sustaining lives - john keells plc 2012-13.pdf · john keells plc annual report 2012/2013 3 vision...

1878

1993

1890

As a significant player in the local tea and rubber industries, John Keells PLC is directly and indirectly, a major employer of people - over 5,000 in fact, all of who depend on our continued success and well-being for their own. We are proud of these partnerships, some of which are generations old and all of which reflect the long-term focus on sustainability that we have placed at the forefront of our business operations. We know we must continue to have nothing but a positive impact on all those with who we interact - whoever and wherever they are.

Our process chain is a wide-ranging one and as such, affects people from every demographic, from village communities to distributors, brokers and the young executives and school leavers we employ.

This is why making sure our business is truly sustainable is our priority. Because what we do and how we act impacts so many people’s lives.

“Today John Keells PLC is a tightly managed and vertically integrated business. We have a long established reputation for integrity, for professionalism and for managing the truly sustainable operation that supports thousands of livelihoods along our process chain...”

Sustaining Lives1971

19701966

1986

2000

2001

2011

This partnership was dissolved and Edwin John started an establishment of his own titled “E. John” and carried on the business of produce and exchange broking. The first decade of business of E. John was one of low activity. Villers records this period thus, “Business in those days was very limited. Coffee had all but gone out, Tea had not expanded sufficiently and the little business in Chinchona was not enough to go around.” During this period, Reginald, son of Edwin John, joined his father in Ceylon.

Financial Statements of the associates Keells Realtors Ltd., and International Tourists and Hoteliers Ltd. were incorporated to the Consolidated Accounts.

Prospects began to improve rapidly with the approaching tea business.

John Keells Ltd, moved its offices to Glennie Street, Slave Island.

M.C. Bostock was elected Chairman of the Company.

The initial step towards diversification of the activities of the Company was taken with the acquisition of Ceylon Mineral Waters Ltd.,

K. Balendra retired as Chairman on 31st December, 2000.

The Board of Directors at a meeting held on 11th May 2011 resolved to increase the number of shares by way of a share sub -division in the ratio of one (1) share for every one (1) share held. Consequently, the no of shares after the sub - division increased to 60,800,000 shares from the previous 30,400,000 shares.

John Keells Holdings PLC, acquired the controlling interest of John Keells Ltd., M.C. Bostock retired and D.J.M. Blackler took over as the Chairman of the Company.

V. Lintotawela took over as Chairman on 1st January 2001. John Keells Ltd, incorporated John Keells Warehousing (Pvt) Ltd, a fully owned subsidiary with B.O.I. status.

3JOHN KEELLS PLC Annual Report 2012/2013

VisionTo be internationally recognised as the best Produce Broker in the world.

MissionTo retain the pre-eminent position as Sri Lanka’s leading Tea and Rubber broker; To uphold the traditions and ethics of the Tea and Rubber trades; To ensure superior customer service through a dedicated and motivated workforce.

ValuesWe are committed to the highest level of integrity and ethical conduct in all our business activities.

We will look towards exceeding shareholder and customer expectationsby achieving excellence in all areas of operations.

We recognise the right of every individual to be treated with fairness, dignity and respect and assist our employees to improve their skills and reward their accomplishments.

We will focus on corporate social responsibility and look to protect and safeguard the environment.

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Financial Calendar

INTERIM REPORTS1st Quarter 27th July 20122nd Quarter 8th November 20123rd Quarter 30th January 20134th Quarter 28th May 2013

ANNUAL REPORTS2012/13 3rd June 20132011/12 1st June 2012

MEETINGS66th Annual General Meeting 26th June 201365th Annual General Meeting 27th June 2012

DIVIDENDSFirst and Final dividend of Rs 3.50 per share will be paid on 17 th June 2013

Company: John Keells PLCPrincipal Activities: Produce Broking and Real Estate OwnershipSubsidiary: John Keells Warehousing (Pvt) Ltd.Directors of The Company: Mr. S.C. Ratnayake (Chairman), Mr. A.D. Gunewardene, Mr. R.S. FernandoYear of Incorporation: 2001 Principal Activities: Warehousing of Tea and Rubber

Capital Structure: No. of Shareholders Issued Share Capital Holding Percentage (Rs.000’s) (%) 2013 2012 2013 2012 2013 2012

2 2 120,000 120,000 100 100

(Rs.000’s) (Rs.000’s) (Rs.000’s) 2013 2012 2013 2012 2013 2012

87,521 97,069 34,148 41,564 43 42

Subsidiary: John Keells Stock Brokers (Pvt) Ltd. Directors of the Company: Mr. A.D. Gunewardene (Chairman), Mr. S.C. Ratnayake, Mr. K.N.J. BalendraYear of Incorporation: 1979 Principal Activities: Share Broking


5 5 7,500 7,500 76 76

(Rs.000’s) (Rs.000’s) (Rs.000’s) 2013 2012 2013 2012 2013 2012

208,965 313,130 63,049 171,441 28 33

Associate: Keells Realtors Ltd.Directors of the Company: Mr. S.C. Ratnayake (Chairman), Mr. A.D. Gunewardene, Mr. S. RajendraYear of Incorporation: 1966 Principal Activities: Property Development and Real Estate Operations


9 9 75,000 75,000 32 32

(Rs.000’s) (Rs.000’s) (Rs.000’s) 2013 2012 2013 2012 2013 2012

7,347 5,663 35,793 23,958 1 1


Group Structure

6

Highlights of our Performance


Financial Highlights GROUP COMPANY 2012/2013 2011/2012 Change % 2012/2013 2011/2012 Change %

Revenue (Rs.000’s) 858,097 891,499 (3.75) 572,940 492,077 16.43

Earnings per share ( Rs.) 12.22 14.15 (13.65) 12.57 14.86 (15.43)Dividend per share ( Rs.) 4.00 2.50 60.00 4.00 2.50 60.00Dividend Cover (Times) 3.05 5.66 (46.03) 3.14 5.94 (47.14)Net Assets per Share (Rs.) 53.89 42.96 25.44 46.59 38.12 22.23 No. of Employees 180 178 0.56 109 103 5.83 Turnover per Employee (Rs.000’s) 4,767 5,008 (4.81) 5,256 4,777 10.02

858.1mnRevenue

753.6mn Rs.12.22Earnings per share

8

Sustaining Lives.partnerships that span generations...

We are a major employer of people, often in communities

we bring.

WarehousingOur state of the art warehouse

Tea BrokingOnce again, we established the most top prices and record prices.


and rubber industries, John Keells PLC is directly and indirectly, a major employer of people - over 5,000 in fact, all of whom depend on our continued success and well-being for their own.”

StockbrokingJohn Keells Stockbrokers has continued to gain market share.

Rubber BrokingRubber prices declined sharply during the year under review

10

partnerships that span generations...

Sustaining Lives.

We have a positive impact both on our direct employees and on other businesses we work with.




StockbrokingJohn Keells Stockbrokers has continued to gain market share.

Stock BrokingJohn Keells Stockbrokers has continued to gain market share.

“Our process chain is a wide-ranging one and as such, affects people from every demographic, from village communities to distributors, brokers and the young executives and school leavers we employ.”

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competitiveness. The average price of High, Medium and Low grown tea increased by 13.8 per cent, 9.7 per cent and 6.7 per cent respectively. The annual average price of all teas achieved an all-time record of Rs. 391.64 per kg in 2012 surpassing the previous best of Rs.370.60 per kg recorded in 2010.

Rubber BrokingRubber production in Sri Lanka declined to 152,000 MT as reported by the Rubber Development Department, which is 3.9 per cent lower when compared with the previous year‘s production. This was primarily on account of the

during high cropping months.

Economic Environment Tea BrokingAgainst the backdrop of several global and domestic challenges, the Sri Lankan

in 2012 for the fourth consecutive year, with the unemployment rate declining to 4 per cent in 2012. Despite adverse weather conditions, the Agricultural sector grew by 5.8 per cent in 2012 when compared to 1.4 per cent in the previous year.

Business EnvironmentTea brokingTea production in Sri Lanka was initially impacted by the drought conditions that prevailed in all tea growing areas at the beginning of the year, followed by cold and wet weather in the High Grown sector towards the latter part of the year. Despite the adverse weather conditions, tea production reached 328.3 Mkgs which is a marginal increase of 0.26 per cent compared with the previous

per cent and 2.74 per cent respectively whereas production of High Elevation teas recorded a contraction of 5.85 per cent. Most major black tea producing countries recorded substantial crop shortfalls due to weather related issues.

due to the increase in the FOB price per kg from Rs.510.72 to Rs.563.94 against

in 2012 declined to US Dollars 4.37 per kg from US Dollars 4.58 per kg in 2011.

The general trend of declining prices that were witnessed from the second

elevations recording a fall in price as a result of lower demand due to political turmoil and economic sanctions in the Middle East, which hindered the most important markets for Sri Lankan Low Grown teas. However, during the second half of the year, tea prices at the Colombo auctions rebounded as global supply contracted on account of a shortfall in Black tea production and the devaluation

Chairman’s Statement

Proud partnerships

Sri Lanka Tea Crop/Averages(2005 - 2012)

0

50

100

150

200

250

300

350

400

Crop - Mkgs Averages - Rs.2005 2006 2007 2008 2009 2010 2011 2012

317.

2

310.

8

304.

6

318.

7

289.

8

331.

4

327.

5

328.

3

185.

8

199.

5

279.

4

310.

8

360.

5

370.

6

359.

9

391.

6

13

Crepe 1X’s were selling at Rs.470.00 per kg and RSS.1 at Rs.465.00 per kg. By December 2012, 1X’s declined Rs.378.00 per kg, whilst RSS.1 dropped to

year 1X’s & RSS.1’s had both reduced to Rs.370.00 per kg.

Warehousing After several years, the warehouse charge for tea witnessed an upward revision. It is hoped that the Colombo Brokers’ Association together with stakeholders

storing and logistics provided by state of the art warehouses such as the one operated by your Company.

Stock Broking

supported by renewed buying interest focused on selected large cap counters during the second half of the year.

of a brief recovery in early January 2013, the ASPI was largely range bound in the

lower when compared to the Rs. 1.83 billion recorded in the previous year. Local buying was largely led by institutional investors, while High Net Worth Individuals and retail investors remained on the sidelines. Foreign institutional investors were

positions in the larger cap stocks. Foreign participation accounted for 32 per

share during the year with continued growth in the foreign

as a result of the lower daily market turnover compared to

Financial PerformanceFor the year ended 31st March 2013, the Group achieved revenues of Rs.858 million (Rs. 891 million in 2012) with a

Million (Rs.860 million in 2012), amounting to a decrease of 4 per cent and 14 per cent respectively.

of investment property of Rs.484 million (Rs.581 million in 2012). Adjusting for the impact of the gain from the change in fair value of investment property in both years,

is Rs.259 million as against Rs.279 million in the previous year, representing a decrease of 7 per cent.

ConclusionI would like to thank all categories of Staff for their commitment, as well as all other Stakeholders for their contribution during the year. I am also grateful to the Members of the Board for their guidance and support.

S C RatnayakeChairman

28th May 2013

JOHN KEELLS PLC Annual Report 2012/2013

14

and greater brand choice will also help to drive up Russia’s consumption.

Tea consumption in Iran is forecasted to decline owing to the country’s poor performance and trade sanctions

have reported drops in sales to Iran after Iranian Banks access to International Banking systems were curtailed,

also been affected by high volatility making imports

Global TrendsTeaSri Lanka’s tea production in 2012 was 328.3 Mkg which

whilst both the Medium and Low Grown Sectors showed

369.6 Mkg decreased by almost 8.5 Mkg when compared to the previous year. Amongst the major Tea producers, Sri Lanka, India and Kenya, Indonesia and Vietnam have reported lower production in the year 2012.

Tea Production 2011 - 2012

High Grown

Medium Grow

Low Grown

Total

2011 78.2 52.6 196.7 327.5

2012 73.7 52.6 202.1 328.3

Sri Lanka ended 2012 on a positive note with a national total tea average at an All Time Record of Rs.391.64

IntroductionThe Tea Industry which was once the back bone of the Sri Lankan Economy is

rests heavily in the movement of global prices and production costs.

COP of the Sri Lankan Tea Producer is considered the highest when compared with any tea producing country globally.

The Industry needs to make more important strategic choices in order to maintain competitiveness globally.

The Tea Industry in Sri Lanka occupies an important place in the country’s economy. At present, the entire Industry is facing change and new competition globally. Labour cost and productivity cost have risen, the market share has dropped and production has moved off the Plantations to Smallholders. With all these changes in the Industry, structural reforms are urgently needed to make the Tea Industry viable.

in China and emerging economies in Asia, the Middle East and Africa will

consumption habits, stemming from rising income levels. Tea consumption in

will grow at a slightly higher rate in 2013.

Rising income levels, falling unemployment and growing demand for Green

Chief Executive Officer’s Report


Turkey occupying the 4th and 5th positions respectively.

Colombo Auction Averages ( In Rs.)

2011 2012

Uva High Grown 302.77 344.95

Western High Grown 340.12 386.84

High Grown 329.85 375.53

Uva Medium 320.10 354.29

Western Medium 319.86 349.31

Medium Grown 319.95 351.08

Low Grown 381.30 407.14

Total 359.89 391.64

Operational ReviewTea Broking

companies in Sri Lanka and once again established the highest number of Top Prices and Record Prices amongst

an attractive premium over the national average. The Company continue to offer high end services to the

elevations recorded positive gains with High Grown, Medium Grown and Low

tea prices at the Colombo Auctions.

Colombo continued to be the largest Auction Centre for single origin teas.

Quantity Sold at World Auction Centres (Million Kg)

Country 2008 2009 2009 2011 2012

Colombo 264.9 271.8 271.8 316.1 322.5

Calcutta 139.3 151.6 151.6 165.9 144.7

Guwahatti 152.3 138.5 138.5 125.6 123.39

Siliguri 89.7 85.0 85.0 93.7 94.32

Coonoor 50.6 44.7 44.7 52.8 55.02

Coimbatore 28.1 25.6 25.6 18.0 18.04

Cochin 61.6 55.1 55.1 61.6 57.36

Chittagong 55.0 54.2 54.2 53.9 58.08

Mombasa 303.2 279.4 279.4 333.9 359.80

Local Trends

a decrease of 2.7 Mkg compared to the corresponding year 2011. The average FOB price per kg was Rs.563.94 compared to Rs.510.72 per kg which is an

High Grown Medium Grown Low Grown Total

Rs US$ Rs. US$ Rs. US$ Rs. US$

2008 273.83 2.52 270.13 2.49 336.38 3.10 310.81 2.86

2009 319.73 2.78 316.06 2.74 387.70 3.37 360.45 3.13

2010 337.38 2.99 329.50 2.93 393.19 3.48 370.61 3.28

2011 329.95 2.98 319.77 2.89 381.27 3.45 359.89 3.25

2012 375.53 2.90 351.08 2.70 407.14 3.15 391.64 3.03

16

Rubber BrokingThe year 2012 was not very healthy for the Rubber Industry. The main concerns were the debt crisis in Europe which weighed down the consumer patterns worldwide and slowed down raw material consumption which in turn affected the demand for the commodity and its prices. China and Japan who are the biggest consumers of natural rubber in the world were compelled to reduce their consumption drastically, as they had no market for the end products they manufacture owing to the debt crisis which was a dark cloud over the European region.

Colombo Rubber Auction Averages from April 2012 to March 2013

0

100

200

300

400

500

APR

MAY

JUN

JUL

AU

G

SEP

OC

T

NO

V

DEC

JAN

'13

FEB

MA

R

L.CR.1X RSS.1

Rs

in April’12 dropped to Rs.378.00 per kg by December’12, whilst RSS.1 dropped to Rs.375.00 per kg from Rs.465.00 per kg in April’12.

Real EstateThe Revenue and PBT of the real estate arm decreased during the year when compared with the previous year.

was mainly due to the decrease in fair value of investment property, which is Rs.483.5 Mn.

Performance of Associate CompanyKeells Realtors (Pvt) Ltd. (32% Holding)Keells Realtors (Pvt) Limited, an associate Company of John

increase in fair valuation of investment property whereas

change of Fair Valuation of Investment Property.

Performance of SubsidiaryJohn Keells Stock Brokers (Pvt) Ltd. (76% Holding)

improvement in market share with steep growth in the foreign segment and steady growth in the High Net Worth Individuals and local institutional segments. However lower local participation during the period given the comparatively higher interest rate environment resulted in


Best Corporate ReportsWe are pleased to inform you that your company received the Silver Award

Accountants Annual Report Awards 2012. The competition is conducted annually by the Institute of Chartered Accountants of Sri Lanka.

John Keells Warehousing (Pvt) Ltd.(100% Holding)The Warehouse continued to maintain the high standard that had been

Health & Safety Assessment Series (OHSAS) in November, becoming the

Tea Warehouse rent was increased from March 2013.

Sustainability Reporting John Keells PLC is committed to better integrating sustainability throughout its value chain with its strategic outlook based on the ‘triple bottom line’ (TBL) of economic, environmental and social performance. The Group has understood the importance of identifying and engaging with all relevant stakeholders. The parent company John Keells Holdings PLC is further supported through

adherence to the Global Reporting Initiative (GRI-G3) framework. The organisation is also a member of the United Nations Global Compact (UNGC) and supports the Millennium Development Goals, further reiterating the Group’s commitment towards sustainable development.

Risk ManagementThe Company and its subsidiaries adopt the Group’s Risk Management Programme which focuses on wider sustainability development, to identify, evaluate and

risk scenarios. The programme ensures that a multitude of risks are effectively managed in creating and preserving shareholder and other stakeholder wealth. The detailed Risk Management report of the Annual Report describes the process of risk management as adopted by the

of the company’s strategic business objective.

Employee Relation Staff Welfareand Employee DevelopmentJKPLC HR Department functioned during the year 2012, in order to align HR strategy with the Business strategy and to enhance the effectiveness of the HR function of the Company.

The Company continuously invests in the training and development of staff in all categories from Senior

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and also as a community development project to various communities. The staff members participated in all Group and mercantile sports tournaments and CSR projects.

Internship training is given to University undergraduates to develop soft skills.

OmbudsmanAll employees of the Company have recourse to an Ombudsman appointed by our parent Company John Keells Holdings PLC (JKH). This is an appointment to further strengthen the governance structure and to encourage and facilitate all employees to live by JKH values.

In conclusion, I wish to thank the Chairman and the Board of Directors, for their direction and guidance. My gratitude also goes to all categories of Staff and our valued Clients for their loyalty and support.

Sudath Munasinghe

28th May 2013

Management downwards and the training

JKPLC employees were engaged in E-Learning Management System online.

views for the development of the Company through Joint Consultative Committee meetings and all the relevant information about the Company are conveyed to all the employees at the staff meetings.

Reward programmes such as “Employee of the

the group. Long service staff members are also

Award”.

In addition to the above mentioned annual awards, the employees at different levels who demonstrated superior performance in line with the group values were well recognised for their

the V-SPARC gatherings.

Our volunteered staff members conduct HIV/Aids workplace education programmes for the staff


Board of DirectorsSusantha RatnayakeNon Independent Non Executive Chairman

Susantha Ratnayake was appointed as the Chairman and CEO of John Keells Holdings PLC (JKH) in January 2006 and has served on the JKH Board since 1992/93. He is also the Chairman of many of the listed and un-listed companies within the Group. Mr. Ratnayake is the Chairman of the Ceylon Chamber of Commerce and Vice Chairman of the Employers’ Federation of Ceylon and serves on several clusters of the National Council for Economic Development.

Keells Group.

Ajit GunewardeneNon Independent Non Executive Director

Ajit Gunewardene is the Deputy Chairman of John Keells Holdings PLC and has been a member of their Board for over 20 years. He is a Director of many companies in the John Keells Group and is the Chairman of Union Assurance PLC. He is a member of the board of SLINTEC, a company established for the development of nanotechnology in Sri Lanka under the auspices of the Ministry of Science and Technology. He has also served as the Chairman of the Colombo

Ronnie PeirisNon Independent Non Executive Director

Appointed to the John Keells Holdings PLC Board during 2002/03, Ronnie Peiris has overall responsibility for the Group’s Finance and Accounting including

and Group Initiatives. He was previously the Managing Director of Anglo American Corporation (Central Africa) Limited in Zambia. Ronnie has over 40

He is a Fellow of the Chartered Institute of Management Accountants, UK;

Management Accountants, Sri Lanka and holds an MBA from the University of Cape Town, South Africa. He is a member of the committee of the Ceylon

on its Economic, Fiscal and Policy Planning Sub Committee. He is a Director of several companies in the John Keells Group and the outgoing President of the Sri Lanka Institute of Directors.

