Annual report for 2004/05 - Hemas Holdings, Ltd

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Notes to the Financial StatementsYear ended 31 March 20051. CORPORATE INFORMATION1.1 GeneralHemas Holdings Limited (formally “Hemas Holdings (Pte)Ltd”) is a public limited liability company incorporated anddomiciled in Sri Lanka. The company changed its status froma private company to a public limited liability company on7th August 2003, under section 20(1) of the Companies Act,No.17 of 1982. Subsequently, the company changed itsname from Hemas Holdings (Pte) Ltd, to Hemas HoldingsLtd.Hemas Holdings Limited (“Company”) was listed in theColombo Stock Exchange on 15th October 2003.The registered office and the principal place of business issituated at No. 36, Bristol Street, Colombo 01.Hemas Holdings Ltd., does not have an identifiable parent ofits own.1.2 Principal Activities and Nature of OperationsDuring the year, the principal activities of the Company werecarrying out investment activities, and providingmanagement and administration services to otherCompanies in the group.1.3 Date of Authorisation for IssueThe financial statements of Hemas Holdings Limited for theyear ended 31st March 2005 , were authorised for issue , inaccordance with a resolution of the Board of Directors on20th May 2005.1.4 Number of EmployeesThe number of employees of the company at the end of theyear was 10 (2004- 9)The number of employees of Hemas Holdings Ltd., and its100% owned subsidiaries was 1171 at the end of the year.(2004-2525)2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1 General Policies2.1.1 Basis of PreparationThe balance sheet, statements of income, changes in equityand cash flows, together with accounting policies and notes,(“Financial Statements”) of the Company as at 31st March2005 and for the year then ended, comply with the SriLanka Accounting Standards.These financial statements presented in Sri Lanka Rupeeshave been prepared on historical cost basis except for thevaluation of certain Property Plant & Equipment, which arestated at market values.2.1.2 Consolidation Policy- Principles of Consolidation(a) SubsidiariesThe financial statements of the Group represent theconsolidation of the financial statements of the Company,and its controlled subsidiaries after elimination of allmaterial intra group transactions and unrealized gainsarising from intra – group transactions.Subsidiaries are consolidated from the date the Parentobtains control until such time as control ceases.The total profits & losses for the period of the Company andof its subsidiaries included in consolidation are shown in theconsolidated income statement with the proportion of profitor loss after taxation pertaining to minority shareholders ofsubsidiaries being deducted as “Minority Interest”.All assets and liabilities of the Company and of itssubsidiaries included in consolidation are shown in theconsolidated balance sheet. The interest of minorityshareholders of subsidiaries in the fair value of net assets ofthe Group are indicated separately in the consolidatedbalance sheet under the heading “Minority Interest.”(b) Associate CompaniesAssociate companies have been accounted for on the equitymethod.Associates are those investments in which the Group has asignificant influence of 20% to 50% and which are neithersubsidiaries nor joint ventures of the Group.The income statement reflects the Group’s share of theresults of the operations of each associate.The related investments are carried forward in theconsolidated balance sheet initially at cost and valuesadjusted to reflect the Group’s share of post acquisitionprofit /(loss) of the associates , net of any dividends paid bysuch associate.Unrealized gains arising from transactions with associatesare eliminated against the investment in the associate , tothe extent of Group’s interest in the enterprise.(c) Joint VenturesThe Group’s interests in Joint Ventures is accounted for byproportionate consolidation, whereby the venturers’proportionate share of each of the assets, liabilities, incomeand expenses of the jointly controlled entity is combined ona line by line basis with similar items in the consolidatedfinancial statements.(d) GoodwillGoodwill arising on acquisition represents the excess of costof the acquisition over the fair value of identifiable net40H E M A S H O L D I N G S L I M I T E D
