Modernización estructural y despegue vitivinícola

Information on the Company’s performance, financial information, press releases, annual reports all relevant announcements made to the Colombo Stock Exchange and related information and other corporate information is made available on the Company’s website at

http://www.dialog.lk/financial-• Investor Relations

The Group Investor Relations (IR) Unit proactively disseminates relevant information about the Company to the investor community, specifically the institutional fund managers and analysts. The IR unit maintains close contact with the investor community by means of road shows, company visits, one-on-one meetings, teleconferences and emails etc to ensure that the Group’s strategies, operational activities and financial performance are well understood and that such information is made available to them in a timely manner.

In the year 2014, the Company actively participated in three overseas investor conferences held in Singapore, London and Hong Kong. The Company also took part in two local forums for clients of reputed global financial services institutions. In addition the Company has conducted one-on-one meetings and conference calls with key local and foreign investors on a regular basis.

The Company held earnings calls via teleconference every quarter to brief local and foreign analysts and investors on the results achieved in that quarter.

Further the annual investor forum was held in February 2015 providing local analysts the opportunity to interact with the senior management. These sessions not only provide analysts and investors with a comprehensive review of the Group’s financial performance, but also give them the opportunity to clarify related queries they may have. The contents of these briefings are posted on the Company’s website at http://www.dialog.lk/quarterly-reports.

• Major Transactions

There were no transactions during the year deemed a “major transaction” in terms of the definition of stipulated in the Companies’ Act, No. 7 of 2007.

Role of the Committee

The Board Audit Committee (BAC) is a formally constituted sub-committee of the Board of Directors (Board). It reports to and is accountable to the Board.

The primary role of the BAC is to implement, address issues and support the oversight function of the Board in relation to the Group’s financial results, audits, corporate risks and internal controls. It ensures compliance with international best practices, accounting standards as defined by the Institute of Chartered Accountants of Sri Lanka and applicable local laws and regulations and the requirements of the Listing Rules of the Colombo Stock Exchange (CSE).

The Terms of Reference (ToR) of the BAC, as formulated by the Board, are reviewed annually.

The effectiveness of the BAC is evaluated annually by each member of the BAC. The work practices and performance of the external auditors are also reviewed.

Composition

The BAC comprises of three non-executive directors, of whom a majority are independent directors. The BAC is chaired by Mr. Mohamed Muhsin, who is a Fellow member of the Institute of Chartered Accountants of Sri Lanka. The composition meets the requirements stipulated in the Listing Rules of the CSE. The Board Secretary functions as the Secretary to the BAC.

The members of the BAC as at 31 December 2014

Mr. Moksevi Prelis and Mr. James Maclaurin were re-appointed to the BAC effective 16 June 2014 and the following members resigned from the BAC during the year 2014 –

1. Mr. Jayantha Dhanapala – w.e.f. 17 June 2014 2. Mr. Mohd Khairil Abdullah – w.e.f. 19 September

2014

3. Mr. James Maclaurin – w.e.f. 19 September 2014

The BAC wishes to place on record its appreciation to Mr. Jayantha Dhanapala, Mr. Mohd Khairil Abdullah and Mr. James Maclaurin for their valued contribution.

Mr. Thandalam Veeravalli Thirumala Chari was appointed as a member of the BAC effective 19 September 2014.

Meetings

The BAC had eight meetings during the year 2014 which includes four special meetings. The meeting attendance of the members is set out in the table

Mr. Moksevi Re-appointed

Name of

The Group Chief Executive Officer, the Group Chief Financial Officer and the Group Chief Internal Auditor, attended these meetings on invitation. The external auditors also attended meetings, on invitation, to brief the BAC on specific issues. In addition to these formal meetings, the BAC Chairman met with the external auditors in private sessions without any of the management present to exchange views.

The Board is apprised of the significant issues deliberated and considers and adopts, if thought fit, the recommendations of the BAC.

