1. Corporate Information

1.1 Reporting Entity

Hayleys PLC, is a company incorporated and domiciled in Sri Lanka. The ordinary shares of the Company are listed on the Colombo Stock Exchange of Sri Lanka. The address of the Company’s registered office and the principal place of business are given in the Corporate Information.

1.2 Consolidated Financial Statements

The Consolidated Financial Statements of Hayleys PLC, as at and for the year ended 31st March, 2014 encompass the Company and its Subsidiaries (together referred to as the ‘Group’) and the Group’s interest in Equity Accounted Investees and interest in Joint Ventures.

1.3 Nature of Operations and Principal Activities of the Company and the Group

Descriptions of the nature of the operations and principal activities of the Company, its Subsidiaries, Equity Accounted Investees and Joint Ventures are given in the Group Companies. There were no significant changes in the nature of the principal activities of the Company and the Group during the financial year under review.

Hayleys PLC, does not have an identifiable parent of its own.

The Financial Statements of all companies in the Group other than those mentioned in Note 36 to the Financial Statements are prepared for a common financial year, which ends on 31st March.

1.4 Approval of Financial Statements

The Financial Statements were authorised for issue by the Directors on 19th May, 2014.

1.5 Responsibility for Financial Statements

The responsibility of the Directors in relation to the Financial Statements is set out in the Statement of Directors’ Responsibility Report in the Annual Report.

2. Basis of Preparation

2.1 Statement of Compliance

The Consolidated Financial Statements have been prepared in accordance with the Sri Lanka Accounting and Auditing Standards Act No. 15 of 1995, which requires compliance with Sri Lanka Accounting Standards promulgated by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), and with the requirements of the Companies Act No. 07 of 2007.

2.2 Basis of Measurement

The Consolidated Financial Statements have been prepared on the historical cost basis, except for the following material items in the Statement of Financial Position.

• Lands which are recognised as property, plant & equipment are measured at cost at the time of the acquisition and subsequently lands are carried at valuation.
• Financial instruments - fair value through profit or loss are measured at fair value.
• Financial instruments - available-for-sale financial assets are measured at fair value.
• Bearer biological assets are measured at fair value.

Where appropriate, the specific policies are explained in the succeeding Notes.

No adjustments have been made for inflationary factors in the Consolidated Financial Statements.

2.3 Functional and Presentation Currency

The Financial Statements are presented in Sri Lankan Rupees, which is the Group’s functional currency, except for certain subsidiaries whose functional currencies are different as they operate in different economic environments (see Note 34). All financial information presented in Sri Lankan Rupees have been given to the nearest thousand (Rs. 000), unless stated otherwise.

2.4 Materiality and Aggregation

Each material class of similar items is presented separately in the Consolidated Financial Statements. Items of a dissimilar nature or function are presented separately unless they are immaterial.

3. Basis of Consolidation

Subsidiaries, Equity Accounted Investees and Joint Ventures are disclosed in Note 18 to the Financial Statements.

3.1 Subsidiaries

Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities which is evident when the Group controls the composition of the Board of Directors of the entity or holds more than 50% of the issued shares of the entity or 50% of the voting rights of the entity or entitled to receive more than half of every dividend from shares carrying an unlimited right to participate in distribution of profits or capital.

Entities that are subsidiaries of another entity which is a subsidiary of the Company are also treated as subsidiaries of the Company.

The interest of outside shareholders in Group companies is disclosed separately under the heading of ‘Non-Controlling Interest’.

The results of subsidiaries acquired or incorporated during the period have been consolidated from the date of acquisition or incorporation, while the results of subsidiaries disposed, have been accounted up to the date of disposal. Non-Controlling Interest is measured at the proportionate share of the acquiree’s identifiable net assets.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

• Derecognises the assets (including goodwill) and liabilities of the subsidiary
• Derecognises the carrying amount of any non-controlling interest
• Derecognises the cumulative translation differences, recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of any investment retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate.

3.1.1 Business Combination and Goodwill

Business Combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.

Transaction costs, other than those associated with the issue of debt or equity securities that the Group incurs in connection with a business combination are expensed and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with LKAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of LKAS 39, it is measured in accordance with the appropriate SLFRS/LKAS.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion the cash-generating unit retained.

3.1.2 Transactions with Non-Controlling Interests

The profit or loss and net assets of a subsidiary attributable to equity interests that are not owned by the parent, directly or indirectly through subsidiaries, is disclosed separately under the heading ‘Non-Controlling Interest’.

The Group applies a policy of treating transactions with non-controlling interests as transactions with parties external to the Group.

Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.

3.1.3 Equity Accounted Investees

Equity accounted investees are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Equity accounted investees are accounted for using the equity method.

Under the equity method, the investment in the equity accounted investee is carried on the Statement of Financial Position at cost plus post acquisition changes in the Group’s share of net assets of the equity accounted investee. Goodwill relating to the equity accounted investee is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The Income Statement reflects the Group’s share of the results of operations of the equity accounted investee. When there has been a change recognised directly in the equity of the equity accounted investee, the Group recognises its share of any changes and discloses this, when applicable, in the Statement of Changes in Equity. Unrealised gains and losses resulting from transactions between the Group and the equity accounted investee are eliminated to the extent of the interest in the equity accounted investee.

The Consolidated Financial Statements include the Group’s share of profit net of tax and equity movements of equity accounted investees from the date that significant influence commences until the date significant influence ceases. When the Group’s share of losses exceeds its investment in an equity accounted investee, the carrying amount of that interest is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has incurred obligations or has made payments on behalf of the investee.

The Financial Statements of the equity accounted investees are prepared for the same reporting period as the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on its investment in its equity accounted investee. The Group determines at each reporting date whether there is any objective evidence that the investment in the equity accounted investee is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the equity accounted investee and its carrying value and recognises the amount in the ‘share of profit of an equity accounted investee’ in the Income Statement.

Upon loss of significant influence over the equity accounted investee, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the equity accounted investee upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

3.1.4 Interest in a Joint Venture

The Group has interests in a joint ventures which are jointly controlled entities, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entities. The agreement requires unanimous agreement for financial and operating decisions among the venturers. The Group recognises its interests in the joint ventures using the proportionate consolidation method. The Group combines its proportionate share of each of the assets, liabilities, income and expenses of the joint ventures with similar items, line by line, in its Consolidated Financial Statements. The Financial Statements of the joint ventures are prepared for the same reporting period as the Group.

Adjustments are made in the Group’s Consolidated Financial Statements to eliminate the Group’s share of intra-group balances, transactions and unrealised gains and losses on such transactions between the Group and its jointly controlled entities. Losses on transactions are recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss. The joint venture are proportionately consolidated until the date on which the Group ceases to have joint control over the joint ventures.

Upon loss of joint control the Group measures and recognises its remaining investment at its fair value. Any difference between the carrying amount of the former joint controlled entities upon loss of joint control and the fair value of the remaining investment and proceeds from disposal are recognised in profit or loss. When the remaining investment constitutes significant influence, it is accounted for as investment in an Equity Accounted Investee.

3.1.5 Transactions Eliminated on Consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

3.1.6 Foreign Currency

3.1.6.1 Foreign Currency Transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates applicable on the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated at the functional currency spot rate of exchange ruling at the reporting date. Foreign currency differences arising on retranslation are recognised in profit and loss. All differences arising on settlement or translation of monetary items are taken to the Income Statement. Non-monetary assets and liabilities which are carried in terms of historical cost in a foreign currency are translated at the exchange rate that prevailed at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

3.1.6.2 Foreign Operations

The results and financial position of all Group entities that have a functional currency other than Sri Lankan Rupee are translated into Sri Lankan Rupees as follows:

- assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on the acquisition, are translated to Sri Lankan Rupees at the exchange rate at the reporting date;

- income and expenses are translated at the average exchange rates for the period.

Foreign currency differences are recognised in other comprehensive income. When a foreign operation is disposed of, the relevant amount in the translation reserve is transferred to profit or loss as part of the profit or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other partial disposal of a foreign operation, the relevant proportion is reclassified to profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation.

3.2 Assets and Bases of their Valuation

3.2.1 Property, Plant & Equipment

The Group applies the requirements of LKAS 16 - ‘Property Plant & Equipment’ in accounting for its owned assets which are held for and use in the provision of the services, for rental to others or for administration purposes and are expected to be used for more than one year.

3.2.1.1 Basis of Recognition

Property Plant and Equipment is recognised if it is probable that future economic benefits associated with the assets will flow to the Group and cost of the assets can be reliably measured.

3.2.1.2 Basis of Measurement

Items of property, plant & equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any, whilst land is measured at fair value.

3.2.1.3 Owned Assets

The cost of property, plant & equipment includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets.

Purchased software that is integral to the functionality of the related equipment is capitalised as a part of that equipment.

When parts of an item of property, plant & equipment have different useful lives, they are accounted for as separate items (major components) of property, plant & equipment.

Revaluation of land does with sufficient frequency to ensure that the fair value of the land dose not differ materially from its carrying amount, and is undertaken by professionally qualified valuers.

Any revaluation surplus is recorded in other comprehensive income and credited to the asset revaluation reserve in equity, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the income statement, in which case, the increase is recognised in the income statement. A revaluation deficit is recognised in the income statement, except to the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.

3.2.1.4 Subsequent Costs

The cost of replacing a component of an item of property, plant & equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised in accordance with the derecognition policy given below.

The costs of the day-to-day servicing of property, plant & equipment are recognised in profit and loss as incurred.

3.2.1.5 Derecognition

The carrying amount of an item of property, plant & equipment is derecognised on disposal; or when no future economic benefits are expected from its use. Gains and losses on derecognition are recognised in profit and loss and gains are not classified as revenue. When revalued assets are sold, any related amount included in the Revaluation Reserve is transferred to Retained Earnings.

3.2.1.6 Depreciation

Depreciation is recognised in profit and loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant & equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

The estimated useful lives for the current and comparative periods are as follows:

Leasehold right to land	- Over the lease period
Buildings	- 20 - 50 years
Software	- 03 - 05 years
Plant & machinery	- 05 - 50 years
Stores equipment	- 05 - 10 years
Motor vehicles	- 04 - 05 years
Furniture, fittings & office equipment	- 02 - 13 years

 

Depreciation of an asset begins when it is available for use and ceases at the earlier of the dates on which the asset is classified as held for sale or is derecognised.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate.

3.2.1.7 Leased Assets

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

3.2.1.8 Group as a Lessee

Finance leases that transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the income statement.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.

3.2.1.9 Group as a Lessor for Operating Leases

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

Contingent rents are recognised as revenue in the period in which they are earned.

3.2.2 Investment Property

Investment property is property held either to earn rental income or for capital appreciation or both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at its cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal.

The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the income statement in the period of derecognition.

Transfers are made to or from investment property only when there is a change in use. Transfers between investment property, owner-occupied property do not change the carrying amount of the property transferred and they do not change the cost of that property for measurement or disclosure purposes.

3.2.3 Intangible Assets

3.2.3.1 Basis of Recognition

An intangible asset is recognised if it is probable that future economic benefits associated with the assets will flow to the Group and cost of the asset can be reliably measured.

3.2.3.2 Basis of Measurement

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination are their fair value as at the date of acquisition. Following initial recognition,intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.

Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred.

3.2.3.3 Useful Economic Lives, and Amortisation

The useful lives of intangible assets are assessed as either finite or indefinite. Useful economic lives, amortisation and impairment of finite and indefinite intangible assets are described below:

3.2.3.3.1 Intangible Assets with Finite Lives and Amortisation

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible assets.

3.2.3.4 Derecognition of Intangible Assets

Intangible assets are derecognised on disposal or when no future economic benefits are expected from its use. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

3.2.3.5 Leasehold Rights

In respect of operating leases acquired under a business combination where the Group is lessee, Group determines whether the terms of each operating lease are favourable or unfavourable relative to market terms. The Group recognises an intangible asset if the terms of an operating lease are favourable relative to market terms and a liability if the terms are unfavourable relative to market terms. Leasehold rights represent value of favourable lease terms.

3.2.3.6 Research and Development

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:

• The technical feasibility of completing the intangible asset so that it will be available for use or sale
• Its intention to complete and its ability to use or sell the asset
• How the asset will generate future economic benefits
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost of sales. During the period of development, the asset is tested for impairment annually if there are indicators of impairment

3.2.3.7 Brand Name

Brands acquired as part of a business combination, are capitalised as part of a Brand Names if the Brand meets the definition of an intangible asset and the recognition criteria are satisfied. Brand Names are reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

3.2.3.8 Customer Lists

The present value of the income anticipated deriving from repeat customer lists to of the travel agents as at the acquisition date is recognised as an intangible asset based on a valuation carried out by an independent valuer. Subsequent to initial recognition, the intangible asset is carried at cost less accumulated amortisation and accumulated impairment losses.

Customer Lists recognised at the acquisition date will be amortised over the period over which income is anticipated to be derived from repeat customers and reviewed annually for any impairment in value if there are indicators of impairment.

3.2.3.9 Other Intangible Assets

Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses.

3.2.3.10 Subsequent Expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally-generated goodwill and brands, is recognised in profit and loss as incurred.

3.2.3.11 Amortisation

Amortisation is recognised in profit and loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill and brand name, from the date on which they are available for use. The estimated useful lives for the current and comparative periods are as follows:

• Right to generate hydro power - 15-20 years
• Customer List - 5 years
• ERP Systems - 5-10 years
• Operating Lease - The Kingsbury PLC- 56 years

  - Amaya Leisure PLC - 22 years

3.3 Financial Instruments - Initial Recognition and Subsequent Measurement

3.3.1 Financial Assets

3.3.1.1 Initial Recognition and Measurement

Financial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

The Group’s financial assets include cash and short-term deposits, trade and other receivables, loans and other receivables, amounts due from subsidiaries, amounts due from equity accounted investees, quoted and unquoted financial instruments and derivative financial instruments.

3.3.1.2 Subsequent Measurement

The subsequent measurement of financial assets depends on their classification as described below:

Financial Assets at Fair Value through Profit or Loss

Financial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments as defined by LKAS 39.

Financial assets at fair value through profit and loss are carried in the Statement of Financial Position at fair value with net changes in fair value recognised in finance income or finance costs in the income statement.

Financial assets designated upon initial recognition at fair value through profit and loss are designated at their initial recognition date and only if the criteria under LKAS 39 are satisfied.

The Group evaluates its financial assets held for trading, other than derivatives, to determine whether the intention to sell them in the near term is still appropriate. When in rare circumstances the Group is unable to trade these financial assets due to inactive markets and management’s intention to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets. The reclassification to loans and receivables, available-for-sale or held-to-maturity depends on the nature of the asset. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation, these instruments cannot be reclassified after initial recognition.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in the income statement. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the income statement in finance costs for loans and in other operating expenses for receivables.

Held-to-Maturity Investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold them to maturity. After initial measurement, held-to-maturity investments are measured at amortised cost using the effective interest rate, less impairment.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the income statement in finance costs.

Available-for-Sale Financial Investments

Available-for-sale financial investments include equity investments and debt securities. Equity investments classified as available-for-sale are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for-sale reserve to the income statement in finance costs. Interest earned whilst holding available-for-sale financial investments is reported as interest income using the effective interest rate method.

The Group evaluates whether the ability and intention to sell its available-for-sale financial assets in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets and management’s intention to do so significantly changes in the foreseeable future, the Group may elect to reclassify these financial assets. Reclassification to loans and receivables is permitted when the financial assets meet the definition of loans and receivables and the Group has the intent and ability to hold these assets for the foreseeable future or until maturity. Reclassification to the held-to-maturity category is permitted only when the entity has the ability and intention to hold the financial asset accordingly.

For a financial asset reclassified from the available-for-sale category, the fair value at the date of reclassification becomes its new amortised cost and any previous gain or loss on the asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the maturity amount is also amortised over the remaining life of the asset using the effective interest rate. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the income statement.

3.3.1.3 Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• The rights to receive cash flows from the asset have expired
• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. In that case,the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

3.3.1.4 Impairment of Financial Assets

The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if,and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and when observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

3.3.1.4.1 Financial Assets Carried at Amortised Cost

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current EIR.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the income statement. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the income statement.

3.3.1.4.2 Available-for-Sale Financial Investments

The Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. When there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement - is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income.

3.3.2 Financial Liabilities

3.3.2.1 Initial Recognition and Measurement

Financial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings, directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, bank overdrafts, loans and borrowings, financial guarantee contracts, amount due to subsidiaries, amounts due to equity accounted investees and derivative financial instruments.

3.3.2.2 Subsequent Measurement

The measurement of financial liabilities depends on their classification as described below:

Financial Liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by LKAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the income statement.

Financial liabilities designated upon initial recognition at fair value through profit and loss so designated at the initial date of recognition, and only if criteria of LKAS 39 are satisfied.

Loans and Borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement.

Financial Guarantee Contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Fair values of corporate guarantees to banks are measured on a periodic basis and the same is recognised as finance income through inter-company current account balances. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.

3.3.2.3 Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the income statement.

3.3.3 Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount reported in the Consolidated Statement of Financial Position if, and only if:

• There is a currently enforceable legal right to offset the recognised amounts and
• There is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously

3.3.4 Fair Value of Financial Instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include:

• Using recent arm’s length market transactions
• Reference to the current fair value of another instrument that is substantially the same
• A discounted cash flow analysis or other valuation models.

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 19 to the Financial Statements.

3.3.5 Derivative Financial Instruments

3.3.5.1 Initial Recognition and Subsequent Measurement

The Group uses derivative financial instruments, such as forward currency contracts, to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to the Income Statement.

3.3.6 Impairment of Non-Financial Assets

The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at each reporting date or more frequently, if events or changes in circumstances indicate that they might be impaired.

Formers - Provision for Impairment

In respect of formers, a 10% provision on the written down value is recognised as impairment in profit and loss .

3.3.6.1 Calculation of Recoverable Amount

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups.

3.3.6.2 Impairment/Reversal of Impairment

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit and loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

3.3.7 Non-Current Assets Held for Sale

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property and biological assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

3.3.8 Current Assets

Assets classified as current assets on the Statement of Financial Position are cash and bank balances and those which are expected to be realised in cash during the normal operating cycle or within one year from the reporting date, whichever is shorter.

3.3.8.1 Inventories

Inventories are measured at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows:

• All inventory items, except manufactured inventories and work-in-progress are measured at weighted average directly attributable cost.
• Manufactured inventories and work-in-progress are measured at weighted average factory cost which includes all direct expenditure and appropriate share of production overhead based on normal operating capacity but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business less, the estimated cost of completion and the estimated costs necessary to make the sale.

3.3.8.2 Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the Statement of Cash Flows.

3.4 Liabilities and Provisions

3.4.1 Employee Benefits

3.4.1.1 Defined Contribution Plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to Provident and Trust Funds covering all employees are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

The Group contributes 12% and 3% of gross emoluments to employees as Provident Fund and Trust Fund contribution respectively.

3.4.1.2 Defined Benefit Plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The defined benefit is calculated by independent actuaries using Projected Unit Credit (PUC) method as recommended by LKAS 19 - ‘Employee Benefits’. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related liability. The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Key assumptions used in determining the defined retirement benefit obligations are given in Note 28 Any changes in these assumptions will impact the carrying amount of defined benefit obligations.

Provision has been made for retirement gratuities from the beginning of service for all employees, in conformity with LKAS 19 on ‘Employee Benefits’. However, under the Payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of 5 years of continued service.

The liability is not externally funded. This liability is computed on the following basis:

Length of service (Years)	No. of months salary for each completed year of service
Up to 20	1/2
20 up to 25	3/4
25 up to 30	1
30 up to 35	1 1/4
Over 35	1 1/2

3.4.2 Recognition of Actuarial Gains or losses

Actuarial gains or losses are recognised in full in the other comprehensive income.

3.4.3 Short-Term Benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

3.4.4 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

3.4.5 Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighing of possible outcomes against their associated probabilities.

