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ANNUAL REPORT ANNUAL REPORT 2011 2012 2011 - 2012

LANKA ALUMINIUM INDUSTRIES PLC

Contents

LANKA ALUMINIUM INDUSTRIES PLC

Page

General Information Notice of Meeting Chairmans Statement Board of Directors Report of the Directors Audit Committee Report Remuneration Committee Report Shareholders Information Independent Auditors Report Income Statement Balance Sheet Statement of Changes in Equity Cash Flow Statement Notes to the Financial Statements Segmental Information Group Five Year Summary Form of Proxy Instructions for Completion of Form of Proxy

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Annual Reports & Accounts 2012

LANKA ALUMINIUM INDUSTRIES PLC

General Information

BOARD OF DIRECTORS Mr. Sri Theagarajah Nagendra Mr. Jude Dinal Peiris Mr. Jayantha Mootatamby Swaminathan Mr. Ranjeevan Seevaratnam Mr. Paras Chandaria Mr. Hemaka Devapriya Senarath Amarasuriya Mr. Chandima Lalith Kumar Perera Jayasuriya Mr. Dinesh Stephen Weerakkody SECRETARIES S S P Corporate Services (Private) Limited, 101, Inner Flower Road, Colombo 3. COMPANY REGISTRATION NUMBER P Q 187 REGISTERED OFFICE 1st Floor, Lakshmans Building, 321, Galle Road, Colombo 3. INTERNET www.lanka-aluminium.com BANKERS NDB Bank DFCC Vardhana Bank Hatton National Bank Standard Chartered Bank Nations Trust Bank LAWYERS Messrs Julius & Creasy, 41, Janadhipathi Mawatha, Colombo 1 Prasanna Goonewardene & Co., 26/1, Colonel T. G. Jayawardane Mawatha, Colombo 3. AUDITORS KPMG Ford, Rhodes, Thornton & Company, 32 A, Sir Mohamed Macan Marker Mawatha, Colombo 3

Annual Reports & Accounts 2012

Notice of Meeting

LANKA ALUMINIUM INDUSTRIES PLC

Notice is hereby given that the Twenty Sixth Annual General Meeting of Lanka Aluminium Industries PLC will be held at the Auditorium of Sri Lanka Institute of Marketing, 2 n d Floor, Lakshmans Building, 321, Galle Road, Colombo 03 on 24th September 2012 at 9.30 a.m. and the business to be brought before the meeting will be: AGENDA

Swaminathan who is 71 years of age (having reached 70 years of age on 09th January, 2011). The Company has received a special notice from a shareholder to pass the undernoted ordinary resolution in compliance with section 211 of the Companies Act No.7 of 2007 in relation to his re-appointment. Ordinary Resolution

1.

To consider and adopt the Annual Report of the Board and the Statements of Accounts for the year ended 31st March 2012 with the Report of the Auditors thereon. To declare a First and Final Dividend of Rs.0.50 per share in respect of the financial year ended 31st March 2012 as recommended by the Directors. To re-elect as a Director Mr. Paras Chandaria who retires by rotation in terms of Article No.86 of the Articles of Association of the Company. To re-elect as a Director Mr. H.D.S. Amarasuriya, who retires by roation in terms of Article 86 of the Articles of Association of the Company. To re-elect as a Director Mr. D.S. Weerakkody, who retires at the Annual General Meeting in terms of Article 92 of the Articles of Association of the Company. To re-appoint, as a Director, Mr. S.T. Nagendra who is 74 years of age (having reached 70 years of age on 28th September, 2007). The Company has received a special notice from a shareholder to pass the undernoted ordinary resolution in compliance with section 211 of the Companies Act No.7 of 2007 in relation to his re-appointment.

2.

3.

That the age limit of 70 years referred to in Section 210 of the Companies Act, shall not apply to Mr. Jayantha Mootatamby Swaminathan, who is 71 years of age (having reached 70 years of age on 9th January 2011) and accordingly that Mr. Jayantha Mootatamby Swaminathan be and is hereby re-appointed a Director of the Company, in terms of Section 211 of the Companies Act No.7 of 2007. 9. To authorize Directors to determine the remuneration of the Auditors, Messrs KPMG, who are deemed to have been re-appointed as Auditors in terms of Section 158 of the Companies Act No.07 of 2007.

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10. To authorise the Directors to determine contributions to charities. By Order of the Board
SSP CORPORATE SERVICES (PRIVATE) LIMITED SECRETARIES

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6.

Colombo 16th August 2012 The member entitled to attend and vote at the above mentioned meeting is entitled to appoint a proxy to attend and vote instead of him/her. Such proxy need not be a member of the Company. A Form of Proxy is enclosed. Note:The completed Form of Proxy should be deposited at the Registered Office of the Company, at 1st Floor, Lakshman's Building, No. 321, Galle Road, Colombo 3, not later than 48 hours before the time appointed for the holding of the meeting.

Ordinary Resolution That the age limit of 70 years referred to in Section 210 of the Companies Act, shall not apply to Mr. Sri Theagarajah Nagendra, who is 74 years of age (having reached 70 years of age on 28th September, 2007) and accordingly that Mr. Sri Theagarajah Nagendra be and is hereby re-appointed a Director of the Company, in terms of Section 211 of the Companies Act No.7 of 2007. 7. To re-appoint as a Director Mr.J.M.

Annual Reports & Accounts 2012

LANKA ALUMINIUM INDUSTRIES PLC

Chairmans Statement

On behalf of your Board of Directors, I am pleased to welcome you to the 26


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year end, which nearly tripled our net finance expenses to Rs.26.2 Million, which in turn reduced profit before tax to Rs.14 Million. An income tax reversal helped increase this figure to make a net profit after tax for the year of approx. Rs.18 Million, which is better than last year.

Annual General

Meeting of Lanka Aluminium Industries PLC, and present to you the Audited Accounts for the financial year ended 31 March 2012. During the early part of the year under review, the country's economy grew at a high level, whilst inflation was kept under control by prudent economic policies. The construction sector too grew at a very high level, mainly due to major infrastructure development activities undertaken by the Government, such as port and airport development, road construction, power generation projects and other government buildings. Private sector construction activities were limited and most of the major private sector projects were at their planning stages. Unfortunately, the demand for aluminium extrusions did not increase at a high level, since most of the ongoing construction activity, such as building of roads, bridges, etc., do not use much of our products. During the year, the lack of expected growth in demand and increased competitor action compounded by high raw material prices, reduced profit margins and our gross profits margin reduced by 2%. In spite of increased competition, your company's revenue increased by 19% to Rs.793 Million and profit from operations by 19% to Rs.40.2 Million.
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Your Board of Directors has recommended a first and final dividend of Rs.0.50 per share to be made from the year's profits. Our subsidiary, Classic Teas (Private) Limited, which exports bulk and value added teas, also had a difficult year with the unsettled conditions in the Middle East and recession in Europe which affected sales. The company posted a loss of Rs.14.6 Million for the year due to the devaluation of the Rupee in January 2012, as the foreign currency packing credit loans in respect of orders unshipped exceeded the value of foreign currency debtors as at 31.03.2012. The accounting standards required the conversion of foreign debtors and packing credit loans at the rate of exchange which prevailed as at 31.03.2012. Comark Engineers (Private) Limited performed reasonably well in its second year of operations making a profit of Rs.12.9 Million. Castalloys, the aluminium casting company also made a profit of Rs.4 Million for the year. Comark Lanka (Private) Limited also contributed

Unfortunately, the extended credit facilities and maintaining high levels of stocks in order to cut down on lead-times meant we had to increase our borrowings from the banks. Interest rates also increased during this period from approx. 10% at the beginning of the year to nearly 16% - 17% as at

to the group profits, which was approx. Rs.9.3 Million for the year. In spite of two consecutive years of mediocre performance, we are optimistic of the future. Private sector projects have finally broken ground

Annual Reports & Accounts 2012

Chairmans Statement

LANKA ALUMINIUM INDUSTRIES PLC

with international hotel chains, such as the Shangri la, Hyatt, Sheraton, the Welcome Group, etc., commencing foundation work. Several multistoried apartment blocks, shopping malls and other buildings are under construction in and around Colombo; while many hotels have started construction island-wide and all of these will need aluminium extrusions. The government still continues to be the largest builder with several projects such as the Army Hospital, Pradeshya Sabas, etc., all having started work. We expect all of these to increase the demand for aluminium extrusions from 2014 onwards. This, we feel, would then reduce the excess capacity amongst the manufacturers in the market and increase profitability. Meantime, we are continuing with our new product developments and search for ways to improve our operation and reduce cost. Classic Teas have ventured into new profitable markets, which has already improved their performance and Comark Engineers, Castalloys as well as Comark Lanka should post similar results in the coming year. Considering the above, we are expecting a better 2012/13, providing there are no unexpected shocks to the economy. In the longer term, there is no doubt that the aluminium extrusion industry will perform well, since almost every modern building especially high-rise buildings will require aluminium extrusions. We are optimistic and wait patiently for the building construction to reach the stage that requires aluminium extrusions.

Your Board's advice and guidance has been invaluable not only in meeting the challenges of a difficult year, but also in planning for the future. My sincere thanks to them, the Managing Director, the management team, our loyal employees and most of all, our customers who had been with us in spite of increased competition.

Sgd.

S.T. Nagendra Chairman 16th August 2012.

Annual Reports & Accounts 2012

LANKA ALUMINIUM INDUSTRIES PLC

Board of Directors

MR. S.T. NAGENDRA NON - EXECUTIVE CHAIRMAN Mr. Nagendra was appointed to the Board of Lanka Aluminium Industries PLC in October 1990 and currently holds the office of Non-Executive Chairman. (He held the office of Executive Chairman from 16th January 1996 to 31st July 2011). He was formerly Chairman of the James Finlay Group, the Employers Federation of Ceylon and the British Business Association. He has served on the committees of the Planters Association of Ceylon and the Ceylon Chamber of Commerce. He is presently Director of many companies in Sri Lanka. MR. J.D. PEIRIS MANAGING DIRECTOR Joined Lanka Aluminium in December 1989 as General Manager, was appointed to the board in 1990 and subsequently made Managing Director in May 1999. He is an engineer by profession with a B.Sc Eng. (Hons) from City University, England and an MBA from the London Business School. He is also the Chairman/Managing Director of the companys subsidiaries, the Chairman of Acme Printing & Packaging PLC., and Acme Solutions (Pvt) Limited, and is on the Board of several unquoted companies in Sri Lanka.

