Metropolitan Resource Holdings PLC Annual Report 2009 - 2010

CONTENTSPage NosNotice of Meeting 01Corporate Information 02Chairman’s Review 03Resume of Directors 04Investor Information 06Annual Report of the Board of Directors on the affairs of the Company 08Corporate Governance 11Report of the Audit Committee 14Statements of Directors Responsibility 15Report of the Auditors 16Financial Statements 17Form of Proxy

METROPOLITAN RESOURCE HOLDINGS PLCNOTICE IS HEREBY GIVEN that the Sixteenth Annual General Meeting of MetropolitanResource Holdings PLC will be held at the Auditorium, Sri Lanka Foundation Institute,Colombo 07 on 30 th September 2010 at 9.15 a.m. for the following purposes:1. To receive and consider the Annual Report of the Board of Directors on the affairs of theCompany and the Statement of Accounts for the year ended 31 st March 2010 with theReport of the Auditors thereon.2. To re-elect Mr. Dinesh Jamnadas Ambani who retires by rotation in terms of Article 93and 94 of the Articles of Association of the Company.3. To re-elect Mr. Lalith Jamnadas Ambani who retires by rotation in terms of Article 93and 94 of the Articles of Association of the Company.4. To re-elect Mr. Magage Sarath Wimal Fernando who retires by rotation in terms ofArticle 93 and 94 of the Articles of Association of the Company.5. To re-appoint the Auditors, Messrs B D O Partners Chartered Accountants and authorizethe Directors to determine their remuneration.6. To authorize the Directors to determine donations for the year ending 31 st March 2010and up to the date of the next Annual General Meeting.By order of the BoardMETROPOLITAN RESOURCE HOLDINGS PLCEsjay Corporate Services (Private) LimitedSecretaries4 th August 2010Notes: 1. A member is entitled to appoint a Proxy to attend and vote instead of himself and a Proxy neednot be a member of the Company. A Form of Proxy is enclosed for this purpose. The completedForm of Proxy should be deposited at the Registered Office of the Company, No.153, NawalaRoad, Narahenpita, Colombo 05 not less than 45 hours before the time fixed for thecommencement of the meeting.2. The shareholders and the proxy holders are kindly requested to bring this Report and theirNational Identity Card / Passport.``` Page 01

CORPORATE INFORMATIONCOMPANY : Metropolitan Resource Holdings PLCREGISTERED OFFICE : 153, Nawala Road, Narahenpita, Colombo 5MAILING ADDRESS : 153, Nawala Road, Narahenpita, Colombo 5LEGAL FORM : Public Quoted CompanyDIRECTORS : Mr. Dinesh Jamnadas AmbaniMr. Lalith Jamnadas AmbaniMr. Collin William KingsnorthMr. David Edward Howard Panter(Alternate to C W Kingsnorth)Mr. Carl Michael Oscarsson HaglindDr. Romesh Dias Bandaranaike(Resigned w.e.f. 12 th April 2010)Mr. Magage Sarath Wimal FernandoMr. Gerard Victor Maurice NanayakkaraMr. Jayampathy MolligodaMr. Arya Keerthi KumarasenaMr. Amarasinghe Arachchige Douglas Senaka SaparamaduSECRETARIES : Esjay Corporate Services (Private) LimitedLevel 04,No. 02, Castle Lane,Colombo 04.AUDITORS : B D O Partners,Chartered Accountants,P.O Box 962,Charter House,Colombo 02.BANKERS : Commercial Bank of Ceylon PLCSUBSIDIARIES : Bogawantalawa Tea Estates PLCBPL Teas (Private) LimitedCeylon Tea Gardens LimitedPage 02

CHAIRMAN’S REVIEWOn behalf of the Board of Directors of the Metropolitan Resource Holdings PLC, I have pleasurein presenting to you the Annual Report and the Financial Statement of the Company for the yearended 31 st March 2010.Operational Performance of the CompanyMetropolitan Resource Holdings PLC made a pre-tax profit of Rs. 1.517 million in the yearunder review compared to a pre-tax loss of Rs. 6.672 million in the previous year.Operational Performance of the Group and its SubsidiariesThe Metropolitan Resource Holdings PLC Group ended the year with a pre-tax profit of Rs145.624 million compared to a pre-tax loss of Rs 129.238 million in the previous year.Metropolitan Resource Holdings PLC is the holding company of Bogawantalawa Tea EstatesPLC holding 70.75% of the issued share capital and also Ceylon Tea Gardens Ltd holding 99.98% of the issued share capital. The main income of Metropolitan Resource Holdings PLC is thedividends received from Bogawantalawa Tea Estates PLC.Bogawantalawa Tea Estates PLCBogawantalawa Tea Estates PLC ended the year with a pre-tax profit of Rs.134.152 millioncompared to pre-tax loss of Rs 227.905 million in the previous year. A detailed analysis of theperformance of BTE and the subsidiary is given in its Annual Report for the year 2009/2010.Ceylon Tea Gardens LtdCeylon Tea Gardens Ltd is a non operative Company for the last five years with all of itsphysical assets under the management of Bogawantalawa Tea Estates PLC. For the year2009/2010 the Ceylon Tea Gardens Ltd made a pre-tax profit of Rs 3.033 million compared to apre-tax loss of Rs 1.066 million the previous year. The profit was due to the sale of motorvehicles during the year.ConclusionOn behalf of the Board of Directors of the Company, I wish to place on record my sincereappreciation to the shareholders, employees, suppliers and customers of the company and thesubsidiaries for the support extended over the year.Mr D J AmbaniChairman4 th August 2010Page 03

RESUME OF DIRECTORSMr D J AmbaniMr Dinesh Jamnadas Ambani is the present Chairman of the following companies.- Metropolitan Resource Holdings PLC and its subsidiary Ceylon Tea Gardens Ltd,- Bogawantalawa Tea Estates PLC and its 100% owned subsidiary BPL Teas (Pvt) Ltd- Metrocorp (Pvt) Ltd holding company of MG Consultants (Pvt) Ltd. / EngineeringConsultants Pvt Ltd. and Megatech (Pvt) Ltd.- Eco Power Holdings Ltd and- Vice Chairman of Suntel LtdMr L J AmbaniMr Lalithkumar Jamnadas Ambani is a fellow Member of the Chartered Institute of ManagementAccountants (FCMA) and an Associate member of the Sri Lanka Institute of Chartered Accountants(ACA). He also functions as a Director of the following Companies.- Bogawantalawa Tea Estates PLC- BPL Teas (Pvt) Ltd- Metrocorp (Pvt) Ltd- Megatech (Pvt) Ltd- Office Network (Pvt) LtdDr R D Bandaranaike ( Resigned w.e.f. 12 th April 2010)Dr. Romesh Dias Bandaranaike has a B.Sc. (1 st Class Honours) in Physics from the University of Colomboand a M.S. in Physics and a Ph.D. in Economics, both from the University of Maryland, USA. He has beena Director and the Chief Executive Officer of the Eco Power group of companies for the past 10 years,since its inception. Prior to this he was the head of the government unit which privatized the plantationsector. His previous employment includes as Executive Director/Sri Lanka Business Development Centrefor five years and four years in the USA where he was Project Manager for a large energy consulting firm.Dr. Bandaranaike has also been an international economic and financial consultant for 25 years, workingfor the World Bank, the Asian Development Bank, UNDP, USAID and a number of other organisations.Mr M S W FernandoMr Magage Sarath Wimal Fernando FCMA, MBA (Sri J) has over 20 years experience in Seniormanagement level in Finance, Administration, Manufacturing and IT fields. He has working experience inEngland, Belgium and in Sweden. He is a Fellow Member of the Chartered Institute of ManagementAccountants UK , and holds an MBA from the Post Graduate Institute of Management – SriJayewardenepura University. He is a Visiting Senior Academic at the Faculty of Graduate Studies,University of Colombo and a Visiting Lecturer at the University of Moratuwa.At present he is the Director/CEO of Bogawantalawa Tea Estates PLC and Director/CEO of BPL Teas(Pvt) Ltd. Formerly he was a Director of Royal Ceramics Lanka Limited and General Manager – Financeand Administration at Trelleborg Lanka Pvt Limited.Mr Fernando has held the following positions among many others :- President : PIM Alumni Association – Post Graduate Institute of Management- Chairman : The Management ClubMr C M O HaglindMr Carl Michael Oscarsson Haglind has a MBA from Stockholm School of Economics. He is a Founderand President of Teamwork Technology. He is also a Director of Eco Power, BPL Teas (Pvt) Ltd, SuntelLtd and Gourmet Teas. Prior to this he was the Vice President of Manpower in Sweden.Mr C W KingsnorthMr Colin William Kingsnorth is a Director of Laxey Partners (UK) Limited the Investment Manager toLaxey Investment PLC. He was the Chief Executive Officer of Regent Fund Management (UK) Ltd theprevious investment manager, from 1995 to January 1999. He holds a BSc in Economics and is anAssociate member of the Institute of Investment Management and Research.Page 04

Mr D E H Panter ( Alternate to Mr C W Kingsnorth )Mr David Panter, Chairman of Laxey Investment PLC has spent over 40 years in the tea industry. Heretired in 1996 as a consultant to Thompson Lloyd & Ewart, one of the largest and oldest tea broking firmsin London. Prior to this he was the chairman of Geo. White & Company Limited, which was merged intoThompson Lloyd & Ewart Limited in 1993. He spent 25 years as a tea broker in London and as a consultantto the World Bank, Overseas Development Authority, and to various plantation projects. Previously he had16 years service in India where he was chairman of Carritt Moran & Company Limited and a director of anumber of tea plantation companies.Mr. G V M NanayakkaraMr. Gerald Vincent Morris Nanayakkara is a Fellow of the Institute of Chartered Accountants of Sri Lankaand a Fellow of the Chartered Institute of Management Accountants United Kingdom. He has over 25 yearsexperience in Finance and Administrative functions as Head of Finance in large commercial & industrialestablishments in Sri Lanka, both in private (Metropolitan Agencies Ltd) and state sector (CoconutDevelopment Authority & Colombo Commercial Co. Ltd.) He engages in financial consultancies specialistin corporate restructure and project financing as well as involvement in strategic planning and businessdevelopment operations, including work in the structuring, evaluation and execution ofrestructuring/financing transactions.Mr. J MolligodaMr Jayampathy Molligoda A fellow member of the Institute of Chartered Accountants of Sri Lanka andobtained his Masters of Business Administration from Postgraduate Institute of Management, University ofSri Jayawardenapura. He has also completed the “Executive Strategy Programme” at Victoria University,Melbourne, Australia. and a fellow member of the Society of Certified Management Accountants of SriLanka.He counts over twenty eight years of experience in the fields of, human resource development, financialmanagement and strategic planning. At present, employed at Bogawantalawa Tea Estates PLC, asDirector, Strategic Planning & Projects and Non-Executive Director of Hapugastenne PlantationsPLC/Udapussellawa Plantations PLC.Mr. A K KumaresenaMr. Arya Keerthi Kumarasena Currently a Consultant to the Metropolitan Group of Companies. He holds aBachelor of Science (Honors) in Engineering and has over 35 years of work experience in seniormanagement.Mr. D S SaparamaduMr. Douglas Senaka Saparamadu is an Associate member of the Chartered Institute of ManagementAccountants United Kingdom and holds a BA in Business Studies and a Masters in Finance.At present he is the Business Controller at Metrocorp (Pvt) Ltd. Prior to this he was a Vice President atAmba Research Lanka (Pvt) Ltd and was attached to a team of investment analysts that conductedinvestment research of the global oil and gas equities.Page 05

INVESTOR INFORMATION1. Stock Exchange ListingThe Ordinary shares of the Company are listed on the Diri Savi Board of the Colombo StockExchange in Sri Lanka.Ordinary SharesIssued and fully paid capital as at 31 st March 2010Rs. 17,264,802 shares2. Major Shareholders as at 31 st March2010 2009No. of sharesNo. of sharesD J Ambani 3,942,019 22.83% 3,942,019 22.83%Ocema Investment Company (Pvt) Ltd. 3,046,875 17.65% 3,046,875 17.65%HSBC International Nominees Ltd. 2,481,027 14.37% 2,481,027 14.37%Kelmarsh Investments Ltd. 2,341,702 13.56% 2,341,702 13.56%L T C Murman 1,313,951 7.61% 1,313,951 7.61%C M O Haglind 1,161,537 6.73% 1,161,537 6.73%Metrocorp (Pvt) Ltd 746,435 4.32% 746,435 4.32%Sealbe Holding AG 719,878 4.17% 719,878 4.17%Trapeze Corporation Panama 460,378 2.67% 460,378 2.67%Ameco Limited 457,030 2.65% 457,030 2.65%R D Bandaranaike (Dr) 198,046 1.15% 198,046 1.15%Carnehall Ltd. 145,074 0.84% 145,074 0.84%A V R de S Jayatilleke 65,507 0.38% 65,507 0.38%L Soderberg 36,562 0.21% 36,562 0.21%Laxey Partners Ltd. C/o HSBC 26,637 0.15% 26,637 0.15%Dag de Meo AB 21,762 0.13% 21,762 0.13%Causidicus Konsult AB 21,762 0.13% 21,762 0.13%Christoffer Hamilton AB 21,762 0.13% 21,762 0.13%C Haglind 14,799 0.09% 14,799 0.09%G H Samarakone 13,058 0.08% 13,058 0.08%3. Categories of Shareholders – Resident/Non Resident2010 2009No. of No. of % No. of No. of %Holders SharesHolders SharesLocal Individuals 654 6,606,307 38.26 156 4,244,898 24.58Local Institutions 22 3,936,098 22.80 10 6,303,707 36.51Foreign Individuals 06 2,533,049 14.67 04 2,526,849 14.63Foreign Institutions 08 4,189,348 24.27 08 4,189,348 24.28Total 690 17,264,802 100.00 178 17,264,802 100.00Percentage of shares held by the public – 23.62% (4,078,797 shares)Page 06

Distribution of Ordinary ShareholdersFrom To 2010 2009No. of No. of % No. of No. of %Holders SharesHolders Shares1 - 1,000 459 165,102 0.96 154 10,935 0.061,001 - 5,000 149 413,818 2.40 2 5,658 0.035,001 - 10,000 38 295,408 1.71 2 12,408 0.0710,001 - 50,000 30 623,442 3.61 7 156,342 0.9150,001 - 100,000 3 172,607 1.00 1 65,507 0.38100,001 - 500,000 3 1,062,482 6.15 4 1,260,528 7.30500,001 - 1,000,000 2 1,466,313 8.49 2 1,466,313 8.49Over 1,000,000 6 13,065,630 75.68 6 14,287,111 82.75690 17,264,802 100.00 178 17,264,802 100.004. Other InformationOther Information As at 31/03/2010 As at 31/03/2009Group Company Group CompanyEarning per share (Rs.) 7.20 0.05 (0.51) (1.21)Dividend per share (Rs.) - - - -Net asset per share (Rs.) 36.71 15.33 31.26 15.30Return on capital employed 13.7 % 0.34 % (18.4%) (3.4%)Market value of shares (Rs.)- Highest - 96.00 - 54.00- Lowest - 26.25 - 54.00- Year End - 26.25 - 54.00Page 07

