Our Vision 04
Our Mission 05
Corporate Information 06
Chairman’s Message 08
Corporate Management 10
Report of Directors 11
Balance Sheet 18
Income Statement 19
Statement of Changes in Equity 20
Cash Flow Statement 21
Notes to the Financial Statements 22
Ten Year Summary 45
Auditor’s Report to the shareholders 15
Our Vision Our Mission
To provide the best energy
solutions to the Society
through continuous innovation
LECO Annual Report 2010 7 / PageLECO Annual Report 2010 6 / Page
CORPORATE INFORMATIONLanka Electricity Company (Private) Ltd
LEGAL FORM
LIST OF DIRECTORS DURING THE PERIOD 01.01.2010 – 31.12.2010
COMPANY SECRETARIES
REGISTERED OFFICE
Private Limited Liability Company incorporated in 1983 under the provisions of the Companies Act No 17 of 1982 and the Companies Act No 7 of 2007
Mr Chandana J. Haputantri Appointed with effect from 21.05.2010 ( Appointed Chairman w.e.f 2010-05-25
Mr Vidya Dilruk Amarapala Appointed with effect from 14.05.2010
Mrs Badra Jayaweera 08-09-2008
Mrs P.K.A.D de Silva 01-07-2009
Mr Rohan Seneviratne 30-06-2010
Mr A.A Ranapriya Abeyasinghe 11-08-2010
Mr H.S. Somathilaka 14-02-2011
Mr Champani Padmasekera 28.12.2005 Resigned w.e.f 30-04-2010
Mr U.D.S. Parakrama Perera 17.01.2006 Resigned w.e.f 05-02-2010
Dr M.N.Susantha Perera 17.01.2006 Resigned w.e,f 05-02-2010
Mr M.H.Prasanna Silva 30.10.2007 Resigned w.e.f 09-06-2010
Mr E.A.S.K Edirisinghe 16.12.2008 Resigned w.e.f 11-02-2010
Mr T.M. Herath 19-02-2010 Resigned w.e.f 04-05-2010
Secretaries & Registrars (Pvt) Ltdst1 Floor , 32A Sir Macan Markar Mawatha,
Colombo 03
411, Galle Road E.H.Cooray Bldg Colombo 03.
BANKERS
AUDITORS
Bank of Ceylon Commercial Bank of Ceylon PLCHatton National Bank PLCNations Trust Bank PLCPeoples BankSampath Bank Seylan Bank PLCStandard Chartered Bank State Mortgage and Investment Bank Housing Development Finance Corporation BankNational Development Bank Ltd
Ernst and Young – Chartered Accountants201, De Seram Place Colombo 10
On behalf of the Board of Directors of Lanka
Electricity Company (Private) Limited I am very thpleased to welcome you to the 27 Annual General
Meeting of the Company and to present the Annual
Report and the Statement of Accounts for the year st ndended 31 December 2010. This is the 2 Annual
General Meeting since my taking over as the
Chairman in May last year. During the year under
review Company has been able to take steps for the
improvement of its performance. We were able to
resolve the problem of the tariff with the Public
Utilities Commission of Sri Lanka and eliminate the
situation under which the Company faced losses
during the last 3 years. Setting up of the project,
funded by the ADB, for the construction of five
Primary Substations for the improvement of the
power supply to certain areas is yet another
remarkable step taken during the year. Completion
of this project will certainly achieve the objective of
the Hon. Minister of Power & Energy and the
Government for providing a quality service to meet
the customer needs.
The year under review has recorded electricity sales of 1,123 GWh (7 % increase over the previous year ) and revenue earnings of Rs 14.027 Million compared to 13,065 . The highest contributor to overall revenue was the Commercial sector 38% , followed by domestic sector 37% and industrial sector 19%.
Additional cost of Rs 390 Million for energy
purchases has been included in the current year, in
order to comply to directive issued by the Public
Utility Commision of Sri Lanka to account for
purchases for a calendar year , the inclusion of the
additional cost has resulted in a Net loss after tax of
Rs 605 Mn . However this problem would be
resolved with the new tariff structure which is
effective from January 2011.
The Company has invested in Rs 340 Million in enhancing the distribution network during the year under review resulting in a net asset value per share of Rs 79.00 . Our customer Service and revenue collection have been improved by entering into
FINANCIAL HIGHLIGHTS
OPERATIONS
agreements with private Banks and Cargills Food City to accept LECO Bills.
We have set up a very systematic and improved programme of training for our human resources which are the most important asset of the Company. A well trained and motivated work force, with career development opportunities to meet the challenges, is our objective. We are thankful to all our Trade Unions for their co-operation and assistance in maintaining good industrial relations.
On behalf of the Board of Directors I wish to express my very sincere thanks to the Management and each and every member of the staff for the valuable contribution made and co-operation extended during the year.
The Board also wishes to place on record its appreciation to all the valued Customers, Shareholders, Business Associates, Bankers, Ministry of Power & Energy and other Government Authorities, Suppliers, Company Secretaries and the Auditors for the support and co-operation extended.
Chandana .J.HaputantriChairman
.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
ACKNOWLEDGMENT
MESSAGE OF THE CHAIRMAN
LECO Annual Report 2010 9 / Page
Chairman’s Message
Corporate Management
Report of Directors
Left to Right
Mr. Vimal PereraChief Financial Officer
Dr. Narendra de SilvaHead of Engineering
Mr. H. N. GunasekaraHead of Operations
Mr. D. MunasigheHead of Human Resource
Mr. V. Kandasamy Chief Internal Auditor
The Board of Directors of Lanka Electricity Company (Private) Limited has pleasure in presenting their Annual Report together with the Audited Financial
stStatements of the Company for the year ended 31 December 2010
This Annual Report on the affairs of the Company contains the information required in terms of Section 168 of the Companies Act, No. 7 of 2007 and certain additional information.
The Company's principal activities, which remained unchanged during the year, were the business of retailing electricity. The Company purchases electricity in bulk from the national grid owned and managed by the Ceylon Electricity Board and distributes to customers through a modern distribution system managed by the Company.
P R I N C I PA L AC T I V I T I ES O F T H E C O M P A N Y A N D R E V I E W O F PERFORMANCE DURING THE YEAR
STATED CAPITAL
PROPERTY PLANT AND EQUIPMENT
TURNOVER
The turnover of the Company for the year was Rs. 14,027 Million (2009 – Rs.13,065 Million)
FINANCIAL STATEMENTS
The total Stated Capital of the Company as at 31st December 2010 was Rs.1,145.1 Million representing 113,580,264 “A” class ordinary shares and 926,390 “B” class Ordinary Shares.
The movement of the Share Capital of the Company is shown in Note.10 to the Accounts.
Information relating to movement in property, plant and equipment are given in Note 3 to the Audited Accounts.
The complete Financial Statements of the Company duly signed by Mr C.J.Haputantri. and Mr V. D Amarapala on behalf of the Board.
AUDITORS' REPORT
ACCOUNTING POLICIES
DIRECTORS
The Report of the Auditors on the Financial Statements of the Company is attached with the Financial Statements
The principal accounting policies adopted by the Company in the preparation of Financial Statements are given in Note 2.1 of the Financial Statements, which are, unless otherwise stated, consistent with those used in the previous period.
The names of the Directors who held office as at the end of the accounting period are given below
Mr. Chandana J. Haputantri appointed with effect from 21.05.2010 ( appointed Chairman w.e.f 2010-05-25
Mr. Vidya Dilruk Amarapala appointed with effect from 14.05.2010
Mrs. Badra Jayaweera08-09-2008
Mrs. P.K.A.D de Silva 01-07-2009
Mr. Rohan Seneviratne30-06-2010
Mr. A.A Ranapriya Abeyasinghe11-08-2010
Mr. H.S. Somathilaka 14-02-2011
Mr. Champani Padmasekera 28-12-2005 Resigned w.e.f 30-04-2010
Mr. U. D. S. Parakrama Perera 17.01.2006 Resigned w.e.f 05-02-2010
Dr. M.N.Susantha Perera17.01.2006 Resigned w.e,f 05-02-2010
LECO Annual Report 2010 12 / Page
Mr. M.H.Prasanna Silva30.10.2007 Resigned w.e.f 09-06-2010
Mr. E.A.S.K Edirisinghe 16.12.2008 Resigned w.e.f 11-02-2010
Mr T.M. Herath19-02-2010 Resigned w.e.f 04-05-2010
The Company maintains an Interests Register as stipulated by the Companies Act, No. 7 of 2007.
The Directors' remuneration is disclosed in Note 29.3. to the Financial Statements.
The donations made during the year amounted to Rs 32,000
The Directors do not recommend the payment of a dividend for 2010 as the Company has not achieved the 8% return on average net fixed assets, a covenant with the ADB.
The total Company reserves as at 31st December 2010 amounts to 7,891 Million, comprising Capital Reserves of Rs. 6,045 Million and Revenue Reserves of Rs. 1,846. Million. The movement is shown in Note 12 of the Audited accounts.
The number of persons employed by LECO at the end of 2010 was 1,338 (end of 2009 – 1,317)
Commitments and contingencies as at 31st December 2010 are given in Note 27.2. of the Audited Accounts.
INTERESTS REGISTER
DIRECTORS' REMUNERATION
DONATIONS
DIVIDENDS
RESERVES
EMPLOYMENT
COMMITMENT AND CONTINGENCIES
AUDITORS
EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Messrs Ernst & Young, Chartered Accountants served as the Auditors of the Company and Messrs Amarasekera and Co Chartered Accoutnants provided tax compliance services to the Company during the year under review. The Auditors do not have any interest in the Company or its group companies other than that of Auditor and in the aforesaid capacity as advisors on tax compliance.
A sum of Rs 1,096,000/- is payable by the Company to the Auditors as Audit for the year under review.