University of Colombo. He is also a faculty member of the LLM Wales Course conducted by the Sri Lanka Law College and a Faculty Member of Post Attorneys Diploma program on intellectual property law and the Course Director of Post Attorneys Diploma program in Internal Trade Law conducted by the Sri Lanka Law College and is over 45 years in practice. MR. R. SEEVARATNAM EXECUTIVE DIRECTOR Appointed on the Board in December 2008. Former Senior Partner of Messrs KPMG Ford, Rhodes, Thornton & Company, Chartered Accountants. Graduated from the University of London, majoring in Botany and Zoology. Fellow of the Institute of Chartered Accountants England and Wales and Fellow of the Institute of Chartered Accountants of Sri Lanka. He is also presently on the Board of several quoted and unquoted companies. MR PARAS CHANDARIA NON - EXECUTIVE DIRECTOR Appointed to the Board on 15th August 2011. Mr. Paras Chandaria is a graduate from the London School of Economics and Political Science. He has over 18 years international business experience, having worked in Africa, Europe, Americas and Asia. He plays a significant role for the Comcraft Group in monitoring and developing the groups existing business and industrial activities in Asia, Europe and the Americas. He is based in Singapore. He travels widely and is on the Strategy Committee of several leading global businesses. In addition to his business commitments he spends time on CSR projects, in particular a project to promote education for girls in remote rural areas in India. M R . H E M A K A A M A R A S U R I YA INDEPENDENT NON - EXECUTIVE DIRECTOR Appointed to the Board on 15th August 2011. Hemaka Amarasuriya is currently the Chairman of the Singer Group of Companies in Sri Lanka and the Chairman of NDB Bank, Vice President of Annual Reports & Accounts 2012

MR. J.M. SWAMINATHAN INDEPENDENT NON - EXECUTIVE DIRECTOR Appointed to the board of Lanka Aluminium in June 2002. LLB (Ceylon), LLM Phil (Colombo), Attorney-atLaw, is the Precedent Partner of Messrs Julius & Creasy and he was a member of the company Law Advisory Commission, a member of the intellectual Property Law Commission. He is a member of the Council of Legal Education and a Faculty Member of the Faculty of Law of the University of Colombo and has served as a member of the Legal Cluster of the National Economic Commission. He is also a member of the Law Commission of Sri Lanka. He is a visiting lecturer and an examiner at the Faculty of Law 6

Board of Directors

LANKA ALUMINIUM INDUSTRIES PLC

Retail Holdings Ltd., U.S.A., and a former Senior Vice President of Singer Asia Limited. He is a Fellow of the Institute of Chartered Accountants of Sri Lanka and of the Chartered Institute of Management Accountants, U.K. He also holds a Honorary Fellowship from the Chartered Institute of Marketing, U.K. and a Diploma in Marketing Strategy from the University of New York. He is on the Directorate of other listed companies such as, C.W. Mackie PLC, ACL Cables and nonlisted companies such as Bata Shoe Co. Ceylon and Equill Limited. MR C. L. K. P. JAYASURIYA - INDEPENDENT NON - EXECUTIVE DIRECTOR Was appointed as an Independent Non-Executive Director to the Board, with effect from 26th August, 2011. He is presently the Executive Chairman and Managing Director of Finlays Colombo PLC, He is a Fellow of the Chartered Institute of Management Accountants, UK (FCMA) and a Fellow of the Chartered Association of Certified Accountants, UK (FCCA). He is the Chairman of the Mercantile Service Provident Society, immediate past Chairman of the Employers Federation of Ceylon, a Director of the Employees Trust Fund Board, a member of the Board of the Chartered Institute of Management Accountants Sri Lanka Division, and a Member of the Board of the Sri Lanka Accounting and Auditing Standards Monitoring Board. He is a Committee Member of the Ceylon Chamber of Commerce. He is also an Independent Non-Executive Director of Central Finance Company PLC. MR. DINESH WEERAKKODY INDEPENDENT NON - EXECUTIVE DIRECTOR Dinesh Weerakkody is currently Chairman of Commercial Bank Plc. He is a former Chairman/ CEO of the Employees' Trust Fund Board of Sri Lanka and a Director of DFCC Bank Plc . He was also Advisor to the Prime Minister of Sri Lanka from 2002-2004. Mr. Weerakkody has served in many Cabinet Sub Committees and national level committees on Economic Affairs, International Affairs and Labour Management. During his public sector career Mr. Weerakkody engaged Annual Reports & Accounts 2012

pro-actively and innovatively in economic, trade, labour and cultural matters in both bilateral and multilateral contexts. From 2005- 2009 Mr. Weerakkody was a Council Member and 2008-09 Chairman Employer Relations, CIMA Sri Lanka Division. He is a Graduate in Business Administration, an Associate of the Chartered Institute of Management Accountants United Kingdom, a Fellow of the Certified Management Accountants of Sri Lanka, Professional Member of the Singapore Human Resource Institute and has obtained a MBA from the University of Leicester, England. Mr Weerakkody has received extensive Leadership, HR, and Management training in the UK, USA, France, Japan, Singapore and India. He has been on the Sri Lankan Board of GlaxoSmithKline Sri Lanka since 2000 and is Chairman of Cornucopia Lanka Ltd and Director/Advisor of Cornucopia Bangalore, India. He serves and had served in a number of government and private sector boards. He is also a Board member of the International Chamber of Commerce Sri Lanka Chapter and a Vice President of Sri Lanka Tennis. Dinesh has published widely on HR, Leadership, Management, International Relations and development issues, has been involved in largescale research projects in the USA and has presented many papers at national and international level. He is a recipient of two national awards.

LANKA ALUMINIUM INDUSTRIES PLC

Report of the Directors

REPORT OF THE DIRECTORS ON THE STATE AFFAIRS OF THE COMPANY The Board of Directors is pleased to present their Report and the Audited Financial Statements of the Company for the year ended 31st March 2012. The details set out herein provide pertinent information required by the Companies Act, No.7 of 2007, the Listing Rules of the Colombo Stock Exchange and are guided by recommended best accounting practices. 1. Review of the year The Chairman's Statement at page 4 & 5 reviews the affairs of the Company for the financial year ended 31 March 2012. 2. Principal Activity The principal activity of the Company is the manufacture and sale of aluminium extrusions. 3. Financial Statements The financial statements of the Company are given on pages 18 to 42 4. Auditor's Report The Auditor's report on the financial statements is given on page 17 5. Accounting Policies The accounting policies adopted in preparation of Financial Statements and the other explanatory notes are given on pages 22 to 42 There were no material changes in the Accounting Policies adopted. 6. Interest Register The Company maintains an Interest Register and the particulars of those directors who were directly or indirectly interested in a contract of the Company are stated therein.
Mr. D.S. Weerakkody
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7.

Directors' Interest None of the directors had a direct or indirect interest in any contracts or proposed contracts with the Company other than as disclosed in Note 26 related party transactions to the financial statements.

8.

Directors Remuneration and Other Benefits Directors remuneration in respect of the Company for the financial year ended 31st March 2012 is given in Note 7 to the financial statements.

9.

Corporate Donations Donations made by the Company amounted to Rs. 1,029,175 (2011 Rs. 388,770). No donations were made for political purposes.

10. Directors The Directors of the Company as at 31st March 2012.


Mr. S.T. Nagendra Mr. J.D. Peiris - Non Executive Chairman - Managing Director Director Mr. R. Seevaratnam Mr. Paras Chandaria - Executive Director - Non Executive Director Director Mr. C.L.K.P. Jayasuriya - Independent Non-Exectuve Director - Independent Non-Exectuve Director

Mr. J.M. Swaminathan - Independent Non-Executive

Mr. H.D.S. Amarasuriya - Independent Non-Executive

In terms of Article 86 of the Articles of Association of the Company, Messrs. Paras Chandaria and H.D.S. Amarasuriya retire by rotation at the Annual General Meeting and being eligible offer themselves for re-election.

Annual Reports & Accounts 2012

Report of the Directors

LANKA ALUMINIUM INDUSTRIES PLC

In terms of Article 92 of the Articles of Association of the Company Mr. D.S. Weerakkody retires and being eligible offers himself for re-election. A resolution for the re-appointment of Mr. S.T. Nagendra, who is 74 years of age will be proposed at the Annual General Meeting in terms of Section 211 of the Companies Act No.7 of 2007. A special notice has been received from a shareholder informing of her intention to move such a resolution. A resolution for the re-appointment of Mr. J.M. Swaminathan, who is 71 years of age will be proposed at the Annual General Meeting in terms of Section 211 of the Companies Act No.7 of 2007. A special notice has been received from a shareholder informing of her intention to move such a resolution. 11. Board Sub-Committees The following Board Sub-Committees are functional. Audit Committee Mr. H.D.S. Amarasuriya - Chairman/Independent Director Mr. C.L.K.P. Jayasuriya - Member/Independent Director Mr. D.S. Weerakkody - Member/Independent Director Remuneration Committee Mr. D.S. Weerakkody - Chairman/Independent Director Mr. C.L.K.P. Jayasuriya - Member/Independent Director Mr. H.D.S. Amarasuriya - Member/Independent Director

12. Directors Shareholding The Directors of the Company as at 31st March 2012 do not hold ordinary shares of the Company. 13. Auditors The financial statements for the year ended 31st March 2012 have been audited by Messrs KPMG, Chartered Accountants, who express their willingness to continue in office. In accordance with the Companies Act No.07 of 2007, a resolution relating to their reappointment and authorising the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting. The fees paid to the Auditors are disclosed in Note 7. As far as the Directors are aware, the Auditors do not have any relationship (other than that of an Auditor) with the Company other than those disclosed above. Company. 14. Dividends The directors propose for payment a First and Final Dividend of Rs.0.50 per share for the year ended 31st March 2012. 15. Investments Details of investments held by the Company are disclosed in Note 13 to the financial statements. 16. Intangible Assets There were no intangible assets, other than Goodwill, which is disclosed in Note 12 to the financial statements. The Auditors also do not have any interest in the

Annual Reports & Accounts 2012

LANKA ALUMINIUM INDUSTRIES PLC

Report of the Directors

17. Property, Plant and Equipment An analysis of the property, plant and equipment of the Company, additions and disposals made during the year and depreciation charged during the year are set out in Note 11 to the financial statements.

24. Statutory Payments The Directors to the best of their knowledge and belief are satisfied that all statutory payments in relation to the government and the employees have been made on time. 25. Corporate Social Responsibility

18. Capital Commitments There were no capital commitments outstanding as at the Balance Sheet date (2011 Nil). 19. Stated Capital The Stated Capital of the Company is Rs.137,028,230/- There was no change in the Stated Capital of the Company during the year. 20. Taxation The tax position of the Company is given in Note 9 to the Financial Statements. 21. Disclosure as per Colombo Stock Exchange Rule No.7.6 31.03.12 31.03.11 Market price per share as at 31st March Highest share price during the year Lowest share price during the year 22. Shareholding The number of registered shareholders of the Company as at 31 March 2012 was 1,636. 23. Major Shareholders The twenty largest shareholders of the Company as at 31 March 2012, together with an analysis are given on page 15.
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Corporate social responsibility is an extension of the values we stand for as a company. Our goal is to connect the people and businesses we serve with the products, tools, and resources they need to accomplish their goals, drive economic growth and make communities and our Country better. Our CSR work focuses on three key areas: responsible business practices, environmental sustainability, leadership and service, diversity and inclusion. During 2011/12 the Company sponsored and supported charitable and community activities, with donations and sponsorships totaling Rs. 1,029,175. Our products go a long way towards minimizing the felling of trees and are completely recyclable without any negative 25.10 104.00 22.00 56.60 83.00 27.50 impact on the environment. Schemes are in place to collect off-cuts and waste which are recycled in-house for special applications. 26. Corporate Governance/Internal Control Lanka Aluminium Industries PLC confirms that, as at date of the Annual Report, they comply with and firmly believe in good corporate governance. The Company has 6 non-executive Directors on its Board. The Board as a whole decided on the appointment of non-executive independent Directors. The Directors so appointed retire in rotation at each annual general meeting and seek re-appointment by the shareholders.

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Annual Reports & Accounts 2012

Report of the Directors

LANKA ALUMINIUM INDUSTRIES PLC

The Board holds regular meetings and also meet if circumstances warrant. It reviews the strategic direction of the Company the exposure of key business risks, the annual budgets and the progress toward achieving these budgets and their capital expenditure programmes. The Board also recommends the appointment and fees of the external auditors. The Board had delegated the primary objective to achieve the strategic policy within the overall business policy indicated above to the Managing Director. The Board periodically reviews the employment policies of the Company. The remuneration committee is headed by Mr. D.S. Weerakkody. The other member of the committee is Mr. C.L.K.P. Jayasuriya and Mr. H.D.S. Amarasuirya. They are all non-

members of the committee are Mr. C.L.K.P. Jayasuriya and Mr.D.S. Weerakkody who are independent non-executive Directors. The report of the audit committee appears on pages 12 & 13. 27. Contingent Liabilities There were no material contingent liabilities outstandings as at 31st March 2012. 28. Post Balance Sheet Events Subsequent to the date of the Balance Sheet no circumstances have arisen which would require adjustments to the accounts. There are also no significant post balance sheet events which in the opinion of the Directors require disclosure. 29. Annual General Meeting The 26th Annual General Meeting of the Company will be held at the Auditorium of Sri Lanka Institute of Marketing on Monday, 24th September 2012 at 9.30 a.m.

executive independent Directors. The report of the remuneration committee appears on page 14. The Directors are responsible for the Company's systems of internal finance controls. The Board has reviewed the effectiveness of the systems of finance controls for the period up to the date of signing the accounts. The Directors responsibility for the financial statements is described on page 42. The Board has set up an audit committee headed by a non-executive independent Director, Mr. H.D.S. Amarasuriya, a Fellow of the Institute of Chartered Accountants of Sri Lanka and of the Chartered Institute of Management Accountants, U.K. The other

For and on behalf of the Board of Directors of LANKA ALUMINIUM INDUSTRIES PLC

Sgd. ....................... Director

Sgd. ....................... Director

Sgd. ....................... S S P Corporate Services (Private) Limited, Secretaries

16th August 2012

Annual Reports & Accounts 2012

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LANKA ALUMINIUM INDUSTRIES PLC

Audit Committee Report

PREAMBLE The Committee is empowered to review and monitor the financial reporting process of the company so as to provide additional assurance on the reliability of the financial statements through a process of independent and objective review. As such, the audit committee acts as an effective forum in assisting the Board of Directors in discharging their responsibilities on ensuring the quality of financial reporting and related communication to the Shareholders and the Public. COMPOSITION AND ROLE The audit committee appointed by and responsible to the Board of Directors, comprises three non-executive Directors.