Sanjeeva FernandoNon Independent Executive Director

Sanjeeva Fernando, President for the IT Industry Group and Plantation Sector, John Keells Group, bears overall responsibility for both the Information Technology and Plantation Services Sectors.

Mr. Fernando possesses over 26 years of senior managerial

the John Keells Group in 1993 and has headed the Group’s printing and packaging businesses, bunkering businesses and has served as head of the Transportation and Logistics Industry Sector overseeing the Group’s Airline, Travel, Freight Forwarding, Shipping and Bunkering businesses in Sri Lanka India and the Maldives.

Mr. Fernando was also given the responsibility of setting up and developing the Group’s IT Enabled Services business (BPO) in Gurgaon, India and resided in India from 2007 unti 2012 whilst overlooking the rest of the IT businesses in the Group.

London School of Printing and is a member of the London Institute of Printing.

Deshabandu Tilak de Zoysa Independent Non Executive Director

Tilak de Zoysa was appointed as an Independent Non

2005.

He was conferred with the title “Deshabandu” in recognition of his services to Sri Lanka and was the recipient of a prestigious National Honour from the Emperor of Japan.

He is President of the Associated Motorways Group of Companies, Chairman of Carson Cumberbatch PLC,

International UK, Helpage Sri Lanka, Jetwing Zinc Journeys

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Sharmini RatwatteIndependent Non Executive Director

Sharmini Ratwatte was appointed as an Independent Non

2007.

She is a Fellow Member of the Chartered Institute of Management Accountants, UK and also holds a Masters in Business Administration from the University of Colombo.

(Pvt) Ltd, the non-apparel investment arm of the MAS

organization empowering differently-abled persons using the performing arts and Director of the Environmental

environmentally sustainable development in Sri Lanka.

Lanka Pvt Ltd and other listed companies, such as, Taj Lanka Hotels Ltd., Lanka Walltiles PLC., Eastern Merchants, Nawaloka Hospitals PLC., Dutch Lanka Trailer Manufacturers Ltd. - (Tata Group) Inoac Polymer Lanka Private Ltd. and Associated Electrical Corporation Ltd.

Tilak de Zoysa is the Honorary Consul for Croatia in Sri Lanka since 1999 and a Past Chairman of the Ceylon Chamber of Commerce, National Chamber of Commerce of Sri Lanka and the Plastics and Rubber Institute. Mr. de Zoysa also served as a Member of the Monetary Board from 2003-2009.

Kavan Ratnayaka Independent Non Executive Director

of John Keells PLC since July 2005. He holds a Bachelor of Science (Physics)

of Information and Communication Technologies. Kavan was the Group Chief

Country General Manager for Sri Lanka/Maldives (1997-2007).

Kavan is a Director of the Sri Lanka Institute of Directors (SLID) and of the Sri Lanka Business Development Center (SLBDC). He has served on the Council of the Employer’s Federation of Ceylon (EFC) and on the Boards of the Arthur C.

President of Amcham, Sri Lanka.

Yolande HansenIndependent Non Executive Director

to the Board of John Keells PLC, in July 2005. She joined John Keells Group (Walkers Tours) in June 1972, as one of the pioneers in Tourism, and worked for 16 years for the Group. She then joined a Multinational Tourism Conglomerate

Columbus Tours and presently serving as its CEO. She is a Director of the Tourism Training Institute of Sri Lanka.

Board of Directors


Senior Management Team

Mr. Hishantha De MelManager, Tea

Mr. Shane IngramManager, Finance

Mr. Ravin VannitambyManager, Tea

Mr. Shehan MeegamaManager, Rubber

Mr. Kumar BharetiManager, Manufacture

Mr. Ravi KotalawelaConsultant

Mr. Sudath Munasinghe

Mr. Romesh Walpola Assistant Vice President/Head of Operations - Tea

Mr. Ashok JayewickremeAssistant Vice President/Head of Operations - (Warehousing)

Ms. Tishani De AlwisAssistant Vice President/Financial Controller

Mr. Dasarath DassanayakaHead of Manufacturing - High Grown

Mr. Sanjay KarunaratneManager, Tea

Ms. Kushani DaluwatteManager, Tea

22

Human Resources

Category Company Subsidiary Total

President 1 1

EVP 1 1

VP 1 1 2

AVP 2 2 4

Managers 9 4 13

Asst Managers 7 8 15

23 14 37

Clerical 10 1 11

Minor Staff 26 26

Total 79 31 110

Casual/Contract 30 40 70109 71 180

Age Company Subsidiary Total

Above 60 1 1

50 - 60 yrs 15 5 20

40 - 50 38 11 49

30 -40 12 7 19

20 -30 13 8 2179 31 110

Over 20 years 30 11 41

15 - 20 15 2 17

10 - 15 9 1 10

05 - 10 12 8 20

00 - 05 13 9 2279 31 110

Employees Strength

President 0.57%EVP 0.57%VP 1.14%AVP 2.27%Managers 7.39%Asst. Managers 8.52%Executives 21.02%Clerical 6.25%Minor Staff 14.77%Casual/Contract 37.50%

Age Analysis

Above 60 0.91%50-60 18.18%40-50 44.55%30-40 17.27%20-30 19.09%

Service Analysis

Over 20 Years 37.27%15-20 15.45%10-15 9.09%5-10 18.18%00-5 20.00%


country. Contracted to Francis Dawson Mitchell of Ceylon contractors, the station was modelled on the Victorian style British railway stations The station was and still is known for its architectural worth. It remains an emblem of Victorian art, with its stylish arches, intricate woodwork, neo-modern

stone.

It is in this light that John Keells stepped in to refurbish and maintain the station while preserving its colonial architecture. Launched in 2002, the project aims at restoring

the station to its original splendour while maintaining the other amenities within the station. Working on the basis that the station should not be just another amenity to the people who pass by, but more so, clean and user friendly, John Keells PLC ensures daily maintenance of the station.

Corporate Social Responsibility

“John Keells is committed to protect the Colonial Heritage Station in Slave Island .” Situated in a commercial hub, the Slave Island Railway Station, better known as the Kompanna Vidiya Railway Station, stands strong as one of the oldest legacies of our British heritage. The area got its name during the British occupation and originates from the Portuguese and Dutch period. Since then, the area has evolved into a commercial locale with business establishments, hotels and

on the coastline route to have a double platform, following the duplication of the

coastline from 1913 onwards. The Slave Island Railway station was built shortly after the construction of the track, on a grander and more elaborate scale than its precursors, the stations at Colpetty and Wellawatte. It boasted a structure - larger, more spacious and architecturally superior to any other station in the

24

The developments to the station have been on a need basis and in addition to the daily cleaning and maintenance of the station the following work has been done in order to facilitate the users & ensuring that there is a pleasant appearance on entering the station. Replacement of roof sheets, tiling of the lobby & ticket

and appearance of the station has improved drastically as a result of this project.

Our aim is to continue maintaining the station at a high standard on a long term basis as we see this project as a contribution towards the larger community and to the people who are a part of our daily lives.

HIV & AIDS Awareness Campaign John Keells PLC supported the John Keells HIV and AIDS Awareness Campaign which is a CSR initiative of John Keells Foundation aimed at prevention through awareness. The John Keells Group adopted an HIV and AIDS Workplace policy across all the Group companies in Sri Lanka. Since the inception of the initiative,

awareness programmes have been successfully conducted among Group employees as well as various targeted communities of the country where the risk of spread and the importance of awareness is high. This includes businesses, hotels, security forces, prisons and educational institutions. Our in house Master Trainers have also assisted the Lanka Business Coalition on HIV and AIDS (LBCH) on some of their programs to take the message in to the society; changing lives and livelihoods of many.

Sessions for Sri Lanka Army Internal Awareness Sessions Lanka Business Coalition for HIV & AIDS (LBCH) Awareness Sessions with JKH Master Trainers


Corporate Governance

John Keells PLC, its subsidiaries John Keells Warehousing (Private) Limited and John Keells Stock Brokers (Private) Limited and associate company Keells Realtors (Pvt) Limited referred to as the “Group” through its ultimate parent company, John Keells Holdings PLC (JKH) have put in place an operating model to direct, manage and control the affairs of the Group in the best interests of the

The Board of Directors is committed to the highest standards of business integrity, ethical values and professionalism in all its activities towards rewarding all its stakeholders with greater creation of value, year-on-year.

This philosophy has been institutionalised at all levels in the Group through a strong set of corporate values and a written code of conduct, that all employees,

the Group’s image. All the Group’s recognition schemes insist, as a minimum, that all nominees have lived the JKH values and the behaviour of the senior management of the Group, are monitored through an annual 360 degree feedback programme.

The Group believes that the main source of its competitive advantage is the trust that the stakeholders place on the core values underlying its corporate activities.

The Corporate Governance philosophy practiced is in full compliance with the following and where necessary, any deviations as allowed by the relevant rules

best interest of the Company and its stakeholders

safeguarding the rights of multiple stakeholders

us as the goals themselves

decision making

integral aspect of Board effectiveness and a responsible approach to business

regulatory bodies the implementation of Governance Regulations, Accounting Standards, and economic reforms in Sri Lanka and other jurisdictions where the Group has major business interests

governance regulations and accounting standards

present strong commercial advantages especially through a lowering of our cost of capital as a result of

Individual

that ensures transparent and ethical dealings which are compliant with the laws of the country and the standards

The Board of DirectorsChairman of the Board

The Chairman conducts Board meetings ensuring effective participation from all Directors. The Chairman is responsible for providing leadership to the Board and ensuring that proper order and effective discharge of Board functions are carried out at all times by the Board members. The roles of

separate with a clear distinction of responsibilities between

of the company’s business including implementation of strategies approved by the Board and developing and recommending to the Board the business plans and budgets that support the company’s strategy has been entrusted to the CEO.

26

above, have submitted a signed and dated declaration

Board Induction and supply of information

Directors are newly appointed to the Board, they are

legislation.

activities of the Group.

All Directors are fully briefed on important developments in the various business activities of the Group. The Directors have access to

services

matters, new regulations and best practices as relevant to the Group’s businesses.

Board responsibilities and decision rightsThe Board of Directors retains full and effective control of the Company and their

strategies, with emphasis on the medium and long term, in the pursuance of

planning.

Board compositionThe Board of Directors of John Keells PLC as at 31st March 2013 consists of 8

The Directors are collectively responsible for upholding and ensuring the highest standards of corporate governance and inculcating ethics and integrity across the

their governance duties in an effective manner.

(a) Mrs. S T Ratwatte (b) Mr. T De Zoysa

Corporate Governance


Conflicts of interest and independenceEach director has a continuing responsibility to determine

personal relationships in material matters which are considered by the board from time to time.

adhere to best practices as illustrated below.

is the responsibility of the Board.

Board Directors delegation of authorityThe Board has delegated some of its functions to Board committees, while

committees.

to the President- Sector Head, CEO and the Management Committee of the company and its subsidiaries.

All NEDs notify the Chairman-CEO of any changes to their current Board representations or interests.

Directors who have an interest in a

on the subject matter.

matter (abstentions, where applicable, from decisions, are duly minuted).

known their various interests that

interests of the Company.

Prior to Appointment

Once Appointed

During Board meetings

Summary of Non-Executive / Independent Directors’ Interest Share Holding (1) Management

Director (2)Material Business Relationship (3)

Employed by the company (4)

Family member a director or CEO (5)

Continuously served for more

than nine years (6)

T. de Zoysa

K.D.W. Ratnayaka

Ms.S.T. Ratwatte

28

Board tenure, retirement and re-electionAt each Annual General Meeting one third of the Directors retire by rotation on the basis prescribed in the articles of association of the company and are eligible for re-election.

Any Director, who has been appointed to the Board during

The re-election of Directors ensures that shareholders have an opportunity to reassess the composition of the Board. The names of the Directors submitted for re-election are provided to the shareholders in advance to enable them to make an informed decision on their election.

The retiring Directors’ eligible for re-election this year are mentioned in the notice of the AGM on page 136.

Human Resources and Compensation Committee and PolicyThe Human Resources and Compensation Committee of the Parent Company John Keells Holdings PLC functions as the Human Resources and Compensation committee of the Company and its subsidiaries as permitted by

2. Director of another company**

income director income

4. 2 years immediately preceding appointment as director None of the NED/IDs are employed or have been employed at JKH

5. Close family member who is a director or CEO No family members of the EDs or NED/IDs is a director or CEO

nine yearsNone of the NED have served the board continuously for a period

Board meetings & AttendanceThe Board met four times during the year. The attendance at these meetings was

Board Meeting AttendanceMeetings Attended

S. C. Ratnayake - Chairman 4/4

A. D. Gunewardena 4/4

J.R.F Peiris 4/4

R.S. Fernando 3/4

T. de Zoysa 3/4

K.D.W. Ratnayaka 3/4

3/4

Ms.S.T. Ratwatte 4/4

Corporate governance


The more senior the level of management, the higher the proportion of the incentive component, thereby lower

compensation.

The Nominations Committee of the Parent Company John Keells Holdings PLC functions as the Nominations Committee of the Company. The Committee comprises of 4 Independent Directors; Mr. T Das - ChairmanMr. S. RatnayakeMrs. S TiruchelvamMr. S. Enderby - resigned with effect from 8th March 2013

People and talent management The John Keells Group believes that shareholders’ long term interests are well served by involving employees actively in safeguarding the Group Corporate Governance framework, where the employees are encouraged and empowered to positively contribute towards upholding the principles of Corporate Governance.

levels in the internal governance structure. Policies, processes and systems have been put in place to ensure effective recruitment, development and retention of employees as the Group is committed to hiring and

competencies.

Moreover the Group provides a safe, secure and conducive environment for its employees, allows freedom of association and collective bargaining, prohibits child labour, forced or compulsory labour and any discrimination based on gender, race or religion, and promotes workplaces

all of which compliment effective Corporate Governance.

and Compensation Committee of John Keells Holdings PLC comprises four

Mr. E.F.G. Amerasinghe - Chairman Dr. I. CoomaraswamyMr. A.R. GunasekaraMs. S.S. Tiruchelvam

The remuneration policy of the Group is formulated to attract and retain high

strategy in order to optimise long term shareholder value creation.

third party on the basis of the relative worth of the jobs.

Compensation is set at levels that are competitive to enable the recruitment and

guided by the best comparator set of companies from Sri Lanka. Compensation

incentives be tied to performance both individual and organisational.

each level-individual, business and group, thereby aligning shareholder interest through well established performance management system.

The employees are rewarded with a performance based scheme that is

Manager and above - given the high level of decision making authority,

to the Company’s objectives, thereby aligning employee management and stakeholder interests.

- measured only by the individual

performance of their respective business units.

30


The John Keells Foundation, the vehicle used by the Group in developing and implementing the Group’s involvement in ‘the community’ has geared itself to ensure that the social programmes of the Group are consistent with the principles of sustainable development.

Effective and transparent communicationEmployee communicationThe Group is continuously working towards introducing innovative and effective ways of employee communication and employee awareness. The importance of communication - top-down, bottom-up, and lateral communication in gaining employee commitment to organisational goals and values has been conveyed

issued by the Chairman-CEO and the management. Whilst employees have many opportunities to interact with senior management, the Group has also created formal channels for such communication through feedback as described

Skip level meetings - feedback on the Company and its management is obtained from different perspectives by holding regular skip level meetings at Assistant Manager and above levels.

360 degree evaluation - opinion is obtained in the form of 360 degree evaluation for employees at Manager and AVP levels and above.

Online Forum - used as a means of knowledge sharing and gathering new suggestions for new business opportunities and improvements.

Direct email address to the Chairman - enables employees to bring to his notice any transgression of Group values when other established avenues have not yet yielded results.

Employee involvement and empowerment

appropriate, all levels of staff in formulating goals, strategies and plans.

ownership, reduce bureaucracy and speed-up the decision making process.

plans and the Group also ensures employee involvement and empowerment

allocation plan).

by all employees to every level of management.

Employee relationsHR units are designed in a manner that enables high accessibility by any employee to every level of management. Constant dialogue and facilitation are also maintained, relating to work-related issues as well as matters pertaining to general interest that could affect employees and their families. Therefore, the Group follows open-door policies for its employees and key stakeholders and this is promoted at all levels of the Group.

The Group also has skip level meetings where an employee can discuss matters of concern with superiors who are at a level higher than their own immediate

Dialogue with shareholders The Group has opened up several channels to ensure sound communication with the shareholders and the details are found in the relevant sections of this report.

Other stakeholders: Corporate social responsibility and sustainability

value but also to look after the rights and appropriate claims of many non-shareholder groups such as employees, consumers, clients, suppliers, lenders, environmentalists, host communities and governments.


The Ombudsperson entertains complaints from an individual employee or a group of employees of alleged violations of the published ‘Code of Conduct’ if the complainant feels that the alleged violation has not been addressed satisfactorily.

CEO or to the Senior Independent Director upon which the duty of the ombudsperson ceases.

The Chairman/CEO or the Senior Independent Director, as the case may be, will place before the Board;

i. the decision and the recommendations

ii. action taken based on the recommendations

iii. where the Chairman/CEO or the Senior Independent

and or the recommendations thereon, the areas of disagreement and the reasons therefore.

of disagreement and decide on the way forward. The Chairman/CEO or the Senior Independent Director is

that the complainant is not victimised for having invoked this process.

Securities trading policyThe Parent Company’s securities trading policy prohibits all employees and agents engaged by John Keells PLC who are aware of unpublished price sensitive information from trading in John Keells PLC shares or the shares of other companies in which the Group has a present business interest.

Monitoring of financial data

original plan on a monthly basis and a reforecast is done

Integrated Risk ManagementThe Company and its subsidiaries adopt the ultimate parent company’s risk management programme with focus on wider sustainability development, to

risk scenarios. The programme ensures that a multitude of risks, arising as a result of the Group’s diverse operations, are effectively managed in creating and preserving shareholder and other stakeholder wealth.

Following steps are taken towards promoting Group’s integrated risk management;

monitoring and reporting with risk management.

cohesive integrated and aligned manner to improve performance, while

limits for risk taking.

The detailed Risk Management report of the Annual Report describes the process

achievement of the Group’s strategic business objectives.

Audit Committee Refer Audit Committee report on page 51

Employee participation in Assurance Whistleblower policy The employees can report to the Chairman through a communication link named ‘Chairman Direct’, on any concerns about unethical behaviour and any violation of Group values. Employees reporting such incidents are guaranteed complete

committee under the direction of the Chairman.

Ombudsperson All employees of the Company have a recourse to an ombudsperson appointed by our parent company John Keells Holdings PLC (JKH). This is an appointment to further strengthen the governance structure and to encourage and facilitate all employees to live by JKH values.

32

where necessary at GMC, Sector Committee, and Management Committee and

by the Board.

Internal Control The Board has taken necessary steps to ensure the integrity of the Group’s

effective via the review and monitoring of such systems on a periodic basis. What follows is a brief description of some of the key systems.

Internal compliance

regulations.

The presidents of the industry groups, sector heads and the CEOs of business

Internal auditorsThe internal audit function in Group companies is not outsourced to the

independence.

System of internal controlThe Board has, through the involvement of the Group Business Process Systems function, taken steps to obtain assurance that systems designed to safeguard the Company’s assets, maintain proper accounting records and provide management

The risk review programme covering the internal audit of the company and

instance, considered and discussed at the business/ functional unit levels and after


review by the sector head and the president of the industry group are forwarded to the relevant audit committee on a regular basis. Further, the audit committees also assess the effectiveness of the risk review process and systems of internal control on a regular basis.

JKH Code of Conduct

by a strong set of corporate values and the Group values are well institutionalised at all levels within the Group and linked to the reward and recognition schemes in addition to being embedded to the performance management system.

External Audit

and its subsidiaries. They also audit the consolidated

also provided certain non-audit services to the company & its subsidiaries. However, the lead/consolidator auditor would not engage in any services which are in the restricted

such services have been provided with the full knowledge of the respective audit committees and are assessed to

independence.

The Board has agreed that, such non-audit services should

by the subject auditor within the relevant geographic

independence on an annual basis.


