Financial Statements - Hemas Holdings, Ltd

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Hemas Holdings PLC - Annual Report 2007 - 2008Notes to the Financial Statementsvaluation model is used. These calculations are corroboratedby valuation multiples, quoted share prices for publiclytraded subsidiaries or other available fair value indicators.Impairment losses of continuing operations are recognised inthe Income Statement in those expense categories consistentwith the function of the impaired asset, except for propertypreviously revalued where the revaluation was taken toequity. In this case the impairment is also recognised inequity up to the amount of any previous revaluation.For assets excluding goodwill, an assessment is made at eachreporting date as to whether there is any indication thatpreviously recognised impairment losses may no longer existor may have decreased. If such indication exists, the Groupmakes an estimate of recoverable amount. A previouslyrecognised impairment loss is reversed only if there has beena change in the estimates used to determine the asset'srecoverable amount since the last impairment loss wasrecognised. If that is the case the carrying amount of theasset is increased to its recoverable amount. That increasedamount cannot exceed the carrying amount that would havebeen determined, net of depreciation, had no impairmentloss been recognised for the asset in prior years. Suchreversal is recognised in the Income Statement unless theasset is carried at revalued amount, in which case thereversal is treated as a revaluation increase. Impairmentlosses recognised in relation to goodwill are not reversed forsubsequent increases in its recoverable amount.The following criteria are also applied in assessingimpairment of specific assets:GoodwillGoodwill is reviewed for impairment, annually or morefrequently if events or changes in circumstances indicate thatthe carrying value may be impaired.Impairment is determined for goodwill by assessing therecoverable amount of the cash-generating unit (or group ofcash-generating units), to which the goodwill relates. Wherethe recoverable amount of the cash-generating unit (orgroup of cash-generating units) is less than the carryingamount of the cash-generating unit (group of cashgeneratingunits) to which goodwill has been allocated, animpairment loss is recognised. Impairment losses relating toGoodwill cannot be reversed in future periods. The Groupperforms its annual impairment test of goodwill as at 31 March.Intangible AssetsIntangible assets with indefinite useful lives are tested forimpairment annually either individually or at the cashgenerating unit level, as appropriate.AssociatesAfter application of the equity method, the Groupdetermines whether it is necessary to recognise an additionalimpairment loss of the Group's investment in its associates.The Group determines at each Balance Sheet date whetherthere is any objective evidence that the investment inassociate is impaired. If this is the case the Group calculatesthe amount of impairment as being the difference betweenthe fair value of the associate and the acquisition cost andrecognises the amount in the Income Statement.2.3.16 Income StatementRevenue RecognitionRevenue is recognised to the extent that it is probable thatthe economic benefits will flow to the Company and therevenue and associated costs incurred or to be incurred canbe reliably measured. Revenue is measured at the fair valueof the consideration received or receivable net of tradediscounts, value added taxes, and other sales taxes and aftereliminating intra-group sales. The following specific criteriaare used for the purpose of recognition of revenue.a) Sale of GoodsRevenue from sale of goods is recognised when thesignificant risks and rewards of ownership of the goods havepassed to buyer; with the Group retaining neither continuingmanagerial involvement to the degree usually associatedwith ownership, nor effective control over the goods sold.b) Rendering of ServicesRevenue from rendering of services is recognised in theaccounting period in which the services are rendered orperformed.c) Energy SuppliedRevenue from energy supplied is recognised, upon deliveryof energy to Ceylon Electricity Board and will be adjusted forcapacity charge for Minimum Guaranteed Energy Amount(MGEA) at the end of the calendar year if there has been acurtailment. (Delivery of electrical energy shall be completedwhen electrical energy meets the specifications as set out inPower Purchase Agreement (PPA) received at the meteringpoint.)d) Apartment and Food and Beverages SalesApartment revenue is recognised on the rooms occupied ona daily basis, and food and beverages sales are accounted forat the time of sales.e) Turnover Based TaxesTurnover based taxes include Value Added Tax, EconomicService Charge and Turnover Tax, which is payable toProvincial Council in respect of trading activities and66