3.4.6 Capital Commitments and Contingencies

Capital commitments and contingent liabilities of the Group are disclosed in the respective Note 32 to the Financial Statements.

3.4.7 Ordinary Shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

3.5 Income Statements

For the purpose of presentation of the Income Statement, the function of expenses method is adopted.

3.5.1 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made.

The specific recognition criteria described below must also be met before revenue is recognised.

Sale of Goods

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.

Rendering of Services

Revenue from services rendered is recognised in profit and loss in proportion to the stage of completion of the transaction at the reporting date.

Room Revenue

Room revenue is recognised on the rooms occupied on a daily basis. Food and Beverage revenue is recognised at the time of sales.

Rental Income

Rental income is recognised in profit and loss as it accrues.

Dividend

Dividend income is recognised in profit and loss on the date the entity’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

Commission

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the commission earned by the Group.

Grants

Grants are recognised initially as deferred income when there is a reasonable assurance that they will be received and that the Group will comply with the conditions associated with the grant. Grants that compensate the Group for expenses incurred are recognised in profit and loss on a systematic basis in the periods in which the expenses are recognised. Grants that compensate the Group for the cost of an asset are recognised in profit and loss on a systematic basis over the useful life of the asset.

Gains and losses

Gains and losses on disposal of an item of property, plant & equipment are determined by comparing the net sales proceeds with the carrying amounts of property, plant & equipment and are recognised net within ‘other operating income’ in profit and loss

Other Income

Other income is recognised on an accrual basis.

3.5.2 Expenses

Expenses are recognised in the income statement on the basis of a direct association between the cost incurred and the earnings of specific items of income. All expenditure incurred in the running of the business has been charged to income in arriving at the profit for the year.

Repairs and renewals are charged to profit and loss in the year in which the expenditure is incurred.

3.5.2.1 Operating Leases

Payments made under operating leases are recognised in profit and loss on a straight-line basis over the term of the lease.

3.5.2.2 Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred, except to the extent that they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset.

3.5.2.3 Finance Income and Finance Costs

Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss, and losses on hedging instruments that are recognised in profit or loss.

The interest expense component of finance lease payments is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Foreign currency gains and losses are reported on a net basis.

3.5.3 Tax Expense

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

3.5.3.1 Current Tax

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date and any adjustments to tax payable in respect of previous years. Current tax relating to items recognised directly in other comprehensive income is recognised in other comprehensive income and not in the income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

3.5.3.2 Deferred Tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
• In respect of taxable temporary differences associated with investments in subsidiaries, equity accounted investee and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

• When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
• In respect of deductible temporary differences associated with investments in subsidiaries, equity accounted investee and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or parts of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or in profit or loss.

Tax withheld on dividend income from subsidiaries and equity accounted investees is recognised as an expense in the Consolidated Income Statement at the same time as the liability to pay the related dividend is recognised.

3.5.3.3 Sales Tax

Revenues, expenses and assets are recognised net of the amount of sales tax, except:

• When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
• Receivables and payables that are stated with the amount of sales tax. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

4. General

4.1 Events Occurring after the Reporting Date

All material post occurred after the reporting date events have been considered and where appropriate adjustments or disclosures have been made in the respective notes to the Financial Statements.

4.2 Earnings Per Share

The Group presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

4.3 Standards Issued But Not Yet Effective

Standards issued but not yet effective up to the date of issuance of the Group’s Financial Statements are listed below. This listing of standards and interpretations issued are those that the Group reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards when they become effective.

Pending the completion of detailed review, the financial impact is not reasonably estimable at the date of the publication of these Financial Statements.

• SLFRS 9 - Financial Instruments: Classification and Measurement

SLFRS 9 replaces LKAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in LKAS 39. This Standard was originally effective for annual periods commencing on or after 1st January, 2015. However, the effective date has been deferred subsequently. The adoption of the first phase of SLFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will potentially have no impact on classification and measurements of financial liabilities.

• SLFRS 10 - Consolidated Financial Statements

SLFRS 10 replaces the portion of LKAS 27 Consolidated and Separate Financial Statements that addresses the accounting for Consolidated Financial Statements. It also includes the issues raised in Standing Interpretations Committee - SIC-12 Consolidation - Special Purpose Entities.

SLFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by SLFRS 10 will require management to exercise significant judgment to determine which entities are controlled, and therefore, are required to be consolidated by a Parent, compared with the requirements that were in LKAS 27. This standard becomes effective for annual periods beginning on or after 1st January, 2014.

• SLFRS 11 - Joint Arrangements

SLFRS 11 replaces LKAS 31 - ‘Interests in Joint Ventures’ and SIC - 13 Jointly-controlled Entities - Non-monetary Contributions by Venturers. SLFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. The application of this new standard will impact the financial position of the Group. This is due to the cessation of proportionate consolidating of joint ventures being changed to equity accounting. This standard becomes effective for annual periods beginning on or after 1st January, 2014.

• SLFRS 12 - Disclosure of Interests in Other Entities

SLFRS 12 includes all of the disclosures that were previously in LKAS 27 related to Consolidated Financial Statements, as well as all of the disclosures that were previously included in LKAS 31 and LKAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This standard becomes effective for annual periods beginning on or after 1st January, 2014.

• SLFRS 13 - Fair Value Measurement

SLFRS 13 establishes a single source of guidance under SLFRS for all fair value measurements. SLFRS 13 does not state when an entity is required to use fair value, but rather provides guidance on how to measure fair value under SLFRS when fair value is required or permitted. This standard becomes effective for annual periods beginning on or after 1st January, 2014.

4.4 Plantations

The plantation companies in the Group adopt certain accounting policies, which differ from that of the Group, since their nature of operations is significantly different from that of the rest of the Group. The accounting policies adopted are in accordance with LKAS 41 - ‘Agriculture’ and CA Sri Lanka ruling on bearer biological assets.

Those accounting policies that significantly vary from the rest of the Group are given below.

4.4.1 Property, Plant & Equipment

4.4.1.1 Permanent Land Development Costs

Permanent land development costs are those costs incurred in major infrastructure development and building new access roads on leased lands.

The costs have been capitalised and amortised over the shorter of useful lives or remaining lease periods.

Permanent impairments to land development costs are charged to the Income Statement in full or reduced to the net carrying amounts of such assets in the year of occurrence after ascertaining the loss.

4.4.1.2 Biological Asset

Biological assets are classified in to mature biological assets and immature biological assets. Mature biological assets are those that have attained harvestable specifications or are able to sustain regular harvests. Immature biological assets are those that have not yet attained harvestable specifications. Tea, rubber, other plantations and nurseries are classified as biological assets.

Biological assets are further classified as bearer biological assets and consumable biological assets. Bearer biological asset includes tea and rubber trees, those that are not intended to be sold or harvested, however used to grow for harvesting agricultural produce from such biological assets. Consumable biological assets includes managed timber trees those that are to be harvested as agricultural produce or sold as biological assets.

The entity recognises the biological assets when, and only when, the entity controls the assets as a result of past event, it is probable that future economic benefits associated with the assets will flow to the entity and the fair value or cost of the assets can be measured reliably.

The bearer biological assets are measured at cost less accumulated depreciation and accumulated impairment losses, if any, in terms of LKAS 16 - Property, Plant & Equipment’ as per the ruling issued by CA Sri Lanka.

The managed timber trees are measured on initial recognition and at the end of each reporting period at its fair value less cost to sell in terms of LKAS 41. The cost is treated as approximation to fair value of young plants as the impact on biological transformation of such plants to price during this period is immaterial. The fair value of timber trees are measured using DCF method taking in to consideration the current market prices of timber, applied to expected timber content of a tree at the maturity by an independent professional valuer. All other assumptions and sensitivity analysis are given in Note 16 to the Financial Statements.

The main variables in DCF model concerns

Variable	Comment
Currency Valuation	LKR
Timber content	Estimate based on physical verification of girth, height and considering the growth of each species in different geographical regions. Factor all the prevailing statutory regulations enforced against harvesting of timber coupled with forestry plan of the Group
Economic useful life	Estimated based on the normal life span of each species by factoring the forestry plan of the Group
Selling price	Estimated based on prevailing Sri Lankan market price. Factor all the conditions to be fulfil in bringing the trees in to saleable condition
Planting cost	Estimated costs for the further development of immature areas are deducted
Discount rate	Future cash flows are discounted at following discount rates: Timber trees 17.5%

 

Nursery cost includes the cost of direct materials, direct labour and an appropriate proportion of directly attributable overheads, less provision for overgrown plants.

The gain or loss arising on initial recognition of biological assets at fair value less cost to sell and from a change in fair value less cost to sell of biological assets are included in profit or loss for the period in which it arises.

4.4.1.3 Immature and Mature Plantations

The cost of land preparation, rehabilitation, new planting, replanting, crop diversification, interplanting and fertilising, etc., incurred between the time of planting and harvesting (when the planted area attains maturity), are classified as immature plantations. These immature plantations are shown at direct costs plus attributable overheads, including interest attributable to long-term loans used for financing immature plantations. The expenditure incurred on bearer biological assets (Tea, Rubber, Timber fields) which comes into bearing during the year, is transferred to mature plantations. Expenditure incurred on consumable biological assets is recorded at cost at initial recognition and thereafter at fair value at the end of each reporting period.

Permanent impairments to biological assets are charged to the Income Statement in full and reduced to the net carrying amounts of such asset in the year of occurrence after ascertaining the loss.

4.4.1.4 Infilling Cost on Bearer Biological Assets

The land development costs incurred in the form of infilling have been capitalised to the relevant mature field, only where the number of plants per hectare exceeded 3,000 plants and, also if it increases the expected future benefits from that field, beyond its pre-infilling performance assessment. Infilling costs so capitalised are depreciated over the newly assessed remaining useful economic life of the relevant mature plantation, or the unexpired lease period, whichever is lower.

Infilling costs that are not capitalised have been charged to the Income Statement in the year in which they are incurred.

4.4.1.5 Depreciation

Depreciation is recognised in profit and loss on a straight-line basis over the estimated useful lives of each item of property plant & equipment as follows:

Mature Plantations (Replanting and New Planting)

Description	Years
Mature plantations - Tea	33
- Rubber	20
Sanitation, water and electricity supply	20

 

Depreciation methods, useful lives and residual values are reassessed at the reporting date. Mature plantations are reassessed at the reporting date. Mature plantations are depreciated over their useful lives or unexpired lease period, whichever is less.

No depreciation is provided for immature plantations.

4.4.1.6 Leased Assets

The leasehold rights of assets taken over from JEDB/SLSPC are amortised in equal amounts over the shorter of the remaining lease periods and the useful lives as follows:

Description	Years
Bare land	53
Improvements to land	30
Mature plantations (Tea & Rubber)	30
Buildings	25
Machinery	20

 

4.4.2 Borrowing Costs

Borrowing costs incurred in respect of loans that are utilised for field development activities have been capitalised as a part of the cost of the relevant immature plantation. The capitalisation will cease when the crops are ready for commercial harvest.

4.4.3 Inventories

4.4.3.1 Finished Goods Manufactured From Agricultural Produce of Biological Assets

These are valued at the lower of cost and estimated net realisable value, after making due allowance for obsolete and slow moving items.

Net realisable value is the estimated selling price at which stocks can be sold in the ordinary course of business after allowing for cost of realisation and/or cost of conversion from their existing state to saleable condition.

4.4.3.2 Input Material, Spares and Consumables

At actual cost on weighted average basis.

4.4.3.3 Agricultural Produce Harvested from Biological Assets

Agricultural produce harvested from its biological assets are measured at their fair value less cost to sell at the point of harvest. The finished and semi-finished inventories from agriculture produce are valued by adding the cost of conversion to the fair value of the agricultural produce.

4.4.4 Grants and Subsidies

Grants and subsidies are recognised at their fair value where there is a reasonable assurance the grant/subsidy will be received and all attaching conditions, if any, will be complied with. When the grant or subsidy relates to an income item is recognised as income over the periods necessary to match them to the costs to which it is intended to compensate on a systematic basis.

Grants and subsidies related to assets, including non-monetary grants at fair value are deducted at arriving at the carrying value of the asset (or are deferred in the Statements of Financial Position and credited to the Income Statement over the useful life of the asset.)

4.5 Cash Flow Statement

The Cash Flow Statement has been prepared using the ‘indirect method’.

Interest paid is classified as a financing cash flow. Grants received, which are related to purchase and construction of property, plant & equipment are classified as investing cash flows. Dividend and interest income are classified as cash flows from investing activities.

Dividends paid are classified as financing cash flows. Dividends received by Hayleys PLC, which is an investment Company, are classified as operating cash flows and are not disclosed separately in the Company Cash Flow Statement.

4.6 Segment Reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Chairman to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the Chairman include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant & equipment, and intangible assets other than goodwill.

4.7 Changes in Accounting Policies and Disclosures

4.7.1 LKAS 19 Employee Benefits (Revised 2013)

The Group applied LKAS 19 (Revised 2013) retrospectively in the current period in accordance with the transitional provisions set out in the revised standard. Actuarial gain or loss for the comparative period has been recognised in full in comparative other comprehensive income.

LKAS 19 (Revised 2013) has been applied retrospectively, with following permitted exception:

Sensitivity disclosures for the defined benefit obligation for comparative year ended 31st March, 2013.

5. Critical Accounting Estimates and Judgements

Use of Estimates and Judgements

The preparation of Financial Statements in conformity with SLFRS/LKAS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Judgements and estimates are based on historical experience and other factors, including expectations that are believed to be reasonable under the circumstances. Hence actual experience and results may differ from these judgements and estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period and any future periods.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the Financial Statements is included in the following notes:

5.1 Going Concern

The Directors have made an assessment of the Group’s ability to continue as a going concern and is satisfied that it has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going concern. Therefore, the Financial Statements continue to be prepared on the going concern basis.

5.2 Measurement of the Recoverable Amount of Cash-Generating Units Containing Goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 3.3.6.1. The basis of determining the recoverable amounts of cash-generating units and key assumptions used are given in Note 17 to the Financial Statements.

5.3 Taxation

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective domicile of the Group companies.

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together as with future tax planning strategies.

5.4 Measurement of the Defined Benefit Obligations

The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Key assumptions used in determining the defined retirement benefit obligations are given in Note 28 to the Financial Statements. Any changes in these assumptions will impact the carrying amount of defined benefit obligations.

5.5 Impairment of Property, Plant & Equipment and Intangible Assets other than Goodwill

The impairment analysis is principally based upon discounted estimated cash flows from the use and eventual disposal of the assets. Factors like lower than anticipated sales and resulting decreases of net cash flows and changes in the discount rates could lead to impairment. Further details are disclosed in Notes 14 and 17 to the Financial Statements.

5.6 Revaluation of Land

The Group measures lands which are recognised as property, plant & equipment at revalued amount with change in value being recognised in the Statement of Other Comprehensive Income. The valuer has used valuation techniques such as open market value. Further details on revaluation of land are disclosed in Note 14 to the Financial Statements.

5.7 Fair Valuation of Biological Assets

The Group measures consumable Biological Assets at fair value with changes in value being recognised in the statement of income. Fair valuation involves assumptions which are given in Note 16 to the Financial Statements. Such estimations are subject to significant uncertainties.

6. Revenue

6.1 Industry Segment Revenue

	Consolidated
	Sale of goods	Rendering of services	Total Revenue	Sale of goods	Rendering of services	Total Revenue
For the year ended 31st March,			2014			2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Fibre	3,759,192	–	3,759,192	4,028,299	–	4,028,299
Hand Protection	13,376,913	–	13,376,913	14,674,542	–	14,674,542
Purification Products	10,348,067	–	10,348,067	9,868,644	–	9,868,644
Textiles	7,994,776	–	7,994,776	5,738,055	–	5,738,055
Construction Materials	2,804,490	–	2,804,490	2,472,683	–	2,472,683
Agriculture	7,395,466	–	7,395,466	7,346,296	–	7,346,296
Plantations	9,596,803	–	9,596,803	8,951,933	–	8,951,933
Transportation & Logistics	–	11,935,724	11,935,724	–	11,343,068	11,343,068
Leisure & Aviation	–	4,308,197	4,308,197	–	2,062,892	2,062,892
Consumer Products	5,252,132	–	5,252,132	4,509,140	–	4,509,140
Power & Energy	1,012,829	–	1,012,829	756,697	–	756,697
Industry Inputs	1,988,783	–	1,988,783	1,730,833	–	1,730,833
Investments & Services	–	780,738	780,738	–	818,770	818,770
	63,529,451	17,024,659	80,554,110	60,077,122	14,224,730	74,301,852

 

6.2 Geographical Segment Revenue

	Consolidated
For the year ended 31st March,	2014	2013
	Rs. ’000	Rs. ’000
Asia (excluding Sri Lanka)	9,735,023	9,639,509
Australia	1,625,990	1,745,033
Europe	12,385,499	12,530,959
United States of America	6,906,583	7,765,525
Africa	1,168,922	863,652
Indirect Exports	13,797,731	14,747,419
Sri Lanka	34,934,362	27,009,755
	80,554,110	74,301,852

 

6.3 Gross Revenue

	Company
For the year ended 31st March,	2004	2013
	Rs. ’000	Rs. ’000
Rent and building related income	250,570	229,332
	250,570	229,332

 

	Consolidated		Company
For the year ended 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
7. Other Income
Grants amortised*	45,709	52,562	–	–
Gain on disposal of property, plant & equipment	31,260	66,889	24	–
Change in fair value of biological assets	28,065	31,170	–	–
Gain on disposal of long-term investments	–	–	105,212	324
Gain on bargain purchase of subsidiaries	–	9,907	–	–
Sundry income/scrap sales	213,377	78,330	–	–
Rent income	31,519	38,346	–	–
Indent commission	74,244	49,713	–	–
	424,174	326,917	105,236	324

* Details of the grants are given in Note 26 to the Financial Statements.

