Notes to the Financial Statements
1. REPORTING ENTITY
Access Engineering PLC (‘Company’) is a company domiciled and operating in Sri Lanka and listed on the Colombo Stock Exchange. The Company’s registered office and the principal place of business are located at ‘Access Towers’, 278, Union Place, Colombo 02.
The Consolidated Financial Statements of Access Engineering PLC
as at and for the year ended 31st March 2014 comprise the Company and its subsidiaries (together referred to as the ‘Group’).
The Financial Statements of all companies in the Group have a common financial year which ends on 31st March.
1.2 Principal Activities and Nature of Operations
Access Engineering PLC (AEL) is primarily involved in the business of construction activities and supply of construction related services and materials.
Access Realties (Private) Limited, a fully owned subsidiary of AEL engage in the development of high rise buildings and manage the same or otherwise (lease/rent/sale) in whole or in part.
Sathosa Motors PLC which is also a subsidiary of AEL with an 84.4% holding is in the business of importing and sale of motor vehicles and spare parts together with the repair and maintenance of such motor vehicles.
SML frontier Automotive (Private) Limited is a subsidiary of Sathosa Motors PLC with 50% holding and therefore indirect subsidiary of AEL with an effective holding percentage of 42.2% and is in the business of importing and sale of motor vehicles and spare parts together with the repair and maintenance of such motor vehicles.
2. BASIS OF PREPARATION
2.1 Statement of Compliance
The Financial Statements of the Company and those consolidated with such have been prepared in accordance with Sri Lanka Accounting Standards (SLFRSs & LKASs) as issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) and with the requirement of the Companies Act No. 07 of 2007.
These Financial Statements include the following components:
- The Statement of Comprehensive Income: providing information on the financial performance of the Group and the Company for the year.
- The Statement of Financial Position: providing information on the financial position of the Group and the Company as at the year-end.
- The Statement of Changes in Equity: providing information on the movements of stated capital and reserves of the Group and the Company during the year under review.
- The Cash Flow Statement: providing information on the generating of cash and cash equivalents and utilization of the same.
- Notes to the Financial Statements: comprising accounting policies and other explanatory notes.
The Consolidated Financial Statements were authorized for issue by the Board of Directors in accordance with the resolution passed by the Board of Directors on 17th July 2014.
2.2 Basis of Measurement
The Consolidated Financial Statements have been prepared on the historical cost basis except for the following material items in the Statement of Financial Position:
- Financial assets and financial liabilities that have been measured at fair value;
- Employee benefit liability recognized based on actuarial valuation (LKAS 19);
- Land and buildings stated at revalued amounts;
- Investment property measured at fair value.
The Directors have made an assessment of the Group’s ability to continue as a going concern in the foreseeable future and they do not foresee a need for liquidation or cessation of business.
2.3 Functional and Presentation Currency
The Consolidated Financial Statements are presented in Sri Lankan Rupees (Rs.), which is the Group’s functional currency.
2.4 Use of Estimates and Judgments
The preparation of the Group’s Consolidated Financial Statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. 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 have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year are disclosed below.
Revaluation of Property, Plant and Equipment and Investment Properties
The Group measures land and buildings at revalued amounts with changes in fair value being recognized in Statement of Other Comprehensive Income and in the Statement of Changes in Equity. In addition, it carries its investment properties at fair value, with changes in fair value being recognized in the Statement of Comprehensive Income.
The Group engaged an independent professional valuer to assess fair value of land and buildings and investment properties as at 31st March 2014 and 27th February 2012 respectively.
Land and buildings were valued by reference to market-based evidence, using comparable prices adjusted for specific market factors such as nature, location and condition of the property.
Valuation of the investment properties carried out on an open market value for existing use basis.
Taxes
Significant judgment was required to determine the total provision for current, deferred and other taxes due to the uncertainties that exists with respect to the interpretation of the applicability of tax laws, at the time of the preparation of these Financial Statements.
Uncertainties also exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of business relationships and the long term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.
Defined Benefit Plans
The employee benefit liability of the Group is based on the actuarial valuation carried out by an independent actuarial specialist. The actuarial valuations involve making assumptions about discount rates and future salary increases. The complexity of the valuation, the underlying assumptions and its long term nature, the defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Details of the key assumptions used in the estimates are contained in Note 31.
Fair Value Measurement of Financial Instruments
When the fair values of financial assets and financial liabilities recorded in the Statement of Financial Position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments, are further explained in Note 40.
2.5 Comparative Information
The presentation and classification of the financial statement of the previous years have been amended, where relevant for better presentation and to be comparable with those of the current year.
3. SIGNIFICANT ACCOUNTING POLICIES
The Accounting Policies set out below have been applied consistently to all periods presented in these Financial Statements, unless otherwise stated.
The Accounting Policies have been applied consistently by Group entities.
3.1 Basis of Consolidation
3.1.1 Business Combination
Business combinations are accounted for using the acquisition method as at the acquisition date - i.e. when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group also takes into consideration potential voting rights that are currently exercisable.
The Group measures goodwill at the acquisition date as:
- The fair value of the consideration transferred; plus
- The recognized amount of any non-controlling interests in the acquiree; plus
- If the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less
- The net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognized immediately in Statement of Comprehensive Income.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships such amounts are generally recognized in Statement of Comprehensive Income. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
3.1.2 Non-Controlling Interests
The total profit and loss for the year of the Company and its subsidiaries included in consolidation are shown in the Consolidated Statement of Comprehensive Income with the proportion of profit and loss after taxation pertaining to minority shareholders of subsidiaries being deducted as ‘Non-controlling interest’. All assets and liabilities of the Company and of its subsidiaries included in consolidation are shown in the Consolidated Statement of Financial Position. The interest of minority shareholders of subsidiaries in the fair value of net assets of the Group is indicated separately in the Consolidated Statement of Financial Position under the heading ‘Non-controlling interest’. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is recognized in Statement of Comprehensive Income.
3.1.3 Subsidiaries
Subsidiaries are entities controlled by the Group. The Financial Statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences,
until the date that control ceases.
3.1.4 Investment in Associates
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.
The Group’s investments in its associate are accounted for using the equity method. Under the equity method, the investment in an associate is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.
The Statement of Comprehensive Income reflects the Group’s share of the results of operations of the associate. Any change in Other Comprehensive Income of those investees is presented as part of the Group’s Other Comprehensive Income. In addition, when there has been a change recognized directly in the equity of the associate, the Group recognizes its share of any changes, when applicable, in the Statement of Changes in Equity. Unrealized gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.
The Group’s share of profit or loss of an associate is shown on the face of the Statement of Comprehensive Income outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate.
After application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on its investment in its associate. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, and then recognizes the loss as ‘Share of results of Associate’ in the Statement of Comprehensive Income.
Upon loss of significant influence over the associate, the Group measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognized in Statement of Comprehensive Income.
3.1.5 Transactions Eliminated on Consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
3.2 Foreign Currency
3.2.1 Foreign Currency Transactions
All foreign exchange transactions are converted to functional currency, at the rates of exchange prevailing at the time the transactions are effected.
Monetary assets and liabilities denominated in foreign currency are retranslated to functional currency equivalents at the spot exchange rate prevailing at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. The gain or loss arising on translation of non-monetary items is recognized in line with the gain or loss of the item that gave rise to the translation difference.
3.3 Assets and Bases of their Valuation
Assets classified as current assets in the Statement of Financial Position are cash and bank balances and those, which are expected to be realized in cash during the normal operating cycle, or within one year from the Reporting date, whichever is shorter. Assets other than current assets are those, which the Company intends to hold beyond one year period calculated from the reporting date.
3.3.1 Property, Plant and Equipment
3.3.1.1 Recognition and Measurement
Property, Plant and Equipment are stated at cost/revaluation less accumulated depreciation and accumulated impairment losses.
3.3.1.2 Owned Assets
The cost of an item of Property, Plant and Equipment comprise its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour, and any other costs directly attributable to bringing the asset to the working condition for its intended use. This also includes cost of dismantling and removing the items and restoring in the site on which they are located and borrowing costs on qualifying assets.
Purchased software that is integrated to the functionality of the related equipment is capitalized as part of equipment.
When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted as separate items
(major component) of Property, Plant and Equipment.
3.3.1.3 Leased Assets
Leases in terms of which the Group assumes substantially all the risk and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured and capitalized at an amount equal to the lower of its fair value and the present value of minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Other leases are operating leases and, except for investment property, the leased assets are not recognized in the Group’s Statement of Financial Position.
3.3.1.4 Subsequent Costs
The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized.
The costs of the day-to-day servicing of Property, Plant and Equipment are recognized in profit or loss as incurred.
3.3.1.5 Derecognition
The carrying amount of an item of Property, Plant and Equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. Gains or losses on derecognition are recognized within other income in Statement of Comprehensive Income.
3.3.1.6 Revaluation
Revaluation is performed on freehold land and building by professionally qualified valuers using the open market value at least once in every three years. The valuation surplus is recognized on the net carrying value of the asset and is transferred to a revaluation reserve after restating the asset at the revalued amount. The revaluation reserve is transferred to retained earnings at the point of derecognition.
3.3.1.7 Depreciation
Depreciation is recognized in profit or loss on straight-line basis over the estimated useful lives of each part of item of Property, Plant and Equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Depreciation of an asset begins when it is available for use whereas depreciation of an asset ceases at the earlier of the date that the asset is classified as held-for-sale (or included in a disposal group that is classified as held-for-sale) and the date that the asset is derecognized. Depreciation is not charged on Freehold Land and Capital Work-in-Progress.
The estimated useful lives are as follows:
| Asset Category | Useful Life (Years) |
| Freehold Building | 10 - 25 |
| Leasehold Building | 50 |
| Plant & Machinery | 3 -10 |
| Motor Vehicles | 4 - 8 |
| Office Equipment | 3 - 5 |
| Furniture & Fittings | 3 - 5 |
| Tools | 3 - 5 |
Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.
3.3.1.8 Capital Work-in-Progress
Capital expenses incurred during the year which are not completed as at the reporting date are shown as capital work-in-progress, whilst the capital assets which have been completed during the year and available to use have been transferred to Property, Plant and Equipment.
3.3.2 Investment Properties
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, using the production of supply of goods or services or for administrative purposes.
3.3.2.1 Recognition and Measurement
Investment properties are measured initially at cost. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and exclude the costs of day-to-day servicing of an investment property. Subsequently, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the Statement of Comprehensive Income in the year in which they arise. Fair values are evaluated at least once in every three years by an accredited external, independent valuer.
3.3.2.2 Derecognition
Investment properties are derecognized either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the Statement of Comprehensive Income in the event of retirement or disposal.
Transfers are made from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use.
Where Group companies occupy a significant portion of the investment property of a subsidiary, such investment properties are treated as Property, Plant and Equipment in the Consolidated Financial Statements, and accounted using Group accounting policy for Property, Plant and Equipment.
3.3.3 Intangible Assets
An intangible asset is recognized if it is probable that economic benefits are attributable to the assets will flow to the entity and cost of the assets can be measured reliably and carried at cost less accumulated amortization and accumulated impairment losses.
3.3.3.1 Leasehold Right - Land
Leasehold property comprises of land use rights and is amortized on a straight-line basis over the period of the lease in accordance with the pattern of benefits expected to be derived from the lease. Leasehold property is tested for impairment annually and is written down where applicable. The impairment loss if any is recognized in the Income Statement.
The estimated useful lives for the current and comparative periods are as follows:
| Item | Useful Lives |
| Leasehold rights | 74 years (Remaining Lease Period) |
3.3.3.2 Goodwill
Goodwill is measured at cost less accumulated impairment losses.
3.3.3.3 Software
Purchased software is recognized as an intangible asset and is amortized on a straight-line basis over its useful life.
The estimated useful lives are as follows:
| Asset Category | Useful Lives |
| Enterprise Resource Planning System |
10 years |
| Other Software | 3 - 5 years |
3.3.4 Inventories
Inventories are stated at the lower of cost and net realizable value, after making due allowance for obsolete and slow moving items.
The cost of inventories is comprised of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the normal course of business less estimated cost of realization and/or cost of conversion from their existing state to saleable condition.
Inventory movement is reviewed at the end of reporting period by an expert to assess the recoverability of inventory and the items that are identified as irrecoverable are written off during the year.
Work-in-Progress
Contractual costs incurred for future work are recognized as an asset when it is probable that they will be recovered and such costs are classified as work-in-progress.
Variation and claims are recognized in contract revenue only when it is probable that the customer will approve the variation or claim and the amount of revenue can be reliably measured. Until recognized in revenue cost incurred for variations and claims are classified as work-in-progress.
3.3.5 Cash and Cash Equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand and deposits in banks net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from the date of acquisition are also treated as cash equivalents.
3.3.6 Impairment of Non-Financial Assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
Impairment losses of continuing operations are recognized in the Income Statement in those expense categories consistent with the function of the impaired asset, except for a property previously revalued where the revaluation was taken to Other Comprehensive Income. In this case, the impairment is also recognized in Other Comprehensive Income up to the amount of any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the Income Statement unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
3.3.7 Financial Assets
3.3.7.1 Initial Recognition and Measurement
Financial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.
All financial assets are recognized initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs.
Purchase or sale of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
The Group’s financial assets include cash and cash equivalent, short term deposits, trade and other receivables, loans and quoted equity instruments.
3.3.7.2 Subsequent Measurement
The subsequent measurement of financial assets depends on their classification as described below:
3.3.7.3 Financial Assets at Fair Value through Profit or Loss
Financial assets at fair value through profit or loss include financial assets held-for-trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held-for-trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by LKAS 39. Derivatives, including separated embedded derivatives are also classified as held-for-trading unless they are designated as effective hedging instruments. Financial assets at fair value through profit and loss are carried in the Statement of Financial Position at fair value with changes in fair value recognized in finance income or finance costs in the Income Statement.
