Financial Reports

Annual Report of the Board of Directors on the Affairs of the Company

The Directors are pleased to present their report and the Audited Financial Statements of the Company, Sri Lanka Telecom PLC and the Group for the financial year 2017.


Sri Lanka Telecom (“SLT” ) was formed by an Incorporation Order made under Section 2 of the State Industrial Corporations Act No. 49 of 1957 and published in the Extraordinary Gazette No. 596/11 of 6 February 1990. Subsequently, in terms of an order made by the Minister of Posts and Telecommunications ["the Minister"] on 24 July 1991 under Section 23 of the Sri Lanka Telecommunications Act No. 25 of 1991 and published in the Gazette No. 675 of 9 August 1991 all properties, rights and liabilities (other than those excluded by the agreement entered into between the Minister and SLT as per subsection 2 of Section 23 of the Sri Lanka Telecommunication Act) to which the Department of Telecommunications (“DOT”) was entitled or subject to immediately before the transfer date of 1 September 1991 were vested with SLT.

SLT was converted to a public limited company on 25 September 1996, under the Conversion of Public Corporations of Government Owned Business Undertakings into Public Limited Companies Act No. 23 of 1987, vide Extraordinary Gazette No. 942/7 dated 25 September 1996.

SLT was re-registered under the Companies Act No. 07 of 2007 as Sri Lanka Telecom PLC on 4 June 2007.

Principal group activities and review of the business

The Group provides a broad portfolio of telecommunication services across Sri Lanka, the main activity being domestic and international fixed and mobile telephone services. In addition, the range of services provided by the Group include, inter-alia, Internet services, IPTV, wireless broadband, data services, domestic and international leased circuits, frame relay, satellite uplink and maritime transmission.

The Company’s interest in subsidiaries and the business activities of respective subsidiaries are as follows:

Name of the subsidiary Business activity
Mobitel (Private) Limited Mobile service
eChannelling PLC Information infrastructure for the healthcare industry
Sri Lanka Telecom (Services) Limited Total network solutions
SLT Digital Services (Private) Limited [formerly known as SLT Publications (Private) Limited] Directory information, event management & activation and digital services
SLT Human Capital Solutions (Private) Limited Human resources solutions
SLT VisionCom (Private) Limited IPTV support services
Sky Network (Private) Limited Wireless broadband operations
SLT Property Management (Private) Limited Management SLT’s real estate resources
SLT Campus (Private) Limited Higher education
Galle Submarine Cable Depot (Private) Limited Repair and maintenance of submarine telecommunications cable systems to third parties.

A detailed review of the Company’s activities, the development of its businesses, and an indication of likely future developments are given under Management Discussion and Analysis.

Board of Directors

In terms of Section 168 (1) (h) of the Companies Act No. 07 of 2007, the names of persons who held the office as Directors of the Company as at 31 December 2017 are given below:

Name of Director Position Date of
Date of
Mr P G Kumarasinghe Sirisena Chairman/INED 23.01.2015 13.05.2015
Mr Chan Chee Beng NED 05.06.2008 12.05.2016
Mr Lawrence Paratz INED 26.05.2010 12.05.2016
Ms Lai Choon Foong INED 09.05.2014 24.05.2017
Ms Nilanthi Pieris INED 03.02.2015 13.05.2015
Mr W K H Wegapitiya INED 02.12.2015 12.05.2016
Mr A R Desapriya NED 30.10.2017

NED – Non-Executive Director
INED – Independent Non-Executive Director


Ms Chandra Ekanayake, Non-Executive Director tendered her resignation from the Directorate with effect from 1 August 2017 while Mr Rohan De Silva, Independent Non-Executive Director resigned with effect from 19 December 2017.

Mr Dileepa Wijesundare, Group Chief Executive Officer resigned with effect from 11 March 2018.

Brief profiles of the Directors are contained in the Board of Directors section in the Annual Report

Appointment and re-election of Directors

In terms of the Articles of Association of the Company, the Directors are authorised to appoint any person to be a Director either to fill a casual vacancy or as an additional Director provided that the total number of Directors do not exceed the maximum number of Directors specified in the Articles of Association of the Company. The Directors appointed during the year will hold office only until the next Annual General Meeting (“AGM”) and will offer themselves for re-election by the shareholders.

In addition, one third of the Directors (or the number nearest to one third) retire by rotation at each AGM and offer themselves for reappointment by the shareholders.