The Auditors have expressed their willingness to continue in office. A resolution to re-appoint the Auditors and to authorise the Directors to determine their remuneration will be proposed at the Annual General Meeting.
The Board of Directors of Lanka Electricity Company (Pvt) Ltd decided to suspend the services of the General Manger with effect from 11 March 2011
This Annual Report is signed for and on behalf of the Board of Directors by Chairman and Director
Secretaries and Registrars (pvt ) Ltd June 13,. 2010
LECO Annual Report 2010 13 / Page
ANNUAL REPORT OF THE BOARD ON THE AFFAIRS OF THE COMPANY
Auditors’ Report
to the Shareholders
Report on the Financial Statements
Management's Responsibility for the Financial Statements
Scope of Audit and Basis of Opinion
We have audited the accompanying financial statements of Lanka Electricity Company (Private) Limited, the consolidated financial statements of the Company and its subsidiaries, which comprise the balance sheets as at 31 December 2010, and the income statements, statements of changes in equity and cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. Th is respons ib i l i ty inc ludes : des ign ing , implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these financial statements based on our audit. Except as discussed in Paragraphs 1 to 10 below, 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 misstatements.
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 the management, as well as evaluating the overall financial statement presentation.
Except as discussed in Paragraphs 1 to 10 below, 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
1. The ownership documents of following properties were not available for our inspection.
The original title deeds of the following properties were not available for our inspection.
2. We were unable to ascertain the accuracy and completeness of the Infrastructure - work in progress balance approximately amounting to Rs. 358.2 Mn at the year end included under Property, Plant and Equipment due to non availability of adequate information.
3. Non Current Assets have not been tested for impairment in accordance with SLAS 41, even though there are indicators of impairment. If so tested, adjustments may arise as a result of impairment of assets, which have not been made in these financial statements.
.
Opinion
Company
INDEPENDENT AUDITOR'S REPORT
FHL - Nugegoda Supermarket
Premises400,000
FHL – Pitakotte CSC Quarters
11,900,000
FHL – Nugegoda Land 3,350,277
FHL – Hikkaduwa Primary 600,000
FHL – Hikkaduwa Consumer
Service Centre852,124
FHL - Galkanda Land 538,500
LHL – Udahamulla Land 57,000,000
DescriptionAmounts
Rs.
FHL - Nugegoda Stanley Thilakaratna Mawatha
6,395,000
FHL – Kelaniya Substation Land
2,746,840
DescriptionAmounts
Rs.
LECO Annual Report 2010 15 / Page
balance in the general ledger by Rs.37.4 Mn and Rs.3.1Mn respectively for which no satisfactory explanation was received. Further the receivable balance as per confirmation received from Ceylon Electricity Board does not agree with the general l e d g e r b y R s . 1 6 . 3 M n f o r w h i c h n o satisfactory explanation was received.
In our opinion, except for any adjustments, if any as might have been determined to be necessary had we been able to satisfy ourselves of the matters referred in paragraphs 1 to 10, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31 December 2010 and the financial statements give a true and fair view of the Company's state of affairs as at 31 December 2010 and its loss and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.
In our opinion, except for any adjustments, if any as might have been determined to be necessary had we been able to satisfy ourselves of the matters referred in paragraphs 1 to 10, so far as appears from our examination, the consolidated financial statements give a true and fair view of the state of affairs as at 31 December 2010 and its loss 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.
In our opinion, these financial statements also comply with the requirements of Section 151(2) and 153(2) to 153(7) of the Companies Act No. 07 of 2007.
04 May 2011 Colombo
10.The payable balance as per confirmation received from Ceylon Electricity Board and Lanka Transformers (Pvt) Ltd does not agree with the
Group
Report on Other Legal and Regulatory Requirements
4. “Supply of Infrastructure” reflected under Property, Plant & Equipment is revalued using a standard formula prescribed by the lenders to the Company up to 31 December 2009. However, no such revaluation has been carried out for the current year under review.This method of revaluation does not reflect the fair value of the said assets nor such an exercise been carried out. Any resulting impact of such on the Property, Plant & Equipment, the revaluation surplus and the related depreciation charge cannot be ascertained.
5. We were unable to obtain independent confirmations from lawyers to ascertain contingent liabilities of the Company as at the year end including those disclosed in a note 27.2 (b) to these financial statements.
6. We were unable to ensure the completeness and accuracy of the inventory valuation as of the year end due to non availability of all required information and explanations. Further a physical verification of inventories approximately worth Rs.42.5 Mn has not been carried out as of the year end.
7. We were unable to ensure the completeness, recover ability and adequacy of related bad and doubtful debt allowances of trade debtors as of the year end. Further no adjustments have been made in the financial statements in respect of the difference between the ledger and the billing system balances amounting to Rs.770.97 Mn.
8. We have not received the required information from Mr. Champani Padmasekara, Mr. Hilary Prasanna Silva and Mr. E.A.S.K. Edirisinghe, as key management personnel regarding related party transactions as required by SLAS 30.
9. We were unable to ensure the existence and accuracy of the street light maintenance account balance amounting to Rs.21.23 Mn which has been set off with the receivable balance from which local authorities without their agreements and approvals. Further we were unable to ensure the existence and accuracy of other payables amounting to Rs.2.04 Mn included under 'trade and other payables' as of the year end.
Financial
Statements
LECO Annual Report 2010 16 / Page
BALANCE SHEET As at 31 December 2010
I certify that these financial statements are in compliance with the requirements of the Companies Act No.07 of 2007.
(Sgd) Mr. S. M. Vimal Perera
Chief Financial Officer
The board of directors is responsible for the preparation and presentation of these financial statements. Signed for and on behalf of the board by.
(Sgd) Mr. C. J. Haputantri
Director
(Sgd) Mr. V. D. Amarapala
Director
The accounting policies and notes on pages 22 through 44 form an integral part of the financial statements.
04 May 2011 Colombo
INCOME STATEMENTYear ended 31 December 2010
The accounting policies and notes on pages 22 through 44 form an integral part of the financial statements.
Note2010
Rs.'0002009
Rs.'0002010
Rs.'0002009
Rs.'000
19 14,354,489
13,657,688
14,027,002
13,065,755
(12,411,708)
(12,021,449)
(12,154,865)
(11,493,574)
19.2 (389,806)
-
(389,806)
-
1,552,975
1,636,239
1,482,331
1,572,181
20 503,882
373,083
503,744
372,968
(1,259,740)
(1,166,887)
(1,237,138)
(1,161,992)
(1,179,685)
(1,109,288)
(1,134,619)
(1,074,811)
21 186,842
218,253
181,454
210,741
22 (41,793)
(51,335)
(41,626)
(51,178)
23 (237,519)
(99,935)
(245,854)
(132,091)
24 (361,065)
(298,102)
(359,689)
(295,318)
(598,584)
(398,037)
(605,543)
(427,409)
(600,032)
(406,492)
(605,543)
(427,409)
1,448
8,455
-
-
(598,584)
(398,037)
(605,543)
(427,409)
Revenue
Cost of Purchase of Electricity
Additional cost of Purchase of Electricity
Gross Profit
Other Operating Income
Operating Expenses
Administrative Expenses
Finance Income
Finance Cost
Loss Before Tax
Income Tax Expense
Loss for the Year
Equity Holders of the Parent
Minority Interest
Loss for the Year
Basic Loss Per Share 25 (5.24)
(3.55)
(5.29)
(3.73)
CompanyGroup
LECO Annual Report 2010 18 / Page LECO Annual Report 2010 19 / Page
Company
2010 Rs.'000
2009Rs.'000
2010Rs.'000
2009Rs.'000
3 8,477,457 8,804,012 8,420,074 8,734,780
4 2,000,000 2,000,000 2,031,321 2,031,321
5 570,000 570,000 570,000 570,000
6 68,100
145,200
115,185
192,285
11,115,557
11,519,212
11,136,580
11,528,386
7 684,400
723,345
607,442
674,012
8 1,683,448
1,899,782
1,761,306
2,021,564
9 75,818
82,354
32,473
6 1,538,463
951,109
1,532,478
949,350
775,791
537,587
728,975
417,384
4,757,920
4,194,177
4,662,674
4,094,910
15,873,477
15,713,389
15,799,254
15,623,296
10 1,145,067
1,145,067
1,145,067
1,145,067
11 6,045,146
6,053,357
6,045,146
6,039,935
12 449,900
449,900
449,900
449,900
1,393,566
1,993,598
1,396,447
2,001,990
9,033,679
9,641,922
9,036,560
9,636,892
23,325
8,455
-
9,057,004
9,650,377
9,036,560
9,636,892
13 210,014
287,436
210,014
287,436
14 791,574
449,461
791,664
449,468
15 2,691,664
2,588,725
2,691,664
2,588,725
16 318,679
284,189
318,574
284,071
4,011,931
3,609,811
4,011,916
3,609,700
17 2,132,154 1,645,002 2,078,788 1,568,626
18 12,631 31,945 12,631
13 143,485
82,570
143,485
2,804,542
2,453,201
2,750,778
2,376,704
15,873,477 15,713,389
15,799,254
15,623,296
Note
32,600
-
31,945
82,570
Group
ASSETS
Non-Current Assets
Property, Plant & Equipment
Investments in Equity Securities
Borrowings by Department of Treasury Operations
Other Investments
Total Non-Current Assets
Current Assets
Inventories
Trade and Other Receivables
Amounts due from Related Parties
Current Portion of Other Investments
Cash and Bank Balances
Total Current Assets
Total Assets
EQUITY AND LIABILITIES
Equity and Reserves
Stated Capital
Capital Reserves
Revenue Reserves
Retained Earnings
Minority Interest
Total Equity
Non-Current Liabilities
Interest Bearing Loans & Borrowings
Deferred Tax Liability
Deferred Income on Consumer Contributions
Employment Retirement Benefits
Total Non-Current Liabilities
Current Liabilities
Trade and Other Payables
Amount due to Related Parties
Income Tax Liabilities
Current Portion of Interest Bearing Borrowings
Total Current Liabilities
Total Equity and Liabilities
516,272 693,684 515,874 693,563
STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2010
CASH FLOW STATEMENT Year ended 31 December 2010
The accounting policies and notes on pages 22 through 44 form an integral part of the financial statements.The accounting policies and notes on pages 22 through 44 form an integral part of the financial statements.