The audit and non-audit fees paid by the Company and its subsidiaries our

Regulatory FrameworkComplianceThe Board is conscious of its responsibility to the Shareholders, the Government

ethical behaviour in conducting its business. The Board strives to ensure that the Company complies with the laws and regulations of the country.

The Board of Directors has also taken all reasonable steps in ensuring that all

Standards (SLFRS/LKAS) issued by the Institute of Chartered Accountants of

applicable authorities.

The Board is aware of the growing importance of the disclosure of critical accounting policies as a part of good governance and opines that there are no instances where the use of such concepts would have a material impact on the

This report has been prepared as per the rules and regulations stipulated by the

(revised in 2011) and also by the Companies Act No. 07 of 2007.

The Group has also given due consideration and adhered to the Code of Best Practice on Corporate Governance Reporting guidelines jointly set out by the

Commission in preparation of this Corporate Governance Report, and where

regulations.

34


Statement of Compliance under Section 7.10 of the Rules of the Colombo Stock Exchange (CSE ) on Corporate Governance(Implemented on 1st April 2009 and includes amendments up to 1st November 2012)

CSE Rule Compliance Status

JKPLC Action

7.10 Compliance

a. / b. / c. Compliance with Corporate Governance Rules

The Group is in compliance with the Corporate Governance Rules and any

a. / b. / c. At least 2 members or 1/3 of the Board, whichever is higher should be NEDs

7 out of the 8 Board members are NEDs.

Non - ExeExe

7.10.2 Independent Directors

a. 2 or 1/3 of NEDs, whichever is higher shall be ‘independent’.

b. Each NED to submit a signed and dated declaration of his/her independence or non-independence

The JKPLC Group is conscious of the need to maintain an appropriate

composition over time, in line with needs. Independence of the Directors has been determined in accordance with CSE Listing Rules and the four

of their independence.

7.10.3 Disclosures relating to Directors

a. / b. Board shall annually determine the independence or otherwise of NED their independence.

c. A brief resume of each Director should be included in annual report including the

Refer Board of Directors on page no 19.

d. Provide a resume of new Directors appointed to the Board along with details



JKPLC Action

to be an independent director Refer Summary of Directors’ interest.

7.10.5 Remuneration Committee

a. 1 Remuneration Committee shall comprise of NEDs, a majority of whom will be independent

The Human Resources and Compensation Committee of the parent company functions as the Human Resources and Compensation Committee

directors.

appointed as Chairman of the Committee by the board of directors

Committee.

b. Remuneration Committee shall recommend the remuneration of the CEO per the remuneration principles of the Group and recommended by the

Human Resources and Compensation Committee.

c. 1 Names of Remuneration Committee members

The corporate governance report in the annual report gives the names of the members.

c. 2 Statement of Remuneration policy Refer corporate governance report in the annual report.

c. 3 Aggregate remuneration paid to EDs and NEDs

Aggregate remunerationED - Rs.7.5MnNEDs - Rs.6.3 Mn

7.10.6 Audit Committee

a. 1 Audit Committee shall comprise of NEDs, a majority of whom should be independent

directors.

a. 2 A NED shall be the Chairman of the committee

a. 3 CEO and CFO should attend AC meetings

Audit Committee meetings by invitation.

a. 4 The Chairman of the Audit Committee or one member should be a member of a professional accounting body

The Chairman of the Audit Committee is a Fellow of the Institute of Chartered Accountants (UK).

b. Functions of the Audit Committee shall include;

36



JKPLC Action

b. 1 Overseeing of the preparation,

SLFRS and the Group

b. 2 Overseeing the compliance with The Audit Committee has the overall responsibility for overseeing the

regulations of the Country and also recommending to the Board, on the adoption of best accounting policies

b. 3 Ensuring the internal controls and risk The Audit Committee assesses the role and the effectiveness of the Group Business Process Review Division which is largely responsible for internal control and risk management

b. 4 Assessment of the independence and

b. 5 Make recommendations to the board The Committee is responsible for appointment, re-appointment, removal

engagement

c. 1 Names of the Audit Committee members shall be disclosed

Refer Audit Committee Report on page 51

c. 2 Audit Committee shall make a determination of the independence of the


c. 3 Report on the manner in which Audit Committee carried out its functions.



Code of Best practice of Corporate Governance jointly issued by the Securities and Exchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of Sri Lanka (ICSL) (Issued on 1st July 2008)

A. Directors


JKPLC Action

7.10 Compliance

A. 1 The Board

A. 1 Company to be headed by an effective Board to direct and control the company and accountable for the stewardship function of the Group. The Directors are

collectively responsible for upholding and ensuring the highest standards of corporate governance and inculcating ethics and integrity across the Group.

A. 1. 1 Regular Board meetings

A. 1.2 Board should be responsible for matters including implementation of business strategy, skills and succession of the management team, integrity of information, internal controls and risk management, compliance with laws and ethical standards, stakeholder interests, adopting appropriate accounting policies

functions

strategies, with emphasis on the medium and long term, in the pursuance

planning.

A. 1. 3 Act in accordance with the laws of the country and obtain professional advice

The Board seeks independent professional advice when deemed necessary.

advice was deemed necessary in ensuring the integrity of the subject decision.

including that of investment property.

A. 1. 4 Access to advice and services of the Company Secretary

To ensure robust deliberation and optimum decision making, the Directors have access to The services of the company secretaries whose appointment and/or removal is the responsibility of the Board.

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JKPLC Action

A. 1. 5 Bring Independent judgment on various business issues and standards of business conduct

discharging their duties as a JKPLC director and thereby brings independent judgment on various business issues.

effortand decision in between the formal Board meetings,

A. 1. 7 Board induction & training

A. 2 Division of responsibilities between the Chairman and the CE

A. 2. 1 Decision to continue the posts of Chairman and CEO in one person

The positions of Chairman and CEO are separate to ensure a balance of power and authority and to prevent any one individual from possessing unfettered decision making authority.In accordance with best practices and in order to maintain a clear division of responsibilities, the roles of Chairman and CEO have not been combined.

A. 3 Chairman’s Role

A 3.1 The Chairman should ensure Board proceedings are conducted in a proper manner

A. 4 Financial Acumen

A. 4 The Board should ensure the 2 out of the 8 Board members hold memberships in professional accounting




JKPLC Action

A. 5 Board Balance

As at 31st March 2013, the Board consisted of eight Directors, with four being

A 5. 2 Where the constitution of the Board

should be ‘Independent’.

N / Adirectors all of whom are independent.

All the independent directors of the JKPLC Board are independent of management and free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere

A. 5. 4 Declaration of independent directors his/her independence.

A. 5. 5 Board determinations on independence or non-independence of Annual Report

A. 5. 6 Appointment of Senior Independent Director (SID) of Chairman and CEO are separated.

A. 5. 7 Availability of the Senior

discussions with other Directors who may have concerns

Not Applicable

A. 5. 8 The Chairman should hold meetings

present

where they evaluate their performance, that of the Board in general, and identify issues for the future. This is followed by a meeting with the Chairman

A. 5. 9 Where Directors have concerns about the matters of the Company which cannot be unanimously resolved, they should ensure their concerns are recorded in the Board Minutes.

All the Board meeting proceedings are comprehensively recorded in the Board Minutes.

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JKPLC Action

A. 6 Supply of information

A. 6.1 Board should be provided with timely information to enable it to discharge its duties

The Board is provided with;

and best practices as relevant to the Group’s business.

A. 6. 2 Timely submission of the minutes,

meeting.

Board papers are dispatched a week prior to the Board meetings.

A. 7 Appointments to the Board

A. 7 Formal and transparent procedure for Board appointments

Board appointments follow a transparent and formal process within the purview of the Nominations Committee. The Nominations Committee of the parent company functions as the Nominations Committee of the Company

A. 7. 1 Nomination Committee to make recommendations on new Board appointments

It is the responsibility of the Nominations Committee to identify and propose

A. 7. 2 Assessment of the capability of Board to meet strategic demands of the company

The emerging needs, combined with the objectives and the strategies set for

Board members

A. 7. 3 Disclosure of New Board member All new appointments are communicated to the shareholders via the Colombo

A. 8 Re election

A. 8 / A. 8. 1 / A. 8. 2 Re-election at regular intervals and should be subject to election and re-election by shareholders

until their prescribed company retirement age.

per statutory provision at the time of re-appointment following the end of term.




JKPLC Action

the basis prescribed in the articles of the Company. A Director retiring by rotation or a Director who is subject to appointment is eligible for re-election by a shareholder resolution at the AGM.

The resolutions for the AGM to be held on 26th June 2013 cover re-election is provided in the Annual Report, enabling shareholders to make an informed decision.

A. 9 Appraisal of Board performance

A. 9. 1 The Board should annually appraise itself on its performance in the discharge of its key responsibilities

A. 9. 2 The Board should also undertake an annual self-evaluation of its own performance and that of its Committees

A. 9. 3 The Board should state how such performance evaluations have been conducted

The Board continued with its annual Board performance appraisal in 2012/13. This is a formalized process of self-appraisal, whereby each member assesses,

A. 10 Disclosure of information in respect of Directors

A. 11. 1 / A. 11. 2 Appraisal of the CEO against the set strategic targets

The Human Resources and Compensation Committee appraises the performance of the CEO on the basis of pre-agreed objectives for the Group set in consultation with the Board, covering the following broad aspects

B. Directors Remuneration

B. 1 Remuneration procedure

B. 1. 1 the Board of Directors should set up a Remuneration Committee

The Human Resources and Compensation Committee replaced the former Remuneration Committee which was primarily focused on the remuneration

The Human Resources and Compensation Committee is entrusted with the

Group.

make recommendations thereon to the Board of Directors.

42



JKPLC Action

purposes of organisational growth and succession planning, with particular

For the purposes of this report, the terms “compensation” and “remuneration”

Employees Provident Fund and Employees Trust Fund contributions), unless

B. 1. 2 Remuneration Committees should

Directors

The Remuneration Committee of the parent company John Keells Holdings PLC functions as the Remuneration Committee of the Company and it consists

B. 1. 3 The Chairman and members of the Remuneration Committee should be listed in the Annual Report each year.

The corporate governance report in the annual report gives the names of the members.

B. 1. 4 Determination of the remuneration Group in their capacity as Director. NED who are part of the group remit their fees to the group. Other NEDs are remunerated in line with market practices.

B. 1. 5 The Remuneration Committee should consult the Chairman about its proposals relating to the remuneration of

B. 2 The level and makeup of Remuneration

B. 2. 1 to B. 2. 4 Performance related elements in pay structure and alignment to industry practices

variable. This variability is linked to the peer adjusted consolidated Group

assessing the appropriateness of compensation with market benchmarks.

established that the compensation is in-line with the market. Benchmarking

intervals.

be offered at a discountNo share options were granted during the year.

B. 2. 6 Designing schemes of performance-related remuneration the special incentive associated with the achievement of pre-established

payable in the year under review.



JKPLC Action

B. 2. 7 / B. 2. 8 Compensation commitments in the event of early termination of the Directors

There is no terminal compensation commitments other than gratuity in the company’s contracts of service.

B. 2. 9 Level of remuneration of non- Compensation of NEDs is determined in reference to fees paid to other NEDs of comparable companies.

B. 3 Disclosure of Remuneration

B. 3 / B. 3. 1 Disclosure of remuneration policy and aggregate remuneration

C. Relations with Shareholders

C. 1 Constructive use of the Annual General Meeting (AGM) and Conduct of General Meetings

chairmen of the various Board sub-committees to have better familiarity with the Group’s business and operational workings.

present at the AGM are considered for each resolution.

C. 1. 2 Separate resolution to be proposed for each item

Each substantially separate issue is proposed as a separate resolution. The adoption of the report and accounts is proposed as a separate resolution.

C. 1. 3 Heads of Board subcommittees to

C. 1. 4 Notice of Annual General Meeting to be sent to shareholders with other papers as per statute

Notice of the AGM and related documents are sent to shareholders along with

stakeholders to make better informed decisions in their dealings with the Company.

C. 1. 5 Summary of procedures governing voting at General meetings to be informed

A summary of the procedures governing voting at the AGM is provided in the

C. 2 Major Transactions

C. 2 Major Transactions All material and price sensitive information about the Company is promptly

Company are listed, and released to the employees, press and shareholders.

months ended interim reports.

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JKPLC Action

C. 2. 1 Disclosure of all material facts

disposition of assets

D. Accountability and Audit

D. 1 Financial Reporting

D. 1. 1 Disclosure of interim and other price-sensitive and statutorily mandated reports to Regulators

The Board of Directors in consultation with the Audit committee have taken all reasonable steps in ensuring the accuracy and timeliness of published information and in presenting an honest and balanced assessment of results in

All price sensitive information has been made known to the Colombo Stock

the regulations.

D. 1. 2 Declaration by the Directors that the company has not engaged in any activities, which contravene laws and regulations, declaration of all material

of shareholders and going concern with

necessary

All statutory and material declarations are highlighted in the Annual Report of the Board of Directors in the Annual Report.

D. 1. 3 Statement of Directors’ responsibility

Refer Statement on Directors’ Responsibility on page 60.

D. 1. 4 Management Discussion and Analysis Refer Management Discussion and Analysis (Pages 12 &14)

D. 1. 5 The Directors should report that the business is a going concern, with

necessary.

The Board of Directors upon the recommendation of the Audit committee is

the foreseeable future.

D. 1. 6 Remedial action at EGM if net assets

funds.

In the unlikely event that the net assets of the Company fall below a half of

resolution passed on the proposed way forward.

D.2 Internal Control

D. 2. 1 Annual review of effectiveness of system of Internal Control and report to

The Board has taken necessary steps to ensure the integrity of the Group’s

effective via the review and monitoring of such systems on a periodic basis. What follows is a brief description of some of the key systems.



JKPLC Action

D. 2. 2 Internal Audit Function The internal audit function in Group companies is not outsourced to the

the Company for the year under review is found in the Financial Information section of the Annual Report.At the John Keells Group, the role of the internal auditor has transformed into a value adding function instead of merely a ‘policing’ function, where

processes. Thereby, the Group Business Process Review function is a key

diverse businesses among the Group.

D. 3 Audit Committee

D.3.1 The Audit Committee should be comprised of a minimum of two

majority of whom should be independent, whichever is higher. The Chairman of the

Director, appointed by the Board.

The Head and the members of the Audit Committee comprises of

D.3.2 Terms of reference, duties and responsibilities

The Audit Committee has the overall responsibility for overseeing the

of the country and also recommending to the Board, on the adoption of best accounting policies. The Committee is also responsible for maintaining the relationship with the

Business Process Review Division.

D.3.3 The Audit Committee to have written Terms of reference coving the salient aspects as stipulated in the section.

3.4 Composition of the Audit Committee, independence of the Auditors

The Audit Committee has written Terms of reference outlining the scope.


D. 4 Code of Business Conduct and Ethics

D.4.1 Availability of a Code of Business

declaration that the board of directors abide by such Code.

The written Code of Conduct, to which all the employees including the Board of Directors are bound by, engrains the desired behaviours of JKPLC staff at

constantly and rigorously monitored.

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JKPLC Action

D.4.2 The Chairman must certify that he/she is not aware of any violation of any of the provisions of this Code.

of the provisions of the Code of Conduct. In the instances where violations did take place, or were alleged to have taken place, they were investigated and handled through the Company’s well established procedures which, among

ombudsperson as discussed above.

D.5 Corporate Governance disclosures

D.5.1 The Directors should include in the Company’s Annual Report a Corporate Governance Report

Refer Corporate Governance Section (This section of the Annual Report)

E. Institutional investors

E. 1 Shareholder voting

E.1.1 A listed company should conduct a regular and structured dialogue with shareholders based on a mutual understanding of objectives.

The Company has a well-developed investor relations programme to address the information needs of investment institutions and analysts regarding the Company, its strategy, performance and competitive position.

E. 2 Evaluation of Governance Disclosures

E.2. When evaluating Companies’ governance arrangements, particularly those relating to board structure and composition, institutional investors should be encouraged to give due weight to all relevant factors drawn to their attention.

The corporate governance report in the annual report sets out the company’s governance arrangements

F. Other Investors

F.1 Investing Divesting decisionsdecision.

F.1 Individual shareholders, investing directly in shares of companies should be

or seek independent advice in investing or divesting decisions.

decision.

F.2 Shareholder Voting

F.2 Individual shareholders should be encouraged to participate in General

voting rights.

including the receipt of notice of the AGM and related documents within the

of new Directors, new long term incentive schemes or any other issue of


Risk ManagementThe Company and the subsidiaries have adopted the John Keells Group Risk Management Strategy which is an ongoing process of identifying risk (Risk Mapping), measuring the potential impact and likelihood thereof against a broad set of assumptions (Risk Action/Decisions),

levels (Risk Control Strategies).

Risk management takes place as a bottom-up approach, as depicted below;

IntroductionJohn Keells PLC faces many challenges from the business environment from

risks. The processes to manage them within a tolerable level have become

The comprehensive risk management framework practiced by us to identify, assess, manage and monitor the risks has allowed us to sustain our business and enhance our competitive advantage.

John Keells Risk Universe Headline

RisksEnvironment

Business Strategies &

Policies

Business Process

Organisation & People

Analysis & Reporting

Technology & Data

Level 4 JKH PLC Audit Committee

Group Operating Committee (GOC)

Sector Committee

Listed Company Audit Committee

Business Unit

JK Group Review Risk Report & Action

BU Review & Sector Risk Report & Action

BU Risk Report & Action

Report Content

Level 3

Level 2

Level 1

Figure 1

48

Thereafter on a monthly basis the risk mitigation action plans will be monitored by the Company and reported to the Management Committee and Sector Meetings while

to the Audit Committee.

The Risk Management team of the Company is headed by the CEO and comprise of functional and operational managers. The Audit Committee of the Board receives

mitigation activities. The Group Business Process Review function also evaluates the risk mitigation procedures as a part of its audit programmes.

Some of the key risks that may hinder the achievement of

BusinessDue to the controlled environment in which Tea and Rubber Brokers operate; business risk may not be as large as in other industries. The risks can stem mainly from poor service performance and poor business ethics. The

by ensuring that the team of auctioneers and tasters are the best among brokers, by conducting weekly previews

of market related information. Additionally, enterprise management and marketing advice and manufacturing advice are given to producer clients in order that estates

ethics.

Risk Management Process

any situation or circumstance that would adversely effect the achievement of Group activities and to accept and manage unavoidable risks and to ensure surprise events or situations are minimised. This process is aligned directly to the Group strategy, annual plans and monitored by the Audit Committee. The Risk

This part of the process will identify the events or scenarios that could prevent the Group from achieving its set objectives and categorising them using the JKH Group Risk universe.

Risk Assessment and Evaluation

criteria such as business impact, likelihood of occurrence and the level

validated through the assessment criteria, the organisation evaluates the

arrived will determine the level of risk of each risk item. i.e. whether it is a low risk or a ultra –high risk. This will have an impact on mitigation plans and prioritisation /timelines.

Risk Mitigation Action Plans Mitigation action plans are structured as preventive, detective and

The action plan will be developed with timelines for implementation by the risk owners. When the action plans are formulated, accepting and managing risk, transferring the risk to a third party, elimination of the risk

risk, sharing the risk with another party, and insuring against risks are considered.

Monitoring The Group’s Sustainability and Enterprise Risk Management team,

facilitates the Annual Risk Review, and assists the Business Units to identify and evaluate risk items and mitigation plans.


Human Resource The success of our Company depends on the commitment, motivation and skills of our employees. The main human

this risk by encouraging continuous education, providing relevant training and development opportunities, and fostering a culture where all employees, regardless of rank, can actively contribute to the business. During the year a formal succession plan for senior level staff was also developed.

Financial The Company’s objective is to maintain a balance between

mainly overdrafts and bank loans.

The Company deals with mostly recognised, credit worthy clients who are private Tea Factory Owners and Plantation Companies. Credit Risks are minimised as we advance funds based on inventories available in our warehouse

Production

of changes to policies such as fertilizer subsidies and risk related to the perception

Therefore, the Company is actively involved in lobbying with Government and

Competition This relates to the loss of business to competition from Brokers who are not members of the Colombo Brokers Association resorting to unethical business practices. This is being addressed by lobbying with important authorities and conveying the importance for new entrants to be members of the Colombo Brokers Association.

