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THE CLIMB
LANKA REALTY INVESTMENTS PLC | ANNUAL REPORT 2019/20
At Lanka Realty Investments, we are a highly diversified real estate entity
that has remained resilient amidst adversity.
Over the years we have created a positive, sustainable business impact on
all stakeholders including shareholders, customers, employees, business
partners and the Sri Lankan economy. Even as our journey grew steeper
and difficult, we continued on a path towards exponential growth and
achieved increased profitability during the year under review.
Today our optimism and capabilities have strengthened our workforce
to maintain consistency and continuity; consolidated by a solid business
strategy that ensures a resilient transition into a prosperous future.
Financial and Operational Highlights ............................................ 03
LRI Group Structure ........................................................................... 04
Chairman’s Statement ....................................................................... 06
Executive Directors’ Review .............................................................. 08
Board of Directors .............................................................................. 10
Management Discussion & Analysis ............................................... 13
Corporate Governance ...................................................................... 18
Annual Report of the Board of Directors
on the Affairs of the Company ....................................................... 20
Statement of Directors’ Responsibilities
for Financial Reporting ................................................................. 27
Related Party Transactions
Review Committee Report ........................................................... 28
Report of the Audit Committee ....................................................... 29
Risk Management .............................................................................. 30
Independent Auditor’s Report ......................................................... 32
Statement of Profit or Loss ............................................................... 35
Statement of Comprehensive Income ........................................... 36
Statement of Financial Position ...................................................... 37
Statement of Changes in Equity ...................................................... 39
Statement of Cash Flows .................................................................. 40
Notes to the Financial Statements .................................................. 42
Ten Year Summary ........................................................................... 104
Investor Information ........................................................................ 105
Corporate Information .................................................................... 107
Group Directory ............................................................................... 108
Notice of Annual General Meeting ................................................ 110
Form of Proxy .................................................................................... 111
CONTENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 3
FINANCIAL AND OPERATIONAL HIGHLIGHTS
2020 2019
LKR LKR
Earning Highlights and Ratios
Revenue 203,901,916 149,355,356
Gross Profit 47,907,783 60,299,735
Results from Operating Activities (108,540,549) (11,465,466)
Change in Fair Value of Investment Properties 1,037,759,904 48,096,667
Profit for the Year 609,885,409 3,639,304
Profit Attributable to Equity Holders of the Company 615,453,503 3,969,202
Basic/Diluted Earnings Per Share (EPS) 4.48/2.96 0.15/0.15
Return on Equity (ROE) 7.6% 0.2%
Return on Assets (ROA) 5.3% 0.2%
Financial Position Highlights and Ratios
Total Assets 11,593,959,372 2,058,529,875
Equity Attributable to Equity Holders of the Company 8,056,387,821 1,667,840,381
Total Debt 2,639,230,940 51,484,703
Total Equity 8,089,661,276 1,700,323,267
Number of Shares in Issue 193,481,296 44,301,443
Net Assets Per Share 41.64 37.65
Debt/Equity 0.33 0.03
Debt/Total Assets 0.23 0.03
Total Assets
2019 LKR 2 Bn
LKR 12 Bn
Revenue
Profit After Tax
Equity Attributable to
Equity Holders
2019 LKR 149 Mn
2019 LKR 4 Mn
2019 LKR 2 Bn
LKR 204 Mn
LKR 610 Mn
LKR 8 Bn
41.64
0.33
NET ASSETS
PER SHARE
DEBT/EQUITY
4
LRI GROUP STRUCTURE
LANKA REALTY
DEVELOPMENTS
(PVT) LTD
LANKA REALTY
AMBALANGODA
(PVT) LTD
AMTRAD
LTD
LANKA REALTY
LEISURE (PVT) LTD
L & A QUARRIES
(PVT) LTD
BASELINE
HOLDINGS
(PVT) LTD
100% 100% 80%
100% 100% 100%
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 5
ALEXANDRA
HOLDINGS (PVT) LTD
ALMOND TREES
(PVT) LTD
THUDELLA
HOLDINGS
(PVT) LTD
285
DARLEY ROAD
(PVT) LTD
OAK STREET
(PVT) LTD
ILOOK VILLA
(PVT) LTD
CROWN RESORTS
(PVT) LTD
MULBERRY
HOLDINGS
(PVT) LTD
100% 100% 100%
100%
100% 100% 100%
100%
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/206
The total asset base grew from LKR 2.1 billion to LKR 11.6 billion
and the net asset base grew from LKR 1.7 billion to LKR 8.1 billion
during the year under review.
The key highlight for the year 2019/2020 has been the new
addition to the LRI Group by virtue of the share swap that was
carried out in August 2019. This successful acquisition and the
subsequent consolidation of six new subsidiaries have expanded
our current portfolio in the real estate and leisure industries.
The refurbishment of our commercial property on Darley Road,
Colombo 10, reached practical completion and has now been
rebranded as ‘HQ Colombo’. We are confident of attracting and
securing tenants of high repute given the enquiries we have
received. Lettings have now commenced.
Despite the Easter attacks in 2019, a resurgence in the tourism
industry was witnessed towards the latter part of the year. Whilst
the overall business climate remained muted during the last
quarter of 2019 due to the Presidential Elections in November
2019, the emergence of COVID-19 during March 2020 proved
to be an unprecedented event in LRI’s overall growth story.
However, the impact of this on LRI’s performance for the year
under review has been minimal.
Our construction material business represented by Amtrad Ltd,
specialises in the production of concrete blocks and paving
stones. The Company has stayed the course amidst a challenging
backdrop and demonstrated resilience due to the continuation
of existing projects and its aggressive marketing efforts despite
the decline in development activity following the immediate
aftermath of the Easter attacks in April 2019.
We have also reshaped many of our practices in all sectors by
taking into account the escalating global trend of focusing on
being environmental-friendly. Hardy and Archie have highlighted
the need to be sustainable. I am eager to see how they intend
on implementing this into the build process. This will allow us
to position our brand image as being sustainable towards the
environment but may additionally translate into operational
efficiencies, benefiting the performance throughout the Group.
Going forward, we cannot overlook the negative impact
of COVID-19 on most sectors and the challenging issues
that will accompany such a pandemic. Given the valuable
guidance provided by our Board and our astute and energetic
Management team, we are confident of sustaining our
business operations and successfully adapting to the changing
environment. Bold plans have been drawn up with a view
of pro-actively implementing same in the dynamic and fluid
environment that is emerging before us.
Our Group continues to receive due recognition on the Colombo
Stock Exchange by market participants with our share price
trading at close to Net Asset Value and our market capitalisation
being among the top 60 companies listed on the Colombo Stock
Exchange.
As the Chairman, I am pleased with the Management’s
performance and the ability to triumph against all odds and
I hope that you, our valued shareholders, share the same
perspective.
The Executive Directors’ Review and the Management Discussion
& Analysis will provide a crucial breakdown of the performance
of our operations and as to how the Group has been able to excel
during these times.
I wish to thank the Board of Directors for their continuous
commitment and guidance through this challenging trek. The
Management hasn’t failed to display extraordinary commitment
in order to reach the summit in our journey to the top. I would
also like to show appreciation towards our shareholders and
other stakeholders for their extended support and placing their
trust in the Group which is vital in realising our future aspiration
of being the No. 1 brand in the real estate space in Sri Lanka.
CHAIRMAN’SSTATEMENT
I am pleased to present the Annual Report and audited Financial Statements of Lanka Realty Investments PLC (LRI) for the Financial Year ending on the 31st March 2020, conveying a growing performance despite the many challenging and uncertain macro-economic factors faced by the country. Lanka Realty Investments PLC posted a LKR 610 million profit for the year compared with LKR 3.6 million reported in the previous financial year.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 7AnAnAnAnAnAnnnununununnuualalalalallllla RRRRepepepeporororort t tt 20202020201919191 /2/2/220000 || LALALLAALAL NKNKNKKKAA AAA REREREREREALALALALALTTYTTTYYY IIIINNVNVNVESESSSTMTMTMTMTMTT EEEENNNE TTTTTSTSTSTSTSTTTSTSTT PPPPPPPPPPPPPPLCLCLCLCLCCLCLCLCCLCLLLCL 7777
Mohan Joseph Ratnayake
Chairman
31st August 2020
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/208
Lanka Realty Investments PLC (LRI) has demonstrated a
commendable performance for the year 2019/20 with the overall
asset base increasing from LKR 2.3 billion to LKR 9.9 billion and
the net asset base from LKR 1.9 billion to LKR 7.5 billion.
The Group posted a Profit After Tax of LKR 610 million despite
the disruptions and resulting challenging environment due to
the Easter attacks in April 2019 and the emergence of COVID-19
in March 2020. Despite these challenges, to date, Lanka Realty
Investments PLC has been able to remain resilient and agile and
has adapted successfully to overcome the external pressures that
have affected the business environment as a whole. We have
put in place the requisite systems, processes and structures to
better align our operations in order to achieve our objectives
and will remain focused in our mandate to become the largest
income generating asset backed company on the Colombo Stock
Exchange (CSE).
ACQUISITIONS
During the period under review, LRI achieved a symbolic and
historical milestone; the carrying out of an acquisition of six
companies in the real estate and leisure sector amounting to
LKR 5.6 billion. This acquisition which was carried out via a share
swap was the largest carried out historically on the Colombo
Stock Exchange. The acquisition of the six companies enabled
LRI to diversify its property portfolio further within the real
estate space. As a result, the Group now has crucial land banks
in Colombo, assets under planning, development and fully
operational.
LRI has moved up the CSE league tables and is the 60th in terms
of market capitalisation on the Colombo Stock Exchange.
SUBSIDIARY OVERVIEW
On the direct property side of things, we are pleased that HQ
Colombo, our commercial office reached practical completion.
HQ Colombo offers an advanced office product with a quality
service whilst maintaining the rent and the service charge at
affordable levels, thereby giving value back to the tenant. We
were receiving several active inquiries during 4Q 2019 and 1Q
2020 and were successful in closing out three lettings. Given the
quality of the space and pricing we are confident of reaching
100% occupancy within the next 12 to 18 months.
In terms of affordable housing, our residential apartment project,
Mulberry Residencies is progressing well. The superstructure
is 90% completed and we are confident of the success of this
project given the location in Maradana, affordable price point
and quality of our build.
To support our residential initiatives, we have obtained
Preliminary Planning Clearance (PPC) for our land in Thudella
and intend on commencing our land sales soon. We have
obtained the development permit for our property on Baseline
Road. Of note we have a total of 1,600 affordable residential units
which we intend on developing out in the next 5 years.
Amtrad Ltd, our building material manufacturing operation faced
many challenges during the year. Declines in revenue were seen
in the immediate aftermath of the Easter attacks and additionally
due to the intense market competition. The slow-down in
investment towards infrastructure development during the lead
up to the Presidential Elections in November 2019 added further
downward pressure to the overall revenue of Amtrad.
Despite the country facing a decline in overall tourist arrivals by
20% in comparison to 2018/2019, our leisure sector has been
buoyant for the most part of 2019 given the revival of the overall
tourism numbers towards the latter part of the year. A clear
growth was tangible across our entire leisure portfolio but we
were unable to sustain the momentum due to COVID-19 and its
external ramifications.
We will continue to build LRI’s goodwill amongst all stakeholders
by ensuring that we consistently develop high quality products,
deliver consistent service and strive to provide our shareholders
with attractive returns.
APPRECIATION
The unwavering support and guidance from both the Chairman
and Board of Directors of Lanka Realty Investments have enabled
us to weather the storm thus far. We wish to extend our sincere
appreciation to the employees of Lanka Realty Investments
PLC whose determination, diligence and passion have allowed
the Group to withstand and overcome the challenges that were
presented to us for the period under review. Our gratitude is
extended to our loyal clients, suppliers, business partners,
shareholders, and other stakeholders for their support and
loyalty throughout the year.
Hisham Jamaldeen
Executive Director
Archie Buckland Warman
Executive Director
31st August 2020
EXECUTIVE DIRECTORS MESSAGE
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 9AnAnAnAnAnAnAnAnnnnnunununununuaalaalalaalall RRRepepeppporoorroo t tt t 22222022222222222222222 119/20 | LANKKA RERERERRRRRRRRR ALLTY IINVNVNN ESESE TMMMEENENENENENEENENENENENENENENENENENENEENENEEEENTSTSTST PPPLCLCCCLC 99999999999999999999999999
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2010
BOARD OF DIRECTORS
Mr. Mohan Joseph Ratnayake
Chairman – Independent Non-Executive
Director
Mr. Mohamed Hisham Jamaldeen
Executive Director
Mr. Terence Charles Smith
Non-Executive Director
Mr. Saravanan Neelakandan
Independent Non-Executive Director
Mr. Archie Warman
Executive Director
Mr. Kudagamage Jayantha Pradeep
Non-Executive Director
1 2
54
8
3
6
7 9
Mr. Ian Joseph McVeigh
Non-Executive Director
Mr. Piers Morgan
Non-Executive Director
Mr. Mohamed Firdouse Farook
Independent Non-Executive Director
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 11
1 Mr. Mohan Joseph Ratnayake
Chairman – Independent Non-Executive Director
Mr. Ratnayake is a Chartered Management Accountant by
profession and currently functions as the Managing Director
of Colonial Motors (Ceylon) Ltd. He serves as an Independent
Director of several companies and on audit committees. He
was the Chairman of the Committee that floated Sri Lanka’s first
Internationally Listed USD Bond for the expansion of Sri Lanka
Telecom and Mobitel, a leading telecom services provider in Sri
Lanka, successfully obtaining an international rating for Sri Lanka
Telecom when the sovereign had not been rated. Mr. Ratnayake
has an MBA and is a Fellow Member of the Chartered Institute of
Management Accountants, UK.
2 Mr. Mohamed Hisham Jamaldeen
Executive Director
Mr. Jamaldeen is a finance professional with over 20 years of
experience and a seasoned commercial property investor and
advisor. Mr. Jamaldeen serves as a Director of Hayleys PLC,
Talawakelle Tea Estates PLC, Haycarb PLC, Singer (Sri Lanka)
PLC, Singer Industries (Ceylon) PLC, Regnis (Lanka) PLC. He is the
Founding Managing Director of Steradian Capital Investments
(Pvt) Ltd and is responsible for financing, corporate structuring,
acquisitions and development. He has also been the Executive
Director of a number of real estate companies, focusing on
commercial property investment and development. He is a
Fellow of the Association of Certified Chartered Accountants,
UK and holds a degree in Engineering and Business from the
University of Warwick, UK.
3 Mr. Archie Warman
Executive Director
Mr. Warman is a qualified Chartered Surveyor. He has practiced
in commercial and residential real estate and has been involved
in investment brokerage, leasing and letting, valuations and
developments appraisals property management, landlord and
tenant law and asset management initially in the city and West
End of London at Hexell Wylie (now Savills). Mr. Warman was the
property Director at Newbridge Capital Investments Limited, a
property investments and development company, transacting
directly into UK commercial and London residential markets.
He is the Founder Managing Director of Steradian Capital
Investments (Pvt) Ltd.
Archie achieved a MA in Property valuation and Law at Cass
Business School (City University – London) and is a Member of
the Royal Institute of Chartered Surveyors.
4 Mr. Terence Charles Smith
Non-Executive Director
Mr. Smith is a Fund Manager, former FTSE CEO and author
of bestselling book ‘Accounting for Growth’ with over four
decades working in international finance. He began his career at
Barclays Bank, before becoming a stockbroker at W Greenwell
& Co in London and a top rated bank analyst. Mr. Smith led the
management buy-out of the Stockbroker Collins Stewart, which
was floated on the London Stock Exchange, and later became
the Chairman of Collins Stewart and Chief Executive of the
interdealer broker Tullett Prebon. In 2010, Mr. Smith founded
Fundsmith, a fund management company that runs one of the
most popular global equity funds in the UK, with an AUM of over
£28 billion. In 2012, he was appointed a Member of the New
Zealand Order of Merit for services to New Zealand-UK relations.
5 Mr. Ian Joseph McVeigh
Non-Executive Director
Mr. McVeigh commenced his career as a Stockbroker at
Sheppards and Chase and subsequently moved to UBS during
the period 1979-1998. Later, he took on the role of Fund Manager
between 1998-2003, at Schroder Investment Management, a
British multinational asset management company. He was
mandated to manage institutional and mutual funds including
the Schroder Income Fund. From 2004- 2015, he was a Senior
Fund Manager at Jupiter Asset Management, running the UK
Growth Fund with assets of circa £1 billion. From 2015-2017, he
was Head of Governance for Jupiter Asset Management.
He completed his tertiary education at Merton College, Oxford by
obtaining a Degree in Modern History.
6 Mr. Piers Morgan
Non-Executive Director
Mr. Morgan is the Chairman and CEO of The Animal Magic Group
of Companies. A lifelong entrepreneur, Mr. Morgan was born in
London and educated at Harrow School, completing his higher
education qualified in Construction Engineering and Building
Management in 1968.
His early business enterprises, which started in 1969, were
quite diverse and included the logistics and leisure industries.
As a result of moving to the Netherlands in 1988 he became
involved in the toy industry which led to the foundation of
what has grown, over the past 30 years, to become The Animal
Magic Group, based in Hong Kong with extensive manufacturing
facilities in Southern China and sales across the globe.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2012
BOARD OF DIRECTORS
In the early 90s, before Animal Magic had established its own
factories in China, Mr. Morgan manufactured some of his toy
products in Sri Lanka. This gave him some insight into the
Sri Lankan business environment and a profound love of its
natural beauty as well as great respect for the culture of its people.
7 Mr. Mohamed Firdouse Farook
Independent Non-Executive Director
Mr. Farook is an entrepreneur and investor with over 20
years of experience in diversified fields of business including
telecommunications, renewable energy, real estate
development, venture capital and investment promotion.
He served as a member of the Board of Directors at Sri Lanka
Telecom PLC (SLT) and as Director of other subsidiary companies
of SLT. He was the Founding Member and Director of Pan Asian
Power PLC. He also serves as a Board Member and Director
of several Sri Lankan, Malaysian and Singaporean companies
including Lake Side Property Developers (Pvt) Ltd, Omega Group
(Pvt) Ltd and Power Hub Green Energy (Pvt) Ltd.
He is an old boy of Royal College, Colombo.
8 Mr. Saravanan Neelakandan
Independent Non-Executive Director
Mr. Neelankandan is an Attorney-at-Law and a Barrister of
Lincoln’s Inn. He has been practicing in the legal profession for
over 14 years with a wide-ranging legal practice in the areas of
commercial law, corporate law, banking and finance law, foreign
investment, infrastructure projects and dispute resolution. He is
also a Co-Editor of the Bar Association Law Journal.
9 Mr. Kudagamage Jayantha Pradeep
Non-Executive Director
Mr. Pradeep is the Financial Controller of Steradian Capital
Investments (Pvt) Ltd.
He holds a Bachelor of Science in Business Administration
(Special) Degree from the University of Sri Jayawardenepura,
and he is also an Associate Member of the Institute of Chartered
Accountants of Sri Lanka.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 13
MANAGEMENT DISCUSSION& ANALYSIS
REAL ESTATE SEGMENT
In the years to come, we aspire to
facilitate innovative commercial
and residential spaces, all within
close proximity to the bustling
city, enabling customers from
every walk of life to experience
convenience in an urban setting.
LEISURE SEGMENT
Our hotels and villas are nestled
along the coastal line and the city,
with properties that embrace a
combination of contemporary
architecture and design, allowing
our customers to experience
the essence of true Sri Lankan
hospitality.
MANUFACTURING SEGMENT
At Amtrad Limited, we are
Sri Lanka’s oldest manufacturer
of concrete blocks and paving
stones with a strong focus on
sustainable innovation and eco-
friendliness. We are committed
to eliminate wasteful processes
and cater to growing production
demands, whilst securing industry
growth and leading infrastructure
development.
REAL ESTATE SEGMENT
HQ Colombo
HQ Colombo is a state of the art commercial space owned by
our real estate subsidiary, Lanka Realty Developments (LRD). The
property consists of 8 floors and a floor area of approximately
78,133 Sq.ft. HQ Colombo is strategically located in the heart
of the Central Business District in Colombo 10 allowing easy
access to a variety of commercial facilities such as; banks, public
transportation facilities and other commercial establishments.
A successful refurbishment was carried out during the year under
review and has positioned the commercial office as a highly
modernised commercial space available in Colombo 10. The
completion of the building has allowed the LRI staff and a few
other commercial establishments to occupy the premises sooner
than we expected giving us greater advantage in attracting more
tenants. The office has achieved an occupancy of 12% during the
year under review by successfully closing out three lettings with a
further three active inquiries currently being pursued.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2014
The economic downturn that Sri Lanka experienced since
April 2019 due to the Easter Sunday bombings and the
general slowdown in the business environment has dissuaded
institutions from expanding their current business and seeking
out additional office space. This resulted in a tangible slow-down
in demand for commercial office space. Given this change in
industry dynamic, our renting/lettings expectations for the year
were curtailed, although we are pleased with the traction that
we have received in this regard thus far. We are cognisant of the
need by certain organisations that seek to downsize and has
expressed their requirement for work space that is both modern
and cost effective. We feel this segment will grow significantly
in the medium to long term. In order to cater to these changing
requirements we have aligned our marketing efforts accordingly.
Mulberry Residencies
Mulberry Residencies is a residential apartment project of LRI,
located at the core of Colombo 09. The project comprises 121
units across three 15-floor towers. The target market of the
property is towards the middle-income sector through the
provision of two to three bedroom affordable apartment units.
Other features of the property will include a rooftop gymnasium,
two swimming pools and a landscaped rooftop garden.
Currently 12 floors of all three towers have been fully completed;
however, delays in construction were caused following the
immediate aftermath of the Easter attacks and due to the lock-
down in the country that took place in March 2020. Strict health
and safety measures have been adopted on-site to adhere
to COVID-19 health regulations. The project is progressing as
planned and is expected to be completed by end December
2021. Pre-sales have commenced and aggressive marketing and
promotional campaigns are underway.
MANAGEMENT DISCUSSION& ANALYSIS
Mulberry Residencies is a residential apartment
project of LRI, located at the core of Colombo
09. The project comprises 121 units across three
15-floor towers.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 15
Darley Road
This prime property comprises 214 perches and is located
on Darley Road, within close proximity to leading schools,
hotels, supermarkets and commercial hubs. Approval for the
development of 1.1 million Sq.ft. has been obtained.
We have clear plans on unlocking the value of this asset in the
coming year.
Baseline Holdings
The property comprises 230 perches and is situated on a wide 40
foot lane on Baseline Road, Colombo 09. The project proposal
includes a 42-floor tower consisting of 410 residential apartment
units ranging from two to three bedrooms. The project is
currently at planning stage.
Thudella Holdings
This residential real estate project compromises 780 perches
plot, located in Ja-Ela along the Pamunugama -Thudella main
road. The proposed plan for the project is to develop residential
units consisting of a combination of standalone housing units
and apartment units. Currently the project is in the stage of
receiving the subdivision approvals.
MANUFACTURING SEGMENT
Amtrad Limited
LRI’s manufacturing line, Amtrad Limited which has been in
operation since 1980 is Sri Lanka’s oldest manufacturer of
concrete blocks and paving stones and has been a household
name since its incorporation.
The Company has been continuously focusing on innovative
and sustainable production practices in order to be in line with
the growing trend of being eco-friendly as well as mitigating
and eliminating wasteful processes. During the year, production
was carried out by utilising all three plants in order to avoid any
shortfalls in supply and cater to the growing production demand.
However due to the Easter Sunday attacks and the COVID-19
pandemic, the Sri Lankan Government’s construction drive had
eased, resulting in downward pressure on the overall revenues
of Amtrad.
With the new Government in place and the expected thrust
towards infrastructure development, Amtrad is ideally positioned
to take advantage of the envisaged growth in the industry.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2016
LEISURE SEGMENT
W15 Weligama
W15 is a 10-room luxury beachfront boutique hotel and beach
club nestled along the acclaimed coastal line of Weligama and
features a 13-metre long bar and an open-air restaurant. The
resort had experienced volatility in its occupancies during the
period under review, firstly due to the Easter Sunday attacks and
subsequently due to the emergence of COVID-19. Despite the
downward pressure due to external factors, occupancy numbers
stood at 65% for the period under review. The hotel was able to
take advantage of the revival in the tourism sector in December
2019; however the outbreak of the COVID-19 Pandemic since
March 2020 has countered the positive impact and caused
a reduction in turnover during 1Q 2020. W15 Weligama is
experiencing clear signs of a pick-up given the promotional
campaigns and deep-discounts that have been offered to locals.
W15 Escape Ahangama
W15 Escape is a 10-room boutique villa and is perched amongst
the wilderness of the coastal town, Ahangama. The property
embraces a combination of Asian design, Scandinavian thinking
and Western standards. The villa consists of a blend of superior
rooms, garden suites and a well- appointed family suite. The
villa’s attraction being its contemporary design, seclusion and
peaceful environment has its select group of discerning guests
who experience true Sri Lankan hospitality in this luxury abode.
MANAGEMENT DISCUSSION& ANALYSIS
W15 is a 10-room luxury beachfront boutique
hotel and beach club nestled along the
acclaimed coastal line of Weligama and features
a 13-metre long bar and an open-air restaurant.
AV15 Colombo
This acquisition during the period under review resulted in the
addition of six modern townhouses in the heart of Colombo.
The inclusion of AV15 further increased our room count by 24,
boosting our revenue streams. Villas have been converted into
apartments with individual rooms and shared common areas.
Bookings can be made for an entire villa or individual rooms,
depending on the customers’ requirement. However this
property was significantly impacted by both the Easter Sunday
attacks and the COVID-19 pandemic. We are currently utilising
this time to carry out a refurbishment of the villas in order to
upgrade our product and service offering.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 17
Lanka Realty Ambalangoda (Pvt) Ltd (LRA)
LRA is a property subsidiary that comprises 270-perch property
in Ambalangoda on a 50-year lease. The property
is strategically located on the renowned Southern Coast of
Sri Lanka within minutes’ drive from the historical city of Galle.
This area is home to many beach resorts and villas making it an
ideal location for the venture. The proposed project includes
a 50-room hotel, restaurant and bar. Conceptual plans have
been finalised and project development is expected take place
in 4Q 2020.
Lanka Realty Leisure (Pvt) Ltd (LRL)
LRL consists of a 7-acre property in Yala on a 99-year lease.
We aim to develop 30 tented lodges within the world-renowned
Yala National Park. The National Park has been ranked the
second largest national sanctuary in Sri Lanka and is a featured
attraction amongst both foreign tourists and locals.
LRL consists of a 7-acre property in Yala on a 99-year lease. We aim to develop 30 tented lodges within the world-
renowned Yala National Park. The national park has been ranked the second largest national sanctuary in Sri
Lanka and is a featured attraction amongst both foreign tourists and locals.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2018
CORPORATE GOVERNANCE
The Company aspires to adhere to the best practices in Corporate
Governance by ensuring greater transparency, business integrity,
professionalism and ethical values in the best interest of all
stakeholders.
BOARD OF DIRECTORS
The Board is the highest authority and it provides leadership
to achieve the Company’s strategic goals and compliance
with generally accepted corporate governance practices, the
requirements under the Listing Rules of the Colombo Stock
Exchange and the Code of Best Practice issued by the Institute of
Chartered Accountants of Sri Lanka.
COMPOSITION OF THE BOARD
The Board collectively possesses a diverse range of skills and
competencies, including entrepreneurship, financial, legal,
marketing and property development. They are all business leaders
and professionals of high repute. Their profiles are given on
pages 10 to 12.
As at the reporting date, the Board comprised of two (02) Executive
and seven (07) Non-Executive Directors.
INDEPENDENCE OF DIRECTORS
Each Non-Executive Director has submitted a Declaration of his
independence or non independence as required under the Listing
Rules of the Colombo Stock Exchange.
Based on the declarations so submitted by the Non-Executive
Directors, the Board has determined that three (03) Non-Executive
Directors, the Chairman Mr. R M M J Ratnayake and Directors, Mr.
Saravanan Neelakandan and Mr. Mohamed Firdouse Farook are
‘Independent’ as per the criteria set out in the Listing Rules of the
Colombo Stock Exchange.
CHAIRMAN AND EXECUTIVE DIRECTORS
The roles of the Chairman and Executive Directors are separate
with a clear distinction of responsibilities, which ensures balance of
power and authority.
Mr. R M M J Ratnayake who is an Independent Non-Executive
Director is the Chairman of the Board of Directors and Mr. M H
Jamaldeen and Mr. A J B Warman function as Executive Directors.
BOARD MEETINGS
The Board meets formally every quarter as a matter of routine. Ad
hoc meetings are held as and when necessary to maintain regular
communication to discuss relevant business issues and any other
matter directed to the Board which can be resolved by circular
resolution, is decided by Resolutions in writing. Seven days prior
to every meeting the Directors are provided with the relevant
information and background material relevant to the agenda.