 

8. Other Expenses

Loss on disposal of equity accounted investees	–	4,671	–	–
Loss on disposal of property, plant & equipment	–	–	–	1,237
Impairment of property, plant & equipment	50,493	–	–	–
Derecognition of property, plant & equipment	–	43,810	–	–
Loss on disposal of current financial assets	81	743	81	743
Amortisation of intangible assets	101,136	110,039	–	–
Impairment of goodwill	9,864	–	–	–
	161,574	159,263	81	1,980

 

9. Net Finance Cost

9.1 Finance Income

Interest income on available-for-sale financial assets	–	1,157	–	–
Interest income on loans and receivables	27,033	354,343	88,014	93,116
Interest income on bank deposits	154,988	46,433	–
Income from finance lease	11,577	–	–	–
Guarantee income	–	–	1,602	3,152
Dividend income on available-for-sale investments	257,736	310,219	253,221	307,017
Net change in fair value of financial assets at fair value through profit or loss	425	2,267	2,843	–
Foreign exchange gain	318,508	715,997	–	–
	770,267	1,430,416	345,680	403,285
9.2 Finance Cost
Interest on long-term loans	(953,488)	(588,110)	(352,701)	(716,164)
Interest on short-term loans	(1,347,884)	(2,007,052)	(431,651)	(204,146)
Finance charges payable under finance leases	(87,552)	(83,945)	–
Net change in fair value of financial assets at fair value through profit or loss	(905)	–	(1,020)	(596)
Impairment of financial assets - available-for-sale	(17,769)	(15,020)	(12,470)	(12,470)
Foreign exchange loss	(502,766)	(375,049)	(102,123)	–
	(2,910,364)	(3,069,176)	(899,965)	(933,376)
Net Finance Cost	(2,140,097)	(1,638,760)	(554,285)	(530,091)

 

10. Profit before Tax

	Consolidated		Company
For the year ended 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Profit before tax is stated after charging all expenses including the following:
Directors’ emoluments	613,868	585,673	167,039	143,114
Auditors’ fees (includes overseas subsidiaries)
Audit services
- Ernst & Young	37,511	33,771	1,523	1,535
- Other Auditors	16,323	9,637	–	–
Non-Audit services
- Ernst & Young	15,848	16,904	1,080	752
- Other Auditors	6,773	5,111	–	–
Depreciation on property, plant & equipment	2,003,414	1,771,639	29,802	24,892
Donations	14,138	11,613	498	831
Impairment of trade and other receivables	70,673	(182,795)	–	–
Provision for unrealised profit and write-down of inventories	168,171	63,868	–	–
Staff cost
Defined contribution plan cost	1,099,900	892,669	58,081	51,423
Defined benefit plan cost	748,835	761,589	61,632	70,405
Other staff cost (excluding defined contributions and defined benefits)	9,449,582	7,924,320	544,513	461,032
Staff training and development cost	51,165	45,947	7,373	14,037
Legal fees	41,337	30,567	–	–
Operating leases	119,105	95,888	–	–
Research and development cost	55,150	73,223	–	–

 

11. Taxation

11.1 Tax Expense

Consolidated Income Statement

Current income tax
Income tax on current year profits
Parent	30,782	17,489
Subsidiaries	979,809	1,117,247
	1,010,591	1,134,736
Over provision in respect of previous years	(2,700)	(582)
Irrecoverable ESC	1,570	2,012
	1,009,461	1,136,166
Deferred tax expense
Origination of temporary differences
Parent	–	–
Subsidiaries	150,650	43,645
	150,650	43,645
Tax on dividend income	204,899	232,170
Tax expense reported in the Income Statement	1,365,010	1,411,981

 

11.2 Consolidated Statement of Other Comprehensive Income

	Consolidated		Company
For the year ended 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Deferred tax related to items charged or credited directly to other comprehensive income during the year:
Actuarial losses on defined benefit obligations	(579)	(5,883)	–	–
Income tax charged directly to other comprehensive income	(579)	(5,883)	–	–

 

11.3 Reconciliation of Accounting Profit to Income Tax Expense

Profit before tax	5,074,003	4,916,576	568,261	375,154
Share of profit of equity accounted investees	(1,236)	(352)	–	–
Intra-group adjustments	2,121,672	2,203,150	–	–
	7,194,439	7,119,374	568,261	375,154
Disallowable expenses	3,149,313	2,833,691	306,624	135,595
Tax deductible expenses	(4,028,295)	(3,792,474)	(136,420)	(60,618)
Tax exempt income	(2,956,628)	(2,940,497)	(1,406,610)	(1,325,626)
Tax loss b/f	(6,397,716)	(5,381,364)	(2,427,504)	(1,493,078)
Adjustment of tax loss b/f	729,485	256,809	495,474	3,642
Qualifying payments - donations	–	–	(127)	(112)
Tax loss c/f	5,500,565	6,397,716	2,658,425	2,427,504
Taxable income	3,191,163	4,493,255	58,123	62,461
Income tax @ 28%	551,865	583,438	16,274	17,489
Income tax @ 15%	82,913	181,878	–	–
Income tax @ 12%	85,314	8,456	–	–
Income tax at other tax rates	290,499	360,964	–	–
Income tax on current year profit	1,010,591	1,134,736	16,274	17,489
(Over)/under provision in respect of previous years	(2,700)	(582)	14,508	–
Irrecoverable ESC	1,570	2,012	–	–
	1,009,461	1,136,166	30,782	17,489
Origination of temporary differences	150,650	43,645	–	–
Tax on dividend income	204,899	232,170	–	–
Tax expense	1,365,010	1,411,981	30,782	17,489
Effective tax rate	27%	29%	5%	5%

11.4

  Corporate income taxes of companies resident in Sri Lanka have been computed in accordance with the Inland Revenue Act No. 10 of 2006 as amended, whilst Corporate Taxes of non-resident companies in the Group have been computed in keeping with the domestic statutes in their respective countries.

Irrecoverable Economic Service Charge has been charged in the Income Statements.

Resident companies in the Group, excluding those which enjoy a tax holiday or concessionary rate of taxation, were liable to income tax at 28% during 2013/14 (Y/A 2012/13 - 28%).

11.5 Tax Exemptions

11.5.1 In terms of the Inland Revenue Act

• Ultracarb (Pvt) Ltd. is entitled for a 3-year income tax holiday. The tax holiday period is yet to commence.
• Haycarb Value Added Products (Pvt) Ltd. is entitled for a 6-year income tax holiday. The tax holiday commenced during the Y/A 2013/14.
• Foreign dividends received are exempted from income tax in terms of the Inland Revenue Act.

11.5.2 In terms of BOI Agreements

Companies enjoying Tax Holidays under BOI Law are as follows:

Neluwa Cascade Hydro Power (Pvt) Ltd.	5-year tax holiday ending 31st March, 2014
Logiwiz NW (Pvt) Ltd.	5-year tax holiday ending 31st March, 2015
TTEL Somerset Hydro Power (Pvt) Ltd.	5-year tax holiday ending 31st March 2015
TTEL Hydro Power Company (Pvt) Ltd.	5-year tax holiday ending 31st March, 2015
Alco Industries (Pvt) Ltd.	5-year tax holiday ending 31st March, 2015
Hayleys Business Solutions International (Pvt) Ltd.	5-year tax holiday ending 31st March, 2017
Hayleys Agro Biotech (Pvt) Ltd.	8-year tax holiday ending 31st March, 2018
Nirmalapura Wind Power (Pvt) Ltd.	6-year tax holiday ending 31st March, 2019

11.5.3 Exemptions outside Sri Lanka

Haycarb Holdings Bitung Ltd.	Tax Exempt
Shizuka Co. Ltd.	8 year tax holiday ending 31st December, 2019

11. 6 Concessionary Tax Rates

11.6.1 In terms of the Inland Revenue Act

In terms of Sections 17, 46, 48A, 51, 56 and 59 of the Inland Revenue Act No. 10 of 2006, as amended, the profits of companies listed below enjoy concessionary rates of income tax.

Kelani Valley Plantations PLC	Profits from agriculture
Talawakelle Tea Estates PLC	Profits from agriculture
Sunfrost Ltd.	Profits from agriculture
HJS Condiments Ltd.	Profits from agriculture
Hayleys Agro Farms (Pvt) Ltd.	Profits from agriculture
Haycarb PLC	Profits from qualifying exports
Haycolour (Pvt) Ltd.	Profits from qualifying exports
Mabroc Teas (Pvt) Ltd.	Profits from qualifying exports and agriculture
Hayleys MGT Knitting Mills PLC	Profits from indirect exports
Creative Polymats (Pvt) Ltd.	Profits from qualifying exports & indirect exports
Ravi Industries (Pvt) Ltd.	Profits from qualifying exports & indirect exports
Rileys (Pvt) Ltd.	Profits from qualifying exports & indirect exports
Haymat (Pvt) Ltd.	Profits from qualifying exports & indirect exports
Toyo Cushion Lanka (Pvt) Ltd.	Profits from qualifying exports & indirect exports
Logiventures (Pvt) Ltd.	Profits from qualifying exports
Puritas Ltd.	Profits from qualifying exports
Lanka Orient Express Lines Ltd.	Profits from transhipment
DPL Plantations (Pvt) Ltd.	Profits from agriculture
Hayleys Plantation Services (Pvt) Ltd.	Profits from agriculture
Hayleys Travels and Tours (Pvt) Ltd.	Profits from promotion of tourism
Clarion Shipping (Pvt) Ltd.	Profits from transhipment
NYK Line Lanka (Pvt) Ltd.	Profits from transhipment
The Kingsbury PLC	Profits from promotion of tourism
Hunas Falls Hotel PLC	Profits from promotion of tourism
Culture Club Resorts (Pvt) Ltd.	Profits from promotion of tourism
Alumex PLC	Profits from manufacturing

11.6.2 In terms of BOI Agreements

As per agreements signed with the Board of Investment, the business income of the Companies listed below would be subject to a concessionary tax rate for the periods indicated below:

Kandyan Resorts (Pvt) Ltd.	02%	on turnover for 15 years up to Y/A 2026/27
Texnil (Pvt) Ltd.	12%	for 10 years up to Y/A 2022/23
Hanwella Rubber Products Ltd.	12%	for 10 years up to Y/A 2020/21
Grossart (Pvt) Ltd.	12%	for 10 years up to Y/A 2019/20
Dipped Products PLC	12%	for 10 years up to Y/A 2018/19
Venigros (Pvt) Ltd.	12%	for 10 years up to Y/A 2018/19
Logiwiz Ltd.	20%	indefinitely
Neoprex (Pvt) Ltd.	12%	for 10 years up to Y/A 2017/18
Logistics International Ltd.	12%	for 20 years up to Y/A 2016/17
Bonterra (Pvt) Ltd.	12%	for 20 years up to Y/A 2015/16
Moceti International (Pvt) Ltd.	10%	for 02 years up to Y/A 2014/15
Kelani Valley Instant Tea (Pvt) Ltd.	10%	for 02 years up to Y/A 2014/15
Bhagya Hydro Power (Pvt) Ltd.	10%	for 02 years up to Y/A 2013/14
Civaro International Ltd.	10%	for 02 years up to Y/A 2013/14

 

11.7 Non-Resident Companies

Corporate Income Taxes of non-resident companies are:

Company	Income Tax Rate (%)
Haychem (Bangladesh) Ltd.	37.5
PT Mapalus Makawanua Charcoal Industry	25
Haymark Inc	34
Logiwiz Logistics India (Pvt) Ltd.	30
Eurocarb Products Ltd.	23
Haycarb Holding Australia (Pvt) Ltd.	30
Carbokarn Co. Ltd.	20
ICOGUANTI S.p.A.	27.5
CK Regen Systems Co. Ltd.	20
Haylex Japan	30
Dipped Products (Thailand) Ltd. (Reduced rate applicable till 31st December, 2017)	10
PT Haycarb Palu Mitra	25

 

12. Earnings Per Share

Basic Earnings per Share

The calculation of basic earnings per share is based on the profit attributable to owners of the parent and the weighted average number of ordinary shares outstanding during the year.

Diluted Earnings per Share

The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding after adjustment for the effect of all potentially dilutive ordinary shares.

There were no potentially dilutive ordinary shares outstanding at any time during the year/previous year.

Basic/diluted earnings per share are calculated as follows:

	Consolidated
	2014	2013
Profit attributable to ordinary equity holders of the parent (Rs. ’000)	1,808,523	1,761,146
Weighted average number of ordinary shares of the parent (i)	75,000,000	75,000,000
Basic/diluted earnings per share (Rs.)	24.11	23.48
(i) Qualifying ordinary shares at beginning of the year	75,000,000	75,000,000
Qualifying ordinary shares at the end of the year	75,000,000	75,000,000

 

13. Dividends

	Company
	2014	2013
	Rs. ’000	Rs. ’000
First and Final proposed Rs. 5.00 per share (2013 - Rs. 4.50 per share)	375,000	337,500
Dividend per ordinary share (Rs.)	5.00	4.50

(i) The dividends represent redistribution of dividends received by the Company and are therefore not subject to the 10% tax deduction.

(ii) The directors have recommended a Rs. 5/- per share first and final dividend for the year ended 31st March, 2014 to be approved at the Annual General Meeting on 27th June, 2014.

 

14. Property, Plant & Equipment

14.1 Consolidated

	Land	Mature/immature plantations	Buildings	Machinery & stores equipment	Motor vehicles	Furniture, fittings & office equipment	Total
As at 31st March,							2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Cost
Gross book value
At the beginning of the year	11,091,744	5,023,613	11,202,596	17,746,419	951,344	2,430,055	48,445,771	40,467,854
Revaluation of land	–	–	–	–	–	–	–	2,532,488
Acquisition through business combinations	–	–	–	11,353	7,823	12,499	31,675	576,154
Additions	147,767	470,961	673,909	1,137,211	116,125	401,989	2,947,962	5,043,518
Transfers to investment property	(196,765)		(128,318)	–	–	–	(325,083)	–
Disposals	–	–	(29,163)	(208,629)	(54,786)	(87,209)	(379,787)	(656,366)
Increase due to reassessment of liability	38,240	–	–	–	–	–	38,240	–
Effect of movements in exchange rates	(12,149)	–	(4,976)	(76,117)	(3,870)	(62,916)	(160,028)	482,123
At the end of the year	11,068,837	5,494,574	11,714,048	18,610,237	1,016,636	2,694,418	50,598,750	48,445,771
Depreciation:
At the beginning of the year	107,236	1,016,184	1,790,014	7,699,721	511,518	1,488,650	12,613,323	10,892,227
Acquisition through business combinations	–	–	–	10,606	1,778	10,570	22,954	44,345
Depreciation for the year	41,455	134,472	309,023	1,150,041	124,894	243,529	2,003,414	1,771,639
Transfers to investment property	–	–	(60,209)	–	–	–	(60,209)	–
Disposals	–	–	(15,066)	(164,758)	(50,864)	(59,635)	(290,323)	(304,878)
Effect of movements in exchange rates	–	–	(4,230)	(28,972)	314	(55,204)	(88,092)	209,990
At the end of the year	148,691	1,150,656	2,019,532	8,666,638	587,640	1,627,910	14,201,067	12,613,323
Impairment:
At the beginning of the year	–	–	–	–	–	–	–	–
Impairment for the year	–	–	–	50,493	–	–	50,493	–
At the end of the year	–	–	–	50,493	–	–	50,493	–
Net book value as at 31st March	10,920,146	4,343,918	9,694,516	9,893,106	428,996	1,066,508	36,347,190	35,832,448
Capital work in progress							1,870,210	1,364,423
Carrying amount as at 31st March							38,217,400	37,196,871

 

14.2 Company

	Freehold Land	Buildings	Machinery & stores equipment	Motor vehicles	Furniture, fittings & office equipment	Total
As at 31st March,						2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Cost or deemed cost:
At the beginning of the year	4,868,000	201,767	42,259	26,055	237,092	5,375,173	4,093,903
Revaluation of land	–	–	–	–	–	–	1,176,520
Additions	–	27,336	68	–	42,275	69,679	111,314
Disposals	–	–	–	–	(607)	(607)	(6,564)
At the end of the year	4,868,000	229,103	42,327	26,055	278,760	5,444,245	5,375,173
Depreciation
At the beginning of the year	–	49,082	35,395	6,246	171,736	262,459	239,923
Depreciation for the year	–	3,374	1,230	1,302	23,896	29,802	24,892
Disposals	–	–	–	–	(606)	(606)	(2,356)
At the end of the year	–	52,456	36,625	7,548	195,026	291,655	262,459
Net book value as at 31st March	4,868,000	176,647	5,702	18,507	83,734	5,152,590	5,112,714
Capital work-in-progress	–	–	–	–	–	19,055	20,424
Carrying amount as at 31st March	–	–	–	–	–	5,171,645	5,133,138

 

14.3 Carrying Value

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
At cost	26,549,673	25,823,299	303,645	265,138
At valuation	8,349,638	8,349,638	4,868,000	4,868,000
On finance leases	3,318,089	3,023,934	–	–
	38,217,400	37,196,871	5,171,645	5,133,138

(i) Total borrowing cost capitalised in 2014 amounts to Rs. Nil (2013 - Rs. 131.9 mn).

(ii) Group property, plant & equipment includes capitalised finance leases and leasehold rights on land. The carrying amount of these assets are:

 

	Consolidated
	Cost	Accumulated depreciation/	Carrying value
As at 31st March,		amortisation	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Land	535,175	63,024	472,151	457,664
Mature/immature plantations	3,495,954	786,492	2,709,462	2,299,013
Buildings	224,830	154,318	70,512	80,219
Machinery & stores equipment	75,866	61,313	14,553	47,861
Motor vehicles	131,198	79,908	51,290	71,781
Furniture, fittings & office equipment	342	221	121	658
Capital work-in-progress	–	–	–	66,738
Total	4,463,365	1,145,276	3,318,089	3,023,934

 

(iii) Unexpired lease periods of land:

Kelani Valley Plantations PLC	33 Years
Kalupahana Power Company (Pvt) Ltd.	33 Years
HJS Condiments Ltd.	86 Years/79 Years/21 Years
Talawakelle Tea Estates PLC	31 Years
The Kingsbury PLC	55 Years
Culture Club Resorts (Pvt) Ltd.	30 Years

 

(iv) Amounts by which values have been increased to in respect of land revalued by independent qualified valuers are indicated below, together with the last date of revaluation:

		Revaluation surplus
		2014	2013
Company	Location	Rs. ’000	Rs. ’000
Hayleys PLC	Colombo (31.03.2013)	4,861,023	4,861,023
Volanka (Pvt) Ltd.	Kotugoda (31.03.2013)	551,400	551,400
	Katana (31.03.2013)	155,831	155,831
	Galle (31.03.2013)	70,577	70,577
Chas P. Hayley & Co. (Pvt) Ltd.	Galle (31.03.2013)	420,037	420,037
Dipped Products PLC	Kottawa (31.03.2013)	107,633	107,633
	Weliveriya (31.03.2013)	70,973	70,973
	Malabe (31.03.2013)	88,803	88,803
Venigros (Pvt) Ltd.	Weliveriya (31.03.2013)	50,925	50,925
Palma Ltd.	Gonawala (31.03.2013)	35,224	35,224
Haycarb PLC	Badalgama & Madampe (31.03.2013)	89,874	89,874
	Wewalduwa (31.03.2013)	94,377	94,377
Recogen (Pvt) Ltd.	Badalgama (31.03.2013)	26,931	26,931
Carbokarn Co. Ltd.	Pahanatinikhom (31.03.2013)	25,000	25,000
Lignocell (Pvt) Ltd.	Kuliyapitiya (31.03.2013)	26,956	26,956
Hayleys Agriculture Holdings Ltd.	Dambulla (31.03.2013)	1,324	1,324
	Kottawa (31.03.2013)	67,414	67,414
Haychem Bangladesh Ltd.	Mymensingh (31.03.2013)	17,598	17,598
Haycolour (Pvt) Ltd.	Kalutara (31.03.2013)	28,706	28,706
Hayleys Fibre PLC	Ekala (31.03.2013)	185,843	185,843
Hayleys Advantis Ltd.	Welisara (31.03.2013)	689,832	689,832
Ravi Industries (Pvt) Ltd.	Ekala (31.03.2013)	194,700	194,700
Volanka Exports (Pvt) Ltd.	Welipanna (31.03.2013)	18,006	18,006
Rileys Ltd.	Ekala (31.03.2013)	211,555	211,555
Toyo Cushion Lanka (Pvt) Ltd.	Katana (31.03.2013)	48,174	48,174
Sunfrost (Pvt) Ltd.	Allawwa (31.03.2013)	24,126	24,126
Hayleys MGT Knitting PLC	Neboda (31.03.2013)	18,149	18,149
Hayleys Electronics Lighting (Pvt) Ltd.	Hokandara (31.03.2013)	4,047	4,047
Hunas Falls PLC	Elkaduwa (31.03.2013)	1,353	1,353
Kandyan Resorts (Pvt) Ltd.	Kandy (31.03.2013)	55,556	55,556
The Beach Resorts Ltd.	Wadduwa (31.03.2013)	11,553	11,553
Alumex PLC	Makola (31.03.2013)	96,138	96,138
		8,349,638	8,349,638
Revaluation reserve attributable to Non-controlling interests		(392,397)	(392,397)
Share of revaluation reserve of equity accounted investees		101,833	101,833
		8,059,073	8,059,073
Changes in ownership interests in subsidiaries		23,526	34,732
		8,082,600	8,093,806

 

(v) Land owned by the Group is revalued as at 31st March, 2013 by an independent chartered valuation surveyor. The valuation had been carried out based on transactions observed in the market.

(vi) Land owned by the Group other than that mentioned above has been stated at cost as the appreciation in value is insignificant. Further information is provided on page 197. There are no tax implications or tax liabilities pertaining to revaluation of land.

(vii) There has been an impairment of property, plant & equipment amounting to Rs. 50.5 mn which is disclosed in Note 8 to the Financial Statements.

