John Keells PLC Keels PLC Annual Re… · · 2011-06-13Hatton National Bank Hongkong & Shanghai Banking Corporation Ltd. Nation’s Trust Bank National Development Bank PLC

John Keells PLC

Annual Report

2010/2011

The way it grows

John Keells PLCP.O. Box 76, 130 Glennie Street, Colombo 02

Sri Lanka

John Keells PLC

Annual R

eport 2010/2011

Name of Company John Keells PLC

Company Registration Number PQ 11

Name of Subsidiaries John Keells Stock Brokers (Pvt) LtdJohn Keells Warehousing (Pvt) Ltd

Name of Associate CompanyKeells Realtors Limited

Legal Form: Public Limited Liability Company listed on the Colombo Stock Exchange(Incorporated in Sri Lanka in 1960)

Registered Office: P.O. Box 76, 130, Glennie Street, Colombo 2, Sri LankaTel: 2306000Telex: 21389 KEELLS CETelefax: 2446223E-mail: [email protected]

Directors S.C. RatnayakeA.D. GunewardeneJ.R.F. PeirisL.D. Ramanayake T. de Zoysa K.D.W. RatnayakaMs. Y.A. HansenMs. S.T. Ratwatte

Corporate Information

Secretaries & Registrars Keells Consultants (Private) Limited130, Glennie Street, Colombo 2

Auditors Messrs. Ernst & YoungChartered AccountantsP.O. Box 101, Colombo

Principal Bankers (in alphabetical order) Bank of CeylonCommercial Bank of Ceylon Ltd.Deutsche BankDFCC Vardhana BankHatton National Bank Hongkong & Shanghai Banking Corporation Ltd.Nation’s Trust BankNational Development Bank PLCPeople’s BankSampath Bank Ltd.Seylan Bank Ltd.Standard Chartered Bank

Management ReportsFinancial Highlight 3 Financial Calendar 3 Group Structure 4 Being Rooted Chairman’s Message 5Chief Executive Officer’s Report 7 Board of Directors 11 Senior Management Team 13 Human Resources 14 Corporate Social Responsibility 15 Corporate Governance 17 Risk Management 26 Audit Committee Report 29 Historical Milestones 32

Financial ReportsAnnual Report of The Board of Directors 35 The Statements of Directors Responsibility 42Independent Auditor’s Report 43 Balance Sheet 44 Income Statement 45 Statement of Changes in Equity 46 Cash Flow Statement 47 Notes to the Financial Statements 49Statement of Value Added 78 Information to Shareholders and Investors 80 Five Year Summary 82Key Ratios and Information 84 Glossary of Financial Terminology 86 Notice of Meeting 87Form of Proxy 91

Produced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd

John Keells PLC Annual Report 2010/2011

1

The rings of a tree have quite a story to tell. It indicates how much it has grown as well as its history, the challenges and risks it has faced, the droughts and the storms that have shaped the entity that it is today. The concentric circles also show how its surroundings have affected the growth of a tree, a snapshot of development, stability and strength. As another year is set in motion, we are accumulating rings as we pursue our values; teamwork, quality and commitment that makes us a trusted name in the industry.

The way it grows

John Keells PLCAnnual Report 2010/2011

2

Our Corporate VisionTo be internationally recognised as the best Produce Broker in the world.

Our Corporate MissionTo retain the pre-eminent position as Sri Lanka’s leading Tea and Rubber broker; To uphold the traditions and ethics of the Tea and Rubber trades; To ensure superior customer service through a dedicated and motivated workforce.

Our Core ValuesWe are committed to the highest level of integrity and ethical conduct in all our business activities. We will look towards exceeding Shareholder and Customer expectations by achieving excellence in all areas of operations.

We recognise the right of every individual to be treated with fairness, dignity and respect and assist our employees to improve their skills and reward their accomplishments.

We will focus on corporate social responsibility and look to protect and safeguard the environment.


3

GROUP COMPANY 2010/2011 2009/2010 Change % 2010/2011 2009/2010 Change %

Revenue (Rs.000’s) 1,057,863 848,144 24.73 489,609 490,621 (0.21)Profit before Tax (Rs.000’s) 1,012,451 403,931 150.65 699,398 216,968 222.35Profit after Tax (Rs.000’s) 814,936 256,524 217.68 623,423 145,286 329.10Revenue to Government (Rs.000’s) 212,838 164,764 29.18 91,297 89,049 2.52Profit before Tax on Turnover ( % ) 95.71 47.63 101.11 142.85 44.22 223.02Return on Capital Employed ( % ) 48.53 27.86 74.18 43.51 19.93 118.30Earnings per share ( Rs.)** 25.19 7.56 233.18 20.51 4.78 329.02Dividend per share ( Rs.)** 5.00 5.00 - 5.00 5.00 -Dividend Cover (Times) 5.04 1.51 233.18 4.10 0.96 329.02Net Assets per Share (Rs.)** 60.92 40.73 49.57 49.83 34.32 45.19No. of Employees 181 183 (1.64) 109 118 (7.63)Turnover per Employee (Rs.000’s) 5,877 4,635 26.70 4,492 4,158 8.03Profit per Employee (Rs.000’s) 5,625 2,207 154.86 6,417 1,839 248.91

** Based on 30,400,000 shares in issue as at 31st March 2011

Financial Highlight

Financial CalendarINTERIM REPORTS1st Quarter 30th July 20102nd Quarter 04th November 20103rd Quarter 28th January 20114th Quarter 25 th May 2011

ANNUAL REPORTS2010/11 3rd June 20112009/10 4th June 2010

MEETINGS64th Annual General Meeting 29th June 201163rd Annual General Meeting 30th June 2010

DIVIDENDSFirst and Final Dividend of Rs. 5.00 per share paid on 13th May 2011


4

COMPANY: JOHN KEELLS PLCPRINCIPAL ACTIVITIES: PRODUCE BROKING AND REAL ESTATE OWNERSHIP

SUBSIDIARY: JOHN KEELLS WAREHOUSING (PVT) LTD.Directors of the Company: Mr. S.C. Ratnayake (Chairman), Mr. J.R.F. Peiris, Mr L. D. RamanayakeYear of Incorporation: 2001Principal Activities: Warehousing of Tea and RubberCapital Structure: No. of Shareholders Issued Share Capital Holding Percentage (Rs. 000’s) (%) 2011 2010 2011 2010 2011 2010 2 2 120,000 120,000 100 100

Operating Performance: GrossTurnover ProfitbeforeTax No.ofEmployees (Rs. 000’s) (Rs. 000’s) 2011 2010 2011 2010 2011 2010 85,799 91,481 27,273 33,851 40 41

SUBSIDIARY: JOHN KEELLS STOCK BROKERS (PVT) LTD.Directors of the Company: Mr. A.D. Gunewardene (Chairman), Mr. S.C. Ratnayake, Mr. J.R.F. Peiris, Mr. K.N.J. BalendraYear of Incorporation: 1979Principal Activities: Share BrokingCapital Structure: No. of Shareholders Issued Share Capital Holding Percentage (Rs. 000’s) (%) 2011 2010 2011 2010 2011 2010 5 5 7,500 7,500 76 76

Operating Performance: GrossTurnover ProfitbeforeTax No.ofEmployees (Rs. 000’s) (Rs. 000’s) 2011 2010 2011 2010 2011 2010 492,911 287,383 320,975 172,597 31 25

ASSOCIATE: KEELLS REALTORS LTD.Directors of the Company: Mr. S.C. Ratnayake (Chairman), Mr. A.D. Gunewardene, Mr. J.R.F. Peiris, Mr. S. RajendraYear of Incorporation: 1966Principal Activities: Property Development and Real Estate OperationsCapital Structure: No. of Shareholders Issued Share Capital Holding Percentage (Rs. 000’s) (%) 2011 2010 2011 2010 2011 2010 9 9 75,000 75,000 32 32

Operating Performance: GrossTurnover ProfitbeforeTax No.ofEmployees (Rs. 000’s) (Rs. 000’s) 2011 2010 2011 2010 2011 2010 2,066 2,030 102,981 (1,827) 1 1

Group Structure


5

Business Environment Tea BrokingGlobal tea production in 2010 increased by 135 mil kgs, after a disappointing year in 2009. Tea exports worldwide reached a new high of 1,729 mil.kg, an improvement of 151 mil.kg. The Tea Industry in 2010 saw Production, Export Earnings and Sale Averages reaching all time record levels. Production improved by 14.3% over the previous year to reach 331.4 mil.kg. The national Tea Sale Average improved by 2.8%, whilst Export Earnings improved by 16% to US$ 1.37 billion. It is interesting to note that Kenya, which is the largest Tea exporter in the world, had a record harvest and the best ever export quantity but their export revenue was only US$ 859 million, a clear indication of the competitive advantage that Sri Lanka enjoys through value addition.

Rubber BrokingRubber production in Thailand and Indonesia suffered due to poor weather whilst the demand from China and India improved mainly from the automobile industry. These factors had a significant impact on our Rubber market where prices advanced well beyond expectations, with the Latex Crepe 1X grade reaching the Rs. 700 level. The Rubber industry being profitable during the past few years, there is more focus on growing rubber and production is increasing.

“OnbehalfoftheBoardofDirectors,Iampleasedtopresent to you the Annual Report for the year ended 31st March 2011.”

Susantha RatnayakeChairman

Chairman’s Message

TeaExportsofMajorProducingCountries

Sri

Lank

a (N

et) *

*

20092010

Mn. Kgs500

300

400

200

100

0

69.2 10

1.0

95.0

98.0

302.

930

2.4

47.9

50.8

22.2

25.446

.548

.692.3

87.1

3.0

1.0

200.

118

9.0

342.

544

1.0

280.

129

8.6

Ken

ya

Arg

entin

a

Chi

na

Vie

tnam

Uga

nda

Tanz

ania

Mal

awi

Indo

nesi

a *

Bang

lade

sh

Indi

a *

** Excludes Imported Tea* Includes Teas Imported & Re-Exported, Includes green Tea but excludes instant tea.

CropFiguresofMajorProducing&ExportingCountriesSr

i La

nka

(Net

) **

20092010

Mn. Kgs1,500

900

1,200

600

300

0

90.0

102.

0

154.

015

7.0

1,35

8.6

1,37

0.0

51.0

56.6

32.1

31.6

52.5

51.613

6.5

129.

2

60.0

59.2

979.

096

6.4

314.

239

9.0

289.

833

1.4

Ken

ya

Arg

entin

a

Chi

na

Vie

tnam

Uga

nda

Tanz

ania

Mal

awi

Indo

nesi

a *

Bang

lade

sh

Indi

a *


6

WarehousingWe continued to offer specialized high end warehousing and value added services to our clients. The quantity handled improved, in line with the increase in national production. As the warehousing rates were revised in the previous year, there was no upward revision in the year under review for either Tea or Rubber.

Stock BrokingThe post war bull run on the Colombo Stock Exchange continued over the last financial year with the All Share Price index increasing by 94% reflecting a more positive macro outlook and sound corporate earnings growth. Average daily turnover levels increased sharply to Rs. 2,693mn from Rs. 892mn in the previous financial year, largely due to a sharp rise in local retail participation. John Keells Stock Brokers benefited from the increased business volumes and recorded a significant improvement in performance particularly in the foreign segment, despite increased competition and several new entrants in the industry.

Financial PerformanceFor the year ended March 31st 2011, the Group achieved revenues of Rs. 1.06 billion ( Rs.0.848 b in 2010) with a net profit after tax and minority interest of Rs. 766 million (Rs.230 million in 2010) , these being increases of 25% & 233% respectively. The profit includes a gain from the change in fair value of investment property of Rs.383 million.

ConclusionI would like to thank all categories of staff for their excellent effort, as well as all other stakeholders for their contribution during the year. I am also grateful to the members of the Board for their guidance and support.

S.C. RatnayakeChairman

25th May 2011

Sri Lanka’s Yearly Tea Sale Averages

06Sri Lankan Rs.US $

Rs. $400 4

300 3

200 2

100 1

0 00807 09 10

199.

581.

92

310.

812.

86

360.

453.

13

370.

613.

28

279.

442.

52


7

IntroductionSri Lanka’s exports, particularly tea has played a vital role in the Nations economic and Social Development from the inception of its illustrious history. The commodity based product has made inroads as a significant contributor of Sri Lanka’s exports earnings, whilst this segment is also amongst the largest employers in the country.

Global supply has consistently out stripped demand, although the gap has narrowed in recent years. Moreover, prices have been moving in an upward trend in reaction to supply constrains, whilst stronger demand from emerging economies has also pushed up prices.

Sri Lanka scored a record treble in the Tea industry, with Production, Prices and Export earnings recording All Time highs. From the Global perspective, world tea output has gradually recovered from lower production as a result of erratic weather patterns and drought experienced across the major producing countries in 2009. The favorable weather conditions in 2010, particularly during the period January-September 2010 contributed to record production in two major black tea producing countries namely Kenya and Sri Lanka.

A new levy on tea exports of Rs.3.50 per kg was introduced by the government of Sri Lanka to raise funds exclusively for tea promotion

and marketing. The new levy on exports has been introduced to raise Rs.1 billion a year or 10 million US dollars. The Sri Lanka Tea Board plans to increase the share of value added tea exports to 65% from the current 41% within the next five years and boost total export revenue from tea to $ 5 billion by 2020 by increasing value added exports.

During the year many plantations were awarded the Rainforest Alliance Certification for sustainable production by conserving bio-diversity and ensuring sustainable livelihoods by transforming land use practices, business practices and consumer behaviours.

Tea prices are projected to remain high in all major producing countries due to an upsurge in world tea consumption. Significant increase in tea consumption in China and India due to strengthening of their economies will make a large contribution to the rise in world tea consumption despite world tea production being sluggish.

The F.A.O. Projects, world production of black tea to increase by 1.7% per annum until 2014, supported by healthier yields, growth is primarily expected to emanate from the African region.

Meanwhile, consumption is expected to be driven by imports into C.I.S. region along with domestic consumption in China and India.

Global TrendTeaSri Lanka’s tea production in 2010 was 331.4 Mkgs as against the previousbest of 318.7 Mkgs harvested in 2008. The most significant increase was in the Medium grown sector which increased by 25.01%, whilst the Low Grown sector increased 13.01% and High grown increased 8.27%.

Kenya the world’s leading tea exporters production of 399Mkgs saw an increase of almost 27% when compared to the previous year. Amongst the major tea producers, Sri Lanka, China, Vietnam and Kenya reported higher production whilst India registered lower production in 2010. Despite the increase, Sri Lanka ended 2010 on a positive note with a National Total Tea average at an All Time Record of Rs.370.61 per kg, compared with Rs.360.45 per kg recorded in 2009, which reflected a 3% increase. All elevations recorded positive gains with High grown, Medium grown and Low Grown elevations, increasing 5.7%, 5% and 1.5% respectively.

Chief Executive Officer’s Report


8

Due to the increased productioncoupled with high prices the gross turn over at the Colombo Auctions reached a record of Rs.118.7 billion, improving on last year’s Rs.102 billion, despite the rupee appreciating 3.1% against the dollar during the year, the Export value in both rupee and in dollars reached record levels.

World’s Exports for the year 2010 were recorded at 1,729 Mkgs, an increaseof 151 Mkgs over 2009. Kenya retained its position as the largest Tea Exporter in the world exporting a volume of 441 Mkgs. Sri Lanka was placed second with a volume of

314 Mkgs whilst, China came in 3rd with a volume of 302 Mkgs. There was a significant increase in Exports from Argentina with increases also from Vietnam, Uganda, Tunisia and Malawi, however there was a noteworthy decline from India, Bangladesh and Indonesia.

Quantity Sold at World Auction Centres (Million Kg)AuctionCentre

2006 2007 2008 2009 2010

Colombo 265.9 242.0 264.9 271.8 317.8Calcutta 134.2 133.4 139.3 151.6 154.5Guwahatti 118.2 152.7 152.3 138.5 130.4Siliguri 87.1 83.5 89.7 85.0 86.7Coonoor 37.4 37.7 50.6 44.7 50.0Coimbatore 23.3 23.7 28.1 25.6 21.1Cochin 53.7 57.9 61.6 55.1 64.2Chittagong 49.9 54.6 55.0 54.2 56.9Mombasa 281.7 344.3 303.2 279.4 348.1

RubberThere was an increased demand from Overseas Buyers for rubber, as the heavy rains and floods affected the production in major rubber producing countries. The National rubber production in Sri Lanka increased to 138,000 MT as reported by the Rubber Development Department. This is an increase of 1.3% when compared with the last year’s production.

Rubber Plantation Companies and Small Holders continued to enjoy the high prices that prevailed throughout the year for all grades of rubber. Some Local Industries had to cut down on their purchases due to high prices during the latter part of the year. In April 1X’s were selling at Rs.422.00 per kg and RSS.1 at Rs.432.00 per kg. By December 1X’s moved up to Rs.570.00 per kg, whilst RSS.1’s were selling at Rs.511.00 per kg. By the end of the financial year 1X’s were selling at Rs.595.00 per kg, whilst RSS.1’s moved up to Rs.544.00 per kg.

Producers have invested a part of their profits back to the rubber fields as they expect the prices to continue at these levels.

Local TrendsSri Lanka’s Tea Exports for the year 2010 was 314 Mkg, which was an increase of 8.6% over the previous year and net exports for the year amounting to 298.6 Mkgs. Russia and U.A.E retained their positions as the two largest export destinations for Ceylon Tea. Iran was placed third over Syria whilst Turkey remained in the 5th position. Export earnings for the year were a record of Rs.155.4 Billion.

Sri Lanka’s Tea Production 2009 - 2010

High Grown

Mn. Kgs 400

300

200

100

0Medium Grown

Low Grown

Total

20092010

72.3

79.1

44.3 56

.1

289.

8 331.

4

173.

219

6.2

Chief Executive Officer’s Report contd.


9

Operational ReviewTea BrokingYour Company continues to be one of the largest broking companies in Sri Lanka and once again established the highest number of Top Prices and Record Prices amongst brokers. The weekly price average of the Company reflected an attractive premium over the National Average. The Company continued to offer high end services to the producers and export clients.

YearlyElevationAverages(PerKg)High Grown Medium

GrownLow Grown Total

Rs US$ Rs. US$ Rs. US$ Rs. US$

2006 204.32 1.97 175.12 1.69 204.19 1.97 199.58 1.922007 252.46 2.27 242.35 2.18 298.66 2.69 279.44 2.522008 273.83 2.52 270.13 2.49 336.38 3.10 310.81 2.862009 319.73 2.78 316.06 2.74 387.70 3.37 360.45 3.132010 337.82 2.99 330.88 2.93 393.40 3.48 370.61 3.28

Rubber BrokingYour Company benefited by high rubber prices, as throughout the year prices continued to increase. The Company continued to offer high end services to the Producers as well as Exporters.

Real EstateThe revenue and PBT of the real estate arm increased during the year when compared with the previous year. The PBT increased by 697% during the current year and was mainly due to the increase in fair value of investment property, which is Rs. 383.7 Mn.

Best Corporate ReportsWe are pleased to inform you that your Company received a Certificate of Compliance Award at the Annual

Report Awards 2010. This competition is conducted by the Institute of Chartered Accountants of Sri Lanka and is held annually.

John Keells Warehousing (Pvt) Ltd. (100% Holding)

The tea arrivals during the year showed a substantial increase compared to the previous year. The utilization of the warehouse was around 80%.

Sustainability ReportingCorporate social responsibility and Sustainability

The group recognises that it exists not only to maximise long term shareholder value but also to look after the rights and appropriate claims of many non-shareholder groups such as employees, consumers, clients, suppliers, lenders, environmentalists, host communities and governments. The John Keells Foundation, the vehicle used by the group in developing and implementing the group’s involvement in ‘the community’ has geared itself to ensure that the social programmes of the group are consistent with the principles of sustainable development

ColomboAuctionAverages

2009Uva High GrownWestern High GrownHigh GrownUva MediumWestern MediumMedium GrownLow GrownTotal

Rs.400

300

200

100

02010

301.

93 329.

7632

1.28

327.

8530

9.97

316.

7938

8.44

362.

70

311.

21 349.

9333

7.82

335.

9632

7.53

330.

8839

3.40

370.

61


10

Risk ManagementManagement Programme where there is a continuous process for identifying, evaluating and managing the significant risks and stress-test for various risk scenarios. The significant Business risks to the company and its subsidiaries which could undermine the achievement of the Group’s business objectives are identified and the owners are appointed to mitigate these risks. The detailed Risk Management report of the Annual Report describes the process of risk management as adopted by the company and the key risks to the achievement of the group’s strategic business objectives.

Employee Relations Staff Wel-fare and Employee DevelopmentThe JKPLC HR unit is designed in a manner that enables high accessibility by any employee to every level of management. Constant dialogue and facilitation are also maintained, relating to work-related issues as well as matters pertaining to general interest that could affect employees and their families.

OmbudsmanAll employees of the Company have recourse to an Ombudsman appointed by our parent Company John Keells Holdings PLC (JKH). This is an appointment to further strengthen the governance structure and to encourage and facilitate all employees to live by JKH values

In conclusion, I wish to thank the Chairman and the Board of Directors, for their direction and guidance. My gratitude also goes to all categories of staff and our valued clients for their loyalty and support.