The Board’s functions include the assessment of the adequacy
and effectiveness of internal controls, compliance with applicable
laws and regulations, review of management and operational
information, adoption of annual and interim accounts before they
are published, review of exposure to key business risks, strategic
direction of business, approval of annual budgets, monitoring
progress towards achieving the budgets, approvals relating to key
appointments, sanctioning major capital expenditure etc.
The attendance of the Directors at Board Meetings held during the
year was as follows :
Name of Director Status Attendance
Mr. Ratnayake Mudiyanselage Mohan
Joseph Ratnayake *
NED/IND 5/5
Mr. Terence Charles Smith NED 4/5
Mr. Ian Joseph McVeigh NED 5/5
Mr. Mohamed Hisham Jamaldeen ED 5/5
Mr. Archie James Buckland Warman ED 5/5
Mr. Saravanan Neelakandan NED/IND 5/5
Mr. Mohamed Firdouse Farook NED/IND 5/5
Mr. Kudagamage Jayantha Pradeep NED 5/5
Mr. Piers Morgan NED 5/5
NED - Non-Executive Director
ED - Executive Director
IND - Independent Director
* Chairman
APPOINTMENT OF DIRECTORS/RE-ELECTION OF
DIRECTORS/APPOINTMENT OF DIRECTORS OVER 70 YEARS
OF AGE
The Board collectively decides on the appointment of Directors. The
Company’s Articles of Association requires any Director appointed
during the year to hold office until the next Annual General Meeting,
at which he retires and seeks re-election by the shareholders. One
third of Directors other than the Chairman and Executive Directors
retire by rotation at each Annual General Meeting and if eligible seek
re-election by the shareholders.
Directors over 70 years of age shall be appointed/re-appointed by
the shareholders only.
BOARD SUB COMMITTEES
The Board of Directors has formed three Sub Committees in
compliance with the Listing Rules of the Colombo Stock Exchange.
Current composition of Board Sub Committees is set out in the
Annual Report of the Board of Directors appearing on pages 23 and
24. As required by the Listing Rules, the Related Party Transactions
Review Committee Report and the Report of the Audit Committee
appear on pages 28 and 29 respectively, whilst the Remuneration
Policy appears on page 23.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 19
Meetings of Board Sub Committees
The Board Audit Committee and Related Party Transactions Review
Committee meet quarterly with provision to schedule additional
meetings if required. The Remuneration Committee meets as and
when necessary.
The attendance at Board Sub Committee Meetings held during the
year was as follows:
Audit Committee
Name of Director Status Attendance
Mr. Ratnayake Mudiyanselage Mohan
Joseph Ratnayake *
NED/IND 4/4
Mr. Saravanan Neelakandan NED/IND 4/4
Mr. Kudagamage Jayantha Pradeep NED 4/4
NED - Non-Executive Director
IND - Independent Director
Related Party Transactions Review Committee
Name of Director Status Attendance
Mr. Ratnayake Mudiyanselage Mohan
Joseph Ratnayake *
NED/IND 6/6
Mr. Saravanan Neelakandan NED/IND 6/6
Mr. Mohamed Firdouse Farook NED/IND 5/6
NED - Non-Executive Director
IND - Independent Director
COMPANY SECRETARY
P W Corporate Secretarial (Pvt) Ltd acts as the Company Secretary.
The Company Secretary maintains minutes of all Board, Audit
Committee, Related Party Transactions Review Committee,
Remuneration Committee, meetings and attends to Shareholder
related matters. The Company Secretary assists in ensuring the
Board procedures are followed.
The Company Secretary is also responsible for timely circulation
of information and papers related to Board and Sub - Committee
meetings and advice on matters relating to corporate governance.
Board procedures, rules and regulations. All Directors have access to
the advice and services of the Company Secretary.
INTERNAL CONTROLS
The Board is responsible for the Company’s internal controls. In this
respect controls are established for safeguarding the Company’s
assets, making available accurate and timely information and
imposing greater discipline on decision making. The process is
strengthened by regular review by the Audit Committee on internal
controls and procedures in the areas of finance, operations, human
resources, and relevant legal and regulatory compliance.
COMPLIANCE WITH LAWS AND REGULATIONS
All necessary steps have been taken by the Board and the
Management to ensure compliance with all relevant laws and
regulations. The services of Lawyers, Auditors and other Consultants
are obtained whenever it is necessary, to provide assurance to the
Board in this respect.
GOING CONCERN
The Directors have reviewed the Company’s budgets, capital
expenditure requirements and future cash flows and are satisfied
that the Company has sufficient resources to continue in operations
for the foreseeable future. Therefore, the Going concern principle
has been adopted in the preparation of the Financial Statements.
FINANCIAL REPORTING
The Board aims to provide and present a balanced assessment
of the Company’s position and prospects in compliance with the
Sri Lanka Accounting Standards (LKAS / SLFRS) and the relevant
Statutes and has established formal and transparent processes for
financial reporting and internal controls.
The Statement of Directors’ Responsibilities for the Financial
Reporting is given on page 27 of this Report.
CORPORATE DISCLOSURES AND SHAREHOLDER
RELATIONSHIP
The Company is committed to providing timely and accurate
disclosure of all price sensitive information, financial results and
significant developments to all shareholders, the Colombo Stock
Exchange and where necessary, to the general public.
Shareholders are provided with the Annual Report and, the
Company disseminates to the market, Interim Financial Statements
in accordance with the Listing Rules of the Colombo Stock
Exchange.
The Annual General Meeting provides a platform for shareholders to
discuss and seek clarifications on the activities of the Company and
its subsidiaries.
COMPLIANCE
The Company has complied with Rule 7.10 of the Listing Rules of the
Colombo Stock Exchange on ‘Corporate Governance’.
By Order of the Board
Lanka Realty Investments PLC
P W Corporate Secretarial (Pvt) Ltd
Director / Secretaries
31st August 2020
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2020
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY
The Board of Directors of Lanka Realty Investments PLC has
pleasure in presenting to the shareholders their Annual Report
on the affairs of the Company together with the Audited Financial
Statements of the Company and the Consolidated Financial
Statements of the Company and its subsidiaries for the financial
year ended 31st March 2020, conforming to all relevant statutory
requirements.
This Report provides the information as required by the
Companies Act, No.07 of 2007, Listing Rules of the Colombo
Stock Exchange and the recommended best practices.
GENERAL
Lanka Realty Investments PLC (the Company) was incorporated
as a limited liability company under the name ‘Asian Cotton
Mills Limited’ on 29th November 1967 under the Companies
Ordinance No. 51 of 1938. The Company was re-registered under
the new Companies Act No. 07 of 2007 as Asian Cotton Mills PLC
on 16th April 2008, under Company No. PQ 139.
The name of the Company was changed to ‘Ascot Holdings PLC’
on 16th October 2008 and changed as ‘Lanka Realty Investments
PLC’ on 19th September 2018.
The Registered Office of the Company is situated at 1st Floor, HQ
Colombo, 464A, T B Jayah Mawatha Colombo 10.
The ordinary shares of the Company are listed on the Main Board
of the Colombo Stock Exchange.
PRINCIPAL ACTIVITIES OF THE COMPANY AND ITS
SUBSIDIARIES
Lanka Realty Investments PLC, the Group’s holding company,
manages a portfolio of holdings in property development,
commercial property, affordable housing, manufacturing,
tourism and leisure, which together constitute the LRI Group.
Lanka Realty Investments PLC held the following investments as
at the end of the year under review:*
(i) 100% of the issued shares of Lanka Realty Developments
(Pvt) Ltd which is engaged in the business of commercial
property development.**
(ii) 80% of the issued shares of Amtrad Limited which is engaged
in the manufacturing and selling of cement/concrete
building blocks and paving stones.
(iii) 100% of the issued shares of L & A Quarries (Pvt) Ltd which
was in the business of operating crusher plants.
L & A Quarries (Pvt) Ltd did not operate any crusher plants
during the year under review.
(iv) 100% of the issued shares of Lanka Realty Leisure (Pvt) Ltd.
This Company holds leasehold rights of a land in Yala, which
is to be developed as a Hotel property.
(v) Lanka Realty Ambalangoda (Pvt) Ltd which holds leasehold
rights of a property in Ambalangoda to be developed as a
Hotel property.
(vi) 100% of the issued shares of Baseline Holdings (Pvt) Ltd
which is engaged in the business of residential property
development in Colombo 09.
(vii) 100% of the issue shares of Alexandra Holdings (Pvt) Ltd
which owns six townhouses and which have been converted
into villas.
(viii) 100% of the issued shares of 285 Darley Road (Pvt) Ltd
which is engaged in the business of residential property
development in Colombo 10.
(ix) 100% of the issued shares of Mulberry Holdings (Pvt) Ltd
which is engaged in the business of residential property
development in Colombo 10.
(x) 100% of the issued shares of Thudella Holdings (Pvt) Ltd
which is engaged in the business of residential property
development in Ja-Ela.
(xi) 100% of the issued shares of Almond Trees (Pvt) Ltd which
owns a property each in Weligama and Ahangama operated
as leisure properties.
SHARE SWAP RESULTING IN A PRIVATE PLACEMENT
Consequent to the approval granted by the shareholders
at the Extraordinary General Meeting held on 13th August
2019, Lanka Realty Investments PLC, acquired six (06) private
companies namely, Baseline Holdings (Pvt) Ltd, Alexandara
Holdings (Pvt) Ltd, 285 Darley Road (Pvt) Ltd, Mulberry Holdings
(Pvt) Ltd, Thudella Holdings (Pvt) Ltd and Almond Trees (Pvt) Ltd
which were engaged in the business of commercial property,
affordable housing, tourism and leisure for a total consideration
of LKR 5,630,035,257/- via a Share Swap resulting in a Private
Placement.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 21
Accordingly, a total of 149,179,853 ordinary voting shares of the
Company were issued to the shareholders of the said six (06)
private companies, at an issue price of LKR 37/52 per share.
RIGHTS ISSUE
At an Extraordinary General Meeting of the Company held on
12th March 2020 the shareholders approved a Rights Issue of
Shares in the proportion of One (01) new ordinary voting share
for every Two (02) ordinary voting shares held as at the relevant
date at an issue price of LKR 37/50 per share.
Resulting from the lockdown and the disruption to the postal
services in the country, the Rights Issue dates were extended and
it closed on 22nd May 2020.
A totality of 17,889,132 shares were issued in the Rights Issue and
the amount raised was LKR 670,842,450/-.
REVIEW OF BUSINESS
The Chairman’s Message on pages 6 to 7 and the Executive
Directors’ Review on pages 8 to 9 provide an overview of
business performance of the Company and its subsidiaries
(hereinafter sometimes collectively referred to as the Group), and
future developments. These Reports together with the Financial
Statements, reflect the state of affairs of the Company and its
subsidiary companies.
The segment-wise contribution to Group Results, Assets and
Liabilities are provided in Note 41 to the Financial Statements on
pages 102 and 103.
FINANCIAL STATEMENTS
The Financial Statements of the Company and the Consolidated
Financial Statements of the Group have been prepared in
accordance with the Sri Lanka Accounting Standards (SLFRS)
laid down by the Institute of Chartered Accountants of Sri Lanka
and comply with the requirements of the Companies Act,
No.07 of 2007.
The aforesaid Financial Statements, duly signed by the Head
of Finance and Planning, two Directors on behalf of the Board
and the Auditors are included in this Annual Report and form an
integral part of this Annual Report of the Board of Directors.
AUDITORS’ REPORT
The Report of the Auditors on the Group Financial Statements of
the Company is attached with the Financial Statements.
ACCOUNTING POLICIES AND CHANGES DURING THE YEAR
The accounting policies adopted in the preparation of the
Financial Statements are given on pages 44 to 56 . There were
no significant changes to the accounting policies used by the
Company during the year under review vis-à-vis those used in the
previous year, except as referred to in Note 4.21 to the Financial
Statements.
DIRECTORS RESPONSIBILITIES FOR FINANCIAL
REPORTING
The Directors are responsible for the preparation of the Financial
Statements of the Company and the Group, which reflect a true
and fair view of the state of affairs.
The Directors are of the view that the Statement of Income,
Statement of Financial Position, Statement of Changes in
Equity, Cash Flow Statement and Notes to Financial Statements
appearing on pages 35 to 103 have been prepared in conformity
with the requirements of the Sri Lanka Accounting Standards,
Companies Act, No.07 of 2007, Sri Lanka Accounting and Auditing
Standards Act, No. 15 of 1995 and the amendments thereto and
the Listing Rules of the Colombo Stock Exchange.
The Statement of Director Responsibility for Financial Reporting
is given on page 27.
NET REVENUE
The net revenue of the Group during the year under review was
LKR 203.90 Mn (LKR 149.36 Mn in the year 2018/19).
RESULTS AND APPROPRIATIONS
Performance of the Group and the Company and Transfers
to Reserves
The Net Profit/(Loss) before Tax of the Group and the Company
amounted to LKR 762.33 Mn and (LKR 28.31 Mn) respectively
in the year under review [LKR 15.54 Mn and (LKR 10.91 Mn)
respectively in 2018/19].
The Net Profit/(Loss) after Tax of the Group and the Company
amounted to LKR 609.89 Mn and (LKR 28.34 Mn) respectively
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2022
in the year under review (LKR 3.64 Mn and LKR 11.06 Mn
respectively in 2018/19).
Details of Appropriations are given in the Statement of Changes
in Equity on page 39.
Dividends on ordinary shares
The Directors do not recommend the payment of a dividend for
the year under review.
Reserves
A summary of the Group’s Reserves is given in Note 25 to the
Financial Statements on page 84.
Property, Plant and Equipment and Significant Changes in the
Company’s and its subsidiaries’ fixed assets and market value of
land is given in Note 15 to the financial statements.
Land Holdings
The Company does not own any land or investment property.
Land holdings and investment property of subsidiary companies
are set out in Notes 15 and 17 to the Financial Statements.
The immovable property held by the subsidiary companies were
revalued as at 31st March 2020 by an Independent Valuer and
they are recorded at their market values as set out in Note 17 to
the Financial Statements.
Stated Capital
The Stated Capital of the Company as at 31st March 2020 was
LKR 6,380,094,108/- represented by 193,481,296 Ordinary Shares.
(LKR 785,425,237/- represented by 44,301,443 Ordinary Shares as
at 31st March 2019)
SHARE INFORMATION
Distribution Schedule of shareholdings/other information
Information on the distribution of shareholding and the
respective percentages analysis of shareholders and other
applicable information are given on pages 105 to 106 under
Investor Information.
Earnings, Dividends, Net Assets and Market Value of Shares
Information relating to earnings, dividend, net assets and market
value per share are given on page 104.
Major Shareholders
Information on the twenty largest shareholders of the Company
are given on page 105 under Investor Information.
Float adjusted market capitalisation and Public Holding
Information on float adjusted market capitalisation and public
holding in terms of the Listing Rules is given on page 106 under
Investor Information.
The Company has not maintained the minimum public holding
percentage as stipulated by Rule 7.13.1(a) of the Listing Rules.
One of the objectives of the Rights Issue of Shares which
commenced on 16th March 2020 was to increase the minimum
public holding of the Company in order to comply with the
Listing Rules of the Colombo Stock Exchange. However, in view
of the market conditions that prevailed in the country and
globally, due to the Covid-19 pandemic, the level of subscription
by public shareholders did not reach expected levels and on
completion of the Rights Issue, the public holding increased from
7.718% to 10.690% only.
In the circumstances, further steps to be taken by the Company
to comply with Rule 7.13.1 are currently under consideration by
the Board of Directors.
Information on the Directors of the Company and the
Group as at 31st March 2020
The Board of Directors of the Company as at 31st March 2020
consisted of nine (9) Directors and their brief Profiles appear on
pages 10 to 12.
Names of the Directors who held office as at 31st March 2020 are
given below:
Name of Director
Exe
cuti
ve
No
n-E
xecu
tive
Ind
ep
en
de
nt
No
n-E
xecu
tive
Mr. Ratnayake Mudiyanselage
Mohan Joseph Ratnayake
Mr. Terence Charles Smith
Mr. Ian Joseph McVeigh
Mr. Mohamed Hisham Jamaldeen
Mr. Archie James Buckland Warman
Mr. Saravanan Neelakandan
Mr. Mohamed Firdouse Farook
Mr. Kudagamage Jayantha Pradeep
Mr. Piers Morgan
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 23
Changes in the Board of Directors during the year
New Appointments during the year
There were no changes in the directorate during the year under
review.
Resignations during the year
There were no resignations during the year.
Recommendation for re-election of Directors
who retire by rotation
Messrs Terence Charles Smith and Kudagamage Jayantha
Pradeep retire by rotation in terms of Articles 83 and 84 of the
Articles of Association and being eligible are recommended by
the Board for re-election.
Appointment of Directors who are over 70 years of age
Mr Piers Morgan who is 73 years of age and vacates office on
completion of one year since his last appointment in terms
of Section 210(2)(b) of the Companies Act No.7 of 2007 read
together with section 211, is recommended by the Board, for
appointment as a Director under Section 211 of the Companies
Act, specially declaring that the age limit stipulated in Section
210 of the Companies Act shall not apply to the said Director.
Directors of the subsidiaries
as at 31st March 2020
Names of the Directors of all subsidiaries as at 31st March 2020
are given on pages 108 to 109.
Board Meetings
Five (05) Board Meetings of the Company were held during
the year under review and the Directors’ attendance at those
Meetings are set out on page 18.
Directors Shareholding in the Company
The information pertaining to the Directors’ Shareholding in the
Company is given on page 106.
Directors’ Remuneration
The Directors’ remuneration is disclosed under key management
personnel compensation in Note 34.6 to the Financial
Statements on page 96.
CORPORATE GOVERNANCE
The Directors place a high degree of importance on sound
corporate governance practices and are committed to
the highest standards of corporate governance within the
organisation.
The Directors confirm that, the Company is in compliance with
the Corporate Governance Rules contained in the Listing Rules of
the Colombo Stock Exchange.
COMPOSITION OF THE BOARD
The Board of Lanka Realty Investments PLC comprised nine (09)
members as at the end of the financial year, seven (07) of whom
are Non Executive Directors.
INDEPENDENCE OF DIRECTORS
Based on the declarations submitted by the Non-Executive
Directors, the Board has determined that three (03) Non-
Executive Directors, namely, Mr. R M M J Ratnayake, who serves
as the Chairman, Mr. Saravanan Neelakandan and Mr Mohamed
Firdouse Farook are ‘Independent’ as per the criteria set out in
the Listing Rules of the Colombo Stock Exchange.
BOARD SUB COMMITTEES
The Board of Directors has formed three Mandatory Board Sub
Committees in terms of the Listing Rules of the Colombo Stock
Exchange, namely, Audit Committee, Remuneration Committee
and the Related Party Transactions Review Committee.
Audit Committee
The Audit Committee consists of a two Independent Non-
Executive Directors and a Non-Executive Director, namely,
Mr. Ratnayake Mudiyanselage Mohan Joseph Ratnayake
(Chairman of the Committee)
Mr. Saravanan Neelakandan
Mr. Kudagamage Jayantha Pradeep
The Report of the Audit Committee appears on page 29.
Remuneration Committee
The Remuneration Committee consists of two Independent Non-
Executive Directors and a Non-Executive Director, namely,
Mr. Saravanan Neelakandan (Chairman of the Committee)
Mr. Ratnayake Mudiyanselage Mohan Joseph Ratnayake
Mr. Kudagamage Jayantha Pradeep
The Remuneration Policy is designed to attract and retain a
qualified and experienced team of high caliber managers and
professionals and ensure that remuneration is in line with that of
the industry and market.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2024
Related Party Transactions Review Committee
The Related Party Transactions Review Committee consists of three Independent Non-Executive Directors, namely:
Mr. Ratnayake Mudiyanselage Mohan Joseph Ratnayake (Chairman of the Committee)
Mr. Saravanan Neelakandan
Mr. Mohamed Firdouse Farook
The Report of the Related Party Transactions Review Committee
appears on page 28.
DECLARATION - COMPLIANCE WITH RULE 9 OF THE
LISTING RULES
The Directors declare that the Company has complied with Rule
9 of the Listing Rules of the Colombo Stock Exchange pertaining
to Related Party Transactions.
RECURRENT RELATED PARTY TRANSACTIONS – DISCLOSURE IN TERMS OF RULE 9.3.2(b) OF THE LISTING RULES
Name of the
Related Party
Relationship Controlling
Interest
Nature of
the
Transaction
Aggregate value of
Related Party
Transactions entered
into during the financial
year
Aggregate value
of Related Party
Transactions as
a % of Net
Revenue/Income
Terms and
Conditions
of the Related
Party Transactions
Steradian Capital
Investments (Pvt)
Ltd
Other
Related Party
- Technical
Service Fees
137,293,533 92% Commercial Terms
and Conditions
Lanka Realty
Developments
(Pvt) Ltd
Subsidiary 100% Providing
financial
assistances
203,917,901 137% Commercial Terms
and Conditions
Mulberry
Holdings (Pvt)
Ltd
Subsidiary 100% Providing
financial
assistances
584,450,212 391% Commercial Terms
and Conditions
Baseline
Holdings (Pvt)
Ltd
Subsidiary 100% Providing
financial
assistances
69,508,240 47% Commercial Terms
and Conditions
285 Darley Road
(Pvt) Ltd
Subsidiary 100% Providing
financial
assistances
96,153,156 64% Commercial Terms
and Conditions
Almond Trees
(Pvt) Ltd
Subsidiary 100% Providing
financial
assistances
23,640,331 16% Commercial Terms
and Conditions
Thudella
Holdings (Pvt)
Ltd
Subsidiary 100% Providing
financial
assistances
17,812,717 12% Commercial Terms
and Conditions
Oak Streets (Pvt)
Ltd
Sub-
subsidiary
100% Providing
financial
assistances
29,349,720 20% Commercial Terms
and Conditions
Lanka Realty
Developments
(Pvt) Ltd
Subsidiary 100% Settlements
of amount
dues
154,307,931 103% Commercial Terms
and Conditions
Mulberry
Holdings (Pvt)
Ltd
Subsidiary 100% Settlements
of amount
dues
442,175,397 296% Commercial Terms
and Conditions
Steradian Capital
Investments (Pvt)
Ltd
Subsidiary - Settlements
of amount
dues
155,104,481 104% Commercial Terms
and Conditions
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 25
NON-RECURRENT RELATED PARTY TRANSACTIONS
Name of the
Related Party
Relationship Value of the Related Party
Transactions entered into
during the financial year
Value of Related
Party Transactions
as a % of Equity and as
a % of Total Assets
Terms and
Conditions of
the Related Party
Transactions
The rationale for
entering into the
transactions
Eighth Wonder Shareholder 278,761,851 Equity - 17%
Total assets - 14%
Share swap at
LKR 37.52 per
share
To increase the
total asset base and
net assets by LKR
7.3 Bn and LKR 5.6
Bn respectively
To position the
Company as a key
player in the land
and property sector
Diversifying the
overall revenue
streams
Improving access
to debt and equity
funding
T C Smith Director/
Shareholder
844,613,821 Equity - 51%
Total assets - 41%
I J McVeigh Director/
Shareholder
2,148,046,259 Equity - 129%
Total assets - 104%
M H Jamaldeen Director/
Shareholder
856,831,787 Equity - 51%
Total assets - 42%
A J B Warman Director/
Shareholder
279,905,867 Equity - 17%
Total assets - 14%
P Morgan Director/
Shareholder
693,047,360 Equity - 42%
Total assets - 34%
DIRECTORS INTERESTS IN CONTRACTS OR PROPOSED
CONTRACTS AND INTEREST REGISTER
The Company maintains an Interest Register in terms of the
Companies Act No. 07 of 2007, which is deemed to form part and
parcel of this Annual Report and is available for inspection upon
request.
MATERIAL ISSUES PERTAINING TO EMPLOYEES AND
INDUSTRIAL RELATIONS OF THE COMPANY
No material issues pertaining to employees or industrial relations
of the Company occurred during the year under review which
requires disclosure under Rule 7.6(vii) of the Listing Rules.
EMPLOYEE SHARE OPTION SCHEMES/EMPLOYEE SHARE
PURCHASE SCHEMES
The Company does not have any Share Option/Share Purchase
Schemes for its employees.
MATERIAL FORESEEABLE RISK FACTORS
Lanka Realty Investments PLC is a diversified investment holding
company of which the primary business line is “investment in,
development and management of Real Estate”.
The Management considers qualitative and quantitative
methods to evaluate the likelihood and impact of potential
events which might affect the achievement of objectives
including the failure to capitalise on opportunities.
Financial Risk Management objectives and policies are set out in
Note 14 on page 65.
Risks that the Company and its subsidiaries are exposed to
are set out in the Section on Risk Management / Material
Foreseeable Risk factors applicable to Lanka Realty Investments
PLC on page 30.
DONATIONS
During the year, neither the Company nor any of its subsidiaries
made any donations.
INDEPENDENT AUDITORS
Company
Messrs Ernst &Young, Chartered Accountants served as the
Auditors of the Company. A total amount of LKR 551,338.00
is payable by the Company to the Auditors for the year under
review.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2026
The retiring Auditors have expressed willingness to continue in
office. A resolution to re-appoint the Auditors and authorising
the Directors to determine their remuneration will be proposed
at the forthcoming Annual General Meeting.
Group
Messrs Ernst & Young also served as Auditors of all the subsidiary
companies except Almond Trees (Pvt) Ltd whose Auditors are
T&D Associates.
Details of payments to the said Auditors on account of audit fees
are set out in Note 10 to the Financial Statements on page 58.
Independence of Auditors
To the extent that the Directors are aware, the Auditors do not
have any relationship with (other than that of the Auditor), or
interest in, the Company and the Group, which in the opinion
of the Board, may reasonably be considered to have a bearing
on their independence within the meaning of the Code of
Professional Conduct and Ethics issued by the Institute of
Chartered Accountants of Sri Lanka, as applicable on the date of
this Report.
STATUTORY PAYMENTS
The Directors, to the best of their knowledge and belief, are
satisfied that all statutory payments due to the Government,
other regulatory institutions and related to employees have been
paid on their due dates or where relevant have been provided for
in the Financial Statements.
CONTINGENT LIABILITIES
The contingent liabilities as at 31st March 2020 are given in
Note 38 to the Financial Statements on page 101.
EVENTS OCCURRING AFTER THE REPORTING DATE
No event of material significance that requires adjustments
to the Financial Statements, have occurred subsequent to the
Reporting date up to the date of the Auditors’ Report other than
those disclosed in Note 40 to the Financial Statements on page
101.
GOING CONCERN
The Directors have made an assessment of the Company’s
ability to continue as a going concern and are satisfied that it has
resources to continue in business for the foreseeable future.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on 28th September
2020 at 10.00 a.m. at Sri Lanka Foundation, No. 100, Padanam
Mawatha, Independence Square, Colombo 07.
The Notice of the Annual General Meeting appears on page 110.
This Annual Report is signed for and on behalf of the Board of
Directors by
R M M J Ratnayake M H Jamaldeen
Chairman Executive Director
Anusha Wijesekara
P W Corporate Secretarial (Pvt) Ltd
Secretaries
31st August 2020
Colombo
ANNUAL REPORT OF THE BOARD OF DIRECTORS ON THE AFFAIRS OF THE COMPANY
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 27
STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR FINANCIAL REPORTINGThe responsibilities of the Directors, in relation to the Financial
Statements of the Company and its subsidiaries differ from the
responsibilities of the Auditors.
The responsibility of the Independent Auditors in relation to the
Financial Statements is set out in the Report of the Auditors given
on pages 32 to 34 of the Annual Report
As per the Sections 150(1), 151, 152(1) and (2), 153 (1) and (2)
of the Companies Act No. 07 of 2007, the Directors are required
to prepare Financial Statements for each financial year giving 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 of the results
of its operations for the financial year, ensure that they are
completed within six months or such extended period as may
be determined by the Registrar General of Companies, certified
by the person responsible for the preparation of the Financial
Statements that they are in compliance with the said Companies
Act and dated and signed on behalf of the Board by two Directors
of the Company.
In terms of section 166(1) read together with sections 168(1)(b)
and (c) and section 167(1) of the Companies Act, the Directors
shall cause a copy of the aforesaid Financial Statements together
with the Annual Report of the Board of Directors of the Company
prepared as per section 166(1) of the Companies Act to be sent to
every shareholder not less than fifteen working days before the
date fixed for holding the Annual General Meeting.
The Directors consider that in preparing these Financial
Statements set out on pages 35 to 41, appropriate accounting
policies have been selected and applied in a consistent manner
and supported by reasonable and prudent judgment and that
all applicable Accounting Standards, as relevant, have been
followed.
The Directors are of the view that the Company and its
subsidiaries have adequate resources to continue in operation
either on their own or with the assistance of the Company, as the
holding company, and have applied the going concern basis in
preparing these Financial Statements.
Further, the Directors have a responsibility to ensure that the
Company and its subsidiaries maintain sufficient accounting
records to disclose with reasonable accuracy, the financial
position of the Company and its subsidiaries.
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 to prevent and detect fraud
and other irregularities.
