THE CLIMB - LRI

THE CLIMB

LANKA REALTY INVESTMENTS PLC | ANNUAL REPORT 2019/20

At Lanka Realty Investments, we are a highly diversified real estate entity

that has remained resilient amidst adversity.

Over the years we have created a positive, sustainable business impact on

all stakeholders including shareholders, customers, employees, business

partners and the Sri Lankan economy. Even as our journey grew steeper

and difficult, we continued on a path towards exponential growth and

achieved increased profitability during the year under review.

Today our optimism and capabilities have strengthened our workforce

to maintain consistency and continuity; consolidated by a solid business

strategy that ensures a resilient transition into a prosperous future.

Financial and Operational Highlights ............................................ 03

LRI Group Structure ........................................................................... 04

Chairman’s Statement ....................................................................... 06

Executive Directors’ Review .............................................................. 08

Board of Directors .............................................................................. 10

Management Discussion & Analysis ............................................... 13

Corporate Governance ...................................................................... 18

Annual Report of the Board of Directors

on the Affairs of the Company ....................................................... 20

Statement of Directors’ Responsibilities

for Financial Reporting ................................................................. 27

Related Party Transactions

Review Committee Report ........................................................... 28

Report of the Audit Committee ....................................................... 29

Risk Management .............................................................................. 30

Independent Auditor’s Report ......................................................... 32

Statement of Profit or Loss ............................................................... 35

Statement of Comprehensive Income ........................................... 36

Statement of Financial Position ...................................................... 37

Statement of Changes in Equity ...................................................... 39

Statement of Cash Flows .................................................................. 40

Notes to the Financial Statements .................................................. 42

Ten Year Summary ........................................................................... 104

Investor Information ........................................................................ 105

Corporate Information .................................................................... 107

Group Directory ............................................................................... 108

Notice of Annual General Meeting ................................................ 110

Form of Proxy .................................................................................... 111

CONTENTS

Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 3

FINANCIAL AND OPERATIONAL HIGHLIGHTS

2020 2019

LKR LKR

Earning Highlights and Ratios

Revenue 203,901,916 149,355,356

Gross Profit 47,907,783 60,299,735

Results from Operating Activities (108,540,549) (11,465,466)

Change in Fair Value of Investment Properties 1,037,759,904 48,096,667

Profit for the Year 609,885,409 3,639,304

Profit Attributable to Equity Holders of the Company 615,453,503 3,969,202

Basic/Diluted Earnings Per Share (EPS) 4.48/2.96 0.15/0.15

Return on Equity (ROE) 7.6% 0.2%

Return on Assets (ROA) 5.3% 0.2%

Financial Position Highlights and Ratios

Total Assets 11,593,959,372 2,058,529,875

Equity Attributable to Equity Holders of the Company 8,056,387,821 1,667,840,381

Total Debt 2,639,230,940 51,484,703

Total Equity 8,089,661,276 1,700,323,267

Number of Shares in Issue 193,481,296 44,301,443

Net Assets Per Share 41.64 37.65

Debt/Equity 0.33 0.03

Debt/Total Assets 0.23 0.03

Total Assets

2019 LKR 2 Bn

LKR 12 Bn

Revenue

Profit After Tax

Equity Attributable to

Equity Holders

2019 LKR 149 Mn

2019 LKR 4 Mn

2019 LKR 2 Bn

LKR 204 Mn

LKR 610 Mn

LKR 8 Bn

41.64

0.33

NET ASSETS

PER SHARE

DEBT/EQUITY

4

LRI GROUP STRUCTURE

LANKA REALTY

DEVELOPMENTS

(PVT) LTD

LANKA REALTY

AMBALANGODA

(PVT) LTD

AMTRAD

LTD

LANKA REALTY

LEISURE (PVT) LTD

L & A QUARRIES

(PVT) LTD

BASELINE

HOLDINGS

(PVT) LTD

100% 100% 80%

100% 100% 100%


ALEXANDRA

HOLDINGS (PVT) LTD

ALMOND TREES

(PVT) LTD

THUDELLA

HOLDINGS

(PVT) LTD

285

DARLEY ROAD

(PVT) LTD

OAK STREET

(PVT) LTD

ILOOK VILLA

(PVT) LTD

CROWN RESORTS

(PVT) LTD

MULBERRY

HOLDINGS

(PVT) LTD

100% 100% 100%

100%

100% 100% 100%

100%

LANKA REALTY INVESTMENTS PLC | Annual Report 2019/206

The total asset base grew from LKR 2.1 billion to LKR 11.6 billion

and the net asset base grew from LKR 1.7 billion to LKR 8.1 billion

during the year under review.

The key highlight for the year 2019/2020 has been the new

addition to the LRI Group by virtue of the share swap that was

carried out in August 2019. This successful acquisition and the

subsequent consolidation of six new subsidiaries have expanded

our current portfolio in the real estate and leisure industries.

The refurbishment of our commercial property on Darley Road,

Colombo 10, reached practical completion and has now been

rebranded as ‘HQ Colombo’. We are confident of attracting and

securing tenants of high repute given the enquiries we have

received. Lettings have now commenced.

Despite the Easter attacks in 2019, a resurgence in the tourism

industry was witnessed towards the latter part of the year. Whilst

the overall business climate remained muted during the last

quarter of 2019 due to the Presidential Elections in November

2019, the emergence of COVID-19 during March 2020 proved

to be an unprecedented event in LRI’s overall growth story.

However, the impact of this on LRI’s performance for the year

under review has been minimal.

Our construction material business represented by Amtrad Ltd,

specialises in the production of concrete blocks and paving

stones. The Company has stayed the course amidst a challenging

backdrop and demonstrated resilience due to the continuation

of existing projects and its aggressive marketing efforts despite

the decline in development activity following the immediate

aftermath of the Easter attacks in April 2019.

We have also reshaped many of our practices in all sectors by

taking into account the escalating global trend of focusing on

being environmental-friendly. Hardy and Archie have highlighted

the need to be sustainable. I am eager to see how they intend

on implementing this into the build process. This will allow us

to position our brand image as being sustainable towards the

environment but may additionally translate into operational

efficiencies, benefiting the performance throughout the Group.

Going forward, we cannot overlook the negative impact

of COVID-19 on most sectors and the challenging issues

that will accompany such a pandemic. Given the valuable

guidance provided by our Board and our astute and energetic

Management team, we are confident of sustaining our

business operations and successfully adapting to the changing

environment. Bold plans have been drawn up with a view

of pro-actively implementing same in the dynamic and fluid

environment that is emerging before us.

Our Group continues to receive due recognition on the Colombo

Stock Exchange by market participants with our share price

trading at close to Net Asset Value and our market capitalisation

being among the top 60 companies listed on the Colombo Stock

Exchange.

As the Chairman, I am pleased with the Management’s

performance and the ability to triumph against all odds and

I hope that you, our valued shareholders, share the same

perspective.

The Executive Directors’ Review and the Management Discussion

& Analysis will provide a crucial breakdown of the performance

of our operations and as to how the Group has been able to excel

during these times.

I wish to thank the Board of Directors for their continuous

commitment and guidance through this challenging trek. The

Management hasn’t failed to display extraordinary commitment

in order to reach the summit in our journey to the top. I would

also like to show appreciation towards our shareholders and

other stakeholders for their extended support and placing their

trust in the Group which is vital in realising our future aspiration

of being the No. 1 brand in the real estate space in Sri Lanka.

CHAIRMAN’SSTATEMENT

I am pleased to present the Annual Report and audited Financial Statements of Lanka Realty Investments PLC (LRI) for the Financial Year ending on the 31st March 2020, conveying a growing performance despite the many challenging and uncertain macro-economic factors faced by the country. Lanka Realty Investments PLC posted a LKR 610 million profit for the year compared with LKR 3.6 million reported in the previous financial year.

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Mohan Joseph Ratnayake

Chairman

31st August 2020


Lanka Realty Investments PLC (LRI) has demonstrated a

commendable performance for the year 2019/20 with the overall

asset base increasing from LKR 2.3 billion to LKR 9.9 billion and

the net asset base from LKR 1.9 billion to LKR 7.5 billion.

The Group posted a Profit After Tax of LKR 610 million despite

the disruptions and resulting challenging environment due to

the Easter attacks in April 2019 and the emergence of COVID-19

in March 2020. Despite these challenges, to date, Lanka Realty

Investments PLC has been able to remain resilient and agile and

has adapted successfully to overcome the external pressures that

have affected the business environment as a whole. We have

put in place the requisite systems, processes and structures to

better align our operations in order to achieve our objectives

and will remain focused in our mandate to become the largest

income generating asset backed company on the Colombo Stock

Exchange (CSE).

ACQUISITIONS

During the period under review, LRI achieved a symbolic and

historical milestone; the carrying out of an acquisition of six

companies in the real estate and leisure sector amounting to

LKR 5.6 billion. This acquisition which was carried out via a share

swap was the largest carried out historically on the Colombo

Stock Exchange. The acquisition of the six companies enabled

LRI to diversify its property portfolio further within the real

estate space. As a result, the Group now has crucial land banks

in Colombo, assets under planning, development and fully

operational.

LRI has moved up the CSE league tables and is the 60th in terms

of market capitalisation on the Colombo Stock Exchange.

SUBSIDIARY OVERVIEW

On the direct property side of things, we are pleased that HQ

Colombo, our commercial office reached practical completion.

HQ Colombo offers an advanced office product with a quality

service whilst maintaining the rent and the service charge at

affordable levels, thereby giving value back to the tenant. We

were receiving several active inquiries during 4Q 2019 and 1Q

2020 and were successful in closing out three lettings. Given the

quality of the space and pricing we are confident of reaching

100% occupancy within the next 12 to 18 months.

In terms of affordable housing, our residential apartment project,

Mulberry Residencies is progressing well. The superstructure

is 90% completed and we are confident of the success of this

project given the location in Maradana, affordable price point

and quality of our build.

To support our residential initiatives, we have obtained

Preliminary Planning Clearance (PPC) for our land in Thudella

and intend on commencing our land sales soon. We have

obtained the development permit for our property on Baseline

Road. Of note we have a total of 1,600 affordable residential units

which we intend on developing out in the next 5 years.

Amtrad Ltd, our building material manufacturing operation faced

many challenges during the year. Declines in revenue were seen

in the immediate aftermath of the Easter attacks and additionally

due to the intense market competition. The slow-down in

investment towards infrastructure development during the lead

up to the Presidential Elections in November 2019 added further

downward pressure to the overall revenue of Amtrad.

Despite the country facing a decline in overall tourist arrivals by

20% in comparison to 2018/2019, our leisure sector has been

buoyant for the most part of 2019 given the revival of the overall

tourism numbers towards the latter part of the year. A clear

growth was tangible across our entire leisure portfolio but we

were unable to sustain the momentum due to COVID-19 and its

external ramifications.

We will continue to build LRI’s goodwill amongst all stakeholders

by ensuring that we consistently develop high quality products,

deliver consistent service and strive to provide our shareholders

with attractive returns.

APPRECIATION

The unwavering support and guidance from both the Chairman

and Board of Directors of Lanka Realty Investments have enabled

us to weather the storm thus far. We wish to extend our sincere

appreciation to the employees of Lanka Realty Investments

PLC whose determination, diligence and passion have allowed

the Group to withstand and overcome the challenges that were

presented to us for the period under review. Our gratitude is

extended to our loyal clients, suppliers, business partners,

shareholders, and other stakeholders for their support and

loyalty throughout the year.

Hisham Jamaldeen

Executive Director

Archie Buckland Warman

Executive Director

31st August 2020

EXECUTIVE DIRECTORS MESSAGE

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BOARD OF DIRECTORS

Mr. Mohan Joseph Ratnayake

Chairman – Independent Non-Executive

Director

Mr. Mohamed Hisham Jamaldeen

Executive Director

Mr. Terence Charles Smith

Non-Executive Director

Mr. Saravanan Neelakandan

Independent Non-Executive Director

Mr. Archie Warman

Executive Director

Mr. Kudagamage Jayantha Pradeep


1 2

54

8

3

6

7 9

Mr. Ian Joseph McVeigh


Mr. Piers Morgan


Mr. Mohamed Firdouse Farook



1 Mr. Mohan Joseph Ratnayake

Chairman – Independent Non-Executive Director

Mr. Ratnayake is a Chartered Management Accountant by

profession and currently functions as the Managing Director

of Colonial Motors (Ceylon) Ltd. He serves as an Independent

Director of several companies and on audit committees. He

was the Chairman of the Committee that floated Sri Lanka’s first

Internationally Listed USD Bond for the expansion of Sri Lanka

Telecom and Mobitel, a leading telecom services provider in Sri

Lanka, successfully obtaining an international rating for Sri Lanka

Telecom when the sovereign had not been rated. Mr. Ratnayake

has an MBA and is a Fellow Member of the Chartered Institute of

Management Accountants, UK.

2 Mr. Mohamed Hisham Jamaldeen

Executive Director

Mr. Jamaldeen is a finance professional with over 20 years of

experience and a seasoned commercial property investor and

advisor. Mr. Jamaldeen serves as a Director of Hayleys PLC,

Talawakelle Tea Estates PLC, Haycarb PLC, Singer (Sri Lanka)

PLC, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC. He is the

Founding Managing Director of Steradian Capital Investments

(Pvt) Ltd and is responsible for financing, corporate structuring,

acquisitions and development. He has also been the Executive

Director of a number of real estate companies, focusing on

commercial property investment and development. He is a

Fellow of the Association of Certified Chartered Accountants,

UK and holds a degree in Engineering and Business from the

University of Warwick, UK.

3 Mr. Archie Warman

Executive Director

Mr. Warman is a qualified Chartered Surveyor. He has practiced

in commercial and residential real estate and has been involved

in investment brokerage, leasing and letting, valuations and

developments appraisals property management, landlord and

tenant law and asset management initially in the city and West

End of London at Hexell Wylie (now Savills). Mr. Warman was the

property Director at Newbridge Capital Investments Limited, a

property investments and development company, transacting

directly into UK commercial and London residential markets.

He is the Founder Managing Director of Steradian Capital

Investments (Pvt) Ltd.

Archie achieved a MA in Property valuation and Law at Cass

Business School (City University – London) and is a Member of

the Royal Institute of Chartered Surveyors.

4 Mr. Terence Charles Smith


Mr. Smith is a Fund Manager, former FTSE CEO and author

of bestselling book ‘Accounting for Growth’ with over four

decades working in international finance. He began his career at

Barclays Bank, before becoming a stockbroker at W Greenwell

& Co in London and a top rated bank analyst. Mr. Smith led the

management buy-out of the Stockbroker Collins Stewart, which

was floated on the London Stock Exchange, and later became

the Chairman of Collins Stewart and Chief Executive of the

interdealer broker Tullett Prebon. In 2010, Mr. Smith founded

Fundsmith, a fund management company that runs one of the

most popular global equity funds in the UK, with an AUM of over

£28 billion. In 2012, he was appointed a Member of the New

Zealand Order of Merit for services to New Zealand-UK relations.

5 Mr. Ian Joseph McVeigh


Mr. McVeigh commenced his career as a Stockbroker at

Sheppards and Chase and subsequently moved to UBS during

the period 1979-1998. Later, he took on the role of Fund Manager

between 1998-2003, at Schroder Investment Management, a

British multinational asset management company. He was

mandated to manage institutional and mutual funds including

the Schroder Income Fund. From 2004- 2015, he was a Senior

Fund Manager at Jupiter Asset Management, running the UK

Growth Fund with assets of circa £1 billion. From 2015-2017, he

was Head of Governance for Jupiter Asset Management.

He completed his tertiary education at Merton College, Oxford by

obtaining a Degree in Modern History.

6 Mr. Piers Morgan


Mr. Morgan is the Chairman and CEO of The Animal Magic Group

of Companies. A lifelong entrepreneur, Mr. Morgan was born in

London and educated at Harrow School, completing his higher

education qualified in Construction Engineering and Building

Management in 1968.

His early business enterprises, which started in 1969, were

quite diverse and included the logistics and leisure industries.

As a result of moving to the Netherlands in 1988 he became

involved in the toy industry which led to the foundation of

what has grown, over the past 30 years, to become The Animal

Magic Group, based in Hong Kong with extensive manufacturing

facilities in Southern China and sales across the globe.


BOARD OF DIRECTORS

In the early 90s, before Animal Magic had established its own

factories in China, Mr. Morgan manufactured some of his toy

products in Sri Lanka. This gave him some insight into the

Sri Lankan business environment and a profound love of its

natural beauty as well as great respect for the culture of its people.

7 Mr. Mohamed Firdouse Farook


Mr. Farook is an entrepreneur and investor with over 20

years of experience in diversified fields of business including

telecommunications, renewable energy, real estate

development, venture capital and investment promotion.

He served as a member of the Board of Directors at Sri Lanka

Telecom PLC (SLT) and as Director of other subsidiary companies

of SLT. He was the Founding Member and Director of Pan Asian

Power PLC. He also serves as a Board Member and Director

of several Sri Lankan, Malaysian and Singaporean companies

including Lake Side Property Developers (Pvt) Ltd, Omega Group

(Pvt) Ltd and Power Hub Green Energy (Pvt) Ltd.

He is an old boy of Royal College, Colombo.

8 Mr. Saravanan Neelakandan


Mr. Neelankandan is an Attorney-at-Law and a Barrister of

Lincoln’s Inn. He has been practicing in the legal profession for

over 14 years with a wide-ranging legal practice in the areas of

commercial law, corporate law, banking and finance law, foreign

investment, infrastructure projects and dispute resolution. He is

also a Co-Editor of the Bar Association Law Journal.

9 Mr. Kudagamage Jayantha Pradeep


Mr. Pradeep is the Financial Controller of Steradian Capital

Investments (Pvt) Ltd.

He holds a Bachelor of Science in Business Administration

(Special) Degree from the University of Sri Jayawardenepura,

and he is also an Associate Member of the Institute of Chartered

Accountants of Sri Lanka.


MANAGEMENT DISCUSSION& ANALYSIS

REAL ESTATE SEGMENT

In the years to come, we aspire to

facilitate innovative commercial

and residential spaces, all within

close proximity to the bustling

city, enabling customers from

every walk of life to experience

convenience in an urban setting.

LEISURE SEGMENT

Our hotels and villas are nestled

along the coastal line and the city,

with properties that embrace a

combination of contemporary

architecture and design, allowing

our customers to experience

the essence of true Sri Lankan

hospitality.

MANUFACTURING SEGMENT

At Amtrad Limited, we are

Sri Lanka’s oldest manufacturer

of concrete blocks and paving

stones with a strong focus on

sustainable innovation and eco-

friendliness. We are committed

to eliminate wasteful processes

and cater to growing production

demands, whilst securing industry

growth and leading infrastructure

development.

REAL ESTATE SEGMENT

HQ Colombo

HQ Colombo is a state of the art commercial space owned by

our real estate subsidiary, Lanka Realty Developments (LRD). The

property consists of 8 floors and a floor area of approximately

78,133 Sq.ft. HQ Colombo is strategically located in the heart

of the Central Business District in Colombo 10 allowing easy

access to a variety of commercial facilities such as; banks, public

transportation facilities and other commercial establishments.

A successful refurbishment was carried out during the year under

review and has positioned the commercial office as a highly

modernised commercial space available in Colombo 10. The

completion of the building has allowed the LRI staff and a few

other commercial establishments to occupy the premises sooner

than we expected giving us greater advantage in attracting more

tenants. The office has achieved an occupancy of 12% during the

year under review by successfully closing out three lettings with a

further three active inquiries currently being pursued.


The economic downturn that Sri Lanka experienced since

April 2019 due to the Easter Sunday bombings and the

general slowdown in the business environment has dissuaded

institutions from expanding their current business and seeking

out additional office space. This resulted in a tangible slow-down

in demand for commercial office space. Given this change in

industry dynamic, our renting/lettings expectations for the year

were curtailed, although we are pleased with the traction that

we have received in this regard thus far. We are cognisant of the

need by certain organisations that seek to downsize and has

expressed their requirement for work space that is both modern

and cost effective. We feel this segment will grow significantly

in the medium to long term. In order to cater to these changing

requirements we have aligned our marketing efforts accordingly.

Mulberry Residencies

Mulberry Residencies is a residential apartment project of LRI,

located at the core of Colombo 09. The project comprises 121

units across three 15-floor towers. The target market of the

property is towards the middle-income sector through the

provision of two to three bedroom affordable apartment units.

Other features of the property will include a rooftop gymnasium,

two swimming pools and a landscaped rooftop garden.

Currently 12 floors of all three towers have been fully completed;

however, delays in construction were caused following the

immediate aftermath of the Easter attacks and due to the lock-

down in the country that took place in March 2020. Strict health

and safety measures have been adopted on-site to adhere

to COVID-19 health regulations. The project is progressing as

planned and is expected to be completed by end December

2021. Pre-sales have commenced and aggressive marketing and

promotional campaigns are underway.


Mulberry Residencies is a residential apartment

project of LRI, located at the core of Colombo

09. The project comprises 121 units across three

15-floor towers.


Darley Road

This prime property comprises 214 perches and is located

on Darley Road, within close proximity to leading schools,

hotels, supermarkets and commercial hubs. Approval for the

development of 1.1 million Sq.ft. has been obtained.

We have clear plans on unlocking the value of this asset in the

coming year.

Baseline Holdings

The property comprises 230 perches and is situated on a wide 40

foot lane on Baseline Road, Colombo 09. The project proposal

includes a 42-floor tower consisting of 410 residential apartment

units ranging from two to three bedrooms. The project is

currently at planning stage.

Thudella Holdings

This residential real estate project compromises 780 perches

plot, located in Ja-Ela along the Pamunugama -Thudella main

road. The proposed plan for the project is to develop residential

units consisting of a combination of standalone housing units

and apartment units. Currently the project is in the stage of

receiving the subdivision approvals.

MANUFACTURING SEGMENT

Amtrad Limited

LRI’s manufacturing line, Amtrad Limited which has been in

operation since 1980 is Sri Lanka’s oldest manufacturer of

concrete blocks and paving stones and has been a household

name since its incorporation.

The Company has been continuously focusing on innovative

and sustainable production practices in order to be in line with

the growing trend of being eco-friendly as well as mitigating

and eliminating wasteful processes. During the year, production

was carried out by utilising all three plants in order to avoid any

shortfalls in supply and cater to the growing production demand.

However due to the Easter Sunday attacks and the COVID-19

pandemic, the Sri Lankan Government’s construction drive had

eased, resulting in downward pressure on the overall revenues

of Amtrad.

With the new Government in place and the expected thrust

towards infrastructure development, Amtrad is ideally positioned

to take advantage of the envisaged growth in the industry.


LEISURE SEGMENT

W15 Weligama

W15 is a 10-room luxury beachfront boutique hotel and beach

club nestled along the acclaimed coastal line of Weligama and

features a 13-metre long bar and an open-air restaurant. The

resort had experienced volatility in its occupancies during the

period under review, firstly due to the Easter Sunday attacks and

subsequently due to the emergence of COVID-19. Despite the

downward pressure due to external factors, occupancy numbers

stood at 65% for the period under review. The hotel was able to

take advantage of the revival in the tourism sector in December

2019; however the outbreak of the COVID-19 Pandemic since

March 2020 has countered the positive impact and caused

a reduction in turnover during 1Q 2020. W15 Weligama is

experiencing clear signs of a pick-up given the promotional

campaigns and deep-discounts that have been offered to locals.

W15 Escape Ahangama

W15 Escape is a 10-room boutique villa and is perched amongst

the wilderness of the coastal town, Ahangama. The property

embraces a combination of Asian design, Scandinavian thinking

and Western standards. The villa consists of a blend of superior

rooms, garden suites and a well- appointed family suite. The

villa’s attraction being its contemporary design, seclusion and

peaceful environment has its select group of discerning guests

who experience true Sri Lankan hospitality in this luxury abode.


W15 is a 10-room luxury beachfront boutique

hotel and beach club nestled along the

acclaimed coastal line of Weligama and features

a 13-metre long bar and an open-air restaurant.

AV15 Colombo

This acquisition during the period under review resulted in the

addition of six modern townhouses in the heart of Colombo.

The inclusion of AV15 further increased our room count by 24,

boosting our revenue streams. Villas have been converted into

apartments with individual rooms and shared common areas.

Bookings can be made for an entire villa or individual rooms,

depending on the customers’ requirement. However this

property was significantly impacted by both the Easter Sunday

attacks and the COVID-19 pandemic. We are currently utilising

this time to carry out a refurbishment of the villas in order to

upgrade our product and service offering.


Lanka Realty Ambalangoda (Pvt) Ltd (LRA)

LRA is a property subsidiary that comprises 270-perch property

in Ambalangoda on a 50-year lease. The property

is strategically located on the renowned Southern Coast of

Sri Lanka within minutes’ drive from the historical city of Galle.

This area is home to many beach resorts and villas making it an

ideal location for the venture. The proposed project includes

a 50-room hotel, restaurant and bar. Conceptual plans have

been finalised and project development is expected take place

in 4Q 2020.

Lanka Realty Leisure (Pvt) Ltd (LRL)

LRL consists of a 7-acre property in Yala on a 99-year lease.

We aim to develop 30 tented lodges within the world-renowned

Yala National Park. The National Park has been ranked the

second largest national sanctuary in Sri Lanka and is a featured

attraction amongst both foreign tourists and locals.

LRL consists of a 7-acre property in Yala on a 99-year lease. We aim to develop 30 tented lodges within the world-

renowned Yala National Park. The national park has been ranked the second largest national sanctuary in Sri

Lanka and is a featured attraction amongst both foreign tourists and locals.


CORPORATE GOVERNANCE

The Company aspires to adhere to the best practices in Corporate

Governance by ensuring greater transparency, business integrity,

professionalism and ethical values in the best interest of all

stakeholders.

BOARD OF DIRECTORS

The Board is the highest authority and it provides leadership

to achieve the Company’s strategic goals and compliance

with generally accepted corporate governance practices, the

requirements under the Listing Rules of the Colombo Stock

Exchange and the Code of Best Practice issued by the Institute of

Chartered Accountants of Sri Lanka.

COMPOSITION OF THE BOARD

The Board collectively possesses a diverse range of skills and

competencies, including entrepreneurship, financial, legal,

marketing and property development. They are all business leaders

and professionals of high repute. Their profiles are given on

pages 10 to 12.

As at the reporting date, the Board comprised of two (02) Executive

and seven (07) Non-Executive Directors.

INDEPENDENCE OF DIRECTORS

Each Non-Executive Director has submitted a Declaration of his

independence or non independence as required under the Listing

Rules of the Colombo Stock Exchange.

Based on the declarations so submitted by the Non-Executive

Directors, the Board has determined that three (03) Non-Executive

Directors, the Chairman Mr. R M M J Ratnayake and Directors, Mr.

Saravanan Neelakandan and Mr. Mohamed Firdouse Farook are

‘Independent’ as per the criteria set out in the Listing Rules of the

Colombo Stock Exchange.

CHAIRMAN AND EXECUTIVE DIRECTORS

The roles of the Chairman and Executive Directors are separate

with a clear distinction of responsibilities, which ensures balance of

power and authority.

Mr. R M M J Ratnayake who is an Independent Non-Executive

Director is the Chairman of the Board of Directors and Mr. M H

Jamaldeen and Mr. A J B Warman function as Executive Directors.

BOARD MEETINGS

The Board meets formally every quarter as a matter of routine. Ad

hoc meetings are held as and when necessary to maintain regular

communication to discuss relevant business issues and any other

matter directed to the Board which can be resolved by circular

resolution, is decided by Resolutions in writing. Seven days prior

to every meeting the Directors are provided with the relevant

information and background material relevant to the agenda.

The Board’s functions include the assessment of the adequacy

and effectiveness of internal controls, compliance with applicable

laws and regulations, review of management and operational

information, adoption of annual and interim accounts before they

are published, review of exposure to key business risks, strategic

direction of business, approval of annual budgets, monitoring

progress towards achieving the budgets, approvals relating to key

appointments, sanctioning major capital expenditure etc.

The attendance of the Directors at Board Meetings held during the

year was as follows :

Name of Director Status Attendance

Mr. Ratnayake Mudiyanselage Mohan

Joseph Ratnayake *

NED/IND 5/5

Mr. Terence Charles Smith NED 4/5

Mr. Ian Joseph McVeigh NED 5/5

Mr. Mohamed Hisham Jamaldeen ED 5/5

Mr. Archie James Buckland Warman ED 5/5

Mr. Saravanan Neelakandan NED/IND 5/5

Mr. Mohamed Firdouse Farook NED/IND 5/5

Mr. Kudagamage Jayantha Pradeep NED 5/5

Mr. Piers Morgan NED 5/5

NED - Non-Executive Director

ED - Executive Director

IND - Independent Director

* Chairman

APPOINTMENT OF DIRECTORS/RE-ELECTION OF

DIRECTORS/APPOINTMENT OF DIRECTORS OVER 70 YEARS

OF AGE

The Board collectively decides on the appointment of Directors. The

Company’s Articles of Association requires any Director appointed

during the year to hold office until the next Annual General Meeting,

at which he retires and seeks re-election by the shareholders. One

third of Directors other than the Chairman and Executive Directors

retire by rotation at each Annual General Meeting and if eligible seek

re-election by the shareholders.

Directors over 70 years of age shall be appointed/re-appointed by

the shareholders only.

