streamline the business

operations.

• Strategic partnerships

continue to play a crucial

role as part of the Group’s

overall growth strategy

where business units have

entered into agreements

with renowned global

brands that have helped in

developing the Intellectual

Capital to international

standards while enhancing

the Financial Capital.

Management of Social and

Relationship Capital

Society

In the Group’s contribution to

the sustainable development of

the local communities around

which the business activities

takes place, operating within

the construction industry has

enabled the Group to facilitate

the infrastructure development

of the country.

• In keeping with the

Group’s values of uplifting

the communities

and safeguarding the

environment, all business

units continually strive to

minimise any negative

impacts resulting from

operations by ways of

adhering to all relevant

social regulations.

operations as it considers

it to be one of the duties

of being a good corporate

citizen.

• As part of the commitment

of the Group in complying

with the labour principles

and good corporate

citizenship, policies in

the areas of child labour,

forced labour, freedom

of association and

anti-corruption have

been developed and

administered throughout

the Group.

• All policies above on the

material topics have been

formulated in line and with

adherence to local labour

laws and regulations.

• The Group’s sustainability

performance evaluation

of relevant GRI indicators

enables to track incidents of

child labour, forced labour

and other related human

rights violations.

Management of Intellectual

Capital

The Intellectual Capital is one

of the core elements that has

aided the Group in achieving

sustainable triple bottom line

results over the years. The

Group has managed to harness

the value of the Intellectual

Capital by gathering,

retaining and disseminating

the tacit knowledge it has

gained over the 160 years in

operations through knowledge

management approaches

which consequently improved

the overall efficiency of the

Group.

• The brand value of

the Group is assessed

regularly by engaging with

relevant stakeholders and

organisation-wide process

improvements, innovations,

• The Group’s social

performance is monitored

and tracked by the Group

sustainability performance

management system.

• The Group further seeks

to establish a ‘Foundation’

to drive the Group’s social

responsibility initiatives.

Initiatives of the Foundation

will be aligned to the

United Nations Sustainable

Development Goals and

structured based on a social

impact assessment, while

they will be funded by

contributions from profits of

the Group companies and

supported by employee

volunteerism.

• The Group is also

committed to business

integrity and openness

and carries out its business

in an ethical manner,

thereby protecting its brand

reputation. The Group has

in place a policy governing

anti-corruption, which is

based on the principles

of compliance and good

corporate citizenship.

• As part of the risk

management process which

consists of setting up and

monitoring of preventive

and mitigation action plans,

all business units analyse

and assess the risk of non-

compliance and corruption

related matters through a

framework.


Providing a superior quality

product or service that assures

stakeholder satisfaction is of

paramount importance to

the Group. For this reason, the

Group makes every effort to

ensure that highest quality

standards are integrated

throughout the activities of

all business units adhering

54

MTD WALKERS PLC


to relevant statutory and

regulatory requirements.

• The Group’s Quality Policy

revolves around emulating

on the above principles

to which all business units

comply and which in

turn helps to ensure that

customers are serviced

with the highest quality

standards.

• The certification and

implementation of the ISO

9001 Quality Management

System complemented

by the ISO 14001


System and ISO 18001 OHS

certification across most

business units have been

instrumental in facilitating

the Group’s commitment

towards ensuring quality,

safety and efficiency

throughout its products,

services and systems

together with instilling a

culture dedicated to quality.

• The development and

marketing of the Group’s

products and services

to meet customer

requirements and highest

quality standards while

ensuring customer safety

is enabled through the

careful deployment of the

aforementioned policies and

management approaches.

Supply Chain

The Group recognises the

significance of supply chain

as an integral component in

determining the continuity of

In order to ensure consistency

of processes and data

accuracy in relation to

sustainability, all business

units and their permanent

sites undertake internal and

external assurances. Standards

Operating Procedures have

been developed to streamline

the processes mentioned

above and is expected to be

rolled-out across all business

units in the coming years to

further strengthen the Group’s

overall sustainability drive. To

reinforce the administration

of the Standard Operating

Procedures, a robust internal

assurance process to review

compliance will be formulated.

The sustainability performance

of the Group along with

management approach is

subject to annual reviews

against the internal

benchmarks established,

following the internal

and external stakeholder

engagement reviews.

the operations and its overall

sustainability.

The Group seeks to continually

develop and incorporate

responsible business practices

into their dealings with supply

chain partners and reduce

the potential supply chain

risks in relation to labour

practices, health and safety,

environmental practices and

other human rights topics.

• In driving sustainability

throughout the supply

chain, the Group actively

engages with its suppliers

by having constant

dialog to confirm that

workers are not exploited,

provided with safe working

conditions, and that all

operations are executed in

an environment-friendly

approach.

• To facilitate desirable

behavioural changes along

the supply chain, the Group

seeks to provide regular

guidance to its suppliers

in carrying out operations

in an environmentally and

socially responsible manner

and recognising their efforts

accordingly.

• Supplier audits are carried

out annually to assess

the significant suppliers

in areas such as labour

practices, human rights

and environment impacts

through an internally

developed supplier

checklist.

Integrated Group Performance Review 56

Civil Engineering Sector 66

Heavy Engineering Sector 79

Marine Engineering Sector 84

Power Generation 87

Real Estate Sector 90

Trading and Other Sector 94

56

MTD WALKERS PLC


MACRO-ECONOMIC

ENVIRONMENT

The Global Economy

Global economic activity is

picking up with a long-awaited

cyclical recovery in investment,

manufacturing and trade.

World economic growth is

expected to rise from 3.1

percent in 2016 to 3.5 percent

in 2017 and 3.6 percent in

2018 as estimated by the IMF.

Stronger activity, expectations

of more robust global demand,

reduced deflationary pressures

and optimistic financial markets

are all upside developments.

Overall, the need for credible

strategies in advanced

economies and emerging

markets and developing ones

to tackle a number of common

challenges in an integrated

global economy exists.

Sri Lankan Economy

According to the Central Bank

of Sri Lanka, the Sri Lankan

economy grew by 3.3 percent

in 2017, 4.5 percent in 2016,

below the emerging market

and developing economies

average of 4.9 percent. The

bad weather during the year

saw the agricultural sector of

the economy contract, albeit

growth is projected to rebound

in 2018 according to the World

Bank from a low base and

continues to be around 4.5

percent in the medium term,

driven by private consumption

and investment.

Inflation

Inflation in the economy

increased averaging at 6.1

rebound in the year 2018 as

the infrastructure investment

in the country is gradually

improving with key projects

kicked off during the second

and third quarter of 2017.

Furthermore, the country’s

construction industry has also

seen acceleration since 2011

due to the addition of new

airports, harbours, expressways

and numerous real estate

development projects.

OPERATIONAL REVIEW

During the financial year

2017/18, the Group posted a

revenue of LKR 16.3 billion, an

upsurge of 21.1 percent Year

on Year.

The Civil Engineering Sector of

the Group, grew by 17.5 percent

during the year to report a

revenue of LKR 11.9 billion.

The Group’s Property

Development, Marine

Engineering, Heavy Engineering,

Power Generation and Trading

businesses grew by 32.2 percent

to LKR 4.4 billion during the year

to account for 26.8 percent of

the Group’s revenue.

The Group’s Civil Engineering

Sector’s main focus during

the period under review was

to complete their small scale

projects in order to utilise

their existing resources for

their current and upcoming

larger scale projects; Central

Expressway project, the

irrigation project in Upper

Elahera, water project in

Wilgamuwa, rehabilitation /

improvement and maintenance

percent as compared to the

average of 5.0 percent in the

previous year 2017. During

the financial year 2017/18, the

Government tightened their

monetary and fiscal policies in

order to control the inflation

rate in the country.

Interest Rates

The average weekly weighted

lending rate increased during

the period under review year

ranging from 13.29 to 14.03

percent and the weekly AWPLR

increased to 11.55 percent from

11.32 percent. Monetary policy

tightening in the financial year

2017 as a result of high private

sector credit growth, led to the

increase in AWPLR, however this

is broadly stable now due to the

tight control over the inflation

rate in Sri Lanka during the latter

part of the year.

Exchange Rate

The Sri Lankan Rupee exchange

rate against the USD remained

relatively stable in 2017 under a

more market based exchange

rate policy implemented by

the Central Bank of Sri Lanka.

The depreciation pressure on

the Rupee further eased from

mid-2017 with the receipt of

foreign proceeds, particularly

disbursements of two tranches

of the IMF-EFF programme,

which contributed towards

improved investor confidence.

The Construction Industry

The Construction industry

grew by 4.4 percent when

compared to the previous year

of 8.3 percent growth in 2016.

The Construction Industry will

of rural roads in Badulla and

Monaragala District, building

projects and the piling work

for Central Expressway- MAGA

Engineering, ICC, CML- MTD

Construction, Renuka Hotel,

Harbour Village, etc.

In line with the Group’s

strategy to expand regionally,

the Group established a

company named Walkers

CML International (Private)

Limited which is currently

operating in the Republic of

Maldives in partnership with

a reputed property developer

in Maldives named DAMAS

Company (Private) Limited, for

the construction of a 10 storey

luxury residential apartment

complex consisting of 95

apartments, located in one

of Hulhumale’s most tranquil

neighborhoods overlooking

the scenic yacht Marina.

The Group’s Property

Development Sector has

grown significantly during

the year under review which

includes a large portfolio of

projects located in Colombo

and Galle. The Group's latest

project 'Havelock Heights'

located in Colombo 05, a luxury

apartment complex consisting

of 380 units created a profusion

of brand awareness for the

sector. The Real Estate Sector

will continue to concentrate its

developments in the middle

income segment where it

foresees the greatest potential

for growth.

57

The development of the

Group’s first shipyard has

concluded and will commence

full scale operations in

the upcoming financial

year 2018/19. Amidst the

development, limited afloat

ship repair and ship building

work were carried out in order

to gain experience.

The Group's Trading Sector

continued to increase their

machinery sales in order to

capture and create awareness

in the trading industry and

prioritise on strengthening

their after sales services.

FINANCIAL CAPITAL

Revenue

The revenue of the Group

increased by 21.1 percent

Year on Year to LKR 16.3 billion

during this financial year [FY

2016/17: LKR 13.5 billion].

The Civil Engineering Sector

contributed 73.2 percent to the

Group revenue, Real Estate and

Heavy Engineering contributed

10.7 percent and 5.2 percent

respectively. The balance

sectors comprising of Marine

Engineering and Trading and

Other contributed 10.9 percent

to the total revenue of the

Group.

The Civil Engineering, Real

Estate, Marine Engineering

and Trading and Other Sectors

revenue increased by 17.5

percent, 44.0 percent, 181.7

percent and 45.7 percent

respectively during the period

under review, whilst Heavy

Engineering revenue plunged

by 0.3 percent Year on Year.

Engineering Sector suffered

the most as the increase in

costs could not be passed onto

customers.

Operating Profit (EBIT)


review, the Group recorded

an operating loss of LKR 960

million, a decline of 149.5

percent Year on Year [FY

2016/17: 1,938 million]. The

principal contributors to

the drop in the Group’s EBIT

was the Civil Engineering

Sector, Heavy Engineering

and Power Generation Sector.

The Group's selling, general

and administrative expenses

amounted to LKR 2.0 billion

during the year, an increase of

35.8 percent Year on Year [FY

2016/17: LKR 1.5 billion].

Finance Income

The Group reported a finance

income of LKR 285 million

during the year, increased by

61.7 percent Year on Year [FY

2016/17: LKR 180 million]. The

finance income comprises of

an interest income of LKR 219

million from fixed deposits and

saving deposits. Further details

on finance income can be found

in Note 29 of the Financial

Statements on page 152.

Finance Cost

The Group's finance costs

amounted to LKR 2.8 billion [FY

2016/17:1.8 billion]. Increase in

borrowing rates and increase

in borrowings contributed

towards this growth. The

interest expenses on loans and

liabilities increased to LKR 1,449

million from LKR 919 million,

while finance charges on lease

liabilities increased to LKR 83

million from LKR 29 million.

One of the primary reasons for

the Group’s gearing ratio to

rise was the hybrid financing

Revenue

2015/16

11,964

13,466

16.309

2017/182016/17

Rs.

mill

ion

0

4,000

8,000

12,000

16,000

20,000

Revenue Composition

Civil

Engineering Services

Marine Engineering Sector

Real Estate Sector

Trade and Other

73.2%

5.2%

10.9%

10.7%

9.0%

Gross Profit Margin

The Group recorded a Gross

Profit of LKR 358 million a drop

of 86.3 percent in comparison

to the last financial year. This

drop was primarily contributed

by the Civil Engineering and

the Heavy Engineering Sectors

in comparison to the previous

financial year. Low levels of

investment in infrastructure over

the past few years compelled

the Group to take on smaller

projects at thinner margins to

engage its existing resources.

The prevailing shortage of skilled

labour resulted in the Group not

being able to achieve its usual

productivity levels, resulting in

project delays and increased

project and finance costs.

Further to the above, some of

the large scale projects were

on lump sum basis; when

the essential raw materials

increased significantly, the Civil

projects, however these

projects will be completed in

the upcoming financial year

2018/19.

Taxation


2017/18, the Group tax expense

increased by 45.4 percent to

LKR 126 million [FY 2016/17:

LKR 86.3 million]. For further

details on the Group’s tax

impact refer to Note 31 of the

Financial Statements on page

153.

Profit after Tax

The Group recorded a loss of

LKR 3,560 million for the year.

[FY 2016/17: profit of LKR 214

million]. The Civil Engineering,

Heavy Engineering, Power

Generation, Trading and Other

and Marine Engineering Sectors

recorded a net loss of LKR 2,722

million, LKR 70 million, LKR 181

million, LKR 1,059 million and

LKR 32 million respectively,

while the Real Estate Sector

recorded a profit of LKR 505

million.

Return on Assets

For the financial year under

review, the Return on Assets

(ROA) of the Group was (7.7)

percent [FY 2016/17: 0.6

percent]. The drop in ROA

was mainly due to the Civil

Engineering and Trading and

other Sector operating loss.

Economic Value Statement

The Group adopts the Economic

Value Statement to evaluate the

Groups’ economic sustainability,

and aids as an observation for

management performance. In

the financial year 2017/18, the

economic value generated by

the Group improved by 19.7

percent Year on Year. This was

due to the revenue growth of

21.1 percent.


FinancialStatements


58

MTD WALKERS PLC


As presented in the table

titled ‘Economic Value Added

Statement’ the Group dispersed

LKR 3,164 million to the staff

as employee wages, which

included investments made

in terms of staff training

and developing skills of its

employees in order to enhance

the Group’s Human Capital.

In addition to the above,

the Group disbursed LKR

Financial Position

For the period under review,

the Total Assets of the Group

improved to LKR 46.0 billion [FY

2016/17: LKR 36.8 billion]. This

increase is mostly attributed

to the trade receivables of LKR

23.2 billion and the acquisition

and re-evaluation of properties,

plant and equipment

amounting to LKR 6.8 billion.

Cash flow

The cash generated from the

Group's operations before

working capital changes, were

at LKR 0.3 billion during the year

under review, compared with

LKR 2.6 billion in the previous

financial year. Net cash generated

from operations caused a

negative cash outflow due to

the adverse impact arising from

working capital changes. Net

cash used in investment activities

amounted to LKR (2,410) million

during the financial year 2017/18


financial year [FY 2016/17: LKR

(816) million]. This includes a

total of LKR 2.2 billion investment

made in acquisition of property,

plant and equipment, as well

as the investment in fixed

deposits amounting to LKR 590

million. Net cash generated from

financing activities was at LKR

6.7 billion as to LKR 4.7 billion


financial year. The cash generated

from financing activities

was disbursed to finance,

the aforesaid investments in

property, plant and equipment.

Capital Structure

The Group’s Total Assets of

LKR 46.0 billion are supported

through shareholder’s funds

of 9.8 percent, non-controlling

interest of 1.2 percent and

13,351 million on goods

and services during the FY

2017/18, thereby contributing

towards the stimulation of the

local economy. However the

Economic value retained by the

Group, reduced as the Group

recorded a net loss of LKR 3.6

billion resulting the economic

value retained to contract to

LKR (2.1) billion during the

period under review.

total liabilities of 89.0 percent.


2017/18 the non-current

liabilities decreased by 15.4

percent and current liabilities

grew by 71.1 percent as a

result of funding the negative

working capital. The gearing

ratio of the Group was at 85.3

percent during the year under

review. As explained earlier,

one of the main reasons for this

increase is due to the hybrid

financing structure of the

three UDA building projects

which is to be completed in


2018/19.

Credit Rating

The Group obtained a credit

rating of BB+ in September

2017 from ICRA ratings for its

Debenture Issue of LKR 3.0

billion.

Ten Year Summary

The summary of the financial

performance for the past

decade of the Group can be

found in the section ‘Decade at

a Glance’.

MANUFACTURED CAPITAL

The Group’s primary sectors of

operation, Civil Engineering,

Marine Engineering, Heavy

Engineering, Power Generation

and Real Estate are capital

intensive. As a result the Group

continually had to strengthen

their Manufactured Capital

during the financial year

2017/18 whilst engaging in a

strategy of vertical integrations

in some of its operations.

The Group’s key Manufactured

Capital consists of heavy

machinery, a 30MW power

plant in Chunnakkam, Jaffna,

Economic Value Added Statement

FY 2018 FY 2017

LKR 000 LKR 000

Direct Economic Value Generated 17,289,655 14,444,477

Revenue 16,308,501 13,465,970

Finance income 290,869 180,106

Share of results of associates - -

Profit on sale of assets and other income 322,202 271,052

Valuation gain on investment property 368,083 527,350

Economic Value Distributed 19,410,761 13,118,127

Cost of material and services purchased 13,350,814 8,779,514

Employee wages and benefits 3,164,023 2,411,173

Payments to providers of funds 2,764,703 1,818,041

Payment to government as Tax 125,573 86,381

Community investments 5,648 23,017

Shareholders as dividends - -

Economic Value Retained (2,121,106) 1,326,351

Depreciation 1,257,947 1,076,264

Amortizations and Provisions 180,674 36,188

Profit after dividends (3,559,727) 213,898

Return on Capital Employed


2017/18 the Return on Capital

Employed (ROCE) of the

Group had an adverse impact,

declined to (2.8) percent from

6.9 percent in comparison

to the last financial year. The

Group ROCE reduced mainly

due to the net loss generated


year.

Return on Equity


the Return on Equity (ROE) for

the Group was (70.2) percent,

down from 2.4 percent stated

in the last financial year.

59


FinancialStatements


a manufactured sand plant,

asphalt plants, quarries,

batching plants, precast yards

and mechanical workshops.

The Group also possess a

state of-the-art metal working

facility in Sapugaskanda which

is proficient in manufacturing

items to meet most Civil

Engineering and Mechanical

Engineering requirements.


2017/18, the Group invested

in Fixed Assets amounting to

LKR 1,743 million by utilising

LKR 1,280 million in plant and

machinery, while LKR 463

million was invested in other

key areas in order to improve

the Group's operating asset

base.

INTELLECTUAL CAPITAL

The Group continuously

evaluates its intellectual assets

as it plays a significant role

in strengthening the Group’s

Financial Capital to achieve

truly sustainable earnings.

One of the key strategies

of the Group has been to

enhance its brand equity, its

distribution of knowledge, its

operational performance and

the competency of its Human

Capital resources.

The Group’s Intellectual Capital

foundation is a part of the

Group’s brand equity, which

is augmented by its heritage

spanning over 160 years in

existence. In order to further

strengthen the Group’s brand

equity, the Group engages in

numerous strategic interviews

with media that includes

leading business magazines

and newspapers, along with

publishing regular press

releases highlighting different

milestones. The Group brand

is aligned with all press and

partner events carried out by

and Management Accounting

Division (OPMA) carries out

internal assurances of its current

project sites, to guarantee

consistency of information and

processes that supports the

managing of the Group’s overall

sustainability performance.

Further, the Group has adopted

the ISO14001 Environmental

Management System which

also covers aspects of energy

conservation, management of

carbon footprint, conservation

and optimisation of water

usage and waste management.

Materials, Procurement and

Supply Chain

Walkers CML Group is a resource

intensive Group of companies

and recognises material usage

as a significant topic. The

Procurement and Sourcing

Policy of the Group illustrates

the Group’s commitment to

ensuring continuous sourcing

of raw material and the effective

management of challenges

encountered during the

purchasing of material.

The Group also mandates that

all suppliers of key items such as

steel, cement, bitumen, lubricant

and computers are selected

based on Formal Requests for

Proposal (RFPs), which includes

technical and commercial

evaluations and relevant terms

and conditions, and includes

its business units allowing the

brand to be further enhanced in

the market. By actively building

the Group’s brand equity, it

increases brand recognition

amongst its key stakeholders.

NATURAL CAPITAL

The Group’s operations impacts

the environment to a certain

level, and therefore the Group

has put in place policies and

procedures to minimise its

environmental footprint. These

procedures enable the Group

to be sustainable and efficient

in their business operations,

and assists in complying with all

applicable regulations and laws.

The Group’s overall triple

bottom line performance

strategy guarantees that day-

to-day operations including

new projects undertaken, are

monitored and scrutinised

for its financial feasibility and

risks arising from its social and

environmental impacts.

Efficient management of the

Group’s Natural Capital is of great

importance to the Company,

as it enhances the usage of

its input Material, Energy and

Water, while reducing its Carbon

Footprint, Waste Generation and

Effluent Discharge. The Group

monitors all its material topics

on a quarterly basis, as this is

a key element in the Group’s

strategy of managing its Natural

Capital. By monitoring on a

quarterly basis it endeavours to

improve its quarter on quarter

performance.

The above data is circulated to

the Executive Committee when

analysing the sustainability

performance and when making

decisions in terms of operations

of the Group. In addition, the

Group's Sustainability and the

Organisational Performance

environment and other

sustainability related clauses.

During the financial year under

review, the Group evaluated its

11 suppliers [FY 2016/17: 11] of

Tor steel, Bitumen and Cement

in terms of sustainability

practices. The quantity of

suppliers remained constant

due to the signing of formal

agreements during the last

financial year 2016/17, the

agreements included terms

and conditions stipulating

sustainability and environmental

best practices. The Group

plans to expand its coverage

of supplier assessments,

complimented with awareness

programmes, to ensure that

they have in place, safe and

enabling working conditions,

and operations are carried out in

a responsible manner.

A major proportion of the

goods and services consumed

by the Group are purchased

domestically or through an

authorised local agent.

As a whole, the Group works

with local and international

supply chain associates in

carrying out its operations,

while disbursing over LKR 13.4

billion as payments on same.

Supply Chain for the Walkers CML Group

Material

Suppliers

Subcontractors

and Outsourced

Labour

Maintenance

and Support

Services

Capital

Equipment

60

MTD WALKERS PLC


carbon and energy efficiency

from the previous year.


consumed the largest amount

of energy, amounting to over

94.7 percent (FY 2016/17: 96.8

percent) of the total energy

consumption and 92.4 percent

(FY 2016/17: 95.1 percent) of

the Group’s carbon footprint.

All data related to the Group’s

Energy and Emissions are

shown in the tables titled, ‘

Group Energy Consumption’,

‘Carbon Footprint’, ‘Carbon

Footprint by Sector’, ‘Electricity

Consumption’, and 'Energy

Consumption by Sector'.

Group Energy Consumption

Power Consumed (GJ)

2017/18 2016/17

Direct energy 177,290 175,307

Fossil Fuel 177,290 175,307

Diesel 167,607 163,050

Petrol 2,735 2,162

Furnace Oil 5,937 9,150

LPG 1,011 944

Indirect Energy - National Grid 9,076 8,060

Hydro and Renewable 4,447 3,949

Thermal 4,629 4,111

Total Energy Consumption 186,365 183,367

Carbon Footprint

Carbon Footprint (MT)

2017/18 2016/17

Total 14,911 14,582

Scope 1 13,136 13,005

Scope 2 1,775 1,576

Carbon Footprint by Sector

Carbon Footprint (MT) 2017/18 2016/17

Civil Engineering 13,770 13,861

Heavy Engineering 410 219

Power Generation 231 165

Real Estate 40 45

Marine Engineering 130 120

Trading and Other 330 171

Electricity Consumption

2017/18 2016/17

Electricity Consumption (kWh) 2,521,045 2,238,839


The Environmental and

Energy Management policies

of the Group concentrates

on sustaining energy and

minimising its carbon footprint

and are adopted by all sectors

of the Group.

The Group is continually

monitoring its carbon footprint

through a comprehensive data

collection and assessment

process including the assurance

of energy consumption and

carbon emissions.

The measurement of Group

carbon emissions is carried out

according to the Greenhouse

Gas Protocol of the World

Resources Institute (WRI) and

the World Business Council

for Sustainable Development

(WBCSD). Carbon emission

factors found in the IPCC

Guidelines for National

greenhouse gas inventories

published by the Institute

of Global Environmental

Strategies (IGES) has also been

used for calculation purposes.

For the year under review,

Walkers CML Group saw

an increase in their energy

consumption and carbon

footprint. This was mainly due

to the growth in operational

activities in comparison to the

last financial year. Additionally,

scruitinising the Group’s

energy and carbon footprint

consumption per LKR million of

revenue, it was eminent that the

respective intensity factors were

notably below to those of last

year, illustrating that the Group

has improved its overall level of

Comparative data for the financial year 2017/18 and 2016/17 is

listed under ‘Raw Materials Procured for Group’. The variation in the

comparative data is as a result of the different construction phases

of projects and changes in the types of Group operational activity

during the year.

Raw Materials Procured for the Group

FY 2017/18 FY 2016/17

LKR 000 LKR 000

Timber and Plywood (LFT) 49,323 45,956

Aggregates (Cubes) 65,173 33,019

Sand (Cubes) 29,412 14,488

Asphalt (MT) 42,686 57,040

Tor Steel (MT) 8,950 7,787

Bitumen (MT) 2,069 2,316

Ready Mix (m3) 30,080 41,814

Lubricants (l) 104,655 109,144

Cement (MT) 29,364 23,878

Paint (l) 80,266 70,890

Renewable Materials

Raw Materials

Manufactured Materials

61


FinancialStatements


Energy Consumption by Sector

Volume (GJ)

2017/18 2016/17


Heavy Engineering 4,399 2,022

Power Generation 538 608

Real Estate 917 796

Marine Engineering 1,999 1,319

Trading and Other 2,005 1,196

Water and Effluents

The Group’s Water

Management Policy mandates

the optimisation on the usage

of water withdrawn from blue

water sources and embolden

reduced consumption, re-use

and recycling of water.

The policy also states that the

quality levels of discharged

waste water in line with the

relevant country laws.

The Group regularly identifies

opportunities to enhance water

used at operational sites and

is dedicated to manage water

efficiently.

Information pertaining the

Group’s water consumption is

tracked and monitored through

The sector that consumed the

most amount of water was

the Civil Engineering Sector,

however the sector has several

water conservation initiatives

as follows;

• Water consumed for

washing of undercarriages at

the Civil Engineering Sector

workshop in Sapugaskanda

is reused by treating it at

the Effluent Treatment

Plant and reused for the

same purpose, resulting in

the reduction of the water

consumption at site.

• Walkers Piling reuses the

discharged water produced

during pile construction.

The de-sanders allows the

sector to reuse water for

Water Consumption by Sector

Volume (m3)

2017/18 2016/17


Heavy Engineering* 209,205 5,111

Power Generation 1,500 3,080

Real Estate 29,683 14,651

Trading and Other 780 1,818

Marine Engineering 9,436 5,798

Total Volume of Water Withdrawn 519,028 214,931

* During the 1st quarter of the financial year 2017/18, the project

based in Maldives consumed a significant amount of water due to

the civil works undertaken to construct the four fuel tanks.

the use of water meters and the

estimates are based on pump

functional time where meters

are not available. Although

sectors with high usage will

be identified for potential

efficiency improvements, the

Group’s water intensity data

will form the basis for water

reduction objectives in the

forthcoming years.

Comparative data for the

financial year 2017/18 and

2016/17 is listed under the

tables titled ‘Volume of Water

Withdrawn by Source’, Water

Consumption by Sector and

'Water Discharge’.

subsequent piles, thereby

compensating the need for

additional withdrawal from

blue water sources.

• Walkers Piling consumes

Polymer in their operations

as an alternative to

Bentonite, resulting in the

reduction of water usage

and energy consumption.

• The Special Projects

company uses sprinklers

in dust prevention, which

consume less water than

large water tankers. They

also utilised a natural

rainwater harvesting

mechanism at the

Hambantota quarry site by

using a large quarry pit, to

collect and store rain water

for use at the site.

Value of Water Withdrawn by Source

Volume (m3)

2017/18 2016/17

Surface Water - Wetlands, Rivers, Lakes,

Oceans 109,246 19,487

Ground Water 13,618 15,794

Rainwater Harvested 0 450

Waste Water from Another Organisation 287 0

Municipality, Authority Water Sources 395,878 179,201


The upsurge in the volume of water withdrawn during this financial

year was a result of the growth in operational activities of the Group.

Water Discharge

Volume (m3)

Discharge Method 2017/18 2016/17

To Municipality Sewerage, Drainage

Lines 31,563 16,469

To ETPs and Recycled Completely 286 0

To Direct to Rivers, Lakes, Wetlands,

Marshes 0 794

To Ground 483,318 196,912

Total Water Discharged 515,168 214,175

The Environmental Protection License (EPL) guidelines (mandated

by the Central Environmental Authority) specified threshold was

met when releasing effluent in to the environment and is of an

acceptable standard. Water discharged to ground includes water

runoff after being used for dust suppression and similar activities.

62

MTD WALKERS PLC


Waste Management

A Waste Management Policy

and a Hazardous Waste

Management Policy is already

in place for the Group, which

encourages the reduction in

consumption of virgin materials,

through the reuse, recycling,

and disposal of waste by

licensed third party contractors.

The total waste produced

by the Group was regulated

through waste recycling and

reuse within the sectors or

through specialised third

party contractors, and storing

waste on-site, and the balance

directed to landfill.

It is always a challenging effort

for the Group and its sectors

when segregating waste and

estimation, with estimations

of waste data not being

standardised. The Sustainability

Division and OPMA maintains its

retained all its certifications in

the year under review.

The Group’s goal is to be

in compliance with all

environmental laws and

regulations of the country at any

given time and as a result tracks

and monitors any environmental

fines paid by its business units

for spillages or any other non-

compliances under Sri Lankan

legislation. No significant spills or

fines were reported during the

year under review. The Group

outlines significance as spillage

or fines when the financial loss

amounts to LKR 1.0 million.

Environmental Grievance

Mechanisms

Several business units of the

Group have been certified

for ISO14001 and have

demonstrated that the essential

processes have been put in

place at operational sites to

minimise environmental risk.

An Environmental and Health

and Safety Officer is placed at

each site so that they can be

contacted by employees or

members of the community in

the event of any environmental

grievance. This is also recorded

at site-level and communicated

to senior management as

relevant for corrective action.

No significant environmental

grievances were reported


HUMAN CAPITAL

At Walkers CML Group, Human

Capital is the most treasured

resource and considered the

driving force of innovation,

creating a substantial impact

on the Group’s earning

potential, productivity and

long term sustainability. The

efforts in collaborating with the

Sustainability Champion of each

sector to create awareness and

aims to improve accuracy of

its waste estimations reporting

through the introduction of

Standard Operating Procedures

and templates in the

forthcoming year.


review, 411,404 kilograms [FY

2016/17: 99,129 kilograms) of

Hazardous Waste was created

and disposed with 202,596

kilograms being re-used and

7,887 kilograms being stored

on-site.



2016/17 is listed under ‘Disposal

Method of Non-Hazardous

Waste’. Data given are based

on site-level estimations, and

the normal practice of waste

disposal service providers.

Group endeavours to manage

its Human Capital through

continuous engagement,

talent management, career

development and the provision

of a safe place to work.

In the previous financial year

2016/17, the Group reorganised

the Human Resources Division

in order to drive effectiveness

and efficiency of the function,

improve competence

and adapt change to be

sustainable in the future. The

principles of Human Resources

practices, roles, responsibilities

and competencies were

standardised in order to create

added value to the business.

The introduction of business

partners for each of the Group’s

business units, led to the better

management and streamlining

of the new processes

introduced to the Group.

Due to the lack of skilled labour

in the Construction industry in

Sri Lanka, the Group addressed

this issue through sourcing

labour within the region in

order to augment its local

labour.

The Group’s Resourcing Team of

the Human Resources Division

is proactively engaged with

the relevant authorities in

order to guarantee smooth on

boarding, and providing good

working conditions to attract

and retain skilled labour within

the Group. The Resourcing

Team also ensures that all

candidates hired for roles across

the Group are the best suited

for the vacancies advertised,

and recruitment takes place in

a fair and transparent manner.

Disposal Method of Non Hazardous Waste

Weight (kg)

2017/18 2016/17

Total Non-Hazardous Waste

Disposed 13,305,666 30,564,449

Reuse 48,509 1,546

Recycling 107,229 240,399

Composting 3,870 5,719

Recovery 2,389 11

Incineration 146 0

Landfill 13,130,747 30,024,000

On-Site Storage 12,777 292,774

* The Group is yet to fully streamline its hazardous waste

measurement process and intends to do so at a future point in time


and Spillages

The Group’s assurance to

continually enhance its

environmental stewardship

is illustrated due to many of

its facilities being ISO14001

certified. Annual audits of the


Systems are carried out by an

independent certification body

to validate conformance to

the standard. The Group has

63


FinancialStatements



the Group recruited 489

new employees [FY 2016/17:

648], of which 415 were male

employees [FY 2016/17: 528]

and 74 were female employees

[FY 2016/17: 120]. The drop in

the number of new recruits

is mainly due to the Group’s

efforts to reduce their expenses

as it was a challenging year

for the Group and its sectors.

Of the total new hires, 54.4

percent were under 30 years,

with 42.3 percent between the

age of 30 – 50 years and 3.3

percent above 50 years and to

replace the attrition over the

year.

The gender and age profile

diversity the Group’s governance

bodies are divulged in the

profiles of the Board of Directors

in the Corporate Governance

section of this report.

Employee Benefits

All employees who work for

the Group and are based in

At Walkers CML, the senior

management personnel are

associates of the Manufacturing

and Engineering Services Skill

Council, an organisation affiliated

to the National Apprentice

and Industrial Training

Authority (NAITA) and Tertiary

and Vocational Education

Commission (TVC) of Sri Lanka

which is an organisation leaning

towards minimising the skill gaps

in the local industries. Active

member participation of the

Group’s management in such

affiliations establishes the Group

brand at the pubic forefront, and

attract potential talent, obtain

skilled and unskilled workers, and

upgrade the skills of the existing

workforce.

The Group’s Human Resources

Policy administers the

management of its Human

Capital and is in conformity

with all labour laws including

the Factories Ordinance, Shop

and Office Employees Act and

the Wage Board Ordinance.

The following section outlines

the Group’s Human Capital

in terms of its composition,

training and development

initiatives, health and safety

measures and the Group’s

contribution towards employee

benefit plans. The section

also contains information on

compliance and human rights

related topics.

Employee Diversity

When recruiting employees

in to the Group, the process

is a fair and transparent one

where equal opportunities

are provided to all applicants.

The Group also embolden

workplace diversity in order to

cultivate innovative thinking

while creating an enabling

work environment that

promotes productivity.

Sri Lanka, are eligible for the

Employees’ Provident Fund (EPF)

and the Employees’ Trust Fund

(ETF) contributions stipulated

by law. Employees contribute

eight percent of their salaries

towards EPF, with the company

contributing 12.0 percent as per

the Sri Lankan Law. In addition,

the Group contributes three

percent towards ETF. Employees

are also entitled to retirement

gratuity, and the total benefit

liability as at 31st March 2018

was LKR 189 million.

As MTD Walkers PLC is a business unit of the Alloy MTD Group, three

of the Boards members are foreign Non-Executive Directors. The

Executive Committee of the Group comprises of Sri Lankan nationals,

while all operational and site-level management teams are also

Sri Lankan nationals.

Workforce of the Group

2017/18 2016/17

Employees 1,895 1,767

Sub Contract/Casual Workers 2,110 3,353

Total 4,005 5,120

Geographical Location of Employees

2017/18 2016/17

Sri Lanka 1,831 1,718

Outside Sri Lanka 64 49

The increase in the workforce stationed overseas is mainly due to

employees being part of the fuel tank project in Maldives.

Contract Type of Employees

2017/18 2016/17

Permanent Employees 534 514

Contract Employees 1,361 1,253

Performance Appraisals

To build a culture that enables

and rewards performance to

all its employees is the Group’s

ultimate goal. The Group

continued to enhance its

existing performance appraisal

mechanism, where annual

objectives were established

by the employees and their

supervisors at the start of the

financial year. These objectives

were reviewed at the end

of the second quarter, and a

comprehensive review and

feedback process took place at

the end of the year.

Training and Development

One of the key aspects of the

Group’s Human Resources Policy

is Training and Development.

This Policy governs talent,

retention, and strives to create

value for its employees by

investing in capacity building.

The new performance appraisal

implemented has to an extent

illustrated certain training gaps,

which will be addressed in order

to improve the training programs

provided to employees.

Comparative data for training

provided by the sector for its

employees for the financial

years 2017/18 and 2016/17

are given in the table titled:

'Training Hours for Workforce'

and 'Training Hours by Gender'.

Training Hours Workforce

2017/18 2016/17

Total

Hours

Average

Hours

Total

Hours

Average

Hours

Employees 11,984 6.3 12,842 7.3

Above Manager Level 394 8.4 12 0.4

Managerial Level 797 9.6 1,191 15.1

Assistant Manager 39 3.9 8 1.0

Executive Level 5,667 6.4 6,215 8.2

Non-Executive Level 5,088 5.8 5,416 6.1

64

MTD WALKERS PLC


Training Hours by Gender

2017/18 2016/17

Total

Hours

Average

Hours

Total

Hours

Average

Hours

Male Employees 10,150 5.9 11,257 7.2

Female Employees 1,834 11.4 1,585 8.0

than one day, although records

are maintained for such injuries

and diseases at the Group.

Child Labour and Forced/

Compulsory Labour

In order to ensure that the

Group and its business units

adhere to all relevant laws

and regulations, Walkers CML

Group has in place policies

governing the aspects of Child

Labour and Forced Labour.

As a management practice,

the Group obliges that all

potential employees produce

a valid identification during the

recruitment process to ensure

the minimum age requirement

is met. Furthermore, at site level,

employees on a casual basis

are required to produce valid

identification to ensure they are

above 18 years of age, prior to

being granted access to the site.

No cases of child labour or

forced labour were reported in


Freedom of Association and

Collective Bargaining

The Group has no restrictions

in freedom of association, as

per the laws of the country

all employees are free to join

trade unions. Currently there

are no formal trade unions in

the Group. Employees engage

with management every three

months at welfare committee

meetings and this committee

acts as a joint consultative

committee between

representatives from the

workforce and the management

to promote cooperative

resolutions of workplace issues.

Walkers CML Group has in

place an employee grievance

mechanism, where any

2016/17: 2.7 percent] of total

employees. The attrition rate of

the Group was 17.4 percent [FY

2016/17: 26.9 percent]

Health and Safety

Occupational Health and

Safety (OHS) is a key area of the

Group as it contributes towards

employee well-being and

heightened productivity. The

Group tracks and monitors all


related occurrences across

all subsidiaries included in its

reporting boundary, and as a

result, most Group companies

are OHSAS 18001 certified.

The injury rate of the workforce

for the financial year 2018/17

was 1.2 [FY 2016/17:1.1],

which includes 2 fatalities

[FY 2016/17:4]. The lost day

rate of the Group was 0.01

[FY 2016/17: 0.02] and no

unauthorised absenteeism

was recorded during the year.

The occupational injury rate of

the Group for employees was

0.1 [FY 2016/17:1.1] whilst for

outsourced workers was 2.2 [FY

2016/17:1.01].


review, injuries caused

pertaining to moving of objects

was 68.1 percent [FY 2016/17:

86.0 percent) and 23.4 percent

were as a result of falling [FY

2016/17:10.0 percent).

The report excludes minor

occupational injuries or

diseases that resulted in less

employees can anonymously

communicate their grievances

via suggestion boxes, and this

box is only opened by the

central Group Human Resource

team. In addition, employees

can directly contact the Group

Executive Deputy Chairman via

e-mail to communicate on any

grievances. Employees may also

raise any grievances through the

welfare committee which meets

every three months. The Group

also practices an open door

policy, allowing an employee

at any level to communicate

directly with the senior

management. Any human

resource process improvements

suggested through the

suggestion box, are assessed for

practicality, and implemented

across the Group companies.

SOCIAL/RELATIONSHIP

CAPITAL

Local Communities

Being an integrated construction

and engineering company,

the Group possesses many

opportunities to facilitate

infrastructure development in

communities in and around

our operations. The Group

recognises that its operations

may impact surrounding

communities. In order to

mitigate risks arising from such

impacts, and to support local

livelihoods, the Group carries out

social responsibility initiatives

such as community service

programmes and infrastructure

projects on a pro bono basis.

At the commencement

of large scale projects, the

Group engages with the local

communities and informally

assesses any community

development requirements

or philanthropic activities

requested by the community.

Talent Management

Attrition amongst permanent

and contract employees as

well as new hires are tracked

and monitored according to

the composition of gender

and age group. Issues arising

from attrition are addressed

continuously by the Group

through proactive initiatives.

The attrition rate of new hires

for the year under review was

1.2 percent [FY 2016/17: 1.9

percent] of the total employees,

and the attrition rate of male

new hires was 0.7 percent

[FY 2016/17: 1.8 percent] and

female new hires was 0.5 [FY

2016/17: 0.2 percent] of the total

employees. The attrition rate of

new hires aged below 30 years


1.0 percent], aged between 30

– 50 years was 0.6 percent [FY

2016/17: 0.6 percent] and age

above 50 years was 0.0 percent

[FY 2016/17: 0.2 percent] of total

employees.

For the financial year 2017/18,

the total attrition rate of male

employees was 15.9 percent

[FY 2016/17: 24.1 percent] and

the attrition rate of female

employees was 1.5 percent

[FY 2016/17: 2.9 percent]. The

attrition rate of employees

below 30 years was 8.3 percent

[FY 2016/17: 5.5 percent],

aged between 30 – 50 years


18.7 percent] and age above

50 years was 2.0 percent [FY

65


FinancialStatements


The Group invested LKR 5.6

million on social responsibility

initiatives, impacting over 3,000

people directly and over 12,000

indirectly. Moreover, the Group

recruits locally, and directly

supports over 3,000 families

and indirectly supports the

livelihoods of around 50,000

families.