Sudath MunasingheCEO25th May 2011

Chief Executive Officer’s Report contd.


11

Board of Directors

Susantha RatnayakeNon Independent Non Executive Chaiman

Susantha Ratnayake who is currently the Chairman and CEO of John Keells Holdings PLC was appointed the Chairman of John Keells PLC in January 2006. He is a council member of the Employers’ Federation of

Ceylon, serves on various clusters of the National Council of Economic Development (NCED).He is also

Vice Chairman of the Ceylon Chamber of Commerce and Chairman of Sri Lanka Tea Board. He has over 33 years of

Management experience, all of which is within the John Keells Group.

AjitGunewardeneNon Independent Non Executive Director Ajit Gunewardene who is currently the Deputy Chairman of John Keells Holdings PLC was appointed Director of John Keells PLC in January 2001. He is a Director of many companies in the John Keells Group and is the Chairman of Nations Trust Bank PLC and Union Assurance PLC. He is a member of the Board of Nanco (Pvt) Ltd, a company established for the development of Nanotechnology in Sri Lanka under the auspices of the Ministry of Science and Technology. He has also served as the Chairman of the Colombo Stock Exchange. Mr. Gunewardene has a degree in Economics and brings over 27 years of Management experience.

Ronnie Peiris Non Independent Non Executive Director

Ronnie Peiris who is currently the Group Finance Director of John Keells Holdings PLC was appointed

Director of John Keells PLC in July 2005. Mr. Peiris has overall responsibility for Group Finance, including

Taxation, Corporate Finance, Treasury, Group Initiatives, Shared Services and the Information Technology

functions at the centre. He was previously the Managing Director of Anglo American Corporation (Central Africa)

Limited in Zambia.

He has over 39 years of Finance and General Management experience in Sri Lanka and abroad. He is a Fellow of the Chartered Institute of Management Accountants, UK, Association of Chartered Certified

Accountants, UK, and the Society of Certified Management Accountants, Sri Lanka and holds an MBA

from the University of Cape Town, South Africa. He is a member of the committee of the Ceylon Chamber of

Commerce, Chairman of its Taxation Sub Committee and also serves on its Economic, Fiscal and Policy Planning

Sub Committee.

Lallith Ramanayake Non Independent Executive DirectorLallith Ramanayake is the Head of the Plantation Services Sector and Head of the CSR Initiative of JKH and has been with the Group for nearly four decades. He has also served as the Head of the Transportation Sector during the period 2007 to 2009. He is a Member of the Chartered Institute of Marketing, UK with the Chartered Marketer status and holds an MBA from the Postgraduate Institute of Management, University of Sri Jayewardenapura. Lallith has been the Chairman of the Colombo Brokers’ Association, a Director of the Sri Lanka Tea Board, Deputy Chairman of the Tea Association of Sri Lanka and a Member of the Plantation/Tea cluster of the National Council for Economic Development, where he Chaired the Sub Committee which developed the National 10 year Plan for the Tea industry. He has served on the Executive Committee of the Ceylon Chamber of Commerce.


12

Sharmini Ratwatte Independent Non Executive DirectorSharmini Ratwatte was appointed as an Independent Non ExecutiveDirector to the Board of John Keells PLC in May 2007.

She is a Fellow of the Chartered Institute of Management Accountants, UK and also holds a Masters in Business Administration from the University of Colombo.

She holds Non-Executive Directorships in MAS Investments (Pvt) Ltd, the non- apparel investment arm of the MAS Group. Is a Trustee of Sunera Foundation, a non profit organization empowering differently-abled persons using the performing arts and Chairman of the Environmental Foundation Ltd, a non profit organization facilitating environmentally sustainable development in Sri Lanka.

DeshabanduTilakdeZoysa Independent Non Executive Director

Tilak de Zoysa was appointed as an Independent Non Executive Director to the Board of John Keells PLC in July

2005.

He was conferred with the title “Deshabandu” in recognition of his services to Sri Lanka and was the recipient of a

prestigious National Honour from the Emperor of Japan.

He is President of the Associated Motorways Group of Companies, Chairman of Carson Cumberbatch PLC, Amaya Hotels and Resorts, New York, USA , HelpAge International

UK, Helpage Sri Lanka, Jetwing Zinc Journeys Lanka Pvt Ltd and other listed companies, such as, John Keells PLC.,

Taj Lanka Hotels Ltd., Lanka Walltiles PLC., and Nawaloka Hospitals PLC. Tilak de Zoysa is the Honorary Consul

for Croatia in Sri Lanka since 1999 and a Past Chairman of the Ceylon Chamber of Commerce, National Chamber of

Commerce of Sri Lanka and the Plastics and Rubber Institute. Mr.De Zoysa also served as a Member of the Monetary Board

from 2003-2009.

Kavan Ratnayaka Independent Non Executive DirectorKavan Ratnayaka was appointed as an Independent Non Executive Director to the Board of John Keells PLC in July 2005. He is the Group Chief Corporate Officer of Dialog Axiata PLC, leading the group functions responsible for Human Resources, Legal & Regulatory, Corporate Communications and Corporate Sustainability.

Kavan holds a Bachelor of Science (Physics) from the University of California, and has 22 years experience in the field of Information and Communication Technologies. Prior to joining Dialog, he served as IBM’s Country General Manager for Sri Lanka. He has served in the past, on the Boards of the Arthur C. Clarke Institute for Modern Technologies, The Young Entrepreneurs of Sri Lanka (YESL) and The Sri Lanka Institute of Information Technology (SLIIT) and is a past President of the American Chamber of Commerce, Sri Lanka.

Yolande Hansen Independent Non Executive Director

Yolande Hansen was appointed as an Independent Non Executive Director to the Board of John Keells PLC, in July 2005. She joined John Keells Group (Walkers

Tours) in June 1972, as one of the pioneers in Tourism, and worked for 16 years for the Group. She then

joined a Multinational Tourism Conglomerate as their Representative in South Asia from 1988 until 1991,

subsequently forming Columbus Tours and presently serving as CEO. She is a Director of the Tourism Training

Institute of Sri Lanka.

Board of Directors contd.


13

Mr. L.D. RamanayakeExecutive Vice President/JKH – Sector Head

Mr. S.C. MunasingheVice President/Chief Executive Officer

Mr. R.H. Walpola Assistant Vice President/Head of Operations - Tea

Mr. S.A. JayewickremeAssistant Vice President/Head of Operations – (Warehousing)

Ms. T.A.M. De AlwisAssistant Vice President/Financial Controller

Mr. H.R.A. WanasingheHead of Manufacturing – Low Grown

Mr. D. DassanayakaHead of Manufacturing – High Grown

Mr. S. KarunaratneManager Tea

Ms. K. DaluwatteManager Tea

Mr. H. De MelManager Tea

Mr. R.S. IngramManager Finance

Mr.R.VannitambyManager Tea

Mr. S. MeegamaManager Rubber

Mr.P.S.N.RajapakseManager Manufacture

Mr. R.KotalawelaConsultant

Senior Management Team


14

Human ResourcesCategory Company Subsidiary Total

Directors 04 01 05VP 01 02 03AVP 02 02 04Managers 09 03 12Asst Managers 05 07 12Executives 25 19 44Clerical 18 01 19Minor Staff 20 00 20Total 84 35 119Casual/Contract 25 37 62

109 72 181

Age Company Subsidiary Total

50 – 60 yrs 25 01 2640 – 50 37 14 5130 -40 10 06 1620 -30 12 14 26

84 35 119

Years of Service Company Subsidiary Total

Over 20 years 36 05 4115 – 20 16 07 2310 – 15 10 00 1005 – 10 12 08 2000 – 05 10 15 25

84 35 119

Directors 2.78%VP 1.11%AVP 2.22%Managers 6.67%Asst Managers 6.67%Executives 24.44%Clerical 10.56%Minor Staff 11.11%Casual/Contract 34.44%

EmployeesStrength

50 – 60 yrs 22.03%40 – 50 42.37%30 -40 13.56%20 -30 22.03%

Age Analysis

Over 20 years 34.75%15 – 20 19.49%10 – 15 8.47%05 – 10 16.10%00 – 05 21.19%

Service Analysis


15

“John Keells is committed to protect the Slave Island Railway Station with its colonial architectural value in order to maintain this social, economical and commercial treasure.”

The Slave Island Railway Station, better known as the Kompanna Vidiya Railway Station, boasts of a magnificent structure which is larger more spacious than any other, and the colonial influence in architecture makes it truly special and superior to any other station in the country.

It remains an emblem of Victorian art, displaying stylish arches, intricate woodwork, neo-modern metal installations and the signature mixing of iron and stone, standing as a striking example of refined technology.

We undertook to refurbish and maintain the historic Slave Island Railway Station to retain this ‘social, economic and commercial treasure’, while preserving its colonial architectural value.

Corporate Social Responsibility

We also decided to maintain the Slave Island Railway Station since it is close proximity to our Glennie Street Head Office premises and also since it is one of the oldest legacies of our British Heritage.

Working on the basis that the station should not be just another amenity to the people who pass by, but more so, clean and user friendly, John Keells ensures daily maintenance of the station. Other aspects of renovation include the reconstruction of the overhead bridge with additional roofs to the two sides, which has proved to be immensely useful for commuters during the rainy seasons.In addition, all benches have been repaired and painted so that they could be fully utilized during peak hours, the ceiling at the main entrance and ticket counter fully redone, the building re-painted, and all necessary lights replaced, while the rest rooms in the station are also maintained on a regular basis, under this project as well, ensuring that there is a pleasant appearance on entering the station. The next phase will involve paving the concrete blocks and erecting a gate at the side entrance to facilitate the rush

hour workers. Station Master of the Slave Island Railway Station M.A.C. Gunawardene, said the facilities and appearance of the station has improved drastically as a result of this project

JKPLC hopes to continue maintaining the station at a high standard on a long-term basis.

JOHNKEELLSPROVIDES“VISION”Cataract is recognized as the primary cause of preventable blindness in Sri Lanka. The tragedy is that, in the majority of cases, it is curable. But ignorance of this fact or the inability to purchase the required lens leads most patients to risk progressive blindness.

With many of them being the breadwinners of their families, this situation more often than not could have an adverse impact on the social as well as economic situation of entire families.

The project has generated much interest among staff volunteers in spite of them being held on Sundays and holidays in remote parts of the country.One of the largest Eye Camp’s was organized by John Keells PLC spearheaded by Dasarath Dasanayake


16

and supported by the John Keells Foundation on 22nd September 2010 at Ettampitiya Eye Hospital. Ettampitiya is located approximately 16 km off Bandarawela in a rural area where people are mainly farmers living in difficult conditions with limited access to medical care. A total of 950 patients were screened, 70 patients were selected to undergo cataract operations while 132 patients were provided with spectacles. Many more patients that were identified with other vision related complications were referred to the Provincial General Hospital in Bandulla for special investigation and treatment.

The project was conducted with the support of volunteer eye specialists, fiancés of lences and post operative drugs under the guidance of the Eye Surgeon who has performed the most number of cataract operations for the John Keells Vision Project since its inception, Dr. P.B. Iddawela. He is the Consultant Eye Surgeon, Provincial

General Hospital Badulla. He has commented that “Working with John Keells on this project has been a great experience. I feel that the success of this project is mostly due to the trust built over the years, based on the objective of the project and regaining one’s sight is something amazing. I wish John Keells all success with regard to this admirable vision project.”Given the large number of disadvantaged and needy persons across Sri Lanka requiring cataract surgery, we intend to continue the John Keells Vision Project with renewed vigour and commitment well into the future.

JohnKellsre-launches‘EnglishLan-guage Scholarship Programme’John Keells PLC through John Keells Foundation supports the “English Language Scholarship Programme” with the intention of providing a basic foundation in English language

training for early teens. The John Keells Foundation re-launched its ‘English Language Scholarship Programme for 12 to 14 year-old school children. The inauguration of the programme for the first batch of students took place on 1st August 2010 at the Gateway Language Centre, Colombo, with 100 students located in and around Colombo receiving scholarships. The programme will be launched subsequently at Gateway Language Centres in Ampara, Anuradhapura, Batticaloa, Chilaw, Gampaha, Kurunegala, Matara and Ratnapura, with a total of 500 scholarships being awarded under the first intake. The

second intake of students is scheduled for October this year and will be conducted in Bandarawela, Galle, Habarana, Jaffna, Kandy, Negombo, Panadura, Trincomalee and Vavuniya. The second batch will also consist of 500 scholarships.The course focuses primarily on teaching English for daily use and basic interactions , helping students use familiar expressions and asking or answering simple questions. The programme is aimed at enhancing English language skills of school children across the island, to help improve their opportunities of higher learning and employability.

Corporate Social Responsibility contd.


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John Keells PLC, its subsidiaries John Keells Warehousing (Private) Limited and John Keells Stock Brokers (Private) Limited and associate company Keells Realtors Limited referred to as the “Group” through its ultimate parent company, John Keells Holdings PLC (JKH) has put in place a operating model to direct, manage and control the affairs of the Group in the best interests of the stakeholders ensuring greater transparency and timely financial reporting.

The Board of Directors is committed to the highest standards of business integrity, ethical values and professionalism in all its activities towards rewarding all its stakeholders with greater creation of value, year-on-year.

This philosophy has been institutionalised at all levels in the Group through a strong set of corporate values and a written code of conduct, that all employees, senior management and the Board of Directors are required to follow in the performance of their official duties and in other situations that could affect the group’s image. All the Group’s recognition schemes insist, as a minimum, that all nominees have lived the JKH values and the behaviour of the senior management of the Group, are monitored through an annual 360 degree feedback program.

The Group believes that the main source of its competitive advantage is the trust that the stakeholders place on the core values underlying its corporate activities.

The Corporate Governance philosophy practiced is in full compliance with the following and where necessary, any deviations as allowed by the relevant rules and regulations have been explained. • The Companies Act of 2007 and• The Listing rules of the Colombo Stock Exchange(CSE) (revised April 2011); and • The recommendations of the Code of Best Practice on Governance issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka to the extent that they are practicable.

The Corporate Governance framework• The board is responsible to shareholders to fulfill its stewardship obligations, in the best interest of the company and its stakeholders.

• Maximising shareholder wealth-creation on a sustainable basis while safe guarding the rights of multiple stakeholders.

• The methods we employ to achieve our goals are as important to us as the goals themselves.

• No one person has unfettered powers of decision making.

Corporate Governance• Building and improving stake holder relationships is an integral aspect of Board effectiveness and a responsible approach to business.

• Taking an active role in discuss ing with the relevant regulatory bodies the implementation of Governance Regulations, Accounting Standards, and Economic Reforms in Sri Lanka and other jurisdictions where the group has major business interests.

• Opting, when practical, for early adoption of best practice Gov ernance regulations and Accounting Standards

• Our resolve to maintain strong governance practices which present strong commercial advan tages especially through a low ering of our cost of capital as a result of the strengthened stakeholder confidence, particu larly the confidence of our inves tors, both institutional and individual

• The making of business decisions, and resource allocations, in an efficient and timely manner, within a framework that ensures trans parent and ethical dealings which are compliant with the laws of the country and the standards of governance our stakeholders expect of us.


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The Board Of DirectorsBoard composition

The Board of Directors of John Keells PLC as of the year end 31st March 2011 consists of 8 Directors comprising of the Chairman who is a non-executive non independent Director, two non-executive non independent Directors, four non-executive independent Directors and an executive Director.

The Board members have a wide range of expertise as well as significant experience in commercial and financial activities enabling them to discharge their governance duties in an effective manner.

All non-executive independent Directors listed below are considered independent in terms of the listing rules of the Colombo Stock Exchange. (a) Mrs. S T Ratwatte (b) Mr. T De Zoysa (c) Mrs. Y A Hansen (a) Mr. K D W Ratnayaka

All the above non-executive independent Directors, as listed above, have submitted a signed and dated declaration confirming their independence as per the listing rules of the Colombo Stock Exchange.

ConflictsofinterestandindependenceEach director has a continuing responsibility to determine whether he or she has a potential or actual conflict of interest arising from external associations, interests or personal relationships in material matters which are considered by the board from time to time.

Details of companies in which board members hold board or board committee membership is available with the company for inspection by shareholders on request. BoardresponsibilitiesanddecisionrightsThe Board of Directors retains full and effective control of the Company and its primary responsibilities are to provide strategic direction to the Company and its subsidiaries, monitor operational and management performance, determine policy and processes to ensure the integrity of the Group’s risk management and internal control environment The Board also ensures that the Group complies with all relevant laws, regulations and codes of business practices and communicates with stakeholders openly and promptly with substance.

Delegation of authorityThe Board of Directors has whilst reserving specific powers to itself such as approval of major capital expenditure, acquisitions, approval of strategic and operating plans and employment of key staff members, delegated the implementation of the strategic objectives decided by the Board to the Sector Head/ CEO and the Management Committee of the company and its subsidiaries. Directors’ responsibilities in relation to the Financial Statements, Compliance and internal control is indicated on page 42 of this report.

Supply of information All directors are fully briefed on important developments in the various business activities of the group. The directors have access to:

• external and internal auditors • experts and other external professional advisory services• senior managers under a structured arrangement • information as is necessary to carry out their duties and responsibilities effec tively and efficiently.

Nominees are requested to make known their various interests that could potentially conflict with the interest of the company.

Prior to Appointment Once Appointed During Board meetings

Once appointed to the board, all directors are expected to inform the board and obtain board clearance prior toAccepting any positionEngaging in any transaction that could create a potential conflict of interestAll NEDs are required to notify the Chairman of changes to their current board representations

Directors who have had an interest in a matter under discussion have Excused themselves from deliberations on the subject matterAbstained from voting on the subject matter. (Abstentions, where applicable, from board decisions, are duly minuted)

Corporate Governance contd.


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• periodic performance reports• information updates from management on topical matters, new regulations and best practices as relevant to the group’s businesses • the services of the company secretaries whose appointment and/or removal is the responsibility of the board

Chairman of the BoardThe Chairman is a non executive non independent Director. The Chairman conducts Board meetings ensuring effective participation from all Directors. The Chairman is responsible for providing leadership to the Board and ensuring that proper order and effective discharge of Board functions are carried out at all times by the Board members. The roles of the Chairman and the Chief Executive Officer (CEO) are separate with a clear distinction of responsibilities between them. The executive responsibility for the functioning of the company’s business including implementation of strategies approved by the Board and developing and recommending to the Board the business plans and budgets that support the company’s strategy has been entrusted to the CEO.

Board meetingsThe Board met 4 times during the year. The attendance at these meetings was as follows:

Name of Director No. of meetings attended

S. C. Ratnayake - Chairman 4/4A.D. Gunewardene 4/4J.R.F. Peiris 4/4L.D.Ramanayake 4/4T. de Zoysa 4/4K.D.W. Ratnayaka 3/4Ms.Y.A.Hansen 3/4Ms.S.T. Ratwatte 4/4

Tenure, retirement and re-electionAt each Annual General Meeting one third of the directors retire by rotation on the basis prescribed in the articles of association of the company and are eligible for re-election.

Any Director, who has been appointed to the Board during the year, holds office until the next AGM, when he/she is required to retire and be re-elected by the shareholders.

The re-election of Directors ensures that shareholders have an opportunity to reassess the composition of the Board. The names of the Directors’ submitted for re-election are provided to the shareholders in advance to enable them to make an informed decision on their election.

The retiring Directors’ eligible for re-election this year are mentioned in the notice of the AGM on page 87.

Remuneration Committee and PolicyThe Remuneration Committee of the Parent Company John Keells Holdings PLC functions as the remuneration committee of the Company and its subsidiaries as permitted by the Listing Rules of the Colombo Stock Exchange. The Remuneration Committee of John Keells Holdings PLC comprises three independent directors:

Mr. E.F.G. Amerasinghe – ChairmanMr. P.D. RodrigoMs. S.S. Tiruchelvam

The remuneration policy of the Group is formulated to attract and retain high calibre executives and motivate them to develop and implement the business strategy in order to optimise long term shareholder value creation.

The key principles underlying the remuneration policy of the Group are as follows:

All Executive roles across the JKH Group have been banded by an independent third party on the basis of the relative worth of the jobs.


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Compensation is set at levels that are competitive to enable the recruitment and the retention of high calibre executives in the identified job classes / bands - as guided by the best comparator set of companies from Sri Lanka

Compensation comprising of fixed (base) payments,short term incentives and long term incentives be tied to performance both individual and organizational.

Performance be measured annually on well defined objectives and matrices at each level-individual, business and group, thereby aligning shareholder interest through well established performance management system.

The more senior the level of management, the higher the proportion of the incentive component, thereby lower the proportion of the fixed (base) component of the total compensation.

As the seniority, and therefore the decision influencing capability of the position on organizational results, increases the individual performance to hold lesser weightage than the organizational performance when determining total compensation and incentives.

Details of Remuneration paid to Executive and Non Executive Directors are disclosed in note 21 to the Accounts.

AccountabilityAndAuditOperations planning, monitoring and decision rightsResponsibility for monitoring and achieving plans as well as ensuring compliance with Group policies and

guidelines rests with the Chief Executive Officers of the company and heads of functions at the business unit and function levels.