BOARD SUB COMMITTEES

The Board of Directors has formed three Sub Committees in

compliance with the Listing Rules of the Colombo Stock Exchange.

Current composition of Board Sub Committees is set out in the

Annual Report of the Board of Directors appearing on pages 23 and

24. As required by the Listing Rules, the Related Party Transactions

Review Committee Report and the Report of the Audit Committee

appear on pages 28 and 29 respectively, whilst the Remuneration

Policy appears on page 23.


Meetings of Board Sub Committees

The Board Audit Committee and Related Party Transactions Review

Committee meet quarterly with provision to schedule additional

meetings if required. The Remuneration Committee meets as and

when necessary.

The attendance at Board Sub Committee Meetings held during the

year was as follows:

Audit Committee



Joseph Ratnayake *

NED/IND 4/4


Mr. Kudagamage Jayantha Pradeep NED 4/4



Related Party Transactions Review Committee



Joseph Ratnayake *

NED/IND 6/6


Mr. Mohamed Firdouse Farook NED/IND 5/6



COMPANY SECRETARY

P W Corporate Secretarial (Pvt) Ltd acts as the Company Secretary.

The Company Secretary maintains minutes of all Board, Audit

Committee, Related Party Transactions Review Committee,

Remuneration Committee, meetings and attends to Shareholder

related matters. The Company Secretary assists in ensuring the

Board procedures are followed.

The Company Secretary is also responsible for timely circulation

of information and papers related to Board and Sub - Committee

meetings and advice on matters relating to corporate governance.

Board procedures, rules and regulations. All Directors have access to

the advice and services of the Company Secretary.

INTERNAL CONTROLS

The Board is responsible for the Company’s internal controls. In this

respect controls are established for safeguarding the Company’s

assets, making available accurate and timely information and

imposing greater discipline on decision making. The process is

strengthened by regular review by the Audit Committee on internal

controls and procedures in the areas of finance, operations, human

resources, and relevant legal and regulatory compliance.

COMPLIANCE WITH LAWS AND REGULATIONS

All necessary steps have been taken by the Board and the

Management to ensure compliance with all relevant laws and

regulations. The services of Lawyers, Auditors and other Consultants

are obtained whenever it is necessary, to provide assurance to the

Board in this respect.

GOING CONCERN

The Directors have reviewed the Company’s budgets, capital

expenditure requirements and future cash flows and are satisfied

that the Company has sufficient resources to continue in operations

for the foreseeable future. Therefore, the Going concern principle

has been adopted in the preparation of the Financial Statements.

FINANCIAL REPORTING

The Board aims to provide and present a balanced assessment

of the Company’s position and prospects in compliance with the

Sri Lanka Accounting Standards (LKAS / SLFRS) and the relevant

Statutes and has established formal and transparent processes for

financial reporting and internal controls.

The Statement of Directors’ Responsibilities for the Financial

Reporting is given on page 27 of this Report.

CORPORATE DISCLOSURES AND SHAREHOLDER

RELATIONSHIP

The Company is committed to providing timely and accurate

disclosure of all price sensitive information, financial results and

significant developments to all shareholders, the Colombo Stock

Exchange and where necessary, to the general public.

Shareholders are provided with the Annual Report and, the

Company disseminates to the market, Interim Financial Statements

in accordance with the Listing Rules of the Colombo Stock

Exchange.

The Annual General Meeting provides a platform for shareholders to

discuss and seek clarifications on the activities of the Company and

its subsidiaries.

COMPLIANCE

The Company has complied with Rule 7.10 of the Listing Rules of the

Colombo Stock Exchange on ‘Corporate Governance’.

By Order of the Board

Lanka Realty Investments PLC

P W Corporate Secretarial (Pvt) Ltd

Director / Secretaries

31st August 2020


ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY

The Board of Directors of Lanka Realty Investments PLC has

pleasure in presenting to the shareholders their Annual Report

on the affairs of the Company together with the Audited Financial

Statements of the Company and the Consolidated Financial

Statements of the Company and its subsidiaries for the financial

year ended 31st March 2020, conforming to all relevant statutory

requirements.

This Report provides the information as required by the

Companies Act, No.07 of 2007, Listing Rules of the Colombo

Stock Exchange and the recommended best practices.

GENERAL

Lanka Realty Investments PLC (the Company) was incorporated

as a limited liability company under the name ‘Asian Cotton

Mills Limited’ on 29th November 1967 under the Companies

Ordinance No. 51 of 1938. The Company was re-registered under

the new Companies Act No. 07 of 2007 as Asian Cotton Mills PLC

on 16th April 2008, under Company No. PQ 139.

The name of the Company was changed to ‘Ascot Holdings PLC’

on 16th October 2008 and changed as ‘Lanka Realty Investments

PLC’ on 19th September 2018.

The Registered Office of the Company is situated at 1st Floor, HQ

Colombo, 464A, T B Jayah Mawatha Colombo 10.

The ordinary shares of the Company are listed on the Main Board

of the Colombo Stock Exchange.

PRINCIPAL ACTIVITIES OF THE COMPANY AND ITS

SUBSIDIARIES

Lanka Realty Investments PLC, the Group’s holding company,

manages a portfolio of holdings in property development,

commercial property, affordable housing, manufacturing,

tourism and leisure, which together constitute the LRI Group.

Lanka Realty Investments PLC held the following investments as

at the end of the year under review:*

(i) 100% of the issued shares of Lanka Realty Developments

(Pvt) Ltd which is engaged in the business of commercial

property development.**

(ii) 80% of the issued shares of Amtrad Limited which is engaged

in the manufacturing and selling of cement/concrete

building blocks and paving stones.

(iii) 100% of the issued shares of L & A Quarries (Pvt) Ltd which

was in the business of operating crusher plants.

L & A Quarries (Pvt) Ltd did not operate any crusher plants

during the year under review.

(iv) 100% of the issued shares of Lanka Realty Leisure (Pvt) Ltd.

This Company holds leasehold rights of a land in Yala, which

is to be developed as a Hotel property.

(v) Lanka Realty Ambalangoda (Pvt) Ltd which holds leasehold

rights of a property in Ambalangoda to be developed as a

Hotel property.

(vi) 100% of the issued shares of Baseline Holdings (Pvt) Ltd

which is engaged in the business of residential property

development in Colombo 09.

(vii) 100% of the issue shares of Alexandra Holdings (Pvt) Ltd

which owns six townhouses and which have been converted

into villas.

(viii) 100% of the issued shares of 285 Darley Road (Pvt) Ltd



(ix) 100% of the issued shares of Mulberry Holdings (Pvt) Ltd



(x) 100% of the issued shares of Thudella Holdings (Pvt) Ltd


development in Ja-Ela.

(xi) 100% of the issued shares of Almond Trees (Pvt) Ltd which

owns a property each in Weligama and Ahangama operated

as leisure properties.

SHARE SWAP RESULTING IN A PRIVATE PLACEMENT

Consequent to the approval granted by the shareholders

at the Extraordinary General Meeting held on 13th August

2019, Lanka Realty Investments PLC, acquired six (06) private

companies namely, Baseline Holdings (Pvt) Ltd, Alexandara

Holdings (Pvt) Ltd, 285 Darley Road (Pvt) Ltd, Mulberry Holdings

(Pvt) Ltd, Thudella Holdings (Pvt) Ltd and Almond Trees (Pvt) Ltd

which were engaged in the business of commercial property,

affordable housing, tourism and leisure for a total consideration

of LKR 5,630,035,257/- via a Share Swap resulting in a Private

Placement.


Accordingly, a total of 149,179,853 ordinary voting shares of the

Company were issued to the shareholders of the said six (06)

private companies, at an issue price of LKR 37/52 per share.

RIGHTS ISSUE

At an Extraordinary General Meeting of the Company held on

12th March 2020 the shareholders approved a Rights Issue of

Shares in the proportion of One (01) new ordinary voting share

for every Two (02) ordinary voting shares held as at the relevant

date at an issue price of LKR 37/50 per share.

Resulting from the lockdown and the disruption to the postal

services in the country, the Rights Issue dates were extended and

it closed on 22nd May 2020.

A totality of 17,889,132 shares were issued in the Rights Issue and

the amount raised was LKR 670,842,450/-.

REVIEW OF BUSINESS

The Chairman’s Message on pages 6 to 7 and the Executive

Directors’ Review on pages 8 to 9 provide an overview of

business performance of the Company and its subsidiaries

(hereinafter sometimes collectively referred to as the Group), and

future developments. These Reports together with the Financial

Statements, reflect the state of affairs of the Company and its

subsidiary companies.

The segment-wise contribution to Group Results, Assets and

Liabilities are provided in Note 41 to the Financial Statements on

pages 102 and 103.

FINANCIAL STATEMENTS

The Financial Statements of the Company and the Consolidated

Financial Statements of the Group have been prepared in

accordance with the Sri Lanka Accounting Standards (SLFRS)

laid down by the Institute of Chartered Accountants of Sri Lanka

and comply with the requirements of the Companies Act,

No.07 of 2007.

The aforesaid Financial Statements, duly signed by the Head

of Finance and Planning, two Directors on behalf of the Board

and the Auditors are included in this Annual Report and form an

integral part of this Annual Report of the Board of Directors.

AUDITORS’ REPORT

The Report of the Auditors on the Group Financial Statements of

the Company is attached with the Financial Statements.

ACCOUNTING POLICIES AND CHANGES DURING THE YEAR

The accounting policies adopted in the preparation of the

Financial Statements are given on pages 44 to 56 . There were

no significant changes to the accounting policies used by the

Company during the year under review vis-à-vis those used in the

previous year, except as referred to in Note 4.21 to the Financial

Statements.

DIRECTORS RESPONSIBILITIES FOR FINANCIAL

REPORTING

The Directors are responsible for the preparation of the Financial

Statements of the Company and the Group, which reflect a true

and fair view of the state of affairs.

The Directors are of the view that the Statement of Income,

Statement of Financial Position, Statement of Changes in

Equity, Cash Flow Statement and Notes to Financial Statements

appearing on pages 35 to 103 have been prepared in conformity

with the requirements of the Sri Lanka Accounting Standards,

Companies Act, No.07 of 2007, Sri Lanka Accounting and Auditing

Standards Act, No. 15 of 1995 and the amendments thereto and

the Listing Rules of the Colombo Stock Exchange.

The Statement of Director Responsibility for Financial Reporting

is given on page 27.

NET REVENUE

The net revenue of the Group during the year under review was

LKR 203.90 Mn (LKR 149.36 Mn in the year 2018/19).

RESULTS AND APPROPRIATIONS

Performance of the Group and the Company and Transfers

to Reserves

The Net Profit/(Loss) before Tax of the Group and the Company

amounted to LKR 762.33 Mn and (LKR 28.31 Mn) respectively

in the year under review [LKR 15.54 Mn and (LKR 10.91 Mn)

respectively in 2018/19].

The Net Profit/(Loss) after Tax of the Group and the Company

amounted to LKR 609.89 Mn and (LKR 28.34 Mn) respectively


in the year under review (LKR 3.64 Mn and LKR 11.06 Mn

respectively in 2018/19).

Details of Appropriations are given in the Statement of Changes

in Equity on page 39.

Dividends on ordinary shares

The Directors do not recommend the payment of a dividend for

the year under review.

Reserves

A summary of the Group’s Reserves is given in Note 25 to the

Financial Statements on page 84.

Property, Plant and Equipment and Significant Changes in the

Company’s and its subsidiaries’ fixed assets and market value of

land is given in Note 15 to the financial statements.

Land Holdings

The Company does not own any land or investment property.

Land holdings and investment property of subsidiary companies

are set out in Notes 15 and 17 to the Financial Statements.

The immovable property held by the subsidiary companies were

revalued as at 31st March 2020 by an Independent Valuer and

they are recorded at their market values as set out in Note 17 to

the Financial Statements.

Stated Capital

The Stated Capital of the Company as at 31st March 2020 was

LKR 6,380,094,108/- represented by 193,481,296 Ordinary Shares.

(LKR 785,425,237/- represented by 44,301,443 Ordinary Shares as

at 31st March 2019)

SHARE INFORMATION

Distribution Schedule of shareholdings/other information

Information on the distribution of shareholding and the

respective percentages analysis of shareholders and other

applicable information are given on pages 105 to 106 under

Investor Information.

Earnings, Dividends, Net Assets and Market Value of Shares

Information relating to earnings, dividend, net assets and market

value per share are given on page 104.

Major Shareholders

Information on the twenty largest shareholders of the Company

are given on page 105 under Investor Information.

Float adjusted market capitalisation and Public Holding

Information on float adjusted market capitalisation and public

holding in terms of the Listing Rules is given on page 106 under

Investor Information.

The Company has not maintained the minimum public holding

percentage as stipulated by Rule 7.13.1(a) of the Listing Rules.

One of the objectives of the Rights Issue of Shares which

commenced on 16th March 2020 was to increase the minimum

public holding of the Company in order to comply with the

Listing Rules of the Colombo Stock Exchange. However, in view

of the market conditions that prevailed in the country and

globally, due to the Covid-19 pandemic, the level of subscription

by public shareholders did not reach expected levels and on

completion of the Rights Issue, the public holding increased from

7.718% to 10.690% only.

In the circumstances, further steps to be taken by the Company

to comply with Rule 7.13.1 are currently under consideration by

the Board of Directors.

Information on the Directors of the Company and the

Group as at 31st March 2020

The Board of Directors of the Company as at 31st March 2020

consisted of nine (9) Directors and their brief Profiles appear on

pages 10 to 12.

Names of the Directors who held office as at 31st March 2020 are

given below:

Name of Director

Exe

cuti

ve

No

n-E

xecu

tive

Ind

ep

en

de

nt

No

n-E

xecu

tive

Mr. Ratnayake Mudiyanselage

Mohan Joseph Ratnayake

Mr. Terence Charles Smith

Mr. Ian Joseph McVeigh

Mr. Mohamed Hisham Jamaldeen

Mr. Archie James Buckland Warman




Mr. Piers Morgan



Changes in the Board of Directors during the year

New Appointments during the year

There were no changes in the directorate during the year under

review.

Resignations during the year

There were no resignations during the year.

Recommendation for re-election of Directors

who retire by rotation

Messrs Terence Charles Smith and Kudagamage Jayantha

Pradeep retire by rotation in terms of Articles 83 and 84 of the

Articles of Association and being eligible are recommended by

the Board for re-election.

Appointment of Directors who are over 70 years of age

Mr Piers Morgan who is 73 years of age and vacates office on

completion of one year since his last appointment in terms

of Section 210(2)(b) of the Companies Act No.7 of 2007 read

together with section 211, is recommended by the Board, for

appointment as a Director under Section 211 of the Companies

Act, specially declaring that the age limit stipulated in Section

210 of the Companies Act shall not apply to the said Director.

Directors of the subsidiaries

as at 31st March 2020

Names of the Directors of all subsidiaries as at 31st March 2020

are given on pages 108 to 109.

Board Meetings

Five (05) Board Meetings of the Company were held during

the year under review and the Directors’ attendance at those

Meetings are set out on page 18.

Directors Shareholding in the Company

The information pertaining to the Directors’ Shareholding in the

Company is given on page 106.

Directors’ Remuneration

The Directors’ remuneration is disclosed under key management

personnel compensation in Note 34.6 to the Financial

Statements on page 96.

CORPORATE GOVERNANCE

The Directors place a high degree of importance on sound

corporate governance practices and are committed to

the highest standards of corporate governance within the

organisation.

The Directors confirm that, the Company is in compliance with

the Corporate Governance Rules contained in the Listing Rules of

the Colombo Stock Exchange.

COMPOSITION OF THE BOARD

The Board of Lanka Realty Investments PLC comprised nine (09)

members as at the end of the financial year, seven (07) of whom

are Non Executive Directors.

INDEPENDENCE OF DIRECTORS

Based on the declarations submitted by the Non-Executive

Directors, the Board has determined that three (03) Non-

Executive Directors, namely, Mr. R M M J Ratnayake, who serves

as the Chairman, Mr. Saravanan Neelakandan and Mr Mohamed

Firdouse Farook are ‘Independent’ as per the criteria set out in


BOARD SUB COMMITTEES

The Board of Directors has formed three Mandatory Board Sub

Committees in terms of the Listing Rules of the Colombo Stock

Exchange, namely, Audit Committee, Remuneration Committee

and the Related Party Transactions Review Committee.

Audit Committee

The Audit Committee consists of a two Independent Non-

Executive Directors and a Non-Executive Director, namely,

Mr. Ratnayake Mudiyanselage Mohan Joseph Ratnayake

(Chairman of the Committee)



The Report of the Audit Committee appears on page 29.

Remuneration Committee

The Remuneration Committee consists of two Independent Non-

Executive Directors and a Non-Executive Director, namely,

Mr. Saravanan Neelakandan (Chairman of the Committee)

Mr. Ratnayake Mudiyanselage Mohan Joseph Ratnayake


The Remuneration Policy is designed to attract and retain a

qualified and experienced team of high caliber managers and

professionals and ensure that remuneration is in line with that of

the industry and market.



The Related Party Transactions Review Committee consists of three Independent Non-Executive Directors, namely:

Mr. Ratnayake Mudiyanselage Mohan Joseph Ratnayake (Chairman of the Committee)



The Report of the Related Party Transactions Review Committee

appears on page 28.

DECLARATION - COMPLIANCE WITH RULE 9 OF THE

LISTING RULES

The Directors declare that the Company has complied with Rule

9 of the Listing Rules of the Colombo Stock Exchange pertaining

to Related Party Transactions.

RECURRENT RELATED PARTY TRANSACTIONS – DISCLOSURE IN TERMS OF RULE 9.3.2(b) OF THE LISTING RULES

Name of the

Related Party

Relationship Controlling

Interest

Nature of

the

Transaction

Aggregate value of

Related Party

Transactions entered

into during the financial

year

Aggregate value

of Related Party

Transactions as

a % of Net

Revenue/Income

Terms and

Conditions

of the Related

Party Transactions

Steradian Capital

Investments (Pvt)

Ltd

Other

Related Party

- Technical

Service Fees

137,293,533 92% Commercial Terms

and Conditions

Lanka Realty

Developments

(Pvt) Ltd

Subsidiary 100% Providing

financial

assistances


and Conditions

Mulberry

Holdings (Pvt)

Ltd


financial

assistances


and Conditions

Baseline

Holdings (Pvt)

Ltd


financial

assistances


and Conditions

285 Darley Road

(Pvt) Ltd


financial

assistances


and Conditions

Almond Trees

(Pvt) Ltd


financial

assistances


and Conditions

Thudella

Holdings (Pvt)

Ltd


financial

assistances


and Conditions

Oak Streets (Pvt)

Ltd

Sub-

subsidiary

100% Providing

financial

assistances


and Conditions

Lanka Realty

Developments

(Pvt) Ltd

Subsidiary 100% Settlements

of amount

dues


and Conditions

Mulberry

Holdings (Pvt)

Ltd

Subsidiary 100% Settlements

of amount

dues


and Conditions

Steradian Capital

Investments (Pvt)

Ltd

Subsidiary - Settlements

of amount

dues


and Conditions



NON-RECURRENT RELATED PARTY TRANSACTIONS

Name of the

Related Party

Relationship Value of the Related Party

Transactions entered into

during the financial year

Value of Related

Party Transactions

as a % of Equity and as

a % of Total Assets

Terms and

Conditions of

the Related Party

Transactions

The rationale for

entering into the

transactions

Eighth Wonder Shareholder 278,761,851 Equity - 17%

Total assets - 14%

Share swap at

LKR 37.52 per

share

To increase the

total asset base and

net assets by LKR

7.3 Bn and LKR 5.6

Bn respectively

To position the

Company as a key

player in the land

and property sector

Diversifying the

overall revenue

streams

Improving access

to debt and equity

funding

T C Smith Director/

Shareholder

844,613,821 Equity - 51%

Total assets - 41%

I J McVeigh Director/

Shareholder

2,148,046,259 Equity - 129%

Total assets - 104%

M H Jamaldeen Director/

Shareholder

856,831,787 Equity - 51%

Total assets - 42%

A J B Warman Director/

Shareholder

279,905,867 Equity - 17%

Total assets - 14%

P Morgan Director/

Shareholder

693,047,360 Equity - 42%

Total assets - 34%

DIRECTORS INTERESTS IN CONTRACTS OR PROPOSED

CONTRACTS AND INTEREST REGISTER

The Company maintains an Interest Register in terms of the

Companies Act No. 07 of 2007, which is deemed to form part and

parcel of this Annual Report and is available for inspection upon

request.

MATERIAL ISSUES PERTAINING TO EMPLOYEES AND

INDUSTRIAL RELATIONS OF THE COMPANY

No material issues pertaining to employees or industrial relations

of the Company occurred during the year under review which

requires disclosure under Rule 7.6(vii) of the Listing Rules.

EMPLOYEE SHARE OPTION SCHEMES/EMPLOYEE SHARE

PURCHASE SCHEMES

The Company does not have any Share Option/Share Purchase

Schemes for its employees.

MATERIAL FORESEEABLE RISK FACTORS

Lanka Realty Investments PLC is a diversified investment holding

company of which the primary business line is “investment in,

development and management of Real Estate”.

The Management considers qualitative and quantitative

methods to evaluate the likelihood and impact of potential

events which might affect the achievement of objectives

including the failure to capitalise on opportunities.

Financial Risk Management objectives and policies are set out in

Note 14 on page 65.

Risks that the Company and its subsidiaries are exposed to

are set out in the Section on Risk Management / Material

Foreseeable Risk factors applicable to Lanka Realty Investments

PLC on page 30.

DONATIONS

During the year, neither the Company nor any of its subsidiaries

made any donations.

INDEPENDENT AUDITORS

Company

Messrs Ernst &Young, Chartered Accountants served as the

Auditors of the Company. A total amount of LKR 551,338.00

is payable by the Company to the Auditors for the year under

review.


The retiring Auditors have expressed willingness to continue in

office. A resolution to re-appoint the Auditors and authorising

the Directors to determine their remuneration will be proposed

at the forthcoming Annual General Meeting.

Group

Messrs Ernst & Young also served as Auditors of all the subsidiary

companies except Almond Trees (Pvt) Ltd whose Auditors are

T&D Associates.

Details of payments to the said Auditors on account of audit fees

are set out in Note 10 to the Financial Statements on page 58.

Independence of Auditors

To the extent that the Directors are aware, the Auditors do not

have any relationship with (other than that of the Auditor), or

interest in, the Company and the Group, which in the opinion

of the Board, may reasonably be considered to have a bearing

on their independence within the meaning of the Code of

Professional Conduct and Ethics issued by the Institute of

Chartered Accountants of Sri Lanka, as applicable on the date of

this Report.

STATUTORY PAYMENTS

The Directors, to the best of their knowledge and belief, are

satisfied that all statutory payments due to the Government,

other regulatory institutions and related to employees have been

paid on their due dates or where relevant have been provided for

in the Financial Statements.

CONTINGENT LIABILITIES

The contingent liabilities as at 31st March 2020 are given in

Note 38 to the Financial Statements on page 101.

EVENTS OCCURRING AFTER THE REPORTING DATE

No event of material significance that requires adjustments

to the Financial Statements, have occurred subsequent to the

Reporting date up to the date of the Auditors’ Report other than

those disclosed in Note 40 to the Financial Statements on page

101.

GOING CONCERN

The Directors have made an assessment of the Company’s

ability to continue as a going concern and are satisfied that it has

resources to continue in business for the foreseeable future.

ANNUAL GENERAL MEETING

The Annual General Meeting will be held on 28th September

2020 at 10.00 a.m. at Sri Lanka Foundation, No. 100, Padanam

Mawatha, Independence Square, Colombo 07.

The Notice of the Annual General Meeting appears on page 110.

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

Directors by

R M M J Ratnayake M H Jamaldeen

Chairman Executive Director

Anusha Wijesekara


Secretaries

31st August 2020

Colombo



STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR FINANCIAL REPORTINGThe responsibilities of the Directors, in relation to the Financial

Statements of the Company and its subsidiaries differ from the

responsibilities of the Auditors.

The responsibility of the Independent Auditors in relation to the

Financial Statements is set out in the Report of the Auditors given

on pages 32 to 34 of the Annual Report

As per the Sections 150(1), 151, 152(1) and (2), 153 (1) and (2)

of the Companies Act No. 07 of 2007, the Directors are required

to prepare Financial Statements for each financial year giving a

true and fair view of the state of affairs of the Company and its

subsidiaries as at the end of the financial year and of the results

of its operations for the financial year, ensure that they are

completed within six months or such extended period as may

be determined by the Registrar General of Companies, certified

by the person responsible for the preparation of the Financial

Statements that they are in compliance with the said Companies

Act and dated and signed on behalf of the Board by two Directors

of the Company.

In terms of section 166(1) read together with sections 168(1)(b)

and (c) and section 167(1) of the Companies Act, the Directors

shall cause a copy of the aforesaid Financial Statements together

with the Annual Report of the Board of Directors of the Company

prepared as per section 166(1) of the Companies Act to be sent to

every shareholder not less than fifteen working days before the

date fixed for holding the Annual General Meeting.

The Directors consider that in preparing these Financial

Statements set out on pages 35 to 41, appropriate accounting

policies have been selected and applied in a consistent manner

and supported by reasonable and prudent judgment and that

all applicable Accounting Standards, as relevant, have been

followed.

The Directors are of the view that the Company and its

subsidiaries have adequate resources to continue in operation

either on their own or with the assistance of the Company, as the

holding company, and have applied the going concern basis in

preparing these Financial Statements.

Further, the Directors have a responsibility to ensure that the

Company and its subsidiaries maintain sufficient accounting

records to disclose with reasonable accuracy, the financial

position of the Company and its subsidiaries.

The Directors are also responsible for taking reasonable steps to

safeguard the assets of the Company and its subsidiaries and in

this regard to give proper consideration to the establishment of

appropriate internal control systems to prevent and detect fraud

and other irregularities.

Financial Statements prepared and presented in this report

have been prepared based on Sri Lanka Accounting Standards

(SLFRS/LKAS) and are consistent with the underlying books of

accounts and are in conformity with the requirements of Sri

Lanka Accounting Standards, Companies Act No. 07 of 2007, Sri

Lanka Accounting and Auditing Standards Act No. 15 of 1995 and


COMPLIANCE REPORT

The Directors are of the view, that they have discharged their

responsibilities as set out in this statement.

The Directors also confirm that to the best of their knowledge, all

statutory payments payable by the Company and its subsidiaries

as at the reporting date have been paid or where relevant

provided for.

By order of the Board



Director/Secretaries

31st August 2020


RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

The Board has established the Related Party Transactions Review

Committee in terms of Section 9 of the Listing Rules of the

Colombo Stock Exchange.

COMPOSITION

Mr. R M M J Ratnayake (IND/NED) - Chairman

Mr. S Neelakandan (IND/NED)

Mr. F Farook (IND/NED)

IND/NED - Independent Non-Executive Director

(Refer to pages 10 to 12 for brief profiles of the Directors)

ATTENDANCE AT COMMITTEE MEETINGS

Director Attendance

Mr. R M M J Ratnayake 6/6

Mr. S Neelakandan 6/6

Mr. F Farook 5/6

DUTIES OF THE RELATED PARTY TRANSACTIONS

COMMITTEE

• To review in advance all proposed related party transactions

of the Group either prior to the transaction being entered into

or, if the transaction is expressed to be conditional on such

review, prior to the completion of the transaction.

• Seek any information the Committee requires from

management, employees or external parties with regard to any

transaction entered into with a related party.

• Obtain knowledge or expertise to assess all aspects of

proposed related party transactions where necessary

including obtaining appropriate professional and expert

advice from suitably qualified persons.

• To recommend, where necessary, to the Board and obtain

their approval prior to the execution of any non recurrent

related party transaction (as applicable).

• To monitor that all related party transactions of the entity

are transacted on normal commercial terms and are not

prejudicial to the interests of the entity and its minority

shareholders.

• Meet with the Management, Independent Auditors and such

other Advisors as necessary to carry out the assigned duties.

• To review the transfer of resources, services or obligations

between related parties regardless of whether a price is

charged.

• To review the economic and commercial substance of both

recurrent/non recurrent related party transactions

• To monitor and recommend the acquisition or disposal

of substantial assets between related parties, including

obtaining ‘competent independent advice’ from independent

professional experts with regard to the value of the assets of

the related party

• To review the disclosures requirements relating to the Related

Party Transactions.

ACTIVITIES IN 2019/2020

• The Related Party Transactions Review Committee reviewed

the related party transactions of Lanka Realty Investments

PLC and the its Group Companies and their compliances with

applicable Rules and communicated the same to the Board

and relevant Companies.

• In particular the Committee had detailed discussions and

deliberations on the acquisition of six (06) private companies

through a share swap resulting in a Private Placement of

Shares, where shares were issued to Related Parties, and

obtained independent professional advice from Messrs KPMG,

Chartered Accountants on the matter, prior to recommending

the transactions to the Board of Directors.

Following the acquisition of the said six (06) companies the

Committee also deliberated on the recurrent Related Party

Transactions pertaining to the Technical Services Agreement.

• The Committee reviewed the disclosure requirements relating

to both recurrent and non recurrent transactions entered into

by the Company during the year under review.

• The Committee in its review process recognised the adequacy

of the content and quality of the information forwarded to its

members by the Management.