(viii) Property, plant & equipment with a carrying value of Rs. 12,996 mn (2013 - Rs. 5,750 mn) and Rs. Nil for the Group and Company respectively have been pledged as security for term loans obtained. The details are shown in Note 25 to the Financial Statements.

(ix) The carrying value of revalued land given above, had the said land been included at cost, would amount to Rs. 2,571 mn (2013 - Rs. 2,635 mn) for the Group and Rs. 7 mn (2013 - Rs. 7 mn) to the Company.

(x) The cost of fully depreciated Property plant & equipment which are still in use at the reporting date is as follows:

 

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Buildings	67,866	50,274	–	–
Machinery and equipment	2,494,433	1,734,865	38,237	15,700
Furniture, fittings & office equipment	822,974	982,714	153,088	94,827
Motor vehicles	171,501	238,057	5,603	–
	3,556,774	3,005,910	196,928	110,527

 

14.4 Capital Expenditure Commitments

The approximate amounts of capital expenditure approved by the Directors as at 31st March, 2014 were: Capital expenditure contracted for which no provision is made in the Financial Statements for the Group - Rs. 1,521 mn (2013 - Rs. 467 mn) and for the Company Rs. Nil (2013 - Nil). Capital expenditure approved by the Directors but not contracted for the Group Rs. 698 mn (2013 - Rs. 1,274 mn) and for the Company Rs. 86 mn (2013 - Rs. 62 mn).

15. Investment Properties

	Consolidated
	Land	Buildings	Total
As at 31st March,			2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Cost
At the beginning of the year	674,758	19,324	694,082	694,082
Additions	313	3,366	3,679	–
Acquisitions through business combinations	210,000	315,518	525,518	–
Transfer from property, plant & equipment	196,765	128,318	325,083	–
At the end of the year	1,081,836	466,526	1,548,362	694,082
Depreciation
At the beginning of the year	–	6,041	6,041	5,721
Charge for the year	–	3,150	3,150	320
Acquisitions through business combinations	–	25,518	25,518	–
Transfer from property, plant & equipment	–	60,209	60,209	–
At the end of the year	–	94,918	94,918	6,041
Net book value	1,081,836	371,608	1,453,444	688,041

 

15.1 Rental Income

	Consolidated
	2014	2013
	Rs. ’000	Rs. ’000
Rental income derived from investment properties	28,180	15,381
Direct operating expenses generating rental income	(4,581)	–
Direct operating expenses that did not generate rental income	–	–
Net profit arising from investment properties	23,599	15,381

15.2

  Investment property is stated at cost. The fair value of Investment property based on a valuation performed as at 31st March, 2013 by Mr. P.B. Kalugalgedara (Chartered Valuation Surveyor & Estate Agents), an accredited independent, industry specialist is given below. The valuations had been carried out based on transactions observed in the market.

The details of fair value of investment property of the Group.

Company	Location	Building Area (Sq. Ft.)	Land in Acres	Value of Building Rs. ’000	Value of land Rs. ’000	Total Rs. ’000
Hayleys Fibre PLC	‘Ekala Estate’, Minuwangoda Road, Ekala	53,880	6.30	7,382	251,900	259,282
Haycarb PLC	333/25, New Road Hunuputiya Wattala	12,240	0.97	5,901	54,460	60,361
Carbotels (Pvt) Ltd.	Weyagala Estate, Elkaduwa, Matale	–	65.06	–	34,600	34,600
Eastern Hotels (Pvt) Ltd .	Nilakarai Estate, Nilaweli, Trincomalee	–	23.47	–	432,000	432,000
Hayleys Advantis Group	49/4 -18A, Galle Road, Kollupitiya	2,450	–	38,020	–	38,020
	46/12, Sayuru Sevana, Nawam Mawatha, Colombo 2	45,980	0.24	90,000	400,000	490,000
Dipped Products PLC	Nadungamuwa ,Weliweriya	5,029	7.85	10,058	75,312	85,370
Venigros (Pvt) Ltd.	Nadungamuwa, Weliweriya	56,151	7.09	105,076	56,755	161,831
Toyo Cushion Lanka (Pvt) Ltd.	105, Thimbirigaskatuwa Road, Katana	27,945	3.40	23,658	64,698	88,356

15.3

  The Group has no restriction on the realisability of its investment property and no contractual obligations to either purchase, construct or develop Investment property or for maintenance and enhancement.

15.4

  Directors believe that there are no significant differences in the market values compared to last year.

16. Biological Assets

	Consolidated
As at 31st March,	2014	2013
	Rs. ’000	Rs. ’000
At the beginning of the year	235,020	192,112
Increase due to development	4,572	11,697
Change in fair value of biological assets	28,065	31,171
Decrease due to harvest	(1,149)	–
Transfer from receivables	–	40
At the end of the year	266,508	235,020

 

Managed trees include commercial timber plantations cultivated on estates. The cost of immature trees is treated at approximate fair value particularly on the ground that little biological transformation has taken place and impact of the biological transformation on price is not material. When such plantations become mature, the additional investments taken over to bring them to maturity are transferred from Immature to Mature.

The fair value of managed trees was ascertained in accordance with LKAS 41 which is applicable only for managed agricultural activity in terms of the ruling issued by The Institute of Chartered Accountants of Sri Lanka. The valuation was carried out by Messrs Sunil Fernando Associates, chartered valuers, using discounted cash flow methods. In ascertaining the fair value of timber a physical verification was carried out covering all the estates.

16.1 Key Assumptions Used in Valuation

1. The harvesting is approved by the PMMD and Forest Department based on the forestry development plan.
2. The prices adopted are net of expenditure.
3. Discount rate is 17.5%.
4. Compounding rate is 14%
5. Though the replanting is a condition precedent for harvesting, yet the costs are not taken into consideration.

The valuations, as presented in the external valuation models based on net present values, take into account the long-term exploitation of the timber plantations. Because of the inherent uncertainty associated with the valuation at fair value of the biological assets due to the volatility of the variables, their carrying value may differ from their realisable value. The Board of Directors retains the view that commodity markets are inherently volatile and that long-term price projections are highly unpredictable. Hence, the sensitivity analysis regarding selling price and discount rate variations as included in this note allows every investor to reasonably challenge the financial impact of the assumptions used in LKAS 41 against his own assumptions.

The carrying amount of biological assets pledged as securities for liabilities is nil for the year 2014 (2013 – nil).

16.2 Sensitivity Analysis

Sensitivity variation on sales price

Values as appearing in the Statement of Financial Position are very sensitive to price changes with regard to the average sales prices applied. Simulations made for timber, show that an increase or a decrease by 10% of the estimated future selling price has the following effect on the net present value of biological assets:

Sales price fluctuation

+10%

0

-10%

Managed Timber	Rs. ’000	Rs. ’000	Rs. ’000
As at 31st March, 2014	263,599	256,568	252,954
As at 31st March, 2013	239,803	225,384	212,753

 

Sensitivity variation on discount rate

Values as appearing in the Statement of Financial Position are very sensitive to changes of the discount rate applied. Simulations made for timber show that an increase or a decrease by 1.5% of the estimated discount rate has the following effect on the net present value of biological assets:

Discounting rate fluctuation

+1.5%

0

-1.5%

Managed Timber	Rs. ’000	Rs. ’000	Rs. ’000
As at 31st March, 2014	254,276	256,568	258,631
As at 31st March, 2013	224,651	225,384	227,809

 

17. Intangible Assets

	Right to generate hydro power/ development cost	Goodwill	ERP system	Brand name	Customer list	Operating Lease	Consolidated
							Total
As at 31st March,							2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Cost
At the beginning of the year	97,790	3,819,420	266,886	148,183	152,420	1,177,111	5,661,810	5,400,645
Acquisition through business combinations	–	215,857	–	–	–	–	215,857	138,595
Additions	–	–	86,201	–	–	–	86,201	128,046
Disposals	–	–	(5,016)	–	–	–	(5,016)	(3,181)
Effect of movements in exchange rates	–	–	3,195	–	–	–	3,195	(2,296)
At the end of the year	97,790	4,035,277	351,266	148,183	152,420	1,177,111	5,962,047	5,661,810
Amortisation
At the beginning of the year	18,725	136,095	100,887	–	30,484	59,681	345,872	236,265
Amortisation for the year	5,578		44,503		31,500	19,555	101,136	110,039
Impairment for the year	–	9,864	–	–	–	–	9,864	–
Disposals	–	–	(2,910)	–	–	–	(2,910)	–
Effect of movements in exchange rates	–	–	1,361	–	–	–	1,361	(433)
At the end of the year	24,303	145,959	143,841	–	61,984	79,236	455,323	345,872
Net book value	73,487	3,889,318	207,425	148,183	90,436	1,097,875	5,506,724	5,315,938
Capital work in progress	–	–	34,563	–	–	–	34,563	42,610
Carrying amount							5,541,287	5,358,548

(i) The aggregate carrying amount of goodwill allocated to each unit is as follows:

	Rs. mn
Dipped Products PLC	97
Dipped Products’ Group Companies	33
Advantis Group Companies	314
Haycarb Group Companies	202
Hunas Falls Hotels PLC	8
The Kingsbury PLC	633
Hayleys Plantation Services (Pvt) Ltd.	134
Alumex PLC	1,052
Amaya Leisure PLC	1,415
	3,889

 

(ii) There has been an impairment of goodwill arising from Halyex BV Group amounting to Rs. 9.9 mn which is disclosed in Note 8 to the Financial Statements. Methods used in estimating recoverable amounts are given below:

The recoverable values of Dipped Products PLC, Hunas Falls Hotels PLC and Haycarb group were based on fair value less cost to sell and the others were based on value in use. Value in use was determined by discounting the future cash flows generated from the continuing use of the unit and key assumptions used are given below:

Business growth	Based on historical growth rate and business plan
Inflation	Based on the current inflation rate and the percentage of the total cost subject to inflation
Discount rate	Average market borrowing rate adjusted for risk premium
Margin	Based on current margin and business plan

(iii) Remaining amortisation period of Rights to Generate Hydropower excluding development cost amounting to Rs. 35.772 mn.

Remaining amortisation period	Carrying amount Rs. ’000
95 months	2,512
116 months	1,718
155 months	33,485
Total	37,715

 

(iv) The Group has recognised an intangible asset in respect of operating leases acquired from the acquisition of The Kingsbury PLC and Amaya Leisure PLC since the terms of operating leases are favourable relative to market terms.

Intangible asset from Leasehold right is the revalued value of land over the present value of future lease rentals to be paid.

The Kingsbury PLC - 55 years

Amaya Leisure PLC - 21 years

(v) The Group has recognised an intangible asset for the Amaya chain of hotels from the acquisition of Amaya Leisure PLC. ‘Amaya’ brand name is a well established name in the leisure sector. Management is of the opinion that the brand name will be a key attraction in the future booming leisure sector.

(vi) The Group has recognised an intangible asset in respect of customer relationship through the acquisition of Amaya Leisure PLC. The established customer lists of Amaya Hotels is acknowledged as a key component in generation of revenue through travel agents and tour operators. The management is of the opinion that the company is capable of retaining the travel agents through business relationship strategies and this would ensure retention and lead to repeat business over the future years and inflow of future economic benefits from them.

18. Investments

18.1 Company Investment in Subsidiaries

	% Holding		No. of Shares			Value Rs. ’000
	2014	2013	2014	Movement	2013	2014	Movement	2013
Investee
Quoted investments*
Haycarb PLC (Rs. 3,643 mn)	68	68	20,125,103	–	20,125,103	47,204	–	47,204
Hayleys Fibre PLC (Rs. 139 mn)	65	65	5,200,000	–	5,200,000	3,575	–	3,575
Dipped Products PLC (Rs. 2,170 mn)	42	42	24,910,938	8,865	24,902,073	378,761	986	377,775
Hayleys MGT Knitting Mills PLC (Rs. 1,221 mn)	79	79	119,683,817	–	119,683,817	1,393,061	–	1,393,061
Amaya Leisure PLC (Rs. 1,400 mn)	40	40	19,366,234	–	19,366,234	2,084,086	–	2,084,086
Alumex PLC (Rs. 2,168 mn)	51	60	152,644,500	151,444,490	1,200,010	1,277,353	(109,552)	1,386,905
The Kingsbury PLC (Rs. 1,438 mn )	46	38	112,307,057	45,544,367	66,762,690	1,864,073	455,444	1,408,629
			454,237,649	196,997,722	257,239,927	7,048,113	346,878	6,701,235
Unquoted investments
Hayleys Photoprint (Pvt) Ltd.	100	100	6	–	6	–	–	–
Haylex BV	100	100	1,000	–	1,000	25,733	–	25,733
Chas P. Hayley & Co. (Pvt) Ltd.	100	100	999,920	–	999,920	698	–	698
Ravi Industries (Pvt) Ltd.	86	86	10,783,258	9,508	10,773,750	15,631	376	15,255
Hayleys Group Services Ltd.	100	100	10,000	–	10,000	100	–	100
Hayleys Electronics Ltd.	98	98	951,855	–	951,855	95,687	–	95,687
Dean Foster (Pvt) Ltd.	49	49	5,882,351	–	5,882,351	9,904	–	9,904
Hayleys Advantis Ltd.	94	93	33,929,759	286,102	33,643,657	347,525	16,089	331,436
Volanka Exports (Pvt) Ltd.	4	4	118,255	205	118,050	1,989	7	1,982
Sunfrost (Pvt) Ltd.	5	5	423,300	–	423,300	4,233	–	4,233
Rileys (Pvt) Ltd.	6	6	2,500,000	–	2,500,000	10,333	–	10,333
Volanka (Pvt) Ltd.	62	62	6,440	–	6,440	23,107	–	23,107
Toyo Cushion Lanka (Pvt.) Ltd.	19	18	1,217,081	1,955	1,215,126	13,135	55	13,080
Hayleys Produce Marketing Ltd.	100	100	250,000	–	250,000	2,532	–	2,532
Carbotels (Pvt) Ltd.	75	75	27,578,769	–	27,578,769	308,004	–	308,004
HJS Condiments Ltd.	9	9	1,137,564	5,993	1,131,571	13,985	141	13,844
Hayleys Agriculture Holdings Ltd.	97	97	18,946,136	97,934	18,848,202	252,481	6,175	246,306
Hayleys Consumer Products Ltd.	99	99	19,389,879	40,865	19,349,014	250,773	744	250,028
Hayleys Industrial Solutions (Pvt) Ltd.	100	100	38,748,400	–	38,748,400	387,484	–	387,484
Hayleys Business Solutions International (Pvt) Ltd.	100	100	15,000,000	–	15,000,000	150,000	–	150,000
Haydea Business Solutions (Pvt) Ltd.	100	0	249,999	249,999	–	2,500	2,500	–
Hayleys Leisure Holdings (Pvt) Ltd.	100	100	2,000,000	–	2,000,000	20,000	–	20,000
Nirmalapura Wind Power (Pvt) Ltd.	30	30	29,900,000	–	29,900,000	154,204	–	154,204
Quality Seeds Co. Ltd.	74	74	1,878,000	–	1,878,000	3,707	–	3,707
			211,901,972	692,561	211,209,411	2,093,745	26,087	2,067,657
Company investment in subsidiaries (at cost)			666,139,621	692,561	468,449,338	9,141,858	372,964	8,768,892
Provision for fall in value of investments made by the Company
Hayleys Electronics (Pvt) Ltd.						(95,687)	–	(95,687)
Company investment in subsidiary						9,046,171	372,964	8,673,205

*Figures in brackets indicate market value of Quoted investments.

(i) Countries of incorporation of overseas subsidiaries are given in Note 18.3.

 

18.2 Company/Group Investment in Equity Accounted Investees

Investor	Investee	% Holding		No. of Shares		Value Rs. ’000
		2014	2013	2014	2013	2014	2013
Unquoted investments
Hayleys PLC
	World Call Telecommunications Lanka (Pvt) Ltd.	26	26	2,700,000	2,700,000	27,000	27,000
Company Investment in equity accounted investees (at cost)
Provision for impairment of investments
	World Call Telecommunications Lanka (Pvt) Ltd.					(27,000)	(27,000)
Carrying value of company investment in equity accounted investees						–	–
Unquoted Investments
Carbotels Ltd.	Negombo Hotels Ltd.	30	30	60,000	60,000	127,794	127,794
Hayleys Photoprint Ltd.	World Call Telecommunications Lanka (Pvt) Ltd.	3	3	300,000	300,000	3,000	3,000
Hayleys Advantis Group	Yusen Logistics & Kusuhara ( Pvt) Ltd.	49	49	195,000	195,000	1,950	1,950
Volanka Exports Ltd.	PT Tulus Lanka Coir Industries	45	45	164,250	164,250	17,776	17,776
						150,520	150,520
						177,520	177,520
Provision for fall in value of investments
	PT Tulus Lanka Coir Industries					(17,776)	(17,776)
	World Call Telecommunication Lanka (Pvt) Ltd.					(27,000)	(27,000)
Group investments in Equity accounted investees (at cost)						132,744	132,744

 

	Consolidated
	Investment at cost		Share of post acquisition profit/(loss) & MI Adj.		Net assets
As at 31st March,	2014	2013	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Carbotels equity accounted investees	127,794	127,794	(18,829)	3,985	229,044	247,873
World Call Telecommunications Lanka (Pvt) Ltd.	30,000	30,000	–	–	–	–
Yusen Logistics & Kusuhara ( Pvt) Ltd.	1,950	1,950	(2,638)	251	18,292	20,930
PT Tulus Lanka Coir Industries	17,776	17,776			10,091	10,091
	177,520	177,520	(21,467)	4,236	257,427	278,894
Transferred to other long-term investments	–	–	–	–	(10,091)	(10,091)
Group investments in equity accounted investee	177,520	177,520	(21,467)	4,236	247,336	268,803

(i) Summarised financial information of equity accounted investees has not been adjusted for group share:

As at 31st March,	2014	2013
	Rs. ’000	Rs. ’000
Assets and liabilities
Total assets	2,326,534	2,398,769
Total liabilities	(1,487,701)	(1,533,484)
Net assets	838,833	865,285
Revenue and profit
Total revenue	1,561,209	1,865,587
Total profit after tax	6,805	1,412
Total comprehensive income	6,480	1,201

(ii) The Company has neither contingent liabilities nor capital commitments in respect of it’s equity accounted investees.
(iii) The Group has not recognised following shares of its losses in respect of its equity investments, since the Group has no further obligation in respect of those losses beyond its investments.

	Cumulative		For the Year
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
World Call Telecommunications Lanka (Pvt) Ltd.	(31,290)	(31,290)	–	(651)
	(31,290)	(31,290)	–	(651)

(iv) Countries of incorporation of overseas equity accounted investees are given in Note 18.3.

18.3 Countries of Incorporation of Overseas Subsidiaries and Equity Accounted Investees

Countries of incorporation of companies incorporated outside Sri Lanka are stated in brackets against the Company names.

Haychem (Bangladesh) Ltd. (Bangladesh), PT Mapalus Makawanua Charcoal Industry (Indonesia), Haycarb Holdings Bitung Ltd. (British Virgin Island), Eurocarb Products Ltd. (UK), Haycarb Holdings Australia (Pty) Ltd. (Australia), Haymark Inc. (USA), Carbokarn Co. Ltd. (Thailand), Shizuka Co. Ltd (Thailand), Haylex BV Group (Netherlands,Japan & UK), Dipped Products (Thailand) Ltd (Thailand), CK Regen Systems Co. Ltd (Thailand), ICO Guanti SpA (Italy), PT Tulus Lanka Coir Industries (Indonesia), Logiwiz Logistics India (Pvt) Ltd. (India), Civaro Freight India (Pvt) Ltd. (India), and Charles Fibre ( Pvt) Ltd. (India). Haylex USA (USA), PT Haycarb Palu Mitra (Indonesia), Puricarb Pte Ltd (Singapore).

