Annual report for 2004/05 - Hemas Holdings, Ltd

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Notes to the Financial StatementsYear ended 31 March 20052.1.7 Deferred ExpenditureExpenditure which is deemed to have a benefit orrelationship to more than one financial year is classified asdeferred expenditure. Such expenditure is written off overthe period to which it relates, on a straight-line basis.2.1.8 Research and Development CostsResearch and development costs are expensed as incurred,except for development costs, which are recognised as anasset to the extent that it is expected that such asset willgenerate future economic benefits. Where development costsare recognised as an asset, such costs are amortized on astraight- line basis over the period of expected futurebenefits. At each balance sheet date, the company assesseswhether there is any indication of impairment ofdevelopment costs recognized as assets i.e. whether it is nolonger probable that further economic benefits will begenerated. If any such indication exits, only the estimatedrecoverable amount is further amortised.2.1.9 Other Intagible AssetsOther intangible assets (other than positive and negativegoodwill) that are acquired by the Group are stated at costless accumulated amortisation. Acquisition of a Brand isrecognized in the Balance Sheet as an asset and is amortisedover 5 years with no amortisation for year of acquisition anda full year’s charge in the final (5th) year.2.2 Valuation of Assets and their Measurement Bases2.2.1 InventoriesInventories are valued at the lower of cost and net realisablevalue, after making due allowances for obsolete and slowmoving items. Net realisable value is the price at whichinventories can be sold in the ordinary course of businessless the estimated cost of completion and the estimated costnecessary to make the sale.The cost incurred in bringing inventories to its presentlocation and condition are accounted using the followingcost formulae:-Raw Materials - At actual cost on first-in first-out basis /weighted average basis.Finished Goods & Work-in-Progress - At the cost of directmaterials, direct labour and an appropriate proportion offixed production overheads based on normal operatingcapacity.Other Stocks - At actual cost.2.2.2 Trade and Other ReceivablesTrade receivables are stated at the amounts they areestimated to realise net of provisions for bad and doubtfulreceivables.Other receivables and dues from Related Parties arerecognised at cost less provision for bad and doubtfulreceivables.2.2.3 Cash and Cash EquivalentsCash and cash equivalents are defined as cash in hand,demand deposits and short term highly liquid investments,readily convertible to known amounts of cash and subject toan insignificant risk of changes in value.For the purpose of cash flow statement, cash and cashequivalents consist of cash in hand and deposits in banksnet of outstanding bank overdrafts. Investments with shortmaturities i.e. three months or less from the date ofacquisition are also treated as cash equivalents.2.2.4 Property, Plant and Equipmenta) Cost and ValuationAll items of Property, Plant & Equipment are initiallyrecorded at cost. Where items of Property, Plant andEquipment are subsequently revalued, the entire class ofsuch assets is revalued. Revaluations are made withsufficient regularity to ensure that their carrying amountsdo not differ materially from their fair values at the balancesheet date. Subsequent to the initial recognition as an assetat cost, revalued Property, Plant and Equipment are carriedat revalued amounts less any subsequent depreciationthereon. All other Property, Plant and Equipment are statedat historical cost less depreciation.When an asset is revalued, any increase in the carryingamount is credited directly to a revaluation surplus unless itreverses a previous revaluation decrease relating to the sameasset, which was previously recognised as an expense. Inthese circumstances the increase is recognised as income tothe extent of the previous write down. When an asset’scarrying amount is decreased as a result of a revaluation, thedecrease is recognised as an expense unless it reverses aprevious increment relating to that asset, in which case it ischarged against any related revaluation surplus, to theextent that the decrease does not exceed the amount heldin the revaluation surplus in respect of that same asset. Anybalance remaining in the revaluation surplus in respect of anasset, is transferred directly to Accumulated Profits onretirement or disposal of the asset.An amount equal to the excess of the annual depreciationchare on revalued assets over the notional historical costdepreciation charge