ADAM INVESTMENTS PLC - CSE

ANNUAL REPORT 2014A D A M I N V E S T M E N T S P L C

S U S T A I N A B I L I T Y & G R O W T H

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1ADAM INVESTMENTS PLCANNUAL REPORT 2014

ADAM INVESTMENTS PLC

2 ADAM INVESTMENTS PLCANNUAL REPORT 2014


TABLE OF CONTENTS

1. Corporate Information 52. Performance Review of AINV share 73. Chairman’s Report 84. CEO’s Report 95. Board of Directors 106. Corporate Profile 147. Performance Review and Analysis 188. Sustainability Report 249. Statement of Directors’ Responsibility 2810. Annual report of the Board of Directors Year 2014

Adam Investments PLC 2911. Report of the Audit Committee 3212. Report of the Remuneration Committee 3313. Corporate Governance 3414. Risk Management 4415. Independent Auditor’s Report 4616. Statement of Comprehensive Income 4817. Statement of Financial Position 5018. Statement of Changes in Equity 5219. Cash Flow Statement 5520. Accounting Policies 5721. Notes to the Accounts 6722. Shareholder information 9423. Form of Proxy 96


1. CORPORATE INFORMATION

NAME Adam Investments PLC

REGISTRATION NUMBERPV 78150 PQ

REGISTERED ADDRESS NO : 264, Grandpass Road, Colombo 14

LEGAL FORMIncorporated as a Private Limited Liability Company under the Companies Act No.07 of 2007 on 01st April 2011and converted to a Public Company on 28th April 2013. On 19th January 2015 the company name was changes as Adam Investments PLC.

NAME AND ADDRESS OF BANKERSUnion Bank Of Colombo PLC 64, Galle Road, Colombo 03.T.P NO : 0112 374 100

AUDITORS OF THE ENTITY

A.I. Macan Markar & Co.Charted AccountantsNO : 46-2/1, 2nd Floor,Lauries Road,Colombo 04T.P NO : 0112 594 205

SECRETARY TO THE ENTITYPW Corporate Secretarial (Pvt) Ltd,3/17, Kynsey Road,Colombo 08.

COMPANY LAWYERSPaul Ratnayeke Associates59,Gregory’s Road Colombo 7


BOARD OF DIRECTORS

Dr.Ali Asger Shabbir GulamhuseinDr. Lawrence M F AdamsMrs. D C M GulamhuseinMr. L W W PriyankaraMr. Taher Abbas GulamhuseinMr. Malayandi JeyaprakashMr. Idris ShabbirMr. Imran ZahirMr. Govindasamy Ramanan Mr. Iqbal Cassim

ChairmanExecutive Director / CEOExecutive DirectorExecutive DirectorNon-Executive DirectorNon-Executive DirectorNon-Executive DirectorNon Executive Independent directorNon Executive Independent directorAlternate Director for Mr. Imran

AUDIT COMMITTEE MEMBERS

Mr. Govindasamy RamananMr. Malayandi JeyaprakashMr. Imran Zahir

ChairmanNon-Executive DirectorNon Executive Independent director

REMUNERATION COMMITTEE MEMBERS

Mr. Idris ShabbirMr. Malayandi JeyaprakashMr. Imran Zahir

ChairmanNon-Executive DirectorNon Executive Independent director


2. PERFORMANCE REVIEW OF AINV SHAREAdam Investments PLC has been listed on the Diri Savi Board of Colombo Stock Exchange since 10th June 2014. The company is categorized under the diversified sector. The market capitalization of AINV started from Rs. 1.3 billion and increased up to Rs. 1.7 billion by 31st December 2014 representing a 44% growth. Shares issued to public at price of Rs. 3.00 per share and the share price steadily grew over the year and closed at Rs. 3.90 per share.

3.00

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Earning per ShareEPS0

0.0102nd Qtr 03rd Qtr 04th Qtr

0.020.030.040.050.06

NAV Per ShareNAV2.6

02nd Qtr 03rd Qtr 04th Qtr

2.552.5

2.452.4

2.352.3

2014


3. CHAIRMAN’S REPORT

Dear Shareholders,

It gives me great pleasure to present the annual report and audited financial statements for Adam Investments PLC for the year 2014.

Your group has performed commendably during the year under review, persevering to deliver value to all the shareholders. The group’s hybrid strategy of organic and inorganic growth has reaped lucrative benefits elevating your company to greater heights across a multitude of business sectors.

During the year under review your company acquired 53.5% of PCH Holdings PLC and successfully secured full board and management control of both PCH Holdings PLC and its 100% subsidiary Bieco Link Carbons (Pvt) Ltd. This acquisition has added over Rs. 500,000,000/-in tangible assets to your group which due to the non availability of Audited financials of PCH Holdings PLC, we were unable to consolidate in to the accounts of your company for the year under review.

At present renovation and testing of the 12 Acre plant of Bieco Link Carbons (Pvt) Ltd is being completed which will give your company the second largest manufacturing capacity of Granulated Activated Carbon in Sri Lanka, and the only plant to have both vertical and rotary production technology in Sri Lanka. Both PCH Holdings PLC and Bieco Link Carbons (Pvt) Ltd have been subsequently rebranded as Adam Capital PLC and Adam Carbons (Pvt) Ltd respectively.

As per Central Bank of Sri Lanka our country has achieved a strong economic growth of 8% in 2010 followed by 8.2% in 2011, 6.4% in 2012 and 7.3% in 2013 whilst the economy was projected to grow by 7.8% in 2014. Also, Per Capita GDP increased from USD 2,400 in 2010 to 2,836 in

2011, 2,922 in 2012 and 3,280 in 2013, which placed the country in the middle income earning category. Supported by favorable monetary, fiscal and external policies, the current macroeconomic environment is conducive for further investment and growth. Sri Lanka has been able to maintain a single digit inflation rate and a lower interest rate environment since 2009. In the year 2014 the inflation rate has come down from 6.5% to 3.5% from the month January to November. Today, the country is measured as one of the fastest growing economies in the world.

With our country’s bright economic future and prevailing direction of good governance your company will continue its course of fuelling its growth strategy in its present spheres of business while simultaneously perusing other lucrative business opportunities, ensuring value addition for all its shareholders.

I would like to take this opportunity to express my deepest gratitude towards our shareholders for their continuous confidence in us, to the directors for their valued contribution and directions, to our staff for their hard work and commitment, to the Colombo Stock Exchange and The Securities and Exchange Commission for their guidance and governance and to our financial partners for their unwavering support.

Dr.Ali Asger Shabbir GulamhuseinChairman26th May 2015

“The group’s hybrid strategy of organic and inorganic growth has reaped lucrative benefits elevating your company to greater heights across a multitude of business sectors.”


4. CEO’S REPORTDear Shareholders,

I’m pleased to share with you the events, developments and progress in your company during the year and present you the first annual report of Adam Investments PLC. Overall group performance was very satisfying even though we had to face many challenges. The years activity and performance reflects the value your company creates for you. As a group with diverse business interests, we pursue growth by acquisition and sharpening our existing businesses. We will continue to invest in the businesses that gives us good returns and capital appreciation over time.

Growth in the gross domestic product (GDP) of Sri Lanka was consistently robust in the first half of 2014: 7.6% in the first quarter and 7.8% in the second. Country showed a faster growth in construction, textiles, and apparel and maintained steady expansion in industry. Inflation continued to moderate in 2014 and improved slightly from 4.4% in January to 2.1% in December. The balance of payments markedly strengthened in the first half of the year while all major exports such as garments, other manufactures and tea recorded double-digit growth. This proves that the Sri Lankan economy moved in the right direction while your company strategized to capture lucrative opportunities.

Your company’s directors and top management account for over 3 decades experience in various industries and that business maturity molds the strategies of its business acquisitions which expands the group. Your board of directors and top management team is dedicated to create value to the company. PCH Holdings PLC and Bieco Link Carbons (Pvt) Ltd being the new additions to the group we are confident that our management capabilities, re branding and restructuring will mine the hidden pure gold from them in the near future..

Network Communications (Pvt) Ltd, Adam Metals (Pvt) Ltd, Adam Air (Pvt) Ltd and Adam Automobile (Pvt) Ltd are steering steadily under the wings of AINV adding value to the group.

We believe in long term value creation for our shareholders. Many things at your company are progressing well while some are progressing very well. All in all, the results and the value creation during the year have demonstrated a promising future. We shall stay committed to improving operational efficiencies, building and strengthening businesses and deriving value from group synergies with a strong commitment towards profitability and sustainability.

I thank our group chairman Dr.Ali Asger Shabbir for his vision, leadership and drive towards the company. I extend my gratitude to my fellow board members for their valuable contributions and directions. I wish to place on record my sincere appreciation to the senior management and all the employees for their dedication and achievement. I express my sincere gratitude to all our shareholders, financial partners and other stakeholders for your continued faith and trust towards us.

I assure our hard work and commitment towards your company while maintaining our focus on growth and sustainability.

Dr. L M F AdamsChief Executive Officer26th June 2015

“We will continue to invest in the businesses that gives us good returns and capital appreciation over time.”


5. BOARD OF DIRECTORS.

DESHABANDHU DR. ALI ASGER SHABBIR GULAMHUSEINChairman

Deshabandhu Dr. Ali Asger Shabbir Gulamhusein holds a PhD from Tokyo, Japan and a Degree from King’s College London, UK. Dr. Gulamhusein has been bestowed with the prestigious title of “Deshabandhu Manawahithawadhi, Lankaputhra” and also serves as a director of the Insurance Board of Sri Lanka and The Sri Lanka Institute of Textile and Apparel and as a Justice of Peace (all island).

He serves as Chairman of the board of Adam Investments PLC and Orient Garments PLC.

Dr. Gulamhusein also serves as a director of Bieco Link Carbons (Pvt) Ltd, Ceylon and Foreign Trades PLC, Adamexpo (Pvt) Ltd, Spice of Life (Pvt) Ltd, Network Communications (Pvt) Ltd, Adam Apparels (Pvt) Ltd, Adam Metals (Pvt) Ltd, Giorgio Morandi (Pvt) Ltd, Sonakshi Investments (Pvt) Ltd, Sonakshi Gems (Pvt) Ltd, Adam Air conditioners (Pvt) Ltd, Adam Automobiles (Pvt) Ltd, Colombo Apothecaries Company Ltd, Business Chamber of Commerce, Hamilton Resorts (Pvt) Ltd, Ceylon & Foreign Trade Surgi-Tech (Pvt) Ltd, Colombo Freight and Transport Ltd, and Dodwell& Company Ltd.

MRS. DANUSHYA MEDIWAKE GULAMHUSEINExecutive Director

Mrs.Danushya Gulamhusein is the great granddaughter of Sir William Gopallawa, Sri Lanka’s first President and last Governor General. Mrs.Danushya Gulamhusein has served as a director of Adam Investments from the inception of the company. She holds a degree in Psychology and Business Management (UK).

She also serves as a director of Orient Garments PLC, Bieco Link Carbons (Pvt) Ltd , PCH Holdings PLC, Sonakshi Investments (Pvt) Ltd, Sonakshi Gems (Pvt) Ltd, Adam Air conditioners (Pvt) Ltd, Peace Air (Pvt) Ltd, and Adam Automobiles (Pvt) Ltd.

DR. LAWRENCE MERVYN FRITSGERALD ADAMSChief Executive Officer/Executive Director

Dr. Adams holds numerous qualifications such as PhD, MBA, MTh, BTh, DIP TH, DIP HR, DIP Networking, and DIP Hardware, which he has obtained in Japan, Canada, UK and Sri Lanka. Reverent. Dr. Adams also serves as the Chairman of distributions of Gideon’s International, Chairman of Healed by His stripes Ministries Sri Lanka, Dr. Adams is also a prominent public speaker and has been the keynote speaker at prestigious international events such as the CEO forum ASEAN and the CIO/CTO forum of SAARC. Dr. Adams is a former director of Tec Sri Lanka and accounts for over 25 years’ experience in top management in Sri Lanka and overseas. He also serves as director of Orient Garments PLC, Bieco Link Carbons (Pvt) Ltd , PCH Holdings PLC, Adam Air conditioners (Pvt) Ltd and Adam Automobiles (Pvt) Ltd,


MR.TAHER ABBAS GULAMHUSEINNon-Executive Director

Mr. Gulamhusein has served as a director of Adam Investments from the inception of the company. He accounts for over 25 years’ experience in top management positions. He also serves as a director of Ceylon and Foreign Trades Plc, Adamexpo (Pvt) Ltd, Spice of Life (Pvt) Ltd, Network Communications (Pvt) Ltd, Adam Apparels (Pvt) Ltd, Adam Metals (Pvt) Ltd, Colombo Apothecaries Company Ltd, Hamilton Resorts (Pvt) Ltd, Ceylon and Foreign Surgi-tech (Pvt) Ltd, Dodwell& Company Ltd and Giorgio Morandi (Pvt) Ltd.

MR. IDRIS SHABBIRNon-Executive Director

Mr. Shabbir has served as a director of Adam Investments from the inception of the company. He holds a Master’s degree in the field of Information System Management from the University of Aberdeen, Scotland. Mr. Shabbir accounts for over 15 years’ experience in top management in Sri Lanka and overseas. He also serves as a director of the Business Chamber of Commerce, Ceylon and Foreign Trades Plc, Orient Garments PLC, Adamexpo (Pvt) Ltd, Spice of Life (Pvt) Ltd, Network Communications (Pvt) Ltd, Bieco Link Carbons (Pvt) Ltd , PCH Holdings PLC ,Adam Apparels (Pvt) Ltd, Adam Metals (Pvt) Ltd, Giorgio Morandi (Pvt) Ltd, Hamilton Resorts (Pvt) Ltd, Ceylon and Foreign Surgi-tech (Pvt) Ltd, Dodwell& Company Ltd and Colombo Apothecaries Company Ltd.

DESHABANDHU MALAYANDI JEYAPRAKASHNon-Executive Director

Mr. Malayandi Jeyapragash has served as a Director of Adam Investments PLC from the inception of the company. He accounts for over 17 years experience in Financial Management, Treasury Management, Fund Management and Administration.

Mr. Jeyaprakash has been bestowed with the prestigious title of “Deshabandhu Manawahithawadhi, Lankaputhra” and also a Justice of Peace (all island).

He holds a bachelors degree in business management in administration and finance (USA) and has gained many years of experience in External and Internal Audit.

He accounts for over 12 years of experienced in the Apparel Industry and has gained excellent knowledge in ERP & TOP Systems specialized in the Apparel Industry.

Mr. Jeyapragash serves as the CEO and an executive director of Orient Garments PLC , Director of Adam Air Conditions (Pvt) Ltd, Adam Auto Mobile (Pvt) Ltd, Adam Metals (Pvt) Ltd, Sonakshi Gems (Pvt) Ltd and Sonakshi Investments (Pvt) Ltd. respectively.


MR.IMRAN ZAHIRNon-Executive Independent Director

Imran Zahir is a Fellow Member of the Chartered Institute of Management Accountants UK, his experience over the last 15 years, covers Business, Banking Industry, Islamic Banking, Education, and Venture Capital Industries.His scope further expands throughout the Exports, Import & Manufacturing Sectors. He has lead or been part of Directorial Management in leading companies in such industries & Sectors. He has served as a Director of Ceylon and Foreign Trades PLC, Orient Garments PLC, Dodwell & Co, Colombo Apothecaries Ltd, Ceylon & Foreign Surgitech Ltd, Bieco Link Carbons (Pvt) Ltd , PCH Holdings PLC, Adam Apparels Ltd, Giorgio Morandi Ltd. His industry experience includes Ga.rments, Tourism, Edible Oil, Chemicals, Detergents, Hardware, Construction, FMCG, Storage, Electrical Manufacturing, Venture Capital, BPO, KPO, E-commerce, Pharmaceutical, Surgical industry, Finance/Banking- specializing in Islamic Banking and Business Evaluations. He is a member of the Management Committee of the Exporters Association of Sri Lanka and also a past Director of the International Chamber of Commerce in Sri Lanka.

MR. LOOLBADD WADUGE WARUNA PRIYANKARAExecutive Director

Mr. Waruna Priyankara has served as a director of Adam Investments from the inception of the company. He holds a national diploma in Business and Finance (Sri Lanka). Mr. Priyankara is an associate member of the Institute of Certified Management Accountants of Sri Lanka. He accounts for over 10 years’ experience in financial services, trading and manufacturing. Mr. Priyankara also serves as a director of Ceylon and Foreign Trades Plc, Adam Air conditioners (Pvt) Ltd, Adam Automobiles (Pvt) Ltd, Ceylon and Foreign Surgi-tech (Pvt) Ltd, Dodwell& Company Ltd, and Colombo Apothecaries Company Ltd.

