Responsibilities, Independent Auditors' Report... - Hemas Holdings ...

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MANAGEMENT REPORTS SUSTAINABILITY GOVERNANCE FINANCIAL REPORTS 4.1 Details of Investment Properties Property Extent Valuation Date of the Valuer Valuation Details Rs’000 valuation Hemas Holdings PLC Freehold property at Welisara 285,000 31-Mar-2012 Perera Sivaskantha & Co Open market value for Land 1A-3R-8P Incorporated Valuers existing use basis Building 66,340 sq.ft. Freehold property at Handala 46,500 31-Mar-2012 Perera Sivaskantha & Co Open market value for Land 2R-4.13P Incorporated Valuers existing use basis Building 2,960 sq.ft. Hemas Developments (Pvt) Ltd. Freehold property at Baybrook Place 1,139,000 31-Mar-2012 Perera Sivaskantha & Co Income basis Land 1R-10P Incorporated Valuers Building 99,372 sq.ft. The significant assumptions used by the valuer are as follows Growth in future rentals 12% Anticipated maintenance cost 55% Discount rate 6% 4.2 Hemas Holdings PLC and Hemas Developments (Pvt) Ltd have stated their properties at fair value. The gain arising from the fair valuation was recognised in the Consolidated Income Statement, except for 87% of the Investment Property of Hemas Development (Pvt) Ltd which was reclassified to Property, Plant & Equipment in the Consolidated Balance Sheet following the commencement of owner occupation by the group subsidiaries from 01 April 2011 which is the date of the change in use of the property. Hence the respective gain was transfered to revaluation reserve. 5 LEASEHOLD PROPERTIES Group 2012 2011 Rs. ‘000 Rs. ‘000 Cost/Valuation Balance at the Beginning of the Year 76,838 76,838 Balance at the End of the Year 76,838 76,838 Amortisation Balance at the beginning of the Year 18,059 14,993 Amortised during the Year 3,066 3,066 Balance at the end of the Year 21,125 18,059 Carrying Value at the End of the Year 55,713 58,779 5.1 Details of Investment Properties Property Extent Lease period Value Rs’000 Hemas Manufacturing (Pvt) Ltd Land at Attmbakumbura 5A - 1R - 23.47P 21 Years 17,333 Serendib Hotels PLC Land at Bentota 2A - 0R - 6P 50 Years 35,736 1A - 0R - 37P 30 Years Hotel Sigiriya PLC Land at Sigiriya 8A - 0R - 16P 30 Years 2,644 Annual Report 2011/12 89
NOTES TO THE FINANCIAL STATEMENTS 6 INTANGIBLE ASSETS Group 2012 2011 Rs. ‘000 Rs. ‘000 6.1 Non Current Goodwill 187,296 201,194 Brands 111,686 119,864 Development Expenses 1,427 2,837 300,409 323,895 6.1.1 Goodwill Balance at the Beginning of the Year 201,194 201,194 Addition on changing in percentage holding 6,767 - Impairment during the Year (20,665) - Balance at the End of the Year 187,296 201,194 6.1.2 Brands Balance at the Beginning of the Year 119,864 126,658 Impairment/Written Off during the Year (8,178) (6,794) Balance at the End of the Year 111,686 119,864 6.1.3 Development Expenses Balance at the Beginning of the Year 2,837 5,221 Acquired during the year 1,146 941 Amortiztion during the Year (2,556) (3,325) Balance at the End of the Year 1,427 2,837 6.2 Hemas Group and its Subsidiaries annually carry out an impairment test on all its intangible assets. Impairment tests are carried out as follows: Goodwill - The business acquisition to which the goodwill is attributable is valued based on the earnings growth method. Assumptions applied in such computations are reviewed each year. Brands - Brands are valued based on the earnings growth method, and assumptions applied are reviewed each year. Development Expenses - These include all expenditure attributable to the intangible asset during its development stage. The technical feasibility of completing the project/ product and the business case for future economic benefits are reassessed each year. 6.3 Acquisition goodwill on ACX International (Pvt) Ltd was fully impaired taking into the Consideration the remaining recoverable amount after the disposal of 51% group stake during year. 90 The Hemas Group. Enriching Lives
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