Mr. E.F.G. Amarasinghe Audit Committee member. up to 30th September 2011 Mr. C.L.K.P. Jayasuriya Audit Committee member appointed w.e.f. 1st October 2011 Mr. E.J. Gnanam Audit Committee member up to 24th January 2011 Mr. D.S. Weerakkody Audit Committee member appointed w.e.f. 1st October 2011

MEETINGS The audit committee met five times during the

The Chairman and Managing Director of the company attend meetings of the committee by invitation. The Chairman of the Audit Committee is a senior Chartered Accountant. The Committee is chaired by Mr. H.D.S. Amarasuriya who was appointed as the Chairman of the Audit Committee with effect from 1st October 2011 , on the resignation of Mr. J.S. Mather from the Board. The following Directors serve / served on the Audit Committee: Mr. J.S. Mather Chairman up to 26 September 2011 Mr. H.D.S. Amarasuriya Chairman, appointed w.e.f. 1st October 2011
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year. The attendance of the members at these meetings is as follows:Mr. J.S. Mather Mr. E.F.G. Amarasinghe Mr. E.J. Gnanam Mr. H.D.S. Amarasuriya Mr. C.L.K.P. Jayasuriya Mr. D.S. Weerakkody 3/3 3/3 0/2 2/2 2/2 2/2

Other members of the Board and the external & internal auditors were present at discussions where this was appropriate. The proceedings of the audit committee are regularly reported to the Board of Directors, and the minutes of the meetings are made available to the Board of Lanka Aluminium Industries PLC.

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Annual Reports & Accounts 2012

Audit Committee Report

LANKA ALUMINIUM INDUSTRIES PLC

ACTIVITIES The Committee carried out the following activities during the year. The Committee reviewed the financial reporting system adopted by the Company in the preparation of its quarterly and annual financial statements to ensure reliability of the process and consistency of the accounting policies and methods adopted and their compliance with the Sri Lanka Accounting Standards. The methodology included obtaining statements of compliance of relevant revenue regulations from the Finance Manager. The Committee recommended the financial statements to the Board for its deliberations and issuance. The Committee, in its evaluation of the financial reporting system, also recognized the adequacy of the content and quality of routine management information reports forwarded to its members. The Committee reviewed the process to assess the effectiveness of the internal financial controls that have been designed to provide reasonable assurance to the Directors that assets are safeguarded and that the financial reporting system can be relied upon in preparation and presentation of the financial statements. The internal audit function is outsourced to Messrs Ernest & Young, a firm of Chartered Accountants. Internal Auditors directly submitted their findings to Audit Committee and these made available to external auditors. The Committee met the external auditors at the conclusion of the audit, who confirmed that the audit was successfully completed.

The Committee reviewed the nature and value of non-audit work the External Auditors had undertaken, to ensure that it did not compromise their independence. The audit committee has recommended to the Board of Directors that Messrs KPMG, Ford, Rhodes, Thornton & Company be re-appointed as auditors for the financial year ending 31st March 2013.

Sgd.

H.D.S. Amarasuriya, Chairman, Audit Committee. Colombo, 16th August 2012

Annual Reports & Accounts 2012

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LANKA ALUMINIUM INDUSTRIES PLC

Remuneration Committee Report

Employees are vital to our Institution. We have created a favourable work environment that encourages teamwork and continuous improvement. We have had no attrition of staff during 2011-2012. The table below reflects the employment report as at 31st March 2012: Levels Top management Senior management Professionally qualified and experienced specialists and mid-management Skilled technical and academically qualified staff, junior management, supervisors and clerical staff Workers TOTAL PERMANENT Employees on Contract TOTAL Total 3 5

combination of guaranteed pay (fixed pay and Bonus) and variable pay (short-term incentives) depending on the level in the organizational hierarchy and performance. Human Resources and Remuneration Committee meetings The Committee held two meetings during the year under review. The attendance of committee members at meetings is stated in the table below. The Chairman of the Committee can convene a special meeting in the event a requirement arises provided all members are given sufficient notice of such special meeting. The quorum for a meeting is two members. The Managing Director was invited to participate at the sittings of the Committee meetings as and when required by the Chairman considering the topics for deliberation at such meeting. The proceedings of the Committee meetings were regularly reported to the Board of Directors. In 2012-13, the company will continue to focus on introducing and strengthening HR policies, practices & systems in the area of performance management, employee recognition, &employee engagement.
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73 87 177 4 181

As part of the roadmap to sustainability, the HR function has the following key focus areas: Employee Relations We continue to engage our employees through various initiatives. Employee Development People development is at the centre of our agenda in the Institution as we seek to build capacity on the one hand, while creating skills pipeline and leadership bench-strength on the other hand. Remuneration The human resource committee of the board approved the remuneration philosophy, strategy and policy of company. The Company's remuneration philosophy is anchored on the total rewards approach. The remuneration strategy's main aim is to enable the company to develop, motivate, maintain and retain an internal talent pipeline; and when necessary attract the requisite skills from the labour market to enable the institution's growth strategy. The remuneration policy codifies the remuneration principles, processes, practices and procedures to give effect to the Institution's remuneration philosophy and strategy. The pay mix may comprise a 14

D.S.Weerakkody Chairman, Human Resources & Remuneration Committee Colombo,16th August 2012 AT T E N D A N C E O F R E M U N E R AT I O N COMMITTEE The composition and attendance of the members of the Remuneration Committee. From April to September 2011 Mr. E.F.G. Amarasinghe - Chairman Mr. J.S. Mather From October 2011 Mr. D.S. Weerakkody -Chairman Mr. H.D.S. Amarasuriya Mr. C.L.K.P. Jayasuriya

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Annual Reports & Accounts 2012

Shareholder Information

LANKA ALUMINIUM INDUSTRIES PLC

TWENTY (20) MAJOR SHAREHOLDERS AS AT 31st MARCH 2012

31st March 2011


No. Name

31st March 2012

Number of shares Percentage Number of shares Percentage

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Clovis Company Limited Mr. K D D Perera Dr. A C Visvalingam/ Mrs. V I Visvalingam Dr. H S D Soysa Mrs. P N Bhatt Mr. H G Carimjee Mr. Y Esmailjee Pan Asia Banking Corporation PLC/Mr. S.A. Gulamhusein Mr .U.W.J.P.A Sumathipala Mr. U. D. Rajapakse Mr.E.W.A.R Kumara DPMC Assetline Holdings (Pvt) Ltd. Account No. 02 Mr C.N. Pakianathan Mr. H Esmailjee First Capital Market Limited/ Mr.M.A.U. Gunathilaka Mr. M. H. M. Nazeer Mr.R.R.S Ananda Associated Electrical Corporation Ltd Mr.D.S Pathmasiri/ Mrs. M.N.K. Pathirana Dr. R. S. Deraniyagala Percentage of shares held by the public

6,863,429 4,637,023 135,020 138,150 78,613 68,400 50,000 45,200 45,000 28,000 25,050 22,000

50.09 33.84 0.99 1.01 0.57 0.50 0.36 0.33 0.33 0.20 0.18 0.16 16.07

6,863,429 3,991,589 256,020 138,150 78,613 68,400 50,000 45,200 43,000 42,050 37,700 32,700 28,200 27,800 27,000 25,050 25,000 24,700 22,500 22,000

50.09 29.13 1.87 1.01 0.57 0.50 0.36 0.33 0.31 0.31 0.28 0.24 0.21 0.20 0.20 0.18 0.18 0.18 0.16 0.16 20.78

Annual Reports & Accounts 2012

15

LANKA ALUMINIUM INDUSTRIES PLC

Shareholder Information

ANALYSIS OF SHAREHOLDERS ACCORDING TO THE NUMBER OF SHARES AS AT 31ST MARCH 2012

RESIDENT Shareholdings Number Number of Share of Shares holders 1 to 1,000 1,001 to 10,000 10,001 to 100,000 100,001 to 1,000,000 Over 1,000,0000 1245 338 34 2 1 1620 447,560 1,118,203 855,938 394,170 3.27 8.16 6.25 2.88 (%)

NON RESIDENT Number Number of (%) of Share Shares holders 10 5 0 0 1 16 6,634 25,300 0 0

TOTAL Number Number of of Share holders 0.04 1,255 0.18 0.00 0.00 343 34 2 2 454,194 1,143,503 855,938 394,170 10,855,018 3.31 8.34 6.25 2.88 79.22 Shares (%)

3,981,589 29.13 6,807,460 49.69

6,863,429 50.09

6,895,363 50.31 1636

13,702,823 100.00

Categories of shareholders

Number of shareholders

No. of shares

Individual

1566

6,528,615

Institutional

70

7,174,208

1636

13,702,823

16

Annual Reports & Accounts 2012

Independent Auditors Report

LANKA ALUMINIUM INDUSTRIES PLC

KPMG (Chartered Accountants) 32 A, Sir Mohamed Macan Markar Mawatha, P. O. Box 186, Colombo 00300, Sri Lanka.

Tel Fax

: +94 - 11-542 6426 +94 - 11-244 5872 +94 - 11-244 6058 +94 - 11-254 1249 +94 - 11-230 7345 Internet : www.lk.kpmg.com

TO THE SHAREHOLDERS OF LANKA ALUMINIUM INDUSTRIES PLC Report on the Financial Statements We have audited the accompanying financial statements of Lanka Aluminium Industries PLC (the Company), and the consolidated financial statements of the Company and its subsidiaries as at 31st March 2012, which comprise the balance sheet as at 31st March 2012, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 18 to 43 of this Annual Report. . Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Scope of Audit and Basis of Opinion Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion. Opinion Company In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31st March 2012 and the financial statements give a true and fair view of the Company's state of affairs as at 31st March 2012 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. Opinion Group In our opinion, the consolidated financial statements give a true and fair view of the state of affairs as at 31st March 2012 and the profit and cash flows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiaries dealt with thereby, so far as concerns the shareholders of the Company. Report on Other Legal and Regulatory Requirements These financial statements also comply with the requirements of Section 153(2) to 153(7) of the Companies Act No. 07 of 2007.
Sgd. KPMG

CHARTERED ACCOUNTANTS Colombo. 16th August 2012

KPMG, a Sri Lankan Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International cooperative (KPMG International), a Swiss entity.

