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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 2020.


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 sub-section 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 and the shares were listed in the Colombo Stock Exchange (CSE) in January 2003.

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/joint ventures and their business activities are as follows:

Name of the subsidiary/Associate Company Business activity
Mobitel (Pvt) Ltd. Mobile telephone services
e-Channeling PLC Information infrastructure for the healthcare industry
Mobit Technologies (Pvt) Ltd. Software solutions provider
Sri Lanka Telecom (Services) Ltd. Total network solutions
SLT Digital Info Services (Pvt) Ltd. Directory information, event management and activation and digital services
SLT VisionCom (Pvt) Ltd. IPTV support services
SLT Property Management (Pvt) Ltd. Management of SLT’s real estate resources
SLT Campus (Pvt) Ltd. Higher Education
Galle Submarine Cable Depot (Pvt) Ltd. Repair and maintenance of submarine telecommunication cable systems to third parties.
Sky Network (Pvt) Ltd. Operations ceased and the Company has commenced the process liquidate
SLT Human Capital Solutions (Pvt) Ltd. Operation has ceased
Talentfort (Pvt) Ltd. Human resource solutions

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.

Impact of COVID-19 pandemic

SLT being the national communication service provider in Sri Lanka focused on providing uninterrupted service to the consumers, ensured smooth functioning of voice/data services and network quality during COVID-19 crisis as telecommunications services was identified as an
essential service.

SLT as the national telecommunications provider activated the Company’s Business Continuity Plan (“BCP”) and effected changes in operations, supply chain, workforce movements, investments and strategies to cope with the unprecedented challenges posed by the COVID-19 pandemic.

Board of Directors

In terms of Section 168 (1) (h) of the Companies Act No. 07 of 2007 and the Listing Rules of the CSE, the names of persons who held the office as Directors of the Company during the financial year ended 31 December 2020 are given below:

Name of Director Position Date of Appointment Date of Re-election

Mr Rohan Fernando


23 January 2020

15 July 2020

Mr Lalith Seneviratne


23 January 2020

15 July 2020

Mr Chan Chee Beng


5 June 2008

12 May 2016

Mr Lawrence Paratz


26 May 2010

15 July 2020

Ms Lai Choon Foong


9 May 2014

24 May 2017

Mr Mohan Weerakoon, PC


23 January 2020

15 July 2020

Mr Ranjith Rubasinghe


23 January 2020

15 July 2020

Mr Ananda Seneviratne
(Resigned w.e.f. 12 November 2020)


23 January 2020

15 July 2020

Mr Saman Fernando


10 December 2020

To be re-elected
at the AGM

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

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) retires by rotation at each AGM and offer themselves for re-appointment by the shareholders.

Mr Saman Fernando who was appointed to the Directorate on 10 December 2020 will offer himself for re-appointment in accordance with Article 97 of the Articles of Association of the Company.

Mr Chan Chee Beng, who has been longest in office since his last re-election, retire by rotation in terms of Articles 91 and 92 of the Articles of Association of the Company and being eligible offer himself 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 sub-committees have been appointed by the Board to focus in detail on a particular issue:

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

Information relating to Subcommittees is given under Corporate Governance on pages 119 to 120.

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. 7 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. 7 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 entitles or holds substantial interest in such entitles.

The Directors have no direct or indirect interest in any contract or proposed contact with the Company for the year ended 31 December 2020 other than those disclosed in Note 32 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.

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 32 to the Financial Statements.

The Directors confirm that the related party transactions of the Company during the financial year have been reviewed by the Related Party Transactions Review Committee (RPT – RC) and are in compliance with the Section 09 of the CSE Listing Rules

The RPT – RC confirms that non-recurrent related party transactions carried out during the year does not exceed 10% of the equity or 5% of the total assets of the listed entity. In addition the aggregate value of the recurrent related party transactions carried out with individual related entities during the year does not exceed 10% of the gross revenue.

