Annual Report 202021

1 Annual Report 2020/21 ARoyal Ceramics lanka PLCBO riginating from Ancient Greece, the term atomos means uncuttable, indivisible, impossible to destroy. While atoms make up the smallest unit of matter, they are comprised of sub-particles which are constantly in a state of motion, built to seek out and create lasting bonds that make up the very fabric of the Report 2020/211 Royal Ceramics lanka PLC2At Rocell, we have recorded a strong performance on multiple fronts, demonstrating a spirit of incredible resilience and tenacity during the year under review. Ours is a culture of agility, energy and resolve, reinforced by the widespread presence and enduring bonds we share with each and every stakeholder we the COVID-19 pandemic caused a disruption across the global market during the course of the year, we are proud to state that your Company remained steadfast and strong, maintaining our momentum despite significant external we explore the qualities and characteristics which drive us to achieve even amid an environment of uncertainty and intense pressure, we also revisit the partnerships, synergies and foresight that enabled our success since our inception.

2 Today, as a result of our untiring efforts, we stand strong pledging to sustain our legacy of stability and strength well into the future, as an indomitable force, built to Ceramics lanka PLC4 CONTENTSF inancial InformationIndependent Auditor s Report _____ 123 Statement of Financial Position ___ 126 Statement of Profit or Loss _____ 128 Statement of Comprehensive Income _____1 29 Statement of Changes in Equity - Company _____ 130 Statement of Changes in Equity - Consolidated _____ 131 Statement of Cash Flows _____ 132 Notes to the Financial Statements _ 134 Supplementary InformationTen-Year Summary - Company ____ 247 Group Value Added Statement ____ 249 Share Information _____ 250 GRI Index _____ 252 Glossary of Financial Terms _____ 254 Notice of Meeting _____ 255 Form of Proxy _____ 259An OverviewAbout the Report _____ 6

3 About Us _____ 8 Milestones _____ 9 Our Business Segments _____ 10 Our Contribution to the Sustainability Developmental Goals _____ 11 Financial Performance _____ 12 Non-Financial Highlights _____ 13 Our Group Structure _____ 14 Chairman s Message _____ 16 Managing Director s Message _____ 20 Board of Directors _____ 26 The Corporate Management _____ 31 StrategyThe Strategic Report _____ 34 Strategy _____ 36 Stakeholder Engagement _____ 38 Material Issues _____ 40 Managing Risks _____ 41 Stewardship and AccountabilityOperating Environment _____ 48 Business Line Reviews _____ 52 Capital Reports Financial Capital _____ 63 Human Capital _____ 66 Manufactured Capital _____ 73 Social and Relationship Capital __ 80 Natural Capital _____ 84 Intellectual Capital _____ 88 Corporate Governance _____ 94 Annual Report of the Board of Directors on the Affairs of the Company _____ 107 Statement of Directors Responsibilities _____ 115 Report of the Audit Committee ___ 116 Report of the Remuneration Committee _____ 118 Report of the Related Party Transactions Review Committee _____ 119 Annual Report 2020/215WE ARE STRUCTURED TO ACHIEVE LASTING STRENGTH.

4 BUILT ON WELL-BALANCED FUNDAMENTALS THAT DEFINE OUR TRUE POWERFUL COREThe core or nucleus of an atom consists of a base of protons and neutrons which are bound together by a strong nuclear force. These fundamental elements determine the atom s unique chemical OverviewAbout the Report _____ 6 About Us _____ 8 Milestones _____ 9 Our Business Segments _____ 10 Our Contribution to the Sustainability Developmental Goals _____ 11 Financial Performance _____ 12 Non-Financial Highlights _____ 13 Our Group Structure _____ 14 Chairman s Message _____ 16 Managing Director s Message _____ 20 Board of Directors _____ 26 The Corporate Management _____ 31 Royal Ceramics lanka PLC6 ABOUT OUR Report GRI - 102-3 | 102-45 | 102-46 | 102-48 | 102-49 | 102-50 | 102-51 | 102-52 | 102-53 | 102-54 | 102-56 This Report explains the integrated thinking of the Board to create and protect the value drivers

5 Of our business. The strategic progress of our organisation over the last 12 months ended 31st March 2021 are discussed in the Annual Report . How we organise ourselvesSteering the performance of the Group through an effective corporate strategy to enable us optimise our resource allocations within the current operating context. We set strategic priorities (Page 34 ) We monitor both financial and non-financial KPIs (Page 36 ) How we share value with our stakeholders Capital Reports (Page 62 ) Stakeholder Engagement (Page 38 ) Our ApproachOur thinking is backed by the changes in our operating and the material issues that impact our ability to create value. We assess the emerging threats and opportunities in our dynamic operating environment (Page 48 ) We focus and Report on the issues most material to our stakeholders (Page 40 )Our approach to integrated thinkingAssurance Assurance on the Financial Statements has been provided by Messrs.