M.R. Mihular FCA Ms. M.P. Perera FCA P.Y.S. Perera FCA C.P. Jayatilaka FCA T.J.S. Rajakarier FCA W.W.J.C. Perera FCA Ms. S. Joseph FCA Ms. S.M.B. Jayasekara ACA W.K.D.C. Abeyrathne ACA S.T.D.L. Perera FCA G.A.U. Karunaratne ACA R.M.D.B. Rajapakse ACA Principals - S.R.I Perera ACMA, LLB, Attorney-at-Law, H.S. Goonewardene ACA

Annual Reports & Accounts 2012

17

LANKA ALUMINIUM INDUSTRIES PLC

Income Statement

Company For the Year ended 31 March Note Revenue Cost of Sales Gross Profit Other Operating Income Administrative & General Expense Marketing & Distribution Expense Profit From Operations Net Finance Expense Profit Before Taxation Income Tax Reversal/(Expense) Profit for the Year Attributable to: Equity Holders of the Company Minority Interests Profit for the Year Basic Earnings Per Share (Rs.) 10 17,926 17,926 1.31 9,544 9,544 0.70 17,119 3,842 20,961 1.25 9 7 8 6 5
st

Group 2012 Rs.000 1,873,089 (1,624,429) 248,660 2,995 (160,304) (12,868) 78,483 (60,682) 17,801 3,160 20,961 2011 Rs.000 2,524,882 (2,278,872) 246,010 10,163 (146,315) (12,939) 96,919 (44,044) 52,875 (28,321) 24,554 20,289 4,265 24,544 1.48

2012 Rs.000 793,277 (650,224) 143,053 14,438 (105,571) (11,716) 40,204 (26,187) 14,017 3,909 17,926

2011 Rs.000 665,151 (534,126) 131,025 13,413 (98,781) (11,841) 33,816 (9,617) 24,199 (14,655) 9,544

The annexed Notes to the Financial Statements form an integral part of the Financial Statements. Figures in brackets indicate deductions.

18

Annual Reports & Accounts 2012

Balance Sheet

LANKA ALUMINIUM INDUSTRIES PLC

As at 31st March ASSETS Non Current Assets Property, Plant & Equipment Goodwill Investments in Subsidiaries Long Term Investments Total Non Current Assets Current Assets Inventories Trade & Other Receivables Amounts Due from Related Parties Current Taxation Cash & Cash Equivalents Total Current Assets Total Assets EQUITY & LIABILITIES Equity Stated Capital Advances for Allotment of Shares Revaluation Reserve Retained Earnings Total Equity attributable to Equity Holders of the Company Minority Interest Total Equity Non Current Liabilities Interest Bearing Borrowings Deferred Taxation Employee Benefits Total Non Current Liabilities Current Liabilities Trade & Other Payables Current Taxation Amounts Due to Related Parties Interest Bearing Borrowings Bank Overdraft Total Current Liabilities Total Liabilities Total Equity & Liabilities Note 11 12 13.1 13.2

Company 2012 2011 Rs.000 Rs.000 424,690 42,475 36,062 503,227 158,231 198,946 33,475 13,926 87,870 492,448 995,675 212,570 42,475 36,062 291,107 138,379 131,514 39,591 79,230 388,714 679,821

Group 2012 2011 Rs.000 Rs.000 473,570 116 36,062 509,748 337,311 486,004 104 12,023 141,738 977,180 1,486,928 238,381 116 36,062 274,559 260,256 514,404 197 135,864 910,721 1,185,280

14 15 16 17

18

137,028 401 245,272 117,035 499,736 499,736

137,028 401 120,010 105,960 363,399 363,399 8,459 29,462 37,921 23,862 5,177 1,783 168,757 78,922 278,501 316,422 679,821

137,028 401 281,490 166,261 585,180 32,036 617,216 26,164 25,000 28,642 79,806 75,110 330 581,095 133,371 789,906 869,712 1,486,928

137,028 401 136,256 155,993 429,678 27,243 456,921 8,831 33,917 42,748 71,469 10,159 330 514,171 89,482 685,611 728,359 1,185,280

23 19 20

26,164 29,678 23,675 79,517 56,656 3,590 245,440 110,736 416,422 495,939 995,675

21 22 23 17

The annexed notes to the Financial Statements form an integral part of the Financial Statements. These financial statements are in compliance with the requirements of Companies Act No. 7 of 2007. . Mr. V. Lekamge Senior Accountant The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Approved and signed for and on behalf of the Board: . Mr. S.T. Nagendra Chairman th Colombo - 16 August 2012
Sgd. Sgd.

.. Mr. J.D. Peiris Managing Director

Sgd.

Annual Reports & Accounts 2012

19

LANKA ALUMINIUM INDUSTRIES PLC

Statement of Changes in Equity

For the Year ended 31st March 2012 Company Stated Capital Advances for Allotment of Shares Rs.000 Balance as at 1 April 2010 Profit for the Year Dividends Paid (2009/10) Balance as at 31 March 2011 Balance as at 1 April 2011 Profit for the Year Revaluation surplus during the year Dividends Paid (2010/11) Deferred Tax effect on Revaluation Surplus Balance as at 31 March 2012
st st st st

Revaluation Reserve

Retained Earnings

Total

Rs.000 401 401 401 401

Rs.000 120,010 120,010 120,010 150,390 (25,128) 245,272

Rs.000 113,545 9,544 (17,129) 105,960 105,960 17,926 (6,851) 117,035

Rs.000 370,984 9,544 (17,129) 363,399 363,399 17,926 150,390 (6,851) (25,128) 499,736

137,028 137,028 137,028 137,028

Group

Stated Advances Revaluation Retained Capital for Allotment of Shares Rs.000 Rs.000 401 401 401 401 Rs.000 136,256 136,256 136,256 170,362 (25,128) 281,490 Rs.000 20,289 Reserve Earnings

Total Minority Interest

Total Equity

Rs.000 Rs.000 20,289 1,753 4,265

Rs.000 449,691 1,753 24,554 456,921 456,921 1,058 (8,838) 1,880 170,362 20,961 617,216

Balance as at 1 April 2010 Dividends Paid (2010/11) Profit for the Year Balance as at 31 March 2011 Balance as at 1 April 2011 Dividends Paid (2011/12) Increase in minority shareholding Revaluation of PPE Profit for the Year Balance as at 31 March 2012
st st st

st

137,028 137,028 137,028 137,028

152,833 426,518 23,173

Part Settlement of Share Capital (Note)

(17,129) (17,129) (1,948) (19,077) 155,993 429,678 27,243 155,993 429,678 27,243 (6,851) 1,058 1,880 3,842 (6,851) (1,987)

Part Settlement of Share Capital (Note)

- 170,362 - (25,128) 17,119 17,119

Deferred Tax effect on Revaluation Surplus -

- (25,128)

166,261 585,180 32,036

Note: Portion of shares are not fully paid in Classic Tea (Pvt) Ltd. During the year Classic Tea (Pvt) Ltd has collected Rs. 1,058,000 (2011 : Rs. 1,753,000) from the shareholders. The annexed Notes to the Financial Statements from an integral part of the Financial Statements. Figures in brackets indicate deductions. 20 Annual Reports & Accounts 2012

Cash Flow Statement

LANKA ALUMINIUM INDUSTRIES PLC

For the Year ended 31st March Cash Flows from Operating Activities Profit before Taxation Adjustment For: Depreciation Provision for Gratuity Profit on Disposal of Property, Plant & Equipment Exchange loss on Revaluation of Short Term Borrowings Loss from Deemed Disposal Dividend Income Interest Income Interest Expense Operating Profit Before Working Capital Changes

Company 2012 2011 Rs.000 Rs.000 14,017 25,934 3,141 (25) (10,494) (9,497) 35,684 58,760 24,199 23,537 5,500 (1,392) (8,049) (9,640) 19,257 53,412 (33,377) (20,555) (23,048) (10,884) 1,364 (33,088) (17,830) (19,257) (307) (70,482) (17,491) (2,000) (43,535) 8,049 9,640 2,237 (43,100)

Group 2012 2011 Rs.000 Rs.000 17,801 27,438 3,653 (25) 27,351 1,880 (8,774) 53,108 122,432 (77,055) 28,400 93 3,642 77,512 (27,981) (53,108) (8,928) (12,505) (92,848) 8,774 608 (83,466) 52,875 24,679 6,848 (1,392) (7,102) 12,632 88,540 69,926 (38,354) (197) (42,389) 77,526 (28,805) (12,632) (471) 35,618 (17,491) (46,246) 7,102 2,237 (54,398)

(Increase)/ Decrease in Inventories (19,852) (Increase)/ Decrease in Trade & Other Receivables (67,432) (Increase)/ Decrease in amounts due from related companies 6,116 (Increase)/ Decrease in trade and other payables 32,794 Increase in amounts due to related companies 1,807 Cash Generated from / (Used in) Operations 12,193 Tax Paid (19,102) Interest Paid (35,684) Gratuity Paid (8,928) Net Cash Generated from/(used in) Operating Activities (51,521) Cash Flows from Investing Activities Investment in Long Term Investments Investment in Subsdiary Purchase of Property, Plant & Equipment Dividend Received Interest Income Proceeds from Disposal of Property, Plant & Equipment Net Cash Used in Investing Activities Cash Flows from Financing Activities Dividend Paid Short Term Loan Obtained Repayment of Short Term Loan Part Settlement of Share Capital Net Increase in Minority Shareholders Interest Net Cash Generated from Financing Activities Net Increase / (Decrease) in Cash & Cash Equivalents Cash & Cash Equivalent at the Beginning of the Year (88,248) 10,494 9,497 608 (67,649) (6,851) 932,941 (830,094) 95,996 (23,174) 308

(17,129) (8,838) (17,129) 529,538 2,230,076 2,468,309 (412,920) (2,164,340) (2,411,925) 1,058 (195) 99,489 57,956 39,060 (14,093) 14,401 308 (38,015) 46,382 8,367 20,280 26,102 46,382

Cash & Cash Equivalent at the End of the Year (Note 17) (22,866)

The annexed Notes to the Financial Statements form an integral part of the Financial Statements. Figures in brackets indicate deductions. Annual Reports & Accounts 2012 21

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

1. REPORTING ENTITY 1.1 Domicile and Legal Form

Clovis Company Limited (Bermuda) which holds 50% of voting rights. 1.4 Number of Employees

Lanka Aluminium Industries Plc (the Company) is a quoted public company incorporated in Sri Lanka under the Companies Act No 17 of 1982 and re-registered under the new Companies Act No 7 of 2007. Registered office is located at 1st Floor, Lakshman's Building, 321, Galle Road, Colombo 03. The ordinary shares of the Company are listed in the Colombo Stock Exchange. The Consolidated Financial Statements of the Company as at and for the year ended 31 March 2012 comprise the Company and its subsidiaries (together referred to as the Group and individually as Group entities) 1.2 Principal Activities and Nature of Operations

The numbers of employees of the Group and Company as at 31st March 2012 are as follow: Group Company 209 (2011 201) 181 (2011 169)

1.5 Date of authorization for issue The consolidated Financial Statements of the Group for the year ended 31st March 2011 were authorized for issue in accordance with a resolution of the Board of Directors on 16th August 2012. 1.6 Responsibility for The Financial Statements The Board of Directors is responsible for preparation and presentation of these Consolidated Financial Statements. 2. BASIS OF PREPERATION

The principal activity of the Company is the manufacture and sale of aluminium extrusions. The natures of the business of the Company's subsidiaries are as follows: Comark Lanka (Pvt) Limited Trading in Aluminium extrusions and accessories. Castalloys (Pvt) Limited Manufacture and sale of Aluminium ingots and billets. Classic Teas (Pvt) Limited Exporting Tea. Comark Engineers (Pvt) Ltd. Undertaking contracts for aluminium fabrication Comark Agencies (Pvt) Ltd. Trading activities. Comark Agencies (Pvt) Limited was incorporated on 05th August 2011and has not carried out any commercial operations during the year. There were no significant changes in the nature of the principal activities of the Group during the financial year under review. 1.3 Parent Enterprise

2.1 Statement of Compliance The Consolidated Financial Statements comprise the balance sheet, income statement, statement of changes in equity, cash flow statement and notes to the financial statement. The Consolidated Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards (SLAS) as laid down by the Institute of Chartered Accountants of Sri Lanka (ICASL) and the requirements of the Companies Act No. 7 of 2007. 2.2 Basis of Measurement The Consolidated Financial Statements have been prepared on the historical cost basis except for freehold land and buildings which have been revalued to fair values. No adjustments have been made for inflationary factors in the financial statements. Annual Reports & Accounts 2012