MR. GOVINDASAMY RAMANANNon-Executive Independent Director

Mr. Ramanan has over 19 years of experience in the investment banking space in Sri Lanka. He was involved at a senior position in business advisory, fund management, commercial banking and investment banking. Mr. Ramanan was the head of investment banking at Hatton National Bank and CEO of HNB Securities, where he was directly involved in handling the full array of investment banking services and executes several landmark transactions. Mr. Ramanan is a CFA charter holder and a management Accountant, and obtained his MBA from University of Chicago Booth School of Business. He is the acting Managing Director/CEO of People’s Merchant Finance PLC & Director/CEO of Industrial Asphalts (Ceylon) PLC. He is also the Managing Director of Capital Trust Financial (Pvt) Ltd and Capital Trust Wealth Management (Pvt) Ltd.

ADAM INVESTMENTS PLCANNUAL REPORT 2014

13

WHAT WE ARE


6. CORPORATE PROFILE

Adam Investments PLC was incorporated in 2011, to focus on key growth industries that play a pivotal role in the country’s economy. The company commenced its business operations in January 2012. Adam Investments PLC is an investment holding company which holds shares of privately held companies operating in various industries such as apparel, metal, network communication and automobile and in quoted equity shares in the Colombo Stock Exchange. Running an organization as diverse and fast growing as Adam Investments PLC, requires meticulous planning, flawless strategy and precise execution. The top management of Adam Investments has been handpicked to ensure this happens. Each director serving under Chairman Deshabandhu Dr. Ali Asger Shabbir Gulamhusein’s guidance ensures the smooth sailing of the organization. The top management brings with them many years’ worth of experience that helps them understand the requirements of upholding an organization of this caliber. The companies that function under Adam Investments are –

NETWORK COMMUNICATIONS (PVT) LTD (NETCOM)

Network Communications (Pvt.) Ltd was incorporated on 31st July 2002. It is a diversified organization, which has been in operation for the past 12 years. Netcom is specialized in manufacturing, importing, retailing and distributing a diverse portfolio of products such as computer accessories, computer hardware, computer software, computers, mobile phones, accessories and home electronics. The company also holds a license to operate “external gateway for international communications” and license of International Simple Voice Resale (“ISVR”).

Netcom also operates a high class and accurate repairing facility and service center, which provides fast and easy solutions to customers treating them with utmost priority and providing accurate information. Network Communications (Pvt) Ltd has a strong position in the technological world because of the diversity of goods and services it provides. The company also offers up to date software solutions and has a vast distributor base that covers the entire island.

ADAM METALS (PVT) LTD

Adam Metals was started as a sole proprietorship in 1973 and was incorporated as a Private company named Adam Metals (Pvt) Ltd on 14th August 2008. The business has been flourishing in the household and industrial hardware business for over thirty years. Adam Metals manufactures high quality metal products at its own 40 perch factory

situated at Vauxhall Street, Colombo 02. The company also imports a variety of consumer hardware items which are sold on retail and wholesale basis through its own 25 perch sales center located in Abdul Jabbar Mawatha, Colombo 12, and through its island wide distribution network.


The company plays a major role in supplying material to the booming construction industry of Sri Lanka. Manufacturing products such as, GI staples, nails, barbed wire and panel pins. Adam Metals operates with high tech machinery to ensure the highest production quality. Adam Metals also imports products from India and China to cater

to the local market. In a developing country, it goes without saying that construction is an integral part of urbanization. Adam Metals understands the demand there is for high quality construction material and caters to that demand, offering material that ensures long lasting constructions.

PCH HOLDINGS PLC

Adam Capital PLC is a listed entity on the Colombo Stock Exchange. This was previously named as PCH Holdings PLC and was incorporated on 30th November 2006. On 02nd July 2014 Adam Investments PLC increased its stake in PCH Holdings PLC up to 42.9% and announced a mandatory offer to acquire the balance issued voting shares of the company. Adam Investments subsequently obtained full board and management control of the company in November 2014. Currently Adam Investments PLC holds

53.5% of the company. Adam Capital PLC is the sole owner of Adam Carbons (Pvt) Ltd which was previously named Bieco Link Carbons (Pvt) Ltd, one of the largest activated carbons manufacturers in Sri Lanka.

At present Adam Capital PLC is preparing to enter in to the Micro Credit Industry under the patronage of its new Chairman Mr. Ajitta Pasqual to exploit the lucrative opportunities available in this sector

BIECO LINK CARBONS (PVT) LTD

Adam Carbons (Pvt) Ltd was previously named Bieco Link Carbons (Pvt) Ltd and is a fully owned subsidiary of Adam Capital PLC. Adam Carbons is a manufacturer of granular and powdered activated carbon.

Adam Carbons (Pvt) Ltd is the only coconut shell activated

carbon manufacturer in Sri Lanka using both vertical and rotary kiln technologies, in steam activation process, Adam Carbons factory is located in Giriulla, in the North Western province ‘coconut belt’. The factory provides employment and subcontracting opportunities to the many in the neighborhood.

ORIENT GARMENTS PLC

Adam Investments PLC currently holds 39.2% of Orient Garments PLC and obtained board control of OGL in January 2014 and has taken several actions to improve the

efficiency and effectiveness of the company. Orient Garments PLC is a Sri Lankan manufacturer and exporter of high-end apparel - with special expertise in


outerwear, casual wear and sportswear. The company has specialized in apparel for over 30 years, and the rich experience in manufacturing and exporting makes OGL one of the most reliable clothing suppliers in Sri Lanka. As an established player in an aggressive industry, OGL thrives in its perfect mix of state-of-the art machinery and the skills of employees, as OGL strive to satisfy customers who demand the best. By forming critical alliances both at home and worldwide OGL is proud to service some of the best apparel brands in the world.

Since it’s inception in 1982, OGL has grown into 5 modern manufacturing facilities including 2000 machines. OGL has staff strength of around 4000 employees and generates approximately 13.2 million pieces per annum. The manufacturing process is engineered to achieve the most effective method in delivering the end product. From Critical decisions in fabric selection to building design and maximizing efficiency, the process is both streamlined and timed to perfection.

At present OGL is facing litigation which it is vehemently opposing.

ADAM APPARELS (PVT) LTD

Established in 1978, the company is one of the premier apparel manufacturers in Sri Lanka that carries out all forms of production to meet ISO management system standards. It has its factories spanning over an area of approximately four acres. With over 1500 employees and 600 computerized industrial sewing machines, Adam Apparel has a present production capacity of approximately 4.7 Million items of clothing per annum.

Adam Apparels (Pvt) Ltd currently own three garment factories located in Colombo, Hanguranketha and Hakmana and continues to live up the high standards of quality that has become synonymous with the Adam brand. Adam Apparel Hakmana is the new addition of factories bought in January 2014 to the company with a considerable expansion of capacity. With a vision to continuously improve the management strategies and

production methods Adam Apparel strives to increase efficiency and provide products of the highest quality. In addition to this the company recognizes their obligations to the workforce and community, and values the principals of ethical manufacturing and trading. The company specializes in manufacturing of woven items of clothing for kids, ladies and gents. Adam Apparel has a clientele of celebrated international labels. The company’s primary export markets for its finished products are the UK, USA and the EU. With over 3 decades of production and service under its belt, the company strives to ensure the highest quality of customer service. Customer satisfaction is its focus and the success of the organization bears testament to the degree of quality and service provided by it.

ADAM AIR CONDITIONERS (PVT) LTD

Adam Air Conditions (Pvt) Ltd was inaugurated to cater to the growing demand for air conditioning systems in the country and started its operations in July 2013 with a product range uniquely engineered by the company to

provide superior cooling at a reasonable cost in comparison to market competition. Adam Air Conditioners (Pvt) Ltd has steadily been increasing its market share in the retail air conditioning segment.


ADAM AUTOMOBILES (PVT) LTD

In 2011/2012, Sri Lanka saw its largest ever volume of vehicle imports. Thus, Adam Automobiles (Pvt) Ltd was conceived with the aim of providing spares and services to cater to the rapidly increasing demand for these items. Adam Automobiles (Pvt.) Ltd will commence its operations

in 2015 to handle the imports of various vehicles and vehicle parts to meet customer requirements. Adam Automobiles (Pvt) Ltd is a fully owned subsidiary of Adam Investments PLC.

AINV GROUP STRUCTURE

43%

94.3%

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100%

39.2%

8.90%

53.5% 100%


7. PERFORMANCE REVIEW AND ANALYSISSri Lanka achieved a strong economic growth of 8% in 2010 followed by 8.2% in 2011, 6.4% in 2012 and 7.3% in 2013 (as per CBSL) whilst the economy is projected to grow by 7.8% in 2014. Also, Per Capita GDP increased from USD 2,400 in 2010 to 2,836 in 2011, 2,922 in 2012 and 3,280 in 2013, which placed the country in the middle income earning category. Supported by favorable monetary, fiscal and external policies, the current macroeconomic environment is conducive for further investment and growth.

Sri Lanka has been able to maintain a single digit inflation rate and a lower interest rate environment since 2009. In the year 2014 inflation rate has come down from 6.5% to 3.5% from the month January to November. Today, the country is measured as one of the fastest growing economy in the world. After the end of the civil war in May 2009, a number of investment-friendly infrastructure as well as social and economic development programs have been implemented by the government.

AINV being a diversified investment company has extended its wings to corer many viable and booming industries after carefully undertaking sound economic and business analysis. AINV has grown as a group cultivating booming ventures and practicing its conservative management skills in developing each business venture. Following are the companies under management and a review of the performance in each company.

7.1 Network Communication (Pvt) Ltd (NETCOM)

In the past year NETCOM expanded its business in to importing and distributing home appliance. This strategic move of NETCOM was made after carefully analyzing the market sentiment and the demand for such products. Targeting few products instead of a wider range was suitable based on the market condition. We are introducing a range of home appliances that cater to the needs of modern Sri Lankan life style. We have partnered with world renowned manufacturers of home appliances in order to bring the best products with latest technology to Sri Lankan customers.

We currently importing home appliances such as Blu-Ray Players and Rice Cookers for the Sri Lankan market and we are honored to be the only supplier of Cinavia free 3D Blu-Ray players to Sri Lankan customers which provides a wider opportunity and choice for their entertainment. Currently NETCOM has developed this business to obtain an island-wide dealer network and branch network in the country which ensures a promising revenue line for the AINV group and wider reach to our customers.

NETCOM has been a leading importer and distributor for many brands of mobile phones for over a decade. In the year under review NETCOM took another step forward by introducing the brand LAVA, a new icon of beauty in the mobile phone industry. LAVA was launched in November 2014 with style.


Lava International Ltd., established in 2009, is one of the fastest growing mobile handset companies in India. It has demonstrated quick and robust expansion since inception, showing profitability and growing sales since the first year of operations. With “Create Possibilities” as its guiding principle, Lava has embarked on an ambitious journey of becoming the 1st global consumer brand from India by empowering every human with quality innovative products.

Within the year under review NETCOM showed excellent levels of performance with a growth in revenue and profit. The enthusiasm, energy and passion towards modern technology and life style is the key drive behind this performance.

7. 2 Adam Metal (Pvt) Ltd

With the refurbishments and expansions done in the Adam Metal manufacturing plant, the production capacity and production efficiency has improved at a considerable rate.

Advanced Wire Nail Machine Barbed Wire Machine The range of products manufactured under the Adam Metal roof are barbed wire, Wire nails, A I staples and Panel pins. The company also imports a variety of consumer hardware items which are sold on retail and wholesale basis through its own 25 perch sales center located in Abdul Jabbar Mawatha, Colombo 12, and through its island wide distribution network. Adam Metals import products from China and ensures the quality of products is up to standards for the local demand.

The financial performance of the company shows a reasonable upward shift adding value to the AINV

group shareholders. Refurbishment and expansion of the manufacturing plant, expansion of product portfolio and widening the client base are the key drivers for this performance.


7.3 PCH Holdings PLC and Bieco Link Carbon (Pvt) Ltd (BLC)

With the acquisition of PCH Holdings PLC, AINV extended its reach in to the activated carbon manufacturing business. Adam Investments Plc has embarked on the revival and upgrading of the plant and machinery of Bieco link in order to commence its commercial production to meet the continuing demand for activated carbon from its buyers worldwide. The project includes carrying out necessary modifications and automations as well as refurbishment of existing machinery. Under the previous managements, resources of the company were not utilized to its full potential

Under the new management of Adam Investments Plc, BLC is directed professionally with a clear vision and a business strategy. AINV has studied the project and its potential deeply and has taken these decisions and formulated the required strategies.

Bieco Link Carbons (Pvt) Ltd has the unique advantage of having the following 3 production technologies incorporated in the same plant.This situation is not found in any other activated carbon plant in Sri Lanka and

probably in the world.

This is because, Carbonizer technology with energy recovery for steam production is a pioneering innovation in BLC inducted on stream from 2001 after a long period of in-house research & development.The technology available with other similar producers using coconut shell as feed material is completely different from BLCs. Intellectual property rights also would be obtained to develop this technology further.

In addition BLC is the only plant in Sri Lanka, which has a river (MahaOya) as a boundary providing non restricted supply of water throughout the year. This is highly advantageous for the value addition processes at the plant requiring substantial amounts of water. In addition this river water is also used for generation of steam for the activation process. Competitive Advantages arising from Special Technologies at BLC

Vertical Activation Kilns (2 Nos.)

The activation process yield is about 45-46 % compared to 40 % yield from rotary kilns in producing the medium activity AC.The throughput of AC is also high, approximately 6 MT per kiln per day. Additionally there is almost zero percentage of particle breakdowns during production, making particle size recovery very high.


Rotary Kilns (2 Nos.)

The throughput of BLC rotary kilns has been increased to 3.75 -4.00 MT per day compared to standard to that of 2.5 - 2.8 MT per day from similar sized kilns. The previous practice of using furnace oil as a heating source for activation has also been eliminated saving about Rs. 30 million per annum.

Pollution-free Coconut Shell Carbonizer with Energy Recovery (3 Nos.)

The Carbonizer technology was developed for the first time in Sri Lanka by BLC in 2001 to utilize the volatile gases emanating during carbonization (charcoal production) as an energy source. This energy is presently used to raise steam, which is required for the activation process. In addition this unit eliminates the air pollution and ground pollution created in the traditional pit method currently in practice for coconut shell charcoal production.

Using this same equipment it is possible to provide steam for electrical power generation and energy for drying items such as coconuts (desiccated coconut & virgin coconut oil manufacturing), vegetable drying etc.

Bank Liabilities of Bieco Link Carbons for a total of 151 million which was due at the time of acquisition was settled in full. A complete plant upgrade is being initiated with full refurbishment of 01 vertical kiln, 01 rotary kiln, 03 carbonizers, laboratory etc and modification. Operation of the factory is planned to start in mid 2015.

The next move of Adam Capital PLC is to enter in to the micro credit industry. Ground work of this project is being done and this is at the initiation stage.


7.4 Orient Garments PLC (OGL)

In January 2014 AINV assumed operational control of OGL and embarked on a large scale project to turn around and re-establish the company as a leading apparel manufacturer and an exporter in the country. AINV began the journey of the transformation at the grass root level rebuilding worker moral and retention. All the factories of the company are being renovated and re-mechanized to be in line with the international production standards. We worked with several compliance agencies to regain OGL as a internationally certified manufacturer of garments.

Key personnel have been recruited to help rebuild the marketing portfolio and to re-establish the manufacturing

and operational efficiencies. Sound systems of monitoring and reporting mechanisms are being established in the company to monitor production, waste management and cost control. We established an internal audit department to continually evaluate and improve governance systems of OGL. Further we worked closely with the financial providers of OGL to restructure and re stabilize the financial position of OGL

Today the client base of OGL includes prestigious global brands such as NEXT, TESCO, TOMMY HILFIGER, SUPERDRY, BHS etc.

Due to unsound strategies and poor financial and operational management adopted by the previous management, OGL had to go through a turbulent journey in 2014. This resulted a drop in revenue and an overall loss in the year under review. However under the wings of AINV, sound systems and strategies are being placed in OGL and corrective actions have been taken to turn around the company. This has re-directed the company towards the right direction ensuring a bright future.

At present OGL is facing litigation which it is vehemently opposing.


7.5 Adam Air Conditioners (Pvt) Ltd

Adam Air Conditioners (Pvt) Ltd is the youngest member of the AINV group. However Adam Air Conditioners (Pvt) Ltd launched the brand name “Adam Air” and is moderately capturing the market with its timely and relevant strategic positioning. They are currently importing household and industrial air conditioners under the home brand “Adam Air” local island wide distribution.

Adam Air currently supplies Wall Split type air conditioning systems which offer superior performance, energy-efficiency, and comfort in stylish solutions conforming to all interior spaces and lifestyles. Adam Air’s product lineup utilizes technology for lower costs and environmental impact.

The next step of Adam Air is Air conditioners with DC Inverter VRF System which are is designed with a flexible modular combination concept. These products keep optimizing the module size; reduce equipment on space

occupied to meet the demand of designer and installer. Some unique technologies are used for the installers to reduce their work load making installation is easier and easier.

Financial performance of Adam Air is at a reasonable level considering the time period in which the company was in operation. We believe that the company is in the right track with a promising future prospect.


8. SUSTAINABILITY REPORTBeing a responsible corporate citizen in Sri Lanka, AINV takes great pride in ensuring that any impact our company may have in the community, environment and economy is positive and has taken adequate measures to prevent any negative impact.