Hemas Holdings PLC - Annual Report 2007 - 2008Notes to the Financial StatementsTourism Development Levy, which is payable to the CeylonTourist Board by all companies licensed by the Board.Companies in the Group pay such taxes in accordance withthe respective statutes.f) InterestInterest Income is recognised on an accrual basis.g) DividendsDividend income is recognised on a cash basis (net ofdividend tax).h) Rental IncomeRental income is recognised on an accrual basis. Rentalincome arising on investment properties is accounted for ona straight line basis over the lease terms.i) OthersOther income is recognised on an accrual basis.2.4 EMPLOYEE SHARE OPTION PLAN (ESOP)/SHAREOPTION SCHEME (ESOS)An Employee Share Option Plan (ESOP) was approved bythe shareholders of the Company in the year 2003, wherebythe Company issued a total of 3,120,000 Ordinary Shares tothe Senior Management and Employees based onperformance. These options were required to be exercisedbetween the period 01 April 2004 and 31 March 2008.The allocation to the Senior Management and theEmployees, which has taken place and is expected to takeplace in the future is as follows:The first grant which took place on 01 April 2004, entitledSenior Management and Employees to subscribe for theirentitlements of Ordinary Shares at a price of Rs. 50/- pershare. The second grant took place on 10 September 2004,to Senior Management at a price of Rs. 90/- per share.Subsequent to the bonus issue of 1 for 4, the exercise priceof the two grants were adjusted to Rs. 40/- and Rs. 72/-respectively. The first and the second grants were finalised asat 31 March 2006 and 31 March 2007 respectively. The thirdgrant took place on 29 September 2005, to SeniorManagement at a price of Rs. 116/- per share. The Shareoption plan lapsed on 31 March 2008.On 29 June 2006, subsequent to having received theconcurrence of the Colombo Stock Exchange and theSecurities & Exchange Commission of Sri Lanka respectively,shareholders approval was obtained to issue a further2,994,000 shares representing 3% of the issued shares as at31 March 2006 to the eligible management staff of the groupby the creation of an Employee Share Option Scheme(ESOS). For the purpose of operating the ESOS, MessrsJacey Trust Services were appointed as Trustees to the ESOS.The 1st tranche of 1,006,000 shares were issued to theTrustees on 26 September 2006 at Rs. 105/- per share, onbehalf of the Senior Management. Exercise of the shareoptions would be between the period October 2006 andMarch 2009.The Trustees were granted interest free loans by thesubsidiaries of the Company to subscribe for a sumequivalent to the issue price of the total of 1,006,000 shares.86,500 share options have been exercised as at 31 March2008 and transferred from the Trust to the respectiveemployees.2.5 BUSINESS SEGMENT REPORTINGA business segment is a distinguishable component of anenterprise that is engaged in providing an individual productor service or a group of related products or services that issubject to risk and returns that are different from those ofother business segments. The accounting policies adopted forsegment reporting are the same accounting policies adoptedfor preparing and presenting consolidated financialstatements of the Group.Inter Segment transfers are based on fair market prices.Date of No. of Date by which Share No. of No. of No. ofGrant Options Options have Adjusted Options Options ShareGranted to be due to Exercised Exercised LapsedExercised Bonus Issue during to datethe yearScheme IGrant 1 01-04-2004 1,558,850 31-03-2006 68,737 - 1,521,974 105,613Grant 2 10-09-2004 732,500 31-03-2007 126,175 - 831,175 27,500Grant 3 29-09-2005 781,150 31-03-2008 195,287 - 71,050 905,387Scheme IITranche 1 26-09-2006 1,006,000 31-03-2009 - - 86,500 -67
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Financial Statements - Hemas Holdings, Ltd

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