“To be recognized as the premier property management Company in Sri Lanka which provides an excellent service to its tenants”.
“We are dedicated to controlling costs while maintaining the highest levels of satisfaction and comfort to our tenants by responding to their unique requirements and special requests. We listen to them, and then develop a plan and structure that fits their goals, budgets and needs. We immaculately upkeep our properties to the highest quality standards by deploying our team of highly trained professionals”.
On behalf of the Board of Directors of Seylan Developments PLC (SDP), it is my privilege and pleasure to welcome you to the Twenty Eighth Annual General Meeting and to present SDP’s Audited Financial Statements for the Financial Year ending 31st December 2019, which had been circulated.
The profit after tax for the financial year 2019 (which included fair value gain on Investment properties) amounted to Rs. 193.0 Mn. The total asset base of the Company increased during the year from Rs. 5,646.6 Mn to Rs. 5,775.0 Mn. The Net Asset Value per share of the company increased from Rs. 33.35 per share at end of 2018 to Rs. 33.75 per share by end of 2019. The Board has recommended a dividend of Rs. 1.10 per share for the financial year 2019 for approval of the shareholders at the Annual General Meeting
Within the constraints placed on your company in terms of restrictions in investments / projects outside Parent Company Activities, by the Banking Act No. 30 of 1988 your company has been focused on delivering maximum stakeholder value by maximizing opportunities and enhancing efficiencies. It is pertinent to mention that the rental income from parent company increased by 8% compared to previous year. However, the rental income from apartments declined by 11% during the same period.
The demand for apartments declined after the Easter Sunday incidents in April 2019. The decline was also attributable partly to the decrease in demand with opening of high-rise apartment buildings and five star hotels in the Colombo City area as well as the enhanced due diligence and KYC processes practiced by your company when screening potential tenants
The Directors of SDP are confident that the economy and rental markets will improve in the medium term and have begun modernizing and refurbishing the residential apartments with a view to improving their attractiveness and utility. One apartment has been completed by end of January 2020 and the rest have been earmarked for upgrade according to an accelerated project plan.
Steps are also being taken to increase the rentable area in the East tower based on interest expressed by the Parent Company. Measures have already been taken to obtain the consent from the Condominium Management Authority and required approvals are being sought from the Urban Development Authority to commence this project.
The Lease Agreement for the East tower with Seylan Bank PLC which expired on 31.12.2019, has been renewed for a period of two years from 01.01.2020 on revised terms which have been based on independent valuations reasonably adjusted for considerations such as the economies of a single occupant, availability of parking vis a vis the floor area rented etc. The valuations and the offer based on the valuation were reviewed and decided upon by the Related Party transactions Review Committee consisting of independent Directors.
There was no change in the composition of the Board during the year 2019. The board consisted of six Non-Executive Directors at the end of financial year ending December 2019, and of the six, two were independent and one designated as Senior.
However, pursuant to Section 7.10.4 (e) of Listing Rules of Colombo Stock Exchange, the Senior Independent Director Mr. P. Saravanapavan resigned from the Board with effect from 02nd February 2020, as he had completed nine (9) years of service as an Independent Director of the Company and our thanks go out to him for the valuable service rendered to the company during his tenure.
Pursuant to Section 7.10.2 (a) of Listing Rules of Colombo Stock Exchange, Mr. Sunil De Silva a professional with a wide range of local and international exposure was appointed to the Board as an Independent Non-Executive Director effective from 03rd February 2020.
Members of the Board collectively have wide knowledge and experience in the Corporate, banking, civil engineering and architectural sectors.