The Group evaluated its financial assets at fair value through profit and loss (held-for-trading) whether the intent to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and management’s intent to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets in rare circumstances. The reclassification to loans and receivables, available-for-sale or held-to-maturity depends on the nature of the asset.
3.3.7.4 Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method (EIR), less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Income Statement. The losses arising from impairment are recognized in the Income Statement in finance cost.
3.3.7.5 Held-to-Maturity Investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold them to maturity. After initial measurement, held-to-maturity investments are measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Income Statement. The losses arising from impairment are recognized in the Income Statement in finance costs.
The Company has not designated any financial assets upon initial recognition as Held-to-Maturity Investments.
3.3.7.6 Available-for-Sale Financial Investments
Available-for-sale financial investments include equity and debt securities. Equity investments classified as available-for-sale are those, which are neither classified as held-for-trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions.
After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealized gains or losses recognized as Other Comprehensive Income in the available-for-sale reserve until the investment is derecognized, at which time the cumulative gain or loss is recognized in other operating income, or determined to be impaired, at which time the cumulative loss is reclassified to the Income Statement in finance costs and removed from the available-for-sale reserve. Interest income on available-for-sale debt securities is calculated using the effective interest method and is recognized in profit or loss.
The Group evaluates its available-for-sale financial assets to determine whether the ability and intention to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and management’s intention to do so significantly changes in the foreseeable future, the Group may elect to reclassify these financial assets in rare circumstances. Reclassification to loans and receivables is permitted when the financial assets meet the definition of loans and receivables and the Group has the intention and ability to hold these assets for the foreseeable future or until maturity. Reclassification to the held-to-maturity category is permitted only when the entity has the ability and intention to hold the financial asset accordingly.
For a financial asset reclassified out of the available-for-sale category, any previous gain or loss on that asset that has been recognized in equity is amortized to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortized cost and the expected cash flows is also amortized over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the Income Statement.
3.3.7.7 Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when:
- The rights to receive cash flows from the asset have expired,
- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all risks and rewards of the asset nor transferred control of it, the asset is recognized to the extent of the Group’s continuing involvement in it.
In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.
3.3.7.8 Impairment of Financial Assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
3.3.7.9 Financial Assets carried at Amortized Cost
For financial assets carried at amortized cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized 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 amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current 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 recognized in the profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the Income Statement. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized.
If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the profit or loss.
3.3.8 Financial Liabilities
3.3.8.1 Initial Recognition and Measurement
Financial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, carried at amortized cost. This includes directly attributable transaction costs.
The Group financial liabilities include trade and other payables, bank overdrafts and loans and borrowings.
3.3.8.2 Subsequent Measurement
The measurement of financial liabilities depends on their classification as follows:
Financial Liabilities at Fair Value through Profit or Loss
Financial liabilities at fair value through profit or loss include financial liabilities held-for-trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held-for-trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by LKAS 39. Separated embedded derivatives are also classified as held-for-trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held-for-trading are recognized in the profit or loss.
The Group has not designated any financial liabilities upon initial recognition as at fair value through profit or loss.
Loans and Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the Income Statement when the liabilities are derecognized as well as through the effective interest rate method (EIR) amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that is an integral part of the EIR. The EIR amortization is included in finance costs in the Income Statement.
3.3.8.3 Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the Income Statement.
3.3.9 Offsetting of Financial Instruments
Financial assets and financial liabilities are offset with the net amount reported in the Statement of Financial Position only if there is a current enforceable legal right to offset the recognized amounts and intent to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
Income and expense will not be offset in the Consolidated Income Statement unless required or permitted by any accounting standard or interpretation, as specifically disclosed in the accounting policies of the Group.
3.3.10 Fair Value of Financial Instruments
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include:
- Using recent arm's length market transactions;
- Reference to the current fair value of another instrument that is substantially the same;
- A discounted cash flow analysis or other valuation models.
An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 39.
3.4 Provision, Contingent Liabilities, Contingent Assets
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation and a reliable estimate can be made of the amount of the obligation.
All contingent liabilities are disclosed as a note to the Financial Statements unless the outflow of resources is remote.
Contingent assets are disclosed, where inflow of economic benefit is probable.
3.5 Post Employment Benefits
3.5.1 Defined Benefit Plans
The liability recognized in the Statement of Financial Position in respect of defined benefit plan is the present value of defined benefit obligation at the reporting date. The defined benefit obligation is calculated annually by independent actuaries using Project Unit Credit (PUC) method as recommended by LKAS 19 - ‘Employee Benefits’. Actuarial gains and losses for the defined benefit plans are recognized in full in the period in which they occur in Other Comprehensive Income.
The gratuity liability of Access Realties (Private) Limited is not externally funded, nor actuarially valued. The gratuity liability is valued using the Projected Unit Credit (PUC) method considering the assumptions required to arrive at the present value of defined benefit obligation.
However, according to the Payment of Gratuity Act No. 12 of 1983, the liability for gratuity payment to an employee arises only after the completion of 5 years of continued service.
3.5.2 Defined Contribution Plans - Employees’ Provident Fund and Employees’ Trust Fund
A defined contribution plan is a post-employment benefit plan under which an entity pays a fixed contribution to a separate entity and will have no legal or constructive obligation to pay further amounts.
All employees who are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund contributions are covered by relevant contributions funds in line with the relevant statutes. Employer’s contributions to the defined contribution plans are recognized as an expense in profit or loss when incurred.
4. STATEMENT OF COMPREHENSIVE INCOME
4.1 Revenue
Revenue represents the amounts derived from the provision of services, which fall within the Group’s ordinary activities net of trade discounts and turnover related taxes.
4.2 Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue and the 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 sales taxes, and after eliminating sales within the Group. The following specific criteria are used for the purpose of recognition of revenue.
4.2.1 Construction Contracts
Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue is recognized in Statement of Comprehensive Income in proportion to the stage of completion of the contract.
The stage of completion is assessed by reference to surveys of work performed. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable.
4.2.2 Rental Income
Rental income from investment property is recognized in Statement of Comprehensive Income on a straight-line basis over the term of the lease.
4.2.3 Goods Sold
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
4.2.4 Services Rendered
Revenue for services rendered is recognized in the Statement of Comprehensive Income once all significant performance obligations have been provided.
4.2.5 Agency Commissions and Hire Income
Agency commissions are recognized in Statement of Comprehensive Income on an accrual basis.
4.2.6 Interest Income
For all financial instruments measured at amortized cost and interest bearing financial assets classified as available-for-sale, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the Statement of Comprehensive Income.
4.2.7 Dividend Income
Dividend income is accounted when the shareholders’ right to receive payment is established.
4.2.8 Other Income
Profits or losses from disposal of Property, Plant and Equipment recognized having deducted from proceeds on disposal, the carrying value of the assets and the related expenses.
Foreign currency gains and losses are reported on a net basis.
4.3 Expenditure Recognition
Construction Contracts
Contract expenses are recognized as incurred unless they create an asset to future contract activity. An expected loss on a contract is recognized immediately in Statement of Comprehensive Income.
Other Expenses
All expenditure incurred in the running of the business and in maintaining Property, Plant and Equipment in a state of efficiency has been charged to revenue in arriving at the profit for the year.
For the purpose of presentation of Statement of Comprehensive Income the Directors are of the opinion that function of expenses method presents fairly the elements of the enterprises performance, hence such presentation method is adopted.
Recognition of Expected Losses
Expected losses are recognized as an expense when it is probable that the total cost pertaining to construction contracts will exceed its revenue.
Borrowing Costs
Borrowing costs are recognized as an expense in the period in which they are incurred except those that are directly attributable to the construction or development of Property, Plant and Equipment which are capitalized as part of the cost of those assets during the period of construction or development.
4.4 Taxation
4.4.1 Current Taxes
Current income tax liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.
The provision for income tax is based on the elements of income and expenditures reported in the Financial Statements and computed with in accordance with the provisions of the Inland Revenue Act.
The relevant details are disclosed in the respective notes to the Financial Statements.
4.4.2 Deferred Taxation
Deferred tax is provided, using liability method, providing for tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Sales Tax
Revenues, expenses and assets are recognized net of the amount of sales tax, except, where the sales tax incurred on a purchase of assets or service is not recoverable from the taxation authorities, in which case, the sales tax is recognized as a part of the cost of the asset or part of the expense items, as applicable and receivable and payable that are stated with the amount of sales tax included. The net amount of sales tax recoverable from or payable to the taxation authorities is included as a part of receivables or payables in the Statement of Financial Position.
5. SEGMENTAL REPORTING
Segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular Economic Environment (Geographical Segment), which is subject to risks and returns that are different from those of the segments. Segment information is presented in respect of the Group’s Business and Geographical Segments. The Group’s primary format for segmental reporting is based on business segments. The business segments are determined based on the Group’s management and internal reporting structure.
Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
The activities of the Group are located mainly in Sri Lanka. Consequently, the economic environment in which the Group operated is not subject to risks and rewards that are significantly different on a geographical basis. Hence disclosure by geographical region is not provided.
The relevant details are disclosed in the respective notes to the Financial Statements.
6. OTHER GENERAL ACCOUNTING POLICIES
6.1 Related Party Transactions
Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is being charged.
The relevant details are disclosed in the Note 36 to the Financial Statements.
6.2 Cash Flow
The Cash Flow Statement has been prepared using the ‘indirect method’ in accordance with Sri Lanka Accounting Standard - LKAS 7 - ‘Statement of Cash Flows’. Cash and cash equivalent comprise cash in hand, cash at bank and short term investments that are readily convertible to known amount of cash and subject to an insignificant risk of change in value.
Interest received and dividends received are classified as investing cash flows, while dividend paid is classified as financing cash flow and interest paid is classified under the operating cash flows for the purpose of presentation of Statement of Cash Flows.
Bank overdrafts and short term borrowings that are re-payable on demand and forming an integral part of the Group’s cash management are included as a component of cash and cash equivalent for the purpose of the Statement of Cash Flows.
6.3 Earnings per Share
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.
6.4 Events Occurring after the Reporting Period
Events after the reporting period are those events favourable and unfavourable that occurs between the end of the reporting period and the date when the Financial Statements are authorized for issue.
The materiality of the events occurring after the reporting period is considered and appropriate adjustments to or disclosures are made in the Financial Statements, where necessary.
7. SRI LANKA ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
The standards and interpretations that are issued but not yet effective up to the date of issuance of the Company Financial Statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.
a. SLFRS 9 - Financial Instruments: Classification and Measurement
SLFRS 9, as issued reflects the first phase of work on replacement of LKAS 39 and applies to classification and measurement of financial assets and liabilities as defined in LKAS 39.
SLFRS 9 was issued in 2012 and become effective for the financial periods beginning on or after 1st January 2015. Accordingly, the Financial Statements for the year ending 31st March 2016 will adopt the SLFRS 9.
b. SLFRS 13 - Fair Value Measurement
SLFRS 13 establishes a single source of guidance under SLFRS for all fair value measurements. SLFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under SLFRS when fair value is required or permitted.
This Standard is effective for annual periods beginning on or after 1st January 2014. Accordingly, the Financial Statements for the year ending 31st March 2015 will adopt the SLFRS 13.
In addition to the above, following Standards have also been issued and will be effective from 1st January 2014.
- SLFRS 10 - Consolidated Financial Statements
- SLFRS 11 - Joint Arrangements
- SLFRS 12 - Disclosure of Interests in Other Entities
The Group will adopt these Standards when they become effective. Pending a detailed review, the financial impact is not reasonably estimable as at the date of publication of these Financial Statements.