The Company's ultimate parent company is 22

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

2.3Functional and Presentation Currency These consolidated Financial Statements are presented in Sri Lankan Rupees, which is the Group's functional currency. All financial information presented in rupees has been rounded to the nearest thousand 2.4 Use of Estimates and Judgments The preparation of Consolidated Financial Statements requires management to make judgments, estimates and assumptions that effect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Information about significant areas of estimates and uncertainty that have the most significant effects on the amounts recognized in the Consolidated Financial Statements are as follow:
q Measurement of employee benefit

year's presentation. 3. Significant Accounting Polices The accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements, and have been applied consistently by the Group entities. 3.1 Basis of Consolidation 3.1.1 Subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of that enterprise so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control effectively commences until the date that control effectively ceases. Accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Company. Subsidiaries consolidated are: Name of the subsidiaries Holding Percentage

obligations (Note 3.11)


q Assessment of impairment (Note 3.9) q Provisions and contingencies (Note

3.10) 2.5 Materiality And Aggregation

Comark Lanka (Pvt) Ltd Castalloys (Pvt) Ltd Classic Teas (Pvt) Ltd Comark Engineering (Pvt) Ltd Comark Agencies (Pvt) Ltd 3.1.2 Intra Group Transactions

100% 100% 69.79% 51% 50%

Each material class of similar items is presented separately. Items of dissimilar nature or function are presented separately unless they are immaterial. 2.6 Comparative Information

Intra-group balances and transactions, and any unrealized gains from the intra-group transactions are eliminated in preparing the Consolidated Financial Statements. 3.1.3 Profit & Loss

Comparative information has been reclassified wherever necessary to conform to the current Annual Reports & Accounts 2012

In arriving at the profits attributable to the 23

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

shareholders of the Company, the total profits of subsidiaries are included in the Consolidated Financial Statements after eliminating intra group transactions and profit attributable to minority interest. 3.1.4 Assets & Liabilities All Assets and Liabilities of the Company and its Subsidiaries are included in the Consolidated Balance Sheet. 3.1.5 Goodwill Goodwill arising in connection with the acquisition of subsidiaries, which is the excess of the purchase price or consolidation over the fair value of net assets acquired at the date of acquisition, is recognised in the Consolidated Financial Statements. Goodwill reflects the excess of the purchase price over the fair value of the net assets as at the date of purchase. As required by SLAS 25 'Business Combinations' goodwill is not amortised. Instead goodwill will be tested for impairment annually and assessed for that any indication impaired at each Balance Sheet date to ensure its carrying amount does not exceed its recoverable amount. If an impairment loss is identified, it will be recognized immediately in the Income Statement. However, negative goodwill if any arises from acquisitions will be credited to retained earnings immediately. 3.1.6 Minority Interest The total classified as Minority Interest in the Consolidated Financial Statement represent the portion of the consolidated profit after taxation of the Subsidiary Companies applicable to the nongroup shareholders. The proportionate share of the non-group shareholders in the consolidated net assets of such subsidiaries is disclosed as Minority Interest in the Consolidated Balance Sheet. 3.1.7 Financial year All the Companies in the Group have a common 24

financial year, which ends on 31st March. 3.2 Segment Reporting A segment is a distinguishable component of the group that is engaged either in providing product or services (Business Segments), or in providing product or services within a particular economic environment (Geographical Segments), which is subject to risks and rewards that are different from those of other segments. Segment information reflects Extrusions, Imported Extrusions, Billets and Tea. Intersegments transfers are based on fair market prices. The Group's business activities are located in Sri Lanka. Consequently, assets and liabilities by geographic regions are considered not material to be segmented. Expenses that cannot be directly identified to a particular segment are allocated on the basis decided by the management and applied consistently throughout the year. 3.3 Foreign Currency Transactions Transactions in foreign currencies are translated into Sri Lanka Rupees at the spot exchange rate at the time the transaction is effected. Where foreign exchange transactions are covered by forward contracts the rate used is that of the contract. Assets and liabilities denominated in foreign currencies are converted into Sri Lanka Rupees using the rate that prevailed on the Balance Sheet date. All profits or losses arising from transactions in foreign currencies are recognised in the period in which they arise. ASSETS & BASES OF THEIR VALUATION Assets classified as current assets in the Balance Sheet are Cash and those, which are expected to be realized in cash during the normal operating cycle of the Company's or within one year from the Balance Sheet date which ever is shorter. Assets other than current assets are those, which the Company intends to hold beyond a period of one year from the Balance Sheet date. Annual Reports & Accounts 2012

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

3.4

Property, Plant & Equipment

has been treated as capital expenditure. The carrying amount of an item of Property, Plant and Equipment is derecognized on disposal or when no further economic benefits are expected from its use or disposal. 3.4.2 Subsequent Costs

3.4.1. Recognition and Measurement All items of Property, Plant and Equipment are initially recorded at cost. Where items of Property, Plant and Equipment are subsequently revalued, the entire classes of assets are revalued. When an asset is revalued any increase in the carrying value is credited to the revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognized in the income statement, in which case the increase is recognized in the income statement. Any revaluation deficit that off-sets a previous surplus on the same asset is directly offset against the surplus in the revaluation reserve and any excess recognized as an expense. The difference between the depreciation based on the revalued carrying amount and cost has been transferred from revaluation reserve to retained earnings as the said asset's economic benefits are consumed periodically. Revaluation model is applied for Freehold properties owned by the Company and the Board has decided to revalue it's Freehold Land and Building every 3-5 years thereafter to comply with requirement of Revaluation Model under the Sri Lanka Accounting Standard 18 (Revised 2005) "Property Plant and Equipment". Property, Plant and Equipment other than Freehold properties are recorded at cost less accumulated depreciation and impairment losses, in accordance with the "Cost Model" as set out in Sri Lanka Accounting Standards 18 - "Property, Plant and Equipment". Cost of property, plant and equipment is the cost of acquisition or construction together with any expenses incurred in bringing the assets to its usable condition and location for its intended use. Expenditure incurred for the purpose of acquiring, extending or improving assets of a permanent nature by means of which to carry on the business or to increase the earning capacity of the business Annual Reports & Accounts 2012

The cost of replacing part of an item of properly, plant equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced is recognized. The costs of the day-to-day servicing of property, plant and profit or loss as incurred. 3.4.3 Depreciation

Depreciation has been provided on a straight-line basis over periods appropriate to the estimated useful lives of different types of assets, by applying the following percentages on their cost or revalued amounts.

25

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

Lanka Aluminum Industries Ltd. Building Building improvements Motor Vehicles Furniture & Fittings and equipment Plant, Machinery & Electrical Substation Long term Short term 20% 10% 50% 4% 8%

Castalloys (Pvt) Ltd. 40% 5% 10 -6.67%

Classic Teas (Pvt) Ltd 3% 4% 20-3.33%

Comark Engineers Ltd 4% 8%

10%

Leasehold Equipment Dies Tools

10% 4% -

Replacement basis

All assets (excluding land) are depreciated from the month the asset is available for use and ceases at the earlier of the date that the asset is classified as held for sale or is derecognized.

The replacement cost of tools (cutting tools, Blades, etc.) is capitalized and the difference between the replaced cost and the purchase cost of the tools is charge to Income Statement.

Depreciation methods, useful lives and residual values are reviewed regularly.

26

Annual Reports & Accounts 2012

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

3.4.4 Borrowing Costs 3.6 Interest and related costs incurred on external borrowings relating to tangible Property, Plant and Equipment under construction or installation is capitalized until the assets are ready for their intended use. 3.4.5 Impairment of Property, Plant and Equipment The carrying value of Property Plant and Equipment is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying value exceed the estimated recoverable amount the assets are written down to their recoverable amount. Impairment losses are recognized in the Income Statement unless it reverses a previous revaluation surplus for the same asset. 3.5 Investments Inventories Raw materials, finished goods, spare parts & consumables, work in progress, goods in transit and others, are stated at lower of cost or net realizable value after making due allowance for obsolete and slow moving items. The cost of inventories is determined on a first in first out basis. Principle inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. 3.7 Trade and Other Receivables Trade and other receivables are stated at the amounts estimated to be realised. Where necessary, provisions are made for bad and doubtful debts. 3.8 Cash & Cash Equivalents Cash and Cash Equivalents are defined as cash-in-hand, deposits held at call with the banks net of bank overdraft, short term highly liquid investments, and readily convertible loan amounts subject to insignificant risk of changes in value. 27

3.5.1 Investment in Subsidiaries Investments in subsidiaries are treated as long term investments and are valued at cost in the Companys balance sheet. However, where necessary, provision is made for diminution in value of investments which are considered other than temporary. 3.5.2 Long Term Investments Investments in unquoted shares are stated at cost and where necessary provision is made for diminution in value of investments which are considered other than temporary.

Annual Reports & Accounts 2012

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

For the purpose of the cash flow statement, cash and cash equivalents comprise of cash in hand, deposits held in banks and investments in money market instruments, net of short-term loans and bank overdrafts. Overdrafts are classified under Current Liabilities in the Balance Sheet. 3.9 Impairment of assets The carrying amount of the company's non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment and any impairment losses are recognized in profit or loss. An impairment loss is recognised when an assets recoverable amount is less than its carrying amount. LIABILITIES AND PROVISIONS Liabilities classified as Current Liabilities in the Balance Sheet are those obligations payable on demand or within one year from the Balance Sheet. Items classified as non current liabilities are those obligations, which expire beyond a period of one year from the Balance Sheet date.

Sheet when the Company has a legal or constructive obligation as a result of a past event. 3.11 (a) Employee Benefits Defined Contribution Plans (Employees Provident Fund & Employees Trust Fund) A defined contribution plan is a postemployment 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 defined contribution pension plans are recognized as an employee benefit expense in profit or loss when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available. All employees of the Company are members of the Employees' Provident Fund and Employees' Trust Fund, to which the Company contributes 12% and 3% respectively of such employees consolidated salary. The Company contributions are recognised as expenses in the Income Statement when incurred. (b) Defined benefit plans Retirement gratuity A defined benefit plan is a post employment benefit plan other than a defined contribution plan. Gratuity is a defined benefit plan. The liability recognized in the balance sheet in respect of defined benefit plan is the present value of the defined benefit obligation at the balance sheet date together with adjustments for unrecognized past-service costs. The defined benefit obligation is Annual Reports & Accounts 2012

All known liabilities have been accounted for in preparing the Financial Statements. Provision and Liabilities are recognized when the company has a legal or constructive obligation as a result of past events and it is probable that an outflow of economic benefits will be required to settle the obligation. 3.10 Provision A provision is recognized in the Balance 28

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

calculated annually by independent actuary using the 'projected unit credit method' as required by SLAS 16 (Revised 2006) Retirement Benefit. Such actuarial valuations are carried out once in every three years. However, according to the payment of Gratuity Act, No. 12 of 1983, the liability to an employer arises only on completion of five years of continued service. The liability is not externally funded. 3.13 Classic Teas (Pvt) Limited applies the gratuity formulae method as recommended by Sri Lanka Accounting Standards 16 (Revised 2006) - Employee Benefits (SLAS 16) order to compute the liability recognized in the Balance Sheet. Comark Lanka (Pvt) Limited No provision has been made for Retiring Gratuity as there were no employees as at the Balance Sheet date. Castalloys (Pvt) Limited No provision is made for Retiring Gratuity as there were only 3 employees as at the Balance Sheet date, which is below the minimum number of employees required for an employer to become liable to pay retiring gratuity. Comark Engineers (Pvt) Limited 3.14 Based on the revised Sri Lanka Accounting Standards 16 (Revised 2006) Employee Benefits (SLAS 16) which became effective from the financial year commencing after 1st July 2007, the Company does not fall with in the definition of Appendix D1 and D2 of the SLAS 16. Accordingly the Company will continue to make provision for Gratuity at Month Annual Reports & Accounts 2012

salary for each completed years of service. However the liability for payments of gratuity arises only upon the completion of five years continuous service. The retiring gratuity is not externally funded. 3.12 Trade and Other Payables Trade and other payables are stated at Cost. Capital Commitments & Contingent Liabilities All discernible risks are accounted for in determining the amount of all known liabilities. The Company's share of any contingencies and capital commitments of a subsidiary for which the Company is also liable severally or otherwise are also included with appropriate disclosure. Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events or present obligations where the transfer of economic benefit is not probable or cannot be reliably measured. Contingent liabilities are not recorded in the balance sheet but are disclosed unless they are remote. INCOME STATEMENT Revenue Recognition. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the group and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and sales taxes and 29

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

after eliminating sales within the group. The following specific criteria are used for the purpose of recognition of revenue. Revenue from sale of goods is recognized in the Income Statement when the significant risks and rewards of ownership have been transferred to the buyer. Gains & losses of a nature on the disposal property, plant & equipments have been accounted for in the Income Statement Dividend income is recognized on a cash basis.