Financial Statements prepared and presented in this report
have been prepared based on Sri Lanka Accounting Standards
(SLFRS/LKAS) and are consistent with the underlying books of
accounts and are in conformity with the requirements of Sri
Lanka Accounting Standards, Companies Act No. 07 of 2007, Sri
Lanka Accounting and Auditing Standards Act No. 15 of 1995 and
the Listing Rules of the Colombo Stock Exchange.
COMPLIANCE REPORT
The Directors are of the view, that they have discharged their
responsibilities as set out in this statement.
The Directors also confirm that to the best of their knowledge, all
statutory payments payable by the Company and its subsidiaries
as at the reporting date have been paid or where relevant
provided for.
By order of the Board
Lanka Realty Investments PLC
P W Corporate Secretarial (Pvt) Ltd
Director/Secretaries
31st August 2020
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2028
RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT
The Board has established the Related Party Transactions Review
Committee in terms of Section 9 of the Listing Rules of the
Colombo Stock Exchange.
COMPOSITION
Mr. R M M J Ratnayake (IND/NED) - Chairman
Mr. S Neelakandan (IND/NED)
Mr. F Farook (IND/NED)
IND/NED - Independent Non-Executive Director
(Refer to pages 10 to 12 for brief profiles of the Directors)
ATTENDANCE AT COMMITTEE MEETINGS
Director Attendance
Mr. R M M J Ratnayake 6/6
Mr. S Neelakandan 6/6
Mr. F Farook 5/6
DUTIES OF THE RELATED PARTY TRANSACTIONS
COMMITTEE
• To review in advance all proposed related party transactions
of the Group either prior to the transaction being entered into
or, if the transaction is expressed to be conditional on such
review, prior to the completion of the transaction.
• Seek any information the Committee requires from
management, employees or external parties with regard to any
transaction entered into with a related party.
• Obtain knowledge or expertise to assess all aspects of
proposed related party transactions where necessary
including obtaining appropriate professional and expert
advice from suitably qualified persons.
• To recommend, where necessary, to the Board and obtain
their approval prior to the execution of any non recurrent
related party transaction (as applicable).
• To monitor that all related party transactions of the entity
are transacted on normal commercial terms and are not
prejudicial to the interests of the entity and its minority
shareholders.
• Meet with the Management, Independent Auditors and such
other Advisors as necessary to carry out the assigned duties.
• To review the transfer of resources, services or obligations
between related parties regardless of whether a price is
charged.
• To review the economic and commercial substance of both
recurrent/non recurrent related party transactions
• To monitor and recommend the acquisition or disposal
of substantial assets between related parties, including
obtaining ‘competent independent advice’ from independent
professional experts with regard to the value of the assets of
the related party
• To review the disclosures requirements relating to the Related
Party Transactions.
ACTIVITIES IN 2019/2020
• The Related Party Transactions Review Committee reviewed
the related party transactions of Lanka Realty Investments
PLC and the its Group Companies and their compliances with
applicable Rules and communicated the same to the Board
and relevant Companies.
• In particular the Committee had detailed discussions and
deliberations on the acquisition of six (06) private companies
through a share swap resulting in a Private Placement of
Shares, where shares were issued to Related Parties, and
obtained independent professional advice from Messrs KPMG,
Chartered Accountants on the matter, prior to recommending
the transactions to the Board of Directors.
Following the acquisition of the said six (06) companies the
Committee also deliberated on the recurrent Related Party
Transactions pertaining to the Technical Services Agreement.
• The Committee reviewed the disclosure requirements relating
to both recurrent and non recurrent transactions entered into
by the Company during the year under review.
• The Committee in its review process recognised the adequacy
of the content and quality of the information forwarded to its
members by the Management.
Mr. R M M J Ratnayake
Chairman
Related Party Transactions Review Committee
31st August 2020
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 29
REPORT OF THE AUDIT COMMITTEE
COMPOSITION
The Audit Committee as at the reporting date comprises the
following Directors,
Mr. R M M J Ratnayake – (IND/NED) – Chairman
Mr. S Neelakandan – (IND/NED)
Mr. K J Pradeep – (NED)
IND/NED – Independent Non-Executive Director
NED – Non-Executive Director
ATTENDANCE AT COMMITTEE MEETINGS
Name of Director 17/05 01/08 24/10 06/02 Total
Mr. R M M J Ratnayake 4/4
Mr. Saravanan
Neelakandan 4/4
Mr. Kudagamage
Jayantha Pradeep 4/4
The Executive Directors attend the meetings by invitation. The
Company Secretary functions as the secretary to the Committee.
ROLE OF THE COMMITTEE
The primary functions of the committee can be summarised as,
• Ensure compliance with the Sri Lankan Accounting
Standards and all relevant laws and regulations.
• Ensure organisational policies are in line with those of the
best Corporates.
GOVERNANCE PRACTICES
• Ascertainment of the reliability of the Management
Information Systems.
• Review of Annual Financial Statements.
• Review of Quarterly Financial Statements.
• Review of the effectiveness of financial and internal control
systems.
• Ensure the independence of the Auditors and recommend
the appointment of Independent Auditors and their fees.
• Identification of risks that would impact on the Company’s
business.
ACTIVITIES
The Committee reviewed and discussed the Company’s
Quarterly and Annual Financial Statements prior to publication
to ensure reliability and their compliance with the Sri Lanka
Accounting Standards.
The Committee evaluates the internal control reports and
compliance reports furnished by the management and are
satisfied that an effective internal control system is in place.
Based on the proceedings of the Audit Committee meetings,
recommendations and observations were reported to the Board
for appropriate action.
EXTERNAL AUDITORS
The Committee held meetings with the External Auditors to
review the nature, approach and scope of audit. The Committee
also reviewed the Audited Financial Statements with the External
Auditors.
The Audit Committee is satisfied that the independence of the
External Auditors has not been influenced by any event that
results in a conflict of interest. The fees pertaining to audit have
been reviewed and recommended to the Board.
The Audit Committee has recommended to the Board of
Directors that Messrs Ernst & Young continue as Auditors
for the ensuing financial year, subject to the approval of the
shareholders at the next Annual General Meeting.
CONCLUSION
The Audit Committee is satisfied that the Company’s accounting
policies and operational controls provide reasonable assurance
that the affairs of the Company are managed in accordance
with the set rules and that systems are in place to minimise the
impact of identifiable risks.
The Committee further assessed the future prospects of its
business operations and is satisfied with the going concern
assumption used in the preparation of the Financial Statements
as being appropriate.
R M M J Ratnayake
Chairman - Audit Committee
31st August 2020
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2030
RISK MANAGEMENT
MATERIAL RISKS AND PLANS FOR MITIGATION
Risk Impact/Strategies/Action Plan
Strategic Risk Risks of not achieving strategic goals and objectives of the Company, and variations etc.
LRI operates with a clear Business Plan. The Group operates within an approved annual budget and
variances are reviewed periodically by the Board of Directors.
Construction Costs Risks from an increase in construction material and other costs.
Fixed price LKR contracts are entered into with contractors.
Brand & Reputation Risks relating to product quality, timely delivery and service standards.
Maintaining high product and service quality standards and quality assurance/control systems in
projects.
Ensuring high level of hygiene and security protocols are being maintained. Regular reviews of
customer comments and feedback.
Interest Rate Risks relating to Interest Income and Cost of Borrowing.
Monitoring and management of cash flows daily. Negotiating favourable rates and terms on
borrowings and deposits. Maintain an appropriate combination of fixed and floating rate
borrowings.
Human Capital Failure to achieve growth plans as a result of failure to attract and retain sufficient numbers of
qualified and experienced employees and/ or inability to ensure their on-going engagement and
commitment.
Our recruitments are non – discriminatory. Recruiting the best talent, retaining them and providing
an adequate career development plan are critical to our HR Policy.
Close dialogue with employees helps identify areas of concern and maintaining an open door policy
for employees creates accessibility at senior level for an effective work atmosphere.
There are no material issues pertaining to employees and industrial relations to our Entity.
Liquidity Risks Liquidity risk refers to the risk that the Company may not have sufficient liquid financial resources to
meet its obligations as they fall due in the normal course of business.
Strong relationships have been built with banks to ensure that urgent borrowing needs are met
at short notice. Facilities are in place to cover forecasted cash needs for at least a period of twelve
months. Additionally, solvency related analysis is carried out periodically by the finance division.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 31
Statement of Profit or Loss ......................................................................................................................35
Statement of Comprehensive Income ..................................................................................................36
Statement of Financial Position .............................................................................................................37
Statement of Changes in Equity .............................................................................................................39
Statement of Cash Flows .........................................................................................................................40
Notes to the Financial Statements .........................................................................................................42
FINANCIAL INFORMATION
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2032
TO THE SHAREHOLDERS OF LANKA REALTY
INVESTMENTS PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Lanka Realty
Investments PLC (“the Company”) and the consolidated financial
statements of the Company and its subsidiary (“the Group”),
which comprise the statement of financial position as at 31
March 2020, and the statement of profit or loss, statement of
comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended, and notes to
the financial statements, including a summary of significant
accounting policies.
In our opinion, the accompanying financial statements of the
Company and the Group give a true and fair view of the financial
position of the Company and the Group as at 31 March 2020, and
of their financial performance and cash flows for the year then
ended in accordance with Sri Lanka Accounting Standards.
Basis for Opinion
We conducted our audit in accordance with Sri Lanka Auditing
Standards (SLAuSs). Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are
INDEPENDENT AUDITOR’S REPORT
independent of the Group in accordance with the Code of Ethics
issued by CA Sri Lanka (Code of Ethics) and we have fulfilled our
other ethical responsibilities in accordance with the Code of
Ethics. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed
in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter is provided in
that context.
We have fulfilled the responsibilities described in the Auditor’s
responsibilities for the audit of the financial statements
section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures
designed to respond to our assessment of the risks of material
misstatement of the financial statements. The results of our audit
procedures, including the procedures performed to address the
matters below, provide the basis for our audit opinion on the
accompanying financial statements
Key audit matter How our audit addressed the key audit matter
Valuation of land and buildings
Included within investment properties and
property, plant and equipment are land and
buildings carried at fair value. As of reporting
date, such land and buildings within investment
properties and property, plant and equipment
amounted to LKR 7.5 Bn and LKR 2.3 Bn
respectively and collectively account for 85% of
total assets.
The valuation of land and buildings was significant
to our audit due to its materiality, and use of
judgements and unobservable inputs described in
notes 15 and 17 to the financial statements.
The fair values of such properties were determined
by the external valuer engaged by the Group. In
assessing the value, the external valuer has used
significant unobservable inputs including due
consideration for possible effects of COVID-19
outbreak, on such inputs.
Our audit procedures focused on the valuations performed by the external
valuer engaged by the Group, and included the following;
• We assessed the competency, capability and objectivity of the external
valuer engaged by the Group.
• We read the professional valuer’s report and understood the key estimates
made and the approach taken by the valuer in determining the valuation of
each property.
• We engaged our internal specialised resources to assist us in assessing the
appropriateness of the valuation technique, and the reasonableness of the
key assumptions used.
• We have also assessed the adequacy of the disclosures made in Notes 15
and 17 to the financial statements.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 33
Key audit matter How our audit addressed the key audit matter
Acquisition of shares of six companies during the
year
As described in note 36 of the financial
statements, the Group acquired 100% equity
interest in six companies on 13th August 2019.
The amounts involved in the transaction were
material to the consolidated financial statements.
Furthermore, assessments of management’s
judgements in recognition and measurement
of the acquisition and determination if the
acquisition constitute a business or of assets
acquired, and liabilities assumed. As such, the
matter was significant to our audit.
Our audit procedures included (among others) the following;
• Through inquires and observations, we gained an understanding of the six
companies acquired, and assessed if the companies consist of inputs and
processes applied to those inputs that have the ability to create outputs.
• We reviewed the determination made by management to identify whether
the acquisition of shares of each company constituted either a business
combination or an acquisition of assets and liabilities.
• For each acquisition, we evaluated the appropriateness of accounting
treatment focusing on the respective classification determined as above.
• We assessed the adequacy of the related financial statement disclosures as
set out in Note 36 to the financial statements.
Other information included in the 2019/20 annual report
Other information consists of the information included in the Annual Report, other than the financial statements and our auditor’s
report thereon. Management is responsible for the other information.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the management and those charged with governance
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka
Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either
intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with SLAuSs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2034
As part of an audit in accordance with SLAuSs, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls of the Company
and the Group.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with ethical requirements in accordance with
the Code of Ethics regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
As required by section 163 (2) of the Companies Act No. 07 of 2007, we have obtained all the information and explanations that were
required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company.
CA Sri Lanka membership number of the engagement partner responsible for signing this independent auditor’s report is 1420.
10 August 2020
Colombo
INDEPENDENT AUDITOR’S REPORT
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 35
STATEMENT OF PROFIT OR LOSS
In LKR Notes Group Company
For the year ended 31 March 2020 2019 2020 2019
Revenue 5 203,901,916 149,355,356 37,032,728 13,990,974
Cost of sales (155,994,133) (89,055,621) (11,741,396) (15,264,051)
Gross profit 47,907,783 60,299,735 25,291,332 (1,273,077)
Other operating income 6 6,754,610 10,173,580 - -
Selling and distribution expenses (12,409,908) (10,207,431) - -
Administrative expenses (146,322,577) (64,336,680) (29,614,604) (14,539,548)
Other operating expenses 7 (4,470,457) (7,394,670) (103,203) (44,385)
Results from operating activities (108,540,549) (11,465,466) (4,426,475) (15,857,010)
Finance cost 8 (168,675,916) (31,975,965) (24,401,718) (3,064,241)
Finance income 9 1,784,717 10,885,236 523,036 8,014,917
Net finance cost (166,891,199) (21,090,729) (23,878,682) 4,950,676
Change in fair value of investment property 17 1,037,759,904 48,096,667 - -
Profit/(loss) before tax 10 762,328,156 15,540,472 (28,305,157) (10,906,334)
Tax (expense)/reversal 11 (152,442,747) (11,901,168) (39,350) (151,338)
Profit/(loss) for the year 609,885,409 3,639,304 (28,344,507) (11,057,672)
Attributable to:
Equity holders of the parent 615,453,503 3,969,202 (28,344,507) (11,057,672)
Non-controlling interests (5,568,094) (329,898) - -
609,885,409 3,639,304 (28,344,507) (11,057,672)
Earnings/(loss) per share
Basic, profit/(loss) for the year attributable to
ordinary equity holders of the parent
12 4.48 0.15 (0.21) (0.41)
Diluted, profit/(loss) for the year attributable to
ordinary equity holders of the parent 12 2.96 0.15 (0.14) (0.41)
The notes from pages 42 to 103 from an integral part of these financial statements. Figures in brackets indicate deductions.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2036
STATEMENT OF COMPREHENSIVE INCOME
In LKR Notes Group Company
For the year ended 31 March 2020 2019 2020 2019
Profit/(loss) for the year 609,885,409 3,639,304 (28,344,507) (11,057,672)
Other comprehensive income
Other comprehensive income not to be reclassified
to income statement in subsequent periods:
Revaluation of land 187,000,000 - -
Revaluation of buildings 32,597,910 - -
Re-measurement gain/(loss) on employee benefit
liabilities
27 316,509 66,191 - (179,033)
Income tax effect 11.2 (35,130,690) (18,533) - 50,129
Total other comprehensive income/(loss) for the
year, net of tax
184,783,729 47,658 - (128,904)
Total comprehensive income/(loss) for the year, net
of tax
794,669,138 3,686,962 (28,344,507) (11,186,576)
Total comprehensive income attributable to:
Equity holders of the parent 793,878,569 3,651,650 (28,344,507) (11,186,576)
Non-controlling interests 790,569 35,312 - -
794,669,138 3,686,962 (28,344,507) (11,186,576)
The notes from pages 42 to 103 from an integral part of these financial statements. Figures in brackets indicate deductions.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 37
STATEMENT OF FINANCIAL POSITION
In LKR Notes Group Company
As at 31 March 2020 2019 2020 2019
ASSETS
Non-current assets
Property, plant and equipment 15 2,267,676,427 615,030,919 71,925 -
Intangible assets 16 169,641,491 205,330 2,300,596 205,330
Investment properties 17 7,546,864,445 1,295,000,000 - -
Investment in subsidiaries 18 - - 6,679,148,940 1,063,529,235
Other non-current assets 19 8,037,231 7,977,231 - -
Deferred tax assets 26.2 825,385 864,734 825,385 864,735
9,993,044,979 1,919,078,214 6,682,346,846 1,064,599,300
Current assets
Inventories 20 1,461,723,573 22,818,265 - -
Trade and other receivables 21 22,580,461 35,510,839 283,905 283,905
Financial assets-fair value through profit or loss 22 66,923 97,642 66,923 97,642
Amounts due from related parties 34.4 8,479,479 - 588,149,410 103,240,449
Other current assets 23 61,645,179 4,598,893 2,274,660 725,878
Short-term investments 33 67,408 76,067,686 - -
Cash in hand and at bank 33 46,351,370 358,336 9,827,311 217,502
1,600,914,393 139,451,661 600,602,209 104,565,376
Total assets 11,593,959,372 2,058,529,875 7,282,949,055 1,169,164,676
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Stated capital 24 6,380,094,108 785,425,237 6,380,094,108 785,425,237
Revaluation reserve 285,101,689 106,948,689 - -
Retained earnings 25 1,368,092,024 752,366,455 277,121,081 305,465,588
Other components of equity 25 23,100,000 23,100,000 23,100,000 23,100,000
8,056,387,821 1,667,840,381 6,680,315,189 1,113,990,825
Non-controlling interests 33,273,455 32,482,886 - -
Total equity 8,089,661,276 1,700,323,267 6,680,315,189 1,113,990,825
The notes from pages 42 to 103 from an integral part of these financial statements. Figures in brackets indicate deductions.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2038
In LKR Notes Group Company
As at 31 March 2020 2019 2020 2019
Non-current liabilities
Deferred tax liabilities 26.1 577,615,143 222,658,976 - -
Employee benefit liabilities 27 1,748,864 1,207,185 - 98,605
Interest bearing borrowings 28 2,121,138,956 26,358,503 553,343,328 -
Amounts due to related parties 34.5 26,805,440 23,747,904 26,805,440 23,747,904
Other non-current liabilities 29 12,545,538 - - -
2,739,853,941 273,972,568 580,148,768 23,846,509
Current liabilities
Trade and other payables 30 108,959,019 24,468,052 610,426 641,176
Amounts due to related parties 34.5 34,281,410 14,112,100 5,852,196 19,837,351
Income tax liabilities 31 53,447 32,228 32,228 32,228
Current portion of interest bearing borrowings 28 243,461,676 7,084,446 - -
Other current liabilities 32 103,058,295 20,495,459 15,983,034 10,245,941
Bank overdrafts 33 274,630,308 18,041,754 7,214 570,646
764,444,155 84,234,039 22,485,098 31,327,342
Total equity and liabilities 11,593,959,372 2,058,529,875 7,282,949,055 1,169,164,676
The notes from pages 42 to 103 from an integral part of these financial statements. Figures in brackets indicate deductions.
It is certified that the financial statements have been prepared in compliance with the requirements of Companies Act No. 7 of 2007.
Y Jayasekara
Head of finance & planning
The Board of Directors is responsible for these financial statements.
Signed for and on behalf of the board by;
R M M J Ratnayake M H Jamaldeen
Chairman Director
10 August 2020
Colombo
STATEMENT OF FINANCIAL POSITION
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 39
STATEMENT OF CHANGES IN EQUITY
Group
In LKR
Stated
capital
Other
components
of equity
Revaluation
reserve
Retained
earnings
Total Equity
attributable to
equity
holders of the
parent
Non-
controlling
interests
Total
equity
As at 1 April 2018 156,716,270 23,100,000 106,948,689 733,299,908 1,020,064,867 147,862,471 1,167,927,338
Profit/(loss) for the year - - - 3,969,202 3,969,202 (329,898) 3,639,304
Share issue 632,876,610 - - - 632,876,610 - 632,876,610
Direct costs on right issue (4,167,643) - - - (4,167,643) - (4,167,643)
Other comprehensive income
Revaluation of land & building - - - - - -
Re-measurement gain/(loss) on
employee benefit liabilities - - - 17,145 17,145 49,046 66,191
Income tax on other
comprehensive income - - - (4,800) (4,800) (13,733) (18,533)
Acquisition of
non-controlling interest - - 15,085,000 15,085,000 (115,085,000) (100,000,000)
As at 31 March 2019 785,425,237 23,100,000 106,948,689 752,366,455 1,667,840,381 32,482,886 1,700,323,267
Profit/ (loss) for the year - - - 615,453,503 615,453,503 (5,568,094) 609,885,409
Share issue 5,597,228,085 - - - 5,597,228,085 - 5,597,228,085
Direct costs on right issue (2,559,214) - - - (2,559,214) - (2,559,214)
Other comprehensive income
Revaluation of land & building - - 210,773,046 - 210,773,046 8,824,864 219,597,910
Re-measurement gain/(loss) on
employee benefit liabilities - - - 309,897 309,897 6,612 316,509
Income tax on other
comprehensive income - - (32,620,046) (37,830) (32,657,876) (2,472,813) (35,130,689)
As at 31 March 2020 6,380,094,108 23,100,000 285,101,689 1,368,092,024 8,056,387,821 33,273,455 8,089,661,277
Company
In LKR
Stated capital Other
components of
equity
Retained
earnings
Total equity
As at 1 April 2018 156,716,270 23,100,000 316,652,164 496,468,434
Loss for the year - - (11,057,672) (11,057,672)
Other comprehensive income (net of tax) - - (128,904) (128,904)
Share issue 632,876,610 - - 632,876,610
Direct costs on share issue (4,167,643) - - (4,167,643)
As at 31 March 2019 785,425,237 23,100,000 305,465,588 1,113,990,825
Loss for the year - - (28,344,507) (28,344,507)
Other comprehensive income (net of tax) - - - -
Share issue 5,597,228,085 - - 5,597,228,085
Direct costs on share issue (2,559,214) - - (2,559,214)
As at 31 March 2020 6,380,094,108 23,100,000 277,121,081 6,680,315,189
The notes from pages 42 to 103 from an integral part of these financial statements. Figures in brackets indicate deductions.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2040
STATEMENT OF CASH FLOWS
In LKR Notes Group Company
For the year ended 31 March 2020 2019 2020 2019
OPERATING ACTIVITIES
Profit/(loss) before tax 762,328,156 15,540,472 (28,305,157) (10,906,334)
Adjustments to reconcile profit before tax to net cash
flows:
Depreciation of property, plant and equipment 15 28,406,716 15,087,868 20,550 1,214,583
Amortisation of intangible assets 16 188,638 - 74,784 -
Finance income 9 (1,784,717) (10,885,236) (523,036) (8,014,917)
Dividend income 5 - (454) - (454)
Finance expense 8 168,675,916 31,975,965 24,401,718 3,064,241
Gratuity provision and related costs 27 426,407 325,082 (98,605) 99,622
Impairment of trade and other receivables 22,741,951 - - -
Write back of provision of investment properties 6 (1,239,294)
Fair value change in investment properties 17 (1,037,759,904) (48,096,667) - -
(Appreciation)/depreciation in fair value of FVTPL 30,719 23,402 30,719 23,402
Disposal loss on investment property 7 - 5,200,000 - -
Disposal gain on property, plant & equipment 6 - (2,535,601) - -
Impairment of investments - - 14,415,555 -
Working capital adjustments:
(Increase)/decrease in inventories (165,598,861) (16,912,727) - -
(Increase)/decrease in trade and other
receivables
5,275,990 (31,892,682) - 333
(Increase)/decrease in amounts due from related
parties (526,151) - (484,908,961) (10,631,124)
(Increase)/decrease in other refundable assets (60,000) - - -
(Increase)/decrease in other current assets (24,156,317) (1,087,102) (1,548,781) (334,735)
Increase/(decrease) in trade and other payables (10,899,582) 4,285,394 (30,750) 36,837
Increase/(decrease) in amounts due to
related parties (12,683,475) 3,799,002 (10,927,619) 11,894,659
Increase/(decrease) in tenants refundable deposits 12,545,538 - - -
Increase/(decrease) in other current liabilities 59,898,680 (15,209,190) 5,737,093 (9,947,693)
(194,189,590) (50,382,473) (481,662,490) (23,501,580)
Interest received 1,784,717 10,885,236 523,033 8,014,917
Finance expenses paid (145,061,841) (25,272,232) (24,401,718) (1,323)
Employee benefit paid - (340,200) - (340,200)
Net cash flow from/(used in) operating activities (337,466,713) (65,109,670) (505,541,175) (15,828,186)
The notes from pages 42 to 103 from an integral part of these financial statements. Figures in brackets indicate deductions.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 41
In LKR Notes Group Company
For the year ended 31 March 2020 2019 2020 2019
INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment - 10,299,999 - -
Proceeds from sale of investment property - 38,800,000 - -
Purchase of investment property 17 (227,486,886) (145,403,333) - -
Purchase of property, plant and equipment 15 (22,991,195) (32,238,011) (92,475) -
Purchase of intangible assets 16 (2,399,050) (205,330) (2,170,050) (205,330)
Dividend received 5 - 454 - 454
Acquisition of subsidiaries, net of cash acquired (230,645,116) - (32,807,173) (615,000,000)
Net cash flow from/(used in) investing activities (483,522,244) (128,746,221) (35,069,698) (615,204,876)
FINANCING ACTIVITIES
Transaction costs on share issue 24 (2,559,214) (4,167,643) (2,559,214) (4,167,643)
Proceeds from exercise of share issue 24 - 632,876,610 - 632,876,610
Increase in interest in subsidiaries 18.1 - (100,000,000) - -
Net proceeds of bank borrowings 28 542,836,001 (254,771,337) 553,343,328 -
Proceeds from finance lease 28 - 8,500,000 - -
Principal payment under finance lease liabilities 28 (5,883,624) (8,299,438) - -
Net cash flow from/(used in) financing activities 534,393,163 274,138,192 550,784,114 628,708,967
Net increase/(decrease) in
cash and cash equivalents (286,595,798) 80,282,301 10,173,241 (2,324,095)
Cash and cash equivalents at the beginning 58,384,268 (21,898,033) (353,144) 1,970,951
Cash and cash equivalents at the end (228,211,530) 58,384,268 9,820,097 (353,144)
ANALYSIS OF CASH AND CASH EQUIVALENTS
Favorable balances
Cash in hand and at bank 33 46,351,370 358,336 9,827,311 217,502
Investment in repos/Commercial papers (less than
three months) 33 67,408 76,067,686 - -
Unfavorable balances
Bank overdrafts 33 (274,630,308) (18,041,754) (7,214) (570,646)
Total cash and cash equivalents (228,211,530) 58,384,268 9,820,097 (353,144)
The notes from pages 42 to 103 from an integral part of these financial statements. Figures in brackets indicate deductions.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2042
1.1 CORPORATE INFORMATION
1.1.1 Reporting entity
Lanka Realty Investments PLC is a public (limited) liability
Company incorporated and domiciled in Sri Lanka.
The ordinary shares of the Company are listed on the
Colombo Stock Exchange of Sri Lanka. The registered
office of the Company is located at 1st Floor, HQ
Colombo, 464/A, T. B. Jayah Mawatha, Colombo 10.
1.1.2 Consolidated financial statements
The consolidated financial statements of Lanka Realty
Investments PLC, for the year ended 31 March 2020,
encompasses “the Company” referring to Lanka Realty
Investments PLC as the parent and “the Group” referring
to the companies that have been consolidated therein.
1.1.3 Nature of operations and principal activities of
the Company and the Group
Lanka Realty Investments PLC, the Group’s holding
Company, manages a portfolio of holdings consisting of
a range of diverse business operations, which together
constitute the Lanka Realty Investments Group.
Lanka Realty Investments PLC holds 100% of the issued
share capital of Lanka Realty Developments (Pvt) Ltd
which is engaged in the business of commercial property
development, 100% of the issued share capital of L & A
Quarries (Pvt) Ltd which is in the business of operating
crusher plants and 80% of the issued share capital of
Amtrad Ltd which operates in the manufacturing &
selling of cement/concrete building blocks and paving
stones.
Further, the Company holds 100% of the issued
share capital of Lanka Realty Leisure (Pvt) Ltd, Lanka
Realty Ambalangoda (Pvt) Ltd and Ascot Yala (Pvt) Ltd
which are in the business of leisure. There were no
business operations in these three companies since its
incorporation.
On 13th August 2019, Lanka Realty Investments PLC
had acquired 100% of the issued share capital of the
following companies:
• Baseline Holdings (Pvt) Ltd – Holds a bare land.
• 285 Darley Road (Pvt) Ltd – Holds a bare land through
Oak Street (Pvt) Ltd (100% owned subsidiary of 285
Darley Road (Pvt) Ltd).