NoteStatedCapitalRs.'000
CapitalReservesRs.'000
RevenueReserveRs.'000
Retained Earnings Rs.'000
Total
Rs.'000
1,145,067
4,982,731
449,968
2,429,399 9,007,165
11 -
1,057,204
-
-
1,057,204
12 -
-
(68)
-
(68)
-
-
-
(427,409)
(427,409)
1,145,067
6,039,935
449,900
2,001,990
9,636,892
11 -
5,211
-
-
5,211
-
-
-
(605,543)
(605,543)
Balance as at 31 December2008
Surplus on revaluation of
supply of infrastructure
Transferred to during the year
Loss for the year
Balance as at 31 December
2009
Net Additions / (Removals) of
supply of infrastructure
Loss for the year
Balance as at 31 December 2010 1,145,067
6,045,146
449,900
1,396,447
9,036,560
Group Note
Minority
Rs.'000Interest
CapitalReservesRs.'000
RevenueReserveRs.'000
Retained Earnings Rs.'000
StatedCapitalRs.'000
Total
Rs.'000
1,145,067
4,996,153
449,968
2,400,090
-
8,991,278
11 -
1,057,204
-
-
-
1,057,204
12 -
-
(68)
-
-
(68)
-
-
-
(406,492)
8,455
(398,037)
1,145,067 6,053,357
449,900
1,993,598
8,455
9,650,377
11 -
5,211
-
-
-
5,211
-
(13,422)
-
-
13,422
-
-
-
-
(600,032)
1,448
(598,584)
Balance as at 31 December
2008
Surplus on revaluation of
supply of infrastructure
Transferred to during the year
Profit/(Loss) for the year
Balance as at 31 December
2009
Net Additions / (Removals) of
supply of infrastructure
Allotment of shares
Profit/(Loss) for the year
Balance as at 31 December 2010 1,145,067
6,045,146
449,900
1,393,566
23,325
9,057,004
Company
Cash Flows from / (Used in) Investing Activities
Cash Flows From / (Used in) Operating Activities
Adjustments for
Operating Profit/(Loss) before Working Capital
Changes
Cash Generated from Operations
Net Cash From/(Used in) Operating Activities
Net Cash Flows from/(Used in) Investing
Activities
Cash Flows from / (Used in) Financing Activities
Net Cash Flows from/(Used in) Financing
Activities
Net Increase/(Decrease) in Cash and Cash
Equivalents
Cash and Cash Equivalents at the beginning of
the year
Cash and Cash Equivalents at the end of the year
Note
Group Company
2010Rs.'000
20102009Rs.'000 Rs.
2009Rs.'000
102,861 194,399 78,318 159,130
818,676 523,819 891,605 408,017
570,147 289,772 644,427 177,319
271,917 (141,631) 266,800 (233,552)
(77,422) (77,423) (77,422) (77,423)
2,248,190 1,483,548 2,195,390 1,361,586
Profit/(Loss) before tax from operations
Depreciation of Property, Plant & Equipment
Unclaimed NBT
Transfers from Revenue Reserve
Interest Income Profit on Sale of Property, Plant & Equipment
Finance Costs
Amortization of Consumer Contribution
Amortization of Intangible Assets
Provision for Defined Benefit Plans
(Increase)/ Decrease in Inventories
(Increase)/ Decrease in Trade and Other
Receivables
(Increase)/ Decrease in Amounts Due from
Related Parties
Increase/(Decrease) in Amounts Due to
Related Parties
Increase/ (Decrease) in Trade and Other
Payables
Interest Paid
Defined Benefit Plan Costs Paid
Income Tax Paid
Net of Acquisition and Disposal of Property,
Plant & Equipment
Investment/ (Recoveries) in Other
Investments - Non Current
Investment in Equity Securities
Interest Received
Consumer Contribution Received
Repayment of Interest Bearing Loans & Borrowing
(237,519)
(99,935)
(245,854)
(132,091)
685,352
668,696
674,305
658,349
10,378
-
-
-
(68)
-
(186,842)
(218,253)
(181,454)
(210,741)
(2,442)
(15,281)
(2,442)
(15,281)
41,793
51,335
41,626
51,178
(252,736)
(212,660)
(252,736)
(212,660)
17
3
-
44,860
20,562
44,873
20,444
38,945
223,989
66,570
107,508
216,334
164,824
260,258
166,303
2,917
(102,197)
(3,492)
(20,042)
(20,211)
-
(20,211)
477,830
42,804
510,162
(4,882)
(41,793)
(51,335)
(41,626)
(51,178)
(10,370)
(15,433)
(10,370)
(15,433)
(196,366)
(167,279)
(195,182)
(164,087)
(347,700)
(769,184)
(347,430)
(764,018)
77,100
116,375
77,100
116,375
-
-
-
(89,575)
186,842
218,253
181,455
210,741
355,675
292,925
355,675
292,925
(77,422) (77,423) (77,422) (77,423)
3
12
21
23
22
20
16
22
16
5
21
15
13
26
-
(68)
-
-
764,642
(18,861)
833,804
(133,656)
1,483,548
1,502,409
1,361,586
1,495,242
LECO Annual Report 2010 20 / Page LECO Annual Report 2010 21 / Page
NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2010
1. CORPORATE INFORMATION
1.1 General
1.2 Principal Activities and Nature of Operations
1.3 Parent Enterprise and Ultimate Parent Enterprise
1.4 Date of Authorization for Issue
Lanka Electricity Company (Private) Limited is a limited liability Company incorporated and domiciled in Sri Lanka. The registered office of the Company is located at 411, E.H.Cooray Building, Galle Road, Colombo 03.
During the year, the principal activities of the Company were purchasing electricity from Ceylon Electricity Board and retailing to domestic and industrial customers, through the Company's branches located at Galle, Kalutara, Moratuwa, Kelaniya, Nugegoda, Kotte and Negombo.
The subsidiaries of the Company and their principal activities were as follows;
The Company's parent undertaking is Ceylon Electricity Board, which is incorporated in Sri Lanka, under the Ceylon Electricity Board Act No.17 of 1969.
The Financial Statements of Lanka Electricity Company (Private) Limited for the year ended 31December 2010 were authorized for issue in accordance with a resolution of the board of directors on 04 May 2011.
Company Activity
LECO Projects (Pvt.) Ltd
To provide infrastructure facilities for electricity distribution within the Country.
Ante - LECO Metering Company (Pvt.) Ltd
To set up an energy meter manufacturing facility to meet the electronic meter requirements of Sri Lanka and for export market.
2. BASIS OF PREPARATION
2.1 GENERAL ACCOUNTING POLICIES
2.1.1 General
2.1.2 Statement of Compliance
2.1.3 Going Concern
2.1.4 Comparative Information
2.1.5 Basis of Consolidation
These financial statements presented in Sri Lanka Rupees have been prepared on a historical cost basis except for certain Property, Plant and Equipment that have been stated at revalued amounts. The financial statements are presented in Sri Lanka Rupees. The preparation and presentation of these financial statements is in compliance with the Company's Act No. 07 of 2007.
In these financial statements, the 'Company' refers to Lanka Electricity Company (Pvt) Ltd as the holding company and the 'Group' refers to the Companies whose financial statements have been consolidated therein.
The balance sheets, statements of income, statements of changes in equity and cash flows, together with accounting policies and notes, (“financial statements”) of Lanka Electricity Company (Private) Limited, and those consolidated with such as at 31 December 2010 has been prepared in accordance with the Sri Lanka Accounting Standards.
The Directors have made an assessment of the Company's ability to continue as a going concern and they do not intend either to liquidate or cease operations.
The accounting policies have been consistently applied by the Group with those used in the previous year. Previous year figures and phrases have been re-arranged wherever necessary to conform to the current year's presentation. Such reclassifications are more fully described in Note 31 to the financial statements.
a) The Group financial statements comprise consolidation of the financial statements of Lanka Electricity Company (Pvt) Ltd and its
2.3 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
2.3.1 Judgments
subsidiaries in terms of the Sri Lanka Accounting Standard No. 26 (Revised 2005) on Consolidated a n d s e p a ra t e f i n a n c i a l s t a t e m e n t s .The subsidiary companies namely;
b) All the Companies in the Group are incorporated in Sri Lanka and are prepared to a common financial year which ends on 31 December.
c) The total profit and/or loss for the year of the subsidiary companies are included in the Consolidated Income Statement. The amount under the heading Minority Interest in the Consolidated Income Statement represents the proportion of the profit or loss after taxation applicable to outside shareholders.
d) The total Assets and Liabilities at the Balance
Sheet date of the subsidiary companies are included in the Consolidated Balance Sheet.
e) Net assets applicable to the minority shareholders are transferred to the minority interest.
f) All inter-company balances and transactions are eliminated upon consolidation of financial statements.
In the process of applying the Group's accounting policies, management has made the following judgment, apart from those involving estimations, which has the most significant effect on the amounts recognized in the financial statements.
Allowance for Doubtful Debts and Obsolete and Slow Moving Inventories
2.3.2 Estimates and Assumptions
Defined Benefit Plans
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.4.1 Foreign Currency Translation
The Group reviews at each balance sheet date all receivables and inventories to assess whether an allowance should be recorded in respect of doubtful debts and obsolete and slow moving inventories respectively in the income statement. The management uses judgment in estimating such amounts in the light of the duration of outstanding and any other factors management is aware of that indicates uncertainty in recovery.