Further to the above, the Group

invested LKR 12.4 billion in

securing goods and services

locally, encouraging local

economies to develop and

safeguard the Group’s social

license to operate.

The Group has established

a community grievance

handling mechanism in order to

continuously engage with the

community and its stakeholders

to recognise any concerns.

For the year under review all

grievances were presented and

resolved by the Group.

The Project Managers carry out

the impact and need assessment

informally at site-level by

communicating with the local

communities in the area.

Regulators and Customers

who are Governmental bodies

The Group follows all relevant

local environmental laws

including the National

Environmental Act No.

47 of 1980 and the Mines

and Minerals Act No:

33 of 1992, and further

complies with all regulatory

requirements mentioned in

the Environmental Protection

License (EPL).

No significant fines related to

non-compliance over a value of

LKR 1.0 million were reported.

Anti-Corruption

An Anti-Corruption Policy has

been established across the

Group and its subsidiaries, this

No significant fines related

to product or service non-

compliance over a value of

LKR 1.0 million were reported


FUTURE OUTLOOK

The economic outlook of

Sri Lanka will remain favourable

in the future, and is projected

to rebound in 2018 from a low

base figure, to approximately

4.5 percent in the medium

term, and will be driven by

private sector consumption

and investments. With the

expected economic rebound

in the country the Group is

confident that it can capitalise

on this growth by gearing up

its operations to deliver on their

order book of large scale, long-

term infrastructure projects.


will continue to concentrate

on expanding its road,

highway, water supply and

building construction order

book by exploring upcoming

opportunities in the public

sector, as the Government

has numerous initiatives

to enhance infrastructure

development in the country.

The Civil Engineering Sector’s

order book together with

its existing projects will

augment the sector’s skills

and expertise, including its

financial performance in the

imminent financial year. The

segment under the Heavy

Engineering Sector which was

entrusted in the designing and

constructing fuel storage tanks

and the rehabilitation of dams,

will be restructured in order

to become more competitive

in the market. The building

service segment will continue

to sustain its focus on activities

of air conditioning installations,

mechanical, electrical and

plumbing while expanding its

manufacturing capabilities.

policy impels that all employees

adhere to anti-corruption

guidelines and the Code of

Conduct provided by the

Group.

The Group is continuously

evaluated by the policy on

risks pertaining to corruption

and develops mitigation

strategies to minimise such

risks. Furthermore, the Group’s

Internal Audit Division executes

periodical audits to ensure

compliance with Standard

Operating Procedures (SOPs)

and best practices.

No significant risks were

identified relating to corruption

within internal business

processes.


ISO 9001 (Quality Management

System), ISO 14001

(Environmental Management

System) and OHSAS 18001

(Occupational Health


System) certifications have

been obtained by all Group

companies with significant

operations or are engaged in

infrastructure development,

in order to ensure process

excellence across all activities.

The Group further aspires to

maintain the highest standards

through compliance with

all relevant statutory and

regulatory requirements, as

well as compliance with the

industry’s and corporate best

practices. Public projects are

a substantial portion of the

Group’s operations, and as a

result, the Government of

Sri Lanka is one of the Group’s

key customers. Keeping in

line with the requirements

of the Government and the

relevant regulatory authorities

all projects are evaluated for its

quality, health and safety prior

to receiving final approval.

The Real Estate portfolio

of the Group presents a

positive growth, having

launched 1,080 apartments

in two major developments,

strategically positioned to

meet the ongoing middle-

income housing shortage. The

sector will pursue emerging

opportunities in the affordable,

semi-luxury and luxury

segments and augment the

business by exploiting the

Group’s ability to perform both

the roles of developer and

constructor.

The Group’s strategic decision

to diversify in to the Marine

Engineering Sector will help

the Group benefit from the

country’s emerging status

as a major maritime hub in

the greater Indian Ocean

region, and is expected to be

a future driver of the Group’s

profitability and revenue

diversification plan.

The Power Generation arm

of the Group will continue

to explore opportunities for

sustainable energy sources,

consisting of solar and wind

power in commemoration

with the Sustainable Energy

Authority of Sri Lanka.

Furthermore the sector is

looking at establishing a

waste-to-energy plant of

1 to 2 Megawatts to aid in

incinerating municipal waste in

the Western Province.

The Trading Sector and Other

Sector will continue to examine

new prospects to enhance their

scope of work whilst exploring

new business opportunities

regionally and overseas.

66

MTD WALKERS PLC


MANAGEMENT DISCUSSION AND ANALYSIS

OPERATIONAL REVIEW

The financial year under review

was a challenging year for the

Civil Engineering Sector, the

construction industry grew by

only 3.1 percent in comparison

to the 8.3 percent growth in

2016 according to the Central

Bank Annual Report 2017. The

sector’s main focus during the

financial year 2017/18 was

completing smaller projects

with thinner margins and

deploying existing resources for

larger projects with healthier

margins.

sector’s bottom line favourably

in the upcoming financial

year, despite the prevailing

challenging times.

The piling arm of the

Civil Engineering Sector

performance was languished

due to fierce competition in

the industry, which resulted in

Walkers Piling embarking on

smaller private projects during

the first part of the financial

year 2017/18. The larger piling

projects such as the Central

Expressway, Krish, Harbour

Village, etc., were only awarded


reported a revenue of LKR 11.9

billion, despite the growth

in revenue of 17.5 percent in

comparison to the last financial

year 2016/17, the sector

reported a gross loss of LKR 566

million. The shortage of skilled

labour had an adverse impact

to the productivity levels,

resulting in project delays and

increased project and finance

costs. CML- MTD Construction

will gear itself to execute its

order book consisting of large

scale infrastructure projects and

believes that it will impact the

during the latter part of the

financial year under review,

and as a result, the company is

positive that the performance

will be enhanced in the

upcoming financial year.

Construction work carried out at Upper Elahera Canal

67


FinancialStatements


Roads, Bridges, Expressway and Airport

INTERNAL ROADS IN THE MATARA DISTRICT: REHABILITATION

AND IMPROVEMENT

Client Road Development Authority

Main Contractor CML-MTD Construction Limited

Location Matara District

Status Ongoing

Project Description Reconstruction and widening of 96.6

kilometres of internal roads in the Matara

District. The existing three meter road was

widened and it included the construction

of 574 culverts. The total area of road

constructed covered an area of 150 square

kilometres.

INTERNAL ROADS IN THE HAMBANTOTA DISTRICT:

REHABILITATION AND IMPROVEMENT



Location Hambantota District

Status Completed

Project Description Reconstruction and widening of 58.6

kilometres of internal roads in the

Hambantota District. The roads were

widened across four zones (Tangalle,

Okawela, Beliatta and Angunakolapalassa).

Covering a total geographical area of

1,195 square kilometres.

INTERNAL ROADS IN THE MATALE DISTRICT: REHABILITATION

AND IMPROVEMENT



Location Matale District

Status Ongoing

Project Description Construction and widening of a 61.3

kilometer roadway across two zones in the

Matale District covering an area of 1,525

square kilometres.

IMPROVEMENT AND REHABILITATION OF PRIORITY ROAD

PROJECT HAPUGAHAYATATENNA – WATADENIYA ROAD

Client China National Aero-Technology Import &

Export Corporation


Location Kandy District

Status Ongoing

Project Description Improvement and Rehabilitation from

eight kilometres by correcting the existing

surface, construction of drains, culverts

and laying a new surface.


PROJECT NARANWITA – UDADENIYA – WEWATENNA –

NIYANGAMA ROAD


Export Corporation



Status Ongoing

Project Description Improvement and rehabilitation from

five kilometres by correcting the existing

surface, construction of drains, culverts

and laying a new surface.


PROJECT – BULUGOLLA - DOMBE - WAHAUWA ROAD


Export Corporation


Location Kegalle District

Status Ongoing

Project Description Improvement and rehabilitation from

seven kilometers by correcting the

existing surface, construction of drains,

culverts and laying a new surface.

CONSTRUCTION OF BRIDGE NO. 23/1 WARAKAPOLA –

RUWANWELLA ROAD



Location Kegalle District

Status Ongoing

Project Description Removal of existing bridge, related

structures and obstacles, clearing,

grubbing, excavation and re-construction

of new bridge over Warakapola -

Ruwanwella Road.

SOUTHERN EXPRESSWAY SECTION THREE (MATARA)


Main Contractor China National Aero-Technology Import &

Export Corporation


Status Completed

Project Description Earthworks for the construction of the

Southern Expressway section one, sub-

section three. This consists of excavation

of more than 700,000m3 of unclassified

soil, excavation of over 200,000m3

of unsuitable soil and 400,000m3 of

embankment filling.

68

MTD WALKERS PLC


MANAGEMENT DISCUSSION AND ANALYSIS – CIVIL ENGINEERING SECTOR

CENTRAL EXPRESSWAY PROJECT – SECTION II


Main Contractor Maga Engineering (Private) Limited,

CML-MTD Construction Limited,

V. V. Karunaratne & Co and Hovael

Construction (Private) Limited.

Location Kurunegala District

Status Ongoing

Project Description CML-MTD Construction will be responsible

for the construction of a four lane,

2.8 kilometre Section of the Central

Expressway Section II, Package D.

HUB ROADS-HR 06, 10 and 21

Client China State Construction Engineering



Status Ongoing

Project Description The widening and overlaying of a 26km

stretch of road (HR06, HR10 and HR21).

BANDARANAYKE INTERNATIONAL AIRPORT DEVELOPMENT

PROJECT (BIADP) - PHASE 2

Client Airport Aviation Authority

Main Contractor Hazama

Location Colombo District

Status Ongoing

Project Description The construction work of Package B –

Remote Apron and Taxiways.

Buildings

URBAN REGENERATION PROJECT: 1650 HOUSING UNITS –

HENAMULLA

Client Urban Development Authority



Status Ongoing

Project Description Design and construction of 1,650 housing

units for the underserved communities in

Colombo. The project consisted of four,

ground plus 14 storey apartment blocks

with modern amenities and special design

consideration given to safety features,

lighting and spatial design.

URBAN REGENERATION PROJECT: 792 HOUSING UNITS -

SALAMULLA




Status Completed

Project Description Design and construction of 792 housing


Colombo. The project consisted of two,




lighting and spatial design. One tower has

been completed and handed over.

URBAN REGENERATION PROJECT: 576 HOUSING UNITS – ALUTH

MAWATHA




Status Ongoing

Project Description Design and construction of 576 housing


Colombo. The project consisted of three,




lighting and spatial design.

28 ROOM LUXURY HOTEL – KOSGODA

Client Beach Resort Kosgoda (Private) Limited


Location Galle District

Status Completed

Project Description The construction of 28 luxury rooms along

with all the amenities of a luxury hotel.

The hotel consists of a configuration of

ground plus two floors along with roof

top gardens and other service areas to be

constructed within 4,100 square meters

(44,400 square feet) of built up area.

69


FinancialStatements


CONSTRUCTION OF CITY TRAFFIC BUILDING

Client Police Department



Status Ongoing

Project Description Construction of the City traffic Building for

the Police department in Maradana.

CONSTRUCTION OF SHERATON HOTEL - PHASE TWO - BLOCK C

Client Lanka Hotels & Residencies (Private)

Limited



Status Ongoing

Project Description The construction of the building structure

for Sheraton Hotel, Block C at Colombo 03.

CONSTRUCTION OF SHERATON HOTEL - BLOCK B

Client Lanka Hotels & Residencies (Private)

Limited



Status Ongoing

Project Description The construction of the building structure

for Sheraton Hotel, Block B at Colombo 03.

PROPOSED SHOPPING AND APARTMENT COMPLEX IN KELANIYA

Client CK Homes (Private) Limited


Location Gampaha District

Status Ongoing

Project Description The project consists of the construction of

a Shopping Complex and 61 Apartment

Units at 310, Waragoda Road, Wedamulla,

Kelaniya.

PROPOSED OFFICE BUILDING FOR JAT HOLDINGS

Client JAT Holdings (Private) Limited



Status Ongoing

Project Description The construction of a new four storey

office building and refurbishing the

existing office building for JAT Holdings

(Private) Limited at No. 351, Pannipitiya

Road, Thalawathugoda.

SEA BREEZE HOMES, WADDUWA

Client National Housing Development Authority


Location Panadura District

Status Ongoing

Project Description As a part of the accelerated program for

middle income housing and Infrastructure

development, CML-MTD is constructing

Sea Breeze, Wadduwa. Comprising of 196

apartments over five buildings offering two

bedroom one bathroom or three bedroom

two bathroom units. Two types of finishes

will be undertaken; luxury and semi-luxury.

LAVANYA HEIGHTS, RAGAMA

Client National Housing Development Authority


Location Gampaha District

Status Ongoing

Project Description As a part of the accelerated program for

middle income housing and Infrastructure

development, CML-MTD is constructing

Lavanya Heights, Ragama. Comprising of

124 apartments offering two bedroom

one bathroom or three bedroom two

bathroom units. Two types of finishes will

be undertaken; luxury and semi-luxury.

REFURBISHMENT WORK AT MACCAN BUILDING, COLOMBO – 01

Client The Fort Hotel Company



Status Ongoing

Project Description The renovation and retrofitting of the

apothecary building, a colonial landmark.

The building is more than 100 years old

and consists of a cast iron steel structure.

The civil scope of work includes restoration

and strengthening of the existing building

structure and retrofitting the area to convert

the building into a luxury five star hotel.

COLOMBO MUNICIPAL COUNCIL BUILDING - MARADANA

Client Colombo Municipal Council

Main Contractor Larsen and Toubro Limited


Status Completed

Project Description Demolition and reconstruction of Workshop

at Maradana consisting of the design,

construction, installation and rehabilitation

of waste water pumping stations of

Colombo Municipal Council Project.

70

MTD WALKERS PLC



SABARAGAMUWA UNIVERSITY -CONSTRUCTION OF A LIBRARY

BUILDING

Client Sabaragamuwa University


Location Rathnapura District

Status Ongoing

Project Description Construction of a new building complex

for The University Library -Stage L.

RUHUNA UNIVERSITY - CONSTRUCTION OF A BUILDING

COMPLEX

Client Ruhuna University


Location Matara District

Status Ongoing

Project Description Design, construction, supervision,

commissioning and completion of the

second stage of a building complex for

faculty of management and finance,

University of Ruhuna, Wellamadama,

Matara.

SHIP LIFTING YARD AT MUTWAL

Client Walkers Colombo Shipyard (Private)

Limited



Status Completed

Project Description Construction of super-structure of the

landside pier and waste water tank of

the project of “Ship Lifting and Transfer

Platform with Ship transfer Track” at

Mutwal Fishery Habour Premises.

ASCENT APARTMENTS -MARADANA

Client Walkers CML Properties (Private) Limited



Status Ongoing

Project Description Construction of a residential complex in

Colombo 10.

HOMAGAMA TRACK

Client Ministry of Sports



Status Ongoing

Project Description Construction of laying 400 meters nine

lanes IAAF certificate class, two synthetic

track together with other related athletic

field facilities comprising middle grass field

to play football, hockey, and rugby and

inclusive of repairs and improvement works.

Water Supply and Irrigation

WILGAMUWA WATER SUPPLY PROJECT

Client National Water Supply and Drainage Board


Location Matale District

Status Ongoing

Project Description The project comprises of the construction

of a 6,000m3/day capacity raw water

intake and pump house. 5,500m3/day

capacity water treatment plant, 800m3

capacity clear water reservoir and two 225l

water towers. The pipe laying includes

1.3km long raw water transmission line

32km long clear water transmission line

100km long distribution line along with

associated staff quarters and offices.

POLGAHAWELA WATER SUPPLY PROJECT

Client Va Tech Wabag Limited


Location Kurunegala District

Status Ongoing

Project Description Construction, completion and remedying of

any defects of civil works including external

works for intake and water treatment

plant for the Polgahawela, Pothuhera and

Alawwa Integrated Water Supply Project.

CONSTRUCTION OF UPPER ELAHERA CANAL

Client Mahaweli Authority


Location Matale and Polonaruwa District

Status Ongoing

Project Description Construction of a closed concrete canal of

approximately six kilometers.

71


FinancialStatements


KANDY CITY WASTE WATER PROJECT

Client National Drainage and Water Supply Board



Status Completed

Project Description Construction of communal sanitation

facilities in designated low income

areas and testing and commissioning of

constructed facilities.

Projects – Piling

HAVELOCK CITY PHASE IV

Client Mireka Capital Land (Private) Limited

Main Contractor Walkers Piling (Private) Limited

Location Havelock City

Status Completed

Construction

Period

08 months

Project Description Construction of foundation for a 22-storey

residential apartment complex consisting

of 180 bored cast-in-situ piles from the

diameter 1,000 millimeters.

SHIP LIFTING YARD AT MUTWAL

Client Walkers Colombo Shipyard (Private)

Limited


Location Colombo – Mutwal

Status Completed

Construction

Period

12 months

Project Description Construction of foundation for “Ship Lift

and Transfer Platform with Ship Transfer

Track” which includes 65 bored cast in-situ

sea piles from 750 diameters and 50 bored

cast in-situ land piles from 750 diameter.

SOUTH COAST RESIDENCIES

Client Walkers CML Properties (Private) Limited


Location Galle - Habaraduwa

Status Completed

Construction

Period

6 months

Project Description Construction of foundation for an

extension for a four storey residential

apartment complex consisting of 156

bored cast-in-situ piles.

WATER TREATMENT PLANT-ATTANAGALLA

Client China Machinery Engineering Corporation


Location Gampaha - Attanagalla

Status Completed

Construction

Period

02 months

Project Description Piling work for the water treatment

plant of Gampaha, Attanagalla and

Minuwangoda Integrated Water Supply

Scheme.

MALIGAWATTA PUMPING STATION

Client Larsen and Toubro


Sub-Contractor Walkers Piling (Private) Limited

Location Maligawatta

Status Ongoing

Construction

Period

08 months

Project Description Construction of 150 Secant Piling for

rehabilitation of water pumping stations

of Colombo Municipal Council Project.

CENTRAL EXPRESSWAY- ICC

Client International Construction Consortium

(ICC) (Private) Limited


Location Meerigama to Riloluwa

Status Ongoing

Construction

Period

08 months

Project Description Construction of foundation for Central

Expressway - Section two consisting

of 150 bored cast-in-situ piles from the

diameters 1,500 and 1,800 millimeters.

CENTRAL EXPRESSWAY – MAGA

Client MAGA Engineering (Private) Limited


Location Meerigama to Kurunegala

Status Ongoing

Construction

Period

08 months


Expressway -Section two consisting of 150

bored cast-in-situ piles from the diameters

1,500 and 1,800 millimeters.

72

MTD WALKERS PLC



CENTRAL EXPRESSWAY – CML

Client CML-MTD Construction Limited


Location Meerigama to Kurunegala

Status Ongoing

Construction

Period

08 months


Expressway -Section two consisting of 150

bored cast-in-situ piles from the diameters

1,500 and 1,800 millimeters.

FINANCIAL CAPITAL

The year under review was a

difficult period for the sector,

the prevailing shortage of

skilled labour resulted in

the sector not being able to

achieve its usual productivity

levels, resulting in project

delays and increased project

costs, further the construction

industry as a whole, faced many

challenges during the financial

year 2017/18 which ultimately

affected the GDP of the country.


revenue increased to LKR 11.9

billion [FY 2016/17: LKR 10.2

billion] and reported a gross

loss of LKR (0.6) billion. This was

principally due to the escalation

in the cost of sales of the

sector where key raw materials

and imported material prices

increased during the period

under review, in addition, the

lack of skilled manpower in

the industry resulted in further

increased cost of labour.

For the forthcoming years, the

Civil Engineering Sector has

an order book of large scale

long-term projects. The sector

expects profitability to show

a transformation as the sector

level of skills through on-the-job

training programs.

Workshop

Located in Sapugaskanda, the

workshop carries out repairs

and maintenance of the Group’s

heavy equipment, machinery,

and vehicle fleet. It carries out

various types of steel fabrication

that are utilised for both internal

and external consumption. The

workshop also has an Effluent

Treatment Plant which recycles

waste water and is then utilised

for other projects such as

cleaning its vehicle fleet.

Quarry Operations


owns four quarries across

Sri Lanka that is capable of

producing up to 60,000 cubic

meters of aggregate products

per month to be consumed

for projects carried out by the

Group.

Sand Manufacturing Plant

The sector invested in a

manufactured sand plant as an

alternative for consuming river

sand in concrete mixes and

commenced operations during

the financial year 2017/18,

providing a sustainable solution

to resolve issues related to the

mining of river sand.

Asphalt and Concrete

Batching Plants

The sector operates four

asphalt plants and eight

concrete batching plants. The

asphalt plants have a combined

capacity of over 15,000 metric

tons per month while the

concrete batching plants have

a combined capacity of over

10,000 cubic meters per month.

engages in large projects with

healthy margins.

Revenue

2015/16

10,56610,164

11,942

2017/182016/17

Rs.

mill

ion

0

2,000

4,000

6,000

8,000

10,000

12,000


The Civil Engineering Sector of

the Group is one of the leading

infrastructure developers in Sri

Lanka, and the Group maintains

an extensive construction

related resource base which

includes a fleet of over 500

plant and heavy machinery

and equipment, 12 piling rigs,

quarries, a manufactured sand

plant precast plant, batching

plants and workshops.

Incessant investments in

machinery, equipment and

plant increases revenue while

providing job opportunities to

local communities in its area of

operation and improves their

The batching plants help

streamline the supply chain

activities of projects undertaken

by the sector and enables

timely and efficient completion.


For the Civil Engineering Sector,

Intellectual Capital is salient

and pays incessant attention to

it as it augments the Financial

Capital of the sector. People,

brand equity, expertise and its

awards and accreditation are

the elements that drive the

sector’s Intellectual Capital.

CML-MTD Construction and

Walkers Piling brand names play

an important role in building

the sector’s brand equity, as

CML-MTD Construction is one

of the largest construction

partners in Sri Lanka and

Walkers Piling is the pioneer

piling company in Sri Lanka

with the highest capabilities.

The Intellectual Capital of the

sector is further heightened

as the two companies in this

sector yield knowledge and

are the most experienced

operators in the industry, and

is further complemented by

its strategic partnerships with

world renowned infrastructure

development companies.

The awards and accreditations

that have been received by

the subsidiaries of the Group

operating in this sector, includes

the Corporate Platinum rating

by the Green Building Council

of Sri Lanka, CS2 Grading for

CML-MTD Construction and

Grade GP – B1 for Walkers Piling

by the Construction Industry

Development Authority – of

73


FinancialStatements


which all have played a key

role in the sector’s Intellectual

Capital.

NATURAL CAPITAL

The Group’s Civil Engineering

Sector endeavors to conduct

its operations with minimal

impact on the environment. As

a result the sector has in place

an Environmental Management

System – ISO 14001, to

guarantee the reduction of

its operational environmental

impact, and conforms to all

applicable local laws and

regulations.

The sector’s Natural Capital is

also governed by the overall

Group Environmental and

Sustainability policies which

are available on the Group

website (www.walkerscml.com/

sustainability).

It is essential for the sector

that its Natural Capital is

managed efficiently and strives

to heighten the consumption

of input Material, Energy

and Water, while reducing

its Carbon Footprint, Waste

Generation and Effluent

Discharge, ensuing in a direct

positive impact on the sector’s

Financial Capital. Monitoring

of the sector’s performance

indicators of material topics are

conducted on a quarterly basis

in order to improve its quarter

on quarter performance as one

of the key components of its

strategy of managing Natural

Capital. This in turn supports

the sector in managing

its overall sustainability

performance and plays a vital

role in senior management

decision making.

The Group Sustainability

carries out internal assurance

of its project sites to guarantee

consistency of sustainability

related processes and data.

materials, the sector continued to use quarry dust, a by-product of

its quarry operations to produce concrete blocks. The sector also

uses manufactured sand and quarry dust as an alternative to river

sand, allowing the sector to reuse a material which would have

been classified as waste.

Comparative data for the financial year 2017/18 and 2016/17

is listed under ‘Raw Materials Procured for the Civil Engineering

Sector’.

Raw Materials Procured for the Civil Engineering Sector

2017/18 2016/17

Timber and Plywood (LFT) 49,323 45,956

Aggregates (Cubes) 65,149 33,012

Sand (Cubes) 13,072 14,447

Asphalt (MT) 42,686 57,040

Tor Steel (MT) 8,950 7,786

Bitumen (MT) 2,068 2,316

Ready Mix (m3) 29,851 41,814

Lubricants (l) 82,531 95,371

Cement (MT) 29,297 23,868

Paint (l) 73,273 65,507

Renewable Materials

Raw Materials



Conserving energy and reducing carbon footprint is governed by

the Group’s Environmental and Energy Management policies.

The sector monitors its electricity and fossil fuel consumption

according to the methodology that has been approved by the

Group, and as stated in the Integrated Group Review in this Annual

Report.

The carbon intensity factors mentioned under ‘Carbon Footprint

Per Intensity Factor – Civil Engineering Sector’ will form the base for

carbon reduction targets in the forthcoming years.

Carbon Footprint Per Intensity Factor – Civil Engineering Sector

2017/18 2016/17

Construction - per LKR million revenue 1.4 MT 1.1 MT

Quarry Operations - per cube of

aggregate produced 0.02 MT 0.027 MT

Piling - per cubic meter of pile driven 0.16 MT 0.10 MT


Supply Chain

The sector’s procurement and

sourcing processes are guided

by the Group Procurement

and Sourcing Policy which

encourages the effective

sourcing of raw materials from

local suppliers to guarantee an

incessant supply. The key input

materials such as Bitumen,

Cement, Tor Steel, Lubricants

and Computers are obtained

through the Group’s central

sourcing initiative, allowing

the sector to benefit from the

buying power of the Group, in

terms of both price and quality.

The basis for selecting a

supplier is through carrying

out an evaluation on the

technical, commercial viability

and sustainability practices

in order to guarantee quality,

optimal cost and reduced risk

of operations to the Group

while ensuring local suppliers

are benefited.

In the year under review, the

sector evaluated its 11 suppliers

[FY 2016/17: 11] for Bitumen,

Tor Steel, and Cement for

sustainability qualities. The

sector maintained the same

number of suppliers with their

formal agreements which

includes terms and conditions

stipulating sustainability and

environmental best practices

by suppliers.

Majority of the materials, goods

and services consumed by the

sector are acquired locally or

through an authorised local

agent.

In addition, outsourced labour

contractors were used when

required, sub-contract portions

of project work subsequent to

signing a formal contract. To

address the shortage of raw

74

MTD WALKERS PLC



Carbon Footprint – Civil

Engineering Sector


2017/18 2016/17

Total 13,770 13,861

Scope 1 12,664 12,743

Scope 2 1,106 1,117

Energy Consumption - Civil

Engineering Sector

2017/18 2016/17

Energy

Consumption

(GJ) 176,508 177,425

Electricity Consumption - Civil

Engineering Sector

2017/18 2016/17

Electricity

Consumption

(kWh) 1,571,181 1,587,061

Water and Effluent

Management

The Group Water Management

Policy guides the Civil

Engineering Sector on the

optimisation of the use of

water withdrawn from blue

water sources and encourages

reduced consumption, re-use

and recycling of water. In

addition, the policy also states

the quality-levels of discharged

wastewater in line with the

relevant country laws. Water

usage is monitored through

the use of water meters and

estimates based on pump time

where meters are unavailable.

For the period under review,


continued to use Polymer

for its day to day operation

as an alternate to Bentonite.

The sector uses water soluble

polymers for the piling process

in order to sustainably manage

the natural resource of fresh

water.

Blue water conservation

continued to be a priority for

the sector and initiatives which

included the utilisation of

quarry pits at the Hambantota

quarry site to naturally harvest

rainwater to be used at the

site, re-use of waste water for

cleaning vehicle undercarriages

after treatment at the Effluent

Treatment Plant at the

workshop in Sapugaskanda,

and the re-use of discharged

water generated during pile

construction with the use of

de-sanders, enabling the sector

to reuse water for subsequent

piles, thereby offsetting the

need for further withdrawal

from blue water sources.



2016/17 is listed under ‘Volume

of Water Withdrawn by Source

– Civil Engineering Sector’,

and 'Water Discharge – Civil

Engineering Sector’.

Volume of Water Withdrawn by Source – Civil Engineering Sector

Volume of Water

Withdrawn (m3)

Source 2017/18 2016/17

Surface Water - Wetlands, Rivers, Lakes,

Oceans 109,246 19,487

Ground Water 12,118 12,714

Rainwater Harvested 0 450

Waste Water from Another

Organisation 287 0

Municipality, Authority Water Sources 146,774 151,824


Water Discharged – Civil Engineering Sector

Volume (m3)

Destination of Discharge 2017/18 2016/17

To Municipality Sewerage, Drainage Lines 1,100

To ETPs and Recycled Completely 286

Direct to Rivers, Lakes, Wetlands, Marshes 0 794

To Ground 264,544 182,923

Total Water Discharged 265,931 183,717

Waste Management

To improve the efficiency in consumption of virgin material

through reuse and recycling, and disposal of waste by licensed

third party contractors, the Civil Engineering Sector has adopted

the Group Waste Management Policy. Information pertaining to

waste generation was monitored through dispatch and issue notes

at security points and other estimates.

Waste segregation and

estimation continued to be a

challenging effort for the sector

with estimations of waste

data not being standardised.

The Sustainability Division

continues its efforts together

with the Sustainability

Champion of the sector to

create awareness with a view

to enhance accuracy of its

waste estimations, through the

introduction of standardised

procedures.

In addition to the sector’s

exertions of recycling waste,

the use of waste quarry dust

continued for the production

of concrete blocks and as

an alternative to sand in its

construction activities, and

reuses steel offcuts. All non-

hazardous demolition debris at

the construction site is sent to

landfills, keeping in line with all

laws and regulations.

For the financial year 2017/18

the quantity of Hazardous

Waste created and disposed

was 370,904 kilograms [FY

2016/17: 99,129 kilograms) with

202,596 kilograms being re-

used and 7,887 kilograms being

stored onsite.



2016/17 is listed under ‘Disposal

Method of Non Hazardous

Waste – Civil Engineering

Sector.'

75


FinancialStatements



and Spillages

Fine paid, spillages and all

other compliance related

requirements as per Sri Lankan

legislation were tracked

and monitored by the Civil

Engineering Sector. When

associating with environmental

regulatory requirements, a

Standard Operating Procedure

was developed to guarantee

that all business units of the

sector adheres to similar

standards, and as a part of the

Standard Operating Procedure

mitigation of the risk of spillages

secondary containments have

also been included.

There were no significant spills

or fines reported during the

year under review. The Group

defines significant as spillage or

fines where the financial loss is

worth over LKR 1.0 million.

Environmental Grievance

Mechanisms


continues to maintain the

ISO14001 certification in all its

operational sites in an effort

to keep environmental risks

at a minimum. There is an

Environmental and Health

and Safety Officer for each

operational site, who can be

The sector continued to

maintain OHSAS 18001

Management System and

complied with all applicable

local laws and regulations,

predominately based on the

ILO convention in an effort to

reduce the operation impact

on its employees. Employment

related indicators which

include attrition, diversity,

training hours, health and

safety incidents and incidents

related to child labour and

forced labour are tracked by the

sector quarterly.

The sector recruited 296 [FY

2016/17: 401] new employees,

of which 256 were male

employees [FY 2016/17: 333]


[FY2016/17: 68].

Of the total new hires, 51.0


with 47.3 percent between the

age of 30 – 50 years and 1.7

percent above 50 years.



1.1 percent] and the total

attrition rate of the sector was

12.5 percent [FY 2016/17: 20.4

percent].

contacted by members of the

community in the event of any

environmental grievances.

HUMAN CAPITAL

The Group Human Resources

Policy governs the Civil

Engineering Sector, and has

also adopted the Group policies

on Child Labour, Forced Labour,

Anti- Corruption and Freedom

of Association. The Group

Human Resources Division has

mandated relevant processes

and best practice which the

sector has adhered to during


Lack of skilled labour remains

one of the key concerns for

the sector, as the number

of youth opting to work in

the construction industry is

declining. In the upcoming

financial year the sector will

continue to address this

shortage by augmenting its

labour force through regional

hires. The Group Human

Resources Division will engage

proactively with the relevant

authorities to ensure a smooth

entry and sound working

conditions and undertake

measures to attract and retain

skilled labour within the sector.

Employment


is governed by the Group

policies on Recruitment, Equal

Opportunity, Performance

and Talent Management. The

sector further adheres to Group

employee benefits, which are

in line with the regulations of

Sri Lanka.

The sector has a Welfare

Committee that continuously

engages with employees in

an effort to understand and

manage their objectives.

Training


has adopted the Group policies

on Training and Development,

Talent Management and

Career Development. The

Group provides training for

the sector employees on job

skills, leadership and technical

competency in order to

enhance and assist employees

in reaching their potential.

Health and safety training is

one of the key training areas

that the sector focuses on, the

other focused areas include

lean practices, green building,

and technical training.

The sector continuously

engaged with all its employees,

Disposal Method of Non-Hazardous Waste – Civil Engineering

Sector

Volume (kg)

Disposal Method 2017/18 2016/17

Total Non-Hazardous Waste Disposed 13,285,446 30,564,373

Reuse 30,119 1,542

Recycling 107,184 240,357

Composting 2,160 5,700

Recovery 2,389 0

Landfill 13,130,717 30,024,000

On-Site Storage 12,777 292,774

* The sector is yet to fully streamline its hazardous waste

measurement process and intends to do so at a future point in time.

Workforce of the Civil Engineering Sector

2017/18 2016/17

Sector Employees 1,405 1,312

Sub Contract/ Casual workers 2,044 3,244

Total 3,449 4,556

All employees of the workforce were engaged in local operations

with no employees based outside the country.

Contract Type of Employees – Civil Engineering Sector

Type of Contract 2017/18 2016/17


Contract Employees 952 829

76

MTD WALKERS PLC



Training Hours for Employees – Civil Engineering Sector

2017/18 2016/17

Total Training Hours 9,831 11,774

Average Hours Per Managerial Level 16.3 23.0

Average Hours Per Executive Level 5.9 8.7

Average Hours Per Non-Executive Level 8.2 8.2

Average Hours Per Employee 7.0 9.0

Training Hours for Employees by Gender – Civil Engineering

Sector

2017/18 2016/17

Average Hours Per Male Employee 6.5 9.0

Average Hours Per Female Employee 13.9 8.5

guarantee compliance with

the Group’s Health and Safety

Policy and the OHSAS 18001

Management System.

The injury and fatality rate

of the workforce is 1.30 [FY

2016/17:0.94), the Lost Day

rate of the sector is 0.02

[FY 2016/17: 0.01] and no

unauthorised absenteeism was

recorded during the year.

Minor occupational injuries or

diseases that cause absenteeism

for less than one day have been

excluded, although records are

maintained for such injuries and

diseases.


review 67.4 percent of the

injuries was as a result of

moving objects [FY 2016/17:

85.4 percent) and 23.3 percent

was as a result of falling [FY

2016/17: 12.2 percent).

Child Labour

The Child Labour Policy of

the Group has been adopted

by the Civil Engineering

Sector, which mandates the

prohibition in employing any

person below the age of 18

years and zero tolerance of

child labour.

The sector ensures that no

events of child labour arises

by requiring all prospective

employees to produce valid

identification during the

recruitment process, and ensures

the minimum age requirement

is met. During the financial year

under review, the sector had no

reports of child labour.

Forced Labour

The Forced Labour policy works

in line with the Civil Engineering

Sector, the policy also ensures

that the sector complies with all

legal requirements and industry

standards with respect to labour

practices. As applicable, the

business units under the Civil

Engineering Sector provides

compensation or variable

pay for employees working

beyond normal working hours

including provisions for meals

and transport. During the year

under review, the sector did

not identify any areas of risk

associated with forced labour.

Anti-Corruption

The Group’s Anti-Corruption

Policy is adopted by the Civil

Engineering Sector which

entails all employees to adhere

to anti-corruption guidelines

and the Code of Conduct

provided by the Group. The

sector is continuously evaluated

on risks related to corruption

in order to develop mitigation

strategies to reduce such risks.

In addition, the Group Internal

Audit Division carried out

periodical audits on the sector

to ensure compliance with

Standard Operating Procedures

and best practices.

SOCIAL AND

RELATIONSHIP CAPITAL

Enhancing its interactions

with all its stakeholders and

developing long lasting

relationships is of great

importance to the Civil

Engineering Sector. The sector

carries out its operations in

an open and ethical manner,

engaging with stakeholders at

Labour Grievances

Mechanism

The sector has adopted the

Labour Grievance Mechanism

in place for all employees. To

capture the view of casual

employees the sector has in

place an open door policy and

periodic employee surveys.

All employees can directly

communicate to the Deputy

Chairman of the Group via

email.


Safety

The Group’s Health and Safety

Policy has been implemented

by the Civil Engineering Sector,

and takes a proactive approach

to the management of health

and safety practices, while

guaranteeing adherence to

all relevant health and safety

regulations.

The business units under


are OSHAS 18001 certified,

the sector understands the

challenge in implementing

management systems that

records and reports on the

rates of injury, occupational

diseases, near misses, lost

days, absenteeism and a

total number of work-related

casualties for sites that have

a short project period. As a

result the sector continues to

strive for a standard operating

template that deploys

information at such sites in

a short period of time whilst

creating awareness on the

importance of health and safety

within its staff.

The Health and Safety Officers

continuously monitor all

sites for the Occupational

Health and Safety practices, to

providing feedback along with

the annual performance review

that was carried out at the end

of the financial year in concern.

Comparative data for training

provided by the sector for its

employees for the financial years

2016/17 and 2017/18 are given

in the table titled: 'Training Hours

for Employees - Civil Engineering

Sector' and ' Training Hours for

Employees by Gender – Civil

Engineering Sector'.

77


FinancialStatements


various stages to ensure the

alignment of mutual interests.

The Group has in place policies

on Social Responsibility, Anti-

Corruption, and Compliance,

all of which are adopted by the

sector to incorporate principles

of good corporate citizenship.

Local Communities


of the Group carries out

operations in a dynamic

environments amongst

various community groups.

The sector strives to establish

strong relationships with local

communities, to maintain its

social license to operate.


review, social responsibility

initiatives were carried out

to help families in order to

augment the Social and

Relationship Capital of the

sector. In addition, the Civil

Engineering Sector is engaged

in the Accelerated Middle

Income Housing Program

initiative by the Government,

providing affordable housing

for communities to uplift living

standards.

Regulators and Public Sector

Customers

Regulators and Government

bodies have strategic importance

in the sector’s operations, as

it engages predominately in

infrastructure development

initiated by the Government and

its relevant departments.

For the year under review no

significant fines over a value of


for the sector.

Key Initiatives by the Civil Engineering Sector

Partner Project site Initiative

Helpage Sri Lanka Wilgamuwa Water Supply Project Sponsorship for a Medical and Eye

Camp held at Sri Anandarama Viharaya

Gemburuoya

Project Director of the Kandy City Wastewater

Management Project

Kandy City Wastewater Management

Project

Contribution to a Pirith Ceremony

Sinharaja Sumithoro Organisation, Dehigampala - Contribution to an Avurudu Festival

Police Station, Kotadeniyawa CML- Divulapitiya Site Providing of raw materials for the

construction of the Police Station building

Kudagalhena K.V. Pitabeddara CML-Deniyaya I Road Contribution to a Sinhala New Year Festival

on 4th April 2017

Thalawilla Village CML Asphalt Plant Construction of a protective wall for the

temple's Bo Tree

Rathnavali Balika Vidyalaya – Gampaha - Sponsorship for the Inter-school Cricket

Tournament 2017

Pubudu Youth Club - Ilukpitiya - Providing raw materials for the construction

of a library for the Ilukpitiya Primary School

Southern Community Collective – Kotapola - Sponsoring a seminar for Grade 5 scholarship

exam students

Colombo North Teaching Hospital, Ragama - Donation of paints for the renovation work

Getabaru Esala Festival Organising Committee - Sponsorship of lunch packets for the

participants

St. Anthony's Church Dambuwa, Ragama - Providing raw materials for renovation work

at the Church

Sri Lanka Federation of the Visually Handicapped

- Gampaha District Branch

- Contribution to the International White Cane

Day 2017 programme

Helpage Sri Lanka Central Expressway-Kurunegala Sponsorship for three Medical and Eye

Camps held at Nailiya

Nisala Meditation Centre, Udadumbara, Kandy - Assistance for construction of Meditation Hall

PARA Regimental Centre Gemunu Watch - Sponsorship for a Musical Show and Lottery

Draw - 2017

Old Girls Association Viharamahadevi Balika

Vidyalaya Kiribathgoda

Walkers CML Properties (Private) Ltd Sponsorship for "Vibhavi Show 2017"

Maliyadeva Old Boys Association- 95 Group Central Expressway-Kurunegala Sponsorship for a School Souvenir

Department of Civil Engineering , Faculty of

Engineering , University of Peradeniya, Sri Lanka

Sponsorship for a University Exhibition

"Vortex 2017"- Civil Engineering Society

78

MTD WALKERS PLC



FUTURE OUTLOOK

The Government continued

to develop the road network

of the country in order to

augment regional integration

and improved productivity,

it has been identified by

the Government that the

construction industry stems a

significant role in the economic

growth of the country. By

the end of the year 2017, Sri

Lanka’s road network consisted

of 12,210 km of Class A and

Class B roads, 169.8 km of

expressways and 4,662 bridges.

In addition to the recent road

developments that were

executed in the year 2017, the

RDA has strategised several

medium-term and long-term

road development projects.

The Government has identified

the need for enhancing the

irrigation and water supply

infrastructure of the country

during the period under

review by commencing two

large irrigation projects in the

Polonnaruwa and Monaragala

Districts. In 2018, the National

Water Supply and Drainage

Board strategies to implement

12 projects for the supply of

water in the North Central,

Central, Southern, Northern,

Eastern and Western provinces,

is estimated to cost approx. LKR

245.6 billion.

The Urban Development

Authority (UDA) states that

over 50.0 percent of the

Colombo city population lives

in shanties, slums or dilapidated

old housing schemes, which

occupy nine percent of the

total land extent of the city.

By 2020 the UDA believes that

they can create a city free of

shanty dwellers.

The sector believes that with

these upcoming projects

together with their current

order book consisting of

the Central Expressway, four

ADB-funded UVA Province

Integrated Roads, the Upper

Elahera canal, the Wilgamuwa

water supply project, building

projects and their large scale

piling projects will continue

to strengthen the engineering

and infrastructure development

skills and expertise whilst

contributing favourably to the

sector’s top and bottom line in

the imminent financial years.