AuditorsThe financial statements for the year ended 31 st March 2010 were audited by Messrs BDO Partners,Chartered Accountants.The Auditors have confirmed that they have had no interest in or relationship with the Company than that ofAuditors. They confirm that they are independent in accordance with the code of Ethics of the Institute ofChartered Accountants of Sri Lanka.The fee payable to the Auditors for the year under review amounts to Rs.174,600/-.The Auditors have expressed their willingness to continue in office. A resolution to re-appoint the auditorsand to authorize the Directors to determine their remuneration will be proposed at the Annual GeneralMeeting.Significant Accounting PoliciesThe Accounting Policies adopted in the preparation of the Financial Statements are given on page 7 to 17under the Financial Statements section of the Annual Report. There are no changes except for the changeswhich are morefully disclosed in the notes to the Financial Statements in the accounting policies adopted inthe previous year.Statutory PaymentsAll statutory payments of the Company as at the balance sheet date have been paid or where necessaryprovision has been made in the Financial Statements.Going ConcernThe financial statements are prepared on going concern principles after making adequate enquiries frommanagement, the Directors are satisfied that the Company has adequate resources to continue its operationsin the foreseeable future.DividendsThe directors have not recommended a final dividend for the year 2009/2010.DirectorsThe following served as the Directors of the Company during the year under review:Mr. Dinesh Jamnadas AmbaniMr. Lalith Jamnadas AmbaniDr. Romesh Dias Bandaranaike (Resigned w.e.f. 12 th April 2010)Mr. Collin William KingsnorthMr. David Edward Howard Panter(Alternate to C W Kingsnorth)Mr. Carl Michael Oscarsson HaglindMr. Magage Sarath Wimal FernandoMr. Gerard Victor Maurice NanayakkaraMr. Jayampathy MolligodaMr. Arya Keerthi KumarasenaMr. Amarasinghe Arachchige Douglas Senaka SaparamaduDirectors’ interests in ContractsDirectors’ interest in contracts with the company and related party transactions are disclosed in terms No.30and 31 of the Notes to the Accounts, which have been declared by the Directors. The Directors have nodirect or indirect interest in any other contracts or proposed contracts of the company.Page 09

Directors Share HoldingsAs at 31/3/2010 As at 31/3/2009Mr. D.J. Ambani 3,942,019 3,942,019Mr. L.J. Ambani Nil NilDr. R. D. Bandaranaike 198,046 198,046Mr. C.W. Kingsnorth Nil NilMr. C.M.O. Haglind 1,161,537 1,161,537Mr. M. S. W. Fernando Nil NilMr. J. Molligoda 6,967 6,967Mr. G. V. M. Nanayakkara Nil NilMr. A. K. Kumarasena Nil NilMr. A. A. D. S.Saparamadu Nil NilRemuneration and other benefits to DirectorsNo remuneration has been paid to the Board of Directors during the year under review. Other expensesincurred on behalf of Board of Directors have been disclosed in the notes to the financial statements.Public Share Holding as at 31 st March 2010The Public shareholding of the Company was 23.62%.Post Balance sheet: EventsPost Balance Sheet Events have been disclosed in page 37, note no 32 of the Notes to the Accounts.Directors Responsibility in Financial StatementsThe financial statements have been prepared and presented by the Directors in conformity with the SriLanka Accounting Standards and provide the information required by the Companies Act No.7 of 2007 andrequirements of the Colombo Stock Exchange. The Directors continue to adopt the going concern basis inpreparing financial statements. Having scrutinized Group’s plans, the current year budgets and otherrelevant document the Directors consider that the Group has adequate resources to continue in operations.Corporate GovernanceThe Directors of the Board are responsible for the formulation of overall business strategies and policiesand setting standards and ensuring implementation of them. The Board of Directors review the progressquarterly.For and on behalf of the BoardMr. D J AmbaniChairmanMr. M S W FernandoDirector.ESJAY Corporate Services (Pvt) LimitedSecretaries4 th August 2010Page 10

CORPORATE GOVERNANCEMetropolitan Resource Holdings PLC is committed to upholding high standards of ethics, social responsibilities and corporategovernance in conducting its business.Corporate Governance is the system by which companies are directed and controlled by management. Good CorporateGovernance provides the framework within which a company operates, sustained on principles of corporate accountability andtransparency.Your Board has placed high priority on following the Code of Best Practice issued by the Institute of Chartered Accountants ofSri Lanka and the Listing Rule Securities Exchange Commission of Sri Lanka in carrying out its business.THE BOARD OF DIRECTORSBoard ResponsibilityThe Board of Directors are responsible for the Company’s performance and Governance.The main responsibilities of the Board of Directors are‣ Setting the Company’s corporate objective‣ Reviewing and approving major corporate policies‣ Ensuring that all statutory obligations are met‣ Monitoring performance against plans and set objectives‣ Enhancing shareholder valuesIn discharging their duties, the Directors:‣ Bring independent judgment to bear and consider foremost the interests of the Company as a whole.‣ Stay abreast of developments in management practice, the world and domestic economy and other matters relevant tothe Company.‣ May convey concerns to the Chairman, or to a non-executive Director, if and when a need arises.‣ May, where necessary and with the concurrence of the Chairman, consult and consider inputs from ‘experts’ in relevantareas.‣ Declare their interests in contracts under discussion at a Board meeting, and refrain from participating in suchdiscussion.‣ Possessing ‘price-sensitive’ information concerning the Company should not trade in the company’s shares until suchinformation has been adequately disseminated in the market.Directors are provided with quarterly reports on performance and such other reports and documents as necessary. TheChairman ensures that all Directors are adequately briefed on issues arising at meetings.Board CompositionDuring the year Board comprised of Eleven Directors – Ten non-executive Directors including the Chairman and one AlternateDirector for a non-executive Director. The Directors are named below and a brief profile of each is given in page 05 of thisAnnual Report.The Board meets quarterly as a matter of routine and additional meetings are held where necessary. During the year the Boardmet four (4) times and attendance at these meetings are given below.Name of Director Executive / Non-Executive /Independent Non-ExecutiveAttendanceMr. D. J. Ambani Non-Executive 4Mr. L. J. Ambani Non-Executive 2Dr. R. D. Bandaranaike Non-Executive 4Mr. C.W. Kingsnorth Non-Executive -Mr. C. M. O Haglind Non-Executive 4Mr. M. S. W. Fernando Non-Executive 4Mr. J. Molligoda Independent Non-Executive 4Mr. G. V. M. Nanayakkara Independent Non-Executive 2Mr. A. K. Kumarasena Independent Non-Executive 3Mr. A. A. D. S. Saparamadu Independent Non-Executive 4Page 11

The composition of Executive, Non-Executive and Independent Non-Executive Directors satisfies the requirements set down inthe Listing Rules of the CSE. Three of the Non-Executive Directors are also independent Directors while eight Directors areNon-Executive Directors of Metropolitan Resource Holdings PLC.Financial acumenThe Board, including the Alternate Director includes 4 senior accountants – 2 chartered accountants – who possess thenecessary expertise to offer guidance to the Board on matters of finance. One of them serves as Chairman of the AuditCommittee.Appointments to the BoardThe Board collectively decides on the appointment of the Directors.BOARD COMMITTEESAn Audit Committee and a Remuneration Committee function as sub-committees of the Board.The Audit Committee’s Report including names of the members appear on page 14 of this Annual Report.The Remuneration Committee, of the Parent Company, Metropolitan Resource Holdings PLC, acts as the RemunerationCommittee of BTE PLC.The members of the Remuneration Committee (RC) are as followsMr. A K Kumarasena - Chairman RC (Independent non executive Director – MRH PLC)Mr. G V M Nanayakkara - Member RC (Independent non executive Director – MRH PLC)Mr. D.J. Ambani - Member RC (Non Executive Chairman – MRH PLC & BTE PLC)The Remuneration Committee is responsible for the recommendation of the remuneration of the remuneration payable to theChairman, Managing Director, Executive Directors and sets guidelines for the remuneration of the Senior Management withinthe Company and Group, to the Board. The Board makes the final determination upon consideration of such recommendations.The remunerations are based on the present market rates.The gross amount paid as Directors emoluments of the group for the year is disclosed under notes to the financial statements –note no 07 Page 19 – Financial Statements.Major TransactionsThere were no transactions during the year under review, which falls within the definition of “Major Transactions” in terms ofthe Companies Act.Compliance with legal requirementsThe Board through the Company Secretaries and the finance division makes every endeavor to ensure that the Companycomplies with laws and regulations. The Board of Directors requires that in all possible aspects, the financial statements of theCompany are prepared in accordance with Sri Lanka Accounting Standards and the relevant Statutes. The Company has regularcommunication with shareholders through quarterly updates of performance. Maximum possible information is provided toshareholders and full disclosure is made subject only to any sensitive information, which could directly impact the business ofthe Company.The Directors’ confirmation on complying with all statutory dues is given in the report of the directors on page 08.Disclosure of InformationThe Board places emphasis on complete disclosure of both financial and Non-financial information within the bounds ofcommercial reality and the early adoption of sound reporting practices. Due care is exercised with respect to price sensitiveinformation.The statements of Directors Responsibilities for the preparation of financial Statements are giving in page 15 of this AnnualReport.Level of compliance with Section 7 of the CSE Listing Rules on Corporate Governance is given in the following table.Page 12

CORPORATE GOVERNANCE Compliance Table (Colombo Stock Exchange – Listing Rules)Subject Applicable Requirement ComplianceStatusNon-ExecutiveAt least one third of the total number of CompliantDirectors.Directors should be Non-ExecutiveDirectorsIndependent Directors Two or one third of Non-Executive CompliantDirectors, whichever is higher should beIndependentIndependent Directors Each Non –Executive Director should Compliantsubmit a declaration of independence /non –independence in the prescribed formatDisclosure relating to Names independent Director should beDirectorsDisclosure relating toDirectorsRemunerationCommitteeComposition ofRemunerationCommitteeFunctions ofremunerationCommitteeDisclosure in theAnnual Report relatingto RemunerationCommitteeincluded in the Annual ReportA brief resume of each Director should beincluded in the Annual Report including thearea of Expertise.A listed company shall have aRemuneration CommitteeShall comprise of Non-Executive Directorsmajority of whom can be independentThe Remuneration Committee Shallrecommend the remuneration of the ChiefExecutive Officer and Executive DirectorsThe Annual Report Should Set out :DetailsAll Directors are Non-ExecutiveThree of the Eleven Non-Executive Directors areindependentNon-Executive Directors havesubmitted the declaration.Compliant Please refer page 11.Compliant Please refer page 4 and 5.Compliant Name of the members of theremuneration Committee isavailable in page 12.Compliant Remuneration Committeeconsists of three Non-ExecutiveDirectors of which two areindependent.Compliant Please refer page 12Compliant Please Refer page 12a) Names of Directors Comprising theRemuneration Committeeb) Statement of Remuneration Policy Compliant Please refer page 12c) Aggregate remuneration paid toExecutive & Non-Executive Directors.Audit Committee The Company shall have a AuditCommittee.Composition of AuditCommitteeAudit CommitteeFunctionsDisclosure the AnnualReport relating to theAudit Committeeby order of the BoardMetropolitan Resource Holdings PLCShall Comprise of Non-Executive Directorsa majority of whom shall be independent.Chief Executive Officer and the ChiefFinancial officer should attend AuditCommittee MeetingsThe Chairman of the Audit Committee orone member should be a Member of aprofessional accounting bodyShould be as outlined in the Section 6 of thelisting rules.a)Names of the Directors comprising theAudit Committeeb)The Audit Committee shall make adetermination of the independence of theAuditors and disclose the basis for suchdeterminationc) The Annual Report shall Contain aReport of the Audit Committee setting outthe manner of Compliance of the Functions.CompliantCompliantCompliantCompliantNo payments made to theDirectorsNames of the members of theAudit Committee is available onpage 14Audit Committee consists offour Non-Executive Directors ofwhich three are independent.Compliant Chairman of Audit Committeeand one member are members ofa professional accounting bodyCompliant Please refer page 14.CompliantCompliantCompliantPlease refer page 14.Please refer Audit CommitteeReport on page 14Please refer Audit CommitteeReport on page 14.Director4 th August 2010Page 13

Report of the Audit CommitteeThe Audit Committee consists of the following Non Executive Directors• Mr G V M Nanayakkara-Chairman• Mr A K Kumarasena• Mr A A D S Saparamadu• Mr J Molligoda- SecretaryThe Audit Committee of the parent company, Metropolitan Resource Holdings PLC acts as the AuditCommittee of Bogawantalawa Tea Estates PLC.The Audit committee’s role includes, the review of internal control systems, the company’s processfor monitoring compliance with laws / regulations and risk assessment, to make recommendations tothe Board of Directors on the appointment of external auditors and recommend their remuneration andterms of engagement. It also assists the Board in fulfillment of its overall responsibilities of thefinancial reporting process.The Audit Committee held five meetings during the year under review. The Chief FinancialController, Head of Monitoring, sector Senior Accountants and Chief Executive Officer ofBogawantalawa Tea estates PLC were invited and attended to deliberate proceedings. The committeenoted that a comprehensive set of Management accounts/ progress report is produced on a monthlybasis highlighting all key performance indications and reviewed by the Senior Management. TheBoard of Directors reviews the overall performance at the pre- Board meetings followed by the BoardMeetings held quarterly on pre-determined dates and to a agreed agenda.The internal audit function of the Company and its subsidiaries has been entrusted to outsideindependent party, M/S Aiyar & Company, Chartered Accountants and they have carried out nineinternal audit reviews /visits during the financial year. Those reports have been critically reviewedalong with the management explanations and comments at the audit committee meetings. The Auditcommittee also reviewed the effectiveness of the internal control systems and the Group’s approach toits exposure to business and financial risks in the light of the internal audit reports and themanagement comments/explanations thereon. The committee also reviewed the processes that werein place to safeguard the assets of the company and its subsidiary. The committee has recommended aset of guidelines to further strengthen the existing internal control system based on the issues andrecommendations raised by the internal auditors.The audit committee has recommended to the Board of Directors that Messers BDO Partners,Chartered Accountants be continued as the statutory auditors for the year ending 31 st March 2011 aswell.G V M NanayakkaraChairman-Audit Committee4 th August 2010Page 14

STATEMENT OF DIRECTORS RESPONSIBILITYThe Directors are responsible, under Sections 150(1), 151, 152(1), 153(1) and 153(2) of the Companies Act No.7 of2007, to ensure compliance with the requirements set out therein to prepare Financial Statements for each financialyear giving a true and fair view of the state of affairs of the Company as at the end of the financial year and of theprofit and loss of the Company and the Group for the financial year. The Directors are also responsible, underSection 148 for ensuring that proper accounting records are kept disclose, with the reasonable accuracy, the financialposition and enable preparation of the Financial Statements.The Directors confirm that in preparing the Financial Statements, appropriate accounting policies have been selectedand applied consistently while reasonable and prudent judgments have been made so that the form and substance oftransactions are properly reflected.They also confirm that the Financial Statements have been prepared and presented in accordance with the Sri LankaAccounting Standards. The Financial Statements provide the information required by the Companies Act and thelisting rules of the Colombo Stock Exchange.The external auditors Messrs B D O Partners, Chartered Accountants are deemed reappointed in terms of section158 of the Companies Act No.7 of 2007 were provided with every opportunity to under take the inspections theyconsidered appropriate to enable tem to form their opinion on the Financial Statements. The report of the auditors,shown on page 16 sets out their responsibilities in relation to the Financial Statements.COMPLIANCE REPORTThe Directors confirm that to the best of their knowledge, all statutory payments relating to employees and theGovernment that were due in respect of the Company and its subsidiaries as at the Balance Sheet date have beenpaid or where relevant, provided for.By order of the BoardMetropolitan Resource Holdings PLCEsjay Corporate Services (Private) LimitedSecretaries4 th August 2010Page 15