At the Sector Management level and above, the focus is more on headline financial and non-financial indicators, strategic priorities, risk management, use of IT as a tool of competitive advantage, new business development, continuous process improvements and human resource management.

Monitoringoffinancialdata:Actual financials are compared against the original plan and the reforecast on a monthly basis at Sector Committee, Management Committee and Departmental Committee levelsActual financials are reviewed at least quarterly by the Board.

Integrity of systems processes and inter-nal controlYour board has taken necessary steps to ensure the integrity of the company and its subsidiaries accounting and financial reporting systems, internal control systems and also the review and monitoring of such systems on a periodic basis. Our systems covering risk management, financial and operational control, ethical conduct, compliance with legal and regulatory requirements and corporate social responsibility are detailed below.

AuditCommittee,externalauditorsandindependenceA quarterly self certification programme requires the chief financial officers of industry-groups, heads of finance of sectors and finance managers of

operating units to confirm compliance with financial standards and regulations. The CEOs of business units are required to confirm operational compliance with statutory and other regulations and key control procedures, coupled with the identification of any deviations from the expected norms have significantly aided the committee in its efforts in ensuring correct financial reporting and effective internal control and risk management.

The detailed Audit Committee report including the areas reviewed during the financial year 2010/11 is found in the Board Committee report section of the Annual Report.

ExternalAuditorsErnst & Young are the External Auditors of the Company and its subsidiaries and also audit the Consolidated Financial Statements.

In addition to the normal audit services, Ernst and Young also provided certain non-audit services to the Company and its subsidiaries. However, the lead/consolidator auditor would not engage in any services which are in the restricted category as defined by the CSE for external auditors. All such services have been provided with the full knowledge of the respective Audit Committees and are assessed to ensure that there is no compromise of external auditor independence. The Board has agreed that, ideally, such non-audit services should not exceed the value of the total audit fees charged by the subject auditor within the relevant geographic territory. The External Auditor also provides a certificate of independence on an annual basis.



21

The audit and non-audit fees paid by the Company and its subsidiaries to our principal auditor, Ernst & Young, are separately classified in the Notes to the Financial Statements of the Annual Report.Care is taken to ensure that the internal audit function in Group companies is not outsourced to the external auditor of that company. The group attempts, where practical, to give preference to audit firms who are not external auditors of any group company, in carrying out internal audit work in a further attempt to ensure external auditor independence.

The Auditors’ report on the Financial Statements of the Company for the year under review is found in the Financial Reports section of the Annual Report.

System of internal controlYour board has, through the involvement of the Risk Review and Control department, taken steps to obtain assurance that systems designed to safeguard the company’s assets, maintain proper accounting records and provide management information, are in place and are functioning according to expectations. The risk review programme covering the internal audit of the company and its subsidiaries is outsourced and the reports arising out of such audits are, in the first instance, considered and discussed at the business/ functional unit levels and after review by the sector head of the industry group are forwarded to the relevant audit committee on a regular basis. Further, the audit committees also assess the effectiveness of the risk review process and systems of internal control on a regular basis. Follow-ups on internal audits are done on a structured basis.

Risk managementThe Company and its subsidiaries adopt the ultimate Parent Company’s Risk Management Programme where there is a continuous process for identifying, evaluating and managing the significant risks and stress-test for various risk scenarios. The significant Business risks to the Company and its subsidiaries which could undermine the achievement of the Group’s business objectives are identified and the owners are appointed to mitigate these risks. The detailed Risk Management report of the Annual Report describes the process of risk management as adopted by the Company and the key risks to the achievement of the Group’s strategic business objectives.

GoingconcernandfinancialreportingThe Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future. In the unlikely event that the net assets of the company fall below a half of shareholders funds, shareholders would be notified and an extraordinary resolution passed on the proposed way forward.

The going concern principle has been adopted in preparing the Financial Statements. All statutory and material declarations are highlighted in the Annual Report of the Board of Directors in the Annual Report. Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards (SLAS), including all the new standards introduced during the subject year, and International Accounting Standards (IAS), as applicable.

The Statement of Directors’ Responsibilities in relation to financial reporting is given in the Financial Reports section of the Annual Report. The Directors’ interests in contracts of the Company are addressed in the Annual Report of the Board of Directors.

The Directors have taken all reasonable steps in ensuring the accuracy and timeliness of published information and in presenting an honest and balanced assessment of results in the quarterly and annual Financial Statements. As discussed in the shareholder relations section of this note, all price sensitive information has been made known to the Colombo Stock Exchange, shareholders and the press in a timely manner and in keeping with the regulations.

Securities trading policyThe Parent company’s securities trading policy prohibits all employees and agents engaged by John Keells PLC who are aware of unpublished price sensitive information from trading in John Keells PLC shares or the shares of other companies in which the company presently has business interest.

EmployeeRelationsThe HR units are designed in a manner that enables high accessibility by any employee to every level of management. Constant dialogue and facilitation are also maintained, relating to work-related issues as well as matters pertaining to general interest that could affect employees and their families.


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WhistleblowerpolicyThe employees can report to the Chairman through a communication link named ‘Chairman Direct’, concerns about unethical behaviour and any violation of Group values. Employees reporting such incidents are guaranteed complete confidentiality and such complaints are investigated and addressed via a select committee under the direction of the Chairman.

OmbudsmanAll employees of the Company have recourse to an Ombudsman appointed by our parent Company John Keells Holdings PLC (JKH). This is an appointment to further strengthen the governance structure and to encourage and facilitate all employees to live by JKH values.The Ombudsman is to entertain complaints, from an employee or a group of employees, of alleged violations of the published Code of Conduct, when that employee or group of employees feel that an alleged violation has not been addressed satisfactorily using the available/existing procedures and processes.

The findings of the Ombudsman and recommendations arising there from shall be confidential and be communicated to the Chairman/CEO or the Senior Independent Director, where applicable, in writing and the Ombudsman’s duty will thereupon cease forthwith.

The Chairman/CEO or the Senior Independent Director, as the case may be, will place before the Board- I. the decision and the recommendationsII. action taken based on the recommendationsIII. where the Chairman/CEO or the Senior Independent Director disagrees with any or all of the findings and or the recommendations thereon, the areas of disagreement and the reasons therefore.

In situation (iii) the Board shall consider the areas of disagreement and decide on the way forward. The Chairman/CEO or the Senior Independent Director is expected to take such steps as are necessary to ensure that the complainant is not victimised for having invoked this process.

SHAREHOLDERRELATIONSConstructive use of AGMShareholders will have the opportunity at the forthcoming AGM, notice of which has been communicated to you, to put questions to the Board and to the Chairman. The contents of the Annual Report will enable existing and prospective Shareholders to make better informed decisions in their dealings with the Company and its Shareholders.

ComplianceThe Board is conscious of its responsibility to the Shareholders, The Government and the Society in which it operates and is unequivocally committed to upholding ethical behaviour in conducting its business. The Board strives to ensure that the Company complies with the laws and regulations of the Country.

The Board has also taken all reasonable steps to ensure all Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards, the requirements of the Companies Act No. 7 of 2007and other applicable authorities. The Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future.Accordingly, the going concern principle has been adopted in preparing the Financial statements.

The Sri Lanka Accounting Standards as set by the Institute of Chartered Accountants are those which govern the preparation of the Financial Statements. The Board is aware of the growing importance of the disclosure of critical accounting policies as a part of corporate governance and opine that there are no instances where the use of such a concept would have a material impact on the Company’s and the Group financial performance..

CorporateresponsibilityandSustain-abilityThe Group recognises that it exists not only to maximise long term shareholder value but also to look after the rights



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and appropriate claims of many non-shareholder groups such as employees, consumers, clients, suppliers, lenders, environmentalists, host communities and governments. The John Keells Founda-tion, the vehicle used by the Group in developing and implementing the Group’s involvement in ‘the community’ has geared itself to ensure that the social programmes of the Group are consistent with the principles of sustainable devel-opment.

Going ForwardThe Board is committed to its highest standards of Corporate Governance in order that the Company shall achieve its long term sustainable growth objectives. The Board is accountable to the Company’s shareholders for good

governance in the management of the affairs of the Company. The Board confirms that the Company has made every endeavour to comply with all the principles and provisions of the good Corporate Governance throughout the year ended 31 March 2011.

The Company’s approach to Corporate Governance enables it to understand the expectations of stakeholders, forecast trends in social, environmental and ethical requirements and to manage the Company’s performance in an appropriate manner.

While the Board is satisfied with its level of compliance with the governance requirements, it recognizes that practices and procedures can always be improved,

and there is merit in continuously reviewing its own standards. The Boards program of review will continue throughout the year ahead.

The following Chart sets out the Company’s adherence to the Corporate Governance Principles in a nutshell.

Rule No. Subject Applicablerequirement Compliance Status

ApplicableSectionintheAnnual Report

7.10.1(a) Non Executive Directors (NED)

Two or at least one third of the total number of Directors should be NEDs

Compliant Corporate Governance

7.10.2(a) Independent Directors (ID)

Two or one third of NEDs, whichever is higher, should be independent


7.10.2(b) Independent Directors

Each NED should submit a declaration of independence Compliant

Available with the Secretaries for review

7.10.3(a)Disclosure relating to Directors

The Board shall annually determine the independence or otherwise of the NEDsNames of IDs should be disclosed in the Annual Report (AR)

Compliant

Compliant

Corporate Governance

7.10.3(b) Disclosure relating to Directors

The basis for the Board’s determination of ID, if criteria specified for independence is not met

CompliantCorporate Governance

7.10.3(c) Disclosure relating to Directors

A brief resume of each Director should be included in the AR including the Director’s areas of expertise

CompliantBoard of Directors (profile) section in the Annual Report


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7.10.3(d) Disclosure relating to Directors

Provide a brief resume of new Directors appointed to the Board with details specified in 7.10.3(a), (b) and (c) to the CSE

Compliant

Corporate Governance and Board of Directors (profile) section in the Annual Report

7.10.4 (a-h)

Determination of Independence

Requirements for meeting criteria Compliant Corporate Governance

7.10.5 Remuneration Committee (RC)

A listed company shall have a RC Compliant Corporate Governance

7.10.5(a) Composition of Remuneration Committee

Shall comprise of NEDs, a majority of whom will be independent


7.10.5.(b) Functions of Remuneration Committee

The RC shall recommend the remuneration of the Chief Executive Officer (CEO) and EDs


7.10.5.(c) Disclosure in the Annual Report relating to Remuneration Committee

Names of Directors comprising the RCStatement of Remuneration PolicyAggregated remuneration paid to EDs and NEDs

CompliantCompliant

Compliant

Corporate Governance and the Board Committee Reports

7.10.6 Audit Committee (AC)

The Company shall have an AC Compliant Corporate Governance

7.10.6(a) Composition of Audit Committee

Shall comprise of NEDs a majority of whom will be IndependentA NED shall be appointed as the Chairman of the CommitteeCEO and Chief Financial Officer (CFO) should attend AC meetingsThe Chairman of the AC or one member should be a member of a professional accounting body

Compliant

Compliant

Compliant

Compliant




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7.10.6(b) Audit Committee Functions

Overseeing of the –Preparation, presentation and adequacy of disclosures in the Financial Statements in accordance with Sri Lanka Accounting StandardsCompliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirementsProcesses to ensure that the internal controls and risk management are adequate to meet the requirements of the Sri Lanka Auditing StandardsAssessment of the independence and performance of the External AuditorsMake recommendations to the Board pertaining to appointment, re-appointment and removal of External Auditors, and approve the remuneration and terms of engagement of the External Auditor

Compliant

Compliant

Compliant

Compliant

Compliant


7.10.6(c) Disclosure in Annual Report relating to Audit Committee

Names of Directors comprising the ACThe AC shall make a determination of the independence of the Auditors and disclose the basis for such determinationThe AR shall contain a Report of the AC setting out the manner of compliance with their functions

Compliant

Compliant

Compliant



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IntroductionJohn Keells PLC faces many challenges from the business environment from time to time that require continous evaluation and management of significant risks. The identification of such risks and the implementation of appropriate control measures and processes to manage them within a tolerable level have become extremely important to meet or exceed the expectations of our stakeholders. The comprehensive risk management framework practiced by us to identify, assess, manage and monitor the risks had allowed us to sustain our business and enhance our competitive advantage.

The Company and the subsidiaries have adopted the John Keells Group Risk Management Strategy which is an ongoing process of identifying risk (Risk Mapping), measuring the potential impact and likelihood thereof against a broad set of assumptions (Risk Action/Decisions), establishing unacceptable exposures and initiating mitigating activities to reduce exposures to within tolerance levels (Risk Control Strategies).

Risk management takes place as a bottom-up approach, as depicted below;

Risk Management ProcessThe Risk Management process has been designed to ensure identification of any situation or circumstance that would adversely effect the achievement of Group activities and to accept and manage unavoidable risks and to ensure surprise events or situations are minimized. This process is aligned directly to the Group strategy, annual plans and monitored by the Audit Committee. The Risk Management process is outlined as follows:

RiskIdentification This part of the process will identify the events or scenarios that could prevent the Group from achieving its set objectives.

Risk Management

John KeellsRisk Universe

Headline Risks

ExternalEnvironment

BusinessStrategies&Policies

BusinessProcess

Organisation&People

Analysis&Reporting

Technology&Data

Layer 4

Layer 3

JKH PLC Audit Committee

Group Executive Committee (GEC)

JK Group Review

Risk Report& Action

BU Review & Sector RiskReport and

Action

Layer 2

Layer 1

Group Operating Committee (GOC)

Sector Committee

Listed Company Audit Committee BU RiskReport &

Action

Report ContentOperational Units

• Risk Managem

ent Team• Risk&

Control Review

Team• Sustainability Integration

Business Unit


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RiskAssessmentandEvaluationThis is where it is determined whether the risk will have an ultra, high, moderate, low or insignificant impact on the operations of the Group. Also the likelihood of risk occurrence based on past experience as well as future projections are evaluated. The Group Risk Management team along with the Company’s functional and operational Managers carry out the risk assessment and evaluation process.

Risk Mitigation Action Plans Identified and evaluated risks areassigned to risk owners. Risk mitigation action plans will be developed with timelines for implementation by the risk owners along with the management of the Group. When the action plans are formulated, accepting and managing risk, transferring the risk to a third party, elimination of the risk by adopting an exit strategy, building controls into a process to reduce risk, sharing the risk with another party, and insuring against risks are considered.

Monitoring On a monthly basis the risk mitigation action plans will be monitored and reported to the Management Committee and Sector Meetings while on a quarterly basis these will be monitored and reported to the Audit Committee.

Risk Management team of the Company is headed by the CEO and comprise of functional and operational

managers. The Audit Committee of the Board receives regular reports regarding the Company risk profile, and mitigation activities. The Group risk & control review function also evaluates the risk mitigation procedures as a part of its audit programs. Some of the key risks that may hinder the achievement of our strategic business objectives are set below:

BusinessDue to the controlled environment in which Tea and Rubber Brokers operate; business risk may not be as large as in other industries. The risks can stem mainly from poor service performance and poor business ethics. The Company looks to perform beyond customer expectations by ensuring that the team of auctioneers and tasters are the best among brokers, by conducting weekly previews and reviews of the service levels including the exchange of market related information. Additionally, enterprise management and marketing advice and manufacturing advice are given to producer clients in order that estates are aligned to market requirements. The Company is identified by the Tea and Rubber trade for its high business ethics.

Production The Company is concerned with risk related to production and quality on account of changes to policies such as fertilizer subsidies and risk related to the perception of Ceylon tea that could have an impact and loss of critical export markets. Therefore, the Company is actively involved in lobbying with Government and other trade bodies to ensure that minimum standards are maintained as required.

Competition This relates to the loss of businesse to competition from Brokers who are not members of the Colombo Brokers Association resorting to unethical business practices. This is being addressed by lobbying with important authorities and conveying the importance for new entrants to be members of the Colombo Brokers Association.

Legal and Regulatory The Legal division of John Keells Group provides guidance, review and direction to safeguard the Group against exposure to material unexpected losses arising from the legal consequences of transactions it enters into.

The tax division of the Company regularly monitors, reviews and scrutinizes statutory returns submitted in respect of fiscal levies and taxes.


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Human Resource The success of our Company depends on the commitment, motivation and skills of our employees. The main human resource risks are the shortage of experienced and qualified personnel. The Company attempts to mitigate this risk by encouraging continuous education, providing relevant training and development opportunities, and fostering a culture where all employees, regardless of rank, can actively contribute to the business. During the year a formal succession plan for senior level staff was also developed.

Financial The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of mainly overdrafts and bank loans.

The Company deals with mostly recognized, credit worthy clients who are private Tea Factory Owners and Plantation Companies. Credit Risks are minimized as we advance funds based on inventories available in our warehouse valued at historical prices obtained for the relevant marks. Over advances granted are made available only for those clients who have a good track record and are monitored closely.

In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to Bad Debts is insignificant.

On short term advances, exposure to market risk for changes in interest rates is minimized, as the Companies Lending is above the borrowing rates.

Technology The Company operates in a fully computerized, networked environment. Thus, the organizational and technical measures needed to protect the confidentiality, availability and integrity of these systems and data becomes increasingly important. The company has invested in security infrastructure appropriate for our size and scale of operations and security procedures are constantly updated to take account of the latest knowledge and technical enhancements. Security regulations cover technical aspects as well as organizational measures including staff training, end user computer policies etc. The company has a fully fledged disaster recovery center in place and recovery plan is tested periodically and found to be satisfactory.

Risk Management contd.


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IntroductionThe Audit Committee is tasked with the responsibility of assisting the Board in fulfilling its overall responsibility to the shareholders and other stakeholders in relation to the integrity of the Group financial reporting process in accordance with the Company’s Act and other legislative reporting requirements including the adequacy of disclosures of the financial statements in accordance with the Sri Lanka Accounting Standards. The Audit Committee also has responsibility to ensure the internal controls of the Company and its subsidiaries are in compliance with legal and regulatory requirements. The Committee evaluates the performance and the independence of the Group internal as well as its external audit function.

Composition of the Audit CommitteeThe Audit Committee is a sub committee of the Board of Directors and consists of four independent non-executive Directors .The members of the Audit Committee are persons with expertise and ability in their respective fields and bring their collective business expertise to bear in the deliberations of the committee. There is a qualified Management Accountant on the Committee. The Financial Controller of the company serves as Secretary to the Committee.

Meetings of Audit CommitteeThe Audit Committee meets as often as deemed necessary or appropriate in its judgement, and at least quarterly each year. During the year under review, there were six meetings and attendance of the committee members is as given below:

Name of the Director Attendance PercentageDeshabandu Tilak de Zoysa 6 100K.D.W. Ratnayaka 5 83Ms.Y.A.Hansen 4 67Ms.S.T. Ratwatte 6 100

The Executive Director, Chief Executive Officer, Financial Controller and Finance Manager of the Company and Head of Group Risk & Control Review of John Keells Holdings PLC attend by invitation and briefed the committee on specific issues.

The External Auditors and the outsourced internal auditors also attend meetings when matters pertaining to their functions come up for consideration.

Terms of ReferenceThe Committee is governed by the specific terms of reference set out in the Audit Committee Charter. The terms of reference comply with and go beyond the requirements of the listing rules of the Colombo Stock Exchange.

Audit Committee ReportThe Committee focuses on the following objectives in discharging its responsibilities;

a) Risk Managementb) Efficacy of the system of internal controlsc) Independence and objectivity of the external (statutory) auditorsd) Appropriateness of the principal accounting policies usede) Financial statement integrity Summary of Activities• The Committee reviewed the consistency and appropriateness of the Accounting Policies adopted by the company and was assured that the policies used were appropriate and were in compliance with the Sri Lanka Accounting Standards. The committee reviewed and deliberated on policy updates on internal procedures to ascertain that improvements are aligned to best business practices.

• During the course of the year, the Committee reviewed the effectiveness of the internal financial controls to ensure that they provide reasonable assurance to the Directors that the financial reporting system adopted by the Group can be relied on in the preparation and presentation of the quarterly and Annual Financial Statements.

• The Committee obtained quarterly declarations from the Company and its subsidiaries confirming operational, financial and sustainability compliance with established group policies and procedures and highlighting departures, if any, together with reasons.


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• The Committee reviewed the External Auditors’ audit plan and met with the Auditors to discuss in particular matters relating to the co-operation, quality of information and representations received from the management. Such discussions also covered the internal rules and guidelines followed by the External Auditors in ensuring independence.

• During the course of the year, the Committee established processes, via a review of accounting ratios, movements and variances to obtain comfort on quarterly and Annual Financial Statements of John Keells PLC prior to recommending their adoption by the board.

• During the year as per the Audit Charter, an Audit Committee effectiveness self assessment has been introduced for the members of the Audit Committee.

Internal Audit, Risks and Control

The Internal Audit function has been outsourced to Ms. BDO Partners (Chartered Accountants). The audit plans and scope of work were formulated in consultation with the John Keells Group Risk & Control Review Division. In September 2010, the Risk & Control Review Division, recommended to the Audit Committee to shift the focus of Internal Audits from mere financial reviews to a more operational business assurance review. The new operating model has since been effectively implemented.

The Audit Committee has agreed with the outsourced internal auditors as to the frequency of audits to be carried out, the scope of the audit and the areas to be covered and the fee to be paid for their services.