Mr. R M M J Ratnayake

Chairman


31st August 2020


REPORT OF THE AUDIT COMMITTEE

COMPOSITION

The Audit Committee as at the reporting date comprises the

following Directors,

Mr. R M M J Ratnayake – (IND/NED) – Chairman

Mr. S Neelakandan – (IND/NED)

Mr. K J Pradeep – (NED)

IND/NED – Independent Non-Executive Director

NED – Non-Executive Director

ATTENDANCE AT COMMITTEE MEETINGS

Name of Director 17/05 01/08 24/10 06/02 Total

Mr. R M M J Ratnayake 4/4

Mr. Saravanan

Neelakandan 4/4

Mr. Kudagamage

Jayantha Pradeep 4/4

The Executive Directors attend the meetings by invitation. The

Company Secretary functions as the secretary to the Committee.

ROLE OF THE COMMITTEE

The primary functions of the committee can be summarised as,

• Ensure compliance with the Sri Lankan Accounting

Standards and all relevant laws and regulations.

• Ensure organisational policies are in line with those of the

best Corporates.

GOVERNANCE PRACTICES

• Ascertainment of the reliability of the Management

Information Systems.

• Review of Annual Financial Statements.

• Review of Quarterly Financial Statements.

• Review of the effectiveness of financial and internal control

systems.

• Ensure the independence of the Auditors and recommend

the appointment of Independent Auditors and their fees.

• Identification of risks that would impact on the Company’s

business.

ACTIVITIES

The Committee reviewed and discussed the Company’s

Quarterly and Annual Financial Statements prior to publication

to ensure reliability and their compliance with the Sri Lanka

Accounting Standards.

The Committee evaluates the internal control reports and

compliance reports furnished by the management and are

satisfied that an effective internal control system is in place.

Based on the proceedings of the Audit Committee meetings,

recommendations and observations were reported to the Board

for appropriate action.

EXTERNAL AUDITORS

The Committee held meetings with the External Auditors to

review the nature, approach and scope of audit. The Committee

also reviewed the Audited Financial Statements with the External

Auditors.

The Audit Committee is satisfied that the independence of the

External Auditors has not been influenced by any event that

results in a conflict of interest. The fees pertaining to audit have

been reviewed and recommended to the Board.

The Audit Committee has recommended to the Board of

Directors that Messrs Ernst & Young continue as Auditors

for the ensuing financial year, subject to the approval of the

shareholders at the next Annual General Meeting.

CONCLUSION

The Audit Committee is satisfied that the Company’s accounting

policies and operational controls provide reasonable assurance

that the affairs of the Company are managed in accordance

with the set rules and that systems are in place to minimise the

impact of identifiable risks.

The Committee further assessed the future prospects of its

business operations and is satisfied with the going concern

assumption used in the preparation of the Financial Statements

as being appropriate.

R M M J Ratnayake

Chairman - Audit Committee

31st August 2020


RISK MANAGEMENT

MATERIAL RISKS AND PLANS FOR MITIGATION

Risk Impact/Strategies/Action Plan

Strategic Risk Risks of not achieving strategic goals and objectives of the Company, and variations etc.

LRI operates with a clear Business Plan. The Group operates within an approved annual budget and

variances are reviewed periodically by the Board of Directors.

Construction Costs Risks from an increase in construction material and other costs.

Fixed price LKR contracts are entered into with contractors.

Brand & Reputation Risks relating to product quality, timely delivery and service standards.

Maintaining high product and service quality standards and quality assurance/control systems in

projects.

Ensuring high level of hygiene and security protocols are being maintained. Regular reviews of

customer comments and feedback.

Interest Rate Risks relating to Interest Income and Cost of Borrowing.

Monitoring and management of cash flows daily. Negotiating favourable rates and terms on

borrowings and deposits. Maintain an appropriate combination of fixed and floating rate

borrowings.

Human Capital Failure to achieve growth plans as a result of failure to attract and retain sufficient numbers of

qualified and experienced employees and/ or inability to ensure their on-going engagement and

commitment.

Our recruitments are non – discriminatory. Recruiting the best talent, retaining them and providing

an adequate career development plan are critical to our HR Policy.

Close dialogue with employees helps identify areas of concern and maintaining an open door policy

for employees creates accessibility at senior level for an effective work atmosphere.

There are no material issues pertaining to employees and industrial relations to our Entity.

Liquidity Risks Liquidity risk refers to the risk that the Company may not have sufficient liquid financial resources to

meet its obligations as they fall due in the normal course of business.

Strong relationships have been built with banks to ensure that urgent borrowing needs are met

at short notice. Facilities are in place to cover forecasted cash needs for at least a period of twelve

months. Additionally, solvency related analysis is carried out periodically by the finance division.


Statement of Profit or Loss ......................................................................................................................35

Statement of Comprehensive Income ..................................................................................................36

Statement of Financial Position .............................................................................................................37

Statement of Changes in Equity .............................................................................................................39

Statement of Cash Flows .........................................................................................................................40

Notes to the Financial Statements .........................................................................................................42

FINANCIAL INFORMATION


TO THE SHAREHOLDERS OF LANKA REALTY

INVESTMENTS PLC

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Lanka Realty

Investments PLC (“the Company”) and the consolidated financial

statements of the Company and its subsidiary (“the Group”),

which comprise the statement of financial position as at 31

March 2020, and the statement of profit or loss, statement of

comprehensive income, statement of changes in equity and

statement of cash flows for the year then ended, and notes to

the financial statements, including a summary of significant

accounting policies.

In our opinion, the accompanying financial statements of the

Company and the Group give a true and fair view of the financial

position of the Company and the Group as at 31 March 2020, and

of their financial performance and cash flows for the year then

ended in accordance with Sri Lanka Accounting Standards.

Basis for Opinion

We conducted our audit in accordance with Sri Lanka Auditing

Standards (SLAuSs). Our responsibilities under those standards

are further described in the Auditor’s responsibilities for the

audit of the financial statements section of our report. We are

INDEPENDENT AUDITOR’S REPORT

independent of the Group in accordance with the Code of Ethics

issued by CA Sri Lanka (Code of Ethics) and we have fulfilled our

other ethical responsibilities in accordance with the Code of

Ethics. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional

judgment, were of most significance in our audit of the financial

statements of the current period. These matters were addressed

in the context of our audit of the financial statements as a whole,

and in forming our opinion thereon, and we do not provide a

separate opinion on these matters. For each matter below, our

description of how our audit addressed the matter is provided in

that context.

We have fulfilled the responsibilities described in the Auditor’s

responsibilities for the audit of the financial statements

section of our report, including in relation to these matters.

Accordingly, our audit included the performance of procedures

designed to respond to our assessment of the risks of material

misstatement of the financial statements. The results of our audit

procedures, including the procedures performed to address the

matters below, provide the basis for our audit opinion on the

accompanying financial statements

Key audit matter How our audit addressed the key audit matter

Valuation of land and buildings

Included within investment properties and

property, plant and equipment are land and

buildings carried at fair value. As of reporting

date, such land and buildings within investment

properties and property, plant and equipment

amounted to LKR 7.5 Bn and LKR 2.3 Bn

respectively and collectively account for 85% of

total assets.

The valuation of land and buildings was significant

to our audit due to its materiality, and use of

judgements and unobservable inputs described in

notes 15 and 17 to the financial statements.

The fair values of such properties were determined

by the external valuer engaged by the Group. In

assessing the value, the external valuer has used

significant unobservable inputs including due

consideration for possible effects of COVID-19

outbreak, on such inputs.

Our audit procedures focused on the valuations performed by the external

valuer engaged by the Group, and included the following;

• We assessed the competency, capability and objectivity of the external

valuer engaged by the Group.

• We read the professional valuer’s report and understood the key estimates

made and the approach taken by the valuer in determining the valuation of

each property.

• We engaged our internal specialised resources to assist us in assessing the

appropriateness of the valuation technique, and the reasonableness of the

key assumptions used.

• We have also assessed the adequacy of the disclosures made in Notes 15

and 17 to the financial statements.


Key audit matter How our audit addressed the key audit matter

Acquisition of shares of six companies during the

year

As described in note 36 of the financial

statements, the Group acquired 100% equity

interest in six companies on 13th August 2019.

The amounts involved in the transaction were

material to the consolidated financial statements.

Furthermore, assessments of management’s

judgements in recognition and measurement

of the acquisition and determination if the

acquisition constitute a business or of assets

acquired, and liabilities assumed. As such, the

matter was significant to our audit.

Our audit procedures included (among others) the following;

• Through inquires and observations, we gained an understanding of the six

companies acquired, and assessed if the companies consist of inputs and

processes applied to those inputs that have the ability to create outputs.

• We reviewed the determination made by management to identify whether

the acquisition of shares of each company constituted either a business

combination or an acquisition of assets and liabilities.

• For each acquisition, we evaluated the appropriateness of accounting

treatment focusing on the respective classification determined as above.

• We assessed the adequacy of the related financial statement disclosures as

set out in Note 36 to the financial statements.

Other information included in the 2019/20 annual report

Other information consists of the information included in the Annual Report, other than the financial statements and our auditor’s

report thereon. Management is responsible for the other information.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion

thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider

whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit

or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the management and those charged with governance

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka

Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either

intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is

a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the

audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and

perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a

basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting

from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal

control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls of the Company

and the Group.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related

disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit

evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on

the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw

attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to

modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,

future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the

financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the

Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and

performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and

significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with

the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be

thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in

the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our

auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably

be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

As required by section 163 (2) of the Companies Act No. 07 of 2007, we have obtained all the information and explanations that were

required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.

CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 1420.

10 August 2020

Colombo

INDEPENDENT AUDITOR’S REPORT


STATEMENT OF PROFIT OR LOSS

In LKR Notes Group Company

For the year ended 31 March 2020 2019 2020 2019

Revenue 5 203,901,916 149,355,356 37,032,728 13,990,974

Cost of sales (155,994,133) (89,055,621) (11,741,396) (15,264,051)

Gross profit 47,907,783 60,299,735 25,291,332 (1,273,077)

Other operating income 6 6,754,610 10,173,580 - -

Selling and distribution expenses (12,409,908) (10,207,431) - -

Administrative expenses (146,322,577) (64,336,680) (29,614,604) (14,539,548)

Other operating expenses 7 (4,470,457) (7,394,670) (103,203) (44,385)

Results from operating activities (108,540,549) (11,465,466) (4,426,475) (15,857,010)

Finance cost 8 (168,675,916) (31,975,965) (24,401,718) (3,064,241)

Finance income 9 1,784,717 10,885,236 523,036 8,014,917

Net finance cost (166,891,199) (21,090,729) (23,878,682) 4,950,676

Change in fair value of investment property 17 1,037,759,904 48,096,667 - -

Profit/(loss) before tax 10 762,328,156 15,540,472 (28,305,157) (10,906,334)

Tax (expense)/reversal 11 (152,442,747) (11,901,168) (39,350) (151,338)

Profit/(loss) for the year 609,885,409 3,639,304 (28,344,507) (11,057,672)

Attributable to:

Equity holders of the parent 615,453,503 3,969,202 (28,344,507) (11,057,672)

Non-controlling interests (5,568,094) (329,898) - -

609,885,409 3,639,304 (28,344,507) (11,057,672)

Earnings/(loss) per share

Basic, profit/(loss) for the year attributable to

ordinary equity holders of the parent

12 4.48 0.15 (0.21) (0.41)

Diluted, profit/(loss) for the year attributable to

ordinary equity holders of the parent 12 2.96 0.15 (0.14) (0.41)

The notes from pages 42 to 103 from an integral part of these financial statements. Figures in brackets indicate deductions.


STATEMENT OF COMPREHENSIVE INCOME



Profit/(loss) for the year 609,885,409 3,639,304 (28,344,507) (11,057,672)

Other comprehensive income

Other comprehensive income not to be reclassified

to income statement in subsequent periods:

Revaluation of land 187,000,000 - -

Revaluation of buildings 32,597,910 - -

Re-measurement gain/(loss) on employee benefit

liabilities

27 316,509 66,191 - (179,033)

Income tax effect 11.2 (35,130,690) (18,533) - 50,129

Total other comprehensive income/(loss) for the

year, net of tax

184,783,729 47,658 - (128,904)

Total comprehensive income/(loss) for the year, net

of tax

794,669,138 3,686,962 (28,344,507) (11,186,576)

Total comprehensive income attributable to:

Equity holders of the parent 793,878,569 3,651,650 (28,344,507) (11,186,576)

Non-controlling interests 790,569 35,312 - -

794,669,138 3,686,962 (28,344,507) (11,186,576)



STATEMENT OF FINANCIAL POSITION


As at 31 March 2020 2019 2020 2019

ASSETS

Non-current assets

Property, plant and equipment 15 2,267,676,427 615,030,919 71,925 -

Intangible assets 16 169,641,491 205,330 2,300,596 205,330

Investment properties 17 7,546,864,445 1,295,000,000 - -

Investment in subsidiaries 18 - - 6,679,148,940 1,063,529,235

Other non-current assets 19 8,037,231 7,977,231 - -

Deferred tax assets 26.2 825,385 864,734 825,385 864,735

9,993,044,979 1,919,078,214 6,682,346,846 1,064,599,300

Current assets

Inventories 20 1,461,723,573 22,818,265 - -

Trade and other receivables 21 22,580,461 35,510,839 283,905 283,905

Financial assets-fair value through profit or loss 22 66,923 97,642 66,923 97,642

Amounts due from related parties 34.4 8,479,479 - 588,149,410 103,240,449

Other current assets 23 61,645,179 4,598,893 2,274,660 725,878

Short-term investments 33 67,408 76,067,686 - -

Cash in hand and at bank 33 46,351,370 358,336 9,827,311 217,502

1,600,914,393 139,451,661 600,602,209 104,565,376

Total assets 11,593,959,372 2,058,529,875 7,282,949,055 1,169,164,676

EQUITY AND LIABILITIES

Equity attributable to equity holders of the parent

Stated capital 24 6,380,094,108 785,425,237 6,380,094,108 785,425,237

Revaluation reserve 285,101,689 106,948,689 - -

Retained earnings 25 1,368,092,024 752,366,455 277,121,081 305,465,588

Other components of equity 25 23,100,000 23,100,000 23,100,000 23,100,000

8,056,387,821 1,667,840,381 6,680,315,189 1,113,990,825

Non-controlling interests 33,273,455 32,482,886 - -

Total equity 8,089,661,276 1,700,323,267 6,680,315,189 1,113,990,825




As at 31 March 2020 2019 2020 2019

Non-current liabilities

Deferred tax liabilities 26.1 577,615,143 222,658,976 - -

Employee benefit liabilities 27 1,748,864 1,207,185 - 98,605

Interest bearing borrowings 28 2,121,138,956 26,358,503 553,343,328 -

Amounts due to related parties 34.5 26,805,440 23,747,904 26,805,440 23,747,904

Other non-current liabilities 29 12,545,538 - - -

2,739,853,941 273,972,568 580,148,768 23,846,509

Current liabilities

Trade and other payables 30 108,959,019 24,468,052 610,426 641,176

Amounts due to related parties 34.5 34,281,410 14,112,100 5,852,196 19,837,351

Income tax liabilities 31 53,447 32,228 32,228 32,228

Current portion of interest bearing borrowings 28 243,461,676 7,084,446 - -

Other current liabilities 32 103,058,295 20,495,459 15,983,034 10,245,941

Bank overdrafts 33 274,630,308 18,041,754 7,214 570,646

764,444,155 84,234,039 22,485,098 31,327,342

Total equity and liabilities 11,593,959,372 2,058,529,875 7,282,949,055 1,169,164,676


It is certified that the financial statements have been prepared in compliance with the requirements of Companies Act No. 7 of 2007.

Y Jayasekara

Head of finance & planning

The Board of Directors is responsible for these financial statements.

Signed for and on behalf of the board by;

R M M J Ratnayake M H Jamaldeen

Chairman Director

10 August 2020

Colombo

STATEMENT OF FINANCIAL POSITION


STATEMENT OF CHANGES IN EQUITY

Group

In LKR

Stated

capital

Other

components

of equity

Revaluation

reserve

Retained

earnings

Total Equity

attributable to

equity

holders of the

parent

Non-

controlling

interests

Total

equity

As at 1 April 2018 156,716,270 23,100,000 106,948,689 733,299,908 1,020,064,867 147,862,471 1,167,927,338

Profit/(loss) for the year - - - 3,969,202 3,969,202 (329,898) 3,639,304

Share issue 632,876,610 - - - 632,876,610 - 632,876,610

Direct costs on right issue (4,167,643) - - - (4,167,643) - (4,167,643)


Revaluation of land & building - - - - - -

Re-measurement gain/(loss) on

employee benefit liabilities - - - 17,145 17,145 49,046 66,191

Income tax on other

comprehensive income - - - (4,800) (4,800) (13,733) (18,533)

Acquisition of

non-controlling interest - - 15,085,000 15,085,000 (115,085,000) (100,000,000)

As at 31 March 2019 785,425,237 23,100,000 106,948,689 752,366,455 1,667,840,381 32,482,886 1,700,323,267

Profit/ (loss) for the year - - - 615,453,503 615,453,503 (5,568,094) 609,885,409

Share issue 5,597,228,085 - - - 5,597,228,085 - 5,597,228,085

Direct costs on right issue (2,559,214) - - - (2,559,214) - (2,559,214)


Revaluation of land & building - - 210,773,046 - 210,773,046 8,824,864 219,597,910

Re-measurement gain/(loss) on

employee benefit liabilities - - - 309,897 309,897 6,612 316,509

Income tax on other

comprehensive income - - (32,620,046) (37,830) (32,657,876) (2,472,813) (35,130,689)

As at 31 March 2020 6,380,094,108 23,100,000 285,101,689 1,368,092,024 8,056,387,821 33,273,455 8,089,661,277

Company

In LKR

Stated capital Other

components of

equity

Retained

earnings

Total equity

As at 1 April 2018 156,716,270 23,100,000 316,652,164 496,468,434

Loss for the year - - (11,057,672) (11,057,672)

Other comprehensive income (net of tax) - - (128,904) (128,904)

Share issue 632,876,610 - - 632,876,610

Direct costs on share issue (4,167,643) - - (4,167,643)

As at 31 March 2019 785,425,237 23,100,000 305,465,588 1,113,990,825

Loss for the year - - (28,344,507) (28,344,507)

Other comprehensive income (net of tax) - - - -

Share issue 5,597,228,085 - - 5,597,228,085

Direct costs on share issue (2,559,214) - - (2,559,214)

As at 31 March 2020 6,380,094,108 23,100,000 277,121,081 6,680,315,189



STATEMENT OF CASH FLOWS



OPERATING ACTIVITIES

Profit/(loss) before tax 762,328,156 15,540,472 (28,305,157) (10,906,334)

Adjustments to reconcile profit before tax to net cash

flows:

Depreciation of property, plant and equipment 15 28,406,716 15,087,868 20,550 1,214,583

Amortisation of intangible assets 16 188,638 - 74,784 -

Finance income 9 (1,784,717) (10,885,236) (523,036) (8,014,917)

Dividend income 5 - (454) - (454)

Finance expense 8 168,675,916 31,975,965 24,401,718 3,064,241

Gratuity provision and related costs 27 426,407 325,082 (98,605) 99,622

Impairment of trade and other receivables 22,741,951 - - -

Write back of provision of investment properties 6 (1,239,294)

Fair value change in investment properties 17 (1,037,759,904) (48,096,667) - -

(Appreciation)/depreciation in fair value of FVTPL 30,719 23,402 30,719 23,402

Disposal loss on investment property 7 - 5,200,000 - -

Disposal gain on property, plant & equipment 6 - (2,535,601) - -

Impairment of investments - - 14,415,555 -

Working capital adjustments:

(Increase)/decrease in inventories (165,598,861) (16,912,727) - -

(Increase)/decrease in trade and other

receivables

5,275,990 (31,892,682) - 333

(Increase)/decrease in amounts due from related

parties (526,151) - (484,908,961) (10,631,124)

(Increase)/decrease in other refundable assets (60,000) - - -

(Increase)/decrease in other current assets (24,156,317) (1,087,102) (1,548,781) (334,735)

Increase/(decrease) in trade and other payables (10,899,582) 4,285,394 (30,750) 36,837

Increase/(decrease) in amounts due to

related parties (12,683,475) 3,799,002 (10,927,619) 11,894,659

Increase/(decrease) in tenants refundable deposits 12,545,538 - - -

Increase/(decrease) in other current liabilities 59,898,680 (15,209,190) 5,737,093 (9,947,693)

(194,189,590) (50,382,473) (481,662,490) (23,501,580)

Interest received 1,784,717 10,885,236 523,033 8,014,917

Finance expenses paid (145,061,841) (25,272,232) (24,401,718) (1,323)

Employee benefit paid - (340,200) - (340,200)

Net cash flow from/(used in) operating activities (337,466,713) (65,109,670) (505,541,175) (15,828,186)





INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment - 10,299,999 - -

Proceeds from sale of investment property - 38,800,000 - -

Purchase of investment property 17 (227,486,886) (145,403,333) - -

Purchase of property, plant and equipment 15 (22,991,195) (32,238,011) (92,475) -

Purchase of intangible assets 16 (2,399,050) (205,330) (2,170,050) (205,330)

Dividend received 5 - 454 - 454

Acquisition of subsidiaries, net of cash acquired (230,645,116) - (32,807,173) (615,000,000)

Net cash flow from/(used in) investing activities (483,522,244) (128,746,221) (35,069,698) (615,204,876)

FINANCING ACTIVITIES

Transaction costs on share issue 24 (2,559,214) (4,167,643) (2,559,214) (4,167,643)

Proceeds from exercise of share issue 24 - 632,876,610 - 632,876,610

Increase in interest in subsidiaries 18.1 - (100,000,000) - -

Net proceeds of bank borrowings 28 542,836,001 (254,771,337) 553,343,328 -

Proceeds from finance lease 28 - 8,500,000 - -

Principal payment under finance lease liabilities 28 (5,883,624) (8,299,438) - -

Net cash flow from/(used in) financing activities 534,393,163 274,138,192 550,784,114 628,708,967

Net increase/(decrease) in

cash and cash equivalents (286,595,798) 80,282,301 10,173,241 (2,324,095)

Cash and cash equivalents at the beginning 58,384,268 (21,898,033) (353,144) 1,970,951

Cash and cash equivalents at the end (228,211,530) 58,384,268 9,820,097 (353,144)

ANALYSIS OF CASH AND CASH EQUIVALENTS

Favorable balances

Cash in hand and at bank 33 46,351,370 358,336 9,827,311 217,502

Investment in repos/Commercial papers (less than

three months) 33 67,408 76,067,686 - -

Unfavorable balances

Bank overdrafts 33 (274,630,308) (18,041,754) (7,214) (570,646)

Total cash and cash equivalents (228,211,530) 58,384,268 9,820,097 (353,144)



1.1 CORPORATE INFORMATION

1.1.1 Reporting entity

Lanka Realty Investments PLC is a public (limited) liability

Company incorporated and domiciled in Sri Lanka.

The ordinary shares of the Company are listed on the

Colombo Stock Exchange of Sri Lanka. The registered

office of the Company is located at 1st Floor, HQ

Colombo, 464/A, T. B. Jayah Mawatha, Colombo 10.

1.1.2 Consolidated financial statements

The consolidated financial statements of Lanka Realty

Investments PLC, for the year ended 31 March 2020,

encompasses “the Company” referring to Lanka Realty

Investments PLC as the parent and “the Group” referring

to the companies that have been consolidated therein.

1.1.3 Nature of operations and principal activities of

the Company and the Group

Lanka Realty Investments PLC, the Group’s holding

Company, manages a portfolio of holdings consisting of

a range of diverse business operations, which together

constitute the Lanka Realty Investments Group.

Lanka Realty Investments PLC holds 100% of the issued

share capital of Lanka Realty Developments (Pvt) Ltd

which is engaged in the business of commercial property

development, 100% of the issued share capital of L & A

Quarries (Pvt) Ltd which is in the business of operating

crusher plants and 80% of the issued share capital of

Amtrad Ltd which operates in the manufacturing &

selling of cement/concrete building blocks and paving

stones.

Further, the Company holds 100% of the issued

share capital of Lanka Realty Leisure (Pvt) Ltd, Lanka

Realty Ambalangoda (Pvt) Ltd and Ascot Yala (Pvt) Ltd

which are in the business of leisure. There were no

business operations in these three companies since its

incorporation.

On 13th August 2019, Lanka Realty Investments PLC

had acquired 100% of the issued share capital of the

following companies:

• Baseline Holdings (Pvt) Ltd – Holds a bare land.

• 285 Darley Road (Pvt) Ltd – Holds a bare land through

Oak Street (Pvt) Ltd (100% owned subsidiary of 285

Darley Road (Pvt) Ltd).

• Thudella Holdings (Pvt) Ltd – Holds a bare land

through Crown Resorts (Pvt) Ltd (100% owned

subsidiary of Thudella Holdings (Pvt) Ltd)

• Almond Trees (Pvt) Ltd - Engaged in the operation

of a hotel, a restaurant and a pub and the company

holds an investment in a fully owned subsidiary (Ilook

Villa (Pvt) Ltd which engages in operation of a hotel, a

restaurant and a bar.

• Alexandra Holdings (Pvt) Ltd in the business of renting

villas.

• Mulberry Holdings (Pvt) Ltd which is a developer of

residential apartments

1.1.4 Approval of financial statements

The financial statements of Lanka Realty Investments

PLC (“Company”) and the consolidated financial

statements of the Company and its subsidiaries (“Group”)

for the year ended 31 March 2020 were authorised for

issue by the Board of Directors on 10 August 2020.

1.1.5 Responsibility for financial statements

The responsibility of the Board of Directors in relation

to the financial statements is set out in the Statement of

Directors’ Responsibility report in the Annual Report.

2. BASIS OF PREPARATION

2.1 Statement of compliance

The consolidated financial statements which

comprise the statement profit of loss, statements of

comprehensive income, statement of financial position,

statement of changes in equity and the statement of

cash flows together with accounting policies and notes

are prepared in accordance with Sri Lanka Accounting

Standards (SLFRS/LKAS).

2.2 Basis of measurement

The consolidated financial statements have been

prepared on the historical cost basis, except for:

• Land and buildings which are recognised as property

plant and equipment which are measured at cost at

the time of the acquisition and subsequently carried at

fair value

• Land and buildings which are recognised as

investment property which are measured at cost at the

time of the acquisition and subsequently carried at fair

value.

• Lands which are recognised as right of use asset which

are measured at cost at the time of the acquisition and

subsequently carried at fair value.

• Financial instruments reflected as fair value through

profit or loss which are measured at fair value.

NOTES TO THE FINANCIAL STATEMENTS


Where appropriate, the specific policies are explained in

the succeeding notes.

No adjustments have been made for inflationary factors

in the consolidated financial statements.

2.3 Presentation and functional currency

The consolidated financial statements are presented

in Sri Lankan Rupees (LKR), which is also the parent

Company’s functional currency. Each entity in the Group

determines its own functional currency and items

included in the financial statements of each entity are

measured using that functional currency.

2.4 Materiality and aggregation

Each material class of similar items is presented

separately in the consolidated financial statements.

Items of a dissimilar nature or function are presented

separately unless they are immaterial.

2.5 Comparative information

The consolidated financial statements provide

comparative information in respect of the previous

period.

3. BASIS OF CONSOLIDATION

The consolidated financial statements comprise the

financial statements of the Company and its subsidiaries

as at 31 March 2020. The financial statements of the

subsidiaries are prepared in compliance with the Group’s

accounting policies.

3.1 Subsidiaries

Subsidiaries are those entities controlled by the Group.

Control is achieved when the Group is exposed, or rights

to variable returns from its involvement with the investee

and has the ability to affect those returns through its

power over the investee. Specifically, the Group controls

an investee if, and only if, the Group has:

• Power over the investee (i.e., existing rights that give it

the current ability to direct the relevant activities of the

investee)

• Exposure, or rights, to variable returns from its

involvement with the investee

• The ability to use its power over the investee to affect

its returns

Generally, there is a presumption that a majority

of voting rights results in control. To support this

presumption and when the Group has less than

a majority of the voting or similar rights of an

investee, the Group considers all relevant facts and

circumstances in assessing whether it has the power

over an investee, including:

• The contractual arrangement(s) with the other vote

holders of the investee

• Rights arising from other contractual arrangements

• The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an

investee if facts and circumstances indicate that there

are changes to one or more of the three elements of

control. Consolidation of a subsidiary begins when

the Group obtains control over the subsidiary and

ceases when the Group loses control of the subsidiary.

Assets, liabilities, income and expenses of a subsidiary

acquired or disposed of during the year are included in

the consolidated financial statements from the date the

Group gains control until the date the Group ceases to

control the subsidiary.

When necessary, adjustments are made to the financial

statements of subsidiaries to bring their accounting

policies into line with the Group’s accounting policies.

A change in the ownership interest of a subsidiary,

without a loss of control, is accounted for as an

equity transaction. If the Group loses control over a

subsidiary, it derecognises the related assets (including

goodwill), liabilities, non- controlling interest and other

components of equity while any resultant gain or loss is

recognised in the profit or loss. Any investment retained

is recognised at fair value.

Profit or loss and each component of OCI are attributed

to the equity holders of the parent of the Group and

to the non-controlling interests, even if this results in

the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial

statements of subsidiaries to bring their accounting

policies into line with the Group’s accounting policies.