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below. The respective carrying amounts of assets are given in related notes to the financial statements.
The cost of defined benefit plans of the Company is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases and mortality rates. Due to the long term nature of this plan, such estimate is subject to significant uncertainty.
The financial statements are presented in Sri Lanka rupees, which is the Group's functional and presentation currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the Balance Sheet date. All differences are taken to profit or loss. Non monetary items that are measured in terms of historical cost in a foreign currency are
LECO Projects (Pvt.) Ltd
Holding %2010
Holding %2009
100 % 100 %
70 % 70 %Ante LECO MeteringCompany (Pvt) Ltd
LECO Annual Report 2010 22 / Page LECO Annual Report 2010 23 / Page
translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Procurements made under different currencies for Projects under Asian Development Bank Loan was converted to USD at the rate prevailing at the date of receiving suppliers and then converted to SLRS at the exchange rate prevailing at the date of signing of the loan agreement between the Government of Sri Lanka (GOSL) and LECO. Loans are repaid by LECO to GOSL at the exchange rate prevailing at the date of signing the agreement. Exchange gains resulting from the above transactions were transferred to a capital reserve in the previous years.
Foreign exchange differences arising from other transactions in foreign currencies are recognised in the Income Statement.
a) Current Taxes Current income tax assets and liabilities for the
current and prior periods are measured at the amounts expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the Balance Sheet date.
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.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the income statement.
b) Deferred Taxation
Deferred income tax is provided, using the liability method, on all temporary differences at the Balance Sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences:
2.4.2 Taxation
Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised.
The carrying amount of deferred income 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 income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the Balance Sheet date.
Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the income statement.
Borrowing costs are recognized as an expense in the period in which they are incurred.
Inventories are valued at the lower of cost and net realizable value, after making due allowances for obsolete and slow moving items. Net realizable value is the price at which inventories can be sold i n t h e o r d i n a r y course of business less the est imated cost of completion and the estimated cost necessary to make the sale.
The cost incurred in bringing inventories to its present location and condition are accounted using the following cost formulae:-
Trade receivables are stated at the amounts they are estimated to realise net of provisions for bad and doubtful receivables.
2.4.3 Borrowing Costs
2.4.4 Inventories
2.4.5 Trade and Other Receivables
Other receivables and dues from Related Parties are recognised at cost less provision for bad and doubtful receivables.
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 and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents.
a) Cost and ValuationAll items of Property, Plant & Equipment are initially recorded at cost. Where items of Property, Plant and Equipment are subsequently revalued, the entire class of such assets is revalued. Revaluations are made with sufficient regularity to ensure that their carrying amounts do not differ materially from their fair values at the Balance Sheet date. Subsequent to the initial recognition as an asset at cost, revalued Property, Plant and Equipment are carried at revalued amounts less any subsequent depreciation thereon. All other Property, Plant and Equipment are stated at historical cost less depreciation.
As agreed with the Asian Development Bank, the supply infrastructure assets of the Company are revalued annually by applying the weighted average index based on the G-5 MUV index (published by World Bank), in respect of imported assets and wholesale price index in respect of local components of the assets, commencing from the Financial Year Ended 31 December 1987. Assets originally taken-over by LECO from Local Councils / CEB have been valued at historical cost up to and including financial year 1992 and revaluedthereafter. The surplus on revaluation is being credited to a capital reserve. Further, the related increases in the brought forward balance of the accumulated depreciation is adjusted to reflect the new values.
2.4.6 Cash and Cash Equivalents
2.4.7 Property, Plant and Equipment
When an asset is revalued as described in paragraph above, any increase in the carrying amount is credited directly to a revaluation surplus unless it reverses a previous revaluation decrease relating to the same asset, which was previously recognized as an expense. In these circumstances the increase is recognized as income to the extent of the previous write down. When an asset's carrying amount is decreased as a result of a revaluation, the decrease is recognized as an expense unless it reverses a previous increment relating to that asset, in which case it is charged against any related revaluation surplus, to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that same asset. Any balance remaining in the revaluation surplus in respect of an asset, is transferred directly to retained earnings on retirement or disposal of the asset.
b) De-recognition An item of Property, Plant and Equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognized
Operating LeasesLeases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are classified as operating leases.
Lease payments (excluding costs for services such as insurance and maintenance) paid under operating leases are recognized as an expense in the income statement on a straight-line basis over the lease term.
2.4.8 Leases
2.4.9 Investments
Initial Recognition:Cost of investment includes purchase cost and acquisition charges such as brokerages, fees, duties and bank regulatory fees. The Group distinguishes and presents current and non current investment in the balance sheet.
Operational &Maintenance Goods
At actual cost on aweighted average basis
Goods in Transit At actual cost
LECO Annual Report 2010 24 / Page LECO Annual Report 2010 25 / Page
Measurement
2.4.10 Provisions
2.4.11 Retirement Benefit Obligations
Current Investment:Current investments are carried at the lower of cost and market value, determined on the basis of individual investment.
Unrealized losses arising from reduction to market value and reversals of such reduction required to state current investments at lower of cost and market value which are included in the income statement.
Long Term Investments:Long term investments are stated at cost. Carrying amounts are reduced to recognize a decline other than temporary, determined for each investment individually. These reductions for other than temporary declines in carrying amounts are charged to the income statement.
Disposal of InvestmentOn disposal of an investment, the difference between net disposals and proceeds and the carrying amount is recognised as income or expense.
Provisions are recognized when the Group has a present obligation (legal or 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. If the effects of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, increase in the provision due to the passage of time is recognized as an interest expense.
a) Defined Benefit Plan – Gratuity The Company measures the present value of the promised retirement benefits of gratuity which is a defined benefit plan with the advice of an
actuary every year using projected benefits valuation method. Actuarial gains and losses are recognized as income or expenses over the expected average remaining working lives of the participants of the plan.
b) Defined Contribution Plans - Employees' Provident Fund & Employees' Trust Fund Employees are eligible for Employees' Provident Fund Contributions and Employees' Trust Fund Contributions in line with the respective statutes and regulations. The Group contributes 15% and 3% of gross emoluments of employees to Employees' Provident Fund and Employees' Trust Fund respectively.
Contributions from consumers to defray the cost of assets installed to establish new service connections are recognized as deferred obligations. The new service connection assets are depreciated over a period of 20 years. The corresponding consumer contributions are amortised to the Income Statement over a similar period of 20 years, upto 31 December 2008. Commencing from 01 January 2009, receipt of consumer contributions is amortised over 8 years and receipt prior to 31 December 2008 is amortized over 20 years.
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses of continuing operations are recognized in the income statement in those expense categories consistent with the function
2.4.12 Deferred Income of Consumer Contributions
2.4.13 Impairment of Assets
2.4.14 Income Statement
of the impaired asset, except for property previously revalued where the revaluation was taken to equity. In this case the impairment is also recognized in equity up to the amount of any previous revaluation.
Assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot ''exceed' the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
Revenue RecognitionRevenue is recognised 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. The following specific criteria are used for the purpose of recognition of revenue.
a) Rendering of ServicesRevenue from rendering of services is recognized in the accounting period in which the services are rendered or performed.
b) InterestInterest Income is recognized as the interest accrued (taking into account the effective yield on the asset) unless collectability in doubt.
c) DividendsDividend income is recognized on a cash basis.
d) OthersOther income is recognized on an accrual basis.
Net Gains and losses of a revenue nature on the disposal of Property, Plant & Equipment and other non current assets including investments have been accounted for in the income statement, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses. On disposal of revalued Property, Plant and Equipment, amount remaining in Revaluation Reserve relating to that asset is transferred directly to Retained Earnings.
Gains and losses arising from incidental activities to main revenue generating activities and those arising from a group of similar transactions which are not material, are aggregated, reported and presented on a net basis.
a) The following standards have been issued by the Institute of Chartered Accountants of Sri Lanka.
-Sri Lanka Accounting Standard 44 Financial Instruments; Presentation (SLAS 44)-Sri Lanka Accounting Standard 45 Financial Instruments; Recognition and Measurement (SLAS 45)-Sri Lanka Accounting Standard 39 Share Based Payments (SLAS 39)
The effective date of SLAS 44, 45 and 39 was changed during the year to be effective for financial periods beginning on or after 01 January 2012. These three standards have been amended and forms a part of the new set of financial reporting standards mentioned under note (b) below.
a) Following the convergence of Sri Lanka Accounting Standards with the International Financial Reporting Standards, the Council of the Institute of Chartered Accountants of Sri Lanka has adopted a new set of financial reporting standards that would apply for financial periods beginning on or after 01 January 2012. The application of these financial reporting standards is substantially different to the prevailing standards.