Rental income which is the main source of income for the Company recorded a marginal decline by Rs.1.01 Mn, declining from 168.17 in 2013 to Rs. 167.16 Mn in 2014, mainly due to loss of income in the east tower, during the period of change of tenants. Expenses on premises, equipment and establishment increased from Rs.42.36 Mn in 2013 to Rs.55.29 Mn in 2014 mainly due to face-lift work undertaken at Seylan Towers. Administration expenses decreased by Rs. 30 Mn during the year under review compared to previous year due the provisions made for doubtful receivables (Rs. 16.1 Mn) and provisions of Rs. 12.3 Mn made on Corporate Guarantee given to Peoples’ Bank on credit facilities obtained by Ceylinco Packaging Ltd in previously. This resulted in the operating profit before changes in fair value of investment properties increasing from Rs.64.71 Mn in 2013 to 78.38 Mn in 2014. The net finance income too improved from Rs.31.36 Mn in 2013 to Rs.35.39 Mn in 2014. Since the Company reports Investment Properties at the fair value in accordance with the Accounting Standards and Accounting Policy, a loss of Rs.176.07 Mn was made in the Income Statement for the year 2013 whereas a gain of Rs.12.99 Mn was made in the Income Statement for the year 2014. With the fair value gain on investment properties the Company recorded a profit before tax of Rs126.77Mn in 2014 compared to Loss Rs.79.99 Mn in 2013. The tax for the year 2013 was a reversal of Rs.98.41Mn mainly due to diminution in value of investment properties whereas the tax for the year 2014 was a charge of Rs.26.96Mn, resulting in the after tax profits increasing from Rs.18.41Mn in 2013 to Rs.99.81Mn in 2014, resulting in increase of 442%
Directors decided to dispose the remaining three blocks at market price. Approval from Agrarian commissioner is required for such disposal, as these three blocks had been designated as agricultural property. There has been a long and unusual delay in the clearance sought from Agrarian Service Department but this matter is being followed up aggressively. Indications are that there is ample interest in these parcels of land which will ensure profitable disposal upon receipt of regulatory clearances.
The dispute on the ownership of this property was referred for arbitration and the award was received in favour of the company. An auctioneer had been appointed and the process of executing the writ and other formalities for auctioning is in progress
In conformity of our vision of providing highest levels of satisfaction and comfort to the tenants, the company embarked on essential maintenance projects.
Two new Cooling Towers were installed in May 2019 replacing the obsolete ones at a cost of Rs. 29.0 Mn. Air Handling Units on Levels 16 & 17 in the East Tower were also replaced at a cost of Rs. 15 Mn.
The Automatic Transfer Switch panel in the building had no bypass option which was identified as a major risk. Since the existing panel also had obsolete components, Board approved replacing it at a cost of Rs.16.5 Mn. in September 2019. This was completed by January 2020.
The Board in November 2019, approved painting of both towers including the rooftop pergolas, at a total cost of Rs.11.0 Mn. Painting is scheduled to be completed by end March 2020.
The Fire Detection System was modernized for the safety of our tenants and their customers / visitors. Further, the fire escape routes for both East & West Towers were refurbished.
Our objective of Corporate Social Responsibility was to enhance the Educational Facilities of the needy. In keeping with this objective, your company undertook the renovation of the Library Facilities of Veyangoda WP/MINU/Marapola Maha Vidyalaya – Naiwala this year, which comes under the Minuwangoda Pradesheeya Saba in the Gampaha District. The Library Building was colour washed and new furniture, Bookshelves, Books, a Smart TV and a Note Book Computer with Internet Facilities were provided enabling students to enhance their knowledge gaining and reading ability.
Timely and accurate financial reporting, compliance and transparency is considered of paramount importance and in this context, I am pleased to mention to you that the Company won the “Silver Award” in the “Land & Property” category for the Annual Report 2018, at the 55th Annual Report Awards competition organized by the Institute of Chartered Accountants of Sri Lanka.
Before concluding my review, I would like to express my sincere thanks and appreciation to my fellow Board Members for their support and cooperation extended to carry on the activities of the Company. I wish to once again place on record my appreciation to Mr. P. Saravanapavan, for his services during his tenure of office as an Independent Director since 03rd February 2011. I also take this opportunity express my appreciation and gratitude for the commitment and efforts of the Management and Employees at all levels of the Company in discharging their responsibilities.
I welcome Mr. Sunil De Silva as an Independent Non-Executive Director to the Board. I believe that his expertise and vast experience, will undoubtedly contribute to the progress of the company.
I thank the Auditors, M/s. KPMG - Chartered Accountants, the Internal Auditors M/s. Ponnamperuma & Co and Printers M/s. C+ Designs (Pvt) Ltd. for their support extended by discharging their assignments extremely well and in a timely manner. I also wish to thank the Tenants for their patronage.
Finally, my sincere thanks go out to our valued shareholders, who deserve a special mention for their continuous confidence placed in our Company.