79


FinancialStatements



OPERATIONAL REVIEW

During the year under review, sustaining the market presence of

Walker Sons & Company Engineers under the Heavy Engineering

Sector was a challenge, this was mainly as a result of the fierce

competition encountered in the market due to new entrants. The

revenue of the sector reduced by 0.3 percent Year on Year to LKR

844 million [FY 2016/17: 846 million] with a gross profit of LKR 14

million.

The sector continued to maintain its multiple EM1 Grading in the

Heavy Engineering Sector.

Projects

FUEL TANK EXPANSION AND BERTH RETROFITTING PROJECT

Client State Trading Organisation PLC- Republic

of Maldives

Main Contractor Walker Sons & Company Engineers

(Private) Limited

Location Maldives

Status Completed

Project Description Construction of three diesel tanks and one

petrol tank including the foundation.

MULTI-PURPOSE DEVELOPMENT PROJECT - UMA OYA

Client Andriz Hydro GmbH ,Vienna

Sub Contractor Walker Sons & Company Engineers

(Private) Limited

Location Wellawaya

Status Completed

Project Description Installation of Mechanical and Electrical

Equipment.

Mechanical work carried out at Kolonna Balangoda Water Supply

80

MTD WALKERS PLC


DESIGN AND CONSTRUCTION OF A NEW WATER SUPPLY

SCHEME FOR KOLONNA AND AUGMENTATION OF BALANGODA

WATER SUPPLY SCHEME

Client CFE, Belgium


(Private) Limited

Location Kolonna and Balangoda

Status Completed

Project Description Lightning and earthing system for water

treatment plant

Additional work: Carrying out concrete

work, landscaping and turfing,

construction of catch pits and drainage

pipes, providing roofs and diesel storage

tanks and fixing ventilation systems.

REPAIRING AND PAINTING TANK THREE - ORUGODAWATTE

Client Ceylon Petroleum Corporation


(Private) Limited

Location Orugodawatte

Status Ongoing

Project Description Repairing and painting of bottom roof,

shell and sealing system of crude oil

storage Tank No. 03.

PEOPLE’S BANK HEAD OFFICE BUILDING

Client CML-MTD Construction Limited


(Private) Limited

Location Colombo 02

Status Ongoing

Project Description Strengthening of beams using brackets

and plates for People’s Bank head office

building.

FINANCIAL CAPITAL

The Group’s Heavy Engineering Sector experienced a significant

decline in its performance in comparison to the previous financial

year. Revenue of the sector plunged by 0.3 percent Year on Year

to LKR 844 million [FY 2016/17: LKR 846 million]. The key reason

for the drop in revenue was due to unavoidable delays from

the Maldives tank project. Additionally, Walker Sons & Company

Engineers were awarded only a limited number of projects owing

to the rivalry between the existing and new market players.

The gross profit margin of the

sector fell from 18.5 percent to

1.7 percent compared to the

previous financial year, again

mainly due the deferment in

completing the tank project in

Maldives which consequently

resulted in the company

having to incur fixed overhead

costs despite the project not

generating any revenue.

During the financial year, the

sector made a net loss of LKR

70 million in comparison to

the profit of LKR 27 million last


Revenue

2015/16

184

846 844

2017/182016/17

Rs.

mill

ion

0

200

400

600

800

1,000


The Group’s Heavy Engineering

Sector maintains a construction

related resource base which

includes a fleet of heavy

machinery, equipment and

workshops equipped with

state-of-the-art metal working

machinery, and possesses one

of the largest lathe machines

in the country. The sector

also owns a factory capable

of manufacturing aluminium

ducting and is the only local

supplier for ducting with a

diameter greater than 315

millimetres.

MANAGEMENT DISCUSSION AND ANALYSIS – HEAVY ENGINEERING SECTOR


The sector recognises

Intellectual Capital as one of

the most important strategic

assets that could strengthen

the sector’s Financial Capital.

The Intellectual Capital for the

sector includes its brand equity,

expertise, people, awards and

accreditations.

The brand equity of the sector

is largely enhanced by its

heritage company, Walker Sons

& Company Engineers, which

has over 160 years of expertise

and having completed some

of Sri Lanka’s largest landmark

projects. This has also resulted

in the sector being recognised

as one of the leading heavy

engineering companies in

Sri Lanka.

Accreditation received

on the EMI Grading by

the Construction Industry

Development Authority plays

a significant role in the sector’s

Intellectual Capital. The sector’s

partnerships with some of the

world-renowned companies

further enhances its Intellectual

Capital.

NATURAL CAPITAL

The Heavy Engineering Sector

of the Group endeavours

to minimise its operational

environmental impacts

through the establishment of

an Environmental Management

System – ISO 14001:2015,

and by complying with all


regulations.

81


FinancialStatements


The Group’s Environmental and

Sustainability policies (available

on the Group website www.

walkers.com.com/sustainability)

governs the Natural Capital

of the sector, and have been

adopted by the sector.

The sector monitors its material

topics which includes Energy

and Emissions, Water, Effluents

and Waste and Environmental

Compliance in its efforts to

minimise impact under these

areas. Further to this, all data

related to the sector is reviewed

by the Group Sustainability

Division.

Material, Procurement and

Supply Chain

The sector’s procurement

and sourcing processes are

governed by the Group

Procurement and Sourcing

Policy which encourages

the efficient sourcing of raw

materials from local suppliers

and assures continuous

sourcing of raw materials. In

compliant with the Group

policy, majority of the materials,

goods and services used by the

sector are purchased locally or

through an authorised local

agent.

The sector imports its capital

equipment through local

agents, while all other material

is sourced locally. The sector

also utilises outsourced labour

contractors and when needed,

subcontracts portions of a

project subsequent to signing a

formal contract.



2016/17 is listed under ‘Raw

Materials Procured - Heavy


Energy Consumption - Heavy

Engineering Sector

2017/18 2016/17

Energy

Consumption

(GJ) 4,399 2,022

Electricity Consumption -

Heavy Engineering Sector

2017/18 2016/17

Electricity

Consumption

(kWh) 198,123 161,778

Waste and Effluents

The Group’s Waste

Management Policy and the

Hazardous Waste Management

Policy has been adopted

by the Heavy Engineering

Sector, which encourages the

minimising of waste generation

and disposal of waste through

licensed third-party contractors.


and Spillage

The sector tracked and

monitored all fines paid,

spillages and all other

compliance related

requirements as per Sri

Lankan legislation. Standard

Operating Procedures are

utilised to ensure all business

units of the sector adheres

to similar standards when

dealing with environmental

regulatory requirements. As a

part of the Standard Operating

Procedures, in order to mitigate

the risk of spillages, secondary

containments have also

been included. There were

no significant spills or fines

reported during the year under

review. The Group defines

significance as spillage or fines

Raw Materials Procured -


2017/18 2016/17

Lubricants (l) 542 320

Paint (l) 1,165 606

*Sand (Cubes) 16,253 0

Cement (MT) 2 0

Ready mix

(m3) 104 0


* Increase is mainly due to the

tank project in Maldives




governs the sector's energy use

and emission generation which

requires the Group to adopt

lean energy practices to ensure

the conservation of energy and

minimise of the Group’s carbon

footprint. The sector monitors

its electricity and fossil fuel

consumption in accordance to

the calculation methodology

adopted by the Group.



2016/17 is listed under ‘Carbon

Footprint – Heavy Engineering

Sector’, and 'Energy and

Electricity Consumption –

Heavy Engineering Sector’.

Carbon Footprint – Heavy

Engineering Sector


2017/18 2016/17

Total 410 219

Scope 1 271 105

Scope 2 140 114

where the financial loss is

worth over LKR 1.0 million.

HUMAN CAPITAL

The sector is governed by the

Group Human Resources Policy

which has been adopted into

the Group’s policies on Human

Resources, Forced Labour, Child

Labour and Anti-Corruption.

To ensure entrenchment of

these policies for its daily

operations, indicators including

attrition, diversity, training

hours, and incidents related

to child labour and forced

labour are tracked through its

Sustainability Performance -

Management System.

Employment

The Group policy on

Recruitment, Equal Opportunity,

Performance and Talent

Management governs all

employment related activities

carried out by the sector.

The sector also adheres to

Group employee benefits at

a minimum which is detailed

in the Integrated Group

Performance Review section.

The sector also utilised the

Sustainability Performance

Management System to monitor

the diversity of its workforce.

Workforce - Heavy

Engineering Sector

2017/18 2016/17

Employees 230 234

Sub-

Contract/

Casual

Workers 55 -

Total 285 234

82

MTD WALKERS PLC


MANAGEMENT DISCUSSION AND ANALYSIS – HEAVY ENGINEERING SECTOR

Contract Type of Employees –


2017/18 2016/17

Permanent

Employees 17 11

Contract

Employees 213 223

Geographical Location

of Workforce – Heavy

Engineering Sector

2017/18 2016/17

Sri Lanka 182 185

Outside

Sri Lanka 48 49

During the year, the Heavy

Engineering Sector hired 92 [FY

2016/17: 149] new employees,

of which 83 [FY 2016/17: 139]

were male employees and 9

[FY 2016/17: 10] were female

employees.


Safety


has adopted the Group’s Health

and Safety Policy and it takes

a proactive approach to the

management of health and

safety practices, while adhering

to all relevant health and safety

regulations.


2017/18, the sector obtained

the OHSAS 18001 certification

in order to ensure that a

rigorous Occupational Health

and Safety Policy is in place;

which protects employees

against possible occupational

risks and reduces the likelihood

of accidents.

The sector recorded and

reported rates of injury,

occupational diseases, lost days,

unauthorised absenteeism

and a total of work-related

casualties of its workforce.


no significant incidents were

recorded which resulted in

more than one lost day.

Child Labour

The Group’s Child Labour

Policy, which is in line with

local laws and regulations, has

been adopted by the sector.

The sector continues to take

necessary actions and steps to

minimise risk of child labour.

No cases of child labour were

reported during the year under

review.

Of the total new hires, 46


with 42 percent between the

age of 30 – 50 years and 4

percent above 50 years. 41 new

hires were based in Sri Lanka

while 51 new hires were based

outside Sri Lanka.


is 1.7 percent of the total

employees [FY 2016/17: 6.8

percent] and the attrition rate

of the sector is 37.4 percent [FY

2016/17 59.0 percent].

Training

Keeping in line with the

Group’s policies on Training

and Development, Talent

Management and Career

Development, the sector places

emphasis on capacity and skill

development.

Forced Labour

The sector works in line with

the Group policy on Forced

Labour, and it further complies

with all legal requirements and

industry standards with respect

to labour practices. During the

year under review, the sector

did not identify any areas of risk

associated with forced labour.

Anti-Corruption

The Group Anti-Corruption

Policy adopted by the sector

requires all employees to

adhere to the anti-corruption

guidelines and the Code

of Conduct of the Group.

Continuous assessment of risk

related to corruption takes

place to develop mitigation

plans to reduce such risks.

The Internal Audit Division of

the Group carries out periodical

audits on the sector to ensure


Operating Procedures and best

practices.

SOCIAL AND



places great importance on

enhancing its stakeholder

interactions and carries out

its operations in an open and

ethical manner while engaging

with stakeholders at various

stages to ensure the alignment

of mutual interests.

Training Hours for Employees – Heavy Engineering Sector

2017/18 2016/17

Total Training Hours 1,032 596

Average Hours Per Above Managerial Level 26.0 0





Training Hours for Employees by Gender – Heavy Engineering

Sector

2017/18 2016/17



83


FinancialStatements


of dams and electrical and

plumbing work, in order to

identify different strategies to

become more competitive in

the market. Furthermore the

supplementary companies;

Central Workshop and Western

Air Ducts will continue to carry

out operations under the sector.

This new strategic positioning

will support the other sectors of

the Group and aid in enhancing

the manufacturing capabilities,

engineering skills and resources.


Customers


engages predominantly in

infrastructure development

and as a result, Regulators and

the Government bodies are

strategically important to the

sector's operations.


no significant fines over a value

of LKR 1.0 million were reported

for the sector.

FUTURE OUTLOOK

Despite the growth in Sri

Lanka’s construction industry,

the Heavy Mechanical

Engineering Sector in particular

witnessed a significant decline

in growth primarily due to the

slowdown of state involvement

in the heavy industrial

projects, owing to the high

public debt burden and the

growing focus on trimming

fiscal deficit. Furthermore, the

division operating under this

sector encountered a variety

of challenges in finding new

business due to increase in

competition from smaller

unlisted peers, construction

cost over-runs, unclear

governmental approvals and

overlapping regulations.

After careful consideration

and analysis, the management

has decided to restructure

the segment of Walker Sons &

Company Engineers (Private)

Limited, which undertook the

scope of work consisting of

designing, and construction of

fuel storage tanks, rehabilitation

84

MTD WALKERS PLC



OPERATIONAL REVIEW

During the year, Walkers

Colombo Shipyard built two

Bollard Pull Harbour Tugboats

which were launched on

September 21st, 2017 and

January 25th, 2018 to facilitate

the manoeuvring of incoming

vessels to the Shipyard. In

addition, Walkers Colombo

Shipyard was able to secure

its first external build-to-order

contract for a 23 metre self-

propelled barge to Sanken

Overseas Maldives (Private)

Limited which was completed

and launched on November

8th, 2017 and is in the process

of constructing the second

landing craft to the same.

FINANCIAL CAPITAL


the Marine Engineering Sector

of the Group reported a

revenue of LKR 306 million [FY

2016/17: LKR 109 million] and a

gross profit of LKR 133 million

[FY 2016/17: LKR 66 million].

The Marine Engineering Sector

witnessed a growth in revenue

due to a healthy order book

for afloat ship repairs. During

the financial year 2017/18

Walkers Trinco Shipyard did

not recognise any revenue due

to onsite development work.

However, Walkers Colombo

Shipyard recognised revenue

by conducting vessel repairs

Walkers Colombo Shipyard in

the coming financial year, will

see the commissioning of its

fully-fledged vessel repair yard

with a new Shiplift and Transfer

System at the Mutwal Fishery

Harbour.

Walkers Trinco Shipyard located

at the Cod Bay Fishery Harbour

in Trincomalee is expected to

commence full-scale commercial

operations during the next

financial year and will be

equipped with a Boat Lift System

for which the final test phase is

currently being carried out.

The revenue of the sector grew

by 181.7 percent Year on Year

while the gross profit increased

by 103.4 percent.

while continuing onsite

development work.

Revenue

2015/16

86

109

306

2017/182016/17

Rs.

mill

ion

0

50

100

150

200

250

300

350


The main business segments in

the sector includes ship building

and provisioning of ship repair

Harbour Tugboats Sea Gulf - 02 and 03 docked at the Mutwal Shipyard

85


FinancialStatements


services which is supported

by its extensive range of

resources including marine

engineering equipment and

tools. The Sector’s Manufactured

Capital consists of speed boats,

underwater steel cutting and

polishing equipment and deep-

sea diving gear.

Upon completion, the Mutwal

shipyard will be equipped

with a Shiplift and Transfer

System, three tower cranes and

advanced marine engineering

equipment, and the shipyard

in Trincomalee with a 50 Tonne

boatlift.

Walkers Colombo Shipyard’s

fleet of vessels includes a 42

meter deck barge and two

bollard pull harbour tugboats,

designed and developed by

an in-house team of skilled

designers and engineers.



sector comprises of a senior

management team with

specialised knowledge and

extensive experience in marine

engineering. In strengthening

the sector’s brand equity,

awareness campaigns and

information sessions are

regularly carried out targeting

stakeholders. This also ensures

that the sector gains maximum

advantage once complete

operations commence.

Stakeholder awareness is

carried out through partner

events, press releases,

interviews, sponsorships and

other communication activities.

NATURAL CAPITAL


extends its responsibility

towards society by taking an

active role in safeguarding

the marine environment and

ecosystems during the conduct

of operations in building and the

the Group Environment and

Energy Management Policy

which mandates adoption

of lean energy practices that

enables the Group to ensure

the conservation of energy and

the carbon footprint.

Data for the financial year

2017/18 and 2016/17 is listed

under ‘Carbon Footprint –

Marine Engineering Sector’,

and ‘Energy and Electricity

Consumption – Marine


Carbon Footprint – Marine

Engineering Sector


2017/18 2016/17

Total 231 165

Scope 1 97 55

Scope 2 134 110

Energy Consumption - Marine

Engineering Sector

2017/18 2016/17

Energy

Consumption

(GJ) 1,999 1,319

Electricity Consumption -


2017/18 2016/17

Electricity

Consumption

(KwH) 190,033 156,019

Waste and Effluent


Group’s Waste Management

Policy and the Hazardous Waste

Management Policy, which

encourages minimising of

waste generation and disposal

of waste through licensed

third-party contractors.


and Spillages

The Marine Engineering

Sector tracks and monitors

all fines paid, spillages and

maintaining of ships. The sector

complies with all applicable local

laws and regulations to ensure

minimal operational impact to

its environment.

The sector is also governed

by the overall Group

Environmental and

Sustainability policies which

are available on the Group

website (www.walkerscml.com/

sustainability).

The sector monitors its material

topics, Energy and Emissions,

Water, Effluents and Waste,

to arrive at reduction targets

and to work towards reaching

industry benchmarks and

global best practices.

Material, Procurement and

Supply Chain

All materials used by the

sector are purchased locally

or imported through an

authorised local agent.

The sector utilises outsourced

labour contractors and

subcontracts for certain aspects

of project work, subsequent to

signing a formal contract.


2017/18 and 2016/17 is listed

under ‘Raw Materials Procured -

Marine Engineering Sector’.

Raw Materials Procured -


2017/18 2016/17

Aggregate

(Cubes) 103 8

Lubricants (l) 596 20

Paint (l) 704 295

Raw Materials



The sector’s energy use and

emissions are governed by

all other compliance related

requirements as per Sri Lankan

legislation.

HUMAN CAPITAL


is governed by the Group

Human Resources Policy as well

as policies under areas such as

Child Labour, Forced Labour,

Freedom of Association and

Anti-Corruption, which are

currently being embedded into

daily operations.

The sector tracks attrition,

diversity, training hours, health

and safety incidents, incidents

related to child labour, forced

labour and other indicators

relevant to Human Capital

through its Sustainability


templates.

Employment

All recruitment activities of the

sector are governed by the

Group’s Recruitment Policy.


Group employee benefits at

a minimum, which is detailed

in the Integrated Group


The sector also utilised the

Sustainability Performance

Management System to monitor

the diversity of its workforce.

Marine Engineering Sector-

Workforce

2017/18 2016/17

Sector

Employees 42 35

Outsourced

Labour

Contractors 1 109

Total 43 143

All of the sector employees

were engaged in local

operations with no employees

based outside the country.

The sector had 42 contract

86

MTD WALKERS PLC


MANAGEMENT DISCUSSION AND ANALYSIS – MARINE ENGINEERING SECTOR

employees and no permanent

employees.

During the year, the sector

hired 16 new employees, of

which 15 were male employees

and one was a female

employee. Of the total new

hires, 56 percent were under

30 years, 19 percent between

the age of 30 – 50 years and 25



was 2.3 percent of the total

number of employees and the

attrition rate of the sector was

23.8 percent.


Safety

The Group’s Health and Safety

Policy has been adopted by

the sector and the company

takes a proactive approach to

the management of health and

safety practices whilst adhering

to all relevant health and safety

regulations.

The injury and fatality rate of

the workforce for the sector

was 9.30 [FY 2016/17: 7.64], the

lost day rate of the sector was

Child Labour

The sector adopts the Group’s

policy on Child Labour which

mandates zero tolerance of

child labour and prohibits any

company from employing any

individual below the age of 18

years. No cases of child labour

were reported during the year

under review.

Anti – Corruption

The Group’s Anti- Corruption

policy is adopted by the

sector which mandates that all

employees adhere to anti-

corruption guidelines and the

Code of Conduct provided by

the Group.

SOCIAL AND RELATIONSHIP CAPITALLocated adjacent to the Mutwal

and Trincomalee Fishery

Harbours, Walkers Shipyards’

operations will be an impetus

to have a positive impact on the

fishing and local communities

in the vicinity once complete

operations commence in


2018/19. The Group has

identified the void in providing

high standard repair services

for small and medium vessels

in Sri Lanka, and therefore the

harbour locations have been

strategically selected for where

the service is most needed.

FUTURE OUTLOOK

The Government has

announced its intentions to

ready the country as one of

the main maritime hubs in the

region, and is continuing its

efforts to develop the rest of

the ports around the country.

The Colombo port will see

further revamping of facilities

Training


is governed by Group policies

on Training and Development,

Talent Management and Career

Development and emphasis

is placed on capacity and skill

development.


2017/18 and 2016/17 is given

in the tables titled 'Training

Hours for Employees –

Marine Engineering Sector'

and 'Training Hours for

Employees by Gender – Marine

Engineering Sector'.

0.09 [FY 2016/17: 0.24] and no

unauthorised absenteeism was

recorded during the year.

Forced Labour

The Group’s policy on Forced

Labour has been adopted

by the sector and it further

complies with all legal

requirements and industry

standards with respect to

labour practices. During the


had no reports of forced labour.

through the addition of new

terminals and advancement

of existing terminals. A new

passenger terminal will be

built to cater to the growing

numbers in tourist arrivals. This

will give rise to a surge in the

number of freighters and cruise

ships arriving into the port of

Colombo. The Walkers Colombo

Shipyard’s Mutwal Harbour is

strategically located to capitalise

on this opportunity and take

advantage of the anticipated

demand for repair and servicing

of these vessels and is equipped

with latest technology and a

specialised skilled workforce.

The forthcoming years will

see the construction of four

multi-purpose fishery harbours

in Chalai, Delft, Madakal and

Udappuwa with the assistance

of the Korean Government. This

will give rise to opportunities

for Walkers Shipyards to further

explore options of expansion into

new territories and experience

synergistic benefits to achieve

a competitive advantage in line

with the projected growth in the

fisheries industry.

As the country continues to

enhance its image as a key

tourist destination, the traffic for

smaller vessels into the country is

also expected to further increase

along with the rise in tourist

arrivals through cruises and

pleasure yachts. To cater to the

projected surge in tourist arrivals,

the Government has called an

Expression of Interest (EOI) for

the construction of Marinas in

the ports of Colombo and Galle.

Walkers Shipyards seeks to gear

itself by building the sector’s

capabilities of building and

repairing of all types of vessels.

Training Hours for Employees – Marine Engineering Sector

2017/18 2016/17

Total Training Hours 91 200



Average Hours Per Non-Executive Level 0 10.7


Training Hours for Employees by Gender – Marine Engineering

Sector

2017/18 2016/17


Average Hours Per Female Employee 15.5 0

87


FinancialStatements



OPERATIONAL REVIEW

The Power Generation Sector

of the Group, owns a 30 MW

Heavy Fuel Oil (HFO) power

plant which is located in Jaffna,

Sri Lanka. The Northern Power

Company has a Power Purchase

Agreement (PPA) till the end of

2023 which provides power to

the National Grid. Jaffna being

in the peripheral is susceptible

to frequent transmission

losses, thereby the Company is

required to boost power to the

region.

During its operations, the

Northern Power Plant was

faced with a legal matter due

Industrial Technology Institute,

National Building Research

Organisation and the University

of Jaffna.

The sector continues to

maintain the power plant

for essential maintenance

work as the Company is

confident that the Courts

would grant approval for

the recommencement of

operations. In order to ensure

the re-commencement of

operations, the company

continues to work closely with

the Central Environmental

Authority, the Ceylon Electricity

to an alleged contamination

of well water in the region and

operations have been ceased.

The power plant, throughout

its operations, has adhered to

all environmental guidelines

and maintains and renews

all mandated licenses such

as Environmental Protection

license which is reviewed on

an annual basis following the

testing of emmissions and

effluents. The adherence to

all environmental guidelines

have been certified by studies

conducted at the site, and on

ground water sources in the

area by leading independent

industry experts such as

Board and the Board of

Investment.

FINANCIAL CAPITAL


2017/18, the Power Generation

Sector did not recognise

revenue.

The Northern Power Plant

was not able to generate any

revenue due to the curtailment

of operations and the variable

charge component of revenue

billed on the total amount

of power produced was not

applicable during the financial

year 2017/18.

Power Plant in Jaffna

88

MTD WALKERS PLC



The sector's Manufactured

Capital mainly consists of its

Northern Power Plant, which

generates electricity utilising

Heavy Fuel Oil (HFO). The

power plant which is located

in Jaffna has a commissioned

capacity of 30 megawatts (MW)

and a total installed capacity of

36 megawatts (MW).


The Intellectual Capital of

the sector comprises of the

Power Purchase Agreement

(PPA), brand equity, people

and expertise. The sector's

PPA contributes primarily to

its Intellectual Capital. The

agreement is valid until the end

of 2023 to supply 30 MW of

electricity to the National Grid.

NATURAL CAPITAL

The 30 MW Heavy Fuel Oil

(HFO) power plant in Jaffna

operated by the sector

generates power through the

combustion of heavy fuel,

which requires large quantities

of natural resources for

operations.

The material topics monitored

by the sector are Materials,

Energy consumption, Emissions,

Water Use, Effluents and Waste

Discharge. The sector continues

to track data related to these

topics to formulate reduction

targets and to ensure global

best practices are followed.


Supply Chain


there were no significant

quantities of material procured,

as the power plant was not in

No electricity was consumed

at the power plant due to

cessation of power generation,

and utilises standby generators

to run day to day internal

activity when required.

Water and Effluent

Management

The sector’s usage of water

is governed by the Water

Management Policy of the

Group. The water usage of

the sector is currently limited

to maintenance purposes

which includes cooling,

employee sanitation, employee

consumption and gardening.



2017/18 are shown in the

table titled ‘Volume of Water

Withdrawn by Source - Power

Generation Sector.'

Volume of Water Withdrawn

by Source – Power Generation

Sector

Source Volume of Water

Withdrawn (m3)

2017/18 2016/17

Ground

Water 1,500 3,080

Total

volume

of water

withdrawn 1,500 3,080

Waste Management

The Sector has adopted the

Group’s Waste Management

Policy and Hazardous Waste

Management Policy which

stipulates the disposal of waste

through licensed third party

contractors which encourages

the minimisation of waste

generation. As the power plant

operation. The sector reported

that no solid or liquid high/low

level Polychlorinated Biphenyls

(PCBs) were identified in any of

the equipment utilised during

maintenance of the power

plant.

The sector obtains materials

from local suppliers and its

capital equipment is mainly

imported through local

agents. The sector also utilises

outsourced labour contractors

and subcontracts for certain

aspects of the project,

subjective to a formal contract.


The sector’s energy and

emission processes adopts

the Group’s Environmental

Policy and related Energy

Management Policy.

Comparative data related

to Energy and Emissions

of the sector are listed in

the tables titled, 'Carbon

Footprint – Power Generation

Sector’, ‘Energy and Electricity

Consumption – Power

Generation Sector’.

Carbon Footprint – Power

Generation Sector


2017/18 2016/17

Total 40 45

Scope 1 40 45

Scope 2 - -

Energy and Electricity

Consumption – Power

Generation Sector

2017/18 2016/17

Energy

Consumption

(GJ)

538 608

was not in operation during

the year under review, waste

generated by the sector was

mostly attributed to employees

and this waste was segregated

in an appropriate manner.


No significant fines worth over


during the year under review

while all operations were

conducted in compliance with

the stipulated local laws and

regulations.

HUMAN CAPITAL

The Group’s Human Resource

Policy and policies on Child

Labour, Forced Labour and

Anti-Corruption govern the

sector's Human Capital.


2017/18, the sector utilised

its Sustainability Performance

Management System to track

all material indicators including

attrition, diversity, training

hours, health and safety

incidents, and incidents related


labour.

Employment

Contract Type of Workforce –

Power Generation Sector

2017/18 2016/17

Permanent

Employees 0 2

Contract

Employees 14 27

The sector had no new hires

during the financial year

2017/18 and the attrition rate

of the sector was 93 percent

[FY 2016/17: 58 percent].

MANAGEMENT DISCUSSION AND ANALYSIS – POWER GENERATION SECTOR

89


FinancialStatements


Labour Grievance Mechanisms

The Labour Grievance

Mechanisms of the Group are

also adopted by the sector.


the sector had no reports

of any significant labour

grievances.


Safety


has adopted the Group’s

Health and Safety Policy that

encourages the sector to

ensure compliance with all

relevant health and safety

regulations and standards while

improving its performance

continually. It also hopes to

obtain the OHSAS 18001

certification once operations

resume. During the year under

review, no significant health

and safety incidents were

reported.

Child Labour

The Group’s policy on Child

Labour which mandates zero

tolerance related to child

labour prohibits any company

from employing any person

below the age of 18 years to

be employed by the sector. As

majority of the job roles in the

sector are highly technical by

nature, there is very low risk of

child labour at the power plant.


no incidents of child labour

were reported.

Forced Labour

The Group’s policy on Forced

Labour has been adopted

by the sector while ensuring

adherence to all legal


standards with respect to

labour practices. During the


had no incidents of forced

labour.

with the Government and

other related regulators, plays

a strategic importance in the

sector’s operations. As a result,

the sector proactively engages

with the Central Environmental

Authority and Northern

Provincial Council to ensure

that its operations are in line

with local environmental laws,

regulations and conditions

stipulated in its Environmental

Protection License.


regularly communicates with

the Ceylon Electricity Board and

its primary customers, to ensure

that strong links established

during its operations are

sustained.

FUTURE OUTLOOK

The Power Generation

Sector planned to move

to the area of sustainable

energy sources consisting of

solar and wind power and

in alignment with the aims

of the Sustainable Energy

Authority of Sri Lanka. In view

of this intention, the company

has submitted a proposal to

build a 100 megawatt (MW)

wind energy power plant in

Mannar, in collaboration with

a well reputed Singaporean

company, and looks forward to

implement such projects in the

future.

Moreover, the sector is in

the process of researching

and evaluating to establish

a battery storage system to

store solar power. With such

an initiative, the company is in

a position to further provide

10 megawatts (MW) to the

National Grid. These efforts

by the sector will contribute

towards the Government’s goal

of producing 20 percent of the

country’s energy requirement,

Anti-Corruption

With the adoption of the

Group’s Human Resource

Policies and Procedures, all

employees are required to

comply with the related Anti-

Corruption Policy and the Code

of Conduct of the Group. All

business units are annually

audited by the Group’s Internal

Audit Division to ensure


Operating Procedures. The

Group maintains an Enterprise

Risk Management process

which assesses the sector

for risk of corruption, and

aids in the establishment of

preventative mitigation plans

for the same.

Disaster Preparedness

As the sector follows the

Group’s Enterprise Risk

Management process, disaster

preparedness, fire safety and

business continuity plans are

being implemented into the

sector’s disaster management

practices that are expected to

be adopted by the sector once

operations resume.

SOCIAL AND


Local Communities

More than 65 percent of

the sector’s employees are

from local communities

in Jaffna, and during its

operational period, the power

plant provided livelihood

development opportunities

to communities in the area.


the sector was focused on legal

proceedings, and therefore

did not have the opportunity

to carry out any social

responsibility initiatives.


Customers

As the sector engages in power

generation, its relationship

using renewable energy

sources by 2020.

In addition, the company is

also evaluating the feasibility

to establish a 1-2 megawatts

(MW) Waste-to-Energy Power

Plant that will incinerate

municipal waste in the Western

Province. The company is

working jointly with a well

reputed Israeli establishment

and the Kotikawatta Municipal

Council in Sri Lanka, in terms

of provisioning the required

technology and allocation of

the land respectively. Once the

sector obtains the necessary

approvals from the relevant

authorities to proceed on

operations, 100 tons of garbage

a day could be collected to be

recycled to produce energy.

90

MTD WALKERS PLC



OPERATIONAL REVIEW

During the financial year under review, the Real Estate Sector

unveiled its three latest upper middle income housing projects -

Grace, Arcadia and Havelock Heights.

'Grace' is in close proximity to the heart of Nugegoda, a highly

residential area offering convenient facilities such as banks,

hospitals, shopping malls and sports and leisure clubs. It is

designed over a property spanning 82 perches and comprises 81

apartments in two bedroom and three bedroom variants ranging

from 968 sq. ft. to 1,635 sq. ft.

The second project 'Arcadia' is a 42 unit residential apartment

complex strategically located in Subuthipura Battaramulla - the

administrative capital of Sri Lanka. It is a nine floor housing project

consisting of two and three bedroom aesthetically designed

apartments, with each unit comprising of a living area, dining area

and maid’s rooms. Arcadia will also include amenities such as a

swimming pool, gymnasium, yoga pavilion, rooftop garden and a

multi-purpose function hall for its residents.

The latest residential apartment complex to adorn Colombo’s

rapidly changing skyline, redefining elegant living is 'Havelock

Heights'. This is a 32-storey tower which nestles 384 tastefully

designed cozy apartments, complemented with all necessary

amenities available under one roof.

Projects by Walkers CML Properties

RICHMOND HILL RESIDENCIES

Location Wakunagoda, Galle

No. of Apartments 512 units

Status Sold Out

Project Description Marketing and sale of housing units under

the Nila Sevana Mandate for middle

income level public sector employees.

Walkers CML Properties unveils ‘Grace’ in Nugegoda

91


FinancialStatements


SOUTH COAST RESIDENCIES

Location Habaraduwa, Galle


Status Ongoing - construction work

Project Description Marketing and sale of housing units to

promote tourism.

ASCENT

Location Colombo 10



Project Description Development of contemporary apartments

for the middle and upper middle classes.

GRACE

Location Gangodawila, Nugegoda





ARCADIA

Location Subuthipura Battaramulla





HAVELOCK HEIGHTS

Location Colombo 05


Status Project launched



LAVANYA HEIGHTS

Location Ragama

No. of Apartments 124

Status Ongoing - structural work completed


the NHDA program for the middle income

level public sector employees.

SEA BREEZE

Location Wadduwa


Status Ongoing - structural work completed


the NHDA program for the middle income

level.

FINANCIAL CAPITAL

The Group’s Real Estate Sector

reported a revenue growth

amounting to LKR 1,751 million

[FY 2016/17: LKR 1,216 million]

gross profit of LKR 651 million [FY

2016/17: LKR 397 million] and a

net profit of LKR 505 million [FY

2016/17: LKR 314 million]. The

growth in revenue stemmed

mainly from the sector’s existing

project South Coast Residencies,

in addition the profusion of

brand awareness created

by the Real Estate sector’s

strategic marketing tools further

contributed to growth in sales

and performance.

Revenue

2015/16

357

1,216

1,751

2017/182016/17

Rs.

mill

ion

0

500

1,000

1,500

2,000


Customers, customer sentiment

and customer satisfaction are

vital components for the sector

to generate sales.

Association of the Group’s

brand Walkers CML and

its reputation of being a

consistent partner capable of

successfully completing large

scale projects has been an

advantage to the sector.

This was further enhanced

through brand promotion

interviews, press

communications, media

and partner events hosted

throughout the year that

aligned the sector with the

Group brand, Walkers CML.

NATURAL CAPITAL

The sector has a low impact

on the environment and

the use of natural resources,

as its operations primarily

include project management,

marketing and sales activities

with regards to property

development.

The material aspects of its

Natural Capital monitored

by the sector are energy

and emissions, waste and

environmental compliance.


review, the Real Estate Sector

continued to track data related

to relevant material topics.

The sector complies with

all applicable local laws

and regulations and is also

governed by the overall

Group Environmental and

Sustainability policies, available

on the Group website. (www.

walkerscml.com/sustainability)


The energy consumption of

the sector is governed by

the Group’s Environmental

and Energy Management

policies which are pivotal

when conserving energy and

minimising the sector’s carbon

footprint.

Electricity and fossil fuel

consumption are monitored

by the sector to enable overall

monitoring of the carbon

footprint within the sector and

the Group.



2016/17 is illustrated in the

tables titled, ‘Carbon Footprint

– Real Estate Sector’, ‘Energy

and Electricity Consumption –

Real Estate Sector’.

92

MTD WALKERS PLC


MANAGEMENT DISCUSSION AND ANALYSIS – REAL ESTATE SECTOR

Carbon Footprint – Real Estate

Sector


2017/18 2016/17

Total 130 120

Scope 1 29 20

Scope 2 101 100

Energy Consumption – Real

Estate Sector

2017/18 2016/17

Energy

Consumption

(GJ) 917 796

Electricity Consumption – Real

Estate Sector

2017/18 2016/17

Electricity

Consumption

(kWh) 143,160 141,936

Waste Management

The Group encourages efficient

use of material through reusing

and recycling, and disposal of

waste via third-party licensed

contractors. This is governed by

the Group Waste Management

Policy and the Hazardous Waste

Management Policy.

The Real Estate sector only

generates waste related to

office and admin related

procedures.


The Group tracked and

monitored all fines paid by the

sector and all other compliance

related requirements as per

Sri Lankan legislation. No

significant fines worth over



HUMAN CAPITAL

The indicators including attrition,

diversity, occupational health

and safety, and training hours are

tracked by the sector through

its Sustainability Performance

Management System.

Employment

All recruitment carried out in the

sector is based on the Group’s

Recruitment Policy which is

accompanied by policies on

Equal Opportunity, Performance

and Talent Management.


Group employee benefits, at

a minimum, which are in line

with the country’s regulations

as mentioned in the Integrated

Group Performance review.

The diversity of the workforce

based on age and gender as

well as new hires and attrition,

are continuously monitored

through the Sustainability


System.

The workforce of the Real

Estate Sector for the financial

year 2017/18 was 50 [FY

2016/17: 33] of which all were

sector employees and had no

outsourced personnel which

included sub-contractors and

casual workers.

Contract Type of Employees –

Real Estate Sector

2017/18 2016/17

Permanent

Employees 13 2

Contract

Employees 37 31

During the year the sector

hired 20 [FY 2016/17: 18] new

employees, of which 14 were

male employees [FY 2016/17: 13]


[FY 2016/17: 5]. Of the total new

hires, 70 percent were under

30 years, 25 percent between



There were no new hires

who left during the year. The

Anti-Corruption

The sector adopted the Group’s

policy on anti-corruption,that

mandates all employees to

adhere to anti-corruption

guidelines and the Code of

Conduct provided by the

Group. In line with the policy,

the sector is continuously

assessed on risks related to

corruption in order to develop

mitigation plans and reduce

such risks. The Group Internal

Audit Division carries out

periodical audits on the sector

to ensure compliance with

standard operating procedures

and best practices.

attrition rate of the sector is

8.0 percent [FY 2016/17: 6.1

percent]

Training

The emphasis has been

placed on capacity and skill

development of the sector by

adopting the Group policies

on training and development,

talent management and career

development.

SOCIAL AND


The Real Estate sector places

great emphasis in enhancing

its interactions with all

stakeholders and developing

long lasting relationships.

Local Communities

The sector carries out

operations in dynamic

environments amongst various

community groups. They strive

to establish strong relationships

with local communities, to

obtain its social license to

operate.

Training Hours for Employees – Real Estate Sector

2017/18 2016/17

Total Training Hours 58 260





Training Hours for Employees by Gender – Real Estate Sector

2017/18 2016/17



93


FinancialStatements


The sector will conduct

customer satisfaction surveys

to evaluate the end users’

satisfaction and trends over

time, as the sector increases its

real estate inventory during the

upcoming year.

Supply Chain

The Real Estate Sector sources

its important materials and

support services locally, and

when needed, sub contracts

certain aspects of the project

subsequent to the signing a

formal agreement. The sector

also utilises outsourced labour

contractors for its projects.

FUTURE OUTLOOK

The pace of migration from

rural areas into cities has

accelerated since the end of the

civil war, leading to an increase

in demand for affordable

housing. It is evident that there

is lack of supply in the market

for affordable housing. The Real

Estate sector has successfully

taken steps to capitalise on

this growth and will continue

to provide services for projects

such as NDHA. By 2020, the

need for affordable homes

is estimated to be over

50,000 units according to the

UDA, which unveils greater

opportunities for the sector to

perform in.

For a population that is

growing in the high and middle

income segments, luxury and

semi-luxury housing is a key

attraction in the residential

market. Demand for such

housing is seen from a growing

demographic of wealthy urban

dwellers. In addition, significant

demand is expected from

non resident Sri Lankans, keen

to invest in Sri Lanka. As the

population grows in Colombo,

vertical living could become

more of a necessity rather

than a choice for the higher

and middle income category

property investors. The sector

aims to persistently pursue

these emerging opportunities

and exploit these benefits in the

property market.

The Real Estate Sector is a

partner of two key housing

projects carried out by the

Government; the Nila Sevana

Housing Development and the

Accelerated Middle Income

Housing Program. These

programs aim to bridge the

gap in the island wide middle

income housing market and

provide affordable housing to

uplift the standard of living in

several communities.

Regulators

The sector’s relationship with

the regulators play a strategic

importance in its operations.

During the Group’s external

stakeholder engagement, no

concerns were highlighted

from regulators. Further, during

the year under review no

significant fines over a value of


for the sector.

Customers

The customers of the

sector include public sector

employees as well as the

general public. The sector

ensures that health and safety

is considered a priority, in all of

its properties which are being

marketed and sold.

The sector ensures the

minimisation of risks related

to customer health and safety,

through the uses of best

practices during the initial

design stages, and ensures

all properties of the sector

undergo careful inspection to

assess quality, health and safety

before the property is handed

over to customers.

94

MTD WALKERS PLC



OPERATIONAL REVIEW

The construction industry

sustained its growth trajectory

throughout the financial year

2017/18, led predominantly

by the rise in Government

infrastructure projects

and commercial property

developments. The market

for heavy equipment thrived

as a result of the surge in

demand for heavy equipment

by contractors. While Walkers

Equipment was able to

capitalise on this opportunity

to maximise its revenue,

competition intensified due to

the influx of new entrants.

on the relationships of their

existing strategic partners

which enabled the facilitation

of additional trade with greater

transparency and trust.


the Group’s vision to venture

into international markets was

established through ‘Walkers

CML International’, a new

subsidiary of the Walkers CML

Group. The new arm secured its

first 10 storey luxury residential

apartment complex construction,

consisting of 95 apartments,

located in one of Hulhumale’s

most tranquil neighbourhoods

overlooking the scenic yacht

marina in Maldives.

The return from the segment of

spares and services continued

to grow with the equipment

sold previously, reaching their

periodic service cycles and

maintenance schedules in the

period under review.

Recognising the value of

effectively managing the

product portfolio in the heavy

equipment industry, the

sector continually seeks to

strike a balance between the

composition of agencies and

the product types that would

enable the organisation to

reap maximum returns. During

the year under review, Walkers

Equipment continued to build

FINANCIAL CAPITAL


the Trading and Other Sector

of the Group reported a

revenue of LKR 1,465 million [FY

2016/17: LKR 1,006 million] and

a gross profit of LKR 164 million

[FY 2016/17: LKR 114 million].