• Thudella Holdings (Pvt) Ltd – Holds a bare land
through Crown Resorts (Pvt) Ltd (100% owned
subsidiary of Thudella Holdings (Pvt) Ltd)
• Almond Trees (Pvt) Ltd - Engaged in the operation
of a hotel, a restaurant and a pub and the company
holds an investment in a fully owned subsidiary (Ilook
Villa (Pvt) Ltd which engages in operation of a hotel, a
restaurant and a bar.
• Alexandra Holdings (Pvt) Ltd in the business of renting
villas.
• Mulberry Holdings (Pvt) Ltd which is a developer of
residential apartments
1.1.4 Approval of financial statements
The financial statements of Lanka Realty Investments
PLC (“Company”) and the consolidated financial
statements of the Company and its subsidiaries (“Group”)
for the year ended 31 March 2020 were authorised for
issue by the Board of Directors on 10 August 2020.
1.1.5 Responsibility for financial statements
The responsibility of the Board of Directors in relation
to the financial statements is set out in the Statement of
Directors’ Responsibility report in the Annual Report.
2. BASIS OF PREPARATION
2.1 Statement of compliance
The consolidated financial statements which
comprise the statement profit of loss, statements of
comprehensive income, statement of financial position,
statement of changes in equity and the statement of
cash flows together with accounting policies and notes
are prepared in accordance with Sri Lanka Accounting
Standards (SLFRS/LKAS).
2.2 Basis of measurement
The consolidated financial statements have been
prepared on the historical cost basis, except for:
• Land and buildings which are recognised as property
plant and equipment which are measured at cost at
the time of the acquisition and subsequently carried at
fair value
• Land and buildings which are recognised as
investment property which are measured at cost at the
time of the acquisition and subsequently carried at fair
value.
• Lands which are recognised as right of use asset which
are measured at cost at the time of the acquisition and
subsequently carried at fair value.
• Financial instruments reflected as fair value through
profit or loss which are measured at fair value.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 43
Where appropriate, the specific policies are explained in
the succeeding notes.
No adjustments have been made for inflationary factors
in the consolidated financial statements.
2.3 Presentation and functional currency
The consolidated financial statements are presented
in Sri Lankan Rupees (LKR), which is also the parent
Company’s functional currency. Each entity in the Group
determines its own functional currency and items
included in the financial statements of each entity are
measured using that functional currency.
2.4 Materiality and aggregation
Each material class of similar items is presented
separately in the consolidated financial statements.
Items of a dissimilar nature or function are presented
separately unless they are immaterial.
2.5 Comparative information
The consolidated financial statements provide
comparative information in respect of the previous
period.
3. BASIS OF CONSOLIDATION
The consolidated financial statements comprise the
financial statements of the Company and its subsidiaries
as at 31 March 2020. The financial statements of the
subsidiaries are prepared in compliance with the Group’s
accounting policies.
3.1 Subsidiaries
Subsidiaries are those entities controlled by the Group.
Control is achieved when the Group is exposed, or rights
to variable returns from its involvement with the investee
and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls
an investee if, and only if, the Group has:
• Power over the investee (i.e., existing rights that give it
the current ability to direct the relevant activities of the
investee)
• Exposure, or rights, to variable returns from its
involvement with the investee
• The ability to use its power over the investee to affect
its returns
Generally, there is a presumption that a majority
of voting rights results in control. To support this
presumption and when the Group has less than
a majority of the voting or similar rights of an
investee, the Group considers all relevant facts and
circumstances in assessing whether it has the power
over an investee, including:
• The contractual arrangement(s) with the other vote
holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an
investee if facts and circumstances indicate that there
are changes to one or more of the three elements of
control. Consolidation of a subsidiary begins when
the Group obtains control over the subsidiary and
ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in
the consolidated financial statements from the date the
Group gains control until the date the Group ceases to
control the subsidiary.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a
subsidiary, it derecognises the related assets (including
goodwill), liabilities, non- controlling interest and other
components of equity while any resultant gain or loss is
recognised in the profit or loss. Any investment retained
is recognised at fair value.
Profit or loss and each component of OCI are attributed
to the equity holders of the parent of the Group and
to the non-controlling interests, even if this results in
the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions
between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary,
without a loss of control, is accounted for as an equity
transaction.
If the Group loses control over a subsidiary, it
derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other components
of equity, while any resultant gain or loss is recognised
in profit or loss. Any investment retained is recognised at
fair value.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2044
4 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
4.1 Business combination and goodwill
Business combinations are accounted for using
the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration
transferred, which is measured at acquisition date fair
value, and the amount of any non-controlling interests in
the acquiree. For each business combination, the Group
elects whether to measure the non-controlling interests
in the acquiree at fair value or at the proportionate share
of the acquiree’s identifiable net assets. Acquisition-
related costs are expensed as incurred and included in
administrative expenses.
When the Group acquires a business, it assesses the
financial assets and liabilities assumed for appropriate
classification and designation in accordance with
the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This
includes the separation of embedded derivatives in host
contracts by the acquiree.
Any contingent consideration to be transferred by the
acquirer will be recognised at fair value at the acquisition
date. Contingent consideration classified as equity
is not remeasured and its subsequent settlement is
accounted for within equity. Contingent consideration
classified as an asset or liability that is a financial
instrument and within the scope of SLFRS 9 Financial
Instruments, is measured at fair value with the changes
in fair value recognised in the statement of profit or
loss in accordance with SLFRS 9. Other contingent
consideration that is not within the scope of SLFRS 9
is measured at fair value at each reporting date with
changes in fair value recognised in profit or loss.
Goodwill is initially measured at cost (being the excess
of the aggregate of the consideration transferred and
the amount recognised for non-controlling interests
and any previous interest held over the net identifiable
assets acquired and liabilities assumed). If the fair value
of the net assets acquired is in excess of the aggregate
consideration transferred, the Group re-assesses whether
it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures
used to measure the amounts to be recognised at the
acquisition date. If the reassessment still results in an
excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is
recognised in profit or loss.
After initial recognition, goodwill is measured at cost less
any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated
to each of the Group’s cash-generating units that are
expected to benefit from the combination, irrespective
of whether other assets or liabilities of the acquiree are
assigned to those units.
Where goodwill has been allocated to a cash-generating
unit (CGU) and part of the operation within that unit is
disposed of, the goodwill associated with the disposed
operation is included in the carrying amount of the
operation when determining the gain or loss on disposal.
Goodwill disposed in these circumstances is measured
based on the relative values of the disposed operation
and the portion of the cash-generating unit retained.
4.2 Current versus non-current classification
The Group presents assets and liabilities in statement
of financial position based on current/non-current
classification. An asset as current when it is:
• Expected to be realised or intended to be sold or
consumed in normal operating cycle
• Held primarily for the purpose of trading
• Expected to be realised within twelve months after the
reporting period
Or
• Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting period
All other assets are classified as non-current. A liability is
current when:
• It is expected to be settled in normal operating cycle
• It is held primarily for the purpose of trading
• It is due to be settled within twelve months after the
reporting period
Or
• There is no unconditional right to defer the settlement
of the liability for at least twelve months after the
reporting period
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-
current assets and liabilities.
4.3 Fair value measurement
The Group measures financial instruments such as
derivatives, and non-financial assets such as investment
properties, at fair value at each reporting date.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 45
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset
or transfer the liability takes place either:
• In the principal market for the asset or liability
Or
• In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be
accessible by the Group.
The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant’s ability to generate
economic benefits by using the asset in its highest and
best use.
The Group uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, describes follows, based
on the lowest level input that is significant to the fair
value measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
• Level 2 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is directly or indirectly observable
• Level 3 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Group
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
For the purpose of fair value disclosures, the Group
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy as
explained above.
Fair value related disclosures for financial instruments
and non-financial assets that are measured at fair value
or where fair values are disclosed, are summarised in the
following notes:
• Financial instruments (including those carried at
amortised cost)
• Quantitative disclosures of fair value measurement
hierarchy
• Property, plant & equipment under revaluation model
• Investment properties
4.4 Property, plant and equipment
Construction in progress is stated at cost, net of
accumulated impairment losses, if any. Plant and
equipment is stated at cost, net of accumulated
depreciation and accumulated impairment losses,
if any. Such cost includes the cost of replacing part
of the plant and equipment and borrowing costs for
long-term construction projects if the recognition
criteria are met. When significant parts of plant and
equipment are required to be replaced at intervals,
the Group depreciates them separately based on their
specific useful lives. Likewise, when a major inspection is
performed, its cost is recognised in the carrying amount
of the plant and equipment as a replacement if the
recognition criteria are satisfied. All other repair and
maintenance costs are recognised in profit or loss as
incurred.
Land and buildings are measured at fair value less
accumulated depreciation and impairment losses
recognised after the date of revaluation. Valuations are
performed with sufficient frequency to ensure that the
carrying amount of a revalued asset does not differ
materially from its fair value.
A revaluation surplus is recorded in OCI and credited to
the asset revaluation surplus in equity. However, to the
extent that it reverses a revaluation deficit of the same
asset previously recognised in profit or loss, the increase
is recognised in profit and loss. A revaluation deficit is
recognised in profit or loss, except to the extent that it
offsets an existing surplus on the same asset recognised
in the asset revaluation surplus.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2046
An annual transfer from the asset revaluation surplus
to retained earnings is made for the difference between
depreciation based on the revalued carrying amount of
the asset and depreciation based on the asset’s original
cost. Additionally, accumulated depreciation as at the
revaluation date is eliminated against the gross carrying
amount of the asset and the net amount is restated to
the revalued amount of the asset. Upon disposal, any
revaluation surplus relating to the particular asset being
sold is transferred to retained earnings.
Depreciation is calculated on a straight-line basis over
the estimated useful lives of the assets as follows:
Description Period
Buildings 15 - 20
Plant and machinery 4 - 10
Motor vehicles 4
Furniture and fitting, tools & other office
equipment
3 – 5
Cutlery, Cookery & Linen 4
An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the
carrying amount of the asset) is included in the profit or
loss when the asset is derecognised.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
4.5 Leases
The Group assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
4.5.1 Group as a lessee
The Group applies a single recognition and
measurement approach for all leases, except for short-
term leases and leases of low-value assets. The Group
recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the
underlying assets.
4.5.2 Right-of-use assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any re-
measurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made
at or before the commencement date less any lease
incentives received. After recognition the right-of-use
assets is carried at revalue amounts, being its fair value
at the date of the revaluation less any subsequent
accumulated depreciation and subsequent accumulated
impairment losses.
The Group presents right-of-use assets that do not
meet the definition of investment property in ‘property,
plant and equipment’ and lease liabilities in ‘loans and
borrowings’ in the statement of financial position. See
Notes 15.1.2 and 28 to the financial statements
4.5.3 Lease liabilities
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present
value of lease payments to be made over the lease term.
The lease payments include fixed payments (including
insubstance fixed payments) less any lease incentives
receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid
under residual value guarantees. The lease payments
also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and
payments of penalties for terminating the lease, if the
lease term reflects the Group exercising the option to
terminate. Variable lease payments that do not depend
on an index or a rate are recognised as expenses (unless
they are incurred to produce inventories) in the period in
which the event or condition that triggers the payment
occurs.
In calculating the present value of lease payments,
the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate
implicit in the lease is not readily determinable. After
the commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the
carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a
change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate
used to determine such lease payments) or a change in
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 47
the assessment of an option to purchase the underlying
asset.
The Group’s lease liabilities are included in interest-
bearing loans and borrowings. See Note 28 to the
financial statements.
4.5.4 Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition
exemption to its short-term leases. It also applies the
lease of low-value assets recognition exemption to leases
that are considered to be low value. Lease payments
on short-term leases and leases of low-value assets are
recognised as expense on a straight-line basis over the
lease term.
4.5.5 Group as a lessor
Leases in which the Group does not transfer substantially
all the risks and rewards incidental to ownership of an
asset are classified as operating leases. Rental income
arising is accounted for on a straight-line basis over the
lease terms and is included in revenue in the statement
of profit or loss due to its operating nature. Initial direct
costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased
asset and recognised over the lease term on the same
basis as rental income. Contingent rents are recognised
as revenue in the period in which they are earned.
4.6 Investment property
Investment property comprises completed property
under construction or re-development that is held, or
to be held, to earn rentals or for capital appreciation
or both. Property held under a lease is classified as
investment property when it is held to earn rentals or for
capital appreciation or both, rather than for sale in the
ordinary course of business or for use in production or
administrative functions.
Investment property is measured initially at cost,
including transaction costs. Transaction costs include
transfer taxes, professional fees for legal services and
initial leasing commissions to bring the property to the
condition necessary for it to be capable of operating. The
carrying amount also includes the cost of replacing part
of an existing investment property at the time that cost is
incurred if the recognition criteria are met.
Subsequent to initial recognition, investment property is
stated at fair value, which reflects market conditions at
the reporting date. Gains or losses arising from changes
in the fair values of investment properties are included in
profit or loss in the period in which they arise, including
the corresponding tax effect. For the purposes of these
financial statements, in order to avoid double counting,
the fair value reported in the financial statements is:
• Reduced by the carrying amount of any accrued
income resulting from the spreading of lease
incentives and/or minimum lease payments
• In the case of investment property held under a lease,
increased by the carrying amount of any liability to the
head lessor that has been recognised in the statement
of financial position as a finance lease obligation
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.
Investment property is derecognised either when
it has been disposed of or when it is permanently
withdrawn from use and no future economic benefit
is expected from its disposal. The difference between
the net disposal proceeds and the carrying amount of
the asset is recognised in profit or loss in the period of
derecognition.
4.7 Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value
at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.
Internally generated intangibles, excluding capitalised
development costs, are not capitalised and the related
expenditure is reflected in profit or loss in the period in
which the expenditure is incurred.
The useful lives of intangible assets are assessed as
either finite or indefinite. Intangible assets with finite lives
are amortised over the useful economic life and assessed
for impairment whenever there is an indication that
the intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at the
end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are
considered to modify the amortisation period or method,
as appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2048
with finite lives is recognised in the statement of profit or
loss in the expense category that is consistent with the
function of the intangible assets.
Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually,
either individually or at the cash-generating unit level.
The assessment of indefinite life is reviewed annually
to determine whether the indefinite life continues to
be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.
An intangible asset is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no
future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition of
the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset)
is included in the statement of profit or loss.
4.8 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalised as part of the cost
of the asset. All other borrowing costs are expensed in
the period in which they occur. Borrowing costs consist
of interest and other costs that an entity incurs in
connection with the borrowing of funds.
4.9 Financial instruments - Initial recognition and
subsequent measurement
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
4.9.1 Financial assets
4.9.1.1 Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value
through other comprehensive income (OCI) and fair
value through profit or loss.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for
managing them. With the exception of trade receivables
that do not contain a significant financing component or
for which the Group has applied the practical expedient,
the Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing
component or for which the Group has applied the
practical expedient are measured at the transaction price
determined under SLFRS 15. Refer to the accounting
policies in note 4.16 for Revenue from contracts with
customers.
The Group’s business model for managing financial
assets refers to how it manages its financial assets
in order to generate cash flows. The business model
determines whether cash flows will result from collecting
contractual cash flows, selling the financial assets, or
both.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the market place (regular way
trades) are recognised on the trade date, i.e., the date
that the Group commits to purchase or sell the asset.
4.9.1.2 Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling
of cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through OCI
with no recycling of cumulative gains and losses upon
derecognisation (equity instruments)
• Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses
are recognised in profit or loss when the asset is
derecognised, modified or impaired.
The Group’s financial assets at amortised cost includes
trade receivables, and loan to an associate and non-
current trade and other receivables.
Financial assets at fair value through OCI (debt
instruments)
For debt instruments at fair value through OCI, interest
income, foreign exchange revaluation and impairment
losses or reversals are recognised in the statement of
profit or loss and computed in the same manner as
for financial assets measured at amortised cost. The
remaining fair value changes are recognised in OCI.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 49
Upon derecognition, the cumulative fair value change
recognised in OCI is recycled to profit or loss.
The Group’s debt instruments at fair value through
OCI includes investments in quoted debt instruments
included under other noncurrent financial assets.
Financial assets designated at fair value through OCI
(equity instruments)
Upon initial recognition, the Group can elect to classify
irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet
the definition of equity under LKAS 32 Financial
Instruments: Presentation and are not held for trading.
The classification is determined on an instrument by
instrument basis.
Gains and losses on these financial assets are never
recycled to Profit or Loss. Dividends are recognised as
other income in the statement of profit or loss when the
right of payment has been established, except when the
Group benefits from such proceeds as a recovery of part
of the cost of the Financial asset, in which case, such
gains are recorded in OCI. Equity instruments designated
at fair value through OCI are not subject to impairment
assessment.
This category includes listed and non-listed equity
instruments under this category. Financial assets at fair
value through profit or loss Financial assets at fair value
through profit or loss are carried in the statement of
financial position at fair value with net changes in fair
value recognised in the statement of profit or loss.
4.9.1.3 De-recognition
A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the
Group’s consolidated statement of financial position)
when:
• The rights to receive cash flows from the asset have
expired
Or
• The Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation
to pay the received cash flows in full without
material delay to a third party under a ‘pass-through’
arrangement and either (a) the Group has transferred
substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but
has transferred control of the asset
When the Group has transferred its rights to receive cash
flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has
retained the risks and rewards of ownership. When it
has neither transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred
control of the asset, the Group continues to recognise
the transferred asset to the extent of its continuing
involvement. In that case, the Group also recognises
an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects
the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and
the maximum amount of consideration that the Group
could be required to repay.
4.9.1.4 Impairment of financial assets
The Group recognises an allowance for Expected Credit
Losses (ECLs) for all debt instruments not held at fair
value through profit or loss. ECLs are based on the
difference between the contractual cash flows due in
accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an
approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale
of collateral held or other credit enhancements that are
integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures
for which there has not been a significant increase in
credit risk since initial recognition, ECLs are provided
for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL).
For those credit exposures for which there has been a
significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Group
applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit
risk, but instead recognises a loss allowance based
on lifetime ECLs at each reporting date. The Group
has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2050
looking factors specific to the debtors and the economic
environment.
The Group considers a financial asset in default when
contractual payments are 180 days past due. However,
in certain cases, the Group may also consider a
financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive
the outstanding contractual amounts in full before
taking into account any credit enhancements held by
the Group. A financial asset is written off when there is
no reasonable expectation of recovering the contractual
cash flows.
Further disclosures relating to impairment of financial
assets are also provided in the following notes:
• Trade receivables Note 21.1 to the financial statements
4.9.2 Financial liabilities
4.9.2.1 Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
loans and borrowings, payables.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.
The Group’s financial liabilities include trade and
other payables, loans and borrowings including bank
overdrafts
4.9.2.2 Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
4.9.2.3 Loans and borrowings
This is the category most relevant to the Group. After
initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the
EIR method. Gains and losses are recognised in profit
or loss when the liabilities are derecognised as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR amortisation
is included as finance costs in the statement of profit or
loss.
This category generally applies to interest bearing loans
and borrowings. For more information, refer to Note 28
to the financial statement.
4.9.2.4 De-recognition
A financial liability is de-recognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms,
or the terms of an existing liability are substantially
modified, such an exchange or modification is treated
as the de-recognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
statement of profit or loss.
4.9.3 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount is reported in the consolidated statement of
financial position if there is a currently enforceable legal
right to offset the recognised amounts and there is an
intention to settle on a net basis, to realise the assets and
settle the liabilities simultaneously.
4.10 Inventories
Inventories are valued at the lower of cost and net
realisable value. Costs incurred in bringing each product
to its present location and condition are accounted for
as follows:
• Raw materials: Weighted average directly attributable
cost
• Finished goods and work in progress: cost of
direct materials and labour and a proportion of
manufacturing overheads based on the normal
operating capacity, but excluding borrowing costs
Initial cost of inventories includes the transfer of gains
and losses on qualifying cash flow hedges, recognised in
OCI, in respect of the purchases of raw materials.
Net realisable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make
the sale.
4.10.1 Inventory property
Property acquired or being constructed for sale in the
ordinary course of business, rather than to be held
for rental or capital appreciation, is held as inventory
property and is measured at the lower of cost and net
realisable value (NRV).
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 51
Principally, this is residential property that the Group
develops and intends to sell before, or on completion of,
development.
Cost incurred in bringing each property to its present
location and condition includes:
• Freehold land
• Amounts paid to contractors for development
• Planning and design costs, costs of site preparation,
professional fees for legal services, property transfer
taxes, development overheads and other related costs
NRV is the estimated selling price in the ordinary course
of the business, based on market prices at the reporting
date, less estimated costs of completion and the
estimated costs necessary to make the sale.
When an inventory property is sold, the carrying amount
of the property is recognised as an expense in the period
in which the related revenue is recognised. The carrying
amount of inventory property recognised in profit or loss
is determined with reference to the directly attributable
costs incurred on the property sold and an allocation of
any other related costs based on the relative size of the
property sold.
4.11 Impairment of non-financial assets
The Group assesses, at each reporting date, whether
there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment
testing for an asset is required, the Group estimates
the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or cash-generating
unit’s (CGU) fair value less costs of disposal and its value
in use. The recoverable amount 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. When the carrying amount
of an asset or CGU 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. In determining fair value less costs of disposal,
recent market transactions are taken into account. If
no such transactions can be identified, an appropriate
valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices
for publicly traded companies or other available fair
value indicators.
The Group bases its impairment calculation on detailed
budgets and forecast calculations, which are prepared
separately for each of the Group’s CGUs to which the
individual assets are allocated. These budgets and
forecast calculations generally cover a period of five
years. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after
the fifth year.
Impairment on inventories is recognised in the profit or
loss in expense categories consistent with the function of
the impaired asset.
For assets excluding goodwill, an assessment is made
at each reporting date to determine whether there is
an indication that previously recognised impairment
losses no longer exist or have decreased. If such
indication exists, the Group estimates the asset’s or
CGU’s recoverable amount. A previously recognised
impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset’s
recoverable amount since the last impairment loss was
recognised. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable
amount, nor 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 the profit or loss
unless the asset is carried at a revalued amount, in which
case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually and as when
circumstances indicate that the carrying value may be
impaired.
Impairment is determined for goodwill by assessing the
recoverable amount of each CGU (or Group of CGUs)
to which the goodwill relates. When the recoverable
amount of the CGU is less than its carrying amount,
an impairment loss is recognised. Impairment losses
relating to goodwill cannot be reversed in future periods.
4.12 Cash and short-term deposits
Cash and short-term deposits in the statement of
financial position comprise cash at banks and on hand
and short-term deposits with a maturity of three months
or less, which are subject to an insignificant risk of
changes in value.
For the purpose of the consolidated statement of cash
flows, cash and cash equivalents consist of cash and
short-term deposits, as defined above, net of outstanding
bank overdrafts as they are considered an integral part of
the Group’s cash management.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2052
4.13 Provisions, contingent assets and contingent
liabilities
Provisions 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. When the Group expects some
or all of a provision to be reimbursed, the reimbursement
is recognised as a separate asset, but only when the
reimbursement is virtually certain. The expense relating
to a provision is presented in the profit or loss net of any
reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a
finance cost.
4.14 Defined contribution plans- Employees’
provident fund and employees’ trust fund
Employees are eligible for employees’ provident fund
contributions and employees’ trust fund contributions
in line with respective statutes and regulations. The
company contributes the defined percentages of gross
emoluments of employees to an approved employees’
provident fund of 12% and to the employees’ trust fund
of 3% respectively, which are externally funded.
4.15 Defined employee benefit liabilities
The liability recognised in the statement of financial
position is the present value of the defined benefit
obligation at the reporting date using the projected
unit credit method. Any remeasurements gains or
losses arising are recognised immediately in the other
comprehensive income. Remeasurements are not
reclassified to profit or loss in subsequent periods. The
liability is not externally funded.
4.16 Revenue from contracts with customers
The Group is in the business of operating hotels,
manufacturing construction materials and real estate.
Revenue from contracts with customers is recognised
when control of the goods are transferred to the
customer at an amount that reflects the consideration to
which the Group expects to be entitled in exchange for
those goods.
4.16.1 Sale of goods
Revenue from sale of goods is recognised at the point
in time when control of the asset is transferred to the
customer, considering relevant terms of delivery. The
normal credit term is 30 to 90 days upon delivery.
The Group considers whether there are other promises in
the contract that are separate performance obligations
to which a portion of the transaction price needs to be
allocated (e.g., warranties, customer loyalty points). In
determining the transaction price for the sale of goods,
the Group considers the effects of variable consideration,
the existence of significant financing components, non-
cash consideration, and consideration payable to the
customer (if any).
4.16.2 Services transferred over time
Group determines at contract inception whether it
satisfies the performance obligation over time or at a
point in time. For each performance obligation satisfied
overtime, the Group recognises the revenue over time by
measuring the progress towards complete satisfaction of
that performance obligation.
Interest income
For all financial instruments measured at amortised
cost, interest income is recorded using the effective
interest rate (EIR). EIR is the rate that exactly discounts
the estimated future cash payments or receipts over
the expected life of the financial instrument or a shorter
period, where appropriate, to the net carrying amount of
the financial asset or liability.
Dividends
Revenue is recognised when the Group’s right to receive
the payment is established, which is generally when
shareholders approve the dividend and in the case of
quoted securities is the ex-dividend date.
Rental income
Rental income arising from operating leases on
investment property is accounted for on a straight-line
basis over the lease terms.
Room, food and beverage income
The room, food and beverage income gross turnover
comprise proceeds from provision of food, beverage,
lodging and other hospitality industry related activities.
The net turnover excludes turnover taxes and trade
discounts.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 53
The specific recognition criteria described below must
also be met before revenue is recognised.
a) Room revenue is recognised on the rooms occupied
on daily basis.
b) Food and Beverage revenue is recognised at the time
of sales.
c) Other Hotel Related Revenue is accounted when such
service is rendered.
4.16.3 Significant financing component
Generally, the Group receives short-term advances from
its customers. Using the practical expedient in SLFRS
15, the Group does not adjust the promised amount of
consideration for the effects of a significant financing
component if it expects, at contract inception, that the
period between the transfer of the promised good or
service to the customer and when the customer pays for
that good or service will be one year or less.
4.16.4 Contract balances
4.16.4.1 Trade receivables
A receivable represents the Group’s right to an amount of
consideration that is unconditional (i.e., only the passage
of time is required before payment of the consideration
is due). Refer to accounting policies of financial assets in
note 4.9) Financial instruments – initial recognition and
subsequent measurement.
4.16.4.2 Contract liabilities
A contract liability is the obligation to transfer goods or
services to a customer for which the Group has received
consideration (or an amount of consideration is due)
from the customer. If a customer pays consideration
before the Group transfers goods to the customer, a
contract liability is recognised when the payment is
made or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when the
Group performs under the contract.
4.17 Expenses
Expenses are recognised in the profit or loss 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 profit or loss.
For the purpose of presentation of the profit or loss, the
“function of expenses” method has been adopted, on the
basis that it presents fairly the elements of the Group’s
and Company’s performance.
4.18 Foreign currencies
For each entity, the Group determines the functional
currency and items included in the financial statements
of each entity are measured using that functional
currency. The Group uses the direct method of
consolidation and on disposal of a foreign operation, the
gain or loss that is reclassified to profit or loss reflects the
amount that arises from using this method.
Transactions and balances
Transactions in foreign currencies are initially recorded
by the Group’s entities at their respective functional
currency spot rates at the date the transaction first
qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot
rates of exchange at the reporting date.
Differences arising on settlement or translation of
monetary items are recognised in profit or loss with the
exception of monetary items that are designated as part
of the hedge of the Group’s net investment in a foreign
operation. These are recognised in OCI until the net
investment is disposed of, at which time, the cumulative
amount is reclassified to profit or loss. Tax charges and
credits attributable to exchange differences on those
monetary items are also recorded in OCI.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the
date when the fair value is determined.
The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the
recognition of the gain or loss on the change in fair value
of the item (i.e., translation differences on items whose
fair value gain or loss is recognised in OCI or profit or loss
are also recognised in OCI or profit or loss, respectively).
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2054
4.19 Tax
4.19.1 Current income tax
Current income tax assets and liabilities 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 at the reporting date.
Current income tax relating to items recognised directly
in equity is recognised in equity and not in the profit or
loss. Management periodically evaluates positions taken
in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
4.19.2 Deferred tax
Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes at the reporting date. Deferred
tax liabilities are recognised for all taxable temporary
differences, except:
• When the deferred tax liability arises from the initial
recognition of goodwill or 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.
• In respect of taxable temporary differences associated
with investments in subsidiaries, associates and
interests in joint ventures, when 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, the carry forward of unused tax
credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable
profit will be available against which the deductible
temporary differences, and the carry forward of unused
tax credits and unused tax losses can be utilised, except:
• When the deferred 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.
• In respect of deductible temporary differences
associated with investments in subsidiaries, associates
and interests in joint arrangements, 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.
The carrying amount of deferred tax assets is reviewed
at each reporting 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
re-assessed at each reporting date and are recognised
to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit
or loss is recognised outside profit or loss. Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or directly in equity. 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 the deferred taxes
relate to the same taxable entity and the same taxation
authority.