Summary of Principal Activities of the BAC during the Year

During the year, besides complying with the ToR, the BAC reviewed risks, control issues and legal risks of emerging businesses and also gave special attention to the progress of the implementation of the new billing system and IT systems and revenue assurance activities.

The following include other key routine activities carried out by the BAC during 2014:

Financial Reporting

In relation to the BAC’s primary function to provide assurance on the reliability of financial statements through an independent review of risks, controls and the governance process, it reviewed the quarterly and annual financial statements, in consultation with

the external and internal auditors, prior to making recommendations to the Board for approval. Particular consideration was given to

-a) changes in or implementation of accounting policies and practices;

b) significant or material adjustments with financial impact arising from the audit;

c) significant unusual events or exceptional activities;

d) compliance with relevant accounting standards and other statutory and regulatory requirements.

Risk Management and Internal Control During the year, the BAC reviewed and monitored reports furnished by the internal auditors, the external auditors and the management, including;

• enterprise risk management reports on significant risk exposures and risk mitigation plans;

• Management Audit Group Leadership Committee reports on the progress of the management actions to resolve significant internal control issues as highlighted by the internal and external auditors;

• certificate of compliance attested by the GCEO and GCFO, confirming compliance with all applicable statutory and regulatory requirements;

• legal and regulatory reports on significant litigation and regulatory issues.

The BAC further reviewed new policy updates, revisions or enhancements of the internal policies and procedures as recommended by the management to ascertain that the improvements made are aligned to best business practices and effective internal control processes.

External Audit

The BAC reviewed the External Audit Plan including the scope and the fee for the annual audit and also had discussions with the external auditors prior to the

year-end audit to discuss their audit approach and procedures, including matters relating to the scope of the audit.

The BAC reviewed the results of the external audit and the recommendations contained in the Management Letters arising from the audits of the quarterly and annual financial statements, and ensured appropriate follow up actions were taken.

The independence and objectivity of the external auditors were reviewed by the BAC, which held the view that the services outside the scope of the statutory audit provided by the external auditors have not impaired their independence.

The BAC recommended to the Board that Messrs.

PricewaterhouseCoopers be re-appointed as the external auditors for the financial year 2015.

Internal Audit

The BAC is supported by the Group Internal Audit Division, headed by Mr. Izrin Hashim, MEng (Oxon), AIIA, the Group Chief Internal Auditor who reports directly to the BAC. The Division has a mix of expertise in the disciplines of Finance, Information Technology, Sales & Marketing and Network Engineering. The Division leverages global best practices and has an on going knowledge sharing and training program with the Axiata Group.

The Division’s audit plans are reviewed and approved by the BAC and follow up actions are monitored. The performance of the Internal Audit Division is appraised

Mr. Izrin Hashim relinquished his duties as the Group Chief Internal Auditor of the Company in end February 2015 and returned to the parent company, Axiata Group Bhd. The BAC wishes to place on record its appreciation to Mr. Izrin Hashim for the excellent support and service provided.

Conclusion

The BAC is satisfied that the Group’s accounting policies, internal controls and risk management processes are adequate to provide reasonable assurance that the financial affairs of the Group are managed in accordance with Group policies and accepted accounting standards.

On behalf of the Board Audit Committee.

Mohamed Muhsin, FCA Chairman, Board Audit Committee

15 May 2015

The DIAL Share

The continuous decline in policy rates together with substantial foreign inflows into the country have further improved gains made by the Colombo Stock Exchange (CSE), in FY 2014. Though the latter part of the final quarter experienced some volatility due to the political environment that preceded the 2015 presidential poll, ASPI recorded a growth of 23.4%, while the S&P SL20 Index recorded an increase of 25.3%. The market depicted a steady growth especially during Q3 of 2014, driven by foreign as well as local investor participation who channeled their funds back to the Capital Market shifting from bank deposits due to lower interest rates. The 364 day TB yield has declined by 229 basis points during the year.

