Annual Report 2008 - Lanka Sathosa – Lanka Sathosa

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Contents

Corporate Information 3

Vision & Mission 5

Chairman's Message 7

Director's Repot 9

Financial Review 10

Corporate Governance 11

Statements of Value Added 12

Auditor's Report & Financial Statements 13

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Corporate Information

The Company Lanka Sathosa Limited

Registered Address No. 108, Negris Building, York Street, Colombo 01.

Legal Status Fully Government owned Company incorporated in Sri Lanka under the Companies Act No. 17 of 1982

Company Registration No. PB 1326 [Old No. N (PBS) 1290]

Principal Place of Business No. 108, Negris Building, York Street, Colombo 01.

Tel. : 94-11-2436301 – 2

Fax : 94-11-2437583

Board of Directors Mr. K. Nalin R. Fernando - Chairman / Director Dr. R. M. K. Ratneyeke - Secretary to the Ministry Mrs. D. S. R. D. C. T. Rathnayaka - Asst. Secretary to the Ministry Mr. Sajith Ruchika Attygalle - Director General, Dept of Fiscal Policy Mr. D. Jeewanadan - Senior Asst. Secretary to the Ministry Mr. D. Widanegamachchi - Director General, Treasury Operation Mr. A. P. G. Kithsiri – Commissioner, Co-operatives & Society Registrar Mr. Errol Weerasinghe – Chairman, ORYX Benodar Co.

Secretary to the Board S. Wijewardena

Auditors M/S H. L. B. Edirisinghe & Co. Chartered Accountants 45, Braybrooke Street Colombo 02.

Bankers of the Company People's Bank, Corporate Branch, ANCL Building, D. R. Wijewardana Mawatha, Colombo 10.

Share Holders General Treasury – 45% Shares Co-operative Wholesale Establishment – 55% shares

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Our V sion

To maintain a long-term customer relationship by

providing quality consumer services.

Our Missi nTo offer high quality consumer goods at

reasonable prices through an island wide network

of sales outlets, by purchasing locally and as well

as importing and, to provide high quality customer

service.

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Chairman's Massage

It is with great pleasure that I present the Annual Report and the Final account for the year ended 31st December 2008. When I look back and see the progress we have made since inception in 2005 I can only be proud and satisfied that the noble objectives of the promoters of this company namely His Excellency the President

Mahinda Rajapakse and late Minister of Trade Honourable Jeyaraj Fernandopulle, have been achieved. The successive Trade ministers played a vital role in improving Lanka Sathosa Ltdto what it is today.

Presently armed with 100 outlets Lanka Sathosa Ltd is poised to become the largest outlet network in Sri Lanka which maintains one price in all the outlets. We have been instructed to expand the network upto 150 outlets during the next year and we are confident that we could make it with the assistance and guidance given by His Excellency the President and the Honourable Minister of Trade.

It has always been a challenge to any ruling government to provide employment opportunities to rural youth and help them improve their living conditions and Lanka Sathosa Ltd has done a yeoman service by providing 884 employment opportunities which in turn has eased the burden of the Government. In addition to controlling the retail prices in the country Lanka Sathosa Ltd has taken the initiative to reach the farmers in the remote areas, who are deprived of a reasonable price to their produce and offer them a better price thereby eliminating the middle men in the business who ultimately takes the profit out of the business.

We are mindful of the business trends and risks involved in the modern trade and efforts will be made to enhance the quality of the management information system to enable an accurate evaluation of risk and business decisions in order to optimize profits and provide a better service to our valued customers. I take this opportunity to place on record my sincere appreciation of the Board of Directors for their contribution towards our success, the Management team, staff at all levels, our suppliers and our valued customers for patronizing us in our efforts to make Lanka Sathosa Ltd what it is today.

Nalin Fernando

Chairman

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Director's ReportThe Directors submit herewith their report together with the audited financial statement of the company for the year ended 31st December 2008.

The chairman's statements has described the company activities and strategies adopted during the year and the future plans of the company.

Profits & appropriations 2008 2007

Profit for the year after Taxation 11,872,772 (61,011)

Profit /loss Brought forward (20,141,702) (17,548,698)

Prior year adjustment (82,042) (2,531,993)

Retained Earnings (Loss) (8,350,973) (20,141,702)

Capital ExpenditureDuring the year company has incurred Rs. 43.6 M on capital expenditure mainly due to expansion of outlets.