We constantly endeavor to take initiatives to foster and add value to the community with the motive that it would in return benefit the environment and the company. These values are embedded in AINV corporate culture.

The management of the company evaluates the sustainability focus of the group companies wherein AINV has formulated strategies to address the interest of our stakeholders while creating a better, cleaner and eco-friendly environment.

AINV ensures the visionary leadership, policy formulation and best practices will be put in practice along with practical contributions of the Chief Executive Officer and corporate management. As a result during the last year of operation AINV has put in place a sound set of best practices in each company under management while emphasizing on the community, environment and economy.

8.1 Economic Sustainability

AINV holds a diversified investment portfolio where its group comprises of export oriented businesses, manufacturing companies as well as import and distribution companies. This creates a perfect mix for AINV which ensures sustainability through any kind of economic background. It is important to note that all the strategic investments of AINV focus on booming industries of the country which intern gives a promising sustainability.

Within the last year AINV managed to improve and expand its home businesses such as importing and distribution of Information and communication related products and home appliance, metal production, Importing and distribution of Air conditioners, and manufacturing and exporting of apparels. AINV ensured its inorganic growth via investing in to the Activated Carbon Manufacturing business while adding a substantial asset value to the group.

This business sector has a great potential which can flourish under the wings of AINV in the near future.

To ensure effective operation and enhanced performance AINV has placed policies and business plan in each company under management. Business strategies being developed for each company considering the authenticity of each business and goals have put in place to be achieved in the short, medium and long term.

AINV has established high standards of corporate governance and transparency policies in every business under management irrespective of being privately held or publicly listed. To increase its commitment to investors the company has assigned an authorized person to improve investor relationship while attending queries made on business activities.

8.2 Environmental Sustainability

AINV adopt approaches to protect environmental resources with an effort to contribute towards sustaining natural resources and environment conservation for future generations. During the year under review AINV has taken following initiatives to enhance environment friendly practices.

• Reduction and management of hazardous factory waste in all manufacturing plants• Efficient utilization of raw material, energy and water• Maintaining clean and safe working environment in each group company• Adopting environmentally friendly production approaches• Standardizing, reducing and re-using and recycling where possible.,


8.3 Corporate Social Responsibility

Employees are the most important part of the Adam Investments PLC family. In our attempt to make a lasting bond between our family members, organizing a sports day became a great idea. Friendship, Laughter and Joy flourished over the sports day and get together of the AINV family was a proof for the success of this event.


Subsequent to taking over PCH Holdings PLC, it has a become a responsibility of AINV to revamp the operation of Bieco Link Carbons manufacturing factory situated in Giriulla. This factory was non-operational and over 70 employments were at risk. It is our belief that a blessed initiation will lead a long way. Therefore we organized a pirith ceremony at the initiation of the Bieco Link Carbons Factory under renovation. It was a blessing to the factory, employees and the area as a whole.


Children are the future of our country. A happy child will be the foundation for a disciplined and peaceful society in future. With that spirit in heart we decided to give a meaning to children’s day. This project was done under Orient Garments at their Deniyaya factory with our employee’s children below 12. The smile, joy and happiness of those kids made our day.


9. STATEMENT OF DIRECTORS’ RESPONSIBILITYThe Companies Act 07 of 2007 stipulates that Directors are responsible for the preparation of financial statements for each financial year and place before a general meeting financial statements, comprising a Profit and Loss Account and a Balance Sheet which presents a true and fair view of the state of affairs of the Company as at the end of the financial year and which comply with the requirements of the above Act.

The financial statements have been prepared and presented in accordance with Sri Lanka Accounting Standards. In preparing the financial statements, appropriate accounting policies have been selected and applied consistently, whilst reasonable and prudent judgments and estimates have been made.

As per Section 148 of the Act, the Directors are required to maintain sufficient accounting records to disclose with reasonable accuracy the financial position of the Company and to ensure that the financial statements presented comply with the requirements of the Companies Act.

The Directors are also responsible for devising proper internal controls for safeguarding the assets of the Company against unauthorized use or disposition, prevention and detection of fraud and for reliability of financial information used within the business or publication.

The Directors continue to adopt the going concern basis in preparing accounts and after making inquiries and following a review of the Company’s budget for the financial year 2014, including cash flows and borrowing facilities, consider that the Company has adequate resources to continue in operation.

The Board of Directors is of the opinion that Board has discharged its responsibilities as set out above.

By order of the Board ofADAM INVESTMENTS PLC

P W Corporate Secretarial (Pvt) LtdSecretaries

Colombo

26th day of May2015


10. ANNUAL REPORT OF THE BOARD OF DIRECTORS YEAR 2014 ADAM INVESTMENTS PLCThe Directors have pleasure in presenting their Annual Report with the consolidated Audited Financial Statements of the Company and its subsidiary for the year ended 31st December 2014.

Incorporation and listing on the Colombo Stock Exchange

Adam Investments PLC was incorporated as a Private Limited Company on 1st of April 2011, changed its status to a Public Company on 29th April 2013. and was subsequently listed on the Diri Savi Board of the Colombo Stock Exchange on 10th June 2014 through an introduction to the market. The Company changed its name to Adam Investments PLC on 19th January 2015.

Principal Activities of the company and review of performance during the year

A review of the business of the company, its performance during the year and the future prospects are contained in the Chairman’s review.

This report and financial statements reflect the state of affairs of the company.

Financial statement

The consolidated financial statement of the company and its fully owned subsidiary, duly signed by two Directors and the auditors are given on page 50 to 53

Auditors report

The report of the Auditors on the consolidated Financial Statements is given on Page 46 to 47

Accounting Policies

The accounting policies adopted by the company in preparation of the Financial Statement are given on pages 57 to 66

Directors of the company

The name of the directors who held office as at end of the accounting period and their profiles are given on page 10 to 12 of the annual report.

In accordance with Article 88 of the Articles of Association of the Company, Mr.I Shabir and Mr. T Gulamhusain retire by rotation and being eligible offer themselves for re-election.

Interest Register

The company maintains an interest register in terms of the Companies Act No. 7 of 2007, which is available for inspection.

All related party transactions, which encompass the transactions of directors who were directly or indirectly interested in a contract or a related party transaction with the company during the accounting period, are recorded in the interest register.

The relevant interest of Directors in the shares of the company as at 31st December 2014 rare given under the caption “Directors Shareholdings”


Directors’ Shareholdings

The relevant interest of the directors in the shares of the company as at 31st December 2014 is as follows.Name of the Director Shareholdings as at 31st December 2014

Deshabandhu, Dr A A S Gulamhusein 309,660,200

Rev Dr L M F Adams 1,000,000

Mrs D M Gulamhusein Nil

Mr T A Gulamhusein Nil

Mr I Shabbir 4,083,998

Deshabandhu, M Jeyapragash 1,000,000

Mr L W W Priyankara 1,000,000

Seylan Bank LTD/ Mr G Ramanan 8,333,400

Mr I Zahir 10,000

Directors Remuneration

The total remuneration of Directors during the year under review is NIL

Director’s responsibility for financial reporting

The Directors are responsible for the preparation of the Financial Statement of the company to reflect a true and fair view of the state of its affairs. A further statement In this regard is included on page 28

Auditors

Messrs. A I Macan Makar & Co, Chartered Accountants served as the auditor during the year under review. The Auditors are recommended for re-appointment as Auditors of the Company, at the Annual General Meeting.

A total amount of Rs. 200,000/- was paid by the company to the auditors for the year under review.

The Auditors do have any interest in the Company or in any Subsidiary Companies other than that of functioning as the Auditors of the Company.

Details of the Audit fee set out under the notes 3 to the financial statements.

Stated Capital

The stated Capital of the company as at 31st December 2014 was Rs, 714,508,200/= (Rs 316,660,200/= as at 31st December 2013). The number of shares issued by the company stood at 449,276,200 fully paid ordinary shares as at 31st December 2014 (316,660,200 fully paid ordinary shares as at 31st December 2013

Shareholders

There were 972 shareholders registered as at 31st December 2014.

Major Shareholder, Distribution Schedule and other information

Information to investors on the distribution of shareholding, the twenty largest shareholders of the company, percentage of shares held by the public as per the listing rules of the Colombo Stock Exchange and Net Assets per share, are given on


page 94 to 95 under the caption “Shareholders’ Information”. Translation differences related to changes in amortized cost are recognized in the statement of comprehensive income.

Reserves

The reserves of the company, with the movements during the year, are given in the statement of changes in equity in the financial statements on page 52 to 53

Property, Plant and Equipment

Details of movements in Property, Plant and Equipment are given on notes 07 to the financial statements on page 72

Donations

The company made donation amounting in Rs 433,450/- during the year under review.

Land Holdings

Company does not hold any land

Material Foreseeable Risk Factor

The risk statement on page 44 deals with the risk that affect the company.

Statutory Payments

The Director confirm that, to the best of their knowledge, all taxes, duties and levies payable by the company, all contribution, levies and taxes payable on behalf of and in respect of the employees of the company and all other known statutory dues as at the reporting period have been paid or, where relevant provided for.

Contingent Liabilities

There were no material contingent liabilities as at the reporting period.

Event occurring after the reporting period

No event has occurred since the balance sheet date which would require adjustment to, or disclosure in the financial statements, except as disclosures made under note No. 27 to the financial statement on page 89.

Annual General Meeting

The annual general meeting of the company will be held on 26th June 015 at the Olympic House, 100/9F, Indipendent Avenue, Colombo 07. The notice of the annual general meeting appears on page 96.

Dr. Larry AdamsDirector/Chief Executive Officer26th May 2015

Mr. Waruna PriyankaraDirector26th May 2015

P W Corporate Secretarial (Pvt) LtdSecretaries26th May 2015


11. REPORT OF THE AUDIT COMMITTEE

The Audit Committee is appointed by and is responsible to the Board of directors. The Audit committee comprises of the following; Mr.G Ramanan Independent Non Executive DirectorMr. Imran Zahir Independent Non Executive DirectorMr. M. Jeyepragash Non-Executive Director

The Chairman and the Chief Executive Officer together with Chief Financial Officer attends meetings of the Committee by invitation. The Internal and External Auditors are requested to be present when required.

Financial Reporting

The committee oversees the Company’s financial reporting on behalf of the Board of Directors as part of its responsibility and have reviewed the Quarterly and Annual Financial Statements and recommended them to the Board prior to their issuance. When reviewing the financial statements the management checks on the compliance with relevant account standards.

Compliance with Laws & Regulations

The committee has checked the reports submitted by the management on the state of Compliance with applicable laws and regulations. The committee has also checked on the statutory payment made by the company and ensured that all regulations are adhered to..

External Auditors

The committee has held meetings with the external auditors to discuss the nature, scope and the approach of the audit of the company. The committee has also held discussions on matters raised on management letters issued by the Auditors. Necessary action has been taken by the company in response to the issues raised by the Auditors after consulting the business unit heads concerned. The committee has also reviewed the other services provided by the auditors to ensure that the independence of the Auditors has not been impaired in whatsoever.

Meetings

The Audit committee held regular meetings during the year under review. The proceedings of the meetings are reported to the Board of Directors.

Internal Auditors

The committee has done a review on Report of findings by the Internal Auditors to ensure that an effective system of internal control is in place. Wherever necessary the committee has given recommendations to improve the internal controls.

Risk Management

The committee has held discussions with the Sectional Heads to discuss the policies and practices related to risk management. The committee has also reviewed different types of risks attached to the company’s business and its operations during the year under consideration with a view to taking appropriate corrective action.

Mr. G RamananChairman – Audit Committee26th May 2015


12. REPORT OF THE REMUNERATION COMMITTEE

The Remuneration Committee was appointed by and is responsible to the Board of Directors. It comprises of two Non-Executive Directors and one Independent Non-Executive Director.

Mr. Idris Shabbir - ChairmanMr. Malayandi JeyaprakashMr. Imran Zahir

The composition of the members of the Remuneration committee satisfies the criteria specified for listed companies.

Policy

Company remuneration policy which, is an indiscriminative policy irrespective of race, religion or gender it has been developed to attract, motivate and retain good qualitative staff to achieve the goals and objectives of the company.

Scope

* Reviewing and agreeing on the remuneration of the Executive and, Non-Executive Directors and Consultants.* Evaluating the performance of key positions of the senior management against set goals and

targets and determining the basis for revising remuneration and other benefits.* Recommending the policy governing annual increments to staff.

Meetings

The committee holds meetings as and when necessary.

The Executive Chairmen and the CEO attended the meeting upon invitation and brief the committee on specific issues.

Mr.Idris ShabbirChiairman – Remuneration Committee26th May 2015


13. CORPORATE GOVERNANCECorporate Governance

The Board of Directors is committed to the highest standards of governance designed to protect the interest of the shareholders while promoting integrity, transparency and accountability. The Board ensures that the Company is in compliance with applicable legal and regulatory requirements including meeting the requirements of the Listing rules of the Colombo Stock Exchange, (CSE), The Companies Act no. 7 of 2007 and all other applicable laws and regulations.

Composition of the Board of Directors

The Board consists of Nine Directors, comprising of Four Executive Directors, Five Non Executive Directors, two of whom are independent Directors.

The profiles of all the Directors detailing their areas of expertise, is included separately in the Annual Report.

Independence of Directors

The Independence of the Non Executive Directors was determined according to the CSE Listing rules and each of the Directors has declared their independence and submitted signed confirmation to that effect.

Duties of the Board

The Board is responsible for the formulation and implementation of the Company’s short term, medium term and long term strategies. The Board also ensures that the Senior Management team has the requisite skills, expertise and the knowledge to implement these strategies.

The Board has the ultimate responsibility to ensure that controls are in place and ensures that all Company decisions are in compliance with laws and regulations of the Country and that each decision meets the ethical standards. The Board through the Audit Committee ensures that the Company follows accounting standards as set by the Sri Lanka Financial Reporting Standards (SLFRS) and all financial statements are in compliance with financial regulations.

The Board, in addition to keeping all shareholder interests a priority when considering corporate decisions, also keeps the CSE and the public informed of all significant decisions.

Delegation of Authority

The Board has delegated the authority to the CEO for the day to day management of the Company and is responsible for delivering services according to the strategic plan, within the policies and budgets approved by the Board. A team of Senior Management oversees the day to day management of the Company under the direction of the CEO.

Delegation to Board Members

The Board has delegated certain functions and duties to sub committees that comprise of Board Members The duties of each subcommittee namely, the Audit Committee and the Remuneration Committee are detailed in the respective reports.


Meeting Attendance

Directors’ Attendance at the Board Meetings held subsequently to the status change of the company to a listed entity.

Name of Director

2014

08.08.14 13.11.14

Dr A A Shabbir Appointed on 25/03/2011

√ √

Dr. L M F Adams Appointed on 25/03/2011

√ √

Mrs. D C M Gulamhusein Appointed on 25/03/2011

√ √

Mr. T. A. GulamhuseinResigned on : 25/03/2011

- -

Mr. I ShabbirResigned on : 25/03/2011

√ √

Mr. M. JeyaprakashResigned on : 25/03/2011

√ √

Mr. L. W. W. Priyankara Resigned on : 17/05/2012

√ √

Mr. G. RamananAppointed on 10/12/2013

√ √

Mr. Imran Zahir Appointed on 06/02/2014

- √

The Board is also encouraged to seek independent professional advice when necessary, at the Company’s expense and also have access to the Company Secretary to obtain advice and services as necessary.

Appraisal of Board Performance

The Board is aware that appraising their own performance periodically would enhance the understanding of individual performance and the Board as a whole. The Board members ensure that Board responsibilities are satisfactorily discharged.

Re-election of Board Members

Inconformity with the Company’s Articles of Association, members comprising one third of the Board of Directors except The Chairman , CEO and other Executive Directors, are required to stand for retirement by rotation at least once in every three years. Retiring Directors are subject to re-election by shareholders at the Annual General Meeting (AGM).

Appraisal of the Chief Executive Officer

The Board has discussions with the CEO on the short term, medium term and long term objectives of the Company.


Remuneration Committee (RC)

The Remuneration Committee consists of two Independent Non Executive Directors and One Non Executive Director. The RC is responsible to ensure that the Company’s remuneration policies are adequate to attract and retain the requisite talent. The RC is also responsible for recommending the remuneration of the CEO. The aggregated remuneration of the Board of Directors and the Senior Management team are disclosed in the notes to the financial statement.

Audit Committee (AC)

The Audit Committee comprises of Three Non Executive Directors of which two are Independent and one member is a fellow of the Institute of Chartered Accountants of England and Wales. The CEO and the CFO attend these meetings.

The Report of the Audit Committee is given separately in the Annual Report detailing the functions and duties of the Committee and the specific objectives met in the current financial year.

Internal Controls

The Board through delegation to the Audit Committee ensures that the Company maintains a sound system of Internal controls to safeguard investments and Company assets. Therefore, the Audit Committee conducts a review of the effectiveness of the Company’s system of internal controls.

Investor Relations and Communication to shareholders

The Board of Directors use the AGM and disclosures to the CSE, to communicate to its shareholders. The Company ensures that the notice of the AGM along with the Annual Report containing the performance of the Company are delivered to the shareholders at least 15 working days prior to the scheduled meeting.