2.5 Effect of Sri Lanka Accounting Standards issued but not yet effective:
LECO Annual Report 2010 26 / Page LECO Annual Report 2010 27 / Page
3. PROPERTY, PLANT & EQUIPMENT 3.1 Group3.1.1 Gross Carrying Amounts
3.1.4 Net Book Values
Additions DisposalBalance As at
31.12.2010
Balance As at
01.01.2010
Rs.'000 Rs.'000 Rs.'000 Rs.'000
At Cost
Freehold Land 447,264
4,769
-
452,033
Leasehold Land 7,065
-
-
7,065
Buildings 155,701
524
-
156,225
Motor Vehicles 451,840
6,757
(722)
457,875
Computers 228,339
3,355
-
231,694
Office Equipment 233,041
12,619
(88)
245,572
Plant & Machinery 80,428
211
-
80,639
1,603,678
28,235
(810)
1,631,103
At Valuation
Freehold Land 867,279
-
-
867,279
Buildings 333,646
-
-
333,646
Supply of Infrastructure 14,725,499
390,658
(19,729)
15,096,428
15,926,424
390,658
(19,729)
16,297,353
Total Value of Depreciable Assets 17,530,102
418,893
(20,539)
17,928,456
Supply of Infrastructure -Work InProgress
Balance As at
01.01.2010
Rs.'000
Incurred During the
YearRs.'000
Transferred
Rs.'000
Balance As at
31.12.2010
Rs.'000
409,245 339,598 (390,658) 358,185409,245 339,598 (390,658) 358,185
17,939,347 758,491 (411,197) 18,286,641Total Gross Carrying Amount
3.1.2 In the Course of Construction
DisposalBalance As atBalance As at Charge for
the year01.01.2010 31.12.2010
At Cost
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Leasehold Land 3,801 183 - 3,984 Buildings 2,472 3,899 - 6,371 Motor Vehicles 215,404
44,676
(722)
259,358
Computers 216,515
12,293
-
228,808
Office Equipment 180,365
9,074 (88)
189,351
Plant & Machinery 14,024
10,633 -
24,657
632,582
80,758
(810)
712,530
At Valuation
Buildings 17,945
8,355
-
26,300 Supply of Infrastructure 8,485,882
596,239 (11,766)
9,070,355 8,503,827
604,594
(11,766)
9,096,655 Total Depreciation 9,136,408
685,352
(12,576)
9,809,184
3.1.3 Depreciation
2010 2009
Rs.'000 Rs.'000
At Cost
Freehold Land 452,033 447,264
Leasehold Land 3,082 3,264
Buildings 149,854 153,229
Motor Vehicles 198,517 236,436
Computers 2,886 11,824
Office Equipment 56,221 52,654
Plant & Machinery 55,982 67,499
918,574 972,170
At Valuation
Freehold Land 867,279 867,279
Buildings 307,346 315,701
Supply of Infrastructure 6,026,072 6,239,617
7,200,698 7,422,596
In the Course of Construction
Supply of Infrastructure - Work In Progress 358,185 409,245
Total Carrying Amount of Property, Plant & Equipment 8,477,457 8,804,012
3.2 Company
3.2.1 Gross Carrying Amounts
Balance As
at
01.01.2010
Rs.'000
Additions
Rs.'000
Disposal
Rs.'000
Balance As at
31.12.2010
Rs.'000
At Cost
Freehold Land 447,264 4,769 - 452,033
Leasehold Land 7,065 - - 7,065
Buildings 155,701 524 - 156,225
Motor Vehicles 451,840 6,757 (722) 457,875
Computers 228,037 3,355 - 231,392
Office Equipment 231,228 12,560 (88) 243,700
1,521,135 27,965 (810) 1,548,290
At Valuation
Freehold Land 867,279 - - 867,279
Buildings 333,646 - - 333,646
Supply of Infrastructure 14,725,499 390,658 (19,729) 15,096,428
15,926,424 390,658 (19,729) 16,297,353
Total Value of Depreciable Assets 17,447,559 418,623 (20,539) 17,845,643
LECO Annual Report 2010 28 / Page LECO Annual Report 2010 29 / Page
3.2.2 In the Course of Construction
3.2.3 Depreciation
3.2.4 Net Book Values
3.2.7 The useful lives of the Company's assets are as follows;
Balance As at
01.01.2010
Incurred
during Year Transfers
Balance As at
31.12.2010
Rs.'000 Rs.'000 Rs.'000 Rs.'000
409,245 339,598 (390,658) 358,185
409,245 339,598 (390,658) 358,185
Supply of Infrastructure - Work In
Progress
Total Gross Carrying Amount 17,856,804 758,221 (411,197) 18,203,828
Balance As at
01.01.2010 Charge for the
yearDisposal
Balance As at
31.12.2010
Rs.'000 Rs.'000 Rs.'000 Rs.'000
At Cost
Leasehold Land 3,801
183 -
3,984
Buildings 2,472
3,899 -
6,371
Motor Vehicles 215,404
44,676
(722)
259,358
Computers 216,432
12,214
-
228,646
Office Equipment 180,088
8,739 (88)
188,739 618,197
69,711
(810)
687,098
At Valuation
Buildings 17,945
8,355
26,300
Supply of Infrastructure 8,485,882
596,239 (11,766)
9,070,355
8,503,827
604,594
(11,766)
9,096,655
Total Depreciation 9,122,024
674,305
(12,576)
9,783,753
2010 2009
Rs.'000 Rs.'000
452,033 447,264 3,081
3,264
149,853
153,229
198,518
236,436
2,746
11,605 54,961
51,140
861,192
902,938
867,279
867,279
307,346
315,701
6,026,072
6,239,617
7,200,697
7,422,597
358,185
409,245
At Cost
Freehold Land
Leasehold Land
Buildings
Motor Vehicles
Computers
Office Equipment
At Valuation
Freehold Land
Buildings
Supply of Infrastructure
In the Course of Construction
Supply of Infrastructure - Work In Progress
Total Carrying Amount of Property, Plant & Equipment 8,420,074
8,734,780
3.2.5 The fair value of land and buildings was last determined by means of a revaluation during the financial year 31 December 2006 by Messrs. K.T.D. Tissera, P.B.D. Edirisinghe, P.T. Mohideen and S.A.S. Fernando , independent valuers in reference to market based evidence. The results of such revaluation were incorporated in these Financial Statements from its effective date which was 01 January 2007. The surplus arising from the revaluation was transferred to a revaluation reserve.
3.2.6 During the financial year, the Company acquired Property, Plant & Equipment to the aggregate value of Rs.758.221Mn (2009 - Rs. 1,206.651Mn). Cash payments amounting to Rs.23.449 Mn (2009 - Rs.764.018 Mn) were made during the year for purchase of Property, Plant & Equipment.
2010 2009
Buildings 2.5% p.a. 2.5% p.a.Leasehold Land Over lease period Over lease period
Supply of Infrastructure
Substations, Overhead lines & Service Lines taken over from
Local Authorities and CEB 10% p.a. 10% p.a.
Substations, Overhead lines & Service Lines constructed by
Lanka Electricity Company (Pvt) Ltd 4% - 5% p.a. 4% - 5% p.a.
Motor Vehicles 15% p.a. 15% p.a.
Computers 20% p.a. 20% p.a.
Office Equipment 15% p.a. 15% p.a.
3.2.8 The Company's Property, Plant and Equipment includes fully depreciated assets having a gross carrying amounts of Rs.754.268Mn (2009-Rs.431,577Mn).
3.2.9 The details of Leasehold Property are as follows;
CostRs. '000
Lease Period SinceUnexpired Lease
period as at 31/12/2010
Location
Peliyagoda 3,350 99 Years 30/03/99 88 YearsUdahamulla 1,667 99 Years 12/01/88 77 YearsHikkaduwa 1,448 50 Years 07/11/97 37 YearsAmbalangoda 600 30 Years 01/12/96 16 Years
4. INVESTMENTS IN EQUITY SECURITIES
Non-Quoted
Lanka Broad Band
Network (Pvt) Ltd
West Coast Power (Pvt)
Ltd
LECO Projects (Pvt) LtdAnte LECO Metering
Company (Pvt) Ltd Total Investments in
Non-Quoted Equity
SecuritiesLess: Allowances for Fall
in Value
Net Investment in Non
Quoted Equity Security
Carrying
Value 2010
Directors'
Valuation 2010
Carrying Value
2009
Directors'
Valuation 2009
2010 2009 2010 2009 Rs.'000 Rs.'000 Rs.'000 Rs.'000
Ordinary
shares 4% 4% 500,000
500,000
5,000
-
5,000
-
Preferenceshares 100% 100% 1,500,000
1,500,000
15,000
-
15,000
-
Ordinaryshares 17% 17% 20,000,000
20,000,000
2,000,000
2,000,000
2,000,000
2,000,000
Ordinary
shares 100% 100% 100 100 1
1
1
1
Ordinary
shares 70% 70% 3,131,967
3,131,967
31,320
31,320
31,320
31,320
2,051,321
2,031,321
2,051,321
2,031,321
(20,000)
-
(20,000)
-
2,031,321
2,031,321
2,031,321
2,031,321
No. of SharesHolding %Company
LECO Annual Report 2010 30 / Page LECO Annual Report 2010 31 / Page
Administrative Borrowings by Department
of Treasury Operations
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
570,000 570,000 570,000 570,000
570,000 570,000 570,000 570,000
5. BORROWINGS BY DEPARTMENT OF TREASURY OPERATIONS
Ante LECO Metering Company (Pvt) Ltd - - 47,085 47,085
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
-
- 47,085 47,085
Non Current
Long Term Borrowings (6.1) - - 47,085 47,085
Term Deposits 68,100 145,200 68,100 145,200
68,100 145,200 115,185 192,285
Current
Investments in Banks for Loans given to
Employees 482,086 405,458 482,086 405,458
Investments in Other Deposits 1,056,377 545,651 1,050,392 543,891
1,538,463 951,109 1,532,478 949,350
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
6.OTHER INVESTMENTS
6.1 Long Term Borrowings
7. INVENTORIES
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
683,338 725,531 606,380 676,198
14,094 10,846 14,094 10,846
697,432 736,377 620,474 687,044
Operational and Maintenance Goods
Goods in Transit
Allowances for Obsolete and Slow Moving
Inventories (13,032) (13,032) (13,032) (13,032)
684,400 723,345 607,442 674,012
8. TRADE AND OTHER RECEIVABLES
8.1 Summary
Trade Debtors
Other Debtors
Advances and Prepayments
Loans to Company Officers
Allowances for Doubtful Debtors
- Related Parties (8.2)
- Others
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
16,715 21,278 128,263 168,220
1,820,270 1,874,559 1,820,264 1,874,553
1,836,985 1,895,837 1,948,527 2,042,773
114,759 148,448 114,759 148,448
79,852 53,906 21,791 28,752
309,348 322,339 309,348 322,339
(657,496) (520,748) (633,119) (520,748)
1,683,448 1,899,782 1,761,306 2,021,564
8.2 Trade Debtors - Related Parties
Group Company
2010 2009 2010 2009Relationship
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Parent
Company 16,715 21,278 16,715 21,278
Subsidiary
Company - - - -
Subsidiary
Company - - 111,548 146,942
16,715 21,278 128,263 168,220
Ceylon Electricity Board
LECO Projects (Pvt) Ltd
Ante LECO Metering Company
(Pvt) Ltd
9. AMOUNTS DUE FROM RELATED PARTIES
Group Company
2010 2009 2010 2009Relationship
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Ceylon Electricity Board Parent
Company 75,818 82,354 - -
Ante LECO Metering Company
(Pvt) Ltd
Subsidiary
Company - - 30,024 30,281
LECO Projects (Pvt) Ltd Subsidiary
Company - - 2,449 2,319 75,818 82,354 32,473 32,600
LECO Annual Report 2010 32 / Page LECO Annual Report 2010 33 / Page
12. REVENUE RESERVES
12.1 Summary
10. STATED CAPITAL
The holders of ordinary shares confer their right to receive dividends as declared from time to time entitled to one vote per share at a meeting of the Company. All shares rank equally with regard to Company's residual assets.