4.20 General
4.20.1 Events occurring after the reporting date
All material post reporting date events have been
considered and where appropriate adjustments or
disclosures have been made in the financial statements.
Refer Note 40 to the financial statements.
4.20.2 Earnings per share
The Group presents basic and diluted earnings per share
(EPS) for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average
number of ordinary shares outstanding during the
period. Diluted EPS is determined by adjusting the profit
or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 55
4.21 Significant accounting judgments, estimates and
assumptions
The preparation of the Group’s consolidated financial
statements requires management to make judgements,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities,
and the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount
of assets or liabilities affected in future periods. Other
disclosures relating to the Group’s exposure to risks and
uncertainties includes:
• Capital management Note 14.4 to the financial
statements.
• Financial risk management and policies Note 14 to the
financial statements.
• Sensitivity analyses disclosures Notes 14.3.1 and 27 to
the financial statements.
Estimates and assumptions
The key assumptions concerning the future and other
key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described
below. The Group based its assumptions and estimates
on parameters available when the consolidated financial
statements were prepared. Existing circumstances and
assumptions about future developments, however, may
change due to market changes or circumstances arising
that are beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
4.21.1 Going concern
The Directors have made an assessment of the Group’s
ability to continue as a going concern and is satisfied
that it has the resources to continue in business for the
foreseeable future.
The assessment includes the existing and anticipated
effects of the COVID-19 pandemic on the significant
assumptions that are sensitive or susceptible to
change or are inconsistent with historical trends.
As the economic effects of COVID-19 continue to
evolve, management considered a range of scenarios
to determine the potential impact on underlying
performance and future funding requirements.
Furthermore, management is not aware of any material
uncertainties that may cast significant doubt upon the
Group’s ability to continue as a going concern. Therefore,
the financial statements continue to be prepared on the
going concern basis.
4.21.2 Revaluation of property, plant and equipment and
investment properties
The Group carries its investment properties and property,
plant and equipment at fair values, with changes in
fair value being recognised in the statement of profit
or loss and other comprehensive income respectively.
For investment properties and certain property, plant
and equipment, a valuation methodology based on a
discounted cash flow (DCF) model was used, as there is a
lack of comparable market data because of the nature of
the properties.
The Group engaged an independent valuation specialist
to assess fair values as at 31 March 2020 for investment
properties and land and buildings (classified as property,
plant and equipment).
The key assumptions used to determine the fair value of
the properties and sensitivity analyses are provided in
Notes 15 and 17 to the financial statements
4.21.3 Taxation
Deferred tax assets are recognised for unused tax losses
to the extent that it is probable that taxable profit will
be available against which the losses can be utilised.
Significant management judgement 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 as with future tax planning
strategies.
The Group has LKR 1,872 Mn (2019: LKR 406 Mn) of
unused tax losses for which no deferred tax asset is
recognised in the statement of financial position.
These losses relate to Company and subsidiaries that
have a history of losses and may not be used to offset
taxable income elsewhere in the Group. The Company
and subsidiaries neither have any taxable temporary
difference nor any tax planning opportunities available
that could partly support the recognition of these losses
as deferred tax assets. On this basis, the Group has
determined that it cannot recognise deferred tax assets
on the tax losses carried forward.
Further details on taxes are disclosed in Note 11 and 26
to the financial statements.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2056
4.22 Standards issued but not yet effective
The amended standards that are issued, but not yet
effective up to the date of issuance of these financial
statements are disclosed below. The Group intends to
adopt these amended standards, if applicable, when
they become effective.
4.22.1 Amendments to LKAS 1 and LKAS 8: Definition of
Material
Amendments to LKAS 1 Presentation of Financial
Statements and IAS 8 Accounting policies, Changes in
accounting Estimates and Errors are made to align the
definition of “material” across the standard and to clarify
certain aspects of the definition. The new definition
states that, “information is material if omitting or
obscuring it could reasonably be expected to influence
decisions that the primary users of general purpose
financial statements make on the basis of those financial
statements, which provide financial information about a
specific reporting entity.
The amendments are applied prospectively for the
annual periods beginning on or after 1 January 2020 with
early application permitted.
Pending the completion of detailed review of such
amendments, the extent of the probable impact is not
yet reasonably estimable.
4.22.2 Amendments to SLFRS 3: Definition of a Business
Amendments to the definition of a business in SLFRS 3
Business Combinations are made to help the entities
determine whether an acquired set of activities and
assets is a business or not. They clarify the minimum
requirements for a business, remove the assessment of
whether market participants are capable of replacing any
missing elements, add guidance to help entities assess
whether an acquired process is substantive, narrow the
definition of a business and of outputs, and introduce an
optional fair value concentration test.
The amendments are applied prospectively to all
business combinations and asset acquisitions for
which the acquisition date is on or after the first annual
reporting period beginning on or after 1 January 2020,
with early application permitted.
The above amendments to SLFRS 3 is not expected to
have a material impact on the consolidated financial
statements of the group in the foreseeable future.
4.22.3 Amendments to References to the Conceptual
Framework in SLFRS Standards
Revisions to the Conceptual Framework were made
because some important issues were not covered,
and some guidance was unclear or out of date. The
revised Conceptual Framework includes: a new chapter
on measurement; guidance on reporting financial
performance; improved definitions of an asset and a
liability, and guidance supporting these definitions; and
clarifications in important areas, such as the roles of
stewardship, prudence and measurement uncertainty in
financial reporting.
The amendments are effective for annual periods
beginning on or after 1 January 2020, with early
application is permitted.
Pending the completion of detailed review of such
amendments, the extent of the probable impact is not
yet reasonably estimable.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 57
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
5 REVENUE FROM CONTRACTS WITH CUSTOMERS
Interest income on loans to subsidiaries - - 37,032,728 13,990,520
Rental income derived from investment property 9,554,562 69,900,000 - -
Sale of paving blocks 65,498,711 79,454,902 - -
Dividend income - 454 - 454
Room, food and beverage income 128,848,643 - - -
203,901,916 149,355,356 37,032,728 13,990,974
6 OTHER OPERATING INCOME
Net gain on disposal of property, plant & equipment - 2,535,601 - -
Sundry income 3,471,770 1,637,979 - -
Write back of provision 1,239,294 - - -
Foreign exchange gain 2,043,546 - - -
Rent income derived from property, plant and equipment - 6,000,000 - -
6,754,610 10,173,580 - -
7 OTHER OPERATING EXPENSES
Net loss on financial instruments at fair value
through profit or loss 30,719 23,402 30,719 23,402
Bank charges 608,546 81,291 72,484 20,983
Security chargers 2,344,750 - - -
Rates & taxes 732,966 2,014,977 - -
Net loss on sale of investment property - 5,200,000 - -
Other operating expenses 753,476 75,000 - -
4,470,457 7,394,670 103,203 44,385
8 FINANCE COST
Interest expenses on bank overdraft 1,471,381 1,694,006 600 1,321
Interest expenses on interest bearing borrowings 139,973,710 21,985,734 21,343,584 -
Interest expenses on finance leases 4,968,441 5,233,305 - -
Interest expenses on related party loans 3,057,534 3,062,920 3,057,534 3,062,920
Unrealised exchange loss 19,204,850 - - -
168,675,916 31,975,965 24,401,718 3,064,241
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2058
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
9 FINANCE INCOME
Interest income on short- term investments 1,784,717 10,885,236 523,036 8,014,917
1,784,717 10,885,236 523,036 8,014,917
10 PROFIT/(LOSS) BEFORE TAX FROM CONTINUING
OPERATIONS
Profit/(loss) before tax is stated after charging all expenses
including the following;
Directors' fees 5,400,000 5,400,000 5,400,000 5,400,000
Audit service
Ernst & Young 2,044,972 1,236,692 551,388 598,610
T&D Associates 361,648 - - -
Non audit service
Ernst & Young 716,804 - - -
Staff cost
Defined benefit plan cost 393,344 325,082 (98,605) 99,622
Defined contribution plan cost - EPF & ETF 3,159,360 1,020,308 238,976 612,784
Other staff cost (excluding defined benefit plan
cost and defined contribution plan cost) 23,245,167 18,154,038 2,410,007 5,771,894
Technical service fees 65,864,178 29,913,402 9,092,413 10,099,243
Depreciation of property, plant and equipment & lease
hold assets 27,556,716 15,087,868 41,083 1,214,583
Impairment of trade receivables 2,836,593 - - -
Impairment other receivable 19,905,358 - - -
Impairment of investments in subsidiaries - - 14,415,555 -
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 59
In LKR Group Company
For the year ended 31 March Note 2020 2019 2020 2019
11 TAX EXPENSE
Current income tax:
Current income tax charge 11.1 - - - -
Under/(over) provision in respect of current
income tax of previous year (117,780) - - -
Deferred tax:
Relating to origination and reversal of temporary
differences 11.2 152,560,527 11,901,168 39,350 151,338
Income tax expense reported in the income
statement 152,442,747 11,901,168 39,350 151,338
11.1 Reconciliation of tax expense and the
accounting profit
Accounting profit/(loss) before tax 762,328,156 15,540,472 (28,305,157) (10,906,334)
Dividend income - (454) - (454)
Disallowable expenses 78,729,244 34,824,495 2,012,402 2,012,402
Allowable expenses (150,829,440) (40,676,168) (414,914) (414,914)
Income not liable for income tax (1,037,759,904) (48,096,667) - -
Utilisation of previously unrecognised tax losses 11.3 (199,739) (15,344,355) - -
Taxable profit/(loss) for the year (347,731,683) (53,752,677) (26,707,669) (9,309,300)
Income tax charged at
Income tax @ 28% - - - -
Income tax @ 20% - - - -
Income tax @ 14% - - - -
Adjustments in respect of current income tax of
previous year - - - -
Charge for the year - - - -
Deferred tax charge/(reversal) 11.2 152,560,527 11,901,168 39,350 151,338
Income tax expense reported in the income
statement 152,560,527 11,901,168 39,350 151,338
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2060
In LKR Group Company
For the year ended 31 March Note 2020 2019 2020 2019
11.2 Deferred tax expense/(reversal)
Deferred tax expense arising from;
Accelerated depreciation for tax purposes 152,499,006 22,496,988 39,350 20,920
Retirement benefit obligations (5,410) 67,290 - 130,419
Losses available for off setting against future
taxable income (8,783,065) (14,612,848) - -
Unrealised exchange gain/loss - - - -
Gain on fair value of investment properties 8,849,996 3,949,738 - -
Deferred tax charge/(reversal) 152,560,527 11,901,168 39,350 151,339
Deferred tax related to items recognise in OCI
during the year
Gain on revaluation of land 29,400,000 - - -
Gain on revaluation of building 5,761,114 - - -
Net loss/(gain)on actuarial gain and losses (30,424) 18,533 - (50,129)
Deferred tax charged to OCI 35,130,690 18,533 - (50,129)
187,691,217 11,919,701 39,350 101,210
11.3 Tax losses carried forward
Tax losses brought forward 574,530,464 542,013,077 357,603,183 338,497,440
Acquisition through business combination 1,484,825,069 - - -
Tax losses for the year 379,345,731 41,927,890 26,707,669 9,309,300
Adjustments on finalisation of liability 7,589,634 5,933,852 - 9,796,443
Utilisation of previously unrecognised tax losses (199,739) (15,344,355) - -
Tax losses carried forward 2,446,091,159 574,530,464 384,310,852 357,603,183
LKR 1,872 Mn (2019: LKR 406 Mn) of unused tax losses for which no deferred tax asset is recognised in the statement of
financial position.
The unused tax losses amounted to LKR 2,446 Mn (2019: LKR 575 Mn), shall be expired in year of assessment 2024/25 and
2025/26.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 61
11.4 Applicable rates of income tax
Resident companies in the Group, excluding the company which enjoys a concessionary rate of taxation, were liable to income
tax at 28% during year of assessment 2019/20, (Y/A 2018/19 - 28%).
11.4.1 From 1st April 2018 corporate income taxes of companies resident in Sri Lanka will be subjected to the Inland Revenue Act
No.24 of 2017.
11.5 Concessions granted under the Board of Investment Law
Company Nature Period Concessionary
Tax Rates
Lanka Realty Developments (Pvt) Ltd Commercial property development Starting from 01
April 2014
20%
11.5 Concessions granted under the Inland Revenue Act No. 24 of 2017
Company Nature Concessionary
Tax Rates
Almond Trees (Pvt) Ltd Hotel Operation 14%
Ilook Villa (Pvt) Ltd Hotel Operation 14%
Alexandra Holdings (Pvt) Ltd Renting of Villas 14%
12 EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings/(loss) per share
Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be
issued on conversion of the dilutive potential ordinary shares into ordinary shares.
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
12.1 Basic earnings/(loss) per share
Profit/(loss) attributable to ordinary equity holders of the
parent for the basic and diluted EPS calculations. 615,453,503 3,969,202 (28,344,507) (11,057,672)
Weighted average number of ordinary shares for basic EPS* 137,233,155 27,049,022 137,233,155 27,049,022
Weighted average number of ordinary shares adjusted for
the effect of dilution* 207,645,568 27,049,022 207,645,568 27,049,022
*The weight average number of shares takes into account the weighted average effect of the change in ordinary shares
during year.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2062
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
12.1 Basic earnings/(loss) per share
Profit /(loss) attributable to
ordinary equity holders of the parent 615,453,503 3,969,202 (28,344,507) (11,057,672)
Weighted average number of ordinary shares for basic EPS 137,233,155 27,049,022 137,233,155 27,049,022
Basic earnings/(loss) per share 4.48 0.15 (0.21) (0.41)
12.2 Diluted earnings/(loss) per share
Profit/(loss) attributable to equity holders of the parent 615,453,503 3,969,202 (28,344,507) (11,057,672)
Weighted average number of ordinary shares adjusted for
the effect of dilution 207,645,568 27,049,022 207,645,568 27,049,022
Diluted earnings/(loss) per share 2.96 0.15 (0.14) (0.41)
13 FINANCIAL INSTRUMENTS
13.1 Financial assets and liabilities by class
Set out below is a comparison by class of the carrying amounts and fair values of the Group’s and Company’s financial
instruments that are carried in the financial statements.
In LKR Group Company
Financial assets by class Carrying value Fair value Carrying value Fair value
For the year ended 31 March 2020 2020
Financial instruments in current assets
Loans and receivables
Trade and other receivables 22,580,461 22,580,461 283,905 283,905
Amounts due from related parties 8,479,479 8,479,479 588,149,410 588,149,410
Financial assets-fair value through profit or loss 66,923 66,923 66,923 66,923
Short-term investments 67,408 67,408 - -
Cash in hand and at bank 46,351,370 46,351,370 9,827,311 9,827,311
Total 77,545,641 77,545,641 598,327,549 598,327,549
In LKR Group Company
Financial assets by class Carrying value Fair value Carrying value Fair value
For the year ended 31 March 2019 2019
Financial instruments in current assets
Loans and receivables
Trade and other receivables 35,510,839 35,510,839 283,905 283,905
Amounts due from related parties - - 103,240,449 103,240,449
Financial assets-fair value through profit or loss 97,642 97,642 97,642 97,642
Short-term investments 76,067,686 76,067,686 - -
Cash in hand and at bank 358,336 358,336 217,502 217,502
Total 112,034,503 112,034,503 103,839,498 103,839,498
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 63
In LKR Group Company
Financial liabilities by class Financial liabilities measured at
amortised cost
Financial liabilities measured at
amortised cost
As at 31 March 2020 2019 2020 2019
Financial instruments in non-current liabilities
Interest bearing borrowings 2,121,138,956 26,358,503 553,343,328 -
Amount due to related parties 26,805,440 23,747,904 26,805,440 23,747,904
Financial instruments in current liabilities
Trade and other payables 108,959,019 24,468,052 610,426 641,176
Amounts due to related parties 34,281,410 14,112,100 5,852,196 19,837,351
Interest bearing borrowings 243,461,676 7,084,446 - -
Bank overdrafts 274,630,308 18,041,754 7,214 570,646
Total 2,809,276,809 113,812,759 586,618,604 44,797,077
The management assessed that, cash in hand and at bank, short-term investments, amounts due from related parties, trade
and other receivables, trade and other payables, amount due to related parties and bank overdrafts approximate to their
fair value largely due to the short-term maturities of these instruments. The fair value of loans and receivables and financial
liabilities does not significantly vary from the value based on the amortised cost methodology for the Group/Company.
The management also assessed its interest bearing borrowings and since they are approximate to the floating market interest
rates and considered not significantly variable from fair value.
13.2 Financial assets and liabilities by fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable , either
directly or indirectly.
Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable
market data.
The Group and the Company held the following financial and non-financial instruments carried at fair value in the statement of
financial position.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2064
In LKR
As at 31 March Group
2020
Assets measured at fair value Total Level 1 Level 2 Level 3
Investment property / Property Plant & Equipment
(Note 17 & 15)
Land and building 9,416,864,445 - - 9,416,864,445
Long term lease hold rights of lands 351,019,097 - - 351,019,097
9,767,883,542 - - 9,767,883,542
Financial assets at fair value through profit or loss
Quoted equity shares (Note 22) 66,923 66,923 - -
Revalued property, plant and equipment
Land and building (Note 15) 1,870,000,000 - - 1,870,000,000
During the reporting period ended 31st March 2020, there were no transfer between level 1 and level 2 fair value measurements.
In LKR
As at 31 March Group
2019
Assets measured at fair value Total Level 1 Level 2 Level 3
Investment property / Property Plant & Equipment
(Note 17 & 15)
Land and building 1,541,071,628 - - 1,541,071,628
Long term lease hold rights of lands 329,597,755 - - 329,597,755
1,870,669,383 - - 1,870,669,383
Financial assets at fair value through profit or loss
Quoted equity shares (Note 22) 97,642 97,642 - -
Revalued property, plant and equipment
Land and building (Note 15) 241,000,000 - - 241,000,000
In LKR Company
As at 31 March 2020
Assets measured at fair value Total Level 1 Level 2 Level 3
Financial assets at fair value through profit or loss
Quoted equity shares (Note 22) 66,923 66,923 - -
In LKR Company
As at 31 March 2019
Assets measured at fair value Total Level 1 Level 2 Level 3
Financial assets at fair value through profit or loss
Quoted equity shares (Note 22) 97,642 97,642 - -
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 65
14 FINANCIAL RISK MANAGEMENT
The Group has exposure to the following risk from financial instruments
1. Credit risk
2. Liquidity risk
3. Market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, polices and
processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are
included through out these consolidated financial statements.
The Board of Directors has the overall responsibility for the establishment and oversight of the Group’s financial risk
management framework which includes developing and monitoring the Group’s financial risk management policies.
Financial risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group
activities. The Lanka Realty Investments PLC’s audit committee overseas how management monitors compliance with the
Group’s financial risk managements polices and procedures, and review the adequacy of the financial risk management frame
work in relation to the risk faced by the Group.
14.1 Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading
to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its
financing activities, including deposits with banks and financial institutions and other financial instruments.
The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all clients who wish to trade on
credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis
with the result that the Group’s exposure to bad debts is not significant.
With respect to credit risk arising from the other financial assets of the Group, such as cash and cash equivalents, financial
assets FVTPL, and the Group’s exposure to credit risk arises from default of the counterparty. The Group manages its operations
to avoid any excessive concentration of counterparty risk and the Group takes all reasonable steps to ensure the counterparties
fulfill their obligations.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2066
14.1.1 Risk exposure
The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts
(without consideration of collateral, if available). Following table shows the maximum risk positions.
Group 2020
In LKR
As at 31 March
Notes Cash in
hand and
at bank
Fair value
through
profit
or loss
Trade
and other
receivables
Short-term
investments
Amounts
due from
related
parties
Total % of
allocation
Trade and other receivables 14.1.1.1 - - 22,580,461 - - 22,580,461 29%
Amounts due from related parties 14.1.1.2 - - - - 8,479,479 8,479,479 11%
Financial assets/Fair value through
profit or loss
14.1.1.3 - 66,923 - - - 66,923 0%
Short-term investments 14.1.1.4 - - - 67,408 - 67,408 0%
Cash in hand and at bank 14.1.1.4 46,351,370 - - - - 46,351,370 60%
Total credit risk exposure 46,351,370 66,923 22,580,461 67,408 8,479,479 77,545,641 100%
Group 2019
In LKR
As at 31 March
Notes Cash in
hand and
at bank
Fair value
through
profit
or loss
Trade
and other
receivables
Short-term
investments
Amounts
due from
related
parties
Total % of
allocation
Trade and other receivables 14.1.1.1 - - 35,510,839 - - 35,510,839 32%
Amounts due from related parties 14.1.1.2 - - - - - - 0%
Financial assets/Fair value through
profit or loss
14.1.1.3 - 97,642 - - - 97,642 0%
Short-term investments 14.1.1.4 - - - 76,067,686 - 76,067,686 68%
Cash in hand and at bank 14.1.1.4 358,336 - - - - 358,336 0%
Total credit risk exposure 358,336 97,642 35,510,839 76,067,686 - 112,034,503 100%
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 67
14.1.1 Risk exposure (Contd.)
Company 2020
In LKR
As at 31 March Notes
Cash in
hand and
at bank
Fair value
through
profit
or loss
Trade
and other
receivables
Short-term
investments
Amounts
due from
related
parties Total
% of
allocation
Trade and other receivables 14.1.1.1 - - 283,905 - - 283,905 0%
Amounts due from related parties 14.1.1.2 - - - - 588,149,410 588,149,410 98%
Financial assets at fair value
through profit or loss 14.1.1.3 - 66,923 - - - 66,923 0%
Short-term investments 14.1.1.4 - - - - - - 0%
Cash in hand and at bank 14.1.1.4 9,827,311 - - - - 9,827,311 2%
Total credit risk exposure 9,827,311 66,923 283,905 - 588,149,410 598,327,549 100%
Company 2019
In LKR
As at 31 March Notes
Cash in
hand and
at bank
Fair value
through
profit
or loss
Trade
and other
receivables
Short-term
investments
Amounts
due from
related
parties Total
% of
allocation
Trade and other receivables 14.1.1.1 - - 283,905 - - 283,905 0%
Amounts due from related parties 14.1.1.2 - - - - 103,240,449 103,240,449 100%
Financial assets at fair value
through profit or loss 14.1.1.3 - 97,642 - - - 97,642 0%
Short-term investments 14.1.1.4 - - - - - - 0%
Cash in hand and at bank 14.1.1.4 217,502 - - - - 217,502 0%
Total credit risk exposure 217,502 97,642 283,905 - 103,240,449 103,839,498 100%
In LKR Group Company
For the year ended 31 March Note 2020 2019 2020 2019
14.1.1.1 Trade receivables
Neither past due nor impaired 12,435,745 11,276,873 - -
Past due but not impaired
30–60 days 1,943,537 946,189 - -
61–90 days 430,053 863 - -
91–180 days 1,611,981 411,854 - -
> 181 days 3,462,948 (539,169) - -
Impaired 8,764,390 5,927,797 - -
Gross carrying value 28,648,654 18,024,407 - -
Less: impairment provision
Individually assessed impairment provision 21.1.1 (8,764,390) (5,927,797) - -
Total 19,884,264 12,096,610 - -
The requirement for an impairment is analysed at each reporting date on an individual basis for all customers. The calculation
is based on actual incurred historical data.
The possible delay in getting past due receivables from the customers and request for extended credit periods as a result of
COVID-19 are being managed through negotiations with customers on settlements.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2068
14.1.1.2 Amounts due from related parties
The Company’s/Group’s amounts due from related party mainly consists of the balance from subsidiaries (Companies under
common control) and other related companies respectively.
14.1.1.3 Fair value through profit or loss
The financial asset class of fair value through profit or loss consist of quoted investments held for trading purposes.
14.1.1.4 Credit risk relating to cash and cash equivalents
In order to mitigate the concentration, settlement and operational risks related to cash and cash equivalents, the Group/
Company consciously manages the exposure to a single counterparty taking into consideration, where relevant, the rating or
financial standing of the counterparty, where the position is reviewed as and when required, the duration of the exposure in
managing such exposures and the nature of the transaction and agreement governing the exposure.
14.2 Liquidity Risk
The Group’s policy is to hold cash and undrawn committed facilities at a level sufficient to ensure that the Group has available
funds to meet its medium term capital and funding obligations, including organic growth and acquisition activities, and to
meet any unforeseen obligations and opportunities. The Group holds cash and undrawn committed facilities to enable the
Group to manage its liquidity risk.
The Group monitors its risk to a shortage of funds using a daily cash management process. This process considers the maturity
of both the Group’s financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected
cash flows from operations.
All liquidity policies and procedures are subject to review and approval by the Board of Directors. Daily reports cover the
liquidity position of the Group and operating subsidiaries.
Liquidity risk arising from extending credit periods to customers, due to COVID-19 is being managed through negotiating
additional overdraft/short-term financing facilities with banks. In addition the Group has also obtained Saubagya COVID-19
renaissance loans to manage the liquidity risk.
In LKR Group Company
As at 31 March 2020 2019 2020 2019
14.2.1 Net (debt)/cash
Cash in hand and at bank 46,351,370 358,336 9,827,311 217,502
Short-term investments - less than three months 67,408 76,067,686 - -
Liquid assets 46,418,778 76,426,022 9,827,311 217,502
Bank overdrafts 274,630,308 18,041,754 7,214 570,646
Liquid liabilities 274,630,308 18,041,754 7,214 570,646
(Net debt)/cash (228,211,530) 58,384,268 9,820,097 (353,144)
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 69
14.2.2 Maturity analysis
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
payments.
Group 2020
In LKR Within Between Between Between Between More than Total
As at 31 March 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years 5 years
Refer Note 13.1 to the financial statements
Interest bearing borrowings 242,224,650 - - 2,050,868,727 338,397,981 2,631,491,358
Trade and other payables 108,959,019 - - - - - 108,959,019
Amounts due to related parties 61,086,850 - - - - - 61,086,850
Bank overdrafts 274,630,308 - - - - - 274,630,308
Total 686,900,827 - - -
2,050,868,727 338,397,981
3,076,167,535
Group 2019
In LKR Within Between Between Between Between More than Total
As at 31 March 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years 5 years
Interest bearing borrowings 5,901,124 - - 19,051,602 284,689,072 309,641,798
Trade and other payables 24,468,052 - - - - - 24,468,052
Amounts due to related parties 14,112,100 - - - - - 14,112,100
Bank overdrafts 18,041,754 - - - - - 18,041,754
Total 62,523,030 - - - 19,051,602 284,689,072 366,263,704
The table below summarises the maturity profile of the company’s financial liabilities based on contractual undiscounted payments.
Company 2020
In LKR Within Between Between Between Between More than Total
As at 31 March 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years 5 years
Interest bearing borrowings 553,343,328 553,343,328
Trade and other payables 610,426 - - - - - 610,426
Amounts due to related parties 5,852,196 - - - - - 5,852,196
Bank overdrafts 7,214 - - - - - 7,214
Total 6,469,836 - - - 553,343,328 - 559,813,164
Company 2019
In LKR Within Between Between Between Between More than Total
As at 31 March 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years 5 years
Trade and other payables 641,176 - - - - - 641,176
Amounts due to related parties 19,837,351 - - - - - 19,837,351
Bank overdrafts 570,646 - - - - - 570,646
Total 21,049,173 - - - - - 21,049,173
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2070
14.3 Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market prices comprise four types of risk: interest rate risk, foreign currency risk, commodity price risk and other
price risk, such as equity price risk. The financial instruments affected by the Group is FVTPL investments which include equity
securities.
The Group is exposed to foreign currency risk on revenue and cash denominated in currencies other than the functional
currency of the Company. The currencies giving rise to this risk are primarily US Dollars and Sterling Pounds.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return.
14.3.1 Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Company’s
long-term debt obligations with floating interest rates.
In LKR Group Company
As at 31 March Increase/
(decrease)
in basis points
Effect on
profit before
tax (LKR)
Increase/
(decrease)
in basis points
Effect on
profit before
tax (LKR)
2020 +308 (38,849,827) +308 (17,042,975)
-308 38,849,827 -308 17,042,975
2019 +125 (91,041) +125 -
-125 91,041 -125 -
14.3.2 Equity price risk
The Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future
values of the investment securities.
14.3.3 Financial assets or loss investments
All quoted equity and unquoted equity investments are made after obtaining the approval of the Board of Directors approval.
14.4 Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong financial position and healthy
capital ratios to support its business and maximise shareholder value.
The Group manages its capital structure, and makes adjustments to it, in the light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may issue new shares, have a rights issue or buy back of shares.