Legal and Regulatory The Legal division of John Keells Group provides guidance, review and direction

5 Impact 5 10 15 20 25

4Major/Very High

Impact 4 8 12 16 20

3Moderate/Very High

Impact 3 6 9 12 15

2Minor Impact 2 4 6 8 10

1

Impact 1 2 3 4 5

Rare/Remote to occur

Unlikely to occur

Possible to occur

Likely to occur

Almost certain to occur

1 2 3 4 5

Occurrence/Likelihood

Imp

act/

Seve

rity

Figure 2

50

valued at historical prices obtained for the relevant marks. Over advances granted are made available only for those clients who have a good track record and are monitored closely.

minimised, as the Companies Lending is above the borrowing rates.

Technology The Company operates in a fully computerised, networked environment. Thus

availability and integrity of these systems and data becomes increasingly important. The Company has invested in security infrastructure appropriate for our size and scale of operations and security procedures are constantly updated to take account of the latest knowledge and technical enhancements. Security regulations cover technical aspects as well as organisational measures including

disaster recovery center in place and recovery plan is tested periodically and found to be satisfactory.

Fraud & Abuse This is the risk that internal control weaknesses may lead to misappropriation

critical functions, authority limits, segregation of duties and access control. Key controls are reviewed periodically and internal auditors conduct regular reviews of areas which are susceptible to fraud.


The activities and views of the Committee have been

Committee’s meeting.

Terms of Reference

reference set out in the Audit Committee Charter which was reviewed during the year. The terms of reference comply

current and best practice guidelines.

The committee focuses on the following objectives in discharging its responsibilities;a) Risk Management

auditorsd) Appropriateness of the principal accounting policies

usede) Financial statement integrity

Financial ReportingThe Audit Committee has reviewed and discussed the

Lanka Accounting Standards, the appropriateness of its Accounting Policies and material judgmental matters.

and management the matters communicated to the Committee in terms of Sri Lanka Auditing Standard 260 - Communication of Audit Matters with those charged with Governance.

have been presented in compliance with the new Sri Lanka Accounting Standards (SLFRS / LKAS), which have

its overall responsibilities for the integrity of the Financial Statements of the Company, the internal control and risk management systems of the Company

and performance of the internal audit function. This is detailed in the terms of reference of the Committee which has been approved by the Board.

The effectiveness of the Committee is evaluated annually by each member of the Committee and the results are communicated to the Board.

Composition of the Audit CommitteeThe Audit Committee is a sub-committee of the Board of Directors and consists

in the deliberations of the committee. The Chairman of the Audit Committee is a Fellow of the Chartered Institute of Management Accountants (UK). The Financial Controller of John Keells Plantations Group serves as Secretary to the Audit Committee.

Meetings of the Audit CommitteeThe Audit Committee meets as often as deemed necessary or appropriate in its

Name of Director Attendance

Ms. S.T. Ratwatte - Chairman

Mr.T. de Zoysa

Mr. K.D. W. Ratnayaka

Financial Controller, Operations Manager and Manager Finance of the company, Head of Group Business Process Review (Group BPR) of John Keells Holdings

on a needs basis.

Audit Committee Report

52

the scope of the audit, was reviewed and discussed by the

prior to the commencement of the audit.

an on-going basis regarding any unresolved matters

issues and to agree on their treatment. The Committee also

audit of the Financial Statements of the Company for the year 2011 / 2012, together with management’s responses, were discussed with management and the auditors.

consideration has been given to the nature of the services provided by the Auditors and the level of audit and non-audit fees received by the Auditors from the Company. The Committee also reviewed the arrangements made by the Auditors to maintain their independence and

compliance with the independence guidance given in the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka.

evaluated and discussed with the senior management of the Company and the Committee has recommended to

materially converged with the International Financial Reporting Standards (IFRS). Considerable effort and planning has gone into ensuring that this transition has

September 2012 with special focus on compliance with the new accounting

results of the audit were discussed with management and the auditors.

Internal Audit, Risk and Controls

Company and the internal audit plans for the Company with the Head of the Group Business Process Review Division and management. The internal audit function of the Company is outsourced to BDO Partners, Chartered Accountants under the overarching control of the Group BPR Division.

effectiveness of internal controls in the Company and compliance with laws and regulations and established policies and procedures. Reports from the outsourced internal auditors were also reviewed by the Committee.

The John Keells Group Sustainability and Enterprise Risk Management (SRM)

risks and the remedial measures taken to mitigate them.

and status of the internal control systems and risk management systems, and compliance with applicable laws and regulations.


the shareholders at the Annual General Meeting.

Conclusion

operational controls and risk management processes provide reasonable assurance that the affairs of the Company are managed in accordance with Group

safeguarded.

Ms. Sharmini RatwatteChairman, Audit Committee

28th May 2013

MembersDeshabandu Tilak de Zoysa, Mr. Karvan Ratnayaka,

54

Significant Accounting PoliciesThe Accounting Policies adopted in the preparation of the Financial Statements are given on page 69 to 83 of the Annual Report.

Going Concern

to continue its operations in the foreseeable future. Accordingly, the Financial Statements are prepared based on the “Going Concern Concept”.

Stated CapitalThe total stated capital of the Company as at 31 March 2013 was Rs.152 mn (2012 - Rs.152 mn).

RevenueRevenue generated by the Company amounted to Rs.573 mn (2012 - Rs.492 mn), whilst Group revenue amounted to Rs.858 mn (2012 - Rs.891 mn). Contribution to Group revenue, from the different business segments is provided in Note 3.2 to the Financial Statements on page 93.

Results And Appropriations

holders of the parent Company for the year was Rs.743 mn (2012 - Rs.860 mn).

Results of the Company and of the Group are given in the Income Statement on page 62.

Dividend

March 2012 amounting to Rs.243 mn (2011 - Rs.152 mn).

The Directors have pleasure in presenting the 66th Annual Report of your

and the audited Consolidated Financial Statements of the Group for the year ended 31st March, 2013.

GeneralThe Company was incorporated on 01st April 1960 as a Public Limited Liability Company and the issued shares of the Company are listed on the Colombo

of 2007, the Company obtained a new Company registration No. PQ 11 on 15th June 2008.

Principal ActivitiesCompanyThe principal activities of the Company remain unchanged as produce broking.

SubsidiariesJohn Keells Stock Brokers (Pvt) Limited continues to provide stock broking services.

John Keells Warehousing (Pvt) Limited continues to provide warehousing facilities.

Business Review

form and integral part of the Directors Report and provide a fair review of the

Financial StatementsThe Financial Statements of the Company and the Group are set out on page 62 to 125 of the Annual Report.

Auditors’ ReportThe Auditors’ Report on the Financial Statements is given on page 61 of the Annual Report.

Annual Report of the Board of Directors


accordance with Section 57 of the Companies Act no 7 of

prior to approving a First and Final Dividend of Rs 3.50 per share for this year. The First and Final Dividend will be paid on 17th June 2013 to those shareholders on the register as at 05th June 2013.

Detailed description of the results and appropriations are given below.

Dividend per share has been computed based on the amount of dividends

The Directors have recommended a First and Final Dividend of Rs.3.50 per share

In accordance with the Sri Lanka Accounting Standards, events after the Balance Sheet Date, the proposed dividend has not been recognised as a liability as at 31st March 2013.

GROUP COMPANY

2012/2013 Rs.000’s

2011/2012 Rs.000’s

2012/2013 Rs.000’s

2011/2012 Rs.000’s

After making provision for bad and doubtful debts and for all known liabilities 882,923 1,025,367 847,714 968,195

(129,243) (135,457) (83,593) (64,711)

753,680 889,910 764,121 903,484

From which the amount attributable to Minority Interest was (deducted)/added (10,786) (29,675) - -

To which Other Comprehensive Income was added/(deducted) 164,716 (39,599) (5,819) (39,439)

And after the balance brought forward from the previous year was added 2,459,831 1,791,195 2,165,614 1,453,569

The amount available for appropriation was 3,367,441 2,611,831 2,923,916 2,317,614

Appropriations

First and Final Dividend of Rs.4/- per share paid for 2011/2012 on 15th June 2012

(243,200) (152,000) (243,200) (152,000)

3,124,241 2,459,831 2,680,716 2,165,614

DonationsTotal donations made by the Company and Group during the year amounted to Rs.1.3 mn (2012 - Rs.5.4mn) and Rs.1.7 mn (2012 - Rs.3.7 mn), respectively, of these, there were no donations made to approved charities. (2012 - Rs.4.2 mn) at Company and Rs.0.085 mn (2012 Rs.2.6mn) at Group. The amounts do not include contributions on account of John Keells Foundation.

The John Keells Foundation, which operates with funds contributed by each of the companies in the Group, handles most of the Group’s CSR initiatives and activities. The Foundation manages a range of programmes that underpin its key principle of acting responsibly in all areas of business to bring about sustainable development. The Company’s contribution to John Keells Foundation was Rs.2.2 mn (2012 Rs.0.3 mn) and the Group’s contribution was Rs.3.8 mn (2012 Rs.2.5 mn) respectively.

56

The movement and composition of the Capital and Revenue reserves is disclosed in the Statement of Changes

Events Occurring after the Balance Sheet Date

sheet date, which would have any material effect on the Company or on the Group other than those disclosed in note 34 to the Financial Statements on page 125.

Contingent Liabilities and Capital CommitmentsThere have been no commitments or Contingent liabilities other than those stated in note 31 on page 121 of the annual report.

Human ResourcesThe number of persons employed by the Company and Group as at 31 March 2013 was 109 (2012- 103) and 180 (2012- 178), respectively.

The Group is committed to pursuing various HR initiatives that ensure the individual development of all our teams as well as facilitating the creation of value for themselves, the Company and all other stakeholders.

There were no material issues pertaining to employees and industrial relations in the year under review.

Corporate GovernanceCorporate Governance practices and principles with respect to the management and operations of the Company is set out on page 25 of this report. The

Property, Plant and Equipment

amounted to Rs.26 mn (2012- Rs.25 mn) and Rs.328 mn (2012 - Rs.145 mn) for the Company and Group respectively.

- R2.2 mn) and Rs.10.8 mn (2012 - Rs14.5 mn), respectively. Details of property,

statements on pages 108 and 109.

Market Value of Properities

investment property of the Company and Group amounted to Rs2,151 mn (2012 - Rs.1,668 mn) and Rs.2,151 mn (2012 - Rs.1,668 mn) respectively. The investment, property was revalued by Mr. P.B. Kalugalagedra as at 31 March 2013.

Details of the valuation of investment property is provided in note 15.1 to the

The real estate portfolio of the Group as at 31 March 2013 is disclosed on page 111.

InvestmentsInvestments of the Company and the Group in subsidiaries, associate, and other

mn (2012 - Rs.161.3 mn), respectively.

Detailed description of the long term investments held as 31st March 2013, are given in notes 18, 19, 20.1 and 20.2 to the Financial Statements on pages 113, 114 and 115.

ReservesTotal reserves as at 31 March 2013 of the Company and Group amounted to Rs.2,681 mn (2012 - Rs.2,165 mn) and Rs.3,124 mn (2012 - Rs.2,460 mn), respectively.


The report of the Audit Committee is given on page 51 of the Annual report.

Remuneration CommitteeAs permitted by the Listing Rules of the Colombo Stock

Holdings PLC, the parent Company of John Keells PLC functions as the Remuneration Committee of the Company and subsidiaries. The Remuneration Committee of John Keells Holdings PLC comprises of four independent Directors.Mr. E.F.G. Amerasinghe - ChairmanMs. S.S. TiruchelvamMr. A R GunasekaraDr. I. Coomaraswamy

The Remuneration Policy of the Company and its subsidiaries is detailed in the Corporate Governance Report on page 25 of the Annual Report.

Stock Market Information

2013 (31st March 2012 - Rs 66.20). Information relating to public holding, earnings, dividend, net assets, market value per share and share trading is given in “Key Ratios and Information” on pages 132 to 133 and in the Shareholders Information Section on pages 128 to129.

treatment to all shareholders.

Substantial Shareholdings The names of the twenty largest shareholders, the number of shares held and the percentages held are given on page 129 of the Annual Report. The distribution schedule of the shareholders and public holdings are disclosed on page 128 of the Annual Report.

the relevant rules on Corporate Governance contained in the listing rules of the

a) The Company has not engaged in any activities, which contravene laws and regulations

b) The Directors have declared all material interest in contracts involving the Company and refrained from voting on matters in which they were materially interested

shareholders

as necessary and

e) The Directors have conducted a review of internal controls covering

have obtained a reasonable assurance of their effectiveness and successful adherence herewith.

Risk Management and Internal Control

evaluation for each business unit takes place as an integral part of the annual strategic planning cycle and the principle risks and mitigating actions in place are reviewed regularly by the Board and the Audit Committee. The Board, through the involvement of the Business Process Review Division takes steps to gain assurance on the effectiveness of control systems in place. The Audit Committee receives reports on the results of internal control reviews and the Head of the Group Business Process Review Division has direct access to the Chairman of the Audit Committee.

Audit CommitteeThe following members of the Board serve on the Audit Committee.Ms. S.T. Ratwatte- ChairmanT. De Zoysa K.D.W. Ratnayaka

58

Directors’ and CEO’s ShareholdingsName of Director Number of shares

As at 31st March 2013

As at 31st March 2012

S.C. Ratnayake Nil Nil

A.D. Gunewardene Nil Nil

J.R.F. Peiris Nil Nil

R.S.Fernando Nil Nil

T. de Zoysa Nil Nil

K.D.W. Ratnayaka Nil Nil

Nil Nil

Ms. S.T. Ratwatte Nil Nil

S.C. Munasinghe (CEO) Nil Nil

Interest Register

by the Companies Act No. 7 of 2007 and entries have been made therein.

As both subsidiaries of the Company are private companies

an Interest Register, this Annual Report does not contain particulars of entries made in the Interests Registers of subsidiaries.

Particulars of Entries in the Interests Register

a) Interests In Contracts

The Directors have all made a General Disclosure to the Board of Directors as permitted by S 192 (2) of the Companies Act No 7 of 2007 and no additional interests have been disclosed by any Director.

b) There have been no disclosures of share dealings as at 31st March 2013.

DirectorateDuring the year the Board of Directors of John Keells PLC consisted of eight

The Board of Directors of the Company and its subsidiaries as at 31 March 2013 is listed below.

Name of the Director John Keells PLC

John Keells Stock Brokers

(Private) Limited

John Keells Warehousing

(Private) Limited

S.C. Ratnayake - Chairman

A.D. Gunewardene

J.R.F. Peiris - -

R.S.Fernando -

K.N.J. Balendra - -

T. de Zoysa - -

K.D.W. Ratnayaka - -

- -

Ms. S.T. Ratwatte - -

Retirement of Directors by Rotation or otherwise and their Re-Election

of the Articles of association of the company, and being eligible offer themselves for re-election.

Directors’ Remuneration

out in page 94 of the Financial Statements.


The Audit Committee reviews the appointment of the Auditor, its effectiveness and its relationship with the Group, including the level of audit and non-audit fees paid to the Auditor.

A total amount of Rs.1.8 mn (2012 - Rs.1.4 mn) by the Company and Rs.2.9 mn (2012 - Rs.2.2mn) by the Group has been paid out as audit fees. The Auditors, do not have any relationship (other than that of an Auditor) with the Company or any of its subsidiaries.

Further details on the work of the Auditor and the Audit Committee are set out in the Audit Committee Report on page 51.

Annual ReportThe Board of Directors approved the Company and Consolidated Financial Statements on 28th May 2013. The appropriate number of copies of this report will be

Sri Lanka Accounting and Auditing Standards Monitoring Board.

Annual General MeetingThe Annual General Meeting will be held at the HR Auditorium, (Ground Floor) of John Keells Holdings PLC, No. 130, Glennie Street, Colombo 2, on 26th June , 2013 (Wednesday) at 9.30 a.m. The notice of the Annual General Meeting appears on page 136.

This Annual Report is signed for and behalf of the Board of Directors

Director Director Keells Consultants (Pvt) Ltd.

Secretaries

28th May 2013

c) Indemnities and Remuneration

Mr. R.S. Fernando of;

organisation performance and role responsibility based on the results of

dependant on the aforesaid performance rating, organisational rating and role responsibility as recommended by the Remuneration Committee of JKH the holding company of John Keells PLC in keeping with the Group Remuneration Policy.

Supplier PolicyThe Group applies an overall policy of agreeing and clearly communicating terms of payment as part of the commercial agreements negotiated with suppliers, and endeavours to pay for all items properly charged in accordance with these agreed terms. As at 31 March 2013 the trade and other payables of the Company and Group amounted Rs.593 mn (2012 - Rs556 mn) and Rs.1,130 mn (2012- Rs.956 mn) respectively.

Environmental ProtectionThe Group complies with the relevant environmental laws, regulations and endeavors to comply with best practices applicable in the country of operation.

Statutory Payments

levies payable by the Company and its subsidiaries, all contributions, levies and

its subsidiaries, and all other known statutory dues as were due and payable by the Company and its subsidiaries as at the balance sheet date have been paid

Statements on page 121 , covering Contingent Liabilities.

Auditors

of the Company, and a resolution proposing their reappointment will be tabled at the Annual General Meeting.

60

Statements and to provide the Auditors with every opportunity to take whatever steps and undertake whatever inspections they may consider to be appropriate to enable them to give their audit opinion.

the solvency test immediately after the distribution, in accordance with Section 57 of the Companies Act. No. 7

prior to declaring a First and Final Dividend of Rs.3.50 per share for the year, which will be paid on 17th June 2013.

The directors are of the view that they have discharged their responsibilities as set out in this statement.

Compliance Report

behalf of and in respect of the employees of the Company and its subsidiaries, and all other known statutory dues as were due and payable by the Company and its subsidiaries as at the Statement of Financial Position date have been

note 31.2 to the Financial Statements covering Contingent liabilities.

By Order of the Board

Keells Consultants (Pvt) Ltd.Secretaries

28th May 2013

The responsibility of the Directors, in relation to the Financial Statements, is set out in the following statement. The responsibility of the auditors, in relation to the Financial Statements prepared in accordance with the provision the Companies Act No 7 of 2007, is set out in the Report of the Auditors.

the state of affairs of the Company and its subsidiaries as at the end of the

a consistent manner and material departures, if any, have been disclosed and

resources to continue in operation to justify applying the Going Concern basis in preparing these Financial Statements.

Further, the directors have a responsibility to ensure that the company maintains

Position of the Company and its subsidiaries, and to ensure that the Financial

of the Companies Act No. 7 of 2007.

The directors are also responsible for taking reasonable steps to safeguard the assets of the Company and its subsidiaries and in this regard to give proper consideration to the establishment of appropriate internal control systems with a view to preventing and detecting fraud and other irregularities.

Statement of Directors Responsibility


INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF JOHN KEELLS PLC

Report on the Financial StatementsWe have audited the accompanying Financial Statements of John Keells PLC (“Company”), the consolidated Financial Statements of the Company and its

2013, and the income statements, statements of comprehensive income,

notes.

Management’s responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these Financial Statements in accordance with Sri Lanka Accounting Standards. This

relevant to the preparation and fair presentation of Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of audit and basis of opinion

on our audit. We conducted our audit in accordance with Sri Lanka Auditing

reasonable assurance whether the Financial Statements are free from material misstatement.

which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

Opinion

Company maintained proper accounting records for the

Accounting Standards.

year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiaries dealt with thereby, so far as concerns the shareholders of the Company.

Report on other legal and regulatory requirements

Companies Act No. 07 of 2007.

28 May 2013Colombo.

62

GROUP COMPANY

For the Year Ended 31st March 2013 2012 2013 2012 Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Continuing OperationsRendering of Services 764,100 804,891 467,614 394,700 Rental Income 93,997 86,608 105,326 97,377 Revenue 3 858,097 891,499 572,940 492,077 Cost of Sales (261,295) (254,031) (149,769) (147,430)

596,802 637,468 423,171 344,647 Dividend Income 4 - - 73,442 163,800 Other Operating Income 5 5,153 2,727 998 1,415

Results from Operating Activities 418,688 436,321 421,727 412,551

Finance Income 6 33,290 39,843 3,847 3,161 (30,734) 189 (57,528) (25,547)

Share of Results of Associates 11,454 7,666 - - Change in fair value of Investment Property 483,515 581,191 483,515 581,191

8 882,923 1,025,367 847,714 968,195

753,680 889,910 764,121 903,484

Attributable to:

Non-Controlling Interests 10,786 29,675 753,680 889,910

Earning Per Share 10 12.22 14.15

Dividends Per Share 11 4.00 2.50

Figures in brackets indicate deductions.The Accounting Policies and Notes on pages 69 through 125 form an integral part of the Financial Statements.