Directors and Chief Executive Officer’s shareholding

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

The shareholding of the CEO is given below:

Number of shares
01 January 2020 31 December 2020
Chief Executive Officer 1,563 1,563

Remuneration and other benefits of Directors

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

Issue of shares and debentures

Stated capital

The Stated Capital of the Company as at 31 December 2020 was LKR 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.

Substantial shareholding

The following shareholders held more than 5% of the issued shares as at 31 December 2020:

Secretary to the Treasury (Government of Sri Lanka)


Global Telecommunications Holdings N.V. of Netherlands


Voting rights

Ordinary shareholders are entitled to receive notice and to vote 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.

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

Details of the Company’s Stated Capital are set out in Note 28 to the Financial Statements.

The Company in April 2018 issued 70,000,000 Senior Unsecured Redeemable Rated 10-year (2018/2028) Debentures as indicated below:

Type of
Interest rate
(per annum)
No. of debentures
Type A 12.75% payable annually 20,760,000
Type B 12.75% payable semi-annually 49,240,000

Minimum public holding requirement

Private placement

Given that the two controlling shareholders and other Government connected institutions are considered “non-public”, the public free float has reduced to 4.78% of the shareholding. In view of the current situation, SLT is proposing the issue of a maximum of 104,628,852 new ordinary voting shares representing 5.48% of the issued share capital post Private Placement in order to comply with the rules on minimum public float issued by the CSE. The funds expected to be raised through the Private Placement will be utilised to restructure the debt portfolio of SLT.

Financial Statements

The Financial Statements of the Group and the Company have been prepared in accordance with Sri Lanka Accounting Standards (SLFRs/LKASs), laid down by the Institute of Chartered Accountants of Sri Lanka and comply with the requirements of the Companies Act No. 7 of 2007.

The significant accounting policies adopted by the Group and Company in preparing the Financial Statements are set out on 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 2020.

The aforementioned Financial Statements for the year ended 31 December 2020 certified by the Group Chief Financial Officer and signed by two Directors are given on page 146 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 141 while the independent Auditors’ Report is set out in pages 142 to 144 of this report.

Financial results and appropriations

2020 2019


51,552 91,119 50,007 85,948


4,019 7,881 3,780 6,322


62,443 84,179 60,173 78,069

Results of the Company and of the Group are given in the Income Statement on page 145.

The movement of the reserves are given in the Statement of Changes in Equity on pages 147 and 148 of the Annual Report.


The Directors recommend the payment of a first and final dividend of LKR 1.49 per share (2019 – LKR 1.06 per share) for the financial year ended 31 December 2020 payable on 17 May 2021 to the shareholders registered as at 23 April 2021, subject to the approval of the shareholders.

As required by Section 56 (2) of the Companies Act No. 7 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 14 to the Financial Statements. Current status of value of properties is disclosed on pages 215 to 221.


Ernst & Young, (EY) 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:

Audit fees 12 12
Non-audit fees 2 2

SLT Group Audit Committee having considered EY’s performance and their independence recommend to the shareholders the re-appointment of EY 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.

EY have expressed their willingness to continue in office. A resolution to re-appoint them and to authorise the Directors to determine their remuneration will be proposed at the forthcoming AGM.

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 CSE.

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 Directors have approved donations amounting to LKR 2 Mn. for charitable purposes for the year 2020. (2019 – LKR 2 Mn.).

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 and Group is given in Note 7 on page 179.

Sustainability reporting

SLT is conscious of the direct and indirect impact on the environment due to its business activities. The Group endeavours to minimise the adverse effects on the environment and 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 84 to 88 of this Report.

Post Balance Sheet events

Except for matters disclosed in Note 36 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

The AGM will be held at 10.00am on 23 April 2021 at the “Lotus”, Bandaranaike Memorial International Conference Hall (BMICH), Bauddhaloka Mawatha, Colombo 07. The Notice of the Annual General Meeting appears on page 227 of the Annual Report.

By Order of the Board

of Sri Lanka Telecom PLC


Rohan Fernando


Lalith Seneviratne


Mahesh Athukorale
Group Company Secretary

9 March 2021