The main focus of the internal audit was to provide independent assurance on the overall system of internal controls, risk management and governance by evaluating the adequacy and effectiveness of internal controls, and compliance with laws and regulations and established policies and procedures of the Company.

During the year, regular reports were received by the Committee from the Internal Auditors, which were reviewed and discussed with management and the Internal Auditors. The recommendations of the Internal Auditors have been followed up and implemented.

The Audit Committee has also reviewed the processes for the identification, evaluation and management of all significant risks faced by the Company. The most significant risks and the remedial measures taken to mitigate them have been reviewed with management and John Keells Group Sustainability Initiative team.

Formal confirmations and assurances have been received from senior management quarterly regarding the efficacy and status of the internal control systems and risks management systems, and compliance with applicable laws and regulations.

External AuditThe External Auditors of the company submitted a detailed audit plan for the financial year 2010/11, which specified amongst others “areas of special emphasis” which had been identified from the last audit or from a review of current operations. The areas of special emphasis had been selected due to the probability of error and the material impact it can have on the Financial Statements which were discussed by the Committee with the External Auditors and management prior to the commencement of the audit. Before the conclusion of the audit, the Audit Committee met with the External Auditors to discuss all audit issues of any matters of concern discovered in the course of the audit and agree on their treatment. During the year the committee also met with the External Auditors without presence of management.

Audit Committee Report contd.


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The Audit Committee is satisfied that the independence of the External Auditors has not been impaired by any event or services that gives rise to a conflict of interest. Due consideration has been given to the level of audit and non-audit fees received by the External Auditors from John Keells PLC and its subsidiaries and confirmation has been received from the External Auditors of their compliance with the independence criteria given in the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka.

The performance of the External Auditors have been evaluated and discussed with the Senior Management of the company, and the Audit Committee has recommended to the Board of Directors that Messrs. Ernst & Young be re-appointed as Auditors for the financial year ending 31st March 2012, subject to the approval of the shareholders at the next Annual General Meeting.

ConclusionBased on the reports submitted by the External Auditors and the Outsourced Internal Auditors of the company, the assurances and certifications provided by the senior management, and the discussions with management and the auditors both at formal meetings and informally, the Audit Committee is of the view that the control environment within the company is satisfactory and provides reasonable assurance that the financial position of the company is adequately monitored and that the affairs of the group are managed in accordance with group policies and that group assets are properly accounted for and adequately safeguarded.

DeshabanduTilakdeZoysaChairman, Audit Committee

25th May 2011

Other Members K.D.W.RatnayakaMs.Y.A.HansenMs.S.T.Ratwatte


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1870 Edwin John came to Ceylon, as the Island was then called, to join his brother George. Together, they established themselves as Produce and Exchange Brokers.

1876 A partnership styled “John Brothers and Company” was formed with officessituated in Colombo and Kandy.

1878 This partnership was dissolved and Edwin John started an establishment of his own titled “E. John” and carried on the business of produce and exchange broking. The first decade of business of E. John was one of low activity. Villers records this period thus, “Business in those days was very limited. Coffee had all but gone out, Tea had not expanded sufficiently and the little business in Chinchona was not enough to go around.” During this period, Reginald, son of Edwin John, joined his father in Ceylon.

1890 Prospects began to improve rapidly with the approaching tea business.

1895 Reginald John was taken into the partnership of E. John and Co. By this time, business was growing quite rapidly in tea, shares, oil and exchange.

1948 E. John and Co., amalgamated with two London Tea Broking firms, William Jas and Hy Thompson and Co. and Geo White and Co. The firm was then incorporated as a private limited liability company and the name was changed to E. John, Thompson, White and Co. Ltd.

1960 E. John, Thompson, White and Co. Ltd., amalgamated with Keells and Waldock Ltd. The name was changed to John Keells Thompson White Ltd. This Company had its office in the National Mutual Insurance Company building in Chatham Street. The first Chairman of the Company was Douglas Armitage and on his retirement he was succeeded by A.G.R. Willis. The Company acquired its Glennie Street premises from Dodwell and Company which was initially used as a warehouse.

1962 The firm moved to the sixth floor of the then newly constructed Ceylinco House

1966 The initial step towards diversification of the activities of the Company was taken with the acquisition of Ceylon Mineral Waters Ltd.,

1970 M.C. Bostock was elected Chairman of the Company.

1971 John Keells PLC., moved its offices to Glennie Street, Slave Island.

Historical Milestones


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1976 John Keells PLC., became a People’s Company.

1986 John Keells Holdings PLC, acquired the controlling interest of John Keells PLC., M.C. Bostock retired and D.J.M. Blackler took over as the Chairman of the Company.

1990 K. Balendra took over as Chairman, the first Sri Lankan to hold this position. John Keells PLC., acquired controlling interests in John Keells Stock Brokers (Pvt) Ltd.

1993 Financial Statements of the associates Keells Realtors Ltd., and International Tourists and Hoteliers Ltd. were incorporated to the Consolidated Accounts.

2000 K. Balendra retired as Chairman on 31st December, 2000.

2001 V. Lintotawela took over as Chairman on 1st January, 2001. John Keells PLC., incorporated John Keells Warehousing (Pvt) Ltd., a fully owned subsidiary with B.O.I. status.

2003 The state of the art warehouse of John Keells Warehousing (Pvt) Ltd., which is the largest hi-tech tea warehouse in this part of the region was commissioned for storing pre-auctioned produce.

2004 The Company disposed its Investment in International Tourists and Hoteliers Ltd.

2005 V. Lintotawela retired as Chairman on 31st December 2005 and S. Ratnayake took over as Chairman on 01st January 2006.

2007 The name of the Company was changed to John Keells PLC which is a new requirement of the Companies Act No. 7 of 2007.

2010 The Board of Directors at a meeting held on 20 th July 2010 resolved to increase the number of shares by way of a share sub -division in the ratio of one (1) share for every one (1) share held. Consequently, the no of shares after the sub -division increased to 30,400,000 shares from the current 15,200,000 shares.

24.73%Revenue Growth Rate for year 2010/2011

1,012mnProfitbeforetax2010/2011

25.19Rs.Earningspershare2010/2011

Financial ReportsAnnual Report of The Board of Directors 35 The Statements of Directors Responsibility 42Independent Auditor’s Report 43 Balance Sheet 44 Income Statement 45Statement of Changes in Equity 46 Cash Flow Statement 47 Notes to the Financial Statements 49 Statement of Value Added 78 Information to Shareholders and Investors 80 Five Year Summary 82 Key Ratios and Information 84 Glossary of Financial Terminology 86 Notice of Meeting 87 Form of Proxy 91


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The Directors have pleasure in presenting the 64th Annual Report of your Company together with the audited Financial Statements of John Keells PLC., and the audited Consolidated Financial Statements of the Group for the year ended 31st March, 2011.

GeneralThe Company was incorporated on 01st April 1960 as a Public Limited Liability Company and the issued shares of the Company are listed on the Colombo Stock Exchange. Pursuant to the requirements of the new Companies Act No. 7 of 2007, the Company obtained a new Company No. PQ 11 on 15th June 2008.

Principal ActivitiesCompanyThe principal activities of the Company remain unchanged as produce broking.

SubsidiariesJohn Keells Stock Brokers (Pvt) Limited continues to provide stock broking services.John Keells Warehousing (Pvt) Limited continues to provide warehousing facilities.

Business ReviewA review of the Group’s performance during the financial year is given in the Chairman’s Review and the Chief Executive Officer’s Report. These reports form and integral part of the Directors Report and provide a fair review of the performance of the Group during the financial year ended 31st March 2011.

Financial StatementsThe Financial Statements of the Company and the Group are set out on pages 44 to 77 of the Annual Report

Auditors’ ReportThe Auditors’ Report on the Financial Statements is given on page 43 of the Annual Report

Significant Accounting PoliciesThe Accounting Policies adopted in the preparation of the Financial Statements are given on pages 49 to 58 of the Annual Report. There were no changes in the Accounting Policies adopted in the previous year for the Company or the Group.

Going ConcernThe Board of Directors is satisfied that the Company, its subsidiaries and associate, have adequate resources to continue its operations in the foreseeable future. Accordingly, the Financial Statements are prepared based on the “Going Concern Concept”.

Stated CapitalThe total Stated Capital of the Company as at 31 March 2011 was Rs.152 mn (2010 - Rs. 152 mn).The Board of Directors at a meeting held on 20 th July 2010 resolved to increase the number of shares by way of a share sub -division in the ratio of one (1) share for every one (1) share held. Consequently, the no of shares after the sub -division increased to 30,400,000 shares from the previous 15,200,000 shares.

The Articles of the Company permits the sub- division of shares. The sub - division did not increase the Stated Capital of the Company.

RevenueRevenue generated by the Company amounted to Rs.490 mn (2010 - Rs. 491 mn), whilst Group revenue amounted to Rs.1,057 mn (2010 - Rs. 848 mn). Contribution to Group revenue, from the different business segments is provided in Note 18.2 to the Financial Statements on page 69.

Results And AppropriationsThe profit after tax of the Company was Rs.623 mn (2010 - Rs. 145 mn) whilst the Group profit attributable to equity holders of the parent Company for the year was Rs.766 mn (2010 - Rs. 230 mn).

Results of the Company and of the Group are given in the Income Statement on page 45 .

Annual Report of The Board of Directors


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DividendOn 17 June 2010, prior to the share sub-division, a final dividend of Rs10 per share (2010- Rs10.00) was paid for the financial year ended 31 March 2010.amounting to Rs.152 mn (2010 - Rs. 152 mn). Dividend per share has been computed based on the amount of dividends recognized as distribution to the equity holders during the period.

The Directors have recommended a First and Final Dividend of Rs.5.00 per share for the year ended 31st March 2011 from the profits available for appropriation. In accordance with the Sri Lanka Accounting Standards, events after the Balance Sheet Date, the proposed dividend has not been recognized as a liability as at 31st March 2011.

As required by Section 56 (2) of the Companies Act No 7 of 2007, the Board of Directors have, certified that the Company satisfies the solvency test in accordance with Section 57 of the Companies Act no 7 of 2007, and have obtained a certificate from the Auditors, prior to approving a First and Final Dividend of Rs. 5.00 per share for this year. The First and Final Dividend was paid on 13th May 2011 to those shareholders on the register as at 3rd May 2011.

Detailed description of the results and appropriations are given below.

GROUP COMPANYProfits 2010/2011 2009/2010 2010/2011 2009/2010 Rs. 000’s Rs. 000’s Rs. 000’s Rs. 000’s

After making provision for bad and doubtful debts and for all known liabilities and after providing for depreciation on fixed assets, the profit earned was 1,012,451 403,931 699,398 216,968 From which has to be deducted the provision for taxation of (197,515) (147,407) (75,975) (71,682)Leaving a net profit on ordinary activities after taxation of 814,936 256,524 623,423 145,286 From which the amount attributable to Minority Interest was (deducted) (49,209) (26,686) - - And after the balance brought forward from the previous year was added 968,937 891,099 787,363 794,077 The amount available for appropriation was 1,734,664 1,120,937 1,410,786 939,363

AppropriationsAnd an Interim Dividend of Rs. 5 /- per share paid for (2008/2009 ) on 24 th April 2009 - (76,000) - (76,000)First and Final Dividend of Rs. 10/- per share paid for 2009/2010 on 17 th June 2010 (152,000) (76,000) (152,000) (76,000)Leaving a balance to be carried forward to the next year of 1,582,664 968,937 1,258,786 787,363

Annual Report of The Board of Directors contd.


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DonationsTotal donations made by the Company and Group during the year amounted to Rs.1.7 mn (2010 - Rs. 2.1 mn) and Rs. 1.1 mn (2010 - Rs. 2.6 mn), respectively, of these, the donations to approved charities were Rs.0.05 mn (2010 - Rs. 0.6 mn) at Company and Rs.0.6 mn (2010 Rs. 1.1 mn) at Group. The amounts do not include contributions on account of John Keells Foundation initiatives.

The John Keells Foundation, which operates with funds contributed by each of the companies in the Group, handles most of the Group’s CSR initiatives and activities. The Foundation manages a range of programmes that underpin its key principle of acting responsibly in all areas of business to bring about sustainable development. The Company’s contribution to John Keells Foundation was Rs.2 mn (2010 Rs. 1.2 mn) and the Groups contribution was Rs.3 mn (2010 1.7 mn) respectively.

Property, Plant and EquipmentThe book value of property, plant and equipment as at the balance sheet date amounted to Rs.32 mn (2010 - Rs. 28 mn) and Rs.154 mn (2010 - Rs. 157 mn) for the Company and Group respectively.

Capital expenditure for the Company and Group amounted to Rs.13.1 mn (2010 - Rs. 2.4 mn) and Rs.21mn (2010 - Rs. 2.6 mn), respectively. Details of property, plant and equipment and their movements are given in note 2 to the Financial Statements on page 59 .

Market Value of Properities All properties classified as investment property were valued in accordance with the requirements of SLAS 40 (2005) Investment Property. The carrying value of investment property of the Company and Group amounted to Rs1,087 mn (2010 – Rs. 696 mn) and Rs.1,087 mn (2010 - Rs. 696 mn) respectively. The investment property was revalued by Mr. P.B. Kalugalagedra as at 31 March 2011.

Details of the valuation of investment property is provided in note 3 to the Financial Statements on page 61.The real estate portfolio of the Group as at 31 March 2011 is disclosed on page 61.

InvestmentsInvestments of the Company and the group in subsidiaries, associates, and other external investments amounted to Rs.172 mn (2010 - Rs. 172 mn) and Rs.102 mn (2010 - Rs. 68 mn), respectively. Detailed description of the long term investments held as at the balance sheet date, are given in note 5 to the Financial Statements on page 63 .

ReservesTotal Reserves as at 31 March 2011 of the Company and Group amounted to Rs. 1,363 mn (2010 - Rs. 891 mn) and Rs. 1,700 mn (2010 - Rs. 1,086 mn), respectively.

The movement and composition of the Capital and Revenue Reserves is disclosed in the Statement of Changes in Equity on page 46.

Events Occurring After the Balance Sheet DateThere have been no events subsequent to the Balance Sheet date, which would have any material effect on the Company or on the Group other than those disclosed in Note 28 to the Financial Statements on page 77.

Contingent Liabilities And Capi-tal CommitmentsThere have been no commitments or contingent liabilities other than those stated in note 25 on page 74 of the Annual report.

Human ResourcesThe number of persons employed by the Company and Group as at 31 March 2011 was 109 (2010 - 118) and 181 (2010 – 183), respectively.

The Group is committed to pursuing various HR initiatives that ensure the individual development of all our teams as well as facilitating the creation of value for themselves, the Company and all other stakeholders.

There were no material issues pertaining to employees and industrial relations in the year under review.


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Corporate GovernanceCorporate Governance practices and principles with respect to the management and operations of the Company is set out on page 17 of this report. The Directors confirm that the Company is in compliance with the relevant rules on Corporate Governance contained in the listing rules of the Colombo Stock Exchange

The Directors declare that:a) The Company has not engaged in any activities, which contravene laws and regulations

b) The Directors have declared all mate rial interest in contracts involving the Company and refrained from voting on matters in which they were materially interested

c) The Company has made all endeavours to ensure the equitable treatment of shareholders

d) The business is a going concern with supporting assumptions or qualifications as necessary and

e) The Directors have conducted a review of internal controls covering financial operational and compliance controls and risk management and have obtained a reasonable assurance of their effectiveness and successful adherence herewith.

Risk Management And Internal ControlThe Board confirms that there is an ongoing process for identifying, evaluating and managing any significant risks faced by the Group. Risk assessment and evaluation for each business unit takes place as an integral part of the annual strategic planning cycle and the principle risks and mitigating actions in place are reviewed regularly by the Board and the Audit Committee. The Board, through the involvement of the risk review and control department takes steps to gain assurance on the effectiveness of control systems in place. The Audit Committee receives reports on the results of internal control reviews and the Head of the Group Risk Review and Control Department has direct access to the Chairman of the Audit Committee.

Audit CommitteeThe following members of the Board serve on the Audit Committee.

T. De Zoysa - ChairmanK.D.W. RatnayakaMs. Y.A. HansenMs. S.T. RatwatteThe report of the Audit Committee is given on page 29 of the Annual report.

Remuneration CommitteeAs permitted by the Listing Rules of the Colombo Stock Exchange, the Remuneration Committee of John Keells Holdings PLC, the parent Company of John Keells PLC functions as the Remuneration Committee of the Company and subsidiaries. The remuneration committee of John Keells Holdings PLC comprises of three independent Directors.

E.F.G. Amerasinghe – ChairmanP.D. RodrigoMs. S.S. Tiruchelvam

The remuneration policy of the Company and its subsidiaries is detailed in the Corporate Governance Report on page 17 of the Annual Report.

Stock Market InformationAn ordinary share of the Company was quoted on the Colombo Stock Exchange at Rs. 185.20 as at 31st March 2011 (31st March 2010 – Rs 194.50). Information relating to public holding, earnings, dividend, net assets, market value per share and share trading is given in “Key Ratios and Information” on pages 84 to 85 and in the Shareholders Information Section on pages 80 to 81.

The Company endeavours at all times to ensure equitable treatment to all shareholders.



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Substantial Shareholdings The names of the twenty largest shareholders, the number of shares held and the percentages held are given on page 81 of the Annual Report. The distribution schedule of the shareholders and public holdings are disclosed on page 80 of the Annual Report.

DirectorateDuring the year, the Board of Directors of John Keells PLC consisted of eight Directors with wide commercial, academic knowledge and experience. The Directors profile is given on pages 11 of the Annual Report.

The Board of Directors of the Company and its subsidiaries as at 31 March 2011 is listed below.

Name of the Director John Keells PLC John Keells Stock Brokers (Private) Limited

John Keells Warehousing (Private) Limited

S.C. Ratnayake – Chairman √ √ √A.D. Gunewardene √ √ -J.R.F. Peiris √ √ √L.D.Ramanayake √ - √K.N.J. Balendra - √ -T. de Zoysa √ - -K.D.W. Ratnayaka √ - -Ms. Y.A. Hansen √ - -Ms. S.T. Ratwatte √ - -

Retirement of Directors By Rotation or Otherwise and Their Re-ElectionMr. A.D. Gunawardene and Ms. S.T. Ratwatte retire by rotation in terms of Article 83 Of the Articles of association of the company, and being eligible offer themselves for re-election.

Directors’ RemunerationDetails of the remuneration and other benefits received by the Directors are set out in page 70 of the Financial Statements.


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DIRECTORS’ and CEO’s ShareholdingsName of Director Number of shares

As at 31st March 2011 As at 31st March 2010S.C. Ratnayake Nil NilA.D. Gunewardene Nil NilJ.R.F. Peiris Nil NilL.D. Ramanayake Nil NilT. de Zoysa Nil NilK.D.W. Ratnayaka Nil NilMs. Y.A. Hansen Nil NilMs. S.T. Ratwatte Nil NilS.C. Munasinghe (CEO) Nil Nil

Interest RegisterThe Company maintains an Interests Register as required by the Companies Act No. 7 of 2007 and entries have been made therein.

As both subsidiaries of the Company are private companies which have dispensed with the requirement to maintain an Interest Register, this Annual Report does not contain particulars of entries made in the Interests Registers of subsidiaries.

Particulars of Entries in the Interests Registera) Interests In Contracts The Directors have all made a General Disclosure to the Board of Directors as permitted by S 192 (2) of the Companies Act No 7 of 2007 and no additional interests have been disclosed by any Director.

b) There have been no disclosures of share dealings as at 31st March 2011. c) Indemnities and Remuneration The board approved the payment to the Executive Director of the Company, L.D. Ramanayake of;• Short term variable incentives based on individual performance, organization performance and role responsibility based on the results of the financial year 2009/2010 paid in July 2010; and

• Long Term Incentive in the nature of ESOP in John Keells Holdings PLC dependant on the aforesaid performance rating, organizational rating and role responsibility as recommended by the Remuneration Committee of JKH the Holding Company of John Keells PLC in keeping with the Group Remuneration Policy.

Supplier PolicyThe Group applies an overall policy of agreeing and clearly communicating terms of payment as part of the commercial agreements negotiated with suppliers, and endeavors to pay for all items properly charged in accordance with these agreed terms. As at 31 March 2011, the trade and other payables of the Company and Group amounted Rs.68 mn (2010 - Rs. 58 mn) and Rs. 554 mn (2010 - Rs. 281 mn), respectively

Related Party TransactionsThe details of Related Party Transactions during the year are shown in Note 27 on page 75 and investments made in related parties are shown in note 5 on page 63.

Environmental ProtectionThe Group complies with the relevant environmental laws, regulations and endeavors to comply with best practices applicable in the country of operation.

Statutory PaymentsThe Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company and its subsidiaries, all contributions, levies and taxes payable on behalf of, and in respect of the employees of the Company and its subsidiaries, and all other known statutory dues as were due and payable by the Company and its subsidiaries as at the balance sheet date have been paid or, where relevant provided for, except as specified in Note 25.3 to the Financial Statements on page 74 , covering contingent liabilities.



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AuditorsMessrs Ernst & Young, Chartered Accountants, are willing to continue as Auditors of the Company, and a resolution proposing their reappointment will be tabled at the Annual General Meeting.