METROPOLITAN RESOURCE HOLDINGS PLCFINANCIAL STATEMENTSPage nosIncome Statement 01Balance sheet 02 - 03Statement of Change in Equity 04Cash flow Statement 05 - 06Notes to the Financial Statement 07 - 42Page 17

METROPOLITAN RESOURCE HOLDINGS PLC Page 1INCOME STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2010GroupCompany2009/2010 2008/2009 2009/2010 2008/2009Notes Rs. Rs. Rs. Rs.Revenue 3 3,555,811,770 2,858,284,000 - 3,827,456Cost of Sales 4 (3,223,999,088) (2,722,136,094) - -Gross Profit 331,812,682 136,147,906 - 3,827,456Other Income 5 170,026,767 122,430,136 4,761,233 16,823,421Administration Expenses (241,801,685) (275,522,624) (3,244,188) (27,323,380)Finance Cost 6 (114,412,880) (112,294,016) - -Profit/(Loss) Before Taxation 7 145,624,884 (129,238,598) 1,517,045 (6,672,503)Income Tax Expenses 8 (21,255,166) (2,210,701) (607,141) (2,210,701)Profit/(Loss) for the Year 124,369,718 (131,449,299) 909,904 (8,883,204)Attributable toEquity Share Holders of the Company 89,145,066 (94,477,237) 909,904 (8,883,204)Minority Interests 35,224,652 (36,972,062) - -124,369,718 (131,449,299) 909,904 (8,883,204)Earnings Per Share - Basic 9 7.20 (7.61) 0.05 (0.51)Figures in brackets indicate deductionsThe Accounting Policies and Notes from pages 07 to 41 form an integral part of these financial statements.Colombo04th August' 2010

METROPOLITAN RESOURCE HOLDINGS PLC Page 2BALANCE SHEETAS AT 31ST MARCH 2010ASSETSNon-current AssetsLeasehold Right to Bare Land(JEDB/SLSPC)Immovable (JEDB/SLSPC) Estate Assetson Finance Lease (other than Bare Land)Property, Plant and Equipment otherthan Immature/Mature PlantationsGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Notes Rs. Rs. Rs. Rs.10 302,445,373 310,905,360 - -11 271,848,720 293,362,629 - -12 703,602,572 663,240,280 67,821 97,010Immature/Mature Plantations 13 905,292,756 827,398,321 - -Biological Assets 13.1 244,051,397 224,724,506 - -Capital Work-in-Progress 14 7,394,829 6,374,140 - -2,434,635,647 2,326,005,236 67,821 97,010Goodwill on Acquisition 15 5,708,384 5,708,384 - -Investments 16 21,075,810 22,594,761 237,000,000 237,000,0002,461,419,841 2,354,308,381 237,067,821 237,097,010Current AssetsInventories 17 522,009,587 460,543,533 - -Trade and Other Receivables 18 521,113,262 585,564,761 1,188,278 888,269Amount Due from Related Companies 19 910,553 844,633 4,226,987 6,400,385Short Term Investments 20 28,465,177 26,962,404 28,465,177 26,962,404Cash at Banks and in Hand 21 232,552,539 61,574,638 383,536 308,5931,305,051,119 1,135,489,969 34,263,978 34,559,651Total Assets 3,766,470,960 3,489,798,350 271,331,798 271,656,661

METROPOLITAN RESOURCE HOLDINGS PLC Page 3BALANCE SHEETAS AT 31ST MARCH 20102009/2010 2008/2009 2009/2010 2008/2009Notes Rs. Rs. Rs. Rs.EQUITY AND LIABILITIESStated Capital and ReservesStated Capital 22 265,308,222 265,308,222 265,308,222 265,308,222Capital Reserves 23,500 23,500 23,500 23,500General Reserve 27,250,000 27,250,000 - -Retained Earnings 341,217,179 252,072,114 (623,972) (1,211,779)Shareholders' Fund 633,798,901 544,653,836 264,707,750 264,119,943Minority Interest 274,078,339 238,897,425 - -Total Equity 907,877,240 783,551,261 264,707,750 264,119,943Non Current LiabilitiesInterest Bearing Borrowings 23 261,782,018 320,057,921 - -Retirement Benefit Obligations 24 649,130,920 491,825,484 - -Deferred Income 25 525,942,940 395,960,194 - -Net Liability to Lessor ofJEDB/SLSPC Estates26 543,597,817 550,984,591 - -Redeemable Debentures 27 100,000,000 - - -2,080,453,695 1,758,828,190 - -Current LiabilitiesTrade and Other Payables 28 411,920,091 479,712,463 633,852 471,483Amounts Due to Related Companies 29 - 6,000,001 5,074,171 5,074,171Current Portion of InterestBearing Borrowings23 150,111,766 130,043,281 - -Unclaimed Dividends 3,379,929 3,383,270 - -Net Liability to Lessor ofJEDB/SLSPC Estates26 7,386,776 7,102,669 - -Short Term Borrowings 170,383,107 210,136,379 - -Income Tax Liability 916,025 1,991,064 916,025 1,991,064Bank overdrafts 34,042,331 109,049,772 - -778,140,025 947,418,899 6,624,048 7,536,718Total Equity and Liabilities 3,766,470,960 3,489,798,350 271,331,798 271,656,661Figures in brackets indicate deductionsThe Accounting Policies and Notes from pages 07 to 41 form an integral part of these financial statements.It is certified that the Financial Statements have been prepared in compliance with the requirements of theCompanies Act No. 07 of 2007.Mrs. Chamari WahalathantriFinancial Controller (FC)The Board of Directors is responsible for the preparation and presentation of these financial statements.Approved and signed for and on behalf of the Board of Directors.Mr. D.J.AmbaniChairmanMr. M.S.W. FernandoDirectorColombo04th August' 2010TS/ts

METROPOLITAN RESOURCE HOLDINGS PLC Page 4STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31ST MARCH, 2010Stated General Capital RetainedCapital Reserve Reserve Earnings TotalGROUP Rs. Rs. Rs. Rs. Rs.Balance as at 1st April,2008 265,308,222 27,250,000 23,500 361,624,351 654,206,073Loss for the Year - - - (94,477,237) (94,477,237)Dividend Paid - - - (15,075,000) (15,075,000)Balance as at 31st March,2009 265,308,222 27,250,000 23,500 252,072,114 544,653,836Profit for the year - - - 89,145,066 89,145,066Balance as at 31st March,2010 265,308,222 27,250,000 23,500 341,217,179 633,798,901Stated General Capital RetainedCapital Reserve Reserve Earnings TotalCOMPANY Rs. Rs. Rs. Rs. Rs.Balance as at 01st April, 2008 265,308,222 - 23,500 7,671,425 273,003,147Net Profit / (Loss) for the Period - - - (8,883,204) (8,883,204)Balance as at 31st March,2009 265,308,222 - 23,500 (1,211,779) 264,119,943Adjustment - - - (322,096) (322,096)Net Profit / (Loss) for the Period - - - 909,904 909,904Balance as at 31st March,2010 265,308,222 - 23,500 (623,972) 264,707,750Figures in brackets indicate deductionsThe Accounting Policies and Notes from pages 07 to 41 form an integral part of these financial statements.Colombo04th August' 2010

METROPOLITAN RESOURCE HOLDINGS PLC Page 5CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2010GroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Cash Flows From Operating ActivitiesProfit/(loss) before taxation 145,624,884 (129,238,598) 1,517,045 (6,672,503)Adjustments for;Depreciation/Amortisation 122,882,602 127,240,238 29,189 1,378,737Profit on dispsal of property plant & equipment (9,350,557) (7,374,544) (1,321,364) (2,862,692)Loss on Disposal of Brombill Factory - 36,516,912 - -Interest Income (4,970,984) (2,226,162) 3,024,869 3,720,113Lease Interest in Suspense Written Off 3,695,114 2,663,851 - -Interest Expense 108,628,525 103,135,046 - -Dividend Received - 9,600,000 - 9,600,000Provision for Fall in Value of Investments - 22,722,404 - 22,722,404Provision for Retirement Benefit Obligations-Gratuity 200,828,932 59,266,278 - -Amortization of Grants and Subsidiaries (9,979,672) (6,985,547) - -Change in fair value of Biological Assets (19,326,892) (26,954,640) - -Amortization of Net Income from Operating Rights Given to LRL (9,381,311) (6,325,755) - -Amortization of Net Income from Operating Rights Given to ASPIC (416,335) (416,335) - -Amortisation of Brand Development Cost 1,518,951 1,518,951 - -Bad Debts Written off 6,908,310 - - -ESC set off against Taxation (20,628,036) - - -Operating profit/(loss) before working capital changes 516,033,531 183,142,099 3,249,739 27,886,059(Increase)/Decrease in Inventories (60,255,686) 129,890,077 - -(Increase)/Decrease in Trade and Other Receivables 75,641,604 (68,891,371) (300,009) 520,078Increase/(Decrease) in Due From Related Parties (2,183,598) (6,207,445) 2,173,399 (4,393,245)Increase/(Decrease) in Trade and Other Payables (62,937,081) (104,380,418) 162,368 404,446Increase/(Decrease) in Due To Related Parties (3,882,324) (4,642,372) - -Cash generated from/(used in) operating activities 462,416,446 128,910,570 5,285,497 24,417,338Interest Paid (108,628,525) (80,538,375) - -Gratuity Paid (43,523,495) (39,460,815) - -Grants Received 39,760,064 26,594,403 - -Income Tax Paid (2,243,722) (1,349,194) (1,682,180) (1,265,104)-Net cash generated from/(used in) operating activities 347,780,768 34,156,589 3,603,317 23,152,234Cash Flows From Investment ActivitiesInvestment In Immature Plantations (94,233,511) (65,159,096) - -Acquisition of Property, Plant and Equipment (97,998,900) (115,590,518) - -Proceeds from Disposal of Property, Plant and Equipment 5,585,203 8,226,631 1,321,364 2,862,692Proceeds from Lalan Rubber (Pvt) Ltd 110,000,000 - - -Proceeds from Disposal of Brombill Tea Factory - 69,385,666 - -Interest Received 4,970,984 2,226,162 (3,024,869) (3,720,113)Net Investment in Government & Short Term Securities (1,824,869) (12,545,100) (1,824,869) (12,545,100)Net cash from/(used in) investing activities (73,501,093) (113,456,255) (3,528,374) (13,402,521)

METROPOLITAN RESOURCE HOLDINGS PLC Page 6CASH FLOW STATEMENT (Cont….)FOR THE YEAR ENDED 31ST MARCH, 2010GroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Cash Flow From Financing ActivitiesPayments of Finance Lease Rental (12,482,034) (11,977,851) - -Payments to Lessor on Leased Rights (29,426,160) (29,426,160) - -Dividends Received - (9,600,000) - (9,600,000)Receipts From of Interest Bearing Borrowings 76,162,730 290,317,558 - -Payments of Long Term Borrowings (122,792,257) (95,811,188) -Short Term Loans - net (39,753,272) (20,838,070) - -Issue of Redeemable Derbentures 100,000,000 - - -Dividends paid (3,341) (14,392,043) - -Net cash from / ( used in) financing activities (28,294,334) 108,272,246 - (9,600,000)Net increase/ (decrease) in cash and cash equivalents 245,985,342 28,972,580 74,943 149,713Cash and cash equivalents at the beginning of the year (47,475,134) (76,447,714) 308,593 158,880Cash and cash equivalents at the end of the year ( Note A ) 198,510,208 (47,475,134) 383,536 308,593(A) Cash & Cash Equivalents at the end of the yearCash & bank balances 232,552,539 61,574,638 383,536 308,593Bank overdrafts (34,042,331) (109,049,772) - -198,510,208 (47,475,134) 383,536 308,593Figures in brackets indicate deductionsThe Accounting Policies and Notes from pages 07 to 41 form an integral part of these financial statements.Colombo04th August' 2010

METROPOLITAN RESOURCE HOLDINGS PLCPage7SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS1. CORPORATE INFORMATION1.1 GeneralMetropolitan Resource Holdings PLC is a Quoted Public Company incorporated and domiciled in SriLanka., registered under the companies Act No. 7 of 2007. The Registered Office of the Company islocated at No. 153, Nawala Road, Colombo 05.1.2 Principal Activities and Nature of OperationsDuring the year, the principal activities of the Company were to provide plantation managementservices to its subsidiary companies.1.3 Parent EnterpriseThe Company does not have a parent enterprise.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1 GENERAL ACCOUNTING POLICIES2.1.1 Basis of PreparationThese financial statements presented in Sri Lanka Rupees have been prepared under the historicalcost basis except for certain Property, Plant and Equipment which are stated at revalued amounts, inaccordance with generally accepted accounting principles and the standards laid down by theInstitute of Chartered Accountants of Sri Lanka.2.1.2 Statement of ComplianceThe balance sheet, statement of income, changes in equity and cash flows, together with AccountingPolicies and Notes (“Financial Statements”) of Metropolitan Resource Holdings PLC, comply with theSri Lanka Accounting Standards.2.1.3 Going ConcernThe directors have made an assessment of the Metropolitan Resource Holdings PLC’s ability tocontinue as a going concern and they do not intend either to liquidate or to cease operations.The Company holds 99.98 % of Ceylon Tea Gardens Ltd (CTG). Since 2004, CTG has been a nonoperative company as the two tea factories belonging to CTG, namely, Illuktenna and Brombil weretaken over by Bogawantalawa Tea Estates PLC, the other subsidiary of the company. Theaccumulated losses of CTG as at 31 st March, 2010 amounts to Rs. 149.6 Mn (Previous year figure ofRs.152.8 Mn) and the total assets exceed the total liabilities by Rs. 24.434 Mn and the current assetsexceed current liabilities by the same amount as at the Balance Sheet date. CTG recorded a profit ofRs.3 Mn for the year 2009/2010 (Previous year Rs. 1 Mn net loss)2.1.4 Basis of ConsolidationThe consolidated financial statements comprise of the financial statements of Metropolitan ResourceHoldings PLC and its subsidiaries as at 31 st March 2010.The financial statements of the subsidiaries areprepared for the same reporting year as the parent company using consistent accounting policies.All intra-group balances, transactions, incomes and expenses and profits and losses resulting fromintra-group transactions that are recognized in assets, are eliminated in full.Subsidiaries are consolidated from the date the Parent obtains control until such time the controlceases.