Property Plant EquipmentThe movement in Property Plant & Equipment is given is note no. 09 to the financial statements.

ShareholdingPresently 97% of shares are held by the General Treasury and 3%by the CWE.

DirectorateAll the Directors listed on Corporate Information have been on the board throughout the year and expert for Mr. Errol Werasinghe all the other Directors are statutory appointments to the Board.

Director's Interest in Contracts.None of the Directors are either directly or indirectly interested in any existing or proposed contracts with the company as stated in note no 17 to the financial statements.

AuditorsMessrs HLB Edirisinghae & Co. Chartered Accountants have expressed their willingness to accept re-appointment as Auditors.

By the order of the Board S. WijewardenaCompany Secretary

16 – 09 – 2010

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Financial Review 2008

During the year 2008 Lanka Sathosa Ltd recorded a growth of 65% to achieve a turnover

of Rs. 3.6B while other competitors in the modern trade recorded only a 20% growth.

This growth is mainly attributed to the growth in the retail chain from 68 in year 2007 to

100 in 2008. The turnover per outlet has increased form Rs. 32 M to Rs. 36 M.

Gross profit margins have remained unchanged while income from other sources such

as Gondola income etc. almost doubled compared to the last year.

Distribution expenses have increased from 43% while administration expenses increased

from 60% due to new recruitments for outlet expansions. Salaries & wages have been

the highest expense of the company which amounts to 41% of the value added followed

up by 36% to expense creditors and 16% to Government as taxes.

During the year, profit from operations before taxes almost tripled from Rs. 6M in 2007

to Rs. 18M in 2008 though the turnover increased only by 65%. We were able to increase

the profit before taxes by a higher percentage due to cost reductions and economies of

scale.

Total assets increased from Rs. 32M to Rs. 66 M due to the expansion of the outlet

network and rent advances increased in keeping with the expansion program since

most of the buildings are being rented. During the year trading stock doubled in line

with the increased turnover and grocery items account for 70% of same. Though the

bank overdraft reflects a balance of Rs. 150 M, Lanka Sathosa Ltd does not have an

overdraft facility, thus it represents cheques issued but not presented to the bank. Plans

are being made already to expand the outlet network in keeping with Mahinda Chintana

to become the largest Super Market chain in Sri Lanka.

Finance Team

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Corporate Governance

The Company recognizes the need to adopt the code of best practice and good corporate

governance in order to safeguard shareholder rights and discharge its social responsibility.

Given below is a brief description of the measures adopted by the company.

Lanka Sathosa Ltd is managed by a Board of Directors consisting of Treasury and Trade

Ministry representatives including the Chairman who are experienced in the wholesale

and retail trade. The Board is responsible for the formulation of overall business policy

and strategy, providing leadership and guidance, determining priorities and setting

standards for the management and the conduct of the business. The Board meets at least

once a month and meets ore frequently if circumstances warrant. The Board of Directors

are committed to upholding the highest standards of integrity and transparency in

their governance of the company. The Chairman is entrusted with the responsibility of

monitoring the progress and implementing the policies of the company formulated by

the Board.

The Management of the company exercises its authority within the policy framework

established by the Board and the ethical framework and business practices inherent to

a government owned business entity, which demands that best practices are followed in

dealing with employees, customers, suppliers and the community at large. The guidelines

for the internal control system ensure that assets of the company are protected against

any unauthorized use or misappropriation and that proper records are maintained and

reliable information is received by the Board on a timely basis. The Board places great

emphasis on complete disclosure of both financial and non-financial information within

the bounds of commercial reality.

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Statement of value added 2008 2007

Creation of Value added

Gross revenue 3,649,439,020 2,212,832,759

Cost of Sales (3,251,129,572) (1,949,316,730)