18.4 Inter-Company Shareholdings

Investor	Investee	% Holding		No. of Shares
		2014	2013	2014	2013
Agro Technica Ltd.	Sunfrost (Pvt) Ltd.	1	1	75,000	75,000
Chas P. Hayley & Co. (Pvt) Ltd.	Toyo Cushion Lanka (Pvt) Ltd.	3	3	169,267	169,267
	Hayleys Electronics (Pvt) Ltd.	2	2	14,975	14,975
	Lignocell (Pvt) Ltd.	100	100	12,000,000	12,000,000
Dean Foster (Pvt) Ltd.	Volanka (Pvt) Ltd.	38	38	3,920	3,920
	Hayleys Advantis Group	1	1	488,369	488,369
	Chas P. Hayley & Co. (Pvt) Ltd.	–	–	80	80
	Alumex PLC	5	–	14,213,900	–
	Amaya Leisure PLC	21	21	10,252,300	10,252,300
Dipped Products PLC	Palma Ltd.	100	100	4,000,000	4,000,000
	Grossart (Pvt) Ltd.	100	100	4,200,000	4,200,000
	Venigros (Pvt) Ltd.	100	100	8,000,000	8,000,000
	Feltex (Pvt) Ltd.	100	100	1,500,000	1,500,000
	DPL Plantations (Pvt) Ltd.	100	100	55,000,000	55,000,000
	Neoprex (Pvt) Ltd.	100	100	4,000,000	4,000,000
	Dipped Products (Thailand) Ltd. (100 Bhat)	99	99	4,516,248	4,516,248
	Texnil (Pvt) Ltd.	100	100	7,500,000	7,500,000
	ICOGuanti SpA (Italy) (€1 - each)	61	61	2,016,667	2,016,667
	Hanwella Rubber Products Ltd.	73	73	18,152,000	18,152,000
	DPL Premier Gloves Ltd.	100	–	30,000,001	–
DPL Plantations Ltd.	Kelani Valley Plantations PLC	71	71	24,200,000	24,200,000
	Hayleys Plantation Services (Pvt) Ltd.	67	67	13,400,000	13,400,000
Haycarb PLC	Dipped Products PLC	7	7	4,068,746	4,068,746
	Eurocarb Products Ltd. (UK) (£1 - each)	100	100	100,000	100,000
	Haycarb Value Added Products (Pvt) Ltd.	100	100	40,000,000	25,000,000
	Haycarb Holdings Australia (Pty.) Ltd. (Aus $ 1 - each)	100	100	150,000	150,000
	Carbotels (Pvt) Ltd.	25	25	9,290,341	9,290,341
	Carbocarn Co. Ltd. (100 Baht, 72% paid-up)	50	50	250,000	250,000
	Puritas (Pvt) Ltd.	100	100	700,000	700,000
	Recogen (Pvt) Ltd.	100	100	37,000,000	37,000,000
	Haymark Inc. (Texas, USA)	100	100	3,600,000	3,600,000
	Haycarb Holdings Bitung Ltd. ($ 1 - each)	100	100	1,400,000	1,400,000
	PT Mapalus Makawana Charcoal Industry (IDR 1,000,000)	2	2	707	707
	Ultracarb (Pvt) Ltd.	100	100	25,000,000	20,000,000
	Quality Seeds Co. Ltd.	6	6	147,000	147,000
	PT Haycarb Palu Mitra	60	–	1,290,000	–
Carbocarn Co. Ltd.	CK Regen Systems Co. Ltd.	100	100	150,000	150,000
	Shizuka Co. Ltd.	100	100	200,000	200,000
Puritas (Pvt) Ltd.	Lakdiyatha (Pvt) Ltd.	49	49	2,450,000	2,450,000
	Puricarb (Pte) Ltd.	100	–	1	–
Haycarb Holdings Bitung Ltd.	PT Mapalus Makawana Charcoal Industry (IDR 1,000,000)	98	98	36,935	36,935
Hayleys Agriculture Holdings Ltd.	Agro Technica Ltd.	93	93	2,329,894	2,329,894
	Haychem (Pvt) Ltd.	-	100	–	4,400,000
	Hayleys Agro Fertilizers (Pvt) Ltd.	100	100	4,999,999	4,999,999
	Hayleys Agro Farms (Pvt) Ltd.	100	100	1,500,000	1,500,000
	Hayleys Agro Bio-Tech (Pvt) Ltd.	100	100	7,499,999	7,499,999
	HJS Condiments Ltd.	59	59	7,399,343	7,399,343
	Sunfrost (Pvt) Ltd.	93	93	7,445,000	7,445,000
	Haychem Bangladesh Ltd.	100	100	90,702	90,702
	Hayleys Mgt Knitting Mills PLC	2	2	2,546,322	2,546,322
	Quality Seeds Co. Ltd.	20	20	500,000	500,000
Hayleys Fibre PLC	Toyo Cushion Lanka (Pvt) Ltd.	16	16	1,015,602	1,015,602
	Bonterra Lanka Ltd.	50	50	803,394	803,394
	Rileys (Pvt) Ltd.	19	19	7,750,000	7,750,000
Hayleys Industrial Solutions (Pvt) Ltd.	Haycolour (Pvt) Ltd.	100	100	60,000	60,000
	Hayleys Lifesciences Ltd.	100	100	3,000,001	3,000,001
	Power Engineering Solutions (Pvt) Ltd.	100	100	320,001	320,001
	Nirmalapura Wind Power (Pvt) Ltd.	21	21	21,100,000	21,100,000
	Hydro Power (Pvt) Ltd.	100	100	25,067,241	16,417,241
	Neluwa Upper Hydro Power (Pvt) Ltd.	50	50	1	1
Hayleys Hydro Energy (Pvt) Ltd.	Neluwa Cascade Hydro (Pvt) Ltd.	100	100	11,910,001	11,910,001
	Neluwa Upper Hydro Power (Pvt) Ltd.	50	50	1	1
Hayleys Plantation Services (Pvt) Ltd.	Talawakelle Tea Estates PLC	75	75	17,750,000	17,750,000
Talawakelle Tea Estates PLC	TTEL Hydro Power (Pvt) Ltd.	51	51	3,519,000	3,519,000
	TTEL Summerset Hydro Power (Pvt) Ltd.	51	51	3,060,000	3,060,000
Hayleys Advantis Group	Sunfrost (Pvt) Ltd.	1	1	50,000	50,000
	International Consumer Brand Ltd.	100	100	2,999,995	2,999,995
	Hayleys MGT Knitting Mills PLC	2	2	3,693,690	3,693,690
Ravi Industries (Pvt) Ltd.	Rileys (Pvt) Ltd.	31	31	12,250,000	12,250,000
	Dipped Products PLC	1	1	567,000	567,000
	Ravi Marketing Services Ltd.	100	100	9,994	9,994
Rileys (Pvt) Ltd.	Haymat (Pvt) Ltd.	54	54	215,998	215,998
	Creative Polymats (Pvt) Ltd.	100	100	4,999,994	4,999,994
Toyo Cushion Lanka (Pvt) Ltd.	Dean Foster (Pvt) Ltd.	2	2	235,294	235,294
	Super Felt (Pvt) Ltd.	–	100	–	4,680,000
	Amaya Leisure PLC	2	2	816,400	816,400
Volanka (Pvt) Ltd.	Dipped Products PLC	8	8	4,873,640	4,873,640
	Toyo Cushion Lanka (Pvt) Ltd.	21	21	1,455,832	1,455,832
	Dean Foster (Pvt) Ltd.	49	49	5,882,353	5,882,353
	Volanka Exports Ltd.	95	95	2,899,994	2,899,994
	Volanka Insurance Brokers (Pvt) Ltd.	100	100	58,994	58,994
	Rileys (Pvt) Ltd.	44	44	17,500,000	17,500,000
Carbotels (Pvt) Ltd.	Hunas Falls Hotels PLC	50	50	2,824,820	2,824,820
	Eastern Hotel (Pvt) Ltd.	96	96	894,304	894,304
	The Kingsbury PLC	13	13	31,625,000	23,000,000
Volanka Exports Ltd.	O E Techniques Ltd.	100	100	9,993	9,993
	Amaya Leisure PLC	1	1	642,900	642,900
Kelani Valley Plantations PLC	Kalupahana Power Project Co. (Pvt) Ltd.	60	60	1,800,000	1,800,000
	Kelani Valley Instant Tea (Pvt) Ltd.	100	95	3,000,000	2,850,000
	Mabroc Teas (Pvt) Ltd.	100	100	9,000,000	9,000,000
	Hayleys Global Beverage (Pvt) Ltd.	100	100	1	1
Hayleys Group Services (Pvt) Ltd.	Hayleys Mgt Knitting PLC	1	1	508,933	508,933
Hayleys Leisure Holdings (Pvt) Ltd.	Air Global (Pvt) Ltd.	100	100	999,995	999,995
	Millennium Transportation (Pvt) Ltd.	100	100	99,999	99,999
	North South Lines (Pvt) Ltd.	100	100	134,999	134,999
	Hayleys Travels and Tours (Pvt) Ltd.	100	100	1,779,999	1,779,999
Alumex PLC	Alutec Extrusions (Pvt) Ltd.	–	100	–	10,000,000
	Avro Enterprises (Pvt) Ltd.	100	100	25,002	25,002
	Alco Industries (Pvt) Ltd.	100	100	3,000,002	3,000,002
Hayleys Consumer Products (Pvt) Ltd.	Global Consumer Brands (Pvt) Ltd.	100	100	17,599,999	17,599,999
	Hayleys Electronics Lighting (Pvt) Ltd.	100	100	599,999	599,999
Amaya Leisure PLC	Kandyan Resorts (Pvt) Ltd.	100	100	29,784,365	29,784,365
	Culture Club Resorts (Pvt) Ltd.	100	100	27,779,002	27,779,002
	Connaissance Air Travels (Pvt) Ltd.	100	100	100,003	100,003
	The Beach Resorts Ltd.	84	84	6,176,790	6,176,790
	Hunas Falls Hotels PLC	16	16	899,000	899,000
Hayleys Power Ltd.	Bhagya Hydro (Pvt.) Ltd.	100	100	3,499,999	3,499,999
	Hayleys Hydro Energy (Pvt.) Ltd.	51	51	6,120,001	6,120,001
	TTEL Hydro Power (Pvt) Ltd.	49	49	3,366,300	3,366,300
	Kiridiweldola Hydro Power (Pvt) Ltd.	100	100	321,860	121,860
	TTEL Summerset Hydro Power (Pvt) Ltd.	49	49	2,940,000	2,940,000
	Anningkanda Hydro Power (Pvt) Ltd.	100	100	319,080	119,080
	Hayleys Neluwa Hydro Power (Pvt) Ltd.	100	–	8,000,000	–
	Lindula Hydro Power (Pvt) Ltd.	100	–	250,000	–

 

19. Other Financial Assets and Financial Liabilities

19.1 Other Non-Current Financial Assets

	Consolidated					Company
	Available-for-sale investments		Loans and receivables			Available-for-sale investments
	Unquoted equity	Quoted equity	Receivables from finance	Total		Unquoted shares	Total
As at 31st March,	shares	shares	lease	2014	2013		2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
At the beginning of the year	211,338	66,575	89,057	366,970	385,651	179,174	179,174	191,644
Transfer to investments in subsidiary	–	–	–	–	(354)	–	–	–
Transfer to other non-current assets	(24,000)	–	–	(24,000)	–	–	–	–
Impairment	(12,470)	–	–	(12,470)	(15,020)	(12,470)	(12,470)	(12,470)
Repayment	–	–	(10,090)	(10,090)	(7,556)	–	–	–
Interest income	–	–	11,577	11,577	11,115	–	–	–
Change in fair value	2,312	(10,142)	–	(7,830)	(6,866)	–	–	–
At the end of the year	177,180	56,433	90,544	324,157	366,970	166,704	166,704	179,174

19.1.1 Investment Details

Investor	Investee	No. of Shares		Value (Rs. ’000)
		2014	2013	2014	2013
Unquoted equity shares - Available-for-sale investments
Hayleys PLC	Prudentia Investment Corporation Ltd.	–	4,215,000	–	42,150
	Impairment in Prudentia Investment Corporation Ltd.	–	–	–	(42,150)
	AES Kelanitissa (Pvt) Ltd.	24,940,613	24,940,613	124,704	137,174
	Sri Lanka Institute of Nanotechnology (Pvt) Ltd.	3,810,182	3,810,182	42,000	42,000
Hayleys Industrial Solutions (Pvt) Ltd.	350,000 shares in Hydro Trust Lanka (Pvt) Ltd.	350,000	350,000	3,500	3,500
Dipped Products PLC	Wellassa Rubber Company Ltd.	255,000	255,000	2,550	2,550
	Impairment in Wellassa Rubber Company Ltd.			(2,550)	(2,550)
Haycarb Group	Barrik Gold Corporation - Aus. 27.20 each	3,456	3,456	94	94
Hayleys Advantis Group	SLAFFA Cargo Services Ltd.	38,571	38,571	6,882	4,570
Amaya Leisure PLC	Lake Lodge Resort (Pvt) Ltd.			24,000	24,000
	Transfers to other non-current assets	–	–	(24,000)	–
Total				177,180	211,338
Quoted equity shares - Available-for-sale investments
Dipped Products PLC	Royal Ceramic Lanka PLC	1,100	1,100	22	22
Hayleys Advantis Group	Ceybank Unit Trust	200,000	200,000	5,442	5,074
	Pyramid Unit Trust	200,000	200,000	6,218	5,848
	Comtrust Equity Fund	200,000	200,000	3,388	3,732
Amaya Leisure PLC	Royal Ceramic Lanka PLC	521,600	521,600	41,363	51,899
Total				56,433	66,575
Loans and Receivables
Haycarb PLC				90,544	89,057

19.2 Other Current Financial Assets

					Consolidated
	Available-for-sale investments		Financial instruments at fair value through profit or loss
	Unquoted equity shares	Quoted equity shares	Foreign exchange	Quoted equity shares	Total
As at 31st March,			forward contract		2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
At the beginning of the year	5,299	3,243	963	40,233	49,738	175,703
Additions	–	–	–	5,517	5,517	–
Acquisition through business combinations	–	–	–	15,761	15,761	–
Impairment for the year	(5,299)	–	–	–	(5,299)	–
Disposals	–	–	–	(13,004)	(13,004)	(18,096)
Change in fair value	–	1,154	(905)	426	675	(107,869)
At the end of the year	–	4,397	58	48,933	53,388	49,738

	Company
	Financial instruments at fair value through profit or loss
	Quoted equity shares
As at 31st March,	2014	2013
	Rs. ’000	Rs. ’000
At the beginning of the year	22,778	32,240
Disposals	(2,696)	(8,866)
Change in fair value	1,824	(596)
At the end of the year	21,906	22,778

19.2.1 Investment Details

Investor	Investee	No. of Shares		Value
		2014	2013	2014	2013
		Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Unquoted equity shares - Available-for-sale investments
Mabroc Teas (Pvt) Ltd.	Mabroc International (Pvt) Ltd.			732	732
	Impairment in Mabroc International (Pvt) Ltd.			(732)	–
	Mabroc Japan Co.			4,567	4,567
	Impairment in Mabroc Japan Co.			(4,567)	–
				–	5,299
Quoted equity shares - Available-for-sale investments
Advantis Group	Textured Jersey Lanka PLC	160,000	160,000	2,527	1,584
	Union Bank PLC	100,000	100,000	1,870	1,660
		260,000	260,000	4,397	3,244
Foreign exchange forward contract
Dipped Products PLC				–	838
Haycarb PLC				–	125
Ravi Industries Ltd.				58	–
				58	963
Quoted equity shares - Fair value through profit or loss
Hayleys PLC	Aitken Spence Hotel Holdings PLC	112	112	8	8
	ACL Cables PLC	260	260	16	17
	Asiri Hospital Holdings PLC	–	49	–	17
	Central Industries PLC	7,957	7,957	454	497
	Ceylon Cold Stores PLC	252	252	35	34
	DFCC Bank PLC	338	338	49	44
	Kelani Tyres PLC	17,200	17,200	898	593
	Lanka Orix Leasing Co. PLC	1,520	1,520	114	87
	National Development Bank PLC	20,681	20,681	3,694	3,412
	Three Acre Farms PLC	1,840	1,840	73	78
	Overseas Realty (Ceylon) PLC	70,000	70,000	1,435	980
	Pan Asia Power PLC	1,600,000	1,600,000	3,520	4,320
	Access Engineering PLC	400,000	400,000	9,000	7,880
	Hatton National Bank PLC - Non-Voting	15,000	15,000	1,800	1,977
	Hatton National Bank PLC	5,000	5,000	750	837
	Environmental Resources Investment PLC	5,000	5,000	62	78
	Hunter & Company PLC	–	1,500	–	463
	Seylan Bank PLC	–	350	–	108
	Textured Jersey Lanka PLC	–	136,100	–	1,347
		2,145,160	2,283,159	21,906	22,778
Dean Foster (Pvt) Ltd.	ACL Cables PLC	4,120	4,120	263	270
	Asiri Hospital Holdings PLC	270	270	6	3
	Bairaha Farms PLC	900	900	132	135
	Blue Diamonds Jewellery Worldwide PLC	13	13	0	0
	Central Industries PLC	900	900	51	56
	Nation Lanka Finance PLC	1,300	1,300	10	12
	AIA Insurance Lanka PLC	–	30	–	11
	Lanka Orix Leasing Company PLC	3,280	3,280	246	187
	Three Acre Farms PLC	2,000	2,000	79	85
	Kelani Tyres PLC	2,000	2,000	104	69
	Vanik Incorporation PLC - Voting	7,500	7,500	6	6
	- Non-Voting	5,000	5,000	4	4
	Seylan Bank PLC	43	43	3	3
	Browns Investments PLC	186,200	186,200	428	614
	Textured Jersey Lanka PLC	136,100	136,100	2,150	1,347
		349,626	349,656	3,484	2,801
Advantis Group	Commercial Bank of Ceylon PLC	20,000	–	2,460	–
	John Keells Holdings PLC	5,195	–	1,179	–
	DFCC Bank PLC	14,500	–	1,439	–
	Hatton National Bank PLC - Non-Voting	15,429	–	1,200	–
	- Voting	10,000	–	1,500	–
	NDB Bank PLC	10,000	–	1,786	–
	Beruwala Resort PLC	1,000,000	–	1,600	–
	Union Bank of Colombo PLC	6,800	–	7	–
		1,081,924	–	11,171	–
Amaya Leisure PLC	The Fortress Resorts PLC	90,075	90,075	1,198	1,351
	LB Finance PLC	20	20	2	3
	Free Lanka Capital Holdings PLC	5,320,000	5,320,000	11,172	13,300
		5,410,095	5,410,095	12,372	14,654
	Total			48,933	40,233

19.3 Other Current Financial Liabilities

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Financial instruments at fair value through profit or loss
Foreign exchange forward contracts	58,653	–	58,653	–
Total other current financial liabilities	58,653	–	58,653	–

19.4 Fair Value Hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

As at 31st March, 2014, the Group held the following financial instruments carried at fair value in the Statements of Financial Position:

	2014	Level 1	Level 2	Level 3
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Assets measured at fair value
Available-for-sale financial investments:
Unquoted equity shares	177,180	–	–	177,180
Quoted equity shares	60,830	60,830	–	–
Financial assets at fair value through profit or loss:
Foreign exchange forward contract	58	–	58	–
Quoted equity shares (Note 19.1 and 19.2)	48,933	48,933	–	–
Liabilities measured at fair value
Financial liabilities at fair value through profit or loss
Foreign exchange forward contracts	58,653	–	58,653	–

During the reporting period ended 31st March, 2014 there were no transfers between Level 1 and Level 2 fair value measurements.

Reconciliation of fair value measurements of Level 3 financial instruments

The Group carries unquoted equity shares as available-for-sale financial investments classified as Level 3 within the fair value hierarchy.

The Group has equity interests in unlisted entities with which it entered into a collaboration agreement. As part of the agreement, the Group invested in equity instruments of these entities.