The revenue of the sector grew

by 45.7 percent Year on Year

while gross profit increased by

43.9 percent Year on Year.

The key contribution towards

the revenue stemmed from the

after sales services offered by

the sector for heavy machinery.

The combination of after

sales services and the sale of

construction machinery and

Work been carried out by utlising CASE machinery

95


FinancialStatements


equipment, allowed the sector

to report a gross profit margin

of 11.2 percent for the year

under review.

Revenue

2015/16

260

1,006

1,465

2017/182016/17

Rs.

mill

ion

0

300

600

900

1,200

1,500



sector includes the brand, its

people and expertise. Walkers

M3 was incorporated into the

Group to diversify its operations

into IT. The company provides

Oracle Enterprise Project and

Portfolio Management Solutions

from Oracle. The company has

further diversified the solutions

provided by this company to

including tier 1 ERPs, military

grade IT security systems to

many other enterprise systems.

Walkers Equipment continued

with their programs of raising

brand awareness. However,

since the organisation was

becoming increasingly known

amongst numerous players

in the industry, rolling out

aggressive marketing and

promotional campaigns were

not necessary. Focus and priority

was to build relationships with

existing agents and clients;

proving to be considerably

profitable amidst prevailing

resources in the organisation.

The sector is proud to own

exclusive rights to agencies

for several dominant heavy

equipment brands in the

global arena, which acts as its

arsenal to compete and further

Carbon Footprint – Trading

and Other Sector


2017/18 2016/17

Total 330 171

Scope 1 36 36

Scope 2 295 135

Energy Consumption –

Trading and Other Sector

2017/18 2016/17

Energy

Consumption

(GJ) 2,005 1,196

Electricity Consumption –

Trading and Other Sector

2017/18 2016/17

Electricity

Consumption

(kWh) 418,547 192,045

Waste Management

The waste management

operations of the sector are

governed by the Group’s Waste

Management Policy and the

Hazardous Waste Management

Policy.

The sector did not have any

significant waste to be reported

in the year under review and

any hazardous waste generated

at the Walkers Equipment

after sales care centre was

transported and disposed at


workshop in Sapugaskanda.


The Group tracked and

monitored all fines paid by the

sector and all other compliance

related requirements as per

Sri Lankan Legislation. No

significant fines worth over



strengthen its position in the

local market.

NATURAL CAPITAL

The sector’s primary operations

are trading, software and

support services for the

Group’s business units, and

consequently the use of natural

resources and any direct impact

to the environment are to a

great extent minimal. Energy

and Emissions, Effluents and

Waste and Environmental

Compliance were ascertained

as material topics for the sector.

The sector is governed by the

overall Group Environmental

and Sustainability policies

and is compliant with all


regulations which are available

on the Group website (www.

walkerscml.com/sustainability).




govern the sector’s energy use

and emissions to concentrate in

efforts to conserve energy and

reduce the carbon footprint of

the sector.

The sector monitors its

electricity and fossil fuel

consumption to enable the

overall monitoring of the

carbon footprint within the

sector and the Group.

In monitoring the overall

carbon footprint of the sector

and the Group, the electricity

and fossil fuel consumption

rates are regularly being

recorded and reviewed.



2016/17 are shown in tables

titled ‘Carbon Footprint –

Trading and Other Sector’,

'Energy consumption - Trading

and other sectors and

'Electricity Consumption –

Trading and Other Sector'.

HUMAN CAPITAL


Group Human Resources Policy

as well as policies governing

areas such as Forced Labour

and Anti-Corruption, which

are embedded into the daily

operations of the sector.

The sector tracks indicators

including attrition, diversity,

training hours, incidents related


labour through its sustainability


templates.

Employment

The Group’s Recruitment Policy,

complemented by policies on

Equal Opportunity, Performance

and Talent Management,

governs all recruitment activities

of the sector. The sector also

adheres to Group employee

benefits at a minimum which is

detailed in the Integrated Group


The diversity of the workforce

based on age and gender as

well as new hires and attrition,

are continuously monitored

through the sustainability


templates.

The workforce of the Trading

and Other Sector for the

financial year 2017/18 was

154 employees [FY 2016/17:

124] and all employees of the

sector were engaged in local

operations with no employees

based outside the country.

* This excludes Walkers CML

International (Private) Limited

Workforce of the Trading and Other Sector

2017/18 2016/17

Sector Employees 154 124

Sub Contract/Casual Workers 10 -

Total 164 124

96

MTD WALKERS PLC


MANAGEMENT DISCUSSION AND ANALYSIS – TRADING AND OTHER SECTOR

During the year the sector hired

65 new employees [FY 2016/17:

51], of which 47 were male

employees [FY 2016/17: 29] and

18 were female employees [FY

2016/17: 22]. Of the total new

hires, 71 percent were under 30

years, with 26 percent between




is 4.5 percent of the total

employees [FY 2016/17: 0.8

percent] and the attrition rate

of the sector is 26.0 percent [FY

2016/17: 11.3 percent]

Training

The sector follows the Group

policy of placing emphasis on

capacity and skill development,

and is governed by the Group’s

Training and Development,

Talent Management and Career

Development policies. During

the year the sector provided

972 training hours [FY 2016/17:

12] to its employees.

Forced Labour

The Trading and Other Sector

strives to ensure that no

incidents of forced labour takes

place during its operations

by complying with all legal


standards regarding labour, and

by adopting the Group’s policy

on prevention of forced labour.


the sector had no reports of

forced labour.

and as a result, the sector

continues to engage with its

stakeholders to understand

and maintain meaningful

interactions. No significant fines

over the value of LKR 1.0 million

were reported for the year

under review.

Supply Chain

The primary operations of the

sector involves the trading of

heavy construction equipment

by way of being the local agents

for principals. Where required,

and subsequent to the sale, the

sector employs maintenance

and support services from third

parties in the provisioning of

services to its customers.

Customers

Establishing lasting relationships

with customers is key in the

Heavy Equipment Industry

recognising the value derived

from this, and in addition to

supplying superior quality

equipment, Walkers Equipment

provides unmatched after sales

services to its customers which

ensures minimal downtime.

FUTURE OUTLOOK

The forthcoming years will see

the instigation of several large

scale construction projects

funded by a combination of

Foreign Direct Investments,

Government, and private firms,

coupled with the ongoing

rapid urbanisation and rural

flight that is spurring real estate

development. Anticipating the

surge in demand for support

and ancillary services as a

result, the Trading and Other

Sector continuously analyses

the market dynamics and its

supply chain activities to scale

operations and exploit any

opportunities arising promptly.

Child Labour

The Group’s policy on Child

Labour which mandates zero

tolerance of child labour and

prohibits any company from

employing any individual

below the age of 18 years is

adopted by the sector. No cases

of child labour were reported

during the year under review

Anti-Corruption

The Group’s policy on Anti-

Corruption is adopted by

the sector which requires all

employees to adhere to anti-

corruption guidelines and the

Code of Conduct provided

by the Group. The sector is

continuously evaluated on

risks related to corruption

to develop mitigation plans

to reduce such risks. The

Group Internal Audit Division

carries out periodical audits

on the sector with regard

to compliance of operating

procedures.

SOCIAL AND


The Trading and Other Sector

places great importance on

enhancing its interactions

with all its stakeholders which

includes customers, regulators

and the supply chain, and aims

to work towards developing

long lasting relationships with

these stakeholders.

Regulators

The sector’s relationship

with regulators is of strategic

importance for its operations

To cater to the looming demand

for heavy equipment, the sector

will focus on expanding its

customer base and manage

its product portfolio effectively

to reap the maximum returns.

This includes bringing in new

products, gaining new strategic

partnerships while assessing

viability and developing

strategies for its existing

products.

The country’s rising costs of

construction continues to

erode margins for contractors,

within which the cost of project

specific heavy equipment

becomes a significant portion.

Walkers Equipment attempts

to address these issues by

providing flexible solutions to

customers by providing options

such as equipment rentals,

advisory and assistance in

financing purchases.

Walkers CML International will

continue to exploit opportunities

in Maldives and build brand

awareness in the market in

order to take advantage of new

projects related to engineering

and construction arising in the

country.

Walkers M3, in addition to

providing Oracle Enterprise

Project and Portfolio

Management Solutions, tier

1 ERPs and military grade IT

security systems, the company

will diversify its portfolio in

the coming years to include

structured cabling, network

equipment, servers and similar

solutions. Focus will be given

to creating awareness amongst

its stakeholders and building

enhanced relationships with

current customers.

Contract Type - Trading and Other Sector

2017/18 2016/17


Contract Employees 107 108

Annual Report of the Board of Directors 98

Statement of Director’s Responsibility 102

Auditor’s Report 103

Statement of Financial Position 106

Statement of Profit or Loss 107

Statement of Comprehensive Income 108

Statement of Changes in Equity 109

Cash Flow Statement 110

Notes to the Financial Statements 111

98

MTD WALKERS PLC



MTD Walkers PLC is pleased

to present to the members,

their Annual Report, together

with the Audited Consolidated


Company and its business units

for the financial year ended

31st March 2018.

Principal Activities

MTD Walkers PLC consists

of a portfolio of diverse

business operations

covering a range of sectors

including Civil Engineering,

Heavy Engineering, Marine

Financial Results and Appropriations

The loss after tax of the Group was LKR 3.6 billion, whilst the Group

loss attributable to equity holders of the parent for the year was

LKR 3.2 billion. Results of the Company and of the Group are given

in the Statement of Profit or Loss on page 107.

Detailed description of the result and appropriation are given below.

MTD Walkers PLC

For the year ended 31 March

In LKR Mn

2017/18 2016/17

Results from operating activities (960) 1,938

Finance cost (2,765) (1,818)

Finance income 291 180

Profit/(loss) before tax (3,434) 300

Provision for taxation including

deferred tax (126) (86)

Profit/(loss) after tax (3,560) 214

Profit attributable to minority

shareholders (381) 128

Amount available to the Group’s

equity shareholders (3,179) 85

in the Chairman’s Message and

Management Discussion and

Analysis sections of this Annual

Report. These reports; together

with the audited financial

statements, reflect the state

of affairs of the Group and the

Company.

Future Developments

MTD Walkers PLC will continue

to focus on consolidating

its presence in its core areas

of operation while actively

pursuing its entry into regional

and international markets.

Financial Statements

The Financial Statements of

the Group and the Company

for the year ended 31st March

2018 have been prepared in

accordance with Sri Lanka

Accounting Standards

(SLFRs/ LKASs) and comply

with requirements of the

Companies Act No. 07 of

2007. The Report also includes

relevant disclosures required

to be made under the Listing

Rules of the Colombo Stock

Exchange and is guided by the

recommended best practices

on accounting and corporate

governance.

The Financial Statements

which include the Statement

of Financial Position, Statement

of Profit or Loss, Statement

Engineering, Power Generation,

Real Estate, Trading and

investment activities.

There have been no material

changes in the nature of the

principal activities of the

Company and its business units

during the financial year that

may have a significant impact

on the state of the Company’s

affairs.

Review of Performance

The Group’s overall performance

during the year, with comments

on financial results, is reviewed

Turnover

The consolidated turnover

of the Group was LKR 16,309

million as compared with LKR

13,466 million in the previous

year.

A detailed segment wise

analysis of the Group’s turnover

is given in Note 26.2 appearing

on page 150. Further the details

of sectors of the Group are

discussed in the Management

Discussion and Analysis section

of this Annual Report.

of Comprehensive Income,

Statement of Changes in

Equity, Statement of Cash

Flows and Notes to the


Group and the Company for

the year ended 31st March

2018 are given on page 111

of this Annual Report. The

aforementioned Financial

Statements duly signed by the

Head of Group Finance are

given on page 106.

Donations

The Group and the Company

made donations during the

year amounting to LKR 17

million (2016/17 - Group: LKR 9

million).

In LKR Mn Civil

Engineering

Heavy

Engineering

Marine

Engineering

Power

Generation

Real Estate Trading and

Other

Revenue 11,942 844 306 - 1,751 1,465

EBIT (1,092) 6 (23) (135) 501 (216)

Total Asset 31,097 2,445 2,954 4,575 2,786 2,150

99


FinancialStatements


Accounting Policies

All the significant Accounting

Policies adopted in the

preparation of the Financial

Statements are stated on Note

3 to the Financial Statements

on page 112. There has been

no change in the accounting

policies adopted by the Group


Property, Plant and

Equipment

Information relating to

Property, Plant and Equipment

and their movement have

been disclosed in Note 4 to the


127.

The Group’s and Company's

capital expenditure amounted

to LKR 1.7 billion of which

the majority of the additions

were attributable to plant and

machinery. The book value of

property, plant and equipment

for the Group amounted to LKR

6.8 billion, as per the Statement

of Financial Position dated

31st March 2018. Majority of

property, plant and equipment

comprised of plant and

machinery which accounted

for approximately 47.7 percent

of total property, plant and

equipment.

Investments

A detailed description of long

term investments held by the

Group as at the reporting date

are disclosed in Note 5 to the


132.

Stated Capital

The total stated capital of MTD

Walkers PLC as at 31st March

2018 was LKR 6.1 billion which

comprised of 167,647,568

ordinary shares. Details and

movement of the stated capital

Interest Register and is kept

in the custody of the Group

Head of Human Resources and

Administration.

Directors

The Board of Directors of the

Company as at 31st March

2018 and their brief profiles are

given in the Board of Directors

section of the Annual Report.

The Directors of MTD Walkers

PLC as at 31st March 2018 are

as follows:

• Dato’ Nik Faizul Bin Tan Sri

Nik Hussain

• Jehan Prasanna Amaratunga

• Keith George Cowling

• Albert Rasakantha Rasiah

• Niranjan Joseph de Silva

Deva-Aditya

• Hewawasamge

Ravindranath Srilal Wijeratne

• Kim Siew Tee

However the directors

movement is given below post

31st March 2018 in keeping

with the disclosures made to

the Colombo Stock Exchange.

• Zukri Bin Samat- appointed

to the Board of MTD Walkers

PLC on 23rd April 2018 and

resigned with effect from

17th July 2018

are given in Note 16 to the


139.

Revaluation Reserves

The total Group Revaluation

Reserves as at 31st March 2018

amounted to LKR 851 million

as compared with LKR 967

million in the previous year. The

composition and movements

of the reserves are shown in the

Statement of Changes in Equity

in the Financial Statements on

page 109.

Share Information

Information relating to

distribution of individual and

institutional shareholding,

split of residential and non-

residential shareholding as well

as the distribution schedule of

the number of shareholders

and their percentage holding

as per the number of shares

are provided in the Share

Information section of this

Annual Report.

Further Information relating

to net assets per share, market

value per share, the top

twenty shareholders names,

number of shares held and the

percentage held by them are

also presented under Share

Information section of this

Annual Report.

Ratios and Market Price

Information

Details on ratios and market

price information are presented

under the sections; Financial

Highlights on page 8 and Share

Information on page 168 of this

Annual Report.

Interest Register

The Company, in compliance

with the Companies Act No.

07 of 2007, maintains an

Name Share-

holding

As at

31.03.2018

Movement

Shares

As at

31.03.2017

Mrs. P.A.S.

Amaratunga -

Spouse of Mr.

Jehan Prasanna

Amaratunga 0.13% 214,153 - 214,153

• Hizamuddin Bin Jamalluddin

– appointed on 15th May

2018 and resigned with

effect from 08th August

2018

• Md Rijaluddin Bin Mohd

Salleh – appointed with

effect from 08th August

2018

In terms of Article 89 of the

Articles of Association of the

Company Mr. Niranjan Joseph

de Silva Deva-Aditya is to retire

by rotation and is eligible for

re-election.

Kim Siew Tee, Mr. Keth George

Cowling and Mr. Md Rijaluddin

Bin Mohd Salleh are to be

retired in terms of the Article

95 of the Articles of Association

of the Company and eligible

for re-election at the Annual

General Meeting.

Directors’ Shareholding and

their Interest

The relevant Director’s spouse

held shares of the Group as

at 31st March 2018 which is

illustrated in the table below.

Except for the mentioned

Director’s spouse, none of the

other Directors, their spouses,

or dependent held any shares

in the Group during the year

ended 31st March 2018.

100

MTD WALKERS PLC


Directors’ Remuneration and

other Benefits

The Directors’ remunerations

and other benefits in respect

of the Group for the financial

year under review are given

under Note 30 to the Financial


Employee Share Option Plans

and Profit Sharing Plans

MTD Walkers PLC Employee

Share Option will not exceed

3.0 percent of the total issued

shares of the Company.

Details of the options granted,

options exercised, the grant

price and the options cancelled

or lapsed, and outstanding as

at the date of the Director’s

report as required by the

Listing Rules of the Colombo

Stock Exchange are given

under the Share Information


The Directors confirm that

the Company has not granted

any funding to employees

page 165. These interests have

been declared at Directors’

meetings. The Directors have

no direct or indirect interest in

any contract other than what is

disclosed in the Annual Report.


The Group has complied with

the Corporate Governance

rules laid down under the

listing rules of the Colombo

Stock Exchange. The Report

on Corporate Governance is

given under the Corporate

Governance section of the

Annual Report together

with the good corporate

governance principles and

practices adopted by the

Group.

Directors’ Declaration on


The Directors of MTD Walkers

PLC declare that;

1. The Group has complied

with all applicable

laws and regulations in

relation to conducting

the business operations

in Sri Lanka.

2. The business is operating

on a Going Concern

basis with supporting

reasonable assumptions

3. A review of internal

controls covering

financial and operational

aspects of the business

together with a review

of risk management has

been conducted and

reasonable assurance of

their effectiveness and

adherence has been

obtained.

to exercise options. The

employees are not presented

with any profit sharing

schemes.

Non-Current Assets

The total value of non-current

assets of the Group as at 31st

March 2018 amounted to

LKR 12.0 billion. Details of the

non-current assets are given

on page 127 on this Annual

Report.

Issue of Shares and

Debentures

No further debenture shares

have been issued for the 12

month period ending 31st

March 2018.

Directors’ Interest in

Contracts with the Company

Directors’ interests in contracts

or proposed contracts with

the Company, both direct and

indirect are disclosed on this

Annual Report under Note 37.2

to the Financial Statements on

Environmental Protection

The Group and its business

units make every endeavor

to comply with the relevant

environmental laws, regulations

and best practices applicable

in the country. The Group

and the Company has not

been engaged in any activity

which was harmful to the

environment. A summary of

activities in the aforementioned

area are provided under the

Integrated Group Performance

Review section of this Annual

Report.

Statutory Payments

The Directors confirm that, to

the best of their knowledge

having made adequate

inquiries from management,

all taxes, duties, levies and

statutory payments payable

by the Group and its business

units and all contributions,

levies and taxes payable on

behalf of and in respect of the

employees of the Group as at

the date of the statements of

financial position have been

duly paid as at the reporting

date of 31st March 2018.

Risk Factors

The Group has an ongoing

process in place to identify,

evaluate and manage the risks

that are faced by the Group

and its business units. The

Risk Management section of

this Annual report elaborates

these practices, Group’s risk

factors and the details of the

foreseeable exposure to risk

factors on page 43.

Board Committees

The following members serve on the Audit committee and

Remuneration Committees;

Audit

Committee

Remuneration

Committee

Mr. Albert Rasakantha Rasiah -

Chairman x x

Mr. Keith George Cowling x

Mr. Niranjan Joseph de Silva Deva

- Aditya x x

Mr. Hewawasamge Ravindranath

Srilal Wijeratne x x


Hussain- appointed with effect

from 01st June 2017 x x

101


FinancialStatements


Events Occurring after the

Reporting Period

No circumstances have arisen

since the Reporting date, which

would require adjustment

or disclosure to the Financial

Statements; other than those

with their details disclosed

in Note 35 to the Financial


Going Concern

The Board of Directors, after

reviewing the financial position

and the cash flow of the

Company are of the belief that

the Company has adequate

resources to continue in

operational existence for the

foreseeable future. Therefore,

the Group has adopted a ‘Going

Concern’ basis in preparing

these Financial Statements.

Auditors

The Financial Statements for

the period under review were

audited by Messrs Ernst &

Young, Chartered Accountants.

The audit and non-audit fees

paid to the Auditors by the

Company are disclosed in Note

30 on page 153 in this Annual

Report. As far as the Directors

are aware, the Auditors do not

have any relationship (other

than as external auditors) with

the Group other than those

disclosed above.

Auditors Report

The Report of the Independent

Auditors on the Financial

Statements of the Company

and its business units

is included under the

Independent Auditor’s Report


Annual Report

The Board of Directors

has approved the Group’s

Consolidated Financial

Statements on 31st March

2018. The appropriate number

of copies of this report will be

submitted to the Colombo

Stock Exchange and to the Sri

Lanka Accounting and Auditing

Standards Monitoring Board on

31st August 2018.

Annual General Meeting

The Annual General Meeting

will be held at the 'Lotus Hall'

of Bandaranaike Memorial

International Conference

Hall (BMICH) at Bauddhaloka

Mawatha, Colombo 07 at

10.00 am on Thursday, 27th

September 2018. The notice of


of the shareholders appears in

the Supplementary Information



Hussain

Chairman



Chairman


Company Secretary

31st August 2018

Colombo

102

MTD WALKERS PLC


Directors’ Responsibilities

The responsibility of the

Directors in relation to the

financial statements is set out

in the following statement. The

responsibility of the auditors,

in relation to the financial

statements prepared in

accordance with the provision

of the Companies Act No. 07

of 2007, is set out in the Report

of the Auditors. In preparing

the consolidated financial

statements, appropriate

accounting policies have

been selected and applied

consistently, reasonable

and prudent judgment and

estimates have been made,

and applicable accounting

standards have been followed.

The financial statements

comprise of:

• The Statement of Profit

or Loss, Statement of

Comprehensive Income of

the Group and its business

units, which present a true

and fair view of the profit

and loss of the Group for the

financial year.

• The Statement of Financial

Position, which presents

a true and fair view of the

state of affairs of the Group

and its business units as at

end of the financial year.

The Directors endeavour to

ensure that the Company

maintains sufficient records

to be able to disclose, with

reasonable accuracy, the

financial position of the Group

and its business units and to

be able to ensure that the


Company comply with the

requirements of the Companies

Act No. 07 of 2007.

The Directors are required

to prepare the financial

statements and to provide

the auditors with every

opportunity to take whatever

steps and undertake whatever

inspections that may be

considered being appropriate

to enable them to give their

audit opinion

Directors are also responsible

for making arrangements to

safeguard the assets of the

Company and the Group,

and for that purpose have

put in place internal controls,

with a view to detect and

prevent fraud, amongst other

irregularities.

The Directors are of the view

that they have discharged their

responsibilities as set out in this

statement.

The Directors are required

to confirm that the financial

statements have been

prepared:

• Using appropriate

accounting policies which

have been selected and

applied in a consistent

manner, and material

departures, if any, have been

disclosed and explained;

and

• Presented in accordance

with the Sri Lanka

Accounting Standards

(SLFRS/LKAS); and that

reasonable and cautious

judgments and estimates

have been made so that

the form and substance of

transactions are properly

reflected; and

• Provides the information

required by and otherwise

comply with the Companies

Act and the Listing Rules

of the Colombo Stock

Exchange.

The Directors have a reasonable

expectation, that the Company

has adequate resources

to continue in operational

existence for the foreseeable

future, and therefore, have

continued to prepare its

financial statements on a Going

Concern basis.

Compliance Report

The Directors confirm that to

the best of their knowledge,

all taxes, duties and levies

payable by the Group and its

business units, all contributions,

levies and taxes payable on

behalf of and in respect of the

employees of the Group and

its business units, and all other

known statutory dues as were

due and payable by the Group

and its business units as at 31st

March 2018 have been paid,

or where relevant provided for,

except as disclosed in Note 34.2

to the Financial Statements

covering contingent liabilities.

By Order of the Board

MTD Walkers PLC


Company Secretary

31st August 2018

Colombo

103


FinancialStatements


INDEPENDENT AUDITOR’S

REPORT

To the Shareholders of MTD

Walkers PLC

Report on the audit of the

financial statements

Opinion

We have audited the financial

statements of MTD Walkers

PLC (“the Company”) and


statements of the Company

and its subsidiaries (“the

Group”), which comprise the

statement of financial position

as at 31 March 2018, and the

statement of profit or loss and

other comprehensive income,

statement of changes in equity

and statement of cash flows for

the year then ended, and notes

to the financial statements,

including a summary of

significant accounting policies.

In our opinion, the

accompanying financial

statements of the Company

and the Group give a true

and fair view of the financial

position of the Company and

were addressed in the context

of our audit of the financial

statements as a whole, and in

forming our opinion thereon,

and we do not provide a

separate opinion on these

matters. For each matter below,

our description of how our

audit addressed the matter is

provided in that context.

We have fulfilled the

responsibilities described in

the Auditor’s responsibilities

for the audit of the financial

statements section of our

report, including in relation to

these matters. Accordingly, our

audit included the performance

of procedures designed to

respond to our assessment

of the risks of material

misstatement of the financial

statements. The results of our

audit procedures, including

the procedures performed to

address the matters below,

provide the basis for our audit

opinion on the accompanying

financial statements.

the Group as at 31 March

2018, and of their financial

performance and cash flows

for the year then ended in


Accounting Standards.

Basis for opinion

We conducted our audit in


Auditing Standards (SLAuSs).

Our responsibilities under those

standards are further described

in the Auditor’s responsibilities


statements section of our

report. We are independent of

the Group in accordance with

the Code of Ethics issued by CA

Sri Lanka and we have fulfilled

our other ethical responsibilities

in accordance with the Code of

Ethics. We believe that the audit

evidence we have obtained is

sufficient and appropriate to

provide a basis for our opinion.

Key audit matters

Key audit matters are those

matters that, in our professional

judgment, were of most

significant in our audit of the

financial statements of the

current period. These matters

104

MTD WALKERS PLC


Other Information included

in the 2018 Annual Report of

the Company

Other information consists of

the information included in

the Annual Report, other than

the financial statements and

our auditor’s report thereon.

Management is responsible for

the other information.

Our opinion on the financial

statements does not cover

the other information and we

performed, we conclude that

there is a material misstatement

of this other information, we

are required to report that fact.

We have nothing to report in

this regard.

Responsibilities of the

management and those

charged with governance

Management is responsible

for the preparation of financial

statements that give a true and

fair view in accordance with

do not express any form of

assurance conclusion thereon.

In connection with our audit

of the financial statements,

our responsibility is to read

the other information and, in

doing so, consider whether

the other information is

materially inconsistent with

the financial statements or our

knowledge obtained in the

audit or otherwise appears

to be materially misstated. If,

based on the work we have

Sri Lanka Accounting Standards,

and for such internal control

as management determines

is necessary to enable the

preparation of financial

statements that are free from

material misstatement, whether

due to fraud or error.

In preparing the financial

statements, management is

responsible for assessing the

Group’s ability to continue as

a going concern, disclosing,

as applicable, matters related

Key audit matters common to both Group and Company

Key audit matter How our audit addressed the key audit matter

Revenue recognition using the stage of completion

method

As disclosed in Note 26.2, the Group recognized revenue

from its construction contracts based on the stage of

completion method amounting to Rs. 11,942,351,367/-.

The stage of completion on construction contracts was

measured with reference to the proportion of the contract

cost incurred for work performed at each reporting date

against the estimated total contract cost.

We considered the estimations made by the

management relating to the stage of completion as a

key audit matter because of significant management

judgments required in assessing the estimated total cost

of the contracts which include additional cost that could

arise from variations to the original contract terms.

Our audit procedures focused on the Management’s assessment of the

stage of completion included the following, among others;

• We understood the management’s process of estimating the

percentage of completion at the year end.

• For actual cost incurred by the company used in the determination of

the stage of completion, we checked, on a sample basis, to contracts,

invoices, project status reports and other relevant correspondence to

evaluate the reasonableness of the same.

• For cost to complete estimated by the company in the determination

of the stage of completion, we tested the appropriateness of the

estimations made by company the same against actual cost incurred

subsequently.

• We sighted certified progress reports from engineers and performed site

visits to further support the appropriateness of management’s estimates

referring to the physical work completed.

• We assessed the adequacy of the related disclosures provided in Notes

3.11.1, 3.13.2 and 26 to the financial statements.

Recoverability of Trade Receivables

As disclosed in Note 11 to the consolidated financial

statements, the Group has Rs. 18,452,782,333/- of trade

receivables net of impairment as at 31 March 2018 which

represents more than 40% of the total assets of the Group.

The recoverable amount was estimated by management

based on specific recoverability assessments on individual

customers considering timing of certification for

uncertified balances, the profiles of the customers, ageing

of receivables, historical payment patterns and the past

experience of defaults.

We considered the recoverability of trade receivables

as a key audit matter due to the significance of the

balance and involvement of significant judgments and

assumptions in relation to the same.

Our audit procedures focused on the Management’s assessment of

recoverability of trade receivables including the following, among others;

• We understood the management’s process of evaluating recoverability

of trade receivables at the year end.

• We evaluated the accuracy of the ageing of trade receivables considered

by management in assessing the recoverability of trade receivables.

• We checked the subsequent settlements and the certification of uncertified

balances after the reporting date on a sample basis, to source documents

including progress billing reports, invoices and bank statements.

• We assessed the reasonability of the impairment provision determined

by the management having considered the ageing of trade receivables,

subsequent receipts and historical experience of default or delay.

• We also assessed the adequacy of the related disclosures provided in

Note 11 to the financial statements.

105


FinancialStatements


to going concern and

using the going concern

basis of accounting unless

management either intends to

liquidate the Group or to cease

operations, or has no realistic

alternative but to do so.

Those charged with governance

are responsible for overseeing

the Company’s and the Group’s

financial reporting process.

Auditor’s responsibilities


statements

Our objectives are to obtain

reasonable assurance

about whether the financial

statements as a whole are free

from material misstatement,

whether due to fraud or error,

and to issue an auditor’s report

that includes our opinion.

Reasonable assurance is a

high level of assurance, but is

not a guarantee that an audit

conducted in accordance with

SLAuSs will always detect a

material misstatement when

it exists. Misstatements can

arise from fraud or error and

are considered material if,

individually or in the aggregate,

they could reasonably be

expected to influence the

economic decisions of users

taken on the basis of these

financial statements.

As part of an audit in

accordance with SLAuSs, we

exercise professional judgment

and maintain professional

skepticism throughout the

audit. We also:

• Identify and assess the risks

of material misstatement

of the financial statements,

whether due to fraud or

error, design and perform

audit procedures responsive

to those risks, and obtain

evidence obtained up to the

date of our auditor’s report.

However, future events or

conditions may cause the

Group to cease to continue

as a going concern.

• Evaluate the overall

presentation, structure and

content of the financial

statements, including the

disclosures, and whether

the financial statements

represent the underlying

transactions and events in

a manner that achieves fair

presentation.

• Obtain sufficient appropriate

audit evidence regarding

the financial information

of the entities or business

activities within the Group

to express an opinion on


statements. We are

responsible for the direction,

supervision and performance

of the group audit. We

remain solely responsible for

our audit opinion.

We communicate with those


regarding, among other

matters, the planned scope

and timing of the audit and

significant audit findings,

including any significant

deficiencies in internal control

that we identify during our

audit.

We also provide those


with a statement that we

have complied with ethical

requirements in accordance

with the Code of Ethics

regarding independence, and

to communicate with them

all relationships and other

matters that may reasonably

be thought to bear on our

audit evidence that is

sufficient and appropriate

to provide a basis for

our opinion. The risk of

not detecting a material

misstatement resulting

from fraud is higher

than for one resulting

from error, as fraud may

involve collusion, forgery,

intentional omissions,

misrepresentations, or the

override of internal control.

• Obtain an understanding

of internal control relevant

to the audit in order to

design audit procedures

that are appropriate in the

circumstances, but not for

the purpose of expressing an

opinion on the effectiveness

of the internal controls of the

Company and the Group.

• Evaluate the

appropriateness of

accounting policies used

and the reasonableness of

accounting estimates and

related disclosures made by

management.

• Conclude on the

appropriateness of

management’s use of the

going concern basis of

accounting and, based

on the audit evidence

obtained, whether a

material uncertainty

exists related to events or

conditions that may cast

significant doubt on the

Group’s ability to continue

as a going concern. If we

conclude that a material

uncertainty exists, we are

required to draw attention

in our auditor’s report to

the related disclosures in

the financial statements

or, if such disclosures are

inadequate, to modify our

opinion. Our conclusions

are based on the audit

independence, and where

applicable, related safeguards.

From the matters

communicated with those

charged with governance,

we determine those matters

that were of most significance

in the audit of the financial

statements of the current

period and are therefore the

key audit matters. We describe

these matters in our auditor’s

report unless law or regulation

precludes public disclosure

about the matter or when, in

extremely rare circumstances,

we determine that a matter

should not be communicated

in our report because the

adverse consequences of

doing so would reasonably

be expected to outweigh the

public interest benefits of such

communication.

Report on other legal and

regulatory requirements

As required by section 163 (2)

of the Companies Act No. 07 of

2007, we have obtained all the

information and explanations

that were required for the

audit and, as far as appears

from our examination, proper

accounting records have been

kept by the Company.

CA Sri Lanka membership

number of the engagement

partner responsible for signing

this independent auditor’s

report is 1864.

Ernst & Young

Colombo

31st August 2018

106

MTD WALKERS PLC


Group Company

As at 31 March 2018 2018 2017 2018 2017

Note LKR LKR LKR LKR

ASSETSNon-current assetsProperty, plant & equipment 4 6,797,359,101 5,916,055,402 75,377,412 56,809,490 Investment property 5 1,516,000,000 1,050,517,000 - - Intangible assets 6 587,743,398 636,726,905 48,339,878 71,831,593 Finance lease receivables 7 2,693,861,336 2,638,585,388 - Investment in subsidiaries 8 - - 7,189,266,906 6,976,707,078 Other non current financial assets 9 417,442,111 405,035,215 - 17,650 Amounts due from related parties 13 - - 383,909,586 792,723,706

12,012,405,946 10,646,919,910 7,696,893,782 7,898,089,517

Current assetsInventories 10 5,526,597,766 4,219,822,303 - - Finance lease receivables 7 340,423,711 326,087,179 - - Trade and other receivables 11 23,163,991,594 18,426,577,671 219,069,385 188,041,350 Other current assets 12 1,531,152,185 916,797,855 22,355,219 19,078,903 Amounts due from related parties 13 120,332 - 2,922,446,048 2,749,464,473 Income tax receivables 47,949,046 37,155,159 - - Other current financial assets 9 2,183,345,670 1,605,814,234 82,847,796 165,378,813 Cash and cash equivalents 14 698,667,820 665,122,381 5,514,888 89,834,929

33,492,248,124 26,197,376,783 3,252,233,336 3,211,798,469 Non current assets held for sale 15 502,600,000 - - - Total current assets 33,994,848,124 26,197,376,783 3,252,233,336 3,211,798,469 Total assets 46,007,254,070 36,844,296,693 10,949,127,118 11,109,887,986

EQUITY AND LIABILITIESCapital and reservesStated capital 16 6,057,497,739 6,057,497,739 6,057,497,739 6,057,497,739 Revaluation reserve 17 850,559,823 966,796,945 - - Exchange translation reserve 1,879,854 (195,230) - - Retained earnings/(loss) (2,386,680,480) 820,159,252 (1,934,992,477) (587,030,906)Equity attributable to equity holders of the parent 4,523,256,936 7,844,258,706 4,122,505,262 5,470,466,833 Non-controlling interest 18 544,630,795 960,341,727 - Total shareholders' funds and non controlling interest 5,067,887,731 8,804,600,433 4,122,505,262 5,470,466,833

Non-current liabilities Interest bearing loans & borrowings 19 4,344,619,445 7,893,781,170 1,531,723,192 3,732,351,157 Other non current liabilities 23 2,002,129,123 - - - Deferred tax liabilities 20.1 350,696,722 120,259,873 - - Retirement benefit obligations 21 188,502,378 127,840,090 22,692,081 13,699,255

6,885,947,668 8,141,881,132 1,554,415,274 3,746,050,413 Current liabilities Trade and other payables 22 6,169,377,976 5,052,473,505 90,909,285 21,979,791 Other current liabilities 23 1,956,255,546 2,579,131,609 - - Amounts due to related parties 24 669,313,431 589,905,871 369,597,686 411,311,058 Interest bearing loans & borrowings 19 25,076,124,754 11,549,308,460 4,774,523,193 1,421,413,687 Income tax liabilities 182,346,964 126,995,683 37,176,418 38,666,204

34,053,418,671 19,897,815,128 5,272,206,582 1,893,370,740 Total equity and liabilities 46,007,254,070 36,844,296,693 10,949,127,118 11,109,887,986

It is certified that the financial statements have been prepared in compliance with the requirements of the Companies Act No. 7 of 2007.

Siraj Jakariya Head of Group Finance

The Board of Directors is responsible for the preparation and presentation of these financial statements. Signed for and on behalf of the board by,

Jehan Prasanna Amaratunga Keith George Cowling Director Director

The accounting policies and notes on page 111 to 166 form an integral part of these Financial Statements.

31st August 2018Colombo

107


FinancialStatements


Group Company

Year ended 31 March 2018 2018 2017 2018 2017


Revenue 26 16,308,501,221 13,465,969,883 181,441,000 166,825,678

Cost of sales (15,950,185,489) (10,850,356,647) - -

Gross profit 358,315,732 2,615,613,236 181,441,000 166,825,678

Other operating income 27 690,284,674 802,033,085 - 43,920,729

Administrative expenses (1,730,633,745) (1,396,732,930) (908,872,725) (282,044,362)

Selling & distribution cost (278,287,215) (82,589,323) (4,835,185) (9,886,204)

Results from operating activities (960,320,554) 1,938,324,068 (732,266,910) (81,184,159)

Finance cost 28 (2,764,703,386) (1,817,887,893) (771,836,638) (400,185,610)

Finance income 29 290,869,326 179,843,077 158,033,675 75,050,340

Profit/(loss) before tax 30 (3,434,154,614) 300,279,252 (1,346,069,873) (406,319,429)

Income tax expense 31 (125,572,594) (86,381,329) - -

Profit/(loss) for the year (3,559,727,208) 213,897,923 (1,346,069,873) (406,319,429)

Attributable to:

Equity holders of the parent (3,178,783,051) 85,433,369

Non-controlling interest (380,944,157) 128,464,554

(3,559,727,208) 213,897,923

Basic earning/(loss) per share 32 (18.96) 0.51 (8.03) (2.42)


Figures in brackets indicate deductions.