| Group | Company | |||
| For the year ended 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
8. REVENUE |
||||
| Highways Construction | 7,665,049,295 | 5,988,829,816 | 7,665,049,295 | 5,988,829,816 |
| Water and Drainage Construction | 869,093,743 | 841,591,432 | 869,093,743 | 841,591,432 |
| Bridge Construction | 761,627,868 | 241,410,589 | 761,627,868 | 241,410,589 |
| Building and Other Construction | 3,356,491,787 | 3,711,228,891 | 3,356,491,787 | 3,711,228,891 |
| Sale of Construction Related Material | 465,061,673 | 636,525,991 | 465,090,182 | 636,525,991 |
| Hiring Income | 17,648,260 | 7,596,308 | 18,470,214 | 7,596,308 |
| Fabrication Income | 52,517,530 | 20,187,702 | 52,517,530 | 20,187,702 |
| Rental Income | 131,453,790 | 124,573,716 | – | – |
| Service Charges | 13,557,540 | 17,569,677 | – | – |
| Vehicle Sales and After Sales Services | 3,053,989,706 | 2,310,756,122 | – | – |
| 16,386,491,192 | 13,900,270,244 | 13,188,340,619 | 11,447,370,729 | |
9. OTHER INCOME |
||||
| Dividend Income | 9,767,963 | 8,804,734 | 44,825,872 | 40,101,689 |
| Gain on Fair Value Changes in Unit Trust | 624,161 | 133,269 | 624,161 | 133,269 |
| Rent Income | 2,855,550 | 405,000 | 350,000 | 405,000 |
| Profit on Disposal of Property, Plant and Equipment | 13,068,896 | 4,082,369 | 8,517,957 | 1,403,798 |
| Foreign Exchange Gain | 40,071,433 | 22,246,890 | 40,065,806 | 1,115,036 |
| Sundry Income | 21,036,833 | 23,179,762 | 7,439,644 | 272,038 |
| Profit on Sale of Shares | – | 43,508 | – | 43,508 |
| 87,424,836 | 58,895,532 | 101,823,440 | 43,474,338 | |
10. NET FINANCE INCOME |
||||
10.1 Finance Income |
||||
| Interest Income on Fixed Deposits | 127,929,870 | 168,742,150 | 122,442,665 | 165,577,571 |
| Interest Income on Repurchase Agreements | 13,130,475 | 66,965,537 | 9,545,573 | 33,705,592 |
| Interest Income on Retention Receivable | 53,357,336 | 33,709,268 | 53,357,336 | 33,709,268 |
| Interest Income on Trade Receivables | 60,290,834 | 57,074,061 | 60,290,834 | 57,074,061 |
| Interest Income on Staff Loan | 1,892,514 | 1,454,514 | 1,892,514 | 1,454,514 |
| Un-winding of Prepaid Mobilization Advance Expenses | 221,954,418 | 215,109,501 | 221,954,418 | 215,109,501 |
| Other Interest Income | 6,404,044 | 5,120,332 | 4,597,223 | 5,120,332 |
| Interest Income on Loan given to Subsidiary Company | – | – | – | 1,670,511 |
| Total Finance Income | 484,959,491 | 548,175,363 | 474,080,563 | 513,421,350 |
10.2 Finance Cost |
||||
| Interest on Finance Leases | (711,196) | (186,602) | (484,172) | – |
| Interest on Bank Overdraft | (8,626,842) | (666,983) | (1,238,692) | (666,983) |
| Bank Loan Interest | (249,362) | (864,605) | (249,362) | (864,605) |
| Un-winding of Prepaid Retention Receivable Expenses | (53,357,336) | (33,709,268) | (53,357,336) | (33,709,268) |
| Un-winding of Prepaid Staff Loan Expenses | (1,892,514) | (1,454,514) | (1,892,514) | (1,454,514) |
| Un-winding of Prepaid Trade Receivables | (60,290,834) | (57,074,061) | (60,290,834) | (57,074,061) |
| Interest Expenses on Mobilization Advance | (221,954,418) | (215,109,501) | (221,954,418) | (215,109,501) |
| Un-winding of Prepaid Inter-Company Loan Expenses | – | – | – | (1,670,511) |
| Total Finance Cost | (347,082,502) | (309,065,534) | (339,467,328) | (310,549,443) |
| Net Finance Income | 137,876,989 | 239,109,829 | 134,613,235 | 202,871,907 |
| Group | Company | |||
| For the year ended 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
11. PROFIT BEFORE TAX |
||||
| Is stated after charging all expenses including following: | ||||
| Auditor’s Remuneration - Statutory Audit | 3,864,000 | 2,844,000 | 1,805,000 | 1,600,000 |
| - Non-Audit Services | – | 522,160 | – | 522,160 |
| Provision for/(Reversal) of Fall in Value of Investments | (2,083,298) | 7,462,291 | (2,083,298) | 7,462,291 |
| Provision for/Write-off of Bad and Doubtful Debts | 3,879,854 | 1,245,688 | 3,845,682 | – |
| Donations | 11,709,088 | 4,096,740 | 11,315,391 | 4,028,340 |
| Depreciation and Amortization Cost | 590,999,501 | 449,572,762 | 551,874,611 | 432,827,833 |
| Personnel Cost Including | ||||
| Defined Benefit Plan Costs - Gratuity | 30,771,517 | 20,533,064 | 26,229,557 | 15,281,491 |
| Defined Contribution Costs - EPF | 78,248,853 | 65,343,487 | 67,442,752 | 59,587,899 |
| - ETF | 19,551,074 | 16,279,025 | 16,856,899 | 14,840,127 |
| Directors’ Emoluments and Fees | 41,602,800 | 24,063,700 | 32,910,000 | 18,480,000 |
| Staff Cost | 1,687,922,034 | 1,385,120,523 | 1,551,069,151 | 1,312,366,890 |
| Number of Employees | 2,801 | 3,396 | 2,570 | 3,245 |
12. INCOME TAX EXPENSES |
||||
12.1 Current Tax Expense (Note 12.2) |
362,906,839 | 249,919,964 | 212,693,138 | 161,417,211 |
| Over Provision in Respect of Previous Year | (1,873,498) | (50,152,424) | (1,914,387) | (49,497,924) |
| Deferred Tax Expense (Note 12.3) | 66,993,940 | 60,562,617 | 66,214,967 | 60,050,120 |
| 428,027,281 | 260,330,157 | 276,993,717 | 171,969,407 | |
12.2 Reconciliation between Accounting Profit and |
||||
| Accounting Profit before Income Tax Expense | 3,327,222,905 | 2,672,015,761 | 2,800,601,403 | 2,300,903,185 |
| Aggregate Disallowed Items | 906,918,572 | 692,271,467 | 697,612,916 | 574,351,917 |
| Aggregate Allowable Items | (1,347,004,280) | (1,143,872,424) | (1,306,965,944) | (1,116,195,589) |
| Total Statutory Income | 2,887,137,197 | 2,220,414,804 | 2,191,248,375 | 1,759,059,513 |
| Exempted Income | (437,727,787) | (484,547,739) | (437,727,787) | (484,547,739) |
| Taxable Income | 2,449,409,410 | 1,735,867,065 | 1,753,520,588 | 1,274,511,774 |
| Tax on Revenue at 2% | 186,655,739 | 169,823,721 | – | – |
| Tax on Construction Income at 12% | 1,739,328,917 | 1,221,538,036 | 1,739,328,917 | 1,221,538,036 |
| Tax on Other Income at 28% | 523,424,754 | 344,505,308 | 14,191,671 | 52,973,738 |
| 2,449,409,410 | 1,735,867,065 | 1,753,520,588 | 1,274,511,774 | |
| Tax @ 2% | 3,733,115 | 3,396,474 | – | – |
| Tax @ 12% | 208,719,470 | 146,584,564 | 208,719,470 | 146,584,564 |
| Tax @ 28% | 146,558,931 | 96,461,486 | 3,973,668 | 14,832,647 |
| Dividend Tax | 3,895,323 | 3,477,440 | – | – |
| Current Income Tax Expenses | 362,906,839 | 249,919,964 | 212,693,138 | 161,417,211 |
12.3 Deferred Tax Expense |
||||
| Statement of Comprehensive Income | ||||
| Accelerated depreciation for tax purposes | 69,541,835 | 62,804,098 | 68,799,950 | 61,690,987 |
| Defined Benefit Obligation | (2,547,895) | (2,241,481) | (2,584,983) | (1,640,867) |
| 66,993,940 | 60,562,617 | 66,214,967 | 60,050,120 | |
| Other Comprehensive Income | ||||
| Revaluation of Building to Fair Value | 4,736,581 | – | 4,736,581 | – |
| Defined Benefit Obligation | (1,048,741) | (1,738,794) | (841,911) | (1,768,295) |
| Total Deferred Tax Charge | 3,687,840 | (1,738,794) | 3,894,670 | (1,768,295) |
| 70,681,780 | 58,823,823 | 70,109,637 | 58,281,825 | |
To facilitate comparison, the prior year deferred tax attributable to actuarial losses on defined benefit obligation have been re-classified under Other Comprehensive Income.
12.4 Income Tax
Company
Under the provisions of the Inland Revenue Act No. 10 of 2006 and amendments thereto, the Company is liable for income tax at the concessionary rate of 12% on construction income, and 28% on other income.
Tax Exemption
As per Section 17A.2a of Inland Revenue (Amendment) Act No. 22 of 2011 and as amended by Act No. 08 of 2012, profits attributable to manufacturing of construction related material are exempted from Income Tax commencing from year of assessment 2011/12 for a period of 5 years.
Subsidiaries
Access Realties (Private) Limited
In accordance with the Section 17 of the Board of Investments Act No. 4 of 1978, the Company is exempted from Income Tax for a period of seven (07) years from the year of assessment in which the enterprise commences to make profits in relation to the transaction in that year or any year of assessment not later than five (05) years reckoned from the date of its operation whichever year is earlier.
Accordingly, the seven (07) years Income Tax exemption period was enforced from 01st April 2003 to 31st March 2010. Thereafter the Company is liable for a concessionary rate of Income Tax of 2% on its turnover for the period of fifteen years from the year of assessment 2010/11. However, the Company is liable to pay Income Tax at 28% on other income.
Sathosa Motors PLC
In accordance with the provision of the Inland Revenue Act No. 10 of 2006 and amendments thereto the Company is liable for Income Tax at 28% on its taxable profit.
SML Frontier Automotive (Private) Limited
In accordance with the provision of the Inland Revenue Act No.10 of 2006 and amendments there to the Company is liable for Income Tax at 28% on its taxable profit.
13. BASIC EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the Access Engineering PLC by the weighted average number of ordinary shares outstanding during the year.
| Group | Company | |||
| For the year ended 31st March | 2014 | 2013 | 2014 | 2013 |
| Profit Attributable to Equity Holders of the Company (Rs.) | 2,832,058,694 | 2,376,422,812 | 2,523,607,686 | 2,128,933,778 |
| Weighted Average Number of Shares as at the Year end | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 |
| Earnings Per Share (Rs.) | 2.83 | 2.38 | 2.52 | 2.13 |
| Group/Company | ||
| For the year ended 31st March | 2014 | 2013 |
| Rs. | Rs. | |
14. DIVIDEND PER SHARE |
||
| Declared and Paid During the Year | ||
| Dividends on Ordinary Shares | ||
| Final Dividend* | 250,000,000 | 250,000,000 |
| Interim Dividend | 250,000,000 | 250,000,000 |
| Total Dividends | 500,000,000 | 500,000,000 |
| Dividend per Share | 0.50 | 0.50 |
*Previous year's final dividend paid in the current year.
| Freehold | Leasehold | |||||||||||
| Land | Building | Plant and Machinery |
Motor Vehicles | Office Equipment | Furniture & Fittings |
Tools | Other Construction Equipment |
Capital Work-in- Progress |
Motor Vehicles | Plant and Machinery |
Total | |
| Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |
15. PROPERTY, PLANT AND EQUIPMENT |
||||||||||||
15.1 Group |
||||||||||||
| Cost or Valuation | ||||||||||||
| Balance at 1st April 2013 | 341,485,640 | 488,974,545 | 2,728,923,747 | 563,523,358 | 154,366,398 | 87,651,762 | 201,204,699 | 77,815,639 | 4,331,153 | 2,500,000 | – | 4,650,776,941 |
| Addition | – | – | 109,938,355 | 182,362,062 | 71,100,053 | 57,155,997 | 35,956,927 | 42,054,523 | – | – | 10,585,505 | 509,153,422 |
| Transfers | – | – | 3,074,414 | 415,002 | 31,156,017 | (30,790,851) | (3,854,582) | – | (4,331,153) | – | – | (4,331,153) |
| Disposals/Impairment/Derecognition | (2,000,000) | (23,353,440) | (27,892,000) | (11,315,000) | (30,543,882) | (6,729,506) | (5,774,752) | – | – | – | – | (107,608,580) |
| Revaluations | 66,125,471 | 39,471,512 | – | – | – | – | – | – | – | – | – | 105,596,983 |
| Balance at 31st March 2014 | 405,611,111 | 505,092,617 | 2,814,044,516 | 734,985,422 | 226,078,586 | 107,287,402 | 227,532,292 | 119,870,162 | – | 2,500,000 | 10,585,505 | 5,153,587,613 |
| Accumulated Depreciation | ||||||||||||
| Balance at 1st April 2013 | – | 57,074,943 | 417,656,590 | 158,469,820 | 121,949,297 | 61,482,769 | 78,844,630 | 13,885,436 | – | 468,747 | – | 909,832,232 |
| Charge | – | 20,606,044 | 343,490,869 | 110,875,478 | 30,619,899 | 8,443,124 | 51,610,500 | 21,836,321 | – | 624,996 | 527,825 | 588,635,056 |
| Transfers | – | – | 861,942 | 220,240 | 12,829,344 | (12,858,046) | (1,053,480) | – | – | – | – | – |
| Disposals/Impairment/Derecognition | – | (23,353,440) | (18,548,988) | (9,055,689) | (30,437,895) | (6,489,348) | (3,876,559) | – | – | – | – | (91,761,919) |
| Balance at 31st March 2014 | – | 54,327,547 | 743,460,413 | 260,509,849 | 134,960,645 | 50,578,499 | 125,525,091 | 35,721,757 | – | 1,093,743 | 527,825 | 1,406,705,369 |
| Carrying Value at 31st March 2014 | 405,611,111 | 450,765,070 | 2,070,584,103 | 474,475,573 | 91,117,941 | 56,708,903 | 102,007,201 | 84,148,405 | – | 1,406,257 | 10,057,680 | 3,746,882,244 |
| Carrying Value at 31st March 2013 | 341,485,640 | 431,899,601 | 2,311,267,157 | 405,053,538 | 32,417,101 | 26,168,993 | 122,360,069 | 63,930,203 | 4,331,153 | 2,031,253 | – | 3,740,944,709 |
| Freehold | Leasehold | |||||||||
| Land | Building | Plant and Machinery |
Motor Vehicles | Office Equipment | Furniture & Fittings |
Tools | Other Construction Equipment |
Plant and Machinery |
Total | |
| Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |
15.2 Company |
||||||||||
| Cost or Valuation | ||||||||||
| Balance at 1st April 2013 | 341,485,640 | 121,770,817 | 2,713,350,671 | 522,731,454 | 120,887,252 | 74,758,520 | 197,380,771 | 77,815,639 | – | 4,170,180,764 |
| Addition | – | – | 82,504,778 | 97,655,755 | 66,062,852 | 55,930,356 | 35,861,167 | 42,054,523 | 10,585,505 | 390,654,936 |
| Transfers | – | – | 3,074,414 | 415,002 | 31,156,017 | (30,790,851) | (3,854,582) | – | – | – |
| Disposals/Impairment/Derecognition | (2,000,000) | (23,353,440) | (27,892,000) | (5,586,000) | (30,543,882) | (6,729,506) | (5,774,752) | – | – | (101,879,580) |
| Revaluations | 66,125,471 | 39,471,512 | – | – | – | – | – | – | – | 105,596,983 |
| Balance at 31st March 2014 | 405,611,111 | 137,888,889 | 2,771,037,863 | 615,216,211 | 187,562,239 | 93,168,519 | 223,612,604 | 119,870,162 | 10,585,505 | 4,564,553,103 |
| Accumulated Depreciation | ||||||||||
| Balance at 1st April 2013 | – | 15,812,609 | 402,509,298 | 129,320,948 | 92,650,328 | 50,855,904 | 75,430,891 | 13,885,436 | – | 780,465,414 |
| Charge | – | 7,540,831 | 339,775,520 | 93,242,145 | 28,824,024 | 7,897,621 | 51,487,500 | 21,836,321 | 527,825 | 551,131,787 |
| Transfers | – | – | 861,942 | 220,240 | 12,829,344 | (12,858,046) | (1,053,480) | – | – | – |
| Disposals/Impairment/Derecognition | – | (23,353,440) | (18,548,988) | (3,326,689) | (30,437,895) | (6,489,348) | (3,876,559) | – | – | (86,032,919) |
| Balance at 31st March 2014 | – | – | 724,597,772 | 219,456,644 | 103,865,801 | 39,406,131 | 121,988,352 | 35,721,757 | 527,825 | 1,245,564,282 |
| Carrying Value at 31st March 2014 | 405,611,111 | 137,888,889 | 2,046,440,091 | 395,759,567 | 83,696,438 | 53,762,388 | 101,624,252 | 84,148,405 | 10,057,680 | 3,318,988,821 |
| Carrying Value at 31st March 2013 | 341,485,640 | 105,958,208 | 2,310,841,373 | 393,410,506 | 28,236,924 | 23,902,616 | 121,949,880 | 63,930,203 | – | 3,389,715,349 |
Land and Building of the Company at the cost of Rs. 182,556,180/- had been revalued at Rs. 543,500,000/- by K T D Tissera, F I V (Sri Lanka), an independent professional valuer as at 31st March 2014. The surplus arising from the revaluation amounting to Rs. 105,596,983/- was transferred to Revaluation Reserve. The valuation has been conducted on the basis of current market value.