A reconciliation of the beginning and closing balances including movements is summarised below:

	Rs. ’000
Balance as at 1st April, 2013	211,338
Impairment	(12,470)
Transfers to other non-current assets	(24,000)
Change in fair value	2,312
Balance as at 31st March, 2014	177,180

19.5 Fair Values

Set out below is a comparison by class of the carrying amounts and fair values of the Group’s financial instruments that are carried in the Financial Statements.

	Consolidated		Company
	Carrying Value	Fair Value	Carrying Value	Fair Value
As at 31st March,	2014		2014
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Financial Assets
Other non-current financial assets
Available-for-sale investments	233,613	233,613	166,704	166,704
Loans and receivables	90,544	102,977	–	–
Other current financial assets
Available-for-sale investments	4,397	4,397	–	–
Financial instruments at fair value through profit or loss	48,991	48,991	21,906	21,906
Trade and other receivables	16,589,706	16,589,706	9,991	9,991
Short-term deposits	1,536,101	1,536,101
Cash at bank and in hand	2,637,706	2,637,706	155,211	155,211
	21,141,058	21,153,491	353,812	353,812
Financial liabilities
Interest-bearing borrowings*	11,869,271	11,884,009	4,969,801	4,969,801
Trade and other payables	11,679,828	11,679,828	336,705	336,705
Other current financial liabilities
Financial instruments at fair value through profit or loss	58,653	58,653	58,653	58,653
Short-term interest-bearing borrowings	14,008,943	14,008,943	1,553,687	1,553,687
	37,616,695	37,631,433	6,918,846	6,918,846

*Includes fixed interest loans carried at amortised cost.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

- Cash and short-term deposits, trade receivables and trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments.

- Fair value of quoted equity shares is based on price quotations at the reporting date.

20. Other Non-Current Assets

	Consolidated
As at 31st March,	Formers	Others	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Cost	417,687	131,019	548,706	371,607
Provision for impairment	(198,283)	–	(198,283)	(180,960)
	219,404	131,019	350,423	190,647

21. Inventories

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Raw materials & consumables	4,455,579	4,203,077	1,046	1,282
Produce stocks	1,368,393	1,851,907	–	–
Nurseries	24,401	26,071	–	–
Work-in-progress	724,217	674,389	–	–
Finished goods	5,880,136	3,701,818	–	–
Goods-in-transit	183,685	189,583	–	–
	12,636,411	10,646,845	1,046	1,282
Provision for write-down of inventories	(464,441)	(311,524)	–	–
Provision for unrealised profit and write-down of inventories	(73,106)	(57,852)	–	–
	12,098,864	10,277,469	1,046	1,282

(i) Carrying amount of inventories pledged as security for Bank facilities obtained amounted to Rs. 1,686 mn (2013 - Rs. 1,745 mn).

(ii) Inventory carried at net realisable value as at 31st March, 2014 - Rs. 164 mn (2013 - Rs. 189 mn).

22. Trade and Other Receivables/Other Current Assets

22.1 Trade and Other Receivables

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Trade receivables	12,291,003	10,158,369	–	–
Bills receivable	2,159,230	2,043,961	–	–
	14,450,233	12,202,330	–	–
Payments in advance, deposits	2,799,095	3,576,058	42,173	57,759
Duty rebate receivable	23,044	7,668	–	–
Advances made under employee share ownership schemes	471	657	–	–
Employee loans	42,538	37,765	–	–
Provision for impairment	(725,675)	(655,002)	(32,182)	(32,182)
	16,589,706	15,169,476	9,991	25,577

22.1.1 Movement in the Provision for Impairment

At the beginning of the year	(655,002)	(837,797)	(32,182)	(32,182)
Reversal/(charge) for the year	(70,673)	182,795	–	–
At the end of the year	(725,675)	(655,002)	(32,182)	(32,182)

22.1.2 The Aging Analysis of Trade and Bills Receivable is as follows:

		Neither past due nor Impaired		Past due but not impaired
	Total		0-60 days	61-120 days	121-180 days	181-365 days	> 365 days
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Balance as at 31st March, 2014	14,450,233	7,950,508	4,722,606	760,725	243,908	160,371	612,115

22.1.3 Currency-wise Analysis of Trade and Other Receivables

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Rupees	9,184,598	7,853,873	9,991	25,577
Australian Dollars	80,751	220,329	–	–
Pounds Sterling	944,596	147,083	–	–
United States Dollars	4,055,512	3,903,565	–	–
Euro	1,947,400	2,035,904	–	–
Thai Baht	158,564	346,283	–	–
Indian Rupees	20,527	148,263	–	–
Other	197,758	514,176	–	–
	16,589,706	15,169,476	9,991	25,577

22.2 Other Current Assets
Prepayments	1,172,411	907,905	8,134	14,670
Pre paid staff benefit	41,236	71,001	–	–
VAT receivables	244,278	253,224	–	–
	1,457,925	1,232,130	8,134	14,670

23. Stated Capital

		Company
		2014	2013
		Rs. ’000	Rs. ’000
Issued & fully-paid - ordinary shares
At the beginning of the year	- 75,000,000 (1st April, 2013 - 75,000,000)	1,575,000	1,575,000
At the end of the year	- 75,000,000 (31st March, 2014 - 75,000,000)	1,575,000	1,575,000

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

23.1 Employee Share Trust Loan

The Hayleys PLC. Employees’ Share Trust was set up by a special resolution adopted by the shareholders at an Extraordinary General Meeting of the Company. The Trust was allotted 2,400,000 ordinary shares of Rs. 10/- each on 9th February,1998 at the market price of Rs. 210/- per share, payment for the shares being made by the Trustees from the proceeds of an interest-free loan of Rs. 504 mn, granted by the Company. This loan is repayable by the Trustees utilising part of the net income of the Trust.

The market value of the shares held by the Trust as at 31st March, 2014 was Rs. 1,954 mn (2013 - Rs. 2,048 mn).

24. Other Capital Reserves and Retained Earnings

24.1 Other Capital Reserves

	Capital profit on redemption of debentures	Fixed asset replacement reserve	Capital reserve on sale of property, plant & equipment	Capital redemption reserve fund	Debenture redemption reserve fund	Reserve on amalgamation	Total
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Consolidated
Balance as at 1st April, 2012	109	11,750	89,396	57,209	1,047	300,440	459,951
Changes in ownership interests in subsidiaries	–	–	8	54	–	147,843	147,905
Transfers	–	–	–	2,440	–	–	2,440
Balance as at 31st March, 2013	109	11,750	89,404	59,703	1,047	448,283	610,296
Changes in ownership interests in subsidiaries	–	–	–	–	–	198	198
Transfers	–	–	–	2,413	–	–	2,413
Balance as at 31st March, 2014	109	11,750	89,404	62,116	1,047	448,481	612,907

	Capital profit on redemption of debentures	Fixed asset replacement reserve	Capital reserve on sale of property, plant & equipment	Debenture redemption reserve fund	Total
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Company
Balance as at 31st March, 2012	109	11,750	320	1,047	13,226
Balance as at 31st March, 2013	109	11,750	320	1,047	13,226
Balance as at 31st March, 2014	109	11,750	320	1,047	13,226

24.2 Retained Earnings

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Holding company	1,925,740	1,805,332	1,925,740	1,805,332
Subsidiaries	7,978,736	6,636,346	–	–
Equity accounted investees	51,864	70,347	–	–
	9,956,340	8,512,025	1,925,740	1,805,332

25. Interest-Bearing Borrowings

25.1 Total Non-Current Interest-Bearing Borrowings

Finance lease obligations	652,743	637,602	–	–
Debentures	2,023,587	40,000	1,983,587	–
Long-term loans	6,530,689	4,993,551	1,890,118	910,000
Total non-current interest-bearing borrowings	9,207,019	5,671,153	3,873,705	910,000

25.2 Current Portion of Interest-Bearing Borrowings

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Finance lease obligations	25,916	24,794	–	–
Long-term loans	2,636,336	1,559,747	1,096,096	476,667
Total current interest-bearing borrowings	2,662,252	1,584,541	1,096,096	476,667

25.3 Finance Lease Obligations

	Consolidated
As at 31st March,	2014	2013
	Rs. ’000	Rs. ’000
At the beginning of the year	2,649,714	2,751,097
New leases obtained	1,757	16,558
Reassessment of lease liability	205,679	(33,453)
	2,857,150	2,734,203
Repayments	(108,873)	(84,488)
At the end of the year	2,748,277	2,649,714
Finance charge unamortised	(2,069,618)	(1,987,181)
Net lease obligation (i)	678,659	662,533

25.4 Currency-wise Analysis of Finance Lease Obligations

Rupees	668,791	646,745
Taka	9,868	15,788
	678,659	662,533

25.5 Analysis of Finance Lease Obligations by Year of Repayment

Finance lease obligations repayable within 1 year from year-end
Gross liability	101,942	106,889
Finance charges unamortised	(76,026)	(82,096)
Net lease obligations repayable within 1 year from year-end (i)	25,916	24,793
Finance lease obligations repayable between 1 and 5 years from year-end
Gross liability	363,986	365,702
Finance charges unamortised	(257,158)	(318,809)
Net lease obligations (i)	106,828	46,893
Finance lease obligations repayable after 5 years from year-end
Gross liability	2,282,349	2,184,489
Finance charges unamortised	(1,736,434)	(1,593,780)
Net lease obligations (i)	545,915	590,709
Net lease liability repayable later than 1 year from year-end	652,743	637,602

Talawakelle Tea Estates PLC

Liability to make lease payment as above was previously titled as ‘Net Liability to Lessor’. The change was in terms of the Statement of Alternative Treatment (SoAT) issued by The Institute of Chartered Accountants of Sri Lanka on 21st August, 2013. Accordingly the Group reassessed the liability to make lease payments and the corresponding right to use of land in terms of the above SoAT and elected to reassess the liability at each reporting period based on the changes in GDP deflator.

According to the reassessment, the base rental payable per year has increased from Rs. 7.23 mn to Rs. 25.1 mn.

Kelani Valley Plantations PLC

Liability to make lease payment as above was previously titled as ‘Net Liability to Lessor’. The change was in terms of the Statement of Alternative Treatment (SoAT) issued by The Institute of Chartered Accountants of Sri Lanka on 21st August, 2013. Accordingly the Group reassessed the liability to make lease payments and the corresponding right to use of land in terms of the above SoAT and elected to reassess the liability at each reporting period based on the changes in GDP deflator.

According to the reassessment, the base rental payable per year has increased from Rs. 19.6 mn to Rs. 59.4 mn.

25.6 Debentures

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
At the beginning of the year	40,000	40,000	–	–
Issued during year	2,000,000	–	2,000,000	–
Amortisation of debenture issue expense	(16,413)	–	(16,413)	–
At the end of the year	2,023,587	40,000	1,983,587	–
Repayable after one year	2,023,587	40,000	1,983,587	–

Hayleys PLC has issued rated, unsecured, redeemable Debentures at 14.25% p.a. payable quarterly and redeemable on 9th July, 2016. Interest rate of comparable Government Securities as at 31st March, 2014 - 7.68% (Net of tax).

4,000,000 (par value Rs. 10/-) unquoted debentures, were issued to LVL Energy Fund (Pvt) Ltd. at 15%, by Neluwa Cascade Hydro Energy (Pvt) Ltd. to finance its Hydro power Project capital requirements. These debentures are redeemable/convertible to preference shares.

25.7 Currency-wise Analysis of Debentures

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Rupees	2,023,587	40,000	1,983,587	–
	2,023,587	40,000	1,983,587	–

25.8 Analysis of Debentures by Year of Repayment

Debenture repayable between 2 and 5 years from year-end	2,023,587	40,000	1,983,587	–
	2,023,587	40,000	1,983,587	–

25.9 Long-Term Borrowings

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
At the beginning of the year	6,553,298	6,495,183	1,386,667	1,893,333
Acquisitions through business combinations	–	96,668	–	–
Effect of movements in exchange rates	93,891	(24,021)	43,433	–
Adjustment for USD loan facility fee	(13,203)	–	(13,203)	–
New loans obtained	4,759,243	2,074,754	2,267,500	–
	11,393,229	8,642,584	3,684,397	1,893,333
Repayments	(2,226,204)	(2,089,286)	(698,183)	(506,666)
At the end of the year	9,167,025	6,553,298	2,986,214	1,386,667
Transfer to current liabilities (repayable within one year)	(2,636,336)	(1,559,747)	(1,096,096)	(476,667)
Repayable after one year	6,530,689	4,993,551	1,890,118	910,000

(i) Hayleys PLC, The Kingsbury PLC and Haycarb Group have obtained loans during the year amounting to Rs. 2,268 mn, Rs. 1,307 mn and Rs. 385 mn, respectively.

25.10 Currency-wise Analysis of Long-Term Borrowings

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Rupees	7,232,804	4,362,585	1,896,797	1,386,667
Australian Dollars	–	6,079	–	–
Pounds Sterling	–	50,756	–	–
United States Dollars	1,600,439	1,816,273	1,089,417	–
Euro	194,587	157,460	–	–
Taka	7,599	10,335	–	–
Thai Baht	131,596	149,810	–	–
	9,167,025	6,553,298	2,986,214	1,386,667

25.11 Analysis of Long-Term Borrowings by Year of Repayment

Long-term loans repayable between 1 and 2 years from year-end	1,233,955	1,679,827	1,006,096	466,667
Long-term loans repayable between 2 and 5 years from year-end	4,736,665	2,915,599	884,022	443,333
Long-term loans repayable later than 5 years from year-end	560,069	398,125	–	–
	6,530,689	4,993,551	1,890,118	910,000