METROPOLITAN RESOURCE HOLDINGS PLCPage8SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSGoodwill arising on the acquisition represents the excess of the cost of the acquisition over theGroup’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingentliabilities at the date of acquisition. Upon transition to revised Sri Lanka Accounting Standard 25“Business Combinations”, goodwill will no longer be amortized. Instead, goodwill will be tested forimpairment annually and assessed for any indication of impairment at each reporting date to ensurethat its carrying amount does not exceed its recoverable amount. If an impairment loss is identified,it will be recognized immediately in the Income Statement.Negative goodwill arising on acquisition represents the excess of the fair value of the net assetsacquired over the cost of acquisition. Any remaining balance of negative goodwill as at 1 April 2006 istransferred to opening balance of retained earnings in accordance with theSLAS 25 Business Combinations (revised 2005).The total profits and losses for the period of the Company and of its subsidiaries included inconsolidation are shown in the Consolidated Income Statement.Minority Interest represents the portion of profit or loss and net assets held by the group and presentsseparately in the Income Statement within Equity in the Consolidated Balance Sheet, separately fromparent’s share holder’s equity.2.1.5 Comparative InformationThe accounting policies have been consistently applied by the company and it is consistent with thoseof the previous year. The previous years’ figures and phrases have been re-arranged wherevernecessary to conform to the current year’s presentation.2.1.6 Segment ReportingSegment information has been disclosed in the financial statement in respect of the identifiableoperating segments of the company on a consolidated basis.2.1.7 Foreign Currency TranslationAll foreign exchange transactions are converted to Sri Lanka Rupees, which is the reporting currency,at the rates of exchange prevailing at the time the translations were effected.Monetary assets and liabilities denominated in foreign currencies are translated to Sri Lanka Rupeeequivalents using year end spot foreign exchange rates. The resulting gain or losses are accounted inthe income statement.Non monetary assets and liabilities are translated using exchange rates that existed when the valueswere determined. The resulting gain or losses are accounted in the Income Statement.2.1.8 Materiality and aggregationEach material class of similar items is presented separately in the financial statements. Items of adissimilar nature or function are presented separately unless they are immaterial.

METROPOLITAN RESOURCE HOLDINGS PLCPage9SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS2.1.9 Significant Accounting Judgements, Estimates and Assumptionsi) JudgementsIn the process of applying the accounting policies, management has made the followingjudgement, apart from those involving estimations which has most significant effect on theamounts recognized in the financial statements.Inventory valuation – produce stockBogawantalawa Tea Estates Plc and its subsidiary have valued the unsold produce stock as at theBalance Sheet date based on most recent selling prices available subsequent to the year end.ii) Estimates and AssumptionsThe key assumptions concerning the future and other key sources of estimation uncertainty at thebalance sheet date, that have a significant risk of causing a material adjustments to the carryingamounts of assets and liabilities within the next financial year, have been considered.Defined Benefit PlansThe cost of defined benefit plan is determined using actuarial valuations. The actuarial valuationinvolves making assumptions about discount rates, expected rates of return on assets, futuresalary increases, and mortality rates and future increases. Due to the long term nature of theseplans such estimates are subject to significant uncertainty.Further, details are given in Note No.24.2.2 ASSETS & BASES OF THEIR VALUATION2.2.1 Property, Plant & Equipmenta) CostProperty, plant and equipment is recorded at cost less accumulated depreciation and less anyimpairment in value.b) Cost and ValuationAll items of property, plant and equipment are initially recorded at cost. Where items ofproperty, plant and equipment are subsequently revalued, the entire class of such assets isrevalued.When an asset is revalued any increase in the carrying amount is credited directly to arevaluation surplus unless it reverses a previous revaluation decrease relating to the same assetwhich was previously recognized as an expense. In these circumstances the increase is recognisedas income to the extent of the previous written down value. When asset’s carrying amount isdecreased as a result of a revaluation, the decrease is recognized as an expense unless it reversesa previous increment relating to that asset, in which case it is charged against any relatedrevaluation surplus, to the extent that the decrease does not exceed the amount held in therevaluation surplus in respect of that same asset. Any balance remaining in the revaluationsurplus in respect of an asset is transferred directly to accumulated profit or loss on retirementor disposal of the asset.

METROPOLITAN RESOURCE HOLDINGS PLCPage 10SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSc) Depreciation / AmortizationProvision for depreciation is calculated by using straight line on the cost or valuation of allproperty, plant and equipment other than freehold land, in order to write off such amounts overthe estimated useful lives of such assets.Improvements to Bare LandPlant & MachineryOffice EquipmentFurniture & FittingsMotor VehiclesWater Project & Sanitation40 years13 1/3 years08 years10 years05 years20 yearsThe leased hold rights are being amortized in equal amounts over the shorter of followingperiods.a) The lease term andb) The expected useful life of the assets.Bare LandMature PlantationWater Supply SchemeBuildingsPlant & Machinery53 years30 years20 years25 years15 yearsThe cost of area coming into bearing are transferred to mature plantations and depreciatedas follows,TeaRubberCoconut33 1/3 years20 years50 yearsDepreciation of assets begins when it is available for use.The assets residual values, useful lives and methods of depreciation are reviewed andadjusted if appropriate at each financial year.d) Restoration CostsExpenditure incurred on repairs or maintenance of property, plant and equipment in order torestore or maintain the future economic benefits expected from originally assessed standard ofperformance is recognized as an expense when incurred.e) DerecognitionAn item of property, plant and equipment is derecognized upon disposal or when no futureeconomic benefits are expected from its use or disposal. Any gain or loss arising on derecognitionof the asset calculated as the difference between the net disposal proceeds and the carryingamount.

METROPOLITAN RESOURCE HOLDINGS PLCPage 11SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS2.2.2 Immature and Mature PlantationsThe cost of replanting and new planting are classified as immature plantations up to the time ofharvesting the crop.Further, the general charges incurred on the plantation are apportioned based on the labour daysspent on respective replanting and new planting and capitalized on the immature areas. Theremaining portion of the general charges is expensed in the accounting period in which it is incurred.The cost of areas coming into bearing are transferred to mature plantations and depreciated overtheir useful life period.2.2.3 Infilling CostWhere infilling results in an increase in the economic life of the relevant field beyond its previouslyassessed standard of performance, the cost are capitalized in accordance with Sri Lanka AccountingStandard No. 32 and depreciated over the useful life at rates applicable to mature plantation.Infilling cost that are not capitalized have been charged to the income statement in the year in whichthey are incurred.2.2.4 Biological AssetsBiological assets represent Eucalyptus Grandis Immature timber trees that Bogawantalawa TeaEstates PLC grows and manage in its plantations. The Eucalyptus Grandis timber tree mature after 17years and as per best harvesting practice, the trees can be harvested when they are 20 years old.In the absence of a relevant Sri Lanka Accounting Standard, International Standard 41 Agriculture hasbeen used for the recognition, measurement and presentation of biological assets.Grandis Trees are measured at the Directors assessment of their fair value at each reporting date,after considering and making necessary adjustment to the independent valuers report to reflect therequirement of the accounting standard with respect to valuation. In the absence of market basedvaluation measures the fair value of biological assets has been determined using the net presentvalue of expected future cash flows (discount at a risk adjustment rate).The increment or decrement in fair value of Grandis timber trees is recognized revenue or expense inthe period which occurs. The increment or decrement is determined as the difference between thefair value of the Grandis timber plantation recognized as at the beginning of the financial year andthe fair value of the plantation recognized as at the reporting date.2.2.5 Leasesa) Finance Leases – where the company is the lesseeProperty, plant and equipment on finance leases (which effectively transfer to the companysubstantially all the risks and rewards incidental to ownership of the leased item) are capitalizedat their cash price and depreciated or amortised over the period the company is expected tobenefit from the use of the leased assets.The corresponding principal amount payable to the lessor is shown as a liability.The finance charges allocated to future periods are separately disclosed in the notes.

METROPOLITAN RESOURCE HOLDINGS PLCPage 12SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSThe interest element of the rental obligation applicable to each financial year is charged to theincome statement over the period of the lease so as to produce a constant periodic rate ofinterest on the remaining balance of the liability for each period.The cost of improvements to or on leased property is capitalized, and depreciated over theunexpired period of the lease or the estimated useful lives of the improvements, whichever isshorter.b) Operating LeasesLeases where the lessor effectively retains substantially all the risks and benefits of ownershipover the leased term are classified as operating leases.Lease payments (excluding cost of service such as insurance and maintenance) paid underoperating leases are recognized as an expense in the income statement.2.2.6 Impairment of AssetsThe company assesses at each reporting date whether there is an indication that an asset may beimpaired. If such indication exists or when annual impairment testing for an asset is required thecompany makes an estimate of the assets recoverable amount. An assets recoverable amount is thehigher of an assets or cash generating units fair value less costs to sell and its value in use anddetermined for an individual asset, unless the assets does not generate cash inflows that are largelyindependent of those from other assets or groups of assets. Where the carrying amount of an assetexceeds its recoverable amount, the asset is considered impaired and is written down to itsrecoverable amount. In assessing value in use, the estimated future cash flows are discounted to theirpresent value using a pre tax discount rate that reflects current market assessments of the time valueof money and the risk specific to the asset. These calculations are collaborated by valuationmultiples, quoted share prices or other available fair value indicators.Impairment losses of continuing operations are recognized in the income statement in those expensecategories consistent with the function of the impaired asset, except for property previously revaluedwhere the revaluation was taken to equity. In this case the impairment is also recognized in equity upto the amount of any previous revaluation.For assets excluding goodwill, an assessment is made at each reporting date as to whether there isany indication that previously recongnised impairment losses may no longer exist or may havedecreased. If such indication exists, the company makes an estimate of recoverable amount. Apreviously recongnised impairment loss is reversed only if there has been a change in the estimatesused to determine the assets recoverable amount since the last impairment loss was recognized. Ifthat is the case the carrying amount of the asset is increased to its recoverable amount.That increased amount cannot “exceed” the carrying amount that would have been determined, netof depreciation had, had no impairment loss been recognized for the asset in prior years. Suchreversal is recognized in the income statement unless the asset is carried at revalued amount, inwhich case the reversal is treated as a revaluation increase.The following criteria are applied in assessing impairment of Goodwill.Goodwill is reviewed for impairment, annually or more frequently if events or changes incircumstances indicate that the carrying value may be impaired.

METROPOLITAN RESOURCE HOLDINGS PLCPage 13SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS2.2.7 Capital Work in ProgressCapital work in progress is transferred to the respective asset accounts at the time of the firstutilization of the asset.2.2.8 InventoriesInventories other than produced stocks are valued at the lower of cost and net realizable value, aftermaking due allowances for obsolete and slow moving items. Net realizable value is price at whichinventories can be sold in the ordinary course of business less the estimated cost of completion andestimated cost necessary to make the sale.The cost incurred in bringing inventories to its present location and condition is accounted using thefollowing cost formula.Input MaterialsAt average costGrowing Crop – NurseriesAt the cost of direct material, direct labour and appropriate proportion of directly attributableoverheads.Produce StockValued at estimated selling prices or since realized value.Spares and ConsumablesAt the actual cost2.2.9 Trade and Other ReceivablesTrade and other receivables are stated at the amounts they are estimated to realize net of provisionsfor bad and doubtful receivables.Other receivables and dues from related parties are recongised at cost less provision for bad anddoubtful receivables.2.2.10 Cash and Cash EquivalentsCash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquidinvestments readily convertible to known amounts of cash and subject to insignificant risk of changesin value.For the purpose of cash flow statement, cash & cash equivalent consists of cash in hand and depositsin banks net of outstanding bank overdrafts. Investments with short term maturities i.e. three monthsor less from the date of acquisitions are also treated as cash equivalents.The cash flow statement has been prepared based on the indirect method.

METROPOLITAN RESOURCE HOLDINGS PLCPage 14SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS2.2.11 InvestmentsInvestments in subsidiaries are carried at cost.2.3 LIABILITIES & PROVISIONS2.3.1 LiabilitiesLiabilities stated under current liabilities in the balance sheet are those expected to fall due withinone year from the balance sheet date. Items stated as long term liabilities are those expected to falldue at point of time after one year from the balance sheet date.2.3.2 Trade and Other PayablesTrade creditors and other payables are stated at their book values.2.3.3 ProvisionsProvisions are recognized when the company has a present obligations (legal & constructive) as aresult of a past event, where it is probable that an outflow of resources embodying economicbenefits will be required to settle the obligation and a reliable estimate can be made of the amountof the obligation.2.3.3.1 Retirement Benefit Obligations2.3.3.1.1 Defined Benefit Plans – GratuityThe Retirement Benefit Plan adopted is as required under the payment of Gratuity Act No. 12 of1983 and Indian Repatriate Act No. 34 of 1978 to eligible employees. This item is grouped underRetirement Benefit Obligation in the Balance Sheet.Provision for Gratuity on the workers, staff and planting and management executives ofBogawanthalawa Plantations is on an actuarial basis, using the Projected Unit Credit (PUC) methodas recommended by Sri Lanka Accounting Standards 16 – “Retirement Benefit Costs”. The actuarialvaluation is carried out by a professional qualified firm of actuarial valuation once in every twoyears.Last actuarial valuation has been carried out by M/s Actuarial Management Consultant (Pvt.) Ltd forthe year ended 31 st March 2009.The key assumptions used by the actuary for actuarial valuation as at 31 st March, 2009 include thefollowings.The key assumptions used by the actuary include the followings.i Rate of Interest - 10% (Per annum)ii Rate of Salary IncreaseWorkers- 11% (Every two years)Staff- 7.5% (Per annum)iii Retirement Age (male and female) - 60 yearsiv Daily Wages RateTea - Rs. 170 /-Rubber - Rs. 170 /-v The Company will continue in business as a going concern.

METROPOLITAN RESOURCE HOLDINGS PLCPage 15SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSThe actuarial valuation gain, if any, arising on change of assumption is amortized over the averagefuture working lifetime of current employees.However, provision for gratuity for the financial year 2009/10 has been determined by thedirectors of the company based on the last actuarial valuation, after making adjustment for thewage rate increase for plantation staff / workers in October, 2009. (Current wage rate is Rs. 285/-)Further, details are given in note 24.Provision for Retiring Gratuity for the senior management executive staff has been made from thefirst year of service of the employee in conformity with Sri Lanka Accounting Standard No. 16 –“Costs of Retiring Gratuity”.Provision for Retiring Gratuity in the accounts of the subsidiary company has been made from thefirst year of service of the employee in conformity with Sri Lanka Accounting Standard No. 16 –“Costs of Retiring Gratuity”.However, according to the Payment of Gratuity Act No. 12 of 1983, the liability for payment to anemployee arises only after the completion of 5 years continued service.The liability is not externally funded.2.3.3.1.2 Defined Contribution Plans – EPF, ETF & ESPSEmployees are eligible for Employees’ Provident Fund Contributions and Employees’ Trust FundContributions in line with respective statutes and regulations. The Group contributes 12% and 3% ofgross emoluments of employees to the Employees’ Provident Fund and to the Employees’ TrustFund respectively2.3.3.2 Taxationa) Current TaxesCurrent income tax assets & liabilities for the current and prior periods are measured at theamount expected to be recovered from or paid to the Commissioner General of Inland Revenue.The provision for income tax is based on the elements of income and expenditure as reported inthe financial statements and computed in accordance with the provision of the Inland RevenueAct No. 10 of 2006.b) Deferred TaxationDeferred income tax is provided in full using the liability method, for all temporary differencesarising between the tax bases of assets and liabilities and their carrying amounts in thefinancial statements.Tax rates enacted at the balance sheet date are used to determine deferred income tax.2.3.4 Grants and SubsidiesGrants and subsidies are credited to the income statement over the period necessary to match themwith related cost, which they are intended to compensate on a systematic basis.Grants related to assets, including non-monetary grants at fair value, are deferred in the balancesheet and credited to the income statement over the useful life of the related asset.Grants related to income are recognized in the income statement in the period in which they arereceivable.