108

MTD WALKERS PLC


Group Company

Year ended 31 March 2018 2018 2017 2018 2017

LKR LKR LKR LKR

Profit/(loss) for the year (3,559,727,208) 213,897,923 (1,346,069,873) (406,319,429)

Other comprehensive income/(loss)

Other comprehensive income to be reclassified to income

statement in subsequent periods :

Currency translation of foreign operations 2,075,084 (195,230) - -

Net other comprehensive income to be reclassified to

income statement in subsequent periods 2,075,084 (195,230) - -

Other comprehensive income not to be reclassified to

profit or loss in subsequent periods:

Revaluation of lands - 634,240,100 - -

Actuarial gains/(losses) on retirement benefit obligation (19,807,260) (10,153,319) (1,891,698) (5,021,291)

Income tax on retirement benefit obligation 2,433,698 331,245 - -

(17,373,562) (9,822,074) (1,891,698) (5,021,291)

Net other comprehensive income/(loss) not to be

reclassified to profit or loss in subsequent periods

(net of tax): (17,373,562) 624,418,026 (1,891,698) (5,021,291)

Other comprehensive income/(loss) for the year

(net of tax) (17,373,562) 624,418,026 (1,891,698) (5,021,291)

Total comprehensive income/(loss) for the year

(net of tax) (3,577,100,770) 838,315,949 (1,347,961,571) (411,340,720)

Attributable to:

Equity holders of the parent (3,185,053,778) 664,034,844

Non-controlling Interest (392,046,992) 174,281,105

(3,577,100,770) 838,315,949



109


FinancialStatements


Year ended 31 March 2018 Attributable to equity holders of the company Non

Controlling

Interest

Total Equity

Group Stated

Capital

Revaluation

Reserve

Exchange

Translation

Reserve

Retained

Earnings

Total

LKR LKR LKR LKR LKR LKR LKR

Balance as at 01 April 2016 6,057,497,739 378,561,807 - 745,961,721 7,182,021,267 773,011,423 7,955,032,690

Net profit for the year - - - 85,433,369 85,433,369 128,464,554 213,897,921

Currency translation of

foreign operations - - (195,230) - (195,230) - (195,230)

Revaluation of lands - 588,126,807 - - 588,126,807 46,113,293 634,240,100

Actuarial gains on retirement

benefit obligation - - - (9,525,332) (9,525,332) (296,741) (9,822,074)

Share issue in subsidiary - - - - - 11,447,024 11,447,024

Effect of changes in group

structure without loosing

control - 108,331 - (1,710,506) (1,602,175) 1,602,175 -

Balance as at 31 March 2017 6,057,497,739 966,796,945 (195,230) 820,159,252 7,844,258,705 960,341,727 8,804,600,433

Net profit for the year - - - (3,178,783,051)(3,178,783,051) (380,944,157) (3,559,727,208)

Effect of changes in group

structure without loosing

control 45,449,893 (11,442,632) 34,007,261 (34,007,261) -

Currency translation of

foreign operations - - 2,075,084 - 2,075,084 - 2,075,084

Deferred tax effect on

revaluation of lands (Note 17.1) - (161,687,015) - - (161,687,015) - (161,687,015)

Actuarial gains on retirement

benefit obligation - - - (16,614,049) (16,614,049) (759,513) (17,373,562)

Balance as at 31 March 2018 6,057,497,739 850,559,823 1,879,854 (2,386,680,480) 4,523,256,935 544,630,794 5,067,887,732

Company Stated

Capital

Accumulated

loss

Total

LKR LKR LKR

Balance as at 01 April 2016 6,057,497,739 (175,690,186) 5,881,807,553

Net loss for the year - (406,319,429) (406,319,429)

Other comprehensive loss - (5,021,291) (5,021,291)

Balance as at 31 March 2017 6,057,497,739 (587,030,906) 5,470,466,833

Net loss for the year (1,346,069,873)(1,346,069,873)

Other comprehensive loss (1,891,698) (1,891,698)

Balance as at 31 March 2018 6,057,497,739 (1,934,992,477) 4,122,505,262



110

MTD WALKERS PLC


Group Company Year ended 31 March 2018 2018 2017 2018 2017


Cash flows from/(used in) operating activitiesProfit/(loss) from operating activities before tax (3,434,154,614) 300,279,251 (1,346,069,873) (406,319,429)Adjustments for :Depreciation of property, plant & equipment 1,257,947,203 1,083,976,865 24,632,675 26,534,742 Amortisation of intangible assets 6 23,491,715 22,135,267 23,491,715 22,135,267 Impairment on investments in subsidiaries 419,526,132 - Interest income 29 (290,869,326) (168,958,782) (151,832,283) (63,903,257)Dividend income 27 (560,475) (1,571,471) - - Net (gain)/loss on financial assets at fair value

through profit or loss 331,957 - Profit on sale of property, plant & equipment 27 (6,685,053) (36,721,142) - (3,369,000)Finance costs 28 2,764,703,386 1,817,887,893 771,836,638 400,185,610 Provision for retirement benefit plans - gratuity 21.1 53,205,459 33,393,880 7,157,678 3,548,265 Impairment/(reversal) for bad and doubtful debts 149,045,770 163,674,047 - Net unrealized foreign exchange (gain)/loss 83,847,186 (98,408,991) 96,795,871 (39,335,457)Fair value changes in investment property (368,083,000) (534,241,504) - - Impairment of equity investments 17,650 - 17,650 - Impairment off goodwill 25,491,792 - Impairment of inventory 17,008,119 - Amortisation of leasehold property - 1,000,739 - - Operating profit/(loss) before working capital changes 274,405,812 2,582,778,009 (154,443,798) (60,523,260)(Increase)/decrease in inventories (1,323,783,581) (1,095,521,220) - - (Increase)/decrease in trade and other receivables

and other current assets (5,500,814,024) (5,311,510,330) (34,304,351) (76,602,749)(Increase)/decrease in amounts due from related companies (120,332) (34,817,758) (396,235,768) (1,545,747,139)Increase/(decrease) in trade and other payables and

other liabilities 2,496,157,531 1,962,771,776 68,929,494 (70,264,524)Increase/(decrease) in amounts due to related companies 79,407,561 43,327,740 (41,713,372) 130,268,787 Cash generated from/(used in) operations (3,974,747,034) (1,852,971,784) (557,767,794) (1,622,868,885)Finance cost paid (2,756,851,019) (1,810,778,498) (763,984,271) (393,076,214)Income tax paid (9,831,671) (88,783,843) (1,489,786) (13,843)Employee benefit paid (12,350,431) (12,423,628) (56,550) (1,741,250)Net cash flows from/(used in) operating activities (6,753,780,155) (3,764,957,753) (1,323,298,401) (2,017,700,193)Cash flows from/(used in) investing activitiesAcquisition of subsidiary 4.3 - (19,080,542) - (20,201,000)Purchase and constructions of property, plant & equipment (2,154,383,112) (1,598,243,878) (43,200,597) (13,398,538)Acquisition of investment properties - (230,437,373) - - Acquisition of Intangible assets - (11,002,303) - (11,002,303)Proceeds from sale of property, plant & equipment 42,785,937 37,087,024 - 3,369,000 Acquisition of leasehold property - (28,905,300) - - Withdrawal of bank deposits and unit trusts - 863,926,669 82,513,366 537,991,592 Investment in fixed deposits (589,955,982) - Dividend received 560,475 1,571,471 - Interest received 290,869,326 168,958,782 151,832,283 63,903,257 Net cash flows from/(used in) investing activities (2,410,123,356) (816,125,450) 191,145,052 560,662,008 Cash flows from/(used in) financing activitiesRepayment of interest bearing borrowings 19.2 (21,391,782,141) (11,962,665,432) (1,502,657,921) (448,894,116)Long term loan obtained during the year 19.2 28,321,969,835 16,785,789,739 2,219,671,618 1,787,577,003 Principal payment under finance lease liabilities 19.3 (183,575,452) (157,593,103) (7,330,182) (7,079,956)Proceeds form issue of debentures - - - - Share issue in subsidiary - 11,447,025 - - Dividends paid - - - - Net cash flows from/(used in) financing activities 6,746,612,242 4,676,978,229 709,683,514 1,331,602,931 Net (decrease)/increase in cash and cash equivalents (2,417,291,269) 95,895,026 (422,469,834) (125,435,254)Cash and cash equivalents at the beginning of the year 14 (3,778,825,155) (3,874,720,181) 7,733,911 133,169,165 Cash and cash equivalents at the end of the year 14 (6,196,116,424) (3,778,825,155) (414,735,923) 7,733,911

The accounting policies and notes on page 111 to 166 form an integral part of these Financial Statements.Figures in brackets indicate deductions.

111


FinancialStatements


1 Corporate Information

1.1 Reporting Entity

MTD Walkers PLC is a Company

incorporated and domiciled in

Sri Lanka. The ordinary shares

of the Company are listed on

the Colombo Stock Exchange

of Sri Lanka. The registered

office of the Company is

located at No. 18, St Michael’s

Road, Colombo 03, Sri Lanka.

1.2 Consolidated Financial

Statements

The Consolidated Financial

Statements of MTD Walkers

PLC, as at and for the year

ended 31st March 2018

encompasses the Company, its

Subsidiaries (together referred

to as the “Group”).

1.3 Nature of Operations

and Principal Activities

of the Company and

the Group

Descriptions of the nature

of operations and principal

activities of the Company, its

Subsidiaries were as follows,

MTD Walkers PLC

MTD Walkers PLC, the Group’s

holding company, manages

a portfolio of investments

in the civil and mechanical

engineering, marine

engineering, heavy and

light machinery trading, real

estate and power generation

industries.

Walker Sons & Company

Limited


the company decided to

temporarily cease all activities,

and transferred operations to

its subsidiary company Walker

Sons & Company Engineers

(Private) Limited.



Mechanical Engineering.

MTD Walkers Infracon

Limited

Importer and distributor

of power tools and light

machinery.

MTD Walkers Projects

Limited

Facilitates projects which

focuses on infrastructure

development and construction

projects.

Walkers Piling (Private)

Limited

Piling of foundations and other

related earthwork.

CML-MTD Construction

Limited

Civil engineering activities,

hiring of machinery and

supply of raw materials for

construction contracts and

providing other engineering

services.

Special Projects Company

(Private) Limited

Selling of metal items, drilling

quarry and metal crushing.

Northern Power Company

(Private) Limited

Owner and operator of a 30

MW HFO power plant in Jaffna

Peninsula supplying power to

the Ceylon Electricity Board.

Colombo Engineering

Services (Private) Limited

Provide ship repairing and

marine engineering services.

Western Airducts Lanka

(Private) Limited

Manufacturing of spiral wound

ductwork and associated

fittings for exports.

CML-MTD Joint Venture

Limited

Carrying on designing,

building and constructing

of Housing Complex for the

Urban Development Regional

Project for relocation of

underserved settlements for

the city of Colombo.

Walkers CML Properties

(Private) Limited [Formerly

known as Wincon

Development Ceylon

(Private) Limited]

Construction of houses for sale

or lease and the acquisition of

land /lands for the purposes

aforesaid by purchase or lease

or grant or license from the

state (Sri Lanka).

Walkers Equipment Limited

Infrastructure development

support business.

Walkers Colombo Shipyard

(Private) Limited

To establish ships, boats

building, repair facility and

provides services to general

engineering projects in Sri

Lanka and other countries.

Walkers Trinco Shipyard

(Private) Limited

Ship repair & service provider

Walkers M3 (Private) Limited

IT & software service provider

to local & foreign customers

Walkers CML International

(Private) Limited

Engage in Civil Engineering,

Mechanical Engineering,

Electrical Engineering, and

Buildings Services.

Walkers Subsea Services

(Private) Limited

Ship repair & service provider

Walkers CML Property

Development (Pvt) Ltd

Property Development

Walkers CML Property Lanka

(Pvt) Ltd

Property Development.

1.4 Parent Enterprise

and Ultimate Parent

Enterprise

In the opinion of the Directors,

the Company’s parent and

ultimate parent undertaking

and controlling party is also

MTD Capital Bhd, which is

incorporated in Malaysia.

1.5 Date of Authorization

for Issue


Statements of the Group for


2018 were authorized for

issue in accordance with a

resolution of the Board of

Directors on 31st August 2018.

1.6 Responsibility for

financial statements

The responsibility of the

Directors in relation to the

Financial Statements is set out

in the Statement of Directors’

Responsibility Report in the

Annual Report.

2 Basis Of Preparation

2.1 Statement of

Compliance


Statements have been

prepared in accordance with

the Sri Lanka Accounting

and Auditing Standards

Act No. 15 of 1995, which

requires compliance with Sri

Lanka Accounting Standards

promulgated by the Institute


Sri Lanka (CA Sri Lanka), and

112

MTD WALKERS PLC


with the requirements of the

Companies Act No. 07 of 2007.

2.2 Basis of Measurement


Statements have been

prepared on the historical cost

basis, except for;

• Lands are recognised

at cost at the time of

the acquisition and

subsequently measured at

fair value.

• Lands which are recognised

as investment property are

measured at cost at the

time of the acquisition and

subsequently carried at fair

value

• Financial instruments fair

value through profit or loss

is measured at fair value.

Where appropriate, the

specific policies are explained

in the succeeding Notes.

No adjustments have been

made for inflationary factors

in the Consolidated Financial

Statements.

2.3 Going Concern

The Directors have made an

assessment of the Group’s

ability to continue as a going

concern and is satisfied

that it has the resources

to continue in business

for the foreseeable future.

Furthermore, management

is not aware of any material

uncertainties that may cast

significant doubt upon the

Group’s ability to continue as a

going concern. Therefore, the

Financial Statements continue

to be prepared on the going

concern basis.


(Private) Limited

The company’s operations

were suspended on 27th

January 2015 due to a court

order issued as discharging

the waste engine oil of the

power plant is causing ground

water contamination in Jaffna.

Management has made an

appeal on this regard and

Board of Directors is expecting

a favourable position on this

regard.


is presently in two courts

namely, the Court of Appeal

and The Supreme court with

regards to an alleged pollution

of water resources in the

Chunnakam area where the

plant is located.

Northern Power appealed

to the Court of Appeal

against a decision taken by

the Mallakam Magistrate

to restrain the plant from

operating and also forcing

the staff out of the plant. The

court of appeal has granted

access to the plant and on

the last hearing has instructed

Northern Power to provide to

court the waste management

system adopted at the plant

certified and concurred by

the Board of Investment’s

Environmental division who

is responsible for the issue of

the Environmental Protection

license to Northern Power

Company (Private) Limited

and be submitted to court on

the 17th July 2017. The appeal

court will make a ruling on the

future operation of the plant

on the next date of hearing

28th September 2017. At the

Supreme Court Northern

Power is listed as the 8th

respondent on a fundamental

rights case filled by a Non-

Government Organisation in

Colombo clamming that the

alleged pollution of water

has affected the livelihood

of people in the Chunnakam

Area. Further, written

submissions were provided to

court as directed by us as the

8th respondent as the state.

The case came up of hearing

on 04th May 2018, however

due to the original three judge

bench not being available and

case was postponed for 12th

September 2018.

At this case all Government

institutions who are listed as

respondents are represented

by the Attorney General other

than the Board of Investments

who is represented by a

Presidents Counsel.

All investigations carried out

on the quality of the water by

independent organizations

have clearly indicated that

there is no petroleum based

pollution in the water, which

clearly indicates that Northern

Power is in no way responsible

for the alleged pollution.

Based on all those facts and

considering the favourable

evidences available with

company, the management is

in a view favourable position

to commence the commercial

operations in near future.

2.4 Materiality and

Aggregation

Each material class of similar

items is presented separately

in the Consolidated Financial

Statements. Items of a

dissimilar nature or function

are presented separately

unless they are immaterial.

2.5 Functional and

presentation currency

The Financial Statements are

presented in Sri Lankan Rupee

(LKR), which is the Group’s

functional currency.

3 Significant Accounting

Polices

3.1 Basis of Consolidation


Statements (referred to as

the “Group”) comprise the


Company and its subsidiaries.

Subsidiaries are those entities

controlled by the Group.

Control is achieved when the

Group is exposed, or rights

to variable returns from its

involvement with the investee

and when it has the ability to

affect those returns through

its power over the investee.

Specifically, the Group controls

an investee if, and only if, the

Group has:

• Power over the investee

(i.e., existing rights that

give it the current ability to

direct the relevant activities

of the investee)

• Exposure, or rights, to

variable returns from its

involvement with the

investee

• The ability to use its power

over the investee to affect

its returns

Generally, there is a

presumption that a majority

of voting rights results in

control. To support this

presumption and when the

Group has less than a majority

of the voting or similar rights

of an investee, the Group

considers all relevant facts and

circumstances in assessing

113


FinancialStatements


whether it has the power over

an investee.

• The contractual

arrangement(s) with the

other vote holders of the

investee

• Rights arising from other

contractual arrangements

• The Group’s voting rights

and potential voting rights

The Group re-assesses

whether or not it controls

an investee if facts and

circumstances indicate that

there are changes to one or

more of the three elements

of control. Consolidation of a

subsidiary begins when the

Group obtains control over the

subsidiary and ceases when

the Group loses control of the

subsidiary. Assets, liabilities,

income and expenses of

a subsidiary acquired or

disposed of during the year are

included in the Consolidated

Financial Statements from

the date the Group gains

control until the date the

Group ceases to control the

subsidiary.

When necessary, adjustments

are made to the financial

statements of subsidiaries to

bring their accounting policies

into line with the Group’s

accounting policies.

Profit or loss and each

component of other

comprehensive income

(OCI) are attributed to the

equity holders of the parent

of the Group and to the

non-controlling interests,

even if this results in the non-

controlling interests having a

deficit balance. All intra-group

assets and liabilities, equity,

income, expenses and cash

flows relating to transactions

between members of the

Group are eliminated in full on

consolidation.

A change in the ownership

interest of a subsidiary, without

a loss of control, is accounted

for as an equity transaction.

If the Group loses control over

a subsidiary, it derecognises

the related assets (including

goodwill), liabilities, non-

controlling interest and other

components of equity while

any resulting gain or loss is

recognised in the Statement of

Profit or Loss. Any investment

retained is recognised at fair

value.

3.1.1 Business combination and goodwill

Business combinations are

accounted for using the

acquisition method. The cost

of an acquisition is measured

as the aggregate of the

consideration transferred,

which is measured at

acquisition date fair value

and the amount of any non-

controlling interest in the

acquiree. For each business

combination, the Group elects

whether to measures the

non-controlling interest in the

acquire either at fair value or

at the proportionate share of

the acquiree’s identifiable net

assets.

Transaction costs, other than

those associated with the issue

of debt or equity securities

that the Group incurs in

connection with a business

combinations are expensed

and included in administrative

expenses.

When the Group acquires

a business, it assesses the

financial assets and liabilities

assumed for appropriate

classification and designation

in accordance with the

contractual terms, economic

circumstances and pertinent

conditions as at the acquisition

date. This includes the

separation of embedded

derivatives in host contracts by

the acquiree.

If the business combination

is achieved in stages, any

previously held equity

interest is remeasured at its

acquisition date fair value

and any resulting gain or loss

recognised in Statement of

Profit or Loss.

Any contingent consideration

to be transferred by the

acquirer will be recognised

at fair value at the acquisition

date. Subsequent changes in

the fair value of the contingent

consideration which is

deemed to be an asset or

liability, will be recognised

in accordance with LKAS

39 either in the Statement

of Profit or Loss or in Other

Comprehensive Income. If the

contingent consideration is

classified as equity, it will not

be remeasured. Subsequent

settlement is accounted for

within equity. In instances

where the contingent

consideration does not fall

within the scope of LKAS 39,

it is measured in accordance

with the appropriate SLFRS/

LKAS.

Goodwill is initially measured

at cost (being the excess

of the aggregate of the

consideration transferred

and the amount recognised

for non-controlling interests)

and any previous interest

held over the net identifiable

assets acquired and liabilities

assumed. If the fair value of

the net assets acquired is

in excess of the aggregate

consideration transferred, the

Group re-assesses whether

it has correctly identified all

of the assets acquired and all

of the liabilities assumed and

reviews the procedures used

to measure the amounts to be

recognised at the acquisition

date. If the reassessment

still results in an excess of

the fair value of net assets

acquired over the aggregate

consideration transferred, then

the gain is recognized in profit

or loss.

After initial recognition,

goodwill is measured at

cost less any accumulated

impairment losses.

For the purpose of impairment

testing, goodwill acquired in a

business combination is, from

the acquisition date, allocated

to each of the Group’s cash-

generating units that are

expected to benefit from the

combination, irrespective

of whether other assets or

liabilities of the acquiree are

assigned to those units.

Where goodwill has been

allocated to a cash-generating

unit (CGU) and part of the

operation within that unit

is disposed of, the goodwill

associated with the disposed

operation is included in

the carrying amount of the

operation when determining

the gain or loss on disposal.

Goodwill disposed of in this

circumstance is measured

based on the relative values

of the disposed operation

and the portion the cash-

generating unit retained.

114

MTD WALKERS PLC


3.1.2 Subsidiaries

The subsidiaries and their controlling percentages of the Group,

which have been consolidated, are as follows:

Company Name 2018 2017

Walker Sons & Company Limited 99.80% 99.80%

Walker Sons & Company Engineers (Private)

Limited

99.95% 99.95%

MTD Walkers Infracon Limited 99.81% 99.81%

MTD Walkers Projects Limited 86.39% 86.39%

Walkers Piling (Private) Limited 99.99% 99.99%

CML-MTD Construction Limited 92.11% 78.59%

Northern Power Company (Private) Limited 100.00% 100.00%

Special Projects Company (Private) Limited 92.11% 78.59%

Colombo Engineering Services (Private)

Limited

100.% 100.%

Western Airducts Lanka (Private) Limited 79.96% 79.96%

CML-MTD Joint Venture Limited 47.14% 47.14%

Walkers CML Properties (Private) Limited 100% 100%

Walkers Equipment Limited 66.67% 66.67%

Walkers Colombo Shipyard (Private) Limited 94.74% 94.74%

Walkers M3 (Private) Limited 100% 100%

Walkers CML International (Private) Limited 93.58% 93.58%

Walkers Trinco Shipyard (Private) Limited 100% 100%

Walkers Subsea Services (Private) Limited 47.37% 47.37%

Walkers CML Property Development (Pvt) Ltd 100% -

Walkers CML Properties Lanka (Pvt) Ltd 51% -

Colombo Fort Heritage Company (Pvt) Ltd 100% -

All the companies operate in Sri Lanka except Walkers CML

International (Private) Limited operates in Maldives.

3.1.3 Non - controlling interests

Profit or loss and each

component of other

comprehensive income are

attributed to equity holders of

the parent of the Group and to

the non-controlling interests,

even if this results in the non-

controlling interests having a

deficit balance.

3.1.4 Transactions eliminated on consolidation

All intra-group assets and

liabilities, equity, income,

expenses and cash flows

relating to transactions

between members of the

Group are eliminated in full

on consolidation. Unrealised

losses are eliminated in the

same way as unrealised

gains, but only to the extent

that there is no evidence of

impairment.

3.2 Foreign currency

translations

Transactions in foreign

currencies are translated to

the respective functional

currencies of Group entities at

exchange rates applicable on

the dates of the transaction.

Monetary assets and liabilities

denominated in foreign

currencies at the reporting

date are retranslated at the

functional currency spot

rate of exchange ruling at

the reporting date. Foreign

currency differences arising on

retranslation are recognised

in the Statement of Profit or

Loss. All differences arising

on settlement or translation

of monetary items are taken

to Statement of Profit or Loss.

Non-monetary assets and

liabilities which are carried

in terms of historical cost

in a foreign currency are

translated at the exchange

rate that prevailed at the date

of the initial transaction. Non-

monetary items measured

at fair value in a foreign

currency are translated using

the exchange rates at the

date when the fair value is

determined. The gain or loss

arising on retranslation of

non-monetary items is treated

in line with the recognition

of gain or loss on change

in fair value of the item (i.e.,

translation differences on

items whose fair value gain

or loss is recognised in Other

Comprehensive Income or

Statement of Profit or Loss.

3.3 Current versus non-

current classification

The Group presents assets

and liabilities in Statement

of Financial Position based

on current/non-current

classification. An asset is

current when it is:

• Expected to be realised

or intended to sold or

consumed in normal

operating cycle

• Held primarily for the

purpose of trading

• Expected to be realised

within twelve months after

the reporting period, or

• Cash or cash equivalent

unless restricted from being

exchanged or used to settle

a liability for at least twelve

months after the reporting

period

All other assets are classified as

non-current.

A liability is current when it is:

• Expected to be settled in

normal operating cycle

• Held primarily for the

purpose of trading

• Due to be settled within

twelve months after the

reporting period, or

• No unconditional right to

defer the settlement of the

liability for at least twelve

months after the reporting

period.

The Group classifies all other

liabilities as non-current.

Deferred tax assets and

liabilities are classified as non-

current assets and liabilities.

3.4 Fair value measurement

The Group measures

financial instruments which

are designated as fair value

though profit or loss; non-

financial assets such as

owner occupied lands and

investment properties, at

fair value. Fair value related

disclosures for financial

instruments and non-financial

assets that are measured at fair

value or where fair values are

disclosed are summarised in

the following notes:

• Disclosure for valuation

methods, significant

estimates and assumptions

- 25.2

115


FinancialStatements


• Quantitative disclosures

of fair value measurement

hierarchy – Note 25

• Land and Building under

revaluation model – Note

4.8

• Investment properties –

Note 05

Fair value is the price that

would be received to sell

an asset or paid to transfer

a liability in an orderly

transaction between

market participants at the

measurement date. The fair

value measurement is based

on the presumption that the

transaction to sell the asset or

transfer the liability takes place

either:

• In the principal market for

the asset or liability, or

• In the absence of a

principal market, in the

most advantageous market

for the asset or liability

The principal or the most

advantageous market must be

accessible by the Group.

The fair value of an asset

or a liability is measured

using the assumptions that

market participants would

use when pricing the asset

or liability, assuming that

market participants act in their

economic best interest.

A fair value measurement of a

non-financial asset takes into

account a market participant's

ability to generate economic

benefits by using the asset in

its highest and best use or by

selling it to another market

participant that would use the

asset in its highest and best

use.

The Group uses valuation

techniques that are

appropriate in the

circumstances and for which

sufficient data are available to

measure fair value, maximising

the use of relevant observable

inputs and minimising the use

of unobservable inputs.

All assets and liabilities for

which fair value is measured

or disclosed in the financial

statements are categorised

within the fair value hierarchy,

described as follows, based

on the lowest level input that

is significant to the fair value

measurement as a whole:

• Level 1 — Quoted

(unadjusted) market

prices in active markets for

identical assets or liabilities

• Level 2 — Valuation

techniques for which the

lowest level input that is

significant to the fair value

measurement is directly or

indirectly observable

• Level 3 — Valuation

techniques for which the

lowest level input that

is significant to the fair

value measurement is

unobservable

For assets and liabilities that

are recognised in the Financial

Statements at fair value on

a recurring basis, the Group

determines whether transfers

have occurred between

levels in the hierarchy by

re-assessing categorisation

(based on the lowest level

input that is significant to the

fair value measurement as

a whole) at the end of each

reporting period.

For the purpose of fair value

disclosures, the Group has

determined classes of assets

and liabilities on the basis of

the nature, characteristics and

risks of the asset or liability

and the level of the fair value

hierarchy as explained above.

3.5 Assets and Bases of

Their Valuation

3.5.1 Property, plant & equipment

The group applies the

requirements of LKAS 16 on

‘Property, Plant & Equipment’

in accounting for its owned

assets which are held for and

use in the provision of the

services or for administration

purpose and are expected to

be used for more than one

year.

3.5.1.1 Basis of recognition

Property, plant & equipment

is recognised if it is probable

that future economic benefit

associated with the assets will

flow to the Group and cost

of the asset can be reliably

measured.

3.5.1.2 Basis of

measurement

Items of property, plant

& equipment including

construction in progress

are measured at cost net of

accumulated depreciation

and accumulated impairment

losses, if any, except for land

which is measured at fair value.

3.5.1.3 Owned assets

The cost of property, plant

& equipment includes

expenditure that is directly

attributable to the acquisition

of the asset. The cost of self-

constructed assets includes

the cost of materials and direct

labour, any other costs directly

attributable to bringing

the asset to a working

condition for its intended

use, and includes the costs of

dismantling and removing the

items and restoring the site on

which they are located, and

borrowing costs on qualifying

assets. Purchased software that

is integral to the functionality

of the related equipment is

capitalised as a part of that

equipment.

When significant parts of plant

and equipment are required

to be replaced at intervals,

the Group depreciates them

separately based on their

specific useful lives.

Revaluation of land is done

with sufficient frequency to

ensure that the fair value of the

land does not differ materially

from its carrying amount, and

is undertaken by professionally

qualified valuers.

Any revaluation surplus

is recorded in Other

Comprehensive Income

and credited to the asset

revaluation reserve in equity.

However, to the extent that it

reverses a revaluation deficit

of the same asset previously

recognised in the Statement

of Profit or Loss, the increase is


of Profit or Loss. A revaluation

deficit is recognised in the

Statement of Profit or Loss,

except to the extent that it

offsets an existing surplus on

the same asset recognised

in the asset revaluation

reserve. Upon disposal, any

revaluation reserve relating

to the particular asset being

sold is transferred to retained

earnings.

3.5.1.4 Subsequent costs

The cost of replacing a

component of an item of

Property, plant & equipment

is recognised in the carrying

amount of the item if it is

probable that the future

economic benefits embodied

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MTD WALKERS PLC


within the part will flow to

the Group and its cost can be

measured reliably. The carrying

amount of the replaced part

is derecognised in accordance

with the derecognition policy

given below.

The costs of the repair and

maintenance of Property, plant

& equipment are recognised

Statement of Profit or Loss as

incurred.

3.5.1.5 Derecognition

The carrying amount of an

item of Property, plant &

equipment is derecognised

on disposal; or when no

future economic benefits

are expected from its use.

Any gains and losses on

derecognition are recognised

(calculated as the difference

between the net disposal

proceeds and the carrying

amount of the assets) in

Statement of Profit of Loss.

Gains are not classified as

revenue.

3.5.1.6 Depreciation

Depreciation is recognised in

the Statement of Profit or Loss

on a straight-line basis over the

estimated useful lives of each

part of an item of Property,

plant & equipment, in reflects

the expected pattern of

consumption of the future


in the asset.

The estimated useful lives for

the current and comparative

periods are as follows:

Assets Years

Buildings 50

Plant and machinery 05-15

Furniture and fittings 08-10

Component assets 03

Construction & other

equipment 08-10

Motor vehicles 04-05

Tools and other

equipment 04-08

Computer and

accessories 04

Depreciation of an asset

begins when it is available for

use and ceases at the earlier of

the dates on which the asset is

classified as held for sale or is

derecognized.

The asset’s residual values,

useful lives are reviewed, and

adjusted if appropriate, at each

financial year end and adjusted

prospectively, if appropriate.

3.5.2 Investment property

Investment property is

property held either to earn

rental income or for capital

appreciation or both, but

not for sale in the ordinary

course of business, use in the

production or supply of goods

or services or for administrative

purposes.

Investment properties are

measured initially at cost,

including transaction costs.

The carrying value of an

investment property 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 the investment

property. Subsequent to initial

recognition, the investment

properties are stated at fair

values, which reflect market

conditions at the reporting

date.

Gains or losses arising from

changes in fair value are

included in the Statement of

Profit or Loss in the year in

which they arise. Fair values

are evaluated with sufficient

frequency by an accredited

external, independent valuer.

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


of Profit or Loss in the year of

retirement or disposal.

Transfers are made to or from

investment property only

when there is a change in use

for a transfer from investment

property to owner occupied

property or inventory

(WIP), the deemed cost for

subsequent accounting is

the fair value at the date

of change in use. If owner

occupied property becomes

an investment property or

inventory (WIP), the Group

accounts for such property in

accordance with the policy

stated under property, plant

& equipment up to the date

of change in use. Where

Group companies occupy

a significant portion of the

investment property of a

subsidiary, such investment

properties are treated as

property, plant & equipment

in the consolidated financial

statements, and accounted

using Group accounting

policy for property, plant &

equipment

3.5.3 Leases

3.5.3.1 Finance leases

Leases in terms of which the

Group assumes substantially

all the risks and benefits

incidental to ownership of

the leased item, are classified

as finance leases. On initial

recognition, the leased assets

under property, plant and

equipment, is measured at an

amount equal to the lower of

its fair value and the present

value of minimum lease

payments. Subsequent to

initial recognition, the asset is

accounted for in accordance

with the accounting policy

applicable to that asset.

Minimum lease payments

under finance leases are

apportioned between the

finance expense and the

reduction of the outstanding

liability. The finance expense

is allocated to each period

during the lease term so as to

produce a constant periodic

rate interest on the remaining

balance of the liability.

3.5.3.2 Operating leases

Leases where the lessor

effectively retains substantially

all the risks and rewards of

ownership over the assets are

classified as operating leases.

Payments under operating

leases are recognised as an

expense in the Statement of

Profit or Loss on a straight-line

basis over the term of the

lease or any other basis more

representative of the time

pattern of the benefits derived

from the lease. The initial costs

incurred in negotiating an

operating lease are added to

the carrying amount of the

lease asset and recognised

as a non-current asset and

is amortised over the period

of the lease in accordance

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FinancialStatements


with the pattern of benefits

expected to be derived from

the lease. The carrying amount

of leasehold property is tested

for impairment annually.

3.5.3.3 Group as a Lessee

Finance leases which transfer

to the Group substantially

all the risks and benefits

incidental to ownership of the

leased item, are capitalized

at the commencement of

the lease at the fair value

of the leased property or, if

lower, at the present value

of the minimum lease

payments. Lease payments are

apportioned between finance

charges and reduction of the

lease liability so as to achieve

a constant rate of interest on

the remaining balance of the

liability. Finance charges are

recognized in finance costs in

the Statement of Profit or Loss.

3.5.3.4 Determining whether

an arrangement contains a

lease

At the inception of an

arrangement, the Group

determines whether such an

arrangement is, or contains,

a lease is based on the

substance of the arrangement

at inception date. This will be

applied if the following two

criteria are met:

- the fulfilment of the

arrangement is dependent

on the use of a specific

asset or assets; and

- the arrangement contains a

right to use the asset(s).

At the inception or on

reassessment of the

arrangement, the Group

separates payments and

other consideration required

by such an arrangement into

those in respect of the lease

and those for other elements,

on the basis of their relative

fair values. In respect of a

finance lease, if the Group

concludes that it is impractical

to separate the payments

reliably, then an asset and

a liability are recognised at

an amount equal to the fair

value of the underlying asset.

Subsequently as payments are

made the liability is reduced

and imputed finance cost

on the liability is recognised

using the Group’s incremental

borrowing rate.

3.5.4 Intangible assets

3.5.4.1 Basis of recognition

An Intangible asset is

recognised if it is probable

that future economic benefit

associated with the assets will

flow to the Group and cost

of the asset can be reliably

measured.

3.5.4.2 Basis of

measurement

Intangible assets acquired

separately are measured

on initial recognition at

cost. The costs of intangible

assets acquired in a business

combination are their fair value

as at the date of acquisition.

Following initial recognition,

intangible assets are carried

at cost less any accumulated

amortisation and accumulated

impairment losses. Internally

generated intangible assets,

excluding capitalised

development costs, are not

capitalised and expenditure

is reflected in the Statement

of Profit or Loss in the year

in which the expenditure is

incurred.

3.5.4.3 Useful economic lives

and amortisation

The useful lives of intangible

assets are assessed as either

finite or indefinite.

Intangible assets with finite

lives are amortised over the

useful economic life and

assessed for impairment

whenever there is an

indication that the intangible

asset may be impaired. The

amortisation period and the

amortisation method for

an intangible asset with a

finite useful life is reviewed

at least at the end of each

reporting period. Changes

in the expected useful life

or the expected pattern

of consumption of future


in the asset is accounted for

by changing the amortisation

period or method, as

appropriate, and are treated

as changes in accounting

estimates. The amortisation

expense on intangible assets

with finite lives is recognised


Loss in the expense category

consistent with the function of

the intangible assets.

Intangible assets with

indefinite useful lives are not

amortised, but are tested

for impairment annually,

either individually or at the

cash generating unit level.

The assessment of indefinite

useful life is reviewed annually

to determine whether the

indefinite life continues to be

supportable. If not, the change

in useful life from indefinite to

finite is made on a prospective

basis.

3.5.4.4 De-recognition of

intangible assets

Intangible assets are de-

recognised on disposal or

when no future economic

benefits are expected from

its use. Gains or losses arising

from de-recognition of an

intangible asset are measured

as the difference between

the net disposal proceeds

and the carrying amount of

the asset and are recognised

in the Statement of Profit

or Loss when the asset is

derecognised.

3.5.4.5 Subsequent

expenditure

Subsequent expenditure

is capitalised only when it

increases the future economic

benefits embodied in the

specific asset to which it

relates. All other expenditure,

including expenditure on

internally generated goodwill

and brands, is recognised in

profit or loss as incurred.

3.5.4.6 Amortisation

Amortisation is recognised

in Statement of Profit or Loss

on a straight-line basis over

the estimated useful lives

of intangible assets, from

the date on which they are

available for use. The estimated

useful lives for the current and

comparative periods are as

follows:

ERP Systems Over 04 Years

3.5.6 Non-current assets held for sale

Non-current assets are

classified as held for sale if

their carrying amount will be

recovered principally through

a sale transaction rather than

through continuing use.

This condition is regarded as

met only when the asset is

available for immediate sale in

its present condition subject

only to terms that are usual

and customary for sales of

such asset and its sale is highly

probable. Management must

be committed to the sale,

which should be expected

to qualify for recognition

as a completed sale within

one year from the date of

classification.

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MTD WALKERS PLC


Non-current assets classified

as held for sale are measured

at the lower of their carrying

amount and fair value less

costs to sell. Property, plant

and equipment are not

depreciated once classified as

held for sale. Assets classified

as held for sale are presented

separately as current items

in the statement of financial

position.

3.6 Financial Instruments

– Initial recognition

and subsequent

measurement

A Financial instrument is

any contract gives rise to a

financial asset of one entity

and financial liability or equity

instrument of another entity.

3.6.1 Financial assets

3.6.1.1 Initial recognition

and measurement

Financial assets within

the scope of LKAS 39 are

classified as financial assets

at fair value through profit or

loss, loans and receivables,

held-to-maturity investments,

available-for-sale financial

assets, or as derivatives

designated as hedging

instruments in an effective

hedge, as appropriate.

The Group determines the

classification of its financial

assets at initial recognition.

All financial assets are

recognised initially at fair value

plus transaction costs, except

in the case of financial assets

recorded at fair value through

profit or loss.

Purchases or sales of financial

assets that require delivery

of assets within a time frame

established by regulation or

convention in the market

place (regular way trades) are

recognised on the trade date,

i.e., the date that the Group

commits to purchase or sell

the asset.

The Group’s financial assets

include cash and short-

term deposits, trade and

other receivables, loans and

other receivables, quoted

and unquoted financial

instruments.

3.6.1.2 Subsequent

measurement

The subsequent measurement

of financial assets depends on

their classification as described

below:

Financial assets at fair value

through profit or loss

Financial assets at fair value

through profit or loss include

financial assets held for trading

and financial assets designated

upon initial recognition at fair

value through profit or loss.

Financial assets are classified

as held for trading if they are

acquired for the purpose of

selling or repurchasing in

the near term. Derivatives,

including separated

embedded derivatives are also

classified as held for trading

unless they are designated as

effective hedging instruments

as defined by LKAS 39.

The Group has investment in

quoted equity securities which

has classified as financial assets

at fair value through profit and

loss and that are carried in the

Statement of Financial Position

at fair value with net changes

in fair value recognised in

finance income or finance

costs in the Statement of Profit

or Loss.

Financial assets designated

upon initial recognition at fair

value through profit and loss

are designated at their initial

recognition date and only if

the criteria under LKAS 39 are

satisfied.

Loans and receivables

Loans and receivables are

non-derivative financial assets

with fixed or determinable

payments that are not quoted

in an active market. After initial

measurement, such financial

assets are subsequently

measured at amortised cost

using the effective interest rate

method (EIR), less impairment.

Amortised cost is calculated

by taking into account any

discount or premium on

acquisition and fees or costs

that are an integral part of

the EIR. The EIR amortisation

is included in finance income


Loss. The losses arising from

impairment are recognised in

the Statement of Profit or Loss

in finance costs for loans and

in other operating expenses

for receivables.


A financial asset is

derecognised when:

• The rights to receive cash

flows from the asset have

expired

or

• The Group has transferred

its rights to receive cash

flows from the asset or has

assumed an obligation to

pay the received cash flows

in full without material

delay to a third party

under a ‘pass-through’

arrangement; and either (a)

the Group has transferred

substantially all the risks

and rewards of the asset, or

(b) the Group has neither

transferred nor retained

substantially all the risks

and rewards of the asset,

but has transferred control

of the asset.

When the Group has

transferred its rights to

receive cash flows from an

asset or has entered into a

pass-through arrangement, it

evaluates if and to what extent

it has retained the risks and

rewards of ownership. When

it has neither transferred nor

retained substantially all of the

risks and rewards of the asset,

nor transferred control of the

asset, the asset is recognised

to the extent of the Group’s

continuing involvement in the

asset. In that case, the Group

also recognises an associated

liability. The transferred asset

and the associated liability

are measured on a basis

that reflects the rights and

obligations that the Group has

retained.

3.6.1.4 Impairment of

financial assets

The Group assesses, at each

reporting date, whether there

is any objective evidence that

a financial asset or a group of

financial assets is impaired.

A financial asset or a group

of financial assets is deemed

to be impaired if, and only if,

there is objective evidence

of impairment as a result

of one or more events that

has occurred after the initial

recognition of the asset (an

incurred ‘loss event’) and that

loss event has an impact on

the estimated future cash

flows of the financial asset or

119


FinancialStatements


the group of financial assets

that can be reliably estimated.

Evidence of impairment may

include indications that the

debtors or a group of debtors

is experiencing significant

financial difficulty, default

or delinquency in interest

or principal payments, the

probability that they will enter

bankruptcy or other financial

reorganisation and when

observable data indicate that

there is a measurable decrease

in the estimated future cash

flows, such as changes in

arrears or economic conditions

that correlate with defaults.

Financial assets carried at

amortised cost

For financial assets carried at

amortised cost, the Group first

assesses whether objective

evidence of impairment exists

individually for financial assets

that are individually significant,

or collectively for financial

assets that are not individually

significant. If the Group

determines that no objective

evidence of impairment exists

for an individually assessed

financial asset, whether

significant or not, it includes

the asset in a group of financial

assets with similar credit risk

characteristics and collectively

assesses them for impairment.

Assets that are individually

assessed for impairment and

for which an impairment

loss is, or continues to be,

recognised are not included

in a collective assessment of

impairment.

If there is objective evidence

that an impairment loss has

been incurred, the amount

of the loss is measured as

the difference between the

asset’s carrying amount

and the present value of

estimated future cash flows

(excluding future expected

credit losses that have not yet

been incurred). The present

value of the estimated future

cash flows is discounted at

the financial asset’s original

effective interest rate. If a loan

has a variable interest rate, the

discount rate for measuring

any impairment loss is the

current EIR.

The carrying amount of the

asset is reduced through the

use of an allowance account

and the amount of the loss is

recognised in the Statement of

Profit or Loss. Interest income

continues to be accrued on

the reduced carrying amount

and is accrued using the rate

of interest used to discount

the future cash flows for

the purpose of measuring

the impairment loss. The

interest income is recorded

as part of finance income


Loss. Loans together with

the associated allowance are

written off when there is no

realistic prospect of future

recovery and all collateral has

been realised or has been

transferred to the Group. If, in a

subsequent year, the amount

of the estimated impairment

loss increases or decreases

because of an event occurring

after the impairment was

recognised, the previously

recognised impairment loss

is increased or reduced by

adjusting the allowance

account. If a future write-off is

later recovered, the recovery is

credited to finance costs in the


3.6.2 Financial Liabilities

3.6.2.1 Initial recognition

and measurement

Financial liabilities within

the scope of LKAS 39 are

classified as financial liabilities

at fair value through profit or

loss, loans and borrowings,

or as derivatives designated

as hedging instruments

in an effective hedge, as

appropriate. The Group

determines the classification of

its financial liabilities at initial

recognition.

All financial liabilities are

recognised initially at fair

value plus, in the case of

loans and borrowings, directly

attributable transaction costs.

The Group’s financial liabilities

include trade and other

payables, bank overdrafts,

loans and borrowings.

3.6.2.2 Subsequent

measurement

The measurement of financial

liabilities depends on their

classification as described

below:

Loans and borrowings

After initial recognition, interest

bearing loans and borrowings

are subsequently measured at

amortised cost using the EIR

method. Gains and losses are


of Profit or Loss when the

liabilities are derecognised

as well as through the EIR

amortisation process.

Amortised cost is calculated

by taking into account any

discount or premium on

acquisition and fees or costs

that are an integral part of the

EIR. The EIR amortisation is

included in finance costs in the



A financial liability is

derecognised when the

obligation under the liability

is discharged or cancelled or

expires.

When an existing financial

liability is replaced by another

from the same lender on

substantially different terms,

or the terms of an existing

liability are substantially

modified, such an exchange or

modification is treated as the

derecognition of the original

liability and the recognition of

a new liability. The difference

in the respective carrying

amounts is recognised in the


3.6.3 Offsetting of financial instruments

Financial assets and financial

liabilities are offset and the

net amount reported in the

consolidated statement of

financial position if, and only if:

• There is a currently

enforceable legal right

to offset the recognised

amounts

and

• There is an intention

to settle on a net basis,

or to realise the assets

and settle the liabilities

simultaneously

3.6.4 Fair value of financial instruments

The fair value of financial

instruments that are traded

in active markets at each

reporting date is determined

by reference to quoted

market prices or dealer price

quotations (bid price for long

positions and ask price for

short positions), without any

deduction for transaction

costs.

For financial instruments not

traded in an active market,

the fair value is determined

using appropriate valuation

techniques. Such techniques

may include:

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MTD WALKERS PLC


• Using recent arm’s length

market transactions

• Reference to the current fair

value of another instrument

that is substantially the

same

• A discounted cash flow

analysis or other valuation

models.

3.7 Inventories

Inventories are stated at the

lower of cost or net realizable

value, after making due

allowance for obsolete and

slow-moving items.

The cost of inventories is

comprised of all costs of

purchase, costs of conversion

and other costs incurred in

bringing the inventories to

their present location and

condition, are accounted

using Weighted average cost

formula.