Company Secretary

The Company Secretary ensures that Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary also liaises with the CSE on the Company’s communications. The Company Secretary is also responsible for announcing the AGM and EGMs to the Shareholders and for accurate recording of proxy voting. Any decision on the removal of the Company Secretary lies with the Board of Directors.

Major Transactions

The Board of Directors , is required by the Company’s Act to disclose to shareholders all proposed corporate transactions that are of material value to the Company. There were no major transactions entered into by the Company, during the year.

Whistle blowing Policy

This policy addresses the commitment of Adam Investment PLC to uphold the integrity and ethical behavior by helping to foster and maintain an environment where an employee can act appropriately without fear of retaliation. To maintain the standards of business conduct and ethics, the Company encourages its employees to have concerns about suspected serious misconduct or any breach or suspected breach of law or regulation that may adversely affect the Company, to come forward and express these concerns without fear of punishment or unfair treatment.

Outlook

The Board is constantly exploring ways to enhance its transparency in all decisions made. Thus, the staff, customers and all other shareholders are encouraged to provide feedback in order for the management to have an understanding of the areas that need to be strengthened.


CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE

CODE REF. ITEM REQUIREMENT COMPLIANCE

STATUSPAGE IN

ANNUAL REP.

A.1.1 Frequency of Board Meetings

• Board should meet regularly, at least once every quarter √

Corporate Governance/ Annual Report of the Board of Directors

A.1.2 Responsibilities of the Board

Formulation and implementation of strategy, • Skill adequacy of management and

succession • Integrity of information, internal

controls and risk management • Compliance with laws, regulations and

ethical standards • Code of conduct • Adoption of appropriate accounting

policies

√ Corporate Governance

A.1.3Access to Professional Advice Procedures to obtain independent

professional advice √ Corporate Governance

A.1.4 Company Secretary

• Ensure adherence to board procedures and applicable rules and regulations

• Procedure for Directors to access services of Company Secretary


A.1.5 Independent Judgment

• Directors should exercise independent judgement on issues of strategy, resources, performance and standards of business judgement


A.1.6Dedication of adequate time and effort by Directors

• Directors should devote adequate time and effort to discharge their responsibilities to the Company satisfactorily.


A.1.7 Training for Directors- Directors should receive appropriate training on skills and expand knowledge to more effectively perform duties


A.2 DIRECTORS – CHAIRMAN & CHIEF EXECUTIVE OFFICER

A.2Old

Division of responsibilities to ensure no individual has unfettered powers of decision

• A balance of power and authority to be maintained by separating responsibility for conducting Board business from that of executive decision making


A.3 DIRECTORS – ROLE OF CHAIRMAN

A.3 Ensure good corporate governance

• Chairman to preserve order and facilitate effective discharge of Board functions by proper conduct of Board meetings.




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ANNUAL REP.

A.4 DIRECTORS – FINANCIAL ACUMEN

A.4 Possession of adequate financial acumen

• Board to ensure adequacy of financial acumen and knowledge √ Corporate

Governance

A.5 DIRECTORS – BOARD BALANCE

A.5.1 Composition of Board• The Board should include a

sufficient number of Non-Executive Independent Directors


A.5.2 Proportion of independent directors

Two or one third of the Non-Executive Directors should be independent √ Corporate

Governance

A.5.3 Test of Independence

• Independent Directors should be independent of management and free of any business or other relationship that could materially interfere with the exercise of unfettered and independent judgment


A.5.4 Declaration of Independence

Non-Executive Directors should submit a signed and dated declaration of their independence/ non-independence


A.5.5

Annual determination of criteria of independence and declaration of same by Board

The Board should annually determine and disclose the names of Directors deemed to be ‘independent’.


A.5.6Appointment of Senior Independent Director (SID)

If the roles of Chairman/CEO are combined, a Non-Executive Director should be appointed as a Senior Independent Director (SID)

N/A

A.5.7

Availability of Senior Independent Director (SID) to other Directors

If warranted, the SID should be available to the other directors for confidential discussions

N/A

A.5.8

Interaction between Chairman and Non-Executive, Independent Directors

The Chairman should meet the Non-Executive Independent Directors at least once a year.


A.5.9 Directors concerns to be recorded

When matters are not unanimously resolved, Directors to ensure their concerns are recorded in Board minutes.

N/A

A.6 SUPPLY OF INFORMATION

A.6.1 Provision of adequate information to Board

• Management to ensure the board is provided with timely and appropriate information


A.6.2

Adequacy of Notice and formal agenda to be discussed at Board meetings

Board minutes, agenda and papers should be circulated at least seven days before the Board meeting.




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ANNUAL REP.

A.7 APPOINTMENT TO THE BOARD

A.7.1 Nomination Committee

Nomination Committee of parent may function as such for the Company and make recommendations to the Board on new Board appointments.


A.7.2 Annual assessment of Board composition

Nomination Committee or Board should annually assess the composition of the Board


A.7.3 Disclosure of new Board appointments

Profiles of new Board appointments to be communicated to Shareholders √

Corporate Governance/Notice of Meeting

A.8 DIRECTORS – RE-ELECTIONPrinciple A.8 – ALL Directors should be required to submit themselves for re-election at regular intervals and at least once in every three years.

A.8.1 Appointment of Non-Executive Directors

Appointment of Non-Executive Directors should be for specified terms and re-election should not be automatic.

√Corporate Governance/ Annual Report of the Board of Directors

A.8.2Shareholder approval of appointment of all Directors

The appointment of all Directors should be subject to election by shareholders at the first opportunity

√Corporate Governance/ Annual Report of the Board of Directors

A.9 DIRECTORS – APPRAISAL OF BOARD PERFORMANCE

A.9.1 Annual appraisal of Board performance

The Board should annually appraise how effectively it has discharged its key responsibilities.


A.9.2Self-evaluation of Board and Board Committee

The Board should evaluate its performance and that of its committee annually √ Corporate

Governance

A.9.2 Declaration of basis of performance

The Board should disclose in the Annual Report how performance evaluation have been carried out


A.10 DIRECTORS – DISCLOSURE OF INFORMATION IN RESPECT OF DIRECTORS

A.10.1

Biographical profiles and relevant details of Directors to be disclosed.

Annual Report should disclose the biographical details of Directors and attendance at board/committee meetings

√Board of Directors/ Corporate Governance/ Audit Committee Report

A.11 DIRECTORS – APPRAISAL OF CHIEF EXECUTIVE OFFICER (CEO)

A.11.1

Short, medium, long-term objectives with financial and non-financial objectives to be set

The Board should set out the short, medium and long-term objectives, financial and non-financial objectives at the commencement of each year

N/A Corporate Governance

A.11.2Evaluation of CEO’s performance evaluation

The performance of the CEO should be evaluated by the Board at the end of the year.




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B.1 REMUNERATION PROCEDURE

B.1.1Appointment of Remuneration Committee

Remunerationn Committee of parent may function as such for the Company to make recommendations on Directors remuneration


B.1.2Composition of Remuneration Committee

Board to appoint only Non-Executive Directors to serve on Remuneration Committee


B.1.3

Disclosure of members of Remuneration Committee

The Annual Report should disclose the Chairman and Directors who serve on the Remuneration Committee


B.1.4Remuneration of Non-Executive Directors

Board to determine the level of remuneration of Non-Executive Directors √ Corporate

Governance

B.1.5 Access to professional advice

Remuneration Committee should have access to professional advice in order to determine appropriate remuneration for Executive Directors


B.2 DIRECTORS REMUNERATION – LEVEL AND MAKE UP OF REMUNERATION

B.2.1Remuneration Packages for Executive Directors

Packages should be structured to attract, retain and motivate Executive Directors √ Corporate

Governance

B.2.2

Remuneration Packages to be appropriately positioned

Packages to comparable and relative to that of other companies as well as the relative performance of the company


B.2.3

Appropriateness of remuneration and conditions in relation to other Group Companies

When determining annual increases, Remuneration Committee should be sensitive to that of other Group companies


B.2.4Performance related elements of remuneration

Performance related elements of remuneration should be aligned with interests of Company


B.2.5 Share options Executive share options should not be offered at a discount √ Corporate

Governance

B.2.9Remuneration packages for Non-Executive Directors

Should reflect time commitment and responsibilities of role and in line with existing market practice


B.3 DIRECTORS REMUNERATION – Disclosure of Remuneration

B.3.1 Disclosure of details of remuneration

The Annual Report should disclose the remuneration paid to Directors √ Corporate

GovernanceC.1 RELATIONS WITH SHAREHOLDERS - CONSTRUCTIVE USE AND CONDUCT OF ANNUAL

GENERAL MEETING (AGM)

C.1.1 Proxy Votes to be counted

The Company should count and indicate the level of proxies lodged for and against in respect of each resolution


C.1.2 Separate resolution Separate resolutions should be proposed for substantially separate issues √ Corporate

Governance



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C.1.3Availability of Committee Chairmen @ AGM

The Chairmen of Board Committees should be available to answer any queries at AGM √ Corporate

Governance

C.1.4 Notice of AGM 15 calendar days notice to be given to shareholders √ Corporate

Governance

C.1.5 Procedure for voting at meetings

Company to circulate the procedure for voting with Notice of Meeting √ Corporate

GovernanceC.2 MAJOR TRANSACTIONS

C.2.1 Disclosure of Major Transactions

Transactions that have a value which are greater than half of the net assets of the Company should be disclosed


D.1 ACCOUNTABILITY AND AUDIT - FINANCIAL REPORTING

D.1.1 Presentation of Public Reports

Should be balanced, understandable and comply with statutory and regulatory requirements

√

Management Discussion and Analysis, Corporate Governance, Risk Management, Financial Statements

D.1.2 Directors’ Report

The Director’s Report should be included in the Annual Report and confirm that :- the Company has not contravened laws or regulations in concluding its activities- Material interests in contracts have been declared by Directors- the Company has endeavoured to ensure equitable treatment of shareholders- that the business is a “going concern”- that there is reasonable assurance of the effectiveness of the existing business systems following a review of the internal controls covering financial, operational and compliance

√

Annual Report of the Board of Directors

Audit Committee ReportAnnual Report of the Board of Directors/Financial Statements/ Corporate Governance

Annaul Report of the Board of Directors/Audit Committee Report/ Risk Management

D.1.3

Respective responsibilities of Directors and Auditors

The Annual Report should contain separate statements setting out the responsibilities of the Directors for the preparation and presentation of the Financial Statements and the reporting responsibilities of the Auditors.

√Respective responsibilities of Directors and Auditors

D.1.4Management Discussion and Analysis

Annual Report to include section on Management Discussion and Analysis √

Management Discussion and Analysis

D.1.5 Going ConcernDirectors to substantiate and report that the business is a going concern or qualify accordingly.

√Annual Report of the Board of Directors



STATUSPAGE IN

ANNUAL REP.

D.1.6 Serious Loss of Capital

Directors to summon an Extraordinary General Meeting in the event that the net assets of the Company false below 50% of the value of Shareholder Funds.

N/A

D.2 ACCOUNTABILITY AND AUDIT – INTERNAL CONTROL

D.2.1Effectiveness of system of Internal Controls

Directors to annually conduct a review of the effectiveness of the system of internal controls. This responsibility may be delegated to the Audit Committee

√Audit Committee Report Risk Management

D.3 AUDIT COMMITTEE

D.3.1Chairman and Composition of Audit Committee

- Should comprise of a minimum of two Independent, Non-Executive Directors - Audit Committee Chairman should be appointed by the Board

√ Audit CommitteeReport

D.3.2 Duties of Audit Committee

Should include- Review of scope and results of audit and its effectiveness- Independence and objectivity of the Auditors


D.3.3 Terms of Reference/Charter

- The Audit Committee should have a written Term of Reference, which define the purpose of the Committee and its duties and responsibilities


D.3.4 Disclosures

- The Annual Report should disclose the names of Directors serving on the Audit Committee- The Audit Committee should determine the independence of the Auditors and disclose the basis of such determination- The Annual Report should contain a report by the Audit Committee setting out the manner of the compliance of the Company during the period to which the Report relates

√Corporate Governance/Audit Committee Report

D.4 CODE OF BUSINESS CONDUCT AND ETHICS

D.4.1

Adoption of Code of Business Conduct and Ethics and Disclosure in Annual Report

The Company must adopt a Code of Business Conduct and Ethics for directors and members of the senior management team and promptly disclose any violation of the Code


D.4.2 Chairman’s affirmation

The Annual Report must include an affirmation by the Chairman that he is not aware of any violation of the Code of Business Conduct and Ethics

√Chairman’s Statement /Director’s Report



STATUSPAGE IN

ANNUAL REP.

D.5 CORPORATE GOVERNANCE DISCLOSURES

D.5.1 Corporate Governance Report

The Annual Report should include a report setting out the manner and extent to which the Company has adopted the principles and provisions of the Code of Best Practice on Corporate Governance


E. INSTITUTIONAL INVESTORS – STRUCTURED DIALOGUE

E.1.1

Structured Dialogue with Shareholders

A regular and structured dialogue should be conducted with shareholders and the outcome of such dialogue should be communicated to the Board by the Chairman.

√Corporate Governance

E.2

Evaluation of Governance Disclosures by Institutional Investors

Institutional investors should be encouraged to consider the relevant factors drawn to their attention with regard to Board structure and composition


F. OTHER INVESTORS – INVESTING/DIVESTING DECISION

F.1

Individual Investors Individual shareholders should be encouraged to carry out adequate analysis and seek professional advice when making their investment/ divestment decisions


F.2Shareholder Voting Individual shareholders should be

encouraged to participate and exercise their voting rights



14 RISK MANAGEMENT14.1.1 Risks relating to Macro-Environmental Factors.

• Unfavourable political and Economic Changes in Sri Lanka

Government has a substantial influence on many aspects of the economy. Business and financial performance of Adam Metals Limited could be affected by the political instability of the country. Prospects of business sector in which ADMEL is operating is closely linked to government policies. Specially the government policy on infrastructure development is linked to construction sector development in the country. However the post conflict infrastructure developments of the country have witnessed a favourable market condition in the construction sector.

• Exchange Rate Risk

An unfavourable exchange rate fluctuation can increase the cost of imported items and affect the selling price. However, AINV group has an experienced staff that continuously monitors the exchange rate fluctuations and assists the group when fixing prices for exports and imported items.

• Exposure to the Increasing Competition.

Companies managed under AINV face competition from both local and global competitors in respective industries. As an export oriented business Adam Apparel and Orient Garments PLC compete with various apparel suppliers globally. Other companies managed under AINV also face competition from various local competitors. However the strong brand and the proven track records over decades enable the company to face the competitor pressure successfully.

14.1.2 Risks Related to the Existing Businesses of Adam Metals Limited.

• Tax Regulations.

Adam Apparel and Orient Garments PLC are able to import the raw material duty free based to current regulatory conditions in the country. Any changes to these regulations would affect the profitability of the apparel businesses managed under AINV. However based on the current situation and the massive support given by the government to encourage the export business it is highly unlikely that there will be any unfavourable change in these regulations. Additionally import duty is a considerable component of the products imported for Network Communications (Pvt) Ltd, Adam Automobiles and Adam Air Conditions. A regulatory change resulting increase in import duty for these items would affect the revenue of the respective businesses.

• Natural Disasters

Natural Disasters such as earthquakes, floods or tsunami may delay or damage the current business activities of AINV. Despite the necessary precautionary measures taken by the group, to minimize the damage from such events, vulnerability to such risks of natural disasters are inevitable. However sufficient insurance covers have been obtained in order to reduce the risk of such event and potential interruptions to the business operations.

• Uncertainties with the Procurement of Imported Items

Operations of Network Communications (Pvt) Ltd, Adam Automobiles and Adam Air Conditions are dependent on the supply of the products imported. Delays and other disruptions of the supply can lead to impact the operations unfavourably. However the experience of supply chain management and the long term relationships with suppliers have minimize this risk and enables the smooth running of the business.


FINANCIALINFORMATION


A. I. MACAN MARKAR & CO.CHARTERED ACCOUNTANTS“Inspiring All Stakeholders to Reach the Impossible”

Partners - Ms. S. Vishnukanthan FCA Rajan Niles ACA, FCMA E. Annalingam FCA, FSCMA R. Rabendravarman FCA

46-2/1, 2nd Floor, Lauries Road,Colombo 4.

Phone : 2594205, 2594192 Fax : 2594285e-mail - [email protected] Site: www.aimm.lk

INDEPENDENT AUDITORS’ REPORT TO THE SHARE HOLDERS OF ADAM INVESTMENTS PLC

Report on the Financial StatementsWe have audited the accompanying Financial Statements of Adam Investments PLC, the Consolidated Financial Statements of the company and its subsidiaries, as at December 2014, which comprise the Balance Sheet as at December 31, 2014 and the Income Statements, Statements of Changes in Equity and Cash Flow Statements for the year then ended, and summary of Significant Accounting Policies and other explanatory notes as set out thereto.