All intra-group assets and liabilities, equity, income,

expenses and cash flows relating to transactions

between members of the Group are eliminated in full on

consolidation.

A change in the ownership interest of a subsidiary,

without a loss of control, is accounted for as an equity

transaction.

If the Group loses control over a subsidiary, it

derecognises the related assets (including goodwill),

liabilities, non-controlling interest and other components

of equity, while any resultant gain or loss is recognised

in profit or loss. Any investment retained is recognised at

fair value.


4 SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES

4.1 Business combination and goodwill

Business combinations are accounted for using

the acquisition method. The cost of an acquisition

is measured as the aggregate of the consideration

transferred, which is measured at acquisition date fair

value, and the amount of any non-controlling interests in

the acquiree. For each business combination, the Group

elects whether to measure the non-controlling interests

in the acquiree at fair value or at the proportionate share

of the acquiree’s identifiable net assets. Acquisition-

related costs are expensed as incurred and included in

administrative expenses.

When the Group acquires a business, it assesses the

financial assets and liabilities assumed for appropriate

classification and designation in accordance with

the contractual terms, economic circumstances and

pertinent conditions as at the acquisition date. This

includes the separation of embedded derivatives in host

contracts by the acquiree.

Any contingent consideration to be transferred by the

acquirer will be recognised at fair value at the acquisition

date. Contingent consideration classified as equity

is not remeasured and its subsequent settlement is

accounted for within equity. Contingent consideration

classified as an asset or liability that is a financial

instrument and within the scope of SLFRS 9 Financial

Instruments, is measured at fair value with the changes

in fair value recognised in the statement of profit or

loss in accordance with SLFRS 9. Other contingent

consideration that is not within the scope of SLFRS 9

is measured at fair value at each reporting date with

changes in fair value recognised in profit or loss.

Goodwill is initially measured at cost (being the excess

of the aggregate of the consideration transferred and

the amount recognised for non-controlling interests

and any previous interest held over the net identifiable

assets acquired and liabilities assumed). If the fair value

of the net assets acquired is in excess of the aggregate

consideration transferred, the Group re-assesses whether

it has correctly identified all of the assets acquired and

all of the liabilities assumed and reviews the procedures

used to measure the amounts to be recognised at the

acquisition date. If the reassessment still results in an

excess of the fair value of net assets acquired over the

aggregate consideration transferred, then the gain is

recognised in profit or loss.

After initial recognition, goodwill is measured at cost less

any accumulated impairment losses. For the purpose

of impairment testing, goodwill acquired in a business

combination is, from the acquisition date, allocated

to each of the Group’s cash-generating units that are

expected to benefit from the combination, irrespective

of whether other assets or liabilities of the acquiree are

assigned to those units.

Where goodwill has been allocated to a cash-generating

unit (CGU) and part of the operation within that unit is

disposed of, the goodwill associated with the disposed

operation is included in the carrying amount of the

operation when determining the gain or loss on disposal.

Goodwill disposed in these circumstances is measured

based on the relative values of the disposed operation

and the portion of the cash-generating unit retained.

4.2 Current versus non-current classification

The Group presents assets and liabilities in statement

of financial position based on current/non-current

classification. An asset as current when it is:

• Expected to be realised or intended to be sold or

consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the

reporting period

Or

• Cash or cash equivalent unless restricted from being

exchanged or used to settle a liability for at least

twelve months after the reporting period

All other assets are classified as non-current. A liability is

current when:

• It is expected to be settled in normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the

reporting period

Or

• There is no unconditional right to defer the settlement

of the liability for at least twelve months after the

reporting period

The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-

current assets and liabilities.

4.3 Fair value measurement

The Group measures financial instruments such as

derivatives, and non-financial assets such as investment

properties, at fair value at each reporting date.



Fair value is the price that would be received to sell

an asset or paid to transfer a liability in an orderly

transaction between market participants at the

measurement date. The fair value measurement is based

on the presumption that the transaction to sell the asset

or transfer the liability takes place either:

• In the principal market for the asset or liability

Or

• In the absence of a principal market, in the most

advantageous market for the asset or liability

The principal or the most advantageous market must be

accessible by the Group.

The fair value of an asset or a liability is measured using

the assumptions that market participants would use

when pricing the asset or liability, assuming that market

participants act in their economic best interest.

A fair value measurement of a non-financial asset takes

into account a market participant’s ability to generate

economic benefits by using the asset in its highest and

best use.

The Group uses valuation techniques that are

appropriate in the circumstances and for which sufficient

data are available to measure fair value, maximising the

use of relevant observable inputs and minimising the use

of unobservable inputs.

All assets and liabilities for which fair value is measured

or disclosed in the financial statements are categorised

within the fair value hierarchy, describes follows, based

on the lowest level input that is significant to the fair

value measurement as a whole:

• Level 1 - Quoted (unadjusted) market prices in active

markets for identical assets or liabilities

• Level 2 - Valuation techniques for which the lowest

level input that is significant to the fair value

measurement is directly or indirectly observable

• Level 3 - Valuation techniques for which the lowest

level input that is significant to the fair value

measurement is unobservable

For assets and liabilities that are recognised in the

financial statements on a recurring basis, the Group

determines whether transfers have occurred between

levels in the hierarchy by re-assessing categorisation

(based on the lowest level input that is significant to the

fair value measurement as a whole) at the end of each

reporting period.

For the purpose of fair value disclosures, the Group

has determined classes of assets and liabilities on the

basis of the nature, characteristics and risks of the asset

or liability and the level of the fair value hierarchy as

explained above.

Fair value related disclosures for financial instruments

and non-financial assets that are measured at fair value

or where fair values are disclosed, are summarised in the

following notes:

• Financial instruments (including those carried at

amortised cost)

• Quantitative disclosures of fair value measurement

hierarchy

• Property, plant & equipment under revaluation model

• Investment properties

4.4 Property, plant and equipment

Construction in progress is stated at cost, net of

accumulated impairment losses, if any. Plant and

equipment is stated at cost, net of accumulated

depreciation and accumulated impairment losses,

if any. Such cost includes the cost of replacing part

of the plant and equipment and borrowing costs for

long-term construction projects if the recognition

criteria are met. When significant parts of plant and

equipment are required to be replaced at intervals,

the Group depreciates them separately based on their

specific useful lives. Likewise, when a major inspection is

performed, its cost is recognised in the carrying amount

of the plant and equipment as a replacement if the

recognition criteria are satisfied. All other repair and

maintenance costs are recognised in profit or loss as

incurred.

Land and buildings are measured at fair value less

accumulated depreciation and impairment losses

recognised after the date of revaluation. Valuations are

performed with sufficient frequency to ensure that the

carrying amount of a revalued asset does not differ

materially from its fair value.

A revaluation surplus is recorded in OCI and credited to

the asset revaluation surplus in equity. However, to the

extent that it reverses a revaluation deficit of the same

asset previously recognised in profit or loss, the increase

is recognised in profit and loss. A revaluation deficit is

recognised in profit or loss, except to the extent that it

offsets an existing surplus on the same asset recognised

in the asset revaluation surplus.


An annual transfer from the asset revaluation surplus

to retained earnings is made for the difference between

depreciation based on the revalued carrying amount of

the asset and depreciation based on the asset’s original

cost. Additionally, accumulated depreciation as at the

revaluation date is eliminated against the gross carrying

amount of the asset and the net amount is restated to

the revalued amount of the asset. Upon disposal, any

revaluation surplus relating to the particular asset being

sold is transferred to retained earnings.

Depreciation is calculated on a straight-line basis over

the estimated useful lives of the assets as follows:

Description Period

Buildings 15 - 20

Plant and machinery 4 - 10

Motor vehicles 4

Furniture and fitting, tools & other office

equipment

3 – 5

Cutlery, Cookery & Linen 4

An item of property, plant and equipment and any

significant part initially recognised is derecognised

upon disposal or when no future economic benefits

are expected from its use or disposal. Any gain or loss

arising on derecognition of the asset (calculated as the

difference between the net disposal proceeds and the

carrying amount of the asset) is included in the profit or

loss when the asset is derecognised.

The residual values, useful lives and methods of

depreciation of property, plant and equipment are

reviewed at each financial year end and adjusted

prospectively, if appropriate.

4.5 Leases

The Group assesses at contract inception whether a

contract is, or contains, a lease. That is, if the contract

conveys the right to control the use of an identified asset

for a period of time in exchange for consideration.

4.5.1 Group as a lessee

The Group applies a single recognition and

measurement approach for all leases, except for short-

term leases and leases of low-value assets. The Group

recognises lease liabilities to make lease payments and

right-of-use assets representing the right to use the

underlying assets.

4.5.2 Right-of-use assets

The Group recognises right-of-use assets at the

commencement date of the lease (i.e., the date the

underlying asset is available for use). Right-of-use assets

are measured at cost, less any accumulated depreciation

and impairment losses, and adjusted for any re-

measurement of lease liabilities. The cost of right-of-use

assets includes the amount of lease liabilities recognised,

initial direct costs incurred, and lease payments made

at or before the commencement date less any lease

incentives received. After recognition the right-of-use

assets is carried at revalue amounts, being its fair value

at the date of the revaluation less any subsequent

accumulated depreciation and subsequent accumulated

impairment losses.

The Group presents right-of-use assets that do not

meet the definition of investment property in ‘property,

plant and equipment’ and lease liabilities in ‘loans and

borrowings’ in the statement of financial position. See

Notes 15.1.2 and 28 to the financial statements

4.5.3 Lease liabilities

At the commencement date of the lease, the Group

recognises lease liabilities measured at the present

value of lease payments to be made over the lease term.

The lease payments include fixed payments (including

insubstance fixed payments) less any lease incentives

receivable, variable lease payments that depend on

an index or a rate, and amounts expected to be paid

under residual value guarantees. The lease payments

also include the exercise price of a purchase option

reasonably certain to be exercised by the Group and

payments of penalties for terminating the lease, if the

lease term reflects the Group exercising the option to

terminate. Variable lease payments that do not depend

on an index or a rate are recognised as expenses (unless

they are incurred to produce inventories) in the period in

which the event or condition that triggers the payment

occurs.

In calculating the present value of lease payments,

the Group uses its incremental borrowing rate at the

lease commencement date because the interest rate

implicit in the lease is not readily determinable. After

the commencement date, the amount of lease liabilities

is increased to reflect the accretion of interest and

reduced for the lease payments made. In addition, the

carrying amount of lease liabilities is remeasured if

there is a modification, a change in the lease term, a

change in the lease payments (e.g., changes to future

payments resulting from a change in an index or rate

used to determine such lease payments) or a change in



the assessment of an option to purchase the underlying

asset.

The Group’s lease liabilities are included in interest-

bearing loans and borrowings. See Note 28 to the

financial statements.

4.5.4 Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition

exemption to its short-term leases. It also applies the

lease of low-value assets recognition exemption to leases

that are considered to be low value. Lease payments

on short-term leases and leases of low-value assets are

recognised as expense on a straight-line basis over the

lease term.

4.5.5 Group as a lessor

Leases in which the Group does not transfer substantially

all the risks and rewards incidental to ownership of an

asset are classified as operating leases. Rental income

arising is accounted for on a straight-line basis over the

lease terms and is included in revenue in the statement

of profit or loss due to its operating nature. Initial direct

costs incurred in negotiating and arranging an operating

lease are added to the carrying amount of the leased

asset and recognised over the lease term on the same

basis as rental income. Contingent rents are recognised

as revenue in the period in which they are earned.

4.6 Investment property

Investment property comprises completed property

under construction or re-development that is held, or

to be held, to earn rentals or for capital appreciation

or both. Property held under a lease is classified as

investment property when it is held to earn rentals or for

capital appreciation or both, rather than for sale in the

ordinary course of business or for use in production or

administrative functions.

Investment property is measured initially at cost,

including transaction costs. Transaction costs include

transfer taxes, professional fees for legal services and

initial leasing commissions to bring the property to the

condition necessary for it to be capable of operating. The

carrying amount also includes the cost of replacing part

of an existing investment property at the time that cost is

incurred if the recognition criteria are met.

Subsequent to initial recognition, investment property is

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

profit or loss in the period in which they arise, including

the corresponding tax effect. For the purposes of these

financial statements, in order to avoid double counting,

the fair value reported in the financial statements is:

• Reduced by the carrying amount of any accrued

income resulting from the spreading of lease

incentives and/or minimum lease payments

• In the case of investment property held under a lease,

increased by the carrying amount of any liability to the

head lessor that has been recognised in the statement

of financial position as a finance lease obligation

Transfers are made to (or from) investment property

only when there is a change in use. For a transfer from

investment property to owner-occupied property, the

deemed cost for subsequent accounting is the fair value

at the date of change in use.

Investment property is derecognised either when

it has been disposed of or when it is permanently

withdrawn from use and no future economic benefit

is expected from its disposal. The difference between

the net disposal proceeds and the carrying amount of

the asset is recognised in profit or loss in the period of

derecognition.

4.7 Intangible assets

Intangible assets acquired separately are measured on

initial recognition at cost. The cost of intangible assets

acquired in a business combination is their fair value

at the date of acquisition. Following initial recognition,

intangible assets are carried at cost less any accumulated

amortisation and accumulated impairment losses.

Internally generated intangibles, excluding capitalised

development costs, are not capitalised and the related

expenditure is reflected in profit or loss in the period in

which the expenditure is incurred.

The useful lives of intangible assets are assessed as

either finite or indefinite. Intangible assets with finite lives

are amortised over the useful economic life and assessed

for impairment whenever there is an indication that

the intangible asset may be impaired. The amortisation

period and the amortisation method for an intangible

asset with a finite useful life are reviewed at least at the

end of each reporting period. Changes in the expected

useful life or the expected pattern of consumption of

future economic benefits embodied in the asset are

considered to modify the amortisation period or method,

as appropriate, and are treated as changes in accounting

estimates. The amortisation expense on intangible assets


with finite lives is recognised in the statement of profit or

loss in the expense category that is consistent with the

function of the intangible assets.

Intangible assets with indefinite useful lives are not

amortised, but are tested for impairment annually,

either individually or at the cash-generating unit level.

The assessment of indefinite life is reviewed annually

to determine whether the indefinite life continues to

be supportable. If not, the change in useful life from

indefinite to finite is made on a prospective basis.

An intangible asset is derecognised upon disposal (i.e.,

at the date the recipient obtains control) or when no

future economic benefits are expected from its use or

disposal. Any gain or loss arising upon derecognition of

the asset (calculated as the difference between the net

disposal proceeds and the carrying amount of the asset)

is included in the statement of profit or loss.

4.8 Borrowing costs

Borrowing costs directly attributable to the acquisition,

construction or production of an asset that necessarily

takes a substantial period of time to get ready for its

intended use or sale are capitalised as part of the cost

of the asset. All other borrowing costs are expensed in

the period in which they occur. Borrowing costs consist

of interest and other costs that an entity incurs in

connection with the borrowing of funds.

4.9 Financial instruments - Initial recognition and

subsequent measurement

A financial instrument is any contract that gives rise to

a financial asset of one entity and a financial liability or

equity instrument of another entity.

4.9.1 Financial assets

4.9.1.1 Initial recognition and measurement

Financial assets are classified, at initial recognition, as

subsequently measured at amortised cost, fair value

through other comprehensive income (OCI) and fair

value through profit or loss.

The classification of financial assets at initial recognition

depends on the financial asset’s contractual cash flow

characteristics and the Group’s business model for

managing them. With the exception of trade receivables

that do not contain a significant financing component or

for which the Group has applied the practical expedient,

the Group initially measures a financial asset at its fair

value plus, in the case of a financial asset not at fair

value through profit or loss, transaction costs. Trade

receivables that do not contain a significant financing

component or for which the Group has applied the

practical expedient are measured at the transaction price

determined under SLFRS 15. Refer to the accounting

policies in note 4.16 for Revenue from contracts with

customers.

The Group’s business model for managing financial

assets refers to how it manages its financial assets

in order to generate cash flows. The business model

determines whether cash flows will result from collecting

contractual cash flows, selling the financial assets, or

both.

Purchases or sales of financial assets that require

delivery of assets within a time frame established by

regulation or convention in the market place (regular way

trades) are recognised on the trade date, i.e., the date

that the Group commits to purchase or sell the asset.

4.9.1.2 Subsequent measurement

For purposes of subsequent measurement, financial

assets are classified in four categories:

• Financial assets at amortised cost (debt instruments)

• Financial assets at fair value through OCI with recycling

of cumulative gains and losses (debt instruments)

• Financial assets designated at fair value through OCI

with no recycling of cumulative gains and losses upon

derecognisation (equity instruments)

• Financial assets at fair value through profit or loss

Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently

measured using the effective interest (EIR) method

and are subject to impairment. Gains and losses

are recognised in profit or loss when the asset is

derecognised, modified or impaired.

The Group’s financial assets at amortised cost includes

trade receivables, and loan to an associate and non-

current trade and other receivables.

Financial assets at fair value through OCI (debt

instruments)

For debt instruments at fair value through OCI, interest

income, foreign exchange revaluation and impairment

losses or reversals are recognised in the statement of

profit or loss and computed in the same manner as

for financial assets measured at amortised cost. The

remaining fair value changes are recognised in OCI.



Upon derecognition, the cumulative fair value change

recognised in OCI is recycled to profit or loss.

The Group’s debt instruments at fair value through

OCI includes investments in quoted debt instruments

included under other noncurrent financial assets.

Financial assets designated at fair value through OCI

(equity instruments)

Upon initial recognition, the Group can elect to classify

irrevocably its equity investments as equity instruments

designated at fair value through OCI when they meet

the definition of equity under LKAS 32 Financial

Instruments: Presentation and are not held for trading.

The classification is determined on an instrument by

instrument basis.

Gains and losses on these financial assets are never

recycled to Profit or Loss. Dividends are recognised as

other income in the statement of profit or loss when the

right of payment has been established, except when the

Group benefits from such proceeds as a recovery of part

of the cost of the Financial asset, in which case, such

gains are recorded in OCI. Equity instruments designated

at fair value through OCI are not subject to impairment

assessment.

This category includes listed and non-listed equity

instruments under this category. Financial assets at fair

value through profit or loss Financial assets at fair value

through profit or loss are carried in the statement of

financial position at fair value with net changes in fair

value recognised in the statement of profit or loss.

4.9.1.3 De-recognition

A financial asset (or, where applicable, a part of a

financial asset or part of a group of similar financial

assets) is primarily derecognised (i.e., removed from the

Group’s consolidated statement of financial position)

when:

• The rights to receive cash flows from the asset have

expired

Or

• The Group has transferred its rights to receive cash

flows from the asset or has assumed an obligation

to pay the received cash flows in full without

material delay to a third party under a ‘pass-through’

arrangement and either (a) the Group has transferred

substantially all the risks and rewards of the asset,

or (b) the Group has neither transferred nor retained

substantially all the risks and rewards of the asset, but

has transferred control of the asset

When the Group has transferred its rights to receive cash

flows from an asset or has entered into a pass-through

arrangement, it evaluates if, and to what extent, it has

retained the risks and rewards of ownership. When it

has neither transferred nor retained substantially all

of the risks and rewards of the asset, nor transferred

control of the asset, the Group continues to recognise

the transferred asset to the extent of its continuing

involvement. In that case, the Group also recognises

an associated liability. The transferred asset and the

associated liability are measured on a basis that reflects

the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a

guarantee over the transferred asset is measured at the

lower of the original carrying amount of the asset and

the maximum amount of consideration that the Group

could be required to repay.

4.9.1.4 Impairment of financial assets

The Group recognises an allowance for Expected Credit

Losses (ECLs) for all debt instruments not held at fair

value through profit or loss. ECLs are based on the

difference between the contractual cash flows due in

accordance with the contract and all the cash flows

that the Group expects to receive, discounted at an

approximation of the original effective interest rate. The

expected cash flows will include cash flows from the sale

of collateral held or other credit enhancements that are

integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures

for which there has not been a significant increase in

credit risk since initial recognition, ECLs are provided

for credit losses that result from default events that are

possible within the next 12-months (a 12-month ECL).

For those credit exposures for which there has been a

significant increase in credit risk since initial recognition,

a loss allowance is required for credit losses expected

over the remaining life of the exposure, irrespective of

the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group

applies a simplified approach in calculating ECLs.

Therefore, the Group does not track changes in credit

risk, but instead recognises a loss allowance based

on lifetime ECLs at each reporting date. The Group

has established a provision matrix that is based on its

historical credit loss experience, adjusted for forward-


looking factors specific to the debtors and the economic

environment.

The Group considers a financial asset in default when

contractual payments are 180 days past due. However,

in certain cases, the Group may also consider a

financial asset to be in default when internal or external

information indicates that the Group is unlikely to receive

the outstanding contractual amounts in full before

taking into account any credit enhancements held by

the Group. A financial asset is written off when there is

no reasonable expectation of recovering the contractual

cash flows.

Further disclosures relating to impairment of financial

assets are also provided in the following notes:

• Trade receivables Note 21.1 to the financial statements

4.9.2 Financial liabilities

4.9.2.1 Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as

loans and borrowings, payables.

All financial liabilities are recognised initially at fair value

and, in the case of loans and borrowings and payables,

net of directly attributable transaction costs.

The Group’s financial liabilities include trade and

other payables, loans and borrowings including bank

overdrafts

4.9.2.2 Subsequent measurement

The measurement of financial liabilities depends on their

classification, as described below:

4.9.2.3 Loans and borrowings

This is the category most relevant to the Group. After

initial recognition, interest-bearing loans and borrowings

are subsequently measured at amortised cost using the

EIR method. Gains and losses are recognised in profit

or loss when the liabilities are derecognised as well as

through the EIR amortisation process.

Amortised cost is calculated by taking into account any

discount or premium on acquisition and fees or costs

that are an integral part of the EIR. The EIR amortisation

is included as finance costs in the statement of profit or

loss.

This category generally applies to interest bearing loans

and borrowings. For more information, refer to Note 28

to the financial statement.

4.9.2.4 De-recognition

A financial liability is de-recognised when the obligation

under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another

from the same lender on substantially different terms,

or the terms of an existing liability are substantially

modified, such an exchange or modification is treated

as the de-recognition of the original liability and the

recognition of a new liability. The difference in the

respective carrying amounts is recognised in the

statement of profit or loss.

4.9.3 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the

net amount is reported in the consolidated statement of

financial position if there is a currently enforceable legal

right to offset the recognised amounts and there is an

intention to settle on a net basis, to realise the assets and

settle the liabilities simultaneously.

4.10 Inventories

Inventories are valued at the lower of cost and net

realisable value. Costs incurred in bringing each product

to its present location and condition are accounted for

as follows:

• Raw materials: Weighted average directly attributable

cost

• Finished goods and work in progress: cost of

direct materials and labour and a proportion of

manufacturing overheads based on the normal

operating capacity, but excluding borrowing costs

Initial cost of inventories includes the transfer of gains

and losses on qualifying cash flow hedges, recognised in

OCI, in respect of the purchases of raw materials.

Net realisable value is the estimated selling price in the

ordinary course of business, less estimated costs of

completion and the estimated costs necessary to make

the sale.

4.10.1 Inventory property

Property acquired or being constructed for sale in the

ordinary course of business, rather than to be held

for rental or capital appreciation, is held as inventory

property and is measured at the lower of cost and net

realisable value (NRV).



Principally, this is residential property that the Group

develops and intends to sell before, or on completion of,

development.

Cost incurred in bringing each property to its present

location and condition includes:

• Freehold land

• Amounts paid to contractors for development

• Planning and design costs, costs of site preparation,

professional fees for legal services, property transfer

taxes, development overheads and other related costs

NRV is the estimated selling price in the ordinary course

of the business, based on market prices at the reporting

date, less estimated costs of completion and the

estimated costs necessary to make the sale.

When an inventory property is sold, the carrying amount

of the property is recognised as an expense in the period

in which the related revenue is recognised. The carrying

amount of inventory property recognised in profit or loss

is determined with reference to the directly attributable

costs incurred on the property sold and an allocation of

any other related costs based on the relative size of the

property sold.

4.11 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, or when annual impairment

testing for an asset is required, the Group 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 of disposal and its value

in use. The recoverable amount 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. When 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 of disposal,

recent market transactions are taken into account. 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 companies or other available fair

value indicators.

The Group bases its impairment calculation on detailed

budgets and forecast calculations, which are prepared

separately for each of the Group’s CGUs to which the

individual assets are allocated. These budgets and

forecast calculations generally cover a period of five

years. For longer periods, a long-term growth rate is

calculated and applied to project future cash flows after

the fifth year.

Impairment on inventories is recognised in the profit or

loss in expense categories consistent with the function of

the impaired asset.

For assets excluding goodwill, an assessment is made

at each reporting date to determine whether there is

an indication that previously recognised impairment

losses no longer exist or have decreased. If such

indication exists, the Group estimates the asset’s or

CGU’s recoverable amount. A previously recognised

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

recognised. 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 recognised for the asset in prior

years. Such reversal is recognised in the profit or loss

unless the asset is carried at a revalued amount, in which

case, the reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually and as when

circumstances indicate that the carrying value may be

impaired.

Impairment is determined for goodwill by assessing the

recoverable amount of each CGU (or Group of CGUs)

to which the goodwill relates. When the recoverable

amount of the CGU is less than its carrying amount,

an impairment loss is recognised. Impairment losses

relating to goodwill cannot be reversed in future periods.

4.12 Cash and short-term deposits

Cash and short-term deposits in the statement of

financial position comprise cash at banks and on hand

and short-term deposits with a maturity of three months

or less, which are subject to an insignificant risk of

changes in value.

For the purpose of the consolidated statement of cash

flows, cash and cash equivalents consist of cash and

short-term deposits, as defined above, net of outstanding

bank overdrafts as they are considered an integral part of

the Group’s cash management.


4.13 Provisions, contingent assets and contingent

liabilities

Provisions are recognised when the Group has a

present obligation (legal or constructive) as a result of

a past event, it is probable that an outflow of resources

embodying economic benefits will be required to settle

the obligation and a reliable estimate can be made of the

amount of the obligation. When the Group expects some

or all of a provision to be reimbursed, the reimbursement

is recognised as a separate asset, but only when the

reimbursement is virtually certain. The expense relating

to a provision is presented in the profit or loss net of any

reimbursement.

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

provisions are discounted using a current pre-tax rate

that reflects, when appropriate, the risks specific to the

liability. When discounting is used, the increase in the

provision due to the passage of time is recognised as a

finance cost.

4.14 Defined contribution plans- Employees’

provident fund and employees’ trust fund

Employees are eligible for employees’ provident fund

contributions and employees’ trust fund contributions

in line with respective statutes and regulations. The

company contributes the defined percentages of gross

emoluments of employees to an approved employees’

provident fund of 12% and to the employees’ trust fund

of 3% respectively, which are externally funded.

4.15 Defined employee benefit liabilities

The liability recognised in the statement of financial

position is the present value of the defined benefit

obligation at the reporting date using the projected

unit credit method. Any remeasurements gains or

losses arising are recognised immediately in the other

comprehensive income. Remeasurements are not

reclassified to profit or loss in subsequent periods. The

liability is not externally funded.

4.16 Revenue from contracts with customers

The Group is in the business of operating hotels,

manufacturing construction materials and real estate.

Revenue from contracts with customers is recognised

when control of the goods are transferred to the

customer at an amount that reflects the consideration to

which the Group expects to be entitled in exchange for

those goods.

4.16.1 Sale of goods

Revenue from sale of goods is recognised at the point

in time when control of the asset is transferred to the

customer, considering relevant terms of delivery. The

normal credit term is 30 to 90 days upon delivery.

The Group considers whether there are other promises in

the contract that are separate performance obligations

to which a portion of the transaction price needs to be

allocated (e.g., warranties, customer loyalty points). In

determining the transaction price for the sale of goods,

the Group considers the effects of variable consideration,

the existence of significant financing components, non-

cash consideration, and consideration payable to the

customer (if any).

4.16.2 Services transferred over time

Group determines at contract inception whether it

satisfies the performance obligation over time or at a

point in time. For each performance obligation satisfied

overtime, the Group recognises the revenue over time by

measuring the progress towards complete satisfaction of

that performance obligation.

Interest income

For all financial instruments measured at amortised

cost, interest income is recorded using the effective

interest rate (EIR). EIR is the rate that exactly discounts

the estimated future cash payments or receipts over

the expected life of the financial instrument or a shorter

period, where appropriate, to the net carrying amount of

the financial asset or liability.

Dividends

Revenue is recognised when the Group’s right to receive

the payment is established, which is generally when

shareholders approve the dividend and in the case of

quoted securities is the ex-dividend date.

Rental income

Rental income arising from operating leases on

investment property is accounted for on a straight-line

basis over the lease terms.

Room, food and beverage income

The room, food and beverage income gross turnover

comprise proceeds from provision of food, beverage,

lodging and other hospitality industry related activities.

The net turnover excludes turnover taxes and trade

discounts.



The specific recognition criteria described below must

also be met before revenue is recognised.

a) Room revenue is recognised on the rooms occupied

on daily basis.

b) Food and Beverage revenue is recognised at the time

of sales.

c) Other Hotel Related Revenue is accounted when such

service is rendered.