Group property, plant and equipment with a cost of Rs. 239.0 Mn (2013 - Rs. 214.6 Mn) have been fully depreciated and continue to be in use by the Group. The cost of fully depreciated assets of the Company amounts to Rs. 127.9 Mn (2013 - Rs. 126.2 Mn).
Location and extent of Company's' freehold lands at the reporting date are as shown below:
| Location | Extent |
| 1. Land depicted at No. 336/1, Low Level Road, Jalthara, Ranala | 3 Roots and 38.4 Perches |
| 2. Land depicted at No. 267, Dehiwala Road, Maharagama | 3 Roots and 1 Perche |
| 3. Land depicted at No. 278, Alubogahalanda, Jalthara, Ranala | 3 Acres 3 Roots and 4.86 Perches |
| 4. Land depicted at No. 117, Dehiwala Road, Boralesgamuwa | 2 Roots and 37 Perches |
| 5. Land depicted at Dickowita - Hendala | 2 Acres 3 Roots and 10.18 Perches |
| 6. Land depicted at Weliwita - Kaduwela | 2 Acres |
| Group | ||
| As at 31st March | 2014 | 2013 |
| Rs. | Rs. | |
16. INVESTMENT PROPERTIES |
||
| Balance at the beginning of the Year | 2,716,841,871 | 3,000,000,000 |
| Acquisition of Investment Property | 115,196,602 | 28,597,185 |
| Transfer due to Owner Occupation | – | (311,755,314) |
| Balance at the end of the Year | 2,832,038,473 | 2,716,841,871 |
| Rental Income Derived from Investment Properties | 188,855,738 | 169,823,721 |
| Direct Operating Expenses (Including Repair and Maintenance) Generating Rental Income | (31,249,400) | (23,343,430) |
16.1 Investment Property Belonging to Access Realties (Private) Limited
Location:
Access Towers and Land of Messrs Access Realties (Private) Limited, are located at Nos. 264/5, 266, 268 and 278, Dr. Colvin R De Silva Mawatha (Union Place), and Nos. 116 and 118, Dawson Street, Colombo 02.
Extent:
| (i) Lot 1 in plan No. 5754: | 1A - 0R - 07.87P | (0.4246 Hectares) |
| (ii) Lot 1 in plan No. 2824: | 0A - 0R - 04.50P | (0.01138 Hectares) |
| (iii) Lot 1 in plan No. 3021: | 0A - 0R - 13.28P | (0.03359 Hectares) |
| Total | 1A - 0R - 25.56P | (0.46957 Hectares) |
Floor Area:
The total gross floor area of the Access Towers is 216,718 sq.ft.
Valuation:
Based on the observation of Board of Directors, Company decided that sales price of comparative properties has not changed significantly during the year 2013/14. Therefore Company has decided that fair value of the investment property as at 31st March 2014 was similar to the carrying value as at previous reporting date and no need to recognize gain/(loss) on fair value adjustment based on Section 75 - e of the LKAS 40.
Fair value of the investment property was ascertained, by an independent valuation carried out by Mr. J K D Thissera - Chartered Valuation Surveyor, on an open market value for existing use basis as at 27th February 2012.
16.2 Investment Property Belonging to Sathosa Motors PLC
Location:
Building of Sathosa Motors PLC, is located at No. 25/11, New Nuge Road, Peliyagoda.
Floor area:
The total gross floor area of the building is 6,835 sq.ft.
Valuation:
During the year Directors’ valuation was carried out for the investment property and the Directors are of the view that no significant changes in the value of property have taken place as at the reporting date.
Investment property is not revalued and construction cost of the building comprised the carrying amount of the investment property.
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
17. INTANGIBLE ASSETS |
||||
| Leasehold Right (Note 17.1) | 116,756,756 | 118,378,378 | – | – |
| Goodwill | 432,588,101 | 432,588,101 | – | – |
| Software (Note 17.2) | 73,482,597 | – | 73,482,597 | – |
| 622,827,454 | 550,966,479 | 73,482,597 | – | |
| Group | ||
| As at 31st March | 2014 | 2013 |
| Rs. | Rs. | |
17.1 Leasehold Right |
||
| Balance at the beginning of the Year | 118,378,378 | 120,000,000 |
| Amortisation for the Year | (1,621,622) | (1,621,622) |
| Balance at the end of the Year | 116,756,756 | 118,378,378 |
Leasehold land disclosed above relate to the land at Peliyagoda acquired by Sathosa Motors PLC on a 99-years lease commencing from 1989. The leasehold right has been revalued by an independent valuer as at 31st March 2012. Valuation details are as follows:
Location:
The property persistantly known and called as ‘Sathosa Motors Workshop’ is located at No. 25/11, New Nuge Road, Peliyagoda.
Extent:
The total gross area of the land is 343.93 perches.
Valuation:
Fair value of the leasehold right was ascertained, by an independent valuation carried out by Mr. R T K Sirisena - Incorporated Valuer. Valuation has been done based on the demand and supply factors, current evidence of values, improvements and infrastructures etc.
| Group/Company | |
17.2 Software |
|
| Cost | |
| Balance at 1st April 2013 | – |
| Additions | 74,225,421 |
| Balance at 31st March 2014 | 74,225,421 |
| Accumulated Amortization | |
| Balance at 1st April 2013 | – |
| Amortization | 742,824 |
| Balance at 31st March 2014 | 742,824 |
| Carrying Value at 31st March 2014 | 73,482,597 |
| Company | ||||
| As at 31st March | Number of Shares | Effective Holding | 2014 | 2013 |
| % | Rs. | Rs. | ||
18. INVESTMENTS IN SUBSIDIARIES |
||||
| Sathosa Motors PLC | 5,093,745 | 84.42 | 1,196,572,767 | 1,196,232,120 |
| Access Realties (Private) Limited | 67,422,532 | 100 | 2,696,901,280 | 2,696,901,280 |
| 3,893,474,047 | 3,893,133,400 | |||
| As at 31st March | 2014 | 2013 |
| Rs. | Rs. | |
18.1 Assessment of the Fair Value of Investments in Subsidiaries |
||
| Quoted Investment | ||
| Sathosa Motors PLC | 1,222,498,800 | 1,170,720,230 |
| Unquoted Investment | ||
| Access Realties (Private) Limited | 3,189,093,436 | 3,066,723,327 |
| 4,411,592,236 | 4,237,443,557 | |
Fair value of the quoted investment has been decided based on the market value of the shares as at the reporting date.
Fair value of the unquoted investment has been decided based on the net assets attributable for the respective investment.
| Group | Company | |||||
| As at 31st March | Number of Shares | Effective Holding | 2014 | 2013 | 2014 | 2013 |
| % | Rs. | Rs. | Rs. | Rs. | ||
19. INVESTMENTS IN ASSOCIATE |
||||||
| ZPMC Lanka Company (Private) Limited | 5,546,544 | 30 | 62,142,330 | – | 55,465,410 | – |
| 62,142,330 | – | 55,465,410 | – | |||
The Group has a 30% interest in ZPMC Lanka Company (Private) Limited, which has entered into a contract with Colombo International Container Terminal to service and maintain the container handling equipment supplied by Shanghai Zhenhua Heavy Industries Company Limited of China (known as ZPMC).
The following table illustrates summarized financial information of the Group’s investments in ZPMC Lanka Company (Private) Limited.
| As at 31st March | 2014 |
| Share of the Associate’s Statement of Financial Position: | |
| Current Assets | 65,877,028 |
| Non-Current Assets | – |
| Current Liabilities | (3,734,698) |
| Non-Current Liabilities | – |
| Equity | 62,142,330 |
| For the year ended 31st March | 2014 |
| Rs. | |
| Share of the Revenue | 15,224,582 |
| Share of Profit, Net of Tax | 6,676,920 |
| Carrying Amount of the Investment | 62,142,330 |
| Group/Company | |||
| As at 31st March | Numbers of Shares | 2014 | 2013 |
| Rs. | Rs. | ||
20. OTHER LONG TERM INVESTMENTS |
|||
| Unquoted Investments | |||
| Asia Pacific Golf Course Limited | |||
| - Preference Shares | 6 | 1,500,000 | 1,500,000 |
| Less: Fair Value Adjustment | (1,500,000) | (1,500,000) | |
| – | – | ||
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
21. INVENTORIES |
||||
| Inventories | 1,317,317,818 | 1,469,876,287 | 557,874,464 | 576,636,862 |
| Work-in-Progress | 631,209,769 | 390,437,557 | 631,209,769 | 386,691,879 |
| 1,948,527,587 | 1,860,313,844 | 1,189,084,233 | 963,328,741 | |
22. TRADE AND OTHER RECEIVABLES |
||||
| Trade Receivables (Note 22.1) | 4,482,081,935 | 4,045,021,456 | 3,674,470,518 | 3,720,054,519 |
| Other Receivables (Note 22.2) | 103,316,733 | 104,370,414 | 24,946,243 | 37,871,548 |
| Advance and Prepayments (Note 22.3) | 661,824,136 | 145,982,450 | 525,600,172 | 141,500,609 |
| 5,247,222,804 | 4,295,374,320 | 4,225,016,933 | 3,899,426,676 | |
22.1 Trade Receivables |
||||
| Trade Receivables | 4,486,768,530 | 4,046,252,476 | 3,678,316,200 | 3,720,054,519 |
| Less: Provision for Impairment of Receivables | (4,686,595) | (1,231,020) | (3,845,682) | – |
| 4,482,081,935 | 4,045,021,456 | 3,674,470,518 | 3,720,054,519 | |
22.2 Other Receivables |
||||
| Interest Receivable | 11,758,638 | 23,688,773 | 9,355,627 | 22,330,543 |
| Margin on Bond | 6,619,807 | 192,424 | 6,619,807 | 192,425 |
| VAT Receivable | 21,911,211 | 40,767,274 | 8,970,809 | 10,436,120 |
| Other Receivable | 63,027,077 | 39,721,943 | – | 4,912,460 |
| 103,316,733 | 104,370,414 | 24,946,243 | 37,871,548 | |
22.3 Advances and Prepayments |
||||
| Deposits and Prepayments | 20,102,095 | 22,681,057 | 13,582,964 | 19,988,062 |
| Advances | 625,144,294 | 108,454,866 | 497,241,307 | 108,454,866 |
| Refundable Deposit | 16,577,747 | 14,846,527 | 14,775,901 | 13,057,681 |
| 661,824,136 | 145,982,450 | 525,600,172 | 141,500,609 | |
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
23. AMOUNTS DUE FROM RELATED PARTIES |
||||
| China Geo - Salcon - Access JV | 58,446,604 | 58,446,604 | 58,446,604 | 58,446,604 |
| Access International (Private) Limited | 88,243 | 373,583 | 88,243 | – |
| Access International Projects (Private) Limited | 114,999 | 9,343 | – | – |
| Access Energy Solutions (Private) Limited | 9,580,263 | 72,670 | 9,042,864 | – |
| Access Industrial Systems (Private) Limited | 2,060,000 | – | 2,060,000 | – |
| ATSL International (Private) Limited | 244,028 | 827,498 | 244,028 | 827,498 |
| Access Realties 2 (Private) Limited | 24,889,836 | 7,336,895 | – | – |
| ECO Friendly Power Developers (Private) Limited | 38,140,883 | 62,163,279 | 38,140,883 | 62,163,279 |
| Access Agencies (Private) Limited | 1,465,138 | – | 1,465,138 | – |
| Asia Pacific Golf Course (Private) Limited | 13,843,107 | 13,843,107 | 13,843,107 | 13,843,107 |
| Access Real Estate (Private) Limited | – | 49,185 | – | – |