11. CAPITAL RESERVES
11.1 Summary
Group Company
2010 2009 2010 2009
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Revaluation Reserve
On: Property, Plant & Equipment
Lands 764,336 764,336 764,336 764,336
Buildings 43,459 43,459 43,459 43,459
Supply of Infrastructure (11.2) 5,237,351 5,232,140 5,237,351 5,232,140
6,045,146 6,039,935 6,045,146 6,039,935
Pending Allotment of Shares - 13,422 - -
6,045,146 6,053,357 6,045,146 6,039,935
11.2 On: Supply of Infrastructure
Group Group
2010 2009 2010 2009
Rs.'000 Rs.'000 Rs.'000 Rs.'000
Balance as at the beginning of the year 5,232,140 4,174,936 5,232,140 4,174,936
Revaluation of Cost of Supply Infrastructure (3.2.1) - 2,335,478 - 2,335,478
Revaluation of Accumulated Depreciation
(3.2.3) - (1,278,581) - (1,278,581)
Net Additions / (Removals) of supply of infrastructure 5,211 6,606 5,211 6,606
Adjustment in respect of prior years - (6,299) - (6,299)
Balance as at the end of the year 5,237,351 5,232,140 5,237,351 5,232,140
Supply Infrastructure are revalued each year using indices that reflect price changes due to inflation (2010 - Nil% / 2009 - 19.43%). The unrealised surplus cannot be directly distributed to the shareholders.
Foreign Exchange Reserves (12.2)
Asset Replacement Fund (12.3)
Insurance Reserves (12.4)
109,258 109,258 109,258 109,258
311,642 311,642 311,642 311,642
29,000 29,000 29,000 29,000
Group Company
2010 2009 2010 2009
Rs.'000 Rs.'000 Rs.'000 Rs.'000
449,900 449,900 449,900 449,900
12.2 Foreign Exchange Reserve
This represents the gain on exchange in the previous years when Asian Development Bank Term Loans in SDR were paid to the Government of Sri Lanka at contracted rates although supplies of capital goods were received and accounted at higher prevailing rates, and gain recorded when loan agreements were signed.
12.3 Asset Replacement Reserve
Balance as at the beginning of the year
Expensed during the year
Balance as at the end of the year
Group Company
2010 2009 2010 2009
Rs.'000 Rs.'000 Rs.'000 Rs.'000
311,642 311,710 311,642 311,710
- (68) - (68)
311,642 311,642 311,642 311,642
This represents amounts set aside from profit for replacement and rehabilitation of Property, Plant and Equipment of the Company.
12.4 This represents the amount transferred from the Retained Earnings to cover losses and damages to Property, Plant & Equipment and Inventories of the Company.
13. INTEREST BEARING LOANS & BORROWINGS
Company
Bank Loans (13.1)
Bank Over Draft (26.2)
2010 2010 2010 2009 2009 2009
Amount Amount Total Amount Amount TotalRepayable Repayable Repayable Repayable
Within 1 Year After 1 Year Within 1 Year After 1 YearRs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
77,422 210,014 287,436 77,422 287,436 364,858 66,063 - 66,063 5,148 - -
143,485 210,014 353,499 82,570 287,436 364,858
LECO Annual Report 2010 34 / Page LECO Annual Report 2010 35 / Page
Group Company
2010 2009 2010 2009
Rs.'000 Rs.'000 Number '000 Number '000
Issued and Fully Paid Ordinary Shares
A Shares 1,135,803 1,135,803 113,580 113,580 B Shares 9,264 9,264 926 926
1,145,067 1,145,067 114,507 114,507
13.1 Bank Loans
The above loans were given to the Government of Sri Lanka by Asian Development Bank and re-lent to Lanka Electricity Company (Private) Limited.
14. DEFERRED TAX (ASSET) / LIABILITY
Balance as at the beginning of the year
Deferred tax adjustment for the year (24)
Balance as at the end of the year
Depreciation allowances for tax purposes
Deferred Income on Consumer Contribution
Deferred Tax Liability
Deferred Tax Asset
Deferred Income on Consumer Contribution
Employment Retirement Benefits
Group Company
2010 2009 2010 2009
Rs.'000 Rs.'000 Rs.'000 Rs.'000
449,468 278,118 449,468 278,118
342,106 171,343 342,196 171,350
791,574 449,461 791,664 449,468
185,738 569,906 185,828 569,913
695,037 - 695,037 -
- (21,020) - (21,020)
(89,201) (99,425) (89,201) (99,425)
791,574 449,461 791,664 449,468
15. DEFERRED INCOME
16. EMPLOYMENT RETIREMENT BENEFIT
Balance as at 1st January
Consumer contributions during the year
Charged to income statement
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
2,588,725 2,508,460 2,588,725 2,508,460
355,675 292,925 355,675 292,925
(252,736) (212,660) (252,736) (212,660)
2,691,664 2,588,725 2,691,664 2,588,725
Balance as at 1st January
Charge for the year
Payments made during the year
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
284,189 279,060 284,071 279,060
44,860 20,562 44,873 20,444
(10,370) (15,433) (10,370) (15,433)
318,679 284,189 318,574 284,071
16.1 Messrs. Actuarial Management Consultants (Pvt) Ltd Actuaries, carried out an actuarial valuation of the defined benefit plan gratuity of the Company. Appropriate and compatible assumptions were used in determining the cost of retirement benefits. The principal assumptions used are as follows:
Discount Rate
Salary Increment Rate
Normal Retirement Age
Current Service Cost
2010 2009
11% per annum 11% per annum
8.5% 8.5%
Appointments upto 31
December 2006 - 65 years
Appointments upto 31
December 2006 - 65 years Appointments after 01
January 2007 - 55 years
Appointments after 01
January 2007 - 55 years
Rs.17,068,291/- Rs. 15,888,964/-
17. TRADE AND OTHER PAYABLES
17.1 Summary
17.2 Trade Dues Payable to Related Parties
Trade Payable - Related Parties (17.2)
Sundry Creditors including Accrued Expenses
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
1,688,375 1,235,414 1,688,375 1,235,414
443,779 409,588 390,413 333,212
2,132,154 1,645,002 2,078,788 1,568,626
Ceylon Electricity Board Parent Company 1,688,375 1,235,414 1,688,375 1,235,414
1,688,375 1,235,414 1,688,375 1,235,414
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
Relationship
18. AMOUNTS DUE TO RELATED PARTIES
Ceylon Electricity Board
Lanka Transformers (Pvt) Ltd
Group Company
Relationship 2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
Parent Company 472 398 472 398
Affliate Company 12,159 31,547 12,159 31,547
12,631 31,945 12,631 31,945
LECO Annual Report 2010 36 / Page LECO Annual Report 2010 37 / Page
Asian Development Bank
Project 2
Project 3
Repayment Value of an As at Loans Repayment As at
Period Installment 01.01.2010 Obtained 31.12.2010Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000
20 years 22,253 200,280 - (44,507) 155,774
15 years 16,458 164,578 - (32,916) 131,663
364,858 - (77,422) 287,436
InterestRate(%)
10.50
13
19. REVENUE
3,169,198 2,972,408 3,169,198 2,972,408
5,265,461 4,933,826 5,265,461 4,933,826
5,302,446 4,846,785 5,302,446 4,846,785
198,573 218,646 198,573 218,646
75,824 73,851 75,824 73,851
15,500 20,239 15,500 20,239
3,869 2,734 - -
Industrial & Hotels
Domestic
Commercial
Street Light (19.1)
Religious
Temporary Connections
Contract Revenue
Sale of Goods 323,618 589,199 - -
Group Company
2010 2009 2010 2009
Rs.'000 Rs.'000 Rs.'000 Rs.'000
14,027,002 13,065,755 14,027,002 13,065,755
14,354,489 13,657,688 14,027,002 13,065,755
19.1. In the current year, revenue on street light (treasury paid) has been recognized only up to the amount received from the government in the year 2010 which is Rs. 158,603,899/- in these financial statements. If such revenue is recognized during the year on the same basis as previous years the street light revenue would have been increased by Rs. 293,876,602/-. The loss of Rs. 245,854,000/- after taking in to account the cost of Rs. 167,819,007/- for providing the unrecorded street light revenue.