25.12 Long-Term Borrowings Repayable after One Year

Company	Lender/rate	2014	2013	Repayment		Security
	of interest (p.a.)	Rs. ’000	Rs. ’000
Hayleys PLC	Hatton Nation Bank PLC (AWPLR - 1%)	310,000	710,000	To be paid bi-annually		None
	Hatton Nation Bank PLC (AWPLR + 0.5%)	800,000	–	To be paid bi-annually		None
	Standard Chartered Bank PLC - USD (LIBOR + 4.25%)	646,784	–	To be paid bi-annually		None
	DFCC Bank PLC (AWPLR + 0.5%)	133,333	200,000	To be paid semi-annually		None
ICO Guanti SpA	Alessandria Financing 1.95% (Euro 1,000,000)	131,596	133,022	Repayment over 2 years as per agreed schedule		None
Dipped Products (Thailand) Ltd.	HSBC - Thailand Minimum of 4.25% 1 month (LIBOR + 2%) (USD 4 mn)	152,378	265,250	Monthly installments ending July, 2015		Mortgage over land, building and machinery and corporate guarantee by Dipped Products PLC.
Mabroc Teas (Pvt) Ltd.	Union Bank of Colombo PLC 5%	–	5,724	954 x 18 installments ending August, 2013		Primary mortgage over blending machine.
	Union Bank of Colombo PLC (LIBOR 3.5% p.a) with a floor rate of (4.5%)	42,212	–	(USD 8,958.33 x 48) installments monthly ending December, 2017.		Primary mortgage over tea bag machine.
Kelani Valley Plantations PLC	NDB Bank PLC (11.51%)	–	1,853	Monthly installments ending May, 2014		Primary mortgage of Rs. 255 mn over the leasehold rights of Panawatta and Pedro Estates have been pledged and a letter of undertaking from DPL Plantations (Pvt) Ltd. was given to subordinate management fee and dividends in a default situation of term loan.
	DFCC Bank (9.42%)	23,334	34,533	Monthly installments ending March, 2017		Primary mortgage over the leasehold rights of Halgolla, WeOya, Polatagama and Ederapola Estates and a letter of undertaking from DPL Plantations (Pvt) Ltd. was given to subordinate management fee and dividends in a default situation of the term loan. Primary mortgage of Rs. 348 mn over the leasehold right of Halgolla, WeOya, Polatagama and Ederapola Estates and letter of undertakings from DPL Plantation (Pvt) Ltd. was given to subordinate management fee and dividends in a default situation of term loan.
	DFCC Bank (6.5%)	–	4,164	Monthly installments ending November, 2014
	DFCC Bank (11.64%)	28,572	40,000	Monthly installments ending June, 2017
	DFCC Bank (6.5%)	2,543	7,633	Monthly installments ending June, 2015
	DFCC Bank (6.5%)	1,667	3,334	Monthly installments ending December, 2015
	DFCC Bank (6.5%)	–	347	Monthly installments ending February, 2014
Toyo Cushion Lanka (Pvt) Ltd.	Hatton Nation Bank PLC	–	3,335	Monthly ending December, 2014		Stocks and debtors
Haycarb Holding (Australia) Pty Ltd.	Capital Finance Company PLC (Fixed - 9.75%) (LIBOR + 4%)	–	3,857	35 equal installments + one final payment commencing 2006/07		Mortgage over vehicles
Haycarb PLC	Commercial Bank of Ceylon PLC (LIBOR + 3.75%)	50,775	69,904	Monthly installments over 5 years commencing June, 2011		None
	HSBC (LIBOR + 3.5%)	52,946	76,134	Monthly installments over 5 years commencing June, 2011		None
	HSBC (LIBOR + 4.5%)	52,161	–	60 equal monthly installments commencing June, 2013		None
	HSBC (LIBOR + 4.5%)	55,474	–	60 equal monthly installments commencing July, 2013		None
	Commercial Bank of Ceylon PLC (LIBOR + 4.75%)	31,585	88,094	47 equal monthly installments commencing November, 2013		None
	Standard Chartered Bank (LIBOR + 4%)	119,156	126,890	60 equal monthly installments commencing September, 2012		Mortgage over the share certificate of Haycarb Value Added Products (Pvt) Ltd. amounting to Rs. 400 mn
	Standard Chartered Bank (LIBOR + 4%)	73,821	–	12 grace period plus+ 60 monthly installments commencing July, 2014		None
	Standard Chartered Bank (LIBOR + 4%)	123,410	–	12 grace period plus+ 60 monthly installments commencing July, 2015		None
Shizuka Co. Ltd.	Bangkok Bank MLR	21,988	57,025	Payable in 60 monthly installments commencing October, 2010		Mortgage over company land and guaranteed by related person
Lakdiyatha (Pvt) Ltd.	Hatton National Bank PLC (LIBOR + 4.75%)	43,395	47,876	Monthly installments over seven years commencing January, 2013		Development agreement entered between Sri Lanka Tourism Development Authority and Lakdiyatha (Pvt) Ltd.
CK Regen Systems Co. Ltd.	Kasikorn Ban, Thailand (MLR - 0.05%)	–	31,500	Monthly installments over five years commencing January, 2011		Mortgage over Land & Building
PT Mapalus Makawanua Charcoal Industry	Bank Panin Manado - (Fixed - 8%)	39,851	41,882	Monthly installments over five years commencing September, 2011		Mortgage over Land & Building
Haycarb Holding Bitung Ltd.	Commercial Bank of Ceylon PLC (LIBOR + 4.75%)	68,154	81,452	Payable in 59 monthly installments of USD 13,300 each and a final installment of USD 15,300		Corporate guarantee for USD 80,000 from Haycarb PLC
Logiventures Pvt Ltd.	HSBC - (AWPLR + 2%)	–	202,000	Payable in 83 monthly installments of Rs. 3 mn and I installment of Rs. 1 mn		Land
	Hatton Nation Bank PLC (LIBOR + 4.25%)	169,884	–	Payable in 56 monthly installments of Rs. 3 mn and I installment of Rs. 1 mn		Land
Hayleys Agriculture Holdings Ltd.	Hatton Nation Bank PLC (AWPLR + 1%)	47,000	144,200	Monthly Installment Rs. 8.1 mn		None
TTEL Hydro Power Company (Pvt) Ltd.	Sampath Bank PLC (3 months average AWDR + 4% p.a.)	73,605	87,386	12 monthly installments commence from January, 2010 repayable within 8 years		Primary mortgage bond over leasehold rights for Rs. 132.3 mn project assets.
Neluwa Cascade Hydro Power (Pvt) Ltd.	Nations Trust Bank PLC - (3m TB + 1.3%)	–	10,000	24 quarterly installment commencing from December, 2008		Primary mortgage bond over project land and assets for Rs. 180 mn supported by a corporate guarantee from Hayleys Industrial Solutions (Pvt) Ltd. for Rs. 180 mn.
Hayleys Industrial Solutions Ltd.	Sampath Bank PLC (AWPLR + 0.5%)	187,495	–	59 monthly installments commencing from 31st January, 2014		Loan agreement 250 mn mortgage bond over 30 million shares of Hayleys power Ltd. for 250 million original share certificates of Hayleys Power Ltd. total in to 30 mn shares.
	NDB Bank PLC (AWPLR - 1.08%)	18,750	56,250	48 monthly installments commencing from 31st October, 2011		Rs. 150 mn corporate guarantee.
Bhagya Hydro Power (Pvt) Ltd.	Sampath Bank PLC (AWDR + 3%)	2,295	7,275	95 monthly installments commencing September, 2007 of Rs. 410,000/- and a final installment of Rs. 550,000/-		Loan agreement for Rs. 38.5 mn. primary concurrent mortgage for Rs. 78 mn over free hold properties of the project.
	Seylan Bank PLC (AWDR + 5%)	2,142	7,620	95 monthly installments from September, 2007 of Rs. 430,000/- and a final installment of Rs. 422,000/-		Rs. 38.5 mn to be secured by a primary concurrent mortgage over freehold land and project assets.
Hayleys MGT Knitting Mills PLC	Commercial Bank of Ceylon PLC - 6.5%	–	472	71 monthly installments of USD 2,545 (Rs. 280,000/-)		Corporate guarantee.
	Commercial Bank of Ceylon PLC - 6.5%	7,730	11,506	96 monthly installments of USD 2,886 (Rs. 312,500/-)		Mortgage over machinery.
	NDB Bank PLC 3 months (LIBOR + 6.2%)	98,080	–	36 monthly installments of USD 27,778 each		None
	Seylan Bank PLC 1 month (LIBOR + 5%)	50,839	–	36 monthly installments of USD 27,778 each		Corporate guarantee.
TTEL Summerset Hydro Power Company (Pvt) Ltd.	Hatton Nation Bank PLC (AWDR + 1.5%)	11,586	32,592	12 monthly installments commence from December, 2008 repayable within 7 years		Registered primary mortgage bond for Rs. 112 over lease rights of the property. Corporate Guarantee of TTEL and HISL for Rs. 112 mn in the proportionate of 51% and 49% respectively.
Talawakelle Tea Estates PLC	NDB Bank PLC (9.42%)	46,792	58,498	96 monthly installments ending December, 2018		Primary Mortgage over leasehold rights of Somerset, Great Western, Holyrood, Logie and Dessford Estates.
	NDB Bank PLC (13.25%)	85,839	115,270	60 monthly installments ending November, 2017
	NDB Bank PLC (13.07%)	82,863	91,671	60 monthly installments ending June, 2023
	NDB Bank PLC (13.07%)	–	13,500	60 monthly installments ending September, 2023
	Sampath Bank PLC (10.24%)	51,085	64,129	92 monthly installments ending November, 2018		Primary mortgage bond for Rs. 100 mn over leasehold right of MattaKelle Estate
	Sampath Bank PLC (10.76%)	46,850	50,000	48 monthly installments ending September, 2018		Primary mortgage bond for Rs. 30 mn over leasehold rights of Clarendon Estate. Secondary mortgage over leasehold right to the value of Rs. 20 mn of Deniyaya Estate.
	Central Finance Company PLC (5 years TB+2%)	28,456	–	60 monthly installments commencing from January, 2014		Mortgage over 3 numbers of colour sorters
	Hatton National Bank PLC (AWDR + 4%)	–	14,000	96 monthly installments ending January, 2018		Primary floating mortgage for Rs. 109 mn over leasehold rights of Radella, Palmerstone and Handford Estates
Ravi Industries (Pvt) Ltd.	Hatton National Bank PLC 3 months (EUR+3.75%)	–	1,672	Quarterly installments from December, 2010		None
	Hatton National Bank PLC LKR (9.07%)	4,275	6,175	Quarterly installments from September, 2012		Primary mortgage over specific machinery
	Hatton National Bank PLC USD (4.4%)	12,354	17,291	Quarterly installments from September, 2012		None
	Pan Asia Banking Corporation PLC 3 months (EUR + 3.75%)	4,410	7,508	Equal monthly installments from October, 2011		Primary mortgage over specific machinery
	Pan Asia Banking Corporation PLC (LIBOR + 4.24%)	5,001	7,394	Equal monthly installments from March, 2012		Primary mortgage over specific machinery
Volanka (Pvt) Ltd.	DFCC Bank PLC (AWPLR + 4%)	49,999	64,286	One year mercy period loan repayment start date from January, 2012		Mortgage on Volanka Ltd. Land and Building at Katana
Alumex PLC	Commercial Bank of Ceylon PLC (AWPLR + 6.5%)	–	4,108	84 monthly installments - 2007 September to October, 2014		Mortgage over land
	Lanka Orix Leasing Company PLC (6.5%)	7,291	13,542	June 2010 to June 2016		Mortgage over machinery
	Commercial Bank of Ceylon PLC (AWPLR + 1.5%)	10,208	17,695	36 monthly installments ending May, 2016		None
Alutec Extrutions (Pvt) Ltd.	Commercial Bank of Ceylon PLC (AWPLR + 6.5%)	–	18,018	November, 2010 to October, 2014		Mortgage over land and building.
The Kingsbury PLC	Bank of Ceylon PLC (AWPLR)	811,111	1,200,000	7 years including 1 & 1/2 year grace period		Mortgage on leasehold right of the land
	DEG Deutsche Investitions (6 months LIBOR + 4.25%)	1,307,300	–	Semi annual repayment on each 15th of June and December respectively commencing on 15th June, 2015.		Mortgage on the leasehold land, building, fixtures, furniture, equipment and technical equipment
Haychem Bangladesh Ltd.	CBCL (15% p.a.)	4,225	7,150	60 monthly equal installments.		Registered mortgage over land and building
Kandyan Resort (Pvt) Ltd.	NDB Bank PLC (AWPLR + 1%)	2,826	9,844	48 monthly installments commencing from March, 2011		Amaya Hills Property
Culture Club Resort (Pvt) Ltd.	NDB Bank PLC (AWPLR + 1%)	5,447	14,316	48 monthly installments commencing from January, 2011.		Amaya Hills Property
Nirmalapura Wind Power (Pvt) Ltd.	HSBC (LIBOR + 3.9%)	289,816	604,374	48 monthly installments.		Mortgage over project assets
		6,530,689	4,993,551

26. Grants

	Consolidated
As at 31st March,	2014	2013
	Rs. ’000	Rs. ’000
At the beginning of the year	783,222	777,670
Grants received during the year	4,564	58,114
Amortised during the year	(45,709)	(52,562)
At the end of the year	742,077	783,222

 

(i) Grants received by the Group are as follows:

Kelani Valley Plantations PLC - Received from the Plantation Reform Project (PRP), Plantation Human Development Trust, Ministry of Community Development, Asian Development Bank, Social Welfare Project, Estate Infrastructures Development Project, Plantation Development Support Project, Ceylon Electricity Board, Tea Board and Rubber Development Division of the Ministry of Plantations Industry.

Talawakelle Tea Estates PLC - Received from the Tea Board and Unilever Ceylon Ltd. for replanting.

Hunas Falls Hotels PLC - Received from the Ceylon Chamber of Commerce as a grant to finance the project on conversion of the diesel fired boiler to Dendro Thermal Power.

Agriculture Sector - Received from USAID for construction of Gherkin Storage Facilities (Vats) in Padiyathalawa - Eastern Province.

There are no unfulfilled conditions or contingencies attached to these grants.

27. Deferred Taxation

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
27.1 Deferred Tax Assets
Deferred tax assets	397,596	352,206	–	–
Deferred tax liabilities	1,249,361	1,035,201	–	–
Net deferred tax liability	851,765	682,995	–	–

27.2 Net Deferred Tax Liability

At the beginning of the year	682,995	647,378	–	–
Amount originating during the year- Income Statement	150,650	43,418	–	–
Amount reversed during the year- Other Comprehensive Income	(579)	(5,883)	–	–
Acquisition through business combinations	14,069	–	–	–
Effect of movements in exchange rates	4,630	(1,918)	–	–
At the end of the year	851,765	682,995	–	–

27.3 Net deferred tax liabilities are attributable to the following as at the year-end:

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Deferred Tax Assets
Tax effect of defined benefit obligation	(533,762)	(586,740)	–	–
Tax effect of tax loss carried forward	(341,090)	(283,214)	–	–
Tax effect of provisions	(88,685)	(33,343)	–	–
	(963,537)	(903,297)	–	–
Deferred Tax Liabilities
Tax effect of property, plant & equipment	1,815,302	1,586,292	–	–
Net deferred tax liabilities	851,765	682,995	–	–

28. Employee Benefit Obligations

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Present value of unfunded gratuity	4,630,864	4,285,224	450,560	372,714
Total present value of the obligation	4,630,864	4,285,224	450,560	372,714
At the beginning of the year	4,285,224	3,921,370	372,714	333,279
Amortisation through business combinations	5,748	–	–	–
Effect of movement in exchange rates	7,463	18,879	–	–
Benefits paid by the plan	(498,359)	(416,613)	(63,358)	(30,970)
Current service costs	302,355	324,815	20,098	19,802
Interest cost	446,480	405,873	41,535	38,822
Actuarial losses	81,953	30,900	79,571	11,781
At the end of the year	4,630,864	4,285,224	450,560	372,714
The expense is recognised in the following line items in the Income Statement
Cost of Sales	118,991	22,294	1,007	854
Administrative expenses	629,844	708,394	60,626	57,770
	748,835	730,688	61,633	58,624
Consolidated Statement of Other Comprehensive Income
Actuarial loss on employee benefit obligations	81,953	30,900	79,571	11,781
	81,953	30,900	79,571	11,781

LKAS 19 (Revised) - ‘Employee Benefits’ - requires the use of actuarial techniques to make a reliable estimate of the amount of employee benefit that employees have earned in return for their service in the current and prior periods and discount that benefit using the Projected Unit Credit Method in order to determine the present value of the employee benefit obligation and the current service cost. This requires an entity to determine how much benefit is attributable to the current and prior periods and to make estimates about demographic variables and financial variables that will influence the cost of the benefit.

The following key assumptions were made in arriving at the above figure:

Rate of discount	11%
Salary increase	10%

Assumptions regarding future mortality are based on a 67/70 mortality table, issued by the Institute of Actuaries, London.

The demographic assumptions underlying the valuation are with respect to retirement age, early withdrawals from service and retirement on medical grounds.

The Group’s and Company’s employee benefit obligations would have been Rs. 4,029 mn (2013 - Rs. 3,597 mn) and Rs. 378 mn (2013 - 217 mn) respectively, as at the reporting date had the Group calculated its retirement benefit obligation as per the requirements of the Payments of Gratuity Act No. 12 of 1983, applying the basis of computation given in the Financial Statements.

28.1 Sensitivity Analysis - Salary/Discount Rate

Values appearing in the Financial Statements are very sensitive to the changes in financial and non-financial assumptions used.

A sensitivity analysis was carried out as follows:

	Consolidated		Company
	+1%	-1%	+1%	-1%
A one percentage point change in the salary escalation rate
The present value of defined benefit obligation	4,802,590	4,346,525	473,801	441,420

A one percentage point change in the discount rate

The present value of defined benefit obligation

4,250,776

4,897,171

444,489

470,812

28.2 Distribution of Employee Benefit Obligations Over Future Working Lifetime

	Consolidated	Company
As at 31st March,	2014	2014
	Rs. ’000	Rs. ’000
Less than or equal 1 year	247,264	60,825
Over 1 year and less than or equal 5 years	1,155,881	280,373
Over 5 years and less than or equal 10 years	2,196,121	109,362
Over 10 years	1,031,598	–
Total	4,630,864	450,560

29. Trade and Other Payables/Provisions

29.1 Trade and Other Payables

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Trade payables	4,757,172	4,081,646	–	–
Bills payable	1,715,646	1,716,121	–	–
Other payables including accrued expenses	5,110,183	5,116,349	291,713	241,076
Unclaimed dividends	96,827	76,170	44,992	41,054
	11,679,828	10,990,286	336,705	282,130

29.2 Currency-wise Analysis of Trade and Other Payables

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Rupees	5,685,086	6,604,627	336,705	282,130
Pounds Sterling	34,314	25,776	–	–
United States Dollars	3,872,274	2,859,060	–	–
Euro	935,426	952,437	–	–
Thai Baht	989,313	408,405	–	–
Indian Rupees	46,300	7,205	–	–
Other	117,115	132,776	–	–
	11,679,828	10,990,286	336,705	282,130

29.3 Provisions

	Consolidated
	Maintenance	Other	Total
As at 31st March,	warranties**		2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
At the beginning of the year	17,547	19,685	37,232	36,586
Arising during the year	–	9,850	9,850	7,750
Utilised	(7,548)	(10,742)	(18,290)	(7,104)
At the end of the year	9,999	18,793	28,792	37,232

** Hayleys Agriculture Holdings Ltd. selling Heavy Machineries such as combine harvesters, combine threshers, four wheel tractors and making a warranty provision in the Financial Statements for any warranty claim on these machines.

29.4 Other Current Liabilities

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Other tax payable	72,866	22,040	10,011	14,229
Payments received in advance	293,171	–	–	–
	366,037	22,040	10,011	14,229

	Consolidated		Company
As at 31st March,	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
30. Income Tax
30.1 Income Tax Recoverable
At the end of the year (See Note 30.2)	170,888	228,895	–	3,840
30.2 Income Tax Payable
At the beginning of the year	342,464	149,748	7,835	(4,644)
Subsidiaries’/parents’ taxation on current year’s profit	1,010,591	1,134,736	16,274	17,489
Irrecoverable economic service charge	1,570	2,012	–	–
(Over)/under provision in respect of previous years	(2,700)	(582)	14,508	–
Tax on dividend	204,899	232,170	–	–
Acquisition of subsidiary	13,937	20	–	–
Effect of movements in exchange rates	10,850	44	–	–
Payments made during the year	(1,379,156)	(1,175,684)	(36,929)	(5,010)
Net income tax payable/(recoverable)	202,455	342,464	1,688	7,835
Income tax recoverable	170,888	228,895	–	3,840
At the end of the year	373,343	571,359	1,688	11,675

31. Short-Term Interest-Bearing Borrowings

Rupees	8,060,488	11,087,832	1,553,687	4,667,302
Australian Dollars	12,756	83,623	–	–
Pounds Sterling	9,916	–	–	–
United States Dollars	4,658,439	3,582,289	–	–
Euros	569,183	872,654	–	–
Thai Bahts	562,685	551,030	–	–
Indonesian Rupiah	–	44,037	–	–
Bangladeshi Taka	135,476	86,254	–	–
	14,008,943	16,307,719	1,553,687	4,667,302

32. Contingent Liabilities and Commitments

32.1 Contingent Liabilities

Company

The contingent liability as at 31st March, 2014 on guarantees given by Hayleys PLC., to third parties amounted to Rs. 183 mn. (2013 - Rs. 780.25 mn) of this sum Rs. 180 mn (2012 - Rs. 780 mn) relate to facilities obtained by subsidiaries. Details of other guarantees are given in Note 25 to the Financial Statements.

Group

Contingent liability as at 31st March, 2014 on bills discounted amounted to USD 2,188,380 (2013 - 1,108,991) in respect of Hayleys MGT Knitting Mills PLC.

The contingent liability as at 31st March, 2014 on guarantees given by Haycarb PLC to third parties amounted to Rs. 1,119.82 mn (2013 - Rs. 545.62 mn). Of this sum, Rs. 840.7 mn (2013 - Rs. 308.17 mn) relates to facilities obtained by its subsidiaries.

The contingent liabilities as at 31st March, 2014 on guarantees given by Dipped Products PLC to third parties amounted to Rs. 389.61 mn (2013 - 866.78 mn). Total of this sum relates to facilities obtained by its subsidiaries.

32.2 Commitments

Group

(i) In terms of the operating lease agreements entered into, minimum future lease payments payable for the Group are as follows:

	2014	2013
	Rs. ’000	Rs. ’000
Repayable within one year	19,879	6,961
Repayable after one year less than 5 years	112,079	24,870
Repayable after 5 years	670,916	718,209
	802,874	750,040

33. Foreign Currency Translation

The principal exchange rates used for translation purposes were:

	Average		As at 31st March,
	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
United States Dollar	130.52	129.83	130.73	126.89
Australian Dollar	120.72	134.06	120.90	132.28
Pounds Sterling	208.39	205.07	217.41	192.07
Thai Baht	4.13	4.22	4.03	4.34
Bangladesh Taka	1.68	1.61	1.68	1.62
Euro	175.41	167.17	179.67	162.13
Indian Rupee	2.15	2.38	2.18	2.33
Indonesian Rupiah	0.0119	0.0136	0.0115	0.0131

34. Functional Currency

The Group’s functional currency is the Sri Lankan Rupee, except in the following subsidiaries and equity accounted investees where the functional currency is different as they operate in different economic environments.

Company	Functional Currency
Hayleys MGT Knitting Mills PLC	USD
Haychem (Bangladesh) Ltd.	Taka
PT Mapalus Makawanua Charcoal Industry	Rupiah
Haycarb Holdings Bitung Ltd.	USD
Eurocarb Products Ltd.	Sterling Pounds
Haycarb Holdings Australia (Pty) Ltd.	Australian Dollars
Haymark Inc.	USD
Carbokarn Company Ltd.	Thai Baht
Haylex BV Group	Euro, Yen & USD
Dipped Products (Thailand) Ltd.	Thai Baht
CK Regen Systems Co. Ltd.	Thai Baht
ICO Guanti S.p.A.	Euro
PT Tulus Lanka Coir Industries	Rupiah
Civaro Freight India (Pvt) Ltd.	Indian Rupees
Hayleylines Ltd.	USD
Logiwiz Logistics India (Pvt) Ltd.	Indian Rupees
Shizuka Co. Ltd.	Thai Baht
Charles Fibre (Pvt) Ltd.	Indian Rupees
PT Haycarb Palu Mitra (Indonesia)	Rupiah
Haylex USA	USD

35. Events Occurring after the Reporting Date

Other than those mentioned below, no other circumstances have arisen since the reporting date, which would require adjustments to, or disclosure in the Financial Statements.

1. (i) Amaya Leisure PLC, a Subsidiary of Hayleys Group, has acquired 51% equity stake which is denoted by 82,718,215 shares of Sun Tan Beach Resorts (Pvt) Ltd. at a cost of Rs. 563 mn.
2. (ii) Directors have proposed the payment of a final dividend of Rs. 5.00 per share for the year ended 31st March, 2014 which will be declared at the Annual General meeting to be held on 27th June, 2014. In accordance with Sri Lanka Accounting Standard No. 10 on ‘Events after Reporting Period’, the proposed final dividend has not been recognised as a liability as at the Reporting date.

36. Companies with Different Accounting Years

The Financial Statements of Worldcall Telecommunications Lanka (Pvt) Ltd., Hayleys Plantation Services Ltd., Haylex BV Group, Talawakelle Tea Estates PLC, Haychem Bangladesh Ltd., Kelani Valley Plantations Group (excluding Mabroc Group), Carbokarn Co. Ltd. Haycarb Holdings Australia Group, Haymark Inc. PT Mapalus Makawanua Charcoal Industry, Haycarb Holdings Bitung Ltd. ICO Guanti SpA and Dipped Products (Thailand) Ltd. Shizuka Co. Ltd., CK Regen System Co. Ltd., PT Haycarb Palumitra which have been drawn up to 31st December as per their reporting requirements, have been consolidated.

These Companies have been consolidated based on the Financial Statements drawn up to 31st December in compliance with LKAS 27 on ‘Consolidated and Separate Financial Statements’.