The Audit Committee reviews the appointment of the Auditor, its effectiveness and its relationship with the group, including the level of audit and non-audit fees paid to the Auditor.

A total amount of Rs. 1.7 mn (2010 – Rs. 1.2 mn) by the Company and Rs.2.4mn (2010 – Rs. 1.8 mn) by the group has been paid out as audit fees. The Auditors, do not have any relationship (other than that of an Auditor) with the Company or any of its subsidiaries.

Further details on the work of the Auditor and the Audit Committee are set out in the Audit Committee Report on page 29.

Annual ReportThe Board of Directors approved the Company and Consolidated Financial Statements on 25 th May 2011. The appropriate number of copies of this report will be submitted

to the Colombo Stock Exchange and to the Sri Lanka Accounting and Auditing Standards Monitoring Board.

Annual General MeetingThe Annual General Meeting will be held at the HR Auditorium, (Ground Floor) of John Keells Holdings PLC, No. 130, Glennie Street, Colombo 2, on 29th June, 2011 (Wednesday) at 10.00 a.m. The notice of the Annual General Meeting appears on page 87.

This Annual Report is signed for and behalf of the Board of Directors

Director Director Keells Consultants Private Ltd. Secretaries 25th May 2011


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The responsibility of the Directors, in relation to the Financial Statements, is set out in the following statement. The responsibility of the Auditors, in relation to the Financial Statements prepared in accordance with the provision the Companies Act No 7 of 2007, is set out in the Report of the Auditors.

The Financial Statements comprise of:

• A balance sheet, which presents a true and fair view of the state of affairs of the Company and its subsidiaries as at the end of the financial year and

• an income statement of income, which presents a true and fair view of the profit or loss of the company and its subsidiaries for the financial year; which comply with the requirements of the act.

The Directors are required to confirm that the, Financial Statements have been prepared:

• using the appropriate accounting polices which have been selected and applied in a consistent manner and material departures, if any, have been disclosed and explained and; • in accordance with the applicable Accounting Standards as relevant; and

• reasonable and prudent judgements and estimates have been made so that the form and substance of transactions are properly reflected; and • provides the information required by and otherwise comply with the Companies Act No 7 of 2007 and the Listing Rules of the Colombo Stock Exchange

The Directors are also required to ensure that the Company has adequate resources to continue in operation to justify applying the Going Concern basis in preparing these Financial Statements.

Further, the Directors have a responsibility to ensure that the Company maintains sufficient accounting records to disclose, with reasonable accuracy the financial position of the Company and its subsidiaries, and to ensure that the Financial Statements presented reflect the transparency of transactions and provide an accurate disclosure of the Company’s financial position and comply with the requirements of the Companies Act No 7 of 2007.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Company and its subsidiaries and in this regard to give proper consideration to the establishment of appropriate internal control systems with a view to preventing and detecting fraud and other irregularities

The Directors are required to prepare the Financial Statements and to provide the Auditors with every opportunity to take whatever steps and undertake whatever inspections they may consider to be appropriate to enable them to give their audit opinion.

Further, as required by Section 56(2) of the Companies Act. No. 7 of 2007, the Board of Directors have confirmed that the Company, based on the information available, satisfies the solvency test immediately after the distribution, in accordance with Section 57 of the Companies Act. No. 7 of 2007, and has obtained a certificate from the auditors, prior to declaring a First and Final Dividend of Rs. 5.00 per share for the year, which was paid on 13th May 2011.

As per the Companies Act the Board shall cause the Annual General Meeting Report to be sent to every shareholder of the Company not less than 15 working days before the date fixed for holding the Annual General Meeting.

The Directors are of the view that they have discharged their responsibilities as set out in this statement.

Compliance ReportThe Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company and its subsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and its subsidiaries, and all other known statutory dues as were due and payable by the Company and its subsidiaries as at the Balance Sheet date have been paid, or where relevant provided for. Except as specified in Note 25.3 to the Financial Statements covering contingent liabilities.

By Order of the Board

Keells Consultants (Private) LimitedSecretaries

25th May 2011

The Statements of Directors Responsibility


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Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLERS OF JOHN KEELLS PLC

Report on the Financial StatementsWe have audited the accompanying financial statements of John Keells PLC (“Company”), the consolidated financial statements of the Company and its subsidiaries which comprise the balance sheets as at 31 March 2011, the income statements, statements of changes in equity and cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial StatementsThe Management is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

OpinionIn our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31 March 2011 and the financial

statements give a true and fair view of the Company’s state of affairs as at 31 March 2011 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

In our opinion, the consolidated financial statements give a true and fair view of the state of affairs as at 31 March 2011 and the profit and cash flows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiaries dealt with thereby, so far as concerns the shareholders of the Company.

Report on Other Legal and Regula-tory RequirementsIn our opinion, these financial statements also comply with the requirements of Sections 151(2) and 153(2) to 153(7) of the Companies Act No. 07 of 2007.

Colombo.25th May 2011


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Balance Sheet

Group CompanyAs at 31st March 2011 2010 2011 2010 Note Rs.000’s Rs.000’s Rs.000’s Rs.000’s

ASSETSNon-Current AssetsProperty, Plant & Equipment 2 154,075 157,037 32,162 28,292Investment Properties 3 1,086,750 696,250 1,086,750 696,250Leasehold Property 4 43,469 44,558 - -Investments in Subsidiaries 5.1 - - 120,380 120,380Investments in Associate 5.2/5.3 74,640 40,457 24,000 24,000Other Investments 5.4 27,534 27,534 27,534 27,534Other Non Current Assets 6 26,647 19,713 16,060 11,481Deferred Tax Asset 7 2,983 3,192 - -Deposits With Colombo Stock Exchange 12,500 8,000 - - 1,428,598 996,741 1,306,886 907,937Current AssetsInventories 8 3,069 3,253 2,997 3,199Trade & Other Receivables 9 762,933 605,717 459,894 405,765Other Recoverables 2,794 2,752 2,794 2,752Amounts Due From Related Parties 27.1 14,552 23,129 14,552 23,193Short Term Investment 10.1 637,500 305,500 - -Cash and Bank 10.1 70,700 181,359 55,757 118,313 1,491,548 1,121,710 535,994 553,222Total Assets 2,920,146 2,118,451 1,842,880 1,461,159EQUITYANDLIABILITIESEquityAttributabletoEquityHoldersoftheParent Stated Capital 11 152,000 152,000 152,000 152,000Revenue reserves 12 1,699,964 1,086,237 1,362,786 891,363 1,851,964 1,238,237 1,514,786 1,043,363Minority Interest 13 79,893 47,964 - -TotalEquity 1,931,857 1,286,201 1,514,786 1,043,363Non-CurrentLiabilitiesInterest Bearing Loans & Borrowings 17 23,543 41,024 - -Deferred Tax Liabilities 14 37,853 63,772 33,926 51,605Retirement Benefit Obligations 15 57,060 50,764 39,337 37,833 118,456 155,560 73,263 89,438CurrentLiabilitiesTrade and Other Payables 16 553,724 281,419 67,679 58,397Income Tax Payable 111,729 86,087 35,618 33,862Amounts due to Related Parties 27.2 4,639 4,655 5,921 5,405Interest Bearing Loans & Borrowings 17 17,481 164,059 - 150,000Bank Overdrafts 10.2 182,260 140,470 145,613 80,694 869,833 676,690 254,831 328,358Total Equity and Liabilities 2,920,146 2,118,451 1,842,880 1,461,159

I certify that the Financial Statements have been prepared in compliance with the requirements of the Companies Act No.7 of 2007.

Financial Controller

The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by,

Director Director

The Accounting Policies and notes on pages 49 through 77 form an integral part of the Financial Statements.25th May 2011


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Income Statement

Group CompanyYear ended 31st March Note 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Revenue 18 1,057,863 848,144 489,609 490,621Cost of Sales (303,394) (256,641) (138,682) (152,791)Gross Profit 754,469 591,503 350,927 337,830Dividend Income 19.1 - 1,775 68,148 20,675Other Operating Income 19.2 44,556 23,909 4,227 2,295Distribution Expenses (16,895) (17,359) (10,706) (13,563)Administrative Expenses (152,989) (145,213) (73,935) (93,297)Finance Expenses 20 (33,364) (50,099) (22,983) (36,972)Share of Associate Company Profit 32,954 (585) - -Change in fair value of investment property 383,720 - 383,720 -Profit Before Tax 21 1,012,451 403,931 699,398 216,968Income Tax Expense 22 (197,515) (147,407) (75,975) (71,682)Profit for the Period 814,936 256,524 623,423 145,286

Attributableto:Equity Holders of the Parent 765,727 229,838 - -Minority Interest 49,209 26,686 - - 814,936 256,524 - -

Earning Per Share -Basic 23 25.19 7.56 Dividends Per Share -Gross 24 5.00 5.00 Figures in brackets indicate deductions.The Accounting Policies and notes on pages 49 through 77 form an integral part of the Financial Statements.


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Year ended 31st March Note Stated General Accumulated Total Minority TotalGroup Capital Reserve Profit Interest Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Balance as at 31 March 2009 152,000 117,300 891,099 1,160,399 21,278 1,181,677Net Profit for the year - - 229,838 229,838 26,686 256,524 Interim Dividend Paid - 2008/2009 - - (76,000) (76,000) - (76,000)Final Dividend Paid - 2008/2009 24 - - (76,000) (76,000) - (76,000)Balance as at 31 March 2010 152,000 117,300 968,937 1,238,237 47,964 1,286,201Net Profit for the year - - 765,727 765,727 49,209 814,936 Final Dividend -2009/2010 24 - - (152,000) (152,000) - (152,000)Dividends to Minority Shareholders - - - - (17,280) (17,280)Balance as at 31 March 2011 152,000 117,300 1,582,664 1,851,964 79,893 1,931,857

Stated General Accumulated TotalCompany Note Capital Reserve Profit Rs.000’S Rs.000’S Rs.000’S Rs.000’S

Balance as at 31 st March 2009 152,000 104,000 794,077 1,050,077Profit for the Period - - 145,286 145,286Interim Dividend Paid - 2008/2009 24 - - (76,000) (76,000)Final Dividend Paid - 2008/2009 - - (76,000) (76,000)Balance as at 31 March 2010 152,000 104,000 787,363 1,043,363Profit for the Period - - 623,423 623,423Final Dividend Paid - 2009/2010 24 - - (152,000) (152,000)Balance as at 31 March 2011 152,000 104,000 1,258,786 1,514,786

The Accounting Policies and notes on pages 49 through 77 form an integral part of the Financial Statements.

Statement of Changes in Equity


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CASHFLOWFROM/(USEDIN)OPERATINGACTIVITIESOperating Profit Before working Capital Changes (A) 618,965 464,211 281,808 249,722(Increase)/ Decrease in Inventories 184 (457) 202 (506)(Increase)/Decrease in Trade and Other Receivables (157,216) (133,137) (54,129) 32,523(Increase)/Decrease in Other Non Current Assets (6,934) 4,665 (4,579) 964(Increase)/Decrease Other Recoverables (42) 55 (42) 55(Increase) /Decrease in Amounts Due from Related Parties 8,577 (10,368) 8,641 (10,384)Increase/ (Decrease) in Amounts Due to Related Parties (16) 2,983 516 4,216Increase /(Decrease) in Trade and Other Payables 272,304 (60,972) 9,381 (241,548)Cash Generated from Operations 735,822 266,980 241,798 35,042

Finance Expenses Paid 20 (33,364) (50,099) (22,983) (36,972)Income Tax Paid (198,812) (63,586) (91,998) (57,271)Retirement Benefit Cost Paid 15 (2,399) (7,967) (895) (6,628)Retirement Benefit Cost (Net) Transferred 15 - 7,359 (3,275) 7,359Deposits made with Colombo Stock Exchange (4,500) 8,500 - -Net Cash Flows from/(Used in) Operating Activities 496,747 161,187 122,647 (58,470)

CASHFLOWSFROM/(USEDIN)INVESTINGACTIVITIESAcquisition of Property, Plant & Equipment 2 (21,078) (2,642) (13,140) (2,406)Addition of Investment Property (6,780) - (6,780) -Proceeds from Sale of Property, Plant & Equipment 2,891 - 2,891 -Interest Received 19.2 41,110 22,409 759 773Dividend Received 19.1 - 1,775 68,148 20,675Net Cash Flows from/(Used in) Investing Activities 16,143 21,542 51,878 19,042

Cash Flow Statement


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CASHFLOWSFROM/(USEDIN)FINANCINGACTIVITIESRepayment of Interest Bearing Borrowings 17 (164,059) (101,307) (150,000) (90,000)Proceeds from short term borrowings - 150,000 - 150,000Dividends Paid 24 (152,000) (152,000) (152,000) (152,000)Dividends Paid to Minority Shareholders’ (17,280) - - -Net Cash Flows (Used in) Financing Activities (333,339) (103,307) (302,000) (92,000)

NET INCREASE IN CASH AND CASH EQUIVALENTS 179,551 79,422 (127,475) (131,428)CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 10.3 346,389 266,967 37,619 169,047CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 10.3 525,940 346,389 (89,856) 37,619

(A)OperatingProfitBeforeworkingCapitalChangesProfit Before Tax 1,012,451 403,931 699,398 216,968

Adjustmentsfor - Associate company Share of Profit (32,954) 585 - -Depreciation 21 24,032 25,635 9,261 11,006Amotisation of Lease Charges 1,089 1,089 - -Change in fair value of investment property (383,720) - (383,720) -(Profit)/Loss on Sale of Property, Plant & Equipment (2,882) 14 (2,882) -Provision for Retirement Gratuity 15 8,695 7,042 5,675 6,224Interest Income 19.2 (41,110) (22,409) (759) (773)Investment Income 19.1 - (1,775) (68,148) (20,675)Finance Expenses 20 33,364 50,099 22,983 36,972 618,965 464,211 281,808 249,722

The Accounting Policies and notes on pages 49 through 77 form an integral part of the Financial Statements.

Cash Flow Statement contd.


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Notes to the Financial Statements

1. CORPORATE INFORMATION1.1 GeneralJohn Keells PLC. is a public limited liability company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. The registered office and principal place of business of the company is located at 130, Glennie Street, Colombo 2.

Ordinary shares of the Company are listed on the Colombo Stock Exchange.

In the Annual Report of the Board of Directors and in the Financial Statements, “the Company” refers to John Keells PLC. as the Holding Company and “the Group” refers to the companies whose accounts have been consolidated therein. The Financial Statements for the year ended 31 March 2011 were authorised for issue by the Directors on 25th May 2011.

The principal activities of the Group are stated in the Annual Report of the Board of Directors.

1.2. Basis of PreparationThe consolidated financial statements have been prepared on an accrual basis and under the historical cost convention unless stated otherwise.The consolidated financial statements are presented in Sri Lankan Rupees, which is the Group’s functional and presentation currency and all values are rounded to the nearest rupees thousand (Rs. ’000) except when otherwise indicated.

The significant accounting policies are being discussed in note 1.3 below.

Statement of complianceThe Balance Sheet, Statement of Income, Statement of Changes in Equity and the Cash Flow Statement, together with the Accounting Policies and notes (the ”Financial Statements”) have been prepared in compliance with the Sri Lanka Accounting Standards (SLAS) issued by the Institute of Chartered Accountants of Sri Lanka and the requirement of the Companies Act No. 7 of 2007.

Basis of consolidationThe Consolidated Financial Statements comprise the Financial Statements of the Company and its subsidiaries as at 31st March 2011. The Financial Statements of the subsidiaries are prepared in compliance with the Group’s Accounting Policies unless specifically stated.

All intra Group Balances, income and expenses and unrealized gains and losses and dividends resulting from Intra Group transactions are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition or incorporation, being the date on which the group obtains control and continue to be consolidated until the date that such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, which is 12 months ending 31 March, using consistent accounting policies. SubsidiariesSubsidiaries are those enterprises controlled by the parent. Control exists when the parent holds more than 50% of the voting rights or otherwise has a controlling interest. The total profits and losses for the period of the Company and of its subsidiaries included in consolidation and all assets and


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Notes to the Financial Statements contd.

liabilities of the Company and of its subsidiaries included in consolidation are shown in the consolidated income statement and Balance Sheet respectively.

Minority interest which represents the portion of profit or loss and net assets not held by the Group, are shown as a component of profit for the period in the income statement and as a component of equity in the consolidated Balance Sheet, separately from parent shareholders’ equity.

The consolidated cash flow statement includes the cash flows of the Company and its subsidiaries.

1.3 Accounting Policies1.3.1 Changes in Accounting PoliciesThe Accounting Policies adopted are consistent with those of the previous financial year.

Comparative informationPrevious years’ figures and phrases have been re-arranged, wherever necessary, to conform to the current year’s presentation.

1.3.2 Significant Accounting Judgements, Estimates And Assumptions The preparation of the Financial Statements of the Group require the management to make judgments, estimates and assumptions, which may affect the amounts of income, expenditure, assets, liabilities and the disclosure of contingent liabilities, at the end of the reporting period. In the process of applying the Group’s accounting policies the key assumptions made relating to the future and the sources of estimation at the reporting date together with the related judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Revaluation of property, plant and equipment and investment propertiesThe Group measures land and buildings at revalued amounts with changes in fair value being recognised in the statement of Equity. In addition , it carries its investment properties at fair value, with changes in fair value being recognised in the income statement. The Group engaged independent valuation specialists to determine fair value of Investment properties as at 31 March 2011.

For investment property valuation, the valuer has used valuation techniques such as market values and depreciated replacement cost method where there was lack of comparable market data available based on the nature of the property.

The determined fair values of investment properties are most sensitive to the estimated yield as well as the long term occupancy rate. The key assumptions used to determine the fair value of the investment properties, are further explained in Note 3.

Taxes Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. Accordingly based on such reasonable estimates the group establishes the provisions to be made during the financial year.

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available


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against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Contingent LiabilitiesContingent liabilities are possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the entity. All contingent liabilities are disclosed in note 25.3 to the Financial Statement in page 74 unless the possibility of an outflow of resources embodying economic benefit is remote.

Employee Benefit LiabilityThe employee benefit liability of listed company (JKPLC) is based on the actuarial valuation carried out by Messrs. Actuarial & Management Consultants (Pvt) Ltd., actuaries. The actuarial valuations involve making assumptions about discount rates and future salary increases. The complexity of the valuation, the underlying assumptions and its long term nature, a defined benefit obligation are highly sensitive to changes in these assumptions. The employee benefit liability of all other companies in the group is based on the gratuity formula in Appendix E of SLAS 16 - Employee Benefits. All assumptions are reviewed at each reporting date. Details of the key assumptions used in the estimates are contained in Note 15 on page 67.

Deferred tax asset / liabilityDeferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the tax losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with the future tax planning strategy. Deferred tax assets and liabilities are computed based on the revised income tax rate of 28% or relevant concessionary rates as announced in the recent budget proposals and the movement in the deferred tax assets and liabilities due to change in applicable rate have been charged to the income statement in the current year.

1.4 Summary of Significant Accounting Policies1.4.1 Investment in an associateAssociates are those investments over which the Group has significant influence and holds 20% to 50% of the equity and which are neither subsidiaries nor joint ventures of the Group.

The Group ceases to use the equity method of accounting on the date from which it no longer has significant influence in the associate.Associate company of the Group which has been accounted for under the equity method of accounting is :Keells Realtors Ltd

The Associate is incorporated in Sri Lanka. The investments in associate is carried in the Balance Sheet at cost plus post acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the income statement.


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The income statement reflects the share of the results of operations of the associate. Any changes recognised directly in the equity of the associate, the Group recognises its share and discloses this, when applicable in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The Group ceases to recognize further losses when the Group’s share of losses in an associate equals or exceeds the interest in the undertaking, unless it has incurred obligations or made payments on behalf of the entity.

The Accounting Policies of associate companies conform to those used for similar transactions of the Group.

Equity method of accounting has been applied for associate Financial Statements using their respective 12 month financial period.

The reporting date of the Associate is the same as that of the other companies in the Group which is 31 st March .

1.4.2 Tax(a) Current taxCurrent tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the Balance Sheet date

(b) Deferred taxDeferred tax is provided using the liability method on temporary differences at the Balance Sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, and associates where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, and unused tax credits and tax losses carried forward, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the unused tax credits and tax losses carried forward can be utilized except:

where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and·

in respect of deductible temporary differences associated with investments in subsidiaries and associates deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.


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The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each Balance Sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at tax rates that are expected to apply to the year when the asset is realised or liability is settled, based on the tax rates and tax laws that have been enacted or substantively enacted as at the Balance Sheet date.

Income tax relating to items recognized directly in equity is recognized in equity and not in the income statement.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority.

(c) Sales taxRevenues, expenses and assets are recognised net of the amount of sales tax except:

where the sales tax incurred on a purchase of a assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; andreceivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. 1.4.3 Property, plant and equipment(a) CostProperty, Plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment in value.

Land and buildings are measured at fair value less depreciation on buildings and impairment charged subsequent to the date of the revaluation.

The carrying values of property plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Item of property, plant and equipment are derecognized upon replacement, disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised.

(b) DepreciationDepreciation is calculated by using a straight-line method on the cost or valuation of all property, plant and equipment, other than freehold land, in order to write off such amounts over the estimated useful economic life of such assets.