Net realizable value is the

estimated selling price in the

normal course of business less

estimated cost of realization

and/or cost of conversion from

their existing state to saleable

condition.

Work-in-Progress and

Completed Apartments

Property acquired or being

constructed for sale in the

ordinary course of business,

rather than to be held for

rental or capital appreciation,

and completed apartments

are shown as inventories and

measured at the lower of cost

and net realizable value.

Cost includes:

• Freehold rights for land

• Amounts paid to

contractors for construction

• Planning and design costs,

costs of site preparation,

property transfer taxes,

construction overheads

and other related costs.

Non-refundable commissions

paid to sales or marketing

agents on the sale of real

estate units are expensed

when paid.

Net realizable value is the

estimated selling price in

the ordinary course of the

business, based on market

prices at the reporting date

and discounted for the time

value of money if material,

less costs to completion

and the estimated costs of

sale. The cost of inventory

recognized in profit or loss on

disposal is determined with

reference to the costs incurred

on the property sold and an

allocation of costs based on

the gross floor area of the

property developed.

3.8 Cash and cash

equivalents

Cash in hand and at bank and

short-term deposits in the

Statement of Financial Position

comprise cash at banks and

on hand and short-term

deposits with a maturity of

three months or less, which are

subject to an insignificant risk

of changes in value.

For the purpose of the

Statement of Cash Flows,

cash and cash equivalents

consist of cash and short-term

deposits, as defined above, net

of outstanding bank overdrafts

and short term borrowings as

they are considered an integral

part of the Group’s cash

management.

3.9 Impairment of non-

financial assets

The Group assesses, at each

reporting date, whether

there is an indication that an

asset may be impaired. If any

indication exists, or when

annual impairment testing

for an asset is required, the

Group estimates the asset’s

recoverable amount. An

asset’s recoverable amount

is the higher of an asset’s or

CGU’s fair value less costs of

disposal and its value in use.

The recoverable amount 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. When

the carrying amount of an

asset or CGU exceeds its

recoverable amount, the

asset is considered impaired

and is written down to its

recoverable amount.

In assessing value in use,


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. In determining fair

value less costs of disposal,

recent market transactions

are taken into account. If no

such transactions can be

identified, an appropriate

valuation model is used. These

calculations are corroborated

by valuation multiples, quoted

share prices for publicly traded

companies or other available

fair value indicators.

The Group bases its

impairment calculation on

detailed budgets and forecast

calculations, which are

prepared separately for each of

the Group’s CGUs to which the

individual assets are allocated.

These budgets and forecast

calculations generally cover

a period of five years. A long-

term growth rate is calculated

and applied to project future

cash flows after the fifth year.

Impairment losses of

continuing operations are


of Profit or Loss in expense

categories consistent with

the function of the impaired

asset, except for properties

previously revalued with the

revaluation taken to Other

Comprehensive Income.

For such properties, the

impairment is recognised in

Other Comprehensive Income

up to the amount of any

previous revaluation.

For assets excluding goodwill,

an assessment is made at each

reporting date to determine

whether there is an indication

that previously recognised

impairment losses no longer

exist or have decreased. If

such indication exists, the

Group estimates the asset’s

or CGU’s recoverable amount.

A previously recognised

impairment loss is reversed

only if there has been a

change in the assumptions

used to determine the asset’s

recoverable amount since

the last impairment loss was

recognised. The reversal is

limited so that the carrying

amount of the asset does

not exceed its recoverable

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FinancialStatements


amount, nor exceed the

carrying amount that would

have been determined,

net of depreciation, had

no impairment loss been

recognised for the asset in

prior years. Such reversal is

recognized in the Statement of

Profit or Loss unless the asset is

carried at a revalued amount,

in which case, the reversal

is treated as a revaluation

increase.

Goodwill is tested for

impairment annually as

at 31st March and when


the carrying value may be

impaired. Impairment is

determined for goodwill by

assessing the recoverable

amount of each CGU (or

group of CGUs) to which the

goodwill relates. When the

recoverable amount of the

CGU is less than its carrying

amount, an impairment loss is

recognised. Impairment losses

relating to goodwill cannot be

reversed in future periods.

Intangible assets with

indefinite useful lives are

tested for impairment annually

as at 31st March at the CGU

level, as appropriate, and when


the carrying value may be

impaired.

3.10 Liabilities and

provisions

3.10.1 Employee benefits

3.10.1.1 Defined

contribution plans

A defined contribution plan

is a post-employment benefit

plan under which an entity

pays fixed contributions into

a separate entity and will

have no legal or constructive

obligation to pay further

amounts. Obligations for

contributions to Provident

and Trust Funds covering all

employees are recognised as

an employee benefit expense

in Statement of Profit or Loss

in the periods during which

services are rendered by

employees.

The Group contributes 12%

and 3% of gross emoluments

to employees as Provident

Fund and Trust Fund

contribution respectively.

3.10.1.2 Defined benefit

plans

A defined benefit plan is a

post-employment benefit

plan other than a defined

contribution plan. The defined

benefit is calculated by

independent actuaries using

Projected Unit Credit (PUC)

method as recommended by

LKAS 19 – “Employee benefits”.

The present value of the

defined benefit obligation is

determined by discounting


outflows using interest rates

that are denominated in

the currency in which the

benefits will be paid, and

that have terms to maturity

approximating to the terms

of the related liability. The

present value of the defined

benefit obligations depends

on a number of factors that

are determined on an actuarial

basis using a number of

assumptions. Key assumptions

used in determining the

defined retirement benefit

obligations are given in Note

21. Any changes in these

assumptions will impact the

carrying amount of defined

benefit obligations.

Provision has been made for

retirement gratuities from the

beginning of service for all

employees, in conformity with

LKAS 19 on employee benefit.

However for entities of the

Group operating in Sri Lanka,

under the Payment of Gratuity

Act No. 12 of 1983, the liability

to an employee arises only

on completion of 5 years of

continued service.

Recognition of actuarial gains

or losses

Actuarial gains or losses are

recognised in full in the Other

Comprehensive Income.

3.10.1.3 Short-term benefits

Short-term employee benefit

obligations are measured on

an undiscounted basis and

are expensed as the related

service is provided.

3.10.2 Provisions

Provisions are recognised

when the Group has a

present obligation (legal or

constructive) as a result of

a past event, it is probable

that an outflow of resources

embodying economic benefits

will be required to settle

the obligation and a reliable

estimate can be made of the

amount of the obligation.

When the Group expects

some or all of a provision

to be reimbursed, the

reimbursement is recognised

as a separate asset, but only

when the reimbursement is

virtually certain. The expense

relating to any provision is

presented in the Statement

of Profit or Loss net of any

reimbursement.

If the effect of the time

value of money is material,

provisions are discounted

using a current pre-tax rate

that reflects, when appropriate,

the risks specific to the liability.

When discounting is used,

the increase in the provision

due to the passage of time is

recognised as a finance cost.

3.10.3 Capital commitments and contingencies

Capital commitments and

contingent liabilities of the

Group are disclosed in the

respective Note 34 to the

Financial Statements.

3.10.4 Ordinary shares

Ordinary shares are classified

as equity. Incremental costs

directly attributable to the

issue of ordinary shares and

share options are recognised

as a deduction from equity,

net of any tax effects.

3.11 Statement of Profit or

Loss

For the purpose of

presentation of the Statement

of Profit or Loss, the function of

expenses method is adopted.

3.11.1 Revenue

Revenue is recognized to

the extent that it is probable

that the economic benefits

will flow to the Group and

the revenue can be reliably

measured, regardless of when

the payment is being made.

Revenue is measured at the

fair value of the consideration

received or receivable, taking

into account contractually

defined terms of payment

and excluding taxes or duty.

The Group has concluded that

it is the principal in all of its

revenue arrangements since

it is the primary obligor in all

the revenue arrangements,

has pricing latitude, and is

also exposed to inventory and

credit risks.

The specific recognition

criteria described below must

also be met before revenue is

recognized:

Construction revenue

Contract revenue includes the

initial amount agreed in the

122

MTD WALKERS PLC


contract plus any variations

in contract work, claims and

incentive payments, to the

extent that it is probable that

they will result in revenue

and can be measured reliably.

As soon as the outcome of a

construction contract can be

estimated reliably, contract

revenue is recognized in the

Statement of Profit or Loss

in proportion to the stage of

completion of the contract

activity at the reporting

date. Any expected losses

on specific contract are

recognized immediately by

a corresponding reduction

in their revenue. When the

outcome of a construction

contract cannot be estimated

reliably, contract revenue is

recognized only to the extent

of contract costs incurred that

are likely to be recoverable.

For construction contracts,

revenue is recognised by

using the percentage-of-

completion method. This

method is made by reference

to the stage of completion of

projects, determined based

on the proportion of contract

costs incurred to date and the

estimated costs to complete.

Sale of goods

Revenue from the sale of

goods is measured at the fair

value of the consideration

received or receivable, net

of returns and allowances,

trade discounts and volume

rebates. Revenue is recognised

when the significant risks and

rewards of ownership have

been transferred to the buyer,

recovery of the consideration

is probable, the associated

costs and possible return

of goods can be estimated

reliably, there is no continuing

management involvement

with the goods, and the

amount of revenue can be

measured reliably.

Sale of Apartments

In the case of sale of

apartments, the company has

determined that equitable

interest in the property has

vested in the buyer before

legal title passes, and the risks

and rewards of ownership of

such have been transferred

at the time of entering

into Sale and Purchase

agreement. Therefore, revenue

recognition from sale of

apartments is begun from the

point of entering in to Sale

and Purchase Agreement.

Where the property is

under development for a

considerable time frame and

agreement has been reached

to sell such an apartment

when construction works

are completed, the directors

consider whether the contract

comprises;

• A contract to construct a

property or

• A contract for the sale of a

completed property

Where the contract is for the

sale of a completed property,

revenue is recognised, when

significant risk and returns

have been transferred to

the buyer, which is normally

on unconditional exchange

contracts.

Rendering of services

Revenue from rendering of

services is recognized in the

accounting period in which

the services are rendered or

performed.

Commission

When the Group acts in the

capacity of an agent rather

than as the principal in a

transaction, the revenue

recognised is the commission

earned by the Group.

Interest income

For all financial instruments

measured at amortised cost

and interest bearing financial

assets classified as available

for sale, interest income or

expense is recorded using the

effective interest rate (EIR),

which is the rate that exactly

discounts the estimated future

cash payments or receipts

through the expected life

of the financial instrument

or a shorter period, where

appropriate, to the net

carrying amount of the

financial asset or liability.

Interest income is included

in finance income in the


Dividend income

Dividend income is recognised


Loss on the date the entity’s

right to receive payment is

established, which in the case

of quoted securities is the ex-

dividend date.

Rental income

Rental income is recognized in

profit or loss at it accrues.

Gains and losses

Gains and losses on disposal

of an item of property, plant

& equipment are determined

by comparing the net sales

proceeds with the carrying

amounts of property, plant &

equipment and are recognised

net within “other income” in

profit or loss.

Other income

Other income is recognized on

an accrual basis.

3.11.2 Expenditure

recognition

Expenses are recognized in the

Statement of Profit or Loss on

the basis of a direct association

between the cost incurred and

the earnings of specific items

of income. All expenditure

incurred in the running of the

business has been charged to

income in arriving at the profit

of the year.

Repairs and renewals are

charged to Statement of Profit

or Loss in the year which the

expenditure is incurred.

Construction contract

Contract expenses are

recognizsed as incurred unless

they create an asset to future

contract activity. An expected

loss on contract is recognized

immediately in Statement of

Profit or Loss.

Other expenses

All expenditure incurred in the

running of the business and

in maintaining property, plant

and equipment in a state of

efficiency has been charged to

revenue in arriving at the profit

or loss for the year.

For the purpose of

presentation of Statement of

Profit or Loss, the Directors are

of the opinion that function

of expenses methods present

fairly the elements of the

enterprises performance

hence such presentation

method is adopted.

123


FinancialStatements


Recognition of expected

losses

Expected losses are recognised

as an expense when it is

probable that the total cost

pertaining to construction

contracts will exceed its

revenue.

3.11.3 Operating leases

Payments made under

operating leases are

recognised in profit or loss on

a straight-line basis over the

term of the lease.

3.11.4 Borrowing costs

Borrowing costs are

recognized as an expense

in the period in which they

are incurred, except to the

extent that they are directly

attributable to the acquisition,

construction or production

of a qualifying asset, in which

case they are capitalized as

part of the cost of that asset.

3.11.5 Finance income and finance costs

Finance income comprises

interest income on funds

invested, dividend income,

changes in the fair value of

financial assets at fair value

through profit or loss. Interest

income is recognised as it

accrues in the Statement of

Profit or Loss.

Finance cost comprise interest

expense on borrowings,

unwinding of the discount on

provisions, changes in the fair

value of financial assets at fair

value through profit or loss.

The interest expense

component of finance lease

payments is allocated to each

period during the lease term

so as to produce a constant

periodic rate of interest on

the remaining balance of the

liability.

Foreign currency gains and

losses are reported on a net

basis.

3.11.6 Tax expense

Tax expense comprises

current and deferred tax.

Current tax and deferred tax

are recognised in Statement

of Profit or Loss except to

the extent that it relates to a

business combination, or items

recognised directly in Equity

or in Other Comprehensive

Income.

3.11.6.1 Current tax

Current tax is the expected tax

payable on the taxable income

for the year, using tax rates

enacted at the reporting date

and any adjustments to tax

payable in respect of previous

years.

Current tax relating to items

recognised directly in Other


is recognised in Other


and not in the Statement of

Profit or Loss. Management

periodically evaluates positions

taken in the tax returns with

respect to situations in which

applicable tax regulations are

subject to interpretation and

establishes provisions where

appropriate.


(Private) Limited

Pursuant to agreement dated

31st August 2007, entered into

with Board of Investments of

Sri Lanka under section 17 of

the Board of Investment Law

No. 04 of 1978, the provision

of the Inland Revenue Act

No. 10 of 2006 relating to

the imposition, payment

and recovery of income tax

in respect of the profit and

income of the Company shall

not apply for a period of eight

(8) years reckoned from the

year of assessment as may be

determined by the Board (“the

tax exemption period”).

For the above purpose the

year of assessment shall

be reckoned from the year

in which the Company

commences to make profits

or any year of assessment

not later than two (02)

years reckoned from the

date of commencement

of commercial operations

whichever comes first, as may

be specified in a certificate

issued by the Board. This

exemption period commence

from 01st April 2011 and

expires on 31st March 2019.

CML-MTD Joint Venture

Limited

As per the agreement

entered into with the Board

of Investments of Sri Lanka

on 12th August 2014, under

section 17 of the Board of

Investment Law No. 4 of 1978

and as per section 17(A) of

the Inland Revenue Act No.

10 of 2006 as amended by the

Inland Revenue (Amendment)

Act No. 8 of 2014, the

Company is exempted from

income tax for a period of 09

years, subject to the condition

that a minimum investment

made by the Company to the

project shall be more than Sri

Lanka LKR 1,500 million on or

before 31st March 2015 from

the date of agreement. The

above investment shall be

made in fixed assets.










of commercial operations,

whichever year is earlier

as determined by the

Commissioner General of

Inland Revenue.

However, the Company is

liable for income tax on other

income.

Walkers CML Properties

(Private) Limited

Pursuant to agreement dated

03rd April 2003, entered into

with Board of Investments of

Sri Lanka under section 17 of

the Board of Investment Law

No. 04 of 1978, the provision

of the Inland Revenue Act

No. 10 of 2006 relating to

the imposition, payment

and recovery of income tax

in respect of the profit and

income of the Company shall

not apply for a period of ten

(10) years reckoned from the

year of assessment as may be

determined by the Board (“the

tax exemption period”).










of commercial operations

whichever comes first, as may

be specified in a certificate

issued by the Board. This

exemption period commence

from 02nd July 2015 and

expired on 01st July 2025.

After the expiration of the

aforesaid tax exemption

period, the profits and income

of the company shall be

charged at the rate of fifteen

per centum (15%).

124

MTD WALKERS PLC


Deferred tax

Deferred tax is provided

using the liability method

on temporary differences

between the tax bases of

assets and liabilities and their

carrying amounts for financial

reporting purposes at the

reporting date.

Deferred tax liabilities are

recognised for all taxable

temporary differences, except:

• When the deferred tax

liability arises from the

initial recognition of

goodwill or an asset or

liability in a transaction

that is not a business

combination and, at the

time of the transaction,

affects neither the

accounting profit nor

taxable profit or loss

• In respect of taxable

temporary differences

associated with

investments in subsidiaries

when the timing of

the reversal of the


can be controlled and

it is probable that the


will not reverse in the

foreseeable future

Deferred tax assets are

recognised for all deductible

temporary differences, the

carry forward of unused tax

credits and any unused tax

losses. Deferred tax assets are

recognised 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

utilised, except:

• When the deferred tax asset

relating to the deductible

temporary difference arises

from the initial recognition

of an asset or liability in

a transaction that is not

a business combination

and, at the time of the

transaction, affects neither

the accounting profit nor

taxable profit or loss

• In respect of deductible


associated with

investments in subsidiaries

deferred tax assets are

recognised only to the

extent that it is probable

that the temporary

differences will reverse

in the foreseeable future

and taxable profit will be

available against which the

temporary differences can

be utilised.

The carrying amount of

deferred tax assets is reviewed

at each reporting 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 utilised. Unrecognised

deferred tax assets are

reassessed at each reporting

date and are recognised to

the extent that it has become

probable that future taxable

profits will allow the deferred

tax asset to be recovered.

Deferred tax assets and

liabilities are measured at the

tax rates that are expected to

apply in the year when the

asset is realised or the liability

is settled, based on tax rates

that have been enacted or

substantively enacted at the

reporting date.

Deferred tax relating to

items recognised outside

the Statement of Profit or

Loss is recognised outside

the Statement of Profit or

Loss. Deferred tax items are

recognised in correlation to

the underlying transaction

either in other comprehensive

income or directly in equity.

Tax benefits acquired as part

of a business combination,

but not satisfying the criteria

for separate recognition

at that date, would be

recognised subsequently if

new information about facts

and circumstances changed.

The adjustment would either

be treated as a reduction

to goodwill (as long as it

does not exceed goodwill)

if it was Incurred during the

measurement period or in the


Tax on dividend income from

subsidiaries is recognised as an

expense in the Consolidated

Statement of Profit or Loss at

the same time as the liability

to pay the related dividend is

recognised.

3.12 General

3.12.1 Events Occurring After the Reporting Date

All material post reporting

date events have been

considered and where

appropriate adjustments or

disclosures have been made

in the respective notes to the


3.12.2 Earnings per share

The Group presents basic

earnings per share (EPS) for

its ordinary shares. Basic EPS

is calculated by dividing the

profit or loss attributable to

ordinary shareholders of the

Company by the weighted

average number of ordinary

shares outstanding during the

period.

3.12.3 Segment reporting

An operating segment is a

component of the Group

that engages in business

activities from which it may

earn revenues and incur

expenses, including revenues

and expenses that relate to

transactions with any of the

Group’s other components. All

operating segments’ operating

results are reviewed regularly

by the Board of directors

to make decisions about

resources to be allocated to

the segment and assess its

performance, and for which

discrete financial information is

available.

Segment results that are

reported to the senior

management and board of

directors include items directly

attributable to a segment

as well as those that can be

allocated on a reasonable

basis.

Segment capital expenditure is

the total cost incurred during

the period to acquire property,

plant and equipment and

intangible assets other than

good will.

3.12.4 Sri Lanka accounting standards (SLFRS/LKAS) issued but not yet effective

Standards issued but not

yet effective up to the date

of issuance of the Group’s

financial statements are listed

below. The Group intends to

adopt these standards when

they become effective.

125


FinancialStatements


SLFRS 9 Financial Instruments

SLFRS 09 brings together

all three aspects of the

accounting for financial

instruments project:

classification and

measurement, impairment

and hedge accounting. SLFRS

9 is effective for annual periods

beginning on or after 01st

January 2018. Management

has assessed and are of

the view that the effects of

applying this standard do not

have a material impact on the

Group’s financial statements.

SLFRS 15 Revenue from

Contracts with Customers

SLFRS 15 establishes a five-

step model to account for

revenue arising from contracts

with customers. Under SLFRS

15, revenue is recognised at

an amount that reflects the

consideration to which an

entity expects to be entitled

in exchange for transferring

goods or services to a

customer. The new revenue

standard will supersede all

current revenue recognition

requirements under SLFRS.

Either a full retrospective

application or a modified

retrospective application is

required for annual periods

beginning on or after 01st

January 2018. Early adoption is

permitted.

Management has carried out

a gap analysis during the year

and has identified following

key changes under SLFRS 15.

Revenue Type Current accounting Treatment Proposed treatment based on SLFRS 15

Mobilization

advances

Recognize as liability as and when it

received from customers

• A contract liability shall be recognized for the advance payment.

• Increase transaction price based on the total interest payment

calculated on the contract liability.

• Revenue shall therefore be allocated to all other performance

obligations at a higher level, as the revenue recognized shall include

an interest component (an interest expense) from the contract liability

Construction

revenue of

certain projects

Revenue is recognized based on Stage

of completion method based on

survey of work completed.

• The adjusted transaction price (revenue) may be recognized over the

period if legal enforceability to collect payment can be established

upon Termination.

Piling works for

certain projects

Revenue is recognized based on Stage

of completion method based on a

certain number of piles completed.

• Adjusted Revenue shall be recognized at the point of completion of

the Piling projects.

Contract

Retention money

Revenue is recognized in full upon

work handover.

• Revenue shall be recognized upon work hand over.

• The Retention money shall meet the definition of a contract Asset and

Contract Asset Disclosures shall apply for the Retention money.

Management is now in

the process of quantifying

the impact and reporting

requirements of these

accounting implications.

Presentation and disclosure

requirements

SLFRS 15 provides presentation

and disclosure requirements,

which are more detailed than

under current SLFRS. The

presentation requirements

represent a significant change

from current practice and

significantly increases the

volume of disclosures required

in Group’s financial statements.

Many of the disclosure

requirements in SLFRS 15 are

completely new. In 2016 the

Group developed and started

testing of appropriate systems,

internal controls, policies

and procedures necessary

to collect and disclose the

required information.

SLFRS 16 - Leases

SLFRS 16 sets out the

principles for the recognition,

measurement, presentation

and disclosure of leases and

requires lessees to account

for all leases under a single

on-balance sheet model

similar to the accounting for

finance leases under LKAS

17. The standard includes

two recognition exemptions

for lessees – leases of ’low-

value’ assets and short term.

At the commencement

date of a lease, a lessee will

recognise a liability to make

lease payments (i.e., the

lease liability) and an asset

representing the right to

use the underlying asset

during the lease term (i.e., the

right-of use asset). Lessees

will be required to separately

recognise the interest expense

on the lease liability and the

depreciation expense on the

right-of-use asset.

Lessees will be also required

to remeasure the lease liability

upon the occurrence of certain

events (e.g., a change in the

lease term, a change in future

lease payments resulting

from a change in an index

or rate used to determine

those payments). The lessee

will generally recognise the

amount of the remeasurement

of the lease liability as an

adjustment to the right-of-use

asset.

SLFRS 16 is effective for annual

periods beginning on or

after 1st January 2019. Early

application is permitted, but

not before an entity applies

SLFRS 15.

This standard will affect

primarily the accounting for

operating leases and the

Management are of the view

that the adoption of SLFRS

16 do not have any impact

to the financial statements as

the Group do not have any

operating leases.

3.13 Critical Accounting

Estimates and

Judgments

The preparation of Financial

Statements in conformity

with SLFRS/LKAS’s requires

management to make

126

MTD WALKERS PLC


judgements, estimates and

assumptions that affect the

application of accounting

policies and the reported

amounts of assets, liabilities,

income and expenses.

Judgements and estimates are

based on historical experience

and other factors, including

expectations that are believed

to be reasonable under the

circumstances. Hence actual

experience and results may

differ from these judgements

and estimates.

Estimates and underlying

assumptions are reviewed on

an ongoing basis. Revisions

to accounting estimates are

recognised in the period

in which the estimates are

revised if the revision affects

only that period and any future

periods.

Information about significant

areas of estimation uncertainty

and critical judgements in

applying accounting policies

that have the most significant

effect on the amounts

recognised in the financial

statements is included in the

following notes

3.13.1 Impairment of trade receivables

Estimates are based on

management’s assessment

of the likelihood of collecting

outstanding receivables. The

management has considered

the government related

entities such as RDA, UDA, CEB

& private debtors separately in

assessing the impairment. Also,

management has applied their

judgement in determining

the timing of certification of

uncertified debtor.

3.13.2 Revenue recognition

For construction contracts,

revenue is recognised by

using the percentage-of-

completion method. This

method is made by reference

to the stage of completion of

projects, determined based

on the proportion of contract

costs incurred to date and the

estimated costs to complete.

Estimates are made of the

expected costs of individual

contracts when applying

the stage of completion

method. In certain instances

management is required

to exercise judgement to

determine whether the

outcome of the contract can

be reliably estimated.

3.13.3 Measurement of the Recoverable Amount of Cash-Generating Units Containing Goodwill

The Group tests annually

whether goodwill requires

impairment, in accordance

with the accounting policy

stated in Note 3.9 the basis of

determining the recoverable

amounts of cash generating

units and key assumptions

used are given in Note 6.2. to

the Financial Statements.

3.13.4 Income taxes

The group recognises liabilities

for anticipated tax based on

estimates of taxable income.

Where the final tax outcome of

these matters is different from

the amounts that were initially

recorded, such differences

will impact the current and

deferred income tax assets

and liabilities in the period in

which such determination is

made.

3.13.5 Deferred tax

Deferred tax assets are

recognized for unused tax

losses to the extent that it is

probable that taxable profit

will be available against which

the losses can be utilised.

Significant management

judgement is required to

determine the amount of

deferred tax assets that can

be recognised, based on

upon the likely timing and the

level of future taxable profits

together as with future tax

planning strategies.

3.13.6 Measurement of the Employee Benefit Obligations

The present value of the

defined benefit obligations

depends on a number of

factors that are determined

on an actuarial basis using

a number of assumptions.

Key assumptions used in

determining the defined

retirement benefit obligations

are given in Note 21 to the

Financial Statements. Any

changes in these assumptions

will impact the carrying

amount of defined benefit

obligations.

3.13.7 Revaluation of land and buildings

The Group measures land

and buildings which are

recognised as property, plant

& equipment at revalued

amount with change in

value being recognised

in the Statement of Other

comprehensive income. The

valuer has used valuation

techniques such as open

market value. Further details

on revaluation of land are

disclosed in Note 4.8 to the


3.13.8 Fair valuation of investment property

The Group measures lands

and buildings which are

recognised as investment

property at fair value amount

with change in value being

recognised in profit or loss.

The valuer has used the

open market approach in

determining the fair value of

the land. Further details on fair

value of investment property

are disclosed in Note 5.1 to the


127


FinancialStatements


As at 31 March 2018

4 Property, Plant & Equipment

4.1 Group

Balance as at

01.04.2017

Additions/

transfers

Transfer to

investment

property

Exchange

Difference

Disposal/

transfers

Balance as at

31.03.2018

LKR LKR LKR LKR LKR LKR

Gross carrying amountsAt cost or valuationFreehold land 1,225,695,584 - (600,000,000) - - 625,695,584 Buildings 199,221,069 1,417,128 - - - 200,638,197 Plant & machinery 5,657,270,411 705,647,665 - 900,902 (90,521,902) 6,273,297,076 Furniture & fittings 88,635,884 5,649,956 - 3,710 (122,037) 94,167,513 Office equipment 87,980,586 32,198,118 - 37,691 - 120,216,395 Other equipment 1,012,358,520 308,362,204 - 387,647 - 1,321,108,370 Motor vehicles 439,755,334 58,589,819 - 5,721 (26,038,715) 472,312,159

8,710,917,388 1,111,864,890 (600,000,000) 1,335,670 (116,682,654) 9,107,435,294

Assets on finance leasesMotor vehicles 361,942,788 57,077,402 - - (71,082,857) 347,937,333 Plant & machinery 643,278,773 573,880,098 - - (89,343,150) 1,127,815,721

1,005,221,561 630,957,500 - - (160,426,007) 1,475,753,054 Total value of depreciable

assets 9,716,138,949 1,742,822,390 (600,000,000) - (277,108,661) 10,583,188,348

Balance as at

01.04.2017

Incurred During

the Year

On Acquisition

of Subsidiary

Transfers /

Retirements

Balance as at

31.03.2018

LKR LKR LKR LKR LKR

In the course of constructionCapital work in progress 718,834,107 1,031,270,840 - - 1,750,104,947

718,834,107 1,031,270,840 - - 1,750,104,947

4.2 Company

Balance as at

01.04.2017

Additions Disposal /

Transfers

Balance as at

31.03.2018

LKR LKR LKR LKR

Gross carrying amountsAt cost or valuationOffice equipment 2,297,804 521,757 - 2,819,561 Furniture 15,341,810 3,992,804 - 19,334,614 Fixtures & fittings 5,034,959 4,817,932 - 9,852,892 Computer & accessories 46,307,844 5,536,552 - 51,844,396 Motor vehicles 538,270 506,400 - 1,044,670

69,520,687 15,375,445 - 84,896,133

Assets on finance leasesMotor vehicles 38,135,357 - - 38,135,357

38,135,357 - - 38,135,357 Total value of depreciable assets 107,656,044 15,375,445 - 123,031,490

128

MTD WALKERS PLC


As at 31 March 2018

4 Property, Plant & Equipment (Contd.)

4.2 Company

Balance as at

01.04.2017

Additions Disposal /

Transfers

Balance as at

31.03.2018

LKR LKR LKR LKR

In the course of construction

Building work in progress 5,675,361 27,825,152 - 33,500,513

5,675,361 27,825,152 - 33,500,513

4.3 Depreciation-Group

Balance as at

01.04.2017

Charge for the

year / transfers

Disposal /

Transfers

Exchange

Difference

Balance as at

31.03.2018

LKR LKR LKR LKR LKR

At cost or valuation

Buildings 23,700,496 4,072,623 - - 27,773,119

Plant & machinery 3,196,856,124 682,719,978 (74,481,826) 55,535 3,805,149,810

Furniture & fittings 51,414,692 4,753,532 (161,696) 232 56,006,759

Office equipment 49,983,503 33,765,346 - 1,592 83,750,441

Other equipment 410,718,676 244,382,443 - 19,576 655,120,696

Motor vehicles 339,316,061 69,274,093 (25,225,819) 181 383,364,517

4,071,989,552 1,038,968,0165 (99,869,341) 77,116 5,011,165,342

Assets on finance leases

Motor vehicles 158,191,620 71,107,068 (56,755,776) - 172,542,912

Plant & machinery 288,736,482 147,872,119 (84,382,660) - 352,225,942

446,928,102 218,979,187 (141,138,436) - 524,768,854

Total depreciation 4,518,917,654 1,257,947,202 (241,007,777) - 5,535,934,196

4.4 Depreciation - Company

Balance as at

01.04.2017

Charge for the

Year / Transfers

Disposal /

Transfers

Balance as at

31.03.2018

LKR LKR LKR LKR


Office equipment 1,268,756 495,790 - 1,764,546

Furniture 14,183,325 1,164,998 - 15,348,324

Fixtures & fittings 5,034,959 4,817,932 - 9,852,892

Computer & accessories 19,705,469 12,101,086 - 31,806,555

Motor vehicles 163,724 278,454 - 442,178

40,356,233 18,858,260 - 59,214,495


Motor vehicles 16,165,682 5,774,413 - 21,940,095

16,165,682 5,774,413 - 21,940,095

Total depreciation 56,521,915 24,632,673 - 81,154,590

129


FinancialStatements


As at 31 March 2018

4.5 Net Book Value - Group

2018 2017

LKR LKR


Freehold land 625,695,584 1,225,695,584

Buildings 172,865,078 175,520,573

Plant & machinery 2,468,147,266 2,460,414,287

Furniture & fittings 38,160,754 37,221,192

Office equipment 36,465,954 37,997,083

Other equipment 665,987,675 601,639,844

Motor vehicles 88,947,642 100,439,273

4,096,269,953 4,638,927,836


Motor vehicles 175,394,422 203,751,168

Plant & machinery 775,589,779 354,542,291

950,984,201 558,293,459


Capital work in progress 1,750,104,947 718,834,107

1,750,104,947 718,834,107

Total carrying amount of property, plant & equipment 6,797,359,101 5,916,055,402

4.6 Net Book Value - Company

2018 2017

LKR LKR

At cost

Office equipment 1,055,015 1,029,048

Furniture 3,986,290 1,158,485

Computer & accessories 20,037,840 26,602,375

Motor vehicles 602,492 374,546

25,681,637 29,164,454


Motor vehicles 16,195,262 21,969,675

16,195,262 21,969,675


Capital work in progress 33,500,513 5,675,361

33,500,513 5,675,361

Total carrying amount of property, plant & equipment 75,377,412 56,809,490

130

MTD WALKERS PLC


As at 31 March 2018

4 Property, Plant & Equipment (Contd.)

4.7 During the financial year, the group acquired property, plant & equipment for cash to the aggregate value of LKR 2,154,383,112/-

(2017 LKR 1,598,243,878/-). Number of buildings at the reporting date - 08.

4.8 Revaluation of Land

Freehold lands of the Group were revalued by Messers. P.B Kalugalagedera independent valuer and report dated 31st March

2017, an accredited independent valuer to determine the fair value of its land. Fair value is determined by reference to

market-based evidence. Valuations are based on active market prices, adjusted for any difference in the nature, location or

condition of the specific property. Management has determined that the carrying value of lands approximate the fair value

as at 31st March 2018.

Details of company's land & building stated at valuation are indicated below;

Property Method of Valuation Property Valuer Effective Date of

Valuation

Lands Market comparable method P.B Kalugalagedera31 March 2017

Chartered Valuation Surveyors

Fair value measurement disclosures for revalued land is provided in Note 25.

4.9 The carrying amount of revalued land if they were carried at cost is LKR 443,056,000/- (2017 - LKR 443,056,000/-)

Group

As at 31 March Cost Cumulative

Depreciation

if Assets are

Carried at Cost

2018

Net Carrying

Amount

2017

Net Carrying

Amount

LKR LKR LKR LKR

At cost

Freehold land 443,056,000 - 443,056,000 443,056,000

Freehold buildings 44,593,785 (11,618,445) 32,975,340 32,450,088

487,649,785 (11,618,445) 476,031,340 475,506,088

131


FinancialStatements


As at 31 March 2018

4.10 Value of Land and Ownership at the Year End - Group

Information on the freehold lands of the group is as follows;

Company Property Method of

Valuation

Location Extent 2018

Carrying Value

LKR

Walkers Piling (Private)

Limited

Land Market comparable

method

5/A, Thuduwa Road,

Madapatha 101.51 Perches 25,375,000

CML MTD Construction

Limited


method

No.428/1, Samurdhi

Mawatha, Heyanthuduwa 388 Perches 252,200,000


method

Kirwanawatha,

Hamanawatha, Giriulla 758.08 Perches 19,000,000


method

Madatiyawala Mawatha,

Pahala Madatiyawala,

Kaluwakgala, Divulapitiya 6,353 Perches 167,767,500




method

Mahahena Road,

Siyambalape South,

Siyambalape 260.10 Perches 58,500,000


method

Akuressa Road,Wanchawala,

Galle 30.1 Perches 7,500,000


method

Karamadala,Gelioya

173.5 Perches 3,147,084


Limited


method

Walden Place, Waligama

Road, Bandarawela 445 Perches 78,206,000

Western Airducts Lanka

(Private) Limited


method

Mahahena Road,

Siyambalape south,

Siyambalape 445.3 Perches 14,000,000

132

MTD WALKERS PLC


As at 31 March 2018

5 Investment Property - Group

2018 2017

LKR LKR

Carrying value

At the beginning of the year 1,050,517,000 -

Additions - 230,437,373

Transfer from property, plant & equipment 600,000,000 173,025,000

Transfer from leasehold property - 112,813,123

Transfer to Non current assets held for sale (Note 15) (502,600,000) -

Change in fair value during the year 368,083,000 534,241,504

At the end of the year 1,516,000,000 1,050,517,000

Freehold property 1,516,000,000 771,817,000

Leasehold property - 278,700,000

1,516,000,000 1,050,517,000

5.1 Valuation Details of Investment Property

Fair value of the investment property is ascertained by independent valuations carried out by Messers. P.B Kalugalagedera

(Chartered valuation surveyors), who have recent experience in valuing properties of similar location and category.

Investment property is appraised in accordance with LKAS 40, SLFRS 13 and International Valuation Standards published by

the International Valuation Standards Committee (IVSC) by the independent valuers. In determining the fair value, the current

condition of the properties, future usability and associated re-development requirements have been considered. Also, the

valuers have made reference to market evidence of transaction prices for similar properties, with appropriate adjustments for

size and location. The appraised fair values are rounded within the range of values.

5.2 Description of Valuation Techniques Used to Valuation on Investment Properties:

Property Method of Valuation Effective Date of Valuation Value

CML MTD Construction Limited

Nos 20-31 St Michel's Road, Kollupitiya Open market value 31 March 2018 317,700,000

Nos 14, 20,28/1 and 28/2 Mosque Lane,

Kollupitiya

Open market value 31 March 2018 438,300,000

Walker Sons & Company Limited

No. 18, St. Michael's Road, Colombo 03 Open market value 31 March 2018 760,000,000

Fair value of measurement disclosures for investment properties are provided in Note 25.

133


FinancialStatements


As at 31 March 2018

6 Intangible Assets - Group

Goodwill ERP System 2018 2017

LKR LKR LKR LKR

Cost

At the beginning of the year 564,895,312 93,966,860 658,862,172 539,403,520

Transfer from capital work in progress - - - 93,966,860

Acquisitions during the year - - - 25,491,792

At the end of the year 564,895,312 93,966,860 658,862,172 658,862,172

Amortisation and impairment

At the beginning of the year - (22,135,267) (22,135,267) -

Amortisation/Impairment for the year (25,491,792) (23,491,715) (48,983,507) (22,135,267)

At the end of the year (25,491,792) (45,626,982) (71,118,774) (22,135,267)

Carrying amount 539,403,520 48,339,878 587,743,398 636,726,905

6.1 Goodwill

Goodwill acquired through business combinations have been allocated to cash generating units (CGU’s) for impairment

testing as follows;

Group

2018 2017

LKR LKR

Northern Power Company (Private) Limited 289,069,326 289,069,326

Colombo Engineering Services (Private) Limited 160,060,258 160,060,258

Western Airducts Lanka (Private) Limited 62,728,428 62,728,428

Walkers Colombo Shipyard (Private) Limited 27,545,508 27,545,508

Walkers Trinco Shipyard (Private) Limited 25,491,792 25,491,792

564,895,312 564,895,312

Less: Impairment recognised on Walkers Trinco Shipyard (Private) Limited (25,491,792) -

539,403,520 564,895,312

The recoverable amount of all CGU's have been determined based on the fair value less cost to sell or the value in use (VIU)

calculation.

6.2 Key Assumptions Used in the VIU Calculations

Gross Margins

The basis used to determine the value assigned to the budgeted gross margin is the gross margin achieved in the year

preceeding the budgeted year adjusted for projected market conditions.

Discount Rates

The discount rate used (11% - 14%) is the risk free rate, adjusted by the addition of an appropriate risk premium.

Inflation

The basis used to determine the value assigned to the budgeted cost inflation, is the inflation rate, based on projected

economic condition.

Volume Growth

Volume growth has been budgeted on a reasonable and realistic basis by taking into account the growth rates of one to five

years immediately subsequent to the budgeted year based on industry growth rates. Cash flows beyond the five year period

are extrapolated using 0%-2% growth rate based on the current market conditions and considering the operational stages of

each company.

134

MTD WALKERS PLC


As at 31 March 2018

6 Intangible Assets - Group (Contd.)

6.3 Intangible Assets - Company

2018 2017

LKR LKR

ERP System 48,339,878 71,831,593

Amount paid to acquisition and implementation of SAP-ERP system is classified as Intangible assets and amortized over 4

years.

7 Finance Lease Receivables

Upon recognition of the power plant owned by Northern Power Company (Private) Limited, under IFRIC 4 the arrangement

was accounted as a finance lease where Northern Power Company (Private) Limited is treated as the lessor.

Receivable from Ceylon Electricity Board (CEB), owned and administrated by government of Sri Lanka.