| Access Realties (Private) Limited | – | – | 11,560,710 | – |
| 148,873,101 | 143,122,164 | 134,891,577 | 135,280,488 | |
| Less: Provision for Impairment of Receivables | (13,843,107) | (13,843,107) | (13,843,107) | (13,843,107) |
| 135,029,994 | 129,279,057 | 121,048,470 | 121,437,381 | |
24. OTHER FINANCIAL ASSETS AND LIABILITIES |
||||
24.1 Other Financial Assets |
||||
24.1.a Other Non-Current Financial Assets |
||||
| Loans and Receivables at Amortized Cost | ||||
| - Trade Receivable - UDA | – | 431,954,967 | – | 431,954,967 |
| - Prepaid Trade Receivable Expenses - UDA | – | 138,281,261 | – | 138,281,261 |
| - Investment in Debenture | 37,290,000 | – | – | – |
| Total Other Non-Current Financial Assets | 37,290,000 | 570,236,228 | – | 570,236,228 |
24.1.b Other Current Financial Assets |
||||
| Loans and Receivables at Amortized Cost | ||||
| - Trade Receivable - UDA | 1,584,786,919 | – | 1,584,786,919 | – |
| - Retention Receivable | 939,892,583 | 562,078,612 | 939,892,583 | 562,078,612 |
| - Staff Loans | 17,322,761 | 15,742,327 | 15,104,553 | 13,906,057 |
| - Prepaid Trade Receivable Expenses - UDA | 181,323,892 | – | 181,323,892 | – |
| - Prepaid Retention Receivable Expenses | 114,482,027 | 81,413,397 | 114,482,027 | 81,413,397 |
| - Prepaid Staff Loan Expenses | 5,034,069 | 3,476,109 | 5,034,069 | 3,476,109 |
| Total Other Current Financial Assets | 2,842,842,251 | 662,710,445 | 2,840,624,043 | 660,874,175 |
24.2 Other Financial Liabilities |
||||
| Other Current Financial Liabilities | ||||
| Other Current Financial liabilities at Amortized Cost | ||||
| - Mobilization Advance | 1,550,416,667 | 1,669,150,268 | 1,550,416,667 | 1,669,150,268 |
| - Prepaid Mobilization Advance Income | 142,637,804 | 117,315,053 | 142,637,804 | 117,315,053 |
| Total Other Current Financial Liabilities | 1,693,054,471 | 1,786,465,321 | 1,693,054,471 | 1,786,465,321 |
| Cost | Market Value | ||||
| As at 31st March | Number of Shares | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | ||
25. SHORT TERM INVESTMENTS |
|||||
| Group/Company | |||||
| Quoted Investments | |||||
| Nation Lanka Finance PLC | 12,300 | 453,009 | 453,009 | 95,940 | 109,470 |
| Lanka Indian Oil Corporation PLC | 36,600 | 1,035,414 | 1,035,414 | 1,409,100 | 746,640 |
| Tess Agro Company PLC | 80 | – | – | 78 | 120 |
| Touchwood Investments PLC | 21,600 | 414,108 | 414,108 | 56,160 | 123,120 |
| Horana Plantation PLC | 7,500 | 538,464 | 538,464 | 171,750 | 198,750 |
| The Colombo Fort Land & Building Company PLC | 5,000 | 499,533 | 499,533 | 127,500 | 145,000 |
| Namunukula Plantations PLC | 3,300 | 527,231 | 527,231 | 276,540 | 252,780 |
| Richard Peiris & Co PLC | 50,000 | 798,848 | 798,848 | 330,000 | 330,000 |
| Free Lanka Capital Holdings PLC | 15,600 | 78,000 | 78,000 | 32,760 | 39,000 |
| Expo Lanka Holdings PLC | 89,100 | 1,247,400 | 1,247,400 | 775,170 | 605,880 |
| Commercial Bank of Ceylon PLC (N) | 39 | – | – | 4,797 | 4,407 |
| People’s Merchant PLC | 100 | 1,976 | 1,976 | 1,690 | 1,350 |
| CIC Holdings PLC (N) | 204,000 | 23,517,007 | 23,517,007 | 9,282,000 | 12,444,000 |
| Softlogic Holdings PLC | 208,500 | 6,110,307 | 6,110,307 | 2,210,100 | 2,168,400 |
| Vallibel One PLC | 123,300 | 3,210,051 | 3,210,051 | 2,096,100 | 1,972,800 |
| Textured Jersey Lanka PLC | 889,500 | 13,467,501 | 13,467,501 | 14,054,100 | 8,806,050 |
| Central Investments & Finance PLC | 1,000,000 | 10,000,000 | 10,000,000 | 700,000 | 2,600,000 |
| People’s Leasing Company PLC | 839,400 | 15,109,200 | 15,109,200 | 12,003,420 | 10,996,140 |
| Total | 77,008,049 | 77,008,049 | 43,627,205 | 41,543,907 | |
| (Less) Provision for Impairment | (33,380,844) | (35,464,142) | – | – | |
| Fair Value as at the End of the Year | 43,627,205 | 41,543,907 | 43,627,205 | 41,543,907 | |
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
26. SHORT TERM DEPOSITS |
||||
| Fixed Deposits | 1,038,974,827 | 1,265,437,130 | 972,573,735 | 1,210,602,731 |
| Investment in Unit Trust | 100,757,430 | 100,133,269 | 100,757,430 | 100,133,269 |
| Investment in Treasury Bills | – | 4,999,999 | – | – |
| 1,139,732,257 | 1,370,570,398 | 1,073,331,165 | 1,310,736,000 | |
27. CASH AND CASH EQUIVALENTS |
||||
| Favourable Balance | ||||
| Cash at Bank | 1,057,833,280 | 530,143,275 | 1,020,106,307 | 461,221,061 |
| Cash in Hand | 22,096,945 | 37,040,554 | 20,388,490 | 36,990,554 |
| Investment in Repos | 441,559,819 | 136,000,000 | 440,000,000 | 80,000,000 |
| 1,521,490,044 | 703,183,829 | 1,480,494,797 | 578,211,615 | |
| Unfavourable Balance | ||||
| Bank Overdraft | (20,393,157) | (12,081,867) | – | (12,081,867) |
| Cash and Cash Equivalent for the Purpose of Cash Flow Statement | 1,501,096,887 | 691,101,962 | 1,480,494,797 | 566,129,748 |
Land situated at No. 278/4, Union Place, Colombo 02, which is owned by Access Realties (Private) Limited (Subsidiary), has been mortgaged to Bank of Ceylon - Corporate Branch by Access Engineering PLC to increase the existing Overdraft facility (From Rs. 10 Mn to Rs. 30 Mn).
| 2014 | 2013 | |||
| As at 31st March | Number of Shares | Value of Shares | Number of Shares | Value of Shares |
| Rs. | Rs. | |||
28. STATED CAPITAL |
||||
| Issued and Fully Paid | ||||
| At the beginning of the Year | 1,000,000,000 | 9,000,000,000 | 1,000,000,000 | 9,000,000,000 |
| At the end of the Year | 1,000,000,000 | 9,000,000,000 | 1,000,000,000 | 9,000,000,000 |
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per individual present at meetings of the shareholders or one vote per share in the case of a poll.
| Group | ||
| As at 31st March | 2014 | 2013 |
| Rs. | Rs. | |
29. DEFERRED GRANT |
||
| Balance at the beginning of the Year | 7,020,430 | 7,239,819 |
| Amortization | (219,389) | (219,389) |
| Balance at the end of the Year | 6,801,041 | 7,020,430 |
The above represents a Government grant received to Sathosa Motors PLC, for the construction of workshop at Peliygoda and are amortized over a period of fifty (50) years.
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
30. INTEREST-BEARING BORROWINGS |
||||
| Payable Within One Year | ||||
| Term Loan (Note 30.1) | – | 5,978,141 | – | 5,978,141 |
| Finance Lease Obligation (Note 30.2) | 5,260,203 | 227,530 | 4,628,287 | – |
| 5,260,203 | 6,205,671 | 4,628,287 | 5,978,141 | |
| Payable After One Year | ||||
| Finance Lease Obligation (Note 30.2) | 967,690 | 1,933,464 | – | – |
| 967,690 | 1,933,464 | – | – | |
| Group/Company | ||
| As at 31st March | 2014 | 2013 |
| Rs. | Rs. | |
30.1 Term Loan |
||
| Balance at the beginning of the Year | 5,978,141 | 12,586,547 |
| Obtained during the Year | – | – |
| Repayment during the Year | (5,978,141) | (6,608,406) |
| Balance at the end of the Year | – | 5,978,141 |
| Loan Payable within One Year | – | 5,978,141 |
| Loan Payable after One Year | – | – |
| – | 5,978,141 | |
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
30.2 Finance Lease Obligation |
||||
| Balance at the beginning of the Year | 2,628,040 | – | – | – |
| Obtained during the Year | 11,500,000 | 3,153,648 | 11,500,000 | – |
| Repayments during the Year | (7,229,814) | (525,608) | (6,441,390) | – |
| 6,898,226 | 2,628,040 | 5,058,610 | – | |
| Less: Interest in Suspense | (670,333) | (467,046) | (430,323) | – |
| Balance at the end of the Year | 6,227,893 | 2,160,994 | 4,628,287 | – |
| Payable within One Year | 5,260,203 | 227,530 | 4,628,287 | – |
| Payable after One Year | 967,690 | 1,933,464 | – | – |
| 6,227,893 | 2,160,994 | 4,628,287 | – | |
31. EMPLOYEE BENEFITS |
||||
| Balance at the beginning of the Year | 92,755,886 | 61,692,703 | 67,499,119 | 39,089,433 |
| Current Service Cost | 20,647,386 | 14,514,080 | 18,804,654 | 11,373,498 |
| Interest Cost | 10,124,131 | 6,018,984 | 7,424,903 | 3,907,993 |
| Actuarial Loss | 5,403,622 | 13,662,377 | 6,964,120 | 14,735,788 |
| 128,931,025 | 95,888,144 | 100,692,796 | 69,106,712 | |
| Less: Payments made during the Year | (9,210,433) | (3,132,258) | (5,345,533) | (1,607,593) |
| Balance at the end of the Year | 119,720,592 | 92,755,886 | 95,347,263 | 67,499,119 |
31.1 Expense Recognized in Statement of |
||||
| Current Service Cost | 20,647,386 | 14,514,080 | 18,804,654 | 11,373,498 |
| Interest Cost | 10,124,131 | 6,018,984 | 7,424,903 | 3,907,993 |
| Expense Recognized in Comprehensive Income | 30,771,517 | 20,533,064 | 26,229,557 | 15,281,491 |
| Actuarial Losses Recognized in OCI | 5,403,622 | 13,662,377 | 6,964,120 | 14,735,788 |
| Total Provision for the Year | 36,175,139 | 34,195,441 | 33,193,677 | 30,017,279 |
31.2 Company
An independent actuarial valuation of the retirement benefit obligation was carried out as at 31st March 2014 by professional actuaries - M/S K A Pandit, Professional Consultants and Actuaries.
The valuation method used by the Actuaries to value the Retirement Benefit Obligation is the ‘Projected Unit Credit Method’, the method recommended by the LKAS 19 - ‘Employee Benefits’.
The principal assumption used in determining the cost of employee benefits were:
| 2014 | 2013 | |
| Discount Rate | 10% | 11% |
| Expected Annual Average Salary Increment Rate | 8.50% | 8.50% |
| Staff Turnover Factor | 1% | 1% |
| Retirement Age | 55 Years | 55 Years |
The Company will continue as a going concern.
31.3 Group
a. Sathosa Motors PLC
The actuarial valuation has been carried out by Actuarial & Management Consultants (Private) Limited, professional actuaries.
The valuation method used by the Actuaries to value the retirement benefit obligation is the ‘Projected Unit Credit Method’, the method recommended by the LKAS 19 - ‘Employee Benefits’.
b. Access Realties (Private) Limited
The gratuity liabilities of Access Realities (Private) Limited calculated applying the Projected Unit Credit (PUC) method.
The principal assumption used in determining the cost of employee benefits were:
| 2014 | 2013 | |
| Discount Rate | 10% | 11% |
| Expected Annual Average Salary Increment Rate | 10% - 12% | 8.5% - 16.7% |
| Retirement Age | 55 Years | 55 Years |
The Company will continue as a going concern.