Value addition from operations 398,309,448 263,516,029

Other Income 15,918,436 5,775,365

Total Value added 414,227,884 269,291,394

Distribution of value added

Salaries and Wages 171,291,102 41.4 103,006,191 38.3

Depreciation 10,425,995 2.5 7,099,173 2.6

Retained Profits 11,872,772 2.9 (61,011) 0.0

Taxes 68,115,279 16.4 39,918,835 14.8

Expense Creditors 152,522,736 36.8 119,328,207 44.3

414,227,884 100 269,291,394 100

41%

ProfitsProfits

SalariesSalaries

3%Depreciation

Depreciation

3% 16%

Expense

TaxesTaxes

Creditors37%

38%

0%

3% 15%

44%

ExpenseCreditors

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Independent Auditors Report

TO THE SHAREHOLDERS OF LANKA SATOSA LIMITEDReport on the Financial StatementsWe have audited the accompanying financial statements of Lanka Sathosa Ltd., which comprise the balance sheet as at December 31, 2008, statement of change in Equity, Income Statement and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management's Responsibility for the Financial StatementsManagement 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 misstatements, where 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 the 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 responsible assurance whether the financial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements 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"As stated in Note 13 to the financial statements, though gratuity has been provided in the financial statements the liability is not actuarially valued, which practice, in our opinion, is not in accordance with the Sri Lanka Accounting Standards."

In our opinion, except for the effect on the financial statements of the matter referred to in the preceding paragraph, so far as appears from our examination, the Company maintained proper accounting records for the year ended December 31, 2008 and the financial statement give a true and fair view of the Company's state of affairs as at December 31, 2008 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standard.

Report on Other legal and Regulatory RequirementsThese financial statements also comply with the requirements of Section 151(2) of the Companies Act No 07 of 2007.

HLB EDIRISINGHE & Co.Chartered Accountants

Colombo15-Sep-10

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LANKA SATHOSA LTDIncome Statement

FOR THE YEAR ENDED 31ST DECEMBER 2008

2008 2007

Note Rs. Cts. Rs.

Revenue 03 3,649,439,020.28 2,212,832,759

Cost of Sales (3,251,129,572.82) (1,949,316,730)

Gross Profit 398,309,447.46 263,516,029

Other Income 04 15,918,436.83 5,775,365

Distribution Costs (249,462,743.26) (173,609,913)

Administration Expenses (139,617,920.83) (85,140,628)

Financial Costs 05 (6,911,593.76) (4,471,792)

(395,992,257.85) (263,222,332)

Profit / (Loss) from operations 06 18,235,626.44 6,069,062

Profit / (Loss) before Tax 18,235,626.44 (6,069,062

Income Tax Expenses 07 (6,362,854.36) (6,130,073)

Profit / (Loss) after Tax 11,872,772.08 (61,011)

Earnings / (Loss) per Share 08 1,696,110.30 (8,716)

Figures in brackets indicate deductions.

The Accounting Policies and Notes to Accounts form an integral part of these financial statements.

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LANKA SATHOSA LTDBALANCE SHEET AS AT 31ST December 2008 2007

Assets Employed Note Rs. Cts. Rs.

Non – Current Assets

Property, Plant & Equipment 09 47,208,319.54 9,387,803Assets take over from CWE 16,176,547.61 20,892,892Deferred Tax Assets 10 3,246,517.83 2,068,235 66,631,384.98 32,348,930Current AssetsInventories 485,711,647.89 286,223,632Bank guarantee 32,550,000.00 29,050,000Short Term Investments 0.00 27,000,000Trade and Other Receivables 11 38,481,931.75 15,673,262Income Tax Refund 4,705,653.47 1,497,100WHT 2,806.55 2,807Control Account 49,324,245.74 28,875,545Due from Related Companies – CWE 6,766,010.15 6,609,860Cash and Cash Equivalents 3,575,810.03 1,816,157 621,118,105.58 396,748,363TOTAL ASSETS 687,749,490.56 429,097,293

EQUITY & LIABILITIESCapital & ReservesStated Capital 12 70.00 70Government Fund 334,599,930.00 209,600,000Retained Earnings (8,350,973.08) (20,141,703)Shareholders Funds 326,249,026.92 189,458,367

Non - Current Liabilities

Assets taken over form CWE 22,798,842.00 26,109,915Retirement Benefit Obligation 13 8,908,651.02 4,280,417 31,707,493.02 30,390,332Current LiabilitiesTrade and Other Payable 14 171,729,159.05 169,614,706Loans 6,989,500.00 0SRL Payable 191,275.00 79,830Bank Overdraft 150,883,036.57 39,554,059 329,792,970.62 209,248,594

TOTAL EQUITY & LIABILITIES 687,749,490.56 429,097,293

These Financial Statements are in compliance with the requirements of the Company Act No: 07 of 2007

The Directors are responsible for the preparation and presentation of these financial. Signed for on behalf of the Board of Directors.