Group

2018 2017

LKR LKR

Balance at the beginning of the year 2,964,672,567 2,886,222,260

Settlements during the period - (70,336,123)

Adjustments for exchange difference 69,612,479 148,786,430

Balance at the end of the year 3,034,285,046 2,964,672,567

Current portion of finance lease receivables 340,423,711 326,087,179

Non current portion of finance lease receivables 2,693,861,336 2,638,585,388

7.1 Ageing of Gross Finance Lease Receivables and Present Value of Lease Receivables

Gross

Investment

Unearned

Income

Present

Value

Not later than one year 846,937,894 (520,585,009) 326,352,885

One to five years 4,364,863,202 (1,656,931,041) 2,707,932,161

5,211,801,096 (2,177,516,050) 3,034,285,046

135


FinancialStatements


As at 31 March 2018

8 Investments in Subsidiary - Company

2018 2017

Non - Quoted Holding LKR Holding LKR

Walker Sons & Company Limited 99.80% 76,999,860 99.80% 76,999,860

Walker Sons & Company Engineers (Private) Limited 99.60% 400,026,132 99.60% 400,026,132

MTD Walkers Projects Limited 86.38% 399,940 86.38% 399,940

MTD Walkers Infracon Limited 92.55% 34,650 92.55% 34,650

Walkers Piling (Private) Limited 99.99% 411,044,200 99.99% 411,044,200

CML- MTD Construction Limited 92.11% 1,098,834,919 78.59% 466,748,959

Northern Power Company (Private) Limited 100% 2,535,565,347 100% 2,535,565,347

Colombo Engineering Services (Private) Limited 100% 275,000,000 100% 275,000,000

Walkers CML Properties (Private) Limited 100% 2,357,145,400 100% 2,357,145,400

Walkers Equipment Limited 66.67% 6,666,667 66.67% 6,666,667

Walkers Colombo Shipyard (Private) Limited 94.74% 426,874,923 94.74% 426,874,923

Walkers M3 (Private) Limited 100% 1,000 100% 1,000

Walkers CML International (Private) Limited 70% 700,000 70% 700,000

Walkers Trinco Shipyard (Private) Limited 100% 19,500,000 100% 19,500,000

7,608,793,038 6,976,707,078

Less: Impairment on subsidiaries (Note 8.1) (419,526,132) -

7,189,266,906 6,976,707,078

8.1 Impairment on subsidiaries

2018 2017

Non - Quoted Holding LKR Holding LKR

Walker Sons & Company Engineers (Private) Limited 99.60% 400,026,132 99.60% -

Walkers Trinco Shipyard (Private) Limited 100% 19,500,000 100% -

419,526,132 -

(Provision was recognised based on the current status of each company and recoverability assessment of each company)

9 Other Financial Assets

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

- Non current

Quoted equity securities & debt securities 2,462,387 3,614,332 - 17,650

Unquoted equity securities 260,370 260,370 - -

Investment in fixed deposits 414,719,354 401,160,513 - -

417,442,111 405,035,215 - 17,650

- Current

Investment in short term deposits 2,183,345,670 1,605,814,234 82,847,796 165,378,813

2,183,345,670 1,605,814,234 82,847,796 165,378,813

136

MTD WALKERS PLC


As at 31 March 2018

10 Inventories

Group

2018 2017

LKR LKR

Materials 842,013,884 1,196,249,270

Work-in-progress 3,378,046,096 1,860,218,751

Spare parts & consumables 1,174,618,439 848,386,001

Completed apartments and finished goods 123,735,369 314,240,258

Other inventories 25,192,097 728,023

5,543,605,885 4,219,822,303

Less : Provision for unusable of inventories (17,008,119) -

5,526,597,766 4,219,822,303

11 Trade and Other Receivables

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Trade debtors (Note 11.1) 19,022,307,505 14,174,395,902 - -

Less: Impairment for trade debtors (Note 11.2) (569,525,172) (420,479,402) - -

18,452,782,333 13,753,916,500 - -

Retention money, advances and other receivables 4,814,626,706 4,765,844,088 219,069,385 188,041,350

Less: Impairment for other receivables (103,417,445) (93,182,917) - -

4,711,209,261 4,672,661,171 219,069,385 188,041,350

Extra fuel chargers receivable 368,172,482 368,172,482 - -

Less: Impairment for fuel chargers receivables (368,172,482) (368,172,482) - -

- - - -

23,163,991,594 18,426,577,671 219,069,385 188,041,350

137


FinancialStatements


As at 31 March 2018

11.1 The Aging Analysis of Trade Debtors is as follows:

Group Past Due but not

Impaired

Total Neither Past Due

nor Impaired

01 - 02

Year

< 02

Year

LKR LKR LKR LKR

31 March 2018 18,452,782,333 12,491,087,687 3,927,293,143 2,034,401,502

31 March 2017 13,753,916,500 5,958,441,724 7,305,952,146 489,522,630

The Group carries out trade debtors include certified and uncertified amounts due from Government related entities

and non Government related entities. Significant portion of its businesses with the Road Development Authority (RDA),

Ceylon Electricity Board (CEB) and to the Urban Development Authority (UDA) which are owned and administered by the

Government of Sri Lanka (GOSL). It is an inherent factor that invoices relating to work carried out by the Group to these

entities affiliated to the GOSL have long settlement cycles which is, consistent with the current practice in the industry.

The Board of directors of the group is of the view, that this phenomenon is an inherent factor in the construction industry

and further provisioning is not required for bad and doubtful debts on receivables, as they are deemed to be recoverable.

Further, the directors of the group is of the view that the current provisioning for bad and doubtful debts is adequate to

meet any potential bad debts that could crystallize in the future.

11.2 Movement in the Provision for Impairment - Group

Individually impaired

2018 2017

LKR LKR

Balance at the beginning of the year 420,479,402 256,805,355 Charge for the year 149,045,770 163,674,047 Balance as at end of the year 569,525,172 420,479,402

12 Other Current Assets

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

VAT receivable 196,052,669 221,309,963 - -

Deposits and advances 1,284,753,525 695,028,112 22,355,219 19,078,903

Other receivables 50,345,991 459,780 - -

1,531,152,185 916,797,855 22,355,219 19,078,903

138

MTD WALKERS PLC


As at 31 March 2018

13 Amounts Due From Related Parties

Group Company

2018 2017 2018 2017

Relationship LKR LKR LKR LKR

Non-CurrentLoans receivable Northern Power Company (Private) Limited Subsidiary - - 374,212,928 374,212,928 CML-MTD Construction Limited Subsidiary - - - 408,814,120 Walker Sons & Company Engineers (Private) Limited Subsidiary - - - - Walkers Piling (Private) Limited Subsidiary - - - - MTD Walkers Projects Limited Subsidiary - - 9,696,658 9,696,658

- - 383,909,586 792,723,706

CurrentWalker Sons & Company Limited Subsidiary - - 59,853,071 58,865,706 Walkers Piling (Private) Limited Subsidiary - - 265,676,367 284,512,657 Northern Power Company (Private) Limited Subsidiary - - 728,347,684 653,057,751 CML-MTD Construction Limited Subsidiary - - 68,488,922 762,598,825 MTD Walkers Projects Limited Subsidiary - - 42,375,819 35,918,590 Walkers CML Properties (Private) Limited Subsidiary - - 72,864,172 33,037,465 MTD Walkers Infracon Limited Subsidiary - - 5,414,256 1,905,677 Walker Sons & Co. Engineers (Private) Limited Subsidiary - - 62,985,813 -Western Airducts Lanka (Private) Limited Subsidiary - - 8,939,733 8,086,039 Walkers Equipment Limited Subsidiary - - 79,150,349 83,609,072 Special Projects Company (Private) Limited Subsidiary - - 3,676,163 38,671 CML MTD Joint Venture Limited Subsidiary - - 44,621,311 - Walkers Colombo shipyard (Private) Limited Subsidiary - - 1,433,278,504 821,837,203 Walkers M3 (Private) Limited Subsidiary - - 10,479,444 2,445,116 Walkers CML International (Private) Limited Subsidiary - - 93,159,921 3,331,305 Colombo Engineering Services (Private) Limited Subsidiary - - - 220,395 Colombo Fort Heritage Company (Private) Limited Subsidiary - - 6,000,000 -MTD Walkers Overseas (Private) Limited Affiliate 120,332 - 120,332 -

120,332 - 2,985,431,861 2,749,464,473 Less: Impairment for related companies - - (62,985,813) - Total amounts due from related parties 120,332 - 2,922,446,048 2,749,464,473

139


FinancialStatements


As at 31 March 2018

14 Cash and Cash Equivalents in Cash Flow Statement

Components of Cash & Cash Equivalents

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

14.1 Favourable Cash & Cash Equivalent BalancesCash & bank balances 682,091,568 488,409,291 5,514,888 89,834,929 Call deposits 16,576,252 176,713,090 - -

698,667,820 665,122,381 5,514,888 89,834,929

14.2 Unfavourable Cash & Cash Equivalents BalancesBank overdrafts (6,894,784,245) (4,443,947,537) (420,250,810) (82,101,018)Total cash and cash equivalents for the purpose of

the cash flow statements (6,196,116,425) (3,778,825,156) (414,735,922) 7,733,911

15 Non Current Assets Held for Sale

The sale of land located at Katunayaka, Seeduwa, Gampaha was approved by the shareholders by way of a board paper on

31st March 2018.

This land has classified as held for sale as the management intends to recover the carrying amount principally through a sale

transaction rather than through continuing use. This land of the group is available for immediate sale in its present condition.

After careful evaluation, the Board of Directors consider that the sale of the above property is highly probable and the

management is committed to the sale, which is expected to be qualified for recognition as a completed sale within one year

from the date of classification as "held for sale".

Accordingly, net book value of land amounting to LKR 502,600,000 have been reclassified and reported as "asset held for

sale". No impairment loss has been recognised on reclassification of the asset as at 31st March 2018 as the asset fair value less

costs to sell is higher than the carrying value of above land.

The group has recognised LKR 272,162,627/- of fair value gain on this land from the date of classification as Investment

Property.

16 Stated Capital - Group/Company

2018 2017

Number of

Shares

Value of

Shares

Number of

Shares

Value of

Shares

LKR LKR

Fully paid ordinary shares 167,647,568 6,057,497,739 167,647,568 6,057,497,739

140

MTD WALKERS PLC


As at 31 March 2018

17 Revaluation Reserve

Group

2018 2017

LKR LKR

As at 01 April 966,796,945 378,561,807

Revaluation during the year, net of tax - 634,240,100

Deferred tax on revaluation of lands (161,687,015)

Revaluation reserve attributable to non-controlling interest - (46,113,293)

Effect on deemed acquisitions 45,449,893 108,331

As at 31 March 850,559,823 966,796,945

The above revaluation surplus consist of net surplus resulting from the revaluation of lands of the Group.

17.1 As per the new inland revenue act No 24 of 2017 which is effective from 01st April 2018, Business assets including land will

attract income tax at the corporate tax rate applicable to the company, at the time of realization of such assets. Accordingly,

land carried under revaluation model in the financial statements has now been considered as a business asset and subjected to

taxable temporary differences. Accordingly a deferred tax liability amounted to LKR 161,687,015/- has recognized through other

comprehensive income (OCI) and charged to revaluation reserve.

17.2 The new inland revenue act has introduced a new tax rate of 28% (previously 12%) for construction industry. The new tax rate

will be applicable to the company from 01st April 2018. Accordingly the revised rate of 28% has been applied for deferred tax

computation of the company for the year ended 31st March 2018. Due to the tax rates revision additional deferred tax liability of

LKR 92,392,580/- has recognized in these financial statements of the group.

18 Non-Controlling Interest

Group

2018 2017

LKR LKR

As at the beginning of the year 960,341,727 773,011,423

Total Comprehensive Income (381,703,671) 174,281,104

Share issue in subsidiary - 11,447,025

Effect of changes in group structure without loosing control (34,007,261) 1,602,175

As at the end of the year 544,630,795 960,341,727

141


FinancialStatements


As at 31 March 2018

19 Interest Bearing Loans & Borrowings

Group 2018

Amounts

Repayable

within 1 Year

2018

Amounts

Repayable

after 1 Year

2018

Total

2017

Amounts

Repayable

within 1 Year

2017

Amounts

Repayable

after 1 Year

2017

Total


Unsecured

debentures

(Note 19.1) 2,102,260,000 883,417,999 2,985,677,999 - 2,977,825,632 2,977,825,632

Bank loans

(Note 19.2) 15,862,767,235 2,246,392,201 18,109,159,436 6,977,792,914 4,145,331,565 11,123,124,478

Finance leases

(Note 19.3) 216,313,274 570,469,545 786,782,819 127,568,009 223,080,144 350,648,153

Related party loans

(Note 19.4) - 644,339,700 644,339,700 - 547,543,829 547,543,829

Bank overdrafts 6,894,784,245 - 6,894,784,245 4,443,947,537 - 4,443,947,537

25,076,124,754 4,344,619,445 29,420,744,199 11,549,308,460 7,893,781,170 19,443,089,630

Company 2018

Amounts

Repayable

within 1 Year

2018

Amounts

Repayable

after 1 Year

2018

Total

2017

Amounts

Repayable

within 1 Year

2017

Amounts

Repayable

after 1 Year

2017

Total


Unsecured

debentures

(Note 19.1) 2,113,280,000 883,417,999 2,996,697,999 - 2,988,845,632 2,988,845,632

Bank loans

(Note 19.2.1) 2,049,204,187 - 2,049,204,187 1,332,190,490 - 1,332,190,490

Finance leases

(Note 19.3.1) 6,238,196 3,965,493 10,203,690 7,122,179 10,411,697 17,533,876

Related party loans

(Note 19.4.1) 185,550,000 644,339,700 829,889,700 - 733,093,829 733,093,829

Bank overdrafts 420,250,810 - 420,250,810 82,101,018 - 82,101,018

4,774,523,193 1,531,723,192 6,306,246,386 1,421,413,687 3,732,351,157 5,153,764,845

19.1 Unsecured Debentures

On 30th September 2015, MTD Walkers PLC has issued 30,000,000 of unsecured redeemable debentures at LKR 100/- each.

Details of the debentures are as follows;

Amortised Cost

Type of

Debentures

Interest

Payable

Face Value Company Group Interest

Rate

AER Period Redemption

Date

LKR LKR LKR (per Annum) (per Annum)

Type A Semi annual 2,113,280,000 2,113,280,000 2,102,260,000 9.75% 10.03% 3 Years 30-Sep-18

Type B Semi annual 886,720,000 883,417,999 883,417,999 10.25% 10.44% 5 Years 30-Sep-20

3,000,000,000 2,996,697,999 2,985,677,999

142

MTD WALKERS PLC


As at 31 March 2018

19 Interest Bearing Loans & Borrowings (Contd.)

19.2 Bank Loans - Group

Balance as at

01.04.2017

New Loans

Obtained

Repayment Impact of

Exchange Rate

on Conversion

Balance as at

31.03.2018

LKR LKR LKR LKR LKR

Hatton National Bank PLC 1,131,507,105 985,832,967 (958,637,738) - 1,158,702,334

Development Finance Corporation

Ceylon PLC 251,474,817 1,338,615,195 (1,190,047,234) - 400,042,778

Merchant Credit Bank of Sri Lanka

Limited 94,503,503 - (13,425,464) - 81,078,039

People's Bank 2,619,183,680 13,256,892,915 (12,192,355,301) - 3,683,721,293

People's Leasing & Finance PLC 50,000,000 - (50,000,000) - -

Bank of Ceylon 197,579,719 1,210,404,197 (434,990,921) - 972,992,995

National Development Bank PLC 520,275,801 628,312,729 (851,397,746) - 297,190,784

LB Finance PLC - 120,000,000 (90,000,000) - 30,000,000

Nations Trust Bank PLC 3,424,878 - (3,266,956) - 157,923

Sampath Bank PLC 835,819,830 3,537,969,637 (1,989,495,215) - 2,384,294,252

Amana Bank PLC 5,315,442 - (1,842,667) - 3,472,775

EXIM Bank Malasiya BHD 2,334,933,794 721,998,317 - 55,847,264 3,112,779,375

LOLC Finance PLC - 131,000,000 (49,583,331) - 81,416,670

Seylan Bank PLC 152,615,721 1,461,354,000 (351,504,801) - 1,262,464,920

Pan Asia Banking Corporation PLC - 100,000,000 - - 100,000,000

Cargills Bank PLC 113,693,252 146,110,158 (124,595,115) - 135,208,295

Commercial Bank of Ceylon PLC 1,783,550,908 2,907,054,144 (582,809,136) - 4,107,795,916

Abans Finance PLC 90,000,000 140,000,000 (113,333,320) - 116,666,680

Siyapatha Finance PLC 207,055,538 966,753,958 (992,635,088) - 181,174,408

Commercial Papers Issued 732,190,490 669,671,618 (1,401,862,108) - -

11,123,124,479 28,321,969,835 (21,391,782,141) 55,847,264 18,109,159,437

2018 2017

LKR LKR

Current portion of Bank loan 15,862,767,235 6,977,792,914

Non current portion of Bank loan 2,246,392,201 4,145,331,565

18,109,159,436 11,123,124,479

19.2.1 Bank Loans - Company

Balance as at

01.04.2017

New Loans

Obtained

Repayment Impact of

Exchange Rate

on Conversion

Balance as at

31.03.2018

Current LKR LKR LKR LKR LKR

Development Finance Corporation

Ceylon PLC 100,000,000 50,000,000 - - 150,000,000

Commercial Bank of Ceylon PLC 500,000,000 1,000,000,000 (100,795,813) - 1,399,204,187

Seylan Bank PLC - 500,000,000 - - 500,000,000

Commercial Papers Issued 732,190,490 669,671,618 (1,401,862,108) - -

1,332,190,490 2,219,671,618 (1,502,657,921) - 2,049,204,187

143


FinancialStatements


As at 31 March 2018

19.3 Finance Leases - Group

Balance as at

01.04.2017

New Loans

Obtained

Repayment Balance as at

31.03.2018

LKR LKR LKR LKR

People's Leasing & Finance PLC 721,830 - (721,830) -

Hatton National Bank PLC 42,225,835 - (29,898,479) 12,327,356

Bank Of Ceylon 59,712,585 26,242,056 (22,290,244) 63,664,397

Seylan Bank PLC 10,529,091 - (10,790,799) (261,708)

Development Finance Corporation Ceylon PLC 14,829,095 257,989,008 (39,157,602) 233,660,501

Central Finance Company PLC 184,534 - (184,534) -

Pan Asia Banking Corporation PLC 4,482,735 195,538,489 (20,925,976) 179,095,248

Mercantile Investment & Finance PLC 14,535,585 - (13,102,431) 1,433,154

People's Merchant Finance PLC 1,048,120 - (1,048,120) -

Nations Trust Bank PLC 5,615,283 53,328,480 (4,130,609) 54,813,154

Softlogic Finance PLC - 155,313,360 (10,354,224) 144,959,136

Sampath Bank PLC 27,075,570 - (12,691,673) 14,383,897

Commercial Bank of Ceylon PLC 247,359,170 153,570,702 (98,949,495) 301,980,377

Gross liability 428,319,433 841,982,095 (264,246,016) 1,006,055,511

Finance charges allocated to future period (77,671,279) (222,271,977) 80,670,564 (219,272,692)

Net liability 350,648,154 619,710,118 (183,575,452) 786,782,819

2018 2017

LKR LKR

Current portion of finance leases 216,313,274 127,568,009

Non current portion of finance leases 570,469,545 223,080,144

786,782,819 350,648,153

19.3.1 Finance Leases - Company

Balance as at

01.04.2017

New Leases

Obtained

Repayment Balance as at

31.03.2018

LKR LKR LKR LKR

Mercantile Investment & Finance PLC 791,558 - (791,558) -

Hatton National Bank PLC 7,166,200 - (3,738,888) 3,427,312

Bank Of Ceylon 11,902,440 - (4,165,854) 7,736,586

Gross liability 19,860,198 - (8,696,300) 11,163,898

Finance charges allocated to future period (2,326,322) - 1,366,118 (960,208)

Net liability 17,533,876 - (7,330,182) 10,203,690

2018 2017

LKR LKR

Current portion of finance leases 6,238,196 7,122,179

Non current portion of Finance leases 3,965,493 10,411,697

10,203,690 17,533,876

144

MTD WALKERS PLC


As at 31 March 2018

19 Interest Bearing Loans & Borrowings (Contd.)

19.4 Related Party Loans - Group

Relationship Balance as at

01.04.2017

New Loans

Obtained

Impact of

Exchange Rate

on Conversion

Balance as at

31.03.2018

LKR LKR LKR

MTD Capital Bhd Ultimate Parent 547,543,829 - 96,795,871 644,339,700

547,543,829 - 96,795,871 644,339,700

19.4.1 Related Party Loans - Company

Relationship Balance as at

01.04.2017

New Loans

Obtained

Impact of

Exchange Rate

on Conversion

Balance as at

31.03.2018

LKR LKR LKR

MTD Capital Bhd Ultimate Parent 547,543,829 - 96,795,871 644,339,700

Walkers CML Properties (Private)

Limited Subsidiary 185,550,000 - - 185,550,000

733,093,829 - 96,795,871 829,889,700

19.5 Details of assets which were pledged against above bank facilities are disclosed in Note 33.

20 Deferred Tax

20.1 Deferred Tax Liabilities

Group

2018 2017

LKR LKR

Balance at the beginning of the year 120,259,873 105,445,572

Amount origination/ (reversal) of temporary differences

- Recognised in profit or loss 71,124,596 15,145,546

- Recognised in other comprehensive income (2,374,762) (331,245)

Diferred tax on revaluation 161,687,015 -

Balance at the end of the year 350,696,722 120,259,873

20.2 Deferred Tax Assets and Liabilities are Attributable to the following:

2018 2017

Temporary

Difference

Deferred

Tax

Temporary

Difference

Deferred

Tax

LKR LKR LKR LKR

Deferred tax liability

Property, plant and equipment 1,859,009,280 520,522,598 1,720,433,792 224,038,593

Revaluation reserve 206,583,415 44,095,004 - -

Deferred tax asset

Retirement benefit obligation 83,885,847 (37,495,661) (94,343,210) (12,388,381)

Tax losses (564,096,941) (176,425,220) (710,304,296) (91,390,341)

1,585,381,601 350,696,722 915,786,286 120,259,871

145


FinancialStatements


As at 31 March 2018

20.3 Movement in Temporary Differences During the Year

Balance as at

01 April

2017

Recognised

in Total

Comprehensive

Income

Balance as at

31 March

2017

Recognised

in Total

Comprehensive

Income

Balance as at

31 March

2018

LKR LKR LKR LKR LKR

Property, plant and equipment 193,466,533 30,572,060 224,038,593 296,484,005 520,522,598

Revaluation reserve - - - 44,484,445 44,095,004

Retirement benefit obligation (8,787,367) (3,601,013) (12,388,381) (24,043,735) (37,495,661)

Tax losses (79,233,593) (12,156,748) (91,390,341) (85,034,879) (176,425,219)

105,445,573 14,814,299 120,259,871 231,889,836 350,696,722

21 Retirement Benefit Obligation

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Retirement Benefits Obligation-Gratuity

At the beginning of the year 127,840,090 96,716,521 13,699,256 6,870,949

Current service cost 35,751,138 23,973,301 5,411,023 2,826,815

Interest cost 17,454,321 9,420,579 1,746,655 721,450

Benefits Paid/Payable (12,350,431) (12,423,628) (56,550) (1,741,250)

Actuarial (gains)/losses 19,807,260 10,153,319 1,891,698 5,021,291

At the end of the year 188,502,378 127,840,090 22,692,082 13,699,256

21.1 Expense Recognised in Profit or Loss

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Current service cost 35,751,138 23,973,301 5,411,023 2,826,815

Interest cost 17,454,321 9,420,579 1,746,655 721,450

53,205,459 33,393,880 7,157,678 3,548,265

21.2 Actuarial Gains and Losses Recognised Directly in OCI

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Recognized during the period 19,807,260 10,153,319 1,891,698 5,021,291

19,807,260 10,153,319 1,891,698 5,021,291

LKAS 19 (Revised) - 'Employee Benefits' - requires the use of actuarial techniques to make a reliable estimate of the amount

of employee benefit that employees have earned in return for their service in the current and prior periods and discount that

benefit using the Projected Unit Credit Method in order to determine the present value of the employee benefit obligation

and the current service cost. This requires an entity to determine how much benefit is attributable to the current and prior

periods and to make estimates about demographic variables and financial variables that will influence the cost of the benefit.

146

MTD WALKERS PLC


As at 31 March 2018

21 Retirement Benefit Obligation (Contd)

21.2 Actuarial Gains and Losses Recognised Directly in OCI (Contd.)

The Principal Assumptions Used are as follows :

Group/Company

2018 2017

Discount rate 10% - 12% 12.5% - 12.75%

Future salary increases 10% 10%

Retirement age 55 Years 55 Years

21.3 Sensitivity of Assumptions Used

Values appearing in the financial statements are very sensitive to the financial and non-financial assumptions used.

A sensitivity analysis was carried out as follows:

Expected Future Salaries Discount Rate

1% Increase 1% Decrease 1% Increase 1% Decrease

LKR LKR LKR LKR

2018

Group

Present value of defined benefit obligation 196,006,468 181,394,143 182,087,779 195,391,041

Company


2017

Group


Company


21.4 Maturity Analysis of the Payments

The following payments are expected on employee benefit liabilities in future years.

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Less than or equal 1 year 49,971,498 41,551,409 4,225,370 4,605,449

Over 1 year and less than or equal 2 years 11,955,850 9,701,902 183,823 58,768

Over 2 years and less than or equal 5 years 45,531,187 14,471,097 18,282,888 1,210,231

Over 5 years and less than or equal 10 years 78,366,268 51,881,527 - 1,601,860

Over 10 years 2,677,575 10,234,155 - 6,222,947

Total expected payments 188,502,378 127,840,090 22,692,081 13,699,255

147


FinancialStatements


As at 31 March 2018

22 Trade & Other Payables

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Trade creditors 3,326,135,363 3,077,469,745 -

Retention payable 211,893,442 147,758,738 -

Sundry creditors including accrued expenses 2,185,733,544 1,470,093,441 90,909,285 21,979,791

Deposits and advances 445,615,627 357,151,581 -

6,169,377,976 5,052,473,505 90,909,285 21,979,791

23 Other Current Liabilities

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Mobilization advance 3,958,384,669 2,579,131,609 -

3,958,384,669 2,579,131,609 - -

Current portion of other current liabilities 1,956,255,546 2,579,131,609 - -

Non current portion of other current liabilities 2,002,129,123 - - -

24 Amounts due to Related Parties

Group Company

2018 2017 2018 2017

Relationship LKR LKR LKR LKR

Current account balances

MTD Capital Bhd Ultimate parent 591,408,479 552,961,621 345,578,949 312,024,288

Colombo Engineering Services

(Private) Limited Subsidiary - - 10,533,035 -

Walker Sons & Co. Engineers

(Private) Limited Subsidiary - - - 98,012,134

CML MTD Joint Venture Limited Subsidiary - - - 1,274,636

Interocean Services Limited Affiliate 14,375,000 - - -

Key Management Personnel Director 63,529,952 36,944,250 13,485,702 -

669,313,431 589,905,871 369,597,686 411,311,058

148

MTD WALKERS PLC


As at 31 March 2018

25 Fair Value Measurement

25.1 The Group uses the following hierarchy for determining and disclosing the fair value of assets and liabilities by valuation

techniques:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: Inputs other than quoted prices included within level 1 that are observable for the assets or liabilities, either directly

or indirectly

Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on

observable market data

The following table provides the fair value measurement hierarchy of the Group's assets and liabilities.

Level 1 Level 2 Level 3 Total

As at 31 March 2018 Date of Valuation LKR LKR LKR LKR

Assets measured at fair value :

Non financial assets

Property, plant and equipment

- Freehold land 31 March 2017 - - 625,695,584 625,695,584

- Investment property 31 March 2018 - - 1,516,000,000 1,516,000,000

Total non financial assets - - 2,141,695,584 2,141,695,584

Financial assets

Other non current financial assets

- Quoted equity securities 31 March 2018 2,462,387 - - 2,462,387

Total financial assets 2,462,387 - - 2,462,387

Level 1 Level 2 Level 3 TotalAs at 31 March 2017 Date of Valuation LKR LKR LKR LKR

Assets measured at fair value :Non financial assets Property, plant and equipment- Freehold land 31 March 2017 - - 1,225,695,584 1,225,695,584 - Investment property 31 March 2017 - - 1,050,517,000 1,050,517,000 Total non financial assets - - 2,276,212,584 2,276,212,584 Financial assetsOther non current financial assets- Quoted equity securities 31 March 2017 3,614,332 - - 3,614,332 Total financial assets 3,614,332 - - 3,614,332

149


FinancialStatements


As at 31 March 2018

25.2 Valuation Techniques and Significant Unobservable Inputs

The following table shows the valuation techniques used for the Group in measuring Level 3 fair values, and the significant

unobservable inputs used.

Non Financial

Assets

Valuation Technique Significant

Unobservable

Inputs

Sensitivity of the Input to

the Fair Value

Investment Property and Property, Plant and Equipment - Freehold land Market comparable method.

This method considers the selling price of a similar

property within a reasonably recent period of time

in determining the fair value of property being

revalued. This involves evaluation of recent active

market prices of similar assets, making appropriate

adjustments for difference in size, nature and

location of the property.

Price per perch of

land

Investment

property

LKR 250,000 -

LKR 19,000,000

Property, plant and

equipment

LKR 25,000 -

LKR 1,000,000

Estimated fair value would

increase/ (decrease) if ;-

Price per perch increases/

(decreases)

26 Revenue

Group Company2018 2017 2018 2017 LKR LKR LKR LKR

26.1 Goods and Services AnalysisSales of goods 1,456,226,944 1,276,852,305 - - Contract revenue 11,942,351,367 10,164,442,089 - -Rendering of services 1,158,631,843 683,712,963 - - Management fees - - 181,441,000 166,825,678 Revenue from power generation - 124,705,493 - - Sale of apartments 1,751,291,068 1,216,257,033 - -

16,308,501,221 13,465,969,883 181,441,000 166,825,678

150

MTD WALKERS PLC


Year ended 31 March 2018

26 Revenue (Contd.)

26.2 Segment Information

Civil Engineering Segment Engineering Segment Marine Engineering

Segment

2018 2017 2018 2017 2018 2017


Segment revenue

Revenue 12,659,326,636 10,804,392,449 998,845,882 892,829,919 305,679,305 108,527,174

Inter segmental revenue (716,975,269) (639,950,360) (155,085,328) (46,882,571) - -

Total revenue to external customers 11,942,351,367 10,164,442,089 843,760,554 845,947,348 305,679,305 108,527,174

Cost of sale (12,508,213,646) (8,332,921,400) (829,371,094) (689,447,124) (172,316,793) (42,954,300)

Other operating income 411,049,317 588,318,869 205,991,899 11,773,754 1,431,246 1,867,204

Administrative expenses (746,657,751) (754,595,868) (164,641,019) (102,447,164) (151,096,063) (88,299,694)

Selling & distribution cost (190,942,505) (38,834,927) (50,199,199) (4,975,864) (7,133,276) (2,494,971)

Segment results (1,092,413,218) 1,626,408,763 5,541,141 60,850,949 (23,435,581) (23,354,587)

Finance cost (1,768,094,751) (1,286,465,327) (84,692,556) (41,116,040) (5,042,063) (682,459)

Finance income 258,381,130 135,853,756 8,552,841 10,881,999 2,604,154 2,285,101

Net Financing (cost)/income (1,509,713,621) (1,150,611,571) (76,139,715) (30,234,041) (2,437,909) 1,602,643

Profit/(loss) before tax (2,602,126,839) 475,797,192 (70,598,573) 30,616,908 (25,873,490) (21,751,945)

Tax expense (120,230,444) (66,558,326) 393,177 (3,795,202) (6,125,229) (4,480,208)

Profit/(loss) for the year (2,722,357,283) 409,238,866 (70,205,397) 26,821,705 (31,998,720) (26,232,153)

Segment assets 31,097,148,654 23,887,868,201 2,382,757,984 2,139,860,156 2,765,990,855 1,849,874,164

Goodwill on consolidation - - 62,728,428 - 187,605,766 -

Total assets 31,097,148,654 23,887,868,201 2,445,486,612 2,139,860,156 2,953,596,621 1,849,874,164

Segment liabilities 29,974,602,350 19,149,455,671 1,416,834,694 1,373,786,641 961,190,935 535,815,062

Total liabilities 29,974,602,350 19,149,455,671 1,416,834,694 1,373,786,641 961,190,935 535,815,062

151


FinancialStatements


Trading Segment Power Generation

Segment

Real Estate Segment Others Segment Total

2018 2017 2018 2017 2018 2017 2018 2017 2018 2017

LKR LKR LKR LKR LKR LKR LKR LKR LKR LKR

1,841,566,831 1,220,050,806 - 124,705,493 1,751,291,068 1,216,257,033 320,676,724 166,825,678 17,877,386,445 14,533,588,552

(515,383,627) (213,960,060) - - - - (181,441,000) (166,825,678) (1,568,885,223) (1,067,618,670)

1,326,183,204 1,006,090,746 - 124,705,493 1,751,291,068 1,216,257,033 139,235,724 - 16,308,501,221 13,465,969,883

(1,191,144,184) (892,012,356) (39,078,609) (73,733,999) (1,099,996,444) (819,287,468) (110,064,718) - (15,950,185,489) (10,850,356,647)

1,187,960 736,571 69,612,479 154,427,770 536,326 640,430 475,446 44,268,487 690,284,673 802,033,085

(109,691,443) (73,280,044) (165,127,342) (24,463,820) (128,386,721) (71,132,477) (265,033,407) (282,513,864) (1,730,633,746) (1,396,732,930)

(2,214,497) (5,572,829) - (64,000) (22,527,551) (20,760,527) (5,270,185) (9,886,204) (278,287,213) (82,589,323)

24,321,040 35,962,088 (134,593,472) 180,871,445 500,916,677 305,716,992 (240,657,141) (248,131,582) (960,320,554) 1,938,324,067

(82,996,268) (23,155,461) (44,557,105) (64,898,756) (1,688,939) (593,773) (777,631,705) (400,976,078) (2,764,703,386) (1,817,887,893)

193,153 7,087 4,002 - 6,835,921 11,709,582 14,298,126 19,105,553 290,869,326 179,843,077

(82,803,115) (23,148,374) (44,553,103) (64,898,756) 5,146,982 11,115,809 (763,333,579) (381,870,525) (2,473,834,060) (1,638,044,816)

(58,482,075) 12,813,713 (179,146,575) 115,972,689 506,063,660 316,832,800 (1,003,990,720) (630,002,107) (3,434,154,613) 300,279,251

3,630,974 (5,283,327) (1,996,935) (2,985,584) (1,244,138) (3,278,683) (1,578,011) - (125,572,595) (86,381,329)

(54,851,101) 7,530,387 (181,143,510) 112,987,105 504,819,522 313,554,117 (1,003,990,720) (630,002,107) (3,559,727,208) 213,897,922

1,498,072,394 911,274,501 4,285,920,359 4,281,606,973 2,786,255,086 2,499,233,312 651,705,217 709,684,072 45,467,850,548 36,279,401,381

- - 289,069,326 - - - - - 539,403,520 564,895,312

1,498,072,394 911,274,501 4,574,989,685 4,281,606,973 2,786,255,086 2,499,233,312 651,705,217 709,684,072 46,007,254,068 36,844,296,691

1,384,274,852 780,921,157 772,068,406 596,657,238 726,897,045 220,863,460 5,703,498,054 5,382,197,031 40,939,366,336 28,039,696,261

1,384,274,852 780,921,157 772,068,406 596,657,238 726,897,045 220,863,460 5,703,498,054 5,382,197,031 40,939,366,336 28,039,696,261

152

MTD WALKERS PLC



27 Other Operating Income

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Insurance claim - 1,104,967 - -

Profit on sale of property, plant & equipment 6,685,053 36,721,142 - 3,369,000

Creditors & customers advances written back - 4,288,996 - 1,211,127

Sundry income 199,263,958 30,308,833 - 5,145

Fair value changes in investment property 368,083,000 534,241,504 - -

Sludge income 4,554,903 - - -

Dividend income 560,475 1,571,471 - -

Exchange gain 111,137,285 193,796,171 - 39,335,457

690,284,674 802,033,085 - 43,920,729

28 Finance Cost

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Interest expense on loans & borrowings 1,449,107,786 919,496,756 314,314,051 50,175,748

Interest expense on overdrafts 715,266,712 526,938,716 24,202,626 15,742,796

Finance charges on lease liabilities 83,271,040 29,362,349 1,533,032 2,047,607

Default interest on leases & loans 1,286,064 6,001,570 395,289 301,681

Interest on MTD Capital BHD loans - 32,045,506 29,699,549 27,874,782

Guarantee charges 51,438,482

Foreign exchange loss 159,547,335 - 96,906,124 -

Interest on debentures 304,785,967 304,042,996 304,785,967 304,042,996

Exchange loss - -

2,764,703,386 1,817,887,893 771,836,638 400,185,610

29 Finance Income

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Interest income on fixed deposits and savings

deposits 284,633,599 168,958,782 7,893,360 7,958,470

Net gain on financial assets at fair value through

profit or loss 6,235,727 10,884,295 6,201,392 11,147,083

Interest income on related parties loan - - 143,938,923 55,944,787

290,869,326 179,843,077 158,033,675 75,050,340

153


FinancialStatements



30 Profit/(Loss) Before Tax

Profit/(Loss) Before Tax is Stated after Charging all Expenses Including the Following.

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Auditors' remuneration

- Statutory audit fees 7,239,843 6,291,760 963,267 950,000

- Audit related fees - 582,183 - -

Directors fees 34,620,540 35,188,373 5,400,000 6,000,000

Depreciation 1,257,947,203 1,083,976,865 24,632,675 26,534,742

Employee benefits including the following

- Defined contribution plan costs - EPF & ETF 65,554,071 61,433,230 18,223,619 11,734,084

- Defined benefit plan costs - Gratuity 56,093,038 29,691,343 7,157,678 3,548,265

- Other staff costs 1,732,529,544 1,600,712,103 45,023,471 42,931,255

Bonus 31,495,108 30,144,731 13,654,104 13,874,460

Donation 16,554,257 8,623,697 732,800 175,557

EPF/ETF surcharge 218,248 336,857 - -

Penalty & surcharge 1,744,503 3,937,671 - -

Legal fee 13,562,335 5,898,120 569,120 2,616,530

Professional fees 20,552,041 510,685 - -

Advertising 12,565,749 14,984,460 4,735,573 2,856,766

Business promotion 34,163,995 20,054,267 - -

Impairment for debtors 159,280,298 163,674,047 - -

Bad debt written off - 158,433,012 - -

31 Tax Expense

The major components of income tax expense for the year ended 31st March are as follows:

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Income Statement

Current income tax

Current income tax expense on ordinary activities

for the year (Note 31.1) 56,008,351 41,831,876 - -

Under/(over) provision of current taxes in respect

of prior years (1,949,794) 29,403,907 - -

Tax on intercompany dividend income - - - -

54,058,557 71,235,783 - -

Deferred income tax

Deferred taxation charge/(reversal) (Note 20) 71,514,037 15,145,546 - -

Income tax expense reported in the income

statement 125,572,594 86,381,329 - -

154

MTD WALKERS PLC



31 Tax Expense (Contd.)

31.1 A reconciliation between tax expenses and the product of accounting profit multiplied by the applicable tax rates is as

follows:

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Accounting profit/(loss) before income tax (3,434,154,614) 300,279,251 (1,346,069,873) (406,319,429)

Income not form a part of trade or business (643,175,736) (849,541,945) -

Add: Aggregate disallowable items 1,290,221,333 1,555,317,073 138,694,233 63,644,104

Less: Aggregate allowable items (1,317,667,121) (1,482,099,962) (9,985,536) (7,307,366)

Less: Tax exempt profit (493,678,443) (151,060,387) -

Total tax loss of subsidiaries 4,687,917,398 663,639,058 -

Taxable profit/(loss) from business 89,462,817 36,533,088 (1,217,361,176) (349,982,691)

Taxable other income 244,571,414 172,041,922 -

Total Statutory Income 334,034,231 208,575,010 - -

Tax losses (limited to 35 % of the statutory income) (109,210,246) (50,196,280) - -

Taxable Income 224,823,985 158,378,730 - -

Taxable Income of which,

- Taxable income from construction at 12% 38,521,866 15,713,555 - -

- Taxable income other than construction at 28% 186,302,119 142,665,176 - -

224,823,985 158,378,731 - -

Income tax provision for the year is made up of the

following:

- Income tax at 12% 4,622,624 1,885,628 - -

- Income tax at 28% 51,385,727 39,946,249 - -

Current income tax expense 56,008,351 41,831,877 - -

Tax losses

Tax losses brought forward 4,203,452,878 3,590,010,100 609,745,917 259,763,227

Tax losses for the year 4,687,917,398 663,639,058 1,217,361,175 349,982,691

Tax losses set off against taxable profit (109,210,246) (50,196,280) - -

Carried forward tax losses 8,782,160,030 4,203,452,878 1,827,107,092 609,745,917

155


FinancialStatements



32 Earnings/(Loss) Per Share

32.1 Basic earnings/(loss) per share is calculated by dividing the net profit/(loss) for the year attributable to ordinary shareholders

by the weighted average number of ordinary shares outstanding during the year.

32.2 The following reflects the income and share data used in the basic earnings/(loss) per share computation.

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Amounts used as numerator:

Net profit/(loss) for the year attributable to the

owners of the parent (3,178,783,051) 85,433,369 (1,346,069,873) (406,319,429)

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Numbers of ordinary shares used as

denominator:

Weighted average number of ordinary shares in

issue applicable to basic earnings per share 167,647,568 167,647,568 167,647,568 167,647,568

Basic earning/(loss) per share (LKR) (18.96) 0.51 (8.03) (2.42)

32.3 There were no potentially dilutive ordinary shares outstanding at any time during the year.

33 Assets Pledged

Lender Approved Facility Repayment Terms Interest Rate Security Included Under

2018

LKR

2017

LKR

CML MTD CONSTRUCTION LIMITED

People's Bank 8.20 Bn

4.2 Bn Term Loan - One

off

AWPLR+2.5% Mortgage over Machinery and

Vehicles

Property, plant and

equipment

Other Facilities -

Revolving

- Fixed Deposits Other current

financial assets

National

Development Bank

PLC

2.95 Bn 1.7 Bn Revolving Facilities 15% Fixed Deposits Other current

financial assets

Hatton National

Bank PLC

2.57 Bn 1.53 Bn OD - Revolving

Other Facilities -

One off

AWPLR+2.5% Fixed Deposits Other current

financial assets

Mortgage over Machinery and

Vehicles

Property, plant and

equipment

Seylan Bank PLC 1.62 Bn 1.42 Bn Other Facilities -

Revolving

Term Loans - One

off

AWPLR+3% Fixed Deposits Other current

financial assets

Primary, Secondary over property

mortgage Dambugahawatte,

Heiyantuduwa

Property, plant and

equipment

Mortgage over Machinery and

Vehicles

Property, plant and

equipment

156

MTD WALKERS PLC



2018

LKR

2017

LKR

Sampath Bank PLC 4.94 Bn 0.25 Bn Revolving Facilities

Term Loan - One

off

AWPLR+3% Fixed Deposits Other current

financial assets

Amana Bank PLC 0.009 Bn 0.009 Bn One off Facility 15% Mortgage over machinery Property, plant and

equipment

Nations Trust Bank

PLC

0.009 Bn 0.009 Bn One off Facility 15% Mortgage over machinery Property, plant and

equipment

Cargils Bank Limited 0.085 Bn 0.093 Bn Revolving Facilities

Term Loan - One

off

AWPLR + 2.25% Mortgage over machinery Property, plant and

equipment

Siyapatha Finance

PLC

0.18 Bn Revolving Facility 19% Fixed Deposits Property, plant and

equipment

DFCC Bank PLC 0.68 Bn Revolving Facility 15% Fixed Deposits Other current

financial assets

LOLC Finance PLC 0.13 Bn One Off Facility 18.75% Mortgage over vehicles Property, plant and

equipment

LB Finance PLC 0.06 Bn One Off Facility 13.20% Mortgage over vehicles Property, plant and

equipment

MTD WALKERS PLC

People's Bank 6.2 Mn 6.2 Mn Revolving and

renewed annually

FD rate+2.5% Fixed deposit amounting to LKR

6.0 Mn

Other current

financial assets

NORTHERN POWER COMPANY (PRIVATE) LIMITED

Union Bank of

Colombo PLC

25 Mn 25 Mn OD - One off Primary floating mortgage over

leasehold land and building

Financial lease

receivable

WALKER SONS & COMPANY ENGINEERS (PRIVATE) LIMITED

People's Bank 25 Mn 25 Mn Revolving and

renewed annually

SLIBOR+2% Primary mortgage over property

at Siyambalape, Sapugaskanda

Property, plant and

equipment

People's Bank 50 Mn 50 Mn 120 days FD rate+4.5% Fixed deposit of LKR 62 Mn of

MTD Walkers PLC

Other current

financial assets

included under MTD

Walkers PLC

People's Bank 150 Mn 150 Mn Revolving and

renewed annually

- Secondary mortgage over

land at 18, St. Michael's Road,

Colombo 3

Property, plant and

equipment included

under Walker Sons &

Company Limited

People's Bank 40 Mn 40 Mn 120 days SLIBOR+4% Fixed deposit amounting to LKR

22.4 Mn

Other current

financial assets

Commercial Bank

PLC

0.4 Mn 0.4 Mn Revolving and

renewed annually

AWPLR+1% Fixed deposit amounting to LKR

471,947

Other current

financial assets


33 Assets Pledged (Contd.)

157


FinancialStatements



2018

LKR

2017

LKR

Merchant Bank of

Sri Lanka and

Finance PLC

100 Mn 100 Mn Term loan facility AWPR+4% Primary mortgage over property

at Badulla valued for LKR 55 Mn

and corporate guarantee of MTD

Walkers PLC

Additional security of

property plant and

equipment of Walkers

Piling (pvt) Ltd until

receive the Corporate

guarantee from MTD

Walkers PLC

WALKERS PILING (PRIVATE) LIMITED

People's Bank 250 Mn 250 Mn 48 Monthly

Installments

AWPLR+2% Primary mortgage over piling

machine and corporate

guarantee of MTD Walkers PLC

Property, plant &

equipment

People's Bank 75 Mn 75 Mn 36 Monthly

Installments

AWPLR+7% Mortgage over land at 18A, St.