Management’s Responsibility for the Financial StatementsManagement is responsible for the presentation and fair presentation of these Financial Statements in accordance with Sri Lanka Accounting Standards (LKAS & SLFRSs). This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate Accounting Policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these Financial Statements on our audit. We conducted our audit in accordance with Sri Lanka Accounting Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the Financial Statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also included assessing the Accounting Principles used and significant estimates made by management, as well as evaluating the overall Financial Statement presentation.

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

Opinion

CompanyIn our opinion, so far as appears from our examination, the company maintained proper accounting records for the year ended December 31, 2014 and the Financial Statements give a true and fair view of the company’s state of affairs as at December 31, 2014 and of its profit and Cash Flows for the year then ended in accordance with Sri Lanka Accounting Standards (LKAS & SLFRSs).

GroupThe consolidated financial statements for the year ended 31st December 2014 were prepared based on the management accounts of the subsidiary companies of Adam Metal (Pvt) Limited, Adam Air Conditions (Pvt) Ltd and Adam Automobile (Pvt) Ltd and associate company Network Communications (Pvt) Ltd. In the event, the unaudited balances and results of the said subsidiaries and associate are significantly different from those of the subsequently audited balances and results, adjustments would then be required to the consolidated financial statements of the Adam investments PLC.

15. INDEPENDENT AUDITOR’S REPORT


In our opinion, since no audit have been carried out for the year ended 31st December 2014 for subsidiaries and associate of Adam investments PLC and the consolidated Financial Statement prepared purely based on the management accounts, we are not expressing an opinion on the Consolidated Financial Statements of Adam Investments PLC as at 31st December 2014 and of its financial performance 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.

Emphasis on matterWe draw attention to the disclosure made in the note number 28 to these financial statements concerning the exclusion of major subsidiary (PCH Holdings PLC) of the group in preparing the consolidated financial statement. This due to that The financial statement of the subsidiary as at 31st December 2014 was not available for the purpose of preparing the consolidated financial statement.

Report on Other Legal & Regulatory RequirementsGroup

Financial Statements comply with the requirements of Sections 151 (2) & 153 (2) to 153 (7) as appropriate of the Companies Act No. 07 of 2007.

A. I. MACAN MARKAR & CO.CHARTERED ACCOUNTANTS


A. I. MACAN MARKAR & CO CHARTERED ACCOUNTANTS

ADAM INVESTMENTS PLCSTATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31ST DECEMBER 2014

NOTESGROUP COMPANY

31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 Rs Rs Rs Rs

CONTINUING OPERATION Revenue 01 9,130,500 4,332,300 - - Cost of Sales (8,083,677) (3,830,448) - - GROSS PROFIT 1,046,823 501,852 - - Other Income 02 157,783,814 40,903,629 62,508,121 40,903,629 Selling and Distribution Expenses 03 (94,426) - - -

Administrative Expenses (23,593,372) (1,567,858) (22,282,145) (1,086,598)RESULT FROM OPERATING ACTIVITIES 135,142,838 39,837,623 40,225,976 39,817,031

Finance cost 04 (56,931,221) (7,343,017) (56,930,452) (7,342,317) Finance Income - - - - NET FINANCE COST (56,931,221) (7,343,017) (56,930,452) (7,342,317)

PROFIT AFTER FINANCE COST 78,211,618 32,494,606 (16,704,476) 32,474,714

Share of Associate Company's Profit 9,588,116 - - -

PROFIT BEFORE TAX 87,799,733 32,494,606 (16,704,476) 32,474,714

Tax Expense 05 (21,600) 6,337,366 (21,600) - PROFIT FROM CONTINUING OPERATION 87,778,133 38,831,972 (16,726,076) 32,474,714

DISCONTINUING OPERATION Profit (loss) from discontinuing operation (net of tax) - - - -

PROFIT FOR THE YEAR 87,778,133 38,831,972 (16,726,076) 32,474,714 OTHER COMPREHENSIVE INCOME

Net changing fair value of available for sale financial assets 158,397,398 (19,213,606) 158,397,398 (19,213,606)

Defined benefit plan actuarial gains (losses) - - - -

16. STATEMENT OF COMPREHENSIVE INCOME


NOTESGROUP COMPANY


OTHER COMPREHENSIVE INCOME FOR THE YEAR (NET OF TAX)

158,397,398 (19,213,606) 158,397,398 (19,213,606)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 158,397,398 19,618,366 141,671,323 13,261,108

Earnings per share - basic 06 0.20 0.12 (0.04) 0.10

The notes from page 67 to 93 forman integral part of these financial statements. Figures in brackets indicate deductions.



ADAM INVESTMENTS PLCSTATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2014

17. STATEMENT OF FINANCIAL POSITION

NOTESGROUP COMPANY


ASSETS Property, plant and equipment 07 200,458,255 - 3,379,247 - Investment in Subsidiaries 08 - - 253,507,540 20 Investment in Associates 09 122,652,863 212,436,056 100,500,000 202,507,500 Good will on Acquisition 5,000,000 3,267,708 - - NON CURRENT ASSETS 328,111,118 215,703,764 357,386,787 202,507,520

Inventories 10 72,820,640 591,855 - - Investments 11 912,146,107 396,142,961 912,146,107 396,142,961 Trade & other receivable 12 78,583,999 230,000 1,018,355 - Other Receivable 13 - 1,000,000 - 1,000,000 Amount Due from Related Companies 14 467,539,375 56,994,050 360,322,006 57,285,310

Cash & cash equivalents 15 1,522,023 752,646 28,593 718,326 CURRENT ASSETS 1,532,612,144 455,711,513 1,273,515,061 455,146,598 TOTAL ASSETS 1,860,723,262 671,415,277 1,630,901,848 657,654,118

EQUITY Stated capital 16 714,508,200 316,660,200 714,508,200 316,660,200 Reserve 139,183,792 (19,213,606) 139,183,792 (19,213,606) Net profit / (loss) for the Year 219,968,444 137,174,161 102,248,090 123,958,005 TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

1,073,660,436 434,620,755 955,940,081 421,404,599

Non Controlling Interest 21,159,805 - - - TOTAL EQUITY 1,094,820,240 434,620,755 955,940,081 421,404,599 LIABILITIES Interest Bearing Borrowings 17 511,316,797 188,100,761 509,718,209 188,100,761 Deferred Tax Liabilities 18 (19,743) - - - Defined Benefit Plans 19 340,963 - - - NON CURRENT LIABILITIES 511,638,016 188,100,761 509,718,209 188,100,761

Trade & Other Payables 20 61,369,369 13,097,675 1,533,083 13,097,675 Interest Bearing Borrowings 17 174,632,665 - 158,215,688 - Taxation 21 2,204,132 - 21,600 -


I certify that these financial statements have been prepared in compliance with the requirements of the Company act No. 07 of 2007

................................................... Group Chief Financial Officer Waruna Priyankara

The Board of Directors is responsible for the preparation and presentation of these financial statements.

......................................... ........................................ Director Director Dr.L M F Adams Malayandi Jeyaprakash

Approved by the board on 26th May 2015.

NOTESGROUP COMPANY


Amounts Due to Related Companies 22 8,117,759 31,111,060 518,740 30,566,057

Bank Overdraft 15 7,941,079 4,485,026 4,954,447 4,485,026 CURRENT LIABILITIES 254,265,005 48,693,762 165,243,558 48,148,759 TOTAL EQUITY & LIABILITIES 1,860,723,262 671,415,277 1,630,901,848 657,654,118

Net Asset per share 2.44 1.37 2.13 1.33



ADAM INVESTMENTS PLCSTATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2014

18. STATEMENT OF CHANGES IN EQUITY

NOTE STATED

CAPITAL AFS RESERVE NON

CONTROLLING INTEREST

RETAINED PROFIT /

(LOSS) TOTAL

Rs Rs Rs Rs Balance at 1st January 2013 316,660,200 (19,213,606) - 98,342,188 395,788,782

Impacts of Change in Accounting Policies - - - - -

Restated Balance at 1st January 2013 316,660,200 (19,213,606) - 98,342,188 395,788,782

Current Year Profit/(Loss) - - - 38,831,973 38,831,973 Minority Interest - - - - - Other Comprehensive Income - - - - -

Total Comprehensive Income for The Year - - - 38,831,973 38,831,973

Dividends - - - - - Total Contribution by and Distribution to The Owners of The Company

- - - - -

Restated Balance at 31st December2013 316,660,200 (19,213,606) - 137,174,161 434,620,755

- Balance at 1st Jan 2014 316,660,200 (19,213,606) - 137,174,151 434,620,745 Impacts of Change in Accounting Policies - -

Restated Balance at 1st Jan 2014 316,660,200 (19,213,606) - 137,174,151 434,620,745

Current Year Profit/(Loss) - - - 87,778,133 87,778,133 IPO Expenses - - - (4,983,840) (4,983,840)Minority Interest on Business Acquisition - - 21,159,805 - 21,159,805

Other Comprehensive Income - 158,397,398 - - 158,397,398

Total Comprehensive Income for The Year - 158,397,398 21,159,805 82,794,293 262,351,496

Issue of Shares 397,848,000 - - - 397,848,000

Dividends - - - - -

GROUP


NOTE STATED

CAPITAL AFS RESERVE NON

CONTROLLING INTEREST

RETAINED PROFIT /

(LOSS) TOTAL

Rs Rs Rs Rs Total Contribution by and Distribution to The Owners of The Company

397,848,000 - - 397,848,000

Restated Balance at 31st December 2014 714,508,200 139,183,792 21,159,805 219,968,444 1,094,820,240


NOTE STATED

CAPITAL AFS

RESERVE

RETAINED PROFIT /

(LOSS) TOTAL

Rs Rs Rs Rs

Balance at 1st January 2013 316,660,200 (19,213,606) 91,483,291 388,929,885 Impacts of change in accounting policies - - - - Restated Balance at 1st January 2013 316,660,200 (19,213,606) 91,483,291 388,929,885 Current Year Profit/(Loss) - - 32,474,714 - Revaluation of property plant & equipment - - - - Other comprehensive income - - - - Total comprehensive income for the year - - 32,474,714 - Repurchase of shares - - - - Dividends - - - - Total contribution by and distribution to the owners of the company - - -

Restated Balance at 31st December2013 316,660,200 (19,213,606) 123,958,005 388,929,885

Balance at 1st Jan 2014 316,660,200 (19,213,606) 123,958,005 421,404,599 Impacts of change in accounting policies - - - Restated Balance at 1st Jan 2014 316,660,200 (19,213,606) 123,958,005 421,404,599 Current Year Profit/(Loss) - - (16,726,076) (16,726,076)IPO expenses (4,983,840)Net changing fair value of available for sale financial assets 158,397,398 158,397,398

Transfer to retained earnings - - - - Retirement benefit - - - - Total comprehensive income for the year - 158,397,398 (21,709,916) 141,671,323 Issue of share 397,848,000 - 397,848,000 Repurchase of shares - - - - Dividends - - - - Total contribution by and distribution to the owners of the company 397,848,000 - 397,848,000

Restated Balance at 31st December 2014 714,508,200 139,183,792 102,248,090 960,923,921

COMPANY


ADAM INVESTMENTS PLCSTATEMENT OF CHANGES IN EQUITY




ADAM INVESTMENTS PLCCASH FLOW STATEMENT


19. CASH FLOW STATEMENT

GROUP COMPANY 31 Dec 2014 31 Dec 2013 31 Dec 2014 31 Dec 2013

Rs Rs Rs Rs Cash Flow from Operating Activities

Profit/(Loss) for The Year Before Tax (10,007,691) 38,831,973 (16,704,476) 32,474,714 Adjustments for:-Provision for Gratuity / (Over provision) 157,077 - - IPO expenses (4,983,840) (4,983,840)Profit on sale on shares - (42,327,915) (42,327,534)Fair value gain on Short term Investments 158,397,398 - 158,397,398 - Lease Interest Charge 179,166 - 179,166 - Post tax share of equity accounted associate's profit - (6,337,366) - -

Depreciation of Property, Plant & Equipment 1,562,952 245,396 -

Operating Profit before Working Capital Changes 145,305,062 (9,833,308) 137,133,645 (9,852,820)

(Increase)/Decrease in Inventories (67,901,212) (591,855) - - (Increase)/Decrease in Trade & Other Receivables (51,995,157) (980,000) (18,355) (750,000)

(Increase)/Decrease in Amount Due from Subsidiaries (369,834,196) (48,049,510) (303,036,696) (48,340,770)

Increase/(Decrease) in Trade & Other Payables 9,501,912 81,175,568 (30,047,317) 81,175,568

Increase/(decrease) in investments in associate companies - - (11,564,592) -

Director current account - 96,456,675 - 96,456,675 Increase/(Decrease) in Amount Due to Subsidiaries (19,976,782) 31,111,080 - 30,566,057

Cash generating from operation (500,205,435) 159,121,958 (344,666,959) 159,107,530

Net Cash Flow from Operating Activities (354,900,372) 149,288,650 (207,533,315) 149,254,710

Cash Flow from Investment ActivitiesInvestment in short term investment (516,003,146) - (516,003,146) - Sales proceed on sale of shares - 82,871,445 - 82,871,065 Reinvestment of the profit of the sale of share - (40,543,531) - (40,543,531)

Investment in short term - (315,355,278) - -



Rs Rs Rs Rs Investment in Subsidiaries (20) - (20) - (Increase)/Decrease in Investment - - - (315,355,278)Investment in Equity accounted Associates - - (151,500,000) - Issue of shares 397,848,000 - 397,848,000 - Acquisition of Property, Plant & Equipment (142,500) - (142,500) - Cash Flow from Investment Activities (118,297,666) (273,027,364) (269,797,666) (273,027,744)

Cash Flow from Financing ActivitiesLease Installments Paid (266,727) - (266,727) - Loans Received (Net) 599,348,583 120,000,000 599,348,583 120,000,000 Loan payment (126,640,426) - (122,910,031) - Cash Flow from Financing Activities 472,441,430 120,000,000 476,171,825 120,000,000

Net Change in Cash & Cash Equivalents (756,608) (3,738,714) (1,159,156) (3,773,034)Cash & Cash Equivalents at the Beginning of the year (3,732,380) 6,334 (3,766,700) 6,334

Opening Balances of the Acquired Subsidiaries (1,930,070) - - -

Cash & Cash Equivalents at end of the year (6,419,058) (3,732,380) (4,925,855) (3,766,700)


Rs Rs Rs Rs Cash in Hand 74,750 752,646 28,593 718,326 Cash at Bank (7,787,588) (4,485,026) (4,954,447) (4,485,026)Cheques in Hand 1,293,782 - - -

(6,419,056) (3,732,380) (4,925,854) (3,766,700)

Analysis of Cash & Cash Equivalents as at 31.12.2014



ADAM INVESTMENTS PLC.NO: 264, GRANDPASS ROAD, COLOMBO 14.ACCOUNTING POLICIES

1. CORPORATE INFORMATIONAdam Investments PLC (“The Company”) is a Company incorporated and domiciled in Sri Lanka. The ordinary shares of the company are listed in Colombo Stock Exchange of Sri Lanka. The registered office of the Company is located at No: 264, Grandpass Road, Colombo 14.

Principal Activities & Nature of operations

Adam Investments PLCAdam Investments PLC is an investment holding company which holds shares of privately held companies operating in various industries such as apparel, metal, network communication and automobile and in quoted equity shares in the Colombo Stock Exchange.

1.1. SubsidiariesSubsidiaries are those entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Financial Statements of Subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date the control ceases.

Adam Air-conditions (Pvt) LtdAdam Air Conditions (Pvt) Ltd was inaugurated to cater to the growing demand for air conditioning systems in the country. Adam Air Conditions (Pvt) Ltd is importing, marketing and servicing of Air Conditioners.

Adam Automobiles (Pvt) LtdAdam Automobiles (Pvt) is the automobile arm of Adam Investments Limited group incorporated to import vehicles and vehicle spare parts.

Adam Metal (Pvt) Ltd. Manufacturers of metal hardware items

The company has been flourishing in the household and industrial hardware business for over forty years. Adam Metals manufactures high quality metal products at its own 40 perch factory situated at Vauxhall Street, Colombo – 02. The company also imports a variety of consumer hardware items which are sold on retail and wholesale basis through its own 25 perch sales center located in Abdul Jabbar Mawatha, Colombo – 12 and through its island wide distribution network.

1.2. AssociatesAssociates are the entities, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

a. Network Communication (Pvt) Ltd

Importer & supplier of Information Technology

The company is a diversified organization that specializes in manufacturing, importing, retailing and distributing computer accessories, computer hardware, computer software, computers, VOIP services, mobile phones, accessories and electronics. It also operates a high class and accurate repairing facility and service center. The company has been in operation for over ten years. The company also offers up to date software solutions and has a vast distributor base that covers the entire island.

20. ACCOUNTING POLICIES



1.3. Short Term Investment identified as Available for sale financial instrumentsa. Adam Apparel (Pvt) Ltd.

Manufacturer and exporter of garments for leading global fashion labels.