Ms Nilanthi Pieris, who has been longest in office since their last election, retire by rotation in terms of Articles 91 and 92 of the Articles of Association of the Company and being eligible offer herself for re-election.

Board subcommittees

In terms of Section 186 of the Companies Act, the Articles of Association of the Company and the Listing Rules the following mandatory and voluntary subcommittees have been appointed by the Board to focus in detail on a particular issue and to ensure that sufficient attention is being paid to the detail of specific issues:

  • Audit Committee
  • Remuneration and Nomination Committee
  • Senior Tender Board
  • Technology Subcommittee
  • Related Party Transactions Review Committee

Information on the subcommittees is given under “Corporate Governance” on pages 100 to 102.

Directors’ indemnities and insurance

The Company maintains Directors’ and officers’ liability insurance which gives appropriate cover for any legal action brought against its Directors and officers.

Interest register and Directors’ interest in contracts with the Company

An Interest Register is maintained by the Company as per the requirement of the Companies Act No. 07 of 2007. The Directors have made necessary declarations as provided in Section 192 (2) of the aforesaid Companies Act. The Interest Register is available for inspection by shareholders or their authorised representatives as required by Section 119 (1) (d) of the Companies Act No. 07 of 2007.

The Company carries out transactions in the ordinary course of business at commercial rates with entities in which a Director of the Company is the Chairman or Director of such entities or holds substantial interest in such entities.

The Directors have no direct or indirect interest in any contract or proposed contact with the Company for the year ended 31 December 2017 other than those disclosed in Note 33.2 to the Financial Statements.

The Directors have declared all material interest in contacts involving the Company and have refrained from voting on matters in which they have a material interest in.

Related party transactions

Transactions if any that could be classified as Related Party Transactions in terms of LKAS 24 “Related Party Disclosures” are given in Note 33 to the Financial Statements.

The Board in terms of the Listing Rules has appointed a Related Party Transactions Review Committee (“RPTRC”) to review transactions carried out between related entities except those do not fall within the ambit of Rule 9.5 of Listing Rules set out in Rule 9.5 of the Listing Rules.

Directors and Chief Executive Officer’s shareholding

The Directors and the Chief Executive Officer did not hold shares in the Company or its subsidiaries during the financial year under review.

Remuneration and other benefits of Directors

The remuneration and other benefits received by the Directors are given in Note 7 to the Financial Statements on page 150 as required by Section 168 (1) (f) of the Companies Act.

Stated capital

The Stated Capital of the Company as at 31 December 2017 was Rs. 18,048,600,000/- divided into 1,804,860,000 ordinary shares. There were no changes to the issued capital of the Company during the year under review.

Details of the Company’s stated capital are set out in Note 29 to the Financial Statements.

Substantial shareholding

The following shareholders held more than 5% of the issued shares as at 31 December 2017.

Secretary to the Treasury (Government of Sri Lanka) 49.50%
Global Telecommunications Holdings N.V. of Curacao. 44.98%

Voting rights

The shareholders are entitled to receive notice and to attend and speak at any General meeting of the Company. A shareholder entitled to attend and vote at a General Meeting may appoint a proxy to attend and vote instead of him. A proxy need not be a shareholder of the Company.

On a show of hands, every shareholder present in person or by proxy (or being a corporation present by a duly authorised representative) shall have one vote and on a poll every shareholder who is present in person or by proxy (or being a corporation present by a duly authorised representative) shall have one vote for every share held by him.

Financial Statements

The Financial Statements of the Group and the Company have been prepared in accordance with Sri Lanka Accounting Standards (SLFRSs/LKASs), laid down by The Institute of Chartered Accountants of Sri Lanka and comply with the requirements of the Companies Act No. 07 of 2007.

The significant accounting policies adopted by the Group and Company in preparing the Financial Statements are set out in Note 3 to the Financial Statements. These policies, and applicable estimation techniques, have been reviewed by the Directors who have confirmed them to be appropriate for the preparation of the Consolidated Financial Statements for 2017. The policies adopted are consistent with those adopted in the previous financial year.

The aforementioned Financial Statements for the year ended 31 December 2017 certified by the Chief Financial Officer and signed by two Directors are given on page 127 of this Report.

A statement by the Directors of their responsibilities for preparing the Financial Statements is included in the Statement of Directors’ Responsibilities on page 121 while the Independent Auditors’ Report is set out in page 125 of this Report.