In LKR Group Company
As at 31 March 2020 2019 2020 2019
Interest bearing borrowings 2,364,600,632 33,442,949 553,343,328 -
Trade and other payables 108,959,019 24,468,052 610,426 641,176
Less: Cash in hand, at bank and short-term investments (46,418,778) (76,426,022) (9,827,311) (217,502)
Net debt 2,427,140,873 (18,515,021) 544,126,443 423,674
Equity 8,056,387,821 1,667,840,381 6,680,315,189 1,113,990,825
Total capital 8,056,387,821 1,667,840,381 6,680,315,189 1,113,990,825
Capital and net debt 10,483,528,695 1,649,325,360 7,224,441,632 1,114,414,499
Gearing ratio 23% 0% 8% 0%
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 71
15 PROPERTY, PLANT AND EQUIPMENT
15.1 Group
In LKR Land &
building
Plant,
machinery
Cutlery,
Cookery &
Linen
Furniture &
fittings, tools
& other office
equipment
Motor
vehicles
Capital work
in progress
Total Total
As at 31 March 2020 2019
Cost
Freehold assets
At the beginning of the year 253,866,019 86,653,595 - 9,333,482 9,276,554 6,169,188 365,298,838 371,670,903
Acquisition through business
combinations 1,464,392,311 28,739,338 6,800,810 52,116,093 - - 1,552,048,552 -
Additions 2,763,283 7,600,386 929,591 3,297,838 - - 14,591,098 30,470,373
Gain on revaluation 148,978,387 - - - - - 148,978,387 -
Transfer - 6,169,188 - - - (6,169,188) - -
Transfer** - - - - - - - 3,582,583
Transfer*** - - - - - - - (4,052,188)
Disposal - - - - - - - (36,372,833)
At the end of the year 1,870,000,000 129,162,507 7,730,401 64,747,413 9,276,554 - 2,080,916,875 365,298,838
Leasehold assets
At the beginning of the year - 8,500,000 - - - - 8,500,000 37,082,583
Acquisition through business
combinations
- - - - - - - -
Disposal - - - - - - - (25,000,000)
Transfer** - - - - - - - (3,582,583)
At the end of the year - 8,500,000 - - - 8,500,000 8,500,000
Right-of-use assets, except for
investment property
At the beginning of the year 323,777,930 - - - 5,819,826 329,597,756 -
transfer*/ transfer*** - - - - - - 302,552,188
Additions - - - - 8,400,097 8,400,097 1,767,638
Gain on revaluation 14,500,000 - - - - 14,500,000 -
Disposal (1,478,756) - - - - - (1,478,756) -
Re-classification (Note 15.1.2) - - - - - - 25,277,930
At the end of the year 336,799,174 - - - - 14,219,923 351,019,097 329,597,756
Total value of assets 2,206,799,174 137,662,507 7,730,401 64,747,413 9,276,554 14,219,923 2,440,435,972 703,396,594
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2072
In LKR Land &
building
Plant,
machinery
Cutlery,
Cookery &
Linen
Furniture &
fittings, tools
& other office
equipment
Motor
vehicles
Capital work
in progress
Total Total
As at 31 March 2020 2019
Depreciation and impairment
Freehold assets
At the beginning of the year 7,794,391 63,324,211 - 8,584,778 7,812,295 - 87,515,675 105,139,319
Acquisition through business
combinations
29,849,796 25,895,198 6,755,297 49,606,386 - - 112,106,677 -
Charge for the year 18,475,335 7,443,805 (100,976) 1,029,501 709,051 - 27,556,716 15,087,868
Disposal - - - - - - - (33,888,074)
Transfer**** (56,119,523) - - - - - (56,119,523) 1,176,561
At the end of the year - 96,663,214 6,654,321 59,220,665 8,521,346 - 171,059,545 87,515,674
Leasehold assets
At the beginning of the year - 850,000 - - - - 850,000 21,746,926
Charge for the year - 850,000 - - - - 850,000 -
Transfer** - - - - - - - (1,176,564)
Disposals - - - - - - - (19,720,362)
At the end of the year - 1,700,000 - - - 1,700,000 850,000
Total depreciation and impairment - 98,363,214 6,654,321 59,220,665 8,521,346 - 172,759,545 88,365,675
Carrying value
As at 31 March 2020 2,206,799,174 39,299,293 1,076,080 5,526,748 755,208 14,219,923 2,267,676,427 -
As at 31 March 2019 569,849,557 30,979,384 - 748,704 1,464,259 11,989,014 615,030,919
* On 30 March 2019, investment property was transferred to owner-occupied property at its fair value at the date of change in use.
** Transfer from leasehold to/from freehold. ***Transfer to right of use asset.
**** This transfer relates to the accumulated depreciation as at the revaluation date that was eliminated against the gross carrying amount of the revaluated asset.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 73
15.1.1 Land & buildings
Revaluation of land and buildings
Fair value of the land and buildings was determined using the below mentioned valuation techniques. The valuations have
been performed by the valuer and are based on prices of transactions for properties of similar nature, location and condition.
As at the date of revaluation on 31 March 2020, the land and building’s valuations performed by Mr. G.W.G. Abeygunawardene
Chartered Valuation Surveyor, an accredited external valuer who has valuation experience for similar properties since 1996.
A net gain from the revaluation of the land and building LKR 220 Mn in 2020 was recognised in Other Comprehensive Income
(OCI).
Company Location Building
area (Sq
Ft)
Extent
(in
perch)
No. of
Buildings
at each
location
Value of
building
LKR
Value of land
LKR
Total Value
2020 LKR
Total Value
2019 LKR
Amtrad Ltd Kal-eliya, Veyangoda 52,792 748.59 11 131,000,000 153,000,000 284,000,000 246,071,628
Almond Trees (Pvt) Ltd Palhena, Weligama 8,034 86.40 1 182,000,000 413,000,000 595,000,000 -
Ilook Villa (Pvt) Ltd Mahavohara Road,
Ahangama 7,322 105.2 1 158,500,000 69,500,000 228,000,000 -
Alexandra Holdings
(Pvt) Ltd
Alexandra Road,
Wellawatta 16,728 52.48 1 137,000,000 626,000,000 763,000,000 -
608,500,000 1,261,500,000 1,870,000,000 246,071,628
2020
Company Category District Valuation
Technique
Significant
Unobservable
Input
2020 2019
Amtrad Ltd Land and
Building
Gampaha Market
approach
Per perch price in LKR 130,000 to 280,000 100,000 to 250,000
Per Sq. ft price in LKR 1,500 to 2,750 1,000 to 2,250
Almond Trees
(Pvt) Ltd
Land and
Building
Matara Income
Approach
No of rooms 10 -
Room rate per day
In LKR
37,125 -
Discount rate 8.5% -
Occupancy ratio 75% -
Ilook Villa (Pvt)
Ltd
Land and
Building
Galle Income
Approach
No of rooms 8 -
Room rate per day
in LKR
21,000 -
Discount rate 8% -
Occupancy ratio 62% -
Alexandra
Holdings
(Pvt) Ltd
Land and
Building
Colombo 6 Income
Approach
Per perch price in LKR 10,000,000 to
12,000,000
-
Per Sq. ft price in LKR 5,250 to 9,500 -
Significant increases (decreases) in estimated price per perch/ sq. ft in isolation would result in a significantly higher (lower)
fair value on a linear basis. Significant increases (decreases) in estimated rental value and rent growth per annum in isolation
would result in a significantly higher (lower) fair value of the properties. Significant increases (decreases) in discount rate (and
exit yield) in isolation would result in a significantly lower (higher) fair value.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2074
If the land & building were measured using the cost model, the carrying amounts would be as follows:
in LKR 2020 2019
Cost 334,309,484 61,442,296
Additions 2,762,223 12,866,019
Accumulated depreciation and impairment (144,735,144) (7,858,185)
Net carrying amount 192,336,563 66,450,130
5.1.2 Right of use assets
‘Property, plant and equipment’ comprise owned and leased assets that do not meet the definition of investment property.
* In 2019, investment property was transferred to owner-occupied property at its fair value at the date of change in use.
** On initial recognition of long-term land use rights as investment properties lease liability relating to the leased asset was
presented net of investment property in statement of financial position. On 01 April 2018, the present value of the lease
liability of LKR 25,207,109 is separately presented in the statement of financial position by grossing the leasehold assets and
recognising a lease liability. The management elected not to restate the financial statements for the Y/E 31 March 2018, as the
financial implication is immaterial.
15.1.3 Details of right of use asset
Lanka Realty Ambalangoda (Pvt) Ltd and Lanka Realty Leisure (Pvt) Ltd holds right of use properties situated in commercial and
mix development zone in Ambalangoda and tourism development zone ,Tissamaharama respectively.
The area of right of use asset of Lanka Realty Leisure (Pvt) Ltd is considered as a tourism development zone close to yala
national park and surrounded by number of hotels, villas and spas. The property enjoys a beach frontage and proposed for a
hotel development.
Similarly, the area of Lanka Realty Ambalangoda (Pvt) Ltd is situated bordering to the sea shore and contains of a single storied
more than 100 years old Dutch building protected by the Archaeology Department of Sri Lanka.
As at 31 March 2020, the fair value for Lanka Realty Ambalangoda (Pvt) Ltd’s land has been assessed by Messers
G.W.G.Abeygunawardane FRICS (Chartered Valuation Surveyor) accredited specialist in valuing these types of investment
property. Investment property was appraised in accordance with SLFRS 13 and LKAS 16.
15.1.4 Description of valuation techniques used and key inputs to valuation of right of use assets:
Lanka Realty Ambalangoda (Pvt) Ltd
Specialist has assumed a 50-room proposed development to value the residual value of the property and used assumptions
relevant for a hotel operation. Construction period has been assumed as 2 years and applied a capitalisation rate of 8% and
1.5% sinking fund rate.
Property Location Extent of land Valuation technique lease period Significant
Unobservable Inputs
2020 2019
Leasehold long-term
land use right
Ambalangoda 269.8 perch Income approach 50 years starting from
12th December 2014
No. of rooms 50 No. of rooms 50
Room rate per
day 24,650
Room rate per
day LKR 22,750
Discount rate
8%
Discount rate
8%
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 75
Lanka Realty Leisure (Pvt) Ltd
The valuation had been carried out assuming a 30-room proposed development to value residual value of the property and
used assumptions relevant for a hotel operation. Construction period has been assumed as 1 year and applied a capitalisation
rate of 7.5% and 1.5% sinking fund rate.
Property Location Extent of land Valuation technique lease period Significant
Unobservable Inputs
2020 2019
Leasehold long-term
land use right
Thissamaharama 1120 perch Income approach 99 years starting from
13th May 2014
No. of rooms 30 No. of rooms 30
Room rate per
day 29,000
Room rate per
day 29,000
Discount rate
7.5%
Discount rate
7.5%
Significant increases/(decreases) in estimated room rate per day and discount rate per annum in isolation would result in a
significantly higher/(lower) fair value on a linear basis.
Refer to Note 39 to the financial statements.
15.1.5 Fully depreciated assets
Property, plant and equipment includes fully depreciated assets amounting to LKR 71,088,291 (2019: LKR 15,963,116) and
continue to be in use by the Group.
15.1.6 Impact of COVID - 19
Refer Note 17.5 to the financial statements
15.2 Company
In LKR Furniture & fitting &
office equipment
Motor
vehicles
Total Total
As at 31 March 2020 2019
Cost
At the beginning of the year 6,831,057 5,300,000 12,131,057 12,131,057
Additions 92,475 - 92,475 -
Disposals - - - -
At the end of the year 6,923,532 5,300,000 12,223,532 12,131,057
Depreciation
At the beginning of the year 6,831,057 5,300,000 12,131,057 10,916,474
Charge for the year 20,550 - 20,550 1,214,583
Disposals - - - -
At the end of the year 6,851,607 5,300,000 12,151,607 12,131,057
Carrying value
As at 31 March 2020 71,925 - 71,925 -
As at 31 March 2019 - - -
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2076
15.2.1 Fully depreciated assets
Property, plant and equipment includes fully depreciated assets amounting to LKR 12,131,057 (2019: LKR 12,131,057) and
continue to be in use by the Company.
In LKR Goodwill Web
Development
Costs
Total Total
As at 31 March 2020 2019
16 INTANGIBLE ASSETS
16.1 Group
Cost
As at 01 April - 205,330 205,330 -
Acquisition through business combinations 166,258,780 1,766,439 168,025,219 -
Additions - 2,399,050 2,399,050 205,330
As at 31 March 166,258,780 4,370,819 170,629,599 205,330
Accumulated amortisation and impairment
As at 01 April - - -
Acquisition through business combinations - 799,470 799,470 -
Charge for the year - 188,638 188,638 -
As at 31 March - 988,108 988,108 -
Carrying value
As at 31 March 2020 166,258,780 3,382,711 169,641,491 -
As at 31 March 2019 - 205,330 - 205,330
16.2 Company
In LKR Web
Development
Costs
Total Total
As at 31 March 2020 2019
Cost
As at 01 April 205,330 205,330 -
Additions 2,170,050 2,170,050 205,330
As at 31 March 2,375,380 2,375,380 205,330
Accumulated amortisation and impairment
As at 01 April - -
Charge for the year 74,784 74,784 -
As at 31 March 74,784 74,784 -
Carrying value
As at 31 March 2020 2,300,596 2,300,596 -
As at 31 March 2019 205,330 - 205,330
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 77
16.3 Goodwill
The aggregate provisional carrying amount of goodwill allocated to each unit is as follows:
In LKR Group
As at 31 March 2020 2019
Alexandra Holdings (Pvt) Ltd 39,193,877 -
Almond Trees (Pvt) Ltd Group 127,064,903 -
166,258,780 -
Refer to Note 36 to the financial statements for more details.
16.4 Web development costs
Web developments costs includes costs incurred in-relation to the development of Group’s/ Company’s website and it’s
amortised over a period of 10 years.
In LKR Group
As at 31 March 2020 2019
17 INVESTMENT PROPERTIES
At the beginning of the year 1,295,000,000 1,444,000,000
Acquisition through business combinations 4,986,617,654 -
Additions/transfers 227,486,887 145,403,333
Change in fair value during the year 1,037,759,904 48,096,667
Disposal - (44,000,000)
Transfer* - (298,500,000)
At the end of the year 7,546,864,445 1,295,000,000
* On 30 March 2019, investment property was transferred to owner-occupied property at its fair value at the date of change in use.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2078
17.1 The details of investment properties of the group are disclosed below:
The Group’s investment property includes:
- Commercial property situated in T. B. Jayah Mawatha, Colombo 10.
- Land situated in T. B. Jayah Mawatha, Colombo 10.
- Land situated in Century Park, Delathura, Ja-ela.
- Land situated in Danister De Silva Mawatha, Colombo 09.
As at 31 March 2020 the fair values of the properties are based on valuation performed by Messrs.G W G Abeygunawardene
(chartered valuation surveyor), an accredited independent valuer. Messrs.G W G Abeygunawardene is a specialist in valuing
these types of investment properties. Investment Property was appraised in accordance with SLFRS 13 and LKAS 40.
In determining the fair value, a reasonable rent that the property could fetch in its existing use is estimated on the basis of rents
paid to comparable properties and the net income derivable thereby is worked out reducing the usual “outgoings” that have to
be met from such gross income.
17.2 Description of valuation techniques used and key inputs to valuation on investment properties:
As at 31 March 2020 2019
Company
Name
Address Land
Extent
Building
area
(Sq.ft.)
Type of
Investment
Properties
No. of
Buildings
at each
location
Method of
Valuation
Significant
Unobservable
Inputs
Lanka Realty
Developments
(Pvt) Ltd
464/A, T. B. Jaya
Mawatha,
Colombo 10
41.5
perches
78,133 Land &
Building
1 Income
Approach
Estimated rental
value per sq. ft
per month in LKR
250 to 315 140 to 200
Outgoings 20% 20%
Discount rate 7% 8%
Oak Streets
(Pvt) Ltd
285, T. B. Jayah
Mawatha,
Colombo 10
214.65
perches
- Land - Income
Approach
Estimated
apartment selling
value in LKR
46,250,000 to
56,250,000
-
-
Estimated No. of
apartments
228 -
Outgoings 20% -
Discount rate 7% -
Baseline
Holdings (Pvt)
Ltd
270/42,
Danister De
Silva Mawatha,
Colombo 09.
229.5
perches
- Land - Market and
Income
Approach
Estimated
Apartment Selling
Value in LKR
39,000,000 to
49,000,000
-
Estimated No. of
apartments
228 -
Outgoings 20% -
Discount rate 6.5% -
Crowns
Resorts (Pvt)
Ltd
206/01 A,
Century Park,
Delathura,
Ja-ela.
780.49
perches
- Land - Market
Approach
Per perch price
in LKR
525,000 -
Significant increase/(decrease) in estimated rental value in isolation would result in significantly higher (lower) fair value of the
property. Significant increases/(decreases) in the discount rate (and exit yield) in isolation would result in a significantly lower
(higher) fair value.
Generally, a change in the assumption made for the estimated rental value is accompanied by a directionally similar change in
the rent growth per annum and discount rate (and exit yield).
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 79
17.3 The Group as a lessor has entered into operating leases on its investment property consisting of office building located in T. B.
Jayah Mawatha, Colombo 10. These leases have terms of between one and three years. All leases include a clause to enable
upward revision of the rental charge on an annual basis according to prevailing market conditions. The lessee is also required
to provide a residual value guarantee on the properties.
Rental income derived from investment property by the group amount to LKR 9.6 Mn for 08 months occupancy
(2019: LKR 69.9 Mn for 07 months occupancy).
Direct operating expenses on investment property for the year LKR 15.6 Mn (2019: LKR 5 Mn).
Future minimum rentals receivable under non-cancellable operating leases as at 31 March are as follows:
In LKR Group
As at 31 March 2020 2019
Within one year 19,218,064 -
After one year but not more than five years 30,242,328 -
More than five years - -
49,460,392 -
17.4 Lands and buildings with carrying amount of LKR 8,679 Mn (2019: LKR Nil) are subject to a first charge and secured by the
group’s bank loans/overdraft. The details are shown in Note 28.3 to the financial statements.
17.5 Impact of COVID - 19
The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organization as a ‘global pandemic’ on
11 March 2020, has impacted global and local markets including the real estate market.
Accordingly, these valuations are reported on the basis of ‘material valuation uncertainty’ as per VPS 3 and VPGA 10 of the RICS
Red Book Global. Subsequently, less certainty and a high degree of caution may be attached to these valuations than would
normally be the case. There is an unknown level of negative future impact that COVID-19 might have on the real estate market.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2080
In LKR
As at 31 March
Effective
holding %
2020
Effective
holding %
2019
Number of
shares
2020
Number of
shares
2019
2020 2019
18 INVESTMENT IN SUBSIDIARIES
18.1 Company
Unquoted equity investments
L & A Quarries (Pvt) Ltd 100.00% 100.00% 9,437,292 9,437,292 94,372,928 94,372,928
Amtrad Ltd 80.00% 80.00% 8,624,000 8,624,000 86,327,225 86,327,225
Lanka Realty Developments (Pvt) Ltd* 100.00% 100.00% 57,204,262 57,204,262 900,350,003 900,350,000
Lanka Realty Leisure (Pvt) Ltd 100.00% 100.00% 3,546,941 3,546,941 50,468,410 50,468,410
Ascot Yala (Pvt) Ltd 100.00% 100.00% 100 100 42,000 42,000
Lanka Realty Ambalangoda (Pvt) Ltd 100.00% 100.00% 998,160 998,160 9,981,600 9,981,600
Alexandra Holdings (Pvt) Ltd** 100.00% - 605,838 - 478,049,000 -
Mulberry Holdings (Pvt) Ltd** 100.00% - 17,980,820 - 789,930,000 -
Baseline Holdings (Pvt) Ltd** 100.00% - 666,300 - 1,103,387,637 -
285 Darley Road (Pvt) Ltd** 100.00% - 5,756,200 - 2,392,260,000 -
Almond Trees (Pvt) Ltd** 100.00% - 8,566,944 - 567,557,000 -
Thudella Holdings (Pvt) Ltd** 100.00% - 1,121,730 - 298,851,620 -
6,771,577,423 1,141,542,163
Provision for fall in value of investment made by
the Company
L & A Quarries (Pvt) Ltd*** (92,428,483) (78,012,928)
Company investment in subsidiary 6,679,148,940 1,063,529,235
* Refer Note 35 to the financial statements.
** Refer Note 36 to the financial statements.
*** In 2020, the impairment provision of LKR 92,428,483 represent the total impairment e of investment in the L&A Quarries
(Pvt) Ltd. During the year impairment amounted to LKR 14,415,555 was recognised in the income statement as a result of
obsolescence of underlying assets. Since the investment does not generate cash inflows, and the investment’s fair value less
cost of disposal is lower than its carrying value. The recoverable amount of LKR 1,944,445 as at 31 March 2020 is its fair value
less cost to sell.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 81
18.2 Details of the additions during the year are set out below.
In LKR Group
As at 31 March 2020 2019
Lanka Reality Developments (Pvt) Ltd - 600,000,000
Lanka Realty Leisure (Pvt) Ltd - 15,000,000
Alexandra Holdings (Pvt) Ltd 478,049,000 -
Mulberry Holdings (Pvt) Ltd 789,930,000 -
Baseline Holdings (Pvt) Ltd 1,103,387,637 -
285 Darley Road (Pvt) Ltd 2,392,260,000 -
Almond Trees (Pvt) Ltd 567,557,000 -
Thudella Holdings (Pvt) Ltd 298,851,620 -
5,630,035,257 615,000,000
In LKR Group
As at 31 March 2020 2019
19 OTHER NON-CURRENT ASSETS
Deposit made to Ceylon Electricity Board - Lanka Realty Developments (Pvt) Ltd ,Lanka
Realty Leisure (Pvt) Ltd & Baseline Holdings (Pvt) Ltd
5,937,231 5,877,231
Deposit made to Urban Council Ambalangoda on 50 year lease period - Lanka Realty
Ambalangoda (Pvt) Ltd 2,100,000 2,100,000
8,037,231 7,977,231
In LKR Group
As at 31 March 2020 2019
20 INVENTORIES
Raw materials and consumables 947,218 1,025,926.00
Finished goods 20,908,046 21,582,633.00
Mechanical spare parts 209,706 209,706.00
Inventory property 1,435,519,298 -
Food & beverages 4,139,305 -
1,461,723,573 22,818,265
20.1 The Group has a subsidiary that develops residential property, which it sells in the ordinary course of business and has entered
into contracts to sell certain of these properties on completion.
A summary of movement in inventory property is set out below:
In LKR Group
As at 31 March 2020 2019
At 1 April - -
Acquisition through business combinations 1,266,590,041 -
Development cost incurred 127,057,086 -
Interest capitalised* 41,872,171 -
At 31 March 1,435,519,298 -
*The rate used to determine the amount of borrowing costs eligible for capitalisation was 14% which is the EIR of the specific
borrowing.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2082
In LKR Group Company
As at 31 March 2020 2019 2020 2019
21 TRADE & OTHER RECEIVABLES
Trade receivables 19,884,264 20,031,609 - -
Refundable deposit 71,500 71,500 71,500 71,500
Other debtors-miscellaneous 465,368 275,195 212,405 212,405
Receivable from subcontractors 2,150,929 6,624,135 - -
Other receivables 8,400 8,508,400 - -
22,580,461 35,510,839 283,905 283,905
21.1 Trade receivables
Trade receivables 28,648,655 18,024,406 - -
Impairment of trade receivables* (8,764,391) (5,927,797) - -
19,884,264 12,096,609 - -
* See note 14.1.1.1 to the financial statements on credit risk of trade receivables and the aging of trade receivables, which
explains how the Group manages and measures credit quality of trade receivables that are neither past due nor impaired.
In LKR
As at 31 March
Group
Individually
impaired
Total
21.1.1 Movement in impairment of trade receivables
As at 1 April 2018 (5,927,797) (4,139,477)
Charge for the year - (1,788,320)
As at 31 March 2019 (5,927,797) (5,927,797)
Charge for the year (2,836,593) -
As at 31 March 2020 (8,764,390) (5,927,797)
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 83
In LKR No. of shares No. of shares
As at 31 March 2020 2019 2020 2019
22 FINANCIAL ASSETS- FAIR VALUE THROUGH PROFIT
OR LOSS (FVTPL)
Group/ Company
Quoted investments
Ceylon Investment PLC 908 908 26,423 33,142
Pan Asia Banking Corporation PLC 5,000 5,000 40,500 64,500
5,908 5,908 66,923 97,642
In LKR Group Company
As at 31 March 2020 2019 2020 2019
23 OTHER CURRENT ASSETS
Advances & prepayments 52,018,570 2,786,102 1,595,346 51,788
Tax recoverable 6,521,286 1,495,430 491,764 486,538
Other assets 3,105,323 317,361 187,550 187,552
61,645,179 4,598,893 2,274,660 725,878
2020 2019
As at 31 March No. of
shares
Value of
shares LKR
No. of
shares
Value of
shares LKR
24 STATED CAPITAL
Fully paid ordinary shares
At the beginning of the year 44,301,443 785,425,237 12,657,555 156,716,270
Share swap/rights issue * 149,179,853 5,597,228,085 31,643,888 632,876,610
Direct costs on rights issue - (2,559,214) - (4,167,643)
At the end of the year 193,481,296 6,380,094,108 44,301,443 785,425,237
* During year 149,179,853 no of ordinary shares were issued in consideration for acquisition of subsidiaries (Refer Note 36 to the
financial statements).
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2084
2020 2019
In LKR
As at 31 March
Retained
earnings
Other
components
of equity*
Total Retained
earnings
Other
components
of equity*
Total
25 RESERVES
25.1 Group
At the beginning of the year 752,366,455 23,100,000 775,466,455 733,299,908 23,100,000 756,399,908
Profit/(loss) for the year 615,453,503 - 615,453,503 3,969,202 - 3,969,202
Other comprehensive income 272,066 - 272,066 12,345 - 12,345
Acquisition of non controlling
interest - - - 15,085,000 - 15,085,000
At the end of the year 1,368,092,024 23,100,000 1,391,192,024 752,366,455 23,100,000 760,381,455
25.2 Company
At the beginning of the year 305,465,588 23,100,000 328,565,588 316,652,164 23,100,000 339,752,164
Profit/(loss) for the year (28,344,507) - (28,344,507) (11,057,672) - (11,057,672)
Other comprehensive income - - - (128,904) - (128,904)
At the end of the year 277,121,081 23,100,000 300,221,081 305,465,588 23,100,000 328,565,588
*Other component of equity represent the capital redemption reserve fund. This reserve represent profit transferred from
income statement on the redemption of preference shares issued by the Company.
In LKR Group Company
As at 31 March 2020 2019 2020 2019
26 DEFERRED TAX LIABILITY/(ASSETS)
At the beginning of the year 221,794,242 209,874,541 (864,735) (965,944)
Acquisition through business combinations 167,322,815 - - -
Charge/(release) 187,672,701 11,919,701 39,350 101,209
At the end of the year 576,789,758 221,794,242 (825,385) (864,735)
The closing deferred tax asset and liability balances relate to the following;
In LKR Group Company
As at 31 March 2020 2019 2020 2019
26.1 Deferred tax liability/(assets)
Deferred tax on revaluation on land & building 242,851,561 27,440,000 - -
Deferred tax on revaluation on investment properties 159,943,401 83,937,578 - -
Deferred tax on fair value gain on right-of-use asset 39,872,822 37,842,822 - -
Accelerated depreciation for tax purposes 238,541,450 112,020,611 - -
Employee benefit liabilities (413,975) (310,402) - -
Losses available for off setting against
future taxable income (103,180,116) (38,271,631) - -
577,615,143 222,658,976 - -
26.2 Deferred tax assets/(liability)
Employee benefit liabilities 840,000 867,609 840,000 867,610
Accelerated depreciation for tax purposes (14,615) (2,875) (14,615) (2,875)
825,385 864,734 825,385 864,735
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 85
26.3 The deferred tax liabilities amounted to LKR 69,705,486 (2019; LKR Nil), and related to capital gains from the realisation of bare
lands located at T. B. Jayah Mawatha, Colombo 10, Thudella, Ja-ela and Baseline Road, Colombo 08 are recognised base on
the definition of an “Investment Assets” as define in the Inland Revenue Act no 24 of 2017.
If the capital gains from the realisation of these assets are considered as capital assets and used in production of income as
define in the Inland Revenue Act no 24 of 2017; an additional deferred tax liability of LKR 868,301,449 (2019; LKR Nil) shall be
recognised.
In LKR Group Company
As at 31 March 2020 2019 2020 2019
27 EMPLOYEE BENEFIT LIABILITIES
At the beginning of the year 1,207,185 1,288,494 98,605 160,150
Acquisition through business combinations 431,781 - - -
Current service cost 389,683 200,969 - 97,245
Interest cost on employee benefit liabilities 135,329 124,113 - 2,377
Payments/payable - (340,200) - (340,200)
Adjustments (98,605) - (98,605) -
Re-measurement gain/(losses) on employee benefit
liabilities (316,509) (66,191) - 179,033
At the end of the year 1,748,864 1,207,185 - 98,605
27.1 The principal assumptions used in determining the cost of employee benefits were:
As at 31 March 2020 2019 2020 2019
Discount rate 10% 11% - 11%
Future salary increment rate 9% 10% - 10%
Sensitivity of assumptions used
If one percentage (1%) point change in the assumed rate would have the following effects:
27.2 Sensitivity of assumptions used
If one percentage (1%) point change in the assumed rate would have the following effects:
In LKR Group Company
Discount
rate
Salary
increment
rate
Discount
rate
Salary
increment
rate
2020
Effect on the employee benefit liability
Increase by one percentage point (69,773) (42,378) - -
Decrease by one percentage point 75,496 45,265 - -
2019
Effect on the employee benefit liability
Increase by one percentage point (42,378) 10,977 (8,081) 898
Decrease by one percentage point 45,265 (9,173) 8,889 898
The demographic assumption underlying the valuation is the retirement age of 60 years and average duration of the defined
benefit obligation as at the end of reporting period is 24 years ( 2019 - 18 years).
