Lee Hedges : Annual Financial Report 2021/2022

Annual Report

2021 - 2022

Corporate Information

Name of the Company

Lee Hedges PLC

Legal Form

A public quoted Company with limited liability incorporated under the provisions of Companies Act No 7 of 2007.

Company Registration Number

PQ 152

Directors

S.R. Vamadevan (Chairman/Managing Director)

1. Balaratnam D.S.L.P. Wijesinghe S.S. Vamathevan R.R. Spencer

Senior Executive Officer

(Legal & Administration)

S. Jayawardena (Mrs.)

Secretaries

Accounting Systerms Secretarial Services (Pvt) Ltd. Level 03, No 11, Castle Lane, Colombo 04.

Tel : +94 11 - 2505152, 5455525

Fax : +94 11 - 2504008

Email : [e-mail]

Accountants

M/s Ernst & Young Chartered Accountants

201, De Saram Place, Colombo 10. Tel : +94 11 - 2463500

Fax : [phone]

Email : [e-mail]

Registered Office

P.O. Box 84,

353, Kollupitiya Road, Colombo 3, Sri Lanka. Tel : +94 11 - 2301035, 2301732

Fax : +94 11 - 2574636

Email : [e-mail]

Website : www.leehedgesplc.com

Subsidiary Companies

Lee Hedges Investments Limited Pioneer Properties & Lee Hedges Limited.

Auditors

M/s KPMG Chartered Accountants 32A, Sir Mohamed Macan Marker Mw, P.O.Box.186, Colombo 3.

Tel : +94 11 - 542 6426

Fax : +94 11 - 244 5872, 244 6058

Internet : www.lk.kpmg.com/lk

Bankers

Hatton National Bank PLC

Commercial Bank of Ceylon PLC

National Development Bank PLC

Nations Trust Bank PLC

CONTENTS

Chairman's Review	2
Profile of the Directors	3
Annual Report of the Directors on the Affairs of the Company	4 - 7
Statement of Directors' Responsibility for the Preparation of
Financial Statement	8
Corporate Governance Compliance Report	9 - 14
Audit Committee Report	15
Related Party Transactions Review Committee Report	16
Remuneration Committee Report	17

FINANCIAL STATEMENTS

Independent Auditor's Report	20 - 22
Statement of Profit or Loss and Other Comprehensive Income	23
Statement of Financial Position	24
Statement of Changes in Equity	25
Statement of Cash Flows	26
Notes to the Financial Statements	27 - 63
Ten Year Summary	64
Shareholders' Information	65 - 66
Notice of Meeting	67
Notes	68 - 70
Form of Proxy	71 - 72

2

CHAIRMAN'S REVIEW

I am pleased to welcome you to the 103rd Annual General Meeting of Lee Hedges PLC and present you the Annual Report for the financial year ending March 31, 2022.

The year under review has been a highly challenging one on account of disruptions to the wellbeing of the people and the economy caused by the devastating effects on the economic growth of the Sri Lanka by the unabated spread of the pandemic COVD 19.

We trust that the current adverse economic and political crisis would stabilize and improve in the future and minimize the risks to business enterprises.

FINANCIAL PERFORMANCE

The Group recorded a revenue of Rs.156.44 Million for the year under review compared with the gross revenue for 2021 of Rs. 169.98 Million.

The rent income of Lee Hedges Investments Ltd for the year was Rs.172.59 Million compared to Rs. 183.96 Million recorded in year 2021.

The year recorded a net finance income of Rs.93.98 Million in 2021 compared to Rs. 120.81 Million on 2021 due the reduction in the rate of interest earned from fixed deposits in financial institutions.

Profit before tax was recorded at Rs.155.19 Million excluding the fair value gain of Rs.164.43 Million. In the previous year 2021, the profit before taxation was Rs.207.61 Million, no fair value gain/loss were recorded on the Group Investment Properties and a fair value loss of Rs.13.17 Million has been recorded on its equity investments. The fair value loss on equity investments will be recouped when the stability of the share market is restored.

DIVIDEND

Your Board is pleased to recommend a Final Dividend of Rs.1/= per share for the year ended 31st March 2022, out of dividends received from Lee Hedges Investments Ltd for the year ended 31st March 2022.

LEE HEDGES INVESTMENTS LIMITED

Lee Hedges Tower, the multi storied office space of fully owned subsidiary Lee Hedges Investments Limited has recorded 90% occupancy on long leases.

Despite uncertainties on account of COVID19, the company expects that present occupancy level is very likely to be maintained in the future.

The company has accommodated reliefs at the request of tenants affected by COVID 19

Pandemic on account of the lockdown.

Lee Hedges PLC | Annual Report

2021/22

FUTURE OPERATIONS OF THE COMPANY

The Management has decided to put on hold the Car Park Stage 1 proposed project at No 353, Galle Road, Colombo 03 for a further period of one year to be reviewed as the Economic Recovery improves and import restrictions are relaxed to avoid any attendant risks that current situation may entail. In the meantime, the Architects for this project has been requested to obtain required statutory approvals from UDA and other authorities.

Your company will seek "other opportunities" to explore investments in profitable business undertakings and stay resilient whilst focusing on a challenging year ahead.

I wish to take this opportunity to thank the shareholders for the confidence and trust placed in me and the Board of Directors to manage the Company's Day to day affairs, handling their investments and to steer same towards greater profitability.