4.16.3 Significant financing component

Generally, the Group receives short-term advances from

its customers. Using the practical expedient in SLFRS

15, the Group does not adjust the promised amount of

consideration for the effects of a significant financing

component if it expects, at contract inception, that the

period between the transfer of the promised good or

service to the customer and when the customer pays for

that good or service will be one year or less.

4.16.4 Contract balances

4.16.4.1 Trade receivables

A receivable represents the Group’s right to an amount of

consideration that is unconditional (i.e., only the passage

of time is required before payment of the consideration

is due). Refer to accounting policies of financial assets in

note 4.9) Financial instruments – initial recognition and

subsequent measurement.

4.16.4.2 Contract liabilities

A contract liability is the obligation to transfer goods or

services to a customer for which the Group has received

consideration (or an amount of consideration is due)

from the customer. If a customer pays consideration

before the Group transfers goods to the customer, a

contract liability is recognised when the payment is

made or the payment is due (whichever is earlier).

Contract liabilities are recognised as revenue when the

Group performs under the contract.

4.17 Expenses

Expenses are recognised in the profit or loss on the basis

of a direct association between the cost incurred and

the earning of specific items of income. All expenditure

incurred in the running of the business and in

maintaining the property, plant and equipment in a state

of efficiency has been charged to the profit or loss.

For the purpose of presentation of the profit or loss, the

“function of expenses” method has been adopted, on the

basis that it presents fairly the elements of the Group’s

and Company’s performance.

4.18 Foreign currencies

For each entity, the Group determines the functional

currency and items included in the financial statements

of each entity are measured using that functional

currency. The Group uses the direct method of

consolidation and on disposal of a foreign operation, the

gain or loss that is reclassified to profit or loss reflects the

amount that arises from using this method.

Transactions and balances

Transactions in foreign currencies are initially recorded

by the Group’s entities at their respective functional

currency spot rates at the date the transaction first

qualifies for recognition.

Monetary assets and liabilities denominated in foreign

currencies are translated at the functional currency spot

rates of exchange at the reporting date.

Differences arising on settlement or translation of

monetary items are recognised in profit or loss with the

exception of monetary items that are designated as part

of the hedge of the Group’s net investment in a foreign

operation. These are recognised in OCI until the net

investment is disposed of, at which time, the cumulative

amount is reclassified to profit or loss. Tax charges and

credits attributable to exchange differences on those

monetary items are also recorded in OCI.

Non-monetary items that are measured in terms of

historical cost in a foreign currency are translated using

the exchange rates at the dates of the initial transactions.

Non-monetary items measured at fair value in a foreign

currency are translated using the exchange rates at the

date when the fair value is determined.

The gain or loss arising on translation of non-monetary

items measured at fair value is treated in line with the

recognition of the gain or loss on the change in fair value

of the item (i.e., translation differences on items whose

fair value gain or loss is recognised in OCI or profit or loss

are also recognised in OCI or profit or loss, respectively).


4.19 Tax

4.19.1 Current income tax

Current income tax assets and liabilities are measured

at the amount expected to be recovered from or paid to

the taxation authorities. The tax rates and tax laws used

to compute the amount are those that are enacted or

substantively enacted at the reporting date.

Current income tax relating to items recognised directly

in equity is recognised in equity and not in the profit or

loss. Management periodically evaluates positions taken

in the tax returns with respect to situations in which

applicable tax regulations are subject to interpretation

and establishes provisions where appropriate.

4.19.2 Deferred tax

Deferred tax is provided using the liability method on

temporary differences between the tax bases of assets

and liabilities and their carrying amounts for financial

reporting purposes at the reporting date. Deferred

tax liabilities are recognised for all taxable temporary

differences, except:

• When the deferred tax liability arises from the initial

recognition of goodwill or an asset or liability in a

transaction that is not a business combination and,

at the time of the transaction, affects neither the

accounting profit nor taxable profit or loss.

• In respect of taxable temporary differences associated

with investments in subsidiaries, associates and

interests in joint ventures, when the timing of the

reversal of the temporary differences can be controlled

and it is probable that the temporary differences will

not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible

temporary differences, the carry forward of unused tax

credits and any unused tax losses. Deferred tax assets are

recognised to the extent that it is probable that taxable

profit will be available against which the deductible

temporary differences, and the carry forward of unused

tax credits and unused tax losses can be utilised, except:

• When the deferred tax asset relating to the deductible

temporary difference arises from the initial recognition

of an asset or liability in a transaction that is not

a business combination and, at the time of the

transaction, affects neither the accounting profit nor

taxable profit or loss.

• In respect of deductible temporary differences

associated with investments in subsidiaries, associates

and interests in joint arrangements, deferred tax assets

are recognised only to the extent that it is probable

that the temporary differences will reverse in the

foreseeable future and taxable profit will be available

against which the temporary differences can be

utilised.

The carrying amount of deferred tax assets is reviewed

at each reporting date and reduced to the extent that it

is no longer probable that sufficient taxable profit will

be available to allow all or part of the deferred tax asset

to be utilised. Unrecognised deferred tax assets are

re-assessed at each reporting date and are recognised

to the extent that it has become probable that future

taxable profits will allow the deferred tax asset to be

recovered.

Deferred tax assets and liabilities are measured at the

tax rates that are expected to apply in the year when

the asset is realised or the liability is settled, based

on tax rates (and tax laws) that have been enacted or

substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit

or loss is recognised outside profit or loss. Deferred tax

items are recognised in correlation to the underlying

transaction either in OCI or directly in equity. Deferred

tax assets and deferred tax liabilities are offset if a legally

enforceable right exists to set off current tax assets

against current tax liabilities and the deferred taxes

relate to the same taxable entity and the same taxation

authority.

4.20 General

4.20.1 Events occurring after the reporting date

All material post reporting date events have been

considered and where appropriate adjustments or

disclosures have been made in the financial statements.

Refer Note 40 to the financial statements.

4.20.2 Earnings per share

The Group presents basic and diluted earnings per share

(EPS) for its ordinary shares. Basic EPS is calculated

by dividing the profit or loss attributable to ordinary

shareholders of the Company by the weighted average

number of ordinary shares outstanding during the

period. Diluted EPS is determined by adjusting the profit

or loss attributable to ordinary shareholders and the

weighted average number of ordinary shares outstanding

for the effects of all dilutive potential ordinary shares.



4.21 Significant accounting judgments, estimates and

assumptions

The preparation of the Group’s consolidated financial

statements requires management to make judgements,

estimates and assumptions that affect the reported

amounts of revenues, expenses, assets and liabilities,

and the accompanying disclosures, and the disclosure

of contingent liabilities. Uncertainty about these

assumptions and estimates could result in outcomes that

require a material adjustment to the carrying amount

of assets or liabilities affected in future periods. Other

disclosures relating to the Group’s exposure to risks and

uncertainties includes:

• Capital management Note 14.4 to the financial

statements.

• Financial risk management and policies Note 14 to the


• Sensitivity analyses disclosures Notes 14.3.1 and 27 to

the financial statements.

Estimates and assumptions

The key assumptions concerning the future and other

key sources of estimation uncertainty at the reporting

date, that have a significant risk of causing a material

adjustment to the carrying amounts of assets and

liabilities within the next financial year, are described

below. The Group based its assumptions and estimates

on parameters available when the consolidated financial

statements were prepared. Existing circumstances and

assumptions about future developments, however, may

change due to market changes or circumstances arising

that are beyond the control of the Group. Such changes

are reflected in the assumptions when they occur.

4.21.1 Going concern

The Directors have made an assessment of the Group’s

ability to continue as a going concern and is satisfied

that it has the resources to continue in business for the

foreseeable future.

The assessment includes the existing and anticipated

effects of the COVID-19 pandemic on the significant

assumptions that are sensitive or susceptible to

change or are inconsistent with historical trends.

As the economic effects of COVID-19 continue to

evolve, management considered a range of scenarios

to determine the potential impact on underlying

performance and future funding requirements.

Furthermore, management is not aware of any material

uncertainties that may cast significant doubt upon the

Group’s ability to continue as a going concern. Therefore,

the financial statements continue to be prepared on the

going concern basis.

4.21.2 Revaluation of property, plant and equipment and

investment properties

The Group carries its investment properties and property,

plant and equipment at fair values, with changes in

fair value being recognised in the statement of profit

or loss and other comprehensive income respectively.

For investment properties and certain property, plant

and equipment, a valuation methodology based on a

discounted cash flow (DCF) model was used, as there is a

lack of comparable market data because of the nature of

the properties.

The Group engaged an independent valuation specialist

to assess fair values as at 31 March 2020 for investment

properties and land and buildings (classified as property,

plant and equipment).

The key assumptions used to determine the fair value of

the properties and sensitivity analyses are provided in

Notes 15 and 17 to the financial statements

4.21.3 Taxation

Deferred tax assets are recognised for unused tax losses

to the extent that it is probable that taxable profit will

be available against which the losses can be utilised.

Significant management judgement is required to

determine the amount of deferred tax assets that can be

recognised, based upon the likely timing and the level of

future taxable profits together as with future tax planning

strategies.

The Group has LKR 1,872 Mn (2019: LKR 406 Mn) of

unused tax losses for which no deferred tax asset is

recognised in the statement of financial position.

These losses relate to Company and subsidiaries that

have a history of losses and may not be used to offset

taxable income elsewhere in the Group. The Company

and subsidiaries neither have any taxable temporary

difference nor any tax planning opportunities available

that could partly support the recognition of these losses

as deferred tax assets. On this basis, the Group has

determined that it cannot recognise deferred tax assets

on the tax losses carried forward.

Further details on taxes are disclosed in Note 11 and 26

to the financial statements.


4.22 Standards issued but not yet effective

The amended standards that are issued, but not yet

effective up to the date of issuance of these financial

statements are disclosed below. The Group intends to

adopt these amended standards, if applicable, when

they become effective.

4.22.1 Amendments to LKAS 1 and LKAS 8: Definition of

Material

Amendments to LKAS 1 Presentation of Financial

Statements and IAS 8 Accounting policies, Changes in

accounting Estimates and Errors are made to align the

definition of “material” across the standard and to clarify

certain aspects of the definition. The new definition

states that, “information is material if omitting or

obscuring it could reasonably be expected to influence

decisions that the primary users of general purpose

financial statements make on the basis of those financial

statements, which provide financial information about a

specific reporting entity.

The amendments are applied prospectively for the

annual periods beginning on or after 1 January 2020 with

early application permitted.

Pending the completion of detailed review of such

amendments, the extent of the probable impact is not

yet reasonably estimable.

4.22.2 Amendments to SLFRS 3: Definition of a Business

Amendments to the definition of a business in SLFRS 3

Business Combinations are made to help the entities

determine whether an acquired set of activities and

assets is a business or not. They clarify the minimum

requirements for a business, remove the assessment of

whether market participants are capable of replacing any

missing elements, add guidance to help entities assess

whether an acquired process is substantive, narrow the

definition of a business and of outputs, and introduce an

optional fair value concentration test.

The amendments are applied prospectively to all

business combinations and asset acquisitions for

which the acquisition date is on or after the first annual

reporting period beginning on or after 1 January 2020,

with early application permitted.

The above amendments to SLFRS 3 is not expected to

have a material impact on the consolidated financial

statements of the group in the foreseeable future.

4.22.3 Amendments to References to the Conceptual

Framework in SLFRS Standards

Revisions to the Conceptual Framework were made

because some important issues were not covered,

and some guidance was unclear or out of date. The

revised Conceptual Framework includes: a new chapter

on measurement; guidance on reporting financial

performance; improved definitions of an asset and a

liability, and guidance supporting these definitions; and

clarifications in important areas, such as the roles of

stewardship, prudence and measurement uncertainty in

financial reporting.

The amendments are effective for annual periods

beginning on or after 1 January 2020, with early

application is permitted.

Pending the completion of detailed review of such

amendments, the extent of the probable impact is not

yet reasonably estimable.



In LKR Group Company


5 REVENUE FROM CONTRACTS WITH CUSTOMERS

Interest income on loans to subsidiaries - - 37,032,728 13,990,520

Rental income derived from investment property 9,554,562 69,900,000 - -

Sale of paving blocks 65,498,711 79,454,902 - -

Dividend income - 454 - 454

Room, food and beverage income 128,848,643 - - -

203,901,916 149,355,356 37,032,728 13,990,974

6 OTHER OPERATING INCOME

Net gain on disposal of property, plant & equipment - 2,535,601 - -

Sundry income 3,471,770 1,637,979 - -

Write back of provision 1,239,294 - - -

Foreign exchange gain 2,043,546 - - -

Rent income derived from property, plant and equipment - 6,000,000 - -

6,754,610 10,173,580 - -

7 OTHER OPERATING EXPENSES

Net loss on financial instruments at fair value

through profit or loss 30,719 23,402 30,719 23,402

Bank charges 608,546 81,291 72,484 20,983

Security chargers 2,344,750 - - -

Rates & taxes 732,966 2,014,977 - -

Net loss on sale of investment property - 5,200,000 - -

Other operating expenses 753,476 75,000 - -

4,470,457 7,394,670 103,203 44,385

8 FINANCE COST

Interest expenses on bank overdraft 1,471,381 1,694,006 600 1,321

Interest expenses on interest bearing borrowings 139,973,710 21,985,734 21,343,584 -

Interest expenses on finance leases 4,968,441 5,233,305 - -

Interest expenses on related party loans 3,057,534 3,062,920 3,057,534 3,062,920

Unrealised exchange loss 19,204,850 - - -

168,675,916 31,975,965 24,401,718 3,064,241




9 FINANCE INCOME

Interest income on short- term investments 1,784,717 10,885,236 523,036 8,014,917

1,784,717 10,885,236 523,036 8,014,917

10 PROFIT/(LOSS) BEFORE TAX FROM CONTINUING

OPERATIONS

Profit/(loss) before tax is stated after charging all expenses

including the following;

Directors' fees 5,400,000 5,400,000 5,400,000 5,400,000

Audit service

Ernst & Young 2,044,972 1,236,692 551,388 598,610

T&D Associates 361,648 - - -

Non audit service

Ernst & Young 716,804 - - -

Staff cost

Defined benefit plan cost 393,344 325,082 (98,605) 99,622

Defined contribution plan cost - EPF & ETF 3,159,360 1,020,308 238,976 612,784

Other staff cost (excluding defined benefit plan

cost and defined contribution plan cost) 23,245,167 18,154,038 2,410,007 5,771,894

Technical service fees 65,864,178 29,913,402 9,092,413 10,099,243

Depreciation of property, plant and equipment & lease

hold assets 27,556,716 15,087,868 41,083 1,214,583

Impairment of trade receivables 2,836,593 - - -

Impairment other receivable 19,905,358 - - -

Impairment of investments in subsidiaries - - 14,415,555 -




For the year ended 31 March Note 2020 2019 2020 2019

11 TAX EXPENSE

Current income tax:

Current income tax charge 11.1 - - - -

Under/(over) provision in respect of current

income tax of previous year (117,780) - - -

Deferred tax:

Relating to origination and reversal of temporary

differences 11.2 152,560,527 11,901,168 39,350 151,338

Income tax expense reported in the income

statement 152,442,747 11,901,168 39,350 151,338

11.1 Reconciliation of tax expense and the

accounting profit

Accounting profit/(loss) before tax 762,328,156 15,540,472 (28,305,157) (10,906,334)

Dividend income - (454) - (454)

Disallowable expenses 78,729,244 34,824,495 2,012,402 2,012,402

Allowable expenses (150,829,440) (40,676,168) (414,914) (414,914)

Income not liable for income tax (1,037,759,904) (48,096,667) - -

Utilisation of previously unrecognised tax losses 11.3 (199,739) (15,344,355) - -

Taxable profit/(loss) for the year (347,731,683) (53,752,677) (26,707,669) (9,309,300)

Income tax charged at

Income tax @ 28% - - - -

Income tax @ 20% - - - -

Income tax @ 14% - - - -

Adjustments in respect of current income tax of

previous year - - - -

Charge for the year - - - -

Deferred tax charge/(reversal) 11.2 152,560,527 11,901,168 39,350 151,338

Income tax expense reported in the income

statement 152,560,527 11,901,168 39,350 151,338




11.2 Deferred tax expense/(reversal)

Deferred tax expense arising from;

Accelerated depreciation for tax purposes 152,499,006 22,496,988 39,350 20,920

Retirement benefit obligations (5,410) 67,290 - 130,419

Losses available for off setting against future

taxable income (8,783,065) (14,612,848) - -

Unrealised exchange gain/loss - - - -

Gain on fair value of investment properties 8,849,996 3,949,738 - -

Deferred tax charge/(reversal) 152,560,527 11,901,168 39,350 151,339

Deferred tax related to items recognise in OCI

during the year

Gain on revaluation of land 29,400,000 - - -

Gain on revaluation of building 5,761,114 - - -

Net loss/(gain)on actuarial gain and losses (30,424) 18,533 - (50,129)

Deferred tax charged to OCI 35,130,690 18,533 - (50,129)

187,691,217 11,919,701 39,350 101,210

11.3 Tax losses carried forward

Tax losses brought forward 574,530,464 542,013,077 357,603,183 338,497,440

Acquisition through business combination 1,484,825,069 - - -

Tax losses for the year 379,345,731 41,927,890 26,707,669 9,309,300

Adjustments on finalisation of liability 7,589,634 5,933,852 - 9,796,443

Utilisation of previously unrecognised tax losses (199,739) (15,344,355) - -

Tax losses carried forward 2,446,091,159 574,530,464 384,310,852 357,603,183

LKR 1,872 Mn (2019: LKR 406 Mn) of unused tax losses for which no deferred tax asset is recognised in the statement of

financial position.

The unused tax losses amounted to LKR 2,446 Mn (2019: LKR 575 Mn), shall be expired in year of assessment 2024/25 and

2025/26.



11.4 Applicable rates of income tax

Resident companies in the Group, excluding the company which enjoys a concessionary rate of taxation, were liable to income

tax at 28% during year of assessment 2019/20, (Y/A 2018/19 - 28%).

11.4.1 From 1st April 2018 corporate income taxes of companies resident in Sri Lanka will be subjected to the Inland Revenue Act

No.24 of 2017.

11.5 Concessions granted under the Board of Investment Law

Company Nature Period Concessionary

Tax Rates

Lanka Realty Developments (Pvt) Ltd Commercial property development Starting from 01

April 2014

20%

11.5 Concessions granted under the Inland Revenue Act No. 24 of 2017

Company Nature Concessionary

Tax Rates

Almond Trees (Pvt) Ltd Hotel Operation 14%

Ilook Villa (Pvt) Ltd Hotel Operation 14%

Alexandra Holdings (Pvt) Ltd Renting of Villas 14%

12 EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share

Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted

average number of ordinary shares outstanding during the year.

Diluted earnings/(loss) per share

Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted average

number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be

issued on conversion of the dilutive potential ordinary shares into ordinary shares.



12.1 Basic earnings/(loss) per share

Profit/(loss) attributable to ordinary equity holders of the

parent for the basic and diluted EPS calculations. 615,453,503 3,969,202 (28,344,507) (11,057,672)

Weighted average number of ordinary shares for basic EPS* 137,233,155 27,049,022 137,233,155 27,049,022

Weighted average number of ordinary shares adjusted for

the effect of dilution* 207,645,568 27,049,022 207,645,568 27,049,022

*The weight average number of shares takes into account the weighted average effect of the change in ordinary shares

during year.




12.1 Basic earnings/(loss) per share

Profit /(loss) attributable to

ordinary equity holders of the parent 615,453,503 3,969,202 (28,344,507) (11,057,672)

Weighted average number of ordinary shares for basic EPS 137,233,155 27,049,022 137,233,155 27,049,022

Basic earnings/(loss) per share 4.48 0.15 (0.21) (0.41)

12.2 Diluted earnings/(loss) per share

Profit/(loss) attributable to equity holders of the parent 615,453,503 3,969,202 (28,344,507) (11,057,672)

Weighted average number of ordinary shares adjusted for

the effect of dilution 207,645,568 27,049,022 207,645,568 27,049,022

Diluted earnings/(loss) per share 2.96 0.15 (0.14) (0.41)

13 FINANCIAL INSTRUMENTS

13.1 Financial assets and liabilities by class

Set out below is a comparison by class of the carrying amounts and fair values of the Group’s and Company’s financial

instruments that are carried in the financial statements.


Financial assets by class Carrying value Fair value Carrying value Fair value

For the year ended 31 March 2020 2020

Financial instruments in current assets

Loans and receivables

Trade and other receivables 22,580,461 22,580,461 283,905 283,905

Amounts due from related parties 8,479,479 8,479,479 588,149,410 588,149,410

Financial assets-fair value through profit or loss 66,923 66,923 66,923 66,923

Short-term investments 67,408 67,408 - -

Cash in hand and at bank 46,351,370 46,351,370 9,827,311 9,827,311

Total 77,545,641 77,545,641 598,327,549 598,327,549


Financial assets by class Carrying value Fair value Carrying value Fair value


Financial instruments in current assets

Loans and receivables

Trade and other receivables 35,510,839 35,510,839 283,905 283,905

Amounts due from related parties - - 103,240,449 103,240,449

Financial assets-fair value through profit or loss 97,642 97,642 97,642 97,642

Short-term investments 76,067,686 76,067,686 - -

Cash in hand and at bank 358,336 358,336 217,502 217,502

Total 112,034,503 112,034,503 103,839,498 103,839,498




Financial liabilities by class Financial liabilities measured at

amortised cost

Financial liabilities measured at

amortised cost

As at 31 March 2020 2019 2020 2019

Financial instruments in non-current liabilities

Interest bearing borrowings 2,121,138,956 26,358,503 553,343,328 -

Amount due to related parties 26,805,440 23,747,904 26,805,440 23,747,904

Financial instruments in current liabilities

Trade and other payables 108,959,019 24,468,052 610,426 641,176

Amounts due to related parties 34,281,410 14,112,100 5,852,196 19,837,351

Interest bearing borrowings 243,461,676 7,084,446 - -

Bank overdrafts 274,630,308 18,041,754 7,214 570,646

Total 2,809,276,809 113,812,759 586,618,604 44,797,077

The management assessed that, cash in hand and at bank, short-term investments, amounts due from related parties, trade

and other receivables, trade and other payables, amount due to related parties and bank overdrafts approximate to their

fair value largely due to the short-term maturities of these instruments. The fair value of loans and receivables and financial

liabilities does not significantly vary from the value based on the amortised cost methodology for the Group/Company.

The management also assessed its interest bearing borrowings and since they are approximate to the floating market interest

rates and considered not significantly variable from fair value.

13.2 Financial assets and liabilities by fair value hierarchy

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

technique:

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

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

directly or indirectly.

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

market data.

The Group and the Company held the following financial and non-financial instruments carried at fair value in the statement of

financial position.


In LKR

As at 31 March Group

2020

Assets measured at fair value Total Level 1 Level 2 Level 3

Investment property / Property Plant & Equipment

(Note 17 & 15)

Land and building 9,416,864,445 - - 9,416,864,445

Long term lease hold rights of lands 351,019,097 - - 351,019,097

9,767,883,542 - - 9,767,883,542

Financial assets at fair value through profit or loss

Quoted equity shares (Note 22) 66,923 66,923 - -

Revalued property, plant and equipment

Land and building (Note 15) 1,870,000,000 - - 1,870,000,000

During the reporting period ended 31st March 2020, there were no transfer between level 1 and level 2 fair value measurements.

In LKR

As at 31 March Group

2019


Investment property / Property Plant & Equipment

(Note 17 & 15)

Land and building 1,541,071,628 - - 1,541,071,628

Long term lease hold rights of lands 329,597,755 - - 329,597,755

1,870,669,383 - - 1,870,669,383



Revalued property, plant and equipment

Land and building (Note 15) 241,000,000 - - 241,000,000

In LKR Company

As at 31 March 2020




In LKR Company

As at 31 March 2019






14 FINANCIAL RISK MANAGEMENT

The Group has exposure to the following risk from financial instruments

1. Credit risk

2. Liquidity risk

3. Market risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, polices and

processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are

included through out these consolidated financial statements.

The Board of Directors has the overall responsibility for the establishment and oversight of the Group’s financial risk

management framework which includes developing and monitoring the Group’s financial risk management policies.

Financial risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group

activities. The Lanka Realty Investments PLC’s audit committee overseas how management monitors compliance with the

Group’s financial risk managements polices and procedures, and review the adequacy of the financial risk management frame

work in relation to the risk faced by the Group.

14.1 Credit risk

Credit risk is the risk that 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 trade receivables) and from its

financing activities, including deposits with banks and financial institutions and other financial instruments.

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all clients who wish to trade on

credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis

with the result that the Group’s exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Group, such as cash and cash equivalents, financial

assets FVTPL, and the Group’s exposure to credit risk arises from default of the counterparty. The Group manages its operations

to avoid any excessive concentration of counterparty risk and the Group takes all reasonable steps to ensure the counterparties

fulfill their obligations.


14.1.1 Risk exposure

The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts

(without consideration of collateral, if available). Following table shows the maximum risk positions.

Group 2020

In LKR

As at 31 March

Notes Cash in

hand and

at bank

Fair value

through

profit

or loss

Trade

and other

receivables

Short-term

investments

Amounts

due from

related

parties

Total % of

allocation

Trade and other receivables 14.1.1.1 - - 22,580,461 - - 22,580,461 29%

Amounts due from related parties 14.1.1.2 - - - - 8,479,479 8,479,479 11%

Financial assets/Fair value through

profit or loss

14.1.1.3 - 66,923 - - - 66,923 0%

Short-term investments 14.1.1.4 - - - 67,408 - 67,408 0%

Cash in hand and at bank 14.1.1.4 46,351,370 - - - - 46,351,370 60%

Total credit risk exposure 46,351,370 66,923 22,580,461 67,408 8,479,479 77,545,641 100%

Group 2019

In LKR

As at 31 March

Notes Cash in

hand and

at bank

Fair value

through

profit

or loss

Trade

and other

receivables

Short-term

investments

Amounts

due from

related

parties

Total % of

allocation

Trade and other receivables 14.1.1.1 - - 35,510,839 - - 35,510,839 32%

Amounts due from related parties 14.1.1.2 - - - - - - 0%

Financial assets/Fair value through

profit or loss

14.1.1.3 - 97,642 - - - 97,642 0%

Short-term investments 14.1.1.4 - - - 76,067,686 - 76,067,686 68%

Cash in hand and at bank 14.1.1.4 358,336 - - - - 358,336 0%

Total credit risk exposure 358,336 97,642 35,510,839 76,067,686 - 112,034,503 100%



14.1.1 Risk exposure (Contd.)

Company 2020

In LKR

As at 31 March Notes

Cash in

hand and

at bank

Fair value

through

profit

or loss

Trade

and other

receivables

Short-term

investments

Amounts

due from

related

parties Total

% of

allocation

Trade and other receivables 14.1.1.1 - - 283,905 - - 283,905 0%


Financial assets at fair value

through profit or loss 14.1.1.3 - 66,923 - - - 66,923 0%

Short-term investments 14.1.1.4 - - - - - - 0%

Cash in hand and at bank 14.1.1.4 9,827,311 - - - - 9,827,311 2%

Total credit risk exposure 9,827,311 66,923 283,905 - 588,149,410 598,327,549 100%

Company 2019

In LKR

As at 31 March Notes

Cash in

hand and

at bank

Fair value

through

profit

or loss

Trade

and other

receivables

Short-term

investments

Amounts

due from

related

parties Total

% of

allocation

Trade and other receivables 14.1.1.1 - - 283,905 - - 283,905 0%


Financial assets at fair value

through profit or loss 14.1.1.3 - 97,642 - - - 97,642 0%

Short-term investments 14.1.1.4 - - - - - - 0%

Cash in hand and at bank 14.1.1.4 217,502 - - - - 217,502 0%

Total credit risk exposure 217,502 97,642 283,905 - 103,240,449 103,839,498 100%



14.1.1.1 Trade receivables

Neither past due nor impaired 12,435,745 11,276,873 - -

Past due but not impaired

30–60 days 1,943,537 946,189 - -

61–90 days 430,053 863 - -

91–180 days 1,611,981 411,854 - -

> 181 days 3,462,948 (539,169) - -

Impaired 8,764,390 5,927,797 - -

Gross carrying value 28,648,654 18,024,407 - -

Less: impairment provision

Individually assessed impairment provision 21.1.1 (8,764,390) (5,927,797) - -

Total 19,884,264 12,096,610 - -

The requirement for an impairment is analysed at each reporting date on an individual basis for all customers. The calculation

is based on actual incurred historical data.

The possible delay in getting past due receivables from the customers and request for extended credit periods as a result of

COVID-19 are being managed through negotiations with customers on settlements.


14.1.1.2 Amounts due from related parties

The Company’s/Group’s amounts due from related party mainly consists of the balance from subsidiaries (Companies under

common control) and other related companies respectively.

14.1.1.3 Fair value through profit or loss

The financial asset class of fair value through profit or loss consist of quoted investments held for trading purposes.

14.1.1.4 Credit risk relating to cash and cash equivalents

In order to mitigate the concentration, settlement and operational risks related to cash and cash equivalents, the Group/

Company consciously manages the exposure to a single counterparty taking into consideration, where relevant, the rating or

financial standing of the counterparty, where the position is reviewed as and when required, the duration of the exposure in

managing such exposures and the nature of the transaction and agreement governing the exposure.