31.4 Sensitivity of Assumptions Used
A quantitative sensitivity analysis for significant assumptions used by the Company as at 31st March 2014 is as shown below:
| Effect on the Employee Benefit Obligation | Discount Rate | Salary Escalation Rate | Attrition Rate |
| Increase by one percentage point | (10,981,124) | 13,194,917 | 947,743 |
| Decrease by one percentage point | 13,129,313 | (11,214,344) | (1,193,117) |
The sensitivity analysis above have been determined based on a method that extrapolates the impact on employee benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
The following payments are expected contributions to the employee benefit obligation in future years:
| Within the next 12 months (next annual reporting period) | 8,808,435 |
| Between 2 and 5 years | 18,768,687 |
| Beyond 5 years | 72,176,282 |
| Total expected payments | 99,753,404 |
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
32. DEFERRED TAXATION |
||||
| Balance at the beginning of the Year | 157,734,573 | 98,910,750 | 156,426,366 | 98,144,541 |
| Provision during the Year (Note 12.3) | 70,681,780 | 58,823,823 | 70,109,637 | 58,281,825 |
| Balance at the end of the Year | 228,416,353 | 157,734,573 | 226,536,003 | 156,426,366 |
Deferred Tax Provision as at the year end is made up as follows:
| As at 31st March | 2014 | 2014 | ||
| Temporary Difference | Tax Effect on Temporary Difference |
Temporary Difference | Tax Effect on Temporary Difference |
|
| Group | ||||
| Accelerated Depreciation for Tax Purposes | 1,890,325,322 | 240,806,400 | 1,395,117,542 | 171,264,565 |
| Revaluation of Building to Fair Value | 105,596,983 | 4,736,581 | – | – |
| Defined Benefit Obligation | (119,720,592) | (17,126,628) | (92,755,886) | (13,529,992) |
| 1,876,201,713 | 228,416,353 | 1,302,361,656 | 157,734,573 | |
| Company | ||||
| Accelerated Depreciation for Tax Purposes | 1,863,610,358 | 233,326,210 | 1,371,052,167 | 164,526,260 |
| Revaluation of Building to Fair Value | 105,596,983 | 4,736,581 | – | – |
| Defined Benefit Obligation | (95,347,263) | (11,526,788) | (67,499,119) | (8,099,894) |
| 1,873,860,078 | 226,536,003 | 1,303,553,048 | 156,426,366 | |
32.1 Company
Provision has been made for deferred taxation under the liability method in respect of temporary differences arising from difference between accounting and tax base. Deferred tax has been computed at the rate of 12%.
32.2 Group
Access Realties (Private) Limited
No provisions have been made for deferred taxation, since the Company is liable for income tax at 2% on its revenue for next fifteen (15) years after completing the seven (07) years of income tax exemptions. The tax exemption ends at the end of 2010/11 year of assessment.
Sathosa Motors PLC
Provision has been made for deferred taxation under the liability method in respect of temporary differences arising from difference between accounting and tax base. Deferred tax has been computed at the rate of 28%.
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
33. TRADE AND OTHER PAYABLES |
||||
| Trade Creditors | 2,083,367,211 | 1,509,852,731 | 1,478,471,138 | 927,798,091 |
| VAT Payable | 14,448,512 | 1,729,962 | – | – |
| Accrued Expenses | 260,008,178 | 215,011,020 | 226,641,628 | 193,035,184 |
| Advances Received | 271,083,654 | 81,483,200 | 125,078,913 | 53,129,280 |
| Retention Payable | 94,782,679 | 56,922,285 | 94,782,679 | 56,922,285 |
| Security Deposit | 21,026,303 | 21,581,841 | – | – |
| 2,744,716,537 | 1,886,581,039 | 1,924,974,358 | 1,230,884,840 | |
34. AMOUNTS DUE TO RELATED PARTIES |
||||
| Access International (Private) Limited | 19,794,845 | 15,905,634 | 19,794,845 | 15,905,634 |
| Access International Projects (Private)Limited | 2,093,203 | – | 2,093,203 | – |
| Access Agencies(Private) Limited | 880,725 | 3,221,209 | 880,725 | 3,221,209 |
| Access Energy Solution (Private) Limited | 4,138,963 | 2,299,700 | 4,138,963 | 2,299,700 |
| Access Realties (Private) Limited | – | – | 9,398,328 | 891,429 |
| Access Natural Water (Private) Limited | 370,183 | 121,750 | 370,183 | 102,558 |
| Access Projects (Private) Limited | – | 183,502 | – | 183,502 |
| Access Industrial Systems (Private) Limited | – | 661,277 | – | – |
| 27,277,919 | 22,393,072 | 36,676,247 | 22,604,032 | |
35. CURRENT TAX LIABILITIES |
||||
| Balance at the beginning of the Year | 42,770,404 | 189,315,745 | 5,243,652 | 163,231,175 |
| Provision made during the Year | 359,011,516 | 246,442,525 | 212,693,138 | 161,417,211 |
| Adjustment for the prior Year | (1,873,498) | (50,152,425) | (1,914,387) | (49,497,924) |
| Payments Made during the Year | (230,875,624) | (318,561,570) | (130,000,000) | (250,000,000) |
| VAT Refund | (3,705,000) | – | – | – |
| Notional Tax | (2,302,216) | (3,370,559) | (954,557) | (3,370,559) |
| WHT Recoverable | (14,044,527) | (16,367,025) | (13,832,084) | (16,536,251) |
| ESC Recoverable | – | (4,536,287) | – | – |
| Balance at the end of the Year | 148,981,055 | 42,770,404 | 71,235,762 | 5,243,652 |
36. RELATED PARTY TRANSACTIONS
36.1 Company
The following transactions were carried out with related party companies during the year ended 31st March 2014.
Amount (Paid)/Received |
|||||
| Related Party Transaction | Names of the Directors | Nature of Interest | Nature of Transaction | 2014 | 2013 |
| Rs. | Rs. | ||||
| Access International (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez Mr. D A R Fernando Mr. S H S Mendis Mr. S D Munasinghe |
Chairman
Director Director Director Director Director |
Purchase of Plant Equipment and Tools
Clearing Charges Paid Sub Contractor Charges Machinery Hiring Income Purchase of Gabion, Fibertex, Geo MX and Tie Wire Purchase of Reinforcement Steel Strips Purchase of DI Pipes and Fittings Sale of Readymix Concrete Short Term Loan Granted Short Term Loan Repayment |
(827,691)
(535,983) (28,890,560) – (21,337,507) – – 804,558 117,580,000 (117,580,000) |
(17,638,590)
(142,171) (22,173,256) 808,608 (19,090,055) (3,102,904) (159,999,193) – – – |
| Access Realties (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez |
Chairman
Director Director |
Loan Settlement
Dividend Received Office Rentals and Service Charges Reimbursement of Telephone, Electricity and Reimbursement of Office Maintenance Charges Sub Contract Work - (Office Renovation) Reimbursement of Office Renovation Expenses Hiring of Scaffolding Items Sale of Readymix Concrete |
–
12,136,056 (46,641,737) (11,808,271) (533,200) (15,621,446) 11,560,710 821,954 28,509 |
47,500,000
9,102,042 (31,631,360) (6,681,057) (904,663) – – – – |
| Access Natural Water (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez |
Chairman
Director Director |
Purchase of Water Bottles
Purchases of Electronic Dispenser |
(4,088,741)
(213,613) |
(2,839,765)
(17,000) |
| Access Agencies (Private) Limited |
Mr. S J S Perera | Chairman | Sub Contractor Charges
Construction Related Material Purchases Machinery Hiring Income Sale of Readymix Concrete Hiring of Scaffolding Items |
(6,142,871)
– 236,675 4,884,381 197,450 |
(12,900,977)
(1,039,985) – – – |
| Access Projects (Private) Limited |
Mr. S J S Perera | Chairman | Reimbursement of Electricity Bills
Sale of Readymix Concrete Hiring of Scaffolding Items |
(731,580)
– 2,616,704 |
(1,158,831)
274,176 |
| Access Energy Solutions (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez |
Chairman
Director Director |
Sub Contractor Charges
Purchase of Electrical Items |
(3,663,415)
– |
(22,017,084)
(3,595,997) |
| Reprographics (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua |
Chairman
Director |
Purchase of Toner
Photocopy Machine Spare Parts and Service Purchase of Photo Copy Machine |
(177,000)
(166,850) (660,000) |
(196,680)
(233,125) – |
| China Geo Salcon Access Joint Venture |
Mr. J C Joshua
Mr. S H S Mendis Mr. D A R Fernando |
Partner
Partner Partner |
Guarantee Extension Commission | – | (4,837,168) |
| Eco Friendly Power Developers (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez Mr. D A R Fernando |
Chairman
Director Director Director |
Construction Income
Material Advances Received Mobilization Advance Received Mobilization Advance Recoveries Machinery Hiring Income |
2,467,516
– – – 87,783 |
132,027,069
1,031,396 20,725,145 (16,260,364) – |
| ATSL International (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez |
Chairman
Director Director |
Purchase of Construction Materials
Sale of Readymix Concrete Machinery Hiring Income |
–
876,333 1,135,431 |
(1,360,788)
2,372,540 – |
| Sathosa Motors PLC | Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez Mr. D A R Fernando Mr. S H S Mendis Mr. S D Munasinghe |
Chairman
Director Director Director Director Director |
Dividend Received
Purchase of New Vehicle Vehicle Repair and Maintenance |
22,921,853
– (11,996) |
22,194,914
(5,475,000) (890,787) |
| C R D S Development (Private) Limited |
Mr. J C Joshua | Director | Land Rent | (6,000,000) | (2,000,000) |
36.2 Group
The following transactions were carried out between related party companies, within the Group.
| Amount (Paid)/Received | |||||
| Related Party Transaction | Names of the Directors | Nature of Interest | Nature of Transaction | 2014 | 2013 |
| Rs. | Rs. | ||||
| Access Realities (Private) Limited |
|||||
| Access Industrial System (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez Mr. S D Perera Mr. C K Thambydorai |
Chairman
Director Director Director Director |
Lift and Repair Maintenance Charges | (2,457,396) | (1,189,668) |
| Access International (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. D D S Ferdinando Mr. T T B C Fernando Mr. R J S Gomez Mr. B P Obeysekara Mr. S D Perera |
Chairman
Director Director Director Director Director Director |
Rental and Services Income made in the ordinary course of the business | 16,453,680 | 15,710,570 |
| ATSL International (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J.S.Gomez Mr. K M B M |
Chairman
Director Director Director |
Rental and Services Income made in the ordinary course of the business | – | 6,804,000 |
| Access Real Estate (Private) Limited |
Mr. S J S Perera
Mr. T T B C Fernando Mr. S D Perera Mr. S J S Perera |
Chairman
Director Director Director |
Rental and Services Income made in the ordinary course of the business | 2,772,000 | 2,482,600 |
| Access Natural Water (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez |
Chairman
Director Director |
Purchase of Mineral Water | (240,088) | (217,260) |
| Access Energy Solutions (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez |
Chairman
Director Director |
Rental and Service Income made in the ordinary course of business
Purchase of Electrical Equipment |
4,320,000
– |
1,800,000
(943,495) |
| Access International Projects (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. D D S Ferdinando Mr. T T B C Fernando Mr. R J S Gomez Mr. B P Obeysekara Mr. S D Perera |
Chairman
Director Director Director Director Director Director |
Rental and Service Income made in the Ordinary Course of Business | 892,320 | 1,539,780 |
| Access Realties 2 (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez Mr. S H S Mendis Mr. D A R Fernando Mr. S D Munasinghe |
Chairman
Director Director Director Director Director |
Loan Granted | 24,889,836 | – |
| Sathosa Motors PLC | |||||
| Access Natural Water (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez |
Chairman
Director Director |
Purchase of Mineral Water
Supply of Workshop Repair Services |
(119,167)
101,523 |
(93,135) |
| Access International (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua Mr. R J S Gomez |
Chairman
Director Director |
Supply of Workshop Repair Services and Sale of New Vehicles | 8,613,526 | 454,379 |
| Reprographics (Private) Limited |
Mr. S J S Perera
Mr. J C Joshua |
Chairman
Director |
Purchase of Toners for Printers | 54,080 | 100,168 |
| SML Frontier Automotive (Private) Limited |
Mr. S J S Perera
Mr. T D Gunasekara Mr. S G A Fernando Mr. S D Munasinghe Mr. S H S Mendis Ms. R S Fernando |
Chairman
Director Director Director Director Director |
Purchase of New Vehicle | (11,579,000) | – |
36.3 Terms and Conditions of Transactions with Related Parties
The sales to and purchases from related parties are made at terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.
This Note should be read in conjunction with Notes 23 and 34 to these Financial Statements.
36.4 Transactions with Key Management Personnel
LKAS 24 ‘Related Party Disclosures’, Key Management Personnel are those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Board of Directors (including Executive and Non-Executive Directors) as Key Management Personnel of the Company/Group have been classified Key Management Personnel.
| Group | Company | |||
| 2014 | 2013 | 2014 | 2013 | |
| Rs. | Rs. | Rs. | Rs. | |
| Compensation Paid to Key Management Personnel | ||||
| Short Term Employee Benefits | 41,602,800 | 24,063,700 | 32,910,000 | 18,480,000 |
| Post Employment Benefits | 1,920,000 | – | 1,920,000 | – |
| Total Compensation Paid to Key Management Personnel | 43,522,800 | 24,063,700 | 34,830,000 | 18,480,000 |
37. COMMITMENTS AND CONTINGENCIES
37.1 Company
There were no material commitments and contingent liabilities as at the reporting date except for the following:
Legal Cases Filed Against the Company
Case No: CHC706/10/MR
The case of money recovery by GTB Colombo Corporation (Private) Limited Vs. Three defendants, namely, 1st defendant: Asia Pacific Golf Course Limited, 2nd defendant: Access Engineering PLC and 3rd defendant: Urban Development Authority. The claim is made against the three defendants jointly and/or severally in the High Court of Western Province for non-payment of material supplied and invoiced by the Plaintiff to the 1st defendant.
Access Engineering PLC is contesting the case, since the material purportedly supplied by the Plaintiff was not received by the 2nd defendant and not invoiced to the 2nd defendant. Further trial is on 01st August 2014.
Case No: 25455/M
The case of money recovery by S A Hansi Nadesha Madhushani, S A Devindi Thakshila Madhushani, S A Nahara Oshadi Madhushani appearing through D A Anusha Manel Dissanayake against two Defendants namely, 1st Defendant: Nalaka Priyantha Rajapaksha and
2nd Defendant: Access Engineering PLC. The claim is made against the 1st and 2nd Defendants jointly and/or severally in the District Court of Anuradhapura claiming damages for the death of the father S A Imesh Madhushan by an accident which took place in Alankulama. 1st and 2nd Defendants are contesting the case since there is no negligence and/or any fault whatsoever on the part of the 2nd Defendant and/or the 1st Defendant who is an employee of the 2nd Defendant. Further trial is on 24th July 2014.