3.16

Income Tax Expense Income Tax Expenses comprises Current Taxation and Deferred Taxation.

3.16.1 Current Tax Provision for current taxation is based on the profit of the year adjusted to arrive at the taxable profit in accordance with the Inland Revenue Act No. 10 of 2006 and amendments there to. 3.16.2 Deferred Tax

3.15

Expenditure Recognition Deferred Taxation has been provided for under the liability method on temporary differences as at the Balance Sheet date between the tax bases of assets and liabilities, and their carrying amounts for financial reporting purposes. Deferred Tax assets are recognised for all temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The carrying amount of Deferred Tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the Deferred Tax assets to be utilised. Unrecognised Deferred Tax assets are reassessed at each Balance Sheet date and are recognised to the extent that future taxable profit will be available to recover the Deferred Tax assets. Deferred Tax assets and liabilities are measured at tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on Annual Reports & Accounts 2012

3.15.1 Operational Expenses Expenses are recognized in the Income Statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to income in arriving at the profit for the year. 3.15.2 Financial Expenses Interest expenses are recognised on an accrual basis 3.15.3 Borrowing Costs Borrowing Costs that are directly attributable to the construction of a qualifying asset have been capitalized. Other borrowing costs are recognized as expenses in the period in which they are incurred.

30

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

tax rates that have been enacted or substantially enacted by the Balance Sheet date. 3.17 Earnings Per Share The Group presents its earnings per share based on the consolidated profit for the year in accordance with the requirements of Sri Lanka Accounting Standard 34 Earnings per share (SLAS-34.) 3.18 Related Party Transactions Disclosure has been made in respect of transactions in which one party has the ability to control or exercise significant influence over the financial and operating p o l i c e s / d e c i s i o n s o f t h e o t h e r, irrespective of whether a price is charged or not. 3.19 Cash Flow Statement The Cash Flow Statement has been prepared using the indirect method. Interest paid is classified as an Operating cash flows, interest received is classified as an investing cash flow, while dividends paid are classified as a financing cash flow for the purpose of presentation of the Cash Flow Statements. 4 NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT BALANCE SHEET DATE The Institute of Chartered Accountants of Sri Lanka has issued a new volume of Sri Lanka Accounting Standards which will become applicable for financial periods beginning on or after 1st January 2012. Accordingly, these Standards have not been applied in preparing these consolidated financial statements as they Annual Reports & Accounts 2012

were not effective for the year ended 31st March 2012. These Sri Lanka Accounting Standards comprise Accounting Standards prefixed both SLFRS (corresponding to IFRS) and LKAS (corresponding to IAS). Application of Sri Lanka Accounting Standards prefixed SLFRS and LKAS for the first time shall be deemed to be an adoption of SLFRSs. The Group / Company is currently in the process of evaluating the potential effects of these Standards on its consolidated financial statements and the impact on the adoption of these Standards have not been quantified as at Balance Sheet date.

31

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

For the Year ended 31st March 05. REVENUE Gross Revenue Less: VAT BTT NBT Net Revenue Refer Note 30 for segmental analysis of revenue. 06. OTHER OPERATING INCOME Rent Income Insurance Commission Tea Sample Sales Profit on Disposal of Property, Plant, & Equipment Dividend Income from Subsidiaries Gain on Foreign Currency Loss from Deemed Disposal Sundry Income 07. PROFIT FROM OPERATIONS

Company 2012 2011 Rs.000 Rs.000 904,313 (96,067) (14,969) 793,277 765,147 (81,980) (18,016) 665,151

Group 2012 2011 Rs.000 Rs.000 1,995,292 2,633,541 (105,626) (16,577) (88,315) (671) (19,673)

1,873,089 2,524,882

2,400 72 25 10,494 1,399 48 14,438

2,877 60 1,392 8,049 1,018 17 13,413

2,400 72 931 25 1,399 (1,880) 48 2,995

2,877 60 444 1,392 4,541 849 10,163

Profit from operations is stated after charging all the expenses including followings; Depreciation Directors Emoluments Auditors Remuneration (a) Audit Fee (b) Audit Related Services (c) Non Audit Services Fee Defined Benefits Plan- Gratuity Defined Contribution Plan- EPF & ETF Personnel Costs 08. NET FINANCE EXPENSES Finance Income Interest Income Finance Expenses Interest on Term Loans Overdraft Interest & Bank Charges Debit Tax Loss on Foreign Currency Net Finance Expense 9,497 25,542 10,142 35,684 26,187 9,640 11,660 6,372 1,225 19,257 9,617 8,774 25,541 27,567 1 16,347 69,456 60,682 7,102 38.514 9,630 3,002 51,146 44,044 25,934 24,545 200 45 113 3,141 9,110 72,396 23,537 32,015 165 45 90 5,500 9,056 61,847 27,438 30,747 460 45 219 3,653 10,423 91,840 24,679 36,683 364 45 195 6,848 10,265 64,344

32

Annual Reports & Accounts 2012

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

Company For the Year ended 31 March 09 INCOME TAX (REVERSAL)/EXPENSE Current Tax Expense Current Tax Profits for the Year (Note 9.1) Under Provision for the Prior Years Charged Social Responsibility Levy Deferred Tax Expense Deferred Tax Liability Recognised / (Reversed) (Note 19.2) Total Income Tax Expense 9.1 Reconciliation to Accounting Profits and Taxable Income Profit Before Taxation Disallowed Expenses and Provisions Aggregate Allowable Items Taxable Profit Current Tax on Profits for the Year Effective Tax Rate Effective Tax Rate of Total Income Tax Expense 9.2 Analysis of Tax Losses Tax Losses originated during the year Tax Losses utilized during the year Balance at the end of the year (a) Company The profits and income of the Company is liable for income tax at 28%. (b) Subsidiaries Comark Lanka (Pvt) Ltd is liable for income tax at 28%. Castalloys (Pvt) Ltd is liable for income tax at 10%. (11,950) 3,200 (8,750) 14,017 17,862 (11,950) 0% -28% 24,199 58,643 45,731 16,006 66% 61% (3,909) (3,909) (3,909) (1,591) (1,591) 14,655 16,006 240 16,246
st

Group 2012 Rs.000 2011 Rs.000

2012 Rs.000

2011 Rs.000

5,557 242 5,799 (8,959) (8,959) (3,160)

29,649 137 449 30,235 (1,914) (1,914) 28,321

17,801 28,823 2,951 5,799 33% -18%

52,875 63,933 75,485 29,649 56% 54%

(43,829) (37,111)

(43,673) (41,323)

(27,545) 3,200 (24,345)

Classic Teas (Pvt) Ltd is liable for income tax at 15% on its export turnover and 28% on its profit from other activities. Comark Engineering (Pvt) Ltd is liable for income tax at 10% (c) Social Responsibility Levy (SRL) was abolished with effect from 1st April 2011 (2011 - 1.5% of income tax expense)

Annual Reports & Accounts 2012

33

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

10. BASIC EARNINGS PER SHARE The Company's & the Group's earnings per share is calculated on the profit attributable to the shareholders of Lanka Aluminium Industries PLC over the weighted average number of ordinary shares in issue during the year, as required by Sri Lanka Accounting Standard 34 (Revised 2005) - "Earnings per Share". The following reflects the earnings and share data used for the computation of Basic Earnings per Share. Company For the Year ended 31 March 2012 2011 Amounts used as the Numerator Net Profit Attributable to Ordinary Shareholders (Rs. 000) 17,926 9,544 Number of Ordinary Shares in issue used as the Denominator Weighted Average Number of Ordinary Shares 13,702,823 13,702,823 Basic Earnings Per Share (Rs.) 1.31 0.70 Group 2012 2011 17,119 20,289

13,702,823 13,702,823 1.25 1.48

There were no potential dilutive ordinary shares outstanding at any time during the year. Therefore, diluted Earning Per Share is same as Basic Earning Per Share shown above. 11. PROPERTY PLANT & EQUIPMENT 11.1 COMPANY
Land Buildings Machinery Motor & Electrical Vehicles Sub Station & A.P.U. Furniture & Generator Capital Fittings Lab & WIP Equipment Equipment Tools & Dies Total 2012 Total 2011

Cost / Valuation

Rs.000 Rs.000

Rs.000

Rs.000 42,512 10 (7,188) 35,334

Rs.000 155,325 20,769 (1,112) 174,982

Rs.000 Rs.000 Rs.000 Rs.000 9,859 9,859 1,184 557,437 - 150,390 - (11,369) 28,566 88,248 - (8,428) 29,750 776,278 515,547 43,535 (1,645) 557,437

Balance as at 1st April 73,664 75,582 199,311 Revaluation 60,647 89,743 Transferred to Revaluation Reserve - (11,369) Additions during the year 3,343 35,560 Disposals during the year (128) Balance as at 31st March 134,311 157,299 234,743 Depreciation As at 1st April Charged for the year Depreciation on Assets Disposals Transferred to Revaluation Reserve Balance as at 31st March Carrying value As at 31st March 2012 As at 31st March 2011

8,848 180,870 2,521 4,394 (128) - (11,369) - 185,136

24,241 7,110 (7,091) 24,260

121,049 11,909 (625) 132,333

9,859 9,859

- 344,867 322,130 - 25,934 23,537 - (7,844) (800) - (11,369) - 351,588 344,867

134,311 157,299 73,664 66,734

49,607 18,441

11,074 18,271

42,649 34,276

29,750 424,690 212,570

11.2 The Land & Building of the Company was revalued to market values by Mr. K. Arther Perera, a independent certified valuer, as at 31st March 2012 and the book value was written up to correspond with the valuation. Had the asset been carried at cost less depreciation, the written down value for building would have been Rs.30,660,000/- (2011Rs.31,567,000/-) The deferred tax effect on revaluation surplus arrising from the revaluation of freehold building during the year amounting to Rs. 25Mn has been adjusted against the revaluation reserve in the statement of changes in equity. 11.3 The WIP refers to the building work in progress.

34

Annual Reports & Accounts 2012

Notes to the Financial Statement


11. Property, Plant & Equipment 11.4 GROUP
Land

LANKA ALUMINIUM INDUSTRIES PLC

Buildings Machinery Motor Furniture Generator Capital & Vehicles Fittings, & WIP Electrical Tools Equipment Substation & Dies & A.P.U.

Total

Total

2012

2011

Cost / Valuation

Rs.000 Rs.000

Rs.000 Rs.000 Rs.000 Rs.000 Rs.000

Rs.000 Rs.000

As at 1st April 89,664 Revaluation 76,647 Transferred to Revaluation Reserve Additions during the year Disposals during the year As at 31st March 166,311 Depreciation As at 1st April 2010 Charge for the Year Depreciation on Assets Disposals Transferred to Revaluation Reserve As at 31st March Carrying value As at 31st March 2012 As at 31st March 2011 11.5

81,107 216,200 42,775 155,719 15,658 1,184 602,307 557,706 93,715 - 170,362 (11,369) - ((11,369) 3,344 36,363 3,660 20,915 - 28,566 92,848 46,246 - (8,427) (1,645) (128) (7,188) (1,111) 166,797 252,435 39,247 175,523 15,658 29,750 845,721 602,307

- 10,722 193,426 24,503 121,423 13,852 - 2,687 5,231 7,566 11,954 (128) (7,091) (625) - (11,369) - 2,040 198,529 24,978 132,752 13,852

- 363,926 340,047 - 27,438 24,679 - (7,844) (800) - (11,369) - 372,151 363,926

166,311 164,757 89,664 70,385

53,906 14,269 22,774 18,272

42,771 34,296

1,806 29,750 473,570 1,806 1,184 238,381

The deferred tax effect on revaluation surplus, arising from the revaluation of freehold building during the year amounting to Rs. 25 mn has been adjusted against the revaluation reserve in the Statement of Changes in Equity. There is no deferred tax effect on revaluation surplus of land and building revalued by Castalloys (Pvt) Ltd.