GROUP COMPANY

For the Year Ended 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

753,680 889,910 764,121 903,484

Other Comprehensive IncomeRevaluation of Buildings 189,518 - - -

164,716 (39,599) (5,819) (39,439)

918,396 850,311 758,302 864,045

Attributable to :

Non-Controlling Interests 10,786 29,675 918,396 850,311

Figures in brackets indicate deductions.The Accounting Policies and Notes as set out in pages 69 to 125 form an integral part of these Financial Statements.

64

GROUP COMPANY

As at 31st March 2013 2012 As at 1st 2013 2012 As at 1st April April 2011 2011 Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

ASSETSNon-Current Assets

Investment Properties 15 2,151,457 1,667,941 1,086,750 2,151,457 1,667,941 1,086,750 Lease Rentals Paid in Advance 16 42,380 43,469 44,558 - - - Intangible Assets 17 3,098 2,937 3,143 - - - Investments in Subsidiaries 18 - - - 120,380 120,380 120,380 Investments in Associate 19 92,488 82,311 75,088 24,000 24,000 24,000 Other Non - Current Financial Assets 20 244,401 142,539 155,216 229,037 129,092 132,902 Other Non - Current Assets 3,789 2,219 2,249 2,593 1,500 1,475

2,869,978 2,090,667 1,520,918 2,553,147 1,967,552 1,397,669

Current AssetsInventories 22 1,580 2,059 3,069 1,478 1,926 2,997 Trade & Other Receivables 23 1,986,497 1,412,762 1,237,919 1,508,035 1,098,806 940,174 Other Current Assets 4,180 7,911 7,233 938 5,182 3,028 Amounts due from Related Parties 33.1 15,644 14,850 14,552 11,442 14,852 14,552 Short Term Investments 24.1 237,390 392,570 637,500 - - Cash in Hand and at Bank 24.1 163,597 139,632 70,700 65,730 111,421 55,757 2,408,888 1,969,784 1,970,973 1,587,623 1,232,187 1,016,508

Total Assets 5,278,866 4,060,451 3,491,891 4,140,770 3,199,739 2,414,177

EQUITY AND LIABILITIESCapital and Reserves Stated Capital 25 152,000 152,000 152,000 152,000 152,000 152,000 Revenue Reserves 2,907,893 2,408,199 1,699,964 2,635,191 2,114,270 1,362,786

Total Equity 3,276,241 2,611,831 1,943,195 2,832,716 2,317,614 1,605,569 Non-Controlling Interests 54,354 61,568 79,893 - - - 3,330,595 2,673,399 2,023,088 2,832,716 2,317,614 1,605,569


GROUP COMPANY

As at 31st March 2013 2012 As at 1st 2013 2012 As at 1st April April 2011 2011 Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Non-Current Liabilities Interest Bearing Borrowings 30.3 - 1,957 23,544 - - -

135,817 95,317 118,457 74,972 68,132 73,263

Current Liabilities Trade and Other Payables 29 1,129,750 956,288 1,029,444 593,401 556,203 544,293

Amounts due to Related Parties 33.2 5,381 6,947 4,638 8,529 4,569 5,921 Current Portion of Borrowings 30.2 1,957 21,587 17,480 - - - Other Current Liabilities 10,487 4,188 4,795 6,719 3,975 3,900 Bank Overdrafts 24.2 617,575 284,894 182,260 582,968 249,246 145,613 1,812,454 1,291,735 1,350,346 1,233,082 813,993 735,345

Total Equity and Liabilities 5,278,866 4,060,451 3,491,891 4,140,770 3,199,739 2,414,177

Ms T. De AlwisFinancial Controller

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

Signed for and on behalf of the Board by,

J. R. F. Peiris R. S. FernandoDirector Director

28th May 2013

The Accounting Policies and Notes on pages 69 through 125 form an integral part of the Financial Statements.

66

Attributable to equity holders of parent Other components of equity Group Stated Revenue Revaluation Available Total Non Total Capital reserves Reserves for sale controlling reserves Interest Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

As at 1 April 2011 152,000 1,699,964 - 91,231 1,943,195 79,893 2,023,088

Other Comprehensive Income - - - (39,599) (39,599) - (39,599)Total Comprehensive Income - 860,235 - (39,599) 820,636 29,675 850,311 Final Dividend -2010/2011 - (152,000) - - (152,000) - (152,000)Subsidiary Dividend to Non-Controlling Interest - - - - - (48,000) (48,000)As at 31 March 2012 152,000 2,408,199 - 51,632 2,611,831 61,568 2,673,399

Other Comprehensive Income - - 170,567 (5,851) 164,716 - 164,716Total comprehensive income - 742,894 170,567 (5,851) 907,610 10,786 918,396Final Dividend -2011/2012 - (243,200) - - (243,200) - (243,200)Subsidiary Dividend to Non-Controlling Interest - - - - - (18,000) (18,000)

As at 31 March 2013 152,000 2,907,893 170,567 45,781 3,276,241 54,354 3,330,595

Company Stated Revenue Available Total Capital reserves for sale reserves Rs.000’s Rs.000’s Rs.000’s Rs.000’s

As at 1 April 2011 152,000 1,362,786 90,783 1,605,569

Other Comprehensive Income - - (39,439) (39,439)Total Comprehensive Income - 903,484 (39,439) 864,045Final Dividend -2010/2011 - (152,000) - (152,000)

As at 31 March 2012 152,000 2,114,270 51,344 2,317,614

Other Comprehensive Income - - (5,819) (5,819)Total Comprehensive Income - 764,121 (5,819) 758,302Final Dividend -2011/2012 (243,200) - (243,200)

As at 31 March 2013 152,000 2,635,191 45,525 2,832,716



GROUP COMPANY

For the year ended 31st March 2013 2012 2013 2012 Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s

CASH FLOW FROM /(USED IN) OPERATING ACTIVIES 446,994 466,965 363,228 264,120

(Increase)/Decrease in Inventories 479 1,010 448 1,071 (Increase)/Decrease in Trade and Other Receivables (573,733) (174,845) (409,228) (158,632) (Increase)/Decrease in Other Non Current Assets 621 (21,560) 1,657 (33,383) (Increase)/Decrease in Other Current Assets 3,732 (678) (514) 2,603 (Increase) /Decrease in Amounts Due from Related Parties (793) (298) 3,410 (300) Increase/ (Decrease) in Amounts Due to Related Parties (1,566) 2,309 3,960 (1,351) Increase/(Decrease) in Other Current Liabilities 6,396 (707) 2,743 75 Increase /(Decrease) in Trade and Other Payables 173,462 (73,156) 37,198 11,910 Cash Generated from Operations 55,592 199,040 2,902 86,113 Dividend Received 600 - 73,442 163,800

Net Cash Flows from/(Used in) Operating Activities (92,692) (80,660) (22,896) 105,181 CASH FLOWS FROM /(USED IN) INVESTING ACTIVITIES

Proceeds from return of intangible assets - 669 - - Interest Received 28,966 34,773 977 891

Dividend Received 1,420 - 1,420 - Net Cash Flows from/(Used in) Investing Activities (88,417) 19,508 (113,317) (1,150)

CASH FLOWS FROM /(USED IN) FINANCING ACTIVITIES Repayment of Interest Bearing Borrowings (21,587) (17,480) - - Dividend Paid (243,200) (152,000) (243,200) (152,000) Dividend Paid to Non Controlling Shareholders’ (18,000) (48,000) - - Net Cash Flows Used in Financing Activities (282,787) (217,480) (243,200) (152,000)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (463,896) (278,632) (379,413) (47,969)CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 247,308 525,940 (137,825) (89,856)CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 24.3 (216,588) 247,308 (517,238) (137,825)

68

GROUP COMPANY

Year ended 31st March 2013 2012 2013 2012 Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Adjustments for

Depreciation 17,520 20,090 7,622 9,744 Amotisation of Intangible Assets 755 1,241 - - Amotisation of Lease Charges 1,089 1,089 - - Change in fair value of investment property (483,515) (581,191) (483,515) (581,191)

Interest Income (31,870) (39,843) (2,427) (3,161) Dividend Income (1,420) - (74,862) (163,800)

446,994 466,965 363,228 264,120


JOHN KEELLS PLC Annual Report 2012/2013 69

together with the accounting policies and notes

accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) as issued by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and the

For all periods up to and including the year ended

statements in accordance with Sri Lanka Accounting Standards (SLAS) which were effective up to 31 March

in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) immediately effective from 1 April 2012. The effect of the transition to SLFRS/LKAS on previously

1.2. BASIS OF PREPARATION Bases of Measurement

prepared on an accrual basis and under the historical

have been measured at fair value.

Presentation and Functional Currency

in Sri Lankan Rupees, the Group’s functional and presentation currency, which is the primary economic environment in which the Holding Company operates. Each entity in the Group uses the currency of the primary economic environment in which they operate as their functional currency.

All values are rounded to the nearest rupees thousand

Note 1.3 below.

1.1. CORPORATE INFORMATION Reporting Entity John Keells PLC. is a public limited liability company incorporated and domiciled

and principal place of business of the company is located at 130, Glennie Street, Colombo 2.

Consolidated Financial Statements

company” referring to John Keells PLC as the holding company and “the Group” referring to the companies whose accounts have been consolidated therein.

Approval of Financial Statements The Financial statements for the year ended 31 March 2013 were authorised for

issue by the directors on 28th May 2013.

Principal Activities and Nature of Operations Holding company The Principal Activities of John Keells PLC, is Produce Broking and Real Estate

Ownership.

Subsidiaries and Associate The companies within the Group and its business activities are described in the

Group Structure on page 5 of the Annual Report.

Parent Entity and Ultimate Parent Entity The Company’s parent entity is John Keells Holdings PLC in the opinion of the

directors, which is incorporated in Sri Lanka.

Responsibility for Financial Statements

out in ‘The statement of director’s responsibility on Page 60 to in the Annual report.

Statement of compliance

the statement of income, statement of comprehensive income, statement

70

Non-controlling interest which represents the portion

the consolidated income statement and statement of

1.3. ACCOUNTING POLICIES 1.3.1 Changes in Accounting Policies The accounting policies set out below have been

2011 for the purpose of the transition to SLFRS/LKAS, unless otherwise indicated.

Comparative information

statements of the previous years have been amended, where relevant for better presentation and to be comparable with those of the current year.

And Assumptions

estimates and assumptions, which may affect the

the disclosure of contingent liabilities, at the end of the reporting period. In the process of applying the Group’s accounting policies, the key assumptions made relating to the future and the sources of estimation at the reporting date together with the related judgments that

to the carrying amounts of assets and liabilities within

Basis of consolidation

of the subsidiaries are prepared in compliance with the Group’s accounting policies unless otherwise stated.

and dividends resulting from intra-Group transactions are eliminated in full.

Subsidiaries

controlling interest.

being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

period as the parent company, which is 12 months ending 31 March, using consistent accounting policies.

Losses within a subsidiary are attributed to the non-controlling interest even if

A change in the ownership interest of a subsidiary, without a loss of control,

included in consolidation are shown in the consolidated income statement and statement of comprehensive income and all assets and liabilities of the company and of its subsidiaries included in consolidation are shown in the


be recognised, based upon the likely timing and the

planning strategies.

Contingent Liabilities Contingent liabilities are possible obligations that arise

only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the entity. All contingent liabilities are disclosed in

on the actuarial valuation carried out by Independent actuarial specialist. The actuarial valuations involve making assumptions about discount rates and future

underlying assumptions and its long term nature, the

in these assumptions. All assumptions are reviewed at each reporting date. Details of the key assumptions used in the estimates are contained in Note 28.2.

cannot be derived from active markets, their fair value

are taken from observable markets where possible.

Where this is not feasible, a degree of judgment is

Revaluation of property, plant and equipment and investment properties The Group measures land and buildings at revalued amounts with changes in

investment properties at fair value, with changes in fair value being recognised in the income statement. The Group engaged independent valuation specialists

buildings as at 31 March 2013.

based on the nature of the property.

The determined fair values of investment properties, using investment method, are most sensitive to the estimated yield as well as the long term occupancy rate. The methods used to determine the fair value of the investment properties,

to sell and its value in use (VIU). The fair value less costs to sell calculation is based on available data from an active market, in an arm’s length transaction, of similar assets or observable market prices less incremental costs for disposing

do not include restructuring activities that the Group is not yet committed

of the cash generating unit being tested. The recoverable amount is most

purposes.

contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate

based on such reasonable estimates the Group establishes the provisions to be

72

Any contingent consideration to be transferred by the

date. Contingent consideration which is deemed to

and within the scope of LKAS 39, is measured at fair

or as a change to other comprehensive income. If the

consideration does not fall within the scope of LKAS 39, it is measured in accordance with the appropriate SLFRS/LKAS.

of the consideration transferred over the Group’s net

If this consideration is lower than the fair value of the

recognised in the income statement.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is

if events or changes in circumstances indicate that the carrying value maybe impaired.

For the purpose of impairment testing, goodwill

combination, irrespective of whether other assets or

Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash generating unit is less than the carrying amount, an impairment loss is recognised. The impairment loss

goodwill allocated to the unit and then to the other assets pro-rata to the carrying amount of each asset in the unit.

credit risk and volatility. Changes in assumptions about these factors could

liabilities due to change in applicable rate have been charged to the income statement in the current year.

1.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES1.4.1 Business combinations & goodwill

fair value of the consideration transferred including the recognised amount of

purchase gain is recognised immediately in the income statement.

The Group elects on a transaction-by-transaction basis whether to measure non-controlling interests at fair value, or at their proportionate share of the

securities, that the Group incurs in connection with a business combination are

with the contractual terms, economic circumstances and pertinent conditions as


of the associate.

The Group ceases to recognise further losses when

incurred obligations or made payments on behalf of the entity.

The accounting policies of associate companies conform to those used for similar transactions of the Group.

the Group measures and recognises any retaining investment at its fair value. Any difference between the

loss.

those that are enacted or substantively enacted, at the reporting date.

recognized in other comprehensive income shall be recognised in other comprehensive income and not in the income statement. Management periodically

operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

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 of the cash-generating unit retained.

1.4.2 Investment in an associate

ventures of the Group. The Group’s investments in its associates are accounted

Associate companies of the Group which have been accounted for under the

Keells Realtors (Pvt) Ltd The Associate is incorporated in Sri Lanka.The investments in associates are

changes in the Group’s share of net assets of the associates. Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. After application of

any additional impairment loss with respect to the Group’s net investment in the associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and

the income statement and statement of other comprehensive income.

Group recognises its share and discloses this, when applicable in the statement

interest in the associate.

74

substantively enacted as at the reporting date.

items are recognised in correlation to the underlying transaction either in other comprehensive income or

position.

1.4.4 Property, plant and equipment Basis of recognition

asset can be reliably measured.

Basis of measurement

depreciation and any accumulated impairment loss. Such cost includes the cost of replacing component

and establishes provisions where appropriate.

or of an asset or liability in a transaction that is not a business combination

subsidiaries, associates and interests in joint ventures, where 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.

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

and·

temporary differences can be utilised.

to apply to the year when the asset is realised or liability is settled, based on


order to write off such amounts over the estimated useful economic life of such assets.

Depreciation of an asset begins when it is available for use and ceases at the earlier of the date that the asset is

derecognised.

Assets Years Buildings on leasehold land over the lease period 39 Plant and machinery 2-10

Motor vehicles 5

Other 5

The asset’s residual values and useful lives are reviewed,

1.4.5 Lease rentals paid in advance

amortised over the lease term in accordance with the

Details of the Leasehold Property are given in Note 16.3 to the Financial Statements.

1.4.6 Investment properties Investment properties are measured initially at cost,

including transaction costs. The carrying value of an investment property includes the cost of replacing

that cost is incurred if the recognition criteria are met,

the investment properties are stated at fair values, which

Gains or losses arising from changes in fair value are included in the income statement in the year in which

costs for long-term construction projects if the recognition criteria are met.

intervals, the Group derecognises the replaced part, and recognises the new part with its own associated useful life and depreciation. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the

other repair and maintenance costs are recognised in the income statement as

asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

Land and buildings are measured at fair value less accumulated depreciation on

impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

assets is revalued at fair value on the date of revaluation.

Any revaluation surplus is recognised in other comprehensive income and

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

the asset revaluation reserve.

Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.

Derecognition

gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised.

Depreciation Depreciation is calculated by using a straight-line method on the cost or

76

changes are treated as accounting estimates. The

lives is recognised in the income statement.

Software license Software license costs are recognised as an intangible

usage of related ERP systems.

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.

1.4.8 Financial instruments - initial recognition and subsequent measurement

i) Financial assets Initial recognition and measurement

loans and receivables, held-to-maturity investments,

designated as hedging instruments in an effective hedge, as appropriate. The Group determines the

or loss, directly attributable transaction costs. Purchases

assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

deposits, trade and other receivables, loans and other

Investment properties are derecognised when disposed, or permanently

Any gains or losses on retirement or disposal are recognised in the income statement in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property

value at the date of change in use. If owner occupied property becomes an investment property or inventory (WIP), the Group accounts for such property

to the date of change in use.

property of a subsidiary, such investment properties are treated as property,

1.4.7 Intangible assets Basis of recognition

be reliably measured.

Basis of measurement

cost.

Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

Useful economic lives, amortization and impairment

life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation


income statement.

Derecognition

material delay to a third party under a ‘pass-through’ arrangement; and either.

When the Group has transferred its rights to receive

through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognised

it.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability

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 Group assesses at each reporting date whether

if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after

Subsequent measurement

Loans and receivables

cost using the effective interest rate method (EIR), less impairment. Amortised

and fees or costs that are an integral part of the EIR. The EIR amortisation is

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 determined to be impaired, at which

and removed from the available-for-sale reserve.

the ability and intention to sell them in the near term is still appropriate. When

and ability to hold these assets for the foreseeable future or until maturity.

78

statement

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

or prolonged decline in the fair value of the investment

original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss measured as the difference between

any impairment loss on that investment previously recognised in the income statement is removed from other comprehensive income and recognised in

investments are not reversed through the income statement; increases in their fair value after impairments are recognised directly in other comprehensive income.

iii) Financial liabilities Initial recognition and measurement Financial liabilities within the scope of LKAS 39 are

designated as hedging instruments in an effective hedge, as appropriate. The Group determines the

value and, in the case of loans and borrowings, carried at amortised cost. This includes directly attributable transaction costs.

payables, bank overdrafts, loans and borrowings,

the initial recognition of the asset (an incurred ‘loss event’) and that loss event

Evidence of impairment may include indications that the debtors or a group of

interest or principal payments, the probability that they will enter bankruptcy or

arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

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 assets carrying

effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

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

the purpose of measuring the impairment loss. The interest income is recorded

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

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


in active markets at each reporting date is determined

short positions), without any deduction for transaction costs.

further details as to how they are measured are provided in Note 12.2.

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If

estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless

independent of those from other assets or Groups of

its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In

asset.

Impairment losses are recognised in the income

recognised against the revaluation reserve through the

that it reverses a previous revaluation surplus.

An assessment is made at each reporting date as to whether there is any indication that previously

Subsequent measurement

Loans and borrowings

measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.

Amortised cost is calculated by taking into account any discount or premium

Financial guarantee contracts Financial guarantee contracts issued by the Group are those contracts that

the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly

settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.

Derecognition

derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

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.

80

emoluments of employees to an approved Employees’ Provident Fund and to the Employees’ Trust Fund

1.4.14 Provisions, Contingent Assets and Contingent Liabilities

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of

the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group

the income statement net of any reimbursement.

If the effect of the time value of money is material,

liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a

All contingent liabilities are disclosed as a note to the

remote. A contingent liability recognised in a business combination is initially measured at its fair value.

with the general guidance for provisions above (LKAS

1.4.15 Revenue Recognition

and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and value added

recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable

would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

1.4.10 Inventories Inventories are valued at the lower of cost and net realisable value. Net

realisable value is the estimated selling price less estimated costs of completion and the estimated costs necessary to make the sale.