Appointed as Chairman of Seylan Developments PLC on 30th May 2014. Mr. KapilaPrasannaAriyaratne is the General Manager / CEO of Seylan Bank PLC. He commenced his banking career in 1984 and counts over 30 years of banking experience. He has held responsible positions at several international banks both locally and overseas as well as with local state and private sector banks. He is also a Director of Lanka Financial Services Bureau Ltd, Lanka Clear (Pvt) Ltd and Institute of Bankers of Sri Lanka. Mr. KapilaAriyaratne holds a first class honours degree from the University of Colombo.
Appointed as a Director of Seylan Developments PLC on 11th September 2009. Mr. Palihawadana joined Seylan Bank PLC in 1999 as Chief Manager/Chief Dealer. He is overall in-charge of Treasury Dealing activities of Seylan Bank PLC. He held positions of Assistant General Manager/Chief Dealer. At present he holds the position of Deputy General Manager - Treasury, Head of Primary Dealer Unit and Gold Investment Unit. He counts over 41 years experience in the banking industry out of which 31 years in treasury dealing activities.
He has served at Bank of Ceylon, Colombo and London branches before joining Seylan Bank PLC.
Mr. Palihawadana holds a Bachelor of Science (B.Sc) degree from the university of colombo.
Appointed as a Director of Seylan Developments PLC on 30th November 2012. Ramesh Jayasekara is currently the Chief Financial Officer of Seylan Bank Plc and a Director of Seylan Developments Plc. Prior to Ramesh taking over as CFO, he was the Deputy Regional Financial Controller for BNP Paribas, Middle East Region – (Bahrain, Saudi Arabia, Kuwait, Qatar, Dubai, Abu Dhabi & Cyprus) based in Bahrain. He has over 16 years of Banking, Financial Management & Audit experience. Prior to this Ramesh worked at HSBC Sri Lanka as Resident Manager – Finance & Planning (PFS) and at KPMG Sri Lanka as an Audit Manager. Ramesh holds a first class honours degree from the University of Colombo. He is an Associate Member of the Institute of Chartered Accountants of Sri Lanka, an Associate Member of the Chartered Institute of Marketing UK and an Associate Member of the Certified Management Accountants of Sri Lanka.
Appointed as an Independent Non-Executive Director of Seylan Developments PLC on 11th January 2016
After a distinguished career spanning 21 years at Hatton National Bank PLC, MrPiyalHennayake retired on 31 December 2015. He was the Deputy General Manager – Services of Hatton National Bank PLC and the CEO/Director of its real estate subsidiary Sithma Development Pvt Limited. He joined Eco Power Group as the Head of Overseas Operations from 1st January 2016.
He headed HNB Project Finance Division since 1995 and developed it to be a major player in the banking industry. As the Assistant General Manager, Zone III he led one third of the Branch Network in 2004 & 2005. He was the Portfolio Manager of Lanka Ventures Limited from 1992 to 1995 until he joined HNB. After passing out from the University of Moratuwa he joined CECB as a Civil Engineer in February 1983 and worked in Hydropower projects such as Randenigala, Canyon and other infrastructure projects. He is an accomplished professional with 33 years of professional experience.
Starting as a Civil Engineering graduate of the University of Moratuwa, he later obtained Post Graduate Diploma in Construction Management from the same University. He received MBA in Management of Technology from the Asian Institute of Technology, Bangkok, Thailand in 1992. A Chartered Engineer and a Corporate Member of the Institution of Engineers Sri Lanka he served as the President of the Association of Professional Bankers Sri Lanka in 2014/2015. He is also a Graduate Member of Sri Lanka Institute of Directors.
He served as a visiting lecturer in the Universities of Peradeniya&Moratuwa and currently a visiting lecturer in Management of Technology for MBA in MOT in University of Moratuwa.
Mr. Sunil De Silva is a Professional Banker with over 41 years of Experience in the areas of Corporate Banking, Retail Banking, Micro Finance, General Banking, Credit Management and Recoveries. He also holds a Bachelor of Arts, from University of Peradeniya and a fellow of the Institute of Bankers of Sri Lanka. He has served as the Senior Deputy General Manager, Seylan Bank PLC and the Deputy General Manager of Pan Asia Bank PLC. He has also served as the High Commissioner of Sri Lanka to South Africa and Kenya and as the permanent representative to UN Environment Programme and U N Human Settlement Programme. Also served as a member of the Board of Directors of Mahaweli Development Board.