I wish to record my appreciation the foresight, support and valuable expertise always offered by my fellow Directors who have assisted me to ensure that the company remains unaffected by macro and micro socio-economic factors.

I wish & place on record our deep appreciation on the efforts made throughout with the expert guidance of our Accountants (Ernst & Young Chartered Accountants), Company Secretary (Accounting System Secretarial Services Put Ltd), and Auditors (KPMG).

Finally, it is with pride that I state that the opportunity I have got to recognize my staff at Lee Hedges who have been prudent, supportive and diligent in executing their duties during the year under review which has been a key resource for the company's continued growth, stability and perseverance during these challenging time.

S.R. Vamadevan

Chairman/Managing Director

30th August 2022.

Annual Report	|	Lee Hedges PLC	3
2021/22

PROFILE OF THE DIRECTORS

S.R. VAMADEVAN

Chairman & Managing Director

S. BALARATNAM

Independent,

Non - Executive Director

D S L P WIJESINGHE

Independent,

Non - Executive Director

S S VAMATHEVAN

Non - Independent, Non - Executive Director

R. R. SPENCER

Non - Independent, Non - Executive Director

Mr. S.R. Vamadevan is the Chairman and Managing Director of the Company. He also serves as Chairman of the Pioneer Homes Group of Companies. By profession a Mechanical Engineer qualified in both Sri Lanka and the United Kingdom, he has devoted a good part of his life to the construction industry, combining with it over 40 years of corporate experience in Sri Lanka, United Kingdom, Africa and Australia.

He is also Founder of the Pioneer Homes Group which pioneered the development of modern residential apartments in Colombo as well as spearheaded some major ventures into commercial property development to become one of the major players in this burgeoning sector of the economy.

In recognition of his contribution towards the advancement of the domestic construction industry, he was presented the Silver Jubilee Award of the National Construction Association of Sri Lanka in 2006. Further, in recognition of his pioneering entrepreneurial spirit, he was presented the Bronze Award for the Western Province at the Entrepreneur of the Year 1996 Competition organized by the Federation of Chambers of Commerce and Industry of Sri Lanka.

Mr. S. Balaratnam is an Independent, Non- Executive Director of the Company. He is a Tax Consultant, Management Accountant and Registered Auditor, He presently serves as Director of Tax Publications (Pvt) Ltd. He is a Fellow Member of the Sri Lanka Institute of Taxation and Associate Member of the Chartered Institute of Management Accountants, United Kingdom.

He is also a well-known author of three publications meant for the corporate sector, namely, Income Tax in Sri Lanka, Value Added Tax in Sri Lanka and Transfer Pricing in Sri Lanka. He holds a Bachelor of Economics Degree from the University of Peradeniya.

Prof.Dr. Lasantha Wijesinghe is an independent non-executive director of the company. Currently, he serves as the chairman of SBC Asia (Pvt) Ltd, Tradexpo (Pvt) Ltd, Inspector Lanka (Pvt) Ltd, SB Consortium (Pvt) Ltd, Superroo SBC Australia Pte Ltd, Tea SBC (PVT) Ltd and Horamulla Tea Plantations (Pvt) Ltd.

Prof. Dr. Wijesinghe holds triple Doctorates in International Business Management and Administration from Horizons University in France, Brittany University in France and Vern University in Croatia. Further, he owns a degree of Masters in Business Administration from University of Western Sydney, Australia. Besides his PhD and two DBAs and MBA, he is a Chemical engineer qualified in Sri Lanka and England being awarded BSc in Engineering with honors in Energy and Chemical Reaction Engineering, further he is a qualified Lead Auditor and trainer for ISO Quality Management System Certifications by UKAS, England. and serving as a professor at CALMP business school in Sri Lanka and UAE representing EduQual, Brattany University, UK Awards education excellence and Al Shabaka Technical Institute in UAE.

He is the founder of SBC Group of companies in 2004 and for his continued creation, contribution and the commitment to the independent inspection, testing and certification industry for more than 15 years of his service in Sri Lanka, Australia, Bangladesh and the Maldives, he is being awarded a Provincial Merit Award, large category, Western Province in 2013 at the Entrepreneur of the Year 2013 Competition organized by the Federation of Chambers of Commerce and Industry of Sri Lanka.

Mr. S.S. Vamathevan is a non independent, non-executive director of the Company. A Management Accountant, he is currently employed with New South Wales Health in Sydney, Australia.

His career spans over 15 years in the commercial sector as a Financial Analyst for several multinational companies, including Unisys Corporation, Boral, Optus Communications and Alstom.

He is a Certified Practicing Accountant member of CPA Australia and holds a Bachelor or Commerce Degree from the University of Western Sydney.

Mr. R. R. Spencer is a non-Independent,Non-executive Director of the Company. Mr. Spencer qualified as a Mechanical Engineer in Australia. He also holds a Commerce Degree (Australia) and a Master's of Science in Engineering and Business Management (UK).

After working as a Mechanical Designer and Project Manager in Information Technology for the Construction and FMCG fields, he went onto to qualify as a Teacher in the UK, gaining his PGCE in 2010. He has been working as a Lecturer of Mechanical Engineering and a Teacher of Mathematics for more than ten years.