6 Ernst & Young , Chartered Frameworks Integrated Reporting Framework issued by the International Integrated Reporting Council Core option of the GRI standards Code of Best Practice on Corporate Governance issued by the Institute of Chartered Accountants of Sri lanka December 2017 Sustainability Development Goals Communicating Sustainability issued by the Colombo Stock Exchange. Sustainability standards issued by the Global Reporting Frameworks Companies Act of 2007 Continued Listing Requirements of the Colombo Stock Exchange Sri lanka accounting & Auditing standards Act of 2015 Sri lanka Financial Reporting StandardsScope and Boundary This Report covers the activities of the Parent Company, Royal Ceramics lanka PLC (Rocell), 24 Subsidiaries and two Associate Companies.

7 The list of Subsidiaries and their principal activities are given on page Report 2020/217 FORWARD LOOKING STATEMENTS We have included forward-looking statements in this Report , particularly in assessing risk and opportunities and discussion of our future plans which are based on our perceptions, opinions and views of external and internal information available to us at present as we believe these aid the assessment of the future performance of the Group. These statements, assessments and estimates have varying degrees of uncertainty associated with them which we will know only with the benefit of hindsight as they relate to future events, outcomes and impacts which are beyond our control. We believe the COVID- 19 pandemic impacts significantly elevate the uncertainties above normal levels and advise users of this Report to make their own judgements as the forecasts regarding the same remain extremely fluid and volatile even as at the reporting date.

8 This information is provided without recourse or any liability whatsoever to the Board or other preparers of the Annual Report due to the relatively high levels of uncertainty regarding the CHANGES DURING THE YEARThe Report complies with all relevant voluntary and regulatory frameworks as described above. There were no re-statements of information nor changes to our reporting period during the year. The date of our most recent Report was 31st March INFORMATIONThe Report includes sustainability information related to the material topics of the business. We used the guidelines issued by the Global Reporting Initiatives (GRI) to Report key sustainability indicators of the Group. ACKNOWLEDGMENT The Board acknowledges its responsibility to ensure that the Annual Report provides a balanced view of its performance.

9 All information contained in the Annual Report has been reviewed internally by the Senior PereraChairman L N de S WijeyeratneAudit Committee Chairman Aravinda PereraManaging Director FEEDBACK AND INQUIRIESP lease contact;Mr. Haresh Somashantha Director Finance No. 20, R A De Mel Mawatha, Colombo 3 Email: Website: Ceramics lanka PLC8 ABOUT US GRI - 102-1 | 102-5 WHO WE AREROYAL CERAMICS lanka PLC (Rocell) is one of the leading conglomerates in the country with a presence in Manufacturing, Agriculture and Mining sectors. Renowned for its specialisation and artistic excellence in surface coverings for over 30 years, the Rocell brand leads the industry with its best in class, modern and affordable product ranges at different price levels to cater to the interests of every consumer.

10 Our passion lies in creating masterpieces of high quality, functionality, and design that set trends in the architectural landscape of Sri lanka and we consistently invest in technology and upskill our talents to remain competitive. Founded in 1990 AssetsRs. 66,140 MnEmployees 9,424 RevenueRs. 44,972 MnLiabilitiesRs. 24,163 MnA GLANCE AT THE ROCELL Assets Per ShareShare priceRs. Mn16/1718/1917/1819/2020/2105,00010,0001 5,00020,00025,00030,000 Capital investmentsduring the yearFixed AssetsRs. Mn16/1718/1917/1819/2020/21010,00020,000 30,00040,00050,000 RevenueProfit after taxFixed AssetsOUR INVESTMENTTHE INTRINSIC VALUE OF OUR GROUPOUR GROWTH*Based on the pre share split statusAnnual Report 2020/219 MILESTONES1991 Commenced operations as a tile CP Holding (Pvt) operations of Rocell Bathware 20% stake on Delmege Ltd.