METROPOLITAN RESOURCE HOLDINGS PLCPage 16SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS2.4 INCOME STATEMENT2.4.1 Revenue Recognitiona) Sale of GoodsRevenue is recognized to the extent that it is probable that the economic benefits will flow tothe company and the revenue and associated costs incurred can be reliably measured. Revenue ismeasured at the fair value of the consideration received or receivable net of trade discounts andsales taxes.b) InterestInterest income is recognized as the interest accrued on a time basis (taking into account theeffective yield on the asset) unless collectibility is in doubt.c) DividendsDividend income is recognized when the shareholders’ right to receive payment has beenestablished.d) Rental IncomeRental income is recognized on an accrual basis.e) OthersOther income is recognized on an accrual basis.Net profits and losses of a revenue nature on the disposal of property, plant and equipment andother non current assets including investments have been accounted for in the income statementhaving deducted from proceeds on disposal, the carrying amount of the assets and relatedproperty, plant and equipment amount remaining in revaluation reserve relating to that asset istransferred directly to retained earnings.2.4.2 Expenditure Recognitiona) Expenses are recognized in the income statement on the basis of a direct association between thecost incurred and the earning of specific items of income. All the expenditure incurred in therunning of the business and in maintaining the property, plant and equipment in a state ofefficiency has been charged to income in arriving at the profit/(Loss) for the year.b) For the purpose of presentation of the income statement the directors are of the opinion thatfunction of expenses method presents fairly the elements of the company’s performance andhence such presentation method is adopted.

METROPOLITAN RESOURCE HOLDINGS PLCPage 17SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSc) Borrowing CostsBorrowing costs are recognised as an expense in the period in which they are incurred, except tothe extent where borrowing costs are directly attributable to the acquisition, construction orproduction of a qualifying assets which are assets that necessarily takes a substantial period oftime to get ready for its intended use or sale are added to the cost of those assets, until suchtime as the assets are substantially ready for their intended use or sale.Investment income earned on the temporary investment of specific borrowings pending theirexpenditure on qualifying assets is deducted from the borrowing cost eligible for capitalisation.The amount of borrowing costs eligible for capitalization is determined in accordance with the SriLanka Accounting Standard 20, Borrowing Costs allowed alternative treatment.2.5 OFF BALANCE SHEET AND INCOME STATEMENT ITEMS2.5.1 Events Occurring after the Balance Sheet DateAll material events occurring after the balance sheet date have been considered and where necessaryadjustments to or disclosures have been made in the respective notes to the accounts.2.5.2 Contingencies and Unrecognized Contractual CommitmentsContingencies are possible assets or obligation that arise from past event and would be confirmedonly on the occurrence or non occurrence of uncertain future events, which are beyond thecompany’s control.

METROPOLITAN RESOURCE HOLDINGS PLC Page 18SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS3. REVENUEGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Tea 3,552,695,427 2,857,180,609 - -Rubber 3,116,343 1,103,391 - -Tea Sales-Local Operations - - - -Management Fees - - - 3,827,4563,555,811,770 2,858,284,000 - 3,827,4564. COST OF SALESTea 3,221,267,359 2,720,887,578 - -Rubber 2,731,729 1,248,516 - -3,223,999,088 2,722,136,094 - -5. OTHER INCOMEIncome Share - 654,087 - -Interest Income 11,020,722 9,666,388 3,024,869 3,720,113Dividend Income - Quoted - 9,600,000 - 9,600,000Rental Income 415,000 640,616 415,000 640,616Income from Leasing of Bungalows 8,237,378 5,312,223 - -Profit on Sale of Property, Plant and Equipment 7,845,964 7,374,544 1,321,364 2,862,692Amortization of Grants (Note 25.1) 9,979,672 6,985,547 - -Amortization of Net Income from OperatingRights Given to LRL (Note 25.2)9,381,311 6,325,755 - -Amortization of Net Income from OperatingRights Given to ASPIC (Note 25.3)416,335 416,335 - -Sundry Income 13,898,536 2,849,218 - -Exchange Gain/(Loss) 5,902,215 - - -Central Workshop Income 1,373,328 366,474 - -Profit Share of Tea Trails (Pvt) Ltd. 989,016 1,040,598 - -Change in FairValue of Biological Assets 19,326,891 26,954,639 - -Sale of Reprocessed Tea 52,079,075 14,530,814 - -Sale of Refused Tea 13,362,520 27,969,852 - -Income from Timber / Saw Mill Project 15,798,804 1,743,046 - -170,026,767 122,430,136 4,761,233 16,823,421

METROPOLITAN RESOURCE HOLDINGS PLC Page 19SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS6. FINANCE COSTSGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Broker Interest 5,496,270 32,909,961 - -Interest on Finance Lease 3,695,114 2,953,779 - -Interest on Overdraft 7,468,984 20,125,065 - -Lease Interest to JEDB / SLSPC 31,621,615 10,648,439 - -Interest paid by Lalan and ASPIC (21,422,139) - - -Interest on Long Term Loans 58,923,861 42,099,167 - -Interest on Short Term Borrowings 28,629,175 3,557,605 - -114,412,880 112,294,016 - -7. PROFIT/(LOSS) BEFORE TAXATIONProfit before taxation is stated after charging all expenses/income including the following.Directors' Emoluments 6,555,000 6,160,000 - -Auditor's Remuneration 1,846,801 1,593,750 174,000 143,750Depreciation / Amortisation - -- Leasehold Right to Bare Land 8,459,987 8,459,987 - -- Immovable Leased Assets 21,513,910 21,240,704 - -- Property, Plant and Equipment 76,619,827 81,567,200 29,189 1,378,737- Mature Plantation 16,288,878 15,972,346 - -Staff Costs -- Defined Benefit Plan Cost 200,828,932 59,266,278 - -- Salaries and Wages 1,190,653,574 869,999,461 - -Loss on Disposal of Brombill Tea Factory - 36,516,912 - -Amortization of Intangible Assets -1,518,951 1,518,951 - -

METROPOLITAN RESOURCE HOLDINGS PLC Page 20SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSGroupCompany2009/2010 2008/2009 2009/2010 2008/20098. INCOME TAX EXPENSES Rs. Rs. Rs. Rs.8.1 Current Income Tax ExpenseIncome Tax on Current Year Profits 21,403,071 2,210,701 755,046 2,210,701Under/(Over) Provision in Previous Year (147,905) - (147,905) -21,255,166 2,210,701 607,141 2,210,7018.2 Reconciliation of Accounting Profit/(Loss) to Income Tax ExpenseAccounting Profit/(Loss) Before Tax 145,624,884 (129,238,598) 1,517,045 (6,672,503)Aggregate Disallowables 368,156,970 (48,522,106) 29,189 27,971,671Aggregate Allowables (303,954,759) 47,779,830 (4,346,233) (16,182,805)Total Statutory Income 209,827,095 (129,980,874) (2,799,999) 5,116,363Exempt in terms of section 16 of theInland Revenue Act(135,172,691) (89,956,277) - -Statutory Loss from Business 6,991,298 - 2,799,999 -Non Business Income 11,043,401 1,585,251 3,269,839 4,030,192Tax Loss set off (32,441,186) - (1,144,444) -Taxable Income 60,247,917 (218,351,900) 2,125,395 9,146,555Income Tax @ 35% 21,086,771 767,454 743,888 767,454Income Tax @ 15% - 1,410,577 - 1,410,577S.R.L 316,301 32,670.00 11,158 32,670.00Current Income Tax Expense 21,403,071 2,210,701 755,046 2,210,7018.3 TaxationCompanyThe company is liable for income tax at the rate of 35% in terms of Inland Revenue Act No. 10 of 2006.SubsidiariesBogawantalawa Tea Estates PLCIn terms of Inland Revenue Act No.10 of 2006, Profit from any agricultural undertaking would be exempt fromincome tax for a period of five years reckoned from the Year of assessment 2006/2007. The corporate tax rateapplicable to the other income would be at 35%.BPL Teas (Pvt) LtdThe income generated by the company from exports is liable to income tax at a concessionery rate of 15% andother income is taxed at 35%.

METROPOLITAN RESOURCE HOLDINGS PLC Page 21SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS8.3 Taxation (Contd..)Ceylon Tea Gardens Ltd.In terms of the Inland Revenue Act No 10 of 2006, corporate tax rate of 35% has been used in computing thetaxation of Ceylon Tea Gardens Ltd. However, no provision has been made in the accounts due to theavailability of tax losses for the current financial year.8.4 Deferred TaxationThe deferred tax (asset) / liability on each temporary differrences which were not recognised in the financialstatements are disclosed below.GroupCompany31.03.2010 31.03.2009 31.03.2010 31.03.2009Rs. Rs. Rs. Rs.Temporary Differences of PPE 278,306,864 354,172,656 - -Retirement Gratuity (649,130,920) (491,825,484) - -Tax Loss Carried Forward (598,195,207) (39,671,663) (1,665,555) (2,799,999)Tax Credits Carried Forward (54,179,729) (65,152,020) -(1,023,198,992) (177,324,491) (1,665,555) (2,799,999)Tax effect (211,531,073) (240,285,539) (582,944) (980,000)9. EARNINGS/(LOSS) PER SHAREThe calculation of the earnings / (loss) per share is based on profit or loss attributable to ordinary shareholdersGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Net Profit / (Loss) Attributable toOrdinary Shareholder (Rs.)124,369,718 (131,449,299) 909,904 (8,883,204)Weighted Average Number of Ordinary17,264,802 17,264,802 17,264,802 17,264,802Basic earnings / (Loss) per share (Rs.) 7.20 (7.61) 0.05 (0.51)

METROPOLITAN RESOURCE HOLDINGS PLC Page 22SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS10. LEASEHOLD RIGHT TO BARE LAND JEDB/SLSPC ESTATES - (Group)The leasehold rights to bare land on all 28 estates have been taken into the books of Bogawantalawa Tea Estates PLC as at 22nd June,1992 immediately after formation of Bogawantalawa Tea Estates PLC in terms of the ruling obtained from the Urgent Issue Task Force(UITF) of the Institute of Chartered Accountants of Sri Lanka. For this purpose the Board decided at its meeting held on 8th March,1995that these bare lands would be revalued, at the value established for these lands, by the Valuation Specialist Mr. D.R. Wickramasinghe,just prior to the formation of Bogawantalawa Tea Estates PLC. The value taken into the 22nd June,1992, Balance Sheet and theamortisation of leasehold rights upto 31st March, 2010 are disclosed in this note.Leasehold Value of Bare Land of JEDB/SLSPC Estates2009/2010 2008/2009Rs.Rs.Balance as at 31.03.2009 448,380,000 448,380,000Accumulated AmortisationBalance as at the beginning 137,474,640 129,014,652Amortisation for the year 8,459,987 8,459,988Balance as at the end 145,934,627 137,474,640Written down value 302,445,373 310,905,360The Leasehold Right Bare Land of JEDB/SLSPC are being amortised in equal annual amounts over the 53 years lease period and theunexpired period of the lease as at the Balance Sheet date is 35.5 years.11. IMMOVABLE JEDB/SLSPC ESTATE ASSETS ON FINANCE LEASE (OTHER THAN BARE LAND) - (Group)As more fully explained in Note 11, all JEDB/SLSPC estate lease deeds have been executed to date. In terms of the ruling of the UITFof the Institute of Chartered accountants of Sri Lanka, all immovable assets in the JEDP/SLSPC estates under finance leases have beentaken into the books of Bogawanthalawa Tea Eatate PLC retroactive to 22nd June 1992. For this purpose, the Board of BogawanthalawaTea Eatate PLC decided at its meeting on 8th March 1995, that these assets be revalued at their book values as they appear in the booksof the JEDB/SLSPC, on the day immediately preceding the date of formation of the company. These assets are taken into the BalanceSheet as at 22nd June'1992 and amortized as follows.DESCRIPTIONCOST / VALUATIONAMORTISATIONW.D.VW.D.VBalance as at Balance as at Balance as at Charge for Balance as at as at as at01.04.2009 31.03.2010 01.04.2009 the year 31.03.2010 31.03.2010 31.03.2009Rs. Rs. Rs. Rs. Rs. Rs. Rs.Mature Plantation 555,387,492 555,387,492 281,797,484 (18,429,184) 300,226,668 255,160,824 273,590,008Immature Plantations - - - - - - -Buildings 64,948,134 64,948,134 45,178,812 (3,084,726) 48,263,537 16,684,597 19,769,322Plant & Machinery 13,272,826 13,272,826 13,269,527 - 13,269,527 3,299 3,299633,608,452 633,608,452 340,245,823 (21,513,910) 361,759,732 271,848,720 293,362,629Assets are being depreciated in equal annual amounts over the following periods:-Mature Plantations/Improvements to LandBuildingsPlant & Machinery- 30 Years- 25 Years- 15 Years

METROPOLITAN RESOURCE HOLDINGS PLC Page 23SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS12. PROPERTY PLANT AND EQUIPMENT OTHER THAN IMMATURE / MATURE PLANTATION - (GROUP)COST OR VALUATIONDisposals TransferBalance as at Additions During the In/Out Balance as atDescription 01.04.2009 for the year Year 31.03.2010Rs. Rs. Rs. Rs. Rs.Buildings 199,269,321 16,747,453 - - 216,016,774Plant and Machinery 570,636,179 20,084,917 - (1,950,479) 588,770,616Motor Vehicles 82,525,683 3,469,999 (11,154,517) - 74,841,165Others 270,553,880 62,767,227 - (887,806) 332,433,300Assets on Finance Lease 46,373,133 17,209,029 - - 63,582,1621,169,358,196 120,278,625 (11,154,517) (2,838,286) 1,275,644,018DEPRECIATIONAccumulated TransferBalance as at Charge Depreciation on In/Out Balance as atDescription 01.04.2009 for the Year Disposals 31.03.2010Rs. Rs. Rs. Rs. Rs.Buildings 28,235,654 5,683,949 - - 33,919,603Plant and Machinery 281,810,951 41,728,806 - (769,123) 322,770,635Motor Vehicles 60,610,298610 6,650,618650 618 (9,924,330) 924 - 57,336,586586Others 118,188,916 16,264,452 - (2,844) 134,450,524Assets on Finance Lease 17,272,095 6,292,002 - - 23,564,097506,117,915 76,619,827 (9,924,330) (771,967) 572,041,446Written Down Value 663,240,280 703,602,572PROPERTY PLANT AND EQUIPMENT OTHER THAN IMMATURE / MATURE PLANTATION - (COMPANY)COST OR VALUATIONDisposals TransferBalance as at Additions During the In/Out Balance as atDescription 01.04.2009 for the year Year 31.03.2010Rs. Rs. Rs. Rs. Rs.Buildings - - - -Plant and Machinery - - - -Motor Vehicles 12,842,926 - (1,300,000) 11,542,926Others 1,096,066 - - 1,096,06613,938,992 - (1,300,000) 12,638,992DEPRECIATIONAccumulatedBalance as at Charge Depreciation on Balance as atDescription 01.04.2009 for the Year Disposals 31.03.2010Rs. Rs. Rs. Rs.Buildings - - - -Plant and Machinery - - - -Motor Vehicles 12,842,926 - (1,300,000) 11,542,926Others 999,056 29,189 - 1,028,24513,841,982 29,189 (1,300,000) 12,571,172Written Down Value 97,010 67,821

METROPOLITAN RESOURCE HOLDINGS PLC Page 24SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS13. IMMATURE/MATURE PLANTATIONS - (GROUP)COSTBalance as at Additions Balance as atDescription 01.04.2009 for the Year Transfers 31.03.2010Rs. Rs. Rs. Rs.Mature Plantations 406,221,198 - 3,760,718 409,981,916Immature Plantations 551,960,062 94,233,511 (3,810,916) 642,382,657958,181,260 94,233,511 (50,198) 1,052,364,573DEPRECIATIONBalance as at Charge Balance as atDescription 01.04.2009 for the Year Transfers 31.03.2010Rs. Rs. Rs. Rs.Mature Plantations 130,782,939 16,288,878 - 147,071,817Immature Plantations - - - -130,782,939 16,288,878 - 147,071,817Written Down Value 827,398,321 905,292,756These are investments in immature/ mature plantations since the formation of BogawantalawaTea Estates PLC. The assets (including plantations assets) taken over by way of estate leases areset out in notes 10 & 11. Further investment in immature plantations taken over by way of theseleases are shown in the above note. When such plantations become mature, the additionalinvestments since taken over to bring them to maturity will be moved from immature to matureunder this note. A corresponding movement from immature to mature of the investmentundertaken by JEDB/SLSPC on the same plantation prior to the leases are shown under note No.11.