The Accounting Policies an Notes to Accounts from an integral part of these financial Statements.

15-Sep-10Colombo

... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Financial Officer

... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Director

.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Director

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LANKA SATHOSA LTD

STATEMENT OF CHANGES IN EQUITY


Stated Fund Retained

Capital A/C Earnings Total

Rs. Cts. Rs. Cts. Rs. Cts. Rs. Cts.

Balance as at 1st January 2007 70.00 145,000,000.00 (17,548,698.72) 127,451,371.28

Net Profit / (Loss) for the Year 0.00 0.00 (61,011.48) (61,011.48)

Fund Received 0.00 64,600,000.00 0.00 64,600,000.00

Prior Year Adjustments 0.00 0.00 (2,531,992.36) (2,531,992.36)

Balance as at 31st December 2007 70.00 209,600,000.00 (20,141,702.56) 189,458,367.44

Net Profit / (Loss) for the Year 0.00 0.00 11,872,772.08 11,872,772.08

Fund Received 0.00 124,999,930.00 0.00 124,999,930.00

Prior Year Adjustments 0.00 0.00 (82,042.60) (82,042.60)

Balance as at 31st December 2008 70.00 334,599,930.00 (8,350,973.08) 326,249,026.92

Figures in brackets indicate deductions


15 – Sep – 10

Colombo

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CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST DECEMBER 2008 2008 2007

CASH FLOW FROM OPERATING ACTIVITIES Rs. Cts. Rs.

Profit / (Loss) Before Taxation 18,235,626.44 6,069,062Adjustment for: Depreciation 10,425,994.96 7,099,173 Provision for Gratuity net of Payments 4,628,234.35 2,682,500 Prior Year Adjustments (82,042.60) (2,531,992) Over Depreciation – CWE Assets (3,154,497.17) 0

Operating Profit Before Working Capital Changes 30,053,315.98 13,318,743

(Increase) / Decrease in Inventories (199,488,015.72) (167,926,449)(Increase) / Decrease in Trade and Other Receivables (43,257,370.63) (21,399,449)(Increase) / Decrease in Related Company (156,150.00) (1,562,248)(Increase) / Decrease in Trade and Other Payables 9,103,953.49 115,685,253

Cash Generated from Operations (203,744,266.88) (61,884,150)

ESC Paid (10,638,245.00) (6,655,704)

Net Cash Flow from Operating Activities (214,382,511.88) (68,539,855)

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Property, Plant and Equipment (43,686,743.08) (5,577,069)Withdrawal / Investment of/in Fixed Deposits 27,000,000.00 (5,500,000)Purchase / Transfer CWE assets 0.00 0

Net Cash Flow from Investing Activities (16,686,743.08) (11,077,069)

CASH FLOW FROM INVESTING ACTIVITIES

Funds received from Treasury 124,999,930.00 64,600,000Bank guarantees (3,500,000.00) (22,500,000))

Net Cash Flow from Financing Activities 121,499,930.00 42,100,000

Net Increase in Cash and Cash Equivalents (109,569,324.96) (37,516,923)Cash & Cash Equivalents at the Beginning of the Year (37,737,901.58) (220,978)

Cash & Cash Equivalents at the End of the Year (NOTE A) (147,307,226.54) (37,737,902)

NOTE A – CASH AND CASH EQUIVALENTS

Petty Cash Advance 155,630.81 592,037Floating Cash 648,494.80 458,494Saving Accounts 0 765,625Bank Overdraft (150,883,036.57) (39,554,059)Bank A/c 044 2,771,684.42 0

(147,307,226.54) (37,737,902)

Figures in brackets indicates deduction


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LANKA SATHOSA LTD

ACCOUNTING POLICIES TO THE FINANCIAL STATEMENTS


CORPORATE INFORMATION

1.1 General

The Company is a limited liability company incorporated and domiciled in Sri Lanka. The Registered Office of the Company is located at No. 108, York Street, Colombo.

The principal place of business is at No. 108, York Street, Colombo.