Financial results and appropriations

2017 2016
Rs. million
Rs. million
Rs. million
Rs. million
Revenue 44,537 75,741 43,131 73,801
Profit 1,428 3,940 1,725 4,790
Reserves 59,220 71,309 59,000 68,587

Results of the Company and of the Group are given in the Income Statement on page 126.

The movement of the reserves are given in the Statement of Changes in Equity on pages 128 and 129 of the Annual Report.


The Directors recommend the payment of a first and final dividend of Rs. 0.89 per share (2016 – Rs. 0.89 per share) for the financial year ended 31 December 2017 payable on 18 May 2018 to the shareholders registered as at 9 May 2018, subject to the approval of the shareholders.

As required by Section 56(2) of the Companies Act No. 07 of 2007, the Directors have signed a certificate stating that in their opinion the Company based on the information available satisfies the Solvency Test immediately after the dividend distribution is made and have obtained a certificate from the Auditors in terms of Section 57 of the Companies Act.

Property, plant and equipment

The movements in property, plant and equipment during the year are set out in Note 13 to the Financial Statements. Current status of value of properties is disclosed on page 156.


M/s Ernst & Young, Chartered Accountants served as the External Auditors of the Company during the year under review. The Audit fees payable and fees payable for non -audit services rendered are as follows:

Rs. million
Rs. million
Audit fees 7
Fees for non-audit services 3 2

M/s Ernst & Young was appointed Auditors of the Company in 2017. SLT Group Audit Committee having considered M/s Ernst & Young performance and their independence recommend to the shareholders the reappointment of M/s Ernst & Young as the Auditors of the Company for the ensuing year.

Based on the written representation made by the Auditors the Directors are satisfied that the Auditors have had no interest or relationship with the Company or its subsidiaries other than that of External Auditors.

M/s Ernst & Young have expressed their willingness to continue in office. A resolution to reappoint them and to authorise the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting.

Statutory payments and compliance with laws and regulations

The Directors confirm that to the best of their knowledge all taxes, duties and levies payable by the Company and subsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and its subsidiaries and all other known statutory dues as were due and payable by the Company and its subsidiaries as at the reporting date have been paid or where relevant provided for in the Financial Statements.

The Company has also ensured that it complied with the applicable laws and regulations including the Listing Rules of the Colombo Stock Exchange.

Environmental protection

After making adequate enquiries from management, the Directors are satisfied that the Company and its subsidiaries operate in a manner that minimises the detrimental effects on the environment and provides products and services that have a beneficial effect on the customers and the communities within which the Group operates.


The Company has not made any donations for charitable purposes during the year 2017.

Employment policies

The employment policies of SLT cover issues such as diversity, employee well-being and equal opportunities. The Company takes its responsibility towards the physically disabled seriously and does not discriminate any employee or prospective employee based on physical disability. Employees who become disabled during their service at SLT will be retained in employment wherever possible and will be given rehabilitation and training.

The Group companies operate within a framework of human resource policies, practices and regulations appropriate to their market sector. Policies and procedures for recruitment, training, career development and the Code of Ethics for Employees promote equality of opportunity regardless of gender, sexual orientation, age, marital status, disability, race, religion or other beliefs and ethnic or national origin. The aim is to encourage a culture in which all employees have the opportunity to develop fully according to their individual abilities and the needs of the Group.

The number of persons employed by SLT is given in Note 7.1 on page 151.

Sustainability reporting

The Group is conscious of the direct and indirect impact on the environment due to its business activities. Every endeavour is made to minimise the adverse effects on the environment to ensure sustainable continuity of our natural resources. The activities undertaken by the Group in recognition of its responsibility as a corporate citizen are disclosed more fully on pages 76 to 79 of this Report.

Post balance sheet events

Except for matters disclosed in Note 35 to the Financial Statements, there are no material events as at the date of the Auditors’ Report which require adjustments to or disclosure in the Financial Statements.

Going concern

The Directors have reviewed the Company’s business plans and is satisfied that the Company has adequate resources to continue its operations in the foreseeable future to justify adopting the going concern basis in preparing the Financial Statements.

Annual General Meeting (AGM)

The AGM will be held at 10.00am. on Wednesday, 9 May 2018 at the Main Hall of the Bandaranaike Memorial International Conference Hall (BMICH), Bauddhaloka Mawatha, Colombo 07. Details of the meeting and the resolutions to be proposed are set out in a separate Notice of Meeting which accompanies this Annual Report.

By order of the Board,

Sri Lanka Telecom PLC


P G Kumarasinghe Sirisena


A R Desapriya


Mahesh Athukorale
Company Secretary

29 March 2018