Notes to the Financial StatementsYear ended 31 March 2005assets of a subsidiary, associate or joint venture as at thedate of acquisition.Negative GoodwillNegative goodwill arising on acquisition comprises theexcess of the fair value of net identifiable assets acquiredover the purchase price or cost of acquisition.Acquired goodwill is recognized as an intangible asset andnegative goodwill as deferred income in the consolidatedfinancial statements and stated at cost less accumulatedamortization.Any acquired goodwill, including negative goodwill isamortized over 5 years on a straight line basis from the dateof initial recognition.(e) Changes in Group CompaniesHemas Garments (Pte) Limited a subsidiary, (70% controllinginterest) was disposed on 31st March 2005 and Exchange &Finance Investment Limited was acquired as a subsidiary(56% controlling interest) and the controlling interest inPeace Haven Resorts Limited was increased to 88% from71%.(f) Financial YearAll Companies in the Group have a common financial yearthat ends on 31st March .(g) Country of IncorporationAll subsidiaries and the associate companies areincorporated in Sri Lanka.2.1.3 Comparative InformationThe accounting policies have been consistently applied bythe Company and are consistent with those used in theprevious year. The previous years’ figures and phrases havebeen rearranged wherever necessary to conform to thecurrent presentation.2.1.4 Foreign Currency TranslationAll foreign exchange transactions are converted to Sri LankaRupees, which is the reporting currency, at the rates ofexchange prevailing at the time the transactions wereeffected. Monetary assets and liabilities denominated inforeign currencies are translated to Sri Lanka Rupeeequivalents using year-end spot foreign exchange rates.Non- monetary assets and liabilities are translated usingexchange rates that existed when the values weredetermined. The resulting gains and losses are accounted forin the Income Statement.2.1.5 Taxationa) Current TaxesThe provision for income tax is based on the elements ofincome and expenditure as reported in the financialstatements and computed in accordance with the provisionsof the Inland Revenue Act.Trading income of Serendib Hotels Ltd., Hotel Sigiriya Ltd.,Stafford Hotels Ltd., Miami Beach Hotels Ltd., SerendibLeisure Management Ltd., Hemas Travels (Pte) Ltd. andHemtours (Pte) Ltd., is taxed at 15%, other income of theseCompanies are taxed at 30%.The profits of Hemas Garments (Pte) Ltd., are exempt fromIncome Tax under BOI Act No. 4 of 1978 for a period of 15years reckoned from the year of assessment 1996/1997 inwhich the Company commences to make profits in relationto its transactions in that year of assessment not later than5 years from the date of first commercial production oroperation of the enterprise which occurs earlier. On theexpiration of the above tax exemption period the provisionof section 85 A of the Inland Revenue Act No. 38 of 2000shall apply to the company.Hemas Developments (Pte) Ltd., has obtained BOI approvalunder Section 17 and it enjoys a 7 year tax holidaycommencing from the year of assessment 1998/1999 inwhich the enterprise makes profits in relation to itstransactions in that year or not later than 5 years from thedate of its first commercial operation whichever is earlier.b) Deferred TaxationDeferred taxation is provided on the liability method. Thetax effect of all timing differences which occur where itemsare allowed for income tax purposes in a period differentfrom that when they are recognised in financial statementsis included in the provision for deferred taxation at rates oftaxation, which would prevail at the time the differencereverses.Deferred tax assets are recognised for all deductible timingdifferences and carry forward of unused tax losses, to theextent that it is probable that taxable profit will be availableagainst which the deductible timing differences and carryforward of unused tax losses can be utilized. The carryingamount of deferred tax assets is reviewed at each balancesheet date and reduced to the extent that it is no longerprobable that sufficient taxable profit will be available toallow all or part of the deferred tax asset to be utilized.2.1.6 Borrowing CostsBorrowing costs are recognised as an expense in the periodin which they are incurred, unless they are incurred inrespect of qualifying assets in which case it is capitalized aspart of that asset.A N N U A L R E P O R T 2 0 0 4 - 2 0 0 5 41
Page 4: Group ProfileIt was a far thinking
Page 7 and 8: Financial HighlightsYear Ended 31st
Page 9 and 10: CEO’s Reviewfinancial year. We pe
Page 11 and 12: Members of the BoardDebu BhatnagarD
Page 13 and 14: Group Management CommitteeFrom left
Page 15 and 16: Review of OperationsFinancial Revie
Page 17 and 18: Financial ReviewTaxationGroup provi
Page 19 and 20: FMCG Sectorin the market. In the Ha
Page 21 and 22: Leisure SectorThe primary business
Page 23: Strategic InvestmentsPowerAs report
Page 26 and 27: Hemas Tsunami Response Plan26 Decem
Page 28 and 29: Piyawara ProgrammeEarly Childhood C
Page 30 and 31: The Hemas TeamOur team has always b
Page 32 and 33: Corporate GovernanceCommitment to t
Page 34 and 35: Report of the DirectorsDIRECTORS’
Page 36 and 37: Statement of Directors’ Responsib
Page 38 and 39: Income StatementYear ended 31 March
Page 40 and 41: Statement of Changes in EquityYear
Page 44 and 45: Notes to the Financial StatementsYe
Page 72 and 73: Five Year SummaryYear Ended 31st Ma
Page 74 and 75: GlossaryCAPITAL EMPLOYEDTotal share
Page 76 and 77: Notes74H E M A S H O L D I N G S L
Page 78: Form of ProxyNote:1. *Please delete

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