11.6

Freehold land and freehold building of the Company are stated based on a valuation performed by Mr. K. Arthur perera, A.M.I.V (Sri Lanka), an independent professional valuer as at 31st March 2012, the details of which are as follows;

Company Property & Location

Asset Category

No.20, Temple Rd, Freehold Land Ekala, Ja-Ela. Building Group Property & Location

MethodCarrying Value ofCarrying Value ofCarrying Value of of Valuation Revalued Assets Revalued Assets Revalued Assets if carried at cost 2012 2011 Market Approach 722 134,311 73,664 Market Approach 30,660 157,299 66,734

Asset Category

No.60, Temple Rd, Freehold Land Ekala, Ja-Ela. Building 11.7

Carrying Value of Revalued Assets if carried at cost Market Approach 1,522 Market Approach 33,097

Method of Valuation

Carrying Value of Carrying Value of Revalued Assets Revalued Assets 2012 2011 166,311 89,664 164,756 71,047

The Land & Building of the Company was revalued to market values by Mr. K. Arther Perera, a independent certified valuer, as at 31st March 2012 and the book value was written up to correspond with the valuation. Had the asset been carried at cost less depreciation, the written down value for building would have been Rs. 30,660,000/(2011- Rs. 31,567,000/-). The Land & Building of the Castalloys (Pvt) Limited was revalued to market values by Mr. K. Arther Perera, a independent certified valuer, as at 31st March 2012 and the book value was written up to correspond with the valuation. Had the asset been carried at cost less depreciation, the written down value for building would have been Rs. 2,437,232/ (2011- Rs.2,591,167/-). Property, Plant and Equipment includes fully depreciated assets which are in the use of normal business activities having of a cost of Rs. 274,164Mn.

11.8

11.9

Annual Reports & Accounts 2012

35

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

As at 31st March 2012 Rs.000 12. GOODWILL Balance at the beginning of the year Balance at the end of the year -

Company 2011 Rs.000 2012 Rs.000 116 116

Group 2011 Rs.000 116 116

12.1Impairment Test - Goodwill on Consolidation Goodwill is allocated to cash generating units (CGU) operative within the Group. When testing for impairment on goodwill, the recoverable amount of a cash generating unit is determined on the basis of fair value less cost to sell and value-in-use, whichever is higher. The fair value less cost to sell is computed based on earnings multiples of comparable companies (listed), adjusted to reflect the liquidity. Value-in-use calculations are cash flow projections based on financial budgets, which are approved by management, typically covering a five-year period. The cash flows were discounted at an appropriate discount rate. 2012 2011 No. of Holding Cost Directors No. of Holding Cost Directors Shares % Valuation Shares % Valuation 000 Rs.000 Rs.000 000 Rs.000 Rs.000 13.1 Investments in Subsidiaries Non Quoted (Company) Comark Lanka (Pvt) Ltd 100 100% 1,000 1,000 100 100% 1,000 1,000 Comark Engineers (Pvt) Ltd 200 51% 2,000 2,000 200 66.67% 2,000 2,000 Castalloys (Pvt) Ltd 780 100% 600 600 780 100% 600 600 Classic Teas (Pvt) Ltd 3,000 69.79% 38.875 38.875 3,000 69.79% 38,875 38,875 42,475 42,475 42,475 42,475 13.2 Long Term Investments Company 2012 2011 Rs. 000 Rs. 000 5,104 5,104 30,958 30,958 36,062 36,062 Group 2012 2011 Rs. 000 Rs. 000 5,104 5,104 30,958 30,958 36,062 36,062 13. INVESTMENTS

Unquoted Investments in Equity Shares (Note 13.3) Quoted Investments in Equity Shares (Note 13.4)

13.3 Unquoted Investments in Equity Shares (Company/Group) 2012 2011 No. of Holding Cost Directors No. of Holding Cost Directors Shares % Valuation Shares % Valuation 000 Rs.000 Rs.000 000 Rs.000 Rs.000 Timpex (Pvt) Ltd 510 2% 5,104 5,104 510 2% 5,104 5,104

13.4 Quoted Investments in Equity Shares (Company/Group) 2012 2011 No. of Holding Cost Directors No. of Holding Cost Directors Shares % Valuation Shares % Valuation 000 Rs.000 Rs.000 000 Rs.000 Rs.000
ACME Printing & Packaging PLC

1,836

7.17% 30,958

35,802

1,836

7.17% 30,958

39,117

36

Annual Reports & Accounts 2012

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

As at 31st March 14. INVENTORIES Raw Materials Work in Progress Finished Goods Spare Parts & Consumables Goods in Transit Others

Company 2012 2011 Rs.000 Rs.000 60,164 17,378 44,176 17,511 7,126 11,876 158,231 30,460 15,751 52,923 15,533 4,438 19,274 138,379

Group 2012 Rs.000 87,339 17,418 195,747 17,805 7,126 11,876 337,311 2011 Rs.000 107,055 37,047 67,382 15,673 4,438 28,661 260,256

Inventories of Classic Teas (Pvt) Ltd are on an agreed to mortgage condition, againest short term bank borrowings. 15. TRADE & OTHER RECEIVABLES Trade Receivables Other Receivables Advances & Deposits

185,188 7,529 6,229 198,946

116,833 8,340 6,341 131,514

428,838 13,981 43,185 486,004

451,799 51,877 10,728 514,404

Trade receivable of Classic Teas (Pvt) Ltd are on an agreed to mortgage condition, againest short term bank borrowings. 16. AMOUNTS DUE FROM RELATED PARTIES Comark Lanka (Pvt) Ltd Comark Engineering (Pvt) Ltd. Acme Printing and Packaging PLC Comark Agencies (Pvt) Ltd

24,553 8.922 33,475

18,250 21,144 197 39,591

104 104

197 197

Lanka Aluminium Industries PLC Charging interest at the rate of 10% per annum from Comark Lanka (Pvt) Ltd and no interest is charged from Comark Engineers (pvt) Ltd and Acme printing packagingas as it is in the normal course of business. 17. CASH & CASH EQUIVALENTS Cash in Hand Cash at Bank Cash & Cash Equivalents Bank Overdraft Cash and Cash Equivalents as per the Cash Flow Statement

275 87,595 87,870 (110,736) (22,866)

184 79,046 79,230 (78,922) 308

387 141,351 141,738 (133,371) 8,367

1,382 134,482 135,864 (89,482) 46,382

A renewable fixed deposit (FD No -115031035430) of Rs.65Mn at Hatton National Bank PLC has been pledged against short term bank borrowings. 18. STATED CAPITAL 13,702,823 Ordinary Shares Annual Reports & Accounts 2012 137,028 137,028 137,028 137,028 37

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

As at 31 March

st

Company 2012 2011 Rs.000 Rs.000

Group 2012 Rs.000 2011 Rs.000

19. DEFERRED TAX Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against tax liabilities and when the deferred taxes related to the same fiscal authority. 19.1 Deferred Tax Liabilities Deferred Tax Asset (Note 19.3) Deferred Tax Liability (Note 19.4)

9,079 (38,757) (29,678)

8,249 (16,708) (8,459)

14,741 (39,741) (25,000)

9,497 (18,328) (8,831)

The gross movement on the deferred tax asset is as follow: Balance as at the beginning of the Year Impact on Tax Rate change Originating during the Year Deferred Tax on Revaluation Surplus Net Deferred Tax Charged/(Reversed) for the Year (Note 19.2) Balance as at end of the Year 8,459 (3,909) 25,128 21,219 29,678 10,050 (2,115) 524 (1,591) 8,459 8,831 (8,959) 25,128 16,169 25,000 10,711 (2,816) 936 (1,880) 8,831

19.2 Deferred Tax Charge/(Reversed) for the Year Property, Plant & Equipment 22,049 Employee Benefits 1,620 Tax Losses (2,450) Net Deferred Tax (Charge)/Reversal for the Year 21,219 19.3 Deferred Tax Asset Tax Effect on Employee Benefits Tax effect on Tax Losses Total Deferred Tax Assets 19.4 Deferred Tax Liability Tax effect on Property, Plant & Equipments Total Deferred Tax Liability 20. EMPLOYEE BENEFITS

(1,346) (245) (1,591)

21,413 1,573 (6,817) 16,169

(2,022) 142 (1,880)

6,629 2,450 9,079

8,249 8,249

7,924 6,817 14,741

9,497 9,497

38,757 38,757

16,708 16,708

39,741 39,741

18,328 18,328

20.1. Defined Contribution Plan Following contributions have been made to Employees' Provident Fund and Employees' Trust Fund during the year. Employees' Provident Fund Employers' contribution 7,287 7,244 8,843 8,407 Employees' contribution 4,871 4,830 5,895 5,604 Employees' Trust Fund 38 1,823 1,811 2,211 2,102

Annual Reports & Accounts 2012

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

As at 31st March 20.2 Defined Benefit Plan Balance at the beginning of the Year Provision for the Year Payments during the Year Balance as at end of the Year

Company 2012 2011 Rs.000 Rs.000 29,462 3,141 32,603 (8,928) 23,675 24,269 5,500 29,769 (307) 29,462

Group 2012 2011 Rs.000 Rs.000 33,917 3,653 37,570 (8,928) 28,642 27,540 6,848 34,388 (471) 33,917

The gratuity liability of Group and the Company as at 31st March 2012 amounting to Rs. 28,642/- and Rs.23,675/- (2011 Rs. 33,917/- and Rs. 29,462/-) respectively are made based on an actuarial valuation carried out by Mr.Poopalanathan,AIA of Acturial & Management Consultants (Pvt) Ltd. As recommended by the Sri Lanka Accounting Standards No. 16 (Revised 2006) - Employee benefits", the "Projected Unit Credit " (PUC) method has been used in this valuation. The principal assumptions used are: - Rate of discount 11%p.a. - Rate of salary increase 10%p.a. - Retirement age 55 years - Mortality A 67/70 mortality table, issued by the Institute of Actuaries, London was used. - Staff turnover sliding scale by the age of employee from 20% - 0% - The company is a going concern. 20.4. The above has not been externally funded 21. TRADE & OTHER PAYABLES Trade Creditors Other Creditors Unclaimed Dividend Accrued Expenses

3,857 39,301 1,326 12,172 56,656

2,990 7,201 1,227 12,444 23,862

14,825 46,705 1,326 12,254 75,110

45,123 9,537 1,227 15,582 71,469

22. AMOUNTS DUE TO RELATED PARTIES Castalloys (Pvt) Ltd. Texpo Industries Ltd.

3,260 330 3,590

1,453 330 1,783

330 330

330 330

23. SHORT TERM BORROWINGS Balance as at beginning of the Year Obtained during the Year Exchange Loss on Revaluation Repayments during the Year Balance at end of the Year Payable within One Year Payable after One Year

168,757 932,941 (830,094) 271,604 245,440 26,164 271,604

52,139 529,538 (412,920) 168,757 168,757 168,757

514,171 2,230,076 27,352 (2,164,340) 607,259 581,095 26,164 607,259

457,787 2,468,309 (2,411,925) 514,171 514,171 514,171

Current bank borrowings were obtained to fulfill working capital requirements. Securities for these borrowings are inventories, trade receivables and fixed deposits as disclosed in Note 14, Note 15 and Note 17 respectively. Annual Reports & Accounts 2012 39

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

For the Year ended 31st March 2012 24. CONTINGENT LIABILITIES There were no material contingent liabilities as at the Balance Sheet date. 25. CAPITAL COMMITMENTS There were no material capital commitments outstanding as at the balance sheet date, which would require adjustments to or disclosures in the Financial Statements. (2011 - Nil) 26. RELATED PARTY TRANSACTIONS 26.1 Key Management Personnel Information According to Sri Lanka Accounting Standard 30 (Revised 2006) Related Party Disclosures, Key Management Personnel are those having authority and responsibility for planning and controlling the activities of the Group as well as the subsidiaries, directly or indirectly. Compensation paid to / on behalf of key management personnel of the companies are as follows: Company 2012 2011 Rs.000 Rs.000 24,545 32,015 9,653 2,891 34,198 34,906 Group 2012 2011 Rs.000 Rs.000 30,747 36,683 9,920 3,134 40,667 39,817