1.2 Principal Activities and Nature of Operations

During the year, the principal activities of the Company were retail & wholesale of consumer products.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 General Accounting Policies

2.1.1 Basis of Preparation

There financial statements presented in Sri Lanka Rupees have been prepared under the historical cost basis in accordance with generally accepted accounting principles and the standards laid down by the Institute of chartered accountants of Sri Lanka.

2.1.2 Statement of Compliance

The balance sheet, statement of income, changes in equity and cash flow together with accounting policies and notes of the company as at 31st December 2008 and for the year then ended comply with the Sri Lanka Accounting Standards.

2.1.3 Going Concern

The directors have made an assessment of the Company's and it's ability to continue as a going concern and they do not intend to liquidate or to cease trading.

2.1.4 Comparative Information

The accounting policies have been consistently applied by the company and are consistent with those of the previous period. The previous figures and phrases have been rearranged wherever necessary to conform current period presentation.

2.1.5 Foreign Currency Translation

All foreign exchange transactions are converted to Sri Lanka Rupees, which is the reporting currency, at the rates of exchange prevailing at the time the transactions were affected.

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LANKA SATHOSA LTDACCOUNTING POLICIES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31ST DECEMBER 2008

2.2 ASSETS AND BASES OF THEIR VALUATION

2.2.1 Property, Plant & Equipment

a) Cost

Property, plant & equipment is recorded at cost less accumulated depreciation and less any impairment in value.

b) Depreciations

Provision for depreciation is calculated by using straight line on the cost of all property, plant & equipment other than freehold land, in order to write off such amounts over the estimated useful lives of such assets.

The principal annual rates used are as follows.

Office equipment 20%Computers 25%Communication Equipment 20%Furniture & Fittings 20%Motor Vehicle 20%

Depreciation of assets begin when it is available for use.

The assets residual values, useful lives and methods of depreciation are reviewed and adjusted as appropriate at each financial year.

c) Restoration Costs

Expenditure incurred on repairs or maintenance of property, plant & equipment in order to restore or maintain the future economic benefits expected from originally assessed standard of performance is recognized as an expense when incurred.

d) De-recognition

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected form it's use of disposal. Any gain or loss arising on de-recognition of the asset is calculated as the difference between the net disposal proceeds and the carrying amount.

2.2.2 Inventories

Inventories are valued at the lower of cost and net realizable value, after making due allowance for obsolete and slow moving items. Net realizable value is the price at which the inventories can be sold in the ordinary course of business less the estimated cost of completion and estimated costs necessary to make the sale.

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2.2.3 Trade and Other Receivable

Trade and other receivable are stated at the amounts they are estimated to realize net of provisions for bad and doubtful receivables.

Other receivables and dues from related parties are recognized at cost less provision for bad and doubtful receivables.

2.2.4 Cash and Cash Equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

For the purpose of cash flow statement, cash & cash equivalents consists of cash in hand and deposits in banks net of outstanding bank overdrafts. Investment with short term maturities i.e. three months of less from the date of acquisitions are also treated as cash equivalents.

2.2.5 Investments

Current Investments

Current investments are stated at cost.

2.3 LIABILITIES AND PROVISIONS

2.3.1 Liabilities

Liabilities stated under current liabilities in the balance sheet are those expected to fall due within one year from the balance sheet date. Items stated as long term liabilities are those expected to fall due at point of time after one year form the balance sheet date.

Trade and Other Payable

Trade creditors and other payables are stated at their book values.

2.3.2 Provisions

Provisions are recognized when the company has a present obligation (legal and constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

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2.3.2.1 Retirement Benefit Obligation

a) Defined Benefit Plan – Gratuity

Provision has been made for retirement gratuities in conformity with SLAS 16 / Gratuity Act No. 12 of 1983. The liability is not externally funded nor is it actuarially valued.

b) Defined Contribution Plans – EPF & ETF

Employees are eligible for Employees' Provident Fund contributions and Employees' Trust Fund contributions in line with respective statutes and regulations. The company contributes 12% and 3% of gross emoluments of employees to the Employees' Provident Fund and to the Employees' Trust Fund respectively.

2.3.2.2 Taxationa) Current Taxes

The provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the Inland Revenue Act No. 10 of 2006.

2.4 Income statement

2.4.1 Revenue Recognitiona) Sale of Goods

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue and associated costs incurred can be reliably measured. Revenue is measured at the fair value of the consideration received of receivable net of trade discounts and sales taxes.

b) Interest

Interest income is recognized as the interest accrued unless collectibles is in doubt.

d) Others

Other income is recognized on an accrual basis.