19.2. A directive was issued by the Public Utility Commission of Sri Lanka to account for purchases for a calendar year with effect from 1/1/2011.Previously purchases were calculated and recorded for 20 December to 21 December. As a result of this directive, an additional 10 days of purchases of electricity has been recorded for the year ended 31/12/2010. The effect of this on profit/ (loss) is an additional cost of Rs. 389,806,000/- for the year ended 31/12/2010. On this basis the company recorded a loss of Rs.245,854,000/-. If the purchases were recorded on the same basis as in the previous year, the company would have recorded a profit of Rs.143,952,000/-.
20. OTHER OPERATING INCOME
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
252,736 212,660 252,736 212,660
229,688 146,865 229,688 146,865
404 1,883 404 1,883
20,916 11,559 20,916 11,559
Amortization of Consumer Contribution
Recoveries from Consumers
Training School Income
Interest on Staff Loans & Concessionary
Loans to Consumers
Sundry Income 138 115 - -
503,882 373,083 503,744 372,968
21. FINANCE INCOME
23. PROFIT BEFORE TAX
Interest on Other Deposits
Interest on Administrative Borrowings
by Treasury
Interest on Government securities
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
113,126
178,353
107,738
170,841
39,900
39,900
39,900
39,900
33,816
-
33,816
-
186,842
218,253
181,454
210,741
Stated after Charging /(Crediting) following;
Included under other operating expenses
Depreciation
Staff Costs
Included under administration expenses
Depreciation
Donation & Contribution
Public Relations and Advertising
Entertainment
Directors Fees
Research and Development Costs
Staff Costs include;
- Defined Benefit Plan Costs - Gratuity (included in staff cost)
- Defined Contribution Plan Costs - EPF & ETF (included in staff cost)
Allowances for Doubtful Debtors
Audit FeesProfit on Sale of Property, Plant and
Equipment
Allowance for Fall in Value in Investments
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
625,041
599,157
625,041
599,154
404,317
374,230
404,317
374,230
60,201
69,539
49,265
59,195
342
4,512
32
4,512
3,730
10,690
3,722
10,690
75
81
75
81
100
458
100
196
-
9,429
-
9,429
671,545
600,332
662,274
589,813
44,873
20,463
44,873
20,444
101,258
93,675
99,792
93,011
112,377
102,962
112,371
102,962
1,580 1,475 1,096 1,220
(2,422) (15,281) (2,442) (15,281)
- 20,000 - 20,000
LECO Annual Report 2010 38 / Page LECO Annual Report 2010 39 / Page
22 FINANCE COST
Interest Expense on Overdrafts
Interest Expense on Loans & Barrowings
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
187
249
20
93
41,606
51,086
41,606
51,086
41,793
51,335
41,626
51,178
24. INCOME TAX EXPENSE 25. BASIC LOSS PER SHARE
Current Income Tax
Current tax expense on ordinary activities for the year (24.1)
Over provision of current taxes in respect of prior years (24.2)
Social Responsibility Levy @ 1.5%
Deferred Income Tax
Deferred Taxation Charge (14)
Income Tax expense reported in the income statement
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
77,516 124,885 76,076 122,135
(59,724) - (59,724) -
1,167 1,874 1,141 1,833
342,106 171,343 342,196 171,350
361,065 298,102 359,689 295,318
24.1. A reconciliation between tax expense and the product of accounting profit multiplied by the statutory tax rate is as follows:
Accounting Loss Before Tax
Aggregate Disallowed Items
Aggregate Allowable Expenses
Adjusted Taxable Profit
Statutory Tax Rate
Current Tax Expense
Group Company
2010 2009 2010 2009Rs.'000 Rs.'000 Rs.'000 Rs.'000
(237,519) (99,935) (245,854) (132,091)
727,922 687,302 736,648 711,602
(268,928) (230,553) (273,435) (230,553)
221,475 356,814 217,359 348,958
35% 35% 35% 35%
77,516 124,885 76,076 122,135
24.2 . The Department of Inland Revenue had raised an income tax assessment in respect of the year 1995/1996 recognizing the full amount of income arising from new service connection for tax purposes in the same period that such income was derived, whereas the accounting policy is to recognize such income on a deferred basis over a 20 years period.
The matter was under appeal before the Board of Review and the Board of Review on conclusion of the inquiry has determined that there is no additional assessment of income and the income tax assessment raised in respect of year of assessment 1995/96 was not valid. Hence the provision made in respect of this liability of Rs.407.703Mn has been reversed in year 2008.
In 2010, at the meeting held with the Department of Inland Revenue in order to settle the petition of appeal made against the notice of Assessment issued for the Year of Assessment 2007/2008, the Department of Inland Revenue agreed to treat the consumer contribution on the following basis;
-From the year of assessment 2007/2008, the receipts will be taxed over eight years.
-The remaining of the consumer contributions as at the beginning of the year of assessment 2007/2008, i.e. brought forward amount to be taxed on the same as accounting amortization basis, i.e. over twenty years
25.1. Basic loss per share is calculated by dividing the net loss for the year attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding during the year and the previous year are adjusted for events that have changed the number of ordinary shares outstanding without a corresponding change in the resources such as a bonus issue.
25.2 The following reflects the income and share data used in the basic loss per share computation:
Amounts used as the numerator
Loss for the year
Loss attributable to ordinary shareholders
for basic loss per share
Group Company
2010 2009 2010 2009
Rs.'000 Rs.'000 Rs.'000 Rs.'000
(600,032) (406,492) (605,543) (427,409)
(600,032) (406,492) (605,543) (427,409)
26. CASH AND CASH EQUIVALENTS IN THE CASH FLOW STATEMENT
Components of Cash and Cash Equivalents
26.1 Favourable Cash & Cash Equivalents balance
Cash & Bank Balances
Current Portion of Other Investments
26.2 Unfavourable Cash & Cash
Equivalent Balances
Bank Overdraft (13)
Total Cash and Cash Equivalents For the
Purpose of Cash Flow Statement
Group Company
2010Rs.'000
2009Rs.'000
2010Rs.'000
2009Rs.'000
775,791 537,587 728,975 417,384
1,538,462 951,109 1,532,478 949,350
2,314,253 1,488,696 2,261,453 1,366,734
(66,063) (5,148) (66,063) (5,148)
2,248,190 1,483,548 2,195,390 1,361,586
LECO Annual Report 2010 40 / Page LECO Annual Report 2010 41 / Page
Number of ordinary shares used as the
denominator:
Weighted average number of ordinary
shares in issue
2010 2009 2010 2009Number '000 Number '000 Number '000 Number '000
114,507 114,507 114,507 114,507
114,507 114,507 114,507 114,507
27. COMMITMENTS AND CONTINGENCIES
27.1 Capital Expenditure Commitments
The Group/Company does not have material purchase commitments for acquisition of property, plant and equipment incidental to the ordinary course of business as at 31 December 2010 (2009 - Nil).
27.2 Contingent Liabilities
a) The Company suspended paying turnover tax with effect from 1st of July 2008. The turn over tax unpaid for the period 01 July 2008 to 31st December 2010 amounts to Rs.336.74Mn ( 2009 - 196.47Mn). However, the written clearance has not yet been received by the Company from the relevant tax authorities. No provision has been made in the financial statements in this regard.
b) The Company is a defendant or defendant respondent in 23 (2009-24) lawsuits for which the maximum liability is estimated by the Company at Rs.305,822,620/- (2009 - Rs.31,436,033/-) at the year end. Although there is no assurance, the directors believe, based on the information currently available, that the ultimate resolution of such legal procedures would not likely to have a material adverse effect on the results of operations, financial position or liquidity of the Company. Accordingly, no provision for any liability has been made in these financial statements in this regard.
28. ASSETS PLEDGEDFollowing assets have been pledged as security for liabilities.
Nature of Assets
Fixed Deposits
Fixed Deposits
Fixed Deposits
Fixed Deposits
Carrying Amount ofAssets
Pledged
Nature of Liabilities 2010 2009
Rs.'000 Rs.'000
IncludedUnder
Bank overdraft facilities of People's Bank 45,500 36,000
Current Current OtherInvestments
and NonSMI loan schemes of People's Bank 80,838 72,667
Staff loan Schemes of SMIB Bank and HDFC Bank
482,086 405,458
Bond against the stand by Letter of credit facilities of West Cost Power (Pvt) Ltd to NDB Bank
319,000 319,000
927,424 833,125
29. RELATED PARTY DISCLOSURE
Details of significant related party disclosures are as follows;
29.1 The Company carried out following transactions with following related companies;
Parent CompanyOther major
shareholders / Treasury
Affiliates
Ante Leco Metering Company (Pvt) Ltd
Leco Projects(Pvt) Ltd
West CoastPower (Pvt)
Lanka (Pvt) LtdTransformers
2010 2009Rs.'000 Rs.'000
2010Rs.'000
2009Rs.'000
2010Rs.'000
2009Rs.'000
2010Rs.'000
2009Rs.'000
2010Rs.'000
2009Rs.'000
2010Rs.'000
2009Rs.'000
(1,214,534) (1,245,595)
205,142
127,719
176,838
120,705
2,319
1,947
2,000,000
1,910,425
(31,547)
-
(12,544,671) (11,493,574)
-
-
-
-
-
-
-
-
-
-
12,381,356 11,524,635
-
-
-
-
-
-
-
-
-
-
(293,811)
-
77,422
77,422
-
-
-
-
-
-
-
-
-
-
39,900
39,900
-
-
-
-
-
-
-
-
(472)
-
-
-
-
-
-
-
-
-
-
-
-
-
(39,900)
(39,900)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
89,575
-
-
-
-
-
-
285,182
410,638
130
372
-
-
-
-
-
-
-
-
(320,448)
(354,505)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(13,994)
(64,407)
-
-
-
-
-
-
-
-
-
-
33,382
32,860
-
-
-
-
-
-
-
-
-
-
-
-
(1,672,132) (1,214,534) 282,564 205,141 141,572 176,838 2,449 2,319 2,000,000 2,000,000 (12,159) (31,547)
Balance as at 01 January
Purchase of Electricity
Payments for Electricity
ADB Loan Repayments
Interest on Borrowings
Accrued Expenses
Interest Received
Equity
Material Transfer
Receipt of Material
Purchase of goods
Payments
Fund Transfers
Balance as at 31 December
29.2 Transactions with Government Related Entities
For the purpose of this disclosure, the management has decided to disclose transactions with the entities relating to the line ministry to which Company belongs to, in addition to the transactions with the Government Treasury, and there were no such transactions during the year (2009 - Nil).