Short Term Employee Benefits Post Employment Benefits

In addition to the above, the Company also provided non cash benefits to the Key Management Personnel. Mr. S.T.Nagandra, Mr.J.D.Peiris, Mr.V.R.Chandraria, Mr.J.M.Swaminthan, and Mr.R.Seevaratnam, Mr. H.D.S Amarasooriya, Mr. C. L. K. P Jayasooriya, Mr. D. Weerakody the directors of the Company are also directors of the following companies as set out below and with transaction in Note26.2 have been carried out. Name of the Related Castalloys (Pvt) Limited Name of the Director Mr. J.D. Peiris Mr. J.M. Swaminathan Mr. J.D. Peiris Mr. J.M. Swaminathan Mr. J.D. Peiris Mr. R. Seevaratnam Mr. J.D. Peiris Mr. N.M. Chandaria Mr. J.M. Swaminathan Mr. R. Seevaratnam Mr. Paras Chandaria Mr. H. D. S. Amarasuriya Mr. C. L. K. P. Jayasuriya Mr. D. S. Weerakkody

Comark Lanka (Pvt) Limited

Classic Teas (Pvt) Limited

Acme Printing & Packaging PLC

40

Annual Reports & Accounts 2012

Notes to the Financial Statement

LANKA ALUMINIUM INDUSTRIES PLC

Acme Solutions (Pvt) Limited

Mr. J.D. Peiris Mr. J.M. Swaminathan Mr. R. Seevaratnam Mr. J.D. Peiris Mr. J.D. Peiris Mr. J. M. Swaminathan Mr. R. Seevaratnam Mr. J.D. Peiris Mr. R. Seevaratnam Mr. J.M.Swaminathan

Texpro Industries Limited Metecno Lanka (Pvt) Limited

Comark Engineers (Pvt) Ltd

26.2 Transactions with related entitles The Group carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri Lanka Accounting Standard 30 " Related Party Disclosure " The details of which are reported below: 26.2 (a) Transactions with Subsidiaries Name of Related Entities Castalloys (Pvt) Limited Nature of Transaction Reimbursement: Security and Sales Charged: Conversion Charges & Purchases Reimbursement: Rent and Interest Charged: Service Charges Sales of windows Reimbursement: Rent Charged: Sales & Extrusions Scrap Sales Reimbursement: Salary & Accounting Fees Charged: Sale of Tea Amount 2012 Rs. 000 480 16,929 2,387 2,622 2,277 720 11,683 Nil 300 140 Amount 2011 Rs. 000 563 12,721 4,751 2,651 1,829 240 17,368 144 466 66

Comark Lanka (Pvt) Limited

Comark Engineers (Pvt) Ltd

Classic Teas (Pvt) Limited

26.2 (b) Transactions with Other Related Entities ACME Printing & Packaging PLC Reimbursement: Salary & Accounting Fees Rent & A.G.M. Expenses Charges: Telephone Charges 2,808 135 2,820 172 166

Annual Reports & Accounts 2012

41

LANKA ALUMINIUM INDUSTRIES PLC

Notes to the Financial Statement

Texpo Industries Limited

Reimbursement: Salary, Printing Expenses. Rent, Electricity, Advertisements, Water and Staff Welfare. Sales of Motor Cycle Charged: Telephone Charges Local Sales Reimbursement: Salary and Accounting Fees

4,066 121 1,568 -

4,477 1,533 50

Metecno Lanka (Pvt) Limited

3,662

3,612

Amounts Payable to/Receivable from Related Parties are disclosed in Note No 16 and 22 respectively to the financials statements. 27. EVENTS AFTER THE BALANCE SHEET DATE There were no material events occurring after the balance sheet date as at 31st March 2012 that require adjustments to or disclosure in the Financial Statements, other than those disclosed below. 27.1 Proposed Dividends for approval at AGM The Board of Directors has recommended a first and final dividend of Rs.0.50 per share amounting to Rs.6.85 million for the year ended 31st March 2012, which is to be approved by the shareholders at the Annual General Meeting to be held on 24th September 2012. As stipulated by Sri Lanka Accounting Standard No. 12 " Events After the Balance Sheet Date", the proposed dividend is not recognized as a liability as at 31st March 2012 in the Financial Statements. Compliance with Section 56 and 57 of the Companies Act No. 7 of 2007 As required by Section 56 of the Companies Act, No.7 of 2007, the Board of Directors of the Company has certified that the Company satisfies the Solvency Test in accordance with the Section 57, prior to recommending the first and final dividend for the year ended 31st March 2012. A statement of solvency completed and duly signed by the Directors on 16thAugust 2012 has been audited by M/S KPMG . 27.2 Subsequent to the balance sheet date, a case has been instituted by Alutec Extrusion (Pvt) Limited against the Company on 12th August 2012 bearing No. HC/Civil/27/2012(P) in respect of alleged disputes arising out of Intellectual Property Act No.36 of 2003. The matter has been fixed for inquiry. 28. LITIGATION AND CLAIM There are no litigations and claims as at the balance sheet date. 29. COMPARATIVE FIGURES Where necessary information has been rearranged to conform to current years presentation and classification. 30. SEGMENTAL INFORMATION - GROUP Refer next page. 31. DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors is responsible for the preparation and presentation of these financial statements, in accordance with the applicable regulatory requirements. 42 Annual Reports & Accounts 2012

30. SEGMENTAL INFORMATION GROUP SEGMENTAL INFORMATION - The primary segments (Business Segments) (amounts expressed in Sri Lankan Rs. 000) (a) Segment results are as follows Imported Extrusions 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 Billets Tea Fabrication Eliminations Group

Extrusions

For the year ended 31st March 2011 665,151 74,880 77,977 16,929 12,721 24,199 12,892 9,249 3,959 2,766

2012

2011

Notes to the Financial Statement

Annual Reports & Accounts 2012


960,064 1,792,863 66,960 9,062 (39,020) (32,892) 1,873,089 2,524,882 15,078 25,867 14,371 (1,138) (10,494) (8,068) 17,801 52,875 212,570 - 42,527 22,320 78,537 388,714 40,775 28,848 4,573 3,072 679,821 40,775 28,848 47,100 25,392 2,807 453,019 455,826 3,240 3,456 251 500,636 28,006 30,924 503,876 31,462 31,175 473,570 238,381 (42,475) 36,062 36,062 (41,473) 977,180 910,721 (83,948) 1,450,750 1,185,164 116 116 1,486,928 1,185,280 ======== ======== 37,921 278,501 28,059 20,602 316,422 28,059 20,602 928 1,091 2,019 1,582 1,177 2,759 4,388 370,298 374,686 3,233 80 12 397,453 15,791 29,337 400,686 15,871 29,349 (41,459) - (41,459) 79,806 789,906 869,712 ======= 42,748 685,611 728,359 ====== 43,535 23,537 5,500 803 570 78 63 570 78 434 434 2,382 555 1,270 266 17 92,848 27,438 3,654 46,246 24,679 6,848

Total Revenue Profit Before Taxation

793,277 14,017

(b) Segment Assets and liabilities are as follows SEGMENT ASSETS

Property, Plant & Equipment Investments Total Current Assets

424,690 78,537 478,522 981,749

Unallocated Assets Total Segment Assets

SEGMENT LIABILITIES

Non Current Liabilities Total Current Liabilities Total Segment Liabilities

49,839 402,495 452,334

(c) Other Information

Cost incurred during the year to acquire Property Plant & Equipments Depreciation Gratuity

88,248 25,934 -

LANKA ALUMINIUM INDUSTRIES PLC

The above segmentation for the group is based on the business segments. However, the company does not distinguish its products into different Geogrophical Segments as they are insignificant.

43

LANKA ALUMINIUM INDUSTRIES PLC

Five Year Summary

Year ended 31st March 2012 Rs. 000 2011 Rs. 000 2010 Rs. 000 2009 Rs. 000 2008 Rs. 000

Operating Results Turnover (net) Profit Before Taxation Income Tax Expense Profit After Taxation Shareholders Funds Stated Capital Reserves Shareholders Funds Dividends Assets Employment Current Assets Current Liabilities Working Capital Non Current Assets Assets Employed Non Current Liabilities Net Assets Rations and Statistics Year ended 31st March 492,448 (416,422) 76,026 503,227 579,253 (79,517) 499,736 388,714 (278,501) 110,213 291,107 401,320 (37,921) 363,399 303,952 (151,112) 152,840 252,463 405,303 (34,319) 370,984 242,781 (117,524) 125,257 261,793 387,050 (34,337) 352,713 243,535 (102,520) 141,015 246,425 387,440 (38,149) 349,291 137,028 362,708 499,736 6,851 137,028 226,371 363,399 17,129 137,028 233,956 370,984 10,278 137,028 215,685 352,713 17,129 137,028 212,263 349,291 17,129 793,277 14,017 3,909 17,926 665,151 24,199 14,655 9,544 525,251 46,701 18,152 28,549 660,371 28,671 8,120 20,551 716,116 57,907 29,232 28,675

2012 Rs. 1.31 0.61 0.50 (0.75) 36 19.19 1.99 0.05 50 1.54

2011 Rs. 0.70 1.38 1.25 0.50 27 81.26 2.21 0.05 47 3.52

2010 Rs. 2.08 0.58 0.75 (0.50) 27 13.10 2.75 0.09 33 18.39

2009 Rs. 1.50 (0.59) 1.25 26 15.00 5.56 0.09 30 3.01

2008 Rs. 2.09 (0.50) 1.25 0.65 25 15.31 3.91 0.16 29 4.18

Earnings per Share Year on Year Growth in EPS Dividends per Share Year on Year Growth in DPS Net Assets per Share Year end Price Earning Ratio Dividend Yield Operating Return on Investment Borrowings as a % of Total Assets Interest Cover

44

Annual Reports & Accounts 2012

LANKA ALUMINIUM INDUSTRIES PLC

Instruction for Completion of Form of Proxy

INSTRUCTIONS FOR COMPLETION OF FORM OF PROXY 1. Kindly perfect the Form of Proxy by filling in legibly your full name and address, and your instructions as to voting, by signing in the space provided and filling in the date of signature. 2. Please indicate with a 'X' in the cages provided how your proxy is to vote on the Resolutions. If no indication is given or if there is any doubt as to how the Proxy should vote by reason of the manner in which the instructions are carried out, the proxy in his/her discretion may vote as he/she thinks fit. 3. The completed Form of Proxy should be deposited at the Registered Office of the Company at 1st Floor, Lakshman's Building, 321, Galle Road, Colombo 03, not less than 48 hours before the time appointed for holding the meeting. 4. If the Form of Proxy is signed by an attorney, the relative power of attorney should accompany the completed form of proxy for registration, if such power of attorney has not already been registered with the Company. Note: If the shareholder is a Company or body corporate, Section 138 of the Companies Act No.7 of 2007 applies to corporate shareholders of Lanka Aluminium Industries PLC. Section 138 provides for representation of Companies at meetings of other Companies. A Corporation, whether a Company within the meaning of this Act or not, may, where it is a member of another Corporation, being a Company within the meaning of this Act, by resolution of its Directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company. A person authorised as aforesaid shall be entitled to exercise the same power on behalf of the Corporation which it represents as that Corporation could exercise if it were an individual shareholder of that other Company.

46

Annual Reports & Accounts 2012

1st Floor, Lakshmans Building, 321, Galle Road, Colombo 03. Tel : 011 5503300, 011 2565951-53 Fax : 011 5503381, 011 2576944 E-mail : sales@lanka-aluminium.com | marketing@lanka-aluminium.com Web : www.lankaaluminium.lk | www.aluminium.lk REGIONAL SALES & SERVICE CENTRES 545 1/A, Sri Sangaraja Mawatha, Colombo 10. Tel/Fax : 011 2388216 132, Dehiwala Road, Maharagama. Tel/Fax : 0115 553301 FACTORY 20, Remple Road, Ekala-Jaela. Tel: 011 5354700-1, 011 2236941 Fax : 011 2236942

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