Net profits and losses of a revenue nature on the disposal of property, plant and equipment and other non current assets including investments have been accounted for in the income statement having deducted from proceeds on disposal, the carrying value amount of the assets and related property, plant and equipment amount remaining in revaluation reserve relating to that asset is transferred directly to accumulated loss.

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2.4.2 Expenditure Recognition

a) 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 the 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.

b) For the purpose of presentation of the income statement the directors are of the opinion that function of expenses method presents fairly the elements of the company's performance and hence such presentation method is adopted.

2.5 OFF BALANCE SHEET AND INCOME STATEMENT ITEMS

2.5.1 Events Occurring after the Balance Sheet

All material events occurring after the balance sheet date have been considered and where necessary adjustments to or disclosures have been made in the respective notes to the accounts.

2.5.2 Contingencies and Unrecognized Contractual Commitments

Contingencies are possible assets or obligations that arise from past event and would be confirmed only the occurrence of non occurrence of uncertain future events, which are beyond the company's control.

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LANKA SATHOSA LTD

NOTES TO THE FINANCIAL STATEMENTS


3 - REVENUE Rs. Cts. Rs.

Revenue 3,711,191,445.17 2,246,621,521

BTT (61,752,424.89) (33,788,762)

3,649,439,020.28 2,212,832,759

NOTE 4 – OTHER INCOME

FD interest 1,962,863.01 2,949,750

Saving Account interest 3,281.66 0

Transport income 1,261,819.45 984,107

Sundry Income 2,215,085.48 905,932

Gondola Income 348,000.00 66,400

Call Deposit Interest 1,335,484.32 544,694

Transits shortage recovery 0.00 20,856

Stock excess 0.00 303,326

Advertising reimbursement 542,179.14 0

Insurance Claim received 599,991.41 0

Item listing charges 4,000.00 0

Telephone charges recovery 59,842.99 0

Mobile Phone Sim Card 2,300.00 0

Fines 0.00 300

General Provision 4,429,092.20 0

Over Depreciation – CWE Assets 3,154,497.17 0

15,918,436.83 5,775,365.10

NOTE 5 – FINANCE COSTDebit Tax 2,945,439.92 2,067,968

Bank charges & commission 3,807,153.84 2,242,574

Cheque Book Charges 159,000.00 161,250

6,911,593.76 4,471,792

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6 – PROFIT FROM OPERATIONS IS STATED AFTER CHARGINGALL EXPENSES INCLUDING THE FOLLOWING

2008 2007

Rs. Cts. Rs.

Salaries 135,978,136 77,156,587Over Time 16,071,910 10,837,886EPF 13,465,375 9,146,974ETF 1,346,538 914,697Auditors Remuneration 242,000.00 124,200Depreciation 10,425,995 7,099,173Stock Shortages Loss 5,981,888 16,992,982Stock loss – Discarded 8,715,820 5,727,926Defined Benefit Cost, Gratuity 4,628,234.35 2,682,500Subsistence for CEO & Directors 51,000.00 46,500General Provision – Bonus 4,429,092.20 4,950,000Grocery bags 23,759,619.06 25,609,260

225,095,607.48 161,288,685

7 - INCOME TAX EXPENSES

Under Provision Income tax 0.00 87,135

ESC Write off 0.00 48,350

Current Income Tax Provision 7,541,137.00 8,062,824

Deferred Tax provision (1,178,282.64) (2,068,235)

6,362,854.36 6,130,073

8 - EARNINGS / (LOSS) PER SHARE

The basic earnings per share is calculated by dividing the net profit / (loss) for the year attributable to ordinary Shareholders

by number of ordinary shares outstanding during the year

Amounts used as Numerator

Profit / (Loss) attributable to Ordinary Shareholders 11,872,772.08 (61,011)

Number of Ordinary Shares used as the Denominator

Number of Ordinary Shares in lssue 7 7

1,696,110.30 (8,716)

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LANKA SATHOSA LTD

NOTES TO THE FINANCIAL STATEMENTS


Balance as at Additions Balance as at

9 - PROPERTY,PLANT & EQUIPMENT 01. 01. 2008 31.12.2008

COST / VALUATION Rs. Cts. Rs. Cts. Rs. Cts.