Case No: 25409/M
The case of money recovery by D A Anusha Manel Dissanayake against two Defendants namely, 1st Defendant: Nalaka Priyantha Rajapaksha and 2nd Defendant: Access Engineering PLC. The claim is made against two Defendants jointly and/or severally in the District Court of Anuradhapura claiming damages for her husband S.A. Imesh Madhushan by an accident which took place in Alankulama. 1st and 2nd Defendants are contesting the case since there is no negligence and/or any fault whatsoever on the part of the 2nd Defendant and/or the 1st Defendant who is an employee of the 2nd Defendant. Further trial is on 24th July 2014.
Case No: 370/13
The claim of money recovery by Hamsarathani widow of Sinnarasa Sivarasa and Janarthai, Priyangan, Divyapriya, Thanalakshan, Loshan who are minors appearing through Murukananthavel Sivarani against 5 Defendants namely, 1st Defendant: Aviva NDB Insurance,
2nd Defendant: G G Athukorala, 3rd Defendant: Dasanayake Ariyadasa, 4th Defendant: Access Engineering PLC and 5th Defendant: Central Engineering Consultancy Bureau. The claim is made against 5 Defendants in the District Court of Malakkam claiming compensation for Sinnarasa Sivdasa who died in the accident occurred at Street AB 16 known as Kankesanthurai Street with a Water Bowzer.
Plaintiffs claim compensation of Rs. 7,000,000/- from the 4th Defendant. 4th Defendant’s position is that the Plaint of the Plaintiff should be dismissed in limine as the Plaintiff is contrary to provisions of Sections 40 (d) and/or 46(2) of the CPC the Plaint of the Plaintiffs discloses a mis-joinder of parties and the Plaint of the Plaintiffs does not disclose any cause of action against the 4th Defendant. Judgment of the case will announce on 19th August 2014.
Case No: 28310/06/2013
The claim is made by Koralage Nilan Daminda Perera against 11 Defendants namely, 1st Defendant: Access Engineering PLC,
2nd Defendant: Sumal Joseph Sanjeeva Perera, 3rd Defendant: Ranjan John Suriyakumar Gomez, 4th Defendant: Joseph Christopher Joshua, 5th Defendant: Shivantha Harindra Sudaraka Mendis, 6th Defendant: Anton Rahona Fernando, 7th Defendant: Anton Greshan Fernando, 8th Defendant: Saumya Dharshana Munasinghe, 9th Defendant: Malik Kumar Ranasinghe, 10th Defendant: Niroshan Dakshina Gunaratne and 11th Defendant: Alex Indrajith Lovell, Case filed in Magistrate Court of Colombo for stop payment of a cheque. This case was withdrawn by the Plaintiff on 9th June 2014 based on a settlement arrived between the Plaintiff and the 1st Respondent.
Legal Cases Filed by the Company
Case No: 456/13/MR
The case of money recovery by Access Engineering PLC against 5 Defendants namely, 1st Defendant: V V K Karunaratne, 2nd Defendant: Udaya Karunaratne, 3rd Defendant: Susil Karunaratne, 4th Defendant: Mohan Karunarathna and 5th Defendant: T V T R Karunaratne.
The claim is made against 5 Defendants jointly and/or severally for the non-payment of money for the works undertaken by the Plaintiff under the sub contract to complete 0.00 to 6.77 Kilometers stretch of the Velanai-Kyres Road. Access Engineering PLC is proceeding with the case since the Plaintiff has completed the designated work allocated to the Plaintiff under the sub contract to the entire satisfaction of the Defendants and the Defendants have failed and neglected to pay the Plaintiff the sum of Rs. 30,829,466.51 though obliged to do so. Further trial is on 25th September 2014.
Case No: B506/14
The Accused has been charged for fraudulently encashing a cheque for Rs. 3,600,000/- of Access Engineering PLC. The letter of demand has been sent to recovery of said amount to Bank of Ceylon, Union Place branch. Further trial is on 5th November 2014.
Bank guarantees issued by the banks on behalf of the Company are as follows:
| Amount | |
| Rs. | |
| Bank | |
| Nations Trust Bank PLC | 234,330,491 |
| Hatton National Bank PLC | 1,043,408,085 |
| DFCC Bank | 199,624,963 |
| Sampath Bank PLC | 1,401,147,355 |
| Bank of Ceylon | 895,905,527 |
| Hongkong & Shanghai Banking Corporation | 181,956,107 |
| 3,956,372,528 |
37.2 Group
Sathosa Motors PLC
Labour Tribunal Cases against the Company
Ms. Sujatha Silva Vs. Sathosa Motors PLC [Ref. - Ct. 78 (02)]
An Ex- Employee Ms. Sujatha Silva, who stood retired upon her attaining the age of 55 years lodged a complaint to the Termination of Employment unit of the Commissioner of Labour alleging that she has been unlawfully terminated. The Commissioner of Labour dismissed the application of Ms. Sujatha Silva. Subsequently she filed a Special Case in the District Court Colombo bearing No. D.S.P./00137/09.
The Court delivered Order on 11th January 2011 in favour of Sathosa Motors PLC by dismissing the action with costs. The plaintiff has now filed an appeal and the lawyers received the notice of appeal on 27th January 2011. The lawyers have not received any notices from the Court thereafter.
Mr. W A Siriwardane Vs. Sathosa Motors PLC [Ref. - Ct. 78 (25)]
The above application was filed in the Labour Tribunal by an ex-employee Mr. W A Siriwardena who was a driver of the Company for terminating his services. He seeks reinstatement in service, monthly salary inclusive of the relevant allowances pending reinstatement in service. The Company filed answer on 25th June 2009. The Company is vehemently resisting the claim. The further trial is fixed for
29th May 2012. The trial is now concluded. The Tribunal has granted 6th May 2013 for filing of written submissions of both parties.
As the new Judge was sitting the tribunal on the 6th May 2013 the Court reserved the date of delivering the Order. The Order was delivered on 25th August 2013 and the application of Mr. W A. Siriwardane was dismissed. The lawyers have not been notified of any appeal.
As regards any gratuity dues, these would be payable according to law.
Other Cases against the Company
Customs Case No. POM/2280/2006
The Customs Department has initiated an inquiry regarding the payment of Duty on dividend paid to Itochu Corporation of Japan,
who is the exporter of vehicles to the Company.
Based on the above information and the current status of the above cases, the Company is not in a position to quantify the potential financial impact if any, as at the date of Statement of Financial Position.
Consumer Affairs Authority vs. Sathosa Motors PLC [Ref. - Cg. 78 (36)]
The above application was filed by Ms. C N Thilakarathne, Directress of the Consumer Affairs and Information complaining that the Company had published an advertisement in Lankadeepa Newspaper dated 2nd October 2013 in violation of Gazette Extraordinary No. 1687/45 of 7th January 2011 by omitting to mention the retail prices of the vehicles when advertising. The Court issued summons to appear in Court on 29th April 2014. On 29th April 2014 the Company pleaded not guilty and the trial has now been fixed.
Legal Cases filed by the Company
Default by Suriyawewa Pradeshiya Sabha - Purchase of SANY Motor Grader - Cg. 78 (34)
As per the notification that appeared in the ‘Daily News’ and ‘Dinamina’ of 9th May 2013 and the ‘Thinekaran’ the Pradeshiya Sabha of Sooriyawewa called for Bids for the supply of 1 No. Motor Grader;
Subsequent to complying with all conditions Sathosa Motors PLC and being awarded the contract, Sathosa Motors PLC took all necessary steps to import the said item and procured the same which has arrived in Sri Lanka and currently lying in our client’s yard, awaiting delivery. In the meantime, Sooriyawewa Pradeshiya Sabha cancelled the said order temporarily referring to an alleged petition; they have received from Mr. Sarath Ranawaka saying that Sathosa Motors PLC is supposed to have given the same item for a lesser amount. Sathosa Motors PLC suffered much loss and damage as Sooriyawewa Pradeshiya Sabha has awarded the contract to SML and SML having imported the item, the same is now lying in its yard. Action is to be filed for same. The claim of Sathosa Motors PLC is Rs. 19,083,171.02 plus further damages.
Recovery of Outstanding sums from the JEDB/Vehicle No. 32-4334 (Trooper JEEP) - Cg. 78 (33)
‘The Vehicle ISUZU Trooper 32-4334 had been repaired by Sathosa Motors PLC as per estimates provided and approved by Janatha Estates Development Board and after the repairs were effected, the same was inspected and checked by Mr. Nanayakkara, Technical Officer who certified the same. However, the above two invoices for Rs. 2,357,539.97 and Rs. 93,600/- totalling to Rs. 2,451,139.97 were due owing and payable. Out of this sum, only a sum of Rs. One Million had been paid during the period August/September 2011 (by way of three payments for Rs. 500,000/-, Rs. 250,000/- and further Rs. 250,000/=) leaving a balance sum of Rs. 1,451,139.97 due owing and payable by Janatha Estate Development Board. The Vehicle is still lying in Sathosa Motors PLC’s garage and takes up space and other expenses. A notice was sent to Janatha Estate Development Board that Sathosa Motors PLC will not be responsible for the security of the vehicle or any damage that may be caused accidentally. The sum outstanding is Rs. 951,139.97. Action to be filed for same. A provision of Rs. 840,913/- has been recognized on this regard.
38. EVENTS OCCURRING AFTER THE REPORTING PERIOD
There have been no material events occurring after the reporting date except for the following that would require adjustments to or disclosure in the Financial Statements.
38.1 Company
Pursuant to resolution adopted on 8th July 2014, the Board of Directors of the Company approved the payment of a final dividend of fifty cents (0.50 cents) per share for the year ended 31st March 2014.
As required by Section 56 (2) of the Companies Act No. 07 of 2007, the Board of Directors has confirmed that the Company satisfies the solvency test in accordance with Section 57 of the Companies Act No. 07 of 2007, and has obtained a certificate from auditors, prior to declaring a final dividend.
In accordance with the LKAS 10, Events after the reporting period, the final dividends has not been recognized as a liability in the Financial Statements as at 31st March 2014.
38.2 Group
Sathosa Motors PLC
Pursuant to a resolution adopted on 7th July 2014, the Board of Directors of the Company approved the payment of first and final dividend of five Rupees (Rs. 5/-) per share for the year ended 31st March 2014.
As required by Section 56 (2) of the Companies Act No. 07 of 2007, the Board of Directors has confirmed that the Company satisfies the solvency test in accordance with Section 57 of the Companies Act No. 07 of 2007, and has obtained a certificate from auditors, prior to declaring a first and final dividend.
In accordance with the LKAS 10, Events after the reporting period, the first and final dividends has not been recognized as a liability in the Financial Statements as at 31st March 2014.
39. CONSOLIDATION OF UNAUDITED SUBSIDIARY
The Consolidated Financial Statements have been prepared by amalgamating the Financial Statements of the Company and its subsidiaries, Sathosa Motors PLC and SML Frontier Automotive (Private) Limited (SMLF). However, the Fianncial Statements of SMLF which was taken for the consolidation purpose were unaudited for the year ended 31st March 2014. SMLF has been incorporated during current financial year and effective holding percentage of AEL in SMLF is 42.21%. Summarized Financial Statements of SMLF are given below. The amounts involved are not material to the Group.
Statement of Comprehensive Income
| For the year ended 31st March | 2014 |
| Rs. | |
| Revenue | 619,686,440 |
| Cost of Sales | (298,995,489) |
| Gross Profit | 320,690,951 |
| Other Income | 1,410,614 |
| Administrative Expenses | (127,654,386) |
| Selling and Distribution Expenses | (68,662,691) |
| Other Expenses | (21,935,014) |
| Net Finance Income | (50,502) |
| Profit Before Tax | 103,798,972 |
| Income Tax Expenses | (49,736,486) |
| Profit for the year | 54,062,486 |
Statement of Financial Position
| As at 31st March | 2014 |
| Rs. | |
| Assets | |
| Non-Current Assets | |
| Property, Plant and Equipment | 63,845,813 |
| Total Non-Current Assets | 63,845,813 |
| Current Assets | |
| Inventories | 137,043,422 |
| Trade and Other Receivables | 261,836,107 |
| Total Current Assets | 398,879,529 |
| Total Assets | 462,725,342 |
| Equity and Liabilities | |
| Stated Capital | 130,000,000 |
| Retained Earnings | 54,062,485 |
| Total Equity | 184,062,485 |
| Current Liabilities | |
| Trade and Other Payables | 219,795,127 |
| Income Tax Payable | 44,430,289 |
| Bank Overdraft | 14,437,441 |
| Total Current Liabilities | 278,662,857 |
| Total Equity and Liabilities | 462,725,342 |
40. FINANCIAL INSTRUMENTS
40.1 Financial Assets and Liabilities by Categories
Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.
| Financial Assets by Categories | Loans and Receivables (L&R) | Financial Assets at Fair Value Through Profit or Loss (FVTPL) |
Available-for-Sale Financial Assets (AFS) | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |
40.1.1 Group |
||||||
| Financial Instruments in Non-Current Assets |
||||||
| Other Non-Current Financial Assets | 37,290,000 | 570,236,228 | – | – | – | – |
| Financial Instruments in Current Assets |
||||||
| Trade and Other Receivables | 5,205,209,498 | 4,231,925,990 | – | – | – | – |
| Amount due from Related Parties | 135,029,994 | 129,279,057 | – | – | – | – |
| Other Current Financial Assets | 2,842,842,251 | 662,710,445 | – | – | – | – |
| Short Term Investments | – | – | 43,627,205 | 41,543,907 | – | – |
| Short Term Deposits | 1,038,974,827 | 1,265,437,130 | 100,757,430 | 100,133,269 | – | 4,999,999 |
| Cash and Cash Equivalents | 1,079,930,225 | 567,183,829 | – | – | 441,559,819 | 136,000,000 |
| Total | 10,339,276,795 | 7,426,772,679 | 144,384,635 | 141,677,176 | 441,559,819 | 140,999,999 |
The Group has not designated any financial assets upon initial recognition as Held-to Maturity Investments.