on such asssets is transferred annuallyfrom the surplus in the revaluation reserve to theaccumulated profit in Hemas Development (Pte) Ltd. andHemtours (Pte) Ltd.42H 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 2005b) Restoration CostsExpenditure incurred on repairs or maintenance of Property,Plant and Equipment in order to restore or maintain thefuture economic benefits expected from originally assessedstandard of performance, is recognised as an expense whenincurred.c) DepreciationThe provision for depreciation is calculated by using astraight line method (except for Serendib Hotels Ltd, HotelSigiriya Ltd. and Stafford Hotels Ltd,) on the cost orvaluation of all Property, Plant and Equipment other thanfreehold, in order to write off such amounts over theestimated useful lives. The principal annual rates used bythe companies in the Group are as follows:AssetsRate p.a.Buildings 1.5% - 5%Furniture & Fittings 7% - 25%Office & Factory Equipments 10% - 33.33%Computer Accessories 33 1/3 %Plant & Machinery 6% - 25%Motor Vehicles 20% - 25%Leased Assets 25%Crockery & Cutlery 50% - 100%Fire Fighting Equipment 10%Leasehold land and buildings are depreciated over theremaining lease period (except for Serendib Hotel Ltd andHotel Sigiriya Ltd)In Serendib Hotels Ltd., value of the buildings on theleasehold land is amortized in 20 equal annual installmentscommencing from 1 April 1994 and ending on 31 March2014. The Company has further obtained an extension of thelease period for 30 years commencing 1 April 2002.Accordingly the balance written down value of leaseholdland and buildings as at 1st April 2000 is amortized over aperiod of 33 years. However, if the lease is not renewed afterthe date of termination on 31 March 2034, the Company isentitled to compensation for the cost of buildings andlandscaping.Hotel Sigiriya Ltd., has commenced amortizing leaseholdproperty from the year 1994/95, the policy of this Companyis to amortize the leasehold buildings over 20 years in equalannual installments i.e. 10 years beyond the expiry of thelease.No provision is made in the year of purchase and full year’sdepreciation is provided for in the year of sale. (except forHeladhanavi Ltd.)2.2.5 Leasesa) Finance LeasesProperty, Plant and Equipment on finance leases, whicheffectively transfer to the Group substantially all of the riskand benefits incidental to ownership of the leased item arecapitalised at the inception of the lease at the fair value ofleased property or, if lower, at the present value of minimumlease payments. Capitalized leased assets are disclosed asFinance Leases under Property, Plant and Equipment anddepreciated over the period the Group is expected to benefitfrom the use of the leased assets.The corresponding principal amount payable to the lessortogether with interest payable over the period of lease isshown as a liability. Lease payments are apportionedbetween the finance charges and reduction of the leaseliability so as to achieve a constant rate of interest on theremaining balance of the liability. The interest payable overthe period is transferred to an interest in suspense account.The interest element of the rental obligations pertaining toeach financial year is charged to income statement over theperiod of lease.The cost of improvements to or on leasehold property iscapitalised, disclosed as leasehold improvements, anddepreciated over the unexpired period of the lease or theestimated useful lives of the improvements, whichever isshorter.b) Operating LeasesLeases where the lessor effectively retains substantially allthe risks and benefits of ownership over the leased term, areclassified as operating leases.Lease rentals paid under operating leases are recognised asan expense in the income statement on a straight-line basisover the lease term.2.2.6 Investmentsa) Current InvestmentsCurrent investments are stated at lower of cost and marketvalue determined on an aggregate portfolio basis.The cost of an investment is the cost of acquisition inclusiveof brokerages, fees, duties and bank fees.Unrealized gains and losses on current investments carriedat market value i.e. reduction to market value and reversalsof such reductions required to reflect current investments atthe lower of cost and market value, are credited or chargedto income statement.b) Long Term InvestmentsQuoted and unquoted investments in shares held on a longterm basis are stated at cost.A N N U A L R E P O R T 2 0 0 4 - 2 0 0 5 43
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 42 and 43: 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

Annual report for 2004/05 - Hemas Holdings, Ltd

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