Michel Road, Colombo 03 and

corporate guarantee of MTD

Walkers PLC

Property, plant &

equipment included

under Walker Sons &

Company Limited

Mercantile

Investment &

Finance PLC

9.1 Mn 9.1 Mn 48 Monthly

Installments

14% Bhoom truck Property, plant &

equipment

Hatton National

Bank PLC


Installments

11% Double cab Property, plant &

equipment

People's Bank 25 Mn 25 Mn On Demand AWPLR+2.0% Mortgage over land at 18A, St.

Michel Road, Colombo 03 and


Walkers PLC

Property, plant &

equipment included

under Walker Sons &

Company Limited

Hatton National

Bank PLC

50 Mn 50 Mn On Demand AWPLR+1.75% Corporate guarantee of MTD

Walkers PLC

-

National Development

Bank PLC

115 Mn 115 Mn On Demand AWPLR+2.5% Corporate guarantee of MTD

Walkers PLC

-

Seylan Bank PLC 210 Mn - On Demand AWPLR+3% Corporate guarantee of MTD

Walkers PLC

-


Bank PLC


Installments

AWPLR+3% Primary mortgage over

casagrande machine and


Walkers PLC

Property, plant &

equipment


Bank PLC

67.5 Mn 67.5 Mn


Bank PLC

160 Mn 160 Mn 48 Monthly

Installments

AWPLR+3% Primary mortgage over BG

25 machine and corporate


Property, plant &

equipment


Bank PLC


Installments

AWPLR+3% Primary mortgage over Sany

280 R II machine and corporate


Property, plant &

equipment


Bank PLC


Installments

AWPLR+3% Primary mortgage over ancillary

equipment and corporate


Property, plant &

equipment


Bank PLC


Installments

AWPLR+3% Primary mortgage over crane

& pile breaking machine and


Walkers PLC

Property, plant &

equipment

158

MTD WALKERS PLC



2018

LKR

2017

LKR

Cargills Bank Limited 50 Mn 50 Mn On Demand AWPLR+3% Corporate guarantee of MTD

Walkers PLC

-

Hatton National

Bank PLC

361.3 Mn 167 Mn 60 Monthly

Installments

AWPLR+2% Primary mortgage over piling rigs

& kelly bars

Property, plant &

equipment

WESTERN AIRDUCTS LANKA (PRIVATE) LIMITED


Bank PLC

10 Mn 10 Mn Revolving Facilities 16.50% Primary mortgage over inventory Inventories


Bank PLC

32.5 Mn 32.5 Mn Revolving Facilities 16.50% Primary mortgage over plant

and machinery held within the

factory premises at Mahena Road,

Siyabalape, Sapugaskanda

Property, plant and

equipment


Bank PLC

24 Mn 24 Mn Revolving Facilities 16.50% Primary mortgage over property

at Mahena Road, Siyabalape,

Sapugaskanda

Property, plant and

equipment


Bank PLC

27.5 Mn 27.5 Mn Revolving Facilities 16.50% Corporate guarantee from MTD

Walkers PLC

CML MTD JOINT VENTURE LIMITED

Hatton National

Bank PLC

9.3 Mn 9.3 Mn 60 equal monthly

installments

commencing from

January 2015

AWPLR+1.5% Mortgage over machinery Property, plant &

equipment

Hatton National

Bank PLC

55 Mn 55 Mn 60 equal monthly

installments

commencing from

May 2015


equipment

Hatton National

Bank PLC


installments

commencing from

June 2015


equipment

Hatton National

Bank PLC


installments

commencing from

August 2015


equipment

Hatton National

Bank PLC


installments

commencing from

August 2015


equipment

Hatton National

Bank PLC


installments

commencing from

August 2015


equipment

Hatton National

Bank PLC


installments

commencing from

August 2015


equipment



159


FinancialStatements




2018

LKR

2017

LKR

Hatton National

Bank PLC


installments

commencing from

October 2015


equipment

Hatton National

Bank PLC


installments

commencing from

November 2015


equipment

Hatton National

Bank PLC


installments

commencing from

December 2015


equipment

Hatton National

Bank PLC


installments

commencing from

December 2015


equipment

Hatton National

Bank PLC


installments

commencing from

December 2015


equipment

Hatton National

Bank PLC


installments

commencing from

December 2015


equipment

Hatton National

Bank PLC


installments

commencing from

December 2015

AWPLR+1% Mortgage over machinery Property, plant &

equipment

Hatton National

Bank PLC


installments

commencing from

December 2015

AWPLR 1% Mortgage over machinery Property, plant &

equipment

Hatton National

Bank PLC


installments

commencing from

June 2016


equipment

Hatton National

Bank PLC


installments

commencing from

October 2016


equipment

Hatton National

Bank PLC


installments

commencing from

November 2015


equipment

Hatton National

Bank PLC

200 Mn - Revolving facilities AWPLR+2% Board resolution signed by

directors

Other current

financial assets

Hatton National

Bank PLC

379 Mn - Revolving facilities AWPLR+1.5% Offered against fixed deposit

USD 2,534,340

Other current

financial assets

160

MTD WALKERS PLC





2018

LKR

2017

LKR

WALKERS EQUIPMENT LIMITED


Bank PLC

120 Mn 120 Mn Revolving Facilities 16% Corporate Guarantee From MTD

Walkers PLC

Hatton National

Bank PLC

735 Mn 360 Mn Revolving Facilities AWPLR+3% Corporate Guarantee From MTD

Walkers PLC

150 Mn - One-off Facility AWPLR+3% Mortgage Over Stocks

amounting LKR 150 Mn

Inventories

Cargills Bank Limited 35 Mn 35 Mn Revolving Facilities 2% Corporate Guarantee From MTD

Walkers PLC

Mortgage Over Stocks and Book

Debts amounting LKR 35 Mn

Inventories, Trade

and other receivables

People's Bank 325 Mn 325 Mn Revolving Facilities 6 month

SLIBOR+4.5%

Corporate Guarantee From MTD

Walkers PLC

Bank of Ceylon 225 Mn 225 Mn Revolving Facilities AWPLR+3% Corporate Guarantee From MTD

Walkers PLC

Floating Mortgage Over Stocks

in Trade

Inventories

DFCC Bank PLC 75 Mn - Revolving Facilities AWPLR+3% Corporate Guarantee From MTD

Walkers PLC

Sampath Bank PLC 200 Mn - Revolving Facilities 15% Corporate Guarantee From MTD

Walkers PLC

161


FinancialStatements



34 Commitments & Contingencies

34.1 Capital Expenditure Commitments

The Company and Group do not have significant capital commitments as at the reporting date.

34.2 Contingencies

a) Lawsuits

The Group is the plaintiff/defendant in lawsuits filed in respect of the followings:

Company Type of Cases Name / Institution Case No.


(Private) Limited

Revision for Mallakam MC order

Dr. Irajalingam Shiwasankar &

12 Others

Court of appeal case

CA/PHC/APN/29/2015Northern Power Company

(Private) Limited

Revision for Mallakam MC orderNext date 18/09/2017


(Private) Limited

Related matter to case no SC/

FR/141/2015

SC/FR/141/2015

Walker Sons & Company Limited Non payment of gratuity and

EPF

Mr. L.J.K. Hettiarachchi &

H.G Fonseka

SC/(SPL)LA/53/2017

CA/WAIT/280/2012

Western Airducts Lanka (Private)

Limited

Ownership of land - cemetery Mr. Hettiarrchchige Don

Amaradasa

592/L (Gampaha)

Although, there can be no assurance, the directors believe, based on the information currently available, that the ultimate

resolution of such legal procedures would not likely have a material adverse affect on the results of operations, financial

position or liquidity of the company. Accordingly no provision for any liability has been made in the financial statements, nor

has any liability been determined by the ongoing legal cases, as at 31st March 2018.

162

MTD WALKERS PLC



34 Commitments & Contingencies (Contd)

34.2 Contingencies (Contd)

b) Bank and Corporate Guarantees

The Group had given bank & corporate guarantees to its client where contracts are in progress. Based on the information

currently available, The directors do not expect a liability to arise from these Guarantees.

2018 2017

LKR LKR

Bank Guarantees

People's Bank 2,068,579,489 1,601,674,504

Seylan Bank PLC 702,053,295 588,444,622

Nations Trust Bank PLC 67,744,565 97,750,000

DFCC Vardhana Bank PLC 223,022,156 -

Hatton National Bank PLC 1,599,551,058 923,909,471

National Development Bank PLC 1,895,615,885 1,228,943,595

Bank of Ceylon 366,576,505 462,148,969

Sampath Bank PLC 651,317,943 334,923,235

Commercial Bank PLC 1,012,151,101 963,102,351

Cargills Bank Limited 649,756,288 233,558,287

9,236,368,285 6,434,455,034

2018 2017 2018 2017

USD USD LKR LKR

Bank Guarantees - USD

National Development Bank PLC 751,624 - 117,049,504 -

2018 2017

LKR LKR

Corporate Guarantees - LKR

Walkers Piling (Private) Limited 3,620,000,000 1,889,000,000

Walker Sons and Company Engineers (Private) Limited 1,170,000,000 832,000,000

CML-MTD Construction Limited 17,927,000,000 7,397,200,000

Northern Power Company (Private) Limited 739,645,000 739,645,000

Walkers Equipment Limited 1,595,000,000 1,165,000,000

Walkers Colombo Shipyard (Private) Limited 75,000,000 -

Western Airducts Lanka (Private) Limited 27,500,000 27,500,000

Colombo Fort Heritage Company (Private) Limited 700,000,000 -

25,854,145,000 12,050,345,000

2018 2017 2018 2017

USD USD LKR LKR

Corporate Guarantees - USD

Walkers Colombo Shipyard (Private) Limited 5,000,000 5,000,000 778,644,000 757,137,500

Walker CML International (Private) Limited 2,100,000 - 327,030,480 -

7,100,000 5,000,000 1,105,674,480 757,137,500

c) Employees’ Provident Fund & Employees’ Trust Fund

Where ever foreseeable the company has made adequate provision for unpaid EPF & ETF liabilities as at the financial year

end on all group companies. As per the information currently available with the company, no evidence has immerged for

us to believe that further provisions are necessary for additional surcharge/levies for the non-payment of such dues as the

management is of the view that provisioning has been made for any future liability that may crystallize on the same.

163


FinancialStatements



35 Events After the Reporting Period

There have been no material events occurred after the reporting date that require adjustments to or disclosure.

36 Material Partly-Owned Subsidiaries

Summarised Statement of Income

2018 2017

CML- MTD

Construction

Limited

CML- MTD

Joint Venture

Limited

Walkers

Equipment

Limited

CML- MTD

Construction

Limited

(Restated)

CML- MTD

Joint Venture

Limited

Walkers

Equipment

Limited


Revenue 8,480,263,176 1,801,609,073 1,840,130,322 6,265,248,735 2,293,703,542 1,216,472,602

Cost of sales (9,512,343,146) (1,898,504,605) (1,682,292,820) (5,218,996,334) (1,941,273,892) (1,099,824,390)

Administrative expenses (698,012,356) (16,833,151) (108,214,270) (695,316,773) (17,946,278) (68,720,394)

Finance costs (1,338,559,475) (312,766,132) (84,647,336) (938,565,667) (138,213,633) (27,249,962)

Profit/(loss) before tax (2,574,713,221) (288,278,331) (34,707,804) 80,530,533 241,883,990 16,549,997

Income tax (70,143,896) (7,238,428) 3,630,974 (45,995,304) (8,688,973) (5,796,180)

Profit/(loss) for the year (2,644,857,116) (295,516,759) (31,076,830) 34,535,229 233,195,017 10,753,817

Total comprehensive

income (2,783,388,400) (295,516,759) (31,201,495) 234,791,165 233,195,017 10,598,477

Summarised Statement of Financial Position

2018 2017

CML- MTD

Construction

Limited

CML- MTD

Joint Venture

Limited

Walkers

Equipment

Limited

CML- MTD

Construction

Limited

(Restated)

CML- MTD

Joint Venture

Limited

Walkers

Equipment

Limited


Current Assets 19,475,201,921 5,206,996,196 1,550,663,226 14,148,966,086 3,599,051,397 874,816,700

Non- Current Assets 3,724,565,572 783,005,812 36,006,062 3,320,782,500 865,631,104 31,627,377

Current Liabilities (19,068,501,390) (5,212,268,620) (1,600,436,138) (13,665,490,147) (1,030,653,023) (836,301,308)

Non- Current Liabilities (3,878,669,535) (259,591,172) 1,737,834 (1,400,359,431) (2,620,370,502) (51,072,265)

Total equity 252,596,568 518,142,216 (12,029,016) 2,403,899,009 813,658,975 19,070,503

Summarised Cash Flow Information

2018 2017

CML- MTD

Construction

Limited

CML- MTD

Joint Venture

Limited

Walkers

Equipment

Limited

CML- MTD

Construction

Limited

CML- MTD

Joint Venture

Limited

Walkers

Equipment

Limited


Operating (7,006,556,723) (536,194,475) (450,143,559) (988,575,921) (1,374,093,802) (183,236,593)

Investing (2,014,695,383) 95,890,635 (4,378,685) (399,011,001) 547,613,073 (35,680,481)

Financing 4,167,784,474 768,337,986 482,300,256 1,783,364,545 1,108,541,583 105,594,908

Net increase / (decrease)

in cash and cash

equivalents (4,853,467,632) (328,034,146) (27,778,012) 395,777,623 282,060,854 (113,322,166)

164

MTD WALKERS PLC



37 Related Party Disclosures

Details of significant related party disclosures are as follows:

37.1 Transaction with the Related Entities

Parent Company Subsidiary Companies Total

2018 2017 2018 2017 2018 2017


Nature of Transaction

As at 1 April (1,100,505,451) (1,104,806,452) 3,257,351,408 3,170,361,250 2,156,845,957 2,065,554,798

Reimbursement of expenses (4,324,883) (4,314,645) 223,993,723 19,587,353 219,668,840 15,272,708

Interest paid (34,121,975) (32,045,506) - - (34,121,975) (32,045,506)

Interest received - - 109,881,730 56,086,812 109,881,730 56,086,812

Loan received - - - (185,550,000) - (185,550,000)

Temporary advance given - - 5,127,776,405 2,087,415,679 5,127,776,405 2,087,415,679

Temporary advance settled - - (5,177,807,836) (705,313,580) (5,177,807,836) (705,313,580)

Settlement of liabilities - - - - - -

Capitalization of loans from current

accounts - - (223,271,840) (845,958,822) (223,271,840) (845,958,822)

Capitalization of loans from Loan

accounts - - (408,814,120) (327,961,378) (408,814,120) (327,961,378)

Transferred to subsidiary - - - - - -

Lease rental paid - - - (672,285) - (672,285)

Settlement of directors current account - - - - - -

Management fees receivables - - 181,441,000 47,568,769 181,441,000 47,568,769

Corporate Guarantee Commission

receivable - - 52,981,000 - 52,981,000 -

PLC expenses reimbursed by

subsidiaries - - - (60,361,706) - (60,361,706)

Impairment for related companies - - (62,985,813) - (62,985,813) -

VAT on Management fees - - 6,618,780 12,919,088 6,618,780 12,919,088

Investment paid on behalf of Parent - - - (19,500,000) - (19,500,000)

Investment in subsidiaries - - - (701,000) - (701,000)

EPF payments for subsidiaries - - 23,108,161 9,431,228 23,108,161 9,431,228

Exchange loss/ gain (96,795,871) 40,661,152 - (96,795,871) 40,661,152

As at 31 March (1,235,748,180) (1,100,505,451) 3,110,272,598 3,257,351,408 1,874,524,418 2,156,845,958

Included in

Related party - Loans payable (644,339,700) (547,543,829) (185,550,000) (185,550,000) (829,889,700) (733,093,829)

Related party - Loans receivables - - 383,909,586 792,723,706 383,909,586 792,723,706

Amount due to related Party (591,408,479) (552,961,621) (10,533,035) (99,286,770) (601,941,514) (652,248,391)

Amount due from Related Party - 2,922,446,048 2,749,464,473 2,922,446,048 2,749,464,473

(1,235,748,179) (1,100,505,450) 3,110,272,599 3,257,351,409 1,874,524,420 2,156,845,959

Parent: MTD Capital Bhd

Subsidiaries: Walker Sons & Company Ltd, Walker Sons & Company Engineers (Private) Limited, MTD Walkers Infracon Ltd, Walkers Piling

(Private) Limited, MTD Walkers Projects Ltd, CML MTD Construction Ltd, CML Joint Venture Limited, Special Projects Company (Private)

Limited, Colombo Engineering Services (Private) Limited, Northern Power Company (Private) Limited, Western Airducts Lanka (Private)

Limited, Walkers Equipment Limited, Walkers CML Properties (Private) Limited, Walkers Colombo Shipyard (Private) Limited, Walkers

Trinco Shipyard (Private) Limited, Walkers M3 (Private) Limited, Walkers CML International (Private) Limited, Walkers Subsea Services

(Private) Limited, Walkers CML Property Development (Private) Limited, Walkers CML Property Lanka (Private) Limited, Colombo Fort

Heritage Company (Private) Limited.

165


FinancialStatements



37.2 Transactions with Key Management Personnel of the Company

Key management personnel include members of the Board of Directors of MTD Walkers PLC and its subsidiary companies.

a) Key Management Personnel Compensation

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Short-term employee benefits 71,262,800 35,188,373 5,400,000 6,000,000

71,262,800 35,188,373 5,400,000 6,000,000

b) Other Transactions with Key Management Personnel

Group Company

2018 2017 2018 2017

LKR LKR LKR LKR

Payment Settlement 27,991,698 25,204,242 - -

Expenses reimbursement (16,040,874) -

11,950,824 25,204,242 - -

37.3 There are no related party transactions other than those disclosed in Notes 13,19.4,24 & 37 to the financial statements.

38 Financial Risk Management Objectives and Policies

Financial Risk Management Objectives and Policies

The Group’s principal financial liabilities comprise short and long term borrowings, trade and other payables, and trade and

financial guarantee contracts. The main purpose of these financial liabilities is to finance the Group’s operations and to provide

guarantees to support its operations. The Group has loan and other receivables, trade and other receivables, and cash and

short-term deposits that arrive directly from its operations. The Group also holds fair value through profit or loss investments.

The Group is exposed to market risk, credit risk and liquidity risk.

The Board of Directors and Group’s senior management oversees the management of these risks. Reviews and agrees policies

for managing each of these risks, which are summarized below.

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in

market prices. Market prices comprise four types of risk: finance rate risk, currency risk, commodity price risk and other price

risk, such as equity price risk. Financial instruments affected by market risk include: loans and borrowings, deposits and fair

value through profit or loss investments.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes

in market rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term

debt obligations with floating rates. The rates applied to Groups short term borrowings are fixed periodically. The Group

manages its interest rate risk by aggressively negotiating rates for short and long term borrowings and having a portfolio of

facilities from various financial institutions which gives avenues use the facility based on competitive rates.

b) Other Transactions with Key Management Personnel

Change in

Interest rate

Effect on loss

before tax

2018 + 0.5% 171,707,731

- 0.5% (171,707,731)

2017 + 0.5% (15,013,963)

- 0.5% 15,013,963

166

MTD WALKERS PLC


38 Financial Risk Management Objectives and Policies (Contd.)

Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of

changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to

the Group’s operating activities (when revenue or expense is denominated in a different currency from the Group’s functional

currency) and the Group’s net investments in foreign subsidiaries.

The Group manages its foreign currency risk by having a balance of receivables and payables which enables a natural

hedging & through leading and lagging of transactions.

Equity Price Risk

The Group’s listed and unlisted equity securities are susceptible to market-price risk arising from uncertainties about future

values of the investment securities.

At the reporting date, the Group exposure to quoted equity securities at market value was LKR 2,462,387/- A decrease in

comparison to the previous financial year where the market value stood at LKR 3,614,332/-.

At the reporting date, the Group exposure to non-quoted equity securities at carrying value was LKR 260,370/-. This is the

exact carrying value which was held in 2017 for LKR 260,370/-.

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading

to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables) and from its

financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial

instruments.

Trade and Other Receivable

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control

relating to customer credit risk management.

Liquidity Risk

The Group manages liquidity risk exposure through effective working capital management. The Group also has planning

guidelines in place to ensure that the short term and medium term liquidity is managed at acceptable levels.

The table below summaries the maturity profile of Group's financial liabilities based on contractual payments.

Year ended 31 March 2018 01 to 03 Months 03 to 12 Months 01 to 03 Years Above

3 Years

Total

LKR LKR LKR

Bank financing 3,965,691,809 11,897,075,426 2,246,392,201 18,109,159,436

Public debt securities 2,102,260,000 883,417,999 - 2,985,677,999

Finance leases 54,078,318 162,234,955 570,469,546 - 786,782,820

Trade and other payables 6,169,377,976 - - - 6,169,377,976


Share Information 168

Decade at a Glance 171

Circular to Shareholders 172

Notice of Meeting 173

Form of Proxy 175

Corporate Information / IBC

168

MTD WALKERS PLC


Share information at a glance

Total Shares Issued as at 31st March 2018 167,647,568

Public Shareholding as at 31st March 2018 8.4 percent

Stock Ticker KAPI.N0000

Stock Market Review for

Financial Year 2017/18

The performance of the

Sri Lankan stock market has

experienced mixed sentiments

where it has seen both

upward and downward trends

throughout the FY2017/18.

During the year 2017, the

market has managed to reverse

the declining trend seen in the

All Share Price Index and the

S&P SL 20 index over the last

two years, with both market

indices moving into positive

direction.

The All Share Price Index

(ASPI) of the Colombo Stock

Exchange (CSE) closed at

6,476.78 points, making an 6.8

percent gain in comparison to

31st March 2017, while the S&P

SL 20 index, which features the

CSE’s 20 largest and most liquid

stocks, has also improved by 6.1

percent over the financial year

2017/18 closing at 3,650.10

points.

The Financial year 2017 was

categorised as a favourable

macro-economic environment

as it offered encouragement

and confidence to both

local and foreign investors.

The CSE through its market

development activities has

embarked on an awareness

drive in 2017, reaching out to

multiple investor segments

around the country and in

international markets. The CSE’s

market development activities

has resulted in an improved

involvement amongst foreign

investors contributing to a

net foreign inflow of LKR 10.8

billion year-to-date, an increase

of 13.7 percent compared to

the foreign activity in 2016/17.


the market has improved

significantly in comparison to

the two preceding years. The

market activity showed a sharp

increase as the average overall

market capitalisation grew by

13.9 percent to LKR 3,032 billion


financial year of LKR 2,662

billion.

MTD Walkers PLC Share


the closing share price of MTD

Walkers PLC dropped by 41.4

percent [FY 2016/17: 35.0]. The

share price ranged from LKR

19.1 to LKR 43.9 during the year,

before closing at LKR 20.5 as at

31st March 2018.

Employee Share Option Plan

The Group announced an

Employee Share Option Plan

(ESOP) during the financial

year 2015/16 amounting

to 3.0 percent of the issued

shares of MTD Walkers PLC. No

ESOPs were exercised during

the financial year 2017/18,

while out of the 5,029,427

unexercised ESOPs 4,023,542

are eligible for immediate

exercise.

Year of

Vesting

Category of Employee Total Options

Exercised

Price Expiry

Senior

Management

Middle

Management

Executives

2015/16 540,160 492,180 476,488 1,508,828 0 53.7 Jul-2020

2016/17 540,160 492,180 476,488 1,508,828 0 53.7 Jul-2020

2017/18 360,107 328,120 317,659 1,005,885 0 53.7 Jul-2020

2018/19 360,107 328,120 317,659 1,005,885 N/A 53.7 Jul-2020

Total 1,800,534 1,640,600 1,588,293 5,029,427

Earnings per Share

The basic Earnings Per Share

(EPS) for the period under

review reduced to LKR 19.0

[FY 2016/17: LKR 0.5]. It is

calculated by dividing the profit

or loss attributable to ordinary

shareholders of the Company

by the weighted average

number of ordinary shares

outstanding during the period.

Price to Book Value and Net

Asset Value per Share

The Price to Book Value

(PBV) of the Group stood at

0.8 as at 31st March 2018

decreasing from 1.1 last year

due to the contraction in the

Group’s performance and

adverse market conditions

that prevailed during the year.

Further, the Net Asset Value per

Share attributable to equity

holders of the Group reduced

to LKR 27.0 in comparison to

LKR 46.8 last year.

169

20 Major Shareholders

Name of Shareholder 31st March 2018 31st March 2017

No of shares % No of shares %

1 MTD Capital Bhd 152,183,583 90.78 152,183,583 90.78

2 Mr. C.K. Atapattu 1,026,816 0.61 - -

3 Standard Chartered Bank Singapore S/A HL Bank Singapore Branch 591,091 0.35 591,091 0.35

4 Mr. A.A.M. Razik 400,000 0.24 400,000 0.24

5 Sezeka Limited 333,890 0.20 205,115 0.12

6 Mrs. C.A.D.S. Woodward 314,000 0.19 - -

7 Seylan Bank PLC / K L G Udayananda 311,272 0.19 317,266 0.19

8 Nation Lanka Capital Ltd / K L G Udayananda 285,700 0.17 285,700 0.17

9 Peoples Leasing & Finance PLC / Mr D M P Dissanayake 271,500 0.16 271,500 0.16

10 Dr. Sena Yaddehige 237,480 0.14 237,480 0.14

11 Mrs. P.A.S. Amaratunga 214,153 0.13 214,153 0.13

12 Peoples’ Leasing & Finance PLC / Hi Line Trading (Pvt) Ltd 210,134 0.13 200,034 0.12

13 National Development Bank of Sri Lanka Limited A/C No.2 200,494 0.12 200,494 0.12

14 Peoples Leasing & Finance PLC / L. P. Hapangama 149,657 0.09 204,395 0.12

15 SDS Spices (Private) Ltd 139,605 0.08 - -

16 Rockport Limited 136,440 0.08 - -

17 Commercial Credit and Finance PLC 132,000 0.08 - -

18 Merchant Bank of Sri Lanka & Finance PLC 01 130,000 0.08 - -

19 Mr. A.M.V.A. Chaminda 125,000 0.08 - -

20 Mr. D. Rathnayake 120,010 0.07 - -

Analysis Report of Shareholders

31st March 2018 31st March 2017

No of

Shareholders%

Total

Shareholdings%

No of

Shareholders%

Total

Shareholdings%

Individual 2,366 92.8 10,240,975 6.1 2,192 91.8 8,388,571 5.0

Institutional 185 7.2 157,406,593 93.9 196 8.2 159,258,997 95.0

TOTAL 2,551 100.0 167,647,568 100.0 2,388 100.0 167,647,568 100.0

Resident 2,529 99.1 13,791,303 8.2 2,361 98.9 13,545,405 8.1

Non-Resident 22 0.9 153,856,265 91.8 27 1.1 154,102,163 91.9

TOTAL 2,551 100.0 167,647,568 100.0 2,388 100.0 167,647,568 100.0

Categorised Summary Report of Shareholders

31st March 2018 31st March 2017

No of

Shareholders%

Total

Shareholdings%

No of

Shareholders%

Total

Shareholdings%

1 - 1,000 1,520 59.6 433,614 0.3 1,460 61.1 433,614 0.3

1,001 - 10,000 775 30.3 2,530,590 1.5 692 28.9 2,530,590 1.5

10,001 - 100,000 234 9.2 6,192,403 3.7 206 8.6 6,192,403 3.7

100,001 - 1,000,000 20 0.8 6,307,378 3.7 29 1.2 6,307,378 3.7

1,000,00 1 & Over 2 0.1 152,183,583 90.8 1 0.1 152,183,583 90.8

TOTAL 2,551 100.0 167,647,568 100.0 2,388 100.0 167,647,568 100.0


FinancialStatements


170

MTD WALKERS PLC


Public Holding as at 31st March 2018

As at 31st March 2018

Public Holding 8.4 percent

Number of Shares 14,083,411

Number of Public Shareholders 2,547

Float adjusted market capitalisation 288,689,112

* The Company is not in compliance with the Colombo Stock

Exchange (CSE) Listing Rule 7.13.1 (a) Option five, however the

Company is making all endeavors to achieve this task within a

period not exceeding 20 months as stipulated in the Listing Rule

number 7.13.2 (g) of CSE.

Market Value of a Share for the 12 Months

Ended 31st March 2018 (LKR) 2017

(LKR)

Market Price per Share – Highest 43.9 48.0

Market Price per Share – Lowest 19.1 32.5

Market Price per Share – Closing 20.5 35.0

Share Trading for the 12 Months

Ended 31st March 2018 2017

Number of Transactions 5,569 10,630

Number of Shares Traded 6,729,092 11,738,588

Values of Shares Traded (LKR) 208,701,773 486,920,327

171


FinancialStatements


LKR in 000s 31 March

2009

31 March

2010

31 March

2011

31 March

2012

31 March

2013

31 March

2014

31 March

2015

31 March

2016

31 March

2017

31 March

2018

Operating results

Group revenue 1,476,056 1,933,584 2,769,685 5,853,313 7,389,640 10,092,371 14,025,193 11,964,383 13,465,970 16,308,501

Group Gross Profit 289,929 445,898 386,031 1,168,249 1,661,960 2,106,367 3,122,915 1,397,466 2,615,613 358,316

EBIT 93,923 119,197 (23,796) 675,214 1,072,714 1,335,777 1,968,290 141,843 1,938,324 (960,321)

Net finance cost (97,421) (164,814) (173,989) (253,840) (455,981) (605,358) (547,255) (899,671) (1,638,045) (2,473,834)

Profit before tax 109,552 (20,672) (197,785) 421,375 616,734 730,419 1,421,035 (757,827) 300,279 (3,434,155)

Tax expenses (27,315) (43,835) (39,595) (22,638) (62,516) (129,623) (313,767) (49,697) (86,381) (125,573)

Profit for the year 82,237 (64,507) (237,380) 398,737 554,218 600,796 1,107,269 (807,524) 213,898 (3,559,727)

Capital employed

Stated capital 74,332 74,332 3,659,428 3,659,428 3,659,428 3,659,428 6,057,498 6,057,498 6,057,498 6,057,498

Other reserves 164,174 123,646 123,646 123,646 123,646 123,646 379,459 378,562 966,602 852,440

Retained earnings 35,014 (60,319) (266,448) 66,099 500,678 936,225 1,609,716 745,962 820,159 (2,386,680)

273,520 137,659 3,516,627 3,849,173 4,283,753 4,719,299 8,046,673 7,182,021 7,844,259 4,523,257

Non-controlling interest 327,188 188,864 179,309 242,013 297,079 382,650 723,611 773,011 960,342 544,631

Total equity 600,708 326,523 3,695,936 4,091,186 4,580,832 5,101,949 8,770,284 7,955,033 8,804,600 5,067,888

Total debt 690,960 788,469 1,224,132 2,853,145 3,178,019 5,296,447 8,841,290 14,276,578 19,443,090 29,420,744

1,291,667 1,114,992 4,920,068 6,944,331 7,758,851 10,398,396 17,611,574 22,231,611 28,247,690 34,488,632

Assets employed

Property, plant and

equipment (PP&E) 1,152,759 1,047,952 1,610,488 2,305,894 2,450,630 2,604,047 4,232,778 4,685,889 5,916,055 6,797,359

Non current assets other

than PP&E 292 378 2,499,826 2,608,787 2,774,552 3,294,274 3,796,220 4,221,985 4,730,865 5,215,047

Current assets 1,443,584 1,654,064 2,686,608 4,423,141 6,536,583 9,752,516 14,226,573 19,844,830 26,197,377 33,492,248

Liabilities net of debt 1,304,968 2,375,083 3,099,762 5,243,783 7,177,754 10,543,592 13,476,445 20,783,394 28,020,253 40,909,946

1,291,667 327,311 3,697,160 4,094,040 4,584,010 5,107,246 8,779,125 7,969,309 8,824,044 4,594,708

Cashflow

Net cashflow from

operating activities (117,698) (104,363) 185,190 (433,584) 859,861 (52,396) (925,662) (3,145,594) (3,764,958) (6,753,780)

Net cash flow from

investing activities (120,332) (321,822) (759,564) (513,289) (999,327) (1,129,662) (2,659,244) (2,109,683) (816,125) (2,410,123)

Net cash flow from

financing activities 456,778 400,201 555,662 592,482 (242,526) 228,179 1,882,828 4,889,918 4,676,978 6,746,612

Net increase/(decrease) in

cash and cash equivalents 218,748 (25,984) (18,712) (354,391) (381,993) (953,879) (1,702,078) (365,359) 95,895 (2,417,291)

At a glance

EPS (LKR) 14.7 (16.2) 0.1 2.9 3.9 4.2 4.6 (5.2) 0.5 (19.0)

Interest cover (no. of times) 1.0 0.7 (0.1) 2.7 2.4 2.2 3.6 0.2 1.2 (0.4)

Net assets per share 47.8 24.1 30.8 33.7 37.5 41.3 48.0 42.8 46.8 27.0

ROE (%) 13.7 (19.8) (6.4) 9.7 12.1 11.8 12.6 (10.2) 2.4 (70.2)

Debt / debt +equity ratio (%) 62.0 70.7 24.9 41.1 41.0 50.9 50.2 64.2 68.8 85.3

Current ratio 1.2 1.2 1.0 1.0 1.0 1.2 1.4 1.4 1.3 1.0

Market price per share 75.0 386.8 65.0 23.0 24.5 30.1 46.4 33.3 35.0 20.5

172

MTD WALKERS PLC


Notice of the Meeting, Chairman’s Review, the Annual Report

of the Board of Directors, the Statement of Accounts for the

year ended 31st March 2018 and the Report of the Auditors are

attached.

A shareholder appointing a proxy (other than Directors of the

Company) to attend the meeting should indicate the proxy

holder’s National Identity Card number on the form of proxy and

request the proxy holder to bring his/her National Identity Card

with him/her as proof of identity.

Please note that only registered shareholders and/or their proxy

holders will be permitted to attend the meeting.


MTD Walkers PLC


Company Secretary

31st August 2018

Colombo

173


FinancialStatements


NOTICE IS HEREBY GIVEN that

the Thirty Second Annual

General Meeting of MTD

Walkers PLC will be held at the

'Lotus Hall' of Bandaranaike

Memorial International

Conference Hall (BMICH)

at Bauddhaloka Mawatha,

Colombo 07 at 10.00 am on

27th Thursday September 2018

for the following purposes:

1. To receive and consider the

Report of the Directors and

Statement of Accounts for


2018 with the Report of the

Auditors thereon.

2. To re-elect Mr. Niranjan

Joseph de Silva Deva-Aditya

who retires by rotation at


in terms of Article 89 of the

Articles of Association, as a

Director of the Company.

3. To re-elect Mr. Kim Siew Tee

who retires at the Annual

General Meeting in terms of

Article 95 of the Articles of

Association, as a Director of

the Company.

4. To re-elect Mr. Keith George

Cowling who retires at the

Annual General Meeting in

terms of Article 95 of the

Articles of Association, as a

Director of the Company.

5. To re-elect Mr. Md Rijaluddin

Bin Mohd Salleh who

retires at the Annual

General Meeting in terms of

Article 95 of the Articles of

Association, as a Director of

the Company.

6. To consider and if thought

fit to pass the following

resolution as an Ordinary

Resolution –

“IT IS HEREBY RESOLVED

that the age limit referred

to in Section 210 of the

Companies Act No.07 of

2007 shall not apply to Mr.


who presently 72 (Seventy

Two) years of age and that

he be re-appointed as a

director of the company for

a further period of one (01)

year or until the conclusion

of the next Annual General

Meeting whichever occurs

first in terms of the Article

88(ii) of the Articles of

Association.”

7. To appoint Messrs BDO

Partners, Chartered

Accountants as Auditors

of the Company for the

ensuing year in place of

retiring Auditors Messrs

Ernst & Young, Chartered

Accountants and to authorize

the Directors to determine

their remuneration.


MTD Walkers PLC


Company Secretary

31st August 2018

Colombo

Note:

A member entitled to attend

and vote is entitled to appoint

a proxy to attend and vote

and speak on his/her behalf

and such proxy need not be

a member of the Company.

The instrument appointing a

proxy is attached and must

be deposited at the Corporate

Office of the Company at No.

10, Trelawney Place, Colombo

04, not less than 48 (forty eight)

hours before the time fixed for

holding of the meeting.

174

MTD WALKERS PLC


175


FinancialStatements


The Board of Directors

M T D Walkers PLC

No.18, St. Michael’s Road

Colombo 03

I/We ………………………………………………………………………………………………………………………………………of

……………………………………………………………………………………………………..………………………………… being a

Shareholder/Shareholders of the above named Company hereby appoint-

Dato' Nik Faizul Bin Tan Sri Nik Hussain or failing him

Mr. Jehan Prasanna Amaratunga or failing him

Mr. Albert Rasakantha Rasiah or failing him

Mr. Niranjan Joseph de Silva Deva-Aditya or failing him

Mr. Hewawasamge Ravindranath Srilal Wijeratne or failing him

Mr. Kim Siew Tee or failing him

Mr. Keith George Cowling or failing him

Mr. Md Rijaluddin Bin Mohd Salleh or failing him

Mr/Mrs/Miss …………………………………………………... (NIC No ………………………………….……………………………….)

of……………………………………………………………………………………………………………… as my/our Proxy to represent

me/us and to speak and vote whether on a show of hands or on a poll for me/us on my/our behalf at the Thirty Second Annual General

Meeting of the Company to be held on 27th September 2018 and at any adjournment thereof.

FOR AGAINST

1. To receive the Audited Financial Statement and the Directors Report for the year ended 31st

March 2018

2. To re-elect Mr. Niranjan Joseph de Silva Deva-Aditya who retires by rotation in terms of Article 89

of the Articles of Association as a Director of the Company

3. To re-elect Mr. Kim Siew Tee who retires at the Annual General Meeting in terms of Article 95 of

the Articles of Association as a Director of the Company

4. To re-elect Mr. Keith George Cowling who retires at the Annual General Meeting in terms of

Article 95 of the Articles of Association as a Director of the Company

5. To re-elect Mr. Md Rijaluddin Bin Mohd Salleh who retires at the Annual General Meeting in

terms of Article 95 of the Articles of Association as a Director of the Company

6. To consider and if thought fit to pass the following resolution as an Ordinary Resolution –

“IT IS HEREBY RESOLVED that the age limit referred to in Section 210 of the Companies Act No.07

of 2007 shall not apply to Mr Albert Rasakantha Rasiah who presently 72 (Seventy Two) years of

age and that he be re-appointed as a director of the company for a further period of one (01)

year or until the conclusion of the next Annual General Meeting whichever occurs first in terms

of the Article 88(ii) of the Articles of Association.”

7. To appoint Messrs BDO Partners, Chartered Accountants, as Auditors of the Company for the

ensuing year in place of retiring Auditors Messrs Ernst & Young, Chartered Accountants and to

authorize the Directors to determine their remuneration.

Signed this ………………………………………… day of ……………………………………… Two Thousand and Eighteen.

Signature ………………………………………..… National Identity Card No ………………………………………

Share Folio No ………………………………………...………...

Note

If the Form of Proxy is signed by an Attorney, the relevant Power-of-Attorney should accompany the completed Form of Proxy for

registration, if such document has not already been registered with the Company.

176

MTD WALKERS PLC


1. A member entitled to attend

and vote at the Annual

General Meeting is entitled

to appoint a Proxy to attend

and vote on his/her behalf.

2. A Proxy need not be a

member of the Company.

3. Kindly complete the Form

of Proxy by filing legibly the

full name, NIC number and

address of the Proxy Holder

and also of the Shareholder

appointing the Proxy Holder.

Please sign in the space

provided and fill in the date

and NIC number.

4. Please indicate preference of

your vote on each resolution

in the space provided

therefore. If in the view of

the Proxy Holder there is

doubt by reason of the way

in which instructions in the

Proxy have been completed,

the Proxy Holder will vote as

he/she think fit.

5. In terms of Article 74 of the

Articles of Association of the

Company it is provided that;

The instruction appointing a

Proxy shall be in writing and

(a) In the case of an

individual shall be signed

by him/her or his/her

Attorney; and

(b) In the case of a

corporation shall be

signed either under its

common seal or shall be

signed by its Attorney or

by an Officer on behalf of

the corporation.

6. To be valid, the completed

Form of Proxy should be

deposited at the Corporate

Office of the Company,

No. 10, Trelawney Place,

Colombo 04, not less than

48 hours before the time

fixed for the holding of the

meeting.

7. The shareholders and the

proxy holders are kindly

requested to bring this

Annual Report, together

with an acceptable form of

identity.

Instructions as to Completion of Form of Proxy

MTD WALKERS PLC · 2018-09-03 · 6 MTD WALKERS PLC Annual Report 2017/18 @,(9 (; ( .3(5*, April...

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