The company is one of the premier apparel manufacturers in Sri Lanka and has its factories spanning over an area of approximately four acres. It specializes in manufacturing of woven items of clothing for kids, ladies, and gents. The company manufactures clothes for brands such as Tesco, BHS, Mothercare and Sainsburys. The company’s primary export markets for its finished products are the UK, USA and the EU.

a. Orient Garment PLC.

Manufacturer and exporter of Garments.

Orient Garments PLC is a Sri Lankan manufacturer and exporter of high-end apparel - with special expertise in outerwear, casual wear and sportswear. Company specialized in apparel for over 30 years, and the rich experience in manufacturing and exporting makes OGL one of the most reliable clothing suppliers in Sri Lanka.

a. Ceylon and Foreign Trades PLC.

Ceylon and Foreign Trades PLC is a diversified business entity which diversified into various export, import, etc.

1.4. Short Term Investment identified as Fair Value through Profit or loss

a. PC House Holdings PC.

PC House Holdings PLC is mandated with its strategic portfolio to acquire and operate profitable business ventures across growing markets.

2. GENERAL POLICIES

2.1. Statement of ComplianceThe Financial Statement have been prepared in accordance with new Sri Lanka Accounting Standards (hereinafter referred to as SLFRS/LKAS) as issued by the Institute Of Chartered Accountants of Sri Lanka, the requirements if the Company’s Act No 07 of 2007 and the listing rules of the Colombo Stock Exchange.

The Financial Statements were authorized for issue by the board of Directors on 26th May 2015.

2.2. Basis of measurementThe Financial Statement have been prepared on historical cost basis, except as indicated below,

Financial Assets classified as available for sale – Fair Value

Financial asset classified as Fair value through profit or Loss - Fair Value

Property Plant and Equipment (Except for finance lease motor vehicles) - Revalued amounts.

Defined benefit obligation- Projected Unit Credit Method.

The said Financial Statements are prepared in Sri Lankan Rupees (LKR).

Where appropriate, Significant Accounting policies are explained in the succeeding notes.

Use of estimates and judgmentsThe preparation of the consolidated financial statements in conformity with IFRSs requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are



revised and in any future periods affected.

2.3. Functional and presentation currencyThese consolidated financial statements are presented in Sri Lankan Rupees, which is the Group’s functional currency. All financial information presented in Rupees (Rs.), unless stated otherwise.

2.4. Acquisitions of entities under common controlThe purchase method of accounting is used to account for the acquisition of subsidiary by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the Group’s share of the identifiable net assets acquired is recorded as Goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the Statement of Comprehensive Income.

2.5. Transactions eliminated on consolidation Inter group balances and transactions and any unrealized income and expenses arising from inter group transactions are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

2.6. ConsolidationSubsidiariesSubsidiaries are those entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The Financial Statements of Subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date the control ceases. The Financial Statements of the Group represents the Consolidation of the Financial Statements of the Company and its subsidiaries, in accordance with the Companies Act No.7 of 2007, and the Sri Lanka Accounting Standards (SLFRS/LKAS) No 27 “Consolidated and Separate Financial Statements”.

AssociatesAssociates are the entities, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.

Under the equity method of accounting, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the Group’s share of the post-acquisition results and changes of the associate’s reserves in the consolidated statement of comprehensive income after the date of acquisition and net off with any accumulated impairment loss, if any. The Group’s investment in associates includes goodwill identified on acquisition. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The intercompany transaction, balances and unrealized gains on transactions between Group companies are eliminated. The unrealized losses are also eliminated but considered as an impairment of the asset transferred.

3. Investment PropertyThe company management decided that the identifiable asset will be carrying out at fair value model in the financial statement balance sheets. Accordingly if any asset is purchased during the year it should be identified initially at cost and revalued in the financial year end or as at any date decided by Management by the use of chartered valuer. Gain / (Loss) arising from the revaluation should be recognized in the profit statement during the year.


4. Foreign ExchangeTransactions arising in Foreign Currencies are converted into Sri Lankan rupees (Rs) at the rate of exchange prevailing at the time the transactions were effected.

5. Differed Taxation No differed taxation has been provided in the Financial Statement.

6. Comparative InformationThe accounting policies have been consistently applied by the company and are consistent with those of the previous year, the previous year’s figures and phrases have been re-arranged where ever necessary to conform to the current presentation. In the current set of financial statements such comparison is not made since this is the first year of presentation.

7. Post Balance Sheet EventAll material events occurring after the balance sheet date have been considered and were appropriate adjustment to or disclosure have been made in the respective notes to the Financial Statement.

8. ASSETS AND THEIR MEASUREMENT BASIS

8.1. Cash Flow StatementThe Cash Flow has been prepared by using the “Indirect Method”. Cash and cash equivalent comprise of cash in hand. Deposit held at call with bank and statement in Money Market Investment net of bank overdrafts.

8.2. Property Plant and EquipmentThe property plant and equipment are stated at Cost Less Accumulated Depreciation.

Cost includes expenditures that are directly attributable to the acquisition of the asset Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost can be measured reliably. Repairs and maintenance costs are charged to the statement of income during the period in which they are incurred.

The major categories of property, plant and equipment are depreciated on a straight-line basis as follows:

• Leased Motor Vehicle - 05 years• Plant & Machinery - 13 years• Office Equipment - 06 years• Furniture & Fittings - 04 years• Lease Hold Property - 99 years• Motor Vehicle - 4 years• IT equipment - 05 years

The company allocates the amount initially recognized in respect of an item of property, plant and equipment to its significant parts and depreciates separately each such part. The carrying amount of a replaced part is derecognized when replaced. Residual values, method of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.

9. Loans & ReceivableLoans & receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized are initially at fair value plus any directly attributable transaction cost.




Subsequent to initial recognition loans and receivables are measured at amortized cost using the effective interest methods, less any impairment losses.

10. Cash and Cash EquivalentCash & cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, and are used by the group in the management of its short term commitments.

11. LIABILITIES AND PROVISION

11.1. PayablesPayables are stated at their Cost.

11.2. ProvisionProvisions are recognized when the company has a legal or Constructive obligation as a result of past events and it is probable that an Outflow of economic benefits will be required to settle the obligation.

11.3. Capital Commitment and ContingenciesAll the material expenditure Commitment & Contingents Liabilities as at the date of the Balance Sheet have been disclosed in the respective Notes to the Financial Statements.

12. INCOME STATEMENT

12.1. RevenueRevenue is recognized to the extent that it is probable that the economic benefits will flow to the group, and the Revenue and Associated Costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the Consideration received or receivable, net of Trade Discounts and Sales Taxes, and after eliminating Sale with the group.

12.2. Expenditure RecognitionAll Expenditure incurred in the running of the business, and in maintaining the Capital Assets in a state of efficiency have been charged to the Income Statement in arriving at the Profit/(Loss) for the year.

For the purpose of Presentation of the Income Statement, the directors are of the view that the “Function of Expenses” method fairly presents the elements of the Company’s performance, and hence such presentation method is adopted.

13. INTANGIBLE ASSETS

13.1. GoodwillGoodwill arising on the acquisition represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities at the date of acquisition. Goodwill will be tested for impairment annually and assessed for any indication of impairment at each reporting date to ensure that its carrying amount does not exceed its recoverable amount. If an impairment loss is identified, it will be recognized immediately in the Income statement.

13.2. Fair value At The date of statement of financial position, certain of the company’s investments in debt and equity securities were not traded in an active market and their fair value has had to be estimated using valuation techniques. Valuations for certain of these investments required the use of inputs that could not be derived from current market prices.


13.3. Critical accounting estimates and judgmentsThe preparation of financial statements requires management to use judgment in applying its accounting policies and estimates and assumptions about the future. Estimates and other judgments are continuously evaluated and are based on management’s experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. The following discusses the most significant accounting judgments and estimates that the company has made in the preparation of the financial statements:

13.4. Impairment of non-financial assetsProperty, plant and equipment and intangible assets (other than goodwill) are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units or ‘CGUs’). Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or CGU, as determined by management).

The company assesses at each year-end whether there is any objective evidence that its interests in associates are impaired. If so, the carrying value of the company’s share of the underlying assets of associates is written down to its net recoverable amount (being the higher of fair value less cost to sell and value in use) and the loss is charged to the consolidated statement of income in “other gains and losses (net)”.

14. Employee benefits

Post-employment benefit obligations

Employees of companies included in these consolidated financial statements have entitlements under the company’s pension plans which are either defined contribution or defined benefit pension plans. For defined benefit plans, the level of benefit provided is based on the length of service and earnings of the person entitled.

The cost of defined contribution pension plans is charged to expense as the contributions become payable. The cost of defined benefit plans is determined using the projected unit credit method. The related pension liability recognized in the statement of financial position is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. Actuarial valuations for defined benefit plans are carried out annually.

Actuarial gains and losses are recognized in full in the period in which they occur, in other comprehensive income without recycling to the statement of income in subsequent periods. Amounts recognized in other comprehensive income are recognized immediately in retained earnings. Current service cost, the recognized element of any past service cost, the expected return on plan assets and the interest expense arising on the pension liability are included in the same line items in the statement of income as the related compensation cost.

Past service costs are recognized immediately to the extent the benefits are vested, and otherwise are amortized straight-line over the average period until the benefits become vested.

15. Share-based payment No such scheme

16. Termination benefitsThe company recognizes termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing benefits as a result of an offer made to encourage voluntary termination. Benefits falling due more than twelve months after the end of the reporting period are discounted to their present value.



17. Other liabilitiesProvisions for restructuring costs, warranties and legal claims are recognized in other liabilities when the company has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period, and are discounted where the effect is material.

18. Income taxIncome tax comprises current and deferred tax. Income tax is recognized in the statement of income except to the extent that it relates to items recognized directly in other comprehensive income or directly in equity, in which case the income tax is also recognized directly in other comprehensive income or equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

In general, deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not recognized if it arises from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit nor loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the company and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset is realized or liability is settled. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized. Deferred income tax assets and liabilities are presented as non-current.

19. Investments in associatesAssociates are entities over which the company has significant influence. The company accounts for its investment in associates using the equity method. The company’s share of profits or losses of associates is recognized in the consolidated statement of income and its share of other comprehensive income or loss of associates is included in other comprehensive income.

Unrealized gains on transactions between the company and an associate are eliminated to the extent of the company’s interest in the associate. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are recognized in the consolidated statement of income.

20. Foreign currency translationTransactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at exchange rates of monetary assets and liabilities denominated in currencies other than an entities’ functional currency are recognized in the statement of income in “other gains and losses (net)”.

21. Financial instrumentsFinancial assets and liabilities are recognized when the company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have



expired or have been transferred and the company has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognized when the obligation specified in the contract is discharged, cancelled or expires.

At initial recognition, the company classifies its financial instruments in the following categories:

(i) Financial assets and liabilities at fair value through profit or loss

A financial asset or liability is classified in this category if acquired principally for the purpose of selling or repurchasing in the short-term.

Derivatives are also included in this category unless they are designated as hedges.

Financial instruments in this category are recognized initially and subsequently at fair value. Transaction costs are expensed in the consolidated statement of income. Gains and losses arising from changes in fair value are presented in the consolidated statement of income within “other gains and losses (net)” in the period in which they arise. Non-derivative financial assets and liabilities at fair value through profit or loss are classified as current except for the portion expected to be realized or paid beyond twelve months of the balance sheet date, which are classified as long-term.

(ii) Available-for-sale investments

Available-for-sale investments are non-derivatives that are either designated in this category or not classified in any of the other categories. The company’s available-for- sale assets comprise investments in debt and equity securities (other than those qualifying as cash equivalents).

Available-for-sale investments are recognized initially at fair value plus transaction costs and are subsequently carried at fair value. Gains or losses arising from re measurement are recognized in other comprehensive income except for exchange gains and losses on the translation of debt securities, which are recognized in the consolidated statement of income. When an available-for-sale investment is sold or impaired, the accumulated gains or losses are moved from accumulated other comprehensive income to the statement of income and are included in “other gains and losses (net)”.

Available-for-sale investments are classified as non-current, unless an investment matures within twelve months, or management expects to dispose of it within twelve months. Interest on available-for-sale debt instruments, calculated using the effective interest method, is recognized in the statement of income as part of interest income. Dividends on available-for-sale equity instruments are recognized in the statement of income as dividend income when the company’s right to receive payment is established.

(iii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The company’s loans and receivables comprise trade receivables and cash and cash equivalents, and are included in current assets due to their short-term nature. Loans and receivables are initially recognized at the amount expected to be received, less, when material, a discount to reduce the loans and receivables to fair value. Subsequently, loans and receivables are measured at amortized cost using the effective interest method less a provision for impairment.

(iv) Financial liabilities at amortized cost

Financial liabilities at amortized cost include trade payables, bank debt and long-term debt. Trade payables are initially recognized at the amount required to be paid, less, when material, a discount to reduce the payables to fair value. Subsequently, trade payables are measured at amortized cost using the effective interest method. Bank debt and long-term debt are recognized initially at fair value, net of any transaction costs incurred, and subsequently at amortized cost using the effective interest method. These are classified as current liabilities if payment is due within twelve months. Otherwise, they are presented as non-current liabilities.

Long – Term Investment The long- term investments are initially recognized at cost and provision is only made where, in the opinion of the Directors, there is a permanent diminution in value.



Where there has been a permanent diminution in the value of an investment, it is recognized as an expense in the period in which the diminution is identified.

However the cost of the long-term investments is subjected to revaluation and any gain is recognized in the income statement.

Short – Term InvestmentThe short- term investments are carried in the balance sheet at Fair value.

Investment in Adam Apparels (Pvt) Ltd is identified as Short term investment as the directors will look towards trading its securities in the future. The company has carried out a revaluation of it’s’ property on 30th September 2012 which has increased its fair value and it’s duly recognized in Adam Investment limited accounts.

On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement.

(v) Impairment of financial assets

At each reporting date, the company assesses whether there is objective evidence that a financial asset (other than a financial asset classified as fair value through profit or loss) is impaired. The criteria used to determine if objective evidence of an impairment loss include:

(a) Significant financial difficulty of the obligor;

(b) Delinquencies in interest or principal payments; and it become probable that the borrower will enter bankruptcy or other financial reorganization.

For equity securities, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired.

If such evidence exists, the company recognizes an impairment loss, as follows:

(vi) Financial assets carried at amortized cost

The loss is the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

(vii) Available-for-sale financial assets

The impairment loss is the difference between the original cost of the asset and its fair value at the measurement date, less any impairment losses previously recognized in the statement of income. This amount represents the loss in accumulated other comprehensive income that is reclassified to net income. Impairment losses on financial assets carried at amortized cost and available-for-sale debt instruments are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. Impairment losses on available-for-sale equity Instruments are not reversed.



22. Standards issued but not yet effective

The Following SLFRS have been issued by the Institute of Chartered Accountants of Sri Lanka but not yet effective as at the reporting date and have not been applied in preparing these Consolidated Financial statements. Those SLFRS will have an effect on the accounting policies currently adopted by the Group and may have an impact on the future financial Statements.