| Financial Liabilities by Categories | Financial Liabilities Measured at Amortized Cost |
|
| As at 31st March | 2014 | 2013 |
| Rs. | Rs. | |
| Financial Instruments in Non-Current Liabilities | ||
| Interest-Bearing Borrowings | 967,690 | 1,933,464 |
| Financial Instruments in Current Liabilities | ||
| Trade and Other Payables | 2,744,716,537 | 1,886,581,039 |
| Amount due from Related Parties | 27,277,919 | 22,393,072 |
| Other Financial Liabilities | 1,693,054,471 | 1,786,465,321 |
| Interest-Bearing Borrowings | 5,260,203 | 6,205,671 |
| Bank Overdraft | 20,393,157 | 12,081,867 |
| Total | 4,491,669,977 | 3,715,660,434 |
| Financial Assets by Categories | Loans and Receivables (L&R) | Financial Assets at Fair Value Through Profit or Loss (FVTPL) |
Available-for-Sale Financial Assets (AFS) | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |
40.1.2 Company |
||||||
| Financial Instruments in Non-Current Assets |
||||||
| Other Non-Current Financial Assets | – | 570,236,228 | – | – | – | – |
| Financial Instruments in Current Assets |
||||||
| Trade and Other Receivables | 4,202,463,160 | 3,869,002,494 | – | – | – | – |
| Amount due from Related Parties | 121,048,470 | 121,437,381 | – | – | – | – |
| Other Current Financial Assets | 2,840,624,043 | 660,874,175 | – | – | – | – |
| Short Term Investments | – | – | 43,627,205 | 41,543,907 | – | – |
| Short Term Deposits | 972,573,735 | 1,210,602,730 | 100,757,430 | 100,133,269 | – | – |
| Cash and Cash Equivalents | 1,040,494,797 | 498,211,615 | – | – | 440,000,000 | 80,000,000 |
| Total | 9,177,204,205 | 6,930,364,623 | 144,384,635 | 141,677,176 | 440,000,000 | 80,000,000 |
| Financial Liabilities by Categories | Financial Liabilities Measured at Amortized Cost |
|
| As at 31st March | 2014 | 2013 |
| Rs. | Rs. | |
| Financial Instruments in Non-Current Liabilities | ||
| Interest-Bearing Borrowings | – | – |
| Financial Instruments in Current Liabilities | ||
| Trade and Other Payables | 1,924,974,358 | 1,230,884,840 |
| Amount due from Related Parties | 36,676,247 | 22,604,032 |
| Other Financial Liabilities | 1,693,054,471 | 1,786,465,321 |
| Interest-Bearing Borrowings | 4,628,287 | 5,978,141 |
| Bank Overdraft | – | 12,081,867 |
| Total | 3,659,333,363 | 3,058,014,201 |
40.2 Fair Value hierarchy
The table below analyzes financial instruments carried at fair value, by valuation method.
The different levels have been defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
| Level 1 | Level 2 | Level 3 | Total | |
| Rs. | Rs. | Rs. | Rs. | |
| Group | ||||
| As at 31st March 2014 | ||||
| Fair value through P & L | 144,384,635 | – | – | 144,384,635 |
| Available-for-Sale | – | 441,559,819 | – | 441,559,819 |
| Loan and Receivables | 37,290,000 | 2,096,808,107 | 8,205,178,688 | 10,339,276,795 |
| As at 31st March 2013 | ||||
| Fair Value through P & L | 141,677,176 | – | – | 141,677,176 |
| Available-for-Sale | – | 140,999,999 | – | 140,999,999 |
| Loan and Receivables | – | 1,795,580,405 | 5,631,192,273 | 7,426,772,678 |
| Company | ||||
| As at 31st March 2014 | ||||
| Fair Value through P & L | 144,384,635 | – | – | 144,384,635 |
| Available-for-Sale | – | 440,000,000 | – | 440,000,000 |
| Loan and Receivables | – | 1,992,680,042 | 7,184,524,163 | 9,177,204,205 |
| As at 31st March 2013 | ||||
| Fair Value through P & L | 141,677,176 | – | – | 141,677,176 |
| Available-for-Sale | – | 80,000,000 | – | 80,000,000 |
| Loan and Receivables | – | 1,671,823,791 | 5,258,540,832 | 6,930,364,623 |
41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities, comprise loans and borrowings, and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations and to provide guarantees to support its operations. The Group has trade and other receivables, Other financial assets, short term investment and cash and short term deposits that arrive directly from its operations.
The Group is exposed to credit risk, liquidity risk and market risk.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarized below:
41.1 Credit Risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
41.1.1 Trade Receivables
Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management.
The requirement for an impairment is analyzed at each reporting date on an individual basis for major clients. Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actually incurred historical data.
41.1.2 Short Term Deposits and Cash and Cash Equivalents
Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with the Group’s policy.
The Group held short term deposits and cash and cash equivalents of Rs. 2,661 Mn at 31st March 2014 (2013 - Rs. 2,074 Mn) which represents its maximum credit exposure on these assets.
As at 31st March 2014, 96% (2013 - 93%) of the favourable balance of bank and financial institution was rated ‘A+’ or better for the Company.
| 2014 | 2013 | |||
| In Rs. | % | In Rs. | % | |
| Fitch Rating - Company | ||||
| AAA | 725,495 | 0 | 8,720,767 | 1 |
| AA+ | 1,919,676,034 | 96 | 1,562,515,829 | 93 |
| AA | 350,416 | 0 | 17,659,212 | 1 |
| AA- | 18,304,415 | 1 | 265,737 | 0 |
| A | 53,623,682 | 3 | 82,662,246 | 5 |
| Total | 1,992,680,042 | 100 | 1,671,823,791 | 100 |
41.2 Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal or stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
To measure and mitigate liquidity risk, Company closely monitor its net operating Cash Flow, maintained a level of cash and cash equivalents and secured committed funding facilities from financial institutions.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.
| Carrying Amount | Contractual Cash Flows |
6 Months of Less | 6 - 12 Months | More than 1 Year | |
| Non-Derivative Financial Liabilities - Group | |||||
| Trade and Other Payables | 2,744,716,537 | – | 2,744,716,537 | – | – |
| Amounts due to Related Parties | 27,277,919 | – | 27,277,919 | – | – |
| Other Financial Liabilities | 1,693,054,471 | – | – | 1,693,054,471 | – |
| Interest-Bearing Borrowings | 6,227,893 | – | 2,992,242 | 2,267,949 | 967,690 |
| Income Tax Payables | 148,981,055 | 148,981,055 | – | – | – |
| Dividend Payable | 4,459,040 | 4,459,040 | – | – | – |
| Non-Derivative Financial Liabilities - Company | |||||
| Trade and Other Payables | 1,924,974,358 | – | 1,924,974,358 | – | – |
| Amounts due to Related Parties | 36,676,247 | – | 36,676,247 | – | – |
| Other Financial Liabilities | 1,693,054,471 | – | – | 1,693,054,471 | – |
| Interest-Bearing Borrowings | 4,628,287 | – | 2,685,633 | 1,942,654 | – |
| Income Tax Payables | 71,235,762 | 71,235,762 | – | – | – |
| Dividend Payable | 3,122,311 | 3,122,311 | – | – | – |
41.3 Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk comprises of the following types of risk:
- i. Interest Rate Risk
- ii. Currency Risk
- iii. Commodity Price Risk
- iv. Equity Price Risk
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
Interest Rate Risk
At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments was:
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | |
| Fixed Rate Instruments | ||||
| Financial Assets | 1,517,824,646 | 1,406,437,129 | 1,412,573,735 | 1,290,602,730 |
| Financial Liabilities | 6,227,893 | 8,139,135 | 4,628,287 | 5,978,141 |
| Variable Rate Instruments | ||||
| Financial Liabilities | 20,393,157 | 12,081,867 | – | 12,081,867 |
41.4 Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains a strong financial position and healthy capital ratios in order to support its business and maximize shareholder value.
The Group manages its capital structure and makes adjustments to it, in the light of changes in economic conditions.
| Group | Company | |||
| As at 31st March | 2014 | 2013 | 2014 | 2013 |
| % | % | % | % | |
| Debt/Equity | 0.04 | 0.07 | 0.03 | 0.05 |
| Access Engineering PLC | ||||||||||
| Construction | Production of Construction-Related Material | Access Realties (Private) Limited | Sathosa Motors PLC | Group Total | ||||||
| For the year ended 31st March | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |
42. Segment Information |
||||||||||
| Segment Revenue | 12,723,250,437 | 10,810,844,738 | 2,648,863,495 | 2,360,192,684 | 186,655,738 | 169,823,721 | 3,054,001,702 | 2,310,756,122 | 18,612,771,372 | 15,651,617,265 |
| Inter-Segment Revenue | (821,954) | – | (2,183,801,822) | (1,723,666,693) | (41,644,408) | (27,680,328) | (11,996) | – | (2,226,280,180) | (1,751,347,021) |
| Revenue | 12,722,428,483 | 10,810,844,738 | 465,061,673 | 636,525,991 | 145,011,330 | 142,143,393 | 3,053,989,706 | 2,310,756,122 | 16,386,491,192 | 13,900,270,244 |
| Segment Results | 2,118,268,894 | 1,642,114,821 | 547,719,274 | 455,916,457 | 135,910,835 | 122,001,078 | 429,843,657 | 253,083,118 | 3,231,742,660 | 2,473,115,474 |
| Inter-Company Dividend | – | – | – | – | – | – | – | – | (35,057,909) | (31,296,957) |
| Consolidation Adjustment | – | – | – | – | – | – | – | – | (14,015,754) | (8,912,585) |
| Net Finance Income | 134,613,235 | 202,871,907 | – | – | 6,981,886 | 2,977,977 | (3,718,133) | 33,259,945 | 137,876,988 | 239,109,829 |
| Share of results of associate | – | – | – | – | – | – | – | – | 6,676,920 | – |
| Profit before Tax | 2,252,882,129 | 1,844,986,728 | 547,719,274 | 455,916,457 | 142,892,721 | 124,979,055 | 426,125,524 | 286,343,063 | 3,327,222,905 | 2,672,015,761 |
| Income Tax Expense | (276,993,717) | (171,969,407) | – | – | (6,845,708) | (4,293,534) | (140,292,531) | (80,589,777) | (424,131,958) | (256,852,717) |
| Consolidation Adjustment | – | – | – | – | – | – | – | – | (3,895,323) | (3,477,440) |
| Profit for the Period | 1,975,888,412 | 1,673,017,321 | 547,719,274 | 455,916,457 | 136,047,013 | 120,685,521 | 285,832,993 | 205,753,286 | 2,899,195,624 | 2,411,685,604 |
| Capital Expenditure | 471,483,308 | 1,114,879,991 | 8,378,083 | 82,835,103 | 109,380,580 | 7,217,785 | 119,983,354 | 35,550,250 | 709,225,325 | 1,240,483,129 |
| Depreciation and Amortisation | 471,333,472 | 365,000,079 | 80,541,139 | 67,827,754 | 1,047,696 | 648,739 | 23,985,360 | 7,903,997 | 576,907,667 | 441,380,569 |
| Consolidation Adjustment | – | – | – | – | – | – | – | – | 14,091,834 | 8,192,193 |
| 471,333,472 | 365,000,079 | 80,541,139 | 67,827,754 | 1,047,696 | 648,739 | 23,985,360 | 7,903,997 | 590,999,501 | 449,572,762 | |
| Access Engineering PLC | ||||||||||
| Construction | Production of Construction-Related Material | Access Realties (Private) Limited | Sathosa Motors PLC | Group Total | ||||||
| As at 31st March | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |
| Segment Assets | 17,631,328,119 | 14,651,400,566 | 683,309,602 | 777,242,906 | 3,258,083,515 | 3,125,162,076 | 1,989,897,935 | 1,443,378,976 | 23,562,619,171 | 19,997,184,524 |
| Investment in Subsidiary | – | – | – | – | – | – | – | – | (3,893,474,047) | (3,893,133,400) |
| Consolidation Adjustment | – | – | – | – | – | – | – | – | (22,130,852) | (8,115,098) |
| Revaluation of Leasehold Right | – | – | – | – | – | – | – | – | 114,332,390 | 114,332,390 |
| Goodwill | – | – | – | – | – | – | – | – | 432,588,101 | 432,588,101 |
| Share of Results of Associate | – | – | – | – | – | – | – | – | 6,676,920 | – |
| Inter-Segment - Elimination | – | – | – | – | – | – | – | – | (20,959,040) | (891,430) |
| 17,631,328,119 | 14,651,400,566 | 683,309,602 | 777,242,906 | 3,258,083,515 | 3,125,162,076 | 1,989,897,935 | 1,443,378,976 | 20,179,652,643 | 16,641,965,087 | |
| Segment Liabilities | 3,907,821,147 | 3,117,655,016 | 147,753,555 | 170,271,316 | 66,498,499 | 58,438,929 | 898,933,897 | 672,547,892 | 5,021,007,098 | 4,018,913,153 |
| Inter-Segment - Elimination | – | – | – | – | – | – | – | – | (20,959,040) | (891,429) |
| 3,907,821,147 | 3,117,655,016 | 147,753,555 | 170,271,316 | 66,498,499 | 58,438,929 | 898,933,897 | 672,547,892 | 5,000,048,058 | 4,018,021,724 | |