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2086
In LKR Group Company
As at 31 March 2020 2019 2020 2019
27.3 Distribution of employee benefit liabilities over
future working lifetime
Less than or equal 1 year 1 879,927 - - -
Over 1 year and less than or equal 5 years - 779,458 - -
Over 5 year and less than or equal 10 years 130,847 95,807 - -
Over 10 years 738,090 331,920 - 98,605
1,748,864 1,207,185 - 98,605
In LKR Group Company
As at 31 March 2020 2019 2020 2019
28 INTEREST BEARING BORROWINGS
Non current
Bank borrowings 2,097,175,596 - 553,343,328 -
Finance lease liability 23,963,360 26,358,503 - -
2,121,138,956 26,358,503 553,343,328 -
Current
Bank borrowings 236,376,026 - - -
Finance lease liability 7,085,650 7,084,446 - -
243,461,676 7,084,446 - -
Repayable within one year 243,461,676 7,084,446 - -
Repayable after one year
Repayable between one and five years 2,058,574,109 26,358,503 553,343,328 -
Repayable after five years 62,564,847 - - -
2,364,600,632 33,442,949 553,343,328 -
Lease liability
As at 31 March Bank
borrowings
Right of use
asset
Plant &
Machineries
Other short-
term loans
Total
28.1 Group
At the beginning of the year - 26,159,674 7,283,275 - 33,442,949
Finance lease charge un amortised/
accreation of Interest - 3,538,944 1,429,497 - 4,968,441
Acquisition through business
combinations 1,772,069,986 - - 1,772,069,986
Obtained during the period 574,221,075 - - - 574,221,075
Repayments (31,385,074) (2,670,000) (3,213,624) - (37,268,698)
Transfer** - (1,478,756) - - (1,478,756)
Exchange Gain adjustments 18,645,635 - - - 18,645,635
At the end of the year 2,333,551,622 25,549,862 5,499,148 - 2,364,600,632
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 87
2020 2019
In LKR Group Group
Lease liability Lease liability
As at 31 March Bank
borrowings
Right of use
asset
Plant &
machineries
Bank
borrowings
Right of use
asset
Plant &
machineries
28.1.1 Maturity analysis - contractual
undiscounted cash flows
Less than one year 236,376,026 2,635,000 3,213,624 - 2,687,500 3,213,624
One to five years 2,034,610,749 12,508,750 3,749,228 - 12,088,750 6,962,852
More than five years 62,564,847 275,833,134 - - 284,689,072 -
Total 2,333,551,622 290,976,884 6,962,852 - 299,465,322 10,176,476
Interest bearing borrowings included
in the statement of financial position at
31 March 2,333,551,622 27,115,520 5,499,148 - 26,159,674 7,283,275
Current 236,376,026 5,298,284 2,218,735 - 5,300,318 1,784,127
Non current 2,097,175,596 21,817,236 3,280,413 - 20,859,356 5,499,148
Amounts recognised in profit or loss
In LKR
As at 31 March 2020 2019
Interest on lease liabilities 4,968,441 5,233,305
As at 31 March Bank
borrowings
28.2 Company
At the beginning of the year -
obtained during the period 553,343,328
Repayments -
Exchange Gain adjustments -
At the end of the year 553,343,328
2020 2019
Bank
borrowings
Bank
borrowings
28.2.1 Maturity analysis - contractual undiscounted cash flows
Less than one year - -
One to five years 553,343,328 -
More than five years - -
Total 553,343,328 -
Interest bearing borrowings included in the statement of financial position at 31 March 553,343,328 -
Current - -
Non current 553,343,328 -
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2088
28.3 Details of the long term loans - Group (contd..)
Lender Nature of
facility
Interest rate and security Repayment terms 2020
LKR
2019
LKR
Lanka Realty
Investments PLC
Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Loan agreement
for LKR 700,000,000 and primary mortgage over
property depicted as Lot 1 in Plan No 14243 dated
03/08/2019 made by Gamini B Donawal (L.S)
owned by Lanka Realty Developments (Pvt) Ltd
(Extent 0A: 1R: 1.24P).
Capital of each loan to be
repaid in 24 months from
date of grant and interest to
be serviced monthly.
553,343,328 -
Baseline Holdings
(Pvt) Ltd
Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Primary
mortgage over property at No 272/42, Dr
Danister De Silva Mawatha, Colombo 09, for
LKR 175,000,000/- in extent of 1A-1R-31.5P and
Secondary mortgage bond for LKR 38.000,000 over
the property at No 270/42, Dr Danister De Silva
Mawatha, Colombo 09.
59 equal monthly
installments of LKR
2,950,000 and a final
installment of LKR 950,000
with a 36 months grace
period.
144,300,000 -
285 Darley Road
(Pvt) Ltd
People’s Bank Term loan 2.5% per annum above the weekly AWPR. Mortgage
over property at 285, T. B. Jaya Mawatha, Colombo
10.
Capital should be settled
as bullet payment by 28th
May 2021.
950,000,000 -
Mulberry Holdings
(Pvt) Ltd
Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Primary
mortgage for LKR 510,000,000 over the land &
buildings to be constructed in land & marked “Lot
1” in survey plan no: 40/2014 dated 15/09/2014
made by T R De Zoysa in extent of 02 R 26.34P
bearing assessment No. 144, Sri Vajiraganana
Mawatha, Colombo 09.
To be repaid in 7 equal
monthly instalment of
LKR 1,000,000, in 6 equal
monthly instalment of
LKR 3,000,000, in 12 equal
monthly instalment of LKR
10,000,000, in 11 equal
monthly instalment of LKR
12,000,000 and in 1 equal
monthly instalment of LKR
19,000,000.
282,360,246 -
Almond Trees
(Pvt) Ltd
Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Loan agreement
for LKR 60,000,000, Primary mortgage over lot B
in Plan No 202/11 dated 14/05/2011 made by BHB
Nihal Silva L. S. owned by Ilook Villa (Pvt) Ltd for
LKR 60,000,000 and undertaking to mortgage with
power of attorney over the property owned by Ilook
Villa (Pvt) Ltd for LKR 60,000,000.
107 equal monthly
instalments of LKR 550,000
and final instalment of LKR
1,150,000 commencing after
a grace period of 12 months.
46,800,000 -
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 89
Lender Nature of
facility
Interest rate and security Repayment terms 2020
LKR
2019
LKR
Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Loan agreement
for LKR 27,500,000 and primary mortgage over
plant, machinery furniture and other movable
assets of W15 Weligama for LKR 27,500,000.
47 equal monthly
instalments of LKR 550,000
and final instalment of LKR
1,650,000 commencing after
a grace period of 12 months.
14,300,000 -
Sampath Bank PLC Term loan 10% per annum. Loan agreement for LKR 9,500,000. 59 equal monthly
instalments of LKR 160,000
and final instalment of LKR
55,000.
8,159,668 -
Sampath Bank PLC Term loan-
USD
4.5% per annum above the 06 Months LIBOR.
Loan agreement for USD 1,065,000 and primary
mortgage over hotel property of Almond Trees (Pvt)
Ltd depicted as lot F in Plan No 1187/2010 dated
31/03/2010 made by W A C Indraratne L. S. for USD
1,065,000.
107 equal monthly
instalments of USD 9,900
and final instalment of USD
5,700.
161,669,287 -
Sampath Bank PLC Term loan -
USD
3.5% per annum above the 06 months LIBOR. Loan
agreement for USD 62,000.
59 equal monthly
instalments of USD 1,000
and final instalment of USD
3,000.
10,758,832 -
Alexandra Holdings
(Pvt) Ltd
Sampath Bank PLC Term loan 2.5% per annum above the AWPR. Additional
mortgage over property depicted as Lot 7378 &
7379 in plan No.10829 dated 19/01/2006 make by K.
Selvaratnam L. S. for LKR 65,000,000.00.
To be repaid in 107 equal
monthly instalment (Capital)
of LKR 600,000 and a final
Instalment (capital) of LKR
800,000 on 26th day of each
month after a grace period
of 12 months.
65,000,000 -
Sampath Bank PLC Term loan Interest per annum 10%. ‘Primary mortgage bond
for USD 430,000, additional mortgage bond for
LKR 65,000,000 additional mortgage bond for
USD 31,000 & an additional mortgage bond for
LKR10,500,000 over property depicted as Lot 7378 &
7379 in plan No.10829 dated 19/01/2006 make by K.
Selvaratnam L. S. owned by the company.
To be repaid in 60 equal
monthly instalment of LKR
175,000 together with the
interest.
8,680,557 -
Sampath Bank PLC Term loan -
USD
To be paid at an interest rate of 06 months
LIBOR +3.5% p.a. ‘Primary mortgage bond for
USD 430,000, additional mortgage bond for
LKR 65,000,000 additional mortgage bond for
USD 31,000 & an additional mortgage bond for
LKR10,500,000 over property depicted as Lot 7378 &
7379 in plan No.10829 dated 19/01/2006 make by K.
Selvaratnam L. S. owned by the company.
To be repaid in 59 equal
monthly instalment of USD
500 together with the USD
1500 as final instalment
interest on 26th of each
month from 26.07.2020.
5,424,914 -
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2090
Lender Nature of
facility
Interest rate and security Repayment terms 2020
LKR
2019
LKR
Sampath Bank PLC Term loan -
USD
4.5% per annum above the 06 months LIBOR with
a floor rate 5.5%. Primary mortgage over property
depicted as Lot 7378 & 7379 in plan No.10829 dated
19/01/2006 make by K. Selvaratnam L. S. for USD
430,000.
To be repaid in 107 equal
monthly instalment (Capital)
of USD 3,900 and a final
Instalment (capital) of USD
12,700 on 26th day of each
month after a grace period
of 12 months.
82,754,790 75,735,900
Amtrad Ltd
LB Finance PLC Finance
lease
Interest per annum 22%. Leased amount LKR 8.5
Mn.
48 monthly instalments,
Started from 17/05/2018.
5,499,148 7,283,275
In LKR Group Company
As at 31 March 2020 2019 2020 2019
29 OTHER NON-CURRENT LIABILITIES
Tenant rent and service charge refundable deposit 12,245,538 - - -
Tenant electricity charge refundable deposit 300,000 - - -
12,545,538 - - -
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 91
In LKR Group Company
As at 31 March 2020 2019 2020 2019
30 TRADE AND OTHER PAYABLES
Trade payables 8,326,355 5,632,824 - -
Accrued expenses 6,749,877 2,072,953 6,087 36,837
Payable to contractor 68,924,937 - -
Unclaimed dividend 1,072,826 604,339 604,339 604,339
Other payables 23,885,024 16,157,936 - -
108,959,019 24,468,052 610,426 641,176
In LKR Group Company
As at 31 March Note 2020 2019 2020 2019
31 INCOME TAX LIABILITIES
At the beginning of the year 32,228 32,228 32,228 32,228
Acquisition through business combination 138,999 - - -
Charge for the year 11.1 - - - -
Under/(over) provision in respect of previous
years
11.1 (117,780) - - -
Payments and set off against refunds - - - -
At the end of the year 53,447 32,228 32,228 32,228
32 OTHER CURRENT LIABILITIES
Tenant rent and electricity deposit 2,100,000 - - -
Staff cost payable 5,374,502 3,913,434 3,900,000 3,900,000
Taxes payables 31,555,753 10,584,074 4,048,677 3,217,665
Provision for Breakages 1,934,206 - - -
Accrued expenses & other liabilities 36,402,319 5,997,951 8,034,357 3,128,276
Advance received 25,691,515 - - -
103,058,295 20,495,459 15,983,034 10,245,941
33 CASH AND CASH EQUIVALENTS
Cash in hand & cash at bank 46,351,370 358,336 9,827,311 217,502
Short-term investments 67,408 76,067,686 - -
Bank overdraft (274,630,308) (18,041,754) (7,214) (570,646)
Reported for cash flows (228,211,530) 58,384,268 9,820,097 (353,144)
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2092
34 RELATED PARTY TRANSACTIONS
34.1 Parent and ultimate controlling party
Company does not have an identifiable parent of its own.
34.2 Transactions with key management personnel
34.2.1 Loans to directors
No loans have been given to the Directors of the Company.
34.2.2 Key management personnel compensation
Key management personnel comprises the Directors of the Company and details of compensation are given in Note 34.3 to the
financial statements.
34.3 Transactions with subsidiaries and other related companies
Relationships with subsidiaries are explained in Note 1.1.3 to the financial statements.
(i) Companies within the Group engage in trading transactions under relevant commercial terms and condition.
(ii) Lanka Realty Investments PLC, provides financial services to its subsidiary and charges interest.
(iii) The list of Directors at each of the subsidiary companies have been disclosed in group directory 2019/20.
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
34.3.1 Transactions with related parties
Rendering of services (Granting of loans and others)
Subsidiaries
Lanka Realty Developments (Pvt) Ltd - - 203,917,901 -
L & A Quarries (Pvt) Ltd - - 598,320 716,558
Amtrad Ltd - - 9,536,734 18,330,000
Lanka Realty Ambalangoda (Pvt) Ltd - - 7,863,494 7,076,727
Lanka Realty Leisure (Pvt) Ltd - - 4,570,774 776,759
Alexandra Holdings (Pvt) Ltd - - 9,480,684 -
Mulberry Holdings (Pvt) Ltd - - 584,450,212 -
Baseline Holdings (Pvt) Ltd - - 69,508,240 -
285 Darley Road (Pvt) Ltd - - 96,153,156 -
Almond Trees (Pvt) Ltd - - 23,640,331 -
Thudella Holdings (Pvt) Ltd - - 17,812,717 -
Crown Resorts (Pvt) Ltd - - 5,502,463 -
Oak Streets (Pvt) Ltd - - 29,349,720 -
Ilook Villa (Pvt) Ltd - - 6,894,653 -
Bravo Holdings (Pvt) Ltd 2,570,743 - - -
2,570,743 - 1,069,279,399 26,900,044
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 93
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
Receiving of services (Settlement of loans)
Subsidiaries
Lanka Realty Developments (Pvt) Ltd - - 154,307,931 37,705,346
L & A Quarries (Pvt) Ltd - - - 8,500,000
Amtrad Ltd - - - 1,185,000
Mulberry Holdings (Pvt) Ltd - - 442,175,397 -
Alexandra Holdings (Pvt) Ltd - - 2,025,300 -
Almond Trees (Pvt) Ltd - - 10,640,331 -
- - 609,148,959 47,390,346
Receiving of services (Legal and other professional
services)
Other related parties
Neelakandan & Neelakandan - 654,730 - 654,730
N & N Agents and secretaries (Pvt) Ltd 181,000 - - -
181,000 654,730 - 654,730
Technical fees allocation
Lanka Realty Investments PLC 7,377,770 - - -
L & A Quarries (Pvt) Ltd 341,712 - - 140,042
Lanka Realty Ambalangoda (Pvt) Ltd 2,897,534 - - 2,975,994
Lanka Realty Developments (Pvt) Ltd 29,006,245 - - 11,376,934
Lanka Realty Leisure (Pvt) Ltd 3,218,737 - - 2,350,116
Amtrad Ltd 3,097,572 - - 2,971,072
Alexandra Holdings (Pvt) Ltd 8,244,786 - - -
Mulberry Holdings (Pvt) Ltd 7,327,299 - - -
Baseline Holdings (Pvt) Ltd 19,091,626 - - -
Almond Trees (Pvt) Ltd 7,053,043 - - -
Crown Resorts (Pvt) Ltd 5,325,457 - - -
Oak Streets (Pvt) Ltd 41,264,312 - - -
Ilook Villa (Pvt) Ltd 3,047,440 - - -
137,293,533 - - 19,814,158
Payment of underwriting fees - Right Issue
Related Party - Relationship
Mr M H Jamaldeen-Executive Director - 298,624 - 298,624
Mr A J B Warman-Executive Director - 233,310 - 233,310
Mr I J Mcveigh-Director - 468,698 - 468,698
Eighth Wonder - Shareholder - 847,627 - 847,627
Mr P Morgan - Director - 273,198 - 273,198
- 2,121,457 - 2,121,457
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2094
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
Subsidiaries
Lanka Realty Developments (Pvt) Ltd - - 4,190,341 5,839,125
Amtrad Ltd - - 12,252,893 8,151,424
Lanka Realty Leisure (Pvt) Ltd - - 288,471 -
Lanka Realty Ambalangoda (Pvt) Ltd - - 1,879,985 -
Alexandra Holdings (Pvt) Ltd - - 367,451 -
Mulberry Holdings (Pvt) Ltd - - 7,988,259 -
Baseline Holdings (Pvt) Ltd - - 3,424,241 -
285 Darley Road (Pvt) Ltd - - 4,321,231 -
Almond Trees (Pvt) Ltd - - 828,218 -
Thudella Holdings (Pvt) Ltd - - 1,115,477 -
Crown Resorts (Pvt) Ltd - - 65,853 -
Oak Streets (Pvt) Ltd - - 12,851 -
Ilook Villa (Pvt) Ltd - - 293,767 -
- - 37,029,038 13,990,549
Settlements of amount due to other related parties
Steradian Capital Investments (Pvt) Ltd 155,104,481 24,028,469 25,395,844 24,028,469
155,104,481 24,028,469 25,395,844 24,028,469
Borrowing from other related parties
Steradian Capital Investments (Pvt) Ltd - 29,913,402 - 29,913,402
- 29,913,402 - 29,913,402
Interest of amount due to other related parties
Eighth Wonder 1,529,293 1,529,293 1,529,293 1,529,293
Ian McVeigh 1,529,293 1,529,293 1,529,293 1,529,293
3,058,586 3,058,586 3,058,586 3,058,586
* Technical service fee is computed based on the technical service agreement [TSA] between Lanka Realty Investments PLC
[LRI] and Steradian Capital Investments (Pvt) Ltd [SCI].
Services provided by SCI:
The agreement includes services related to general technical services including development activities, project management
services, acquisitions and disposals.
Fees to be paid to SCI:
- Asset management fee of 2.5% of net asset value of Lanka Realty Investments PLC Group as of 31 March 2020.
- Asset management fee of 2.5% of net asset value as of 13 August 2019 of Baseline Holdings (Pvt) Ltd, Alexandra Holdings (Pvt)
Ltd, Mulberry Holdings (Pvt) Ltd, Crown Resorts (Pvt) Ltd, Oak Street (Pvt) Ltd, Almond Trees (Pvt) Ltd and Ilook Villa (Pvt) Ltd.
- Acquisition fee of 2.5% of the purchase price.
- Disposal fee of 3% of the sale price.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 95
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
34.4 Amounts due from related parties
Subsidiaries
Lanka Realty Developments (Pvt) Ltd - - 51,537,134 20,594,527
Amtrad Ltd - - 89,489,762 67,700,137
Lanka Realty Leisure (Pvt) Ltd - - 7,717,934 3,540,974
Ascot Yala (Pvt) Ltd - - 45,761 51,511
Lanka Realty Ambalangoda (Pvt) Ltd - - 21,097,047 11,353,300
Alexandra Holdings (Pvt) Ltd - - 10,242,720 -
Mulberry Holdings (Pvt) Ltd - - 150,263,076 -
Baseline Holdings (Pvt) Ltd - - 72,932,479 -
285 Darley Road (Pvt) Ltd - - 100,474,388 -
Almond Trees (Pvt) Ltd - - 17,571,775 -
Thudella Holdings (Pvt) Ltd - - 18,928,195 -
Crown Resorts (Pvt) Ltd - - 5,568,317 -
Oak Streets (Pvt) Ltd - - 29,362,571 -
Ilook Villa (Pvt) Ltd - - 7,188,420 -
- - 582,419,579 103,240,449
Other related parties
Steradian Capital Investments (Pvt) Ltd 5,899,969 - 5,729,831 -
Hardy James (Pvt) Ltd 8,767 - - -
Bravo Holdings (Pvt) Ltd 2,570,743 - - -
8,479,479 - 588,149,410 103,240,449
34.5 Amounts due to related parties
Non-current
Loans from directors/shareholders** 26,805,440 23,747,904 26,805,440 23,747,904
26,805,440 23,747,904 26,805,440 23,747,904
Current
Subsidiaries
L & A Quarries (Pvt) Ltd - - 5,852,196 6,450,516
- - 5,852,196 6,450,516
Other related parties
Steradian Capital Investments (Pvt) Ltd 33,206,410 14,112,100 - 13,386,835
M H Jamaldeen 75,000 - - -
A J B Warman 1,000,000 - - -
34,281,410 14,112,100 5,852,196 19,837,351
61,086,850 37,860,004 32,657,636 43,585,255
**Two of the significant shareholders of the Company have granted LKR 20Mn loan with interest at rate of 15% per annum
compounding annually shall be repaid by the Company to the Directors/Shareholders in one instalment at the end of the
tenure of three years or such other extended period mutually agreed by both parties.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2096
In LKR Group Company
For the year ended 31 March 2020 2019 2020 2019
34.6 Compensation of key management personnel
Directors’ Fee 5,400,000 5,400,000 5,400,000 5,400,000
5,400,000 5,400,000 5,400,000 5,400,000
34.7 No provision was made in respect of amounts due from related parties.
34.8 No security has been obtained for related party receivables and all related party dues are payable on demand.
34.9 Interest on loans to related parties are decided based on the inter banking rates, associated risks and purpose for which funds
are used.
35 ACQUISITION OF NON-CONTROLLING INTERESTS
On 16 October 2018, the Group acquired an additional 16.65% interest in the voting shares of Lanka Realty Developments (Pvt) Ltd,
increasing its ownership interest to 100%. Cash consideration of LKR 100,000,000 was paid to the non-controlling shareholders.
The carrying value of the net assets of Lanka Realty Developments (Pvt) Ltd (excluding goodwill on the original acquisition) was
LKR 115,085,000 Following is a schedule of additional interest acquired in Lanka Realty Developments (Pvt) Ltd.
In LKR
For the year ended 31 March 2020 2019
Carrying value of the additional interest in Lanka Realty
Developments (Pvt) Ltd - 115,085,000
Cash consideration paid to non-controlling shareholders - (100,000,000)
Difference recognised in retained earnings - 15,085,000
36 ACQUISITION AND DISPOSAL OF SUBSIDIARIES
On 13th August 2019, the shareholders of Lanka Realty Investments PLC (the ‘Company’) approved to carry out the acquisition
of all the shares of six (6) private companies in commercial property, affordable housing and tourism & leisure sectors whereby
the shares of the 6 private companies will be swapped/acquired for shares of the Company. This share swap/private placement
will result in the acquisition of all the shares of the 6 companies at a cumulative value aggregating to LKR 5,630,038,000/-
(including the settlement for the fractional shares), in exchange for which up to 149,179,853 ordinary shares of Lanka Realty
Investments PLC is issued to the shareholders of the said companies at a price of LKR 37.52 per share in the respective
proportions mentioned below;
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 97
Company Existing Total
Number of
Shares in
Issue
Number of
Shares being
Swapped
Value as at
13th August
2019 of the
Shares being
Swapped
(LKR)*
Approx. Proportion in which the
Shares will be Swapped with
Shares of LRI
Total Number
of Shares to
be Issued at
the Share
Swap/Private
Placement to
Shareholders
Baseline Holdings
(Pvt) Ltd (BHPL)
666,300 666,300 1,097,389,000 44 new shares of LRI for every
1 existing share of BHPL
29,317,200
Alexandra Holdings
(Pvt) Ltd (AHPL)
605,838 605,838 478,049,000 21 new shares of LRI for every
1 existing share of AHPL
12,722,598
285 Darley Road (Pvt)
Ltd (DRPL)
5,756,200 5,756,200 2,392,259,000 11 new shares of LRI for every
1 existing share of DRPL
63,318,200
Mulberry Holdings
(Pvt) Ltd (MHL)
17,980,820 17,980,820 789,930,000 7 new shares of LRI for every
6 existing share of MHPL
20,977,614**
Thudella Holdings
(Pvt) Ltd (THPL)
1,121,730 1,121,730 304,852,000 7 new shares of LRI for every
1 existing share of THPL
7,852,110
Almond Trees (Pvt)
Ltd (ATPL)
8,566,944 8,566,944 567,559,000 7 new shares of LRI for every
4 existing share of ATPL
14,992,131**
Total 149,179,853
* The Board has obtained an independent valuation report to derive an independent opinion on the valuation of the
companies that are being considered for the Share Swap. The above values are based on this report.
** The proportion provided is an approximation due to rounding off. Any fractional shares and differences arising from same
will be settled in cash.
These new shares shall rank pari passu in all respects with the existing Ordinary Voting Shares of the Company at the issuance
of such shares. This transaction is in line with Article no. 03- 08 of the Articles of Association of the Company.
36.1 Share Swap/Private placement
The Share Swap/Private placement arrangement is expected to bring in the following benefits to the existing shareholders of the
Company:
- Increase the consolidated total asset base of the Group by approximately LKR 7.3 Bn while increasing the consolidated net
assets by approximately LKR 5.6 Bn, as of the transaction date.
- Positioning the Company as a key player in the land & property sector due to the diversified asset base.
- Diversifying the revenue streams which is expected to derive a higher return to the investors.
- Increase the value of the Company and its shares through the increased asset base and diversified income streams.
- Improve access to funds both debt and equity for both the holding company and subsidiaries.
- Improve attractiveness to foreign investors due to the larger entity and larger market capitalisation.
With the acquisition of shares of above companies, the Group hold 100% of the shareholdings
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/2098
36.2 Total consideration transferred
Acquisition - date fair value of consideration transferred
In LKR 285 Darley
Road (Pvt)
Ltd
Thudella
Holdings (Pvt)
Ltd
Baseline
Holdings (Pvt)
Ltd
Alexandra
Holdings (Pvt)
Ltd
Mulberry
Holdings (Pvt)
Ltd
Almond
Trees (Pvt
Ltd
Total
Total consideration 2,392,260,000 298,851,620 1,103,387,637 478,049,000 789,930,000 567,557,000 5,630,035,257
Shares issued 2,375,698,864 294,611,167 1,099,981,344 477,351,877 787,080,077 562,504,755 5,597,228,085
Cash consideration 16,561,136 4,240,453 3,406,293 697,123 2,849,923 5,052,245 32,807,173
2,392,260,000 298,851,620 1,103,387,637 478,049,000 789,930,000 567,557,000 5,630,035,257
Share options or any other type of equity instruments were not issued as part of the consideration. The consideration
comprised of issued shares and cash in its entirety to the following related parties of the Lanka Realty Investments PLC.
In LKR
Related Party Relationship Value by shares Value by cash Total
Eighth Wonder Shareholder 277,603,764 1,158,087 278,761,851
T C Smith Director/ Shareholder 838,766,729 5,847,092 844,613,821
I J McVeigh Director/ Shareholder 2,138,520,499 9,525,761 2,148,046,259
M H Jamaldeen Director/ Shareholder 850,549,435 6,282,353 856,831,787
A J B Warman Director/ Shareholder 277,603,764 2,302,103 279,905,867
P Morgan Director/ Shareholder 689,117,421 3,929,939 693,047,360
Steradian Capital Investments (Pvt) Ltd Other related parties 41,368,164 60,414 41,428,578
A. Acquisition of assets or a group of assets
The arrangements to acquire 285 Darley Road (Pvt) Ltd, Thudella Holdings (Pvt) Ltd and Baseline Holdings (Pvt) Ltd were
determined to be acquisitions of assets or groups of assets that do not constitute businesses. Accordingly, these arrangements
have been scoped out of the recognition, measurement and disclosure principles and requirements set out under SLFRS
3 Business Combinations for the acquisition method of accounting. For these arrangements the Group has identified and
recognised the individual identifiable assets acquired (including intangible assets) and liabilities assumed.
The number and fair value of the shares issued as consideration is as disclosed above. The acquisition - date fair value of such
shares were measured based on net asset value, adjusted to reflect market values. No goodwill has been recognised from these
arrangements and the cost to the Group has been allocated to individual identifiable assets and liabilities on the basis of their
relatives fair values as at date of purchase.
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 99
B. Acquisition of businesses:
The value of goodwill is primarily attributed to the expected synergies that would flow from the benefits of the share swap /
private placement arrangement, as more fully described below.