1. SLFRS 09 – Financial Instruments Classification and Measurement

Effective from 1st January 2018

2. SLFRS 15 – Revenue from Contracts with Customers


3. SLFRS 14 – Regulatory Deferral Accounts




A. I. MACAN MARKAR & CO CHARTERED ACCOUNTANTS21. NOTES TO THE

ACCOUNTS

ADAM INVESTMENTS PLCNOTES TO THE FINANCIAL STATEMENTS


GROUP COMPANY 31 Dec2014 31 Dec 2013 31 Dec 2014 31 Dec 2013

Rs Rs Rs Rs

Net Revenue 9,130,500 4,332,300 - -

GROUP COMPANY

31 Dec2014 31 Dec 2013 31 Dec 2014 31 Dec 2013

Rs Rs Rs Rs

Dividend Income 4,190 99 4,190 99

REPO Interest 297,138 - 297,138 -

Management Fee 360,000 360,000 360,000 360,000

Profit on Sale of Share 1,720,579 40,543,531 1,720,579 40,543,531

Unrealized Gain/(Loss) of Investments 60,126,214 60,126,214

Gain on bargain purchases 95,275,693 - - -

157,783,814 40,903,629 62,508,121 40,903,629

02.1 Profit on sale of shareSales proceed - 82,871,065 - 82,871,065

Cost of acquisition of the shares - (42,327,534) - (42,327,534)

- 40,543,531 - 40,543,531

01. REVENUE

02. OTHER INCOME






Rs Rs Rs Rs

Adam air 94,426 - - -

94,426 - - -


Rs Rs Rs Rs

Salaries, wages, allowances etc. 2,487,114 112,330 1,195,887 112,330

EPF & ETF 149,325 - 149,325 -

2,636,439 112,330 1,345,212 112,330

Others

Audit fee & expenses 200,000 50,000 200,000 50,000

Legal & documentation fee - 592,042 - 592,042

Legal & secretarial fee 6,974,852 167,704 6,974,852 167,704

Depreciation of property, plant & equipment

245,396 245,396

Donations 433,450 433,450

Consultancy Expenses 2,934,013 2,934,013

Security exchange commission fee 5,600 5,600

Initial public offer Expenses 2,996,744 2,996,744

Professional Charges 308,722 1,000 288,722 1,000

Secretarial Fee 1,232,235 1,232,235

Consolidation fee 75,000 - 75,000

18,042,451 923,076 16,731,223 923,076

03. DISTRIBUTION EXPENSES

OPERATING PROFIT /(LOSS)Profit from the operations is stated after charging all expenses including the followings :






Rs Rs Rs Rs

Bank Charges 137,154 7,342,317 136,386 7,342,317

Bank Interest Charges 38,162,530 - 38,162,530 -

Bank Guarantee Charges 4,057,156 - 4,057,156 -

LOFC Stamp Duty 385,600 - 385,600 -

Interest Fee- Leasing 179,166 - 179,166 -

Pan Asia Margin Trading 11,197,309 - 11,197,309 -

LOLC Margin Trading Interest Charges 2,812,305 - 2,812,305 -

56,931,221 7,342,317 56,930,452 7,342,317

04. FINANCING COST



Rs Rs Rs Rs

Tax on profit for the period 21,600 - 21,600 - Share of income tax of the associate - -

21,600 - 21,600 - Deferred tax charge/ (reversal) of the 345,672 - - - Share of deferred tax of the associates - - - -

367,272 - 21,600 -

Reconciliation of accounting profits and current tax on ordinary activities are as follows:-

Profit/(loss) before taxation (16,704,476) - (16,704,476) - Consolidation adjustment - - - - Accounting profit of the company and its subsidiaries (16,704,476) - (16,704,476) -

Disallowable items (60,569,376) - (60,569,376) - Allowable items (28,500) - (28,500) - Adjusted business profit / (loss) for the year (77,302,351) - (77,302,351) -

Tax losses brought forward - - - - Tax loss claim during the year - - - - Taxable Income from Other Sources 360,000 - 360,000 - Tax losses carry forward 77,302,351 - 77,302,351 - Taxable income 360,000 - 360,000 - Income tax 21,600 - 21,600 -

Provision for the year 21,600 - 21,600 - Dividend tax - - - - Income Tax payable 21,600 - 21,600 -

05. INCOME TAX EXPENSEIncome tax has been provided on the taxable income of the company at 28% and 12%.






Rs Rs Rs Rs

Profit attributable to Ordinary shareholdersWeighted average number of ordinary shares 87,778,133 38,831,972 (16,726,076) 32,474,714

449,276,200 316,660,200 449,276,200 316,660,200 Earnings / (deficit) per ordinary share (Rs) 0.20 0.12 (0.04) 0.10

Movement of Number of Shares during the yearNumber of shares held as at 1st Jan 2014 316,660,200

Movement during the year 132,616,000Number of shares held as at 31st Dec 2014 449,276,200

06. EARNINGS PER SHAREBasic earning /(loss) per share is calculated by dividing the net profit/(loss) for the year attributable to ordinary share-holders by the weighted average number of ordinary shares outstanding during the year, as per the Sri Lanka Accounting Standard - LKAS 33 - Earnings Per Share.





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COMPANY

Description Lease Mortar Vehicle IT Equipment Total Rs Rs Rs

Cost / ValuationOpening balance - - - Additions during the year 3,482,143 142,500 3,624,643 Balance as at 31 Dec 2014 3,482,143 142,500 3,624,643

DepreciationOpening balance - - -

Charge for the year 213,699 31,697 245,396 Balance as at 31 Dec 2014 213,699 31,697 245,396

WDVAs at 31 Dec 2014 3,268,444 110,803 3,379,247 As at 31 Dec 2013 - - -

The book value of the lease land area of 6.75 perches and the building of 1,120 square feet as per the lease agreement hold by the company which is located in no.44, Abdul Jabbar Mawatha, Colombo 12 has been revalued by M.C.Abdul Malick Int.Sc.(Land).,D.I.V,(S.L).,F.I.V.(S.L),retired state value on 30th August 2012. The surplus of Rs. 50,000,000/- has been credited to revaluation reserve in 31st March 2013. The book value of the lease land area of 18.73 perches and the building of 3,875 square feet as per the lease agreement hold by the company which is located in no.279, Vauxhall Street, Colombo has been revalued by M.C.Abdul Malick Int.Sc.(Land).,D.I.V,(S.L).,F.I.V.(S.L),retired state valuer on 30th August 2012. The surplus of Rs. 67,000,000/- has been credited to revaluation reserve in 31st March 2013. The book value of Machinery and Motor Vehicles has been revalued by M.C.Abdul Malick Int.Sc.(Land).,D.I.V,(S.L).,F.I.V.(S.L), retired state valuer on 30th August 2012. The surplus Machinery and Motor Vehicles of Rs. 80,577,000/- and Rs.3,060,000/- has been credited to revaluation reserve respectively in 31st March 2013.


Assets Value Leasehold Land & Building Plant & Machinery Motor Vehicles

Opening Balance on 01st April 2012 1,598,756 3,501,980 797,298

Revalued on 30th August 2012 117,000,000 80,577,000 3,060,000

As at 31st March 2013 117,000,000 80,577,000 3,060,000 Depreciation

For the year ended 31st March 2013 - (469,839) (51,054)

As at 31st March 2013 117,000,000 80,107,160 3,008,945 For the year ended 31st March 2014 (1,181,818) (503,606) (63,750)

As at 31st March 2014 115,818,181 79,603,554 2,945,195 For the period ended 31st Dec. 2014 (886,363) (377,704) (47,812)

As at 31st December 2014 114,931,818 79,225,849 2,897,382

The carrying amount of revalued land & buildings as at 31 December 2014, if they were carried at cost is as follows:-

Description

Cost Cumulative Depreciation if Assets were carried at

cost

Net Carrying Amount12/31/2014

Rs. Rs. Rs.Leasehold Land & Building 1,598,756 1,181,818 416,938Plant & Machinery 3,501,980 3,017,245 484,735Motor Vehicles 797,298 766,353 30,944Total 5,898,034 4,965,416 932,617

08. INVESTMENTS IN SUBSIDIARIES

Holding % No of shares Cost Amount written off 31.Dec.2014 31.Dec.2013

RsAdam auto mobiles (Pvt) ltd

100% 02 20 - 20.00 20

Adam air conditions (Pvt) Ltd

100% 02 20 - 20.00 20

Adam Metals (Pvt) Ltd 94.29% 15,700,000 253,507,500 - 253,507,500 -

253,507,540 - 253,507,540 40

Company31-Dec-14 31-Dec-13

Purchase consideration paid for the investment - Adam metal (Pvt) Ltd - 102,007,500 Network communication 100,500,000 100,500,000

100,500,000 202,507,500


09. INVESTMENT IN ASSOCIATES

31-Dec-14 31-Dec-13 Balance as at 01 Jan 2014 99,371,308 98,882,235 Transfer to purchases consideration (99,371,308) -

Share of associate profits as at 31.12.2014 - 489,073 Share of tax at 31.12.2014 - - Share of associate deferred tax - - Share of profits of associate after tax 31.12.2014 - - Dividend received from associate - - Balance as at 31st December 2014 - 99,371,308




Investment at Cost Adam Metal (Pvt) Ltd

31-Dec-14 31-Dec-13

Balance as at 01 Jan 2014 113,064,748 107,216,454 Due to related party - -

Share of associate profits as at 31.12.2014 9,588,116 7,087,882 Share of tax at 31.12.2014 -

Share of associate deferred tax - (1,239,589) Share of revaluation - - Share of profits of associate after tax 31.12.2014 - - Dividend received from associate - - Balance as at 31st December 2014 122,652,863 113,064,748

Investment at Cost Network Communication (Pvt) Ltd


42,004 41,639 Rs Rs

Non current assets 98,751,345 209,109,395 Current assets 572,275,230 227,194,878 Total assets 671,026,575 436,304,273

Capital & reserves 179,541,837 266,244,967 Total liabilities 491,484,738 170,059,307 Total equity & liabilities 671,026,575 436,304,274

Total income for the year 444,622,732 433,973,476

Profit/(loss) for the year 22,297,943 19,411,000

Reporting period of Subsidiary company Adam Metal (Pvt) Ltd

Reporting period of Associate company Network Communication (Pvt) Ltd








10. INVENTORIES

11. INVESTMENTS

11.1 Available For Sale Financial Assets

Group Company 31 Dec 2014 31 Dec 2013 31 Dec 2014 31 Dec 2013

Rs Rs Rs Rs

Trading items 5,086,205 591,855 - - Raw materials 12,734,074 - - - Finished goods 54,566,861 - - - Packing materials 433,500 - - -

- - - - 72,820,640 591,855 - -

GroupAvailable for sale Financial Assets 11.1 569,349,081 Fair value though profit/loss Financial Assets 11.2 342,797,026

912,146,107

Name of companies NO of Shares Fair value 01.01.2014 Acquisition Disposal

Unrealized gain or

(loss) on shares

Fair value 31.12.2014

Adam apparels (Pvt) Ltd 400,000 105,832,112 - - - 105,832,112 Ceylon & Foreign PLC 12,515,822 83,856,007 - - 10,012,658 93,868,665 Orient Garment PLC 21,574,278 174,752,504 141,920 (2,311,701) 151,031,447 323,614,170 PC Pharma 32,881,524 - 48,680,840 - (2,646,706) 46,034,134 Environmental Resources Investments PLC 78,140 1,101,774 - (1,101,774) - -

Distilleries 10 1,508 - (1,508) - - Vallibal one 100 2,256 - (2,256) - - Balance as at 31 Dec 2014 67,449,874.00 365,546,161 48,822,760 (3,417,239) 158,397,398 569,349,081

Balance as at31 Dec 2013 60,338,495 100,001,290 4,020,000 396,142,961 319,375,278 (19,213,606)


11.2 Fair value though profit/loss Financial Assets

11.2 Fair value though profit/loss Financial Assets

PCH Holdings PLCBalance on 01st Jan 14 30,600,564 Acquisition during the year 252,070,249 Fair value gain / loss 60,126,214 Balance as at 31st Dec 14 342,797,026

PCH Holdings PLCBalance on 01st Jan 14 30,600,564 Acquisition during the year 252,070,249 Fair value gain / loss 60,126,214 Balance as at 31st Dec 14 342,797,026

CompanyAvailable for sale Financial Assets 11.1 569,349,081 Fair value though profit/loss Financial Assets 11.2 342,797,026

912,146,107

Note Number of ordinary shares held in PCH holding Plc is 128,248,761

11.1 Available For Sale Financial Assets

Name of companies NO of Shares Fair value 01.01.2014 Acquisition Disposal

Unrealized gain or (loss)

on shares

Fair value 31.12.2014

Adam apparels (Pvt) Ltd 400,000 105,832,112 - - - 105,832,112 Ceylon & Foreign PLC 12,515,822 83,856,007 - - 10,012,658 93,868,665 Orient Garment PLC 21,574,278 174,752,504 141,920 (2,311,701) 151,031,447 323,614,170 PC Pharma 32,881,524 - 48,680,840 - (2,646,706) 46,034,134 Environmental Resources Investments PLC 78,140 1,101,774 - (1,101,774) - -

Distilleries 10 1,508 - (1,508) - - Vallibal one 100 2,256 - (2,256) - - Balance as at 31 Dec 2014 67,449,874.00 365,546,161 48,822,760 (3,417,239) 158,397,398 569,349,081

Balance as at 31 Dec 2013 60,338,495 100,001,290 4,020,000 396,142,961 319,375,278 (19,213,606)








12. TRADE & OTHER RECEIVABLES

13. OTHER RECEIVABLE


Rs Rs Rs Rs Trade debtors 73,807,971 - - - Colombo court- deposit 1,033,437 - 1,000,000 - JB Securities (Pvt)Ltd 355 - 355 - Other loan 40,827 - - - With holding tax receivable 18,000 - 18,000 - Water dispenser deposit 8,000 - - - Staff loan & festival advance 363,402 - - - Value Added Tax receivables 2,501,009 - - - Orient Garments PLC 360,000 - - - Sundry Debtors 264,000 - - - Salary - 230,000 - - Adam Expo 43,000 - - - PCH Holding PLC 144,000 - - -

78,583,999 - 230,000 - 1,018,355 - -


Colombo court- deposit - 1,000,000 - 1,000,000 - 1,000,000 - 1,000,000


14. AMOUNT DUE FROM RELATED COMPANIES

15. CASH & CASH EQUIVALENTS


Rs Rs Rs Rs Adam Air conditions (Pvt) Ltd - - - 481,260 Adam Auto mobile (pvt) Ltd - 26,000 418,662 26,000 Net work communication (Pvt) Ltd 229,637,928 42,484,408 120,412,552 42,294,408 Adam apparels (Pvt) Ltd 15,297,455 11,618,404 15,297,455 11,618,404 Adam Expo 3,943 - 3,943 - Adam Metal (Pvt) Ltd - 2,645,000 8,012,500 2,645,000 Sonakshi Investment(Pvt) Ltd 21,760 21,760 21,760 21,760 Ceylon & Foreign Trade PLC 9,800,000 - 9,800,000 - Orient Garment Limited 56,526,858 - 56,526,858 - PCH Holding PLC 149,629,799 - 149,629,799 - Spice of Life (Pvt) Ltd 173,474 - - - Giorgio Morandi (Pvt) Ltd 6,249,681 - - - Adam Industry (Pvt) Ltd 198,478 198,478 198,478 198,478 Total 467,539,375 56,994,050 360,322,006 57,285,310


Rs Rs Rs Rs Cash at bank 153,491 752,646 28,593 718,326 Cheques in hand 1,293,782 - - - Cash in hand 74,750

1,522,023 - 752,646 - 28,593 - 718,326

Less : Bank overdraft (7,941,079) (4,485,026) (4,954,447) (4,485,026)

(6,419,056) - (3,732,380) - (4,925,854) - (3,766,700)

Union Bank - 8604800014 4,496,891 - 4,496,891 - DFCC Bank 457,294 - 457,294 - Pan Asia Bank -Facility 1 262 4,485,026 262 4,485,026 Union Bank- 4765400017 2,986,632 - - -

7,941,079 - 4,485,026 - 4,954,447 - 4,485,026





16. STATED CAPITAL


Rs Rs Rs Rs As at 1st January 316,660,200 316,660,200 316,660,200 316,660,200 Issued during the year 397,848,000 - 397,848,000 - As at 31st December 714,508,200 316,660,200 714,508,200 316,660,200




The number of ordinary shares included in the Stated Capital is 449,276,200


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Loans & Margin trading facilities

LEASE LIABILITY

18. DEFERRED TAX LIABILITIES

19. EMPLOYEE BENEFIT PLANS - GRATUITY


Rs Rs Rs Rs Balance on 01.Jan 2014 120,000,000 - 120,000,000 - Obtain during the year 599,348,583 68,100,761 599,348,583 68,100,761 Installment paid during the year (122,910,031) - (122,910,031) - Balance as at 31.Dec.2014 596,438,552 68,100,761 596,438,552 68,100,761


Rs Rs Rs Rs Balance on 01 Jan 2014 - - - - Lease facilities received during the year 5,334,540 - - - Lease installments paid during the year (266,727) - - -

5,067,813 - - - Less : Interest In suspense as at 31 Dec 2014 (1,673,231) - - -

3,394,582 - - - Payable in the ensuing year 441,344 - - - Balance due after one year 2,953,238 - - - Balance on 31 Dec 2014 3,394,582 - - -


Rs Rs Rs Rs Balance on 01st Jan 14 (365,415) - - - Provision/(Reversal) for the year 345,672 - - - Balance as at 31st Dec 14 (19,743) - - -


Rs Rs Rs Rs Balance on 01st Jan 2014 264,835 - - - Payments during the year - - - - Provision during the year 127,946 - - - Interest charge 29,132 - - -

421,913 - - - Gains /loss arising from changes in the assumption or due to (over) / under provi-sion in the previous years

(80,950) - - -

Balance as at 31st Dec 2014 340,963 - - -



20. TRADE PAYABLE


Rs Rs Rs Rs Capital Trust Financials - 12,871,766 - 12,871,766 Trade creditors 15,712,093 - - - Accruals 401,609 - - - Sundry creditors 567,433 - - - Commercial Leasing PLC 38,700,000 - - - Commercial Leasing Loan Interest Payable 290,250 - - - Lease payable 330,000 - - - NBT payable 1,077,534 - - - ESC payable 99,084 - - - VAT payable 2,571,284 - - - WHT Payable 6,000 - - - Audit Fee Payable 235,000 72,848 235,000 72,848 PAYE 1,600 - 1,600 - EPF 17,000 - 17,000 - ETF 2,550 - 2,550 - DFCC Loan Interest Payable 1,035,616 - 1,035,616 - Salary 76,000 - - - Salary payable 91,967 - 91,967 - LOFC Loan Interest Payable 9,350 - 9,350 - Professional Charges payable 70,000 - 65,000 - Consolidation fee 75,000 - 75,000 - Listing fee Payable - 153,061 - 153,061

61,369,369 13,097,675 1,533,083 13,097,675

21. TAXATION


Rs Rs Rs Rs Balance on 1 Jan 2014 618,649 - - - Income tax provision for the year 1,585,483 - 21,600 - Deemed dividend tax - - - -

2,204,132 - 21,600 - LESSWithholding tax - - - - Balance as at 31 Dec 2014 2,204,132 - 21,600 -


22. AMOUNT DUE TO RELATED COMPANIES

23. RELATED PARTY TRANSACTIONS

The Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in Sri Lanka Accounting Standard 24 “Related Party disclosures (Revised 2009)”, the details of which are reported below.The pricing applicable to such transactions is based on the assessment of risk and pricing model of the company and is comparable with what is applied to transactions between the company and its unrelated customers.