The costs incurred in bringing inventories to its present location and condition,

Raw materials and - On a weighted average basis Other inventories - At actual cost

1.4.11 Cash and cash equivalents

cash at banks and on hand and short-term deposits with a maturity of three months or less.

overdrafts.

credit method. Any actuarial gains or losses arising are recognised immediately in income statement.

Employees’ Trust Fund Employees are eligible for Employees’ Provident Fund contributions and

Employees’ Trust Fund contributions in line with respective statutes and


material are aggregated, reported and presented on a net basis.

Any losses arising from guaranteed rentals are accounted for in the year of incurring the same. A provision is recognised if the projection indicates a loss.

Other Income Other income is recognised on an accrual basis.

on the basis of a direct association between the cost

statement.

For the purpose of presentation of the income

been adopted, on the basis that it presents fairly the elements of the company and Group’s performance

Borrowing Costs

construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are

consist of interest and other costs that the Group incurs in connection with the borrowing of funds.

1.5 SRI LANKA ACCOUNTING STANDARDS (SLFRS/LKAS) ISSUED BUT NOT YET EFFECTIVE

Standards issued but not yet effective up to the date of

below. This listing is of standards and interpretations

applicable at a future date. The Group intends to adopt those standards when they become effective.

Brokerage Income

rewards of ownership of the goods have passed to the buyer with the Group retaining neither a continuing managerial involvement to the degree usually associated with ownership, nor an effective control over the goods sold.

Rendering of Services Revenue from rendering of services is recognised by reference to the stage

of completion. Where the contract outcome cannot be measured reliably,

to be recovered.

with the respective statutes.

Dividend Dividend income is recognised when the Group’s right to receive the payment

is established.

Interest Income

Rental Income Rental income arising from operating leases on investment properties is

accounted for on a straight-line basis over the lease terms.

Gains and Losses Net gains and losses of a revenue nature arising from the disposal of property,

accounted for in the income statement, after deducting from the proceeds on

Gains and losses arising from activities incidental to the main revenue generating activities and those arising from a Group of similar transactions, which are not

82

1.6 SEGMENT INFORMATION Operating Segments1.6.1 Reporting Segments The group’s internal organisation and management is

structured based on individual products and services which are similar in nature and process and where the risk and return are similar. The primary segments represent this business structure.

Since the individual segments are located close to each other and operate in the same industry environment, catering to clientele from the same geographical location, the need for geographical segmentation does not arise.

1.6.2 Segment Information Segment information has been prepared in conformity

with the accounting policies adopted for preparing and

group.

No operating segments have been aggregated to form the above reportable operating segments. An individual segment manger is determined for each operating segment and the results are regularly reviewed by the Board of Directors. The Board of Directors monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance

information, is measured differently form operating

Transfer prices between operating segments are on an arm’s-length basis in manner similar to transactions with third parties.

on or after 1 January 2015. The adoption of SLFRS 9 will have an effect on

liabilities.

b) SLFRS 10-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

effective for annual periods beginning on or after 1 January 2014.

c) SLFRS 12 Disclosure of Interests in other entities SLFRS 12 includes all of the disclosures that were previously in LKAS 27 related

previously included in LKAS 31 and LKAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured

effective for annual periods beginning on or after 1 January 2014.

d) SLFRS 13-Fair Value Measurement SLFRS 13 establishes a single source of guidance under SLFRS for all fair value

value, but rather provides guidance on how to measure fair value under SLFRS

This standard becomes effective for annual periods beginning on or after 1 January 2014


of goodwill must be used in the opening SLFRS/

adjustments for goodwill impairment and recognition or derecognition of intangible assets). In accordance with SLFRS 1, the Group has tested goodwill for impairment at the date of transition to SLFRS/LKAS.

Freehold land and buildings, other than investment

position prepared in accordance with SLAS on the basis of valuations performed prior to 31 March 2012. The Group has elected to regard those values as deemed cost at the date of the revaluation since they were broadly comparable to fair value.

IFRIC 4 Determining whether an arrangement contains a Lease

The Group has applied the transitional provision in IFRIC 4 Determining Whether an Arrangement Contains a Lease and has assessed all arrangements based upon the conditions in place as at the date of transition.

Unquoted equity instruments

held at 1 April 2011 as available-for-sale investments.

The Group has applied the following mandatory

assumptions

assumptions at 1 April 2011 and at 31 March 2012 are consistent with those made for the same dates in accordance with SLAS effective up to 31 March

accounting policies).

The estimates used by the Group to present these amounts in accordance with SLFRS/LKAS effective from

of transition to SLFRS/LKAS and as of 31 March 2012.

1.7 FIRST-TIME ADOPTION OF SLFRS/LKAS

the Group has prepared in accordance with SLFRS/LKAS. For periods up to

statements in accordance with Sri Lanka Accounting standards which were effective up to 31 March 2012.

SLFRS/LKAS applicable for periods ending on or after 31 March 2013, together with the comparative period data as at and for the year ended 31 March 2012,

principal adjustments made by the Group in restating its SLAS statement of

statements as at and for the year ended 31 March 2012.

SLFRS 1 First-Time Adoption of Sri Lanka Financial Reporting Standards allows

certain SLFRS/LKAS.

subsidiaries, which are considered businesses for SLFRS/LKAS, or of interests in associates that occurred before 1 April 2011. The Group has not applied LKAS 21 retrospectively to fair value adjustments and goodwill from business combinations that occurred before the date of transition to SLFRS.LKAS. Such fair value adjustments and goodwill are treated as assets and liabilities of the

parent or are non-monetary foreign currency items and no further translation differences occur.

measurement is in accordance with SLFRS/LKAS. Assets and liabilities that do

84

2. FIRST TIME ADOPTION OF SLFRS/LKAS

2.1 Reconciliation of Comprehensive - Income Statement GROUP COMPANY Note Effect of As per Effect of As per As per transition to SLFRS/LKAS As per transition to SLFRS/LKAS SLAS SLFRS/LKAS SLAS SLFRS/LKAS Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Revenue 891,499 - 891,499 492,077 492,077 Cost of Sales (254,031) - (254,031) (147,430) (147,430) 637,468 - 637,468 344,647 - 344,647 Dividend Income - - - 163,800 - 163,800 Other Operating Income 2.4.1 39,766 (37,039) 2,727 2,306 (891) 1,415

Results from Operating Activities 474,272 (37,951) 436,321 414,211 (1,660) 412,551

Finance Income 2.4.1 - 39,843 39,843 - 3,161 3,161 (39,654) 39,843 189 (28,708) 3,161 (25,547) Change in Fair Value of Investment Property 581,191 581,191 581,191 581,191 Share of Results of Associate 7,666 - 7,666 - -

1,023,475 1,892 1,025,367 966,694 1,501 968,195

888,018 1,892 889,910 901,983 1,501 903,484

Attributable to:

Non-controlling Interests 29,604 71 29,675 888,018 1,892 889,910


2. FIRST TIME ADOPTION OF SLFRS/LKAS (Contd.)

2.2 Reconciliation of Comprehensive Income - Statement of other Comprehensive Income GROUP COMPANY Note Effect of As per Effect of As per As per transition to SLFRS/LKAS As per transition to SLFRS/LKAS SLAS SLFRS/LKAS SLAS SLFRS/LKAS Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

888,018 1,892 889,910 901,983 1,501 903,484 Share of Other Comprehensive

Net Loss on Available-for-Sale Financial Assets - (39,439) (39,439) - (39,439) (39,439)

Other Comprehensive Income 2.4.2 - (39,599) (39,599) - (39,439) (39,439)

Total Comprehensive Income 888,018 (37,707) 850,311 901,983 (37,938) 864,045

Attributable to:

Non-Controlling Interests 29,604 71 29,675 888,018 (37,707) 850,311

86


2.3 Reconciliation of Equity - Statement of Financial Position

GROUP Equity as at 31st March 2012 Equity as at 1st April 2011 (date of transition to SLFRS/LKAS) Effect of Effect of As per transition to As per As per transition to As per Note SLAS SLFRS/LKAS SLFRS/LKAS SLAS SLFRS/LKAS SLFRS/LKAS Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s ASSETS Non-Current Assets

Intangible Assets - 2,937 2,937 - 3,143 3,143 Lease Rentals Paid in Advances 43,469 - 43,469 44,558 - 44,558 Investment Properties 1,667,941 - 1,667,941 1,086,750 - 1,086,750 Investments in Subsidiaries - - - - - - Investments in Associate 82,023 288 82,311 74,640 448 75,088 Other Non-Current Financial Assets 2.4.3 - 142,539 142,539 - 155,216 155,216

Other Non-Current Assets 2.4.3 91,524 (89,305) 2,219 66,681 (64,432) 2,249 2,037,145 53,522 2,090,667 1,429,686 91,232 1,520,918 Current assets Inventories 2,059 - 2,059 3,069 - 3,069 Trade and other receivables 2.4.4 / 2.4.5 1,043,315 369,447 1,412,762 764,638 473,281 1,237,919 Amounts due from related parties 14,850 - 14,850 14,552 - 14,552 Other current assets 2.4.4 - 7,911 7,911 - 7,233 7,233 Other investments 392,570 - 392,570 637,500 - 637,500 Cash in hand and at bank 139,632 - 139,632 70,700 - 70,700 1,592,426 377,358 1,969,784 1,490,459 480,514 1,970,973 Total assets 3,629,571 430,880 4,060,451 2,920,145 571,746 3,491,891


COMPANYEquity as at 31st March 2012 Equity as at 1st April 2011

(date of transition to SLFRS/LKAS) Effect of Effect of

As per transition to As per As per transition to As perSLAS SLFRS/LKAS SLFRS/LKAS SLAS SLFRS/LKAS SLFRS/LKAS

Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

- - - - - - - - - - - -

1,667,941 - 1,667,941 1,086,750 - 1,086,750 120,380 - 120,380 120,380 - 120,380 24,000 - 24,000 24,000 - 24,000

- 129,092 129,092 - 132,902 132,902

77,748 (76,248) 1,500 43,594 (42.119) 1,475 1,914,708 52,844 1,967,552 1,306,886 90,783 1,397,669

1,926 1,926 2,997 - 2,997 726,628 372,178 1,098,806 462,688 477,486 940,174 14,852 - 14,852 14,552 - 14,552 4,758 424 5,182 - 3,028 3,028

- - - - - - 111,421 - 111,421 55,757 - 55,757 859,585 372,602 1,232,187 535,994 480,514 1,016,508

2,774,293 425,446 3,199,739 1,842,880 571,297 2,414,177

88


2.3 Reconciliation of Equity - Statement of Financial Position (Contd.)

GROUP Equity as at 31st March 2012 Equity as at 1st April 2011 (date of transition to SLFRS/LKAS) Effect of Effect of As per transition to As per As per transition to As per Note SLAS SLFRS/LKAS SLFRS/LKAS SLAS SLFRS/LKAS SLFRS/LKAS Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s EQUITY AND LIABILITIES Stated capital 152,000 - 152,000 152,000 - 152,000 Revenue reserves 2,406,378 1,821 2,408,199 1,699,964 - 1,699,964

Total equity 2,558,378 53,453 2,611,831 1,851,964 91,231 1,943,195

Non-controlling interests 61,497 71 61,568 79,893 - 79,893 2,619,875 53,524 2,673,399 1,931,857 91,231 2,023,088 Non-current liabilities Borrowings 1,957 - 1,957 23,544 - 23,544

95,317 - 95,317 118,457 - 118,457 Current liabilities Trade and other payables 2.4.6 / 2.4.7 587,876 368,412 956,288 553,724 475,720 1,029,444 Amounts due to related parties 6,947 - 6,947 4,638 - 4,638

Current Portion of Borrowings 21,587 - 21,587 17,480 - 17,480 Other current liabilities 2.4.6 - 4,188 4,188 - 4,795 4,795 Bank overdrafts 284,894 - 284,894 182,260 - 182,260 914,379 377,356 1,291,735 869,831 480,515 1,350,346 Total equity and liabilities 3,629,571 430,880 4,060,451 2,920,145 571,746 3,491,891


COMPANYEquity as at 31st March 2012 Equity as at 1st April 2011

(date of transition to SLFRS/LKAS) Effect of Effect of

As per transition to As per As per transition to As perSLAS SLFRS/LKAS SLFRS/LKAS SLAS SLFRS/LKAS SLFRS/LKAS

Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

152,000 - 152,000 152,000 - 152,000 2,112,769 1,501 2,114,270 1,362,786 - 1,362,786

2,264,769 52,845 2,317,614 1,514,786 90,783 1,605,569

- - - - - -2,264,769 52,845 2,317,614 1,514,786 90,783 1,605,569

- - - - - -

68,132 - 68,132 73,263 - 73,263

187,576 368,627 556,203 67,679 476,614 544,293

4,569 - 4,569 5,921 - 5,921

- - - - - - - 3,975 3,975 - 3,900 3,900

249,246 - 249,246 145,613 - 145,613 441,391 372,602 813,993 254,831 480,514 735,345

2,774,292 425,447 3,199,739 1,842,880 571,297 2,414,177

90


2.4 Notes to the Statement of Income, Other Comprehensive Income for the year ended 31st March 2012, Reconciliation of Equity as at 31 March 2012 and 1 April 2011

2.4.1 Other Operating Income

Group Company For the Year For the Year

ended ended 31 March 2012 31 March 2012 Rs.000’s Rs.000’s

to Finanace Income 37,039 891 Effect of transition to SLFRS/LKAS - Staff motor vehicle loan interest rate diffrential 2,804 2,270 39,843 3,161

2.4.2 Available-for-sale Financial Assets Under previous SLAS, the Group accounted for long term investments measured at cost. However, in accordance with LKAS 39 - Finanacial

transition date and have been recognised at fair value. Difference between the fair value under SLFRS/LKAS and carrying value under

GROUP COMPANY Equity as at Equity as at Equity as at Equity as at 31st March 2012 01st April 2011 31st March 2012 01st April 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Fair value of these assets as per SLFRS/LKAS 79,167 118,765 78,878 118,317 Carrying amount of these assets as per SLAS 27,535 27,534 27,534 27,534 51,632 91,231 51,344 90,783

GROUP COMPANY 2012 2011 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s



2.4.3 Other Non-Current Asset

assets. GROUP COMPANY 2012 2011 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

2.4.4.Other Current Assets


2.4.5 Trade and Other Receivables

Documentation charges, Store rent, Insurance and VAT recoveries. However under SLFRS the Group has recognised the sales of which


Trade and other receivables 372,602 480,514 372,602 480,514

92


2.4.6 Other Current Liabilities


2.4.7 Trade and Other Payables

Documentation charges, Store rent, Insurance and VAT recoveries. However under SLFRS the Group has recognised the sales of which


Trade and other payables 372,602 480,814 372,602 480,514

2.4.8 Statement of Cash Flows

3. REVENUE GROUP COMPANY For the year ended 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

3.1 Summary Revenue 858,097 891,499 572,940 492,077


3. REVENUE (Contd.) Produce Broking & Warehousing Share Broking Real Estate Total For the year ended 31st March 2013 2012 2013 2012 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

3.2 Segment Information - Group Segment Revenue Gross Revenue - Third Parties 555,135 491,761 208,965 313,130 2 9 764,102 804,900 - Related Parties - - 105,324 97,377 105,324 97,377 Inter Segment Sales (11,329) (10,778) (11,329) (10,778) Sales to customers outside the Group 555,135 491,761 208,965 313,130 93,997 86,608 858,097 891,499 Segment Results 311,471 231,715 35,437 141,598 71,780 63,008 418,688 436,321 Finance Income 5,579 5,613 27,620 34,203 91 27 33,290 39,843

Change in fair value of investment property - - - - 483,515 581,191 483,515 581,191 Share of results of associate - - - - 11,454 7,666 11,454 7,666

Segment Assets 2,281,400 1,631,154 820,049 727,959 2,177,417 1,701,338 5,278,866 4,060,451

Segment Liabilities 1,326,212 892,679 592,652 470,504 29,407 23,869 1,948,271 1,387,052

4. DIVIDEND INCOME GROUP COMPANY For the year ended 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Income from Investments with Related Parties - - 73,442 163,800 - - 73,442 163,800

94

5. OTHER OPERATING INCOME GROUP COMPANY For the year ended 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Guarantee Fees - 49 - 83 Sundry Income 948 1,866 948 546

5,153 2,727 998 1,415

6. FINANCE INCOME Interest income on a loan to Inter companies 1,663 3,671 - 73 Dividend Income from available for sale Investments 1,420 - 1,420 - Other Interest income 30,207 36,172 2,427 3,088 33,290 39,843 3,847 3,161

7. FINANCE EXPENSES On Overdrafts 61,394 32,629 61,375 28,564

- Related Parties - 144 - 144 - Others 2,630 6,881 - - 64,024 39,654 61,375 28,708

8. PROFIT BEFORE TAX

Personal costs includes -

- Other Staff Costs 207,400 218,549 90,516 90,203 Donations 5,494 6,239 3,494 5,739

Depreciation 17,520 20,090 7,622 9,744 Amortisation of Lease Charges 1,089 1,089 - - Amortisation of Intangible Assets 755 1,241 - -


9. TAX EXPENSES GROUP COMPANY For the year ended 31st March 2013 2012 2013 2012 Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Dividend Income From Group Companies (73,442) (163,800) (73,442) (163,800)

820,935 869,233 774,272 804,395 Resident dividend (1,420) - (1,420) -

Over Under provision for previous years (5) - (5) -

96

9. INCOME TAX EXPENSE (Contd.) GROUP COMPANY For the year ended 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Income Statement

Revaluation of Investment Property to Fair Value 6,018 172 132 172

11,596 1,912 (2,984) 1,701

Other comprehensive income

Revaluation of land and building to fair value 18,951 - - -

Warehousing Pvt Ltd.

Company Basis Rate Concession period

10. EARNINGS PER SHARE For the year ended 31st March 2013 20112 Rs.000’s Rs.000’s

10.1 Amounts Used as the Numerator:

10.2 Number of Ordinary Shares Used as the Denominator: Weighted Average number of Ordinary Shares in Issue 60,800 60,800 Basic Earnings Per Share (Rs.) 12.22 14.15

average number of ordibary shares outstanding during the year.


11. DIVIDENDS PER SHARE GROUP For the year ended 31st March 2013 2012 Rs.000’s Rs.000’s

Final Dividend Paid

243,200 152,000

Rs. Rs.11.1 Dividend Per Share

The dividend per share is based on the dividend declared and paid in the period covered by the Financial Statements.