60 70 80 90 100 110 120 130 140 150 160

0 30,000 60,000 90,000 120,000 150,000

DIAL Movement ASPI Movement S&P SL20 Movement Share Volume

Index Volume ‘000

2-Jan 2-Mar 2-May 1-Jul 30-Aug 29-Oct 28-Dec

DIAL share started the year at Rs. 9.00 and traded between a high of Rs. 14.10 and a low of Rs. 8.90 to close the year at Rs. 13.30. The share price increased significantly by 47.8% compared to FY 2013. DIAL share outperformed both the ASPI and S&P SL20. The improved market sentiments and performance during the year has translated into positive performance of the share.

Market Capitalisation

The total market capitalisation of the Company increased by 47.8% to Rs. 108.31Bn during the year compared to Rs. 73.29Bn in FY 2013, representing approximately 3.5% of the total market capitalisation of the CSE. DIAL is among the top ten largest companies on the CSE in terms of market capitalisation.

Figure 1: Share Volume and Relative Performance vs Market

2014 Q4 Q3 Q2 Q1 2013

Share Information

Highest Price (Rs) 14.10 14.10 11.60 10.60 9.60 9.90 Lowest Price (Rs) 8.90 11.50 10.40 9.00 8.90 7.90 Closing Price (Rs) 13.30 13.30 11.50 10.50 9.00 9.00

Trading Statistics

Number of Trades’000 11.1 5.0 2.4 2.1 1.6 7.6

% of Total Market Trades 0.6 0.9 0.7 0.6 0.5 0.5

Number of shares traded (Mn) 630 405 53 19 154 338

% of Total Shares Traded 3.8 8.6 6.5 0.6 5.7 3.7

% of Public float 48.6 29.8 4.4 1.6 12.9 28.2

Turnover (Rs. Mn) 7,313 5,127 583 186 1,417 3,035

Avg. Daily Turnover (Rs. Mn)

% of Total Market Turnover 2.1 4.9 0.5 0.3 2.7 1.5

Market Capitalisation (Rs. Mn) 108,312 108,312 93,653 85,510 73,294 73,294

% of Total Market Capitalisation 3.5 3.5 3.1 3.2 2.9 3.0

Table 1: Market information on DIAL share

Dividends

Subsequent to the approval of the financial statements, the Board of Directors resolved on 12th May 2015, to recommend for the approval of shareholders, a total dividend of Rs. 1.1Bn for the financial year ended 31st December 2014, in line with profit available for distribution and the imperative of investing in the future growth of the Company, which translates to a dividend to shareholders of Rs. 0.13 per share.

Earnings Per Share

The basic earnings per share (EPS) for the year was Rs. 0.76 compared to the EPS of Rs. 0.65 recorded in FY 2013 an increase of 16.9% YoY. EPS is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year.

Price Earnings Ratio

DIAL share was trading at 17.5x earnings as at

10

Return on Equity and Return on Invested Capital The Return on Equity (ROE) for the Group increased to 14.9% in FY 2014 from 13.1% in FY 2013. Return on Invested Capital (ROIC) for the Group decreased to 10.3% in FY 2014 from 10.9% in FY 2013.

Figure 2: Return on Equity and Return on Invested Capital

Price to Book Ratio

The price to book ratio of the Group as at 31st December 2014 was 2.4x, an increase of 33.3%

compared to last year.

Figure 3: Trend in Composition of Shareholders

The total number of Shareholders of DIAL decreased to 20,334 as at 31st December 2014 compared to the 21,344 during the previous year.

The public float of DIAL was at 16.7% as at 31st December 2014. In terms of composition of the public float, foreign investors held 69% of the float, 26%

was held by local institutional investors and 5% by local retail investors.

FY 2014 witnessed renewed foreign investor interest in DIAL, accordingly foreign investor composition increased to 69% in FY 2014 compared to 61% in the previous year.

Composition of Shareholders