14.2 Liquidity Risk

The Group’s policy is to hold cash and undrawn committed facilities at a level sufficient to ensure that the Group has available

funds to meet its medium term capital and funding obligations, including organic growth and acquisition activities, and to

meet any unforeseen obligations and opportunities. The Group holds cash and undrawn committed facilities to enable the

Group to manage its liquidity risk.

The Group monitors its risk to a shortage of funds using a daily cash management process. This process considers the maturity

of both the Group’s financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected

cash flows from operations.

All liquidity policies and procedures are subject to review and approval by the Board of Directors. Daily reports cover the

liquidity position of the Group and operating subsidiaries.

Liquidity risk arising from extending credit periods to customers, due to COVID-19 is being managed through negotiating

additional overdraft/short-term financing facilities with banks. In addition the Group has also obtained Saubagya COVID-19

renaissance loans to manage the liquidity risk.


As at 31 March 2020 2019 2020 2019

14.2.1 Net (debt)/cash

Cash in hand and at bank 46,351,370 358,336 9,827,311 217,502

Short-term investments - less than three months 67,408 76,067,686 - -

Liquid assets 46,418,778 76,426,022 9,827,311 217,502

Bank overdrafts 274,630,308 18,041,754 7,214 570,646

Liquid liabilities 274,630,308 18,041,754 7,214 570,646

(Net debt)/cash (228,211,530) 58,384,268 9,820,097 (353,144)



14.2.2 Maturity analysis

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

payments.

Group 2020

In LKR Within Between Between Between Between More than Total

As at 31 March 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years 5 years

Refer Note 13.1 to the financial statements

Interest bearing borrowings 242,224,650 - - 2,050,868,727 338,397,981 2,631,491,358

Trade and other payables 108,959,019 - - - - - 108,959,019

Amounts due to related parties 61,086,850 - - - - - 61,086,850

Bank overdrafts 274,630,308 - - - - - 274,630,308

Total 686,900,827 - - -

2,050,868,727 338,397,981

3,076,167,535

Group 2019



Interest bearing borrowings 5,901,124 - - 19,051,602 284,689,072 309,641,798

Trade and other payables 24,468,052 - - - - - 24,468,052


Bank overdrafts 18,041,754 - - - - - 18,041,754

Total 62,523,030 - - - 19,051,602 284,689,072 366,263,704

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

Company 2020



Interest bearing borrowings 553,343,328 553,343,328

Trade and other payables 610,426 - - - - - 610,426


Bank overdrafts 7,214 - - - - - 7,214

Total 6,469,836 - - - 553,343,328 - 559,813,164

Company 2019



Trade and other payables 641,176 - - - - - 641,176


Bank overdrafts 570,646 - - - - - 570,646

Total 21,049,173 - - - - - 21,049,173


14.3 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 prices comprise four types of risk: interest rate risk, foreign currency risk, commodity price risk and other

price risk, such as equity price risk. The financial instruments affected by the Group is FVTPL investments which include equity

securities.

The Group is exposed to foreign currency risk on revenue and cash denominated in currencies other than the functional

currency of the Company. The currencies giving rise to this risk are primarily US Dollars and Sterling Pounds.

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while

optimising the return.

14.3.1 Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in

market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Company’s

long-term debt obligations with floating interest rates.


As at 31 March Increase/

(decrease)

in basis points

Effect on

profit before

tax (LKR)

Increase/

(decrease)

in basis points

Effect on

profit before

tax (LKR)

2020 +308 (38,849,827) +308 (17,042,975)

-308 38,849,827 -308 17,042,975

2019 +125 (91,041) +125 -

-125 91,041 -125 -

14.3.2 Equity price risk

The Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future

values of the investment securities.

14.3.3 Financial assets or loss investments

All quoted equity and unquoted equity investments are made after obtaining the approval of the Board of Directors approval.

14.4 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 to support its business and maximise shareholder value.

The Group manages its capital structure, and makes adjustments to it, in the light of changes in economic conditions.

To maintain or adjust the capital structure, the Group may issue new shares, have a rights issue or buy back of shares.


As at 31 March 2020 2019 2020 2019

Interest bearing borrowings 2,364,600,632 33,442,949 553,343,328 -

Trade and other payables 108,959,019 24,468,052 610,426 641,176

Less: Cash in hand, at bank and short-term investments (46,418,778) (76,426,022) (9,827,311) (217,502)

Net debt 2,427,140,873 (18,515,021) 544,126,443 423,674

Equity 8,056,387,821 1,667,840,381 6,680,315,189 1,113,990,825

Total capital 8,056,387,821 1,667,840,381 6,680,315,189 1,113,990,825

Capital and net debt 10,483,528,695 1,649,325,360 7,224,441,632 1,114,414,499

Gearing ratio 23% 0% 8% 0%



15 PROPERTY, PLANT AND EQUIPMENT

15.1 Group

In LKR Land &

building

Plant,

machinery

Cutlery,

Cookery &

Linen

Furniture &

fittings, tools

& other office

equipment

Motor

vehicles

Capital work

in progress

Total Total

As at 31 March 2020 2019

Cost

Freehold assets

At the beginning of the year 253,866,019 86,653,595 - 9,333,482 9,276,554 6,169,188 365,298,838 371,670,903

Acquisition through business

combinations 1,464,392,311 28,739,338 6,800,810 52,116,093 - - 1,552,048,552 -

Additions 2,763,283 7,600,386 929,591 3,297,838 - - 14,591,098 30,470,373

Gain on revaluation 148,978,387 - - - - - 148,978,387 -

Transfer - 6,169,188 - - - (6,169,188) - -

Transfer** - - - - - - - 3,582,583

Transfer*** - - - - - - - (4,052,188)

Disposal - - - - - - - (36,372,833)

At the end of the year 1,870,000,000 129,162,507 7,730,401 64,747,413 9,276,554 - 2,080,916,875 365,298,838

Leasehold assets

At the beginning of the year - 8,500,000 - - - - 8,500,000 37,082,583


combinations

- - - - - - - -

Disposal - - - - - - - (25,000,000)

Transfer** - - - - - - - (3,582,583)

At the end of the year - 8,500,000 - - - 8,500,000 8,500,000

Right-of-use assets, except for

investment property

At the beginning of the year 323,777,930 - - - 5,819,826 329,597,756 -

transfer*/ transfer*** - - - - - - 302,552,188

Additions - - - - 8,400,097 8,400,097 1,767,638

Gain on revaluation 14,500,000 - - - - 14,500,000 -

Disposal (1,478,756) - - - - - (1,478,756) -

Re-classification (Note 15.1.2) - - - - - - 25,277,930

At the end of the year 336,799,174 - - - - 14,219,923 351,019,097 329,597,756

Total value of assets 2,206,799,174 137,662,507 7,730,401 64,747,413 9,276,554 14,219,923 2,440,435,972 703,396,594


In LKR Land &

building

Plant,

machinery

Cutlery,

Cookery &

Linen

Furniture &

fittings, tools

& other office

equipment

Motor

vehicles

Capital work

in progress

Total Total

As at 31 March 2020 2019

Depreciation and impairment

Freehold assets

At the beginning of the year 7,794,391 63,324,211 - 8,584,778 7,812,295 - 87,515,675 105,139,319


combinations

29,849,796 25,895,198 6,755,297 49,606,386 - - 112,106,677 -

Charge for the year 18,475,335 7,443,805 (100,976) 1,029,501 709,051 - 27,556,716 15,087,868

Disposal - - - - - - - (33,888,074)

Transfer**** (56,119,523) - - - - - (56,119,523) 1,176,561

At the end of the year - 96,663,214 6,654,321 59,220,665 8,521,346 - 171,059,545 87,515,674

Leasehold assets

At the beginning of the year - 850,000 - - - - 850,000 21,746,926

Charge for the year - 850,000 - - - - 850,000 -

Transfer** - - - - - - - (1,176,564)

Disposals - - - - - - - (19,720,362)

At the end of the year - 1,700,000 - - - 1,700,000 850,000

Total depreciation and impairment - 98,363,214 6,654,321 59,220,665 8,521,346 - 172,759,545 88,365,675

Carrying value

As at 31 March 2020 2,206,799,174 39,299,293 1,076,080 5,526,748 755,208 14,219,923 2,267,676,427 -

As at 31 March 2019 569,849,557 30,979,384 - 748,704 1,464,259 11,989,014 615,030,919

* On 30 March 2019, investment property was transferred to owner-occupied property at its fair value at the date of change in use.

** Transfer from leasehold to/from freehold. ***Transfer to right of use asset.

**** This transfer relates to the accumulated depreciation as at the revaluation date that was eliminated against the gross carrying amount of the revaluated asset.



15.1.1 Land & buildings

Revaluation of land and buildings

Fair value of the land and buildings was determined using the below mentioned valuation techniques. The valuations have

been performed by the valuer and are based on prices of transactions for properties of similar nature, location and condition.

As at the date of revaluation on 31 March 2020, the land and building’s valuations performed by Mr. G.W.G. Abeygunawardene

Chartered Valuation Surveyor, an accredited external valuer who has valuation experience for similar properties since 1996.

A net gain from the revaluation of the land and building LKR 220 Mn in 2020 was recognised in Other Comprehensive Income

(OCI).

Company Location Building

area (Sq

Ft)

Extent

(in

perch)

No. of

Buildings

at each

location

Value of

building

LKR

Value of land

LKR

Total Value

2020 LKR

Total Value

2019 LKR

Amtrad Ltd Kal-eliya, Veyangoda 52,792 748.59 11 131,000,000 153,000,000 284,000,000 246,071,628

Almond Trees (Pvt) Ltd Palhena, Weligama 8,034 86.40 1 182,000,000 413,000,000 595,000,000 -

Ilook Villa (Pvt) Ltd Mahavohara Road,

Ahangama 7,322 105.2 1 158,500,000 69,500,000 228,000,000 -

Alexandra Holdings

(Pvt) Ltd

Alexandra Road,

Wellawatta 16,728 52.48 1 137,000,000 626,000,000 763,000,000 -

608,500,000 1,261,500,000 1,870,000,000 246,071,628

2020

Company Category District Valuation

Technique

Significant

Unobservable

Input

2020 2019

Amtrad Ltd Land and

Building

Gampaha Market

approach

Per perch price in LKR 130,000 to 280,000 100,000 to 250,000

Per Sq. ft price in LKR 1,500 to 2,750 1,000 to 2,250

Almond Trees

(Pvt) Ltd

Land and

Building

Matara Income

Approach

No of rooms 10 -

Room rate per day

In LKR

37,125 -

Discount rate 8.5% -

Occupancy ratio 75% -

Ilook Villa (Pvt)

Ltd

Land and

Building

Galle Income

Approach

No of rooms 8 -

Room rate per day

in LKR

21,000 -

Discount rate 8% -

Occupancy ratio 62% -

Alexandra

Holdings

(Pvt) Ltd

Land and

Building

Colombo 6 Income

Approach

Per perch price in LKR 10,000,000 to

12,000,000

-

Per Sq. ft price in LKR 5,250 to 9,500 -

Significant increases (decreases) in estimated price per perch/ sq. ft in isolation would result in a significantly higher (lower)

fair value on a linear basis. Significant increases (decreases) in estimated rental value and rent growth per annum in isolation

would result in a significantly higher (lower) fair value of the properties. Significant increases (decreases) in discount rate (and

exit yield) in isolation would result in a significantly lower (higher) fair value.


If the land & building were measured using the cost model, the carrying amounts would be as follows:

in LKR 2020 2019

Cost 334,309,484 61,442,296

Additions 2,762,223 12,866,019

Accumulated depreciation and impairment (144,735,144) (7,858,185)

Net carrying amount 192,336,563 66,450,130

5.1.2 Right of use assets

‘Property, plant and equipment’ comprise owned and leased assets that do not meet the definition of investment property.

* In 2019, investment property was transferred to owner-occupied property at its fair value at the date of change in use.

** On initial recognition of long-term land use rights as investment properties lease liability relating to the leased asset was

presented net of investment property in statement of financial position. On 01 April 2018, the present value of the lease

liability of LKR 25,207,109 is separately presented in the statement of financial position by grossing the leasehold assets and

recognising a lease liability. The management elected not to restate the financial statements for the Y/E 31 March 2018, as the

financial implication is immaterial.

15.1.3 Details of right of use asset

Lanka Realty Ambalangoda (Pvt) Ltd and Lanka Realty Leisure (Pvt) Ltd holds right of use properties situated in commercial and

mix development zone in Ambalangoda and tourism development zone ,Tissamaharama respectively.

The area of right of use asset of Lanka Realty Leisure (Pvt) Ltd is considered as a tourism development zone close to yala

national park and surrounded by number of hotels, villas and spas. The property enjoys a beach frontage and proposed for a

hotel development.

Similarly, the area of Lanka Realty Ambalangoda (Pvt) Ltd is situated bordering to the sea shore and contains of a single storied

more than 100 years old Dutch building protected by the Archaeology Department of Sri Lanka.

As at 31 March 2020, the fair value for Lanka Realty Ambalangoda (Pvt) Ltd’s land has been assessed by Messers

G.W.G.Abeygunawardane FRICS (Chartered Valuation Surveyor) accredited specialist in valuing these types of investment

property. Investment property was appraised in accordance with SLFRS 13 and LKAS 16.

15.1.4 Description of valuation techniques used and key inputs to valuation of right of use assets:

Lanka Realty Ambalangoda (Pvt) Ltd

Specialist has assumed a 50-room proposed development to value the residual value of the property and used assumptions

relevant for a hotel operation. Construction period has been assumed as 2 years and applied a capitalisation rate of 8% and

1.5% sinking fund rate.

Property Location Extent of land Valuation technique lease period Significant

Unobservable Inputs

2020 2019

Leasehold long-term

land use right

Ambalangoda 269.8 perch Income approach 50 years starting from

12th December 2014

No. of rooms 50 No. of rooms 50

Room rate per

day 24,650

Room rate per

day LKR 22,750

Discount rate

8%

Discount rate

8%



Lanka Realty Leisure (Pvt) Ltd

The valuation had been carried out assuming a 30-room proposed development to value residual value of the property and

used assumptions relevant for a hotel operation. Construction period has been assumed as 1 year and applied a capitalisation

rate of 7.5% and 1.5% sinking fund rate.

Property Location Extent of land Valuation technique lease period Significant

Unobservable Inputs

2020 2019

Leasehold long-term

land use right

Thissamaharama 1120 perch Income approach 99 years starting from

13th May 2014

No. of rooms 30 No. of rooms 30

Room rate per

day 29,000

Room rate per

day 29,000

Discount rate

7.5%

Discount rate

7.5%

Significant increases/(decreases) in estimated room rate per day and discount rate per annum in isolation would result in a

significantly higher/(lower) fair value on a linear basis.

Refer to Note 39 to the financial statements.

15.1.5 Fully depreciated assets

Property, plant and equipment includes fully depreciated assets amounting to LKR 71,088,291 (2019: LKR 15,963,116) and

continue to be in use by the Group.

15.1.6 Impact of COVID - 19

Refer Note 17.5 to the financial statements

15.2 Company

In LKR Furniture & fitting &

office equipment

Motor

vehicles

Total Total

As at 31 March 2020 2019

Cost

At the beginning of the year 6,831,057 5,300,000 12,131,057 12,131,057

Additions 92,475 - 92,475 -

Disposals - - - -

At the end of the year 6,923,532 5,300,000 12,223,532 12,131,057

Depreciation


Charge for the year 20,550 - 20,550 1,214,583

Disposals - - - -

At the end of the year 6,851,607 5,300,000 12,151,607 12,131,057

Carrying value

As at 31 March 2020 71,925 - 71,925 -

As at 31 March 2019 - - -


15.2.1 Fully depreciated assets

Property, plant and equipment includes fully depreciated assets amounting to LKR 12,131,057 (2019: LKR 12,131,057) and

continue to be in use by the Company.

In LKR Goodwill Web

Development

Costs

Total Total

As at 31 March 2020 2019

16 INTANGIBLE ASSETS

16.1 Group

Cost

As at 01 April - 205,330 205,330 -

Acquisition through business combinations 166,258,780 1,766,439 168,025,219 -

Additions - 2,399,050 2,399,050 205,330

As at 31 March 166,258,780 4,370,819 170,629,599 205,330

Accumulated amortisation and impairment

As at 01 April - - -

Acquisition through business combinations - 799,470 799,470 -

Charge for the year - 188,638 188,638 -

As at 31 March - 988,108 988,108 -

Carrying value

As at 31 March 2020 166,258,780 3,382,711 169,641,491 -

As at 31 March 2019 - 205,330 - 205,330

16.2 Company

In LKR Web

Development

Costs

Total Total

As at 31 March 2020 2019

Cost

As at 01 April 205,330 205,330 -

Additions 2,170,050 2,170,050 205,330

As at 31 March 2,375,380 2,375,380 205,330

Accumulated amortisation and impairment

As at 01 April - -

Charge for the year 74,784 74,784 -

As at 31 March 74,784 74,784 -

Carrying value

As at 31 March 2020 2,300,596 2,300,596 -

As at 31 March 2019 205,330 - 205,330



16.3 Goodwill

The aggregate provisional carrying amount of goodwill allocated to each unit is as follows:

In LKR Group

As at 31 March 2020 2019

Alexandra Holdings (Pvt) Ltd 39,193,877 -

Almond Trees (Pvt) Ltd Group 127,064,903 -

166,258,780 -

Refer to Note 36 to the financial statements for more details.

16.4 Web development costs

Web developments costs includes costs incurred in-relation to the development of Group’s/ Company’s website and it’s

amortised over a period of 10 years.

In LKR Group

As at 31 March 2020 2019

17 INVESTMENT PROPERTIES

At the beginning of the year 1,295,000,000 1,444,000,000

Acquisition through business combinations 4,986,617,654 -

Additions/transfers 227,486,887 145,403,333

Change in fair value during the year 1,037,759,904 48,096,667

Disposal - (44,000,000)

Transfer* - (298,500,000)

At the end of the year 7,546,864,445 1,295,000,000

* On 30 March 2019, investment property was transferred to owner-occupied property at its fair value at the date of change in use.


17.1 The details of investment properties of the group are disclosed below:

The Group’s investment property includes:

- Commercial property situated in T. B. Jayah Mawatha, Colombo 10.

- Land situated in T. B. Jayah Mawatha, Colombo 10.

- Land situated in Century Park, Delathura, Ja-ela.

- Land situated in Danister De Silva Mawatha, Colombo 09.

As at 31 March 2020 the fair values of the properties are based on valuation performed by Messrs.G W G Abeygunawardene

(chartered valuation surveyor), an accredited independent valuer. Messrs.G W G Abeygunawardene is a specialist in valuing

these types of investment properties. Investment Property was appraised in accordance with SLFRS 13 and LKAS 40.

In determining the fair value, a reasonable rent that the property could fetch in its existing use is estimated on the basis of rents

paid to comparable properties and the net income derivable thereby is worked out reducing the usual “outgoings” that have to

be met from such gross income.

17.2 Description of valuation techniques used and key inputs to valuation on investment properties:

As at 31 March 2020 2019

Company

Name

Address Land

Extent

Building

area

(Sq.ft.)

Type of

Investment

Properties

No. of

Buildings

at each

location

Method of

Valuation

Significant

Unobservable

Inputs

Lanka Realty

Developments

(Pvt) Ltd

464/A, T. B. Jaya

Mawatha,

Colombo 10

41.5

perches

78,133 Land &

Building

1 Income

Approach

Estimated rental

value per sq. ft

per month in LKR

250 to 315 140 to 200

Outgoings 20% 20%

Discount rate 7% 8%

Oak Streets

(Pvt) Ltd

285, T. B. Jayah

Mawatha,

Colombo 10

214.65

perches

- Land - Income

Approach

Estimated

apartment selling

value in LKR

46,250,000 to

56,250,000

-

-

Estimated No. of

apartments

228 -

Outgoings 20% -

Discount rate 7% -

Baseline

Holdings (Pvt)

Ltd

270/42,

Danister De

Silva Mawatha,

Colombo 09.

229.5

perches

- Land - Market and

Income

Approach

Estimated

Apartment Selling

Value in LKR

39,000,000 to

49,000,000

-

Estimated No. of

apartments

228 -

Outgoings 20% -

Discount rate 6.5% -

Crowns

Resorts (Pvt)

Ltd

206/01 A,

Century Park,

Delathura,

Ja-ela.

780.49

perches

- Land - Market

Approach

Per perch price

in LKR

525,000 -

Significant increase/(decrease) in estimated rental value in isolation would result in significantly higher (lower) fair value of the

property. Significant increases/(decreases) in the discount rate (and exit yield) in isolation would result in a significantly lower

(higher) fair value.

Generally, a change in the assumption made for the estimated rental value is accompanied by a directionally similar change in

the rent growth per annum and discount rate (and exit yield).



17.3 The Group as a lessor has entered into operating leases on its investment property consisting of office building located in T. B.

Jayah Mawatha, Colombo 10. These leases have terms of between one and three years. All leases include a clause to enable

upward revision of the rental charge on an annual basis according to prevailing market conditions. The lessee is also required

to provide a residual value guarantee on the properties.

Rental income derived from investment property by the group amount to LKR 9.6 Mn for 08 months occupancy

(2019: LKR 69.9 Mn for 07 months occupancy).

Direct operating expenses on investment property for the year LKR 15.6 Mn (2019: LKR 5 Mn).

Future minimum rentals receivable under non-cancellable operating leases as at 31 March are as follows:

In LKR Group

As at 31 March 2020 2019

Within one year 19,218,064 -

After one year but not more than five years 30,242,328 -

More than five years - -

49,460,392 -

17.4 Lands and buildings with carrying amount of LKR 8,679 Mn (2019: LKR Nil) are subject to a first charge and secured by the

group’s bank loans/overdraft. The details are shown in Note 28.3 to the financial statements.

17.5 Impact of COVID - 19

The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organization as a ‘global pandemic’ on

11 March 2020, has impacted global and local markets including the real estate market.

Accordingly, these valuations are reported on the basis of ‘material valuation uncertainty’ as per VPS 3 and VPGA 10 of the RICS

Red Book Global. Subsequently, less certainty and a high degree of caution may be attached to these valuations than would

normally be the case. There is an unknown level of negative future impact that COVID-19 might have on the real estate market.


In LKR

As at 31 March

Effective

holding %

2020

Effective

holding %

2019

Number of

shares

2020

Number of

shares

2019

2020 2019

18 INVESTMENT IN SUBSIDIARIES

18.1 Company

Unquoted equity investments

L & A Quarries (Pvt) Ltd 100.00% 100.00% 9,437,292 9,437,292 94,372,928 94,372,928

Amtrad Ltd 80.00% 80.00% 8,624,000 8,624,000 86,327,225 86,327,225

Lanka Realty Developments (Pvt) Ltd* 100.00% 100.00% 57,204,262 57,204,262 900,350,003 900,350,000

Lanka Realty Leisure (Pvt) Ltd 100.00% 100.00% 3,546,941 3,546,941 50,468,410 50,468,410

Ascot Yala (Pvt) Ltd 100.00% 100.00% 100 100 42,000 42,000

Lanka Realty Ambalangoda (Pvt) Ltd 100.00% 100.00% 998,160 998,160 9,981,600 9,981,600

Alexandra Holdings (Pvt) Ltd** 100.00% - 605,838 - 478,049,000 -

Mulberry Holdings (Pvt) Ltd** 100.00% - 17,980,820 - 789,930,000 -

Baseline Holdings (Pvt) Ltd** 100.00% - 666,300 - 1,103,387,637 -

285 Darley Road (Pvt) Ltd** 100.00% - 5,756,200 - 2,392,260,000 -

Almond Trees (Pvt) Ltd** 100.00% - 8,566,944 - 567,557,000 -

Thudella Holdings (Pvt) Ltd** 100.00% - 1,121,730 - 298,851,620 -

6,771,577,423 1,141,542,163

Provision for fall in value of investment made by

the Company

L & A Quarries (Pvt) Ltd*** (92,428,483) (78,012,928)

Company investment in subsidiary 6,679,148,940 1,063,529,235

* Refer Note 35 to the financial statements.

** Refer Note 36 to the financial statements.

*** In 2020, the impairment provision of LKR 92,428,483 represent the total impairment e of investment in the L&A Quarries

(Pvt) Ltd. During the year impairment amounted to LKR 14,415,555 was recognised in the income statement as a result of

obsolescence of underlying assets. Since the investment does not generate cash inflows, and the investment’s fair value less

cost of disposal is lower than its carrying value. The recoverable amount of LKR 1,944,445 as at 31 March 2020 is its fair value

less cost to sell.



18.2 Details of the additions during the year are set out below.

In LKR Group

As at 31 March 2020 2019

Lanka Reality Developments (Pvt) Ltd - 600,000,000

Lanka Realty Leisure (Pvt) Ltd - 15,000,000

Alexandra Holdings (Pvt) Ltd 478,049,000 -

Mulberry Holdings (Pvt) Ltd 789,930,000 -

Baseline Holdings (Pvt) Ltd 1,103,387,637 -

285 Darley Road (Pvt) Ltd 2,392,260,000 -

Almond Trees (Pvt) Ltd 567,557,000 -

Thudella Holdings (Pvt) Ltd 298,851,620 -

5,630,035,257 615,000,000

In LKR Group

As at 31 March 2020 2019

19 OTHER NON-CURRENT ASSETS

Deposit made to Ceylon Electricity Board - Lanka Realty Developments (Pvt) Ltd ,Lanka

Realty Leisure (Pvt) Ltd & Baseline Holdings (Pvt) Ltd

5,937,231 5,877,231

Deposit made to Urban Council Ambalangoda on 50 year lease period - Lanka Realty

Ambalangoda (Pvt) Ltd 2,100,000 2,100,000

8,037,231 7,977,231

In LKR Group

As at 31 March 2020 2019

20 INVENTORIES

Raw materials and consumables 947,218 1,025,926.00

Finished goods 20,908,046 21,582,633.00

Mechanical spare parts 209,706 209,706.00

Inventory property 1,435,519,298 -

Food & beverages 4,139,305 -

1,461,723,573 22,818,265

20.1 The Group has a subsidiary that develops residential property, which it sells in the ordinary course of business and has entered

into contracts to sell certain of these properties on completion.

A summary of movement in inventory property is set out below:

In LKR Group

As at 31 March 2020 2019

At 1 April - -

Acquisition through business combinations 1,266,590,041 -

Development cost incurred 127,057,086 -

Interest capitalised* 41,872,171 -

At 31 March 1,435,519,298 -

*The rate used to determine the amount of borrowing costs eligible for capitalisation was 14% which is the EIR of the specific

borrowing.



As at 31 March 2020 2019 2020 2019

21 TRADE & OTHER RECEIVABLES

Trade receivables 19,884,264 20,031,609 - -

Refundable deposit 71,500 71,500 71,500 71,500

Other debtors-miscellaneous 465,368 275,195 212,405 212,405

Receivable from subcontractors 2,150,929 6,624,135 - -

Other receivables 8,400 8,508,400 - -

22,580,461 35,510,839 283,905 283,905

21.1 Trade receivables

Trade receivables 28,648,655 18,024,406 - -

Impairment of trade receivables* (8,764,391) (5,927,797) - -

19,884,264 12,096,609 - -

* See note 14.1.1.1 to the financial statements on credit risk of trade receivables and the aging of trade receivables, which

explains how the Group manages and measures credit quality of trade receivables that are neither past due nor impaired.

In LKR

As at 31 March

Group

Individually

impaired

Total

21.1.1 Movement in impairment of trade receivables

As at 1 April 2018 (5,927,797) (4,139,477)

Charge for the year - (1,788,320)

As at 31 March 2019 (5,927,797) (5,927,797)

Charge for the year (2,836,593) -

As at 31 March 2020 (8,764,390) (5,927,797)



In LKR No. of shares No. of shares

As at 31 March 2020 2019 2020 2019

22 FINANCIAL ASSETS- FAIR VALUE THROUGH PROFIT

OR LOSS (FVTPL)

Group/ Company

Quoted investments

Ceylon Investment PLC 908 908 26,423 33,142

Pan Asia Banking Corporation PLC 5,000 5,000 40,500 64,500

5,908 5,908 66,923 97,642


As at 31 March 2020 2019 2020 2019

23 OTHER CURRENT ASSETS

Advances & prepayments 52,018,570 2,786,102 1,595,346 51,788

Tax recoverable 6,521,286 1,495,430 491,764 486,538

Other assets 3,105,323 317,361 187,550 187,552

61,645,179 4,598,893 2,274,660 725,878

2020 2019

As at 31 March No. of

shares

Value of

shares LKR

No. of

shares

Value of

shares LKR

24 STATED CAPITAL

Fully paid ordinary shares


Share swap/rights issue * 149,179,853 5,597,228,085 31,643,888 632,876,610

Direct costs on rights issue - (2,559,214) - (4,167,643)

At the end of the year 193,481,296 6,380,094,108 44,301,443 785,425,237

* During year 149,179,853 no of ordinary shares were issued in consideration for acquisition of subsidiaries (Refer Note 36 to the

financial statements).