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The estimated useful life of assets is as follows: Building on Leasehold Land Over 50 yearsPlant and machinery Over 10 yearsOffice Equipment Over 6 YearsFurniture and fittings Over 8 YearsMotor vehicles Over 5 yearsComputer Equipment - Hardware Over 5 Years - Software Over 3 yearsOthers Over 5 years

The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year end.

Upon major inspection, the cost is recognised in the carrying amount of the plant and equipment if the recognition criteria are satisfied.

1.4.4 Leases Operating LeasesLeases where the lessor effectively retains substantially all the risk and benefits of ownership over the leased term are classified as Operating Leases. Rentals paid under operating leases are recognised as an expenses in the Income Statement on a straight – line basis over the lease term.

1.4.5 Leasehold propertyPrepaid lease rentals paid to acquire land use rights are amortised over the lease term in accordance with the pattern of benefits provided. Leasehold property is tested for impairment annually and is written down where applicable. The impairment loss if any, is recognised in the income statement.

1.4.6 Investment propertiesInvestment properties are measured initially at cost. The carrying value of an investment property includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and, excludes the costs of day to day servicing of the investment property. Subsequent to initial recognition the investment properties are stated at fair values, which reflect market conditions at the Balance Sheet date.

Gains or losses arising from changes in fair value are included in the income statement in the period of derecognition.

Investment properties are derecognised when disposed, or permanently withdrawn from use because no future economic benefits are expected. Any gains or losses on retirement or disposal are recognised in the income statement in the year of retirement or disposal.Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.


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Where group companies occupy a significant portion of the investment property of a subsidiary, such investment properties are treated as property, plant and equipment in the consolidated financial statements, and accounted using group accounting policy for Property, Plant and Equipment.

1.4.7 Equity investmentsAll quoted and unquoted securities, which are held as non-current investments, are valued at cost. . The cost of investment is the cost of acquisition inclusive of brokerage and costs of transaction. The carrying amounts of long term investments are reduced to recognise a decline which is considered other than temporary, in the value of investments, determined on an individual investment basis.

In the Company’s Financial Statements, investments in subsidiaries and associate companies have been accounted for at cost, net of any impairment losses which are charged to the income statement. Income from these investments are recognised only to the extent of dividends received.

1.4.8 Impairment of assetsThe Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an assets cash generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses are recognised in the income statement, except that, impairment losses in respect of property, plant and equipment are recognised against the revaluation reserve to the extent that it reverses a previous revaluation surplus.

An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that 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, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount , less any residual value, on a systematic basis over its remaining useful life. Impairment loss on goodwill is not reversed.

1.4.9 InventoriesBuilding materials, consumables and spares are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow moving items. Net realisable value is the estimated selling price less estimated costs of completion and the estimated costs necessary to make the sale.

The costs incurred in bringing inventories to its present location and condition, are accounted for as follows:

Raw materials - On a weighted average basis Other inventories - At actual cost


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1.4.10 TradeandotherreceivablesTrade and other receivables are stated at the amounts they are estimated to realise, net of provisions for bad and doubtful receivables.

A provision for doubtful debts is made when the debt exceeds 180 days, and collection of the full amount is no longer probable. Bad debts are written off when identified.

1.4.11 Short-term investmentsTreasury bills and other interest bearing securities held for resale in the near future to benefit from short-term market movements are accounted for at cost plus the relevant proportion of the discounts or premiums.

1.4.12 Cash and cash equivalentsCash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short term deposits with a maturity of 3 months or less, net of outstanding bank overdrafts.

1.4.13 Defined benefit plan - gratuityThe liability recognized in the Balance Sheet is the present value of the defined benefit obligation at the Balance Sheet date using the projected unit credit method. Any actuarial gains or losses arising are recognised immediately in the income statement.

1.4.14 Definedcontributionplan-Employees’ProvidentFundandEmployees’TrustFundEmployees are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund contributions in line with respective statutes and regulations. The companies contribute the defined percentages of gross emoluments of employees to an approved Employees’ Provident Fund and to the Employees’ Trust Fund respectively, which are externally funded.

1.4.15 Provisions, contingent assets and contingent liabilitiesProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

All contingent liabilities are disclosed as a note to the Financial Statements unless the outflow of resources is remote.

Contingent assets are disclosed, where inflow of economic benefit is probable.

1.4.16 Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group, and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and value added taxes, after eliminating sales within the Group.The following specific criteria are used for recognition of revenue:

(a) Brokerage IncomeBrokerage Income is recognised on an accrual basis on the contractual date. Brokerage Income in respect of forward sales contracts are recognised at the point of delivery of goods.


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(b) Rendering of servicesRevenue from rendering of services is recognised by reference to the stage of completion.

(c) DividendDividend income is recognised on a cash basis.

(d) Interest incomeInterest income is recognized as interest accrues.

(e) Rental incomeRental income is recognised on an accrual basis over the term of the lease.

(f) Gains and lossesNet gains and losses of a revenue nature arising from the disposal of property, plant and equipment and other non-current assets, including investments, are accounted for in the income statement, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.

Gains and losses arising from activities incidental to the main revenue generating activities and those arising from a group of similar transactions, which are not material are aggregated, reported and presented on a net basis.

(g) Other incomeOther income is recognised on an accrual basis.

1.4.17 Expenditure recognitionExpenses are recognised in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the property, plant and equipment in a state of efficiency has been charged to the income statement.

For the purpose of presentation of the income statement, the “function of expenses” method has been adopted, on the basis that it presents fairly the elements of the company and group’s performance.

1.4.18 Borrowing costsBorrowing costs are recognised as an expense in the period in which they are incurred, unless they are incurred in respect of qualifying assets in which case it is capitalised.

1.5 Segment Information1.5.1 Reporting segmentsThe Group’s internal organisation and management is structured based on individual products and services which are similar in nature and process and where the risk and return are similar. The primary segments represent this business structure.

Since the individual segments are located close to each other and operate in the same industry environment, catering to clientele from the same geographical location, the need for geographical segmentation does not arise.

1.5.2 Segment informationSegment information has been prepared in conformity with the Accounting Policies adopted for preparing and presenting the Consolidated Financial Statements of the Group.


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1.6 Effect Of Sri Lanka Accounting Standards (SLAS) Issued But Not Yet EffectiveThe following standards have been issued by the Institute of Chartered Accountants of Sri Lanka.

Sri Lanka Accounting Standard 44 Financial Instruments; Presentation (SLAS 44)Sri Lanka Accounting Standard 45 Financial Instruments; Recognition and Measurement (SLAS 45)Sri Lanka Accounting Standard 39 Share Based Payments (SLAS 39)

The effective date of SLAS 44, 45 and 39 was changed during the year to be effective for financial periods beginning on or after 01 January 2012. These three standards have been amended and forms a part of the new set of financial reporting standards mentioned below.

Following the convergence of Sri Lanka Accounting Standards with the International Financial Reporting Standards, the Council of the Institute of Chartered Accountants of Sri Lanka has adopted a new set of Financial Reporting Standards that would apply for financial periods beginning on or after 01 January 2012. The application of these Financial Reporting Standards is substantially different to the prevailing standards.

Due to the complex nature of the effects of these standards the impact of adoption in the period of initial application cannot be estimated as at the date of publication of these Financial Statements.


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2 PROPERTY, PLANT & EqUIPMENT2.1 At Cost

Balance Additions Disposals Balance as at as at 01.04.2010 31.03.2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’S GROUP Building on Leasehold Land 121,186 - - 121,186Plant & Machinery 95,269 628 - 95,897 Furniture & Fittings 88,345 4,527 (123) 92,749 Motor Vehicles 11,840 7,320 (2,000) 17,160 Computer Equipment 42,946 3,994 (1,683) 45,257Office Equipment 4,449 842 (742) 4,549 Others 12,612 1,270 - 13,882 Computer Software 4,223 2,497 - 6,720Total Value of Assets 380,870 21,078 (4,548) 397,400

2.2 Depreciation

Balance Additions Disposals Balance as at as at 01.04.2010 31.03.2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

At Cost Building on Leasehold Land 18,618 2,362 - 20,980Plant & Machinery 73,071 6,310 - 79,381Furniture & Fittings 69,090 9,268 (114) 78,244Motor Vehicles 8,728 1,379 (2,000) 8,107Computer Equipment 39,902 1,721 (1,683) 39,940Office Equipment 3,635 295 (742) 3,188Others 8,092 1,889 - 9,981Computer Software 2,697 807 - 3,504Total Depreciation 223,833 24,031 (4,539) 243,325


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2.3 Net Book Value of Assets

2011 2010 Rs.000’s Rs.000’s

At Cost 154,075 157,037Total carrying amount of Property, Plant & Equipment 154,075 157,037

Company2.4 At Cost


Plant & Machinery 64,154 628 - 64,782Furniture & Fittings 35,369 4,032 (123) 39,278Motor Vehicles 11,840 7,320 (2,000) 17,160Computer Equipment 29,944 788 (1,683) 29,049Office Equipment 1,830 55 (742) 1,143Others 10,279 317 - 10,596Total Value of Assets 153,416 13,140 (4,548) 162,008

2.5 Depreciation


At CostPlant & Machinery 52,351 3,199 - 55,550Furniture & Fittings 26,375 2,766 (114) 29,027Motor Vehicles 8,728 1,379 (2,000) 8,107Computer Equipment 28,787 546 (1,683) 27,650Office Equipment 1,750 35 (742) 1,043Others 7,133 1,336 - 8,469Total Depreciation 125,124 9,261 (4,539) 129,846



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2.6 Net Book Value of Assets

2011 2010 Rs.000’s Rs.000’s

At Cost 32,162 28,292Total carrying amount of Property, Plant & Equipment 32,162 28,292

3 . INVESTMENT PROPERTIES Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

At the beginning of the year 696,250 696,250 696,250 696,250Fair value as of 1 April 696,250 696,250 696,250 696,250Additions 6,780 6,780Change in fair value during the year 383,720 - 383,720 -At the end of year 1,086,750 696,250 1,086,750 696,250

3.1 The details of Investment Properties of the company are disclosed below.

Owner Company/Location Area (Bldgs.) Land in Acres Valuation Date Name of Sq.Ft. F/hold L/hold (Rs000’s) Valuer

John Keells PLC 122,338 1.78 0.58 1,011,500 31/03/11 Mr P B130,Glennie Street, KalugalagederaColombo 2 (Chartered Valuer)

50, Minuwangoda Road , 2.64 - 74,000 31/03/11 Mr P B Ekala, Ja- Ela Kalugalagedera (Chartered Valuer)

58, Kirulapone Avenue . 0.08 - 1,250 31/03/11 Mr P B Colombo 6 Kalugalagedera (Chartered Valuer)


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Investment Properties are stated at fair value which has been determined based on a valuation performed by Mr P. B Kalugalagedera, Chartered Valuer, using the Open Market Value Method of valuation as at 31 March 2011.

Rental income earned from investment properties by the Company amount to Rs 89,556,969/-(2010 - Rs.85,596,126/-)Direct operating expenses incurred amounted to Rs 27,797,187/- (2010 -Rs.29,868,289/-).

4. LEASEHOLD PROPERTY 4.1 Summary

Group 2011 2010 Rs.000’s Rs.000’s

Balance as at 1st April 44,558 45,647Amortised during the year (1,089) (1,089)Balance as at 31st March 43,469 44,558

4.2 Amortisation of Leasehold Property

MuturajawelaLand Rs.000’s

To be amortised in 2011 1,089To be amortised from 2012 - 2016 5,445To be amortised from 2017 - 2052 36,935 43,469

John Keells Warehousing (Pvt) Ltd has entered into a 50 year lease agreement with the Sri Lanka Land Reclamation and Development Corporation to lease a land in Muthurajawela for a total lease rent of Rs 54,450,000/-. The total lease liability was paid off during 31/03/2005. The total pre-paid lease rentals are being amortised over the lease period of 50 years.

4.3 Details of Leasehold Land as at 31 st March 2011 LeaseholdProperty ExtendofLand PeriodofLease AnnualRental Rs 000’s

John Keells PLC A - R - P RsLand facing the Beira Lake at 130, Glennie Street Colombo 2 2 12 64 Annual 12,771/-

John Keells Warehousing (Pvt) LtdLand at Muthurajawela 43,469 6 - - Ending 2052 1,089,000/-



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5. LONG TERM INVESTMENTS Summary

Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Investments in Subsidiaries (5.1) - - 120,380 120,380Investments in Associates (5.2) & (5.3) 74,640 40,457 24,000 24,000Other Investments (5.4) 27,534 27,534 27,534 27,534Total Investments 102,174 67,991 171,914 171,914

5.1 Investment in Subsidiaries

2011 2010 No. of shares Holding Cost Directors’ Cost Directors’ 2011 2010 % Valuation Valuation Non-Quoted 000’s 000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

John Keells Warehousing (Pvt) Ltd. 12,000 12,000 100% 120,000 120,000 120,000 120,000John Keells Stock Brokers (Pvt) Ltd. 570 570 76% 380 380 380 380 120,380 120,380 120,380 120,380

5.2 Investments in Associate - Company

2011 2010 No. of shares Holding Cost Directors’ Cost Directors’ 2011 2010 Valuation Valuation Non-Quoted 000’s 000’s % Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Keells Realtors Ltd. 2,400 2,400 32% 24,000 24,000 24,000 24,000

5.3 Summarised Financial Information of Associate - Group

Group 2011 2010 Rs.000’s Rs.000’s

Group Share of Balance Sheet Total Assets 75,801 42,889Group Share of Balance Sheet Total Liabilities (1,161) (2,432) 74,640 40,457

Group Share of Revenue 661 650Group Share of Profits/(Loss) 32,954 (585)


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5.4 Other Investments Cost of Investment Group & Company

2011 2010 No. of shares Market MarketOther Investments 2011 2010 Holding Cost Value Cost ValueQuoted 000’s 000’s % Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Keells Food Products PLC. 789 789 9.28% 27,534 118,318 27,534 54,426 27,534 118,318 27,534 54,426

6 OTHER NON CURRENT ASSETS Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Staff Vehicle LoanAt the beginning of the year 26,909 32,012 15,884 16,281Loans Granted 11,456 2,634 5,666 2,544Loans transferred from /(to) - 1,605 (2,359) 1,605Loans Recovered (9,671) (9,342) (4,629) (4,546)Long Term Portion of Loans Given to Tea Clients 5,876 - 5,876 - 34,570 26,909 20,438 15,884Receivable with in one year 7,923 7,196 4,378 4,403Receivable after one year 26,647 19,713 16,060 11,481 34,570 26,909 20,438 15,884

7. DEFERRED TAX ASSET Group Company 2,011 2,010 2,011 2,010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

At the beginning of the year 3,192 9,058 - -Addition / (Release) (209) (5,866) - -At the end of the year 2,983 3,192 - -

The closing Deferred Tax Asset Balance relates to the following:

Accelerated Depreciation for tax purposes (772) (964) - -Retirement Benefit Obligations 3,755 4,156 - - 2,983 3,192 - -



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8. INVENTORIES Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Building Materials 903 982 903 982Consumables and Spares 2,166 2,271 2,094 2,217 3,069 3,253 2,997 3,199

9. TRADE AND OTHER RECEIVABLES Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Trade Debtors 758,563 604,531 465,335 412,932Less: Provision for Doubtful Debts (20,877) (21,586) (20,865) (20,888)Other Debtors 8,450 6,835 7,787 6,313Advances and Prepayments 8,874 8,741 3,259 3,005Loans to Executives 7,923 7,196 4,378 4,403 762,933 605,717 459,894 405,765

10. CASH AND CASH EqUIVALENTS IN CASH FLOW STATEMENT Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

10.1 Favourable Cash & Cash EquivalentsCash & Bank Balances 70,700 181,359 55,757 118,313Short Term Investment 637,500 305,500 - - 708,200 486,859 55,757 118,31310.2 Unfavourable Cash & Cash EquivalentsBank Overdrafts (182,260) (140,470) (145,613) (80,694)

10.3 Net Cash & Cash Equivalents 525,940 346,389 (89,856) 37,619


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11. STATED CAPITAL11.1 Issued and Fully Paid

Group Company No of Shares 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Opening Balance Ordinary Shares 15,200,000 152,000 152,000 152,000 152,000Closing Balance Ordinary Shares 30,400,000 152,000 152,000 152,000 152,000

12. REVENUE RESERVES Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

General Reserve 117,300 117,300 104,000 104,000Accumulated Profit 1,582,664 968,937 1,258,786 787,363 1,699,964 1,086,237 1,362,786 891,363

13. MINORITY INTEREST 2011 2010 Rs.000’s Rs.000’s

Balance at the beginning of the year 47,964 21,278Share of Profits for the year 49,209 26,686Dividend Paid (17,280) -Balance at the end of the year 79,893 47,964

14. DEFERRED TAX LIABILITIES Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Balance as at the Beginning of the Year 63,772 59,171 51,605 55,512Charge for the Year (25,919) 4,601 (17,679) (3,907)Balance as at the end of the Year 37,853 63,772 33,926 51,605

The closing Deferred Tax Liability balance relates to the following:Accelerated Depreciation for Tax Purposes 8,687 23,829 3,627 4,872Revaluation of Investment Property to Fair Value 41,313 59,982 41,313 59,982Retirement Benefit Obligations (11,445) (13,619) (11,014) (13,249)Others - Tax Losses (702) (6,420) - - 37,853 63,772 33,926 51,605



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15. RETIREMENT BENEFIT OBLIGATIONS - GRATUITY Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Balance as at the Beginning of the Year 50,764 44,331 37,833 30,878Provision made during the Year 3,377 2,995 2,207 2,031Interest Cost for the Year 5,377 4,433 3,783 3,088Payments made during the Year (2,399) (7,967) (895) (6,628)Transfers During the Year - 7,359 (3,275) 7,359(Gain)/Loss arising from changes in the assumptions or - due to (over)/under provision in the previous years (59) (387) (316) 1,105Balance as at the end of the Year 57,060 50,764 39,337 37,833

The employee benefit liability of John Keells PLC is based on the actuarial valuation carried out by Messrs. Actuarial & Management Consultants (Pvt) Ltd., actuaries. The employees benefit liability of all other companies in the Group are based on gratuity formula in Appendix E of SLAS 16 - Employee Benefits

The expenses are recognised in the following line items in the income statement


Cost of Sale 6,169 5,850 4,589 5,480Administrative Expenses 2,526 1,192 1,085 744 8,695 7,042 5,674 6,224

The principal assumptions used in determining the cost of employee benefits were:

Discount rate 10% 10%Future salary increases 10% 10%


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16. TRADE AND OTHER PAYABLES Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Trade Creditors 481,837 219,138 40,070 31,324Sundry Creditors and Accrued Expenses 71,887 62,281 27,609 27,073 553,724 281,419 67,679 58,397

17. INTEREST BEARING LIABILITIES Asset Backed notes payable

Loans Loans Balance Obtained Repaid Balance as at during the during the as at 01/04/2010 year year 31/03/2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Gross Liability 74,896 - 24,362 50,534Finance Charges (19,813) - (10,303) (9,510)NDB Bank Loan 150,000 - 150,000 - 205,083 - 164,059 41,024

2011 2011 2010 2010 Amount Amount Amount Amount Repayable Repayable 2011 Repayable Repayable 2010 Within 1 year After 1 year Total Within 1 year After 1 year Total Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Asset Backed Notes 17,481 23,543 41,024 14,059 41,024 55,083 NDB Bank Loan - - - 150,000 - 150,000 17,481 23,543 41,024 164,059 41,024 205,083

Gross Liability 24,362 26,172 50,534 24,362 50,534 74,896 Finance Charges Allocated to future periods (6,881) (2,629) (9,510) (10,303) (9,510) (19,813)NDB Bank Loan - - - 150,000 - 150,000 17,481 23,543 41,024 164,059 41,024 205,083



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Company Loans Loans Balance Obtained Repaid Balance as at during the during the as at 01/04/2010 year year 31/03/2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

NDB Bank Loan 150,000 - 150,000 - 150,000 - 150,000 -

18. REVENUE18.1 Summary


Gross Revenue 1,057,863 848,144 489,609 490,621 1,057,863 848,144 489,609 490,621

18.2 Segment Information - Group ProduceBroking& Warehousing ShareBroking RealEstate Total 2011 2010 2011 2010 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Segment RevenueGross Revenue- Third Parties 482,895 492,654 492,911 287,383 12 22 975,818 780,059- Related Parties - - - - 93,304 89,426 93,304 89,426Inter Segment Sales - - - - (11,259) (21,341) (11,259) (21,341) Sales to customers outside the Group 482,895 492,654 492,911 287,383 82,057 68,107 1,057,863 848,144Segment ResultsProfit Before Tax 214,076 176,168 320,975 172,597 477,400 55,143 1,012,451 403,931Taxation 739 (12,420) (115,937) (61,403) (6,343) (1,902) (121,541) (75,725)Unallocated Tax - - - - - - (75,974) (71,682)Total Tax - - - - - - (197,515) (147,407)Profit After Tax 814,936 256,523Segment Assets 767,390 935,754 938,861 542,211 1,213,895 640,486 2,920,146 2,118,451Segment Liabilities 343,383 435,600 605,059 341,447 39,847 55,200 988,289 832,250OthersPurchase of Property Plant & Equipment 10,009 522 6,092 216 4,977 1,904 21,078 2,642Depreciation 14,562 15,909 2,169 2,125 7,301 7,601 24,032 25,635


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19. OTHER INCOME Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

19.1 Dividend IncomeIncome from Investments with Related Parties - Quoted - 1,775 - 1,775 - Un-quoted - - 68,148 18,900 - 1,775 68,148 20,675

19.2 Other Operating IncomeInterest Income - Outside 41,110 22,409 759 773Guarantee Fees 195 218 195 218Sundry Income 369 1,282 391 1,304Profit/ (loss) on Sale of Fixed Assets 2,882 - 2,882 - 44,556 23,909 4,227 2,295

20. FINANCE EXPENSES Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Interest Expense on Overdrafts 12,651 18,491 12,572 18,419Interest Expense on Loans & Borrowings Payable to- Others 20,713 31,608 10,411 18,553 33,364 50,099 22,983 36,972

21. PROFIT BEFORE TAXStated after charging/(crediting)Remuneration to Executive Directors 11,171 8,997 9,155 6,981Remuneration to Non Executive Directors 5,400 5,900 4,200 4,450 Personal costs includes -- Defined Benefit Plan Costs - Gratuity 8,695 7,042 5,675 6,224- Defined Benefit Plan Costs - EPF & ETF 26,505 17,557 9,644 9,987- Other Staff Costs 231,924 167,089 79,297 76,284Donations 5,297 4,247 3,797 3,297Auditors’ Fees & Expense 2,422 1,824 1,748 1,157Depreciation 24,032 25,635 9,261 11,006Amortisation of Lease Charges 1,089 1,089 - -Legal Fees & Professional Charges 2,178 4,320 2,178 4,320BOI Fees 255 248(Profit)/Loss on Disposal of Assets 2,882 14 2,882 -



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22. INCOME TAX EXPENSE Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Current Tax on Ordinary Activities for the year (22.1) 215,653 134,840 93,654 75,589Deferred Taxation Charge (22.2) (25,710) 10,467 (17,679) (3,907)Tax on Dividend Income 7,572 2,100 - -Total Income tax Expenses 197,515 147,407 75,975 71,682

Social Responsibility Levy has been charged at the rate of 1.5% on the Income Tax Liability, which is includedin the Income Tax Expense.