	Acquisition of Ceylon Ocean Lines (Pvt) Ltd.	Total
	2014	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000
37. Acquisition of Subsidiaries
37.1 The acquisition had the following effect on the Group’s assets and liabilities:
Property, plant and equipment	8,721	8,721	531,809
Investment property	500,000	500,000	–
Inventories	15,754	15,754	26,499
Trade and other receivables	56,804	56,804	1,555
Current financial assets	15,761	15,761	–
Borrowings	–	–	(96,668)
Employee benefit obligations	(5,748)	–	–
Deferred tax liability	(14,070)	–	–
Trade and other payables	(42,763)	(42,763)	(17,370)
Income tax payable	(13,937)	(13,937)	(20)
Net identifiable assets and liabilities	520,522	520,522	445,805
Share of net assets accounted under equity accounted investees	–	–	(29,657)
Non-controlling interests	(46,192)	(46,192)	–
Goodwill acquired on business combination	215,857	215,857	128,688
	690,187	690,187	544,836
37.2
Satisfied by
Cash consideration	690,187	690,187	544,836
Analysis of cash and cash equivalents on acquisition of subsidiary
Cash consideration	(785,000)	(785,000)	(129,108)
Short-term borrowings	(4,601)	(4,601)	(13,464)
Cash at bank and in hand acquired	99,414	99,414	(402,264)
	(690,187)	(690,187)	(544,836)

37.3

During the year Hayleys Advantis Ltd., a subsidiary of Hayleys PLC acquired the controlling interest in Ceylon Ocean Lines (Pvt) Ltd.

38. Prior Year Adjustment

The Consolidated Financial Statements have been restated in accordance with Sri Lanka Accounting Standard LKAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, to reflect the following:

1. (i) Rileys (Pvt) Ltd., Haymat (Pvt) Ltd., Creative Polymats (Pvt) Ltd., which are subsidiaries of Hayleys PLC, adjusted errors due to over statement and under statement of assets and liabilities in previous years. Comparative information in the Consolidated Financial Statements have been restated as follows:

Impact to the Consolidated Financial Position as at 31st March, 2013

	Property, plant & equipment	Inventories	Trade and other receivables	Trade and other payables	Income tax payable
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
As per Annual Report published for 2013	37,205,718	10,365,582	15,287,867	10,959,952	571,132
Impact of errors	(8,847)	(88,113)	(118,391)	30,334	227
As per Annual Report published for 2014	37,196,871	10,277,469	15,169,476	10,990,286	571,359

	Revenue reserves	Non-controlling interest	Total impact to the Equity
	Rs. ’000	Rs. ’000	Rs. ’000
As per Annual Report published for 2013	11,011,187	11,195,960	33,670,799
Impact of errors	(223,055)	(22,858)	(245,913)
As per Annual Report published for 2014	10,788,133	11,173,102	33,424,886

Impact to the Consolidated Income Statement for the year ended 31st March, 2013

	Cost of sales	Distribution expenses	Net finance cost	Total Impact to the income statement
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
As per Annual Report published for 2013	(57,211,418)	(2,232,081)	(1,638,124)	–
Impact of errors	(134,984)	(3,964)	(636)	(139,584)
As per Annual Report published for 2014	(57,346,402)	(2,236,045)	(1,638,760)	–

(ii) The Consolidated Income Statement has been restated due to recognition of actuarial losses in the Other Comprehensive Income.

	Consolidated	Company
	Administrative expenses	Administrative expenses
	Rs. ’000	Rs. ’000
As per Annual Report published for 2013	(8,362,975)	(178,647)
Impact of change in accounting policy	30,900	11,781
As per Annual Report published for 2014	(8,332,075)	(166,866)

(iii) Due to the above restatements, total impact to the Consolidated Income Statements is as follows:

	Profit before tax	Tax expense	Profit for the year
	Rs. ’000	Rs. ’000	Rs. ’000
Impact of errors in the subsidiaries	(139,584)	(227)	(139,811)
Impact of change in accounting policies	30,900	(5,883)	25,017
Total impact	(108,684)	(6,110)	(114,794)

	Profit attributable to ordinary equity holders	Non-controlling interest	Earnings per share
	Rs. ’000	Rs. ’000	Rs. ’000
As per Annual Report published for 2013	1,853,641	1,765,748	24.72
Impact of errors	(92,495)	(22,299)	(1.24)
As per Annual Report published for 2014	1,761,146	1,743,449	23.48

39. Related Party Transactions

39.1 Parent and Ultimate Controlling Party

Company does not have an identifiable parent of its own.

39.2 Transactions with Key Management Personnel

39.2.1 Loans to Directors

No loans have been given to the Directors of the Company.

39.2.2 Key Management Personnel Compensation

Key Management Personnel comprises the Directors of the Company and details of compensation are given in Note 10 to the Financial Statements.

39.2.3 Other Transactions with Key Management Personnel

A. The names of Directors of Hayleys PLC, who are also Directors of subsidiaries joint ventures and equity accounted investees companies are stated in Annual Report of the Board of Directors.

B. Details of Directors and their spouses’ shareholdings are given in Annexes. There were no other transactions with Key Management Personnel other than those disclosed in Note 39 to Financial Statements.

C. The undermentioned Directors of Hayleys PLC, have leased the following residential premises to the under noted companies in the Group:

Lessor	Premises	Lessee	Monthly Rental Rs.
A.M. Pandithage	No. 119, Kynsey Road, Colombo 08	Hayleys PLC	5,000
S.C. Ganegoda	No. 28, Campbell Place, Dehiwala	Haylays PLC	2,500

39.3 Transactions with Subsidiaries, Equity Accounted Investees and Other Related Companies

Relationships with subsidiaries and equity accounted investees are explained in Note 18 and also under Group Companies. Business segment classification is also given under Group Companies.

(i) Companies within the Group engage in trading transactions under normal commercial terms and conditions.

(ii) Hayleys PLC provides office space to its subsidiary and equity accounted investees and charges rent. In addition the Company incurs common expenses such as on export shipping, secretarial, data processing, personnel and administration functions. Such costs are allocated to subsidiary and joint venture companies. Details are given below:

For the year ended 31st March,	2014			2013
Company	Rs. ’000			Rs. ’000
	Subsidiaries			Subsidiaries
Business segment	Rent	Common expenses	Purchase of goods and services	Rent	Common expenses	Purchase of goods and services
Fibre	3,578	90,220	1,859	3,490	80,208	1,548
Hand protection	12,130	105,024	–	12,037	82,415	12,658
Purification	16,858	101,589	149	15,364	82,191	135
Textiles	–	69,190	231	–	71,197	296
Construction materials	–	33,308	696	–	17,721	–
Agriculture	10,221	84,577	132	9,923	75,712	36
Plantations	12,689	68,852	336	10,957	58,522	434
Industry inputs	7,144	45,807	7,429	7,928	38,595	3,411
Power and energy	473	5,592	–	1,079	2,816	–
Transportation and logistics	53,567	107,156	379	52,926	95,274	13,281
Consumer products	12,490	56,620	1,431	10,996	55,435	755
Leisure and aviation	11,671	142,308	19,587	9,660	76,134	10,304
Investments and services	8,601	41,202	10,150	8,183	21,125	12,143
	149,422	951,445	42,379	142,543	757,345	55,001

For the year ended 31st March,	2014	2013
Group	Rs. ’000	Rs. ’000
Business segment	Equity accounted investees	Equity accounted investees
	Net expenses	Net expenses
Transportation and logistics	27,814	(12,504)
	27,814	(12,504)

For the year ended 31st March,	2014	2013
Group	Rs. ’000	Rs. ’000
Business segment	Joint ventures	Joint ventures
	Dividend received	Dividend received
Purification	167	246
	167	246

Details of inter-company balances are given below:

Company	2014		2013
	Rs. ’000		Rs. ’000
	Subsidiaries		Subsidiaries
Business segment	Receivable	Payable	Receivable	Payable
Fibre	112,092	–	74,052	–
Hand protection	8,969	(1,557)	8,442	–
Purification products	11,960	–	11,143	–
Textiles	381,172	–	258,748	–
Construction materials	267	–	1,778	–
Agriculture	41,171	–	37,424	10
Plantations	12,385	–	7,933	(486,749)
Industry inputs	234,614	(5)	45,470	(618)
Power and energy	3,158	(0)	86,477	(0)
Transportation and logistics	4,948	(31)	23,794	(6,024)
Consumer products	32,680	(626)	25,872	(626)
Leisure and aviation	136,492	(204)	860,597	–
Investments and services	112,761	(21,134)	4,719	(174,603)
Total	1,092,669	(23,557)	1,446,449	(668,608)

Group	2014		2013
	Rs. ’000		Rs. ’000
	Equity Accounted Investees		Equity Accounted Investees
Business segment	Receivable	Payable	Receivable	Payable
Transportation	9,040	(10,023)	1,334	(30,131)
Total	9,040	(10,023)	1,334	(30,131)

Transactions with other Related Companies

Company	Relationship	Name of Director	Nature of Transaction	Amount
Sampath Bank PLC	Key management personnel/Significant Shareholder	Mr. Dhammika Perera	Bank Facility	2,415,818
			Outstanding	1,673,747
			Interest	118,165
LB Finance PLC	Key management personnel/Significant Shareholder	Mr. Dhammika Perera	Lease Rental Paid	7,334
			Interest	3,998
Pan Asia Bank PLC	Significant Shareholder	Mr. Dhammika Perera	Bank Facility	688,763
			Outstanding	267,420
			Interest	57,339
Royal Ceramics PLC	Control/Significant Shareholder	Mr. Dhammika Perera	Purchase of Goods & Services	5,621
			Outstanding	3,255

39.4

Details of guarantees given in respect of related parties are given in Note 32 to the Financial Statements.

39.5

No provision was made in respect of related party receivables.

39.6

No security has been obtained for related party receivables and all related party dues are payable on demand.

39.7

Interest on related party dues are decided based on the inter bank lending rates, associated risk and purpose for which funds are used.

39.8

There are no related parties or related party transactions other than those disclosed in Note 38 to the Financial Statements.

40. Discontinued Operations/Assets Held-for-Sale

Assets and Liabilities of Discontinued Operations

	Consolidated
As at 31st March,	2014	2013
	Rs. ’000	Rs. ’000
Assets classified as held-for-sale
Trade and other receivable	1,906	1,906
Cash in hand and bank	1,115	1,115
Total assets	3,021	3,021
Liabilities directly associated with assets classified as held-for-sale
Trade and other payables	332	332
Total liabilities	332	332

Civaro India (Pvt) Ltd., which was setup in India, to develop an international freight management network, has now ceased operation due to negative effect of the global recession and will be wound up.

41. Segment Analysis

The segment information is based on two segmental formats. The business segment is considered as the primary format and based on the management structure of the Group. The management are of the view that the Chairman is considered the Chief Operating decision maker and resources are allocated and performance assessed based on the sectors, Therefore each sector which falls under the purview of a different GMC member is considered a separate segment. The geographical format is considered as a secondary format and is based on the location of office in which the business is recorded.

 

42. Financial Risk Management

The Group has exposure to the following risk from financial instruments:

1. Credit risk
2. Liquidity risk
3. Market risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further, quantitative disclosures are included throughout these Consolidated Financial Statements.

Financial Risk Management Framework

The Board of Directors has the overall responsibility for the establishment and oversight of the Group’s financial risk management framework, which includes developing and monitoring the Group’s financial risk management policies.

The Group’s financial risk management policies are established to identify, quantify and analyse the financial risks faced by the Group, to set appropriate risk limits and controls, and to monitor financial risks and adherence to limits. Financial risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. All derivative activities for risk management purposes are carried out by Group Treasury that have the appropriate skills and experience.

The Group Audit Committee oversees how management monitors compliance with the Group’s financial risk management policies and procedures, and reviews the adequacy of the financial risk management framework in relation to the risks faced by the Group. The Group Audit Committee is assisted in its oversight role by the Management Audit System Review Department (MASRD). MASRD undertakes both regular and ad hoc reviews of financial risk management policies and procedures, the results of which are reported to the Group Audit Committee.

Credit Risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily from trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade and Other Receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The Group has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when available, and in some cases, bank references. Purchase limits are established for each customer, which represents the maximum open amount without requiring approval from the Management; these limits are reviewed quarterly. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a prepayment basis. Outstanding customer receivables are regularly monitored at the individual sector and Group Management Committee (GMC) level. Further, SLECIC cover or other forms of credit insurance is obtained for most exports or in the instance this is not obtained, specific GMC approval is obtained prior to the export.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, whether they are a wholesale, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties. Trade and other receivables relate mainly to the Group’s wholesale customers. Customers that are graded as ‘high risk’ are placed on a restricted customer list and future sales are made on a prepayment basis.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.

The maximum exposure to credit risk for trade and other receivables at the reporting date is Rs. 16.6 bn (2013 - Rs. 15.2 bn) which is recorded in Note 22 to the Financial Statements.

Investments

Credit risk from invested balances with the financial institutions are managed by the Group’s treasury department in accordance with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure.

Cash at Bank and in Hand

The Group held Cash at bank and in hand of Rs. 2.6 bn as at 31st March, 2014 (2013 - 2.1 bn) which represents its maximum credit exposure on these assets.

Respective credit ratings of banks in which group cash balances held are as follows:

• People’s Bank - AA+(lka)
• Standard Chartered Bank - AAA(lka)
• Hong Kong and Shanghai Banking Corporation Ltd. - AAA(lka)
• Commercial Bank of Ceylon PLC - AA(lka)
• Sampath Bank PLC - AA-(lka)
• Nations Trust Bank PLC - A(lka)
• Pan Asia Banking Corporation PLC Bank - BBB(lka)
• Hatton National Bank PLC - AA-(lka)
• Bank of Ceylon - AA+(lka)
• DFCC Bank - AA-(lka)

Liquidity Risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and finance leases. The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders.

Group treasury receives information from other business units regarding the liquidity profile of their financial assets and liabilities and details of other projected cash flows arising from projected future business. The liquidity requirements of business units and subsidiaries are met through central cash management by Group treasury to cover any short-term fluctuations and longer-term funding to address any structural liquidity requirements. The Group treasury monitors the cash flows in subsidiary and Group level and obtains adequate bank facilities to meet the funding requirements. The Group does not concentrate on a single financial institution, thereby minimising the exposure to liquidity risk through diversification of funding sources. The Group aims to fund investment activities of the individual and Group level by funding the long-term investment with long-term financial sources in terms of equity, debenture or long-term loans. Short-term investments are funded using short-term loans. Group has been successful in arranging long term funding from overseas as a measure to diversify its funding sources which enabled reducing the sole dependency on domestic market for project financing. The Group also issued debentures in domestic market as a measure to reduce its dependency on local banking system for all its financing requirement and thereby freeing available banking lines for future projects.

The monthly liquidity position is monitored by the Treasury. All liquidity policies and procedures are subject to review and approval by Board of Directors. Daily reports cover the liquidity position of both the Group and operating subsidiaries.

The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.

As at 31st March, 2014	On demand	Less than 3 months	3 to 12 months	1 to 5 years	>5 years	Total
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Group
Interest-bearing loans and borrowings	1,586,147	12,540,649	2,544,399	8,101,034	1,105,985	25,878,214
Trade and other payables	2,392,578	8,327,080	723,119	233,216	3,835	11,679,828
Other current financial liabilities	–	58,653	–	–	–	58,653
	3,978,725	20,926,382	3,267,518	8,334,250	1,109,820	37,616,695
Company
Interest-bearing loans and borrowings	9,387	1,818,324	822,072	3,873,705	–	6,523,488
Trade and other payables	174,875	90,041	–	69,756	2,033	336,705
Other Current financial liabilities	–	58,653	–	–	–	58,653
	184,262	1,967,018	822,072	3,943,461	2,033	6,918,846

As at 31st March, 2013	On demand	Less than 3 months	3 to 12 months	1 to 5 years	>5 years	Total
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Group
Interest-bearing loans and borrowings	4,468,933	4,473,065	8,950,262	4,682,320	988,834	23,563,414
Trade and other payables	2,770,322	5,479,976	2,739,988	–	–	10,990,286
	7,239,255	9,953,041	11,690,250	4,682,320	988,834	34,553,700
Company
Interest-bearing loans and borrowings	1,392,439	3,394,030	357,500	910,000	–	6,053,969
Trade and other payables	138,304	83,173	–	59,794	859	282,130
	1,530,743	3,447,203	357,500	969,794	859	6,336,099

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risks, such as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, available-for-sale investments and derivative financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The sensitivity analyses in the following sections relate to the position as at 31st March, 2014 and 2013.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group mainly borrows in the short term to fund its working capital requirements which are linked to floating interest rates. For other funding needs the Group maintains a proper mix of fixed and floating interest rates based on the predictability of future cash flows. Group treasury closely monitors the interest rate fluctuations in the market and advises the sectors of the Group on a regular basis.

Interest Rate Sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings as follows:

	Increase/decrease in basis points	Effect on profit before tax Rs. ’000
Group
2014	+ 150	89,307
	- 150	(89,307)
2013	+ 105	(43,915)
	- 105	43,915
Company
2014	+ 150	28,352
	- 150	(28,352)
2013	+ 105	9,555
	- 105	(9,555)

Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to currency risk on sales, purchases and borrowings and net investments in foreign subsidiaries that are denominated in a currency other than the respective functional currencies of the Group. These currencies primarily are the Euro, US Dollars (USD), Bangladesh Taka, Pound Sterling (GBP), Indonesia Rupiah and Thailand Baht.

The Group hedges its exposure to fluctuations on the translation of its foreign operations by holding net borrowings in foreign currencies and by using foreign currency swaps and forward contracts. Group treasury closely monitors the exchange rate fluctuations and advises the sectors on a regular basis.

Foreign Currency Sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in the US Dollar and Euro exchange rates, with all other variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities.

The Group’s exposure to foreign currency changes for all other currencies is not material.

		Increase/decrease in exchange rate	Effect on profit before tax Rs. ’000
Group
2014	USD	+ 5%	(303,782)
	Euro	+ 5%	12,410
	USD	- 5%	303,782
	Euro	- 5%	(12,410)
2013	USD	+ 5%	(217,703)
	Euro	+ 5%	2,668
	USD	- 5%	217,703
	Euro	- 5%	(2,668)
Company
2014	USD	+ 5%	(54,471)
	USD	- 5%	54,471

Commodity Risk

The Group is affected by the volatility of certain commodities. Its operating activities require the ongoing purchase and manufacturing process. Due to the significantly increased volatility of the price of the underlying, the management has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The sectors constantly monitor the raw material price levels of Charcoal, Rubber, Aluminium and Yarn for downwards trends and invest in bulk purchase when low prices are prevalent. Management may revise the selling price based on the commodity prices whenever possible.

Equity Price Risk

The Group’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Management of the Group monitors the mix of debt and equity securities in its investment portfolio based on market indices. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the GMC. Equity price risk is not material to the Financial Statements.

Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of share capital, reserves, retained earnings and non-controlling interests of the Group. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The gearing ratio at the reporting date was as follows:

	Consolidated		Company
	2014	2013	2014	2013
	Rs. ’000	Rs. ’000	Rs. ’000	Rs. ’000
Consolidated
Interest-bearing borrowing	9,207,019	5,671,153	3,873,705	910,000
Current portion of long-term interest-bearing borrowings	2,662,252	1,584,541	1,096,096	476,667
Short-term interest-bearing borrowings	14,008,943	16,307,719	1,553,687	4,667,302
	25,878,214	23,563,413	6,523,488	6,053,969
Equity	36,337,266	33,424,886	8,268,815	8,146,781
Equity and debts	62,215,480	56,988,299	14,792,303	14,200,750
Gearing ratio	42%	41%	44%	43%

Collateral

The Group has not pledged its debtors as collateral for long-term borrowings as at 31st March, 2014, other than those mentioned in Note 25.12 to the Financial Statements.