METROPOLITAN RESOURCE HOLDINGS PLC Page 25SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS13.Biological AssetsBiological Assets - TimberGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Balance at the beginning of the224,724,506 197,769,967 - -Add : Increase due to New - 5,083,420 - -Fair Value Adjustment 19,326,891 21,871,119 - -Balance at the end of the Year244,051,397 224,724,506 - -The biological assets, Eucalyptus Grandis Mature and Immature Timber Trees of the company were inspectedand valued by M/s.Ariyatileka & Co (Pvt) Ltd., independent Chartered Valuers (UK). Based on the ValuationReports dated 24th July 2009, the Eucalyptus Grandis Tree Plantations were valued as at 31st March 2009 asRs.244,051,397/=, after making adjustments for the discounting rate to reflect the requirement of theAccounting Standard.Eucalyptus Grandis Timber Trees are measured at the directors' assessment of their value at each reportingdate. The fair value is determined as being the net present value of expected future cash flows (discounted at arisk adjustment rate) significant assumption used as follows.a)Trees will reach maturity 20 years after planting and further 40% of the existing inventory of trees will bethinned out during the next 2 to 5 years with clear fell at 20 years.b)Trees have been valued as per the current timber prices in the domestic market based on the price list of theState Timber Corporation and prices of timber trees sold by Estates and prices of logs and sawn timber in thepopular timber traders in Sri Lanka.c)Timber yields have been adjusted to reflect volumes as reported by independent valuers contracted byBogawantalawa Tea Estates PLC. Plantations have been independently inspected by the valuers and assessed inorder to make this determination.d)Future cash flows are determined by reference to current timber prices without considering the inflationaryeffect.e)The ongoing costs of growing the trees which are deducted in determining the net cash flows are constant inreal terms.f)A nominal discounting rate of 18% per annum comprising of a Weighted Average Cost of Capital of the companyat the rate of 13% and a risk premium of 5%,is applied to the estimated cash flows. The risk premium wasdetermined having regard to the following.* The illiquid nature of the plantations prior to maturity.* A lack of market evidence as to the value of biological assets through their life cycle.* Risk relations to diseases and fire affecting the Biological Assets* Adoption of conservative valuation approach

METROPOLITAN RESOURCE HOLDINGS PLC Page 26SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS2009/2010 2008/2009 2009/2010 2008/200914. CAPITAL WORK IN PROGRESS Rs. Rs. Rs. Rs.Balance as at 01.04.2009 6,374,140 8,409,042 - -Additions During the Year 57,618,981 91,703,213 - -63,993,121 100,112,255 - -Capitalised During the Year (56,598,292) (91,952,994) - -Amount Charge to Revenue - (1,785,121) - -7,394,829 6,374,140 - -15. GOODWILL ON ACQUISITIONGross AmountBalance as at the beginning of the year 54,751,821 54,751,821 - -Accumulated AmortisationBalance as at the beginning of the year 49,043,437 49,043,437 - -Amortisation during the year - - - -Balance as at the End of the Year 49,043,437 49,043,437 - -16. INVESTMENTS5,708,384 5,708,384 - -Investments in Equity Shares (Note 16.1) 15,000,000 15,000,000 - -Brand Development Cost (Note 16.2) 6,075,810 7,594,761 - -21,075,810 22,594,761 - -Investments in Subsidiaries No of Shares % HoldingInvestments in Quoted SubsidiariesBogawantalawa Tea Estates PLC 35,550,000 70.75% - - 237,000,000 237,000,000Investments in Unquoted SubsidiariesCeylon Tea Gardens Ltd 14,548,703 99.99% - - 83,000,000 83,000,000BPL Teas (Pvt) Ltd Indirect shareholding 70.75% - - - -- - 83,000,000 83,000,000Less: Provision for diminution in value - - (83,000,000) (83,000,000)- - 237,000,000 237,000,000Total 21,075,810 22,594,761 237,000,000 237,000,00016.1 Investment in Equity Shares of Tea Trails (Pvt.) Ltd.CompanyBogawanthalawa Tea Estate PLC has received No.1,500,000 Ordinary Shares of Rs.10/= each for free of charge from Tea Trails(Pvt) Ltd., as Promoter Shares. Corresponding entry has been credited to the Income Statement in the year 2005/2006.Group16.2 Brand Development CostThis represents the investments made in brand developments, acquiring marketing rights and legal protections for the brandswhich will result in future economic benefits. The costs relating to Investment in Brand aquiring, acquiring of marketing rightsand leagal protection will be amortised over a period of ten years commencing from 2004/2005.Balance at the beginning of the year 7,594,761 9,113,712 - -Amortization during the Year (1,518,951) (1,518,951) - -Balance at the end of the year 6,075,810 7,594,761 - -

METROPOLITAN RESOURCE HOLDINGS PLC Page 27SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.17. INVENTORIESInput Materials 209,651,204 205,361,970 - -Less: Provision for obsolete and damaged items (11,550,543) (9,626,379) - -198,100,661 195,735,591 - -Growing Crop Nurseries 18,343,982 12,548,435 - -Provision for over grown plants (782,736) (1,496,532) - -17,561,246 11,051,903Harvested Crops 262,039,932 206,879,968 - -Goods in Transit 368,000 2,434,160 - -Finish Goods and Work in Progress 43,939,748 44,441,911 - -522,009,587 460,543,533 - -18. TRADE AND OTHER RECEIVABLESTrade Receivables 182,113,412 206,662,053 - -Deposits, Prepayments and Other Receivables 53,721,697 85,867,273 836,615 553,856Economic Service Charge Recoverable 27,527,558 43,041,367 - -VAT Receivable 66,758,390 62,978,702 - -Amount Receivable from-Lalan Rubbers (Pvt) Ltd. (Note 18.1) 118,031,871 128,139,184 - -Amount Receivable from-ASPIC Corporation (Pvt) Ltd.(Note 18.2) 4,784,553 8,115,745 -Advance Company Tax Recoverable 17,926,245 17,926,245 - -Staff Loans 72,758,204 44,916,170 152,120 152,120Tax Receivables 182,293 182,293 182,293 182,293Recivable from Metrocorp (Pvt) Ltd 17,250 - 17,250 -Lalan rubber Interest 6,388,872 6,388,872 - -Withholding Tax Recoverable 3,961,236 3,373,692 - -554,171,581 607,591,596 1,188,278 888,269Provision for Bad Debtors/Losses (33,058,319) (22,026,835) - -18.1 AMOUNT RECEIVABLE FROM LALAN RUBBERS (PVT) LTD521,113,262 585,564,761 1,188,278 888,269This includes the amount recievable for the following liabilities of the Rubber Division taken over by Lalan Rubbers (Pvt) Ltd.(LRL), in terms of the Operating Agreement signed by Bogawantalawa Tea Estate Plc and LRL on 19th March 2003 and theamount receivable in instalments as part payments for giving up operating rights and transfer of movable assets.GroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Retiring Gratuity Liability (Note 18.1.i) 78,446,325 78,446,325 - -Long Term Loans (Note 18.1.ii) 39,585,546 49,692,859 - -118,031,871 128,139,184 - -The above balance remains as a liabilty of Bogawantalawa Tea Estates PLC (BTE) since the legal obligation of these remainswith BTE and it will be changed annually in accordance with the settlements of loans and movements of gratuity liability.

METROPOLITAN RESOURCE HOLDINGS PLC Page 28SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSGroupCompany2009/2010 2008/2009 2009/2010 2008/200918.1.i Retiring Gratuity Liability Rs. Rs. Rs. Rs.Balance at the beginning of the year 78,446,325 67,414,387 - -Amount receivable for the provision madeon behalf of Rubber Division- 11,031,938 - -Balance at the end of the year 78,446,325 78,446,325 - -18.1.ii Long Term LoansGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Balance at the beginning of the year 49,692,859 60,971,809 - -Payments made during the year (10,107,313) (11,278,950) - -Balance at the end of the year 39,585,546 49,692,859 - -18.2 AMOUNT RECEIVABLE FROM ASPIC CORPORATION (PVT) LTD.This represents the amount receivable from ASPIC Corporation (Pvt) Ltd as part of consideration for giving upof all of the operating rights relating to coconut cultivation of the Maliboda Estate and Noori Estateexcluding an extent of approximately 152.32 hectares covered by foresty and timber planted and to beplanted under ADB projects and an extent of approximately 2 hectares there of the Noori Estate, Interestsand transfer of movable assets.Consideration for the Operating Right givenGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Balance as at the beginning of the year 8,115,745 12,000,000 - -Less: Payments made during the year (3,331,192) (3,884,255) - -Balance at the end of the year 4,784,553 8,115,745 - -As per the Operating Agreement, ASPIC Corporation (Pvt) Limited is required to pay a sum of Rs.20 million insix installments as follows:Initial payment of Rs.500,000 /- at the time of execution of the agreement and a payment of Rs.3.5 millionon or before 31st January 2007 and four equal instalments of Rs.4 million each on or before 31st January2008, 2009, 2010 and 2011. In addittion ASPIC is required to pay 25% share of profits from the 5th year to the40th year.As per the Ammendment to the Operating Agreement, dated 11th January 2008, the above installmentpayments were amended as follows.Three minimum payments of Rs. 4 million each on or before 31st January 2009, 31st January 2001 and 31stJanuary 2011 or 10% of the turnover of the Company whichever is higher.

METROPOLITAN RESOURCE HOLDINGS PLC Page 29SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTSGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.19. AMOUNT DUE FROM RELATED COMPANIESBogawantalawa Tea Estates Plc. - - 3,997,368 6,297,966BPL Teas ( Pvt) Ltd. - - 4,870,834 4,870,834Eco Power Construction (Pvt) Ltd 98,455 98,455 98,455 98,455Eco Products (Pvt) Ltd 29,479 29,479 29,479 29,479Eco Power (Pvt) Ltd 99,165 3,965 99,165 3,965BPL Rubbers (Pvt) Ltd. - 75,800 - -Ceylon Tea Gardens (Pvt) Ltd. - - 32,000 -Symbio (Pvt.) Ltd. - 92,850 - -Tea Trails (Pvt) Ltd 683,454 544,084 - -910,553 844,633 9,127,301 11,300,699Less: Provision for doubtful debts - - (4,900,314) (4,900,314)Total 910,553 844,633 4,226,987 6,400,38520. SHORT TERM INVESTMENTSTreasury Bills 21,378,834 20,374,098 21,378,834 20,374,098Fixed Deposits 7,086,343 6,266,210 7,086,343 6,266,210Call Deposits - 322,096 - 322,09628,465,177 26,962,404 28,465,177 26,962,40421. CASH AND CASH EQUIVALENTS21.1 Favourable BalancesFixed Deposits 110,928,219 38,083,035 - -Cash in Hand 417,917 355,054 - 2,500Cash in Transit 55,676 839,806 - -Cash at Bank 121,150,727 22,296,743 383,536 306,09321.2 Unfavourable Balances232,552,539 61,574,638 383,536 308,593Bank Overdraft (34,042,331) (109,049,772) - -Cash & Cash Equivalents for the purposeof Cash Flow Statements198,510,208 (47,475,134) 383,536 308,59322. STATED CAPITALNos. Nos. Nos. Nos.Number of Ordinary Shares 17,264,802 17,264,802 17,264,802 17,264,802Rs. Rs. Rs. Rs.Value of Ordinary Shares 265,308,222 265,308,222 265,308,222 265,308,222

METROPOLITAN RESOURCE HOLDINGS PLC Page 30SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS23. INTEREST BEARING BORROWINGS- (GROUP)2009/2010 2008/2009Payable Payable Payable Amount Balance Payable Payable BalanceWithin one Within After Repayable As At Within one More than As AtYear 02 - 05 Years 05 Years after 1 Year 31.03.2010 Year One Year 31.03.2009Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.Term Loans Note 23.1.1 139,985,124 172,739,924 73,783,430 246,523,354 386,508,478 122,531,328 310,795,002 433,326,330Lease Creditors Note 23.1.2 10,126,642 15,258,664 - 15,258,664 25,385,306 7,511,952.73 9,262,919 16,774,872150,111,766 187,998,588 73,783,430 261,782,018 411,893,784 130,043,281 320,057,921 450,101,202Balance New BalanceAs At Loans As At23.1.1 Term Loans 31.03.2009 Obtained Repayments 31.03.2010Rs. Rs. Rs. Rs.National Development Bank Note 23.1.1.1 48,868,246 58,000,000 (13,178,854) 93,689,392DFCC Bank Note 23.1.1.2 9,076,288 - (2,070,396) 7,005,892Commercial Bank of Ceylon Ltd., Note 23.1.1.3 141,383,394 18,162,730 (20,535,700) 139,010,424People's Leasing Co Ltd., Note 23.1.1.4 16,228,449 - (2,624,022) 13,604,427ICICI Bank Note 23.1.1.5 17,581,628 - (2,983,285) 14,598,343NDB Investment Bank Note 23.1.1.6 200,000,000 - (81,400,000) 118,600,000433,138,005 76,162,730 (122,792,257) 386,508,478Balance New Balance Terms ofTotal As At Loans As At Repayments23.1.1.1 National Development Loan No. Facility 31.03.2009 Obtained Repayments 31.03.2010 per MonthRs. Rs. Rs. Rs. Rs. Rs.Term Loan 1 LD0025000166/8 40,000,000 11,958,330 - (4,291,662) 7,666,668 333,333Term Loan 2 LD0025000167 12,632,909 3,776,741 - (1,355,415) 2,421,326 105,275Term Loan 7 LD0025000204 19,019,403 8,690,080 - (2,033,289) 6,656,791 158,495Term Loan 4 LD0025000256 18,996,095 8,567,810 - (811,110) 7,756,700 149,492Term Loan 5 LD0025000257 17,939,123 10,456,608 - (3,133,500) 7,323,108 158,300Term Loan 6 LD0218400102 7,976,930 - - - - 11,594Term Loan 3 LD0634900107 7,250,000 5,418,677 - (1,553,878) 3,864,799 120,900Term Loan 8 LD0920800104 58,000,000 - 58,000,000 58,000,000 805,000181,814,460 48,868,246 58,000,000 (13,178,854) 93,689,392