22.1 Reconciliation between tax expenses/(income) and the product of accounting profit.

2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

Profit Before Tax 1,012,451 403,931 699,398 216,968Dividend Income (68,148) (1,775) (68,148) (20,675)Share of Profits From Associate Company 32,954 585 - -Aggregate Accounting Profit 977,257 402,741 631,250 196,293Accounting Profit 977,257 402,741 631,250 196,293

Income Tax on Accounting Profit at Applicable Rates 197,574 134,036 75,687 68,539Under/(Over ) Provision for Previous Year 655 (911) 655 (634)Aggregate Disallowed Expenses 5,459 10,119 6,612 2,426Social Responsibility Levy at the Rate of 1.5% (2010-1.5%) 3,454 2,261 1,496 1,351Tax on Dividend Income 7,572 2,100 - -Tax effect on rate differentials (15,970) - (8,475) -Share of Associate Company Income Tax Expense (1,229) (198) - -Total Income Tax Expenses 197,515 147,407 75,975 71,682


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Income Tax charged atStandard Rate - CSE Listed Companies 91,504 74,872 91,504 74,872Standard Rate - Others 35% 121,269 54,712 - -Concessionary Rate of 15% - 3,828 - -Social Responsibility Levy at the Rate of 1.5% (2010-1.5%) 3,422 2,233 1,495 1,351Deferred Tax Charge/ (Reversed) (25,710) 10,467 (17,679) (3,907)Under/(Over ) Provision for Previous Year 655 (634) 655 (634)Share of Associate Company Income Tax Expenses (1,229) (198) - -Tax on Dividend Income 7,572 2,100 - -1.5% SRL on Inter Company Dividends 32 27 - -Total Income Tax Expenses 197,515 147,407 75,975 71,682

The Group tax expenses is based on the taxable profit of each Group Company, since at present the tax lawsdo not provide for Group taxation.

In terms of agreement dated 14 th March , 2003 entered into with the Board of Investment of Sri Lanka under section 15 of the BOI Law No 4 of 1978 John Keells Warehousing (Pvt) Ltd, is entitled to a concessionary tax rate of 15% on business profits for a period of 7 years. Commencing from the year of assessment 2003/2004.

22.2 Deferred Tax Expense


Deferred Tax arisingAccelerated Depreciation for tax purposes (15,334) (2,136) (1,245) (1,466)Revaluation of Investment Property to Fair Value (18,668) - (18,668) -Retirement benefits - Gratuity 2,574 (2,304) 2,234 (2,441)Deffered Tax Recognised due to change in income tax rate - 6,953 - -Benefit Arisisng from Tax Losses 5,718 7,954 - -Total Deferred Tax Charged (25,710) 10,467 (17,679) (3,907)

Deferred Tax Liabilities have been computed at 28% for all standard rate companies (including listed companies) .



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23. EARNINGS PER SHARE23.1 Amounts Used as the Numerator:

Group 2011 2010 Rs.000’s Rs.000’s

Net Profit Attributable to Ordinary Shareholders 765,727 229,838

23.2 Number of Ordinary Shares Used as the Denominator:

2011 2010 000’s 000’s

Ordinary Shares at the beginning of the year 15,200 15,200 Effect of Share sub division 15,200 -Weighted Average number of Ordinary Shares in Issue 30,400 15,200 Basic Earnings Per Share (Rs) 25.19 7.56

The Basic Earnings per Share is calculated by dividing the net profit for the year attributable to ordinary shareholders by theweighted average number of ordinary shares outstanding during the year. The Weighted average number of ordinary sharesoutstanding during the year & previous year are adjusted for events that have changed the number of ordinary shares outstanding without a corresponding change in the resources such as a bonus issue.

24. DIVIDENDS Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

InterimDividend Paid - Rs 5/- per share (2008/2009)Out of Dividends received - Free of tax - 1,462 - 1,462Out of Profits - Liable for tax - 74,538 - 74,538 - 76,000 - 76,000

Final Dividend Paid Rs.5/- per share (2009/2010)Out of Dividends received - Free of tax 69,923 - 69,923 -Out of Profits - Liable for tax 82,077 76,000 82,077 76,000 152,000 76,000 152,000 76,000Total 152,000 152,000 152,000 152,000


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24.3 Dividend Per Share


Dividends Paid During the Year -Net (Rs) 5.00 5.00 5.00 5.00

The dividend per share is based on the dividend declared and proposed for the period covered by the financial statements.The dividend per share has been adjusted to reflect the 30,400,000 shares in issue as at 31st March.

25. COMMITMENTS AND CONTINGENCIES25.1 Capital CommitmentsThe Company does not have any Capital Commitments as at the Balance Sheet Date

25.2 Financial CommitmentsThe Company has guaranteed banking facilities of it’s related companies amounting to Rs.Mn 63.5 (2010- Rs (Mn89.4).Name of the Company Amount Amount Guaranteed Guaranteed 2011 2010 Relationship Rs.000’s Rs.000’s

Keells Food Products PLC. Affiliate 1,000 1,000John Keells Stock Brokers (Pvt) Ltd. Subsidiary 2,000 2,000Walker Tours Ltd. Affiliate 10,000 11,500John Keells Warehousing (Pvt) Ltd. Subsidiary 50,535 74,897 63,535 89,397

25.3 ContingenciesThere are no contingent liabilities as at the balance sheet date other than the following.

Sesame Senhora Tea (Pvt)Ltd has claimed a sum of Rs 1.1. million ,which has been contested in courts, Other than this ,no other claim or litigation has been or expected to be received.



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26 ASSETS PLEDGEDAs at the Balance Sheet date the following assets of the Company have been pledged as security against the Company’s borrowings. Carrying Amount Natureofassets NatureofLiability Pledged2011 Pledged2010 Rs 000’s Rs 000’s

Property Bank Borrowing 45,500 45,500Investments Bnak Borrowing 3,965 3,965 49,465 49,465

27 RELATED PARTY DISCLOSURES Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’s

27.1 Amounts Due From Related PartiesUltimate Parent 6,032 5,233 6,032 5,233Subsidiary - - - 65Companies Under Common Control 8,520 17,896 8,520 17,895Key Management Personnel - - - -Companies controlled / jointly controlled / significantly influencedby KMP and their close family members Close Family Members of KMP - - - - 14,552 23,129 14,552 23,193

27.2 Amounts Due To Related PartiesUltimate Parent 919 2,560 463 2,291Subsidiary - - 1,822 1,742Companies Under Common Control 3,720 2,095 3,636 1,372Key Management Personnel - -Close Family Members of KMP - - - -Companies controlled / jointly controlled / significantly influencedby KMP and their close family members - - - - 4,639 4,655 5,921 5,405


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27.3 Transactions With Related Parties

Group Company 2011 2010 2011 2010 Rs.000’s Rs.000’s Rs.000’s Rs.000’sUltimate ParentReceiving of Services for which fees are paid 8,411 18,336 8,411 18,336Renting of office space for which rent is received (40,142) (40,242) (40,142) (40,242)Providing of Services for which fees are received - (133) - (133)SubsidiariesTaken store space on Rent - - 3,761 2,910Renting of office space for which rent is received - - (7,498) (7,516)

AssociateTaken store space on Rent - 611 - 611Companies under Common ControlPurchase of goods for a fee 2,311 2,977 2,311 2,977Receiving of Services for which fees are paid 10,141 4,454 10,141 4,454Renting of office space for which rent is received (42,720) (38,644) (42,720) (38,644)Providing of Services for which fees are received (34,613) (29,784) (34,613) (29,784) (96,612) (82,425) (100,349) (87,031)

Company 2011 2010 Relationship Rs.000’s Rs.000’s

Guaranteed Bank FacilitiesKeells Food Products PLC Affiliate 1,000 1,000John Keells stock Brokers (Pvt) Ltd Subsidiary 2,000 2,000Wokers Tours Ltd Affiliate 10,000 11,500John Keells Warehouse (Pvt) Ltd Subsidiary 50,535 74,897 63,535 89,397



77


27.4 Post Employment Benefit PlanContribution to the staff provident fund 1,795 2,104 1,795 2,104

27.5 Compensation of Key Management Personnel

Short Term Employee Benefits 16,571 14,897 13,355 11,431Post employment benefits - - - -Other Long Term benefits - - - -Termination benefits - - - -Share based payments - - - - 16,571 14,897 13,355 11,431

Key Management Personnel include members of the Board of Directors of the Company, & Ultimate Parent Company John Keells Holdings PLC.

27.6 Terms and Conditions of Transactions with Related PartiesTransactions with Related Parties are at normal market prices. Outstanding balances at year end are unsecured, interest free and settlement occurs in cash.

28 EVENTS OCCURRING AFTER THE BALANCE SHEET DATEThe Board of Directors at a meeting held on 21 st April 2011 proposed a First & Final Dividend of Rs 5/- per Share for the Financial Year ended 31 st March 2011. As required by section 56 (2) of the Companies Act No 7 of 2007, the Board of Directors has confirmed that the Company satisfies the Solvency test in accordance with section 57 of the Companies Act No 7 of 2007. and has obtained a certificate from the auditors, prior to declaring a First & Final Dividend which was paid on the 13 th of May 2011.

In accordance with the Sri Lanka Accounting Standard 12 (revised 2005) , Events after the Balance Sheet date, the first & final dividend has not been recognized as a liability in the financial statement as at 31 st March 2011.

The Board of Directors at a meeting held on 11th of May 2011 recommended to the shareholders, the increase in the number of ordinary shares of the company in issue by way of a sub-division whereby the 30,400,000 ordinary shares currently in issue would be sub-divided into 2 ordinary shares each, thereby increasing the number of ordinary shares in issue to 60,800,000, An extra ordinary general meeting of the shareholders will be convened for this purpose.


78

COMPANY CONSOLIDATED 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

VALUEADDEDGross Revenue 374,912 409,215 457,023 490,621 489,609 634,647 641,348 607,949 848,144 1,057,863 Other Income 112,075 171,686 55,534 22,970 72,375 25,391 32,256 30,177 25,684 44,556 486,987 580,901 512,557 513,591 561,984 660,038 673,604 638,126 873,828 1,102,419 Cost of Materials and Services purchased (150,629) (134,065) (96,046) (140,462) (99,244) (77,147) (162,024) (136,847) (186,526) (118,858) 336,358 446,836 416,511 373,129 462,740 582,891 511,580 501,279 687,302 983,561

% SHARE % SHARE % SHARE % SHARE % SHARE % SHARE % SHARE % SHARE % SHARE % SHARE

DISTRIBUTIONOFVALUEADDEDTo employees as Remuneration 29 95,005 20 89,311 27 111,424 21 77,874 20 93,821 25 147,709 34 174,785 38 187,792 28 198,668 18 176,134 To Government (see below) 15 52,122 15 68,072 20 82,405 24 89,049 20 91,298 20 109,568 24 122,279 18 91,030 24 164,764 22 212,838 To Lenders of Capital -Interest on borrowings 2 7,242 4 17,718 11 45,364 10 36,972 5 22,983 4 25,489 7 34,597 12 60,668 7 50,099 3 33,364 -Minority Interest - - - - - 3 17,038 2 11,280 - (1,230) 4 26,687 5 49,209 To Shareholders as Dividends 54 181,989 24 106,400 36 152,000 40 152,000 33 152,000 31 181,989 21 106,400 30 152,000 22 152,000 15 152,000 Retained in the Business - - 37 165,335 6 25,318 5 17,234 22 102,638 17 101,098 12 62,239 2 11,019 14 95,083 37 360,016 100 336,358 100 446,836 100 416,511 100 373,129 100 462,740 100 582,891 100 511,580 100 501,279 100 687,302 100 983,561

The statement of Value Added shows the wealth, the Company and the Group have been able to create on its own and its employeeseffort. It also explains how Value Added has been distributed.

REVENUETOGOVERNMENT.SRL /NBT/FINANCIAL VAT 6,697 6,609 12,838 14,044 12,092 6,697 6,609 12,838 14,044 12,092 Rates and Taxes 3,365 3,326 3,331 3,323 3,231 3,365 3,326 3,331 3,323 3,231 Income Tax 42,060 58,137 66,236 71,682 75,975 99,506 112,344 74,861 147,397 197,515 Total 52,122 68,072 82,405 89,049 91,298 109,568 122,279 91,030 164,764 212,838

Statement of Value Added

To employees as Remuneration 18%To Government (see below) 22%To lenders of Capital Interest on borrowings 3%To lenders of Capital Minority Interest 5%To shareholders as Dividents 15%Retained in the Business 37%

DistributionofValueAdded


79

COMPANY CONSOLIDATED 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

VALUEADDEDGross Revenue 374,912 409,215 457,023 490,621 489,609 634,647 641,348 607,949 848,144 1,057,863 Other Income 112,075 171,686 55,534 22,970 72,375 25,391 32,256 30,177 25,684 44,556 486,987 580,901 512,557 513,591 561,984 660,038 673,604 638,126 873,828 1,102,419 Cost of Materials and Services purchased (150,629) (134,065) (96,046) (140,462) (99,244) (77,147) (162,024) (136,847) (186,526) (118,858) 336,358 446,836 416,511 373,129 462,740 582,891 511,580 501,279 687,302 983,561

% SHARE % SHARE % SHARE % SHARE % SHARE % SHARE % SHARE % SHARE % SHARE % SHARE

DISTRIBUTIONOFVALUEADDEDTo employees as Remuneration 29 95,005 20 89,311 27 111,424 21 77,874 20 93,821 25 147,709 34 174,785 38 187,792 28 198,668 18 176,134 To Government (see below) 15 52,122 15 68,072 20 82,405 24 89,049 20 91,298 20 109,568 24 122,279 18 91,030 24 164,764 22 212,838 To Lenders of Capital -Interest on borrowings 2 7,242 4 17,718 11 45,364 10 36,972 5 22,983 4 25,489 7 34,597 12 60,668 7 50,099 3 33,364 -Minority Interest - - - - - 3 17,038 2 11,280 - (1,230) 4 26,687 5 49,209 To Shareholders as Dividends 54 181,989 24 106,400 36 152,000 40 152,000 33 152,000 31 181,989 21 106,400 30 152,000 22 152,000 15 152,000 Retained in the Business - - 37 165,335 6 25,318 5 17,234 22 102,638 17 101,098 12 62,239 2 11,019 14 95,083 37 360,016 100 336,358 100 446,836 100 416,511 100 373,129 100 462,740 100 582,891 100 511,580 100 501,279 100 687,302 100 983,561

The statement of Value Added shows the wealth, the Company and the Group have been able to create on its own and its employeeseffort. It also explains how Value Added has been distributed.

REVENUETOGOVERNMENT.SRL /NBT/FINANCIAL VAT 6,697 6,609 12,838 14,044 12,092 6,697 6,609 12,838 14,044 12,092 Rates and Taxes 3,365 3,326 3,331 3,323 3,231 3,365 3,326 3,331 3,323 3,231 Income Tax 42,060 58,137 66,236 71,682 75,975 99,506 112,344 74,861 147,397 197,515 Total 52,122 68,072 82,405 89,049 91,298 109,568 122,279 91,030 164,764 212,838

SRL /NBT/FINACIAL VAT 6% Rates and Taxes 2% Income Tax 92%

Revenue to Government


80

1 STOCK EXCHANGE LISTINGThe issued ordinary shares of John Keells PLC are listed with the Colombo Stock Exchange of Sri LankaThe Audited Accounts of the Company and the Consolidated Accounts for the year ended 31st March, 2011have been submitted to the Colombo Stock Exchange.

2 DISTRIBUTION OF SHAREHOLDINGS

No. of Shares held 31st March 2011 31st March 2010Shareholders Holdings Shareholders Holdings

Number % Number % Number % Number %

Less than 1,000 712 67.55 239,579 0.79 590 72.39 179,064 1.181,001 - 10,000 268 25.43 922,205 3.03 183 22.45 571,568 3.7610,001 - 100,000 65 6.17 1,569,480 5.16 38 4.66 972,832 6.40100,001 - 1000,000 8 0.76 1,251,344 4.12 2 0.25 267,840 1.76over 1,000,000 1 0.09 26,417,392 86.90 2 0.25 13,208,696 86.90Total 1054 100.00 30,400,000 100.00 815 100.00 15,200,000 100.00

3 ANALYSIS OF SHAREHOLDERS

Categories ofShareholders

31st March 2011 31st March 2010Shareholders Holdings Shareholders Holdings

Number % Number % Number % Number %Individuals 961 91.18 2,727,592 8.97 746 91.53 1,442,376 9.49Institutions 93 8.82 27,672,408 91.03 69 8.47 13,757,624 90.51Total 1054 100.00 30,400,000 100.00 815 100.00 15,200,000 100.00Residents 1041 98.77 30,290,608 99.64 805 98.77 15,140,004 99.61Non Residents 13 1.23 109,392 0.36 10 1.23 59,996 0.39Total 1054 100.00 30,400,000 100.00 815 100.00 15,200,000 100.00John Keells Holdingsand Subsidiaries 1 0.09 26,417,392 86.90 1 0.12 13,208,696 86.90Public 1053 99.91 3,982,608 13.10 814 99.88 1,991,304 13.10Total 1054 100.00 30,400,000 100.00 815 100.00 15,200,000 100.00

4 SHARE PERFORMANCE AT COLOMBO STOCK EXCHANGE

2010/2011 2009/2010

Highest Market Price 371.00 200.00Lowest Market Price 160.00 63.00Closing Price as at 31st of March 185.20 194.50

Information to Shareholders and Investors


81

5 DIVIDEND PAYMENTS - First and Final Dividend of Rs. 5/- per share was paid on 13th May 2011.

6 TOP TWENTY SHAREHOLDERS

NAMEOFSHAREHOLDERS Asat31stMarch2011Asat31stMarch2010 No. of Shares Holding % No. of Shares Holding %

John Keells Holdings PLC 26,417,392 86.90 13,208,696 86.90Dr. H.S.D. Soysa 308,880 1.02 153,440 1.01The Roman Catholic Archbishop of Colombo 171,416 0.56 85,708 0.56Bank of Ceylon - No 2 A/C 169,400 0.56 114,400 0.75Mr. C.D. Kohombanwickramage 135,600 0.45 44,100 0.29Bhadra Investments Ltd. 125,712 0.41 69,112 0.45Mrs. H.G.S. Ansell 120,000 0.39 60,000 0.39Mr. M. Radhakrishnan 116,400 0.38 58,200 0.38Mrs. M.L. De Silva 103,936 0.34 51,968 0.34Waldock Mackenzie Ltd./Delmege Forsyth and Company (Shipping) Ltd. 94,800 0.31 35,200 0.23Mr. W.R.H. Perera 86,536 0.28 43,268 0.28Ms. N.S. De Mel 68,568 0.23 34,284 0.23Mrs. Tirimanne 66,000 0.22 35,600 0.23Colombo Fort Investments PLC 56,400 0.19 28,200 0.19Sisira Investors Limited 52,852 0.17 28,568 0.19Colombo Investment Trust PLC 51,424 0.17 25,712 0.17Waldock Mackenzie Ltd./Delmege Forsyth and Company (Exports) Ltd. 51,200 0.17 - 0.00Mrs. H.J.C. Fernando 45,304 0.15 22,852 0.15Favourite Garments Ltd. 40,000 0.13 20,000 0.13Eric Rajapakse and Company Ltd. 39,968 0.13 56,284 0.37Mr. B.V. Hettithanthrige - - 20,000 0.13

28,321,788 93.16 14,195,592 93.39

Earnings&Divedendsper Share

07Earnings per shareDividend per share

Rs. 30

25

20

15

10

5

00908 10 11

6.33

11.4

5

4.44

3.50 4.22 5.00 7.