2020 2019

In LKR

As at 31 March

Retained

earnings

Other

components

of equity*

Total Retained

earnings

Other

components

of equity*

Total

25 RESERVES

25.1 Group

At the beginning of the year 752,366,455 23,100,000 775,466,455 733,299,908 23,100,000 756,399,908

Profit/(loss) for the year 615,453,503 - 615,453,503 3,969,202 - 3,969,202

Other comprehensive income 272,066 - 272,066 12,345 - 12,345

Acquisition of non controlling

interest - - - 15,085,000 - 15,085,000

At the end of the year 1,368,092,024 23,100,000 1,391,192,024 752,366,455 23,100,000 760,381,455

25.2 Company

At the beginning of the year 305,465,588 23,100,000 328,565,588 316,652,164 23,100,000 339,752,164

Profit/(loss) for the year (28,344,507) - (28,344,507) (11,057,672) - (11,057,672)

Other comprehensive income - - - (128,904) - (128,904)

At the end of the year 277,121,081 23,100,000 300,221,081 305,465,588 23,100,000 328,565,588

*Other component of equity represent the capital redemption reserve fund. This reserve represent profit transferred from

income statement on the redemption of preference shares issued by the Company.


As at 31 March 2020 2019 2020 2019

26 DEFERRED TAX LIABILITY/(ASSETS)

At the beginning of the year 221,794,242 209,874,541 (864,735) (965,944)

Acquisition through business combinations 167,322,815 - - -

Charge/(release) 187,672,701 11,919,701 39,350 101,209

At the end of the year 576,789,758 221,794,242 (825,385) (864,735)

The closing deferred tax asset and liability balances relate to the following;


As at 31 March 2020 2019 2020 2019

26.1 Deferred tax liability/(assets)

Deferred tax on revaluation on land & building 242,851,561 27,440,000 - -

Deferred tax on revaluation on investment properties 159,943,401 83,937,578 - -

Deferred tax on fair value gain on right-of-use asset 39,872,822 37,842,822 - -

Accelerated depreciation for tax purposes 238,541,450 112,020,611 - -

Employee benefit liabilities (413,975) (310,402) - -

Losses available for off setting against

future taxable income (103,180,116) (38,271,631) - -

577,615,143 222,658,976 - -

26.2 Deferred tax assets/(liability)

Employee benefit liabilities 840,000 867,609 840,000 867,610

Accelerated depreciation for tax purposes (14,615) (2,875) (14,615) (2,875)

825,385 864,734 825,385 864,735



26.3 The deferred tax liabilities amounted to LKR 69,705,486 (2019; LKR Nil), and related to capital gains from the realisation of bare

lands located at T. B. Jayah Mawatha, Colombo 10, Thudella, Ja-ela and Baseline Road, Colombo 08 are recognised base on

the definition of an “Investment Assets” as define in the Inland Revenue Act no 24 of 2017.

If the capital gains from the realisation of these assets are considered as capital assets and used in production of income as

define in the Inland Revenue Act no 24 of 2017; an additional deferred tax liability of LKR 868,301,449 (2019; LKR Nil) shall be

recognised.


As at 31 March 2020 2019 2020 2019

27 EMPLOYEE BENEFIT LIABILITIES

At the beginning of the year 1,207,185 1,288,494 98,605 160,150

Acquisition through business combinations 431,781 - - -

Current service cost 389,683 200,969 - 97,245

Interest cost on employee benefit liabilities 135,329 124,113 - 2,377

Payments/payable - (340,200) - (340,200)

Adjustments (98,605) - (98,605) -

Re-measurement gain/(losses) on employee benefit

liabilities (316,509) (66,191) - 179,033

At the end of the year 1,748,864 1,207,185 - 98,605

27.1 The principal assumptions used in determining the cost of employee benefits were:

As at 31 March 2020 2019 2020 2019

Discount rate 10% 11% - 11%

Future salary increment rate 9% 10% - 10%

Sensitivity of assumptions used

If one percentage (1%) point change in the assumed rate would have the following effects:

27.2 Sensitivity of assumptions used

If one percentage (1%) point change in the assumed rate would have the following effects:


Discount

rate

Salary

increment

rate

Discount

rate

Salary

increment

rate

2020

Effect on the employee benefit liability

Increase by one percentage point (69,773) (42,378) - -

Decrease by one percentage point 75,496 45,265 - -

2019

Effect on the employee benefit liability

Increase by one percentage point (42,378) 10,977 (8,081) 898

Decrease by one percentage point 45,265 (9,173) 8,889 898

The demographic assumption underlying the valuation is the retirement age of 60 years and average duration of the defined

benefit obligation as at the end of reporting period is 24 years ( 2019 - 18 years).



As at 31 March 2020 2019 2020 2019

27.3 Distribution of employee benefit liabilities over

future working lifetime

Less than or equal 1 year 1 879,927 - - -

Over 1 year and less than or equal 5 years - 779,458 - -

Over 5 year and less than or equal 10 years 130,847 95,807 - -

Over 10 years 738,090 331,920 - 98,605

1,748,864 1,207,185 - 98,605


As at 31 March 2020 2019 2020 2019

28 INTEREST BEARING BORROWINGS

Non current

Bank borrowings 2,097,175,596 - 553,343,328 -

Finance lease liability 23,963,360 26,358,503 - -

2,121,138,956 26,358,503 553,343,328 -

Current

Bank borrowings 236,376,026 - - -

Finance lease liability 7,085,650 7,084,446 - -

243,461,676 7,084,446 - -

Repayable within one year 243,461,676 7,084,446 - -

Repayable after one year

Repayable between one and five years 2,058,574,109 26,358,503 553,343,328 -

Repayable after five years 62,564,847 - - -

2,364,600,632 33,442,949 553,343,328 -

Lease liability

As at 31 March Bank

borrowings

Right of use

asset

Plant &

Machineries

Other short-

term loans

Total

28.1 Group

At the beginning of the year - 26,159,674 7,283,275 - 33,442,949

Finance lease charge un amortised/

accreation of Interest - 3,538,944 1,429,497 - 4,968,441


combinations 1,772,069,986 - - 1,772,069,986

Obtained during the period 574,221,075 - - - 574,221,075

Repayments (31,385,074) (2,670,000) (3,213,624) - (37,268,698)

Transfer** - (1,478,756) - - (1,478,756)

Exchange Gain adjustments 18,645,635 - - - 18,645,635

At the end of the year 2,333,551,622 25,549,862 5,499,148 - 2,364,600,632



2020 2019

In LKR Group Group

Lease liability Lease liability

As at 31 March Bank

borrowings

Right of use

asset

Plant &

machineries

Bank

borrowings

Right of use

asset

Plant &

machineries

28.1.1 Maturity analysis - contractual

undiscounted cash flows

Less than one year 236,376,026 2,635,000 3,213,624 - 2,687,500 3,213,624

One to five years 2,034,610,749 12,508,750 3,749,228 - 12,088,750 6,962,852

More than five years 62,564,847 275,833,134 - - 284,689,072 -

Total 2,333,551,622 290,976,884 6,962,852 - 299,465,322 10,176,476

Interest bearing borrowings included

in the statement of financial position at

31 March 2,333,551,622 27,115,520 5,499,148 - 26,159,674 7,283,275

Current 236,376,026 5,298,284 2,218,735 - 5,300,318 1,784,127

Non current 2,097,175,596 21,817,236 3,280,413 - 20,859,356 5,499,148

Amounts recognised in profit or loss

In LKR

As at 31 March 2020 2019

Interest on lease liabilities 4,968,441 5,233,305

As at 31 March Bank

borrowings

28.2 Company

At the beginning of the year -

obtained during the period 553,343,328

Repayments -

Exchange Gain adjustments -

At the end of the year 553,343,328

2020 2019

Bank

borrowings

Bank

borrowings

28.2.1 Maturity analysis - contractual undiscounted cash flows

Less than one year - -

One to five years 553,343,328 -

More than five years - -

Total 553,343,328 -

Interest bearing borrowings included in the statement of financial position at 31 March 553,343,328 -

Current - -

Non current 553,343,328 -


28.3 Details of the long term loans - Group (contd..)

Lender Nature of

facility

Interest rate and security Repayment terms 2020

LKR

2019

LKR

Lanka Realty

Investments PLC

Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Loan agreement

for LKR 700,000,000 and primary mortgage over

property depicted as Lot 1 in Plan No 14243 dated

03/08/2019 made by Gamini B Donawal (L.S)

owned by Lanka Realty Developments (Pvt) Ltd

(Extent 0A: 1R: 1.24P).

Capital of each loan to be

repaid in 24 months from

date of grant and interest to

be serviced monthly.

553,343,328 -

Baseline Holdings

(Pvt) Ltd

Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Primary

mortgage over property at No 272/42, Dr

Danister De Silva Mawatha, Colombo 09, for

LKR 175,000,000/- in extent of 1A-1R-31.5P and

Secondary mortgage bond for LKR 38.000,000 over

the property at No 270/42, Dr Danister De Silva

Mawatha, Colombo 09.

59 equal monthly

installments of LKR

2,950,000 and a final

installment of LKR 950,000

with a 36 months grace

period.

144,300,000 -

285 Darley Road

(Pvt) Ltd

People’s Bank Term loan 2.5% per annum above the weekly AWPR. Mortgage

over property at 285, T. B. Jaya Mawatha, Colombo

10.

Capital should be settled

as bullet payment by 28th

May 2021.

950,000,000 -

Mulberry Holdings

(Pvt) Ltd

Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Primary

mortgage for LKR 510,000,000 over the land &

buildings to be constructed in land & marked “Lot

1” in survey plan no: 40/2014 dated 15/09/2014

made by T R De Zoysa in extent of 02 R 26.34P

bearing assessment No. 144, Sri Vajiraganana

Mawatha, Colombo 09.

To be repaid in 7 equal

monthly instalment of

LKR 1,000,000, in 6 equal

monthly instalment of

LKR 3,000,000, in 12 equal

monthly instalment of LKR

10,000,000, in 11 equal


12,000,000 and in 1 equal


19,000,000.

282,360,246 -

Almond Trees

(Pvt) Ltd


for LKR 60,000,000, Primary mortgage over lot B

in Plan No 202/11 dated 14/05/2011 made by BHB

Nihal Silva L. S. owned by Ilook Villa (Pvt) Ltd for

LKR 60,000,000 and undertaking to mortgage with

power of attorney over the property owned by Ilook

Villa (Pvt) Ltd for LKR 60,000,000.

107 equal monthly

instalments of LKR 550,000

and final instalment of LKR

1,150,000 commencing after

a grace period of 12 months.

46,800,000 -



Lender Nature of

facility


LKR

2019

LKR


for LKR 27,500,000 and primary mortgage over

plant, machinery furniture and other movable

assets of W15 Weligama for LKR 27,500,000.

47 equal monthly



1,650,000 commencing after

a grace period of 12 months.

14,300,000 -

Sampath Bank PLC Term loan 10% per annum. Loan agreement for LKR 9,500,000. 59 equal monthly



55,000.

8,159,668 -

Sampath Bank PLC Term loan-

USD

4.5% per annum above the 06 Months LIBOR.

Loan agreement for USD 1,065,000 and primary

mortgage over hotel property of Almond Trees (Pvt)

Ltd depicted as lot F in Plan No 1187/2010 dated

31/03/2010 made by W A C Indraratne L. S. for USD

1,065,000.

107 equal monthly

instalments of USD 9,900

and final instalment of USD

5,700.

161,669,287 -

Sampath Bank PLC Term loan -

USD

3.5% per annum above the 06 months LIBOR. Loan

agreement for USD 62,000.

59 equal monthly

instalments of USD 1,000

and final instalment of USD

3,000.

10,758,832 -

Alexandra Holdings

(Pvt) Ltd

Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Additional

mortgage over property depicted as Lot 7378 &

7379 in plan No.10829 dated 19/01/2006 make by K.

Selvaratnam L. S. for LKR 65,000,000.00.


monthly instalment (Capital)

of LKR 600,000 and a final

Instalment (capital) of LKR

800,000 on 26th day of each

month after a grace period

of 12 months.

65,000,000 -

Sampath Bank PLC Term loan Interest per annum 10%. ‘Primary mortgage bond

for USD 430,000, additional mortgage bond for

LKR 65,000,000 additional mortgage bond for

USD 31,000 & an additional mortgage bond for

LKR10,500,000 over property depicted as Lot 7378 &


Selvaratnam L. S. owned by the company.



175,000 together with the

interest.

8,680,557 -


USD

To be paid at an interest rate of 06 months

LIBOR +3.5% p.a. ‘Primary mortgage bond for

USD 430,000, additional mortgage bond for

LKR 65,000,000 additional mortgage bond for

USD 31,000 & an additional mortgage bond for

LKR10,500,000 over property depicted as Lot 7378 &


Selvaratnam L. S. owned by the company.


monthly instalment of USD

500 together with the USD

1500 as final instalment

interest on 26th of each

month from 26.07.2020.

5,424,914 -


Lender Nature of

facility


LKR

2019

LKR


USD

4.5% per annum above the 06 months LIBOR with

a floor rate 5.5%. Primary mortgage over property

depicted as Lot 7378 & 7379 in plan No.10829 dated

19/01/2006 make by K. Selvaratnam L. S. for USD

430,000.


monthly instalment (Capital)

of USD 3,900 and a final

Instalment (capital) of USD

12,700 on 26th day of each

month after a grace period

of 12 months.

82,754,790 75,735,900

Amtrad Ltd

LB Finance PLC Finance

lease

Interest per annum 22%. Leased amount LKR 8.5

Mn.

48 monthly instalments,

Started from 17/05/2018.

5,499,148 7,283,275


As at 31 March 2020 2019 2020 2019

29 OTHER NON-CURRENT LIABILITIES

Tenant rent and service charge refundable deposit 12,245,538 - - -

Tenant electricity charge refundable deposit 300,000 - - -

12,545,538 - - -




As at 31 March 2020 2019 2020 2019

30 TRADE AND OTHER PAYABLES

Trade payables 8,326,355 5,632,824 - -

Accrued expenses 6,749,877 2,072,953 6,087 36,837

Payable to contractor 68,924,937 - -

Unclaimed dividend 1,072,826 604,339 604,339 604,339

Other payables 23,885,024 16,157,936 - -

108,959,019 24,468,052 610,426 641,176


As at 31 March Note 2020 2019 2020 2019

31 INCOME TAX LIABILITIES

At the beginning of the year 32,228 32,228 32,228 32,228

Acquisition through business combination 138,999 - - -

Charge for the year 11.1 - - - -

Under/(over) provision in respect of previous

years

11.1 (117,780) - - -

Payments and set off against refunds - - - -

At the end of the year 53,447 32,228 32,228 32,228

32 OTHER CURRENT LIABILITIES

Tenant rent and electricity deposit 2,100,000 - - -

Staff cost payable 5,374,502 3,913,434 3,900,000 3,900,000

Taxes payables 31,555,753 10,584,074 4,048,677 3,217,665

Provision for Breakages 1,934,206 - - -

Accrued expenses & other liabilities 36,402,319 5,997,951 8,034,357 3,128,276

Advance received 25,691,515 - - -

103,058,295 20,495,459 15,983,034 10,245,941

33 CASH AND CASH EQUIVALENTS

Cash in hand & cash at bank 46,351,370 358,336 9,827,311 217,502

Short-term investments 67,408 76,067,686 - -

Bank overdraft (274,630,308) (18,041,754) (7,214) (570,646)

Reported for cash flows (228,211,530) 58,384,268 9,820,097 (353,144)


34 RELATED PARTY TRANSACTIONS

34.1 Parent and ultimate controlling party

Company does not have an identifiable parent of its own.

34.2 Transactions with key management personnel

34.2.1 Loans to directors

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

34.2.2 Key management personnel compensation

Key management personnel comprises the Directors of the Company and details of compensation are given in Note 34.3 to the


34.3 Transactions with subsidiaries and other related companies

Relationships with subsidiaries are explained in Note 1.1.3 to the financial statements.

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

(ii) Lanka Realty Investments PLC, provides financial services to its subsidiary and charges interest.

(iii) The list of Directors at each of the subsidiary companies have been disclosed in group directory 2019/20.



34.3.1 Transactions with related parties

Rendering of services (Granting of loans and others)

Subsidiaries

Lanka Realty Developments (Pvt) Ltd - - 203,917,901 -

L & A Quarries (Pvt) Ltd - - 598,320 716,558

Amtrad Ltd - - 9,536,734 18,330,000

Lanka Realty Ambalangoda (Pvt) Ltd - - 7,863,494 7,076,727

Lanka Realty Leisure (Pvt) Ltd - - 4,570,774 776,759

Alexandra Holdings (Pvt) Ltd - - 9,480,684 -

Mulberry Holdings (Pvt) Ltd - - 584,450,212 -

Baseline Holdings (Pvt) Ltd - - 69,508,240 -

285 Darley Road (Pvt) Ltd - - 96,153,156 -

Almond Trees (Pvt) Ltd - - 23,640,331 -

Thudella Holdings (Pvt) Ltd - - 17,812,717 -

Crown Resorts (Pvt) Ltd - - 5,502,463 -

Oak Streets (Pvt) Ltd - - 29,349,720 -

Ilook Villa (Pvt) Ltd - - 6,894,653 -

Bravo Holdings (Pvt) Ltd 2,570,743 - - -

2,570,743 - 1,069,279,399 26,900,044





Receiving of services (Settlement of loans)

Subsidiaries

Lanka Realty Developments (Pvt) Ltd - - 154,307,931 37,705,346

L & A Quarries (Pvt) Ltd - - - 8,500,000

Amtrad Ltd - - - 1,185,000




- - 609,148,959 47,390,346

Receiving of services (Legal and other professional

services)

Other related parties

Neelakandan & Neelakandan - 654,730 - 654,730

N & N Agents and secretaries (Pvt) Ltd 181,000 - - -

181,000 654,730 - 654,730

Technical fees allocation

Lanka Realty Investments PLC 7,377,770 - - -

L & A Quarries (Pvt) Ltd 341,712 - - 140,042

Lanka Realty Ambalangoda (Pvt) Ltd 2,897,534 - - 2,975,994

Lanka Realty Developments (Pvt) Ltd 29,006,245 - - 11,376,934

Lanka Realty Leisure (Pvt) Ltd 3,218,737 - - 2,350,116

Amtrad Ltd 3,097,572 - - 2,971,072

Alexandra Holdings (Pvt) Ltd 8,244,786 - - -

Mulberry Holdings (Pvt) Ltd 7,327,299 - - -

Baseline Holdings (Pvt) Ltd 19,091,626 - - -

Almond Trees (Pvt) Ltd 7,053,043 - - -

Crown Resorts (Pvt) Ltd 5,325,457 - - -

Oak Streets (Pvt) Ltd 41,264,312 - - -

Ilook Villa (Pvt) Ltd 3,047,440 - - -

137,293,533 - - 19,814,158

Payment of underwriting fees - Right Issue

Related Party - Relationship

Mr M H Jamaldeen-Executive Director - 298,624 - 298,624

Mr A J B Warman-Executive Director - 233,310 - 233,310

Mr I J Mcveigh-Director - 468,698 - 468,698

Eighth Wonder - Shareholder - 847,627 - 847,627

Mr P Morgan - Director - 273,198 - 273,198

- 2,121,457 - 2,121,457




Subsidiaries


Amtrad Ltd - - 12,252,893 8,151,424

Lanka Realty Leisure (Pvt) Ltd - - 288,471 -

Lanka Realty Ambalangoda (Pvt) Ltd - - 1,879,985 -

Alexandra Holdings (Pvt) Ltd - - 367,451 -




Almond Trees (Pvt) Ltd - - 828,218 -


Crown Resorts (Pvt) Ltd - - 65,853 -

Oak Streets (Pvt) Ltd - - 12,851 -

Ilook Villa (Pvt) Ltd - - 293,767 -

- - 37,029,038 13,990,549

Settlements of amount due to other related parties

Steradian Capital Investments (Pvt) Ltd 155,104,481 24,028,469 25,395,844 24,028,469

155,104,481 24,028,469 25,395,844 24,028,469

Borrowing from other related parties

Steradian Capital Investments (Pvt) Ltd - 29,913,402 - 29,913,402

- 29,913,402 - 29,913,402

Interest of amount due to other related parties

Eighth Wonder 1,529,293 1,529,293 1,529,293 1,529,293

Ian McVeigh 1,529,293 1,529,293 1,529,293 1,529,293

3,058,586 3,058,586 3,058,586 3,058,586

* Technical service fee is computed based on the technical service agreement [TSA] between Lanka Realty Investments PLC

[LRI] and Steradian Capital Investments (Pvt) Ltd [SCI].

Services provided by SCI:

The agreement includes services related to general technical services including development activities, project management

services, acquisitions and disposals.

Fees to be paid to SCI:

- Asset management fee of 2.5% of net asset value of Lanka Realty Investments PLC Group as of 31 March 2020.

- Asset management fee of 2.5% of net asset value as of 13 August 2019 of Baseline Holdings (Pvt) Ltd, Alexandra Holdings (Pvt)

Ltd, Mulberry Holdings (Pvt) Ltd, Crown Resorts (Pvt) Ltd, Oak Street (Pvt) Ltd, Almond Trees (Pvt) Ltd and Ilook Villa (Pvt) Ltd.

- Acquisition fee of 2.5% of the purchase price.

- Disposal fee of 3% of the sale price.





34.4 Amounts due from related parties

Subsidiaries


Amtrad Ltd - - 89,489,762 67,700,137

Lanka Realty Leisure (Pvt) Ltd - - 7,717,934 3,540,974

Ascot Yala (Pvt) Ltd - - 45,761 51,511

Lanka Realty Ambalangoda (Pvt) Ltd - - 21,097,047 11,353,300







Crown Resorts (Pvt) Ltd - - 5,568,317 -

Oak Streets (Pvt) Ltd - - 29,362,571 -

Ilook Villa (Pvt) Ltd - - 7,188,420 -

- - 582,419,579 103,240,449


Steradian Capital Investments (Pvt) Ltd 5,899,969 - 5,729,831 -

Hardy James (Pvt) Ltd 8,767 - - -

Bravo Holdings (Pvt) Ltd 2,570,743 - - -

8,479,479 - 588,149,410 103,240,449

34.5 Amounts due to related parties

Non-current

Loans from directors/shareholders** 26,805,440 23,747,904 26,805,440 23,747,904

26,805,440 23,747,904 26,805,440 23,747,904

Current

Subsidiaries

L & A Quarries (Pvt) Ltd - - 5,852,196 6,450,516

- - 5,852,196 6,450,516


Steradian Capital Investments (Pvt) Ltd 33,206,410 14,112,100 - 13,386,835

M H Jamaldeen 75,000 - - -

A J B Warman 1,000,000 - - -

34,281,410 14,112,100 5,852,196 19,837,351

61,086,850 37,860,004 32,657,636 43,585,255

**Two of the significant shareholders of the Company have granted LKR 20Mn loan with interest at rate of 15% per annum

compounding annually shall be repaid by the Company to the Directors/Shareholders in one instalment at the end of the

tenure of three years or such other extended period mutually agreed by both parties.




34.6 Compensation of key management personnel

Directors’ Fee 5,400,000 5,400,000 5,400,000 5,400,000

5,400,000 5,400,000 5,400,000 5,400,000

34.7 No provision was made in respect of amounts due from related parties.

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

34.9 Interest on loans to related parties are decided based on the inter banking rates, associated risks and purpose for which funds

are used.

35 ACQUISITION OF NON-CONTROLLING INTERESTS

On 16 October 2018, the Group acquired an additional 16.65% interest in the voting shares of Lanka Realty Developments (Pvt) Ltd,

increasing its ownership interest to 100%. Cash consideration of LKR 100,000,000 was paid to the non-controlling shareholders.

The carrying value of the net assets of Lanka Realty Developments (Pvt) Ltd (excluding goodwill on the original acquisition) was

LKR 115,085,000 Following is a schedule of additional interest acquired in Lanka Realty Developments (Pvt) Ltd.

In LKR


Carrying value of the additional interest in Lanka Realty

Developments (Pvt) Ltd - 115,085,000

Cash consideration paid to non-controlling shareholders - (100,000,000)

Difference recognised in retained earnings - 15,085,000

36 ACQUISITION AND DISPOSAL OF SUBSIDIARIES

On 13th August 2019, the shareholders of Lanka Realty Investments PLC (the ‘Company’) approved to carry out the acquisition

of all the shares of six (6) private companies in commercial property, affordable housing and tourism & leisure sectors whereby

the shares of the 6 private companies will be swapped/acquired for shares of the Company. This share swap/private placement

will result in the acquisition of all the shares of the 6 companies at a cumulative value aggregating to LKR 5,630,038,000/-

(including the settlement for the fractional shares), in exchange for which up to 149,179,853 ordinary shares of Lanka Realty

Investments PLC is issued to the shareholders of the said companies at a price of LKR 37.52 per share in the respective

proportions mentioned below;



Company Existing Total

Number of

Shares in

Issue

Number of

Shares being

Swapped

Value as at

13th August

2019 of the

Shares being

Swapped

(LKR)*

Approx. Proportion in which the

Shares will be Swapped with

Shares of LRI

Total Number

of Shares to

be Issued at

the Share

Swap/Private

Placement to

Shareholders

Baseline Holdings

(Pvt) Ltd (BHPL)

666,300 666,300 1,097,389,000 44 new shares of LRI for every

1 existing share of BHPL

29,317,200

Alexandra Holdings

(Pvt) Ltd (AHPL)

605,838 605,838 478,049,000 21 new shares of LRI for every

1 existing share of AHPL

12,722,598

285 Darley Road (Pvt)

Ltd (DRPL)

5,756,200 5,756,200 2,392,259,000 11 new shares of LRI for every

1 existing share of DRPL

63,318,200

Mulberry Holdings

(Pvt) Ltd (MHL)

17,980,820 17,980,820 789,930,000 7 new shares of LRI for every

6 existing share of MHPL

20,977,614**

Thudella Holdings

(Pvt) Ltd (THPL)


1 existing share of THPL

7,852,110

Almond Trees (Pvt)

Ltd (ATPL)


4 existing share of ATPL

14,992,131**

Total 149,179,853

* The Board has obtained an independent valuation report to derive an independent opinion on the valuation of the

companies that are being considered for the Share Swap. The above values are based on this report.

** The proportion provided is an approximation due to rounding off. Any fractional shares and differences arising from same

will be settled in cash.

These new shares shall rank pari passu in all respects with the existing Ordinary Voting Shares of the Company at the issuance

of such shares. This transaction is in line with Article no. 03- 08 of the Articles of Association of the Company.

36.1 Share Swap/Private placement

The Share Swap/Private placement arrangement is expected to bring in the following benefits to the existing shareholders of the

Company:

- Increase the consolidated total asset base of the Group by approximately LKR 7.3 Bn while increasing the consolidated net

assets by approximately LKR 5.6 Bn, as of the transaction date.

- Positioning the Company as a key player in the land & property sector due to the diversified asset base.

- Diversifying the revenue streams which is expected to derive a higher return to the investors.

- Increase the value of the Company and its shares through the increased asset base and diversified income streams.

- Improve access to funds both debt and equity for both the holding company and subsidiaries.

- Improve attractiveness to foreign investors due to the larger entity and larger market capitalisation.

With the acquisition of shares of above companies, the Group hold 100% of the shareholdings


36.2 Total consideration transferred

Acquisition - date fair value of consideration transferred

In LKR 285 Darley

Road (Pvt)

Ltd

Thudella

Holdings (Pvt)

Ltd

Baseline

Holdings (Pvt)

Ltd

Alexandra

Holdings (Pvt)

Ltd

Mulberry

Holdings (Pvt)

Ltd

Almond

Trees (Pvt

Ltd

Total

Total consideration 2,392,260,000 298,851,620 1,103,387,637 478,049,000 789,930,000 567,557,000 5,630,035,257

Shares issued 2,375,698,864 294,611,167 1,099,981,344 477,351,877 787,080,077 562,504,755 5,597,228,085

Cash consideration 16,561,136 4,240,453 3,406,293 697,123 2,849,923 5,052,245 32,807,173

2,392,260,000 298,851,620 1,103,387,637 478,049,000 789,930,000 567,557,000 5,630,035,257

Share options or any other type of equity instruments were not issued as part of the consideration. The consideration

comprised of issued shares and cash in its entirety to the following related parties of the Lanka Realty Investments PLC.

In LKR

Related Party Relationship Value by shares Value by cash Total

Eighth Wonder Shareholder 277,603,764 1,158,087 278,761,851

T C Smith Director/ Shareholder 838,766,729 5,847,092 844,613,821

I J McVeigh Director/ Shareholder 2,138,520,499 9,525,761 2,148,046,259

M H Jamaldeen Director/ Shareholder 850,549,435 6,282,353 856,831,787

A J B Warman Director/ Shareholder 277,603,764 2,302,103 279,905,867

P Morgan Director/ Shareholder 689,117,421 3,929,939 693,047,360

Steradian Capital Investments (Pvt) Ltd Other related parties 41,368,164 60,414 41,428,578

A. Acquisition of assets or a group of assets

The arrangements to acquire 285 Darley Road (Pvt) Ltd, Thudella Holdings (Pvt) Ltd and Baseline Holdings (Pvt) Ltd were

determined to be acquisitions of assets or groups of assets that do not constitute businesses. Accordingly, these arrangements

have been scoped out of the recognition, measurement and disclosure principles and requirements set out under SLFRS

3 Business Combinations for the acquisition method of accounting. For these arrangements the Group has identified and

recognised the individual identifiable assets acquired (including intangible assets) and liabilities assumed.

The number and fair value of the shares issued as consideration is as disclosed above. The acquisition - date fair value of such

shares were measured based on net asset value, adjusted to reflect market values. No goodwill has been recognised from these

arrangements and the cost to the Group has been allocated to individual identifiable assets and liabilities on the basis of their

relatives fair values as at date of purchase.