METROPOLITAN RESOURCE HOLDINGS PLC Page 31SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS23 INTEREST BEARING BORROWINGS (Contd...)23.1.1 Term Loans (Contd...) Balance New Balance Terms ofTotal As At Loans As At Repayments23.1.1.2 DFCC Bank Loan No. Facility 01.04.2009 Obtained Repayments 31.03.2010 per MonthRs. Rs. Rs. Rs. Rs. Rs.Term Loan 1 28909 7,026,250 2,693,392 - (702,624) 1,990,768 58,552Term Loan 2 29974 & 29975 13,677,680 6,382,896 - (1,367,772) 5,015,124 113,98120,703,930 9,076,288 - (2,070,396) 7,005,892Balance New Balance Terms ofTotal As At Loans As At Repayments23.1.1.3 Commercial Bank of Ceylon Ltd. Loan No. Facility 01.04.2009 Obtained Repayments 31.03.2010 per MonthRs. Rs. Rs. Rs. Rs. Rs.Term Loan 1 37782 2,947,083 1,088,160 - (429,118) 659,042 24,600Term Loan 2 37781 12,997,635 4,116,019 - (1,190,283) 2,925,736 108,300Term Loan 3 55867 22,518,314 9,382,814 - (2,251,800) 7,131,014 187,650Term Loan 4 61664 6,967,296 - - - - 82,944Term Loan 5 62150 6,656,630 - - - - 79,245Term Loan 6 62458 2,836,085 1,347,080 - (307,255) 1,039,825 23,635Term Loan 7 68868 22,995,542 11,689,355 - (2,299,543) 9,389,812 191,630Term Loan 8 73236 5,632,833 3,004,193 - (855,840) 2,148,353 46,940Term Loan 9 73235 6,144,000 292,560 - (292,560) - 73,143Term Loan 10 73527 1,326,498 78,931 - (78,931) - 15,792Term Loan 11 240681 45,000,000 - - - - 1,250,000Term Loan 12 96238 31,088,960 20,728,960 - (3,108,000) 17,620,960 259,000Term Loan 13 103688 6,140,907 4,349,782 - (614,100) 3,735,682 51,175299000 2,022,882 2,022,882 - (26,970) 1,995,912 -299000 1,785,000 1,599,100 - (55,770) 1,543,330 18,590299000 5,520,000 5,520,000 - - 5,520,000 -299000 4,977,118 4,977,118 - (592,500) 4,384,618 -Term Loan 14 369825 2,191,712 2,168,882 - (183,030) 1,985,852 22,830Term Loan 15 464637 5,498,288 5,498,288 - - 5,498,288 -Term Loan 16 489215 8,043,750 8,043,750 - - 8,043,750 224,505Term Loan 17 483152 4,044,300 4,044,300 - - 4,044,300 224,505Term Loan 18 476136 3,969,270 3,969,270 - - 3,969,270 224,505Term Loan 19 475256 3,961,950 3,961,950 - - 3,961,950 224,505Term Loan 20 461200 43,500,000 43,500,000 - (8,250,000) 35,250,000 125,000Term Loan 21 514681 17,500,000 - 17,500,000 - 17,500,000Term Loan 22 533762 1,553,230 - 662,730 - 662,730277,819,283 141,383,394 18,162,730 (20,535,700) 139,010,424

METROPOLITAN RESOURCE HOLDINGS PLC Page 32SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS23 INTEREST BEARING BORROWINGS (Contd...)23.1.1 Term Loans (Contd.,) Balance New Balance Terms ofTotal As At Loans As At Repayments23.1.1.4 People's Leasing Co Ltd Loan No. Facility 01.04.2009 Obtained Repayments 31.03.2010 per MonthRs. Rs. Rs. Rs. Rs. Rs.Term Loan 1 STL/AM/091 9,658,600 9,059,940 - (1,358,991) 7,700,949 421,677Term Loan 2 STL/AM/081 8,990,800 7,168,509 - (1,265,031) 5,903,478 452,99718,649,400 16,228,449 - (2,624,022) 13,604,427Balance New Balance Terms ofTotal As At Loans As At Repayments23.1.1.5 ICICI Bank Loan No. Facility 01.04.2009 Obtained Repayments 31.03.2010 per MonthRs. Rs. Rs. Rs. Rs. Rs.Term Loan 1 LACOL00001243580 19,800,000 17,581,628 - (2,983,285) 14,598,343 546,85523.1.1.6 NDB Investment BankTerm Loan 8 200,000,000 200,000,000 - 81,400,000 118,600,00023.1.2 Lease Creditors23.1.2.1 Gross LiabilityBalance New Balance Net Terms ofDescription of Facility As At Leases As At Carrying RepaymentClass of Asset Facility Number Asset Name of Lease Creditor Amount 01.04.2009 Obtained Repayments 31.03.2010 Amount per MonthRs. Rs. Rs. Rs. Rs. Rs. Rs.Motor Vehicles NWL/Lease C/04/22341 01 Jeep Seylan Bank Ltd. 2,414,040 201,170 - (201,170) - - 40,234NWL/Lease C/04/028 01 Jeep Seylan Bank Ltd. 3,086,640 - - - - - 51,444NWL/Lease C/04/027 02 Cars Seylan Bank Ltd. 4,933,800 657,849 - (657,849) - - 82,230NWLC/04/2234 01 Jeep Hatton National Bank Ltd 2,376,360 198,030 - (198,030) - - 39,606113369966 01 Car Central Finance Company 1,203,960 601,980 - (240,792) 361,188 330,874 20,066NWL/Lease C/05/010 02 Lorries Seylan Bank Ltd. 4,691,040 293,190 - (293,190) - - 97,730V/08/003/3172 Commercial Bank of Ceylon PL 1,649,592 1,557,948 - (549,864) 1,008,084 728,019 45,822/=20,355,432 3,510,167 - (2,140,895) 1,369,272 1,058,893Plant & Machinery 3806/002/BR/017 01 Stalk Extractor Hatton National Bank Ltd 2,287,008 1,288,928 - (603,239) 685,689 621,521 47,646E/05/003/2261 01 Saw Mill Commercial Bank Ltd. 3,034,698 1,094,957 - (729,972) 364,985 358,535 60,83109/003/3227 1Colour Seperator Commercial Bank Ltd. 24,724,416 - 24,724,416 (2,575,460) 22,148,956 15,961,198 515,092E/06/003/2501 Commercial Bank of Ceylon PL 12,110,940 4,844,376 - (2,422,188) 2,422,188 2,147,222 201,849/=E/06/003/2680 Commercial Bank of Ceylon PLC 20,051,400 11,028,270 - (4,010,280) 7,017,990 5,049,610 334,190/=62,208,462 18,256,531 24,724,416 (10,341,139) 32,639,808 24,138,087Lease Creditor - Vanik 266,943 266,943Total Gross Liability 82,563,894 22,033,641 24,724,416 (12,482,034) 34,276,023 25,463,923

METROPOLITAN RESOURCE HOLDINGS PLC Page 33SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS23 INTEREST BEARING BORROWINGS (Contd...)23.1.2 Lease Creditors (Contd.,)23.1.2.2 Finance Charges Allocated to Future YearsBalance On New Interest BalanceClass of Description of As At Leases Written As AtAsset Facility Number Asset Name of Lease Creditor01.04.2009 Obtained Off 31.03.2010Rs. Rs. Rs. Rs.Motor Vehicles NWL/Lease C/04/22341 01 Jeep Seylan Bank Ltd. 558 - (558) -NWL/Lease C/04/027 02 Cars Seylan Bank Ltd. 7,066 - (7,066) -NWLC/04/2234 01 Jeep Hatton National Bank Ltd 6,297 - (6,297) -113369966 01 Car Central Finance Company 90,706 - (60,392) 30,314NWL/Lease C/05/010 02 Lorries Seylan Bank Ltd. 6,190 - (6,190) -V/08/003/3172 Commercial Bank Ltd. 432,828 - (152,763) 280,065543,645 - (233,266) 310,379Plant & Machinery 3806/002/BR/017 01 Stalk Extractor Hatton National Bank Ltd 215,411 - (151,243) 64,168E/05/003/2261 01 Saw Mill Commercial Bank Ltd. 84,094 - (77,644) 6,45009/003/3227 01 Colour Seperator Commercial Bank Ltd. - 7,515,388 (1,327,630) 6,187,758E/06/003/2501 Commercial Bank Ltd. 969,851 - (694,885) 274,966E/06/003/2680 Commercial Bank Ltd. 3,178,826 - (1,210,446) 1,968,3804,448,181 7,515,388 (3,461,848) 8,501,721Lease Creditor - Vanik 78,617 78,617Total Finance Charges Allocated to Future Years 5,070,443 7,515,388 (3,695,114) 8,890,717Net Present Value of Lease Creditors 16,963,198 25,385,306

METROPOLITAN RESOURCE HOLDINGS PLC Page 34SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS24. RETIREMENT BENEFIT OBLIGATIONSGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Balance at the Beginning of the Year 491,825,483 472,142,981 - -Provision for the Period 200,828,932 59,266,278 - -692,654,415 531,409,259 - -Paid During the Year (43,523,495) (39,460,815) - -Brombil factory provision - (122,960) - -Balance at the End of the Year 649,130,920 491,825,484 - -25. DEFERRED INCOME - (Group)Grants and Subsidies 182,608,956 152,828,564 - -Net Income from Operating Rights Givento Lalan Rubbers (Pvt) Ltd.(25.2)328,345,906 227,727,217 - -Net Income from Operating Rights Givento ASPIC Corporation (Pvt) Ltd(25.3)14,988,078 15,404,413 - -25.1 GRANTS AND SUBSIDIES525,942,940 395,960,194 - -Balance at the beginning of the year 152,828,564 133,219,708 - -Received during the year 39,760,064 26,594,403 - -Total grants available for amortization 192,588,628 159,814,111 - -Amortization for the year (9,979,672) (6,985,547) - -Balance at the end of the year 182,608,956 152,828,564 - -25.2 NET INCOME FROM OPERATING RIGHTS GIVEN TO LALAN RUBBERS (PVT) LTD.Gross carrying amount at the beginningof the year227,727,217 234,052,972 - -Amortization for the year (9,381,311) (6,325,755) - -Balance Received 110,000,000 -Net carrying amount at the end of the year 328,345,906 227,727,217 - -25.3 NET INCOME FROM OPERATING RIGHTS GIVEN TO ASPIC CORPORATION (PVT) LTD.Gross carrying amount at the beginning of the year 15,404,413 15,820,748 - -Amortization for the year (416,335) (416,335) - -Net carrying amount at the end of the year 14,988,078 15,404,413 - -

METROPOLITAN RESOURCE HOLDINGS PLC Page 35SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS26. NET LIABILITY TO LESSOR OF JEDB/SLSPC ESTATES - (Group)Repayable Repayable Balance as at Balance as atwithin 1 year after 1 year 31.03.2010 31.03.2009Rs. Rs. Rs. Rs.Gross Liability 29,426,160 1,007,845,980 1,037,272,140 1,066,698,300Interest in Suspense (22,039,384) (464,248,163) (486,287,547) (508,611,040)Net Liability 7,386,776 543,597,817 550,984,593 558,087,26027. REDEEMABLE DEBENTURESGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.100,000,000 - - -100,000,000 - - -During the financial year Company has issued Rs. 100Mn worth of Redeemable Debentures to the Plantation TrustFund on 27th July'2009. Further details are given in the table below.Debenture Per Value No. of DebenturesAgreement Ref. Rs. Issued Maturity Period Interest RateDebenture 2012 25,000,000 01 Redeemable in 3 years from the 14.83 % p.adate of subscriptionDebenture 2013 25,000,000 01 Redeemable in 4 years from the 15.08 % p.adate of subscriptionDebenture 2014 A 25,000,000 01 Redeemable in 5 years from the 15.33 % p.adate of subscriptionDebenture 2014 B 25,000,000 01 Redemption shall be on or before 15.58 % p.a30th June' 201528. TRADE AND OTHER PAYABLESGroupCompany2009/2010 2008/2009 2009/2010 2008/2009Rs. Rs. Rs. Rs.Trade Creditors 255,358,161 284,252,929 - -Accruals and other payables 156,561,930 166,183,047 633,852 471,483Rental Payable - JEDB / SLSPC - 29,276,487 -411,920,091 479,712,463 633,852 471,48329. AMOUNTS DUE TO RELATED COMPANIESCeylon Tea Gardens (Pvt.) Ltd. - - 5,074,171 5,074,171Metrocorp (Pvt) Ltd - 6,000,001 - -- 6,000,001 5,074,171 5,074,17130. CONTINGENT LIABILITIESThere were no contingent liabilities as at the balance sheet date.