565.

00

25.1

95.

00

NetAssets&MarketPrice per Share

07Net Asset per shareMarket Price per share

Rs. 200

150

100

50

00908 10 11

38.0

285

.25

38.9

6

38.1

7 62.0

0

40.7

319

4.50

60.9

218

5.20

90.0

0


82

COMPANY CONSOLIDATEDFor the year ended 31 st March 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

TRADINGRESULTSGross Revenue 374,912 409,215 457,023 490,621 489,609 634,647 641,348 607,949 848,144 1,057,863Operating Profit 106,812 159,328 180,105 230,970 266,286 234,764 243,733 187,349 428,931 584,585Other Income 5,803 5,330 3,132 2,295 4,227 25,391 31,212 28,715 23,909 44,556Dividend Income 106,272 166,356 52,402 20,675 68,148 - 1,044 1,462 1,775 - Changes in Fair Value of Investment Property - - 34,531 - 383,720 - - 34,531 - 383,720Finance Charges (7,242) (17,719) (45,364) (36,972) (22,982) (25,489) (34,597) (60,668) (50,099) (33,364)Share of Association Company Profits/ (Loss) - - - - - 74,784 17,195 10,357 (585) 32,954Profit before Taxation 211,645 313,295 224,806 216,968 699,399 309,450 258,587 201,746 403,931 1,012,451Taxation based thereon (42,287) (58,137) (66,236) (71,682) (75,975) (100,104) (112,344) (74,861) (147,407) (197,515)Profit after Taxation 169,358 255,158 158,570 145,286 623,424 209,346 146,243 126,885 256,524 814,936Minority Interest - - - - - (17,038) (11,280) 1,230 (26,686) (49,209)Profit attributable to John Keells PLC 169,358 255,158 158,570 145,286 623,424 192,308 134,963 128,115 229,838 765,727

SHARECAPITALANDRESERVESStated Capital 152,000 152,000 152,000 152,000 152,000 152,000 152,000 152,000 152,000 152,000Revenue Reserves 742,750 891,507 898,077 891,363 1,362,786 1,003,722 1,032,284 1,008,399 1,086,237 1,699,964Shareholders’ Funds 894,750 1,043,507 1,050,077 1,043,363 1,514,786 1,155,722 1,184,284 1,160,399 1,238,237 1,851,964Minority Interest - - - - - 21,548 30,908 21,278 47,964 79,893 894,750 1,043,507 1,050,077 1,043,363 1,514,786 1,177,270 1,215,192 1,181,677 1,286,201 1,931,857

ASSETSLESSLIABILITIESCurrent Assets 390,147 597,289 635,492 553,222 535,994 688,323 1,313,105 768,648 1,121,710 1,491,548Current Liabilities (290,826) (355,057) (416,526) (328,358) (254,831) (511,884) (922,735) (471,637) (676,690) (869,832)Net Current Assets/(Liabilities) 99,321 242,232 218,966 224,864 281,163 176,439 390,370 297,011 445,020 621,716Fixed Assets and Investments 874,770 877,259 917,501 907,937 1,306,886 1,167,009 981,036 1,043,251 996,741 1,428,598Long Term Liabilities - - - - - (75,483) (66,390) (55,083) (41,024) (23,544)Deferred Liabilities (79,341) (75,984) (86,390) (89,438) (73,263) (90,695) (89,824) (103,502) (114,536) (94,913) 894,750 1,043,507 1,050,077 1,043,363 1,514,786 1,177,270 1,215,192 1,181,677 1,286,201 1,931,857

Five Year Summary


83

COMPANY CONSOLIDATEDFor the year ended 31 st March 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s Rs.000’s

TRADINGRESULTSGross Revenue 374,912 409,215 457,023 490,621 489,609 634,647 641,348 607,949 848,144 1,057,863Operating Profit 106,812 159,328 180,105 230,970 266,286 234,764 243,733 187,349 428,931 584,585Other Income 5,803 5,330 3,132 2,295 4,227 25,391 31,212 28,715 23,909 44,556Dividend Income 106,272 166,356 52,402 20,675 68,148 - 1,044 1,462 1,775 - Changes in Fair Value of Investment Property - - 34,531 - 383,720 - - 34,531 - 383,720Finance Charges (7,242) (17,719) (45,364) (36,972) (22,982) (25,489) (34,597) (60,668) (50,099) (33,364)Share of Association Company Profits/ (Loss) - - - - - 74,784 17,195 10,357 (585) 32,954Profit before Taxation 211,645 313,295 224,806 216,968 699,399 309,450 258,587 201,746 403,931 1,012,451Taxation based thereon (42,287) (58,137) (66,236) (71,682) (75,975) (100,104) (112,344) (74,861) (147,407) (197,515)Profit after Taxation 169,358 255,158 158,570 145,286 623,424 209,346 146,243 126,885 256,524 814,936Minority Interest - - - - - (17,038) (11,280) 1,230 (26,686) (49,209)Profit attributable to John Keells PLC 169,358 255,158 158,570 145,286 623,424 192,308 134,963 128,115 229,838 765,727

SHARECAPITALANDRESERVESStated Capital 152,000 152,000 152,000 152,000 152,000 152,000 152,000 152,000 152,000 152,000Revenue Reserves 742,750 891,507 898,077 891,363 1,362,786 1,003,722 1,032,284 1,008,399 1,086,237 1,699,964Shareholders’ Funds 894,750 1,043,507 1,050,077 1,043,363 1,514,786 1,155,722 1,184,284 1,160,399 1,238,237 1,851,964Minority Interest - - - - - 21,548 30,908 21,278 47,964 79,893 894,750 1,043,507 1,050,077 1,043,363 1,514,786 1,177,270 1,215,192 1,181,677 1,286,201 1,931,857

ASSETSLESSLIABILITIESCurrent Assets 390,147 597,289 635,492 553,222 535,994 688,323 1,313,105 768,648 1,121,710 1,491,548Current Liabilities (290,826) (355,057) (416,526) (328,358) (254,831) (511,884) (922,735) (471,637) (676,690) (869,832)Net Current Assets/(Liabilities) 99,321 242,232 218,966 224,864 281,163 176,439 390,370 297,011 445,020 621,716Fixed Assets and Investments 874,770 877,259 917,501 907,937 1,306,886 1,167,009 981,036 1,043,251 996,741 1,428,598Long Term Liabilities - - - - - (75,483) (66,390) (55,083) (41,024) (23,544)Deferred Liabilities (79,341) (75,984) (86,390) (89,438) (73,263) (90,695) (89,824) (103,502) (114,536) (94,913) 894,750 1,043,507 1,050,077 1,043,363 1,514,786 1,177,270 1,215,192 1,181,677 1,286,201 1,931,857

Growth In Shareholder’s Funds

07ReservesStated Capital

Rs. Mn.6,000

3,000

2,000

1,000

00908 10 11

1,00

415

2

1,03

215

2

1,00

815

2

1,08

615

2

1,70

015

2

Revenue&PBT

07RevenuePBT

Rs. Mn.1,200

1,000

800

600

400

200

00908 10 11

635

309

641

258

608

201

848

404

1,05

81,

012

Quoted Investments

07Book ValueMarket Value

Rs. Mn.120

90

60

30

00908 10 11

11 16 1123

1126 27

54

2711

8


84

COMPANY CONSOLIDATED 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

Key Indicators (A)Profitability&ReturnToShareholdersAnnual Turnover Growth (%) 2.92 9.15 11.68 7.35 (0.21) 1.70 1.06 (5.21) 39.51 24.63Net Profit Ratio (%) 45.17 62.35 34.70 29.61 127.33 30.30 21.04 21.07 27.10 72.44Earnings Per Share (Rs.) ** 5.57 8.40 5.22 4.78 20.51 6.33 4.44 4.22 7.56 25.19Returns On Shareholders’ Funds (%) 18.93 24.45 15.10 13.92 41.16 16.34 11.11 10.84 17.87 39.64Return On Capital Employed (%) 22.42 28.37 23.49 19.93 43.51 18.77 19.35 18.69 27.86 48.53Dividend Per Share (Rs.)** 11.45 3.50 5.00 5.00 5.00 11.45 3.50 5.00 5.00 5.00Debt Equity Ratio (%) 9.13 11.81 9.51 22.11 9.61 17.71 17.37 14.14 26.87 11.56

(B)LiquidityCurrent Ratio (No. Of Times) 1.34 1.68 1.53 1.68 2.10 1.34 1.42 1.63 1.66 1.71Interest Cover (No. Of Times) 30.22 18.68 5.96 6.87 31.43 13.14 8.47 4.33 9.06 31.35

(C) Investor Ratios Net Assets Per Share At Year End (Rs.)** 29.43 34.33 34.54 34.32 49.83 38.02 38.96 38.17 40.73 60.92Price-Earnings Ratio (Times)** 15.31 10.72 11.89 40.69 9.03 13.48 20.27 14.71 25.73 7.35Effective Rate At Dividend (%) 234.00 70.00 100.00 100.00 100.00 234 70 100 100 100Dividend (Rs. 000’S) 348,080 106,400 152,000 152,000 152,000 348,080 106,400 152,000 152,000 152,000Dividend Cover (Times)** 0.49 2.40 1.04 0.96 4.10 0.55 1.27 0.84 1.51 5.04

(D) Share Valuation Market Price Per Share (Rs) 85.25 90.00 62.00 194.50 185.20 85.25 90.00 62.00 194.50 185.20

(E)OtherInformationNumber Of Employees 149 133 109 118 109 180 153 140 183 180Turnover Per Employee (Rs. 000’S) 2,516 3,077 4,193 4,158 4,492 3,526 4,192 4,342 4,635 5,873Value Added Per Employee (Rs. 000’S) 2,257 3,360 3,821 3,162 3,396 3,238 3,227 3,581 3,096 4,101

Note: **Earnings Per Share ,Dividends Per Share & Net Assets Per Share Is Based On 30,400,000 Number Of Shares In IssueAs At 31st March, 2011.

Key Ratios and Information


85

COMPANY CONSOLIDATED 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011

Key Indicators (A)Profitability&ReturnToShareholdersAnnual Turnover Growth (%) 2.92 9.15 11.68 7.35 (0.21) 1.70 1.06 (5.21) 39.51 24.63Net Profit Ratio (%) 45.17 62.35 34.70 29.61 127.33 30.30 21.04 21.07 27.10 72.44Earnings Per Share (Rs.) ** 5.57 8.40 5.22 4.78 20.51 6.33 4.44 4.22 7.56 25.19Returns On Shareholders’ Funds (%) 18.93 24.45 15.10 13.92 41.16 16.34 11.11 10.84 17.87 39.64Return On Capital Employed (%) 22.42 28.37 23.49 19.93 43.51 18.77 19.35 18.69 27.86 48.53Dividend Per Share (Rs.)** 11.45 3.50 5.00 5.00 5.00 11.45 3.50 5.00 5.00 5.00Debt Equity Ratio (%) 9.13 11.81 9.51 22.11 9.61 17.71 17.37 14.14 26.87 11.56

(B)LiquidityCurrent Ratio (No. Of Times) 1.34 1.68 1.53 1.68 2.10 1.34 1.42 1.63 1.66 1.71Interest Cover (No. Of Times) 30.22 18.68 5.96 6.87 31.43 13.14 8.47 4.33 9.06 31.35

(C) Investor Ratios Net Assets Per Share At Year End (Rs.)** 29.43 34.33 34.54 34.32 49.83 38.02 38.96 38.17 40.73 60.92Price-Earnings Ratio (Times)** 15.31 10.72 11.89 40.69 9.03 13.48 20.27 14.71 25.73 7.35Effective Rate At Dividend (%) 234.00 70.00 100.00 100.00 100.00 234 70 100 100 100Dividend (Rs. 000’S) 348,080 106,400 152,000 152,000 152,000 348,080 106,400 152,000 152,000 152,000Dividend Cover (Times)** 0.49 2.40 1.04 0.96 4.10 0.55 1.27 0.84 1.51 5.04

(D) Share Valuation Market Price Per Share (Rs) 85.25 90.00 62.00 194.50 185.20 85.25 90.00 62.00 194.50 185.20

(E)OtherInformationNumber Of Employees 149 133 109 118 109 180 153 140 183 180Turnover Per Employee (Rs. 000’S) 2,516 3,077 4,193 4,158 4,492 3,526 4,192 4,342 4,635 5,873Value Added Per Employee (Rs. 000’S) 2,257 3,360 3,821 3,162 3,396 3,238 3,227 3,581 3,096 4,101

Note: **Earnings Per Share ,Dividends Per Share & Net Assets Per Share Is Based On 30,400,000 Number Of Shares In IssueAs At 31st March, 2011.


86

Accrual BasisRecording Revenues and Expenses in the period in which they are earned or incurred regardless of whether cash is received or disbursed in that period.

Capital EmployedShareholders’ Funds plus Debt

Contingent LiabilitiesA condition or situation existing at the Balance Sheet date due to past events, where the financial effect is not recognised because:

1. The obligation is crystallised by the occurrence or non oc currence of one or more future events or,

2. A probable outflow of economic resources is not expected or,

3. It is unable to be measured with sufficient reliability

Current RatioCurrent Assets over Current Liabilities

Debt/Equity RatioDebt as a percentage of Shareholders Funds

Dividend CoverEarnings per Share over Dividends per Share

Dividend Payout RatioTotal Dividend interest and Tax as percentage of Capital Employed

Earnings Per Share (Eps)Profit after tax attributable to ordinary shareholding over weighted average numbers of shares in issue during the period

Earnings YieldEarnings per Share as a percentage of Market price per Share end of the period.

Effective Rate of TaxationIncome Tax, including deferred tax over Profit before Tax

Interest CoverProfit before Interest and Tax over Finance Expenses

Market CapitalisationNumber of Shares in issue at the end of the period multiplied by the Market price at end of period

Net AssetsTotal assets minus Current Liabilities minus Long Term Liabilities minus Minority Interest

Glossary of Financial Terminology

Net Asset Per ShareNet Assets, over number of Ordinary Shares in issue

Net DebtNet Debt minus (Cash plus Short Term Deposits)

Net Turnover Per EmployeeNet Turnover over average number of employees

Price Earnings RatioMarket Price per Share over Earnings per Share

quick Asset RatioCash plus Short Term Investments plus Receivables, Dividend by Current Liabilities

quick RatioCash plus Short Term Investments plus Receivables over Current Liabilities

Return on AssetsProfit after Tax over Average Total Assets

Return on EquityProfit after Tax as a percentage of Average Shareholder’s Funds

Return on Capital EmployedEarning before interest and tax as percentage of Capital Employed

Shareholders FundsStated Capital, Capital Reserves plus Revenue Reserves

Total DebtLong Term Loans plus Short Term Loans and Overdrafts

Total Value AddedThe difference between revenue (including other income) and expenses, cost of materials and services purchased from external sources

Total AssetsFixed Assets plus Investments plus Non Current Assets plus Current Assets

Working CapitalCapital required finance the day-to-day operations Current Assets minus Current Liabilities


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NOTICE IS HEREBY GIVEN THAT the Sixty Fourth Annual General Meeting of John Keells PLC will be held on 29th June 2011 (Wednesday) at 10.00 a.m. at the HR Auditorium (Ground Floor) of John Keells Holdings PLC, No. 130 Glennie Street, Colombo 2. The business to be brought before the Meeting will be:

• To read the Notice convening the Meeting

• To receive and consider the Report of the Directors and the Statement of Accounts for the Financial Year ended 31st March 2011 with the Report of the Auditors thereon

• To re-elect as Director, Mr. A.D. Gunawardene who retires in Terms of Article 83 of the Articles of Association

• To re-elect as Director, Ms. S.T. Ratwatte who retires in Terms of Article 83 of the Articles of Association

• To re-appoint Auditors and to authorise the Directors to determine their remuneration

• To authorise the Directors to determine and make donations

• To consider any other business of which due notice has been given

Note:

I. A member unable to attend is entitled to appoint a proxy to attend and vote in his/her place

II. A proxy need not be a member of the Company

III. A member wishing to vote by proxy at the meeting may use the Proxy Form enclosed

IV. To be valid, the completed Proxy Form must be lodged at the registered office of the Company not less than 48 hours before the meeting

By Order of the Board

KEELLSCONSULTANTSPRIVATELIMITEDSecretariesColombo

03rd June 2011

Notice of Meeting


88

Notes


89

Notes


90

Notes


91

I/We……………...............……………………………………………….............………............................................................................of…………………………………………………………............….....................................................................................................................being a member/members of John Keells PLC hereby appoint

……………………………………………………………………………………….........................................................................................of ……………………………………………………………........................................................................................... or failing him/her

Mr. Susantha Chaminda Ratnayake of Colombo, failing himMr. Ajit Damon Gunewardene of Colombo, failing himMr. James Ronnie Felitus Peiris of Colombo, failing himMr. Lallith Devakumar Ramanayake of Colombo, failing himMr. Tilak de Zoysa of Colombo, failing himMr. Kavantissa Danudra Weerawardene Ratnayaka of Colombo, failing himMs. Yolande Ann Hansen of Colombo, failing herMs. Sharmini Tamara Ratwatte of Colombo

as my/our proxy to vote for me/us on my/our behalf at the Sixty Fourth Annual General Meeting of the Company to be held on 29th June 2011 and at every poll which may be taken on consequence of the aforesaid meeting and at any adjournment thereof.

Signed this ……..………………….. day of …………………...Two Thousand and Eleven.

………………………….. Signature of Shareholder

Note:(1) A proxy need not be a member of the Group.(2) Instructions regarding completion appear on the reverse hereof.

Form of Proxy


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Instructions To Completion

1) To be valid, the Form of Proxy must be deposited at the Registered Office of the Company, 130 Glennie Street, Colombo 2, not less than 48 hours before the time appointed for holding the meeting.

2) In perfecting the Form of Proxy, please ensure that all details are legible, sign in the space provided and fill in the date of signature.

3) If you wish to appoint a person other than the Directors as your proxy, please insert the relevant details in the space provided overleaf and initial against this entry.

4) In the case of a company or body corporate, the Proxy must be executed under its common seal which should be affixed and attested in the manner prescribed by its Articles and Association of Constitution.

Name of Company John Keells PLC

Company Registration Number PQ 11

Name of Subsidiaries John Keells Stock Brokers (Pvt) LtdJohn Keells Warehousing (Pvt) Ltd

Name of Associate CompanyKeells Realtors Limited

Legal Form: Public Limited Liability Company listed on the Colombo Stock Exchange(Incorporated in Sri Lanka in 1960)

Registered Office: P.O. Box 76, 130, Glennie Street, Colombo 2, Sri LankaTel: 2306000Telex: 21389 KEELLS CETelefax: 2446223E-mail: [email protected]

Directors S.C. RatnayakeA.D. GunewardeneJ.R.F. PeirisL.D. Ramanayake T. de Zoysa K.D.W. RatnayakaMs. Y.A. HansenMs. S.T. Ratwatte

Corporate Information

Secretaries & Registrars Keells Consultants (Private) Limited130, Glennie Street, Colombo 2

Auditors Messrs. Ernst & YoungChartered AccountantsP.O. Box 101, Colombo

Principal Bankers (in alphabetical order) Bank of CeylonCommercial Bank of Ceylon Ltd.Deutsche BankDFCC Vardhana BankHatton National Bank Hongkong & Shanghai Banking Corporation Ltd.Nation’s Trust BankNational Development Bank PLCPeople’s BankSampath Bank Ltd.Seylan Bank Ltd.Standard Chartered Bank

Management ReportsFinancial Highlight 3 Financial Calendar 3 Group Structure 4 Being Rooted Chairman’s Message 5Chief Executive Officer’s Report 7 Board of Directors 11 Senior Management Team 13 Human Resources 14 Corporate Social Responsibility 15 Corporate Governance 17 Risk Management 26 Audit Committee Report 29 Historical Milestones 32

Financial ReportsAnnual Report of The Board of Directors 35 The Statements of Directors Responsibility 42Independent Auditor’s Report 43 Balance Sheet 44 Income Statement 45 Statement of Changes in Equity 46 Cash Flow Statement 47 Notes to the Financial Statements 49Statement of Value Added 78 Information to Shareholders and Investors 80 Five Year Summary 82Key Ratios and Information 84 Glossary of Financial Terminology 86 Notice of Meeting 87Form of Proxy 91

Produced by Copyline (Pvt) Ltd Printed by Gunaratne Offset Ltd

John Keells PLC

Annual Report

2010/2011

The way it grows

John Keells PLCP.O. Box 76, 130 Glennie Street, Colombo 02

Sri Lanka

John Keells PLC

Annual R

eport 2010/2011

Documents

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