The Directors of Adam Investments PLC are also the Directors of the following Related Companies.


Rs Rs Rs Rs Adam Expo 3,109,951 30,566,057 - 30,566,057 Adam Air-conditions (Pvt) Ltd - - 518,740.00 - Adam Metals (Pvt) Ltd - 545,002.92 - - Adam Apparels (Pvt) Ltd 5,007,808 - - -

8,117,759 31,111,060 518,740.00 30,566,057


Name of the Director AAC AAM SIL ADAM AML NETCOM AAP AIND CFT OGL PCHH

Dr.A.A.Shabbir Gulamhusein

a a a a a a a a a a a

Mr.T.A. Gulamhusein - - - - a a a - - - -

Mr.I. Shabbir - - - - a a a - a a a

Mrs.Danushya M.Gulamhusein

a a a - - - - a - a a

Dr.L.M.F.Adams a a a - - - - a - a a

Mr.M.Jayaprakash a a a - - - - a - a a

Mr.L.W.W. Priyankara a a - - - - - - a - -Mr.G.Ramanan - - - - - - - - - - -Mr.I.Zahir - - - - - - - - a - -

Name of the Company Nature of the RelationshipAdam Air conditions (Pvt) Ltd (AAC) SubsidiaryAdam Auto mobile (pvt) Ltd (AAM) SubsidiaryNet work communication Ltd (NETCOM) AssociateAdam apparels (Pvt) Ltd (AAP) InvestmentAdam Expo (Pvt) Ltd (ADAM) Other Related PartyAdam Metal (Pvt) Ltd (AML) SubsidiaryAdam Industries (Pvt) Ltd (AIND) Other Related PartySonakshi investment (Pvt) Ltd (SIL) Other Related PartyCeylon and Foreign Trades PLC (CFT) InvestmentOrient Garments PLC (OGL) InvestmentPCH Holdings PLC (PCHH) Subsidiary


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31 st Dec14 31 st Dec 13Rs Rs

Expenses incurred on behalf of related parties Adam Air conditions (Pvt) Ltd - 481,260 Adam Auto mobile (pvt) Ltd 392,662 26,000 Sonakshi investment (Pvt) Ltd - 21,760 Adam Industries (Pvt) Ltd - 198,478

Receivables Adam Air conditions (Pvt) Ltd - 481,260 Adam Auto mobile (pvt) Ltd 418,662 26,000 Net work communication Ltd 120,412,552 42,294,408 Adam apparels (Pvt) Ltd 15,297,455 11,618,404 Adam Metal (Pvt) Ltd 8,012,500 2,645,000 Sonakshi investment (Pvt) Ltd 21,760 21,760 Adam Industries (Pvt) Ltd 198,478 198,478 Ceylon & Foreign Trade PLC 9,800,000 - Orient Garment Limited 56,526,858 - PCH Holding PLC 149,629,799 -

Payables

Adam Expo (Pvt) Ltd - 30,566,057

Adam Air conditions (Pvt) Ltd 518,740 -

Finance Facilities Obtained by AINV Adam Expo (Pvt) Ltd - 30,566,057

Finance Facilities Granted by AINV Net work communication Ltd 120,412,552 42,294,408 Adam apparels (Pvt) Ltd 15,297,455 11,618,404 Adam Metal (Pvt) Ltd 8,012,500 2,645,000 Ceylon & Foreign Trade PLC 9,800,000 Orient Garment Limited 56,526,858 PCH Holding PLC 149,629,799



24. CAPITAL COMMITMENTS There were no capital commitments outstanding at the balance sheet date. 25. CONTINGENT LIABILITIES There are no significant contingent liabilities as at balance sheet date, which require adjustments to or disclosures in the financial statements. 26. DIRECTORS’ INTEREST IN CONTRACTS No directors of the company is directly or indirectly interested in any contract or proposed contract with the company. 27. EVENTS OCCURRING AFTER BALANCE SHEET DATE Subsidiary Name changed The name of PCH Holdings PLC was resolved by the shareholders to be changed as “Adam Capital PLC” at the extra general meeting held on 31.03.2015 Winding up Application A major shareholder has filed a winding up application in respect of Orient Garments PLC in the Commercial High Court of the Western Province of Sri Lanka on 20.02.2015 Except for the above paragh,no other circumstances have arisen since the balance sheet date, which would require material adjustments to or disclosures in the financial statements. 28. INTERESTS IN UNCONSOLIDATED SUBSIDIARY PCH Holdings PLC is a subsidiary of Adam Investments PLC has been excluded from the preparation of consolidated financial statements due to the unavailability of the financial statements for the year ended 31st Dec 2014. Therefore in accordance to SLFRS 12 (under paragh 19A) the investment has classified as financial assets at Fair Value Through Profit or Loss. These disclosures have been made according to the SLFRS 12 requirements under paragraph 19B.


Name of the Subsidiary Principle place of the Business Proportion of the Ownership held by the Adam Investments PLC

PCH Holdings PLC No. 451, Galle Road, Colombo 03. 53.5%

The followings are the subsidiaries of PCH Holdings PLC.%

Bieco Link Carbons (Pvt) Ltd. 100.0%

The followings are the associates of PCH Holdings PLC.%

Serendib Investments Holdings Ltd. 40.0%Black Eagle International (Pvt) Ltd 49.0%


29. BUSINESS COMBINATION Adam Investments PLC hold 47% out of total shares (705,000 Number of Shares) of Adm Metals (Pvt) Ltd as at 31.12.2013 and it has been treated as investment in associates. During the year 2014, the parent company has acquired all the additional shares issued (15,150,000 Number of Shares) by the Adam Metals (Pvt) Ltd as the share holding has been increased up to 94.29% Hence from the year 2014, Adam Metals (Pvt) Ltd has been treated as the subsidiary of Adam Investments PLC.

30. FINANCIAL INSTRUMENTS FINANCIAL RISK MANAGEMENT The Company has exposure to the following risks from financial instruments: 1. Credit risk 2. Liquidity risk 3. Market risk This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these Consolidated Financial Statements. Credit Risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was



COMPANYMaturity analysis of financial assets

Carrying amount

Contractual cash flows

6 months or less

6-12 months

More than 1 yr 1-2 years 2-5 years 5 years

Loans, receivables and advance payment - - - - - - -

Cash and cash equivalents 28,593 - 28,593 - - - -

Amount due from related companies 360,322,006 - - 360,322,006 - - -

360,350,599 - 28,593 360,322,006 - - -

Maturity analysis of financial liabilities

Carrying amount


6 months or less

6-12 months


Trade and other payables 1,533,083 - 1,533,083 - - - - Bank overdraft 4,954,447 - 4,954,447 - - - - Amount due to related companies 518,740 - - 518,740.00 - - -

7,006,270 - 6,487,530 518,740 - - -

GROUPMaturity analysis of financial assets

Carrying amount


6 months or less

6-12 months


Loans, receivables and advance payment - - - - - - -

Cash and cash equivalents 1,522,023 - 1,522,023 - - - -

Amount due from related companies 7,941,079 - - 7,941,079 - - -

9,463,101 - 1,522,023 7,941,079 - - -



Maturity analysis of financial liabilities

Carrying amount


6 months or less

6-12 months


Trade and other payables 61,369,369 - 61,369,369 - - - - Bank overdraft 7,941,079 - 7,941,079 - - - - Amount due to related companies 8,117,759 - 8,117,759 - - -

77,428,207 - 69,310,448 8,117,759 - - -

The company has not identified any impairment of financial assets during the reporting period since no receivable is passed its due dateThe company does not have any collective impairments on its loans and other receivables Liquidity Risk The following are the contractual maturities of financial liabilities,

Non-derivative financial liabilities

Carrying amount


6 months or less

6-12 months


Trade and other payables 61,369,369 61,369,369 - - - -

Bank overdraft 7,941,079 7,941,079 - - - - Amount due to related companies 8,117,759 8,117,759 - - -

77,428,207 - 69,310,448 8,117,759 - - -

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts. Currency risk Entity is not subjected to Currency risk as it does not engage in any foreign currency transactions Interest rate risk The company has no interest bearing financial assets or liabilities for the reporting period concerned



Faire value disclosures Carrying amount

Faire value

Assets carried at fair value Held-to-maturity investments Financial assets designated at fair value through profit or loss Available-for-sale financial assets (Note 11) 303,383,004 569,349,081 Financial assets held for trading 316,889,047 342,797,026

Assets carried at Amortized cost Loans and receivables 7,941,079 7,941,079 Cash and cash equivalents 1,522,023 1,522,023

9,463,101 9,463,101

Liabilities carried at fair value - -

Liabilities carried at Amortized cost Trade and other payables 61,369,369 61,369,369 Bank overdraft 7,941,079 7,941,079

61,369,369 61,369,369

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 01 Level 02 Level 03 Total

Held-to-maturity investments - - - - Financial assets designated at fair value through profit or loss (Note 11.2)

342,797,026.40 - 342,797,026.40

Available-for-sale financial assets (Note 11.1) 463,516,968.60 - 463,516,968.60 Financial assets held for trading - - - -

806,313,995.00 - - 806,313,995.00



22. SHAREHOLDER INFORMATION20 Major shareholders as of 31st December 2014

ADAM INVESTMENTS LIMITED20 MAJOR SHAREHOLDERS AS AT 31ST DECEMBER 2014

No of Shares (%)1 DR A A S GULAMHUSEIN 309,660,200 68.9242 SAMPATH BANK PLC/DR T SENTHILVERL 43,550,906 9.6943 REDINGTON GLOBAL (PRIVATE) LIMITED 22,000,000 4.8974 MRS L N BALDSING 18,522,569 4.1235 SEYLAN BANK LTD/GOVINDASAMY RAMANAN 8,333,400 1.8556 MR G I SHABBIR 4,083,998 0.9097 COMMERCIAL BANK OF CEYLON PLC/CEYLON & FOREIGN TRADES PLC 2,980,000 0.6638 MR A Y TYEBKHAN 2,265,604 0.5049 SEYLAN BANK PLC/AASIRI MANMOHAN IDDAMALGODA 1,976,798 0.440

10 MR S C HITHTHATIYAGE 1,931,899 0.43011 BANK OF CEYLON A/C CEYBANK UNIT TRUST 1,909,512 0.42512 COMMERCIAL BANK OF CEYLON PLC/S A GULAMHUSEIN 1,880,000 0.41813 PAN ASIA BANKING CORPORATION PLC/MR V P K A PALPITA 1,196,456 0.26614 MR M JEYAPRAGASH 1,000,000 0.22315 MR S A RATNAM 1,000,000 0.22316 DR L M F ADAMS 1,000,000 0.22317 MR L W W PRIYANKARA 1,000,000 0.22318 FIRST CAPITAL MARKETS LIMITED/BIMPUTH FINANCE PLC 852,700 0.19019 MR C R PERERA 800,000 0.17820 MR W JINADASA 720,000 0.160

426,664,042 94.967OTHERS 22,612,158 5.033TOTAL 449,276,200 100.00


Share Distribution as at 31st December 2014

From To No of Holders No of Shares %

1 1,000 282 114,783 0.031,001 10,000 385 1,916,344 0.4210,001 100,000 233 8,951,805 1.99100,001 1,000,000 59 18,001,926 4.01Over 1,000,000 13 420,291,342 93.55

972 449,276,200 100.00

Categories of Shareholders

Local Individuals 903 358,230,347 79.73Local Institutions 66 88,492,249 19.70Foreign Individuals 3 2,553,604 0.57

Foreign Institutions 0 0.00 0.00972 449,276,200 100.00

Director’s and CEO’s shareholding as at 31st December 2014NO. OF SHARES %

Deshabandhu. Dr A A S Gulamhusein 309,660,200 68.92%

Rev. Dr. L M F Adams 1,000,000 0.22%Mrs. D M Gulamhusein Nil -Mr. T A Gulamhusein Nil -Mr. I Shabbir 4,083,998 0.90%Mr. M Jeyapragash 1,000,000 0.22%Mr. L W W Priyankara 1,000,000 0.22%

Shares held in the following mannerSeylan Bank LTD/Mr G Ramanan 8,333,400 1.86%Mr. I Zahir 10,000 0.00%

Share Price for the YearAs at31/12/2014

Market price per shareHighest during the year - Rs.6.20 (01-07-14)Lowest during the year - Rs.3.30 (10-06-14)As at end of the year - Rs.3.90

Public HoldingThe Public Holding percentage – 17.30 %


23. FORM OF PROXY

ADAM INVESTMENT S PLC

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Adam Investments PLC will be held at “Olympic House”, 100/9F, Independence Avenue, Colombo 07 on 26th June 2015 at 3.00 p.m. for the following purposes.

1. To receive and consider the Annual Report and the Financial Statements for the year ended 31st December 2014 and the Report of the Auditors thereon.

2. To re-elect Mr. Idris Shabbir who retires by rotation in terms of Article 88 of the Articles of Association, as a Director of the Company.

3. To re-elect Mr. Taher Gulamhusein who retires by rotation in terms of Article 88 of the Articles of Association, as a Director of the Company.

4. To re-appoint M/s A I Macan Makar & Co, Chartered Accountants as Auditors of the Company and to authorize the Directors to determine their remuneration.

5. To authorize the Directors to determine and make donations to charities

By order of the Board ofADAM INVESTMENTS PLC

P W Corporate Secretarial (Pvt) LtdSecretaries

Colombo 26th May 2015

Note:i) A Shareholder entitled to attend and vote at the Meeting is entitled to appoint a Proxy who need not be a

shareholder, to attend instead of him/her. A Proxy may vote on a poll (and join in demanding a poll) but not on a show of hands.

ii) A Form of Proxy is enclosed in this Report

iii) The completed form of proxy should be deposited at the Registered office of the Secretaries: 3/17, Kynsey Road, Colombo 8 by 3.00 p.m. on 25th June 2015.


FORM OF PROXY

ANNUAL GENERAL MEETING

*I/We………………………………………………………………………………………of……………………………………………………………………………………………being a Shareholder / Shareholders* of ADAM INVESTMENTS PLC do hereby appoint ............................................................................................................................................(holder of NIC no. …………………………………………) of……………………………………………………………………………………………………………………………………………………………………………………. or failing him /her

Dr. Ali Asger Shabbir Gulamhusein or failing himDr. Larry Adams or failing himMrs. Danushya Gulamhusein or failing herMr. Taher Gulamhusein or failing himMr. Idris Shabir or failing himMr. Malayandi Jeyapragash or failing himMr. Waruna Priyankara or failing him Mr. G Ramanan or failing himMr. Imran Zahir

as *my/our proxy to represent me/us and to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on at “Olympic House”, 100/9F, Independence Avenue, Colombo 07 on the 26th June 2015 at 3.00 p.m and any adjournment thereof and at every poll which may be taken in consequence thereof.

i) To receive and consider the Annual Report, the Statement of Accounts for

the year ended 31st December 2014, with the Report of the Auditors thereon.

ii) To re-elect Mr. Idris Shabir, who retires by rotation in terms of Article 88 of the Articles of Association as a Director of the Company

iii) To re-elect, Mr. Taher Gulamhusein who retires by rotation in Terms of Article 88 of the Articles of Association as a Director of the Company.

iv) To re appoint M/s M R Macan Makar & Co and to authorize the Directors to determine their remuneration.

v) To authorize the Directors, to determine and make donations to Charities.

Signed this .............. day of ................... 2015

NOTICE *

FOR AGAINST

1. Please delete the inappropriate words.2. Instructions as to completion are noted on the reverse hereof.3. If you wish your proxy to speak at the meeting you should interpolate the words “and to speak” immediately after the words “to

vote”


INSTRUCTIONS AS TO COMPLETION 1. Kindly perfect the Form of Proxy by filling in legibly your full name address and signing in the space provided and

filling in the date of signature.

2. A shareholder entitled to attend and vote at the meeting is entitled to appoint a Proxy who need not be a shareholder, to attend and vote instead of him. Please indicate with an “X” in the boxes provided how your Proxy is to vote on each resolution. If no indication is given, the Proxy in his discretion will vote as he thinks fit.

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 appointer is a Company / incorporated body this Form must be executed in accordance with the Articles of Association / Statute.

6. The completed Form of Proxy should be deposited at the office of the Secretaries; 3/17, Kynsey Road, Colombo 8 by 3.00 p. m. On 25th June 2015.


NOTES

ADAM INVESTMENTS PLC. 264, Grandpass Road,

Colombo 14.

ADAM INVESTMENTS PLC - CSE

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