The fair values of the identifiable assets acquired and liabilities assumed as at the date of acquisition for arrangements
determined to be acquisitions of businesses are as below:
Fair value recognised on acquisition
Mulberry
Holdings
(Pvt) Ltd
Alexandra
Holdings
(Pvt) Ltd
Almond Trees
(Pvt) Ltd
Total
Assets
Property, plant and equipment 51,458 646,865,689 792,586,981 1,439,504,128
Intangible assets - 298,369 668,600 966,969
Goodwill - - 61,020,219 61,020,219
Inventories 900,944,202 - 3,817,748 904,761,950
Trade and other receivables - 318,139 864,066 1,182,205
Other current assets 7,577,440 366,831 6,052,000 13,996,271
Amounts due from related parties 6,040,845 137,496 1,773,339 7,951,680
Income tax receivables - - - -
Cash in hand and at bank 4,549,844 1,132,567 23,582 5,705,993
919,163,789 649,119,091 866,806,535 2,435,089,415
Liabilities
Deferred tax liabilities - 39,976,729 86,260,617 126,237,346
Employee benefit liabilities - - 431,781 431,781
Interest bearing borrowings 291,895,320 146,333,149 217,691,517 655,919,986
Amounts due to related parties - 2,649,905 1,221,494 3,871,399
Trade and other payables 6,097,841 15,068,112 37,510,543 58,676,496
Other current liabilities - 6,157,361 15,267,501 21,424,862
Bank overdrafts 197,136,467 78,711 6,910,767 204,125,945
495,129,628 210,263,968 365,294,219 1,070,687,815
Total identifiable net assets as fair value 424,034,161 438,855,123 501,512,316 1,364,401,600
Excess consideration transferred on acquisition 365,895,839 39,193,877 66,044,684 471,134,400
Purchase consideration 789,930,000 478,049,000 567,557,000 1,835,536,000
Shares issued 787,080,077 477,351,877 562,504,755 1,826,936,709
Cash consideration 2,849,923 697,123 5,052,245 8,599,291
Total purchase consideration 789,930,000 478,049,000 567,557,000 1,835,536,000
Net cash acquired with the subsidiary (192,586,623) 1,053,856 (6,887,185) (198,419,952)
Cash consideration (2,849,923) (697,123) (5,052,245) (8,599,291)
Net cash flow on acquisition (195,436,546) 356,733 (11,939,430) (207,019,242)
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/20100
36.3 The net assets recognised in the 31st March 2020 financial statements were based on a provisional assessment of their fair
value while the Group sought an independent valuation for the land and buildings owned by Alexandra Holdings (Pvt) Ltd,
Almond Trees (Pvt) Ltd Group and inventory property of Mulberry Holdings (Pvt) Ltd. The valuations had not been completed
by the date the 2019/20 financial statements were approved for issue by the Board of Directors.
36.4 The Group allocated its excess of the consideration transferred of LKR 365,895,839 to inventory property (Mulberry Holdings
(Pvt) Ltd) acquired through business combination on the basis of their relative fair values at date of acquisition.
36.5 The transaction cost directly attributable to the share issue amounted to LKR 2,559,214 is recognised in the statement of
changes in equity.
36.6 The fair value of the trade receivables amounts to LKR 1,182,205. The gross amount of trade receivables is LKR 1,182,205 and it’s
expected that the full contractual amounts can be collected in short-terms.
36.7 From the date of acquisition, the below mention companies contributed LKR 128,848,643 of revenue and LKR 31,905,126 to
loss before tax of the Group. If the combination had taken place at the beginning of the year, revenue would have been LKR
170,070,559 and profit before tax for the Group would have been LKR 104,701,162.
Fair value recognised on acquisition
Mulberry
Holdings
(Pvt) Ltd
Alexandra
Holdings
(Pvt) Ltd
Almond Trees
(Pvt) Ltd
Total
Revenue
1st April 2019 to 13th August 2019 - 3,621,891 37,600,025 41,221,916
14th August 2019 to 31st March 2020 - 15,822,046 113,026,597 128,848,643
Total revenue - 19,443,937 150,626,622 170,070,559
Profit/(loss) before tax
1st April 2019 to 13th August 2019 (131,740) (11,342,039) (12,215,863) (23,689,642)
14th August 2019 to 31st March 2020 (3,069,472) (21,896,490) (7,558,437) (32,524,399)
Total profit/(loss) before tax (3,201,212) (33,238,529) (19,774,300) (56,214,041)
37 PRINCIPAL SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS
Summarised financial information in respect of Lanka Reality Investments PLC’s subsidiary of Amtrad Ltd that have material
non-controlling interest, reflecting amounts before inter-company eliminations, is set out below.
In LKR
As at 31 March 2020 2019
Non-current assets 315,615,251 282,377,603
Current assets 34,096,450 42,953,342
Total assets 349,711,701 325,330,945
Non-current liabilities 49,811,377 51,099,642
Current liabilities 133,523,676 111,826,016
Total liabilities 183,335,053 162,925,658
Equity attributable to equity holders of the parent 133,101,319 129,924,230
Non-controlling interests 33,275,330 32,481,057
Non-controlling interests % 20% 20%
NOTES TO THE FINANCIAL STATEMENTS
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 101
In LKR
As at 31 March 2020 2019
Revenue 65,498,711 79,454,932
Profit/(loss) for the year (27,840,468) (26,762,296)
Profit attributable to equity holders of the parent (22,272,374) (21,409,837)
Profit attributable to non-controlling interests (5,568,094) (5,352,459)
Total comprehensive income for the year, net of tax 3,952,847 (20,163,339)
Dividend paid - -
Net cash outflow from operating activities 8,601,629 (1,840,022)
Net cash inflow from investing activities (4,242,749) 8,629,627
Net cash inflow from financing activities (3,213,624) 3,284,937
Total net cash (outflow)/inflow 1,145,255 10,074,542
38 COMMITMENT AND CONTINGENCIES
The Group does not have significant commitments and contingencies as at the reporting date.
38.1 Capital Expenditure Commitments
The approximate amounts of capital expenditure approved by the Directors as at 31st March, 2020 were: Capital expenditure
contracted for which no provision is made in the Financial Statements for the Group LKR. 2.2 Bn (2019 - LKR Nil) and for the
Company LKR Nil (2019 - LKR Nil).
39 LITIGATION
The Sri Lanka Tourism Development Authority (SLTDA) sought by letter dated 13th November 2019, to unilaterally treat the
Lease Agreement No. 117 dated 13th May 2014, between SLTDA and Lanka Realty Leisure (Pvt) Ltd (LRL) for the lease hold right
(land) in Yala, as terminated. Lanka Realty Leisure (Pvt) Ltd, who continues to remain in possession and control of the land, has
disputed the purported notice. Subsequently, Lanka Realty Leisure (Pvt) Ltd has filed an action against SLTDA in the District
Court of Colombo bearing case No: DSP/00084/2020, challenging the purported steps taken to terminate the lease agreement
with SLTDA.
On 4th August 2020, the Court granted interim injunction until the conclusion of the case, restraining SLTDA from taking any
steps pursuant to the documents marked ‘P12’ and ‘P13’ and also the purported Deed of Cancellation No. 177 dated 28th May
2020 attested by P.D.I.S Punchihewa, ‘Notary Public’. Thus the rights of LRL under the lease agreement No. 177, dated 13 May
2014, still remains in force.
In-light of the above the Board of Directors decided not to re-value the lease hold land-use-rights (right-of-use-asset) of LRL
during the year and the right-of-use-asset is carried at LKR 150,070,821 until the court concludes the civil proceeding.
40 EVENTS AFTER THE REPORTING PERIOD
The official announcement for a rights issue was made on the Colombo Stock Exchange (CSE) on 1st November 2019 (provided
below).
The number of shares to be issued: Voting : 96,740,648
The consideration for which the shares are to be issued (LKR.) : Voting :37.50
Current stated capital of the entity (LKR.) : 6,380,094,108
The purpose which the proceeds of the issue are to be utilised:
1. Acquisition of income yielding commercial asset/s 900Mn
2. Development of existing properties held by two subsidiary companies 450Mn
3. Investment in the real estate sector 450Mn
4. Settlement / part settlement of debt obligations of identified subsidiary companies 1800 Mn
The proportion in which the shares are to be used: Voting : One (01) new Ordinary Share for every two (02) Ordinary Shares
The Shareholders of Lanka Realty Investments PLC approved the rights issue on the 12th of March 2020 at the Extraordinary
General Meeting.
LKR 670,842,450.00 was raised via the issuance of 17,889,132 new shares to investors. The allocation of the shares took place
on the 15th of June 2020. The rights issue proceeds are accumulating interest in a money market account until such time that a
suitable investment opportunity is identified.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/20102
NOTES TO THE FINANCIAL STATEMENTS
41 SEGMENT ANALYSIS
The segment information is based on one segmental format. The business segment is considered as the primary format and
based on the management structure of the group.
The management is of the view that the Executive Directors are the decision makers and resources are allocated and
performance assessed based on the following sectors.
In LKR ‘000 Investment and
services
Manufacturing
For the year ended 31st March, 2020 2019 2020 2019
Total revenue 37,033 13,991 65,499 79,455
Intra group revenue (37,033) (13,991) -
External revenue - - 65,499 79,455
Segment results
Results from operating activities (4,426) (15,857) (32,233) (8,835)
Net finance income/ (cost) (23,879) 4,951 (15,001) (11,499)
Profit/ (loss) before tax (28,305) (10,906) (47,234) (20,334)
Tax (39) (151) 11,906 7,443
Depreciation on property, plant & equipment 21 1,215 16,241 13,873
Impairment on property, plant & equipment - - - -
Impairment on investment in subsidiary - - - -
Increase in fair value of investment properties - - - -
Total assets 7,282,949 1,169,165 357,562 340,890
Additions to property, plant & equipment 92 4,243 30,470
Non interest bearing liabilities
Deferred tax liability - 45,787 45,347
Employee benefit obligations - 99 1,288 1,109
Trade and other payables 610 641 19,634 22,820
Cash flows
Segment cash flows from operating activities (505,541) (15,828) 8,563 (10,257)
Segment cash flows from investment activities (35,070) (615,205) (4,243) 18,630
Segment cash flows from financing activities 550,784 628,709 (3,214) 1,778
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 103
Commercial / residential
development
Leisure/ Hoteliering Adjustments and
eliminations
Total
2020 2019 2020 2019 2020 2019 2020 2019
9,555 69,900 170,071 - (41,222) - 240,935 163,346
- - - - - (37,033) (13,991)
9,555 69,900 170,071 - (41,222) - 203,902 149,355
(68,127) 48,973 (1,539) (6,748) (2,215) (28,997) (108,541) (11,465)
(168,366) (24,964) (58,172) (3,569) 98,526 13,991 (166,891) (21,091)
859,266 58,606 (59,711) 3,182 38,312 (15,008) 762,328 15,540
(174,632) (10,724) 4,523 (8,468) 5,800 - (152,443) (11,901)
247 - 20,736 - (8,837) - 28,407 15,088
- - - - - - - -
- - - - - - - -
1,095,760 34,597 - 13,500 (58,000) - 1,037,760 48,097
10,399,114 1,385,781 2,156,341 335,938 (8,602,006) (1,173,244) 11,593,959 2,058,530
1,036 - 18,362 - (743) - 22,991 30,470
349,485 139,469 182,343 37,843 - - 577,615 222,659
- - 461 - - - 1,749 1,207
71,346 1,007 17,369 - - - 108,959 24,468
(1,563) (28,397) 44,715 4,382 116,359 (15,000) (337,467) (65,100)
(208,852) (145,403) (17,973) (1,768) (217,385) 615,000 (483,522) (128,746)
(45,335) 246,329 (2,670) (2,688) 34,828 (600,000) 534,393 274,128
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/20104
TEN YEAR SUMMARY
LKR ’000
31st March 2011 2012 2013 2014 2015 2016
2017
Restated 2018 2019 2020
Operating Results
Turnover 57,525 77,067 149,692 347,847 222,168 171,400 182,688 146,123 149,335 203,902
Profit before Tax 144,676 (35,917) 19,621 37,154 45,102 46,784 42,587 269,663 15,540 762,328
Income Tax (66,555) (11,642) (10,929) (11,138) (13,968) (15,061) (9,315) (34,176) (11,901) (152,443)
Profit After Tax 78,121 (47,559) 8,692 26,016 6,909 31,723 33,272 235,487 3,639 609,885
Minority Interest 30,733 (3,312) (2,016) 5,763 13,196 7,381 5,559 4,370 (330) (5,568)
Profit/(Loss) Attributable
to the Group 47,388 (44,247) 10,708 20,253 (6,287) 24,342 27,713 235,487 3,969 615,454
Capital Employed
Stated Capital 92,399 92,399 92,399 92,399 140,086 156,716 156,716 156,716 785,425 6,380,094
Capital Reserves 23,100 23,100 23,100 23,100 23,100 23,100 23,100 23,100 23,100 23,100
Revenue Reserves 472,664 415,729 424,995 445,300 439,369 464,431 517,410 856,249 859,315 1,368,092
Shareholders’ Funds 588,163 531,228 540,494 560,799 602,555 644,247 697,226 1,036,065 1,667,840 8,056,388
Minority Interest 143,488 61,755 62,254 68,033 80,672 87,829 100,691 131,862 32,483 33,273
Total Liabilities 513,708 519,409 631,793 704,596 592,837 539,590 499,199 583,084 358,207 3,504,298
Total Equity & Liabilities 1,245,359 1,112,392 1,234,541 1,333,428 1,276,064 1,271,666 1,297,116 1,751,011 2,058,530 11,593,959
Assets Employed
Non-Current Assets 1,117,898 1,006,773 1,133,859 1,155,146 1,160,459 1,215,735 1,273,273 1,734,810 1,919,078 9,993,045
Current Assets 127,461 105,619 100,682 178,282 115,605 55,931 23,844 16,201 139,452 1,600,914
Total Assets 1,245,359 1,112,392 1,234,541 1,333,428 1,276,064 1,271,666 1,297,116 1,751,011 2,058,530 11,593,959
LKR
Share Price 118.00 200.00 157.00 114.00 36.00 24.00 23.00 32.50 23.90 33.50
Earnings/(loss) per Share 5.93 (5.54) 1.36 1.90 (0.58) 2.01 2.19 18.26 0.15 4.48
Dividend per Share Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
Book Value per Share 74.00 68.00 68.00 70.00 50.00 51.00 55.08 81.85 37.65 41.64
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 105
INVESTOR INFORMATION
Resident Non-Resident Total
Shareholding
No. of
Shareholders
Total
Shareholding %
No. of
Shareholders
Total
Shareholding %
No. of
Shareholders
Total
Shareholding %
01-1,000 1,498 326,737 0.17 20 5,302 0.00 1,518 332,039 0.17
1,001-10,000 227 681,365 0.35 4 18,012 0.01 231 699,377 0.36
10,001-100,000 29 643,247 0.33 - - - 29 643,247 0.33
100,001-1,000,000 4 1,294,722 0.67 2 1,743,000 0.90 6 3,037,722 1.57
Over 1,000,000 3 31,352,597 16.21 7 157,416,314 81.36 10 188,768,911 97.57
1,761 34,298,668 17.73 33 159,182,628 82.27 1,794 193,481,296 100
No. of
Shareholders % No. of Shares %
Individual 1,712 95.43 100,956,769 52.18
Institutional 82 4.57 92,524,527 47.82
1,794 100.00 193,481,296 100.00
TWENTY MAJOR SHAREHOLDERS OF THE COMPANY
31st March 2020 31st March 2019
Name No . of Shares (%) No . of Shares (%)
1. NORTHERN TRUST COMPANY S/A IAN JOSEPH MCVEIGH 66,128,169 34.18 - -
IAN JOSEPH MCVEIGH - - 9,131,354 20.61
2. MR M.H. JAMALDEEN 28,925,034 14.95 6,255,806 14.12
3. EIGHTH WONDER 23,912,684 12.36 16,513,863 37.28
4. MR P. MORGAN 23,689,496 12.24 5,322,827 12.02
5. MR T.C. SMITH 22,355,190 11.55 - -
6. MR A.J.B. WARMAN 11,110,235 5.74 2,783,208 6.28
7. MR S.G. RODEN 8,622,680 4.46 - -
8. MRS E.S. KALBIAN 1,597,860 0.83 - -
9. MR M.F. FAROOK 1,325,000 0.69 1,325,000 2.99
10. STERADIAN CAPITAL INVESTMENTS (PVT) LTD 1,102,563 0.57 - -
11. MR R.J. MCMULLEN 871,500 0.45 - -
12. MR L.S. BOASE 871,500 0.45 - -
13. LB FINANCE PLC/BOSTON CAPITAL (PVT) LTD 473,291 0.25 473,291 1.07
14. BOSTON CAPITAL (PVT) LTD 426,975 0.22 426,975 0.96
15. GEORGE STEUART FINANCE PLC/ BOSTON CAPITAL (PVT) LTD 260,000 0.13 260,000 0.59
16. MR R.SENEVIRATNE 134,456 0.07 - -
17. MR W.W.D.D.S. PERERA 50,000 0.03 80,790 0.18
18. AXIS FINANCIAL SERVICES (PVT) LTD 49,303 0.03 49,303 0.11
19. MR P.G.W. SIRISENA 47,250 0.02 47,250 0.11
20. MR T.G. THORADENIYA 46,275 0.02 46,275 0.10
191,999,461 99.23 42,715,942 96.42
OTHERS 1,481,835 0.77 1,585,501 3.58
193,481,296 100.00 44,301,443 100.00
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/20106
DIRECTORS’ AND CEO’S SHAREHOLDING AS AT 31ST MARCH
2020 2019
No. of Shares % No. of Shares %
01. Ratnayake Mudiyanselage Mohan Joseph RATNAYAKE Nil Nil Nil Nil
02. Terence Charles SMITH 22,355,190 11.55% Nil Nil
03. Ian Joseph MCVEIGH
Shares held in the following manner
Northern Trust Company S/A Ian Joseph McVeigh
66,128,169 34.18% 9,131,354 20.61%
04. Mohamed Hisham JAMALDEEN 28,925,034 14.95% 6,255,806 14.12%
05. Archie James Buckland WARMAN 11,110,235 5.74% 2,783,208 6.28%
06. Saravanan NEELAKANDAN Nil Nil Nil Nil
07. Mohamed Firdouse FAROOK 1,325,000 0.68% 1,325,000 2.99%
08. Kudagamage Jayantha PRADEEP Nil Nil Nil Nil
09. Piers MORGAN 23,689,496 12.24% 5,322,827 12.02%
SHARE PRICES FOR THE YEAR
Year ended
31/03/2020 31/03/2019
Market price per share
Highest during the year (LKR) 49.00 (04.09.2019) 39.50 (04.06.2018)
Lowest during the year (LKR) 20.10 (24.05.2019) 18.00 (30.01.2019,
14.11.2018 & 06.09.2018)
As at end of the year (LKR) 33.50 23.90
Share trading information
Number of Transactions during the year 4,966 1,746
Number of Shares traded during the year 1,767,450 1,582,043
Value of shares traded during the year (LKR) 60,542,171.80 61,389,168.60
PUBLIC HOLDING
1. The Public Holding Percentage as at 31st March 2020 being 7.718%
2. Total number of shareholders who hold the Public Holdings as at 31st March 2020 - 1,794
3. The float adjusted market capitalisation as at 31st March 2020 = LKR 500,252,987.50
4. The Float adjusted market capitalisation of the Company falls under Option 5 of Rule 7.13.1 (a) of the Listing Rules of the Colombo
Stock Exchange and the Company has complied with the minimum public holding requirement applicable under the said option.
INVESTOR INFORMATION
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 107
CORPORATE INFORMATION
LEGAL FORM
A Public Limited Liability Company incorporate in
Sri Lanka under the Companies Ordinance No. 51 of
1938 (Cap 145), (Registered under the Companies
Act No. 07 of 2007) and listed on the Colombo
Stock Exchange.
COMPANY REGISTRATION NUMBER
PQ 139
DIRECTORS
Mr. R M M J Rathnayake
Mr. T C Smith
Mr. I J McVeigh
Mr. P Morgan
Mr. M H Jamaldeen
Mr. A J B Warman
Mr. S Neelakandan
Mr. M F Farook
Mr. K J Pradeep
AUDIT COMMITTEE
Mr. R M M J Ratnayake
Mr. S Neelakandan
Mr. K J Pradeep
RELATED PARTY TRANSACTIONS REVIEW COMMITTEE
Mr R M M J Ratnayake
Mr. M F Farook
Mr. S Neelakandan
REMUNERATION COMMITTEE
Mr. S Neelakandan
Mr R M M J Ratnayake
Mr. K J Pradeep
AUDITORS
Ernst & Young
Chartered Accountants
201, De Saram Place,
Colombo 10.
REGISTERED OFFICE
HQ Colombo, 1st Floor
464A, T. B. Jayah Mawatha,
Colombo 10,
Sri Lanka
Tel : 011 2331556
Fax : 011 2331555
Email : [email protected]
LAWYERS
Neelakandan & Neelakandan
Attorneys-at-Law & Notaries Public
M & N Building, (Level 05)
02, Deal Place
Colombo 3.
SECRETARIES
P W Corporate Secretarial (Pvt) Ltd
3/17, Kynsey Road,
Colombo 8.
BANKERS
Sampath Bank PLC
Pan Asia Banking Corporation PLC
Bank of Ceylon
National Development Bank PLC
Commercial Bank of Ceylon PLC
Hatton National Bank
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/20108
GROUP DIRECTORY
Company Name PV % Ownership Type Date of Incorporation
Amtrad Ltd PB 1317 80% Manufacturer of Building
Construction Material
March 28, 1980
285 Darley Road (Pvt) Ltd PV 109954 100% Real Estate Development November 23, 2015
Alexandra Holdings (Pvt) Ltd PV 97631 100% Operators of Hotels March 18, 2014
Almond Trees (Pvt) Ltd PV 80159 100% Operators of Hotels July 20, 2011
Baseline Holdings (Pvt) Ltd PV 104087 100% Real Estate Development February 25th, 2015
Crown Resorts (Pvt) Ltd PV 73541 100% Real Estate Development August 02, 2010
Ilook Villa (Pvt) Ltd PV 78938 100% Operators of Hotels May 20, 2011
L & A Quarries (Pvt) Ltd PV 79275 100% Operators of Crusher Plants June 07, 2011
Lanka Realty Ambalangoda
(Pvt) Ltd
PV 91199 100% Operators of Hotels February 22, 2013
Lanka Realty Developments
(Pvt) Ltd
PV 12802 100% Commercial Property
Development
April 01, 2009
Lanka Realty Leisure (Pvt) Ltd PV 84290 100% Operators of Hotels February 15, 2012
Mulberry Holdings (Pvt) Ltd PV 100666 100% Real Estate Development September 03, 2014
Oak Street (Pvt) Ltd PV 12729 100% Real Estate Development April 06, 2009
Thudella Holdings (Pvt) Ltd PV 95031 100% Real Estate Development October 14, 2013
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 109
Registered Address Telephone Number Directors Stated Capital (LKR)
1st Floor
HQ Colombo, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 A J B Warman (Chairman)
M H Jamaldeen
D A J Warnakulasuriya
P Madanayake
M F Farook
K J Pradeep
87,800,000.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
1,048,935,226.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
231,657,537.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
93,350,901.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
358,344,298.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
50,717,090.00
1st Floor
HQ Colombo, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
19,985,960.00
1st Floor
HQ Colombo, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
94,372,920.00
1st Floor
HQ Colombo, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
9,981,600.00
1st Floor
HQ Colombo, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
M F Farook
830,000,006.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
35,468,410.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
456,866,196.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
2,255,641,870.00
HQ Colombo
1st Floor, No. 464, T.B. Jayah Mawatha, Colombo 10.
011 2331556 M H Jamaldeen
A J B Warman
99,037,348.00
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/20110
NOTICE OFANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Fiftieth (50th) Annual General
Meeting of Lanka Realty Investments PLC will be held at the
Sri Lanka Foundation, No. 100, Padanam Mawatha,
Independence Square, Colombo 07 on 28th September 2020 at
10.00 a.m. for the following purposes:
1 To receive and consider the Annual Report of the Board of
Directors on the affairs of the Company and the Financial
Statements for the year ended 31st March 2020 together with
the Report of the Auditors thereon.
2 To re-elect as a Director, Mr. Terence Charles Smith who
retires in terms of Articles 83 and 84 of the Articles of
Association of the Company.
3 To re-elect as a Director, Mr. Kudagamage Jayantha Pradeep
who retires in terms of Articles 83 and 84 of the Articles of
Association of the Company.
4 To appoint as a Director, Mr. Piers Morgan who is 73 years of
age by passing the following resolution:
“IT IS HEREBY RESOLVED THAT Mr. Piers Morgan who is 73
years of age be and is hereby appointed a Director of the
Company and it is hereby declared as provided for in Section
211(1) of the Companies Act No. 07 of 2007 that the age limit
of 70 years referred to in Section 210 of the Companies Act
shall not apply to Mr. Piers Morgan.”
5 To re-appoint the Messrs Ernst & Young, Chartered
Accountants, as the Company’s Auditors and authorise the
Directors to determine their remuneration.
6 To authorise the Directors to determine donations for the
year ending 31st March 2021 and up to the date of the next
Annual General Meeting.
By Order of the Board
Lanka Realty Investments PLC
P W Corporate Secretarial (Pvt) Ltd
Director / Secretaries
31st August 2020
Notes:
1. A shareholder is entitled to appoint a Proxy to attend and
vote at the meeting on his/her behalf.
2. A Proxy need not be a shareholder of the Company.
3. A Form of Proxy accompanies this Notice.
4. The completed Form of Proxy should be deposited at the
Registered Office of the Company, HQ Colombo, 1st Floor,
464A, T.B. Jayah Mawatha, Colombo 10 by 10.00 a.m.
on 26th September 2020.
Annual Report 2019/20 | LANKA REALTY INVESTMENTS PLC 111
FORM OF PROXY
I/We* ................................................................................................................................................................ (holder of NIC No. ......................................)
of ...................................................................................................................................................................................................................................................
shareholder/s of LANKA REALTY INVESTMENTS PLC hereby appoint .............................................................................................................................
..................................................................................... (holder of NIC No. ......................................) of ...................................................................................
................................................................................................................................................................................................................... or failing him/her*
Mr. Ratnayake Mudiyanselage Mohan Joseph Ratnayake or failing him*
Mr Terence Charles Smith or failing him*
Mr Ian Joseph McVeigh or failing him*
Mr Mohamed Hisham Jamaldeen or failing him*
Mr. Archie James Buckland Warman or failing him*
Mr. Saravanan Neelakandan or failing him*
Mr. Mohamed Firdouse Farook or failing him*
Mr. Kudagamage Jayantha Pradeep or failing him*
Mr. Piers Morgan
as my/our* proxy to represent me/us* and to vote as indicated hereunder for me/us* and on my/our* behalf at the Fiftieth (50th) Annual
General Meeting of the Company to be held on 28th September 2020 and at every poll which may be taken in consequence of the
aforesaid meeting and at any adjournment thereof.
For Against
(1) To re-elect as a Director, Mr. Terence Charles Smith who retires in terms of Articles 83 and 84
of the Articles of Association of the Company.
(2) To re-elect as a Director, Mr. Kudagamage Jayantha Pradeep who Retires in terms of Articles
83 and 84 of the Articles of Association of the Company.
(3) To pass the ordinary resolution set out under item 4 of the Notice of Meeting for the
appointment of Mr. Piers Morgan as a Director.
(4) To re-appoint the retiring Auditors Messrs Ernst & Young, Chartered Accountants as the Company’s
Auditors and authorise the Directors to determine their remuneration.
(5) To authorise the Directors to determine donations for the year ending 31st March 2021 and up to
the date of the next Annual General Meeting.
In witness my/our* hand/s this ........................................ day of ........................................ Two Thousand and Twenty.
...................................................
Signature of Shareholder/s
*Please delete what is inapplicable.
LANKA REALTY INVESTMENTS PLC | Annual Report 2019/20112
Instructions for completion
1. The full name, National Identity Card number and the registered address of the shareholder appointing the Proxy and the relevant
details of the Proxy should be legibly entered in the Form of Proxy which should be duly signed and dated.
2. The completed Proxy should be deposited at the Registered Office of the Company, 1st Floor, HQ Colombo, 464A, T.B. Jayah
Mawatha, Colombo 10, by 10.00 a.m on 26th of September 2020.
3. The Proxy shall –
(a) In the case of an individual be signed by the shareholder or by his/her attorney, and if signed by an Attorney, a notarially
certified copy of the Power of Attorney should be attached to the completed Proxy if it has not already been registered with the
Company.
(b) In the case of a company or corporate / statutory body either be under its Common Seal or signed by its Attorney or by an
Officer on behalf of the company or corporate / statutory body in accordance with its Articles of Association or the Constitution
or the Statute (as applicable).
4. Please indicate with a ‘X’ how the Proxy should vote on each resolution. If no indication is given, the Proxy in his/her discretion will
vote as he/she thinks fit.
FORM OF PROXY
LANKA REALTY INVESTMENTS PLC
HQ Colombo, 1st Floor, 464A, T. B. Jayah Mawatha, Colombo 10, Sri Lanka
www.lriplc.com