29.3 Transaction with the key Management Personal of the Company or its Parent
The Company has defined, the key Management personnel of the Company are the members of its Board of Directors and that of its parent and the divisional heads including General Manager.
Key management personnel Compensation
Directors fees and short term benefits
Remuneration of other key management personnel
Total compensation paid to key
Company
2010 2009Rs.'000 Rs.'000
474 744
13,879 10,731
14,353 11,475
30. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
The Board of Directors of Lanka Electricity Company (Pvt) Ltd decided to suspend the services of the General Manager with effect from 11 March 2011.
LECO Annual Report 2010 42 / Page LECO Annual Report 2010 43 / Page
31. COMPARATIVE INFORMATION
The presentation and classification of following items in the Financial Statements are amended to ensure the comparability with the current year.
Balance Sheet
Trade and Other PayablesSundry Creditors including Accrued Expenses (a)
Balance SheetAmount Due to Related Parties (a)
Group Company
Increase Decrease Increase DecreaseAs reported previously
2009Rs.'000
Current Presentation
2009Rs.'000
As reported previously
2009Rs.'000
Current Presentation
2009Rs.'000
441,533
-
(31,945)
409,588
365,157
-
(31,945) 333,212
- 31,945 - 31,945 - 31,945 - 31,945
441,533 31,945 (31,945) 441,533 365,157 31,945 (31,945) 365,157
Reason for change in the Presentation and Classification The Amounts due to related parties which was classified under Sundry Creditors including Accrued Expenses during the previous year was reclassified under Amounts due to Related Parties during the current year for better presentation in the Financial Statements.
LECO Annual Report 2010 44 / Page LECO Annual Report 2010 45 / Page
10 Year Summery
For the Year ended 31 st December 2010
PERFORMANCE HIGHLIGHTS
2,010Rs. '000
2009Rs. ' 000
2008Rs. ' 000
2007Rs. ' 000
2006Rs. ' 000
2005Rs. ' 000
2004Rs. ' 000
2003Rs. ' 000
2002Rs. ' 000
2001Rs. ' 000
14,027,002 13,065,755
13,229,654
11,517,269
9,713,653
8,175,259
7,587,016
6,976,467
5,625,636
3,661,595
-204,228 (80,913) 593,835
1,007,507
1,046,184
592,747
468,953
241,445
226,006
410,224
181,454 210,741
300,411
460,503
340,244
271,244
220,484
195,092
282,847
366,332
41,626 51,178
60,289
69,142
80,850
101,905
105,861
121,458
161,140
159,577
-245,854 (132,091) 533,546
938,364
965,334
760,770
583,576
315,079
347,713
616,979
359,689 295,318
747,981
535,328
370,184
274,526
268,984
120,500
197,969
283,131
-605,543 (427,409) (214,435) 403,036
595,150
486,244
314,592
194,579
149,744
333,848
1,145,067 1,145,067
1,145,067
1,145,067
1,145,067
1,145,067
1,145,067
1,145,067
1,145,067
1,145,067
6,045,146 6,039,935
4,982,731
4,473,981
3,331,032
3,176,836
2,953,821
2,800,778
2,647,078
2,493,253
449,900 449,900
449,968
450,127
341,539
363,189
1,221,469
906,877
893,297
743,553
4,011,916 3,609,700
3,430,497
2,973,040
3,045,153
2,805,387
3,314,405
3,285,082
3,307,192
3,244,393
2,750,778 2,376,704
2,436,836
2,535,429
2,471,970
1,955,196
1,832,223
1,488,019
1,431,846
1,415,288
14,402,807 13,621,306
12,445,099
11,577,644
10,334,761
9,445,675
10,466,985
9,625,823
9,424,480
9,041,554
11,136,580 11,528,386
10,386,277
9,536,369
6,336,746
5,926,066
5,625,300
5,535,673
4,894,909
4,729,720
4,662,674 4,094,910
4,488,221
4,685,110
6,148,733
5,304,190
4,841,685
4,090,151
4,529,571
4,311,834
15,799,254 15,623,296
14,874,498
14,221,479
12,485,479
11,230,256
10,466,985
9,625,824
9,424,480
9,041,554
0 0 0 3.66
5.20 4.25 2.75 1.70 1.31 2.92
78.92 84.16 78.66 76.09 60.85 56.5 46.46 42.38 40.92 38.27
0 0 0 1.50
2.00 1.50 1.50 0 0 2.00
1,338 1,326
1,358
1,283
1,270
1,284
1,302
1,318
1,314
1,322
354 354 338 347
338 320 302 285 274 261
6.85% -10.50% -9.68% 0.33% 9.38 9.00 6.20 3.70 0.90 4.40
0.06 0.06 0.07 0.08
0.11 0.19 0.23 0.27 0.31 0.33
1.70 1.72 1.84 1.85 2.49 2.7 2.6 2.7 3.2
0 172
229 172 172 0 0 229
1123.02 1,051.62
1,071.25
1,099.03
1,045.30
974.38
914.78
848.51
764.12
743.20
1228.02 1,120.23
1,124.48
1,144.22
1,110.75
1,036.77
969.17
899.18
838.51
797.01
6.28 5.81
5.03
4.74
5.80 5.32 5.61 5.63 6.41 6.75
473,079 469,323
459,548
445,386
429,387
411,157
392,782
376,098
360,357
345,314
3
Operating Results
Revenue from Sale of Electricity
Profit Before Interest
Interest Earned
Interest Incurred
Profit Before Tax
Taxation
Profit After Tax
Equity & Liabilities
Share Capital
Capital Resreves
Revenue Reserves
Non Current Liabilities
Current Liabilities
Assets
Non Current Assets
Current Assets
Share Information
Employee Information
No. of Employees
Consumer/ EmployeeRatio
Ratios & Other Information
Return on Average Net Fixed Assets (%)
Current Ratio
Dividend Paid (Rs.Mn)
Sales (GWh) Purchases
from CEB (GWh)
Purchases from CEB(Gwh)
Distribution System Losses %
No. of Consumers
Long Term Debt to Equity
DividendPer Share (Rs.)
Net Assets Per Share (Rs.)
Earnings Per Share (Rs.)
LECO Annual Report 2010 46 / Page
NOTICE OF MEETING
NOTICE IS HEREBY GIVEN that the Twenty Seventh Annual General Meeting of Lanka Electricity Company rd(Private) Limited will be held at the Registered Office of the Company at 3 Floor, E. H. Cooray Building, 411 Galle
throad, Colombo 03 on 30 June 2011 for the following purposes:
1. To receive and consider the Annual Report of the Board of Directors on the affairs of the Company and the stStatement of Accounts for the year ended 31 December 2010 and the Report of the Auditors thereon.
2. To re-appoint Messrs Ernst & Young, Chartered Accountants, the retiring Auditors and to authorise the Directors to determine their remuneration.
st3. To authorise the Directors to determine donations for the year ending 31 December 2011 and up to the date of the next Annual General Meeting.
4. To adopt the new Articles in lieu of the existing Articles of Association of the Company .
Secretaries and Registrars Limited
Secretaries
Notes:
1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on behalf of him/her.
2. A proxy need not be a member of the Company.
3. The Form of Proxy is enclosed for this purpose.
4. The completed Form of Proxy must be deposited at the Registered Office of the Company, not later than 48 hours prior to the time appointed for the holding of the meeting.
By Order of the Board
LECO Annual Report 2010 47 / Page
LANKA ELECTRICITY COMPANY (PRIVATE) LIMITED
FORM OF PROXY
I/We* ………………..……………………………………………………………………………………….……..................................................................
of ………………………………….…………………………………………………………………………….......................................................................
shareholder/s of LANKA ELECTRICITY COMPANY (PRIVATE) LIMITED hereby appoint
……………………………………………...............……………………………………….. of ………………………………………………………………….…….......
…………………………………………………………………………. or failing him............... of .......................................................................
thas my/our proxy to represent me/us/ on my / our behalf at the Annual General Meeting of the Company to be held on 30
June 2011 and at any adjournment there of and at every poll which may be taken in consequence of the aforesaid
Meeting and to VOTE as indicated below.
In witness my/our* hand this ……………… day of …………………. Two Thousand and Eleven
……………………………….
Signature
*Please delete what is inapplicable.
Note: Instructions are given below.
INSTRUCTIONS FOR COMPLETION
1. Kindly perfect the Form of Proxy by filling in legibly your full name address and the National Identity Card number and signing in the space provided and filling in the date of signature.
2. The completed Form of Proxy should be deposited at the Registered Office of the Company.
3. If you wish to appoint a person other than the Chairman or a Director of the Company as your Proxy, please insert the relevant details in the space provided (above the names of the Board of Directors) on the Proxy Form.
4. If the Form of Proxy is signed by an Attorney, the relative Power of Attorney should accompany the Form of Proxy for registration if such Power of Attorney has not already been registered with the Company.
5. If the appointor is a company / incorporated body this Form must be executed in accordance with the Articles of Association / Statute.
Planing & Construction Division
Branch Engineer
Kaluthara Branch
Branch Reception
Branch Manager - Mr. M. D. Gamage
Account Division
Custermer Service
LECO Kaluthara Branch
Management Staff & Branch Managers