12 FINANCIAL INSTRUMENTS

12.1 Financial Assets and Liabilities by Categories Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.

12.1.1 Financial assets by categories - Group Loans and Receivables Available-for-Sale Total Financial Assets As at As at As at 1 April 1 April 1 April As at 31 st March 2013 2012 2011 2013 2012 2011 2013 2012 2011 Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s

Financial Instruments in Non-Current Assets Other Non-Current Financial Assets 64,276 63,660 36,899 180,125 78,879 118,317 244,401 142,539 155,216 Financial Instruments in Current Assets Trade and Other Receivables 1,986,497 1,412,762 1,237,919 - - - 1,986,497 1,412,762 1,237,919 Amounts due from Related Parties 15,644 14,850 14,552 - - - 15,644 14,850 14,552 Short Term Investments 237,390 392,570 637,500 - - - 237,390 392,570 637,500 Cash in Hand and at Bank 163,597 139,632 70,700 - - - 163,597 139,632 70,700 Total 2,467,404 2,023,471 1,997,570 180,125 78,879 118,317 2,647,529 2,102,353 2,115,887

98

12 FINANCIAL INSTRUMENTS (Contd.)

12.1.2 Financial Liabilities by Categories - Group Financial Liabilities Measured Total at Amortised Cost As at As at 1 April 1 April As at 31 st March 2013 2012 2011 2013 2012 2011 Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s

Financial Instruments in Non-Current Liabilities Interest Bearing Borrowings - 1,957 23,544 - 1,957 23,544 Financial Instruments in Current Liabilities Trade and Other Payables 1,129,750 956,288 1,029,444 1,129,750 956,288 1,029,444 Amounts Due to Related Parties 5,381 6,947 4,638 5,381 6,947 4,638 Current Portion of Interest Bearing Borrowings 1,957 21,587 17,480 1,957 21,587 17,480 Bank Overdrafts 617,575 284,894 182,260 617,575 284,894 182,260 Total 1,754,663 1,271,673 1,257,366 1,754,663 1,271,673 1,257,366

12.1.3 Financial Assets by categories - Company Loans and Receivables Available-for-Sale Total Financial Assets As at As at As at 1 April 1 April 1 April As at 31 st March 2013 2012 2011 2013 2012 2011 2013 2012 2011 Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s

Financial Instruments in Non-Current Assets Other Non-Current Financial Assets 48,912 50,213 14,585 180,125 78,879 118,317 229,037 129,092 132,902

Financial Instruments in Current Assets - - - Trade and Other Receivables 1,508,035 1,098,806 940,174 - - - 1,508,035 1,098,806 940,174 Amounts Due from Related Parties 11,442 14,852 14,552 - - - 11,442 14,852 14,552 Short Term Investments - - - - - - - - - Cash in Hand and at Bank 65,730 111,421 55,757 - - - 65,730 111,421 55,757 Total 1,634,119 1,275,292 1,025,068 180,125 78,879 118,317 1,814,244 1,354,171 1,143,385


12 FINANCIAL INSTRUMENTS

12.1.4 Financial Liabilities by Categories - Company Financial Liabilities Measured Total at Amortised Cost As at As at 1 April 1 April As at 31 st March 2013 2012 2011 2013 2012 2011 Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s

Financial Instruments in Non-Current Liabilities Interest Bearing Borrowings - - - - - - Financial Instruments in Current Liabilities Trade and Other Payables 593,401 556,203 544,293 593,401 556,203 544,293 Amounts Due to Related Parties 8,529 4,569 5,921 8,529 4,569 5,921 Bank Overdrafts 582,968 249,246 145,613 582,968 249,246 145,613 Total 1,184,898 810,018 695,827 1,184,898 810,018 695,827

12.2 Financial Assets By Fair Value Hierarchy Group / Company

indirectly

FINANCIAL ASSETS Level 1 Level 2 Level 3 As at As at As at 1 April 1 April 1 April As at 31 st March 2013 2012 2011 2013 2012 2011 2013 2012 2011 Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s

Available for Sale

Total 180,124 78,878 118,317 - - - - - -

100

13. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group and the Company has loan and other receivables, trade and other receivables, and cash and short-term deposits that arise

13.1 Credit risk

The Group and the Company trades only with recognised, creditworthy third parties. It is the Group’s and the Company’s policy that all


13. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Contd.)

13.1.2 Group As at 31st March 2013 Notes Other Cash in Trade and Amounts Non Current hand other due from Financial and receivables Other related % of Assets at bank investments parties Total allocation Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s

As at 31st March 2012 Notes Other Cash in Trade and Amounts Non Current hand other due from Financial and receivables Other related % of Assets at bank investments parties Total allocation Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s

102


13.1.3 Company As at 31st March 2013 Notes Other Cash in Trade and Amounts Non Current hand other due from Financial and receivables Other related % of Assets at bank investments parties Total allocation Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s

As at 31st March 2012 Notes Other Cash in Trade and Amounts Non Current hand other due from Financial and receivables Other related % of Assets at bank investments parties Total allocation Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s Rs. ’000s

13.1.3.1 Government securities

of treasury bills and reverse repo investments. Government securities are usually referred to as risk free due to the sovereign nature of the instrument

respective business units have obtained the necessary Power of Attorney/promissory notes as collateral for the loans granted.



13.1.3.3 Trade and other receivables GROUP COMPANY As at 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Neither past due nor impaired 1,893,094 1,395,687 1,420,219 1,088,496 Past due but not impaired 61-90 days 3,660 2,882 3,636 1,296 91-180 days 53,492 - 53,492 - > 181 days 23,718 - 23,715 - impaired 19,191 36,237 19,090 36,163 Gross carrying value 1,993,155 1,434,806 1,520,152 1,125,955

Individually assessed impairment provision (19,191) (36,237) (19,090) (36,163) Collectively assessed impairment provision - - - - Total 1,973,964 1,398,569 1,501,062 1,089,792

The Group has advance money to client by reviewing their past performance and credit worthiness, as collateral.

actual incurred historical data.

13.1.3.4 Loans and Other receivables The Company has Loaned money to tea producers by reviewing their past performance and credit worthiness, as collateral.

13.1.3.5 Amounts due from related parties The Group’s amounts due from related party mainly consists of balances due from companies under common control and associate.

13.1.3.6 Credit risk relating to cash and cash equivalents

104


13.2 Liquidity Risk

any unforeseen obligations and opportunities. The Group and the Company holds cash and undrawn committed facilities to enable the

The Group and the Company monitors its risk to a shortage of funds using a daily cash management process. This process considers the

sources of funding including bank loans, loan notes, & overdrafts.

13.2.1 Net Debt/(Cash)

GROUP COMPANY As at 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Short term investments 237,390 392,570 - - Cash in hand and at bank 163,597 139,632 65,730 111,421 Liquid Assets 400,987 532,202 65,730 111,421

Current Portion of borrowings 1,957 21,587 - - Bank overdrafts 617,575 284,894 582,968 249,246 Liquid Liabilities 619,532 306,481 582,968 249,246 Net Debt/(Cash) 218,545 (225,721) 517,238 137,825



13.2.2 Liquidity risk management

the sale of assets, repurchase agreement or other secured borrowing.

Maturity analysis

As at 31st March 2013 2012 More More Group Less than 3 to 12 than Less than 3 to 12 than 3 months Months 12 months Total 3 months months 12 months Total Rs.’000s Rs.’000s Rs.’000s Rs.’000s Rs.’000s Rs.’000s Rs.’000s Rs.’000s

Trade and other payables 1,129,750 - - 1,129,750 956,288 - 956,288 Amounts due to related parties 5,381 - - 5,381 6,947 - 6,947 Current portion of borrowings 1,957 - - 1,957 5,397 16,190 - 21,587 Bank overdrafts 617,575 - - 617,575 284,894 284,894 1,754,663 - - 1,754,663 1,253,526 16,190 - 1,269,716

As at 31st March 2013 2012 More More Compay Less than 3 to 12 than Less than 3 to 12 than 3 months Months 12 months Total 3 months months 12 months Total Rs.’000s Rs.’000s Rs.’000s Rs.’000s Rs.’000s Rs.’000s Rs.’000s Rs.’000s

Trade and other payables 593,401 - - 593,401 556,203 - - 556,203 Amounts due to related parties 8,529 - - 8,529 4,569 - - 4,569 Bank overdrafts 582,968 - - 582,968 249,246 - 249,246 1,184,898 - - 1,184,898 810,018 - - 810,018

106


13.3 Market risk

no interest rate risk, currency risk and commodity price risk to the Group and Comapny.

the return.

13.3.1 Equity price risk

investment securities.

13.3.2 Available-for-sale investments

13.3.3 Sensitivity analysis

Group Company Effect on Effect on As at 31st March

Rs. 000’s Rs. 000’s



13.4 Capital management

The Group manages its capital structure, and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust the capital structure, the Group may issue new shares, have a rights issue or buy back of shares.

GROUP COMPANYAs at 31st March 2013 2012 2013 2012

108

14. PROPERTY, PLANT & EQUIPMENT

As at 31st March Leasehold and and Vehicles Equipment Equipment 1st April Group Land Machinery Fittings 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

14.1 Cost/Valuation At the beginning

of the year 121,186 106,669 92,707 16,990 47,212 4,582 14,024 403,370 391,429 377,327 Additions - 657 11 7,800 785 27 1,556 10,836 14,582 18,650 Revaluation 189,518 - - - - - - 189,518 - - Transfer* (25,704) (25,704) - - Disposals - - - (104) - - - (104) (2,641) (4,548) At the end of the year 285,000 107,326 92,718 24,686 47,997 4,609 15,580 577,916 403,370 391,429 14.2 Accumulated depreciation and impairment At the beginning of the year (23,343) (84,569) (83,549) (10,536) (40,551) (3,730) (11,668) (257,946) (240,497) (221,800) Charge for the year (2,361) (6,848) (2,395) (2,234) (2,135) (231) (1,316) (17,520) (20,090) (23,236) Transfer* 25,704 - - - - - - 25,704 - - Disposals - - - 104 - - - 104 2,641 4,539 At the end of the year - (91,417) (85,944) (12,666) (42,686) (3,961) (12,984) (249,658) (257,946) (240,497)

14.3 Carrying value As at 31 March 2013 285,000 15,909 6,774 12,020 5,311 648 2,596 328,258 As at 31 March 2012 97,843 22,100 9,158 6,454 6,661 852 2,356 145,424 As at 1 April 2011 100,206 16,516 14,505 9,053 5,390 1,361 3,901 150,932 * This transfer relates to the accumulated depreciation as at the revaluation date that was eliminated against the gross carrying amount of

the revalued asset.


14. PROPERTY, PLANT & EQUIPMENT (Contd.)

14.4 Property, Plant & Equipment As at 31st March Machinery and Vehicles Equipment Equipment 1st April

Company Fittings 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Cost At the beginning of the year 65,331 39,236 16,990 29,799 1,177 10,640 163,173 162,007 153,415 Additions 65 - 7,800 735 27 36 8,663 2,221 13,140 Disposals - - (104) - - - (104) (1,055) (4,548) At the end of the year 65,396 39,236 24,686 30,534 1,204 10,676 171,732 163,173 162,007

14.5 Accumulated depreciation and impairment At the beginning of the year (57,622) (31,791) (10,536) (27,965) (1,064) (9,556) (138,534) (129,845) (125,123) Charge for the year (2,029) (1,902) (2,234) (858) (29) (570) (7,622) (9,744) (9,261) Disposals - - 104 - - - 104 1,055 4,539 At the end of the year (59,651) (33,693) (12,666) (28,823) (1,093) (10,126) (146,052) (138,534) (129,845)

14.6 Carrying value As at 31 March 2013 5,745 5,543 12,020 1,711 111 550 25,680 As at 31 March 2012 7,709 7,445 6,454 1,834 113 1,084 24,639 As at 1 April 2011 9,232 10,251 9,053 1,400 100 2,126 32,162

GROUP COMPANY As at As at As at 31st March 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs 000’s Rs 000’s Rs 000’s Rs 000’s Rs 000’s Rs 000’s

14.7 Carrying value At cost 43,258 145,424 150,932 25,680 24,639 32,162 At valuation 285,000 - - - - - 328,258 145,424 150,932 25,680 24,639 32,162

110

14. PROPERTY, PLANT & EQUIPMENT (Contd.)

14.8 Details of group’s building stated at valuation are indicated below;

Property Method of Effective date Property valuation of valuation valuer Building on leasehold land Investment 31 March 2013 Mr. K.T.D. Tissera John Keells Warehouse (Pvt) ltd Method Chartered Valuation Surveyor

14.9 The carrying amount of revalued land and buildings if they were carried at cost less depreciation, would be as follows;

Group As at 1 April As at 31st March 2013 2012 2011 Rs.‘000s Rs.‘000s Rs.‘000s

Cost 121,186 121,186 121,186 Accumulated depreciation and impairment (25,704) (23,343) (20,981) Carrying value 95,482 97,843 100,205

15 . INVESTMENT PROPERTIES Group Company As at 1st April As at 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s At the beginning of the year 1,667,942 1,086,750 696,250 1,667,942 1,086,750 696,250 Addition - - 6,780 - - 6,780 Change in fair value during the year 483,515 581,191 383,720 483,515 581,191 383,720 At the end of year 2,151,457 1,667,941 1,086,750 2,151,457 1,667,941 1,086,750


15 . INVESTMENT PROPERTIES (Contd.)

15.1 Valuation details of investment property

Buildings Land Valuation Property Freehold Leasehold (Rs.000’s)

130,Glennie Street, Colombo 2

50, Minuwangoda Road 3.8 A - 105,683 Ekala, Ja- Ela 58, Kirulapone Avenue 0.08 A - 1,250 Colombo 6

Fair value of the above Investment Properties has been ascertained by independent valuation carried by Mr. P. .B Kalugalagedera & Associates-, Chartered Valuer, using the Open Market Value Method of valuation as at 31 March 2013.

have been considered. The valuer has made reference to market evidence of transaction prices for similar properties, with appropriate

adjusted under the Investment Property valuation as at 31st March 2013.” ** This represents Annual Permit Land.

Market value Per Perch 2013 2012 Rs. Rs. Location 130, Glennie Street Colombo 2 6,900,000 5,000,000 50 Minuwangoda Road, Ekala, Ja Ela 175,000 200,000

There has been no change in the value of Kirulaponne Land

15.3 Rental income earned from investment properties by the Company amount to Rs.102,380,438/- (2012 - Rs.94,433,255/-) Direct operating

112

16. LEASE RENTALS PAID IN ADVANCE Group As at 1st April As at 31st March 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s

16.1 Summary At the begining of the year 43,469 44,558 45,647 Amortisation for the year (1,089) (1,089) (1,089) At the end of the year 42,380 43,469 44,558

16.2 Amortisation of Leasehold Property Muturajawela Land Rs.000’s To be amortised in 2014 1,089 To be amortised from 2015 - 2019 5,445 To be amortised from 2020 - 2052 35,846 42,380

John Keells Warehousing (Pvt) Ltd has entered into a 50 year lease agreement with the Sri Lanka Land Recramation and Development Corporation to lease a land in Muthurajawela for a total lease rent of Rs.54,450,000/-.

Property As at 1st April As at 31st March Rs.000’s Rs.000’s Rs.000’s 16.3 Details of Leasehold Land Group John Keells Warehousing (Pvt) Ltd 6 A 50 years from 1 March 2002 42,380 43,469 44,558 Land - Muthurajawela

17. INTANGIBLE ASSETS GROUP As at 31st March Software As at 1st April licenses 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

17.1 Cost At the beginning of the year 6,861 6,861 5,971 3,543 Additions 916 916 1,559 2,428 Derecognition - - (669) - At the end of the year 7,777 7,777 6,861 5,971


17. INTANGIBLE ASSETS (Contd.) GROUP As at 31st March Software As at 1st April licenses 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

17.2 Accumulated amortisation and impairment At the beginning of the year (3,924) (3,924) (2,828) (2,032) Amortisation (755) (755) (1,241) (796) Derecognition - - 145 - At the end of the year (4,679) (4,679) (3,924) (2,828)

17.3 Carrying value As at 31 March 2013 3,098 3,098 - - As at 31 March 2012 2,937 - 2,937 - As at 1 April 2011 3,143 - - 3,143

18. INVESTMENTS IN SUBSIDIARIES GROUP COMPANY As at As at 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Investments in Subsidiaries - - - 120,380 120,380 120,380

As at 1st April As at 31st March 2013 2012 2011 No. of Holding Cost Directors’ Cost Directors’ Cost Directors shares % Valuation Valuation Valuation 000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

18.1 Investment in Subsidiaries Unquoted John Keells Warehousing (Pvt) Ltd. 12,000 100 120,000 120,000 120,000 120,000 120,000 120,000 John Keells Stock Brokers (Pvt) Ltd. 570 76 380 380 380 380 380 380 120,380 120,380 120,380 120,380 120,380 120,380

114

19. INVESTMENTS IN ASSOCIATE GROUP COMPANY As at 31st March As at As at 1st April 1st April Unquoted No. of shares Holding 2013 2012 2011 2013 2012 2011

Keells Realtors Ltd. 2,400 32 24,000 24,000 24000 24,000 24,000 24,000

group net of dividend 68,744 58,599 50,640 - - - Cumulative adjustment on account of associate company share of net assets (256) (288) 448 - - - 92,488 82,311 75,088 24,000 24,000 24,000

GROUP As at 1st April 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s

19.1 Summarised Financial Information of Associate Continuing Operations 11,780 8,140

Finance costs - - 10,753 7,383

Other Comprehensive income (32) (160)

Total Assets 94,373 83,911 76,249 Total Liabilities (1,885) (1,600) (1,161) Net Assets 92,488 82,311 75,088


20. OTHER NON CURRENT FINANCIAL ASSETS GROUP COMPANY As at 1st April As at 1st April As at 31st March Note 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

244,401 142,539 155,216 229,037 129,092 132,902

As at 1st April As at 31st March 2013 2012 2011 No. of Holding Cost Fair Cost Fair Cost Fair shares % Valuation Valuation Valuation 000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

20.1 Other Quoted Equity Investments Group/Company Quoted Keells Food Products PLC At the beginning of the year 788 3.09 27,534 55,215 27,534 78,878 27,534 118,317 Additions 1,784 7.00 107,065 124,909 - - - - At the end of the year 2,572 10.09 134,599 180,124 27,534 78,878 27,534 118,317

20.2 Unquoted Ceylon Cold Stores PLC- Preference Share 1 1 1 1 1 1 - -

116

GROUP COMPANY As at 1st April As at 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

20.3 Other Non Equity investments

Loans to tea clients 34,403 38,376 5,876 34,402 38,376 5,876

64,276 63,660 36,899 48,912 50,213 14,585

At the beginning of the year 30,360 26,446 24,685 16,540 13,087 14,409 Loans Granted 12,769 11,797 11,456 10,420 8,130 3,307 Loans Recovered (9,899) (7,883) (9,695) (6,390) (4,676) (4,629) At the end of the year 33,230 30,360 26,446 20,570 16,541 13,087

Recivable with in one year 10,357 8,576 7,923 6,060 4,704 4,378 Recivable after one year 22,873 21,784 18,523 14,510 11,837 8,709 33,230 30,360 26,446 20,570 16,541 13,087

21. DEFERRED TAX ASSETS GROUP As at 1st April As at 31st March 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s At the beginning of the year 3,827 2,983 3,191 Addition / (Release) 280 844 (209) At the end of the year 4,107 3,827 2,982

4,107 3,827 2,982


22. INVENTORIES GROUP COMPANY As at As at 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Building Materials 829 859 903 829 859 903 Consumables and Spares 751 1,200 2,166 649 1,067 2094 1,580 2,059 3,069 1,478 1,926 2,997

23. TRADE AND OTHER RECEIVABLES Trade Debtors 1,993,155 1,434,806 1,240,142 1,520,152 1,125,955 948,874

Other Debtors 2,176 5,617 10,719 913 4,310 7,787

1,986,497 1,412,762 1,237,919 1,508,035 1,098,806 940,174

24. CASH AND CASH EQUIVALENTS IN CASH FLOW STATEMENT GROUP COMPANY As at As at 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

24.1 Favourable Cash & Cash Equivalents Short Term Investments 237,390 392,570 637,500 - - - Cash & Bank Balances 163,597 139,632 70,700 65,730 111,421 55,757 400,987 532,202 708,200 65,730 111,421 55,757

24.2 Unfavourable Cash & Cash Equivalents Bank Overdrafts (617,575) (284,894) (182,260) (582,968) (249,246) (145,613) 24.3 Net Cash & Cash Equivalents (216,588) 247,308 525,940 (517,238) (137,825) (89,856)

118

25. STATED CAPITAL GROUP COMPANY As at 31st March No of Shares 2013 No of Shares 2012 No of Shares 2011 In 000’s Rs.000’s In 000’s Rs.000’s In 000’s Rs.000’s

25.1 Issued and Fully Paid Ordinary Shares At the beginning of the year 60,800 152,000 30,400 152,000 15,200 152,000 Share sub-division - - 30,400 - 15,200 At the end of the year 60,800 152,000 60,800 152,000 30,400 152,000

26. OTHER COMPONENTS OF EQUITY GROUP COMPANY As at As at 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

26.1 Revaluation reserve 170,567 - - - - -26.2 Available for sale reserve 45,781 51,632 91,231 45,525 51,344 90,783 216,348 51,632 91,231 45,525 51,344 90,783

26.1 Revaluation reserve consists of the net surplus on the revaluation of properties.26.2

27. DEFERRED TAX LIABILITIES GROUP COMPANY As at As at 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Charge (Release) 30,828 2,755 (25,919) (2,984) 1,701 (17,679)

Revaluation of land and building to fair value 18,952 - - - - - Revaluation of Investment Property to Fair Value 47,503 41,485 41,313 41,617 41,485 41,313

Losses available for offset against

71,436 40,608 37,853 32,643 35,627 33,926


28. EMPLOYEE BENEFIT LIABILITIES GROUP COMPANY As at As at 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Current Service Cost 3,804 4,522 3,377 2,393 3,033 2,207

Payments (3,123) (12,418) (2,399) (3,123) (12,172) (895) Transfers 5,796 (466) - 5,612 (466) (3,275) (Gain)/Loss arising from changes in the assumptions or due to (over)/under provision in the previous years (14) (1,652) (59) 1,800 (1,161) (316)

Consultants (Pvt) Ltd., actuaries.