Motor Vehicle 0.00 5,413,500.00 5,413,500.00Computer Equipment 1,926,990.75 3,316,511.00 5,243,501.75Office Equipment 4,945,933.06 34,706,290.58 39,652,223.64Furniture & Fittings 4,280,418.71 121,588.50 4,402,007.21Communication Equipment 1,637,956.38 128,853.00 1,766,809.38

12,791,298.90 43,686,743.08 56,478,041.98

DEPRECATION

Motor Vehicle 0.00 541,350.00 541,350.00Computer Equipment 816,026.31 698,319.15 1,514,345.46Office Equipment 488,833.92 3,426,583.05 3,915,416.97Furniture & Fittings 1,531,428.28 858,590.88 2,390,019.16Communication Equipment 567,207.55 341,383.29 908,590.84

3,403,496.07 5,866,226.37 9,269,722.44

WRITTEN DOWN VALUE

Motor Vehicle 0.00 4,872,150.00Computer Equipment 1,110,964.44 3,729,156.29Office Equipment 4,457,099.14 35,736,806.67Furniture & Fitting 2,748,990.43 2,011,988.05Communication Equipment 1,070,748.83 858,218.54

9,387,802.83 47,208,319.54

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LANKA SATHOSA LTDNOTES TO THE FINANCIAL STATEMENTS


10 - PROVISION FOR DIFFERED TAXATION Rs. Cts. Rs.

Balance as at the beginning of the year 2,068,235.19 -

Transferred (to)/from income statement 1,178,282.64 2,068,235

Balance as at end of the year 3,246,517.83 2,068,235

11 - TRADE AND OTHER RECEIVABLESRent advance 18,495,813.50 3,654,622 Liquor license renewal advance 1,839,512.50 - Cigarettes advance (2,965.00) 67,879 Rent deposits 75,000.00 75,000 Fixed deposit interest 921,562.50 921,563 Stock shortage recoverable 831,335.61 1,113,670 Prepayments 85,172.50 2,027,310 Cheque return 242,614.86 242,615 Refundable deposits 178,500.00 186,000 Government agent Jaffna - 998,835 Excess payment of turn over tax 3,989.00 3,989 Under remittance 15,026,767.45 6,291,843 Stock loss recoverable 89,867.40 89,867 Other receivables-For shares - 70 Disaster loans 627,081.43 - Mobile phone collecting fees (58,800.00) - Newdail promotions 117,300.00 - Salary returns 9,180.00 -

38,481,931.75 15,673,263

12 - STATED CAPITAL

Issued and fully paid

07 ordinary shares of Rs. 10 each 70.00 70

70.00 70

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LANKA SATHOSA LTDNOTES TO THE FINANCIAL STATEMENTS


13 - RETIREMENT BENEFIT OBLIGATIONS Rs. Cts. Rs.

Provision at the beginning of the year 4,280,416.67 1,597,917

Provision for the year 4,628,234.35 2,682,500

8,908,651.02 4,280,417 Payment during the year - -

Provision at the end of the year 8,908,651.02 4,280,417

Note : Retirement benefit cost balance has not been Actuarially valued as at 31st December 2008

14 - TRADE AND OTHER PAYABLES 2008 2007

Trade Creditors 106,328,544.20 114,084,336

Expense Creditors 65,400,614.85 55,530,370

171,729,159.05 169,614,706

15 - ASSETS PLEDGED

The following assets have been pledged as securities for liabilities

Nature ofNature of Asset Liabilities 2008 2007

BankFixed Deposits Guarantee 32,550,000.00 19,500,000

16 - EVENTS AFTER THE BALANCE SHEET DATE

16.1 As at the Balance Sheet date 98 outlets have operated by the Lanka Sathosa Ltd. and

108 outlets have been opened after the Balance Sheet date. All together 206 outlets

have operated at audit report date.

17 - RELATED PARTY TRANSACTIONS

None of the Directors are either directly or indirectly interested in any existing or proposed contracts with the Company.

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Lanka Sathosa LimitedRetail Chain Islandwide as at 03rd November 2008

Annual Report 2008 - Lanka Sathosa – Lanka Sathosa

Documents

Transcript of Annual Report 2008 - Lanka Sathosa – Lanka Sathosa