METROPOLITAN RESOURCE HOLDINGS PLC Page 36SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS31 RELATED PARTY DISCLOSURES31.1 Key Management Personnel InformationThe Directors of the company have Interest in the transactions detailed below and some directors held the post of Directors of suchrelated companies during the year. The transactions listed below have been carried out under normal commercial terms.Mr. D.J. Ambani, Dr. D.R. Bandaranaike, Mr. C.M.O. Haglind, Mr. L.J. Ambani and Mr. M.S.W. Fernando the directors of the company arealso directors of following companies and has had transactions as disclosed in Note 31.2 below.31.2 Related Party TransactionsThe company has a related party relationship with its related group companies as disclosed in Note 31.2. The following transactions havebeen carried out with related parties during the year ended 31st March 2010 under normal commercial terms.31.2.1Transactions with Companies in which Directors of the Company holds Other DirectorshipsThe Company has carried out transactions with entities where the Chairman or a Director of the Company is the Chairman or a Directorof such entities as detailed below.Name of the Ultimate ParentCompanyName of DirectorRelationshipNature of TransactionBogawantalawa Tea EstatesPLC. (BTE).Mr. D.J.AmbaniMr. L.J.AmbaniDr. R.D. BandaranaikeMr. M.S.W. FernandoMr. C.M.O. HaglindChairmanDirectorDirectorDirectorDirectorCompany has earned Rs. Nil (Previous Year - Rs.4,401,578/=)as Management Fees for providing management services to BTEfor the period.Company has earned Rs. Nil (Previous Year - Rs.115,708/=) forHiring Vehicles to BTE.Company has incurred Rs. Nil (Previous Year - Rs.105,955/=)for Printing and Stationary charges from BTE.GroupCompany has received funds amounting to Rs. 2,300,598/=from BTE PLC.Ceylon Tea Gardens (Pvt)Limited. (CTGL)Mr.D.J.AmbaniDr.R.D. BandaranaikeMr.M.S.W.FernandoChairmanDirectorDirectorGroup has earned Rs.62,847/= (Previous Year - Rs.134,650/=)as reimbursement of expenses met on behalf of CTGL.BPL Teas ( Pvt) Limited. (BPL)Mr.D.J. AmbaniMr. C.M.O. HaglindMr. M.S.W.FernandoChairmanDirectorDirectorGroup has earned Rs.4,607,524/= ( Previous Year -Rs.1,446,734/= ) as reimbursement of expenses met on behalfof BPL.Metrocorp (Pvt) Ltd. (MPL)Mr.D.J.AmbaniChairmanGroup has incurred Rs.195,000/= ( Previous Year -Rs.180,000/= ) as Service Charges for obtaining services fromFT Services (Pvt) Ltd. (FTS)Mr.M.S.W.FernandoDirectorGroup has incurred Rs.4,009,687/32/= ( Previous Year -Rs.,1,096,850/= ) as Service Charges for obtaining servicesfrom FTS.Eco Power (Pvt) Ltd. (EPL)Mr.D.J.AmbaniDr.R.D.BandaranaikeChairmanDirectorGroup has earned Rs.Nil ( Previous Year - Rs.654,087/= ) asRent Income from EPL.Tea Trails (Pvt) Ltd (TTPL) Mr.D.J.Ambani DirectorGroup has earned Rs. 4,496,915/= as income from leasing ofbungalows and Rs. 2,188,860/= as reimbursement of expensesfrom TTPLSuntel (Pvt) Ltd. (SPL)Mr.D.J.AmbaniMr. C.M.O. HaglindVice ChairmanDirectorGroup has incurred Rs.4,419,710/25/= ( Previous Year -Rs.2,279,544/= ) as Telephone Charges for obtaining TelephoneServices from SPL.Office Network (Pvt) Ltd(ONPL)Mr.L.J.AmbaniDirectorGroup has incurred Rs.4,614/= (Previous Year - Rs.17,169/=)for service obtained for the maintenance of Photo CopyMachines from ONPL.

METROPOLITAN RESOURCE HOLDINGS PLC Page 37SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS31 RELATED PARTY DISCLOSURES (Contd.,)31.2.2 Transactions with Key Management Personnel ( KMP ) of the Company or ParentKey management personnel are those persons having authority and responsibility for planning, directing and controlling the activities ofthe company as well as its related parties, directly or indirectly, including any director (whether executive or otherwise) of thecompany.a) Loans to DirectorsNo loans have been given to directors of the company and its parent company.b) Compensations to Key Management Personnel of the Company and its Parent Company 2009/2010Rs.Short-Term Employment BenefitsNilc)Group has not incurred any amount as Termination Benefits or Post Employment Benefits on account of the Key Managerial Personnelduring the year.31.2.3Amounts receivable and payable to related parties are disclosed in Notes 20 and 29 to the financial statements.32. EVENTS OCCURRING AFTER THE BALANCE SHEET DATEThere has been no material events occurring after the balance sheet date that require adjustments or disclosures in the financialstatements other than the events mentioned below.1.The coconut cultivation of the Maliboda Estate which was given under a operating agreement to ASPIC Corporation (Pvt.) Ltd hasbeen taken over by the company on 1st June 2010.2.The Board of Directors of Bogawanthalawa Tea Estates PLC has recommended a declaration of a final dividend of fifty cents pershare on 16th July, 2010.33. UNRECOGNISED CONTRACTUAL COMMITMENTSThere were no material capital commitments as at the balance sheet date.

METROPOLITAN RESOURCE HOLDINGS PLC Page 38SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS34 MORTGAGE UNDERTAKINGThe following assets of the Bogawantalawa Tea Estates PLC have been pledged as collaterals for overdraft facilities and Loansobtained by the company to the respective financial institution concerned.Name of the FinancialInstitution/Purpose of FacilityNature ofthe FacilityFacilityGrantedBalanceOutstanding asat 31.03.2010Securities PledgedRs.Rs.a) Commercial Bank of Ceylon PLC Overdraft 10,000,000 10,983,085 Mortgage over stock and book debts.10,000,000 10,983,085Primary mortgage for Rs.5 Mln over thestocks in trade and other movable assetstogether with an assignment over bookdebts executed by the company.b) Sampath Bank PLCOverdraft 25,000,000 -Forbes & Walker Tea Brokers (Pvt) Ltd.,has agreed to remit proceeds from sale ofProduce Stocks of the Company direct toSampath Bank PLC.c) Seylan Bank PLC - Millenium Overdraft 30,000,000 - Fixed Deposit of Rs.30 Milliond) National Development BankLimited65,000,000 10,983,085Purchase of Tea Bagging Machine Term Loan 40,000,000 7,666,668LD0025000166/8Primary mortgage over Tea BaggingMachine.Factory Development Term Loan 12,632,909 2,421,326LD0025000167Primary mortgage over the leaseholdrights of Loinorn and SapumalkandaFactory Development and purchaseof Agriculture EquipmentTerm Loan 19,019,403 6,656,791 Primary mortgage over the leaseholdrights of Loinorn and SapumalkandaEstates.LD0025000204Field Developments and processimprovementsLD0025000256 Term Loan 18,996,095 7,756,700LD0025000257 Term Loan 17,939,123 7,323,108LD0920800104 Term Loan 58,000,000 58,000,000Mortgage over Property of SapumalkandaEstate.Mortgage over the leasehold right of thethree estates namelyLoinorn,bogawantalawa,andSapumalkanda and further mortgage overthe movable machinery.Energy Saving Plant to NorwoodEstateLD0634900107Term Loan 7,250,000 3,864,799Primary Mortgage over project assets.Further mortgage over Leasehold Rights ofthree estates namely, Loinorn,Bogawantalawa and Sapumalkandaalready mortgaged to the bank. Further,mortgage over IMA C23 Tea BaggingMachine located at Welisara Estate.Total 173,837,530 93,689,392e) NDB Investment BankWorking Capital Requirements Term Loan 200,000,000 118,600,000(Securitization Loan)Securitized Debt Certificates which areissued for the future tea sales or cashflows

METROPOLITAN RESOURCE HOLDINGS PLC Page 39SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS34 MORTGAGE UNDERTAKING ( Contd., )Name of the FinancialInstitution/Purpose of Facilityf) DFCC BankNature ofthe FacilityFacilityGrantedRs.BalanceOutstanding asat 31.03.2010Rs.Securities PledgedField Developments and purchaseof agriculture equipment28909Term Loan 7,026,250 1,990,768 Primary mortgage over the leaseholdrights of Bogawana Estate.Field Developments and purchaseof agriculture equipment29974 & 29975Term Loan 13,677,680 5,015,124 Primary mortgage over the leaseholdrights of Bogawana Estate.Total 20,703,930 7,005,892g)Commercial Bank of Ceylon PLCField Development and purchaseof agricultural equipment37782 Term Loan 2,947,083 659,04237781 Term Loan 12,997,635 2,925,73615,944,718 3,584,778Field Development61664 Term Loan 6,967,296 -62150 Term Loan 6,656,630 -13,623,926 -Purchase of Vehicles andEquipment55867 Term Loan 22,518,314 7,131,01462458 Term Loan 2,836,085 1,039,82525,354,399 8,170,839Primary mortgage over the leaseholdrights of Wanarajah Estate.Primary mortgage over the leaseholdrights of Wanarajah Estate.Primary mortgage over the leaseholdrights of Wanarajah Estate.68868 Term Loan 22,995,542 9,389,81273236 Term Loan 5,632,833 2,148,35328,628,375 11,538,165Purchase of Vehicle andEquipment73235 Term Loan 6,144,000 -73527 Term Loan 1,326,498 -7,470,498 -Mortgage over Property of Wanarajah,Pitiyakanda, Mahaoya & UdabageMortgage over Property of Wanarajah,Pitiyakanda, Mahaoya & UdabageField Development Term Loan 31,088,960 17,620,960 Mortgage over Norwood Estate96,238Field Development Term Loan 6,140,907 3,735,682 Further mortgage over property of103688Norwood EstateTo meet the working capitalrequirements of the Company240681Term Loan 45,000,000 -No such security since a 50 million ODfacilities transferred to a 45 million Termloan.For Timber harvesting equipment Term Loan 14,305,000 13,443,86029900096,534,867 34,800,502Leeway of Rs.36,748,000/- available inthe existing mortgage over leaseholdrights over Wanarajah & Norwood

METROPOLITAN RESOURCE HOLDINGS PLC Page 40SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS34 MORTGAGE UNDERTAKING ( Contd., )BalanceName of the Financial Nature of Facility Outstanding as atInstitution/Purpose of Facility the Facility Granted 31.03.2010Rs.Rs.For Tea factory modernization -MalibodaTerm Loan369825 2,191,712 1,985,852464637 5,498,288 5,498,2887,690,000 7,484,140For Tea factory modernization -Purchase of solid fuel boilers Term Loan489215 8,043,750 8,043,750483152 4,044,300 4,044,300476136 3,969,270 3,969,270475256 3,961,950 3,961,950433762 1,533,230 662,73021,552,500 20,019,270Securities PledgedLeeway of Rs.36,748,000/- available inthe existing mortgage over leaseholdrights over Wanarajah & Norwoodestates.Leeway of Rs.36,748,000/- available inthe existing mortgage over leaseholdrights over Wanarajah, Mahaoya &Udabage, Norwood & PitiyakandaEstates.For tea factory development andhigh axial fans for energy savingTerm Loan514681 17,500,000 17,500,000Leeway of Rs.36,748,000/- available inthe existing mortgage over leaseholdrights over Wanarajah, Mahaoya &Udabage, Norwood & PitiyakandaEstates.Working capital requirements BPL teas (Pvt) Ltd.461200 43,500,000 35,250,000Primary Mortgage for Rs.45 Mn overmachinery owned by the company heldat No.21, Parakrama Road,Mattumagala, Welisara.h) People's Leasing Co LtdPurchase of solid fuel boiler-Wanarajah Term Loan 9,658,600 7,700,949 Primary mortgage over the boiler.STL/AM/091Purchase of solid fuel boiler-Kotiyagala Term Loan 8,990,800 5,903,478STL/AM/081Total 18,649,400 13,604,427Primary mortgage over the boiler,Circular Saw,Wood Spliteri) ICICI BankPurchase of Motor Vehicles Term Loan 19,800,000 14,598,343LACOL00001243580Primary mortgage over the MotorVehicles purchased.

METROPOLITAN RESOURCE HOLDINGS PLC Page 41SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS35 SEGMENTAL ANALYSIS BY PRINCIPAL CROPS35.1 GROUPTea Rubber Unallocated Total35.1.1 Segmental Results 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.Revenue 3,552,695,427 2,857,180,609 3,116,343 1,103,391 - - 3,555,811,770 2,858,284,000Cost of Sales (3,221,267,359) (2,720,887,578) (2,731,729) (1,248,516) - - (3,223,999,088) (2,722,136,094)Gross Profit/(Loss) 331,428,068 136,293,031 384,614 (145,125) - - 331,812,682 136,147,906Add : Other Income - - - - 162,077,206 105,606,714 162,077,206 105,606,714Less : Unallocated Expenses - - - - - - (352,815,702) (368,154,832)Profit / (Loss) from before Taxation 331,428,068 136,293,031 384,614 (145,125) 162,077,206 105,606,714 141,074,186 (126,400,212)Less : Taxation - - - - - - (20,648,025) -Net Profit/(Loss) for the Year 331,428,068 136,293,031 384,614 (145,125) 162,077,206 105,606,714 120,426,161 (126,400,212)35.1.2 Segment AssetsNon-current Assets 1,490,888,702 1,341,633,827 640,382,939 732,932,708 303,296,186 272,930,779 2,434,567,827 2,347,497,314Current Assets 788,275,477 729,258,743 4,830,502 5,037,637 502,899,006 373,599,376 1,296,004,985 1,107,895,7562,279,164,179 2,070,892,570 645,213,441 737,970,345 806,195,192 646,530,155 3,730,572,812 3,455,393,07035.1.3 Segment LiabilitiesNon-current Liabilities 568,922,811 449,607,256 332,066,160 246,328,217 1,164,466,338 1,062,892,717 2,065,455,309 1,758,828,190Current Liabilities 596,078,940 561,357,055 - 18,675,719 209,327,656 391,833,240 805,406,596 971,866,0141,165,001,751 1,010,964,311 332,066,160 265,003,936 1,373,793,994 1,454,725,957 2,870,861,905 2,730,694,20435.1.4 Segmental Expenses35.1.4.1 Capital Expenditure 215,532,824 285,197,878 - - - - 215,532,824 193,244,88435.1.4.2 Depreciation/Amortization 85,143,272 103,379,476 22,577,508 22,482,025 15,132,638 - 122,853,418 125,861,501

FORM OF PROXYI /We …………………………………………..……………………………(NIC No:……………………………...)of ……………………………………………………………………………………………………………………being a member/s* of METROPOLITAN RESOURCE HOLDINGS PLC, hereby appoint;……………………………………………………………………………………………………of ……...……………………………………………………………………………………….....or failing him/her*Mr. Dinesh Jamnadas AmbaniMr. Lalith Jamnadas AmbaniMr. Collin William KingsnorthMr. David Edward HowardMr. Carl Michael Oscarsson HaglindMr. Magage Sarath Wimal FernandoMr. Gerard Victor Maurice NanayakkaraMr .Jayampathy MolligodaMr. Arya Keerthi KumarasenaMr. A A Douglas Senaka Saparamaduof Colombo, or failing himof Colombo, or failing himof United Kingdom, or failing himof United Kingdom, or failing himof Dtursholm, or failing himof Colombo, or failing himof Colombo, or failing himof Colombo, or failing himof Colombo, or failing himof Colombo, or failing himas my/our* proxy to represent me/us* and to speak and vote for me/us* and on my/our* behalfat the Sixteenth Annual General Meeting of the Company to be held on Thursday, 30 thSeptember 2010 and at every poll which may be taken in consequence of the aforesaid meetingand at any adjournment thereof.Signed this………………………….day of …………………………2010……………………………….Signature of the shareholder* Please delete what is inapplicable.Instructions as to the completion of Proxy Form1. This form of Proxy must be deposited at No. 153, Nawala Road, Narahenpita, Colombo 5 not less thanforty Five (45) hours before the time fixed for the Meeting.2. In perfecting the Form of Proxy please ensure that all details are legible.3. If you wish to appoint a person other than a Director of the Company as your proxy,. Please insert therelevant details in the space provided.4. In the case of a Company/Corporation, the proxy must be under its Common Seal, which should beaffixed and attested in the manner prescribed by its Articles of Association.5. In the case of joint holders the form of Proxy must be signed by the first holder.