GROUP COMPANY As at As at 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Cost of Sale 7,049 6,378 6,169 6,245 4,720 4,589

8,956 8,576 8,695 7,335 5,806 5,674

120

28. EMPLOYEE BENEFIT LIABILITIES (Contd.)

28.3 Sensitivity of assumptions used

GROUP COMPANY 2013 2013 Rs.000’s Rs.000’s

29. TRADE AND OTHER PAYABLES GROUP COMPANY As at As at 1st April 1st April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Trade Creditors 1,068,622 932,419 1,005,735 563,994 532,334 520,584

1,129,750 956,288 1,029,444 593,401 556,203 544,293

30. INTEREST BEARING LIABILITIES GROUP As at 1st April As at 31st March 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s

30.1 Asset Backed notes payable At the beginning of the year 23,544 41,024 55,084 Additions - - - Repayments (21,587) (17,480) (14,060) At the end of the year 1,957 23,544 41,024

30.2 Repayable within one year Gross liability 1,957 24,217 24,362 Finance charges - (2,630) (6,882) 1,957 21,587 17,480


30. INTEREST BEARING LIABILITIES (Contd.) GROUP As at 1st April As at 31st March 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s

30.3 Finance lease obligations repayable after one year Gross liability - 1,957 26,172 Finance charges - - (2,628) - 1,957 23,544

30.4 Security and repayment terms Lending institution Nature of facility Interest rate and security Repayment terms

Corporate guarantee of John keells PLC commencing May 2003

31. COMMITMENTS AND CONTINGENCIES

31.1 Commitments

31.2 Contingencies There are no contingent liabilities as at the balance sheet date other than the following. Sesame Senhora Tea Company (Pvt) Ltd., against John Keells PLC. The court entered judgment for a sum of Rs. 500,000/- and JKL has

made appeal against the District Court judgment to the Civil High Court of Colombo.

auction. The matter is still pending in court. We have been advised that the said claim has no basis and is not prescribed in Law. Other than

31.2.1 Contingencies on guarantees issued

GROUP COMPANY As at 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Name of the Company John Keells Stock Brokers (Pvt.) Ltd. - - - 2,000 Keells Food Products PLC. 1,000 1,000 1,000 1,000 Walker Tours Ltd. 10,000 10,000 10,000 10,000 John Keells Warehousing (Pvt) Ltd. - - 1,957 26,174 11,000 11,000 12,957 39,174

122

32. ASSETS PLEDGED As at the Balance Sheet date there are no Assets pledged against the borrowings.

33. RELATED PARTY DISCLOSURES GROUP COMPANY As at 1 April As at 1 April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

33.1 Amounts Due from Related Parties Ultimate Parent 5,619 6,343 6,032 5,619 6,343 6,032 Subsidiary - - - - - - Companies Under Common Control 5,802 8,507 8,520 5,823 8,509 8,520 Key Management Personnel 4,223 - - - - - Close Family Members of KMP - - - - - - 15,644 14,850 14,552 11,442 14,852 14,552

GROUP COMPANY As at 1 April As at 1 April As at 31st March 2013 2012 2011 2013 2012 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

33.2 Amounts Due to Related Parties Ultimate Parent 1,107 670 918 768 409 463 Subsidiary - - - - 1,822 Companies Under Common Control 4,252 1,189 3,720 7,761 4,160 3,636 Key Management Personnel - 5,066 - - - - Close Family Members of KMP 22 22 - - - - Companies controlled / jointly controlled /

their close family members - - - - - - 5,381 6,947 4,638 8,529 4,569 5,921


33. RELATED PARTY DISCLOSURES (Contd.) GROUP COMPANY For the year ended 31st March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

33.3 Transactions with Related Parties Ultimate Parent Receiving of Services for which fees are paid 26,662 25,650 16,003 15,275

Receiving Services for which fees are received (824) - - -

Subsidiaries Renting of store space for which rent is paid - - 4,093 3,998

Providing Services for which Fees are Paid - - 1 4 Gurantees given - - 1,957 28,174

Companies under Common Control Purchase of goods for a fee 4,202 4,955 3,631 3,722 Receiving of Services for which fees are paid 12,559 8,788 7,832 8,788 Lending Money for which interest is received (722) (867) (722) (73)

Providing of Services for which fees are received (34,735) (26,941) (25,700) (16,353) Gurantees given 11,000 11,000 11,000 11,000 Key Management Personnel Brokerage commission earned on share transaction (2,878) - - - Close Family Members of KMP Brokerage commission earned on share transaction - (11) - -

124

33. RELATED PARTY DISCLOSURES (Contd.) GROUP COMPANY For the year ended 31 March 2013 2012 2013 2012 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Contribution to the staff provident fund 11,319 8,872 11,319 8,872

33.5 Compensation of Key Management Personnel

Share based payments - - - - 17,636 17,777 13,820 14,761 Key Mangement Personnel include members of the Board of Directors of the Company, & Ultimate Parent Company John Keells Holdings

PLC.

33.6 Terms and Conditions of Transactions with Related Parties Transactions with Related Parties are at normal market prices. Outstanding balances at year end are unsecured, interest free and settlement

occurs in cash.


34. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

the auditors, prior to declaring a First & Final Divedend which is to be paid on the 17th June 2013.

126

Statement of Value Added

COMPANY 2009 2010 2011 2012 2013 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

VALUE ADDEDGross Revenue 457,023 490,621 489,609 492,077 572,940 Other Income & Valuation Gains 55,534 22,970 456,096 707,858 555,983 512,557 513,591 945,705 1,199,935 1,128,923 Cost of Materials and Services purchased (96,046) (140,462) (99,244) (272,024) (98,007) 416,511 373,129 846,461 927,911 1,030,916

DISTRIBUTION OF VALUE ADDEDTo employees as Remuneration 27 111,424 21 77,874 11 93,822 12 114,972 11 108,595 To Government (see below) 20 82,405 24 89,049 11 91,298 8 75,169 10 103,918 To Lenders of Capital - Interest on borrowing 11 45,364 10 36,972 3 22,983 3 28,708 6 61,375 - Non-controlling Interest - To Shareholders as Dividends 36 152,000 40 152,000 18 152,000 16 152,000 23 243,200 Retained in the Business 6 25,318 5 17,234 57 486,358 61 557,062 50 513,828 100 416,511 100 373,129 100 846,461 100 927,911 100 1,030,916

The statement of value added shows the wealth, the Company and the Group have been able to create on its own and

REVENUE TO GOVERNMENTSRL/NBT/FINANCE VAT 12,838 14,044 12,092 8,598 13,683

Total 82,405 89,049 91,298 75,169 103,918


GROUP 2009 2010 2011 2012 2013

Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

607,949 848,144 1,057,863 891,499 858,097 30,177 25,684 428,276 581,358 686,674 638,126 873,828 1,486,139 1,472,857 1,544,771

(136,847) (186,526) (118,357) (274,739) (77,460) 501,279 687,302 1,367,782 1,198,118 1,467,311

38 187,792 29 198,669 13 176,133 22 260,706 16 238,187 18 91,030 24 164,764 16 213,342 12 146,208 9 139,674

12 60,668 7 50,099 2 33,363 3 39,654 4 64,024 - (1,230) 4 26,687 3 49,209 2 29,604 1 10,786

30 152,000 22 152,000 11 152,000 13 152,000 17 243,200 2 11,019 14 95,083 55 743,735 48 569,946 53 771,440

100 501,279 100 687,302 100 1,367,782 100 1,198,118 100 1,467,311

12,838 14,044 12,092 8,598 17,865

91,030 164,764 213,342 146,208 139,674

To employees as Remuneration 16%To Government (see below) 9%To Lenders of Capital 5%To Shareholders as Dividends 17%Retained in the Business 53%

SRL/NBT/FINANCE VAT 14%Rates and Taxes 3%Income Tax 83%

Distribution ofValue Added

Revenue toGovernment

128

Information to Shareholders and Investors

1. STOCK EXCHANGE LISTING

2. DISTRIBUTION OF SHAREHOLDINGS31st March 2013 31st March 2012

No. of Shares held Shareholders Holdings Shareholders Holdings

Number % Number % Number % Number %

Less than 1,000 773 60.39 253,626 0.42 726 58.64 256,031 0.42

1,001 - 10,000 395 30.86 1,425,935 2.35 396 31.99 1,397,389 2.30

10,001 - 100,000 95 7.42 2,920,460 4.80 100 8.08 2,977,769 4.90

100,001 - 1000,000 16 1.25 3,365,195 5.53 15 1.21 3,334,027 5.48

over 1,000,001 1 0.08 52,834,784 86.90 1 0.08 52,834,784 86.90

Total 1280 100.00 60,800,000 100.00 1238 100.00 60,800,000 100.00

3. ANALYSIS OF SHAREHOLDERS31st March 2013 31st March 2012

No. of Shares held Shareholders Holdings Shareholders Holdings

Number % Number % Number % Number %

Individuals 1188 92.81 5,360,842 8.82 1147 92.65 5,268,282 8.66

Institutions 92 7.19 55,439,158 91.18 91 7.35 55,531,718 91.34

Total 1280 100.00 60,800,000 100.00 1238 100.00 60,800,000 100.00

Residents 1263 98.67 60,521,876 99.54 1222 98.71 60,525,016 99.55

Non Residents 17 1.33 278,124 0.46 16 1.29 274,984 0.45

Total 1280 100.00 60,800,000 100.00 1238 100.00 60,800,000 100.00

John Keells Holdings and Subsidiaries

1 0.08 52,834,784 86.90 1 0.08 52,834,784 86.90

Public 1279 99.92 7,965,216 13.10 1237 99.92 7,965,216 13.10

Total 1280 100.00 60,800,000 100.00 1238 100.00 60,800,000 100.00


4. SHARE PERFORMANCE AT COLOMBO STOCK EXCHANGE 2012/2013 2011/2012 Highest Market Price 74.90 249.90 Lowest Market Price 52.50 59.00 Closing Price as at 31st of March 61.30 66.20

5. DIVIDEND PAYMENTS First and Final Dividend of Rs.4/- per share was paid on 15th June 2012.

6. TOP TWENTY SHAREHOLDERSName of Shareholders As at 31st March 2013 As at 31st March 2012

No. of Shares Holding % No. of Shares Holding %

John Keells Holdings PLC 52,834,784 86.90 52,834,784 86.90

Dr. H.S.D. Soysa 620,160 1.02 620,160 1.02

Bank of Ceylon No 2 A/C 338,800 0.56 338,800 0.56

Bhadra Investments Ltd. 251,424 0.41 251,424 0.41

Mrs. H.G.S. Ansell 240,000 0.39 240,000 0.39

Mr. M. Radhakrishnan 232,800 0.38 232,800 0.38

Employees trust Fund Board 214,200 0.35 214,200 0.35

Mrs. M.L. De Silva 207,872 0.34 207,872 0.34

Mr. W.R.H. Perera 173,072 0.28 173,072 0.28

The Roman Catholic Archbishop of Colombo 171,416 0.28 342,832 0.56

Catholic Bishops Conference in Sri lanka 171,416 0.28 - -

Associated Electrical Corporation Ltd 145,000 0.24 - -

N.S. De Mel 137,115 0.23 137,115 0.23

Mrs. Tirimanne 132,000 0.22 132,000 0.22

Sisira Investors Limited 114,272 0.19 105,704 0.17

Colombo Fort Inv ts PLC 112,800 0.19 112,800 0.19

Colombo Investment Trust PLC 102,848 0.17 102,848 0.17

MISS W.K. Pitiyage 100,000 0.16 100,000 0.16

H.P.N. Soysa 92,560 0.15 85,060 0.14

Mrs. H.J.C. Fernando 90,608 0.15 90,608 0.15

56,483,147 92.90 56,322,079 92.63

130

Five Year Summary

COMPANY For the year ended 31 st March 2009 2010 2011 2012 2013 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

TRADING RESULTSGross Revenue 457,023 490,621 489,609 492,077 572,940

Other Income 3,132 2,295 4,227 1,415 998 Dividend Income 52,402 20,675 68,148 163,800 73,442 Changes inFair Value of Investment Property 34,531 - 383,720 581,191 483,515 Finance Charges (45,364) (36,972) (22,983) (28,708) (61,375) Finanace Income - - - 3,161 3,847

Non-controlling interests - - - - -

SHARE CAPITAL AND RESERVESStated Capital 152,000 152,000 152,000 152,000 152,000 Revenue Reserves 898,077 891,363 1,362,786 2,114,270 2,635,191 Shareholders’ Funds 1,050,077 1,043,363 1,514,786 2,266,270 2,787,191

Non-controlling interests - - - - - 1,050,077 1,043,363 1,605,569 2,317,614 2,832,716

ASSETS LESS LIABILITIESCurrent Assets 635,492 553,222 1,016,508 1,232,187 1,587,623 Current Liabilities (416,526) (328,358) (735,345) (813,993) (1,233,082) Net Current Assets/(Liabilities) 218,966 224,864 281,163 418,194 354,541

Long Term Liabilities - - - - - Deferred Liabilities (86,390) (89,438) (73,263) (68,132) (74,972) 1,050,077 1,043,363 1,605,569 2,317,614 2,832,716


GROUP 2009 2010 2011 2012 2013


607,949 848,744 1,057,863 891,499 858,097

28,715 23,909 44,556 2,727 5,153 1,462 1,775 - - -

34,531 - 383,720 581,191 483,515 (60,668) (50,099) (33,364) (39,654) (64,024)

- - - 39,843 33,290

1,230 (26,686) (49,209) (29,675) (10,786)

152,000 152,000 152,000 152,000 152,000 1,008,399 1,086,237 1,699,964 2,408,199 2,907,893 1,160,399 1,238,237 1,851,964 2,560,199 3,059,893

21,278 47,964 79,893 61,568 54,354 1,181,677 1,286,201 2,023,088 2,673,399 3,330,595

768,648 1,121,710 1,970,973 1,969,784 2,408,888 (471,637) (676,690) (1,350,346) (1,291,735) (1,812,454) 297,011 445,020 620,627 678,049 596,434

(55,083) (41,024) (23,544) (1,957) - (103,502) (114,536) (94,913) (93,360) (135,817)

1,181,677 1,286,201 2,023,088 2,673,399 3,330,595

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Revenue PBT

Revenue & PBT (Rs 000's)

2009 2010 2011 2012 2013

0

40,000

80,000

120,000

160,000

200,000

Book Value Market Value

Quoted Investments (Rs 000's)

2009 2010 2011 2012 2013

0

600,000

1,200,000

1,800,000

2,400,000

3,000,000

Growth in Shareholder's Funds (Rs 000's)

2009 2010 2011 2012 2013

132

Key Ratios and Information

COMPANY For the year ended 31 st March 2009 2010 2011 2012 2013 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

KEY INDICATORS

Earnings per share (Rs.) ** 2.61 2.39 10.25 14.86 12.57

Dividend per share (Rs.)** 1,75 2.50 2.50 2.50 4.00

(B) LiquidityCurrent Ratio (No. of Times) 1.53 1.68 1.38 1.51 1.29 Interest Cover (No. of Times) 5.96 6.87 31.43 34.62 14.75

(C) Investor RatiosNet Assets per share at year end (Rs.)** 17.16 17.27 24.91 38.12 46.59 Price-Earnings Ratio (Times)** 23.78 81.40 18.06 4.45 4.88

Dividend (Rs. 000’s) 106,400 152,000 152,000 152,000 243,200 Dividend Cover (Times)** 1.49 0.96 4.10 5.94 3.14

(D) Share ValuationMarket price per share (Rs) 62.00 194.50 185.20 66.20 61.30

(E) Other InformationNumber of Employees 109 118 109 103 109 Turnover per employee (Rs. 000’s) 4,193 4,158 4,492 4,777 5,256 Value Added per Employee (Rs. 000’s) 3,821 3,162 7,766 9,025 9,431

**Earnings per share ,Dividends per share & Net Assets per share is based on 60,800,000 number of shares in issue as at 31st March, 2013


GROUP 2009 2010 2011 2012 2013


2.11 3.78 12.59 14.15 12.22

2.50 2.50 2.50 2.50 4.00

1.63 1.66 1.46 1.52 1.33 4.33 9.06 31.35 25.85 14.27

19.09 20.37 30.46 42.96 53.89 29.42 51.45 14.71 4.68 5.02

152,000 152,000 152,000 152,000 243,200 0.84 1.51 5.04 5.66 3.05

62.00 194.50 185.20 66.20 61.30

140 183 181 178 180 4,342 4,638 5,845 5,008 4,767 3,581 3,756 7,557 6,742 8,087

0

3

6

9

12

15

Earnings per share

Dividends per share

Earnings & Dividendsper Share (Rs.)

2009 2010 2011 2012 2013

0

40

80

120

160

200

Net Assets Per Share

Market Price per Share

Net Assets & Market Priceper Share (Rs.)

2009 2010 2011 2012 2013

134

Glossary of Financial Terminology

Accrual Basis

incurred regardless of whether cash is received or disbursed in that period.

Capital EmployedShareholders’ Funds plus Debt

Contingent Liabilities

1. The obligation is crystallised by the occurrence or non occurrence of one or more future events or,

Current RatioCurrent Assets over Current Liabilities

Debt/Equity RatioDebt as a percentage of Shareholders Funds

Dividend CoverEarnings per Share over Dividends per Share

Dividend Payout Ratio

Earnings Per Share (Eps)

numbers of shares in issue during the period

Earnings YieldEarnings per Share as a percentage of Market price per Share end of the period.

Effective Rate of Taxation

Interest Cover

Market CapitalisationNumber of Shares in issue at the end of the period multiplied by the Market price at end of period

Net AssetsTotal assets minus Current Liabilities minus Long Term Liabilities minus Minority Interest

Net Asset per ShareNet Assets, over number of Ordinary Shares in issue

Net DebtNet Debt minus (Cash plus Short Term Deposits)

Net Turnover per EmployeeNet Turnover over average number of employees

Price Earnings RatioMarket Price per Share over Earnings per Share

Quick Asset RatioCash plus Short Term Investments plus Receivables, Dividend by Current Liabilities

Quick RatioCash plus Short Term Investments plus Receivables over Current Liabilities


Return on Assets

Return on Equity

Return on Capital Employed

Shareholders FundsStated Capital plus Revenue Reserves

Total DebtLong Term Loans plus Short Term Loans and Overdrafts

Total Value Added

Total Assets

Working Capital

Liabilities

136

Notice of Meeting

Note:

vote in his / her place.

hours before the meeting.

By Order of the BoardKeells Consultants (Pvt) LimitedSecretariesColombo

3rd June 2013

Keells PLC will be held on Wednesday 26th June 2013 at 9.30 a.m. at the HR Auditorium, (Ground Floor) of John Keells Holdings PLC, No.130, Glennie Street,

Auditors thereon

of Article 83 of the Articles of Association of the company

the Articles of Association of the company

remuneration

of the relevant laws and regulations.


Form of ProxyI/We ............................................................................................................................................................................................................................. of...........................................................................................................................................................................................................................................being a member/members of John Keells PLC hereby appoint ..................................................................................................................................of ........................................................................................................................................................................................................ or failing him/herMr. Susantha Chaminda Ratnayake of Colombo, failing himMr. Ajit Damon Gunewardene of Colombo, failing himMr. James Ronnie Felitus Peiris of Colombo, failing himMr. Tilak de Zoysa of Colombo, failing himMr. Kavantissa Danudra Weerawardene Ratnayaka of Colombo, failing him

Ms. Sharmini Tamara Ratwatte of Colombo, failing herMr. Ravinath Sanjeeva Fernando of Colombo

For Against

i) To re-elect as a Director, Mr. K.D.W. Ratnayake who retires by rotation in terms of Article 83 of the Articles of Association of the company.

of the company.iii) To re-appoint Auditors and to authorize the Directors to determine their remuneration.

Signed this ……..………..............………….. day of ………...........…………... Two Thousand and Thirteen.

Signature of Shareholder

Note:(i) *Strike out whichever is not desired.

(iii) Instructions regarding completing appear on the reverse hereof.

138

INSTRUCTIONS TO COMPLETION

Constitutional documents.

Colombo 02, not less than 48 hours before the time appointed for the holding of the meeting.

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