B. Acquisition of businesses:

The value of goodwill is primarily attributed to the expected synergies that would flow from the benefits of the share swap /

private placement arrangement, as more fully described below.

The fair values of the identifiable assets acquired and liabilities assumed as at the date of acquisition for arrangements

determined to be acquisitions of businesses are as below:

Fair value recognised on acquisition

Mulberry

Holdings

(Pvt) Ltd

Alexandra

Holdings

(Pvt) Ltd

Almond Trees

(Pvt) Ltd

Total

Assets

Property, plant and equipment 51,458 646,865,689 792,586,981 1,439,504,128

Intangible assets - 298,369 668,600 966,969

Goodwill - - 61,020,219 61,020,219

Inventories 900,944,202 - 3,817,748 904,761,950

Trade and other receivables - 318,139 864,066 1,182,205

Other current assets 7,577,440 366,831 6,052,000 13,996,271

Amounts due from related parties 6,040,845 137,496 1,773,339 7,951,680

Income tax receivables - - - -

Cash in hand and at bank 4,549,844 1,132,567 23,582 5,705,993

919,163,789 649,119,091 866,806,535 2,435,089,415

Liabilities

Deferred tax liabilities - 39,976,729 86,260,617 126,237,346

Employee benefit liabilities - - 431,781 431,781

Interest bearing borrowings 291,895,320 146,333,149 217,691,517 655,919,986

Amounts due to related parties - 2,649,905 1,221,494 3,871,399

Trade and other payables 6,097,841 15,068,112 37,510,543 58,676,496

Other current liabilities - 6,157,361 15,267,501 21,424,862

Bank overdrafts 197,136,467 78,711 6,910,767 204,125,945

495,129,628 210,263,968 365,294,219 1,070,687,815

Total identifiable net assets as fair value 424,034,161 438,855,123 501,512,316 1,364,401,600

Excess consideration transferred on acquisition 365,895,839 39,193,877 66,044,684 471,134,400

Purchase consideration 789,930,000 478,049,000 567,557,000 1,835,536,000

Shares issued 787,080,077 477,351,877 562,504,755 1,826,936,709

Cash consideration 2,849,923 697,123 5,052,245 8,599,291

Total purchase consideration 789,930,000 478,049,000 567,557,000 1,835,536,000

Net cash acquired with the subsidiary (192,586,623) 1,053,856 (6,887,185) (198,419,952)

Cash consideration (2,849,923) (697,123) (5,052,245) (8,599,291)

Net cash flow on acquisition (195,436,546) 356,733 (11,939,430) (207,019,242)


36.3 The net assets recognised in the 31st March 2020 financial statements were based on a provisional assessment of their fair

value while the Group sought an independent valuation for the land and buildings owned by Alexandra Holdings (Pvt) Ltd,

Almond Trees (Pvt) Ltd Group and inventory property of Mulberry Holdings (Pvt) Ltd. The valuations had not been completed

by the date the 2019/20 financial statements were approved for issue by the Board of Directors.

36.4 The Group allocated its excess of the consideration transferred of LKR 365,895,839 to inventory property (Mulberry Holdings

(Pvt) Ltd) acquired through business combination on the basis of their relative fair values at date of acquisition.

36.5 The transaction cost directly attributable to the share issue amounted to LKR 2,559,214 is recognised in the statement of

changes in equity.

36.6 The fair value of the trade receivables amounts to LKR 1,182,205. The gross amount of trade receivables is LKR 1,182,205 and it’s

expected that the full contractual amounts can be collected in short-terms.

36.7 From the date of acquisition, the below mention companies contributed LKR 128,848,643 of revenue and LKR 31,905,126 to

loss before tax of the Group. If the combination had taken place at the beginning of the year, revenue would have been LKR

170,070,559 and profit before tax for the Group would have been LKR 104,701,162.

Fair value recognised on acquisition

Mulberry

Holdings

(Pvt) Ltd

Alexandra

Holdings

(Pvt) Ltd

Almond Trees

(Pvt) Ltd

Total

Revenue

1st April 2019 to 13th August 2019 - 3,621,891 37,600,025 41,221,916

14th August 2019 to 31st March 2020 - 15,822,046 113,026,597 128,848,643

Total revenue - 19,443,937 150,626,622 170,070,559

Profit/(loss) before tax

1st April 2019 to 13th August 2019 (131,740) (11,342,039) (12,215,863) (23,689,642)

14th August 2019 to 31st March 2020 (3,069,472) (21,896,490) (7,558,437) (32,524,399)

Total profit/(loss) before tax (3,201,212) (33,238,529) (19,774,300) (56,214,041)

37 PRINCIPAL SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

Summarised financial information in respect of Lanka Reality Investments PLC’s subsidiary of Amtrad Ltd that have material

non-controlling interest, reflecting amounts before inter-company eliminations, is set out below.

In LKR

As at 31 March 2020 2019

Non-current assets 315,615,251 282,377,603

Current assets 34,096,450 42,953,342

Total assets 349,711,701 325,330,945

Non-current liabilities 49,811,377 51,099,642

Current liabilities 133,523,676 111,826,016

Total liabilities 183,335,053 162,925,658

Equity attributable to equity holders of the parent 133,101,319 129,924,230

Non-controlling interests 33,275,330 32,481,057

Non-controlling interests % 20% 20%



In LKR

As at 31 March 2020 2019

Revenue 65,498,711 79,454,932

Profit/(loss) for the year (27,840,468) (26,762,296)

Profit attributable to equity holders of the parent (22,272,374) (21,409,837)

Profit attributable to non-controlling interests (5,568,094) (5,352,459)

Total comprehensive income for the year, net of tax 3,952,847 (20,163,339)

Dividend paid - -

Net cash outflow from operating activities 8,601,629 (1,840,022)

Net cash inflow from investing activities (4,242,749) 8,629,627

Net cash inflow from financing activities (3,213,624) 3,284,937

Total net cash (outflow)/inflow 1,145,255 10,074,542

38 COMMITMENT AND CONTINGENCIES

The Group does not have significant commitments and contingencies as at the reporting date.

38.1 Capital Expenditure Commitments

The approximate amounts of capital expenditure approved by the Directors as at 31st March, 2020 were: Capital expenditure

contracted for which no provision is made in the Financial Statements for the Group LKR. 2.2 Bn (2019 - LKR Nil) and for the

Company LKR Nil (2019 - LKR Nil).

39 LITIGATION

The Sri Lanka Tourism Development Authority (SLTDA) sought by letter dated 13th November 2019, to unilaterally treat the

Lease Agreement No. 117 dated 13th May 2014, between SLTDA and Lanka Realty Leisure (Pvt) Ltd (LRL) for the lease hold right

(land) in Yala, as terminated. Lanka Realty Leisure (Pvt) Ltd, who continues to remain in possession and control of the land, has

disputed the purported notice. Subsequently, Lanka Realty Leisure (Pvt) Ltd has filed an action against SLTDA in the District

Court of Colombo bearing case No: DSP/00084/2020, challenging the purported steps taken to terminate the lease agreement

with SLTDA.

On 4th August 2020, the Court granted interim injunction until the conclusion of the case, restraining SLTDA from taking any

steps pursuant to the documents marked ‘P12’ and ‘P13’ and also the purported Deed of Cancellation No. 177 dated 28th May

2020 attested by P.D.I.S Punchihewa, ‘Notary Public’. Thus the rights of LRL under the lease agreement No. 177, dated 13 May

2014, still remains in force.

In-light of the above the Board of Directors decided not to re-value the lease hold land-use-rights (right-of-use-asset) of LRL

during the year and the right-of-use-asset is carried at LKR 150,070,821 until the court concludes the civil proceeding.

40 EVENTS AFTER THE REPORTING PERIOD

The official announcement for a rights issue was made on the Colombo Stock Exchange (CSE) on 1st November 2019 (provided

below).

The number of shares to be issued: Voting : 96,740,648

The consideration for which the shares are to be issued (LKR.) : Voting :37.50

Current stated capital of the entity (LKR.) : 6,380,094,108

The purpose which the proceeds of the issue are to be utilised:

1. Acquisition of income yielding commercial asset/s 900Mn

2. Development of existing properties held by two subsidiary companies 450Mn

3. Investment in the real estate sector 450Mn

4. Settlement / part settlement of debt obligations of identified subsidiary companies 1800 Mn

The proportion in which the shares are to be used: Voting : One (01) new Ordinary Share for every two (02) Ordinary Shares

The Shareholders of Lanka Realty Investments PLC approved the rights issue on the 12th of March 2020 at the Extraordinary

General Meeting.

LKR 670,842,450.00 was raised via the issuance of 17,889,132 new shares to investors. The allocation of the shares took place

on the 15th of June 2020. The rights issue proceeds are accumulating interest in a money market account until such time that a

suitable investment opportunity is identified.



41 SEGMENT ANALYSIS

The segment information is based on one segmental format. The business segment is considered as the primary format and

based on the management structure of the group.

The management is of the view that the Executive Directors are the decision makers and resources are allocated and

performance assessed based on the following sectors.

In LKR ‘000 Investment and

services

Manufacturing

For the year ended 31st March, 2020 2019 2020 2019

Total revenue 37,033 13,991 65,499 79,455

Intra group revenue (37,033) (13,991) -

External revenue - - 65,499 79,455

Segment results

Results from operating activities (4,426) (15,857) (32,233) (8,835)

Net finance income/ (cost) (23,879) 4,951 (15,001) (11,499)

Profit/ (loss) before tax (28,305) (10,906) (47,234) (20,334)

Tax (39) (151) 11,906 7,443

Depreciation on property, plant & equipment 21 1,215 16,241 13,873

Impairment on property, plant & equipment - - - -

Impairment on investment in subsidiary - - - -

Increase in fair value of investment properties - - - -

Total assets 7,282,949 1,169,165 357,562 340,890

Additions to property, plant & equipment 92 4,243 30,470

Non interest bearing liabilities

Deferred tax liability - 45,787 45,347

Employee benefit obligations - 99 1,288 1,109

Trade and other payables 610 641 19,634 22,820

Cash flows

Segment cash flows from operating activities (505,541) (15,828) 8,563 (10,257)

Segment cash flows from investment activities (35,070) (615,205) (4,243) 18,630

Segment cash flows from financing activities 550,784 628,709 (3,214) 1,778


Commercial / residential

development

Leisure/ Hoteliering Adjustments and

eliminations

Total

2020 2019 2020 2019 2020 2019 2020 2019

9,555 69,900 170,071 - (41,222) - 240,935 163,346

- - - - - (37,033) (13,991)

9,555 69,900 170,071 - (41,222) - 203,902 149,355

(68,127) 48,973 (1,539) (6,748) (2,215) (28,997) (108,541) (11,465)

(168,366) (24,964) (58,172) (3,569) 98,526 13,991 (166,891) (21,091)

859,266 58,606 (59,711) 3,182 38,312 (15,008) 762,328 15,540

(174,632) (10,724) 4,523 (8,468) 5,800 - (152,443) (11,901)

247 - 20,736 - (8,837) - 28,407 15,088

- - - - - - - -

- - - - - - - -

1,095,760 34,597 - 13,500 (58,000) - 1,037,760 48,097

10,399,114 1,385,781 2,156,341 335,938 (8,602,006) (1,173,244) 11,593,959 2,058,530

1,036 - 18,362 - (743) - 22,991 30,470

349,485 139,469 182,343 37,843 - - 577,615 222,659

- - 461 - - - 1,749 1,207

71,346 1,007 17,369 - - - 108,959 24,468

(1,563) (28,397) 44,715 4,382 116,359 (15,000) (337,467) (65,100)

(208,852) (145,403) (17,973) (1,768) (217,385) 615,000 (483,522) (128,746)

(45,335) 246,329 (2,670) (2,688) 34,828 (600,000) 534,393 274,128


TEN YEAR SUMMARY

LKR ’000

31st March 2011 2012 2013 2014 2015 2016

2017

Restated 2018 2019 2020

Operating Results

Turnover 57,525 77,067 149,692 347,847 222,168 171,400 182,688 146,123 149,335 203,902

Profit before Tax 144,676 (35,917) 19,621 37,154 45,102 46,784 42,587 269,663 15,540 762,328

Income Tax (66,555) (11,642) (10,929) (11,138) (13,968) (15,061) (9,315) (34,176) (11,901) (152,443)

Profit After Tax 78,121 (47,559) 8,692 26,016 6,909 31,723 33,272 235,487 3,639 609,885

Minority Interest 30,733 (3,312) (2,016) 5,763 13,196 7,381 5,559 4,370 (330) (5,568)

Profit/(Loss) Attributable

to the Group 47,388 (44,247) 10,708 20,253 (6,287) 24,342 27,713 235,487 3,969 615,454

Capital Employed

Stated Capital 92,399 92,399 92,399 92,399 140,086 156,716 156,716 156,716 785,425 6,380,094

Capital Reserves 23,100 23,100 23,100 23,100 23,100 23,100 23,100 23,100 23,100 23,100

Revenue Reserves 472,664 415,729 424,995 445,300 439,369 464,431 517,410 856,249 859,315 1,368,092

Shareholders’ Funds 588,163 531,228 540,494 560,799 602,555 644,247 697,226 1,036,065 1,667,840 8,056,388

Minority Interest 143,488 61,755 62,254 68,033 80,672 87,829 100,691 131,862 32,483 33,273

Total Liabilities 513,708 519,409 631,793 704,596 592,837 539,590 499,199 583,084 358,207 3,504,298

Total Equity & Liabilities 1,245,359 1,112,392 1,234,541 1,333,428 1,276,064 1,271,666 1,297,116 1,751,011 2,058,530 11,593,959

Assets Employed

Non-Current Assets 1,117,898 1,006,773 1,133,859 1,155,146 1,160,459 1,215,735 1,273,273 1,734,810 1,919,078 9,993,045

Current Assets 127,461 105,619 100,682 178,282 115,605 55,931 23,844 16,201 139,452 1,600,914

Total Assets 1,245,359 1,112,392 1,234,541 1,333,428 1,276,064 1,271,666 1,297,116 1,751,011 2,058,530 11,593,959

LKR

Share Price 118.00 200.00 157.00 114.00 36.00 24.00 23.00 32.50 23.90 33.50

Earnings/(loss) per Share 5.93 (5.54) 1.36 1.90 (0.58) 2.01 2.19 18.26 0.15 4.48

Dividend per Share Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Book Value per Share 74.00 68.00 68.00 70.00 50.00 51.00 55.08 81.85 37.65 41.64


INVESTOR INFORMATION

Resident Non-Resident Total

Shareholding

No. of

Shareholders

Total

Shareholding %

No. of

Shareholders

Total

Shareholding %

No. of

Shareholders

Total

Shareholding %

01-1,000 1,498 326,737 0.17 20 5,302 0.00 1,518 332,039 0.17

1,001-10,000 227 681,365 0.35 4 18,012 0.01 231 699,377 0.36

10,001-100,000 29 643,247 0.33 - - - 29 643,247 0.33

100,001-1,000,000 4 1,294,722 0.67 2 1,743,000 0.90 6 3,037,722 1.57

Over 1,000,000 3 31,352,597 16.21 7 157,416,314 81.36 10 188,768,911 97.57

1,761 34,298,668 17.73 33 159,182,628 82.27 1,794 193,481,296 100

No. of

Shareholders % No. of Shares %

Individual 1,712 95.43 100,956,769 52.18

Institutional 82 4.57 92,524,527 47.82

1,794 100.00 193,481,296 100.00

TWENTY MAJOR SHAREHOLDERS OF THE COMPANY

31st March 2020 31st March 2019

Name No . of Shares (%) No . of Shares (%)

1. NORTHERN TRUST COMPANY S/A IAN JOSEPH MCVEIGH 66,128,169 34.18 - -

IAN JOSEPH MCVEIGH - - 9,131,354 20.61

2. MR M.H. JAMALDEEN 28,925,034 14.95 6,255,806 14.12

3. EIGHTH WONDER 23,912,684 12.36 16,513,863 37.28

4. MR P. MORGAN 23,689,496 12.24 5,322,827 12.02

5. MR T.C. SMITH 22,355,190 11.55 - -

6. MR A.J.B. WARMAN 11,110,235 5.74 2,783,208 6.28

7. MR S.G. RODEN 8,622,680 4.46 - -

8. MRS E.S. KALBIAN 1,597,860 0.83 - -

9. MR M.F. FAROOK 1,325,000 0.69 1,325,000 2.99

10. STERADIAN CAPITAL INVESTMENTS (PVT) LTD 1,102,563 0.57 - -

11. MR R.J. MCMULLEN 871,500 0.45 - -

12. MR L.S. BOASE 871,500 0.45 - -

13. LB FINANCE PLC/BOSTON CAPITAL (PVT) LTD 473,291 0.25 473,291 1.07

14. BOSTON CAPITAL (PVT) LTD 426,975 0.22 426,975 0.96

15. GEORGE STEUART FINANCE PLC/ BOSTON CAPITAL (PVT) LTD 260,000 0.13 260,000 0.59

16. MR R.SENEVIRATNE 134,456 0.07 - -

17. MR W.W.D.D.S. PERERA 50,000 0.03 80,790 0.18

18. AXIS FINANCIAL SERVICES (PVT) LTD 49,303 0.03 49,303 0.11

19. MR P.G.W. SIRISENA 47,250 0.02 47,250 0.11

20. MR T.G. THORADENIYA 46,275 0.02 46,275 0.10

191,999,461 99.23 42,715,942 96.42

OTHERS 1,481,835 0.77 1,585,501 3.58

193,481,296 100.00 44,301,443 100.00


DIRECTORS’ AND CEO’S SHAREHOLDING AS AT 31ST MARCH

2020 2019

No. of Shares % No. of Shares %

01. Ratnayake Mudiyanselage Mohan Joseph RATNAYAKE Nil Nil Nil Nil

02. Terence Charles SMITH 22,355,190 11.55% Nil Nil

03. Ian Joseph MCVEIGH

Shares held in the following manner

Northern Trust Company S/A Ian Joseph McVeigh

66,128,169 34.18% 9,131,354 20.61%

04. Mohamed Hisham JAMALDEEN 28,925,034 14.95% 6,255,806 14.12%

05. Archie James Buckland WARMAN 11,110,235 5.74% 2,783,208 6.28%

06. Saravanan NEELAKANDAN Nil Nil Nil Nil

07. Mohamed Firdouse FAROOK 1,325,000 0.68% 1,325,000 2.99%

08. Kudagamage Jayantha PRADEEP Nil Nil Nil Nil

09. Piers MORGAN 23,689,496 12.24% 5,322,827 12.02%

SHARE PRICES FOR THE YEAR

Year ended

31/03/2020 31/03/2019

Market price per share

Highest during the year (LKR) 49.00 (04.09.2019) 39.50 (04.06.2018)

Lowest during the year (LKR) 20.10 (24.05.2019) 18.00 (30.01.2019,

14.11.2018 & 06.09.2018)

As at end of the year (LKR) 33.50 23.90

Share trading information

Number of Transactions during the year 4,966 1,746

Number of Shares traded during the year 1,767,450 1,582,043

Value of shares traded during the year (LKR) 60,542,171.80 61,389,168.60

PUBLIC HOLDING

1. The Public Holding Percentage as at 31st March 2020 being 7.718%

2. Total number of shareholders who hold the Public Holdings as at 31st March 2020 - 1,794

3. The float adjusted market capitalisation as at 31st March 2020 = LKR 500,252,987.50

4. The Float adjusted market capitalisation of the Company falls under Option 5 of Rule 7.13.1 (a) of the Listing Rules of the Colombo

Stock Exchange and the Company has complied with the minimum public holding requirement applicable under the said option.

INVESTOR INFORMATION


CORPORATE INFORMATION

LEGAL FORM

A Public Limited Liability Company incorporate in

Sri Lanka under the Companies Ordinance No. 51 of

1938 (Cap 145), (Registered under the Companies

Act No. 07 of 2007) and listed on the Colombo

Stock Exchange.

COMPANY REGISTRATION NUMBER

PQ 139

DIRECTORS

Mr. R M M J Rathnayake

Mr. T C Smith

Mr. I J McVeigh

Mr. P Morgan

Mr. M H Jamaldeen

Mr. A J B Warman

Mr. S Neelakandan

Mr. M F Farook

Mr. K J Pradeep

AUDIT COMMITTEE

Mr. R M M J Ratnayake

Mr. S Neelakandan

Mr. K J Pradeep

RELATED PARTY TRANSACTIONS REVIEW COMMITTEE

Mr R M M J Ratnayake

Mr. M F Farook

Mr. S Neelakandan

REMUNERATION COMMITTEE

Mr. S Neelakandan

Mr R M M J Ratnayake

Mr. K J Pradeep

AUDITORS

Ernst & Young

Chartered Accountants

201, De Saram Place,

Colombo 10.

REGISTERED OFFICE

HQ Colombo, 1st Floor

464A, T. B. Jayah Mawatha,

Colombo 10,

Sri Lanka

Tel : 011 2331556

Fax : 011 2331555

Email : [email protected]

LAWYERS

Neelakandan & Neelakandan

Attorneys-at-Law & Notaries Public

M & N Building, (Level 05)

02, Deal Place

Colombo 3.

SECRETARIES


3/17, Kynsey Road,

Colombo 8.

BANKERS

Sampath Bank PLC

Pan Asia Banking Corporation PLC

Bank of Ceylon

National Development Bank PLC

Commercial Bank of Ceylon PLC

Hatton National Bank


GROUP DIRECTORY

Company Name PV % Ownership Type Date of Incorporation

Amtrad Ltd PB 1317 80% Manufacturer of Building

Construction Material

March 28, 1980

285 Darley Road (Pvt) Ltd PV 109954 100% Real Estate Development November 23, 2015

Alexandra Holdings (Pvt) Ltd PV 97631 100% Operators of Hotels March 18, 2014

Almond Trees (Pvt) Ltd PV 80159 100% Operators of Hotels July 20, 2011

Baseline Holdings (Pvt) Ltd PV 104087 100% Real Estate Development February 25th, 2015

Crown Resorts (Pvt) Ltd PV 73541 100% Real Estate Development August 02, 2010

Ilook Villa (Pvt) Ltd PV 78938 100% Operators of Hotels May 20, 2011

L & A Quarries (Pvt) Ltd PV 79275 100% Operators of Crusher Plants June 07, 2011

Lanka Realty Ambalangoda

(Pvt) Ltd

PV 91199 100% Operators of Hotels February 22, 2013

Lanka Realty Developments

(Pvt) Ltd

PV 12802 100% Commercial Property

Development

April 01, 2009

Lanka Realty Leisure (Pvt) Ltd PV 84290 100% Operators of Hotels February 15, 2012

Mulberry Holdings (Pvt) Ltd PV 100666 100% Real Estate Development September 03, 2014

Oak Street (Pvt) Ltd PV 12729 100% Real Estate Development April 06, 2009

Thudella Holdings (Pvt) Ltd PV 95031 100% Real Estate Development October 14, 2013


Registered Address Telephone Number Directors Stated Capital (LKR)

1st Floor

HQ Colombo, No. 464, T.B. Jayah Mawatha, Colombo 10.

011 2331556 A J B Warman (Chairman)

M H Jamaldeen

D A J Warnakulasuriya

P Madanayake

M F Farook

K J Pradeep

87,800,000.00

HQ Colombo

1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.

011 2331556 M H Jamaldeen

A J B Warman

1,048,935,226.00

HQ Colombo



A J B Warman

231,657,537.00

HQ Colombo



A J B Warman

93,350,901.00

HQ Colombo



A J B Warman

358,344,298.00

HQ Colombo



A J B Warman

50,717,090.00

1st Floor



A J B Warman

19,985,960.00

1st Floor



A J B Warman

94,372,920.00

1st Floor



A J B Warman

9,981,600.00

1st Floor



A J B Warman

M F Farook

830,000,006.00

HQ Colombo



A J B Warman

35,468,410.00

HQ Colombo



A J B Warman

456,866,196.00

HQ Colombo



A J B Warman

2,255,641,870.00

HQ Colombo



A J B Warman

99,037,348.00


NOTICE OFANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Fiftieth (50th) Annual General

Meeting of Lanka Realty Investments PLC will be held at the

Sri Lanka Foundation, No. 100, Padanam Mawatha,

Independence Square, Colombo 07 on 28th September 2020 at

10.00 a.m. for the following purposes:

1 To receive and consider the Annual Report of the Board of

Directors on the affairs of the Company and the Financial

Statements for the year ended 31st March 2020 together with

the Report of the Auditors thereon.

2 To re-elect as a Director, Mr. Terence Charles Smith who

retires in terms of Articles 83 and 84 of the Articles of

Association of the Company.

3 To re-elect as a Director, Mr. Kudagamage Jayantha Pradeep

who retires in terms of Articles 83 and 84 of the Articles of

Association of the Company.

4 To appoint as a Director, Mr. Piers Morgan who is 73 years of

age by passing the following resolution:

“IT IS HEREBY RESOLVED THAT Mr. Piers Morgan who is 73

years of age be and is hereby appointed a Director of the

Company and it is hereby declared as provided for in Section

211(1) of the Companies Act No. 07 of 2007 that the age limit

of 70 years referred to in Section 210 of the Companies Act

shall not apply to Mr. Piers Morgan.”

5 To re-appoint the Messrs Ernst & Young, Chartered

Accountants, as the Company’s Auditors and authorise the

Directors to determine their remuneration.

6 To authorise the Directors to determine donations for the

year ending 31st March 2021 and up to the date of the next

Annual General Meeting.

By Order of the Board



Director / Secretaries

31st August 2020

Notes:

1. A shareholder is entitled to appoint a Proxy to attend and

vote at the meeting on his/her behalf.

2. A Proxy need not be a shareholder of the Company.

3. A Form of Proxy accompanies this Notice.

4. The completed Form of Proxy should be deposited at the

Registered Office of the Company, HQ Colombo, 1st Floor,

464A, T.B. Jayah Mawatha, Colombo 10 by 10.00 a.m.

on 26th September 2020.


FORM OF PROXY

I/We* ................................................................................................................................................................ (holder of NIC No. ......................................)

of ...................................................................................................................................................................................................................................................

shareholder/s of LANKA REALTY INVESTMENTS PLC hereby appoint .............................................................................................................................

..................................................................................... (holder of NIC No. ......................................) of ...................................................................................

................................................................................................................................................................................................................... or failing him/her*

Mr. Ratnayake Mudiyanselage Mohan Joseph Ratnayake or failing him*

Mr Terence Charles Smith or failing him*

Mr Ian Joseph McVeigh or failing him*

Mr Mohamed Hisham Jamaldeen or failing him*

Mr. Archie James Buckland Warman or failing him*

Mr. Saravanan Neelakandan or failing him*

Mr. Mohamed Firdouse Farook or failing him*

Mr. Kudagamage Jayantha Pradeep or failing him*

Mr. Piers Morgan

as my/our* proxy to represent me/us* and to vote as indicated hereunder for me/us* and on my/our* behalf at the Fiftieth (50th) Annual

General Meeting of the Company to be held on 28th September 2020 and at every poll which may be taken in consequence of the

aforesaid meeting and at any adjournment thereof.

For Against

(1) To re-elect as a Director, Mr. Terence Charles Smith who retires in terms of Articles 83 and 84

of the Articles of Association of the Company.

(2) To re-elect as a Director, Mr. Kudagamage Jayantha Pradeep who Retires in terms of Articles

83 and 84 of the Articles of Association of the Company.

(3) To pass the ordinary resolution set out under item 4 of the Notice of Meeting for the

appointment of Mr. Piers Morgan as a Director.

(4) To re-appoint the retiring Auditors Messrs Ernst & Young, Chartered Accountants as the Company’s

Auditors and authorise the Directors to determine their remuneration.

(5) To authorise the Directors to determine donations for the year ending 31st March 2021 and up to

the date of the next Annual General Meeting.

In witness my/our* hand/s this ........................................ day of ........................................ Two Thousand and Twenty.

...................................................

Signature of Shareholder/s

*Please delete what is inapplicable.


Instructions for completion

1. The full name, National Identity Card number and the registered address of the shareholder appointing the Proxy and the relevant

details of the Proxy should be legibly entered in the Form of Proxy which should be duly signed and dated.

2. The completed Proxy should be deposited at the Registered Office of the Company, 1st Floor, HQ Colombo, 464A, T.B. Jayah

Mawatha, Colombo 10, by 10.00 a.m on 26th of September 2020.

3. The Proxy shall –

(a) In the case of an individual be signed by the shareholder or by his/her attorney, and if signed by an Attorney, a notarially

certified copy of the Power of Attorney should be attached to the completed Proxy if it has not already been registered with the

Company.

(b) In the case of a company or corporate / statutory body either be under its Common Seal or signed by its Attorney or by an

Officer on behalf of the company or corporate / statutory body in accordance with its Articles of Association or the Constitution

or the Statute (as applicable).

4. Please indicate with a ‘X’ how the Proxy should vote on each resolution. If no indication is given, the Proxy in his/her discretion will

vote as he/she thinks fit.

FORM OF PROXY

LANKA REALTY INVESTMENTS PLC

HQ Colombo, 1st Floor, 464A, T. B. Jayah Mawatha, Colombo 10, Sri Lanka

www.lriplc.com

THE CLIMB - LRI

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